BOK Financial Corporation Reports Quarterly Earnings of $65 million or $0.92 Per Share in the Second Quarter

TULSA, Okla., July 22, 2020 (GLOBE NEWSWIRE) -- BOK Financial (NASDAQ: BOKF) today reported net earnings applicable to common shareholders for the second quarter of 2020 of $65 million, or $0.92 per diluted common share.

"The second quarter, unlike any in recent memory, demonstrated the effectiveness of our diversified revenue model," said Steven G. Bradshaw, president and chief executive officer. "Record quarters from both our Wealth Management and Mortgage businesses added more than $150 million to fee revenue this quarter, eclipsing our pre-provision net revenue from the same quarter a year ago. In fact, this quarter generated the highest level of pre-provision net revenue in the history of our company, even after normalizing for the impact of the Paycheck Protection Program. Considering the economic environment we find ourselves in today, this is truly a remarkable outcome."

Bradshaw continued, "With more than 40 percent of our company's revenues derived from a host of fee-based businesses, we have the proven ability to generate positive outcomes through all parts of the economic cycle. In this time of margin compression and credit concerns, financial institutions like BOK Financial demonstrate the real power of a diversified business model and sound underwriting methods."

  • Net income was $64.7 million or $0.92 per diluted share for the second quarter of 2020 and $62.1 million or $0.88 per diluted share for the first quarter of 2020. Pre-provision net revenue was $215.8 million for the second quarter of 2020 compared to $173.0 million for the prior quarter. The second quarter of 2020 included a pre-tax provision for expected credit losses of $135.3 million compared to $93.8 million in the prior quarter.

  • Net interest revenue totaled $278.1 million, an increase of $16.7 million, largely due to the addition of loans related to the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") that began on April 3, 2020. Net interest margin was 2.83 percent compared to 2.80 percent in the first quarter of 2020. Our ability to move deposit costs down, along with LIBOR remaining elevated early in the second quarter relative to recent Federal Reserve rate cuts and the strategic positioning of our balance sheet, has allowed us to combat much of the market pressure on our margin.

  • Fees and commissions revenue totaled $213.7 million, an increase of $21.0 million. Low mortgage interest rates continued to drive increases in mortgage banking revenue of $16.8 million and related bond trading activity of $9.5 million over the first quarter of 2020. These increases were partially offset by a reduction in service charges, largely due to "shelter in place" impacts coupled with proactive waivers of fees that were extended as a courtesy to our customers during the COVID-19 pandemic.

  • Operating expense was $295.4 million, an increase of $26.8 million. Personnel expense increased $20.1 million, including an $11.0 million increase in incentive compensation expense reflecting the growth in our trading activity. Non-personnel expense increased $6.7 million compared to the first quarter of 2020. Increases in mortgage banking costs and occupancy and equipment expense were partially offset by a decrease in business promotion expense.

  • Changes in the fair value of mortgage servicing rights and related economic hedges provided $9.3 million during the second quarter of 2020. A $7.4 million increase in the fair value of securities and derivative contracts held as an economic hedge and $2.7 million of related net interest revenue, were partially offset by a $761 thousand decrease in the fair value of mortgage servicing rights.  

  • We have implemented programs to help our customers through this uncertain time. We are actively participating in programs initiated by the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), including the SBA's PPP. Average loans for the second quarter increased $2.2 billion to $24.1 billion with $1.7 billion of those being PPP loans. Period-end loans increased $1.7 billion to $24.2 billion. Period-end PPP loans were $2.1 billion. We have also granted $1.2 billion in forbearance requests from customers as of June 30, including $704 million of commercial loans, $398 million in commercial real estate loans and $143 million in loans to individuals.

  • The allowance for loan losses totaled $436 million or 1.80 percent of outstanding loans at June 30, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $469 million or 1.94 percent of outstanding loans at June 30, 2020. Excluding PPP loans, the allowance for loan losses was 1.97 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.12 percent. At March 31, 2020, the allowance for loan losses was $315 million or 1.40 percent of outstanding loans. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $344 million or 1.53 percent of outstanding loans.

  • Average deposits increased $4.5 billion to $32.7 billion and period-end deposits increased $4.6 billion to $33.9 billion. An estimated $2.7 billion of this growth was related to CARES Act funding, with the remainder due to growth from our broader customer base.

  • The company's common equity Tier 1 capital ratio was 11.41 percent at June 30, 2020. In addition, the company's Tier 1 capital ratio was 11.41 percent, total capital ratio was 13.40 percent, and leverage ratio was 7.74 percent at June 30, 2020. At March 31, 2020, the company's common equity Tier 1 capital ratio was 10.98 percent, Tier 1 capital ratio was 10.98 percent, total capital ratio was 12.65 percent, and leverage ratio was 8.15 percent.
Second Quarter 2020 Business Segment Highlights
  • Commercial Banking contributed $81.0 million to net income, an increase of $6.0 million over the first quarter. While net interest revenue decreased $6.3 million, fees and commissions revenue increased $5.1 million. Customer reaction to the volatile price environment drove an increase of $4.4 million in customer hedging revenue this quarter. Other gains (losses), net also increased $4.6 million, primarily related to an impairment of an alternative investment in the first quarter. Operating expense increased $2.2 million, largely due to incentive compensation.

  • Consumer Banking contributed $31.9 million to net income, an increase of $9.0 million over the first quarter. Net interest revenue decreased $4.7 million; however, fees and commissions revenue increased $12.1 million. Mortgage banking revenue increased $16.8 million following another strong quarter for mortgage loan production. Low mortgage interest rates continue to increase volume, particularly around refinances, which is responsible for 71 percent of the volume in the second quarter. The large increase in refinance demand, which reduced industry-wide capacity, has led to the ability to increase margins. Gain on sale margin increased 159 basis points to 3.65 percent. This increase was partially offset by a decrease in service charges as we waived certain fees in the second quarter to help customers throughout this uncertain time. Changes in the fair value of mortgage servicing rights and related economic hedges provided $9.3 million during the second quarter of 2020. Operating expense increased $4.1 million, primarily due to an increase in mortgage banking costs.

  • Wealth Management contributed $33.4 million to net income, an increase of $10.8 million over the first quarter. Net interest revenue increased $8.0 million and fees and commissions increased $8.9 million. Lower interest rates drove record increases in industry-wide mortgage loan production volume during the second quarter. We increased our trading pipeline to provide greater liquidity to the housing market. As a result, trading revenue increased $9.5 million. Trust fees and commissions decreased $3.2 million as we waived certain fees for our customers and market conditions led to reduction in trust revenue. Operating expense increased $2.4 million, primarily due to incentive compensation costs related to increased trading activity partially offset by lower business promotion expense.
Net Interest Revenue

Net interest revenue was $278.1 million for the second quarter of 2020, a $16.7 million increase compared to the first quarter of 2020. PPP loans added $13.6 million to net interest revenue in the second quarter.

Average earning assets increased $1.9 billion compared to the first quarter of 2020. Average loan balances increased $2.2 billion, largely due to the influx of PPP loans. Available for sale securities increased $816 million as we have adjusted our balance sheet for the current rate environment. Fair value option securities, held as an economic hedge of the changes in fair value of our mortgage servicing rights, decreased $1.0 billion. In addition, receivables from unsettled securities sales, primarily related to our U.S. agency residential mortgage-backed trading operations, increased $1.6 billion. Growth in average earning assets and non-interest bearing receivables was largely funded by a $2.2 billion increase in interest-bearing deposits. Other borrowings decreased $3.0 billion, primarily due to a decrease in funds borrowed from the Federal Home Loan Bank, partially offset by an increase in PPP loans funded through the Federal Reserve's PPP Liquidity Facility. Funds purchased and repurchase agreements increased $2.0 billion.

Net interest margin was 2.83 percent compared to 2.80 percent in the previous quarter. The reduction in deposit costs, LIBOR remaining elevated early in the second quarter, and the strategic positioning of our balance sheet, have combined to reduce the pressure on margin. PPP loans added one basis point to net interest margin.

The yield on average earning assets was 3.12 percent, a 61 basis point decrease from the prior quarter as we start to see the effects of the recent Federal Reserve rate cuts. The loan portfolio yield was 3.63 percent, down 87 basis points. The yield on the available for sale securities portfolio decreased 19 basis points to 2.29 percent.

Funding costs were 0.37 percent, down 82 basis points. The cost of interest-bearing deposits decreased 64 basis points to 0.34 percent. The cost of other borrowed funds was down 117 basis points to 0.30 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 8 basis points for the second quarter of 2020 compared to 26 basis points for the first quarter of 2020.

Fees and Commissions Revenue

Fees and commissions revenue totaled $213.7 million for the second quarter of 2020, an increase of $21.0 million over the first quarter of 2020, led by significant growth in mortgage banking and brokerage and trading revenue.

Declining interest rates have propelled mortgage production, particularly refinance activities, and have allowed for margin expansion. Mortgage banking revenue increased $16.8 million to $53.9 million compared to the prior quarter. Mortgage loan production volume was $1.1 billion for the second quarter of 2020, an increase of 2 percent over an already very strong first quarter. Refinances grew to 71 percent of our production volume compared to 57 percent in the prior quarter. Gain on sale margin increased 159 basis points to 3.65 percent as industry-wide capacity constraints have eased pricing competition.

Brokerage and trading revenue increased $11.2 million to $62.0 million. We continue to grow our relationships with mortgage originators by providing liquidity and financial instruments to help them manage their pipeline risk. Trading revenue, primarily related to sales of residential mortgage-backed securities guaranteed by U.S. government agencies and related derivative instruments, increased $9.5 million. Industry-wide mortgage loan production increased in the second quarter driven by the lower rates as the Federal Reserve stepped in to provide market stability. We increased our bond trading pipeline to provide greater liquidity to the housing market during a time of record loan production volumes. Customer hedging revenue also increased $3.0 million as existing customers increased hedging activities in the volatile environment.

Deposit service charges decreased $4.1 million compared to the first quarter. In order to help our customers during uncertain times, we proactively waived certain fees during the second quarter.

Fiduciary and asset management revenue decreased $3.2 million compared to the first quarter of 2020. As a result of the significant decline in interest rates, we provided $1.1 million in fee waivers during the second quarter. In addition, asset volumes and market conditions have affected our trust revenues. These decreases were partially offset by an increase in seasonal tax preparation fees.

Operating Expense

Total operating expense was $295.4 million for the second quarter of 2020, an increase of $26.8 million compared to the first quarter of 2020.

Personnel expense increased $20.1 million. Incentive compensation increased $22.3 million. Cash based incentive compensation increased $11.0 million, primarily due to increased residential mortgage-backed securities trading activity. Deferred compensation, which is largely offset by an increase in the value of related investments included in Other gains (losses), net, increased $11.6 million. Regular compensation increased $1.5 million. Employee benefits decreased $3.8 million, primarily due to a seasonal decrease in payroll taxes.

Non-personnel expense increased $6.7 million compared to the first quarter of 2020. Mortgage banking costs increased $5.1 million. Accruals related to default servicing and loss mitigation costs on loans serviced for others increased $2.8 million due to changes in our portfolio and loan counts, delinquency levels, and additional accruals related to losses on loans in forbearance. Increased amortization of mortgage servicing rights from actual prepayments also added $1.7 million to mortgage banking costs during the second quarter of 2020. Occupancy and equipment expense increased $4.6 million as impairment charges were incurred on two leases where assumptions regarding subleasing changed due to deteriorating economic conditions. We also made a charitable contribution of $3.0 million to the BOKF Foundation in the second quarter. These increases were partially offset by a decrease of $4.3 million in business promotion costs, largely related to reduced travel and entertainment expenses.

Loans, Deposits and Capital

Loans

Outstanding loans were $24.2 billion at June 30, 2020, up $1.7 billion over March 31, 2020, primarily due to a $2.1 billion increase from PPP loans, partially offset by paydowns in the commercial portfolio.

Outstanding core commercial loan balances decreased $637 million or 4 percent compared to March 31, 2020, primarily due to paydowns during the second quarter. Although the primary source of repayment of our commercial loan portfolio is the on-going cash flow from operations of the customer's business, loans are generally governed by a borrowing base and secured by the customer’s assets.

General business loans decreased $448 million to $3.1 billion or 13 percent of total loans. General business loans include $1.7 billion of wholesale/retail loans and $780 million of loans from other commercial industries. Broad paydowns across our core commercial and industrial loan book contracted the portfolio.

Services loan balances decreased $176 million to $3.8 billion or 16 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, educational services, consumer services and commercial services.

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

Energy loan balances decreased $138 million to $4.0 billion or 16 percent of total loans as the current commodity price environment dampened demand for new loans and borrowers focused on paying down debt to reduce leverage. Supporting the energy industry has been a hallmark of the Company for over a century. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 62 percent of committed production loans are secured by properties primarily producing oil. The remaining 38 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $2.5 billion at June 30, 2020, a $222 million decrease compared to March 31, 2020, primarily due to semi-annual borrowing base redeterminations completed during the second quarter.

Healthcare sector loan balances increased $124 million to $3.3 billion or 14 percent of total loans, primarily due to growth in balances from hospital systems. Our healthcare sector loans primarily consist of $2.4 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally we loan to borrowers with a portfolio of multiple facilities that serves to help diversify risks specific to a single facility. The remaining balance is composed of hospitals and other medical service providers impacted by a deferral of elective procedures. The CARES Act does include multiple revenue enhancement measures for both hospitals and skilled nursing facilities as they manage through the risks of the virus.

Commercial real estate loan balances were up $104 million over March 31, 2020 and represent 19 percent of total loans at June 30, 2020. Multifamily residential loans, our largest exposure in commercial real estate, increased $125 million to $1.4 billion at June 30, 2020. Paydowns from refinances into the permanent market slowed during the second quarter. Loans secured by office buildings increased $12 million to $974 million. Loans secured by other commercial real estate properties decreased $32 million to $533 million. Loans secured by retail facilities were $780 million at June 30, 2020, largely unchanged from the prior quarter. Loans secured by retail facilities and office buildings may be impacted by measures being taken to hinder the spread of the virus as well as changes in consumer behavior.

Loans to individuals increased $144 million, primarily due to an increase in residential mortgage loans guaranteed by U.S. government agencies. The Company may repurchase loans previously sold into GNMA mortgage pools when certain defined delinquency criteria are met. Because of this repurchase right, the Company is deemed to have regained effective control over these loans and must include them on the Consolidated Balance Sheet. Loans to individuals represent 14 percent of total loans at June 30, 2020.

Deposits

Period-end deposits totaled $33.9 billion at June 30, 2020, a $4.6 billion increase over March 31, 2020. Inflows resulting from PPP loans and government stimulus payments during the pandemic, along with additional core deposit growth as customers maintain higher balances, have all contributed to the significant increase in deposits. Interest-bearing transaction account balances grew by $2.3 billion and demand deposit balances increased $2.2 billion. Average deposits were $32.7 billion at June 30, 2020, a $4.5 billion increase compared to March 31, 2020. Average demand deposit balances grew by $2.3 billion and interest-bearing transaction deposits increased $1.9 billion.

Capital

The company's common equity Tier 1 capital ratio was 11.41 percent at June 30, 2020. In addition, the company's Tier 1 capital ratio was 11.41 percent, total capital ratio was 13.40 percent, and leverage ratio was 7.74 percent at June 30, 2020. We have elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period, which added 30 basis points to the company's common equity tier 1 capital ratio at June 30. At March 31, 2020, the company's common equity Tier 1 capital ratio was 10.98 percent, Tier 1 capital ratio was 10.98 percent, total capital ratio was 12.65 percent, and leverage ratio was 8.15 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.79 percent at June 30, 2020 and 8.39 percent at March 31, 2020. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

The company paused share repurchases through the second quarter of 2020. The company repurchased 442,000 shares at an average price of $75.52 in the first quarter of 2020. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

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

The provision for credit losses was $135.3 million for the second quarter of 2020, with $138.8 million related to lending activities. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to the anticipated impact of the on-going COVID-19 pandemic, and other assumptions, required a provision of $54.6 million. All other changes totaled $84.2 million, which included $14.4 million primarily due to increased specific impairment of energy loans, portfolio changes of $55.7 million primarily due to changes in risk grades related to energy loans, partially offset by the impact of a decrease in loan balances, and net charge-offs of $14.1 million. The provision related to lending activities was partially offset by a $3.6 million decrease in the accrual for expected credit losses from mortgage banking activities. During the second quarter, the Company sold certain mortgage servicing rights related to residential mortgage loans transferred to mortgage-backed securities. These servicing rights expose the Company to credit risk for amounts that exceed the U.S. government agency guarantees.

Our base case reasonable and supportable forecast includes an 18 percent increase in GDP and an 8.4 percent civilian unemployment rate in the third quarter of 2020, as adjusted for the impact of government stimulus programs. Our forward twelve month forecast through the second quarter of 2021 assumes a 5.0 percent increase in GDP and an 8.5 percent civilian unemployment rate. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of June 2020, $38.99 per barrel for delivery in the third quarter of 2020 and increasing to $40.13 per barrel for delivery in the second quarter of 2021. Our downside reasonable and supportable forecast reflects a more severe and prolonged disruption in economic activity than the base case and includes a 6.0 percent increase in GDP and a 9.7 percent adjusted civilian unemployment rate in the third quarter of 2020. Our forward twelve month forecast through the second quarter of 2021 assumes a 6.0 percent increase in GDP and a 10.0 percent civilian unemployment rate. WTI oil prices are projected to range from $33.99 per barrel for delivery in the third quarter of 2020 to $34.63 per barrel for delivery in the second quarter of 2021.

The allowance for loan losses totaled $436 million or 1.80 percent of outstanding loans and 175 percent of nonaccruing loans at June 30, 2020, excluding residential mortgage loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $469 million or 1.94 percent of outstanding loans and 188 percent of nonaccruing loans at June 30, 2020. The combined allowance for credit losses attributed to energy was 4.44 percent of outstanding energy loans at June 30. Excluding PPP loans, the allowance for loan losses was 1.97 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.12 percent.

At March 31, 2020, the allowance for loan losses was $315 million or 1.40 percent of outstanding loans and 199 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $344 million or 1.53 percent of outstanding loans and 217 percent of nonaccruing loans.

Nonperforming assets totaled $405 million or 1.68 percent of outstanding loans and repossessed assets at June 30, 2020, compared to $292 million or 1.30 percent at March 31, 2020. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $285 million or 1.19 percent of outstanding loans and repossessed assets at June 30, 2020, compared to $195 million or 0.87 percent at March 31, 2020.

Nonaccruing loans were $255 million or 1.16 percent of outstanding loans at June 30, 2020. Nonaccruing commercial loans totaled $202 million or 1.43 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $14.0 million or 0.31 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $39 million or 1.17 percent of outstanding loans to individuals. 

Nonaccruing loans increased $92 million from March 31, 2020, primarily due to a $67 million increase in nonaccruing energy loans and a $13 million increase in nonaccruing services loans. New nonaccruing loans identified in the second quarter totaled $124 million, offset by $16 million in payments received, $16 million in charge-offs and $1.1 million of foreclosures.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $626 million at June 30, compared to $293 million at March 31. The increase largely resulted from energy and service sector loans. Oil prices remained depressed during April and May during our semi-annual borrowing base redeterminations resulting in credit quality migration in the energy portfolio. While prices have subsequently improved, the pricing environment remains fragile and tied to the continued economic recovery.

Net charge-offs were $14.1 million or 0.25 percent of average loans on an annualized basis for the second quarter of 2020, excluding PPP loans. Net charge-offs were $17.2 million or 0.31 percent of average loans on an annualized basis for the first quarter of 2020. Gross charge-offs were $15.6 million for the second quarter compared to $18.9 million for the previous quarter. Recoveries totaled $1.5 million for the second quarter of 2020 and $1.7 million for the first quarter of 2020.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $12.5 billion at June 30, 2020, a $218 million decrease compared to March 31, 2020. At June 30, 2020, the available for sale securities portfolio consisted primarily of $9.1 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.3 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At June 30, 2020, the available for sale securities portfolio had a net unrealized gain of $487 million compared to $436 million at March 31, 2020.

The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities decreased $981 million to $723 million at June 30, 2020.

The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $9.3 million during the second quarter of 2020, including a $7.4 million increase in the fair value of securities and derivative contracts held as an economic hedge, $761 thousand decrease in the fair value of mortgage servicing rights, and $2.7 million of related net interest revenue. The completion of a sale of mortgage servicing rights on $1.6 billion of unpaid principal balance, primarily related to loans guaranteed by the Veteran's Administration, was a large contributor to the increase in the fair value of contracts held as an economic hedge. Interest rate movements between the date we established the transaction price and the closing date of the sale produced positive results.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on July 22, 2020 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-6671 and referencing conference ID # 13706496.

About BOK Financial Corporation

BOK Financial Corporation is a $46 billion regional financial services company headquartered in Tulsa, Oklahoma with $79 billion in assets under management and administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Milwaukee and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

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

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


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

 June 30, 2020 Mar. 31, 2020
ASSETS   
Cash and due from banks$762,453    $670,500   
Interest-bearing cash and cash equivalents485,319    302,577   
Trading securities1,196,105    2,110,585   
Investment securities, net of allowance267,988    272,576   
Available for sale securities12,475,919    12,694,277   
Fair value option securities722,657    1,703,238   
Restricted equity securities125,683    390,042   
Residential mortgage loans held for sale319,357    204,720   
Loans:   
Commercial14,158,510    14,795,975   
Commercial real estate4,554,144    4,450,085   
Paycheck protection program2,081,428    —   
Loans to individuals3,361,808    3,217,910   
Total loans24,155,890    22,463,970   
Allowance for loan losses(435,597)  (315,311) 
Loans, net of allowance23,720,293    22,148,659   
Premises and equipment, net550,230    546,093   
Receivables226,934    207,341   
Goodwill1,048,091    1,048,091   
Intangible assets, net123,595    121,807   
Mortgage servicing rights97,971    110,828   
Real estate and other repossessed assets, net35,330    36,744   
Derivative contracts, net651,553    922,716   
Cash surrender value of bank-owned life insurance393,741    391,006   
Receivable on unsettled securities sales1,863,719    2,171,881   
Other assets752,936    1,065,481   
TOTAL ASSETS$45,819,874    $47,119,162   
    
LIABILITIES AND EQUITY   
Deposits:   
Demand$11,992,165    $9,821,582   
Interest-bearing transaction18,850,418    16,596,292   
Savings696,971    593,805   
Time2,352,760    2,232,473   
Total deposits33,892,314    29,244,152   
Funds purchased and repurchase agreements1,357,602    4,583,768   
Other borrowings3,173,563    5,529,554   
Subordinated debentures275,973    275,942   
Accrued interest, taxes and expense365,634    309,236   
Due on unsettled securities purchases599,510    537,709   
Derivative contracts, net610,020    1,213,445   
Other liabilities440,835    391,196   
TOTAL LIABILITIES40,715,451    42,085,002   
Shareholders' equity:   
Capital, surplus and retained earnings4,726,679    4,694,956   
Accumulated other comprehensive gain370,316    331,292   
TOTAL SHAREHOLDERS' EQUITY5,096,995    5,026,248   
Non-controlling interests7,428    7,912   
TOTAL EQUITY5,104,423    5,034,160   
TOTAL LIABILITIES AND EQUITY$45,819,874    $47,119,162   


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

 Three Months Ended
 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
ASSETS         
Interest-bearing cash and cash equivalents$619,737    $721,659    $573,203    $500,823    $535,491   
Trading securities1,871,647    1,690,104    1,672,426    1,696,568    1,757,335   
Investment securities, net of allowance268,947    282,265    298,567    308,090    328,482   
Available for sale securities12,480,065    11,664,521    11,333,524    10,747,439    9,435,668   
Fair value option securities786,757    1,793,480    1,521,528    1,553,879    898,772   
Restricted equity securities273,922    429,133    479,687    476,781    413,812   
Residential mortgage loans held for sale288,588    129,708    203,535    203,319    192,102   
Loans:         
Commercial14,502,652    14,452,851    14,344,534    14,507,185    14,175,057   
Commercial real estate4,543,511    4,346,886    4,532,649    4,652,534    4,656,861   
Paycheck protection program1,699,369    —    —    —    —   
Loans to individuals3,353,960    3,143,286    3,358,817    3,253,199    3,172,487   
Total loans24,099,492    21,943,023    22,236,000    22,412,918    22,004,405   
Allowance for loan losses(367,583)  (250,338)  (205,417)  (201,714)  (205,532) 
Loans, net of allowance23,731,909    21,692,685    22,030,583    22,211,204    21,798,873   
Total earning assets40,321,572    38,403,555    38,113,053    37,698,103    35,360,535   
Cash and due from banks678,878    669,369    690,806    717,338    703,294   
Derivative contracts, net642,969    376,621    311,542    331,834    328,802   
Cash surrender value of bank-owned life insurance391,951    390,009    388,012    385,190    384,974   
Receivable on unsettled securities sales4,626,307    3,046,111    1,973,604    1,742,794    1,437,462   
Other assets3,095,354    2,834,953    2,736,337    2,705,089    2,629,710   
TOTAL ASSETS$49,757,031    $45,720,618    $44,213,354    $43,580,348    $40,844,777   
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$11,489,322    $9,232,859    $9,612,533    $9,759,710    $9,883,965   
Interest-bearing transaction18,040,170    16,159,654    14,685,385    13,131,542    12,512,282   
Savings656,669    563,821    554,605    557,122    558,738   
Time2,464,793    2,239,234    2,247,717    2,251,800    2,207,391   
Total deposits32,650,954    28,195,568    27,100,240    25,700,174    25,162,376   
Funds purchased and repurchase agreements5,816,484    3,815,941    4,120,610    3,106,163    2,066,950   
Other borrowings3,527,303    6,542,325    6,247,194    8,125,023    7,175,617   
Subordinated debentures275,949    275,932    275,916    275,900    275,887   
Derivative contracts, net836,667    379,342    276,078    300,051    283,484   
Due on unsettled securities purchases887,973    960,780    784,174    745,893    821,688   
Other liabilities690,087    642,764    561,654    547,144    460,732   
TOTAL LIABILITIES44,685,417    40,812,652    39,365,866    38,800,348    36,246,734   
Total equity5,071,614    4,907,966    4,847,488    4,780,000    4,598,043   
TOTAL LIABILITIES AND EQUITY$49,757,031    $45,720,618    $44,213,354    $43,580,348    $40,844,777   


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

 Three Months Ended Six Months Ended
 June 30, June 30,
 2020 2019 2020 2019
        
Interest revenue$306,384    $390,820    $655,321    $766,894   
Interest expense28,280    105,388    115,857    203,360   
Net interest revenue278,104    285,432    539,464    563,534   
Provision for credit losses135,321    5,000    229,092    13,000   
Net interest revenue after provision for credit losses142,783    280,432    310,372    550,534   
Other operating revenue:       
Brokerage and trading revenue62,022    40,526    112,801    72,143   
Transaction card revenue22,940    21,915    44,821    42,653   
Fiduciary and asset management revenue41,257    45,025    85,715    88,383   
Deposit service charges and fees22,046    28,074    48,176    56,317   
Mortgage banking revenue53,936    28,131    91,103    51,965   
Other revenue11,479    12,437    23,788    25,199   
Total fees and commissions213,680    176,108    406,404    336,660   
Other gains (losses), net6,768    3,480    (3,973)  6,456   
Gain on derivatives, net21,885    11,150    40,305    15,817   
Gain (loss) on fair value option securities, net(14,459)  9,853    53,934    19,518   
Change in fair value of mortgage servicing rights(761)  (29,555)  (89,241)  (50,221) 
Gain on available for sale securities, net5,580    1,029    5,583    1,105   
Total other operating revenue232,693    172,065    413,012    329,335   
Other operating expense:       
Personnel176,235    160,342    332,416    329,570   
Business promotion1,935    10,142    8,150    18,016   
Professional fees and services12,161    13,002    25,109    29,141   
Net occupancy and equipment30,675    26,880    56,736    56,401   
Insurance5,156    6,454    10,136    11,293   
Data processing and communications32,942    29,735    65,685    61,184   
Printing, postage and supplies3,502    4,107    7,774    8,992   
Net losses and operating expenses of repossessed assets1,766    580    3,297    2,576   
Amortization of intangible assets5,190    5,138    10,284    10,329   
Mortgage banking costs15,598    11,545    26,143    21,451   
Other expense7,227    8,212    15,281    14,341   
Total other operating expense295,387    277,137    564,011    564,294   
        
Net income before taxes80,089    175,360    159,373    315,575   
Federal and state income taxes15,803    37,580    33,103    67,530   
        
Net income64,286    137,780    126,270    248,045   
Net income (loss) attributable to non-controlling interests(407)  217    (502)  (130) 
Net income attributable to BOK Financial Corporation shareholders$64,693    $137,563    $126,772    $248,175   
        
Average shares outstanding:       
Basic69,876,043    70,887,063    69,999,865    71,135,414   
Diluted69,877,467    70,902,033    70,003,817    71,151,558   
        
Net income per share:       
Basic$0.92    $1.93    $1.80    $3.47   
Diluted$0.92    $1.93    $1.80    $3.46   


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

 Three Months Ended
 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
Capital:         
Period-end shareholders' equity$5,096,995   $5,026,248   $4,855,795   $4,829,016   $4,709,438  
Risk weighted assets$32,258,548   $32,973,242   $31,673,425   $32,159,139   $32,040,741  
Risk-based capital ratios:         
Common equity tier 111.41% 10.98% 11.39% 11.06% 10.84%
Tier 111.41% 10.98% 11.39% 11.06% 10.84%
Total capital13.40% 12.65% 12.94% 12.56% 12.34%
Leverage ratio7.74% 8.15% 8.40% 8.41% 8.75%
Tangible common equity ratio18.79% 8.39% 8.98% 8.72% 8.69%
          
Common stock:         
Book value per share$72.50   $71.49   $68.80   $68.15   $66.15  
Tangible book value per share55.83   54.85   52.17   51.60   49.68  
Market value per share:         
High$67.62   $87.40   $88.28   $84.35   $88.17  
Low$37.80   $34.57   $71.85   $72.96   $72.60  
Cash dividends paid$35,769   $35,949   $36,011   $35,472   $35,631  
Dividend payout ratio55.29% 57.91% 32.63% 24.94% 25.90%
Shares outstanding, net70,306,690   70,308,532   70,579,598   70,858,010   71,193,770  
Stock buy-back program:         
Shares repurchased—    442,000   280,000   336,713   250,000  
Amount$—    $33,380   $22,844   $25,937   $20,125  
Average price per share$—    $75.52   $81.59   $77.03   $80.50  
          
Performance ratios (quarter annualized):
Return on average assets0.52% 0.55% 0.99% 1.29% 1.35%
Return on average equity5.14% 5.10% 9.05% 11.83% 12.02%
Net interest margin2.83% 2.80% 2.88% 3.01% 3.30%
Efficiency ratio59.57% 58.62% 63.65% 59.31% 59.51%
          
Reconciliation of non-GAAP measures:
1   Tangible common equity ratio:         
Total shareholders' equity$5,096,995   $5,026,248   $4,855,795   $4,829,016   $4,709,438  
Less: Goodwill and intangible assets, net1,171,686   1,169,898   1,173,362   1,172,411   1,172,564  
Tangible common equity$3,925,309   $3,856,350   $3,682,433   $3,656,605   $3,536,874  
          
Total assets$45,819,874   $47,119,162   $42,172,021   $43,127,205   $41,893,073  
Less: Goodwill and intangible assets, net 1,171,686    1,169,898    1,173,362    1,172,411    1,172,564  
Tangible assets$44,648,188   $45,949,264   $40,998,659   $41,954,794   $40,720,509  
Tangible common equity ratio8.79% 8.39% 8.98% 8.72% 8.69%
               
Pre-provision net revenue:         
Net income before taxes$80,089   $79,284   $141,039   $174,254   $175,360  
Provision for expected credit losses135,321   93,771   19,000   12,000   5,000  
Net income (loss) attributable to non-controlling interests(407)  (95)  430   (373)  217  
Pre-provision net revenue$215,817   $173,150   $159,609   $186,627   $180,143  
          
Other data:         
Tax equivalent interest$2,630   $2,715   $2,726   $2,936   $3,481  
Net unrealized gain (loss) on available for sale securities$487,334   $435,989   $138,149   $178,060   $131,780  
          
Mortgage banking:         
Mortgage production revenue$39,185   $21,570   $9,169   $13,814   $11,869  
          
Mortgage loans funded for sale$1,184,249   $548,956   $855,643   $877,280   $729,841  
Add: current period-end outstanding commitments546,304   657,570   158,460   379,377   344,087  
Less: prior period end outstanding commitments657,570   158,460   379,377   344,087   263,434  
Total mortgage production volume$1,072,983   $1,048,066   $634,726   $912,570   $810,494  
          
Mortgage loan refinances to mortgage loans funded for sale71% 57% 57% 56% 31%
Gain on sale margin3.65% 2.06% 1.44% 1.51% 1.46%
          
Mortgage servicing revenue$14,751   $15,597   $16,227   $16,366   $16,262  
Average outstanding principal balance of mortgage loans serviced for others19,319,872   20,416,546   20,856,446   21,172,874   21,418,690  
Average mortgage servicing revenue rates0.31% 0.31% 0.31% 0.31% 0.30%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$21,815   $18,371   $(4,714)  $3,742   $11,128  
Gain (loss) on fair value option securities, net(14,459)  68,393   (8,328)  4,597   9,853  
Gain (loss) on economic hedge of mortgage servicing rights7,356   86,764   (13,042)  8,339   20,981  
Gain (loss) on changes in fair value of mortgage servicing rights(761)  (88,480)  9,297   (12,593)  (29,555) 
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue6,595   (1,716)  (3,745)  (4,254)  (8,574) 
Net interest revenue on fair value option securities22,702   4,268   1,544   1,245   1,296  
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$9,297   $2,552   $(2,201)  $(3,009)  $(7,278) 

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


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

 Three Months Ended
 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
          
Interest revenue$306,384    $348,937    $369,857    $395,207    $390,820   
Interest expense28,280    87,577    99,608    116,111    105,388   
Net interest revenue278,104    261,360    270,249    279,096    285,432   
Provision for credit losses135,321    93,771    19,000    12,000    5,000   
Net interest revenue after provision for credit losses142,783    167,589    251,249    267,096    280,432   
Other operating revenue:         
Brokerage and trading revenue62,022    50,779    43,843    43,840    40,526   
Transaction card revenue22,940    21,881    22,548    22,015    21,915   
Fiduciary and asset management revenue41,257    44,458    45,021    43,621    45,025   
Deposit service charges and fees22,046    26,130    27,331    28,837    28,074   
Mortgage banking revenue53,936    37,167    25,396    30,180    28,131   
Other revenue11,479    12,309    15,283    17,626    12,437   
Total fees and commissions213,680    192,724    179,422    186,119    176,108   
Other gains (losses), net6,768    (10,741)  (1,649)  4,544    3,480   
Gain (loss) on derivatives, net21,885    18,420    (4,644)  3,778    11,150   
Gain (loss) on fair value option securities, net(14,459)  68,393    (8,328)  4,597    9,853   
Change in fair value of mortgage servicing rights(761)  (88,480)  9,297    (12,593)  (29,555) 
Gain on available for sale securities, net5,580       4,487       1,029   
Total other operating revenue232,693    180,319    178,585    186,450    172,065   
Other operating expense:         
Personnel176,235    156,181    168,422    162,573    160,342   
Business promotion1,935    6,215    8,787    8,859    10,142   
Charitable contributions to BOKF Foundation3,000    —    2,000    —    1,000   
Professional fees and services12,161    12,948    13,408    12,312    13,002   
Net occupancy and equipment30,675    26,061    26,316    27,558    26,880   
Insurance5,156    4,980    5,393    4,220    6,454   
Data processing and communications32,942    32,743    31,884    31,915    29,735   
Printing, postage and supplies3,502    4,272    3,700    3,825    4,107   
Net losses and operating expenses of repossessed assets1,766    1,531    2,403    1,728    580   
Amortization of intangible assets5,190    5,094    5,225    5,064    5,138   
Mortgage banking costs15,598    10,545    14,259    14,975    11,545   
Other expense7,227    8,054    6,998    6,263    8,212   
Total other operating expense295,387    268,624    288,795    279,292    277,137   
Net income before taxes80,089    79,284    141,039    174,254    175,360   
Federal and state income taxes15,803    17,300    30,257    32,396    37,580   
Net income64,286    61,984    110,782    141,858    137,780   
Net income (loss) attributable to non-controlling interests(407)  (95)  430    (373)  217   
Net income attributable to BOK Financial Corporation shareholders$64,693    $62,079    $110,352    $142,231    $137,563   
          
Average shares outstanding:         
Basic69,876,043    70,123,685    70,295,899    70,596,307    70,887,063   
Diluted69,877,467    70,130,166    70,309,644    70,609,924    70,902,033   
Net income per share:         
Basic$0.92    $0.88    $1.56    $2.00    $1.93   
Diluted$0.92    $0.88    $1.56    $2.00    $1.93   


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

  June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
Commercial:          
Energy $3,974,174   $4,111,676   $3,973,377   $4,114,269   $3,921,353  
Services 3,779,881   3,955,748   3,832,031   4,011,089   4,105,117  
Healthcare 3,289,343   3,165,096   3,033,916   3,032,968   2,926,510  
General business 3,115,112   3,563,455   3,192,326   3,266,299   3,383,928  
Total commercial 14,158,510   14,795,975   14,031,650   14,424,625   14,336,908  
           
Commercial real estate:          
Multifamily 1,407,107   1,282,457   1,265,562   1,324,839   1,300,372  
Office 973,995   962,004   928,379   1,014,275   1,056,306  
Retail 780,467   774,198   775,521   799,169   825,399  
Industrial 723,005   728,026   856,117   873,536   828,569  
Residential construction and land development 136,911   138,958   150,879   135,361   141,509  
Other commercial real estate 532,659   564,442   457,325   478,877   557,878  
Total commercial real estate 4,554,144   4,450,085   4,433,783   4,626,057   4,710,033  
           
Paycheck protection program 2,081,428   —   —   —   —  
           
Loans to individuals:          
Permanent mortgage 1,813,442   1,844,555   1,886,378   1,925,539   1,975,449  
Permanent mortgages guaranteed by U.S. government agencies 322,269   197,889   197,794   191,764   195,373  
Personal 1,226,097   1,175,466   1,201,382   1,117,382   1,037,889  
Total loans to individuals 3,361,808   3,217,910   3,285,554   3,234,685   3,208,711  
           
Total $24,155,890   $22,463,970   $21,750,987   $22,285,367   $22,255,652  


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

 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
          
Texas:         
Commercial$5,771,691   $6,350,690   $6,174,894   $6,220,227   $5,877,265  
Commercial real estate1,389,547   1,296,266   1,259,117   1,292,116   1,341,609  
Paycheck protection program612,133   —   —   —   —  
Loans to individuals748,474   756,634   727,175   749,361   673,463  
Total Texas8,521,845   8,403,590   8,161,186   8,261,704   7,892,337  
          
Oklahoma:         
Commercial5,086,934   3,886,086   3,454,825   3,690,100   3,762,234  
Commercial real estate636,021   593,473   631,026   679,786   717,970  
Paycheck protection program442,518   —   —   —   —  
Loans to individuals1,967,665   1,788,518   1,854,864   1,753,698   1,786,162  
Total Oklahoma8,133,138   6,268,077   5,940,715   6,123,584   6,266,366  
          
Colorado:         
Commercial1,600,382   2,181,309   2,169,598   2,247,798   2,325,742  
Commercial real estate937,742   955,608   927,826   975,066   1,023,410  
Paycheck protection program488,279   —   —   —   —  
Loans to individuals264,872   268,674   276,939   303,605   314,317  
Total Colorado3,291,275   3,405,591   3,374,363   3,526,469   3,663,469  
          
Arizona:         
Commercial1,036,862   1,396,582   1,307,073   1,276,534   1,330,415  
Commercial real estate689,121   714,161   728,832   771,425   761,243  
Paycheck protection program318,961   —   —   —   —  
Loans to individuals177,066   181,821   186,539   170,815   168,019  
Total Arizona2,222,010   2,292,564   2,222,444   2,218,774   2,259,677  
          
Kansas/Missouri:         
Commercial404,860   556,255   527,872   566,969   602,836  
Commercial real estate314,504   310,799   322,541   374,795   331,443  
Paycheck protection program76,724   —   —   —   —  
Loans to individuals102,577   116,734   131,069   146,522   155,453  
Total Kansas/Missouri898,665   983,788   981,482   1,088,286   1,089,732  
          
New Mexico:         
Commercial182,688   327,164   305,320   335,409   350,520  
Commercial real estate455,574   434,150   402,148   374,331   385,058  
Paycheck protection program128,058   —   —   —   —  
Loans to individuals83,470   87,110   90,257   92,270   92,626  
Total New Mexico849,790   848,424   797,725   802,010   828,204  
          
Arkansas:         
Commercial75,093   97,889   92,068   87,588   87,896  
Commercial real estate131,635   145,628   162,293   158,538   149,300  
Paycheck protection program14,755   —   —   —   —  
Loans to individuals17,684   18,419   18,711   18,414   18,671  
Total Arkansas239,167   261,936   273,072   264,540   255,867  
          
TOTAL BOK FINANCIAL$24,155,890   $22,463,970   $21,750,987   $22,285,367   $22,255,652  

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


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

 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
Oklahoma:         
  Demand$4,378,559   $3,669,558   $3,257,337   $3,515,312   $3,279,360  
  Interest-bearing:         
  Transaction11,438,489   9,955,697   8,574,912   7,447,799   7,020,484  
  Savings387,557   329,631   306,194   308,103   307,785  
  Time1,330,619   1,137,802   1,125,446   1,198,170   1,253,804  
  Total interest-bearing13,156,665   11,423,130   10,006,552   8,954,072   8,582,073  
Total Oklahoma17,535,224   15,092,688   13,263,889   12,469,384   11,861,433  
          
Texas:         
  Demand3,070,955   2,767,399   2,757,376   2,867,915   2,970,340  
  Interest-bearing:         
  Transaction3,358,090   2,874,362   2,911,731   2,589,063   2,453,187  
  Savings128,892   115,039   102,456   100,597   103,125  
  Time476,867   505,565   495,343   464,264   425,253  
  Total interest-bearing3,963,849   3,494,966   3,509,530   3,153,924   2,981,565  
Total Texas7,034,804   6,262,365   6,266,906   6,021,839   5,951,905  
          
Colorado:         
  Demand2,096,075   1,579,764   1,729,674   1,694,044   1,621,820  
  Interest-bearing:         
  Transaction1,816,604   1,759,384   1,769,037   1,910,874   1,800,271  
  Savings67,477   58,000   53,307   60,107   57,263  
  Time254,845   279,105   283,517   273,622   246,198  
  Total interest-bearing2,138,926   2,096,489   2,105,861   2,244,603   2,103,732  
Total Colorado4,235,001   3,676,253   3,835,535   3,938,647   3,725,552  
          
New Mexico:         
  Demand965,877   750,052   623,722   645,698   630,861  
  Interest-bearing:         
  Transaction752,565   563,891   558,493   539,260   557,881  
  Savings80,242   67,553   63,999   62,863   62,636  
  Time222,370   235,778   238,140   236,135   232,569  
  Total interest-bearing1,055,177   867,222   860,632   838,258   853,086  
Total New Mexico2,021,054   1,617,274   1,484,354   1,483,956   1,483,947  
          
Arizona:         
  Demand985,757   665,396   681,268   705,895   704,144  
  Interest-bearing:         
  Transaction780,500   729,603   684,929   600,103   560,861  
  Savings15,669   8,832   10,314   12,487   11,966  
  Time42,318   47,081   49,676   44,347   43,099  
  Total interest-bearing838,487   785,516   744,919   656,937   615,926  
Total Arizona1,824,244   1,450,912   1,426,187   1,362,832   1,320,070  


 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
Kansas/Missouri:         
  Demand427,795   318,985   384,533   376,020   431,856  
  Interest-bearing:         
  Transaction526,635   537,552   784,574   284,940   310,774  
  Savings15,033   12,888   12,169   11,689   13,125  
  Time17,746   19,137   17,877   19,126   19,205  
  Total interest-bearing559,414   569,577   814,620   315,755   343,104  
Total Kansas/Missouri987,209   888,562   1,199,153   691,775   774,960  
          
Arkansas:         
  Demand67,147   70,428   27,381   39,513   29,176  
  Interest-bearing:         
  Transaction177,535   175,803   108,076   149,506   148,485  
  Savings2,101   1,862   1,837   1,747   1,783  
  Time7,995   8,005   7,850   7,877   7,810  
  Total interest-bearing187,631   185,670   117,763   159,130   158,078  
Total Arkansas254,778   256,098   145,144   198,643   187,254  
          
TOTAL BOK FINANCIAL$33,892,314   $29,244,152   $27,621,168   $26,167,076   $25,305,121  


NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

 Three Months Ended
 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents0.07% 1.33% 1.62% 2.42% 2.57%
Trading securities2.46% 2.89% 3.19% 3.49% 3.59%
Investment securities, net of allowance4.77% 4.73% 4.69% 4.46% 4.41%
Available for sale securities2.29% 2.48% 2.52% 2.60% 2.63%
Fair value option securities2.00% 2.67% 2.62% 2.79% 3.34%
Restricted equity securities2.75% 5.49% 5.37% 6.34% 6.30%
Residential mortgage loans held for sale3.10% 3.50% 3.55% 3.73% 3.65%
Loans3.63% 4.50% 4.75% 5.12% 5.39%
Allowance for loan losses         
Loans, net of allowance3.69% 4.55% 4.80% 5.17% 5.45%
Total tax-equivalent yield on earning assets3.12% 3.73% 3.93% 4.25% 4.51%
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
  Interest-bearing transaction0.21% 0.89% 1.00% 1.08% 1.04%
  Savings0.05% 0.09% 0.11% 0.14% 0.12%
  Time1.36% 1.83% 1.94% 1.94% 1.90%
Total interest-bearing deposits0.34% 0.98% 1.09% 1.17% 1.13%
Funds purchased and repurchase agreements0.14% 1.14% 1.56% 2.01% 2.08%
Other borrowings0.56% 1.66% 2.01% 2.42% 2.67%
Subordinated debt5.16% 5.30% 5.40% 5.48% 5.53%
Total cost of interest-bearing liabilities0.37% 1.19% 1.40% 1.68% 1.70%
Tax-equivalent net interest revenue spread2.75% 2.54% 2.53% 2.57% 2.81%
Effect of noninterest-bearing funding sources and other0.08% 0.26% 0.35% 0.44% 0.49%
Tax-equivalent net interest margin2.83% 2.80% 2.88% 3.01% 3.30%

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
 June 30, 2020 Mar. 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019
Nonperforming assets:         
Nonaccruing loans:         
Commercial:         
Energy$162,989    $96,448    $91,722    $88,894    $71,632   
Healthcare3,645    4,070    4,480    5,978    16,148   
Services21,032    8,425    7,483    6,119    10,087   
General business14,333    9,681    11,731    10,715    25,528   
Total commercial201,999    118,624    115,416    111,706    123,395   
          
Commercial real estate13,956    8,545    27,626    23,185    21,670   
          
Loans to individuals:         
Permanent mortgage33,098    30,721    31,522    30,972    31,734   
Permanent mortgage guaranteed by U.S. government agencies6,110    5,005    6,100    6,332    6,743   
Personal233    277    287    271    237   
Total loans to individuals39,441    36,003    37,909    37,575    38,714   
          
Total nonaccruing loans$255,396    $163,172    $180,951    $172,466    $183,779   
Accruing renegotiated loans guaranteed by U.S. government agencies114,571    91,757    92,452    92,718    95,989   
Real estate and other repossessed assets35,330    36,744    20,359    21,026    16,940   
Total nonperforming assets$405,297    $291,673    $293,762    $286,210    $296,708   
Total nonperforming assets excluding those guaranteed by U.S. government agencies284,616    194,911    195,210    187,160    193,976   
          
Accruing loans 90 days past due111,316    3,706    7,680    1,541    2,698   
          
Gross charge-offs$15,570    $18,917    $14,268    $11,707    $13,227   
Recoveries(1,491)  (1,696)  (1,816)  (1,066)  (5,503) 
Net charge-offs$14,079    $17,221    $12,452    $10,641    $7,724   
          
Provision for loan losses$134,365    $95,964    $18,779    $12,539    $4,918   
Provision for credit losses from off-balance sheet unfunded loan commitments4,405    3,377    221    (539)  82   
Provision for expected credit losses from mortgage banking activities2(3,575)  (6,020)  —    —    —   
Provision for credit losses related to held-to maturity (investment) securities portfolio2126    450    —    —    —   
Total provision for credit losses$135,321    $93,771    $19,000    $12,000    $5,000   
          
Allowance for loan losses to period end loans1.80% 1.40% 0.97% 0.92% 0.91%
Allowance for loan losses to period end loans excluding PPP loans31.97% 1.40% 0.97% 0.92% 0.91%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans1.94% 1.53% 0.98% 0.92% 0.92%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans32.12% 1.53% 0.98% 0.92% 0.92%
Nonperforming assets to period end loans and repossessed assets1.68% 1.30% 1.35% 1.28% 1.33%
Net charge-offs (annualized) to average loans0.23% 0.31% 0.22% 0.19% 0.14%
Net charge-offs (annualized) to average loans excluding PPP loans30.25% 0.31% 0.22% 0.19% 0.14%
Allowance for loan losses to nonaccruing loans1174.74% 199.35% 120.54% 123.05% 114.40%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1187.94% 217.38% 121.44% 123.87% 115.48%

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


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

  Three Months Ended Change
Commercial Banking June 30, 2020 Mar. 31, 2020 June 30, 2019 2Q20 vs
1Q20
 2Q20 vs
2Q19
Net interest revenue $145,109   $151,407   $184,471   (4.2)% (21.3)%
Fees and commissions revenue 46,515   41,459   41,105   12.2% 13.2 %
Other operating expense 62,933   60,752   63,415   3.6% (0.8)%
Corporate expense allocations 5,437   8,905   10,652   (38.9)% (49.0)%
Net income 80,992   74,975   106,280   8.0% (23.8)%
           
Average assets 27,575,652   24,687,976   22,910,724   11.7% 20.4%
Average loans 19,262,827   18,812,015   18,812,800   2.4% 2.4%
Average deposits 14,599,225   11,907,386   10,724,206   22.6% 36.1%
           
Consumer Banking          
Net interest revenue $39,270   $43,932   $52,715   (10.6)% (25.5)%
Fees and commissions revenue 67,192   55,062   48,830   22.0% 37.6%
Other operating expense 58,936   54,793   57,694   7.6% 2.2%
Corporate expense allocations 10,812   10,487   11,695   3.1% (7.6)%
Net income 31,900   22,921   16,342   39.2% 95.2%
           
Average assets 9,920,005   9,850,853   9,212,667   0.7% 7.7%
Average loans 1,679,164   1,711,703   1,796,823   (1.9)% (6.5)%
Average deposits 7,587,246   6,869,481   6,998,677   10.4% 8.4%
           
Wealth Management          
Net interest revenue $26,880   $18,904   $26,941   42.2% (0.2)%
Fees and commissions revenue 106,757   97,881   85,925   9.1% 24.2%
Other operating expense 80,567   78,192   69,452   3.0% 16.0%
Corporate expense allocations 8,204   8,265   9,168   (0.7)% (10.5)%
Net income 33,394   22,573   25,544   47.9% 30.7%
           
Average assets 15,721,452   12,723,412   9,849,396   23.6% 59.6%
Average loans 1,709,363   1,705,735   1,647,680   0.2% 3.7%
Average deposits 8,385,681   7,623,986   6,220,848   10.0% 34.8%
Fiduciary assets 50,560,584   47,053,101   49,296,896   7.5% 2.6%
Assets under management or administration 79,452,502   75,783,829   81,774,602   4.8% (2.8)%
              

Contact:

Cody McAlester
Vice President, Investor Relations
918-595-3030

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