BOKF
$72.71
Bok Financial
$3.04
4.36%
Earnings Details
3rd Quarter September 2020
Wednesday, October 21, 2020 7:55:00 AM
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Summary

Bok Financial (BOKF) Recent Earnings

Bok Financial (BOKF) reported 3rd Quarter September 2020 earnings of $2.19 per share on revenue of $528.8 million. The consensus earnings estimate was $1.51 per share on revenue of $482.6 million. Revenue fell 9.1% compared to the same quarter a year ago.

BOK Financial Corp is a financial holding company. The Company through its subsidiaries provides financial services to commercial and industrial customers, other financial institutions, municipalities, and consumers.

Results
Reported Earnings
$2.19
Earnings Whisper
-
Consensus Estimate
$1.51
Reported Revenue
$528.8 Mil
Revenue Estimate
$482.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

BOK Financial Corporation Reports Record Quarterly Earnings of $154 million or $2.19 Per Share in the Third Quarter

TULSA, Okla., Oct. 21, 2020 (GLOBE NEWSWIRE) -- BOK Financial (NASDAQ: BOKF) today reported net earnings applicable to common shareholders for the third quarter of 2020 of $154 million, or $2.19 per diluted common share.

CEO Commentary

"Building off prior quarters, our large percentage of fee-based revenues provided a differentiated earnings outcome compared to many similar-sized financial institutions," said Steven G. Bradshaw, president and chief executive officer. "Both our Wealth Management and Mortgage businesses delivered impressively in a time of compressed net interest margin and unsure credit outcomes across the industry."

Bradshaw continued, "Beyond the financial success we've had this quarter, I'm incredibly proud of the impact we've made in our communities. We have increased our charitable investments from the BOKF Foundation and our employees also stepped up their collective volunteer hours to help address needs across our communities. Our top ranking in the 2020 American Banker reputation survey is a testament to the level of leadership and engagement our employees provide in our banking communities. We have earned the reputation as an organization known for unwavering integrity, and that is demonstrated in everything that we do. Whether it's the role we play in our communities or the financial results for our shareholders - it's more about actions than words at BOK Financial."

Third Quarter 2020 Financial Highlights

  • Net income was $154.0 million or $2.19 per diluted share for the third quarter of 2020 and $64.7 million or $0.92 per diluted share for the second quarter of 2020. Pre-provision net revenue was $204.6 million for the third quarter of 2020 compared to $215.0 million for the prior quarter. No provision for expected credit losses was necessary in the third quarter, while the second quarter of 2020 included a pre-tax provision for expected credit losses of $135.3 million. Our forecasts of economic conditions have improved since the previous quarter.
  • Net interest revenue totaled $271.8 million, a decrease of $6.4 million. Discount accretion on acquired loans totaled $13.3 million in the third quarter of 2020 and $3.3 million in the prior quarter. Net interest margin was 2.81 percent compared to 2.83 percent in the second quarter of 2020. Excluding discount accretion, net interest margin was 2.67 percent compared to 2.80 percent in the prior quarter.
  • Fees and commissions revenue totaled $222.9 million, an increase of $9.2 million. Brokerage and trading revenue increased $7.5 million, largely due to an increase trading revenue and customer hedging revenue.
  • Operating expense was $301.3 million, an increase of $5.9 million. Personnel expense increased $3.6 million. Incentive compensation increased $5.6 million, largely related to vesting assumptions regarding the Company's earnings per share growth relative to a defined peer group. Non-personnel expense increased $2.3 million compared to the second quarter of 2020. Increases in net losses and expenses on two repossessed properties, professional fees and data processing and communications expense were partially offset by decreases in occupancy and equipment expense and other expenses. In addition, the second quarter of 2020 included a $3.0 million charitable contribution to the BOKF Foundation.
  • Changes in the fair value of mortgage servicing rights and related economic hedges added $6.5 million during the third quarter of 2020 and $9.3 million in the prior quarter.
  • Period-end loans decreased $353 million to $23.8 billion at September 30, 2020, primarily due to continued paydowns of commercial loans. Average loans were relatively consistent with the second quarter at $24.1 billion.
  • The allowance for loan losses totaled $420 million or 1.76 percent of outstanding loans at September 30, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 1.88 percent of outstanding loans at September 30, 2020. Excluding Paycheck Protection Program (PPP) loans, the allowance for loan losses was 1.93 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.06 percent. Excluding PPP loans, the allowance for loan losses was $436 million or 1.97 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $469 million or 2.12 percent of outstanding loans at June 30, 2020.
  • Average deposits increased $2.0 billion to $34.6 billion and period-end deposits increased $1.1 billion to $35.0 billion, largely due to growth in commercial and wealth management balances. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment.
  • The company's common equity Tier 1 capital ratio was 12.07 percent at September 30, 2020. In addition, the company's Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent at September 30, 2020. At June 30, 2020, the company's common equity Tier 1 capital ratio was 11.44 percent, Tier 1 capital ratio was 11.44 percent, total capital ratio was 13.43 percent, and leverage ratio was 7.74 percent.

Third Quarter 2020 Business Segment Highlights

  • Commercial Banking contributed $75.1 million to net income, a decrease of $5.9 million compared to the second quarter. Net interest revenue increased $4.8 million, including higher discount accretion. Net loans charged off increased $8.8 million. Fees and commissions revenue increased $3.6 million led by increased customer hedging and loan syndication activity. Operating expense increased $3.9 million, largely due to increases in incentive compensation and deposit insurance expense. Net losses and expenses on repossessed assets also increased $4.5 million due to impairment of a set of oil and gas properties and a retail commercial real estate property. Average Commercial Banking loans decreased $585 million due to repayment of defensive draws taken earlier in the year and purposeful deleveraging by our customers. Commercial deposits grew more than 5 percent to $14.6 billion in the third quarter.
  • Consumer Banking contributed $26.3 million to net income, a decrease of $5.6 million compared to the second quarter. Net interest revenue decreased $6.1 million, largely due to lower yields on deposits sold to our Funds Management unit and compressed loan spreads. Fees and commissions revenue was largely unchanged compared to the prior quarter. While mortgage production revenue decreased slightly compared to the prior quarter, it was another strong quarter for our mortgage banking business. Low mortgage interest rates continue to result in high volumes and increased margins. Deposit service charges increased in the current quarter as many "stay at home" orders have been lifted and consumer activity starts to return to more normal levels. Changes in the fair value of mortgage servicing rights and related economic hedges provided $6.5 million during the third quarter of 2020 and $9.3 million in the prior quarter.
  • Wealth Management contributed $31.2 million to net income, a decrease of $2.2 million compared to the second quarter. This segment produced another record quarter for total revenue. While net interest revenue decreased $3.9 million due to lower yields on deposits sold to our Funds Management unit, fees and commissions grew by $4.9 million. Increases in trading revenue of $3.0 million and other revenue of $2.3 million were partially offset by a decrease in fiduciary and asset management revenue. We continue to maintain an increased trading pipeline to provide greater liquidity to the housing market during this time of low interest rates. Deposit growth remains strong with total average deposits growing $704 million or 8 percent compared to the previous quarter. Assets under management or administration totaled $82.4 billion, up $3.0 billion since June 30.

Net Interest Revenue

Net interest revenue was $271.8 million for the third quarter of 2020, a $6.4 million decrease compared to the second quarter of 2020. Net purchase accounting discount accretion on acquired loans totaled $13.3 million in the third quarter of 2020 and $3.3 million in the second quarter of 2020. Increased accretion was primarily due to early payoffs of acquired loans.

Average earning assets decreased $681 million compared to the second quarter of 2020. Fair value option securities, held as an economic hedge of the changes in fair value of our mortgage servicing rights, decreased $399 million and restricted equity securities decreased $130 million. Residential mortgage loans held for sale decreased $75 million while interest-bearing cash and cash equivalents decreased $67 million. Average loan balances remained largely unchanged. Available for sale securities increased $101 million. Average interest-bearing deposits grew by $1.5 billion, primarily due to interest-bearing transaction deposits. Funds purchased and repurchase agreements decreased $3.0 billion and other borrowings decreased $145 million.

Net interest margin was 2.81 percent compared to 2.83 percent in the second quarter of 2020. Excluding discount accretion on acquired loans, net interest margin was 2.67 percent compared to 2.80 percent in the prior quarter. Recent interest rate cuts continue to compress the net interest margin. While the company has been proactive in reducing deposit costs and implementing LIBOR floors in loan agreements to support the margin, funds received from available for sale securities continue to be reinvested at lower rates.

The yield on average earning assets was 3.04 percent, an 8 basis point decrease from the prior quarter. The yield on the available for sale securities portfolio decreased 18 basis points to 2.11 percent and the loan portfolio yield decreased 3 basis points to 3.60 percent. Excluding loan discount accretion, the yield on average earning assets was 2.91 percent, down 18 basis points and the loan portfolio yield was 3.38 percent, down 20 basis points from the previous quarter. The yield on fair value option securities decreased 8 basis points to 1.92 percent.

Funding costs were 0.31 percent, down 6 basis points. The cost of interest-bearing deposits decreased 8 basis points to 0.26 percent. The cost of other borrowed funds was down 1 basis point to 0.31 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 8 basis points for the third quarter of 2020, consistent with the prior quarter.

Fees and Commissions Revenue

Fees and commissions revenue totaled $222.9 million for the third quarter of 2020, an increase of $9.2 million over the second quarter of 2020, led by continued growth in brokerage and trading revenue.

Brokerage and trading revenue increased $7.5 million to $69.5 million. Trading revenue increased $3.0 million. The low mortgage interest rate environment continues to drive our U.S. agency mortgage-backed securities trading activity. Customer hedging revenue increased $2.4 million as energy customers increased hedging activities in the volatile environment. Investment banking revenue also grew by $1.8 million largely due to loan syndication activity.

Deposit service charges increased $2.2 million compared to the first quarter. As "stay at home" orders have been lifted and customer activity returns to normal, we have seen service charges return to a more normal level as well. Other revenue increased $2.2 million.

Mortgage banking revenue decreased $2.0 million to $52.0 million, primarily due to a reduction of mortgage servicing revenue. During the second quarter of 2020, we completed a sale of mortgage servicing rights on $1.6 billion of unpaid principal balance, primarily related to loans guaranteed by the Veteran's Administration. Mortgage production revenue remained very strong at $38.4 million, decreasing only slightly from the previous quarter.

Fiduciary and asset management revenue decreased $1.3 million compared to the second quarter of 2020, largely due to a decrease from seasonal tax preparation fees earned in the second quarter.

Operating Expense

Total operating expense was $301.3 million for the third quarter of 2020, an increase of $5.9 million compared to the second quarter of 2020.

Personnel expense increased $3.6 million. Stock based incentive compensation increased $5.9 million due to changes related to vesting assumptions regarding the Company's earnings per share growth relative to a defined peer group. Cash based incentive compensation increased $3.1 million, primarily due to increased securities trading activity. Deferred compensation, which is largely offset by a decrease in the value of related investments included in Other gains (losses), decreased $3.5 million. Regular compensation decreased $2.6 million, primarily related to unfilled positions due to attrition.

Non-personnel expense increased $2.3 million over the second quarter of 2020. Net losses and expenses on repossessed assets increased $4.5 million, largely due to write-downs on a set of oil and gas properties and a retail commercial real estate property. Professional fees and services expense increased $1.9 million due mainly to higher legal fees. Data processing and communications expense increased $1.8 million due to continued investment in technology.

Occupancy and equipment expense decreased $2.6 million, primarily related to impairment charges incurred in the second quarter and other expense decreased $1.8 million. We also made a charitable contribution of $3.0 million to the BOKF Foundation in the second quarter.

Income Taxes

The effective tax rate was 24.7 percent for the third quarter of 2020, an increase from 19.7 percent for the second quarter of 2020. An increase in forecasted pre-tax income for 2020 and the completion of 2019 tax returns drove the increase in effective tax rate for the quarter. The effective tax rate excluding these items was 21.7 percent. 

Loans, Deposits and Capital

Loans

Outstanding loans were $23.8 billion at September 30, 2020, a $353 million decrease compared to June 30, 2020, primarily due to commercial loan payoffs.

Outstanding core commercial loan balances decreased $593 million or 4 percent compared to June 30, 2020, primarily due to continued pay downs. Although the primary source of repayment of our commercial loan portfolio is the on-going cash flow from operations of the customer's business, loans are generally governed by a borrowing base and secured by the customer’s assets.

Energy loan balances decreased $257 million to $3.7 billion or 16 percent of total loans. The current commodity price environment is continuing to dampen demand for new loans and borrowers are paying down debt to reduce leverage. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 67 percent of committed production loans are secured by properties primarily producing oil. The remaining 33 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $2.3 billion at September 30, 2020, a $214 million decrease compared to June 30, 2020, and a $660 million decrease compared to December 31, 2019, largely as a result of the semi-annual borrowing base redetermination process in the second quarter.

Healthcare sector loan balances increased $36 million to $3.3 billion or 14 percent of total loans, primarily due to growth in loans to senior housing and care facilities. Our healthcare sector loans primarily consist of $2.5 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally we loan to borrowers with a portfolio of multiple facilities that serves to help diversify risks specific to a single facility. The remaining balance is composed of hospitals and other medical service providers impacted by a deferral of elective procedures. The CARES Act does include multiple revenue enhancement measures for both hospitals and skilled nursing facilities as they manage through the risks of the virus.

General business loans decreased $138 million to $3.0 billion or 13 percent of total loans. General business loans include $1.7 billion of wholesale/retail loans and $748 million of loans from other commercial industries. Broad pay downs across our core commercial and industrial loan book contracted the portfolio.

Services loan balances decreased $234 million to $3.5 billion or 15 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, educational services, consumer services and commercial services.

Although not a significant portion of our commercial portfolio, our services and general business loans also include areas we consider to be more exposed to the economic slowdown as a result of the social distancing measures in place to combat the COVID-19 pandemic such as entertainment and recreation, retail, hotels, churches, airline travel, and higher education that are dependent on large social gatherings to remain profitable. This represents less than 7 percent of our total portfolio. Some of these borrowers have participated in the PPP, which has provided some measure of relief. We will continue to monitor these areas closely in the coming months.

Commercial real estate loan balances were up $140 million over June 30, 2020 and represent 20 percent of total loans at September 30, 2020. Loans secured by office buildings increased $126 million to $1.1 billion. Loans secured by industrial facilities increased $69 million. Loans secured by other commercial real estate properties decreased $26 million to $507 million. Multifamily residential loans, our largest exposure in commercial real estate, decreased $20 million to $1.4 billion at September 30, 2020. Loans secured by retail facilities were $786 million at September 30, 2020, largely unchanged from the prior quarter. Loans secured by retail facilities and office buildings may be impacted by measures being taken to hinder the spread of the virus as well as changes in consumer behavior.

Loans to individuals increased $85 million, primarily due to an increase in residential mortgage loans guaranteed by U.S. government agencies. The Company may repurchase loans previously sold into GNMA mortgage pools when certain defined delinquency criteria are met. Because of this repurchase right, the Company is deemed to have regained effective control over these loans and must include them on the Consolidated Balance Sheet. Loans to individuals represent 14 percent of total loans at September 30, 2020.

Deposits

Period-end deposits totaled $35.0 billion at September 30, 2020, a $1.1 billion increase over June 30, 2020. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment. Interest-bearing transaction account balances grew by $1.3 billion. Average deposits were $34.6 billion at September 30, 2020, a $2.0 billion increase compared to June 30, 2020. Interest-bearing transaction deposits increased $1.7 billion.

Capital

The company's common equity Tier 1 capital ratio was 12.07 percent at September 30, 2020. In addition, the company's Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent at September 30, 2020. We have elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period, which added 29 basis points to the company's common equity tier 1 capital ratio at September 30. At June 30, 2020, the company's common equity Tier 1 capital ratio was 11.44 percent, Tier 1 capital ratio was 11.44 percent, total capital ratio was 13.43 percent, and leverage ratio was 7.74 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 9.02 percent at September 30, 2020 and 8.79 percent at June 30, 2020. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

Credit Quality

The Company adopted FASB Accounting Standard Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Assets Measured at Amortized Cost ("CECL") on January 1, 2020. CECL requires recognition of expected credit losses on assets carried at amortized cost over their expected lives. Our CECL models measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rate and West Texas Intermediate ("WTI") oil prices on a probability weighted basis.

No provision for credit losses was necessary for the third quarter of 2020. A $1.7 million provision related to lending activities was offset by a decrease in the accrual for expected credit losses from mortgage banking activities and allowance for credit losses from investment securities. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to an improved economic outlook related to the anticipated impact of the on-going COVID-19 pandemic, and other assumptions, resulted in a $12.8 million decrease in the provision for credit losses from lending activities. Changes in the loan portfolio characteristics, including specific impairment and losses, loan balances and risk grading resulted in a $14.5 million increase in the provision for credit losses from lending activities.

Our base case reasonable and supportable forecast assumes that the COVID-19 pandemic maintains its current trajectory with localized and state-level hotspots. This scenario assumes approval of a vaccine prior to the end of 2020, with a large share of the U.S. population vaccinated by the end of the third quarter of 2021. After a strong increase in GDP in the third quarter, we expect GDP growth to moderate to rates consistent with historical averages and recovering to pre-COVID levels by the end of 2021. We expect a 4 percent increase in GDP over the next twelve months. Our forecasted civilian unemployment rate is 8.0 percent for the fourth quarter of 2020, improving to 6.9 percent by the third quarter of 2021. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of September 2020, averaging $41.65 per barrel over the next twelve months.

The allowance for loan losses totaled $420 million or 1.76 percent of outstanding loans and 195 percent of non-accruing loans at September 30, 2020, excluding residential mortgage loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 1.88 percent of outstanding loans and 208 percent of non-accruing loans at September 30, 2020. The combined allowance for credit losses attributed to energy was 4.30 percent of outstanding energy loans at September 30. Excluding PPP loans, the allowance for loan losses was 1.93 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.06 percent.

At June 30, 2020, the allowance for loan losses was $436 million or 1.80 percent of outstanding loans and 175 percent of non-accruing loans, excluding loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $469 million or 1.94 percent of outstanding loans and 188 percent of non-accruing loans.

Non-performing assets totaled $417 million or 1.75 percent of outstanding loans and repossessed assets at September 30, 2020, compared to $405 million or 1.68 percent at June 30, 2020. Non-performing assets that are not guaranteed by U.S. government agencies totaled $268 million or 1.25 percent of outstanding loans and repossessed assets at September 30, 2020, down from $285 million or 1.31 percent at June 30, 2020.

Non-accruing loans were $221 million or 1.02 percent of outstanding loans, excluding PPP loans, at September 30, 2020. Non-accruing commercial loans totaled $170 million or 1.25 percent of outstanding commercial loans. Non-accruing commercial real estate loans totaled $13 million or 0.28 percent of outstanding commercial real estate loans. Non-accruing loans to individuals totaled $38 million or 1.11 percent of outstanding loans to individuals.

Non-accruing loans decreased $34 million compared to June 30, 2020, primarily due to a $36 million decrease in non-accruing energy loans. New non-accruing loans identified in the third quarter totaled $45 million, offset by $30 million in payments received, $27 million in charge-offs and $23 million of foreclosures.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $623 million at September 30, compared to $626 million at June 30. A decrease in potential problem energy loans was partially offset by an increase in general business loans and commercial real estate loans.

Net charge-offs were $22.4 million or 0.41 percent of average loans on an annualized basis for the third quarter of 2020, excluding PPP loans. Net charge-offs were 0.30 percent of average loans over the last four quarters. Net charge-offs were $14.1 million or 0.25 percent of average loans on an annualized basis for the second quarter of 2020, excluding PPP loans. Gross charge-offs were $26.7 million for the third quarter compared to $15.6 million for the previous quarter. Recoveries totaled $4.2 million for the third quarter of 2020 and $1.5 million for the second quarter of 2020.

Loans in deferral status have dropped to just over 1 percent of total loans from a peak of more than 7 percent. More than 80 percent of the loans that were deferred have now moved back to payment status. Of the loans that remain in deferral, approximately half are in the Commercial Real Estate portfolio.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $12.8 billion at September 30, 2020, a $341 million increase compared to June 30, 2020. At September 30, 2020, the available for sale securities portfolio consisted primarily of $9.4 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.3 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At September 30, 2020, the available for sale securities portfolio had a net unrealized gain of $481 million compared to $487 million at June 30, 2020.

The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities decreased $588 million to $135 million at September 30, 2020.

The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $6.5 million during the third quarter of 2020, including a $3.4 million increase in the fair value of mortgage servicing rights, $1.5 million increase in the fair value of securities and derivative contracts held as an economic hedge, and $1.6 million of related net interest revenue.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on October 21, 2020 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-6671 and referencing conference ID # 13711391.

About BOK Financial Corporation

BOK Financial Corporation is a $46 billion regional financial services company headquartered in Tulsa, Oklahoma with $82 billion in assets under management and administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Milwaukee and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of September 30, 2020 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial Corporation, the financial services industry, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” “will,” “intends,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that acquisitions and growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These various forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in government, consumer or business responses to, and ability to treat or prevent further outbreak of the COVID-19 pandemic, changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial Corporation and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.




BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

 Sept. 30, 2020 June 30, 2020
ASSETS   
Cash and due from banks$658,612   $762,453  
Interest-bearing cash and cash equivalents347,759   485,319  
Trading securities2,245,480   1,196,105  
Investment securities, net of allowance256,001   267,988  
Available for sale securities12,817,269   12,475,919  
Fair value option securities134,756   722,657  
Restricted equity securities111,656   125,683  
Residential mortgage loans held for sale295,290   319,357  
Loans:   
Commercial13,565,706   14,158,510  
Commercial real estate4,693,700   4,554,144  
Paycheck protection program2,097,325   2,081,428  
Loans to individuals3,446,569   3,361,808  
Total loans23,803,300   24,155,890  
Allowance for loan losses(419,777)  (435,597) 
Loans, net of allowance23,383,523   23,720,293  
Premises and equipment, net542,625   550,230  
Receivables245,514   226,934  
Goodwill1,048,091   1,048,091  
Intangible assets, net118,524   123,595  
Mortgage servicing rights97,644   97,971  
Real estate and other repossessed assets, net52,847   35,330  
Derivative contracts, net593,568   651,553  
Cash surrender value of bank-owned life insurance396,497   393,741  
Receivable on unsettled securities sales1,934,495   1,863,719  
Other assets787,073   752,936  
TOTAL ASSETS$46,067,224   $45,819,874  
    
LIABILITIES AND EQUITY   
Deposits:   
Demand$12,047,338   $11,992,165  
Interest-bearing transaction20,196,740   18,850,418  
Savings720,949   696,971  
Time2,007,973   2,352,760  
Total deposits34,973,000   33,892,314  
Funds purchased and repurchase agreements973,652   1,357,602  
Other borrowings2,771,429   3,173,563  
Subordinated debentures275,986   275,973  
Accrued interest, taxes and expense335,914   365,634  
Due on unsettled securities purchases641,817   599,510  
Derivative contracts, net446,328   610,020  
Other liabilities422,989   440,835  
TOTAL LIABILITIES40,841,115   40,715,451  
Shareholders' equity:   
Capital, surplus and retained earnings4,853,617   4,726,679  
Accumulated other comprehensive gain365,170   370,316  
TOTAL SHAREHOLDERS' EQUITY5,218,787   5,096,995  
Non-controlling interests7,322   7,428  
TOTAL EQUITY5,226,109   5,104,423  
TOTAL LIABILITIES AND EQUITY$46,067,224   $45,819,874  




AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

 Three Months Ended
 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
ASSETS         
Interest-bearing cash and cash equivalents$553,070   $619,737   $721,659   $573,203   $500,823  
Trading securities1,834,160   1,871,647   1,690,104   1,672,426   1,696,568  
Investment securities, net of allowance258,965   268,947   282,265   298,567   308,090  
Available for sale securities12,580,850   12,480,065   11,664,521   11,333,524   10,747,439  
Fair value option securities387,784   786,757   1,793,480   1,521,528   1,553,879  
Restricted equity securities144,415   273,922   429,133   479,687   476,781  
Residential mortgage loans held for sale213,125   288,588   129,708   203,535   203,319  
Loans:         
Commercial13,772,217   14,502,652   14,452,851   14,344,534   14,507,185  
Commercial real estate4,754,269   4,543,511   4,346,886   4,532,649   4,652,534  
Paycheck protection program2,092,933   1,699,369           
Loans to individuals3,491,044   3,353,960   3,143,286   3,358,817   3,253,199  
Total loans24,110,463   24,099,492   21,943,023   22,236,000   22,412,918  
Allowance for loan losses(441,831)  (367,583)  (250,338)  (205,417)  (201,714) 
Loans, net of allowance23,668,632   23,731,909   21,692,685   22,030,583   22,211,204  
Total earning assets39,641,001   40,321,572   38,403,555   38,113,053   37,698,103  
Cash and due from banks723,826   678,878   669,369   690,806   717,338  
Derivative contracts, net581,839   642,969   376,621   311,542   331,834  
Cash surrender value of bank-owned life insurance394,680   391,951   390,009   388,012   385,190  
Receivable on unsettled securities sales4,563,301   4,626,307   3,046,111   1,973,604   1,742,794  
Other assets3,027,108   3,095,354   2,834,953   2,736,337   2,705,089  
TOTAL ASSETS$48,931,755   $49,757,031   $45,720,618   $44,213,354   $43,580,348  
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$11,929,694   $11,489,322   $9,232,859   $9,612,533   $9,759,710  
Interest-bearing transaction19,752,106   18,040,170   16,159,654   14,685,385   13,131,542  
Savings707,121   656,669   563,821   554,605   557,122  
Time2,251,012   2,464,793   2,239,234   2,247,717   2,251,800  
Total deposits34,639,933   32,650,954   28,195,568   27,100,240   25,700,174  
Funds purchased and repurchase agreements2,782,150   5,816,484   3,815,941   4,120,610   3,106,163  
Other borrowings3,382,688   3,527,303   6,542,325   6,247,194   8,125,023  
Subordinated debentures275,980   275,949   275,932   275,916   275,900  
Derivative contracts, net458,390   836,667   379,342   276,078   300,051  
Due on unsettled securities purchases1,516,880   887,973   960,780   784,174   745,893  
Other liabilities712,674   690,087   642,764   561,654   547,144  
TOTAL LIABILITIES43,768,695   44,685,417   40,812,652   39,365,866   38,800,348  
Total equity5,163,060   5,071,614   4,907,966   4,847,488   4,780,000  
TOTAL LIABILITIES AND EQUITY$48,931,755   $49,757,031   $45,720,618   $44,213,354   $43,580,348  




STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2020 2019 2020 2019
        
Interest revenue$294,659   $395,207   $949,980   $1,162,101  
Interest expense22,909   116,111   138,766   319,471  
Net interest revenue271,750   279,096   811,214   842,630  
Provision for credit losses   12,000   229,092   25,000  
Net interest revenue after provision for credit losses271,750   267,096   582,122   817,630  
Other operating revenue:       
Brokerage and trading revenue69,526   43,840   182,327   115,983  
Transaction card revenue23,465   22,015   68,286   64,668  
Fiduciary and asset management revenue39,931   43,621   125,646   132,004  
Deposit service charges and fees24,286   28,837   72,462   85,154  
Mortgage banking revenue51,959   30,180   143,062   82,145  
Other revenue13,698   17,626   37,486   42,825  
Total fees and commissions222,865   186,119   629,269   522,779  
Other gains, net6,265   4,544   2,292   11,000  
Gain on derivatives, net2,354   3,778   42,659   19,595  
Gain (loss) on fair value option securities, net(754)  4,597   53,180   24,115  
Change in fair value of mortgage servicing rights3,441   (12,593)  (85,800)  (62,814) 
Gain (loss) on available for sale securities, net(12)  5   5,571   1,110  
Total other operating revenue234,159   186,450   647,171   515,785  
Other operating expense:       
Personnel179,860   162,573   512,276   492,143  
Business promotion2,633   8,859   10,783   26,875  
Charitable contributions to BOKF Foundation      3,000   1,000  
Professional fees and services14,074   12,312   39,183   41,453  
Net occupancy and equipment28,111   27,558   84,847   83,959  
Insurance5,848   4,220   15,984   15,513  
Data processing and communications34,751   31,915   100,436   93,099  
Printing, postage and supplies3,482   3,825   11,256   12,817  
Net losses and operating expenses of repossessed assets6,244   1,728   9,541   4,304  
Amortization of intangible assets5,071   5,064   15,355   15,393  
Mortgage banking costs15,803   14,975   41,946   36,426  
Other expense5,388   6,263   20,669   20,604  
Total other operating expense301,265   279,292   865,276   843,586  
Net income before taxes204,644   174,254   364,017   489,829  
Federal and state income taxes50,552   32,396   83,655   99,926  
Net income154,092   141,858   280,362   389,903  
Net income (loss) attributable to non-controlling interests58   (373)  (444)  (503) 
Net income attributable to BOK Financial Corporation shareholders$154,034   $142,231   $280,806   $390,406  
        
Average shares outstanding:       
Basic69,877,866   70,596,307   69,958,944   70,953,544  
Diluted69,879,290   70,609,924   69,962,053   70,968,845  
        
Net income per share:       
Basic$2.19   $2.00   $3.99   $5.47  
Diluted$2.19   $2.00   $3.99   $5.47  




FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)

 Three Months Ended
 Sept. 30, 2020
 June 30, 2020
 Mar. 31, 2020
 Dec. 31, 2019
 Sept. 30, 2019
Capital:              
Period-end shareholders' equity$5,218,787  $5,096,995  $5,026,248  $4,855,795  $4,829,016 
Risk weighted assets$31,529,826  $32,180,602  $32,973,242  $31,673,425  $32,159,139 
Risk-based capital ratios:              
Common equity tier 112.07% 11.44% 10.98% 11.39% 11.06%
Tier 112.07%  11.44%  10.98%  11.39%  11.06%
Total capital14.05%  13.43%  12.65%  12.94%  12.56%
Leverage ratio8.39%  7.74%  8.15%  8.40%  8.41%
Tangible common equity ratio19.02%  8.79%  8.39%  8.98%  8.72%
               
Common stock:              
Book value per share$74.23  $72.50  $71.49  $68.80  $68.15 
Tangible book value per share57.64  55.83  54.85  52.17  51.60 
Market value per share:              
High$62.86  $67.62  $87.40  $88.28  $84.35 
Low$48.41  $37.80  $34.57  $71.85  $72.96 
Cash dividends paid$35,799  $35,769  $35,949  $36,011  $35,472 
Dividend payout ratio23.24%  55.29%  57.91%  32.63%  24.94%
Shares outstanding, net70,305,833  70,306,690  70,308,532  70,579,598  70,858,010 
Stock buy-back program:              
Shares repurchased    442,000  280,000  336,713 
Amount$  $  $33,380  $22,844  $25,937 
Average price per share$  $  $75.52  $81.59  $77.03 
               
Performance ratios (quarter annualized):              
Return on average assets1.25%  0.52%  0.55%  0.99%  1.29%
Return on average equity11.89%  5.14%  5.10%  9.05%  11.83%
Net interest margin2.81%  2.83%  2.80%  2.88%  3.01%
Efficiency ratio60.41%  59.57%  58.62%  63.65%  59.31%
               
Reconciliation of non-GAAP measures:              
1     Tangible common equity ratio:              
Total shareholders' equity$5,218,787  $5,096,995  $5,026,248  $4,855,795  $4,829,016 
Less: Goodwill and intangible assets, net1,166,615  1,171,686  1,169,898  1,173,362  1,172,411 
Tangible common equity$4,052,172  $3,925,309  $3,856,350  $3,682,433  $3,656,605 
               
Total assets$46,067,224  $45,819,874  $47,119,162  $42,172,021  $43,127,205 
Less: Goodwill and intangible assets, net1,166,615  1,171,686  1,169,898  1,173,362  1,172,411 
Tangible assets$44,900,609  $44,648,188  $45,949,264  $40,998,659  $41,954,794 
               
Tangible common equity ratio9.02%  8.79%  8.39%  8.98%  8.72%


 Three Months Ended
 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
          
Pre-provision net revenue:         
Net income before taxes$204,644  $80,089  $79,284  $141,039  $174,254 
Provision for expected credit losses  135,321  93,771  19,000  12,000 
Net income (loss) attributable to non-controlling interests58  (407) (95) 430  (373)
Pre-provision net revenue$204,586  $215,817  $173,150  $159,609  $186,627 
               
Other data:              
Tax equivalent interest$2,457  $2,630  $2,715  $2,726  $2,936 
Net unrealized gain (loss) on available for sale securities$480,563  $487,334  $435,989  $138,149  $178,060 
               
Mortgage banking:              
Mortgage production revenue$38,431  $39,185  $21,570  $9,169  $13,814 
               
Mortgage loans funded for sale$1,032,472  $1,184,249  $548,956  $855,643  $877,280 
Add: current period-end outstanding commitments560,493  546,304  657,570  158,460  379,377 
Less: prior period end outstanding commitments546,304  657,570  158,460  379,377  344,087 
Total mortgage production volume$1,046,661  $1,072,983  $1,048,066  $634,726  $912,570 
               
Mortgage loan refinances to mortgage loans funded for sale54% 71% 57% 57% 56%
Gain on sale margin3.67% 3.65% 2.06% 1.44% 1.51%
               
Mortgage servicing revenue$13,528  $14,751  $15,597  $16,227  $16,366 
Average outstanding principal balance of mortgage loans serviced for others17,434,215  19,319,872  20,416,546  20,856,446  21,172,874 
Average mortgage servicing revenue rates0.31% 0.31% 0.31% 0.31% 0.31%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:                   
Gain (loss) on mortgage hedge derivative contracts, net$2,295  $21,815  $18,371  $(4,714) $3,742 
Gain (loss) on fair value option securities, net(754) (14,459) 68,393  (8,328) 4,597 
Gain (loss) on economic hedge of mortgage servicing rights1,541  7,356  86,764  (13,042) 8,339 
Gain (loss) on changes in fair value of mortgage servicing rights3,441  (761) (88,480) 9,297  (12,593)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue4,982  6,595  (1,716) (3,745) (4,254)
Net interest revenue on fair value option securities21,565  2,702  4,268  1,544  1,245 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$6,547  $9,297  $2,552  $(2,201) $(3,009)

2    Actual interest earned on fair value option securities less internal transfer-priced cost of funds.




QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)

 Three Months Ended
 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
          
Interest revenue$294,659  $306,384  $348,937  $369,857  $395,207 
Interest expense22,909  28,280  87,577  99,608  116,111 
Net interest revenue271,750  278,104  261,360  270,249  279,096 
Provision for credit losses  135,321  93,771  19,000  12,000 
Net interest revenue after provision for credit losses271,750  142,783  167,589  251,249  267,096 
Other operating revenue:              
Brokerage and trading revenue69,526  62,022  50,779  43,843  43,840 
Transaction card revenue23,465  22,940  21,881  22,548  22,015 
Fiduciary and asset management revenue39,931  41,257  44,458  45,021  43,621 
Deposit service charges and fees24,286  22,046  26,130  27,331  28,837 
Mortgage banking revenue51,959  53,936  37,167  25,396  30,180 
Other revenue13,698  11,479  12,309  15,283  17,626 
Total fees and commissions222,865  213,680  192,724  179,422  186,119 
Other gains (losses), net6,265  6,768  (10,741) (1,649) 4,544 
Gain (loss) on derivatives, net2,354  21,885  18,420  (4,644) 3,778 
Gain (loss) on fair value option securities, net(754) (14,459) 68,393  (8,328) 4,597 
Change in fair value of mortgage servicing rights3,441  (761) (88,480) 9,297  (12,593)
Gain (loss) on available for sale securities, net(12) 5,580  3  4,487  5 
Total other operating revenue234,159  232,693  180,319  178,585  186,450 
Other operating expense:              
Personnel179,860  176,235  156,181  168,422  162,573 
Business promotion2,633  1,935  6,215  8,787  8,859 
Charitable contributions to BOKF Foundation  3,000    2,000   
Professional fees and services14,074  12,161  12,948  13,408  12,312 
Net occupancy and equipment28,111  30,675  26,061  26,316  27,558 
Insurance5,848  5,156  4,980  5,393  4,220 
Data processing and communications34,751  32,942  32,743  31,884  31,915 
Printing, postage and supplies3,482  3,502  4,272  3,700  3,825 
Net losses and operating expenses of repossessed assets6,244  1,766  1,531  2,403  1,728 
Amortization of intangible assets5,071  5,190  5,094  5,225  5,064 
Mortgage banking costs15,803  15,598  10,545  14,259  14,975 
Other expense5,388  7,227  8,054  6,998  6,263 
Total other operating expense301,265  295,387  268,624  288,795  279,292 
Net income before taxes204,644  80,089  79,284  141,039  174,254 
Federal and state income taxes50,552  15,803  17,300  30,257  32,396 
Net income154,092  64,286  61,984  110,782  141,858 
Net income (loss) attributable to non-controlling interests58  (407) (95) 430  (373)
Net income attributable to BOK Financial Corporation shareholders$154,034  $64,693  $62,079  $110,352  $142,231 
               
Average shares outstanding:              
Basic69,877,866  69,876,043  70,123,685  70,295,899  70,596,307 
Diluted69,879,290  69,877,467  70,130,166  70,309,644  70,609,924 
Net income per share:              
Basic$2.19  $0.92  $0.88  $1.56  $2.00 
Diluted$2.19  $0.92  $0.88  $1.56  $2.00 




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

  Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
Commercial:          
Energy $3,717,101  $3,974,174  $4,111,676  $3,973,377  $4,114,269 
Services 3,545,825  3,779,881  3,955,748  3,832,031  4,011,089 
Healthcare 3,325,790  3,289,343  3,165,096  3,033,916  3,032,968 
General business 2,976,990  3,115,112  3,563,455  3,192,326  3,266,299 
Total commercial 13,565,706  14,158,510  14,795,975  14,031,650  14,424,625 
           
Commercial real estate:          
Multifamily 1,387,461  1,407,107  1,282,457  1,265,562  1,324,839 
Office 1,099,563  973,995  962,004  928,379  1,014,275 
Retail 786,211  780,467  774,198  775,521  799,169 
Industrial 792,389  723,005  728,026  856,117  873,536 
Residential construction and land development 121,258  136,911  138,958  150,879  135,361 
Other commercial real estate 506,818  532,659  564,442  457,325  478,877 
Total commercial real estate 4,693,700  4,554,144  4,450,085  4,433,783  4,626,057 
           
Paycheck protection program 2,097,325  2,081,428       
           
Loans to individuals:          
Residential mortgage 1,849,144  1,813,442  1,844,555  1,886,378  1,925,539 
Residential mortgages guaranteed by U.S. government agencies 384,247  322,269  197,889  197,794  191,764 
Personal 1,213,178  1,226,097  1,175,466  1,201,382  1,117,382 
Total loans to individuals 3,446,569  3,361,808  3,217,910  3,285,554  3,234,685 
           
Total $23,803,300  $24,155,890  $22,463,970  $21,750,987  $22,285,367 




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

 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
          
Texas:         
Commercial$5,545,158  $5,771,691  $6,350,690  $6,174,894  $6,220,227 
Commercial real estate1,499,630  1,389,547  1,296,266  1,259,117  1,292,116 
Paycheck protection program614,970  612,133       
Loans to individuals792,994  748,474  756,634  727,175  749,361 
Total Texas8,452,752  8,521,845  8,403,590  8,161,186  8,261,704 
          
Oklahoma:         
Commercial4,901,666  5,086,934  3,886,086  3,454,825  3,690,100 
Commercial real estate647,228  636,021  593,473  631,026  679,786 
Paycheck protection program487,247  442,518       
Loans to individuals2,036,452  1,967,665  1,788,518  1,854,864  1,753,698 
Total Oklahoma8,072,593  8,133,138  6,268,077  5,940,715  6,123,584 
          
Colorado:         
Commercial1,501,821  1,600,382  2,181,309  2,169,598  2,247,798 
Commercial real estate890,746  937,742  955,608  927,826  975,066 
Paycheck protection program494,910  488,279       
Loans to individuals257,345  264,872  268,674  276,939  303,605 
Total Colorado3,144,822  3,291,275  3,405,591  3,374,363  3,526,469 
          
Arizona:         
Commercial956,047  1,036,862  1,396,582  1,307,073  1,276,534 
Commercial real estate692,987  689,121  714,161  728,832  771,425 
Paycheck protection program272,114  318,961       
Loans to individuals166,115  177,066  181,821  186,539  170,815 
Total Arizona2,087,263  2,222,010  2,292,564  2,222,444  2,218,774 
          
Kansas/Missouri:         
Commercial414,038  404,860  556,255  527,872  566,969 
Commercial real estate352,241  314,504  310,799  322,541  374,795 
Paycheck protection program80,230  76,724       
Loans to individuals96,358  102,577  116,734  131,069  146,522 
Total Kansas/Missouri942,867  898,665  983,788  981,482  1,088,286 
          
New Mexico:         
Commercial157,322  182,688  327,164  305,320  335,409 
Commercial real estate471,505  455,574  434,150  402,148  374,331 
Paycheck protection program133,244  128,058       
Loans to individuals79,890  83,470  87,110  90,257  92,270 
Total New Mexico841,961  849,790  848,424  797,725  802,010 
          
Arkansas:         
Commercial89,654  75,093  97,889  92,068  87,588 
Commercial real estate139,363  131,635  145,628  162,293  158,538 
Paycheck protection program14,610  14,755       
Loans to individuals17,415  17,684  18,419  18,711  18,414 
Total Arkansas261,042  239,167  261,936  273,072  264,540 
          
TOTAL BOK FINANCIAL$23,803,300  $24,155,890  $22,463,970  $21,750,987  $22,285,367 

Loans attributed to a principal market may not always represent the location of the borrower or the collateral.




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

 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
Oklahoma:         
Demand$4,493,691  $4,378,559  $3,669,558  $3,257,337  $3,515,312 
Interest-bearing:         
Transaction12,586,401  11,438,489  9,955,697  8,574,912  7,447,799 
Savings401,062  387,557  329,631  306,194  308,103 
Time1,081,176  1,330,619  1,137,802  1,125,446  1,198,170 
Total interest-bearing14,068,639  13,156,665  11,423,130  10,006,552  8,954,072 
Total Oklahoma18,562,330  17,535,224  15,092,688  13,263,889  12,469,384 
          
Texas:         
Demand3,152,393  3,070,955  2,767,399  2,757,376  2,867,915 
Interest-bearing:         
Transaction3,482,603  3,358,090  2,874,362  2,911,731  2,589,063 
Savings136,787  128,892  115,039  102,456  100,597 
Time438,337  476,867  505,565  495,343  464,264 
Total interest-bearing4,057,727  3,963,849  3,494,966  3,509,530  3,153,924 
Total Texas7,210,120  7,034,804  6,262,365  6,266,906  6,021,839 
          
Colorado:         
Demand2,057,603  2,096,075  1,579,764  1,729,674  1,694,044 
Interest-bearing:         
Transaction1,861,763  1,816,604  1,759,384  1,769,037  1,910,874 
Savings68,230  67,477  58,000  53,307  60,107 
Time226,780  254,845  279,105  283,517  273,622 
Total interest-bearing2,156,773  2,138,926  2,096,489  2,105,861  2,244,603 
Total Colorado4,214,376  4,235,001  3,676,253  3,835,535  3,938,647 
          
New Mexico:         
Demand964,908  965,877  750,052  623,722  645,698 
Interest-bearing:         
Transaction713,418  752,565  563,891  558,493  539,260 
Savings85,463  80,242  67,553  63,999  62,863 
Time200,525  222,370  235,778  238,140  236,135 
Total interest-bearing999,406  1,055,177  867,222  860,632  838,258 
Total New Mexico1,964,314  2,021,054  1,617,274  1,484,354  1,483,956 
          
Arizona:         
Demand928,671  985,757  665,396  681,268  705,895 
Interest-bearing:         
Transaction771,319  780,500  729,603  684,929  600,103 
Savings11,498  15,669  8,832  10,314  12,487 
Time36,929  42,318  47,081  49,676  44,347 
Total interest-bearing819,746  838,487  785,516  744,919  656,937 
Total Arizona1,748,417  1,824,244  1,450,912  1,426,187  1,362,832 


 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
Kansas/Missouri:         
Demand405,360  427,795  318,985  384,533  376,020 
Interest-bearing:         
Transaction616,797  526,635  537,552  784,574  284,940 
Savings15,520  15,033  12,888  12,169  11,689 
Time16,430  17,746  19,137  17,877  19,126 
Total interest-bearing648,747  559,414  569,577  814,620  315,755 
Total Kansas/Missouri1,054,107  987,209  888,562  1,199,153  691,775 
          
Arkansas:         
Demand44,712  67,147  70,428  27,381  39,513 
Interest-bearing:         
Transaction164,439  177,535  175,803  108,076  149,506 
Savings2,389  2,101  1,862  1,837  1,747 
Time7,796  7,995  8,005  7,850  7,877 
Total interest-bearing174,624  187,631  185,670  117,763  159,130 
Total Arkansas219,336  254,778  256,098  145,144  198,643 
          
TOTAL BOK FINANCIAL$34,973,000  $33,892,314  $29,244,152  $27,621,168  $26,167,076 




NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

 Three Months Ended
 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents0.12% 0.07% 1.33% 1.62% 2.42%
Trading securities1.92% 2.46% 2.89% 3.19% 3.49%
Investment securities, net of allowance4.85% 4.77% 4.73% 4.69% 4.46%
Available for sale securities2.11% 2.29% 2.48% 2.52% 2.60%
Fair value option securities1.92% 2.00% 2.67% 2.62% 2.79%
Restricted equity securities2.53% 2.75% 5.49% 5.37% 6.34%
Residential mortgage loans held for sale3.01% 3.10% 3.50% 3.55% 3.73%
Loans3.60% 3.63% 4.50% 4.75% 5.12%
Allowance for loan losses         
Loans, net of allowance3.67% 3.69% 4.55% 4.80% 5.17%
Total tax-equivalent yield on earning assets3.04% 3.12% 3.73% 3.93% 4.25%
          
COST OF INTEREST-BEARING LIABILITIES          
Interest-bearing deposits:         
Interest-bearing transaction0.17% 0.21% 0.89% 1.00% 1.08%
Savings0.05% 0.05% 0.09% 0.11% 0.14%
Time1.13% 1.36% 1.83% 1.94% 1.94%
Total interest-bearing deposits0.26% 0.34% 0.98% 1.09% 1.17%
Funds purchased and repurchase agreements0.17% 0.14% 1.14% 1.56% 2.01%
Other borrowings0.43% 0.56% 1.66% 2.01% 2.42%
Subordinated debt4.89% 5.16% 5.30% 5.40% 5.48%
Total cost of interest-bearing liabilities0.31% 0.37% 1.19% 1.40% 1.68%
Tax-equivalent net interest revenue spread2.73% 2.75% 2.54% 2.53% 2.57%
Effect of noninterest-bearing funding sources and other0.08% 0.08% 0.26% 0.35% 0.44%
Tax-equivalent net interest margin2.81% 2.83% 2.80% 2.88% 3.01%

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




CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)

 Three Months Ended
 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
Nonperforming assets:         
Nonaccruing loans:         
Commercial:         
Energy$126,816   $162,989   $96,448   $91,722   $88,894  
Healthcare3,645   3,645   4,070   4,480   5,978  
Services25,817   21,032   8,425   7,483   6,119  
General business13,675   14,333   9,681   11,731   10,715  
Total commercial169,953   201,999   118,624   115,416   111,706  
          
Commercial real estate12,952   13,956   8,545   27,626   23,185  
          
Loans to individuals:         
Permanent mortgage31,599   33,098   30,721   31,522   30,972  
Permanent mortgage guaranteed by U.S. government agencies6,397   6,110   5,005   6,100   6,332  
Personal252   233   277   287   271  
Total loans to individuals38,248   39,441   36,003   37,909   37,575  
          
Total nonaccruing loans$221,153   $255,396   $163,172   $180,951   $172,466  
Accruing renegotiated loans guaranteed by U.S. government agencies142,770   114,571   91,757   92,452   92,718  
Real estate and other repossessed assets52,847   35,330   36,744   20,359   21,026  
Total nonperforming assets$416,770   $405,297   $291,673   $293,762   $286,210  
Total nonperforming assets excluding those guaranteed by U.S. government agencies267,603   284,616   194,911   195,210   187,160  
          
Accruing loans 90 days past due17,684   10,992   3,706   7,680   1,541  
          
Gross charge-offs$26,661   $15,570   $18,917   $14,268   $11,707  
Recoveries(4,232)  (1,491)  (1,696)  (1,816)  (1,066) 
Net charge-offs$22,429   $14,079   $17,221   $12,452   $10,641  
          
Provision for loan losses$6,609   $134,365   $95,964   $18,779   $12,539  
Provision for credit losses from off-balance sheet unfunded loan commitments(4,950)  4,405   3,377   221   (539) 
Provision for expected credit losses from mortgage banking acitivities2(770)  (3,575)  (6,020)       
Provision for credit losses related to held-to maturity (investment) securities portfolio2(889)  126   450        
Total provision for credit losses$   $135,321   $93,771   $19,000   $12,000  


 Three Months Ended
 Sept. 30, 2020 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019
Allowance for loan losses to period end loans1.76% 1.80% 1.40% 0.97% 0.92%
Allowance for loan losses to period end loans excluding PPP loans31.93% 1.97% 1.40% 0.97% 0.92%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans1.88% 1.94% 1.53% 0.98% 0.92%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans32.06% 2.12% 1.53% 0.98% 0.92%
Nonperforming assets to period end loans and repossessed assets1.75% 1.68% 1.30% 1.35% 1.28%
Net charge-offs (annualized) to average loans0.37% 0.23% 0.31% 0.22% 0.19%
Net charge-offs (annualized) to average loans excluding PPP loans30.41% 0.25% 0.31% 0.22% 0.19%
Allowance for loan losses to nonaccruing loans1195.47% 174.74% 199.35% 120.54% 123.05%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1208.49% 187.94% 217.38% 121.44% 123.87%

1   Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
2   Included in Provision for credit losses effective with implementation of CECL on January 1, 2020.
3   Represents a non-GAAP measure meaningful due to the unique characteristics and short-term nature of the PPP loans.




SEGMENTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)

  Three Months Ended Change
Commercial Banking Sept. 30, 2020
 June 30, 2020
 Sept. 30, 2019
 3Q20 vs
2Q20
 3Q20 vs
3Q19
Net interest revenue $149,946  $145,109  $178,960  3.3% (16.2)%
Fees and commissions revenue 50,085  46,515  46,159  7.7%  8.5%
Other operating expense 66,846  62,933  69,127  6.2%  (3.3)%
Corporate expense allocations 5,172  5,437  11,772  (4.9)%  (56.1)%
Net income 75,097  80,992  100,986  (7.3)%  (25.6)%
                
Average assets 28,000,183  27,575,652  23,973,925  1.5%  16.8%
Average loans 18,677,401  19,262,827  19,226,347  (3.0)%  (2.9)%
Average deposits 15,375,450  14,599,225  10,833,057  5.3%  41.9%
                
Consumer Banking               
Net interest revenue $33,130  $39,270  $48,462  (15.6)%  (31.6)%
Fees and commissions revenue 67,974  67,192  51,461  1.2%  32.1%
Other operating expense 59,839  58,936  59,699  1.5%  0.2%
Corporate expense allocations 10,812  10,812  11,776  % (8.2)%
Net income 26,256  31,900  16,640  (17.7)%  57.8%
                
Average assets 9,898,119  9,920,005  9,827,130  (0.2)%  0.7%
Average loans 1,825,865  1,679,164  1,773,831  8.7%  2.9%
Average deposits 7,940,973  7,587,246  6,983,018  4.7%  13.7%
                
Wealth Management               
Net interest revenue $22,985  $26,880  $23,066  (14.5)%  (0.4)%
Fees and commissions revenue 111,655  106,757  89,422  4.6%  24.9%
Other operating expense 82,868  80,567  71,619  2.9%  15.7%
Corporate expense allocations 9,397  8,204  9,416  14.5%  (0.2)%
Net income 31,212  33,394  23,206  (6.5)%  34.5%
                
Average assets 16,206,522  15,721,452  10,391,225  3.1%  56.0%
Average loans 1,777,008  1,709,363  1,671,102  4.0%  6.3%
Average deposits 9,090,116  8,385,681  6,590,332  8.4%  37.9%
Fiduciary assets 52,935,646  50,560,584  49,259,697  4.7%  7.5%
Assets under management or administration 82,419,932  79,452,502  80,796,949  3.7%  2.0%


BOKF logo.jpg

Source: BOK Financial Corporation