Press Release

BOK Financial Reports 2017 Fourth Quarter and Full Year Results

Company Release - 1/24/2018 7:55 AM ET

TULSA, Okla., Jan. 24, 2018 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASDAQ:BOKF) reported net income of $334.6 million or $5.11 per diluted share for the year ended December 31, 2017. Net income for the year ended December 31, 2016 was $232.7 million or $3.53 per diluted share.

Net income for fourth quarter of 2017 totaled $72.5 million or $1.11 per diluted share compared to $85.6 million or $1.31 per diluted share for the third quarter of 2017 and $50.0 million or $0.76 per diluted share for the fourth quarter of 2016.

The Tax Cuts and Jobs Act ("the Act") signed into law on December 22, 2017 resulted in an $11.7 million or $0.18 per share reduction in net income for the fourth quarter. A decrease in the federal corporate tax rate from 35% to 21% required us to revalue deferred tax assets and liabilities. Provisions of the Act also limit the deductibility of certain other expenses.

Steven G. Bradshaw, president and chief executive officer, stated, “The fourth quarter wrapped up a very strong year for BOK Financial, in which we delivered our strongest earnings performance in the past five years. While we benefited from a healthy interest rate environment, the key to earnings leverage was maintaining expense discipline throughout the year. In addition, the benign credit environment combined with our strong underwriting minimized credit costs during the year. Finally, our wealth management business delivered record financial results in 2017 and surpassed $80 billion of assets under management and administration for the first time in company history, leading our diverse set of fee based businesses.”

Bradshaw continued, “Now that we have clarity on tax reform and healthcare, we believe the stage is set for stronger loan growth in 2018. In the fourth quarter our healthcare business grew at its strongest pace in over a year, and we are already seeing an increase in client loan demand in our commercial and industrial business. In addition, energy banking continues to benefit from the company’s long-term commitment to our energy borrowers, and our private banking division remains among our fastest-growing lending segments.”

“The write-down of our deferred tax asset was necessitated by expected lower future tax rates and negatively impacted fourth quarter earnings. However, we believe the passage of tax reform will be beneficial to economic growth across our footprint, drive increased loan demand in many of our businesses, and provide a material benefit to future profitability,” Bradshaw concluded.

Fourth Quarter 2017 Highlights

  • Net interest revenue totaled $216.9 million for the fourth quarter of 2017, compared to $218.5 million for the third quarter of 2017. Net interest margin was 2.97 percent, compared to 3.01 percent in the third quarter of 2017. Recoveries of foregone interest on nonaccruing loans added $4.7 million and 6 basis points to net interest margin in the third quarter. Average earning assets increased $122 million over the prior quarter.

  • Fees and commissions revenue totaled $168.2 million for the fourth quarter of 2017, compared to $173.5 million for the third quarter of 2017. Transaction card revenue decreased $3.3 million and other revenue decreased $1.9 million. Fiduciary and asset management revenue grew $1.1 million.

  • Operating expense was $264.0 million for the fourth quarter, a $1.9 million decrease compared to the prior quarter. Personnel costs decreased $2.6 million, partially offset by a $634 thousand increase in non-personnel expense.

  • The Company recorded a $7.0 million negative provision for credit losses in the fourth quarter, due to continued improvement in credit metric trends. No provision for credit losses was recorded in the third quarter of 2017. The company had net charge-offs of $11.7 million or 27 basis points of average loans on an annualized basis in the fourth quarter of 2017, compared to net charge-offs of $3.4 million or 8 basis points of average loans on annualized basis in the third quarter.  For the full year, net charge-offs were $16.0 million or 9 basis points of average loans in 2017 and $34.8 million or 21 basis points of average loans in 2016.

  • The combined allowance for credit losses totaled $234 million or 1.37 percent of outstanding loans at December 31, 2017, compared to $253 million or 1.47 percent of outstanding loans at September 30, 2017.

  • Nonperforming assets that are not guaranteed by U.S. government agencies totaled $207 million or 1.22 percent of outstanding loans and repossessed assets at December 31, 2017 compared to $249 million or 1.46 percent of outstanding loans and repossessed assets at September 30, 2017. The decrease in nonperforming assets was primarily due to nonaccruing energy, other commercial and industrial and healthcare sector loans.

  • Average loan balances were largely unchanged compared to the previous quarter. Growth in residential mortgage and personal loans was offset by decreased commercial and commercial real estate loan balances. Period-end outstanding loan balances were $17.2 billion at December 31, 2017, a $53 million decrease compared to September 30, 2017.

  • Average deposits were largely unchanged compared to the previous quarter. Growth in interest-bearing transaction and demand deposit account balances was partially offset by a decrease in time deposits. Period end deposits increased $213 million over September 30, 2017 to $22.1 billion at December 31, 2017.

  • The common equity Tier 1 capital ratio was 11.95 percent at December 31, 2017. In addition, the Company's Tier 1 capital ratio was 11.95 percent, total capital ratio was 13.43 percent and leverage ratio was 9.31 percent. At September 30, 2017, the common equity Tier 1 capital ratio was 11.90 percent, the Tier 1 capital ratio was 11.90 percent, total capital ratio was 13.47 percent and leverage ratio was 9.30 percent.

  • The company repurchased 80,000 common shares at an average price of $92.54 per share during the fourth quarter of 2017. No shares were repurchased during the third quarter of 2017.

Tax Cuts and Jobs Act

Fourth quarter and full year 2017 earnings included an $11.7 million or $0.18 per diluted share charge as a result of the Tax Cuts and Jobs Act which was signed into law on December 22, 2017. The write-down of net deferred tax assets from a federal and state statutory tax rate of 38.9 percent to 25.5 percent totaled $9.5 million, including $6.4 million of deferred tax assets related to unrealized losses on available for sale securities. In addition, the charge included $2.2 million to write-off deferred tax assets related to the compensation of certain executive officers that will no longer be deductible.

We currently expect that the federal and state effective tax rate for 2018 will be between 22 percent and 23 percent, compared to 33.8 percent for 2017, excluding the tax effects of equity compensation arrangements and similar discrete items. 

Net Interest Revenue

Net interest revenue was $216.9 million for the fourth quarter of 2017, a decrease of $1.6 million compared to the third quarter of 2017.

Net interest margin was 2.97 percent for the fourth quarter of 2017, compared to 3.01 percent for the third quarter of 2017. Recoveries of foregone interest primarily related to nonaccruing energy loans added $4.7 million to net interest revenue and 6 basis points to net interest margin for the third quarter. Excluding the impact of interest recoveries in the third quarter, the yield on average earning assets was 3.49 percent, a 5 basis point increase over the prior quarter and the yield on the loan portfolio increased 9 basis points to 4.29 percent. The yield on the available for sale securities portfolio increased 4 basis points to 2.21 percent. Funding costs were 0.79 percent, up 4 basis points. The cost of interest-bearing deposits increased 3 basis points to 0.48 percent as market pricing pressure remained relatively subdued. The cost of other borrowed funds was up 5 basis points to 1.28 percent.

Average earning assets increased $122 million during the fourth quarter of 2017. Fair value option securities held as an economic hedge of our mortgage servicing rights increased $108 million. Average trading securities balances increased $69 million. This growth was partially offset by a $76 million decrease in average loan balances primarily due to lower commercial and commercial real estate balances, partially offset by growth in residential mortgage and personal loans. Average interest-bearing deposits increased $14 million over the third quarter of 2017. The average balance of borrowed funds increased $124 million.

Fees and Commissions Revenue

Fees and commissions revenue totaled $168.2 million for the fourth quarter of 2017, a $5.3 million decrease compared to the third quarter of 2017.

Fiduciary and asset management revenue grew $1.1 million or 3 percent over the third quarter of 2017.  Total assets under management or in custody totaled $81.8 billion, up 5 percent since September 30 due to a combination of net cash inflows and higher asset valuation.

Mortgage banking revenue totaled $24.4 million, unchanged from the previous quarter. Production volume was down 9 percent from the previous quarter due primarily to the effect of higher interest rates. The impact of decreased production volume on revenue was offset by improved pricing margin.

Transaction card revenue decreased $3.3 million compared to the third quarter of 2017 primarily due to a customer early termination fee received in the third quarter. Additionally, other revenue decreased $1.9 million primarily as a result of the sale of a consolidated merchant banking investment. Other expense also decreased as a result of the sale.

Operating Expenses

Total operating expenses were $264.0 million for the fourth quarter of 2017, a decrease of $1.9 million compared to the third quarter of 2017.

Personnel costs decreased $2.6 million compared to the previous quarter. Employee benefits expense decreased $1.8 million primarily due to lower pension costs. Regular salary expense decreased $798 thousand while incentive compensation expense remained relatively flat.

Non-personnel expense increased $634 thousand over the third quarter of 2017. Professional fees increased $3.1 million primarily due to project costs related to the new online account opening product. The fourth quarter also included a $2.0 million contribution to the BOKF Foundation. Net losses and operating expenses of repossessed assets decreased $5.7 million. A $4.7 million write-down of a set of oil and gas properties was recognized in the third quarter.

Loans, Deposits and Capital

Loans

Outstanding loans were $17.2 billion at December 31, 2017, a $53 million decrease compared to September 30. Decreased commercial and commercial real estate loan balances were partially offset by growth in residential mortgage and personal loans.

Outstanding commercial loan balances decreased $62 million compared to September 30, 2017. Wholesale/retail sector loan balances decreased $187 million and manufacturing sector loan balances decreased $23 million. Healthcare sector loans grew by $75 million over the prior quarter and energy sector loans were up $62 million over September 30, 2017.

Unfunded energy loan commitments grew by $182 million in the fourth quarter to $2.9 billion. All other unfunded commercial loan commitments totaled $4.8 billion at December 31, 2017, largely unchanged compared to September 30, 2017.

Commercial real estate loans decreased by $38 million compared to September 30, 2017 due primarily to continued pay-down activity as borrowers took advantage of favorable long-term rates and refinanced into the permanent market. Retail sector loans decreased by $34 million, multifamily residential loans decreased by $19 million and loans secured by industrial facilities decreased by $18 million. Loans secured by office buildings increased $35 million. Unfunded commercial real estate loan commitments totaled $1.2 billion at December 31, 2017, a $112 million increase over September 30, 2017.

Residential mortgage loans grew by $28 million and personal loans were up $19 million over the prior quarter.

Deposits

Period-end deposits totaled $22.1 billion at December 31, 2017, a $213 million increase over September 30, 2017. Interest-bearing transaction account balances grew by $225 million and demand deposit balances increased $58 million, partially offset by a $74 million decrease in time deposits. Among the lines of business, Commercial Banking deposits increased $220 million and Wealth Management deposits increased $163 million, partially offset by a $147 million decrease in Consumer Banking deposits.

Capital

The company's common equity Tier 1 capital ratio was 11.95 percent at December 31, 2017. In addition, the Company's Tier 1 capital ratio was 11.95 percent, total capital ratio was 13.43 percent and leverage ratio was 9.31 percent at December 31, 2017. At September 30, 2017, the Company's common equity Tier 1 capital ratio was 11.90 percent, Tier 1 capital ratio was 11.90 percent, total capital ratio was 13.47 percent and leverage ratio was 9.30 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 9.50 percent at December 31, 2017 and 9.23 percent at September 30, 2017. 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.

Credit Quality

Nonperforming assets totaled $290 million or 1.69 percent of outstanding loans and repossessed assets at December 31, 2017, down from $328 million or 1.90 percent of outstanding loans and repossessed assets at September 30, 2017. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $207 million or 1.22 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at December 31, 2017 and $249 million or 1.46 percent at September 30, 2017.

Nonaccruing loans totaled $188 million or 1.10 percent of outstanding loans at December 31, 2017, compared to $226 million or 1.31 percent of outstanding loans at September 30, 2017. New nonaccruing loans identified in the fourth quarter totaled $33 million, offset by $53 million in payments received, $14.7 million in charge-offs and $1.9 million in foreclosures and repossessions. At December 31, 2017, nonaccruing commercial loans totaled $137 million or 1.28 percent of outstanding commercial loans. Nonaccruing commercial real estate loans were only $2.9 million or 0.08 percent of outstanding commercial real estate loans. Nonaccruing residential mortgage loans not guaranteed by U.S. government agencies totaled $38 million or 2.15 percent of outstanding residential mortgage loans.

At December 31, 2017, approximately $51 million of nonaccruing loans required a specific allowance of $8.8 million. No specific allowance was necessary for the remaining $137 million of nonaccruing loans based on estimated cash flows or collateral value. At September 30, 2017, $90 million of nonaccruing loans required a specific allowance of $13 million and no specific allowance was necessary on the remaining $136 million of nonaccruing loans.

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, decreased to $241 million at December 31, 2017 from $285 million at September 30, 2017. This decrease largely resulted from energy loans, partially offset by an increase in services and healthcare sector loans.

The company had net charge-offs of $11.7 million or 27 basis points of average loans on an annualized basis for the fourth quarter of 2017, compared to net charge-offs of $3.4 million or 8 basis points of average loans on annualized basis for the third quarter of 2017. Gross charge-offs totaled $14.7 million for the fourth quarter, compared to $5.8 million for the previous quarter. Recoveries totaled $3.1 million for the fourth quarter of 2017 and $2.4 million for the third quarter of 2017.

After evaluating all credit factors, including continued improvement in nonaccruing and potential problem loans, the company determined that a $7.0 million negative provision for credit losses was appropriate during the fourth quarter of 2017. No provision for credit losses was recorded in the third quarter of 2017.

The combined allowance for credit losses totaled $234 million or 1.37 percent of outstanding loans and 131 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies, at December 31, 2017. The allowance for loan losses was $231 million and the accrual for off-balance sheet credit losses was $3.7 million. At September 30, 2017, the combined allowance for credit losses was $253 million or 1.47 percent of outstanding loans and 117 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $248 million and the accrual for off-balance sheet credit losses was $5.4 million.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $8.3 billion at December 31, 2017 and $8.4 billion at September 30, 2017. At December 31, 2017, the available for sale portfolio consisted primarily of $5.3 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $2.8 billion of commercial mortgage-backed securities fully backed by U.S. government agencies.

The available for sale securities portfolio had a net unrealized loss of $47 million at December 31, 2017, compared to a net unrealized gain of $14 million at September 30, 2017. The increase in net unrealized loss was primarily due to an increase in interest rates during the fourth quarter.

The Company also maintains a portfolio of financial instruments consisting primarily of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts held as an economic hedge of the changes in the fair value of our mortgage servicing rights.

The net economic benefit of the changes in fair value of mortgage servicing rights and related economic hedges was $1.3 million during the fourth quarter of 2017, including a $5.9 million increase in the fair value of mortgage servicing rights, a $7.3 million decrease in the fair value of securities and derivative contracts held as an economic hedge and $2.7 million of related net interest revenue.

The fair value of mortgage servicing rights, net of economic hedge, increased by $1.0 million in the third quarter. The fair value of securities and interest rate derivative contracts held as an economic hedge of mortgage servicing rights increased by $1.7 million. Related net interest revenue was $2.5 million during the third quarter of 2017.

Conference Call and Webcast

The Company will hold a conference call at 9 a.m. Central time on Wednesday, January 24, 2018 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 replay PIN number 13675236.

About BOK Financial Corporation

BOK Financial is a $32 billion regional financial services company based in Tulsa, Oklahoma. The Company's stock is publicly traded on NASDAQ under the Global Select market listings (symbol: BOKF). BOK Financial's holdings include BOKF, NA, BOK Financial Securities, Inc. and The Milestone Group, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management, BOK Financial Asset Management, Inc. and seven banking divisions: Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Mobank, Bank of Oklahoma, Bank of Texas and Colorado State Bank and Trust. Through its subsidiaries, the Company provides commercial and consumer banking, investment and trust services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The Company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of December 31, 2017 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

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

 
BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
  Dec. 31, 2017 Sept. 30, 2017 Dec. 31, 2016
ASSETS      
Cash and due from banks $602,510  $547,203  $620,846 
Interest-bearing cash and cash equivalents 1,714,544  1,926,779  1,916,651 
Trading securities 462,676  614,117  337,628 
Investment securities 461,793  466,562  546,145 
Available for sale securities 8,321,578  8,383,199  8,676,829 
Fair value option securities 755,054  819,531  77,046 
Restricted equity securities 320,189  347,542  307,240 
Residential mortgage loans held for sale 221,378  275,643  301,897 
Loans:      
Commercial 10,733,975  10,795,934  10,390,824 
Commercial real estate 3,479,987  3,518,142  3,809,046 
Residential mortgage 1,973,686  1,945,750  1,949,832 
Personal 965,776  947,008  839,958 
Total loans 17,153,424  17,206,834  16,989,660 
Allowance for loan losses (230,682) (247,703) (246,159)
Loans, net of allowance 16,922,742  16,959,131  16,743,501 
Premises and equipment, net 317,335  320,060  325,849 
Receivables 442,897  314,251  772,952 
Goodwill 447,430  446,697  448,899 
Intangible assets, net 28,658  39,013  46,931 
Mortgage servicing rights, net 252,867  245,858  247,073 
Real estate and other repossessed assets, net 28,437  32,535  44,287 
Derivative contracts, net 220,502  352,559  689,872 
Cash surrender value of bank-owned life insurance 316,498  314,201  308,430 
Receivable on unsettled securities sales 75,980  230,225  7,188 
Other assets 359,092  370,409  353,017 
TOTAL ASSETS $32,272,160  $33,005,515  $32,772,281 
       
LIABILITIES AND EQUITY      
Deposits:      
Demand $9,243,338  $9,185,481  $9,235,720 
Interest-bearing transaction 10,250,393  10,025,084  10,865,105 
Savings 469,158  465,225  425,470 
Time 2,098,416  2,172,289  2,221,800 
Total deposits 22,061,305  21,848,079  22,748,095 
Funds purchased 58,628  62,356  57,929 
Repurchase agreements 516,335  328,189  668,661 
Other borrowings 5,134,897  6,241,275  4,846,072 
Subordinated debentures 144,677  144,668  144,640 
Accrued interest, taxes, and expense 164,895  152,029  146,704 
Due on unsettled securities purchases 151,198  160,781  6,508 
Derivative contracts, net 171,963  336,327  664,531 
Other liabilities 349,928  217,372  182,784 
TOTAL LIABILITIES 28,753,826  29,491,076  29,465,924 
Shareholders' equity:      
Capital, surplus and retained earnings 3,524,991  3,482,057  3,285,821 
Accumulated other comprehensive income (loss) (29,624) 6,757  (10,967)
TOTAL SHAREHOLDERS' EQUITY 3,495,367  3,488,814  3,274,854 
Non-controlling interests 22,967  25,625  31,503 
TOTAL EQUITY 3,518,334  3,514,439  3,306,357 
TOTAL LIABILITIES AND EQUITY $32,272,160  $33,005,515  $32,772,281 
             


 
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Three Months Ended
 Dec. 31, 2017 Sept. 30, 2017 June 30, 2017 March 31, 2017 Dec. 31, 2016
ASSETS         
Interest-bearing cash and cash equivalents$1,976,395  $1,965,645  $2,007,746  $2,087,964  $2,032,785 
Trading securities560,321  491,613  456,028  579,549  476,498 
Investment securities462,869  475,705  499,372  530,936  542,869 
Available for sale securities8,435,916  8,428,353  8,384,057  8,567,049  8,766,555 
Fair value option securities792,647  684,571  476,102  416,524  210,733 
Restricted equity securities337,673  328,677  295,743  312,498  334,114 
Residential mortgage loans held for sale257,927  256,343  245,401  220,325  345,066 
Loans:         
Commercial10,751,235  10,827,198  10,604,456  10,414,579  10,228,095 
Commercial real estate3,485,583  3,528,330  3,676,976  3,903,850  3,749,393 
Residential mortgage1,976,860  1,951,385  1,933,091  1,962,759  1,919,296 
Personal967,329  949,750  915,010  854,637  826,804 
Total loans17,181,007  17,256,663  17,129,533  17,135,825  16,723,588 
Allowance for loan losses(246,143) (250,590) (251,632) (249,379) (246,977)
Total loans, net16,934,864  17,006,073  16,877,901  16,886,446  16,476,611 
Total earning assets29,758,612  29,636,980  29,242,350  29,601,291  29,185,231 
Cash and due from banks576,737  546,653  530,352  547,104  578,694 
Derivative contracts, net292,961  238,583  248,168  401,886  681,455 
Cash surrender value of bank-owned life insurance315,034  313,079  311,310  309,223  309,532 
Receivable on unsettled securities sales49,219  76,622  79,248  62,641  33,813 
Other assets2,459,552  2,196,253  1,957,143  2,032,844  2,172,351 
TOTAL ASSETS$33,452,115  $33,008,170  $32,368,571  $32,954,989  $32,961,076 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$9,417,351  $9,389,849  $9,338,683  $9,101,763  $9,124,595 
Interest-bearing transaction10,142,744  10,088,522  10,087,640  10,567,475  9,980,132 
Savings466,496  464,130  461,586  441,254  421,654 
Time2,134,469  2,176,820  2,204,422  2,258,930  2,177,035 
Total deposits22,161,060  22,119,321  22,092,331  22,369,422  21,703,416 
Funds purchased63,713  49,774  63,263  55,508  62,004 
Repurchase agreements424,617  361,512  427,353  523,561  560,891 
Other borrowings6,209,903  6,162,641  5,572,031  5,737,955  6,072,150 
Subordinated debentures144,673  144,663  144,654  144,644  144,635 
Derivative contracts, net288,408  221,371  178,695  405,444  682,808 
Due on unsettled securities purchases218,684  145,155  157,438  91,529  77,575 
Other liabilities425,667  319,092  323,373  299,534  321,404 
TOTAL LIABILITIES29,936,725  29,523,529  28,959,138  29,627,597  29,624,883 
Total equity3,515,390  3,484,641  3,409,433  3,327,392  3,336,193 
TOTAL LIABILITIES AND EQUITY$33,452,115  $33,008,170  $32,368,571  $32,954,989  $32,961,076 
                    


 
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 Three Months Ended Year Ended
 Dec. 31, Dec. 31,
 2017 2016 2017 2016
        
Interest revenue$255,767  $215,737  $972,751  $829,117 
Interest expense38,904  21,539  131,050  81,889 
Net interest revenue216,863  194,198  841,701  747,228 
Provision for credit losses(7,000)   (7,000) 65,000 
Net interest revenue after provision for credit losses223,863  194,198  848,701  682,228 
Other operating revenue:       
Brokerage and trading revenue33,045  28,500  131,601  138,377 
Transaction card revenue129,536  29,682  119,988  116,452 
Fiduciary and asset management revenue41,767  34,535  162,893  135,477 
Deposit service charges and fees127,685  28,204  112,075  111,499 
Mortgage banking revenue24,362  28,414  104,719  133,914 
Other revenue11,762  12,693  52,168  51,029 
Total fees and commissions168,157  162,028  683,444  686,748 
Other gains (losses), net552  (1,279) 9,004  4,030 
Gain (loss) on derivatives, net(3,045) (35,815) 779  (15,685)
Loss on fair value option securities, net(4,238) (20,922) (2,733) (10,555)
Change in fair value of mortgage servicing rights5,898  39,751  172  (2,193)
Gain (loss) on available for sale securities, net(488) (9) 4,428  11,675 
Total other operating revenue166,836  143,754  695,094  674,020 
Other operating expense:       
Personnel145,329  141,132  573,408  553,119 
Business promotion7,317  7,344  28,877  26,582 
Charitable contributions to BOKF Foundation2,000  2,000  2,000  2,000 
Professional fees and services15,344  16,828  51,067  56,783 
Net occupancy and equipment22,403  21,470  86,477  80,024 
Insurance6,555  8,705  19,653  32,489 
Data processing and communications38,411  33,691  146,970  131,841 
Printing, postage and supplies3,781  3,998  15,689  15,584 
Net losses and operating expenses of repossessed assets340  1,627  9,687  3,359 
Amortization of intangible assets1,430  1,558  6,779  6,862 
Mortgage banking costs14,331  17,348  52,856  61,387 
Other expense6,746  9,846  32,054  47,560 
Total other operating expense263,987  265,547  1,025,517  1,017,590 
        
Net income before taxes126,712  72,405  518,278  338,658 
Federal and state income taxes54,347  22,496  182,593  106,377 
        
Net income72,365  49,909  335,685  232,281 
Net income (loss) attributable to non-controlling interests(127) (117) 1,041  (387)
                
Net income attributable to BOK Financial Corporation shareholders$72,492  $50,026  $334,644  $232,668 
        
Average shares outstanding:       
Basic64,793,005  64,719,018  64,745,364  65,085,627 
Diluted64,843,179  64,787,728  64,806,284  65,143,898 
        
Net income per share:       
Basic$1.112 $0.76  $5.112 $3.53 
Diluted$1.112 $0.76  $5.112 $3.53 
                
1   Checkcard revenue was reclassified from transaction card revenue to deposit service charges and fees.
2   EPS decreased $0.18 due to tax reform.
                


 
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 Three Months Ended
 Dec. 31, 2017 Sept. 30, 2017 June 30, 2017 March 31, 2017 Dec. 31, 2016
Capital:         
Period-end shareholders' equity$3,495,367  $3,488,814  $3,422,469  $3,341,744  $3,274,854 
Risk weighted assets$25,733,711  $25,409,728  $25,130,802  $24,901,019  $25,274,848 
Risk-based capital ratios:         
Common equity tier 111.95% 11.90% 11.76% 11.59% 11.21%
Tier 111.95% 11.90% 11.76% 11.59% 11.21%
Total capital13.43% 13.47% 13.36% 13.25% 12.81%
Leverage ratio9.31% 9.30% 9.27% 8.89% 8.72%
Tangible common equity ratio19.50% 9.23% 9.24% 8.88% 8.61%
          
Common stock:         
Book value per share$53.45  $53.30  $52.32  $51.09  $50.12 
Tangible book value per share46.17  45.88  44.87  43.63  42.53 
Market value per share:         
High$93.97  $90.69  $88.31  $85.25  $85.00 
Low$79.67  $77.10  $74.09  $73.44  $67.11 
Cash dividends paid$29,328  $28,655  $28,652  $28,646  $28,860 
Dividend payout ratio40.46% 33.46% 32.50% 32.42% 57.69%
Shares outstanding, net65,394,937  65,456,786  65,416,403  65,408,019  65,337,432 
          
Stock buy-back program:         
Shares repurchased80,000        700,000 
Amount$7,403  $  $  $  $49,021 
Average price per share$92.54  $  $  $  $70.03 
          
Performance ratios (quarter annualized):
Return on average assets0.86% 1.03% 1.09% 1.09% 0.60%
Return on average equity8.24% 9.83% 10.46% 10.86% 6.03%
Net interest margin2.97% 3.01% 2.89% 2.81% 2.69%
Efficiency ratio66.89% 66.77% 64.61% 65.77% 72.93%
          
Reconciliation of non-GAAP measures:
1      Tangible common equity ratio:         
Total shareholders' equity$3,495,367  $3,488,814  $3,422,469  $3,341,744  $3,274,854 
Less: Goodwill and intangible assets, net476,088  485,710  487,452  488,294  495,830 
Tangible common equity$3,019,279  $3,003,104  $2,935,017  $2,853,450  $2,779,024 
          
Total assets$32,272,160  $33,005,515  $32,263,532  $32,628,932  $32,772,281 
Less: Goodwill and intangible assets, net476,088  485,710  487,452  488,294  495,830 
Tangible assets$31,796,072  $32,519,805  $31,776,080  $32,140,638  $32,276,451 
          
Tangible common equity ratio9.50% 9.23% 9.24% 8.88% 8.61%
          
Other data:         
Fiduciary assets$48,761,477  $45,177,185  $45,089,153  $44,992,920  $42,378,053 
Tax equivalent adjustment$4,131  $4,314  $4,330  $4,428  $4,389 
Net unrealized gain (loss) on available for sale securities$(47,497) $14,061  $16,041  $(5,537) $(14,899)
          
Mortgage banking:         
Mortgage production revenue$7,786  $8,329  $13,840  $8,543  $11,937 
Mortgage loans funded for sale$840,080  $832,796  $902,978  $711,019  $1,189,975 
Add: current period-end outstanding commitments222,919  334,337  362,088  381,732  318,359 
Less: prior period end outstanding commitments334,337  362,088  381,732  318,359  630,804 
Total mortgage production volume$728,662  $805,045  $883,334  $774,392  $877,530 
          
Mortgage loan refinances to mortgage loans funded for sale47% 38% 33% 44% 63%
Gain on sale margin1.07% 1.03% 1.57% 1.10% 1.36%
Mortgage servicing revenue$16,576  $16,561  $16,436  $16,648  $16,477 
Average outstanding principal balance of mortgage loans serviced for others22,054,877  22,079,177  22,055,127  22,006,295  21,924,552 
Average mortgage servicing revenue rates0.30% 0.30% 0.30% 0.31% 0.30%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$(3,057) $1,025  $3,241  $(528) $(35,868)
Gain (loss) on fair value option securities, net(4,238) 661  1,984  (1,140) (20,922)
Gain (loss) on economic hedge of mortgage servicing rights(7,295) 1,686  5,225  (1,668) (56,790)
Gain (loss) on changes in fair value of mortgage servicing rights5,898  (639) (6,943) 1,856  39,751 
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue(1,397) 1,047  (1,718) 188  (17,039)
Net interest revenue on fair value option securities22,656  2,543  1,965  1,271  114 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$1,259  $3,590  $247  $1,459  $(16,925)
                    
2   Actual interest earned on fair value option securities less internal transfer-priced cost of funds.
                    


 
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
 Three Months Ended
 Dec. 31, 2017 Sept. 30, 2017 June 30, 2017 March 31, 2017 Dec. 31, 2016
          
Interest revenue$255,767  $255,413  $235,181  $226,390  $215,737 
Interest expense38,904  36,961  29,977  25,208  21,539 
Net interest revenue216,863  218,452  205,204  201,182  194,198 
Provision for credit losses(7,000)        
Net interest revenue after provision for credit losses223,863  218,452  205,204  201,182  194,198 
Other operating revenue:         
Brokerage and trading revenue33,045  33,169  31,764  33,623  28,500 
Transaction card revenue129,536  32,844  30,228  27,380  29,682 
Fiduciary and asset management revenue41,767  40,687  41,808  38,631  34,535 
Deposit service charges and fees127,685  28,191  28,422  27,777  28,204 
Mortgage banking revenue24,362  24,890  30,276  25,191  28,414 
Other revenue11,762  13,670  14,984  11,752  12,693 
Total fees and commissions168,157  173,451  177,482  164,354  162,028 
Other gains (losses), net552  (1,283) 6,108  3,627  (1,279)
Gain (loss) on derivatives, net(3,045) 1,033  3,241  (450) (35,815)
Gain (loss) on fair value option securities, net(4,238) 661  1,984  (1,140) (20,922)
Change in fair value of mortgage servicing rights5,898  (639) (6,943) 1,856  39,751 
Gain (loss) on available for sale securities, net(488) 2,487  380  2,049  (9)
Total other operating revenue166,836  175,710  182,252  170,296  143,754 
Other operating expense:         
Personnel145,329  147,910  143,744  136,425  141,132 
Business promotion7,317  7,105  7,738  6,717  7,344 
Contribution to BOKF Foundation2,000        2,000 
Professional fees and services15,344  11,887  12,419  11,417  16,828 
Net occupancy and equipment22,403  21,325  21,125  21,624  21,470 
Insurance6,555  6,005  689  6,404  8,705 
Data processing and communications38,411  37,327  36,330  34,902  33,691 
Printing, postage and supplies3,781  3,917  4,140  3,851  3,998 
Net losses and operating expenses of repossessed assets340  6,071  2,267  1,009  1,627 
Amortization of intangible assets1,430  1,744  1,803  1,802  1,558 
Mortgage banking costs14,331  13,450  12,072  13,003  17,348 
Other expense6,746  9,193  8,558  7,557  9,846 
Total other operating expense263,987  265,934  250,885  244,711  265,547 
Net income before taxes126,712  128,228  136,571  126,767  72,405 
Federal and state income taxes54,347  42,438  47,705  38,103  22,496 
Net income72,365  85,790  88,866  88,664  49,909 
Net income (loss) attributable to non-controlling interests(127) 141  719  308  (117)
Net income attributable to BOK Financial Corporation shareholders$72,492  $85,649  $88,147  $88,356  $50,026 
          
Average shares outstanding:         
Basic64,793,005  64,742,822  64,729,752  64,715,964  64,719,018 
Diluted64,843,179  64,805,172  64,793,134  64,783,737  64,787,728 
Net income per share:         
Basic$1.112 $1.31  $1.35  $1.35  $0.76 
Diluted$1.112 $1.31  $1.35  $1.35  $0.76 
                    
Checkcard revenue was reclassified from transaction card revenue to deposit service charges and fees.
EPS decreased $0.18 due to tax reform.
                    


 
LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
  Dec. 31, 2017 Sept. 30, 2017 June 30, 2017 March 31, 2017 Dec. 31, 2016
Commercial:          
Services $2,986,949  $2,967,513  $2,958,827  $3,013,375  $3,108,990 
Energy 2,930,156  2,867,981  2,847,240  $2,537,112  2,497,868 
Healthcare 2,314,753  2,239,451  2,221,518  2,265,604  2,201,916 
Wholesale/retail 1,471,256  1,658,098  1,543,695  1,506,243  1,576,818 
Manufacturing 496,774  519,446  546,137  543,430  514,975 
Other commercial and industrial 534,087  543,445  520,538  461,346  490,257 
Total commercial 10,733,975  10,795,934  10,637,955  10,327,110  10,390,824 
           
Commercial real estate:          
Multifamily 980,017  999,009  952,380  922,991  903,272 
Office 831,770  797,089  862,973  860,889  798,888 
Retail 691,532  725,865  722,805  745,046  761,888 
Industrial 573,014  591,080  693,635  871,463  871,749 
Residential construction and land development 117,245  112,102  141,592  135,994  135,533 
Other real estate 286,409  292,997  315,207  334,680  337,716 
Total commercial real estate 3,479,987  3,518,142  3,688,592  3,871,063  3,809,046 
           
Residential mortgage:          
Permanent mortgage 1,043,435  1,013,965  989,040  977,743  1,006,820 
Permanent mortgages guaranteed by U.S. government agencies 197,506  187,370  191,729  204,181  199,387 
Home equity 732,745  744,415  758,429  764,350  743,625 
Total residential mortgage 1,973,686  1,945,750  1,939,198  1,946,274  1,949,832 
           
Personal 965,776  947,008  917,900  847,459  839,958 
           
Total $17,153,424  $17,206,834  $17,183,645  $16,991,906  $16,989,660 
                     


 
LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Dec. 31, 2017 Sept. 30, 2017 June 30, 2017 March 31, 2017 Dec. 31, 2016
          
Bank of Oklahoma:         
  Commercial$3,238,720  $3,408,973  $3,369,967  $3,189,183  $3,370,259 
  Commercial real estate682,037  712,915  667,932  691,332  684,381 
  Residential mortgage1,435,432  1,405,900  1,398,021  1,404,054  1,407,197 
  Personal342,212  322,320  318,016  310,708  303,823 
Total Bank of Oklahoma5,698,401  5,850,108  5,753,936  5,595,277  5,765,660 
          
Bank of Texas:         
  Commercial4,520,401  4,434,595  4,339,634  4,148,316  4,022,455 
  Commercial real estate1,261,864  1,236,702  1,360,164  1,452,988  1,415,011 
  Residential mortgage233,675  229,993  232,074  231,647  233,981 
  Personal375,084  375,173  354,222  312,092  306,748 
Total Bank of Texas6,391,024  6,276,463  6,286,094  6,145,043  5,978,195 
          
Bank of Albuquerque:         
  Commercial343,296  367,747  369,370  407,403  399,256 
  Commercial real estate341,282  319,208  324,405  307,927  284,603 
  Residential mortgage98,018  101,983  103,849  106,432  108,058 
  Personal11,721  12,953  12,439  11,305  11,483 
Total Bank of Albuquerque794,317  801,891  810,063  833,067  803,400 
          
Bank of Arkansas:         
  Commercial95,644  91,051  85,020  88,010  86,577 
  Commercial real estate87,393  80,917  73,943  74,469  73,616 
  Residential mortgage6,596  6,318  6,395  6,829  7,015 
  Personal9,992  10,388  11,993  6,279  6,524 
Total Bank of Arkansas199,625  188,674  177,351  175,587  173,732 
          
Colorado State Bank & Trust:         
  Commercial1,130,714  1,124,200  1,065,780  998,216  1,018,208 
  Commercial real estate174,201  186,427  255,379  266,218  265,264 
  Residential mortgage63,350  63,734  63,346  62,313  59,631 
  Personal63,115  60,513  56,187  49,523  50,372 
Total Colorado State Bank & Trust1,431,380  1,434,874  1,440,692  1,376,270  1,393,475 
          
Bank of Arizona:         
  Commercial687,792  634,809  617,759  643,222  686,253 
  Commercial real estate660,094  706,188  705,858  737,088  747,409 
  Residential mortgage41,771  40,730  37,034  36,737  36,265 
  Personal57,140  55,050  55,528  51,386  52,553 
Total Bank of Arizona1,446,797  1,436,777  1,416,179  1,468,433  1,522,480 
          
Mobank (Kansas City):         
  Commercial717,408  734,559  790,425  852,760  807,816 
  Commercial real estate273,116  275,785  300,911  341,041  338,762 
  Residential mortgage94,844  97,092  98,479  98,262  97,685 
  Personal106,512  110,611  109,515  106,166  108,455 
Total Mobank (Kansas City)1,191,880  1,218,047  1,299,330  1,398,229  1,352,718 
          
TOTAL BOK FINANCIAL$17,153,424  $17,206,834  $17,183,645  $16,991,906  $16,989,660 
                    
Loans attributed to a geographical region may not always represent the location of the borrower or the collateral.
                    


 
DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Dec. 31, 2017 Sept. 30, 2017 June 30, 2017 March 31, 2017 Dec. 31, 2016
Bank of Oklahoma:         
  Demand$3,885,008  $4,061,612  $4,353,421  $4,320,666  $3,993,170 
  Interest-bearing:         
Transaction5,901,293  5,909,259  5,998,787  6,114,288  6,345,536 
Savings265,870  265,023  263,664  265,014  241,696 
Time1,092,133  1,131,547  1,170,014  1,189,144  1,118,355 
  Total interest-bearing7,259,296  7,305,829  7,432,465  7,568,446  7,705,587 
Total Bank of Oklahoma11,144,304  11,367,441  11,785,886  11,889,112  11,698,757 
          
Bank of Texas:         
  Demand3,239,098  3,094,184  3,121,890  3,091,258  3,137,009 
  Interest-bearing:         
Transaction2,397,071  2,272,987  2,272,185  2,317,576  2,388,812 
Savings93,620  93,400  91,491  89,640  83,101 
Time502,879  521,072  502,128  511,037  535,642 
  Total interest-bearing2,993,570  2,887,459  2,865,804  2,918,253  3,007,555 
Total Bank of Texas6,232,668  5,981,643  5,987,694  6,009,511  6,144,564 
          
Bank of Albuquerque:         
  Demand663,353  659,793  612,117  593,117  627,979 
  Interest-bearing:         
Transaction552,393  551,884  558,523  623,677  590,571 
Savings55,647  53,532  54,136  53,683  49,963 
Time216,743  224,773  229,616  233,506  238,408 
  Total interest-bearing824,783  830,189  842,275  910,866  878,942 
Total Bank of Albuquerque1,488,136  1,489,982  1,454,392  1,503,983  1,506,921 
          
Bank of Arkansas:         
  Demand30,384  31,442  40,511  42,622  26,389 
  Interest-bearing:         
Transaction85,095  126,746  129,848  106,804  105,232 
Savings1,881  1,876  2,135  2,304  2,192 
Time14,045  14,434  14,876  15,067  16,696 
  Total interest-bearing101,021  143,056  146,859  124,175  124,120 
Total Bank of Arkansas131,405  174,498  187,370  166,797  150,509 
          
Colorado State Bank & Trust:         
  Demand633,714  540,300  577,617  601,778  576,000 
  Interest-bearing:         
Transaction657,629  628,807  626,343  610,510  616,679 
Savings35,223  34,776  35,651  37,801  32,866 
Time224,962  231,927  228,458  234,740  242,782 
  Total interest-bearing917,814  895,510  890,452  883,051  892,327 
Total Colorado State Bank & Trust1,551,528  1,435,810  1,468,069  1,484,829  1,468,327 
          
          
Bank of Arizona:         
  Demand334,701  335,740  366,866  342,854  366,755 
  Interest-bearing:         
Transaction274,846  174,010  154,457  180,254  305,099 
Savings3,343  4,105  3,638  3,858  2,973 
Time20,394  20,831  19,911  26,112  27,765 
  Total interest-bearing298,583  198,946  178,006  210,224  335,837 
Total Bank of Arizona633,284  534,686  544,872  553,078  702,592 
          
Mobank (Kansas City):         
  Demand457,080  462,410  496,473  514,278  508,418 
  Interest-bearing:         
Transaction382,066  361,391  346,996  406,105  513,176 
Savings13,574  12,513  13,603  13,424  12,679 
Time27,260  27,705  31,119  34,242  42,152 
  Total interest-bearing422,900  401,609  391,718  453,771  568,007 
Total Mobank (Kansas City)879,980  864,019  888,191  968,049  1,076,425 
          
TOTAL BOK FINANCIAL$22,061,305  $21,848,079  $22,316,474  $22,575,359  $22,748,095 
                    


 
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
 Three Months Ended
 Dec. 31, 2017 Sept. 30, 2017 June 30, 2017 March 31, 2017 Dec. 31, 2016
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents1.27% 1.29% 1.04% 0.82% 0.55%
Trading securities3.38% 3.47% 3.23% 3.87% 3.91%
Investment securities:         
  Taxable5.31% 5.31% 5.34% 5.44% 5.39%
  Tax-exempt2.69% 2.60% 2.51% 2.45% 2.33%
Total investment securities3.98% 3.86% 3.76% 3.70% 3.60%
Available for sale securities:         
  Taxable2.19% 2.16% 2.09% 2.02% 1.98%
  Tax-exempt5.41% 5.27% 6.09% 5.37% 5.27%
Total available for sale securities2.21% 2.17% 2.11% 2.05% 2.00%
Fair value option securities2.90% 2.97% 2.92% 2.27% 0.99%
Restricted equity securities5.87% 5.87% 5.95% 5.52% 5.45%
Residential mortgage loans held for sale3.72% 3.36% 3.92% 3.35% 3.31%
Loans4.29% 4.31% 4.03% 3.88% 3.67%
Allowance for loan losses         
Loans, net of allowance4.35% 4.38% 4.09% 3.94% 3.72%
Total tax-equivalent yield on earning assets3.49% 3.50% 3.30% 3.15% 2.98%
          
COST OF INTEREST-BEARING LIABILITIES         
Interest-bearing deposits:         
  Interest-bearing transaction0.35% 0.32% 0.26% 0.20% 0.16%
  Savings0.07% 0.08% 0.08% 0.08% 0.09%
  Time1.17% 1.16% 1.11% 1.09% 1.12%
Total interest-bearing deposits0.48% 0.45% 0.40% 0.35% 0.32%
Funds purchased0.90% 0.92% 0.61% 0.47% 0.28%
Repurchase agreements0.18% 0.15% 0.06% 0.02% 0.02%
Other borrowings1.36% 1.29% 1.09% 0.83% 0.61%
Subordinated debt5.55% 5.68% 5.55% 5.68% 5.51%
Total cost of interest-bearing liabilities0.79% 0.75% 0.63% 0.52% 0.44%
Tax-equivalent net interest revenue spread2.70% 2.75% 2.67% 2.63% 2.54%
Effect of noninterest-bearing funding sources and other0.27% 0.26% 0.22% 0.18% 0.15%
Tax-equivalent net interest margin2.97% 3.01% 2.89% 2.81% 2.69