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| 8-K - 8-K - BOK FINANCIAL CORP | bokf-20200722.htm |
Exhibit 99(a)
NASD: BOKF
BOK Financial Corporation Reports Quarterly Earnings of $65 million or $0.92 Per Share in the Second Quarter
| CEO Commentary | ||
| "The second quarter, unlike any in recent memory, demonstrated the effectiveness of our diversified revenue model," said Steven G. Bradshaw, president and chief executive officer. "Record quarters from both our Wealth Management and Mortgage businesses added more than $150 million to fee revenue this quarter, eclipsing our pre-provision net revenue from the same quarter a year ago. In fact, this quarter generated the highest level of pre-provision net revenue in the history of our company, even after normalizing for the impact of the Paycheck Protection Program. Considering the economic environment we find ourselves in today, this is truly a remarkable outcome." Bradshaw continued, "With more than 40 percent of our company's revenues derived from a host of fee-based businesses, we have the proven ability to generate positive outcomes through all parts of the economic cycle. In this time of margin compression and credit concerns, financial institutions like BOK Financial demonstrate the real power of a diversified business model and sound underwriting methods." | ||
| Second Quarter 2020 Financial Highlights | ||
•Net income was $64.7 million or $0.92 per diluted share for the second quarter of 2020 and $62.1 million or $0.88 per diluted share for the first quarter of 2020. Pre-provision net revenue was $215.8 million for the second quarter of 2020 compared to $173.0 million for the prior quarter. The second quarter of 2020 included a pre-tax provision for expected credit losses of $135.3 million compared to $93.8 million in the prior quarter.
•Net interest revenue totaled $278.1 million, an increase of $16.7 million, largely due to the addition of loans related to the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") that began on April 3, 2020. Net interest margin was 2.83 percent compared to 2.80 percent in the first quarter of 2020. Our ability to move deposit costs down, along with LIBOR remaining elevated early in the second quarter relative to recent Federal Reserve rate cuts and the strategic positioning of our balance sheet, has allowed us to combat much of the market pressure on our margin.
•Fees and commissions revenue totaled $213.7 million, an increase of $21.0 million. Low mortgage interest rates continued to drive increases in mortgage banking revenue of $16.8 million and related bond trading activity of $9.5 million over the first quarter of 2020. These increases were partially offset by a reduction in service charges, largely due to "shelter in place" impacts coupled with proactive waivers of fees that were extended as a courtesy to our customers during the COVID-19 pandemic.
•Operating expense was $295.4 million, an increase of $26.8 million. Personnel expense increased $20.1 million, including an $11.0 million increase in incentive compensation expense reflecting the growth in our trading activity. Non-personnel expense increased $6.7 million compared to the first quarter of 2020. Increases in mortgage banking costs and occupancy and equipment expense were partially offset by a decrease in business promotion expense.
•Changes in the fair value of mortgage servicing rights and related economic hedges provided $9.3 million during the second quarter of 2020. A $7.4 million increase in the fair value of securities and derivative contracts held as an economic hedge and $2.7 million of related net interest revenue, were partially offset by a $761 thousand decrease in the fair value of mortgage servicing rights.
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•We have implemented programs to help our customers through this uncertain time. We are actively participating in programs initiated by the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), including the SBA's PPP. Average loans for the second quarter increased $2.2 billion to $24.1 billion with $1.7 billion of those being PPP loans. Period-end loans increased $1.7 billion to $24.2 billion. Period-end PPP loans were $2.1 billion. We have also granted $1.2 billion in forbearance requests from customers as of June 30, including $704 million of commercial loans, $398 million in commercial real estate loans and $143 million in loans to individuals.
•The allowance for loan losses totaled $436 million or 1.80 percent of outstanding loans at June 30, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $469 million or 1.94 percent of outstanding loans at June 30, 2020. Excluding PPP loans, the allowance for loan losses was 1.97 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.12 percent. At March 31, 2020, the allowance for loan losses was $315 million or 1.40 percent of outstanding loans. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $344 million or 1.53 percent of outstanding loans.
•Average deposits increased $4.5 billion to $32.7 billion and period-end deposits increased $4.6 billion to $33.9 billion. An estimated $2.7 billion of this growth was related to CARES Act funding, with the remainder due to growth from our broader customer base.
•The company's common equity Tier 1 capital ratio was 11.41 percent at June 30, 2020. In addition, the company's Tier 1 capital ratio was 11.41 percent, total capital ratio was 13.40 percent, and leverage ratio was 7.74 percent at June 30, 2020. At March 31, 2020, the company's common equity Tier 1 capital ratio was 10.98 percent, Tier 1 capital ratio was 10.98 percent, total capital ratio was 12.65 percent, and leverage ratio was 8.15 percent.
| Second Quarter 2020 Business Segment Highlights | ||||||||||||||
•Commercial Banking contributed $81.0 million to net income, an increase of $6.0 million over the first quarter. While net interest revenue decreased $6.3 million, fees and commissions revenue increased $5.1 million. Customer reaction to the volatile price environment drove an increase of $4.4 million in customer hedging revenue this quarter. Other gains (losses), net also increased $4.6 million, primarily related to an impairment of an alternative investment in the first quarter. Operating expense increased $2.2 million, largely due to incentive compensation.
•Consumer Banking contributed $31.9 million to net income, an increase of $9.0 million over the first quarter. Net interest revenue decreased $4.7 million; however, fees and commissions revenue increased $12.1 million. Mortgage banking revenue increased $16.8 million following another strong quarter for mortgage loan production. Low mortgage interest rates continue to increase volume, particularly around refinances, which is responsible for 71 percent of the volume in the second quarter. The large increase in refinance demand, which reduced industry-wide capacity, has led to the ability to increase margins. Gain on sale margin increased 159 basis points to 3.65 percent. This increase was partially offset by a decrease in service charges as we waived certain fees in the second quarter to help customers throughout this uncertain time. Changes in the fair value of mortgage servicing rights and related economic hedges provided $9.3 million during the second quarter of 2020. Operating expense increased $4.1 million, primarily due to an increase in mortgage banking costs.
•Wealth Management contributed $33.4 million to net income, an increase of $10.8 million over the first quarter. Net interest revenue increased $8.0 million and fees and commissions increased $8.9 million. Lower interest rates drove record increases in industry-wide mortgage loan production volume during the second quarter. We increased our trading pipeline to provide greater liquidity to the housing market. As a result, trading revenue increased $9.5 million. Trust fees and commissions decreased $3.2 million as we waived certain fees for our customers and market conditions led to reduction in trust revenue. Operating expense increased $2.4 million, primarily due to incentive compensation costs related to increased trading activity partially offset by lower business promotion expense.
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| Net Interest Revenue | ||||||||||||||
Net interest revenue was $278.1 million for the second quarter of 2020, a $16.7 million increase compared to the first quarter of 2020. PPP loans added $13.6 million to net interest revenue in the second quarter.
Average earning assets increased $1.9 billion compared to the first quarter of 2020. Average loan balances increased $2.2 billion, largely due to the influx of PPP loans. Available for sale securities increased $816 million as we have adjusted our balance sheet for the current rate environment. Fair value option securities, held as an economic hedge of the changes in fair value of our mortgage servicing rights, decreased $1.0 billion. In addition, receivables from unsettled securities sales, primarily related to our U.S. agency residential mortgage-backed trading operations, increased $1.6 billion. Growth in average earning assets and non-interest bearing receivables was largely funded by a $2.2 billion increase in interest-bearing deposits. Other borrowings decreased $3.0 billion, primarily due to a decrease in funds borrowed from the Federal Home Loan Bank, partially offset by an increase in PPP loans funded through the Federal Reserve's PPP Liquidity Facility. Funds purchased and repurchase agreements increased $2.0 billion.
Net interest margin was 2.83 percent compared to 2.80 percent in the previous quarter. The reduction in deposit costs, LIBOR remaining elevated early in the second quarter, and the strategic positioning of our balance sheet, have combined to reduce the pressure on margin. PPP loans added one basis point to net interest margin.
The yield on average earning assets was 3.12 percent, a 61 basis point decrease from the prior quarter as we start to see the effects of the recent Federal Reserve rate cuts. The loan portfolio yield was 3.63 percent, down 87 basis points. The yield on the available for sale securities portfolio decreased 19 basis points to 2.29 percent.
Funding costs were 0.37 percent, down 82 basis points. The cost of interest-bearing deposits decreased 64 basis points to 0.34 percent. The cost of other borrowed funds was down 117 basis points to 0.30 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 8 basis points for the second quarter of 2020 compared to 26 basis points for the first quarter of 2020.
| Fees and Commissions Revenue | ||||||||||||||
Fees and commissions revenue totaled $213.7 million for the second quarter of 2020, an increase of $21.0 million over the first quarter of 2020, led by significant growth in mortgage banking and brokerage and trading revenue.
Declining interest rates have propelled mortgage production, particularly refinance activities, and have allowed for margin expansion. Mortgage banking revenue increased $16.8 million to $53.9 million compared to the prior quarter. Mortgage loan production volume was $1.1 billion for the second quarter of 2020, an increase of 2 percent over an already very strong first quarter. Refinances grew to 71 percent of our production volume compared to 57 percent in the prior quarter. Gain on sale margin increased 159 basis points to 3.65 percent as industry-wide capacity constraints have eased pricing competition.
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Brokerage and trading revenue increased $11.2 million to $62.0 million. We continue to grow our relationships with mortgage originators by providing liquidity and financial instruments to help them manage their pipeline risk. Trading revenue, primarily related to sales of residential mortgage-backed securities guaranteed by U.S. government agencies and related derivative instruments, increased $9.5 million. Industry-wide mortgage loan production increased in the second quarter driven by the lower rates as the Federal Reserve stepped in to provide market stability. We increased our bond trading pipeline to provide greater liquidity to the housing market during a time of record loan production volumes. Customer hedging revenue also increased $3.0 million as existing customers increased hedging activities in the volatile environment.
Deposit service charges decreased $4.1 million compared to the first quarter. In order to help our customers during uncertain times, we proactively waived certain fees during the second quarter.
Fiduciary and asset management revenue decreased $3.2 million compared to the first quarter of 2020. As a result of the significant decline in interest rates, we provided $1.1 million in fee waivers during the second quarter. In addition, asset volumes and market conditions have affected our trust revenues. These decreases were partially offset by an increase in seasonal tax preparation fees.
| Operating Expense | ||||||||||||||
Total operating expense was $295.4 million for the second quarter of 2020, an increase of $26.8 million compared to the first quarter of 2020.
Personnel expense increased $20.1 million. Incentive compensation increased $22.3 million. Cash based incentive compensation increased $11.0 million, primarily due to increased residential mortgage-backed securities trading activity. Deferred compensation, which is largely offset by an increase in the value of related investments included in Other gains (losses), net, increased $11.6 million. Regular compensation increased $1.5 million. Employee benefits decreased $3.8 million, primarily due to a seasonal decrease in payroll taxes.
Non-personnel expense increased $6.7 million compared to the first quarter of 2020. Mortgage banking costs increased $5.1 million. Accruals related to default servicing and loss mitigation costs on loans serviced for others increased $2.8 million due to changes in our portfolio and loan counts, delinquency levels, and additional accruals related to losses on loans in forbearance. Increased amortization of mortgage servicing rights from actual prepayments also added $1.7 million to mortgage banking costs during the second quarter of 2020. Occupancy and equipment expense increased $4.6 million as impairment charges were incurred on two leases where assumptions regarding subleasing changed due to deteriorating economic conditions. We also made a charitable contribution of $3.0 million to the BOKF Foundation in the second quarter. These increases were partially offset by a decrease of $4.3 million in business promotion costs, largely related to reduced travel and entertainment expenses.
| Loans, Deposits and Capital | ||||||||||||||
Loans
Outstanding loans were $24.2 billion at June 30, 2020, up $1.7 billion over March 31, 2020, primarily due to a $2.1 billion increase from PPP loans, partially offset by paydowns in the commercial portfolio.
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Outstanding core commercial loan balances decreased $637 million or 4 percent compared to March 31, 2020, primarily due to paydowns during the second quarter. Although the primary source of repayment of our commercial loan portfolio is the on-going cash flow from operations of the customer's business, loans are generally governed by a borrowing base and secured by the customer’s assets.
General business loans decreased $448 million to $3.1 billion or 13 percent of total loans. General business loans include $1.7 billion of wholesale/retail loans and $780 million of loans from other commercial industries. Broad paydowns across our core commercial and industrial loan book contracted the portfolio.
Services loan balances decreased $176 million to $3.8 billion or 16 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, educational services, consumer services and commercial services.
Although not a significant portion of our commercial portfolio, our services and general business loans also include areas we consider to be more exposed to the economic slowdown as a result of the social distancing measures in place to combat the COVID-19 pandemic such as entertainment and recreation, retail, hotels, churches, airline travel, and higher education that are dependent on large social gatherings to remain profitable. This represents less than 7 percent of our total portfolio. Some of these borrowers have participated in the PPP, which has provided some measure of relief. We will continue to monitor these areas closely in the coming months.
Energy loan balances decreased $138 million to $4.0 billion or 16 percent of total loans as the current commodity price environment dampened demand for new loans and borrowers focused on paying down debt to reduce leverage. Supporting the energy industry has been a hallmark of the Company for over a century. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 62 percent of committed production loans are secured by properties primarily producing oil. The remaining 38 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $2.5 billion at June 30, 2020, a $222 million decrease compared to March 31, 2020, primarily due to semi-annual borrowing base redeterminations completed during the second quarter.
Healthcare sector loan balances increased $124 million to $3.3 billion or 14 percent of total loans, primarily due to growth in balances from hospital systems. Our healthcare sector loans primarily consist of $2.4 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally we loan to borrowers with a portfolio of multiple facilities that serves to help diversify risks specific to a single facility. The remaining balance is composed of hospitals and other medical service providers impacted by a deferral of elective procedures. The CARES Act does include multiple revenue enhancement measures for both hospitals and skilled nursing facilities as they manage through the risks of the virus.
Commercial real estate loan balances were up $104 million over March 31, 2020 and represent 19 percent of total loans at June 30, 2020. Multifamily residential loans, our largest exposure in commercial real estate, increased $125 million to $1.4 billion at June 30, 2020. Paydowns from refinances into the permanent market slowed during the second quarter. Loans secured by office buildings increased $12 million to $974 million. Loans secured by other commercial real estate properties decreased $32 million to $533 million. Loans secured by retail facilities were $780 million at June 30, 2020, largely unchanged from the prior quarter. Loans secured by retail facilities and office buildings may be impacted by measures being taken to hinder the spread of the virus as well as changes in consumer behavior.
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Loans to individuals increased $144 million, primarily due to an increase in residential mortgage loans guaranteed by U.S. government agencies. The Company may repurchase loans previously sold into GNMA mortgage pools when certain defined delinquency criteria are met. Because of this repurchase right, the Company is deemed to have regained effective control over these loans and must include them on the Consolidated Balance Sheet. Loans to individuals represent 14 percent of total loans at June 30, 2020.
Deposits
Period-end deposits totaled $33.9 billion at June 30, 2020, a $4.6 billion increase over March 31, 2020. Inflows resulting from PPP loans and government stimulus payments during the pandemic, along with additional core deposit growth as customers maintain higher balances, have all contributed to the significant increase in deposits. Interest-bearing transaction account balances grew by $2.3 billion and demand deposit balances increased $2.2 billion. Average deposits were $32.7 billion at June 30, 2020, a $4.5 billion increase compared to March 31, 2020. Average demand deposit balances grew by $2.3 billion and interest-bearing transaction deposits increased $1.9 billion.
Capital
The company's common equity Tier 1 capital ratio was 11.41 percent at June 30, 2020. In addition, the company's Tier 1 capital ratio was 11.41 percent, total capital ratio was 13.40 percent, and leverage ratio was 7.74 percent at June 30, 2020. We have elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period, which added 30 basis points to the company's common equity tier 1 capital ratio at June 30. At March 31, 2020, the company's common equity Tier 1 capital ratio was 10.98 percent, Tier 1 capital ratio was 10.98 percent, total capital ratio was 12.65 percent, and leverage ratio was 8.15 percent.
The company's tangible common equity ratio, a non-GAAP measure, was 8.79 percent at June 30, 2020 and 8.39 percent at March 31, 2020. 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 paused share repurchases through the second quarter of 2020. The company repurchased 442,000 shares at an average price of $75.52 in the first quarter of 2020. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.
| Credit Quality | ||||||||||||||
The Company adopted FASB Accounting Standard Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Assets Measured at Amortized Cost ("CECL") on January 1, 2020. CECL requires recognition of expected credit losses on assets carried at amortized cost over their expected lives. The previous incurred loss model incorporated only known information as of the balance sheet date. CECL uses models to measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rate and West Texas Intermediate ("WTI") oil prices on a probability weighted basis.
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The provision for credit losses was $135.3 million for the second quarter of 2020, with $138.8 million related to lending activities. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to the anticipated impact of the on-going COVID-19 pandemic, and other assumptions, required a provision of $54.6 million. All other changes totaled $84.2 million, which included $14.4 million primarily due to increased specific impairment of energy loans, portfolio changes of $55.7 million primarily due to changes in risk grades related to energy loans, partially offset by the impact of a decrease in loan balances, and net charge-offs of $14.1 million. The provision related to lending activities was partially offset by a $3.6 million decrease in the accrual for expected credit losses from mortgage banking activities. During the second quarter, the Company sold certain mortgage servicing rights related to residential mortgage loans transferred to mortgage-backed securities. These servicing rights expose the Company to credit risk for amounts that exceed the U.S. government agency guarantees.
Our base case reasonable and supportable forecast includes an 18 percent increase in GDP and an 8.4 percent civilian unemployment rate in the third quarter of 2020, as adjusted for the impact of government stimulus programs. Our forward twelve month forecast through the second quarter of 2021 assumes a 5.0 percent increase in GDP and an 8.5 percent civilian unemployment rate. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of June 2020, $38.99 per barrel for delivery in the third quarter of 2020 and increasing to $40.13 per barrel for delivery in the second quarter of 2021. Our downside reasonable and supportable forecast reflects a more severe and prolonged disruption in economic activity than the base case and includes a 6.0 percent increase in GDP and a 9.7 percent adjusted civilian unemployment rate in the third quarter of 2020. Our forward twelve month forecast through the second quarter of 2021 assumes a 6.0 percent increase in GDP and a 10.0 percent civilian unemployment rate. WTI oil prices are projected to range from $33.99 per barrel for delivery in the third quarter of 2020 to $34.63 per barrel for delivery in the second quarter of 2021.
The allowance for loan losses totaled $436 million or 1.80 percent of outstanding loans and 175 percent of nonaccruing loans at June 30, 2020, excluding residential mortgage loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $469 million or 1.94 percent of outstanding loans and 188 percent of nonaccruing loans at June 30, 2020. The combined allowance for credit losses attributed to energy was 4.44 percent of outstanding energy loans at June 30. Excluding PPP loans, the allowance for loan losses was 1.97 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.12 percent.
At March 31, 2020, the allowance for loan losses was $315 million or 1.40 percent of outstanding loans and 199 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $344 million or 1.53 percent of outstanding loans and 217 percent of nonaccruing loans.
Nonperforming assets totaled $405 million or 1.68 percent of outstanding loans and repossessed assets at June 30, 2020, compared to $292 million or 1.30 percent at March 31, 2020. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $285 million or 1.19 percent of outstanding loans and repossessed assets at June 30, 2020, compared to $195 million or 0.87 percent at March 31, 2020.
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Nonaccruing loans were $255 million or 1.16 percent of outstanding loans at June 30, 2020. Nonaccruing commercial loans totaled $202 million or 1.43 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $14.0 million or 0.31 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $39 million or 1.17 percent of outstanding loans to individuals.
Nonaccruing loans increased $92 million from March 31, 2020, primarily due to a $67 million increase in nonaccruing energy loans and a $13 million increase in nonaccruing services loans. New nonaccruing loans identified in the second quarter totaled $124 million, offset by $16 million in payments received, $16 million in charge-offs and $1.1 million of foreclosures.
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 $626 million at June 30, compared to $293 million at March 31. The increase largely resulted from energy and service sector loans. Oil prices remained depressed during April and May during our semi-annual borrowing base redeterminations resulting in credit quality migration in the energy portfolio. While prices have subsequently improved, the pricing environment remains fragile and tied to the continued economic recovery.
Net charge-offs were $14.1 million or 0.25 percent of average loans on an annualized basis for the second quarter of 2020, excluding PPP loans. Net charge-offs were $17.2 million or 0.31 percent of average loans on an annualized basis for the first quarter of 2020. Gross charge-offs were $15.6 million for the second quarter compared to $18.9 million for the previous quarter. Recoveries totaled $1.5 million for the second quarter of 2020 and $1.7 million for the first quarter of 2020.
| Securities and Derivatives | ||||||||||||||
The fair value of the available for sale securities portfolio totaled $12.5 billion at June 30, 2020, a $218 million decrease compared to March 31, 2020. At June 30, 2020, the available for sale securities portfolio consisted primarily of $9.1 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.3 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At June 30, 2020, the available for sale securities portfolio had a net unrealized gain of $487 million compared to $436 million at March 31, 2020.
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 $981 million to $723 million at June 30, 2020.
The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $9.3 million during the second quarter of 2020, including a $7.4 million increase in the fair value of securities and derivative contracts held as an economic hedge, $761 thousand decrease in the fair value of mortgage servicing rights, and $2.7 million of related net interest revenue. The completion of a sale of mortgage servicing rights on $1.6 billion of unpaid principal balance, primarily related to loans guaranteed by the Veteran's Administration, was a large contributor to the increase in the fair value of contracts held as an economic hedge. Interest rate movements between the date we established the transaction price and the closing date of the sale produced positive results.
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| Conference Call and Webcast | ||||||||||||||
The company will hold a conference call at 9 a.m. Central time on July 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 # 13706496.
| About BOK Financial Corporation | ||||||||||||||
BOK Financial Corporation is a $46 billion regional financial services company headquartered in Tulsa, Oklahoma with $79 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 June 30, 2020 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 Corporation, the financial services industry, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. 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 acquisitions and 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 various forward-looking 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 government, consumer or business responses to, and ability to treat or prevent further outbreak of the COVID-19 pandemic, 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
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technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial Corporation 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.
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Exhibit 99(b)
BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
| June 30, 2020 | Mar. 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ | 762,453 | $ | 670,500 | |||||||
| Interest-bearing cash and cash equivalents | 485,319 | 302,577 | |||||||||
| Trading securities | 1,196,105 | 2,110,585 | |||||||||
| Investment securities, net of allowance | 267,988 | 272,576 | |||||||||
| Available for sale securities | 12,475,919 | 12,694,277 | |||||||||
| Fair value option securities | 722,657 | 1,703,238 | |||||||||
| Restricted equity securities | 125,683 | 390,042 | |||||||||
| Residential mortgage loans held for sale | 319,357 | 204,720 | |||||||||
| Loans: | |||||||||||
| Commercial | 14,158,510 | 14,795,975 | |||||||||
| Commercial real estate | 4,554,144 | 4,450,085 | |||||||||
| Paycheck protection program | 2,081,428 | — | |||||||||
| Loans to individuals | 3,361,808 | 3,217,910 | |||||||||
| Total loans | 24,155,890 | 22,463,970 | |||||||||
| Allowance for loan losses | (435,597) | (315,311) | |||||||||
| Loans, net of allowance | 23,720,293 | 22,148,659 | |||||||||
| Premises and equipment, net | 550,230 | 546,093 | |||||||||
| Receivables | 226,934 | 207,341 | |||||||||
| Goodwill | 1,048,091 | 1,048,091 | |||||||||
| Intangible assets, net | 123,595 | 121,807 | |||||||||
| Mortgage servicing rights | 97,971 | 110,828 | |||||||||
| Real estate and other repossessed assets, net | 35,330 | 36,744 | |||||||||
| Derivative contracts, net | 651,553 | 922,716 | |||||||||
| Cash surrender value of bank-owned life insurance | 393,741 | 391,006 | |||||||||
| Receivable on unsettled securities sales | 1,863,719 | 2,171,881 | |||||||||
| Other assets | 752,936 | 1,065,481 | |||||||||
| TOTAL ASSETS | $ | 45,819,874 | $ | 47,119,162 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Deposits: | |||||||||||
| Demand | $ | 11,992,165 | $ | 9,821,582 | |||||||
| Interest-bearing transaction | 18,850,418 | 16,596,292 | |||||||||
| Savings | 696,971 | 593,805 | |||||||||
| Time | 2,352,760 | 2,232,473 | |||||||||
| Total deposits | 33,892,314 | 29,244,152 | |||||||||
| Funds purchased and repurchase agreements | 1,357,602 | 4,583,768 | |||||||||
| Other borrowings | 3,173,563 | 5,529,554 | |||||||||
| Subordinated debentures | 275,973 | 275,942 | |||||||||
| Accrued interest, taxes and expense | 365,634 | 309,236 | |||||||||
| Due on unsettled securities purchases | 599,510 | 537,709 | |||||||||
| Derivative contracts, net | 610,020 | 1,213,445 | |||||||||
| Other liabilities | 440,835 | 391,196 | |||||||||
| TOTAL LIABILITIES | 40,715,451 | 42,085,002 | |||||||||
| Shareholders' equity: | |||||||||||
| Capital, surplus and retained earnings | 4,726,679 | 4,694,956 | |||||||||
Accumulated other comprehensive gain | 370,316 | 331,292 | |||||||||
| TOTAL SHAREHOLDERS' EQUITY | 5,096,995 | 5,026,248 | |||||||||
| Non-controlling interests | 7,428 | 7,912 | |||||||||
| TOTAL EQUITY | 5,104,423 | 5,034,160 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 45,819,874 | $ | 47,119,162 | |||||||
11
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| Three Months Ended | |||||||||||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Interest-bearing cash and cash equivalents | $ | 619,737 | $ | 721,659 | $ | 573,203 | $ | 500,823 | $ | 535,491 | |||||||||||||||||||
| Trading securities | 1,871,647 | 1,690,104 | 1,672,426 | 1,696,568 | 1,757,335 | ||||||||||||||||||||||||
| Investment securities, net of allowance | 268,947 | 282,265 | 298,567 | 308,090 | 328,482 | ||||||||||||||||||||||||
| Available for sale securities | 12,480,065 | 11,664,521 | 11,333,524 | 10,747,439 | 9,435,668 | ||||||||||||||||||||||||
| Fair value option securities | 786,757 | 1,793,480 | 1,521,528 | 1,553,879 | 898,772 | ||||||||||||||||||||||||
| Restricted equity securities | 273,922 | 429,133 | 479,687 | 476,781 | 413,812 | ||||||||||||||||||||||||
| Residential mortgage loans held for sale | 288,588 | 129,708 | 203,535 | 203,319 | 192,102 | ||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||
| Commercial | 14,502,652 | 14,452,851 | 14,344,534 | 14,507,185 | 14,175,057 | ||||||||||||||||||||||||
| Commercial real estate | 4,543,511 | 4,346,886 | 4,532,649 | 4,652,534 | 4,656,861 | ||||||||||||||||||||||||
| Paycheck protection program | 1,699,369 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 3,353,960 | 3,143,286 | 3,358,817 | 3,253,199 | 3,172,487 | ||||||||||||||||||||||||
| Total loans | 24,099,492 | 21,943,023 | 22,236,000 | 22,412,918 | 22,004,405 | ||||||||||||||||||||||||
| Allowance for loan losses | (367,583) | (250,338) | (205,417) | (201,714) | (205,532) | ||||||||||||||||||||||||
| Loans, net of allowance | 23,731,909 | 21,692,685 | 22,030,583 | 22,211,204 | 21,798,873 | ||||||||||||||||||||||||
| Total earning assets | 40,321,572 | 38,403,555 | 38,113,053 | 37,698,103 | 35,360,535 | ||||||||||||||||||||||||
| Cash and due from banks | 678,878 | 669,369 | 690,806 | 717,338 | 703,294 | ||||||||||||||||||||||||
Derivative contracts, net | 642,969 | 376,621 | 311,542 | 331,834 | 328,802 | ||||||||||||||||||||||||
Cash surrender value of bank-owned life insurance | 391,951 | 390,009 | 388,012 | 385,190 | 384,974 | ||||||||||||||||||||||||
| Receivable on unsettled securities sales | 4,626,307 | 3,046,111 | 1,973,604 | 1,742,794 | 1,437,462 | ||||||||||||||||||||||||
| Other assets | 3,095,354 | 2,834,953 | 2,736,337 | 2,705,089 | 2,629,710 | ||||||||||||||||||||||||
| TOTAL ASSETS | $ | 49,757,031 | $ | 45,720,618 | $ | 44,213,354 | $ | 43,580,348 | $ | 40,844,777 | |||||||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Demand | $ | 11,489,322 | $ | 9,232,859 | $ | 9,612,533 | $ | 9,759,710 | $ | 9,883,965 | |||||||||||||||||||
| Interest-bearing transaction | 18,040,170 | 16,159,654 | 14,685,385 | 13,131,542 | 12,512,282 | ||||||||||||||||||||||||
| Savings | 656,669 | 563,821 | 554,605 | 557,122 | 558,738 | ||||||||||||||||||||||||
| Time | 2,464,793 | 2,239,234 | 2,247,717 | 2,251,800 | 2,207,391 | ||||||||||||||||||||||||
| Total deposits | 32,650,954 | 28,195,568 | 27,100,240 | 25,700,174 | 25,162,376 | ||||||||||||||||||||||||
Funds purchased and repurchase agreements | 5,816,484 | 3,815,941 | 4,120,610 | 3,106,163 | 2,066,950 | ||||||||||||||||||||||||
| Other borrowings | 3,527,303 | 6,542,325 | 6,247,194 | 8,125,023 | 7,175,617 | ||||||||||||||||||||||||
| Subordinated debentures | 275,949 | 275,932 | 275,916 | 275,900 | 275,887 | ||||||||||||||||||||||||
| Derivative contracts, net | 836,667 | 379,342 | 276,078 | 300,051 | 283,484 | ||||||||||||||||||||||||
| Due on unsettled securities purchases | 887,973 | 960,780 | 784,174 | 745,893 | 821,688 | ||||||||||||||||||||||||
| Other liabilities | 690,087 | 642,764 | 561,654 | 547,144 | 460,732 | ||||||||||||||||||||||||
| TOTAL LIABILITIES | 44,685,417 | 40,812,652 | 39,365,866 | 38,800,348 | 36,246,734 | ||||||||||||||||||||||||
| Total equity | 5,071,614 | 4,907,966 | 4,847,488 | 4,780,000 | 4,598,043 | ||||||||||||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 49,757,031 | $ | 45,720,618 | $ | 44,213,354 | $ | 43,580,348 | $ | 40,844,777 | |||||||||||||||||||
12
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Interest revenue | $ | 306,384 | $ | 390,820 | $ | 655,321 | $ | 766,894 | |||||||||||||||
| Interest expense | 28,280 | 105,388 | 115,857 | 203,360 | |||||||||||||||||||
| Net interest revenue | 278,104 | 285,432 | 539,464 | 563,534 | |||||||||||||||||||
| Provision for credit losses | 135,321 | 5,000 | 229,092 | 13,000 | |||||||||||||||||||
Net interest revenue after provision for credit losses | 142,783 | 280,432 | 310,372 | 550,534 | |||||||||||||||||||
| Other operating revenue: | |||||||||||||||||||||||
| Brokerage and trading revenue | 62,022 | 40,526 | 112,801 | 72,143 | |||||||||||||||||||
| Transaction card revenue | 22,940 | 21,915 | 44,821 | 42,653 | |||||||||||||||||||
| Fiduciary and asset management revenue | 41,257 | 45,025 | 85,715 | 88,383 | |||||||||||||||||||
| Deposit service charges and fees | 22,046 | 28,074 | 48,176 | 56,317 | |||||||||||||||||||
| Mortgage banking revenue | 53,936 | 28,131 | 91,103 | 51,965 | |||||||||||||||||||
| Other revenue | 11,479 | 12,437 | 23,788 | 25,199 | |||||||||||||||||||
| Total fees and commissions | 213,680 | 176,108 | 406,404 | 336,660 | |||||||||||||||||||
| Other gains (losses), net | 6,768 | 3,480 | (3,973) | 6,456 | |||||||||||||||||||
| Gain on derivatives, net | 21,885 | 11,150 | 40,305 | 15,817 | |||||||||||||||||||
| Gain (loss) on fair value option securities, net | (14,459) | 9,853 | 53,934 | 19,518 | |||||||||||||||||||
| Change in fair value of mortgage servicing rights | (761) | (29,555) | (89,241) | (50,221) | |||||||||||||||||||
| Gain on available for sale securities, net | 5,580 | 1,029 | 5,583 | 1,105 | |||||||||||||||||||
| Total other operating revenue | 232,693 | 172,065 | 413,012 | 329,335 | |||||||||||||||||||
| Other operating expense: | |||||||||||||||||||||||
| Personnel | 176,235 | 160,342 | 332,416 | 329,570 | |||||||||||||||||||
| Business promotion | 1,935 | 10,142 | 8,150 | 18,016 | |||||||||||||||||||
| Professional fees and services | 12,161 | 13,002 | 25,109 | 29,141 | |||||||||||||||||||
| Net occupancy and equipment | 30,675 | 26,880 | 56,736 | 56,401 | |||||||||||||||||||
| Insurance | 5,156 | 6,454 | 10,136 | 11,293 | |||||||||||||||||||
| Data processing and communications | 32,942 | 29,735 | 65,685 | 61,184 | |||||||||||||||||||
| Printing, postage and supplies | 3,502 | 4,107 | 7,774 | 8,992 | |||||||||||||||||||
| Net losses and operating expenses of repossessed assets | 1,766 | 580 | 3,297 | 2,576 | |||||||||||||||||||
| Amortization of intangible assets | 5,190 | 5,138 | 10,284 | 10,329 | |||||||||||||||||||
| Mortgage banking costs | 15,598 | 11,545 | 26,143 | 21,451 | |||||||||||||||||||
| Other expense | 7,227 | 8,212 | 15,281 | 14,341 | |||||||||||||||||||
| Total other operating expense | 295,387 | 277,137 | 564,011 | 564,294 | |||||||||||||||||||
| Net income before taxes | 80,089 | 175,360 | 159,373 | 315,575 | |||||||||||||||||||
| Federal and state income taxes | 15,803 | 37,580 | 33,103 | 67,530 | |||||||||||||||||||
| Net income | 64,286 | 137,780 | 126,270 | 248,045 | |||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | (407) | 217 | (502) | (130) | |||||||||||||||||||
Net income attributable to BOK Financial Corporation shareholders | $ | 64,693 | $ | 137,563 | $ | 126,772 | $ | 248,175 | |||||||||||||||
| Average shares outstanding: | |||||||||||||||||||||||
| Basic | 69,876,043 | 70,887,063 | 69,999,865 | 71,135,414 | |||||||||||||||||||
| Diluted | 69,877,467 | 70,902,033 | 70,003,817 | 71,151,558 | |||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic | $ | 0.92 | $ | 1.93 | $ | 1.80 | $ | 3.47 | |||||||||||||||
| Diluted | $ | 0.92 | $ | 1.93 | $ | 1.80 | $ | 3.46 | |||||||||||||||
13
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
| Three Months Ended | |||||||||||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Capital: | |||||||||||||||||||||||||||||
| Period-end shareholders' equity | $ | 5,096,995 | $ | 5,026,248 | $ | 4,855,795 | $ | 4,829,016 | $ | 4,709,438 | |||||||||||||||||||
| Risk weighted assets | $ | 32,258,548 | $ | 32,973,242 | $ | 31,673,425 | $ | 32,159,139 | $ | 32,040,741 | |||||||||||||||||||
| Risk-based capital ratios: | |||||||||||||||||||||||||||||
| Common equity tier 1 | 11.41 | % | 10.98 | % | 11.39 | % | 11.06 | % | 10.84 | % | |||||||||||||||||||
| Tier 1 | 11.41 | % | 10.98 | % | 11.39 | % | 11.06 | % | 10.84 | % | |||||||||||||||||||
| Total capital | 13.40 | % | 12.65 | % | 12.94 | % | 12.56 | % | 12.34 | % | |||||||||||||||||||
| Leverage ratio | 7.74 | % | 8.15 | % | 8.40 | % | 8.41 | % | 8.75 | % | |||||||||||||||||||
Tangible common equity ratio1 | 8.79 | % | 8.39 | % | 8.98 | % | 8.72 | % | 8.69 | % | |||||||||||||||||||
| Common stock: | |||||||||||||||||||||||||||||
| Book value per share | $ | 72.50 | $ | 71.49 | $ | 68.80 | $ | 68.15 | $ | 66.15 | |||||||||||||||||||
| Tangible book value per share | 55.83 | 54.85 | 52.17 | 51.60 | 49.68 | ||||||||||||||||||||||||
| Market value per share: | |||||||||||||||||||||||||||||
| High | $ | 67.62 | $ | 87.40 | $ | 88.28 | $ | 84.35 | $ | 88.17 | |||||||||||||||||||
| Low | $ | 37.80 | $ | 34.57 | $ | 71.85 | $ | 72.96 | $ | 72.60 | |||||||||||||||||||
| Cash dividends paid | $ | 35,769 | $ | 35,949 | $ | 36,011 | $ | 35,472 | $ | 35,631 | |||||||||||||||||||
| Dividend payout ratio | 55.29 | % | 57.91 | % | 32.63 | % | 24.94 | % | 25.90 | % | |||||||||||||||||||
| Shares outstanding, net | 70,306,690 | 70,308,532 | 70,579,598 | 70,858,010 | 71,193,770 | ||||||||||||||||||||||||
| Stock buy-back program: | |||||||||||||||||||||||||||||
| Shares repurchased | — | 442,000 | 280,000 | 336,713 | 250,000 | ||||||||||||||||||||||||
| Amount | $ | — | $ | 33,380 | $ | 22,844 | $ | 25,937 | $ | 20,125 | |||||||||||||||||||
| Average price per share | $ | — | $ | 75.52 | $ | 81.59 | $ | 77.03 | $ | 80.50 | |||||||||||||||||||
Performance ratios (quarter annualized): | |||||||||||||||||||||||||||||
| Return on average assets | 0.52 | % | 0.55 | % | 0.99 | % | 1.29 | % | 1.35 | % | |||||||||||||||||||
| Return on average equity | 5.14 | % | 5.10 | % | 9.05 | % | 11.83 | % | 12.02 | % | |||||||||||||||||||
| Net interest margin | 2.83 | % | 2.80 | % | 2.88 | % | 3.01 | % | 3.30 | % | |||||||||||||||||||
| Efficiency ratio | 59.57 | % | 58.62 | % | 63.65 | % | 59.31 | % | 59.51 | % | |||||||||||||||||||
| Reconciliation of non-GAAP measures: | |||||||||||||||||||||||||||||
1 Tangible common equity ratio: | |||||||||||||||||||||||||||||
| Total shareholders' equity | $ | 5,096,995 | $ | 5,026,248 | $ | 4,855,795 | $ | 4,829,016 | $ | 4,709,438 | |||||||||||||||||||
Less: Goodwill and intangible assets, net | 1,171,686 | 1,169,898 | 1,173,362 | 1,172,411 | 1,172,564 | ||||||||||||||||||||||||
| Tangible common equity | $ | 3,925,309 | $ | 3,856,350 | $ | 3,682,433 | $ | 3,656,605 | $ | 3,536,874 | |||||||||||||||||||
| Total assets | $ | 45,819,874 | $ | 47,119,162 | $ | 42,172,021 | $ | 43,127,205 | $ | 41,893,073 | |||||||||||||||||||
Less: Goodwill and intangible assets, net | 1,171,686 | 1,169,898 | 1,173,362 | 1,172,411 | 1,172,564 | ||||||||||||||||||||||||
| Tangible assets | $ | 44,648,188 | $ | 45,949,264 | $ | 40,998,659 | $ | 41,954,794 | $ | 40,720,509 | |||||||||||||||||||
| Tangible common equity ratio | 8.79 | % | 8.39 | % | 8.98 | % | 8.72 | % | 8.69 | % | |||||||||||||||||||
14
| Three Months Ended | |||||||||||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Pre-provision net revenue: | |||||||||||||||||||||||||||||
| Net income before taxes | $ | 80,089 | $ | 79,284 | $ | 141,039 | $ | 174,254 | $ | 175,360 | |||||||||||||||||||
| Provision for expected credit losses | 135,321 | 93,771 | 19,000 | 12,000 | 5,000 | ||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | (407) | (95) | 430 | (373) | 217 | ||||||||||||||||||||||||
| Pre-provision net revenue | $ | 215,817 | $ | 173,150 | $ | 159,609 | $ | 186,627 | $ | 180,143 | |||||||||||||||||||
| Other data: | |||||||||||||||||||||||||||||
| Tax equivalent interest | $ | 2,630 | $ | 2,715 | $ | 2,726 | $ | 2,936 | $ | 3,481 | |||||||||||||||||||
Net unrealized gain (loss) on available for sale securities | $ | 487,334 | $ | 435,989 | $ | 138,149 | $ | 178,060 | $ | 131,780 | |||||||||||||||||||
| Mortgage banking: | |||||||||||||||||||||||||||||
| Mortgage production revenue | $ | 39,185 | $ | 21,570 | $ | 9,169 | $ | 13,814 | $ | 11,869 | |||||||||||||||||||
| Mortgage loans funded for sale | $ | 1,184,249 | $ | 548,956 | $ | 855,643 | $ | 877,280 | $ | 729,841 | |||||||||||||||||||
Add: current period-end outstanding commitments | 546,304 | 657,570 | 158,460 | 379,377 | 344,087 | ||||||||||||||||||||||||
Less: prior period end outstanding commitments | 657,570 | 158,460 | 379,377 | 344,087 | 263,434 | ||||||||||||||||||||||||
Total mortgage production volume | $ | 1,072,983 | $ | 1,048,066 | $ | 634,726 | $ | 912,570 | $ | 810,494 | |||||||||||||||||||
Mortgage loan refinances to mortgage loans funded for sale | 71 | % | 57 | % | 57 | % | 56 | % | 31 | % | |||||||||||||||||||
| Gain on sale margin | 3.65 | % | 2.06 | % | 1.44 | % | 1.51 | % | 1.46 | % | |||||||||||||||||||
| Mortgage servicing revenue | $ | 14,751 | $ | 15,597 | $ | 16,227 | $ | 16,366 | $ | 16,262 | |||||||||||||||||||
Average outstanding principal balance of mortgage loans serviced for others | 19,319,872 | 20,416,546 | 20,856,446 | 21,172,874 | 21,418,690 | ||||||||||||||||||||||||
| Average mortgage servicing revenue rates | 0.31 | % | 0.31 | % | 0.31 | % | 0.31 | % | 0.30 | % | |||||||||||||||||||
Gain (loss) on mortgage servicing rights, net of economic hedge: | |||||||||||||||||||||||||||||
Gain (loss) on mortgage hedge derivative contracts, net | $ | 21,815 | $ | 18,371 | $ | (4,714) | $ | 3,742 | $ | 11,128 | |||||||||||||||||||
Gain (loss) on fair value option securities, net | (14,459) | 68,393 | (8,328) | 4,597 | 9,853 | ||||||||||||||||||||||||
Gain (loss) on economic hedge of mortgage servicing rights | 7,356 | 86,764 | (13,042) | 8,339 | 20,981 | ||||||||||||||||||||||||
Gain (loss) on changes in fair value of mortgage servicing rights | (761) | (88,480) | 9,297 | (12,593) | (29,555) | ||||||||||||||||||||||||
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue | 6,595 | (1,716) | (3,745) | (4,254) | (8,574) | ||||||||||||||||||||||||
Net interest revenue on fair value option securities2 | 2,702 | 4,268 | 1,544 | 1,245 | 1,296 | ||||||||||||||||||||||||
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges | $ | 9,297 | $ | 2,552 | $ | (2,201) | $ | (3,009) | $ | (7,278) | |||||||||||||||||||
2 Actual interest earned on fair value option securities less internal transfer-priced cost of funds.
15
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
| Three Months Ended | |||||||||||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Interest revenue | $ | 306,384 | $ | 348,937 | $ | 369,857 | $ | 395,207 | $ | 390,820 | |||||||||||||||||||
| Interest expense | 28,280 | 87,577 | 99,608 | 116,111 | 105,388 | ||||||||||||||||||||||||
| Net interest revenue | 278,104 | 261,360 | 270,249 | 279,096 | 285,432 | ||||||||||||||||||||||||
| Provision for credit losses | 135,321 | 93,771 | 19,000 | 12,000 | 5,000 | ||||||||||||||||||||||||
Net interest revenue after provision for credit losses | 142,783 | 167,589 | 251,249 | 267,096 | 280,432 | ||||||||||||||||||||||||
| Other operating revenue: | |||||||||||||||||||||||||||||
| Brokerage and trading revenue | 62,022 | 50,779 | 43,843 | 43,840 | 40,526 | ||||||||||||||||||||||||
| Transaction card revenue | 22,940 | 21,881 | 22,548 | 22,015 | 21,915 | ||||||||||||||||||||||||
| Fiduciary and asset management revenue | 41,257 | 44,458 | 45,021 | 43,621 | 45,025 | ||||||||||||||||||||||||
| Deposit service charges and fees | 22,046 | 26,130 | 27,331 | 28,837 | 28,074 | ||||||||||||||||||||||||
| Mortgage banking revenue | 53,936 | 37,167 | 25,396 | 30,180 | 28,131 | ||||||||||||||||||||||||
| Other revenue | 11,479 | 12,309 | 15,283 | 17,626 | 12,437 | ||||||||||||||||||||||||
| Total fees and commissions | 213,680 | 192,724 | 179,422 | 186,119 | 176,108 | ||||||||||||||||||||||||
| Other gains (losses), net | 6,768 | (10,741) | (1,649) | 4,544 | 3,480 | ||||||||||||||||||||||||
| Gain (loss) on derivatives, net | 21,885 | 18,420 | (4,644) | 3,778 | 11,150 | ||||||||||||||||||||||||
Gain (loss) on fair value option securities, net | (14,459) | 68,393 | (8,328) | 4,597 | 9,853 | ||||||||||||||||||||||||
Change in fair value of mortgage servicing rights | (761) | (88,480) | 9,297 | (12,593) | (29,555) | ||||||||||||||||||||||||
Gain on available for sale securities, net | 5,580 | 3 | 4,487 | 5 | 1,029 | ||||||||||||||||||||||||
| Total other operating revenue | 232,693 | 180,319 | 178,585 | 186,450 | 172,065 | ||||||||||||||||||||||||
| Other operating expense: | |||||||||||||||||||||||||||||
| Personnel | 176,235 | 156,181 | 168,422 | 162,573 | 160,342 | ||||||||||||||||||||||||
| Business promotion | 1,935 | 6,215 | 8,787 | 8,859 | 10,142 | ||||||||||||||||||||||||
Charitable contributions to BOKF Foundation | 3,000 | — | 2,000 | — | 1,000 | ||||||||||||||||||||||||
| Professional fees and services | 12,161 | 12,948 | 13,408 | 12,312 | 13,002 | ||||||||||||||||||||||||
| Net occupancy and equipment | 30,675 | 26,061 | 26,316 | 27,558 | 26,880 | ||||||||||||||||||||||||
| Insurance | 5,156 | 4,980 | 5,393 | 4,220 | 6,454 | ||||||||||||||||||||||||
Data processing and communications | 32,942 | 32,743 | 31,884 | 31,915 | 29,735 | ||||||||||||||||||||||||
| Printing, postage and supplies | 3,502 | 4,272 | 3,700 | 3,825 | 4,107 | ||||||||||||||||||||||||
Net losses and operating expenses of repossessed assets | 1,766 | 1,531 | 2,403 | 1,728 | 580 | ||||||||||||||||||||||||
Amortization of intangible assets | 5,190 | 5,094 | 5,225 | 5,064 | 5,138 | ||||||||||||||||||||||||
| Mortgage banking costs | 15,598 | 10,545 | 14,259 | 14,975 | 11,545 | ||||||||||||||||||||||||
| Other expense | 7,227 | 8,054 | 6,998 | 6,263 | 8,212 | ||||||||||||||||||||||||
| Total other operating expense | 295,387 | 268,624 | 288,795 | 279,292 | 277,137 | ||||||||||||||||||||||||
| Net income before taxes | 80,089 | 79,284 | 141,039 | 174,254 | 175,360 | ||||||||||||||||||||||||
| Federal and state income taxes | 15,803 | 17,300 | 30,257 | 32,396 | 37,580 | ||||||||||||||||||||||||
| Net income | 64,286 | 61,984 | 110,782 | 141,858 | 137,780 | ||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | (407) | (95) | 430 | (373) | 217 | ||||||||||||||||||||||||
Net income attributable to BOK Financial Corporation shareholders | $ | 64,693 | $ | 62,079 | $ | 110,352 | $ | 142,231 | $ | 137,563 | |||||||||||||||||||
| Average shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 69,876,043 | 70,123,685 | 70,295,899 | 70,596,307 | 70,887,063 | ||||||||||||||||||||||||
| Diluted | 69,877,467 | 70,130,166 | 70,309,644 | 70,609,924 | 70,902,033 | ||||||||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||||||||
| Basic | $ | 0.92 | $ | 0.88 | $ | 1.56 | $ | 2.00 | $ | 1.93 | |||||||||||||||||||
| Diluted | $ | 0.92 | $ | 0.88 | $ | 1.56 | $ | 2.00 | $ | 1.93 | |||||||||||||||||||
16
LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | ||||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||||||||
| Energy | $ | 3,974,174 | $ | 4,111,676 | $ | 3,973,377 | $ | 4,114,269 | $ | 3,921,353 | ||||||||||||||||||||||
| Services | 3,779,881 | 3,955,748 | 3,832,031 | 4,011,089 | 4,105,117 | |||||||||||||||||||||||||||
| Healthcare | 3,289,343 | 3,165,096 | 3,033,916 | 3,032,968 | 2,926,510 | |||||||||||||||||||||||||||
| General business | 3,115,112 | 3,563,455 | 3,192,326 | 3,266,299 | 3,383,928 | |||||||||||||||||||||||||||
| Total commercial | 14,158,510 | 14,795,975 | 14,031,650 | 14,424,625 | 14,336,908 | |||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||
| Multifamily | 1,407,107 | 1,282,457 | 1,265,562 | 1,324,839 | 1,300,372 | |||||||||||||||||||||||||||
| Office | 973,995 | 962,004 | 928,379 | 1,014,275 | 1,056,306 | |||||||||||||||||||||||||||
| Retail | 780,467 | 774,198 | 775,521 | 799,169 | 825,399 | |||||||||||||||||||||||||||
| Industrial | 723,005 | 728,026 | 856,117 | 873,536 | 828,569 | |||||||||||||||||||||||||||
Residential construction and land development | 136,911 | 138,958 | 150,879 | 135,361 | 141,509 | |||||||||||||||||||||||||||
| Other commercial real estate | 532,659 | 564,442 | 457,325 | 478,877 | 557,878 | |||||||||||||||||||||||||||
| Total commercial real estate | 4,554,144 | 4,450,085 | 4,433,783 | 4,626,057 | 4,710,033 | |||||||||||||||||||||||||||
| Paycheck protection program | 2,081,428 | — | — | — | — | |||||||||||||||||||||||||||
| Loans to individuals: | ||||||||||||||||||||||||||||||||
| Permanent mortgage | 1,813,442 | 1,844,555 | 1,886,378 | 1,925,539 | 1,975,449 | |||||||||||||||||||||||||||
Permanent mortgages guaranteed by U.S. government agencies | 322,269 | 197,889 | 197,794 | 191,764 | 195,373 | |||||||||||||||||||||||||||
| Personal | 1,226,097 | 1,175,466 | 1,201,382 | 1,117,382 | 1,037,889 | |||||||||||||||||||||||||||
| Total loans to individuals | 3,361,808 | 3,217,910 | 3,285,554 | 3,234,685 | 3,208,711 | |||||||||||||||||||||||||||
| Total | $ | 24,155,890 | $ | 22,463,970 | $ | 21,750,987 | $ | 22,285,367 | $ | 22,255,652 | ||||||||||||||||||||||
17
LOANS MANAGED BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Texas: | |||||||||||||||||||||||||||||
| Commercial | $ | 5,771,691 | $ | 6,350,690 | $ | 6,174,894 | $ | 6,220,227 | $ | 5,877,265 | |||||||||||||||||||
| Commercial real estate | 1,389,547 | 1,296,266 | 1,259,117 | 1,292,116 | 1,341,609 | ||||||||||||||||||||||||
| Paycheck protection program | 612,133 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 748,474 | 756,634 | 727,175 | 749,361 | 673,463 | ||||||||||||||||||||||||
| Total Texas | 8,521,845 | 8,403,590 | 8,161,186 | 8,261,704 | 7,892,337 | ||||||||||||||||||||||||
| Oklahoma: | |||||||||||||||||||||||||||||
| Commercial | 5,086,934 | 3,886,086 | 3,454,825 | 3,690,100 | 3,762,234 | ||||||||||||||||||||||||
| Commercial real estate | 636,021 | 593,473 | 631,026 | 679,786 | 717,970 | ||||||||||||||||||||||||
| Paycheck protection program | 442,518 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 1,967,665 | 1,788,518 | 1,854,864 | 1,753,698 | 1,786,162 | ||||||||||||||||||||||||
| Total Oklahoma | 8,133,138 | 6,268,077 | 5,940,715 | 6,123,584 | 6,266,366 | ||||||||||||||||||||||||
| Colorado: | |||||||||||||||||||||||||||||
| Commercial | 1,600,382 | 2,181,309 | 2,169,598 | 2,247,798 | 2,325,742 | ||||||||||||||||||||||||
| Commercial real estate | 937,742 | 955,608 | 927,826 | 975,066 | 1,023,410 | ||||||||||||||||||||||||
| Paycheck protection program | 488,279 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 264,872 | 268,674 | 276,939 | 303,605 | 314,317 | ||||||||||||||||||||||||
| Total Colorado | 3,291,275 | 3,405,591 | 3,374,363 | 3,526,469 | 3,663,469 | ||||||||||||||||||||||||
| Arizona: | |||||||||||||||||||||||||||||
| Commercial | 1,036,862 | 1,396,582 | 1,307,073 | 1,276,534 | 1,330,415 | ||||||||||||||||||||||||
| Commercial real estate | 689,121 | 714,161 | 728,832 | 771,425 | 761,243 | ||||||||||||||||||||||||
| Paycheck protection program | 318,961 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 177,066 | 181,821 | 186,539 | 170,815 | 168,019 | ||||||||||||||||||||||||
| Total Arizona | 2,222,010 | 2,292,564 | 2,222,444 | 2,218,774 | 2,259,677 | ||||||||||||||||||||||||
| Kansas/Missouri: | |||||||||||||||||||||||||||||
| Commercial | 404,860 | 556,255 | 527,872 | 566,969 | 602,836 | ||||||||||||||||||||||||
| Commercial real estate | 314,504 | 310,799 | 322,541 | 374,795 | 331,443 | ||||||||||||||||||||||||
| Paycheck protection program | 76,724 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 102,577 | 116,734 | 131,069 | 146,522 | 155,453 | ||||||||||||||||||||||||
| Total Kansas/Missouri | 898,665 | 983,788 | 981,482 | 1,088,286 | 1,089,732 | ||||||||||||||||||||||||
| New Mexico: | |||||||||||||||||||||||||||||
| Commercial | 182,688 | 327,164 | 305,320 | 335,409 | 350,520 | ||||||||||||||||||||||||
| Commercial real estate | 455,574 | 434,150 | 402,148 | 374,331 | 385,058 | ||||||||||||||||||||||||
| Paycheck protection program | 128,058 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 83,470 | 87,110 | 90,257 | 92,270 | 92,626 | ||||||||||||||||||||||||
| Total New Mexico | 849,790 | 848,424 | 797,725 | 802,010 | 828,204 | ||||||||||||||||||||||||
| Arkansas: | |||||||||||||||||||||||||||||
| Commercial | 75,093 | 97,889 | 92,068 | 87,588 | 87,896 | ||||||||||||||||||||||||
| Commercial real estate | 131,635 | 145,628 | 162,293 | 158,538 | 149,300 | ||||||||||||||||||||||||
| Paycheck protection program | 14,755 | — | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 17,684 | 18,419 | 18,711 | 18,414 | 18,671 | ||||||||||||||||||||||||
| Total Arkansas | 239,167 | 261,936 | 273,072 | 264,540 | 255,867 | ||||||||||||||||||||||||
| TOTAL BOK FINANCIAL | $ | 24,155,890 | $ | 22,463,970 | $ | 21,750,987 | $ | 22,285,367 | $ | 22,255,652 | |||||||||||||||||||
Loans attributed to a principal market may not always represent the location of the borrower or the collateral.
18
DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Oklahoma: | |||||||||||||||||||||||||||||
| Demand | $ | 4,378,559 | $ | 3,669,558 | $ | 3,257,337 | $ | 3,515,312 | $ | 3,279,360 | |||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 11,438,489 | 9,955,697 | 8,574,912 | 7,447,799 | 7,020,484 | ||||||||||||||||||||||||
| Savings | 387,557 | 329,631 | 306,194 | 308,103 | 307,785 | ||||||||||||||||||||||||
| Time | 1,330,619 | 1,137,802 | 1,125,446 | 1,198,170 | 1,253,804 | ||||||||||||||||||||||||
| Total interest-bearing | 13,156,665 | 11,423,130 | 10,006,552 | 8,954,072 | 8,582,073 | ||||||||||||||||||||||||
| Total Oklahoma | 17,535,224 | 15,092,688 | 13,263,889 | 12,469,384 | 11,861,433 | ||||||||||||||||||||||||
| Texas: | |||||||||||||||||||||||||||||
| Demand | 3,070,955 | 2,767,399 | 2,757,376 | 2,867,915 | 2,970,340 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 3,358,090 | 2,874,362 | 2,911,731 | 2,589,063 | 2,453,187 | ||||||||||||||||||||||||
| Savings | 128,892 | 115,039 | 102,456 | 100,597 | 103,125 | ||||||||||||||||||||||||
| Time | 476,867 | 505,565 | 495,343 | 464,264 | 425,253 | ||||||||||||||||||||||||
| Total interest-bearing | 3,963,849 | 3,494,966 | 3,509,530 | 3,153,924 | 2,981,565 | ||||||||||||||||||||||||
| Total Texas | 7,034,804 | 6,262,365 | 6,266,906 | 6,021,839 | 5,951,905 | ||||||||||||||||||||||||
| Colorado: | |||||||||||||||||||||||||||||
| Demand | 2,096,075 | 1,579,764 | 1,729,674 | 1,694,044 | 1,621,820 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 1,816,604 | 1,759,384 | 1,769,037 | 1,910,874 | 1,800,271 | ||||||||||||||||||||||||
| Savings | 67,477 | 58,000 | 53,307 | 60,107 | 57,263 | ||||||||||||||||||||||||
| Time | 254,845 | 279,105 | 283,517 | 273,622 | 246,198 | ||||||||||||||||||||||||
| Total interest-bearing | 2,138,926 | 2,096,489 | 2,105,861 | 2,244,603 | 2,103,732 | ||||||||||||||||||||||||
| Total Colorado | 4,235,001 | 3,676,253 | 3,835,535 | 3,938,647 | 3,725,552 | ||||||||||||||||||||||||
| New Mexico: | |||||||||||||||||||||||||||||
| Demand | 965,877 | 750,052 | 623,722 | 645,698 | 630,861 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 752,565 | 563,891 | 558,493 | 539,260 | 557,881 | ||||||||||||||||||||||||
| Savings | 80,242 | 67,553 | 63,999 | 62,863 | 62,636 | ||||||||||||||||||||||||
| Time | 222,370 | 235,778 | 238,140 | 236,135 | 232,569 | ||||||||||||||||||||||||
| Total interest-bearing | 1,055,177 | 867,222 | 860,632 | 838,258 | 853,086 | ||||||||||||||||||||||||
| Total New Mexico | 2,021,054 | 1,617,274 | 1,484,354 | 1,483,956 | 1,483,947 | ||||||||||||||||||||||||
| Arizona: | |||||||||||||||||||||||||||||
| Demand | 985,757 | 665,396 | 681,268 | 705,895 | 704,144 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 780,500 | 729,603 | 684,929 | 600,103 | 560,861 | ||||||||||||||||||||||||
| Savings | 15,669 | 8,832 | 10,314 | 12,487 | 11,966 | ||||||||||||||||||||||||
| Time | 42,318 | 47,081 | 49,676 | 44,347 | 43,099 | ||||||||||||||||||||||||
| Total interest-bearing | 838,487 | 785,516 | 744,919 | 656,937 | 615,926 | ||||||||||||||||||||||||
| Total Arizona | 1,824,244 | 1,450,912 | 1,426,187 | 1,362,832 | 1,320,070 | ||||||||||||||||||||||||
19
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Kansas/Missouri: | |||||||||||||||||||||||||||||
| Demand | 427,795 | 318,985 | 384,533 | 376,020 | 431,856 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 526,635 | 537,552 | 784,574 | 284,940 | 310,774 | ||||||||||||||||||||||||
| Savings | 15,033 | 12,888 | 12,169 | 11,689 | 13,125 | ||||||||||||||||||||||||
| Time | 17,746 | 19,137 | 17,877 | 19,126 | 19,205 | ||||||||||||||||||||||||
| Total interest-bearing | 559,414 | 569,577 | 814,620 | 315,755 | 343,104 | ||||||||||||||||||||||||
| Total Kansas/Missouri | 987,209 | 888,562 | 1,199,153 | 691,775 | 774,960 | ||||||||||||||||||||||||
| Arkansas: | |||||||||||||||||||||||||||||
| Demand | 67,147 | 70,428 | 27,381 | 39,513 | 29,176 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 177,535 | 175,803 | 108,076 | 149,506 | 148,485 | ||||||||||||||||||||||||
| Savings | 2,101 | 1,862 | 1,837 | 1,747 | 1,783 | ||||||||||||||||||||||||
| Time | 7,995 | 8,005 | 7,850 | 7,877 | 7,810 | ||||||||||||||||||||||||
| Total interest-bearing | 187,631 | 185,670 | 117,763 | 159,130 | 158,078 | ||||||||||||||||||||||||
| Total Arkansas | 254,778 | 256,098 | 145,144 | 198,643 | 187,254 | ||||||||||||||||||||||||
| TOTAL BOK FINANCIAL | $ | 33,892,314 | $ | 29,244,152 | $ | 27,621,168 | $ | 26,167,076 | $ | 25,305,121 | |||||||||||||||||||
20
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
| Three Months Ended | |||||||||||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| TAX-EQUIVALENT ASSETS YIELDS | |||||||||||||||||||||||||||||
| Interest-bearing cash and cash equivalents | 0.07 | % | 1.33 | % | 1.62 | % | 2.42 | % | 2.57 | % | |||||||||||||||||||
| Trading securities | 2.46 | % | 2.89 | % | 3.19 | % | 3.49 | % | 3.59 | % | |||||||||||||||||||
| Investment securities, net of allowance | 4.77 | % | 4.73 | % | 4.69 | % | 4.46 | % | 4.41 | % | |||||||||||||||||||
| Available for sale securities | 2.29 | % | 2.48 | % | 2.52 | % | 2.60 | % | 2.63 | % | |||||||||||||||||||
| Fair value option securities | 2.00 | % | 2.67 | % | 2.62 | % | 2.79 | % | 3.34 | % | |||||||||||||||||||
| Restricted equity securities | 2.75 | % | 5.49 | % | 5.37 | % | 6.34 | % | 6.30 | % | |||||||||||||||||||
| Residential mortgage loans held for sale | 3.10 | % | 3.50 | % | 3.55 | % | 3.73 | % | 3.65 | % | |||||||||||||||||||
| Loans | 3.63 | % | 4.50 | % | 4.75 | % | 5.12 | % | 5.39 | % | |||||||||||||||||||
| Allowance for loan losses | |||||||||||||||||||||||||||||
| Loans, net of allowance | 3.69 | % | 4.55 | % | 4.80 | % | 5.17 | % | 5.45 | % | |||||||||||||||||||
| Total tax-equivalent yield on earning assets | 3.12 | % | 3.73 | % | 3.93 | % | 4.25 | % | 4.51 | % | |||||||||||||||||||
| COST OF INTEREST-BEARING LIABILITIES | |||||||||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||||||||
| Interest-bearing transaction | 0.21 | % | 0.89 | % | 1.00 | % | 1.08 | % | 1.04 | % | |||||||||||||||||||
| Savings | 0.05 | % | 0.09 | % | 0.11 | % | 0.14 | % | 0.12 | % | |||||||||||||||||||
| Time | 1.36 | % | 1.83 | % | 1.94 | % | 1.94 | % | 1.90 | % | |||||||||||||||||||
| Total interest-bearing deposits | 0.34 | % | 0.98 | % | 1.09 | % | 1.17 | % | 1.13 | % | |||||||||||||||||||
| Funds purchased and repurchase agreements | 0.14 | % | 1.14 | % | 1.56 | % | 2.01 | % | 2.08 | % | |||||||||||||||||||
| Other borrowings | 0.56 | % | 1.66 | % | 2.01 | % | 2.42 | % | 2.67 | % | |||||||||||||||||||
| Subordinated debt | 5.16 | % | 5.30 | % | 5.40 | % | 5.48 | % | 5.53 | % | |||||||||||||||||||
| Total cost of interest-bearing liabilities | 0.37 | % | 1.19 | % | 1.40 | % | 1.68 | % | 1.70 | % | |||||||||||||||||||
| Tax-equivalent net interest revenue spread | 2.75 | % | 2.54 | % | 2.53 | % | 2.57 | % | 2.81 | % | |||||||||||||||||||
Effect of noninterest-bearing funding sources and other | 0.08 | % | 0.26 | % | 0.35 | % | 0.44 | % | 0.49 | % | |||||||||||||||||||
| Tax-equivalent net interest margin | 2.83 | % | 2.80 | % | 2.88 | % | 3.01 | % | 3.30 | % | |||||||||||||||||||
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.
21
CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
| Three Months Ended | |||||||||||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
| Nonperforming assets: | |||||||||||||||||||||||||||||
| Nonaccruing loans: | |||||||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||
| Energy | $ | 162,989 | $ | 96,448 | $ | 91,722 | $ | 88,894 | $ | 71,632 | |||||||||||||||||||
| Healthcare | 3,645 | 4,070 | 4,480 | 5,978 | 16,148 | ||||||||||||||||||||||||
| Services | 21,032 | 8,425 | 7,483 | 6,119 | 10,087 | ||||||||||||||||||||||||
| General business | 14,333 | 9,681 | 11,731 | 10,715 | 25,528 | ||||||||||||||||||||||||
| Total commercial | 201,999 | 118,624 | 115,416 | 111,706 | 123,395 | ||||||||||||||||||||||||
| Commercial real estate | 13,956 | 8,545 | 27,626 | 23,185 | 21,670 | ||||||||||||||||||||||||
| Loans to individuals: | |||||||||||||||||||||||||||||
| Permanent mortgage | 33,098 | 30,721 | 31,522 | 30,972 | 31,734 | ||||||||||||||||||||||||
Permanent mortgage guaranteed by U.S. government agencies | 6,110 | 5,005 | 6,100 | 6,332 | 6,743 | ||||||||||||||||||||||||
| Personal | 233 | 277 | 287 | 271 | 237 | ||||||||||||||||||||||||
| Total loans to individuals | 39,441 | 36,003 | 37,909 | 37,575 | 38,714 | ||||||||||||||||||||||||
| Total nonaccruing loans | $ | 255,396 | $ | 163,172 | $ | 180,951 | $ | 172,466 | $ | 183,779 | |||||||||||||||||||
Accruing renegotiated loans guaranteed by U.S. government agencies | 114,571 | 91,757 | 92,452 | 92,718 | 95,989 | ||||||||||||||||||||||||
| Real estate and other repossessed assets | 35,330 | 36,744 | 20,359 | 21,026 | 16,940 | ||||||||||||||||||||||||
| Total nonperforming assets | $ | 405,297 | $ | 291,673 | $ | 293,762 | $ | 286,210 | $ | 296,708 | |||||||||||||||||||
Total nonperforming assets excluding those guaranteed by U.S. government agencies | 284,616 | 194,911 | 195,210 | 187,160 | 193,976 | ||||||||||||||||||||||||
Accruing loans 90 days past due1 | 11,316 | 3,706 | 7,680 | 1,541 | 2,698 | ||||||||||||||||||||||||
| Gross charge-offs | $ | 15,570 | $ | 18,917 | $ | 14,268 | $ | 11,707 | $ | 13,227 | |||||||||||||||||||
| Recoveries | (1,491) | (1,696) | (1,816) | (1,066) | (5,503) | ||||||||||||||||||||||||
| Net charge-offs | $ | 14,079 | $ | 17,221 | $ | 12,452 | $ | 10,641 | $ | 7,724 | |||||||||||||||||||
Provision for loan losses | $ | 134,365 | $ | 95,964 | $ | 18,779 | $ | 12,539 | $ | 4,918 | |||||||||||||||||||
Provision for credit losses from off-balance sheet unfunded loan commitments | 4,405 | 3,377 | 221 | (539) | 82 | ||||||||||||||||||||||||
Provision for expected credit losses from mortgage banking acitivities2 | (3,575) | (6,020) | — | — | — | ||||||||||||||||||||||||
Provision for credit losses related to held-to maturity (investment) securities portfolio2 | 126 | 450 | — | — | — | ||||||||||||||||||||||||
| Total provision for credit losses | $ | 135,321 | $ | 93,771 | $ | 19,000 | $ | 12,000 | $ | 5,000 | |||||||||||||||||||
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| Three Months Ended | |||||||||||||||||||||||||||||
| June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | |||||||||||||||||||||||||
Allowance for loan losses to period end loans | 1.80 | % | 1.40 | % | 0.97 | % | 0.92 | % | 0.91 | % | |||||||||||||||||||
Allowance for loan losses to period end loans excluding PPP loans3 | 1.97 | % | 1.40 | % | 0.97 | % | 0.92 | % | 0.91 | % | |||||||||||||||||||
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans | 1.94 | % | 1.53 | % | 0.98 | % | 0.92 | % | 0.92 | % | |||||||||||||||||||
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans3 | 2.12 | % | 1.53 | % | 0.98 | % | 0.92 | % | 0.92 | % | |||||||||||||||||||
Nonperforming assets to period end loans and repossessed assets | 1.68 | % | 1.30 | % | 1.35 | % | 1.28 | % | 1.33 | % | |||||||||||||||||||
Net charge-offs (annualized) to average loans | 0.23 | % | 0.31 | % | 0.22 | % | 0.19 | % | 0.14 | % | |||||||||||||||||||
Net charge-offs (annualized) to average loans excluding PPP loans3 | 0.25 | % | 0.31 | % | 0.22 | % | 0.19 | % | 0.14 | % | |||||||||||||||||||
Allowance for loan losses to nonaccruing loans1 | 174.74 | % | 199.35 | % | 120.54 | % | 123.05 | % | 114.40 | % | |||||||||||||||||||
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1 | 187.94 | % | 217.38 | % | 121.44 | % | 123.87 | % | 115.48 | % | |||||||||||||||||||
1 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
2 Included in Provision for credit losses effective with implementation of CECL on January 1, 2020.
3 Represents a non-GAAP measure meaningful due to the unique characteristics and short-term nature of the PPP loans.
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SEGMENTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
| Three Months Ended | Change | |||||||||||||||||||||||||||||||
| Commercial Banking | June 30, 2020 | Mar. 31, 2020 | June 30, 2019 | 2Q20 vs 1Q20 | 2Q20 vs 2Q19 | |||||||||||||||||||||||||||
| Net interest revenue | $ | 145,109 | $ | 151,407 | $ | 184,471 | (4.2) | % | (21.3) | % | ||||||||||||||||||||||
| Fees and commissions revenue | 46,515 | 41,459 | 41,105 | 12.2 | % | 13.2 | % | |||||||||||||||||||||||||
| Other operating expense | 62,933 | 60,752 | 63,415 | 3.6 | % | (0.8) | % | |||||||||||||||||||||||||
| Corporate expense allocations | 5,437 | 8,905 | 10,652 | (38.9) | % | (49.0) | % | |||||||||||||||||||||||||
| Net income | 80,992 | 74,975 | 106,280 | 8.0 | % | (23.8) | % | |||||||||||||||||||||||||
| Average assets | 27,575,652 | 24,687,976 | 22,910,724 | 11.7 | % | 20.4 | % | |||||||||||||||||||||||||
| Average loans | 19,262,827 | 18,812,015 | 18,812,800 | 2.4 | % | 2.4 | % | |||||||||||||||||||||||||
| Average deposits | 14,599,225 | 11,907,386 | 10,724,206 | 22.6 | % | 36.1 | % | |||||||||||||||||||||||||
| Consumer Banking | ||||||||||||||||||||||||||||||||
| Net interest revenue | $ | 39,270 | $ | 43,932 | $ | 52,715 | (10.6) | % | (25.5) | % | ||||||||||||||||||||||
| Fees and commissions revenue | 67,192 | 55,062 | 48,830 | 22.0 | % | 37.6 | % | |||||||||||||||||||||||||
| Other operating expense | 58,936 | 54,793 | 57,694 | 7.6 | % | 2.2 | % | |||||||||||||||||||||||||
| Corporate expense allocations | 10,812 | 10,487 | 11,695 | 3.1 | % | (7.6) | % | |||||||||||||||||||||||||
| Net income | 31,900 | 22,921 | 16,342 | 39.2 | % | 95.2 | % | |||||||||||||||||||||||||
| Average assets | 9,920,005 | 9,850,853 | 9,212,667 | 0.7 | % | 7.7 | % | |||||||||||||||||||||||||
| Average loans | 1,679,164 | 1,711,703 | 1,796,823 | (1.9) | % | (6.5) | % | |||||||||||||||||||||||||
| Average deposits | 7,587,246 | 6,869,481 | 6,998,677 | 10.4 | % | 8.4 | % | |||||||||||||||||||||||||
| Wealth Management | ||||||||||||||||||||||||||||||||
| Net interest revenue | $ | 26,880 | $ | 18,904 | $ | 26,941 | 42.2 | % | (0.2) | % | ||||||||||||||||||||||
| Fees and commissions revenue | 106,757 | 97,881 | 85,925 | 9.1 | % | 24.2 | % | |||||||||||||||||||||||||
| Other operating expense | 80,567 | 78,192 | 69,452 | 3.0 | % | 16.0 | % | |||||||||||||||||||||||||
| Corporate expense allocations | 8,204 | 8,265 | 9,168 | (0.7) | % | (10.5) | % | |||||||||||||||||||||||||
| Net income | 33,394 | 22,573 | 25,544 | 47.9 | % | 30.7 | % | |||||||||||||||||||||||||
| Average assets | 15,721,452 | 12,723,412 | 9,849,396 | 23.6 | % | 59.6 | % | |||||||||||||||||||||||||
| Average loans | 1,709,363 | 1,705,735 | 1,647,680 | 0.2 | % | 3.7 | % | |||||||||||||||||||||||||
| Average deposits | 8,385,681 | 7,623,986 | 6,220,848 | 10.0 | % | 34.8 | % | |||||||||||||||||||||||||
| Fiduciary assets | 50,560,584 | 47,053,101 | 49,296,896 | 7.5 | % | 2.6 | % | |||||||||||||||||||||||||
| Assets under management or administration | 79,452,502 | 75,783,829 | 81,774,602 | 4.8 | % | (2.8) | % | |||||||||||||||||||||||||
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