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| 8-K - 8-K - BOK FINANCIAL CORP | bokf-20201021.htm |
Exhibit 99(a)
NASD: BOKF
BOK Financial Corporation Reports Record Quarterly Earnings of $154 million or $2.19 Per Share in the Third Quarter
| CEO Commentary | ||
| "Building off prior quarters, our large percentage of fee-based revenues provided a differentiated earnings outcome compared to many similar-sized financial institutions," said Steven G. Bradshaw, president and chief executive officer. "Both our Wealth Management and Mortgage businesses delivered impressively in a time of compressed net interest margin and unsure credit outcomes across the industry." Bradshaw continued, "Beyond the financial success we've had this quarter, I'm incredibly proud of the impact we've made in our communities. We have increased our charitable investments from the BOKF Foundation and our employees also stepped up their collective volunteer hours to help address needs across our communities. Our top ranking in the 2020 American Banker reputation survey is a testament to the level of leadership and engagement our employees provide in our banking communities. We have earned the reputation as an organization known for unwavering integrity, and that is demonstrated in everything that we do. Whether it's the role we play in our communities or the financial results for our shareholders - it's more about actions than words at BOK Financial." | ||
| Third Quarter 2020 Financial Highlights | ||
•Net income was $154.0 million or $2.19 per diluted share for the third quarter of 2020 and $64.7 million or $0.92 per diluted share for the second quarter of 2020. Pre-provision net revenue was $204.6 million for the third quarter of 2020 compared to $215.0 million for the prior quarter. No provision for expected credit losses was necessary in the third quarter, while the second quarter of 2020 included a pre-tax provision for expected credit losses of $135.3 million. Our forecasts of economic conditions have improved since the previous quarter.
•Net interest revenue totaled $271.8 million, a decrease of $6.4 million. Discount accretion on acquired loans totaled $13.3 million in the third quarter of 2020 and $3.3 million in the prior quarter. Net interest margin was 2.81 percent compared to 2.83 percent in the second quarter of 2020. Excluding discount accretion, net interest margin was 2.67 percent compared to 2.80 percent in the prior quarter.
•Fees and commissions revenue totaled $222.9 million, an increase of $9.2 million. Brokerage and trading revenue increased $7.5 million, largely due to an increase trading revenue and customer hedging revenue.
•Operating expense was $301.3 million, an increase of $5.9 million. Personnel expense increased $3.6 million. Incentive compensation increased $5.6 million, largely related to vesting assumptions regarding the Company's earnings per share growth relative to a defined peer group. Non-personnel expense increased $2.3 million compared to the second quarter of 2020. Increases in net losses and expenses on two repossessed properties, professional fees and data processing and communications expense were partially offset by decreases in occupancy and equipment expense and other expenses. In addition, the second quarter of 2020 included a $3.0 million charitable contribution to the BOKF Foundation.
•Changes in the fair value of mortgage servicing rights and related economic hedges added $6.5 million during the third quarter of 2020 and $9.3 million in the prior quarter.
•Period-end loans decreased $353 million to $23.8 billion at September 30, 2020, primarily due to continued paydowns of commercial loans. Average loans were relatively consistent with the second quarter at $24.1 billion.
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•The allowance for loan losses totaled $420 million or 1.76 percent of outstanding loans at September 30, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 1.88 percent of outstanding loans at September 30, 2020. Excluding Paycheck Protection Program (PPP) loans, the allowance for loan losses was 1.93 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.06 percent. Excluding PPP loans, the allowance for loan losses was $436 million or 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 $469 million or 2.12 percent of outstanding loans at June 30, 2020.
•Average deposits increased $2.0 billion to $34.6 billion and period-end deposits increased $1.1 billion to $35.0 billion, largely due to growth in commercial and wealth management balances. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment.
•The company's common equity Tier 1 capital ratio was 12.07 percent at September 30, 2020. In addition, the company's Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent at September 30, 2020. At June 30, 2020, the company's common equity Tier 1 capital ratio was 11.44 percent, Tier 1 capital ratio was 11.44 percent, total capital ratio was 13.43 percent, and leverage ratio was 7.74 percent.
| Third Quarter 2020 Business Segment Highlights | ||||||||||||||
•Commercial Banking contributed $75.1 million to net income, a decrease of $5.9 million compared to the second quarter. Net interest revenue increased $4.8 million, including higher discount accretion. Net loans charged off increased $8.8 million. Fees and commissions revenue increased $3.6 million led by increased customer hedging and loan syndication activity. Operating expense increased $3.9 million, largely due to increases in incentive compensation and deposit insurance expense. Net losses and expenses on repossessed assets also increased $4.5 million due to impairment of a set of oil and gas properties and a retail commercial real estate property. Average Commercial Banking loans decreased $585 million due to repayment of defensive draws taken earlier in the year and purposeful deleveraging by our customers. Commercial deposits grew more than 5 percent to $14.6 billion in the third quarter.
•Consumer Banking contributed $26.3 million to net income, a decrease of $5.6 million compared to the second quarter. Net interest revenue decreased $6.1 million, largely due to lower yields on deposits sold to our Funds Management unit and compressed loan spreads. Fees and commissions revenue was largely unchanged compared to the prior quarter. While mortgage production revenue decreased slightly compared to the prior quarter, it was another strong quarter for our mortgage banking business. Low mortgage interest rates continue to result in high volumes and increased margins. Deposit service charges increased in the current quarter as many "stay at home" orders have been lifted and consumer activity starts to return to more normal levels. Changes in the fair value of mortgage servicing rights and related economic hedges provided $6.5 million during the third quarter of 2020 and $9.3 million in the prior quarter.
•Wealth Management contributed $31.2 million to net income, a decrease of $2.2 million compared to the second quarter. This segment produced another record quarter for total revenue. While net interest revenue decreased $3.9 million due to lower yields on deposits sold to our Funds Management unit, fees and commissions grew by $4.9 million. Increases in trading revenue of $3.0 million and other revenue of $2.3 million were partially offset by a decrease in fiduciary and asset management revenue. We continue to maintain an increased trading pipeline to provide greater liquidity to the housing market during this time of low interest rates. Deposit growth remains strong with total average deposits growing $704 million or 8 percent compared to the previous quarter. Assets under management or administration totaled $82.4 billion, up $3.0 billion since June 30.
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| Net Interest Revenue | ||||||||||||||
Net interest revenue was $271.8 million for the third quarter of 2020, a $6.4 million decrease compared to the second quarter of 2020. Net purchase accounting discount accretion on acquired loans totaled $13.3 million in the third quarter of 2020 and $3.3 million in the second quarter of 2020. Increased accretion was primarily due to early payoffs of acquired loans.
Average earning assets decreased $681 million compared to the second quarter of 2020. Fair value option securities, held as an economic hedge of the changes in fair value of our mortgage servicing rights, decreased $399 million and restricted equity securities decreased $130 million. Residential mortgage loans held for sale decreased $75 million while interest-bearing cash and cash equivalents decreased $67 million. Average loan balances remained largely unchanged. Available for sale securities increased $101 million. Average interest-bearing deposits grew by $1.5 billion, primarily due to interest-bearing transaction deposits. Funds purchased and repurchase agreements decreased $3.0 billion and other borrowings decreased $145 million.
Net interest margin was 2.81 percent compared to 2.83 percent in the second quarter of 2020. Excluding discount accretion on acquired loans, net interest margin was 2.67 percent compared to 2.80 percent in the prior quarter. Recent interest rate cuts continue to compress the net interest margin. While the company has been proactive in reducing deposit costs and implementing LIBOR floors in loan agreements to support the margin, funds received from available for sale securities continue to be reinvested at lower rates.
The yield on average earning assets was 3.04 percent, an 8 basis point decrease from the prior quarter. The yield on the available for sale securities portfolio decreased 18 basis points to 2.11 percent and the loan portfolio yield decreased 3 basis points to 3.60 percent. Excluding loan discount accretion, the yield on average earning assets was 2.91 percent, down 18 basis points and the loan portfolio yield was 3.38 percent, down 20 basis points from the previous quarter. The yield on fair value option securities decreased 8 basis points to 1.92 percent.
Funding costs were 0.31 percent, down 6 basis points. The cost of interest-bearing deposits decreased 8 basis points to 0.26 percent. The cost of other borrowed funds was down 1 basis point to 0.31 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 8 basis points for the third quarter of 2020, consistent with the prior quarter.
| Fees and Commissions Revenue | ||||||||||||||
Fees and commissions revenue totaled $222.9 million for the third quarter of 2020, an increase of $9.2 million over the second quarter of 2020, led by continued growth in brokerage and trading revenue.
Brokerage and trading revenue increased $7.5 million to $69.5 million. Trading revenue increased $3.0 million. The low mortgage interest rate environment continues to drive our U.S. agency mortgage-backed securities trading activity. Customer hedging revenue increased $2.4 million as energy customers increased hedging activities in the volatile environment. Investment banking revenue also grew by $1.8 million largely due to loan syndication activity.
Deposit service charges increased $2.2 million compared to the first quarter. As "stay at home" orders have been lifted and customer activity returns to normal, we have seen service charges return to a more normal level as well. Other revenue increased $2.2 million.
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Mortgage banking revenue decreased $2.0 million to $52.0 million, primarily due to a reduction of mortgage servicing revenue. During the second quarter of 2020, we completed a sale of mortgage servicing rights on $1.6 billion of unpaid principal balance, primarily related to loans guaranteed by the Veteran's Administration. Mortgage production revenue remained very strong at $38.4 million, decreasing only slightly from the previous quarter.
Fiduciary and asset management revenue decreased $1.3 million compared to the second quarter of 2020, largely due to a decrease from seasonal tax preparation fees earned in the second quarter.
| Operating Expense | ||||||||||||||
Total operating expense was $301.3 million for the third quarter of 2020, an increase of $5.9 million compared to the second quarter of 2020.
Personnel expense increased $3.6 million. Stock based incentive compensation increased $5.9 million due to changes related to vesting assumptions regarding the Company's earnings per share growth relative to a defined peer group. Cash based incentive compensation increased $3.1 million, primarily due to increased securities trading activity. Deferred compensation, which is largely offset by a decrease in the value of related investments included in Other gains (losses), decreased $3.5 million. Regular compensation decreased $2.6 million, primarily related to unfilled positions due to attrition.
Non-personnel expense increased $2.3 million over the second quarter of 2020. Net losses and expenses on repossessed assets increased $4.5 million, largely due to write-downs on a set of oil and gas properties and a retail commercial real estate property. Professional fees and services expense increased $1.9 million due mainly to higher legal fees. Data processing and communications expense increased $1.8 million due to continued investment in technology.
Occupancy and equipment expense decreased $2.6 million, primarily related to impairment charges incurred in the second quarter and other expense decreased $1.8 million. We also made a charitable contribution of $3.0 million to the BOKF Foundation in the second quarter.
| Income Taxes | ||||||||||||||
The effective tax rate was 24.7 percent for the third quarter of 2020, an increase from 19.7 percent for the second quarter of 2020. An increase in forecasted pre-tax income for 2020 and the completion of 2019 tax returns drove the increase in effective tax rate for the quarter. The effective tax rate excluding these items was 21.7 percent.
| Loans, Deposits and Capital | ||||||||||||||
Loans
Outstanding loans were $23.8 billion at September 30, 2020, a $353 million decrease compared to June 30, 2020, primarily due to commercial loan payoffs.
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Outstanding core commercial loan balances decreased $593 million or 4 percent compared to June 30, 2020, primarily due to continued pay downs. 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.
Energy loan balances decreased $257 million to $3.7 billion or 16 percent of total loans. The current commodity price environment is continuing to dampen demand for new loans and borrowers are paying down debt to reduce leverage. 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 67 percent of committed production loans are secured by properties primarily producing oil. The remaining 33 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $2.3 billion at September 30, 2020, a $214 million decrease compared to June 30, 2020, and a $660 million decrease compared to December 31, 2019, largely as a result of the semi-annual borrowing base redetermination process in the second quarter.
Healthcare sector loan balances increased $36 million to $3.3 billion or 14 percent of total loans, primarily due to growth in loans to senior housing and care facilities. Our healthcare sector loans primarily consist of $2.5 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.
General business loans decreased $138 million to $3.0 billion or 13 percent of total loans. General business loans include $1.7 billion of wholesale/retail loans and $748 million of loans from other commercial industries. Broad pay downs across our core commercial and industrial loan book contracted the portfolio.
Services loan balances decreased $234 million to $3.5 billion or 15 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.
Commercial real estate loan balances were up $140 million over June 30, 2020 and represent 20 percent of total loans at September 30, 2020. Loans secured by office buildings increased $126 million to $1.1 billion. Loans secured by industrial facilities increased $69 million. Loans secured by other commercial real estate properties decreased $26 million to $507 million. Multifamily residential loans, our largest exposure in commercial real estate, decreased $20 million to $1.4 billion at September 30, 2020. Loans secured by retail facilities were $786 million at September 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 $85 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 September 30, 2020.
Deposits
Period-end deposits totaled $35.0 billion at September 30, 2020, a $1.1 billion increase over June 30, 2020. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment. Interest-bearing transaction account balances grew by $1.3 billion. Average deposits were $34.6 billion at September 30, 2020, a $2.0 billion increase compared to June 30, 2020. Interest-bearing transaction deposits increased $1.7 billion.
Capital
The company's common equity Tier 1 capital ratio was 12.07 percent at September 30, 2020. In addition, the company's Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent at September 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 29 basis points to the company's common equity tier 1 capital ratio at September 30. At June 30, 2020, the company's common equity Tier 1 capital ratio was 11.44 percent, Tier 1 capital ratio was 11.44 percent, total capital ratio was 13.43 percent, and leverage ratio was 7.74 percent.
The company's tangible common equity ratio, a non-GAAP measure, was 9.02 percent at September 30, 2020 and 8.79 percent at June 30, 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.
| 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. Our CECL models 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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No provision for credit losses was necessary for the third quarter of 2020. A $1.7 million provision related to lending activities was offset by a decrease in the accrual for expected credit losses from mortgage banking activities and allowance for credit losses from investment securities. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to an improved economic outlook related to the anticipated impact of the on-going COVID-19 pandemic, and other assumptions, resulted in a $12.8 million decrease in the provision for credit losses from lending activities. Changes in the loan portfolio characteristics, including specific impairment and losses, loan balances and risk grading resulted in a $14.5 million increase in the provision for credit losses from lending activities.
Our base case reasonable and supportable forecast assumes that the COVID-19 pandemic maintains its current trajectory with localized and state-level hotspots. This scenario assumes approval of a vaccine prior to the end of 2020, with a large share of the U.S. population vaccinated by the end of the third quarter of 2021. After a strong increase in GDP in the third quarter, we expect GDP growth to moderate to rates consistent with historical averages and recovering to pre-COVID levels by the end of 2021. We expect a 4 percent increase in GDP over the next twelve months. Our forecasted civilian unemployment rate is 8.0 percent for the fourth quarter of 2020, improving to 6.9 percent by the third quarter of 2021. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of September 2020, averaging $41.65 per barrel over the next twelve months.
The allowance for loan losses totaled $420 million or 1.76 percent of outstanding loans and 195 percent of non-accruing loans at September 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 $448 million or 1.88 percent of outstanding loans and 208 percent of non-accruing loans at September 30, 2020. The combined allowance for credit losses attributed to energy was 4.30 percent of outstanding energy loans at September 30. Excluding PPP loans, the allowance for loan losses was 1.93 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.06 percent.
At June 30, 2020, the allowance for loan losses was $436 million or 1.80 percent of outstanding loans and 175 percent of non-accruing 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 $469 million or 1.94 percent of outstanding loans and 188 percent of non-accruing loans.
Non-performing assets totaled $417 million or 1.75 percent of outstanding loans and repossessed assets at September 30, 2020, compared to $405 million or 1.68 percent at June 30, 2020. Non-performing assets that are not guaranteed by U.S. government agencies totaled $268 million or 1.25 percent of outstanding loans and repossessed assets at September 30, 2020, down from $285 million or 1.31 percent at June 30, 2020.
Non-accruing loans were $221 million or 1.02 percent of outstanding loans, excluding PPP loans, at September 30, 2020. Non-accruing commercial loans totaled $170 million or 1.25 percent of outstanding commercial loans. Non-accruing commercial real estate loans totaled $13 million or 0.28 percent of outstanding commercial real estate loans. Non-accruing loans to individuals totaled $38 million or 1.11 percent of outstanding loans to individuals.
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Non-accruing loans decreased $34 million compared to June 30, 2020, primarily due to a $36 million decrease in non-accruing energy loans. New non-accruing loans identified in the third quarter totaled $45 million, offset by $30 million in payments received, $27 million in charge-offs and $23 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 $623 million at September 30, compared to $626 million at June 30. A decrease in potential problem energy loans was partially offset by an increase in general business loans and commercial real estate loans.
Net charge-offs were $22.4 million or 0.41 percent of average loans on an annualized basis for the third quarter of 2020, excluding PPP loans. Net charge-offs were 0.30 percent of average loans over the last four quarters. 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. Gross charge-offs were $26.7 million for the third quarter compared to $15.6 million for the previous quarter. Recoveries totaled $4.2 million for the third quarter of 2020 and $1.5 million for the second quarter of 2020.
Loans in deferral status have dropped to just over 1 percent of total loans from a peak of more than 7 percent. More than 80 percent of the loans that were deferred have now moved back to payment status. Of the loans that remain in deferral, approximately half are in the Commercial Real Estate portfolio.
| Securities and Derivatives | ||||||||||||||
The fair value of the available for sale securities portfolio totaled $12.8 billion at September 30, 2020, a $341 million increase compared to June 30, 2020. At September 30, 2020, the available for sale securities portfolio consisted primarily of $9.4 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 September 30, 2020, the available for sale securities portfolio had a net unrealized gain of $481 million compared to $487 million at June 30, 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 $588 million to $135 million at September 30, 2020.
The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $6.5 million during the third quarter of 2020, including a $3.4 million increase in the fair value of mortgage servicing rights, $1.5 million increase in the fair value of securities and derivative contracts held as an economic hedge, and $1.6 million of related net interest revenue.
| Conference Call and Webcast | ||||||||||||||
The company will hold a conference call at 9 a.m. Central time on October 21, 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 # 13711391.
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| About BOK Financial Corporation | ||||||||||||||
BOK Financial Corporation is a $46 billion regional financial services company headquartered in Tulsa, Oklahoma with $82 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 September 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 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)
| Sept. 30, 2020 | June 30, 2020 | ||||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ | 658,612 | $ | 762,453 | |||||||
| Interest-bearing cash and cash equivalents | 347,759 | 485,319 | |||||||||
| Trading securities | 2,245,480 | 1,196,105 | |||||||||
| Investment securities, net of allowance | 256,001 | 267,988 | |||||||||
| Available for sale securities | 12,817,269 | 12,475,919 | |||||||||
| Fair value option securities | 134,756 | 722,657 | |||||||||
| Restricted equity securities | 111,656 | 125,683 | |||||||||
| Residential mortgage loans held for sale | 295,290 | 319,357 | |||||||||
| Loans: | |||||||||||
| Commercial | 13,565,706 | 14,158,510 | |||||||||
| Commercial real estate | 4,693,700 | 4,554,144 | |||||||||
| Paycheck protection program | 2,097,325 | 2,081,428 | |||||||||
| Loans to individuals | 3,446,569 | 3,361,808 | |||||||||
| Total loans | 23,803,300 | 24,155,890 | |||||||||
| Allowance for loan losses | (419,777) | (435,597) | |||||||||
| Loans, net of allowance | 23,383,523 | 23,720,293 | |||||||||
| Premises and equipment, net | 542,625 | 550,230 | |||||||||
| Receivables | 245,514 | 226,934 | |||||||||
| Goodwill | 1,048,091 | 1,048,091 | |||||||||
| Intangible assets, net | 118,524 | 123,595 | |||||||||
| Mortgage servicing rights | 97,644 | 97,971 | |||||||||
| Real estate and other repossessed assets, net | 52,847 | 35,330 | |||||||||
| Derivative contracts, net | 593,568 | 651,553 | |||||||||
| Cash surrender value of bank-owned life insurance | 396,497 | 393,741 | |||||||||
| Receivable on unsettled securities sales | 1,934,495 | 1,863,719 | |||||||||
| Other assets | 787,073 | 752,936 | |||||||||
| TOTAL ASSETS | $ | 46,067,224 | $ | 45,819,874 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Deposits: | |||||||||||
| Demand | $ | 12,047,338 | $ | 11,992,165 | |||||||
| Interest-bearing transaction | 20,196,740 | 18,850,418 | |||||||||
| Savings | 720,949 | 696,971 | |||||||||
| Time | 2,007,973 | 2,352,760 | |||||||||
| Total deposits | 34,973,000 | 33,892,314 | |||||||||
| Funds purchased and repurchase agreements | 973,652 | 1,357,602 | |||||||||
| Other borrowings | 2,771,429 | 3,173,563 | |||||||||
| Subordinated debentures | 275,986 | 275,973 | |||||||||
| Accrued interest, taxes and expense | 335,914 | 365,634 | |||||||||
| Due on unsettled securities purchases | 641,817 | 599,510 | |||||||||
| Derivative contracts, net | 446,328 | 610,020 | |||||||||
| Other liabilities | 422,989 | 440,835 | |||||||||
| TOTAL LIABILITIES | 40,841,115 | 40,715,451 | |||||||||
| Shareholders' equity: | |||||||||||
| Capital, surplus and retained earnings | 4,853,617 | 4,726,679 | |||||||||
Accumulated other comprehensive gain | 365,170 | 370,316 | |||||||||
| TOTAL SHAREHOLDERS' EQUITY | 5,218,787 | 5,096,995 | |||||||||
| Non-controlling interests | 7,322 | 7,428 | |||||||||
| TOTAL EQUITY | 5,226,109 | 5,104,423 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 46,067,224 | $ | 45,819,874 | |||||||
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AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| Three Months Ended | |||||||||||||||||||||||||||||
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Interest-bearing cash and cash equivalents | $ | 553,070 | $ | 619,737 | $ | 721,659 | $ | 573,203 | $ | 500,823 | |||||||||||||||||||
| Trading securities | 1,834,160 | 1,871,647 | 1,690,104 | 1,672,426 | 1,696,568 | ||||||||||||||||||||||||
| Investment securities, net of allowance | 258,965 | 268,947 | 282,265 | 298,567 | 308,090 | ||||||||||||||||||||||||
| Available for sale securities | 12,580,850 | 12,480,065 | 11,664,521 | 11,333,524 | 10,747,439 | ||||||||||||||||||||||||
| Fair value option securities | 387,784 | 786,757 | 1,793,480 | 1,521,528 | 1,553,879 | ||||||||||||||||||||||||
| Restricted equity securities | 144,415 | 273,922 | 429,133 | 479,687 | 476,781 | ||||||||||||||||||||||||
| Residential mortgage loans held for sale | 213,125 | 288,588 | 129,708 | 203,535 | 203,319 | ||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||
| Commercial | 13,772,217 | 14,502,652 | 14,452,851 | 14,344,534 | 14,507,185 | ||||||||||||||||||||||||
| Commercial real estate | 4,754,269 | 4,543,511 | 4,346,886 | 4,532,649 | 4,652,534 | ||||||||||||||||||||||||
| Paycheck protection program | 2,092,933 | 1,699,369 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 3,491,044 | 3,353,960 | 3,143,286 | 3,358,817 | 3,253,199 | ||||||||||||||||||||||||
| Total loans | 24,110,463 | 24,099,492 | 21,943,023 | 22,236,000 | 22,412,918 | ||||||||||||||||||||||||
| Allowance for loan losses | (441,831) | (367,583) | (250,338) | (205,417) | (201,714) | ||||||||||||||||||||||||
| Loans, net of allowance | 23,668,632 | 23,731,909 | 21,692,685 | 22,030,583 | 22,211,204 | ||||||||||||||||||||||||
| Total earning assets | 39,641,001 | 40,321,572 | 38,403,555 | 38,113,053 | 37,698,103 | ||||||||||||||||||||||||
| Cash and due from banks | 723,826 | 678,878 | 669,369 | 690,806 | 717,338 | ||||||||||||||||||||||||
Derivative contracts, net | 581,839 | 642,969 | 376,621 | 311,542 | 331,834 | ||||||||||||||||||||||||
Cash surrender value of bank-owned life insurance | 394,680 | 391,951 | 390,009 | 388,012 | 385,190 | ||||||||||||||||||||||||
| Receivable on unsettled securities sales | 4,563,301 | 4,626,307 | 3,046,111 | 1,973,604 | 1,742,794 | ||||||||||||||||||||||||
| Other assets | 3,027,108 | 3,095,354 | 2,834,953 | 2,736,337 | 2,705,089 | ||||||||||||||||||||||||
| TOTAL ASSETS | $ | 48,931,755 | $ | 49,757,031 | $ | 45,720,618 | $ | 44,213,354 | $ | 43,580,348 | |||||||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Demand | $ | 11,929,694 | $ | 11,489,322 | $ | 9,232,859 | $ | 9,612,533 | $ | 9,759,710 | |||||||||||||||||||
| Interest-bearing transaction | 19,752,106 | 18,040,170 | 16,159,654 | 14,685,385 | 13,131,542 | ||||||||||||||||||||||||
| Savings | 707,121 | 656,669 | 563,821 | 554,605 | 557,122 | ||||||||||||||||||||||||
| Time | 2,251,012 | 2,464,793 | 2,239,234 | 2,247,717 | 2,251,800 | ||||||||||||||||||||||||
| Total deposits | 34,639,933 | 32,650,954 | 28,195,568 | 27,100,240 | 25,700,174 | ||||||||||||||||||||||||
Funds purchased and repurchase agreements | 2,782,150 | 5,816,484 | 3,815,941 | 4,120,610 | 3,106,163 | ||||||||||||||||||||||||
| Other borrowings | 3,382,688 | 3,527,303 | 6,542,325 | 6,247,194 | 8,125,023 | ||||||||||||||||||||||||
| Subordinated debentures | 275,980 | 275,949 | 275,932 | 275,916 | 275,900 | ||||||||||||||||||||||||
| Derivative contracts, net | 458,390 | 836,667 | 379,342 | 276,078 | 300,051 | ||||||||||||||||||||||||
| Due on unsettled securities purchases | 1,516,880 | 887,973 | 960,780 | 784,174 | 745,893 | ||||||||||||||||||||||||
| Other liabilities | 712,674 | 690,087 | 642,764 | 561,654 | 547,144 | ||||||||||||||||||||||||
| TOTAL LIABILITIES | 43,768,695 | 44,685,417 | 40,812,652 | 39,365,866 | 38,800,348 | ||||||||||||||||||||||||
| Total equity | 5,163,060 | 5,071,614 | 4,907,966 | 4,847,488 | 4,780,000 | ||||||||||||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 48,931,755 | $ | 49,757,031 | $ | 45,720,618 | $ | 44,213,354 | $ | 43,580,348 | |||||||||||||||||||
11
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Interest revenue | $ | 294,659 | $ | 395,207 | $ | 949,980 | $ | 1,162,101 | |||||||||||||||
| Interest expense | 22,909 | 116,111 | 138,766 | 319,471 | |||||||||||||||||||
| Net interest revenue | 271,750 | 279,096 | 811,214 | 842,630 | |||||||||||||||||||
| Provision for credit losses | — | 12,000 | 229,092 | 25,000 | |||||||||||||||||||
Net interest revenue after provision for credit losses | 271,750 | 267,096 | 582,122 | 817,630 | |||||||||||||||||||
| Other operating revenue: | |||||||||||||||||||||||
| Brokerage and trading revenue | 69,526 | 43,840 | 182,327 | 115,983 | |||||||||||||||||||
| Transaction card revenue | 23,465 | 22,015 | 68,286 | 64,668 | |||||||||||||||||||
| Fiduciary and asset management revenue | 39,931 | 43,621 | 125,646 | 132,004 | |||||||||||||||||||
| Deposit service charges and fees | 24,286 | 28,837 | 72,462 | 85,154 | |||||||||||||||||||
| Mortgage banking revenue | 51,959 | 30,180 | 143,062 | 82,145 | |||||||||||||||||||
| Other revenue | 13,698 | 17,626 | 37,486 | 42,825 | |||||||||||||||||||
| Total fees and commissions | 222,865 | 186,119 | 629,269 | 522,779 | |||||||||||||||||||
| Other gains, net | 6,265 | 4,544 | 2,292 | 11,000 | |||||||||||||||||||
| Gain on derivatives, net | 2,354 | 3,778 | 42,659 | 19,595 | |||||||||||||||||||
| Gain (loss) on fair value option securities, net | (754) | 4,597 | 53,180 | 24,115 | |||||||||||||||||||
| Change in fair value of mortgage servicing rights | 3,441 | (12,593) | (85,800) | (62,814) | |||||||||||||||||||
| Gain (loss) on available for sale securities, net | (12) | 5 | 5,571 | 1,110 | |||||||||||||||||||
| Total other operating revenue | 234,159 | 186,450 | 647,171 | 515,785 | |||||||||||||||||||
| Other operating expense: | |||||||||||||||||||||||
| Personnel | 179,860 | 162,573 | 512,276 | 492,143 | |||||||||||||||||||
| Business promotion | 2,633 | 8,859 | 10,783 | 26,875 | |||||||||||||||||||
| Charitable contributions to BOKF Foundation | — | — | 3,000 | 1,000 | |||||||||||||||||||
| Professional fees and services | 14,074 | 12,312 | 39,183 | 41,453 | |||||||||||||||||||
| Net occupancy and equipment | 28,111 | 27,558 | 84,847 | 83,959 | |||||||||||||||||||
| Insurance | 5,848 | 4,220 | 15,984 | 15,513 | |||||||||||||||||||
| Data processing and communications | 34,751 | 31,915 | 100,436 | 93,099 | |||||||||||||||||||
| Printing, postage and supplies | 3,482 | 3,825 | 11,256 | 12,817 | |||||||||||||||||||
| Net losses and operating expenses of repossessed assets | 6,244 | 1,728 | 9,541 | 4,304 | |||||||||||||||||||
| Amortization of intangible assets | 5,071 | 5,064 | 15,355 | 15,393 | |||||||||||||||||||
| Mortgage banking costs | 15,803 | 14,975 | 41,946 | 36,426 | |||||||||||||||||||
| Other expense | 5,388 | 6,263 | 20,669 | 20,604 | |||||||||||||||||||
| Total other operating expense | 301,265 | 279,292 | 865,276 | 843,586 | |||||||||||||||||||
| Net income before taxes | 204,644 | 174,254 | 364,017 | 489,829 | |||||||||||||||||||
| Federal and state income taxes | 50,552 | 32,396 | 83,655 | 99,926 | |||||||||||||||||||
| Net income | 154,092 | 141,858 | 280,362 | 389,903 | |||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | 58 | (373) | (444) | (503) | |||||||||||||||||||
Net income attributable to BOK Financial Corporation shareholders | $ | 154,034 | $ | 142,231 | $ | 280,806 | $ | 390,406 | |||||||||||||||
| Average shares outstanding: | |||||||||||||||||||||||
| Basic | 69,877,866 | 70,596,307 | 69,958,944 | 70,953,544 | |||||||||||||||||||
| Diluted | 69,879,290 | 70,609,924 | 69,962,053 | 70,968,845 | |||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic | $ | 2.19 | $ | 2.00 | $ | 3.99 | $ | 5.47 | |||||||||||||||
| Diluted | $ | 2.19 | $ | 2.00 | $ | 3.99 | $ | 5.47 | |||||||||||||||
12
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
| Three Months Ended | |||||||||||||||||||||||||||||
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| Capital: | |||||||||||||||||||||||||||||
| Period-end shareholders' equity | $ | 5,218,787 | $ | 5,096,995 | $ | 5,026,248 | $ | 4,855,795 | $ | 4,829,016 | |||||||||||||||||||
| Risk weighted assets | $ | 31,529,826 | $ | 32,180,602 | $ | 32,973,242 | $ | 31,673,425 | $ | 32,159,139 | |||||||||||||||||||
| Risk-based capital ratios: | |||||||||||||||||||||||||||||
| Common equity tier 1 | 12.07 | % | 11.44 | % | 10.98 | % | 11.39 | % | 11.06 | % | |||||||||||||||||||
| Tier 1 | 12.07 | % | 11.44 | % | 10.98 | % | 11.39 | % | 11.06 | % | |||||||||||||||||||
| Total capital | 14.05 | % | 13.43 | % | 12.65 | % | 12.94 | % | 12.56 | % | |||||||||||||||||||
| Leverage ratio | 8.39 | % | 7.74 | % | 8.15 | % | 8.40 | % | 8.41 | % | |||||||||||||||||||
Tangible common equity ratio1 | 9.02 | % | 8.79 | % | 8.39 | % | 8.98 | % | 8.72 | % | |||||||||||||||||||
| Common stock: | |||||||||||||||||||||||||||||
| Book value per share | $ | 74.23 | $ | 72.50 | $ | 71.49 | $ | 68.80 | $ | 68.15 | |||||||||||||||||||
| Tangible book value per share | 57.64 | 55.83 | 54.85 | 52.17 | 51.60 | ||||||||||||||||||||||||
| Market value per share: | |||||||||||||||||||||||||||||
| High | $ | 62.86 | $ | 67.62 | $ | 87.40 | $ | 88.28 | $ | 84.35 | |||||||||||||||||||
| Low | $ | 48.41 | $ | 37.80 | $ | 34.57 | $ | 71.85 | $ | 72.96 | |||||||||||||||||||
| Cash dividends paid | $ | 35,799 | $ | 35,769 | $ | 35,949 | $ | 36,011 | $ | 35,472 | |||||||||||||||||||
| Dividend payout ratio | 23.24 | % | 55.29 | % | 57.91 | % | 32.63 | % | 24.94 | % | |||||||||||||||||||
| Shares outstanding, net | 70,305,833 | 70,306,690 | 70,308,532 | 70,579,598 | 70,858,010 | ||||||||||||||||||||||||
| Stock buy-back program: | |||||||||||||||||||||||||||||
| Shares repurchased | — | — | 442,000 | 280,000 | 336,713 | ||||||||||||||||||||||||
| Amount | $ | — | $ | — | $ | 33,380 | $ | 22,844 | $ | 25,937 | |||||||||||||||||||
| Average price per share | $ | — | $ | — | $ | 75.52 | $ | 81.59 | $ | 77.03 | |||||||||||||||||||
Performance ratios (quarter annualized): | |||||||||||||||||||||||||||||
| Return on average assets | 1.25 | % | 0.52 | % | 0.55 | % | 0.99 | % | 1.29 | % | |||||||||||||||||||
| Return on average equity | 11.89 | % | 5.14 | % | 5.10 | % | 9.05 | % | 11.83 | % | |||||||||||||||||||
| Net interest margin | 2.81 | % | 2.83 | % | 2.80 | % | 2.88 | % | 3.01 | % | |||||||||||||||||||
| Efficiency ratio | 60.41 | % | 59.57 | % | 58.62 | % | 63.65 | % | 59.31 | % | |||||||||||||||||||
| Reconciliation of non-GAAP measures: | |||||||||||||||||||||||||||||
1 Tangible common equity ratio: | |||||||||||||||||||||||||||||
| Total shareholders' equity | $ | 5,218,787 | $ | 5,096,995 | $ | 5,026,248 | $ | 4,855,795 | $ | 4,829,016 | |||||||||||||||||||
Less: Goodwill and intangible assets, net | 1,166,615 | 1,171,686 | 1,169,898 | 1,173,362 | 1,172,411 | ||||||||||||||||||||||||
| Tangible common equity | $ | 4,052,172 | $ | 3,925,309 | $ | 3,856,350 | $ | 3,682,433 | $ | 3,656,605 | |||||||||||||||||||
| Total assets | $ | 46,067,224 | $ | 45,819,874 | $ | 47,119,162 | $ | 42,172,021 | $ | 43,127,205 | |||||||||||||||||||
Less: Goodwill and intangible assets, net | 1,166,615 | 1,171,686 | 1,169,898 | 1,173,362 | 1,172,411 | ||||||||||||||||||||||||
| Tangible assets | $ | 44,900,609 | $ | 44,648,188 | $ | 45,949,264 | $ | 40,998,659 | $ | 41,954,794 | |||||||||||||||||||
| Tangible common equity ratio | 9.02 | % | 8.79 | % | 8.39 | % | 8.98 | % | 8.72 | % | |||||||||||||||||||
13
| Three Months Ended | |||||||||||||||||||||||||||||
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| Pre-provision net revenue: | |||||||||||||||||||||||||||||
| Net income before taxes | $ | 204,644 | $ | 80,089 | $ | 79,284 | $ | 141,039 | $ | 174,254 | |||||||||||||||||||
| Provision for expected credit losses | — | 135,321 | 93,771 | 19,000 | 12,000 | ||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | 58 | (407) | (95) | 430 | (373) | ||||||||||||||||||||||||
| Pre-provision net revenue | $ | 204,586 | $ | 215,817 | $ | 173,150 | $ | 159,609 | $ | 186,627 | |||||||||||||||||||
| Other data: | |||||||||||||||||||||||||||||
| Tax equivalent interest | $ | 2,457 | $ | 2,630 | $ | 2,715 | $ | 2,726 | $ | 2,936 | |||||||||||||||||||
Net unrealized gain (loss) on available for sale securities | $ | 480,563 | $ | 487,334 | $ | 435,989 | $ | 138,149 | $ | 178,060 | |||||||||||||||||||
| Mortgage banking: | |||||||||||||||||||||||||||||
| Mortgage production revenue | $ | 38,431 | $ | 39,185 | $ | 21,570 | $ | 9,169 | $ | 13,814 | |||||||||||||||||||
| Mortgage loans funded for sale | $ | 1,032,472 | $ | 1,184,249 | $ | 548,956 | $ | 855,643 | $ | 877,280 | |||||||||||||||||||
Add: current period-end outstanding commitments | 560,493 | 546,304 | 657,570 | 158,460 | 379,377 | ||||||||||||||||||||||||
Less: prior period end outstanding commitments | 546,304 | 657,570 | 158,460 | 379,377 | 344,087 | ||||||||||||||||||||||||
Total mortgage production volume | $ | 1,046,661 | $ | 1,072,983 | $ | 1,048,066 | $ | 634,726 | $ | 912,570 | |||||||||||||||||||
Mortgage loan refinances to mortgage loans funded for sale | 54 | % | 71 | % | 57 | % | 57 | % | 56 | % | |||||||||||||||||||
| Gain on sale margin | 3.67 | % | 3.65 | % | 2.06 | % | 1.44 | % | 1.51 | % | |||||||||||||||||||
| Mortgage servicing revenue | $ | 13,528 | $ | 14,751 | $ | 15,597 | $ | 16,227 | $ | 16,366 | |||||||||||||||||||
Average outstanding principal balance of mortgage loans serviced for others | 17,434,215 | 19,319,872 | 20,416,546 | 20,856,446 | 21,172,874 | ||||||||||||||||||||||||
| Average mortgage servicing revenue rates | 0.31 | % | 0.31 | % | 0.31 | % | 0.31 | % | 0.31 | % | |||||||||||||||||||
Gain (loss) on mortgage servicing rights, net of economic hedge: | |||||||||||||||||||||||||||||
Gain (loss) on mortgage hedge derivative contracts, net | $ | 2,295 | $ | 21,815 | $ | 18,371 | $ | (4,714) | $ | 3,742 | |||||||||||||||||||
Gain (loss) on fair value option securities, net | (754) | (14,459) | 68,393 | (8,328) | 4,597 | ||||||||||||||||||||||||
Gain (loss) on economic hedge of mortgage servicing rights | 1,541 | 7,356 | 86,764 | (13,042) | 8,339 | ||||||||||||||||||||||||
Gain (loss) on changes in fair value of mortgage servicing rights | 3,441 | (761) | (88,480) | 9,297 | (12,593) | ||||||||||||||||||||||||
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue | 4,982 | 6,595 | (1,716) | (3,745) | (4,254) | ||||||||||||||||||||||||
Net interest revenue on fair value option securities2 | 1,565 | 2,702 | 4,268 | 1,544 | 1,245 | ||||||||||||||||||||||||
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges | $ | 6,547 | $ | 9,297 | $ | 2,552 | $ | (2,201) | $ | (3,009) | |||||||||||||||||||
2 Actual interest earned on fair value option securities less internal transfer-priced cost of funds.
14
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
| Three Months Ended | |||||||||||||||||||||||||||||
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| Interest revenue | $ | 294,659 | $ | 306,384 | $ | 348,937 | $ | 369,857 | $ | 395,207 | |||||||||||||||||||
| Interest expense | 22,909 | 28,280 | 87,577 | 99,608 | 116,111 | ||||||||||||||||||||||||
| Net interest revenue | 271,750 | 278,104 | 261,360 | 270,249 | 279,096 | ||||||||||||||||||||||||
| Provision for credit losses | — | 135,321 | 93,771 | 19,000 | 12,000 | ||||||||||||||||||||||||
Net interest revenue after provision for credit losses | 271,750 | 142,783 | 167,589 | 251,249 | 267,096 | ||||||||||||||||||||||||
| Other operating revenue: | |||||||||||||||||||||||||||||
| Brokerage and trading revenue | 69,526 | 62,022 | 50,779 | 43,843 | 43,840 | ||||||||||||||||||||||||
| Transaction card revenue | 23,465 | 22,940 | 21,881 | 22,548 | 22,015 | ||||||||||||||||||||||||
| Fiduciary and asset management revenue | 39,931 | 41,257 | 44,458 | 45,021 | 43,621 | ||||||||||||||||||||||||
| Deposit service charges and fees | 24,286 | 22,046 | 26,130 | 27,331 | 28,837 | ||||||||||||||||||||||||
| Mortgage banking revenue | 51,959 | 53,936 | 37,167 | 25,396 | 30,180 | ||||||||||||||||||||||||
| Other revenue | 13,698 | 11,479 | 12,309 | 15,283 | 17,626 | ||||||||||||||||||||||||
| Total fees and commissions | 222,865 | 213,680 | 192,724 | 179,422 | 186,119 | ||||||||||||||||||||||||
| Other gains (losses), net | 6,265 | 6,768 | (10,741) | (1,649) | 4,544 | ||||||||||||||||||||||||
| Gain (loss) on derivatives, net | 2,354 | 21,885 | 18,420 | (4,644) | 3,778 | ||||||||||||||||||||||||
Gain (loss) on fair value option securities, net | (754) | (14,459) | 68,393 | (8,328) | 4,597 | ||||||||||||||||||||||||
Change in fair value of mortgage servicing rights | 3,441 | (761) | (88,480) | 9,297 | (12,593) | ||||||||||||||||||||||||
| Gain (loss) on available for sale securities, net | (12) | 5,580 | 3 | 4,487 | 5 | ||||||||||||||||||||||||
| Total other operating revenue | 234,159 | 232,693 | 180,319 | 178,585 | 186,450 | ||||||||||||||||||||||||
| Other operating expense: | |||||||||||||||||||||||||||||
| Personnel | 179,860 | 176,235 | 156,181 | 168,422 | 162,573 | ||||||||||||||||||||||||
| Business promotion | 2,633 | 1,935 | 6,215 | 8,787 | 8,859 | ||||||||||||||||||||||||
Charitable contributions to BOKF Foundation | — | 3,000 | — | 2,000 | — | ||||||||||||||||||||||||
| Professional fees and services | 14,074 | 12,161 | 12,948 | 13,408 | 12,312 | ||||||||||||||||||||||||
| Net occupancy and equipment | 28,111 | 30,675 | 26,061 | 26,316 | 27,558 | ||||||||||||||||||||||||
| Insurance | 5,848 | 5,156 | 4,980 | 5,393 | 4,220 | ||||||||||||||||||||||||
Data processing and communications | 34,751 | 32,942 | 32,743 | 31,884 | 31,915 | ||||||||||||||||||||||||
| Printing, postage and supplies | 3,482 | 3,502 | 4,272 | 3,700 | 3,825 | ||||||||||||||||||||||||
Net losses and operating expenses of repossessed assets | 6,244 | 1,766 | 1,531 | 2,403 | 1,728 | ||||||||||||||||||||||||
Amortization of intangible assets | 5,071 | 5,190 | 5,094 | 5,225 | 5,064 | ||||||||||||||||||||||||
| Mortgage banking costs | 15,803 | 15,598 | 10,545 | 14,259 | 14,975 | ||||||||||||||||||||||||
| Other expense | 5,388 | 7,227 | 8,054 | 6,998 | 6,263 | ||||||||||||||||||||||||
| Total other operating expense | 301,265 | 295,387 | 268,624 | 288,795 | 279,292 | ||||||||||||||||||||||||
| Net income before taxes | 204,644 | 80,089 | 79,284 | 141,039 | 174,254 | ||||||||||||||||||||||||
| Federal and state income taxes | 50,552 | 15,803 | 17,300 | 30,257 | 32,396 | ||||||||||||||||||||||||
| Net income | 154,092 | 64,286 | 61,984 | 110,782 | 141,858 | ||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | 58 | (407) | (95) | 430 | (373) | ||||||||||||||||||||||||
Net income attributable to BOK Financial Corporation shareholders | $ | 154,034 | $ | 64,693 | $ | 62,079 | $ | 110,352 | $ | 142,231 | |||||||||||||||||||
| Average shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 69,877,866 | 69,876,043 | 70,123,685 | 70,295,899 | 70,596,307 | ||||||||||||||||||||||||
| Diluted | 69,879,290 | 69,877,467 | 70,130,166 | 70,309,644 | 70,609,924 | ||||||||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||||||||
| Basic | $ | 2.19 | $ | 0.92 | $ | 0.88 | $ | 1.56 | $ | 2.00 | |||||||||||||||||||
| Diluted | $ | 2.19 | $ | 0.92 | $ | 0.88 | $ | 1.56 | $ | 2.00 | |||||||||||||||||||
15
LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | ||||||||||||||||||||||||||||
| Commercial: | ||||||||||||||||||||||||||||||||
| Energy | $ | 3,717,101 | $ | 3,974,174 | $ | 4,111,676 | $ | 3,973,377 | $ | 4,114,269 | ||||||||||||||||||||||
| Services | 3,545,825 | 3,779,881 | 3,955,748 | 3,832,031 | 4,011,089 | |||||||||||||||||||||||||||
| Healthcare | 3,325,790 | 3,289,343 | 3,165,096 | 3,033,916 | 3,032,968 | |||||||||||||||||||||||||||
| General business | 2,976,990 | 3,115,112 | 3,563,455 | 3,192,326 | 3,266,299 | |||||||||||||||||||||||||||
| Total commercial | 13,565,706 | 14,158,510 | 14,795,975 | 14,031,650 | 14,424,625 | |||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||
| Multifamily | 1,387,461 | 1,407,107 | 1,282,457 | 1,265,562 | 1,324,839 | |||||||||||||||||||||||||||
| Office | 1,099,563 | 973,995 | 962,004 | 928,379 | 1,014,275 | |||||||||||||||||||||||||||
| Retail | 786,211 | 780,467 | 774,198 | 775,521 | 799,169 | |||||||||||||||||||||||||||
| Industrial | 792,389 | 723,005 | 728,026 | 856,117 | 873,536 | |||||||||||||||||||||||||||
Residential construction and land development | 121,258 | 136,911 | 138,958 | 150,879 | 135,361 | |||||||||||||||||||||||||||
| Other commercial real estate | 506,818 | 532,659 | 564,442 | 457,325 | 478,877 | |||||||||||||||||||||||||||
| Total commercial real estate | 4,693,700 | 4,554,144 | 4,450,085 | 4,433,783 | 4,626,057 | |||||||||||||||||||||||||||
| Paycheck protection program | 2,097,325 | 2,081,428 | — | — | — | |||||||||||||||||||||||||||
| Loans to individuals: | ||||||||||||||||||||||||||||||||
| Residential mortgage | 1,849,144 | 1,813,442 | 1,844,555 | 1,886,378 | 1,925,539 | |||||||||||||||||||||||||||
| Residential mortgages guaranteed by U.S. government agencies | 384,247 | 322,269 | 197,889 | 197,794 | 191,764 | |||||||||||||||||||||||||||
| Personal | 1,213,178 | 1,226,097 | 1,175,466 | 1,201,382 | 1,117,382 | |||||||||||||||||||||||||||
| Total loans to individuals | 3,446,569 | 3,361,808 | 3,217,910 | 3,285,554 | 3,234,685 | |||||||||||||||||||||||||||
| Total | $ | 23,803,300 | $ | 24,155,890 | $ | 22,463,970 | $ | 21,750,987 | $ | 22,285,367 | ||||||||||||||||||||||
16
LOANS MANAGED BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| Texas: | |||||||||||||||||||||||||||||
| Commercial | $ | 5,545,158 | $ | 5,771,691 | $ | 6,350,690 | $ | 6,174,894 | $ | 6,220,227 | |||||||||||||||||||
| Commercial real estate | 1,499,630 | 1,389,547 | 1,296,266 | 1,259,117 | 1,292,116 | ||||||||||||||||||||||||
| Paycheck protection program | 614,970 | 612,133 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 792,994 | 748,474 | 756,634 | 727,175 | 749,361 | ||||||||||||||||||||||||
| Total Texas | 8,452,752 | 8,521,845 | 8,403,590 | 8,161,186 | 8,261,704 | ||||||||||||||||||||||||
| Oklahoma: | |||||||||||||||||||||||||||||
| Commercial | 4,901,666 | 5,086,934 | 3,886,086 | 3,454,825 | 3,690,100 | ||||||||||||||||||||||||
| Commercial real estate | 647,228 | 636,021 | 593,473 | 631,026 | 679,786 | ||||||||||||||||||||||||
| Paycheck protection program | 487,247 | 442,518 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 2,036,452 | 1,967,665 | 1,788,518 | 1,854,864 | 1,753,698 | ||||||||||||||||||||||||
| Total Oklahoma | 8,072,593 | 8,133,138 | 6,268,077 | 5,940,715 | 6,123,584 | ||||||||||||||||||||||||
| Colorado: | |||||||||||||||||||||||||||||
| Commercial | 1,501,821 | 1,600,382 | 2,181,309 | 2,169,598 | 2,247,798 | ||||||||||||||||||||||||
| Commercial real estate | 890,746 | 937,742 | 955,608 | 927,826 | 975,066 | ||||||||||||||||||||||||
| Paycheck protection program | 494,910 | 488,279 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 257,345 | 264,872 | 268,674 | 276,939 | 303,605 | ||||||||||||||||||||||||
| Total Colorado | 3,144,822 | 3,291,275 | 3,405,591 | 3,374,363 | 3,526,469 | ||||||||||||||||||||||||
| Arizona: | |||||||||||||||||||||||||||||
| Commercial | 956,047 | 1,036,862 | 1,396,582 | 1,307,073 | 1,276,534 | ||||||||||||||||||||||||
| Commercial real estate | 692,987 | 689,121 | 714,161 | 728,832 | 771,425 | ||||||||||||||||||||||||
| Paycheck protection program | 272,114 | 318,961 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 166,115 | 177,066 | 181,821 | 186,539 | 170,815 | ||||||||||||||||||||||||
| Total Arizona | 2,087,263 | 2,222,010 | 2,292,564 | 2,222,444 | 2,218,774 | ||||||||||||||||||||||||
| Kansas/Missouri: | |||||||||||||||||||||||||||||
| Commercial | 414,038 | 404,860 | 556,255 | 527,872 | 566,969 | ||||||||||||||||||||||||
| Commercial real estate | 352,241 | 314,504 | 310,799 | 322,541 | 374,795 | ||||||||||||||||||||||||
| Paycheck protection program | 80,230 | 76,724 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 96,358 | 102,577 | 116,734 | 131,069 | 146,522 | ||||||||||||||||||||||||
| Total Kansas/Missouri | 942,867 | 898,665 | 983,788 | 981,482 | 1,088,286 | ||||||||||||||||||||||||
| New Mexico: | |||||||||||||||||||||||||||||
| Commercial | 157,322 | 182,688 | 327,164 | 305,320 | 335,409 | ||||||||||||||||||||||||
| Commercial real estate | 471,505 | 455,574 | 434,150 | 402,148 | 374,331 | ||||||||||||||||||||||||
| Paycheck protection program | 133,244 | 128,058 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 79,890 | 83,470 | 87,110 | 90,257 | 92,270 | ||||||||||||||||||||||||
| Total New Mexico | 841,961 | 849,790 | 848,424 | 797,725 | 802,010 | ||||||||||||||||||||||||
| Arkansas: | |||||||||||||||||||||||||||||
| Commercial | 89,654 | 75,093 | 97,889 | 92,068 | 87,588 | ||||||||||||||||||||||||
| Commercial real estate | 139,363 | 131,635 | 145,628 | 162,293 | 158,538 | ||||||||||||||||||||||||
| Paycheck protection program | 14,610 | 14,755 | — | — | — | ||||||||||||||||||||||||
| Loans to individuals | 17,415 | 17,684 | 18,419 | 18,711 | 18,414 | ||||||||||||||||||||||||
| Total Arkansas | 261,042 | 239,167 | 261,936 | 273,072 | 264,540 | ||||||||||||||||||||||||
| TOTAL BOK FINANCIAL | $ | 23,803,300 | $ | 24,155,890 | $ | 22,463,970 | $ | 21,750,987 | $ | 22,285,367 | |||||||||||||||||||
Loans attributed to a principal market may not always represent the location of the borrower or the collateral.
17
DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| Oklahoma: | |||||||||||||||||||||||||||||
| Demand | $ | 4,493,691 | $ | 4,378,559 | $ | 3,669,558 | $ | 3,257,337 | $ | 3,515,312 | |||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 12,586,401 | 11,438,489 | 9,955,697 | 8,574,912 | 7,447,799 | ||||||||||||||||||||||||
| Savings | 401,062 | 387,557 | 329,631 | 306,194 | 308,103 | ||||||||||||||||||||||||
| Time | 1,081,176 | 1,330,619 | 1,137,802 | 1,125,446 | 1,198,170 | ||||||||||||||||||||||||
| Total interest-bearing | 14,068,639 | 13,156,665 | 11,423,130 | 10,006,552 | 8,954,072 | ||||||||||||||||||||||||
| Total Oklahoma | 18,562,330 | 17,535,224 | 15,092,688 | 13,263,889 | 12,469,384 | ||||||||||||||||||||||||
| Texas: | |||||||||||||||||||||||||||||
| Demand | 3,152,393 | 3,070,955 | 2,767,399 | 2,757,376 | 2,867,915 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 3,482,603 | 3,358,090 | 2,874,362 | 2,911,731 | 2,589,063 | ||||||||||||||||||||||||
| Savings | 136,787 | 128,892 | 115,039 | 102,456 | 100,597 | ||||||||||||||||||||||||
| Time | 438,337 | 476,867 | 505,565 | 495,343 | 464,264 | ||||||||||||||||||||||||
| Total interest-bearing | 4,057,727 | 3,963,849 | 3,494,966 | 3,509,530 | 3,153,924 | ||||||||||||||||||||||||
| Total Texas | 7,210,120 | 7,034,804 | 6,262,365 | 6,266,906 | 6,021,839 | ||||||||||||||||||||||||
| Colorado: | |||||||||||||||||||||||||||||
| Demand | 2,057,603 | 2,096,075 | 1,579,764 | 1,729,674 | 1,694,044 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 1,861,763 | 1,816,604 | 1,759,384 | 1,769,037 | 1,910,874 | ||||||||||||||||||||||||
| Savings | 68,230 | 67,477 | 58,000 | 53,307 | 60,107 | ||||||||||||||||||||||||
| Time | 226,780 | 254,845 | 279,105 | 283,517 | 273,622 | ||||||||||||||||||||||||
| Total interest-bearing | 2,156,773 | 2,138,926 | 2,096,489 | 2,105,861 | 2,244,603 | ||||||||||||||||||||||||
| Total Colorado | 4,214,376 | 4,235,001 | 3,676,253 | 3,835,535 | 3,938,647 | ||||||||||||||||||||||||
| New Mexico: | |||||||||||||||||||||||||||||
| Demand | 964,908 | 965,877 | 750,052 | 623,722 | 645,698 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 713,418 | 752,565 | 563,891 | 558,493 | 539,260 | ||||||||||||||||||||||||
| Savings | 85,463 | 80,242 | 67,553 | 63,999 | 62,863 | ||||||||||||||||||||||||
| Time | 200,525 | 222,370 | 235,778 | 238,140 | 236,135 | ||||||||||||||||||||||||
| Total interest-bearing | 999,406 | 1,055,177 | 867,222 | 860,632 | 838,258 | ||||||||||||||||||||||||
| Total New Mexico | 1,964,314 | 2,021,054 | 1,617,274 | 1,484,354 | 1,483,956 | ||||||||||||||||||||||||
| Arizona: | |||||||||||||||||||||||||||||
| Demand | 928,671 | 985,757 | 665,396 | 681,268 | 705,895 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 771,319 | 780,500 | 729,603 | 684,929 | 600,103 | ||||||||||||||||||||||||
| Savings | 11,498 | 15,669 | 8,832 | 10,314 | 12,487 | ||||||||||||||||||||||||
| Time | 36,929 | 42,318 | 47,081 | 49,676 | 44,347 | ||||||||||||||||||||||||
| Total interest-bearing | 819,746 | 838,487 | 785,516 | 744,919 | 656,937 | ||||||||||||||||||||||||
| Total Arizona | 1,748,417 | 1,824,244 | 1,450,912 | 1,426,187 | 1,362,832 | ||||||||||||||||||||||||
18
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| Kansas/Missouri: | |||||||||||||||||||||||||||||
| Demand | 405,360 | 427,795 | 318,985 | 384,533 | 376,020 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 616,797 | 526,635 | 537,552 | 784,574 | 284,940 | ||||||||||||||||||||||||
| Savings | 15,520 | 15,033 | 12,888 | 12,169 | 11,689 | ||||||||||||||||||||||||
| Time | 16,430 | 17,746 | 19,137 | 17,877 | 19,126 | ||||||||||||||||||||||||
| Total interest-bearing | 648,747 | 559,414 | 569,577 | 814,620 | 315,755 | ||||||||||||||||||||||||
| Total Kansas/Missouri | 1,054,107 | 987,209 | 888,562 | 1,199,153 | 691,775 | ||||||||||||||||||||||||
| Arkansas: | |||||||||||||||||||||||||||||
| Demand | 44,712 | 67,147 | 70,428 | 27,381 | 39,513 | ||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||
| Transaction | 164,439 | 177,535 | 175,803 | 108,076 | 149,506 | ||||||||||||||||||||||||
| Savings | 2,389 | 2,101 | 1,862 | 1,837 | 1,747 | ||||||||||||||||||||||||
| Time | 7,796 | 7,995 | 8,005 | 7,850 | 7,877 | ||||||||||||||||||||||||
| Total interest-bearing | 174,624 | 187,631 | 185,670 | 117,763 | 159,130 | ||||||||||||||||||||||||
| Total Arkansas | 219,336 | 254,778 | 256,098 | 145,144 | 198,643 | ||||||||||||||||||||||||
| TOTAL BOK FINANCIAL | $ | 34,973,000 | $ | 33,892,314 | $ | 29,244,152 | $ | 27,621,168 | $ | 26,167,076 | |||||||||||||||||||
19
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
| Three Months Ended | |||||||||||||||||||||||||||||
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| TAX-EQUIVALENT ASSETS YIELDS | |||||||||||||||||||||||||||||
| Interest-bearing cash and cash equivalents | 0.12 | % | 0.07 | % | 1.33 | % | 1.62 | % | 2.42 | % | |||||||||||||||||||
| Trading securities | 1.92 | % | 2.46 | % | 2.89 | % | 3.19 | % | 3.49 | % | |||||||||||||||||||
| Investment securities, net of allowance | 4.85 | % | 4.77 | % | 4.73 | % | 4.69 | % | 4.46 | % | |||||||||||||||||||
| Available for sale securities | 2.11 | % | 2.29 | % | 2.48 | % | 2.52 | % | 2.60 | % | |||||||||||||||||||
| Fair value option securities | 1.92 | % | 2.00 | % | 2.67 | % | 2.62 | % | 2.79 | % | |||||||||||||||||||
| Restricted equity securities | 2.53 | % | 2.75 | % | 5.49 | % | 5.37 | % | 6.34 | % | |||||||||||||||||||
| Residential mortgage loans held for sale | 3.01 | % | 3.10 | % | 3.50 | % | 3.55 | % | 3.73 | % | |||||||||||||||||||
| Loans | 3.60 | % | 3.63 | % | 4.50 | % | 4.75 | % | 5.12 | % | |||||||||||||||||||
| Allowance for loan losses | |||||||||||||||||||||||||||||
| Loans, net of allowance | 3.67 | % | 3.69 | % | 4.55 | % | 4.80 | % | 5.17 | % | |||||||||||||||||||
| Total tax-equivalent yield on earning assets | 3.04 | % | 3.12 | % | 3.73 | % | 3.93 | % | 4.25 | % | |||||||||||||||||||
| COST OF INTEREST-BEARING LIABILITIES | |||||||||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||||||||
| Interest-bearing transaction | 0.17 | % | 0.21 | % | 0.89 | % | 1.00 | % | 1.08 | % | |||||||||||||||||||
| Savings | 0.05 | % | 0.05 | % | 0.09 | % | 0.11 | % | 0.14 | % | |||||||||||||||||||
| Time | 1.13 | % | 1.36 | % | 1.83 | % | 1.94 | % | 1.94 | % | |||||||||||||||||||
| Total interest-bearing deposits | 0.26 | % | 0.34 | % | 0.98 | % | 1.09 | % | 1.17 | % | |||||||||||||||||||
| Funds purchased and repurchase agreements | 0.17 | % | 0.14 | % | 1.14 | % | 1.56 | % | 2.01 | % | |||||||||||||||||||
| Other borrowings | 0.43 | % | 0.56 | % | 1.66 | % | 2.01 | % | 2.42 | % | |||||||||||||||||||
| Subordinated debt | 4.89 | % | 5.16 | % | 5.30 | % | 5.40 | % | 5.48 | % | |||||||||||||||||||
| Total cost of interest-bearing liabilities | 0.31 | % | 0.37 | % | 1.19 | % | 1.40 | % | 1.68 | % | |||||||||||||||||||
| Tax-equivalent net interest revenue spread | 2.73 | % | 2.75 | % | 2.54 | % | 2.53 | % | 2.57 | % | |||||||||||||||||||
Effect of noninterest-bearing funding sources and other | 0.08 | % | 0.08 | % | 0.26 | % | 0.35 | % | 0.44 | % | |||||||||||||||||||
| Tax-equivalent net interest margin | 2.81 | % | 2.83 | % | 2.80 | % | 2.88 | % | 3.01 | % | |||||||||||||||||||
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.
20
CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
| Three Months Ended | |||||||||||||||||||||||||||||
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
| Nonperforming assets: | |||||||||||||||||||||||||||||
| Nonaccruing loans: | |||||||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||
| Energy | $ | 126,816 | $ | 162,989 | $ | 96,448 | $ | 91,722 | $ | 88,894 | |||||||||||||||||||
| Healthcare | 3,645 | 3,645 | 4,070 | 4,480 | 5,978 | ||||||||||||||||||||||||
| Services | 25,817 | 21,032 | 8,425 | 7,483 | 6,119 | ||||||||||||||||||||||||
| General business | 13,675 | 14,333 | 9,681 | 11,731 | 10,715 | ||||||||||||||||||||||||
| Total commercial | 169,953 | 201,999 | 118,624 | 115,416 | 111,706 | ||||||||||||||||||||||||
| Commercial real estate | 12,952 | 13,956 | 8,545 | 27,626 | 23,185 | ||||||||||||||||||||||||
| Loans to individuals: | |||||||||||||||||||||||||||||
| Permanent mortgage | 31,599 | 33,098 | 30,721 | 31,522 | 30,972 | ||||||||||||||||||||||||
Permanent mortgage guaranteed by U.S. government agencies | 6,397 | 6,110 | 5,005 | 6,100 | 6,332 | ||||||||||||||||||||||||
| Personal | 252 | 233 | 277 | 287 | 271 | ||||||||||||||||||||||||
| Total loans to individuals | 38,248 | 39,441 | 36,003 | 37,909 | 37,575 | ||||||||||||||||||||||||
| Total nonaccruing loans | $ | 221,153 | $ | 255,396 | $ | 163,172 | $ | 180,951 | $ | 172,466 | |||||||||||||||||||
Accruing renegotiated loans guaranteed by U.S. government agencies | 142,770 | 114,571 | 91,757 | 92,452 | 92,718 | ||||||||||||||||||||||||
| Real estate and other repossessed assets | 52,847 | 35,330 | 36,744 | 20,359 | 21,026 | ||||||||||||||||||||||||
| Total nonperforming assets | $ | 416,770 | $ | 405,297 | $ | 291,673 | $ | 293,762 | $ | 286,210 | |||||||||||||||||||
Total nonperforming assets excluding those guaranteed by U.S. government agencies | 267,603 | 284,616 | 194,911 | 195,210 | 187,160 | ||||||||||||||||||||||||
Accruing loans 90 days past due1 | 7,684 | 10,992 | 3,706 | 7,680 | 1,541 | ||||||||||||||||||||||||
| Gross charge-offs | $ | 26,661 | $ | 15,570 | $ | 18,917 | $ | 14,268 | $ | 11,707 | |||||||||||||||||||
| Recoveries | (4,232) | (1,491) | (1,696) | (1,816) | (1,066) | ||||||||||||||||||||||||
| Net charge-offs | $ | 22,429 | $ | 14,079 | $ | 17,221 | $ | 12,452 | $ | 10,641 | |||||||||||||||||||
Provision for loan losses | $ | 6,609 | $ | 134,365 | $ | 95,964 | $ | 18,779 | $ | 12,539 | |||||||||||||||||||
Provision for credit losses from off-balance sheet unfunded loan commitments | (4,950) | 4,405 | 3,377 | 221 | (539) | ||||||||||||||||||||||||
Provision for expected credit losses from mortgage banking acitivities2 | (770) | (3,575) | (6,020) | — | — | ||||||||||||||||||||||||
Provision for credit losses related to held-to maturity (investment) securities portfolio2 | (889) | 126 | 450 | — | — | ||||||||||||||||||||||||
| Total provision for credit losses | $ | — | $ | 135,321 | $ | 93,771 | $ | 19,000 | $ | 12,000 | |||||||||||||||||||
21
| Three Months Ended | |||||||||||||||||||||||||||||
| Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | |||||||||||||||||||||||||
Allowance for loan losses to period end loans | 1.76 | % | 1.80 | % | 1.40 | % | 0.97 | % | 0.92 | % | |||||||||||||||||||
Allowance for loan losses to period end loans excluding PPP loans3 | 1.93 | % | 1.97 | % | 1.40 | % | 0.97 | % | 0.92 | % | |||||||||||||||||||
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans | 1.88 | % | 1.94 | % | 1.53 | % | 0.98 | % | 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 | 2.06 | % | 2.12 | % | 1.53 | % | 0.98 | % | 0.92 | % | |||||||||||||||||||
Nonperforming assets to period end loans and repossessed assets | 1.75 | % | 1.68 | % | 1.30 | % | 1.35 | % | 1.28 | % | |||||||||||||||||||
Net charge-offs (annualized) to average loans | 0.37 | % | 0.23 | % | 0.31 | % | 0.22 | % | 0.19 | % | |||||||||||||||||||
Net charge-offs (annualized) to average loans excluding PPP loans3 | 0.41 | % | 0.25 | % | 0.31 | % | 0.22 | % | 0.19 | % | |||||||||||||||||||
Allowance for loan losses to nonaccruing loans1 | 195.47 | % | 174.74 | % | 199.35 | % | 120.54 | % | 123.05 | % | |||||||||||||||||||
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1 | 208.49 | % | 187.94 | % | 217.38 | % | 121.44 | % | 123.87 | % | |||||||||||||||||||
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 | Sept. 30, 2020 | June 30, 2020 | Sept. 30, 2019 | 3Q20 vs 2Q20 | 3Q20 vs 3Q19 | |||||||||||||||||||||||||||
| Net interest revenue | $ | 149,946 | $ | 145,109 | $ | 178,960 | 3.3 | % | (16.2) | % | ||||||||||||||||||||||
| Fees and commissions revenue | 50,085 | 46,515 | 46,159 | 7.7 | % | 8.5 | % | |||||||||||||||||||||||||
| Other operating expense | 66,846 | 62,933 | 69,127 | 6.2 | % | (3.3) | % | |||||||||||||||||||||||||
| Corporate expense allocations | 5,172 | 5,437 | 11,772 | (4.9) | % | (56.1) | % | |||||||||||||||||||||||||
| Net income | 75,097 | 80,992 | 100,986 | (7.3) | % | (25.6) | % | |||||||||||||||||||||||||
| Average assets | 28,000,183 | 27,575,652 | 23,973,925 | 1.5 | % | 16.8 | % | |||||||||||||||||||||||||
| Average loans | 18,677,401 | 19,262,827 | 19,226,347 | (3.0) | % | (2.9) | % | |||||||||||||||||||||||||
| Average deposits | 15,375,450 | 14,599,225 | 10,833,057 | 5.3 | % | 41.9 | % | |||||||||||||||||||||||||
| Consumer Banking | ||||||||||||||||||||||||||||||||
| Net interest revenue | $ | 33,130 | $ | 39,270 | $ | 48,462 | (15.6) | % | (31.6) | % | ||||||||||||||||||||||
| Fees and commissions revenue | 67,974 | 67,192 | 51,461 | 1.2 | % | 32.1 | % | |||||||||||||||||||||||||
| Other operating expense | 59,839 | 58,936 | 59,699 | 1.5 | % | 0.2 | % | |||||||||||||||||||||||||
| Corporate expense allocations | 10,812 | 10,812 | 11,776 | — | % | (8.2) | % | |||||||||||||||||||||||||
| Net income | 26,256 | 31,900 | 16,640 | (17.7) | % | 57.8 | % | |||||||||||||||||||||||||
| Average assets | 9,898,119 | 9,920,005 | 9,827,130 | (0.2) | % | 0.7 | % | |||||||||||||||||||||||||
| Average loans | 1,825,865 | 1,679,164 | 1,773,831 | 8.7 | % | 2.9 | % | |||||||||||||||||||||||||
| Average deposits | 7,940,973 | 7,587,246 | 6,983,018 | 4.7 | % | 13.7 | % | |||||||||||||||||||||||||
| Wealth Management | ||||||||||||||||||||||||||||||||
| Net interest revenue | $ | 22,985 | $ | 26,880 | $ | 23,066 | (14.5) | % | (0.4) | % | ||||||||||||||||||||||
| Fees and commissions revenue | 111,655 | 106,757 | 89,422 | 4.6 | % | 24.9 | % | |||||||||||||||||||||||||
| Other operating expense | 82,868 | 80,567 | 71,619 | 2.9 | % | 15.7 | % | |||||||||||||||||||||||||
| Corporate expense allocations | 9,397 | 8,204 | 9,416 | 14.5 | % | (0.2) | % | |||||||||||||||||||||||||
| Net income | 31,212 | 33,394 | 23,206 | (6.5) | % | 34.5 | % | |||||||||||||||||||||||||
| Average assets | 16,206,522 | 15,721,452 | 10,391,225 | 3.1 | % | 56.0 | % | |||||||||||||||||||||||||
| Average loans | 1,777,008 | 1,709,363 | 1,671,102 | 4.0 | % | 6.3 | % | |||||||||||||||||||||||||
| Average deposits | 9,090,116 | 8,385,681 | 6,590,332 | 8.4 | % | 37.9 | % | |||||||||||||||||||||||||
| Fiduciary assets | 52,935,646 | 50,560,584 | 49,259,697 | 4.7 | % | 7.5 | % | |||||||||||||||||||||||||
| Assets under management or administration | 82,419,932 | 79,452,502 | 80,796,949 | 3.7 | % | 2.0 | % | |||||||||||||||||||||||||
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