BOK Financial Reports Quarterly Earnings Of $98 Million

BOK Financial Corporation reported net income of $97.6 million or $1.43 per diluted share for the second quarter of 2012, up $14.0 million or 17% over the prior quarter. Net income was $83.6 million or $1.22 per diluted share for the first quarter of 2012 and $69.0 million or $1.00 per diluted share for the second quarter of 2011. Net income for the six months ended June 30, 2012 totaled $181.2 million or $2.65 per diluted share compared to $133.8 million or $1.95 per diluted share for the six months ended June 30, 2011.

“BOK Financial is pleased to announce solid performance for the second quarter of 2012,” said President and CEO Stan Lybarger. “All of our non-interest revenue sources increased over the previous quarter, led by a 20% increase in mortgage banking revenue. Our mortgage banking efforts produced outstanding results as the current low interest rate environment continues to drive demand. In addition, improvements in credit quality increased net income by more than $14 million or $0.21 per diluted share during the second quarter. We recognized a $14 million pretax gain on the sale of common stock received in settlement of a defaulted loan and recorded an $8 million negative provision for credit losses."

Highlights of second quarter of 2012 included:
  • Net interest revenue increased to $181.4 million for the second quarter of 2012 compared to $173.6 million for the first quarter of 2012. Net interest margin was 3.30% for the second quarter of 2012 and 3.19% for the first quarter of 2012. Net interest revenue for the second quarter of 2012 included $2.9 million from the full recovery of a nonaccruing commercial loan. Excluding this recovery, net interest margin was 3.25% for the second quarter of 2012.
  • Fees and commissions revenue totaled $154.5 million, up $10.1 million or 7% over the first quarter of 2012. Mortgage banking revenue increased $6.5 million. All other fee-based revenue sources also increased over the prior quarter.
  • Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $212.3 million, up $20.0 million over the previous quarter. Personnel expenses were up $7.5 million due largely to incentive compensation. Non-personnel expenses increased $12.4 million due primarily to higher mortgage banking, repossessed assets, and data processing expenses.
  • An $8.0 million negative provision for credit losses was recorded in the second quarter of 2012. No provision for credit losses was recorded in the first quarter of 2012. Net charge-offs continued to decrease and other credit quality indicators continue to improve. Net charge-offs totaled $4.8 million or 0.17% of average loans on an annualized basis in the second quarter of 2012 compared to $8.5 million or 0.30% of average loans on an annualized basis in the first quarter of 2012. Net charge-offs for the second quarter were reduced by $2.1 million from the full recovery of a nonaccruing commercial loan.
  • The combined allowance for credit losses totaled $241 million or 2.09% of outstanding loans at June 30, 2012 compared to $254 million or 2.20% of outstanding loans at March 31, 2012. Nonperforming assets totaled $279 million or 2.38% of outstanding loans and repossessed assets at June 30, 2012 and $336 million or 2.87% of outstanding loans and repossessed assets at March 31, 2012.
  • Outstanding loan balances were $11.6 billion at June 30, 2012, flat compared to the prior quarter. Commercial loan balances increased $93 million and residential mortgage loans increased $37 million over March 31, 2012. Commercial real estate loans decreased $107 million and consumer loans decreased $24 million.
  • Period end deposits totaled $18.4 billion at June 30, 2012 compared to $18.5 billion at March 31, 2012. Demand deposit accounts were up $251 million, offset by a $357 million decrease in interest-bearing transaction accounts and a $58 million decrease in time deposits.
  • Tangible common equity ratio was 10.07% at June 30, 2012 and 9.75% at March 31, 2012. The tangible common equity ratio is a non-GAAP measure of capital strength used by the Company and investors based on shareholders' equity minus intangible assets and equity that does not benefit common shareholders. The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company's Tier 1 capital ratios, as defined by banking regulations, were 13.62% at June 30, 2012 and 13.03% at March 31, 2012.
  • The Company paid a cash dividend of $26 million or $0.38 per common share during the second quarter of 2012. On July 31, 2012, the board of directors approved a quarterly cash dividend of $0.38 per common share payable on or about August 31, 2012 to shareholders of record as of August 17, 2012.

Net Interest Revenue

Net interest revenue increased $7.8 million over the first quarter of 2012, including $2.9 million from the full recovery of a nonaccruing commercial loan during the second quarter. Excluding this interest recovery, net interest margin increased 6 basis points over the prior quarter to 3.25%.

The yield on average earning assets was flat compared to the prior quarter and the yield on the loan portfolio decreased by 2 basis point to 4.48%, excluding the impact of the interest recovery. The available for sale securities portfolio yield increased 4 basis points to 2.54% primarily due to efforts to reduce our exposure to prepayment risk on our mortgage-back securities portfolio. The cost of interest-bearing liabilities decreased 7 basis points from the previous quarter to 0.56%. The average rate of interest paid on subordinated debentures decreased 167 basis points compared to the first quarter of 2012 to 3.95%. The interest rate on $233 million of these subordinated debentures converted from a fixed interest rate of 5.75% to a floating interest rate based on LIBOR plus 0.69% during the second quarter.

Average earning assets increased $163 million during the second quarter of 2012. Average outstanding loans increased $178 million due primarily to a $194 million increase in commercial loan balances. The average balance of the available for sale securities portfolio increased $144 million over the first quarter of 2012. The average balance of residential mortgage-backed securities we have elected to carry at fair value decreased $219 million compared to the first quarter of 2012. These securities are generally used as an economic hedge against changes in the value of mortgage servicing rights and the average outstanding balance can change significantly.

Average interest-bearing deposits decreased $637 million compared to the previous quarter. Average demand deposits balances were up $431 million over the prior quarter. Average interest-bearing transaction account balances decreased $540 million and average time deposit account balances decreased $114 million. Average balances of borrowed funds increased $328 million over the first quarter of 2012.

Fees and Commissions Revenue

Fees and commissions revenue totaled $154.5 million, up $10.1 million over the first quarter of 2012 due primarily to a $6.5 million increase in mortgage banking revenue. All other significant sources of fee revenue also increased over the previous quarter.

Growth in mortgage banking revenue was due to increased mortgage loan production volumes and improved pricing of loans sold which resulted from continued low interest rates. Residential mortgage loans funded for sale totaled $842 million for the second quarter of 2012, up $96 million or 13% over the previous quarter. Refinanced mortgage loans were 51% of loans originated for sale in the second quarter of 2012 compared to 67% of the loans originated for sale in the first quarter of 2012. The unpaid principal balance of residential mortgage loans held for sale was up $5.9 million or 3% and outstanding mortgage loan commitments were up $90 million or 30% over March 31, 2012. Expansion of our mortgage banking division in the Texas, Colorado and Kansas markets positioned us to benefit from increased demand as the result of continued low mortgage interest rates.

Trust fees and commissions revenue increased $1.5 million over the first quarter of 2012 primarily due to the seasonal timing of tax-service fees. Brokerage and trading revenue was up $1.5 million. Investment banking revenues increased $1.2 million primarily due to the expansion of our municipal financial advisory services, particularly in the Texas market. Retail brokerage fees were up $512 thousand due to increased market volatility and customer transactions. Securities trading and customer hedging revenue were flat compared to the prior quarter. The Company received a $2.9 million recovery of derivative contract losses from the 2008 Lehman Brothers bankruptcy. This recovery was offset by a decrease in revenue from energy derivative contracts due to a decline in contract volumes. Transaction card revenue increased $1.3 million due primarily to an increase in the volume of card transactions processed on behalf of merchant services customers. Deposits service charges and fees increased $837 thousand due primarily to an increased volume of overdraft charges compared to the first quarter of 2012.

Operating Expenses

Total operating expenses were $223.8 million for the second quarter of 2012 compared to $185.2 million for the first quarter of 2012. Excluding changes in the fair value of mortgage servicing rights, operating expenses totaled $212.3 million, up $20.0 million over the first quarter of 2012.

Personnel costs increased $7.5 million due primarily to increased incentive compensation expense. Stock-based incentive compensation expense increased $4.7 million primarily due to the timing of accruals for the BOK Financial Corporation True-Up Plan, which provides incentive compensation for certain senior executives based on earnings per share performance and compensation of comparable senior executives at peer banks. Cash-based incentive compensation, which rewards employees as they generate business opportunities for the Company by growing loans, deposits, customer relationships or other measurable metrics, increased $1.7 million. Regular compensation expense was up $2.1 million primarily due to standard annual merit increases which were fully effective in the second quarter of 2012.

Non-personnel expense increased $12.4 million over the first quarter of 2012. Net losses and operating expenses on repossessed properties were up $3.7 million over the first quarter of 2012. Losses on sales and write-downs of repossessed assets increased by $2.7 million. Write-downs of repossessed assets were up primarily due regularly scheduled appraisal updates, partially offset by decreased losses on sales of repossessed assets. Operating expenses of repossessed assets were up $945 thousand over the first quarter. Mortgage banking costs were up $3.6 million due to increased provision for potential losses on loans sold to government sponsored entities under standard representation and warranties. While the number of actual repurchases has remained low, the loss severity has trended higher. At June 30, 2012, we have unresolved deficiency requests from the agencies on 303 loans with an aggregate outstanding principal balance of $40 million from our $11.6 billion mortgage servicing portfolio. Data processing and communications expense increased $3.1 million. Data processing and communications expense in the first quarter was lower due to the favorable resolution of a dispute with a service provider. Business promotion expense was up $2.4 million due primarily to timing of marketing expenses.

Loans, Deposits and Capital

Loans

Outstanding loans at June 30, 2012 were $11.6 billion, flat compared to March 31, 2012. Growth in commercial and residential mortgage loans was offset by decreases in commercial real estate and consumer loans.

Outstanding commercial loan balances increased $93 million over March 31, 2012 due primarily to a $69 million increase in loans attributed to Colorado and a $60 million increase in loans attributed to Texas, partially offset by a $15 million decrease in loans attributed to the Arkansas market. Energy sector loans increased $112 million, growing in the Colorado, Oklahoma and Texas markets. Service sector loans increased $19 million. Growth in the Texas, Colorado and Arizona markets was partially offset by decreased loan balances in the Oklahoma market. Wholesale/retail sector loans decreased $67 million primarily in the Texas and Oklahoma markets. Other commercial and industrial sector loans increased $5 million primarily due to a decrease in the Arkansas market, partially offset by an increase in the Texas market. Unfunded energy loan commitments increased $220 million during the second quarter to $2.1 billion. All other unfunded commercial loan commitments totaled $3.1 billion at June 30, 2012.

Commercial real estate loans decreased $107 million compared to March 31, 2012 due to improved market conditions for permanent financing. Loans secured by multifamily residential properties decreased $74 million primarily related to loans in the Texas market. Loans secured by industrial properties decreased $58 million primarily in the Texas market. Construction and land development loan balances continued to decline, down $31 million, primarily in the Oklahoma, Texas and Colorado markets. Unfunded commercial real estate loan commitments totaled $535 million at June 30, 2012, up $85 million over March 31, 2012.

Residential mortgage loans increased $37 million over March 31, 2012. Home equity loans increased $48 million. Non-guaranteed permanent mortgage loans increased $6.4 million and permanent mortgage loans guaranteed by U.S. government agencies decreased $18 million.

Consumer loans decreased $24 million from March 31, 2012, primarily due to continued runoff of indirect automobile loans related to the previously announced decision to curtail that business in favor of a customer-focused direct approach to consumer lending. Approximately $63 million of indirect automobile loans remain outstanding at June 30, 2012.

Deposits

Deposits totaled $18.4 billion at June 30, 2012 compared to $18.5 billion at March 31, 2012. Demand deposit balances increased $251 million. Interest-bearing transaction account balances decreased $357 million and time deposits decreased $58 million. Among the lines of business, commercial deposits increased $35 million, wealth management deposits decreased $120 million and consumer deposits decreased $107 million. Increased commercial and industrial and energy account balances were partially offset by decreased treasury services customer balances. Commercial customers continue to maintain high account balances due to continued economic uncertainty and persistently low yields available on high quality investment alternatives.

Capital

The Company and its subsidiary bank exceeded the regulatory definition of well capitalized at June 30, 2012. The Company's Tier 1 capital ratio was 13.62% at June 30, 2012 and 13.03% at March 31, 2012. The total capital ratio was 16.19% at June 30, 2012 and 16.16% at March 31, 2012. In addition, the Company's tangible common equity ratio, a non-GAAP measure, was 10.07% at June 30, 2012 and 9.75% at March 31, 2012. Unrealized securities gains added 49 basis points to the tangible common equity ratio at June 30, 2012. The Company repurchased 39,496 common shares at an average price of $53.81 per share during the second quarter through a previously-announced share repurchase program.

In June, banking regulators issued a Notice of Proposed Rulemaking that will incorporate Basel III capital changes for substantially all U.S. banking organizations. If adopted as proposed, these changes will establish a 7% threshold for the Tier 1 common equity ratio consisting of a minimum level plus a capital conservation buffer. BOK Financial's Tier 1 common equity ratio based on the existing Basel I standards was 13.41% as of June 30, 2012. Our estimated Tier 1 common equity ratio under a fully phased in Basel III framework is approximately 12.75%, nearly 575 basis points above the 7% regulatory threshold. This estimate is subject to interpretation of rules that are not yet final. Additionally, the proposed definition of Tier 1 common equity includes unrealized gains and losses on available for sale securities which will vary based on market conditions.

Credit Quality

Nonperforming assets decreased $57 million during the second quarter of 2012 to $279 million or 2.38% of outstanding loans and repossessed assets at June 30, 2012. Nonaccruing loans decreased $39 million and real estate and other repossessed assets decreased $10 million. Renegotiated loans, largely consisting of residential mortgage loans guaranteed by U.S. government agencies, decreased $8 million due primarily to loans sold to government agencies.

Nonaccruing loans totaled $144 million or 1.25% of outstanding loans at June 30, 2012 and $183 million or 1.58% of outstanding loans at March 31, 2012. During the second quarter of 2012, $18 million of new nonaccruing loans were identified, offset by $38 million in payments received, $12 million in charge-offs and $6.2 million in foreclosures and repossessions.

Nonaccruing commercial loans decreased to $35 million or 0.49% of outstanding commercial loans at June 30, 2012 from $62 million or 0.89% of outstanding commercial loans at March 31, 2012. Significant decreases included the full recovery of an $11 million wholesale/retail sector loan in the Arkansas market, plus recovery of $2.1 million previously charged off and $2.9 million of foregone interest and fees. In addition, a partial payment of $12 million was received during the second quarter on a nonaccruing manufacturing sector loan in the Oklahoma market. Nonaccruing commercial real estate loans decreased to $80 million or 3.77% of outstanding commercial real estate loans at June 30, 2012 from $86 million or 3.87% of outstanding commercial real estate loans at March 31, 2012. Nonaccruing commercial real estate loans consist primarily of land development and residential construction loans. Nonaccruing land development and residential construction loans decreased $6.4 million to $46 million or 16.04% of all land development and construction loans nonaccruing at June 30, 2012.

Nonaccruing residential mortgage loans decreased $4.7 million during the second quarter of 2012 to $23 million or 1.13% of outstanding residential mortgage loans. Principally all non-guaranteed residential mortgage loans past due 90 days or more are nonaccruing. Residential mortgage loans past due 30 to 89 days and still accruing interest, excluding loans guaranteed by U.S. government agencies, totaled $17 million at June 30, 2012 and $15 million at March 31, 2012.

The combined allowance for credit losses totaled $241 million or 2.09% of outstanding loans and 166.75% of nonaccruing loans at June 30, 2012. The allowance for loan losses was $232 million and the accrual for off-balance sheet credit losses was $9.7 million. Quarterly net charge-offs continued to decline. Net loans charged-off against the allowance for loan loss totaled $4.8 million or 0.17% on an annualized basis for the second quarter of 2012 compared to $8.5 million or 0.30% on an annualized basis for the first quarter of 2012. Gross charge-offs continue to decrease, down $2.1 million from the previous quarter. Other credit factors also continue to improve. Most economic indicators are stable or improving in our primary markets. After evaluating all credit factors, the Company recorded an $8.0 million negative provision for credit losses during the second quarter of 2012.

Subsequent to June 30, 2012, BOK Financial refunded $7.1 million received from the City of Tulsa in 2008 to settle claims related to a defaulted loan. The settlement agreement between BOK Financial and the City of Tulsa had been invalidated by the Oklahoma Supreme Court and the refund amount was fully accrued in 2011. The refund of this settlement will increase third quarter net charge-offs.

Real estate and other repossessed assets totaled $106 million at June 30, 2012, primarily consisting of $40 million of 1-4 family residential properties (including $21 million guaranteed by U.S. government agencies), $32 million of developed commercial real estate properties, $17 million of undeveloped land and $14 million of residential land and land development properties. The distribution of real estate owned and other repossessed assets among various markets included $28 million attributed to Arizona, $22 million attributed to Texas, $19 million attributed to New Mexico and $15 million attributed to Oklahoma. Real estate and other repossessed assets decreased by $10 million during the second quarter of 2012. Sales of $37 million were partially offset by $30 million of additions. Additions included $21 million and sales included $20 million of 1-4 family residential properties guaranteed by U.S. government agencies. Write-downs and net losses on sales of real estate and other repossessed assets totaled $3.2 million.

The Company also has off-balance sheet credit risk related to residential mortgage loans sold prior to 2008 to U.S. government agencies under various community development programs with full recourse for the life of the loans. The outstanding principal balance of these loans decreased to $241 million at June 30, 2012 from $248 million at March 31, 2012. The loans are primarily to borrowers in our market areas, including $170 million in Oklahoma. At June 30, 2012, approximately 5% of these loans are nonperforming and 6% were past due 30 to 89 days. A separate accrual for credit risk of $18 million is available to absorb losses on these loans.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $10.4 billion at June 30, 2012 and $10.2 billion at March 31, 2012. The available for sale portfolio consisted primarily of residential mortgage-backed securities, including $9.9 billion fully backed by U.S. government agencies and $318 million privately issued by publicly owned financial institutions. Privately issued mortgage-backed securities included $199 million backed by Jumbo-A residential mortgage loans and $118 million backed by Alt-A residential mortgage loans. Net unamortized premiums are less than 1% of the securities portfolio amortized cost.

Net unrealized gains on available for sale securities totaled $242 million at June 30, 2012 and $277 million at March 31, 2012. Net unrealized gains on residential mortgage-backed securities issued by U.S. government agencies decreased $27 million during the second quarter to $272 million at June 30, 2012. Net unrealized losses on privately issued residential mortgage-backed securities totaled $36 million at June 30, 2012 and $45 million at March 31, 2012.

The amortized cost of privately issued residential mortgage-backed securities totaled $354 million at June 30, 2012, down $17 million since March 31, 2012. All of these securities are rated below investment grade by at least one nationally-recognized rating agency. The amortized cost of these securities was reduced during the second quarter of 2012 by $16 million of cash payments received and $858 thousand of credit-related impairment charges during the quarter.

In the second quarter of 2012, the Company recognized net gains of $20.5 million from sales of available for sale securities, including a gain of $14.2 million from the sale of $26 million of stock received in settlement of a defaulted loan. The Company also recognized $6.1 million of gains on sales of $433 million of residential mortgage-backed securities guaranteed by U.S. government agencies held in available for sale securities. These securities were sold either because they had reached their expected maximum potential total return or to mitigate exposure to prepayment risk. Net gains from sales of available for sale securities totaled $4.3 million in the first quarter of 2012.

The Company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts designated as an economic hedge of the changes in the fair value of our mortgage servicing rights. Residential mortgage interest rates decreased during the second quarter of 2012, causing prepayment speeds to increase and the value of our mortgage servicing rights to decrease by $11.5 million. This decrease was partially offset by a $9.5 million increase in the value of securities and interest rate derivative contracts held as an economic hedge.

About BOK Financial Corporation

BOK Financial is a $26 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, BOSC, Inc. and Cavanal Hill Investment Management, Inc. BOKF, NA operates the TransFund electronic funds network and seven banking divisions: Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, 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 adequacy of the allowance for credit losses and asset impairment as of June 30, 2012 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,” 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 involve judgments as to future events and are inherently forward-looking statements. Assessments that BOK Financial's acquisitions and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to (1) the ability to fully realize expected cost savings from mergers within the expected time frames, (2) the ability of other companies on which BOK Financial relies to provide goods and services in a timely and accurate manner, (3) changes in interest rates and interest rate relationships, (4) demand for products and services, (5) the degree of competition by traditional and nontraditional competitors, (6) changes in banking regulations, tax laws, prices, levies and assessments, (7) the impact of technological advances and (8) trends in consumer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

 
BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
 

June 30,2012
 

March 31,2012
 

June 30,2011
ASSETS
Cash and due from banks $ 628,092 $ 691,697 $ 1,098,721
Funds sold and resell agreements 11,171 14,609 12,040
Trading securities 149,317 128,376 99,846
Investment securities 412,479 427,259 349,583
Available for sale securities 10,395,415 10,186,597 9,567,008
Fair value option securities 325,177 347,952 553,231
Residential mortgage loans held for sale 259,174 247,039 169,609
Loans:
Commercial 7,052,544 6,959,092 6,170,245
Commercial real estate 2,126,214 2,233,683 2,188,031
Residential mortgage 2,005,097 1,968,372 1,871,954
Consumer     392,576       416,297       507,314  
Total loans 11,576,431 11,577,444 10,737,544
Less allowance for loan losses     (231,669 )     (244,209 )     (286,611 )
Loans, net of allowance 11,344,762 11,333,235 10,450,933
Premises and equipment, net 261,508 263,579 265,057
Receivables 121,944 138,325 129,944
Goodwill 335,601 335,601 335,601
Intangible assets, net 9,098 9,645 12,010
Mortgage servicing rights, net 91,783 98,138 109,192
Real estate and other repossessed assets 105,708 115,790 129,026
Bankers' acceptances 2,873 3,493 1,661
Derivative contracts 366,204 384,996 229,887
Cash surrender value of bank-owned life insurance 269,093 266,227 261,203
Receivable on unsettled securities sales 32,876 511,288 170,600
Other assets     453,771       380,327       293,030  
TOTAL ASSETS   $ 25,576,046     $ 25,884,173     $ 24,238,182  
LIABILITIES AND EQUITY
Deposits:
Demand $ 6,440,375 $ 6,189,172 $ 4,725,977
Interest-bearing transaction 8,551,874 8,908,397 9,013,323
Savings 261,998 259,619 211,877
Time     3,107,950       3,166,099       3,634,700  
Total deposits 18,362,197 18,523,287 17,585,877
Funds purchased 1,453,750 1,784,940 1,706,893
Repurchase agreements 1,136,948 1,162,546 1,106,163
Other borrowings 58,056 209,230 149,703
Subordinated debentures 353,378 394,760 398,788
Accrued interest, taxes, and expense 140,434 180,840 104,493
Bankers' acceptances 2,873 3,493 1,661
Due on unsettled securities purchases 603,800 305,166 166,607
Derivative contracts 370,053 305,290 173,917
Other liabilities     171,836       144,220       151,906  
TOTAL LIABILITIES 22,653,325 23,013,772 21,546,008
Shareholders' equity:
Capital, surplus and retained earnings 2,746,744 2,673,001 2,521,462
Accumulated other comprehensive income     139,190       161,418       146,255  
TOTAL SHAREHOLDERS' EQUITY 2,885,934 2,834,419 2,667,717
Non-controlling interest     36,787       35,982       24,457  
TOTAL EQUITY     2,922,721       2,870,401       2,692,174  
TOTAL LIABILITIES AND EQUITY   $ 25,576,046     $ 25,884,173     $ 24,238,182  
 
 
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
  Three Months Ended

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
ASSETS
Funds sold and resell agreements $ 19,187 $ 11,385 $ 12,035 $ 12,344 $ 8,814
Trading securities 143,770 95,293 97,972 88,576 80,113
Investment securities 416,284 430,890 443,326 329,627 357,698
Available for sale securities 10,091,279 9,947,227 9,914,523 9,656,592 9,543,482
Fair value option securities 335,965 555,233 660,025 594,629 518,073
Residential mortgage loans held for sale 191,311 182,372 201,242 156,621 134,876
Loans:
Commercial 7,075,871 6,882,277 6,502,981 6,329,135 6,145,918
Commercial real estate 2,133,247 2,198,832 2,256,153 2,208,757 2,172,166
Residential mortgage 2,011,729 1,944,462 1,949,929 1,868,627 1,858,117
Consumer     393,875       411,240       443,252       466,285       504,553  
Total loans 11,614,722 11,436,811 11,152,315 10,872,805 10,680,755
Less allowance for loan losses     (242,605 )     (252,538 )     (266,473 )     (285,570 )     (291,308 )
Total loans, net     11,372,117       11,184,273       10,885,842       10,587,235       10,389,447  
Total earning assets 22,569,913 22,406,673 22,214,965 21,425,624 21,032,503
Cash and due from banks 748,811 908,628 1,234,312 1,045,450 764,806
Cash surrender value of bank-owned life insurance 267,246 264,354 261,496 260,505 259,337
Derivative contracts 371,690 311,178 247,411 228,466 253,163
Other assets     1,580,857       1,625,750       1,679,256       1,661,693       1,669,426  
TOTAL ASSETS   $ 25,538,517     $ 25,516,583     $ 25,637,440     $ 24,621,738     $ 23,979,235  
 
LIABILITIES AND EQUITY
Deposits:
Demand $ 6,278,342 $ 5,847,682 $ 5,588,596 $ 5,086,538 $ 4,554,000
Interest-bearing transaction 8,779,659 9,319,978 9,276,608 9,310,046 9,184,141
Savings 259,386 241,442 220,236 214,979 210,707
Time     3,132,220       3,246,362       3,485,059       3,617,731       3,632,130  
Total deposits 18,449,607 18,655,464 18,570,499 18,229,294 17,580,978
Funds purchased 1,740,354 1,337,614 1,197,154 994,099 1,168,670
Repurchase agreements 1,095,298 1,183,778 1,189,861 1,128,275 1,004,217
Other borrowings 86,667 72,911 88,489 128,288 187,441
Subordinated debentures 357,609 397,440 398,858 398,812 398,767
Derivative contracts 302,329 207,864 180,623 187,515 175,199
Other liabilities     637,920       826,279       1,241,469       817,049       813,074  
TOTAL LIABILITIES 22,669,784 22,681,350 22,866,953 21,883,332 21,328,346
Total equity     2,868,733       2,835,233       2,770,487       2,738,406       2,650,889  
TOTAL LIABILITIES AND EQUITY   $ 25,538,517     $ 25,516,583     $ 25,637,440     $ 24,621,738     $ 23,979,235  
 
 
STATEMENTS OF EARNINGS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except per share data)
 
  Three Months Ended   Six Months Ended
June 30, 2012   June 30, 2011   June 30, 2012   June 30, 2011
 
Interest revenue $ 203,055 $ 205,717 $ 401,263 $ 407,806
Interest expense     21,694       31,716       46,333       63,166  
Net interest revenue 181,361 174,001 354,930 344,640
Provision for credit losses     (8,000 )     2,700       (8,000 )     8,950  
Net interest revenue after provision for credit losses     189,361       171,301       362,930       335,690  
Other operating revenue:
Brokerage and trading revenue 32,600 23,725 63,711 49,101
Transaction card revenue 26,758 31,024 52,188 59,469
Trust fees and commissions 19,931 19,150 38,369 37,572
Deposit service charges and fees 25,216 23,857 49,595 46,337
Mortgage banking revenue 39,548 19,356 72,626 36,712
Bank-owned life insurance 2,838 2,872 5,709 5,735
Other revenue     7,559       7,842       16,586       16,174  
Total fees and commissions 154,450 127,826 298,784 251,100
Gain on other assets, net 3,765 3,344 3,409 3,276
Gain (loss) on derivatives, net 2,345 1,225 (128 ) (1,188 )
Gain on fair value option securities, net 6,852 9,921 5,119 6,403
Gain on available for sale securities, net 20,481 5,468 24,812 10,370
Total other-than-temporary impairment losses (135 ) (74 ) (640 ) (74 )
Portion of loss recognized in (reclassified from) other comprehensive income     (723 )     (4,750 )     (3,940 )     (9,349 )
Net impairment losses recognized in earnings     (858 )     (4,824 )     (4,580 )     (9,423 )
Total other operating revenue 187,035 142,960 327,416 260,538
Other operating expense:
Personnel 122,297 105,603 237,066 205,597
Business promotion 6,746 4,777 11,134 9,401
Professional fees and services 8,343 6,258 15,942 13,716
Net occupancy and equipment 16,906 15,554 32,929 31,158
Insurance 4,011 4,771 7,877 10,957
Data processing and communications 25,264 24,428 47,408 46,931
Printing, postage and supplies 3,903 3,586 7,214 6,668
Net losses and operating expenses of repossessed assets 5,912 5,859 8,157 11,874
Amortization of intangible assets 545 896 1,120 1,792
Mortgage banking costs 11,173 8,968 18,746 15,439
Change in fair value of mortgage servicing rights 11,450 13,493 4,323 10,364
Other expense     7,236       9,016       17,107       17,761  
Total other operating expense 223,786 203,209 409,023 381,658
 
Net income before taxes 152,610 111,052 281,323 214,570
Federal and state income taxes     53,149       39,357       98,669       78,109  
 
Net income 99,461 71,695 182,654 136,461
Net income attributable to non-controlling interest     1,833       2,688       1,411       2,680  
Net income attributable to BOK Financial Corporation shareholders   $ 97,628     $ 69,007     $ 181,243     $ 133,781  
 
Average shares outstanding:
Basic 67,472,665 67,898,483 67,573,280 67,900,279
Diluted 67,744,828 68,169,485 67,847,659 68,173,182
 
Net income per share:
Basic $ 1.43 $ 1.01 $ 2.66 $ 1.96
Diluted $ 1.43 $ 1.00 $ 2.65 $ 1.95
 
FINANCIAL HIGHLIGHTS -- UNAUDITED

BOK FINANCIAL CORPORATION
 
(in thousands, except ratio and share data)      

 

Three Months Ended
Capital:

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
Period-end shareholders' equity $ 2,885,934 $ 2,834,419 $ 2,750,468 $ 2,732,592 $ 2,667,717
Risk weighted assets $ 17,758,118 $ 17,993,379 $ 17,291,105 $ 17,106,533 $ 16,452,305
Risk-based capital ratios:
Tier 1 13.62 % 13.03 % 13.27 % 13.14 % 13.30 %
Total capital 16.19 % 16.16 % 16.49 % 16.54 % 16.80 %
Leverage ratio 9.64 % 9.35 % 9.15 % 9.37 % 9.29 %
Tangible common equity ratio1 10.07 % 9.75 % 9.56 % 9.65 % 9.71 %
Tier 1 common equity ratio2 13.41 % 12.83 % 13.06 % 12.93 % 13.15 %
 
Common stock:
Book value per share $ 42.35 $ 41.61 $ 40.36 $ 40.18 $ 38.97
Market value per share:
High $ 58.12 $ 59.02 $ 55.90 $ 55.81 $ 54.72
Low $ 53.34 $ 52.56 $ 45.68 $ 44.00 $ 50.13
Cash dividends paid $ 25,904 $ 22,571 $ 22,451 $ 18,836 $ 18,823
Dividend payout ratio 26.53 % 26.99 % 33.51 % 22.13 % 27.28 %
Shares outstanding, net 68,144,159 68,116,893 68,153,044 68,006,390 68,462,869
Stock buy-back program:
Shares repurchased 39,496 345,300 69,581 492,444
Amount       $ 2,125     $ 18,432     $ 3,579     $ 22,866     $  
Average price per share       $ 53.81     $ 53.38     $ 51.44     $ 46.43     $  
 
Performance ratios (quarter annualized):
Return on average assets 1.54 % 1.32 % 1.04 % 1.37 % 1.15 %
Return on average equity 13.69 % 11.86 % 9.59 % 12.33 % 10.44 %
Net interest margin 3.3 % 3.19 % 3.20 % 3.34 % 3.40 %
Efficiency ratio 62.45 % 59.77 % 69.73 % 60.13 % 62.23 %
 
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio:
Total shareholders' equity $ 2,885,934 $ 2,834,419 $ 2,750,468 $ 2,732,592 $ 2,667,717
Less: Goodwill and intangible assets, net         (344,699 )     (345,246 )     (345,820 )     (346,716 )     (347,611 )
Tangible common equity       $ 2,541,235     $ 2,489,173     $ 2,404,648     $ 2,385,876     $ 2,320,106  
 
Total assets $ 25,576,046 $ 25,884,173 $ 25,493,946 $ 25,066,265 $ 24,238,182
Less: Goodwill and intangible assets, net         (344,699 )     (345,246 )     (345,820 )     (346,716 )     (347,611 )
Tangible assets       $ 25,231,347     $ 25,538,927     $ 25,148,126     $ 24,719,549     $ 23,890,571  
 
Tangible common equity ratio         10.07 %     9.75 %     9.56 %     9.65 %     9.71 %
 
2 Tier 1 common equity ratio:
Tier 1 capital $ 2,418,985 $ 2,344,779 $ 2,295,061 $ 2,247,576 $ 2,188,199
Less: Non-controlling interest         (36,787 )     (35,982 )     (36,184 )     (34,958 )     (24,457 )
Tier 1 common equity       $ 2,382,198     $ 2,308,797     $ 2,258,877     $ 2,212,618     $ 2,163,742  
 
Risk weighted assets       $ 17,758,118     $ 17,993,379     $ 17,291,105     $ 17,106,533     $ 16,452,305  
 
Tier 1 common equity ratio         13.41 %     12.83 %     13.06 %     12.93 %     13.15 %
 
 
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 
      Three Months Ended

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
Other data:
Trust assets $ 35,748,719 $ 35,650,798 $ 34,398,796 $ 31,750,636 $ 33,075,456
Mortgage servicing portfolio $ 11,564,643 $ 11,378,806 $ 11,300,986 $ 11,249,503 $ 11,283,442
Mortgage loans funded for sale $ 841,960 $ 746,241 $ 753,215 $ 637,127 $ 483,808
Mortgage loan refinances to total fundings 51 % 67 % 66 % 54 % 36 %
Tax equivalent adjustment $ 2,252 $ 2,094 $ 2,274 $ 2,233 $ 2,261
Net unrealized gain on available for sale securities $ 242,253 $ 277,277 $ 222,160 $ 278,616 $ 263,199
 
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts $ 2,623 $ (2,445 ) $ 121 $ 4,048 $ 1,224
Gain (loss) on mortgage trading securities         6,908       (2,393 )     222       17,788       9,921  
Gain (loss) on economic hedge of mortgage servicing rights 9,531 (4,838 ) 343 21,836 11,145
Gain (loss) on changes in fair value of mortgage servicing rights         (11,450 )     7,127       (5,261 )     (24,822 )     (13,493 )
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges       $ (1,919 )   $ 2,289     $ (4,918 )   $ (2,986 )   $ (2,348 )
 
Net interest revenue on mortgage trading securities       $ 2,148     $ 3,165     $ 4,436     $ 5,036     $ 5,120  
 
 
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
 
      Three Months Ended

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
Interest revenue $ 203,055 $ 198,208 $ 198,040 $ 205,749 $ 205,717
Interest expense         21,694       24,639       26,570       30,365       31,716  
Net interest revenue 181,361 173,569 171,470 175,384 174,001
Provision for credit losses         (8,000 )           (15,000 )           2,700  
Net interest revenue after provision for credit losses 189,361 173,569 186,470 175,384 171,301
Other operating revenue:
Brokerage and trading revenue 32,600 31,111 25,629 29,451 23,725
Transaction card revenue 26,758 25,430 25,960 31,328 31,024
Trust fees and commissions 19,931 18,438 17,865 17,853 19,150
Deposit service charges and fees 25,216 24,379 24,921 24,614 23,857
Mortgage banking revenue 39,548 33,078 25,438 29,493 19,356
Bank-owned life insurance 2,838 2,871 2,784 2,761 2,872
Other revenue         7,559       9,027       9,189       10,535       7,842  
Total fees and commissions 154,450 144,334 131,786 146,035 127,826
Gain (loss) on other assets, net 3,765 (356 ) 1,897 712 3,344
Gain (loss) on derivatives, net 2,345 (2,473 ) (174 ) 4,048 1,225
Gain (loss) on fair value option securities, net 6,852 (1,733 ) 222 17,788 9,921
Gain on available for sale securities, net 20,481 4,331 7,080 16,694 5,468
Total other-than-temporary impairment losses (135 ) (505 ) (1,037 ) (9,467 ) (74 )
Portion of loss recognized in (reclassified from) other comprehensive income         (723 )     (3,217 )     (1,747 )     (1,833 )     (4,750 )
Net impairment losses recognized in earnings         (858 )     (3,722 )     (2,784 )     (11,300 )     (4,824 )
Total other operating revenue 187,035 140,381 138,027 173,977 142,960
Other operating expense:
Personnel 122,297 114,769 121,129 103,260 105,603
Business promotion 6,746 4,388 5,868 5,280 4,777
Contribution to BOKF Charitable Foundation 4,000
Professional fees and services 8,343 7,599 7,664 7,418 6,258
Net occupancy and equipment 16,906 16,023 16,826 16,627 15,554
Insurance 4,011 3,866 3,636 2,206 4,771
Data processing and communications 25,264 22,144 26,599 24,446 24,428
Printing, postage and supplies 3,903 3,311 3,637 3,780 3,586
Net losses and operating expenses of repossessed assets 5,912 2,245 6,180 5,939 5,859
Amortization of intangible assets 545 575 895 896 896
Mortgage banking costs 11,173 7,573 10,154 9,349 8,968
Change in fair value of mortgage servicing rights 11,450 (7,127 ) 5,261 24,822 13,493
Other expense         7,236       9,871       11,348       12,873       9,016  
Total other operating expense 223,786 185,237 219,197 220,896 203,209
Net income before taxes 152,610 128,713 105,300 128,465 111,052
Federal and state income taxes         53,149       45,520       37,396       43,006       39,357  
Net income 99,461 83,193 67,904 85,459 71,695
Net income (loss) attributable to non-controlling interest         1,833       (422 )     911       358       2,688  
Net income attributable to BOK Financial Corporation shareholders       $ 97,628     $ 83,615     $ 66,993     $ 85,101     $ 69,007  
 
Average shares outstanding:
Basic 67,472,665 67,665,300 67,526,009 67,827,591 67,898,483
Diluted 67,744,828 67,941,895 67,774,721 68,037,419 68,169,485
Net income per share:
Basic $ 1.43 $ 1.22 $ 0.98 $ 1.24 $ 1.01
Diluted $ 1.43 $ 1.22 $ 0.98 $ 1.24 $ 1.00
 
 
LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
        Three Months Ended

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
 
Oklahoma:
Commercial $ 3,098,651 $ 3,107,726 $ 2,826,649 $ 2,865,740 $ 2,722,370
Commercial real estate 644,761 631,891 607,030 615,848 607,100
Residential mortgage 1,332,319 1,303,486 1,320,051 1,251,874 1,180,502
Consumer           205,436     215,693     235,909     250,048     267,993
Total Oklahoma           5,281,167     5,258,796     4,989,639     4,983,510     4,777,965
 
Texas:
Commercial 2,414,824 2,354,593 2,249,888 2,116,377 2,050,112
Commercial real estate 678,745 802,979 830,642 759,574 727,940
Residential mortgage 295,972 288,751 285,091 294,310 303,538
Consumer           115,602     124,692     126,570     133,454     138,713
Total Texas           3,505,143     3,571,015     3,492,191     3,303,715     3,220,303
 
New Mexico:
Commercial 262,144 273,284 258,668 279,319 283,760
Commercial real estate 285,871 282,834 303,500 302,980 307,190
Residential mortgage 144,944 144,180 132,772 139,922 131,943
Consumer           15,828     18,378     19,369     19,393     19,120
Total New Mexico           708,787     718,676     714,309     741,614     742,013
 
Arkansas:
Commercial 49,305 64,595 76,199 80,304 73,287
Commercial real estate 119,895 139,670 136,170 134,028 122,749
Residential mortgage 23,510 23,350 22,593 22,172 23,975
Consumer           24,270     28,783     35,911     44,445     52,572
Total Arkansas           216,980     256,398     270,873     280,949     272,583
 
Colorado:
Commercial 610,384 541,280 544,020 495,429 500,442
Commercial real estate 149,541 144,757 156,013 189,948 167,414
Residential mortgage 89,428 89,861 85,689 104,572 92,769
Consumer           20,612     19,790     21,598     22,183     19,619
Total Colorado           869,965     795,688     807,320     812,132     780,244
 
Arizona:
Commercial 278,119 269,099 271,914 269,381 275,469
Commercial real estate 181,513 180,830 198,160 227,085 207,300
Residential mortgage 76,616 81,281 94,363 100,132 103,657
Consumer           6,227     5,381     5,633     6,670     6,813
Total Arizona           542,475     536,591     570,070     603,268     593,239
 
Kansas / Missouri:
Commercial 339,117 348,515 327,732 315,052 264,805
Commercial real estate 65,888 50,722 59,788 43,370 48,338
Residential mortgage 42,308 37,463 33,968 36,919 35,570
Consumer           4,601     3,580     3,853     4,040     2,484
Total Kansas / Missouri           451,914     440,280     425,341     399,381     351,197
 
TOTAL BOK FINANCIAL         $ 11,576,431   $ 11,577,444   $ 11,269,743   $ 11,124,569   $ 10,737,544
 

Loans attributed to a geographical region may not always represent the location of the borrower or the collateral. The previous periods have been reclassified to conform to the current period loan classification and market attribution.
 
DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)

 
        Three Months Ended
Oklahoma:

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
Demand $ 3,499,834 $ 3,445,424 $ 3,223,201 $ 2,953,410 $ 2,486,671
Interest-bearing:
Transaction 5,412,002 5,889,625 6,050,986 6,038,770 5,916,784
Savings 150,353 148,556 126,763 122,829 120,278
Time           1,354,148     1,370,868     1,450,571     1,489,486     1,462,137
Total interest-bearing           6,916,503     7,409,049     7,628,320     7,651,085     7,499,199
Total Oklahoma           10,416,337     10,854,473     10,851,521     10,604,495     9,985,870
Texas:
Demand 1,966,465 1,876,133 1,808,491 1,710,315 1,528,772
Interest-bearing:
Transaction 1,813,209 1,734,655 1,940,819 1,820,116 1,741,176
Savings 51,114 50,331 45,872 42,272 42,185
Time           772,809     789,860     867,664     938,200     992,366
Total interest-bearing           2,637,132     2,574,846     2,854,355     2,800,588     2,775,727
Total Texas           4,603,597     4,450,979     4,662,846     4,510,903     4,304,499
New Mexico:
Demand 357,367 333,707 319,269 325,612 299,305
Interest-bearing:
Transaction 506,165 503,015 491,068 480,816 483,026
Savings 31,215 32,688 27,487 26,127 24,613
Time           383,350     392,234     410,722     431,436     449,618
Total interest-bearing           920,730     927,937     929,277     938,379     957,257
Total New Mexico           1,278,097     1,261,644     1,248,546     1,263,991     1,256,562
Arkansas:
Demand 16,921 22,843 18,513 21,809 17,452
Interest-bearing:
Transaction 172,829 151,708 131,181 181,486 138,954
Savings 2,220 2,358 1,727 1,735 1,673
Time           48,517     54,157     61,329     74,163     82,112
Total interest-bearing           223,566     208,223     194,237     257,384     222,739
Total Arkansas           240,487     231,066     212,750     279,193     240,191
Colorado:
Demand 301,646 311,057 272,565 217,394 196,915
Interest-bearing:
Transaction 465,276 476,718 511,993 520,743 509,738
Savings 24,202 23,409 22,771 22,599 21,406
Time           491,280     498,124     523,969     547,481     563,642
Total interest-bearing           980,758     998,251     1,058,733     1,090,823     1,094,786
Total Colorado           1,282,404     1,309,308     1,331,298     1,308,217     1,291,701
Arizona:
Demand 137,313 131,539 106,741 138,971 150,194
Interest-bearing:
Transaction 113,310 95,010 104,961 101,933 107,961
Savings 2,313 1,772 1,192 1,366 1,364
Time           31,539     34,199     37,641     40,007     44,619
Total interest-bearing           147,162     130,981     143,794     143,306     153,944
Total Arizona           284,475     262,520     250,535     282,277     304,138
Kansas / Missouri:
Demand 160,829 68,469 51,004 46,773 46,668
Interest-bearing:
Transaction 69,083 57,666 123,449 108,973 115,684
Savings 581 505 545 503 358
Time           26,307     26,657     30,086     33,697     40,206
Total interest-bearing           95,971     84,828     154,080     143,173     156,248
Total Kansas / Missouri           256,800     153,297     205,084     189,946     202,916
 
TOTAL BOK FINANCIAL         $ 18,362,197   $ 18,523,287   $ 18,762,580   $ 18,439,022   $ 17,585,877
 
 
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
 
        Three Months Ended

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
 
TAX-EQUIVALENT ASSETS YIELDS
Funds sold and resell agreements 0.08 % 0.07 % 0.10 % 0.16 % 0.14 %
Trading securities 1.53 % 1.88 % 2.79 % 2.85 % 2.92 %
Investment securities:
Taxable1 5.93 % 5.89 % 5.91 % 5.63 % 6.13 %
Tax-exempt1         4.90 %   4.87 %   4.81 %   4.94 %   4.82 %
Total investment securities1         5.63 %   5.59 %   5.59 %   5.35 %   5.49 %
Available for sale securities:
Taxable1 2.52 % 2.48 % 2.36 % 2.82 % 3.02 %
Tax-exempt1         4.69 %   5.17 %   5.14 %   4.92 %   5.12 %
Total available for sale securities1         2.54 %   2.50 %   2.38 %   2.83 %   3.04 %
Fair value option securities 2.62 % 2.79 % 2.98 % 3.66 % 4.42 %
Residential mortgage loans held for sale 3.75 % 3.90 % 4.01 % 4.09 % 4.48 %
Loans 4.58 % 4.50 % 4.65 % 4.71 % 4.69 %
Less allowance for loan losses         %   %   %   %   %
Loans, net of allowance 4.68 % 4.61 % 4.76 % 4.84 % 4.82 %
Total tax-equivalent yield on earning assets1 3.69 % 3.64 % 3.69 % 3.91 % 4.01 %
 
COST OF INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest-bearing transaction 0.16 % 0.17 % 0.18 % 0.23 % 0.27 %
Savings 0.23 % 0.24 % 0.26 % 0.34 % 0.39 %
Time         1.63 %   1.68 %   1.70 %   1.84 %   1.86 %
Total interest-bearing deposits 0.54 % 0.55 % 0.59 % 0.68 % 0.71 %
Funds purchased 0.16 % 0.09 % 0.06 % 0.05 % 0.09 %
Repurchase agreements 0.10 % 0.09 % 0.13 % 0.17 % 0.20 %
Other borrowings 3.96 % 5.58 % 4.75 % 5.26 % 4.76 %
Subordinated debt         3.95 %   5.62 %   5.61 %   5.60 %   5.57 %
Total cost of interest-bearing liabilities         0.56 %   0.63 %   0.66 %   0.76 %   0.81 %
Tax-equivalent net interest revenue spread 3.13 % 3.01 % 3.03 % 3.15 % 3.20 %
Effect of noninterest-bearing funding sources and other         0.17 %   0.18 %   0.17 %   0.19 %   0.20 %
Tax-equivalent net interest margin1         3.30 %   3.19 %   3.20 %   3.34 %   3.40 %

Yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income.
 
CREDIT QUALITY INDICATORS

BOK FINANCIAL CORPORATION
 
(in thousands, except ratios)         Quarter Ended
Nonperforming assets:

June 30,2012
 

March 31,2012
 

December 31,2011
 

September 30,2011
 

June 30,2011
Nonaccruing loans:
Commercial $ 34,529 $ 61,750 $ 68,811 $ 83,736 $ 53,365
Commercial real estate 80,214 86,475 99,193 110,048 110,363
Residential mortgage 22,727 27,462 29,767 31,731 31,693
Consumer           7,012       7,672       3,515       3,960       4,749  
Total nonaccruing loans 144,482 183,359 201,286 229,475 200,170
Renegotiated loans1 28,415 36,764 32,893 30,477 22,261
Real estate and other repossessed assets           105,708       115,790       122,753       127,943       129,026  
Total nonperforming assets         $ 278,605     $ 335,913     $ 356,932     $ 387,895     $ 351,457  
 
Nonaccruing loans by principal market:
Oklahoma $ 49,931 $ 64,097 $ 65,261 $ 73,794 $ 41,411
Texas 24,553 29,745 28,083 29,783 32,385
New Mexico 13,535 15,029 15,297 17,242 17,244
Arkansas 6,865 18,066 23,450 26,831 24,842
Colorado 28,239 28,990 33,522 36,854 37,472
Arizona 21,326 27,397 35,673 44,929 43,307
Kansas / Missouri           33       35             42       3,509  
Total nonaccruing loans         $ 144,482     $ 183,359     $ 201,286     $ 229,475     $ 200,170  
 
Nonaccruing loans by loan portfolio sector:
Commercial:
Energy $ 3,087 $ 336 $ 336 $ 3,900 $ 345
Manufacturing 12,230 23,402 23,051 27,691 4,366
Wholesale / retail 4,175 15,388 21,180 27,088 25,138
Integrated food services
Services 10,123 12,890 16,968 18,181 16,254
Healthcare 3,310 7,946 5,486 5,715 5,962
Other commercial and industrial           1,604       1,788       1,790       1,161       1,300  
Total commercial           34,529       61,750       68,811       83,736       53,365  
Commercial real estate:
Construction and land development 46,050 52,416 61,874 72,207 76,265
Retail 7,908 6,193 6,863 6,492 4,642
Office 10,589 10,733 11,457 11,967 11,473
Multifamily 3,219 3,414 3,513 4,036 4,717
Industrial
Other commercial real estate           12,448       13,719       15,486       15,346       13,266  
Total commercial real estate           80,214       86,475       99,193       110,048       110,363  
Residential mortgage:
Permanent mortgage 18,136 22,822 25,366 27,486 27,991
Home equity           4,591       4,640       4,401       4,245       3,702  
Total residential mortgage           22,727       27,462       29,767       31,731       31,693  
Consumer           7,012       7,672       3,515       3,960       4,749  
Total nonaccruing loans         $ 144,482     $ 183,359     $ 201,286     $ 229,475     $ 200,170  

 
 
 
CREDIT QUALITY INDICATORS
BOK FINANCIAL CORPORATION

(in thousands, except ratios)
Quarter Ended

June 30,2012

March 31,2012

December 31,2011

September 30,2011

June 30,2011
Performing loans 90 days past due2 $ 691 $ 6,140 $ 2,496 $ 1,401 $ 2,341
 
Gross charge-offs $ 11,544 $ 13,674 $ 14,771 $ 14,023 $ 12,774
Recoveries           6,703       5,189       5,311       3,869       4,256  
Net charge-offs         $ 4,841     $ 8,485     $ 9,460     $ 10,154     $ 8,518  
 
Provision for (reduction of) allowances for credit losses $ (8,000 ) $ $ (15,000 ) $ $ 2,700
 
Allowance for loan losses to period end loans 2.00 % 2.11 % 2.25 % 2.44 % 2.67 %
Combined allowance for credit losses to period end loans 2.09 % 2.20 % 2.33 % 2.58 % 2.77 %
Nonperforming assets to period end loans and repossessed assets 2.38 % 2.87 % 3.13 % 3.45 % 3.23 %
Net charge-offs (annualized) to average loans 0.17 % 0.30 % 0.34 % 0.37 % 0.32 %
Allowance for loan losses to nonaccruing loans 160.34 % 133.19 % 125.93 % 118.29 % 143.18 %
Combined allowance for credit losses to nonaccruing loans 167.09 % 138.67 % 130.53 % 125.16 % 148.55 %
 
1 Includes residential mortgage loans guaranteed by agencies of the U.S. government. These loans have been modified to extend payment terms and/or reduce interest rates to current market. $ 24,760 $ 32,770 $ 28,974 $ 26,670 $ 18,716
 
2 Excludes residential mortgage loans guaranteed agencies of the U.S. government.

Copyright Business Wire 2010

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