Press Release

BOK Financial Reports Quarterly Earnings of $88 Million

Company Release - 7/26/2017 7:50 AM ET

TULSA, Okla., July 26, 2017 (GLOBE NEWSWIRE) -- BOK Financial Corporation (Nasdaq:BOKF) reported net income of $88.1 million or $1.35 per diluted share for the second quarter of 2017. Net income was $88.4 million or $1.35 per diluted share for the first quarter of 2017 and $65.8 million or $1.00 per diluted share for the second quarter of 2016.

Steven G. Bradshaw, president and chief executive officer of BOK Financial, stated, “It was another very strong quarter for BOK Financial, with net income up 34 percent compared to the second quarter of 2016 and 63 percent compared to the first half of 2016. Profit growth was driven by higher net interest margin and net interest income combined with continued careful expense management, as total expenses are essentially flat compared to last year. At the same time, credit quality remains sound, resulting in us recording no provision for credit losses for the third consecutive quarter.”

Bradshaw continued, “I want to commend all of our employees for their dedication to the company, as evidenced by BOK Financial being named one of the most respected banks in America in an annual survey by Reputation Institute and American Banker magazine. The survey ranks BOK Financial highest in the areas that are very important to us, including corporate citizenship, governance, workplace, ethical behavior and fairness in the way we conduct business. This validates that we have a strong and effective culture and that our employees show pride in our company and their work.”

Second Quarter 2017 Highlights

  • Net interest revenue totaled $205.2 million for the second quarter of 2017, up $4.0 million over the first quarter of 2017. Net interest margin increased to 2.89 percent for the second quarter of 2017 from 2.81 percent for the first quarter of 2017. Average earning assets decreased $359 million compared to the first quarter of 2017.

  • Fees and commissions revenue totaled $177.5 million for the second quarter of 2017, a $13.1 million increase over the prior quarter. Mortgage banking revenue was up $5.1 million. Fiduciary and asset management revenue grew by $3.2 million and transaction card revenue increased $3.2 million.

  • Operating expense was $250.9 million for the second quarter of 2017, an increase of $6.2 million over the prior quarter. Personnel expense was up $7.3 million over the prior quarter, primarily due to certain performance-based equity awards. Non-personnel expense decreased $1.1 million. Deposit insurance expense decreased primarily due to $5.1 million in credits received during the second quarter of 2017 related to revision of certain inputs to the assessment calculation filed in previous periods. Combined, all other non-personnel expense increased $4.0 million.

  • Income tax expense was $47.7 million or 34.9 percent of net income before taxes for the second quarter of 2017, compared to $38.1 million or 30.1 percent in the first quarter of 2017. The effective tax rate was 33.7 percent for the second quarter of 2017 and 33.2 percent for the first quarter of 2017, excluding a change in accounting for the tax effect of equity compensation. Tax expense may fluctuate based on the time period when equity awards vest as a result of this change.

  • No provision for credit losses was recorded in the second quarter of 2017 or the first quarter of 2017. The company had net charge-offs of $1.7 million in the second quarter of 2017, compared to a net recovery of $747 thousand in the previous quarter.

  • The combined allowance for credit losses totaled $256 million or 1.49 percent of outstanding loans at June 30, 2017 compared to $258 million or 1.52 percent of outstanding loans at March 31, 2017.

  • Nonperforming assets that are not guaranteed by U.S. government agencies totaled $276 million or 1.62 percent of outstanding loans and repossessed assets at June 30, 2017 and $240 million or 1.43 percent of outstanding loans and repossessed assets at March 31, 2017. The increase in nonperforming assets was primarily due to nonaccruing healthcare and energy loans.

  • Average loans were largely unchanged compared to the previous quarter. Period-end outstanding loan balances totaled $17.2 billion at June 30, 2017, an increase of $192 million over March 31, 2017.

  • Average deposits decreased $277 million compared to the previous quarter. Average demand deposit balances grew by $237 million, offset by a $480 million decrease in average interest-bearing transaction deposits and a $55 million decrease in time deposit balances. Period-end deposits were $22.3 billion at June 30, 2017, a $259 million decrease compared to March 31, 2017.

  • The common equity Tier 1 capital ratio at June 30, 2017 was 11.76 percent. Other regulatory capital ratios were Tier 1 capital ratio, 11.76 percent, total capital ratio, 13.37 percent and leverage ratio, 9.26 percent. At March 31, 2017, the common equity Tier 1 capital ratio was 11.59 percent, the Tier 1 capital ratio was 11.59 percent, total capital ratio was 13.25 percent, and leverage ratio was 8.89 percent.

  • The company paid a regular quarterly cash dividend of $29 million or $0.44 per common share during the second quarter of 2017. On July 25, 2017, the board of directors approved a quarterly cash dividend of $0.44 per common share payable on or about August 25, 2017 to shareholders of record as of August 11, 2017.

Net Interest Revenue

Net interest revenue was $205.2 million for the second quarter of 2017, up $4.0 million over the first quarter of 2017.

Net interest margin was 2.89 percent for the second quarter of 2017, an increase of 8 basis points over the first quarter of 2017, due largely to the impact of an increase in short-term market interest rates. The Federal Reserve's 25 basis point hikes in March and June increased yields on floating-rate earning assets, but had minimal impact on deposit costs. The yield on average earning assets was 3.30 percent, an increase of 15 basis points. The loan portfolio yield increased 15 basis points to 4.03 percent. The yield on the available for sale securities portfolio increased 6 basis points to 2.11 percent. The yield on interest-bearing cash and cash equivalents increased 22 basis points. Funding costs were 0.63 percent, up 11 basis points. Growth in the cost of interest-bearing deposits increased 5 basis points to 0.40 percent as market pricing pressure remained relatively subdued. 

Steven Nell, chief financial officer, added, “We are encouraged that net interest margins continue to migrate back to pre–Great Recession levels. The banking industry still has a lot of ground to make up after a decade of near-zero interest rates. To date, we are seeing limited deposit price competition across our footprint, and we are hopeful that this rational behavior will continue."

Average earning assets decreased $359 million compared to the second quarter of 2017. The average balance of the available for sale securities portfolio decreased $183 million. Average trading securities portfolio balances decreased $124 million and interest-bearing cash and cash equivalents balances decreased $80 million. These decreases were partially offset by a $60 million increase in the average balance of fair value option securities held as an economic hedge of our mortgage servicing rights.

Average interest-bearing deposit balances decreased $514 million compared to the first quarter of 2017. The average balance of borrowed funds decreased $254 million.

Fees and Commissions Revenue

Fees and commissions revenue totaled $177.5 million for the second quarter of 2017, an increase of $13.1 million over the first quarter of 2017.

Mortgage banking revenue totaled $30.3 million for the second quarter of 2017, a $5.1 million increase over the first quarter of 2017. Revenue from mortgage loan production increased $5.3 million. Mortgage production volume increased $109 million in response to lower primary mortgage interest rates and normal seasonality. Gain on sale margin improved 47 basis points over the first quarter of 2017, primarily due to increased retail margins and improved pipeline hedging performance.

Fiduciary and asset management revenue grew by $3.2 million to $41.8 million, primarily due to an annual assessment of tax preparation fees and a $96 million increase in the value of fiduciary assets under management.

Transaction card revenue was up $3.2 million, primarily due to a seasonal increase in transaction volumes and a full quarter's impact of TransFund's expansion into the Arizona market.

Brokerage and trading revenue decreased $1.9 million primarily due to a $1.0 million decrease in trading revenue and an $862 thousand decrease in retail brokerage revenue. Institutional trading volumes were lower compared to the prior quarter, primarily due to customer anticipation of future interest rate increases. Implementation of the fiduciary rule during the second quarter slowed retail sales activity.

Other Gains, Net

Other gains totaled $6.1 million primarily due to a $5.7 million gain on sale of a merchant banking investment during the second quarter of 2017. Other gains totaled $3.6 million in the first quarter of 2017.

Operating Expense

Total operating expense was $250.9 million for the second quarter of 2017, a $6.2 million increase over the first quarter of 2017.

Personnel expense increased $7.3 million. Incentive compensation expense increased $7.1 million. Share-based compensation expense was up $5.8 million related to adjustments in the vesting assumptions of certain performance-based awards that were granted in January 2015 and a $5.86 per share increase in the fair value of BOK Financial common shares. Cash-based incentive compensation expense increased $1.1 million. A $2.6 million increase in employee healthcare costs were offset by a $2.2 million seasonal decrease in payroll tax expense.

Non-personnel expense decreased $1.1 million compared to the first quarter of 2017. Deposit insurance expense decreased $5.7 million. In conjunction with ongoing cost reduction efforts, management performed a comprehensive review of inputs into the deposit insurance assessment calculation that resulted in $5.1 million of rebates for years 2013 through 2016. Data processing and communication expense increased $1.4 million primarily due to increased transaction activity. Net losses and operating expenses of repossessed assets increased $1.3 million primarily due to increased operating expenses related to repossessed oil and gas properties. This increased expense was offset by revenue from these properties included in other revenue.

Loans, Deposits and Capital

Loans

Outstanding loans were $17.2 billion at June 30, 2017, an increase of $192 million over March 31, 2017. Growth in commercial loan balances was partially offset by a decrease in commercial real estate loan balances.

Outstanding commercial loan balances increased $311 million, primarily due to growth in energy loan balances. Unfunded energy loan commitments were largely unchanged at $2.7 billion. Other commercial and industrial loans increased by $59 million and wholesale/retail sector loan balances increased by $37 million. This growth was offset by a $55 million decrease in service sector loan balances and a $44 million decrease in healthcare sector loan balances.

Commercial real estate loan balances decreased $182 million from March 31, 2017. Loans secured by industrial properties decreased $178 million. Retail sector loans decreased $22 million, primarily in the Oklahoma, Arizona and Texas markets, partially offset by growth in the Kansas/Missouri and Colorado markets. Multifamily residential loans increased $29 million. Growth in the Texas market was partially offset by a decrease in the Kansas/Missouri market.

Deposits

Period-end deposits totaled $22.3 billion at June 30, 2017, a $259 million decrease compared to March 31, 2017. Interest-bearing transaction account balances decreased $272 million and time deposits decreased $48 million, partially offset by a $62 million increase in demand deposit balances. Wealth Management deposits grew by $207 million and Commercial Banking deposits decreased $344 million. Consumer Banking deposits were largely unchanged compared to the previous quarter. 

Capital

The company's common equity Tier 1 capital ratio was 11.76 percent at June 30, 2017. In addition, the company's Tier 1 capital ratio was 11.76 percent, total capital ratio was 13.37 percent and leverage ratio was 9.26 percent at June 30, 2017. At March 31, 2017, the company's common equity Tier 1 capital ratio was 11.59 percent, Tier 1 capital ratio was 11.59 percent, total capital ratio was 13.25 percent, and leverage ratio was 8.89 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 9.24 percent at June 30, 2017 and 8.88 percent at March 31, 2017. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

Credit Quality

Nonperforming assets totaled $365 million or 2.12 percent of outstanding loans and repossessed assets at June 30, 2017, compared to $334 million or 1.96 percent at March 31, 2017. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $276 million or 1.62 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at June 30, 2017, compared to $240 million or 1.43 percent at March 31, 2017. 

Nonaccruing loans totaled $245 million or 1.43 percent of outstanding loans at June 30, 2017, up from $208 million or 1.22 percent of outstanding loans at March 31, 2017. The increase in nonaccruing loans was primarily due to a $24 million increase in healthcare loans and a $14 million increase in energy loans. New nonaccruing loans identified in the second quarter totaled $59 million, offset by $15 million in payments received, $2.9 million in charge-offs and $2.3 million in foreclosures and repossessions. Additionally, $618 thousand was returned to accruing status based on improved credit risk and performance. At June 30, 2017, nonaccruing commercial loans totaled $197 million or 1.85 percent of outstanding commercial loans, nonaccruing commercial real estate loans totaled $3.8 million or 0.10 percent of outstanding commercial real estate loans and nonaccruing residential mortgage loans totaled $44 million or 2.28 percent of outstanding residential mortgage loans. 

Approximately $73 million of nonaccruing loans required a specific allowance of $9.7 million. No specific allowance was necessary for the remaining $172 million of nonaccruing loans based on estimated cash flows or collateral value. At March 31, 2017, $52 million of nonaccruing loans required specific allowances of $3.5 million. No specific allowance was necessary for the remaining $156 million of nonaccruing loans.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $327 million at June 30 compared to $413 million at March 31. The decrease largely resulted from energy, manufacturing and service sector potential problem loans, partially offset by an increase in other commercial and industrial potential problem loans.

The company had net charge-offs of $1.7 million for the second quarter of 2017, compared to a net recovery of $747 thousand in the first quarter of 2017. Gross charge-offs totaled $2.9 million for the second quarter, compared to $2.2 million for the previous quarter. Recoveries totaled $1.2 million for the second quarter of 2017 and $2.9 million for the first quarter of 2017.

Based on an evaluation of all credit factors, including changes in nonaccruing and potential problem loans, overall loan portfolio growth and net charge-offs, the company determined that no provision for credit losses was necessary during the first and second quarter of 2017.

The combined allowance for credit losses totaled $256 million or 1.49 percent of outstanding loans and 109 percent of nonaccruing loans at June 30, 2017, excluding residential mortgage loans guaranteed by U.S. government agencies. The allowance for loan losses was $250 million and the accrual for off-balance sheet credit losses was $6.4 million. At March 31, 2017, the combined allowance for credit losses was $258 million or 1.52 percent of outstanding loans and 131 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $249 million and the accrual for off-balance sheet credit losses was $9.4 million.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $8.3 billion at June 30, 2017, a $96 million decrease compared to March 31, 2017. At June 30, 2017, the available for sale portfolio consisted primarily of $5.4 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $2.8 billion of commercial mortgage-backed securities fully backed by U.S. government agencies.

At June 30, 2017, the available for sale securities portfolio had a net unrealized gain of $16 million compared to a net unrealized loss of $5.5 million at March 31, 2017, primarily due to changes in interest rates. The $7.3 million net unrealized loss on residential mortgage-backed securities issued by U.S. government agencies at March 31, 2017 improved to a net unrealized gain of $995 thousand at June 30, 2017. Commercial mortgage-backed securities had a net unrealized loss of $6.5 million at June 30, 2017, a $12 million improvement compared to March 31, 2017.

The company also maintains a portfolio of financial instruments consisting primarily of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights.

The net economic benefit of the changes in fair value of mortgage servicing rights and related economic hedges was $247 thousand during the second quarter of 2017, including a $6.9 million decrease in the fair value of mortgage servicing rights, a $5.2 million increase in the fair value of securities and derivative contracts held as an economic hedge and $2.0 million of related net interest revenue.

The fair value of mortgage servicing rights increased by $1.9 million during the first quarter of 2017 primarily due to an increase in residential mortgage rates. The fair value of securities and interest rate derivative contracts held as an economic hedge of mortgage servicing rights decreased by $1.7 million.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, July 26, 2017 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-6671 and referencing conference ID # 13666185.

About BOK Financial Corporation

BOK Financial Corporation is a $32 billion regional financial services company based in Tulsa, Oklahoma. The company's stock is publicly traded on NASDAQ under the Global Select market listings (symbol: BOKF). BOK Financial's holdings include BOKF, NA, BOK Financial Securities, Inc. and The Milestone Group, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management, BOK Financial Asset Management, Inc. and seven banking divisions: Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Mobank, Bank of Oklahoma, Bank of Texas and Colorado State Bank and Trust. Through its subsidiaries, the company provides commercial and consumer banking, investment and trust services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of June 30, 2017 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

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,” “will,”  “intends,” 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, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected 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 changes in commodity prices, interest rates and interest rate relationships, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer 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 -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
 June 30, 2017 Mar. 31, 2017 June 30, 2016
ASSETS     
Cash and due from banks$561,587  $546,575  $498,713 
Interest-bearing cash and cash equivalents2,078,831  2,220,640  1,907,838 
Trading securities441,414  677,156  211,622 
Investment securities490,426  519,402  560,711 
Available for sale securities8,341,041  8,437,291  8,830,689 
Fair value option securities445,169  441,714  263,265 
Restricted equity securities311,033  283,936  319,639 
Residential mortgage loans held for sale287,259  248,707  430,728 
Loans:     
Commercial10,637,955  10,327,110  10,356,437 
Commercial real estate3,688,592  3,871,063  3,581,966 
Residential mortgage1,939,198  1,946,274  1,880,923 
Personal917,900  847,459  587,423 
Total loans17,183,645  16,991,906  16,406,749 
Allowance for loan losses(250,061) (248,710) (243,259)
Loans, net of allowance16,933,584  16,743,196  16,163,490 
Premises and equipment, net321,038  325,546  315,199 
Receivables295,042  394,394  173,638 
Goodwill446,697  445,738  382,739 
Intangible assets, net40,755  42,556  43,372 
Mortgage servicing rights245,239  249,403  190,747 
Real estate and other repossessed assets, net39,436  42,726  24,054 
Derivative contracts, net280,289  304,727  883,673 
Cash surrender value of bank-owned life insurance312,774  310,537  307,860 
Receivable on unsettled securities sales33,177  9,921  142,820 
Other assets358,741  384,767  319,653 
TOTAL ASSETS$32,263,532  $32,628,932  $31,970,450 
      
LIABILITIES AND EQUITY     
Deposits:     
Demand$9,568,895  $9,506,573  $8,424,609 
Interest-bearing transaction10,087,139  10,359,214  9,668,869 
Savings464,318  465,724  419,262 
Time2,196,122  2,243,848  2,247,061 
Total deposits22,316,474  22,575,359  20,759,801 
Funds purchased67,990  47,629  56,780 
Repurchase agreements396,333  508,352  472,683 
Other borrowings5,232,343  5,238,947  5,830,736 
Subordinated debentures144,658  144,649  371,812 
Accrued interest, taxes and expense133,198  140,235  197,742 
Due on unsettled securities purchases32,636  137,069  11,757 
Derivative contracts, net285,819  276,422  719,159 
Other liabilities204,536  189,376  147,242 
TOTAL LIABILITIES28,813,987  29,258,038  28,567,712 
Shareholders' equity:     
Capital, surplus and retained earnings3,414,505  3,346,965  3,251,201 
Accumulated other comprehensive income (loss)7,964  (5,221) 117,632 
TOTAL SHAREHOLDERS' EQUITY3,422,469  3,341,744  3,368,833 
Non-controlling interests27,076  29,150  33,905 
TOTAL EQUITY3,449,545  3,370,894  3,402,738 
TOTAL LIABILITIES AND EQUITY$32,263,532  $32,628,932  $31,970,450 


AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Three Months Ended
 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 June 30, 2016
ASSETS         
Interest-bearing cash and cash equivalents$2,007,746  $2,087,964  $2,032,785  $2,047,991  $2,022,028 
Trading securities456,028  579,549  476,498  366,545  237,808 
Investment securities499,372  530,936  542,869  552,592  562,391 
Available for sale securities8,384,057  8,567,049  8,766,555  8,862,590  8,890,112 
Fair value option securities476,102  416,524  210,733  266,998  368,434 
Restricted equity securities295,743  312,498  334,114  335,812  319,136 
Residential mortgage loans held for sale245,401  220,325  345,066  445,930  401,114 
Loans:         
Commercial10,604,456  10,414,579  10,228,095  10,109,692  10,265,782 
Commercial real estate3,676,976  3,903,850  3,749,393  3,789,673  3,550,611 
Residential mortgage1,933,091  1,962,759  1,919,296  1,870,855  1,864,458 
Personal915,010  854,637  826,804  677,530  582,281 
Total loans17,129,533  17,135,825  16,723,588  16,447,750  16,263,132 
Allowance for loan losses(251,632) (249,379) (246,977) (247,901) (245,448)
Total loans, net16,877,901  16,886,446  16,476,611  16,199,849  16,017,684 
Total earning assets29,242,350  29,601,291  29,185,231  29,078,307  28,818,707 
Cash and due from banks530,352  547,104  578,694  511,534  507,085 
Derivative contracts, net248,168  401,886  681,455  766,671  823,584 
Cash surrender value of bank-owned life insurance311,310  309,223  309,532  308,670  306,318 
Receivable on unsettled securities sales79,248  62,641  33,813  259,906  49,568 
Other assets1,957,143  2,032,844  2,172,351  1,721,385  1,480,780 
TOTAL ASSETS$32,368,571  $32,954,989  $32,961,076  $32,646,473  $31,986,042 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$9,338,683  $9,101,763  $9,124,595  $8,497,037  $8,162,134 
Interest-bearing transaction10,087,640  10,567,475  9,980,132  9,650,618  9,590,855 
Savings461,586  441,254  421,654  420,009  417,122 
Time2,204,422  2,258,930  2,177,035  2,197,350  2,297,621 
Total deposits22,092,331  22,369,422  21,703,416  20,765,014  20,467,732 
Funds purchased63,263  55,508  62,004  68,280  70,682 
Repurchase agreements427,353  523,561  560,891  522,822  611,264 
Other borrowings5,572,031  5,737,955  6,072,150  6,342,369  6,076,028 
Subordinated debentures144,654  144,644  144,635  255,890  232,795 
Derivative contracts, net178,695  405,444  682,808  747,187  791,313 
Due on unsettled securities purchases157,438  91,529  77,575  200,574  93,812 
Other liabilities323,373  299,534  321,404  352,671  298,170 
TOTAL LIABILITIES28,959,138  29,627,597  29,624,883  29,254,807  28,641,796 
Total equity3,409,433  3,327,392  3,336,193  3,391,666  3,344,246 
TOTAL LIABILITIES AND EQUITY$32,368,571  $32,954,989  $32,961,076  $32,646,473  $31,986,042 


STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 Three Months Ended Six Months Ended
 June 30, June 30,
 2017 2016 2017 2016
        
Interest revenue$235,181  $202,267  $461,571  $404,063 
Interest expense29,977  19,655  55,185  38,879 
Net interest revenue205,204  182,612  406,386  365,184 
Provision for credit losses  20,000    55,000 
Net interest revenue after provision for credit losses205,204  162,612  406,386  310,184 
Other operating revenue:       
Brokerage and trading revenue31,764  39,530  65,387  71,871 
Transaction card revenue35,296  34,950  67,423  67,304 
Fiduciary and asset management revenue41,808  34,813  80,439  66,869 
Deposit service charges and fees23,354  22,618  46,384  45,160 
Mortgage banking revenue30,276  34,884  55,467  66,984 
Other revenue14,984  13,352  26,736  25,256 
Total fees and commissions177,482  180,147  341,836  343,444 
Other gains, net6,108  1,307  9,735  2,867 
Gain on derivatives, net3,241  10,766  2,791  17,904 
Gain on fair value option securities, net1,984  4,279  844  13,722 
Change in fair value of mortgage servicing rights(6,943) (16,283) (5,087) (44,271)
Gain on available for sale securities, net380  5,326  2,429  9,290 
Total other operating revenue182,252  185,542  352,548  342,956 
Other operating expense:       
Personnel143,744  139,213  280,169  272,775 
Business promotion7,738  6,703  14,455  12,399 
Professional fees and services12,419  14,158  23,836  25,917 
Net occupancy and equipment21,125  19,677  42,749  38,443 
Insurance689  7,129  7,093  14,394 
Data processing and communications36,330  32,802  71,232  64,819 
Printing, postage and supplies4,140  3,889  7,991  7,796 
Net losses and operating expenses of repossessed assets2,267  1,588  3,276  2,658 
Amortization of intangible assets1,803  2,624  3,605  3,783 
Mortgage banking costs12,072  15,746  25,075  28,076 
Other expense8,558  7,856  16,115  22,895 
Total other operating expense250,885  251,385  495,596  493,955 
Net income before taxes136,571  96,769  263,338  159,185 
Federal and state income taxes47,705  30,497  85,808  51,925 
        
Net income88,866  66,272  177,530  107,260 
Net income (loss) attributable to non-controlling interests719  471  1,027  (1,105)
Net income attributable to BOK Financial Corporation shareholders$88,147  $65,801  $176,503  $108,365 
        
Average shares outstanding:       
Basic64,729,752  65,245,887  64,722,744  65,271,214 
Diluted64,793,134  65,302,926  64,788,322  65,317,177 
        
Net income per share:       
Basic$1.35  $1.00  $2.70  $1.64 
Diluted$1.35  $1.00  $2.69  $1.64 


FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 Three Months Ended
 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 June 30, 2016
Capital:         
Period-end shareholders' equity$3,422,469  $3,341,744  $3,274,854  $3,398,311  $3,368,833 
Risk weighted assets$25,127,604  $24,901,019  $25,274,848  $24,358,385  $24,191,016 
Risk-based capital ratios:         
Common equity tier 111.76% 11.59% 11.21% 11.99% 11.86%
Tier 111.76% 11.59% 11.21% 11.99% 11.86%
Total capital13.37% 13.25% 12.81% 13.65% 13.51%
Leverage ratio9.26% 8.89% 8.72% 9.06% 9.06%
Tangible common equity ratio19.24% 8.88% 8.61% 9.19% 9.33%
                    
Common stock:                   
Book value per share$52.32  $51.09  $50.12  $51.56  $51.15 
Tangible book value per share44.87  43.63  42.53  45.12  44.68 
Market value per share:                   
High$88.31  $85.25  $85.00  $70.05  $65.14 
Low$74.09  $73.44  $67.11  $56.36  $51.00 
Cash dividends paid$28,652  $28,646  $28,860  $28,181  $28,241 
Dividend payout ratio32.50% 32.42% 57.69% 37.94% 42.92%
Shares outstanding, net65,416,403  65,408,019  65,337,432  65,910,454  65,866,317 
Stock buy-back program:                   
Shares repurchased    700,000    305,169 
Amount$  $  $49,021  $  $17,771 
Average price per share$  $  $70.03  $  $58.23 
                    
Performance ratios (quarter annualized):                   
Return on average assets1.09% 1.09% 0.60% 0.91% 0.83%
Return on average equity10.46% 10.86% 6.03% 8.80% 8.00%
Net interest margin2.89% 2.81% 2.69% 2.64% 2.63%
Efficiency ratio64.61% 65.77% 72.93% 68.88% 68.16%
                    
Reconciliation of non-GAAP measures:                   
1      Tangible common equity ratio:                   
Total shareholders' equity$3,422,469  $3,341,744  $3,274,854  $3,398,311  $3,368,833 
                    
Less: Goodwill and intangible assets, net487,452  488,294  495,830  424,716  426,111 
Tangible common equity$2,935,017  $2,853,450  $2,779,024  $2,973,595  $2,942,722 
                    
Total assets$32,263,532  $32,628,932  $32,772,281  $32,779,231  $31,970,450 
Less: Goodwill and intangible assets, net487,452  488,294  495,830  424,716  426,111 
Tangible assets$31,776,080  $32,140,638  $32,276,451  $32,354,515  $31,544,339 
                    
Tangible common equity ratio9.24% 8.88% 8.61% 9.19% 9.33%
                    
Other data:                   
Fiduciary assets$45,089,153  $44,992,920  $42,378,053  $41,810,943  $40,496,583 
Tax equivalent interest$4,330  $4,428  $4,389  $4,455  $4,372 
Net unrealized gain (loss) on available for sale securities$16,041  $(5,537) $(14,899) $159,533  $195,385 
                    
                    
Mortgage banking:                   
Mortgage production revenue$13,840  $8,543  $11,937  $21,958  $19,086 
                    
Mortgage loans funded for sale$902,978  $711,019  $1,189,975  $1,864,583  $1,818,844 
Add: current period-end outstanding commitments362,088  381,732  318,359  630,804  965,631 
Less: prior period end outstanding commitments381,732  318,359  630,804  965,631  902,986 
Total mortgage production volume$883,334  $774,392  $877,530  $1,529,756  $1,881,489 
                    
Mortgage loan refinances to mortgage loans funded for sale33% 44% 63% 51% 44%
Gain on sale margin1.57% 1.10% 1.36% 1.44% 1.01%
                    
Mortgage servicing revenue$16,436  $16,648  $16,477  $16,558  $15,798 
Average outstanding principal balance of mortgage loans service for others22,055,127  22,006,295  21,924,552  21,514,962  20,736,525 
Average mortgage servicing revenue rates0.30% 0.31% 0.30% 0.31% 0.31%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:                   
Gain (loss) on mortgage hedge derivative contracts, net$3,241  $(528) $(35,868) $2,268  $10,766 
Gain (loss) on fair value option securities, net1,984  (1,140) (20,922) (3,355) 4,279 
Gain (loss) on economic hedge of mortgage servicing rights5,225  (1,668) (56,790) (1,087) 15,045 
Gain (loss) on changes in fair value of mortgage servicing rights(6,943) 1,856  39,751  2,327  (16,283)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue(1,718) 188  (17,039) 1,240  (1,238)
Net interest revenue on fair value option securities21,965  1,271  114  861  1,348 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$247  $1,459  $(16,925) $2,101  $110 

Actual interest earned on fair value option securities less internal transfer-priced cost of funds.


QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
 Three Months Ended
 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 June 30, 2016
          
Interest revenue$235,181  $226,390  $215,737  $209,317  $202,267 
Interest expense29,977  25,208  21,539  21,471  19,655 
Net interest revenue205,204  201,182  194,198  187,846  182,612 
Provision for credit losses      10,000  20,000 
Net interest revenue after provision for credit losses205,204  201,182  194,198  177,846  162,612 
Other operating revenue:         
Brokerage and trading revenue31,764  33,623  28,500  38,006  39,530 
Transaction card revenue35,296  32,127  34,521  33,933  34,950 
Fiduciary and asset management revenue41,808  38,631  34,535  34,073  34,813 
Deposit service charges and fees23,354  23,030  23,365  23,668  22,618 
Mortgage banking revenue30,276  25,191  28,414  38,516  34,884 
Other revenue14,984  11,752  12,693  13,080  13,352 
Total fees and commissions177,482  164,354  162,028  181,276  180,147 
Other gains (losses), net6,108  3,627  (1,279) 2,442  1,307 
Gain (loss) on derivatives, net3,241  (450) (35,815) 2,226  10,766 
Gain (loss) on fair value option securities, net1,984  (1,140) (20,922) (3,355) 4,279 
Change in fair value of mortgage servicing rights(6,943) 1,856  39,751  2,327  (16,283)
Gain (loss) on available for sale securities, net380  2,049  (9) 2,394  5,326 
Total other operating revenue182,252  170,296  143,754  187,310  185,542 
Other operating expense:         
Personnel143,744  136,425  141,132  139,212  139,213 
Business promotion7,738  6,717  7,344  6,839  6,703 
Charitable contributions to BOKF Foundation    2,000     
Professional fees and services12,419  11,417  16,828  14,038  14,158 
Net occupancy and equipment21,125  21,624  21,470  20,111  19,677 
Insurance689  6,404  8,705  9,390  7,129 
Data processing and communications36,330  34,902  33,691  33,331  32,802 
Printing, postage and supplies4,140  3,851  3,998  3,790  3,889 
Net losses (gains) and operating expenses of repossessed assets2,267  1,009  1,627  (926) 1,588 
Amortization of intangible assets1,803  1,802  1,558  1,521  2,624 
Mortgage banking costs12,072  13,003  17,348  15,963  15,746 
Other expense8,558  7,557  9,846  14,819  7,856 
Total other operating expense250,885  244,711  265,547  258,088  251,385 
Net income before taxes136,571  126,767  72,405  107,068  96,769 
Federal and state income taxes47,705  38,103  22,496  31,956  30,497 
Net income88,866  88,664  49,909  75,112  66,272 
Net income (loss) attributable to non-controlling interests719  308  (117) 835  471 
Net income attributable to BOK Financial Corporation shareholders$88,147  $88,356  $50,026  $74,277  $65,801 
          
Average shares outstanding:         
Basic64,729,752  64,715,964  64,719,018  65,085,392  65,245,887 
Diluted64,793,134  64,783,737  64,787,728  65,157,841  65,302,926 
Net income per share:         
Basic$1.35  $1.35  $0.76  $1.13  $1.00 
Diluted$1.35  $1.35  $0.76  $1.13  $1.00 


LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
  June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 June 30, 2016
Commercial:          
Energy $2,847,240  $2,537,112  $2,497,868  $2,520,804  $2,818,656 
Services 2,958,827  3,013,375  3,108,990  2,936,599  2,830,864 
Healthcare 2,221,518  2,265,604  2,201,916  2,085,046  2,051,146 
Wholesale/retail 1,543,695  1,506,243  1,576,818  1,602,030  1,532,957 
Manufacturing 546,137  543,430  514,975  499,486  595,403 
Other commercial and industrial 520,538  461,346  490,257  476,198  527,411 
Total commercial 10,637,955  10,327,110  10,390,824  10,120,163  10,356,437 
           
Commercial real estate:          
Retail 722,805  745,046  761,888  801,377  795,419 
Multifamily 952,380  922,991  903,272  873,773  787,200 
Office 862,973  860,889  798,888  752,705  769,112 
Industrial 693,635  871,463  871,749  838,021  645,586 
Residential construction and land development 141,592  135,994  135,533  159,946  157,576 
Other commercial real estate 315,207  334,680  337,716  367,776  427,073 
Total commercial real estate 3,688,592  3,871,063  3,809,046  3,793,598  3,581,966 
           
Residential mortgage:          
Permanent mortgage 989,040  977,743  1,006,820  969,558  969,007 
Permanent mortgages guaranteed by U.S. government agencies 191,729  204,181  199,387  190,309  192,732 
Home equity 758,429  764,350  743,625  712,926  719,184 
Total residential mortgage 1,939,198  1,946,274  1,949,832  1,872,793  1,880,923 
           
Personal 917,900  847,459  839,958  678,232  587,423 
           
Total $17,183,645  $16,991,906  $16,989,660  $16,464,786  $16,406,749 


LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 June 30, 2016
          
Bank of Oklahoma:         
Commercial$3,369,967  $3,189,183  $3,370,259  $3,545,924  $3,698,215 
Commercial real estate667,932  691,332  684,381  795,806  781,458 
Residential mortgage1,398,021  1,404,054  1,407,197  1,401,166  1,415,766 
Personal318,016  310,708  303,823  271,420  246,229 
Total Bank of Oklahoma5,753,936  5,595,277  5,765,660  6,014,316  6,141,668 
          
Bank of Texas:         
Commercial4,339,634  4,148,316  4,022,455  3,903,218  3,901,632 
Commercial real estate1,360,164  1,452,988  1,415,011  1,400,709  1,311,408 
Residential mortgage232,074  231,647  233,981  229,345  222,548 
Personal354,222  312,092  306,748  278,167  233,304 
Total Bank of Texas6,286,094  6,145,043  5,978,195  5,811,439  5,668,892 
          
Bank of Albuquerque:         
Commercial369,370  407,403  399,256  398,147  398,427 
Commercial real estate324,405  307,927  284,603  299,785  322,956 
Residential mortgage103,849  106,432  108,058  110,478  114,226 
Personal12,439  11,305  11,483  11,333  10,569 
Total Bank of Albuquerque810,063  833,067  803,400  819,743  846,178 
          
Bank of Arkansas:         
Commercial85,020  88,010  86,577  83,544  81,227 
Commercial real estate73,943  74,469  73,616  72,649  69,235 
Residential mortgage6,395  6,829  7,015  6,936  6,874 
Personal11,993  6,279  6,524  6,757  7,025 
Total Bank of Arkansas177,351  175,587  173,732  169,886  164,361 
          
Colorado State Bank & Trust:         
Commercial1,065,780  998,216  1,018,208  1,013,314  1,076,620 
Commercial real estate255,379  266,218  265,264  254,078  237,569 
Residential mortgage63,346  62,313  59,631  59,838  59,425 
Personal56,187  49,523  50,372  42,901  35,064 
Total Colorado State Bank & Trust1,440,692  1,376,270  1,393,475  1,370,131  1,408,678 
          
Bank of Arizona:         
Commercial617,759  643,222  686,253  680,447  670,814 
Commercial real estate705,858  737,088  747,409  726,542  639,112 
Residential mortgage37,034  36,737  36,265  39,206  38,998 
Personal55,528  51,386  52,553  31,205  24,248 
Total Bank of Arizona1,416,179  1,468,433  1,522,480  1,477,400  1,373,172 
          
Mobank:         
Commercial790,425  852,760  807,816  495,569  529,502 
Commercial real estate300,911  341,041  338,762  244,029  220,228 
Residential mortgage98,479  98,262  97,685  25,824  23,086 
Personal109,515  106,166  108,455  36,449  30,984 
Total Mobank1,299,330  1,398,229  1,352,718  801,871  803,800 
          
TOTAL BOK FINANCIAL$17,183,645  $16,991,906  $16,989,660  $16,464,786  $16,406,749 

Loans attributed to a geographical region may not always represent the location of the borrower or the collateral.

 
DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 June 30, 2016
Bank of Oklahoma:         
Demand$4,353,421  $4,320,666  $3,993,170  $4,158,273  $4,020,181 
Interest-bearing:         
Transaction5,998,787  6,114,288  6,345,536  5,701,983  5,741,302 
Savings263,664  265,014  241,696  242,959  247,984 
Time1,170,014  1,189,144  1,118,355  1,091,464  1,167,271 
Total interest-bearing7,432,465  7,568,446  7,705,587  7,036,406  7,156,557 
Total Bank of Oklahoma11,785,886  11,889,112  11,698,757  11,194,679  11,176,738 
          
Bank of Texas:         
Demand3,121,890  3,091,258  3,137,009  2,734,981  2,677,253 
Interest-bearing:         
Transaction2,272,185  2,317,576  2,388,812  2,240,040  2,035,634 
Savings91,491  89,640  83,101  84,642  83,862 
Time502,128  511,037  535,642  528,380  516,231 
Total interest-bearing2,865,804  2,918,253  3,007,555  2,853,062  2,635,727 
Total Bank of Texas5,987,694  6,009,511  6,144,564  5,588,043  5,312,980 
          
Bank of Albuquerque:         
Demand612,117  593,117  627,979  584,681  530,853 
Interest-bearing:         
Transaction558,523  623,677  590,571  555,326  573,690 
Savings54,136  53,683  49,963  54,480  49,200 
Time229,616  233,506  238,408  244,706  250,068 
Total interest-bearing842,275  910,866  878,942  854,512  872,958 
Total Bank of Albuquerque1,454,392  1,503,983  1,506,921  1,439,193  1,403,811 
          
Bank of Arkansas:         
Demand40,511  42,622  26,389  32,203  30,607 
Interest-bearing:         
Transaction129,848  106,804  105,232  313,480  278,335 
Savings2,135  2,304  2,192  2,051  1,853 
Time14,876  15,067  16,696  17,534  18,911 
Total interest-bearing146,859  124,175  124,120  333,065  299,099 
Total Bank of Arkansas187,370  166,797  150,509  365,268  329,706 
          
Colorado State Bank & Trust:         
Demand577,617  601,778  576,000  517,063  528,124 
Interest-bearing:         
Transaction626,343  610,510  616,679  623,055  625,240 
Savings35,651  37,801  32,866  31,613  31,509 
Time228,458  234,740  242,782  247,667  254,164 
Total interest-bearing890,452  883,051  892,327  902,335  910,913 
Total Colorado State Bank & Trust1,468,069  1,484,829  1,468,327  1,419,398  1,439,037 
          
          
Bank of Arizona:         
Demand366,866  342,854  366,755  418,718  396,837 
Interest-bearing:         
Transaction154,457  180,254  305,099  303,750  302,297 
Savings3,638  3,858  2,973  2,959  3,198 
Time19,911  26,112  27,765  27,935  28,681 
Total interest-bearing178,006  210,224  335,837  334,644  334,176 
Total Bank of Arizona544,872  553,078  702,592  753,362  731,013 
          
Mobank:         
Demand496,473  514,278  508,418  235,445  240,755 
Interest-bearing:         
Transaction346,996  406,105  513,176  86,526  112,371 
Savings13,603  13,424  12,679  1,645  1,656 
Time31,119  34,242  42,152  11,945  11,735 
Total interest-bearing391,718  453,771  568,007  100,116  125,762 
Total Mobank888,191  968,049  1,076,425  335,561  366,517 
          
TOTAL BOK FINANCIAL$22,316,474  $22,575,359  $22,748,095  $21,095,504  $20,759,802 



NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
 Three Months Ended
 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016 June 30, 2016
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents1.04% 0.82% 0.55% 0.51% 0.51%
Trading securities3.23% 3.87% 3.91% 2.71% 1.89%
Investment securities:              
Taxable5.34% 5.44% 5.39% 5.34% 5.41%
Tax-exempt2.51% 2.45% 2.33% 2.26% 2.25%
Total investment securities3.76% 3.70% 3.60% 3.51% 3.52%
Available for sale securities:              
Taxable2.09% 2.02% 1.98% 1.99% 2.01%
Tax-exempt6.09% 5.37% 5.27% 5.47% 5.06%
Total available for sale securities2.11% 2.05% 2.00% 2.01% 2.04%
Fair value option securities2.92% 2.27% 0.99% 1.70% 2.19%
Restricted equity securities5.95% 5.52% 5.45% 5.37% 4.84%
Residential mortgage loans held for sale3.92% 3.35% 3.31% 3.28% 3.53%
Loans4.03% 3.88% 3.67% 3.63% 3.58%
Allowance for loan losses              
Loans, net of allowance4.09% 3.94% 3.72% 3.69% 3.63%
Total tax-equivalent yield on earning assets3.30% 3.15% 2.98% 2.93% 2.91%
               
COST OF INTEREST-BEARING LIABILITIES              
Interest-bearing deposits:              
Interest-bearing transaction0.26% 0.20% 0.16% 0.14% 0.14%
Savings0.08% 0.08% 0.09% 0.09% 0.10%
Time1.11% 1.09% 1.12% 1.14% 1.16%
Total interest-bearing deposits0.40% 0.35% 0.32% 0.32% 0.33%
Funds purchased0.61% 0.47% 0.28% 0.19% 0.19%
Repurchase agreements0.06% 0.02% 0.02% 0.04% 0.05%
Other borrowings1.09% 0.83% 0.61% 0.57% 0.57%
Subordinated debt5.55% 5.68% 5.51% 3.84% 1.52%
Total cost of interest-bearing liabilities0.63% 0.52% 0.44% 0.44% 0.41%
Tax-equivalent net interest revenue spread2.67% 2.63% 2.54% 2.49% 2.50%
Effect of noninterest-bearing funding sources and other0.22% 0.18% 0.15%