Market Overview

BOK Financial Reports Quarterly Earnings of $79 Million

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TULSA, Okla.--(BUSINESS WIRE)--

BOK Financial Corporation reported net income of $79.2 million or $1.15 per diluted share for the second quarter of 2015. Net income was $74.8 million or $1.08 per diluted share for the first quarter of 2015 and $75.9 million or $1.10 per diluted share for the second quarter of 2014.

Steven G. Bradshaw, president and chief executive officer, stated, "The second quarter of 2015 was exceptionally strong for BOK Financial, with continued double-digit loan growth and net interest margin expansion. In addition, we realized record quarterly fees and commissions revenue for the second consecutive quarter, with strong performance from all of our fee-generating businesses. We are executing well all across the business, controlling expense growth, and benefiting from a continued strong economic environment throughout our footprint.

"We have not seen a noticeable impact from the downturn in energy prices," Bradshaw continued. "Our largest markets of Oklahoma and Texas continue to have unemployment rates well below the national average, as jobs lost in the oil and gas industry are being replaced by job growth in other industries. Credit quality in our loan portfolio remains solid, and we continue to gain market share and win new business with customers and prospects. We remain optimistic about our growth opportunities through the balance of 2015 and beyond."

Highlights of second quarter of 2015 included:

  • Net interest revenue totaled $175.7 million for the second quarter of 2015, up $8.0 million over the first quarter of 2015. Net interest margin was 2.61 percent for the second quarter of 2015 and 2.55 percent for the first quarter of 2015. Average earning assets increased $383 million during the second quarter of 2015, primarily related to a $351 million increase in average loan balances.
  • Fees and commissions revenue totaled $172.5 million for the second quarter of 2015, an increase of $6.6 million over the prior quarter. Brokerage and trading revenue grew $4.3 million. A $2.5 million decrease in mortgage banking revenue was offset by growth in all other fee-based business lines.
  • Changes in fair value of mortgage servicing rights, net of economic hedges, decreased pre-tax net income by $1.1 million in the second quarter of 2015 and $5.0 million in the first quarter of 2015.
  • Operating expense was $227.1 million for the second quarter, an increase of $6.8 million over the previous quarter, primarily due to increased incentive compensation expense.
  • A $4.0 million provision for credit losses was recorded in the second quarter of 2015. No provision was recorded in the first quarter of 2015. The additional provision was primarily due to loan portfolio growth. Net loans charged off totaled $671 thousand in the second quarter of 2015, compared to net recoveries of $8.4 million in the previous quarter.
  • The combined allowance for credit losses totaled $202 million or 1.34 percent of outstanding loans at June 30, 2015 compared to $199 million or 1.35 percent of outstanding loans at March 31, 2015. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $123 million or 0.82 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at June 30, 2015 and $123 million or 0.85 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at March 31, 2015.
  • Average loans increased by $351 million over the previous quarter, primarily due to growth in commercial loans. Period-end outstanding loan balances also increased $440 million to $15.1 billion at June 30, 2015.
  • Average deposits decreased $155 million compared to the previous quarter, primarily due to a decrease in interest-bearing transaction accounts, partially offset by an increase in average demand deposit balances. Period-end deposits were $21.1 billion at June 30, 2015, largely unchanged compared to March 31, 2015.
  • New regulatory capital rules were effective for BOK Financial on January 1, 2015 and components of these rules will phase in through January 1, 2019. The new capital rules establish a 7 percent threshold for the common equity Tier 1 ratio. The common equity Tier 1 capital ratio at June 30 was 13.01 percent. Other ratios measured under the new regulatory capital rules were Tier 1 capital ratio, 13.01 percent; total capital ratio, 14.11 percent; and leverage ratio, 9.75 percent. At March 31, 2015, the common equity Tier 1 capital ratio was 13.07 percent, the Tier 1 capital ratio was 13.07 percent, total capital ratio was 14.39 percent, and leverage ratio was 9.74 percent.
  • The company paid a regular quarterly cash dividend of $29 million or $0.42 per common share during the second quarter of 2015. On July 28, 2015, the board of directors approved a quarterly cash dividend of $0.42 per common share payable on or about August 28, 2015 to shareholders of record as of August 14, 2015.

Net Interest Revenue

Net interest revenue was $175.7 million for the second quarter of 2015, up $8.0 million over the first quarter of 2015.

Net interest margin was 2.61 percent for the second quarter of 2015, an increase of 6 basis points over the first quarter of 2015. The yield on average earning assets was 2.84 percent, an increase of 4 basis points over the prior quarter. The loan portfolio yield increased 6 basis points over the previous quarter to 3.65 percent, primarily due to $2.3 million of non-accrual interest recoveries during the quarter and increased loan fees. Competitive loan pricing and low interest rates continue to impact loan yields. The yield on the available for sale securities portfolio decreased 4 basis points to 1.94 percent. Excess cash flows continue to be reinvested in short-duration securities that are yielding near 2.00 percent. Funding costs were 0.35 percent, down 3 basis points compared to the prior quarter.

Average earning assets increased $383 million during the second quarter of 2015, primarily related to a $351 million increase in average loan portfolio balances. Residential mortgage loans held for sale, restricted equity securities and fair value option securities also increased over the prior quarter. These increases were partially offset by an $87 million decrease in interest-bearing cash and cash equivalent balances and a $38 million decrease in the average balance of the available for sale securities portfolio. Average deposit balances decreased $155 million compared to the first quarter of 2015. The average balance of borrowed funds increased $684 million. The average balance of subordinated debentures decreased $40 million as $122 million of fixed rate subordinated debt matured on June 1, 2015.

Fees and Commissions Revenue

Fees and commissions revenue totaled $172.5 million for the second quarter of 2015, an increase of $6.6 million over the first quarter of 2015, with growth in nearly all fee categories.

Brokerage and trading revenue totaled $36.0 million, an increase of $4.3 million over the prior quarter. Investment banking revenue increased $2.4 million over the prior quarter due primarily to growth in loan syndication and underwriting fees related to the timing and volume of transactions completed. Securities trading revenue increased $1.4 million. Customer hedging revenue increased $1.3 million. Retail brokerage fees were down $880 thousand.

Mortgage banking revenue totaled $36.8 million for the second quarter of 2015, a decrease of $2.5 million compared to the first quarter of 2015. Revenue from mortgage loan production decreased $2.9 million. While loan production activity increased over the previous quarter, margin compression reduced mortgage production revenue. Total mortgage loans originated during the second quarter increased $263 million or 17 percent over the previous quarter and outstanding mortgage loan commitments at June 30 increased $26 million or 3 percent over March 31. However, mortgage interest rates increased during the second quarter which reduced higher-margin refinance activity.

Transaction card revenues grew by $1.8 million to $32.8 million due to increased transaction volumes during the second quarter. Fiduciary and asset management revenue continued to grow, up $1.2 million to $32.7 million for the second quarter. Deposit service charges and fees increased $644 thousand to $22.3 million for the second quarter, primarily due to increased overdraft fees.

Operating Expense

Total operating expense was $227.1 million for the second quarter of 2015, an increase of $6.8 million over the first quarter of 2015.

Personnel costs increased by $4.1 million over the first quarter of 2015, primarily due to a $6.3 million increase in incentive compensation expense, partially offset by a $2.5 million decrease in employee benefit expense due to decreased employee health insurance costs and payroll taxes.

Non-personnel expense increased $2.7 million compared to the first quarter of 2015. Other expense increased $2.5 million primarily due to increased recruiting expense. Business promotion expense increased $2.0 million, offset by a $1.9 million decrease in mortgage banking expense.

Loans, Deposits and Capital

Loans

Outstanding loans were $15.1 billion at June 30, 2015, an increase of $440 million over the previous quarter. Commercial and commercial real estate balances both grew over the prior quarter, partially offset by a decrease in residential mortgage loan balances.

Outstanding commercial loan balances increased $385 million or 4 percent over March 31, 2015, growing in almost every sector of our commercial loan portfolio. Healthcare sector loans grew by $135 million. Service sector loans grew by $109 million over the prior quarter. Wholesale/retail sector loans increased $107 million. Energy loan balances were largely unchanged compared to March 31, 2015. Unfunded energy loan commitments decreased by $177 million during the second quarter to $2.6 billion. All other unfunded commercial loan commitments totaled $4.2 billion at June 30, 2015, an increase of $49 million over March 31, 2015.

Commercial real estate loans grew by $98 million or 3 percent over March 31, 2015. Loans secured by office buildings increased $49 million. Other commercial real estate loan balances increased $39 million. Retail sector loan balances increased $30 million. This growth was partially offset by a $39 million decrease in multifamily residential loans. Industrial and residential construction and land development loan balances also increased over March 31, 2015. Unfunded commercial real estate loan commitments totaled $813 million at June 30, 2015, an increase of $59 million over March 31, 2015.

Norm Bagwell, EVP-Regional Banks, stated, "We saw continued robust loan growth across our footprint and in substantially all of our end markets in the second quarter. The loan production environment and our pipelines remain strong, fueled by the diverse economies of the states in our footprint, as well as our continued efforts to grow our business with new and existing customers. Accordingly, we are forecasting mid- to high-single-digit loan growth for the second half of 2015, and expect double-digit loan growth for the full year."

Stacy Kymes, EVP-Corporate Banking, added, "In late July we updated our quarterly energy portfolio stress test and we continue to believe our portfolio is well-positioned with high quality borrowers. Potential problem energy loans increased this quarter as part of the anticipated credit migration in this environment. We do not expect significant losses if the current downturn behaves like others we have experienced over the past 20 years. In addition, the most recent decline in oil prices may ultimately be a positive for the industry's long-term health as it will likely serve to suppress renewed drilling until prices stabilize at a new equilibrium."

Deposits

Deposits totaled $21.1 billion at June 30, 2015, largely unchanged compared to March 31, 2015. Demand deposit balances increased $147 million, offset by a $208 million decrease in interest-bearing transaction deposits and a $27 million decrease in time deposits. Among the lines of business, Wealth Management deposits increased $127 million over March 31. Consumer Banking deposits decreased $159 million and Commercial Banking deposits decreased $139 million.

Capital

New regulatory capital rules were effective for BOK Financial on January 1, 2015 and established a 7 percent threshold for the common equity Tier 1 ratio. The Company's common equity Tier 1 capital ratio was 13.01 percent at June 30, 2015. In addition, the Company's Tier 1 capital ratio was 13.01 percent, total capital ratio was 14.11 percent and leverage ratio was 9.75 percent at June 30, 2015. At March 31, 2015, the Company's common equity Tier 1 capital ratio was 13.07 percent, Tier 1 capital ratio was 13.07 percent, total capital ratio was 14.39 percent, and leverage ratio was 9.74 percent.

In addition, the Company's tangible common equity ratio, a non-GAAP measure, was 9.72 percent at June 30, 2015 and 9.86 percent at March 31, 2015. 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.

Credit Quality

Nonperforming assets totaled $209 million or 1.38 percent of outstanding loans and repossessed assets at June 30, 2015 compared to $207 million or 1.40 percent at March 31, 2015. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $123 million or 0.82 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at June 30, 2015 and $123 million or 0.85 percent at March 31, 2015, a decrease of $355 thousand.

Nonaccruing loans totaled $91 million or 0.60 percent of outstanding loans at June 30, 2015, compared to $81 million or 0.55 percent of outstanding loans at March 31, 2015. New nonaccruing loans identified in the second quarter totaled $20 million, offset by $5.0 million in payments received, $2.9 million in charge-offs and $1.4 million in foreclosures and repossessions. At June 30, 2015, nonaccruing commercial loans totaled $24 million or 0.25 percent of outstanding commercial loans, nonaccruing commercial real estate loans totaled $20 million or 0.66 percent of outstanding commercial real estate loans and nonaccruing residential mortgage loans totaled $46 million or 2.44 percent of outstanding residential mortgage loans.

Net loans charged off totaled $671 thousand for the second quarter of 2015, compared to net recoveries of $8.4 million for the first quarter of 2015. Gross charge-offs totaled $2.9 million for the second quarter, compared to $2.2 million for the previous quarter. Recoveries totaled $2.2 million for the second quarter of 2015 and $10.5 million for the first quarter of 2015.

After evaluating all credit factors, the Company recorded a $4.0 million provision for credit losses during the second quarter of 2015, primarily due to continued growth in the loan portfolio. The combined allowance for credit losses totaled $202 million or 1.34 percent of outstanding loans and 222 percent of nonaccruing loans at June 30, 2015. The allowance for loan losses was $201 million and the accrual for off-balance sheet credit losses was $882 thousand.

Real estate and other repossessed assets totaled $35 million at June 30, 2015, primarily consisting of $16 million of one-to-four family residential properties, $9.8 million of developed commercial real estate properties, $6.1 million of undeveloped land and $2.7 million of residential land and land development properties.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $9.0 billion at June 30, 2015, a decrease of $158 million over March 31, 2015. At June 30, 2015, the available for sale portfolio consisted primarily of $6.3 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $2.4 billion of commercial mortgage-backed securities fully backed by U.S. government agencies.

At June 30, 2015 the available for sale securities portfolio had a net unrealized gain of $89 million compared to a net unrealized gain of $152 million at March 31, 2015 primarily due to changes in interest rates during the quarter. Net unrealized gains on residential mortgage-backed securities issued by U.S. government agencies at June 30, 2015 decreased $51 million during the second quarter to $79 million. Commercial mortgage-backed securities had a net unrealized loss of $4.1 million at June 30, 2015, compared to a net unrealized gain of $6.9 million at March 31, 2015.

In the second quarter of 2015, the Company recognized a $3.4 million net gain from the sale of $379 million of available for sale securities. Securities were sold either because they had reached their expected maximum potential return or to move into securities that will perform better in a rising rate environment. The Company recognized $4.3 million of net gains from sales of $335 million of available for sale securities in the first quarter of 2015.

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. The fair value of mortgage servicing rights increased by $8.0 million, primarily due to an increase in mortgage interest rates during the second quarter of 2015, partially offset by increased mortgage servicing costs. The value of securities and interest rate derivative contracts held as an economic hedge decreased by $9.1 million during the quarter. The fair value of mortgage servicing rights, net of economic hedges, decreased $5.0 million in the first quarter of 2015, primarily due to changes in interest rates.

Conference Call and Webcast

The Company will hold a conference call at 9 a.m. Central time on Wednesday, July 29, 2015 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 1-412-902-6611. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-0088 and referencing conference ID # 10069201.

About BOK Financial Corporation

BOK Financial Corporation is a $31 billion regional financial services company based in Tulsa, Oklahoma. The Company's stock is publicly traded on NASDAQ under the Global Select market listings (symbol: BOKF). BOK Financial's holdings include BOKF, NA, BOSC, Inc. and The Milestone Group, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management, MBM Advisors 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 June 30, 2015 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial, the financial services industry and the economy generally. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "plans," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses involve judgments as to future events and are inherently forward-looking statements. Assessments that BOK Financial's acquisitions and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to (1) the ability to fully realize expected cost savings from mergers within the expected time frames, (2) the ability of other companies on which BOK Financial relies to provide goods and services in a timely and accurate manner, (3) changes in interest rates and interest rate relationships, (4) demand for products and services, (5) the degree of competition by traditional and nontraditional competitors, (6) changes in banking regulations, tax laws, prices, levies and assessments, (7) the impact of technological advances and (8) trends in consumer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

 
BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION

(In thousands)

    June 30,
2015
    March 31,
2015
    June 30,
2014
ASSETS
Cash and due from banks $ 443,577 $ 490,683 $ 615,479
Interest-bearing cash and cash equivalents 2,119,072 2,119,987 732,395
Trading securities 158,209 118,044 101,097
Investment securities 625,664 634,587 649,937
Available for sale securities 9,000,117 9,158,175 9,699,146
Fair value option securities 436,324 434,077 185,674
Restricted equity securities 231,520 212,685 91,213
Residential mortgage loans held for sale 502,571 513,196 325,875
Loans:
Commercial 9,775,721 9,391,163 8,367,661
Commercial real estate 3,033,497 2,935,464 2,654,978
Residential mortgage 1,884,728 1,926,999 2,008,215
Consumer       430,190         430,510         396,004  
Total loans 15,124,136 14,684,136 13,426,858
Allowance for loan losses       (201,087 )       (197,686 )       (190,690 )
Loans, net of allowance 14,923,049 14,486,450 13,236,168
Premises and equipment, net 284,238 279,075 280,286
Receivables 149,629 183,447 115,991
Goodwill 385,454 377,780 377,780
Intangible assets, net 46,061 33,286 36,576
Mortgage servicing rights 198,694 175,051 155,740
Real estate and other repossessed assets, net 35,499 45,551 100,111
Derivative contracts, net 630,435 462,386 357,680
Cash surrender value of bank-owned life insurance 298,606 296,192 289,231
Receivable on unsettled securities sales 8,693 9,598 14,025
Other assets       248,151         269,728         479,366  
TOTAL ASSETS     $ 30,725,563       $ 30,299,978       $ 27,843,770  
 
LIABILITIES AND EQUITY
Deposits:
Demand $ 8,156,401 $ 8,009,577 $ 7,908,005
Interest-bearing transaction 9,899,777 10,108,202 9,698,404
Savings 379,172 383,790 349,629
Time       2,624,379         2,651,778         2,615,826  
Total deposits 21,059,729 21,153,347 20,571,864
Funds purchased 64,677 66,320 705,573
Repurchase agreements 712,033 897,663 1,072,375
Other borrowings 4,332,162 3,727,050 1,231,662
Subordinated debentures 226,278 348,030 347,890
Accrued interest, taxes and expense 124,568 147,184 100,227
Due on unsettled securities purchases 37,571 25,935 124,537
Derivative contracts, net 620,277 419,351 297,851
Other liabilities       135,435         124,846         144,145  
TOTAL LIABILITIES 27,312,730 26,909,726 24,596,124
Shareholders' equity:
Capital, surplus and retained earnings 3,323,840 3,266,858 3,163,101
Accumulated other comprehensive income       51,792         90,303         49,416  
TOTAL SHAREHOLDERS' EQUITY 3,375,632 3,357,161 3,212,517
Non-controlling interests       37,201         33,091         35,129  
TOTAL EQUITY       3,412,833         3,390,252         3,247,646  
TOTAL LIABILITIES AND EQUITY     $ 30,725,563       $ 30,299,978       $ 27,843,770  
 
 
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)

    Three Months Ended
June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
ASSETS
Interest-bearing cash and cash equivalents $ 2,002,456 $ 2,089,546 $ 2,090,176 $ 1,217,942 $ 635,140
Trading securities 127,391 140,968 164,502 107,909 116,186
Investment securities 628,489 642,825 650,911 641,375 658,793
Available for sale securities 9,063,006 9,101,464 9,161,901 9,526,727 9,800,934
Fair value option securities 435,294 404,775 221,773 180,268 164,684
Restricted equity securities 221,911 179,385 182,737 142,418 97,016
Residential mortgage loans held for sale 464,269 348,054 321,746 310,924 219,308
Loans:
Commercial 9,634,306 9,308,307 8,886,952 8,468,575 8,266,455
Commercial real estate 2,989,615 2,909,565 2,665,547 2,691,318 2,622,866
Residential mortgage 1,857,464 1,909,998 1,904,777 1,955,769 1,983,926
Consumer       423,967         426,712         424,729         402,916         391,214  
Total loans 14,905,352 14,554,582 13,882,005 13,518,578 13,264,461
Allowance for loan losses       (198,400 )       (194,948 )       (190,787 )       (191,141 )       (189,329 )
Total loans, net       14,706,952         14,359,634         13,691,218         13,327,437         13,075,132  
Total earning assets 27,649,768 27,266,651 26,484,964 25,455,000 24,767,193
Cash and due from banks 492,737 513,734 528,595 493,200 481,944
Derivative contracts, net 475,687 447,565 352,565 288,682 291,325
Cash surrender value of bank-owned life insurance 297,022 294,803 292,411 290,044 287,725
Receivable on unsettled securities sales 94,374 99,706 69,109 63,277 108,825
Other assets       1,454,484         1,348,245         1,404,553         1,525,354         1,549,809  
TOTAL ASSETS     $ 30,464,072       $ 29,970,704       $ 29,132,197       $ 28,115,557       $ 27,486,821  
 
LIABILITIES AND EQUITY
Deposits:
Demand $ 7,996,717 $ 7,885,485 $ 7,974,165 $ 7,800,350 $ 7,654,225
Interest-bearing transaction 10,063,589 10,338,396 9,730,564 9,473,575 9,850,991
Savings 381,833 365,835 346,132 342,488 355,459
Time       2,651,820         2,659,323         2,647,147         2,610,561         2,636,444  
Total deposits 21,093,959 21,249,039 20,698,008 20,226,974 20,497,119
Funds purchased 63,312 69,730 71,728 320,817 574,926
Repurchase agreements 773,977 1,000,839 996,308 1,027,206 914,892
Other borrowings 4,001,479 3,084,214 3,021,094 2,333,961 1,294,932
Subordinated debentures 307,903 348,007 347,960 347,914 347,868
Derivative contracts, net 455,431 418,848 321,367 270,998 243,619
Due on unsettled securities purchases 151,369 205,096 137,566 124,952 166,521
Other liabilities       235,173         243,370         228,021         214,306         270,220  
TOTAL LIABILITIES 27,082,603 26,619,143 25,822,052 24,867,128 24,310,097
Total equity       3,381,469         3,351,561         3,310,145         3,248,429         3,176,724  
TOTAL LIABILITIES AND EQUITY     $ 30,464,072       $ 29,970,704       $ 29,132,197       $ 28,115,557       $ 27,486,821  
 
 
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except per share data)

    Three Months Ended       Six Months Ended
June 30,       June 30,
2015     2014       2015     2014
 
Interest revenue $ 191,813 $ 182,631 $ 376,382 $ 361,751
Interest expense       16,082         16,534           32,925         33,012  
Net interest revenue 175,731 166,097 343,457 328,739
Provision for credit losses       4,000                   4,000          
Net interest revenue after provision for credit losses       171,731         166,097           339,457         328,739  
Other operating revenue:
Brokerage and trading revenue 36,012 39,056 67,719 68,572
Transaction card revenue 32,778 31,510 63,788 60,644
Fiduciary and asset management revenue 32,712 29,543 64,181 55,265
Deposit service charges and fees 22,328 23,133 44,012 45,822
Mortgage banking revenue 36,846 29,330 76,166 52,174
Bank-owned life insurance 2,398 2,274 4,596 4,380
Other revenue       9,473         9,208           18,076         18,060  
Total fees and commissions 172,547 164,054 338,538 304,917
Gain (loss) on other assets, net 1,457 3,521 2,212 1,193
Gain (loss) on derivatives, net (1,032 ) 831 (121 ) 1,799
Gain (loss) on fair value option securities, net (8,130 ) 4,176 (5,483 ) 6,836
Change in fair value of mortgage servicing rights 8,010 (6,444 ) (512 ) (10,905 )
Gain on available for sale securities, net 3,433 4 7,760 1,244
Total other-than-temporary impairment losses (781 )
Portion of loss recognized in (reclassified from) other comprehensive income                         689          
Net impairment losses recognized in earnings                         (92 )        
Total other operating revenue 176,285 166,142 342,302 305,084
Other operating expense:
Personnel 132,695 123,714 261,243 228,147
Business promotion 7,765 7,150 13,513 12,991
Charitable contributions to BOKF Foundation 2,420
Professional fees and services 9,560 11,054 19,619 18,619
Net occupancy and equipment 18,927 18,789 37,971 35,685
Insurance 5,116 4,467 10,096 9,008
Data processing and communications 31,463 29,071 62,083 56,206
Printing, postage and supplies 3,553 3,429 7,014 6,970
Net losses and operating expenses of repossessed assets 223 1,118 836 2,550
Amortization of intangible assets 1,090 949 2,180 1,765
Mortgage banking costs 7,419 7,960 16,738 11,594
Other expense       9,302         7,006           16,085         13,856  
Total other operating expense 227,113 214,707 447,378 399,811
 
Net income before taxes 120,903 117,532 234,381 234,012
Federal and state income taxes       40,630         40,803           79,014         80,240  
 
Net income 80,273 76,729 155,367 153,772
Net income attributable to non-controlling interests       1,043         834           1,294         1,287  
Net income attributable to BOK Financial Corporation shareholders     $ 79,230       $ 75,895         $ 154,073       $ 152,485  
 
Average shares outstanding:
Basic 68,096,341 68,359,945 68,175,327 68,318,689
Diluted 68,210,353 68,511,378 68,277,386 68,475,802
 
Net income per share:
Basic $ 1.15 $ 1.10 $ 2.23 $ 2.21
Diluted $ 1.15 $ 1.10 $ 2.23 $ 2.20
 
 
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except ratio and share data)

    Three Months Ended
June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
Capital:
Period-end shareholders' equity $ 3,375,632 $ 3,357,161 $ 3,302,179 $ 3,243,093 $ 3,212,517
Risk weighted assets $ 22,533,295 $ 22,053,246 $ 21,290,908 $ 20,491,089 $ 20,216,268
Risk-based capital ratios1:

Common equity Tier 1

13.01 % 13.07 % N/A N/A N/A
Tier 1 13.01 % 13.07 % 13.33 % 13.72 % 13.63 %
Total capital 14.11 % 14.39 % 14.66 % 15.11 % 15.38 %
Leverage ratio 9.75 % 9.74 % 9.96 % 10.22 % 10.26 %
Tangible common equity ratio2 9.72 % 9.86 % 10.08 % 9.86 % 10.20 %
 
Common stock:
Book value per share $ 48.96 $ 48.71 $ 47.78 $ 46.77 $ 46.39
Market value per share:
High $ 71.66 $ 61.78 $ 68.69 $ 69.56 $ 70.66
Low $ 59.59 $ 52.63 $ 56.87 $ 63.36 $ 61.64
Cash dividends paid $ 28,841 $ 28,952 $ 29,114 $ 27,705 $ 27,706
Dividend payout ratio 36.40 % 38.68 % 45.27 % 36.63 % 36.51 %
Shares outstanding, net 68,945,139 68,922,314 69,113,736 69,344,082 69,256,958
Stock buy-back program:
Shares repurchased 502,156 200,000
Amount     $       $ 29,484       $ 12,337       $       $  
Average price per share     $       $ 58.71       $ 61.68       $       $  
 
Performance ratios (quarter annualized):
Return on average assets 1.04 % 1.01 % 0.88 % 1.07 % 1.11 %
Return on average equity 9.50 % 9.15 % 7.79 % 9.34 % 9.69 %
Net interest margin 2.61 % 2.55 % 2.61 % 2.67 % 2.75 %
Efficiency ratio 64.21 % 64.91 % 67.95 % 67.18 % 64.30 %
 

1 March 31, 2015 risk-based capital ratios calculated under revised regulatory capital rules issued July 2013 and effective for the Company January 1, 2015. Previous risk-based capital ratios presented are calculated in accordance with then current regulatory capital rules.

 
Reconciliation of non-GAAP measures:

2  Tangible common equity ratio:

Total shareholders' equity $ 3,375,632 $ 3,357,161 $ 3,302,179 $ 3,243,093 $ 3,212,517
Less: Goodwill and intangible assets, net       431,515         411,066         412,156         413,256         414,356  
Tangible common equity     $ 2,944,117       $ 2,946,095       $ 2,890,023       $ 2,829,837       $ 2,798,161  
 
Total assets $ 30,725,563 $ 30,299,978 $ 29,089,698 $ 29,105,020 $ 27,843,770
Less: Goodwill and intangible assets, net       431,515         411,066         412,156         413,256         414,356  
Tangible assets     $ 30,294,048       $ 29,888,912       $ 28,677,542       $ 28,691,764       $ 27,429,414  
 
Tangible common equity ratio       9.72 %       9.86 %       10.08 %       9.86 %       10.20 %
 
Other data:
Fiduciary assets $ 38,772,018 $ 37,511,746 $ 35,997,877 $ 34,020,442 $ 32,716,648
Tax equivalent adjustment $ 3,035 $ 2,956 $ 2,859 $ 2,739 $ 2,803
Net unrealized gain on available for sale securities $ 89,158 $ 152,107 $ 96,955 $ 42,935 $ 85,480
 
Mortgage banking:
Mortgage servicing portfolio $ 17,979,623 $ 16,937,128 $ 16,162,887 $ 15,499,653 $ 14,626,291
Mortgage commitments $ 849,619 $ 824,036 $ 627,505 $ 638,925 $ 546,864
Mortgage loans funded for sale $ 1,828,230 $ 1,565,016 $ 1,264,269 $ 1,394,211 $ 1,090,629
Mortgage loan refinances to total fundings 40 % 56 % 37 % 26 % 25 %
Mortgage loans sold $ 1,861,968 $ 1,382,042 $ 1,350,529 $ 1,369,295 $ 1,008,993
 
Net realized gains on mortgage loans sold $ 23,856 $ 17,251 $ 17,671 $ 17,100 $ 12,745
Net unrealized gain (loss) on mortgage loans held for sale       (743 )       8,789         (482 )       (2,407 )       4,982  
Total production revenue 23,113 26,040 17,189 14,693 17,727
Servicing revenue       13,733         13,280         12,916         12,121         11,603  
Total mortgage banking revenue     $ 36,846       $ 39,320       $ 30,105       $ 26,814       $ 29,330  
 
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net $ (1,005 ) $ 911 $ 1,070 $ (93 ) $ 831
Gain (loss) on fair value option securities, net       (8,130 )       2,647         3,685         (341 )       4,074  
Gain (loss) on economic hedge of mortgage servicing rights (9,135 ) 3,558 4,755 (434 ) 4,905
Gain (loss) on changes in fair value of mortgage servicing rights       8,010         (8,522 )       (10,821 )       5,281         (6,444 )
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges     $ (1,125 )     $ (4,964 )     $ (6,066 )     $ 4,847       $ (1,539 )
 
Net interest revenue on fair value option securities     $ 1,985       $ 1,739       $ 912       $ 830       $ 721  
 
 
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except ratio and per share data)

    Three Months Ended
June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
 
Interest revenue $ 191,813 $ 184,569 $ 186,620 $ 183,868 $ 182,631
Interest expense       16,082         16,843         16,956         17,077         16,534  
Net interest revenue 175,731 167,726 169,664 166,791 166,097
Provision for credit losses       4,000                                  
Net interest revenue after provision for credit losses 171,731 167,726 169,664 166,791 166,097
Other operating revenue:
Brokerage and trading revenue 36,012 31,707 30,602 35,263 39,056
Transaction card revenue 32,778 31,010 31,467 31,578 31,510
Fiduciary and asset management revenue 32,712 31,469 30,649 29,738 29,543
Deposit service charges and fees 22,328 21,684 22,581 22,508 23,133
Mortgage banking revenue 36,846 39,320 30,105 26,814 29,330
Bank-owned life insurance 2,398 2,198 2,380 2,326 2,274
Other revenue       9,473         8,603         10,071         10,320         9,208  
Total fees and commissions 172,547 165,991 157,855 158,547 164,054
Gain (loss) on other assets, net 1,457 755 338 1,422 3,521
Gain (loss) on derivatives, net (1,032 ) 911 1,070 (93 ) 831
Gain (loss) on fair value option securities, net (8,130 ) 2,647 3,685 (332 ) 4,176
Change in fair value of mortgage servicing rights 8,010 (8,522 ) (10,821 ) 5,281 (6,444 )
Gain on available for sale securities, net 3,433 4,327 149 146 4
Total other-than-temporary impairment losses (781 ) (373 )
Portion of loss recognized in (reclassified from) other comprehensive income               689                          
Net impairment losses recognized in earnings               (92 )       (373 )                
Total other operating revenue 176,285 166,017 151,903 164,971 166,142
Other operating expense:
Personnel 132,695 128,548 125,741 123,043 123,714
Business promotion 7,765 5,748 7,498 6,160 7,150
Charitable contributions to BOKF Foundation 1,847
Professional fees and services 9,560 10,059 11,058 14,763 11,054
Net occupancy and equipment 18,927 19,044 22,655 18,892 18,789
Insurance 5,116 4,980 4,777 4,793 4,467
Data processing and communications 31,463 30,620 30,872 29,971 29,071
Printing, postage and supplies 3,553 3,461 3,168 3,380 3,429
Net losses (gains) and operating expenses of repossessed assets 223 613 (1,497 ) 4,966 1,118
Amortization of intangible assets 1,090 1,090 1,100 1,100 949
Mortgage banking costs 7,419 9,319 10,553 7,734 7,960
Other expense       9,302         6,783         8,105         7,032         7,006  
Total other operating expense 227,113 220,265 225,877 221,834 214,707
Net income before taxes 120,903 113,478 95,690 109,928 117,532
Federal and state income taxes       40,630         38,384         30,109         33,802         40,803  
Net income 80,273 75,094 65,581 76,126 76,729
Net income attributable to non-controlling interests       1,043         251         1,263         494         834  
Net income attributable to BOK Financial Corporation shareholders     $ 79,230       $ 74,843       $ 64,318       $ 75,632       $ 75,895  
 
Average shares outstanding:
Basic 68,096,341 68,254,780 68,481,630 68,455,866 68,359,945
Diluted 68,210,353 68,344,886 68,615,808 68,609,765 68,511,378
Net income per share:
Basic $ 1.15 $ 1.08 $ 0.93 $ 1.09 $ 1.10
Diluted $ 1.15 $ 1.08 $ 0.93 $ 1.09 $ 1.10
 
 
LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

(In thousands)

    June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
Commercial:
Energy $ 2,902,143 $ 2,902,994 $ 2,860,428 $ 2,551,699 $ 2,419,788
Services 2,837,553 2,728,354 2,518,229 2,487,817 2,377,065
Wholesale/retail 1,377,303 1,270,322 1,313,316 1,273,241 1,318,151
Manufacturing 579,549 560,925 532,594 479,543 452,866
Healthcare 1,646,025 1,511,177 1,454,969 1,382,399 1,394,156
Other commercial and industrial       433,148       417,391       416,134       397,339       405,635
Total commercial       9,775,721       9,391,163       9,095,670       8,572,038       8,367,661
 
Commercial real estate:
Residential construction and land development 148,574 139,152 143,591 175,228 184,779
Retail 688,447 658,860 666,889 611,265 642,110
Office 563,085 513,862 415,544 438,909 394,217
Multifamily 711,333 749,986 704,298 739,757 677,403
Industrial 488,054 478,584 428,817 371,426 342,080
Other commercial real estate       434,004       395,020       369,011       387,614       414,389
Total commercial real estate       3,033,497       2,935,464       2,728,150       2,724,199       2,654,978
 
Residential mortgage:
Permanent mortgage 946,324 964,264 969,951 991,107 1,020,928
Permanent mortgages guaranteed by U.S. government agencies 190,839 200,179 205,950 198,488 188,087
Home equity       747,565       762,556       773,611       790,068       799,200
Total residential mortgage       1,884,728       1,926,999       1,949,512       1,979,663       2,008,215
 
Consumer       430,190       430,510       434,705       407,839       396,004
 
Total     $ 15,124,136     $ 14,684,136     $ 14,208,037     $ 13,683,739     $ 13,426,858
 
 
LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)

    June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
 
Bank of Oklahoma:
Commercial $ 3,529,406 $ 3,276,553 $ 3,142,689 $ 3,106,264 $ 3,101,513
Commercial real estate 614,995 612,639 603,610 592,865 598,790
Residential mortgage 1,413,690 1,442,340 1,467,096 1,481,264 1,490,171
Consumer       190,909       205,496       206,115       193,207       187,914
Total Bank of Oklahoma       5,749,000       5,537,028       5,419,510       5,373,600       5,378,388
 
Bank of Texas:
Commercial 3,738,742 3,709,467 3,549,128 3,169,458 3,107,808
Commercial real estate 1,158,056 1,130,973 1,027,817 1,046,322 995,182
Residential mortgage 228,683 237,985 235,948 247,117 251,290
Consumer       156,260       149,827       154,363       148,965       147,322
Total Bank of Texas       5,281,741       5,228,252       4,967,256       4,611,862       4,501,602
 
Bank of Albuquerque:
Commercial 392,362 388,005 383,439 378,663 381,843
Commercial real estate 291,953 296,696 296,358 313,905 309,421
Residential mortgage 123,376 127,326 127,999 130,045 137,110
Consumer       11,939       12,095       10,899       11,714       12,346
Total Bank of Albuquerque       819,630       824,122       818,695       834,327       840,720
 
Bank of Arkansas:
Commercial 99,086 91,485 95,510 74,866 71,859
Commercial real estate 85,997 87,034 88,301 96,874 85,633
Residential mortgage 6,999 6,807 7,261 7,492 8,334
Consumer       5,189       5,114       5,169       5,508       6,323
Total Bank of Arkansas       197,271       190,440       196,241       184,740       172,149
 
Colorado State Bank & Trust:
Commercial 1,019,454 1,008,316 977,961 957,917 856,323
Commercial real estate 229,721 209,272 194,553 190,812 200,995
Residential mortgage 54,135 55,925 57,119 56,705 60,360
Consumer       30,373       27,792       27,918       24,812       23,330
Total Colorado State Bank & Trust       1,333,683       1,301,305       1,257,551       1,230,246       1,141,008
 
Bank of Arizona:
Commercial 572,477 519,767 547,524 500,208 446,814
Commercial real estate 472,061 432,269 355,140 316,698 292,799
Residential mortgage 37,493 36,161 35,872 39,256 41,059
Consumer       12,875       12,394       12,883       11,201       7,821
Total Bank of Arizona       1,094,906       1,000,591       951,419       867,363       788,493
 
Bank of Kansas City:
Commercial 424,194 397,570 399,419 384,662 401,501
Commercial real estate 180,714 166,581 162,371 166,723 172,158
Residential mortgage 20,352 20,455 18,217 17,784 19,891
Consumer       22,645       17,792       17,358       12,432       10,948
Total Bank of Kansas City       647,905       602,398       597,365       581,601       604,498
 
TOTAL BOK FINANCIAL     $ 15,124,136     $ 14,684,136     $ 14,208,037     $ 13,683,739     $ 13,426,858
 

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)

    June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
Bank of Oklahoma:
Demand $ 4,068,088 $ 3,982,534 $ 3,828,819 $ 3,915,560 $ 3,785,922
Interest-bearing:
Transaction 6,018,381 6,199,468 6,117,886 5,450,692 5,997,474
Savings 225,694 227,855 206,357 201,690 210,330
Time       1,380,566       1,372,250       1,301,194       1,292,738       1,195,586
Total interest-bearing       7,624,641       7,799,573       7,625,437       6,945,120       7,403,390
Total Bank of Oklahoma       11,692,729       11,782,107       11,454,256       10,860,680       11,189,312
 
Bank of Texas:
Demand 2,565,234 2,511,032 2,639,732 2,636,713 2,617,194
Interest-bearing:
Transaction 2,020,817 2,062,063 2,065,723 2,020,737 1,957,236
Savings 74,373 76,128 72,037 66,798 67,012
Time       536,844       547,371       547,316       569,929       606,248
Total interest-bearing       2,632,034       2,685,562       2,685,076       2,657,464       2,630,496
Total Bank of Texas       5,197,268       5,196,594       5,324,808       5,294,177       5,247,690
 
Bank of Albuquerque:
Demand 508,224 537,466 487,819 480,023 515,554
Interest-bearing:
Transaction 537,156 535,791 519,544 502,787 489,378
Savings 41,802 42,088 37,471 36,127 36,442
Time       285,890       290,706       295,798       303,074       309,540
Total interest-bearing       864,848       868,585       852,813       841,988       835,360
Total Bank of Albuquerque       1,373,072       1,406,051       1,340,632       1,322,011       1,350,914
 
Bank of Arkansas:
Demand 19,731 31,002 35,996 35,075 44,471
Interest-bearing:
Transaction 284,349 253,691 158,115 234,063 205,216
Savings 1,712 1,677 1,936 2,222 2,287
Time       28,220       28,277       28,520       38,811       41,155
Total interest-bearing       314,281       283,645       188,571       275,096       248,658
Total Bank of Arkansas       334,012       314,647       224,567       310,171       293,129
 
Colorado State Bank & Trust:
Demand 403,491 412,532 445,755 422,044 396,185
Interest-bearing:
Transaction 601,741 604,665 631,874 571,807 566,320
Savings 31,285 31,524 29,811 29,768 29,234
Time       322,432       340,006       353,998       372,401       385,252
Total interest-bearing       955,458       976,195       1,015,683       973,976       980,806
Total Colorado State Bank & Trust       1,358,949       1,388,727       1,461,438       1,396,020       1,376,991
 
Bank of Arizona:
Demand 352,024 271,091 369,115 279,811 293,836
Interest-bearing:
Transaction 298,073 295,480 347,214 336,584 379,170
Savings 2,726 2,900 2,545 3,718 2,813
Time       28,165       28,086       36,680       38,842       37,666
Total interest-bearing       328,964       326,466       386,439       379,144       419,649
Total Bank of Arizona       680,988       597,557       755,554       658,955       713,485
 
Bank of Kansas City:
Demand 239,609 263,920 259,121 268,903 254,843
Interest-bearing:
Transaction 139,260 157,044 273,999 128,039 103,610
Savings 1,580 1,618 1,274 1,315 1,511
Time       42,262       45,082       45,210       48,785       40,379
Total interest-bearing       183,102       203,744       320,483       178,139       145,500
Total Bank of Kansas City       422,711       467,664       579,604       447,042       400,343
 
TOTAL BOK FINANCIAL     $ 21,059,729     $ 21,153,347     $ 21,140,859     $ 20,289,056     $ 20,571,864
 
 
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
    Three Months Ended
June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
 
TAX-EQUIVALENT ASSETS YIELDS
Interest-bearing cash and cash equivalents 0.25 % 0.27 % 0.28 % 0.20 % 0.24 %
Trading securities 1.85 % 2.55 % 2.48 % 2.67 % 2.40 %
Investment securities:
Taxable 5.49 % 5.51 % 5.68 % 5.66 % 5.64 %
Tax-exempt     1.56 %     1.56 %     1.56 %     1.56 %     1.63 %
Total investment securities     3.05 %     3.04 %     3.11 %     3.03 %     3.01 %
Available for sale securities:
Taxable 1.92 % 1.95 % 1.97 % 1.94 % 1.94 %
Tax-exempt     4.21 %     4.40 %     4.23 %     3.14 %     4.44 %
Total available for sale securities     1.94 %     1.98 %     1.99 %     1.95 %     1.96 %
Fair value option securities 2.17 % 2.28 % 2.18 % 2.05 % 1.94 %
Restricted equity securities 5.82 % 5.79 % 5.77 % 5.99 % 5.26 %
Residential mortgage loans held for sale 3.37 % 3.41 % 3.87 % 3.79 % 4.63 %
Loans 3.65 % 3.59 % 3.73 % 3.78 % 3.85 %
Allowance for loan losses                              
Loans, net of allowance 3.70 % 3.64 % 3.78 % 3.83 % 3.91 %
Total tax-equivalent yield on earning assets 2.84 % 2.80 % 2.86 % 2.93 % 3.02 %
 
COST OF INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest-bearing transaction 0.09 % 0.10 % 0.09 % 0.10 % 0.10 %
Savings 0.11 % 0.10 % 0.11 % 0.12 % 0.12 %
Time     1.36 %     1.46 %     1.47 %     1.56 %     1.55 %
Total interest-bearing deposits 0.35 % 0.37 % 0.38 % 0.41 % 0.40 %
Funds purchased 0.08 % 0.09 % 0.08 % 0.07 % 0.07 %
Repurchase agreements 0.03 % 0.04 % 0.04 % 0.05 % 0.08 %
Other borrowings 0.31 % 0.32 % 0.32 % 0.34 % 0.40 %
Subordinated debt     2.21 %     2.52 %     2.50 %     2.46 %     2.52 %
Total cost of interest-bearing liabilities     0.35 %     0.38 %     0.39 %     0.41 %     0.42 %
Tax-equivalent net interest revenue spread 2.49 % 2.42 % 2.47 % 2.52 % 2.60 %
Effect of noninterest-bearing funding sources and other     0.12 %     0.13 %     0.14 %     0.15 %     0.15 %
Tax-equivalent net interest margin     2.61 %     2.55 %     2.61 %     2.67 %     2.75 %
 

Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.

CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except ratios)

    Three Months Ended
June 30,
2015
    Mar. 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
Nonperforming assets:
Nonaccruing loans:
Commercial $ 24,233 $ 13,880 $ 13,527 $ 16,404 $ 17,103
Commercial real estate 20,139 19,902 18,557 30,660 34,472
Residential mortgage 45,969 46,487 48,121 48,907 44,340
Consumer       550         464         566         580         765  
Total nonaccruing loans 90,891 80,733 80,771 96,551 96,680
Accruing renegotiated loans guaranteed by U.S. government agencies 82,368 80,287 73,985 70,459 57,818
Real estate and other repossessed assets:
Guaranteed by U.S. government agencies2 49,898 46,809 49,720
Other       35,499         45,551         51,963         51,062         50,391  
Total real estate and other repossessed assets       35,499         45,551         101,861         97,871         100,111  
Total nonperforming assets     $ 208,758       $ 206,571       $ 256,617       $ 264,881       $ 254,609  
Total nonperforming assets excluding those guaranteed by U.S. government agencies     $ 122,673       $ 123,028       $ 129,022       $ 143,778       $ 145,124  
 
Nonaccruing loans by loan class:
Commercial:
Energy $ 6,841 $ 1,875 $ 1,416 $ 1,508 $ 1,619
Services 10,944 4,744 5,201 3,584 3,669
Wholesale / retail 4,166 4,401 4,149 5,502 5,885
Manufacturing 379 417 450 3,482 3,507
Healthcare 1,278 1,558 1,380 1,417 1,422
Other commercial and industrial       625         885         931         911         1,001  
Total commercial       24,233         13,880         13,527         16,404         17,103  
Commercial real estate:
Residential construction and land development 9,367 9,598 5,299 14,634 15,146
Retail 3,826 3,857 3,926 4,009 4,199
Office 2,360 2,410 3,420 3,499 3,591
Multifamily 195
Industrial 76 76 631
Other commercial real estate       4,315         3,961         5,912         8,518         10,905  
Total commercial real estate       20,139         19,902         18,557         30,660         34,472  
Residential mortgage:
Permanent mortgage 32,187 33,365 34,845 35,137 32,952
Permanent mortgage guaranteed by U.S. government agencies 3,717 3,256 3,712 3,835 1,947
Home equity       10,065         9,866         9,564         9,935         9,441  
Total residential mortgage       45,969         46,487         48,121         48,907         44,340  
Consumer       550         464         566         580         765  
Total nonaccruing loans     $ 90,891       $ 80,733       $ 80,771       $ 96,551       $ 96,680  
 
Performing loans 90 days past due1 $ 99 $ 523 $ 125 $ 25 $ 67
 
Gross charge-offs $ (2,877 ) $ (2,169 ) $ (7,224 ) $ (2,638 ) $ (3,522 )
Recoveries       2,206         10,523         5,036         3,114         5,524  
Net recoveries (charge-offs)     $ (671 )     $ 8,354       $ (2,188 )     $ 476       $ 2,002  
 
Provision for credit losses $ 4,000 $ $ $ $
 
Allowance for loan losses to period end loans 1.33 % 1.35 % 1.33 % 1.40 % 1.42 %
Combined allowance for credit losses to period end loans 1.34 % 1.35 % 1.34 % 1.41 % 1.43 %
Nonperforming assets to period end loans and repossessed assets 1.38 % 1.40 % 1.79 % 1.92 % 1.88 %
Net charge-offs (annualized) to average loans 0.02 % (0.23 )% 0.06 % (0.01 )% (0.06 ) %
Allowance for loan losses to nonaccruing loans 221.24 % 244.86 % 234.06 % 198.08 % 197.24 %
Combined allowance for credit losses to nonaccruing loans 222.21 % 246.05 % 235.59 % 199.35 % 198.59 %
 

1 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.

2 Approximately $50 million was reclassified from Real estate and other repossessed assets to Receivables on the balance sheet on January 1, 2015 with the adoption of Financial Accounting Standards Board Update No. 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure ("ASU 2014-14"). Upon foreclosure of loans for which the loan balance is expected to be recovered from the guarantee by a U.S. government agency, the loan balance will be directly reclassified to other receivables without including such foreclosed assets in real estate and other repossessed assets.

BOK Financial Corporation
Joseph Crivelli, 918-595-3027
Investor Relations
or
Andrea Myers, 918-594-7794
Corporate Communications

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