Press Release

BOK Financial Reports Quarterly Earnings of $108 million or $1.50 Per Share

Record Annual Earnings of $446 million or $6.63 Per Share

Company Release - 1/30/2019 7:55 AM ET

TULSA, Okla., Jan. 30, 2019 (GLOBE NEWSWIRE) --

CEO Commentary

Steven G. Bradshaw, president, and chief executive officer, stated, “Another strong quarter was the capstone on a record year for BOK Financial. This quarter, and all throughout the year, we saw growth in net interest margin and net interest income, combined with strong, broad-based, loan growth. This year’s outstanding loan production, led by our specialty lines of business like Energy, Healthcare and Commercial Real Estate, fueled the largest annual revenues in the history of the company. While we benefited from a healthy economy and stable credit environment in 2018, the key driver for our expanding earnings leverage was our success at maintaining expense discipline throughout the year. I couldn’t be more proud of the hard work and dedication of every single one of our employees.”

Bradshaw continued, “2018 also brought the largest acquisition in company history, CoBiz Financial. Integration is well underway, and we are already capitalizing on our opportunities in Colorado and Arizona - two important growth markets. I am excited for what CoBiz adds to our organization, and I am as confident in our business prospects today as I have been in years. Though there are some market headwinds that many will point to as potential roadblocks for the financial industry, I have full faith in our diversified approach to driving shareholder value. We believe we are well-positioned to continue to grow revenues and energize earnings growth in 2019.”

Fourth Quarter 2018 Financial Highlights

  • Net income was $108.5 million or $1.50 per diluted share for the fourth quarter of 2018 and $117.3 million and $1.79 per diluted share for the third quarter of 2018. The fourth quarter included a 15 cent per share reduction as a result of CoBiz closing and integrations costs. The third quarter included an 18 cent per share addition from a client asset management fee. The Company also issued 7.2 million shares in the fourth quarter to fund the CoBiz Financial acquisition.
  • Net interest revenue totaled $285.7 million, up $44.8 million. CoBiz added $43.1 million. Net interest margin increased to 3.40 percent from 3.21 percent.
  • Fees and commissions revenue totaled $160.1 million, a decrease of $6.1 million or 4 percent.
  • Operating expense increased $32.0 million or 13 percent to $284.6 million, including $14.5 million of closing and integration costs. CoBiz added $29.7 million of operating costs.
  • A $9.0 million provision for credit losses was recorded in the fourth quarter of 2018. The combined allowance for credit losses totaled $209 million or 0.97 percent of outstanding loans and 1.12 percent of outstanding loans, excluding acquired loans.
  • Period-end loans increased $3.3 billion. Excluding $2.9 billion of acquired loans, period-end loans increased $393 million or 2 percent.
  • The Company repurchased 525,000 shares at an average price of $85.82 per share.

Fourth Quarter 2018 Business Segment Highlights

Commercial Banking

  • Contributed $84.6 million to net income, consistent with the prior quarter. Increased net interest revenue was offset by increased net charge-offs.
  • Net interest revenue was $148 million, an increase of $3.2 million.
  • Average loans increased $307 million or 2 percent.

Consumer Banking

  • Contributed $2.7 million to net income, a decrease of $5.6 million compared to the third quarter. Interest rate volatility affected the effectiveness of our mortgage servicing rights hedging strategy.
  • Net interest revenue increased $2.3 million or 6 percent.
  • Fees and commissions revenue decreased $1.2 million or 3 percent while operating expenses decreased $1.9 million or 4 percent.

Wealth Management

  • Contributed $17.5 million to net income, a decrease of $11.6 million compared to the prior quarter. The third quarter included a $15.4 million fee earned on the sale of client assets.
  • Net interest revenue remained consistent compared to the prior quarter at $29.3 million.
  • Average loans grew $9.0 million or 1 percent.
  • Assets under management or administration were $76.3 billion at December 31, 2018 compared to $77.6 billion at September 30, 2018. Fiduciary assets totaled $44.8 billion at December 31, 2018 and $45.6 billion at September 30, 2018.

Net Interest Revenue

Net interest revenue was $285.7 million for the fourth quarter of 2018, a $44.8 million increase over the third quarter of 2018.  The CoBiz acquisition added $43.1 million to net interest revenue, including $6.4 million of net purchase accounting discount accretion.

Net interest margin was 3.40 percent for the fourth quarter of 2018, up 19 basis points over the third quarter of 2018. The yield on average earning assets was 4.33 percent, a 29 basis point increase. The yield on the loan portfolio was 5.09 percent, up 29 basis points including 12 basis points from net purchase accounting discount accretion. The remaining increase is due primarily to an increase in short-term market interest rates related to the Federal Reserve's 25 basis point rate increase in September. The yield on the available for sale securities portfolio increased 14 basis points to 2.51 percent. The yield on the trading securities portfolio was up 12 basis points.

Funding costs were 1.42 percent, up 17 basis points. The cost of interest-bearing deposits increased 10 basis points to 0.87 percent. The cost of other borrowed funds was up 29 basis points to 2.33 percent. The benefit to net interest margin from assets funded by non-interest liabilities increased to 49 basis points from 42 basis points in the third quarter of 2018.

Average earning assets increased $3.8 billion compared to the third quarter of 2018, primarily related to the CoBiz acquisition. Average loan balances were up $3.4 billion. Trading securities balances increased $167 million and interest-bearing cash and cash equivalents balances decreased $126 million. Available for sale securities increased $576 million. Average interest-bearing deposit balances increased $1.8 billion compared to the third quarter of 2018 and borrowed funds increased $608 million.

Fees and Commissions Revenue

Fees and commissions revenue totaled $160.1 million for the fourth quarter of 2018, a decrease of $6.1 million due largely to a $15.4 million fee earned on the sale of client assets in the third quarter. CoBiz added $8.5 million to fees and commissions revenue in the fourth quarter of 2018. Excluding these items, fees and commissions revenue was consistent with the prior quarter.

Brokerage and trading revenue increased $1.6 million due primarily to customer risk management products.

Mortgage banking revenue decreased $1.7 million. Rising interest rates combined with seasonal production reductions and increased market competition decreased mortgage production volume by $137 million. Mortgage gain on sale margins decreased 11 basis points.

Operating Expense

Total operating expense was $284.6 million for the fourth quarter of 2018, an increase of $32.0 million compared to the third quarter of 2018. CoBiz closing and integration costs were $14.5 million in the fourth quarter of 2018. The following discussion excludes the impact of these costs.

Personnel expense increased $11.5 million including $19.3 million due to the addition of CoBiz operations. Incentive compensation expense decreased $10.8 million mainly due to changes in vesting assumptions related to the Company's earnings per share growth relative to a defined peer group.

Non-personnel expense increased $6.8 million. The fourth quarter included $10.4 million related to CoBiz operations. Excluding this impact, non-personnel expense decreased $3.6 million or 3 percent. Data processing and communications expense decreased $4.1 million, primarily due to impairment of a software license in the third quarter. Insurance expense decreased $2.0 million due to the elimination of a large bank deposit insurance surcharge assessed by the FDIC. The fourth quarter included a $2.8 million contribution to the BOKF Foundation.

Income Taxes

The effective tax rate for the fourth quarter is less than 16 percent, nearly 7 percentage points lower than usual. The 2017 tax returns were finalized in the fourth quarter. This resolved several uncertainties caused by last year's Tax Cuts and Jobs Act. Resolution of these uncertainties and other routine adjustments reduced tax expense for the quarter by $8.6 million. This is a single-quarter impact and the tax rate will revert to a 22-23 percent level.

Loans, Deposits and Capital

Loans

Outstanding loans were $21.7 billion at December 31, 2018, up $3.3 billion over September 30, 2018. Excluding $2.9 billion of loans, net of fair value adjustments, added by the CoBiz acquisition, loans were up $393 million or 2 percent. Loan growth continued to be focused in commercial and commercial real estate. The fluctuation discussion following excludes acquired loans.

Outstanding commercial loan balances grew by $230 million or 2 percent over September 30, 2018. Energy loan balances were up $275 million, consistent with our ongoing support and commitment to the oil and gas industry. Other commercial and industrial loans were up $125 million. Service sector loans increased $50 million and healthcare sector loans increased by $47 million. This growth was partially offset by a $182 million decrease in wholesale/retail sector loans and an $82 million decrease in manufacturing sector loans.

Commercial real estate loan balances continued to grow, up $122 million or 3 percent over September 30, 2018. Loans secured by office buildings increased $79 million and loans secured by multifamily residential properties increased $40 million.

Deposits

Period-end deposits totaled $25.3 billion at December 31, 2018, a $3.6 billion increase compared to September 30, 2018, including $3.3 billion related to CoBiz. Demand deposit balances increased $1.4 billion, interest-bearing transaction account balances increased $2.2 billion and time deposit balances increased by $38 million.

Capital

The company's common equity Tier 1 capital ratio was 10.92 percent at December 31, 2018. In addition, the company's Tier 1 capital ratio was 10.92 percent, total capital ratio was 12.50 percent, and leverage ratio was 8.96 percent at December 31, 2018. At September 30, 2018, the company's common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.37 percent, and leverage ratio was 9.90 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.82 percent at December 31, 2018 and 9.55 percent at September 30, 2018. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

Credit Quality

Nonperforming assets totaled $267 million or 1.23 percent of outstanding loans and repossessed assets at December 31, 2018, compared to $261 million or 1.42 percent at September 30, 2018. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $174 million or 0.81 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at December 31, 2018, compared to $170 million or 0.93 percent at September 30, 2018. The CoBiz acquisition added $18 million to nonperforming assets during the fourth quarter, net of fair value adjustments.

Nonaccruing loans were $163 million or 0.75 percent of outstanding loans at December 31, 2018. Nonaccruing commercial loans totaled $100 million or 0.73 percent of outstanding commercial loans.  Nonaccruing commercial real estate loans totaled $22 million or 0.45 percent of outstanding commercial real estate loans. Nonaccruing residential mortgage loans totaled $42 million or 1.86 percent of outstanding residential mortgage loans.

Excluding CoBiz, nonaccruing loans decreased $2.2 million from September 30, 2018. Wholesale/retail sector loans decreased $8.6 million, energy loans decreased $7.5 million and healthcare sector loans decreased $4.6 million. These decreases were partially offset by a $20 million increase in nonaccruing retail sector loans. New nonaccruing loans identified in the fourth quarter totaled $44 million, offset by $31 million in payments received and $15 million in charge-offs.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $215 million at December 31, compared to $176 million at September 30. The increase was primarily due to the addition of $65 million of acquired potential problem loans. Potential problem loans from the legacy BOKF portfolio decreased $26 million.

Net charge-offs were $12.3 million or 0.23 percent of average loans on an annualized basis for fourth quarter of 2018, compared to $9.0 million or 0.20 percent of average loans on an annualized basis for the third quarter of 2018. Net charge-offs were 0.18 percent of average loans over the last four quarters. Net charge-offs for the fourth quarter were primarily related to a single wholesale/retail sector borrower and a single energy production borrower, both of which had previously been identified as impaired and appropriately reserved. Gross charge-offs were $14.5 million for the fourth quarter compared to $11.1 million for the previous quarter. Recoveries totaled $2.2 million for the fourth quarter of 2018 and $2.1 million for the third quarter of 2018.

Based on an evaluation of all credit factors, including overall loan portfolio growth, changes in nonaccruing and potential problem loans and net charge-offs, the company determined that a $9.0 million provision for credit losses was appropriate for the fourth quarter of 2018. The company recorded $4.0 million provision for credit losses in the third quarter of 2018.

The combined allowance for credit losses totaled $209 million or 0.97 percent of outstanding loans and 134 percent of nonaccruing loans at December 31, excluding residential mortgage loans guaranteed by U.S. government agencies. Excluding loans from the CoBiz acquisition, which are measured at acquisition-date fair value, the combined allowance for loan losses was 1.12 percent of outstanding loans and 146 percent of nonaccruing loans at December 31. The allowance for loan losses was $207 million and the accrual for off-balance sheet credit losses was $1.8 million. At September 30, the combined allowance for credit losses was $213 million or 1.16 percent of outstanding loans and 146 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $211 million and the accrual for off-balance sheet credit losses was $2.0 million.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $8.9 billion at December 31, 2018, a $785 million increase compared to September 30, 2018. At December 31, 2018, the available for sale securities portfolio consisted primarily of $5.8 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.0 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2018, the available for sale securities portfolio had a net unrealized loss of $95 million compared to a $217 million net unrealized loss at September 30, 2018.

Trading securities increased $344 million to $2.0 billion during the fourth quarter of 2018 as a result of the company providing continued liquidity to its core client base of mortgage originators. The company holds an inventory of trading securities in support of sales to a variety of customers, including banks, corporations, insurance companies, money managers, and others.

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.

The net economic cost of the changes in fair value of mortgage servicing rights and related economic hedges was $11.7 million during the fourth quarter of 2018,  including a $24.2 million decrease in the fair value of mortgage servicing rights, a $11.9 million increase in the fair value of securities and derivative contracts held as an economic hedge, and $695 thousand of related net interest revenue largely driven by a 60 basis point drop in the primary mortgage interest rate in the last two months of the fourth quarter.

The fair value of mortgage servicing rights increased by $6.0 million during the third quarter of 2018.  The fair value of securities and interest rate derivative contracts held as an economic hedge of mortgage servicing rights decreased by $7.2 million. Related net interest revenue was $1.1 million during the third quarter of 2018.

Commercial Banking

Net income for Commercial Banking was $84.6 million for the fourth quarter of 2018, consistent with the third quarter of 2018. Increased net interest revenue was offset by increased net charge-offs.

Average loan balances increased $307 million or 2 percent, largely due to increases in energy and commercial real estate loans. Average customer deposits were $8.4 billion, a decrease of $240 million or 3 percent, mostly due to the energy and real estate sectors. The fourth quarter of 2018 saw a shift in the deposit mix with demand deposit balances declining $330 million and interest-bearing transaction deposits increasing $95 million.

Both fees and commissions revenue and operating expenses were consistent with the third quarter of 2018. There has been continued success in leading syndicated loan transactions, which has led to a record year for syndication revenue.

Consumer Banking

Net income from Consumer Banking was $2.7 million in the fourth quarter of 2018, a decrease of $5.6 million or 67 percent. The net economic cost of the changes in fair value of mortgage servicing rights and related economic hedges was $11.7 million for the fourth quarter of 2018 compared to $156 thousand for the third quarter of 2018.

Net interest revenue from Consumer Banking activities increased $2.3 million. Average loans increased $26 million or 2 percent over the third quarter of 2018. Average deposits decreased $38 million or 1 percent due to a seasonal reduction in mortgage escrow accounts related to annual property tax payments.

Revenues from mortgage banking activities decreased $1.6 million from the prior quarter due to rising interest rates, increased market competition and seasonal production decreases. Mortgage production volume declined 21 percent compared to the prior quarter. Operating expenses decreased $1.9 million as expenses are reduced to align with lower mortgage production.

Wealth Management

Net income for Wealth Management decreased $11.6 million to $17.5 million during the fourth quarter of 2018. This decrease included an after tax benefit of $11.5 million as a result of a fee earned on the sale of client assets in the third quarter. Excluding this fee, fiduciary and asset management fees produced relatively consistent results compared to the third quarter of 2018.

Average loans increased $9 million or 1 percent to $1.4 billion. Average deposits were stable at $5.5 billion. Assets under management or administration were $76.3 billion at December 31, 2018 compared to $77.6 billion at September 30, 2018. Fiduciary assets totaled $44.8 billion at December 31, 2018 and $45.6 billion at September 30, 2018.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, January 30, 2019 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 # 13686207.

About BOK Financial Corporation

BOK Financial Corporation is a $38 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, CoBiz Bank, 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, 2018 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial, the financial services industry and the economy generally. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” “will,”  “intends,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that BOK Financial's acquisitions, including its latest acquisition of CoBiz Financial, Inc., and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. There may also be difficulties and delays in integrating CoBiz Financial Inc.'s business or fully realizing cost savings and other benefits including, but not limited to, business disruption and customer acceptance of BOK Financial Corporation's products and services. 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, 2018 Sept. 30, 2018 Dec. 31, 2017
ASSETS     
Cash and due from banks$741,749  $815,458  $602,510 
Interest-bearing cash and cash equivalents401,675  430,789  1,714,544 
Trading securities1,956,923  1,613,400  462,676 
Investment securities355,187  374,039  461,793 
Available for sale securities8,857,120  8,072,014  8,321,578 
Fair value option securities283,235  452,150  755,054 
Restricted equity securities344,447  311,189  320,189 
Residential mortgage loans held for sale149,221  175,866  221,378 
Loans:     
Commercial13,636,078  11,576,101  10,733,975 
Commercial real estate4,764,813  3,804,675  3,479,987 
Residential mortgage2,230,033  1,971,742  1,973,686 
Personal1,025,806  996,941  965,776 
Total loans21,656,730  18,349,459  17,153,424 
Allowance for loan losses(207,457) (210,569) (230,682)
Loans, net of allowance21,449,273  18,138,890  16,922,742 
Premises and equipment, net330,033  327,129  317,335 
Receivables204,960  277,738  178,800 
Goodwill1,049,263  447,430  447,430 
Intangible assets, net134,849  33,370  28,658 
Mortgage servicing rights259,254  284,673  252,867 
Real estate and other repossessed assets, net17,487  24,515  28,437 
Derivative contracts, net320,929  349,481  220,502 
Cash surrender value of bank-owned life insurance381,608  323,628  316,498 
Receivable on unsettled securities sales336,400  421,313  340,077 
Other assets446,891  416,792  359,092 
TOTAL ASSETS$38,020,504  $33,289,864  $32,272,160 
      
LIABILITIES AND EQUITY     
Deposits:     
Demand$10,414,592  $9,063,623  $9,243,338 
Interest-bearing transaction12,206,576  9,990,219  10,250,393 
Savings529,215  502,601  469,158 
Time2,113,380  2,075,846  2,098,416 
Total deposits25,263,763  21,632,289  22,061,305 
Funds purchased and repurchase agreements1,018,411  790,741  574,963 
Other borrowings6,124,390  6,025,483  5,134,897 
Subordinated debentures275,913  144,707  144,677 
Accrued interest, taxes and expense192,826  231,592  164,895 
Due on unsettled securities purchases156,370  414,283  338,745 
Derivative contracts, net362,306  252,387  171,963 
Other liabilities183,480  172,622  162,381 
TOTAL LIABILITIES33,577,459  29,664,104  28,753,826 
Shareholders' equity:     
Capital, surplus and retained earnings4,504,694  3,777,394  3,531,541 
Accumulated other comprehensive loss(72,585) (162,362) (36,174)
TOTAL SHAREHOLDERS' EQUITY4,432,109  3,615,032  3,495,367 
Non-controlling interests10,936  10,728  22,967 
TOTAL EQUITY4,443,045  3,625,760  3,518,334 
TOTAL LIABILITIES AND EQUITY$38,020,504  $33,289,864  $32,272,160 
            


AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Three Months Ended
 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
ASSETS         
Interest-bearing cash and cash equivalents$563,132  $688,872  $1,673,387  $2,059,517  $1,976,395 
Trading securities1,929,601  1,762,794  1,482,302  933,404  560,321 
Investment securities364,737  379,566  399,088  441,207  462,869 
Available for sale securities8,704,963  8,129,214  8,163,142  8,236,938  8,435,916 
Fair value option securities277,575  469,398  487,192  626,251  792,647 
Restricted equity securities362,729  328,842  348,546  349,176  337,673 
Residential mortgage loans held for sale179,553  207,488  218,600  199,380  257,927 
Loans:         
Commercial13,587,344  11,484,200  11,189,899  10,871,569  10,751,235 
Commercial real estate4,747,784  3,774,470  3,660,166  3,491,335  3,485,583 
Residential mortgage2,222,063  1,956,089  1,915,015  1,937,198  1,976,860 
Personal1,022,140  989,026  986,162  961,379  967,329 
Total loans21,579,331  18,203,785  17,751,242  17,261,481  17,181,007 
Allowance for loan losses(209,613) (214,160) (222,856) (228,996) (246,143)
Total loans, net21,369,718  17,989,625  17,528,386  17,032,485  16,934,864 
Total earning assets33,752,008  29,955,799  30,300,643  29,878,358  29,758,612 
Cash and due from banks731,700  578,905  571,333  564,585  576,737 
Derivative contracts, net299,319  294,126  318,375  278,694  292,961 
Cash surrender value of bank-owned life insurance379,893  322,038  319,507  317,334  315,034 
Receivable on unsettled securities sales799,548  768,785  618,240  998,803  821,275 
Other assets2,423,275  1,776,164  1,777,937  1,687,178  1,687,496 
TOTAL ASSETS$38,385,743  $33,695,817  $33,906,035  $33,724,952  $33,452,115 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$10,648,683  $9,325,002  $9,223,327  $9,151,272  $9,417,351 
Interest-bearing transaction11,773,651  10,010,031  10,189,354  10,344,469  10,142,744 
Savings526,275  503,821  503,671  480,110  466,496 
Time2,146,786  2,097,441  2,138,880  2,151,044  2,134,469 
Total deposits25,095,395  21,936,295  22,055,232  22,126,895  22,161,060 
Funds purchased and repurchase agreements1,205,568  1,193,583  593,250  532,412  488,330 
Other borrowings6,361,141  5,765,440  6,497,020  6,326,967  6,209,903 
Subordinated debentures276,378  144,702  144,692  144,682  144,673 
Derivative contracts, net268,848  185,029  235,543  223,373  288,408 
Due on unsettled securities purchases493,887  544,263  527,804  558,898  332,155 
Other liabilities341,438  311,605  340,322  333,151  312,196 
TOTAL LIABILITIES34,042,655  30,080,917  30,393,863  30,246,378  29,936,725 
Total equity4,343,088  3,614,900  3,512,172  3,478,574  3,515,390 
TOTAL LIABILITIES AND EQUITY$38,385,743  $33,695,817  $33,906,035  $33,724,952  $33,452,115 
                    


STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 Three Months Ended Year Ended
 Dec. 31, Dec. 31,
 2018 2017 2018 2017
        
Interest revenue$365,592  $255,767  $1,228,426  $972,751 
Interest expense79,906  38,904  243,559  131,050 
Net interest revenue285,686  216,863  984,867  841,701 
Provision for credit losses9,000  (7,000) 8,000  (7,000)
Net interest revenue after provision for credit losses276,686  223,863  976,867  848,701 
Other operating revenue:       
Brokerage and trading revenue28,101  33,045  108,323  131,601 
Transaction card revenue120,664  20,028  84,025  81,143 
Fiduciary and asset management revenue43,665  41,773  184,703  162,889 
Deposit service charges and fees29,393  27,679  112,153  112,079 
Mortgage banking revenue21,880  24,362  97,787  104,719 
Other revenue16,430  11,013  56,651  49,959 
Total fees and commissions160,133  157,900  643,642  642,390 
Other gains (losses), net(8,331) 1,301  (2,731) 11,213 
Gain (loss) on derivatives, net11,167  (3,045) (422) 779 
Loss on fair value option securities, net(282) (4,238) (25,572) (2,733)
Change in fair value of mortgage servicing rights(24,233) 5,898  4,668  172 
Gain (loss) on available for sale securities, net(1,999) (488) (2,801) 4,428 
Total other operating revenue136,455  157,328  616,784  656,249 
Other operating expense:       
Personnel160,706  145,329  583,131  573,408 
Business promotion9,207  7,317  30,523  28,877 
Charitable contributions to BOKF Foundation2,846  2,000  2,846  2,000 
Professional fees and services20,712  15,344  59,099  51,067 
Net occupancy and equipment27,780  22,403  97,981  86,477 
Insurance4,248  6,555  23,318  19,653 
Data processing and communications127,575  28,903  114,796  108,125 
Printing, postage and supplies5,232  3,781  17,169  15,689 
Net losses and operating expenses of repossessed assets2,581  340  17,052  9,687 
Amortization of intangible assets5,331  1,430  9,620  6,779 
Mortgage banking costs11,518  14,331  46,298  52,856 
Other expense6,907  6,746  26,333  32,054 
Total other operating expense284,643  254,479  1,028,166  986,672 
        
Net income before taxes128,498  126,712  565,485  518,278 
Federal and state income taxes20,121  54,347  119,061  182,593 
        
Net income108,377  72,365  446,424  335,685 
Net income (loss) attributable to non-controlling interests(79) (127) 778  1,041 
Net income attributable to BOK Financial Corporation shareholders$108,456  $72,492  $445,646  $334,644 
        
Average shares outstanding:       
Basic71,808,029  64,793,005  66,628,640  64,745,364 
Diluted71,833,334  64,843,179  66,662,273  64,806,284 
        
Net income per share:       
Basic$1.50  $1.11  $6.63  $5.11 
Diluted$1.50  $1.11  $6.63  $5.11 
                

Non-GAAP measure to net interchange charges for periods prior to 2018 between transaction card revenue and data processing and communications expense. This measure has no effect on net income or earnings per share.

FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 Three Months Ended
 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
Capital:         
Period-end shareholders' equity$4,432,109  $3,615,032  $3,553,431  $3,495,029  $3,495,367 
Risk weighted assets$30,742,095  $27,398,072  $27,004,559  $26,025,660  $25,733,711 
Risk-based capital ratios:         
Common equity tier 110.92% 12.07% 11.92% 12.06% 12.05%
Tier 110.92% 12.07% 11.92% 12.06% 12.05%
Total capital12.50% 13.37% 13.26% 13.49% 13.54%
Leverage ratio8.96% 9.90% 9.57% 9.40% 9.31%
Tangible common equity ratio18.82% 9.55% 9.21% 9.18% 9.50%
          
Common stock:         
Book value per share$61.45  $55.25  $54.30  $53.39  $53.45 
Tangible book value per share45.03  47.90  46.95  46.10  46.17 
Market value per share:         
High$98.29  $105.22  $106.65  $107.00  $93.97 
Low$69.96  $92.40  $92.39  $89.82  $79.67 
Cash dividends paid$35,977  $32,591  $29,340  $29,342  $29,328 
Dividend payout ratio33.17% 27.79% 25.65% 27.80% 40.46%
Shares outstanding, net72,122,932  65,434,258  65,439,090  65,459,505  65,394,937 
Stock buy-back program:         
Shares repurchased525,000    8,257  82,583  80,000 
Amount$45,057  $  $824  $7,584  $7,403 
Average price per share$85.82  $  $99.84  $91.83  $92.54 
          
Performance ratios (quarter annualized):
Return on average assets1.12% 1.38% 1.35% 1.27% 0.86%
Return on average equity9.93% 12.95% 13.14% 12.39% 8.24%
Net interest margin3.40% 3.21% 3.17% 2.99% 2.97%
Efficiency ratio363.24% 61.59% 61.76% 64.93% 66.07%
          
Reconciliation of non-GAAP measures:
1  Tangible common equity ratio:         
Total shareholders' equity$4,432,109  $3,615,032  $3,553,431  $3,495,029  $3,495,367 
Less: Goodwill and intangible assets, net1,184,112  480,800  481,366  477,088  476,088 
Tangible common equity$3,247,997  $3,134,232  $3,072,065  $3,017,941  $3,019,279 
          
Total assets$38,020,504  $33,289,864  $33,833,107  $33,361,492  $32,272,160 
Less: Goodwill and intangible assets, net1,184,112  480,800  481,366  477,088  476,088 
Tangible assets$36,836,392  $32,809,064  $33,351,741  $32,884,404  $31,796,072 
          
Tangible common equity ratio8.82% 9.55% 9.21% 9.18% 9.50%
               


FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 Three Months Ended
 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
Other data:         
Fiduciary assets$44,841,339  $45,560,107  $46,531,900  $46,648,290  $48,761,477 
Tax equivalent interest$3,069  $1,894  $1,983  $2,010  $4,131 
Net unrealized loss on available for sale securities$(95,271) $(216,793) $(180,602) $(148,247) $(47,497)
                    

Mortgage banking:
         
Mortgage production revenue$5,073  $7,250  $9,915  $9,452  $7,786 
          
Mortgage loans funded for sale$497,353  $651,076  $773,910  $664,958  $840,080 
Add: current period-end outstanding commitments160,848  197,752  251,231  298,318  222,919 
Less: prior period end outstanding commitments197,752  251,231  298,318  222,919  334,337 
Total mortgage production volume$460,449  $597,597  $726,823  $740,357  $728,662 
          
Mortgage loan refinances to mortgage loans funded for sale23% 23% 22% 42% 47%
Gain on sale margin1.10% 1.21% 1.36% 1.28% 1.07%
          
Mortgage servicing revenue$16,807  $16,286  $16,431  $16,573  $16,576 
Average outstanding principal balance of mortgage loans serviced for others21,706,541  21,895,041  21,986,065  22,027,726  22,054,877 
Average mortgage servicing revenue rates0.31% 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$12,162  $(2,843) $(3,070) $(5,698) $(3,057)
Loss on fair value option securities, net(282) (4,385) (3,341) (17,564) (4,238)
Gain (loss) on economic hedge of mortgage servicing rights11,880  (7,228) (6,411) (23,262) (7,295)
Gain (loss) on changes in fair value of mortgage servicing rights(24,233) 5,972  1,723  21,206  5,898 
Loss on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue(12,353) (1,256) (4,688) (2,056) (1,397)
Net interest revenue on fair value option securities2695  1,100  1,203  1,800  2,656 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$(11,658) $(156) $(3,485) $(256) $1,259 
                    

Actual interest earned on fair value option securities less internal transfer-priced cost of funds.
Periods prior to 2018 are shown on a comparable basis to net interchange charges between transaction card revenue and data processing and communications expense.

QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
 Three Months Ended
 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
          
Interest revenue$365,592  $303,247  $294,180  $265,407  $255,767 
Interest expense79,906  62,364  55,618  45,671  38,904 
Net interest revenue285,686  240,883  238,562  219,736  216,863 
Provision for credit losses9,000  4,000    (5,000) (7,000)
Net interest revenue after provision for credit losses276,686  236,883  238,562  224,736  223,863 
Other operating revenue:         
Brokerage and trading revenue28,101  23,086  26,488  30,648  33,045 
Transaction card revenue120,664  21,396  20,975  20,990  20,028 
Fiduciary and asset management revenue43,665  57,514  41,692  41,832  41,773 
Deposit service charges and fees29,393  27,765  27,834  27,161  27,679 
Mortgage banking revenue21,880  23,536  26,346  26,025  24,362 
Other revenue16,430  12,968  13,996  13,257  11,013 
Total fees and commissions160,133  166,265  157,331  159,913  157,900 
Other gains (losses), net(8,331) 2,686  4,505  (1,591) 1,301 
Gain (loss) on derivatives, net11,167  (2,847) (3,057) (5,685) (3,045)
Loss on fair value option securities, net(282) (4,385) (3,341) (17,564) (4,238)
Change in fair value of mortgage servicing rights(24,233) 5,972  1,723  21,206  5,898 
Gain (loss) on available for sale securities, net(1,999) 250  (762) (290) (488)
Total other operating revenue136,455  167,941  156,399  155,989  157,328 
Other operating expense:         
Personnel160,706  143,531  138,947  139,947  145,329 
Business promotion9,207  7,620  7,686  6,010  7,317 
Charitable contributions to BOKF Foundation2,846        2,000 
Professional fees and services20,712  13,209  14,978  10,200  15,344 
Net occupancy and equipment27,780  23,394  22,761  24,046  22,403 
Insurance4,248  6,232  6,245  6,593  6,555 
Data processing and communications127,575  31,665  27,739  27,817  28,903 
Printing, postage and supplies5,232  3,837  4,011  4,089  3,781 
Net losses (gains) and operating expenses of repossessed assets2,581  4,044  2,722  7,705  340 
Amortization of intangible assets5,331  1,603  1,386  1,300  1,430 
Mortgage banking costs11,518  11,741  12,890  10,149  14,331 
Other expense6,907  5,741  7,111  6,574  6,746 
Total other operating expense284,643  252,617  246,476  244,430  254,479 
Net income before taxes128,498  152,207  148,485  136,295  126,712 
Federal and state income taxes20,121  34,662  33,330  30,948  54,347 
Net income108,377  117,545  115,155  105,347  72,365 
Net income (loss) attributable to non-controlling interests(79) 289  783  (215) (127)
Net income attributable to BOK Financial Corporation shareholders$108,456  $117,256  $114,372  $105,562  $72,492 
          
Average shares outstanding:         
Basic71,808,029  64,901,095  64,901,975  64,847,334  64,793,005 
Diluted71,833,334  64,934,351  64,937,226  64,888,033  64,843,179 
Net income per share:         
Basic$1.50  $1.79  $1.75  $1.61  $1.11 
Diluted$1.50  $1.79  $1.75  $1.61  $1.11 
                    

Non-GAAP measure to net interchange charges for periods prior to 2018 between transaction card revenue and data processing and communications expense. This measure has no effect on net income or earnings per share.

LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

  Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
Commercial:          
Energy $3,590,333  $3,294,867  $3,147,219  $2,969,618  $2,930,156 
Services 3,252,146  2,597,711  2,510,445  2,481,754  2,522,025 
Healthcare 2,733,537  2,370,455  2,285,732  2,289,779  2,243,487 
Wholesale/retail 1,621,158  1,650,729  1,699,554  1,531,576  1,471,256 
Public finance 876,336  491,597  507,629  522,274  541,775 
Manufacturing 730,521  660,582  647,816  559,695  496,774 
Other commercial and industrial 832,047  510,160  550,644  564,971  528,502 
Total commercial 13,636,078  11,576,101  11,349,039  10,919,667  10,733,975 
           
Commercial real estate:          
Multifamily 1,288,065  1,120,166  1,056,984  1,008,903  980,017 
Office 1,072,920  824,829  820,127  737,144  831,770 
Retail 919,082  759,423  768,024  750,396  691,532 
Industrial 778,106  696,774  653,384  613,608  573,014 
Residential construction and land development 148,584  101,872  118,999  117,458  117,245 
Other commercial real estate 558,056  301,611  294,702  279,273  286,409 
Total commercial real estate 4,764,813  3,804,675  3,712,220  3,506,782  3,479,987 
           
Residential mortgage:          
Permanent mortgage 1,320,165  1,094,926  1,068,412  1,047,785  1,043,435 
Permanent mortgages guaranteed by U.S. government agencies 190,866  180,718  169,653  177,880  197,506 
Home equity 719,002  696,098  704,185  720,104  732,745 
Total residential mortgage 2,230,033  1,971,742  1,942,250  1,945,769  1,973,686 
           
Personal 1,025,806  996,941  1,000,187  965,632  965,776 
           
Total $21,656,730  $18,349,459  $18,003,696  $17,337,850  $17,153,424 
                     

LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
          
Oklahoma:         
Commercial$3,491,117  $3,609,109  $3,465,407  $3,265,013  $3,238,720 
Commercial real estate700,756  651,315  662,665  668,031  682,037 
Residential mortgage1,440,566  1,429,843  1,403,658  1,419,281  1,435,432 
Personal375,543  376,201  362,846  353,128  342,212 
Total Oklahoma6,007,982  6,066,468  5,894,576  5,705,453  5,698,401 
          
Texas:         
Commercial5,438,133  5,115,646  4,922,451  4,715,841  4,520,401 
Commercial real estate1,341,783  1,354,679  1,336,101  1,254,421  1,261,864 
Residential mortgage266,805  253,265  243,400  229,761  233,675 
Personal394,743  381,452  394,021  363,608  375,084 
Total Texas7,441,464  7,105,042  6,895,973  6,563,631  6,391,024 
          
New Mexico:         
Commercial340,489  325,048  305,167  315,701  343,296 
Commercial real estate383,670  392,494  386,878  348,485  341,282 
Residential mortgage87,346  88,110  90,581  93,490  98,018 
Personal10,662  11,659  11,107  11,667  11,721 
Total New Mexico822,167  817,311  793,733  769,343  794,317 
          
Arkansas:         
Commercial111,338  102,237  93,217  94,430  95,644 
Commercial real estate141,898  106,701  90,807  88,700  87,393 
Residential mortgage7,537  7,278  6,927  7,033  6,596 
Personal11,955  12,126  12,331  9,916  9,992 
Total Arkansas272,728  228,342  203,282  200,079  199,625 
          
Colorado:         
Commercial2,275,069  1,132,500  1,165,721  1,180,655  1,130,714 
Commercial real estate963,575  354,543  267,065  210,801  174,201 
Residential mortgage251,849  68,694  64,839  64,530  63,350 
Personal72,916  56,999  60,504  63,118  63,115 
Total Colorado3,563,409  1,612,736  1,558,129  1,519,104  1,431,380 
          
Arizona:         
Commercial1,320,139  621,658  681,852  624,106  687,792 
Commercial real estate889,903  666,562  710,784  672,319  660,094 
Residential mortgage97,959  44,659  47,010  39,227  41,771 
Personal68,546  67,280  65,541  57,023  57,140 
Total Arizona2,376,547  1,400,159  1,505,187  1,392,675  1,446,797 
          
Kansas/Missouri:         
Commercial659,793  669,903  715,224  723,921  717,408 
Commercial real estate343,228  278,381  257,920  264,025  273,116 
Residential mortgage77,971  79,893  85,835  92,447  94,844 
Personal91,441  91,224  93,837  107,172  106,512 
Total Kansas/Missouri1,172,433  1,119,401  1,152,816  1,187,565  1,191,880 
          
TOTAL BOK FINANCIAL$21,656,730  $18,349,459  $18,003,696  $17,337,850  $17,153,424 
                    

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, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
Oklahoma:         
Demand$3,610,593  $3,564,307  $3,867,933  $4,201,842  $3,885,008 
Interest-bearing:         
Transaction6,445,831  6,010,972  5,968,460  6,051,302  5,901,293 
Savings288,210  288,080  289,202  289,351  265,870 
Time1,118,643  1,128,810  1,207,471  1,203,534  1,092,133 
Total interest-bearing7,852,684  7,427,862  7,465,133  7,544,187  7,259,296 
Total Oklahoma11,463,277  10,992,169  11,333,066  11,746,029  11,144,304 
          
Texas:         
Demand3,289,659  3,353,248  3,317,656  3,015,869  3,239,098 
Interest-bearing:         
Transaction2,294,740  2,181,382  2,168,488  2,208,480  2,397,071 
Savings99,624  97,909  97,809  98,852  93,620 
Time423,880  453,119  445,500  475,967  502,879 
Total interest-bearing2,818,244  2,732,410  2,711,797  2,783,299  2,993,570 
Total Texas6,107,903  6,085,658  6,029,453  5,799,168  6,232,668 
          
New Mexico:         
Demand691,692  722,188  770,974  695,060  663,353 
Interest-bearing:         
Transaction571,347  593,760  586,593  555,414  552,393 
Savings58,194  57,794  59,415  60,596  55,647 
Time224,515  221,513  212,689  216,306  216,743 
Total interest-bearing854,056  873,067  858,697  832,316  824,783 
Total New Mexico1,545,748  1,595,255  1,629,671  1,527,376  1,488,136 
          
Arkansas:         
Demand36,800  36,579  39,896  35,291  30,384 
Interest-bearing:         
Transaction91,593  128,001  143,298  94,206  85,095 
Savings1,632  1,826  1,885  1,960  1,881 
Time8,726  10,214  10,771  11,878  14,045 
Total interest-bearing101,951  140,041  155,954  108,044  101,021 
Total Arkansas138,751  176,620  195,850  143,335  131,405 
          
Colorado:         
Demand1,658,473  593,442  529,912  521,963  633,714 
Interest-bearing:         
Transaction1,899,203  622,520  701,362  687,785  657,629 
Savings57,289  40,308  38,176  37,232  35,223 
Time274,877  217,628  208,049  215,330  224,962 
Total interest-bearing2,231,369  880,456  947,587  940,347  917,814 
Total Colorado3,889,842  1,473,898  1,477,499  1,462,310  1,551,528 
          

DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
Arizona:         
Demand709,176  370,299  387,952  330,196  334,701 
Interest-bearing:         
Transaction575,996  130,837  194,353  248,337  274,846 
Savings10,545  3,559  3,935  4,116  3,343 
Time43,051  23,927  22,447  21,009  20,394 
Total interest-bearing629,592  158,323  220,735  273,462  298,583 
Total Arizona1,338,768  528,622  608,687  603,658  633,284 
          
Kansas/Missouri:         
Demand418,199  423,560  459,636  505,802  457,080 
Interest-bearing:         
Transaction327,866  322,747  401,545  381,447  382,066 
Savings13,721  13,125  13,052  13,845  13,574 
Time19,688  20,635  20,805  22,230  27,260 
Total interest-bearing361,275  356,507  435,402  417,522  422,900 
Total Kansas/Missouri779,474  780,067  895,038  923,324  879,980 
          
TOTAL BOK FINANCIAL$25,263,763  $21,632,289  $22,169,264  $22,205,200  $22,061,305 
                    


NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
 Three Months Ended
 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents2.23% 1.98% 1.86% 1.57% 1.27%
Trading securities4.10% 3.98% 3.63% 3.40% 3.38%
Investment securities4.26% 4.06% 3.95% 3.78% 3.98%
Available for sale securities2.51% 2.37% 2.30% 2.23% 2.21%
Fair value option securities3.56% 3.25% 3.16% 2.95% 2.90%
Restricted equity securities6.39% 6.36% 6.21% 5.86% 5.87%
Re