Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets [Text Block]

Goodwill and Intangible Assets

On October 1, 2018, the Company acquired CoBiz Financial, Inc. ("CoBiz"), parent company of CoBiz Bank. CoBiz is headquartered in Denver, Colorado serving the Colorado and Arizona markets. The Company paid total consideration of $944 million, which included $243 million in cash along with the issuance of 7.2 million shares of BOK Financial common stock valued at $701 million in exchange for all the outstanding shares of CoBiz. Goodwill acquired is attributed to synergies expected to be gained through consolidation of administrative functions resulting in cost savings.

A summary of the preliminary purchase price allocation and resulting goodwill at October 1, 2018 follows (in thousands):



Cash and due from banks	$	80,827
Investment securities	17,287
Available for sale securities	546,776
Restricted equity securities	5,261
Loans (Unpaid principal balance - $3,066,521)	2,937,499
Premises and equipment	5,515
Receivables	24,893
Intangible assets	106,733
Real estate and other repossessed assets	5,155
Derivative contracts asset, net	8,197
Cash surrender value of bank-owned life insurance	55,740
Other assets	56,642
Total assets acquired	3,850,525

Deposits	3,289,071
Funds purchased and repurchase agreements	37,218
Subordinated debentures	131,197
Accrued interest, taxes and expense	33,122
Derivative contracts liability, net	12,303
Other liabilities	5,254
Total liabilities assumed	3,508,165

Net assets acquired	342,360
Less: Purchase price	944,193
Goodwill	$	601,833

The preliminary purchase price allocation represents acquired assets and liabilities at estimated fair value. Fair value for loans and intangibles assets was determined by applying discounted cash flow measurement techniques using significant unobservable (Level 3) inputs. These inputs include estimates of loss rates and prepayment speeds, customer attrition rates, operating costs, alternative funding costs and discount rates. The fair value of other acquired assets and liabilities was determined primarily through the use of significant other observable (Level 2) inputs.

On May 1, 2018, the Company acquired a majority voting interest in Switchgrass Holdings, LLC, a restaurant franchise owner and operator, pursuant to merchant banking regulations and restrictions. The purchase price for the acquisition was $14 million and included $6.7 million of intangible assets.

On December 1, 2016, the Company acquired MBT Bancshares (“MBT”), parent company of Missouri Bank and Trust of Kansas City (“Mobank”) following regulatory approval of the transaction. Mobank operated four banking branches in the Kansas City, Mo. area. BOK Financial paid $103 million in an all-cash deal for all outstanding shares of MBT stock. The purchase price allocation resulted in $15 million of identifiable intangibles and $66 million of goodwill.

The pro-forma impact of all acquisition transactions on earnings for periods prior to the acquisition dates were not material to the Company's financial statements.

The following table presents the original cost and accumulated amortization of intangible assets (in thousands):



	Dec. 31,
	2018		2017
Core deposit premiums	$	103,200	$	6,510
Less accumulated amortization	5,032		808
Net core deposit premiums	98,168		5,702

Other identifiable intangible assets	63,497		44,468
Less accumulated amortization	26,816		21,512
Net other identifiable intangible assets	36,681		22,956

Total intangible assets, net	$	134,849	$	28,658

Expected amortization expense for intangible assets that will continue to be amortized (in thousands):



	Core Deposit Premiums		Other Identifiable Intangible Assets		Total
2019	$	14,332	$	6,149	$	20,481
2020	12,892		6,304		19,196
2021	11,893		5,606		17,499
2022	10,981		4,238		15,219
2023	10,145		3,199		13,344
Thereafter	37,925		11,185		49,110
	$	98,168	$	36,681	$	134,849

The changes in the carrying value of goodwill by operating segment are as follows (in thousands):



	Commercial Banking			Consumer Banking		Wealth Management			Funds Management and Other			Total
Balance, December 31, 2016	272,196			39,023		71,520			66,160			448,899
Goodwill recognized during 2017	4,301			—		—			—			4,301
Sales of consolidated merchant banking investments during 2017	(5,219		)	—		(25		)	—			(5,244		)
Adjustment¹	41,992			4,435		19,207			(66,160		)	(526		)
Balance, December 31, 2017	313,270			43,458		90,702			—			447,430
Goodwill recognized during 2018²	—			—		—			601,833			601,833
Balance, December 31, 2018	$	313,270		$	43,458	$	90,702		$	601,833		$	1,049,263


¹	Goodwill from Mobank acquisition was not yet allocated to the segments as of December 31, 2016. Adjustment was made in 2017 for final purchase price adjustments and to allocate to the segments.


²	Goodwill related to the CoBiz acquisition was not yet allocated to the operating segments as of December 31, 2018 and is included in Funds Management and Other above.

The annual goodwill evaluations for 2018 and 2017 did not indicate impairment for any reporting unit. Economic conditions did not indicate that impairment existed for any identifiable intangible assets and therefore no impairment evaluation was performed.