BOK Financial Year-to-Date Earnings Down 1%

BOK Financial Corporation (NASDAQ:BOKF) reported earnings of $43.7 million or $0.65 per diluted share for the second quarter of 2008. Net income totaled $62.3 million or $0.92 per diluted share for the first quarter of 2008 and $53.9 million or $0.80 per diluted share for the second quarter of 2007. Net income for the six months ended June 30, 2008 totaled $105.9 million or $1.57 per diluted share compared with net income of $106.7 million or $1.58 per diluted share for the same period of 2007. Highlights of the second quarter of 2008 included: Net interest revenue totaled $159.1 million, up $12.0 million over the first quarter of 2008 and $24.2 million or 18% over the second quarter of 2007. Net interest margin increased to 3.45% for the second quarter of 2008 from 3.31% for both the first quarter of 2008 and the second quarter of 2007. Fees and commissions revenue totaled $113.6 million, down $263 thousand from the first quarter of 2008 and up $16.6 million or 17% over the second quarter of 2007. Non-performing assets totaled $158 million or 1.26% of outstanding loans at June 30, 2008, up from $126 million or 1.02% of outstanding loans at March 31, 2008 and $70 million or 0.60% of outstanding loans at June 30, 2007. Net loans charged off and provision for credit losses were $13.0 million and $38.3 million, respectively, for the second quarter of 2008. Net loans charged off totaled $8.9 million for the first quarter of 2008 and $5.8 million for the second quarter of 2007. The provision for credit losses was $17.6 million for the first quarter of 2008 and $7.8 million for the second quarter of 2007. Net losses on securities, derivatives and mortgage servicing rights totaled $9.0 million for the second quarter of 2008, compared with net gains on securities, derivatives and mortgage servicing rights of $5.0 million for the first quarter of 2008 and net losses of $1.4 million in the second quarter of 2007. The change in net gains and losses on securities, derivatives and mortgage servicing rights decreased second quarter’s net income $9.0 million compared with the first quarter of 2008. No other than temporary impairment charges against the Company’s securities portfolio were recognized in the second quarter of 2008 compared with charges of $5.3 million in the first quarter of 2008. The Company has no equity investments in FNMA or FHLMC. "We are disappointed with the impact of rising credit costs on our performance,” said President and CEO Stan Lybarger. "However, net interest revenue showed solid growth due to both earning assets and rising net interest margin. Non-interest revenue was 42% of our total revenue for the second quarter – a level that sets us apart from most regional banks. We also have one of the stronger capital positions among the top 50 U.S. banks.” Net Interest Revenue Net interest revenue totaled $159.1 million for the second quarter of 2008, up $12.0 million over the first quarter of 2008 and $24.2 million or 18% over the second quarter of 2007. Average earning assets increased $720 million compared with the first quarter of 2008, including a $346 million increase in average loans and a $397 million increase in average securities. Average earning assets increased $2.1 billion over the second quarter of 2007, including a $1.2 billion increase in average outstanding loans and a $917 million increase in average securities. Growth in average earning assets compared with the first quarter of 2008 was funded primarily by a $991 million increase in average federal funds purchased and other borrowed funds. In addition, average deposits increased $198 million over the first quarter of 2008. Average interest-bearing transaction accounts increased $244 million and average demand deposit account balances increased $100 million. Average time deposits decreased $149 million. Funds generated by growth in deposits and borrowings were also used to fund a $485 million increase in average margin assets. Margin assets placed by the Company secure its obligations under various derivatives contracts. Net interest margin was 3.45% for the second quarter of 2008 compared with 3.31% for both the first quarter of 2008 and the second quarter of 2007. Widening of the spread between LIBOR and the federal funds rate increased our net interest margin. LIBOR is the basis for the interest earned on many of our loans and the federal funds rate is the basis for the interest paid on many of our interest-bearing liabilities. Yields on average earning assets decreased 56 basis points from the previous quarter to 5.61%. Loan yields were down 79 basis points and securities yields were down 3 basis points. The cost of interest-bearing liabilities decreased 82 basis points from the previous quarter to 2.29%. The cost of interest-bearing deposits decreased 77 basis points and the cost of other borrowed funds decreased 101 basis points. Loans and Deposits Outstanding loans totaled $12.7 billion at June 30, 2008, up $276 million or 9% annualized since March 31, 2008. Commercial loans totaled $7.1 billion and commercial real estate loans totaled $2.8 billion. The outstanding balance of commercial loans increased $108 million or 6% annualized while the outstanding balance of commercial real estate loans decreased $4 million or 1% annualized. Commercial real estate loans comprised 22% of the total loan portfolio at June 30, 2008. Residential mortgage loans, which includes loans secured by 1-4 family properties and home equity loans, totaled $1.6 billion at June 30, 2008. Home equity loans totaled $479 million at June 30, 2008, including $318 million in Oklahoma, $73 million in Texas and $68 million in New Mexico. Consumer loans totaled $1.0 billion, including $735 million of indirect automobile loans. Indirect auto loans were up $49 million since March 31, 2008. Commercial loans to the services and other portfolio sectors increased $64 million and $49 million, respectively, since March 31, 2008. In addition, the outstanding balances of loans to the wholesale / retail and healthcare sectors were up $21 million and $15 million. Loans to the energy sector of the portfolio were down $46 million. Commercial real estate loans secured by land, residential lots and construction totaled $1.0 billion or 8% of the loan portfolio at June 30, 2008, down $45 million since March 31, 2008. The distribution of land and residential lot and construction loans among our various markets included $299 million in Texas, $265 million in Oklahoma, $180 million in Colorado and $173 million in Arizona. Total deposits increased $796 million or 24% annualized since March 31, 2008. Interest-bearing transaction account balances increased $321 million and time deposit balances increased $378 million. In addition, demand deposit account balances were up $95 million. Substantially all deposit growth during the second quarter was attributed to Oklahoma, the market with our largest retail distribution network. Credit Quality Non-performing assets totaled $158 million or 1.26% of outstanding loans and repossessed assets at June 30, 2008, up $32 million since March 31, 2008. Non-performing commercial, commercial real estate and residential mortgage loans generally are secured and individually less than $10 million. In addition, $8.6 million of non-performing residential mortgage loans are guaranteed by agencies of the U.S. government and $14 million of non-performing assets in the Colorado market were acquired with First United Bank in the second quarter of 2007. The Company will be reimbursed by the sellers up to $8 million for any losses incurred during a three-year period after the acquisition date. Non-performing assets, excluding assets guaranteed by the U.S. government or subject to the First United Bank sellers’ escrow totaled $135 million or 1.08% of outstanding loans and repossessed assets. Non-accruing commercial real estate loans totaled $60 million or 2.14% of outstanding commercial real estate loans at June 30, 2008. Non-accruing commercial real estate loans included $45 million of land and residential lot and construction loans, $896 thousand of loans secured by multifamily properties and $14 million of loans secured by other commercial properties. The distribution of non-accruing land and residential lot and construction loans among our various markets included $30 million in Arizona, $6 million in Texas, $5 million in Colorado and $2 million in Oklahoma. At June 30, 2008, non-performing assets in the Arizona market totaled $35 million or 5.67% of loans and repossessed assets, up from $19 million or 3.17% at March 31, 2008. Non-performing land and residential lot and construction loans in the Arizona market totaled $30 million, up from $16 million at March 31, 2008. "While we were disappointed in this quarter’s asset quality trends, it is important to note that the Arizona real estate market has been the biggest driver of the deterioration,” said Lybarger. "This market is a relatively small percentage of our Company’s balance sheet. Credit cycles are a normal part of the banking environment and we will be impacted. However, we have long maintained commercial real estate below 25% of total loans, which should help as we work through this cycle.” Non-performing commercial loans totaled $46 million at June 30, 2008 or 0.65% of outstanding commercial loans. Approximately $30 million of non-performing commercial loans are in the services sector of the portfolio. The distribution of non-performing loans to the services sector among our various markets included $18 million in Oklahoma, $5 million in Texas and $4 million in Colorado. At June 30, 2008, the distribution of indirect automobile loans among our various markets was $476 million in Oklahoma, $181 million in Arkansas and $78 million in Texas. Approximately 1.95% of the indirect automobile loan portfolio is past due 30 days or more, including 2.03% in Oklahoma, 2.03% in Arkansas and 1.27% in Texas. At March 31, 2008, approximately 1.96% of the indirect automobile loan portfolio was past due 30 days or more. Comparable national average past due rate is 3.09% based on survey data as of March 31, 2008. Net loans charged-off totaled $1.7 million in the second quarter of 2008 and $1.6 million in the first quarter of 2008. The combined allowance for loan losses and off-balance sheet credit losses totaled $182 million or 1.45% of outstanding loans and 145% of non-accruing loans at June 30, 2008. The allowance for loan losses was $159 million and the reserve for off-balance sheet credit losses was $23 million. At March 31, 2008, the combined allowance for loan losses and off-balance sheet credit losses totaled $156 million or 1.27% of outstanding loans and 158% of non-accruing loans. The allowance for loan losses was $137 million and the reserve for off-balance sheet credit losses was $19 million. As is always the case, the Company will continue to evaluate the adequacy of the allowance for loan losses as of June 30, 2008 through August 9, 2008, the date its financial statements are filed with the Securities and Exchange Commission, and will make adjustments to amounts reported if necessary. Real estate and other repossessed assets totaled $21 million at June 30, 2008, up from $15 million at March 31, 2008. Real estate and other repossessed assets included $13 million of 1-4 family residential properties and residential land development properties, $2 million of automobiles and $3 million of manufacturing facilities. Approximately $1.7 million of real estate and other repossessed assets are supported by the First United Bank sellers’ guaranty. The Company also has off-balance sheet obligations related to certain community development residential mortgage loans that were sold with recourse. These mortgage loans were underwritten to standards approved by U.S. government agencies, including full documentation and were originated under programs available only for owner-occupied properties. The outstanding principal balance of these loans totaled $400 million at June 30, 2008. All of these loans are to borrowers in our primary markets including $281 million to borrowers in Oklahoma, $45 million to borrowers in Arkansas, $23 million to borrowers in New Mexico and $19 million to borrowers in the Kansas City area. At June 30, 2008 approximately 2.12% of these loans are non-performing. A separate reserve for credit risk of $7.5 million is maintained for these loans. Fees and Commission Revenue Fees and commission revenue decreased $263 thousand from the first quarter of 2008 and increased $16.6 million or 17% over the second quarter of 2007. Brokerage and trading revenue was down $9.4 million over the previous quarter due primarily to the effect of increased risk associated with continued high energy prices and volatility on the fair value of energy derivatives. Brokerage and trading revenue increased $1.2 million or 9% over the second quarter of 2007 due primarily to institutional securities sales, partially offset by a decrease in derivatives revenue. Deposit service charges increased $2.5 million over the first quarter of 2008 and $3.4 million or 13% over the second quarter of 2007 due primarily to growth in overdraft fees and commercial account charges. Transaction card revenue increased $2.2 million over the previous quarter and $2.9 million or 13% over the second quarter of 2007 due to growth in ATM, merchant discount and debit card fees. Fees earned on margin assets totaled $4.5 million in the second quarter of 2008, $2.0 million in the first quarter of 2008 and $969 thousand in the second quarter of 2007. Securities, Derivatives and Mortgage Servicing Rights Net losses on securities, derivatives and mortgage servicing rights totaled $9.0 million for the second quarter of 2008 compared with net gains on securities, derivatives and mortgage servicing rights of $5.0 million for the first quarter of 2008. The change between quarters reduced net income $9.0 million.   Quarter Ended June 30   March 31   June 30   2008     2008     2007   Gain (loss) on portfolio securities $ 276 $ 2,947 $ ( 580 ) Gain on Visa IPO securities - 6,788 - Other than temporary impairment of equity securities - (5,306 ) - Gain (loss) on derivative contracts (2,961 ) 2,113 ( 183 ) Gain (loss) on mortgage hedge securities (5,518 ) 191 (5,682 ) Gain (loss) on change in fair value of mortgage servicing rights ( 767 ) (1,762 ) 5,061 Gain (loss) on mortgage servicing rights net of mortgage hedge securities (6,285 ) (1,571 ) ( 621 ) Net gain (loss) on securities, derivatives and mortgage servicing rights $ (8,970 ) $ 4,971 $ (1,384 ) Operating Expense Operating expenses totaled $159.3 million for the second quarter of 2008, up $5.9 million over the preceding quarter and $25.1 million or 19% over the same period of 2007. Excluding changes in the fair value of mortgage servicing rights, operating expenses increased $6.9 million over the first quarter of 2008 and $19.3 million or 14% over the second quarter of 2007. Personnel expense grew $1.5 million compared with the first quarter of 2008 and $9.5 million or 12% compared with the second quarter of 2007. Insurance expense decreased $1.1 million compared with the first quarter of 2008 and increased $1.9 million compared with the second quarter of 2007 due primarily to FDIC insurance costs. Credit losses on mortgage loans sold with recourse, which is included in mortgage banking costs, totaled $2.9 million in the second quarter of 2008 and $2.5 million in the first quarter of 2008. Capital Management The Company’s tangible capital ratio was 7.33% at June 30, 2008, down from 7.83% at March 31, 2008. The decrease in the tangible capital ratio was due primarily to balance sheet growth, including a $715 million increase in the fair value of derivative contracts held for customer risk management programs. Cash dividends paid during the second quarter of 2008 totaled $15.2 million or $0.225 per common share. The cash dividend paid per common share was up 12% compared with the first quarter of 2008. About BOK Financial Corp. BOK Financial Corp. 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 Arizona, N.A., Bank of Arkansas, N.A., Bank of Oklahoma, N.A., Bank of Texas, N.A., Colorado State Bank & Trust, N.A., Bank of Kansas City, N.A., BOSC, Inc., the TransFund electronic funds network, Cavanal Hill Investment Management, Inc. and Southwest Trust Company, N.A. Shares of BOK Financial are traded on the Nasdaq under the symbol BOKF. For more information, visit www.bokf.com. This news release contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about BOK Financial, 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 nontraditional competitors, (6) changes in banking regulations, tax laws, prices, levies and assessments, (7) the impact of technological advances and (8) trends in consumer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise. BALANCE SHEETS BOK FINANCIAL CORPORATION (In thousands)   Period Ended June 30,     December 31,     June 30, 2008 2007 2007 (Unaudited) (Unaudited) ASSETS Cash and due from banks $ 712,324 $ 717,259 $ 596,827 Trading securities 62,532 45,724 30,977 Funds sold and resell agreements 52,005 173,154 50,635 Securities: Available for sale 5,926,602 5,650,540 5,038,966 Investment 245,754 247,949 265,507 Mortgage trading securities   98,269     154,701     133,967   Total securities 6,270,625 6,053,190 5,438,440 Loans: Commercial 7,064,573 6,737,505 6,548,832 Commercial real estate 2,827,497 2,750,472 2,791,980 Residential mortgage 1,607,597 1,531,296 1,403,298 Residential mortgage held for sale 119,944 76,677 112,596 Consumer   1,044,371     921,297     842,676   Total loans 12,663,982 12,017,247 11,699,382 Less reserve for loan losses   (159,018 )   (126,677 )   (119,759 ) Loans, net of reserve 12,504,964 11,890,570 11,579,623 Premises and equipment, net 266,435 258,786 241,579 Accrued revenue receivable 159,206 138,243 160,595 Intangible assets, net 365,060 368,353 377,957 Mortgage servicing rights, net 72,103 70,009 74,067 Real estate and other repossessed assets 21,025 9,475 7,664 Bankers' acceptances 16,031 1,780 31,702 Derivative contracts 1,430,874 502,446 264,845 Cash surrender value of bank-owned life insurance 231,527 229,540 224,250 Receivable on unsettled securities trades 39,052 10,071 - Other assets   295,719     199,101     202,075   TOTAL ASSETS $ 22,499,482   $ 20,667,701   $ 19,281,236         LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand $ 1,951,939 $ 1,875,946 $ 1,701,756 Interest-bearing transaction 7,650,255 7,096,339 6,508,677 Savings 162,138 156,368 207,251 Time   4,361,384     4,330,638     4,744,570   Total deposits 14,125,716 13,459,291 13,162,254 Funds purchased and repurchase agreements 3,101,425 3,225,131 2,317,846 Other borrowings 2,153,853 1,027,564 888,362 Subordinated debentures 398,340 398,273 547,896 Accrued interest, taxes, and expense 100,208 124,029 104,224 Bankers' acceptances 16,031 1,780 31,702 Due on unsettled securities trades - - 71,838 Derivative contracts 456,379 341,677 217,140 Other liabilities   160,310     154,572     144,066   TOTAL LIABILITIES 20,512,262 18,732,317 17,485,328 Shareholders' equity: Capital, surplus and retained earnings 2,051,598 1,966,618 1,885,435 Accumulated other comprehensive loss   (64,378 )   (31,234 )   (89,527 ) TOTAL SHAREHOLDERS' EQUITY   1,987,220     1,935,384     1,795,908   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 22,499,482   $ 20,667,701   $ 19,281,236   AVERAGE BALANCE SHEETS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands)   Quarter Ended June 30,     March 31,     December 31,     September 30,     June 30, 2008 2008 2007 2007 2007   ASSETS Trading securities $ 74,058 $ 74,957 $ 29,303 $ 24,413 $ 32,897 Funds sold and resell agreements 72,444 80,735 86,948 101,281 67,057 Securities: Available for sale 5,880,844 5,438,655 5,574,417 5,183,056 4,967,974 Investment 249,723 248,974 249,350 246,273 261,518 Mortgage trading securities   155,612     201,199     138,306     137,863     139,695   Total securities 6,286,179 5,888,828 5,962,073 5,567,192 5,369,187 Loans: Commercial 6,987,727 6,841,006 6,619,760 6,487,139 6,347,091 Commercial real estate 2,797,345 2,784,640 2,702,449 2,775,184 2,705,280 Residential mortgage 1,602,799 1,510,238 1,504,594 1,472,537 1,375,620 Residential mortgage held for sale 105,925 84,291 75,082 93,042 93,804 Consumer   1,033,502     961,104     904,358     881,736     816,346   Total loans 12,527,297 12,181,279 11,806,242 11,709,638 11,338,140 Less allowance for loan losses   (145,520 )   (131,709 )   (125,996 )   (123,059 )   (118,505 ) Total loans, net   12,381,777     12,049,570     11,680,246     11,586,579     11,219,635   Total earning assets 18,814,458 18,094,090 17,758,570 17,279,465 16,688,776 Cash and due from banks 524,922 543,232 546,704 529,282 534,385 Cash surrender value of bank-owned life insurance 229,731 230,283 227,810 225,206 218,007 Derivative contracts 897,236 513,696 387,876 255,673 204,647 Other assets   1,142,910     1,115,752     1,061,655     1,046,749     912,255   TOTAL ASSETS $ 21,609,257   $ 20,497,053   $ 19,982,615   $ 19,336,375   $ 18,558,070     LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand $ 1,336,552 $ 1,236,552 $ 1,293,419 $ 1,300,280 $ 1,295,930 Interest-bearing transaction 7,717,777 7,473,670 7,016,136 6,683,056 6,414,014 Savings 159,798 156,953 160,170 200,362 158,718 Time   4,076,167     4,225,141     4,544,802     4,798,812     4,507,053   Total deposits 13,290,294 13,092,316 13,014,527 12,982,510 12,375,715 Funds purchased and repurchase agreements 3,126,110 3,061,783 3,158,153 2,603,372 2,627,230 Other borrowings 2,267,076 1,340,846 936,353 880,894 866,096 Subordinated debentures 398,336 398,241 398,109 471,458 410,883 Derivative contracts 239,211 297,660 276,992 198,438 152,105 Other liabilities   302,833     321,061     303,582     378,723     335,295   TOTAL LIABILITIES 19,623,860 18,511,907 18,087,716 17,515,395 16,767,324 Shareholders' equity   1,985,397     1,985,146     1,894,899     1,820,980     1,790,746   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 21,609,257   $ 20,497,053   $ 19,982,615   $ 19,336,375   $ 18,558,070   STATEMENTS OF EARNINGS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands, except per share data)   Quarter Ended     Six Months Ended June 30, June 30, 2008   2007 2008   2007     Interest revenue $ 260,226 $ 288,685 $ 536,267 $ 563,261 Interest expense   101,147     153,772     230,060     299,510   Net interest revenue 159,079 134,913 306,207 263,751 Provision for credit losses   38,310     7,820     55,881     14,320   Net interest revenue after provision for credit losses 120,769 127,093 250,326 249,431   Other operating revenue Brokerage and trading revenue 14,536 13,317 38,449 26,599 Transaction card revenue 25,786 22,917 49,344 43,101 Trust fees and commissions 20,940 19,458 41,736 38,453 Deposit service charges and fees 30,199 26,797 57,885 51,395 Mortgage banking revenue 7,198 4,034 14,415 9,554 Bank-owned life insurance 2,658 2,525 5,170 4,924 Margin asset fees 4,460 969 6,427 1,727 Other revenue   7,824     6,947     14,039     12,798   Total fees and commissions 113,601 96,964 227,465 188,551 Gain (loss) on asset sales 216 (348 ) 181 346 Gain (loss) on securities, net (5,242 ) (6,262 ) (622 ) (6,825 ) Gain (loss) on derivatives, net   (2,961 )   (183 )   (848 )   (112 ) Total other operating revenue 105,614 90,171 226,176 181,960   Other operating expense Personnel 89,597 80,054 177,703 158,382 Business promotion 5,777 5,391 10,416 9,961 Professional fees and services 6,973 5,963 12,621 10,837 Net occupancy and equipment 15,100 13,860 30,161 27,066 Insurance 2,626 693 6,336 1,415 Data processing and communications 19,523 18,402 38,416 35,376 Printing, postage and supplies 4,156 4,179 8,575 8,148 Net (gains) losses and operating expenses of repossessed assets (229 ) 192 149 399 Amortization of intangible assets 1,885 1,443 3,810 2,579 Mortgage banking costs 6,054 2,485 11,734 5,009 Change in fair value of mortgage servicing rights 767 (5,061 ) 2,529 (3,897 ) Visa retrospective responsibility obligation - - (2,767 ) - Other expense   7,039     6,530     12,989     10,967   Total other operating expense 159,268 134,131 312,672 266,242   Income before taxes 67,115 83,133 163,830 165,149 Federal and state income taxes   23,432     29,270     57,882     58,493     Net income $ 43,683   $ 53,863   $ 105,948   $ 106,656     Average shares outstanding: Basic 67,282,501 67,116,902 67,246,250 67,099,752 Diluted 67,662,197 67,606,330 67,610,014 67,589,146   Earnings per share: Basic $ 0.65   $ 0.80   $ 1.58   $ 1.59   Diluted $ 0.65   $ 0.80   $ 1.57   $ 1.58   FINANCIAL HIGHLIGHTS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands, except ratio and share data)   Quarter Ended June 30,     March 31,     December 31,     September 30,     June 30, 2008 2008 2007 2007 2007   Capital: Period-end shareholders' equity $ 1,987,220 $ 1,992,570 $ 1,935,384 $ 1,868,563 $ 1,795,908 Risk-based capital ratios: Tier 1 9.09 % 9.11 % 9.38 % 9.30 % 9.12 % Total capital 12.09 % 12.12 % 12.54 % 12.53 % 12.36 % Leverage ratio 8.17 % 8.22 % 8.20 % 8.17 % 8.30 % Period-end tangible capital ratio 7.33 % 7.83 % 7.72 % 7.67 % 7.50 %   Common stock: Book value per share $ 29.45 $ 29.57 $ 28.75 $ 27.86 $ 26.69   Market value per share: High $ 60.74 $ 55.23 $ 55.43 $ 54.20 $ 55.12 Low $ 49.11 $ 46.82 $ 51.44 $ 47.37 $ 48.58   Cash dividends paid $ 15,180 $ 13,484 $ 13,438 $ 13,445 $ 13,452 Dividend payout ratio 34.75 % 21.66 % 26.27 % 22.47 % 24.97 % Shares outstanding, net 67,488,388 67,383,318 67,306,380 67,062,517 67,280,107 Stock buy-back program: Shares repurchased - 91,114 33,583 261,916 18,783 Amount $ -   $ 4,655,477   $ 1,770,368   $ 13,359,753   $ 967,122   Average price per share $ -   $ 51.10   $ 52.72   $ 51.01   $ 51.49     Performance ratios: Return on average assets 0.81 % 1.22 % 1.02 % 1.23 % 1.16 % Return on average equity 8.85 % 12.62 % 10.71 % 13.04 % 12.06 % Net interest margin 3.45 % 3.31 % 3.22 % 3.27 % 3.31 % Efficiency ratio 57.69 % 57.60 % 60.04 % 60.08 % 59.50 %   Other data: Gain (loss) on economic hedge of mortgage servicing rights $ (5,518 ) $ 191 $ 1,288 $ 3,654 $ (5,682 ) Trust assets $ 34,433,874 $ 35,524,730 $ 36,288,592 $ 34,875,758 $ 33,711,040 Mortgage servicing portfolio $ 5,075,285 $ 4,967,384 $ 4,893,011 $ 4,824,420 $ 4,644,724 Mortgage loan fundings during the quarter $ 288,937 $ 256,617 $ 239,620 $ 246,097 $ 257,074 Mortgage loan refinances to total fundings 36.76 % 51.19 % 35.49 % 26.51 % 23.88 % Tax equivalent adjustment $ 2,084 $ 2,154 $ 2,502 $ 2,464 $ 2,069 QUARTERLY EARNINGS TRENDS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands, except ratio and per share data)   Quarter Ended June 30,     March 31,     December 31,     September 30,     June 30, 2008 2008 2007 2007 2007   Interest revenue $ 260,226 $ 276,041 $ 297,096 $ 300,380 $ 288,685 Interest expense   101,147     128,913     155,807     160,935   153,772   Net interest revenue 159,079 147,128 141,289 139,445 134,913 Provision for credit losses   38,310     17,571     13,200     7,201   7,820   Net interest revenue after provision for credit losses 120,769 129,557 128,089 132,244 127,093   Other operating revenue Brokerage and trading revenue 14,536 23,913 20,402 15,541 13,317 Transaction card revenue 25,786 23,558 23,512 23,812 22,917 Trust fees and commissions 20,940 20,796 20,145 19,633 19,458 Deposit service charges and fees 30,199 27,686 29,938 27,885 26,797 Mortgage banking revenue 7,198 7,217 6,912 5,809 4,034 Bank-owned life insurance 2,658 2,512 2,614 2,520 2,525 Margin asset fees 4,460 1,967 2,012 1,061 969 Other revenue   7,824     6,215     7,819     7,456   6,947   Total fees and commissions 113,601 113,864 113,354 103,717 96,964 Gain (loss) on asset sales 216 (35 ) (1,316 ) 42 (348 ) Gain (loss) on securities, net (5,242 ) 4,620 (6,251 ) 4,748 (6,262 ) Gain (loss) on derivatives, net   (2,961 )   2,113     1,529     865   (183 ) Total other operating revenue 105,614 120,562 107,316 109,372 90,171   Other operating expense Personnel 89,597 88,106 84,512 85,811 80,054 Business promotion 5,777 4,639 6,528 5,399 5,391 Professional fees and services 6,973 5,648 6,209 5,749 5,963 Net occupancy and equipment 15,100 15,061 15,466 14,752 13,860 Insurance 2,626 3,710 843 759 693 Data processing and communications 19,523 18,893 19,086 18,271 18,402 Printing, postage and supplies 4,156 4,419 4,221 4,201 4,179 Net (gains) losses and operating expenses of repossessed assets (229 ) 378 120 172 192 Amortization of intangible assets 1,885 1,925 2,382 2,397 1,443 Mortgage banking costs 6,054 5,681 4,225 3,877 2,485 Change in fair value of mortgage servicing rights 767 1,762 3,344 3,446 (5,061 ) Visa retrospective responsibility obligation - (2,767 ) 2,767 - - Other expense   7,039     5,949     8,024     6,184   6,530   Total other operating expense 159,268 153,404 157,727 151,018 134,131   Income before taxes 67,115 96,715 77,678 90,598 83,133 Federal and state income taxes   23,432     34,450     26,518     30,750   29,270     Net income $ 43,683   $ 62,265   $ 51,160   $ 59,848 $ 53,863     Average shares outstanding: Basic 67,282,501 67,202,128 67,051,499 67,078,378 67,116,902 Diluted 67,662,197 67,549,960 67,482,798 67,537,643 67,606,330   Earnings per share: Basic $ 0.65 $ 0.93 $ 0.76 $ 0.89 $ 0.80 Diluted $ 0.65 $ 0.92 $ 0.76 $ 0.89 $ 0.80 LOANS BY PRINCIPAL MARKET AREA - UNAUDITED BOK FINANCIAL CORPORATION (In thousands)   Quarter Ended June 30,     March 31,     December 31,     September 30,     June 30, 2008 2008 2007 2007 2007   Oklahoma: Commercial $ 3,254,179 $ 3,248,424 $ 3,219,176 $ 3,113,412 $ 3,317,877 Commercial real estate 875,546 940,686 890,703 875,135 897,838 Residential mortgage 1,099,277 1,080,882 1,080,483 1,058,142 971,692 Residential mortgage held for sale 119,944 91,905 76,677 73,488 112,596 Consumer   601,184   586,695   576,070   562,631   540,986 Total Oklahoma 5,950,130 5,948,592 5,843,109 5,682,808 5,840,989   Texas: Commercial 2,166,925 2,124,192 1,985,645 1,941,731 1,856,049 Commercial real estate 889,364 838,781 846,303 913,910 888,118 Residential mortgage 299,996 262,305 275,533 266,850 263,344 Consumer   204,081   168,949   142,958   133,391   135,659 Total Texas 3,560,366 3,394,227 3,250,439 3,255,882 3,143,170   New Mexico: Commercial 451,225 472,543 473,262 446,573 434,394 Commercial real estate 271,177 258,731 252,884 256,994 263,342 Residential mortgage 89,469 85,834 84,336 83,274 81,521 Consumer   16,977   14,977   16,105   15,769   13,225 Total New Mexico 828,848 832,085 826,587 802,610 792,482   Arkansas: Commercial 96,775 100,489 106,328 117,993 103,534 Commercial real estate 124,049 130,956 124,317 107,588 102,537 Residential mortgage 19,527 16,621 16,393 18,411 22,508 Consumer   197,979   180,551   163,626   148,404   129,431 Total Arkansas 438,330 428,617 410,664 392,396 358,010   Colorado: Commercial 489,844 486,525 490,373 491,204 480,097 Commercial real estate 276,062 261,099 252,537 247,802 274,610 Residential mortgage 38,517 31,011 26,556 26,322 18,516 Consumer   16,367   17,552   16,457   18,623   18,470 Total Colorado 820,790 796,187 785,923 783,951 791,693   Arizona: Commercial 207,173 174,360 157,341 147,103 124,765 Commercial real estate 351,058 361,567 342,673 349,840 326,951 Residential mortgage 53,321 50,719 46,269 43,510 43,192 Consumer   5,315   6,815   5,522   5,491   4,683 Total Arizona 616,867 593,461 551,805 545,944 499,591   Kansas: Commercial 398,452 350,325 305,380 252,345 232,116 Commercial real estate 40,241 40,104 41,055 33,766 38,584 Residential mortgage 7,490 2,397 1,726 1,059 2,525 Consumer   2,468   1,665   559   403   222 Total Kansas 448,651 394,491 348,720 287,573 273,447           TOTAL BOK FINANCIAL $ 12,663,982 $ 12,387,660 $ 12,017,247 $ 11,751,164 $ 11,699,382 DEPOSITS BY PRINCIPAL MARKET AREA - UNAUDITED BOK FINANCIAL CORPORATION (In thousands)   Quarter Ended June 30,     March 31,     December 31,     September 30,     June 30, 2008 2008 2007 2007 2007   Oklahoma: Demand $ 1,003,516 $ 999,214 $ 936,160 $ 717,478 $ 876,671 Interest-bearing: Transaction 4,449,617 4,124,046 3,935,909 3,473,547 3,470,896 Savings 90,100 88,141 80,467 83,139 88,133 Time   2,672,401   2,230,110   2,426,822   2,725,992   2,798,719 Total interest-bearing   7,212,118   6,442,297   6,443,198   6,282,678   6,357,748 Total Oklahoma   8,215,634   7,441,511   7,379,358   7,000,156   7,234,419   Texas: Demand 734,730 651,781 738,105 597,534 626,193 Interest-bearing: Transaction 2,025,052 1,996,784 2,050,872 1,978,920 2,019,311 Savings 33,207 32,191 34,618 35,310 36,989 Time   723,146   759,892   800,460   893,018   804,877 Total interest-bearing   2,781,405   2,788,867   2,885,950   2,907,248   2,861,177 Total Texas   3,516,135   3,440,648   3,624,055   3,504,782   3,487,370   New Mexico: Demand 99,605 103,329 93,923 109,854 113,579 Interest-bearing: Transaction 486,623 492,096 490,227 479,204 521,154 Savings 16,432 16,141 15,146 16,437 17,662 Time   445,505   455,861   486,868   512,497   500,443 Total interest-bearing   948,560   964,098   992,241   1,008,138   1,039,259 Total New Mexico   1,048,165   1,067,427   1,086,164   1,117,992   1,152,838   Arkansas: Demand 15,322 16,661 9,755 10,225 11,030 Interest-bearing: Transaction 30,344 25,923 22,519 22,401 22,096 Savings 895 945 883 993 1,011 Time   39,305   39,803   40,692   43,401   46,597 Total interest-bearing   70,544   66,671   64,094   66,795   69,704 Total Arkansas   85,866   83,332   73,849   77,020   80,734   Colorado: Demand 65,647 51,901 60,250 42,194 42,006 Interest-bearing: Transaction 551,310 577,454 504,116 432,188 426,031 Savings 20,245 22,233 23,806 27,143 35,152 Time   423,014   455,262   539,523   608,962   549,676 Total interest-bearing   994,569   1,054,949   1,067,445   1,068,293   1,010,859 Total Colorado   1,060,216   1,106,850   1,127,695   1,110,487   1,052,865   Arizona: Demand 28,196 28,592 29,807 25,295 31,196 Interest-bearing: Transaction 94,733 102,564 82,682 98,611 74,892 Savings 1,233 878 1,435 1,269 1,233 Time   6,364   8,395   11,603   13,314   11,563 Total interest-bearing   102,330   111,837   95,720   113,194   87,688 Total Arizona   130,526   140,429   125,527   138,489   118,884   Kansas: Demand 4,923 5,341 7,946 7,849 1,081 Interest-bearing: Transaction 12,576 9,993 10,014 3,169 1,356 Savings 26 92 13 15 12 Time   51,649   33,837   24,670   23,119   32,695 Total interest-bearing   64,251   43,922   34,697   26,303   34,063 Total Kansas   69,174   49,263   42,643   34,152   35,144   TOTAL BOK FINANCIAL $ 14,125,716 $ 13,329,460 $ 13,459,291 $ 12,983,078 $ 13,162,254 NET INTEREST MARGIN TREND - UNAUDITED BOK FINANCIAL CORPORATION   Quarter Ended June 30,     March 31,     December 31,     September 30,     June 30, 2008 2008 2007 2007 2007 TAX-EQUIVALENT ASSETS YIELDS Trading securities 6.88 % 7.69 % 6.63 % 7.46 % 5.86 % Funds sold and resell agreements 1.97 % 4.18 % 5.95 % 6.22 % 5.53 % Securities: Taxable 5.08 % 5.11 % 4.94 % 4.92 % 4.85 % Tax-exempt 6.46 % 6.38 % 5.88 % 5.30 % 5.73 % Total securities 5.14 % 5.17 % 4.99 % 4.95 % 4.90 % Total loans 5.80 % 6.59 % 7.50 % 7.88 % 7.94 % Less Allowance for loan losses -   -   -   -   -   Total loans, net 5.87 % 6.66 % 7.58 % 7.96 % 8.03 % Total tax-equivalent yield on earning assets 5.61 % 6.17 % 6.70 % 6.99 % 7.00 % COST OF INTEREST-BEARING LIABILITIES Interest-bearing deposits: Interest-bearing transaction 1.45 % 2.27 % 2.79 % 3.01 % 3.02 % Savings 0.37 % 0.61 % 0.86 % 0.81 % 0.95 % Time 3.77 % 4.35 % 4.68 % 4.83 % 4.76 % Total interest-bearing deposits 2.22 % 2.99 % 3.50 % 3.72 % 3.69 % Funds purchased and repurchase agreements 1.95 % 3.11 % 4.42 % 4.95 % 5.06 % Other borrowings 2.49 % 3.51 % 4.92 % 5.31 % 5.45 % Subordinated debt 5.88 % 5.45 % 5.69 % 6.03 % 6.66 % Total cost of interest-bearing liabilities 2.29 % 3.11 % 3.81 % 4.08 % 4.12 % Tax-equivalent net interest revenue spread 3.32 % 3.06 % 2.89 % 2.91 % 2.88 % Effect of noninterest-bearing funding sources and other 0.13 % 0.25 % 0.33 % 0.36 % 0.43 % Tax-equivalent net interest margin 3.45 % 3.31 % 3.22 % 3.27 % 3.31 % CREDIT QUALITY INDICATORS BOK FINANCIAL CORPORATION (In thousands, except ratios)   Quarter Ended June 30,   March 31,   December 31,   September 30,   June 30, 2008 2008 2007 2007 2007   Nonperforming assets: Nonaccruing loans (C): Commercial $ 45,992 $ 41,966 $ 42,981 $ 21,168 $ 20,456 Commercial real estate 60,456 40,399 25,319 11,355 19,470 Residential mortgage 17,861 15,960 15,272 11,469 11,418 Consumer   611     812     718     705     675   Total nonaccruing loans $ 124,920 $ 99,137 $ 84,290 $ 44,697 $ 52,019 Renegotiated loans (B) 11,840 11,850 10,394 10,752 10,113 Real estate and other repossessed assets   21,025     15,112     9,475     10,627     7,664   Total nonperforming assets $ 157,785   $ 126,099   $ 104,159   $ 66,076   $ 69,796     Nonaccruing loans by principal market (C): Oklahoma $ 45,306 $ 52,211 $ 47,977 $ 24,628 $ 26,529 Texas 20,860 8,157 4,983 4,921 6,176 New Mexico 9,838 7,497 11,118 6,542 7,025 Arkansas 2,924 2,866 1,635 843 816 Colorado 11,974 8,101 9,222 5,688 8,067 Arizona 33,482 18,811 9,355 2,075 3,406 Kansas   536     1,494     -     -     -   Total nonaccruing loans $ 124,920   $ 99,137   $ 84,290   $ 44,697   $ 52,019             Nonaccruing loans by loan portfolio sector (C): Commercial: Energy $ 493 $ 475 $ 529 $ 536 $ 542 Manufacturing 6,731 9,274 9,915 8,858 8,705 Wholesale / retail 3,735 3,868 3,792 3,850 2,838 Agriculture 811 1,848 380 540 769 Services 30,080 23,849 25,468 5,987 6,843 Healthcare 3,791 2,079 2,301 963 509 Other   351     573     596     434     250   Total commercial 45,992 41,966 42,981 21,168 20,456 Commercial real estate: Land development and construction 45,291 29,439 13,466 7,289 9,333 Multifamily 896 1,906 3,998 1,238 2,233 Other commercial real estate   14,269     9,054     7,855     2,828     7,904   Total commercial real estate 60,456 40,399 25,319 11,355 19,470 Residential mortgage 17,861 15,960 15,272 11,469 11,418 Consumer   611     812     718     705     675   Total nonaccruing loans $ 124,920   $ 99,137   $ 84,290   $ 44,697   $ 52,019             Performing loans 90 days past due $ 10,683 $ 11,266 $ 5,575 $ 3,986 $ 4,215   Gross charge-offs $ 15,526 $ 11,078 $ 8,930 $ 7,489 $ 8,811 Recoveries   2,534     2,221     1,584     2,620     3,039   Net charge-offs $ 12,992   $ 8,857   $ 7,346   $ 4,869   $ 5,772     Provision for credit losses $ 38,310 $ 17,571 $ 13,200 $ 7,201 $ 7,820   Reserve for loan losses to period end loans (A) 1.27 % 1.11 % 1.06 % 1.04 % 1.03 % Combined reserves for credit losses to period end loans (A) 1.45 % 1.27 % 1.24 % 1.21 % 1.20 % Nonperforming assets to period end loans (A) and repossessed assets 1.26 % 1.02 % 0.87 % 0.57 % 0.60 % Net charge-offs (annualized) to average loans (A) 0.42 % 0.29 % 0.25 % 0.17 % 0.21 % Reserve for loan losses to nonaccruing loans 127.30 % 137.77 % 150.29 % 272.80 % 230.22 % Combined reserves for credit losses to nonaccruing loans 145.34 % 157.60 % 175.03 % 316.97 % 267.99 %   (A) excluding residential mortgage loans held for sale (B) includes residential mortgage loans guaranteed by agencies of the U.S. government. These loans have been modified to extend payment terms and/or reduce interest rates to current market. $ 8,638 $ 8,386 $ 7,550 $ 7,083 $ 6,430 (C) includes loans subject to First United Bank sellers escrow $ 11,973 $ 8,101 $ 8,412 $ 4,677 $ 6,944