TULSA, Okla., Jan. 20, 2021 (GLOBE NEWSWIRE) -- BOK Financial (NASDAQ: BOKF) today reported net earnings applicable to common shareholders for the fourth quarter of 2020 of $154.2 million, or $2.21 per diluted common share.
CEO Commentary
Steven G. Bradshaw, president and chief executive officer stated, “Despite the macroeconomic challenges in the first half of the year, BOK Financial ended 2020 on a high note. The fourth quarter was the second-consecutive, record earnings quarter for the company, and ultimately culminated in record annual revenue in our wealth management and mortgage businesses, proving the value of our diversified revenue earnings model during times of economic uncertainty.”
Bradshaw continued, “In addition to our earnings success, our differentiated credit culture was also a standout in the fourth quarter and throughout 2020. We once again proved the depth of our energy expertise as we navigated another steep commodities downturn with net charge-off performance near the top of our peer group of energy banks. Our success in 2020 proves why diversified revenue and strong credit culture have been the company’s defining hallmarks for decades. These guiding principles give us confidence for continued success in 2021.”
2020 Financial Highlights
- Net income for the year ended December 31, 2020 totaled $435.0 million or $6.19 per diluted share compared to $500.8 million or $7.03 per diluted share for the year ended December 31, 2019. A pre-tax provision for expected credit losses of $222.6 million was included in 2020 while a pre-tax provision for incurred losses of $44.0 million was included in 2019. The Company adopted the current expected credit loss ("CECL") model on January 1, 2020.
- Net interest revenue totaled $1.1 billion, consistent with the prior year. Net interest margin was 2.83 percent for 2020 compared to 3.11 percent for 2019. The Federal Reserve reduced the federal funds rate to near zero early in the year putting pressure on the margin in 2020.
- Fees and commissions revenue increased $108.1 million to $810.3 million in 2020, led by strong growth in mortgage banking revenue and brokerage and trading revenue. Declining mortgage interest rates have propelled mortgage production and related trading activities.
- Operating expense totaled $1.2 billion in 2020, an increase of $33.6 million. Incentive compensation expense increased $41.7 million, largely related to the increase in trading and mortgage activity in 2020. This increase was partially offset by decreased business promotion expenses of $21.2 million related to lower advertising and travel and entertainment costs as a result of the ongoing pandemic.
- The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $24.9 million during 2020 compared to an economic cost of $17.9 million during 2019.
- Period-end loans were up $1.3 billion to $23.0 billion while average loans increased $1.3 billion to $23.4 billion. We are actively participating in programs initiated by the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), including the Small Business Administration's Paycheck Protection Program ("PPP"). PPP loans accounted for $1.7 billion at December 31, 2020 and averaged $1.4 billion for 2020.
- Period-end deposits increased $8.5 billion to $36.1 billion and average deposits increased $7.1 billion to $32.8 billion. Deposit growth was largely due to customers retaining higher balances in the current economic environment combined with increases due to various COVID-19 related government program stimulus payments.
- Commercial Banking added $306.0 million to net income in 2020 compared to $374.8 million in 2019. Combined net interest and fee revenue decreased $69.3 million compared to the prior year. A decrease in net interest revenue, largely due to compressed loan spreads, was partially offset by growth in customer energy hedging revenue. Transaction card revenue also increased $3.7 million. An increase in financial institution customer contracts during 2020 provides opportunities for future growth. Operating expense increased $6.4 million. Increased non-personnel expense was partially offset by decreased incentive compensation costs. Charge-offs increased $30.5 million, primarily due to energy loans. Average loans for 2020 increased $621 million to $18.7 billion. Average deposits increased $4.0 billion to $14.3 billion. Government stimulus payments were received during the year from the PPP and other government programs and customers are retaining higher cash balances due to the uncertain economic environment.
- Consumer Banking added a record $95.4 million to net income during the year compared to $56.6 million in the prior year. Combined net interest and fee revenue increased $9.1 million over the prior year. Net interest revenue was significantly affected by lower yields on deposits sold to our Funds Management unit and compressed loan spreads. However, mortgage production revenue increased $83.1 million due to lower mortgage interest rates. Service charges declined $15.4 million as we waived certain fees in the midst of the pandemic. The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $24.9 million during 2020 compared to an economic cost of $17.9 million in 2019.
- With revenues surpassing $500 million, Wealth Management produced a record year, contributing $115.6 million to net income in 2020 compared to $95.3 million in 2019. Combined net interest and fee revenue increased $75.1 million over the prior year. Low mortgage interest rates significantly increased mortgage trading activity, which led to an increase in both trading interest income and brokerage and trading revenue. This increase was partially offset by lower yields on deposits sold to our Funds Management unit. We increased our trading pipeline to provide greater liquidity to the housing market during a time of record loan production volumes. Fiduciary and asset management revenue decreased $7.9 million compared to 2019. The low rate environment has put pressure on our mutual fund revenue streams, partially offset by increased trust and managed account fees from higher client asset balances. Operating expense increased $48.3 million, primarily due to incentive compensation driven by growth in our trading business. Average deposits grew $2.2 billion to $8.7 billion in 2020, led by growth in interest-bearing transaction deposits.
Fourth Quarter 2020 Financial Highlights
- Net income was $154.2 million or $2.21 per diluted share for the fourth quarter of 2020 and $154.0 million or $2.19 per diluted share for the third quarter of 2020. A negative pre-tax provision for expected credit losses of $6.5 million was recorded in the fourth quarter of 2020 compared to no provision in the prior quarter.
- Net interest revenue totaled $297.2 million, an increase of $25.5 million, largely due to a $5.1 billion increase in average trading securities. Net interest margin was 2.72 percent compared to 2.81 percent in the third quarter of 2020. The increase in the trading securities portfolio combined with the repricing of our available for sale securities portfolio at current interest rates decreased the net interest margin in the fourth quarter. The company has been proactive in reducing deposit costs and implementing LIBOR floors in loan agreements to support the margin.
- Fees and commissions revenue totaled $181.1 million, a decrease of $41.8 million. Brokerage and trading revenue decreased $30.0 million, largely due to a shift from trading revenue to interest income on trading securities. While still strong, mortgage banking revenue decreased $12.7 million compared to the prior quarter, primarily the result of seasonal declines in production coupled with market driven margin compression.
- Operating expense was $300.7 million, consistent with the prior quarter. Personnel expense decreased $3.7 million, primarily due to lower incentive compensation and a seasonal decrease in employee benefits costs. Non-personnel expense increased $3.1 million compared to the third quarter of 2020. We made a $6.0 million charitable contribution to the BOKF Foundation in the fourth quarter. This increase, along with an increase in business promotion expense, was partially offset by lower FDIC insurance expense and net losses and expenses on repossessed assets.
- Period-end loans decreased $796 million to $23.0 billion at December 31, 2020, primarily due to paydowns of commercial loans and PPP loans. Average loans were $23.4 billion, a $663 million decrease compared to the third quarter.
- The allowance for loan losses totaled $389 million or 1.69 percent of outstanding loans at December 31, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $426 million or 1.85 percent of outstanding loans at December 31, 2020. Excluding PPP loans, the allowance for loan losses was 1.82 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.00 percent. Excluding PPP loans, the allowance for loan losses was $420 million or 1.93 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 2.06 percent of outstanding loans at September 30, 2020.
- Average deposits increased $883 million to $35.5 billion and period-end deposits increased $1.2 billion to $36.1 billion, largely due to growth in wealth management balances. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment.
- The company's common equity Tier 1 capital ratio was 11.94 percent at December 31, 2020. In addition, the company's Tier 1 capital ratio was 11.94 percent, total capital ratio was 13.81 percent, and leverage ratio was 8.28 percent at December 31, 2020. At September 30, 2020, the company's common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent.
- The company repurchased 665,100 shares of common stock at an average price of $63.82 a share in the fourth quarter.
- Commercial Banking contributed $74.9 million to net income in the fourth quarter of 2020, consistent with the third quarter. Combined net interest revenue decreased $8.9 million, primarily due to compressed loan spreads. This was partially offset by a decrease in net loans charged off of $6.4 million. Average Commercial Banking loans decreased $577 million due to purposeful deleveraging by our customers.
- Consumer Banking contributed $14.3 million to net income in the fourth quarter of 2020, a decrease of $12.0 million compared to the third quarter. Combined net interest and fee revenue decreased $15.1 million. Net interest revenue decreased $2.5 million, mainly due to lower yields on deposits sold to our Funds Management unit and compressed loan spreads. Fees and commissions revenue decreased $12.6 million due to normal seasonality in mortgage production combined with reduced gain on sale margins. While mortgage production revenue decreased, it remained a strong quarter for our mortgage banking business.
- Wealth Management contributed $28.4 million to net income in the fourth quarter of 2020, a decrease of $2.8 million compared to the third quarter. Combined net interest and fee revenue decreased $3.2 million. Deposit growth remains strong with total average deposits growing $500 million compared to the previous quarter. Assets under management or administration totaled $91.6 billion compared to $82.4 billion in the prior quarter.
Net Interest Revenue
Net interest revenue was $297.2 million for the fourth quarter of 2020, a $25.5 million increase compared to the third quarter of 2020, primarily due to the increase in average trading securities.
Average earning assets increased $4.8 billion compared to the third quarter of 2020. Average trading securities balances increased $5.1 billion due to continued growth in our trading of U.S. government issued mortgage-backed securities and timing of settlements. Average loan balances decreased $663 million, primarily from commercial loan payments. Available for sale securities increased $369 million and restricted equity securities increased $136 million. Average interest-bearing deposits grew by $676 million, primarily due to higher interest-bearing transaction deposits, partially offset by lower time deposits. Other borrowings increased $1.8 billion while funds purchased and repurchase agreements decreased $629 million.Net interest revenue was $297.2 million for the fourth quarter of 2020, a $25.5 million increase compared to the third quarter of 2020, primarily due to the increase in average trading securities.
Net interest margin was 2.72 percent compared to 2.81 percent in the third quarter of 2020. Growth in our trading securities portfolio contributed approximately $25.1 million to net interest revenue, but diluted the net interest margin by approximately 9 basis points. This, combined with the repricing of our available for sale securities portfolio to current interest rates has resulted in a decrease to net interest margin in the fourth quarter. However, the company has been proactive in reducing deposit costs and implementing LIBOR floors in loan agreements to support the margin.
The yield on average earning assets was 2.92 percent, a 12 basis point decrease from the prior quarter. The yield on the available for sale securities portfolio decreased 13 basis points to 1.98 percent. The loan portfolio yield increased 8 basis points to 3.68 percent due to the timing of loan fees and recovery of non-accrual interest. In addition, net purchase accounting discount accretion added $5.3 million or 9 basis points to the loan portfolio yield in the fourth quarter and $13.3 million or 22 basis points to the third quarter. Approximately $48 million of purchase accounting discount remains to be accreted.
Funding costs were 0.28 percent, down 3 basis points. The cost of interest-bearing deposits decreased 7 basis points to 0.19 percent. The cost of other borrowed funds was up 7 basis points to 0.38 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 8 basis points for the fourth quarter of 2020, consistent with the prior quarter.
Fees and Commissions Revenue
Fees and commissions revenue totaled $181.1 million for the fourth quarter of 2020, a decrease of $41.8 million compared to the third quarter of 2020. Brokerage and trading revenue decreased $30.0 million to $39.5 million, largely due to the shift of brokerage and trading fee revenue to net interest revenue. In addition, customer hedging revenue decreased $4.0 million, primarily due to decreased energy customer hedging activities. Investment banking revenue grew by $1.9 million, mainly due to timing of loan syndication activity.
Mortgage banking revenue decreased $12.7 million compared to the prior quarter. While mortgage interest rates remain at record low levels, mortgage production experienced a normal seasonal decline and margins also started to compress. The gain on sale margin decreased 41 basis points to 3.26 percent. Transaction card revenue decreased $1.6 million, primarily due to lower transaction volumes.Fees and commissions revenue totaled $181.1 million for the fourth quarter of 2020, a decrease of $41.8 million compared to the third quarter of 2020. Brokerage and trading revenue decreased $30.0 million to $39.5 million, largely due to the shift of brokerage and trading fee revenue to net interest revenue. In addition, customer hedging revenue decreased $4.0 million, primarily due to decreased energy customer hedging activities. Investment banking revenue grew by $1.9 million, mainly due to timing of loan syndication activity.
Fiduciary and asset management revenue increased $1.9 million, primarily driven by the increase in the fair value of assets under management in the fourth quarter.
Operating Expense
Total operating expense was $300.7 million for the fourth quarter of 2020, consistent with the third quarter of 2020.
Personnel expense decreased $3.7 million. Share based incentive compensation decreased $7.4 million from elevated levels in the prior quarter due to vesting assumption changes. This decrease was partially offset by growth in cash based incentive compensation and deferred compensation, which is largely offset by a decrease in the value of related investments included in Other gains (losses).
Non-personnel expense increased $3.1 million over the third quarter of 2020. We made a charitable contribution of $6.0 million to the BOKF Foundation in the fourth quarter as we continue to focus on the communities we serve and the extreme needs created by the pandemic. Business promotion expense increased $1.1 million, largely due to increased advertising expense, while other expense increased $3.3 million.
Net losses and expenses on repossessed assets decreased $5.1 million, primarily due to write-downs on a set of oil and gas properties and a retail commercial real estate property in the third quarter. Insurance expense also decreased $1.8 million while mortgage banking costs dropped by $1.0 million.
Loans, Deposits and Capital
Loans
Outstanding loans were $23.0 billion at December 31, 2020, a $796 million decrease compared to September 30, 2020, primarily due to payoffs of commercial loans and PPP loans.
Outstanding core commercial loan balances decreased $488 million or 4 percent compared to September 30, 2020, primarily due to continued pay downs as borrowers continue to reduce leverage during the time of economic uncertainty. Although the primary source of repayment of our commercial loan portfolio is the on-going cash flow from operations of the customer's business, loans are generally governed by a borrowing base and secured by the customer’s assets.
Energy loan balances decreased $248 million to $3.5 billion or 15 percent of total loans. Although the commodity price environment has improved considerably over the past few months, sourcing new loans remains a challenge in this environment and existing borrowers continue to pay down debt to reduce leverage. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 67 percent of committed production loans are secured by properties primarily producing oil. The remaining 33 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $2.4 billion at December 31, 2020, a $136 million increase over September 30, 2020, and a $524 million decrease compared to December 31, 2019, largely as a result of the semi-annual borrowing base redetermination process in the second and fourth quarters.
Healthcare sector loan balances decreased $20 million to $3.3 billion or 14 percent of total loans. Growth in loans to senior housing and care facilities was offset by a decrease in loans to hospital systems. Our healthcare sector loans primarily consist of $2.6 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally we loan to borrowers with a portfolio of multiple facilities that serves to help diversify risks specific to a single facility. The most recent stimulus bill passed last month, like the CARES Act, has multiple revenue enhancement measures for both hospitals and skilled nursing facilities as they manage through the risks of the virus.
General business loans decreased $183 million to $2.8 billion or 12 percent of total loans. General business loans include $1.6 billion of wholesale/retail loans and $701 million of loans from other commercial industries. Broad pay downs across our core commercial and industrial loan book contracted the portfolio.
Services loan balances decreased $37 million to $3.5 billion or 15 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, educational services, foundations and not-for-profit organizations and specialty trade contractors.
Although not a significant portion of our commercial portfolio, our services and general business loans also include areas we consider to be more exposed to the economic slowdown as a result of the social distancing measures in place to combat the COVID-19 pandemic such as entertainment and recreation, retail, hotels, churches, airline travel, and higher education that are dependent on large social gatherings to remain profitable. This represents less than 7 percent of our total portfolio. Some of these borrowers have participated in the PPP, which has provided some measure of relief. We will continue to monitor these areas closely in the coming months.
Commercial real estate loan balances were largely unchanged compared to September 30, 2020 and represent 20 percent of total loans at December 31, 2020. Loans secured by other commercial real estate properties increased $52 million to $559 million. Loans secured by industrial facilities increased $18 million to $811 million. Multifamily residential loans, our largest exposure in commercial real estate, decreased $59 million to $1.3 billion at December 31, 2020. Loans secured by office buildings decreased $14 million to $1.1 billion. Loans secured by retail facilities were $796 million at December 31, 2020, a $10 million increase over September 30. Loans secured by retail facilities and office buildings may be impacted by measures being taken to hinder the spread of the virus as well as changes in consumer behavior.
PPP loan balances decreased $415 million to $1.7 billion or 7 percent of total loans. The complexity of the forgiveness process and borrowers' reluctance to apply for forgiveness in hopes of further legislative action that would relax the requirements has made the forgiveness process slower than initially anticipated. The recent Economic Aid Act will provide substantial forgiveness process relief, particularly for those clients with existing loans of less than $150 thousand, which represents more the 70 percent of our total PPP loan volume. The Company expects to participate in the newest round of PPP, with largely the same strategy of focusing on our existing client base in order to timely meet our existing clients' needs.
Loans to individuals increased $103 million and represent 15 percent of total loans at December 31, 2020. Personal loans were up $64 million and residential mortgage loans guaranteed by U.S. government agencies increased $24 million. The Company may repurchase loans previously sold into GNMA mortgage pools when certain defined delinquency criteria are met. Because of this repurchase right, the Company is deemed to have regained effective control over these loans and must include them on the Consolidated Balance Sheet.
Deposits
Period-end deposits totaled $36.1 billion at December 31, 2020, a $1.2 billion increase over September 30, 2020. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment. Interest-bearing transaction account balances grew by $1.0 billion. Average deposits were $35.5 billion at December 31, 2020, an $883 million increase compared to September 30, 2020. Interest-bearing transaction deposits increased $1.0 billion.
Capital
The company's common equity Tier 1 capital ratio was 11.94 percent at December 31, 2020. In addition, the company's Tier 1 capital ratio was 11.94 percent, total capital ratio was 13.81 percent, and leverage ratio was 8.28 percent at December 31, 2020. We have elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period, which added 27 basis points to the company's common equity tier 1 capital ratio at December 31. At September 30, 2020, the company's common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent.
The company's tangible common equity ratio, a non-GAAP measure, was 9.02 percent at December 31, 2020 and 9.02 percent at September 30, 2020. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.
The company repurchased 665,100 shares of common stock at an average price of $63.82 a share in the fourth quarter. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.
Credit Quality
The Company adopted FASB Accounting Standard Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Assets Measured at Amortized Cost ("CECL") on January 1, 2020. CECL requires recognition of expected credit losses on assets carried at amortized cost over their expected lives. Our CECL models measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rate and West Texas Intermediate ("WTI") oil prices on a probability weighted basis.
We recorded a $6.5 million negative provision for credit losses in the fourth quarter of 2020. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to an improved economic outlook related to the anticipated impact of the on-going COVID-19 pandemic offset by changes in the probability weighting of the economic scenarios and other assumptions, resulted in a $3.0 million increase in the provision for credit losses from lending activities. Changes in the loan portfolio characteristics, including specific impairment and losses, risk grading and loan balances resulted in an $8.6 million decrease in the provision for credit losses from lending activities.
Our base case reasonable and supportable forecast assumes that the COVID-19 pandemic maintains its current trajectory with localized and state-level hotspots. This scenario assumes approval of several more vaccines through the first half of 2021, with a large share of the U.S. population vaccinated by the end of the third quarter of 2021. Regional shutdown and consumer risk aversion weigh negatively on the economic and employment recovery in the first quarter of 2021. However, widespread vaccine distribution helps boost consumer confidence and GDP recovers to pre-COVID levels by the third quarter of 2021. We expect a 4.1 percent increase in GDP over the next twelve months. Our forecasted civilian unemployment rate is 6.8 percent for the first quarter of 2021, improving to 6.3 percent by the fourth quarter of 2021. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of December 2020, averaging $46.80 per barrel over the next twelve months. The probability weighting of our base case reasonable and supportable forecast increased to 60 percent for the fourth quarter compared to 50 percent in the third quarter.
The probability weighting of our downside case reasonable and supportable forecast increased to 30 percent from 25 percent, while the probability weighting of our upside case reasonable and supportable forecast decreased to 10 percent from 25 percent in the third quarter. There continues to be a high level of uncertainty in the current economic outlook. Our downside case assumes additional waves and hotspot emerge throughout the first half of 2021 and more constrained distribution of vaccines not reaching widespread distribution until the first quarter of 2022. This results in no GDP growth over the next twelve months and unemployment rates remaining elevated throughout 2021.
The allowance for loan losses totaled $389 million or 1.69 percent of outstanding loans and 171 percent of nonaccruing loans at December 31, 2020, excluding residential mortgage loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $426 million or 1.85 percent of outstanding loans and 188 percent of nonaccruing loans at December 31, 2020. The combined allowance for credit losses attributed to energy was 3.61 percent of outstanding energy loans at December 31 compared to 4.30 at September 30. Excluding PPP loans, the allowance for loan losses was 1.82 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.00 percent.
At September 30, 2020, the allowance for loan losses was $420 million or 1.76 percent of outstanding loans and 195 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 1.88 percent of outstanding loans and 208 percent of nonaccruing loans.
Nonperforming assets totaled $477 million or 2.07 percent of outstanding loans and repossessed assets at December 31, 2020, compared to $417 million or 1.75 percent at September 30, 2020. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $317 million or 1.51 percent of outstanding loans and repossessed assets at December 31, 2020, up from $268 million or 1.25 percent at September 30, 2020.
Nonaccruing loans were $235 million or 1.10 percent of outstanding loans, excluding PPP loans, at December 31, 2020. Nonaccruing commercial loans totaled $167 million or 1.28 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $27 million or 0.58 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $40 million or 1.14 percent of outstanding loans to individuals.
Nonaccruing loans increased $14 million over September 30, 2020, primarily due to an increase in nonaccruing commercial real estate loans. New nonaccruing loans identified in the fourth quarter totaled $99 million, offset by $13 million in payments received, $18 million in charge-offs and $43 million of foreclosures.
Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $478 million at December 31, down from $623 million at September 30. Almost all potential problem loan classes were down compared to the prior quarter, led by potential problem energy and general business loans.
Net charge-offs were $16.7 million or 0.31 percent of average loans on an annualized basis for the fourth quarter of 2020, excluding PPP loans. Net charge-offs were 0.32 percent of average loans over the last four quarters. Net charge-offs were $22.4 million or 0.41 percent of average loans on an annualized basis for the third quarter of 2020, excluding PPP loans. Gross charge-offs were $18.3 million for the fourth quarter compared to $26.7 million for the previous quarter. Recoveries totaled $1.6 million for the fourth quarter of 2020 and $4.2 million for the third quarter of 2020.
Loans in deferral status have dropped to just below 1 percent of total loans from a peak of more than 7 percent. More than 90 percent of the loans that were deferred have now moved back to payment status.
Securities and Derivatives
The fair value of the available for sale securities portfolio totaled $13.1 billion at December 31, 2020, a $233 million increase compared to September 30, 2020. At December 31, 2020, the available for sale securities portfolio consisted primarily of $9.3 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.5 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2020, the available for sale securities portfolio had a net unrealized gain of $441 million compared to $481 million at September 30, 2020.
We hold an inventory of trading securities in support of sales to a variety of customers. At December 31, 2020, the trading securities portfolio totaled $4.7 billion compared to $2.2 billion in the prior quarter. We have increased our bond trading pipeline to provide greater liquidity to the housing market during a time of high mortgage loan production volumes.
The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities decreased $20 million to $115 million at December 31, 2020.
The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $6.5 million during the fourth quarter of 2020, including a $6.3 million increase in the fair value of mortgage servicing rights, $317 thousand decrease in the fair value of securities and derivative contracts held as an economic hedge, and $550 thousand of related net interest revenue.
Conference Call and Webcast
The company will hold a conference call at 9 a.m. Central time on January 20, 2021 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 # 13714612.
About BOK Financial Corporation
BOK Financial Corporation is a $47 billion regional financial services company headquartered in Tulsa, Oklahoma with $92 billion in assets under management and administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Milwaukee and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.
The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of December 31, 2020 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.
This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial Corporation, the financial services industry, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” “will,” “intends,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that acquisitions and growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These various forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in government, consumer or business responses to, and ability to treat or prevent further outbreak of the COVID-19 pandemic, changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial Corporation and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
| Dec. 31, 2020 | Sept. 30, 2020 | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 798,757 | $ | 658,612 | |||
| Interest-bearing cash and cash equivalents | 381,816 | 347,759 | |||||
| Trading securities | 4,707,975 | 2,245,480 | |||||
| Investment securities, net of allowance | 244,843 | 256,001 | |||||
| Available for sale securities | 13,050,665 | 12,817,269 | |||||
| Fair value option securities | 114,982 | 134,756 | |||||
| Restricted equity securities | 171,391 | 111,656 | |||||
| Residential mortgage loans held for sale | 252,316 | 295,290 | |||||
| Loans: | |||||||
| Commercial | 13,077,535 | 13,565,706 | |||||
| Commercial real estate | 4,698,538 | 4,693,700 | |||||
| Paycheck protection program | 1,682,310 | 2,097,325 | |||||
| Loans to individuals | 3,549,137 | 3,446,569 | |||||
| Total loans | 23,007,520 | 23,803,300 | |||||
| Allowance for loan losses | (388,640 | ) | (419,777 | ) | |||
| Loans, net of allowance | 22,618,880 | 23,383,523 | |||||
| Premises and equipment, net | 551,308 | 542,625 | |||||
| Receivables | 245,880 | 245,514 | |||||
| Goodwill | 1,048,091 | 1,048,091 | |||||
| Intangible assets, net | 113,436 | 118,524 | |||||
| Mortgage servicing rights | 101,172 | 97,644 | |||||
| Real estate and other repossessed assets, net | 90,526 | 52,847 | |||||
| Derivative contracts, net | 810,688 | 593,568 | |||||
| Cash surrender value of bank-owned life insurance | 398,758 | 396,497 | |||||
| Receivable on unsettled securities sales | 62,386 | 1,934,495 | |||||
| Other assets | 907,218 | 787,073 | |||||
| TOTAL ASSETS | $ | 46,671,088 | $ | 46,067,224 | |||
| LIABILITIES AND EQUITY | |||||||
| Deposits: | |||||||
| Demand | $ | 12,266,338 | $ | 12,047,338 | |||
| Interest-bearing transaction | 21,158,422 | 20,196,740 | |||||
| Savings | 751,992 | 720,949 | |||||
| Time | 1,967,128 | 2,007,973 | |||||
| Total deposits | 36,143,880 | 34,973,000 | |||||
| Funds purchased and repurchase agreements | 1,662,386 | 973,652 | |||||
| Other borrowings | 1,882,970 | 2,771,429 | |||||
| Subordinated debentures | 276,005 | 275,986 | |||||
| Accrued interest, taxes and expense | 323,667 | 335,914 | |||||
| Due on unsettled securities purchases | 257,627 | 641,817 | |||||
| Derivative contracts, net | 405,779 | 446,328 | |||||
| Other liabilities | 427,213 | 422,989 | |||||
| TOTAL LIABILITIES | 41,379,527 | 40,841,115 | |||||
| Shareholders' equity: | |||||||
| Capital, surplus and retained earnings | 4,930,398 | 4,853,617 | |||||
| Accumulated other comprehensive gain | 335,868 | 365,170 | |||||
| TOTAL SHAREHOLDERS' EQUITY | 5,266,266 | 5,218,787 | |||||
| Non-controlling interests | 25,295 | 7,322 | |||||
| TOTAL EQUITY | 5,291,561 | 5,226,109 | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 46,671,088 | $ | 46,067,224 | |||
AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| Three Months Ended | |||||||||||||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Interest-bearing cash and cash equivalents | $ | 643,926 | $ | 553,070 | $ | 619,737 | $ | 721,659 | $ | 573,203 | |||||||||
| Trading securities | 6,888,189 | 1,834,160 | 1,871,647 | 1,690,104 | 1,672,426 | ||||||||||||||
| Investment securities, net of allowance | 251,863 | 258,965 | 268,947 | 282,265 | 298,567 | ||||||||||||||
| Available for sale securities | 12,949,702 | 12,580,850 | 12,480,065 | 11,664,521 | 11,333,524 | ||||||||||||||
| Fair value option securities | 122,329 | 387,784 | 786,757 | 1,793,480 | 1,521,528 | ||||||||||||||
| Restricted equity securities | 280,428 | 144,415 | 273,922 | 429,133 | 479,687 | ||||||||||||||
| Residential mortgage loans held for sale | 229,631 | 213,125 | 288,588 | 129,708 | 203,535 | ||||||||||||||
| Loans: | |||||||||||||||||||
| Commercial | 13,113,449 | 13,772,217 | 14,502,652 | 14,452,851 | 14,344,534 | ||||||||||||||
| Commercial real estate | 4,788,393 | 4,754,269 | 4,543,511 | 4,346,886 | 4,532,649 | ||||||||||||||
| Paycheck protection program | 1,928,665 | 2,092,933 | 1,699,369 | — | — | ||||||||||||||
| Loans to individuals | 3,617,011 | 3,491,044 | 3,353,960 | 3,143,286 | 3,358,817 | ||||||||||||||
| Total loans | 23,447,518 | 24,110,463 | 24,099,492 | 21,943,023 | 22,236,000 | ||||||||||||||
| Allowance for loan losses | (414,225 | ) | (441,831 | ) | (367,583 | ) | (250,338 | ) | (205,417 | ) | |||||||||
| Loans, net of allowance | 23,033,293 | 23,668,632 | 23,731,909 | 21,692,685 | 22,030,583 | ||||||||||||||
| Total earning assets | 44,399,361 | 39,641,001 | 40,321,572 | 38,403,555 | 38,113,053 | ||||||||||||||
| Cash and due from banks | 742,432 | 723,826 | 678,878 | 669,369 | 690,806 | ||||||||||||||
| Derivative contracts, net | 553,779 | 581,839 | 642,969 | 376,621 | 311,542 | ||||||||||||||
| Cash surrender value of bank-owned life insurance | 397,354 | 394,680 | 391,951 | 390,009 | 388,012 | ||||||||||||||
| Receivable on unsettled securities sales | 1,094,198 | 4,563,301 | 4,626,307 | 3,046,111 | 1,973,604 | ||||||||||||||
| Other assets | 3,200,040 | 3,027,108 | 3,095,354 | 2,834,953 | 2,736,337 | ||||||||||||||
| TOTAL ASSETS | $ | 50,387,164 | $ | 48,931,755 | $ | 49,757,031 | $ | 45,720,618 | $ | 44,213,354 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Demand | $ | 12,136,071 | $ | 11,929,694 | $ | 11,489,322 | $ | 9,232,859 | $ | 9,612,533 | |||||||||
| Interest-bearing transaction | 20,718,390 | 19,752,106 | 18,040,170 | 16,159,654 | 14,685,385 | ||||||||||||||
| Savings | 737,360 | 707,121 | 656,669 | 563,821 | 554,605 | ||||||||||||||
| Time | 1,930,808 | 2,251,012 | 2,464,793 | 2,239,234 | 2,247,717 | ||||||||||||||
| Total deposits | 35,522,629 | 34,639,933 | 32,650,954 | 28,195,568 | 27,100,240 | ||||||||||||||
| Funds purchased and repurchase agreements | 2,153,254 | 2,782,150 | 5,816,484 | 3,815,941 | 4,120,610 | ||||||||||||||
| Other borrowings | 5,193,656 | 3,382,688 | 3,527,303 | 6,542,325 | 6,247,194 | ||||||||||||||
| Subordinated debentures | 275,998 | 275,980 | 275,949 | 275,932 | 275,916 | ||||||||||||||
| Derivative contracts, net | 399,476 | 458,390 | 836,667 | 379,342 | 276,078 | ||||||||||||||
| Due on unsettled securities purchases | 957,642 | 1,516,880 | 887,973 | 960,780 | 784,174 | ||||||||||||||
| Other liabilities | 656,147 | 712,674 | 690,087 | 642,764 | 561,654 | ||||||||||||||
| TOTAL LIABILITIES | 45,158,802 | 43,768,695 | 44,685,417 | 40,812,652 | 39,365,866 | ||||||||||||||
| Total equity | 5,228,362 | 5,163,060 | 5,071,614 | 4,907,966 | 4,847,488 | ||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 50,387,164 | $ | 48,931,755 | $ | 49,757,031 | $ | 45,720,618 | $ | 44,213,354 | |||||||||
STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Interest revenue | $ | 319,020 | $ | 369,857 | $ | 1,269,000 | $ | 1,531,958 | |||||||
| Interest expense | 21,790 | 99,608 | 160,556 | 419,079 | |||||||||||
| Net interest revenue | 297,230 | 270,249 | 1,108,444 | 1,112,879 | |||||||||||
| Provision for credit losses | (6,500 | ) | 19,000 | 222,592 | 44,000 | ||||||||||
| Net interest revenue after provision for credit losses | 303,730 | 251,249 | 885,852 | 1,068,879 | |||||||||||
| Other operating revenue: | |||||||||||||||
| Brokerage and trading revenue | 39,506 | 43,843 | 221,833 | 159,826 | |||||||||||
| Transaction card revenue | 21,896 | 22,548 | 90,182 | 87,216 | |||||||||||
| Fiduciary and asset management revenue | 41,799 | 45,021 | 167,445 | 177,025 | |||||||||||
| Deposit service charges and fees | 24,343 | 27,331 | 96,805 | 112,485 | |||||||||||
| Mortgage banking revenue | 39,298 | 25,396 | 182,360 | 107,541 | |||||||||||
| Other revenue | 14,209 | 15,283 | 51,695 | 58,108 | |||||||||||
| Total fees and commissions | 181,051 | 179,422 | 810,320 | 702,201 | |||||||||||
| Other gains (losses), net | 5,383 | (1,649 | ) | 7,675 | 9,351 | ||||||||||
| Gain (loss) on derivatives, net | (339 | ) | (4,644 | ) | 42,320 | 14,951 | |||||||||
| Gain (loss) on fair value option securities, net | 68 | (8,328 | ) | 53,248 | 15,787 | ||||||||||
| Change in fair value of mortgage servicing rights | 6,276 | 9,297 | (79,524 | ) | (53,517 | ) | |||||||||
| Gain on available for sale securities, net | 4,339 | 4,487 | 9,910 | 5,597 | |||||||||||
| Total other operating revenue | 196,778 | 178,585 | 843,949 | 694,370 | |||||||||||
| Other operating expense: | |||||||||||||||
| Personnel | 176,198 | 168,422 | 688,474 | 660,565 | |||||||||||
| Business promotion | 3,728 | 8,787 | 14,511 | 35,662 | |||||||||||
| Charitable contributions to BOKF Foundation | 6,000 | 2,000 | 9,000 | 3,000 | |||||||||||
| Professional fees and services | 14,254 | 13,408 | 53,437 | 54,861 | |||||||||||
| Net occupancy and equipment | 27,875 | 26,316 | 112,722 | 110,275 | |||||||||||
| Insurance | 4,006 | 5,393 | 19,990 | 20,906 | |||||||||||
| Data processing and communications | 35,061 | 31,884 | 135,497 | 124,983 | |||||||||||
| Printing, postage and supplies | 3,805 | 3,700 | 15,061 | 16,517 | |||||||||||
| Net losses and operating expenses of repossessed assets | 1,168 | 2,403 | 10,709 | 6,707 | |||||||||||
| Amortization of intangible assets | 5,088 | 5,225 | 20,443 | 20,618 | |||||||||||
| Mortgage banking costs | 14,765 | 14,259 | 56,711 | 50,685 | |||||||||||
| Other expense | 8,713 | 6,998 | 29,382 | 27,602 | |||||||||||
| Total other operating expense | 300,661 | 288,795 | 1,165,937 | 1,132,381 | |||||||||||
| Net income before taxes | 199,847 | 141,039 | 563,864 | 630,868 | |||||||||||
| Federal and state income taxes | 45,138 | 30,257 | 128,793 | 130,183 | |||||||||||
| Net income | 154,709 | 110,782 | 435,071 | 500,685 | |||||||||||
| Net income (loss) attributable to non-controlling interests | 485 | 430 | 41 | (73 | ) | ||||||||||
| Net income attributable to BOK Financial Corporation shareholders | $ | 154,224 | $ | 110,352 | $ | 435,030 | $ | 500,758 | |||||||
| Average shares outstanding: | |||||||||||||||
| Basic | 69,489,597 | 70,295,899 | 69,840,977 | 70,787,700 | |||||||||||
| Diluted | 69,493,050 | 70,309,644 | 69,844,172 | 70,802,612 | |||||||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 2.21 | $ | 1.56 | $ | 6.19 | $ | 7.03 | |||||||
| Diluted | $ | 2.21 | $ | 1.56 | $ | 6.19 | $ | 7.03 | |||||||
FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
| Three Months Ended | ||||||||||||||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||||||||
| Capital: | ||||||||||||||||||||
| Period-end shareholders' equity | $ | 5,266,266 | $ | 5,218,787 | $ | 5,096,995 | $ | 5,026,248 | $ | 4,855,795 | ||||||||||
| Risk weighted assets | $ | 32,501,807 | $ | 31,529,826 | $ | 32,180,602 | $ | 32,973,242 | $ | 31,673,425 | ||||||||||
| Risk-based capital ratios: | ||||||||||||||||||||
| Common equity tier 1 | 11.94 | % | 12.07 | % | 11.44 | % | 10.98 | % | 11.39 | % | ||||||||||
| Tier 1 | 11.94 | % | 12.07 | % | 11.44 | % | 10.98 | % | 11.39 | % | ||||||||||
| Total capital | 13.81 | % | 14.05 | % | 13.43 | % | 12.65 | % | 12.94 | % | ||||||||||
| Leverage ratio | 8.28 | % | 8.39 | % | 7.74 | % | 8.15 | % | 8.40 | % | ||||||||||
| Tangible common equity ratio1 | 9.02 | % | 9.02 | % | 8.79 | % | 8.39 | % | 8.98 | % | ||||||||||
| Common stock: | ||||||||||||||||||||
| Book value per share | $ | 75.62 | $ | 74.23 | $ | 72.50 | $ | 71.49 | $ | 68.80 | ||||||||||
| Tangible book value per share | 58.94 | 57.64 | 55.83 | 54.85 | 52.17 | |||||||||||||||
| Market value per share: | ||||||||||||||||||||
| High | $ | 73.07 | $ | 62.86 | $ | 67.62 | $ | 87.40 | $ | 88.28 | ||||||||||
| Low | $ | 50.09 | $ | 48.41 | $ | 37.80 | $ | 34.57 | $ | 71.85 | ||||||||||
| Cash dividends paid | $ | 36,219 | $ | 35,799 | $ | 35,769 | $ | 35,949 | $ | 36,011 | ||||||||||
| Dividend payout ratio | 23.48 | % | 23.24 | % | 55.29 | % | 57.91 | % | 32.63 | % | ||||||||||
| Shares outstanding, net | 69,637,600 | 70,305,833 | 70,306,690 | 70,308,532 | 70,579,598 | |||||||||||||||
| Stock buy-back program: | ||||||||||||||||||||
| Shares repurchased | 665,100 | — | — | 442,000 | 280,000 | |||||||||||||||
| Amount | $ | 42,450 | $ | — | $ | — | $ | 33,380 | $ | 22,844 | ||||||||||
| Average price per share | $ | 63.82 | $ | — | $ | — | $ | 75.52 | $ | 81.59 | ||||||||||
| Performance ratios (quarter annualized): | ||||||||||||||||||||
| Return on average assets | 1.22 | % | 1.25 | % | 0.52 | % | 0.55 | % | 0.99 | % | ||||||||||
| Return on average equity | 11.75 | % | 11.89 | % | 5.14 | % | 5.10 | % | 9.05 | % | ||||||||||
| Net interest margin | 2.72 | % | 2.81 | % | 2.83 | % | 2.80 | % | 2.88 | % | ||||||||||
| Efficiency ratio | 62.36 | % | 60.41 | % | 59.57 | % | 58.62 | % | 63.65 | % | ||||||||||
| Reconciliation of non-GAAP measures: | ||||||||||||||||||||
| 1 | Tangible common equity ratio: | |||||||||||||||||||
| Total shareholders' equity | $ | 5,266,266 | $ | 5,218,787 | $ | 5,096,995 | $ | 5,026,248 | $ | 4,855,795 | ||||||||||
| Less: Goodwill and intangible assets, net | 1,161,527 | 1,166,615 | 1,171,686 | 1,169,898 | 1,173,362 | |||||||||||||||
| Tangible common equity | $ | 4,104,739 | $ | 4,052,172 | $ | 3,925,309 | $ | 3,856,350 | $ | 3,682,433 | ||||||||||
| Total assets | $ | 46,671,088 | $ | 46,067,224 | $ | 45,819,874 | $ | 47,119,162 | $ | 42,172,021 | ||||||||||
| Less: Goodwill and intangible assets, net | 1,161,527 | 1,166,615 | 1,171,686 | 1,169,898 | 1,173,362 | |||||||||||||||
| Tangible assets | $ | 45,509,561 | $ | 44,900,609 | $ | 44,648,188 | $ | 45,949,264 | $ | 40,998,659 | ||||||||||
| Tangible common equity ratio | 9.02 | % | 9.02 | % | 8.79 | % | 8.39 | % | 8.98 | % | ||||||||||
| Three Months Ended | |||||||||||||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |||||||||||||||
| Pre-provision net revenue: | |||||||||||||||||||
| Net income before taxes | $ | 199,847 | $ | 204,644 | $ | 80,089 | $ | 79,284 | $ | 141,039 | |||||||||
| Provision for expected credit losses | (6,500 | ) | — | 135,321 | 93,771 | 19,000 | |||||||||||||
| Net income (loss) attributable to non-controlling interests | 485 | 58 | (407 | ) | (95 | ) | 430 | ||||||||||||
| Pre-provision net revenue | $ | 192,862 | $ | 204,586 | $ | 215,817 | $ | 173,150 | $ | 159,609 | |||||||||
| Other data: | |||||||||||||||||||
| Tax equivalent interest | $ | 2,414 | $ | 2,457 | $ | 2,630 | $ | 2,715 | $ | 2,726 | |||||||||
| Net unrealized gain on available for sale securities | $ | 440,814 | $ | 480,563 | $ | 487,334 | $ | 435,989 | $ | 138,149 | |||||||||
| Mortgage banking: | |||||||||||||||||||
| Mortgage production revenue | $ | 26,662 | $ | 38,431 | $ | 39,185 | $ | 21,570 | $ | 9,169 | |||||||||
| Mortgage loans funded for sale | $ | 998,435 | $ | 1,032,472 | $ | 1,184,249 | $ | 548,956 | $ | 855,643 | |||||||||
| Add: current period-end outstanding commitments | 380,637 | 560,493 | 546,304 | 657,570 | 158,460 | ||||||||||||||
| Less: prior period end outstanding commitments | 560,493 | 546,304 | 657,570 | 158,460 | 379,377 | ||||||||||||||
| Total mortgage production volume | $ | 818,579 | $ | 1,046,661 | $ | 1,072,983 | $ | 1,048,066 | $ | 634,726 | |||||||||
| Mortgage loan refinances to mortgage loans funded for sale | 58 | % | 54 | % | 71 | % | 57 | % | 57 | % | |||||||||
| Gain on sale margin | 3.26 | % | 3.67 | % | 3.65 | % | 2.06 | % | 1.44 | % | |||||||||
| Mortgage servicing revenue | $ | 12,636 | $ | 13,528 | $ | 14,751 | $ | 15,597 | $ | 16,227 | |||||||||
| Average outstanding principal balance of mortgage loans serviced for others | 16,518,208 | 17,434,215 | 19,319,872 | 20,416,546 | 20,856,446 | ||||||||||||||
| Average mortgage servicing revenue rates | 0.30 | % | 0.31 | % | 0.31 | % | 0.31 | % | 0.31 | % | |||||||||
| Gain (loss) on mortgage servicing rights, net of economic hedge: | |||||||||||||||||||
| Gain (loss) on mortgage hedge derivative contracts, net | $ | (385 | ) | $ | 2,295 | $ | 21,815 | $ | 18,371 | $ | (4,714 | ) | |||||||
| Gain (loss) on fair value option securities, net | 68 | (754 | ) | (14,459 | ) | 68,393 | (8,328 | ) | |||||||||||
| Gain (loss) on economic hedge of mortgage servicing rights | (317 | ) | 1,541 | 7,356 | 86,764 | (13,042 | ) | ||||||||||||
| Gain (loss) on changes in fair value of mortgage servicing rights | 6,276 | 3,441 | (761 | ) | (88,480 | ) | 9,297 | ||||||||||||
| Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue | 5,959 | 4,982 | 6,595 | (1,716 | ) | (3,745 | ) | ||||||||||||
| Net interest revenue on fair value option securities2 | 550 | 1,565 | 2,702 | 4,268 | 1,544 | ||||||||||||||
| Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges | $ | 6,509 | $ | 6,547 | $ | 9,297 | $ | 2,552 | $ | (2,201 | ) | ||||||||
2 Actual interest earned on fair value option securities less internal transfer-priced cost of funds.
QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
| Three Months Ended | |||||||||||||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |||||||||||||||
| Interest revenue | $ | 319,020 | $ | 294,659 | $ | 306,384 | $ | 348,937 | $ | 369,857 | |||||||||
| Interest expense | 21,790 | 22,909 | 28,280 | 87,577 | 99,608 | ||||||||||||||
| Net interest revenue | 297,230 | 271,750 | 278,104 | 261,360 | 270,249 | ||||||||||||||
| Provision for credit losses | (6,500 | ) | — | 135,321 | 93,771 | 19,000 | |||||||||||||
| Net interest revenue after provision for credit losses | 303,730 | 271,750 | 142,783 | 167,589 | 251,249 | ||||||||||||||
| Other operating revenue: | |||||||||||||||||||
| Brokerage and trading revenue | 39,506 | 69,526 | 62,022 | 50,779 | 43,843 | ||||||||||||||
| Transaction card revenue | 21,896 | 23,465 | 22,940 | 21,881 | 22,548 | ||||||||||||||
| Fiduciary and asset management revenue | 41,799 | 39,931 | 41,257 | 44,458 | 45,021 | ||||||||||||||
| Deposit service charges and fees | 24,343 | 24,286 | 22,046 | 26,130 | 27,331 | ||||||||||||||
| Mortgage banking revenue | 39,298 | 51,959 | 53,936 | 37,167 | 25,396 | ||||||||||||||
| Other revenue | 14,209 | 13,698 | 11,479 | 12,309 | 15,283 | ||||||||||||||
| Total fees and commissions | 181,051 | 222,865 | 213,680 | 192,724 | 179,422 | ||||||||||||||
| Other gains (losses), net | 5,383 | 6,265 | 6,768 | (10,741 | ) | (1,649 | ) | ||||||||||||
| Gain (loss) on derivatives, net | (339 | ) | 2,354 | 21,885 | 18,420 | (4,644 | ) | ||||||||||||
| Gain (loss) on fair value option securities, net | 68 | (754 | ) | (14,459 | ) | 68,393 | (8,328 | ) | |||||||||||
| Change in fair value of mortgage servicing rights | 6,276 | 3,441 | (761 | ) | (88,480 | ) | 9,297 | ||||||||||||
| Gain (loss) on available for sale securities, net | 4,339 | (12 | ) | 5,580 | 3 | 4,487 | |||||||||||||
| Total other operating revenue | 196,778 | 234,159 | 232,693 | 180,319 | 178,585 | ||||||||||||||
| Other operating expense: | |||||||||||||||||||
| Personnel | 176,198 | 179,860 | 176,235 | 156,181 | 168,422 | ||||||||||||||
| Business promotion | 3,728 | 2,633 | 1,935 | 6,215 | 8,787 | ||||||||||||||
| Charitable contributions to BOKF Foundation | 6,000 | — | 3,000 | — | 2,000 | ||||||||||||||
| Professional fees and services | 14,254 | 14,074 | 12,161 | 12,948 | 13,408 | ||||||||||||||
| Net occupancy and equipment | 27,875 | 28,111 | 30,675 | 26,061 | 26,316 | ||||||||||||||
| Insurance | 4,006 | 5,848 | 5,156 | 4,980 | 5,393 | ||||||||||||||
| Data processing and communications | 35,061 | 34,751 | 32,942 | 32,743 | 31,884 | ||||||||||||||
| Printing, postage and supplies | 3,805 | 3,482 | 3,502 | 4,272 | 3,700 | ||||||||||||||
| Net losses and operating expenses of repossessed assets | 1,168 | 6,244 | 1,766 | 1,531 | 2,403 | ||||||||||||||
| Amortization of intangible assets | 5,088 | 5,071 | 5,190 | 5,094 | 5,225 | ||||||||||||||
| Mortgage banking costs | 14,765 | 15,803 | 15,598 | 10,545 | 14,259 | ||||||||||||||
| Other expense | 8,713 | 5,388 | 7,227 | 8,054 | 6,998 | ||||||||||||||
| Total other operating expense | 300,661 | 301,265 | 295,387 | 268,624 | 288,795 | ||||||||||||||
| Net income before taxes | 199,847 | 204,644 | 80,089 | 79,284 | 141,039 | ||||||||||||||
| Federal and state income taxes | 45,138 | 50,552 | 15,803 | 17,300 | 30,257 | ||||||||||||||
| Net income | 154,709 | 154,092 | 64,286 | 61,984 | 110,782 | ||||||||||||||
| Net income (loss) attributable to non-controlling interests | 485 | 58 | (407 | ) | (95 | ) | 430 | ||||||||||||
| Net income attributable to BOK Financial Corporation shareholders | $ | 154,224 | $ | 154,034 | $ | 64,693 | $ | 62,079 | $ | 110,352 | |||||||||
| Average shares outstanding: | |||||||||||||||||||
| Basic | 69,489,597 | 69,877,866 | 69,876,043 | 70,123,685 | 70,295,899 | ||||||||||||||
| Diluted | 69,493,050 | 69,879,290 | 69,877,467 | 70,130,166 | 70,309,644 | ||||||||||||||
| Net income per share: | |||||||||||||||||||
| Basic | $ | 2.21 | $ | 2.19 | $ | 0.92 | $ | 0.88 | $ | 1.56 | |||||||||
| Diluted | $ | 2.21 | $ | 2.19 | $ | 0.92 | $ | 0.88 | $ | 1.56 | |||||||||
LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Commercial: | ||||||||||||||
| Services | $ | 3,508,583 | $ | 3,545,825 | $ | 3,779,881 | $ | 3,955,748 | $ | 3,832,031 | ||||
| Energy | 3,469,194 | 3,717,101 | 3,974,174 | 4,111,676 | 3,973,377 | |||||||||
| Healthcare | 3,305,990 | 3,325,790 | 3,289,343 | 3,165,096 | 3,033,916 | |||||||||
| General business | 2,793,768 | 2,976,990 | 3,115,112 | 3,563,455 | 3,192,326 | |||||||||
| Total commercial | 13,077,535 | 13,565,706 | 14,158,510 | 14,795,975 | 14,031,650 | |||||||||
| Commercial real estate: | ||||||||||||||
| Multifamily | 1,328,045 | 1,387,461 | 1,407,107 | 1,282,457 | 1,265,562 | |||||||||
| Office | 1,085,257 | 1,099,563 | 973,995 | 962,004 | 928,379 | |||||||||
| Industrial | 810,510 | 792,389 | 723,005 | 728,026 | 856,117 | |||||||||
| Retail | 796,223 | 786,211 | 780,467 | 774,198 | 775,521 | |||||||||
| Residential construction and land development | 119,394 | 121,258 | 136,911 | 138,958 | 150,879 | |||||||||
| Other commercial real estate | 559,109 | 506,818 | 532,659 | 564,442 | 457,325 | |||||||||
| Total commercial real estate | 4,698,538 | 4,693,700 | 4,554,144 | 4,450,085 | 4,433,783 | |||||||||
| Paycheck protection program | 1,682,310 | 2,097,325 | 2,081,428 | — | — | |||||||||
| Loans to individuals: | ||||||||||||||
| Residential mortgage | 1,863,003 | 1,849,144 | 1,813,442 | 1,844,555 | 1,886,378 | |||||||||
| Residential mortgages guaranteed by U.S. government agencies | 408,687 | 384,247 | 322,269 | 197,889 | 197,794 | |||||||||
| Personal | 1,277,447 | 1,213,178 | 1,226,097 | 1,175,466 | 1,201,382 | |||||||||
| Total loans to individuals | 3,549,137 | 3,446,569 | 3,361,808 | 3,217,910 | 3,285,554 | |||||||||
| Total | $ | 23,007,520 | $ | 23,803,300 | $ | 24,155,890 | $ | 22,463,970 | $ | 21,750,987 | ||||
LOANS MANAGED BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Texas: | ||||||||||||||
| Commercial | $ | 5,445,132 | $ | 5,545,158 | $ | 5,771,691 | $ | 6,350,690 | $ | 6,174,894 | ||||
| Commercial real estate | 1,500,250 | 1,499,630 | 1,389,547 | 1,296,266 | 1,259,117 | |||||||||
| Paycheck protection program | 501,079 | 614,970 | 612,133 | — | — | |||||||||
| Loans to individuals | 854,700 | 792,994 | 748,474 | 756,634 | 727,175 | |||||||||
| Total Texas | 8,301,161 | 8,452,752 | 8,521,845 | 8,403,590 | 8,161,186 | |||||||||
| Oklahoma: | ||||||||||||||
| Commercial | 4,381,569 | 4,901,666 | 5,086,934 | 3,886,086 | 3,454,825 | |||||||||
| Commercial real estate | 628,727 | 647,228 | 636,021 | 593,473 | 631,026 | |||||||||
| Paycheck protection program | 413,108 | 487,247 | 442,518 | — | — | |||||||||
| Loans to individuals | 2,054,205 | 2,036,452 | 1,967,665 | 1,788,518 | 1,854,864 | |||||||||
| Total Oklahoma | 7,477,609 | 8,072,593 | 8,133,138 | 6,268,077 | 5,940,715 | |||||||||
| Colorado: | ||||||||||||||
| Commercial | 1,554,670 | 1,501,821 | 1,600,382 | 2,181,309 | 2,169,598 | |||||||||
| Commercial real estate | 877,610 | 890,746 | 937,742 | 955,608 | 927,826 | |||||||||
| Paycheck protection program | 377,111 | 494,910 | 488,279 | — | — | |||||||||
| Loans to individuals | 263,872 | 257,345 | 264,872 | 268,674 | 276,939 | |||||||||
| Total Colorado | 3,073,263 | 3,144,822 | 3,291,275 | 3,405,591 | 3,374,363 | |||||||||
| Arizona: | ||||||||||||||
| Commercial | 1,014,958 | 956,047 | 1,036,862 | 1,396,582 | 1,307,073 | |||||||||
| Commercial real estate | 718,548 | 692,987 | 689,121 | 714,161 | 728,832 | |||||||||
| Paycheck protection program | 211,725 | 272,114 | 318,961 | — | — | |||||||||
| Loans to individuals | 177,900 | 166,115 | 177,066 | 181,821 | 186,539 | |||||||||
| Total Arizona | 2,123,131 | 2,087,263 | 2,222,010 | 2,292,564 | 2,222,444 | |||||||||
| Kansas/Missouri: | ||||||||||||||
| Commercial | 400,555 | 414,038 | 404,860 | 556,255 | 527,872 | |||||||||
| Commercial real estate | 366,409 | 352,241 | 314,504 | 310,799 | 322,541 | |||||||||
| Paycheck protection program | 56,011 | 80,230 | 76,724 | — | — | |||||||||
| Loans to individuals | 105,755 | 96,358 | 102,577 | 116,734 | 131,069 | |||||||||
| Total Kansas/Missouri | 928,730 | 942,867 | 898,665 | 983,788 | 981,482 | |||||||||
| New Mexico: | ||||||||||||||
| Commercial | 195,846 | 157,322 | 182,688 | 327,164 | 305,320 | |||||||||
| Commercial real estate | 471,310 | 471,505 | 455,574 | 434,150 | 402,148 | |||||||||
| Paycheck protection program | 109,881 | 133,244 | 128,058 | — | — | |||||||||
| Loans to individuals | 75,665 | 79,890 | 83,470 | 87,110 | 90,257 | |||||||||
| Total New Mexico | 852,702 | 841,961 | 849,790 | 848,424 | 797,725 | |||||||||
| Arkansas: | ||||||||||||||
| Commercial | 84,805 | 89,654 | 75,093 | 97,889 | 92,068 | |||||||||
| Commercial real estate | 135,684 | 139,363 | 131,635 | 145,628 | 162,293 | |||||||||
| Paycheck protection program | 13,395 | 14,610 | 14,755 | — | — | |||||||||
| Loans to individuals | 17,040 | 17,415 | 17,684 | 18,419 | 18,711 | |||||||||
| Total Arkansas | 250,924 | 261,042 | 239,167 | 261,936 | 273,072 | |||||||||
| TOTAL BOK FINANCIAL | $ | 23,007,520 | $ | 23,803,300 | $ | 24,155,890 | $ | 22,463,970 | $ | 21,750,987 | ||||
Loans attributed to a principal market may not always represent the location of the borrower or the collateral.
DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Oklahoma: | ||||||||||||||
| Demand | $ | 4,328,619 | $ | 4,493,691 | $ | 4,378,559 | $ | 3,669,558 | $ | 3,257,337 | ||||
| Interest-bearing: | ||||||||||||||
| Transaction | 12,603,603 | 12,586,401 | 11,438,489 | 9,955,697 | 8,574,912 | |||||||||
| Savings | 420,996 | 401,062 | 387,557 | 329,631 | 306,194 | |||||||||
| Time | 1,134,453 | 1,081,176 | 1,330,619 | 1,137,802 | 1,125,446 | |||||||||
| Total interest-bearing | 14,159,052 | 14,068,639 | 13,156,665 | 11,423,130 | 10,006,552 | |||||||||
| Total Oklahoma | 18,487,671 | 18,562,330 | 17,535,224 | 15,092,688 | 13,263,889 | |||||||||
| Texas: | ||||||||||||||
| Demand | 3,450,468 | 3,152,393 | 3,070,955 | 2,767,399 | 2,757,376 | |||||||||
| Interest-bearing: | ||||||||||||||
| Transaction | 3,800,482 | 3,482,603 | 3,358,090 | 2,874,362 | 2,911,731 | |||||||||
| Savings | 139,173 | 136,787 | 128,892 | 115,039 | 102,456 | |||||||||
| Time | 383,062 | 438,337 | 476,867 | 505,565 | 495,343 | |||||||||
| Total interest-bearing | 4,322,717 | 4,057,727 | 3,963,849 | 3,494,966 | 3,509,530 | |||||||||
| Total Texas | 7,773,185 | 7,210,120 | 7,034,804 | 6,262,365 | 6,266,906 | |||||||||
| Colorado: | ||||||||||||||
| Demand | 2,168,404 | 2,057,603 | 2,096,075 | 1,579,764 | 1,729,674 | |||||||||
| Interest-bearing: | ||||||||||||||
| Transaction | 2,170,485 | 1,861,763 | 1,816,604 | 1,759,384 | 1,769,037 | |||||||||
| Savings | 69,384 | 68,230 | 67,477 | 58,000 | 53,307 | |||||||||
| Time | 208,778 | 226,780 | 254,845 | 279,105 | 283,517 | |||||||||
| Total interest-bearing | 2,448,647 | 2,156,773 | 2,138,926 | 2,096,489 | 2,105,861 | |||||||||
| Total Colorado | 4,617,051 | 4,214,376 | 4,235,001 | 3,676,253 | 3,835,535 | |||||||||
| New Mexico: | ||||||||||||||
| Demand | 941,074 | 964,908 | 965,877 | 750,052 | 623,722 | |||||||||
| Interest-bearing: | ||||||||||||||
| Transaction | 733,007 | 713,418 | 752,565 | 563,891 | 558,493 | |||||||||
| Savings | 91,646 | 85,463 | 80,242 | 67,553 | 63,999 | |||||||||
| Time | 186,307 | 200,525 | 222,370 | 235,778 | 238,140 | |||||||||
| Total interest-bearing | 1,010,960 | 999,406 | 1,055,177 | 867,222 | 860,632 | |||||||||
| Total New Mexico | 1,952,034 | 1,964,314 | 2,021,054 | 1,617,274 | 1,484,354 | |||||||||
| Arizona: | ||||||||||||||
| Demand | 905,201 | 928,671 | 985,757 | 665,396 | 681,268 | |||||||||
| Interest-bearing: | ||||||||||||||
| Transaction | 768,220 | 771,319 | 780,500 | 729,603 | 684,929 | |||||||||
| Savings | 12,174 | 11,498 | 15,669 | 8,832 | 10,314 | |||||||||
| Time | 32,721 | 36,929 | 42,318 | 47,081 | 49,676 | |||||||||
| Total interest-bearing | 813,115 | 819,746 | 838,487 | 785,516 | 744,919 | |||||||||
| Total Arizona | 1,718,316 | 1,748,417 | 1,824,244 | 1,450,912 | 1,426,187 | |||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Kansas/Missouri: | ||||||||||||||
| Demand | 426,738 | 405,360 | 427,795 | 318,985 | 384,533 | |||||||||
| Interest-bearing: | ||||||||||||||
| Transaction | 960,237 | 616,797 | 526,635 | 537,552 | 784,574 | |||||||||
| Savings | 16,286 | 15,520 | 15,033 | 12,888 | 12,169 | |||||||||
| Time | 14,610 | 16,430 | 17,746 | 19,137 | 17,877 | |||||||||
| Total interest-bearing | 991,133 | 648,747 | 559,414 | 569,577 | 814,620 | |||||||||
| Total Kansas/Missouri | 1,417,871 | 1,054,107 | 987,209 | 888,562 | 1,199,153 | |||||||||
| Arkansas: | ||||||||||||||
| Demand | 45,834 | 44,712 | 67,147 | 70,428 | 27,381 | |||||||||
| Interest-bearing: | ||||||||||||||
| Transaction | 122,388 | 164,439 | 177,535 | 175,803 | 108,076 | |||||||||
| Savings | 2,333 | 2,389 | 2,101 | 1,862 | 1,837 | |||||||||
| Time | 7,197 | 7,796 | 7,995 | 8,005 | 7,850 | |||||||||
| Total interest-bearing | 131,918 | 174,624 | 187,631 | 185,670 | 117,763 | |||||||||
| Total Arkansas | 177,752 | 219,336 | 254,778 | 256,098 | 145,144 | |||||||||
| TOTAL BOK FINANCIAL | $ | 36,143,880 | $ | 34,973,000 | $ | 33,892,314 | $ | 29,244,152 | $ | 27,621,168 | ||||
NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
| Three Months Ended | ||||||||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| TAX-EQUIVALENT ASSETS YIELDS | ||||||||||||||
| Interest-bearing cash and cash equivalents | 0.10 | % | 0.12 | % | 0.07 | % | 1.33 | % | 1.62 | % | ||||
| Trading securities | 2.02 | % | 1.92 | % | 2.46 | % | 2.89 | % | 3.19 | % | ||||
| Investment securities, net of allowance | 4.88 | % | 4.85 | % | 4.77 | % | 4.73 | % | 4.69 | % | ||||
| Available for sale securities | 1.98 | % | 2.11 | % | 2.29 | % | 2.48 | % | 2.52 | % | ||||
| Fair value option securities | 2.27 | % | 1.92 | % | 2.00 | % | 2.67 | % | 2.62 | % | ||||
| Restricted equity securities | 3.25 | % | 2.53 | % | 2.75 | % | 5.49 | % | 5.37 | % | ||||
| Residential mortgage loans held for sale | 2.75 | % | 3.01 | % | 3.10 | % | 3.50 | % | 3.55 | % | ||||
| Loans | 3.68 | % | 3.60 | % | 3.63 | % | 4.50 | % | 4.75 | % | ||||
| Allowance for loan losses | ||||||||||||||
| Loans, net of allowance | 3.75 | % | 3.67 | % | 3.69 | % | 4.55 | % | 4.80 | % | ||||
| Total tax-equivalent yield on earning assets | 2.92 | % | 3.04 | % | 3.12 | % | 3.73 | % | 3.93 | % | ||||
| COST OF INTEREST-BEARING LIABILITIES | ||||||||||||||
| Interest-bearing deposits: | ||||||||||||||
| Interest-bearing transaction | 0.14 | % | 0.17 | % | 0.21 | % | 0.89 | % | 1.00 | % | ||||
| Savings | 0.05 | % | 0.05 | % | 0.05 | % | 0.09 | % | 0.11 | % | ||||
| Time | 0.89 | % | 1.13 | % | 1.36 | % | 1.83 | % | 1.94 | % | ||||
| Total interest-bearing deposits | 0.19 | % | 0.26 | % | 0.34 | % | 0.98 | % | 1.09 | % | ||||
| Funds purchased and repurchase agreements | 0.28 | % | 0.17 | % | 0.14 | % | 1.14 | % | 1.56 | % | ||||
| Other borrowings | 0.42 | % | 0.43 | % | 0.56 | % | 1.66 | % | 2.01 | % | ||||
| Subordinated debt | 4.87 | % | 4.89 | % | 5.16 | % | 5.30 | % | 5.40 | % | ||||
| Total cost of interest-bearing liabilities | 0.28 | % | 0.31 | % | 0.37 | % | 1.19 | % | 1.40 | % | ||||
| Tax-equivalent net interest revenue spread | 2.64 | % | 2.73 | % | 2.75 | % | 2.54 | % | 2.53 | % | ||||
| Effect of noninterest-bearing funding sources and other | 0.08 | % | 0.08 | % | 0.08 | % | 0.26 | % | 0.35 | % | ||||
| Tax-equivalent net interest margin | 2.72 | % | 2.81 | % | 2.83 | % | 2.80 | % | 2.88 | % | ||||
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 | |||||||||||||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |||||||||||||||
| Nonperforming assets: | |||||||||||||||||||
| Nonaccruing loans: | |||||||||||||||||||
| Commercial: | |||||||||||||||||||
| Energy | $ | 125,059 | $ | 126,816 | $ | 162,989 | $ | 96,448 | $ | 91,722 | |||||||||
| Services | 25,598 | 25,817 | 21,032 | 8,425 | 7,483 | ||||||||||||||
| Healthcare | 3,645 | 3,645 | 3,645 | 4,070 | 4,480 | ||||||||||||||
| General business | 12,857 | 13,675 | 14,333 | 9,681 | 11,731 | ||||||||||||||
| Total commercial | 167,159 | 169,953 | 201,999 | 118,624 | 115,416 | ||||||||||||||
| Commercial real estate | 27,246 | 12,952 | 13,956 | 8,545 | 27,626 | ||||||||||||||
| Loans to individuals: | |||||||||||||||||||
| Permanent mortgage | 32,228 | 31,599 | 33,098 | 30,721 | 31,522 | ||||||||||||||
| Permanent mortgage guaranteed by U.S. government agencies | 7,741 | 6,397 | 6,110 | 5,005 | 6,100 | ||||||||||||||
| Personal | 319 | 252 | 233 | 277 | 287 | ||||||||||||||
| Total loans to individuals | 40,288 | 38,248 | 39,441 | 36,003 | 37,909 | ||||||||||||||
| Total nonaccruing loans | $ | 234,693 | $ | 221,153 | $ | 255,396 | $ | 163,172 | $ | 180,951 | |||||||||
| Accruing renegotiated loans guaranteed by U.S. government agencies | 151,775 | 142,770 | 114,571 | 91,757 | 92,452 | ||||||||||||||
| Real estate and other repossessed assets | 90,526 | 52,847 | 35,330 | 36,744 | 20,359 | ||||||||||||||
| Total nonperforming assets | $ | 476,994 | $ | 416,770 | $ | 405,297 | $ | 291,673 | $ | 293,762 | |||||||||
| Total nonperforming assets excluding those guaranteed by U.S. government agencies | 317,478 | 267,603 | 284,616 | 194,911 | 195,210 | ||||||||||||||
| Accruing loans 90 days past due1 | 10,369 | 7,684 | 10,992 | 3,706 | 7,680 | ||||||||||||||
| Gross charge-offs | $ | 18,251 | $ | 26,661 | $ | 15,570 | $ | 18,917 | $ | 14,268 | |||||||||
| Recoveries | (1,592 | ) | (4,232 | ) | (1,491 | ) | (1,696 | ) | (1,816 | ) | |||||||||
| Net charge-offs | $ | 16,659 | $ | 22,429 | $ | 14,079 | $ | 17,221 | $ | 12,452 | |||||||||
| Provision for loan losses | $ | (14,478 | ) | $ | 6,609 | $ | 134,365 | $ | 95,964 | $ | 18,779 | ||||||||
| Provision for credit losses from off-balance sheet unfunded loan commitments | 8,952 | (4,950 | ) | 4,405 | 3,377 | 221 | |||||||||||||
| Provision for expected credit losses from mortgage banking acitivities2 | (923 | ) | (770 | ) | (3,575 | ) | (6,020 | ) | — | ||||||||||
| Provision for credit losses related to held-to maturity (investment) securities portfolio2 | (51 | ) | (889 | ) | 126 | 450 | — | ||||||||||||
| Total provision for credit losses | $ | (6,500 | ) | $ | — | $ | 135,321 | $ | 93,771 | $ | 19,000 | ||||||||
| Three Months Ended | ||||||||||||||
| Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Allowance for loan losses to period end loans | 1.69 | % | 1.76 | % | 1.80 | % | 1.40 | % | 0.97 | % | ||||
| Allowance for loan losses to period end loans excluding PPP loans3 | 1.82 | % | 1.93 | % | 1.97 | % | 1.40 | % | 0.97 | % | ||||
| Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans | 1.85 | % | 1.88 | % | 1.94 | % | 1.53 | % | 0.98 | % | ||||
| Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans3 | 2.00 | % | 2.06 | % | 2.12 | % | 1.53 | % | 0.98 | % | ||||
| Nonperforming assets to period end loans and repossessed assets | 2.07 | % | 1.75 | % | 1.68 | % | 1.30 | % | 1.35 | % | ||||
| Net charge-offs (annualized) to average loans | 0.28 | % | 0.37 | % | 0.23 | % | 0.31 | % | 0.22 | % | ||||
| Net charge-offs (annualized) to average loans excluding PPP loans3 | 0.31 | % | 0.41 | % | 0.25 | % | 0.31 | % | 0.22 | % | ||||
| Allowance for loan losses to nonaccruing loans1 | 171.24 | % | 195.47 | % | 174.74 | % | 199.35 | % | 120.54 | % | ||||
| Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1 | 187.51 | % | 208.49 | % | 187.94 | % | 217.38 | % | 121.44 | % | ||||
1 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
2 Included in Provision for credit losses effective with implementation of CECL on January 1, 2020.
3 Metric meaningful due to the unique characteristics and short-term nature of the PPP loans.
SEGMENTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
| Three Months Ended | 4Q20 vs 3Q20 | Year Ended | 2020 vs 2019 | ||||||||||||||||||||||
| Commercial Banking | Dec. 31, 2020 | Sept. 30, 2020 | $ change | % change | Dec. 31, 2020 | Dec. 31, 2019 | $ change | % change | |||||||||||||||||
| Net interest revenue | $ | 142,026 | $ | 149,946 | $ | (7,920 | ) | (5.3 | )% | $ | 588,488 | $ | 676,241 | $ | (87,753 | ) | (13.0 | )% | |||||||
| Fees and commissions revenue | 49,060 | 50,085 | (1,025 | ) | (2.0 | )% | 187,119 | 168,667 | 18,452 | 10.9 | % | ||||||||||||||
| Combined net interest and fee revenue | 191,086 | 200,031 | (8,945 | ) | (4.5 | )% | 775,607 | 844,908 | (69,301 | ) | (8.2 | )% | |||||||||||||
| Other operating expense | 68,372 | 66,846 | 1,526 | 2.3 | % | 258,903 | 252,459 | 6,444 | 2.6 | % | |||||||||||||||
| Corporate expense allocations | 5,348 | 5,172 | 176 | 3.4 | % | 24,862 | 43,055 | (18,193 | ) | (42.3 | )% | ||||||||||||||
| Net income | 74,941 | 75,097 | (156 | ) | (0.2 | )% | 306,005 | 374,806 | (68,801 | ) | (18.4 | )% | |||||||||||||
| Average assets | 27,693,742 | 28,000,183 | (306,441 | ) | (1.1 | )% | 26,994,075 | 22,807,589 | 4,186,486 | 18.4 | % | ||||||||||||||
| Average loans | 18,100,333 | 18,677,401 | (577,068 | ) | (3.1 | )% | 18,711,372 | 18,090,224 | 621,148 | 3.4 | % | ||||||||||||||
| Average deposits | 15,373,673 | 15,375,450 | (1,777 | ) | — | % | 14,319,729 | 10,319,677 | 4,000,052 | 38.8 | % | ||||||||||||||
| Consumer Banking | |||||||||||||||||||||||||
| Net interest revenue | $ | 30,672 | $ | 33,130 | $ | (2,458 | ) | (7.4 | )% | $ | 147,004 | $ | 195,454 | $ | (48,450 | ) | (24.8 | )% | |||||||
| Fees and commissions revenue | 55,326 | 67,974 | (12,648 | ) | (18.6 | )% | 245,554 | 187,996 | 57,558 | 30.6 | % | ||||||||||||||
| Combined net interest and fee revenue | 85,998 | 101,104 | (15,106 | ) | (14.9 | )% | 392,558 | 383,450 | 9,108 | 2.4 | % | ||||||||||||||
| Other operating expense | 59,857 | 59,839 | 18 | — | % | 233,425 | 230,916 | 2,509 | 1.1 | % | |||||||||||||||
| Corporate expense allocations | 10,527 | 10,812 | (285 | ) | (2.6 | )% | 42,638 | 47,169 | (4,531 | ) | (9.6 | )% | |||||||||||||
| Net income | 14,283 | 26,256 | (11,973 | ) | (45.6 | )% | 95,360 | 56,606 | 38,754 | 68.5 | % | ||||||||||||||
| Average assets | 9,700,466 | 9,898,119 | (197,653 | ) | (2.0 | )% | 9,842,125 | 9,301,341 | 540,784 | 5.8 | % | ||||||||||||||
| Average loans | 1,840,492 | 1,825,865 | 14,627 | 0.8 | % | 1,764,682 | 1,762,915 | 1,767 | 0.1 | % | |||||||||||||||
| Average deposits | 7,993,971 | 7,940,973 | 52,998 | 0.7 | % | 7,599,937 | 6,876,676 | 723,261 | 10.5 | % | |||||||||||||||
| Wealth Management | |||||||||||||||||||||||||
| Net interest revenue | $ | 48,521 | $ | 22,985 | $ | 25,536 | 111.1 | % | $ | 117,290 | $ | 100,092 | $ | 17,198 | 17.2 | % | |||||||||
| Fees and commissions revenue | 82,936 | 111,655 | (28,719 | ) | (25.7 | )% | 399,229 | 341,333 | 57,896 | 17.0 | % | ||||||||||||||
| Combined net interest and fee revenue | 131,457 | 134,640 | (3,183 | ) | (2.4 | )% | 516,519 | 441,425 | 75,094 | 17.0 | % | ||||||||||||||
| Other operating expense | 83,981 | 82,868 | 1,113 | 1.3 | % | 325,608 | 277,267 | 48,341 | 17.4 | % | |||||||||||||||
| Corporate expense allocations | 9,465 | 9,397 | 68 | 0.7 | % | 35,331 | 36,239 | (908 | ) | (2.5 | )% | ||||||||||||||
| Net income | 28,449 | 31,212 | (2,763 | ) | (8.9 | )% | 115,628 | 95,331 | 20,297 | 21.3 | % | ||||||||||||||
| Average assets | 18,101,182 | 16,204,510 | 1,896,672 | 11.7 | % | 15,695,646 | 10,204,426 | 5,491,220 | 53.8 | % | |||||||||||||||
| Average loans | 1,839,695 | 1,777,008 | 62,687 | 3.5 | % | 1,758,226 | 1,609,464 | 148,762 | 9.2 | % | |||||||||||||||
| Average deposits | 9,589,814 | 9,090,116 | 499,698 | 5.5 | % | 8,676,047 | 6,447,987 | 2,228,060 | 34.6 | % | |||||||||||||||
| Fiduciary assets | 60,495,213 | 52,935,646 | 7,559,567 | 14.3 | % | 60,495,213 | 52,352,135 | 8,143,078 | 15.6 | % | |||||||||||||||
| Assets under management or administration | 91,592,247 | 82,419,932 | 9,172,315 | 11.1 | % | 91,592,247 | 82,740,961 | 8,851,286 | 10.7 | % | |||||||||||||||