Press Release

BOK Financial Reports Quarterly Earnings of $86 Million

Company Release - 10/25/2017 7:55 AM ET

TULSA, Okla., Oct. 25, 2017 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASDAQ:BOKF) reported net income of $85.6 million or $1.31 per diluted share for the third quarter of 2017. Net income was $88.1 million or $1.35 per diluted share for the second quarter of 2017 and $74.3 million or $1.13 per diluted share for the third quarter of 2016.

Steven G. Bradshaw, president and chief executive officer of BOK Financial, stated, “It was another very strong quarter for BOK Financial, and the earnings momentum we’ve demonstrated in 2017 continued through the third quarter. Net interest margin continued to expand as a result of the June 2017 Federal Reserve rate hike, combined with deposit pricing discipline across the banking industry. This, in turn, translated to record net interest income for the quarter. Our sound credit underwriting and discipline, combined with a benign credit environment, resulted in no loan loss provision for the fourth consecutive quarter. Looking forward to 2018, we see many of the trends we’ve experienced in 2017 continuing, including a favorable rate environment, strong organic revenue growth, and careful expense management to drive earnings leverage.”

Bradshaw continued, “During the third quarter, the company was impacted by two weather events: Hurricane Harvey in Houston, as well as a tornado, which struck one of our facilities in Tulsa. In both cases, employees rallied and worked around the clock to minimize the impact to customers. In addition, employees contributed almost $90,000 to an assistance fund to help their colleagues in Houston recover from the storm, and several employees reported that teammates arrived at their homes the weekend following to help remove debris, pull down damaged drywall, and lend a helping hand. I’m extremely proud of our employees for their heartfelt response and can-do attitude during these events. From a company standpoint, the storms negatively impacted earnings by $2.4 million this quarter.”

 Third Quarter 2017 Highlights

  • Net interest revenue totaled $218.5 million for the third quarter of 2017, up $13.2 million over the second quarter of 2017. Net interest margin increased to 3.01 percent for the third quarter of 2017 from 2.89 percent for the second quarter of 2017. Recoveries of foregone interest on non-accruing loans added 6 basis points to net interest margin in the third quarter of 2017. Average earning assets grew by $395 million.

  • Fees and commissions revenue totaled $173.5 million for the third quarter of 2017, compared to $177.5 million for the second quarter of 2017. Mortgage banking revenue decreased $5.4 million due to lower gain on sale margin and mortgage production volumes.

  • Operating expense was $265.9 million for the third quarter of 2017, an increase of $15.0 million over the prior quarter. Personnel expense was up $4.2 million, primarily due to increased incentive compensation expense. Non-personnel expense increased $10.9 million. Deposit insurance expense for the second quarter of 2017 included $5.1 million in credits related to the revision of certain inputs to the assessment calculation filed in previous periods. Net losses and operating expenses of repossessed assets increased $3.8 million primarily due to the write-down of one set of repossessed oil and gas properties.

  • No provision for credit losses was recorded in the third quarter of 2017 or the second quarter of 2017. The company had net charge-offs of $3.4 million in the third quarter of 2017, compared to net charge-offs of $1.7 million in the previous quarter.

  • The combined allowance for credit losses totaled $253 million or 1.47 percent of outstanding loans at September 30, 2017, compared to $256 million or 1.49 percent of outstanding loans at June 30, 2017.

  • Nonperforming assets that are not guaranteed by U.S. government agencies totaled $249 million or 1.46 percent of outstanding loans and repossessed assets at September 30, 2017 and $276 million or 1.62 percent of outstanding loans and repossessed assets at June 30, 2017. The decrease in nonperforming assets was primarily due to nonaccruing energy loans. 

  • Average loans increased $127 million over the previous quarter. Period-end outstanding loan balances totaled $17.2 billion at September 30, 2017, a $23 million increase over June 30, 2017.

  • Average deposits were largely unchanged compared to the previous quarter. Average demand deposit balances grew by $51 million, partially offset by a $28 million decrease in time deposit balances. Period-end deposits were $21.8 billion at September 30, 2017, a $468 million decrease compared to June 30, 2017. 

  • The common equity Tier 1 capital ratio at September 30, 2017 was 11.90 percent. Other regulatory capital ratios were Tier 1 capital ratio, 11.90 percent, total capital ratio, 13.47 percent and leverage ratio, 9.30 percent. At June 30, 2017, the common equity Tier 1 capital ratio was 11.76 percent, the Tier 1 capital ratio was 11.76 percent, total capital ratio was 13.36 percent, and leverage ratio was 9.27 percent.

Net Interest Revenue

Net interest revenue was $218.5 million for the third quarter of 2017, up $13.2 million over the second quarter of 2017.

Net interest margin was 3.01 percent for the third quarter of 2017, an increase of 12 basis points over the second quarter of 2017. Recoveries of foregone interest primarily related to nonaccruing energy loans added 6 basis points to the net interest margin for the third quarter. Net interest margin also increased due to a full quarter's impact on short-term market interest rates from the 25 basis point rate hike by the Federal Reserve in June. Yields on floating-rate earning assets improved, while deposit costs rose modestly. Excluding interest recoveries, the yield on average earning assets was 3.44 percent, an increase of 14 basis points and the loan portfolio yield was 4.20 percent, a 17 basis point increase. The yield on the available for sale securities portfolio increased 6 basis points to 2.17 percent. The yield on interest-bearing cash and cash equivalents increased 25 basis points. Funding costs were 0.75 percent, up 12 basis points. The cost of interest-bearing deposits increased 5 basis points to 0.45 percent as market pricing pressure remained relatively subdued. The cost of other borrowed funds was up 21 basis points to 1.23 percent. The benefit to net interest margin from assets funded by non-interest liabilities increased to 26 basis points from 22 basis points in the second quarter of 2017.

Average earning assets increased $395 million over the third quarter of 2017. Fair value option securities held as an economic hedge of our mortgage servicing rights increased $208 million. Average loan balances grew by $127 million. Available for sale securities increased $44 million, trading securities increased $36 million and restricted equity security balances were up $33 million over the prior quarter. These increases were partially offset by a $42 million decrease in average interest-bearing cash and cash equivalents balances.

Average interest-bearing deposit balances decreased $24 million compared to the second quarter of 2017. The average balance of borrowed funds increased $511 million.

Fees and Commissions Revenue

Fees and commissions revenue totaled $173.5 million for the third quarter of 2017, a decrease of $4.0 million compared to the second quarter of 2017.

Mortgage banking revenue totaled $24.9 million for the third quarter of 2017, a $5.4 million decrease compared to the second quarter of 2017. Revenue from mortgage loan production decreased $5.5 million due to a 54 basis point decrease in gain on sale margin and a $78 million decrease in mortgage loan production, due to market pricing pressure.

Increased transaction card revenue and brokerage and trading revenue was partially offset by lower fiduciary and asset management revenue.

Operating Expense

Total operating expense was $265.9 million for the third quarter of 2017, a $15.0 million increase over the second quarter of 2017, including $1.3 million of expense related to tornado damage sustained on our Tulsa operations center and the impact of the hurricane in the Houston market.

Personnel expense increased $4.2 million primarily due to a $4.7 million increase in incentive compensation expense. Equity compensation expense included charges of $4.0 million from changes in the probability that performance-based awards granted in 2015, 2016 and 2017 will vest and $1.9 million from a $4.93 per share increase in the fair value of BOKF stock. Cash-based incentive compensation expense increased $3.7 million due to continued improvement in performance metrics.

Non-personnel expense increased $10.9 million over the second quarter of 2017. Deposit insurance expense increased $5.3 million. The second quarter included $5.1 million of rebates for years 2013 through 2016. Net losses and operating expenses of repossessed assets increased $3.8 million, primarily due to a $4.7 million write-down of a set of repossessed oil and gas properties.

Loans, Deposits and Capital

Loans

Outstanding loans were $17.2 billion at September 30, 2017, an increase of $23 million over June 30, 2017. Growth in commercial loan balances was partially offset by a decrease in commercial real estate loan balances.

Outstanding commercial loan balances grew by $158 million. Wholesale/retail sector loan balances grew by $114 million. Other commercial and industrial loans increased by $23 million and energy loan balances were up $21 million. Unfunded energy loan commitments were largely unchanged at $2.7 billion. Healthcare sector loan balances increased $18 million. This growth was partially offset by a $27 million decrease in manufacturing service sector loan balances.

Commercial real estate loan balances decreased $170 million compared to June 30, 2017 as a higher than expected number of borrowers refinanced in the long-term permanent markets during the quarter. Loans secured by industrial properties decreased $103 million, primarily in the Texas market partially offset by growth in loans in the Oklahoma market. Loans secured by office buildings decreased $66 million, primarily in the Texas and Colorado markets. Residential land and construction loans decreased $29 million and other commercial real estate loans decreased $22 million. Multifamily residential loans increased $47 million. Growth in the Texas and Oklahoma markets was partially offset by a decrease in the Colorado market.

Deposits

Period-end deposits totaled $21.8 billion at September 30, 2017, a $468 million decrease compared to June 30, 2017. Demand deposit balances decreased $383 million. Wealth management demand deposit balances were elevated at June 30 in anticipation of upcoming debt service payments for corporate trust customers. Interest-bearing transaction account balances decreased $62 million and time deposits decreased $24 million. Wealth Management deposits decreased $363 million and Commercial Banking deposits decreased $218 million. Consumer Banking deposits were largely unchanged compared to the previous quarter. 

Capital

The company's common equity Tier 1 capital ratio was 11.90 percent at September 30, 2017. In addition, the company's Tier 1 capital ratio was 11.90 percent, total capital ratio was 13.47 percent and leverage ratio was 9.30 percent at September 30, 2017. At June 30, 2017, the company's common equity Tier 1 capital ratio was 11.76 percent, Tier 1 capital ratio was 11.76 percent, total capital ratio was 13.36 percent, and leverage ratio was 9.27 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 9.23 percent at September 30, 2017 and 9.24 percent at June 30, 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 $328 million or 1.90 percent of outstanding loans and repossessed assets at September 30, 2017, compared to $365 million or 2.12 percent at June 30, 2017. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $249 million or 1.46 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at September 30, 2017, compared to $276 million or 1.62 percent at June 30, 2017. 

Nonaccruing loans totaled $226 million or 1.31 percent of outstanding loans at September 30, 2017, down from $245 million or 1.43 percent of outstanding loans at June 30, 2017. The decrease in nonaccruing loans was primarily due to a $13 million decrease in energy loans. Nonaccruing wholesale/retail sector loans decreased $8.7 million and nonaccruing service sector loans decreased $6.6 million, partially offset by a $9.0 million increase in nonaccruing other commercial and industrial loans. New nonaccruing loans identified in the third quarter totaled $24 million, offset by $35 million in payments received, $5.8 million in charge-offs and $3.8 million in foreclosures and repossessions. At September 30, 2017, nonaccruing commercial loans totaled $177 million or 1.64 percent of outstanding commercial loans, nonaccruing commercial real estate loans totaled $3.0 million or 0.08 percent of outstanding commercial real estate loans and nonaccruing residential mortgage loans totaled $46 million or 2.34 percent of outstanding residential mortgage loans. 

Approximately $90 million of nonaccruing loans required a specific allowance of $13 million. No specific allowance was necessary for the remaining $136 million of nonaccruing loans based on estimated cash flows or collateral value. At June 30, 2017, $73 million of nonaccruing loans required specific allowances of $9.7 million. No specific allowance was necessary for the remaining $172 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 $285 million at September 30 compared to $327 million at June 30. The decrease largely resulted from energy and service sector potential problem loans, partially offset by an increase in healthcare and other commercial and industrial potential problem loans.

The company had net charge-offs of $3.4 million for the third quarter of 2017, compared to net charge-offs of $1.7 million in the second quarter of 2017. Gross charge-offs totaled $5.8 million for the third quarter, compared to $2.9 million for the previous quarter. Recoveries totaled $2.4 million for the third quarter of 2017 and $1.2 million for the second 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 third quarter of 2017.

The combined allowance for credit losses totaled $253 million or 1.47 percent of outstanding loans and 117 percent of nonaccruing loans at September 30, 2017, excluding residential mortgage loans guaranteed by U.S. government agencies. The allowance for loan losses was $248 million and the accrual for off-balance sheet credit losses was $5.4 million. At June 30, 2017, the combined allowance for credit losses was $256 million or 1.49 percent of outstanding loans and 109 percent of nonaccruing loans, excluding 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. 

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $8.4 billion at September 30, 2017, a $42 million increase compared to June 30, 2017. At September 30, 2017, the available for sale portfolio consisted primarily of $5.3 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $2.9 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At September 30, 2017, the available for sale securities portfolio had a net unrealized gain of $14 million compared to a $16 million net unrealized gain at June 30, 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 $3.6 million during the third quarter of 2017, including a $639 thousand decrease in the fair value of mortgage servicing rights, a $1.7 million increase in the fair value of securities and derivative contracts held as an economic hedge and $2.5 million of related net interest revenue.

The fair value of mortgage servicing rights decreased by $6.9 million during the second quarter of 2017.  The fair value of securities and interest rate derivative contracts held as an economic hedge of mortgage servicing rights increased by $5.2 million. Related net interest revenue was $2.0 million during the second quarter of 2017.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, October 25, 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 # 13671914.

About BOK Financial Corporation

BOK Financial Corporation is a $33 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 September 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)
 Sept. 30, 2017 June 30, 2017 Sept. 30, 2016
ASSETS     
Cash and due from banks$547,203  $561,587  $535,916 
Interest-bearing cash and cash equivalents1,926,779  2,078,831  2,080,978 
Trading securities614,117  441,414  546,615 
Investment securities466,562  490,426  546,457 
Available for sale securities8,383,199  8,341,041  8,862,283 
Fair value option securities819,531  445,169  222,409 
Restricted equity securities347,542  311,033  333,391 
Residential mortgage loans held for sale275,643  287,259  447,592 
Loans:     
Commercial10,795,934  10,637,955  10,120,163 
Commercial real estate3,518,142  3,688,592  3,793,598 
Residential mortgage1,945,750  1,939,198  1,872,793 
Personal947,008  917,900  678,232 
Total loans17,206,834  17,183,645  16,464,786 
Allowance for loan losses(247,703) (250,061) (245,103)
Loans, net of allowance16,959,131  16,933,584  16,219,683 
Premises and equipment, net320,060  321,038  318,196 
Receivables314,251  295,042  650,368 
Goodwill446,697  446,697  382,739 
Intangible assets, net39,013  40,755  41,977 
Mortgage servicing rights245,858  245,239  203,621 
Real estate and other repossessed assets, net32,535  39,436  31,941 
Derivative contracts, net352,559  280,289  655,078 
Cash surrender value of bank-owned life insurance         314,201  312,774  310,211 
Receivable on unsettled securities sales230,225  33,177  19,642 
Other assets370,409  358,741  370,134 
TOTAL ASSETS$  33,005,515  $  32,263,532  $  32,779,231 
      
LIABILITIES AND EQUITY     
Deposits:     
Demand$9,185,481  $9,568,895  $8,681,364 
Interest-bearing transaction10,025,084  10,087,139  9,824,160 
Savings465,225  464,318  420,349 
Time2,172,289  2,196,122  2,169,631 
Total deposits21,848,079  22,316,474  21,095,504 
Funds purchased62,356  67,990  109,031 
Repurchase agreements328,189  396,333  504,573 
Other borrowings6,241,275  5,232,343  6,533,443 
Subordinated debentures144,668  144,658  144,631 
Accrued interest, taxes and expense152,029  133,198  191,276 
Due on unsettled securities purchases160,781  32,636  677 
Derivative contracts, net336,327  285,819  573,987 
Other liabilities217,372  204,536  193,698 
TOTAL LIABILITIES29,491,076  28,813,987  29,346,820 
Shareholders' equity:     
Capital, surplus and retained earnings3,482,057  3,414,505  3,302,584 
Accumulated other comprehensive income6,757  7,964  95,727 
TOTAL SHAREHOLDERS' EQUITY3,488,814  3,422,469  3,398,311 
Non-controlling interests25,625  27,076  34,100 
TOTAL EQUITY3,514,439  3,449,545  3,432,411 
TOTAL LIABILITIES AND EQUITY$33,005,515  $32,263,532  $32,779,231 
            


 
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Three Months Ended
 Sept. 30, 2017 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016
ASSETS         
Interest-bearing cash and cash equivalents$1,965,645  $2,007,746  $2,087,964  $2,032,785  $2,047,991 
Trading securities491,613  456,028  579,549  476,498  366,545 
Investment securities475,705  499,372  530,936  542,869  552,592 
Available for sale securities8,428,353  8,384,057  8,567,049  8,766,555  8,862,590 
Fair value option securities684,571  476,102  416,524  210,733  266,998 
Restricted equity securities328,677  295,743  312,498  334,114  335,812 
Residential mortgage loans held for sale256,343  245,401  220,325  345,066  445,930 
Loans:         
Commercial10,827,198  10,604,456  10,414,579  10,228,095  10,109,692 
Commercial real estate3,528,330  3,676,976  3,903,850  3,749,393  3,789,673 
Residential mortgage1,951,385  1,933,091  1,962,759  1,919,296  1,870,855 
Personal949,750  915,010  854,637  826,804  677,530 
Total loans17,256,663  17,129,533  17,135,825  16,723,588  16,447,750 
Allowance for loan losses(250,590) (251,632) (249,379) (246,977) (247,901)
Total loans, net17,006,073  16,877,901  16,886,446  16,476,611  16,199,849 
Total earning assets29,636,980  29,242,350  29,601,291  29,185,231  29,078,307 
Cash and due from banks546,653  530,352  547,104  578,694  511,534 
Derivative contracts, net238,583  248,168  401,886  681,455  766,671 
Cash surrender value of bank-owned life insurance         313,079  311,310  309,223  309,532  308,670 
Receivable on unsettled securities sales76,622  79,248  62,641  33,813  259,906 
Other assets2,196,253  1,957,143  2,032,844  2,172,351  1,721,385 
TOTAL ASSETS$  33,008,170  $  32,368,571  $  32,954,989  $  32,961,076  $  32,646,473 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$9,389,849  $9,338,683  $9,101,763  $9,124,595  $8,497,037 
Interest-bearing transaction10,088,522  10,087,640  10,567,475  9,980,132  9,650,618 
Savings464,130  461,586  441,254  421,654  420,009 
Time2,176,820  2,204,422  2,258,930  2,177,035  2,197,350 
Total deposits22,119,321  22,092,331  22,369,422  21,703,416  20,765,014 
Funds purchased49,774  63,263  55,508  62,004  68,280 
Repurchase agreements361,512  427,353  523,561  560,891  522,822 
Other borrowings6,162,641  5,572,031  5,737,955  6,072,150  6,342,369 
Subordinated debentures144,663  144,654  144,644  144,635  255,890 
Derivative contracts, net221,371  178,695  405,444  682,808  747,187 
Due on unsettled securities purchases145,155  157,438  91,529  77,575  200,574 
Other liabilities319,092  323,373  299,534  321,404  352,671 
TOTAL LIABILITIES29,523,529  28,959,138  29,627,597  29,624,883  29,254,807 
Total equity3,484,641  3,409,433  3,327,392  3,336,193  3,391,666 
TOTAL LIABILITIES AND EQUITY$33,008,170  $32,368,571  $32,954,989  $32,961,076  $32,646,473 
                    


 
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
        
Interest revenue$255,413  $209,317  $716,984  $613,380 
Interest expense36,961  21,471  92,146  60,350 
Net interest revenue218,452  187,846  624,838  553,030 
Provision for credit losses  10,000    65,000 
Net interest revenue after provision for credit losses218,452  177,846  624,838  488,030 
Other operating revenue:       
Brokerage and trading revenue33,169  38,006  98,556  109,877 
Transaction card revenue37,826  33,933  105,249  101,237 
Fiduciary and asset management revenue40,687  34,073  121,126  100,942 
Deposit service charges and fees23,209  23,668  69,593  68,828 
Mortgage banking revenue24,890  38,516  80,357  105,500 
Other revenue13,670  13,080  40,406  38,336 
Total fees and commissions173,451  181,276  515,287  524,720 
Other gains (losses), net(1,283) 2,442  8,452  5,309 
Gain on derivatives, net1,033  2,226  3,824  20,130 
Gain (loss) on fair value option securities, net661  (3,355) 1,505  10,367 
Change in fair value of mortgage servicing rights(639) 2,327  (5,726) (41,944)
Gain on available for sale securities, net2,487  2,394  4,916  11,684 
Total other operating revenue175,710  187,310  528,258  530,266 
Other operating expense:       
Personnel147,910  139,212  428,079  411,987 
Business promotion7,105  6,839  21,560  19,238 
Professional fees and services11,887  14,038  35,723  39,955 
Net occupancy and equipment21,325  20,111  64,074  58,554 
Insurance6,005  9,390  13,098  23,784 
Data processing and communications37,327  33,331  108,559  98,150 
Printing, postage and supplies3,917  3,790  11,908  11,586 
Net losses (gains) and operating expenses of repossessed assets6,071  (926) 9,347  1,732 
Amortization of intangible assets1,744  1,521  5,349  5,304 
Mortgage banking costs13,450  15,963  38,525  44,039 
Other expense9,193  14,819  25,308  37,714 
Total other operating expense265,934  258,088  761,530  752,043 
        
Net income before taxes128,228  107,068  391,566  266,253 
Federal and state income taxes42,438  31,956  128,246  83,881 
        
Net income85,790  75,112  263,320  182,372 
Net income (loss) attributable to non-controlling interests141  835  1,168  (270)
Net income attributable to BOK Financial Corporation shareholders         $85,649  $74,277  $262,152  $182,642 
        
Average shares outstanding:       
Basic  64,742,822    65,085,392    64,729,391    65,208,774 
Diluted64,805,172  65,157,841  64,793,893  65,263,566 
        
Net income per share:       
Basic$1.31  $1.13  $4.01  $2.77 
Diluted$1.31  $1.13  $4.00  $2.76 
                


 
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 Three Months Ended
 Sept. 30, 2017 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016
Capital:         
Period-end shareholders' equity$3,488,814  $3,422,469  $3,341,744  $3,274,854  $3,398,311 
Risk weighted assets$25,409,728  $25,130,802  $24,901,019  $25,274,848  $24,358,385 
Risk-based capital ratios:         
Common equity tier 111.90% 11.76% 11.59% 11.21% 11.99%
Tier 111.90% 11.76% 11.59% 11.21% 11.99%
Total capital13.47% 13.36% 13.25% 12.81% 13.65%
Leverage ratio9.30% 9.27% 8.89% 8.72% 9.06%
Tangible common equity ratio19.23% 9.24% 8.88% 8.61% 9.19%
          
Common stock:         
Book value per share$53.30  $52.32  $51.09  $50.12  $51.56 
Tangible book value per share45.88  44.87  43.63  42.53  45.12 
Market value per share:         
High$90.69  $88.31  $85.25  $85.00  $70.05 
Low$77.10  $74.09  $73.44  $67.11  $56.36 
Cash dividends paid$28,655  $28,652  $28,646  $28,860  $28,181 
Dividend payout ratio33.46% 32.50% 32.42% 57.69% 37.94%
Shares outstanding, net65,456,786  65,416,403  65,408,019  65,337,432  65,910,454 
Stock buy-back program:         
Shares repurchased      700,000   
Amount$  $  $  $49,021  $ 
Average price per share$  $  $  $70.03  $ 
          
Performance ratios (quarter annualized):
Return on average assets1.03% 1.09% 1.09% 0.60% 0.91%
Return on average equity9.83% 10.46% 10.86% 6.03% 8.80%
Net interest margin3.01% 2.89% 2.81% 2.69% 2.64%
Efficiency ratio66.77% 64.61% 65.77% 72.93% 68.88%
          
Reconciliation of non-GAAP measures:
1       Tangible common equity ratio:         
Total shareholders' equity$3,488,814  $3,422,469  $3,341,744  $3,274,854  $3,398,311 
Less: Goodwill and intangible assets, net485,710  487,452  488,294  495,830  424,716 
Tangible common equity$3,003,104  $2,935,017  $2,853,450  $2,779,024  $2,973,595 
          
Total assets$33,005,515  $32,263,532  $32,628,932  $32,772,281  $32,779,231 
Less: Goodwill and intangible assets, net485,710  487,452  488,294  495,830  424,716 
Tangible assets$32,519,805  $31,776,080  $32,140,638  $32,276,451  $32,354,515 
          
Tangible common equity ratio9.23% 9.24% 8.88% 8.61% 9.19%
          
Other data:         
Fiduciary assets$45,177,185  $45,089,153  $44,992,920  $42,378,053  $41,810,943 
Tax equivalent interest$4,314  $4,330  $4,428  $4,389  $4,455 
Net unrealized gain (loss) on available for sale securities$14,061  $16,041  $(5,537) $(14,899) $159,533 
          
Mortgage banking:         
Mortgage production revenue$8,329  $13,840  $8,543  $11,937  $21,958 
          
Mortgage loans funded for sale$832,796  $902,978  $711,019  $1,189,975  $1,864,583 
Add: current period-end outstanding commitments334,337  362,088  381,732  318,359  630,804 
Less: prior period end outstanding commitments362,088  381,732  318,359  630,804  965,631 
Total mortgage production volume$805,045  $883,334  $774,392  $877,530  $1,529,756 
          
Mortgage loan refinances to mortgage loans funded for sale38% 33% 44% 63% 51%
Gain on sale margin1.03% 1.57% 1.10% 1.36% 1.44%
          
Mortgage servicing revenue$16,561  $16,436  $16,648  $16,477  $16,558 
Average outstanding principal balance of mortgage loans service for others22,079,177  22,055,127  22,006,295  21,924,552  21,514,962 
Average mortgage servicing revenue rates0.30% 0.30% 0.31% 0.30% 0.31%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$1,025  $3,241  $(450) $(35,868) $2,268 
Gain (loss) on fair value option securities, net661  1,984  (1,140) (20,922) (3,355)
Gain (loss) on economic hedge of mortgage servicing rights1,686  5,225  (1,590) (56,790) (1,087)
Gain (loss) on changes in fair value of mortgage servicing rights(639) (6,943) 1,856  39,751  2,327 
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue1,047  (1,718) 266  (17,039) 1,240 
Net interest revenue on fair value option securities22,543  1,965  1,271  114  861 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$3,590  $247  $1,537  $(16,925) $2,101 

2    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
 Sept. 30, 2017 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016
          
Interest revenue$255,413  $235,181  $226,390  $215,737  $209,317 
Interest expense36,961  29,977  25,208  21,539  21,471 
Net interest revenue218,452  205,204  201,182  194,198  187,846 
Provision for credit losses        10,000 
Net interest revenue after provision for credit losses218,452  205,204  201,182  194,198  177,846 
Other operating revenue:         
Brokerage and trading revenue33,169  31,764  33,623  28,500  38,006 
Transaction card revenue37,826  35,296  32,127  34,521  33,933 
Fiduciary and asset management revenue40,687  41,808  38,631  34,535  34,073 
Deposit service charges and fees23,209  23,354  23,030  23,365  23,668 
Mortgage banking revenue24,890  30,276  25,191  28,414  38,516 
Other revenue13,670  14,984  11,752  12,693  13,080 
Total fees and commissions173,451  177,482  164,354  162,028  181,276 
Other gains (losses), net(1,283) 6,108  3,627  (1,279) 2,442 
Gain (loss) on derivatives, net1,033  3,241  (450) (35,815) 2,226 
Gain (loss) on fair value option securities, net661  1,984  (1,140) (20,922) (3,355)
Change in fair value of mortgage servicing rights(639) (6,943) 1,856  39,751  2,327 
Gain (loss) on available for sale securities, net2,487  380  2,049  (9) 2,394 
Total other operating revenue175,710  182,252  170,296  143,754  187,310 
Other operating expense:         
Personnel147,910  143,744  136,425  141,132  139,212 
Business promotion7,105  7,738  6,717  7,344  6,839 
Charitable contributions to BOKF Foundation      2,000   
Professional fees and services11,887  12,419  11,417  16,828  14,038 
Net occupancy and equipment21,325  21,125  21,624  21,470  20,111 
Insurance6,005  689  6,404  8,705  9,390 
Data processing and communications37,327  36,330  34,902  33,691  33,331 
Printing, postage and supplies3,917  4,140  3,851  3,998  3,790 
Net losses (gains) and operating expenses of repossessed assets6,071  2,267  1,009  1,627  (926)
Amortization of intangible assets1,744  1,803  1,802  1,558  1,521 
Mortgage banking costs13,450  12,072  13,003  17,348  15,963 
Other expense9,193  8,558  7,557  9,846  14,819 
Total other operating expense265,934  250,885  244,711  265,547  258,088 
Net income before taxes128,228  136,571  126,767  72,405  107,068 
Federal and state income taxes42,438  47,705  38,103  22,496  31,956 
Net income85,790  88,866  88,664  49,909  75,112 
Net income (loss) attributable to non-controlling interests141  719  308  (117) 835 
Net income attributable to BOK Financial Corporation shareholders $85,649  $88,147  $88,356  $50,026  $74,277 
          
Average shares outstanding:         
Basic64,742,822  64,729,752  64,715,964  64,719,018  65,085,392 
Diluted64,805,172  64,793,134  64,783,737  64,787,728  65,157,841 
Net income per share:         
Basic$1.31  $1.35  $1.35  $0.76  $1.13 
Diluted$1.31  $1.35  $1.35  $0.76  $1.13 
                    


 
LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
  Sept. 30, 2017 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016
Commercial:          
Energy $2,867,981  $2,847,240  $2,537,112  $2,497,868  $2,520,804 
Services 2,967,513  2,958,827  3,013,375  3,108,990  2,936,599 
Healthcare 2,239,451  2,221,518  2,265,604  2,201,916  2,085,046 
Wholesale/retail 1,658,098  1,543,695  1,506,243  1,576,818  1,602,030 
Manufacturing 519,446  546,137  543,430  514,975  499,486 
Other commercial and industrial 543,445  520,538  461,346  490,257  476,198 
Total commercial 10,795,934  10,637,955  10,327,110  10,390,824  10,120,163 
           
Commercial real estate:          
Retail 725,865  722,805  745,046  761,888  801,377 
Multifamily 999,009  952,380  922,991  903,272  873,773 
Office 797,089  862,973  860,889  798,888  752,705 
Industrial 591,080  693,635  871,463  871,749  838,021 
Residential construction and land development 112,102  141,592  135,994  135,533  159,946 
Other commercial real estate 292,997  315,207  334,680  337,716  367,776 
Total commercial real estate 3,518,142  3,688,592  3,871,063  3,809,046  3,793,598 
           
Residential mortgage:          
Permanent mortgage 1,013,965  989,040  977,743  1,006,820  969,558 
Permanent mortgages guaranteed by U.S. government agencies  187,370  191,729  204,181  199,387  190,309 
Home equity 744,415  758,429  764,350  743,625  712,926 
Total residential mortgage 1,945,750  1,939,198  1,946,274  1,949,832  1,872,793 
           
Personal 947,008  917,900  847,459  839,958  678,232 
           
Total $ 17,206,834  $ 17,183,645  $ 16,991,906  $ 16,989,660  $ 16,464,786 
                     


 
LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Sept. 30, 2017 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016
          
Bank of Oklahoma:         
Commercial$3,408,973  $3,369,967  $3,189,183  $3,370,259  $3,545,924 
Commercial real estate712,915  667,932  691,332  684,381  795,806 
Residential mortgage1,405,900  1,398,021  1,404,054  1,407,197  1,401,166 
Personal322,320  318,016  310,708  303,823  271,420 
Total Bank of Oklahoma5,850,108  5,753,936  5,595,277  5,765,660  6,014,316 
          
Bank of Texas:         
Commercial4,434,595  4,339,634  4,148,316  4,022,455  3,903,218 
Commercial real estate1,236,702  1,360,164  1,452,988  1,415,011  1,400,709 
Residential mortgage229,993  232,074  231,647  233,981  229,345 
Personal375,173  354,222  312,092  306,748  278,167 
Total Bank of Texas6,276,463  6,286,094  6,145,043  5,978,195  5,811,439 
          
Bank of Albuquerque:         
Commercial367,747  369,370  407,403  399,256  398,147 
Commercial real estate319,208  324,405  307,927  284,603  299,785 
Residential mortgage101,983  103,849  106,432  108,058  110,478 
Personal12,953  12,439  11,305  11,483  11,333 
Total Bank of Albuquerque801,891  810,063  833,067  803,400  819,743 
          
Bank of Arkansas:         
Commercial91,051  85,020  88,010  86,577  83,544 
Commercial real estate80,917  73,943  74,469  73,616  72,649 
Residential mortgage6,318  6,395  6,829  7,015  6,936 
Personal10,388  11,993  6,279  6,524  6,757 
Total Bank of Arkansas188,674  177,351  175,587  173,732  169,886 
          
Colorado State Bank & Trust:         
Commercial1,124,200  1,065,780  998,216  1,018,208  1,013,314 
Commercial real estate186,427  255,379  266,218  265,264  254,078 
Residential mortgage63,734  63,346  62,313  59,631  59,838 
Personal60,513  56,187  49,523  50,372  42,901 
Total Colorado State Bank & Trust         1,434,874  1,440,692  1,376,270  1,393,475  1,370,131 
          
Bank of Arizona:         
Commercial634,809  617,759  643,222  686,253  680,447 
Commercial real estate706,188  705,858  737,088  747,409  726,542 
Residential mortgage40,730  37,034  36,737  36,265  39,206 
Personal55,050  55,528  51,386  52,553  31,205 
Total Bank of Arizona1,436,777  1,416,179  1,468,433  1,522,480  1,477,400 
          
Mobank (Kansas City):         
Commercial734,559  790,425  852,760  807,816  495,569 
Commercial real estate275,785  300,911  341,041  338,762  244,029 
Residential mortgage97,092  98,479  98,262  97,685  25,824 
Personal110,611  109,515  106,166  108,455  36,449 
Total Mobank (Kansas City)1,218,047  1,299,330  1,398,229  1,352,718  801,871 
          
TOTAL BOK FINANCIAL$  17,206,834  $  17,183,645  $  16,991,906  $  16,989,660  $  16,464,786 

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)
 Sept. 30, 2017 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016
Bank of Oklahoma:         
  Demand$4,061,612  $4,353,421  $4,320,666  $3,993,170  $4,158,273 
  Interest-bearing:         
  Transaction5,909,259  5,998,787  6,114,288  6,345,536  5,701,983 
  Savings265,023  263,664  265,014  241,696  242,959 
  Time1,131,547  1,170,014  1,189,144  1,118,355  1,091,464 
  Total interest-bearing7,305,829  7,432,465  7,568,446  7,705,587  7,036,406 
Total Bank of Oklahoma11,367,441  11,785,886  11,889,112  11,698,757  11,194,679 
          
Bank of Texas:         
  Demand3,094,184  3,121,890  3,091,258  3,137,009  2,734,981 
  Interest-bearing:         
  Transaction2,272,987  2,272,185  2,317,576  2,388,812  2,240,040 
  Savings93,400  91,491  89,640  83,101  84,642 
  Time521,072  502,128  511,037  535,642  528,380 
  Total interest-bearing2,887,459  2,865,804  2,918,253  3,007,555  2,853,062 
Total Bank of Texas5,981,643  5,987,694  6,009,511  6,144,564  5,588,043 
          
Bank of Albuquerque:         
  Demand659,793  612,117  593,117  627,979  584,681 
  Interest-bearing:         
  Transaction551,884  558,523  623,677  590,571  555,326 
  Savings53,532  54,136  53,683  49,963  54,480 
  Time224,773  229,616  233,506  238,408  244,706 
  Total interest-bearing830,189  842,275  910,866  878,942  854,512 
Total Bank of Albuquerque1,489,982  1,454,392  1,503,983  1,506,921  1,439,193 
          
Bank of Arkansas:         
  Demand31,442  40,511  42,622  26,389  32,203 
  Interest-bearing:         
  Transaction126,746  129,848  106,804  105,232  313,480 
  Savings1,876  2,135  2,304  2,192  2,051 
  Time14,434  14,876  15,067  16,696  17,534 
  Total interest-bearing143,056  146,859  124,175  124,120  333,065 
Total Bank of Arkansas174,498  187,370  166,797  150,509  365,268 
          
Colorado State Bank & Trust:         
  Demand540,300  577,617  601,778  576,000  517,063 
  Interest-bearing:         
  Transaction628,807  626,343  610,510  616,679  623,055 
  Savings34,776  35,651  37,801  32,866  31,613 
  Time231,927  228,458  234,740  242,782  247,667 
  Total interest-bearing895,510  890,452  883,051  892,327  902,335 
Total Colorado State Bank & Trust         1,435,810  1,468,069  1,484,829  1,468,327  1,419,398 
          
          
Bank of Arizona:         
  Demand335,740  366,866  342,854  366,755  418,718 
  Interest-bearing:         
  Transaction174,010  154,457  180,254  305,099  303,750 
  Savings4,105  3,638  3,858  2,973  2,959 
  Time20,831  19,911  26,112  27,765  27,935 
  Total interest-bearing198,946  178,006  210,224  335,837  334,644 
Total Bank of Arizona534,686  544,872  553,078  702,592  753,362 
          
Mobank (Kansas City):         
  Demand462,410  496,473  514,278  508,418  235,445 
  Interest-bearing:         
  Transaction361,391  346,996  406,105  513,176  86,526 
  Savings12,513  13,603  13,424  12,679  1,645 
  Time27,705  31,119  34,242  42,152  11,945 
  Total interest-bearing401,609  391,718  453,771  568,007  100,116 
Total Mobank (Kansas City)864,019  888,191  968,049  1,076,425  335,561 
          
TOTAL BOK FINANCIAL$  21,848,079  $  22,316,474  $  22,575,359  $  22,748,095  $  21,095,504 
                    


 
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
 Three Months Ended
  Sept. 30, 2017   June 30, 2017   Mar. 31, 2017   Dec. 31, 2016   Sept. 30, 2016 
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents  1.29%   1.04%   0.82%   0.55%   0.51%
Trading securities3.47% 3.23% 3.87% 3.91% 2.71%
Investment securities:         
  Taxable5.31% 5.34% 5.44% 5.39% 5.34%
  Tax-exempt2.60% 2.51% 2.45% 2.33% 2.26%
Total investment securities3.86% 3.76% 3.70% 3.60% 3.51%
Available for sale securities:         
  Taxable2.16% 2.09% 2.02% 1.98% 1.99%
  Tax-exempt5.27% 6.09% 5.37% 5.27% 5.47%
Total available for sale securities2.17% 2.11% 2.05% 2.00% 2.01%
Fair value option securities2.97% 2.92% 2.27% 0.99% 1.70%
Restricted equity securities5.87% 5.95% 5.52% 5.45% 5.37%
Residential mortgage loans held for sale3.36% 3.92% 3.35% 3.31% 3.28%
Loans4.31% 4.03% 3.88% 3.67% 3.63%
Allowance for loan losses         
Loans, net of allowance4.38% 4.09% 3.94% 3.72% 3.69%
Total tax-equivalent yield on earning assets3.50% 3.30% 3.15% 2.98% 2.93%
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
  Interest-bearing transaction0.32% 0.26% 0.20% 0.16% 0.14%
  Savings0.08% 0.08% 0.08% 0.09% 0.09%
  Time1.16% 1.11% 1.09% 1.12% 1.14%
Total interest-bearing deposits0.45% 0.40% 0.35% 0.32% 0.32%
Funds purchased0.92% 0.61% 0.47% 0.28% 0.19%
Repurchase agreements0.15% 0.06% 0.02% 0.02% 0.04%
Other borrowings1.29% 1.09% 0.83% 0.61% 0.57%
Subordinated debt5.68% 5.55% 5.68% 5.51% 3.84%
Total cost of interest-bearing liabilities0.75% 0.63% 0.52% 0.44% 0.44%
Tax-equivalent net interest revenue spread2.75% 2.67% 2.63% 2.54% 2.49%
Effect of noninterest-bearing funding sources and other         0.26% 0.22% 0.18% 0.15% 0.15%
Tax-equivalent net interest margin3.01% 2.89% 2.81% 2.69% 2.64%

Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.


 
CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
 Three Months Ended
 Sept. 30, 2017 June 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sept. 30, 2016
Nonperforming assets:         
Nonaccruing loans:         
Commercial$176,900  $197,157  $156,825  $178,953  $176,464 
Commercial real estate2,975  3,775  4,475  5,521  7,350 
Residential mortgage45,506  44,235  46,081  46,220  52,452 
Personal255  272  235  290  686 
Total nonaccruing loans225,636  245,439  207,616  230,984  236,952 
Accruing renegotiated loans guaranteed by U.S. government agencies69,440  80,624  83,577  81,370  80,306 
Real estate and other repossessed assets32,535  39,436  42,726  44,287  31,941 
Total nonperforming assets$327,611  $365,499  $333,919  $356,641  $349,199 
Total nonperforming assets excluding those guaranteed by U.S. government agencies       $249,280  $275,823  $240,234  $263,425  $253,461 
          
Nonaccruing loans by loan class:         
Commercial:         
Energy$110,683  $123,992  $110,425  $132,499  $142,966 
Services1,174  7,754  7,713  8,173  8,477 
Wholesale / retail1,893  10,620  11,090  11,407  2,453 
Manufacturing9,059  9,656  5,907  4,931  274 
Healthcare24,446  24,505  909  825  855 
Other commercial and industrial29,645  20,630  20,781  21,118  21,439 
Total commercial176,900  197,157  156,825  178,953  176,464 
Commercial real estate: