BOK Financial Reports Record Quarterly Earnings of $117 million or $1.79 Per Share

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TULSA, Okla., Oct. 24, 2018 (GLOBE NEWSWIRE) —

CEO Commentary

Steven G. Bradshaw, president, and chief executive officer, stated, “This is yet another record quarter for BOK Financial, with continued growth in both our loan portfolio and net interest revenue. We added $346 million in new loan production to last quarter’s record loan growth. The competitive ability and scale of our wealth management business allowed us to earn a $15 million fee in client asset management. These factors, combined with a stable credit environment and diligent expense management, cause us to see earnings leverage continuing.”

Bradshaw added, “We are proud to have closed our acquisition of CoBiz Financial on October 1st in record time, in part due to our strong community engagement track record and Outstanding CRA rating. We welcome CoBiz employees into our organization and look forward to many great things to come. The combination of CoBiz and BOK Financial creates the premier commercial bank in Colorado and Arizona, and we are excited to see how it helps drive earnings into 2019 and beyond.”

Third Quarter 2018 Financial Highlights
  • Net income was $117.3 million and $1.79 per diluted share for the third quarter of 2018, including 18 cents per share from a client asset management fee. Net income was $114.4 million and $1.75 per diluted share for the second quarter of 2018.
  • Net interest revenue totaled $240.9 million, up $2.3 million compared to the second quarter of 2018.
  • Net interest margin increased to 3.21 percent from 3.17 percent. Net interest margin grew 11 basis points excluding recoveries of foregone interest on nonaccruing loans from the previous quarter.
  • Fees and commissions revenue totaled $167.5 million, an increase of $9.7 million or 6 percent compared to the previous quarter, led by an increase in trust fees and commissions.
  • Operating expense increased $6.1 million or 2 percent to $252.6 million. Personnel expense increased $4.6 million and non-personnel expense increased $1.6 million.
  • A $4.0 million provision for credit losses was recorded in the third quarter of 2018.  Net charge-offs were $9.0 million in the third quarter compared to $10.5 million in the previous quarter.
  • Combined allowance for credit losses totaled $213 million or 1.16 percent of outstanding loans compared to $218 million or 1.21 percent of outstanding loans in the previous quarter.
  • Average loans increased $453 million while period-end loans increased $346 million to $18.3 billion.
  • Common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.37 percent and leverage ratio was 9.90 percent.
Third Quarter 2018 Business Segment Highlights 
Commercial Banking

  • Contributed $85.0 million to net income, down $2.6 million or 3 percent compared to the prior quarter.
  • Net interest revenue remained consistent compared to the second quarter of 2018 at $145 million.
  • Fees and commissions revenue decreased $3.5 million or 8 percent and operating expenses increased $1.7 million or 3 percent.
  • Average loans increased $421 million or 3 percent.

   Consumer Banking

  • Contributed $9.2 million to net income, up $3.1 million, primarily due to improved hedge performance related to mortgage servicing rights.
  • Net interest revenue increased $820 thousand or 2 percent.
  • Fees and commissions revenue decreased $2.3 million or 5 percent and operating expenses decreased $2.7 million or 5 percent.

   Wealth Management

  • Contributed $29.3 million to net income, up 44 percent compared to the prior quarter.
  • Net interest revenue remained consistent compared to the prior quarter at $29.4 million.
  • Fees and commissions revenue increased $13.1 million or 19 percent due to a fee earned from the sale of client assets in the third quarter of 2018 while operating expenses increased only 1 percent.
  • Average loans grew $26.6 million or 2 percent.
  • Assets under management or administration were $77.6 billion at September 30, 2018 compared to $78.9 billion at June 30, 2018. Fiduciary assets totaled $45.6 billion at September 30, 2018 and $46.5 billion at June 30, 2018.

Net Interest Revenue

Net interest revenue was $240.9 million for the third quarter of 2018, a $2.3 million increase over the second quarter of 2018. Recoveries of foregone interest on nonaccruing loans added $5.3 million to net interest revenue or 7 basis points to net interest margin in the previous quarter. Excluding this impact, net interest margin was 3.21 percent for the third quarter of 2018, up 11 basis points over the second quarter of 2018. The Company reduced excess cash balances held at the Federal Reserve funded by borrowings from the Federal Home Loan Banks. The spread narrowed at the end of the second quarter and was no longer contributing to net interest revenue, which resulted in a 10 basis point improvement to net interest margin in the third quarter of 2018.

Excluding the impact of interest recoveries, the yield on average earning assets was 4.04 percent, a 20 basis point increase, and the yield on the loan portfolio was 4.80 percent up 12 basis points. This increase is due primarily to an increase in short-term market interest rates related to the Federal Reserve’s 25 basis point rate increase in June. The yield on the available for sale securities portfolio increased 7 basis points to 2.37 percent. The yield on the trading securities portfolio was up 35 basis points.

Funding costs were 1.25 percent, up 14 basis points. The cost of interest-bearing deposits increased 11 basis points to 0.77 percent. The cost of other borrowed funds was up 20 basis points to 2.04 percent. The benefit to net interest margin from assets funded by non-interest liabilities increased to 42 basis points from 37 basis points in the second quarter of 2018.

Average earning assets decreased $345 million compared to the second quarter of 2018. Average loan balances grew by $453 million. Trading securities balances increased $280 million. Average interest-bearing cash and cash equivalents balances decreased $985 million. Average available for sale securities decreased $34 million. Average interest-bearing deposit balances decreased $221 million compared to the second quarter of 2018. The average balance of borrowed funds decreased $131 million.

Fees and Commissions Revenue

Fees and commissions revenue totaled $167.5 million for the third quarter of 2018, an increase of $9.7 million or 6 percent over the second quarter of 2018. A fee earned in the sale of client assets added $15.4 million to trust fees and commissions in the third quarter.

Rising interest rates have slowed the origination of mortgage loans and related investment products leading to compressed margins. This has adversely affected both our trading revenue as well as our mortgage banking revenue. Brokerage and trading revenue decreased $3.4 million and mortgage banking revenue decreased $2.8 million compared to the second quarter of 2018.

Operating Expense

Total operating expense was $252.6 million for the third quarter of 2018, an increase of $6.1 million or 2 percent compared to the second quarter of 2018.

Personnel expense increased $4.6 million, primarily due to an increase in incentive compensation expense of $6.0 million. Share-based compensation expense was $3.9 million in the third quarter of 2018 and a negative $1.4 million in the previous quarter. Changes in assumptions for the number of performance-based awards that will ultimately vest reduced share-based compensation expense by $4.3 million in the second quarter of 2018. Employee benefits expense decreased $1.5 million compared to the second quarter of 2018, primarily due to a seasonal decrease in payroll taxes.

Non-personnel expense increased $1.6 million. Data processing and communications expense increased $3.9 million, primarily due to impairment of a software license. Net losses and operating expenses of repossessed assets increased $1.3 million as a result of a write down on a healthcare property.

Professional fees and services expense decreased $1.8 million, primarily due to seasonal wealth management tax service fees in the second quarter of 2018. Other expense and mortgage banking costs decreased due to lower loss contingency accruals.

Loans, Deposits and Capital

Loans

Outstanding loans were $18.3 billion at September 30, 2018, up $346 million or 1.9 percent over June 30, 2018, primarily due to continued growth in commercial and commercial real estate loans.

Outstanding commercial loan balances grew by $227 million or 2 percent over June 30, 2018. Energy loan balances were up $148 million, consistent with our ongoing support and commitment to the oil and gas industry. Healthcare sector loans increased by $84 million. The healthcare lending group celebrated their 5 year anniversary as a distinct line of business and continues to be a driver of our core loan growth. Service sector loans increased $73 million. This growth was partially offset by a $49 million decrease in wholesale/retail sector loans and a $41 million decrease in other commercial and industrial loans.

Commercial real estate loan balances continued to grow, up $92 million or 2 percent over June 30, 2018. Multifamily residential loan balances were up $63 million. Loans secured by industrial properties grew by $43 million. Construction and land development loans decreased $17 million.

Deposits

Period-end deposits totaled $21.6 billion at September 30, 2018, a $537 million decrease compared to June 30, 2018. Demand deposit balances decreased $310 million, interest-bearing transaction account balances decreased $174 million and time deposit balances decreased by $52 million.

Capital

The company’s common equity Tier 1 capital ratio was 12.07 percent at September 30, 2018. In addition, the company’s Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.37 percent, and leverage ratio was 9.90 percent at September 30, 2018. At June 30, 2018, the company’s common equity Tier 1 capital ratio was 11.92 percent, Tier 1 capital ratio was 11.92 percent, total capital ratio was 13.26 percent, and leverage ratio was 9.57 percent.

The company’s tangible common equity ratio, a non-GAAP measure, was 9.55 percent at September 30, 2018 and 9.21 percent at June 30, 2018. The tangible common equity ratio is primarily based on total shareholders’ equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

Credit Quality

Nonperforming assets totaled $261 million or 1.42 percent of outstanding loans and repossessed assets at September 30, 2018, compared to $269 million or 1.49 percent at June 30, 2018. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $170 million or 0.93 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at September 30, 2018, down from $186 million or 1.04 percent at June 30, 2018.

Nonaccruing loans were $153 million or 0.83 percent of outstanding loans at September 30, 2018, compared to $166 million or 0.92 percent of outstanding loans at June 30, 2018. The decrease in nonaccruing loans was primarily due to a $12 million decrease in energy loans and a $4.8 million decrease in wholesale/retail sector loans, partially offset by a $6.2 million increase in manufacturing sector loans. New nonaccruing loans identified in the third quarter totaled $20 million, offset by $20 million in payments received, $11 million in charge-offs, and $1.6 million in foreclosures and repossessions. At September 30, 2018, nonaccruing commercial loans totaled $109 million or 0.95 percent of outstanding commercial loans, nonaccruing commercial real estate loans totaled $1.3 million or 0.03 percent of outstanding commercial real estate loans, and nonaccruing residential mortgage loans totaled $42 million or 2.13 percent of outstanding residential mortgage loans.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers’ ability to continue to perform, totaled $176 million at September 30, compared to $140 million at June 30. The increase largely resulted from commercial real estate loans secured by retail facilities, energy sector and services sector loans.

The company had net charge-offs of $9.0 million or 0.20 percent of average loans on an annualized basis for third quarter of 2018, compared to net charge-offs of $10.5 million or 0.24 percent of average loans on an annualized basis for the second quarter of 2018. Net charge-offs were 0.18 percent of average loans over the last four quarters. Net charge-offs for the third quarter were primarily related to a single energy production borrower and single wholesale/retail sector borrower, both of which had previously been identified as impaired and appropriately reserved. Gross charge-offs were $11.1 million for the third quarter compared to $15.1 million for the previous quarter. Recoveries totaled $2.1 million for the third quarter of 2018 and $4.6 million for the second quarter of 2018.

Based on an evaluation of all credit factors, including overall loan portfolio growth, changes in nonaccruing and potential problem loans and net charge-offs, the company determined that a $4.0 million provision for credit losses was appropriate for the third quarter of 2018. The company recorded no provision for credit losses in the second quarter of 2018.

The combined allowance for credit losses totaled $213 million or 1.16 percent of outstanding loans and 146 percent of nonaccruing loans at September 30, 2018, excluding residential mortgage loans guaranteed by U.S. government agencies. The allowance for loan losses was $211 million and the accrual for off-balance sheet credit losses was $2.0 million. At June 30, 2018, the combined allowance for credit losses was $218 million or 1.21 percent of outstanding loans and 138 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $215 million and the accrual for off-balance sheet credit losses was $2.4 million.

Commercial Banking

Net income for Commercial Banking was $85.0 million for the third quarter of 2018, a decrease of $2.6 million compared to the second quarter of 2018. Second quarter earnings included $5.3 million in interest recoveries on nonaccrual loans. Excluding the impact of interest recoveries, growth in net interest revenue was driven by strong growth in loan balances and improved loan yields. This growth was partially offset by a modest increase in our internal cost of funds allocation.

Average loan balances increased $421 million or 3 percent, largely impacted by energy, commercial real estate, service and other commercial and industrial loans. Average customer deposits were $8.6 billion, an increase of $254 million or 3 percent, mostly due to energy, real estate, and general commercial and industrial deposits.

Fees and commissions revenue decreased $3.5 million or 8 percent as a result of reduced customer hedging revenue and the timing of closing loan syndication transactions after an exceptionally strong second quarter. Expense growth outpaced revenue growth primarily due to an increase in incentive compensation as a result of continued loan growth as well as a $1.7 million write down of a repossessed property in the third quarter.

Consumer Banking

Net income from Consumer Banking was $9.2 million in the third quarter of 2018, an increase of $3.1 million or 50 percent. The net economic cost of the changes in fair value of mortgage servicing rights and related economic hedges was $156 thousand for the third quarter of 2018 compared to $3.5 million for the second quarter of 2018.

Revenues from mortgage banking activities decreased $2.8 million from the prior quarter. Continued rising interest rates and increased market competition slowed origination activity, which declined 16 percent compared to the prior quarter. Efforts to right size current capacity have resulted in personnel expense savings of $1.7 million from the previous quarter.

Net interest revenue from Consumer Banking activities increased $820 thousand while deposit service charges and fees increased $588 thousand over the second quarter of 2018. The introduction of a new time deposit product as well as interest rate increases on existing money market products have positively impacted runoff trends.

Average consumer loans and deposits remained relatively consistent compared to the prior quarter at $1.7 billion and $6.6 billion, respectively.

Wealth Management

Net income for Wealth Management increased $9.0 million to $29.3 million during the third quarter of 2018. This increase included an after tax benefit of $11.5 million as a result of a fee earned on the sale of client assets. Excluding this fee, fiduciary and asset management fees produced relatively consistent results compared to the second quarter of 2018.

Average loans increased $27 million or 2 percent to $1.4 billion. Average deposits decreased $343 million or 6 percent, primarily due to client migrations to investments. Assets under management decreased $1.2 billion or 1.6 percent to $77.6 billion at September 30, 2018.

Brokerage and trading revenue decreased $1.7 million or 8 percent compared to the second quarter of 2018 due to a decreased demand in investment products related to rising interest rates and slowing mortgage production.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, October 24, 2018 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-6671 and referencing conference ID # 13683709.

About BOK Financial Corporation

BOK Financial Corporation is a $33 billion regional financial services company based in Tulsa, Oklahoma. The company’s stock is publicly traded on NASDAQ under the Global Select market listings (symbol: BOKF). BOK Financial’s holdings include BOKF, NA, BOK Financial Securities, Inc. and The Milestone Group, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management, BOK Financial Asset Management, Inc. and seven banking divisions: Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Mobank, Bank of Oklahoma, Bank of Texas and Colorado State Bank and Trust. Through its subsidiaries, the company provides commercial and consumer banking, investment and trust services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of September 30, 2018 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

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

BALANCE SHEETS — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
  Sept. 30, 2018   June 30, 2018   Sept. 30, 2017
ASSETS          
Cash and due from banks $ 815,458     $ 585,801     $ 547,203  
Interest-bearing cash and cash equivalents 430,789     872,999     1,926,779  
Trading securities 1,613,400     1,909,615     614,117  
Investment securities 374,039     392,013     466,562  
Available for sale debt securities 8,072,014     8,162,866     8,383,199  
Fair value option securities 452,150     482,227     819,531  
Restricted equity securities 311,189     347,721     347,542  
Residential mortgage loans held for sale 175,866     223,301     275,643  
Loans:          
Commercial 11,576,101     11,349,039     10,795,934  
Commercial real estate 3,804,675     3,712,220     3,518,142  
Residential mortgage 1,971,742     1,942,250     1,945,750  
Personal 996,941     1,000,187     947,008  
Total loans 18,349,459     18,003,696     17,206,834  
Allowance for loan losses (210,569 )   (215,142 )   (247,703 )
Loans, net of allowance 18,138,890     17,788,554     16,959,131  
Premises and equipment, net 327,129     320,810     320,060  
Receivables 277,738     212,893     173,990  
Goodwill 447,430     453,093     446,697  
Intangible assets, net 33,370     28,273     39,013  
Mortgage servicing rights 284,673     278,719     245,858  
Real estate and other repossessed assets, net 24,515     27,891     32,535  
Derivative contracts, net 349,481     373,373     352,559  
Cash surrender value of bank-owned life insurance 323,628     321,024     314,201  
Receivable on unsettled securities sales 421,313     604,552     370,486  
Other assets 416,792     447,382     370,409  
TOTAL ASSETS $ 33,289,864     $ 33,833,107     $ 33,005,515  
           
LIABILITIES AND EQUITY          
Deposits:          
Demand $ 9,063,623     $ 9,373,959     $ 9,185,481  
Interest-bearing transaction 9,990,219     10,164,099     10,025,084  
Savings 502,601     503,474     465,225  
Time 2,075,846     2,127,732     2,172,289  
Total deposits 21,632,289     22,169,264     21,848,079  
Funds purchased and repurchase agreements 790,741     880,027     390,545  
Other borrowings 6,025,483     5,929,445     6,241,275  
Subordinated debentures 144,707     144,697     144,668  
Accrued interest, taxes and expense 231,592     160,568     152,029  
Due on unsettled securities purchases 414,283     571,034     176,498  
Derivative contracts, net 252,387     234,856     336,327  
Other liabilities 172,622     167,171     201,655  
TOTAL LIABILITIES 29,664,104     30,257,062     29,491,076  
Shareholders’ equity:          
Capital, surplus and retained earnings 3,777,394     3,688,736     3,482,057  
Accumulated other comprehensive gain (loss) (162,362 )   (135,305 )   6,757  
TOTAL SHAREHOLDERS’ EQUITY 3,615,032     3,553,431     3,488,814  
Non-controlling interests 10,728     22,614     25,625  
TOTAL EQUITY 3,625,760     3,576,045     3,514,439  
TOTAL LIABILITIES AND EQUITY $ 33,289,864     $ 33,833,107     $ 33,005,515  

AVERAGE BALANCE SHEETS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
  Three Months Ended
  Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
ASSETS                  
Interest-bearing cash and cash equivalents $ 688,872     $ 1,673,387     $ 2,059,517     $ 1,976,395     $ 1,965,645  
Trading securities 1,762,794     1,482,302     933,404     560,321     491,613  
Investment securities 379,566     399,088     441,207     462,869     475,705  
Available for sale debt securities 8,129,214     8,163,142     8,236,938     8,435,916     8,428,353  
Fair value option securities 469,398     487,192     626,251     792,647     684,571  
Restricted equity securities 328,842     348,546     349,176     337,673     328,677  
Residential mortgage loans held for sale 207,488     218,600     199,380     257,927     256,343  
Loans:                  
Commercial 11,484,200     11,189,899     10,871,569     10,751,235     10,827,198  
Commercial real estate 3,774,470     3,660,166     3,491,335     3,485,583     3,528,330  
Residential mortgage 1,956,089     1,915,015     1,937,198     1,976,860     1,951,385  
Personal 989,026     986,162     961,379     967,329     949,750  
Total loans 18,203,785     17,751,242     17,261,481     17,181,007     17,256,663  
Allowance for loan losses (214,160 )   (222,856 )   (228,996 )   (246,143 )   (250,590 )
Total loans, net 17,989,625     17,528,386     17,032,485     16,934,864     17,006,073  
Total earning assets 29,955,799     30,300,643     29,878,358     29,758,612     29,636,980  
Cash and due from banks 578,905     571,333     564,585     576,737     546,653  
Derivative contracts, net 294,126     318,375     278,694     292,961     238,583  
Cash surrender value of bank-owned life insurance 322,038     319,507     317,334     315,034     313,079  
Receivable on unsettled securities sales 768,785     618,240     998,803     821,275     608,412  
Other assets 1,776,164     1,777,937     1,687,178     1,687,496     1,664,463  
TOTAL ASSETS $ 33,695,817     $ 33,906,035     $ 33,724,952     $ 33,452,115     $ 33,008,170  
                   
LIABILITIES AND EQUITY                  
Deposits:                  
Demand $ 9,325,002     $ 9,223,327     $ 9,151,272     $ 9,417,351     $ 9,389,849  
Interest-bearing transaction 10,010,031     10,189,354     10,344,469     10,142,744     10,088,522  
Savings 503,821     503,671     480,110     466,496     464,130  
Time 2,097,441     2,138,880     2,151,044     2,134,469     2,176,820  
Total deposits 21,936,295     22,055,232     22,126,895     22,161,060     22,119,321  
Funds purchased and repurchase agreements 1,193,583     593,250     532,412     488,330     411,286  
Other borrowings 5,765,440     6,497,020     6,326,967     6,209,903     6,162,641  
Subordinated debentures 144,702     144,692     144,682     144,673     144,663  
Derivative contracts, net 185,029     235,543     223,373     288,408     221,371  
Due on unsettled securities purchases 544,263     527,804     558,898     332,155     145,977  
Other liabilities 311,605     340,322     333,151     312,196     318,270  
TOTAL LIABILITIES 30,080,917     30,393,863     30,246,378     29,936,725     29,523,529  
Total equity 3,614,900     3,512,172     3,478,574     3,515,390     3,484,641  
TOTAL LIABILITIES AND EQUITY $ 33,695,817     $ 33,906,035     $ 33,724,952     $ 33,452,115     $ 33,008,170  

STATEMENTS OF EARNINGS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2018   2017   2018   2017
               
Interest revenue $ 303,247     $ 255,413     $ 862,834     $ 716,984  
Interest expense 62,364     36,961     163,653     92,146  
Net interest revenue 240,883     218,452     699,181     624,838  
Provision for credit losses 4,000         (1,000 )    
Net interest revenue after provision for credit losses 236,883     218,452     700,181     624,838  
Other operating revenue:              
Brokerage and trading revenue 23,086     33,169     80,222     98,556  
Transaction card revenue1 21,396     22,929     63,361     61,115  
Fiduciary and asset management revenue 57,514     40,687     141,045     121,126  
Deposit service charges and fees 27,765     28,191     82,753     84,390  
Mortgage banking revenue 23,536     24,890     75,907     80,357  
Other revenue 14,213     13,670     41,061     40,406  
Total fees and commissions 167,510     163,536     484,349     485,950  
Other gains (losses), net 1,441     (1,283 )   4,760     8,452  
Gain (loss) on derivatives, net (2,847 )   1,033     (11,589 )   3,824  
Gain (loss) on fair value option securities, net (4,385 )   661     (25,290 )   1,505  
Change in fair value of mortgage servicing rights 5,972     (639 )   28,901     (5,726 )
Gain (loss) on available for sale securities, net 250     2,487     (802 )   4,916  
Total other operating revenue 167,941     165,795     480,329     498,921  
Other operating expense:              
Personnel 143,531     147,910     422,425     428,079  
Business promotion 7,620     7,105     21,316     21,560  
Professional fees and services 13,209     11,887     38,387     35,723  
Net occupancy and equipment 23,394     21,325     70,201     64,074  
Insurance 6,232     6,005     19,070     13,098  
Data processing and communications1 31,665     27,412     87,221     79,222  
Printing, postage and supplies 3,837     3,917     11,937     11,908  
Net losses and operating expenses of repossessed assets 4,044     6,071     14,471     9,347  
Amortization of intangible assets 1,603     1,744     4,289     5,349  
Mortgage banking costs 11,741     13,450     34,780     38,525  
Other expense 5,741     9,193     19,426     25,308  
Total other operating expense 252,617     256,019     743,523     732,193  
               
Net income before taxes 152,207     128,228     436,987     391,566  
Federal and state income taxes 34,662     42,438     98,940     128,246  
               
Net income 117,545     85,790     338,047     263,320  
Net income attributable to non-controlling interests 289     141     857     1,168  
Net income attributable to BOK Financial Corporation shareholders $ 117,256     $ 85,649     $ 337,190     $ 262,152  
               
Average shares outstanding:              
Basic 64,901,095     64,742,822     64,883,319     64,729,391  
Diluted 64,934,351     64,805,172     64,919,728     64,793,893  
               
Net income per share:              
Basic $ 1.79     $ 1.31     $ 5.15     $ 4.01  
Diluted $ 1.79     $ 1.31     $ 5.15     $ 4.00  

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

FINANCIAL HIGHLIGHTS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
  Three Months Ended
  Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Capital:                  
Period-end shareholders’ equity $ 3,615,032     $ 3,553,431     $ 3,495,029     $ 3,495,367     $ 3,488,814  
Risk weighted assets $ 27,398,072     $ 27,004,559     $ 26,025,660     $ 25,733,711     $ 25,409,728  
Risk-based capital ratios:                  
Common equity tier 1 12.07 %   11.92 %   12.06 %   12.05 %   11.90 %
Tier 1 12.07 %   11.92 %   12.06 %   12.05 %   11.90 %
Total capital 13.37 %   13.26 %   13.49 %   13.54 %   13.47 %
Leverage ratio 9.90 %   9.57 %   9.40 %   9.31 %   9.30 %
Tangible common equity ratio1 9.55 %   9.21 %   9.18 %   9.50 %   9.23 %
                   
Common stock:                  
Book value per share $ 55.25     $ 54.30     $ 53.39     $ 53.45     $ 53.30  
Tangible book value per share 47.90     46.95     46.10     46.17     45.88  
Market value per share:                  
High $ 105.22     $ 106.65     $ 107.00     $ 93.97     $ 90.69  
Low $ 92.40     $ 92.39     $ 89.82     $ 79.67     $ 77.10  
Cash dividends paid $ 32,591     $ 29,340     $ 29,342     $ 29,328     $ 28,655  
Dividend payout ratio 27.79 %   25.65 %   27.80 %   40.46 %   33.46 %
Shares outstanding, net 65,434,258     65,439,090     65,459,505     65,394,937     65,456,786  
Stock buy-back program:                  
Shares repurchased     8,257     82,583     80,000      
Amount $     $ 824     $ 7,584     $ 7,403     $  
Average price per share $     $ 99.84     $ 91.83     $ 92.54     $  
                   
Performance ratios (quarter annualized):
Return on average assets 1.38 %   1.35 %   1.27 %   0.86 %   1.03 %
Return on average equity 12.95 %   13.14 %   12.39 %   8.24 %   9.83 %
Net interest margin 3.21 %   3.17 %   2.99 %   2.97 %   3.01 %
Efficiency ratio3 61.41 %   61.68 %   65.09 %   66.07 %   65.92 %
                   
Reconciliation of non-GAAP measures:
1  Tangible common equity ratio:                  
Total shareholders’ equity $ 3,615,032     $ 3,553,431     $ 3,495,029     $ 3,495,367     $ 3,488,814  
Less: Goodwill and intangible assets, net 480,800     481,366     477,088     476,088     485,710  
Tangible common equity $ 3,134,232     $ 3,072,065     $ 3,017,941     $ 3,019,279     $ 3,003,104  
                   
Total assets $ 33,289,864     $ 33,833,107     $ 33,361,492     $ 32,272,160     $ 33,005,515  
Less: Goodwill and intangible assets, net 480,800     481,366     477,088     476,088     485,710  
Tangible assets $ 32,809,064     $ 33,351,741     $ 32,884,404     $ 31,796,072     $ 32,519,805  
                   
Tangible common equity ratio 9.55 %   9.21 %   9.18 %   9.50 %   9.23 %
                   
Other data:                  
Fiduciary assets $ 45,560,107     $ 46,531,900     $ 46,648,290     $ 48,761,477     $ 45,177,185  
Tax equivalent interest $ 1,894     $ 1,983     $ 2,010     $ 4,131     $ 4,314  
Net unrealized gain (loss) on available for sale securities $ (216,793 )   $ (180,602 )   $ (148,247 )   $ (47,497 )   $ 14,061  
                   
Mortgage banking:                  
Mortgage production revenue $ 7,250     $ 9,915     $ 9,452     $ 7,786     $ 8,329  
                   
Mortgage loans funded for sale $ 651,076     $ 773,910     $ 664,958     $ 840,080     $ 832,796  
Add: current period-end outstanding commitments 197,752     251,231     298,318     222,919     334,337  
Less: prior period end outstanding commitments 251,231     298,318     222,919     334,337     362,088  
Total mortgage production volume $ 597,597     $ 726,823     $ 740,357     $ 728,662     $ 805,045  
                   
Mortgage loan refinances to mortgage loans funded for sale 23 %   22 %   42 %   47 %   38 %
Gain on sale margin 1.21 %   1.36 %   1.28 %   1.07 %   1.03 %
                   
Mortgage servicing revenue $ 16,286     $ 16,431     $ 16,573     $ 16,576     $ 16,561  
Average outstanding principal balance of mortgage loans serviced for others 21,895,041     21,986,065     22,027,726     22,054,877     22,079,177  
Average mortgage servicing revenue rates 0.30 %   0.30 %   0.31 %   0.30 %   0.30 %
                   
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net $ (2,843 )   $ (3,070 )   $ (5,698 )   $ (3,057 )   $ 1,025  
Gain (loss) on fair value option securities, net (4,385 )   (3,341 )   (17,564 )   (4,238 )   661  
Gain (loss) on economic hedge of mortgage servicing rights (7,228 )   (6,411 )   (23,262 )   (7,295 )   1,686  
Gain (loss) on changes in fair value of mortgage servicing rights 5,972     1,723     21,206     5,898     (639 )
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue (1,256 )   (4,688 )   (2,056 )   (1,397 )   1,047  
Net interest revenue on fair value option securities2 1,100     1,203     1,800     2,656     2,543  
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges $ (156 )   $ (3,485 )   $ (256 )   $ 1,259     $ 3,590  

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

QUARTERLY EARNINGS TREND — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
  Three Months Ended
  Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
                   
Interest revenue $ 303,247     $ 294,180     $ 265,407     $ 255,767     $ 255,413  
Interest expense 62,364     55,618     45,671     38,904     36,961  
Net interest revenue 240,883     238,562     219,736     216,863     218,452  
Provision for credit losses 4,000         (5,000 )   (7,000 )    
Net interest revenue after provision for credit losses 236,883     238,562     224,736     223,863     218,452  
Other operating revenue:                  
Brokerage and trading revenue 23,086     26,488     30,648     33,045     33,169  
Transaction card revenue1 21,396     20,975     20,990     20,028     22,929  
Fiduciary and asset management revenue 57,514     41,699     41,832     41,767     40,687  
Deposit service charges and fees 27,765     27,827     27,161     27,685     28,191  
Mortgage banking revenue 23,536     26,346     26,025     24,362     24,890  
Other revenue 14,213     14,518     12,330     11,762     13,670  
Total fees and commissions 167,510     157,853     158,986     158,649     163,536  
Other gains (losses), net 1,441     3,983     (664 )   552     (1,283 )
Gain (loss) on derivatives, net (2,847 )   (3,057 )   (5,685 )   (3,045 )   1,033  
Gain (loss) on fair value option securities, net (4,385 )   (3,341 )   (17,564 )   (4,238 )   661  
Change in fair value of mortgage servicing rights 5,972     1,723     21,206     5,898     (639 )
Gain (loss) on available for sale securities, net 250     (762 )   (290 )   (488 )   2,487  
Total other operating revenue 167,941     156,399     155,989     157,328     165,795  
Other operating expense:                  
Personnel 143,531     138,947     139,947     145,329     147,910  
Business promotion 7,620     7,686     6,010     7,317     7,105  
Charitable contributions to BOKF Foundation             2,000      
Professional fees and services 13,209     14,978     10,200     15,344     11,887  
Net occupancy and equipment 23,394     22,761     24,046     22,403     21,325  
Insurance 6,232     6,245     6,593     6,555     6,005  
Data processing and communications1 31,665     27,739     27,817     28,903     27,412  
Printing, postage and supplies 3,837     4,011     4,089     3,781     3,917  
Net losses (gains) and operating expenses of repossessed assets 4,044     2,722     7,705     340     6,071  
Amortization of intangible assets 1,603     1,386     1,300     1,430     1,744  
Mortgage banking costs 11,741     12,890     10,149     14,331     13,450  
Other expense 5,741     7,111     6,574     6,746     9,193  
Total other operating expense 252,617     246,476     244,430     254,479     256,019  
Net income before taxes 152,207     148,485     136,295     126,712     128,228  
Federal and state income taxes 34,662     33,330     30,948     54,347     42,438  
Net income 117,545     115,155     105,347     72,365     85,790  
Net income (loss) attributable to non-controlling interests 289     783     (215 )   (127 )   141  
Net income attributable to BOK Financial Corporation shareholders $ 117,256     $ 114,372     $ 105,562     $ 72,492     $ 85,649  
                   
Average shares outstanding:                  
Basic 64,901,095     64,901,975     64,847,334     64,793,005     64,742,822  
Diluted 64,934,351     64,937,226     64,888,033     64,843,179     64,805,172  
Net income per share:                  
Basic $ 1.79     $ 1.75     $ 1.61     $ 1.11     $ 1.31  
Diluted $ 1.79     $ 1.75     $ 1.61     $ 1.11     $ 1.31  

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

LOANS TREND — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
    Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Commercial:                    
Energy   $ 3,294,867     $ 3,147,219     $ 2,969,618     $ 2,930,156     $ 2,867,981  
Services   3,017,311     2,944,499     2,928,294     2,986,949     2,967,513  
Healthcare   2,437,323     2,353,722     2,359,928     2,314,753     2,239,451  
Wholesale/retail   1,650,729     1,699,554     1,531,576     1,471,256     1,658,098  
Manufacturing   660,582     647,816     559,695     496,774     519,446  
Other commercial and industrial   515,289     556,229     570,556     534,087     543,445  
Total commercial   11,576,101     11,349,039     10,919,667     10,733,975     10,795,934  
                     
Commercial real estate:                    
Multifamily   1,120,166     1,056,984     1,008,903     980,017     999,009  
Office   824,829     820,127     737,144     831,770     797,089  
Retail   759,423     768,024     750,396     691,532     725,865  
Industrial   696,774     653,384     613,608     573,014     591,080  
Residential construction and land development   101,872     118,999     117,458     117,245     112,102  
Other commercial real estate   301,611     294,702     279,273     286,409     292,997  
Total commercial real estate   3,804,675     3,712,220     3,506,782     3,479,987     3,518,142  
                     
Residential mortgage:                    
Permanent mortgage   1,094,926     1,068,412     1,047,785     1,043,435     1,013,965  
Permanent mortgages guaranteed by U.S. government agencies   180,718     169,653     177,880     197,506     187,370  
Home equity   696,098     704,185     720,104     732,745     744,415  
Total residential mortgage   1,971,742     1,942,250     1,945,769     1,973,686     1,945,750  
                     
Personal   996,941     1,000,187     965,632     965,776     947,008  
                     
Total   $ 18,349,459     $ 18,003,696     $ 17,337,850     $ 17,153,424     $ 17,206,834  

LOANS BY PRINCIPAL MARKET AREA — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
  Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
                   
Oklahoma:                  
Commercial $ 3,609,109     $ 3,465,407     $ 3,265,013     $ 3,238,720     $ 3,408,973  
Commercial real estate 651,315     662,665     668,031     682,037     712,915  
Residential mortgage 1,429,843     1,403,658     1,419,281     1,435,432     1,405,900  
Personal 376,201     362,846     353,128     342,212     322,320  
Total Oklahoma 6,066,468     5,894,576     5,705,453     5,698,401     5,850,108  
                   
Texas:                  
Commercial 5,115,646     4,922,451     4,715,841     4,520,401     4,434,595  
Commercial real estate 1,354,679     1,336,101     1,254,421     1,261,864     1,236,702  
Residential mortgage 253,265     243,400     229,761     233,675     229,993  
Personal 381,452     394,021     363,608     375,084     375,173  
Total Texas 7,105,042     6,895,973     6,563,631     6,391,024     6,276,463  
                   
New Mexico:                  
Commercial 325,048     305,167     315,701     343,296     367,747  
Commercial real estate 392,494     386,878     348,485     341,282     319,208  
Residential mortgage 88,110     90,581     93,490     98,018     101,983  
Personal 11,659     11,107     11,667     11,721     12,953  
Total New Mexico 817,311     793,733     769,343     794,317     801,891  
                   
Arkansas:                  
Commercial 102,237     93,217     94,430     95,644     91,051  
Commercial real estate 106,701     90,807     88,700     87,393     80,917  
Residential mortgage 7,278     6,927     7,033     6,596     6,318  
Personal 12,126     12,331     9,916     9,992     10,388  
Total Arkansas 228,342     203,282     200,079     199,625     188,674  
                   
Colorado:                  
Commercial 1,132,500     1,165,721     1,180,655     1,130,714     1,124,200  
Commercial real estate 354,543     267,065     210,801     174,201     186,427  
Residential mortgage 68,694     64,839     64,530     63,350     63,734  
Personal 56,999     60,504     63,118     63,115     60,513  
Total Colorado 1,612,736     1,558,129     1,519,104     1,431,380     1,434,874  
                   
Arizona:                  
Commercial 621,658     681,852     624,106     687,792     634,809  
Commercial real estate 666,562     710,784     672,319     660,094     706,188  
Residential mortgage 44,659     47,010     39,227     41,771     40,730  
Personal 67,280     65,541     57,023     57,140     55,050  
Total Arizona 1,400,159     1,505,187     1,392,675     1,446,797     1,436,777  
                   
Kansas/Missouri:                  
Commercial 669,903     715,224     723,921     717,408     734,559  
Commercial real estate 278,381     257,920     264,025     273,116     275,785  
Residential mortgage 79,893     85,835     92,447     94,844     97,092  
Personal 91,224     93,837     107,172     106,512     110,611  
Total Kansas/Missouri 1,119,401     1,152,816     1,187,565     1,191,880     1,218,047  
                   
TOTAL BOK FINANCIAL $ 18,349,459     $ 18,003,696     $ 17,337,850     $ 17,153,424     $ 17,206,834  

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)
  Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Oklahoma:                  
Demand $ 3,564,307     $ 3,867,933     $ 4,201,842     $ 3,885,008     $ 4,061,612  
Interest-bearing:                  
Transaction 6,010,972     5,968,460     6,051,302     5,901,293     5,909,259  
Savings 288,080     289,202     289,351     265,870     265,023  
Time 1,128,810     1,207,471     1,203,534     1,092,133     1,131,547  
Total interest-bearing 7,427,862     7,465,133     7,544,187     7,259,296     7,305,829  
Total Oklahoma 10,992,169     11,333,066     11,746,029     11,144,304     11,367,441  
                   
Texas:                  
Demand 3,353,248     3,317,656     3,015,869     3,239,098     3,094,184  
Interest-bearing:                  
Transaction 2,181,382     2,168,488     2,208,480     2,397,071     2,272,987  
Savings 97,909     97,809     98,852     93,620     93,400  
Time 453,119     445,500     475,967     502,879     521,072  
Total interest-bearing 2,732,410     2,711,797     2,783,299     2,993,570     2,887,459  
Total Texas 6,085,658     6,029,453     5,799,168     6,232,668     5,981,643  
                   
New Mexico:                  
Demand 722,188     770,974     695,060     663,353     659,793  
Interest-bearing:                  
Transaction 593,760     586,593     555,414     552,393     551,884  
Savings 57,794     59,415     60,596     55,647     53,532  
Time 221,513     212,689     216,306     216,743     224,773  
Total interest-bearing 873,067     858,697     832,316     824,783     830,189  
Total New Mexico 1,595,255     1,629,671     1,527,376     1,488,136     1,489,982  
                   
Arkansas:                  
Demand 36,579     39,896     35,291     30,384     31,442  
Interest-bearing:                  
Transaction 128,001     143,298     94,206     85,095     126,746  
Savings 1,826     1,885     1,960     1,881     1,876  
Time 10,214     10,771     11,878     14,045     14,434  
Total interest-bearing 140,041     155,954     108,044     101,021     143,056  
Total Arkansas 176,620     195,850     143,335     131,405     174,498  
                   
Colorado:                  
Demand 593,442     529,912     521,963     633,714     540,300  
Interest-bearing:                  
Transaction 622,520     701,362     687,785     657,629     628,807  
Savings 40,308     38,176     37,232     35,223     34,776  
Time 217,628     208,049     215,330     224,962     231,927  
Total interest-bearing 880,456     947,587     940,347     917,814     895,510  
Total Colorado 1,473,898     1,477,499     1,462,310     1,551,528     1,435,810  
                   
Arizona:                  
Demand 370,299     387,952     330,196     334,701     335,740  
Interest-bearing:                  
Transaction 130,837     194,353     248,337     274,846     174,010  
Savings 3,559     3,935     4,116     3,343     4,105  
Time 23,927     22,447     21,009     20,394     20,831  
Total interest-bearing 158,323     220,735     273,462     298,583     198,946  
Total Arizona 528,622     608,687     603,658     633,284     534,686  
                   
Kansas/Missouri:                  
Demand 423,560     459,636     505,802     457,080     462,410  
Interest-bearing:                  
Transaction 322,747     401,545     381,447     382,066     361,391  
Savings 13,125     13,052     13,845     13,574     12,513  
Time 20,635     20,805     22,230     27,260     27,705  
Total interest-bearing 356,507     435,402     417,522     422,900     401,609  
Total Kansas/Missouri 780,067     895,038     923,324     879,980     864,019  
                   
TOTAL BOK FINANCIAL $ 21,632,289     $ 22,169,264     $ 22,205,200     $ 22,061,305     $ 21,848,079  

NET INTEREST MARGIN TREND — UNAUDITED
BOK FINANCIAL CORPORATION
  Three Months Ended
  Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 30, 2017   Sept. 30, 2017
                   
TAX-EQUIVALENT ASSETS YIELDS                  
Interest-bearing cash and cash equivalents 1.98 %   1.86 %   1.57 %   1.27 %   1.29 %
Trading securities 3.98 %   3.63 %   3.40 %   3.38 %   3.47 %
Investment securities 4.06 %   3.95 %   3.78 %   3.98 %   3.86 %
Available for sale securities 2.37 %   2.30 %   2.23 %   2.21 %   2.17 %
Fair value option securities 3.25 %   3.16 %   2.95 %   2.90 %   2.97 %
Restricted equity securities 6.36 %   6.21 %   5.86 %   5.87 %   5.87 %
Residential mortgage loans held for sale 4.27 %   4.28 %   3.71 %   3.72 %   3.36 %
Loans 4.80 %   4.80 %   4.45 %   4.29 %   4.31 %
Allowance for loan losses                  
Loans, net of allowance 4.86 %   4.86 %   4.51 %   4.35 %   4.38 %
Total tax-equivalent yield on earning assets 4.04 %   3.91 %   3.61 %   3.49 %   3.50 %
                   
COST OF INTEREST-BEARING LIABILITIES                
Interest-bearing deposits:                  
Interest-bearing transaction 0.67 %   0.55 %   0.45 %   0.35 %   0.32 %
Savings 0.09 %   0.08 %   0.07 %   0.07 %   0.08 %
Time 1.40 %   1.29 %   1.25 %   1.17 %   1.16 %
Total interest-bearing deposits 0.77 %   0.66 %   0.57 %   0.48 %   0.45 %
Funds purchased and repurchase agreements 1.25 %   0.53 %   0.40 %   0.28 %   0.25 %
Other borrowings 2.20 %   1.96 %   1.60 %   1.36 %   1.29 %
Subordinated debt 5.55 %   5.67 %   5.61 %   5.55 %   5.68 %
Total cost of interest-bearing liabilities 1.25 %   1.11 %   0.93 %   0.79 %   0.75 %
Tax-equivalent net interest revenue spread 2.79 %   2.80 %   2.68 %   2.70 %   2.75 %
Effect of noninterest-bearing funding sources and other 0.42 %   0.37 %   0.31 %   0.27 %   0.26 %
Tax-equivalent net interest margin 3.21 %   3.17 %   2.99 %   2.97 %   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, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Nonperforming assets:                  
Nonaccruing loans:                  
Commercial $ 109,490     $ 120,978     $ 131,460     $ 137,303     $ 176,900  
Commercial real estate 1,316     1,996     2,470     2,855     2,975  
Residential mortgage 41,917     42,343     45,794     47,447     45,506  
Personal 269     340     340     269     255  
Total nonaccruing loans 152,992     165,657     180,064     187,874     225,636  
Accruing renegotiated loans guaranteed by U.S. government agencies 83,347     75,374     74,418     73,994     69,440  
Real estate and other repossessed assets 24,515     27,891     23,652     28,437     32,535  
Total nonperforming assets $ 260,854     $ 268,922     $ 278,134     $ 290,305     $ 327,611  
Total nonperforming assets excluding those guaranteed by U.S. government agencies $ 169,717     $ 185,981     $ 194,833     $ 207,132     $ 249,280  
                   
Nonaccruing loans by loan class:                  
Commercial:                  
Energy $ 54,033     $ 65,597     $ 89,942     $ 92,284     $ 110,683  
Healthcare 15,704     16,125     15,342     14,765     24,446  
Wholesale/retail 9,249     14,095     2,564     2,574     1,893  
Manufacturing 9,202     2,991     3,002     5,962     9,059  
Services 4,097     4,377     2,109     2,620     1,174  
Other commercial and industrial 17,205     17,793     18,501     19,098     29,645  
Total commercial 109,490     120,978     131,460     137,303     176,900  
Commercial real estate:                  
Retail 777     1,068     264     276     289  
Residential construction and land development 350     350     1,613     1,832     1,924  
Office     275     275     275     275  
Industrial                  
Multifamily                  
Other commercial real estate 189     303     318     472     487  
Total commercial real estate 1,316     1,996     2,470     2,855     2,975  
Residential mortgage:                  
Permanent mortgage 22,855     23,105     24,578     25,193     24,623  
Permanent mortgage guaranteed by U.S. government agencies 7,790     7,567     8,883     9,179     8,891  
Home equity 11,272     11,671     12,333     13,075     11,992  
Total residential mortgage 41,917     42,343     45,794     47,447     45,506  
Personal 269     340     340     269     255  
Total nonaccruing loans $ 152,992     $ 165,657     $ 180,064     $ 187,874     $ 225,636  
                   
Performing loans 90 days past due1 $ 518     $ 879     $ 90     $ 633     $ 253  
                   
Gross charge-offs $ 11,073     $ 15,105     $ 2,890     $ 14,749     $ 5,825  
Recoveries (2,092 )   (4,578 )   (1,576 )   (3,061 )   (2,437 )
Net charge-offs $ 8,981     $ 10,527     $ 1,314     $ 11,688     $ 3,388  
                   
Provision for credit losses $ 4,000     $     $ (5,000 )   $ (7,000 )   $  
                   
Allowance for loan losses to period end loans 1.15 %   1.19 %   1.29 %   1.34 %   1.44 %
Combined allowance for credit losses to period end loans 1.16 %   1.21 %   1.32 %   1.37 %   1.47 %
Nonperforming assets to period end loans and repossessed assets 1.42 %   1.49 %   1.60 %   1.69 %   1.90 %
Net charge-offs (annualized) to average loans 0.20 %   0.24 %   0.03 %   0.27 %   0.08 %
Allowance for loan losses to nonaccruing loans1 145.02 %   136.09 %   130.84 %   129.09 %   114.28 %
Combined allowance for credit losses to nonaccruing loans1 146.41 %   137.63 %   133.25 %   131.18 %   116.78 %

1   Excludes residential mortgage loans guaranteed by agencies of the U.S. government.

SEGMENTS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
    Three Months Ended   Change
Commercial Banking   Sept. 30, 2018   June 30, 2018   Sept. 30, 2017   3Q18 vs 2Q18   3Q18 vs 3Q17
Net interest revenue   $ 145,147     $ 145,025     $ 135,112     0.1 %   7.4 %
Fees and commissions revenue   39,391     42,874     44,747     (8.1 )%   (12.0 )%
Other operating expense   49,136     47,483     47,430     3.5 %   3.6 %
Corporate expense allocations   11,027     11,269     8,733     (2.1 )%   26.3 %
Net income   84,963     87,577     68,610     (3.0 )%   23.8 %
                     
Average assets   18,499,979     18,072,155     17,780,494     2.4 %   4.0 %
Average loans   15,321,600     14,900,918     14,511,639     2.8 %   5.6 %
Average deposits   8,633,204     8,379,584     8,727,221     3.0 %   (1.1 )%
                     
Consumer Banking                    
Net interest revenue   $ 40,114     $ 39,294     $ 35,946     2.1 %   11.6 %
Fees and commissions revenue   44,038     46,332     45,006     (5.0 )%   (2.2 )%
Other operating expense   53,187     55,906     56,147     (4.9 )%   (5.3 )%
Corporate expense allocations   15,863     15,867     16,920     %   (6.2 )%
Net income   9,162     6,102     4,809     50.1 %   90.5 %
                     
Average assets   8,323,542     8,353,558     8,683,998     (0.4 )%   (4.2 )%
Average loans   1,719,679     1,716,259     1,724,523     0.2 %   (0.3 )%
Average deposits   6,580,395     6,579,635     6,663,969     %   (1.3 )%
                     
Wealth Management                    
Net interest revenue   $ 29,398     $ 29,306     $ 20,774     0.3 %   41.5 %
Fees and commissions revenue   83,562     70,489     75,915     18.5 %   10.1 %
Other operating expense   62,255     61,491     61,792     1.2 %   0.7 %
Corporate expense allocations   11,126     11,142     9,819     (0.1 )%   13.3 %
Net income   29,331     20,358     15,472     44.1 %   89.6 %
                     
Average assets   8,498,363     8,495,557     6,992,021     %   21.5 %
Average loans   1,439,774     1,413,170     1,324,574     1.9 %   8.7 %
Average deposits   5,492,048     5,834,669     5,495,250     (5.9 )%   (0.1 )%
Fiduciary assets   45,560,107     46,531,900     45,177,185     (2.1 )%   0.8 %
Assets under management or administration   77,628,015     78,873,446     77,650,909     (1.6 )%   %

For Further Information Contact:
Katy Hall                    
(918) 595-3030