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Section 1: 8-K (8-K)

Document
false0000875357 0000875357 2020-01-22 2020-01-22


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
January 22, 2020

Commission File No. 0-19341

BOK FINANCIAL CORP ET AL
(Exact name of registrant as specified in its charter)

Oklahoma
 
73-1373454
(State or other jurisdiction
of Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
 
Bank of Oklahoma Tower
 
 
Boston Avenue at Second Street
 
 
Tulsa,
Oklahoma
 
74192
(Address of Principal Executive Offices)
 
(Zip Code)
 
(918) 588-6000
(Registrant’s telephone number, including area code)

N/A
___________________________________________
(Former name or former address, if changes since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨







INFORMATION TO BE INCLUDED IN THE REPORT

ITEM 2.02. Results of Operations and Financial Condition.

On January 22, 2020, BOK Financial Corporation (“BOK Financial”) issued a press release announcing its financial results for the three months and year ended December 31, 2019 (“Press Release”). The full text of the Press Release is attached as Exhibit 99(a) to this report and is incorporated herein by reference. On January 22, 2020, in connection with issuance of the Press Release, BOK Financial released financial information related to the three months and year ended December 31, 2019 (“Financial Information”), which includes certain historical financial information relating to BOK Financial. The Financial Information is attached as Exhibit 99(b) to this report and is incorporated herein by reference.


ITEM 9.01. Financial Statements and Exhibits.

(a)
Exhibits

99
  
101        Interactive Data Files.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


BOK FINANCIAL CORPORATION




By: /s/ Steven E. Nell            
Steven E. Nell
Executive Vice President
Chief Financial Officer
Date: January 22, 2020



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Section 2: EX-99 (EXHIBIT 99)

Exhibit



Exhibit 99(a)
402384042_image0a01a01a01a34.jpg
NASD: BOKF

BOK Financial Reports Record Annual Earnings of $501 million or $7.03 Per Share
Earnings of $110 million or $1.56 Per Share in the Fourth Quarter

CEO Commentary
“The fourth quarter concluded our second-consecutive year of record earnings for the organization,” said Steven G. Bradshaw, president and chief executive officer. “Achieving our business integration and financial goals for CoBiz early in 2019 set the tone for a monumental year, and helped drive momentum in two of our high-growth markets. The balance between our banking and fee service businesses was evident all year, allowing us to continue our strong earnings growth even with industry headwinds intensifying. This is a testament to how BOK Financial has been carefully constructed over many years with the distinct ability to outperform in challenging conditions.”

Bradshaw continued, “While the economic and political environment in 2020 will bring its own set of challenges, our focus remains on the long-term. We fully expect that our approach to creating and sustaining earnings and growing shareholder value will continue to serve us well in 2020.”
2019 Financial Highlights
Net income for the year ended December 31, 2019 totaled $500.8 million or $7.03 per diluted share compared to $445.6 million or $6.63 per diluted share for the year ended December 31, 2018.
Net interest revenue totaled $1.1 billion, an increase of $128.0 million. CoBiz added $158.5 million to net interest revenue, including $37.8 million of net purchase accounting discount accretion for 2019. CoBiz added $43.1 million to net interest revenue for 2018. Net interest margin was 3.11 percent for 2019 compared to 3.20 percent for 2018.
Fees and commissions revenue increased $59.0 million to $702.2 million in 2019. Strong growth in brokerage and trading revenue and mortgage banking revenue, which were both positively affected by lower mortgage interest rates in 2019, contributed to the majority of the increase.
Operating expense totaled $1.1 billion in 2019, an increase of $104.2 million. We incurred $17.2 million of closing and integration costs in 2019 compared to $16.6 million in 2018. Expenses related to CoBiz operations were $84.0 million in 2019 and $29.7 million in 2018. Excluding these costs, operating expense increased $49.3 million or 5 percent, primarily related to growth in personnel expense.
Period-end loans were up $94 million to $21.8 billion at December 31, 2019 and period-end deposits grew $2.4 billion to $27.6 billion.

Fourth Quarter 2019 Financial Highlights
Net income was $110.4 million or $1.56 per diluted share for the fourth quarter of 2019 and $142.2 million or $2.00 per diluted share for the third quarter of 2019.
Net interest revenue totaled $270.2 million, a decrease of $8.8 million. Net interest margin was 2.88 percent compared to 3.01 percent in the third quarter of 2019. Lower loan discount accretion, changes in funding mix, and the two recent federal funds rate cuts by the Federal Reserve contributed to compression in the net interest margin.
Fees and commissions revenue totaled $179.4 million, a decrease of $6.7 million, primarily due to a seasonal decline in mortgage banking revenue.


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Fourth Quarter 2019 Financial Highlights con't
Operating expense increased $9.5 million to $288.8 million. Personnel expense increased $5.8 million while non-personnel expense increased $3.7 million over the third quarter of 2019.
A $19.0 million provision for credit losses was recorded in the fourth quarter of 2019 compared to $12.0 million in the third quarter of 2019. The combined allowance for credit losses totaled $212 million or 0.98 percent of outstanding loans compared to $206 million or 0.92 percent in the previous quarter.
Average loans decreased $177 million to $22.2 billion while period-end loans decreased $534 million to $21.8 billion, largely due to decreases in commercial and commercial real estate loans.
Average deposits increased $1.4 billion to $27.1 billion and period-end deposits increased $1.5 billion to $27.6 billion.
Commercial banking contributed $81.7 million to net income, a decrease of $18.9 million compared to the prior quarter. Net interest revenue decreased by $16.7 million due to a decrease in loan volume combined with decreased yields. Average loans decreased by $126 million to $19.1 billion. Fee revenue decreased $2.8 million, largely due to lower syndication fees. Average deposits increased $587 million to $11.4 billion, including an increase in interest-bearing transaction deposits partially offset by a decrease in demand deposits.
Consumer banking contributed $8.3 million to net income, decreasing $8.4 million. Net interest revenue decreased $5.3 million, largely due to a lower yield on deposits sold to our Funds Management unit. Fee revenue decreased $6.6 million. A seasonal decline in mortgage production reduced mortgage banking revenue by $4.8 million. Mortgage production volume decreased $278 million to $635 million and gain on sale margin decreased 7 basis points to 1.44 percent.
Wealth Management contributed $22.9 million to net income, consistent with the prior quarter. Fee revenue increased $3.3 million, largely related to brokerage and trading revenue, partially offset by a $1.2 million decrease in net interest revenue. Total operating expenses increased $3.1 million, primarily related to variable compensation that is related to revenue growth. Assets under management or administration were $82.7 billion at December 31, 2019 compared to $80.8 billion at September 30, 2019. Fiduciary assets totaled $52.4 billion at December 31, 2019 and $49.3 billion at September 30, 2019.

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Net Interest Revenue
Net interest revenue was $270.2 million for the fourth quarter of 2019, an $8.8 million decrease compared to the third quarter of 2019. Discount accretion on acquired loans totaled $5.8 million for the fourth quarter and $10.9 million for the third quarter.
Average earning assets increased $415 million compared to the third quarter of 2019. Available for sale securities increased $586 million as we continue to position our balance sheet for the current rate environment. Average loan balances decreased $177 million and interest-bearing cash and cash equivalents increased $72 million. Growth in average earning assets was largely funded by a $1.5 billion increase in interest-bearing deposits while other borrowed funds decreased $863 million.
Net interest margin was 2.88 percent compared to 3.01 percent in the previous quarter. A decrease in demand deposits combined with an increase in receivables from trading activities reduced net interest margin by 9 basis points. Lower loan discount accretion reduced net interest margin by 6 basis points. A 3 basis point increase from higher loan fees was partially offset by spread compression.
The yield on average earning assets was 3.93 percent, a 32 basis point decrease from the prior quarter. The loan portfolio yield was 4.75 percent, down 37 basis points. The yield on the available for sale securities portfolio decreased 8 basis points to 2.52 percent while the yield on interest-bearing cash and cash equivalents decreased 80 basis points.
Funding costs were 1.40 percent, down 28 basis points. The cost of interest-bearing deposits decreased 8 basis points to 1.09 percent. The cost of other borrowed funds was down 48 basis points to 1.83 percent.
Fees and Commissions Revenue
Fees and commissions revenue totaled $179.4 million for the fourth quarter of 2019, a decrease of $6.7 million compared to the third quarter of 2019.
Mortgage banking revenue decreased $4.8 million. Mortgage loan production volume decreased 30 percent, primarily due to seasonality. Other revenue decreased $2.3 million primarily due to lower revenue from repossessed oil and gas properties. Brokerage and trading revenue was unchanged from the previous quarter. Growth in trading revenue of $5.6 million was offset by decreases in customer hedging revenue and loan syndication fees. A decrease in overdraft service charges was offset by an increase in trust fees and commissions.

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Operating Expense
Total operating expense was $288.8 million for the fourth quarter of 2019, an increase of $9.5 million over the third quarter of 2019.
Personnel expense increased $5.8 million. Incentive compensation increased $4.3 million, primarily due to increased transaction activity in wealth management. The fourth quarter included approximately $2.0 million in severance costs due to realignment of personnel for the current operating environment.
Non-personnel expense increased $3.7 million over the third quarter of 2019. The fourth quarter included a $2.0 million charitable contribution to the BOKF Foundation, which provides support to many nonprofit partners in our communities.
Loans, Deposits and Capital
Loans
Outstanding loans were $21.8 billion at December 31, 2019, a decrease of $534 million compared September 30, 2019. General paydowns in energy and commercial real estate, along with two anticipated large year-end paydowns in commercial, contributed to the decline in balances.
Outstanding commercial loan balances decreased by $393 million or 3 percent compared to September 30, 2019. Services loan balances decreased $144 million. Energy loan balances decreased $141 million. Wholesale/retail sector loans decreased $88 million. Public finance loans decreased by $35 million and manufacturing loans decreased $33 million while other commercial and industrial loans increased $47 million.
Commercial real estate loan balances decreased $192 million or 4 percent compared to September 30, 2019. Loans secured by office buildings decreased $86 million. Loans secured by multifamily residential properties decreased $59 million. Loans secured by retail properties decreased $24 million and loans secured by other commercial real estate properties decreased $22 million.
Deposits
Period-end deposits totaled $27.6 billion at December 31, 2019, a $1.5 billion increase over September 30, 2019. A focus on deposit growth throughout the year led to the execution of several specific initiatives that resulted in large deposit acquisitions during the fourth quarter. Interest-bearing transaction account balances grew by $1.9 billion and demand deposit balances decreased $383 million. Average deposits were $27.1 billion at December 31, 2019, an increase of $1.4 billion compared to September 30, 2019. Total interest-bearing transaction deposits increased $1.6 billion, partially offset by a decrease in demand deposits of $147 million.
Capital
The company's common equity Tier 1 capital ratio was 11.39 percent at December 31, 2019. In addition, the company's Tier 1 capital ratio was 11.39 percent, total capital ratio was 12.94 percent, and leverage ratio was 8.40 percent at December 31, 2019. At September 30, 2019, the company's common equity Tier 1 capital ratio was 11.06 percent, Tier 1 capital ratio was 11.06 percent, total capital ratio was 12.56 percent, and leverage ratio was 8.41 percent.

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The company's tangible common equity ratio, a non-GAAP measure, was 8.98 percent at December 31, 2019 and 8.72 percent at September 30, 2019. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

The company repurchased 280,000 shares at an average price of $81.59 per share in the fourth quarter of 2019 and 336,713 shares at an average price of $77.03 in the third quarter of 2019.
Credit Quality
Nonperforming assets totaled $294 million or 1.35 percent of outstanding loans and repossessed assets at December 31, 2019, compared to $286 million or 1.28 percent at September 30, 2019. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $195 million or 0.90 percent of outstanding loans and repossessed assets at December 31, 2019, compared to $187 million or 0.85 percent at September 30, 2019.
Nonaccruing loans were $181 million or 0.83 percent of outstanding loans at December 31, 2019. Nonaccruing commercial loans totaled $115 million or 0.82 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $28 million or 0.62 percent of outstanding commercial real estate loans. Nonaccruing residential mortgage loans totaled $38 million or 1.81 percent of outstanding residential mortgage loans.
Nonaccruing loans increased $8.5 million from September 30, 2019, primarily due to a $6.6 million multifamily community development credit. Nonaccruing energy loans also increased $2.8 million. New nonaccruing loans identified in the fourth quarter totaled $49 million, offset by $24 million in payments received and $14 million in charge-offs.
Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $160 million at December 31, compared to $143 million at September 30. The increase largely resulted from energy loans, partially offset by a decrease in loans secured by commercial real estate.
Net charge-offs were $12.5 million or 0.22 percent of average loans on an annualized basis for the fourth quarter of 2019, compared to $10.6 million or 0.19 percent of average loans on an annualized basis for the third quarter of 2019. Net charge-offs were 0.21 percent of average loans over the last four quarters. Gross charge-offs were $14.3 million for the fourth quarter compared to $11.7 million for the previous quarter. Recoveries totaled $1.8 million for the fourth quarter of 2019 and $1.1 million for the third quarter of 2019.
Based on an evaluation of all credit factors, including specific impairment of two shared national credit energy loans where the Company is not the lead agent, changes in nonaccruing and potential problem loans and net charge-offs, the company determined that a $19.0 million provision for credit losses was appropriate for the fourth quarter of 2019. The company recorded a $12.0 million provision for credit losses in the third quarter of 2019.


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The combined allowance for credit losses totaled $212 million or 0.98 percent of outstanding loans and 121 percent of nonaccruing loans at December 31, 2019, excluding residential mortgage loans guaranteed by U.S. government agencies. Excluding loans acquired in the CoBiz acquisition, which are measured at acquisition-date fair value, the combined allowance for loan losses was 1.06 percent of outstanding loans and 127 percent of nonaccruing loans at December 31, 2019 compared to 1.02 percent of outstanding loans and 130 percent of nonaccruing loans at September 30, 2019. The allowance for loan losses was $211 million and the accrual for off-balance sheet credit losses was $1.6 million. At September 30, 2019, the combined allowance for credit losses was $206 million or 0.92 percent of outstanding loans and 124 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $204 million and the accrual for off-balance sheet credit losses was $1.4 million.
Securities and Derivatives
The fair value of the available for sale securities portfolio totaled $11.3 billion at December 31, 2019, a $245 million increase compared to September 30, 2019. At December 31, 2019, the available for sale securities portfolio consisted primarily of $8.0 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.2 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2019, the available for sale securities portfolio had a net unrealized gain of $138 million compared to $178 million at September 30, 2019.
The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities decreased $718 million to $1.1 billion at December 31, 2019.
The net economic cost of the changes in fair value of mortgage servicing rights and related economic hedges was $2.2 million during the fourth quarter of 2019, including a $13.0 million decrease in the fair value of securities and derivative contracts held as an economic hedge, a $9.3 million increase in the fair value of mortgage servicing rights, and $1.5 million of related net interest revenue.


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Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, January 22, 2020 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-6671 and referencing conference ID # 13697774.

About BOK Financial Corporation
BOK Financial Corporation is a $42 billion regional financial services company headquartered in Tulsa, Oklahoma with $83 billion in assets under management and administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Milwaukee and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.
The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of December 31, 2019 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.
This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial, the financial services industry and the economy generally. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” “will,” “intends,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that BOK Financial's acquisitions, including its latest acquisition of CoBiz Financial, Inc., and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no

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obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.


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Exhibit 99(b)

BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
 
Dec. 31, 2019
 
Sept. 30, 2019
ASSETS
 
 
 
Cash and due from banks
$
735,836

 
$
761,130

Interest-bearing cash and cash equivalents
522,985

 
465,458

Trading securities
1,623,921

 
1,675,212

Investment securities
293,418

 
304,224

Available for sale securities
11,269,643

 
11,024,551

Fair value option securities
1,098,577

 
1,816,398

Restricted equity securities
460,552

 
479,018

Residential mortgage loans held for sale
182,271

 
282,487

Loans:
 
 
 
Commercial
14,031,650

 
14,424,625

Commercial real estate
4,433,783

 
4,626,057

Residential mortgage
2,084,172

 
2,117,303

Personal
1,201,382

 
1,117,382

Total loans
21,750,987

 
22,285,367

Allowance for loan losses
(210,759
)
 
(204,432
)
Loans, net of allowance
21,540,228

 
22,080,935

Premises and equipment, net
535,519

 
516,597

Receivables
231,811

 
219,420

Goodwill
1,048,091

 
1,048,091

Intangible assets, net
125,271

 
124,320

Mortgage servicing rights
201,886

 
193,661

Real estate and other repossessed assets, net
20,359

 
21,026

Derivative contracts, net
323,375

 
352,019

Cash surrender value of bank-owned life insurance
389,879

 
387,035

Receivable on unsettled securities sales
1,020,404

 
904,630

Other assets
547,995

 
470,993

TOTAL ASSETS
$
42,172,021

 
$
43,127,205

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Deposits:
 
 
 
Demand
$
9,461,291

 
$
9,844,397

Interest-bearing transaction
15,391,752

 
13,521,545

Savings
550,276

 
557,593

Time
2,217,849

 
2,243,541

Total deposits
27,621,168

 
26,167,076

Funds purchased and repurchase agreements
3,818,350

 
3,413,051

Other borrowings
4,527,055

 
6,822,334

Subordinated debentures
275,923

 
275,909

Accrued interest, taxes and expense
259,701

 
218,775

Due on unsettled securities purchases
182,547

 
703,448

Derivative contracts, net
251,128

 
336,791

Other liabilities
372,230

 
352,156

TOTAL LIABILITIES
37,308,102

 
38,289,540

Shareholders' equity:
 
 
 
Capital, surplus and retained earnings
4,750,872

 
4,695,263

Accumulated other comprehensive gain
104,923

 
133,753

TOTAL SHAREHOLDERS' EQUITY
4,855,795

 
4,829,016

Non-controlling interests
8,124

 
8,649

TOTAL EQUITY
4,863,919

 
4,837,665

TOTAL LIABILITIES AND EQUITY
$
42,172,021

 
$
43,127,205



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AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
Three Months Ended
 
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
ASSETS
 
 
 
 
 
 
 
 
 
Interest-bearing cash and cash equivalents
$
573,203

 
$
500,823

 
$
535,491

 
$
537,903

 
$
563,132

Trading securities
1,672,426

 
1,696,568

 
1,757,335

 
1,968,399

 
1,929,601

Investment securities
298,567

 
308,090

 
328,482

 
343,282

 
364,737

Available for sale securities
11,333,524

 
10,747,439

 
9,435,668

 
8,883,054

 
8,704,963

Fair value option securities
1,521,528

 
1,553,879

 
898,772

 
594,349

 
277,575

Restricted equity securities
479,687

 
476,781

 
413,812

 
395,432

 
362,729

Residential mortgage loans held for sale
203,535

 
203,319

 
192,102

 
145,040

 
179,553

Loans:
 
 
 
 
 
 
 
 
 
Commercial
14,344,534

 
14,507,185

 
14,175,057

 
13,966,521

 
13,587,344

Commercial real estate
4,532,649

 
4,652,534

 
4,656,861

 
4,602,149

 
4,747,784

Residential mortgage
2,130,646

 
2,129,421

 
2,146,315

 
2,193,334

 
2,222,063

Personal
1,228,171

 
1,123,778

 
1,026,172

 
1,004,061

 
1,022,140

Total loans
22,236,000

 
22,412,918

 
22,004,405

 
21,766,065

 
21,579,331

Allowance for loan losses
(205,417
)
 
(201,714
)
 
(205,532
)
 
(206,092
)
 
(209,613
)
Total loans, net
22,030,583

 
22,211,204

 
21,798,873

 
21,559,973

 
21,369,718

Total earning assets
38,113,053

 
37,698,103

 
35,360,535

 
34,427,432

 
33,752,008

Cash and due from banks
690,806

 
717,338

 
703,294

 
705,411

 
731,700

Derivative contracts, net
311,542

 
331,834

 
328,802

 
262,927

 
299,319

Cash surrender value of bank-owned life insurance
388,012

 
385,190

 
384,974

 
382,538

 
379,893

Receivable on unsettled securities sales
1,973,604

 
1,742,794

 
1,437,462

 
1,224,700

 
799,548

Other assets
2,736,337

 
2,705,089

 
2,629,710

 
2,669,673

 
2,423,275

TOTAL ASSETS
$
44,213,354

 
$
43,580,348

 
$
40,844,777

 
$
39,672,681

 
$
38,385,743

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Demand
$
9,612,533

 
$
9,759,710

 
$
9,883,965

 
$
9,988,088

 
$
10,648,683

Interest-bearing transaction
14,685,385

 
13,131,542

 
12,512,282

 
11,931,539

 
11,773,651

Savings
554,605

 
557,122

 
558,738

 
541,575

 
526,275

Time
2,247,717

 
2,251,800

 
2,207,391

 
2,153,277

 
2,146,786

Total deposits
27,100,240

 
25,700,174

 
25,162,376

 
24,614,479

 
25,095,395

Funds purchased and repurchase agreements
4,120,610

 
3,106,163

 
2,066,950

 
2,033,036

 
1,205,568

Other borrowings
6,247,194

 
8,125,023

 
7,175,617

 
7,040,279

 
6,361,141

Subordinated debentures
275,916

 
275,900

 
275,887

 
275,882

 
276,378

Derivative contracts, net
276,078

 
300,051

 
283,484

 
273,786

 
268,848

Due on unsettled securities purchases
784,174

 
745,893

 
821,688

 
453,937

 
493,887

Other liabilities
561,654

 
547,144

 
460,732

 
501,788

 
341,438

TOTAL LIABILITIES
39,365,866

 
38,800,348

 
36,246,734

 
35,193,187

 
34,042,655

Total equity
4,847,488

 
4,780,000

 
4,598,043

 
4,479,494

 
4,343,088

TOTAL LIABILITIES AND EQUITY
$
44,213,354

 
$
43,580,348

 
$
40,844,777

 
$
39,672,681

 
$
38,385,743



10



STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Interest revenue
$
369,857

 
$
365,592

 
$
1,531,958

 
$
1,228,426

Interest expense
99,608

 
79,906

 
419,079

 
243,559

Net interest revenue
270,249

 
285,686

 
1,112,879

 
984,867

Provision for credit losses
19,000

 
9,000

 
44,000

 
8,000

Net interest revenue after provision for credit losses
251,249

 
276,686

 
1,068,879

 
976,867

Other operating revenue:
 
 
 
 
 
 
 
Brokerage and trading revenue
43,843

 
28,101

 
159,826

 
108,323

Transaction card revenue
22,548

 
20,664

 
87,216

 
84,025

Fiduciary and asset management revenue
45,021

 
43,665

 
177,025

 
184,703

Deposit service charges and fees
27,331

 
29,393

 
112,485

 
112,153

Mortgage banking revenue
25,396

 
21,880

 
107,541

 
97,787

Other revenue
15,283

 
16,404

 
58,108

 
56,185

Total fees and commissions
179,422

 
160,107

 
702,201

 
643,176

Other gains (losses), net
(1,649
)
 
(8,305
)
 
9,351

 
(2,265
)
Gain (loss) on derivatives, net
(4,644
)
 
11,167

 
14,951

 
(422
)
Gain (loss) on fair value option securities, net
(8,328
)
 
(282
)
 
15,787

 
(25,572
)
Change in fair value of mortgage servicing rights
9,297

 
(24,233
)
 
(53,517
)
 
4,668

Gain (loss) on available for sale securities, net
4,487

 
(1,999
)
 
5,597

 
(2,801
)
Total other operating revenue
178,585

 
136,455

 
694,370

 
616,784

Other operating expense:
 
 
 
 
 
 
 
Personnel
168,422

 
160,706

 
660,565

 
583,131

Business promotion
8,787

 
9,207

 
35,662

 
30,523

Charitable contributions to BOKF Foundation
2,000

 
2,846

 
3,000

 
2,846

Professional fees and services
13,408

 
20,712

 
54,861

 
59,099

Net occupancy and equipment
26,316

 
27,780

 
110,275

 
97,981

Insurance
5,393

 
4,248

 
20,906

 
23,318

Data processing and communications
31,884

 
27,575

 
124,983

 
114,796

Printing, postage and supplies
3,700

 
5,232

 
16,517

 
17,169

Net losses and operating expenses of repossessed assets
2,403

 
2,581

 
6,707

 
17,052

Amortization of intangible assets
5,225

 
5,331

 
20,618

 
9,620

Mortgage banking costs
14,259

 
11,518

 
50,685

 
46,298

Other expense
6,998

 
6,907

 
27,602

 
26,333

Total other operating expense
288,795

 
284,643

 
1,132,381

 
1,028,166

 
 
 
 
 
 
 
 
Net income before taxes
141,039

 
128,498

 
630,868

 
565,485

Federal and state income taxes
30,257

 
20,121

 
130,183

 
119,061

 
 
 
 
 
 
 
 
Net income
110,782

 
108,377

 
500,685

 
446,424

Net income (loss) attributable to non-controlling interests
430

 
(79
)
 
(73
)
 
778

Net income attributable to BOK Financial Corporation shareholders
$
110,352

 
$
108,456

 
$
500,758

 
$
445,646

 
 
 
 
 
 
 
 
Average shares outstanding:
 
 
 
 
 
 
 
Basic
70,295,899

 
71,808,029

 
70,787,700

 
66,628,640

Diluted
70,309,644

 
71,833,334

 
70,802,612

 
66,662,273

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
1.56

 
$
1.50

 
$
7.03

 
$
6.63

Diluted
$
1.56

 
$
1.50

 
$
7.03

 
$
6.63




11



FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 
Three Months Ended
 
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
Capital:
 
 
 
 
 
 
 
 
 
Period-end shareholders' equity
$
4,855,795

 
$
4,829,016

 
$
4,709,438

 
$
4,522,873

 
$
4,432,109

Risk weighted assets
$
31,671,519

 
$
32,159,139

 
$
32,040,741

 
$
31,601,558

 
$
30,742,295

Risk-based capital ratios:
 
 
 
 
 
 
 
 
 
Common equity tier 1
11.39
%
 
11.06
%
 
10.84
%
 
10.71
%
 
10.92
%
Tier 1
11.39
%
 
11.06
%
 
10.84
%
 
10.71
%
 
10.92
%
Total capital
12.94
%
 
12.56
%
 
12.34
%
 
12.24
%
 
12.50
%
Leverage ratio
8.40
%
 
8.41
%
 
8.75
%
 
8.76
%
 
8.96
%
Tangible common equity ratio1
8.98
%
 
8.72
%
 
8.69
%
 
8.64
%
 
8.82
%
 
 
 
 
 
 
 
 
 
 
Common stock:
 
 
 
 
 
 
 
 
 
Book value per share
$
68.80

 
$
68.15

 
$
66.15

 
$
63.30

 
$
61.45

Tangible book value per share
52.17

 
51.60

 
49.68

 
46.82

 
45.03

Market value per share:
 
 
 
 
 
 
 
 
 
High
$
88.28

 
$
84.35

 
$
88.17

 
$
93.72

 
$
98.29

Low
$
71.85

 
$
72.96

 
$
72.60

 
$
72.11

 
$
69.96

Cash dividends paid
$
36,011

 
$
35,472

 
$
35,631

 
$
35,885

 
$
35,977

Dividend payout ratio
32.63
%
 
24.94
%
 
25.90
%
 
32.44
%
 
33.17
%
Shares outstanding, net
70,579,598

 
70,858,010

 
71,193,770

 
71,449,982

 
72,122,932

Stock buy-back program:
 
 
 
 
 
 
 
 
 
Shares repurchased
280,000

 
336,713

 
250,000

 
705,609

 
525,000

Amount
$
22,844

 
$
25,937

 
$
20,125

 
$
60,577

 
$
45,057

Average price per share
$
81.59

 
$
77.03

 
$
80.50

 
$
85.85

 
$
85.82

 
 
 
 
 
 
 
 
 
 
Performance ratios (quarter annualized):
Return on average assets
0.99
%
 
1.29
%
 
1.35
%
 
1.13
%
 
1.12
%
Return on average equity
9.05
%
 
11.83
%
 
12.02
%
 
10.04
%
 
9.93
%
Net interest margin
2.88
%
 
3.01
%
 
3.30
%
 
3.30
%
 
3.40
%
Efficiency ratio
63.65
%
 
59.31
%
 
59.51
%
 
64.80
%
 
63.25
%
 
 
 
 
 
 
 
 
 
 
Reconciliation of non-GAAP measures:
1      Tangible common equity ratio:
 
 
 
 
 
 
 
 
 
Total shareholders' equity
$
4,855,795

 
$
4,829,016

 
$
4,709,438

 
$
4,522,873

 
$
4,432,109

Less: Goodwill and intangible assets, net
1,173,362

 
1,172,411

 
1,172,564

 
1,177,573

 
1,184,112

Tangible common equity
$
3,682,433

 
$
3,656,605

 
$
3,536,874

 
$
3,345,300

 
$
3,247,997

 
 
 
 
 
 
 
 
 
 
Total assets
$
42,172,021

 
$
43,127,205

 
$
41,893,073

 
$
39,882,962

 
$
38,020,504

Less: Goodwill and intangible assets, net
1,173,362

 
1,172,411

 
1,172,564

 
1,177,573

 
1,184,112

Tangible assets
$
40,998,659

 
$
41,954,794

 
$
40,720,509

 
$
38,705,389

 
$
36,836,392

 
 
 
 
 
 
 
 
 
 
Tangible common equity ratio
8.98
%
 
8.72
%
 
8.69
%
 
8.64
%
 
8.82
%
 
 
 
 
 
 
 
 
 
 

12



FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 
Three Months Ended
 
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
Other data:
 
 
 
 
 
 
 
 
 
Tax equivalent interest
$
2,726

 
$
2,936

 
$
3,481

 
$
2,529

 
$
3,067

Net unrealized gain (loss) on available for sale securities
$
138,149

 
$
178,060

 
$
131,780

 
$
(2,609
)
 
$
(95,271
)
 
 
 
 
 
 
 
 
 
 
Mortgage banking:
 
 
 
 
 
 
 
 
 
Mortgage production revenue
$
9,169

 
$
13,814

 
$
11,869

 
$
7,868

 
$
5,073

 
 
 
 
 
 
 
 
 
 
Mortgage loans funded for sale
$
855,643

 
$
877,280

 
$
729,841

 
$
510,527

 
$
497,353

Add: current period-end outstanding commitments
158,460

 
379,377

 
344,087

 
263,434

 
160,848

Less: prior period end outstanding commitments
379,377

 
344,087

 
263,434

 
160,848

 
197,752

Total mortgage production volume
$
634,726

 
$
912,570

 
$
810,494

 
$
613,113

 
$
460,449

 
 
 
 
 
 
 
 
 
 
Mortgage loan refinances to mortgage loans funded for sale
57
%
 
56
%
 
31
%
 
30
%
 
23
%
Gain on sale margin
1.44
%
 
1.51
%
 
1.46
%
 
1.28
%
 
1.10
%
 
 
 
 
 
 
 
 
 
 
Mortgage servicing revenue
$
16,227

 
$
16,366

 
$
16,262

 
$
15,966

 
$
16,807

Average outstanding principal balance of mortgage loans serviced for others
20,856,446

 
21,172,874

 
21,418,690

 
21,581,835

 
21,706,541

Average mortgage servicing revenue rates
0.31
%
 
0.31
%
 
0.30
%
 
0.30
%
 
0.31
%
 
 
 
 
 
 
 
 
 
 
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net
$
(4,714
)
 
$
3,742

 
$
11,128

 
$
4,432

 
$
12,162

Gain (loss) on fair value option securities, net
(8,328
)
 
4,597

 
9,853

 
9,665

 
(282
)
Gain (loss) on economic hedge of mortgage servicing rights
(13,042
)
 
8,339

 
20,981

 
14,097

 
11,880

Gain (loss) on changes in fair value of mortgage servicing rights
9,297

 
(12,593
)
 
(29,555
)
 
(20,666
)
 
(24,233
)
Loss on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue
(3,745
)
 
(4,254
)
 
(8,574
)
 
(6,569
)
 
(12,353
)
Net interest revenue on fair value option securities2
1,544

 
1,245

 
1,296

 
1,129

 
695

Total economic cost of changes in the fair value of mortgage servicing rights, net of economic hedges
$
(2,201
)
 
$
(3,009
)
 
$
(7,278
)
 
$
(5,440
)
 
$
(11,658
)
2  
Actual interest earned on fair value option securities less internal transfer-priced cost of funds.



13



QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
 
Three Months Ended
 
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
 
 
 
 
 
 
 
 
 
Interest revenue
$
369,857

 
$
395,207

 
$
390,820

 
$
376,074

 
$
365,592

Interest expense
99,608

 
116,111

 
105,388

 
97,972

 
79,906

Net interest revenue
270,249

 
279,096

 
285,432

 
278,102

 
285,686

Provision for credit losses
19,000

 
12,000

 
5,000

 
8,000

 
9,000

Net interest revenue after provision for credit losses
251,249

 
267,096

 
280,432

 
270,102

 
276,686

Other operating revenue:
 
 
 
 
 
 
 
 
 
Brokerage and trading revenue
43,843

 
43,840

 
40,526

 
31,617

 
28,101

Transaction card revenue
22,548

 
22,015

 
21,915

 
20,738

 
20,664

Fiduciary and asset management revenue
45,021

 
43,621

 
45,025

 
43,358

 
43,665

Deposit service charges and fees
27,331

 
28,837

 
28,074

 
28,243

 
29,393

Mortgage banking revenue
25,396

 
30,180

 
28,131

 
23,834

 
21,880

Other revenue
15,283

 
17,626

 
12,437

 
12,762

 
16,404

Total fees and commissions
179,422

 
186,119

 
176,108

 
160,552

 
160,107

Other gains (losses), net
(1,649
)
 
4,544

 
3,480

 
2,976

 
(8,305
)
Gain (loss) on derivatives, net
(4,644
)
 
3,778

 
11,150

 
4,667

 
11,167

Gain (loss) on fair value option securities, net
(8,328
)
 
4,597

 
9,853

 
9,665

 
(282
)
Change in fair value of mortgage servicing rights
9,297

 
(12,593
)
 
(29,555
)
 
(20,666
)
 
(24,233
)
Gain (loss) on available for sale securities, net
4,487

 
5

 
1,029

 
76

 
(1,999
)
Total other operating revenue
178,585

 
186,450

 
172,065

 
157,270

 
136,455

Other operating expense:
 
 
 
 
 
 
 
 
 
Personnel
168,422

 
162,573

 
160,342

 
169,228

 
160,706

Business promotion
8,787

 
8,859

 
10,142

 
7,874

 
9,207

Charitable contributions to BOKF Foundation
2,000

 

 
1,000

 

 
2,846

Professional fees and services
13,408

 
12,312

 
13,002

 
16,139

 
20,712

Net occupancy and equipment
26,316

 
27,558

 
26,880

 
29,521

 
27,780

Insurance
5,393

 
4,220

 
6,454

 
4,839

 
4,248

Data processing and communications
31,884

 
31,915

 
29,735

 
31,449

 
27,575

Printing, postage and supplies
3,700

 
3,825

 
4,107

 
4,885

 
5,232

Net losses and operating expenses of repossessed assets
2,403

 
1,728

 
580

 
1,996

 
2,581

Amortization of intangible assets
5,225

 
5,064

 
5,138

 
5,191

 
5,331

Mortgage banking costs
14,259

 
14,975

 
11,545

 
9,906

 
11,518

Other expense
6,998

 
6,263

 
8,212

 
6,129

 
6,907

Total other operating expense
288,795

 
279,292

 
277,137

 
287,157

 
284,643

Net income before taxes
141,039

 
174,254

 
175,360

 
140,215

 
128,498

Federal and state income taxes
30,257

 
32,396

 
37,580

 
29,950

 
20,121

Net income
110,782

 
141,858

 
137,780

 
110,265

 
108,377

Net income (loss) attributable to non-controlling interests
430

 
(373
)
 
217

 
(347
)
 
(79
)
Net income attributable to BOK Financial Corporation shareholders
$
110,352

 
$
142,231

 
$
137,563

 
$
110,612

 
$
108,456

 
 
 
 
 
 
 
 
 
 
Average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
70,295,899

 
70,596,307

 
70,887,063

 
71,387,070

 
71,808,029

Diluted
70,309,644

 
70,609,924

 
70,902,033

 
71,404,388

 
71,833,334

Net income per share:
 
 
 
 
 
 
 
 
 
Basic
$
1.56

 
$
2.00

 
$
1.93

 
$
1.54

 
$
1.50

Diluted
$
1.56

 
$
2.00

 
$
1.93

 
$
1.54

 
$
1.50


14



LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
 
 
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
Commercial:
 
 
 
 
 
 
 
 
 
 
Energy
 
$
3,973,377

 
$
4,114,269

 
$
3,921,353

 
$
3,705,099

 
$
3,590,333

Services
 
3,122,163

 
3,266,249

 
3,309,458

 
3,287,563

 
3,258,192

Healthcare
 
3,033,916

 
3,032,968

 
2,926,510

 
2,915,885

 
2,799,277

Wholesale/retail
 
1,760,866

 
1,848,617

 
1,793,118

 
1,706,900

 
1,621,158

Public finance
 
709,868

 
744,840

 
795,659

 
803,083

 
804,550

Manufacturing
 
665,449

 
698,408

 
761,357

 
742,374

 
730,521

Other commercial and industrial
 
766,011

 
719,274

 
829,453

 
801,071

 
832,047

Total commercial
 
14,031,650

 
14,424,625

 
14,336,908

 
13,961,975

 
13,636,078

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 

 
 

 
 

Multifamily
 
1,265,562

 
1,324,839

 
1,300,372

 
1,210,358

 
1,288,065

Office
 
928,379

 
1,014,275

 
1,056,306

 
1,033,158

 
1,072,920

Industrial
 
856,117

 
873,536

 
828,569

 
767,757

 
778,106

Retail
 
775,521

 
799,169

 
825,399

 
890,685

 
919,082

Residential construction and land development
 
150,879

 
135,361

 
141,509

 
149,686

 
148,584

Other commercial real estate
 
457,325

 
478,877

 
557,878

 
549,007

 
558,056

Total commercial real estate
 
4,433,783

 
4,626,057

 
4,710,033

 
4,600,651

 
4,764,813

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
1,057,321

 
1,066,460

 
1,088,370

 
1,098,481

 
1,122,610

Permanent mortgages guaranteed by U.S. government agencies
 
197,794

 
191,764

 
195,373

 
193,308

 
190,866

Home equity
 
829,057

 
859,079

 
887,079

 
900,831

 
916,557

Total residential mortgage
 
2,084,172

 
2,117,303

 
2,170,822

 
2,192,620

 
2,230,033

 
 
 
 
 
 
 
 
 
 
 
Personal
 
1,201,382

 
1,117,382

 
1,037,889

 
1,003,734

 
1,025,806

 
 
 
 
 
 
 
 
 
 
 
Total
 
$
21,750,987

 
$
22,285,367

 
$
22,255,652

 
$
21,758,980

 
$
21,656,730


15



LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
 
 
 
 
 
 
 
 
 
Texas:
 
 
 
 
 
 
 
 
 
Commercial
$
6,174,894

 
$
6,220,227

 
$
5,877,265

 
$
5,754,018

 
$
5,438,133

Commercial real estate
1,259,117

 
1,292,116

 
1,341,609

 
1,344,810

 
1,341,783

Residential mortgage
268,282

 
273,931

 
272,878

 
265,927

 
266,805

Personal
458,893

 
475,430

 
400,585

 
396,794

 
394,743

Total Texas
8,161,186

 
8,261,704

 
7,892,337

 
7,761,549

 
7,441,464

 
 
 
 
 
 
 
 
 
 
Oklahoma:
 
 
 
 
 
 
 
 
 
Commercial
3,454,825

 
3,690,100

 
3,762,234

 
3,551,054

 
3,491,117

Commercial real estate
631,026

 
679,786

 
717,970

 
665,190

 
700,756

Residential mortgage
1,375,080

 
1,370,452

 
1,403,398

 
1,417,381

 
1,440,566

Personal
479,784

 
383,246

 
382,764

 
374,807

 
375,543

Total Oklahoma
5,940,715

 
6,123,584

 
6,266,366

 
6,008,432

 
6,007,982

 
 
 
 
 
 
 
 
 
 
Colorado:
 
 
 
 
 
 
 
 
 
Commercial
2,169,598

 
2,247,798

 
2,325,742

 
2,231,703

 
2,275,069

Commercial real estate
927,826

 
975,066

 
1,023,410

 
957,348

 
963,575

Residential mortgage
196,326

 
224,872

 
241,780

 
241,722

 
251,849

Personal
80,613

 
78,733

 
72,537

 
65,812

 
72,916

Total Colorado
3,374,363

 
3,526,469

 
3,663,469

 
3,496,585

 
3,563,409

 
 
 
 
 
 
 
 
 
 
Arizona:
 
 
 
 
 
 
 
 
 
Commercial
1,307,073

 
1,276,534

 
1,330,415

 
1,335,140

 
1,320,139

Commercial real estate
728,832

 
771,425

 
761,243

 
791,466

 
889,903

Residential mortgage
89,396

 
92,121

 
91,684

 
98,973

 
97,959

Personal
97,143

 
78,694

 
76,335

 
61,875

 
68,546

Total Arizona
2,222,444

 
2,218,774