0000875357-13-000002.txt : 20130130 0000875357-13-000002.hdr.sgml : 20130130 20130130171437 ACCESSION NUMBER: 0000875357-13-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130130 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130130 DATE AS OF CHANGE: 20130130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOK FINANCIAL CORP ET AL CENTRAL INDEX KEY: 0000875357 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 731373454 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19341 FILM NUMBER: 13559890 BUSINESS ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: PO BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 BUSINESS PHONE: 9185953025 MAIL ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: P O BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 8-K 1 bokf-20121231x8k.htm 8-K BOKF-2012.12.31-8K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
January 30, 2013

Commission File No. 0-19341

BOK FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

Oklahoma
 
73-1373454
(State or other jurisdiction
of Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
 
Bank of Oklahoma Tower
 
 
P.O. Box 2300
 
 
Tulsa, Oklahoma
 
74192
(Address of Principal Executive Offices)
 
(Zip Code)
 
(918) 588-6000
(Registrant’s telephone number, including area code)

N/A
___________________________________________
(Former name or former address, if changes since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).







INFORMATION TO BE INCLUDED IN THE REPORT

ITEM 2.02. Results of Operations and Financial Condition.

On January 30, 2013, BOK Financial Corporation (“BOK Financial”) issued a press release announcing its financial results for the three months and year ended December 31, 2012 (“Press Release”). The full text of the Press Release is attached as Exhibit 99(a) to this report and is incorporated herein by reference. On January 30, 2013, in connection with issuance of the Press Release, BOK Financial released financial information related to the three months and year ended December 31, 2012 (“Financial Information”), which includes certain historical financial information relating to BOK Financial. The Financial Information is attached as Exhibit 99(b) to this report and is incorporated herein by reference.


ITEM 9.01. Financial Statements and Exhibits.

(a)
Exhibits

99
Text of Press Release, dated January 30, 2013 titled “BOK Financial Reports Record Earnings of $351 Million for 2012 -- Fourth Quarter Earnings Total $83 Million” and Financial Information for the Three Months and Year Ended December 31, 2012




Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


BOK FINANCIAL CORPORATION




By: /s/ Steven E. Nell            
Steven E. Nell
Executive Vice President
Chief Financial Officer
Date: January 30, 2013



EX-99.A 2 bokf-20121231xex99.htm EXHIBIT BOKF-2012.12.31-EX 99

Exhibit 99 (a)

NASD: BOKF


For Further Information Contact:
Steven Nell             Andrea Myers
Chief Financial Officer     Corporate Communications
(918) 588-6752         (918) 594-7794

BOK Financial Reports Record Earnings of $351 Million for 2012
Fourth Quarter Earnings Total $83 Million
TULSA, Okla. (Wednesday, January 30, 2013) - BOK Financial Corporation reported record net income of $351.2 million or $5.13 per diluted share for the year ended December 31, 2012, up $65.3 million or 23% over 2011. Net income for the year ended December 31, 2011 was $285.9 million or $4.17 per diluted share.
“BOK Financial's results for 2012 reflect the value of our diversified revenue business model,” said President and CEO Stan Lybarger. “Non-interest revenue increased by $103 million or 20% over 2011, led by tremendous growth in mortgage banking revenue. Our mortgage banking professionals originated over $3.7 billion in loans, assisting a record number of customers in the purchase or refinance of their home during this year. In addition to mortgage banking revenue, brokerage and trading revenue was up nearly $23 million over the previous year, which more than offset the full year effect of regulatory limits on interchange fees."
"Our commercial loan portfolio grew by $1.1 billion or 16% and deposits grew by $2.4 billion or 13% over December 31, 2011," said Lybarger. "Additionally, continued improvements in credit quality in 2012 required us to further reduce our combined allowances for credit losses by $45 million through net charge-offs and a $22 million negative provision for credit losses."
"While persistently low interest rates and modest economic growth present a challenge for all banks, including BOK Financial, we expect the Company to continue to perform well," said Lybarger. "Our outlook for the upcoming year includes continued loan growth, increased non-interest revenue and operating expense discipline."
Net income for the fourth quarter of 2012 totaled $82.6 million or $1.21 per diluted share, compared to net income of $87.4 million or $1.27 per diluted share for the third quarter of 2012 and net income of $67.0 million or $0.98 per diluted share for the fourth quarter of 2011.

1


Highlights of fourth quarter of 2012 included:
Net interest revenue totaled $173.4 million for the fourth quarter of 2012 compared to $176.0 million for the third quarter of 2012. Net interest margin was 2.95% for the fourth quarter of 2012 and 3.12% for the third quarter of 2012. Securities portfolio yield continued to decline as cash flows were reinvested at lower rates.
Fees and commissions revenue totaled $165.8 million, largely unchanged compared to the third quarter of 2012. Mortgage banking revenue decreased $3.9 million compared to the prior quarter primarily due to seasonal decreases in mortgage commitments and mortgage loans held for sale. Trust fees and commission revenue increased $2.4 million over the prior quarter. All other revenue sources were up $1.3 million over the prior quarter.
Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $226.8 million, up $14.0 million over the previous quarter. Personnel expense increased $8.4 million. Non-personnel expense increased $5.6 million.
A $14.0 million negative provision for credit losses was recorded in the fourth quarter of 2012. Improving charge-off trends resulted in lower estimated loss rates. Most economic factors are stable or improving in our primary markets. No provision for credit losses was recorded in the third quarter of 2012. Net charge-offs totaled $4.3 million or 0.14% of average loans on an annualized basis in the fourth quarter of 2012 compared to net charge-offs of $5.7 million or 0.19% of average loans on an annualized basis in the third quarter of 2012. Gross charge-offs continue to decline, down $921 thousand from the previous quarter.
The combined allowance for credit losses totaled $217 million or 1.77% of outstanding loans at December 31, 2012 compared to $236 million or 1.99% of outstanding loans at September 30, 2012. Nonperforming assets totaled $277 million or 2.23% of outstanding loans and repossessed assets at December 31, 2012 and $264 million or 2.21% of outstanding loans and repossessed assets at September 30, 2012. Nonperforming assets increased $31 million due to the implementation of recent regulatory guidance concerning borrowers who have filed for Chapter 7 bankruptcy. Excluding the impact of this new guidance, nonperforming assets decreased $19 million during the fourth quarter of 2012.
Outstanding loan balances were $12.3 billion at December 31, 2012, up $479 million over the prior quarter. Commercial loan balances grew by $351 million or 19% on an annualized basis over September 30, 2012. Commercial real estate loans grew by $68 million, residential mortgage loans grew by $32 million and consumer loans grew by $28 million.
Period end deposits totaled $21.2 billion at December 31, 2012 compared to $19.1 billion at September 30, 2012. Demand deposit accounts increased $1.2 billion and interest-bearing transaction accounts increased $885 million, partially offset by a $54 million decrease in time deposits.
Tangible common equity ratio was 9.25% at December 31, 2012 and 9.67% at September 30, 2012. The tangible common equity ratio is a non-GAAP measure of capital strength used by the Company and investors based on shareholders' equity minus intangible assets and equity that does not benefit common shareholders. The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company's Tier 1 capital ratios, as defined by banking regulations, were 12.78% at December 31, 2012 and 13.21% at September 30, 2012.

2


The Company paid a regular quarterly cash dividend of $26 million or $0.38 per common share and a special cash dividend of $68 million or $1.00 per common share during the fourth quarter of 2012. On January 29, 2013, the board of directors approved a quarterly cash dividend of $0.38 per common share payable on or about March 1, 2013 to shareholders of record as of February 15, 2013.
Net Interest Revenue
Net interest revenue decreased $2.7 million compared to the third quarter of 2012. Net interest margin was 2.95% for the fourth quarter of 2012 compared to 3.12% for the third quarter of 2012.
The yield on average earning assets decreased 17 basis points compared to the prior quarter. The available for sale securities portfolio yield decreased 28 basis points to 2.10% due primarily to the continued reinvestment of cash flows from the portfolio at lower current rates. The loan portfolio yield of 4.33% was unchanged compared to the previous quarter.
"In the present low interest rate environment, our ability to further decrease funding costs is limited," said Steven Nell, Chief Financial Officer. "In addition, our ability to bolster near term net interest revenue through continued securities portfolio growth may be constrained by our conservative approach to interest rate risk management. We intend to focus on supporting net interest revenue through continued loan portfolio growth. Based on the current interest rate environment, we see continued pressure on net interest margin in 2013."
Average earning assets increased $741 million during the fourth quarter of 2012. The average balance of the available for sale securities portfolio increased $424 million over the third quarter of 2012 due primarily to growth in residential and commercial mortgage-backed securities issued by U.S. government agencies. Average outstanding loans increased $250 million due primarily to a $209 million increase in commercial loan balances.
Average deposits increased $1.4 billion over the previous quarter. Demand deposit balances were up $787 million and interest-bearing transaction account balances increased $624 million. Time deposit account balances decreased $59 million. The average balance of borrowed funds decreased $328 million compared to the third quarter of 2012.
Fees and Commissions Revenue
Fees and commissions revenue totaled $165.8 million, largely unchanged compared to the third quarter of 2012. Increased revenue from an acquisition made during the third quarter was mostly offset by decreased mortgage banking revenue.
Mortgage banking revenue totaled $46.4 million, down $3.9 million from the prior quarter. Record mortgage loan production volume during the fourth quarter was offset by a seasonal decrease in mortgage loan commitments and loans held for sale. Residential mortgage loans funded for sale totaled $1.1 billion for the fourth quarter of 2012, up $27 million or 3% over the previous quarter. Refinanced mortgage loans were 62% of loans originated for sale in the fourth quarter of 2012 compared to 61% of the loans originated for sale in the third quarter of 2012. Outstanding mortgage loan commitments decreased $95 million and the unpaid principal balance of loans held for sale decreased $25 million compared to September 30, 2012.

3


"Despite some industry forecasts of a reduction in mortgage lending activity, we expect our mortgage banking revenue to remain strong in 2013," said Nell. "During 2012, we increased the number of mortgage lenders, expanded further into our regional markets and added correspondent loan origination channels. In addition, it does not appear that government policies that stimulate mortgage lending will end anytime soon. We also expect continued revenue growth from our wealth management business in 2013 through a full year's performance from our Milestone acquisition and further expansion throughout our regional markets."
Trust fees and commissions revenue were up $2.4 million primarily related to revenue from The Milestone Group, Inc., a Denver-based Registered Investment Adviser acquired by BOK Financial in the third quarter. Brokerage and trading revenue increased $697 thousand, transaction card revenue increased $221 thousand and deposit service charges and fees decreased $974 thousand.
Operating Expenses
Total operating expenses were $222.1 million for the fourth quarter of 2012 compared to $222.3 million for the third quarter of 2012. Excluding changes in the fair value of mortgage servicing rights, operating expenses totaled $226.8 million, up $14.0 million over the third quarter of 2012.
Personnel costs increased $8.4 million over the third quarter of 2012 due largely to increased incentive compensation and health care costs. Incentive compensation expense increased $5.8 million. Stock-based incentive compensation expense increased $4.8 million primarily due to increased incentive compensation accruals for executive compensation plans. Cash-based incentive compensation, which rewards employees as they generate business opportunities for the Company by growing loans, deposits, customer relationships or other measurable metrics, increased $1.0 million. Employee health care costs increased $3.0 million over the third quarter of 2012 primarily due to an increased level of large dollar claims.
Non-personnel expense increased $5.6 million over the third quarter of 2012. During the fourth quarter, the Company made a $2.1 million discretionary contribution to the BOKF Foundation. The BOKF Foundation partners with various charitable organizations to support needs within our communities. All other non-personnel expenses were up $3.5 million over the previous quarter.
Loans, Deposits and Capital
Loans
Outstanding loans at December 31, 2012 were $12.3 billion, up $479 million over September 30, 2012. All categories of loans experienced growth during the fourth quarter.
Outstanding commercial loan balances grew by $351 million or 19% on an annualized basis over September 30, 2012. Outstanding balances were up in most geographic markets, including $133 million in Oklahoma, $125 million in Texas, $46 million in Kansas/Missouri and $33 million in Colorado. Service sector loans grew by $134 million primarily in the Texas and Oklahoma markets. Energy sector loans increased $57 million. Energy sector loans grew primarily in the Oklahoma and Colorado markets, partially offset by a decrease in the Texas market. Healthcare sector loans increased $56 million primarily in the Texas market. Wholesale/retail sector loans increased $55 million primarily in the Texas and Kansas/Missouri markets, partially offset by a decrease in the Oklahoma market. Other commercial and industrial sector loans increased $33 million and manufacturing sector loans increased $18 million both primarily in the Oklahoma market. Unfunded energy loan commitments increased $170 million during the

4


fourth quarter to $2.4 billion. All other unfunded commercial loan commitments totaled $3.2 billion at December 31, 2012, up slightly from September 30, 2012.
Commercial real estate loans were up $68 million over September 30, 2012. Loans secured by industrial properties increased by $59 million primarily in the Texas market. Other real estate loans increased $24 million. Growth in the Oklahoma and Colorado markets was partially offset by a decrease in the Texas market. Loans secured by office buildings were up $20 million primarily due to growth in the Texas market, partially offset by a decrease in loans attributed to the Oklahoma market. Growth in these loan classes was partially offset by a $40 million decrease in construction and land development loans primarily in the Oklahoma, Texas and Colorado markets. Unfunded commercial real estate loan commitments totaled $621 million at December 31, 2012, up $47 million over September 30, 2012.
Residential mortgage loans increased $32 million over September 30, 2012. Home equity loans increased $46 million. Growth continues to be primarily focused in first-lien, fully amortizing home equity loans. At December 31, 2012, approximately 63% of our $761 million home equity loan portfolio consisted of first-lien, fully amortizing loans. Non-guaranteed permanent mortgage loans decreased $11.0 million. Permanent mortgage loans guaranteed by U.S. government agencies decreased $2.2 million.
Consumer loans increased $28 million from September 30, 2012. Other consumer loans were up $40 million over September 30, 2012, partially offset by a $13 million decrease primarily related to continued runoff of indirect automobile loans resulting from the previously announced decision to curtail that business in favor of a customer-focused direct approach to consumer lending. Approximately $35 million of indirect automobile loans remain outstanding at December 31, 2012.
Deposits
Deposits totaled $21.2 billion at December 31, 2012 compared to $19.1 billion at September 30, 2012. Demand deposit balances increased $1.2 billion. Interest-bearing transaction account balances increased $885 million and time deposits decreased $54 million. Among the lines of business, commercial deposits increased $1.1 billion, wealth management deposits increased $599 million and consumer deposits increased $80 million. Energy, commercial real estate, treasury services and small business customer account balances all increased over the prior quarter. Commercial customers continue to maintain high account balances due to continued economic uncertainty and persistently low yields available on high-quality investment alternatives. A significant driver of deposit growth in the fourth quarter was sales of businesses or assets by customers. During the first half of January 2013, demand deposit balances decreased by approximately $700 million as customers redeployed these funds.
The temporary unlimited deposit insurance coverage program for noninterest-bearing transaction accounts at all FDIC-insured institutions provided for by the Dodd-Frank Wall Street Reform and Consumer Protection Act expired on December 31, 2012. Noninterest-bearing transaction accounts are now insured up to $250,000.

5


Capital
The Company and its subsidiary bank exceeded the regulatory definition of well capitalized at December 31, 2012. The Company's Tier 1 capital ratio was 12.78% at December 31, 2012 and 13.21% at September 30, 2012. The total capital ratio was 15.13% at December 31, 2012 and 15.71% at September 30, 2012. In addition, the Company's tangible common equity ratio, a non-GAAP measure, was 9.25% at December 31, 2012 and 9.67% at September 30, 2012. Unrealized securities gains added 48 basis points to the tangible common equity ratio at December 31, 2012. The decrease in Tier 1, total and tangible common equity ratios was largely due to the $1.00 per share special dividend paid in the fourth quarter.
"BOK Financial has increased cash dividends each year since paying its first quarterly cash dividend in 2005," said Nell. "We will consider migrating toward a higher regular dividend payout ratio in the future, subject to attractive capital deployment opportunities."
In June 2012, banking regulators issued a Notice of Proposed Rulemaking that will incorporate Basel III capital changes for substantially all U.S. banking organizations. If adopted as proposed, these changes will establish a 7% threshold for the Tier 1 common equity ratio consisting of a minimum level plus a capital conservation buffer. BOK Financial's Tier 1 common equity ratio based on the existing Basel I standards was 12.59% as of December 31, 2012. Our estimated Tier 1 common equity ratio under a fully phased in Basel III framework is approximately 12.15%, nearly 515 basis points above the 7% regulatory threshold. This estimate is subject to interpretation of rules that are not yet final. Additionally, the proposed definition of Tier 1 common equity includes unrealized gains and losses on available for sale securities which will vary based on market conditions.
Credit Quality
Nonperforming assets increased $13 million during the fourth quarter of 2012 to $277 million or 2.23% of outstanding loans and repossessed assets at December 31, 2012. Excluding the impact of recent regulatory guidance that primarily affected residential mortgage loans, nonperforming assets decreased $19 million. Implementation of this guidance increased nonperforming assets by $31 million in the fourth quarter.
The Office of the Comptroller of the Currency issued interpretive guidance in the third quarter of 2012 regarding accounting for and classification of retail loans to borrowers who have filed for Chapter 7 bankruptcy. This guidance requires that these loans be charged-down to collateral value and classified as nonaccruing and troubled debt restructurings, regardless of current payment status. We have generally been complying with this guidance by charging down such loans to collateral value. Implementation of this guidance in the fourth quarter did not significantly affect charge-offs or provision for credit losses. Nonaccruing loans increased by approximately $19 million. At December 31, 2012, payments on approximately 65% of these newly-identified nonaccruing loans are current. Most of this increase in nonaccruing loans is attributed to residential mortgage loans in the the Oklahoma market. Implementation of this guidance also increased renegotiated residential mortgage loans guaranteed by U.S. government agencies by $12 million.
Nonaccruing loans totaled $134 million or 1.09% of outstanding loans at December 31, 2012 and $132 million or 1.11% of outstanding loans at September 30, 2012. New nonaccruing loans identified in the fourth quarter totaled $38 million, including $19 million identified related to the implementation of the recent regulatory guidance on Chapter 7 bankruptcies. This was offset by $16 million in payments received, $8.0 million in charge-offs and $13 million in foreclosures and repossessions.

6


Nonaccruing commercial loans increased to $24 million or 0.32% of outstanding commercial loans at December 31, 2012 from $22 million or 0.30% of outstanding commercial loans at September 30, 2012. Nonaccruing commercial real estate loans decreased to $61 million or 2.71% of outstanding commercial real estate loans at December 31, 2012 from $76 million or 3.50% of outstanding commercial real estate loans at September 30, 2012. Nonaccruing commercial real estate loans consist primarily of land development and residential construction loans. Nonaccruing land development and residential construction loans totaled $26 million or 10.49% of all land development and construction loans at December 31, 2012, a decrease of $12 million during the fourth quarter.
Nonaccruing residential mortgage loans increased $17 million during the fourth quarter of 2012 to $47 million or 2.27% of outstanding residential mortgage loans. Principally all non-guaranteed residential mortgage loans past due 90 days or more are nonaccruing. Residential mortgage loans past due 30 to 89 days and still accruing interest, excluding loans guaranteed by U.S. government agencies, totaled $11 million at December 31, 2012 and $21 million at September 30, 2012.
The combined allowance for credit losses totaled $217 million or 1.77% of outstanding loans and 161.76% of nonaccruing loans at December 31, 2012. The allowance for loan losses was $216 million and the accrual for off-balance sheet credit losses was $1.9 million. Gross charge-offs continue to decrease, totaling $8.0 million for the fourth quarter, compared to $8.9 million for the previous quarter. Recoveries totaled $3.7 million for the fourth quarter of 2012. Net charge-offs totaled $4.3 million or 0.14% on an annualized basis for the fourth quarter of 2012 compared with net charge-offs of $5.7 million or 0.19% on an annualized basis for the third quarter of 2012.
After evaluating all credit factors, the Company determined that a $14 million negative provision for credit losses was necessary during the fourth quarter of 2012. Improving trends in gross charge-offs and loan portfolio risk grading across most loan classes resulted in lower estimated loss rates used in developing the combined allowance for credit losses. Most economic factors are stable or improving in our primary markets.
Real estate and other repossessed assets totaled $104 million at December 31, 2012, primarily consisting of $44 million of 1-4 family residential properties (including $22 million guaranteed by U.S. government agencies), $25 million of developed commercial real estate properties, $18 million of undeveloped land and $16 million of residential land and land development properties. The distribution of real estate owned and other repossessed assets among various markets included $29 million attributed to Arizona, $18 million attributed to New Mexico, $16 million attributed to Texas, $15 million attributed to Oklahoma and $13 million attributed to Colorado. Real estate and other repossessed assets decreased by $337 thousand during the fourth quarter of 2012. Additions of $36 million were partially offset by $33 million of sales. Additions included $23 million and sales included $24 million of 1-4 family residential properties guaranteed by U.S. government agencies. Write-downs and net losses on sales of real estate and other repossessed assets totaled $4.1 million.
Securities and Derivatives
The fair value of the available for sale securities portfolio totaled $11.3 billion at December 31, 2012 and $11.5 billion at September 30, 2012. At December 31, 2012, the available for sale portfolio consisted primarily of $9.9 billion of residential mortgage-backed securities fully backed by U.S. government agencies, $895 million of commercial mortgage-backed securities fully backed by U.S. government agencies, and $325 million of residential mortgage-backed securities privately issued by publicly owned financial institutions. Privately issued residential mortgage-backed securities included $202 million

7


backed by Jumbo-A mortgage loans and $123 million backed by Alt-A mortgage loans. Net unamortized premiums are less than 1% of the securities portfolio amortized cost.
Net unrealized gains on available for sale securities totaled $255 million at December 31, 2012 and $281 million at September 30, 2012. Net unrealized gains on residential mortgage-backed securities issued by U.S. government agencies decreased $34 million during the fourth quarter to $239 million at December 31, 2012. The privately issued residential mortgage-backed securities portfolio has a net unrealized gain of $2.3 million at December 31, 2012 compared to a net unrealized loss of $5.3 million at September 30, 2012.
The amortized cost of privately issued residential mortgage-backed securities totaled $323 million at December 31, 2012, down $14 million since September 30, 2012. All of these securities are rated below investment grade by at least one nationally-recognized rating agency. The amortized cost of these securities was reduced during the fourth quarter of 2012 by $14 million of cash payments received and $197 thousand of credit-related impairment charges during the quarter.
In the fourth quarter of 2012, the Company recognized net gains of $1.1 million from sales of $84 million of available for sale securities. These securities were sold either because they had reached their expected maximum potential total return or to mitigate exposure to prepayment risk. Net gains from sales of $209 million of available for sale securities in the third quarter of 2012 totaled $8.0 million.
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. Due to changes in residential mortgage interest rates during the fourth quarter of 2012, prepayment speeds decreased and the value of our mortgage servicing rights increased by $4.7 million. This increase was partially offset by a $2.9 million decrease in the value of securities and interest rate derivative contracts held as an economic hedge.


8


About BOK Financial Corporation
BOK Financial is a $28 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., The Milestone Group, Inc. and Cavanal Hill Investment Management, Inc. BOKF, NA operates the TransFund electronic funds network 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 adequacy of the allowance for credit losses and asset impairment as of December 31, 2012 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.

9


BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
 
December 31,
2012
 
September 30,
2012
 
December 31,
2011
ASSETS
 
 
 
 
 
 
Cash and due from banks
 
$
1,266,834

 
$
596,590

 
$
976,191

Funds sold and resell agreements
 
19,405

 
18,904

 
10,174

Trading securities
 
214,102

 
204,242

 
76,800

Investment securities
 
499,534

 
432,114

 
439,236

Available for sale securities
 
11,287,221

 
11,506,434

 
10,179,365

Fair value option securities
 
284,296

 
331,887

 
651,226

Residential mortgage loans held for sale
 
293,762

 
325,102

 
188,125

Loans:
 
 
 
 
 
 
Commercial
 
7,624,420

 
7,273,217

 
6,555,070

Commercial real estate
 
2,233,158

 
2,165,526

 
2,291,303

Residential mortgage
 
2,051,354

 
2,018,980

 
1,974,527

Consumer
 
402,524

 
374,644

 
448,843

Total loans
 
12,311,456

 
11,832,367

 
11,269,743

Less allowance for loan losses
 
(215,507
)
 
(233,756
)
 
(253,481
)
Loans, net of allowance
 
12,095,949

 
11,598,611

 
11,016,262

Premises and equipment, net
 
265,920

 
259,195

 
262,735

Receivables
 
114,185

 
116,243

 
123,257

Goodwill
 
361,979

 
358,962

 
335,601

Intangible assets, net
 
28,192

 
33,196

 
10,219

Mortgage servicing rights, net
 
100,812

 
89,653

 
86,783

Real estate and other repossessed assets
 
103,791

 
104,128

 
122,753

Bankers' acceptances
 
605

 
1,605

 
1,881

Derivative contracts
 
338,106

 
435,653

 
293,859

Cash surrender value of bank-owned life insurance
 
274,531

 
271,830

 
263,318

Receivable on unsettled securities sales
 
211,052

 
32,480

 
75,151

Other assets
 
388,355

 
400,812

 
381,010

TOTAL ASSETS
 
$
28,148,631

 
$
27,117,641

 
$
25,493,946

LIABILITIES AND EQUITY
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
Demand
 
$
8,038,286

 
$
6,848,401

 
$
5,799,785

Interest-bearing transaction
 
9,888,038

 
9,002,567

 
9,354,456

Savings
 
284,744

 
269,573

 
226,357

Time
 
2,967,992

 
3,022,326

 
3,381,982

Total deposits
 
21,179,060

 
19,142,867

 
18,762,580

Funds purchased
 
1,167,416

 
1,680,626

 
1,063,318

Repurchase agreements
 
887,030

 
1,109,696

 
1,233,064

Other borrowings
 
651,775

 
639,254

 
74,485

Subordinated debentures
 
347,633

 
347,592

 
398,881

Accrued interest, taxes, and expense
 
176,678

 
182,410

 
149,508

Bankers' acceptances
 
605

 
1,605

 
1,881

Due on unsettled securities purchases
 
297,453

 
556,998

 
653,371

Derivative contracts
 
283,589

 
254,422

 
236,522

Other liabilities
 
163,711

 
189,696

 
133,684

TOTAL LIABILITIES
 
25,154,950

 
24,105,166

 
22,707,294

Shareholders' equity:
 
 
 
 
 
 
Capital, surplus and retained earnings
 
2,807,940

 
2,813,264

 
2,621,489

Accumulated other comprehensive income
 
149,920

 
162,393

 
128,979

TOTAL SHAREHOLDERS' EQUITY
 
2,957,860

 
2,975,657

 
2,750,468

Non-controlling interest
 
35,821

 
36,818

 
36,184

TOTAL EQUITY
 
2,993,681

 
3,012,475

 
2,786,652

TOTAL LIABILITIES AND EQUITY
 
$
28,148,631

 
$
27,117,641

 
$
25,493,946


10


AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
ASSETS
 
 
 
 
 
 
 
 
 
Funds sold and resell agreements
$
19,553

 
$
17,837

 
$
19,187

 
$
11,385

 
$
12,035

Trading securities
165,109

 
132,213

 
143,770

 
95,293

 
97,972

Investment securities
474,085

 
408,646

 
416,284

 
430,890

 
443,326

Available for sale securities
11,482,212

 
11,058,055

 
10,091,279

 
9,947,227

 
9,914,523

Fair value option securities
292,490

 
336,160

 
335,965

 
555,233

 
660,025

Residential mortgage loans held for sale
272,581

 
264,024

 
191,311

 
182,372

 
201,242

Loans:

 

 

 

 

  Commercial
7,424,922

 
7,216,232

 
7,075,871

 
6,882,277

 
6,502,981

  Commercial real estate
2,174,726

 
2,148,559

 
2,133,247

 
2,198,832

 
2,256,153

  Residential mortgage
1,997,679

 
2,003,162

 
2,011,729

 
1,944,462

 
1,949,929

  Consumer
391,992

 
371,709

 
393,875

 
411,240

 
443,252

Total loans
11,989,319

 
11,739,662

 
11,614,722

 
11,436,811

 
11,152,315

Less allowance for loan losses
(229,095
)
 
(231,177
)
 
(242,605
)
 
(252,538
)
 
(266,473
)
Total loans, net
11,760,224

 
11,508,485

 
11,372,117

 
11,184,273

 
10,885,842

Total earning assets
24,466,254

 
23,725,420

 
22,569,913

 
22,406,673

 
22,214,965

Cash and due from banks
849,614

 
746,364

 
748,811

 
908,628

 
1,234,312

Cash surrender value of bank-owned life insurance
272,778

 
270,084

 
267,246

 
264,354

 
261,496

Derivative contracts
316,579

 
291,965

 
371,690

 
311,178

 
247,411

Other assets
1,591,551

 
1,554,339

 
1,580,857

 
1,625,750

 
1,679,256

TOTAL ASSETS
$
27,496,776

 
$
26,588,172

 
$
25,538,517

 
$
25,516,583

 
$
25,637,440

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
  Demand
$
7,505,074

 
$
6,718,572

 
$
6,278,342

 
$
5,847,682

 
$
5,588,596

  Interest-bearing transaction
9,343,421

 
8,719,648

 
8,779,659

 
9,319,978

 
9,276,608

  Savings
278,714

 
267,498

 
259,386

 
241,442

 
220,236

  Time
3,010,367

 
3,068,870

 
3,132,220

 
3,246,362

 
3,485,059

Total deposits
20,137,576

 
18,774,588

 
18,449,607

 
18,655,464

 
18,570,499

Funds purchased
1,295,442

 
1,678,006

 
1,740,354

 
1,337,614

 
1,197,154

Repurchase agreements
900,131

 
1,112,847

 
1,095,298

 
1,183,778

 
1,189,861

Other borrowings
364,425

 
97,003

 
86,667

 
72,911

 
88,489

Subordinated debentures
347,613

 
352,432

 
357,609

 
397,440

 
398,858

Derivative contracts
246,296

 
247,148

 
302,329

 
207,864

 
180,623

Other liabilities
1,233,806

 
1,378,956

 
637,920

 
826,279

 
1,241,469

TOTAL LIABILITIES
24,525,289

 
23,640,980

 
22,669,784

 
22,681,350

 
22,866,953

Total equity
2,971,487

 
2,947,192

 
2,868,733

 
2,835,233

 
2,770,487

TOTAL LIABILITIES AND EQUITY
$
27,496,776

 
$
26,588,172

 
$
25,538,517

 
$
25,516,583

 
$
25,637,440




11


STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Interest revenue
$
194,314

 
$
198,040

 
$
791,648

 
$
811,595

Interest expense
20,945

 
26,570

 
87,322

 
120,101

Net interest revenue
173,369

 
171,470

 
704,326

 
691,494

Provision for credit losses
(14,000
)
 
(15,000
)
 
(22,000
)
 
(6,050
)
Net interest revenue after provision for credit losses
187,369

 
186,470

 
726,326

 
697,544

Other operating revenue:
 
 
 
 
 
 
 
Brokerage and trading revenue
31,958

 
25,629

 
126,930

 
104,181

Transaction card revenue
28,009

 
25,960

 
107,985

 
116,757

Trust fees and commissions
22,030

 
17,865

 
80,053

 
73,290

Deposit service charges and fees
24,174

 
24,921

 
98,917

 
95,872

Mortgage banking revenue
46,410

 
25,438

 
169,302

 
91,643

Bank-owned life insurance
2,673

 
2,784

 
11,089

 
11,280

Other revenue
10,554

 
9,189

 
37,827

 
35,620

Total fees and commissions
165,808

 
131,786

 
632,103

 
528,643

Gain (loss) on other assets, net
137

 
1,682

 
(1,415
)
 
4,156

Gain (loss) on derivatives, net
(637
)
 
(174
)
 
(301
)
 
2,686

Gain (loss) on fair value option securities, net
(2,081
)
 
222

 
9,230

 
24,413

Gain on available for sale securities, net
1,066

 
7,080

 
33,845

 
34,144

Total other-than-temporary impairment losses
(504
)
 
(1,037
)
 
(1,144
)
 
(10,578
)
Portion of loss recognized in (reclassified from) other comprehensive income
(1,163
)
 
(1,747
)
 
(6,207
)
 
(12,929
)
Net impairment losses recognized in earnings
(1,667
)
 
(2,784
)
 
(7,351
)
 
(23,507
)
Total other operating revenue
162,626

 
137,812

 
666,111

 
570,535

Other operating expense:
 
 
 
 
 
 
 
Personnel
131,192

 
121,129

 
491,033

 
429,986

Business promotion
6,150

 
5,868

 
23,338

 
20,549

Contribution to BOKF Charitable Foundation
2,062

 

 
2,062

 
4,000

Professional fees and services
10,082

 
7,664

 
34,015

 
28,798

Net occupancy and equipment
16,883

 
16,826

 
66,726

 
64,611

Insurance
3,789

 
3,636

 
15,356

 
16,799

Data processing and communications
25,010

 
26,599

 
98,904

 
97,976

Printing, postage and supplies
3,403

 
3,637

 
14,228

 
14,085

Net losses and operating expenses of repossessed assets
6,665

 
6,180

 
20,528

 
23,715

Amortization of intangible assets
1,065

 
895

 
2,927

 
3,583

Mortgage banking costs
8,653

 
10,154

 
38,965

 
34,942

Change in fair value of mortgage servicing rights
(4,689
)
 
5,261

 
9,210

 
40,447

Other expense
11,820

 
11,133

 
32,281

 
40,253

Total other operating expense
222,085

 
218,982

 
849,573

 
819,744

 
 
 
 
 
 
 
 
Net income before taxes
127,910

 
105,300

 
542,864

 
448,335

Federal and state income taxes
44,293

 
37,396

 
188,740

 
158,511

 
 
 
 
 
 
 
 
Net income
83,617

 
67,904

 
354,124

 
289,824

Net income attributable to non-controlling interest
1,051

 
911

 
2,933

 
3,949

Net income attributable to BOK Financial Corporation shareholders
$
82,566

 
$
66,993

 
$
351,191

 
$
285,875

 
 
 
 
 
 
 
 
Average shares outstanding:
 
 
 
 
 
 
 
Basic
67,622,777

 
67,526,009

 
67,684,043

 
67,787,676

Diluted
67,914,717

 
67,774,721

 
67,964,940

 
68,038,763

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
1.21

 
$
0.98

 
$
5.15

 
$
4.18

Diluted
$
1.21

 
$
0.98

 
$
5.13

 
$
4.17



12


FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
Capital:
 
 
 
 
 
 
 
 
 
Period-end shareholders' equity
$
2,957,860

 
$
2,975,657

 
$
2,885,934

 
$
2,834,419

 
$
2,750,468

Risk weighted assets
$
19,016,673

 
$
18,448,854

 
$
17,758,118

 
$
17,993,379

 
$
17,291,105

Risk-based capital ratios:
 
 
 
 
 
 
 
 
 
Tier 1
12.78
%
 
13.21
%
 
13.62
%
 
13.03
%
 
13.27
%
Total capital
15.13
%
 
15.71
%
 
16.19
%
 
16.16
%
 
16.49
%
Leverage ratio
9.01
%
 
9.34
%
 
9.64
%
 
9.35
%
 
9.15
%
Tangible common equity ratio1
9.25
%
 
9.67
%
 
10.07
%
 
9.75
%
 
9.56
%
Tier 1 common equity ratio2
12.59
%
 
13.01
%
 
13.41
%
 
12.83
%
 
13.06
%
 
 
 
 
 
 
 
 
 
 
Common stock:
 
 
 
 
 
 
 
 
 
Book value per share
$
43.29

 
$
43.62

 
$
42.35

 
$
41.61

 
$
40.36

Market value per share:
 
 
 
 
 
 
 
 
 
High
$
59.77

 
$
59.47

 
$
58.12

 
$
59.02

 
$
55.90

Low
$
54.19

 
$
55.63

 
$
53.34

 
$
52.56

 
$
45.68

Cash dividends paid
$
94,231

 
$
25,912

 
$
25,904

 
$
22,571

 
$
22,451

Dividend payout ratio
114.13
%
 
29.65
%
 
26.53
%
 
26.99
%
 
33.51
%
Shares outstanding, net
68,327,351

 
68,215,354

 
68,144,159

 
68,116,893

 
68,153,044

Stock buy-back program:
 
 
 
 
 
 
 
 
 
Shares repurchased

 

 
39,496

 
345,300

 
69,581

Amount
$

 
$

 
$
2,125

 
$
18,432

 
$
3,579

Average price per share
$

 
$

 
$
53.81

 
$
53.38

 
$
51.44

 
 
 
 
 
 
 
 
 
 
Performance ratios (quarter annualized):
Return on average assets
1.19
%
 
1.31
%
 
1.54
%
 
1.32
%
 
1.04
%
Return on average equity
11.05
%
 
11.80
%
 
13.69
%
 
11.86
%
 
9.59
%
Net interest margin
2.95
%
 
3.12
%
 
3.30
%
 
3.19
%
 
3.20
%
Efficiency ratio
66.00
%
 
61.18
%
 
61.98
%
 
58.76
%
 
69.66
%
 
 
 
 
 
 
 
 
 
 
Reconciliation of non-GAAP measures:
1      Tangible common equity ratio:
 
 
 
 
 
 
 
 
 
Total shareholders' equity
$
2,957,860

 
$
2,975,657

 
$
2,885,934

 
$
2,834,419

 
$
2,750,468

Less: Goodwill and intangible assets, net
(390,171
)
 
(392,158
)
 
(344,699
)
 
(345,246
)
 
(345,820
)
Tangible common equity
$
2,567,689

 
$
2,583,499

 
$
2,541,235

 
$
2,489,173

 
$
2,404,648

 
 
 
 
 
 
 
 
 
 
Total assets
$
28,148,631

 
$
27,117,641

 
$
25,576,046

 
$
25,884,173

 
$
25,493,946

Less: Goodwill and intangible assets, net
(390,171
)
 
(392,158
)
 
(344,699
)
 
(345,246
)
 
(345,820
)
Tangible assets
$
27,758,460

 
$
26,725,483

 
$
25,231,347

 
$
25,538,927

 
$
25,148,126

 
 
 
 
 
 
 
 
 
 
Tangible common equity ratio
9.25
%
 
9.67
%
 
10.07
%
 
9.75
%
 
9.56
%
 
 
 
 
 
 
 
 
 
 
2      Tier 1 common equity ratio:
 
 
 
 
 
 
 
 
 
Tier 1 capital
$
2,430,671

 
$
2,436,791

 
$
2,418,985

 
$
2,344,779

 
$
2,295,061

Less: Non-controlling interest
(35,821
)
 
(36,818
)
 
(36,787
)
 
(35,982
)
 
(36,184
)
Tier 1 common equity
$
2,394,850

 
$
2,399,973

 
$
2,382,198

 
$
2,308,797

 
$
2,258,877

 
 
 
 
 
 
 
 
 
 
Risk weighted assets
$
19,016,673

 
$
18,448,854

 
$
17,758,118

 
$
17,993,379

 
$
17,291,105

 
 
 
 
 
 
 
 
 
 
Tier 1 common equity ratio
12.59
%
 
13.01
%
 
13.41
%
 
12.83
%
 
13.06
%

13


FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
Other data:
 
 
 
 
 
 
 
 
 
Fiduciary assets
$
25,829,038

 
$
25,208,276

 
$
23,136,625

 
$
23,774,788

 
$
22,821,813

Mortgage servicing portfolio
$
11,981,624

 
$
11,756,350

 
$
11,564,643

 
$
11,378,806

 
$
11,300,986

Mortgage loans funded for sale
$
1,073,541

 
$
1,046,608

 
$
841,960

 
$
746,241

 
$
753,215

Mortgage loan refinances to total fundings
62
%
 
61
%
 
51
%
 
67
%
 
66
%
Tax equivalent adjustment
$
2,472

 
$
2,509

 
$
2,252

 
$
2,094

 
$
2,274

Net unrealized gain on available for sale securities
$
254,587

 
$
281,455

 
$
242,253

 
$
277,277

 
$
222,160

 
 
 
 
 
 
 
 
 
 
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts
$
(707
)
 
$
645

 
$
2,623

 
$
(2,445
)
 
$
121

Gain (loss) on mortgage trading securities
(2,177
)
 
5,455

 
6,908

 
(2,393
)
 
222

Gain (loss) on economic hedge of mortgage servicing rights
(2,884
)
 
6,100

 
9,531

 
(4,838
)
 
343

Gain (loss) on changes in fair value of mortgage servicing rights
4,689

 
(9,576
)
 
(11,450
)
 
7,127

 
(5,261
)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges
$
1,805

 
$
(3,476
)
 
$
(1,919
)
 
$
2,289

 
$
(4,918
)
 
 
 
 
 
 
 
 
 
 
Net interest revenue on mortgage trading securities
$
748

 
$
1,750

 
$
2,148

 
$
3,165

 
$
4,436



14


QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
Interest revenue
$
194,314

 
$
196,071

 
$
203,055

 
$
198,208

 
$
198,040

Interest expense
20,945

 
20,044

 
21,694

 
24,639

 
26,570

Net interest revenue
173,369

 
176,027

 
181,361

 
173,569

 
171,470

Provision for credit losses
(14,000
)
 

 
(8,000
)
 

 
(15,000
)
Net interest revenue after provision for credit losses
187,369

 
176,027

 
189,361

 
173,569

 
186,470

Other operating revenue:
 
 
 
 
 
 
 
 
 
Brokerage and trading revenue
31,958

 
31,261

 
32,600

 
31,111

 
25,629

Transaction card revenue
28,009

 
27,788

 
26,758

 
25,430

 
25,960

Trust fees and commissions
22,030

 
19,654

 
19,931

 
18,438

 
17,865

Deposit service charges and fees
24,174

 
25,148

 
25,216

 
24,379

 
24,921

Mortgage banking revenue
46,410

 
50,266

 
39,548

 
33,078

 
25,438

Bank-owned life insurance
2,673

 
2,707

 
2,838

 
2,871

 
2,784

Other revenue
10,554

 
9,149

 
8,860

 
9,264

 
9,189

Total fees and commissions
165,808

 
165,973

 
155,751

 
144,571

 
131,786

Gain (loss) on other assets, net
137

 
452

 
1,689

 
(3,693
)
 
1,682

Gain (loss) on derivatives, net
(637
)
 
464

 
2,345

 
(2,473
)
 
(174
)
Gain (loss) on fair value option securities, net
(2,081
)
 
6,192

 
6,852

 
(1,733
)
 
222

Gain on available for sale securities, net
1,066

 
7,967

 
20,481

 
4,331

 
7,080

Total other-than-temporary impairment losses
(504
)
 

 
(135
)
 
(505
)
 
(1,037
)
Portion of loss recognized in (reclassified from) other comprehensive income
(1,163
)
 
(1,104
)
 
(723
)
 
(3,217
)
 
(1,747
)
Net impairment losses recognized in earnings
(1,667
)
 
(1,104
)
 
(858
)
 
(3,722
)
 
(2,784
)
Total other operating revenue
162,626

 
179,944

 
186,260

 
137,281

 
137,812

Other operating expense:
 
 
 
 
 
 
 
 
 
Personnel
131,192

 
122,775

 
122,297

 
114,769

 
121,129

Business promotion
6,150

 
6,054

 
6,746

 
4,388

 
5,868

Contribution to BOKF Charitable Foundation
2,062

 

 

 

 

Professional fees and services
10,082

 
7,991

 
8,343

 
7,599

 
7,664

Net occupancy and equipment
16,883

 
16,914

 
16,906

 
16,023

 
16,826

Insurance
3,789

 
3,690

 
4,011

 
3,866

 
3,636

Data processing and communications
25,010

 
26,486

 
25,264

 
22,144

 
26,599

Printing, postage and supplies
3,403

 
3,611

 
3,903

 
3,311

 
3,637

Net losses and operating expenses of repossessed assets
6,665

 
5,706

 
5,912

 
2,245

 
6,180

Amortization of intangible assets
1,065

 
742

 
545

 
575

 
895

Mortgage banking costs
8,653

 
11,566

 
11,173

 
7,573

 
10,154

Change in fair value of mortgage servicing rights
(4,689
)
 
9,576

 
11,450

 
(7,127
)
 
5,261

Other expense
11,820

 
7,229

 
6,461

 
6,771

 
11,133

Total other operating expense
222,085

 
222,340

 
223,011

 
182,137

 
218,982

Net income before taxes
127,910

 
133,631

 
152,610

 
128,713

 
105,300

Federal and state income taxes
44,293

 
45,778

 
53,149

 
45,520

 
37,396

Net income
83,617

 
87,853

 
99,461

 
83,193

 
67,904

Net income (loss) attributable to non-controlling interest
1,051

 
471

 
1,833

 
(422
)
 
911

Net income attributable to BOK Financial Corporation shareholders
$
82,566

 
$
87,382

 
$
97,628

 
$
83,615

 
$
66,993

 
 
 
 
 
 
 
 
 
 
Average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
67,622,777

 
67,966,700

 
67,472,665

 
67,665,300

 
67,526,009

Diluted
67,914,717

 
68,334,989

 
67,744,828

 
67,941,895

 
67,774,721

Net income per share:
 
 
 
 
 
 
 
 
 
Basic
$
1.21

 
$
1.28

 
$
1.43

 
$
1.22

 
$
0.98

Diluted
$
1.21

 
$
1.27

 
$
1.43

 
$
1.22

 
$
0.98




15


LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
 
 
 
 
 
 
 
 
 
 
Bank of Oklahoma:
 
 
 
 
 
 
 
 
 
    Commercial
$
3,273,833

 
$
3,141,217

 
$
3,098,651

 
$
3,107,726

 
$
2,826,649

    Commercial real estate
636,398

 
639,156

 
644,761

 
631,891

 
607,030

    Residential mortgage
1,501,000

 
1,477,583

 
1,460,173

 
1,426,827

 
1,411,560

    Consumer
227,115

 
200,217

 
205,436

 
215,693

 
235,909

        Total Bank of Oklahoma
5,638,346

 
5,458,173

 
5,409,021

 
5,382,137

 
5,081,148

 
 
 
 
 
 
 
 
 
 
Bank of Texas:
 
 
 
 
 
 
 
 
 
    Commercial
2,654,875

 
2,529,473

 
2,414,824

 
2,354,593

 
2,249,888

    Commercial real estate
771,791

 
712,895

 
678,745

 
802,979

 
830,642

    Residential mortgage
274,388

 
266,791

 
268,639

 
262,556

 
268,053

    Consumer
116,252

 
108,854

 
115,602

 
124,692

 
126,570

        Total Bank of Texas
3,817,306

 
3,618,013

 
3,477,810

 
3,544,820

 
3,475,153

 
 
 
 
 
 
 
 
 
 
Bank of Albuquerque:
 
 
 
 
 
 
 
 
 
    Commercial
255,382

 
267,469

 
262,144

 
273,284

 
258,668

    Commercial real estate
305,049

 
294,731

 
285,871

 
282,834

 
303,500

    Residential mortgage
128,201

 
117,783

 
113,987

 
106,754

 
104,695

    Consumer
15,456

 
15,883

 
15,828

 
18,378

 
19,369

        Total Bank of Albuquerque
704,088

 
695,866

 
677,830

 
681,250

 
686,232

 
 
 
 
 
 
 
 
 
 
Bank of Arkansas:
 
 
 
 
 
 
 
 
 
    Commercial
62,049

 
48,097

 
49,305

 
64,595

 
76,199

    Commercial real estate
90,821

 
119,305

 
119,895

 
139,670

 
136,170

    Residential mortgage
12,684

 
12,408

 
12,513

 
14,557

 
15,772

    Consumer
15,421

 
19,720

 
24,270

 
28,783

 
35,911

        Total Bank of Arkansas
180,975

 
199,530

 
205,983

 
247,605

 
264,052

 
 
 
 
 
 
 
 
 
 
Colorado State Bank & Trust:
 
 
 
 
 
 
 
 
 
    Commercial
649,203

 
616,321

 
610,384

 
541,280

 
544,020

    Commercial real estate
160,344

 
145,077

 
149,541

 
144,757

 
156,013

    Residential mortgage
57,712

 
57,637

 
60,893

 
61,329

 
64,627

    Consumer
19,333

 
19,028

 
20,612

 
19,790

 
21,598

        Total Colorado State Bank & Trust
886,592

 
838,063

 
841,430

 
767,156

 
786,258

 
 
 
 
 
 
 
 
 
 
Bank of Arizona:
 
 
 
 
 
 
 
 
 
    Commercial
313,294

 
300,557

 
278,119

 
269,099

 
271,914

    Commercial real estate
184,290

 
186,553

 
181,513

 
180,830

 
198,160

    Residential mortgage
57,559

 
65,234

 
67,822

 
76,699

 
89,315

    Consumer
4,686

 
6,150

 
6,227

 
5,381

 
5,633

        Total Bank of Arizona
559,829

 
558,494

 
533,681

 
532,009

 
565,022

 
 
 
 
 
 
 
 
 
 
Bank of Kansas City:
 
 
 
 
 
 
 
 
 
    Commercial
415,784

 
370,083

 
339,117

 
348,515

 
327,732

    Commercial real estate
84,465

 
67,809

 
65,888

 
50,722

 
59,788

    Residential mortgage
19,810

 
21,544

 
21,070

 
19,650

 
20,505

    Consumer
4,261

 
4,792

 
4,601

 
3,580

 
3,853

        Total Bank of Kansas City
524,320

 
464,228

 
430,676

 
422,467

 
411,878

 
 
 
 
 
 
 
 
 
 
TOTAL BOK FINANCIAL
$
12,311,456

 
$
11,832,367

 
$
11,576,431

 
$
11,577,444

 
$
11,269,743


Loans attributed to a geographical region may not always represent the location of the borrower or the collateral.




16


DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
Bank of Oklahoma:
 
 
 
 
 
 
 
 
 
    Demand
$
4,223,923

 
$
3,734,900

 
$
3,499,834

 
$
3,445,424

 
$
3,223,201

    Interest-bearing:
 
 
 
 
 
 
 
 
 
       Transaction
6,031,541

 
5,496,724

 
5,412,002

 
5,889,625

 
6,050,986

       Savings
163,512

 
155,277

 
150,353

 
148,556

 
126,763

       Time
1,267,904

 
1,274,336

 
1,354,148

 
1,370,868

 
1,450,571

    Total interest-bearing
7,462,957

 
6,926,337

 
6,916,503

 
7,409,049

 
7,628,320

Total Bank of Oklahoma
11,686,880

 
10,661,237

 
10,416,337

 
10,854,473

 
10,851,521

Bank of Texas:
 
 
 
 
 
 
 
 
 
    Demand
2,606,176

 
1,983,678

 
1,966,465

 
1,876,133

 
1,808,491

    Interest-bearing:
 
 
 
 
 
 
 
 
 
       Transaction
2,129,084

 
1,782,296

 
1,813,209

 
1,734,655

 
1,940,819

       Savings
58,429

 
52,561

 
51,114

 
50,331

 
45,872

       Time
762,233

 
789,725

 
772,809

 
789,860

 
867,664

    Total interest-bearing
2,949,746

 
2,624,582

 
2,637,132

 
2,574,846

 
2,854,355

Total Bank of Texas
5,555,922

 
4,608,260

 
4,603,597

 
4,450,979

 
4,662,846

Bank of Albuquerque:
 
 
 
 
 
 
 
 
 
    Demand
427,510

 
416,796

 
357,367

 
333,707

 
319,269

    Interest-bearing:
 
 
 
 
 
 
 
 
 
       Transaction
511,593

 
526,029

 
506,165

 
503,015

 
491,068

       Savings
31,926

 
31,940

 
31,215

 
32,688

 
27,487

       Time
364,928

 
375,611

 
383,350

 
392,234

 
410,722

    Total interest-bearing
908,447

 
933,580

 
920,730

 
927,937

 
929,277

Total Bank of Albuquerque
1,335,957

 
1,350,376

 
1,278,097

 
1,261,644

 
1,248,546

Bank of Arkansas:
 
 
 
 
 
 
 
 
 
    Demand
38,935

 
29,254

 
16,921

 
22,843

 
18,513

    Interest-bearing:
 
 
 
 
 
 
 
 
 
       Transaction
101,366

 
168,827

 
172,829

 
151,708

 
131,181

       Savings
2,239

 
2,246

 
2,220

 
2,358

 
1,727

       Time
42,573

 
45,719

 
48,517

 
54,157

 
61,329

    Total interest-bearing
146,178

 
216,792

 
223,566

 
208,223

 
194,237

Total Bank of Arkansas
185,113

 
246,046

 
240,487

 
231,066

 
212,750

Colorado State Bank & Trust:
 
 
 
 
 
 
 
 
 
    Demand
331,157

 
330,641

 
301,646

 
311,057

 
272,565

    Interest-bearing:
 
 
 
 
 
 
 
 
 
       Transaction
676,140

 
627,015

 
465,276

 
476,718

 
511,993

       Savings
25,889

 
24,689

 
24,202

 
23,409

 
22,771

       Time
472,305

 
476,564

 
491,280

 
498,124

 
523,969

    Total interest-bearing
1,174,334

 
1,128,268

 
980,758

 
998,251

 
1,058,733

Total Colorado State Bank & Trust
1,505,491

 
1,458,909

 
1,282,404

 
1,309,308

 
1,331,298

Bank of Arizona:
 
 
 
 
 
 
 
 
 
    Demand
161,094

 
151,738

 
137,313

 
131,539

 
106,741

    Interest-bearing:
 
 
 
 
 
 
 
 
 
       Transaction
360,275

 
298,048

 
113,310

 
95,010

 
104,961

       Savings
1,978

 
2,201

 
2,313

 
1,772

 
1,192

       Time
31,371

 
33,169

 
31,539

 
34,199

 
37,641

    Total interest-bearing
393,624

 
333,418

 
147,162

 
130,981

 
143,794

Total Bank of Arizona
554,718

 
485,156

 
284,475

 
262,520

 
250,535

Bank of Kansas City:
 
 
 
 
 
 
 
 
 
    Demand
249,491

 
201,393

 
160,829

 
68,469

 
51,004

    Interest-bearing:
 
 
 
 
 
 
 
 
 
       Transaction
78,039

 
103,628

 
69,083

 
57,666

 
123,449

       Savings
771

 
660

 
581

 
505

 
545

       Time
26,678

 
27,202

 
26,307

 
26,657

 
30,086

    Total interest-bearing
105,488

 
131,490

 
95,971

 
84,828

 
154,080

Total Bank of Kansas City
354,979

 
332,883

 
256,800

 
153,297

 
205,084

 
 
 
 
 
 
 
 
 
 
TOTAL BOK FINANCIAL
$
21,179,060

 
$
19,142,867

 
$
18,362,197

 
$
18,523,287

 
$
18,762,580


17


NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
 
 
 
 
 
 
 
 
 
 
TAX-EQUIVALENT ASSETS YIELDS
 
 
 
 
 
 
 
 
 
Funds sold and resell agreements
0.06
%
 
0.07
%
 
0.08
%
 
0.07
%
 
0.10
%
Trading securities
1.06
%
 
2.12
%
 
1.53
%
 
1.88
%
 
2.79
%
Investment securities:
 
 
 
 
 
 
 
 
 
    Taxable1
5.86
%
 
5.83
%
 
5.93
%
 
5.89
%
 
5.91
%
    Tax-exempt1
2.93
%
 
4.12
%
 
4.90
%
 
4.87
%
 
4.81
%
Total investment securities1
4.67
%
 
5.33
%
 
5.63
%
 
5.59
%
 
5.59
%
Available for sale securities:
 
 
 
 
 
 
 
 
 
    Taxable1
2.08
%
 
2.36
%
 
2.52
%
 
2.48
%
 
2.37
%
    Tax-exempt1
3.80
%
 
4.70
%
 
4.69
%
 
5.17
%
 
5.14
%
Total available for sale securities1
2.10
%
 
2.38
%
 
2.54
%
 
2.50
%
 
2.39
%
Fair value option securities
1.58
%
 
2.27
%
 
2.62
%
 
2.79
%
 
2.98
%
Residential mortgage loans held for sale
3.39
%
 
3.48
%
 
3.75
%
 
3.90
%
 
4.01
%
Loans
4.33
%
 
4.33
%
 
4.58
%
 
4.50
%
 
4.65
%
Less allowance for loan losses
%
 
%
 
%
 
%
 
%
Loans, net of allowance
4.41
%
 
4.42
%
 
4.68
%
 
4.61
%
 
4.76
%
Total tax-equivalent yield on earning assets1
3.30
%
 
3.47
%
 
3.69
%
 
3.64
%
 
3.69
%
 
 
 
 
 
 
 
 
 
 
COST OF INTEREST-BEARING LIABILITIES
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
  Interest-bearing transaction
0.15
%
 
0.16
%
 
0.16
%
 
0.17
%
 
0.18
%
  Savings
0.18
%
 
0.19
%
 
0.23
%
 
0.24
%
 
0.26
%
  Time
1.80
%
 
1.61
%
 
1.63
%
 
1.68
%
 
1.70
%
Total interest-bearing deposits
0.54
%
 
0.53
%
 
0.54
%
 
0.55
%
 
0.59
%
Funds purchased
0.15
%
 
0.15
%
 
0.16
%
 
0.09
%
 
0.06
%
Repurchase agreements
0.09
%
 
0.10
%
 
0.10
%
 
0.09
%
 
0.13
%
Other borrowings
0.90
%
 
3.03
%
 
3.96
%
 
5.58
%
 
4.75
%
Subordinated debt
2.56
%
 
2.79
%
 
3.95
%
 
5.62
%
 
5.61
%
Total cost of interest-bearing liabilities
0.54
%
 
0.52
%
 
0.56
%
 
0.63
%
 
0.66
%
Tax-equivalent net interest revenue spread
2.76
%
 
2.95
%
 
3.13
%
 
3.01
%
 
3.03
%
Effect of noninterest-bearing funding sources and other
0.19
%
 
0.17
%
 
0.17
%
 
0.18
%
 
0.17
%
Tax-equivalent net interest margin1
2.95
%
 
3.12
%
 
3.30
%
 
3.19
%
 
3.20
%
1 
Yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income.





18


CREDIT QUALITY INDICATORS
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
 
Quarter Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
Nonperforming assets:
 
 
 
 
 
 
 
 
 
Nonaccruing loans:
 
 
 
 
 
 
 
 
 
Commercial
$
24,467

 
$
21,762

 
$
34,529

 
$
61,750

 
$
68,811

Commercial real estate
60,626

 
75,761

 
80,214

 
86,475

 
99,193

Residential mortgage
46,608

 
29,267

 
22,727

 
27,462

 
29,767

Consumer
2,709

 
5,109

 
7,012

 
7,672

 
3,515

Total nonaccruing loans
134,410

 
131,899

 
144,482

 
183,359

 
201,286

Renegotiated loans1
38,515

 
27,992

 
28,415

 
36,764

 
32,893

Real estate and other repossessed assets
103,791

 
104,128

 
105,708

 
115,790

 
122,753

Total nonperforming assets
$
276,716

 
$
264,019

 
$
278,605

 
$
335,913

 
$
356,932

 
 
 
 
 
 
 
 
 
 
Nonaccruing loans by principal market2:
 
 
 
 
 
 
 
 
 
Bank of Oklahoma
$
56,424

 
$
41,599

 
$
49,931

 
$
64,097

 
$
65,261

Bank of Texas
31,623

 
28,046

 
24,553

 
29,745

 
28,083

Bank of Albuquerque
13,401

 
13,233

 
13,535

 
15,029

 
15,297

Bank of Arkansas
1,132

 
5,958

 
6,865

 
18,066

 
23,450

Colorado State Bank & Trust
14,364

 
22,878

 
28,239

 
28,990

 
33,522

Bank of Arizona
17,407

 
20,145

 
21,326

 
27,397

 
35,673

Bank of Kansas City
59

 
40

 
33

 
35

 

Total nonaccruing loans
$
134,410

 
$
131,899

 
$
144,482

 
$
183,359

 
$
201,286

 
 
 
 
 
 
 
 
 
 
Nonaccruing loans by loan portfolio sector:
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
Energy
$
2,460

 
$
3,063

 
$
3,087

 
$
336

 
$
336

Manufacturing
2,007

 
2,283

 
12,230

 
23,402

 
23,051

Wholesale / retail
3,077

 
2,007

 
4,175

 
15,388

 
21,180

Integrated food services
684

 

 

 

 

Services
12,090

 
10,099

 
10,123

 
12,890

 
16,968

Healthcare
3,166

 
3,305

 
3,310

 
7,946

 
5,486

Other commercial and industrial
983

 
1,005

 
1,604

 
1,788

 
1,790

Total commercial
24,467

 
21,762

 
34,529

 
61,750

 
68,811

 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 

Construction and land development
26,131

 
38,143

 
46,050

 
52,416

 
61,874

Retail
8,117

 
6,692

 
7,908

 
6,193

 
6,863

Office
6,829

 
9,833

 
10,589

 
10,733

 
11,457

Multifamily
2,706

 
3,145

 
3,219

 
3,414

 
3,513

Industrial
3,968

 
4,064

 

 

 

Other commercial real estate
12,875

 
13,884

 
12,448

 
13,719

 
15,486

Total commercial real estate
60,626

 
75,761

 
80,214

 
86,475

 
99,193


19


CREDIT QUALITY INDICATORS
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
 
Quarter Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 
 
 
 
 
 
 

Permanent mortgage
39,863

 
23,717

 
18,136

 
22,822

 
25,366

Permanent mortgage guaranteed by U.S. government agencies
489

 

 

 

 

Home equity
6,256

 
5,550

 
4,591

 
4,640

 
4,401

Total residential mortgage
46,608

 
29,267

 
22,727

 
27,462

 
29,767

 
 
 
 
 
 
 
 
 
 
Consumer
2,709

 
5,109

 
7,012

 
7,672

 
3,515

Total nonaccruing loans
$
134,410

 
$
131,899

 
$
144,482

 
$
183,359

 
$
201,286

 
 
 
 
 
 
 
 
 
 
Performing loans 90 days past due3
$
3,925

 
$
1,181

 
$
691

 
$
6,140

 
$
2,496

 
 
 
 
 
 
 
 
 
 
Gross charge-offs
$
8,000

 
$
8,921

 
$
11,543

 
$
13,674

 
$
14,771

Recoveries
3,724

 
3,204

4 
6,702

 
5,189

 
5,311

Net charge-offs
$
4,276

 
$
5,717

 
$
4,841

 
$
8,485

 
$
9,460

 
 
 
 
 
 
 
 
 
 
Provision for (reduction of) allowances for credit losses
$
(14,000
)
 
$

 
$
(8,000
)
 
$

 
$
(15,000
)
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses to period end loans
1.75
%
 
1.98
%
 
2.00
%
 
2.11
%
 
2.25
%
Combined allowance for credit losses to period end loans
1.77
%
 
1.99
%
 
2.09
%
 
2.20
%
 
2.33
%
Nonperforming assets to period end loans and repossessed assets
2.23
%
 
2.21
%
 
2.38
%
 
2.87
%
 
3.13
%
Net charge-offs (annualized) to average loans
0.14
%
 
0.19
%
4 
0.17
%
 
0.30
%
 
0.34
%
Allowance for loan losses to nonaccruing loans
160.34
%
 
177.22
%
 
160.34
%
 
133.19
%
 
125.93
%
Combined allowance for credit losses to nonaccruing loans
161.76
%
 
178.70
%
 
167.09
%
 
138.67
%
 
130.53
%
 
 
 
 
 
 
 
 
 
 
1   Includes residential mortgage loans guaranteed by agencies of the U.S. government. These loans have been modified to extend payment terms and/or reduce interest rates to current market.
$
38,515

 
$
24,590

 
$
24,760

 
$
32,770

 
$
28,974

 
 
 
 
 
 
 
 
 
 
2   Nonaccruing loans attributed to a principal market do not always represent the location of the borrower or the collateral.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3   Excludes residential mortgage loans guaranteed agencies of the U.S. government.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4  Includes $7.1 million of negative recovery related to a refund of a settlement agreement between BOK Financial and the City of Tulsa invalidated by the Oklahoma Supreme Court. Excluding this refund, BOK Financial had net charge-offs (recoveries) to average loans of (0.05%) on an annualized basis.
 
 
 
 
 
 
 
 
 


20
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