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

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TULSA, Okla., April 22, 2020 (GLOBE NEWSWIRE) -- BOK Financial (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 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 # 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 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 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 equivalents

302,577

522,985

Trading securities

2,110,585

1,623,921

Investment securities, net of allowance

272,576

293,418

Available for sale securities

12,694,277

11,269,643

Fair value option securities

1,703,238

1,098,577

Restricted equity securities

390,042

460,552

Residential mortgage loans held for sale

204,720

182,271

Loans:

Commercial

14,795,975

14,031,650

Commercial real estate

4,450,085

4,433,783

Loans to individuals

3,217,910

3,285,554

Total loans

22,463,970

21,750,987

Allowance for loan losses

(315,311

)

(210,759

)

Loans, net of allowance

22,148,659

21,540,228

Premises and equipment, net

546,093

535,519

Receivables

207,341

231,811

Goodwill

1,048,091

1,048,091

Intangible assets, net

121,807

125,271

Mortgage servicing rights

110,828

201,886

Real estate and other repossessed assets, net

36,744

20,359

Derivative contracts, net

922,716

323,375

Cash surrender value of bank-owned life insurance

391,006

389,879

Receivable on unsettled securities sales

2,171,881

1,020,404

Other assets

1,065,481

547,995

TOTAL ASSETS

$

47,119,162

$

42,172,021

LIABILITIES AND EQUITY

Deposits:

Demand

$

9,821,582

$

9,461,291

Interest-bearing transaction

16,596,292

15,391,752

Savings

593,805

550,276

Time

2,232,473

2,217,849

Total deposits

29,244,152

27,621,168

Funds purchased and repurchase agreements

4,583,768

3,818,350

Other borrowings

5,529,554

4,527,055

Subordinated debentures

275,942

275,923

Accrued interest, taxes and expense

309,236

259,701

Due on unsettled securities purchases

537,709

182,547

Derivative contracts, net

1,213,445

251,128

Other liabilities

391,196

372,230

TOTAL LIABILITIES

42,085,002

37,308,102

Shareholders' equity:

Capital, surplus and retained earnings

4,694,956

4,750,872

Accumulated other comprehensive gain

331,292

104,923

TOTAL SHAREHOLDERS' EQUITY

5,026,248

4,855,795

Non-controlling interests

7,912

8,124

TOTAL EQUITY

5,034,160

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 securities

1,690,104

1,672,426

1,696,568

1,757,335

1,968,399

Investment securities, net of allowance

282,265

298,567

308,090

328,482

343,282

Available for sale securities

11,664,521

11,333,524

10,747,439

9,435,668

8,883,054

Fair value option securities

1,793,480

1,521,528

1,553,879

898,772

594,349

Restricted equity securities

429,133

479,687

476,781

413,812

395,432

Residential mortgage loans held for sale

129,708

203,535

203,319

192,102

145,040

Loans:

Commercial

14,452,851

14,344,534

14,507,185

14,175,057

13,966,521

Commercial real estate

4,346,886

4,532,649

4,652,534

4,656,861

4,602,149

Loans to individuals

3,143,286

3,358,817

3,253,199

3,172,487

3,197,395

Total loans

21,943,023

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 allowance

21,692,685

22,030,583

22,211,204

21,798,873

21,559,973

Total earning assets

38,403,555

38,113,053

37,698,103

35,360,535

34,427,432

Cash and due from banks

669,369

690,806

717,338

703,294

705,411

Derivative contracts, net

376,621

311,542

331,834

328,802

262,927

Cash surrender value of bank-owned life insurance

390,009

388,012

385,190

384,974

382,538

Receivable on unsettled securities sales

3,046,111

1,973,604

1,742,794

1,437,462

1,224,700

Other assets

2,834,953

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 transaction

16,159,654

14,685,385

13,131,542

12,512,282

11,931,539

Savings

563,821

554,605

557,122

558,738

541,575

Time

2,239,234

2,247,717

2,251,800

2,207,391

2,153,277

Total deposits

28,195,568

27,100,240

25,700,174

25,162,376

24,614,479

Funds purchased and repurchase agreements

3,815,941

4,120,610

3,106,163

2,066,950

2,033,036

Other borrowings

6,542,325

6,247,194

8,125,023

7,175,617

7,040,279

Subordinated debentures

275,932

275,916

275,900

275,887

275,882

Derivative contracts, net

379,342

276,078

300,051

283,484

273,786

Due on unsettled securities purchases

960,780

784,174

745,893

821,688

453,937

Other liabilities

642,764

561,654

547,144

460,732

501,788

TOTAL LIABILITIES

40,812,652

39,365,866

38,800,348

36,246,734

35,193,187

Total equity

4,907,966

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 expense

87,577

97,972

Net interest revenue

261,360

278,102

Provision for credit losses

93,771

8,000

Net interest revenue after provision for credit losses

167,589

270,102

Other operating revenue:

Brokerage and trading revenue

50,779

31,617

Transaction card revenue

21,881

20,738

Fiduciary and asset management revenue

44,458

43,358

Deposit service charges and fees

26,130

28,243

Mortgage banking revenue

37,167

23,834

Other revenue

12,309

12,762

Total fees and commissions

192,724

160,552

Other gains (losses), net

(10,741

)

2,976

Gain on derivatives, net

18,420

4,667

Gain on fair value option securities, net

68,393

9,665

Change in fair value of mortgage servicing rights

(88,480

)

(20,666

)

Gain on available for sale securities, net

3

76

Total other operating revenue

180,319

157,270

Other operating expense:

Personnel

156,181

169,228

Business promotion

6,215

7,874

Professional fees and services

12,948

16,139

Net occupancy and equipment

26,061

29,521

Insurance

4,980

4,839

Data processing and communications

32,743

31,449

Printing, postage and supplies

4,272

4,885

Net losses and operating expenses of repossessed assets

1,531

1,996

Amortization of intangible assets

5,094

5,191

Mortgage banking costs

10,545

9,906

Other expense

8,054

6,129

Total other operating expense

268,624

287,157

Net income before taxes

79,284

140,215

Federal and state income taxes

17,300

29,950

Net income

61,984

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:

Basic

70,123,685

71,387,070

Diluted

70,130,166

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 1

10.98

%

11.39

%

11.06

%

10.84

%

10.71

%

Tier 1

10.98

%

11.39

%

11.06

%

10.84

%

10.71

%

Total capital

12.58

%

12.94

%

12.56

%

12.34

%

12.24

%

Leverage ratio

8.16

%

8.40

%

8.41

%

8.75

%

8.76

%

Tangible common equity ratio1

8.39

%

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 share

54.85

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 ratio

57.91

%

32.63

%

24.94

%

25.90

%

32.44

%

Shares outstanding, net

70,308,532

70,579,598

70,858,010

71,193,770

71,449,982

Stock buy-back program:

Shares repurchased

442,000

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 assets

0.55

%

0.99

%

1.29

%

1.35

%

1.13

%

Return on average equity

5.10

%

9.05

%

11.83

%

12.02

%

10.04

%

Net interest margin

2.80

%

2.88

%

3.01

%

3.30

%

3.30

%

Efficiency ratio

58.62

%

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, net

1,169,898

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, net

1,169,898

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 ratio

8.39

%

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 commitments

657,570

158,460

379,377

344,087

263,434

Less: prior period end outstanding commitments

158,460

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 sale

57

%

57

%

56

%

31

%

30

%

Gain on sale margin

2.06

%

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 others

20,416,546

20,856,446

21,172,874

21,418,690

21,581,835

Average mortgage servicing revenue rates

0.31

%

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, net

68,393

(8,328

)

4,597

9,853

9,665

Gain (loss) on economic hedge of mortgage servicing rights

86,764

(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 securities2

4,268

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 expense

87,577

99,608

116,111

105,388

97,972

Net interest revenue

261,360

270,249

279,096

285,432

278,102

Provision for credit losses

93,771

19,000

12,000

5,000

8,000

Net interest revenue after provision for credit losses

167,589

251,249

267,096

280,432

270,102

Other operating revenue:

Brokerage and trading revenue

50,779

43,843

43,840

40,526

31,617

Transaction card revenue

21,881

22,548

22,015

21,915

20,738

Fiduciary and asset management revenue

44,458

45,021

43,621

45,025

43,358

Deposit service charges and fees

26,130

27,331

28,837

28,074

28,243

Mortgage banking revenue

37,167

25,396

30,180

28,131

23,834

Other revenue

12,309

15,283

17,626

12,437

12,762

Total fees and commissions

192,724

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, net

18,420

(4,644

)

3,778

11,150

4,667

Gain (loss) on fair value option securities, net

68,393

(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, net

3

4,487

5

1,029

76

Total other operating revenue

180,319

178,585

186,450

172,065

157,270

Other operating expense:

Personnel

156,181

168,422

162,573

160,342

169,228

Business promotion

6,215

8,787

8,859

10,142

7,874

Charitable contributions to BOKF Foundation

2,000

1,000

Professional fees and services

12,948

13,408

12,312

13,002

16,139

Net occupancy and equipment

26,061

26,316

27,558

26,880

29,521

Insurance

4,980

5,393

4,220

6,454

4,839

Data processing and communications

32,743

31,884

31,915

29,735

31,449

Printing, postage and supplies

4,272

3,700

3,825

4,107

4,885

Net losses and operating expenses of repossessed assets

1,531

2,403

1,728

580

1,996

Amortization of intangible assets

5,094

5,225

5,064

5,138

5,191

Mortgage banking costs

10,545

14,259

14,975

11,545

9,906

Other expense

8,054

6,998

6,263

8,212

6,129

Total other operating expense

268,624

288,795

279,292

277,137

287,157

Net income before taxes

79,284

141,039

174,254

175,360

140,215

Federal and state income taxes

17,300

30,257

32,396

37,580

29,950

Net income

61,984

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:

Basic

70,123,685

70,295,899

70,596,307

70,887,063

71,387,070

Diluted

70,130,166

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

Healthcare

3,165,096

3,033,916

3,032,968

2,926,510

2,915,885...

Services

3,955,748

3,832,031

4,011,089

4,105,117

4,090,646

General business

3,563,455

3,192,326

3,266,299

3,383,928

3,250,345

Total commercial

14,795,975

14,031,650

14,424,625

14,336,908

13,961,975

Commercial real estate

4,450,085

4,433,783

4,626,057

4,710,033

4,600,651

Loans to individuals:

Permanent mortgage

1,844,555

1,886,378

1,925,539

1,975,449

1,999,312

Permanent mortgages guaranteed by U.S. government agencies

197,889

197,794

191,764

195,373

193,308

Personal

1,175,466

1,201,382

1,117,382

1,037,889

1,003,734

Total loans to individuals

3,217,910

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 estate

1,296,266

1,259,117

1,292,116

1,341,609

1,344,810

Loans to individuals

756,634

727,175

749,361

673,463

662,721

Total Texas

8,403,590

8,161,186

8,261,704

7,892,337

7,761,549

Oklahoma:

Commercial

3,886,086

3,454,825

3,690,100

3,762,234

3,551,054

Commercial real estate

593,473

631,026

679,786

717,970

665,190

Loans to individuals

1,788,518

1,854,864

1,753,698

1,786,162

1,792,188

Total Oklahoma

6,268,077

5,940,715

6,123,584

6,266,366

6,008,432

Colorado:

Commercial

2,181,309

2,169,598

2,247,798

2,325,742

2,231,703

Commercial real estate

955,608

927,826

975,066

1,023,410

957,348

Loans to individuals

268,674

276,939

303,605

314,317

307,534

Total Colorado

3,405,591

3,374,363

3,526,469

3,663,469

3,496,585

Arizona:

Commercial

1,396,582

1,307,073

1,276,534

1,330,415

1,335,140

Commercial real estate

714,161

728,832

771,425

761,243

791,466

Loans to individuals

181,821

186,539

170,815

168,019

160,848

Total Arizona

2,292,564

2,222,444

2,218,774

2,259,677

2,287,454

Kansas/Missouri:

Commercial

556,255

527,872

566,969

602,836

667,859

Commercial real estate

310,799

322,541

374,795

331,443

327,870

Loans to individuals

116,734

131,069

146,522

155,453

157,391

Total Kansas/Missouri

983,788

981,482

1,088,286

1,089,732

1,153,120

New Mexico:

Commercial

327,164

305,320

335,409

350,520

342,915

Commercial real estate

434,150

402,148

374,331

385,058

371,416

Loans to individuals

87,110

90,257

92,270

92,626

96,391

Total New Mexico

848,424

797,725

802,010

828,204

810,722

Arkansas:

Commercial

97,889

92,068

87,588

87,896

79,286

Commercial real estate

145,628

162,293

158,538

149,300

142,551

Loans to individuals

18,419

18,711

18,414

18,671

19,281

Total Arkansas

261,936

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:

Transaction

9,955,697

8,574,912

7,447,799

7,020,484

6,542,548

Savings

329,631

306,194

308,103

307,785

309,875

Time

1,137,802

1,125,446

1,198,170

1,253,804

1,217,371

Total interest-bearing

11,423,130

10,006,552

8,954,072

8,582,073

8,069,794

Total Oklahoma

15,092,688

13,263,889

12,469,384

11,861,433

11,502,033

Texas:

Demand

2,767,399

2,757,376

2,867,915

2,970,340

2,964,600

Interest-bearing:

Transaction

2,874,362

2,911,731

2,589,063

2,453,187

2,385,001

Savings

115,039

102,456

100,597

103,125

101,849

Time

505,565

495,343

464,264

425,253

419,269

Total interest-bearing

3,494,966

3,509,530

3,153,924

2,981,565

2,906,119

Total Texas

6,262,365

6,266,906

6,021,839

5,951,905

5,870,719

Colorado:

Demand

1,579,764

1,729,674

1,694,044

1,621,820

1,897,547

Interest-bearing:

Transaction

1,759,384

1,769,037

1,910,874

1,800,271

1,844,632

Savings

58,000

53,307

60,107

57,263

58,919

Time

279,105

283,517

273,622

246,198

261,235

Total interest-bearing

2,096,489

2,105,861

2,244,603

2,103,732

2,164,786

Total Colorado

3,676,253

3,835,535

3,938,647

3,725,552

4,062,333

New Mexico:

Demand

750,052

623,722

645,698

630,861

662,362

Interest-bearing:

Transaction

563,891

558,493

539,260

557,881

573,203

Savings

67,553

63,999

62,863

62,636

61,497

Time

235,778

238,140

236,135

232,569

228,212

Total interest-bearing

867,222

860,632

838,258

853,086

862,912

Total New Mexico

1,617,274

1,484,354

1,483,956

1,483,947

1,525,274

Arizona:

Demand

665,396

681,268

705,895

704,144

697,381

Interest-bearing:

Transaction

729,603

684,929

600,103

560,861

622,039

Savings

8,832

10,314

12,487

11,966

12,144

Time

47,081

49,676

44,347

43,099

44,004

Total interest-bearing

785,516

744,919

656,937

615,926

678,187

Total Arizona

1,450,912

1,426,187

1,362,832

1,320,070

1,375,568

Kansas/Missouri:

Demand

318,985

384,533

376,020

431,856

410,799

Interest-bearing:

Transaction

537,552

784,574

284,940

310,774

361,590

Savings

12,888

12,169

11,689

13,125

13,815

Time

19,137

17,877

19,126

19,205

19,977

Total interest-bearing

569,577

814,620

315,755

343,104

395,382

Total Kansas/Missouri

888,562

1,199,153

691,775

774,960

806,181

Arkansas:

Demand

70,428

27,381

39,513

29,176

31,624

Interest-bearing:

Transaction

175,803

108,076

149,506

148,485

147,964

Savings

1,862

1,837

1,747

1,783

1,785

Time

8,005

7,850

7,877

7,810

8,321

Total interest-bearing

185,670

117,763

159,130

158,078

158,070

Total Arkansas

256,098

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 equivalents

1.33

%

1.62

%

2.42

%

2.57

%

2.56

%

Trading securities

2.89

%

3.19

%

3.49

%

3.59

%

3.88

%

Investment securities, net of allowance

4.73

%

4.69

%

4.46

%

4.41

%

4.50

%

Available for sale securities

2.48

%

2.52

%

2.60

%

2.63

%

2.57

%

Fair value option securities

2.67

%

2.62

%

2.79

%

3.34

%

3.62

%

Restricted equity securities

5.49

%

5.37

%

6.34

%

6.30

%

6.42

%

Residential mortgage loans held for sale

3.50

%

3.55

%

3.73

%

3.65

%

4.58

%

Loans

4.50

%

4.75

%

5.12

%

5.39

%

5.26

%

Allowance for loan losses

Loans, net of allowance

4.55

%

4.80

%

5.17

%

5.45

%

5.31

%

Total tax-equivalent yield on earning assets

3.73

%

3.93

%

4.25

%

4.51

%

4.46

%

COST OF INTEREST-BEARING LIABILITIES

Interest-bearing deposits:

Interest-bearing transaction

0.89

%

1.00

%

1.08

%

1.04

%

0.94

%

Savings

0.09

%

0.11

%

0.14

%

0.12

%

0.12

%

Time

1.83

%

1.94

%

1.94

%

1.90

%

1.80

%

Total interest-bearing deposits

0.98

%

1.09

%

1.17

%

1.13

%

1.04

%

Funds purchased and repurchase agreements

1.14

%

1.56

%

2.01

%

2.08

%

2.07

%

Other borrowings

1.66

%

2.01

%

2.42

%

2.67

%

2.68

%

Subordinated debt

5.30

%

5.40

%

5.48

%

5.53

%

5.50

%

Total cost of interest-bearing liabilities

1.19

%

1.40

%

1.68

%

1.70

%

1.66

%

Tax-equivalent net interest revenue spread

2.54

%

2.53

%

2.57

%

2.81

%

2.80

%

Effect of noninterest-bearing funding sources and other

0.26

%

0.35

%

0.44

%

0.49

%

0.50

%

Tax-equivalent net interest margin

2.80

%

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

Healthcare

4,070

4,480

5,978

16,148

18,768

Services

8,425

7,483

6,119

10,087

9,555

General business

9,681

11,731

10,715

25,528

26,703

Total commercial

118,624

115,416

111,706

123,395

90,358

Commercial real estate

8,545

27,626

23,185

21,670

21,508

Loans to individuals:

Permanent mortgage

30,721

31,522

30,972

31,734

33,463

Permanent mortgage guaranteed by U.S. government agencies

5,005

6,100

6,332

6,743

6,946

Personal

277

287

271

237

302

Total loans to individuals

36,003

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 agencies

91,757

92,452

92,718

95,989

91,787

Real estate and other repossessed assets

36,744

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 agencies

194,911

195,210

187,160

193,976

162,770

Accruing loans 90 days past due2

3,706

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 commitments

3,377

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 portfolio1

450

Total provision for credit losses

$

93,771

$

19,000

$

12,000

$

5,000

$

8,000

Allowance for loan losses to period end loans

1.40

%

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 loans

1.53

%

0.98

%

0.92

%

0.92

%

0.95

%

Nonperforming assets to period end loans and repossessed assets

1.30

%

1.35

%

1.28

%

1.33

%

1.20

%

Net charge-offs (annualized) to average loans

0.31

%

0.22

%

0.19

%

0.14

%

0.19

%

Allowance for loan losses to nonaccruing loans2

199.35

%

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 loans2

217.38

%

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, 2019

1

1Q20 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.