BOK Financial Reports Record Earnings of $351 Million for 2012 Fourth Quarter Earnings Total $83 Million
TULSA, Okla.--(BUSINESS WIRE)--
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.
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.
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.
"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 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.
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 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.
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 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.
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 .
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.
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
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
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
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
%
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
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
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.
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
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.
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
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 by 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.
BOK Financial Corporation Steven Nell, 918-588-6752 Chief
Financial Officer or Andrea Myers, 918-594-7794 Corporate
Communications
Press Release $BOKF BOK Financial Corporation
TULSA, Okla.--(BUSINESS WIRE)-- 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.
Highlights of fourth quarter of 2012 included:
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.
"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 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.
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 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.
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 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.
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 .
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.
BOK FINANCIAL CORPORATION
(in thousands)
2012
2012
2011
BOK FINANCIAL CORPORATION
(in thousands)
2012
2012
2012
2012
2011
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
Portion of loss recognized in (reclassified from) other
comprehensive income
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
2012
2012
2012
2012
2011
1 Tangible common equity ratio:
Less: Goodwill and intangible
assets, net
Less: Goodwill and intangible
assets, net
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
2012
2012
2012
2012
2011
Mortgage loan refinances to total
Net unrealized gain on available
Gain (loss) on mortgage hedge
)
Gain (loss) on mortgage trading
Gain (loss) on economic hedge of
mortgage servicing rights
Gain (loss) on changes in fair
value of mortgage servicing rights
Gain (loss) on changes in fair
value of mortgage servicing
rights, net of economic hedges
Net interest revenue on mortgage
trading securities
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
2012
2012
2012
2012
2011
Net interest revenue after provision for credit
losses
Portion of loss recognized in (reclassified from)
other comprehensive income
(1,104
)
Net losses and operating expenses of
repossessed assets
Change in fair value of mortgage servicing
rights
Net income (loss) attributable to non-controlling
interest
Net income attributable to BOK Financial
Corporation shareholders
BOK FINANCIAL CORPORATION
(in thousands)
2012
2012
2012
2012
2011
Loans attributed to a geographical region may not always represent the location of the borrower or the collateral.
BOK FINANCIAL CORPORATION
(in thousands)
2012
2012
2012
2012
2011
BOK FINANCIAL CORPORATION
2012
2012
2012
2012
2011
1 Yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income.
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
2012
2012
2012
2012
2011
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
2012
2012
2012
2012
2011
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.
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 by 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.
BOK Financial Corporation
Steven Nell, 918-588-6752
Chief Financial Officer
or
Andrea Myers, 918-594-7794
Corporate Communications
Source: BOK Financial Corporation