2007 Earnings Grow at BOK Financial

BOK Financial Corporation (NASDAQ:BOKF) reported its 17th consecutive year of record earnings for 2007. Net income totaled $217.7 million or $3.22 per diluted share for 2007 compared with $213.0 million or $3.16 per diluted share for 2006. Net income totaled $51.2 million or $0.76 per diluted share for the fourth quarter of 2007 compared with $50.6 million or $0.75 per diluted share for the fourth quarter of 2006. Diluted earnings per share for both the fourth quarter and full year 2007 were reduced $0.11 by charges recognized for the impairment of certain securities and for the Company’s share of its contingent liabilities to support Visa’s antitrust litigation costs. Highlights of the fourth quarter of 2007 included: Average outstanding loans and deposits increased 14% and 10%, respectively over the fourth quarter of 2006. Period-end annualized loan and deposit growth rates were 9% and 15%, respectively since the end of the third quarter of 2007. Net interest revenue increased 14% over the fourth quarter of 2006 and 5% annualized over the third quarter of 2007. Net interest margin was 3.22% for the fourth quarter of 2007, down 3 basis points from the fourth quarter of 2006 and down 5 basis points from the third quarter of 2007. Non-performing assets totaled $104 million or 0.87% of outstanding loans at December 31, 2007, up from $66 million or 0.57% of outstanding loans at September 30, 2007. The provision for credit losses was $13.2 million for the fourth quarter of 2007, up from $7.2 million for the third quarter of 2007 and $6.0 million for the fourth quarter of 2006. Fees and commissions revenue increased 20% over the fourth quarter of 2006 and 12% annualized over the third quarter of 2007. All major categories were up over the same period last year. Changes in the fair value of mortgage servicing rights, net of economic hedges reduced net income by $1.3 million or $0.02 per diluted share for the fourth quarter of 2007, but had little effect on the fourth quarter of 2006 or the third quarter of 2007. Operating expenses, excluding changes in the fair value of mortgage servicing rights, were up 15% over the fourth quarter of 2006. Personnel costs were up 8%. "We are pleased to report an increase in earnings over the previous year. While the earnings growth rate is lower than we are accustomed to historically, it remains favorable when compared to the overall banking industry,” said President and CEO Stan Lybarger. "Our high percentage of fee revenues, diversity within our loan portfolios and overall sound credit quality has and should continue to serve us well during this very challenging banking environment.” Impairment and Contingent Liability Charges During the fourth quarter of 2007, the Company recognized an $8.6 million pre-tax reduction in the fair value of its holdings of variable rate perpetual preferred stock issued by six major banks and brokerage houses. These issuers remain rated investment grade by the major rating agencies and all scheduled dividend payments on these preferred stocks have been made. However, based on widening credit spreads, the duration and severity of the reduction in fair value and the market’s negative outlook on the sector for 2008, it was management’s judgment that recovery of fair value to at least the cost basis of the securities was not expected in the near term. The carrying value of preferred stocks which equals their December 31, 2007 fair value was $32.8 million. The Company also accrued $2.8 million in the fourth quarter of 2007 for its various obligations as a member of Visa. On November 7, 2007 Visa announced that it had reached a settlement with American Express related to an antitrust lawsuit and in a subsequent filing with the Securities and Exchange Commission, Visa disclosed that it had recognized a contingent liability for a similar lawsuit with Discover. In addition, Visa is a party to other litigation matters that could affect BOK Financial. As a member, BOK Financial is obligated for its proportionate share of losses incurred by Visa. Visa intends that payments related to these litigation matters will be funded by an escrow account to be established with a portion of the proceeds from its initial public offering which is currently planned for 2008. The Company anticipates that its proportionate share of the proceeds of Visa’s initial public offering will exceed the contingent liabilities related to Visa litigation based on information available at this time. Net Interest Revenue Net interest revenue totaled $141.3 million for the fourth quarter of 2007, up $17.0 million or 14% over the fourth quarter of 2006 and $1.8 million or 5% annualized over the third quarter of 2007. Average earning assets increased $2.4 billion or 15% over the fourth quarter of 2006, including a $1.4 billion increase in average outstanding loans and a $897 million increase in average securities. Growth in the securities portfolio generally consisted of highly-rated, fixed-rate mortgage-backed securities. These securities supplement the Company’s earnings and help manage the balance sheet to a position that is essentially neutral to changes in interest rates. The expected duration of the securities portfolio is approximately 2.0 years based on a range of interest rates and prepayment assumptions. These securities provide positive earnings over their funding sources. However, because the yield on these securities is less than loan yields, growth in the securities portfolio tends to reduce the Company’s net interest margin. This is a primary driver of the modest decline in the net interest margin from both the fourth quarter of 2006 and third quarter of 2007. Average deposits were up $1.2 billion or 10% over the fourth quarter of 2006. Average interest-bearing transaction accounts grew $1.2 billion or 22% and average time deposits grew $127 million or 3% compared with the fourth quarter of 2006. Average demand deposits decreased $188 million or 13%. In addition to deposit growth, average earning assets were funded by a $1.0 billion or 29% increase in average federal funds purchased and other borrowed funds. Net interest margin was 3.22% for the fourth quarter of 2007 compared with 3.25% for the fourth quarter of 2006 and 3.27% for the third quarter of 2007. Yields on average earning assets decreased 23 basis points to 6.70% and the cost of interest-bearing liabilities decreased 29 basis points to 3.81% compared with the fourth quarter of 2006. Yields on average earning assets and the cost of interest-bearing liabilities decreased 29 basis points and 27 basis points, respectively, compared with the third quarter of 2007. Loan yields decreased 38 basis points to 7.50%. Competition for funds limited the decrease in the cost of interest-bearing deposits to 22 basis points. Competition for deposits remains intense in all our markets and may impact our ability to continue to move deposit rates down as the Federal Reserve continues to ease rates. The benefit to the net interest margin from earning assets funded by non-interest bearing liabilities was 33 basis points in the fourth quarter of 2007 compared with 42 basis points in the fourth quarter of 2006 and 36 basis points in the preceding quarter. Loans and Deposits Outstanding loans totaled $12.0 billion at December 31, 2007, up $266 million or 9% annualized since September 30, 2007. The outstanding balance of commercial loans increased $227 million or 14% annualized while the outstanding balance of commercial real estate loans decreased $35 million or 5% compared with the preceding quarter’s end. Energy loans grew $102 million or 22% annualized since September 30, 2007. Commercial loans to the services, wholesale/retail and healthcare sectors of the loan portfolio increased $46 million, $41 million and $35 million, respectively. Growth in the outstanding balance of commercial loans was partially offset by reductions in the manufacturing and agriculture sectors. Commercial real estate loans secured by residential properties and land grew $29 million or 12% annualized during the fourth quarter. Loans secured by multifamily residential properties and other commercial real estate, primarily office and industrial properties, decreased $63 million. The Company is seeing fewer high-quality credit opportunities to replace maturing commercial real estate loans. Commercial loans in the Kansas City market where we established our formal full-service banking operations just over a year ago were up $53 million in the fourth quarter of 2007 and $59 million since the beginning of 2007. Outstanding commercial loan balances were up $106 million or 14% annualized in Oklahoma, $44 million or 9% annualized in Texas, and $27 million or 24% annualized in New Mexico. Commercial real estate loans decreased $68 million or 30% annualized in Texas and $32 million or 36% annualized in Arizona and increased $32 million or 15% in Oklahoma. Consumer loans were up $37 million or 17% annualized during the fourth quarter of 2007. Indirect auto loans, which totaled $625 million at December 31, 2007, increased $33 million or 22% annualized in the Arkansas, Oklahoma and Texas markets. Growth in indirect auto loans continues to focus on high-quality credits. Near-prime borrowers represent approximately 7% of the total indirect auto loan portfolio. Total deposits increased $476 million during the fourth quarter of 2007. Interest-bearing transaction accounts increased $608 million and time deposits decreased $490 million. The shift in funds from time deposits to interest-bearing transaction accounts reflects changes in interest rates during the fourth quarter. Although rates offered on both deposit types decreased, the reduction in rates offered on longer-term time deposits was greater than the reduction in rates offered on interest-bearing transaction accounts. Demand deposit accounts totaled $1.9 billion at December 31, 2007, up $366 million over September 30. Average demand deposits for the fourth quarter of 2007 totaled $1.3 billion, down $6.9 million from the average for the third quarter of 2007. Credit Quality Non-performing assets totaled $104 million or 0.87% of outstanding loans and repossessed assets at December 31, 2007 compared with $66 million or 0.57% at September 30, 2007 and $44 million or 0.42% at December 31, 2006. Non-performing assets included $11 million of non-performing assets acquired with First United Bank in the second quarter of 2007. The Company will be reimbursed by the sellers up to $8 million for losses incurred on any acquired loans during a three-year period after the acquisition date. Non-performing assets also included residential mortgage loans guaranteed by agencies of the U.S. government. The outstanding principal balances of these guaranteed loans were $7.6 million at December 31, 2007, $7.1 million at September 30, 2007 and $5.7 million at December 31, 2006. Non-performing commercial loans totaled $43 million and were primarily distributed among our various markets, $29 million in Oklahoma, $5 million in New Mexico, $4 million in Texas and $3 million in Colorado. Non-performing commercial real estate loans totaled $25 million and were primarily distributed among our various markets, $9 million in Arizona, $6 million in Colorado, $5 million in Oklahoma and $5 million in New Mexico. All non-accruing commercial and commercial real estate loans are secured and individually are less than $10 million. Loans first classified as non-performing in the fourth quarter of 2007 totaled $43 million, including $3.8 million of loans subject to the First United Bank seller’s escrow. Non-performing commercial loans increased $25 million primarily in the Oklahoma and Colorado markets. Non-performing commercial real estate loans increased $15 million primarily in the Arizona and New Mexico markets. "Our non-performing assets and charge-offs are returning to more normal levels after being at historic lows for almost three years,” said Chief Financial Officer Steven Nell. "We increased our reserves for credit losses in recognition of the current environment. While our asset quality will be impacted in the near-term by the broader economic health of our markets, we should benefit from a balanced and diverse loan portfolio. Our commercial real estate exposure has remained controlled at less than 25% of total loans for many years.” The combined allowance for loan losses and off-balance sheet credit losses totaled $148 million or 1.24% of outstanding loans and 175% of non-accruing loans at December 31, 2007. The allowance for loan losses was $127 million and the reserve for off-balance sheet credit losses was $21 million. At September 30, 2007, the combined allowance for loan losses and off-balance sheet credit losses totaled $142 million or 1.21% of outstanding loans and 317% of non-accruing loans. The allowance for loan losses was $122 million and the reserve for off-balance sheet credit losses was $20 million. The provision for credit losses totaled $13.2 million or $5.9 million more than net loans charged-off for the fourth quarter of 2007. For the full year 2007, the provision for credit losses totaled $34.7 million or $13.6 million more than net loans charged-off. During the fourth quarter and full year, 2006 the provision for credit losses exceeded net loans charged-off by $3.2 million and $5.9 million, respectively. Fees and Commission Revenue Fees and commission revenue increased $18.5 million or 20% compared with the fourth quarter of 2006. Brokerage and trading revenue was up $6.0 million or 42% for the fourth quarter due largely to securities trading gains and completion of investment banking transactions. Deposit service charges and fees increased $4.2 million or 16% due to growth in overdraft fees and commercial account activity charges. Transaction card revenue increased $3.3 million or 16% compared to 2006 due to ATM fees and debit card processing volumes. Trust revenue increased $1.9 million or 10% due largely to a 15% increase in the fair value of trust assets. Mortgage Servicing Rights BOK Financial recognized a net loss of $2.1 million from changes in the fair value of mortgage servicing rights and related hedges during the fourth quarter of 2007, compared with a $229 thousand net loss from changes in the fair value of mortgage servicing rights in the fourth quarter of 2006. The fair value of mortgage servicing rights decreased $3.3 million during the fourth quarter of 2007. Prepayment speeds, default rates and servicing costs remain low. However, volatility in the market has increased returns expected by purchasers of mortgage servicing rights and decreased the fair value of our servicing rights. The fair value of securities held as an economic hedge of our servicing rights increased $1.3 million during the fourth quarter. Operating Expenses Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $154.4 million, up $20.2 million or 15% over the fourth quarter of 2006. Personnel expense totaled $84.5 million for fourth quarter of 2007, a $6.5 million or 8% increase over the same period of 2006. Acquisitions of Worth National Bank and First United Bank in June 2007 increased fourth quarter’s personnel expense by $3.1 million. Excluding acquisitions, personnel expense increased $3.3 million or 4% over the fourth quarter of 2006. Non-personnel operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $69.9 million for the fourth quarter of 2007 compared with $56.2 million for the fourth quarter of 2006. Contingent obligations to Visa increased fourth quarter operating expenses by $2.8 million. The June 2007 acquisitions of Worth National Bank and First United Bank increased fourth quarter’s non-personnel operating expenses by $2.9 million. Capital Management and Liquidity The Company’s tangible capital ratio was 7.65% at December 31, 2007, up from 7.64% at September 30, 2007. The Company’s tangible capital levels have consistently been among the top quartile of the largest US banks. During 2007, the Company paid $17.4 million to repurchase 339,282 common shares, including $1.8 million paid to repurchase 33,583 common shares in the fourth quarter of 2007. Cash dividends paid during 2007 totaled $0.75 per common share. During 2007, the Company added $250 million of 10-year subordinated debt at Bank of Oklahoma to support future growth. In addition, during the fourth quarter of 2007, BOK Financial increased its borrowing lines from various commercial banks from $100 million to $188 million to enhance its ability to fund future growth. About BOK Financial Corporation 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 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, 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 December 31, December 31,   2007     2006   (Unaudited) ASSETS Cash and due from banks $ 700,504 $ 775,376 Trading securities 45,724 37,076 Funds sold and resell agreements 189,909 21,950 Securities: Available for sale 5,650,540 4,655,061 Investment 247,949 248,689 Mortgage trading securities   154,701     162,837   Total securities 6,053,190 5,066,587 Loans: Commercial 6,737,505 6,208,884 Commercial real estate 2,750,472 2,446,540 Residential mortgage 1,531,296 1,256,259 Residential mortgage held for sale 76,677 64,625 Consumer   921,297     739,495   Total loans 12,017,247 10,715,803 Less reserve for loan losses   (126,677 )   (109,497 ) Loans, net of reserve 11,890,570 10,606,306 Premises and equipment, net 258,786 188,041 Accrued revenue receivable 138,243 118,236 Intangible assets, net 368,353 258,060 Mortgage servicing rights, net 70,009 65,946 Real estate and other repossessed assets 9,475 8,486 Bankers' acceptances 1,780 43,613 Derivative contracts 502,446 284,239 Cash surrender value of bank-owned life insurance 229,540 212,230 Receivable on unsettled securities trades 10,071 - Other assets   371,264     373,478   TOTAL ASSETS $ 20,839,864   $ 18,059,624         LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand $ 1,875,946 $ 1,780,059 Interest-bearing transaction 7,096,339 5,996,970 Savings 156,368 139,130 Time   4,330,638     4,470,546   Total deposits 13,459,291 12,386,705 Funds purchased and repurchase agreements 3,225,131 2,348,516 Other borrowings 1,027,564 593,731 Subordinated debentures 398,273 297,800 Accrued interest, taxes, and expense 124,029 104,752 Bankers' acceptances 1,780 43,613 Due on unsettled securities trades - 107,420 Derivative contracts 513,840 298,679 Other liabilities   154,572     157,386   TOTAL LIABILITIES 18,904,480 16,338,602 Shareholders' equity: Capital, surplus and retained earnings 1,966,618 1,794,466 Accumulated other comprehensive loss   (31,234 )   (73,444 ) TOTAL SHAREHOLDERS' EQUITY   1,935,384     1,721,022   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 20,839,864   $ 18,059,624     AVERAGE BALANCE SHEETS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands)     Quarter Ended December 31,   September 30,   June 30,   March 31,   December 31,   2007     2007     2007     2007     2006     ASSETS Trading securities $ 29,303 $ 24,413 $ 32,897 $ 29,613 $ 22,668 Funds sold and resell agreements 86,948 101,281 67,057 55,674 39,665 Securities: Available for sale 5,574,417 5,183,056 4,967,974 4,750,643 4,670,470 Investment 249,350 246,273 261,518 242,622 248,692 Mortgage trading securities   138,306     137,863     139,695     131,705     145,426   Total securities 5,962,073 5,567,192 5,369,187 5,124,970 5,064,588 Loans: Commercial 6,619,760 6,487,139 6,347,091 6,297,338 6,028,240 Commercial real estate 2,702,449 2,775,184 2,705,280 2,493,445 2,352,289 Residential mortgage 1,504,594 1,472,537 1,375,620 1,291,827 1,209,115 Residential mortgage held for sale 75,082 93,042 93,804 69,818 61,328 Consumer   904,358     881,736     816,346     740,735     710,869   Total loans 11,806,242 11,709,638 11,338,140 10,893,163 10,361,841 Less allowance for loan losses   (125,996 )   (123,059 )   (118,505 )   (113,379 )   (108,377 ) Total loans, net   11,680,246     11,586,579     11,219,635     10,779,784     10,253,464   Total earning assets 17,758,570 17,279,465 16,688,776 15,990,041 15,380,385 Cash and due from banks 546,704 529,282 534,385 564,588 619,236 Cash surrender value of bank-owned life insurance 227,810 225,206 218,007 213,128 210,777 Other assets   1,575,342     1,375,225     1,188,294     1,172,201     1,328,634   TOTAL ASSETS $ 20,108,426   $ 19,409,178   $ 18,629,462   $ 17,939,958   $ 17,539,032     LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand $ 1,293,419 $ 1,300,280 $ 1,295,930 $ 1,397,874 $ 1,481,455 Interest-bearing transaction 7,016,136 6,683,056 6,414,014 6,100,117 5,768,216 Savings 160,170 200,362 158,718 143,101 139,796 Time   4,544,802     4,798,812     4,507,053     4,420,390     4,417,427   Total deposits 13,014,527 12,982,510 12,375,715 12,061,482 11,806,894 Funds purchased and repurchase agreements 3,158,153 2,603,372 2,627,230 2,640,485 2,584,354 Other borrowings 936,353 880,894 866,096 668,078 586,743 Subordinated debentures 398,109 471,458 410,883 297,806 298,427 Other liabilities   706,385     649,964     558,792     530,659     566,128   TOTAL LIABILITIES 18,213,527 17,588,198 16,838,716 16,198,510 15,842,546 Shareholders' equity   1,894,899     1,820,980     1,790,746     1,741,448     1,696,486   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 20,108,426   $ 19,409,178   $ 18,629,462   $ 17,939,958   $ 17,539,032   - - - - -   STATEMENTS OF EARNINGS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands, except per share data)     Quarter Ended   Year Ended December 31, December 31,   2007       2006     2007       2006       Interest revenue $ 297,096 $ 266,924 $ 1,160,737 $ 986,429 Interest expense   155,807     142,646     616,252     499,741   Net interest revenue 141,289 124,278 544,485 486,688 Provision for credit losses   13,200     5,953     34,721     18,402   Net interest revenue after provision for credit losses 128,089 118,325 509,764 468,286   Other operating revenue Brokerage and trading revenue 20,402 14,382 62,542 53,413 Transaction card revenue 23,512 20,224 90,425 78,622 Trust fees and commissions 20,145 18,240 78,231 71,037 Deposit service charges and fees 29,938 25,787 109,218 102,436 Mortgage banking revenue 6,912 6,077 22,275 26,996 Bank-owned life insurance 2,614 2,346 10,058 2,558 Other revenue   9,831     7,799     32,873     36,634   Total fees and commissions 113,354 94,855 405,622 371,696 Gain (loss) on asset sales (1,316 ) 252 (928 ) 1,499 Gain (loss) on securities, net (6,251 ) (864 ) (8,328 ) (950 ) Gain (loss) on derivatives, net   1,529     (520 )   2,282     (622 ) Total other operating revenue 107,316 93,723 398,648 371,623   Other operating expense Personnel 84,512 78,054 328,705 296,260 Business promotion 6,528 5,345 21,888 19,351 Professional fees and services 6,209 4,734 22,795 17,744 Net occupancy and equipment 15,466 12,741 57,284 52,188 Data processing and communications 19,086 16,843 72,733 66,926 Printing, postage and supplies 4,221 3,774 16,570 15,862 Net (gains) losses and operating expenses of repossessed assets 120 167 691 474 Amortization of intangible assets 2,382 1,299 7,358 5,327 Mortgage banking costs 3,086 3,034 12,018 11,829 Change in fair value of mortgage servicing rights 3,344 (236 ) 2,893 (3,009 ) Other expense   12,773     8,236     32,052     29,355   Total other operating expense 157,727 133,991 574,987 512,307   Income before taxes 77,678 78,057 333,425 327,602 Federal and state income taxes   26,518     27,472     115,761     114,625     Net income $ 51,160   $ 50,585   $ 217,664   $ 212,977     Average shares outstanding: Basic 67,051,499 66,813,519 67,083,200 66,759,384 Diluted 67,482,798 67,359,208 67,550,538 67,310,005   Earnings per share: Basic $ 0.76   $ 0.76   $ 3.24   $ 3.19   Diluted $ 0.76   $ 0.75   $ 3.22   $ 3.16     FINANCIAL HIGHLIGHTS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands, except ratio and share data)     Quarter Ended December 31,   September 30,   June 30,   March 31,   December 31,   2007     2007     2007     2007     2006     Capital: Period-end shareholders' equity $ 1,935,384 $ 1,868,563 $ 1,795,908 $ 1,785,948 $ 1,721,022 Risk-based capital ratios: Tier 1 9.38 % 9.30 % 9.12 % 9.97 % 9.78 % Total capital 12.54 % 12.53 % 12.36 % 11.76 % 11.58 % Leverage ratio 8.20 % 8.17 % 8.30 % 8.95 % 8.79 % Period-end tangible capital ratio 7.65 % 7.64 % 7.47 % 8.54 % 8.22 %   Common stock: Book value per share $ 28.75 $ 27.86 $ 26.69 $ 26.57 $ 25.66   Market value per share: High $ 55.43 $ 54.20 $ 55.12 $ 55.43 $ 54.98 Low $ 51.44 $ 47.37 $ 48.58 $ 49.37 $ 50.40   Cash dividends paid $ 13,438 $ 13,445 $ 13,452 $ 10,081 $ 10,037 Dividend payout ratio 26.27 % 22.47 % 24.97 % 19.10 % 19.84 % Shares outstanding, net 67,306,380 67,062,517 67,280,107 67,227,050 67,067,750 Stock buy-back program: Shares repurchased 33,583 261,916 18,783 25,000 7,500 Amount $ 1,770,368   $ 13,359,753   $ 967,122   $ 1,256,000   $ 380,998   Average price per share $ 52.72   $ 51.01   $ 51.49   $ 50.24   $ 50.80     Performance ratios: Return on average assets 1.01 % 1.22 % 1.16 % 1.19 % 1.14 % Return on average equity 10.71 % 13.04 % 12.06 % 12.29 % 11.83 % Net interest margin 3.22 % 3.27 % 3.31 % 3.32 % 3.25 % Efficiency ratio 60.04 % 60.08 % 59.50 % 58.85 % 60.71 %   Other data: Gain (loss) on economic hedge of mortgage servicing rights $ 1,288 $ 3,654 $ (5,682 ) $ 254 $ (465 ) Trust assets $ 36,288,592 $ 34,875,758 $ 33,711,040 $ 33,113,964 $ 31,704,091 Mortgage servicing portfolio $ 4,893,011 $ 4,824,420 $ 4,644,724 $ 4,525,719 $ 4,526,508 Mortgage loan fundings during the quarter $ 239,620 $ 246,097 $ 257,074 $ 177,032 $ 179,139 Mortgage loan refinances to total fundings 35.49 % 26.51 % 23.88 % 34.72 % 39.19 % Tax equivalent adjustment $ 2,502 $ 2,464 $ 2,069 $ 2,085 $ 1,965   QUARTERLY EARNINGS TRENDS - UNAUDITED BOK FINANCIAL CORPORATION (In thousands, except ratio and per share data)     Quarter Ended December 31,   September 30,   June 30,   March 31,   December 31,   2007     2007   2007     2007     2006     Interest revenue $ 297,096 $ 300,380 $ 288,685 $ 274,576 $ 266,924 Interest expense   155,807     160,935   153,772     145,738     142,646   Net interest revenue 141,289 139,445 134,913 128,838 124,278 Provision for credit losses   13,200     7,201   7,820     6,500     5,953   Net interest revenue after provision for credit losses 128,089 132,244 127,093 122,338 118,325   Other operating revenue Brokerage and trading revenue 20,402 15,541 13,317 13,282 14,382 Transaction card revenue 23,512 23,812 22,917 20,184 20,224 Trust fees and commissions 20,145 19,633 19,458 18,995 18,240 Deposit service charges and fees 29,938 27,885 26,797 24,598 25,787 Mortgage banking revenue 6,912 5,809 4,034 5,520 6,077 Bank-owned life insurance 2,614 2,520 2,525 2,399 2,346 Other revenue   9,831     8,517   7,916     6,609     7,799   Total fees and commissions 113,354 103,717 96,964 91,587 94,855 Gain (loss) on asset sales (1,316 ) 42 (348 ) 694 252 Gain (loss) on securities, net (6,251 ) 4,748 (6,262 ) (563 ) (864 ) Gain (loss) on derivatives, net   1,529     865   (183 )   71     (520 ) Total other operating revenue 107,316 109,372 90,171 91,789 93,723   Other operating expense Personnel 84,512 85,811 80,054 78,328 78,054 Business promotion 6,528 5,399 5,391 4,570 5,345 Professional fees and services 6,209 5,749 5,963 4,874 4,734 Net occupancy and equipment 15,466 14,752 13,860 13,206 12,741 Data processing and communications 19,086 18,271 18,402 16,974 16,843 Printing, postage and supplies 4,221 4,201 4,179 3,969 3,774 Net (gains) losses and operating expenses of repossessed assets 120 172 192 207 167 Amortization of intangible assets 2,382 2,397 1,443 1,136 1,299 Mortgage banking costs 3,086 3,001 2,987 2,944 3,034 Change in fair value of mortgage servicing rights 3,344 3,446 (5,061 ) 1,164 (236 ) Other expense   12,773     7,819   6,721     4,739     8,236   Total other operating expense 157,727 151,018 134,131 132,111 133,991   Income before taxes 77,678 90,598 83,133 82,016 78,057 Federal and state income taxes   26,518     30,750   29,270     29,223     27,472     Net income $ 51,160   $ 59,848 $ 53,863   $ 52,793   $ 50,585     Average shares outstanding: Basic 67,051,499 67,078,378 67,116,902 67,085,310 66,813,519 Diluted 67,482,798 67,537,643 67,606,330 67,574,671 67,359,208   Earnings per share: Basic $ 0.76 $ 0.89 $ 0.80 $ 0.79 $ 0.76 Diluted $ 0.76 $ 0.89 $ 0.80 $ 0.78 $ 0.75   LOANS BY PRINCIPAL MARKET AREA - UNAUDITED BOK FINANCIAL CORPORATION (In thousands)     Quarter Ended December 31,   September 30,   June 30,   March 31,   December 31,   2007   2007   2007   2007   2006   Oklahoma: Commercial $ 3,219,176 $ 3,113,412 $ 3,317,877 $ 3,294,873 $ 3,186,085 Commercial real estate 907,034 875,135 897,838 895,585 979,251 Residential mortgage 1,080,483 1,058,142 971,692 945,147 896,567 Residential mortgage held for sale 76,677 73,488 112,596 75,011 64,625 Consumer   576,070   562,631   540,986   509,787   512,032 Total Oklahoma 5,859,440 5,682,808 5,840,989 5,720,403 5,638,560   Texas: Commercial 1,985,645 1,941,731 1,856,049 1,797,262 1,722,627 Commercial real estate 846,303 913,910 888,118 721,207 670,635 Residential mortgage 275,533 266,850 263,344 216,087 213,801 Consumer   142,958   133,391   135,659   105,604   95,652 Total Texas 3,250,439 3,255,882 3,143,170 2,840,160 2,702,715   New Mexico: Commercial 473,262 446,573 434,394 424,539 411,272 Commercial real estate 261,056 256,994 263,342 279,203 257,079 Residential mortgage 84,336 83,274 81,521 77,800 75,159 Consumer   16,105   15,769   13,225   11,493   13,256 Total New Mexico 834,759 802,610 792,482 793,035 756,766   Arkansas: Commercial 106,328 117,993 103,534 96,084 95,483 Commercial real estate 124,317 107,588 102,537 97,190 94,395 Residential mortgage 16,393 18,411 22,508 21,825 23,076 Consumer   163,626   148,404   129,431   103,662   86,017 Total Arkansas 410,664 392,396 358,010 318,761 298,971   Colorado: Commercial 490,373 491,204 480,097 457,758 451,046 Commercial real estate 252,537 247,802 274,610 199,736 193,747 Residential mortgage 26,556 26,322 18,516 15,501 15,812 Consumer   16,457   18,623   18,470   17,746   26,591 Total Colorado 785,923 783,951 791,693 690,741 687,196   Arizona: Commercial 157,341 147,103 124,765 120,351 96,453 Commercial real estate 318,170 349,840 326,951 316,661 207,035 Residential mortgage 46,269 43,510 43,192 41,731 31,280 Consumer   5,522   5,491   4,683   8,654   5,947 Total Arizona 527,302 545,944 499,591 487,397 340,715   Kansas: Commercial 305,380 252,345 232,116 251,489 245,918 Commercial real estate 41,055 33,766 38,584 41,065 44,398 Residential mortgage 1,726 1,059 2,525 200 564 Consumer   559   403   222   43   - Total Kansas 348,720 287,573 273,447 292,797 290,880           TOTAL BOK FINANCIAL $ 12,017,247 $ 11,751,164 $ 11,699,382 $ 11,143,294 $ 10,715,803   DEPOSITS BY PRINCIPAL MARKET AREA - UNAUDITED BOK FINANCIAL CORPORATION (In thousands)     Quarter Ended December 31,   September 30,   June 30,   March 31,   December 31,   2007   2007   2007   2007   2006   Oklahoma: Demand $ 936,160 $ 717,478 $ 876,671 $ 877,623 $ 915,101 Interest-bearing: Transaction 3,935,909 3,473,547 3,470,896 3,481,859 3,456,322 Savings 80,467 83,139 88,133 92,678 83,017 Time   2,426,822   2,725,992   2,798,719   2,556,423   2,595,890 Total interest-bearing   6,443,198   6,282,678   6,357,748   6,130,960   6,135,229 Total Oklahoma   7,379,358   7,000,156   7,234,419   7,008,583   7,050,330   Texas: Demand 738,105 597,534 626,193 602,315 640,159 Interest-bearing: Transaction 2,050,872 1,978,920 2,019,311 1,701,382 1,688,131 Savings 34,618 35,310 36,989 24,558 24,074 Time   800,460   893,018   804,877   682,292   829,255 Total interest-bearing   2,885,950   2,907,248   2,861,177   2,408,232   2,541,460 Total Texas   3,624,055   3,504,782   3,487,370   3,010,547   3,181,619   New Mexico: Demand 93,923 109,854 113,579 126,111 124,088 Interest-bearing: Transaction 490,227 479,204 521,154 464,569 432,342 Savings 15,146 16,437 17,662 17,972 16,417 Time   486,868   512,497   500,443   485,662   490,460 Total interest-bearing   992,241   1,008,138   1,039,259   968,203   939,219 Total New Mexico   1,086,164   1,117,992   1,152,838   1,094,314   1,063,307   Arkansas: Demand 9,755 10,225 11,030 10,980 12,589 Interest-bearing: Transaction 22,519 22,401 22,096 21,762 17,905 Savings 883 993 1,011 1,029 1,010 Time   40,692   43,401   46,597   54,687   57,446 Total interest-bearing   64,094   66,795   69,704   77,478   76,361 Total Arkansas   73,849   77,020   80,734   88,458   88,950   Colorado: Demand 60,250 42,194 42,006 39,821 48,756 Interest-bearing: Transaction 504,116 432,188 426,031 314,506 328,254 Savings 23,806 27,143 35,152 12,092 12,632 Time   539,523   608,962   549,676   502,880   485,200 Total interest-bearing   1,067,445   1,068,293   1,010,859   829,478   826,086 Total Colorado   1,127,695   1,110,487   1,052,865   869,299   874,842   Arizona: Demand 29,807 25,295 31,196 29,461 39,352 Interest-bearing: Transaction 82,682 98,611 74,892 67,364 73,729 Savings 1,435 1,269 1,233 1,367 1,978 Time   11,603   13,314   11,563   10,018   6,574 Total interest-bearing   95,720   113,194   87,688   78,749   82,281 Total Arizona   125,527   138,489   118,884   108,210   121,633   Kansas: Demand 7,946 7,849 1,081 325 14 Interest-bearing: Transaction 10,014 3,169 1,356 670 287 Savings 13 15 12 11 2 Time   24,670   23,119   32,695   28,166   5,721 Total interest-bearing   34,697   26,303   34,063   28,847   6,010 Total Kansas   42,643   34,152   35,144   29,172   6,024   TOTAL BOK FINANCIAL $ 13,459,291 $ 12,983,078 $ 13,162,254 $ 12,208,583 $ 12,386,705   NET INTEREST MARGIN TREND - UNAUDITED BOK FINANCIAL CORPORATION     Quarter Ended December 31,   September 30,   June 30,   March 31,   December 31, 2007 2007 2007 2007 2006 TAX-EQUIVALENT ASSETS YIELDS Trading securities 6.63 % 7.46 % 5.86 % 7.11 % 5.64 % Funds sold and resell agreements 5.95 % 6.22 % 5.53 % 4.84 % 5.46 % Securities: Taxable 4.94 % 4.92 % 4.85 % 4.86 % 4.69 % Tax-exempt 5.88 % 5.30 % 5.73 % 6.09 % 5.52 % Total securities 4.99 % 4.95 % 4.90 % 4.93 % 4.74 % Total loans 7.50 % 7.88 % 7.94 % 7.93 % 7.94 % Less Allowance for loan losses -   -   -   -   -   Total loans, net 7.58 % 7.96 % 8.03 % 8.02 % 8.02 % Total tax-equivalent yield on earning assets 6.70 % 6.99 % 7.00 % 7.02 % 6.93 % COST OF INTEREST-BEARING LIABILITIES Interest-bearing deposits: Interest-bearing transaction 2.79 % 3.01 % 3.02 % 3.08 % 2.99 % Savings 0.86 % 0.81 % 0.95 % 1.03 % 1.04 % Time 4.68 % 4.83 % 4.76 % 4.69 % 4.65 % Total interest-bearing deposits 3.50 % 3.72 % 3.69 % 3.72 % 3.67 % Funds purchased and repurchase agreements 4.42 % 4.95 % 5.06 % 5.16 % 5.18 % Other borrowings 4.92 % 5.31 % 5.45 % 5.52 % 5.50 % Subordinated debt 5.69 % 6.03 % 6.66 % 7.09 % 6.95 % Total cost of interest-bearing liabilities 3.81 % 4.08 % 4.12 % 4.14 % 4.10 % Tax-equivalent net interest revenue spread 2.89 % 2.91 % 2.88 % 2.88 % 2.83 % Effect of noninterest-bearing funding sources and other 0.33 % 0.36 % 0.43 % 0.44 % 0.42 % Tax-equivalent net interest margin 3.22 % 3.27 % 3.31 % 3.32 % 3.25 %   CREDIT QUALITY INDICATORS BOK FINANCIAL CORPORATION (In thousands, except ratios)     Quarter Ended December 31,   September 30,   June 30,   March 31,   December 31,   2007     2007     2007     2007     2006     Nonperforming assets: Nonaccruing loans: Commercial $ 42,981 $ 21,168 $ 20,456 $ 14,218 $ 10,737 Commercial real estate 25,319 11,355 19,470 6,832 4,771 Residential mortgage 15,272 11,469 11,418 9,920 10,325 Consumer   718     705     675     364     222   Total nonaccruing loans $ 84,290 $ 44,697 $ 52,019 $ 31,334 $ 26,055 Renegotiated loans (B) 10,703 10,752 10,113 9,947 9,802 Real estate and other repossessed assets   9,475     10,627     7,664     8,414     8,486   Total nonperforming assets $ 104,468   $ 66,076   $ 69,796   $ 49,695   $ 44,343     Nonaccruing loans by principal market: Oklahoma $ 47,977 $ 24,628 $ 26,529 $ 22,803 $ 17,683 Texas 4,983 4,921 6,176 5,462 6,096 New Mexico 11,118 6,542 7,025 943 871 Arkansas 1,635 843 816 814 267 Colorado (C) 9,222 5,688 8,067 1,127 1,138 Arizona 9,355 2,075 3,406 185 - Kansas   -     -     -     -     -   Total nonaccruing loans $ 84,290   $ 44,697   $ 52,019   $ 31,334   $ 26,055   - - - - - Nonaccruing loans by loan portfolio sector: Commercial: Energy $ 529 $ 536 $ 542 $ 535 $ 535 Manufacturing 9,915 8,858 8,705 100 101 Wholesale / retail 3,792 3,850 2,838 4,176 2,457 Agriculture 380 540 769 1,752 93 Services 25,468 5,987 6,843 5,851 5,759 Healthcare 2,301 963 509 1,647 1,600 Other   596     434     250     157     192   Total commercial 42,981 21,168 20,456 14,218 10,737 Commercial real estate: Land development and construction 13,466 7,289 9,333 4,120 2,031 Multifamily 3,998 1,238 2,233 311 320 Other commercial real estate   7,855     2,828     7,904     2,401     2,420   Total commercial real estate 25,319 11,355 19,470 6,832 4,771 Residential mortgage 15,272 11,469 11,418 9,920 10,325 Consumer   718     705     675     364     222   Total nonaccruing loans $ 84,290   $ 44,697   $ 52,019   $ 31,334   $ 26,055   - - - - - Performing loans 90 days past due $ 6,516 $ 3,986 $ 4,215 $ 20,623 $ 5,945   Gross charge-offs $ 8,930 $ 7,489 $ 8,811 $ 6,387 $ 5,867 Recoveries   1,584     2,620     3,039     3,268     3,079   Net charge-offs $ 7,346   $ 4,869   $ 5,772   $ 3,119   $ 2,788     Provision for credit losses $ 13,200 $ 7,201 $ 7,820 $ 6,500 $ 5,953   Reserve for loan losses to period end loans (A) 1.06 % 1.04 % 1.03 % 1.03 % 1.03 % Combined reserves for credit losses to period end loans (A) 1.24 % 1.21 % 1.20 % 1.21 % 1.22 % Nonperforming assets to period end loans (A) and repossessed assets 0.87 % 0.57 % 0.60 % 0.45 % 0.42 % Net charge-offs (annualized) to average loans (A) 0.25 % 0.17 % 0.21 % 0.12 % 0.11 % Reserve for loan losses to nonaccruing loans 150.29 % 272.80 % 230.22 % 365.01 % 420.25 % Combined reserves for credit losses to nonaccruing loans 175.03 % 316.97 % 267.99 % 426.91 % 500.43 % (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. Borrowers are performing in accordance with the modified terms of the loans. $ 7,550 $ 7,083 $ 6,430 $ 6,030 $ 5,747 (C) Includes loans subject to First United Bank sellers escrow $ 8,412 $ 4,677 $ 6,944 $ - $ -