BOKF BOK Financial Corporation

BOK Financial Reports Quarterly Earnings of $62 million or $0.88 Per Share in the First Quarter

BOK Financial Reports Quarterly Earnings of $62 million or $0.88 Per Share in the First Quarter

TULSA, Okla., April 22, 2020 (GLOBE NEWSWIRE) -- BOK Financial (NASDAQ: BOKF) today reported net earnings applicable to common shareholders for the first quarter of 2020 of $62 million, or $0.88 per diluted common share.

CEO Commentary

"While this quarter showcased the momentum with which we entered 2020, I am most proud of the resiliency and flexibility of our employees as we navigate this difficult time," said Steven G. Bradshaw, president, and chief executive officer. "The extreme health concerns surrounding the COVID-19 virus have created a rapidly changing work environment for our 5,000 employees, and the continued health and safety for them and their families remains our top objective. We also embrace the responsibility we have to our many clients and the communities in which we serve to maintain our high standards of customer service and community engagement. The culture of collaboration and commitment our employees have worked hard to build for many years has really revealed itself during this turbulent period. I could not be more proud of the compassion our employees have shown for our customers and those in need. This is the sustaining core of our BOKF culture."

Bradshaw continued, "While the second and third quarters of 2020 will certainly pose unprecedented economic challenges, we continue to be an organization focused on the long-term. We expect our business revenue diversity along with proven credit underwriting in all lending segments to serve as our foundation for continued shareholder value going forward."

COVID-19 Pandemic Response

  • We have implemented our cross-functional crisis management team led by our Chief Human Resources Officer and Chief Risk Officer. This team has focused on ensuring employee and customer safety while continuing to meet customer needs. We have implemented social distancing measures within our internal and external operations. Employees are working from home as able, we have split remaining employees across multiple locations, and we have closed banking center lobbies and converted to drive-thru and by appointment only.



  • We have implemented programs to help our customers through this uncertain time. We are actively participating in programs initiated by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), including the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") that began on April 3, 2020 and Mortgage Forbearance program. As of April 17, 2020, we have processed approximately 4,700 PPP applications and currently have SBA approval for $1.8 billion. We have the ability to fund PPP loans through the Federal Reserve's PPP liquidity facility. We are also evaluating participating in the Main Street Lending Program. We are waiving fees on excessive savings and money market account withdrawals as well as overdraft protection transfer fees for automatic transfers between linked accounts at BOKF through May 31, 2020. Further, we are waiving loan payment late fees on consumer loan payments, mortgage accounts and small business loans in April 2020.



  • We have enhanced our benefits to support our employees as they navigate changes in their working environment. We are providing a temporary child care reimbursement program for those employees that need assistance because of school closures and have also added incremental paid time off hours for employees. We expanded our telemedicine options to deliver medical and behavioral health services at no cost. Further, we have enacted premium pay for certain non-exempt employees who must remain in the office.



  • We are closely monitoring our loan portfolio for effects related to COVID-19. Exposure to highly affected industries include, but are not limited to, oil and gas, entertainment and leisure, and senior housing. Energy loan balances comprise 18 percent of total loans, senior housing comprises 11 percent, and entertainment and leisure comprises approximately 8 percent. While our liquidity remains strong, we have enhanced daily monitoring of liquidity by tracking deposit inflows and outflows by customer, analyzing loan advances by segment, optimizing our borrowing capacity at the Federal Home Loan Bank, and increasing our collateral at the Federal Reserve Discount Window, among other things.

First Quarter 2020 Financial Highlights

  • Net income was $62.1 million or $0.88 per diluted share for the first quarter of 2020 and $110.4 million or $1.56 per diluted share for the fourth quarter of 2019. The first quarter of 2020 included a pre-tax provision for expected credit losses of $93.8 million compared to a pre-tax provision for incurred credit losses of $19.0 million in the prior quarter. The Company adopted the current expected credit loss ("CECL") model on January 1, 2020.



  • Net interest revenue totaled $261.4 million, a decrease of $8.9 million. Net interest margin was 2.80 percent compared to 2.88 percent in the fourth quarter of 2019. The Federal Reserve reduced the federal funds rate by 1.50 percent in two rate cuts in March 2020.



  • Fees and commissions revenue totaled $192.7 million, an increase of $13.3 million. Falling mortgage interest rates increased mortgage banking revenue and related trading activity.



  • Operating expense decreased $20.2 million to $268.6 million. Personnel expense decreased $12.2 million, largely due to a decrease in incentive compensation expense, partially offset by a seasonal increase in employee benefits expense. Non-personnel expense decreased $7.9 million compared to the fourth quarter of 2019 led by decreases in business promotion and mortgage banking expenses.



  • The allowance for loan losses totaled $315 million or 1.40 percent of outstanding loans at March 31, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $344 million or 1.53 percent of outstanding loans at March 31, 2020. At December 31, 2019, the allowance for loan losses was $211 million or 0.97 percent of outstanding loans. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $212 million or 0.98 percent of outstanding loans.



  • Average loans decreased $293 million to $21.9 billion. Period-end loans increased $713 million to $22.5 billion.



  • Average deposits increased $1.1 billion to $28.2 billion and period-end deposits increased $1.6 billion to $29.2 billion, primarily due to a combination of our continued focus on growing core customer deposits, inflows from external money funds, and seasonal inflows.



  • The company's common equity Tier 1 capital ratio was 10.98 percent at March 31, 2020. In addition, the company's Tier 1 capital ratio was 10.98 percent, total capital ratio was 12.58 percent, and leverage ratio was 8.16 percent at March 31, 2020. We have elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL. At December 31, 2019, the company's common equity Tier 1 capital ratio was 11.39 percent, Tier 1 capital ratio was 11.39 percent, total capital ratio was 12.94 percent, and leverage ratio was 8.40 percent.



  • The company repurchased 442,000 shares at an average price of $75.52 per share in the first quarter of 2020 and 280,000 shares at an average price of $81.59 in the fourth quarter of 2019. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Net Interest Revenue

Net interest revenue was $261.4 million for the first quarter of 2020, an $8.9 million decrease compared to the fourth quarter of 2019. Discount accretion on acquired loans totaled $4.1 million for the first quarter of 2020 and $5.8 million for the prior quarter.

Average earning assets increased $291 million compared to the fourth quarter of 2019. Available for sale securities increased $331 million as we continue to position our balance sheet for the current rate environment. Fair value option securities, held as an economic hedge of the changes in fair value of our mortgage servicing rights, increased $272 million. Interest-bearing cash and cash equivalents increased $148 million. Average loan balances decreased $293 million. In addition, receivables from unsettled securities sales, primarily related to our U.S. agency residential mortgage-backed trading operations, increased $1.1 billion. Growth in average earning assets and non-interest bearing receivables was largely funded by a $1.5 billion increase in interest-bearing deposits.

Net interest margin was 2.80 percent compared to 2.88 percent in the previous quarter. While the Federal Reserve reduced the federal funds rate in multiple rates cuts in the latter half of 2019 and first quarter of 2020, LIBOR has remained elevated relative to the rate cuts. This, combined with our ability to move deposit costs down, has preserved a large portion of our margin.

The yield on average earning assets was 3.73 percent, a 20 basis point decrease from the prior quarter. The loan portfolio yield was 4.50 percent, down 25 basis points. The yield on the available for sale securities portfolio decreased 4 basis points to 2.48 percent while the yield on interest-bearing cash and cash equivalents decreased 29 basis points.

Funding costs were 1.19 percent, down 21 basis points. The cost of interest-bearing deposits decreased 11 basis points to 0.98 percent. The cost of other borrowed funds was down 36 basis points to 1.47 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 26 basis points for the first quarter of 2020 compared to 35 basis points for the fourth quarter of 2019.

Fees and Commissions Revenue

Fees and commissions revenue totaled $192.7 million for the first quarter of 2020, an increase of $13.3 million over the fourth quarter of 2019.

Declining interest rates increased mortgage banking revenue and related trading activity. Mortgage banking revenue increased $11.8 million or 46 percent. Mortgage loan production volume increased 65 percent and the gain on sale margin increased 62 basis points to 2.06 percent. Brokerage and trading revenue increased $6.9 million to $50.8 million. Revenue from mortgage trading activity increased $15.0 million over the previous quarter. Mortgage trading revenue was partially offset by widening spreads that decreased the quarter-end fair value of asset-backed and municipal securities.

Fiduciary and asset management revenue remained relatively consistent with the prior quarter, even given the current economic environment. Approximately a third of the assets are currently exposed to equities. This diversification, combined with strong sales efforts, has continued to produce strong results during this time.

Other revenue decreased $3.0 million, primarily due to lower revenue from repossessed oil and gas properties. Other operating expense related to these properties decreased by a comparable amount.

Operating Expense

Total operating expense was $268.6 million for the first quarter of 2020, a decrease of $20.2 million compared to the fourth quarter of 2019.

Personnel expense decreased $12.2 million. Incentive compensation decreased $13.6 million, largely due to a decrease in deferred compensation, which is partially offset by a decrease in the value of related investments included in Other gains (losses). Cash based incentive compensation was down $4.7 million, primarily due to annual incentives incurred in the fourth quarter. Regular compensation decreased $2.2 million. The fourth quarter included approximately $2.0 million in severance costs due to realignment of personnel. Employee benefits increased $3.6 million as a seasonal increase in payroll taxes and retirement plan expenses was partially offset by a decrease in employee healthcare costs.

Non-personnel expense decreased $7.9 million compared to the fourth quarter of 2019. Mortgage banking costs decreased $3.7 million due to a reduction of mortgage servicing rights amortization. Business promotion expense decreased $2.6 million due to a seasonal decrease in advertising costs combined with reduced travel costs largely as a result of the current pandemic. The fourth quarter of 2019 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 $22.5 billion at March 31, 2020, up $713 million over December 31, 2019.Loans

Outstanding commercial loan balances grew by $764 million or 5 percent over December 31, 2019. Advances on existing commercial revolving lines of credit in the first quarter represented $751 million of this increase, due to both seasonal factors and customer responses to the COVID-19 pandemic. Although the primary source of repayment of our commercial loan portfolio is the on-going cash flow from operations of the customer's business, loans are generally governed by a borrowing base and secured by the customer’s assets.

General business loans increased $371 million to $3.6 billion or 16 percent of total loans. General business loans includes $2.0 billion of wholesale/retail loans and $698 million of manufacturing loans.

Energy loan balances increased $138 million to $4.1 billion or 18 percent of total loans. Supporting the energy industry has been a hallmark of the Company for over a century. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending.

Demand declines related to the COVID-19 pandemic coupled with the OPEC Plus production conflict have led to price declines of current spot and future oil prices. Approximately 62 percent of committed production loans are secured by properties primarily producing oil. The remaining 38 percent is secured by properties primarily producing natural gas, which are not as significantly impacted by the recent downturn. As we have said in the past, the duration of the downturn is a more significant factor affecting performance than the level of prices. If drivers of this decline are short term, meaning less than twelve months, then our expected losses in the portfolio will not be overly impactful to the company.

We also conduct quarterly stress tests of our energy borrowers with more than 50 percent funding on their lines of credit and all criticized loans using a price deck discounted at 20 percent. This stress test helps us identify potential issues, although the most recent test resulted in no surprises once hedging was taken into consideration. Of all the energy customers that we stress test, which makes up 92 percent of production loans outstanding, 95 percent of our customers have some level of hedging in the 12-month range and many of them carry into the 24-month range. We believe our disciplined underwriting approach and doing business with high-quality borrowers will work to weather this downturn as we have previous downturns.

Healthcare sector loan balances increased $131 million to $3.2 billion or 14 percent of total loans. Our healthcare sector loans primarily consist of $2.4 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally we loan to borrowers with a portfolio of multiple facilities that serves to help diversify risks specific to a single facility. The remaining balance is composed of hospitals and other medical service providers impacted by a deferral of elective procedures to ensure adequate protective equipment and ventilators for those providing acute care to virus patients. The CARES Act does include multiple revenue enhancement measures for both hospitals and skilled nursing facilities as they manage through the risks of the virus.

Services loan balances increased $124 million to $4.0 billion or 18 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, educational services, consumer services and commercial services.

Our services and general business loans include areas we consider to be more exposed to the economic slowdown as a result of the social distancing measures in place to combat the COVID-19 pandemic such as entertainment and recreation, retail, hotels, churches, airline travel, and higher education that are dependent on large social gatherings to remain profitable. This represents approximately 8 percent of our total portfolio. This risk may be further mitigated as some of these borrowers participate in the Paycheck Protection Program. We will continue to monitor these areas closely in the coming months.

Commercial real estate loan balances were largely unchanged compared to December 31, 2019 and represent 20 percent of total loans at March 31, 2020. Loans secured by other commercial real estate properties increased $107 million to $564 million. Loans secured by office buildings increased $34 million to $962 million. Loans secured by industrial facilities decreased $128 million to $728 million. Multifamily residential loans are our largest exposure in commercial real estate loans totaling $1.3 billion at March 31, 2020. Loans secured by retail facilities were $774 million at March 31, 2020. Loans secured by retail facilities are clearly the most vulnerable to the impacts of measures being taken to hinder the spread of the virus, the extent of which is dependent upon the duration of various governmental orders and adjustments in consumer behavior after these orders are lifted. While office and multifamily may also be impacted, we believe our geographic footprint will help in the long term because of strong in-migration over time.

Loans to individuals decreased $68 million, including a $38 million decrease in home equity loans and a $26 million decrease in personal loans. Loans to individuals represent 14 percent of total loans at March 31, 2020.

Deposits

Period-end deposits totaled $29.2 billion at March 31, 2020, a $1.6 billion increase over December 31, 2019. Strong deposit growth was driven by a combination of our continued focus on growing core customer deposits, inflows from external money funds, and seasonal inflows. Interest-bearing transaction account balances grew by $1.2 billion and demand deposit balances increased $360 million. Average deposits were $28.2 billion at March 31, 2020, an increase of $1.1 billion compared to December 31, 2019. Total interest-bearing transaction deposits increased $1.5 billion, partially offset by a decrease in demand deposits of $380 million.

Capital

The company's common equity Tier 1 capital ratio was 10.98 percent at March 31, 2020. In addition, the company's Tier 1 capital ratio was 10.98 percent, total capital ratio was 12.58 percent, and leverage ratio was 8.16 percent at March 31, 2020. We have elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period. At December 31, 2019, the company's common equity Tier 1 capital ratio was 11.39 percent, Tier 1 capital ratio was 11.39 percent, total capital ratio was 12.94 percent, and leverage ratio was 8.40 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.39 percent at March 31, 2020 and 8.98 percent at December 31, 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 442,000 shares at an average price of $75.52 per share in the first quarter of 2020 and 280,000 shares at an average price of $81.59 in the fourth quarter of 2019. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

The Company adopted FASB Accounting Standard Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Assets Measured at Amortized Cost ("CECL") on January 1, 2020 through a pre-tax cumulative-effect adjustment to equity of $61.4 million. CECL requires recognition of expected credit losses on assets carried at amortized cost over their expected lives. The previous incurred loss model incorporated only known information as of the balance sheet date. CECL uses models to measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rate and West Texas Intermediate ("WTI") oil prices on a probability weighted basis.

The provision for credit losses was $93.8 million for the first quarter of 2020, with $99.3 million related to lending activity. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to the impact of the COVID-19 pandemic, oil price declines, and other assumptions, required a provision of $66.2 million. All other changes totaled $33.1 million, which included portfolio changes of $15.9 million and net charge-offs of $17.2 million.

Our base case reasonable and supportable forecast includes a 20 percent decrease in GDP and an 8.3 percent civilian unemployment rate in the second quarter of 2020. Our forward twelve month forecast through the first quarter of 2021 assumes a 4.6 percent decrease in GDP and a 6.5 percent civilian unemployment rate. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of March 2020, $25.10 per barrel for delivery in the second quarter of 2020 and increasing to $34.73 per barrel for delivery in the first quarter of 2021. Our downside reasonable and supportable forecast reflects a more severe and prolonged disruption in economic activity than the base case and includes a 30 percent decrease in GDP and a 9.5 percent civilian unemployment rate in the second quarter of 2020. Our forward twelve month forecast through the first quarter of 2021 assumes a 10.9 percent decrease in GDP and an 8.0 percent civilian unemployment rate. WTI oil prices are projected to range from $19.10 per barrel for delivery in the second quarter of 2020 to $31.73 per barrel for delivery in the first quarter of 2021.

The allowance for loan losses totaled $315 million or 1.40 percent of outstanding loans and 199 percent of nonaccruing loans at March 31, 2020, excluding residential mortgage loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $344 million or 1.53 percent of outstanding loans and 217 percent of nonaccruing loans at March 31, 2020. The combined allowance for credit losses attributed to energy was 2.43 percent of outstanding energy loans at March 31.

At December 31, 2019, the allowance for loan losses was $211 million or 0.97 percent of outstanding loans and 121 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $212 million or 0.98 percent of outstanding loans and 121 percent of nonaccruing loans.

Nonperforming assets totaled $292 million or 1.30 percent of outstanding loans and repossessed assets at March 31, 2020, compared to $294 million or 1.35 percent at December 31, 2019. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $195 million or 0.87 percent of outstanding loans and repossessed assets at March 31, 2020, compared to $195 million or 0.90 percent at December 31, 2019.

Nonaccruing loans were $163 million or 0.73 percent of outstanding loans at March 31, 2020. Nonaccruing commercial loans totaled $119 million or 0.80 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $8.5 million or 0.19 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $36 million or 1.12 percent of outstanding loans to individuals.

Nonaccruing loans decreased $18 million from December 31, 2019, primarily due to a $19 million decrease in nonaccruing commercial real estate loans. Nonaccruing energy loans increased $4.7 million. New nonaccruing loans identified in the first quarter totaled $30 million, offset by $8.9 million in payments received, $19 million in charge-offs and $18 million of foreclosures.

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 $293 million at March 31, compared to $160 million at December 31. The increase largely resulted from energy and service sector loans.

Net charge-offs were $17.2 million or 0.31 percent of average loans on an annualized basis for the first quarter of 2020, compared to $12.5 million or 0.22 percent of average loans on an annualized basis for the fourth quarter of 2019. Net charge-offs were 0.24 percent of average loans over the last four quarters. Gross charge-offs were $18.9 million for the first quarter compared to $14.3 million for the previous quarter. Recoveries totaled $1.7 million for the first quarter of 2020 and $1.8 million for the fourth quarter of 2019.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $12.7 billion at March 31, 2020, a $1.4 billion increase compared to December 31, 2019. At March 31, 2020, the available for sale securities portfolio consisted primarily of $9.3 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.4 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At March 31, 2020, the available for sale securities portfolio had a net unrealized gain of $436 million compared to $138 million at December 31, 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 increased $605 million to $1.7 billion at March 31, 2020.

The net economic benefit of the changes in fair value of mortgage servicing rights and related economic hedges was $2.6 million during the first quarter of 2020. The magnitude of declines in mortgage rates resulted in an $88.5 million decrease in the fair value of mortgage servicing rights. However, our securities and derivatives hedges held as the economic hedge offset that decrease by $86.8 million. We also had $4.3 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, April 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 . 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  or by dialing 1-412-317-6671 and referencing conference ID # 13701466.

About BOK Financial Corporation

BOK Financial Corporation is a $47 billion regional financial services company headquartered in Tulsa, Oklahoma with $76 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 .

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 March 31, 2020 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 Corporation, the financial services industry, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. 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 acquisitions and 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 various forward-looking 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 government, consumer or business responses to, and ability to treat or prevent further outbreak of the COVID-19 pandemic, 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 Corporation 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)
 Mar. 31, 2020 Dec. 31, 2019
ASSETS   
Cash and due from banks$670,500  $735,836 
Interest-bearing cash and cash equivalents302,577  522,985 
Trading securities2,110,585  1,623,921 
Investment securities, net of allowance272,576  293,418 
Available for sale securities12,694,277  11,269,643 
Fair value option securities1,703,238  1,098,577 
Restricted equity securities390,042  460,552 
Residential mortgage loans held for sale204,720  182,271 
Loans:   
Commercial14,795,975  14,031,650 
Commercial real estate4,450,085  4,433,783 
Loans to individuals3,217,910  3,285,554 
Total loans22,463,970  21,750,987 
Allowance for loan losses(315,311) (210,759)
Loans, net of allowance22,148,659  21,540,228 
Premises and equipment, net546,093  535,519 
Receivables207,341  231,811 
Goodwill1,048,091  1,048,091 
Intangible assets, net121,807  125,271 
Mortgage servicing rights110,828  201,886 
Real estate and other repossessed assets, net36,744  20,359 
Derivative contracts, net922,716  323,375 
Cash surrender value of bank-owned life insurance391,006  389,879 
Receivable on unsettled securities sales2,171,881  1,020,404 
Other assets1,065,481  547,995 
TOTAL ASSETS$47,119,162  $42,172,021 
    
LIABILITIES AND EQUITY   
Deposits:   
Demand$9,821,582  $9,461,291 
Interest-bearing transaction16,596,292  15,391,752 
Savings593,805  550,276 
Time2,232,473  2,217,849 
Total deposits29,244,152  27,621,168 
Funds purchased and repurchase agreements4,583,768  3,818,350 
Other borrowings5,529,554  4,527,055 
Subordinated debentures275,942  275,923 
Accrued interest, taxes and expense309,236  259,701 
Due on unsettled securities purchases537,709  182,547 
Derivative contracts, net1,213,445  251,128 
Other liabilities391,196  372,230 
TOTAL LIABILITIES42,085,002  37,308,102 
Shareholders' equity:   
Capital, surplus and retained earnings4,694,956  4,750,872 
Accumulated other comprehensive gain331,292  104,923 
TOTAL SHAREHOLDERS' EQUITY5,026,248  4,855,795 
Non-controlling interests7,912  8,124 
TOTAL EQUITY5,034,160  4,863,919 
TOTAL LIABILITIES AND EQUITY$47,119,162  $42,172,021 



AVERAGE BALANCE SHEETS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands)
 Three Months Ended
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
ASSETS         
Interest-bearing cash and cash equivalents$721,659  $573,203  $500,823  $535,491  $537,903 
Trading securities1,690,104  1,672,426  1,696,568  1,757,335  1,968,399 
Investment securities, net of allowance282,265  298,567  308,090  328,482  343,282 
Available for sale securities11,664,521  11,333,524  10,747,439  9,435,668  8,883,054 
Fair value option securities1,793,480  1,521,528  1,553,879  898,772  594,349 
Restricted equity securities429,133  479,687  476,781  413,812  395,432 
Residential mortgage loans held for sale129,708  203,535  203,319  192,102  145,040 
Loans:         
Commercial14,452,851  14,344,534  14,507,185  14,175,057  13,966,521 
Commercial real estate4,346,886  4,532,649  4,652,534  4,656,861  4,602,149 
Loans to individuals3,143,286  3,358,817  3,253,199  3,172,487  3,197,395 
Total loans21,943,023  22,236,000  22,412,918  22,004,405  21,766,065 
Allowance for loan losses(250,338) (205,417) (201,714) (205,532) (206,092)
Loans, net of allowance21,692,685  22,030,583  22,211,204  21,798,873  21,559,973 
Total earning assets38,403,555  38,113,053  37,698,103  35,360,535  34,427,432 
Cash and due from banks669,369  690,806  717,338  703,294  705,411 
Derivative contracts, net376,621  311,542  331,834  328,802  262,927 
Cash surrender value of bank-owned life insurance390,009  388,012  385,190  384,974  382,538 
Receivable on unsettled securities sales3,046,111  1,973,604  1,742,794  1,437,462  1,224,700 
Other assets2,834,953  2,736,337  2,705,089  2,629,710  2,669,673 
TOTAL ASSETS$45,720,618  $44,213,354  $43,580,348  $40,844,777  $39,672,681 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$9,232,859  $9,612,533  $9,759,710  $9,883,965  $9,988,088 
Interest-bearing transaction16,159,654  14,685,385  13,131,542  12,512,282  11,931,539 
Savings563,821  554,605  557,122  558,738  541,575 
Time2,239,234  2,247,717  2,251,800  2,207,391  2,153,277 
Total deposits28,195,568  27,100,240  25,700,174  25,162,376  24,614,479 
Funds purchased and repurchase agreements3,815,941  4,120,610  3,106,163  2,066,950  2,033,036 
Other borrowings6,542,325  6,247,194  8,125,023  7,175,617  7,040,279 
Subordinated debentures275,932  275,916  275,900  275,887  275,882 
Derivative contracts, net379,342  276,078  300,051  283,484  273,786 
Due on unsettled securities purchases960,780  784,174  745,893  821,688  453,937 
Other liabilities642,764  561,654  547,144  460,732  501,788 
TOTAL LIABILITIES40,812,652  39,365,866  38,800,348  36,246,734  35,193,187 
Total equity4,907,966  4,847,488  4,780,000  4,598,043  4,479,494 
TOTAL LIABILITIES AND EQUITY$45,720,618  $44,213,354  $43,580,348  $40,844,777  $39,672,681 



STATEMENTS OF EARNINGS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except per share data)
 Three Months Ended
 March 31,
 2020 2019
    
Interest revenue$348,937  $376,074 
Interest expense87,577  97,972 
Net interest revenue261,360  278,102 
Provision for credit losses93,771  8,000 
Net interest revenue after provision for credit losses167,589  270,102 
Other operating revenue:   
Brokerage and trading revenue50,779  31,617 
Transaction card revenue21,881  20,738 
Fiduciary and asset management revenue44,458  43,358 
Deposit service charges and fees26,130  28,243 
Mortgage banking revenue37,167  23,834 
Other revenue12,309  12,762 
Total fees and commissions192,724  160,552 
Other gains (losses), net(10,741) 2,976 
Gain on derivatives, net18,420  4,667 
Gain on fair value option securities, net68,393  9,665 
Change in fair value of mortgage servicing rights(88,480) (20,666)
Gain on available for sale securities, net3  76 
Total other operating revenue180,319  157,270 
Other operating expense:   
Personnel156,181  169,228 
Business promotion6,215  7,874 
Professional fees and services12,948  16,139 
Net occupancy and equipment26,061  29,521 
Insurance4,980  4,839 
Data processing and communications32,743  31,449 
Printing, postage and supplies4,272  4,885 
Net losses and operating expenses of repossessed assets1,531  1,996 
Amortization of intangible assets5,094  5,191 
Mortgage banking costs10,545  9,906 
Other expense8,054  6,129 
Total other operating expense268,624  287,157 
    
Net income before taxes79,284  140,215 
Federal and state income taxes17,300  29,950 
    
Net income61,984  110,265 
Net loss attributable to non-controlling interests(95) (347)
Net income attributable to BOK Financial Corporation shareholders$62,079  $110,612 
    
Average shares outstanding:   
Basic70,123,685  71,387,070 
Diluted70,130,166  71,404,388 
    
Net income per share:   
Basic$0.88  $1.54 
Diluted$0.88  $1.54 



FINANCIAL HIGHLIGHTS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except ratio and share data)
 Three Months Ended
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
Capital:         
Period-end shareholders' equity$5,026,248  $4,855,795  $4,829,016  $4,709,438  $4,522,873 
Risk weighted assets$32,973,242  $31,673,425  $32,159,139  $32,040,741  $31,601,558 
Risk-based capital ratios:         
Common equity tier 110.98% 11.39% 11.06% 10.84% 10.71%
Tier 110.98% 11.39% 11.06% 10.84% 10.71%
Total capital12.58% 12.94% 12.56% 12.34% 12.24%
Leverage ratio8.16% 8.40% 8.41% 8.75% 8.76%
Tangible common equity ratio18.39% 8.98% 8.72% 8.69% 8.64%
          
Common stock:         
Book value per share$71.49  $68.80  $68.15  $66.15  $63.30 
Tangible book value per share54.85  52.17  51.60  49.68  46.82 
Market value per share:         
High$87.40  $88.28  $84.35  $88.17  $93.72 
Low$34.57  $71.85  $72.96  $72.60  $72.11 
Cash dividends paid$35,949  $36,011  $35,472  $35,631  $35,885 
Dividend payout ratio57.91% 32.63% 24.94% 25.90% 32.44%
Shares outstanding, net70,308,532  70,579,598  70,858,010  71,193,770  71,449,982 
Stock buy-back program:         
Shares repurchased442,000  280,000  336,713  250,000  705,609 
Amount$33,380  $22,844  $25,937  $20,125  $60,577 
Average price per share$75.52  $81.59  $77.03  $80.50  $85.85 
          
Performance ratios (quarter annualized):
Return on average assets0.55% 0.99% 1.29% 1.35% 1.13%
Return on average equity5.10% 9.05% 11.83% 12.02% 10.04%
Net interest margin2.80% 2.88% 3.01% 3.30% 3.30%
Efficiency ratio58.62% 63.65% 59.31% 59.51% 64.80%
          
Reconciliation of non-GAAP measures:
1  Tangible common equity ratio:         
Total shareholders' equity$5,026,248  $4,855,795  $4,829,016  $4,709,438  $4,522,873 
Less: Goodwill and intangible assets, net1,169,898  1,173,362  1,172,411  1,172,564  1,177,573 
Tangible common equity$3,856,350  $3,682,433  $3,656,605  $3,536,874  $3,345,300 
          
Total assets$47,119,162  $42,172,021  $43,127,205  $41,893,073  $39,882,962 
Less: Goodwill and intangible assets, net1,169,898  1,173,362  1,172,411  1,172,564  1,177,573 
Tangible assets$45,949,264  $40,998,659  $41,954,794  $40,720,509  $38,705,389 
          
Tangible common equity ratio8.39% 8.98% 8.72% 8.69% 8.64%
          
Other data:         
Tax equivalent interest$2,715  $2,726  $2,936  $3,481  $2,529 
Net unrealized gain (loss) on available for sale securities$435,989  $138,149  $178,060  $131,780  $(2,609)
          
Mortgage banking:         
Mortgage production revenue$21,570  $9,169  $13,814  $11,869  $7,868 
          
Mortgage loans funded for sale$548,956  $855,643  $877,280  $729,841  $510,527 
Add: current period-end outstanding commitments657,570  158,460  379,377  344,087  263,434 
Less: prior period end outstanding commitments158,460  379,377  344,087  263,434  160,848 
Total mortgage production volume$1,048,066  $634,726  $912,570  $810,494  $613,113 
          
Mortgage loan refinances to mortgage loans funded for sale57% 57% 56% 31% 30%
Gain on sale margin2.06% 1.44% 1.51% 1.46% 1.28%
          
Mortgage servicing revenue$15,597  $16,227  $16,366  $16,262  $15,966 
Average outstanding principal balance of mortgage loans serviced for others20,416,546  20,856,446  21,172,874  21,418,690  21,581,835 
Average mortgage servicing revenue rates0.31% 0.31% 0.31% 0.30% 0.30%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$18,371  $(4,714) $3,742  $11,128  $4,432 
Gain (loss) on fair value option securities, net68,393  (8,328) 4,597  9,853  9,665 
Gain (loss) on economic hedge of mortgage servicing rights86,764  (13,042) 8,339  20,981  14,097 
Gain (loss) on changes in fair value of mortgage servicing rights(88,480) 9,297  (12,593) (29,555) (20,666)
Loss on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue(1,716) (3,745) (4,254) (8,574) (6,569)
Net interest revenue on fair value option securities24,268  1,544  1,245  1,296  1,129 
Total economic cost of changes in the fair value of mortgage servicing rights, net of economic hedges$2,552  $(2,201) $(3,009) $(7,278) $(5,440)

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
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
          
Interest revenue$348,937  $369,857  $395,207  $390,820  $376,074 
Interest expense87,577  99,608  116,111  105,388  97,972 
Net interest revenue261,360  270,249  279,096  285,432  278,102 
Provision for credit losses93,771  19,000  12,000  5,000  8,000 
Net interest revenue after provision for credit losses167,589  251,249  267,096  280,432  270,102 
Other operating revenue:         
Brokerage and trading revenue50,779  43,843  43,840  40,526  31,617 
Transaction card revenue21,881  22,548  22,015  21,915  20,738 
Fiduciary and asset management revenue44,458  45,021  43,621  45,025  43,358 
Deposit service charges and fees26,130  27,331  28,837  28,074  28,243 
Mortgage banking revenue37,167  25,396  30,180  28,131  23,834 
Other revenue12,309  15,283  17,626  12,437  12,762 
Total fees and commissions192,724  179,422  186,119  176,108  160,552 
Other gains (losses), net(10,741) (1,649) 4,544  3,480  2,976 
Gain (loss) on derivatives, net18,420  (4,644) 3,778  11,150  4,667 
Gain (loss) on fair value option securities, net68,393  (8,328) 4,597  9,853  9,665 
Change in fair value of mortgage servicing rights(88,480) 9,297  (12,593) (29,555) (20,666)
Gain on available for sale securities, net3  4,487  5  1,029  76 
Total other operating revenue180,319  178,585  186,450  172,065  157,270 
Other operating expense:         
Personnel156,181  168,422  162,573  160,342  169,228 
Business promotion6,215  8,787  8,859  10,142  7,874 
Charitable contributions to BOKF Foundation  2,000    1,000   
Professional fees and services12,948  13,408  12,312  13,002  16,139 
Net occupancy and equipment26,061  26,316  27,558  26,880  29,521 
Insurance4,980  5,393  4,220  6,454  4,839 
Data processing and communications32,743  31,884  31,915  29,735  31,449 
Printing, postage and supplies4,272  3,700  3,825  4,107  4,885 
Net losses and operating expenses of repossessed assets1,531  2,403  1,728  580  1,996 
Amortization of intangible assets5,094  5,225  5,064  5,138  5,191 
Mortgage banking costs10,545  14,259  14,975  11,545  9,906 
Other expense8,054  6,998  6,263  8,212  6,129 
Total other operating expense268,624  288,795  279,292  277,137  287,157 
Net income before taxes79,284  141,039  174,254  175,360  140,215 
Federal and state income taxes17,300  30,257  32,396  37,580  29,950 
Net income61,984  110,782  141,858  137,780  110,265 
Net income (loss) attributable to non-controlling interests(95) 430  (373) 217  (347)
Net income attributable to BOK Financial Corporation shareholders$62,079  $110,352  $142,231  $137,563  $110,612 
          
Average shares outstanding:         
Basic70,123,685  70,295,899  70,596,307  70,887,063  71,387,070 
Diluted70,130,166  70,309,644  70,609,924  70,902,033  71,404,388 
Net income per share:         
Basic$0.88  $1.56  $2.00  $1.93  $1.54 
Diluted$0.88  $1.56  $2.00  $1.93  $1.54 



LOANS TREND -- UNAUDITED

BOK FINANCIAL CORPORATION

(In thousands)
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
Commercial:         
Energy$4,111,676  $3,973,377  $4,114,269  $3,921,353  $3,705,099 
Healthcare3,165,096  3,033,916  3,032,968  2,926,510  2,915,885 
Services3,955,748  3,832,031  4,011,089  4,105,117  4,090,646 
General business3,563,455  3,192,326  3,266,299  3,383,928  3,250,345 
Total commercial14,795,975  14,031,650  14,424,625  14,336,908  13,961,975 
          
Commercial real estate4,450,085  4,433,783  4,626,057  4,710,033  4,600,651 
          
Loans to individuals:         
Permanent mortgage1,844,555  1,886,378  1,925,539  1,975,449  1,999,312 
Permanent mortgages guaranteed by U.S. government agencies197,889  197,794  191,764  195,373  193,308 
Personal1,175,466  1,201,382  1,117,382  1,037,889  1,003,734 
Total loans to individuals3,217,910  3,285,554  3,234,685  3,208,711  3,196,354 
          
Total$22,463,970  $21,750,987  $22,285,367  $22,255,652  $21,758,980 



LOANS MANAGED BY PRINCIPAL MARKET AREA -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands)
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
          
Texas:         
Commercial$6,350,690  $6,174,894  $6,220,227  $5,877,265  $5,754,018 
Commercial real estate1,296,266  1,259,117  1,292,116  1,341,609  1,344,810 
Loans to individuals756,634  727,175  749,361  673,463  662,721 
Total Texas8,403,590  8,161,186  8,261,704  7,892,337  7,761,549 
          
Oklahoma:         
Commercial3,886,086  3,454,825  3,690,100  3,762,234  3,551,054 
Commercial real estate593,473  631,026  679,786  717,970  665,190 
Loans to individuals1,788,518  1,854,864  1,753,698  1,786,162  1,792,188 
Total Oklahoma6,268,077  5,940,715  6,123,584  6,266,366  6,008,432 
          
Colorado:         
Commercial2,181,309  2,169,598  2,247,798  2,325,742  2,231,703 
Commercial real estate955,608  927,826  975,066  1,023,410  957,348 
Loans to individuals268,674  276,939  303,605  314,317  307,534 
Total Colorado3,405,591  3,374,363  3,526,469  3,663,469  3,496,585 
          
Arizona:         
Commercial1,396,582  1,307,073  1,276,534  1,330,415  1,335,140 
Commercial real estate714,161  728,832  771,425  761,243  791,466 
Loans to individuals181,821  186,539  170,815  168,019  160,848 
Total Arizona2,292,564  2,222,444  2,218,774  2,259,677  2,287,454 
          
Kansas/Missouri:         
Commercial556,255  527,872  566,969  602,836  667,859 
Commercial real estate310,799  322,541  374,795  331,443  327,870 
Loans to individuals116,734  131,069  146,522  155,453  157,391 
Total Kansas/Missouri983,788  981,482  1,088,286  1,089,732  1,153,120 
          
New Mexico:         
Commercial327,164  305,320  335,409  350,520  342,915 
Commercial real estate434,150  402,148  374,331  385,058  371,416 
Loans to individuals87,110  90,257  92,270  92,626  96,391 
Total New Mexico848,424  797,725  802,010  828,204  810,722 
          
Arkansas:         
Commercial97,889  92,068  87,588  87,896  79,286 
Commercial real estate145,628  162,293  158,538  149,300  142,551 
Loans to individuals18,419  18,711  18,414  18,671  19,281 
Total Arkansas261,936  273,072  264,540  255,867  241,118 
          
TOTAL BOK FINANCIAL$22,463,970  $21,750,987  $22,285,367  $22,255,652  $21,758,980 

Loans attributed to a principal market may not always represent the location of the borrower or the collateral.

DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands)
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
Oklahoma:         
Demand$3,669,558  $3,257,337  $3,515,312  $3,279,360  $3,432,239 
Interest-bearing:         
Transaction9,955,697  8,574,912  7,447,799  7,020,484  6,542,548 
Savings329,631  306,194  308,103  307,785  309,875 
Time1,137,802  1,125,446  1,198,170  1,253,804  1,217,371 
Total interest-bearing11,423,130  10,006,552  8,954,072  8,582,073  8,069,794 
Total Oklahoma15,092,688  13,263,889  12,469,384  11,861,433  11,502,033 
          
Texas:         
Demand2,767,399  2,757,376  2,867,915  2,970,340  2,964,600 
Interest-bearing:         
Transaction2,874,362  2,911,731  2,589,063  2,453,187  2,385,001 
Savings115,039  102,456  100,597  103,125  101,849 
Time505,565  495,343  464,264  425,253  419,269 
Total interest-bearing3,494,966  3,509,530  3,153,924  2,981,565  2,906,119 
Total Texas6,262,365  6,266,906  6,021,839  5,951,905  5,870,719 
          
Colorado:         
Demand1,579,764  1,729,674  1,694,044  1,621,820  1,897,547 
Interest-bearing:         
Transaction1,759,384  1,769,037  1,910,874  1,800,271  1,844,632 
Savings58,000  53,307  60,107  57,263  58,919 
Time279,105  283,517  273,622  246,198  261,235 
Total interest-bearing2,096,489  2,105,861  2,244,603  2,103,732  2,164,786 
Total Colorado3,676,253  3,835,535  3,938,647  3,725,552  4,062,333 
          
New Mexico:         
Demand750,052  623,722  645,698  630,861  662,362 
Interest-bearing:         
Transaction563,891  558,493  539,260  557,881  573,203 
Savings67,553  63,999  62,863  62,636  61,497 
Time235,778  238,140  236,135  232,569  228,212 
Total interest-bearing867,222  860,632  838,258  853,086  862,912 
Total New Mexico1,617,274  1,484,354  1,483,956  1,483,947  1,525,274 
          
Arizona:         
Demand665,396  681,268  705,895  704,144  697,381 
Interest-bearing:         
Transaction729,603  684,929  600,103  560,861  622,039 
Savings8,832  10,314  12,487  11,966  12,144 
Time47,081  49,676  44,347  43,099  44,004 
Total interest-bearing785,516  744,919  656,937  615,926  678,187 
Total Arizona1,450,912  1,426,187  1,362,832  1,320,070  1,375,568 
          
Kansas/Missouri:         
Demand318,985  384,533  376,020  431,856  410,799 
Interest-bearing:         
Transaction537,552  784,574  284,940  310,774  361,590 
Savings12,888  12,169  11,689  13,125  13,815 
Time19,137  17,877  19,126  19,205  19,977 
Total interest-bearing569,577  814,620  315,755  343,104  395,382 
Total Kansas/Missouri888,562  1,199,153  691,775  774,960  806,181 
          
Arkansas:         
Demand70,428  27,381  39,513  29,176  31,624 
Interest-bearing:         
Transaction175,803  108,076  149,506  148,485  147,964 
Savings1,862  1,837  1,747  1,783  1,785 
Time8,005  7,850  7,877  7,810  8,321 
Total interest-bearing185,670  117,763  159,130  158,078  158,070 
Total Arkansas256,098  145,144  198,643  187,254  189,694 
          
TOTAL BOK FINANCIAL$29,244,152  $27,621,168  $26,167,076  $25,305,121  $25,331,802 



NET INTEREST MARGIN TREND -- UNAUDITED

BOK FINANCIAL CORPORATION
 Three Months Ended
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents1.33% 1.62% 2.42% 2.57% 2.56%
Trading securities2.89% 3.19% 3.49% 3.59% 3.88%
Investment securities, net of allowance4.73% 4.69% 4.46% 4.41% 4.50%
Available for sale securities2.48% 2.52% 2.60% 2.63% 2.57%
Fair value option securities2.67% 2.62% 2.79% 3.34% 3.62%
Restricted equity securities5.49% 5.37% 6.34% 6.30% 6.42%
Residential mortgage loans held for sale3.50% 3.55% 3.73% 3.65% 4.58%
Loans4.50% 4.75% 5.12% 5.39% 5.26%
Allowance for loan losses         
Loans, net of allowance4.55% 4.80% 5.17% 5.45% 5.31%
Total tax-equivalent yield on earning assets3.73% 3.93% 4.25% 4.51% 4.46%
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
Interest-bearing transaction0.89% 1.00% 1.08% 1.04% 0.94%
Savings0.09% 0.11% 0.14% 0.12% 0.12%
Time1.83% 1.94% 1.94% 1.90% 1.80%
Total interest-bearing deposits0.98% 1.09% 1.17% 1.13% 1.04%
Funds purchased and repurchase agreements1.14% 1.56% 2.01% 2.08% 2.07%
Other borrowings1.66% 2.01% 2.42% 2.67% 2.68%
Subordinated debt5.30% 5.40% 5.48% 5.53% 5.50%
Total cost of interest-bearing liabilities1.19% 1.40% 1.68% 1.70% 1.66%
Tax-equivalent net interest revenue spread2.54% 2.53% 2.57% 2.81% 2.80%
Effect of noninterest-bearing funding sources and other0.26% 0.35% 0.44% 0.49% 0.50%
Tax-equivalent net interest margin2.80% 2.88% 3.01% 3.30% 3.30%

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
 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 Mar. 31, 2019
Nonperforming assets:         
Nonaccruing loans:         
Commercial:         
Energy$96,448  $91,722  $88,894  $71,632  $35,332 
Healthcare4,070  4,480  5,978  16,148  18,768 
Services8,425  7,483  6,119  10,087  9,555 
General business9,681  11,731  10,715  25,528  26,703 
Total commercial118,624  115,416  111,706  123,395  90,358 
          
Commercial real estate8,545  27,626  23,185  21,670  21,508 
          
Loans to individuals:         
Permanent mortgage30,721  31,522  30,972  31,734  33,463 
Permanent mortgage guaranteed by U.S. government agencies5,005  6,100  6,332  6,743  6,946 
Personal277  287  271  237  302 
Total loans to individuals36,003  37,909  37,575  38,714  40,711 
          
Total nonaccruing loans$163,172  $180,951  $172,466  $183,779  $152,577 
Accruing renegotiated loans guaranteed by U.S. government agencies91,757  92,452  92,718  95,989  91,787 
Real estate and other repossessed assets36,744  20,359  21,026  16,940  17,139 
Total nonperforming assets$291,673  $293,762  $286,210  $296,708  $261,503 
Total nonperforming assets excluding those guaranteed by U.S. government agencies194,911  195,210  187,160  193,976  162,770 
          
Accruing loans 90 days past due23,706  7,680  1,541  2,698  610 
          
Gross charge-offs$18,917  $14,268  $11,707  $13,227  $11,775 
Recoveries(1,696) (1,816) (1,066) (5,503) (1,689)
Net charge-offs$17,221  $12,452  $10,641  $7,724  $10,086 
          
Provision for loan losses$95,964  $18,779  $12,539  $4,918  $7,969 
Provision for credit losses from off-balance sheet unfunded loan commitments3,377  221  (539) 82  31 
Provision for expected credit losses from mortgage banking acitivities1(6,020)        
Provision for credit losses related to held-to maturity (investment) securities portfolio1450         
Total provision for credit losses$93,771  $19,000  $12,000  $5,000  $8,000 
          
Allowance for loan losses to period end loans1.40% 0.97% 0.92% 0.91% 0.94%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans1.53% 0.98% 0.92% 0.92% 0.95%
Nonperforming assets to period end loans and repossessed assets1.30% 1.35% 1.28% 1.33% 1.20%
Net charge-offs (annualized) to average loans0.31% 0.22% 0.19% 0.14% 0.19%
Allowance for loan losses to nonaccruing loans2199.35% 120.54% 123.05% 114.40% 141.00%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans2217.38% 121.44% 123.87% 115.48% 142.25%

1   Included in Provision for credit losses effective with implementation of CECL on January 1, 2020.

2   Excludes residential mortgage loans guaranteed by agencies of the U.S. government.



SEGMENTS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except ratios)
  Three Months Ended Change
Commercial Banking Mar. 31, 2020 Dec. 31, 2019 Mar. 31, 201911Q20 vs

4Q19
 1Q20 vs

1Q19
Net interest revenue $151,407  $162,240  $150,571  (6.7)% 0.6%
Fees and commissions revenue 41,459  43,357  38,046  (4.4)% 9.0%
Other operating expense 60,752  69,290  50,627  (12.3)% 20.0%
Corporate expense allocations 8,905  11,176  9,455  (20.3)% (5.8)%
Net income 74,975  82,019  85,521  (8.6)% (12.3)%
           
Average assets 24,687,976  24,346,565  19,937,878  1.4% 23.8%
Average loans 18,812,015  19,100,101  15,988,843  (1.5)% 17.7%
Average deposits 11,907,386  11,419,558  8,261,543  4.3% 44.1%
           
Consumer Banking          
Net interest revenue $43,932  $43,176  $51,102  1.8% (14.0)%
Fees and commissions revenue 55,062  44,884  42,821  22.7% 28.6%
Other operating expense 54,793  59,702  53,821  (8.2)% 1.8%
Corporate expense allocations 10,487  11,798  11,900  (11.1)% (11.9)%
Net income 27,408  8,287  15,337  230.7% 78.7%
           
Average assets 9,850,853  9,772,710  8,371,683  0.8% 17.7%
Average loans 1,711,703  1,730,467  1,750,642  (1.1)% (2.2)%
Average deposits 6,869,481  6,974,453  6,544,665  (1.5)% 5.0%
           
Wealth Management          
Net interest revenue $18,904  $21,826  $28,256  (13.4)% (33.1)%
Fees and commissions revenue 97,881  92,729  73,256  5.6% 33.6%
Other operating expense 78,192  74,688  61,507  4.7% 27.1%
Corporate expense allocations 8,265  9,296  8,360  (11.1)% (1.1)%
Net income 22,573  22,863  23,719  (1.3)% (4.8)%
           
Average assets 12,723,412  11,225,207  9,328,986  13.3% 36.4%
Average loans 1,705,735  1,667,278  1,448,718  2.3% 17.7%
Average deposits 7,623,986  7,301,391  5,659,771  4.4% 34.7%
Fiduciary assets 47,053,101  52,352,135  46,401,149  (10.1)% 1.4%
Assets under management or administration 75,783,829  82,740,961  78,852,284  (8.4)% (3.9)%

1    Acquired assets and liabilities were allocated to segments in the second quarter of 2019.

EN
22/04/2020

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