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CST: 22/08/2019 17:52:54   

BOK Financial Reports Quarterly Earnings of $108 million or $1.50 Per Share

204 Days ago

Record Annual Earnings of $446 million or $6.63 Per Share

TULSA, Okla., Jan. 30, 2019 (GLOBE NEWSWIRE) --

CEO Commentary

Steven G. Bradshaw, president, and chief executive officer, stated, “Another strong quarter was the capstone on a record year for BOK Financial. This quarter, and all throughout the year, we saw growth in net interest margin and net interest income, combined with strong, broad-based, loan growth. This year’s outstanding loan production, led by our specialty lines of business like Energy, Healthcare and Commercial Real Estate, fueled the largest annual revenues in the history of the company. While we benefited from a healthy economy and stable credit environment in 2018, the key driver for our expanding earnings leverage was our success at maintaining expense discipline throughout the year. I couldn’t be more proud of the hard work and dedication of every single one of our employees.”

Bradshaw continued, “2018 also brought the largest acquisition in company history, CoBiz Financial. Integration is well underway, and we are already capitalizing on our opportunities in Colorado and Arizona - two important growth markets. I am excited for what CoBiz adds to our organization, and I am as confident in our business prospects today as I have been in years. Though there are some market headwinds that many will point to as potential roadblocks for the financial industry, I have full faith in our diversified approach to driving shareholder value. We believe we are well-positioned to continue to grow revenues and energize earnings growth in 2019.”

Fourth Quarter 2018 Financial Highlights

  • Net income was $108.5 million or $1.50 per diluted share for the fourth quarter of 2018 and $117.3 million and $1.79 per diluted share for the third quarter of 2018. The fourth quarter included a 15 cent per share reduction as a result of CoBiz closing and integrations costs. The third quarter included an 18 cent per share addition from a client asset management fee. The Company also issued 7.2 million shares in the fourth quarter to fund the CoBiz Financial acquisition.
  • Net interest revenue totaled $285.7 million, up $44.8 million. CoBiz added $43.1 million. Net interest margin increased to 3.40 percent from 3.21 percent.
  • Fees and commissions revenue totaled $160.1 million, a decrease of $6.1 million or 4 percent.
  • Operating expense increased $32.0 million or 13 percent to $284.6 million, including $14.5 million of closing and integration costs. CoBiz added $29.7 million of operating costs.
  • A $9.0 million provision for credit losses was recorded in the fourth quarter of 2018. The combined allowance for credit losses totaled $209 million or 0.97 percent of outstanding loans and 1.12 percent of outstanding loans, excluding acquired loans.
  • Period-end loans increased $3.3 billion. Excluding $2.9 billion of acquired loans, period-end loans increased $393 million or 2 percent.
  • The Company repurchased 525,000 shares at an average price of $85.82 per share.

Fourth Quarter 2018 Business Segment Highlights

Commercial Banking

  • Contributed $84.6 million to net income, consistent with the prior quarter. Increased net interest revenue was offset by increased net charge-offs.
  • Net interest revenue was $148 million, an increase of $3.2 million.
  • Average loans increased $307 million or 2 percent.

Consumer Banking

  • Contributed $2.7 million to net income, a decrease of $5.6 million compared to the third quarter. Interest rate volatility affected the effectiveness of our mortgage servicing rights hedging strategy.
  • Net interest revenue increased $2.3 million or 6 percent.
  • Fees and commissions revenue decreased $1.2 million or 3 percent while operating expenses decreased $1.9 million or 4 percent.

Wealth Management

  • Contributed $17.5 million to net income, a decrease of $11.6 million compared to the prior quarter. The third quarter included a $15.4 million fee earned on the sale of client assets.
  • Net interest revenue remained consistent compared to the prior quarter at $29.3 million.
  • Average loans grew $9.0 million or 1 percent.
  • Assets under management or administration were $76.3 billion at December 31, 2018 compared to $77.6 billion at September 30, 2018. Fiduciary assets totaled $44.8 billion at December 31, 2018 and $45.6 billion at September 30, 2018.

Net Interest Revenue

Net interest revenue was $285.7 million for the fourth quarter of 2018, a $44.8 million increase over the third quarter of 2018.  The CoBiz acquisition added $43.1 million to net interest revenue, including $6.4 million of net purchase accounting discount accretion.

Net interest margin was 3.40 percent for the fourth quarter of 2018, up 19 basis points over the third quarter of 2018. The yield on average earning assets was 4.33 percent, a 29 basis point increase. The yield on the loan portfolio was 5.09 percent, up 29 basis points including 12 basis points from net purchase accounting discount accretion. The remaining increase is due primarily to an increase in short-term market interest rates related to the Federal Reserve's 25 basis point rate increase in September. The yield on the available for sale securities portfolio increased 14 basis points to 2.51 percent. The yield on the trading securities portfolio was up 12 basis points.

Funding costs were 1.42 percent, up 17 basis points. The cost of interest-bearing deposits increased 10 basis points to 0.87 percent. The cost of other borrowed funds was up 29 basis points to 2.33 percent. The benefit to net interest margin from assets funded by non-interest liabilities increased to 49 basis points from 42 basis points in the third quarter of 2018.

Average earning assets increased $3.8 billion compared to the third quarter of 2018, primarily related to the CoBiz acquisition. Average loan balances were up $3.4 billion. Trading securities balances increased $167 million and interest-bearing cash and cash equivalents balances decreased $126 million. Available for sale securities increased $576 million. Average interest-bearing deposit balances increased $1.8 billion compared to the third quarter of 2018 and borrowed funds increased $608 million.

Fees and Commissions Revenue

Fees and commissions revenue totaled $160.1 million for the fourth quarter of 2018, a decrease of $6.1 million due largely to a $15.4 million fee earned on the sale of client assets in the third quarter. CoBiz added $8.5 million to fees and commissions revenue in the fourth quarter of 2018. Excluding these items, fees and commissions revenue was consistent with the prior quarter.

Brokerage and trading revenue increased $1.6 million due primarily to customer risk management products.

Mortgage banking revenue decreased $1.7 million. Rising interest rates combined with seasonal production reductions and increased market competition decreased mortgage production volume by $137 million. Mortgage gain on sale margins decreased 11 basis points.

Operating Expense

Total operating expense was $284.6 million for the fourth quarter of 2018, an increase of $32.0 million compared to the third quarter of 2018. CoBiz closing and integration costs were $14.5 million in the fourth quarter of 2018. The following discussion excludes the impact of these costs.

Personnel expense increased $11.5 million including $19.3 million due to the addition of CoBiz operations. Incentive compensation expense decreased $10.8 million mainly due to changes in vesting assumptions related to the Company's earnings per share growth relative to a defined peer group.

Non-personnel expense increased $6.8 million. The fourth quarter included $10.4 million related to CoBiz operations. Excluding this impact, non-personnel expense decreased $3.6 million or 3 percent. Data processing and communications expense decreased $4.1 million, primarily due to impairment of a software license in the third quarter. Insurance expense decreased $2.0 million due to the elimination of a large bank deposit insurance surcharge assessed by the FDIC. The fourth quarter included a $2.8 million contribution to the BOKF Foundation.

Income Taxes

The effective tax rate for the fourth quarter is less than 16 percent, nearly 7 percentage points lower than usual. The 2017 tax returns were finalized in the fourth quarter. This resolved several uncertainties caused by last year's Tax Cuts and Jobs Act. Resolution of these uncertainties and other routine adjustments reduced tax expense for the quarter by $8.6 million. This is a single-quarter impact and the tax rate will revert to a 22-23 percent level.

Loans, Deposits and Capital

Loans

Outstanding loans were $21.7 billion at December 31, 2018, up $3.3 billion over September 30, 2018. Excluding $2.9 billion of loans, net of fair value adjustments, added by the CoBiz acquisition, loans were up $393 million or 2 percent. Loan growth continued to be focused in commercial and commercial real estate. The fluctuation discussion following excludes acquired loans.

Outstanding commercial loan balances grew by $230 million or 2 percent over September 30, 2018. Energy loan balances were up $275 million, consistent with our ongoing support and commitment to the oil and gas industry. Other commercial and industrial loans were up $125 million. Service sector loans increased $50 million and healthcare sector loans increased by $47 million. This growth was partially offset by a $182 million decrease in wholesale/retail sector loans and an $82 million decrease in manufacturing sector loans.

Commercial real estate loan balances continued to grow, up $122 million or 3 percent over September 30, 2018. Loans secured by office buildings increased $79 million and loans secured by multifamily residential properties increased $40 million.

Deposits

Period-end deposits totaled $25.3 billion at December 31, 2018, a $3.6 billion increase compared to September 30, 2018, including $3.3 billion related to CoBiz. Demand deposit balances increased $1.4 billion, interest-bearing transaction account balances increased $2.2 billion and time deposit balances increased by $38 million.

Capital

The company's common equity Tier 1 capital ratio was 10.92 percent at December 31, 2018. In addition, the company's Tier 1 capital ratio was 10.92 percent, total capital ratio was 12.50 percent, and leverage ratio was 8.96 percent at December 31, 2018. At September 30, 2018, the company's common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.37 percent, and leverage ratio was 9.90 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.82 percent at December 31, 2018 and 9.55 percent at September 30, 2018. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

Credit Quality

Nonperforming assets totaled $267 million or 1.23 percent of outstanding loans and repossessed assets at December 31, 2018, compared to $261 million or 1.42 percent at September 30, 2018. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $174 million or 0.81 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at December 31, 2018, compared to $170 million or 0.93 percent at September 30, 2018. The CoBiz acquisition added $18 million to nonperforming assets during the fourth quarter, net of fair value adjustments.

Nonaccruing loans were $163 million or 0.75 percent of outstanding loans at December 31, 2018. Nonaccruing commercial loans totaled $100 million or 0.73 percent of outstanding commercial loans.  Nonaccruing commercial real estate loans totaled $22 million or 0.45 percent of outstanding commercial real estate loans. Nonaccruing residential mortgage loans totaled $42 million or 1.86 percent of outstanding residential mortgage loans.

Excluding CoBiz, nonaccruing loans decreased $2.2 million from September 30, 2018. Wholesale/retail sector loans decreased $8.6 million, energy loans decreased $7.5 million and healthcare sector loans decreased $4.6 million. These decreases were partially offset by a $20 million increase in nonaccruing retail sector loans. New nonaccruing loans identified in the fourth quarter totaled $44 million, offset by $31 million in payments received and $15 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 $215 million at December 31, compared to $176 million at September 30. The increase was primarily due to the addition of $65 million of acquired potential problem loans. Potential problem loans from the legacy BOKF portfolio decreased $26 million.

Net charge-offs were $12.3 million or 0.23 percent of average loans on an annualized basis for fourth quarter of 2018, compared to $9.0 million or 0.20 percent of average loans on an annualized basis for the third quarter of 2018. Net charge-offs were 0.18 percent of average loans over the last four quarters. Net charge-offs for the fourth quarter were primarily related to a single wholesale/retail sector borrower and a single energy production borrower, both of which had previously been identified as impaired and appropriately reserved. Gross charge-offs were $14.5 million for the fourth quarter compared to $11.1 million for the previous quarter. Recoveries totaled $2.2 million for the fourth quarter of 2018 and $2.1 million for the third quarter of 2018.

Based on an evaluation of all credit factors, including overall loan portfolio growth, changes in nonaccruing and potential problem loans and net charge-offs, the company determined that a $9.0 million provision for credit losses was appropriate for the fourth quarter of 2018. The company recorded $4.0 million provision for credit losses in the third quarter of 2018.

The combined allowance for credit losses totaled $209 million or 0.97 percent of outstanding loans and 134 percent of nonaccruing loans at December 31, excluding residential mortgage loans guaranteed by U.S. government agencies. Excluding loans from the CoBiz acquisition, which are measured at acquisition-date fair value, the combined allowance for loan losses was 1.12 percent of outstanding loans and 146 percent of nonaccruing loans at December 31. The allowance for loan losses was $207 million and the accrual for off-balance sheet credit losses was $1.8 million. At September 30, the combined allowance for credit losses was $213 million or 1.16 percent of outstanding loans and 146 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $211 million and the accrual for off-balance sheet credit losses was $2.0 million.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $8.9 billion at December 31, 2018, a $785 million increase compared to September 30, 2018. At December 31, 2018, the available for sale securities portfolio consisted primarily of $5.8 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.0 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2018, the available for sale securities portfolio had a net unrealized loss of $95 million compared to a $217 million net unrealized loss at September 30, 2018.

Trading securities increased $344 million to $2.0 billion during the fourth quarter of 2018 as a result of the company providing continued liquidity to its core client base of mortgage originators. The company holds an inventory of trading securities in support of sales to a variety of customers, including banks, corporations, insurance companies, money managers, and others.

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.

The net economic cost of the changes in fair value of mortgage servicing rights and related economic hedges was $11.7 million during the fourth quarter of 2018,  including a $24.2 million decrease in the fair value of mortgage servicing rights, a $11.9 million increase in the fair value of securities and derivative contracts held as an economic hedge, and $695 thousand of related net interest revenue largely driven by a 60 basis point drop in the primary mortgage interest rate in the last two months of the fourth quarter.

The fair value of mortgage servicing rights increased by $6.0 million during the third quarter of 2018.  The fair value of securities and interest rate derivative contracts held as an economic hedge of mortgage servicing rights decreased by $7.2 million. Related net interest revenue was $1.1 million during the third quarter of 2018.

Commercial Banking

Net income for Commercial Banking was $84.6 million for the fourth quarter of 2018, consistent with the third quarter of 2018. Increased net interest revenue was offset by increased net charge-offs.

Average loan balances increased $307 million or 2 percent, largely due to increases in energy and commercial real estate loans. Average customer deposits were $8.4 billion, a decrease of $240 million or 3 percent, mostly due to the energy and real estate sectors. The fourth quarter of 2018 saw a shift in the deposit mix with demand deposit balances declining $330 million and interest-bearing transaction deposits increasing $95 million.

Both fees and commissions revenue and operating expenses were consistent with the third quarter of 2018. There has been continued success in leading syndicated loan transactions, which has led to a record year for syndication revenue.

Consumer Banking

Net income from Consumer Banking was $2.7 million in the fourth quarter of 2018, a decrease of $5.6 million or 67 percent. The net economic cost of the changes in fair value of mortgage servicing rights and related economic hedges was $11.7 million for the fourth quarter of 2018 compared to $156 thousand for the third quarter of 2018.

Net interest revenue from Consumer Banking activities increased $2.3 million. Average loans increased $26 million or 2 percent over the third quarter of 2018. Average deposits decreased $38 million or 1 percent due to a seasonal reduction in mortgage escrow accounts related to annual property tax payments.

Revenues from mortgage banking activities decreased $1.6 million from the prior quarter due to rising interest rates, increased market competition and seasonal production decreases. Mortgage production volume declined 21 percent compared to the prior quarter. Operating expenses decreased $1.9 million as expenses are reduced to align with lower mortgage production.

Wealth Management

Net income for Wealth Management decreased $11.6 million to $17.5 million during the fourth quarter of 2018. This decrease included an after tax benefit of $11.5 million as a result of a fee earned on the sale of client assets in the third quarter. Excluding this fee, fiduciary and asset management fees produced relatively consistent results compared to the third quarter of 2018.

Average loans increased $9 million or 1 percent to $1.4 billion. Average deposits were stable at $5.5 billion. Assets under management or administration were $76.3 billion at December 31, 2018 compared to $77.6 billion at September 30, 2018. Fiduciary assets totaled $44.8 billion at December 31, 2018 and $45.6 billion at September 30, 2018.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, January 30, 2019 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 # 13686207.

About BOK Financial Corporation

BOK Financial Corporation is a $38 billion regional financial services company based in Tulsa, Oklahoma. The company's stock is publicly traded on NASDAQ under the Global Select market listings (symbol: BOKF). BOK Financial's holdings include BOKF, NA, CoBiz Bank, BOK Financial Securities, Inc. and The Milestone Group, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management, BOK Financial Asset Management, Inc. and seven banking divisions: Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Mobank, Bank of Oklahoma, Bank of Texas and Colorado State Bank and Trust. Through its subsidiaries, the company provides commercial and consumer banking, investment and trust services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of December 31, 2018 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. There may also be difficulties and delays in integrating CoBiz Financial Inc.'s business or fully realizing cost savings and other benefits including, but not limited to, business disruption and customer acceptance of BOK Financial Corporation's products and services. 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, 2018   Sept. 30, 2018   Dec. 31, 2017
ASSETS          
Cash and due from banks $ 741,749     $ 815,458     $ 602,510  
Interest-bearing cash and cash equivalents 401,675     430,789     1,714,544  
Trading securities 1,956,923     1,613,400     462,676  
Investment securities 355,187     374,039     461,793  
Available for sale securities 8,857,120     8,072,014     8,321,578  
Fair value option securities 283,235     452,150     755,054  
Restricted equity securities 344,447     311,189     320,189  
Residential mortgage loans held for sale 149,221     175,866     221,378  
Loans:          
Commercial 13,636,078     11,576,101     10,733,975  
Commercial real estate 4,764,813     3,804,675     3,479,987  
Residential mortgage 2,230,033     1,971,742     1,973,686  
Personal 1,025,806     996,941     965,776  
Total loans 21,656,730     18,349,459     17,153,424  
Allowance for loan losses (207,457 )   (210,569 )   (230,682 )
Loans, net of allowance 21,449,273     18,138,890     16,922,742  
Premises and equipment, net 330,033     327,129     317,335  
Receivables 204,960     277,738     178,800  
Goodwill 1,049,263     447,430     447,430  
Intangible assets, net 134,849     33,370     28,658  
Mortgage servicing rights 259,254     284,673     252,867  
Real estate and other repossessed assets, net 17,487     24,515     28,437  
Derivative contracts, net 320,929     349,481     220,502  
Cash surrender value of bank-owned life insurance 381,608     323,628     316,498  
Receivable on unsettled securities sales 336,400     421,313     340,077  
Other assets 446,891     416,792     359,092  
TOTAL ASSETS $ 38,020,504     $ 33,289,864     $ 32,272,160  
           
LIABILITIES AND EQUITY          
Deposits:          
Demand $ 10,414,592     $ 9,063,623     $ 9,243,338  
Interest-bearing transaction 12,206,576     9,990,219     10,250,393  
Savings 529,215     502,601     469,158  
Time 2,113,380     2,075,846     2,098,416  
Total deposits 25,263,763     21,632,289     22,061,305  
Funds purchased and repurchase agreements 1,018,411     790,741     574,963  
Other borrowings 6,124,390     6,025,483     5,134,897  
Subordinated debentures 275,913     144,707     144,677  
Accrued interest, taxes and expense 192,826     231,592     164,895  
Due on unsettled securities purchases 156,370     414,283     338,745  
Derivative contracts, net 362,306     252,387     171,963  
Other liabilities 183,480     172,622     162,381  
TOTAL LIABILITIES 33,577,459     29,664,104     28,753,826  
Shareholders' equity:          
Capital, surplus and retained earnings 4,504,694     3,777,394     3,531,541  
Accumulated other comprehensive loss (72,585 )   (162,362 )   (36,174 )
TOTAL SHAREHOLDERS' EQUITY 4,432,109     3,615,032     3,495,367  
Non-controlling interests 10,936     10,728     22,967  
TOTAL EQUITY 4,443,045     3,625,760     3,518,334  
TOTAL LIABILITIES AND EQUITY $ 38,020,504     $ 33,289,864     $ 32,272,160  
                       


AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
  Three Months Ended
  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
ASSETS                  
Interest-bearing cash and cash equivalents $ 563,132     $ 688,872     $ 1,673,387     $ 2,059,517     $ 1,976,395  
Trading securities 1,929,601     1,762,794     1,482,302     933,404     560,321  
Investment securities 364,737     379,566     399,088     441,207     462,869  
Available for sale securities 8,704,963     8,129,214     8,163,142     8,236,938     8,435,916  
Fair value option securities 277,575     469,398     487,192     626,251     792,647  
Restricted equity securities 362,729     328,842     348,546     349,176     337,673  
Residential mortgage loans held for sale 179,553     207,488     218,600     199,380     257,927  
Loans:                  
Commercial 13,587,344     11,484,200     11,189,899     10,871,569     10,751,235  
Commercial real estate 4,747,784     3,774,470     3,660,166     3,491,335     3,485,583  
Residential mortgage 2,222,063     1,956,089     1,915,015     1,937,198     1,976,860  
Personal 1,022,140     989,026     986,162     961,379     967,329  
Total loans 21,579,331     18,203,785     17,751,242     17,261,481     17,181,007  
Allowance for loan losses (209,613 )   (214,160 )   (222,856 )   (228,996 )   (246,143 )
Total loans, net 21,369,718     17,989,625     17,528,386     17,032,485     16,934,864  
Total earning assets 33,752,008     29,955,799     30,300,643     29,878,358     29,758,612  
Cash and due from banks 731,700     578,905     571,333     564,585     576,737  
Derivative contracts, net 299,319     294,126     318,375     278,694     292,961  
Cash surrender value of bank-owned life insurance 379,893     322,038     319,507     317,334     315,034  
Receivable on unsettled securities sales 799,548     768,785     618,240     998,803     821,275  
Other assets 2,423,275     1,776,164     1,777,937     1,687,178     1,687,496  
TOTAL ASSETS $ 38,385,743     $ 33,695,817     $ 33,906,035     $ 33,724,952     $ 33,452,115  
                   
LIABILITIES AND EQUITY                  
Deposits:                  
Demand $ 10,648,683     $ 9,325,002     $ 9,223,327     $ 9,151,272     $ 9,417,351  
Interest-bearing transaction 11,773,651     10,010,031     10,189,354     10,344,469     10,142,744  
Savings 526,275     503,821     503,671     480,110     466,496  
Time 2,146,786     2,097,441     2,138,880     2,151,044     2,134,469  
Total deposits 25,095,395     21,936,295     22,055,232     22,126,895     22,161,060  
Funds purchased and repurchase agreements 1,205,568     1,193,583     593,250     532,412     488,330  
Other borrowings 6,361,141     5,765,440     6,497,020     6,326,967     6,209,903  
Subordinated debentures 276,378     144,702     144,692     144,682     144,673  
Derivative contracts, net 268,848     185,029     235,543     223,373     288,408  
Due on unsettled securities purchases 493,887     544,263     527,804     558,898     332,155  
Other liabilities 341,438     311,605     340,322     333,151     312,196  
TOTAL LIABILITIES 34,042,655     30,080,917     30,393,863     30,246,378     29,936,725  
Total equity 4,343,088     3,614,900     3,512,172     3,478,574     3,515,390  
TOTAL LIABILITIES AND EQUITY $ 38,385,743     $ 33,695,817     $ 33,906,035     $ 33,724,952     $ 33,452,115  
                                       


STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
  Three Months Ended   Year Ended
  Dec. 31,   Dec. 31,
  2018   2017   2018   2017
               
Interest revenue $ 365,592     $ 255,767     $ 1,228,426     $ 972,751  
Interest expense 79,906     38,904     243,559     131,050  
Net interest revenue 285,686     216,863     984,867     841,701  
Provision for credit losses 9,000     (7,000 )   8,000     (7,000 )
Net interest revenue after provision for credit losses 276,686     223,863     976,867     848,701  
Other operating revenue:              
Brokerage and trading revenue 28,101     33,045     108,323     131,601  
Transaction card revenue1 20,664     20,028     84,025     81,143  
Fiduciary and asset management revenue 43,665     41,773     184,703     162,889  
Deposit service charges and fees 29,393     27,679     112,153     112,079  
Mortgage banking revenue 21,880     24,362     97,787     104,719  
Other revenue 16,430     11,013     56,651     49,959  
Total fees and commissions 160,133     157,900     643,642     642,390  
Other gains (losses), net (8,331 )   1,301     (2,731 )   11,213  
Gain (loss) on derivatives, net 11,167     (3,045 )   (422 )   779  
Loss on fair value option securities, net (282 )   (4,238 )   (25,572 )   (2,733 )
Change in fair value of mortgage servicing rights (24,233 )   5,898     4,668     172  
Gain (loss) on available for sale securities, net (1,999 )   (488 )   (2,801 )   4,428  
Total other operating revenue 136,455     157,328     616,784     656,249  
Other operating expense:              
Personnel 160,706     145,329     583,131     573,408  
Business promotion 9,207     7,317     30,523     28,877  
Charitable contributions to BOKF Foundation 2,846     2,000     2,846     2,000  
Professional fees and services 20,712     15,344     59,099     51,067  
Net occupancy and equipment 27,780     22,403     97,981     86,477  
Insurance 4,248     6,555     23,318     19,653  
Data processing and communications1 27,575     28,903     114,796     108,125  
Printing, postage and supplies 5,232     3,781     17,169     15,689  
Net losses and operating expenses of repossessed assets 2,581     340     17,052     9,687  
Amortization of intangible assets 5,331     1,430     9,620     6,779  
Mortgage banking costs 11,518     14,331     46,298     52,856  
Other expense 6,907     6,746     26,333     32,054  
Total other operating expense 284,643     254,479     1,028,166     986,672  
               
Net income before taxes 128,498     126,712     565,485     518,278  
Federal and state income taxes 20,121     54,347     119,061     182,593  
               
Net income 108,377     72,365     446,424     335,685  
Net income (loss) attributable to non-controlling interests (79 )   (127 )   778     1,041  
Net income attributable to BOK Financial Corporation shareholders $ 108,456     $ 72,492     $ 445,646     $ 334,644  
               
Average shares outstanding:              
Basic 71,808,029     64,793,005     66,628,640     64,745,364  
Diluted 71,833,334     64,843,179     66,662,273     64,806,284  
               
Net income per share:              
Basic $ 1.50     $ 1.11     $ 6.63     $ 5.11  
Diluted $ 1.50     $ 1.11     $ 6.63     $ 5.11  
                               

Non-GAAP measure to net interchange charges for periods prior to 2018 between transaction card revenue and data processing and communications expense. This measure has no effect on net income or earnings per share.

FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
  Three Months Ended
  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
Capital:                  
Period-end shareholders' equity $ 4,432,109     $ 3,615,032     $ 3,553,431     $ 3,495,029     $ 3,495,367  
Risk weighted assets $ 30,742,095     $ 27,398,072     $ 27,004,559     $ 26,025,660     $ 25,733,711  
Risk-based capital ratios:                  
Common equity tier 1 10.92 %   12.07 %   11.92 %   12.06 %   12.05 %
Tier 1 10.92 %   12.07 %   11.92 %   12.06 %   12.05 %
Total capital 12.50 %   13.37 %   13.26 %   13.49 %   13.54 %
Leverage ratio 8.96 %   9.90 %   9.57 %   9.40 %   9.31 %
Tangible common equity ratio1 8.82 %   9.55 %   9.21 %   9.18 %   9.50 %
                   
Common stock:                  
Book value per share $ 61.45     $ 55.25     $ 54.30     $ 53.39     $ 53.45  
Tangible book value per share 45.03     47.90     46.95     46.10     46.17  
Market value per share:                  
High $ 98.29     $ 105.22     $ 106.65     $ 107.00     $ 93.97  
Low $ 69.96     $ 92.40     $ 92.39     $ 89.82     $ 79.67  
Cash dividends paid $ 35,977     $ 32,591     $ 29,340     $ 29,342     $ 29,328  
Dividend payout ratio 33.17 %   27.79 %   25.65 %   27.80 %   40.46 %
Shares outstanding, net 72,122,932     65,434,258     65,439,090     65,459,505     65,394,937  
Stock buy-back program:                  
Shares repurchased 525,000         8,257     82,583     80,000  
Amount $ 45,057     $     $ 824     $ 7,584     $ 7,403  
Average price per share $ 85.82     $     $ 99.84     $ 91.83     $ 92.54  
                   
Performance ratios (quarter annualized):
Return on average assets 1.12 %   1.38 %   1.35 %   1.27 %   0.86 %
Return on average equity 9.93 %   12.95 %   13.14 %   12.39 %   8.24 %
Net interest margin 3.40 %   3.21 %   3.17 %   2.99 %   2.97 %
Efficiency ratio3 63.24 %   61.59 %   61.76 %   64.93 %   66.07 %
                   
Reconciliation of non-GAAP measures:
1  Tangible common equity ratio:                  
Total shareholders' equity $ 4,432,109     $ 3,615,032     $ 3,553,431     $ 3,495,029     $ 3,495,367  
Less: Goodwill and intangible assets, net 1,184,112     480,800     481,366     477,088     476,088  
Tangible common equity $ 3,247,997     $ 3,134,232     $ 3,072,065     $ 3,017,941     $ 3,019,279  
                   
Total assets $ 38,020,504     $ 33,289,864     $ 33,833,107     $ 33,361,492     $ 32,272,160  
Less: Goodwill and intangible assets, net 1,184,112     480,800     481,366     477,088     476,088  
Tangible assets $ 36,836,392     $ 32,809,064     $ 33,351,741     $ 32,884,404     $ 31,796,072  
                   
Tangible common equity ratio 8.82 %   9.55 %   9.21 %   9.18 %   9.50 %
                             


FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
  Three Months Ended
  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
Other data:                  
Fiduciary assets $ 44,841,339     $ 45,560,107     $ 46,531,900     $ 46,648,290     $ 48,761,477  
Tax equivalent interest $ 3,069     $ 1,894     $ 1,983     $ 2,010     $ 4,131  
Net unrealized loss on available for sale securities $ (95,271 )   $ (216,793 )   $ (180,602 )   $ (148,247 )   $ (47,497 )
                                       

Mortgage banking:
                 
Mortgage production revenue $ 5,073     $ 7,250     $ 9,915     $ 9,452     $ 7,786  
                   
Mortgage loans funded for sale $ 497,353     $ 651,076     $ 773,910     $ 664,958     $ 840,080  
Add: current period-end outstanding commitments 160,848     197,752     251,231     298,318     222,919  
Less: prior period end outstanding commitments 197,752     251,231     298,318     222,919     334,337  
Total mortgage production volume $ 460,449     $ 597,597     $ 726,823     $ 740,357     $ 728,662  
                   
Mortgage loan refinances to mortgage loans funded for sale 23 %   23 %   22 %   42 %   47 %
Gain on sale margin 1.10 %   1.21 %   1.36 %   1.28 %   1.07 %
                   
Mortgage servicing revenue $ 16,807     $ 16,286     $ 16,431     $ 16,573     $ 16,576  
Average outstanding principal balance of mortgage loans serviced for others 21,706,541     21,895,041     21,986,065     22,027,726     22,054,877  
Average mortgage servicing revenue rates 0.31 %   0.30 %   0.30 %   0.31 %   0.30 %
                   
                   
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net $ 12,162     $ (2,843 )   $ (3,070 )   $ (5,698 )   $ (3,057 )
Loss on fair value option securities, net (282 )   (4,385 )   (3,341 )   (17,564 )   (4,238 )
Gain (loss) on economic hedge of mortgage servicing rights 11,880     (7,228 )   (6,411 )   (23,262 )   (7,295 )
Gain (loss) on changes in fair value of mortgage servicing rights (24,233 )   5,972     1,723     21,206     5,898  
Loss on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue (12,353 )   (1,256 )   (4,688 )   (2,056 )   (1,397 )
Net interest revenue on fair value option securities2 695     1,100     1,203     1,800     2,656  
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges $ (11,658 )   $ (156 )   $ (3,485 )   $ (256 )   $ 1,259  
                                       

Actual interest earned on fair value option securities less internal transfer-priced cost of funds.
Periods prior to 2018 are shown on a comparable basis to net interchange charges between transaction card revenue and data processing and communications expense.

QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
  Three Months Ended
  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
                   
Interest revenue $ 365,592     $ 303,247     $ 294,180     $ 265,407     $ 255,767  
Interest expense 79,906     62,364     55,618     45,671     38,904  
Net interest revenue 285,686     240,883     238,562     219,736     216,863  
Provision for credit losses 9,000     4,000         (5,000 )   (7,000 )
Net interest revenue after provision for credit losses 276,686     236,883     238,562     224,736     223,863  
Other operating revenue:                  
Brokerage and trading revenue 28,101     23,086     26,488     30,648     33,045  
Transaction card revenue1 20,664     21,396     20,975     20,990     20,028  
Fiduciary and asset management revenue 43,665     57,514     41,692     41,832     41,773  
Deposit service charges and fees 29,393     27,765     27,834     27,161     27,679  
Mortgage banking revenue 21,880     23,536     26,346     26,025     24,362  
Other revenue 16,430     12,968     13,996     13,257     11,013  
Total fees and commissions 160,133     166,265     157,331     159,913     157,900  
Other gains (losses), net (8,331 )   2,686     4,505     (1,591 )   1,301  
Gain (loss) on derivatives, net 11,167     (2,847 )   (3,057 )   (5,685 )   (3,045 )
Loss on fair value option securities, net (282 )   (4,385 )   (3,341 )   (17,564 )   (4,238 )
Change in fair value of mortgage servicing rights (24,233 )   5,972     1,723     21,206     5,898  
Gain (loss) on available for sale securities, net (1,999 )   250     (762 )   (290 )   (488 )
Total other operating revenue 136,455     167,941     156,399     155,989     157,328  
Other operating expense:                  
Personnel 160,706     143,531     138,947     139,947     145,329  
Business promotion 9,207     7,620     7,686     6,010     7,317  
Charitable contributions to BOKF Foundation 2,846                 2,000  
Professional fees and services 20,712     13,209     14,978     10,200     15,344  
Net occupancy and equipment 27,780     23,394     22,761     24,046     22,403  
Insurance 4,248     6,232     6,245     6,593     6,555  
Data processing and communications1 27,575     31,665     27,739     27,817     28,903  
Printing, postage and supplies 5,232     3,837     4,011     4,089     3,781  
Net losses (gains) and operating expenses of repossessed assets 2,581     4,044     2,722     7,705     340  
Amortization of intangible assets 5,331     1,603     1,386     1,300     1,430  
Mortgage banking costs 11,518     11,741     12,890     10,149     14,331  
Other expense 6,907     5,741     7,111     6,574     6,746  
Total other operating expense 284,643     252,617     246,476     244,430     254,479  
Net income before taxes 128,498     152,207     148,485     136,295     126,712  
Federal and state income taxes 20,121     34,662     33,330     30,948     54,347  
Net income 108,377     117,545     115,155     105,347     72,365  
Net income (loss) attributable to non-controlling interests (79 )   289     783     (215 )   (127 )
Net income attributable to BOK Financial Corporation shareholders $ 108,456     $ 117,256     $ 114,372     $ 105,562     $ 72,492  
                   
Average shares outstanding:                  
Basic 71,808,029     64,901,095     64,901,975     64,847,334     64,793,005  
Diluted 71,833,334     64,934,351     64,937,226     64,888,033     64,843,179  
Net income per share:                  
Basic $ 1.50     $ 1.79     $ 1.75     $ 1.61     $ 1.11  
Diluted $ 1.50     $ 1.79     $ 1.75     $ 1.61     $ 1.11  
                                       

Non-GAAP measure to net interchange charges for periods prior to 2018 between transaction card revenue and data processing and communications expense. This measure has no effect on net income or earnings per share.

LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

    Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
Commercial:                    
Energy   $ 3,590,333     $ 3,294,867     $ 3,147,219     $ 2,969,618     $ 2,930,156  
Services   3,252,146     2,597,711     2,510,445     2,481,754     2,522,025  
Healthcare   2,733,537     2,370,455     2,285,732     2,289,779     2,243,487  
Wholesale/retail   1,621,158     1,650,729     1,699,554     1,531,576     1,471,256  
Public finance   876,336     491,597     507,629     522,274     541,775  
Manufacturing   730,521     660,582     647,816     559,695     496,774  
Other commercial and industrial   832,047     510,160     550,644     564,971     528,502  
Total commercial   13,636,078     11,576,101     11,349,039     10,919,667     10,733,975  
                     
Commercial real estate:                    
Multifamily   1,288,065     1,120,166     1,056,984     1,008,903     980,017  
Office   1,072,920     824,829     820,127     737,144     831,770  
Retail   919,082     759,423     768,024     750,396     691,532  
Industrial   778,106     696,774     653,384     613,608     573,014  
Residential construction and land development   148,584     101,872     118,999     117,458     117,245  
Other commercial real estate   558,056     301,611     294,702     279,273     286,409  
Total commercial real estate   4,764,813     3,804,675     3,712,220     3,506,782     3,479,987  
                     
Residential mortgage:                    
Permanent mortgage   1,320,165     1,094,926     1,068,412     1,047,785     1,043,435  
Permanent mortgages guaranteed by U.S. government agencies   190,866     180,718     169,653     177,880     197,506  
Home equity   719,002     696,098     704,185     720,104     732,745  
Total residential mortgage   2,230,033     1,971,742     1,942,250     1,945,769     1,973,686  
                     
Personal   1,025,806     996,941     1,000,187     965,632     965,776  
                     
Total   $ 21,656,730     $ 18,349,459     $ 18,003,696     $ 17,337,850     $ 17,153,424  
                                         

LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
                   
Oklahoma:                  
Commercial $ 3,491,117     $ 3,609,109     $ 3,465,407     $ 3,265,013     $ 3,238,720  
Commercial real estate 700,756     651,315     662,665     668,031     682,037  
Residential mortgage 1,440,566     1,429,843     1,403,658     1,419,281     1,435,432  
Personal 375,543     376,201     362,846     353,128     342,212  
Total Oklahoma 6,007,982     6,066,468     5,894,576     5,705,453     5,698,401  
                   
Texas:                  
Commercial 5,438,133     5,115,646     4,922,451     4,715,841     4,520,401  
Commercial real estate 1,341,783     1,354,679     1,336,101     1,254,421     1,261,864  
Residential mortgage 266,805     253,265     243,400     229,761     233,675  
Personal 394,743     381,452     394,021     363,608     375,084  
Total Texas 7,441,464     7,105,042     6,895,973     6,563,631     6,391,024  
                   
New Mexico:                  
Commercial 340,489     325,048     305,167     315,701     343,296  
Commercial real estate 383,670     392,494     386,878     348,485     341,282  
Residential mortgage 87,346     88,110     90,581     93,490     98,018  
Personal 10,662     11,659     11,107     11,667     11,721  
Total New Mexico 822,167     817,311     793,733     769,343     794,317  
                   
Arkansas:                  
Commercial 111,338     102,237     93,217     94,430     95,644  
Commercial real estate 141,898     106,701     90,807     88,700     87,393  
Residential mortgage 7,537     7,278     6,927     7,033     6,596  
Personal 11,955     12,126     12,331     9,916     9,992  
Total Arkansas 272,728     228,342     203,282     200,079     199,625  
                   
Colorado:                  
Commercial 2,275,069     1,132,500     1,165,721     1,180,655     1,130,714  
Commercial real estate 963,575     354,543     267,065     210,801     174,201  
Residential mortgage 251,849     68,694     64,839     64,530     63,350  
Personal 72,916     56,999     60,504     63,118     63,115  
Total Colorado 3,563,409     1,612,736     1,558,129     1,519,104     1,431,380  
                   
Arizona:                  
Commercial 1,320,139     621,658     681,852     624,106     687,792  
Commercial real estate 889,903     666,562     710,784     672,319     660,094  
Residential mortgage 97,959     44,659     47,010     39,227     41,771  
Personal 68,546     67,280     65,541     57,023     57,140  
Total Arizona 2,376,547     1,400,159     1,505,187     1,392,675     1,446,797  
                   
Kansas/Missouri:                  
Commercial 659,793     669,903     715,224     723,921     717,408  
Commercial real estate 343,228     278,381     257,920     264,025     273,116  
Residential mortgage 77,971     79,893     85,835     92,447     94,844  
Personal 91,441     91,224     93,837     107,172     106,512  
Total Kansas/Missouri 1,172,433     1,119,401     1,152,816     1,187,565     1,191,880  
                   
TOTAL BOK FINANCIAL $ 21,656,730     $ 18,349,459     $ 18,003,696     $ 17,337,850     $ 17,153,424  
                                       

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, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
Oklahoma:                  
Demand $ 3,610,593     $ 3,564,307     $ 3,867,933     $ 4,201,842     $ 3,885,008  
Interest-bearing:                  
Transaction 6,445,831     6,010,972     5,968,460     6,051,302     5,901,293  
Savings 288,210     288,080     289,202     289,351     265,870  
Time 1,118,643     1,128,810     1,207,471     1,203,534     1,092,133  
Total interest-bearing 7,852,684     7,427,862     7,465,133     7,544,187     7,259,296  
Total Oklahoma 11,463,277     10,992,169     11,333,066     11,746,029     11,144,304  
                   
Texas:                  
Demand 3,289,659     3,353,248     3,317,656     3,015,869     3,239,098  
Interest-bearing:                  
Transaction 2,294,740     2,181,382     2,168,488     2,208,480     2,397,071  
Savings 99,624     97,909     97,809     98,852     93,620  
Time 423,880     453,119     445,500     475,967     502,879  
Total interest-bearing 2,818,244     2,732,410     2,711,797     2,783,299     2,993,570  
Total Texas 6,107,903     6,085,658     6,029,453     5,799,168     6,232,668  
                   
New Mexico:                  
Demand 691,692     722,188     770,974     695,060     663,353  
Interest-bearing:                  
Transaction 571,347     593,760     586,593     555,414     552,393  
Savings 58,194     57,794     59,415     60,596     55,647  
Time 224,515     221,513     212,689     216,306     216,743  
Total interest-bearing 854,056     873,067     858,697     832,316     824,783  
Total New Mexico 1,545,748     1,595,255     1,629,671     1,527,376     1,488,136  
                   
Arkansas:                  
Demand 36,800     36,579     39,896     35,291     30,384  
Interest-bearing:                  
Transaction 91,593     128,001     143,298     94,206     85,095  
Savings 1,632     1,826     1,885     1,960     1,881  
Time 8,726     10,214     10,771     11,878     14,045  
Total interest-bearing 101,951     140,041     155,954     108,044     101,021  
Total Arkansas 138,751     176,620     195,850     143,335     131,405  
                   
Colorado:                  
Demand 1,658,473     593,442     529,912     521,963     633,714  
Interest-bearing:                  
Transaction 1,899,203     622,520     701,362     687,785     657,629  
Savings 57,289     40,308     38,176     37,232     35,223  
Time 274,877     217,628     208,049     215,330     224,962  
Total interest-bearing 2,231,369     880,456     947,587     940,347     917,814  
Total Colorado 3,889,842     1,473,898     1,477,499     1,462,310     1,551,528  
                   

DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
Arizona:                  
Demand 709,176     370,299     387,952     330,196     334,701  
Interest-bearing:                  
Transaction 575,996     130,837     194,353     248,337     274,846  
Savings 10,545     3,559     3,935     4,116     3,343  
Time 43,051     23,927     22,447     21,009     20,394  
Total interest-bearing 629,592     158,323     220,735     273,462     298,583  
Total Arizona 1,338,768     528,622     608,687     603,658     633,284  
                   
Kansas/Missouri:                  
Demand 418,199     423,560     459,636     505,802     457,080  
Interest-bearing:                  
Transaction 327,866     322,747     401,545     381,447     382,066  
Savings 13,721     13,125     13,052     13,845     13,574  
Time 19,688     20,635     20,805     22,230     27,260  
Total interest-bearing 361,275     356,507     435,402     417,522     422,900  
Total Kansas/Missouri 779,474     780,067     895,038     923,324     879,980  
                   
TOTAL BOK FINANCIAL $ 25,263,763     $ 21,632,289     $ 22,169,264     $ 22,205,200     $ 22,061,305  
                                       


NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
  Three Months Ended
  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
                   
TAX-EQUIVALENT ASSETS YIELDS                  
Interest-bearing cash and cash equivalents 2.23 %   1.98 %   1.86 %   1.57 %   1.27 %
Trading securities 4.10 %   3.98 %   3.63 %   3.40 %   3.38 %
Investment securities 4.26 %   4.06 %   3.95 %   3.78 %   3.98 %
Available for sale securities 2.51 %   2.37 %   2.30 %   2.23 %   2.21 %
Fair value option securities 3.56 %   3.25 %   3.16 %   2.95 %   2.90 %
Restricted equity securities 6.39 %   6.36 %   6.21 %   5.86 %   5.87 %
Residential mortgage loans held for sale 4.00 %   4.27 %   4.28 %   3.71 %   3.72 %
Loans 5.09 %   4.80 %   4.80 %   4.45 %   4.29 %
Allowance for loan losses                  
Loans, net of allowance 5.14 %   4.86 %   4.86 %   4.51 %   4.35 %
Total tax-equivalent yield on earning assets 4.33 %   4.04 %   3.91 %   3.61 %   3.49 %
                   
COST OF INTEREST-BEARING LIABILITIES                
Interest-bearing deposits:                  
Interest-bearing transaction 0.79 %   0.67 %   0.55 %   0.45 %   0.35 %
Savings 0.11 %   0.09 %   0.08 %   0.07 %   0.07 %
Time 1.54 %   1.40 %   1.29 %   1.25 %   1.17 %
Total interest-bearing deposits 0.87 %   0.77 %   0.66 %   0.57 %   0.48 %
Funds purchased and repurchase agreements 1.36 %   1.25 %   0.53 %   0.40 %   0.28 %
Other borrowings 2.51 %   2.20 %   1.96 %   1.60 %   1.36 %
Subordinated debt 5.38 %   5.55 %   5.67 %   5.61 %   5.55 %
Total cost of interest-bearing liabilities 1.42 %   1.25 %   1.11 %   0.93 %   0.79 %
Tax-equivalent net interest revenue spread 2.91 %   2.79 %   2.80 %   2.68 %   2.70 %
Effect of noninterest-bearing funding sources and other 0.49 %   0.42 %   0.37 %   0.31 %   0.27 %
Tax-equivalent net interest margin 3.40 %   3.21 %   3.17 %   2.99 %   2.97 %
                             

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
  Dec. 31, 2018   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017
Nonperforming assets:                  
Nonaccruing loans:                  
Commercial $ 99,841     $ 109,490     $ 120,978     $ 131,460     $ 137,303  
Commercial real estate 21,621     1,316     1,996     2,470     2,855  
Residential mortgage 41,555     41,917     42,343     45,794     47,447  
Personal 230     269     340     340     269  
Total nonaccruing loans 163,247     152,992     165,657     180,064     187,874  
Accruing renegotiated loans guaranteed by U.S. government agencies 86,428     83,347     75,374     74,418     73,994  
Real estate and other repossessed assets 17,487     24,515     27,891     23,652     28,437  
Total nonperforming assets $ 267,162     $ 260,854     $ 268,922     $ 278,134     $ 290,305  
Total nonperforming assets excluding those guaranteed by U.S. government agencies $ 173,602     $ 169,717     $ 185,981     $ 194,833     $ 207,132  
                   
Nonaccruing loans by loan class:                  
Commercial:                  
Energy $ 47,494     $ 54,033     $ 65,597     $ 89,942     $ 92,284  
Services 8,567     4,097     4,377     2,109     2,620  
Healthcare 16,538     15,704     16,125     15,342     14,765  
Manufacturing 8,919     9,202     2,991     3,002     5,962  
Wholesale/retail 1,316     9,249     14,095     2,564     2,574  
Public finance                  
Other commercial and industrial 17,007     17,205     17,793     18,501     19,098  
Total commercial 99,841     109,490     120,978     131,460     137,303  
Commercial real estate:                  
Retail 20,279     777     1,068     264     276  
Residential construction and land development 350     350     350     1,613     1,832  
Multifamily 301                  
Office         275     275     275  
Industrial                  
Other commercial real estate 691     189     303     318     472  
Total commercial real estate 21,621     1,316     1,996     2,470     2,855  
Residential mortgage:                  
Permanent mortgage 23,951     22,855     23,105     24,578     25,193  
Permanent mortgage guaranteed by U.S. government agencies 7,132     7,790     7,567     8,883     9,179  
Home equity 10,472     11,272     11,671     12,333     13,075  
Total residential mortgage 41,555     41,917     42,343     45,794     47,447  
Personal 230     269     340     340     269  
Total nonaccruing loans $ 163,247     $ 152,992     $ 165,657     $ 180,064     $ 187,874  
                   
                   
Performing loans 90 days past due1 $ 1,338     $ 518     $ 879     $ 90     $ 633  
                   
Gross charge-offs $ 14,515     $ 11,073     $ 15,105     $ 2,890     $ 14,749  
Recoveries (2,168 )   (2,092 )   (4,578 )   (1,576 )   (3,061 )
Net charge-offs $ 12,347     $ 8,981     $ 10,527     $ 1,314     $ 11,688  
                   
Provision for credit losses $ 9,000     $ 4,000     $     $ (5,000 )   $ (7,000 )
                   
Allowance for loan losses to period end loans 0.96 %   1.15 %   1.19 %   1.29 %   1.34 %
Combined allowance for credit losses to period end loans 0.97 %   1.16 %   1.21 %   1.32 %   1.37 %
Nonperforming assets to period end loans and repossessed assets 1.23 %   1.42 %   1.49 %   1.60 %   1.69 %
Net charge-offs (annualized) to average loans 0.23 %   0.20 %   0.24 %   0.03 %   0.27 %
Allowance for loan losses to nonaccruing loans1 132.89 %   145.02 %   136.09 %   130.84 %   129.09 %
Combined allowance for credit losses to nonaccruing loans1 134.03 %   146.41 %   137.63 %   133.25 %   131.18 %
                             

1 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   Dec. 31, 2018   Sept. 30, 2018   Dec. 31, 2017   4Q18 vs 3Q18   4Q18 vs 4Q17
Net interest revenue   $ 148,359     $ 145,147     $ 132,185     2.2 %   12.2 %
Fees and commissions revenue   39,667     39,391     41,317     0.7 %   (4.0 )%
Other operating expense   49,725     49,135     48,849     1.2 %   1.8 %
Corporate expense allocations   11,015     11,028     7,846     (0.1 )%   40.4 %
Net income   84,588     84,965     62,138     (0.4 )%   36.1 %
                     
Average assets   19,341,927     18,499,979     17,708,194     4.6 %   9.2 %
Average loans   15,628,731     15,321,600     14,385,927     2.0 %   8.6 %
Average deposits   8,393,016     8,633,204     8,799,166     (2.8 )%   (4.6 )%
                     
Consumer Banking                    
Net interest revenue   $ 41,364     $ 39,044     $ 37,044     5.9 %   11.7 %
Fees and commissions revenue   42,840     44,040     44,085     (2.7 )%   (2.8 )%
Other operating expense   51,240     53,186     57,542     (3.7 )%   (11.0 )%
Corporate expense allocations   15,939     15,863     16,743     0.5 %   (4.8 )%
Net income   2,741     8,365     2,500     (67.2 )%   9.6 %
                     
Average assets   8,071,978     8,323,542     8,766,423     (3.0 )%   (7.9 )%
Average loans   1,745,642     1,719,679     1,741,148     1.5 %   0.3 %
Average deposits   6,542,188     6,580,395     6,622,149     (0.6 )%   (1.2 )%
                     
Wealth Management                    
Net interest revenue   $ 29,292     $ 29,095     $ 21,454     0.7 %   36.5 %
Fees and commissions revenue   67,607     83,562     76,095     (19.1 )%   (11.2 )%
Other operating expense   62,410     62,255     63,809     0.2 %   (2.2 )%
Corporate expense allocations   10,967     11,126     10,125     (1.4 )%   8.3 %
Net income   17,472     29,105     14,528     (40.0 )%   20.3 %
                     
Average assets   8,687,234     8,498,363     7,373,081     2.2 %   17.8 %
Average loans   1,448,805     1,439,774     1,352,694     0.6 %   7.1 %
Average deposits   5,483,455     5,492,048     5,457,566     (0.2 )%   0.5 %
Fiduciary assets   44,841,339     45,560,107     48,761,477     (1.6 )%   (8.0 )%
Assets under management or administration   76,279,777     77,628,015     81,827,797     (1.7 )%   (6.8 )%
                               

Contact:
Cody McAlester
+1 918-295-0486
cmcalester@bokf.com

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