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

Tulsa, Oklahoma, UNITED STATES


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

CEO Commentary

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

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

Third Quarter 2018 Financial Highlights
  • Net income was $117.3 million and $1.79 per diluted share for the third quarter of 2018, including 18 cents per share from a client asset management fee. Net income was $114.4 million and $1.75 per diluted share for the second quarter of 2018.
  • Net interest revenue totaled $240.9 million, up $2.3 million compared to the second quarter of 2018.
  • Net interest margin increased to 3.21 percent from 3.17 percent. Net interest margin grew 11 basis points excluding recoveries of foregone interest on nonaccruing loans from the previous quarter.
  • Fees and commissions revenue totaled $167.5 million, an increase of $9.7 million or 6 percent compared to the previous quarter, led by an increase in trust fees and commissions.
  • Operating expense increased $6.1 million or 2 percent to $252.6 million. Personnel expense increased $4.6 million and non-personnel expense increased $1.6 million.
  • A $4.0 million provision for credit losses was recorded in the third quarter of 2018.  Net charge-offs were $9.0 million in the third quarter compared to $10.5 million in the previous quarter.
  • Combined allowance for credit losses totaled $213 million or 1.16 percent of outstanding loans compared to $218 million or 1.21 percent of outstanding loans in the previous quarter.
  • Average loans increased $453 million while period-end loans increased $346 million to $18.3 billion.
  • Common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.37 percent and leverage ratio was 9.90 percent.
Third Quarter 2018 Business Segment Highlights 
Commercial Banking
  • Contributed $85.0 million to net income, down $2.6 million or 3 percent compared to the prior quarter.
  • Net interest revenue remained consistent compared to the second quarter of 2018 at $145 million.
  • Fees and commissions revenue decreased $3.5 million or 8 percent and operating expenses increased $1.7 million or 3 percent.
  • Average loans increased $421 million or 3 percent.
   Consumer Banking
  • Contributed $9.2 million to net income, up $3.1 million, primarily due to improved hedge performance related to mortgage servicing rights.
  • Net interest revenue increased $820 thousand or 2 percent.
  • Fees and commissions revenue decreased $2.3 million or 5 percent and operating expenses decreased $2.7 million or 5 percent.
   Wealth Management
  • Contributed $29.3 million to net income, up 44 percent compared to the prior quarter.
  • Net interest revenue remained consistent compared to the prior quarter at $29.4 million.
  • Fees and commissions revenue increased $13.1 million or 19 percent due to a fee earned from the sale of client assets in the third quarter of 2018 while operating expenses increased only 1 percent.
  • Average loans grew $26.6 million or 2 percent.
  • Assets under management or administration were $77.6 billion at September 30, 2018 compared to $78.9 billion at June 30, 2018. Fiduciary assets totaled $45.6 billion at September 30, 2018 and $46.5 billion at June 30, 2018.


Net Interest Revenue

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

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

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

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

Fees and Commissions Revenue

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

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

Operating Expense

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

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

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

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

Loans, Deposits and Capital

Loans

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

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

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

Deposits

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

Capital

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

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

Credit Quality

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

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

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

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

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

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

Commercial Banking

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

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

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

Consumer Banking

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

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

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

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

Wealth Management

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

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

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

Conference Call and Webcast

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

About BOK Financial Corporation

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

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

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

BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
 Sept. 30, 2018 June 30, 2018 Sept. 30, 2017
ASSETS     
Cash and due from banks$815,458  $585,801  $547,203 
Interest-bearing cash and cash equivalents430,789  872,999  1,926,779 
Trading securities1,613,400  1,909,615  614,117 
Investment securities374,039  392,013  466,562 
Available for sale debt securities8,072,014  8,162,866  8,383,199 
Fair value option securities452,150  482,227  819,531 
Restricted equity securities311,189  347,721  347,542 
Residential mortgage loans held for sale175,866  223,301  275,643 
Loans:     
Commercial11,576,101  11,349,039  10,795,934 
Commercial real estate3,804,675  3,712,220  3,518,142 
Residential mortgage1,971,742  1,942,250  1,945,750 
Personal996,941  1,000,187  947,008 
Total loans18,349,459  18,003,696  17,206,834 
Allowance for loan losses(210,569) (215,142) (247,703)
Loans, net of allowance18,138,890  17,788,554  16,959,131 
Premises and equipment, net327,129  320,810  320,060 
Receivables277,738  212,893  173,990 
Goodwill447,430  453,093  446,697 
Intangible assets, net33,370  28,273  39,013 
Mortgage servicing rights284,673  278,719  245,858 
Real estate and other repossessed assets, net24,515  27,891  32,535 
Derivative contracts, net349,481  373,373  352,559 
Cash surrender value of bank-owned life insurance323,628  321,024  314,201 
Receivable on unsettled securities sales421,313  604,552  370,486 
Other assets416,792  447,382  370,409 
TOTAL ASSETS$33,289,864  $33,833,107  $33,005,515 
      
LIABILITIES AND EQUITY     
Deposits:     
Demand$9,063,623  $9,373,959  $9,185,481 
Interest-bearing transaction9,990,219  10,164,099  10,025,084 
Savings502,601  503,474  465,225 
Time2,075,846  2,127,732  2,172,289 
Total deposits21,632,289  22,169,264  21,848,079 
Funds purchased and repurchase agreements790,741  880,027  390,545 
Other borrowings6,025,483  5,929,445  6,241,275 
Subordinated debentures144,707  144,697  144,668 
Accrued interest, taxes and expense231,592  160,568  152,029 
Due on unsettled securities purchases414,283  571,034  176,498 
Derivative contracts, net252,387  234,856  336,327 
Other liabilities172,622  167,171  201,655 
TOTAL LIABILITIES29,664,104  30,257,062  29,491,076 
Shareholders' equity:     
Capital, surplus and retained earnings3,777,394  3,688,736  3,482,057 
Accumulated other comprehensive gain (loss)(162,362) (135,305) 6,757 
TOTAL SHAREHOLDERS' EQUITY3,615,032  3,553,431  3,488,814 
Non-controlling interests10,728  22,614  25,625 
TOTAL EQUITY3,625,760  3,576,045  3,514,439 
TOTAL LIABILITIES AND EQUITY$33,289,864  $33,833,107  $33,005,515 


AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Three Months Ended
 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sept. 30, 2017
ASSETS         
Interest-bearing cash and cash equivalents$688,872  $1,673,387  $2,059,517  $1,976,395  $1,965,645 
Trading securities1,762,794  1,482,302  933,404  560,321  491,613 
Investment securities379,566  399,088  441,207  462,869  475,705 
Available for sale debt securities8,129,214  8,163,142  8,236,938  8,435,916  8,428,353 
Fair value option securities469,398  487,192  626,251  792,647  684,571 
Restricted equity securities328,842  348,546  349,176  337,673  328,677 
Residential mortgage loans held for sale207,488  218,600  199,380  257,927  256,343 
Loans:         
Commercial11,484,200  11,189,899  10,871,569  10,751,235  10,827,198 
Commercial real estate3,774,470  3,660,166  3,491,335  3,485,583  3,528,330 
Residential mortgage1,956,089  1,915,015  1,937,198  1,976,860  1,951,385 
Personal989,026  986,162  961,379  967,329  949,750 
Total loans18,203,785  17,751,242  17,261,481  17,181,007  17,256,663 
Allowance for loan losses(214,160) (222,856) (228,996) (246,143) (250,590)
Total loans, net17,989,625  17,528,386  17,032,485  16,934,864  17,006,073 
Total earning assets29,955,799  30,300,643  29,878,358  29,758,612  29,636,980 
Cash and due from banks578,905  571,333  564,585  576,737  546,653 
Derivative contracts, net294,126  318,375  278,694  292,961  238,583 
Cash surrender value of bank-owned life insurance322,038  319,507  317,334  315,034  313,079 
Receivable on unsettled securities sales768,785  618,240  998,803  821,275  608,412 
Other assets1,776,164  1,777,937  1,687,178  1,687,496  1,664,463 
TOTAL ASSETS$33,695,817  $33,906,035  $33,724,952  $33,452,115  $33,008,170 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$9,325,002  $9,223,327  $9,151,272  $9,417,351  $9,389,849 
Interest-bearing transaction10,010,031  10,189,354  10,344,469  10,142,744  10,088,522 
Savings503,821  503,671  480,110  466,496  464,130 
Time2,097,441  2,138,880  2,151,044  2,134,469  2,176,820 
Total deposits21,936,295  22,055,232  22,126,895  22,161,060  22,119,321 
Funds purchased and repurchase agreements1,193,583  593,250  532,412  488,330  411,286 
Other borrowings5,765,440  6,497,020  6,326,967  6,209,903  6,162,641 
Subordinated debentures144,702  144,692  144,682  144,673  144,663 
Derivative contracts, net185,029  235,543  223,373  288,408  221,371 
Due on unsettled securities purchases544,263  527,804  558,898  332,155  145,977 
Other liabilities311,605  340,322  333,151  312,196  318,270 
TOTAL LIABILITIES30,080,917  30,393,863  30,246,378  29,936,725  29,523,529 
Total equity3,614,900  3,512,172  3,478,574  3,515,390  3,484,641 
TOTAL LIABILITIES AND EQUITY$33,695,817  $33,906,035  $33,724,952  $33,452,115  $33,008,170 


STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2018 2017 2018 2017
        
Interest revenue$303,247  $255,413  $862,834  $716,984 
Interest expense62,364  36,961  163,653  92,146 
Net interest revenue240,883  218,452  699,181  624,838 
Provision for credit losses4,000    (1,000)  
Net interest revenue after provision for credit losses236,883  218,452  700,181  624,838 
Other operating revenue:       
Brokerage and trading revenue23,086  33,169  80,222  98,556 
Transaction card revenue121,396  22,929  63,361  61,115 
Fiduciary and asset management revenue57,514  40,687  141,045  121,126 
Deposit service charges and fees27,765  28,191  82,753  84,390 
Mortgage banking revenue23,536  24,890  75,907  80,357 
Other revenue14,213  13,670  41,061  40,406 
Total fees and commissions167,510  163,536  484,349  485,950 
Other gains (losses), net1,441  (1,283) 4,760  8,452 
Gain (loss) on derivatives, net(2,847) 1,033  (11,589) 3,824 
Gain (loss) on fair value option securities, net(4,385) 661  (25,290) 1,505 
Change in fair value of mortgage servicing rights5,972  (639) 28,901  (5,726)
Gain (loss) on available for sale securities, net250  2,487  (802) 4,916 
Total other operating revenue167,941  165,795  480,329  498,921 
Other operating expense:       
Personnel143,531  147,910  422,425  428,079 
Business promotion7,620  7,105  21,316  21,560 
Professional fees and services13,209  11,887  38,387  35,723 
Net occupancy and equipment23,394  21,325  70,201  64,074 
Insurance6,232  6,005  19,070  13,098 
Data processing and communications131,665  27,412  87,221  79,222 
Printing, postage and supplies3,837  3,917  11,937  11,908 
Net losses and operating expenses of repossessed assets4,044  6,071  14,471  9,347 
Amortization of intangible assets1,603  1,744  4,289  5,349 
Mortgage banking costs11,741  13,450  34,780  38,525 
Other expense5,741  9,193  19,426  25,308 
Total other operating expense252,617  256,019  743,523  732,193 
        
Net income before taxes152,207  128,228  436,987  391,566 
Federal and state income taxes34,662  42,438  98,940  128,246 
        
Net income117,545  85,790  338,047  263,320 
Net income attributable to non-controlling interests289  141  857  1,168 
Net income attributable to BOK Financial Corporation shareholders$117,256  $85,649  $337,190  $262,152 
        
Average shares outstanding:       
Basic64,901,095  64,742,822  64,883,319  64,729,391 
Diluted64,934,351  64,805,172  64,919,728  64,793,893 
        
Net income per share:       
Basic$1.79  $1.31  $5.15  $4.01 
Diluted$1.79  $1.31  $5.15  $4.00 

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

FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
 Three Months Ended
 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sept. 30, 2017
Capital:         
Period-end shareholders' equity$3,615,032  $3,553,431  $3,495,029  $3,495,367  $3,488,814 
Risk weighted assets$27,398,072  $27,004,559  $26,025,660  $25,733,711  $25,409,728 
Risk-based capital ratios:         
Common equity tier 112.07% 11.92% 12.06% 12.05% 11.90%
Tier 112.07% 11.92% 12.06% 12.05% 11.90%
Total capital13.37% 13.26% 13.49% 13.54% 13.47%
Leverage ratio9.90% 9.57% 9.40% 9.31% 9.30%
Tangible common equity ratio19.55% 9.21% 9.18% 9.50% 9.23%
          
Common stock:         
Book value per share$55.25  $54.30  $53.39  $53.45  $53.30 
Tangible book value per share47.90  46.95  46.10  46.17  45.88 
Market value per share:         
High$105.22  $106.65  $107.00  $93.97  $90.69 
Low$92.40  $92.39  $89.82  $79.67  $77.10 
Cash dividends paid$32,591  $29,340  $29,342  $29,328  $28,655 
Dividend payout ratio27.79% 25.65% 27.80% 40.46% 33.46%
Shares outstanding, net65,434,258  65,439,090  65,459,505  65,394,937  65,456,786 
Stock buy-back program:         
Shares repurchased  8,257  82,583  80,000   
Amount$  $824  $7,584  $7,403  $ 
Average price per share$  $99.84  $91.83  $92.54  $ 
          
Performance ratios (quarter annualized):
Return on average assets1.38% 1.35% 1.27% 0.86% 1.03%
Return on average equity12.95% 13.14% 12.39% 8.24% 9.83%
Net interest margin3.21% 3.17% 2.99% 2.97% 3.01%
Efficiency ratio361.41% 61.68% 65.09% 66.07% 65.92%
          
Reconciliation of non-GAAP measures:
1  Tangible common equity ratio:         
Total shareholders' equity$3,615,032  $3,553,431  $3,495,029  $3,495,367  $3,488,814 
Less: Goodwill and intangible assets, net480,800  481,366  477,088  476,088  485,710 
Tangible common equity$3,134,232  $3,072,065  $3,017,941  $3,019,279  $3,003,104 
          
Total assets$33,289,864  $33,833,107  $33,361,492  $32,272,160  $33,005,515 
Less: Goodwill and intangible assets, net480,800  481,366  477,088  476,088  485,710 
Tangible assets$32,809,064  $33,351,741  $32,884,404  $31,796,072  $32,519,805 
          
Tangible common equity ratio9.55% 9.21% 9.18% 9.50% 9.23%
          
Other data:         
Fiduciary assets$45,560,107  $46,531,900  $46,648,290  $48,761,477  $45,177,185 
Tax equivalent interest$1,894  $1,983  $2,010  $4,131  $4,314 
Net unrealized gain (loss) on available for sale securities$(216,793) $(180,602) $(148,247) $(47,497) $14,061 
          
Mortgage banking:         
Mortgage production revenue$7,250  $9,915  $9,452  $7,786  $8,329 
          
Mortgage loans funded for sale$651,076  $773,910  $664,958  $840,080  $832,796 
Add: current period-end outstanding commitments197,752  251,231  298,318  222,919  334,337 
Less: prior period end outstanding commitments251,231  298,318  222,919  334,337  362,088 
Total mortgage production volume$597,597  $726,823  $740,357  $728,662  $805,045 
          
Mortgage loan refinances to mortgage loans funded for sale23% 22% 42% 47% 38%
Gain on sale margin1.21% 1.36% 1.28% 1.07% 1.03%
          
Mortgage servicing revenue$16,286  $16,431  $16,573  $16,576  $16,561 
Average outstanding principal balance of mortgage loans serviced for others21,895,041  21,986,065  22,027,726  22,054,877  22,079,177 
Average mortgage servicing revenue rates0.30% 0.30% 0.31% 0.30% 0.30%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$(2,843) $(3,070) $(5,698) $(3,057) $1,025 
Gain (loss) on fair value option securities, net(4,385) (3,341) (17,564) (4,238) 661 
Gain (loss) on economic hedge of mortgage servicing rights(7,228) (6,411) (23,262) (7,295) 1,686 
Gain (loss) on changes in fair value of mortgage servicing rights5,972  1,723  21,206  5,898  (639)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue(1,256) (4,688) (2,056) (1,397) 1,047 
Net interest revenue on fair value option securities21,100  1,203  1,800  2,656  2,543 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$(156) $(3,485) $(256) $1,259  $3,590 

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

QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
 Three Months Ended
 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sept. 30, 2017
          
Interest revenue$303,247  $294,180  $265,407  $255,767  $255,413 
Interest expense62,364  55,618  45,671  38,904  36,961 
Net interest revenue240,883  238,562  219,736  216,863  218,452 
Provision for credit losses4,000    (5,000) (7,000)  
Net interest revenue after provision for credit losses236,883  238,562  224,736  223,863  218,452 
Other operating revenue:         
Brokerage and trading revenue23,086  26,488  30,648  33,045  33,169 
Transaction card revenue121,396  20,975  20,990  20,028  22,929 
Fiduciary and asset management revenue57,514  41,699  41,832  41,767  40,687 
Deposit service charges and fees27,765  27,827  27,161  27,685  28,191 
Mortgage banking revenue23,536  26,346  26,025  24,362  24,890 
Other revenue14,213  14,518  12,330  11,762  13,670 
Total fees and commissions167,510  157,853  158,986  158,649  163,536 
Other gains (losses), net1,441  3,983  (664) 552  (1,283)
Gain (loss) on derivatives, net(2,847) (3,057) (5,685) (3,045) 1,033 
Gain (loss) on fair value option securities, net(4,385) (3,341) (17,564) (4,238) 661 
Change in fair value of mortgage servicing rights5,972  1,723  21,206  5,898  (639)
Gain (loss) on available for sale securities, net250  (762) (290) (488) 2,487 
Total other operating revenue167,941  156,399  155,989  157,328  165,795 
Other operating expense:         
Personnel143,531  138,947  139,947  145,329  147,910 
Business promotion7,620  7,686  6,010  7,317  7,105 
Charitable contributions to BOKF Foundation      2,000   
Professional fees and services13,209  14,978  10,200  15,344  11,887 
Net occupancy and equipment23,394  22,761  24,046  22,403  21,325 
Insurance6,232  6,245  6,593  6,555  6,005 
Data processing and communications131,665  27,739  27,817  28,903  27,412 
Printing, postage and supplies3,837  4,011  4,089  3,781  3,917 
Net losses (gains) and operating expenses of repossessed assets4,044  2,722  7,705  340  6,071 
Amortization of intangible assets1,603  1,386  1,300  1,430  1,744 
Mortgage banking costs11,741  12,890  10,149  14,331  13,450 
Other expense5,741  7,111  6,574  6,746  9,193 
Total other operating expense252,617  246,476  244,430  254,479  256,019 
Net income before taxes152,207  148,485  136,295  126,712  128,228 
Federal and state income taxes34,662  33,330  30,948  54,347  42,438 
Net income117,545  115,155  105,347  72,365  85,790 
Net income (loss) attributable to non-controlling interests289  783  (215) (127) 141 
Net income attributable to BOK Financial Corporation shareholders$117,256  $114,372  $105,562  $72,492  $85,649 
          
Average shares outstanding:         
Basic64,901,095  64,901,975  64,847,334  64,793,005  64,742,822 
Diluted64,934,351  64,937,226  64,888,033  64,843,179  64,805,172 
Net income per share:         
Basic$1.79  $1.75  $1.61  $1.11  $1.31 
Diluted$1.79  $1.75  $1.61  $1.11  $1.31 

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

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


LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sept. 30, 2017
          
Oklahoma:         
Commercial$3,609,109  $3,465,407  $3,265,013  $3,238,720  $3,408,973 
Commercial real estate651,315  662,665  668,031  682,037  712,915 
Residential mortgage1,429,843  1,403,658  1,419,281  1,435,432  1,405,900 
Personal376,201  362,846  353,128  342,212  322,320 
Total Oklahoma6,066,468  5,894,576  5,705,453  5,698,401  5,850,108 
          
Texas:         
Commercial5,115,646  4,922,451  4,715,841  4,520,401  4,434,595 
Commercial real estate1,354,679  1,336,101  1,254,421  1,261,864  1,236,702 
Residential mortgage253,265  243,400  229,761  233,675  229,993 
Personal381,452  394,021  363,608  375,084  375,173 
Total Texas7,105,042  6,895,973  6,563,631  6,391,024  6,276,463 
          
New Mexico:         
Commercial325,048  305,167  315,701  343,296  367,747 
Commercial real estate392,494  386,878  348,485  341,282  319,208 
Residential mortgage88,110  90,581  93,490  98,018  101,983 
Personal11,659  11,107  11,667  11,721  12,953 
Total New Mexico817,311  793,733  769,343  794,317  801,891 
          
Arkansas:         
Commercial102,237  93,217  94,430  95,644  91,051 
Commercial real estate106,701  90,807  88,700  87,393  80,917 
Residential mortgage7,278  6,927  7,033  6,596  6,318 
Personal12,126  12,331  9,916  9,992  10,388 
Total Arkansas228,342  203,282  200,079  199,625  188,674 
          
Colorado:         
Commercial1,132,500  1,165,721  1,180,655  1,130,714  1,124,200 
Commercial real estate354,543  267,065  210,801  174,201  186,427 
Residential mortgage68,694  64,839  64,530  63,350  63,734 
Personal56,999  60,504  63,118  63,115  60,513 
Total Colorado1,612,736  1,558,129  1,519,104  1,431,380  1,434,874 
          
Arizona:         
Commercial621,658  681,852  624,106  687,792  634,809 
Commercial real estate666,562  710,784  672,319  660,094  706,188 
Residential mortgage44,659  47,010  39,227  41,771  40,730 
Personal67,280  65,541  57,023  57,140  55,050 
Total Arizona1,400,159  1,505,187  1,392,675  1,446,797  1,436,777 
          
Kansas/Missouri:         
Commercial669,903  715,224  723,921  717,408  734,559 
Commercial real estate278,381  257,920  264,025  273,116  275,785 
Residential mortgage79,893  85,835  92,447  94,844  97,092 
Personal91,224  93,837  107,172  106,512  110,611 
Total Kansas/Missouri1,119,401  1,152,816  1,187,565  1,191,880  1,218,047 
          
TOTAL BOK FINANCIAL$18,349,459  $18,003,696  $17,337,850  $17,153,424  $17,206,834 

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

DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sept. 30, 2017
Oklahoma:         
Demand$3,564,307  $3,867,933  $4,201,842  $3,885,008  $4,061,612 
Interest-bearing:         
Transaction6,010,972  5,968,460  6,051,302  5,901,293  5,909,259 
Savings288,080  289,202  289,351  265,870  265,023 
Time1,128,810  1,207,471  1,203,534  1,092,133  1,131,547 
Total interest-bearing7,427,862  7,465,133  7,544,187  7,259,296  7,305,829 
Total Oklahoma10,992,169  11,333,066  11,746,029  11,144,304  11,367,441 
          
Texas:         
Demand3,353,248  3,317,656  3,015,869  3,239,098  3,094,184 
Interest-bearing:         
Transaction2,181,382  2,168,488  2,208,480  2,397,071  2,272,987 
Savings97,909  97,809  98,852  93,620  93,400 
Time453,119  445,500  475,967  502,879  521,072 
Total interest-bearing2,732,410  2,711,797  2,783,299  2,993,570  2,887,459 
Total Texas6,085,658  6,029,453  5,799,168  6,232,668  5,981,643 
          
New Mexico:         
Demand722,188  770,974  695,060  663,353  659,793 
Interest-bearing:         
Transaction593,760  586,593  555,414  552,393  551,884 
Savings57,794  59,415  60,596  55,647  53,532 
Time221,513  212,689  216,306  216,743  224,773 
Total interest-bearing873,067  858,697  832,316  824,783  830,189 
Total New Mexico1,595,255  1,629,671  1,527,376  1,488,136  1,489,982 
          
Arkansas:         
Demand36,579  39,896  35,291  30,384  31,442 
Interest-bearing:         
Transaction128,001  143,298  94,206  85,095  126,746 
Savings1,826  1,885  1,960  1,881  1,876 
Time10,214  10,771  11,878  14,045  14,434 
Total interest-bearing140,041  155,954  108,044  101,021  143,056 
Total Arkansas176,620  195,850  143,335  131,405  174,498 
          
Colorado:         
Demand593,442  529,912  521,963  633,714  540,300 
Interest-bearing:         
Transaction622,520  701,362  687,785  657,629  628,807 
Savings40,308  38,176  37,232  35,223  34,776 
Time217,628  208,049  215,330  224,962  231,927 
Total interest-bearing880,456  947,587  940,347  917,814  895,510 
Total Colorado1,473,898  1,477,499  1,462,310  1,551,528  1,435,810 
          
Arizona:         
Demand370,299  387,952  330,196  334,701  335,740 
Interest-bearing:         
Transaction130,837  194,353  248,337  274,846  174,010 
Savings3,559  3,935  4,116  3,343  4,105 
Time23,927  22,447  21,009  20,394  20,831 
Total interest-bearing158,323  220,735  273,462  298,583  198,946 
Total Arizona528,622  608,687  603,658  633,284  534,686 
          
Kansas/Missouri:         
Demand423,560  459,636  505,802  457,080  462,410 
Interest-bearing:         
Transaction322,747  401,545  381,447  382,066  361,391 
Savings13,125  13,052  13,845  13,574  12,513 
Time20,635  20,805  22,230  27,260  27,705 
Total interest-bearing356,507  435,402  417,522  422,900  401,609 
Total Kansas/Missouri780,067  895,038  923,324  879,980  864,019 
          
TOTAL BOK FINANCIAL$21,632,289  $22,169,264  $22,205,200  $22,061,305  $21,848,079 


NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
 Three Months Ended
 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 30, 2017 Sept. 30, 2017
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents1.98% 1.86% 1.57% 1.27% 1.29%
Trading securities3.98% 3.63% 3.40% 3.38% 3.47%
Investment securities4.06% 3.95% 3.78% 3.98% 3.86%
Available for sale securities2.37% 2.30% 2.23% 2.21% 2.17%
Fair value option securities3.25% 3.16% 2.95% 2.90% 2.97%
Restricted equity securities6.36% 6.21% 5.86% 5.87% 5.87%
Residential mortgage loans held for sale4.27% 4.28% 3.71% 3.72% 3.36%
Loans4.80% 4.80% 4.45% 4.29% 4.31%
Allowance for loan losses         
Loans, net of allowance4.86% 4.86% 4.51% 4.35% 4.38%
Total tax-equivalent yield on earning assets4.04% 3.91% 3.61% 3.49% 3.50%
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
Interest-bearing transaction0.67% 0.55% 0.45% 0.35% 0.32%
Savings0.09% 0.08% 0.07% 0.07% 0.08%
Time1.40% 1.29% 1.25% 1.17% 1.16%
Total interest-bearing deposits0.77% 0.66% 0.57% 0.48% 0.45%
Funds purchased and repurchase agreements1.25% 0.53% 0.40% 0.28% 0.25%
Other borrowings2.20% 1.96% 1.60% 1.36% 1.29%
Subordinated debt5.55% 5.67% 5.61% 5.55% 5.68%
Total cost of interest-bearing liabilities1.25% 1.11% 0.93% 0.79% 0.75%
Tax-equivalent net interest revenue spread2.79% 2.80% 2.68% 2.70% 2.75%
Effect of noninterest-bearing funding sources and other0.42% 0.37% 0.31% 0.27% 0.26%
Tax-equivalent net interest margin3.21% 3.17% 2.99% 2.97% 3.01%

Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.

CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
 Three Months Ended
 Sept. 30, 2018 June 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sept. 30, 2017
Nonperforming assets:         
Nonaccruing loans:         
Commercial$109,490  $120,978  $131,460  $137,303  $176,900 
Commercial real estate1,316  1,996  2,470  2,855  2,975 
Residential mortgage41,917  42,343  45,794  47,447  45,506 
Personal269  340  340  269  255 
Total nonaccruing loans152,992  165,657  180,064  187,874  225,636 
Accruing renegotiated loans guaranteed by U.S. government agencies83,347  75,374  74,418  73,994  69,440 
Real estate and other repossessed assets24,515  27,891  23,652  28,437  32,535 
Total nonperforming assets$260,854  $268,922  $278,134  $290,305  $327,611 
Total nonperforming assets excluding those guaranteed by U.S. government agencies$169,717  $185,981  $194,833  $207,132  $249,280 
          
Nonaccruing loans by loan class:         
Commercial:         
Energy$54,033  $65,597  $89,942  $92,284  $110,683 
Healthcare15,704  16,125  15,342  14,765  24,446 
Wholesale/retail9,249  14,095  2,564  2,574  1,893 
Manufacturing9,202  2,991  3,002  5,962  9,059 
Services4,097  4,377  2,109  2,620  1,174 
Other commercial and industrial17,205  17,793  18,501  19,098  29,645 
Total commercial109,490  120,978  131,460  137,303  176,900 
Commercial real estate:         
Retail777  1,068  264  276  289 
Residential construction and land development350  350  1,613  1,832  1,924 
Office  275  275  275  275 
Industrial         
Multifamily         
Other commercial real estate189  303  318  472  487 
Total commercial real estate1,316  1,996  2,470  2,855  2,975 
Residential mortgage:         
Permanent mortgage22,855  23,105  24,578  25,193  24,623 
Permanent mortgage guaranteed by U.S. government agencies7,790  7,567  8,883  9,179  8,891 
Home equity11,272  11,671  12,333  13,075  11,992 
Total residential mortgage41,917  42,343  45,794  47,447  45,506 
Personal269  340  340  269  255 
Total nonaccruing loans$152,992  $165,657  $180,064  $187,874  $225,636 
          
Performing loans 90 days past due1$518  $879  $90  $633  $253 
          
Gross charge-offs$11,073  $15,105  $2,890  $14,749  $5,825 
Recoveries(2,092) (4,578) (1,576) (3,061) (2,437)
Net charge-offs$8,981  $10,527  $1,314  $11,688  $3,388 
          
Provision for credit losses$4,000  $  $(5,000) $(7,000) $ 
          
Allowance for loan losses to period end loans1.15% 1.19% 1.29% 1.34% 1.44%
Combined allowance for credit losses to period end loans1.16% 1.21% 1.32% 1.37% 1.47%
Nonperforming assets to period end loans and repossessed assets1.42% 1.49% 1.60% 1.69% 1.90%
Net charge-offs (annualized) to average loans0.20% 0.24% 0.03% 0.27% 0.08%
Allowance for loan losses to nonaccruing loans1145.02% 136.09% 130.84% 129.09% 114.28%
Combined allowance for credit losses to nonaccruing loans1146.41% 137.63% 133.25% 131.18% 116.78%

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

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

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