The rating affirmation follows BOKF’s disclosure of its exposure to SemGroup, L.P. which recently filed for bankruptcy protection following large trading losses. BOKF had credit exposure through loans and derivative contracts totaling approximately $147 million. Additionally, until recently SemGroup’s CEO and founder was on BOKF’s board of directors.
With this new information, BOKF plans to adjust its previously released second quarter-2008 (2Q’08) results to reflect additionally charges of approximately $71 million (pre-tax) essentially wiping out the quarter’s earnings. BOKF expects to return to profitability in 3Q’08. This appears to be an isolated problem and not indicative of a breakdown of BOKF’s procedures or underwriting process. That said, the derivative business has shown increasing volatility with energy prices and BOKF’s exposure to this business remains relatively large.
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