BOK Financial Reports Annual and Quarterly Earnings for 2014

Company Provides Update on Energy Lending

TULSA, Okla.--()--BOK Financial Corporation reported net income of $292.4 million or $4.22 per diluted share for the year ended December 31, 2014. Net income for the year ended December 31, 2013 was $316.6 million or $4.59 per diluted share.

Net income for fourth quarter of 2014 totaled $64.3 million or $0.93 per diluted share compared to net income of $75.6 million or $1.09 per diluted share for the third quarter of 2014. Branch closure costs accrued in the fourth quarter and net changes in the fair value of mortgage servicing rights between the third and fourth quarters reduced net income by $10.7 million or $0.16 per diluted share.

Steven G. Bradshaw, president and chief executive officer, stated, “Overall, 2014 was a very solid year for BOK Financial, and we executed well on the strategic objectives outlined at the start of the year. We re-energized loan growth, increased assets under management, repositioned our balance sheet to prepare for a possible rising interest rate environment, and made significant investments to further strengthen our risk and compliance infrastructure. We enter 2015 with strong momentum across the business and a sound plan to continue to enhance long-term shareholder value.”

Bradshaw continued, “The fourth quarter’s profitability was negatively impacted by two notable items. However, we posted our strongest quarter of the year from a loan growth standpoint and continued to show good revenue momentum in several key fee-generating lines of business while carefully managing expenses. All told, I am pleased with our results in 2014 and the fourth quarter. BOK Financial remains well-positioned with a strong franchise, high-quality products and services, a professional team, and a rock-solid balance sheet.”

Highlights of fourth quarter of 2014 included:

  • Net interest revenue totaled $169.7 million for the fourth quarter of 2014, up $2.9 million over the third quarter of 2014. Net interest margin was 2.61% for the fourth quarter of 2014, and 2.67% for the third quarter of 2014.
  • Fees and commissions revenue totaled $157.9 million for the fourth quarter of 2014, compared to $158.5 million for the third quarter of 2014. Brokerage and trading revenue decreased $4.7 million and mortgage banking revenue was up $3.3 million over the prior quarter.
  • Change in fair value of mortgage servicing rights, net of economic hedges decreased pre-tax net income in the fourth quarter of 2014 by $6.1 million and increased pre-tax net income in the third quarter of 2014 by $4.8 million.
  • Operating expenses were $225.9 million for the fourth quarter, an increase of $4.0 million over the previous quarter, including $4.9 million of branch closure costs. Personnel expense increased $2.7 million and non-personnel expense increased $1.3 million.
  • No provision for credit losses was recorded in the fourth or third quarters of 2014. Net charge-offs were $2.2 million for the fourth quarter of 2014, compared to net recoveries of $476 thousand in the third quarter.
  • The combined allowance for credit losses totaled $190 million or 1.34% of outstanding loans at December 31, 2014 compared to $192 million or 1.41% of outstanding loans at September 30, 2014. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $129 million or 0.92% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at December 31, 2014 and $144 million or 1.06% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at September 30, 2014.
  • Average loans increased $363 million over the previous quarter due primarily to growth in commercial loans. Average commercial loans were up $418 million. Average commercial real estate loans decreased $26 million. Residential mortgage and consumer loans decreased by a total of $29 million. Period-end outstanding loan balances were $14.2 billion at December 31, 2014, an increase of $524 million over September 30, 2014. Commercial loan balances increased $524 million and commercial real estate loans were largely unchanged. A decrease in residential mortgage loans was partially offset by growth in consumer loans.
  • Average deposits increased $471 million over the previous quarter. Interest-bearing transaction, demand and time deposits all grew over the prior quarter. Period end deposits grew by $852 million over September 30, 2014 to $21.1 billion at December 31, 2014. Interest-bearing transaction accounts increased $870 million. Demand deposit account balances were largely unchanged and time deposits decreased $56 million.
  • The Company's Tier 1 common equity ratio, as defined by banking regulations, was 13.13% at December 31, 2014 and 13.55% at September 30, 2014. The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company's Tier 1 capital ratio was 13.29% at December 31, 2014 and 13.72% at September 30, 2014. Total capital ratio was 14.61% at December 31, 2014 and 15.11% at September 30, 2014. The Company's leverage ratio was 9.96% at December 31, 2014 and 10.22% at September 30, 2014.
  • The Company paid a regular quarterly cash dividend of $29 million or $0.42 per common share during the fourth quarter of 2014. On January 27, 2015, the board of directors approved a quarterly cash dividend of $0.42 per common share payable on or about February 27, 2015 to shareholders of record as of February 13, 2015. During the fourth quarter, the Company repurchased 200,000 common shares at an average price of $61.68 per share.

Net Interest Revenue

Net interest revenue increased $2.9 million over the third quarter of 2014. Net interest margin was 2.61% for the fourth quarter of 2014, compared to 2.67% for the third quarter of 2014.

The yield on average earning assets was 2.86%, a decrease of 7 basis points compared to the prior quarter. The loan portfolio yield decreased 5 basis points from the previous quarter to 3.73% primarily due to continued market pricing pressure. The yield on the available for sale securities portfolio increased 4 basis points to 1.99%. Excess cash flows continue to be reinvested in short-duration securities that yield around 2%. Funding costs decreased 2 basis points compared to the prior quarter to 0.39%.

Average earning assets increased $1.0 billion during the fourth quarter of 2014 primarily due to an $872 million increase in interest-bearing cash and cash equivalents. This increase was primarily driven by the full quarter impact of depositing $1.5 billion of borrowed funds in the Federal Reserve Bank to earn a spread. Average loan balances increased $363 million, offset by a $365 million decrease in the available for sale securities portfolio. Average deposits increased $471 million over the third quarter of 2014. The average balance of borrowed funds increased $407 million primarily due to increased borrowings from the Federal Home Loan Bank.

Steven Nell, Chief Financial Officer, noted, “During the year, we remixed our balance sheet to replace fixed income securities with high-quality commercial loans, which should better position the bank in anticipation of rising interest rates in 2015. In total, the amortized cost of our securities portfolio decreased $1.3 billion, while our loan portfolio grew by $1.4 billion. We expect to continue this transition at a pace consistent with the fourth quarter. In addition, increased cash balances deposited at the Federal Reserve reduced tax equivalent net interest margin by 8 basis points compared to the third quarter. Excluding this strategy which adds net interest revenue, net interest margin increased two basis points over the third quarter."

Fees and Commissions Revenue

Fees and commissions revenue totaled $157.9 million for the fourth quarter of 2014, largely unchanged compared to the third quarter of 2014. A decrease in brokerage and trading revenue was largely offset by growth in mortgage banking revenue and fiduciary and asset management revenue.

Brokerage and trading revenue totaled $30.6 million, a $4.7 million decrease compared to the prior quarter. The fourth quarter included $562 thousand of recoveries from the Lehman bankruptcy. Excluding these recoveries, customer hedging revenue decreased $1.4 million primarily due to a decrease in energy and foreign exchange derivative contracts sold to customers. Retail brokerage fees were $2.7 million lower than the prior quarter. Investment banking revenue decreased $934 thousand and securities trading revenue decreased $179 thousand.

Mortgage banking revenue totaled $30.1 million for the fourth quarter of 2014, up $3.3 million over the third quarter of 2014. Revenue from mortgage loan production increased $2.5 million over the prior quarter. Net realized gain from loans funded and sold into the secondary market increased $571 thousand primarily due to an increase in refinanced mortgage loans. The valuation on loan commitments and loans that have closed but have not yet been sold as of the end of the fourth quarter, net of forward sales commitments was $1.9 million more than at the end of the third quarter. Revenue from mortgage loan servicing grew by $795 thousand due to an increase in the volume of loans serviced.

Fiduciary and asset management revenue was $30.6 million, a $911 thousand increase over the prior quarter, primarily due to growth in the fair value of fiduciary asset administered by the Company. Fiduciary assets were $36.0 billion at December 31, 2014 compared to $34.0 billion at September 30, 2014.

Operating Expenses

Total operating expenses were $225.9 million for the fourth quarter of 2014, an increase of $4.0 million over the third quarter of 2014. During the fourth quarter, the Company announced the discontinuation of the grocery store branch model, resulting in 29 in-store branch closures during the first quarter of 2015. The decision comes as consumer trends lean more towards use of digital banking for everyday transactions and banking center visits for in-person advice or consult. Approximately $4.9 million was expensed in the fourth quarter related to the announced closures, primarily related to facilities and severance costs.

Personnel costs increased $2.7 million over the previous quarter. Regular compensation expense increased $3.7 million and included $800 thousand of branch closure costs. This increase was partially offset by an $822 thousand seasonal decrease in payroll taxes. Incentive compensation was unchanged compared to the prior quarter.

Non-personnel expense increased $1.3 million over the third quarter of 2014. Net losses (gains) and operating expenses of repossessed assets decreased $6.5 million during the fourth quarter to a net gain of $1.5 million. Professional fees and services expense decreased $3.7 million as risk management and regulatory compliance cost stabilized. The third quarter included $2.2 million for an independent assessment of certain risk management capabilities. Net occupancy expense increased $3.8 million over the third quarter. Approximately $4.1 million was expensed in the fourth quarter related to branch closure costs. Mortgage banking costs increased $2.8 million over the third quarter primarily due to increased prepayments of loans serviced for others and accruals for loan servicing costs. The Company also made a $1.8 million contribution of developed commercial real estate to the BOKF Foundation during the fourth quarter. This contribution resulted in an $822 thousand reduction in income tax expense.

Loans, Deposits and Capital

Loans

Outstanding loans were $14.2 billion at December 31, 2014, an increase of $524 million over the previous quarter. Commercial, commercial real estate and consumer loan balances all grew over the prior quarter, partially offset by a decrease in residential mortgage loan balances.

Outstanding commercial loan balances increased $524 million over September 30, 2014. All sectors of our commercial loan portfolio grew over the prior quarter. Energy sector loans grew $309 million over September 30, 2014. Healthcare sector loans were up $73 million and manufacturing sector loans grew by $53 million. Wholesale/retail sector loans were up $40 million, service sector loans balances grew by $30 million and Other commercial and industrial loans increased $19 million. Unfunded energy loan commitments were increased by $25 million in the fourth quarter to $2.9 billion. All other unfunded commercial loan commitments totaled $4.3 billion at December 31, 2014, an increase of $494 million over September 30, 2014.

Commercial real estate loans increased $4.0 million over September 30, 2014. Loans secured by industrial facilities were up $57 million and retail sector loans grew by $56 million over the prior quarter. This growth was offset by a $35 million decrease in loans secured by multifamily residential properties, a $23 million decrease in loans secured by office buildings and construction and a $32 million decrease in residential construction and land development loans. Unfunded commercial real estate loan commitments totaled $753 million at December 31, 2014, an increase of $95 million over September 30, 2014.

Dan Ellinor, Chief Operating Officer, stated, “We continue to see strong demand for commercial loans across the business. Fourth quarter loan growth was robust, and our new deal pipelines remain full at the beginning of 2015. Accordingly, we continue to forecast low-double-digit loan growth through 2015. In particular, as we expected, loan demand in our energy lending business has accelerated due to a more rational competitive environment as well as fewer non-bank alternatives for high-quality energy borrowers.”

Energy Loan Update

At December 31, 2014, the Company's energy loan portfolio totaled $2.9 billion, up from $2.6 billion at September 30, 2014 and $2.4 billion at December 31, 2013. Loans to energy exploration and production companies represented 86% of total energy loans outstanding. Loans to energy services, midstream and retail / wholesale energy companies were 8%, 3% and 3%, respectively.

With the recent decrease in energy prices, the Company has conducted a comprehensive credit review of those areas of the energy portfolio that it deems having the highest level of risk in an energy industry downturn: energy services companies, energy borrowers with high total leverage, and those energy customers determined to be most susceptible to lower commodity prices in the Company's most recent energy portfolio stress test. The Company conducted an updated stress test of its energy portfolio, assuming starting commodity prices of $45 per barrel for oil and $2.50 per MMBTUs for natural gas. The Company also reviewed borrowers who comprised a majority of energy loan growth in the fourth quarter.

The results of the comprehensive review and updated stress test did not alter the general view that the loan portfolio is well positioned to withstand a short-term correction in oil and natural gas prices. No material near-term losses were identified.

Stacy Kymes, Chief Credit Officer, noted, “Commodity price volatility is inherent in energy lending. Oil or natural gas prices have fallen by 50% or more in a six-month period six times since 2000, and thus far by historic standards, the price drop which began in June 2014 is less severe than those previous declines. Our average gross charge-offs in the energy production portfolio are 9.9 basis points over the past 10 years and 6.4 basis points over the past 20 years, making it our best performing portfolio from a credit quality standpoint.”

Kymes continued, “We believe the duration of the downturn is the key question to assess credit risk or risk of an economic slowdown in our footprint. To that end, we see two distinct risk periods: if commodity prices return to a normalized, stable level over the next 6-12 months, we expect to see some credits migrate to potential problem loan or non-accrual status, but few, if any material actual losses in the portfolio. In addition, we expect a more modest impact on economic growth in our footprint. If the downturn extends beyond 12 months, outcomes are obviously more difficult to predict. At that point, we would be more likely to see loss content in the portfolio and a greater impact on the overall economy, and in turn lower loan demand. However, at present our portfolio is strong, we are doing business with high-quality borrowers, and we do not view the current commodity price decline as inherently different than previous declines we have experienced since 2000.”

Deposits

Deposits totaled $21.1 billion at December 31, 2014, an increase of $852 million over September 30, 2014 primarily due to normal seasonality and temporary customer activity. Interest-bearing transaction account balances grew by $870 million. Demand deposit balances were largely unchanged compared to the prior quarter. Time deposits decreased $56 million. Among the lines of business, commercial deposits increased $173 million, consumer deposits decreased $5.9 million and wealth management deposits increased $298 million.

Capital

The Company and its subsidiary bank exceeded the regulatory definition of well capitalized at December 31, 2014. The Company's Tier 1 capital ratio was 13.29% at December 31, 2014 and 13.72% at September 30, 2014. The total capital ratio was 14.61% at December 31, 2014 and 15.11% at September 30, 2014. In addition, the Company's tangible common equity ratio, a non-GAAP measure, was 10.08% at December 31, 2014 and 9.86% at September 30, 2014.

In July 2013, banking regulators issued the final rule revising regulatory capital rules for substantially all U.S. banking organizations. The new capital rules, which were effective for BOK Financial on January 1, 2015, establish a 7% threshold for the Tier 1 common equity ratio. The Company will elect to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital, consistent with the treatment under current capital rules. BOK Financial's Tier 1 common equity ratio based on the existing Basel I standards was 13.13% as of December 31, 2014. Based on our interpretation of the new capital rule, our estimated Tier 1 common equity ratio on a fully phased-in basis would be approximately 12.25%, nearly 525 basis points above the 7% regulatory threshold.

Credit Quality

Nonperforming assets totaled $257 million or 1.79% of outstanding loans and repossessed assets at December 31, 2014 compared to $265 million or 1.92% of outstanding loans and repossessed assets at September 30, 2014. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $129 million or 0.92% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at December 31, 2014 and $144 million or 1.06% at September 30, 2014, a decrease of $15 million or 10%.

Nonaccruing loans totaled $81 million or 0.57% of outstanding loans at December 31, 2014 compared to $97 million or 0.71% of outstanding loans at September 30, 2014. New nonaccruing loans identified in the fourth quarter totaled $14 million, offset by $17 million in payments received, $7.2 million in charge-offs and $5.7 million in foreclosures and repossessions. At December 31, 2014, nonaccruing commercial loans totaled $14 million or 0.15% of outstanding commercial loans and nonaccruing commercial real estate loans totaled $19 million or 0.68% of outstanding commercial real estate loans. Nonaccruing residential mortgage loans totaled $48 million or 2.47% of outstanding residential mortgage loans.

Net charge-offs were $2.2 million for the fourth quarter of 2014, compared to net recoveries of $476 thousand for the third quarter of 2014. Gross charge-offs totaled $7.2 million for the fourth quarter, compared to $2.6 million for the previous quarter. Recoveries totaled $5.0 million for the fourth quarter of 2014 and $3.1 million for the third quarter of 2014.

After evaluating all credit factors, including the inherent risk of falling energy prices, the Company determined that no provision for credit losses was necessary during the fourth quarter of 2014. The combined allowance for credit losses totaled $190 million or 1.34% of outstanding loans and 235.59% of nonaccruing loans at December 31, 2014. The allowance for loan losses was $189 million and the accrual for off-balance sheet credit losses was $1.2 million.

Real estate and other repossessed assets totaled $102 million at December 31, 2014, primarily consisting of $68 million of 1-4 family residential properties (including $50 million guaranteed by U.S. government agencies), $21 million of developed commercial real estate properties, $7.9 million of undeveloped land and $4.9 million of residential land and land development properties.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $9.0 billion at December 31, 2014 and $9.3 billion at September 30, 2014. At December 31, 2014, the available for sale portfolio consisted primarily of $6.6 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $2.0 billion of commercial mortgage-backed securities fully backed by U.S. government agencies.

The available for sale securities portfolio had a net unrealized gain of $97 million at December 31, 2014, compared to a net unrealized gain of $43 million at September 30, 2014. Net unrealized gains on residential mortgage-backed securities issued by U.S. government agencies at September 30, 2014 increased $41 million during the fourth quarter to a net unrealized gain of $98 million at December 31, 2014. Commercial mortgage-backed securities had a net unrealized loss of $15 million at December 31, 2014, compared to a net unrealized loss of $27 million at September 30, 2014.

In the fourth quarter of 2014, the Company recognized net gains of $149 thousand from sales of $772 million of available for sale securities. Securities were sold either because they had reached their expected maximum potential return or to move into securities that will perform better in a rising rate environment. Net gains from sales of $553 million of available for sale securities in the third quarter of 2014 totaled $146 thousand.

The Company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts designated as an economic hedge of the changes in the fair value of our mortgage servicing rights. The value of our mortgage servicing rights decreased by $10.8 million due primarily to a nearly 40 basis point decrease in residential mortgage interest rates during the fourth quarter of 2014. The value of securities and interest rate derivative contracts held as an economic hedge increased by $4.8 million. Mortgage interest rate changes increased the fair value of mortgage servicing rights net of economic hedges by $4.8 million in the third quarter.

Conference Call and Webcast

The Company will hold a conference call at 9:00 a.m. central time on Wednesday, January 28, 2015 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 1-412-902-6611. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-0088 and referencing conference ID # 10058729.

About BOK Financial Corporation

BOK Financial is a $29 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, BOSC, Inc. and The Milestone Group, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management, MBM Advisors and seven banking divisions: Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, 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, 2014 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,” 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 involve judgments as to future events and are inherently forward-looking statements. Assessments that BOK Financial's acquisitions and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to (1) the ability to fully realize expected cost savings from mergers within the expected time frames, (2) the ability of other companies on which BOK Financial relies to provide goods and services in a timely and accurate manner, (3) changes in interest rates and interest rate relationships, (4) demand for products and services, (5) the degree of competition by traditional and nontraditional competitors, (6) changes in banking regulations, tax laws, prices, levies and assessments, (7) the impact of technological advances and (8) trends in consumer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

 
 
BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION

(In thousands)

  December 31,
2014
  September 30,
2014
  December 31,
2013
ASSETS
Cash and due from banks $ 550,576 $ 557,658 $ 512,931
Interest-bearing cash and cash equivalents 1,925,266 2,007,901 574,282
Trading securities 188,700 169,712 91,616
Investment securities 652,360 655,091 677,878
Available for sale securities 8,978,945 9,306,886 10,147,162
Fair value option securities 311,597 175,761 167,125
Restricted equity securities 141,494 189,587 85,240
Residential mortgage loans held for sale 304,182 373,253 200,546
Loans:
Commercial 9,095,670 8,572,038 7,943,221
Commercial real estate 2,728,150 2,724,199 2,415,353
Residential mortgage 1,949,512 1,979,663 2,052,026
Consumer     434,705       407,839       381,664  
Total loans 14,208,037 13,683,739 12,792,264
Allowance for loan losses     (189,056 )     (191,244 )     (185,396 )
Loans, net of allowance 14,018,981 13,492,495 12,606,868
Premises and equipment, net 273,833 275,718 277,849
Receivables 132,408 114,374 117,126
Goodwill 377,780 377,780 359,759
Intangible assets, net 34,376 35,476 24,564
Mortgage servicing rights, net 171,976 173,286 153,333
Real estate and other repossessed assets, net 101,861 97,871 92,272
Derivative contracts, net 361,874 360,809 265,012
Cash surrender value of bank-owned life insurance 293,978 291,583 284,801
Receivable on unsettled securities sales 74,259 94,881 17,174
Other assets     195,252       354,898       359,894  
TOTAL ASSETS   $ 29,089,698     $ 29,105,020     $ 27,015,432  
 
LIABILITIES AND EQUITY
Deposits:
Demand $ 8,066,357 $ 8,038,129 $ 7,316,277
Interest-bearing transaction 10,114,355 9,244,709 9,934,051
Savings 351,431 341,638 323,006
Time     2,608,716       2,664,580       2,695,993  
Total deposits 21,140,859 20,289,056 20,269,327
Funds purchased 57,031 85,135 868,081
Repurchase agreements 1,187,489 1,026,009 813,454
Other borrowings 2,133,774 3,484,487 1,040,353
Subordinated debentures 347,983 347,936 347,802
Accrued interest, taxes, and expense 120,211 100,664 194,870
Due on unsettled securities purchases 290,540 8,126 45,740
Derivative contracts, net 354,554 348,687 247,185
Other liabilities     121,051       137,608       133,647  
TOTAL LIABILITIES 25,753,492 25,827,708 23,960,459
Shareholders' equity:
Capital, surplus and retained earnings 3,245,506 3,219,798 3,045,672
Accumulated other comprehensive income (loss)     56,673       23,295       (25,623 )
TOTAL SHAREHOLDERS' EQUITY 3,302,179 3,243,093 3,020,049
Non-controlling interests     34,027       34,219       34,924  
TOTAL EQUITY     3,336,206       3,277,312       3,054,973  
TOTAL LIABILITIES AND EQUITY   $ 29,089,698     $ 29,105,020     $ 27,015,432  
 
 
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)

  Three Months Ended
December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
ASSETS
Interest-bearing cash and cash equivalents $ 2,090,176 $ 1,217,942 $ 635,140 $ 549,473 $ 559,918
Trading securities 164,502 107,909 116,186 92,409 127,011
Investment securities 650,911 641,375 658,793 671,756 672,722
Available for sale securities 9,161,901 9,526,727 9,800,934 10,076,942 10,434,810
Fair value option securities 221,773 180,268 164,684 165,515 167,490
Restricted equity securities 182,737 142,418 97,016 85,234 123,009
Residential mortgage loans held for sale 321,746 310,924 219,308 185,196 217,811
Loans:
Commercial 8,886,952 8,468,575 8,266,455 7,971,712 7,737,883
Commercial real estate 2,665,547 2,691,318 2,622,866 2,605,264 2,352,915
Residential mortgage 1,904,777 1,955,769 1,983,926 1,998,620 1,998,980
Consumer     424,729       402,916       391,214       372,330       371,798  
Total loans 13,882,005 13,518,578 13,264,461 12,947,926 12,461,576
Allowance for loan losses     (190,787 )     (191,141 )     (189,329 )     (186,979 )     (193,309 )
Total loans, net     13,691,218       13,327,437       13,075,132       12,760,947       12,268,267  
Total earning assets 26,484,964 25,455,000 24,767,193 24,587,472 24,571,038
Cash and due from banks 528,595 493,200 481,944 473,758 324,349
Derivative contracts, net 352,565 288,682 291,325 287,363 314,530
Cash surrender value of bank-owned life insurance 292,411 290,044 287,725 285,592 283,289
Receivable on unsettled securities sales 69,109 63,277 108,825 114,708 83,016
Other assets     1,404,553       1,525,354       1,549,809       1,489,875       1,526,566  
TOTAL ASSETS   $ 29,132,197     $ 28,115,557     $ 27,486,821     $ 27,238,768     $ 27,102,788  
 
LIABILITIES AND EQUITY
Deposits:
Demand $ 7,974,165 $ 7,800,350 $ 7,654,225 $ 7,312,076 $ 7,356,063
Interest-bearing transaction 9,730,564 9,473,575 9,850,991 9,900,823 9,486,136
Savings 346,132 342,488 355,459 336,576 323,123
Time     2,647,147       2,610,561       2,636,444       2,686,041       2,710,019  
Total deposits 20,698,008 20,226,974 20,497,119 20,235,516 19,875,341
Funds purchased 71,728 320,817 574,926 1,021,755 748,074
Repurchase agreements 996,308 1,027,206 914,892 773,127 752,286
Other borrowings 3,021,094 2,333,961 1,294,932 1,038,747 1,551,591
Subordinated debentures 347,960 347,914 347,868 347,824 347,781
Derivative contracts, net 321,367 270,998 243,619 258,729 294,315
Due on unsettled securities purchases 137,566 124,952 166,521 116,295 152,078
Other liabilities     228,021       214,306       270,220       341,701       327,519  
TOTAL LIABILITIES 25,822,052 24,867,128 24,310,097 24,133,694 24,048,985
Total equity     3,310,145       3,248,429       3,176,724       3,105,074       3,053,803  
TOTAL LIABILITIES AND EQUITY   $ 29,132,197     $ 28,115,557     $ 27,486,821     $ 27,238,768     $ 27,102,788  
 
 
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except per share data)

  Three Months Ended   Year Ended
December 31, December 31,
  2014       2013     2014       2013  
 
Interest revenue $ 186,620 $ 183,120 $ 732,239 $ 745,371
Interest expense     16,956       16,876       67,045       70,894  
Net interest revenue 169,664 166,244 665,194 674,477
Provision for credit losses           (11,400 )           (27,900 )
Net interest revenue after provision for credit losses     169,664       177,644       665,194       702,377  
Other operating revenue:
Brokerage and trading revenue 30,602 28,515 134,437 125,478
Transaction card revenue 31,467 29,134 123,689 116,823
Fiduciary and asset management revenue 30,649 25,074 115,652 96,082
Deposit service charges and fees 22,581 23,440 90,911 95,110
Mortgage banking revenue 30,105 21,876 109,093 121,934
Bank-owned life insurance 2,380 2,285 9,086 10,155
Other revenue     10,071       12,048       38,451       38,262  
Total fees and commissions 157,855 142,372 621,319 603,844
Gain (loss) on other assets, net (1,529 ) 651 (6,346 ) (925 )
Gain (loss) on derivatives, net 1,070 (930 ) 2,776 (4,367 )
Gain (loss) on fair value option securities, net 3,685 (2,805 ) 10,189 (15,212 )
Change in fair value of mortgage servicing rights (10,821 ) 6,093 (16,445 ) 22,720
Gain on available for sale securities, net 149 1,634 1,539 10,720
Total other-than-temporary impairment losses (373 ) (373 ) (2,574 )
Portion of loss recognized in (reclassified from) other comprehensive income                       266  
Net impairment losses recognized in earnings     (373 )           (373 )     (2,308 )
Total other operating revenue 150,036 147,015 612,659 614,472
Other operating expense:
Personnel 125,741 125,662 476,931 505,225
Business promotion 7,498 6,020 26,649 22,598
Contribution to BOKF Foundation 1,847 4,267 2,062
Professional fees and services 11,058 10,003 44,440 32,552
Net occupancy and equipment 22,655 19,103 77,232 69,773
Insurance 4,777 4,394 18,578 16,122
Data processing and communications 30,872 28,196 117,049 106,075
Printing, postage and supplies 3,168 3,126 13,518 13,885
Net losses (gains) and operating expenses of repossessed assets (1,497 ) 1,618 6,019 5,160
Amortization of intangible assets 1,100 842 3,965 3,428
Mortgage banking costs 10,553 7,071 29,881 31,088
Other expense     8,105       9,384       28,993       32,652  
Total other operating expense 225,877 215,419 847,522 840,620
 
Net income before taxes 93,823 109,240 430,331 476,229
Federal and state income taxes     28,242       35,318       134,852       157,298  
 
Net income 65,581 73,922 295,479 318,931
Net income attributable to non-controlling interests     1,263       946       3,044       2,322  
Net income attributable to BOK Financial Corporation shareholders   $ 64,318     $ 72,976     $ 292,435     $ 316,609  
 
Average shares outstanding:
Basic 68,481,630 68,095,254 68,394,194 67,988,897
Diluted 68,615,808 68,293,758 68,544,770 68,205,519
 
Net income per share:
Basic $ 0.93 $ 1.06 $ 4.23 $ 4.61
Diluted $ 0.93 $ 1.06 $ 4.22 $ 4.59
 
 
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except ratio and share data)

  Three Months Ended
December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
Capital:
Period-end shareholders' equity $ 3,302,179 $ 3,243,093 $ 3,212,517 $ 3,109,925 $ 3,020,049
Risk weighted assets $ 21,358,938 $ 20,491,089 $ 20,216,268 $ 19,720,418 $ 19,389,381
Risk-based capital ratios:
Tier 1 13.29 % 13.72 % 13.63 % 13.77 % 13.77 %
Total capital 14.61 % 15.11 % 15.38 % 15.55 % 15.56 %
Leverage ratio 9.96 % 10.22 % 10.26 % 10.17 % 10.05 %
Tangible common equity ratio1 10.08 % 9.86 % 10.20 % 10.06 % 9.90 %
Tier 1 common equity ratio 13.13 % 13.55 % 13.46 % 13.59 % 13.59 %
 
Common stock:
Book value per share $ 47.78 $ 46.77 $ 46.39 $ 45.00 $ 43.88
Market value per share:
High $ 68.69 $ 69.56 $ 70.66 $ 69.69 $ 66.32
Low $ 56.87 $ 63.36 $ 61.64 $ 62.34 $ 60.81
Cash dividends paid $ 29,114 $ 27,705 $ 27,706 $ 27,637 $ 27,523
Dividend payout ratio 45.27 % 36.63 % 36.51 % 36.08 % 37.72 %
Shares outstanding, net 69,113,736 69,344,082 69,256,958 69,111,167 68,829,450
 
Stock buy-back program:
Shares repurchased 200,000
Amount   $ 12,337     $     $     $     $  
Average price per share   $ 61.68     $     $     $     $  
 
Performance ratios (quarter annualized):
Return on average assets 0.88 % 1.07 % 1.11 % 1.14 % 1.07 %
Return on average equity 7.71 % 9.24 % 9.58 % 10.00 % 9.48 %
Net interest margin 2.61 % 2.67 % 2.75 % 2.71 % 2.74 %
Efficiency ratio 67.57 % 66.79 % 63.62 % 59.69 % 68.50 %
 
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio:
Total shareholders' equity $ 3,302,179 $ 3,243,093 $ 3,212,517 $ 3,109,925 $ 3,020,049
Less: Goodwill and intangible assets, net     412,156       413,256       414,356       396,131       384,323  
Tangible common equity   $ 2,890,023     $ 2,829,837     $ 2,798,161     $ 2,713,794     $ 2,635,726  
 
Total assets $ 29,089,698 $ 29,105,020 $ 27,843,770 $ 27,364,714 $ 27,015,432
Less: Goodwill and intangible assets, net     412,156       413,256       414,356       396,131       384,323  
Tangible assets   $ 28,677,542     $ 28,691,764     $ 27,429,414     $ 26,968,583     $ 26,631,109  
 
Tangible common equity ratio     10.08 %     9.86 %     10.20 %     10.06 %     9.90 %
 
Estimated Tier 1 common equity ratio under fully phased-in Basel III:
Tier 1 common under existing Basel I $ 2,804,102
Estimated adjustments     (31,250 )
Estimated Tier 1 common equity under fully phased-in Basel III   $ 2,772,852  
 
Risk weighted assets $ 21,358,938
Estimated adjustments     1,270,601  
Estimated risk weighted assets under fully phased-in Basel III   $ 22,629,539  
 
Estimated Tier 1 common equity under fully phased-in Basel III     12.25 %
 
Other data:
Fiduciary assets $ 35,997,877 $ 34,020,442 $ 32,716,648 $ 31,296,565 $ 30,137,092
Tax equivalent adjustment $ 2,857 $ 2,739 $ 2,803 $ 2,551 $ 2,467
Net unrealized gain (loss) on available for sale securities $ 96,955 $ 42,935 $ 85,480 $ 15,446 $ (37,929 )
 
Mortgage banking:
Mortgage servicing portfolio $ 16,162,887 $ 15,499,653 $ 14,626,291 $ 14,045,642 $ 13,718,942
Mortgage commitments $ 520,829 $ 537,975 $ 546,864 $ 387,755 $ 258,873
Mortgage loans funded for sale $ 1,264,269 $ 1,394,211 $ 1,090,629 $ 727,516 $ 848,870
Mortgage loan refinances to total fundings 37 % 26 % 25 % 32 % 29 %
 
Net realized gains on mortgage loans sold $ 17,671 $ 17,100 $ 12,746 $ 9,179 $ 12,162
Net unrealized gains (losses) on mortgage loans held for resale 618 (3,110 ) 5,052 2,797 (6,808 )
Change in fair value of mortgage loan commitments 1,491 (5,136 ) 7,581 3,379 (8,292 )
Change in fair value of forward sales contracts     (2,591 )     5,839       (7,652 )     (3,903 )     13,669  
Total production revenue 17,189 14,693 17,727 11,452 10,731
Servicing revenue     12,916       12,121       11,603       11,392       11,145  
Total mortgage banking revenue   $ 30,105     $ 26,814     $ 29,330     $ 22,844     $ 21,876  
 
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net $ 1,070 $ (93 ) $ 831 $ 968 $ (931 )
Gain (loss) on fair value option securities, net     3,685       (341 )     4,074       2,585       (3,013 )
Gain (loss) on economic hedge of mortgage servicing rights 4,755 (434 ) 4,905 3,553 (3,944 )
Gain (loss) on changes in fair value of mortgage servicing rights     (10,821 )     5,281       (6,444 )     (4,461 )     6,093  
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges   $ (6,066 )   $ 4,847     $ (1,539 )   $ (908 )   $ 2,149  
 
Net interest revenue on fair value option securities   $ 912     $ 830     $ 721     $ 790     $ 811  
 
 
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands, except ratio and per share data)

  Three Months Ended
December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
 
Interest revenue $ 186,620 $ 183,868 $ 182,631 $ 179,120 $ 183,120
Interest expense     16,956       17,077       16,534       16,478       16,876  
Net interest revenue 169,664 166,791 166,097 162,642 166,244
Provision for credit losses                             (11,400 )
Net interest revenue after provision for credit losses 169,664 166,791 166,097 162,642 177,644
Other operating revenue:
Brokerage and trading revenue 30,602 35,263 39,056 29,516 28,515
Transaction card revenue 31,467 31,578 31,510 29,134 29,134
Fiduciary and asset management revenue 30,649 29,738 29,543 25,722 25,074
Deposit service charges and fees 22,581 22,508 23,133 22,689 23,440
Mortgage banking revenue 30,105 26,814 29,330 22,844 21,876
Bank-owned life insurance 2,380 2,326 2,274 2,106 2,285
Other revenue     10,071       10,320       9,208       8,852       12,048  
Total fees and commissions 157,855 158,547 164,054 140,863 142,372
Gain (loss) on other assets, net (1,529 ) (501 ) (52 ) (4,264 ) 651
Gain (loss) on derivatives, net 1,070 (93 ) 831 968 (930 )
Gain (loss) on fair value option securities, net 3,685 (332 ) 4,176 2,660 (2,805 )
Change in fair value of mortgage servicing rights (10,821 ) 5,281 (6,444 ) (4,461 ) 6,093
Gain (loss) on available for sale securities, net 149 146 4 1,240 1,634
Total other-than-temporary impairment losses (373 )
Portion of loss recognized in (reclassified from) other comprehensive income                              
Net impairment losses recognized in earnings     (373 )                        
Total other operating revenue 150,036 163,048 162,569 137,006 147,015
Other operating expense:
Personnel 125,741 123,043 123,714 104,433 125,662
Business promotion 7,498 6,160 7,150 5,841 6,020
Contribution to BOKF Foundation 1,847 2,420
Professional fees and services 11,058 14,763 11,054 7,565 10,003
Net occupancy and equipment 22,655 18,892 18,789 16,896 19,103
Insurance 4,777 4,793 4,467 4,541 4,394
Data processing and communications 30,872 29,971 29,071 27,135 28,196
Printing, postage and supplies 3,168 3,380 3,429 3,541 3,126
Net losses (gains) and operating expenses of repossessed assets (1,497 ) 4,966 1,118 1,432 1,618
Amortization of intangible assets 1,100 1,100 949 816 842
Mortgage banking costs 10,553 7,734 7,960 3,634 7,071
Other expense     8,105       7,032       7,006       6,850       9,384  
Total other operating expense 225,877 221,834 214,707 185,104 215,419
Net income before taxes 93,823 108,005 113,959 114,544 109,240
Federal and state income taxes     28,242       31,879       37,230       37,501       35,318  
Net income 65,581 76,126 76,729 77,043 73,922
Net income attributable to non-controlling interests     1,263       494       834       453       946  
Net income attributable to BOK Financial Corporation shareholders   $ 64,318     $ 75,632     $ 75,895     $ 76,590     $ 72,976  
 
Average shares outstanding:
Basic 68,481,630 68,455,866 68,359,945 68,273,685 68,095,254
Diluted 68,615,808 68,609,765 68,511,378 68,436,478 68,293,758
Net income per share:
Basic $ 0.93 $ 1.09 $ 1.10 $ 1.11 $ 1.06
Diluted $ 0.93 $ 1.09 $ 1.10 $ 1.11 $ 1.06
 
 
LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

(In thousands)

  December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
Commercial:
Energy $ 2,860,428 $ 2,551,699 $ 2,419,788 $ 2,344,072 $ 2,351,760
Services 2,518,229 2,487,817 2,377,065 2,232,471 2,282,210
Wholesale/retail 1,313,316 1,273,241 1,318,151 1,225,990 1,201,364
Manufacturing 532,594 479,543 452,866 444,215 391,751
Healthcare 1,454,969 1,382,399 1,394,156 1,396,562 1,274,246
Other commercial and industrial     416,134     397,339     405,635     408,396     441,890
Total commercial     9,095,670     8,572,038     8,367,661     8,051,706     7,943,221
 
Commercial real estate:
Residential construction and land development 143,591 175,228 184,779 184,820 206,258
Retail 666,889 611,265 642,110 640,506 586,047
Office 415,544 438,909 394,217 436,264 411,499
Multifamily 704,298 739,757 677,403 662,674 576,502
Industrial 428,817 371,426 342,080 305,207 243,877
Other real estate     369,011     387,614     414,389     401,936     391,170
Total commercial real estate     2,728,150     2,724,199     2,654,978     2,631,407     2,415,353
 
Residential mortgage:
Permanent mortgage 969,951 991,107 1,020,928 1,033,572 1,062,744
Permanent mortgages guaranteed by U.S. government agencies 205,950 198,488 188,087 184,822 181,598
Home equity     773,611     790,068     799,200     800,281     807,684
Total residential mortgage     1,949,512     1,979,663     2,008,215     2,018,675     2,052,026
 
Consumer 434,705 407,839 396,004 376,066 381,664
                     
Total   $ 14,208,037   $ 13,683,739   $ 13,426,858   $ 13,077,854   $ 12,792,264
 
 
LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION

(in thousands)

  December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
 
Bank of Oklahoma:
Commercial $ 3,142,689 $ 3,106,264 $ 3,101,513 $ 2,782,997 $ 2,902,140
Commercial real estate 603,610 592,865 598,790 593,282 602,010
Residential mortgage 1,467,096 1,481,264 1,490,171 1,505,702 1,524,212
Consumer     206,115     193,207     187,914     179,733     192,283
Total Bank of Oklahoma     5,419,510     5,373,600     5,378,388     5,061,714     5,220,645
 
Bank of Texas:
Commercial 3,549,128 3,169,458 3,107,808 3,161,203 3,052,274
Commercial real estate 1,027,817 1,046,322 995,182 969,804 816,574
Residential mortgage 235,948 247,117 251,290 256,332 260,544
Consumer     154,363     148,965     147,322     136,782     131,297
Total Bank of Texas     4,967,256     4,611,862     4,501,602     4,524,121     4,260,689
 
Bank of Albuquerque:
Commercial 383,439 378,663 381,843 351,454 342,336
Commercial real estate 296,358 313,905 309,421 305,080 308,829
Residential mortgage 127,999 130,045 137,110 131,932 133,900
Consumer     10,899     11,714     12,346     12,972     13,842
Total Bank of Albuquerque     818,695     834,327     840,720     801,438     798,907
 
Bank of Arkansas:
Commercial 95,510 74,866 71,859 73,804 81,556
Commercial real estate 88,301 96,874 85,633 81,181 78,264
Residential mortgage 7,261 7,492 8,334 7,898 7,922
Consumer     5,169     5,508     6,323     6,881     8,023
Total Bank of Arkansas     196,241     184,740     172,149     169,764     175,765
 
Colorado State Bank & Trust:
Commercial 977,961 957,917 856,323 825,315 735,626
Commercial real estate 194,553 190,812 200,995 213,850 190,355
Residential mortgage 57,119 56,705 60,360 57,345 62,821
Consumer     27,918     24,812     23,330     22,095     22,686
Total Colorado State Bank & Trust     1,257,551     1,230,246     1,141,008     1,118,605     1,011,488
 
Bank of Arizona:
Commercial 547,524 500,208 446,814 453,799 417,702
Commercial real estate 355,140 316,698 292,799 301,266 257,477
Residential mortgage 35,872 39,256 41,059 42,899 47,111
Consumer     12,883     11,201     7,821     7,145     7,887
Total Bank of Arizona     951,419     867,363     788,493     805,109     730,177
 
Bank of Kansas City:
Commercial 399,419 384,662 401,501 403,134 411,587
Commercial real estate 162,371 166,723 172,158 166,944 161,844
Residential mortgage 18,217 17,784 19,891 16,567 15,516
Consumer     17,358     12,432     10,948     10,458     5,646
Total Bank of Kansas City     597,365     581,601     604,498     597,103     594,593
 
TOTAL BOK FINANCIAL   $ 14,208,037   $ 13,683,739   $ 13,426,858   $ 13,077,854   $ 12,792,264

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)

  December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
Bank of Oklahoma:
Demand $ 3,828,819 $ 3,915,560 $ 3,785,922 $ 3,476,876 $ 3,432,940
Interest-bearing:
Transaction 6,117,886 5,450,692 5,997,474 6,148,712 6,318,045
Savings 206,357 201,690 210,330 211,770 191,880
Time     1,301,194     1,292,738     1,195,586     1,209,002     1,214,507
Total interest-bearing     7,625,437     6,945,120     7,403,390     7,569,484     7,724,432
Total Bank of Oklahoma     11,454,256     10,860,680     11,189,312     11,046,360     11,157,372
 
Bank of Texas:
Demand 2,639,732 2,636,713 2,617,194 2,513,729 2,481,603
Interest-bearing:
Transaction 2,065,723 2,020,737 1,957,236 1,967,107 1,966,580
Savings 72,037 66,798 67,012 70,890 64,632
Time     547,316     569,929     606,248     621,925     638,465
Total interest-bearing     2,685,076     2,657,464     2,630,496     2,659,922     2,669,677
Total Bank of Texas     5,324,808     5,294,177     5,247,690     5,173,651     5,151,280
 
Bank of Albuquerque:
Demand 487,819 480,023 515,554 524,191 502,395
Interest-bearing:
Transaction 519,544 502,787 489,378 516,734 529,140
Savings 37,471 36,127 36,442 37,481 33,944
Time     295,798     303,074     309,540     320,352     327,281
Total interest-bearing     852,813     841,988     835,360     874,567     890,365
Total Bank of Albuquerque     1,340,632     1,322,011     1,350,914     1,398,758     1,392,760
 
Bank of Arkansas:
Demand 35,996 35,075 44,471 40,026 38,566
Interest-bearing:
Transaction 158,115 234,063 205,216 212,144 144,018
Savings 1,936 2,222 2,287 2,264 1,986
Time     28,520     38,811     41,155     32,312     32,949
Total interest-bearing     188,571     275,096     248,658     246,720     178,953
Total Bank of Arkansas     224,567     310,171     293,129     286,746     217,519
 
Colorado State Bank & Trust:
Demand 445,755 422,044 396,185 399,820 409,942
Interest-bearing:
Transaction 631,874 571,807 566,320 536,438 541,675
Savings 29,811 29,768 29,234 28,973 26,880
Time     353,998     372,401     385,252     399,948     407,088
Total interest-bearing     1,015,683     973,976     980,806     965,359     975,643
Total Colorado State Bank & Trust     1,461,438     1,396,020     1,376,991     1,365,179     1,385,585
 
 
Bank of Arizona:
Demand 369,115 279,811 293,836 265,149 204,092
Interest-bearing:
Transaction 347,214 336,584 379,170 409,200 364,736
Savings 2,545 3,718 2,813 2,711 2,432
Time     36,680     38,842     37,666     37,989     34,391
Total interest-bearing     386,439     379,144     419,649     449,900     401,559
Total Bank of Arizona     755,554     658,955     713,485     715,049     605,651
 
Bank of Kansas City:
Demand 259,121 268,903 254,843 252,496 246,739
Interest-bearing:
Transaction 273,999 128,039 103,610 109,321 69,857
Savings 1,274 1,315 1,511 1,507 1,252
Time     45,210     48,785     40,379     40,646     41,312
Total interest-bearing     320,483     178,139     145,500     151,474     112,421
Total Bank of Kansas City     579,604     447,042     400,343     403,970     359,160
 
TOTAL BOK FINANCIAL   $ 21,140,859   $ 20,289,056   $ 20,571,864   $ 20,389,713   $ 20,269,327
 
 
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
  Three Months Ended
December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
 
TAX-EQUIVALENT ASSETS YIELDS
Interest-bearing cash and cash equivalents 0.28 % 0.20 % 0.24 % 0.20 % 0.18 %
Trading securities 2.48 % 2.67 % 2.40 % 2.85 % 1.73 %
Investment securities:
Taxable 5.68 % 5.66 % 5.64 % 5.64 % 5.75 %
Tax-exempt   1.56 %   1.56 %   1.63 %   1.67 %   1.66 %
Total investment securities   3.11 %   3.03 %   3.01 %   3.04 %   3.12 %
Available for sale securities:
Taxable 1.97 % 1.94 % 1.94 % 1.90 % 1.89 %
Tax-exempt   4.23 %   3.14 %   4.44 %   3.11 %   2.74 %
Total available for sale securities   1.99 %   1.95 %   1.96 %   1.91 %   1.89 %
Fair value option securities 2.18 % 2.05 % 1.94 % 1.99 % 2.06 %
Restricted equity securities 5.77 % 5.99 % 5.26 % 4.68 % 5.06 %
Residential mortgage loans held for sale 3.87 % 3.79 % 4.63 % 3.46 % 4.16 %
Loans 3.73 % 3.78 % 3.85 % 3.89 % 4.01 %
Allowance for loan losses                    
Loans, net of allowance 3.78 % 3.83 % 3.91 % 3.95 % 4.07 %
Total tax-equivalent yield on earning assets 2.86 % 2.93 % 3.02 % 2.99 % 3.02 %
 
COST OF INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest-bearing transaction 0.09 % 0.10 % 0.10 % 0.10 % 0.11 %
Savings 0.11 % 0.12 % 0.12 % 0.12 % 0.12 %
Time   1.47 %   1.56 %   1.55 %   1.56 %   1.55 %
Total interest-bearing deposits 0.38 % 0.41 % 0.40 % 0.41 % 0.42 %
Funds purchased 0.08 % 0.07 % 0.07 % 0.06 % 0.08 %
Repurchase agreements 0.04 % 0.05 % 0.08 % 0.08 % 0.06 %
Other borrowings 0.32 % 0.34 % 0.40 % 0.40 % 0.31 %
Subordinated debt   2.50 %   2.46 %   2.52 %   2.52 %   2.48 %
Total cost of interest-bearing liabilities   0.39 %   0.41 %   0.42 %   0.41 %   0.42 %
Tax-equivalent net interest revenue spread 2.47 % 2.52 % 2.60 % 2.58 % 2.60 %
Effect of noninterest-bearing funding sources and other   0.14 %   0.15 %   0.15 %   0.13 %   0.14 %
Tax-equivalent net interest margin   2.61 %   2.67 %   2.75 %   2.71 %   2.74 %

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
BOK FINANCIAL CORPORATION

(in thousands, except ratios)

  Three Months Ended
December 31,
2014
  September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
Nonperforming assets:
Nonaccruing loans:
Commercial $ 13,527 $ 16,404 $ 17,103 $ 19,047 $ 16,760
Commercial real estate 18,557 30,660 34,472 39,305 40,850
Residential mortgage 48,121 48,907 44,340 45,380 42,320
Consumer     566       580       765       974       1,219  
Total nonaccruing loans 80,771 96,551 96,680 104,706 101,149
Accruing renegotiated loans guaranteed by U.S. government agencies 73,985 70,459 57,818 55,507 54,322
Real estate and other repossessed assets:
Guaranteed by U.S. government agencies 49,898 46,809 49,720 45,638 37,431
Other     51,963       51,062       50,391       49,877       54,841  
Total real estate and other repossessed assets     101,861       97,871       100,111       95,515       92,272  
Total nonperforming assets   $ 256,617     $ 264,881     $ 254,609     $ 255,728     $ 247,743  
Total nonperforming assets excluding those guaranteed by U.S. government agencies   $ 129,022     $ 143,778     $ 145,124     $ 153,011     $ 155,213  
 
Nonaccruing loans by loan portfolio sector:
Commercial:
Energy $ 1,416 $ 1,508 $ 1,619 $ 1,759 $ 1,860
Manufacturing 450 3,482 3,507 3,565 592
Wholesale/retail 4,149 5,502 5,885 6,854 6,969
Services 5,201 3,584 3,669 4,581 4,922
Healthcare 1,380 1,417 1,422 1,443 1,586
Other commercial and industrial     931       911       1,001       845       831  
Total commercial     13,527       16,404       17,103       19,047       16,760  
Commercial real estate:
Residential construction and land development 5,299 14,634 15,146 16,547 17,377
Retail 3,926 4,009 4,199 4,626 4,857
Office 3,420 3,499 3,591 6,301 6,391
Multifamily 7
Industrial 631 886 252
Other commercial real estate     5,912       8,518       10,905       10,945       11,966  
Total commercial real estate     18,557       30,660       34,472       39,305       40,850  
Residential mortgage:
Permanent mortgage 34,845 35,137 32,952 36,342 34,279
Permanent mortgage guaranteed by U.S. government agencies 3,712 3,835 1,947 1,572 777
Home equity     9,564       9,935       9,441       7,466       7,264  
Total residential mortgage     48,121       48,907       44,340       45,380       42,320  
Consumer     566       580       765       974       1,219  
Total nonaccruing loans   $ 80,771     $ 96,551     $ 96,680     $ 104,706     $ 101,149  
 
 
Performing loans 90 days past due1 $ 125 $ 25 $ 67 $ 1,991 $ 1,415
 
Gross charge-offs $ (7,224 ) $ (2,638 ) $ (3,522 ) $ (2,848 ) $ (3,113 )
Recoveries     5,036       3,114       5,524       5,360       6,068  
Net recoveries (charge-offs)   $ (2,188 )   $ 476     $ 2,002     $ 2,512     $ 2,955  
 
Provision for credit losses $ $ $ $ $ (11,400 )
 
Allowance for loan losses to period end loans 1.33 % 1.40 % 1.42 % 1.44 % 1.45 %
Combined allowance for credit losses to period end loans 1.34 % 1.41 % 1.43 % 1.45 % 1.47 %
Nonperforming assets to period end loans and repossessed assets 1.79 % 1.92 % 1.88 % 1.94 % 1.92 %
Net charge-offs (annualized) to average loans 0.06 % (0.01 )% (0.06 )% (0.08 )% (0.09 )%
Allowance for loan losses to nonaccruing loans 234.06 % 198.08 % 197.24 % 179.86 % 183.29 %
Combined allowance for credit losses to nonaccruing loans 235.59 % 199.35 % 198.59 % 181.46 % 185.35 %
 
1 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.

Contacts

BOK Financial Corporation
Joseph Crivelli, 918-595-3027
Investor Relations
or
Andrea Myers, 918-594-7794
Corporate Communications

Release Summary

BOK Financial reports annual and fourth quarter earnings for 2014 and provides update on energy lending.

Contacts

BOK Financial Corporation
Joseph Crivelli, 918-595-3027
Investor Relations
or
Andrea Myers, 918-594-7794
Corporate Communications