A Word to Our Customers Regarding Our Second Quarter Results for 2009
As of July 29, 2009

BOK Financial is pleased to report another quarter with earnings over $50 million. Net interest revenue growth and strong fee revenue provided the foundation for a solid second quarter of 2009. The growth from our diversified revenue sources continues to enhance our strong capital and liquidity position. However, declining loan demand may challenge future net interest revenue and mortgage banking revenue until the economy begins to recover. The following is only a summary of information contained in BOK Financial's second quarter press release and 10-Q filing with the Securities and Exchange Commission. All the information found in this statement should be considered in conjunction with information in the second quarter press release and the 10-Q which may be found at www.BOKF.com.

Second Quarter Earnings

  • BOK Financial reported earnings of $52.1 million, down $2.9 million over the first quarter of 2009.
  • Net interest revenue increased $5.7 million or 14% annualized compared to the first quarter of 2009.
  • Net interest margin was up 8 basis points over the first quarter to 3.55%, largely due to higher loan yields and lower funding costs.
  • Fees and commission revenue totaled $123.1 million, up 5% annualized primarily due to increased transaction card revenue, mortgage banking revenue and deposit service charges partially offset by decreased brokerage and trading revenue.
  • Operating expenses were up $10 million over first quarter largely due to an industry-wide FDIC special assessment of $11.8 million.

Increased Equity and Capital Strength

  • As of June 30, BOK Financial reported $2.1 billion in shareholders' equity.
  • Tier 1 capital ratio was 9.86%, up 20 basis points from first quarter and far exceeding the 6% required to be considered "well capitalized" for regulatory purposes.
  • Tangible common equity ratio increased to 7.55%, up 71 basis points from first quarter.
  • BOK Financial was the largest commercial bank that elected not to participate in the Treasury's Capital Purchase Plan, an element of the Troubled Asset Relief Plan (TARP).

Ample Liquidity and Safe Deposits

  • BOK Financial's diverse sources of liquidity include deposits, federal funds purchased from other banks and borrowings from the Federal Home Loan Banks.
  • Average deposits increased $479 million compared to the first quarter of 2009.
  • BOK Financial elected to participate in the FDIC's Temporary Liquidity Guarantee Program. This program provides full deposit insurance coverage of non-interest bearing transaction deposit accounts.

Stable Credit Ratings

  • Rated investment grade by the primary rating agencies - S&P, Moody's, Fitch and DBRS. Ratings have been stable since the financial tumult began.
  • Ratings reports can be viewed on our website at www.BOKF.com.

Our Investment Portfolio

  • We actively manage our portfolio by continuously reviewing the performance, diversity and quality of our securities. During the second quarter, our available for sale portfolio increased $233 million due to a combination of net sales and an increase in the net fair value.
  • Our investment portfolio does not and has not contained any sub-prime mortgages, CLOs (collateralized loan obligations), CDOs (collateralized debt obligations), corporate debt, or preferred or common equity exposure to Fannie Mae or Freddie Mac.

Credit Quality

  • The combined reserve for credit losses was 2.27% of outstanding loans at June 30.
  • Net charge-offs for the second quarter were 1.13% annualized of average loans.
  • At June 30, non-performing assets totaled $446 million or 3.67% of outstanding loans and repossessed assets. The growth rate of non-performing assets has decreased over the past three quarters.
  • Our strategy involves retaining assets to maximize value rather than liquidating non-performing assets at depressed prices.
  • We have no concentration in sub-prime residential mortgage loans, CDOs or CLOs.