BOK Financial Reports Quarterly Earnings Of $87 Million

BOK Financial Corporation reported net income of $87.4 million or $1.27 per diluted share for the third quarter of 2012, compared to net income of $97.6 million or $1.43 per diluted share for the second quarter of 2012 and net income of $85.1 million or $1.24 per diluted share for the third quarter of 2011. A gain on the sale of common stock received in settlement of a defaulted loan and a negative provision for credit losses increased net income by $14 million or $0.21 per diluted share in the second quarter of 2012.

Net income for the nine months ended September 30, 2012 totaled $268.6 million or $3.92 per diluted share compared to $218.9 million or $3.19 per diluted share for the nine months ended September 30, 2011.

“BOK Financial's strong financial results for the third quarter continue to reflect the strength of our diversified revenue business model,” said President and CEO Stan Lybarger. “The prolonged low interest rate environment has enabled our mortgage banking professionals to assist a record number of customers in the purchase or refinance of their home. We experienced strong commercial loan growth and continued growth in our deposit base. We are also very pleased to welcome The Milestone Group to BOK Financial. The Milestone Group is a Denver-based registered investment adviser which provides wealth management services to high net worth clients in Colorado and Nebraska."

Highlights of third quarter of 2012 included:
  • Net interest revenue totaled $176.0 million for the third quarter of 2012 compared to $181.4 million for the second quarter of 2012. Net interest margin was 3.12% for the third quarter of 2012 and 3.30% for the second quarter of 2012. The yield on our securities portfolio continued to decline as cash flows are reinvested at lower rates. In addition, 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 for the second quarter was 3.25%.
  • Fees and commissions revenue totaled $166.3 million, up $11.9 million or 8% over the second quarter of 2012. Mortgage banking revenue increased $10.7 million due to record mortgage loan production volumes and improved pricing of loans sold.
  • Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $212.8 million, up $1.2 million or less than 1% over the previous quarter. Personnel expense increased $478 thousand. Non-personnel expense increased $725 thousand.
  • No provision for credit losses was recorded in the third quarter of 2012 compared to an $8.0 million negative provision for credit losses in the second quarter of 2012. Net charge-offs totaled $5.7 million or 0.19% of average loans on an annualized basis in the third quarter of 2012 compared to net charge-offs of $4.8 million or 0.17% of average loans on an annualized basis in the second quarter of 2012. Gross charge-offs continue to decline, down $2.6 million from the previous quarter. Third quarter recoveries were reduced by $7.1 million due to the refund of a settlement between BOK Financial and the City of Tulsa.
  • The combined allowance for credit losses totaled $236 million or 1.99% of outstanding loans at September 30, 2012 compared to $241 million or 2.09% of outstanding loans at June 30, 2012. Nonperforming assets totaled $264 million or 2.21% of outstanding loans and repossessed assets at September 30, 2012 and $279 million or 2.38% of outstanding loans and repossessed assets at June 30, 2012.
  • Outstanding loan balances were $11.8 billion at September 30, 2012, up $256 million over the prior quarter. Commercial loan balances grew by $221 million or 13% on an annualized basis over June 30, 2012. Commercial real estate loans grew by $39 million and residential mortgage loans grew by $14 million, partially offset by an $18 million decrease in consumer loans.
  • Available for sale securities grew by $1.1 billion during the third quarter to $11.5 billion at September 30, 2012. The Company increased its holdings of short-duration U.S. government guaranteed residential mortgage-backed securities during the third quarter.
  • Period end deposits totaled $19.1 billion at September 30, 2012 compared to $18.4 billion at June 30, 2012. Interest-bearing transaction accounts increased $451 million and demand deposit accounts increased $408 million, partially offset by an $86 million decrease in time deposits.
  • Tangible common equity ratio was 9.67% at September 30, 2012 and 10.07% at June 30, 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 13.21% at September 30, 2012 and 13.62% at June 30, 2012.
  • The Company paid a cash dividend of $26 million or $0.38 per common share during the third quarter of 2012. On October 30, 2012, the board of directors approved a quarterly cash dividend of $0.38 per common share payable on or about November 30, 2012 to shareholders of record as of November 16, 2012.
  • On October 30, 2012, the board of directors also approved a special cash dividend of $1.00 per common share payable on or about November 30, 2012 to shareholders of record as of November 16, 2012.

Net Interest Revenue

Net interest revenue decreased $5.3 million compared to the second quarter of 2012. Net interest margin was 3.12% for the third quarter of 2012 compared to 3.30% for the second quarter of 2012. Net interest revenue for the second quarter included $2.9 million from the full recovery of a nonaccruing commercial loan. Excluding this interest recovery, net interest margin was 3.25% for the second quarter of 2012.

The yield on average earning assets decreased 22 basis points compared to the prior quarter. The available for sale securities portfolio yield decreased 16 basis points to 2.38% due primarily to the continued reinvestment of cash flows from the portfolio at lower current rates. The loan portfolio yield decreased by 15 basis points to 4.33%, excluding the impact of the previously noted interest recovery in the second quarter. The loan yield decrease was largely due to renewals of maturing fixed-rate loans at current lower rates and narrowing credit spreads in this prolonged low interest rate environment, and a reduction in fees recognized when loans prepay. The cost of interest-bearing liabilities decreased 4 basis points from the previous quarter to 0.52%. The average rate of interest paid on subordinated debentures decreased to 2.79% in the third quarter of 2012 compared to 3.95% in the second quarter of 2012. 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 $1.2 billion during the third quarter of 2012. The average balance of the available for sale securities portfolio increased $967 million over the second quarter of 2012 due primarily to growth in residential and commercial mortgage-backed securities issued by U.S. government agencies. Average outstanding loans increased $125 million due primarily to a $140 million increase in commercial loan balances. The average balance of residential mortgage loans held for sale increased $73 million over the second quarter of 2012 due to increased origination volumes.

Average deposits increased $325 million over the previous quarter. Demand deposit balances were up $440 million. Time deposit account balances decreased $63 million and interest-bearing transaction account balances decreased $60 million. In addition, average balances of borrowed funds decreased $34 million compared to the second quarter of 2012.

Fees and Commissions Revenue

Fees and commissions revenue totaled $166.3 million, up $11.9 million over the second quarter of 2012 due primarily to a $10.7 million increase in mortgage banking revenue.

Growth in mortgage banking revenue was due to record mortgage loan production volumes and improved pricing of loans sold. Residential mortgage loans funded for sale totaled $1.0 billion for the third quarter of 2012, up $205 million or 24% over the previous quarter. Refinanced mortgage loans were 61% of loans originated for sale in the third quarter of 2012 compared to 51% of the loans originated for sale in the second quarter of 2012. Growth in mortgage loan production volume was stimulated by continued low primary mortgage interest rates and government programs that encourage refinancing. In addition to growth in loans funded, outstanding mortgage loan commitments at September 30, 2012 were up $60 million or 15% over June 30, 2012. Mortgage banking revenue also increased due to improved pricing of loans sold which resulted from government actions to reduce secondary market interest rates. Average secondary market rates for the third quarter of 2012 decreased nearly 50 basis points compared to the previous quarter.

Other sources of fees and commissions revenue were up modestly over the previous quarter. Transaction card revenue increased $1.0 million due primarily to an increase in the number of transactions processed by our TransFund electronic funds transfer network and for merchant services clients. Brokerage and trading revenue was down $1.3 million. Growth in securities trading and customer hedging revenue was partially offset by decreased retail brokerage and investment banking fees. Securities trading revenue increased $2.9 million. Excluding the impact of a $2.9 million recovery of derivative contract losses from the 2008 Lehman Brothers bankruptcy during the second quarter of 2012, customer hedging revenue increased $673 thousand. Retail brokerage revenue decreased $1.4 million and investment banking revenues decreased $577 thousand. Trust fees and commissions revenue and deposit service charges and fees were largely unchanged compared to the second quarter of 2012.

Operating Expenses

Total operating expenses were $222.3 million for the third quarter of 2012 compared to $223.0 million for the second quarter of 2012. Excluding changes in the fair value of mortgage servicing rights, operating expenses totaled $212.8 million, up $1.2 million over the second quarter of 2012.

Personnel costs increased $478 thousand over the second quarter of 2012. Regular compensation expense was up $1.5 million primarily due to increases in personnel headcount. Incentive compensation expense decreased $1.3 million. Stock-based incentive compensation expense decreased $4.1 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 $2.8 million.

Non-personnel expense increased $725 thousand over the second quarter of 2012. Data processing and communications expense increased $1.2 million primarily due to impairment charges on two discontinued software projects. Net losses and operating expenses on repossessed properties were down $206 thousand compared to the second quarter of 2012. All other expenses were down $291 thousand from the second quarter of 2012.

Loans, Deposits and Capital

Loans

Outstanding loans at September 30, 2012 were $11.8 billion, up $256 million over June 30, 2012. Growth in commercial, commercial real estate and residential mortgage loans was partially offset by a decrease in consumer loans.

Outstanding commercial loan balances grew by $221 million or 13% on an annualized basis over June 30, 2012. Outstanding balances were up in most geographic markets, including $115 million in Texas, $43 million in Oklahoma, $31 million in Kansas/Missouri and $22 million in Arizona. Energy sector loans increased $155 million, growing primarily in the Texas and Colorado markets. Wholesale/retail sector loans increased $119 million primarily in the Oklahoma and Texas markets. Service sector loans were down $40 million compared to June 30, 2012 primarily in the Oklahoma market and other commercial and industrial sector loans decreased $39 million primarily in the Texas market. Unfunded energy loan commitments increased $76 million during the third quarter to $2.2 billion. All other unfunded commercial loan commitments totaled $3.2 billion at September 30, 2012, up slightly from June 30, 2012.

Commercial real estate loans were up $39 million over June 30, 2012. Loans secured by multifamily residential properties increased $36 million primarily related to loans in the Texas market. Loans secured by retail facilities grew by $33 million primarily related to loans in the Oklahoma market. Loans secured by office buildings were up $22 million primarily in the Oklahoma and Texas markets. Growth in these loan classes was partially offset by a $44 million decrease in loans secured by industrial properties, primarily in the Texas and Oklahoma markets. Unfunded commercial real estate loan commitments totaled $574 million at September 30, 2012, up $40 million over June 30, 2012.

Residential mortgage loans increased $14 million over June 30, 2012. Home equity loans increased $19 million. Growth was primarily in first-lien, fully amortizing home equity loans. Non-guaranteed permanent mortgage loans decreased $6.9 million and permanent mortgage loans guaranteed by U.S. government agencies increased $1.3 million.

Consumer loans decreased $18 million from June 30, 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 $47 million of indirect automobile loans remain outstanding at September 30, 2012.

Deposits

Deposits totaled $19.1 billion at September 30, 2012 compared to $18.4 billion at June 30, 2012. Demand deposit balances increased $408 million. Interest-bearing transaction account balances increased $451 million and time deposits decreased $86 million. Among the lines of business, commercial deposits increased $623 million, wealth management deposits increased $210 million and consumer deposits increased $17 million. Commercial and industrial, treasury services, commercial real estate, energy and small business customer account balances all increased over the prior quarter. Commercial customers continue to maintain high account balances due to continued economic uncertainty and persistently low yields available on high quality investment alternatives.

The Dodd-Frank Wall Street Reform and Consumer Protection Act temporarily provided unlimited deposit insurance coverage for noninterest-bearing transaction accounts at all FDIC-insured institutions. Although an extension is currently being considered, this temporary program is set to expire on December 31, 2012. Upon expiration, noninterest-bearing transaction accounts will be insured only up to $250,000. The impact of the expiration of this temporary program is uncertain, but could result in a decrease in average demand deposit balances held by customers.

Capital

The Company and its subsidiary bank exceeded the regulatory definition of well capitalized at September 30, 2012. The Company's Tier 1 capital ratio was 13.21% at September 30, 2012 and 13.62% at June 30, 2012. The total capital ratio was 15.71% at September 30, 2012 and 16.19% at June 30, 2012. In addition, the Company's tangible common equity ratio, a non-GAAP measure, was 9.67% at September 30, 2012 and 10.07% at June 30, 2012. Unrealized securities gains added 54 basis points to the tangible common equity ratio at September 30, 2012. The decrease in Tier 1, total and tangible common equity ratios was largely due to asset growth. In each case, capital used to calculate these ratios at September 30 exceeded June 30.

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 13.01% as of September 30, 2012. Our estimated Tier 1 common equity ratio under a fully phased in Basel III framework is approximately 12.35%, nearly 535 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 $15 million during the third quarter of 2012 to $264 million or 2.21% of outstanding loans and repossessed assets at September 30, 2012. Nonaccruing loans decreased $13 million and real estate and other repossessed assets decreased $1.6 million. Accruing renegotiated loans, largely consisting of residential mortgage loans guaranteed by U.S. government agencies, decreased $423 thousand.

During the third quarter of 2012, the Office of the Comptroller of the Currency issued interpretive guidance regarding accounting for and classification of retail loans to borrowers who have filed for Chapter 7 bankruptcy. This guidance states that these loans should be charged-down to collateral value and classified as nonaccruing and troubled debt restructurings, regardless of current payment status. Generally, we have been complying with this guidance by charging down such loans to collateral value within 60 days of being notified of the borrower's bankruptcy filing. Based on available information we do not expect implementation to significantly affect charge-offs or provision for credit losses. We estimate that nonaccruing loans and troubled debt restructuring may increase by $10 million to $15 million. At September 30, 2012, payments on approximately 89% of loans that may be classified as nonaccruing are current. We expect to implement this guidance in the fourth quarter.

Nonaccruing loans totaled $132 million or 1.11% of outstanding loans at September 30, 2012 and $144 million or 1.25% of outstanding loans at June 30, 2012. During the third quarter of 2012, $20 million of new nonaccruing loans were identified, offset by $18 million in payments received, $8.9 million in charge-offs and $7.0 million in foreclosures and repossessions .

Nonaccruing commercial loans decreased to $22 million or 0.30% of outstanding commercial loans at September 30, 2012 from $35 million or 0.49% of outstanding commercial loans at June 30, 2012. The decrease was due primarily to the repayment of a $9.5 million manufacturing sector loan in the Oklahoma market. The Company also received a $1.8 million partial recovery of amounts previously charged off on this loan. Nonaccruing commercial real estate loans decreased to $76 million or 3.50% of outstanding commercial real estate loans at September 30, 2012 from $80 million or 3.77% of outstanding commercial real estate loans at June 30, 2012. Nonaccruing commercial real estate loans consist primarily of land development and residential construction loans. Nonaccruing land development and residential construction loans totaled $38 million or 13.17% of all land development and construction loans at September 30, 2012, a decrease of $7.9 million from June 30, 2012.

Nonaccruing residential mortgage loans increased $6.5 million during the third quarter of 2012 to $29 million or 1.45% 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 $21 million at September 30, 2012 and $17 million at June 30, 2012.

The combined allowance for credit losses totaled $236 million or 1.99% of outstanding loans and 178.70% of nonaccruing loans at September 30, 2012. The allowance for loan losses was $234 million and the accrual for off-balance sheet credit losses was $1.9 million. Gross charge-offs continue to decrease, totaling $8.9 million for the third quarter, compared to $11.5 million for the previous quarter. Recoveries of $10.3 million during the third quarter were partially offset by the return of $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 was invalidated by the Oklahoma Supreme Court in 2011. Recoveries totaled $6.7 million for the second quarter of 2012. Net charge-offs totaled $5.7 million or 0.19% on an annualized basis for the third quarter of 2012 compared with net charge-offs of $4.8 million or 0.17% on an annualized basis for the second quarter of 2012.

After evaluating all credit factors, no provision for credit losses was necessary during the third quarter of 2012. The previously noted recovery refund was expected and had been accrued in prior periods. Net recoveries recorded during the quarter offset an increase in required reserves due to loan portfolio growth. Credit quality indicators and most economic factors are stable or improving in our primary markets.

Real estate and other repossessed assets totaled $104 million at September 30, 2012, primarily consisting of $40 million of 1-4 family residential properties (including $23 million guaranteed by U.S. government agencies), $29 million of developed commercial real estate properties, $21 million of undeveloped land and $12 million of residential land and land development properties. The distribution of real estate owned and other repossessed assets among various markets included $29 million attributed to Arizona, $20 million attributed to New Mexico, $19 million attributed to Texas and $14 million attributed to Oklahoma. Real estate and other repossessed assets decreased by $1.6 million during the third quarter of 2012. Additions of $41 million were partially offset by $38 million of sales. Additions included $23 million and sales included $21 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 $3.6 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 $238 million at September 30, 2012 from $241 million at June 30, 2012. The loans are primarily to borrowers in our market areas, including $167 million in Oklahoma. At September 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 $11.5 billion at September 30, 2012 and $10.4 billion at June 30, 2012. The increase came primarily in short-duration U.S. government agency residential mortgage-backed securities and U.S. government agency commercial mortgage-backed securities. At September 30, 2012, the available for sale portfolio consisted primarily of $10.7 billion of residential mortgage-backed securities fully backed by U.S. government agencies, $339 million of commercial mortgage-backed securities fully backed by U.S. government agencies, and $332 million privately issued by publicly owned financial institutions. Privately issued mortgage-backed securities included $208 million backed by Jumbo-A residential mortgage loans and $124 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 $281 million at September 30, 2012 and $242 million at June 30, 2012. Net unrealized gains on residential mortgage-backed securities issued by U.S. government agencies increased $2.0 million during the second quarter to $274 million at September 30, 2012. Net unrealized losses on privately issued residential mortgage-backed securities totaled $5.3 million at September 30, 2012 and $36 million at June 30, 2012.

The amortized cost of privately issued residential mortgage-backed securities totaled $337 million at September 30, 2012, down $17 million since June 30, 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 third quarter of 2012 by $16 million of cash payments received and $1.1 million of credit-related impairment charges during the quarter.

In the third quarter of 2012, the Company recognized net gains of $8.0 million from sales of $209 million of 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 $20.5 million in the second quarter of 2012 and included a gain of $14.2 million from the sale of $26 million of stock received in settlement of a defaulted loan.

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 third quarter of 2012, causing prepayment speeds to increase and the value of our mortgage servicing rights to decrease by $9.6 million. This decrease was partially offset by a $6.1 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 $27 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 September 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)
      September 30, 2012     June 30, 2012     September 30, 2011
ASSETS
Cash and due from banks $ 596,590 $ 628,092 $ 953,688
Funds sold and resell agreements 18,904 11,171 19,193
Trading securities 204,242 149,317 109,659
Investment securities 432,114 412,479 452,652
Available for sale securities 11,506,434 10,395,415 9,619,631
Fair value option securities 331,887 325,177 672,191
Residential mortgage loans held for sale 325,102 259,174 256,397
Loans:
Commercial 7,273,217 7,052,544 6,421,602
Commercial real estate 2,165,526 2,126,214 2,272,833
Residential mortgage 2,018,980 2,005,097 1,949,901
Consumer       374,644       392,576       480,233
Total loans 11,832,367 11,576,431 11,124,569
Less allowance for loan losses       (233,756 )     (231,669 )     (271,456)
Loans, net of allowance 11,598,611 11,344,762 10,853,113
Premises and equipment, net 259,195 261,508 264,325
Receivables 116,243 121,944 111,427
Goodwill 358,962 335,601 335,601
Intangible assets, net 33,196 9,098 11,115
Mortgage servicing rights, net 89,653 91,783 87,948
Real estate and other repossessed assets 104,128 105,708 127,943
Bankers' acceptances 1,605 2,873 211
Derivative contracts 435,653 366,204 370,616
Cash surrender value of bank-owned life insurance 271,830 269,093 260,506
Receivable on unsettled securities sales 32,480 32,876 172,641
Other assets       400,812       453,771       387,408
TOTAL ASSETS       $ 27,117,641       $ 25,576,046       $ 25,066,265
LIABILITIES AND EQUITY
Deposits:
Demand $ 6,848,401 $ 6,440,375 $ 5,414,284
Interest-bearing transaction 9,002,567 8,551,874 9,252,837
Savings 269,573 261,998 217,431
Time       3,022,326       3,107,950       3,554,470
Total deposits 19,142,867 18,362,197 18,439,022
Funds purchased 1,680,626 1,453,750 1,318,668
Repurchase agreements 1,109,696 1,136,948 1,206,793
Other borrowings 639,254 58,056 80,276
Subordinated debentures 347,592 353,378 398,834
Accrued interest, taxes, and expense 182,410 140,434 155,188
Bankers' acceptances 1,605 2,873 211
Due on unsettled securities purchases 556,998 603,800 218,097
Derivative contracts 254,422 370,053 341,822
Other liabilities       189,696       171,836       139,804
TOTAL LIABILITIES 24,105,166 22,653,325 22,298,715
Shareholders' equity:
Capital, surplus and retained earnings 2,813,264 2,746,744 2,569,021
Accumulated other comprehensive income       162,393       139,190       163,571
TOTAL SHAREHOLDERS' EQUITY 2,975,657 2,885,934 2,732,592
Non-controlling interest       36,818       36,787       34,958
TOTAL EQUITY       3,012,475       2,922,721       2,767,550
TOTAL LIABILITIES AND EQUITY       $ 27,117,641       $ 25,576,046       $ 25,066,265
 
AVERAGE BALANCE SHEETS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands)
      Three Months Ended
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
ASSETS
Funds sold and resell agreements $ 17,837 $ 19,187 $ 11,385 $ 12,035 $ 12,344
Trading securities 132,213 143,770 95,293 97,972 88,576
Investment securities 408,646 416,284 430,890 443,326 329,627
Available for sale securities 11,058,055 10,091,279 9,947,227 9,914,523 9,656,592
Fair value option securities 336,160 335,965 555,233 660,025 594,629
Residential mortgage loans held for sale 264,024 191,311 182,372 201,242 156,621
Loans:
Commercial 7,216,232 7,075,871 6,882,277 6,502,981 6,329,136
Commercial real estate 2,148,559 2,133,247 2,198,832 2,256,153 2,208,757
Residential mortgage 2,003,162 2,011,729 1,944,462 1,949,929 1,868,627
Consumer       371,709       393,875       411,240       443,252       466,285  
Total loans 11,739,662 11,614,722 11,436,811 11,152,315 10,872,805
Less allowance for loan losses       (231,177 )     (242,605 )     (252,538 )     (266,473 )     (285,570 )
Total loans, net       11,508,485       11,372,117       11,184,273       10,885,842       10,587,235  
Total earning assets 23,725,420 22,569,913 22,406,673 22,214,965 21,425,624
Cash and due from banks 746,364 748,811 908,628 1,234,312 1,045,450
Cash surrender value of bank-owned life insurance 270,084 267,246 264,354 261,496 260,505
Derivative contracts 291,965 371,690 311,178 247,411 228,466
Other assets       1,554,339       1,580,857       1,625,750       1,679,256       1,661,693  
TOTAL ASSETS       $ 26,588,172       $ 25,538,517       $ 25,516,583       $ 25,637,440       $ 24,621,738  
 
LIABILITIES AND EQUITY
Deposits:
Demand $ 6,718,572 $ 6,278,342 $ 5,847,682 $ 5,588,596 $ 5,086,538
Interest-bearing transaction 8,719,648 8,779,659 9,319,978 9,276,608 9,310,046
Savings 267,498 259,386 241,442 220,236 214,979
Time       3,068,870       3,132,220       3,246,362       3,485,059       3,617,731  
Total deposits 18,774,588 18,449,607 18,655,464 18,570,499 18,229,294
Funds purchased 1,678,006 1,740,354 1,337,614 1,197,154 994,099
Repurchase agreements 1,112,847 1,095,298 1,183,778 1,189,861 1,128,275
Other borrowings 97,003 86,667 72,911 88,489 128,288
Subordinated debentures 352,432 357,609 397,440 398,858 398,812
Derivative contracts 247,148 302,329 207,864 180,623 187,515
Other liabilities       1,379,495       637,920       826,279       1,241,469       817,049  
TOTAL LIABILITIES 23,641,519 22,669,784 22,681,350 22,866,953 21,883,332
Total equity       2,946,653       2,868,733       2,835,233       2,770,487       2,738,406  
TOTAL LIABILITIES AND EQUITY       $ 26,588,172       $ 25,538,517       $ 25,516,583       $ 25,637,440       $ 24,621,738  
 
STATEMENTS OF EARNINGS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except per share data)
      Three Months Ended     Nine Months Ended

September 30,

2012
   

September 30,

2011
 

September 30,

2012
   

September 30,

2011
 
Interest revenue $ 196,071 $ 205,749 $ 597,334 $ 613,555
Interest expense       20,044       30,365       66,377       93,531  
Net interest revenue 176,027 175,384 530,957 520,024
Provision for credit losses                   (8,000 )     8,950  
Net interest revenue after provision for credit losses       176,027       175,384       538,957       511,074  
Other operating revenue:
Brokerage and trading revenue 31,261 29,451 94,972 78,552
Transaction card revenue 27,788 31,328 79,976 90,797
Trust fees and commissions 19,654 17,853 58,023 55,425
Deposit service charges and fees 25,148 24,614 74,743 70,951
Mortgage banking revenue 50,266 29,493 122,892 66,205
Bank-owned life insurance 2,707 2,761 8,416 8,496
Other revenue       9,476       10,535       26,062       26,709  
Total fees and commissions 166,300 146,035 465,084 397,135
Gain (loss) on other assets, net 125 351 (341 ) 2,474
Gain on derivatives, net 464 4,048 336 2,860
Gain on fair value option securities, net 6,192 17,788 11,311 24,191
Gain on available for sale securities, net 7,967 16,694 32,779 27,064
Total other-than-temporary impairment losses (9,467 ) (640 ) (9,541 )
Portion of loss recognized in (reclassified from) other comprehensive income       (1,104 )     (1,833 )     (5,044 )     (11,182 )
Net impairment losses recognized in earnings       (1,104 )     (11,300 )     (5,684 )     (20,723 )
Total other operating revenue 179,944 173,616 503,485 433,001
Other operating expense:
Personnel 122,775 103,260 359,841 308,857
Business promotion 6,054 5,280 17,188 14,681
Contribution to BOKF Charitable Foundation 4,000 4,000
Professional fees and services 7,991 7,418 23,933 21,134
Net occupancy and equipment 16,914 16,627 49,843 47,785
Insurance 3,690 2,206 11,567 13,163
Data processing and communications 26,486 24,446 73,894 71,377
Printing, postage and supplies 3,611 3,780 10,825 10,448
Net losses and operating expenses of repossessed assets 5,706 5,939 13,863 17,813
Amortization of intangible assets 742 896 1,862 2,688
Mortgage banking costs 11,566 9,349 30,312 24,788
Change in fair value of mortgage servicing rights 9,576 24,822 13,899 35,186
Other expense       7,229       12,512       20,460       29,120  
Total other operating expense 222,340 220,535 627,487 601,040
 
Net income before taxes 133,631 128,465 414,955 343,035
Federal and state income taxes       45,778       43,006       144,447       121,115  
 
Net income 87,853 85,459 270,508 221,920
Net income attributable to non-controlling interest       471       358       1,882       3,038  
Net income attributable to BOK Financial Corporation shareholders       $ 87,382       $ 85,101       $ 268,626       $ 218,882  
 
Average shares outstanding:
Basic 67,966,700 67,827,591 67,704,343 67,875,875
Diluted 68,334,989 68,037,419 67,981,558 68,127,754
 
Net income per share:
Basic $ 1.28 $ 1.24 $ 3.94 $ 3.20
Diluted $ 1.27 $ 1.24 $ 3.92 $ 3.19
 
FINANCIAL HIGHLIGHTS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except ratio and share data)
      Three Months Ended
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
Capital:
Period-end shareholders' equity $ 2,975,657 $ 2,885,934 $ 2,834,419 $ 2,750,468 $ 2,732,592
Risk weighted assets $ 18,448,854 $ 17,758,118 $ 17,993,379 $ 17,291,105 $ 17,106,533
Risk-based capital ratios:
Tier 1 13.21 % 13.62 % 13.03 % 13.27 % 13.14 %
Total capital 15.71 % 16.19 % 16.16 % 16.49 % 16.54 %
Leverage ratio 9.34 % 9.64 % 9.35 % 9.15 % 9.37 %
Tangible common equity ratio 1 9.67 % 10.07 % 9.75 % 9.56 % 9.65 %
Tier 1 common equity ratio 2 13.01 % 13.41 % 12.83 % 13.06 % 12.93 %
 
Common stock:
Book value per share $ 43.62 $ 42.35 $ 41.61 $ 40.36 $ 40.18
Market value per share:
High $ 59.47 $ 58.12 $ 59.02 $ 55.90 $ 55.81
Low $ 55.63 $ 53.34 $ 52.56 $ 45.68 $ 44.00
Cash dividends paid $ 25,912 $ 25,904 $ 22,571 $ 22,451 $ 18,836
Dividend payout ratio 29.65 % 26.53 % 26.99 % 33.51 % 22.13 %
Shares outstanding, net 68,215,354 68,144,159 68,116,893 68,153,044 68,006,390
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 1.31 % 1.54 % 1.32 % 1.04 % 1.37 %
Return on average equity 11.80 % 13.69 % 11.86 % 9.59 % 12.33 %
Net interest margin 3.12 % 3.30 % 3.19 % 3.20 % 3.34 %
Efficiency ratio 61.12 % 62.45 % 59.77 % 69.73 % 60.13 %
 
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio:
Total shareholders' equity $ 2,975,657 $ 2,885,934 $ 2,834,419 $ 2,750,468 $ 2,732,592
Less: Goodwill and intangible assets, net       (392,158 )     (344,699 )     (345,246 )     (345,820 )     (346,716 )
Tangible common equity       $ 2,583,499       $ 2,541,235       $ 2,489,173       $ 2,404,648       $ 2,385,876  
 
Total assets $ 27,117,641 $ 25,576,046 $ 25,884,173 $ 25,493,946 $ 25,066,265
Less: Goodwill and intangible assets, net       (392,158 )     (344,699 )     (345,246 )     (345,820 )     (346,716 )
Tangible assets       $ 26,725,483       $ 25,231,347       $ 25,538,927       $ 25,148,126       $ 24,719,549  
 
Tangible common equity ratio       9.67 %     10.07 %     9.75 %     9.56 %     9.65 %
 
2 Tier 1 common equity ratio:
Tier 1 capital $ 2,436,791 $ 2,418,985 $ 2,344,779 $ 2,295,061 $ 2,247,576
Less: Non-controlling interest       (36,818 )     (36,787 )     (35,982 )     (36,184 )     (34,958 )
Tier 1 common equity       $ 2,399,973       $ 2,382,198       $ 2,308,797       $ 2,258,877       $ 2,212,618  
 
Risk weighted assets       $ 18,448,854       $ 17,758,118       $ 17,993,379       $ 17,291,105       $ 17,106,533  
 
Tier 1 common equity ratio       13.01 %     13.41 %     12.83 %     13.06 %     12.93 %
 
FINANCIAL HIGHLIGHTS -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except ratio and share data)
      Three Months Ended
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
Other data:
Trust assets $ 37,721,780 $ 35,748,719 $ 35,650,798 $ 34,398,796 $ 31,750,636
Mortgage servicing portfolio $ 11,756,350 $ 11,564,643 $ 11,378,806 $ 11,300,986 $ 11,249,503
Mortgage loans funded for sale $ 1,046,608 $ 841,959 $ 746,241 $ 753,215 $ 637,127
Mortgage loan refinances to total fundings 61 % 51 % 67 % 66 % 54 %
Tax equivalent adjustment $ 2,509 $ 2,252 $ 2,094 $ 2,274 $ 2,233
Net unrealized gain on available for sale securities $ 281,455 $ 242,253 $ 201,340 $ 222,160 $ 278,616
 
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts $ 645 $ 2,623 $ (2,445 ) $ 121 $ 4,048
Gain (loss) on mortgage trading securities       5,455       6,908       (2,393 )     222       17,788  
Gain (loss) on economic hedge of mortgage servicing rights 6,100 9,531 (4,838 ) 343 21,836
Gain (loss) on changes in fair value of mortgage servicing rights       (9,576 )     (11,450 )     7,127       (5,261 )     (24,822 )
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges       $ (3,476 )     $ (1,919 )     $ 2,289       $ (4,918 )     $ (2,986 )
 
Net interest revenue on mortgage trading securities       $ 1,750       $ 2,148       $ 3,165       $ 4,436       $ 5,036  
 
QUARTERLY EARNINGS TREND -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands, except ratio and per share data)
      Three Months Ended
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
Interest revenue $ 196,071 $ 203,055 $ 198,208 $ 198,040 $ 205,749
Interest expense       20,044       21,694       24,639       26,570       30,365  
Net interest revenue 176,027 181,361 173,569 171,470 175,384
Provision for credit losses             (8,000 )           (15,000 )      
Net interest revenue after provision for credit losses 176,027 189,361 173,569 186,470 175,384
Other operating revenue:
Brokerage and trading revenue 31,261 32,600 31,111 25,629 29,451
Transaction card revenue 27,788 26,758 25,430 25,960 31,328
Trust fees and commissions 19,654 19,931 18,438 17,865 17,853
Deposit service charges and fees 25,148 25,216 24,379 24,921 24,614
Mortgage banking revenue 50,266 39,548 33,078 25,438 29,493
Bank-owned life insurance 2,707 2,838 2,871 2,784 2,761
Other revenue       9,476       7,559       9,027       9,189       10,535  
Total fees and commissions 166,300 154,450 144,334 131,786 146,035
Gain (loss) on other assets, net 125 2,990 (3,456 ) 1,682 351
Gain (loss) on derivatives, net 464 2,345 (2,473 ) (174 ) 4,048
Gain (loss) on fair value option securities, net 6,192 6,852 (1,733 ) 222 17,788
Gain on available for sale securities, net 7,967 20,481 4,331 7,080 16,694
Total other-than-temporary impairment losses (135 ) (505 ) (1,037 ) (9,467 )
Portion of loss recognized in (reclassified from) other comprehensive income       (1,104 )     (723 )     (3,217 )     (1,747 )     (1,833 )
Net impairment losses recognized in earnings       (1,104 )     (858 )     (3,722 )     (2,784 )     (11,300 )
Total other operating revenue 179,944 186,260 137,281 137,812 173,616
Other operating expense:
Personnel 122,775 122,297 114,769 121,129 103,260
Business promotion 6,054 6,746 4,388 5,868 5,280
Contribution to BOKF Charitable Foundation 4,000
Professional fees and services 7,991 8,343 7,599 7,664 7,418
Net occupancy and equipment 16,914 16,906 16,023 16,826 16,627
Insurance 3,690 4,011 3,866 3,636 2,206
Data processing and communications 26,486 25,264 22,144 26,599 24,446
Printing, postage and supplies 3,611 3,903 3,311 3,637 3,780
Net losses and operating expenses of repossessed assets 5,706 5,912 2,245 6,180 5,939
Amortization of intangible assets 742 545 575 895 896
Mortgage banking costs 11,566 11,173 7,573 10,154 9,349
Change in fair value of mortgage servicing rights 9,576 11,450 (7,127 ) 5,261 24,822
Other expense       7,229       6,461       6,770       11,133       12,512  
Total other operating expense 222,340 223,011 182,136 218,982 220,535
Net income before taxes 133,631 152,610 128,714 105,300 128,465
Federal and state income taxes       45,778       53,149       45,520       37,396       43,006  
Net income 87,853 99,461 83,194 67,904 85,459
Net income (loss) attributable to non-controlling interest       471       1,833       (422 )     911       358  
Net income attributable to BOK Financial Corporation shareholders       $ 87,382       $ 97,628       $ 83,616       $ 66,993       $ 85,101  
 
Average shares outstanding:
Basic 67,966,700 67,472,665 67,665,300 67,526,009 67,827,591
Diluted 68,334,989 67,744,828 67,941,895 67,774,721 68,037,419
Net income per share:
Basic $ 1.28 $ 1.43 $ 1.22 $ 0.98 $ 1.24
Diluted $ 1.27 $ 1.43 $ 1.22 $ 0.98 $ 1.24
 
LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED

BOK FINANCIAL CORPORATION

(in thousands)
      Three Months Ended
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
 
Bank of Oklahoma:
Commercial $ 3,141,217 $ 3,098,651 $ 3,107,726 $ 2,826,649 $ 2,865,740
Commercial real estate 639,156 644,761 631,891 607,030 615,848
Residential mortgage 1,477,583 1,460,173 1,426,827 1,411,560 1,378,519
Consumer       200,217       205,436       215,693       235,909       250,048
Total Bank of Oklahoma       5,458,173       5,409,021       5,382,137       5,081,148       5,110,155
 
Bank of Texas:
Commercial 2,529,473 2,414,824 2,354,593 2,249,888 2,116,377
Commercial real estate 712,895 678,745 802,979 830,642 759,574
Residential mortgage 266,791 268,639 262,556 268,053 276,721
Consumer       108,854       115,602       124,692       126,570       133,454
Total Bank of Texas       3,618,013       3,477,810       3,544,820       3,475,153       3,286,126
 
Bank of Albuquerque:
Commercial 267,469 262,144 273,284 258,668 279,319
Commercial real estate 294,731 285,871 282,834 303,500 302,980
Residential mortgage 117,783 113,987 106,754 104,695 99,191
Consumer       15,883       15,828       18,378       19,369       19,393
Total Bank of Albuquerque       695,866       677,830       681,250       686,232       700,883
 
Bank of Arkansas:
Commercial 48,097 49,305 64,595 76,199 80,304
Commercial real estate 119,305 119,895 139,670 136,170 134,028
Residential mortgage 12,408 12,513 14,557 15,772 15,793
Consumer       19,720       24,270       28,783       35,911       44,445
Total Bank of Arkansas       199,530       205,983       247,605       264,052       274,570
 
Colorado State Bank & Trust:
Commercial 616,321 610,384 541,280 544,020 495,429
Commercial real estate 145,077 149,541 144,757 156,013 189,948
Residential mortgage 57,637 60,893 61,329 64,627 66,491
Consumer       19,028       20,612       19,790       21,598       22,183
Total Colorado State Bank & Trust       838,063       841,430       767,156       786,258       774,051
 
Bank of Arizona:
Commercial 300,557 278,119 269,099 271,914 269,381
Commercial real estate 186,553 181,513 180,830 198,160 227,085
Residential mortgage 65,234 67,822 76,699 89,315 92,293
Consumer       6,150       6,227       5,381       5,633       6,670
Total Bank of Arizona       558,494       533,681       532,009       565,022       595,429
 
Bank of Kansas City:
Commercial 370,083 339,117 348,515 327,732 315,052
Commercial real estate 67,809 65,888 50,722 59,788 43,370
Residential mortgage 21,544 21,070 19,650 20,505 20,893
Consumer       4,792       4,601       3,580       3,853       4,040
Total Bank of Kansas City       464,228       430,676       422,467       411,878       383,355
 
TOTAL BOK FINANCIAL       $ 11,832,367       $ 11,576,431       $ 11,577,444       $ 11,269,743       $ 11,124,569
 

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
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
Bank of Oklahoma:
Demand $ 3,734,900 $ 3,499,834 $ 3,445,424 $ 3,223,201 $ 2,953,410
Interest-bearing:
Transaction 5,496,724 5,412,002 5,889,625 6,050,986 6,038,770
Savings 155,277 150,353 148,556 126,763 122,829
Time       1,274,336       1,354,148       1,370,868       1,450,571       1,489,486
Total interest-bearing       6,926,337       6,916,503       7,409,049       7,628,320       7,651,085
Total Bank of Oklahoma       10,661,237       10,416,337       10,854,473       10,851,521       10,604,495
Bank of Texas:
Demand 1,983,678 1,966,465 1,876,133 1,808,491 1,710,315
Interest-bearing:
Transaction 1,782,296 1,813,209 1,734,655 1,940,819 1,820,116
Savings 52,561 51,114 50,331 45,872 42,272
Time       789,725       772,809       789,860       867,664       938,200
Total interest-bearing       2,624,582       2,637,132       2,574,846       2,854,355       2,800,588
Total Bank of Texas       4,608,260       4,603,597       4,450,979       4,662,846       4,510,903
Bank of Albuquerque:
Demand 416,796 357,367 333,707 319,269 325,612
Interest-bearing:
Transaction 526,029 506,165 503,015 491,068 480,816
Savings 31,940 31,215 32,688 27,487 26,127
Time       375,611       383,350       392,234       410,722       431,436
Total interest-bearing       933,580       920,730       927,937       929,277       938,379
Total Bank of Albuquerque       1,350,376       1,278,097       1,261,644       1,248,546       1,263,991
Bank of Arkansas:
Demand 29,254 16,921 22,843 18,513 21,809
Interest-bearing:
Transaction 168,827 172,829 151,708 131,181 181,486
Savings 2,246 2,220 2,358 1,727 1,735
Time       45,719       48,517       54,157       61,329       74,163
Total interest-bearing       216,792       223,566       208,223       194,237       257,384
Total Bank of Arkansas       246,046       240,487       231,066       212,750       279,193
Colorado State Bank & Trust:
Demand 330,641 301,646 311,057 272,565 217,394
Interest-bearing:
Transaction 627,015 465,276 476,718 511,993 520,743
Savings 24,689 24,202 23,409 22,771 22,599
Time       476,564       491,280       498,124       523,969       547,481
Total interest-bearing       1,128,268       980,758       998,251       1,058,733       1,090,823
Total Colorado State Bank & Trust       1,458,909       1,282,404       1,309,308       1,331,298       1,308,217
Bank of Arizona:
Demand 151,738 137,313 131,539 106,741 138,971
Interest-bearing:
Transaction 298,048 113,310 95,010 104,961 101,933
Savings 2,201 2,313 1,772 1,192 1,366
Time       33,169       31,539       34,199       37,641       40,007
Total interest-bearing       333,418       147,162       130,981       143,794       143,306
Total Bank of Arizona       485,156       284,475       262,520       250,535       282,277
Bank of Kansas City:
Demand 201,393 160,829 68,469 51,004 46,773
Interest-bearing:
Transaction 103,628 69,083 57,666 123,449 108,973
Savings 660 581 505 545 503
Time       27,202       26,307       26,657       30,086       33,697
Total interest-bearing       131,490       95,971       84,828       154,080       143,173
Total Bank of Kansas City       332,883       256,800       153,297       205,084       189,946
 
TOTAL BOK FINANCIAL       $ 19,142,867       $ 18,362,197       $ 18,523,287       $ 18,762,580       $ 18,439,022
 
NET INTEREST MARGIN TREND -- UNAUDITED

BOK FINANCIAL CORPORATION
      Three Months Ended  
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
 
TAX-EQUIVALENT ASSETS YIELDS
Funds sold and resell agreements 0.07 % 0.08 % 0.07 % 0.10 % 0.16 %
Trading securities 2.12 % 1.53 % 1.88 % 2.79 % 2.85 %
Investment securities:
Taxable 1 5.83 % 5.93 % 5.89 % 5.91 % 5.63 %
Tax-exempt 1       4.12 %     4.90 %     4.87 %     4.81 %     4.94 %
Total investment securities 1       5.33 %     5.63 %     5.59 %     5.59 %     5.35 %
Available for sale securities:
Taxable 1 2.36 % 2.52 % 2.48 % 2.36 % 2.82 %
Tax-exempt 1       4.70 %     4.69 %     5.17 %     5.14 %     4.92 %
Total available for sale securities 1       2.38 %     2.54 %     2.50 %     2.38 %     2.83 %
Fair value option securities 2.27 % 2.62 % 2.79 % 2.98 % 3.66 %
Residential mortgage loans held for sale 3.48 % 3.75 % 3.90 % 4.01 % 4.09 %
Loans 4.33 % 4.58 % 4.50 % 4.65 % 4.71 %
Less allowance for loan losses       %     %     %     %     %
Loans, net of allowance 4.42 % 4.68 % 4.61 % 4.76 % 4.84 %
Total tax-equivalent yield on earning assets 1 3.47 % 3.69 % 3.64 % 3.69 % 3.91 %
 
COST OF INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest-bearing transaction 0.16 % 0.16 % 0.17 % 0.18 % 0.23 %
Savings 0.19 % 0.23 % 0.24 % 0.26 % 0.34 %
Time       1.61 %     1.63 %     1.68 %     1.70 %     1.84 %
Total interest-bearing deposits 0.53 % 0.54 % 0.55 % 0.59 % 0.68 %
Funds purchased 0.15 % 0.16 % 0.09 % 0.06 % 0.05 %
Repurchase agreements 0.10 % 0.10 % 0.09 % 0.13 % 0.17 %
Other borrowings 3.03 % 3.96 % 5.58 % 4.75 % 5.26 %
Subordinated debt       2.79 %     3.95 %     5.62 %     5.61 %     5.60 %
Total cost of interest-bearing liabilities       0.52 %     0.56 %     0.63 %     0.66 %     0.76 %
Tax-equivalent net interest revenue spread 2.95 % 3.13 % 3.01 % 3.03 % 3.15 %
Effect of noninterest-bearing funding sources and other       0.17 %     0.17 %     0.18 %     0.17 %     0.19 %
Tax-equivalent net interest margin 1       3.12 %     3.30 %     3.19 %     3.20 %     3.34 %

1 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
September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
Nonperforming assets:
Nonaccruing loans:
Commercial $ 21,762 $ 34,529 $ 61,750 $ 68,811 $ 83,736
Commercial real estate 75,761 80,214 86,475 99,193 110,048
Residential mortgage 29,267 22,727 27,462 29,767 31,731
Consumer       5,109       7,012       7,672       3,515       3,960
Total nonaccruing loans 131,899 144,482 183,359 201,286 229,475
Renegotiated loans 1 27,992 28,415 36,764 32,893 30,477
Real estate and other repossessed assets       104,128       105,708       115,790       122,753       127,943
Total nonperforming assets       $ 264,019       $ 278,605       $ 335,913       $ 356,932       $ 387,895
 
Nonaccruing loans by principal market:
Oklahoma $ 41,599 $ 49,931 $ 64,097 $ 65,261 $ 73,794
Texas 28,046 24,553 29,745 28,083 29,783
New Mexico 13,233 13,535 15,029 15,297 17,242
Arkansas 5,958 6,865 18,066 23,450 26,831
Colorado 22,878 28,239 28,990 33,522 36,854
Arizona 20,145 21,326 27,397 35,673 44,929
Kansas / Missouri       40       33       35             42
Total nonaccruing loans       $ 131,899       $ 144,482       $ 183,359       $ 201,286       $ 229,475
 
Nonaccruing loans by loan portfolio sector:
Commercial:
Energy $ 3,063 $ 3,087 $ 336 $ 336 $ 3,900
Manufacturing 2,283 12,230 23,402 23,051 27,691
Wholesale / retail 2,007 4,175 15,388 21,180 27,088
Integrated food services
Services 10,099 10,123 12,890 16,968 18,181
Healthcare 3,305 3,310 7,946 5,486 5,715
Other commercial and industrial       1,005       1,604       1,788       1,790       1,161
Total commercial       21,762       34,529       61,750       68,811       83,736
Commercial real estate:
Construction and land development 38,143 46,050 52,416 61,874 72,207
Retail 6,692 7,908 6,193 6,863 6,492
Office 9,833 10,589 10,733 11,457 11,967
Multifamily 3,145 3,219 3,414 3,513 4,036
Industrial 4,064
Other commercial real estate       13,884       12,448       13,719       15,486       15,346
Total commercial real estate       75,761       80,214       86,475       99,193       110,048
Residential mortgage:
Permanent mortgage 23,717 18,136 22,822 25,366 27,486
Home equity       5,550       4,591       4,640       4,401       4,245
Total residential mortgage       29,267       22,727       27,462       29,767       31,731
Consumer       5,109       7,012       7,672       3,515       3,960
Total nonaccruing loans       $ 131,899       $ 144,482       $ 183,359       $ 201,286       $ 229,475
 
CREDIT QUALITY INDICATORS

BOK FINANCIAL CORPORATION

(in thousands, except ratios)
      Quarter Ended
September 30, 2012   June 30, 2012     March 31, 2012     December 31, 2011     September 30, 2011
Performing loans 90 days past due 2 $ 1,181 $ 691 $ 6,140 $ 2,496 $ 1,401
 
Gross charge-offs $ 8,921 $ 11,543 $ 13,674 $ 14,771 $ 14,023
Recoveries       3,204     3 6,702       5,189       5,311       3,869  
Net charge-offs       $ 5,717       $ 4,841       $ 8,485       $ 9,460       $ 10,154  
 
Provision for (reduction of) allowances for credit losses $ $ (8,000 ) $ $ (15,000 ) $
 
Allowance for loan losses to period end loans 1.98 % 2.00 % 2.11 % 2.25 % 2.44 %
Combined allowance for credit losses to period end loans 1.99 % 2.09 % 2.20 % 2.33 % 2.58 %
Nonperforming assets to period end loans and repossessed assets 2.21 % 2.38 % 2.87 % 3.13 % 3.45 %
Net charge-offs (annualized) to average loans 0.19 % 3 0.17 % 0.30 % 0.34 % 0.37 %
Allowance for loan losses to nonaccruing loans 177.22 % 160.34 % 133.19 % 125.93 % 118.29 %
Combined allowance for credit losses to nonaccruing loans 178.70 % 167.09 % 138.67 % 130.53 % 125.16 %
 

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.
$ 24,590 $ 24,760 $ 32,770 $ 28,974 $ 26,670
 

2 Excludes residential mortgage loans guaranteed agencies of the U.S. government.
 
3 Includes $7.1 million of negative recovery related to a refund of a settlement agreement between BOK Financial and the City of Tulsa invalidated by the Oklahoma Supreme Court. Excluding this refund, BOK Financial had net charge-offs (recoveries) to average loans of (0.05%) on an annualized basis.

Copyright Business Wire 2010