Press Release

BOK Financial Reports Record Annual Earnings of $501 million or $7.03 Per Share

Earnings of $110 million or $1.56 Per Share in the Fourth Quarter

Company Release - 1/22/2020 7:55 AM ET

TULSA, Okla., Jan. 22, 2020 (GLOBE NEWSWIRE) -- BOK Financial (NASDAQ: BOKF) today reported net earnings applicable to common shareholders for the fourth quarter of 2019 of $110 million, or $1.56 per diluted common share.

CEO Commentary

“The fourth quarter concluded our second-consecutive year of record earnings for the organization,” said Steven G. Bradshaw, president and chief executive officer. “Achieving our business integration and financial goals for CoBiz early in 2019 set the tone for a monumental year, and helped drive momentum in two of our high-growth markets. The balance between our banking and fee service businesses was evident all year, allowing us to continue our strong earnings growth even with industry headwinds intensifying. This is a testament to how BOK Financial has been carefully constructed over many years with the distinct ability to outperform in challenging conditions.”

Bradshaw continued, “While the economic and political environment in 2020 will bring its own set of challenges, our focus remains on the long-term. We fully expect that our approach to creating and sustaining earnings and growing shareholder value will continue to serve us well in 2020.”

2019 Financial Highlights
  • Net income for the year ended December 31, 2019 totaled $500.8 million or $7.03 per diluted share compared to $445.6 million or $6.63 per diluted share for the year ended December 31, 2018.
  • Net interest revenue totaled $1.1 billion, an increase of $128.0 million. CoBiz added $158.5 million to net interest revenue, including $37.8 million of net purchase accounting discount accretion for 2019. CoBiz added $43.1 million to net interest revenue for 2018. Net interest margin was 3.11 percent for 2019 compared to 3.20 percent for 2018.
  • Fees and commissions revenue increased $59.0 million to $702.2 million in 2019. Strong growth in brokerage and trading revenue and mortgage banking revenue, which were both positively affected by lower mortgage interest rates in 2019, contributed to the majority of the increase.
  • Operating expense totaled $1.1 billion in 2019, an increase of $104.2 million. We incurred $17.2 million of closing and integration costs in 2019 compared to $16.6 million in 2018. Expenses related to CoBiz operations were $84.0 million in 2019 and $29.7 million in 2018. Excluding these costs, operating expense increased $49.3 million or 5 percent, primarily related to growth in personnel expense.
  • Period-end loans were up $94 million to $21.8 billion at December 31, 2019 and period-end deposits grew $2.4 billion to $27.6 billion.
Fourth Quarter 2019 Financial Highlights
  • Net income was $110.4 million or $1.56 per diluted share for the fourth quarter of 2019 and $142.2 million or $2.00 per diluted share for the third quarter of 2019.
  • Net interest revenue totaled $270.2 million, a decrease of $8.8 million. Net interest margin was 2.88 percent compared to 3.01 percent in the third quarter of 2019. Lower loan discount accretion, changes in funding mix, and the two recent federal funds rate cuts by the Federal Reserve contributed to compression in the net interest margin.
Fourth Quarter 2019 Financial Highlights con't
  • Fees and commissions revenue totaled $179.4 million, a decrease of $6.7 million, primarily due to a seasonal decline in mortgage banking revenue.
  • Operating expense increased $9.5 million to $288.8 million. Personnel expense increased $5.8 million while non-personnel expense increased $3.7 million over the third quarter of 2019.
  • A $19.0 million provision for credit losses was recorded in the fourth quarter of 2019 compared to $12.0 million in the third quarter of 2019. The combined allowance for credit losses totaled $212 million or 0.98 percent of outstanding loans compared to $206 million or 0.92 percent in the previous quarter.
  • Average loans decreased $177 million to $22.2 billion while period-end loans decreased $534 million to $21.8 billion, largely due to decreases in commercial and commercial real estate loans.
  • Average deposits increased $1.4 billion to $27.1 billion and period-end deposits increased $1.5 billion to $27.6 billion.
  • Commercial banking contributed $81.7 million to net income, a decrease of $18.9 million compared to the prior quarter. Net interest revenue decreased by $16.7 million due to a decrease in loan volume combined with decreased yields. Average loans decreased by $126 million to $19.1 billion. Fee revenue decreased $2.8 million, largely due to lower syndication fees. Average deposits increased $587 million to $11.4 billion, including an increase in interest-bearing transaction deposits partially offset by a decrease in demand deposits.
  • Consumer banking contributed $8.3 million to net income, decreasing $8.4 million. Net interest revenue decreased $5.3 million, largely due to a lower yield on deposits sold to our Funds Management unit. Fee revenue decreased $6.6 million. A seasonal decline in mortgage production reduced mortgage banking revenue by $4.8 million. Mortgage production volume decreased $278 million to $635 million and gain on sale margin decreased 7 basis points to 1.44 percent.
  • Wealth Management contributed $22.9 million to net income, consistent with the prior quarter. Fee revenue increased $3.3 million, largely related to brokerage and trading revenue, partially offset by a $1.2 million decrease in net interest revenue. Total operating expenses increased $3.1 million, primarily related to variable compensation that is related to revenue growth. Assets under management or administration were $82.7 billion at December 31, 2019 compared to $80.8 billion at September 30, 2019. Fiduciary assets totaled $52.4 billion at December 31, 2019 and $49.3 billion at September 30, 2019.
Net Interest Revenue

Net interest revenue was $270.2 million for the fourth quarter of 2019, an $8.8 million decrease compared to the third quarter of 2019. Discount accretion on acquired loans totaled $5.8 million for the fourth quarter and $10.9 million for the third quarter.

Average earning assets increased $415 million compared to the third quarter of 2019. Available for sale securities increased $586 million as we continue to position our balance sheet for the current rate environment. Average loan balances decreased $177 million and interest-bearing cash and cash equivalents increased $72 million. Growth in average earning assets was largely funded by a $1.5 billion increase in interest-bearing deposits while other borrowed funds decreased $863 million.

Net interest margin was 2.88 percent compared to 3.01 percent in the previous quarter. A decrease in demand deposits combined with an increase in receivables from trading activities reduced net interest margin by 9 basis points. Lower loan discount accretion reduced net interest margin by 6 basis points. A 3 basis point increase from higher loan fees was partially offset by spread compression.

The yield on average earning assets was 3.93 percent, a 32 basis point decrease from the prior quarter. The loan portfolio yield was 4.75 percent, down 37 basis points. The yield on the available for sale securities portfolio decreased 8 basis points to 2.52 percent while the yield on interest-bearing cash and cash equivalents decreased 80 basis points.

Funding costs were 1.40 percent, down 28 basis points. The cost of interest-bearing deposits decreased 8 basis points to 1.09 percent. The cost of other borrowed funds was down 48 basis points to 1.83 percent.

Fees and Commissions Revenue

Fees and commissions revenue totaled $179.4 million for the fourth quarter of 2019, a decrease of $6.7 million compared to the third quarter of 2019.

Mortgage banking revenue decreased $4.8 million. Mortgage loan production volume decreased 30 percent, primarily due to seasonality. Other revenue decreased $2.3 million primarily due to lower revenue from repossessed oil and gas properties. Brokerage and trading revenue was unchanged from the previous quarter. Growth in trading revenue of $5.6 million was offset by decreases in customer hedging revenue and loan syndication fees. A decrease in overdraft service charges was offset by an increase in trust fees and commissions.

Operating Expense

Total operating expense was $288.8 million for the fourth quarter of 2019, an increase of $9.5 million over the third quarter of 2019.

Personnel expense increased $5.8 million. Incentive compensation increased $4.3 million, primarily due to increased transaction activity in wealth management. The fourth quarter included approximately $2.0 million in severance costs due to realignment of personnel for the current operating environment.

Non-personnel expense increased $3.7 million over the third quarter of 2019. The fourth quarter included a $2.0 million charitable contribution to the BOKF Foundation, which provides support to many nonprofit partners in our communities.

Loans, Deposits and Capital

Loans

Outstanding loans were $21.8 billion at December 31, 2019, a decrease of $534 million compared September 30, 2019. General paydowns in energy and commercial real estate, along with two anticipated large year-end paydowns in commercial, contributed to the decline in balances.

Outstanding commercial loan balances decreased by $393 million or 3 percent compared to September 30, 2019. Services loan balances decreased $144 million. Energy loan balances decreased $141 million. Wholesale/retail sector loans decreased $88 million. Public finance loans decreased by $35 million and manufacturing loans decreased $33 million while other commercial and industrial loans increased $47 million.

Commercial real estate loan balances decreased $192 million or 4 percent compared to September 30, 2019. Loans secured by office buildings decreased $86 million. Loans secured by multifamily residential properties decreased $59 million. Loans secured by retail properties decreased $24 million and loans secured by other commercial real estate properties decreased $22 million.

Deposits

Period-end deposits totaled $27.6 billion at December 31, 2019, a $1.5 billion increase over September 30, 2019. A focus on deposit growth throughout the year led to the execution of several specific initiatives that resulted in large deposit acquisitions during the fourth quarter. Interest-bearing transaction account balances grew by $1.9 billion and demand deposit balances decreased $383 million. Average deposits were $27.1 billion at December 31, 2019, an increase of $1.4 billion compared to September 30, 2019. Total interest-bearing transaction deposits increased $1.6 billion, partially offset by a decrease in demand deposits of $147 million.

Capital

The company's common equity Tier 1 capital ratio was 11.39 percent at December 31, 2019. In addition, the company's Tier 1 capital ratio was 11.39 percent, total capital ratio was 12.94 percent, and leverage ratio was 8.40 percent at December 31, 2019. At September 30, 2019, the company's common equity Tier 1 capital ratio was 11.06 percent, Tier 1 capital ratio was 11.06 percent, total capital ratio was 12.56 percent, and leverage ratio was 8.41 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.98 percent at December 31, 2019 and 8.72 percent at September 30, 2019. 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.

The company repurchased 280,000 shares at an average price of $81.59 per share in the fourth quarter of 2019 and 336,713 shares at an average price of $77.03 in the third quarter of 2019.

Credit Quality

Nonperforming assets totaled $294 million or 1.35 percent of outstanding loans and repossessed assets at December 31, 2019, compared to $286 million or 1.28 percent at September 30, 2019. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $195 million or 0.90 percent of outstanding loans and repossessed assets at December 31, 2019, compared to $187 million or 0.85 percent at September 30, 2019.

Nonaccruing loans were $181 million or 0.83 percent of outstanding loans at December 31, 2019. Nonaccruing commercial loans totaled $115 million or 0.82 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $28 million or 0.62 percent of outstanding commercial real estate loans. Nonaccruing residential mortgage loans totaled $38 million or 1.81 percent of outstanding residential mortgage loans.

Nonaccruing loans increased $8.5 million from September 30, 2019, primarily due to a $6.6 million multifamily community development credit. Nonaccruing energy loans also increased $2.8 million. New nonaccruing loans identified in the fourth quarter totaled $49 million, offset by $24 million in payments received and $14 million in charge-offs.

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 $160 million at December 31, compared to $143 million at September 30. The increase largely resulted from energy loans, partially offset by a decrease in loans secured by commercial real estate.

Net charge-offs were $12.5 million or 0.22 percent of average loans on an annualized basis for the fourth quarter of 2019, compared to $10.6 million or 0.19 percent of average loans on an annualized basis for the third quarter of 2019. Net charge-offs were 0.21 percent of average loans over the last four quarters. Gross charge-offs were $14.3 million for the fourth quarter compared to $11.7 million for the previous quarter. Recoveries totaled $1.8 million for the fourth quarter of 2019 and $1.1 million for the third quarter of 2019.

Based on an evaluation of all credit factors, including specific impairment of two shared national credit energy loans where the Company is not the lead agent, changes in nonaccruing and potential problem loans and net charge-offs, the company determined that a $19.0 million provision for credit losses was appropriate for the fourth quarter of 2019. The company recorded a $12.0 million provision for credit losses in the third quarter of 2019.

The combined allowance for credit losses totaled $212 million or 0.98 percent of outstanding loans and 121 percent of nonaccruing loans at December 31, 2019, excluding residential mortgage loans guaranteed by U.S. government agencies. Excluding loans acquired in the CoBiz acquisition, which are measured at acquisition-date fair value, the combined allowance for loan losses was 1.06 percent of outstanding loans and 127 percent of nonaccruing loans at December 31, 2019 compared to 1.02 percent of outstanding loans and 130 percent of nonaccruing loans at September 30, 2019. The allowance for loan losses was $211 million and the accrual for off-balance sheet credit losses was $1.6 million. At September 30, 2019, the combined allowance for credit losses was $206 million or 0.92 percent of outstanding loans and 124 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $204 million and the accrual for off-balance sheet credit losses was $1.4 million.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $11.3 billion at December 31, 2019, a $245 million increase compared to September 30, 2019. At December 31, 2019, the available for sale securities portfolio consisted primarily of $8.0 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.2 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2019, the available for sale securities portfolio had a net unrealized gain of $138 million compared to $178 million at September 30, 2019.

The company also maintains a portfolio 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. This portfolio of fair value option securities decreased $718 million to $1.1 billion at December 31, 2019.

The net economic cost of the changes in fair value of mortgage servicing rights and related economic hedges was $2.2 million during the fourth quarter of 2019, including a $13.0 million decrease in the fair value of securities and derivative contracts held as an economic hedge, a $9.3 million increase in the fair value of mortgage servicing rights, and $1.5 million of related net interest revenue.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, January 22, 2020 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 # 13697774.

About BOK Financial Corporation

BOK Financial Corporation is a $42 billion regional financial services company headquartered in Tulsa, Oklahoma with $83 billion in assets under management and administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc.BOKF, NA operates TransFund, Cavanal Hill Investment Management and BOK Financial Asset Management, Inc.BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Milwaukee and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance 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 December 31, 2019 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, including its latest acquisition of CoBiz Financial, Inc., 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, inflation, 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)
 Dec. 31, 2019 Sept. 30, 2019
ASSETS   
Cash and due from banks$735,836  $761,130 
Interest-bearing cash and cash equivalents522,985  465,458 
Trading securities1,623,921  1,675,212 
Investment securities293,418  304,224 
Available for sale securities11,269,643  11,024,551 
Fair value option securities1,098,577  1,816,398 
Restricted equity securities460,552  479,018 
Residential mortgage loans held for sale182,271  282,487 
Loans:   
Commercial14,031,650  14,424,625 
Commercial real estate4,433,783  4,626,057 
Residential mortgage2,084,172  2,117,303 
Personal1,201,382  1,117,382 
Total loans21,750,987  22,285,367 
Allowance for loan losses(210,759) (204,432)
Loans, net of allowance21,540,228  22,080,935 
Premises and equipment, net535,519  516,597 
Receivables231,811  219,420 
Goodwill1,048,091  1,048,091 
Intangible assets, net125,271  124,320 
Mortgage servicing rights201,886  193,661 
Real estate and other repossessed assets, net20,359  21,026 
Derivative contracts, net323,375  352,019 
Cash surrender value of bank-owned life insurance389,879  387,035 
Receivable on unsettled securities sales1,020,404  904,630 
Other assets547,995  470,993 
TOTAL ASSETS$42,172,021  $43,127,205 
    
LIABILITIES AND EQUITY   
Deposits:   
Demand$9,461,291  $9,844,397 
Interest-bearing transaction15,391,752  13,521,545 
Savings550,276  557,593 
Time2,217,849  2,243,541 
Total deposits27,621,168  26,167,076 
Funds purchased and repurchase agreements3,818,350  3,413,051 
Other borrowings4,527,055  6,822,334 
Subordinated debentures275,923  275,909 
Accrued interest, taxes and expense259,701  218,775 
Due on unsettled securities purchases182,547  703,448 
Derivative contracts, net251,128  336,791 
Other liabilities372,230  352,156 
TOTAL LIABILITIES37,308,102  38,289,540 
Shareholders' equity:   
Capital, surplus and retained earnings4,750,872  4,695,263 
Accumulated other comprehensive gain104,923  133,753 
TOTAL SHAREHOLDERS' EQUITY4,855,795  4,829,016 
Non-controlling interests8,124  8,649 
TOTAL EQUITY4,863,919  4,837,665 
TOTAL LIABILITIES AND EQUITY$42,172,021  $43,127,205 


AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Three Months Ended
 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
ASSETS         
Interest-bearing cash and cash equivalents$573,203  $500,823  $535,491  $537,903  $563,132 
Trading securities1,672,426  1,696,568  1,757,335  1,968,399  1,929,601 
Investment securities298,567  308,090  328,482  343,282  364,737 
Available for sale securities11,333,524  10,747,439  9,435,668  8,883,054  8,704,963 
Fair value option securities1,521,528  1,553,879  898,772  594,349  277,575 
Restricted equity securities479,687  476,781  413,812  395,432  362,729 
Residential mortgage loans held for sale203,535  203,319  192,102  145,040  179,553 
Loans:         
Commercial14,344,534  14,507,185  14,175,057  13,966,521  13,587,344 
Commercial real estate4,532,649  4,652,534  4,656,861  4,602,149  4,747,784 
Residential mortgage2,130,646  2,129,421  2,146,315  2,193,334  2,222,063 
Personal1,228,171  1,123,778  1,026,172  1,004,061  1,022,140 
Total loans22,236,000  22,412,918  22,004,405  21,766,065  21,579,331 
Allowance for loan losses(205,417) (201,714) (205,532) (206,092) (209,613)
Total loans, net22,030,583  22,211,204  21,798,873  21,559,973  21,369,718 
Total earning assets38,113,053  37,698,103  35,360,535  34,427,432  33,752,008 
Cash and due from banks690,806  717,338  703,294  705,411  731,700 
Derivative contracts, net311,542  331,834  328,802  262,927  299,319 
Cash surrender value of bank-owned life insurance388,012  385,190  384,974  382,538  379,893 
Receivable on unsettled securities sales1,973,604  1,742,794  1,437,462  1,224,700  799,548 
Other assets2,736,337  2,705,089  2,629,710  2,669,673  2,423,275 
TOTAL ASSETS$44,213,354  $43,580,348  $40,844,777  $39,672,681  $38,385,743 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$9,612,533  $9,759,710  $9,883,965  $9,988,088  $10,648,683 
Interest-bearing transaction14,685,385  13,131,542  12,512,282  11,931,539  11,773,651 
Savings554,605  557,122  558,738  541,575  526,275 
Time2,247,717  2,251,800  2,207,391  2,153,277  2,146,786 
Total deposits27,100,240  25,700,174  25,162,376  24,614,479  25,095,395 
Funds purchased and repurchase agreements4,120,610  3,106,163  2,066,950  2,033,036  1,205,568 
Other borrowings6,247,194  8,125,023  7,175,617  7,040,279  6,361,141 
Subordinated debentures275,916  275,900  275,887  275,882  276,378 
Derivative contracts, net276,078  300,051  283,484  273,786  268,848 
Due on unsettled securities purchases784,174  745,893  821,688  453,937  493,887 
Other liabilities561,654  547,144  460,732  501,788  341,438 
TOTAL LIABILITIES39,365,866  38,800,348  36,246,734  35,193,187  34,042,655 
Total equity4,847,488  4,780,000  4,598,043  4,479,494  4,343,088 
TOTAL LIABILITIES AND EQUITY$44,213,354  $43,580,348  $40,844,777  $39,672,681  $38,385,743 



STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 Three Months Ended Year Ended
 December 31, December 31,
 2019 2018 2019 2018
        
Interest revenue$369,857  $365,592  $1,531,958  $1,228,426 
Interest expense99,608  79,906  419,079  243,559 
Net interest revenue270,249  285,686  1,112,879  984,867 
Provision for credit losses19,000  9,000  44,000  8,000 
Net interest revenue after provision for credit losses251,249  276,686  1,068,879  976,867 
Other operating revenue:       
Brokerage and trading revenue43,843  28,101  159,826  108,323 
Transaction card revenue22,548  20,664  87,216  84,025 
Fiduciary and asset management revenue45,021  43,665  177,025  184,703 
Deposit service charges and fees27,331  29,393  112,485  112,153 
Mortgage banking revenue25,396  21,880  107,541  97,787 
Other revenue15,283  16,404  58,108  56,185 
Total fees and commissions179,422  160,107  702,201  643,176 
Other gains (losses), net(1,649) (8,305) 9,351  (2,265)
Gain (loss) on derivatives, net(4,644) 11,167  14,951  (422)
Gain (loss) on fair value option securities, net(8,328) (282) 15,787  (25,572)
Change in fair value of mortgage servicing rights9,297  (24,233) (53,517) 4,668 
Gain (loss) on available for sale securities, net4,487  (1,999) 5,597  (2,801)
Total other operating revenue178,585  136,455  694,370  616,784 
Other operating expense:       
Personnel168,422  160,706  660,565  583,131 
Business promotion8,787  9,207  35,662  30,523 
Charitable contributions to BOKF Foundation2,000  2,846  3,000  2,846 
Professional fees and services13,408  20,712  54,861  59,099 
Net occupancy and equipment26,316  27,780  110,275  97,981 
Insurance5,393  4,248  20,906  23,318 
Data processing and communications31,884  27,575  124,983  114,796 
Printing, postage and supplies3,700  5,232  16,517  17,169 
Net losses and operating expenses of repossessed assets2,403  2,581  6,707  17,052 
Amortization of intangible assets5,225  5,331  20,618  9,620 
Mortgage banking costs14,259  11,518  50,685  46,298 
Other expense6,998  6,907  27,602  26,333 
Total other operating expense288,795  284,643  1,132,381  1,028,166 
        
Net income before taxes141,039  128,498  630,868  565,485 
Federal and state income taxes30,257  20,121  130,183  119,061 
        
Net income110,782  108,377  500,685  446,424 
Net income (loss) attributable to non-controlling interests430  (79) (73) 778 
Net income attributable to BOK Financial Corporation shareholders$110,352  $108,456  $500,758  $445,646 
        
Average shares outstanding:       
Basic70,295,899  71,808,029  70,787,700  66,628,640 
Diluted70,309,644  71,833,334  70,802,612  66,662,273 
        
Net income per share:       
Basic$1.56  $1.50  $7.03  $6.63 
Diluted$1.56  $1.50  $7.03  $6.63 



FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 Three Months Ended
 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
Capital:         
Period-end shareholders' equity$4,855,795  $4,829,016  $4,709,438  $4,522,873  $4,432,109 
Risk weighted assets$31,671,519  $32,159,139  $32,040,741  $31,601,558  $30,742,295 
Risk-based capital ratios:         
Common equity tier 111.39%  11.06%  10.84%  10.71%  10.92% 
Tier 111.39%  11.06%  10.84%  10.71%  10.92% 
Total capital12.94%  12.56%  12.34%  12.24%  12.50% 
Leverage ratio8.40%  8.41%  8.75%  8.76%  8.96% 
Tangible common equity ratio18.98%  8.72%  8.69%  8.64%  8.82% 
          
Common stock:         
Book value per share$68.80  $68.15  $66.15  $63.30  $61.45 
Tangible book value per share52.17  51.60  49.68  46.82  45.03 
Market value per share:         
High$88.28  $84.35  $88.17  $93.72  $98.29 
Low$71.85  $72.96  $72.60  $72.11  $69.96 
Cash dividends paid$36,011  $35,472  $35,631  $35,885  $35,977 
Dividend payout ratio32.63% 24.94% 25.90% 32.44% 33.17%
Shares outstanding, net70,579,598  70,858,010  71,193,770  71,449,982  72,122,932 
Stock buy-back program:         
Shares repurchased280,000  336,713  250,000  705,609  525,000 
Amount$22,844  $25,937  $20,125  $60,577  $45,057 
Average price per share$81.59  $77.03  $80.50  $85.85  $85.82 
          
Performance ratios (quarter annualized):
Return on average assets0.99%  1.29%  1.35%  1.13%  1.12% 
Return on average equity9.05%  11.83%  12.02%  10.04%  9.93% 
Net interest margin2.88%  3.01%  3.30%  3.30%  3.40% 
Efficiency ratio63.65%  59.31%  59.51%  64.80%  63.25% 
          
Reconciliation of non-GAAP measures:
1  Tangible common equity ratio:         
Total shareholders' equity$4,855,795  $4,829,016  $4,709,438  $4,522,873  $4,432,109 
Less: Goodwill and intangible assets, net1,173,362  1,172,411  1,172,564  1,177,573  1,184,112 
Tangible common equity$3,682,433  $3,656,605  $3,536,874  $3,345,300  $3,247,997 
          
Total assets$42,172,021  $43,127,205  $41,893,073  $39,882,962  $38,020,504 
Less: Goodwill and intangible assets, net1,173,362  1,172,411  1,172,564  1,177,573  1,184,112 
Tangible assets$40,998,659  $41,954,794  $40,720,509  $38,705,389  $36,836,392 
          
Tangible common equity ratio8.98%  8.72%  8.69%  8.64%  8.82% 
          
          
          
          
          
          
          
          
          
          
Other data:         
Tax equivalent interest$2,726  $2,936  $3,481  $2,529  $3,067 
Net unrealized gain (loss) on available for sale securities$138,149  $178,060  $131,780  $(2,609) $(95,271)
          
Mortgage banking:         
Mortgage production revenue$9,169  $13,814  $11,869  $7,868  $5,073 
          
Mortgage loans funded for sale$855,643  $877,280  $729,841  $510,527  $497,353 
Add: current period-end outstanding commitments158,460  379,377  344,087  263,434  160,848 
Less: prior period end outstanding commitments379,377  344,087  263,434  160,848  197,752 
Total mortgage production volume$634,726  $912,570  $810,494  $613,113  $460,449 
          
Mortgage loan refinances to mortgage loans funded for sale57% 56% 31% 30% 23%
Gain on sale margin1.44% 1.51% 1.46% 1.28% 1.10%
          
Mortgage servicing revenue$16,227  $16,366  $16,262  $15,966  $16,807 
Average outstanding principal balance of mortgage loans serviced for others20,856,446  21,172,874  21,418,690  21,581,835  21,706,541 
Average mortgage servicing revenue rates0.31% 0.31% 0.30% 0.30% 0.31%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$(4,714) $3,742  $11,128  $4,432  $12,162 
Gain (loss) on fair value option securities, net(8,328) 4,597  9,853  9,665  (282)
Gain (loss) on economic hedge of mortgage servicing rights(13,042) 8,339  20,981  14,097  11,880 
Gain (loss) on changes in fair value of mortgage servicing rights9,297  (12,593) (29,555) (20,666) (24,233)
Loss on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue(3,745) (4,254) (8,574) (6,569) (12,353)
Net interest revenue on fair value option securities21,544  1,245  1,296  1,129  695 
Total economic cost of changes in the fair value of mortgage servicing rights, net of economic hedges$(2,201) $(3,009) $(7,278) $(5,440) $(11,658)

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
 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
          
Interest revenue$369,857  $395,207  $390,820  $376,074  $365,592 
Interest expense99,608  116,111  105,388  97,972  79,906 
Net interest revenue270,249  279,096  285,432  278,102  285,686 
Provision for credit losses19,000  12,000  5,000  8,000  9,000 
Net interest revenue after provision for credit losses251,249  267,096  280,432  270,102  276,686 
Other operating revenue:         
Brokerage and trading revenue43,843  43,840  40,526  31,617  28,101 
Transaction card revenue22,548  22,015  21,915  20,738  20,664 
Fiduciary and asset management revenue45,021  43,621  45,025  43,358  43,665 
Deposit service charges and fees27,331  28,837  28,074  28,243  29,393 
Mortgage banking revenue25,396  30,180  28,131  23,834  21,880 
Other revenue15,283  17,626  12,437  12,762  16,404 
Total fees and commissions179,422  186,119  176,108  160,552  160,107 
Other gains (losses), net(1,649) 4,544  3,480  2,976  (8,305)
Gain (loss) on derivatives, net(4,644) 3,778  11,150  4,667  11,167 
Gain (loss) on fair value option securities,
net
(8,328) 4,597  9,853  9,665  (282)
Change in fair value of mortgage servicing
rights
9,297  (12,593) (29,555) (20,666) (24,233)
Gain (loss) on available for sale securities,
net
4,487  5  1,029  76  (1,999)
Total other operating revenue178,585  186,450  172,065  157,270  136,455 
Other operating expense:         
Personnel168,422  162,573  160,342  169,228  160,706 
Business promotion8,787  8,859  10,142  7,874  9,207 
Charitable contributions to BOKF
Foundation
2,000    1,000    2,846 
Professional fees and services13,408  12,312  13,002  16,139  20,712 
Net occupancy and equipment26,316  27,558  26,880  29,521  27,780 
Insurance5,393  4,220  6,454  4,839  4,248 
Data processing and communications31,884  31,915  29,735  31,449  27,575 
Printing, postage and supplies3,700  3,825  4,107  4,885  5,232 
Net losses and operating expenses of repossessed assets2,403  1,728  580  1,996  2,581 
Amortization of intangible assets5,225  5,064  5,138  5,191  5,331 
Mortgage banking costs14,259  14,975  11,545  9,906  11,518 
Other expense6,998  6,263  8,212  6,129  6,907 
Total other operating expense288,795  279,292  277,137  287,157  284,643 
Net income before taxes141,039  174,254  175,360  140,215  128,498 
Federal and state income taxes30,257  32,396  37,580  29,950  20,121 
Net income110,782  141,858  137,780  110,265  108,377 
Net income (loss) attributable to non-controlling interests430  (373) 217  (347) (79)
Net income attributable to BOK Financial Corporation shareholders$110,352  $142,231  $137,563  $110,612  $108,456 
          
Average shares outstanding:         
Basic70,295,899  70,596,307  70,887,063  71,387,070  71,808,029 
Diluted70,309,644  70,609,924  70,902,033  71,404,388  71,833,334 
Net income per share:         
Basic$1.56  $2.00  $1.93  $1.54  $1.50 
Diluted$1.56  $2.00  $1.93  $1.54  $1.50 


LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
  Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
Commercial:          
Energy $3,973,377  $4,114,269  $3,921,353  $3,705,099  $3,590,333 
Services 3,122,163  3,266,249  3,309,458  3,287,563  3,258,192 
Healthcare 3,033,916  3,032,968  2,926,510  2,915,885  2,799,277 
Wholesale/retail 1,760,866  1,848,617  1,793,118  1,706,900  1,621,158 
Public finance 709,868  744,840  795,659  803,083  804,550 
Manufacturing 665,449  698,408  761,357  742,374  730,521 
Other commercial and industrial 766,011  719,274  829,453  801,071  832,047 
Total commercial 14,031,650  14,424,625  14,336,908  13,961,975  13,636,078 
           
Commercial real estate:          
Multifamily 1,265,562  1,324,839  1,300,372  1,210,358  1,288,065 
Office 928,379  1,014,275  1,056,306  1,033,158  1,072,920 
Industrial 856,117  873,536  828,569  767,757  778,106 
Retail 775,521  799,169  825,399  890,685  919,082 
Residential construction and land development 150,879  135,361  141,509  149,686  148,584 
Other commercial real estate 457,325  478,877  557,878  549,007  558,056 
Total commercial real estate 4,433,783  4,626,057  4,710,033  4,600,651  4,764,813 
           
Residential mortgage:          
Permanent mortgage 1,057,321  1,066,460  1,088,370  1,098,481  1,122,610 
Permanent mortgages guaranteed by U.S. government agencies 197,794  191,764  195,373  193,308  190,866 
Home equity 829,057  859,079  887,079  900,831  916,557 
Total residential mortgage 2,084,172  2,117,303  2,170,822  2,192,620  2,230,033 
           
Personal 1,201,382  1,117,382  1,037,889  1,003,734  1,025,806 
           
Total $21,750,987  $22,285,367  $22,255,652  $21,758,980  $21,656,730 


LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
          
Texas:         
Commercial$6,174,894  $6,220,227  $5,877,265  $5,754,018  $5,438,133 
Commercial real estate1,259,117  1,292,116  1,341,609  1,344,810  1,341,783 
Residential mortgage268,282  273,931  272,878  265,927  266,805 
Personal458,893  475,430  400,585  396,794  394,743 
Total Texas8,161,186  8,261,704  7,892,337  7,761,549  7,441,464 
          
Oklahoma:         
Commercial3,454,825  3,690,100  3,762,234  3,551,054  3,491,117 
Commercial real estate631,026  679,786  717,970  665,190  700,756 
Residential mortgage1,375,080  1,370,452  1,403,398  1,417,381  1,440,566 
Personal479,784  383,246  382,764  374,807  375,543 
Total Oklahoma5,940,715  6,123,584  6,266,366  6,008,432  6,007,982 
          
Colorado:         
Commercial2,169,598  2,247,798  2,325,742  2,231,703  2,275,069 
Commercial real estate927,826  975,066  1,023,410  957,348  963,575 
Residential mortgage196,326  224,872  241,780  241,722  251,849 
Personal80,613  78,733  72,537  65,812  72,916 
Total Colorado3,374,363  3,526,469  3,663,469  3,496,585  3,563,409 
          
Arizona:         
Commercial1,307,073  1,276,534  1,330,415  1,335,140  1,320,139 
Commercial real estate728,832  771,425  761,243  791,466  889,903 
Residential mortgage89,396  92,121  91,684  98,973  97,959 
Personal97,143  78,694  76,335  61,875  68,546 
Total Arizona2,222,444  2,218,774  2,259,677  2,287,454  2,376,547 
          
Kansas/Missouri:         
Commercial527,872  566,969  602,836  667,859  659,793 
Commercial real estate322,541  374,795  331,443  327,870  343,228 
Residential mortgage66,771  67,035  71,229  75,560  77,971 
Personal64,298  79,487  84,224  81,831  91,441 
Total Kansas/Missouri981,482  1,088,286  1,089,732  1,153,120  1,172,433 
          
New Mexico:         
Commercial305,320  335,409  350,520  342,915  340,489 
Commercial real estate402,148  374,331  385,058  371,416  383,670 
Residential mortgage80,325  81,383  82,390  85,326  87,346 
Personal9,932  10,887  10,236  11,065  10,662 
Total New Mexico797,725  802,010  828,204  810,722  822,167 
          
Arkansas:         
Commercial92,068  87,588  87,896  79,286  111,338 
Commercial real estate162,293  158,538  149,300  142,551  141,898 
Residential mortgage7,992  7,509  7,463  7,731  7,537 
Personal10,719  10,905  11,208  11,550  11,955 
Total Arkansas273,072  264,540  255,867  241,118  272,728 
          
TOTAL BOK FINANCIAL$21,750,987  $22,285,367  $22,255,652  $21,758,980  $21,656,730 

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)
 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
Oklahoma:         
  Demand$3,257,337  $3,515,312  $3,279,359  $3,432,239  $3,610,593 
  Interest-bearing:         
  Transaction8,574,912  7,447,799  7,020,484  6,542,548  6,445,831 
  Savings306,194  308,103  307,785  309,875  288,210 
  Time1,125,446  1,198,170  1,253,804  1,217,371  1,118,643 
  Total interest-bearing10,006,552  8,954,072  8,582,073  8,069,794  7,852,684 
Total Oklahoma13,263,889  12,469,384  11,861,432  11,502,033  11,463,277 
          
Texas:         
  Demand2,766,379  2,870,429  2,974,005  2,966,743  3,291,433 
  Interest-bearing:         
  Transaction2,912,302  2,589,511  2,453,619  2,385,305  2,295,169 
  Savings102,456  100,597  103,125  101,849  99,624 
  Time495,343  464,264  425,253  419,269  423,880 
  Total interest-bearing3,510,101  3,154,372  2,981,997  2,906,423  2,818,673 
Total Texas6,276,480  6,024,801  5,956,002  5,873,166  6,110,106 
          
Colorado:         
  Demand1,729,674  1,694,044  1,621,820  1,897,547  1,658,473 
  Interest-bearing:         
  Transaction1,769,037  1,910,874  1,800,271  1,844,632  1,899,203 
  Savings53,307  60,107  57,263  58,919  57,289 
  Time283,517  273,622  246,198  261,235  274,877 
  Total interest-bearing2,105,861  2,244,603  2,103,732  2,164,786  2,231,369 
Total Colorado3,835,535  3,938,647  3,725,552  4,062,333  3,889,842 
          
New Mexico:         
  Demand623,722  645,698  630,861  662,362  691,692 
  Interest-bearing:         
  Transaction558,493  539,260  557,881  573,203  571,347 
  Savings63,999  62,863  62,636  61,497  58,194 
  Time238,140  236,135  232,569  228,212  224,515 
  Total interest-bearing860,632  838,258  853,086  862,912  854,056 
Total New Mexico1,484,354  1,483,956  1,483,947  1,525,274  1,545,748 
          
Arizona:         
  Demand672,265  703,381  700,480  695,238  707,402 
  Interest-bearing:         
  Transaction684,358  599,655  560,429  621,735  575,567 
  Savings10,314  12,487  11,966  12,144  10,545 
  Time49,676  44,347  43,099  44,004  43,051 
  Total interest-bearing744,348  656,489  615,494  677,883  629,163 
Total Arizona1,416,613  1,359,870  1,315,974  1,373,121  1,336,565 
          
          
          
Kansas/Missouri:         
  Demand384,533  376,020  431,856  410,799  418,199 
  Interest-bearing:         
  Transaction784,574  284,940  310,774  361,590  327,866 
  Savings12,169  11,689  13,125  13,815  13,721 
  Time17,877  19,126  19,205  19,977  19,688 
  Total interest-bearing814,620  315,755  343,104  395,382  361,275 
Total Kansas/Missouri1,199,153  691,775  774,960  806,181  779,474 
          
Arkansas:         
  Demand27,381  39,513  29,176  31,624  36,800 
  Interest-bearing:         
  Transaction108,076  149,506  148,485  147,964  91,593 
  Savings1,837  1,747  1,783  1,785  1,632 
  Time7,850  7,877  7,810  8,321  8,726 
  Total interest-bearing117,763  159,130  158,078  158,070  101,951 
Total Arkansas145,144  198,643  187,254  189,694  138,751 
          
TOTAL BOK FINANCIAL$27,621,168  $26,167,076  $25,305,121  $25,331,802  $25,263,763 



NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
 Three Months Ended
 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents1.62%  2.42%  2.57%  2.56%  2.23% 
Trading securities3.19%  3.49%  3.59%  3.88%  4.10% 
Investment securities4.69%  4.46%  4.41%  4.50%  4.26% 
Available for sale securities2.52%  2.60%  2.63%  2.57%  2.51% 
Fair value option securities2.62%  2.79%  3.34%  3.62%  3.56% 
Restricted equity securities5.37%  6.34%  6.30%  6.42%  6.39% 
Residential mortgage loans held for sale3.55%  3.73%  3.65%  4.58%  4.00% 
Loans4.75%  5.12%  5.39%  5.26%  5.09% 
Allowance for loan losses         
Loans, net of allowance4.80%  5.17%  5.45%  5.31%  5.14% 
Total tax-equivalent yield on earning assets3.93%  4.25%  4.51%  4.46%  4.33% 
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
  Interest-bearing transaction1.00%  1.08%  1.04%  0.94%  0.79% 
  Savings0.11%  0.14%  0.12%  0.12%  0.11% 
  Time1.94%  1.94%  1.90%  1.80%  1.54% 
Total interest-bearing deposits1.09%  1.17%  1.13%  1.04%  0.87% 
Funds purchased and repurchase agreements1.56%  2.01%  2.08%  2.07%  1.36% 
Other borrowings2.01%  2.42%  2.67%  2.68%  2.51% 
Subordinated debt5.40%  5.48%  5.53%  5.51%  5.38% 
Total cost of interest-bearing liabilities1.40%  1.68%  1.70%  1.66%  1.42% 
Tax-equivalent net interest revenue spread2.53%  2.57%  2.81%  2.80%  2.91% 
Effect of noninterest-bearing funding sources and other0.35%  0.44%  0.49%  0.50%  0.49% 
Tax-equivalent net interest margin2.88%  3.01%  3.30%  3.30%  3.40% 

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.


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CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
 Three Months Ended
 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019 Dec. 31, 2018
Nonperforming assets:         
Nonaccruing loans:         
Commercial$115,416  $111,706  $123,395  $90,358  $99,841 
Commercial real estate27,626  23,185  21,670  21,508  21,621 
Residential mortgage37,622  37,304  38,477  40,409  41,555 
Personal287  271  237  302  230 
Total nonaccruing loans180,951  172,466  183,779  152,577  163,247 
Accruing renegotiated loans guaranteed by U.S. government agencies92,452  92,718  95,989  91,787  86,428 
Real estate and other repossessed assets20,359  21,026  16,940  17,139  17,487 
Total nonperforming assets$293,762  $286,210  $296,708  $261,503  $267,162 
Total nonperforming assets excluding those guaranteed by U.S. government agencies$195,210  $187,160  $193,976  $162,770  $173,602 
          
Nonaccruing loans by loan class:         
Commercial:         
Energy$91,722  $88,894  $71,632  $35,332  $47,494 
Services7,483  6,119  10,087  9,555  8,567 
Healthcare4,480  5,978  16,148  18,768  16,538 
Manufacturing10,133  8,741  8,613  9,548  8,919 
Wholesale/retail1,163  1,504  1,390  1,425  1,316 
Public finance         
Other commercial and industrial435  470  15,525  15,730  17,007 
Total commercial115,416  111,706  123,395  90,358  99,841 
Commercial real estate:         
Retail18,868  20,132  20,057  20,159  20,279 
Residential construction and land development350  350  350  350  350 
Multifamily6,858  286  275    301 
Office  855  855  855   
Industrial909  909       
Other commercial real estate641  653  133  144  691 
Total commercial real estate27,626  23,185  21,670  21,508  21,621 
Residential mortgage:         
Permanent mortgage20,441  20,165  21,803  22,937  23,951 
Permanent mortgage guaranteed by U.S.
government agencies
6,100  6,332  6,743  6,946  7,132 
Home equity11,081  10,807  9,931  10,526  10,472 
Total residential mortgage37,622  37,304  38,477  40,409  41,555 
Personal287  271  237  302  230 
Total nonaccruing loans$180,951  $172,466  $183,779  $152,577  $163,247