BOK Financial Reports Quarterly Earnings Of $76 Million

BOK Financial Corporation reported net income of $75.7 million or $1.10 per diluted share for the third quarter of 2013. Net income was $79.9 million or $1.16 per diluted share for the second quarter of 2013 and $87.4 million or $1.27 per diluted share for the third quarter of 2012.

Net income for the nine months ended September 30, 2013 totaled $243.6 million or $3.54 per diluted share compared to $268.6 million or $3.92 per diluted share for the nine months ended September 30, 2012.

"This quarter proved to be challenging as uncertainty over government policies continued to drive higher long-term interest rates. Our mortgage banking revenue declined 36% due to a combination of narrowed gain on sale margins and lower production volumes," said President and Chief Executive Officer Stan Lybarger. "BOK Financial remains committed to driving long-term growth in non-interest income. We recently announced the acquisition of GTRUST Financial Corporation, a Topeka, Kansas-based independent trust and asset management company which will increase assets under management and provide new wealth management capability that can be leveraged across our entire geographic footprint."

Mr. Lybarger continued, "Credit quality remains solid, which required an $8.5 million reduction in our combined allowance for credit losses. BOK Financial remains extremely well capitalized. Our Tier 1 common equity ratio stands at 13.33%. Recognizing our strong capital position, the Company's board of directors approved an increase in the quarterly dividend to 40 cents per share."

Highlights of third quarter of 2013 included:
  • Net interest revenue totaled $166.4 million for the third quarter of 2013 compared to $167.2 million for the second quarter of 2013. Net interest margin was 2.80% for the third quarter of 2013 and 2.81% for the second quarter of 2013.
  • Fees and commissions revenue totaled $146.8 million, a decrease of $14.1 million compared to the second quarter of 2013. Mortgage banking revenue decreased $13.1 million as gain on sale margins compressed and production activity slowed. Mortgage loans funded for sale were down 10% and mortgage commitments decreased 36%.
  • Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $210.3 million, largely unchanged compared to the previous quarter. Personnel expense decreased $2.3 million. Non-personnel expense increased $1.7 million.
  • An $8.5 million negative provision for credit losses was recorded in the third quarter of 2013 and no provision for credit losses was recorded in the second quarter. Net charge-offs in the third quarter of 2013 totaled $299 thousand or 0.01% of average loans on an annualized basis compared to $2.3 million or 0.08% of average loans on an annualized basis in the second quarter.
  • The combined allowance for credit losses totaled $196 million or 1.59% of outstanding loans at September 30, 2013 compared to $205 million or 1.65% of outstanding loans at June 30, 2013. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $183 million or 1.49% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at September 30, 2013 and $200 million or 1.62% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at June 30, 2013.
  • Average loans increased $125 million over the previous quarter due primarily to growth in commercial real estate loans. Average commercial loans were unchanged. Period-end outstanding loan balances were $12.4 billion at September 30, 2013, a decrease of $91 million compared to June 30, 2013. Commercial loan balances decreased $137 million during the third quarter, partially offset by a $32 million increase in commercial real estate loans.
  • Average deposits decreased $80 million compared to the previous quarter, principally due to a decline in time deposits. Growth in demand deposits was offset by lower interest-bearing transaction accounts. Period end deposits totaled $19.5 billion at September 30, 2013 largely unchanged compared to June 30, 2013. Demand deposit account balances increased $187 million during the third quarter, offset by a $147 million decrease in interest-bearing transaction accounts and a $48 million decrease in time deposits.
  • Tangible common equity ratio was 9.73% at September 30, 2013 and 9.38% at June 30, 2013. 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 13.51% at September 30, 2013 and 13.37% at June 30, 2013.
  • The Company paid a regular quarterly cash dividend of $26 million or $0.38 per common share during the third quarter of 2013. On October 29, 2013, the board of directors approved an increase in the quarterly cash dividend to $0.40 per common share payable on or about November 29, 2013 to shareholders of record as of November 16, 2013.

Net Interest Revenue

Net interest revenue decreased $805 thousand compared to the second quarter of 2013. Net interest margin was 2.80% for the third quarter of 2013 compared to 2.81% for the second quarter of 2013.

The yield on average earning assets was 3.09%, a decrease of 2 basis points compared to the prior quarter. The yield on the available for sale securities portfolio decreased 1 basis point to 1.92%. The impact of cash flows being reinvested at lower current market rates was offset by slower prepayment speeds. Cash flows received from payments on residential mortgage-backed securities are currently being reinvested in short-duration securities that yield nearly 1.75%. The loan portfolio yield decreased to 4.06% from 4.12% in the previous quarter primarily due to continued market pricing pressure. Funding costs decreased 1 basis point to 0.42% primarily due to decreased rates paid on interest-bearing deposits.

Average earning assets decreased $500 million during the third quarter of 2013 primarily due to a $502 million decrease in the available for sale securities portfolio. Average loans balances were up $125 million over the previous quarter. Average deposits decreased $80 million and the average balance of borrowed funds decreased $30 million compared to the second quarter of 2013.

Fees and Commissions Revenue

Fees and commissions revenue totaled $146.8 million for the third quarter of 2013, a decrease of $14.1 million compared to the second quarter of 2013. Mortgage banking revenue decreased $13.1 million.

Mortgage banking revenue totaled $23.5 million for the third quarter of 2013 compared to $36.6 million for the second quarter of 2013. Mortgage interest rates began to trend higher in the second quarter resulting in a decrease in mortgage loans funded and commitments to originate mortgages in the third quarter. Residential mortgage loans funded for sale totaled $1.1 billion, a decrease of $116 million compared to the previous quarter. Outstanding commitments to originate mortgage loans also decreased to $351 million at September 30 from $548 million at June 30. Higher mortgage interest rates resulted in a narrowing of gain on sale margins. Gain on sale margins also tightened as our product mix shifted to loans with narrower margins. Approximately 39% of loans originated in the third quarter were through correspondent channels, up from 26% in the previous quarter. Refinanced mortgage loans decreased to 30% of loans originated for sale in the third quarter of 2013 from 48% in the second quarter of 2013.

“Despite the cyclical downturn in the mortgage business during the quarter, we believe this business drives significant long-term shareholder value and we continue to invest in growth opportunities,” stated Steve Bradshaw, Senior Executive Vice President. “Accordingly, earlier this month we launched HomeDirect Mortgage to reach consumers all across the country through online loan aggregators and we continue to expand partnerships with loan originators, especially those who have strong ties to local real estate markets and can drive purchase volume. During the quarter, we also adjusted expense levels in the mortgage business in light of the reduced origination volume.”

All other fee revenue sources were largely unchanged compared to the previous quarter. Trust fees and commissions were down $911 thousand primarily due to the seasonal timing of tax service fees. Brokerage and trading revenue decreased $536 thousand. Decreased customer hedging revenue from a decrease in the volume of interest rate contracts sold to our mortgage banking customers was partially offset by increased securities trading and brokerage revenue. Deposit service charges and fees increased $780 thousand due primarily to increased overdraft fee volumes.

Operating Expenses

Total operating expenses were $210.6 million for the third quarter of 2013 compared to $196.6 million for the second quarter of 2013. Excluding changes in the fair value of mortgage servicing rights, operating expenses totaled $210.3 million, largely unchanged compared to the second quarter of 2013.

Personnel costs decreased $2.3 million from the second quarter of 2013 primarily due to a seasonal decrease in payroll taxes. Incentive compensation expense decreased $844 thousand. Cash-based incentive compensation decreased $2.8 million. Stock-based incentive compensation expense increased $2.0 million primarily due to executive compensation plans which are based on performance of Company stock and other investments.

Non-personnel expense increased $1.7 million over the second quarter of 2013. During the third quarter, the Company made a $2.1 million discretionary contribution of appreciated stock to the BOKF Foundation. The BOKF Foundation partners with various charitable organizations to support needs within our communities. This contribution also resulted in a $1.1 million reduction in income tax expense for the third quarter. Net losses and operating expenses of repossessed assets increased $1.7 million primarily due to increased impairment charges as a result of regularly scheduled appraisal updates. Professional fees and services expense was down $1.2 million and data processing and communications expense decreased $1.0 million over the prior quarter.

Loans, Deposits and Capital

Loans

Outstanding loans were $12.4 billion at September 30, 2013, a decrease of $91 million compared to the prior quarter. Growth in commercial real estate and consumer loan balances was offset by a decrease in outstanding commercial loan balances.

Outstanding commercial loan balances decreased $137 million from June 30, 2013. The healthcare sector was the strongest performing component of our commercial loan portfolio, growing $41 million over June 30, 2013. This growth was offset by decreases of $73 million in energy sector loans, $56 million in service sector loans, $30 million in integrated food service sectors loans and $30 million in other commercial and industrial sector loans. Commercial loans attributed to the New Mexico market were up $30 million and commercial loans attributed to the Arizona market were up $24 million over June 30, 2013. Commercial loans also grew in the Kansas/Missouri, Arkansas and Texas markets. This loan growth was offset by a $191 million decrease in loans attributed to the Oklahoma market and a $38 million decrease in loans attributed to the Colorado market. Unfunded energy loan commitments grew by $124 million in the third quarter to $2.6 billion. All other unfunded commercial loan commitments totaled $3.5 billion at September 30, 2013, up $110 million over June 30, 2013.

“Average loan balances grew at a four percent annualized rate in the third quarter, driven by strength in commercial real estate and consumer loans,” stated Dan Ellinor, Senior Executive Vice President. “Commercial loan balances were flat compared to the second quarter, as several large borrowers freed up cash and paid down bank debt as a result of asset sales and capital markets activity. Our healthcare lending business, which is focused on skilled nursing facilities and acute care hospitals, was a bright spot, with annualized loan growth in the low-double-digits during the quarter.”

“While pipelines are strong in the fourth quarter, our borrowers remain cautious due to economic uncertainty,” added Ellinor. “Accordingly, we believe loan growth will remain in the mid single digits in the near term.”

Commercial real estate loans grew by $32 million over June 30, 2013. Other real estate loans increased $64 million primarily in the New Mexico and Texas markets. Loans secured by multifamily residential properties were up $20 million, primarily attributed to growth in the Texas market, partially offset by loans in the Arizona market. Loans secured by office buildings decreased $38 million due a decrease in loan balances attributed to the New Mexico market. Unfunded commercial real estate loan commitments totaled $547 million at September 30, 2013, a decrease of $58 million from June 30, 2013.

Residential mortgage loans decreased $5.0 million from June 30, 2013, due primarily to a decrease in permanent mortgage loans, partially offset by growth in permanent mortgage balances guaranteed by U.S. government agencies and first lien, fully amortizing home equity loans. Consumer loans were up $19 million. Strong growth in other consumer loans, primarily in the Texas market, was partially offset by continued runoff of the indirect automobile loan portfolio.

Deposits

Deposits totaled $19.5 billion at September 30, 2013, unchanged compared to June 30, 2013. Demand deposit balances grew by $187 million. Interest-bearing transaction account balances decreased $147 million and time deposits decreased $48 million. Among the lines of business, commercial deposits increased $15 million, consumer deposits decreased $57 million and wealth management deposits decreased $64 million. Growth in commercial and industrial, small business and commercial real estate account balances were offset by a decrease in balances attributed to energy and treasury services customers during the third quarter.

Capital

The Company and its subsidiary bank exceeded the regulatory definition of well capitalized at September 30, 2013. The Company's Tier 1 capital ratio was 13.51% at September 30, 2013 and 13.37% at June 30, 2013. The total capital ratio was 15.35% at September 30, 2013 and 15.28% at June 30, 2013. In addition, the Company's tangible common equity ratio, a non-GAAP measure, was 9.73% at September 30, 2013 and 9.38% at June 30, 2013.

In July 2013, banking regulators issued the final rule revising regulatory capital rules for substantially all U.S. banking organizations. The new capital rule will be effective for BOK Financial on January 1, 2015. The new capital rule establishes a 7% threshold for the Tier 1 common equity ratio consisting of a minimum level plus a capital conservation buffer. The Company expects to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital, consistent with the treatment under current capital rules. BOK Financial's Tier 1 common equity ratio based on the existing Basel I standards was 13.33% as of September 30, 2013. Based on our interpretation of the new capital rule, our estimated Tier 1 common equity ratio would be approximately 12.35%, nearly 535 basis points above the 7% regulatory threshold.

Credit Quality

Nonperforming assets totaled $271 million or 2.18% of outstanding loans and repossessed assets at September 30, 2013 compared to $281 million or 2.24% of outstanding loans and repossessed assets at June 30, 2013. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $183 million or 1.49% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at September 30, 2013 and $200 million or 1.62% at June 30, 2013, a decrease of $17 million.

Nonaccruing loans totaled $113 million or 0.91% of outstanding loans at September 30, 2013 compared to $122 million or 0.98% of outstanding loans at June 30, 2013. New nonaccruing loans identified in the third quarter totaled $24 million, offset by $20 million in foreclosures and repossessions, $9.3 million in payments received and $4.7 million in charge-offs .

Nonaccruing commercial loans were $20 million or 0.26% of outstanding commercial loans at September 30, 2013 compared to $21 million or 0.27% of outstanding commercial loans at June 30, 2013.

Nonaccruing commercial real estate loans decreased to $53 million or 2.23% of outstanding commercial real estate loans at September 30, 2013 from $59 million or 2.53% of outstanding commercial real estate loans at June 30, 2013. Nonaccruing commercial real estate loans consist primarily of land development and residential construction loans. Nonaccruing land development and residential construction loans totaled $21 million at September 30, 2013, a decrease of $351 thousand during the third quarter.

Nonaccruing residential mortgage loans totaled $39 million or 1.93% of outstanding residential mortgage loans, a decrease of $1.3 million from June 30, 2013. 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 $8.6 million at September 30, 2013 and $11.1 million at June 30, 2013.

After evaluating all credit factors, the Company determined that an $8.5 million negative provision for credit losses was necessary during the third quarter of 2013 primarily due to declining gross loss rates. The combined allowance for credit losses totaled $196 million or 1.59% of outstanding loans and 173.54% of nonaccruing loans at September 30, 2013. The allowance for loan losses was $194 million and the accrual for off-balance sheet credit losses was $1.6 million. Gross charge-offs totaled $4.7 million for the third quarter, compared to $8.6 million for the previous quarter. Recoveries totaled $4.4 million for the third quarter of 2013. Net charge-offs were $299 thousand or 0.01% of average loans on an annualized basis for the third quarter of 2013 compared with net charge-offs of $2.3 million or 0.08% of average loans on an annualized basis for the second quarter of 2013.

Real estate and other repossessed assets totaled $108 million at September 30, 2013, primarily consisting of $56 million of 1-4 family residential properties (including $38 million guaranteed by U.S. government agencies), $24 million of developed commercial real estate properties, $17 million of undeveloped land and $8.8 million of residential land and land development properties. The distribution of real estate owned and other repossessed assets among various markets included $32 million attributed to New Mexico, $20 million attributed to Arizona, $18 million attributed to Oklahoma and $10 million attributed to Colorado. Real estate and other repossessed assets decreased $2.0 million during the third quarter of 2013. Additions of $20 million were offset by $22 million of sales. Additions included $15 million and sales included $9.1 million of 1-4 family residential properties guaranteed by U.S. government agencies. Net gains on sales and write-downs of real estate and other repossessed assets totaled $438 thousand in the third quarter of 2013 compared to $1.1 million in the second quarter.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $10.4 billion at September 30, 2013 and $10.7 billion at June 30, 2013. At September 30, 2013, the available for sale portfolio consisted primarily of $8.0 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $1.9 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. Net unamortized premiums are less than 1% of the securities portfolio amortized cost.

Net unrealized gains on available for sale securities totaled $7.4 million at September 30, 2013 and $42 million at June 30, 2013. Substantially all of the decrease in net unrealized gains resulted from rising interest rates. Net unrealized gains on residential mortgage-backed securities issued by U.S. government agencies decreased $32 million during the third quarter to $38 million at September 30, 2013. Commercial mortgage-backed securities had a net unrealized loss of $40 million at September 30, 2013, largely unchanged compared to June 30, 2013.

In the third quarter of 2013, the Company recognized net gains of $478 thousand from sales of $356 million of available for sale securities. Securities were sold either because they had reached their expected maximum potential return or sold to reinvest those proceeds into shorter average life securities. Net gains from sales of $1.1 billion of available for sale securities in the second quarter of 2013 totaled $3.8 million.

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. Due to fluctuations in residential mortgage interest rates during the third quarter of 2013, the value of our mortgage servicing rights decreased by $346 thousand. The value of securities and interest rate derivative contracts held as an economic hedge also decreased by $58 thousand.

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., The Milestone Group, 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 appropriateness of the allowance for credit losses and asset impairment as of September 30, 2013 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 30,2013
   

June 30,2013
   

September 30,2012
ASSETS
Cash and due from banks $ 1,133,771 $ 1,026,497 $ 596,590
Funds sold and resell agreements 27,214 51,888 18,904
Trading securities 150,887 190,591 204,242
Investment securities 644,225 615,790 432,114
Available for sale securities 10,372,903 10,698,074 11,506,434
Fair value option securities 167,860 205,756 331,887
Residential mortgage loans held for sale 230,511 301,057 325,102
Loans:
Commercial 7,571,075 7,708,120 7,266,907
Commercial real estate 2,349,229 2,317,096 2,177,272
Residential mortgage 2,034,765 2,039,785 2,016,303
Consumer       395,031         375,781         371,885  
Total loans 12,350,100 12,440,782 11,832,367
Allowance for loan losses       (194,325 )       (203,124 )       (233,756 )
Loans, net of allowance 12,155,775 12,237,658 11,598,611
Premises and equipment, net 275,347 271,191 259,195
Receivables 108,435 136,605 116,243
Goodwill 359,759 359,759 358,962
Intangible assets, net 25,407 26,242 33,196
Mortgage servicing rights, net 140,863 132,889 89,653
Real estate and other repossessed assets, net 108,122 110,112 104,128
Bankers' acceptances 748 198 1,605
Derivative contracts 377,325 546,206 435,653
Cash surrender value of bank-owned life insurance 282,490 280,047 271,830
Receivable on unsettled securities sales 93,020 182,147 32,480
Other assets       511,705         435,493         400,812  
TOTAL ASSETS     $ 27,166,367       $ 27,808,200       $ 27,117,641  
LIABILITIES AND EQUITY
Deposits:
Demand $ 7,331,976 $ 7,145,323 $ 6,848,401
Interest-bearing transaction 9,119,810 9,266,560 9,002,567
Savings 319,849 316,375 269,573
Time       2,720,020         2,767,972         3,022,326  
Total deposits 19,491,655 19,496,230 19,142,867
Funds purchased 992,345 747,165 1,680,626
Repurchase agreements 782,418 845,106 1,109,696
Other borrowings 1,837,181 2,481,644 639,254
Subordinated debentures 347,758 347,716 347,592
Accrued interest, taxes, and expense 182,076 175,677 182,410
Bankers' acceptances 748 198 1,605
Due on unsettled securities purchases 114,259 49,369 556,998
Derivative contracts 232,544 521,991 254,422
Other liabilities       158,409         150,222         189,696  
TOTAL LIABILITIES 24,139,393 24,815,318 24,105,166
Shareholders' equity:
Capital, surplus and retained earnings 2,993,870 2,938,623 2,813,264
Accumulated other comprehensive income (loss)       (2,626 )       19,014         162,393  
TOTAL SHAREHOLDERS' EQUITY 2,991,244 2,957,637 2,975,657
Non-controlling interest       35,730         35,245         36,818  
TOTAL EQUITY       3,026,974         2,992,882         3,012,475  
TOTAL LIABILITIES AND EQUITY     $ 27,166,367       $ 27,808,200       $ 27,117,641  
 
 
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)
    Three Months Ended

September 30,2013
   

June 30,2013
   

March 31,2013
   

December 31,2012
   

September 30,2012
ASSETS
Funds sold and resell agreements $ 44,578 $ 42,604 $ 25,418 $ 19,553 $ 17,837
Trading securities 124,689 181,866 162,353 165,109 132,213
Investment securities 621,104 610,940 534,772 474,085 408,646
Available for sale securities 10,558,677 11,060,700 11,292,181 11,482,212 11,058,055
Fair value option securities 169,299 216,312 251,725 292,490 336,160
Residential mortgage loans held for sale 225,789 261,977 216,816 272,581 264,024
Loans:
Commercial 7,602,950 7,606,918 7,498,905 7,441,957 7,209,972
Commercial real estate 2,359,120 2,286,674 2,309,988 2,170,676 2,160,213
Residential mortgage 2,043,332 2,013,004 2,034,315 1,991,530 2,000,506
Consumer       396,694         370,847         381,752         385,156         368,971  
Total loans 12,402,096 12,277,444 12,224,960 11,989,319 11,739,662
Allowance for loan losses       (201,616 )       (206,807 )       (214,017 )       (229,095 )       (231,177 )
Total loans, net       12,200,480         12,070,637         12,010,943         11,760,224         11,508,485  
Total earning assets 23,944,616 24,445,036 24,494,208 24,466,254 23,725,420
Cash and due from banks 996,345 912,178 828,126 849,614 746,364
Derivative contracts 377,664 401,485 286,772 316,579 291,965
Cash surrender value of bank-owned life insurance 280,909 278,501 275,705 272,778 270,084
Receivable on unsettled securities sales 90,014 135,964 178,561 144,077 99,355
Other assets       1,565,184         1,486,160         1,450,059         1,447,474         1,454,984  
TOTAL ASSETS     $ 27,254,732       $ 27,659,324       $ 27,513,431       $ 27,496,776       $ 26,588,172  
 
LIABILITIES AND EQUITY
Deposits:
Demand $ 7,110,079 $ 6,888,983 $ 7,002,046 $ 7,505,074 $ 6,718,572
Interest-bearing transaction 9,276,136 9,504,128 9,836,204 9,343,421 8,719,648
Savings 317,912 315,421 296,319 278,714 267,498
Time       2,742,970         2,818,533         2,913,999         3,010,367         3,068,870  
Total deposits 19,447,097 19,527,065 20,048,568 20,137,576 18,774,588
Funds purchased 776,356 789,302 1,155,983 1,295,442 1,678,006
Repurchase agreements 799,175 819,373 878,679 900,131 1,112,847
Other borrowings 2,175,747 2,172,417 863,360 364,425 97,003
Subordinated debentures 347,737 347,695 347,654 347,613 352,432
Derivative contracts 330,819 334,877 220,037 246,296 247,148
Due on unsettled securities purchases 111,998 330,926 665,175 854,474 1,054,239
Other liabilities       300,880         310,015         336,136         379,332         324,717  
TOTAL LIABILITIES 24,289,809 24,631,670 24,515,592 24,525,289 23,640,980
Total equity       2,964,923         3,027,654         2,997,839         2,971,487         2,947,192  
TOTAL LIABILITIES AND EQUITY     $ 27,254,732       $ 27,659,324       $ 27,513,431       $ 27,496,776       $ 26,588,172  
 
 
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except per share data)
    Three Months Ended     Nine Months Ended
September 30, September 30,
  2013         2012     2013         2012  
 
Interest revenue $ 183,890 $ 196,071 $ 557,930 $ 597,334
Interest expense       17,539         20,044         54,018         66,377  
Net interest revenue 166,351 176,027 503,912 530,957
Provision for credit losses       (8,500 )               (16,500 )       (8,000 )
Net interest revenue after provision for credit losses       174,851         176,027         520,412         538,957  
Other operating revenue:
Brokerage and trading revenue 32,338 31,261 96,963 94,972
Transaction card revenue 30,055 27,788 87,689 79,976
Trust fees and commissions 23,892 19,654 71,008 58,023
Deposit service charges and fees 24,742 25,148 71,670 74,743
Mortgage banking revenue 23,486 50,266 100,058 122,892
Bank-owned life insurance 2,408 2,707 7,870 8,416
Other revenue       9,852         9,149         30,535         27,273  
Total fees and commissions 146,773 165,973 465,793 466,295
Gain (loss) on other assets, net (377 ) 452 (1,576 ) (1,552 )
Gain (loss) on derivatives, net 31 464 (3,437 ) 336
Gain (loss) on fair value option securities, net (80 ) 6,192 (12,407 ) 11,311
Gain on available for sale securities, net 478 7,967 9,086 32,779
Total other-than-temporary impairment losses (1,436 ) (2,574 ) (640 )
Portion of loss recognized in (reclassified from) other comprehensive income       (73 )       (1,104 )       266         (5,044 )
Net impairment losses recognized in earnings       (1,509 )       (1,104 )       (2,308 )       (5,684 )
Total other operating revenue 145,316 179,944 455,151 503,485
Other operating expense:
Personnel 125,799 122,775 379,563 359,841
Business promotion 5,355 6,054 16,578 17,188
Contribution to BOKF Charitable Foundation 2,062 2,062
Professional fees and services 7,183 7,991 22,549 23,933
Net occupancy and equipment 17,280 16,914 50,670 49,843
Insurance 3,939 3,690 11,728 11,567
Data processing and communications 25,695 26,486 77,879 73,894
Printing, postage and supplies 3,505 3,611 10,759 10,825
Net losses and operating expenses of repossessed assets 2,014 5,706 3,542 13,863
Amortization of intangible assets 835 742 2,586 1,862
Mortgage banking costs 8,753 13,036 24,017 33,792
Change in fair value of mortgage servicing rights 346 9,576 (16,627 ) 13,899
Other expense       7,878         5,759         23,268         16,980  
Total other operating expense 210,644 222,340 608,574 627,487
 
Net income before taxes 109,523 133,631 366,989 414,955
Federal and state income taxes       33,461         45,778         121,980         144,447  
 
Net income 76,062 87,853 245,009 270,508
Net income attributable to non-controlling interest       324         471         1,376         1,882  
Net income attributable to BOK Financial Corporation shareholders     $ 75,738       $ 87,382       $ 243,633       $ 268,626  
 
Average shares outstanding:
Basic 68,049,179 67,966,700 67,953,253 67,704,343
Diluted 68,272,861 68,334,989 68,175,915 67,981,558
 
Net income per share:
Basic $ 1.10 $ 1.28 $ 3.55 $ 3.94
Diluted $ 1.10 $ 1.27 $ 3.54 $ 3.92
 
 
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except ratio and share data)
    Three Months Ended

September 30,2013
   

June 30,2013
   

March 31,2013
   

December 31,2012
   

September 30,2012
Capital:
Period-end shareholders' equity $ 2,991,244 $ 2,957,637 $ 3,011,958 $ 2,957,860 $ 2,975,657
Risk weighted assets $ 19,366,620 $ 19,157,978 $ 18,756,648 $ 19,016,673 $ 18,448,854
Risk-based capital ratios:
Tier 1 13.51 % 13.37 % 13.35 % 12.78 % 13.21 %
Total capital 15.35 % 15.28 % 15.68 % 15.13 % 15.71 %
Leverage ratio 9.80 % 9.43 % 9.28 % 9.01 % 9.34 %
Tangible common equity ratio1 9.73 % 9.38 % 9.70 % 9.25 % 9.67 %
Tier 1 common equity ratio2 13.33 % 13.19 % 13.16 % 12.59 % 13.01 %
 
Common stock:
Book value per share $ 43.49 $ 43.03 $ 43.85 $ 43.29 $ 43.62
Market value per share:
High $ 69.36 $ 65.95 $ 62.77 $ 59.77 $ 59.47
Low $ 62.93 $ 60.52 $ 55.05 $ 54.19 $ 55.63
Cash dividends paid $ 26,135 $ 26,118 $ 26,067 $ 94,231 $ 25,912
Dividend payout ratio 34.51 % 32.68 % 29.63 % 114.13 % 29.65 %
Shares outstanding, net 68,787,584 68,739,208 68,687,718 68,327,351 68,215,354
Stock buy-back program:
Shares repurchased
Amount     $       $       $       $       $  
Average price per share     $       $       $       $       $  
 
Performance ratios (quarter annualized):
Return on average assets 1.10 % 1.16 % 1.30 % 1.19 % 1.31 %
Return on average equity 10.13 % 10.59 % 11.90 % 11.05 % 11.80 %
Net interest margin 2.80 % 2.81 % 2.92 % 2.95 % 3.12 %
Efficiency ratio 66.03 % 63.11 % 61.04 % 66.00 % 61.18 %
 
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio:
Total shareholders' equity $ 2,991,244 $ 2,957,637 $ 3,011,958 $ 2,957,860 $ 2,975,657
Less: Goodwill and intangible assets, net       (385,166 )       (386,001 )       (386,876 )       (390,171 )       (392,158 )
Tangible common equity     $ 2,606,078       $ 2,571,636       $ 2,625,082       $ 2,567,689       $ 2,583,499  
 
Total assets $ 27,166,367 $ 27,808,200 $ 27,447,158 $ 28,148,631 $ 27,117,641
Less: Goodwill and intangible assets, net       (385,166 )       (386,001 )       (386,876 )       (390,171 )       (392,158 )
Tangible assets     $ 26,781,201       $ 27,422,199       $ 27,060,282       $ 27,758,460       $ 26,725,483  
 
Tangible common equity ratio       9.73 %       9.38 %       9.70 %       9.25 %       9.67 %
 
2 Tier 1 common equity ratio:
Tier 1 capital $ 2,616,610 $ 2,561,399 $ 2,503,892 $ 2,430,671 $ 2,436,791
Less: Non-controlling interest       (35,730 )       (35,245 )       (35,934 )       (35,821 )       (36,818 )
Tier 1 common equity     $ 2,580,880       $ 2,526,154       $ 2,467,958       $ 2,394,850       $ 2,399,973  
 
Risk weighted assets     $ 19,361,429       $ 19,157,978       $ 18,756,648       $ 19,016,673       $ 18,448,854  
 
Tier 1 common equity ratio       13.33 %       13.19 %       13.16 %       12.59 %       13.01 %

Three Months Ended

September 30,2013

June 30,2013

March 31,2013

December 31,2012

September 30,2012
Other data:
Fiduciary assets $ 29,593,140 $ 28,280,214 $ 27,606,180 $ 25,829,038 $ 25,208,276
Mortgage servicing portfolio $ 13,298,479 $ 12,741,651 $ 12,272,691 $ 11,981,624 $ 11,756,350
Mortgage commitments $ 351,196 $ 547,508 $ 466,571 $ 356,634 $ 452,129
Mortgage loans funded for sale $ 1,080,167 $ 1,196,038 $ 956,315 $ 1,073,541 $ 1,046,608
Mortgage loan refinances to total fundings 30 % 48 % 62 % 62 % 61 %
Tax equivalent adjustment $ 2,565 $ 2,647 $ 2,619 $ 2,472 $ 2,509
Net unrealized gain on available for sale securities $ 7,425 $ 42,233 $ 228,620 $ 254,587 $ 281,455
 
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts $ 31 $ (2,526 ) $ (1,654 ) $ (707 ) $ 645
Gain (loss) on fair value option securities       (89 )       (9,102 )       (3,232 )       (2,177 )       5,455  
Gain (loss) on economic hedge of mortgage servicing rights (58 ) (11,628 ) (4,886 ) (2,884 ) 6,100
Gain (loss) on changes in fair value of mortgage servicing rights       (346 )       14,315         2,658         4,689         (9,576 )
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges     $ (404 )     $ 2,687       $ (2,228 )     $ 1,805       $ (3,476 )
 
Net interest revenue on fair value option securities     $ 741       $ 910       $ 828       $ 748       $ 1,750  
 
 
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

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

September 30,2013
   

June 30,2013
   

March 31,2013
   

December 31,2012
   

September 30,2012
Interest revenue $ 183,890 $ 185,041 $ 188,999 $ 194,314 $ 196,071
Interest expense       17,539         17,885         18,594         20,945         20,044  
Net interest revenue 166,351 167,156 170,405 173,369 176,027
Provision for credit losses       (8,500 )               (8,000 )       (14,000 )        
Net interest revenue after provision for credit losses 174,851 167,156 178,405 187,369 176,027
Other operating revenue:
Brokerage and trading revenue 32,338 32,874 31,751 31,958 31,261
Transaction card revenue 30,055 29,942 27,692 28,009 27,788
Trust fees and commissions 23,892 24,803 22,313 22,030 19,654
Deposit service charges and fees 24,742 23,962 22,966 24,174 25,148
Mortgage banking revenue 23,486 36,596 39,976 46,410 50,266
Bank-owned life insurance 2,408 2,236 3,226 2,673 2,707
Other revenue       9,852         10,496         10,187         10,554         9,149  
Total fees and commissions 146,773 160,909 158,111 165,808 165,973
Gain (loss) on other assets, net (377 ) (1,666 ) 467 137 452
Gain (loss) on derivatives, net 31 (2,527 ) (941 ) (637 ) 464
Gain (loss) on fair value option securities, net (80 ) (9,156 ) (3,171 ) (2,081 ) 6,192
Gain on available for sale securities, net 478 3,753 4,855 1,066 7,967
Total other-than-temporary impairment losses (1,436 ) (1,138 ) (504 )
Portion of loss recognized in (reclassified from) other comprehensive income       (73 )       586         (247 )       (1,163 )       (1,104 )
Net impairment losses recognized in earnings       (1,509 )       (552 )       (247 )       (1,667 )       (1,104 )
Total other operating revenue 145,316 150,761 159,074 162,626 179,944
Other operating expense:
Personnel 125,799 128,110 125,654 131,192 122,775
Business promotion 5,355 5,770 5,453 6,150 6,054
Contribution to BOKF Charitable Foundation 2,062 2,062
Professional fees and services 7,183 8,381 6,985 10,082 7,991
Net occupancy and equipment 17,280 16,909 16,481 16,883 16,914
Insurance 3,939 4,044 3,745 3,789 3,690
Data processing and communications 25,695 26,734 25,450 25,010 26,486
Printing, postage and supplies 3,505 3,580 3,674 3,403 3,611
Net losses and operating expenses of repossessed assets 2,014 282 1,246 6,665 5,706
Amortization of intangible assets 835 875 876 1,065 742
Mortgage banking costs 8,753 7,910 7,354 10,542 13,036
Change in fair value of mortgage servicing rights 346 (14,315 ) (2,658 ) (4,689 ) 9,576
Other expense       7,878         8,326         7,064         9,931         5,759  
Total other operating expense 210,644 196,606 201,324 222,085 222,340
Net income before taxes 109,523 121,311 136,155 127,910 133,631
Federal and state income taxes       33,461         41,423         47,096         44,293         45,778  
Net income 76,062 79,888 89,059 83,617 87,853
Net income (loss) attributable to non-controlling interest       324         (43 )       1,095         1,051         471  
Net income attributable to BOK Financial Corporation shareholders     $ 75,738       $ 79,931       $ 87,964       $ 82,566       $ 87,382  
 
Average shares outstanding:
Basic 68,049,179 67,993,822 67,814,550 67,622,777 67,966,700
Diluted 68,272,861 68,212,497 68,040,180 67,914,717 68,334,989
Net income per share:
Basic $ 1.10 $ 1.16 $ 1.28 $ 1.21 $ 1.28
Diluted $ 1.10 $ 1.16 $ 1.28 $ 1.21 $ 1.27
 
 
LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)
   

September 30,2013
   

June 30,2013
   

March 31,2013
   

December 31,2012
   

September 30,2012
 
Bank of Oklahoma:
Commercial $ 2,801,979 $ 2,993,247 $ 2,853,608 $ 3,089,686 $ 3,015,621
Commercial real estate 564,141 569,780 568,500 580,694 598,667
Residential mortgage 1,497,027 1,503,457 1,468,434 1,488,486 1,466,590
Consumer       207,360       211,744       207,662       220,096       197,457
Total Bank of Oklahoma       5,070,507       5,278,228       5,098,204       5,378,962       5,278,335
 
Bank of Texas:
Commercial 2,858,970 2,849,888 2,718,050 2,726,925 2,572,928
Commercial real estate 853,857 813,659 800,577 771,796 712,899
Residential mortgage 263,945 263,916 272,406 275,408 268,250
Consumer       129,144       105,390       110,060       116,252       108,854
Total Bank of Texas       4,105,916       4,032,853       3,901,093       3,890,381       3,662,931
 
Bank of Albuquerque:
Commercial 325,542 296,036 271,075 265,830 267,467
Commercial real estate 306,914 314,871 332,928 326,135 316,040
Residential mortgage 131,756 133,058 129,727 130,337 120,606
Consumer       14,583       14,364       14,403       15,456       15,883
Total Bank of Albuquerque       778,795       758,329       748,133       737,758       719,996
 
Bank of Arkansas:
Commercial 73,063 61,414 54,191 62,049 48,097
Commercial real estate 84,364 85,546 88,264 90,821 119,306
Residential mortgage 10,466 10,691 11,285 13,046 12,939
Consumer       9,426       11,819       13,943       15,421       19,720
Total Bank of Arkansas       177,319       169,470       167,683       181,337       200,062
 
Colorado State Bank & Trust:
Commercial 748,331 786,262 822,942 776,610 708,223
Commercial real estate 158,320 146,137 171,251 173,327 158,387
Residential mortgage 66,475 62,490 56,052 59,363 59,395
Consumer       22,592       23,148       20,990       19,333       19,029
Total Colorado State Bank & Trust       995,718       1,018,037       1,071,235       1,028,633       945,034
 
Bank of Arizona:
Commercial 379,817 355,698 326,266 313,296 300,544
Commercial real estate 250,129 258,938 229,020 201,760 204,164
Residential mortgage 49,109 51,774 54,285 57,803 65,513
Consumer       7,059       4,947       5,664       4,686       6,150
Total Bank of Arizona       686,114       671,357       615,235       577,545       576,371
 
Bank of Kansas City:
Commercial 383,373 365,575 372,173 407,516 354,027
Commercial real estate 131,504 128,165 94,620 84,466 67,809
Residential mortgage 15,987 14,399 20,261 20,597 23,010
Consumer       4,867       4,369       4,927       4,261       4,792
Total Bank of Kansas City       535,731       512,508       491,981       516,840       449,638
 
TOTAL BOK FINANCIAL     $ 12,350,100     $ 12,440,782     $ 12,093,564     $ 12,311,456     $ 11,832,367

Loans attributed to a geographical region may not always represent the location of the borrower or the collateral.
 
 
DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)
   

September 30,2013
   

June 30,2013
   

March 31,2013
   

December 31,2012
   

September 30,2012
Bank of Oklahoma:
Demand $ 3,458,114 $ 3,561,255 $ 3,602,581 $ 4,223,923 $ 3,734,901
Interest-bearing:
Transaction 5,574,615 5,653,062 6,140,899 6,031,541 5,496,724
Savings 189,411 185,345 185,363 163,512 155,276
Time       1,198,507       1,180,265       1,264,415       1,267,904       1,274,336
Total interest-bearing       6,962,533       7,018,672       7,590,677       7,462,957       6,926,336
Total Bank of Oklahoma       10,420,647       10,579,927       11,193,258       11,686,880       10,661,237
Bank of Texas:
Demand 2,499,021 2,299,631 2,098,891 2,606,176 1,983,678
Interest-bearing:
Transaction 1,853,586 1,931,758 1,979,318 2,129,084 1,782,296
Savings 63,368 63,745 63,218 58,429 52,561
Time       667,873       692,888       717,974       762,233       789,725
Total interest-bearing       2,584,827       2,688,391       2,760,510       2,949,746       2,624,582
Total Bank of Texas       5,083,848       4,988,022       4,859,401       5,555,922       4,608,260
Bank of Albuquerque:
Demand 491,894 455,580 446,841 427,510 416,796
Interest-bearing:
Transaction 541,565 525,481 513,611 511,593 526,029
Savings 34,003 34,096 35,560 31,926 31,940
Time       334,946       346,506       354,303       364,928       375,611
Total interest-bearing       910,514       906,083       903,474       908,447       933,580
Total Bank of Albuquerque       1,402,408       1,361,663       1,350,315       1,335,957       1,350,376
Bank of Arkansas:
Demand 32,621 31,108 31,957 38,935 29,254
Interest-bearing:
Transaction 205,420 186,689 155,571 101,366 168,827
Savings 1,919 1,974 2,642 2,239 2,246
Time       35,184       37,272       41,613       42,573       45,719
Total interest-bearing       242,523       225,935       199,826       146,178       216,792
Total Bank of Arkansas       275,144       257,043       231,783       185,113       246,046
Colorado State Bank & Trust:
Demand 373,200 365,161 295,067 331,157 330,641
Interest-bearing:
Transaction 536,730 519,580 528,056 676,140 627,015
Savings 27,782 27,948 27,187 25,889 24,689
Time       424,225       451,168       461,496       472,305       476,564
Total interest-bearing       988,737       998,696       1,016,739       1,174,334       1,128,268
Total Colorado State Bank & Trust       1,361,937       1,363,857       1,311,806       1,505,491       1,458,909
Bank of Arizona:
Demand 184,454 186,381 157,754 161,094 151,738
Interest-bearing:
Transaction 338,068 376,305 378,421 360,275 298,048
Savings 2,286 2,238 2,122 1,978 2,201
Time       35,791       35,490       34,690       31,371       33,169
Total interest-bearing       376,145       414,033       415,233       393,624       333,418
Total Bank of Arizona       560,599       600,414       572,987       554,718       485,156
Bank of Kansas City:
Demand 292,672 246,207 267,769 249,491 201,393
Interest-bearing:
Transaction 69,826 73,685 46,426 78,039 103,628
Savings 1,080 1,029 983 771 660
Time       23,494       24,383       25,563       26,678       27,202
Total interest-bearing       94,400       99,097       72,972       105,488       131,490
Total Bank of Kansas City       387,072       345,304       340,741       354,979       332,883
 
TOTAL BOK FINANCIAL     $ 19,491,655     $ 19,496,230     $ 19,860,291     $ 21,179,060     $ 19,142,867
 
 
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
    Three Months Ended

September 30,2013
   

June 30,2013
   

March 31,2013
   

December 31,2012
   

September 30,2012
 
TAX-EQUIVALENT ASSETS YIELDS
Funds sold and resell agreements 0.05 % 0.04 % 0.03 % 0.06 % 0.07 %
Trading securities 2.19 % 1.83 % 1.77 % 1.06 % 2.12 %
Investment securities:
Taxable1 5.74 % 5.89 % 5.97 % 5.86 % 5.83 %
Tax-exempt1     1.59 %     1.89 %     2.42 %     2.93 %     4.12 %
Total investment securities1     3.20 %     3.59 %     4.22 %     4.67 %     5.33 %
Available for sale securities:
Taxable1 1.91 % 1.91 % 2.07 % 2.08 % 2.36 %
Tax-exempt1     3.47 %     4.46 %     4.25 %     3.80 %     4.70 %
Total available for sale securities1     1.92 %     1.93 %     2.09 %     2.10 %     2.38 %
Fair value option securities 1.85 % 1.91 % 2.05 % 1.58 % 2.27 %
Residential mortgage loans held for sale 3.81 % 3.51 % 3.35 % 3.39 % 3.48 %
Loans 4.06 % 4.12 % 4.20 % 4.33 % 4.33 %
Allowance for loan losses                              
Loans, net of allowance 4.12 % 4.19 % 4.28 % 4.41 % 4.42 %
Total tax-equivalent yield on earning assets1 3.09 % 3.11 % 3.24 % 3.30 % 3.47 %
 
COST OF INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest-bearing transaction 0.11 % 0.12 % 0.13 % 0.15 % 0.16 %
Savings 0.13 % 0.15 % 0.16 % 0.18 % 0.19 %
Time     1.55 %     1.57 %     1.62 %     1.80 %     1.61 %
Total interest-bearing deposits 0.43 % 0.44 % 0.46 % 0.54 % 0.53 %
Funds purchased 0.07 % 0.10 % 0.13 % 0.15 % 0.15 %
Repurchase agreements 0.06 % 0.06 % 0.07 % 0.09 % 0.10 %
Other borrowings 0.28 % 0.27 % 0.49 % 0.90 % 3.03 %
Subordinated debt     2.52 %     2.54 %     2.52 %     2.56 %     2.79 %
Total cost of interest-bearing liabilities     0.42 %     0.43 %     0.46 %     0.54 %     0.52 %
Tax-equivalent net interest revenue spread 2.67 % 2.68 % 2.78 % 2.76 % 2.95 %
Effect of noninterest-bearing funding sources and other     0.13 %     0.13 %     0.14 %     0.19 %     0.17 %
Tax-equivalent net interest margin1     2.80 %     2.81 %     2.92 %     2.95 %     3.12 %

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)
    Three Months Ended  

September 30,2013
   

June 30,2013
   

March 31,2013
   

December 31,2012
   

September 30,2012
 
Nonperforming assets:
Nonaccruing loans:
Commercial $ 19,522 $ 20,869 $ 19,861 $ 24,467 $ 21,762
Commercial real estate 52,502 58,693 65,175 60,626 75,761
Residential mortgage 39,256 40,534 45,426 46,608 29,267
Consumer       1,624         2,037         2,171         2,709         5,109    
Total nonaccruing loans 112,904 122,133 132,633 134,410 131,899
Accruing renegotiated loans:
Guaranteed by U.S. government agencies 50,099 48,733 47,942 38,515 24,590
Other                                       3,402    
Total accruing renegotiated loans 50,099 48,733 47,942 38,515 27,992
Real estate and other repossessed assets:
Guaranteed by U.S. government agencies 37,906 32,155 27,864 22,365 22,819
Other       70,216         77,957         74,837         81,426         81,309    
Total real estate and other repossessed assets       108,122         110,112         102,701         103,791         104,128    
Total nonperforming assets     $ 271,125       $ 280,978       $ 283,276       $ 276,716       $ 264,019    
Total nonperforming assets excluding those guaranteed by U.S. government agencies     $ 182,543       $ 200,007       $ 207,256       $ 215,347       $ 216,610    
 
Nonaccruing loans by loan portfolio sector:
Commercial:
Energy $ 1,953 $ 2,277 $ 2,377 $ 2,460 $ 3,063
Manufacturing 843 876 1,848 2,007 2,283
Wholesale / retail 7,223 6,700 2,239 3,077 2,007
Integrated food services 684
Services 6,927 7,448 9,474 12,090 10,099
Healthcare 1,733 2,670 2,962 3,166 3,305
Other commercial and industrial       843         898         961         983         1,005    
Total commercial       19,522         20,869         19,861         24,467         21,762    
Commercial real estate:
Construction and land development 20,784 21,135 23,462 26,131 38,143
Retail 7,914 8,406 8,921 8,117 6,692
Office 6,838 7,828 12,851 6,829 9,833
Multifamily 4,350 6,447 4,501 2,706 3,145
Industrial 2,198 3,968 4,064
Other commercial real estate       12,616         14,877         13,242         12,875         13,884    
Total commercial real estate       52,502         58,693         65,175         60,626         75,761    
Residential mortgage:
Permanent mortgage 31,797 32,747 38,153 39,863 23,207
Permanent mortgage guaranteed by U.S. government agencies 577 83 214 489 510
Home equity       6,882         7,704         7,059         6,256         5,550    
Total residential mortgage       39,256         40,534         45,426         46,608         29,267    
Consumer       1,624         2,037         2,171         2,709         5,109    
Total nonaccruing loans     $ 112,904       $ 122,133       $ 132,633       $ 134,410       $ 131,899    
 
Three Months Ended  

September 30,2013

June 30,2013

March 31,2013

December 31,2012

September 30,2012
 
Nonaccruing loans by principal market1:
Bank of Oklahoma $ 49,245 $ 52,541 $ 54,392 $ 56,424 $ 41,599
Bank of Texas 20,127 21,620 37,571 31,623 28,046
Bank of Albuquerque 21,369 24,134 12,479 13,401 13,233
Bank of Arkansas 896 998 1,008 1,132 5,958
Colorado State Bank & Trust 8,754 9,510 11,771 14,364 22,878
Bank of Arizona 12,507 13,323 15,392 17,407 20,145
Bank of Kansas City       6         7         20         59         40    
Total nonaccruing loans     $ 112,904       $ 122,133       $ 132,633       $ 134,410       $ 131,899    
 
Performing loans 90 days past due2 $ 188 $ 2,460 $ 4,229 $ 3,925 $ 1,181
 
Gross charge-offs $ (4,708 ) $ (8,552 ) $ (8,909 ) $ (8,000 ) $ (8,921 )
Recoveries       4,409         6,210         6,557         3,723         3,204  

3

 
Net charge-offs     $ (299 )     $ (2,342 )     $ (2,352 )     $ (4,277 )     $ (5,717 )  
 
Provision for credit losses $ (8,500 ) $ $ (8,000 ) $ (14,000 ) $
 
Allowance for loan losses to period end loans 1.57 % 1.63 % 1.70 % 1.75 % 1.98 %
Combined allowance for credit losses to period end loans 1.59 % 1.65 % 1.71 % 1.77 % 1.99 %
Nonperforming assets to period end loans and repossessed assets 2.18 % 2.24 % 2.32 % 2.23 % 2.21 %
Net charge-offs (annualized) to average loans 0.01 % 0.08 % 0.08 % 0.14 % 0.19 %

3

 
Allowance for loan losses to nonaccruing loans 172.12 % 166.31 % 155.29 % 160.34 % 177.22 %
Combined allowance for credit losses to nonaccruing loans 173.54 % 167.63 % 156.12 % 161.76 % 178.70 %

1 Nonaccruing loans attributed to a principal market do not always represent the location of the borrower or the collateral.

2 Excludes residential mortgage loans guaranteed by 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

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