NASDAQ: BOKF
Steven Nell
Chief Financial Officer
BOK Financial Corp.
(918) 588-6319
For Further Information Contact:
Danny M. Boyd
Corporate Communications Manager
BOK Financial Corp.
(918) 588-6348
BOK Financial Income Up 12% in Second Quarter
Net Interest Revenue, Credit Quality Fuel Earnings Growth
TULSA, Okla. (Tuesday, July 27, 2004) - Growth in net interest revenue
and solid credit quality increased net income for the second quarter of 2004 by
12 percent at BOK Financial Corporation.
The company reported net income of $45.5 million, or 68 cents per
diluted share, for the second quarter compared with $40.8 million, or 61 cents
per diluted share, for the second quarter of 2003. Prior-year earnings per share
have been restated for a 3 percent dividend paid in common shares on May 31,
2004.
"We are pleased to report double-digit growth in both net income and
diluted earnings per share for the second quarter of 2004. Success for this
quarter included our ability to grow earning assets while maintaining a high
standard of credit quality," said President and CEO Stan Lybarger. "This growth
came in spite of continued uncertain commercial loan demand and a reduction in
outstanding energy lines. Our fee revenues continue to increase beyond the
unprecedented results generated by mortgage banking last year. We also enjoyed
the benefits of disciplined operating expense management and investments made to
improve our operations."
Mr. Lybarger continued, "BOK Financial is proud to be listed on the
Keefe, Bruyette & Woods, Inc. Honor Roll for the second consecutive year. The
Honor Roll acknowledges banking institutions that have reported annual increases
in earning per share over the past decade. This is a significant accomplishment
for the company and further evidence of the soundness of our business strategy."
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Page 2-BOK Financial Earnings
Net interest revenue increased $7.3 million, or 7 percent, due to a
$873 million increase in average earning assets. Average loans increased $577
million, or 8 percent, and average securities increased $293 million, or 6
percent, compared with the second quarter of 2003. The growth in average earning
assets was funded primarily by a $959 million increase in deposits, including a
$547 million increase in demand deposits. Net interest margin remained stable at
3.46 percent compared with 3.48 percent in the second quarter of 2003 and 3.47
percent in the first quarter of 2004.
Credit quality remained strong and led to a reduced provision for loan
losses. The provision for loan losses fell 58 percent, to $4.0 million for the
quarter. Net charge-offs totaled $4.9 million compared with $6.4 million last
year. The allowance for loan losses was 1.73 percent of outstanding loans and
224 percent of non-performing loans at June 30, 2004, compared with 1.78 percent
and 221 percent, respectively, at June 30, 2003. Non-performing loans totaled
$57.6 million, or 0.77 percent, of loans at June 30, 2004, compared with $55.6
million, or 0.81 percent, a year ago.
Fee and commission revenue rose $2.1 million, or 3 percent. Service
charges on deposit accounts grew $4.3 million, or 22 percent, while transaction
card revenue increased $2.8 million, or 20 percent. The growth in deposit
service charges came primarily from consumer banking accounts, which increased
fees by $2.7 million, compared with 2003. Additionally, trust fees increased
$3.1 million, or 29 percent, including $1.8 million from the acquisition of
Colorado State Bank and Trust ("CSBT") in the third quarter of 2003. The growth
in revenue was partially offset by a $9.1 million decrease in mortgage banking
revenue. Secondary marketing gains decreased $8.0 million as the volume of loans
funded fell to $197 million, compared with $400 million last year. Mortgage
servicing revenue decreased $1.1 million due to a 14 percent reduction in the
outstanding balance of loans serviced for others.
BOK Financial manages a portion of its securities portfolio as an
economic hedge against changes in fair value of mortgage servicing rights
("MSRs"). During the second quarter of 2004, the company recorded a $10.9
million recovery of the provision for impairment of MSRs due to an increase in
fair value. This recovery was offset by $10.1 million in losses on securities.
During the second quarter of 2003, a provision for impairment of MSRs of $3.4
million was recorded, which reflected a decrease in fair value.
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This provision was offset by gains of $4.4 million on hedge securities. The
company also recognized losses of $892,000 on the sale of securities not
designated as economic hedges of MSRs during the second quarter of 2004. This
compares to gains of $6.1 million realized on the sale of other securities in
the second quarter of 2003.
Operating expenses, excluding the provision for MSRs, increased 1
percent, or $976,000 compared with last year. This increase included $4.8
million of operating expenses for CSBT. Personnel costs increased $6.2 million,
or 12 percent. Incentive compensation, which is directly related to revenue
growth measured against defined targets, accounted for $3.7 million of the
increase. The acquisition of CSBT increased personnel costs by $2.8 million. The
increase in personnel costs were largely offset by a $7.0 million reduction in
mortgage banking costs. Mortgage banking costs consist primarily of amortization
of MSRs. This amortization decreased from last year as rising interest rates
slowed loan prepayment speeds. Data processing expense increased $2.3 million,
including $1.8 million directly related to the processing of bankcard
transactions. Additionally, CSBT contributed $274,000 to the increase in data
processing expense.
Outstanding loan balances increased $25 million over the quarter and
totaled $7.5 billion at June 30, 2004. Commercial loans increased $14 million as
an $88 million increase in loans to the services sector of the portfolio was
largely offset by net reductions in the energy, manufacturing and
wholesale/retail sectors. Commercial real estate loans decreased $30 million,
including a $14 million decrease in commercial construction loans and a $7
million decrease in multifamily loans.
BOK Financial is a regional financial services company that provides
commercial and consumer banking, investment and trust services, mortgage
origination and servicing, and an electronic funds transfer network. Holdings
include Bank of Albuquerque, N.A., Bank of Arkansas, N.A., Bank of Oklahoma,
N.A., Bank of Texas, N.A., Colorado State Bank and Trust, N.A., BOSC, Inc. and
the TransFund electronic funds network. Shares of BOK Financial are traded on
the NASDAQ under the symbol BOKF. For more information, visit our website at
www.bokf.com.
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This news release contains forward-looking statements that are based on
management's beliefs, assumptions, current expectations, estimates and
projections about BOK Financial Corp., the financial services industry and the
economy generally. Words such as "anticipates," "believes," ""estimates,"
"expects," "forecasts," ""plans," "projects," variations of such words and
similar expressions are intended to identify such forward-looking statements.
Management judgments relating to, and discussion of the provision and allowance
for credit losses involve judgments as to future events and are inherently
forward-looking statements. Assessments that BOK Financial's acquisitions and
other growth endeavors will be profitable are necessary statements of belief as
to the outcome of future events based in part on information provided by others
which BOK Financial has not independently verified. These statements are not
guarantees of future performance and involve certain risks, uncertainties, and
assumptions which are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. Therefore, actual results and outcomes may
materially differ from what is expected, implied or forecasted in such
forward-looking statements. Internal and external factors that might cause such
a difference include, but are not limited to (1) the ability to fully realize
expected cost savings from mergers within the expected time frames, (2) the
ability of other companies on which BOK Financial relies to provide goods and
services in a timely and accurate manner, (3) changes in interest rates and
interest rate relationships, (4) demand for products and services, (5) the
degree of competition by traditional and non-traditional competitors, (6)
changes in banking regulations, tax laws, prices, levies, and assessments, (7)
the impact of technological advances, and (8) trends in customer behavior as
well as their ability to repay loans. BOK Financial Corp. and its affiliates
undertake no obligation to update, amend, or clarity forward-looking statements,
whether as a result of new information, future events or otherwise.