2015 ANNUAL REPORT
2014 | Annual Report
BOK Financial Corporation:
A Well-Balanced, Diversified Regional Bank
A DESIRABLE OPERATING REGION:
Full-Service
Banking Markets
Additional Mortgage
Banking Markets
Additional Wealth
Management Markets
Loans by Principal Market:
(In Millions)
12/31/2015
Oklahoma
Texas
New Mexico
Arkansas
Colorado
Arizona
Kansas/MO
6,187.0
5,535.2
821.3
170.7
1,288.2
1,189.4
749.3
15,941.1
38.8%
34.7%
5.2%
1.1%
8.1%
7.5%
4.7%
100%
Deposits by Principal Market:
(In Millions)
12/31/2015
Oklahoma
Texas
New Mexico
Arkansas
Colorado
Arizona
Kansas/MO
11,534.3
5,387.5
1,362.5
256.8
1,442.2
717.3
387.5
21,088.1
54.7%
25.5%
6.5%
1.2%
6.8%
3.4%
1.8%
100%
DIVERSIFIED REVENUE SOURCES AND LOAN PORTFOLIO:
Brokerage & Trading 9.5%
Transfund Card 9.4%
Net Interest 51.6%
Trust Fees 9.3%
Loan Portfolio by Sector:
COMMERCIAL (In Millions)
12/31/2015
Energy
Services
Healthcare
Wholesale/Retail
Manufacturing
Other C&I
3,097.3
2,784.3
1,883.4
1,422.0
556.7
508.8
Service Charges 6.6%
Total Commercial
10,252.5
Mortgage 9.9%
Other 3.7%
Total Commercial RE
Total Residential Mortg.
Total Consumer
3,259.0
1,876.9
552.7
19.4%
17.5%
11.8%
8.9%
3.5%
3.2%
64.3%
20.4%
11.8%
3.5%
Percent of total revenue
12 Months Ended 12/31/15
Total Loans
15,941.1
100.0%
Steven G. Bradshaw
President and
Chief Executive Officer
To Our Shareholders:
2015 was a year dominated by headlines of an energy industry down-
turn, marked by speculation over what that downturn would mean
to BOK Financial Corporation’s energy lending portfolio and the
economy in our footprint. Despite these concerns, and despite the
headwind of low energy prices throughout the year, we delivered
strong earnings with $288.6 million of net income or $4.21 per share
for the year, down slightly compared to $292.4 million and $4.22
per share in 2014.
The downgrade of a single credit in the energy portfolio sidetracked our goal to
return to earnings growth this year. While this was a disappointment, I believe our
energy lending and credit team has managed through the downturn extremely well.
I’ll share more on this later in my letter.
The health of our franchise is strong, and we have a lot to be proud of in our 2015
results. We accelerated lending in our commercial and industrial portfolio across
all markets. Additionally, our loan growth of 12.2 percent exceeded the rate of
growth of the economy and put us near the top of our peer group. Arizona and
Kansas City were our fastest-growing markets, which provide geographic diversity
in our operations.
Our Healthcare group continued its recent strong track record with 29.4 percent
loan growth in 2015. Since we launched healthcare as a line of business in early 2014,
loan outstandings are up nearly 50 percent, and it has grown at an 18.4 percent
compounded annual growth rate over the past five years. Because we see this as a
major growth driver, we have expanded it to serve clients nationwide.
The $659 million of fees and commissions revenue we generated in 2015 was a
record for the company, exceeding the previous record set in 2012. Our fee businesses
remain strong and diverse, and provide a counter-cyclical benefit year after year. As an
example, our brokerage and trading grew nicely in recent years but had a slight dip in
revenues in 2015. Rather than downsizing the business and missing the next
opportunity, we focused on accelerating assets under management in our trust
business to counter that affect. As a result, fiduciary assets under management
increased 6.5 percent to $38.3 billion and assets under management or custody
increased 10 percent to $71 billion. This accomplishment is even more impressive
when considering the stock market was flat for the year.
Mortgage is another example of our counter-cyclical approach. While retail origination
clearly varies with interest rates, we’ve worked to reduce volatility by growing our
correspondent and consumer direct channel. This has the added benefit of creating a
servicing asset that produces a growing revenue stream even when originations are
off due to higher rates. Accordingly, mortgage was our strongest line of business in
2015 with 23.2 percent growth during the year.
1
MORE ON ENERGY BANKING
To date we have not seen broad-based impact on the econ-
BOK Financial is known nationwide as a leader in energy
omy in our footprint. The employment picture has held up
banking. It is a great business for us, and across the credit
well, and as of this writing, both Oklahoma and Texas
cycle, energy lending has been one of the best performing
continue to have unemployment rates below the national
portfolios in the bank with very low loss rates compared to
average. We are carefully monitoring leading economic
other lending businesses.
indicators and are cognizant that this could change, but
at this point the economy remains healthy here.
As an Oklahoma-based bank, energy is in our DNA. We
were founded in 1910 by oil industry pioneers. Our chair-
CAPITAL PRIORITIES
man and majority shareholder George Kaiser is a renowned
We are prudent managers of capital. We stick to our focus
energy industry entrepreneur. And several members of our
of finding high-quality acquisition partners that provide
board of directors are CEOs of leading energy companies.
additional talent, products or market scale. We avoided
As such, we have a unique perspective on the industry that
acquiring broken or poorly-scaled franchises, so we don’t
informs our decision making, our credit policies and our
dilute management’s attention and focus on organic
growth strategies.
growth. Because of this, we were largely on the sidelines
during the recession years, but are now more actively iden-
We remain committed to the energy industry. It is times
tifying quality partners, as evidenced by our first whole
like these when newcomer energy banks, of which there
bank transaction since 2007.
were plenty during the recent boom times, lose their con-
viction. We have said from the beginning of the downturn
MBT Bancshares, or mobank, is a $655 million financial
that if commodity prices remained depressed beyond one
institution in Kansas City, Mo. mobank has long been on
year, we would see an increasing risk of loss. However,
our target list in Kansas City as it is a high-quality organiza-
we continue to believe our energy portfolio is well-con-
tion that has demonstrated disciplined organic growth and
structed to withstand even an extended downturn and we
developed a unique approach to client service that differen-
have the credit loss reserves and capital to absorb any
tiates the bank in the market. mobank fits well with our
losses with minimal impact to our profitability.
legacy Kansas City operation. Its unique consumer
banking strategy and proven expertise in business banking
For our part, we are vigilantly monitoring every energy
augment Bank of Kansas City’s commercial banking,
credit relationship for signs of weakness. To date, with few
wealth management and mortgage banking presence in
exceptions, our portfolio has held up well. This is because
the market. We also expect to drive higher organic growth
we have historically focused primarily on secured lending
from our existing Kansas City franchise, as this visible in-
to oil and gas producers, which is the sweet spot in energy
vestment in the market will be viewed positively by
lending; because we remained disciplined in our credit
prospective clients and potential new hires.
culture even during the oil and gas boom and avoided
“stretching” to take risks we otherwise wouldn’t have; and
Our asset purchase agreement of Weaver Wealth Man-
because we have the internal engineering resources to
agement, which we announced in early January 2016, will
make sure our collateral position is strong and sound. As
increase BOK Financial’s assets under management and
an example of our discipline, during 2015 there were 42 oil
administration by approximately $340 million and expand
and gas companies with a combined $18 billion in debt
the company’s wealth management reach in Texas. And
outstanding that declared bankruptcy. We had zero funded
our acquisition of E-Spectrum Advisors, which we also
exposure to any of these companies, and had declined two
announced in early January, brings to us a boutique energy
relationships at origination and exited another two from
investment banking firm based in Dallas that offers a broad
the bank in recent years.
range of oil and natural gas property sales and strategic
2
advisory services to clients. The firm has closed more than
LONG TERM PRINCIPLES
150 transactions with an aggregate value of more than
We operate the bank on a foundation of long-term princi-
$10 billion since 1997.
ples. These principles were evident throughout 2015 in a
We also buy back stock when we believe it creates a
number of ways:
superior return opportunity for investors. In 2015, this was
Prudent balance sheet management: We manage our
underscored as we repurchased 3.6 million shares for the
balance sheet for interest rate neutrality because our his-
year, with 1.9 million of that in just the fourth quarter.
torical experience demonstrates that over the cycle, this
approach delivers better shareholder returns than trying to
Going forward, our priorities for deployment of capital
predict the direction and timing of interest rate changes.
remain the same. However, we believe buybacks will be
Over the past several years, since the 2008 recession, we
a smaller part of the plan in 2016 as we set aside capital
remained fully invested and slightly liability sensitive as we
for closing the MBT Bancshares acquisition.
expected the low-rate environment to continue. We are
LOOKING FORWARD
working to return to our historic neutral position, but this is
fluid as we monitor rates. We estimate our decision to
We believe the company is poised for greater growth in
remain fully invested delivered more than $200 million of
an operating environment of higher risk management
after-tax net interest income over the past five years.
costs, increasing technology investments and sluggish
but upward trending interest rates. We streamlined branch
Disciplined lending: We don’t deviate from historical
delivery, flattened our senior management structure and
lessons on prudent lending, and we are extremely quick to
identified meaningful reductions in controllable expenses
recognize problems and aggressively pursue positive out-
in a way that has offset much of the cost associated with
comes. Regarding the former, energy is a prime example.
accelerated investments in risk management and technol-
In the 1980s, loss exposure was highest in the energy
ogy. And we did so in a way that was mindful about
services sector. At BOK Financial, that portfolio represents
not impacting client experience or disrupting the above-
only nine percent of our total energy portfolio and has been
market revenue growth we have worked very hard to
filtered over the years to create a set of borrowers we
build the past 25 years.
believe are best of breed in the services sector. Similarly,
we have avoided some of the higher risk energy lending
We expect credit costs to return to historical norms,
segments, including second lien, mezzanine, subordinated
led by, but not limited to, energy. We’ve been clear for
and high-yield debt, and we have no exposure to higher
several years that minimal current levels of charge-offs
cost offshore exploration. We have been aggressively
were not sustainable over the long term. But we are
working with our borrowers throughout the year and
confident in our highly conservative approach to credit
believe we are taking all the right steps to mitigate loss
underwriting to support our hard-earned reputation as a
exposure, albeit returning to a more normalized level
leader in loss mitigation.
of provisioning.
We have built the bank in a way that creates a performance
Revenue diversity: One of the most noteworthy risk miti-
delta versus peer investment alternatives in both a
gants for BOK Financial is our extremely diverse set of
steady state and recessionary environment. While we are
lending and fee businesses. We have many different ways
currently in the former — a period of low but sustained
we can serve clients and grow the bank, which eliminates
economic growth — we are equally well-positioned for
the desire to rationalize extending risk in an area that may
the latter.
eventually enter a down cycle. This is a competitive
3
advantage for us, and we worked diligently over the past 25
strengthen a market, provide access to new clients and bring
years to build an enviable revenue mix that is balanced 50/50
new lines of business. We believe each of these transactions
between net interest revenue and fee income, but with an
will make us stronger as a bank and fuel revenue synergies as
efficiency ratio that compares favorably to other banks with a
we deliver the entirety of the bank to our newly-acquired clients.
similar high mix of fee revenue.
We are confident about our future notwithstanding the current
Focus on our competitive capabilities to draw market
commodity price environment. We are well aware an extended
share from national banks: This not only leads to greater
downturn will mean increased credit migration, loan loss re-
technology investment over time, but also relies heavily on hav-
serves and potential credit losses. But as a team, we have been
ing a broad mix of products and services and, most importantly,
through numerous commodities cycles previously and are con-
sophisticated and experienced talent in every part of the organi-
fident we have the depth of expertise to manage through them.
zation to provide a better client experience.
I want to close by thanking our employees for their hard work
Attract, retain and further develop talent across the
in 2015. Since becoming president and CEO in 2014, I’ve been
company: Many initiatives over the past two years have been
impressed with all of our employees’ commitment to our mis-
designed to improve two-way communication with our bankers,
sion. With their help, we’ve been able to create a congenial and
create higher engagement in company vision and goals, and to
collaborative work environment that makes BOK Financial a
prepare our best performers for greater responsibility as we
great place to build a career and a fun place to work. Their
grow. We see this as a critical differentiator in an environment
can-do attitude and positive energy is inspiring to me and my
that increasingly stresses sameness in operating manner to
leadership team. They make our communities a better place to
make regulatory oversight more efficient and effective.
live by volunteering their time and donating to more than 800
CONCLUSION
nonprofits across the footprint. In doing so, they change lives
and serve as ambassadors for the company. Each and every
As noted throughout this letter, BOK Financial benefits from a
one of them has my admiration and respect.
diversified business that was intentionally constructed to with-
stand downturns in the overall economy or even in certain
As always, I appreciate the support of our shareholders. BOK
sectors of the economy. We have a broad portfolio of fee
Financial has always attracted shareholders who are aligned
businesses that drive almost half our revenue, many of which
with our mission. They understand we are constructed and
have little direct correlation to energy prices. We have a bal-
managed to deliver long-term shareholder value and outper-
anced lending portfolio, including a fast-growing healthcare
form our peer group across the economic cycle. While 2015
specialty lending business. We also benefit from a footprint that
was a volatile year, and 2016 has started off even more so, we
includes desirable non-energy growth markets.
are working hard to build long-term shareholder value and
believe your patience will be rewarded.
We continue to invest in our business. Each of the acquisitions
we announced recently fits with our long-term strategy to sup-
plement core organic growth with acquired businesses that
Sincerely,
Steven G. Bradshaw
President and Chief Executive Officer
4
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(Mark One)
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For the quarterly period ended December 31, 2015
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For the transition period from _____________ to ______________
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Oklahoma
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Bank of Oklahoma Tower
Boston Avenue at Second Street
Tulsa, Oklahoma
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73-1373454
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74172
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(918) 588-6000
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Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common stock, $0.00006 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
No
subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files)Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of “larger accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated filer
Smaller reporting company
Non-accelerated filer
Accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the registrant's common stock ("Common Stock") held by non-affiliates is approximately $1.5 billion (based
on the June 30, 2015 closing price of Common Stock of $69.58 per share). As of January 31, 2016, there were 66,119,435 shares of Common
Stock outstanding.
Part III incorporates certain information by reference from the Registrant’s Proxy Statement for the 2016 Annual Meeting of Shareholders.
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(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)
Index
Part I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Part II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Item 10
Item 11
Item 12
Item 13
Item 14
Part IV
Item 15
Exhibits, Financial Statement Schedules
Signatures
Exhibit 10.4.10 Employment Agreement - Stacy Kymes
Exhibit 21
Exhibit 23
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Exhibit 31.1
Chief Executive Officer Section 302 Certification
Exhibit 31.2
Exhibit 32
Chief Financial Officer Section 302 Certification
Section 906 Certifications
1
9
13
13
13
13
14
17
17
74
78
174
174
174
174
174
175
175
175
175
179
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:20)(cid:17)(cid:3)(cid:3)(cid:3)(cid:37)(cid:56)(cid:54)(cid:44)(cid:49)(cid:40)(cid:54)(cid:54)
(cid:51)(cid:36)(cid:53)(cid:55)(cid:3)(cid:44)
(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)
Developments relating to individual aspects of the business of BOK Financial Corporation (“BOK Financial” or “the
Company”) are described below. Additional discussion of the Company’s activities during the current year appears within Item
7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
(cid:39)(cid:72)(cid:86)(cid:70)(cid:85)(cid:76)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)
BOK Financial is a financial holding company incorporated in the state of Oklahoma in 1990 whose activities are governed by
the Bank Holding Company Act of 1956 (“BHCA”), as amended by the Financial Services Modernization Act or Gramm-
Leach-Bliley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). BOK
Financial offers full service banking in Oklahoma, Texas, New Mexico, Northwest Arkansas, Colorado, Arizona, and Kansas/
Missouri. At December 31, 2015, the Company reported total consolidated assets of $31 billion and ranked as the 53rd largest
bank holding company based on asset size.
BOKF, NA (“the Bank”) is a wholly owned subsidiary bank of BOK Financial. 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, Bank of Kansas City, Bank of Oklahoma, Bank of Texas and Colorado State Bank and Trust. Other
wholly owned subsidiaries of BOK Financial include BOSC, Inc., a broker/dealer that engages in retail and institutional
securities sales and municipal bond underwriting and The Milestone Group, Inc., an investment adviser to high net worth
clients. Other non-bank subsidiary operations do not have a significant effect on the Company’s financial statements.
Our overall strategic objective is to emphasize growth in long-term value by building on our leadership position in Oklahoma
through expansion into other high-growth markets in contiguous states. We operate primarily in the metropolitan areas of Tulsa
and Oklahoma City, Oklahoma; Dallas, Fort Worth and Houston, Texas; Albuquerque, New Mexico; Denver, Colorado;
Phoenix, Arizona, and Kansas City, Kansas/Missouri. Our acquisition strategy targets fairly priced quality organizations with
demonstrated solid growth that would supplement our principal lines of business. We provide additional growth opportunities
by hiring talent to enhance competitiveness, adding locations and broadening product offerings. Our operating philosophy
embraces local decision-making in each of our geographic markets while adhering to common Company standards.
Our primary focus is to provide a comprehensive range of nationally competitive financial products and services in a
personalized and responsive manner. Products and services include loans and deposits, cash management services, fiduciary
services, mortgage banking and brokerage and trading services to middle-market businesses, financial institutions and
consumers. Commercial banking represents a significant part of our business. Our credit culture emphasizes building
relationships by making high quality loans and providing a full range of financial products and services to our customers. Our
energy financing expertise enables us to offer commodity derivatives for customers to use in their risk management. We also
offer derivative products for customers to use in managing their interest rate and foreign exchange risk. Our diversified base of
revenue sources is designed to generate returns in a range of economic situations. Historically, fees and commissions provide
43% to 49% of our total revenue. Approximately 48% of our revenue came from fees and commissions in 2015.
BOK Financial’s corporate headquarters is located at Bank of Oklahoma Tower, Boston Avenue at Second Street, Tulsa,
Oklahoma 74172.
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
amendments to those reports are available on the Company’s website at www.bokf.com as soon as reasonably practicable after
the Company electronically files such material with or furnishes it to the Securities and Exchange Commission.
1
(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:54)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
BOK Financial operates three principal lines of business: Commercial Banking, Consumer Banking and Wealth
Management. Commercial Banking includes lending, treasury and cash management services and customer risk management
products for small businesses, middle market and larger commercial customers. Commercial Banking also includes the
TransFund electronic funds network. Consumer Banking includes retail lending and deposit services, lending and deposit
services to small business customers served through the retail branch network and all mortgage banking activities. Wealth
Management provides fiduciary services, private bank services and investment advisory services in all markets. Wealth
Management also underwrites state and municipal securities and engages in brokerage and trading activities. Discussion of
these principal lines of business appears within the Lines of Business section of “Management's Discussion and Analysis of
Financial Condition and Results of Operations” and within Note 17 of the Company’s Notes to Consolidated Financial
Statements, both of which appear elsewhere herein.
(cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)
BOK Financial and its operating segments face competition from other banks, thrifts, credit unions and other non-bank
financial institutions, such as investment banking firms, investment advisory firms, brokerage firms, investment companies,
government agencies, mortgage brokers and insurance companies. The Company competes largely on the basis of customer
services, interest rates on loans and deposits, lending limits and customer convenience. Some operating segments face
competition from institutions that are not as closely regulated as banks, and therefore are not limited by the same capital
requirements and other restrictions. All market share information presented below is based upon share of deposits in specified
areas according to SNL DataSource as of June 30, 2015.
We are the largest financial institution in the state of Oklahoma with 15% of the state’s total deposits. Bank of Oklahoma has
32% and 13% of the market share in the Tulsa and Oklahoma City areas, respectively.(cid:3)We compete with two banks that have
operations nationwide and have greater access to funds at lower costs, higher lending limits, and greater access to technology
resources. We also compete with regional and locally-owned banks in both the Tulsa and Oklahoma City areas, as well as in
every other community in which we do business throughout the state.
Bank of Texas competes against numerous financial institutions, including some of the largest in the United States,(cid:3)and has a
market share of approximately 2% in the Dallas, Fort Worth area and less than 1% in the Houston area. Bank of Albuquerque
has a number four market share position with 9% of deposits in the Albuquerque area and competes with four large national
banks, some regional banks and several locally-owned smaller community banks. Colorado State Bank and Trust has a market
share of approximately 2% in the Denver area.(cid:3)Bank of Arkansas serves Benton and Washington counties in Arkansas with a
market share of approximately 4%. Bank of Arizona operates as a community bank with locations in Phoenix, Mesa and
Scottsdale with a market share of approximately 1%. Bank of Kansas City serves the Kansas City, Kansas/Missouri market
with a market share of approximately 2%. The Company’s ability to expand into additional states remains subject to various
federal and state laws.
(cid:40)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)
As of December 31, 2015, BOK Financial and its subsidiaries employed 4,789 full-time equivalent employees. None of the
Company’s employees are represented by collective bargaining agreements. Management considers its employee relations to be
good.
(cid:54)(cid:88)(cid:83)(cid:72)(cid:85)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
BOK Financial and its subsidiaries are subject to extensive regulations under federal and state laws. These regulations are
designed to promote safety and soundness, protect consumers and ensure the stability of the banking system as a whole. The
purpose of these regulations is not necessarily to protect shareholders and creditors. As detailed below, these regulations require
the Company and its subsidiaries to maintain certain capital balances and require the Company to provide financial support to
its subsidiaries. These regulations may restrict the Company’s ability to diversify, to acquire other institutions and to pay
dividends on its capital stock. These regulations also include requirements on certain programs and services offered to our
customers, including restrictions on fees charged for certain services.
The following information summarizes certain existing laws and regulations that affect the Company’s operations. It does not
summarize all provisions of these laws and regulations and does not include all laws and regulations that affect the Company
presently or in the future.
2
General
As a financial holding company, BOK Financial is regulated under the BHCA and is subject to regular inspection, examination
and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). Under the BHCA,
BOK Financial files quarterly reports and other information with the Federal Reserve Board.
The Bank is organized as a national banking association under the National Banking Act, and is subject to regulation,
supervision and examination by the Office of the Comptroller of the Currency (the “OCC”), the Federal Deposit Insurance
Corporation (the “FDIC”), the Federal Reserve Board, the Consumer Financial Protection Bureau and other federal and state
regulatory agencies. The OCC has primary supervisory responsibility for national banks and must approve certain corporate or
structural changes, including changes in capitalization, payment of dividends, change of place of business, and establishment of
a branch or operating subsidiary. The OCC performs examinations concerning safety and soundness, the quality of management
and directors, information technology and compliance with applicable regulations. The National Banking Act authorizes the
OCC to examine every national bank as often as necessary.
A financial holding company, and the companies under its control, are permitted to engage in activities considered “financial in
nature” as defined by the BHCA, Gramm-Leach-Bliley Act and Federal Reserve Board interpretations. Activities that are
“financial in nature” include securities underwriting and dealing, insurance underwriting, merchant banking, operating a
mortgage company, performing certain data processing operations, servicing loans and other extensions of credit, providing
investment and financial advice, owning and operating savings and loan associations, and leasing personal property on a full
pay-out, non-operating basis. A financial holding company is required to notify the Federal Reserve Board within thirty days of
engaging in new activities determined to be “financial in nature.” BOK Financial is engaged in some of these activities and has
notified the Federal Reserve Board.
In order for a financial holding company to commence any new activity permitted by the BHCA, each insured depository
institution subsidiary of the financial holding company must be "well capitalized" and "well managed" and received a rating of
at least "satisfactory" in its most recent examination under the Community Reinvestment Act. A financial holding company and
its depository institution subsidiaries are considered to be "well capitalized" if they meet the requirements discussed in the
section captioned "Capital Adequacy and Prompt Corrective Action" which follows. A financial holding company and its
depository institution subsidiaries are considered to be "well managed" if they receive a composite rating and management
rating of at least "satisfactory" in their most recent examinations. If a financial holding company fails to meet these
requirements, the Federal Reserve Board may impose limitations or conditions on the conduct of its activities and the company
may not commence any new financial activities without prior approval.
The BHCA requires the Federal Reserve Board’s prior approval for the direct or indirect acquisition of more than five percent
of any class of voting stock of any non-affiliated bank. Under the Federal Bank Merger Act, the prior approval of the OCC is
required for a national bank to merge with another bank or purchase the assets or assume the deposits of another bank. In
reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities consider,
among other things, the competitive effect and public benefits of the transactions, the capital position of the combined
organization, the applicant’s performance record under the Community Reinvestment Act and fair housing laws and the
effectiveness of the subject organizations in combating money laundering activities.
A financial holding company and its subsidiaries are prohibited under the BHCA from engaging in certain tie-in arrangements
in connection with the provision of any credit, property or services. Thus, a subsidiary of a financial holding company may not
extend credit, lease or sell property, furnish any services or fix or vary the consideration for these activities on the condition
that (1) the customer obtain or provide additional credit, property or services from or to the financial holding company or any
subsidiary thereof, or (2) the customer may not obtain some other credit, property or services from a competitor, except to the
extent reasonable conditions are imposed to insure the soundness of credit extended.
The Bank and other non-bank subsidiaries are also subject to other federal and state laws and regulations. For example, BOSC,
Inc. is regulated by the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority
(“FINRA”), the Federal Reserve Board, and state securities regulators. Such regulations generally include licensing of certain
personnel, customer interactions, and trading operations.
3
Dodd-Frank Wall Street Reform and Consumer Protection Act
On July 21, 2010, the Dodd-Frank Act was signed into law, giving federal banking agencies authority to increase regulatory
capital requirements, impose additional rules and regulations over consumer financial products and services and limit the
amount of interchange fees that may be charged in an electronic debit transaction. In addition, the Dodd-Frank Act made
permanent the $250,000 limit for federal deposit insurance. It also repealed prohibitions on payment of interest on demand
deposits, which could impact how interest is paid on business transaction and other accounts. Further, the Dodd-Frank Act
prohibits banking entities from engaging in proprietary trading and restricts banking entities sponsorship of or investment in
private equity funds and hedge funds. Final rules required to implement the Dodd-Frank Act have largely been issued. Many of
these rules have extended phase-in periods and the full impact of this legislation on the banking industry, including the
Company, remains unknown.
The Durbin Amendment to the Dodd-Frank Act required that interchange fees on electronic debit transactions paid by
merchants must be “reasonable and proportional to the cost incurred by the issuer” and prohibited card network rules that have
limited price competition among networks. Effective October 1, 2011, the Federal Reserve issued its final ruling to implement
the Durbin Amendment. This ruling established a cap on interchange fees banks with more than $10 billion in total assets can
charge merchants for certain debit card transactions. The Durbin Amendment also required all banks to comply with the
prohibition on network exclusivity and routing requirements. Debit card issuers are required to make at least two unaffiliated
networks available to merchants.
The Dodd-Frank Act established the Consumer Financial Protection Bureau ("CFPB") with powers to supervise and enforce
consumer protection laws. The CFPB has broad rule-making authority for a wide range of consumer protection laws that apply
to all banks and savings institutions, including the authority to prohibit "unfair, deceptive or abusive" acts and practices.
Established July 21, 2011, the CFPB has examination and enforcement authority over all banks and savings institutions with
more than $10 billion in assets for certain designated consumer laws and regulations. The CFPB issued mortgage servicing
standards and mortgage lending rules, including “qualified mortgage” rules that are designed to protect consumers and ensure
the reliability of mortgages. Mortgage lenders are required to make a reasonable and good faith determination based on verified
and documented information that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according
to its terms. Qualified mortgages that meet this requirement and other specified criteria are given a safe harbor of compliance.
Rules affecting mortgage lenders and servicers became effective on January 10, 2014.
Title VI of the Dodd-Frank Act, commonly known as the Volcker Rule, prohibits banking entities from engaging in proprietary
trading as defined by the Dodd-Frank Act and restricts sponsorship of, or investment in, private equity funds and hedge funds,
subject to limited exceptions and exclusions. In December 2013, Federal banking agencies approved regulations that implement
the Volcker Rule. In December 2014, the Federal Reserve extended the conformance period for key elements of the Rule
relating to relationships with funds until July 2017. The Company’s private equity investment activities will be curtailed. The
Company’s trading activity were largely unaffected, as most trading activities are exempted or excluded from the Volcker Rule
trading prohibitions.
Title VII of the Dodd-Frank Act subjects nearly all derivative transactions to the regulations of the Commodity Futures Trading
Commission (“CFTC”) or SEC. This includes registration, recordkeeping, reporting, capital, margin and business conduct
requirements on swap dealers and major swap participants. The CFTC and SEC both approved interim final rules on the
definition "swap" and “swap dealer" which were effective October 2012. Under these rules, entities transacting in less than $8
billion in notional value of swaps over any 12 month period during the first three years after these rules are effective will be
exempt from the definition of "swap dealer." After December 2017, this threshold may be reduced to $3 billion subject to the
results of studies the commissions intend to undertake once the derivative rules are effective. The Company currently estimates
that the nature and volume of swap activity will not require it to register as a swap dealer any time prior to December 2017.
Although the ultimate impact of Title VII remains uncertain, we currently believe its full implementation is likely not to impose
significantly higher compliance costs on the Company.
4
Capital Adequacy and Prompt Corrective Action
The Federal Reserve Board, the OCC and the FDIC have issued substantially similar risk-based and leverage capital guidelines
applicable to United States banking organizations to ensure capital adequacy based upon the risk levels of assets and off-
balance sheet financial instruments. In addition, these regulatory agencies may from time to time require that a banking
organization maintain capital above the minimum levels, whether because of its financial condition or actual or anticipated
growth. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets,
liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by regulators regarding components, risk weighting and other factors.
Prior to January 1, 2015, the Federal Reserve Board risk-based guidelines defined a three-tier capital framework. Core capital
(Tier 1) included common shareholders' equity and qualifying preferred stock, less goodwill, most intangible assets and other
adjustments. Supplementary capital (Tier 2) consisted of preferred stock not qualifying as Tier 1 capital, qualifying mandatory
convertible debt securities, limited amounts of subordinated debt, other qualifying term debt and allowances for credit losses,
subject to limitations. Market risk capital (Tier 3) included qualifying unsecured subordinated debt. Assets and off-balance
sheet exposures were assigned to one of four categories of risk-weights, based primarily upon relative credit risk. Risk-based
capital ratios are calculated by dividing Tier 1 and total capital by risk-weighted assets.
New capital rules were effective for banks and bank holding companies, including BOK Financial on January 1, 2015 as part of
a package of regulatory reforms developed by the Basel Committee on Banking Supervision ("BCBS") to strengthen the
regulation, supervision and risk management of the banking sector, commonly referred to as the Basel III framework.
Components of these rules will phase in through January 1, 2019. The new capital rules reduced instruments that qualify as
regulatory capital and generally increased risk weighted assets. The new capital rules established a 7% threshold for common
equity Tier 1 ratio consisting of a minimum level plus a capital conservation buffer. The rules also changed both the Tier 1 risk
based capital requirements and the total risk based requirements to a minimum of 6% and 8%, respectively, plus a capital
conservation buffer of 2.5% totaling 8.5% and 10.5%, respectively. The Company elected to exclude unrealized gains and
losses from available for sale securities from its calculation of Tier 1 capital, consistent with the treatment under previous
capital rules.
As of December 31, 2015, BOK Financial's common equity Tier 1 ratio was 12.13%. BOK Financial's Tier 1 and total capital
were 12.13% and 13.30%, respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted average total assets. Banking organizations are required
to maintain a ratio of at least 4%. A bank which falls below these levels, including the capital conservation buffer, would be
subject to regulatory restrictions on capital distributions (including but not limited to dividends and share repurchases) and
executive bonus payments. BOK Financial's leverage ratio at December 31, 2015 was 9.25%.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the “FDICIA”), among other things, identifies five
capital categories for insured depository institutions from well capitalized to critically undercapitalized and requires the
respective federal regulatory agencies to implement systems for prompt corrective action for institutions failing to meet
minimum capital requirements within such categories. FDICIA imposes progressively more restrictive covenants on operations,
management and capital distributions, depending upon the category in which an institution is classified. The various regulatory
agencies have adopted substantially similar regulations that define the five capital categories identified by FDICIA, using the
total risk-based capital, Tier 1 risk-based capital and leverage capital ratios as the relevant capital measures. Such regulations
establish various degrees of corrective action to be taken when an institution is considered undercapitalized. Under these
guidelines, the Bank was considered well capitalized as of December 31, 2015.
Liquidity Requirements
The Basel III framework also requires bank holding companies and banks to measure their liquidity against specific liquidity
tests. One test, referred to as the liquidity coverage ratio, is designed to ensure that the banking entity maintains a prescribed
minimum level of unencumbered high-quality liquid assets equal to expected net cash outflows as defined. The other test,
referred to as the net stable funding ratio, is designed to promote greater reliance on medium and long term funding sources.
5
On September 3, 2014, U.S. federal banking agencies published the final rule covering Liquidity Risk Management Standards
that would standardize minimum liquidity requirements for internationally active banking organizations as defined (generally
those with total consolidated assets in excess of $250 billion) as well as modified liquidity requirements for other banking
organizations with total consolidated assets in excess of $50 billion that are not internationally active. Although the final rule
does not apply to banking organizations with total assets less than $50 billion, including the Company, if growth in the balance
sheet of the Company were to approach the $50 billion threshold, the costs of such liquidity regulations would begin to be
realized.
Stress Testing
As required by the Dodd-Frank Act, the Federal Reserve published regulations that require bank holding companies with $10
billion to $50 billion in assets to perform annual capital stress tests. The requirements for annual capital stress test became
effective for the Company in the fourth quarter of 2013. The Dodd-Frank Act Stress Test ("DFAST") is a forward-looking
exercise under which the Company and its banking subsidiary estimate the impact of a hypothetical severely adverse
macroeconomic scenario provided by the Federal Reserve and the Office of the Comptroller of the Currency on its financial
condition and regulatory capital ratios over a nine-quarter time horizon. Under the scenario provided by the regulatory agencies
for the Company's most recently completed stress test, all capital ratio measures remain comfortably above the minimum
regulatory thresholds. Additional information concerning the annual stress test may be found on the Company's Investor
Relations page at www.bokf.com under the "Presentations" tab. The results of future capital stress tests may place constraints
on capital distributions or increases in required regulatory capital under certain circumstances.
Further discussion of regulatory capital, including regulatory capital amounts and ratios, is set forth under the heading
“Liquidity and Capital” within “Management's Discussion and Analysis of Financial Condition and Results of Operations” and
in Note 15 of the Company's Notes to Consolidated Financial Statements, both of which appear elsewhere herein.
Executive and Incentive Compensation
Guidelines adopted by federal banking agencies prohibit excessive compensation as an unsafe and unsound practice and
describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by
an executive officer, employee, director or principal shareholder. The Federal Reserve Board has issued comprehensive
guidance on incentive compensation intended to ensure that the incentive compensation policies do not undermine safety and
soundness by encouraging excessive risk taking. This guidance covers all employees that have the ability to materially affect
the risk profile of an organization, either individually or as part of a group, based on key principles that (i) incentives do not
encourage risk-taking beyond the organization's ability to identify and manage risk, (ii) compensation arrangements are
compatible with effective internal controls and risk management, and (iii) compensation arrangements are supported by strong
corporate governance, including active and effective board oversight. Deficiencies in compensation practices may affect
supervisory ratings and enforcement actions may be taken if incentive compensation arrangements pose a risk to safety and
soundness.
Deposit Insurance
Substantially all of the deposits held by the Bank are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of
the FDIC and are subject to deposit insurance assessments to maintain the DIF. In 2011, the FDIC released a final rule to
implement provisions of the Dodd-Frank Act that affect deposit insurance assessments. Among other things, the Dodd-Frank
Act raised the minimum designated reserve ratio from 1.15% to 1.35% of estimated insured deposits, removed the upper limit
of the designated reserve ratio, required that the designated reserve ratio reach 1.35% by September 30, 2020, and required that
the FDIC offset the effect of increasing the minimum designated reserve ratio on depository institutions with total assets of less
than $10 billion. The Dodd-Frank Act provided the FDIC flexibility in implementation of the increase in the designated reserve
ratio, but it will ultimately result in increased deposit insurance costs to the Company. The Dodd-Frank Act also required that
the FDIC redefine the assessment base to average consolidated assets minus average tangible equity.
Dividends
A key source of liquidity for BOK Financial is dividends from the Bank, which is limited by various banking regulations to net
profits, as defined, for the year plus retained profits for the preceding two years. Dividends are further restricted by minimum
capital requirements and the Company's internal capital policy. The Bank's dividend limitations are discussed under the heading
“Liquidity and Capital” within “Management's Discussion and Analysis of Financial Condition and Results of Operations”.
6
Source of Strength Doctrine
According to Federal Reserve Board policy, a bank holding company is expected to act as a source of financial strength to each
subsidiary bank and to commit resources to support each such subsidiary. This support may be required at times when a bank
holding company may not be able to provide such support.
Transactions with Affiliates
The Federal Reserve Board regulates transactions between the Company and its subsidiaries. Generally, the Federal Reserve
Act and Regulation W, as amended by the Dodd-Frank Act, limit the Company’s banking subsidiary and its subsidiaries, to
lending and other “covered transactions” with affiliates. The aggregate amount of covered transactions a banking subsidiary or
its subsidiaries may enter into with an affiliate may not exceed 10% of the capital stock and surplus of the banking subsidiary.
The aggregate amount of covered transactions with all affiliates may not exceed 20% of the capital stock and surplus of the
banking subsidiary.
Covered transactions with affiliates are also subject to collateralization requirements and must be conducted on arm’s length
terms. Covered transactions include (a) a loan or extension of credit by the banking subsidiary, including derivative contracts,
(b) a purchase of securities issued to a banking subsidiary, (c) a purchase of assets by the banking subsidiary unless otherwise
exempted by the Federal Reserve, (d) acceptance of securities issued by an affiliate to the banking subsidiary as collateral for a
loan, and (e) the issuance of a guarantee, acceptance or letter of credit by the banking subsidiary on behalf of an affiliate.
Bank Secrecy Act and USA PATRIOT Act
The Bank Secrecy Act (“BSA”) and the The USA PATRIOT Act of 2001 (“PATRIOT Act”) imposes many requirements on
financial institutions in the interest of national security and law enforcement. BSA requires banks to maintain records and file
suspicious activity reports that are of use to law enforcement and regulators in combating money laundering and other financial
crimes. The PATRIOT Act is intended to deny terrorists and criminals the ability to access the U.S. financial services system
and places significantly greater requirements on financial institutions. Financial institutions, such as the Company and its
subsidiaries, must have a designated BSA Officer, internal controls, independent testing and training programs commensurate
with their size and risk profile. As part of its internal control program, a financial institution is expected to have effective
customer due diligence and enhanced due diligence requirements for high-risk customers, as well as processes to prohibit
transaction with entities subject to Office of Foreign Asset Control sanctions. Documentation and recordkeeping requirements,
as well as system requirements, aimed at identifying and reporting suspicious activity reporting, must increase with the
institution's size and complexity. Failure to implement or maintain adequate programs and controls to combat terrorist financing
and money laundering may have serious legal, financial, and reputational consequences.
7
(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:51)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:41)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)
The operations of BOK Financial and its subsidiaries are affected by legislative changes and by the policies of various
regulatory authorities and, in particular, the policies of the Federal Reserve Board. The Federal Reserve Board has statutory
objectives to maximize employment and maintain price stability. Among the instruments of monetary policy used by the
Federal Reserve Board to implement these objectives are: open-market operations in U.S. Government securities, changes in
the discount rate and federal funds rate on bank borrowings, and changes in reserve requirements on bank deposits. The effect
of future changes in such policies on the business and earnings of BOK Financial and its subsidiaries is uncertain.
In response to the significant recession in business activity which began in 2007, the Federal Reserve took aggressive actions to
reduce interest rates and provide liquidity. While many of the crisis-related programs have expired or been closed, government
legislation and policies continue to be accommodative, including increases in government spending, reduction of certain taxes
and promotion of home affordability programs.
The Federal Reserve completed its bond purchase program designed to reduce longer-term rates in October of 2014, although it
continues to maintain an accommodative policy of reinvesting principal payments from its holdings of agency debt and agency
mortgage-backed securities in agency mortgage-backed securities and to rollover maturing Treasury securities. The Federal
Reserve has indicated that it will likely foster a low-interest rate environment for a considerable time, dependent on inflation
and employment levels the progress. The short-term effectiveness and long-term impact of these programs on the economy in
general and on BOK Financial Corporation in particular are uncertain.
BOK Financial does not engage in operations in foreign countries, nor does it lend to foreign governments.
(cid:41)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
8
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:20)(cid:36)(cid:17)(cid:3)(cid:3)(cid:3)(cid:53)(cid:44)(cid:54)(cid:46)(cid:3)(cid:41)(cid:36)(cid:38)(cid:55)(cid:50)(cid:53)(cid:54)
BOK Financial Corporation and its subsidiaries could be adversely affected by risks and uncertainties that could have a
material impact on its financial condition and results of operations, as well as on its common stock and other financial
instruments. Risk factors which are significant to the Company include, but are not limited to:
(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:41)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)
Adverse factors could impact BOK Financial's ability to implement its operating strategy.
Although BOK Financial has developed an operating strategy which it expects to result in continuing improved financial
performance, BOK Financial cannot assure that it will be successful in fulfilling this strategy or that this operating strategy will
be successful. Achieving success is dependent upon a number of factors, many of which are beyond BOK Financial's direct
control. Factors that may adversely affect BOK Financial's ability to implement its operating strategy include:
•
•
•
•
•
•
•
•
deterioration of BOK Financial's asset quality;
deterioration in general economic conditions, especially in BOK Financial's core markets;
inability to control BOK Financial's non-interest expenses;
inability to increase non-interest income;
inability to access capital;
decreases in net interest margins;
increases in competition;
adverse regulatory developments.
Substantial competition could adversely affect BOK Financial.
Banking is a competitive business. BOK Financial competes actively for loan, deposit and other financial services business in
the southwest region of the United States. BOK Financial's competitors include a large number of small and large local and
national banks, savings and loan associations, credit unions, trust companies, broker-dealers and underwriters, as well as many
financial and non-financial firms that offer services similar to those of BOK Financial. Large national financial institutions
have substantial capital, technology and marketing resources. Such large financial institutions may have greater access to
capital at a lower cost than BOK Financial does, which may adversely affect BOK Financial's ability to compete effectively.
BOK Financial has expanded into markets outside of Oklahoma, where it competes with a large number of financial institutions
that have an established customer base and greater market share than BOK Financial. BOK Financial may not be able to
continue to compete successfully in these markets outside of Oklahoma. With respect to some of its services, BOK Financial
competes with non-bank companies that are not subject to regulation. The absence of regulatory requirements may give non-
banks a competitive advantage.
Government regulations could adversely affect BOK Financial.
BOKF and BOKF, NA are subject to banking laws and regulations that limit the type of acquisitions and investments that we
may make. In addition, certain permitted acquisitions and investments are subject to prior review and approval by banking
regulators, including the Federal Reserve, OCC and FDIC. Banking regulators have broad discretion on whether to approve
proposed acquisitions and investments. In deciding whether to approve a proposed acquisition, federal banking regulators will
consider, among other things, the effect of the acquisition on competition; the convenience and needs of the communities to be
served, including our record of compliance under the Community Reinvestment Act; and our effectiveness in combating money
laundering. They will also consider our financial condition and our future prospects, including projected capital ratios and
levels; the competence, experience, and integrity of our management; and our record of compliance with laws and regulations.
The trend of increasingly extensive regulation is likely to continue and become more costly in the future. Laws, regulations or
policies currently affecting BOK Financial and its subsidiaries may change. The implementation of the Dodd-Frank Act has and
will continue to affect BOK Financial’s businesses, including interchange revenue, mortgage banking, derivative and trading
activities on behalf of customers, consumer products and funds management.
9
Regulatory authorities may change their interpretation of these statutes and regulations and are likely to increase their
supervisory activities, including the OCC, our primary regulator, and the CFPB, our new regulator for certain designated
consumer laws and regulations. Violations of laws and regulations could limit the growth potential of BOK Financial's
businesses. We have made extensive investments in human and technological resources to address enhanced regulatory
expectations, including investments in the areas of risk management, compliance, and capital planning.
Adverse political environment could negatively impact BOK Financial’s business.
As a result of the financial crisis and related government intervention to stabilize the banking system, there have been a series
of laws and related regulations proposed or enacted in an attempt to ensure the crisis is not repeated. Many of the proposed new
regulations are far-reaching. The intervention by the government also impacted populist sentiment with a negative view of
financial institutions. This sentiment may increase litigation risk to the Company. While the Company did not participate in the
Troubled Asset Relief Program and performed well throughout the downturn, the adverse political environment could have an
adverse impact on BOK Financial’s future operations.
(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:41)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)
Adverse regional economic developments could negatively affect BOK Financial's business.
At December 31, 2015, loans to businesses and individuals with collateral primarily located in Texas represented approximately
33% of the total loan portfolio and loans to businesses and individuals with collateral primarily located in Oklahoma
represented approximately 24% of our total loan portfolio. These geographic concentrations subject the loan portfolio to the
general economic conditions within these areas. Poor economic conditions in Oklahoma, Texas or other markets in the
southwest region may cause BOK Financial to incur losses associated with higher default rates and decreased collateral values
in BOK Financial's loan portfolio. A regional economic downturn could also adversely affect revenue from brokerage and
trading activities, mortgage loan originations and other sources of fee-based revenue.
Extended oil and gas commodity price downturns could negatively effect BOK Financial customers
At December 31, 2015, 19% of BOK Financial's total loan portfolio is comprised of loans to borrowers in the energy industry.
The energy industry is historically cyclical and prolonged periods of low oil and gas commodity prices could negatively impact
borrowers' ability to pay. In addition, the Company does business in several major oil and natural gas producing states
including Oklahoma, Texas and Colorado. The economies of these states could be negatively impacted by prolonged periods of
low oil and gas commodity prices resulting in increased credit migration to classified and nonaccruing categories, higher loan
loss provisions and risk of credit losses from both energy borrowers and businesses and individuals in those regional
economies.
Other adverse economic factors affecting particular industries could have a negative effect on BOK Financial customers
and their ability to make payments to BOK Financial.
Certain industry-specific economic factors also affect BOK Financial. For example, BOK Financial's loan portfolio includes
commercial real estate loans. A downturn in the real estate industry in general or in certain segments of the commercial real
estate industry in the southwest region could also have an adverse effect on BOK Financial's operations.
Adverse global economic factors could have a negative effect on BOK Financial customers and counter-parties.
Economic conditions globally, including those of the European Union and China, could impact BOK Financial’s customers and
counter-parties with which we do business. We have no direct exposure to European sovereign debt and our aggregate gross
exposure to European financial institutions totaled $8.8 million at December 31, 2015. Our exposure to Chinese financial
institution is limited. In addition, we have an aggregate gross exposure to internationally active domestic financial institutions
of approximately $200 million at December 31, 2015 composed of $182 million of cash and securities positions and $19
million of gross derivative positions. The financial condition of these institutions is monitored on an on-going basis. We have
not identified any significant customer exposures to European sovereign debt, European financial institutions or Chinese
financial institutions.
10
(cid:47)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:41)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)
Fluctuations in interest rates could adversely affect BOK Financial's business.
BOK Financial's business is highly sensitive to:
•
•
•
the monetary policies implemented by the Federal Reserve Board, including the discount rate on bank borrowings and
changes in reserve requirements, which affect BOK Financial's ability to make loans and the interest rates we may
charge;
changes in prevailing interest rates, due to the dependency of the Bank on interest income;
open market operations in U.S. Government securities.
A significant increase in market interest rates, or the perception that an increase may occur, could adversely affect both BOK
Financial's ability to originate new loans and BOK Financial's ability to grow. Conversely, a decrease in interest rates could
result in acceleration in the payment of loans, including loans underlying BOK Financial's holdings of residential mortgage-
backed securities and termination of BOK Financial's mortgage servicing rights. In addition, changes in market interest rates,
changes in the relationships between short-term and long-term market interest rates or changes in the relationships between
different interest rate indices, could affect the interest rates charged on interest-earning assets differently than the interest rates
paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest income
which would reduce the Company’s net interest revenue. In a low interest rate environment, the Company's ability to support
net interest revenue through continued securities portfolio growth or further reduce deposit costs could be limited. An increase
in market interest rates also could adversely affect the ability of BOK Financial's floating-rate borrowers to meet their higher
payment obligations. If this occurred, it could cause an increase in nonperforming assets and net charge-offs, which could
adversely affect BOK Financial's business.
Changes in mortgage interest rates could adversely affect mortgage banking operations as well as BOK Financial's
substantial holdings of residential mortgage-backed securities and mortgage servicing rights.
Our available for sale residential mortgage-backed security portfolio represents investment interests in pools of residential
mortgages, composing $6.0 billion or 19% of total assets of the Company at December 31, 2015. Residential mortgage-backed
securities are highly sensitive to changes in interest rates. BOK Financial mitigates this risk somewhat by investing principally
in shorter duration mortgage products, which are less sensitive to changes in interest rates. A significant decrease in interest
rates has led mortgage holders to refinance the mortgages constituting the pool backing the securities, subjecting BOK
Financial to a risk of prepayment and decreased return on investment due to subsequent reinvestment at lower interest rates. A
significant decrease in interest rates has also accelerated premium amortization. Conversely, a significant increase in interest
rates could cause mortgage holders to extend the term over which they repay their loans, which delays the Company’s
opportunity to reinvest funds at higher rates.
Residential mortgage-backed securities are also subject to credit risk from delinquency or default of the underlying loans. BOK
Financial mitigates this risk somewhat by investing in securities issued by U.S. government agencies. Principal and interest
payments on the loans underlying these securities are guaranteed by these agencies.
The Federal Reserve Board and other government agencies have implemented policies and programs to stimulate the U.S.
economy and housing market. These policies and programs have significantly reduced both primary mortgage interest rates, the
rates paid by borrowers, and secondary mortgage interest rates, the rates required by investors in mortgage backed securities.
They have also reduced barriers to mortgage refinancing such as insufficient home values.
BOK Financial derives a substantial amount of revenue from mortgage banking activities, including $78 million from the
production and sale of mortgage loans, $56 million from the servicing of mortgage loans and $34 million from sales of
financial instruments to other mortgage lenders in 2015. These activities, as well our substantial holdings of residential
mortgage backed securities and mortgage servicing rights may be adversely affected by changes in government policies and
programs.
11
In addition, as part of BOK Financial's mortgage banking business, BOK Financial has substantial holdings of mortgage
servicing rights, totaling $219 million or 0.69% of total assets at December 31, 2015. The value of these rights is also very
sensitive to changes in interest rates. Falling interest rates tend to increase loan prepayments, which may lead to cancellation of
the related servicing rights. BOK Financial attempts to manage this risk by maintaining an active hedging program for its
mortgage servicing rights. The Company's hedging program focuses on partially hedging the risk of changes in fair value,
primarily related to changes mortgage interest rates. Other factors, such as short-term interest rates, also impact the value of
mortgage servicing rights, may not be hedged. The value of mortgage servicing rights may also decrease due to rising
delinquency or default of the loans serviced which are not hedged. This risk is mitigated somewhat by adherence to
underwriting standards on loans originated for sale.
Market disruptions could impact BOK Financial’s funding sources.
BOK Financial’s subsidiary bank may rely on other financial institutions and the Federal Home Loan Bank of Topeka as a
significant source of funds. Our ability to fund loans, manage our interest rate risk and meet other obligations depends on funds
borrowed from these sources. The inability to borrow funds at market interest rates could have a material adverse effect on our
operations.
(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:41)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)
Dependence on technology increases cybersecurity risk.
As a financial institution, we process a significant number of customer transactions and possess a significant amount of
sensitive customer information. As technology advances, the ability to initiate transactions and access data has become more
widely distributed among mobile phones, personal computers, automated teller machines, remote deposit capture sites and
similar access points. These technological advances increase cybersecurity risk. While the Company maintains programs
intended to prevent or limit the effects of cybersecurity risk, there is no assurance that unauthorized transactions or
unauthorized access to customer information will not occur. The financial, reputational and regulatory impact of unauthorized
transactions or unauthorized access to customer information could be significant.
We depend on third parties for critical components of our infrastructure.
We outsource a significant portion of our information systems, communications, data management and transaction processing
to third parties. These third parties are sources of risk associated with operational errors, system interruptions or breaches,
unauthorized disclosure of confidential information and misuse of intellectual property. If the service providers encounter any
of these issues, we could be exposed to disruption of service, reputation damages, and litigation risk that could be material to
our business.
(cid:53)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:81)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)
Although publicly traded, BOK Financial's common stock has substantially less liquidity than the average trading market
for a stock quoted on the NASDAQ National Market System.
A relatively small fraction of BOK Financial's outstanding common stock is actively traded. The risks of low liquidity include
increased volatility of the price of BOK Financial's common stock. Low liquidity may also limit holders of BOK Financial's
common stock in their ability to sell or transfer BOK Financial's shares at the price, time and quantity desired.
BOK Financial's principal shareholder controls a majority of BOK Financial's common stock.
Mr. George B. Kaiser owns approximately 61% of the outstanding shares of BOK Financial's common stock at December 31,
2015. Mr. Kaiser is able to elect all of BOK Financial's directors and effectively control the vote on all matters submitted to a
vote of BOK Financial's common shareholders. Mr. Kaiser's ability to prevent an unsolicited bid for BOK Financial or any
other change in control could have an adverse effect on the market price for BOK Financial's common stock. A substantial
majority of BOK Financial's directors are not officers or employees of BOK Financial or any of its affiliates. However, because
of Mr. Kaiser's control over the election of BOK Financial's directors, he could change the composition of BOK Financial's
Board of Directors so that it would not have a majority of outside directors.
12
Possible future sales of shares by BOK Financial's principal shareholder could adversely affect the market price of BOK
Financial's common stock.
Mr. Kaiser has the right to sell shares of BOK Financial's common stock in compliance with the federal securities laws at any
time, or from time to time. The federal securities laws will be the only restrictions on Mr. Kaiser's ability to sell. Because of his
current control of BOK Financial, Mr. Kaiser could sell large amounts of his shares of BOK Financial's common stock by
causing BOK Financial to file a registration statement that would allow him to sell shares more easily. In addition, Mr. Kaiser
could sell his shares of BOK Financial's common stock without registration under Rule 144 of the Securities Act. Although
BOK Financial can make no predictions as to the effect, if any, that such sales would have on the market price of BOK
Financial's common stock, sales of substantial amounts of BOK Financial's common stock, or the perception that such sales
could occur, could adversely affect market prices. If Mr. Kaiser sells or transfers his shares of BOK Financial's common stock
as a block, another person or entity could become BOK Financial's controlling shareholder.
Statutory restrictions on subsidiary dividends and other distributions and debts of BOK Financial's subsidiaries could limit
amounts BOK Financial's subsidiaries may pay to BOK Financial.
A substantial portion of BOK Financial's cash flow typically comes from dividends paid by the Bank. Statutory provisions and
regulations restrict the amount of dividends the Bank may pay to BOK Financial without regulatory approval. Management
also developed, and the BOK Financial board of directors approved, an internal capital policy that is more restrictive than the
regulatory capital standards. In the event of liquidation, creditors of the Bank and other non-bank subsidiaries of BOK
Financial are entitled to receive distributions from the assets of that subsidiary before BOK Financial, as holder of an equity
interest in the subsidiaries, is entitled to receive any distributions.
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:20)(cid:37)(cid:17)(cid:3)(cid:3)(cid:3)(cid:56)(cid:49)(cid:53)(cid:40)(cid:54)(cid:50)(cid:47)(cid:57)(cid:40)(cid:39)(cid:3)(cid:54)(cid:55)(cid:36)(cid:41)(cid:41)(cid:3)(cid:38)(cid:50)(cid:48)(cid:48)(cid:40)(cid:49)(cid:55)(cid:54)
None.
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:21)(cid:17)(cid:3)(cid:3)(cid:3)(cid:51)(cid:53)(cid:50)(cid:51)(cid:40)(cid:53)(cid:55)(cid:44)(cid:40)(cid:54)
BOK Financial and its subsidiaries own and lease improved real estate that is carried at $178 million, net of depreciation and
amortization. The Company’s principal offices are located in leased premises in the Bank of Oklahoma Tower in Tulsa,
Oklahoma. Banking offices are primarily located in Tulsa and Oklahoma City, Oklahoma; Dallas, Fort Worth and Houston,
Texas; Albuquerque, New Mexico; Denver, Colorado; Phoenix, Arizona; and Kansas City, Kansas/Missouri. Primary
operations facilities are located in Tulsa and Oklahoma City, Oklahoma; Dallas, Texas and Albuquerque, New Mexico. The
Company’s facilities are suitable for their respective uses and present needs.
The information set forth in Notes 5 and 14 of the Company’s Notes to Consolidated Financial Statements, which appear
elsewhere herein, provides further discussion related to properties.
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:22)(cid:17)(cid:3)(cid:3)(cid:3)(cid:47)(cid:40)(cid:42)(cid:36)(cid:47)(cid:3)(cid:51)(cid:53)(cid:50)(cid:38)(cid:40)(cid:40)(cid:39)(cid:44)(cid:49)(cid:42)(cid:54)
The information set forth in Note 14 of the Company’s Notes to Consolidated Financial Statements, which appear elsewhere
herein, provides discussion related to legal proceedings.
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:23)(cid:17)(cid:3)(cid:3)(cid:3)(cid:48)(cid:44)(cid:49)(cid:40)(cid:3)(cid:54)(cid:36)(cid:41)(cid:40)(cid:55)(cid:60)(cid:3)(cid:39)(cid:44)(cid:54)(cid:38)(cid:47)(cid:50)(cid:54)(cid:56)(cid:53)(cid:40)(cid:54)
Not applicable.
13
(cid:51)(cid:36)(cid:53)(cid:55)(cid:3)(cid:44)(cid:44)
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:24)(cid:17)(cid:3)(cid:3)(cid:3)(cid:48)(cid:36)(cid:53)(cid:46)(cid:40)(cid:55)(cid:3)(cid:41)(cid:50)(cid:53)(cid:3)(cid:53)(cid:40)(cid:42)(cid:44)(cid:54)(cid:55)(cid:53)(cid:36)(cid:49)(cid:55)(cid:182)(cid:54)(cid:3)(cid:38)(cid:50)(cid:48)(cid:48)(cid:50)(cid:49)(cid:3)(cid:40)(cid:52)(cid:56)(cid:44)(cid:55)(cid:60)(cid:15)(cid:3)(cid:53)(cid:40)(cid:47)(cid:36)(cid:55)(cid:40)(cid:39)(cid:3)(cid:54)(cid:55)(cid:50)(cid:38)(cid:46)(cid:43)(cid:50)(cid:47)(cid:39)(cid:40)(cid:53)(cid:3)(cid:48)(cid:36)(cid:55)(cid:55)(cid:40)(cid:53)(cid:54)(cid:3)(cid:36)(cid:49)(cid:39)(cid:3)
(cid:44)(cid:54)(cid:54)(cid:56)(cid:40)(cid:53)(cid:3)(cid:51)(cid:56)(cid:53)(cid:38)(cid:43)(cid:36)(cid:54)(cid:40)(cid:54)(cid:3)(cid:50)(cid:41)(cid:3)(cid:40)(cid:52)(cid:56)(cid:44)(cid:55)(cid:60)(cid:3)(cid:54)(cid:40)(cid:38)(cid:56)(cid:53)(cid:44)(cid:55)(cid:44)(cid:40)(cid:54)
BOK Financial’s $0.00006 par value common stock is traded on the NASDAQ Stock Market under the symbol BOKF. As of
January 31, 2016, common shareholders of record numbered 798 with 66,119,435 shares outstanding.
The highest and lowest quarterly closing bid price for shares and cash dividends declared per share of BOK Financial common
stock follows:
2015:
Low
High
Cash dividends declared
2014:
Low
High
Cash dividends declared
(cid:41)(cid:76)(cid:85)(cid:86)(cid:87)
(cid:54)(cid:72)(cid:70)(cid:82)(cid:81)(cid:71)
(cid:55)(cid:75)(cid:76)(cid:85)(cid:71)
(cid:41)(cid:82)(cid:88)(cid:85)(cid:87)(cid:75)
$
53.37
$
60.18
$
57.09
$
61.67
0.42
70.72
0.42
70.15
0.42
$
62.34
$
62.18
$
63.47
$
69.69
0.40
70.18
0.40
68.71
0.40
58.92
72.44
0.43
57.87
62.28
0.42
14
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:53)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:3)(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:42)(cid:85)(cid:68)(cid:83)(cid:75)
Set forth below is a line graph comparing the change in cumulative shareholder return of the NASDAQ Index, the NASDAQ
Bank Index, and the KBW 50 Bank Index for the period commencing December 31, 2010 and ending December 31, 2015.*
Index
BOK Financial Corporation
NASDAQ Composite
NASDAQ Bank Index
KBW 50
Period Ending December 31,
(cid:21)(cid:19)(cid:20)(cid:19)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:24)
100.00
100.00
100.00
100.00
105.19
99.21
89.50
76.82
109.01
116.82
106.23
102.19
136.04
163.75
150.55
140.78
126.24
188.03
157.95
153.96
129.04
201.40
171.92
154.73
* Graph assumes value of an investment in the Company's Common Stock for each index was $100 on December 31, 2010. The KBW 50
Bank index is the Keefe, Bruyette & Woods, Inc. index, which is available only for calendar quarter end periods. Cash dividends on
Common Stock are assumed to have been reinvested in BOK Financial Common Stock.
15
The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated
purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock
during the three months ended December 31, 2015.
(cid:51)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)
October 1, 2015 to October 31, 2015
November 1, 2015 to November 30, 2015
December 1, 2015 to December 31, 2015
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)
(cid:51)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)
(cid:68)(cid:86)(cid:3)(cid:51)(cid:68)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:79)(cid:92)(cid:3)
(cid:36)(cid:81)(cid:81)(cid:82)(cid:88)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3)
(cid:51)(cid:79)(cid:68)(cid:81)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)
(cid:51)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:86)(cid:3)(cid:20)
40,000
423,000
1,411,074
(cid:48)(cid:68)(cid:91)(cid:76)(cid:80)(cid:88)(cid:80)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)
(cid:48)(cid:68)(cid:92)(cid:3)(cid:60)(cid:72)(cid:87)(cid:3)(cid:37)(cid:72)
(cid:51)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:71)
(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)
(cid:51)(cid:79)(cid:68)(cid:81)(cid:86)
4,960,000
4,537,000
3,125,926
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)
(cid:51)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:21)
47,720
424,340
1,416,069
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:68)(cid:76)(cid:71)(cid:3)
(cid:83)(cid:72)(cid:85)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)
$
$
$
67.36
68.90
62.88
Total
1 On October 1, 2015, the Company's board of directors authorized the Company to repurchase up to five million shares of the Company's
common stock. As of December 31, 2015, the Company had repurchased 1,874,074 shares under this plan. Future repurchases of the
Company's common stock will vary based on market conditions, regulatory limitations and other factors.
1,888,129
1,874,074
2 The Company routinely repurchases shares from employees to cover the exercise price and taxes in connection with employee shared-
based compensation.
16
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:25)(cid:17)(cid:3)(cid:3)(cid:54)(cid:40)(cid:47)(cid:40)(cid:38)(cid:55)(cid:40)(cid:39)(cid:3)(cid:41)(cid:44)(cid:49)(cid:36)(cid:49)(cid:38)(cid:44)(cid:36)(cid:47)(cid:3)(cid:39)(cid:36)(cid:55)(cid:36)
The selected financial data is set forth within Table 1 of Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:26)(cid:17)(cid:3)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:3)(cid:16)(cid:16)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)
(Dollars in thousands, except per share data)
(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)
For the year:
Interest revenue
Interest expense
Net interest revenue
Provision for for credit losses
Fees and commissions revenue
Net income attributable to BOK Financial
Corporation shareholders
Period-end:
Loans
Assets
Deposits
Subordinated debentures
Shareholders’ equity
Nonperforming assets1
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:7)
(cid:26)(cid:25)(cid:25)(cid:15)(cid:27)(cid:21)(cid:27)
$
732,239
$
745,371
$
794,871
$
813,146
(cid:25)(cid:22)(cid:15)(cid:23)(cid:26)(cid:23)
(cid:26)(cid:19)(cid:22)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:22)(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:25)(cid:24)(cid:28)(cid:15)(cid:19)(cid:20)(cid:28)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
(cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
(cid:22)(cid:20)(cid:15)(cid:23)(cid:26)(cid:25)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:21)(cid:20)(cid:15)(cid:19)(cid:27)(cid:27)(cid:15)(cid:20)(cid:24)(cid:27)
(cid:21)(cid:21)(cid:25)(cid:15)(cid:22)(cid:24)(cid:19)
(cid:22)(cid:15)(cid:21)(cid:22)(cid:19)(cid:15)(cid:24)(cid:24)(cid:25)
(cid:21)(cid:24)(cid:20)(cid:15)(cid:28)(cid:19)(cid:27)
67,045
665,194
—
621,319
70,894
674,477
(27,900)
603,844
87,322
707,549
(22,000)
628,880
120,101
693,045
(6,050)
527,093
292,435
316,609
351,191
285,875
14,208,037
12,792,264
12,311,456
29,089,698
27,015,432
28,148,631
21,140,859
20,269,327
21,179,060
347,983
347,802
347,633
3,302,179
3,020,049
2,957,860
256,617
247,743
276,716
11,269,743
25,493,946
18,762,580
398,881
2,750,468
356,932
(cid:51)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:76)(cid:86)(cid:87)(cid:76)(cid:70)(cid:86)
Earnings per share (based on average equivalent
shares):
Basic
Diluted
Percentages (based on daily averages):
Return on average assets
Return on average total equity
Average total equity to average assets
(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)
Per Share:
Book value per common share
Market price: December 31 close
Market range – High close bid price
Market range – Low close bid price
Cash dividends declared
Dividend payout ratio
(cid:7)
(cid:7)
$
(cid:23)(cid:17)(cid:21)(cid:21)
(cid:23)(cid:17)(cid:21)(cid:20)
$
4.23
4.22
$
4.61
4.59
$
5.15
5.13
4.18
4.17
(cid:19)(cid:17)(cid:28)(cid:23)(cid:8)
(cid:27)(cid:17)(cid:25)(cid:25)
(cid:20)(cid:20)(cid:17)(cid:19)(cid:22)
$
(cid:23)(cid:28)(cid:17)(cid:19)(cid:22)
(cid:24)(cid:28)(cid:17)(cid:26)(cid:28)
(cid:26)(cid:21)(cid:17)(cid:23)(cid:23)
(cid:24)(cid:22)(cid:17)(cid:22)(cid:26)
(cid:20)(cid:17)(cid:25)(cid:28)
1.04%
1.16%
1.34%
9.20
11.47
47.78
60.04
70.18
57.87
1.62
$
10.59
11.00
43.88
66.32
69.36
55.05
1.54
12.19
11.05
$
$
43.29
54.46
59.77
52.56
4
2.47
48.01% 4
1.17%
10.81
10.95
40.36
54.93
56.30
44.00
1.13
27.01%
(cid:23)(cid:19)(cid:17)(cid:19)(cid:22)(cid:8)
38.35%
33.43%
17
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:3)(cid:16)(cid:16)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)
(Dollars in thousands, except per share data)
(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:76)(cid:86)(cid:87)(cid:76)(cid:70)(cid:86)
Period-end:
Common equity Tier 1 ratio2
Tier 1 capital ratio2
Total capital ratio2
Leverage ratio2
Allowance for loan losses to nonaccruing loans5
Allowance for loan losses to loans
Combined allowances for credit losses to loans 3
(cid:48)(cid:76)(cid:86)(cid:70)(cid:72)(cid:79)(cid:79)(cid:68)(cid:81)(cid:72)(cid:82)(cid:88)(cid:86)(cid:3)(cid:11)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:12)
Number of employees (full-time equivalent)
Number of banking locations
Number of TransFund locations
Fiduciary assets
Mortgage loans serviced for others
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:20)(cid:21)(cid:17)(cid:20)(cid:22)(cid:8)
(cid:20)(cid:21)(cid:17)(cid:20)(cid:22)(cid:8)
N/A
13.33%
N/A
13.77%
N/A
12.78%
N/A
13.27%
(cid:20)(cid:22)(cid:17)(cid:22)(cid:19)
(cid:28)(cid:17)(cid:21)(cid:24)
(cid:20)(cid:27)(cid:19)(cid:17)(cid:19)(cid:28)
(cid:20)(cid:17)(cid:23)(cid:20)
(cid:20)(cid:17)(cid:23)(cid:22)
(cid:23)(cid:15)(cid:26)(cid:27)(cid:28)
(cid:20)(cid:24)(cid:21)
(cid:20)(cid:15)(cid:28)(cid:26)(cid:21)
14.66
9.96
245.34
1.33
1.34
4,743
182
2,080
15.56
10.05
184.71
1.45
1.47
4,632
206
1,998
15.13
9.01
160.92
1.75
1.77
4,704
217
1,970
16.49
9.15
125.93
2.25
2.33
4,511
212
1,912
(cid:7) (cid:22)(cid:27)(cid:15)(cid:22)(cid:22)(cid:22)(cid:15)(cid:25)(cid:22)(cid:27)
(cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:27)(cid:15)(cid:21)(cid:21)(cid:25)
$ 35,997,877
$ 30,137,092
$ 25,829,038
$ 22,821,813
16,162,887
13,718,942
11,981,624
11,300,986
1 Includes nonaccruing loans, renegotiated loans and assets acquired in satisfaction of loans. Excludes loans past due 90 days or more and still accruing.
2 Risk-based capital ratios for 2015 calculated under revised regulatory capital rules issued July 2013 and effective for the Company on January 1, 2015.
Previous risk-based ratios presented are calculated in accordance with then current regulatory capital rules.
3 Includes allowance for loan losses and accrual for off-balance sheet credit risk.
4 Includes $1.00 per share special dividend.
5 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:50)(cid:89)(cid:72)(cid:85)(cid:89)(cid:76)(cid:72)(cid:90)
The following discussion is management’s analysis to assist in the understanding and evaluation of the financial condition and
results of operations of BOK Financial Corporation (“BOK Financial” or “the Company”). This discussion should be read in
conjunction with the consolidated financial statements and footnotes and selected financial data presented elsewhere in this
report.
Economic activity expanded at a solid pace and unemployment continued to improve during 2015. National unemployment
rates were 5.0% in December of 2015 compared to 5.6% in December of 2014. Inflationary pressure have remained subdued
and the U.S. government has continued to provide accommodative economic policy to support growth in the economy and
further reduction in the unemployment rate. According to the minutes of the Federal Open Market Committee ("FOMC") of the
Federal Reserve for December, household spending and business investment has expanded at a moderate rate toward the end of
2015 and the housing sector has improved, but net exports have been soft and inventory investment has slowed. Investment
returns for 2015 were flat for large cap U.S. equities, bonds, and developed international markets. Total return was negative for
small cap U.S. stocks and down double digits for emerging market equities. And although the S&P 500 was flat, there was
considerable volatility during the year.
The FOMC voted to raise the target range for the federal funds rate by ¼ percentage point, bringing it to ¼ to ½ percent, ending
an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the
economy from the worst financial crisis and recession since the Great Depression. The long end of the yield curve remains
under pressure due to weakness in Europe and Japan and the curve will likely continue to flatten in 2016. The continued low
interest rate environment has continued to present challenges for all financial institutions as cash flows from loan and securities
portfolios are reinvested at current rates and competition for high-quality borrowers has been significant.
Increases in the global supply of oil and other factors caused energy prices to continue to decline in 2015. West Texas
Intermediate crude oil fell from a high just below $108/bbl in June 2014 to a low of $27/bbl in January 2016. The longer the
18
prices remain in a sustained downturn, energy borrowers and the local economies in our geographical footprint will be more
significantly impacted.
Performance Summary
Net income for the year ended December 31, 2015 totaled $288.6 million or $4.21 per diluted share compared with net income
of $292.4 million or $4.22 per diluted share for the year ended December 31, 2014.
Highlights of 2015 included:
• Net interest revenue totaled $703.4 million for 2015, up from $665.2 million for 2014. Growth in average earning assets
primarily related to growth in average loans was partially offset by the impact of lower average rates. Net interest margin
was 2.60% for 2015 compared to 2.68% for 2014.
•
Fees and commissions revenue increased $37.7 million or 6% over 2014 to $659.0 million for 2015. Mortgage banking
revenue increased $25.3 million primarily due to a record level of mortgage loan originations during the year. Fiduciary
and asset management revenue grew by $10.5 million due to acquisitions and organic growth.
• Operating expenses totaled $904.6 million, an increase of $57.0 million or 7% over the prior year. Personnel costs increased
$46.6 million. Deferred compensation expense for 2014 included a $12.6 million net reduction in the accrual for amounts
payable to certain executive officers of the Company under the 2011 True-Up Plan. In addition, cash-based incentive
compensation and regular salaries also increased over the prior year. Non-personnel expenses increased $10.5 million or
3% over the prior year due to increased mortgage banking and data processing and communications expense.
• After evaluating all credit factors, the Company determined that a $34.0 million provision for credit losses was necessary
in 2015, primarily due to credit migration in the energy portfolio and overall loan portfolio growth. No provision for
credit losses was necessary in 2014. The Company had a net recovery of $2.9 million or (0.02)% of average loans for
2015 compared to a net recovery of $2.8 million or (0.02)% of average loans for 2014. Gross charge-offs decreased to
$15.2 million in 2015 from $16.2 million in 2014.
• The combined allowance for credit losses totaled $227 million or 1.43% of outstanding loans at December 31, 2015
compared to $190 million or 1.34% of outstanding loans at December 31, 2014.
• Nonperforming assets not guaranteed by U.S. government agencies totaled $156 million or 0.99% of outstanding loans
and repossessed assets (excluding those guaranteed by U.S. government agencies) at December 31, 2015 and $129 million
or 0.92% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at
December 31, 2014. Excluding assets guaranteed by U.S. government agencies, nonaccruing loans increased $48 million
and repossessed assets decreased $21 million during 2015.
•
•
Period-end outstanding loan balances were $15.9 billion at December 31, 2015, an increase of $1.7 billion over the prior
year. Commercial loan balances grew by $1.2 billion or 13% and commercial real estate loans increased $531 million or
19%. Residential mortgage loans decreased $73 million. Personal loans increased $118 million.
Period-end deposits totaled $21.1 billion at December 31, 2015, largely unchanged compared to December 31,
2014. Demand deposit accounts increased by $231 million, offset by a $115 million decrease in interest-bearing transaction
deposits and a $203 million decrease in time deposit balances.
• New regulatory capital rules were effective for BOK Financial on January 1, 2015 and established a 7% threshold for
the common equity Tier 1 ratio. The Company's common equity Tier 1 capital ratio was 12.13% at December 31, 2015.
In addition, the Company's Tier 1 capital ratio was 12.13%, total capital ratio was 13.30% and leverage ratio was 9.25%
at December 31, 2015. At December 31, 2014, the Company's Tier 1 capital ratio was 13.33% at December 31, 2014,
the total capital ratio was 14.66% and the leverage ratio was 9.96%. The decrease in capital ratios was primarily due to
share repurchases. The Company repurchased 3,634,578 shares at an average price of $63.15 per share.
• The Company paid cash dividends of $1.69 per common share during 2015 and $1.62 per common share in 2014.
19
Net income for the fourth quarter of 2015 totaled $59.6 million or $0.89 per diluted share compared to $64.3 million or $0.93
per diluted share for the fourth quarter of 2014.
Highlights of the fourth quarter of 2015 included:
• Net interest revenue totaled $181.3 million for the fourth quarter of 2015, up $11.6 million over the fourth quarter of
2014. Net interest margin was 2.64% for the fourth quarter of 2015 compared to 2.61% for the fourth quarter of 2014.
Net interest revenue increased primarily due to the growth in average loan balances, partially offset by a decrease in
available for sale securities and interest-bearing cash and cash equivalent balances. An increase in the yield on the available
for sale securities portfolio and lower funding costs was partially offset by a decrease in loan yields.
•
Fees and commissions revenue was $155.8 million for the fourth quarter of 2015 compared to $157.9 million for the
fourth quarter of 2014. Mortgage banking revenue was $5.1 million lower than in the fourth quarter of 2014, partially
offset by growth in all other fee categories.
• Operating expenses totaled $232.6 million, an increase of $6.7 million over the prior year, primarily due to increased
personnel expense compared to the fourth quarter of 2014. Incentive compensation expense, employee healthcare costs
and regular salaries expense all increased over the prior year. The fourth quarter of 2014 included $4.9 million of branch
closure costs and a $1.8 million contribution of developed commercial real estate to the BOKF Foundation.
• A $22.5 million provision for credit losses was recorded in the fourth quarter of 2015 due to credit migration and increased
impairment in the energy loan portfolio. No provision for credit losses was recorded in the fourth quarter of 2014. Net
charge-offs totaled $3.0 million in the fourth quarter of 2015 compared to $2.2 million in the fourth quarter of 2014.
Gross charge-offs were $4.9 million compared to $7.2 million in the prior year.
(cid:38)(cid:85)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:51)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:9)(cid:3)(cid:40)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:86)
The Consolidated Financial Statements and accompanying notes are prepared in accordance with generally accepted
accounting principles in the United States of America (“GAAP”). The Company's accounting policies are more fully described
in Note 1 of the Consolidated Financial Statements. Management makes significant assumptions and estimates in the
preparation of the Consolidated Financial Statements and accompanying notes in conformity with GAAP that may be highly
subjective, complex and subject to variability. Actual results could differ significantly from these assumptions and estimates.
The following discussion addresses the most critical areas where these assumptions and estimates could affect the financial
condition, results of operations and cash flows of the Company. These critical accounting policies and estimates have been
discussed with the appropriate committees of the Board of Directors.
Allowance for Loan Losses and Accrual for Off-Balance Sheet Credit Risk
The appropriateness of the allowance for loan losses and accrual for off-balance sheet credit risk is assessed quarterly by
management based on an ongoing evaluation of the probable estimated losses inherent in the loan portfolio and probable
estimated losses on unused commitments to provide financing. A consistent, well-documented methodology has been
developed and is applied by an independent Credit Administration department to assure consistency across the Company. The
allowance for loan losses consists of specific allowances attributed to certain impaired loans that have not yet been charged
down to amounts we expect to recover, general allowances for unimpaired loans that are based on estimated loss rates by loan
class and nonspecific allowances for risks beyond factors specific to a particular portfolio segment or loan class. There have
been no material changes in the approach or techniques utilized in developing the allowance for loan losses and accrual for off-
balance sheet credit risk during 2015.
Loans are considered impaired when it is probable that we will not collect all amounts due according to the contractual terms of
the loan agreements, including loans modified in a troubled debt restructuring. Internally risk graded loans are evaluated
individually for impairment. Substantially all commercial and commercial real estate loans and certain residential mortgage and
consumer loans are risk graded through a quarterly evaluation of the borrower's ability to repay. Certain commercial loans and
most residential mortgage and consumer loans which represent small balance, homogeneous pools are not risk graded. Non-risk
graded loans are identified as impaired based on performance status. Generally, non-risk graded loans are considered impaired
when 90 or more days past due, in bankruptcy or modified in a troubled debt restructuring.
20
Specific allowances for impaired loans that have not yet been charged down to amounts we expect to recover are measured by
an evaluation of estimated future cash flows discounted at the loan's initial effective interest rate or the fair value of collateral
for certain collateral dependent loans. Collateral value of real property is generally based on third party appraisals that conform
to Uniform Standards of Professional Appraisal Practice, less estimated selling costs. Appraised values are on an “as-is” basis
and generally are not adjusted by the Company. Updated appraisals are obtained at least annually or more frequently if market
conditions indicate collateral values may have declined. Collateral value of mineral rights is determined by our internal staff of
engineers based on projected cash flows under current market conditions. The value of other collateral is generally determined
by our special assets staff based on liquidation cash flows under current market conditions. Collateral values and available cash
resources that support impaired loans are evaluated quarterly. Historical statistics may be used as a practical way to estimate
impairment in limited situations, such as when a collateral dependent loan is identified as impaired near the end of a reporting
period until an updated appraisal of collateral value is received or a full assessment of future cash flows is completed. Estimates
of future cash flows and collateral values require significant judgments and may be volatile.
General allowances for unimpaired loans are based on estimated loss rates by loan class. The appropriate historical gross loss
rate for each loan class is determined by the greater of the current loss rate based on the most recent twelve months or a ten-
year average gross loss rate. Recoveries are not directly considered in the estimation of historical loss rates. Recoveries
generally do not follow predictable patterns and are not received until well-after the charge-off date as a result of protracted
legal proceedings. For risk graded loans, historical loss rates are adjusted for changes in risk rating. For each loan class, the
weighted average current risk grade is compared to the weighted average long-term risk grade. This comparison determines
whether the risk in each loan class is increasing or decreasing. Historical loss rates are adjusted upward or downward in
proportion to changes in weighted average risk grading. General allowances for unimpaired loans also consider inherent risks
identified for a given loan class. Inherent risks include consideration of the loss rates that most appropriately represent the
current credit cycle and other factors attributable to a specific loan class which have not yet been represented in the historical
gross loss rates or risk grading. Examples of these factors include changes in commodity prices or engineering imprecision
which may affect the value of reserves that secure our energy loan portfolio, construction risk that may affect commercial real
estate loans, changes in regulations and public policy that may disproportionately impact health care loans and changes in loan
product types.
Nonspecific allowances are maintained for risks beyond factors specific to a particular portfolio segment or loan class. These
factors include trends in the economy in our primary lending areas, concentrations in loans with large balances and other
relevant factors.
Fair Value Measurement
Certain assets and liabilities are recorded at fair value in the Consolidated Financial Statements. Fair value is defined by
applicable accounting guidance as the price to sell an asset or transfer a liability in an orderly transaction between market
participants in the principal markets for the given asset or liability at the measurement date based on markets conditions at that
date. An orderly transaction assumes exposure to the market for a customary period for marketing activities prior to the
measurement date and not a forced liquidation or distressed sale.
A hierarchy for fair value has been established that prioritizes the inputs of valuation techniques used to measure fair value into
three broad categories: unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), other observable
inputs that can be observed either directly or indirectly (Level 2) and unobservable inputs for assets or liabilities (Level 3). Fair
value may be recorded for certain assets and liabilities every reporting period on a recurring basis or under certain
circumstances on a non-recurring basis.
The following represents significant fair value measurements included in the Consolidated Financial Statements based on
estimates. See Note 18 of the Consolidated Financial Statements for additional discussion of fair value measurement and
disclosure included in the Consolidated Financial Statements.
Mortgage Servicing Rights
We have a significant investment in mortgage servicing rights. Our mortgage servicing rights are primarily retained
from sales in the secondary market of residential mortgage loans we have originated or purchased from correspondent
lenders. Occasionally mortgage servicing rights may be purchased from other lenders. Both originated and purchased
mortgage servicing rights are initially recognized at fair value. We carry all mortgage servicing rights at fair value.
Changes in fair value are recognized in earnings as they occur.
21
There is no active market for mortgage servicing rights after origination. The fair value of mortgage servicing rights
are determined by discounting the projected cash flows. Certain significant assumptions and estimates used in valuing
mortgage servicing rights are based on current market sources including projected prepayment speeds, assumed
servicing costs, earnings on escrow deposits, ancillary income and discount rates. Assumptions used to value our
mortgage servicing rights are considered significant unobservable inputs and represent our best estimate of
assumptions that market participants would use to value this asset. A separate third party model is used to estimate
prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults and
other relevant factors. The prepayment model is updated daily for changes in market conditions and adjusted to better
correlate with actual performance of our servicing portfolio. The discount rate is based on benchmark rates for
mortgage loans plus a market spread expected by investors in servicing rights. Significant assumptions used to
determine the fair value of our mortgage servicing rights are presented in Note 7 to the Consolidated Financial
Statements. At least annually, we request estimates of fair value from outside sources to corroborate the results of the
valuation model.
The assumptions used in this model are primarily based on mortgage interest rates. Evaluation of the effect of a
change in one assumption without considering the effect of that change on other assumptions is not meaningful.
Considering all related assumptions, we expect a 50 basis point increase in primary mortgage interest rates to increase
the fair value of our servicing rights by $17 million. We expect a $19 million decrease in the fair value of our
mortgage servicing rights from a 50 basis point decrease in primary mortgage interest rates.
Valuation of Derivative Instruments
We use interest rate derivative instruments to manage our interest rate risk. We also offer interest rate, commodity,
foreign exchange and equity derivative contracts to our customers. All derivative instruments are carried on the
balance sheet at fair value. Fair values for exchange-traded contracts are based on quoted prices in an active market for
identical instruments. Fair values for over-the-counter interest rate contracts used to manage our interest rate risk are
generated internally using third-party valuation models. Inputs used in third-party valuation models to determine fair
values are considered significant other observable inputs. Fair values for interest rate, commodity, foreign exchange
and equity contracts used in our customer hedging programs are based on valuations generated internally by third-
party provided pricing models. These models use significant other observable market inputs to estimate fair values.
Changes in assumptions used in these pricing models could significantly affect the reported fair values of derivative
assets and liabilities, though the net effect of these changes should not significantly affect earnings.
Credit risk is considered in determining the fair value of derivative instruments. Deterioration in the credit rating of
customers or dealers reduces the fair value of asset contracts. The reduction in fair value is recognized in earnings
during the current period. Fair value adjustments are based on various risk factors including but not limited to
counterparty credit rating or equivalent loan grading, derivative contract notional size, price volatility of the
underlying commodity, duration of the derivative contracts and expected loss severity. Expected loss severity is based
on historical losses for similarly risk-graded commercial loan customers. Deterioration in our credit rating below
investment grade would affect the fair value of our derivative liabilities. In the event of a credit down-grade, the fair
value of our derivative liabilities would decrease. The reduction in fair value would be recognized in earnings in the
current period. The impact of credit valuation adjustments on the total valuation of derivative contracts was not
significant.
Valuation of Securities
The fair value of our securities portfolio is generally based on a single price for each financial instrument provided to
us by a third-party pricing service determined by one or more of the following:
• Quoted prices for similar, but not identical, assets or liabilities in active markets;
• Quoted prices for identical or similar assets or liabilities in inactive markets;
•
Inputs other than quoted prices that are observable, such as interest rate and yield curves, volatilities,
prepayment speeds, loss severities, credit risks and default rates;
• Other inputs derived from or corroborated by observable market inputs.
22
The underlying methods used by the third-party pricing services are considered in determining the primary inputs used
to determine fair values. We evaluate the methodologies employed by the third-party pricing services by comparing
the price provided by the pricing service with other sources, including brokers' quotes, sales or purchases of similar
instruments and discounted cash flows to establish a basis for reliance on the pricing service values. Significant
differences between the pricing service provided value and other sources are discussed with the pricing service to
understand the basis for their values. Based on all observable inputs, management may adjust prices obtained from
third-party pricing services to more appropriately reflect the prices that would be received to sell assets or paid to
transfer liabilities in orderly transactions in the current market. No significant adjustments were made to prices
provided by third-party pricing services at December 31, 2015 or December 31, 2014.
Valuation of Impaired Loans and Real Estate and Other Repossessed Assets
The fair value of collateral for certain impaired loans and real estate and other repossessed assets is measured on a
non-recurring basis. The fair value of real estate is generally based on unadjusted third-party appraisals derived
principally from or corroborated by observable market data. Fair value measurements based on these appraisals are
considered to be based on Level 2 inputs. Fair value measurements based on appraisals that are not based on
observable inputs or that require significant adjustments by us or fair value measurements that are not based on third-
party appraisals are considered to be based on Level 3 inputs. Significant unobservable inputs include listing prices for
comparable assets, uncorroborated expert opinions or management's knowledge of the collateral or industry.
The fair value of mineral rights is generally determined by our internal staff of engineers based on projected cash
flows from proven oil and gas reserves under existing economic and operating conditions. Proven oil and gas reserves
are estimated quantities that geological and engineering data demonstrate, with reasonable certainty, to be recoverable
in future years from known reservoirs using existing prices and costs. Projected cash flows incorporate assumptions
related to a number of factors including production, sales prices, operating expenses, severance, ad valorem taxes,
capital costs and appropriate discount rate. Fair values determined through this process are considered to be based on
Level 3 inputs.
Goodwill Impairment
Goodwill for each reporting unit is evaluated for impairment annually as of October 1st or more frequently if conditions
indicate that impairment may have occurred. The evaluation of possible goodwill impairment involves significant judgment
based upon short-term and long-term projections of future performance.
We perform a qualitative assessment that evaluates, based on the weight of the evidence, the significance of all identified
events and circumstances in the context of determining whether it is more likely than not that the fair value of our reporting
units are less than their carrying amounts, including goodwill. This qualitative assessment considers general economic
conditions including trends in unemployment rates in our primary geographical areas, our earnings and stock price changes
during the year, current and anticipated credit quality performance and the prolonged low interest rate environment and the
impact of increased regulation. The qualitative assessment is supplemented by quantitative analysis that compares the
Company's overall performance and each individual reporting unit's performance against prior period actual results and
management's plans, and the excess of each reporting unit's most recently measured fair value over its carrying value, including
goodwill attributed to the reporting unit.
If we conclude that it is not more likely than not that the fair value of each reporting unit is less than its carrying amount,
including goodwill through the qualitative assessment, we perform a quantitative assessment. The quantitative assessment
considers goodwill to be impaired if the estimated fair value of the reporting unit is less than its carrying value, including
goodwill. Impairment is measured through additional assessment of the estimated fair values for each asset and liability
assigned to the reporting unit when necessary.
Numerous other factors could affect future impairment analyses including credit losses that exceed projected amounts or failure
to meet growth projections. Additionally, fee income may be adversely affected by increasing residential mortgage interest rates
and changes in federal regulations.
23
Other-Than-Temporary Impairment
On a quarterly basis, the Company performs separate evaluations of impaired debt and equity investment and available for sale
securities to determine if the unrealized losses are temporary or other-than-temporary.
For impaired debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be
required to sell the impaired securities. This determination considers current and forecasted liquidity requirements, regulatory
and capital requirements and securities portfolio management. All impaired debt securities we intend to sell or we expect to be
required to sell are considered other-than-temporarily impaired and the full impairment loss is recognized as a charge against
earnings. All impaired debt securities we do not intend or expect to be required to sell are evaluated further.
Impairment of debt securities rated investment grade by all nationally-recognized rating agencies is considered temporary
unless specific contrary information is identified. Impairment of securities rated below investment grade by at least one of the
nationally-recognized rating agencies is evaluated to determine if we expect to recover the entire amortized cost basis of the
security based on the present value of projected cash flows from individual loans underlying each security. Below investment
grade securities we own consist primarily of privately issued residential mortgage-backed securities. The primary assumptions
used to project cash flows are disclosed in Note 2 to the Consolidated Financial Statements.
We consider the principal and interest cash flows from the underlying loan pool as well as the remaining credit enhancement
coverage as part of our assessment of cash flows available to recover the amortized cost of our securities. The credit
enhancement coverage is an estimate of currently remaining subordinated tranches available to absorb losses on pools of loans
that support the security. Credit losses, which are defined as the excess of current amortized cost over the present value of
projected cash flows, on other-than-temporarily impaired debt securities are recognized as a charge against earnings. Any
remaining impairment attributed to factors other than credit losses are recognized in accumulated other comprehensive losses.
Credit losses are based on long-term projections of cash flows which are sensitive to changes in assumptions. Changes in
assumptions and differences between assumed and actual results regarding unemployment rates, delinquency rates, default
rates, foreclosures costs and home price depreciation can affect estimated and actual credit losses. Deterioration of these factors
beyond those described in Note 2 to the Consolidated Financial Statements could result in the recognition of additional credit
losses.
We performed a sensitivity analysis of all privately issued residential mortgage-backed securities. Significant assumptions of
this analysis included an increase in the unemployment rate to 10% with an additional 25.4% home price depreciation indicates
an additional $300 thousand of credit losses are possible.
Impaired equity securities, including perpetual preferred stocks, are evaluated based on our ability and intent to hold the
securities until fair value recovers over a period not to exceed three years. The assessment of the ability and intent to hold these
securities considers liquidity needs, asset / liability management objectives and securities portfolio objectives. Factors
considered when assessing recovery include forecasts of general economic conditions and specific performance of the issuer,
analyst ratings, and credit spreads for preferred stocks which have debt-like characteristics.
Income Taxes
Determination of income tax expense and related assets and liabilities is complex and requires estimates and judgments when
applying tax laws, rules, regulations and interpretations. It also requires judgments as to future earnings and the timing of future
events. Accrued income taxes represent an estimate of net amounts due to or from taxing jurisdictions based upon these
estimates, interpretations and judgments.
Management evaluates the Company's current tax expense or benefit based upon estimates of taxable income, tax credits and
statutory tax rates. Annually, we file tax returns with each jurisdiction where we conduct business and adjust recognized income
tax expense or benefit to filed tax returns.
We recognize deferred tax assets and liabilities based upon the differences between the values of assets and liabilities as
recognized in the financial statements and their related tax basis using enacted tax rates in effect for the year in which the
differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some
portion of the entire deferred tax asset may not be realized based on taxes previously paid in net loss carry-back periods and
other factors.
24
We also recognize the benefit of uncertain income tax positions when based upon all relevant evidence it is more-likely-than-
not that our position would prevail upon examination, including resolution of related appeals or litigation, based upon the
technical merits of the position. Unrecognized tax benefits, including estimated interest and penalties, are part of our current
accrued income tax liability. Estimated penalties and interest are recognized in income tax expense. Income tax expense in
future periods may decrease if an uncertain tax position is favorably resolved, generally upon completion of an examination by
the taxing authorities, expiration of a statute of limitations, or changes in facts and circumstances.
Results of Operations
(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:48)(cid:68)(cid:85)(cid:74)(cid:76)(cid:81)
Net interest revenue is the interest earned on debt securities, loans and other interest-earning assets less interest paid for
interest-bearing deposits and other borrowings. The net interest margin is calculated by dividing tax-equivalent net interest
revenue by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-
earning assets and the average rate paid on interest-bearing liabilities. Net interest margin is typically greater than net interest
spread due to interest income earned on assets funded by non-interest bearing liabilities such as demand deposits and equity.
Tax-equivalent net interest revenue totaled $715.8 million for 2015, up from $676.1 million for 2014. Net interest margin was
2.60% for 2015 and 2.68% for 2014. Tax-equivalent net interest revenue increased $39.7 million over the prior year. Net
interest revenue increased $60.1 million from growth in earning assets, partially offset by a $20.4 million decrease due to rates.
Loan yields narrowed, partially offset by lower funding costs and increased yield on the available for sale securities portfolio.
Table 2 shows the effects on net interest revenue of changes in average balances and interest rates for the various types of
earning assets and interest-bearing liabilities. In addition, see the Annual and Quarterly Financial Summary of consolidated
daily average balances, yields and rates following the Consolidated Financial Statements.
The tax-equivalent yield on earning assets was 2.84% for 2015 compared to 2.95% in 2014. The decrease was primarily due to
the change in the mix of earning asset during 2015. Loan yields decreased 23 basis points compared to the prior year primarily
due to market pricing pressure and lower interest rates during the majority of 2015. The available for sale securities portfolio
yield increased 4 basis points to 1.99%. Yields on restricted equity securities, fair value option securities and interest-bearing
cash and cash equivalents all improved over the prior year. Funding costs were down 6 basis points compared to 2014. The cost
of interest-bearing deposits decreased 6 basis points, while the cost of other borrowed funds increased 5 basis points largely due
to the mix of funding sources. The cost of subordinated debentures decreased 66 basis points as $122 million of fixed-rate
subordinated debt matured on June 1, 2015. The cost of this subordinated debt was 5.56%. The benefit to net interest margin
from earning assets funded by non-interest bearing liabilities was 11 basis points for 2015, compared to 14 basis points for
2014.
Average earning assets for 2015 increased $2.4 billion or 9% over 2014. Average loans, net of allowance for loan losses,
increased $1.6 billion due primarily to growth in average commercial and commercial real estate loans. The average balance of
interest-bearing cash and cash equivalents was up $904 million over the prior year, as borrowings from the Federal Home Loan
Bank were deposited in the Federal Reserve to earn a spread. The average balance of available for sale securities, which
consists largely of residential and commercial mortgage-backed securities guaranteed by U.S. government agencies, decreased
$620 million. We purchase securities to supplement earnings and to manage interest rate risk. We reduced the size of our bond
portfolio during 2014 and 2015 through normal monthly runoff to better position the balance sheet for an environment of rising
longer-term rates. Our outlook for earning assets is for continued growth in loan balances, partially offset by a reduction in the
securities portfolio balance. We expect mid to high single digit annualized loan growth for 2016 and a decrease in the size of
the bond portfolio as we migrate toward interest rate neutral. We expect stable to rising net interest margin and increasing net
interest revenue.
Growth in average assets was funded by a $518 million increase in average deposits. Average demand deposit balances
increased $361 million over the prior year. Average interest-bearing transaction accounts were up $182 million, partially offset
by a $57 million decrease in average time deposits. Average borrowed funds increased $1.7 billion over the prior year.
Borrowings from the Federal Home Loan Banks increased $3.0 billion, partially offset by decreased funds purchased,
repurchase agreements and subordinated debenture balances compared to the prior year.
25
Our overall objective is to manage the Company’s balance sheet to be relatively neutral to changes in interest rates as is further
described in the Market Risk section of this report. As shown in Table 20, approximately 82% of our commercial and
commercial real estate loan portfolios are either variable rate loans or fixed rate loans that will re-price within one year. These
loans are funded primarily by deposit accounts that are either non-interest bearing, or that re-price more slowly than the
loans. The result is a balance sheet that would be asset sensitive, which means that assets generally re-price more quickly than
liabilities. Among the strategies that we use to manage toward a relatively rate-neutral position, we purchase fixed rate
residential mortgage-backed securities issued primarily by U.S. government agencies and fund them with market rate sensitive
liabilities. The liability-sensitive nature of this strategy provides an offset to the asset-sensitive characteristics of our loan
portfolio. We also may use derivative instruments to manage our interest rate risk.
The effectiveness of these strategies is reflected in the overall change in net interest revenue due to changes in interest rates as
shown in Table 2 and in the interest rate sensitivity projections as shown in the Market Risk section of this report.
Fourth Quarter 2015 Net Interest Revenue
Tax-equivalent net interest revenue totaled $184.5 million for the fourth quarter of 2015, up from $172.5 million for the fourth
quarter of 2014. Net interest margin was 2.64% for the fourth quarter of 2015 and 2.61% for the fourth quarter of 2014.
Tax-equivalent net interest revenue increased $12.0 million over the fourth quarter of 2014. Net interest revenue increased
$15.4 million primarily due to the growth in average loan balances, partially offset by a decrease in available for sale securities
and interest-bearing cash and cash equivalent balances. Net interest revenue decreased $3.4 million due primarily to lower loan
yields, partially offset by lower funding costs and increased yield on the available for sale securities portfolio.
The tax-equivalent yield on earning assets was 2.86% for the fourth quarter of 2015, unchanged compared to the fourth quarter
of 2014. Loan yields decreased 18 basis points due primarily to continued market pricing pressure and lower interest rates
compared to the fourth quarter of 2014. The available for sale securities portfolio yield increased 5 basis points to 2.04%. The
yield on interest-bearing cash and cash equivalents increased 1 basis point to 0.29%. Funding costs were down 5 basis points
from the fourth quarter of 2014. The cost of interest-bearing deposits decreased 6 basis points and the cost of other borrowed
funds increased 9 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities
was 12 basis points in the fourth quarter of 2015 and 14 basis points in the fourth quarter of 2014.
Average earning assets for the fourth quarter of 2015 increased $1.6 billion over the fourth quarter of 2014. Average loans, net
of allowance for loan losses, increased $1.7 billion over the fourth quarter of 2014 due primarily to growth in average
commercial and commercial real estate loans. The average balance of interest-bearing cash and cash equivalents and available
for sale securities decreased compared to the fourth quarter of 2014, partially offset by an increase in the average balance of fair
value option securities held as an economic hedge of mortgage servicing rights and restricted equity securities.
Average deposits increased $7.4 million over the fourth quarter of 2014. Average demand deposit balances increased $339
million. Average interest-bearing transaction accounts decreased $203 million and average time deposits decreased $164
million. Average borrowed funds increased $1.6 billion over the fourth quarter of 2014 primarily due to increased Federal
Home Loan Bank borrowings.
2014 Net Interest Revenue
Tax-equivalent net interest revenue for 2014 was $676.1 million compared to $684.8 million for 2013. Net interest margin was
2.68% for 2014 compared to 2.80% for 2013. The decrease in net interest margin was due primarily to narrowing loan yields
during the year, partially offset by growth in earning assets.
The tax-equivalent yield on average earning assets decreased 14 basis points from 2013. Loan yields decreased 29 basis points.
Spreads narrowed primarily due to market pricing pressure. The available for sale securities portfolio yield was down 2 basis
points due to cash flow reinvestment at lower rates. The cost of interest-bearing liabilities decreased 2 basis points. The cost of
interest-bearing deposits was down 4 basis points and the cost of other borrowed funds increased 3 basis points largely due to
the mix of funding sources.
26
Average earning assets increased $537 million during 2014. Average loans, net of allowance for loan losses, increased $1.1
billion and the average balance of the available for sale securities portfolio decreased $1.2 billion. We began to proactively
shrink the size of our securities portfolio beginning in the fourth quarter of 2013 to better position the balance sheet for an
environment of rising longer-term rates. The average balance of interest-bearing cash and cash equivalents grew by $624
million over 2013. Growth in average assets was funded by a $692 million increase in average deposit balances and a $20
million decrease in average borrowed funds balances. Average demand deposit account balances grew by $597 million and
average interest-bearing transaction account balances grew by $214 million, partially offset by a $151 million decrease in
average time deposit balances. At the end of August 2014, we increased our borrowings from the Federal Home Loan Banks by
approximately $1.5 billion, earning a small spread by depositing the proceeds in the Federal Reserve. Increased borrowings
from the Federal Home Loan Banks and increased repurchase agreement balances were offset by a decrease in average funds
purchased compared to 2013.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:3)(cid:177)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:18)(cid:53)(cid:68)(cid:87)(cid:72)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)
(In thousands)
(cid:3)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:18)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:3)(cid:18)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)
(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:39)(cid:88)(cid:72)(cid:3)(cid:55)(cid:82)(cid:20)
(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:39)(cid:88)(cid:72)(cid:3)(cid:55)(cid:82)(cid:20)
(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)
(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)(cid:3)(cid:18)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)
(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)
(cid:18)(cid:53)(cid:68)(cid:87)(cid:72)
Tax-equivalent interest revenue:
Interest-bearing cash and cash equivalents
(cid:7)
(cid:21)(cid:15)(cid:27)(cid:22)(cid:20)
(cid:7)
(cid:21)(cid:15)(cid:22)(cid:22)(cid:20)
(cid:7)
Trading securities
Investment securities:
Taxable securities
Tax-exempt securities
Total investment securities
Available for sale securities:
Taxable securities
Tax-exempt securities
Total available for sale securities
Fair value option securities
Restricted equity securities
Residential mortgage loans held for sale
Loans
Total tax-equivalent interest revenue
Interest expense:
Transaction deposits
Savings deposits
Time deposits
Funds purchased
Repurchase agreements
Other borrowings
Subordinated debentures
Total interest expense
Tax-equivalent net interest revenue
Change in tax-equivalent adjustment
(cid:24)(cid:22)(cid:24)
(cid:25)(cid:21)(cid:24)
(cid:11)(cid:21)(cid:24)(cid:20)(cid:12)
(cid:11)(cid:27)(cid:20)(cid:23)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:19)(cid:25)(cid:24)(cid:12)
(cid:20)(cid:26)(cid:21)
(cid:11)(cid:24)(cid:26)(cid:28)(cid:12)
(cid:11)(cid:23)(cid:19)(cid:26)(cid:12)
(cid:11)(cid:20)(cid:19)(cid:15)(cid:22)(cid:23)(cid:20)(cid:12)
(cid:11)(cid:20)(cid:22)(cid:15)(cid:23)(cid:19)(cid:20)(cid:12)
(cid:21)(cid:19)
(cid:11)(cid:23)(cid:20)(cid:26)(cid:12)
(cid:11)(cid:20)(cid:19)(cid:15)(cid:22)(cid:21)(cid:20)(cid:12)
(cid:11)(cid:20)(cid:22)(cid:15)(cid:27)(cid:20)(cid:27)(cid:12)
(cid:24)(cid:15)(cid:25)(cid:24)(cid:22)
(cid:25)(cid:15)(cid:23)(cid:28)(cid:21)
(cid:22)(cid:15)(cid:23)(cid:24)(cid:28)
(cid:21)(cid:27)(cid:15)(cid:24)(cid:20)(cid:19)
(cid:22)(cid:25)(cid:15)(cid:19)(cid:28)(cid:23)
(cid:11)(cid:28)(cid:22)(cid:25)(cid:12)
(cid:11)(cid:20)(cid:27)(cid:12)
(cid:11)(cid:24)(cid:15)(cid:24)(cid:24)(cid:28)(cid:12)
(cid:11)(cid:21)(cid:26)(cid:25)(cid:12)
(cid:11)(cid:22)(cid:19)(cid:20)(cid:12)
(cid:26)(cid:15)(cid:20)(cid:19)(cid:28)
(cid:11)(cid:22)(cid:15)(cid:24)(cid:28)(cid:19)(cid:12)
(cid:11)(cid:22)(cid:15)(cid:24)(cid:26)(cid:20)(cid:12)
(cid:22)(cid:28)(cid:15)(cid:25)(cid:25)(cid:24)
(cid:20)(cid:15)(cid:24)(cid:19)(cid:24)
(cid:24)(cid:15)(cid:19)(cid:21)(cid:24)
(cid:24)(cid:15)(cid:25)(cid:24)(cid:28)
(cid:23)(cid:15)(cid:24)(cid:23)(cid:19)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:22)(cid:25)
(cid:25)(cid:24)(cid:15)(cid:20)(cid:28)(cid:20)
(cid:20)(cid:20)(cid:19)
(cid:23)(cid:24)
(cid:11)(cid:27)(cid:22)(cid:28)(cid:12)
(cid:11)(cid:22)(cid:22)(cid:25)(cid:12)
(cid:11)(cid:20)(cid:19)(cid:25)(cid:12)
(cid:26)(cid:15)(cid:26)(cid:23)(cid:23)
(cid:11)(cid:20)(cid:15)(cid:24)(cid:22)(cid:26)(cid:12)
(cid:24)(cid:15)(cid:19)(cid:27)(cid:20)
(cid:25)(cid:19)(cid:15)(cid:20)(cid:20)(cid:19)
(cid:24)(cid:19)(cid:19)
$
(cid:11)(cid:28)(cid:19)(cid:12)
1,674
$
1,417
$
(176)
(813)
257
637
(cid:11)(cid:23)(cid:21)(cid:22)(cid:12)
(cid:11)(cid:21)(cid:22)(cid:24)(cid:12)
(cid:11)(cid:25)(cid:24)(cid:27)(cid:12)
(cid:22)(cid:15)(cid:19)(cid:25)(cid:19)
(cid:23)(cid:22)(cid:26)
(cid:22)(cid:15)(cid:23)(cid:28)(cid:26)
(cid:25)(cid:21)(cid:27)
(cid:27)(cid:22)(cid:22)
(cid:11)(cid:20)(cid:15)(cid:19)(cid:27)(cid:20)(cid:12)
(cid:11)(cid:22)(cid:21)(cid:15)(cid:26)(cid:21)(cid:25)(cid:12)
(cid:11)(cid:21)(cid:28)(cid:15)(cid:19)(cid:28)(cid:26)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:19)(cid:23)(cid:25)(cid:12)
(cid:11)(cid:25)(cid:22)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:26)(cid:21)(cid:19)(cid:12)
(cid:25)(cid:19)
(cid:11)(cid:20)(cid:28)(cid:24)(cid:12)
(cid:11)(cid:25)(cid:22)(cid:24)(cid:12)
(cid:11)(cid:21)(cid:15)(cid:19)(cid:24)(cid:22)(cid:12)
(cid:11)(cid:27)(cid:15)(cid:25)(cid:24)(cid:21)(cid:12)
(cid:11)(cid:21)(cid:19)(cid:15)(cid:23)(cid:23)(cid:24)(cid:12)
(1,077)
461
(616)
(670)
1,281
611
(21,907)
(19,705)
(177)
(778)
(22,084)
(20,483)
(296)
1,969
1,638
5,413
(12,478)
(1,398)
(41)
(3,442)
(507)
80
1,510
(51)
(3,849)
(8,629)
654
(446)
(505)
206
42,410
22,397
382
33
(2,346)
(310)
75
780
(6)
(1,392)
23,789
(407)
(820)
(1,227)
(2,202)
601
(1,601)
150
2,474
1,432
(36,997)
(34,875)
(1,780)
(74)
(1,096)
(197)
5
730
(45)
(2,457)
(32,418)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
1 Changes attributable to both volume and yield/rate are allocated to both volume and yield/rate on an equal basis.
(cid:22)(cid:27)(cid:15)(cid:20)(cid:25)(cid:19)
(cid:7)
(9,283)
$
27
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:3)(cid:177)(cid:3)(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:18)(cid:53)(cid:68)(cid:87)(cid:72)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:11)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:12)
(In thousands)
Tax-equivalent interest revenue:
Interest-bearing cash and cash equivalents
Trading securities
Investment securities:
Taxable securities
Tax-exempt securities
Total investment securities
Available for sale securities:
Taxable securities
Tax-exempt securities
Total available for sale securities
Fair value option securities
Restricted equity securities
Residential mortgage loans held for sale
Loans
Total tax-equivalent interest revenue
Interest expense:
Transaction deposits
Savings deposits
Time deposits
Funds purchased
Repurchase agreements
Other borrowings
Subordinated debentures
Total interest expense
Tax-equivalent net interest revenue
Change in tax-equivalent adjustment
(cid:55)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:18)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:39)(cid:88)(cid:72)(cid:3)(cid:55)(cid:82)(cid:20)
(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)
(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)(cid:3)(cid:18)
(cid:53)(cid:68)(cid:87)(cid:72)
$
(34) $
(61)
(77) $
(187)
(324)
(173)
(497)
(304)
(118)
(422)
1,408
1,270
(133)
8,994
10,525
(230)
(7)
(1,896)
7
(41)
2,277
(1,545)
(1,435)
11,960
363
(164)
(146)
(310)
(1,507)
(116)
(1,623)
1,306
1,142
(120)
15,661
15,792
(138)
10
(552)
1
(39)
1,691
(555)
418
15,374
43
126
(160)
(27)
(187)
1,203
(2)
1,201
102
128
(13)
(6,667)
(5,267)
(92)
(17)
(1,344)
6
(2)
586
(990)
(1,853)
(3,414)
Net interest revenue
1 Changes attributable to both volume and yield/rate are allocated to both volume and yield/rate on an equal basis.
11,597
$
28
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
Other operating revenue was $666.9 million for 2015, up $44.9 million or 7% over 2014. Fees and commissions revenue
increased $37.7 million or 6% over 2014. The change in the fair value of mortgage servicing rights, net of economic hedges,
decreased other operating revenue by $7.9 million in 2015 and decreased other operating revenue by $3.7 million in 2014. Net
gains on available for sale securities were $10.5 million more than net gains recognized in 2014. Other-than-temporary
impairment charges recognized in earnings in 2015 were $1.4 million more than charges recognized in 2014.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:3)(cid:177)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)
(In thousands)
Brokerage and trading revenue
Transaction card revenue
Fiduciary and asset management revenue
Deposit service charges and fees
Mortgage banking revenue
Bank-owned life insurance
Other revenue
Total fees and commissions revenue
Gain on other assets, net
Gain (loss) on derivatives, net
Gain (loss) on fair value option securities, net
Change in fair value of mortgage servicing rights
Gain on available for sale securities, net
Total other-than-temporary impairment
Portion of loss recognized in (reclassified from) other
comprehensive income
Net impairment losses recognized in earnings
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:20)(cid:21)(cid:28)(cid:15)(cid:24)(cid:24)(cid:25)
$
(cid:21)(cid:19)(cid:20)(cid:23)
134,437
$
(cid:21)(cid:19)(cid:20)(cid:22)
125,478
116,823
96,082
95,110
$
(cid:21)(cid:19)(cid:20)(cid:21)
126,930
107,985
80,053
98,917
121,934
169,302
10,155
38,262
11,089
34,604
$
(cid:21)(cid:19)(cid:20)(cid:20)
104,181
116,757
73,290
95,872
91,643
11,280
34,070
123,689
115,652
90,911
109,093
9,086
38,451
621,319
603,844
628,880
527,093
2,953
2,776
4,875
(4,367)
10,189
(15,212)
(16,445)
1,539
(373)
—
(373)
22,720
10,720
(2,574)
266
(2,308)
2,397
(301)
9,230
(9,210)
33,845
(1,144)
(6,207)
(7,351)
8,666
2,686
24,413
(40,447)
34,144
(10,578)
(12,929)
(23,507)
(cid:20)(cid:21)(cid:27)(cid:15)(cid:25)(cid:21)(cid:20)
(cid:20)(cid:21)(cid:25)(cid:15)(cid:20)(cid:24)(cid:22)
(cid:28)(cid:19)(cid:15)(cid:23)(cid:22)(cid:20)
(cid:20)(cid:22)(cid:23)(cid:15)(cid:22)(cid:26)(cid:24)
(cid:28)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:23)(cid:19)(cid:15)(cid:24)(cid:26)(cid:28)
(cid:25)(cid:24)(cid:28)(cid:15)(cid:19)(cid:20)(cid:28)
(cid:24)(cid:15)(cid:26)(cid:19)(cid:21)
(cid:23)(cid:22)(cid:19)
(cid:11)(cid:22)(cid:15)(cid:25)(cid:27)(cid:23)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:27)(cid:24)(cid:22)(cid:12)
(cid:20)(cid:21)(cid:15)(cid:19)(cid:24)(cid:27)
(cid:11)(cid:21)(cid:15)(cid:23)(cid:23)(cid:22)(cid:12)
(cid:25)(cid:21)(cid:23)
(cid:11)(cid:20)(cid:15)(cid:27)(cid:20)(cid:28)(cid:12)
Total other operating revenue
(cid:7)
(cid:25)(cid:25)(cid:25)(cid:15)(cid:27)(cid:24)(cid:22)
$
621,958
$
620,272
$
657,490
$
533,048
Fees and commissions revenue
Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 48% of total
revenue for 2015, excluding provision for credit losses and gains and losses on asset sales, securities and derivatives and the
change in the fair value of mortgage servicing rights. We believe that a variety of fee revenue sources provide an offset to
changes in interest rates, values in the equity markets, commodity prices and consumer spending, all of which can be
volatile. As an example of this strength, many of the economic factors that cause net interest revenue compression such as
falling interest rates may also drive growth in our mortgage banking revenue. We expect growth in other operating revenue to
come through offering new products and services and by further development of our presence in other markets. However,
current and future economic conditions, regulatory constraints, increased competition and saturation in our existing markets
could affect the rate of future increases.
Brokerage and trading revenue, which includes revenues from securities trading, retail brokerage, customer hedging and
investment banking decreased $4.9 million compared to the prior year.
Securities trading revenue totaled $44.7 million for 2015, an increase of $4.0 million or 10% over the prior year. Securities
trading revenue represents net realized and unrealized gains primarily related to sales of U.S. government securities, residential
mortgage-backed securities guaranteed by U.S. government agencies and municipal securities to institutional customers.
29
Customer hedging revenue is based primarily on realized and unrealized changes in the fair value of derivative contracts held
for customer risk management programs. As more fully discussed under Customer Derivative Programs in Note 3 of the
Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange and equity derivatives to our
customers. Customer hedging revenue totaled $40.9 million for 2015, an increase of $3.1 million or 8% compared to 2014. The
volume of derivative contracts sold to our mortgage banking customers used to hedge their pipelines of mortgage loan
originations increased as average mortgage rates trended down during 2015. This increase was partially offset by a decrease in
revenue from derivative contracts sold to energy customers primarily due to the decrease in energy prices during 2015. The
Company also received recoveries from the Lehman Brothers and MF Global bankruptcies related to derivative contract losses
incurred in 2008 of $669 thousand during 2015 and $2.2 million during 2014.
Revenue earned from retail brokerage transactions totaled $24.5 million for 2015, a decrease of $9.5 million or 28% compared
to the prior year. Retail brokerage revenue is primarily based on fees and commissions earned on sales of fixed income
securities, annuities and mutual funds to retail customers. Revenue is primarily based on the volume of customer transactions
and applicable commission rate for each type of product. During 2015, activity shifted from sales of products that pay us at a
higher commission rate to sales of products that pay us at a lower commission rate. The decrease in revenue from changes in
product mix was partially offset by growth in transaction volume. In addition, volume shifted from sales of products that pay us
a one-time transaction fee to accounts that pay us an ongoing management fee.
Investment banking, which includes fees earned upon completion of underwriting, financial advisory services and loan
syndication fees totaled $19.4 million for 2015, a decrease of $2.5 million or 11% compared to 2014 related to the timing and
volume of completed transactions.
Transaction card revenue depends largely on the volume and amount of transactions processed, the number of TransFund
automated teller machine (“ATM”) locations and the number of merchants served. Transaction card revenue totaled $128.6
million for 2015, a $4.9 million or 4% increase over 2014. Revenues from the processing of transactions on behalf of the
members of our TransFund electronic funds transfer ("EFT") network totaled $65.2 million, up $1.5 million or 2% over 2014,
due primarily to increased transaction volumes. The number of TransFund ATM locations totaled 1,972 at December 31, 2015
compared to 2,080 at December 31, 2014. Merchant services fees paid by customers for account management and electronic
processing of card transactions totaled $44.3 million, an increase of $3.1 million or 7% over the prior year. The increase was
primarily due to higher transaction processing volume throughout our geographical footprint. Revenue from interchange fees
paid by merchants for transactions processed from debit cards issued by the Company totaled $19.0 million, an increase of
$292 thousand or 2% over 2014 due to increased transaction volume.
Fiduciary and asset management revenue grew $10.5 million or 9% over 2014. A full year of revenue in 2015 from the
acquisitions of Topeka, Kansas-based GTRUST Financial Corporation in the first quarter of 2014 and Houston, Texas-based
MBM Advisors in the second quarter of 2014 added $4.0 million in revenue in 2015. The remaining increase was primarily due
to the growth in the fair value of fiduciary assets administered by the Company. Fiduciary assets are assets for which the
Company possesses investment discretion on behalf of another, or any other similar capacity. The fair value of fiduciary assets
administered by the Company totaled $38.3 billion at December 31, 2015 and $36.0 billion at December 31, 2014.
We also earn fees as administrator to and investment adviser for the Cavanal Hill Funds, a diversified, open-ended investment
company established as a business trust under the Investment Company Act of 1940 (the "1940 Act"). The Bank is custodian
and BOSC, Inc. is distributor for the Funds. The Funds’ products are offered to customers, employee benefit plans, trusts and
the general public in the ordinary course of business. We have voluntarily waived administration fees on the Cavanal Hill
money market funds in order to maintain positive yields on these funds in the current low short-term interest rate
environment. Waived fees totaled $12.5 million for 2015 compared to $10.1 million for 2014.
Deposit service charges and fees decreased $480 thousand or 1% compared to 2014. Overdraft fees totaled $41.2 million for
2015, a decrease of $3.4 million or 8% compared to last year. Commercial account service charge revenue totaled $42.1
million, an increase $3.4 million or 9% over the prior year. Service charges on deposit accounts with a standard monthly fee
were $7.0 million, a decrease of $405 thousand or 5% compared to the prior year.
30
Mortgage banking revenue totaled $134.4 million for 2015, a $25.3 million or 23% increase over 2014. Mortgage production
revenue totaled $78.0 million, an increase of $16.9 million over the prior year. A record $6.4 billion of mortgage loans were
funded for sale during 2015, an increase of $1.9 billion or 42% over 2014. The record volume of originations was due primarily
to the expansion of our correspondent and Home Direct online lending channels and a decrease in average primary mortgage
interest rates during 2015. Approximately 46% of loans originated in 2015 were through correspondent channels and 15% were
through our Home Direct online channel. The correspondent and Home Direct online lending channels have lower margins than
the retail lending channel. Loan refinances, which have higher margins than loans to finance home purchases, were 42% of
loans originated in 2015, compared to 30% in 2014.
The unpaid principal balance of mortgage loans closed but not yet sold was $294 million at December 31, 2015, $2.1 million or
1% higher than the prior year. Outstanding commitments to originate mortgage loans decreased $26 million or 4%(cid:3)compared to(cid:3)
December 31, 2014 to $601 million at December 31, 2015. The cumulative change in the valuation of mortgage loans held for
sale and mortgage commitments, net of forward sales contracts, was a $2.2 million gain for 2015, compared to a $4.4 million
gain for 2014.
Mortgage servicing revenue was $56.4 million, an increase of $8.4 million or 17% over the prior year. The outstanding
principal balance of mortgage loans serviced for others totaled $19.7 billion, a $3.5 billion increase over December 31, 2014.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:23)(cid:3)(cid:177)(cid:3)(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)(cid:3)(cid:37)(cid:68)(cid:81)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)
(In thousands)
Net realized gains on mortgage loans sold
(cid:7)
(cid:26)(cid:24)(cid:15)(cid:26)(cid:27)(cid:19)
$
56,696
$
95,309
$
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:21)
115,879
(cid:21)(cid:19)(cid:20)(cid:20)
$
50,812
Change in net unrealized gains on mortgage loans
held for sale
Total mortgage production revenue
Servicing revenue
Total mortgage revenue
(cid:21)(cid:15)(cid:20)(cid:27)(cid:19)
(cid:26)(cid:26)(cid:15)(cid:28)(cid:25)(cid:19)
(cid:24)(cid:25)(cid:15)(cid:23)(cid:20)(cid:24)
4,365
61,061
48,032
(15,764)
79,545
42,389
13,238
129,117
40,185
(cid:7)
(cid:20)(cid:22)(cid:23)(cid:15)(cid:22)(cid:26)(cid:24)
$
109,093
$
121,934
$
169,302
$
1,170
51,982
39,661
91,643
Mortgage loans funded for sale
(cid:7) (cid:25)(cid:15)(cid:22)(cid:26)(cid:21)(cid:15)(cid:28)(cid:24)(cid:25)
$ 4,484,394
$ 4,081,390
$ 3,708,350
$ 2,293,834
Mortgage loan refinances to total funded
(cid:23)(cid:21)(cid:8)
30%
43%
60%
53%
Mortgage loans sold
(cid:7) (cid:25)(cid:15)(cid:23)(cid:23)(cid:25)(cid:15)(cid:25)(cid:24)(cid:28)
$ 4,441,819
$ 4,254,151
$ 3,731,830
$ 2,369,895
Primary residential mortgage interest rate – average
Secondary residential mortgage interest rate –
average
(cid:22)(cid:17)(cid:27)(cid:28)(cid:8)
(cid:21)(cid:17)(cid:28)(cid:20)(cid:8)
4.17%
3.22%
3.99%
3.05%
3.66%
2.52%
4.45%
3.71%
Primary rates disclosed in Table 4 above represent rates generally available to borrowers on 30 year conforming mortgage
loans. Secondary rates represent rates generally paid on 30 year residential mortgage-backed securities guaranteed by U.S.
government agencies.
Outstanding principal balance of mortgage loans
serviced for others
(cid:7) (cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:27)(cid:15)(cid:21)(cid:21)(cid:25)
$ 16,162,887
$ 13,718,942
$ 11,981,624
$ 11,300,986
Outstanding mortgage loan commitments
(cid:25)(cid:19)(cid:20)(cid:15)(cid:20)(cid:23)(cid:26)
627,505
258,873
356,634
189,770
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:39)(cid:72)(cid:70)(cid:17)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
Net gains on securities, derivatives and other assets
We recognized $12.1 million of net gains from sales of $1.6 billion of available for sale securities in 2015. We recognized $1.5
million of net gains from sales of $2.7 billion of available for sale securities in 2014. Securities were sold either because they
had reached their expected maximum potential or to move into securities that are expected to perform better in a rising rate
environment.
31
We also maintain a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate
derivative contracts that are held as an economic hedge of the changes in the fair value of our mortgage servicing rights. The
fair value of our mortgage servicing rights fluctuates due to changes in prepayment speeds and other assumptions as more fully
described in Note 7 to the Consolidated Financial Statements. As primary mortgage rates increase, prepayment speeds slow and
the value of our mortgage servicing rights increases. As primary mortgage rates fall, prepayment speeds increase and the value
of our mortgage servicing rights decreases.
Changes in the fair value of mortgage servicing rights are highly dependent on changes in primary mortgage rates, rates offered
to borrowers, and assumptions about servicing revenues, servicing costs and discount rates. Changes in the fair value of
residential mortgage-backed securities and interest rate derivative contracts are highly dependent on changes in secondary
mortgage rates, or rates required by investors. While primary and secondary mortgage rates generally move in the same
direction, the spread between them may widen and narrow due to market conditions and government intervention. Changes in
the spread between the primary and secondary rates can cause significant earnings volatility. Additionally, the fair value of
mortgage servicing rights is dependent on short-term interest rates that affect the value of custodial funds. Changes in the
spread between short-term and long-term interest rates can also cause significant earnings volatility.
Table 5 following shows the relationship between changes in the fair value of mortgage servicing rights and the fair value of
fair value option residential mortgage-backed securities and interest rate derivative contracts held as an economic hedge. The
decrease in the fair value of mortgage servicing rights for 2015 included factors that we do not hedge, such as an increase in the
servicing cost assumption.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:24)(cid:3)(cid:177)(cid:3)(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:82)(cid:81)(cid:3)(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)(cid:3)(cid:54)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:53)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:15)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:43)(cid:72)(cid:71)(cid:74)(cid:72)(cid:3)
(In thousands)
Gain (loss) on mortgage hedge derivative contracts, net
(cid:7)
(cid:25)(cid:22)(cid:23)
$
2,776
$
(5,080) $
116
$
2,974
Gain (loss) on fair value option securities, net
Gain (loss) on economic hedge of mortgage servicing rights
Gain (loss) on change in fair value of mortgage servicing rights
(cid:11)(cid:22)(cid:15)(cid:25)(cid:27)(cid:23)(cid:12)
(cid:11)(cid:22)(cid:15)(cid:19)(cid:24)(cid:19)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:27)(cid:24)(cid:22)(cid:12)
10,003
12,779
(15,436)
(20,516)
7,793
7,909
24,413
27,387
(16,445)
22,720
(9,210)
(40,447)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:20)
Gain (loss) on changes in fair value of mortgage servicing rights, net of
economic hedges
(cid:7)
(cid:11)(cid:26)(cid:15)(cid:28)(cid:19)(cid:22)(cid:12) $
(3,666) $
2,204
Net interest revenue on fair value option securities1
1 Actual interest earned on fair value option securities less internal transfer-priced cost of funds.
(cid:27)(cid:15)(cid:19)(cid:19)(cid:20)
$
(cid:7)
3,253
$
3,290
$
$
(1,301) $ (13,060)
7,811
$ 17,650
Net gains on other assets totaled $5.7 million for 2015. The Company recognized a $1.7 million gain on the sale of bank
premises and a $2.8 million gain on underlying investments held by two consolidated private equity funds. Private equity gains
are largely attributed to non-controlling interests.
Fourth Quarter 2015 Other Operating Revenue
Other operating revenue was $161.1 million for the fourth quarter of 2015, up $9.2 million over the fourth quarter of
2014. Fees and commissions revenue decreased $2.0 million. The change in the fair value of mortgage servicing rights, net of
economic hedges, increased operating revenue $2.6 million for the fourth quarter of 2015 and decreased operating revenue
$6.1 million for the fourth quarter of 2014. Net gains on sales of available for sale securities were $2.0 million less than the
prior year. Other-than-temporary impairment charges were $1.4 million more in the fourth quarter of 2015 than in the fourth
quarter of 2014.
Brokerage and trading revenue decreased $347 thousand compared to the fourth quarter of 2014. Securities trading revenue
totaled $11.7 million for the fourth quarter of 2015, an increase of $2.4 million. Customer hedging revenue totaled $9.6 million,
a decrease of $342 thousand compared to the prior year. Revenue earned from retail brokerage transactions was $5.8 million,
unchanged compared to the fourth quarter of 2014. Investment banking revenue totaled $3.1 million, a $2.4 million decrease
compared to the fourth quarter of 2014 related to the timing and volume of completed transactions.
32
Transaction card revenue for the fourth quarter of 2015 increased $852 thousand or 3% over the fourth quarter of 2014,
primarily due to a $586 thousand increase in merchant services fees. Revenues from the processing of transactions on behalf of
the members of our TransFund EFT network totaled $16.5 million, merchant services fees totaled $11.0 million and revenue
from interchange fees paid by merchants for transactions processed from debit cards issued by the Company totaled $4.8
million.
Fiduciary and asset management revenue increased $516 thousand over the fourth quarter of 2014 to $31.2 million primarily
due to an increase in the fair value of assets managed. Waived administration fees on the Cavanal Hill money market funds
totaled $3.5 million for the fourth quarter of 2015, compared to $2.8 million for the fourth quarter of 2014.
Deposit service charges and fees were $22.8 million for the fourth quarter of 2015 compared to $22.6 million for the fourth
quarter of 2014. Overdraft fees totaled $10.7 million, largely unchanged compared to the fourth quarter of 2014. Commercial
account service charge revenue totaled $10.4 million, an increase of $496 thousand. Service charges on deposit accounts with a
standard monthly fee were $1.7 million, a decrease of $175 thousand.
Mortgage banking revenue was $25.0 million for the fourth quarter of 2015, compared to $30.1 million for the fourth quarter of
2014. Primary mortgage interest rates fell during the fourth quarter of 2014, driving loan production volume and higher loan
commitment levels as of December 31, 2014. Average primary mortgage interest rates were approximately 8 basis points lower
compared with the fourth quarter of 2014, resulting in continued loan production volume growth and refinancing activity, but
primary mortgage rates began trending upward at the end of the fourth quarter of 2015. This resulted in a reduced level of
outstanding commitments as of December 31, 2015. Mortgage loans funded for sale totaled $1.4 billion in the fourth quarter of
2015 compared to $1.3 billion in the fourth quarter of 2014. Mortgage loan refinances represented 41% of total loans funded
during the fourth quarter of 2015, compared to 37% in the fourth quarter of 2014. Loans originated by our correspondent
channel increased to 46% of total loans funded during the fourth quarter of 2015 from 44% of total loans funded in the fourth
quarter of 2014. Outstanding mortgage loan commitments decreased $26 million while the unpaid principal balance of
mortgage loans held for sale was largely unchanged.
For the fourth quarter of 2015, changes in the fair value of mortgage servicing rights increased operating revenue by $7.4
million, partially offset by a net loss of $4.9 million on fair value option securities and derivative contracts held as an economic
hedge. For the fourth quarter of 2014, changes in the fair value of mortgage servicing rights decreased operating revenue by
$10.8 million, partially offset by a $4.8 million net gain on fair value option securities and derivative contracts held as an
economic hedge.
2014 Other Operating Revenue
Other operating revenue totaled $622.0 million for 2014, compared to $620.3 million for 2013. Fees and commissions revenue
increased $17.5 million. The change in the fair value of mortgage servicing rights, net of economic hedges, decreased operating
revenue in 2014 by $3.7 million and increased operating revenue $2.2 million in 2013. Net gains on sales of available for sale
securities were $1.5 million for 2014 compared to $10.7 million for 2013. Other-than-temporary impairment charges
recognized in earnings were $1.9 million less than charges recognized in 2013.
Brokerage and trading revenue for 2014 increased $9.0 million over 2013. Revenue in 2013 was reduced $8.7 million from the
impact of the fair value adjustment to our trading securities inventory due to a sharp increase in interest rates during 2013.
Excluding this adjustment, securities trading revenue decreased $2.3 million. Customer hedging revenue decreased $4.2
million. The decrease was primarily due to a decrease in revenue from derivative contracts sold to our mortgage banking and
energy customers, partially offset by growth related to increased volumes of foreign exchange contracts. Customer hedging
revenue for 2014 included $2.2 million of recoveries from the Lehman Brothers and MF Global bankruptcies and 2013
included $2.4 million of recoveries. Retail brokerage revenue was largely unchanged compared to 2013 and investment
banking revenue increased $6.8 million. Transaction card revenue grew by $6.9 million over 2013 primarily due to TransFund
network transaction volume growth and higher merchant services transaction volumes. Fiduciary and asset management fees
increased $19.6 million. The GTRUST Financial Corporation and MBM Advisors acquisitions during 2014 added $7.8 million
of revenue. The remaining was primarily due to growth in the fair value of fiduciary assets. Deposit service charges and fees
decreased $4.2 million primarily due to lower overdraft fees partially offset by increased commercial account service charges.
Mortgage banking revenue decreased $12.8 million compared to 2013. While the volume of loans funded for sale and
outstanding loan commitments increased, our product mix shifted toward lower margin products.
33
Net gains on other assets totaled $3.0 million for 2014. The fair value of certain alternative investments held as a hedge of a
deferred compensation liability were adjusted downward by $1.7 million and a $1.5 million charge was taken against a
merchant-banking investment accounted for under the equity method. These losses were partially offset by a $6.6 million gain
on underlying investments held by two consolidated private equity funds. Private equity gains are largely attributed to non-
controlling interests.
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)
Other operating expense for 2015 totaled $904.6 million, a $57.0 million or 7% increase over the prior year. Personnel expense
for 2014 included a $12.6 million net reduction in the accrual for amounts payable to certain executive officers under the 2011
True-Up Plan. Excluding the impact of the 2011 True-Up Plan adjustment, personnel expense increased $33.9 million or 7%.
Non-personnel expenses increased $10.5 million or 3% over the prior year.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:25)(cid:3)(cid:177)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)
(In thousands)
Regular compensation
Incentive compensation:
Cash-based compensation
Share-based compensation
Deferred compensation
Total incentive compensation
Employee benefits
Total personnel expense
Business promotion
Charitable contributions to BOKF Foundation
Professional fees and services
Net occupancy and equipment
Insurance
Data processing & communications
Printing, postage and supplies
Net losses & operating expenses of repossessed assets
Amortization of intangible assets
Mortgage banking costs
Other expense
Total other operating expense
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:22)(cid:20)(cid:24)(cid:15)(cid:22)(cid:27)(cid:28)
$
(cid:21)(cid:19)(cid:20)(cid:23)
298,420
(cid:21)(cid:19)(cid:20)(cid:22)
279,493
$
(cid:21)(cid:19)(cid:20)(cid:21)
262,736
(cid:21)(cid:19)(cid:20)(cid:20)
247,945
$
$
(cid:20)(cid:20)(cid:28)(cid:15)(cid:27)(cid:27)(cid:26)
(cid:20)(cid:21)(cid:15)(cid:22)(cid:24)(cid:27)
(cid:22)(cid:25)(cid:20)
(cid:20)(cid:22)(cid:21)(cid:15)(cid:25)(cid:19)(cid:25)
(cid:26)(cid:24)(cid:15)(cid:23)(cid:28)(cid:21)
(cid:24)(cid:21)(cid:22)(cid:15)(cid:23)(cid:27)(cid:26)
(cid:21)(cid:26)(cid:15)(cid:27)(cid:24)(cid:20)
(cid:26)(cid:28)(cid:25)
(cid:23)(cid:19)(cid:15)(cid:20)(cid:21)(cid:22)
(cid:26)(cid:25)(cid:15)(cid:19)(cid:20)(cid:25)
(cid:21)(cid:19)(cid:15)(cid:22)(cid:26)(cid:24)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:22)(cid:27)(cid:22)
(cid:20)(cid:22)(cid:15)(cid:23)(cid:28)(cid:27)
(cid:20)(cid:15)(cid:23)(cid:23)(cid:25)
(cid:23)(cid:15)(cid:22)(cid:24)(cid:28)
(cid:22)(cid:27)(cid:15)(cid:28)(cid:28)(cid:26)
(cid:22)(cid:24)(cid:15)(cid:21)(cid:22)(cid:22)
111,748
10,875
(13,692)
108,931
69,580
476,931
26,649
4,267
44,440
77,232
18,578
115,225
13,518
6,019
3,965
31,705
28,993
110,871
116,718
8,189
32,083
151,143
74,589
505,225
22,598
2,062
32,552
69,773
16,122
105,967
13,885
5,160
3,428
31,196
32,652
9,668
27,502
153,888
74,409
491,033
23,338
2,062
34,015
66,726
15,356
98,904
14,228
20,528
2,927
44,334
26,912
97,222
9,995
10,563
117,780
64,261
429,986
20,549
4,000
28,798
64,611
16,799
97,976
14,085
23,715
3,583
37,621
37,575
(cid:7)
(cid:28)(cid:19)(cid:23)(cid:15)(cid:24)(cid:25)(cid:23)
$
847,522
$
840,620
$
840,363
$
779,298
Average number of employees (full-time equivalent)
(cid:23)(cid:15)(cid:26)(cid:28)(cid:26)
4,679
4,683
4,614
4,474
Personnel expense
Regular compensation expense, which consists of salaries and wages, overtime pay and temporary personnel costs, increased
$17.0 million or 6% over 2014. The average number of employees grew by 3% over the prior year. Recent additions have been
higher-costing compliance and risk management, technology and wealth management positions. In addition, standard annual
merit increases in regular compensation were effective for the majority of our staff March 1. Regular compensation expense for
2014 included $800 thousand related to branch closure costs.
34
Excluding the impact of the 2011 True-Up Plan adjustment in 2014, incentive compensation increased $11.1 million or 9% over
2014. Cash-based incentive compensation plans are either intended to provide current rewards to employees who generate
long-term business opportunities for the Company based on growth in loans, deposits, customer relationships and other
measurable metrics or intended to compensate employees with commissions on completed transactions. Total cash-based
incentive compensation increased $8.1 million or 7% over 2014.
Share-based compensation expense represents expense for equity awards based on the grant-date fair value. Share-based
compensation expense for equity awards increased $1.5 million or 14% over 2014 primarily due to a change in the vesting
period on non-vested shares awarded. Non-vested shares awarded prior to 2013 generally cliff vest in 5 years. Non-vested
shares awarded since January 1, 2013 generally cliff vest in 3 years and are subject to a two year holding period after vesting.
The Company currently offers a deferred compensation plan for certain executive and senior officers. Deferred compensation
expense totaled $361 thousand for 2015. Deferred compensation expense for 2014 and prior years was largely based on the
2011 True-Up Plan. Approved by shareholders on April 26, 2011, the True-Up Plan was designed to adjust annual and long-
term performance-based incentive compensation for certain senior executives for 2006 through 2013. The 2011 True-Up Plan
ended on December 31, 2013 and amounts accrued were paid in May 2014.
Employee benefit expense increased $5.9 million or 8% compared to 2014. Employee medical costs totaled $25.0 million, a
$3.6 million or 17% increase over the prior year. The Company self-insures a portion of its employee health care coverage and
these costs may be volatile. Payroll tax expense increased $1.1 million over 2014 to $28.6 million. Employee retirement plan
costs totaled $20.6 million, up $2.0 million.
Non-personnel operating expense
Non-personnel expense increased $10.5 million or 3% over the prior year. Mortgage banking expense increased $7.3 million or
23% primarily due to an $8.7 million increase in amortization of mortgage servicing rights due to higher actual prepayments.
Data processing and communications expense increased $7.2 million or 6% primarily related to increased transaction activity
costs. In addition, data processing and communications expense increased over the prior year as risk management and
compliance projects were completed. We expect these costs to continue to increase in 2016 as we continue to invest in upgrades
in information technology infrastructure and cybersecurity. Professional fees and services expense decreased $4.3 million or
10% compared to the prior year primarily as risk management and regulatory compliance costs stabilized in 2015 after growing
37% during 2014. Net losses and operating expenses of repossessed assets decreased $4.6 million compared to the prior year.
All other non-personnel operating expenses were up $4.9 million, net.
Fourth Quarter 2015 Operating Expenses
Other operating expense for the fourth quarter of 2015 totaled $232.6 million, a $6.7 million increase over the fourth quarter of
2014.
Personnel expense increased $7.4 million over the fourth quarter of 2014. Regular compensation expense increased $2.0
million over the fourth quarter of 2014. Incentive compensation increased $2.7 million compared to the fourth quarter of 2014
primarily due to a change in estimated share-based compensation expense. Share-based compensation includes grants with
vesting criteria based on the Company's earnings per share growth relative to peers over a forward looking three-year
performance period. The Company's forecasted earnings per share growth over the performance period increased largely due to
common shares repurchased during the third and fourth quarters of 2015. Employee benefit expense increased $2.7 million
compared to the fourth quarter of 2014 primarily due to an increase in employee medical insurance claim expense.
Non-personnel expense decreased $760 thousand compared to the fourth quarter of 2014. Premises and equipment expense for
the fourth quarter of 2014 included a $4.1 million accrual of costs related the discontinuance of the grocery store branch model
and closure of 28 in-store branches. The Company also made a $1.8 million contribution of developed commercial real estate to
the BOKF Foundation during the fourth quarter of 2014. Net losses and operating expenses of repossessed assets were
$343 thousand for the fourth quarter of 2015, compared to a net gain of $1.5 million in the fourth quarter of 2014. All other
non-personnel expenses were up $2.5 million over the prior year on a net basis.
35
2014 Operating Expenses
Other operating expense totaled $847.5 million for 2014, a $6.9 million or 1% increase over 2013. The Company's investment
in risk management and regulatory compliance resulted in a $16.7 million increase, primarily in personnel, professional fees
and services and data processing and communications expense for 2014. In addition, approximately $4.9 million was expensed
in the fourth quarter of 2014 related to the announced closure of the grocery store branch network, primarily related to facilities
and employee costs.
Personnel expense decreased $28.3 million or 6%. Regular compensation expense totaled $298.4 million, up $18.9 million
primarily due to the investment in higher-costing wealth management, compliance and risk management positions. Incentive
compensation expense decreased $42.2 million, primarily due to the adjustment of amounts payable under the 2011 True-Up
Plan. Employee benefit expense decreased $5.0 million primarily due to employee medical costs.
Non-personnel expense for 2014 was $35.2 million or 10% higher than 2013. Professional fees and services expense increased
$11.9 million primarily due to increased risk management and regulatory compliance costs. Data processing and
communications expense increased $9.3 million primarily related to increased transaction activity costs. Net occupancy and
equipment expense increased $7.5 million, including $4.1 million of branch closure costs. All other non-personnel operating
expenses were up $4.9 million, net.
(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:55)(cid:68)(cid:91)(cid:72)(cid:86)
Income tax expense was $139.4 million or 32.3% of net income before taxes for 2015, $144.2 million or 32.8% of net income
before taxes for 2014 and $163.1 million or 33.8% of net income before taxes for 2013. Tax expense currently payable totaled
$130 million in 2015, $105 million in 2014 and $146 million in 2013.
The statute of limitations expired on an uncertain tax position and the Company adjusted its current income tax liability to
amounts on filed tax returns for 2014 in 2015, 2013 in 2014 and 2012 in 2013. Excluding these adjustments income tax
expense would have been $141.4 million or 32.7% of net income before taxes for 2015, $146.4 million or 33.3% of net income
before taxes for 2014 and $164.5 million or 34.1% of net income before taxes for 2013.
The Company adopted FASB Accounting Standards Update No. 2014-01, Accounting for Investments in Qualified Affordable
Housing Projects, on January 1, 2015. This standard allows amortization expense related to qualified affordable housing
investment costs to be recognized in provision for income taxes and was retrospectively applied to all periods presented. Prior
to 2015, these amounts were recognized in other operating expense, and therefore, for comparative purposes,
$9.3 million and $5.8 million of amortization expense has been reclassified to federal and state income taxes for the years
ended December 31, 2014 and 2013, respectively. This reclassification increased the effective tax rate by 150 basis points in
2014 and 80 basis points in 2013. Adoption of this standard did not affect net income.
Net deferred tax liabilities totaled $1.4 million at December 31, 2015 and $7.2 million at December 31, 2014. We have
evaluated the recoverability of our deferred tax assets based on taxes previously paid in net loss carry-back periods and other
factors and determined that no valuation allowance was required in 2015 and 2014.
Unrecognized tax benefits totaled $13 million at December 31, 2015 and December 31, 2014. BOK Financial operates in
numerous jurisdictions, which requires judgment regarding the allocation of income, expense and earnings under various laws
and regulations of each of these taxing jurisdictions. Each jurisdiction may audit our tax returns and may take different
positions with respect to these allocations.
Income tax expense was $26.2 million or 30.1% of net income before taxes for the fourth quarter of 2015 compared to $30.1
million or 31.5% of net income before taxes for the fourth quarter of 2014. Income tax expense as a percentage of net income
before taxes was lower in the fourth quarter of 2015, primarily due to a decrease in net income before taxes during the fourth
quarter. This resulted in a year to date decrease in tax expense that was recognized in the fourth quarter of 2015.
36
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:26)(cid:3)(cid:177)(cid:3)(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)(cid:3)
(In thousands, except per share data)(cid:3)
Interest revenue
Interest expense
Net interest revenue
Provision for credit losses
Net interest revenue after provision for credit losses
Fees and commissions revenue
Gain (loss) on financial instruments and other assets, net
Change in fair value of mortgage servicing rights
Other-than-temporary impairment losses
Other operating revenue
Personnel expense
Other non-personnel expense
Total other operating expense
Net income before taxes
Federal and state income taxes
Net income
Net income attributable to non-controlling interests
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:41)(cid:76)(cid:85)(cid:86)(cid:87)
(cid:54)(cid:72)(cid:70)(cid:82)(cid:81)(cid:71)
(cid:55)(cid:75)(cid:76)(cid:85)(cid:71)
(cid:41)(cid:82)(cid:88)(cid:85)(cid:87)(cid:75)
(cid:7)
(cid:20)(cid:27)(cid:23)(cid:15)(cid:24)(cid:25)(cid:28)
(cid:7)
(cid:20)(cid:28)(cid:20)(cid:15)(cid:27)(cid:20)(cid:22)
(cid:7)
(cid:20)(cid:28)(cid:22)(cid:15)(cid:25)(cid:25)(cid:23)
(cid:7)
(cid:20)(cid:28)(cid:25)(cid:15)(cid:26)(cid:27)(cid:21)
(cid:20)(cid:25)(cid:15)(cid:27)(cid:23)(cid:22)
(cid:20)(cid:25)(cid:26)(cid:15)(cid:26)(cid:21)(cid:25)
(cid:178)
(cid:20)(cid:25)(cid:26)(cid:15)(cid:26)(cid:21)(cid:25)
(cid:20)(cid:25)(cid:15)(cid:19)(cid:27)(cid:21)
(cid:20)(cid:26)(cid:24)(cid:15)(cid:26)(cid:22)(cid:20)
(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:20)(cid:26)(cid:20)(cid:15)(cid:26)(cid:22)(cid:20)
(cid:20)(cid:25)(cid:24)(cid:15)(cid:28)(cid:28)(cid:20)
(cid:20)(cid:26)(cid:21)(cid:15)(cid:24)(cid:23)(cid:26)
(cid:27)(cid:15)(cid:25)(cid:23)(cid:19)
(cid:11)(cid:27)(cid:15)(cid:24)(cid:21)(cid:21)(cid:12)
(cid:11)(cid:28)(cid:21)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:21)(cid:26)(cid:21)(cid:12)
(cid:27)(cid:15)(cid:19)(cid:20)(cid:19)
(cid:178)
(cid:20)(cid:24)(cid:15)(cid:19)(cid:21)(cid:27)
(cid:20)(cid:26)(cid:27)(cid:15)(cid:25)(cid:22)(cid:25)
(cid:26)(cid:15)(cid:24)(cid:19)(cid:19)
(cid:20)(cid:26)(cid:20)(cid:15)(cid:20)(cid:22)(cid:25)
(cid:20)(cid:25)(cid:23)(cid:15)(cid:25)(cid:24)(cid:26)
(cid:20)(cid:19)(cid:15)(cid:24)(cid:22)(cid:25)
(cid:11)(cid:20)(cid:20)(cid:15)(cid:26)(cid:24)(cid:26)(cid:12)
(cid:178)
(cid:20)(cid:24)(cid:15)(cid:24)(cid:21)(cid:20)
(cid:20)(cid:27)(cid:20)(cid:15)(cid:21)(cid:25)(cid:20)
(cid:21)(cid:21)(cid:15)(cid:24)(cid:19)(cid:19)
(cid:20)(cid:24)(cid:27)(cid:15)(cid:26)(cid:25)(cid:20)
(cid:20)(cid:24)(cid:24)(cid:15)(cid:27)(cid:21)(cid:23)
(cid:11)(cid:22)(cid:28)(cid:27)(cid:12)
(cid:26)(cid:15)(cid:23)(cid:20)(cid:25)
(cid:11)(cid:20)(cid:15)(cid:26)(cid:21)(cid:26)(cid:12)
(cid:20)(cid:25)(cid:25)(cid:15)(cid:19)(cid:20)(cid:26)
(cid:20)(cid:26)(cid:25)(cid:15)(cid:21)(cid:27)(cid:24)
(cid:20)(cid:25)(cid:22)(cid:15)(cid:23)(cid:22)(cid:25)
(cid:20)(cid:25)(cid:20)(cid:15)(cid:20)(cid:20)(cid:24)
(cid:20)(cid:21)(cid:27)(cid:15)(cid:24)(cid:23)(cid:27)
(cid:28)(cid:20)(cid:15)(cid:26)(cid:20)(cid:26)
(cid:21)(cid:21)(cid:19)(cid:15)(cid:21)(cid:25)(cid:24)
(cid:20)(cid:22)(cid:21)(cid:15)(cid:25)(cid:28)(cid:24)
(cid:28)(cid:23)(cid:15)(cid:23)(cid:20)(cid:27)
(cid:21)(cid:21)(cid:26)(cid:15)(cid:20)(cid:20)(cid:22)
(cid:20)(cid:21)(cid:28)(cid:15)(cid:19)(cid:25)(cid:21)
(cid:28)(cid:24)(cid:15)(cid:24)(cid:25)(cid:25)
(cid:21)(cid:21)(cid:23)(cid:15)(cid:25)(cid:21)(cid:27)
(cid:20)(cid:20)(cid:22)(cid:15)(cid:23)(cid:26)(cid:27)
(cid:20)(cid:21)(cid:19)(cid:15)(cid:28)(cid:19)(cid:22)
(cid:20)(cid:19)(cid:28)(cid:15)(cid:28)(cid:23)(cid:23)
(cid:22)(cid:27)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:26)(cid:24)(cid:15)(cid:19)(cid:28)(cid:23)
(cid:21)(cid:24)(cid:20)
(cid:23)(cid:19)(cid:15)(cid:25)(cid:22)(cid:19)
(cid:27)(cid:19)(cid:15)(cid:21)(cid:26)(cid:22)
(cid:20)(cid:15)(cid:19)(cid:23)(cid:22)
(cid:22)(cid:23)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:26)(cid:24)(cid:15)(cid:27)(cid:20)(cid:25)
(cid:28)(cid:21)(cid:24)
(cid:20)(cid:22)(cid:22)(cid:15)(cid:20)(cid:27)(cid:21)
(cid:28)(cid:28)(cid:15)(cid:22)(cid:26)(cid:25)
(cid:21)(cid:22)(cid:21)(cid:15)(cid:24)(cid:24)(cid:27)
(cid:27)(cid:26)(cid:15)(cid:22)(cid:20)(cid:27)
(cid:21)(cid:25)(cid:15)(cid:21)(cid:23)(cid:21)
(cid:25)(cid:20)(cid:15)(cid:19)(cid:26)(cid:25)
(cid:20)(cid:15)(cid:23)(cid:26)(cid:24)
Net income attributable to shareholders of BOK Financial Corp. shareholders (cid:7)
(cid:26)(cid:23)(cid:15)(cid:27)(cid:23)(cid:22)
(cid:7)
(cid:26)(cid:28)(cid:15)(cid:21)(cid:22)(cid:19)
(cid:7)
(cid:26)(cid:23)(cid:15)(cid:27)(cid:28)(cid:20)
(cid:7)
(cid:24)(cid:28)(cid:15)(cid:25)(cid:19)(cid:20)
Earnings per share:
Basic
Diluted
Average shares:
Basic
Diluted
(cid:7)
(cid:7)
(cid:20)(cid:17)(cid:19)(cid:27)
(cid:20)(cid:17)(cid:19)(cid:27)
(cid:7)
(cid:7)
(cid:20)(cid:17)(cid:20)(cid:24)
(cid:20)(cid:17)(cid:20)(cid:24)
(cid:7)
(cid:7)
(cid:20)(cid:17)(cid:19)(cid:28)
(cid:20)(cid:17)(cid:19)(cid:28)
(cid:7)
(cid:7)
(cid:19)(cid:17)(cid:27)(cid:28)
(cid:19)(cid:17)(cid:27)(cid:28)
(cid:25)(cid:27)(cid:15)(cid:21)(cid:24)(cid:24)
(cid:25)(cid:27)(cid:15)(cid:22)(cid:23)(cid:24)
(cid:25)(cid:27)(cid:15)(cid:19)(cid:28)(cid:25)
(cid:25)(cid:27)(cid:15)(cid:21)(cid:20)(cid:19)
(cid:25)(cid:26)(cid:15)(cid:25)(cid:25)(cid:27)
(cid:25)(cid:26)(cid:15)(cid:26)(cid:25)(cid:21)
(cid:25)(cid:25)(cid:15)(cid:22)(cid:26)(cid:27)
(cid:25)(cid:25)(cid:15)(cid:23)(cid:25)(cid:27)
37
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:26)(cid:3)(cid:177)(cid:3)(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)(cid:3)(cid:11)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:12)
(In thousands, except per share data)
Interest revenue
Interest expense
Net interest revenue
Provision for credit losses
(cid:21)(cid:19)(cid:20)(cid:23)
$
(cid:41)(cid:76)(cid:85)(cid:86)(cid:87)
179,120
16,478
162,642
—
(cid:54)(cid:72)(cid:70)(cid:82)(cid:81)(cid:71)
(cid:55)(cid:75)(cid:76)(cid:85)(cid:71)
(cid:41)(cid:82)(cid:88)(cid:85)(cid:87)(cid:75)
$
182,631
$
183,868
$
186,620
16,534
166,097
—
17,077
166,791
—
16,956
169,664
—
Net interest revenue after provision for credit losses
162,642
166,097
166,791
169,664
Fees and commissions revenue
Gain (loss) on financial instruments and other assets, net
Change in fair value of mortgage servicing rights
Other-than-temporary impairment losses
Other operating revenue
140,863
164,054
158,547
2,540
(4,461)
—
8,532
(6,444)
—
1,143
5,281
—
157,855
5,242
(10,821)
(373)
138,942
166,142
164,971
151,903
Personnel expense
Other non-personnel expense
Total other operating expense
Net income before taxes
Federal and state income taxes
Net income
Net income (loss) attributable to non-controlling interests
104,433
80,671
185,104
116,480
39,437
77,043
453
$
Net income attributable to shareholders of BOK Financial Corp. shareholders $
76,590
123,714
90,993
214,707
117,532
40,803
123,043
98,791
221,834
109,928
33,802
76,729
$
76,126
$
834
75,895
494
75,632
125,741
100,136
225,877
95,690
30,109
65,581
1,263
64,318
1.10
1.10
$
$
1.09
1.09
$
$
0.93
0.93
$
$
$
$
$
$
1.11
1.11
Earnings per share:
Basic
Diluted
Average shares:
Basic
Diluted
68,274
68,436
68,360
68,511
68,456
68,610
68,482
68,616
38
(cid:47)(cid:76)(cid:81)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)
We operate three principal lines of business: Commercial Banking, Consumer Banking and Wealth Management. Commercial
Banking includes lending, treasury and cash management services and customer risk management products for small
businesses, middle market and larger commercial customers. Commercial banking also includes the TransFund EFT
network. Consumer Banking includes retail lending and deposit services, lending and deposit services to small businesses
served through our consumer branch network and all mortgage banking activities. Wealth Management provides fiduciary
services, private bank services and investment advisory services in all markets. Wealth Management also underwrites state and
municipal securities and engages in brokerage and trading activities.
In addition to our lines of business, we have a Funds Management unit. The primary purpose of this unit is to manage our
overall liquidity needs and interest rate risk. Each line of business borrows funds from and provides funds to the Funds
Management unit as needed to support their operations. Operating results for Funds Management and other include the effect of
interest rate risk positions and risk management activities, securities gains and losses including impairment charges, the
provision for credit losses in excess of net loans charged off, tax planning strategies and certain executive compensation costs
that are not attributed to the lines of business.
We allocate resources and evaluate the performance of our lines of business using the net direct contribution which includes the
allocation of funds, actual net credit losses and capital costs. In addition, we measure the performance of our business lines
after allocations of certain direct expenses and taxes based on statutory rates.
The cost of funds borrowed from the Funds Management unit by the operating lines of business is transfer priced at rates that
approximate market rates for funds with similar duration. Market rates are generally based on the applicable LIBOR or interest
rate swap rates, adjusted for prepayment risk. This method of transfer-pricing funds that support assets of the operating lines of
business tends to insulate them from interest rate risk.
The value of funds provided by the operating lines of business to the Funds Management unit is also based on rates which
approximate wholesale market rates for funds with similar duration and re-pricing characteristics. Market rates are generally
based on LIBOR or interest rate swap rates. The funds credit formula applied to deposit products with indeterminate maturities
is established based on their re-pricing characteristics reflected in a combination of the short-term LIBOR rate and a moving
average of an intermediate term swap rate, with an appropriate spread applied to both. Shorter duration products are weighted
towards the short term LIBOR rate and longer duration products are weighted towards the intermediate swap rates. The
expected duration ranges from 30 days for certain rate-sensitive deposits to five years.
Economic capital is assigned to the business units by a capital allocation model that reflects management’s assessment of
risk. This model assigns capital based upon credit, operating, interest rate and market risk inherent in our business lines and
recognizes the diversification benefits among the units. The level of assigned economic capital is a combination of the risk
taken by each business line, based on its actual exposures and calibrated to its own loss history where possible. Average
invested capital includes economic capital and amounts we have invested in the lines of business.
As shown in Table 8 following, net income attributable to our lines of business increased $21.3 million or 10% over the prior
year. The increase in net income attributed to our lines of business was due primarily to a $49.2 million increase in net interest
revenue mostly from commercial loan growth and a $40.4 million increase in fees and commission revenue mostly from
growth in mortgage banking revenue and fiduciary and asset management fee revenue growth. These increases were partially
offset by a $21.4 million increase in personnel expense primarily from regular salaries and incentive compensation expense
growth and a $13.6 million increase in non-personnel expense primarily from increased mortgage banking expense. The
decrease in net income provided by Funds Management was largely due to a $34.0 million provision for credit losses being
recorded in the current year, compared to no provision for credit losses being recorded in the prior year. Lower net interest
revenue from our securities portfolio and increased operating expenses primarily due to incentive compensation expense was
partially offset by increased gains on sales from our available for sale securities portfolio. Funds Management and other also
included $4.9 million that was accrued during 2014 related to the closure of 29 in-store branches during the first quarter of
2015. This accrual was reversed and actual costs related to these closures was attributed to the Consumer Banking segment in
2015.
39
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:27)(cid:3)(cid:177)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:69)(cid:92)(cid:3)(cid:47)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)
(In thousands)
Commercial Banking
Consumer Banking
Wealth Management
Subtotal
Funds Management and other
Total
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:21)(cid:19)(cid:20)(cid:15)(cid:22)(cid:22)(cid:23)
$
164,410
$
148,602
(cid:21)(cid:21)(cid:15)(cid:23)(cid:20)(cid:24)
(cid:20)(cid:25)(cid:15)(cid:27)(cid:27)(cid:24)
(cid:21)(cid:23)(cid:19)(cid:15)(cid:25)(cid:22)(cid:23)
(cid:23)(cid:26)(cid:15)(cid:28)(cid:22)(cid:20)
33,736
21,215
219,361
73,074
60,766
17,014
226,382
90,227
(cid:7)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
$
292,435
$
316,609
40
Commercial Banking
Commercial Banking contributed $201.3 million to consolidated net income in 2015, up $36.9 million or 22% over the prior
year. Net interest revenue grew by $51.3 million as the balance of average commercial loans increased $1.7 billion or 16%. Net
recoveries were $1.4 million less than in 2014. Fees and commission revenue increased $7.0 million or 4% over the prior year
primarily due to growth in transaction card and deposit service charges and fees revenue. Other operating expense increased
$3.2 million or 2% compared to 2014, primarily due to increased personnel expense.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:28)(cid:3)(cid:177)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:37)(cid:68)(cid:81)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)
(Dollars in thousands)
Net interest revenue from external sources
Net interest expense from internal sources
Total net interest revenue
Net loans charged off (recovered)
Net interest revenue after net loans charged off
Fees and commissions revenue
Gain (loss) on financial instruments and other assets, net
Other operating revenue
Personnel expense
Other non-personnel expense
Other operating expense
Net direct contribution
Corporate allocations
Net income before taxes
Federal and state income taxes
Net income
Average assets
Average loans
Average deposits
Average invested capital
Return on average assets
Return on invested capital
Efficiency ratio
Net charge-offs (recoveries) to average loans
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:23)(cid:22)(cid:28)(cid:15)(cid:26)(cid:21)(cid:26)
$
(cid:11)(cid:24)(cid:19)(cid:15)(cid:25)(cid:26)(cid:27)(cid:12)
(cid:22)(cid:27)(cid:28)(cid:15)(cid:19)(cid:23)(cid:28)
(cid:11)(cid:25)(cid:15)(cid:19)(cid:20)(cid:27)(cid:12)
(cid:22)(cid:28)(cid:24)(cid:15)(cid:19)(cid:25)(cid:26)
(cid:20)(cid:26)(cid:27)(cid:15)(cid:22)(cid:22)(cid:22)
(cid:11)(cid:27)(cid:20)(cid:20)(cid:12)
(cid:20)(cid:26)(cid:26)(cid:15)(cid:24)(cid:21)(cid:21)
(cid:20)(cid:20)(cid:22)(cid:15)(cid:22)(cid:27)(cid:24)
(cid:28)(cid:23)(cid:15)(cid:19)(cid:19)(cid:28)
(cid:21)(cid:19)(cid:26)(cid:15)(cid:22)(cid:28)(cid:23)
(cid:22)(cid:25)(cid:24)(cid:15)(cid:20)(cid:28)(cid:24)
(cid:22)(cid:24)(cid:15)(cid:25)(cid:27)(cid:19)
(cid:22)(cid:21)(cid:28)(cid:15)(cid:24)(cid:20)(cid:24)
(cid:20)(cid:21)(cid:27)(cid:15)(cid:20)(cid:27)(cid:20)
(cid:21)(cid:19)(cid:20)(cid:23)
381,687
(43,939)
337,748
(7,447)
345,195
171,332
(1,628)
169,704
110,637
93,593
204,230
310,669
41,585
269,084
104,674
$
(cid:21)(cid:19)(cid:20)(cid:22)
363,961
(51,592)
312,369
(4,372)
316,741
159,715
3,491
163,206
106,293
86,336
192,629
287,318
44,107
243,211
94,609
(cid:7)
(cid:21)(cid:19)(cid:20)(cid:15)(cid:22)(cid:22)(cid:23)
$
164,410
$
148,602
(cid:7) (cid:20)(cid:22)(cid:15)(cid:22)(cid:23)(cid:21)(cid:15)(cid:24)(cid:27)(cid:24)
$ 11,384,782
$ 10,386,502
(cid:20)(cid:21)(cid:15)(cid:23)(cid:19)(cid:23)(cid:15)(cid:19)(cid:25)(cid:24)
(cid:27)(cid:15)(cid:26)(cid:26)(cid:24)(cid:15)(cid:19)(cid:23)(cid:27)
(cid:20)(cid:15)(cid:19)(cid:24)(cid:19)(cid:15)(cid:26)(cid:24)(cid:28)
10,712,559
8,887,809
946,383
9,657,793
8,365,466
906,717
(cid:20)(cid:17)(cid:24)(cid:20) (cid:8)
(cid:20)(cid:28)(cid:17)(cid:20)(cid:27) (cid:8)
(cid:22)(cid:25)(cid:17)(cid:24)(cid:20) (cid:8)
(cid:11)(cid:19)(cid:17)(cid:19)(cid:24)(cid:12)(cid:8)
1.45 %
17.40 %
40.06 %
(0.07)%
1.43 %
16.39 %
40.74 %
(0.05)%
Net interest revenue increased $51.3 million or 15% over 2014. Growth in net interest revenue was due to a $1.7 billion
increase in average loan balances, partially offset by decreased loan yields and a $113 million decrease in average deposit
balances.
Fees and commissions revenue increased $7.0 million or 4% over 2014. Transaction card revenue generated by the TransFund
EFT network increased $4.8 million or 5% due to increased customer transaction volume. Commercial deposit service charges
and fees increased $3.0 million or 8% over the prior year. Other revenue increased $2.3 million or 10% primarily related to
merchant banking activity. Brokerage and trading revenue decreased $3.1 million or 27%. Loan syndication fees were lower
due to the timing and volume of completed deals. Customer hedging revenue decreased primarily related to lower energy
prices.
41
Operating expenses increased $3.2 million or 2% over 2014. Personnel costs increased $2.7 million or 2% primarily due to
standard annual merit increases. Non-personnel expense was largely unchanged compared to the prior year. Net losses and
operating expenses on repossessed assets were $5.5 million lower than the prior year, offset by higher data processing expenses
related to increased transaction card activity and increased other expenses primarily related to merchant banking activity.
Corporate expense allocations decreased $5.9 million compared to the prior year.
The average outstanding balance of loans attributed to Commercial Banking grew by $1.7 billion to $12.4 billion for 2015. See
the Loans section of Management’s Discussion and Analysis of Financial Condition following for additional discussion of
changes in commercial and commercial real estate loans which are primarily attributed to the Commercial Banking
segment. Commercial Banking experienced a net recovery of $6.0 million for 2015, compared to a net recovery of $7.4 million
or 0.07% of average loans attributed to this line of business for 2014.
Average deposits attributed to Commercial Banking were $8.8 billion for 2015, a decrease of $113 million or 1% compared to
2014. Decreased interest-bearing transaction account and time deposit balances, were partially offset by growth in demand
deposit balances. Average balances attributed to our commercial & industrial loan customers increased $495 million or 13%.
Average balances attributed to our healthcare customers grew by $82 million or 15% over the prior year. Small business
banking customer average balances increased $118 million or 10%. Average balances attributed to our energy customers
decreased $98 million or 6%. Average balances held by treasury services customers decreased $768 million or 57% compared
to the prior year. Commercial customers continue to maintain large cash reserves primarily due to low yields available on other
high quality investment alternatives and to minimize deposit service charges through the earnings credit. The earnings credit is
a non-cash method that enables commercial customers to offset deposit service charges based on account balances.
Consumer Banking
Consumer banking services are provided through four primary distribution channels: traditional branches, the 24-hour
ExpressBank call center, Internet banking and mobile banking. Consumer banking also conducts mortgage banking activities
through offices located outside of our consumer banking markets, through correspondent loan originators and through Home
Direct Mortgage, an online origination channel.
Consumer banking contributed $22.4 million to consolidated net income for 2015, compared to $33.7 million in the prior year.
Increased operating expense and corporate expense allocations and lower net interest revenue, was partially offset by growth in
fees and commission revenue. Fees and commission revenue increased primarily due to mortgage banking revenue, partially
offset by lower deposit service charges and fees. The change in the fair value of mortgage servicing rights, net of economic
hedges, decreased other operating revenue attributed to Consumer Banking by $7.9 million in 2015 and decreased other
operating revenue by $3.7 million in 2014.
42
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:19)(cid:3)(cid:177)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:37)(cid:68)(cid:81)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)
(Dollars in thousands)
Net interest revenue from external sources
Net interest revenue from internal sources
Total net interest revenue
Net loans charged off
Net interest revenue after net loans charged off
Fees and commissions revenue
Gain (loss) on financial instruments and other assets, net
Change in fair value of mortgage servicing rights
Other operating revenue
Personnel expense
Other non-personnel expense
Total other operating expense
Net direct contribution
Corporate allocations
Net income before taxes
Federal and state income taxes
Net income
Average assets
Average loans
Average deposits
Average invested capital
Return on average assets
Return on invested capital
Efficiency ratio
Net charge-offs to average loans
Banking locations
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
$
$
$
(cid:7)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:27)(cid:23)(cid:15)(cid:27)(cid:23)(cid:27)
(cid:21)(cid:28)(cid:15)(cid:27)(cid:21)(cid:23)
(cid:20)(cid:20)(cid:23)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:25)(cid:15)(cid:20)(cid:19)(cid:27)
(cid:20)(cid:19)(cid:27)(cid:15)(cid:24)(cid:25)(cid:23)
(cid:21)(cid:20)(cid:27)(cid:15)(cid:20)(cid:27)(cid:27)
(cid:22)(cid:15)(cid:23)(cid:22)(cid:26)
(cid:11)(cid:23)(cid:15)(cid:27)(cid:24)(cid:22)(cid:12)
(cid:21)(cid:20)(cid:25)(cid:15)(cid:26)(cid:26)(cid:21)
(cid:20)(cid:19)(cid:24)(cid:15)(cid:21)(cid:24)(cid:21)
(cid:20)(cid:19)(cid:27)(cid:15)(cid:24)(cid:22)(cid:19)
(cid:21)(cid:20)(cid:22)(cid:15)(cid:26)(cid:27)(cid:21)
(cid:20)(cid:20)(cid:20)(cid:15)(cid:24)(cid:24)(cid:23)
(cid:26)(cid:23)(cid:15)(cid:27)(cid:25)(cid:27)
(cid:22)(cid:25)(cid:15)(cid:25)(cid:27)(cid:25)
(cid:20)(cid:23)(cid:15)(cid:21)(cid:26)(cid:20)
(cid:7)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:20)(cid:24)
(cid:7)
(cid:25)(cid:15)(cid:26)(cid:20)(cid:22)(cid:15)(cid:23)(cid:23)(cid:23)
(cid:20)(cid:15)(cid:28)(cid:19)(cid:19)(cid:15)(cid:26)(cid:25)(cid:27)
(cid:25)(cid:15)(cid:25)(cid:25)(cid:27)(cid:15)(cid:24)(cid:21)(cid:19)
(cid:21)(cid:25)(cid:24)(cid:15)(cid:26)(cid:26)(cid:24)
(cid:19)(cid:17)(cid:22)(cid:22)(cid:8)
(cid:27)(cid:17)(cid:23)(cid:22)(cid:8)
(cid:25)(cid:21)(cid:17)(cid:24)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:21)(cid:8)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
$
$
$
81,852
36,801
118,653
5,477
113,176
196,641
20,619
(16,445)
200,815
96,681
99,089
195,770
118,221
63,006
55,215
21,479
33,736
6,584,157
1,987,668
6,520,835
277,404
0.51%
12.16%
59.14%
0.28%
85,813
39,628
125,441
5,622
119,819
217,269
(14,653)
22,720
225,336
94,145
94,600
188,745
156,410
56,957
99,453
38,687
60,766
6,520,498
2,013,416
6,432,498
293,736
0.93%
20.69%
53.22%
0.28%
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:20)(cid:24)(cid:21)
182
206
Net interest revenue from consumer banking activities decreased $4.0 million compared to 2014 primarily due to a $4.7 million
decrease in revenue related to a deposit advance product that was phased out during the second quarter of 2014. Average loan
balances decreased $87 million or 4%. This impact was partially offset by a $148 million or 2% increase in average deposit
balances, which are provided to the Funds Management unit and earn a spread. Net loans charged off by the Consumer Banking
unit increased $631 thousand over 2014 to $6.1 million or 0.32% of average loans. Net consumer banking charge-offs include
overdrawn deposit accounts and other consumer loans.
Fees and commissions revenue increased $21.5 million or 11% compared to the prior year. Mortgage banking revenue was up
$25.1 million or 23% over the prior year primarily due to a record level of residential mortgage loans originated for sale.
Deposit service charges and fees decreased $3.6 million or 7% compared to the prior year primarily due to lower overdraft fees.
43
Operating expenses increased $18.0 million or 9% over 2014, including $3.0 million of actual facilities costs and $633
thousand of actual personnel costs related to the previously announced closure of 29 grocery store branches. These costs were
accrued in 2014 in the Funds Management and Other unit, with the actual costs charged to Consumer Banking as incurred in
2015. Excluding the impact of the branch closure costs, personnel expenses were up $7.9 million or 8% primarily due to
increased regular salary and incentive compensation expense. Non-personnel expense increased $6.5 million or 7%, excluding
the impact of the branch closure costs. Mortgage banking costs were up $9.0 million primarily due to increased amortization of
mortgage servicing rights due to higher actual prepayments. Corporate expense allocations increased $11.9 million or 19% over
the prior year, primarily due to increased risk management and compliance costs.
Average consumer deposit balances increased $148 million or 2% over the prior year. Average demand deposit balances
increased $166 million or 12% and average interest-bearing transaction accounts increased $124 million or 4%. Average
savings account balances were up $35 million or 11%. Higher costing time deposit balances decreased $178 million or 11%.
44
Wealth Management
Wealth Management contributed $16.9 million to consolidated net income in 2015, compared to $21.2 million in the prior year.
Net interest revenue increased $1.9 million or 4%, primarily due to an increase in average loan balances, partially offset by
decreased loan yields. Fees and commissions revenue increased $11.9 million or 5% over the prior year. Other operating
expense increased $13.8 million or 6%.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:20)(cid:3)(cid:177)(cid:3)(cid:58)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
(Dollars in thousands)
Net interest revenue from external sources
Net interest revenue from internal sources
Total net interest revenue
Net loans charged off
Net interest revenue after net loans charged off
Fees and commissions revenue
Loss on financial instruments and other assets, net
Other operating revenue
Personnel expense
Other non-personnel expense
Other operating expense
Net direct contribution
Corporate allocations
Net income before taxes
Federal and state income tax
Net income
Average assets
Average loans
Average deposits
Average invested capital
Return on average assets
Return on invested capital
Efficiency ratio
Net charge-offs to average loans
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:21)(cid:23)(cid:15)(cid:26)(cid:26)(cid:19)
(cid:21)(cid:20)(cid:15)(cid:24)(cid:21)(cid:23)
(cid:23)(cid:25)(cid:15)(cid:21)(cid:28)(cid:23)
(cid:11)(cid:27)(cid:28)(cid:20)(cid:12)
(cid:23)(cid:26)(cid:15)(cid:20)(cid:27)(cid:24)
(cid:21)(cid:24)(cid:21)(cid:15)(cid:23)(cid:28)(cid:19)
(cid:11)(cid:20)(cid:15)(cid:24)(cid:23)(cid:27)(cid:12)
(cid:21)(cid:24)(cid:19)(cid:15)(cid:28)(cid:23)(cid:21)
(cid:20)(cid:27)(cid:20)(cid:15)(cid:28)(cid:20)(cid:26)
(cid:23)(cid:27)(cid:15)(cid:28)(cid:21)(cid:20)
(cid:21)(cid:22)(cid:19)(cid:15)(cid:27)(cid:22)(cid:27)
(cid:25)(cid:26)(cid:15)(cid:21)(cid:27)(cid:28)
(cid:22)(cid:28)(cid:15)(cid:25)(cid:24)(cid:23)
(cid:21)(cid:26)(cid:15)(cid:25)(cid:22)(cid:24)
(cid:20)(cid:19)(cid:15)(cid:26)(cid:24)(cid:19)
$
$
23,826
20,578
44,404
213
44,191
240,621
(1,576)
239,045
171,839
45,210
217,049
66,187
31,465
34,722
13,507
25,478
20,061
45,539
1,275
44,264
212,878
(1,223)
211,655
160,517
37,680
198,197
57,722
29,876
27,846
10,832
(cid:7)
(cid:20)(cid:25)(cid:15)(cid:27)(cid:27)(cid:24)
$
21,215
$
17,014
(cid:7) (cid:23)(cid:15)(cid:25)(cid:27)(cid:28)(cid:15)(cid:27)(cid:24)(cid:19)
$ 4,518,511
$ 4,556,132
(cid:20)(cid:15)(cid:19)(cid:25)(cid:27)(cid:15)(cid:26)(cid:19)(cid:24)
(cid:23)(cid:15)(cid:24)(cid:26)(cid:22)(cid:15)(cid:27)(cid:24)(cid:22)
(cid:21)(cid:21)(cid:24)(cid:15)(cid:28)(cid:25)(cid:27)
985,726
932,229
4,391,434
4,385,553
215,089
203,914
(cid:19)(cid:17)(cid:23)(cid:20) (cid:8)
(cid:27)(cid:17)(cid:23)(cid:24) (cid:8)
(cid:26)(cid:26)(cid:17)(cid:19)(cid:24) (cid:8)
(cid:11)(cid:19)(cid:17)(cid:19)(cid:27)(cid:12)(cid:8)
0.51%
10.77%
76.00%
0.02%
0.40%
8.95%
76.49%
0.14%
Our Wealth Management division serves as custodian to or manages assets of customers. Fees are earned commensurate with
the level of service provided. We may have sole or joint investment discretion over the assets of the customer or may be
fiduciary for the assets, but investment selection authority remains with the customer or a manager outside of the Company.
The Wealth Management division also provides safekeeping services for personal and institutional customers including holding
of the customer's assets, processing of income and redemptions and other customer recordkeeping and reporting services. We
also provide brokerage services for customers who maintain or delegate investment authority and for which BOK Financial
does not have custody of the assets.
A summary of assets under management or in custody follows in Table 12.
45
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:21)(cid:3)(cid:177)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:85)(cid:3)(cid:44)(cid:81)(cid:3)(cid:38)(cid:88)(cid:86)(cid:87)(cid:82)(cid:71)(cid:92)(cid:3)
(Dollars in thousands)
Fiduciary assets in custody for which BOKF has sole or joint discretionary authority
Fiduciary assets not in custody for which BOKF has sole or joint discretionary
authority
Non-managed fiduciary assets in custody
Total fiduciary assets
Assets held in safekeeping
Brokerage accounts under BOKF administration
Assets under management or in custody
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:20)(cid:23)(cid:15)(cid:19)(cid:20)(cid:21)(cid:15)(cid:22)(cid:24)(cid:19)
(cid:7)
(cid:21)(cid:19)(cid:20)(cid:23)
14,644,494
(cid:21)(cid:19)(cid:20)(cid:22)
12,752,460
$
$
(cid:22)(cid:15)(cid:22)(cid:27)(cid:23)(cid:15)(cid:23)(cid:23)(cid:23)
(cid:21)(cid:19)(cid:15)(cid:28)(cid:22)(cid:25)(cid:15)(cid:27)(cid:23)(cid:23)
(cid:22)(cid:27)(cid:15)(cid:22)(cid:22)(cid:22)(cid:15)(cid:25)(cid:22)(cid:27)
(cid:21)(cid:25)(cid:15)(cid:27)(cid:28)(cid:26)(cid:15)(cid:20)(cid:19)(cid:26)
(cid:24)(cid:15)(cid:27)(cid:20)(cid:26)(cid:15)(cid:19)(cid:21)(cid:27)
(cid:26)(cid:20)(cid:15)(cid:19)(cid:23)(cid:26)(cid:15)(cid:26)(cid:26)(cid:22)
(cid:7)
3,324,667
18,028,716
35,997,877
22,952,394
5,653,095
64,603,366
1,728,426
15,656,206
30,137,092
22,087,207
4,882,930
57,107,229
$
$
Net interest revenue increased $1.9 million or 4% compared to the prior year. Average loan balances were up $83 million or
8%. The benefit of this growth was partially offset by lower yields. Average deposit balances, which are sold to the Funds
Management unit, increased $182 million over the prior year. Time deposit balances increased $178 million and non-interest-
bearing demand deposits increased $106 million, partially offset by a $100 million decrease in interest-bearing transaction
balances.
Fees and commissions revenue increased $11.9 million or 5% over the prior year. Fiduciary and asset management revenue
increased $10.6 million or 9%. A full year of earnings from the acquisitions of Topeka, Kansas-based GTRUST Financial
Corporation in the first quarter of 2014 and Houston, Texas-based MBM Advisors in the second quarter of 2014 added $4.0
million in revenue over 2014. The remaining increase was primarily due to the growth in the fair value of fiduciary assets
administered by the Company. Brokerage and trading revenue increased $895 thousand or 1% over the prior year. A $10.1
million or 15% increase in securities trading revenue, was offset by an $8.6 million or 25% decrease in retail brokerage revenue
and a $554 thousand or 3% decrease in investment banking fees.
Other operating revenue includes fees earned from state and municipal bond underwriting and financial advisory services,
primarily in the Oklahoma and Texas markets. In 2015, the Wealth Management division participated in 434 underwritings that
totaled $9.3 billion. As a participant, the Wealth Management division was responsible for facilitating the sale of approximately
$2.9 billion of these underwritings. In 2014, the Wealth Management division participated in 422 underwritings that totaled
approximately $8.6 billion. Our interest in these underwritings totaled approximately $2.5 billion. The Wealth Management
division also participated in 16 corporate debt underwritings during 2015 that totaled $11.8 billion. Our interest in these
underwritings was $230 million.
Operating expenses increased $13.8 million or 6% over the prior year. Personnel expenses increased $10.1 million or 6%.
Regular compensation costs increased $5.4 million primarily due to increased headcount and annual merit increases. Incentive
compensation increased $3.5 million over the prior year. Non-personnel expenses increased $3.7 million or 8%. Growth in net
occupancy and equipment, data processing and communications and other expense, was partially offset by lower deposit
insurance expense. Corporate expense allocations were up $8.2 million or 26%, primarily due to increased risk management
and compliance costs.
46
Financial Condition
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
We maintain a securities portfolio to enhance profitability, manage interest rate risk, provide liquidity and comply with
regulatory requirements. Securities are classified as trading, held for investment, or available for sale. See Note 2 to the
consolidated financial statements for the composition of the securities portfolio as of December 31, 2015, December 31, 2014
and December 31, 2013.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:22)(cid:3)(cid:177)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
(In thousands)
Trading:
U.S. Government agency debentures
U.S. government agency residential
mortgage-backed securities
Municipal and other tax-exempt securities
Other trading securities
Total trading securities
Investment:
Municipal and other tax-exempt securities
U.S. government agency residential
mortgage-backed securities1
Other debt securities
Total investment securities
Available for sale:
U.S. Treasury securities
Municipal and other tax-exempt securities
Residential mortgage-backed securities:
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
$
61,366
$
61,295
$
85,154
$
85,092
$
34,043
$
34,120
10,972
31,691
18,235
122,264
$
10,989
31,901
18,219
122,404
$
30,930
38,933
33,496
188,513
$
31,199
38,951
33,458
188,700
$
20,888
27,532
9,142
91,605
$
21,011
27,350
9,135
91,616
365,258
$
368,910
$
405,090
408,344
$
440,187
$
439,870
26,833
205,745
597,836
1,000
56,681
$
$
27,874
232,375
629,159
995
56,817
$
$
35,750
211,520
652,360
1,005
63,018
$
$
37,463
227,819
673,626
1,005
63,557
$
$
50,182
187,509
677,878
1,042
73,232
$
$
51,864
195,393
687,127
1,042
73,775
$
$
$
$
U.S. government agencies
Private issue
5,861,096
128,111
5,898,351
139,118
6,549,304
154,360
6,646,884
165,957
7,720,189
214,181
7,716,010
221,099
Total residential mortgage-backed
securities
Commercial mortgage-backed securities
guaranteed by U.S. government
agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
Total available for sale securities
Fair value option securities:
5,989,207
6,037,469
6,703,664
6,812,841
7,934,370
7,937,109
2,919,044
4,400
17,171
17,121
$ 9,004,624
2,905,796
4,151
19,672
17,833
$ 9,042,733
2,064,091
9,438
22,171
18,603
$ 8,881,990
2,048,609
9,212
24,277
19,444
$ 8,978,945
2,100,146
35,061
22,171
19,069
$ 10,185,091
2,055,804
35,241
22,863
21,328
$ 10,147,162
U.S. government agency residential
$
Other securities
mortgage-backed securities
Total fair value option securities
157,431
9,694
167,125
1 Includes net realized gain of $112 thousand at December 31, 2015, $615 thousand at December 31, 2014 and $1.8 million at December 31,
2013 remaining in Accumulated Other Comprehensive Income in the Consolidated Balance Sheets related to securities transferred from the
available for sale securities portfolio to the investment portfolio in 2011. See Note 2 to the Consolidated Financial Statements for
additional discussion.
446,277
—
446,277
311,597
—
311,597
165,809
9,485
175,294
444,217
—
444,217
309,973
—
309,973
$
$
$
$
$
$
$
$
$
$
$
47
In addition to the above, restricted equity securities include stock we are required to hold as members of the Federal Reserve
system and the Federal Home Loan Banks ("FHLB"). Restricted equity securities are carried at cost as these securities do not
have a readily determined fair value because ownership of these shares are restricted and they lack a market. Federal Reserve
Bank stock totaled $36 million at December 31, 2015, $35 million at December 31, 2014 and $34 million at December 31,
2013. Holdings of FHLB stock totaled $237 million at December 31, 2015, $106 million at December 31, 2014 and $51 million
at December 31, 2013. Requirements to hold FHLB stock are directly related to borrowings from the FHLB.
At December 31, 2015, the carrying value of investment (held-to-maturity) securities was $598 million and the fair value was
$629 million. Investment securities consist primarily of intermediate and long-term, fixed rate Oklahoma and Texas municipal
bonds, taxable Texas school construction bonds and residential mortgage-backed securities issued by U.S. government
agencies. The investment security portfolio is diversified among issuers. The largest obligation of any single issuer is $30
million. Substantially all of these bonds are general obligations of the issuers. Approximately $104 million of the Texas school
construction bonds are also guaranteed by the Texas Permanent School Fund Guarantee Program supervised by the State Board
of Education for the State of Texas.
Available for sale securities, which may be sold prior to maturity, are carried at fair value. Unrealized gains or losses, net of
deferred taxes, are recorded as accumulated other comprehensive income in shareholders’ equity. The amortized cost of
available for sale securities totaled $9.0 billion at December 31, 2015, an increase of $123 million over December 31,
2014. Available for sale securities consist primarily of U.S. government agency residential mortgage-backed securities and U.S.
government agency commercial mortgage-backed securities. Commercial mortgage-backed securities have prepayment
penalties similar to commercial loans. At December 31, 2015, residential mortgage-backed securities represented 67% of total
available for sale securities. The increase in amortized cost during the year was primarily due to an increase in commercial
mortgage-backed securites guaranteed by U.S. government agencies, partially offset by a decrease in U.S. government agency
residential mortgage-backed securities.
A primary risk of holding residential mortgage-backed securities comes from extension during periods of rising interest rates or
prepayment during periods of falling interest rates. We evaluate this risk through extensive modeling of risk both before making
an investment and throughout the life of the security. Our best estimate of the duration of the combined investment and
available for sale securities portfolios at December 31, 2015 is 3.25 years. Management estimates the combined portfolios'
duration extends to 3.7 years assuming an immediate 200 basis point upward shock. The estimated combined portfolios'
duration contracts to 3.0 years assuming a 50 basis point decline in the current low rate environment.
Residential mortgage-backed securities also have credit risk from delinquency or default of the underlying loans. We mitigate
this risk by primarily investing in securities issued by U.S. government agencies. Principal and interest payments on the
underlying loans are fully guaranteed. At December 31, 2015, approximately $5.9 billion of the amortized cost of the
Company’s residential mortgage-backed securities were issued by U.S. government agencies. The fair value of these residential
mortgage-backed securities totaled $5.9 billion at December 31, 2015.
We also hold amortized cost of $128 million in residential mortgage-backed securities privately issued by publicly-owned
financial institutions. The amortized cost of these securities decreased $26 million from December 31, 2014. The fair value of
our portfolio of privately issued residential mortgage-backed securities totaled $139 million at December 31, 2015.
The amortized cost of our portfolio of privately issued residential mortgage-backed securities included $72 million of Jumbo-A
residential mortgage loans and $56 million of Alt-A residential mortgage loans. Jumbo-A residential mortgage loans generally
meet government underwriting standards, but have loan balances that exceed agency maximums. Alt-A mortgage loans
generally do not have sufficient documentation to meet government agency underwriting standards. Approximately 91% of our
Alt-A mortgage-backed securities represent pools of fixed rate residential mortgage loans. None of the adjustable rate
mortgages are payment option adjustable rate mortgages (“ARMs”). Approximately 30% of our Jumbo-A residential mortgage-
backed securities represent pools of fixed rate residential mortgage loans and none of the adjustable rate mortgages are
payment option ARMs.
The aggregate gross amount of unrealized losses on available for sale securities totaled $42 million at December 31, 2015, an
increase of $8.9 million compared to December 31, 2014. On a quarterly basis, we perform separate evaluations on debt and
equity securities to determine if the unrealized losses are temporary as more fully described in Note 2 of the Consolidated
Financial Statements. Other-than-temporary impairment charges of $1.8 million were recognized in earnings in 2015.
48
Certain residential mortgage-backed securities issued by U.S. government agencies and included in fair value option securities
on the Consolidated Balance Sheets, have been segregated and designated as economic hedges of changes in the fair value of
our mortgage servicing rights. We have elected to carry these securities at fair value with changes in fair value recognized in
current period income. These securities are held with the intent that gains or losses will offset changes in the fair value of
mortgage servicing rights and related derivative contracts.
(cid:37)(cid:68)(cid:81)(cid:78)(cid:16)(cid:50)(cid:90)(cid:81)(cid:72)(cid:71)(cid:3)(cid:47)(cid:76)(cid:73)(cid:72)(cid:3)(cid:44)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)
We have approximately $303 million of bank-owned life insurance at December 31, 2015. This investment is expected to
provide a long-term source of earnings to support existing employee benefit programs. Approximately $272 million is held in
separate accounts. Our separate account holdings are invested in diversified portfolios of investment-grade fixed income
securities and cash equivalents, including U.S. Treasury and Agency securities, residential mortgage-backed securities,
corporate debt, asset-backed and commercial mortgage-backed securities. The portfolios are managed by unaffiliated
professional managers within parameters established in the portfolio’s investment guidelines. The cash surrender value of
certain life insurance policies is further supported by a stable value wrap, which protects against changes in the fair value of the
investments. At December 31, 2015, the fair value of investments held in separate accounts was approximately $283
million. As the underlying fair value of the investments held in a separate account at December 31, 2015 exceeded the net book
value of the investments, no cash surrender value was supported by the stable value wrap. The stable value wrap is provided by
a domestic financial institution. The remaining cash surrender value of $31 million primarily represents the cash surrender
value of policies held in general accounts and other amounts due from various insurance companies.
49
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)
The aggregate loan portfolio before allowance for loan losses totaled $15.9 billion at December 31, 2015, growing $1.7 billion
or 12% over December 31, 2014(cid:17) Commercial loans have grown by $1.2 billion or 13% due largely to growth in healthcare,
services and energy sector loans. Commercial real estate loans increased $531 million or 19% primarily due to growth in loans
secured by office buildings, industrial facilities and retail facilities. Residential mortgage loans decreased $73 million and
personal loans increased $118 million.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:23)(cid:3)(cid:177)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)
(In thousands)
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgages guaranteed by U.S.
government agencies
Home equity
Total residential mortgage
Personal
Total
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:7)
(cid:22)(cid:15)(cid:19)(cid:28)(cid:26)(cid:15)(cid:22)(cid:21)(cid:27)
$
2,860,428
$
2,351,760
$
2,460,659
$
2,005,041
(cid:21)(cid:15)(cid:26)(cid:27)(cid:23)(cid:15)(cid:21)(cid:26)(cid:25)
(cid:20)(cid:15)(cid:27)(cid:27)(cid:22)(cid:15)(cid:22)(cid:27)(cid:19)
(cid:20)(cid:15)(cid:23)(cid:21)(cid:21)(cid:15)(cid:19)(cid:25)(cid:23)
(cid:24)(cid:24)(cid:25)(cid:15)(cid:26)(cid:21)(cid:28)
(cid:24)(cid:19)(cid:27)(cid:15)(cid:26)(cid:24)(cid:23)
2,391,530
1,454,969
1,440,015
532,594
416,134
2,282,210
1,274,246
1,201,364
391,751
441,890
2,164,186
1,081,406
1,106,439
348,484
480,738
1,761,538
978,160
967,426
336,733
506,172
(cid:20)(cid:19)(cid:15)(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:22)(cid:20)
9,095,670
7,943,221
7,641,912
6,555,070
(cid:26)(cid:28)(cid:25)(cid:15)(cid:23)(cid:28)(cid:28)
(cid:26)(cid:24)(cid:20)(cid:15)(cid:19)(cid:27)(cid:24)
(cid:25)(cid:22)(cid:26)(cid:15)(cid:26)(cid:19)(cid:26)
(cid:24)(cid:25)(cid:22)(cid:15)(cid:20)(cid:25)(cid:28)
(cid:20)(cid:25)(cid:19)(cid:15)(cid:23)(cid:21)(cid:25)
(cid:22)(cid:24)(cid:19)(cid:15)(cid:20)(cid:23)(cid:26)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
(cid:3)
(cid:3)
666,889
704,298
415,544
428,817
143,591
369,011
586,047
576,502
411,499
243,877
206,258
391,170
522,786
402,896
427,872
245,994
253,093
376,358
509,402
369,028
405,923
278,186
342,054
386,710
2,728,150
2,415,353
2,228,999
2,291,303
(cid:28)(cid:23)(cid:24)(cid:15)(cid:22)(cid:22)(cid:25)
969,951
1,062,744
1,123,965
1,157,133
(cid:20)(cid:28)(cid:25)(cid:15)(cid:28)(cid:22)(cid:26)
(cid:26)(cid:22)(cid:23)(cid:15)(cid:25)(cid:21)(cid:19)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:25)(cid:15)(cid:27)(cid:28)(cid:22)
205,950
773,611
181,598
807,684
160,444
760,631
184,973
632,421
1,949,512
2,052,026
2,045,040
1,974,527
(cid:24)(cid:24)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
434,705
381,664
395,505
448,843
(cid:7)
(cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
$ 14,208,037
$
12,792,264
$
12,311,456
$
11,269,743
50
Commercial
Commercial loans represent loans for working capital, facilities acquisition or expansion, purchases of equipment and other
needs of commercial customers primarily located within our geographical footprint. Commercial loans are underwritten
individually and represent on-going relationships based on a thorough knowledge of the customer, the customer’s industry and
market. While commercial loans are generally secured by the customer’s assets including real property, inventory, accounts
receivable, operating equipment, interests in mineral rights and other property and may also include personal guarantees of the
owners and related parties, the primary source of repayment of the loans is the on-going cash flow from operations of the
customer’s business. Inherent lending risks are centrally monitored on a continuous basis from underwriting throughout the life
of the loan for compliance with commercial lending policies.
Healthcare sector loans increased $428 million or 29% over December 31, 2014. Service sector loans increased $393 million or
16% and energy sector loans increased $237 million or 8%. Other commercial and industrial sector loans increased $93 million
or 22% and manufacturing sector loans increased $24 million or 5%. This growth was partially offset by an $18 million or 1%
decrease in wholesale/retail sector loans.
Table 15 presents our commercial loan portfolio distributed primarily by collateral location. Loans for which the collateral
location is less relevant, such as unsecured loans and reserve-based energy loans, are distributed by the borrower’s primary
operating location.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:24)(cid:3)(cid:177)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:47)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
(In thousands)
(cid:50)(cid:78)(cid:79)(cid:68)(cid:75)(cid:82)(cid:80)(cid:68)
$ 819,338
(cid:55)(cid:72)(cid:91)(cid:68)(cid:86)
$1,406,754
(cid:49)(cid:72)(cid:90)
(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)
$ 61,642
(cid:36)(cid:85)(cid:78)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86) (cid:38)(cid:82)(cid:79)(cid:82)(cid:85)(cid:68)(cid:71)(cid:82)
$ 314,017
$
5,847
(cid:36)(cid:85)(cid:76)(cid:93)(cid:82)(cid:81)(cid:68)
$ 10,391
813,738
269,662
369,582
149,619
852,839
199,180
353,761
124,467
569,827
199,411
37,053
2,848
8,380
84,915
37,089
9,715
268,045
159,800
137,275
102,752
62,918
50,008
51,569
43,365
(cid:46)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86)(cid:18)
(cid:48)(cid:76)(cid:86)(cid:86)(cid:82)(cid:88)(cid:85)(cid:76)
$ 94,863
161,150
225,254
29,807
37,083
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
$ 384,476
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$ 3,097,328
321,144
585,294
264,219
64,680
2,784,276
1,883,380
1,422,064
556,729
80,588
148,567
4,936
79,758
36,232
29,287
74,725
54,661
508,754
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial
and industrial
Total commercial
loans
$2,502,527
$3,531,159
$430,126
$ 225,704
$ 868,495
$397,164
$ 622,882
$1,674,474
$10,252,531
The majority of our commercial portfolio is located within our geographic footprint. The Other category includes two primary
locations, California and Louisiana, which represent $242 million or 2.4% of the commercial portfolio and $167 million or
1.6% of the commercial portfolio, respectively at December 31, 2015. All other states individually represent less than one
percent of total commercial loans.
Supporting the energy industry with loans to producers and other energy-related entities has been a hallmark of the Company
since its founding and represents a large portion of our commercial loan portfolio. In addition, energy production and related
industries have a significant impact on the economy in our primary markets. Loans collateralized by oil and gas properties are
subject to a semi-annual engineering review by our internal staff of petroleum engineers. This review is utilized as the basis for
developing the expected cash flows supporting the loan amount. The projected cash flows are discounted according to risk
characteristics of the underlying oil and gas properties. Loans are evaluated to demonstrate with reasonable certainty that crude
oil, natural gas and natural gas liquids can be recovered from known oil and gas reservoirs under existing economic and
operating conditions at current pricing levels and with existing conventional equipment and operating methods and costs. As
part of our evaluation of credit quality, we analyze rigorous stress tests over a range of commodity prices and take proactive
steps to mitigate risk when appropriate.
51
Energy loans totaled $3.1 billion or 19% of total loans at December 31, 2015. Unfunded energy loan commitments decreased
by $502 million during the year to $2.4 billion at December 31, 2015. Approximately $2.5 billion or 82% of energy loans were
to oil and gas producers, an increase of $83 million over December 31, 2014. The majority of this portfolio is first lien, senior
secured, reserve-based lending, which we believe is the lowest risk form of energy lending. The Company has largely avoided
higher-risk energy lending areas including second-lien financing, mezzanine debt and subordinated debt. In addition, the
Company has no direct exposure to energy company equity or to borrowers with deepwater offshore exposure. Approximately
62% of the committed production loans are secured by properties primarily producing oil and 38% of the committed production
loans are secured by properties primarily producing natural gas. Loans to borrowers that provide services to the energy industry
totaled $279 million or 9% of energy loans, an increase of $57 million during 2015. Loans to borrowers in the midstream sector
of the industry totaled $193 million or 5% of energy loans, an increase of $92 million over the prior year. Loans to other energy
borrowers, including those engaged in wholesale or retail energy sales totaled $86 million or 4% of energy loans, an increase of
$4.7 million over the prior year.
The services sector of the loan portfolio totaled $2.8 billion or 17% of total loans and consists of a large number of loans to a
variety of businesses, including governmental, financial & insurance, religious and not-for-profit, educational and professional/
technical services. Approximately $1.2 billion of the services category is made up of loans with individual balances of less than
$10 million. Service sector loans are generally secured by the assets of the borrower with repayment coming from the cash
flows of ongoing operations of the customer’s business.
We participate in shared national credits when appropriate to obtain or maintain business relationships with local
customers. Shared national credits are defined by banking regulators as credits of more than $20 million and with three or more
non-affiliated banks as participants. At December 31, 2015, the outstanding principal balance of these loans totaled $3.4
billion. Approximately 83% of these loans are to borrowers with local market relationships. We serve as the agent lender in
approximately 16% of our shared national credits, based on dollars committed. We hold shared credits to the same standard of
analysis and perform the same level of review as internally originated credits. Our lending policies generally avoid loans in
which we do not have the opportunity to maintain or achieve other business relationships with the customer. In addition to
management’s quarterly assessment of credit risk, banking regulators annually review a sample of shared national credits for
proper risk grading.
Commercial Real Estate
Commercial real estate represents loans for the construction of buildings or other improvements to real estate and property held
by borrowers for investment purposes. The majority of commercial real estate loans are secured by properties within our
geographic footprint, with the larger concentrations in Texas and Oklahoma, 30% and 13% at December 31, 2015. We require
collateral values in excess of the loan amounts, demonstrated cash flows in excess of expected debt service requirements,
equity investment in the project and a portion of the project already sold, leased or permanent financing already secured. The
expected cash flows from all significant new or renewed income producing property commitments are stress tested to reflect
the risks in varying interest rates, vacancy rates and rental rates. As with commercial loans, inherent lending risks are centrally
monitored on a continuous basis from underwriting throughout the life of the loan for compliance with applicable lending
policies.
Commercial real estate loans totaled $3.3 billion or 20% of the loan portfolio at December 31, 2015. The outstanding balance
of commercial real estate loans increased $531 million over 2014, primarily due to growth in loans secured by office buildings,
industrial facilities and retail facilities. The commercial real estate loan balance as a percentage of our total loan portfolio has
ranged from 18% to 20% over the past five years. The commercial real estate segment of our loan portfolio distributed by
collateral location follows in Table 16.
52
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:25)(cid:3)(cid:177)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:68)(cid:79)(cid:3)(cid:40)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:47)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
(In thousands)
Retail
Multifamily
Office
Industrial
Residential
construction and
land development
Other commercial
real estate
Total commercial
real estate loans
(cid:50)(cid:78)(cid:79)(cid:68)(cid:75)(cid:82)(cid:80)(cid:68)
86,217
90,035
96,444
54,231
(cid:55)(cid:72)(cid:91)(cid:68)(cid:86)
289,217
255,815
174,054
162,871
(cid:49)(cid:72)(cid:90)
(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)
91,184
32,056
58,644
37,003
(cid:36)(cid:85)(cid:78)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86) (cid:38)(cid:82)(cid:79)(cid:82)(cid:85)(cid:68)(cid:71)(cid:82) (cid:36)(cid:85)(cid:76)(cid:93)(cid:82)(cid:81)(cid:68)
39,873
60,135
3,831
18,646
1,862
219
73,435
29,455
5,778
72,157
48,727
14,942
(cid:46)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86)(cid:18)
(cid:48)(cid:76)(cid:86)(cid:86)(cid:82)(cid:88)(cid:85)(cid:76)
8,723
55,324
69,215
43,224
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
217,319
153,617
159,306
244,901
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
796,499
751,085
637,707
563,169
21,747
36,843
16,366
5,686
40,024
529
6,093
33,138
160,426
68,295
68,502
15,201
9,844
23,252
27,393
3,392
134,268
350,147
$ 416,969
$ 987,302
$ 250,454
$ 40,088
$ 232,079
$203,621
$ 185,971
$ 942,549
$ 3,259,033
The Other category includes California with $129 million or 3.9% of total commercial real estate loans, Florida with $87
million or 2.7% of total commercial real estate loans, Mississippi with $83 million or 2.6% of total commercial real estate loans
and Utah with $64 million or 2.0% of total commercial real estate loans. All other locations included in Other individually
represent less than 2.0% of the total commercial real estate loan population.
Commercial real estate in Houston, Texas, our most energy exposed market, was $320 million or 2% of the loan portfolio at
December 31, 2015. Approximately 51% of our commercial real estate exposure in Houston was retail, 19% to loans secured
by industrial facilities, 9% to multifamily residential properties, 9% to office buildings, with the balance in secured by other
commercial real estate. We have no office exposure in downtown Houston.
Residential Mortgage and Personal
Residential mortgage loans provide funds for our customers to purchase or refinance their primary residence or to borrow
against the equity in their home. Residential mortgage loans are secured by a first or second-mortgage on the customer’s
primary residence. Personal loans consist primarily of loans to wealth management clients secured by the cash surrender value
of insurance policies and marketable securities. It also includes direct loans secured by and for the purchase of automobiles,
recreational and marine equipment as well as unsecured loans. Residential mortgage and personal loans are made in accordance
with underwriting policies we believe to be conservative and are fully documented. Credit scoring is assessed based on
significant credit characteristics including credit history, residential and employment stability.
Residential mortgage loans totaled $1.9 billion, a $73 million or 4% decrease compared to December 31, 2014. In general, we
sell the majority of our fixed rate loan originations that conform to U.S. government agency standards in the secondary market
and retain the majority of our non-conforming and adjustable-rate mortgage loans. We have no concentration in sub-prime
residential mortgage loans. Our mortgage loan portfolio does not include payment option adjustable rate mortgage loans or
adjustable rate mortgage loans with initial rates that are below market. Collateral for 98% of our residential mortgage portfolio
is located within our geographic footprint.
The majority of our permanent mortgage loan portfolio is primarily composed of various non-conforming mortgage programs
to support customer relationships including jumbo mortgage loans, non-builder construction loans and special loan programs
for high net worth individuals or certain professionals. Jumbo loans may be fixed or variable rate and are fully amortizing. The
size of jumbo loans exceed maximums set under government sponsored entity standards, but otherwise generally conform to
those standards. These loans generally require a minimum FICO score of 720 and a maximum debt-to-income ratio (“DTI”) of
38%. Loan-to-value ratios (“LTV”) are tiered from 60% to 100%, depending on the market. Special mortgage programs include
fixed and variable rate fully amortizing loans tailored to the needs of certain healthcare professionals. Variable rate loans are
fully indexed at origination and may have fixed rates for three to ten years, then adjust annually thereafter.
53
At December 31, 2015, $197 million of permanent residential mortgage loans are guaranteed by U.S. government agencies. We
have minimal credit exposure on loans guaranteed by the agencies. This amount includes residential mortgage loans previously
sold into GNMA mortgage pools that are eligible to be repurchased. We may repurchase these loans 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 in the Consolidated Balance Sheets. Permanent residential mortgage loans guaranteed by
U.S. government agencies decreased $9.0 million or 4% compared to December 31, 2014.
Home equity loans totaled $735 million at December 31, 2015, a $39 million or 5% decrease compared to December 31, 2014.
Our home equity portfolio is primarily composed of first-lien, fully amortizing home equity loans. Home equity loans generally
require a minimum FICO score of 700 and a maximum DTI of 40%. The maximum loan amount available for our home equity
loan products is generally $400 thousand. Revolving loans have a 5 year revolving period followed by 15 year term of
amortizing repayments. Interest-only home equity loans may not be extended for any additional revolving time. All other home
equity loans may be extended at management's discretion for an additional 5 year revolving term subject to an update of certain
credit information. A summary of our home equity loan portfolio at December 31, 2015 by lien position and amortizing status
follows in Table 17.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:26)(cid:3)(cid:177)(cid:3)(cid:43)(cid:82)(cid:80)(cid:72)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)
(In thousands)
First lien
Junior lien
Total home equity
(cid:53)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:76)(cid:81)(cid:74)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$
$
40,012
$
459,116
$
82,948
152,544
122,960
$
611,660
$
499,128
235,492
734,620
The distribution of residential mortgage and personal loans at December 31, 2015 is presented in Table 18. Residential
mortgage loans are distributed by collateral location. Personal loans are generally distributed by borrower location.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:27)(cid:3)(cid:177)(cid:3)(cid:53)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:47)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
(In thousands)
Residential mortgage:
Permanent mortgage
Permanent
mortgages guaranteed
by U.S. government
agencies
Home equity
Total residential
mortgage
(cid:50)(cid:78)(cid:79)(cid:68)(cid:75)(cid:82)(cid:80)(cid:68)
(cid:55)(cid:72)(cid:91)(cid:68)(cid:86)
(cid:49)(cid:72)(cid:90)
(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)
(cid:36)(cid:85)(cid:78)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86) (cid:38)(cid:82)(cid:79)(cid:82)(cid:85)(cid:68)(cid:71)(cid:82) (cid:36)(cid:85)(cid:76)(cid:93)(cid:82)(cid:81)(cid:68)
(cid:46)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86)(cid:18)
(cid:48)(cid:76)(cid:86)(cid:86)(cid:82)(cid:88)(cid:85)(cid:76)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$ 196,724
$389,713
$ 40,319
$ 15,376
$ 135,174
$ 93,580
$ 50,416
$ 24,034
$ 945,336
63,794
430,904
24,065
132,197
66,054
115,824
5,160
5,337
7,853
32,257
1,496
9,794
12,855
7,771
15,660
536
196,937
734,620
$ 691,422
$545,975
$ 222,197
$ 25,873
$ 175,284
$104,870
$ 71,042
$ 40,230
$ 1,876,893
Personal
$ 250,017
$205,384
$ 11,597
$
819
$ 23,501
$ 30,782
$ 26,931
$ 3,666
$ 552,697
The Company secondarily evaluates loan portfolio performance based on the primary geographical market managing the loan.
Loans attributed to a geographical market may not represent the location of the borrower or the collateral. All permanent
mortgage loans serviced by our mortgage banking unit and held for investment by the Bank are centrally managed by the Bank
of Oklahoma.
54
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:20)(cid:28)(cid:3)(cid:177)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:51)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:42)(cid:72)(cid:82)(cid:74)(cid:85)(cid:68)(cid:83)(cid:75)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)
(In thousands)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
Bank of Oklahoma:
Commercial
Commercial real estate
Residential mortgage
Personal
Total Bank of Oklahoma
Bank of Texas:
Commercial
Commercial real estate
Residential mortgage
Personal
Total Bank of Texas
Bank of Albuquerque:
Commercial
Commercial real estate
Residential mortgage
Personal
Total Bank of Albuquerque
Bank of Arkansas:
Commercial
Commercial real estate
Residential mortgage
Personal
Total Bank of Arkansas
Colorado State Bank & Trust:
Commercial
Commercial real estate
Residential mortgage
Personal
Total Colorado State Bank & Trust
Bank of Arizona:
Commercial
Commercial real estate
Residential mortgage
Personal
Total Bank of Arizona
Bank of Kansas City:
Commercial
Commercial real estate
Residential mortgage
Personal
Total Bank of Kansas City
(cid:7)
$
(cid:22)(cid:15)(cid:26)(cid:27)(cid:21)(cid:15)(cid:25)(cid:27)(cid:26)
(cid:26)(cid:22)(cid:28)(cid:15)(cid:27)(cid:21)(cid:28)
(cid:20)(cid:15)(cid:23)(cid:19)(cid:28)(cid:15)(cid:20)(cid:20)(cid:23)
(cid:21)(cid:24)(cid:24)(cid:15)(cid:22)(cid:27)(cid:26)
(cid:25)(cid:15)(cid:20)(cid:27)(cid:26)(cid:15)(cid:19)(cid:20)(cid:26)
$
3,142,689
603,610
1,467,096
206,115
5,419,510
$
2,902,140
602,010
1,524,212
192,283
5,220,645
$
3,089,686
580,694
1,488,486
220,096
5,378,962
(cid:22)(cid:15)(cid:28)(cid:19)(cid:27)(cid:15)(cid:23)(cid:21)(cid:24)
(cid:20)(cid:15)(cid:21)(cid:19)(cid:23)(cid:15)(cid:21)(cid:19)(cid:21)
(cid:21)(cid:20)(cid:28)(cid:15)(cid:20)(cid:21)(cid:25)
(cid:21)(cid:19)(cid:22)(cid:15)(cid:23)(cid:28)(cid:25)
(cid:24)(cid:15)(cid:24)(cid:22)(cid:24)(cid:15)(cid:21)(cid:23)(cid:28)
3,549,128
1,027,817
235,948
154,363
4,967,256
3,052,274
816,574
260,544
131,297
4,260,689
2,726,925
771,796
275,408
116,252
3,890,381
(cid:22)(cid:26)(cid:24)(cid:15)(cid:27)(cid:22)(cid:28)
(cid:22)(cid:20)(cid:22)(cid:15)(cid:23)(cid:21)(cid:21)
(cid:20)(cid:21)(cid:19)(cid:15)(cid:24)(cid:19)(cid:26)
(cid:20)(cid:20)(cid:15)(cid:24)(cid:24)(cid:26)
(cid:27)(cid:21)(cid:20)(cid:15)(cid:22)(cid:21)(cid:24)
(cid:28)(cid:21)(cid:15)(cid:22)(cid:24)(cid:28)
(cid:25)(cid:28)(cid:15)(cid:22)(cid:21)(cid:19)
(cid:27)(cid:15)(cid:20)(cid:25)(cid:28)
(cid:27)(cid:20)(cid:28)
(cid:20)(cid:26)(cid:19)(cid:15)(cid:25)(cid:25)(cid:26)
(cid:28)(cid:27)(cid:26)(cid:15)(cid:19)(cid:26)(cid:25)
(cid:21)(cid:21)(cid:22)(cid:15)(cid:28)(cid:23)(cid:25)
(cid:24)(cid:22)(cid:15)(cid:26)(cid:27)(cid:21)
(cid:21)(cid:22)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:20)(cid:15)(cid:21)(cid:27)(cid:27)(cid:15)(cid:20)(cid:27)(cid:27)
(cid:25)(cid:19)(cid:25)(cid:15)(cid:26)(cid:22)(cid:22)
(cid:24)(cid:19)(cid:26)(cid:15)(cid:24)(cid:21)(cid:22)
(cid:23)(cid:23)(cid:15)(cid:19)(cid:23)(cid:26)
(cid:22)(cid:20)(cid:15)(cid:19)(cid:25)(cid:19)
(cid:20)(cid:15)(cid:20)(cid:27)(cid:28)(cid:15)(cid:22)(cid:25)(cid:22)
(cid:23)(cid:28)(cid:28)(cid:15)(cid:23)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:19)(cid:15)(cid:26)(cid:28)(cid:20)
(cid:21)(cid:21)(cid:15)(cid:20)(cid:23)(cid:27)
(cid:21)(cid:25)(cid:15)(cid:28)(cid:28)(cid:23)
(cid:26)(cid:23)(cid:28)(cid:15)(cid:22)(cid:23)(cid:24)
383,439
296,358
127,999
10,899
818,695
95,510
88,301
7,261
5,169
196,241
342,336
308,829
133,900
13,842
798,907
81,556
78,264
7,922
8,023
175,765
265,830
326,135
130,337
15,456
737,758
62,049
90,821
13,046
15,421
181,337
977,961
194,553
57,119
27,918
1,257,551
735,626
190,355
62,821
22,686
1,011,488
776,610
173,327
59,363
19,333
1,028,633
547,524
355,140
35,872
12,883
951,419
399,419
162,371
18,217
17,358
597,365
417,702
257,477
47,111
7,887
730,177
411,587
161,844
15,516
5,646
594,593
313,296
201,760
57,803
4,686
577,545
407,516
84,466
20,597
4,261
516,840
2,826,649
607,030
1,411,560
235,909
5,081,148
2,249,888
830,642
268,053
126,570
3,475,153
258,668
303,500
104,695
19,369
686,232
76,199
136,170
15,772
35,911
264,052
544,020
156,013
64,627
21,598
786,258
271,914
198,160
89,315
5,633
565,022
327,732
59,788
20,505
3,853
411,878
Total BOK Financial loans
(cid:7)
(cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
$ 14,208,037
$
12,792,264
$
12,311,456
$
11,269,743
55
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:19)(cid:3)(cid:177)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:48)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)(cid:3)(cid:54)(cid:72)(cid:81)(cid:86)(cid:76)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)
(In thousands)
Loan maturity:
Commercial
Commercial real estate
Total
Interest rate sensitivity for selected loans with:
Predetermined interest rates
Floating or adjustable interest rates
Total
(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:53)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:48)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:20)
(cid:60)(cid:72)(cid:68)(cid:85)
(cid:20)(cid:16)(cid:24)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:36)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:24)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
$ 10,252,531
3,259,033
$ 13,511,564
$
2,506,596
11,004,968
$ 13,511,564
$
$
$
$
745,356
$
5,953,627
$
3,553,548
296,768
1,932,993
1,029,272
1,042,124
$
7,886,620
$
4,582,820
8,435
1,033,689
1,042,124
$
$
575,187
$
1,922,974
7,311,433
2,659,846
7,886,620
$
4,582,820
We enter into certain off-balance sheet arrangements in the normal course of business. These arrangements included unfunded
loan commitments which totaled $8.5 billion and standby letters of credit which totaled $508 million at December 31, 2015.
Loan commitments may be unconditional obligations to provide financing or conditional obligations that depend on the
borrower’s financial condition, collateral value or other factors. Standby letters of credit are unconditional commitments to
guarantee the performance of our customer to a third party. Since some of these commitments are expected to expire before
being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Approximately $166
thousand of the outstanding standby letters of credit were issued on behalf of customers whose loans are nonperforming at
December 31, 2015.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:20)(cid:3)(cid:177)(cid:3)(cid:50)(cid:73)(cid:73)(cid:16)(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
(In thousands)
Loan commitments
Standby letters of credit
Mortgage loans sold with recourse
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:27)(cid:15)(cid:23)(cid:24)(cid:24)(cid:15)(cid:19)(cid:22)(cid:26)
$
(cid:21)(cid:19)(cid:20)(cid:23)
8,328,416
(cid:21)(cid:19)(cid:20)(cid:22)
7,096,373
(cid:21)(cid:19)(cid:20)(cid:21)
6,636,587
(cid:21)(cid:19)(cid:20)(cid:20)
5,193,545
$
$
$
(cid:24)(cid:19)(cid:26)(cid:15)(cid:28)(cid:27)(cid:27)
(cid:20)(cid:24)(cid:24)(cid:15)(cid:23)(cid:27)(cid:28)
447,599
179,822
444,248
191,299
466,477
226,922
534,565
289,021
As more fully described in Note 7 to the Consolidated Financial Statements, we have off-balance sheet commitments related to
certain residential mortgage loans originated under community development loan programs that were sold to a U.S.
government agency with full recourse. These mortgage loans were underwritten to standards approved by the agencies,
including full documentation and originated under programs available only for owner-occupied properties. The Company no
longer sells residential mortgage loans with recourse other than obligations under standard representations and warranties. We
are obligated to repurchase these loans for the life of these loans in the event of foreclosure for the unpaid principal and interest
at the time of foreclosure. At December 31, 2015, the principal balance of residential mortgage loans sold subject to recourse
obligations totaled $155 million, down from $180 million at December 31, 2014. Substantially all of these loans are to
borrowers in our primary markets including $102 million to borrowers in Oklahoma, $16 million to borrowers in Arkansas and
$12 million to borrowers in New Mexico. At December 31, 2015, approximately 3% of these loans are nonperforming and 6%
were past due 30 to 89 days. A separate accrual for credit risk of $4.6 million is available to absorb losses on these loans.
We also have an off-balance sheet obligation to repurchase residential mortgage loans sold to government sponsored entities
through our mortgage banking activities due to standard representations and warranties made under contractual agreements as
described further in Note 7 to the Consolidated Financial Statements. For the period from 2010 through 2015, approximately
21% of repurchase requests have currently resulted in actual repurchases or indemnification by the Company. The accrual for
credit losses related to potential loan repurchases under representations and warranties totaled $3.4 million at December 31,
2015.
56
(cid:38)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3)(cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:51)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:86)
We offer programs that permit our customers to hedge various risks, including fluctuations in energy, cattle and other
agricultural product prices, interest rates and foreign exchange rates. Each of these programs work essentially the same
way. Derivative contracts are executed between the customers and the Company. Offsetting contracts are executed between the
Company and selected counterparties or exchanges to minimize market risk to us from changes in commodity prices, interest
rates or foreign exchange rates. The counterparty contracts are identical to the customer contracts, except for a fixed pricing
spread or a fee paid to us as compensation for administrative costs, credit risk and profit.
The customer derivative programs create credit risk for potential amounts due to the Company from our customers and from
the counterparties. Customer credit risk is monitored through existing credit policies and procedures. The effects of changes in
commodity prices, interest rates or foreign exchange rates are evaluated across a range of possible options to determine the
maximum exposure we are willing to have individually to any customer. Customers may also be required to provide cash
margin or other collateral in conjunction with our credit agreements to further limit our credit risk.
Counterparty credit risk is evaluated through existing policies and procedures. This evaluation considers the total relationship
between BOK Financial and each of the counterparties. Individual limits are established by management, approved by Credit
Administration and reviewed by the Asset / Liability Committee. Margin collateral is required if the exposure between the
Company and any counterparty exceeds established limits. Based on declines in the counterparties’ credit ratings, these limits
may be reduced and additional margin collateral may be required.
A deterioration of the credit standing of one or more of the customers or counter-parties to these contracts may result in BOK
Financial recognizing a loss as the fair value of the affected contracts may no longer move in tandem with the offsetting
contracts. This occurs if the credit standing of the customer or counterparty deteriorated such that either the fair value of
underlying collateral no longer supports the contract or the customer or counterparty’s ability to provide margin collateral was
impaired. Credit losses on customer derivatives reduce brokerage and trading revenue in the Consolidated Statement of
Earnings.
Derivative contracts are carried at fair value. At December 31, 2015, the net fair values of derivative contracts, before
consideration of cash margin, reported as assets under these programs totaled $611 million compared to $433 million at
December 31, 2014. Derivative contracts carried as assets include foreign exchange contracts with fair values of $499 million,
energy contracts with fair values of $60 million, interest rate swaps primarily sold to loan customers with fair values of $32
million, to-be-announced residential mortgage-backed securities with fair values of $15 million and equity option contracts
with fair values of $3.8 million. Before consideration of cash margin paid to counterparties, the aggregate net fair values of
derivative contracts held under these programs reported as liabilities totaled $606 million.
At December 31, 2015, total derivative assets were reduced by $25 million of cash collateral received from counterparties and
total derivative liabilities were reduced by $25 million of cash collateral paid to counterparties related to instruments executed
with the same counterparty under a master netting agreement.
A table showing the notional and fair value of derivative assets and liabilities on both a gross and net basis is presented in Note
3 to the Consolidated Financial Statements.
The fair value of derivative contracts reported as assets under these programs, net of cash margin held by the Company, by
category of debtor at December 31, 2015 follows in Table 22.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:21)(cid:3)(cid:177)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:86)(cid:3)
(In thousands)
Customers
Banks and other financial institutions
Exchanges
Fair value of customer hedge asset derivative contracts, net
$
316,048
231,609
38,530
$
586,187
The largest exposure to a single counterparty was to an exchange for energy derivative contracts which totaled $34 million at
December 31, 2015.
57
Our customer derivative program also introduces liquidity and capital risk. We are required to provide cash margin to certain
counterparties when the net negative fair value of the contracts exceeds established limits. Also, changes in commodity prices
affect the amount of regulatory capital we are required to hold as support for the fair value of our derivative assets. These risks
are modeled as part of the management of these programs. Based on current prices, a decrease in market prices equivalent to
$20.79 per barrel of oil would increase the fair value of derivative assets by $196 thousand. An increase in prices equivalent to
$57.96 per barrel of oil would increase the fair value of derivative assets by $23 million. Liquidity requirements of this
program are also affected by our credit rating. A decrease in credit rating to below investment grade would increase our
obligation to post cash margin on existing contracts by approximately $20 million. The fair value of our to-be-announced
residential mortgage-backed securities and interest rate swap derivative contracts is affected by changes in interest rates. Based
on our assessment as of December 31, 2015, changes in interest rates would not materially impact regulatory capital or liquidity
needed to support this portion of our customer derivative program.
(cid:54)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:47)(cid:82)(cid:86)(cid:86)(cid:3)(cid:40)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)
We maintain an allowance for loan losses and an accrual for off-balance sheet credit risk. At December 31, 2015, the combined
allowance for loan losses and accrual for off-balance sheet risk totaled $227 million or 1.43% of outstanding loans and 181% of
nonaccruing loans, excluding loans guaranteed by U.S. Government agencies. The allowance for loan losses was $226 million
and the accrual for off-balance sheet credit risk was $1.7 million. At December 31, 2014, the combined allowance for credit
losses was $190 million or 1.34% of outstanding loans and 247% of nonaccruing loans, excluding loans guaranteed by U.S.
Government agencies. The allowance for loan losses was $189 million and the accrual for off-balance sheet credit risk was $1.2
million.
The provision for credit losses is the amount necessary to maintain the allowance for loan losses and an accrual for off-balance
sheet credit risk at an amount determined by management to be appropriate based on its evaluation. The provision includes the
combined charge or credit to expense for both the allowance for loan losses and the accrual for off-balance sheet credit risk. All
losses incurred from lending activities will ultimately be reflected in charge-offs against the allowance for loan losses following
funds advanced against outstanding commitments. After evaluating all credit factors, the Company determined that a $34.0
million provision for credit losses was necessary due to increased impairment and continued credit migration in our energy loan
portfolio and continued growth of the loan portfolio. In addition, a single energy borrower reported steeper than expected
production declines and higher lease operating expenses, leading to a $14 million impairment on the loan. No provision for
credit losses was necessary for 2014.
Based on currently available information, our expectations for loan growth, historical credit factors by loan type and other
qualitative and environmental factors, and including the results of our energy stress testing, discussed in more detail following,
we estimate a loan loss provision range of $60 million to $80 million may be necessary to maintain an appropriate loan loss
reserve in 2016.
58
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:22)(cid:3)(cid:177)(cid:3)(cid:54)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:47)(cid:82)(cid:86)(cid:86)(cid:3)(cid:40)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)
(In thousands)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:29)
Beginning balance
Loans charged off:
Commercial
Commercial real estate
Residential mortgage
Personal
Total
Recoveries of loans previously charged off:
Commercial
Commercial real estate
Residential mortgage
Personal
Total
Net loans recovered (charged off )
Provision for loan losses
Ending balance
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:73)(cid:16)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:29)
Beginning balance
Provision for off-balance sheet credit risk
Ending balance
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)
Allowance for loan losses to loans outstanding at
period end
Net charge-offs (recoveries) to average loans
Total provision for credit losses to average loans
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:7)
(cid:20)(cid:27)(cid:28)(cid:15)(cid:19)(cid:24)(cid:25)
$ 185,396
$
215,507
$
253,481
$
292,971
(cid:11)(cid:25)(cid:15)(cid:26)(cid:22)(cid:23)(cid:12)
(cid:11)(cid:28)(cid:23)(cid:23)(cid:12)
(cid:11)(cid:21)(cid:15)(cid:21)(cid:19)(cid:24)(cid:12)
(cid:11)(cid:24)(cid:15)(cid:21)(cid:27)(cid:27)(cid:12)
(cid:11)(cid:20)(cid:24)(cid:15)(cid:20)(cid:26)(cid:20)(cid:12)
(cid:21)(cid:15)(cid:26)(cid:21)(cid:28)
(cid:20)(cid:20)(cid:15)(cid:19)(cid:26)(cid:28)
(cid:20)(cid:15)(cid:21)(cid:25)(cid:19)
(cid:22)(cid:15)(cid:19)(cid:24)(cid:21)
(cid:20)(cid:27)(cid:15)(cid:20)(cid:21)(cid:19)
(cid:21)(cid:15)(cid:28)(cid:23)(cid:28)
(cid:22)(cid:22)(cid:15)(cid:24)(cid:20)(cid:28)
(3,569)
(2,047)
(4,448)
(6,168)
(6,335)
(5,845)
(5,753)
(7,349)
(16,232)
(25,282)
5,703
7,003
2,000
4,328
19,034
2,802
858
7,488
9,420
1,558
4,778
23,244
(2,038)
(28,073)
185,396
1,915
173
2,088
$
$
$
— $
(27,900)
(9,341)
(11,642)
(10,047)
(11,108)
(42,138)
6,128
5,706
1,928
5,056
18,818
(23,320)
(14,654)
215,507
9,261
(7,346)
1,915
(22,000)
(14,836)
(15,973)
(14,107)
(11,884)
(56,800)
7,478
2,780
2,334
5,758
18,350
(38,450)
(1,040)
253,481
14,271
(5,010)
9,261
(6,050)
$
$
$
$
$
$
$
$
1.45 %
0.02 %
(0.23)%
91.94 %
1.75 %
0.20 %
(0.19)%
44.66 %
2.25 %
0.35 %
(0.06)%
32.31 %
(cid:21)(cid:21)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)
$ 189,056
(cid:20)(cid:15)(cid:21)(cid:22)(cid:19)
(cid:23)(cid:27)(cid:20)
(cid:20)(cid:15)(cid:26)(cid:20)(cid:20)
(cid:22)(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
$
$
$
2,088
(858)
1,230
(cid:20)(cid:17)(cid:23)(cid:20) (cid:8)
(cid:11)(cid:19)(cid:17)(cid:19)(cid:21)(cid:12)(cid:8)
(cid:19)(cid:17)(cid:21)(cid:22) (cid:8)
1.33 %
(0.02)%
— %
Recoveries to gross charge-offs
(cid:20)(cid:20)(cid:28)(cid:17)(cid:23)(cid:23) (cid:8)
117.26 %
Allowance for loan losses as a multiple of net
charge-offs
Accrual for off-balance sheet credit risk to off-
balance sheet credit commitments
Combined allowance for credit losses to loans
(cid:11)(cid:26)(cid:25)(cid:17)(cid:23)(cid:26)(cid:12)(cid:91)
(67.47)x
90.97x
9.24x
6.59x
(cid:19)(cid:17)(cid:19)(cid:21) (cid:8)
0.01 %
0.03 %
0.03 %
0.14 %
outstanding at period-end
2.33 %
1 Includes $7.1 million of negative recovery related to a refund of a settlement between BOK Financial and the City of Tulsa invalidated by
the Oklahoma Supreme Court. Excluding this refund, BOK Financial net charge-offs to average loans was 0.14%, recoveries to gross
charge-offs were 61.51% and the allowance for loan losses as a multiple of net charge-offs was 13.29x for 2012.
(cid:20)(cid:17)(cid:23)(cid:22) (cid:8)
1.77 %
1.34 %
1.47 %
59
Allowance for Loan Losses
The appropriateness of the allowance for loan losses is assessed by management based on an ongoing quarterly evaluation of
the probable estimated losses inherent in the portfolio. The allowance consists of specific allowances attributed to certain
impaired loans, general allowances based on estimated loss rates by loan class and non-specific allowances based on general
economic conditions, concentration in loans with large balances and other relevant factors.
Loans are considered to be impaired when it is probable that we will not collect all amounts due according to the contractual
terms of the loan agreements. This includes all nonaccruing loans, all loans modified in trouble debt restructurings and all
government guaranteed loans repurchased from GNMA pools. At December 31, 2015, impaired loans totaled $322 million,
including $44 million with specific allowances of $16 million and $278 million with no specific allowances because the loan
balances represent the amounts we expect to recover. At December 31, 2014, impaired loans totaled $283 million, including
$1.2 million of impaired loans with specific allowances of $312 thousand and $282 million with no specific allowances.
General allowances for unimpaired loans are based on an estimated loss rate by loan class. Estimated loss rates for risk-graded
loans are either increased or decreased based on changes in risk grading for each loan class. Estimated loss rates for both risk-
graded and non-risk graded loans may be further adjusted for inherent risks identified for the given loan class which have not
yet been captured in the loss rate.
The aggregate amount of general allowances for all unimpaired loans totaled $179 million at December 31, 2015, compared to
$161 million at December 31, 2014. The general allowance for the commercial loan portfolio segment increased by $23 million
primarily due to loan growth and exposure to lower energy prices. The general allowance for the commercial real estate loan
portfolio segment decreased $1.0 million over December 31, 2014. The general allowance for residential mortgage loans
decreased $3.9 million. The general allowance for personal loans was largely unchanged compared to the prior year.
Nonspecific allowances are maintained for risks beyond factors specific to a particular portfolio segment or loan class. These
factors include trends in the economy in our primary lending areas, concentrations in loans with large balances and other
relevant factors. Nonspecific allowances totaled $30 million at December 31, 2015, compared to $28 million at December 31,
2014. The nonspecific allowance includes consideration of the indirect impact of falling energy prices on the broader
economies within our geographical footprint that are highly dependent on the energy industry.
An allocation of the allowance for loan losses by loan category follows in Table 24.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:23)(cid:3)(cid:177)(cid:3)(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:47)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:36)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
(Dollars in thousands)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:20)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:20)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:20)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:20)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:20)
Loan category:
Commercial
(cid:7) (cid:20)(cid:22)(cid:19)(cid:15)(cid:22)(cid:22)(cid:23)
(cid:25)(cid:23)(cid:17)(cid:22)(cid:21)(cid:8) $
90,875
64.02% $
79,180
62.10% $
65,280
62.07% $
83,443
58.17%
Commercial
real estate
Residential
mortgage
Personal
Nonspecific
allowance
(cid:23)(cid:20)(cid:15)(cid:22)(cid:28)(cid:20)
(cid:21)(cid:19)(cid:17)(cid:23)(cid:23)(cid:8)
42,445
19.20%
41,573
18.88%
54,884
18.11%
67,034
20.33%
(cid:20)(cid:20)(cid:17)(cid:26)(cid:26)(cid:8)
(cid:22)(cid:17)(cid:23)(cid:26)(cid:8)
(cid:20)(cid:28)(cid:15)(cid:24)(cid:19)(cid:28)
(cid:23)(cid:15)(cid:20)(cid:25)(cid:23)
(cid:22)(cid:19)(cid:15)(cid:20)(cid:21)(cid:25)
23,458
4,233
28,045
13.72%
3.06%
29,465
6,965
28,213
16.04%
2.98%
16.61%
3.21%
41,703
9,453
44,187
17.52%
3.98%
46,476
10,178
46,350
Total
(cid:7) (cid:21)(cid:21)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)
(cid:20)(cid:19)(cid:19)(cid:17)(cid:19)(cid:19)(cid:8) $ 189,056
100.00% $ 185,396
100.00% $ 215,507
100.00% $ 253,481
100.00%
1 Represents ratio of loan category balance to total loans.
60
Our loan monitoring process also identified loans that possess more than the normal amount of risk due to deterioration in the
financial condition of the borrower or the value of the collateral. Because the borrowers are still performing in accordance with
the original terms of the loan agreements, and no loss of principal or interest is anticipated, these loans were not included in
nonperforming assets. Known information does, however, cause management concern as to the borrowers’ continued ability to
comply with current repayment terms. The potential problem loans totaled $155 million at December 31, 2015. The current
composition of potential problem loans by primary industry included energy - $130 million, services - $6.8 million, multifamily
residential properties - $6.5 million and wholesale/retail - $6.4 million. Potential problem loans totaled $79 million at
December 31, 2014.
Our performing loan totals include loans that management considers to be "other loans especially mentioned" based on
regulatory guidelines. Other loans especially mentioned are in compliance with the original terms of the agreement, but may
have a weakness that deserves management's close attention. Energy loans categorized as other loans especially mentioned
totaled $326 million or 11% of outstanding energy loans at December 31, 2015 and $11 million or less than 1% of outstanding
energy loans at December 31, 2014.
We updated our energy portfolio stress test at December 31, 2015 to determine how the energy portfolio will respond in a
prolonged low-price environment. Stress test assumptions included a starting price of $1.80 per million BTUs for natural gas
and $25 per barrel of oil, gradually escalating over five years to a maximum of $2.45 and $42, respectively. In this scenario, the
energy portfolio exhibits a greater stress than the Company has experienced to date and losses are expected to exceed the
Company's fifteen year historical loss rate on energy production loans of 8 basis points. The results of the stress test are
factored into our expectation that the loan loss provision could range from $60 million to $80 million for 2016, which includes
a significant increase in the loan loss provision for energy-related loans. The portion of the combined allowance for credit
losses attributable to the energy portfolio totaled 2.89% of outstanding energy loans at December 31, 2015, compared to 1.28%
of outstanding energy loans at December 31, 2014.
We have been advised that as banking regulators conduct 2016 shared national credit and targeted energy credit reviews, they
will consider all of the borrowers' debts, including senior lien positions, junior lien positions and unsecured debt, in comparison
to underlying collateral value whether or not we hold any of the borrower's junior lien or unsecured subordinated debt. This
change in grading methodology may increase loans especially mentioned, potential problem loans and non-accruing loans in
the first half of 2016. Because substantially all our energy loan portfolio is supported by senior lien positions that have lower
loss exposure, the historical relationship between loan classification and loss exposure may become more difficult to evaluate.
Since December 31, energy prices have continued to decline. Closing spot prices for West Texas Intermediate crude oil fell
from $37.04 per barrel at year end to a low of $26.21 per barrel on February 11, 2016. Our current loan loss provision forecast
for 2016 considers energy price volatility. However, we will better understand the impact of lower prices on our customers
during the spring semi-annual revaluation and results of the above mentioned reviews. The results of the revaluation and impact
of grading methodology changes on our loan loss provision may exceed our current estimate.
Net Loans Charged Off
Loans are charged off against the allowance for loan losses when the loan balance or a portion of the loan balance is no longer
covered by the paying capacity of the borrower based on an evaluation of available cash resources and collateral
value. Internally risk graded loans are evaluated quarterly and charge-offs are taken in the quarter in which the loss is
identified. Non-risk graded loans are generally charged off when payments are between 60 days and 180 days past due,
depending on loan class. In addition, non-risk graded loans are generally charged-down to collateral value within 60 days of
being notified of a borrower's bankruptcy filing, regardless of payment status.
BOK Financial had net recoveries of $2.9 million or (0.02)% of average loans for 2015 and $2.8 million or (0.02)% of average
loans in 2014.
Net commercial loans charged off totaled $4.0 million. Net commercial real estate loan recoveries totaled $10.1 million. Net
charge-offs on residential mortgage loans totaled $945 thousand for the year and net charge-offs of personal loans were $2.2
million.
61
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:24)(cid:3)(cid:177)(cid:3)(cid:49)(cid:82)(cid:81)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
(In thousands)
Nonaccruing loans:
Commercial
Commercial real estate
Residential mortgage
Personal
Total nonaccruing loans
Accruing renegotiated loans:
Guaranteed by U.S. government agencies
Other
Total accruing renegotiated loans
Total nonperforming loans
Real estate and other repossessed assets:
Guaranteed by U.S. government agencies1
Other
Real estate and other repossessed assets
Total nonperforming assets
Total nonperforming assets excluding those
guaranteed by U.S. government agencies
Nonaccruing loans by loan class:
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgages guaranteed by U.S.
government agencies
Home equity
Total residential mortgage
Personal
Total nonaccruing loans
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
$
16,760
40,850
42,320
1,219
$
24,467
60,626
46,608
2,709
68,811
99,193
29,767
3,515
101,149
134,410
201,286
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:26)(cid:25)(cid:15)(cid:23)(cid:21)(cid:23)
(cid:28)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:23)(cid:19)
(cid:23)(cid:25)(cid:22)
(cid:20)(cid:23)(cid:26)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:26)(cid:23)(cid:15)(cid:19)(cid:23)(cid:28)
(cid:178)
(cid:26)(cid:23)(cid:15)(cid:19)(cid:23)(cid:28)
(cid:21)(cid:21)(cid:20)(cid:15)(cid:20)(cid:26)(cid:26)
(cid:178)
(cid:22)(cid:19)(cid:15)(cid:26)(cid:22)(cid:20)
(cid:22)(cid:19)(cid:15)(cid:26)(cid:22)(cid:20)
(cid:21)(cid:24)(cid:20)(cid:15)(cid:28)(cid:19)(cid:27)
(cid:20)(cid:24)(cid:24)(cid:15)(cid:28)(cid:24)(cid:28)
(cid:25)(cid:20)(cid:15)(cid:20)(cid:27)(cid:28)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:28)(cid:19)
(cid:20)(cid:15)(cid:19)(cid:26)(cid:21)
(cid:21)(cid:15)(cid:28)(cid:20)(cid:28)
(cid:22)(cid:22)(cid:20)
(cid:25)(cid:21)(cid:22)
(cid:26)(cid:25)(cid:15)(cid:23)(cid:21)(cid:23)
(cid:20)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:21)(cid:26)(cid:23)
(cid:25)(cid:24)(cid:20)
(cid:26)(cid:25)
(cid:23)(cid:15)(cid:23)(cid:19)(cid:28)
(cid:21)(cid:15)(cid:21)(cid:26)(cid:21)
(cid:28)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:21)(cid:27)(cid:15)(cid:28)(cid:27)(cid:23)
(cid:21)(cid:20)(cid:15)(cid:28)(cid:19)(cid:19)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:24)(cid:25)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:23)(cid:19)
(cid:23)(cid:25)(cid:22)
$
$
$
$
$
$
$
$
13,527
18,557
48,121
566
80,771
73,985
—
73,985
154,756
49,898
51,963
101,861
256,617
129,022
1,416
5,201
1,380
4,149
450
931
54,322
—
54,322
155,471
37,431
54,841
92,272
247,743
155,213
1,860
4,922
1,586
6,969
592
831
13,527
16,760
3,926
—
3,420
—
5,299
5,912
18,557
34,845
3,712
9,564
48,121
566
4,857
7
6,391
252
17,377
11,966
40,850
34,279
777
7,264
42,320
1,219
38,515
—
38,515
172,925
22,365
81,426
103,791
276,716
215,347
$
$
2,460
$
$
$
$
12,090
3,166
3,077
2,007
1,667
24,467
8,117
2,706
6,829
3,968
26,131
12,875
60,626
39,863
489
6,256
46,608
2,709
28,974
3,919
32,893
234,179
16,952
105,801
122,753
356,932
311,006
336
16,968
5,486
21,180
23,051
1,790
68,811
6,863
3,513
11,457
—
61,874
15,486
99,193
25,366
—
4,401
29,767
3,515
(cid:7)
(cid:20)(cid:23)(cid:26)(cid:15)(cid:20)(cid:21)(cid:27)
$
80,771
$
101,149
$
134,410
$
201,286
62
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:24)(cid:3)(cid:177)(cid:3)(cid:49)(cid:82)(cid:81)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
(In thousands)
Nonaccruing loans as % of outstanding loan balance for class:
Nonaccruing loans by loan class:
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgages guaranteed by U.S.
government agencies
Home equity
Total residential mortgage
Personal
Total nonaccruing loans
(cid:20)(cid:17)(cid:28)(cid:27)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:26)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:25)(cid:8)
(cid:19)(cid:17)(cid:21)(cid:20)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:25)(cid:8)
(cid:19)(cid:17)(cid:20)(cid:21)(cid:8)
(cid:19)(cid:17)(cid:26)(cid:24)(cid:8)
(cid:19)(cid:17)(cid:20)(cid:26)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:20)(cid:19)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:20)(cid:8)
(cid:21)(cid:17)(cid:26)(cid:24)(cid:8)
(cid:19)(cid:17)(cid:25)(cid:24)(cid:8)
(cid:19)(cid:17)(cid:21)(cid:27)(cid:8)
(cid:22)(cid:17)(cid:19)(cid:26)(cid:8)
(cid:20)(cid:20)(cid:17)(cid:20)(cid:21)(cid:8)
(cid:20)(cid:17)(cid:23)(cid:20)(cid:8)
(cid:22)(cid:17)(cid:21)(cid:25)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:27)(cid:8)
(cid:19)(cid:17)(cid:28)(cid:21)(cid:8)
0.05%
0.22%
0.09%
0.29%
0.08%
0.22%
0.15%
0.59%
—%
0.82%
—%
3.69%
1.60%
0.68%
3.59%
1.80%
1.24%
2.47%
0.13%
0.57%
0.08%
0.22%
0.12%
0.58%
0.15%
0.19%
0.21%
0.83%
—%
1.55%
0.10%
8.42%
3.06%
1.69%
3.23%
0.43%
0.90%
2.06%
0.32%
0.79%
0.10%
0.56%
0.29%
0.28%
0.58%
0.35%
0.32%
1.55%
0.67%
1.60%
1.61%
10.32%
3.42%
2.72%
3.55%
0.30%
0.82%
2.28%
0.68%
1.09%
0.02%
0.96%
0.56%
2.19%
6.85%
0.35%
1.05%
1.35%
0.95%
2.82%
—%
18.09%
4.00%
4.33%
2.19%
—%
0.70%
1.51%
0.78%
1.79%
Allowance for loan losses to nonaccruing loans2
Accruing loans 90 days or more past due2
Foregone interest on nonaccruing loans3
11,726
1 Approximately $50 million was reclassified from Real estate and other repossessed assets to Receivables on the balance sheet on January
(cid:20)(cid:27)(cid:19)(cid:17)(cid:19)(cid:28)(cid:8)
184.71%
245.34%
160.92%
9,815
1,415
(cid:26)(cid:15)(cid:23)(cid:22)(cid:21)
2,496
(cid:20)(cid:15)(cid:21)(cid:19)(cid:26)
5,361
3,925
8,170
125
$
$
$
$
(cid:7)
125.93%
1, 2015 with the adoption of Financial Accounting Standards Board Update No. 2014-14, Classification of Certain Government-
Guaranteed Mortgage Loans Upon Foreclosure ("ASU 2014-14"). With the implementation of ASU 2014-14, upon foreclosure of loans
for which the loan balance is expected to be recovered from the guarantee by a U.S. government agency, the loan balance is directly
reclassified to other receivables without including such foreclosed assets in real estate and other repossessed assets.
2 Excludes residential mortgages guaranteed by agencies of the U.S. government.
3 Interest collected and recognized on nonaccruing loans was not significant in 2015 and previous years.
Nonperforming assets decreased $4.7 million during 2015 to $252 million or 1.58% of outstanding loans and repossessed assets
at December 31, 2015. Nonaccruing loans totaled $147 million, accruing renegotiated residential mortgage loans totaled $74
million (all guaranteed by U.S. government agencies) and real estate and other repossessed assets totaled $31 million. All
accruing renegotiated residential mortgage loans and $22 million of nonaccruing loans are guaranteed by U.S. government
agencies. Permanent mortgage loans guaranteed by U.S. government agencies increased $18 million over the prior year as
repurchased loans are reaching program limits on when further interest accruals must be discontinued. Excluding assets
guaranteed by U.S. government agencies, nonperforming assets increased $27 million during the year to $156 million or 0.99%
of outstanding non-guaranteed loans and repossessed assets. The increase was primarily due to an increase in nonaccruing
energy loans, partially offset by a decrease in real estate and other repossessed assets. The Company generally retains
nonperforming assets to maximize potential recovery, which may cause future nonperforming assets to decrease more slowly.
63
Loans are generally classified as nonaccruing when it becomes probable that we will not collect the full contractual principal
and interest. As more fully discussed in Note 4 to the Consolidated Financial Statements, we may modify loans in a troubled
debt restructuring. Modifications may include extension of payment terms and rate concessions. We generally do not forgive
principal or accrued but unpaid interest. All loans modified in troubled debt restructurings, except residential mortgage loans
guaranteed by U.S. government agencies, are classified as nonaccruing. We may renew matured nonaccruing loans. All
nonaccruing loans, including those renewed or modified in troubled debt restructurings, are charged off when the loan balance
is no longer covered by the paying capacity of the borrower based on a quarterly evaluation of available cash resources and
collateral value. All nonaccruing loans generally remain on nonaccruing status until full collection of principal and interest in
accordance with the original terms, including principal previously charged off, is probable. We generally do not voluntarily
modify consumer loans to troubled borrowers. Consumer loans modified at the direction of bankruptcy court orders are
identified as troubled debt restructurings and classified as nonaccruing.
As of December 31, 2015, renegotiated loans consist solely of accruing residential mortgage loans guaranteed by U.S.
government agencies that have been modified in troubled debt restructurings. See Note 4 to the Consolidated Financial
Statements for additional discussion of troubled debt restructurings. Generally, we modify residential mortgage loans primarily
by reducing interest rates and extending the number of payments in accordance with U.S. government agency guidelines. No
unpaid principal or interest is forgiven. Interest continues to accrue based on the modified terms of the loan. Modified loans
guaranteed by U.S. government agencies under residential mortgage loan programs may be sold once they become eligible
according to U.S. agency guidelines.
A rollforward of nonperforming assets for the year ended December 31, 2015 follows in Table 26.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:25)(cid:3)(cid:177)(cid:3)(cid:53)(cid:82)(cid:79)(cid:79)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:49)(cid:82)(cid:81)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)
(In thousands)
Balance, December 31, 2014
Additions
Net transfer to premises and equipment
Payments
Charge-offs
Net gains (losses) and write-downs
Foreclosure of nonaccruing loans
Foreclosure of loans guaranteed by U.S. government agencies
Proceeds from sales
Charitable contribution to BOKF Foundation
Transfer of foreclosed loans guaranteed by U.S. Government agencies
to Receivables1
Net transfers to nonaccruing loans
Return to accrual status
Other, net
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)
(cid:53)(cid:72)(cid:81)(cid:72)(cid:74)(cid:82)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)
(cid:53)(cid:72)(cid:68)(cid:79)(cid:3)(cid:40)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:53)(cid:72)(cid:83)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:72)(cid:71)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:49)(cid:82)(cid:81)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
$
80,771
$
73,985
$
101,861
$
122,385
—
(31,503)
(15,171)
—
(13,643)
(4,601)
—
—
—
10,489
(1,599)
—
67,761
—
(2,747)
—
—
—
(8,263)
(46,655)
—
—
(10,489)
—
457
—
(1,051)
—
—
1,940
13,643
—
(34,669)
(796)
(49,898)
—
—
(299)
256,617
190,146
(1,051)
(34,250)
(15,171)
1,940
—
(12,864)
(81,324)
(796)
(49,898)
—
(1,599)
158
Balance, December 31, 2015
251,908
1 Approximately $50 million was reclassified from Real estate and other repossessed assets to Receivables on the balance sheet on January
147,128
30,731
74,049
$
$
$
$
1, 2015 with the adoption of Financial Accounting Standards Board Update No. 2014-14, Classification of Certain Government-
Guaranteed Mortgage Loans Upon Foreclosure ("ASU 2014-14"). With the implementation of ASU 2014-14, upon foreclosure of loans
for which the loan balance is expected to be recovered from the guarantee by a U.S. government agency, the loan balance is directly
reclassified to other receivables without including such foreclosed assets in real estate and other repossessed assets.
We foreclose on loans guaranteed by U.S. government agencies in accordance with agency guidelines. Generally these loans
are not eligible for modification programs or have failed to comply with modified loan terms. Principal is guaranteed by
agencies of the U.S. government, subject to limitations and credit risk is minimal. These properties will be conveyed to the
agencies once applicable criteria have been met.
64
Nonaccruing loans totaled $147 million or 0.92% of outstanding loans at December 31, 2015 compared to $81 million or
0.57% of outstanding loans at December 31, 2014. Nonaccruing loans increased $66 million from December 31, 2014. Newly
identified nonaccruing loans totaled $122 million for 2015, partially offset by $32 million of payments, $15 million of charge-
offs and $14 million of foreclosures.
Commercial
Nonaccruing commercial loans totaled $76 million or 0.75% of total commercial loans at December 31, 2015, compared to
$14 million or 0.15% of total commercial loans at December 31, 2014. Nonaccruing commercial loans increased $63 million
during 2015. Newly identified nonaccruing commercial loans totaled $79 million, offset by $8.7 million in payments, $6.7
million of charge-offs and $392 thousand of repossessions.
Nonaccruing commercial loans at December 31, 2015 were primarily composed of $61 million or 1.98% of total energy sector
loans and $10 million or 0.37% of total services sector loans. Over half of nonaccruing energy loans was a single energy credit.
Commercial Real Estate
Nonaccruing commercial real estate loans were $9.0 million or 0.28% of outstanding commercial real estate loans at
December 31, 2015, compared to $19 million or 0.68% of outstanding commercial real estate loans at December 31, 2014. The
$10 million decrease was primarily due to $13 million of cash payments received, $4.1 million of foreclosures and $944
thousand of charge-offs, partially offset by $8.6 million of newly identified commercial real estate loans during the year.
Nonaccruing commercial real estate loans were composed of $4.4 million or 2.75% of total residential land development and
construction loans, $2.3 million or 0.65% of total other commercial real estate loans and $1.3 million or 0.17% of loans secured
by retail facilities.
Residential Mortgage and Personal
Nonaccruing residential mortgage loans totaled $61 million or 3.26% of outstanding residential mortgage loans at
December 31, 2015, compared to $48 million or 2.47% of outstanding residential mortgage loans at December 31, 2014. Newly
identified nonaccruing residential mortgage loans of $28 million were offset by $13 million of foreclosures, $9.5 million of
cash payments and $2.2 million of loans charged off during the year. Nonaccruing residential mortgage loans primarily
consisted of $29 million or 3.07% of non-guaranteed permanent residential mortgage loans and $22 million or 11.12% of
permanent residential mortgage loans guaranteed by U.S. government agencies. Nonaccruing home equity loans totaled $10.4
million or 1.41% of total home equity loans.
Payments on accruing residential mortgage loans and personal loans may be delinquent. The composition of residential
mortgage loans and personal loans past due but still accruing is included in the following Table 27. Substantially all non-
guaranteed residential loans past due 90 days or more are nonaccruing. Residential mortgage loans 30 to 89 days past due
decreased $2.3 million to $6.4 million at December 31, 2015. Personal loans past due 30 to 89 days increased $146 thousand
over December 31, 2014.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:26)(cid:3)(cid:177)(cid:3)(cid:53)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:51)(cid:68)(cid:86)(cid:87)(cid:3)(cid:39)(cid:88)(cid:72)(cid:3)
(In thousands)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:28)(cid:19)(cid:3)(cid:39)(cid:68)(cid:92)(cid:86)(cid:3)(cid:82)(cid:85)
(cid:48)(cid:82)(cid:85)(cid:72)
(cid:22)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:27)(cid:28)
(cid:39)(cid:68)(cid:92)(cid:86)
(cid:28)(cid:19)(cid:3)(cid:39)(cid:68)(cid:92)(cid:86)(cid:3)(cid:82)(cid:85)
(cid:48)(cid:82)(cid:85)(cid:72)
(cid:22)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:27)(cid:28)
(cid:39)(cid:68)(cid:92)(cid:86)
Residential mortgage:
Permanent mortgage1
Home equity
Total residential mortgage
(cid:7)
(cid:7)
(cid:178) (cid:7)
(cid:21)(cid:19)
(cid:21)(cid:19)
(cid:7)
(cid:3)
Personal
(cid:7)
1 Excludes past due residential mortgage loans guaranteed by agencies of the U.S. government.
(cid:27)
(cid:7)
$
(cid:22)(cid:15)(cid:21)(cid:28)(cid:19)
(cid:22)(cid:15)(cid:19)(cid:28)(cid:24)
(cid:25)(cid:15)(cid:22)(cid:27)(cid:24)
(cid:3)
(cid:25)(cid:28)(cid:22)
$
46
77
123
2
$
$
$
5,970
2,723
8,693
547
65
Real Estate and Other Repossessed Assets
Real estate and other repossessed assets are assets acquired in partial or total forgiveness of loans. The assets are carried at the
lower of cost as determined by fair value at date of foreclosure or current fair value, less estimated selling costs.
Real estate and other repossessed assets totaled $31 million at December 31, 2015, a $71 million decrease from December 31,
2014. The distribution of real estate and other repossessed assets distributed primarily by collateral location is included in Table
28 following.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:27)(cid:3)(cid:177)(cid:3)(cid:53)(cid:72)(cid:68)(cid:79)(cid:3)(cid:40)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:72)(cid:71)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:47)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)
(In thousands)
Developed commercial
real estate properties
1-4 family residential
properties
Undeveloped land
Residential land
development
properties
Vehicles
Other
Total real estate and
other repossessed
assets
(cid:50)(cid:78)(cid:79)(cid:68)(cid:75)(cid:82)(cid:80)(cid:68)
(cid:55)(cid:72)(cid:91)(cid:68)(cid:86)
(cid:38)(cid:82)(cid:79)(cid:82)(cid:85)(cid:68)(cid:71)(cid:82) (cid:36)(cid:85)(cid:78)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86)
(cid:49)(cid:72)(cid:90)
(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)
(cid:36)(cid:85)(cid:76)(cid:93)(cid:82)(cid:81)(cid:68)
(cid:46)(cid:68)(cid:81)(cid:86)(cid:68)(cid:86)(cid:18)
(cid:48)(cid:76)(cid:86)(cid:86)(cid:82)(cid:88)(cid:85)(cid:76)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$
64
$
988
$
3,456
$
— $
756
$
221
$
3,024
$ 1,950
$ 10,459
4,726
265
2,352
1,520
162
4
—
—
56
—
—
203
594
—
—
1,180
—
2,394
—
—
—
—
—
5
—
3,308
792
1,570
—
324
695
—
2
—
—
120
—
14,775
2,780
—
—
—
2,328
65
324
$
5,221
$
4,916
$
4,253
$
1,180
$
3,155
$
6,215
$
3,721
$ 2,070
$ 30,731
Undeveloped land is primarily zoned for commercial development. Developed commercial real estate properties are primarily
completed with no additional construction necessary for sale.
(cid:47)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)
Subsidiary Bank
Deposits and borrowed funds are the primary sources of liquidity for the subsidiary bank. Based on the average balances for
2015, approximately 68% of our funding was provided by deposit accounts, 17% from borrowed funds, 1% from long-term
subordinated debt and 11% from equity. Our funding sources, which primarily include deposits and borrowings from the
Federal Home Loan Banks and other banks, provide adequate liquidity to meet our operating needs.
Deposit accounts represent our largest funding source. We compete for retail and commercial deposits by offering a broad
range of products and services and focusing on customer convenience. Retail deposit growth is supported through our Perfect
Banking sales and customer service program, free checking, online bill paying services, mobile banking services, an extensive
network of branch locations and ATMs and a 24-hour Express Bank call center. Commercial deposit growth is supported by
offering treasury management and lockbox services. We also acquire brokered deposits when the cost of funds is advantageous
to other funding sources.
66
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:21)(cid:28)(cid:3)(cid:16)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:39)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:47)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)
(In thousands)
Commercial Banking
Consumer Banking
Wealth Management
Subtotal
Funds Management and other
Total
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:27)(cid:15)(cid:26)(cid:26)(cid:24)(cid:15)(cid:19)(cid:23)(cid:27)
$
(cid:25)(cid:15)(cid:25)(cid:25)(cid:27)(cid:15)(cid:24)(cid:21)(cid:19)
(cid:23)(cid:15)(cid:24)(cid:26)(cid:22)(cid:15)(cid:27)(cid:24)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:23)
8,887,809
6,520,835
4,391,434
(cid:21)(cid:19)(cid:15)(cid:19)(cid:20)(cid:26)(cid:15)(cid:23)(cid:21)(cid:20)
19,800,078
(cid:28)(cid:20)(cid:24)(cid:15)(cid:27)(cid:21)(cid:24)
615,080
(cid:7) (cid:21)(cid:19)(cid:15)(cid:28)(cid:22)(cid:22)(cid:15)(cid:21)(cid:23)(cid:25)
$ 20,415,158
Average deposits for 2015 totaled $20.9 billion and represented approximately 68% of total liabilities and capital compared
with $20.4 billion and 73% of total liabilities and capital for 2014. Average deposits increased $518 million over the prior year.
Demand deposits increased $361 million and interest-bearing transaction deposit accounts were up $182 million. Time deposits
decreased $57 million.
Average Commercial Banking deposit balances decreased $113 million compared to the prior year, due primarily to a $177
million decrease in interest-bearing transaction deposits, partially offset by an $88 million increase in demand deposit balances.
Average balances attributed to our commercial & industrial loan customers increased $495 million or 13%. Average balances
attributed to our healthcare customers grew by $82 million or 15% over the prior year. Small business banking customer
average balances increased $118 million or 10%. Average balances attributed to our energy customers decreased $98 million or
6%. Average balances held by treasury services customers decreased $768 million or 57% compared to the prior year.
Commercial customers continue to maintain large cash reserves primarily due to low yields available on other high quality
investment alternatives and to minimize deposit service charges through the earnings credit. The earnings credit is a non-cash
method that enables commercial customers to offset deposit service charges based on account balances.
Average Consumer Banking deposit balances increased $148 million from 2014. Demand deposit balances grew by $166
million and interest-bearing transaction account balances increased $124 million. Higher costing time deposit balances
decreased $178 million. Average Wealth Management deposits increased $182 million over the prior year. Time deposit
balances grew by $178 million and demand deposit balances grew by $106 million during 2015, offset by a $100 million
decrease in interest-bearing transaction accounts.
The general trend of increased deposits over the past several years reflects modest growth in the overall economy and low
short-term interest rates. If economic activity were to improve significantly or if short-term interest rates were to increase
further, deposits may decline as customers deploy funds into projects or shift demand deposits into money market instruments.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:19)(cid:3)(cid:16)(cid:3)(cid:48)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:82)(cid:80)(cid:72)(cid:86)(cid:87)(cid:76)(cid:70)(cid:3)(cid:38)(cid:39)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)
(cid:3)(cid:41)(cid:88)(cid:81)(cid:71)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:20)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:82)(cid:85)(cid:3)(cid:48)(cid:82)(cid:85)(cid:72)
(In thousands)
Months to maturity:
3 or less
Over 3 through 6
Over 6 through 12
Over 12
Total
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:7)
(cid:21)(cid:28)(cid:21)(cid:15)(cid:21)(cid:28)(cid:21)
$
(cid:21)(cid:19)(cid:25)(cid:15)(cid:28)(cid:22)(cid:24)
(cid:21)(cid:25)(cid:27)(cid:15)(cid:27)(cid:28)(cid:23)
(cid:26)(cid:23)(cid:25)(cid:15)(cid:26)(cid:20)(cid:28)
225,410
166,578
375,032
915,029
(cid:20)(cid:15)(cid:24)(cid:20)(cid:23)(cid:15)(cid:27)(cid:23)(cid:19)
$
1,682,049
Brokered deposits included in time deposits averaged $416 million for 2015 compared to $237 million for 2014. Brokered
deposits included in time deposits totaled $358 million at December 31, 2015 and $334 million at December 31, 2014.
Average interest-bearing transaction accounts for 2015 included $577 million of brokered deposits compared to $298 million
for 2014. Brokered deposits included in interest-bearing transaction accounts totaled $561 million at December 31, 2015 and
$585 million at December 31, 2014.
67
The distribution of our period end deposit account balances among principal markets follows in Table 31.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:20)(cid:3)(cid:16)(cid:16)(cid:3)(cid:51)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:40)(cid:81)(cid:71)(cid:3)(cid:39)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:36)(cid:85)(cid:72)(cid:68)
(In thousands)
Bank of Oklahoma:
Demand
Interest-bearing:
Transaction
Savings
Time
Total interest-bearing
Total Bank of Oklahoma
Bank of Texas:
Demand
Interest-bearing:
Transaction
Savings
Time
Total interest-bearing
Total Bank of Texas
Bank of Albuquerque:
Demand
Interest-bearing:
Transaction
Savings
Time
Total interest-bearing
Total Bank of Albuquerque
Bank of Arkansas:
Demand
Interest-bearing:
Transaction
Savings
Time
Total interest-bearing
Total Bank of Arkansas
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:7)
(cid:23)(cid:15)(cid:20)(cid:22)(cid:22)(cid:15)(cid:24)(cid:21)(cid:19)
$
3,828,819
$
3,432,940
$ 4,207,263
$
3,196,436
(cid:24)(cid:15)(cid:28)(cid:26)(cid:20)(cid:15)(cid:27)(cid:20)(cid:28)
(cid:21)(cid:21)(cid:25)(cid:15)(cid:26)(cid:22)(cid:22)
(cid:20)(cid:15)(cid:21)(cid:19)(cid:21)(cid:15)(cid:21)(cid:26)(cid:23)
(cid:26)(cid:15)(cid:23)(cid:19)(cid:19)(cid:15)(cid:27)(cid:21)(cid:25)
(cid:20)(cid:20)(cid:15)(cid:24)(cid:22)(cid:23)(cid:15)(cid:22)(cid:23)(cid:25)
6,117,886
206,357
1,301,194
7,625,437
6,318,045
6,023,384
191,880
1,214,507
7,724,432
163,512
1,267,854
7,454,750
5,966,528
126,682
1,444,332
7,537,542
11,454,256
11,157,372
11,662,013
10,733,978
(cid:21)(cid:15)(cid:25)(cid:21)(cid:26)(cid:15)(cid:26)(cid:25)(cid:23)
2,639,732
2,481,603
2,606,176
1,808,490
(cid:21)(cid:15)(cid:20)(cid:22)(cid:21)(cid:15)(cid:19)(cid:28)(cid:28)
(cid:26)(cid:26)(cid:15)(cid:28)(cid:19)(cid:21)
(cid:24)(cid:23)(cid:28)(cid:15)(cid:26)(cid:23)(cid:19)
(cid:21)(cid:15)(cid:26)(cid:24)(cid:28)(cid:15)(cid:26)(cid:23)(cid:20)
(cid:24)(cid:15)(cid:22)(cid:27)(cid:26)(cid:15)(cid:24)(cid:19)(cid:24)
2,065,723
1,966,580
2,129,084
1,940,819
72,037
547,316
2,685,076
5,324,808
64,632
638,465
2,669,677
5,151,280
58,429
762,233
2,949,746
5,555,922
45,872
867,664
2,854,355
4,662,845
(cid:23)(cid:27)(cid:26)(cid:15)(cid:21)(cid:27)(cid:25)
487,819
502,395
427,510
319,269
(cid:24)(cid:25)(cid:22)(cid:15)(cid:26)(cid:21)(cid:22)
(cid:23)(cid:22)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:21)(cid:25)(cid:26)(cid:15)(cid:27)(cid:21)(cid:20)
(cid:27)(cid:26)(cid:24)(cid:15)(cid:21)(cid:20)(cid:25)
519,544
37,471
295,798
852,813
529,140
33,944
327,281
890,365
511,758
31,926
364,928
908,612
491,068
27,487
410,722
929,277
(cid:20)(cid:15)(cid:22)(cid:25)(cid:21)(cid:15)(cid:24)(cid:19)(cid:21)
1,340,632
1,392,760
1,336,122
1,248,546
(cid:21)(cid:26)(cid:15)(cid:21)(cid:24)(cid:21)
35,996
38,566
39,897
19,405
(cid:21)(cid:19)(cid:21)(cid:15)(cid:27)(cid:24)(cid:26)
(cid:20)(cid:15)(cid:26)(cid:23)(cid:26)
(cid:21)(cid:23)(cid:15)(cid:28)(cid:27)(cid:22)
(cid:21)(cid:21)(cid:28)(cid:15)(cid:24)(cid:27)(cid:26)
(cid:21)(cid:24)(cid:25)(cid:15)(cid:27)(cid:22)(cid:28)
158,115
1,936
28,520
188,571
224,567
144,018
1,986
32,949
178,953
217,519
101,868
2,239
42,573
146,680
186,577
131,703
1,727
61,329
194,759
214,164
68
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:20)(cid:3)(cid:16)(cid:16)(cid:3)(cid:51)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:40)(cid:81)(cid:71)(cid:3)(cid:39)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:36)(cid:85)(cid:72)(cid:68)
(In thousands)
Colorado State Bank & Trust:
Demand
Interest-bearing:
Transaction
Savings
Time
Total interest-bearing
Total Colorado State Bank & Trust
Bank of Arizona:
Demand
Interest-bearing:
Transaction
Savings
Time
Total interest-bearing
Total Bank of Arizona
Bank of Kansas City:
Demand
Interest-bearing:
Transaction
Savings
Time
Total interest-bearing
Total Bank of Kansas City
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:21)
(cid:21)(cid:19)(cid:20)(cid:20)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:23)(cid:28)(cid:26)(cid:15)(cid:22)(cid:20)(cid:27)
445,755
409,942
336,252
292,556
(cid:25)(cid:20)(cid:25)(cid:15)(cid:25)(cid:28)(cid:26)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:21)(cid:26)
(cid:21)(cid:28)(cid:25)(cid:15)(cid:21)(cid:21)(cid:23)
(cid:28)(cid:23)(cid:23)(cid:15)(cid:27)(cid:23)(cid:27)
(cid:20)(cid:15)(cid:23)(cid:23)(cid:21)(cid:15)(cid:20)(cid:25)(cid:25)
631,874
29,811
353,998
1,015,683
1,461,438
541,675
26,880
407,088
975,643
1,385,585
676,144
25,889
472,305
1,174,338
1,510,590
512,904
22,771
523,969
1,059,644
1,352,200
(cid:22)(cid:21)(cid:25)(cid:15)(cid:22)(cid:21)(cid:23)
369,115
204,092
161,093
106,741
(cid:22)(cid:24)(cid:27)(cid:15)(cid:24)(cid:24)(cid:25)
(cid:21)(cid:15)(cid:27)(cid:28)(cid:22)
(cid:21)(cid:28)(cid:15)(cid:23)(cid:28)(cid:27)
(cid:22)(cid:28)(cid:19)(cid:15)(cid:28)(cid:23)(cid:26)
(cid:26)(cid:20)(cid:26)(cid:15)(cid:21)(cid:26)(cid:20)
347,214
2,545
36,680
386,439
755,554
364,736
2,432
34,391
401,559
605,651
360,276
1,978
31,371
393,625
554,718
104,961
1,192
37,641
143,794
250,535
(cid:20)(cid:28)(cid:26)(cid:15)(cid:23)(cid:21)(cid:23)
259,121
246,739
260,095
56,888
(cid:20)(cid:24)(cid:22)(cid:15)(cid:21)(cid:19)(cid:22)
(cid:20)(cid:15)(cid:22)(cid:26)(cid:27)
(cid:22)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)
(cid:20)(cid:28)(cid:19)(cid:15)(cid:20)(cid:19)(cid:24)
(cid:22)(cid:27)(cid:26)(cid:15)(cid:24)(cid:21)(cid:28)
273,999
1,274
45,210
320,483
579,604
69,857
1,252
41,312
112,421
359,160
85,524
771
26,728
113,023
373,118
206,473
626
36,325
243,424
300,312
Total BOK Financial deposits
(cid:7)
(cid:21)(cid:20)(cid:15)(cid:19)(cid:27)(cid:27)(cid:15)(cid:20)(cid:24)(cid:27)
$
21,140,859
$ 20,269,327
$ 21,179,060
$
18,762,580
See Note 9 to the Consolidated Financial Statements for a summary of other borrowings.
In addition to deposits, subsidiary bank liquidity is provided primarily by federal funds purchased, securities repurchase
agreements and Federal Home Loan Bank borrowings. Federal funds purchased consist primarily of unsecured, overnight funds
acquired from other financial institutions. Funds are primarily purchased from bankers’ banks and Federal Home Loan banks
from across the country. The largest single source of wholesale federal funds purchased totaled $430 million at December 31,
2015. Securities repurchase agreements generally mature within 90 days and are secured by certain available for sale securities.
Federal Home Loan Bank borrowings are generally short term and are secured by a blanket pledge of eligible collateral
(generally unencumbered U.S. Treasury and mortgage-backed securities, 1-4 family residential mortgage loans, multifamily
and other qualifying commercial real estate loans). Amounts borrowed from the Federal Home Loan Bank of Topeka averaged
$4.9 billion during 2015 and $1.9 billion during 2014.
At December 31, 2015, the estimated unused credit available to the subsidiary bank from collateralized sources was
approximately $5.1 billion.
69
In 2007, the Bank issued $250 million of subordinated debt due May 15, 2017 to fund the Worth National Bank and First
United Bank acquisitions and fund continued asset growth. Interest on this debt was based on a fixed rate of 5.75% through
May 14, 2012 which then converted to a floating rate of three-month LIBOR plus 0.69%. At December 31, 2015, $226 million
of this subordinated debt remains outstanding.
In 2005, the Bank issued $150 million of 10-year, fixed rate subordinated debt. The cost of this subordinated debt, including
issuance discounts and hedge loss, is 5.56%. The proceeds of this debt were used to repay $95 million of BOK Financial's
unsecured revolving line of credit and to provide additional capital to support asset growth. The remaining outstanding balance
of $122 million matured on June 1, 2015.
The Bank also has a liability related to the repurchase of certain delinquent residential mortgage loans previously sold in
GNMA mortgage pools. Interest is payable monthly at rates contractually due to investors.
Parent Company and Other Non-Bank Subsidiaries
The primary sources of liquidity for BOK Financial are cash on hand and dividends from the subsidiary bank. Cash on hand at
December 31, 2015 totaled $282 million. Dividends from the subsidiary bank are limited by various banking regulations to net
profits, as defined, for the year plus retained profits for the two preceding years. Dividends are further restricted by minimum
capital requirements. At December 31, 2015, based on the most restrictive limitations as well as management’s internal capital
policy, the subsidiary bank could declare up to $100 million of dividends without regulatory approval. Dividend constraints
may be alleviated through increases in retained earnings, capital issuances or changes in risk weighted assets. Future losses or
increases in required regulatory capital at the subsidiary bank could also affect its ability to pay dividends to the parent
company. As discussed further in Note 6 to the consolidated financial statements, the holding company will pay $102.5 million
in an all-cash deal for all outstanding shares of MBT Bancshares stock in 2016, subject to customary closing conditions,
including regulatory approval, and potential adjustments.
The Company had a $100 million senior unsecured 364 day revolving credit facility with Wells Fargo Bank, National
Association, administrative agent and other commercial banks which matured on June 5, 2015 and was not renewed by us.
Our equity capital at December 31, 2015 was $3.2 billion, a decrease of $72 million from December 31, 2014. Net income less
cash dividends paid increased equity $173 million during 2015. Accumulated other comprehensive income decreased $35
million during 2015 primarily related to the change in net unrealized gains and losses on available for sale securities. The
Company also repurchased $230 million of our common stock during 2015 as described below. Capital is managed to
maximize long-term value to the shareholders. Factors considered in managing capital include projections of future earnings,
asset growth and acquisition strategies, and regulatory and debt covenant requirements. Capital management may include
subordinated debt issuance, share repurchase and stock and cash dividends.
On April 24, 2012, the Board of Directors authorized the Company to purchase up to two million shares of our common stock.
The specific timing and amount of shares repurchased will vary based on market conditions, regulatory limitations and other
factors. Repurchases may be made over time in open market or privately negotiated transactions. The repurchase program may
be suspended or discontinued at any time without prior notice. The Company repurchased 1,760,504 shares during 2015 at the
average price of $62.35 per share, completing this existing authorization. On October 27, 2015, the board of directors
authorized the Company to purchase up to five million additional common shares, subject to market conditions, securities laws
and other regulatory compliance limitations. The Company repurchased an additional 1,874,074 shares during 2015 under this
new authorization at an average price of $63.91 per share.
BOK Financial and the subsidiary bank are subject to various capital requirements administered by federal agencies. Failure to
meet minimum capital requirements can result in certain mandatory and additional discretionary actions by regulators that
could have a material impact on operations. These capital requirements include quantitative measures of assets, liabilities and
off-balance sheet items. The capital standards are also subject to qualitative judgments by the regulators.
New capital rules were effective for BOK Financial on January 1, 2015. Components of these rules will phase in through
January 1, 2019. The new capital rules reduced instruments that qualify as regulatory capital and generally increased risk
weighted assets. The impact of these changes was partially offset by improved data granularity. The new capital rules establish
a 7% threshold for the common equity Tier 1 ratio consisting of a minimum level plus capital conservation buffer. The
Company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1
capital, consistent with the treatment under previous capital rules.
70
The rules also change both the Tier 1 risk based capital requirements and the total risk based requirements to a minimum of 6%
and 8%, respectively, plus a capital conservation buffer of 2.5% totaling 8.5% and 10.5%, respectively. The leverage ratio
requirement under the rule is 4%. A banking organization which falls below these levels, including the capital conservation
buffer, would be subject to regulatory restrictions on capital distributions (including but not limited to dividends and share
repurchases) and executive bonus payments.
The capital ratios for BOK Financial on a consolidated basis are presented in Table 32 following.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:21)(cid:3)(cid:177)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:53)(cid:68)(cid:87)(cid:76)(cid:82)(cid:86)(cid:3)
(cid:48)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)
(cid:53)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:20)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
(cid:37)(cid:88)(cid:73)(cid:73)(cid:72)(cid:85)(cid:21)
(cid:48)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:44)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:37)(cid:88)(cid:73)(cid:73)(cid:72)(cid:85)
4.50%
6.00%
8.00%
4.00%
2.50%
2.50%
2.50%
N/A
7.00%
8.50%
10.50%
4.00%
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)(cid:22)
(cid:20)(cid:21)(cid:17)(cid:20)(cid:22)(cid:8)
(cid:20)(cid:21)(cid:17)(cid:20)(cid:22)(cid:8)
(cid:20)(cid:22)(cid:17)(cid:22)(cid:19)(cid:8)
(cid:28)(cid:17)(cid:21)(cid:24)(cid:8)
(cid:20)(cid:20)(cid:17)(cid:19)(cid:22)(cid:8)
(cid:28)(cid:17)(cid:19)(cid:21)(cid:8)
(cid:20)(cid:20)(cid:17)(cid:28)(cid:26)(cid:8)
N/A
13.33%
14.66%
9.96%
11.47%
10.08%
13.17%
Risk-based capital:
Common equity Tier 1
Tier 1 capital
Total capital
Tier 1 Leverage
Average total equity to average assets
Tangible common equity ratio
Tier 1 common equity ratio
1 Effective January 1, 2015
2 Effective January 1, 2016
3 Calculated under then current capital rules
Capital resources of financial institutions are also regularly measured by the tangible common shareholders’ equity
ratio. Tangible common shareholders’ equity is shareholders’ equity as defined by generally accepted accounting principles in
the United States of America (“GAAP”), including unrealized gains and losses on available for sale securities, less intangible
assets and equity which does not benefit common shareholders. Equity that does not benefit common shareholders includes
preferred equity. This non-GAAP measure is a valuable indicator of a financial institution’s capital strength since it eliminates
intangible assets from shareholders’ equity and retains the effect of unrealized losses on securities and other components of
accumulated other comprehensive income in shareholders’ equity.
Table 33 following provides a reconciliation of the non-GAAP measures with financial measures defined by GAAP.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:22)(cid:3)(cid:177)(cid:3)(cid:49)(cid:82)(cid:81)(cid:16)(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)
(Dollars in thousands)
(cid:55)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:29)
Total shareholders' equity
Less: Goodwill and intangible assets, net
Tangible common equity
Total assets
Less: Goodwill and intangible assets, net
Tangible assets
Tangible common equity ratio
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:22)(cid:15)(cid:21)(cid:22)(cid:19)(cid:15)(cid:24)(cid:24)(cid:25)
$
3,302,179
(cid:23)(cid:21)(cid:28)(cid:15)(cid:22)(cid:26)(cid:19)
(cid:21)(cid:15)(cid:27)(cid:19)(cid:20)(cid:15)(cid:20)(cid:27)(cid:25)
(cid:22)(cid:20)(cid:15)(cid:23)(cid:26)(cid:25)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:23)(cid:21)(cid:28)(cid:15)(cid:22)(cid:26)(cid:19)
412,156
2,890,023
29,089,698
412,156
(cid:7)
(cid:22)(cid:20)(cid:15)(cid:19)(cid:23)(cid:25)(cid:15)(cid:26)(cid:24)(cid:27)
$ 28,677,542
(cid:28)(cid:17)(cid:19)(cid:21)(cid:8)
10.08%
71
On June 17, 2015, BOK Financial published the results of its annual capital stress test. In accordance with the Dodd-Frank Act,
the Federal Reserve must publish regulations that require bank holding companies with $10 billion to $50 billion in assets to
perform annual capital stress tests. The requirements for annual capital stress tests became effective for the Company in the
fourth quarter of 2013. The Dodd-Frank Act Stress Test ("DFAST") is a forward-looking exercise under which the Company
and its banking subsidiary estimate the impact of a hypothetical severely adverse macroeconomic scenario provided by the
Federal Reserve and Office of the Comptroller of the Currency on its financial condition and regulatory capital ratios over a
nine-quarter time horizon. Under the scenario provided by the regulatory agencies, all capital ratio measures remain
comfortably above minimum regulatory thresholds. Additional information concerning the annual stress test may be found on
the Company's Investor Relations page at www.bokf.com under the "Presentations" tab. The results of future capital stress tests
may place constraints on capital distributions or increases in required regulatory capital under certain circumstances.
(cid:50)(cid:73)(cid:73)(cid:16)(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:36)(cid:85)(cid:85)(cid:68)(cid:81)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
See Note 14 to the Consolidated Financial Statements for a discussion of the Company’s significant off-balance sheet
commitments.
(cid:36)(cid:74)(cid:74)(cid:85)(cid:72)(cid:74)(cid:68)(cid:87)(cid:72)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:50)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
BOK Financial has numerous contractual obligations in the normal course of business. These obligations include time deposits
and other borrowed funds, premises used under various operating leases, commitments to extend credit to borrowers and to
purchase securities, derivative contracts and contracts for services such as data processing that are integral to our operations.
Table 34 following summarizes payments due per these contractual obligations at December 31, 2015.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:23)(cid:3)(cid:177)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:50)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(In thousands)
Time deposits
Other borrowings
Subordinated debentures
Operating lease obligations
Derivative contracts
Data processing services
Total
Loan commitments
Standby letters of credit
Mortgage loans sold with recourse
Alternative investment commitments
Unfunded third-party private equity commitments
(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:55)(cid:75)(cid:68)(cid:81)(cid:3)
(cid:20)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)
(cid:20)(cid:3)(cid:87)(cid:82)(cid:3)(cid:22)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:23)(cid:3)(cid:87)(cid:82)(cid:3)(cid:24)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:48)(cid:82)(cid:85)(cid:72)(cid:3)(cid:55)(cid:75)(cid:68)(cid:81)
(cid:24)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$
776,536
$
560,239
$
179,202
$
354,496
$
1,870,473
724
2,382
23,995
568,934
17,232
1,614
229,725
39,164
9,497
26,267
2,168
—
27,423
1,525
8,783
15,056
—
56,426
1,745
1,265
19,562
232,107
147,008
581,701
53,547
$
1,389,803
$
866,506
$
219,101
$
428,988
$
2,904,398
$
8,455,037
507,988
155,489
20,891
4,866
Payments on time deposits, other borrowed funds and subordinated debentures include interest which has been calculated from
rates at December 31, 2015. These obligations may have variable interest rates and actual payments will differ from the
amounts shown on this table.
Payments on time deposits are based on contractual maturity dates. These funds may be withdrawn prior to maturity. We may
charge the customer a penalty for early withdrawal.
Operating lease commitments generally represent real property we rent for branch offices, corporate offices and operations
facilities. Payments presented represent the minimum lease payments and exclude related costs such as utilities and property
taxes.
72
Obligations under derivative contracts are used in customer hedging programs. As previously discussed, we have entered into
derivative contracts which are expected to substantially offset the cash payments due on these obligations.
We also have obligations with respect to employee benefit plans. See Note 11 to the Consolidated Financial Statements for
additional information about our employee benefit plans.
Data processing and communications contracts represent the minimum obligations under the contracts. Additional payments
that are based on the volume of transactions processed are excluded.
Loan commitments represent legally binding obligations to provide financing to our customers. Some of these commitments
are expected to expire before being drawn upon and the total commitment amounts do not necessarily represent future cash
requirements. Approximately $1.4 billion of the loan commitments expire within one year.
The Company has funded $146 million and has commitments to fund an additional $21 million for various alternative
investments. Alternative investments generally consist of limited partnership interests in or loans to entities that invest in low
income housing or economic development projects, distressed assets, energy development, venture capital and other
activities. The Company is prohibited by banking regulations from controlling or actively managing the activities of these
investments. Legally binding commitments to fund alternative investments are recognized as liabilities in the consolidated
financial statements.
An indirect wholly-owned subsidiary of the Company is general partner of two private equity funds and has contingent
obligations to make additional investments totaling $4.9 million as of December 31, 2015. These commitments, which are
included in unfunded third-party private equity commitments, generally reflect customer investment obligations. We do not
recognize contingent commitments to fund investments that are primarily customer obligations as liabilities in the consolidated
financial statements.
(cid:53)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:44)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:54)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:86)
See Note 1 of the consolidated financial statements for disclosure of newly adopted and pending accounting standards.
(cid:41)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:16)(cid:47)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
This report 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 in general. Words such as
“anticipates,” “believes,” ”estimates,” “expects,” “forecasts,” “plans,” “projects,” variations of such words and similar
expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the
provision and allowance for loan losses and accrual for off-balance sheet credit risk, allowance for uncertain tax positions and
accruals for loss contingencies involve judgments as to expected events and are inherently forward-looking
statements. Assessments that BOK Financial's acquisitions and other growth endeavors will be profitable are necessary
statements of belief as to the outcome of future events, based in part on information provided by others that BOK Financial has
not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties
and assumptions that 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 expressed, implied, or forecasted in such forward-looking
statements. Internal and external factors that might cause such a difference include, but are not limited to: (1) the ability to fully
realize expected cost savings from mergers within the expected time frames, (2) the ability of other companies on which BOK
Financial relies to provide goods and services in a timely and accurate manner, (3) changes in interest rates and interest rate
relationships, (4) demand for products and services, (5) the degree of competition by traditional and nontraditional competitors,
(6) changes in banking regulations, tax laws, prices, levies, and assessments, (7) the impact of technological advances and (8)
trends in customer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to
update, amend, or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
(cid:47)(cid:72)(cid:74)(cid:68)(cid:79)(cid:3)(cid:49)(cid:82)(cid:87)(cid:76)(cid:70)(cid:72)
As used in this report, the term “BOK Financial” and such terms as “the Company,” “the Corporation,” “our,” “we” and “us”
may refer to one or more of the consolidated subsidiaries or all of them taken as a whole. All these terms are used for
convenience only and are not intended as a precise description of any of the separate companies, each of which manages its
own affairs.
73
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:26)(cid:36)(cid:17)(cid:3)(cid:3)(cid:52)(cid:56)(cid:36)(cid:49)(cid:55)(cid:44)(cid:55)(cid:36)(cid:55)(cid:44)(cid:57)(cid:40)(cid:3)(cid:36)(cid:49)(cid:39)(cid:3)(cid:52)(cid:56)(cid:36)(cid:47)(cid:44)(cid:55)(cid:36)(cid:55)(cid:44)(cid:57)(cid:40)(cid:3)(cid:39)(cid:44)(cid:54)(cid:38)(cid:47)(cid:50)(cid:54)(cid:56)(cid:53)(cid:40)(cid:54)(cid:3)(cid:36)(cid:37)(cid:50)(cid:56)(cid:55)(cid:3)(cid:48)(cid:36)(cid:53)(cid:46)(cid:40)(cid:55)(cid:3)(cid:53)(cid:44)(cid:54)(cid:46)
(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial
instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity
prices or equity prices. Financial instruments that are subject to market risk can be classified either as held for trading or held
for purposes other than trading. Market risk excludes changes in fair value due to credit of the individual issuers of financial
instruments.
BOK Financial is subject to market risk primarily through the effect of changes in interest rates on both its assets held for
purposes other than trading and trading assets. The effects of other changes, such as foreign exchange rates, commodity prices
or equity prices do not pose significant market risk to BOK Financial. BOK Financial has no material investments in assets that
are affected by changes in foreign exchange rates or equity prices. Energy and agricultural product derivative contracts, which
are affected by changes in commodity prices, are matched against offsetting contracts as previously discussed.
The Asset/Liability Committee is responsible for managing market risk in accordance with policy guidelines established by the
Board of Directors. The Committee monitors projected variation in net interest revenue, net interest income and economic
value of equity due to specified changes in interest rates. The internal policy limit for net interest revenue variation is a
maximum decline of 5% to an up or down 200 basis point change over twelve months. These guidelines also set maximum
levels for short-term borrowings, short-term assets, public funds and brokered deposits and establish minimum levels for
unpledged assets, among other things. Compliance with these internal guidelines is reviewed monthly. Further, in 2015, the
Asset/Liability Committee approved new market risk limits for fixed income trading, mortgage pipeline and mortgage
servicing assets inclusive of economic hedge benefits. Each of these three desks must limit projected exposure from a 50 basis
point change in interest rates.
Interest Rate Risk – Other than Trading
As previously noted in the Net Interest Revenue section of this report, management has implemented strategies to manage the
Company’s balance sheet to have relatively limited exposure to changes in interest rates over a twelve-month period. The
effectiveness of these strategies in managing the overall interest rate risk is evaluated through the use of an asset/liability
model. BOK Financial performs a sensitivity analysis to identify more dynamic interest rate risk exposures, including
embedded option positions, on net interest revenue, net income and economic value of equity. A simulation model is used to
estimate the effect of changes in interest rates on the Company's performance across multiple interest rate scenarios. While the
current internal policy limit for net interest revenue variation is a maximum decline of 5% due to a 200 basis point change in
market interest rates over twelve months, the results of a 200 basis point decrease in interest rates in the current low-rate
environment are not meaningful. We report the effect of a 50 basis point decrease in the interim.
The Company’s primary interest rate exposures include the Federal Funds rate, which affects short-term borrowings, and the
prime lending rate and LIBOR, which are the basis for much of the variable rate loan pricing. Additionally, residential
mortgage rates directly affect the prepayment speeds for residential mortgage-backed securities and mortgage servicing
rights. Derivative financial instruments and other financial instruments used for purposes other than trading are included in this
simulation. In addition, the impact on the level and composition of demand deposit accounts and other core deposit balances
resulting from a significant increase in short-term market interest rates and the overall interest rate environment is likely to be
material. The simulation incorporates assumptions regarding the effects of such changes based on a combination of historical
analysis and expected behavior. The impact of planned growth and new business activities is factored into the simulation
model. The effects of changes in interest rates on the value of mortgage servicing rights are excluded from Table 35 due to the
extreme volatility over such a large rate range and our active risk management approach for that asset. The effects of interest
rate changes on the value of mortgage servicing rights and financial instruments identified as economic hedges are presented in
Note 7 to the Consolidated Financial Statements.
The simulations used to manage market risk are based on numerous assumptions regarding the effects of changes in interest
rates on the timing and extent of re-pricing characteristics, future cash flows and customer behavior. These assumptions are
inherently uncertain and, as a result, the model cannot precisely estimate net interest revenue, net income or economic value of
equity or precisely predict the impact of higher or lower interest rates on net interest revenue, net income or economic value of
equity. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes, market
conditions and management strategies, among other factors.
74
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:24)(cid:3)(cid:177)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)(cid:3)(cid:54)(cid:72)(cid:81)(cid:86)(cid:76)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:92)
(Dollar in thousands)
Anticipated impact over the next twelve months on net interest revenue
(cid:7)
(cid:11)(cid:26)(cid:15)(cid:24)(cid:26)(cid:25)(cid:12)
$
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(5,046)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7) (cid:11)(cid:21)(cid:21)(cid:15)(cid:24)(cid:19)(cid:20)(cid:12)
$
(cid:21)(cid:19)(cid:20)(cid:23)
(18,617)
(cid:11)(cid:19)(cid:17)(cid:28)(cid:26)(cid:12)(cid:8)
(0.70)%
(cid:11)(cid:21)(cid:17)(cid:27)(cid:26)(cid:12)(cid:8)
(2.58)%
(cid:21)(cid:19)(cid:19)(cid:3)(cid:69)(cid:83)(cid:3)(cid:44)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)
(cid:24)(cid:19)(cid:3)(cid:69)(cid:83)(cid:3)(cid:39)(cid:72)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)
Trading Activities
BOK Financial enters into trading activities both as an intermediary for customers and for its own account. As an intermediary,
BOK Financial will take positions in securities, generally residential mortgage-backed securities, government agency securities
and municipal bonds. These securities are purchased for resale to customers, which include individuals, corporations,
foundations and financial institutions. On a limited basis, BOK Financial may also take trading positions in U.S. Treasury
securities, residential mortgage-backed securities, and municipal bonds to enhance returns on its securities portfolios. Both of
these activities involve interest rate, liquidity and price risk. BOKF Financial has an insignificant exposure to foreign exchange
risk and does not take positions in commodity derivatives.
A variety of methods are used to manage the interest rate risk of trading activities. These methods include daily marking of all
positions to market value, independent verification of inventory pricing, and position limits for each trading activity. Hedges in
either the futures or cash markets may be used to reduce the risk associated with some trading programs.
Management uses a Value at Risk (“VaR”) methodology to measure the market risk due to changes in interest rates inherent in
its trading activities. VaR is calculated based upon historical simulations over the past five years using a variance/covariance
matrix of interest rate changes, a 10 business day holding period and a 99% confidence interval. It represents an amount of
market loss that is likely to be exceeded in only one out of every 100 two-week periods. Trading positions are managed within
guidelines approved by the Board of Directors. These guidelines limit the VaR to $7.3 million. There were no instances of VaR
being exceeded during the years ended December 31, 2015 and 2014. At December 31, 2015, there were no trading positions
for the purposes of enhancing returns on the Company's securities portfolio.
The average, high and low VaR amounts for the years ended December 31, 2015, 2014, and 2013 are as follows in Table 36.
(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:22)(cid:25)(cid:3)(cid:177)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:11)(cid:57)(cid:68)(cid:53)(cid:12)(cid:3)
(In thousands)
Average
High
Low
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:20)(cid:15)(cid:24)(cid:22)(cid:23)
$
1,987
$
(cid:21)(cid:15)(cid:25)(cid:27)(cid:19)
(cid:26)(cid:24)(cid:23)
3,868
479
2,785
5,826
261
75
(cid:44)(cid:55)(cid:40)(cid:48)(cid:3)(cid:27)(cid:17)(cid:3)(cid:3)(cid:41)(cid:44)(cid:49)(cid:36)(cid:49)(cid:38)(cid:44)(cid:36)(cid:47)(cid:3)(cid:54)(cid:55)(cid:36)(cid:55)(cid:40)(cid:48)(cid:40)(cid:49)(cid:55)(cid:54)(cid:3)(cid:36)(cid:49)(cid:39)(cid:3)(cid:54)(cid:56)(cid:51)(cid:51)(cid:47)(cid:40)(cid:48)(cid:40)(cid:49)(cid:55)(cid:36)(cid:53)(cid:60)(cid:3)(cid:39)(cid:36)(cid:55)(cid:36)
(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
Management of BOK Financial is responsible for the preparation, integrity and fair presentation of the consolidated financial
statements included in this annual report. The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States and necessarily include some amounts that are based on our best
estimates and judgments.
Management, under the supervision of the Chief Executive Officer and the Chief Financial Officer, conducted an assessment of
internal control over financial reporting as of December 31, 2015. Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s
consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the
United States. In establishing internal control over financial reporting, management assesses risk and designs controls to
prevent or detect financial reporting misstatements that may be consequential to a reader. Management also assesses the impact
of any internal control deficiencies and oversees efforts to improve internal control over financial reporting. Because of
inherent limitations, it is possible that internal controls may not prevent or detect misstatements, and it is possible that internal
controls may vary over time based on changing conditions. There have been no material changes in internal controls
subsequent to December 31, 2015.
The Audit Committee, consisting entirely of independent directors, meets regularly with management, internal auditors and the
independent registered public accounting firm, Ernst & Young LLP, regarding management’s assessment of internal control
over financial reporting.
(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)
Management is responsible for establishing and maintaining adequate internal control over financial reporting and for assessing
the effectiveness of internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f), as amended. Management has assessed the effectiveness of the Company’s internal control over financial reporting
based on the criteria established in “Internal Control – Integrated Framework,” issued by the Committee of Sponsoring
Organizations (“COSO”) of the Treadway Commission in 2013. Based on that assessment and criteria, management has
determined that the Company maintained effective internal control over financial reporting as of December 31, 2015.
Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements of the
Company included in this annual report has issued an audit report on the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2015. Their report, which expresses unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2015, is included in this annual report.
76
(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:85)(cid:81)(cid:86)(cid:87)(cid:3)(cid:9)(cid:3)(cid:60)(cid:82)(cid:88)(cid:81)(cid:74)(cid:15)(cid:3)(cid:47)(cid:47)(cid:51)(cid:15)(cid:3)(cid:44)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:41)(cid:76)(cid:85)(cid:80)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:50)(cid:46)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
We have audited the accompanying consolidated balance sheets of BOK Financial Corporation ("the Company") as of
December 31, 2015 and 2014, and the related consolidated statements of earnings, comprehensive income, changes in equity,
and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of BOK Financial Corporation at December 31, 2015 and 2014, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), BOK Financial Corporation's internal control over financial reporting as of December 31, 2015, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) and our report dated February 29, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Tulsa, Oklahoma
February 29, 2016
77
(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:85)(cid:81)(cid:86)(cid:87)(cid:3)(cid:9)(cid:3)(cid:60)(cid:82)(cid:88)(cid:81)(cid:74)(cid:15)(cid:3)(cid:47)(cid:47)(cid:51)(cid:15)(cid:3)(cid:44)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:41)(cid:76)(cid:85)(cid:80)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:50)(cid:46)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
We have audited BOK Financial Corporation’s ("the Company") internal control over financial reporting as of December 31,
2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). BOK Financial Corporation’s management
is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Report of Management on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, BOK Financial Corporation maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2015, based on(cid:3)the COSO criteria(cid:17)
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of BOK Financial Corporation as of December 31, 2015 and 2014, and the related consolidated
statements of earnings, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended
December 31, 2015 and our report dated February 29, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Tulsa, Oklahoma
February 29, 2016
78
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)
(In thousands, except share and per share data)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
Loans
Residential mortgage loans held for sale
Trading securities
Taxable securities
Tax-exempt securities
Total investment securities
Taxable securities
Tax-exempt securities
Total available for sale securities
Fair value option securities
Restricted equity securities
Interest-bearing cash and cash equivalents
Total interest revenue
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)
Deposits
Borrowed funds
Subordinated debentures
Total interest expense
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
(cid:51)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
Brokerage and trading revenue
Transaction card revenue
Fiduciary and asset management revenue
Deposit service charges and fees
Mortgage banking revenue
Bank-owned life insurance
Other revenue
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:73)(cid:72)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)
Gain on assets, net
Gain (loss) on derivatives, net
Gain (loss) on fair value option securities, net
Change in fair value of mortgage servicing rights
Gain on available for sale securities, net
Total other-than-temporary impairment losses
Portion of loss recognized in other comprehensive income
Net impairment losses recognized in earnings
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)
Personnel
Business promotion
Charitable contributions to BOKF Foundation
Professional fees and services
Net occupancy and equipment
Insurance
Data processing and communications
Printing, postage and supplies
Net losses and operating expenses of repossessed assets
Amortization of intangible assets
Mortgage banking costs
Other expense
Total other operating expense
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)
Federal and state income taxes
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)
Net income attributable to non-controlling interests
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:37)(cid:50)(cid:46)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)
(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:29)
Basic
Diluted
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:88)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:29)
Basic
Diluted
(cid:39)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:71)(cid:72)(cid:70)(cid:79)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)
See accompanying notes to consolidated financial statements.
79
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:24)(cid:21)(cid:28)(cid:15)(cid:25)(cid:27)(cid:22)
(cid:20)(cid:22)(cid:15)(cid:25)(cid:19)(cid:21)
(cid:21)(cid:15)(cid:21)(cid:23)(cid:19)
(cid:20)(cid:21)(cid:15)(cid:28)(cid:22)(cid:21)
(cid:24)(cid:15)(cid:20)(cid:25)(cid:25)
(cid:20)(cid:27)(cid:15)(cid:19)(cid:28)(cid:27)
(cid:20)(cid:26)(cid:21)(cid:15)(cid:24)(cid:27)(cid:21)
(cid:21)(cid:15)(cid:21)(cid:23)(cid:26)
(cid:20)(cid:26)(cid:23)(cid:15)(cid:27)(cid:21)(cid:28)
(cid:28)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:20)(cid:22)(cid:15)(cid:24)(cid:22)(cid:21)
(cid:24)(cid:15)(cid:24)(cid:27)(cid:19)
(cid:26)(cid:25)(cid:25)(cid:15)(cid:27)(cid:21)(cid:27)
(cid:23)(cid:23)(cid:15)(cid:20)(cid:26)(cid:19)
(cid:20)(cid:23)(cid:15)(cid:21)(cid:19)(cid:23)
(cid:24)(cid:15)(cid:20)(cid:19)(cid:19)
(cid:25)(cid:22)(cid:15)(cid:23)(cid:26)(cid:23)
(cid:26)(cid:19)(cid:22)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:22)(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:25)(cid:25)(cid:28)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:20)(cid:21)(cid:28)(cid:15)(cid:24)(cid:24)(cid:25)
(cid:20)(cid:21)(cid:27)(cid:15)(cid:25)(cid:21)(cid:20)
(cid:20)(cid:21)(cid:25)(cid:15)(cid:20)(cid:24)(cid:22)
(cid:28)(cid:19)(cid:15)(cid:23)(cid:22)(cid:20)
(cid:20)(cid:22)(cid:23)(cid:15)(cid:22)(cid:26)(cid:24)
(cid:28)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:23)(cid:19)(cid:15)(cid:24)(cid:26)(cid:28)
(cid:25)(cid:24)(cid:28)(cid:15)(cid:19)(cid:20)(cid:28)
(cid:24)(cid:15)(cid:26)(cid:19)(cid:21)
(cid:23)(cid:22)(cid:19)
(cid:11)(cid:22)(cid:15)(cid:25)(cid:27)(cid:23)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:27)(cid:24)(cid:22)(cid:12)
(cid:20)(cid:21)(cid:15)(cid:19)(cid:24)(cid:27)
(cid:11)(cid:21)(cid:15)(cid:23)(cid:23)(cid:22)(cid:12)
(cid:25)(cid:21)(cid:23)
(cid:11)(cid:20)(cid:15)(cid:27)(cid:20)(cid:28)(cid:12)
(cid:25)(cid:25)(cid:25)(cid:15)(cid:27)(cid:24)(cid:22)
(cid:24)(cid:21)(cid:22)(cid:15)(cid:23)(cid:27)(cid:26)
(cid:21)(cid:26)(cid:15)(cid:27)(cid:24)(cid:20)
(cid:26)(cid:28)(cid:25)
(cid:23)(cid:19)(cid:15)(cid:20)(cid:21)(cid:22)
(cid:26)(cid:25)(cid:15)(cid:19)(cid:20)(cid:25)
(cid:21)(cid:19)(cid:15)(cid:22)(cid:26)(cid:24)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:22)(cid:27)(cid:22)
(cid:20)(cid:22)(cid:15)(cid:23)(cid:28)(cid:27)
(cid:20)(cid:15)(cid:23)(cid:23)(cid:25)
(cid:23)(cid:15)(cid:22)(cid:24)(cid:28)
(cid:22)(cid:27)(cid:15)(cid:28)(cid:28)(cid:26)
(cid:22)(cid:24)(cid:15)(cid:21)(cid:22)(cid:22)
(cid:28)(cid:19)(cid:23)(cid:15)(cid:24)(cid:25)(cid:23)
(cid:23)(cid:22)(cid:20)(cid:15)(cid:25)(cid:23)(cid:22)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:21)(cid:28)(cid:21)(cid:15)(cid:21)(cid:24)(cid:28)
(cid:22)(cid:15)(cid:25)(cid:28)(cid:23)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
(cid:23)(cid:17)(cid:21)(cid:21)
(cid:23)(cid:17)(cid:21)(cid:20)
(cid:25)(cid:26)(cid:15)(cid:24)(cid:28)(cid:23)(cid:15)(cid:25)(cid:27)(cid:28)
(cid:25)(cid:26)(cid:15)(cid:25)(cid:28)(cid:20)(cid:15)(cid:25)(cid:24)(cid:27)
(cid:20)(cid:17)(cid:25)(cid:28)
$
$
$
$
$
502,753
10,143
1,945
13,183
5,708
18,891
182,923
2,184
185,107
3,611
7,040
2,749
732,239
50,683
7,672
8,690
67,045
665,194
—
665,194
134,437
123,689
115,652
90,911
109,093
9,086
38,451
621,319
2,953
2,776
10,189
(16,445)
1,539
(373)
—
(373)
621,958
476,931
26,649
4,267
44,440
77,232
18,578
115,225
13,518
6,019
3,965
31,705
28,993
847,522
439,630
144,151
295,479
3,044
292,435
4.23
4.22
68,394,194
68,544,770
1.62
$
$
$
$
$
498,600
8,505
1,962
14,260
4,781
19,041
204,830
2,380
207,210
3,907
5,071
1,075
745,371
55,564
6,589
8,741
70,894
674,477
(27,900)
702,377
125,478
116,823
96,082
95,110
121,934
10,155
38,262
603,844
4,875
(4,367)
(15,212)
22,720
10,720
(2,574)
266
(2,308)
620,272
505,225
22,598
2,062
32,552
69,773
16,122
105,967
13,885
5,160
3,428
31,196
32,652
840,620
482,029
163,098
318,931
2,322
316,609
4.61
4.59
67,988,897
68,205,519
1.54
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)
(In thousands)
Net income
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)
Reclassification adjustments included in earnings:
Interest revenue, Investments securities, Taxable securities
Interest expense, Subordinated debentures
Net impairment losses recognized in earnings
Gain on available for sale securities, net
Other comprehensive income (loss), before income taxes
Federal and state income taxes
Other comprehensive income (loss), net of income taxes
Comprehensive income
Comprehensive income attributable to non-controlling interests
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:28)(cid:21)(cid:15)(cid:21)(cid:24)(cid:28)
$
(cid:21)(cid:19)(cid:20)(cid:23)
295,479
(cid:21)(cid:19)(cid:20)(cid:22)
318,931
$
(cid:7)
(cid:3)
(cid:11)(cid:23)(cid:25)(cid:15)(cid:27)(cid:19)(cid:22)(cid:12)
136,775
(275,945)
(cid:11)(cid:24)(cid:19)(cid:22)(cid:12)
(cid:20)(cid:21)(cid:20)
(cid:20)(cid:15)(cid:27)(cid:20)(cid:28)
(cid:11)(cid:20)(cid:21)(cid:15)(cid:19)(cid:24)(cid:27)(cid:12)
(cid:11)(cid:24)(cid:26)(cid:15)(cid:23)(cid:21)(cid:23)(cid:12)
(cid:11)(cid:21)(cid:21)(cid:15)(cid:22)(cid:22)(cid:27)(cid:12)
(cid:11)(cid:22)(cid:24)(cid:15)(cid:19)(cid:27)(cid:25)(cid:12)
(cid:21)(cid:24)(cid:26)(cid:15)(cid:20)(cid:26)(cid:22)
(cid:22)(cid:15)(cid:25)(cid:28)(cid:23)
(1,216)
(3,210)
296
373
262
2,308
(1,539)
(10,720)
134,689
52,393
(cid:27)(cid:21)(cid:15)(cid:21)(cid:28)(cid:25)
377,775
3,044
(287,305)
(111,762)
(cid:11)(cid:20)(cid:26)(cid:24)(cid:15)(cid:24)(cid:23)(cid:22)(cid:12)
143,388
2,322
Comprehensive income attributable to BOK Financial Corp. shareholders
(cid:7)
(cid:21)(cid:24)(cid:22)(cid:15)(cid:23)(cid:26)(cid:28)
$
374,731
$
141,066
See accompanying notes to consolidated financial statements.
80
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:75)(cid:72)(cid:72)(cid:87)(cid:86)
(In thousands, except share data)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
Cash and due from banks
Interest-bearing cash and cash equivalents
Trading securities
Investment securities (fair value(cid:29)(cid:3)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:177)(cid:3)(cid:7)(cid:25)(cid:21)(cid:28)(cid:15)(cid:20)(cid:24)(cid:28)(cid:30)(cid:3)2014 – $673,626)
Available for sale securities
Fair value option securities
Restricted equity securities
Residential mortgage loans held for sale
Loans
Allowance for loan losses
Loans, net of allowance
Premises and equipment, net
Receivables
Goodwill
Intangible assets, net
Mortgage servicing rights
Real estate and other repossessed assets, net of allowance ((cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:177)(cid:3)(cid:7)(cid:20)(cid:21)(cid:15)(cid:25)(cid:21)(cid:21); 2014 – $22,937)
Derivative contracts
Cash surrender value of bank-owned life insurance
Receivable on unsettled securities sales
Other assets
Total assets
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Liabilities:
Noninterest-bearing demand deposits
Interest-bearing deposits:
Transaction
Savings
Time
Total deposits
Funds purchased
Repurchase agreements
Other borrowings
Subordinated debentures
Accrued interest, taxes and expense
Derivative contracts
Due on unsettled securities purchases
Other liabilities
Total liabilities
Shareholders' equity:
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: (cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:177)(cid:3)
(cid:26)(cid:23)(cid:15)(cid:24)(cid:22)(cid:19)(cid:15)(cid:22)(cid:25)(cid:23)(cid:30) 2014 – 74,003,754)
Capital surplus
Retained earnings
Treasury stock (shares at cost: (cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:177)(cid:3)(cid:27)(cid:15)(cid:25)(cid:22)(cid:25)(cid:15)(cid:22)(cid:22)(cid:21); 2014 – 4,890,018)
Accumulated other comprehensive income
Total shareholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
81
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:24)(cid:26)(cid:22)(cid:15)(cid:25)(cid:28)(cid:28)
(cid:21)(cid:15)(cid:19)(cid:25)(cid:28)(cid:15)(cid:28)(cid:19)(cid:19)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:23)(cid:19)(cid:23)
(cid:24)(cid:28)(cid:26)(cid:15)(cid:27)(cid:22)(cid:25)
(cid:28)(cid:15)(cid:19)(cid:23)(cid:21)(cid:15)(cid:26)(cid:22)(cid:22)
(cid:23)(cid:23)(cid:23)(cid:15)(cid:21)(cid:20)(cid:26)
(cid:21)(cid:26)(cid:22)(cid:15)(cid:25)(cid:27)(cid:23)
(cid:22)(cid:19)(cid:27)(cid:15)(cid:23)(cid:22)(cid:28)
(cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
(cid:11)(cid:21)(cid:21)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)(cid:12)
(cid:20)(cid:24)(cid:15)(cid:26)(cid:20)(cid:24)(cid:15)(cid:25)(cid:22)(cid:19)
(cid:22)(cid:19)(cid:25)(cid:15)(cid:23)(cid:28)(cid:19)
(cid:20)(cid:25)(cid:22)(cid:15)(cid:23)(cid:27)(cid:19)
(cid:22)(cid:27)(cid:24)(cid:15)(cid:23)(cid:25)(cid:20)
(cid:23)(cid:22)(cid:15)(cid:28)(cid:19)(cid:28)
(cid:21)(cid:20)(cid:27)(cid:15)(cid:25)(cid:19)(cid:24)
(cid:22)(cid:19)(cid:15)(cid:26)(cid:22)(cid:20)
(cid:24)(cid:27)(cid:25)(cid:15)(cid:21)(cid:26)(cid:19)
(cid:22)(cid:19)(cid:22)(cid:15)(cid:22)(cid:22)(cid:24)
(cid:23)(cid:19)(cid:15)(cid:20)(cid:28)(cid:22)
(cid:21)(cid:23)(cid:28)(cid:15)(cid:20)(cid:20)(cid:21)
(cid:22)(cid:20)(cid:15)(cid:23)(cid:26)(cid:25)(cid:15)(cid:20)(cid:21)(cid:27)
$
$
550,576
1,925,266
188,700
652,360
8,978,945
311,597
141,494
304,182
14,208,037
(189,056)
14,018,981
273,833
132,408
377,780
34,376
171,976
101,861
361,874
293,978
74,259
195,252
29,089,698
(cid:27)(cid:15)(cid:21)(cid:28)(cid:25)(cid:15)(cid:27)(cid:27)(cid:27)
$
8,066,357
(cid:28)(cid:15)(cid:28)(cid:28)(cid:27)(cid:15)(cid:28)(cid:24)(cid:23)
(cid:22)(cid:27)(cid:25)(cid:15)(cid:21)(cid:24)(cid:21)
(cid:21)(cid:15)(cid:23)(cid:19)(cid:25)(cid:15)(cid:19)(cid:25)(cid:23)
(cid:21)(cid:20)(cid:15)(cid:19)(cid:27)(cid:27)(cid:15)(cid:20)(cid:24)(cid:27)
(cid:23)(cid:28)(cid:20)(cid:15)(cid:20)(cid:28)(cid:21)
(cid:26)(cid:21)(cid:21)(cid:15)(cid:23)(cid:23)(cid:23)
(cid:23)(cid:15)(cid:27)(cid:22)(cid:26)(cid:15)(cid:27)(cid:26)(cid:28)
(cid:21)(cid:21)(cid:25)(cid:15)(cid:22)(cid:24)(cid:19)
(cid:20)(cid:20)(cid:28)(cid:15)(cid:24)(cid:27)(cid:23)
(cid:24)(cid:27)(cid:20)(cid:15)(cid:26)(cid:19)(cid:20)
(cid:20)(cid:25)(cid:15)(cid:27)(cid:28)(cid:26)
(cid:20)(cid:21)(cid:23)(cid:15)(cid:21)(cid:27)(cid:23)
(cid:21)(cid:27)(cid:15)(cid:21)(cid:19)(cid:27)(cid:15)(cid:23)(cid:27)(cid:28)
(cid:23)
(cid:28)(cid:27)(cid:21)(cid:15)(cid:19)(cid:19)(cid:28)
(cid:21)(cid:15)(cid:26)(cid:19)(cid:23)(cid:15)(cid:20)(cid:21)(cid:20)
(cid:11)(cid:23)(cid:26)(cid:26)(cid:15)(cid:20)(cid:25)(cid:24)(cid:12)
(cid:21)(cid:20)(cid:15)(cid:24)(cid:27)(cid:26)
(cid:22)(cid:15)(cid:21)(cid:22)(cid:19)(cid:15)(cid:24)(cid:24)(cid:25)
(cid:22)(cid:26)(cid:15)(cid:19)(cid:27)(cid:22)
(cid:22)(cid:15)(cid:21)(cid:25)(cid:26)(cid:15)(cid:25)(cid:22)(cid:28)
(cid:22)(cid:20)(cid:15)(cid:23)(cid:26)(cid:25)(cid:15)(cid:20)(cid:21)(cid:27)
$
10,114,355
351,431
2,608,716
21,140,859
57,031
1,187,489
2,133,774
347,983
120,211
354,554
290,540
121,051
25,753,492
4
954,644
2,530,837
(239,979)
56,673
3,302,179
34,027
3,336,206
29,089,698
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
(In thousands)
(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)
(cid:55)(cid:85)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:92)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)
(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)
(cid:54)(cid:88)(cid:85)(cid:83)(cid:79)(cid:88)(cid:86)
(cid:53)(cid:72)(cid:87)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)
(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)
(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)
(cid:36)(cid:70)(cid:70)(cid:88)(cid:80)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:38)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)
(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)
(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
(cid:49)(cid:82)(cid:81)(cid:16)
(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:86)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
$859,278
$2,137,541
4,088
$ (188,883) $
149,920
$
2,957,860
$
35,821
$2,993,681
—
(175,543)
316,609
(175,543)
898,586
2,349,428
4,305
(202,346)
(25,623)
3,020,049
34,924
3,054,973
—
(3,219)
(3,219)
—
292,435
3,044
295,479
82,296
82,296
Balance, December 31,
2012
Net income
Other comprehensive loss
Repurchase of common
stock
Issuance of shares for
equity compensation,
net
Tax effect from equity
compensation, net
Share-based compensation
Cash dividends on
common stock
Capital calls and
distributions, net
Balance, December 31,
2013
Net income
Other comprehensive
income
Repurchase of common
stock
Issuance of shares for
equity compensation,
net
Tax effect from equity
compensation, net
Share-based compensation
Issuance of shares in
settlement of deferred
compensation, net
Cash dividends on
common stock
Capital calls and
distributions, net
Balance, December 31,
2014
Net income
Other comprehensive
income
Repurchase of common
stock
Issuance of shares for
equity compensation,
net
Tax effect from equity
compensation, net
Share-based compensation
Cash dividends on
common stock
Sale of non-controlling
interest
Capital calls and
distributions, net
Balance, December 31,
2015
72,415
$
—
—
—
748
—
—
—
—
73,163
—
—
—
510
—
—
331
—
—
74,004
(cid:178)
(cid:178)
(cid:178)
(cid:24)(cid:21)(cid:25)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
4
—
—
—
—
—
—
—
—
4
—
—
—
—
—
—
—
—
—
4
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
—
—
—
30,029
2,210
7,069
316,609
—
—
—
—
—
—
—
(104,722)
—
—
—
—
—
—
—
217
(13,463)
—
—
—
—
—
—
—
—
—
—
—
16,632
8,258
9,680
292,435
—
—
—
—
—
—
—
—
—
200
(12,337)
183
(12,160)
—
—
—
—
21,488
—
202
(13,136)
—
—
(111,026)
—
—
—
—
—
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:23)(cid:15)(cid:22)(cid:24)(cid:26)
(cid:28)(cid:21)(cid:24)
(cid:20)(cid:21)(cid:15)(cid:19)(cid:27)(cid:22)
(cid:178)
(cid:178)
(cid:178)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178) (cid:22)(cid:15)(cid:25)(cid:22)(cid:23)
(cid:11)(cid:21)(cid:21)(cid:28)(cid:15)(cid:24)(cid:23)(cid:19)(cid:12)
(cid:178)
(cid:178)
(cid:178)
(cid:11)(cid:20)(cid:20)(cid:24)(cid:15)(cid:21)(cid:27)(cid:20)(cid:12)
(cid:178)
(cid:20)(cid:20)(cid:21)
(cid:11)(cid:26)(cid:15)(cid:25)(cid:23)(cid:25)(cid:12)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
2,322
318,931
—
—
—
—
—
—
(175,543)
—
16,566
2,210
7,069
(104,722)
—
—
—
—
—
—
—
82,296
(12,337)
4,472
8,258
9,680
8,352
(111,026)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:11)(cid:22)(cid:24)(cid:15)(cid:19)(cid:27)(cid:25)(cid:12)
(cid:11)(cid:21)(cid:21)(cid:28)(cid:15)(cid:24)(cid:23)(cid:19)(cid:12)
(cid:25)(cid:15)(cid:26)(cid:20)(cid:20)
(cid:28)(cid:21)(cid:24)
(cid:20)(cid:21)(cid:15)(cid:19)(cid:27)(cid:22)
(cid:11)(cid:20)(cid:20)(cid:24)(cid:15)(cid:21)(cid:27)(cid:20)(cid:12)
—
16,566
2,210
7,069
(104,722)
(12,337)
4,472
8,258
9,680
8,352
(111,026)
(cid:11)(cid:21)(cid:21)(cid:28)(cid:15)(cid:24)(cid:23)(cid:19)(cid:12)
(cid:25)(cid:15)(cid:26)(cid:20)(cid:20)
(cid:28)(cid:21)(cid:24)
(cid:20)(cid:21)(cid:15)(cid:19)(cid:27)(cid:22)
(cid:11)(cid:20)(cid:20)(cid:24)(cid:15)(cid:21)(cid:27)(cid:20)(cid:12)
(cid:178)
(cid:178)
(cid:24)(cid:15)(cid:24)(cid:19)(cid:19)
(cid:24)(cid:15)(cid:24)(cid:19)(cid:19)
(cid:11)(cid:25)(cid:15)(cid:20)(cid:22)(cid:27)(cid:12)
(cid:11)(cid:25)(cid:15)(cid:20)(cid:22)(cid:27)(cid:12)
—
—
—
—
—
—
—
—
—
—
—
—
—
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
954,644
2,530,837
4,890
(239,979)
56,673
3,302,179
34,027
3,336,206
—
(3,941)
(3,941)
(cid:178)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
(cid:22)(cid:15)(cid:25)(cid:28)(cid:23)
(cid:21)(cid:28)(cid:21)(cid:15)(cid:21)(cid:24)(cid:28)
(cid:11)(cid:22)(cid:24)(cid:15)(cid:19)(cid:27)(cid:25)(cid:12)
(cid:11)(cid:22)(cid:24)(cid:15)(cid:19)(cid:27)(cid:25)(cid:12)
(cid:26)(cid:23)(cid:15)(cid:24)(cid:22)(cid:19)
(cid:7)
(cid:23)
(cid:7)(cid:28)(cid:27)(cid:21)(cid:15)(cid:19)(cid:19)(cid:28)
(cid:7)(cid:21)(cid:15)(cid:26)(cid:19)(cid:23)(cid:15)(cid:20)(cid:21)(cid:20)
(cid:27)(cid:15)(cid:25)(cid:22)(cid:25)
(cid:7) (cid:11)(cid:23)(cid:26)(cid:26)(cid:15)(cid:20)(cid:25)(cid:24)(cid:12) (cid:7)
(cid:21)(cid:20)(cid:15)(cid:24)(cid:27)(cid:26)
(cid:7)
(cid:22)(cid:15)(cid:21)(cid:22)(cid:19)(cid:15)(cid:24)(cid:24)(cid:25)
(cid:7)
(cid:22)(cid:26)(cid:15)(cid:19)(cid:27)(cid:22)
(cid:7)(cid:22)(cid:15)(cid:21)(cid:25)(cid:26)(cid:15)(cid:25)(cid:22)(cid:28)
See accompanying notes to consolidated financial statements.
82
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)
(In thousands)
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:41)(cid:85)(cid:82)(cid:80)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:29)
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses
Change in fair value of mortgage servicing rights
Unrealized losses (gains) from derivative contracts
Depreciation and amortization
Change in bank-owned life insurance
Tax effect from equity compensation, net
Share-based compensation
Net amortization of securities discounts and premiums
Net realized losses (gains) on financial instruments and other assets
Net gain on mortgage loans held for sale
Mortgage loans originated for sale
Proceeds from sale of mortgage loans held for sale
Capitalized mortgage servicing rights
Change in trading and fair value option securities
Change in receivables
Change in other assets
Change in accrued interest, taxes and expense
Change in other liabilities
(cid:49)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:11)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:12)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:41)(cid:85)(cid:82)(cid:80)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:29)
Proceeds from sales of available for sale securities
Proceeds from maturities or redemptions of investment securities
Proceeds from maturities or redemptions of available for sale securities
Purchases of investment securities
Purchases of available for sale securities
Change in amount receivable on unsettled securities sales
Loans originated, net of principal collected
Net payments on derivative asset contracts
Proceeds from disposition of assets
Acquisitions, net of cash acquired
Purchases of assets
Net cash provided by (used in) investing activities
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:41)(cid:85)(cid:82)(cid:80)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:29)
Net change in demand deposits, transaction deposits and savings accounts
Net change in time deposits
Net change in other borrowed funds
Repayment of subordinated debentures
Change in amount due on unsettled security purchases
Issuance of common and treasury stock, net
Net change in derivative margin accounts
Net payments or proceeds on derivative liability contracts
Tax effect from equity compensation, net
Sale of non-controlling interests
Repurchase of common stock
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:69)(cid:72)(cid:74)(cid:76)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:72)(cid:81)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)
83
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:21)(cid:28)(cid:21)(cid:15)(cid:21)(cid:24)(cid:28)
$
295,479
$
318,931
(cid:22)(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:23)(cid:15)(cid:27)(cid:24)(cid:22)
(cid:28)(cid:25)(cid:23)
(cid:25)(cid:24)(cid:15)(cid:28)(cid:27)(cid:21)
(cid:11)(cid:28)(cid:15)(cid:22)(cid:19)(cid:23)(cid:12)
(cid:11)(cid:28)(cid:21)(cid:24)(cid:12)
(cid:20)(cid:21)(cid:15)(cid:19)(cid:27)(cid:22)
(cid:24)(cid:24)(cid:15)(cid:20)(cid:23)(cid:24)
(cid:11)(cid:20)(cid:24)(cid:15)(cid:21)(cid:20)(cid:21)(cid:12)
(cid:11)(cid:26)(cid:24)(cid:15)(cid:26)(cid:27)(cid:19)(cid:12)
(cid:11)(cid:25)(cid:15)(cid:22)(cid:26)(cid:21)(cid:15)(cid:28)(cid:24)(cid:25)(cid:12)
(cid:25)(cid:15)(cid:23)(cid:23)(cid:25)(cid:15)(cid:25)(cid:24)(cid:28)
(cid:11)(cid:26)(cid:28)(cid:15)(cid:24)(cid:23)(cid:25)(cid:12)
(cid:11)(cid:25)(cid:28)(cid:15)(cid:21)(cid:28)(cid:27)(cid:12)
(cid:11)(cid:25)(cid:15)(cid:28)(cid:23)(cid:22)(cid:12)
(cid:11)(cid:21)(cid:19)(cid:15)(cid:21)(cid:23)(cid:23)(cid:12)
(cid:20)(cid:26)(cid:15)(cid:24)(cid:20)(cid:26)
(cid:20)(cid:24)(cid:15)(cid:26)(cid:24)(cid:25)
(cid:21)(cid:28)(cid:24)(cid:15)(cid:19)(cid:20)(cid:19)
(cid:20)(cid:15)(cid:25)(cid:19)(cid:19)(cid:15)(cid:22)(cid:27)(cid:19)
(cid:26)(cid:21)(cid:15)(cid:25)(cid:25)(cid:23)
(cid:20)(cid:15)(cid:24)(cid:23)(cid:21)(cid:15)(cid:24)(cid:20)(cid:26)
(cid:11)(cid:21)(cid:24)(cid:15)(cid:20)(cid:22)(cid:21)(cid:12)
(cid:11)(cid:22)(cid:15)(cid:22)(cid:19)(cid:19)(cid:15)(cid:25)(cid:19)(cid:20)(cid:12)
(cid:22)(cid:23)(cid:15)(cid:19)(cid:25)(cid:25)
(cid:11)(cid:20)(cid:15)(cid:25)(cid:27)(cid:20)(cid:15)(cid:19)(cid:22)(cid:24)(cid:12)
(cid:11)(cid:20)(cid:24)(cid:25)(cid:15)(cid:23)(cid:20)(cid:28)(cid:12)
(cid:20)(cid:28)(cid:24)(cid:15)(cid:26)(cid:25)(cid:19)
(cid:11)(cid:20)(cid:27)(cid:15)(cid:19)(cid:28)(cid:27)(cid:12)
(cid:11)(cid:21)(cid:25)(cid:24)(cid:15)(cid:23)(cid:19)(cid:25)(cid:12)
(cid:11)(cid:21)(cid:15)(cid:19)(cid:19)(cid:20)(cid:15)(cid:22)(cid:19)(cid:23)(cid:12)
(cid:20)(cid:23)(cid:28)(cid:15)(cid:28)(cid:24)(cid:20)
(cid:11)(cid:21)(cid:19)(cid:21)(cid:15)(cid:25)(cid:24)(cid:21)(cid:12)
(cid:21)(cid:15)(cid:24)(cid:23)(cid:26)(cid:15)(cid:25)(cid:27)(cid:27)
(cid:11)(cid:20)(cid:21)(cid:20)(cid:15)(cid:27)(cid:20)(cid:19)(cid:12)
(cid:11)(cid:21)(cid:26)(cid:22)(cid:15)(cid:25)(cid:23)(cid:22)(cid:12)
(cid:25)(cid:15)(cid:26)(cid:20)(cid:20)
(cid:11)(cid:23)(cid:22)(cid:15)(cid:21)(cid:21)(cid:25)(cid:12)
(cid:20)(cid:23)(cid:28)(cid:15)(cid:23)(cid:21)(cid:27)
(cid:28)(cid:21)(cid:24)
(cid:24)(cid:15)(cid:24)(cid:19)(cid:19)
(cid:11)(cid:21)(cid:21)(cid:28)(cid:15)(cid:24)(cid:23)(cid:19)(cid:12)
(cid:11)(cid:20)(cid:20)(cid:24)(cid:15)(cid:21)(cid:27)(cid:20)(cid:12)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:23)(cid:15)(cid:19)(cid:24)(cid:20)
(cid:20)(cid:25)(cid:26)(cid:15)(cid:26)(cid:24)(cid:26)
(cid:21)(cid:15)(cid:23)(cid:26)(cid:24)(cid:15)(cid:27)(cid:23)(cid:21)
(cid:21)(cid:15)(cid:25)(cid:23)(cid:22)(cid:15)(cid:24)(cid:28)(cid:28)
—
16,445
(6,495)
56,032
(9,086)
(8,258)
9,680
57,202
(1,362)
(62,053)
(4,484,394)
4,441,819
(54,413)
(243,265)
(7,103)
77,907
(115,772)
1,007
(36,630)
2,664,740
63,258
1,635,533
(44,723)
(3,045,077)
(57,085)
(1,346,995)
(247,726)
273,271
(21,898)
(307,318)
(434,020)
958,809
(87,277)
511,776
—
244,800
4,472
84,365
257,439
8,258
—
(12,337)
(111,026)
1,859,279
1,388,629
1,087,213
2,475,842
(27,900)
(22,720)
16,256
53,261
(10,155)
(2,210)
7,069
62,274
(12,586)
(84,403)
(4,081,390)
4,254,151
(49,431)
237,581
(3,122)
76,257
18,192
(13,735)
736,320
2,436,093
143,445
2,650,045
(326,815)
(4,287,146)
193,878
(441,474)
59,390
229,405
(7,500)
(212,292)
437,029
(637,734)
(271,999)
(111,905)
—
(251,713)
16,566
51,646
(64,724)
2,210
—
—
(104,722)
(1,372,375)
(199,026)
1,286,239
1,087,213
$
$
$
$
(cid:7)
(cid:7)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)
(In thousands)
(cid:54)(cid:88)(cid:83)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:29)
Cash paid for interest
Cash paid for taxes
Net loans and bank premises transferred to repossessed real estate and other assets
Residential mortgage loans guaranteed by U.S. government agencies that became eligible
for repurchase during the period
Conveyance of other real estate owned guaranteed by U.S. government agencies
Issuance of shares in settlement of accrued executive compensation
See accompanying notes to consolidated financial statements.
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:25)(cid:25)(cid:15)(cid:19)(cid:28)(cid:20)
(cid:20)(cid:19)(cid:20)(cid:15)(cid:28)(cid:28)(cid:20)
(cid:20)(cid:21)(cid:15)(cid:24)(cid:28)(cid:21)
$
$
$
(cid:20)(cid:21)(cid:22)(cid:15)(cid:22)(cid:27)(cid:22)
(cid:20)(cid:20)(cid:19)(cid:15)(cid:24)(cid:19)(cid:24)
$
$
(cid:178) $
65,721
67,199
79,464
144,630
44,963
8,352
$
$
$
$
$
$
69,830
132,176
86,868
127,572
43,901
—
84
(cid:49)(cid:82)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:11)(cid:20)(cid:12)(cid:3)(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:51)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)
Basis of Presentation
The Consolidated Financial Statements of BOK Financial Corporation (“BOK Financial” or “the Company”) have been
prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"), including
interpretations of U.S. GAAP issued by federal banking regulators and general practices of the banking industry. The
consolidated financial statements include the accounts of BOK Financial and its subsidiaries, principally BOKF, NA (“the
Bank”), BOSC, Inc., The Milestone Group, Inc. and Cavanal Hill Investment Management, Inc. All significant intercompany
transactions are eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year
presentation.
The consolidated financial statements include the assets, liabilities, non-controlling interests and results of operations of
variable interest entities (“VIEs”) when BOK Financial is determined to be the primary beneficiary. Variable interest entities
are generally defined as entities that either do not have sufficient equity to finance their activities without support from other
parties or whose equity investors lack a controlling financial interest. See additional discussion of variable interest entities at
Note 14 following.
Nature of Operations
BOK Financial, through its subsidiaries, provides a wide range of financial services to commercial and industrial customers,
other financial institutions, municipalities, and consumers. These services include depository and cash management; lending
and lease financing; mortgage banking; securities brokerage, trading and underwriting; and personal and corporate trust.
The Bank operates as Bank of Oklahoma primarily in Tulsa and Oklahoma City metropolitan areas of the state of Oklahoma
and Bank of Texas primarily in the Dallas, Fort Worth and Houston metropolitan areas of the state of Texas. In addition, the
Bank does business as Bank of Albuquerque in Albuquerque, New Mexico; Colorado State Bank and Trust in Denver,
Colorado; Bank of Arizona in Phoenix, Arizona; Bank of Kansas City in Kansas City, Missouri/Kansas and Bank of Arkansas
in Northwest Arkansas. The Bank also operates the TransFund electronic funds network.
Use of Estimates
Preparation of BOK Financial's consolidated financial statements requires management to make estimates of future economic
activities, including loan collectability, prepayments and cash flows from customer accounts. These estimates are based upon
current conditions and information available to management. Actual results may differ significantly from these estimates.
Acquisitions
Assets and liabilities acquired, including identifiable intangible assets, are recorded at fair value on the acquisition date. The
purchase price includes consideration paid at closing and the estimated fair value of contingent consideration that will be paid
in the future, subject to achieving defined performance criteria. Goodwill is recognized as the excess of the purchase price over
the net fair value of assets acquired and liabilities assumed. The Consolidated Statements of Earnings include the results of
operations from the acquisition date.
Goodwill and Intangible Assets
Goodwill and intangible assets generally result from business combinations and are evaluated for each of BOK Financial's
reporting units for impairment annually or more frequently if conditions indicate impairment. The evaluation of possible
impairment of goodwill and intangible assets involves significant judgment based upon short-term and long-term projections of
future performance.
85
Reporting units are defined by the Company as significant lines of business within each operating segment. This definition is
consistent with the manner in which the chief operating decision maker assesses the performance of the Company and makes
decisions concerning the allocation of resources. The Company qualitatively assesses whether it is more likely than not that the
fair value of the reporting units are less than their carrying value. This assessment includes consideration of relevant events and
circumstances including but not limited to macroeconomic conditions, industry and market conditions, the financial and stock
performance of the Company and other relevant factors.
If the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying
amount through the qualitative assessment, a quantitative Step 1 analysis is performed. The quantitative analysis compares the
fair value of the reporting unit with its carrying value, including goodwill. The fair value of each reporting unit is estimated by
the discounted future earnings method. Goodwill is considered impaired if the fair value of the reporting unit is less than the
carrying value of the reporting unit, including goodwill. Impairment is measured through a detailed Step 2 assessment of the
fair values for each asset and liability assigned to the reporting unit performed in a manner similar to a business combination.
Intangible assets are generally composed of customer relationships, naming rights, non-compete agreements and core deposit
premiums. They are amortized using accelerated or straight-line methods, as appropriate, over the estimated benefit periods.
These periods range from 3 years to 20 years. The net book values of identifiable intangible assets are evaluated for impairment
when economic conditions indicate impairment may exist.
Cash Equivalents
Due from banks, funds sold (generally federal funds sold for one day), resell agreements (which generally mature within one to
30 days) and investments in money market funds are considered cash equivalents.
Securities
Securities are identified as trading, investment (held to maturity) or available for sale at the time of purchase based upon the
intent of management, liquidity and capital requirements, regulatory limitations and other relevant factors. Trading securities,
which are acquired for profit through resale, are carried at fair value with unrealized gains and losses included in current period
earnings. Investment securities are carried at amortized cost. Amortization is computed by methods that approximate level yield
and is adjusted for changes in prepayment estimates. Securities identified as available for sale are carried at fair value.
Unrealized gains and losses are recorded, net of deferred income taxes, as accumulated other comprehensive income in
shareholders' equity. Available for sale securities are separately identified as pledged to creditors if the creditor has the right to
sell or re-pledge the collateral.
The purchase or sale of securities is recognized on a trade date basis. Realized gains and losses on sales of securities are based
upon specific identification of the security sold. A receivable or payable is recognized for subsequent transaction settlement.
BOK Financial will periodically commit to purchase to-be-announced residential mortgage-backed securities. These
commitments are carried at fair value if they are considered derivative contracts. Investment securities may be sold or
transferred to trading or available for sale classification in certain limited circumstances specified in generally accepted
accounting principles. Securities meeting certain criteria may also be transferred from the available for sale classification to the
investment securities portfolio at fair value on the date of transfer. The unrealized gain or loss at the date of transfer is retained
in accumulated other comprehensive income and in the carrying value of the investment securities portfolio. Such amounts are
amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related amortization of the
premium or accretion of the discount on the transferred securities.
On a quarterly basis, the Company performs separate evaluations of impaired debt investment and available for sale securities
and equity available for sale securities to determine if the decline in fair value below the amortized cost is other-than-
temporary.
For debt securities, management determines whether it intends to sell or if it is more likely than not that it will be required to
sell impaired securities. This determination considers current and forecasted liquidity requirements and securities portfolio
management. If the Company intends to sell or it is more likely than not that it will be required to sell the impaired debt
security, a charge is recognized against earnings for the entire unrealized loss. For all impaired debt securities for which there is
no intent or expected requirement to sell, the evaluation considers all available evidence to assess whether it is more likely than
not that all amounts due would not be collected according to the security's contractual terms. Any expected credit loss due to
the inability to collect all amounts due according to the security's contractual terms is recognized as a charge against
earnings. Any remaining unrealized loss related to other factors would be recognized in other comprehensive income, net of
taxes.
86
For equity securities, management evaluates various factors including cause, severity and duration of the decline in value of the
security and prospects for recovery, as well as the Company's intent and ability not to sell the security until the fair value
exceeds amortized cost. If an unrealized loss is determined to be other-than-temporary, a charge is recognized against earnings
for the difference between the security's amortized cost and fair value.
BOK Financial has elected to carry certain non-trading securities at fair value with changes in fair value recognized in current
period income. These securities are held with the intent that gains or losses will offset changes in the fair value of mortgage
servicing rights or certain derivative instruments.
Restricted equity securities represent equity interests the Company is required to hold in the Federal Reserve Banks and Federal
Home Loan Banks. Restricted equity securities are carried at cost as these securities do not have a readily determined fair value
because ownership of these shares is restricted and they lack a market.
Derivative Instruments
Derivative instruments may be used by the Company as part of its interest rate risk management programs or may be offered to
customers. All derivative instruments are carried at fair value. The determination of fair value of derivative instruments
considers changes in interest rates, commodity prices and foreign exchange rates. Credit risk is also considered in determining
fair value. Deterioration in the credit rating of customers or other counterparties reduces the fair value of asset
contracts. Deterioration of our credit rating to below investment grade or the credit ratings of other counterparties could
decrease the fair value of our derivative liabilities. Changes in fair value are generally reported in income as they occur.
Derivative instruments used to manage interest rate risk consist primarily of interest rate swaps. These contracts modify the
interest income or expense of certain assets or liabilities. Amounts receivable from or payable to counterparties are reported in
interest income or expense using the accrual method. Changes in fair value of interest rate swaps are reported in other operating
revenue - gain (loss) on derivatives, net.
Derivative instruments may be designated as cash flow hedges of variable rate assets or liabilities, or of anticipated
transactions. Changes in the fair value of derivative instruments designated as cash flow hedges are recorded in accumulated
other comprehensive income to the extent they are effective. The amount recorded in other comprehensive income is
reclassified to earnings in the same periods as the hedged cash flows impact earnings. The ineffective portion of changes in fair
value is reported in current earnings.
If a derivative instrument that had been designated as a fair value hedge is terminated or if the hedge designation is removed or
deemed to no longer be effective, the difference between the hedged items carrying value and its face amount is recognized into
income over the remaining original hedge period. Similarly, if a derivative instrument that had been designated as a cash flow
hedge is terminated or if the hedge designation is removed or deemed to no longer be effective, the amount remaining in
accumulated other comprehensive income is reclassified to earnings in the same period as the hedged item.
BOK Financial also enters into mortgage loan commitments that are considered derivative contracts that have not been
designated as hedging instruments. Forward sales contracts are used to hedge these mortgage loan commitments as well as
mortgage loans held for sale. Mortgage loan commitments are carried at fair value based upon quoted prices. Changes in fair
value of mortgage loans held for sale are reported in Other Operating Revenue - Mortgage Banking Revenue.
BOK Financial offers programs that permit its customers to manage various risks, including fluctuations in energy, cattle and
other agricultural products, interest rates and foreign exchanges rates with derivative contracts. Derivative contracts are
executed between the customers and BOK Financial. Offsetting contracts are executed between BOK Financial and other
selected counterparties to minimize market risk from changes in commodity prices, interest rates or foreign exchange rates. The
counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to BOK Financial as
profit and compensation for administrative costs and credit risk which is recognized over the life of the contracts and included
in other operating revenue - brokerage and trading revenue in the Consolidated Statements of Earnings.
When bilateral netting agreements exist between the Company and its counterparties that create a single legal claim or
obligation to pay or receive the net amount in settlement of the individual derivative contracts, the Company reports derivative
assets and liabilities on a net by derivative contract by counterparty basis.
87
Derivative contracts may also require the Company to provide or receive cash margin as collateral for derivative assets and
liabilities. Derivative assets and liabilities are reported net of cash margin when certain conditions are met. In addition,
derivative contracts executed with customers under Customer Risk Management Programs may be secured by non-cash
collateral in conjunction with a credit agreement with that customer. Access to collateral, in the event of default is reasonably
assured.
Loans
Loans are either secured or unsecured based on the type of loan and the financial condition of the borrower. Repayment is
generally expected from cash flow or proceeds from the sale of selected assets of the borrower. BOK Financial is exposed to
risk of loss on loans due to the borrower's financial difficulties, which may arise from any number of factors, including
problems within the respective industry or local economic conditions. Access to collateral, in the event of borrower default, is
reasonably assured through adherence to applicable lending laws and through sound lending standards and credit review
procedures. Accounting policies for all loans, excluding residential loans guaranteed by U.S. government agencies, are as
follows.
Interest is accrued at the applicable interest rate on the outstanding principal amount. Loans are placed on nonaccruing status
when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are
individually evaluated for nonaccruing status quarterly. Non-risk graded loans are generally placed on nonaccruing status when
90 days or more past due or within 60 days of being notified of the borrower's bankruptcy filing. Interest previously accrued
but not collected is charged against interest income when the loan is placed on nonaccruing status. Payments received on
nonaccruing loans are applied to principal or recognized as interest income, according to management's judgment as to the
collectability of principal. Loans may be returned to accruing status when, in the opinion of management, full collection of
principal and interest, including principal previously charged off, is probable based on improvements in the borrower's financial
condition or a sustained period of performance.
Loans to borrowers experiencing financial difficulties may be modified in troubled debt restructurings ("TDRs"). All TDRs are
classified as nonaccruing. Modifications generally consist of extension of payment terms or interest rate concessions and may
result either voluntarily through negotiations with the borrower or involuntarily through court order. Generally, principal and
accrued but unpaid interest is not voluntarily forgiven.
Performing loans may be renewed under the current collateral, debt service ratio and other underwriting standards.
Nonaccruing loans may also be renewed and will remain classified as nonaccruing.
Occasionally, loans, other than residential mortgage loans, may be held for sale in order to manage credit concentration. These
loans are carried at the lower of cost or fair value with gains or losses recognized in gain (loss) on assets.
All loans are charged-off when the loan balance or a portion of the loan balance is no longer supported by the paying capacity
of the borrower or when the required cash flow is reduced in a TDR. The charge-off amount is determined through an
evaluation of available cash resources and collateral value. Internally risk graded loans are evaluated quarterly and charge-offs
are taken in the quarter in which the loss is identified. Non-risk graded loans that are past due between 60 days and 180 days,
based on the loan product type, are charged off. Loans to borrowers whose personal obligation has been discharged through
Chapter 7 bankruptcy proceedings are charged off within 60 days of notice of the bankruptcy filing, regardless of payment
status.
Loan origination and commitment fees and direct loan acquisition and origination costs are deferred and amortized as an
adjustment to yield over the life of the loan or over the commitment period, as applicable. Amortization does not anticipate loan
prepayments. Net unamortized fees are recognized in full at time of payoff.
Qualifying residential mortgage loans guaranteed by U.S. government agencies have been sold into GNMA pools. Under
certain performance conditions specified in government programs, the Company has the right, but not the obligation to
repurchase loans from GNMA pools. These loans no longer qualify for sale accounting and are recognized in the Consolidated
Balance Sheet. Guaranteed loans are considered to be impaired because we do not expect to receive all principal and interest
based on the loan's contractual terms. The principal balance continues to be guaranteed, however, interest accrues at a curtailed
rate as specified in the programs. The carrying value of these loans is reduced based on an estimate of expected cash flows
discounted at the original note rate plus a liquidity spread. Guaranteed loans may be modified in TDRs in accordance with U.S.
government agency guidelines. Interest continues to accrue at the modified rate. U.S. government guaranteed loans may either
be resold into GNMA pools after a performance period specified by the programs or foreclosed and conveyed to the guarantors.
88
Loans are disaggregated into portfolio segments and further disaggregated into classes. The portfolio segment is the level at
which the Company develops and documents a systematic method for determining its Allowance for Credits Losses. Classes
are based on the risk characteristics of the loans and the Company's method for monitoring and assessing credit risk.
Allowance for Loan Losses and Accrual for Off-Balance Sheet Credit Risk
The appropriateness of the allowance for loan losses and accrual for off-balance sheet credit risk (collectively "Allowance for
Credit Losses") is assessed by management quarterly based on an ongoing quarterly evaluation of the probable estimated losses
inherent in the portfolio, including probable losses on outstanding loans and unused commitments to provide financing. A
consistent well-documented methodology has been developed and is applied by an independent Credit Administration
department to assure consistency across the Company.
The allowance for loan losses consists of specific allowances attributed to impaired loans that have not yet been charged down
to amounts we expect to recover, general allowances based on estimated loss rates by loan class and nonspecific allowances
based on factors that affect more than one portfolio segment. There were no changes to the methodology for estimating general
allowances during 2015 or 2014.
Loans are considered to be impaired when it becomes probable that BOK Financial will be unable to collect all amounts due
according to the contractual terms of the loan agreements. Internally risk graded loans are evaluated individually for
impairment. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans
are risk graded based on a quarterly evaluation of the borrowers' ability to repay. Certain commercial loans and most residential
mortgage and consumer loans are small balance, homogeneous pools of loans that are not risk graded. Non-risk graded loans
are identified as impaired based on performance status. Generally, non-risk graded loans 90 days or more past due, modified in
a troubled debt restructuring or in bankruptcy are considered to be impaired.
Specific allowances for impaired loans are measured by an evaluation of estimated future cash flows discounted at the loan's
initial effective interest rate or the fair value of collateral for certain collateral dependent loans. The fair value of real property
held as collateral is generally based on third party appraisals that conform to Uniform Standards of Professional Appraisal
Practice, less estimated selling costs. Appraised values are on an “as-is” basis and generally are not adjusted by the
Company. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values
may have declined. Collateral value of mineral rights is generally determined by our internal staff of engineers based on
projected cash flows from proven oil and gas reserves under existing economic and operating conditions. The value of other
collateral is generally determined by our special assets staff based on projected liquidation cash flows under current market
conditions. Collateral values and available cash resources that support impaired loans are evaluated quarterly. Historical
statistics may be used as a practical way to estimate impairment in limited situations, such as when a collateral dependent loan
is identified as impaired at the end of a reporting period until an appraisal of collateral value is received or a full assessment of
future cash flows is completed. Estimates of future cash flows and collateral values require significant judgments and may be
volatile.
General allowances for unimpaired loans are based on an estimated loss rate by loan class. The appropriate historical gross loss
rate for each loan class is determined by the greater of the current loss rate based on the most recent twelve months or a ten-
year average gross loss rate. Recoveries are not directly considered in the estimation of historical loss rates. Recoveries
generally do not follow predictable patterns and are not received until well-after the charge-off date as a result of protracted
legal actions. For risk graded loans, historical gross loss rates are adjusted for changes in risk grading. For each loan class, the
current weighted average risk grade is compared to the long-term weighted average risk grade. This comparison determines
whether credit risk in each loan class is increasing or decreasing. Historical loss rates are adjusted upward or downward in
proportion to changes in average risk grading. General allowances for unimpaired loans also consider inherent risks identified
for each loan class. Inherent risks consider loss rates that most appropriately represent the current credit cycle and other factors
attributable to a specific loan class which have not yet been represented in the historical gross loss rates or risk grading. These
factors include changes in commodity prices or engineering imprecision which may affect the value of reserves that secure our
energy loan portfolio, construction risk that may affect commercial real estate loans, changes in regulations and public policy
that may disproportionately impact health care loans and changes in loan products.
Nonspecific allowances are maintained for risks beyond factors specific to a particular portfolio segment or loan class. These
factors include trends in the economy in our primary lending areas, concentration in large-balance loans and other relevant
factors.
An accrual for off-balance sheet credit risk is included in Other liabilities. The appropriateness of the accrual is determined in
the same manner as the allowance for loan losses.
89
A provision for credit losses is charged against or credited to earnings in amounts necessary to maintain an appropriate
Allowance for Credit Losses. Recoveries of loans previously charged off are added to the allowance when received.
Transfers of Financial Assets
BOK Financial regularly transfers financial assets as part of its mortgage banking activities and periodically may transfer other
financial assets. Transfers are recorded as sales when the criteria for surrender of control are met.
The Company has elected to carry certain residential mortgage loans held for sale at fair value under the fair value option.
Changes in fair value are recognized in net income as they occur. These loans are reported separately in the Consolidated
Balance Sheets and changes in fair value are recorded in other operating revenue - mortgage banking revenue in the
Consolidated Statements of Earnings.
Fair value of conforming residential mortgage loans that will be sold to U.S. government agencies is based on sales
commitments or market quotes considered Level 2 inputs. Fair value of mortgage loans that are unable to be sold to U.S.
government agencies is based on Level 3 inputs using quoted prices of loans that are sold in securitization transactions with a
liquidity discount applied. The fair value is corroborated with an independent third party on at least an annual basis.
BOK Financial retains a repurchase obligation under underwriting representations and warranties related to residential
mortgage loans transferred and generally retains the right to service the loans. The Company may incur a recourse obligation in
limited circumstances. Separate accruals are recognized in Other liabilities in the Consolidated Balance Sheets for repurchase
and recourse obligations. These reserves reflect the estimated amount of probable loss the bank will incur as a result of
repurchasing a loan, indemnifications, and other settlement resolutions.
Repurchases of loans with an origination defect that are also credit impaired are considered collateral dependent and are
initially recognized at net realizable value (appraised value less the cost to sell). The difference between unpaid principal
balance and net realizable value is not accreted. Repurchases of loans with an origination defect that are not credit impaired are
carried at fair value as of the repurchase date. Interest income continues to accrue on these loans and the discount is accreted
over the estimated life of the loan.
The accrual for credit losses related to recourse loans for principal and interest is performed by Credit Administration and
subject to oversight by the Finance/Credit Administration Allowance Committee while all other mortgage related accruals are
reviewed monthly by the Mortgage Contingency Loss Accrual Committee which is subject to oversight by Finance.
The Company may also choose to purchase GNMA loans once certain mandated delinquency criteria are met. The loans that
are eligible and are chosen to be repurchased are carried at fair value based on expected cash flow discounted using the average
agency guaranteed debenture rates, average actual principal loss rates and liquidity premium.
The Company may also retain a residual interest in excess cash flows generated by the assets. All assets obtained, including
cash, servicing rights and residual interests, and all liabilities incurred, including recourse obligations, are initially recognized
at fair value, all assets transferred are derecognized and any gain or loss on the sale is recognized in earnings. Subsequently,
servicing rights and residual interest are carried at fair value with changes in fair value recognized in earnings as they occur.
90
Real Estate and Other Repossessed Assets
Real estate and other repossessed assets are acquired in partial or total forgiveness of loans. These assets are carried at the
lower of cost, which is determined by fair value at date of foreclosure less estimated disposal costs, or current fair value less
estimated disposal costs. Decreases in fair value below cost are recognized as asset-specific valuation allowances which may be
reversed when supported by future increases in fair value. Subsequent increases in fair value may be used to reduce the
allowance but not below zero. Fair values of real estate are based on “as is” appraisals which are updated at least annually or
more frequently for certain asset types or assets located in certain distressed markets. Fair values based on appraisals are
generally considered to be based on significant other observable inputs. The Company also considers decreases in listing price
and other relevant information in quarterly evaluations and reduces the carrying value of real estate and other repossessed
assets when necessary. Fair values based on list prices and other relevant information are generally considered to be based on
significant unobservable inputs. Additional costs incurred to complete real estate and other repossessed assets may increase the
carrying value, up to current fair value based on “as completed” appraisals. The fair value of mineral rights included in
repossessed assets are generally determined by our internal staff of engineers based on projected cash flows from proven oil
and gas reserves under existing economic and operating conditions. The value of other repossessed assets is generally
determined by our special assets staff based on projected liquidation cash flows under current market conditions. Income
generated by these assets is recognized as received. Operating expenses are recognized as incurred. Gains or losses on sales of
real estate and other repossessed assets are based on the cash proceeds received less the cost basis of the asset, net of any
valuation allowances. The estimated disposal costs of real estate and other repossessed assets are evaluated by the Company on
an annual basis based on actual results.
Premises and Equipment
Premises and equipment are carried at cost, including capitalized interest when appropriate, less accumulated depreciation and
amortization. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets
or, for leasehold improvements, over the shorter of the estimated useful lives or remaining lease terms. Useful lives range from
5 years to 40 years for buildings and improvements, 3 years to 10 years for software and 3 years to 10 years for furniture and
equipment. Construction in progress represents facilities construction and data processing systems projects underway that have
not yet been placed into service. Depreciation and amortization begin once the assets are placed into service. Repair and
maintenance costs, including software maintenance and enhancement costs, are charged to expense as incurred.
Premises no longer used by the Company are transferred to real estate and other repossessed assets. The transferred amount is
the lower of cost less accumulated depreciation or fair value less estimated disposal costs as of the transfer date.
Rent expense for leased premises is recognized as incurred over the lease term. The effects of rent holidays, significant rent
escalations and other adjustments to rent payments are recognized on a straight-line basis over the lease term.
Ongoing technology projects of significant size or length are reviewed at least annually for impairment. The construction in
progress account is reviewed for projects or components of projects that do not support the value of the asset being constructed.
Findings of obsolescence, duplicate effort or other conditions that do not support the recorded value are impaired, with the cost
of the impaired components being charged to current-year earnings.
Mortgage Servicing Rights
Mortgage servicing rights may be purchased or may be recognized when mortgage loans are originated pursuant to an existing
plan for sale or, if no such plan exists, when the mortgage loans are sold. All mortgage servicing rights are carried at fair
value. Changes in the fair value are recognized in earnings as they occur.
There is no active market for trading in mortgage servicing rights after origination. A cash flow model is used to determine fair
value. Key assumptions and estimates, including projected prepayment speeds and assumed servicing costs, earnings on escrow
deposits, ancillary income and discount rates, used by this model are based on current market sources. Assumptions used to
value mortgage servicing rights are considered significant unobservable inputs. A separate third party model is used to estimate
prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults and other
relevant factors. The prepayment model is updated daily for changes in market conditions and adjusted to better correlate with
actual performance of BOK Financial's servicing portfolio. Fair value estimates from outside sources are received at least
annually to corroborate the results of the valuation model.
91
Federal and State Income Taxes
BOK Financial and its subsidiaries file consolidated tax returns. The subsidiaries provide for income taxes on a separate return
basis and remit to BOK Financial amounts determined to be currently payable. BOK Financial is agent for its subsidiaries
under the Company's tax sharing agreements and has no ownership rights to any refunds received for the benefit of its
subsidiaries.
Current income tax expense or benefit is based on an evaluation that considers estimated taxable income, tax credits, and
statutory federal and state income tax rates. The amount of current income tax expense or benefit recognized in any period may
differ from amounts reported to taxing authorities. Annually, tax returns are filed with each jurisdiction where the Company
conducts business and recognized current income tax expense or benefit is adjusted to the filed tax returns.
Deferred tax assets and liabilities are based upon the differences between the values of assets and liabilities as recognized in the
financial statements and their related tax basis using enacted tax rates in effect for the year in which the differences are
expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion of the
entire deferred tax asset may not be realized based on taxes previously paid in net loss carry-back periods and other factors.
BOK Financial has unrecognized tax benefits, which are included in accrued current income taxes payable, for the uncertain
portion of recorded tax benefits and related interest. These uncertainties result from the application of complex tax laws, rules,
regulations and interpretations, primarily in state taxing jurisdictions. Unrecognized tax benefits are assessed quarterly and may
be adjusted through current income tax expense in future periods based on changing facts and circumstances, completion of
examinations by taxing authorities or expiration of a statute of limitations. Estimated penalties and interest on uncertain tax
positions are recognized in income tax expense.
Employee Benefit Plans
BOK Financial sponsors a defined benefit cash balance pension plan (“Pension Plan”), qualified profit sharing plan (“Thrift
Plan”) and employee health care plans. Pension Plan costs, which are based upon actuarial computations of current costs, are
expensed annually. Unrecognized prior service cost and net gains or losses are amortized on a straight-line basis over a period
not to exceed the average remaining service periods of the participants. Employer contributions to the Pension Plan are in
accordance with Federal income tax regulations. Pension Plan benefits were curtailed as of April 1, 2006. No participants may
be added to the Pension Plan and no additional service benefits will be accrued.
BOK Financial recognizes the funded status of its employee benefit plans. For a pension plan, the funded status is the
difference between the fair value of plan assets and the projected benefit obligation measured as of the fiscal year-end
date. Adjustments required to recognize the Pension Plan's net funded status are made through accumulated other
comprehensive income, net of deferred income taxes.
Employer contributions to the Thrift Plan, which matches employee contributions subject to percentage and years of service
limits, are expensed when incurred. BOK Financial recognizes the expense of health care benefits on the accrual method.
Share-Based Compensation Plans
BOK Financial awards stock options and non-vested common shares as compensation to certain officers. Compensation cost is
generally fixed based on the grant date fair value of the award. The grant date fair value of stock options is based on the Black-
Scholes option pricing model. Stock options generally have graded vesting over 7 years. Each tranche is considered a separate
award for valuation and compensation cost recognition. Grant date fair value of non-vested shares is based on the current
market value of BOK Financial common stock. Non-vested shares awarded prior to 2013 generally cliff vest in 5 years. Non-
vested shares awarded since January 1, 2013 generally cliff vest in 3 years and are subject to a two year holding period after
vesting. Shares awarded under the Executive Incentive Plan are subject to downward adjustment at the discretion of the
Incentive Compensation Committee. Compensation cost of non-vested shares granted under the Executive Incentive Plan varies
based on changes in the fair value of BOKF common shares.
Compensation cost is recognized as expense over the service period, which is generally the vesting period. Expense is reduced
for estimated forfeitures over the vesting period and adjusted for actual forfeitures as they occur. Stock-based compensation
awarded to certain officers has performance conditions that affect the number of awards granted. Compensation cost is adjusted
based on the probable outcome of the performance conditions.
92
Excess tax benefits from share-based payments recognized in capital surplus are determined by the excess of tax benefits
recognized over the tax effect of compensation cost recognized. Dividends on non-vested shares that are not subject to
forfeiture are charged to dividends paid.
Other Operating Revenue
Fees and commission revenue is recognized at the time the related services are provided or products are sold and may be
accrued when necessary. Accrued fees and commissions are reversed against revenue if amounts are subsequently deemed to be
uncollectible. Revenue is recognized on a gross basis whenever we have primary responsibility and risk in providing the
services or products to our customers and on a net basis whenever we act as a broker for products or services of others.
Brokerage and trading revenue includes changes in the fair value of securities held for trading purposes and derivatives held for
customer risk management programs, including credit losses on trading securities and derivatives, commissions earned from
the retail sale of securities, mutual funds and other financial instruments, and underwriting and financial advisory fees.
Transaction card revenue includes merchant discount fees, electronic funds transfer network fees and check card fees. Merchant
discount fees represent fees paid by customers for account management and electronic processing of transactions. Merchant
discount fees are recognized at the time the customer's transactions are processed or other services are performed. The
Company also maintains the TransFund electronic funds transfer network for the benefit of its members, which includes the
Bank. Electronic funds transfer fees are recognized as electronic transactions processed on behalf of its members. Check card
fees represent interchange fees paid by a merchant bank for transactions processed from cards issued by the Company. Check
card fees are recognized when transactions are processed.
Trust fees and commissions include revenue from asset management, custody, recordkeeping, investment advisory and
administration services. Revenue is recognized on an accrual basis at the time the services are performed and may be based on
either the fair value of the account or the service provided.
Deposit service charges and fees are recognized at least quarterly in accordance with a published deposit account agreements
and disclosure statements for retail accounts or contractual agreements for commercial accounts. Item charges for overdraft or
non-sufficient funds items are recognized as items are presented for payment. Account balance charges and activity fees are
accrued monthly and collected in arrears. Commercial account activity fees may be offset by an earnings credit based on
account balances.
(cid:49)(cid:72)(cid:90)(cid:79)(cid:92)(cid:3)(cid:36)(cid:71)(cid:82)(cid:83)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:72)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:51)(cid:85)(cid:82)(cid:81)(cid:82)(cid:88)(cid:81)(cid:70)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:54)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:11)(cid:5)(cid:41)(cid:36)(cid:54)(cid:37)(cid:5)(cid:12)
FASB Accounting Standards Update No. 2014-01, Accounting for Investments in Qualified Affordable Housing Projects ("ASU
2014-01")
On January 15, 2014, the FASB issued ASU 2014-01 to simplify the amortization method an entity uses and modify the criteria
to elect a measurement and presentation alternative, including the simplified amortization method, for certain investments in
qualified affordable housing projects. This alternative permits the entity to present the investment's performance net of the
related tax benefits as part of income tax expense. ASU 2014-01 was effective for the Company for interim and annual periods
beginning after December 15, 2014. Adoption of ASU 2014-01 affected income statement presentation, but otherwise did not
have a material impact on the Company's consolidated financial statements.
FASB Accounting Standards Update No. 2014-04, Reclassification of Residential Real Estate Collateralized Consumer
Mortgage Loans Upon Foreclosure ("ASU 2014-04")
On January 17, 2014, the FASB issued ASU 2014-04 to clarify when an entity is considered to have obtained physical
possession (from an in-substance possession or foreclosure) of a residential real estate property collateralizing a mortgage loan.
Upon physical possession of such real property, an entity is required to reclassify the nonperforming mortgage loan to other real
estate owned. ASU 2014-04 was effective for the Company for interim and annual periods beginning after December 15, 2014.
Adoption of ASU 2014-04 did not have a material impact on the Company's consolidated financial statements.
93
FASB Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09")
On May 28, 2014, the FASB issued ASU 2014-09 to clarify the principles for recognizing revenue by providing a more robust
framework that will give greater consistency and comparability in revenue recognition practices. In the new framework, an
entity recognizes revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
goods or services. The new model requires the identification of performance obligations included in contracts with customers, a
determination of the transaction price and an allocation of the price to those performance obligations. The entity recognizes
revenue when performance obligations are satisfied. ASU 2014-09 is effective for the Company for annual reporting periods
beginning after December 15, 2017, including interim periods within that reporting period. The Company is evaluating the
impact the adoption of ASU 2014-09 will have on the Company's financial statements.
FASB Accounting Standards Update No. 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon
Foreclosure ("ASU 2014-14")
On August 8, 2014, the FASB issued ASU 2014-14 to give greater consistency in the classification of government-guaranteed
loans upon foreclosure. ASU 2014-14 applies to all loans that contain a government guarantee that is not separable from the
loan or for which the creditor has both the intent and ability to recover a fixed amount under the guarantee by conveying the
property to the guarantor. Upon foreclosure, the creditor should reclassify the mortgage loan to an other receivable that is
separate from loans and should measure the receivable at the amount of the loan balance expected to be recovered from the
guarantor. ASU 2014-14 was effective for the Company for interim and annual periods beginning after December 15, 2014. At
January 1, 2015, approximately $50 million of real estate owned was reclassified from Real estate and other repossessed assets
to Receivables on the balance sheet with adoption of ASC 2014-14.
FASB Accounting Standards Update No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host
Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity ("ASU 2014-16")
On November 3, 2014, the FASB issued ASU 2014-16 to eliminate the use of different methods and reduce diversity under
GAAP in the accounting for hybrid financial instruments issued in the form of a share. For hybrid financial instruments issued
in the form of a share, an entity should determine the nature of the host contract by considering all stated and implied
substantive terms and features of the hybrid financial instrument. The entity should determine the nature of the host contract by
considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative
feature that is being evaluated for separate accounting from the host contract. For public business entities, the ASU is effective
for annual periods beginning after December 15, 2015, and interim periods within those annual periods. Early adoption is
permitted. Adoption of ASU 2014-16 is not expected to have a material impact on the Company's consolidated financial
statements.
FASB Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis
("ASU 2015-02")
On February 18, 2015, the FASB issued ASU 2015-02 to address concerns that current U.S. GAAP may require a reporting
entity to consolidate another legal entity where the reporting entity's contractual rights do not give it the ability to act primarily
on its own behalf, the reporting entity does not hold a majority of the legal entity's voting rights, or the reporting entity is not
exposed to a majority of the legal entity's economic benefits or obligations. The amendments affect limited partnerships and
similar legal entities, the evaluation of fees paid to a decision maker or a service provider as a variable interest, the effect of fee
arrangements and related parties on the primary beneficiary determination, and certain investment funds. The ASU will be
effective for periods beginning after December 15, 2015 for public companies. Early adoption is permitted, including adoption
in an interim period. Adoption of ASU 2015-02 is not expected to have a material impact on the Company's consolidated
financial statements.
FASB Accounting Standards Update No. 2015-07, Fair Value Measurements (Topic 820): Disclosures for Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its Equivalent) ("ASU 2015-07")
On May 1, 2015, the FASB issued ASU 2015-07 to gain consistency within the categorization of the fair value hierarchy. The
update removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured
using the net asset value per share practical expedient. It also removes the requirement to make certain disclosures for all investments
that are eligible to be measured at fair value using the net asset value per share practical expedient. The ASU is effective for the
Company for interim and annual periods beginning January 1, 2016 and should be applied retrospectively to all periods presented.
Early adoption is permitted. Adoption of ASU 2015-07 is not expected to have a material impact on the Company's consolidated
financial statements.
94
FASB Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01")
On January 5, 2016, the FASB issued ASU 2016-01 over the recognition and measurement of financial assets and liabilities.
The update requires equity investments, in general, to be measured at fair value with changes in fair value recognized in
earnings. It also eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value
for financial instruments measured at amortized cost, requires entities to use the exit price notion when measuring fair value,
requires an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability
resulting from a change in the instrument-specific credit risk when the fair value option has been elected, requires separate
presentation of financial assets and liabilities by measurement category and form on the balance sheet or accompanying notes,
clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale
securities in combination with the entity's other deferred tax assets, and simplifies the impairment assessment of equity
investments without readily determinable fair values. The ASU is effective for the Company for interim and annual periods
beginning after December 15, 2017. Upon adoption, unrealized gains and losses from equity securities will be reclassified
from other comprehensive income to retained earnings. As of December 31, 2015, the Company had $3.2 million of unrealized
gains and losses from equity securities in other comprehensive income.
FASB Accounting Standards Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02")
On February 25, 2016, the FASB issued ASU 2016-02 to increase transparency and comparability by recognizing lease assets
and liabilities on the balance and disclosing key information about leasing arrangements. The final guidance requires lessees to
put most leases on their balance sheets and recognize expenses on their income statement, eliminates the current real estate-
specific provisions, modifies the classification criteria and the accounting for sales-type and direct financing leases for lessors.
The ASU is effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within fiscal
years beginning after December 15, 2020. Early application of the amendments is permitted. The Company is evaluating the
impact the adoption of ASU 2016-02 will have on the Company's financial statements.
(cid:11)(cid:21)(cid:12)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
(cid:55)(cid:85)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
The fair value and net unrealized gain (loss) included in trading securities is as follows (in thousands):
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
U.S. government agency debentures
(cid:7)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:28)(cid:24)
(cid:7)
(cid:11)(cid:26)(cid:20)(cid:12) $
85,092
$
U.S. government agency residential mortgage-backed securities
Municipal and other tax-exempt securities
Other trading securities
Total trading securities
(cid:20)(cid:19)(cid:15)(cid:28)(cid:27)(cid:28)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:19)(cid:20)
(cid:20)(cid:27)(cid:15)(cid:21)(cid:20)(cid:28)
(cid:20)(cid:26)
(cid:21)(cid:20)(cid:19)
(cid:11)(cid:20)(cid:25)(cid:12)
31,199
38,951
33,458
(cid:7)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:23)(cid:19)(cid:23)
(cid:7)
(cid:20)(cid:23)(cid:19)
$
188,700
$
(62)
269
18
(38)
187
95
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
The amortized cost and fair values of investment securities are as follows (in thousands):
Municipal and other tax-exempt securities
(cid:7)
(cid:22)(cid:25)(cid:24)(cid:15)(cid:21)(cid:24)(cid:27)
(cid:7)
(cid:22)(cid:25)(cid:24)(cid:15)(cid:21)(cid:24)(cid:27)
(cid:7)
(cid:22)(cid:25)(cid:27)(cid:15)(cid:28)(cid:20)(cid:19)
(cid:7)
(cid:22)(cid:15)(cid:28)(cid:22)(cid:24)
(cid:7)
(cid:11)(cid:21)(cid:27)(cid:22)(cid:12)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:20)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)(cid:21)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:42)(cid:68)(cid:76)(cid:81)
U.S. government agency residential mortgage-backed securities
– Other
Other debt securities
(cid:21)(cid:25)(cid:15)(cid:26)(cid:21)(cid:20)
(cid:21)(cid:19)(cid:24)(cid:15)(cid:26)(cid:23)(cid:24)
(cid:21)(cid:25)(cid:15)(cid:27)(cid:22)(cid:22)
(cid:21)(cid:19)(cid:24)(cid:15)(cid:26)(cid:23)(cid:24)
(cid:21)(cid:26)(cid:15)(cid:27)(cid:26)(cid:23)
(cid:21)(cid:22)(cid:21)(cid:15)(cid:22)(cid:26)(cid:24)
(cid:20)(cid:15)(cid:19)(cid:25)(cid:22)
(cid:21)(cid:25)(cid:15)(cid:25)(cid:27)(cid:28)
Total investment securities
(cid:7)
1 Carrying value includes$112 thousand of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) in the
(cid:24)(cid:28)(cid:26)(cid:15)(cid:26)(cid:21)(cid:23)
(cid:25)(cid:21)(cid:28)(cid:15)(cid:20)(cid:24)(cid:28)
(cid:24)(cid:28)(cid:26)(cid:15)(cid:27)(cid:22)(cid:25)
(cid:22)(cid:20)(cid:15)(cid:25)(cid:27)(cid:26)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:11)(cid:21)(cid:21)(cid:12)
(cid:11)(cid:24)(cid:28)(cid:12)
(cid:11)(cid:22)(cid:25)(cid:23)(cid:12)
Consolidated Balance Sheets related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities
portfolio in 2011.
2 Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.
Municipal and other tax-exempt securities
U.S. government agency residential mortgage-backed securities
– Other
Other debt securities
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
405,090
$
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:20)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)(cid:21)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:42)(cid:68)(cid:76)(cid:81)
$
405,090
$
408,344
$
4,205
$
(951)
35,135
211,520
35,750
211,520
37,463
227,819
1,713
16,956
—
(657)
(1,608)
Total investment securities
1 Carrying value includes $615 thousand of net unrealized gain which remains in AOCI in the Consolidated Balance Sheets related to certain
652,360
651,745
673,626
22,874
$
$
$
$
$
securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio in 2011.
2 Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.
96
The amortized cost and fair values of investment securities at December 31, 2015, by contractual maturity, are as shown in the
following table (dollars in thousands):
Municipal and other tax-exempt securities:
Carrying value
Fair value
Nominal yield¹
Other debt securities:
Carrying value
Fair value
Nominal yield
Total fixed maturity securities:
Carrying value
Fair value
Nominal yield
Residential mortgage-backed securities:
Carrying value
Fair value
Nominal yield4
Total investment securities:
Carrying value
Fair value
Nominal yield
(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)
(cid:50)(cid:81)(cid:72)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)
(cid:50)(cid:81)(cid:72)(cid:3)(cid:87)(cid:82)
(cid:41)(cid:76)(cid:89)(cid:72)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:54)(cid:76)(cid:91)(cid:3)(cid:87)(cid:82)
(cid:55)(cid:72)(cid:81)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:50)(cid:89)(cid:72)(cid:85)
(cid:55)(cid:72)(cid:81)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
56,431
56,505
$
257,290
$
258,212
17,585
17,748
1.46%
1.85%
3.16%
$
11,423
11,594
$
43,383
46,662
86,461
98,535
$
$
33,952
36,445
$
365,258
368,910
5.77%
2.22%
64,478
75,584
$
205,745
232,375
4.27%
4.57%
5.67%
5.96%
5.45%
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:48)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:240)
3.28
8.64
67,854
68,099
$
300,673
$
104,046
$
98,430
$
571,003
5.21
304,874
116,283
112,029
601,285
1.94%
2.24%
5.24%
5.89%
3.38%
$
$
$
³
$
26,833
27,874
2.75%
$
597,836
629,159
3.35%
1 Calculated on a taxable equivalent basis using a 39% effective tax rate.
2 Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without
penalty.
3 The average expected lives of residential mortgage-backed securities were 4.1 years based upon current prepayment assumptions.
4 The nominal yield on residential mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may
differ significantly based upon actual prepayments. See Quarterly Financial Summary - Unaudited for current yields on the investment securities
portfolio.
97
(cid:36)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:54)(cid:68)(cid:79)(cid:72)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
The amortized cost and fair value of available for sale securities are as follows (in thousands):
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)1
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:42)(cid:68)(cid:76)(cid:81)
(cid:50)(cid:55)(cid:55)(cid:44)²
U.S. Treasury securities
Municipal and other tax-exempt securities
Residential mortgage-backed securities:
U.S. government agencies:
FNMA
FHLMC
GNMA
Other
Total U.S. government agencies
Private issue:
Alt-A loans
Jumbo-A loans
Total private issue
Total residential mortgage-backed securities
Commercial mortgage-backed securities guaranteed by U.S.
government agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
(cid:7)
(cid:20)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:7)
(cid:28)(cid:28)(cid:24)
(cid:7)
(cid:24)(cid:25)(cid:15)(cid:25)(cid:27)(cid:20)
(cid:24)(cid:25)(cid:15)(cid:27)(cid:20)(cid:26)
(cid:178) (cid:7)
(cid:27)(cid:26)(cid:22)
(cid:11)(cid:24)(cid:12) (cid:7)
(cid:11)(cid:26)(cid:22)(cid:26)(cid:12)
(cid:22)(cid:15)(cid:20)(cid:24)(cid:25)(cid:15)(cid:21)(cid:20)(cid:23)
(cid:20)(cid:15)(cid:28)(cid:23)(cid:19)(cid:15)(cid:28)(cid:20)(cid:24)
(cid:26)(cid:25)(cid:22)(cid:15)(cid:28)(cid:25)(cid:26)
(cid:178)
(cid:22)(cid:15)(cid:20)(cid:27)(cid:26)(cid:15)(cid:21)(cid:20)(cid:24)
(cid:20)(cid:15)(cid:28)(cid:23)(cid:28)(cid:15)(cid:22)(cid:22)(cid:24)
(cid:26)(cid:25)(cid:20)(cid:15)(cid:27)(cid:19)(cid:20)
(cid:178)
(cid:24)(cid:15)(cid:27)(cid:25)(cid:20)(cid:15)(cid:19)(cid:28)(cid:25)
(cid:24)(cid:15)(cid:27)(cid:28)(cid:27)(cid:15)(cid:22)(cid:24)(cid:20)
(cid:24)(cid:25)(cid:15)(cid:22)(cid:27)(cid:26)
(cid:26)(cid:20)(cid:15)(cid:26)(cid:21)(cid:23)
(cid:20)(cid:21)(cid:27)(cid:15)(cid:20)(cid:20)(cid:20)
(cid:25)(cid:21)(cid:15)(cid:24)(cid:26)(cid:23)
(cid:26)(cid:25)(cid:15)(cid:24)(cid:23)(cid:23)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:20)(cid:20)(cid:27)
(cid:24)(cid:15)(cid:28)(cid:27)(cid:28)(cid:15)(cid:21)(cid:19)(cid:26)
(cid:25)(cid:15)(cid:19)(cid:22)(cid:26)(cid:15)(cid:23)(cid:25)(cid:28)
(cid:21)(cid:15)(cid:28)(cid:20)(cid:28)(cid:15)(cid:19)(cid:23)(cid:23)
(cid:21)(cid:15)(cid:28)(cid:19)(cid:24)(cid:15)(cid:26)(cid:28)(cid:25)
(cid:23)(cid:15)(cid:23)(cid:19)(cid:19)
(cid:20)(cid:26)(cid:15)(cid:20)(cid:26)(cid:20)
(cid:20)(cid:26)(cid:15)(cid:20)(cid:21)(cid:20)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:20)(cid:26)(cid:15)(cid:27)(cid:22)(cid:22)
(cid:23)(cid:20)(cid:15)(cid:24)(cid:19)(cid:21)
(cid:20)(cid:23)(cid:15)(cid:26)(cid:21)(cid:26)
(cid:21)(cid:15)(cid:22)(cid:27)(cid:24)
(cid:178)
(cid:24)(cid:27)(cid:15)(cid:25)(cid:20)(cid:23)
(cid:25)(cid:15)(cid:24)(cid:26)(cid:23)
(cid:24)(cid:15)(cid:21)(cid:25)(cid:19)
(cid:20)(cid:20)(cid:15)(cid:27)(cid:22)(cid:23)
(cid:26)(cid:19)(cid:15)(cid:23)(cid:23)(cid:27)
(cid:24)(cid:15)(cid:22)(cid:28)(cid:25)
(cid:178)
(cid:21)(cid:15)(cid:24)(cid:19)(cid:20)
(cid:26)(cid:24)(cid:21)
(cid:11)(cid:20)(cid:19)(cid:15)(cid:24)(cid:19)(cid:20)(cid:12)
(cid:11)(cid:25)(cid:15)(cid:22)(cid:19)(cid:26)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:24)(cid:24)(cid:20)(cid:12)
(cid:178)
(cid:11)(cid:21)(cid:20)(cid:15)(cid:22)(cid:24)(cid:28)(cid:12)
—
(cid:178)
(cid:178)
(cid:11)(cid:21)(cid:20)(cid:15)(cid:22)(cid:24)(cid:28)(cid:12)
(cid:11)(cid:20)(cid:27)(cid:15)(cid:25)(cid:23)(cid:23)(cid:12)
(cid:11)(cid:21)(cid:23)(cid:28)(cid:12)
(cid:178)
(cid:11)(cid:23)(cid:19)(cid:12)
Total available for sale securities
(cid:7) (cid:28)(cid:15)(cid:19)(cid:19)(cid:23)(cid:15)(cid:25)(cid:21)(cid:23)
1 Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.
2 Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.
(cid:28)(cid:15)(cid:19)(cid:23)(cid:21)(cid:15)(cid:26)(cid:22)(cid:22)
(cid:26)(cid:28)(cid:15)(cid:28)(cid:26)(cid:19)
(cid:7)
(cid:7)
(cid:7)
(cid:11)(cid:23)(cid:20)(cid:15)(cid:19)(cid:22)(cid:23)(cid:12) (cid:7)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:11)(cid:22)(cid:27)(cid:26)(cid:12)
(cid:11)(cid:23)(cid:23)(cid:19)(cid:12)
(cid:11)(cid:27)(cid:21)(cid:26)(cid:12)
(cid:11)(cid:27)(cid:21)(cid:26)(cid:12)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:11)(cid:27)(cid:21)(cid:26)(cid:12)
98
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)(cid:239)
(cid:42)(cid:68)(cid:76)(cid:81)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:50)(cid:55)(cid:55)(cid:44)²
U.S. Treasury securities
Municipal and other tax-exempt securities
Residential mortgage-backed securities:
U.S. government agencies:
FNMA
FHLMC
GNMA
Other
$
1,005
$
1,005
$
— $
63,018
63,557
1,280
— $
(741)
3,932,200
1,810,476
801,820
4,808
3,997,428
1,836,870
807,443
5,143
71,200
29,043
8,240
335
(5,972)
(2,649)
(2,617)
—
Total U.S. government agencies
6,549,304
6,646,884
108,818
(11,238)
Private issue:
Alt-A loans
Jumbo-A loans
Total private issue
65,582
88,778
154,360
71,952
94,005
165,957
Total residential mortgage-backed securities
6,703,664
6,812,841
Commercial mortgage-backed securities guaranteed by U.S.
government agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
2,064,091
2,048,609
9,438
22,171
18,603
9,212
24,277
19,444
6,677
5,584
12,261
121,079
4,437
26
2,183
871
—
—
—
(11,238)
(19,919)
(252)
(77)
(30)
Total available for sale securities
8,881,990
1 Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.
2 Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.
8,978,945
129,876
$
$
$
$
(32,257) $
—
—
—
—
—
—
—
(307)
(357)
(664)
(664)
—
—
—
—
(664)
99
The amortized cost and fair values of available for sale securities at December 31, 2015, by contractual maturity, are as shown in the
following table (dollars in thousands):
U.S. Treasury securities:
Amortized cost
Fair value
Nominal yield
Municipal and other tax-exempt securities:
Amortized cost
Fair value
Nominal yield¹
Commercial mortgage-backed securities:
Amortized cost
Fair value
Nominal yield
Other debt securities:
Amortized cost
Fair value
Nominal yield
Total fixed maturity securities:
Amortized cost
Fair value
Nominal yield
Residential mortgage-backed securities:
Amortized cost
Fair value
Nominal yield4
Perpetual preferred stock. equity securities
and mutual funds:
Amortized cost
Fair value
Nominal yield
Total available-for-sale securities:
Amortized cost
Fair value
Nominal yield
(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)
(cid:50)(cid:81)(cid:72)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)
(cid:50)(cid:81)(cid:72)(cid:3)(cid:87)(cid:82)
(cid:41)(cid:76)(cid:89)(cid:72)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:54)(cid:76)(cid:91)(cid:3)(cid:87)(cid:82)
(cid:55)(cid:72)(cid:81)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)
(cid:50)(cid:89)(cid:72)(cid:85)
(cid:55)(cid:72)(cid:81)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:86)(cid:25)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:48)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:24)
$
— $
1,000
$
— $
— $
—
—%
995
0.87%
—
—%
—
—%
9,733
9,779
22,433
22,982
2,776
2,832
21,739
21,224
3.35%
4.38%
3.67%
2.01%
1,000
995
0.87%
56,681
56,817
3.26%
—
—
—%
—
—
—%
822,161
818,007
1,756,875
1,749,403
340,008
338,386
2,919,044
2,905,796
1.57%
2.08%
1.23%
1.84%
—
—
—%
—
—
—%
4,400
4,151
1.71%
4,400
4,151
1.71%
2.04
8.03
7.39
31.66
$
9,733
9,779
$
845,594
$ 1,759,651
$
366,147
$
2,981,125
7.44
841,984
1,752,235
363,761
2,967,759
3.35%
1.65%
2.08%
1.28%
1.86%
2
³
$
5,989,207
6,037,469
1.95%
$
34,292
37,505
—%
$
9,004,624
9,042,733
1.91%
1 Calculated on a taxable equivalent basis using a 39% effective tax rate.
2 The average expected lives of mortgage-backed securities were 3.8 years based upon current prepayment assumptions.
3 Primarily common stock and preferred stock of corporate issuers with no stated maturity.
4 The nominal yield on mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ
significantly based upon actual prepayments. See Quarterly Financial Summary –– Unaudited following for current yields on available for sale
securities portfolio.
5 Expected maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without
penalty.
6 Nominal yield on municipal and other tax-exempt securities and other debt securities with contractual maturity dates over ten years are based on
variable rates which generally are reset within 35 days.
100
Sales of available for sale securities resulted in gains and losses as follows (in thousands):
Proceeds
Gross realized gains
Gross realized losses
Related federal and state income tax expense
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:20)(cid:15)(cid:25)(cid:19)(cid:19)(cid:15)(cid:22)(cid:27)(cid:19)
$
(cid:21)(cid:19)(cid:20)(cid:23)
2,664,740
(cid:21)(cid:19)(cid:20)(cid:22)
2,436,093
(cid:20)(cid:24)(cid:15)(cid:27)(cid:23)(cid:28)
(cid:11)(cid:22)(cid:15)(cid:26)(cid:28)(cid:20)(cid:12)
(cid:23)(cid:15)(cid:25)(cid:28)(cid:20)
24,923
(23,384)
599
25,711
(14,991)
4,170
A summary of investment and available for sale securities that have been pledged as collateral for repurchase agreements, public trust
funds on deposit and for other purposes, as required by law was as follows (in thousands):
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:29)
Carrying value
Fair value
(cid:36)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:29)
Amortized cost
Fair value
The secured parties do not have the right to sell or re-pledge these securities.
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:21)(cid:22)(cid:20)(cid:15)(cid:19)(cid:22)(cid:22)
$
(cid:21)(cid:22)(cid:23)(cid:15)(cid:22)(cid:27)(cid:21)
63,495
65,855
(cid:25)(cid:15)(cid:27)(cid:22)(cid:20)(cid:15)(cid:26)(cid:23)(cid:22)
(cid:25)(cid:15)(cid:27)(cid:23)(cid:28)(cid:15)(cid:24)(cid:21)(cid:23)
5,855,220
5,893,972
101
(cid:55)(cid:72)(cid:80)(cid:83)(cid:82)(cid:85)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:44)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(In thousands)
Investment:
Municipal and other tax-exempt
securities
U.S. Agency residential mortgage-
backed securities – Other
Other debt securities
Total investment securities
Available for sale:
Treasury
Municipal and other tax-exempt
securities
Residential mortgage-backed
securities:
U.S. government agencies:
FNMA
FHLMC
GNMA
Total U.S. agencies
Private issue1:
Alt-A loans
Jumbo-A loans
Total private issue
Total residential mortgage-backed
securities
Commercial mortgage-backed securities
guaranteed by U.S. government
agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)
(cid:82)(cid:73)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:55)(cid:75)(cid:68)(cid:81)(cid:3)(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)
(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)(cid:47)(cid:82)(cid:81)(cid:74)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:26)(cid:22)
(cid:7)
(cid:20)(cid:21)(cid:26)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:7)
(cid:21)(cid:19)(cid:26)
(cid:7)
(cid:20)(cid:22)(cid:15)(cid:22)(cid:27)(cid:19)
(cid:7)
(cid:26)(cid:26)
(cid:7)
(cid:20)(cid:23)(cid:19)(cid:15)(cid:25)(cid:28)(cid:28)
(cid:7)
(cid:20)
(cid:20)(cid:20)
(cid:27)(cid:24)
(cid:24)(cid:15)(cid:24)(cid:22)(cid:22)
(cid:20)(cid:15)(cid:19)(cid:27)(cid:21)
(cid:21)(cid:21)
(cid:23)(cid:20)
(cid:178)
(cid:20)(cid:15)(cid:26)(cid:20)(cid:24)
(cid:7)
(cid:20)(cid:22)(cid:22)(cid:15)(cid:28)(cid:22)(cid:23)
(cid:7)
(cid:21)(cid:26)(cid:19)
(cid:7)
(cid:20)(cid:24)(cid:15)(cid:19)(cid:28)(cid:24)
(cid:7)
(cid:178)
(cid:20)(cid:27)
(cid:28)(cid:24)
(cid:24)(cid:15)(cid:24)(cid:22)(cid:22)
(cid:21)(cid:15)(cid:26)(cid:28)(cid:26)
(cid:7)
(cid:20)(cid:23)(cid:28)(cid:15)(cid:19)(cid:21)(cid:28)
(cid:7)
(cid:21)(cid:27)(cid:23)
(cid:21)(cid:21)
(cid:24)(cid:28)
(cid:22)(cid:25)(cid:24)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)
(cid:82)(cid:73)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:55)(cid:75)(cid:68)(cid:81)(cid:3)(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)
(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)(cid:47)(cid:82)(cid:81)(cid:74)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:20)
(cid:21)(cid:19)
(cid:7)
(cid:7)
(cid:28)(cid:28)(cid:24)
(cid:28)(cid:15)(cid:28)(cid:19)(cid:28)
(cid:24)(cid:24)
(cid:23)(cid:19)
(cid:20)(cid:24)
(cid:20)(cid:15)(cid:20)(cid:27)(cid:27)(cid:15)(cid:19)(cid:21)(cid:21)
(cid:26)(cid:21)(cid:25)(cid:15)(cid:26)(cid:20)(cid:22)
(cid:22)(cid:25)(cid:23)(cid:15)(cid:28)(cid:20)(cid:28)
(cid:20)(cid:20)(cid:19)
(cid:21)(cid:15)(cid:21)(cid:26)(cid:28)(cid:15)(cid:25)(cid:24)(cid:23)
(cid:3)
(cid:23)
(cid:27)
(cid:20)(cid:21)
(cid:178)
(cid:178)
(cid:178)
(cid:3)
(cid:24)
(cid:21)(cid:26)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:3)
(cid:3)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:3)
(cid:28)(cid:28)(cid:24)
(cid:20)(cid:20)(cid:15)(cid:25)(cid:25)(cid:23)
(cid:7)
(cid:26)(cid:20)(cid:19)
(cid:7)
(cid:21)(cid:20)(cid:15)(cid:24)(cid:26)(cid:22)
(cid:3)
(cid:24)
(cid:26)(cid:22)(cid:26)
(cid:7)
(cid:7)
(cid:3)
(cid:3)
(cid:3)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:25)(cid:21)
(cid:23)(cid:15)(cid:27)(cid:21)(cid:26)
(cid:20)(cid:15)(cid:28)(cid:24)(cid:20)
(cid:20)(cid:26)(cid:15)(cid:19)(cid:23)(cid:19)
(cid:178)
(cid:178)
(cid:178)
(cid:3)
(cid:3)
(cid:3)
(cid:20)(cid:27)(cid:15)(cid:21)(cid:22)(cid:25)
(cid:26)(cid:26)(cid:15)(cid:24)(cid:23)(cid:24)
(cid:20)(cid:19)(cid:21)(cid:15)(cid:20)(cid:19)(cid:28)
(cid:20)(cid:28)(cid:26)(cid:15)(cid:27)(cid:28)(cid:19)
(cid:28)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:27)(cid:15)(cid:23)(cid:27)(cid:21)
(cid:20)(cid:26)(cid:15)(cid:26)(cid:23)(cid:25)
(cid:3)
(cid:3)
(cid:3)
(cid:21)(cid:22)(cid:28)
(cid:20)(cid:15)(cid:23)(cid:27)(cid:19)
(cid:21)(cid:15)(cid:25)(cid:19)(cid:19)
(cid:23)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:22)(cid:27)(cid:26)
(cid:23)(cid:23)(cid:19)
(cid:27)(cid:21)(cid:26)
(cid:20)(cid:15)(cid:21)(cid:19)(cid:25)(cid:15)(cid:21)(cid:24)(cid:27)
(cid:27)(cid:19)(cid:23)(cid:15)(cid:21)(cid:24)(cid:27)
(cid:23)(cid:25)(cid:26)(cid:15)(cid:19)(cid:21)(cid:27)
(cid:21)(cid:15)(cid:23)(cid:26)(cid:26)(cid:15)(cid:24)(cid:23)(cid:23)
(cid:28)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:27)(cid:15)(cid:23)(cid:27)(cid:21)
(cid:20)(cid:26)(cid:15)(cid:26)(cid:23)(cid:25)
(cid:20)(cid:19)(cid:15)(cid:24)(cid:19)(cid:20)
(cid:25)(cid:15)(cid:22)(cid:19)(cid:26)
(cid:23)(cid:15)(cid:24)(cid:24)(cid:20)
(cid:21)(cid:20)(cid:15)(cid:22)(cid:24)(cid:28)
(cid:22)(cid:27)(cid:26)
(cid:23)(cid:23)(cid:19)
(cid:27)(cid:21)(cid:26)
(cid:20)(cid:21)(cid:21)
(cid:21)(cid:15)(cid:21)(cid:26)(cid:28)(cid:15)(cid:25)(cid:24)(cid:23)
(cid:20)(cid:26)(cid:15)(cid:19)(cid:23)(cid:19)
(cid:21)(cid:20)(cid:24)(cid:15)(cid:25)(cid:22)(cid:25)
(cid:24)(cid:15)(cid:20)(cid:23)(cid:25)
(cid:21)(cid:15)(cid:23)(cid:28)(cid:24)(cid:15)(cid:21)(cid:28)(cid:19)
(cid:21)(cid:21)(cid:15)(cid:20)(cid:27)(cid:25)
(cid:21)(cid:20)(cid:22)
(cid:20)(cid:15)(cid:24)(cid:27)(cid:21)(cid:15)(cid:23)(cid:25)(cid:28)
(cid:20)(cid:20)(cid:15)(cid:23)(cid:20)(cid:28)
(cid:21)
(cid:178)
(cid:25)(cid:20)
(cid:178)
(cid:178)
(cid:26)(cid:27)(cid:21)
(cid:178)
(cid:178)
(cid:24)
(cid:23)(cid:27)(cid:23)(cid:15)(cid:21)(cid:24)(cid:27)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:178)
(cid:28)(cid:28)(cid:20)
(cid:26)(cid:15)(cid:21)(cid:21)(cid:24)
(cid:21)(cid:23)(cid:28)
(cid:178)
(cid:22)(cid:24)
(cid:21)(cid:15)(cid:19)(cid:25)(cid:25)(cid:15)(cid:26)(cid:21)(cid:26)
(cid:20)(cid:27)(cid:15)(cid:25)(cid:23)(cid:23)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:178)
(cid:20)(cid:15)(cid:26)(cid:26)(cid:22)
(cid:21)(cid:23)(cid:28)
(cid:178)
(cid:23)(cid:19)
(cid:23)(cid:20)(cid:15)(cid:27)(cid:25)(cid:20)
Total available for sale securities
1 Includes securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income.
(cid:7) (cid:22)(cid:15)(cid:27)(cid:26)(cid:22)(cid:15)(cid:27)(cid:19)(cid:28)
(cid:7) (cid:23)(cid:15)(cid:24)(cid:28)(cid:19)(cid:15)(cid:24)(cid:19)(cid:28)
(cid:26)(cid:20)(cid:25)(cid:15)(cid:26)(cid:19)(cid:19)
(cid:21)(cid:27)(cid:15)(cid:23)(cid:28)(cid:25)
(cid:20)(cid:22)(cid:15)(cid:22)(cid:25)(cid:24)
(cid:23)(cid:20)(cid:28)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
102
(cid:55)(cid:72)(cid:80)(cid:83)(cid:82)(cid:85)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:44)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(In thousands)
Investment:
Municipal and other tax- exempt
securities
Other debt securities
Total investment securities
Available for sale:
Municipal and other tax-exempt
securities
Residential mortgage-backed
securities:
U. S. government agencies:
FNMA
FHLMC
GNMA
Total U.S. agencies
Private issue1:
Alt-A loans
Jumbo-A loans
Total private issue
Total residential mortgage-backed
securities
Commercial mortgage-backed
securities guaranteed by U.S.
government agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)
(cid:82)(cid:73)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:55)(cid:75)(cid:68)(cid:81)(cid:3)(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)
(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)(cid:47)(cid:82)(cid:81)(cid:74)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
78
84
162
$
$
112,677
31,274
143,951
$
$
426
637
1,063
$
$
60,076
761
60,837
$
$
525
20
545
$
$
172,753
32,035
204,788
$
$
951
657
1,608
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)
(cid:82)(cid:73)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:55)(cid:75)(cid:68)(cid:81)(cid:3)(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)
(cid:20)(cid:21)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)(cid:47)(cid:82)(cid:81)(cid:74)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:47)(cid:82)(cid:86)(cid:86)
22
$
10,838
$
12
$
12,176
$
729
$
23,014
$
741
24
16
5
45
4
8
12
57
104
2
2
68
257,854
62,950
8,550
329,354
11,277
—
11,277
340,631
547
37
12
596
307
—
307
903
454,394
310,834
128,896
894,124
—
10,020
10,020
5,425
2,612
2,605
712,248
373,784
137,446
5,972
2,649
2,617
10,642
1,223,478
11,238
—
357
357
11,277
10,020
21,297
307
357
664
904,144
10,999
1,244,775
11,902
223,106
454
1,238,376
19,465
1,461,482
19,919
—
2,898
—
—
77
—
4,150
—
1,205
252
—
30
4,150
2,898
1,205
252
77
30
32,921
Total available for sale securities
1 Includes securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income.
$ 2,160,051
$ 2,737,524
577,473
31,475
1,446
255
$
$
$
$
On a quarterly basis, the Company performs separate evaluations of impaired debt and equity investments and available for sale
securities to determine if the unrealized losses are temporary.
For debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be required to sell
impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements
and securities portfolio management. Based on this evaluation as of December 31, 2015, we do not intend to sell any impaired
available for sale securities before fair value recovers to our current amortized cost and it is more-likely-than-not that we will not be
required to sell impaired securities before fair value recovers, which may be maturity.
Impairment of debt securities rated investment grade by all nationally-recognized rating agencies is considered temporary unless
specific contrary information is identified. None of the debt securities rated investment grade were considered to be other-than-
temporarily impaired at December 31, 2015.
103
At December 31, 2015, the composition of the Company’s investment and available for sale securities portfolios by the lowest current
credit rating assigned by any of the three nationally-recognized rating agencies is as follows (in thousands):
(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:42)(cid:82)(cid:89)(cid:87)(cid:18)(cid:42)(cid:54)(cid:40) 1
(cid:36)(cid:36)(cid:36)(cid:3)(cid:16)(cid:3)(cid:36)(cid:36)
(cid:36)(cid:3)(cid:16)(cid:3)(cid:37)(cid:37)(cid:37)
(cid:37)(cid:72)(cid:79)(cid:82)(cid:90)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)
(cid:49)(cid:82)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
Investment:
Municipal and
other tax-
exempt
U.S. government
agency
mortgage-
backed
securities --
Other
Other debt
securities
Total investment
securities
Available for
Sale:
$
— $
— $ 240,353
$241,217
$
5,276
$ 5,293
$
— $
— $ 119,629
$122,400
$
365,258
$
368,910
26,833
27,874
—
—
—
—
151,442
175,460
—
—
—
—
—
—
—
—
—
—
26,833
27,874
54,303
56,915
205,745
232,375
$
26,833
$
27,874
$ 391,795
$416,677
$
5,276
$ 5,293
$
— $
— $ 173,932
$179,315
$
597,836
$
629,159
(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:42)(cid:82)(cid:89)(cid:87)(cid:3)(cid:18)(cid:3)(cid:42)(cid:54)(cid:40) 1
(cid:36)(cid:36)(cid:36)(cid:3)(cid:16)(cid:3)(cid:36)(cid:36)
(cid:36)(cid:3)(cid:16)(cid:3)(cid:37)(cid:37)(cid:37)
(cid:37)(cid:72)(cid:79)(cid:82)(cid:90)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)
(cid:49)(cid:82)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
U.S. Treasury
$
1,000
$
995
$
— $
— $
— $
— $
— $
— $
— $
— $
1,000
$
995
—
—
33,798
34,503
9,912
9,348
—
—
12,971
12,966
56,681
56,817
Municipal and
other tax-
exempt
Residential
mortgage-
backed
securities:
U. S.
government
agencies:
FNMA
FHLMC
GNMA
Other
Total U.S.
government
agencies
Private issue:
Alt-A
loans
Jumbo-A
loans
Total private
issue
Total residential
mortgage-
backed
securities
Commercial
mortgage-
backed
securities
guaranteed by
U.S.
government
agencies
Other debt
securities
Perpetual
preferred
stock
Equity securities
and mutual
funds
3,156,214
3,187,215
1,940,915
1,949,335
763,967
761,801
—
—
5,861,096
5,898,351
—
—
—
—
—
—
5,861,096
5,898,351
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,919,044
2,905,796
—
—
4,400
4,151
—
—
—
—
—
—
—
4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
56,387
62,574
71,724
76,544
128,111
139,118
—
128,111
139,118
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,156,214
3,187,215
1,940,915
1,949,335
763,967
761,801
—
—
—
5,861,096
5,898,351
—
—
—
56,387
62,574
71,724
76,544
128,111
139,118
—
5,989,207
6,037,469
—
—
—
2,919,044
2,905,796
4,400
4,151
17,171
19,672
—
6,406
7,429
10,765
12,243
478
—
—
—
—
17,117
17,355
17,121
17,833
Total available
for sale
securities
$ 9,042,733
1 U.S. government and government sponsored enterprises are not rated by the nationally-recognized rating agencies as these securities are guaranteed by agencies of the U.S. government or
$ 9,004,624
$ 8,805,142
$ 8,781,140
$ 138,876
$151,361
$ 30,321
$ 39,132
$ 16,777
16,318
30,088
38,202
$
$
$
government-sponsored enterprises.
104
At December 31, 2015, the entire portfolio of privately issued residential mortgage-backed securities was rated below investment
grade by at least one of the nationally-recognized rating agencies. The gross unrealized loss on these securities totaled $827 thousand.
Ratings by the nationally-recognized rating agencies are subjective in nature and accordingly ratings can vary significantly amongst
the agencies. Limitations generally expressed by the rating agencies include statements that ratings do not predict the specific
percentage default likelihood over any given period of time and that ratings do not opine on expected loss severity of an obligation
should the issuer default. As such, the impairment of securities rated below investment grade by at least one of the nationally-
recognized rating agencies was evaluated to determine if we expect not to recover the entire amortized cost basis of the security. This
evaluation was based on projections of estimated cash flows based on individual loans underlying each security using current and
anticipated increases in unemployment and default rates, changes in housing prices and estimated liquidation costs at foreclosure.
The primary assumptions used in this evaluation were:
Unemployment rate
Housing price appreciation/depreciation
Estimated liquidation costs
Discount rates
1 Federal Housing Finance Agency
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
Decreasing to 4.8% over the next 12
months and remain at 4.8% thereafter.
Held constant at 5.6% over the next 12
months and remain at 5.6% thereafter.
Starting with current depreciated
housing prices based on information
derived from the FHFA1, appreciating
3.5% over the next 12 months, then
flat for the following 12 months and
then appreciating at 2% per year
thereafter.
Starting with current depreciated
housing prices based on information
derived from the FHFA1, appreciating
3.2% over the next 12 months, then
flat for the following 12 months and
then appreciating at 2% per year
thereafter.
Reflect actual historical liquidations
costs observed on Jumbo and Alt-A
residential mortgage loans in securities
owned by the Company.
Reflect actual historical liquidations
costs observed on Jumbo and Alt-A
residential mortgage loans in securities
owned by the Company.
Estimated cash flows were discounted
at rates that range from 2.00% to
6.25% based on our current expected
yields.
Estimated cash flows were discounted
at rates that range from 2.00% to
6.25% based on our current expected
yields.
We also consider the current loan-to-value ratio and remaining credit enhancement as part of the assessment of the cash flows
available to recover the amortized cost of the debt securities. Each factor is considered in the evaluation.
The Company calculates the current loan-to-value ratio for each mortgage-backed security using loan-level data. Current loan-to-value
ratio is the current outstanding loan amount divided by an estimate of the current home value. The current home value is derived from
FHFA data. FHFA provides historical information on home price depreciation at both the Metropolitan Statistical Area and state
level. This information is matched to each loan to estimate the home price depreciation. Data is accumulated from the loan level to
determine the current loan-to-value ratio for the security as a whole.
Remaining credit enhancement is the amount of credit enhancement available to absorb current projected losses within the pool of
loans that support the security. The Company acquires the benefit of credit enhancement by investing in super-senior tranches for
many of our residential mortgage-backed securities. Subordinated tranches held by other investors are specifically designed to absorb
losses before the super-senior tranches which added an additional layer to the typical credit support for these types of bonds. Current
projected losses consider depreciation of home prices based on FHFA data, estimated costs and additional losses to liquidate collateral
and delinquency status of the individual loans underlying the security.
Credit loss impairment is recorded as a charge to earnings. Additional impairment based on the difference between the total unrealized
loss and the estimated credit loss on these securities was charged against other comprehensive income, net of deferred taxes.
The Company recognized $157 thousand credit loss impairment on private-label residential mortgage-backed securities in earnings
during 2015. No credit loss impairment was recognized in earnings on private-label residential mortgage-backed securities in 2014
and $938 thousand was recognized in 2013.
105
The Company recognized a $1.4 million of credit loss impairment in 2013 on certain below investment grade municipal securities
based on an assessment of the issuer's on-going financial difficulties and bankruptcy filing in 2011. These below investment grade
municipal securities were subsequently redeemed by the issuer during 2013.
A distribution of the amortized cost (after recognition of the other-than-temporary impairment), fair value and credit loss impairments
recognized on our privately issued residential mortgage-backed securities is as follows (in thousands, except for number of securities):
(cid:3)
(cid:3)
Alt-A
Jumbo-A
Total
(cid:3)
(cid:3)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
14
30
44
(cid:3)
(cid:3)
$
$
(cid:3)
(cid:3)
(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:47)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:53)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:47)(cid:76)(cid:73)(cid:72)(cid:16)(cid:87)(cid:82)(cid:16)(cid:71)(cid:68)(cid:87)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
56,387
$
62,574
71,724
76,544
128,111
$ 139,118
4
—
4
(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)
157
$
—
157
$
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
14
29
43
(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)
$ 36,284
18,220
$ 54,504
Impaired equity securities, including perpetual preferred stocks, are evaluated based on management's ability and intent to hold the
securities until fair value recovers over periods not to exceed three years. The assessment of the ability and intent to hold these
securities focuses on the liquidity needs, asset/liability management objectives and securities portfolio objectives. Factors considered
when assessing recovery include forecasts of general economic conditions and specific performance of the issuer, analyst ratings and
credit spreads for preferred stocks which have debt-like characteristics. The Company has evaluated the near-term prospects of the
investments in relation to the severity and duration of the impairment and based on that evaluation has the ability and intent to hold
these investments until a recovery in fair value. Based on this evaluation, $1.7 million of other-than-temporary impairment losses were
recorded in earnings on equity securities during 2015. All remaining impairment of equity securities was considered temporary at
December 31, 2015 and December 31, 2014. A $373 thousand other-than-temporary impairment loss related to equity securities was
recorded in earnings in 2014 and no impairment losses were recognized on equity securities in 2013.
The following is a tabular roll forward of the amount of credit-related OTTI recognized on available for sale debt securities in
earnings (in thousands):
Balance of credit-related OTTI recognized on available for sale debt, beginning of period
(cid:7)
(cid:24)(cid:23)(cid:15)(cid:22)(cid:23)(cid:26)
$
67,346
$
75,228
Additions for credit-related OTTI not previously recognized
Additions for increases in credit-related OTTI previously recognized when there is no intent to sell and
no requirement to sell before recovery of amortized cost
Reductions for change in intent to hold before recovery
Sales
(cid:178)
(cid:20)(cid:24)(cid:26)
(cid:178)
(cid:178)
—
—
—
(12,999)
618
320
(3,589)
(5,231)
Balance of credit-related OTTI recognized on available for sale debt securities, end of period
(cid:7)
(cid:24)(cid:23)(cid:15)(cid:24)(cid:19)(cid:23)
$
54,347
$
67,346
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Fair value option securities represent securities which the Company has elected to carry at fair value and separately identified on the
Consolidated Balance Sheets with changes in the fair value recognized in earnings as they occur. Certain residential mortgage-backed
securities issued by U.S. government agencies and derivative contracts are held as an economic hedge of the mortgage servicing
rights.
The fair value and net unrealized gain (loss) included in Fair value option securities is as follows (in thousands):
U.S. agency residential mortgage-backed securities
106
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
(cid:7)
(cid:23)(cid:23)(cid:23)(cid:15)(cid:21)(cid:20)(cid:26)
(cid:7)
(cid:11)(cid:21)(cid:15)(cid:19)(cid:25)(cid:19)(cid:12) $
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
311,597
(cid:49)(cid:72)(cid:87)
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
1,624
$
(cid:53)(cid:72)(cid:86)(cid:87)(cid:85)(cid:76)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Restricted equity securities include stock we are required to hold as members of the Federal Reserve system and the Federal Home
Loan Banks ("FHLB"). Restricted equity securities are carried at cost as these securities do not have a readily determined fair value
because ownership of these shares is restricted and they lack a market. A summary of restricted equity securities follows (in
thousands):
Federal Reserve Bank stock
Federal Home Loan Bank stock
Other
Total
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:7)
(cid:22)(cid:25)(cid:15)(cid:20)(cid:23)(cid:27)
$
(cid:21)(cid:22)(cid:26)(cid:15)(cid:22)(cid:25)(cid:24)
(cid:20)(cid:26)(cid:20)
35,018
106,476
—
(cid:21)(cid:26)(cid:22)(cid:15)(cid:25)(cid:27)(cid:23)
$
141,494
107
(cid:11)(cid:22)(cid:12)(cid:3)(cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in
the balance sheet at December 31, 2015 (in thousands):
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
(cid:49)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:20)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:37)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-
backed securities
Interest rate swaps
Energy contracts
Agricultural contracts
Foreign exchange contracts
Equity option contracts
(cid:7) (cid:20)(cid:23)(cid:15)(cid:24)(cid:27)(cid:22)(cid:15)(cid:19)(cid:24)(cid:21)
(cid:7) (cid:23)(cid:22)(cid:15)(cid:21)(cid:26)(cid:19)
(cid:7)
(cid:11)(cid:21)(cid:27)(cid:15)(cid:22)(cid:19)(cid:24)(cid:12) (cid:7)
(cid:20)(cid:23)(cid:15)(cid:28)(cid:25)(cid:24)
(cid:7)
(cid:178) (cid:7)
(cid:20)(cid:15)(cid:22)(cid:22)(cid:21)(cid:15)(cid:19)(cid:23)(cid:23)
(cid:23)(cid:26)(cid:19)(cid:15)(cid:25)(cid:20)(cid:22)
(cid:25)(cid:20)(cid:15)(cid:25)(cid:25)(cid:21)
(cid:24)(cid:23)(cid:25)(cid:15)(cid:24)(cid:26)(cid:21)
(cid:20)(cid:22)(cid:26)(cid:15)(cid:21)(cid:26)(cid:27)
(cid:22)(cid:20)(cid:15)(cid:26)(cid:23)(cid:23)
(cid:27)(cid:22)(cid:15)(cid:19)(cid:23)(cid:24)
(cid:21)(cid:15)(cid:24)(cid:28)(cid:20)
(cid:23)(cid:28)(cid:27)(cid:15)(cid:27)(cid:22)(cid:19)
(cid:22)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:178)
(cid:11)(cid:21)(cid:21)(cid:15)(cid:28)(cid:26)(cid:19)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:20)(cid:24)(cid:27)(cid:12)
(cid:178)
(cid:178)
(cid:22)(cid:20)(cid:15)(cid:26)(cid:23)(cid:23)
(cid:25)(cid:19)(cid:15)(cid:19)(cid:26)(cid:24)
(cid:20)(cid:15)(cid:23)(cid:22)(cid:22)
(cid:23)(cid:28)(cid:27)(cid:15)(cid:27)(cid:22)(cid:19)
(cid:22)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:11)(cid:20)(cid:15)(cid:23)(cid:21)(cid:23)(cid:12)
(cid:11)(cid:20)(cid:27)(cid:15)(cid:25)(cid:19)(cid:25)(cid:12)
(cid:178)
(cid:11)(cid:23)(cid:15)(cid:20)(cid:23)(cid:19)(cid:12)
(cid:11)(cid:23)(cid:26)(cid:19)(cid:12)
Total customer risk management programs
(cid:20)(cid:26)(cid:15)(cid:20)(cid:22)(cid:20)(cid:15)(cid:21)(cid:21)(cid:20)
(cid:25)(cid:25)(cid:22)(cid:15)(cid:21)(cid:25)(cid:19)
(cid:11)(cid:24)(cid:21)(cid:15)(cid:23)(cid:22)(cid:22)(cid:12)
(cid:25)(cid:20)(cid:19)(cid:15)(cid:27)(cid:21)(cid:26)
(cid:11)(cid:21)(cid:23)(cid:15)(cid:25)(cid:23)(cid:19)(cid:12)
Interest rate risk management programs
(cid:21)(cid:21)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:27)(cid:22)
(cid:178)
(cid:27)(cid:22)
(cid:178)
(cid:20)(cid:23)(cid:15)(cid:28)(cid:25)(cid:24)
(cid:22)(cid:19)(cid:15)(cid:22)(cid:21)(cid:19)
(cid:23)(cid:20)(cid:15)(cid:23)(cid:25)(cid:28)
(cid:20)(cid:15)(cid:23)(cid:22)(cid:22)
(cid:23)(cid:28)(cid:23)(cid:15)(cid:25)(cid:28)(cid:19)
(cid:22)(cid:15)(cid:22)(cid:20)(cid:19)
(cid:24)(cid:27)(cid:25)(cid:15)(cid:20)(cid:27)(cid:26)
(cid:27)(cid:22)
Total derivative contracts
(cid:7) (cid:20)(cid:26)(cid:15)(cid:20)(cid:24)(cid:22)(cid:15)(cid:21)(cid:21)(cid:20)
(cid:7) (cid:25)(cid:25)(cid:22)(cid:15)(cid:22)(cid:23)(cid:22)
(cid:7)
(cid:11)(cid:24)(cid:21)(cid:15)(cid:23)(cid:22)(cid:22)(cid:12) (cid:7) (cid:25)(cid:20)(cid:19)(cid:15)(cid:28)(cid:20)(cid:19)
(cid:7) (cid:11)(cid:21)(cid:23)(cid:15)(cid:25)(cid:23)(cid:19)(cid:12) (cid:7)
(cid:24)(cid:27)(cid:25)(cid:15)(cid:21)(cid:26)(cid:19)
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:49)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:239)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:37)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-
backed securities
Interest rate swaps
Energy contracts
Agricultural contracts
Foreign exchange contracts
Equity option contracts
(cid:7) (cid:20)(cid:23)(cid:15)(cid:20)(cid:25)(cid:27)(cid:15)(cid:28)(cid:21)(cid:26)
(cid:7) (cid:23)(cid:19)(cid:15)(cid:20)(cid:23)(cid:20)
(cid:7)
(cid:11)(cid:21)(cid:27)(cid:15)(cid:22)(cid:19)(cid:24)(cid:12) (cid:7)
(cid:20)(cid:20)(cid:15)(cid:27)(cid:22)(cid:25)
(cid:7)
(cid:11)(cid:20)(cid:15)(cid:22)(cid:19)(cid:27)(cid:12) (cid:7)
(cid:20)(cid:15)(cid:22)(cid:22)(cid:21)(cid:15)(cid:19)(cid:23)(cid:23)
(cid:23)(cid:25)(cid:22)(cid:15)(cid:26)(cid:19)(cid:22)
(cid:25)(cid:20)(cid:15)(cid:25)(cid:24)(cid:26)
(cid:24)(cid:23)(cid:25)(cid:15)(cid:23)(cid:19)(cid:24)
(cid:20)(cid:22)(cid:26)(cid:15)(cid:21)(cid:26)(cid:27)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:21)(cid:27)
(cid:27)(cid:20)(cid:15)(cid:27)(cid:25)(cid:28)
(cid:21)(cid:15)(cid:24)(cid:26)(cid:28)
(cid:23)(cid:28)(cid:27)(cid:15)(cid:24)(cid:26)(cid:23)
(cid:22)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:178)
(cid:11)(cid:21)(cid:21)(cid:15)(cid:28)(cid:26)(cid:19)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:20)(cid:24)(cid:27)(cid:12)
(cid:178)
(cid:178)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:21)(cid:27)
(cid:24)(cid:27)(cid:15)(cid:27)(cid:28)(cid:28)
(cid:20)(cid:15)(cid:23)(cid:21)(cid:20)
(cid:23)(cid:28)(cid:27)(cid:15)(cid:24)(cid:26)(cid:23)
(cid:22)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:11)(cid:21)(cid:19)(cid:15)(cid:24)(cid:22)(cid:19)(cid:12)
(cid:178)
(cid:11)(cid:20)(cid:15)(cid:21)(cid:23)(cid:27)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:28)(cid:24)(cid:20)(cid:12)
(cid:178)
Total customer risk management programs
(cid:20)(cid:25)(cid:15)(cid:26)(cid:20)(cid:19)(cid:15)(cid:19)(cid:20)(cid:23)
(cid:25)(cid:24)(cid:27)(cid:15)(cid:27)(cid:26)(cid:20)
(cid:11)(cid:24)(cid:21)(cid:15)(cid:23)(cid:22)(cid:22)(cid:12)
(cid:25)(cid:19)(cid:25)(cid:15)(cid:23)(cid:22)(cid:27)
(cid:11)(cid:21)(cid:24)(cid:15)(cid:19)(cid:22)(cid:26)(cid:12)
Interest rate risk management programs
(cid:26)(cid:24)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:22)(cid:19)(cid:19)
(cid:178)
(cid:22)(cid:19)(cid:19)
(cid:178)
(cid:20)(cid:19)(cid:15)(cid:24)(cid:21)(cid:27)
(cid:20)(cid:20)(cid:15)(cid:22)(cid:28)(cid:27)
(cid:24)(cid:27)(cid:15)(cid:27)(cid:28)(cid:28)
(cid:20)(cid:26)(cid:22)
(cid:23)(cid:28)(cid:25)(cid:15)(cid:25)(cid:21)(cid:22)
(cid:22)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:24)(cid:27)(cid:20)(cid:15)(cid:23)(cid:19)(cid:20)
(cid:22)(cid:19)(cid:19)
Total derivative contracts
1 Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the
(cid:11)(cid:24)(cid:21)(cid:15)(cid:23)(cid:22)(cid:22)(cid:12) (cid:7) (cid:25)(cid:19)(cid:25)(cid:15)(cid:26)(cid:22)(cid:27)
(cid:7) (cid:11)(cid:21)(cid:24)(cid:15)(cid:19)(cid:22)(cid:26)(cid:12) (cid:7)
(cid:7) (cid:20)(cid:25)(cid:15)(cid:26)(cid:27)(cid:24)(cid:15)(cid:19)(cid:20)(cid:23)
(cid:7) (cid:25)(cid:24)(cid:28)(cid:15)(cid:20)(cid:26)(cid:20)
(cid:7)
(cid:24)(cid:27)(cid:20)(cid:15)(cid:26)(cid:19)(cid:20)
contract.
When bilateral netting agreements exist between the Company and its counterparties that create a single legal claim or
obligation to pay or receive the net amount in settlement of the individual derivative contracts, the Company reports derivative
assets and liabilities on a net by counterparty basis. Contracts may also require the Company to provide or receive cash margin
as collateral for derivative assets and liabilities. Derivative assets and liabilities are reported net of cash margin when certain
conditions are met.
108
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in
the balance sheet at December 31, 2014 (in thousands):
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
(cid:49)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:20)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:37)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-
backed securities
Interest rate swaps
Energy contracts
Agricultural contracts
Foreign exchange contracts
Equity option contracts
$ 13,313,615
$ 94,719
$
(39,359) $
55,360
$
— $
1,165,568
35,405
579,801
141,166
47,657
290,965
194,960
1,904
238,395
10,834
—
(48,624)
(1,256)
—
—
35,405
92,542
648
238,395
10,834
—
(71,310)
—
—
—
Total customer risk management programs
15,592,566
522,423
(89,239)
433,184
(71,310)
Interest rate risk management programs
—
—
—
—
—
55,360
35,405
21,232
648
238,395
10,834
361,874
—
Total derivative contracts
$ 15,592,566
$ 522,423
$
(89,239) $ 433,184
$ (71,310) $
361,874
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:49)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:239)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:37)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)
(cid:38)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-
backed securities
Interest rate swaps
Energy contracts
Agricultural contracts
Foreign exchange contracts
Equity option contracts
$ 13,471,880
$ 91,949
$
(39,359) $
52,590
$ (52,290) $
1,165,568
35,599
579,801
142,839
47,418
290,856
194,960
1,908
238,118
10,834
—
(48,624)
(1,256)
—
—
35,599
94,215
652
238,118
10,834
(18,717)
—
(596)
(6,703)
—
Total customer risk management programs
15,750,483
521,247
(89,239)
432,008
(78,306)
Interest rate risk management programs
47,000
852
—
852
—
300
16,882
94,215
56
231,415
10,834
353,702
852
Total derivative contracts
1 Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the
(89,239) $ 432,860
$ (78,306) $
$ 15,797,483
$ 522,099
$
354,554
contract.
109
The following summarizes the pre-tax net gains (losses) on derivative instruments and where they are recorded in the Consolidated
Statement of Earnings (in thousands):
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:37)(cid:85)(cid:82)(cid:78)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:68)(cid:81)(cid:71)(cid:3)
(cid:55)(cid:85)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
(cid:82)(cid:81)(cid:3)
(cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)(cid:3)
(cid:49)(cid:72)(cid:87)
(cid:37)(cid:85)(cid:82)(cid:78)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:68)(cid:81)(cid:71)(cid:3)
(cid:55)(cid:85)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
(cid:82)(cid:81)(cid:3)
(cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)
(cid:49)(cid:72)(cid:87)
(cid:37)(cid:85)(cid:82)(cid:78)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:68)(cid:81)(cid:71)(cid:3)
(cid:55)(cid:85)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)
(cid:82)(cid:81)(cid:3)
(cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)
(cid:49)(cid:72)(cid:87)
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-
backed securities
Interest rate swaps
Energy contracts
Agricultural contracts
Foreign exchange contracts
Equity option contracts
Total customer risk management programs
Interest rate risk management programs
Total derivative contracts
(cid:7)
(cid:23)(cid:19)(cid:15)(cid:26)(cid:20)(cid:23)
(cid:7)
(cid:7)
(cid:22)(cid:22)(cid:15)(cid:27)(cid:26)(cid:26)
(cid:7)
(cid:178) $
27,007
$
— $
29,614
$
(cid:21)(cid:15)(cid:19)(cid:25)(cid:25)
(cid:23)(cid:15)(cid:19)(cid:25)(cid:19)
(cid:20)(cid:21)(cid:22)
(cid:26)(cid:28)(cid:26)
(cid:178)
(cid:23)(cid:19)(cid:15)(cid:28)(cid:21)(cid:22)
(cid:11)(cid:21)(cid:19)(cid:28)(cid:12)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:23)(cid:22)(cid:19)
(cid:23)(cid:22)(cid:19)
$
2,494
6,572
146
1,581
(cid:178)
37,800
(cid:178)
37,800
—
—
—
—
—
—
2,776
2,991
8,303
357
687
—
41,952
—
$
2,776
$
41,952
$
—
—
—
—
—
—
—
(4,367)
(4,367)
At December 31, 2015, BOK Financial had interest rate swaps with a notional value of $97 million used as part of the
economic hedge of the change in the fair value of mortgage servicing rights.
As discussed in Note 7, certain derivative contracts not designated as hedging instruments related to mortgage loan
commitments and forward sales contracts are included in Residential mortgage loans held for sale on the Consolidated Balance
Sheets. See Note 7 for additional discussion of notional, fair value and impact on earnings of these contracts. Forward sales
contracts are not considered swaps under the Commodity and Futures Trading Commission final rules.
None of these derivative contracts have been designated as hedging instruments.
(cid:11)(cid:23)(cid:12)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:47)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)
The portfolio segments of the loan portfolio are as follows (in thousands):
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:41)(cid:76)(cid:91)(cid:72)(cid:71)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:57)(cid:68)(cid:85)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:49)(cid:82)(cid:81)(cid:16)
(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:7) (cid:20)(cid:15)(cid:27)(cid:24)(cid:19)(cid:15)(cid:24)(cid:23)(cid:27)
(cid:7) (cid:27)(cid:15)(cid:22)(cid:21)(cid:24)(cid:15)(cid:24)(cid:24)(cid:28)
(cid:7)
(cid:26)(cid:25)(cid:15)(cid:23)(cid:21)(cid:23)
(cid:7) (cid:20)(cid:19)(cid:15)(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:22)(cid:20)
(cid:41)(cid:76)(cid:91)(cid:72)(cid:71)
(cid:53)(cid:68)(cid:87)(cid:72)
$ 1,736,976
(cid:57)(cid:68)(cid:85)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
$ 7,345,167
(cid:49)(cid:82)(cid:81)(cid:16)
(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
$ 13,527
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$ 9,095,670
(cid:25)(cid:21)(cid:26)(cid:15)(cid:25)(cid:26)(cid:27)
(cid:21)(cid:15)(cid:25)(cid:21)(cid:21)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:20)(cid:15)(cid:24)(cid:28)(cid:27)(cid:15)(cid:28)(cid:28)(cid:21)
(cid:28)(cid:20)(cid:15)(cid:27)(cid:20)(cid:25)
(cid:21)(cid:20)(cid:25)(cid:15)(cid:25)(cid:25)(cid:20)
(cid:23)(cid:25)(cid:19)(cid:15)(cid:23)(cid:20)(cid:27)
(cid:28)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:23)(cid:19)
(cid:23)(cid:25)(cid:22)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:25)(cid:15)(cid:27)(cid:28)(cid:22)
(cid:24)(cid:24)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
721,513
1,988,080
1,698,620
102,865
202,771
331,274
18,557
48,121
566
2,728,150
1,949,512
434,705
(cid:7) (cid:23)(cid:15)(cid:20)(cid:25)(cid:28)(cid:15)(cid:19)(cid:22)(cid:23)
(cid:7) (cid:20)(cid:20)(cid:15)(cid:25)(cid:21)(cid:23)(cid:15)(cid:28)(cid:28)(cid:21)
(cid:7) (cid:20)(cid:23)(cid:26)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:7) (cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
$ 4,259,974
$ 9,867,292
$ 80,771
$ 14,208,037
(cid:7)
(cid:20)(cid:15)(cid:21)(cid:19)(cid:26)
(cid:7)
(cid:26)(cid:15)(cid:23)(cid:22)(cid:21)
$
125
$
8,170
Commercial
Commercial real
estate
Residential mortgage
Personal
Total
Accruing loans past
due (90 days)1
Foregone interest on
nonaccrual loans
1 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
110
At December 31, 2015, loans to businesses and individuals with collateral primarily located in Texas totaled $5.3 billion or
33% of the total loan portfolio. Loans to businesses and individuals with collateral primarily located in Oklahoma totaled $3.9
billion or 24% of our total loan portfolio. Loans for which the collateral location is not relevant, such as unsecured loans and
reserve-based energy loans, are distributed by the borrower’s primary operating location. These geographic concentrations
subject the loan portfolio to the general economic conditions within these areas. At December 31, 2014, loans to businesses and
individuals with collateral primarily located in Texas totaled $4.9 billion or 34% of the loan portfolio and loans to businesses
and individuals with collateral primarily located in Oklahoma totaled $3.4 billion or 24% of the loan portfolio.
Commercial
Commercial loans represent loans for working capital, facilities acquisition or expansion, purchases of equipment and other
needs of commercial customers primarily located within our geographical footprint. Commercial loans are underwritten
individually and represent on-going relationships based on a thorough knowledge of the customer, the customer’s industry and
market. While commercial loans are generally secured by the customer’s assets including real property, inventory, accounts
receivable, operating equipment, interest in mineral rights and other property and may also include personal guarantees of the
owners and related parties, the primary source of repayment of the loans is the on-going cash flow from operations of the
customer’s business. Inherent lending risk is centrally monitored on a continuous basis from underwriting throughout the life of
the loan for compliance with commercial lending policies.
At December 31, 2015, commercial loans with collateral primarily located in Texas totaled $3.5 billion or 34% of the
commercial loan portfolio segment and commercial loans with collateral primarily located in Oklahoma totaled $2.5 billion or
24% of the commercial loan portfolio segment. The commercial loan portfolio segment is further divided into loan classes. The
energy loan class totaled $3.1 billion or 19% of total loans, including $2.5 billion of outstanding loans to energy producers.
Approximately 62% of committed production loans were secured by properties primarily producing oil and 38% are secured by
properties producing natural gas. The services loan class totaled $2.8 billion or 17% of total loans. Approximately $1.2 billion
of loans in the services category consisted of loans with individual balances of less than $10 million. Businesses included in the
services class include governmental, financial & insurance, religious and not-for-profit, educational and professional/technical
services. The healthcare loan class totaled $1.9 billion or 12% of total loans. The healthcare loan class consists primarily of
loans for the development and operation of senior housing and care facilities, including independent living, assisted living and
skilled nursing. Healthcare also includes loans to hospitals and other medical service providers.
At December 31, 2014, commercial loans with collateral primarily located in Texas totaled $3.2 billion or 36% of the
commercial loan portfolio segment and commercial loans with collateral primarily located in Oklahoma totaled $2.0 billion or
22% of the commercial loan portfolio segment. The energy loan class totaled $2.9 billion or 20% of total loans, including $2.5
billion of outstanding loans to energy producers. At December 31, 2014, approximately 59% of committed production loans
were secured by properties primarily producing oil and 41% were secured by properties producing natural gas. The services
loan class totaled $2.4 billion or 17% of total loans. Approximately $1.2 billion of loans in the services category consisted of
loans with individual balances of less than $10 million. The healthcare loan class totaled $1.5 billion or 10% of total loans.
Commercial Real Estate
Commercial real estate loans are for the construction of buildings or other improvements to real estate and property held by
borrowers for investment purposes primarily within our geographical footprint. We require collateral values in excess of the
loan amounts, demonstrated cash flows in excess of expected debt service requirements, equity investment in the project and a
portion of the project already sold, leased or permanent financing already secured. The expected cash flows from all significant
new or renewed income producing property commitments are stress tested to reflect the risks in varying interest rates, vacancy
rates and rental rates. As with commercial loans, inherent lending risks are centrally monitored on a continuous basis from
underwriting throughout the life of the loan for compliance with applicable lending policies.
At December 31, 2015, 30% of commercial real estate loans are secured by properties primarily located in the Dallas and
Houston areas of Texas. An additional 13% of commercial real estate loans are secured by properties located primarily in the
Tulsa and Oklahoma City metropolitan areas of Oklahoma. At December 31, 2014, 34% of commercial real estate loans were
secured by properties in Texas, 16% of commercial real estate loans were secured by properties in Oklahoma.
111
Residential Mortgage and Personal
Residential mortgage loans provide funds for our customers to purchase or refinance their primary residence or to borrow
against the equity in their home. Residential mortgage loans are secured by a first or second mortgage on the customer’s
primary residence. Personal loans consist primarily of loans secured by the cash surrender value of insurance policies and
marketable securities. It also includes direct loans secured by and for the purchase of automobiles, recreational and marine
equipment as well as other unsecured loans. Residential mortgage and personal loans are made in accordance with underwriting
policies we believe to be conservative and are fully documented. Credit scoring is assessed based on significant credit
characteristics including credit history, residential and employment stability. Residential mortgage loans retained in the
Company’s portfolio are primarily composed of various mortgage programs to support customer relationships including jumbo
mortgage loans, non-builder construction loans and special loan programs for high net worth individuals and certain
professionals. Jumbo loans may be fixed or variable rate and are fully amortizing. Jumbo loans generally conform to
government sponsored entity standards, except that the loan size exceeds maximums required under these standards. These
loans generally require a minimum FICO score of 720 and a maximum debt-to-income ratio (“DTI”) of 38%. Loan-to-value
(“LTV”) ratios are tiered from 60% to 100%, depending on the market. Special mortgage programs include fixed and variable
fully amortizing loans tailored to the needs of certain healthcare professionals. Variable rate loans are fully indexed at
origination and may have fixed rates for three to ten years, then adjust annually thereafter.
At December 31, 2015 and 2014, residential mortgage loans included $197 million and $206 million, respectively, of loans
guaranteed by U.S. government agencies previously sold into GNMA mortgage pools. These loans either have been
repurchased or are eligible to be repurchased by the Company when certain defined delinquency criteria are met. Although
payments on these loans generally are past due more than 90 days, interest continues to accrue based on the government
guarantee.
Home equity loans totaled $735 million at December 31, 2015 and $774 million at December 31, 2014. At December 31, 2015,
68% of the home equity loan portfolio was comprised of first lien loans and 32% of the home equity portfolio was comprised
of junior lien loans. Junior lien loans were distributed 65% to amortizing term loans and 35% to revolving lines of credit. At
December 31, 2014, 69% of the home equity portfolio was comprised of first lien loans and 31% of the home equity loan
portfolio was comprised of junior lien loans. Junior lien loans were distributed 71% to amortizing term loans and 29% to
revolving lines of credit. Home equity loans generally require a minimum FICO score of 700 and a maximum DTI of 40%. The
maximum loan amount available for our home equity loan products is generally $400 thousand. Revolving loans have a 5 year
revolving period followed by 15 year term of amortizing repayments. Interest-only home equity loans may not be extended for
any additional revolving time. All other home equity loans may be extended at management's discretion for an additional 5 year
revolving term subject to an update of certain credit information.
At December 31, 2015, 37% of residential mortgage loans are secured by properties located in Oklahoma, 29% of residential
mortgage loans are secured by properties located in Texas, 12% of residential mortgage are secured by properties located in
New Mexico and 9% of residential mortgage are secured by properties located in Colorado. At December 31, 2014, 38% of
residential mortgage loans were secured by properties in Oklahoma, 28% of residential mortgage were secured by properties in
Texas 12% of residential mortgage loans are secured by properties in New Mexico and 10% of residential mortgage loans are
secured by properties in Colorado.
Credit Commitments
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in
the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a
fee. At December 31, 2015, outstanding commitments totaled $8.5 billion. Because some commitments are expected to expire
before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial
uses the same credit policies in making commitments as it does loans.
The amount of collateral obtained, if deemed necessary, is based upon management’s credit evaluation of the borrower.
112
Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party.
Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan
commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally,
BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan
commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the
underlying loan commitment. At December 31, 2015, outstanding standby letters of credit totaled $508 million. Commercial
letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is
consummated. At December 31, 2015, outstanding commercial letters of credit totaled $7.9 million.
Allowances for Credit Losses
BOK Financial maintains an allowance for loan losses and an accrual for off-balance sheet credit risk. The accrual for off-
balance sheet credit risk is maintained at a level that is appropriate to cover estimated losses associated with credit instruments
that are not currently recognized as assets such as loan commitments, standby letters of credit or guarantees. As discussed in
greater detail in Note 7, the Company also has separate accruals related to off-balance sheet credit risk related to residential
mortgage loans previously sold with full or partial recourse and for residential mortgage loans sold to government sponsored
agencies under standard representations and warranties.
The allowance for loan losses consists of specific allowances attributed to impaired loans that have not yet been charged down
to amounts we expect to recover, general allowances for unimpaired loans based on estimated loss rates by loan class and
nonspecific allowances based on general economic conditions, concentration in loans with large balances and other relevant
factors.
The activity in the allowance for loan losses and the accrual for off-balance sheet credit risk related to loan commitments and
standby letters of credit for the year ended December 31, 2015 is summarized as follows (in thousands):
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:29)
Beginning balance
Provision for loan losses
Loans charged off
Recoveries
Ending balance
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:68)(cid:79)(cid:3)(cid:40)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)
(cid:53)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)
(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)
(cid:51)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)
(cid:49)(cid:82)(cid:81)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:7)
(cid:28)(cid:19)(cid:15)(cid:27)(cid:26)(cid:24)
(cid:23)(cid:22)(cid:15)(cid:23)(cid:25)(cid:23)
(cid:11)(cid:25)(cid:15)(cid:26)(cid:22)(cid:23)(cid:12)
(cid:21)(cid:15)(cid:26)(cid:21)(cid:28)
(cid:7)
(cid:23)(cid:21)(cid:15)(cid:23)(cid:23)(cid:24)
(cid:7)
(cid:21)(cid:22)(cid:15)(cid:23)(cid:24)(cid:27)
(cid:7)
(cid:23)(cid:15)(cid:21)(cid:22)(cid:22)
(cid:7)
(cid:21)(cid:27)(cid:15)(cid:19)(cid:23)(cid:24)
(cid:7)
(cid:20)(cid:27)(cid:28)(cid:15)(cid:19)(cid:24)(cid:25)
(cid:11)(cid:20)(cid:20)(cid:15)(cid:20)(cid:27)(cid:28)(cid:12)
(cid:11)(cid:28)(cid:23)(cid:23)(cid:12)
(cid:20)(cid:20)(cid:15)(cid:19)(cid:26)(cid:28)
(cid:11)(cid:22)(cid:15)(cid:19)(cid:19)(cid:23)(cid:12)
(cid:11)(cid:21)(cid:15)(cid:21)(cid:19)(cid:24)(cid:12)
(cid:20)(cid:15)(cid:21)(cid:25)(cid:19)
(cid:21)(cid:15)(cid:20)(cid:25)(cid:26)
(cid:11)(cid:24)(cid:15)(cid:21)(cid:27)(cid:27)(cid:12)
(cid:22)(cid:15)(cid:19)(cid:24)(cid:21)
(cid:21)(cid:15)(cid:19)(cid:27)(cid:20)
(cid:178)
(cid:178)
(cid:22)(cid:22)(cid:15)(cid:24)(cid:20)(cid:28)
(cid:11)(cid:20)(cid:24)(cid:15)(cid:20)(cid:26)(cid:20)(cid:12)
(cid:20)(cid:27)(cid:15)(cid:20)(cid:21)(cid:19)
(cid:7)
(cid:20)(cid:22)(cid:19)(cid:15)(cid:22)(cid:22)(cid:23)
(cid:7)
(cid:23)(cid:20)(cid:15)(cid:22)(cid:28)(cid:20)
(cid:7)
(cid:20)(cid:28)(cid:15)(cid:24)(cid:19)(cid:28)
(cid:7)
(cid:23)(cid:15)(cid:20)(cid:25)(cid:23)
(cid:7)
(cid:22)(cid:19)(cid:15)(cid:20)(cid:21)(cid:25)
(cid:7)
(cid:21)(cid:21)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:73)(cid:16)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)
(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:29)
Beginning balance
Provision for off-balance sheet credit
risk
Ending balance
Total provision for credit losses
(cid:7)
(cid:7)
(cid:7)
(cid:23)(cid:26)(cid:24)
(cid:20)(cid:15)(cid:19)(cid:22)(cid:20)
(cid:20)(cid:15)(cid:24)(cid:19)(cid:25)
(cid:23)(cid:23)(cid:15)(cid:23)(cid:28)(cid:24)
(cid:7)
(cid:7)
(cid:7)
(cid:26)(cid:19)(cid:26)
(cid:7)
(cid:21)(cid:27)
(cid:7)
(cid:21)(cid:19)
(cid:7)
(cid:178) (cid:7)
(cid:20)(cid:15)(cid:21)(cid:22)(cid:19)
(cid:11)(cid:24)(cid:24)(cid:23)(cid:12)
(cid:20)(cid:24)(cid:22)
(cid:7)
(cid:21)
(cid:22)(cid:19)
(cid:7)
(cid:21)
(cid:21)(cid:21)
(cid:11)(cid:20)(cid:20)(cid:15)(cid:26)(cid:23)(cid:22)(cid:12) (cid:7)
(cid:11)(cid:22)(cid:15)(cid:19)(cid:19)(cid:21)(cid:12) (cid:7)
(cid:21)(cid:15)(cid:20)(cid:25)(cid:28)
(cid:178)
(cid:178) (cid:7)
(cid:23)(cid:27)(cid:20)
(cid:20)(cid:15)(cid:26)(cid:20)(cid:20)
(cid:21)(cid:15)(cid:19)(cid:27)(cid:20)
(cid:7)
(cid:22)(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:7)
(cid:7)
113
The activity in the allowance for loan losses and the accrual for off-balance sheet credit risk related to loan commitments and
standby letters of credit for the year ended December 31, 2014 is summarized as follows (in thousands):
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:68)(cid:79)(cid:3)(cid:40)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)
(cid:53)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)
(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)
(cid:51)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)
(cid:49)(cid:82)(cid:81)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:29)
Beginning balance
Provision for loan losses
Loans charged off
Recoveries
Ending balance
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:73)(cid:16)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)
(cid:85)(cid:76)(cid:86)(cid:78)(cid:29)
Beginning balance
Provision for off-balance sheet credit
risk
Ending balance
Total provision for credit losses
$
$
$
$
$
79,180
$
41,573
$
29,465
$
6,965
$
28,213
$
185,396
9,561
(3,569)
5,703
(4,084)
(2,047)
7,003
(3,559)
(4,448)
2,000
(892)
(6,168)
4,328
(168)
—
—
858
(16,232)
19,034
90,875
$
42,445
$
23,458
$
4,233
$
28,045
$
189,056
119
$
1,876
$
90
$
3
$
— $
2,088
356
475
9,917
$
$
(1,169)
707
$
(62)
28
$
17
20
$
—
— $
(858)
1,230
(5,253) $
(3,621) $
(875) $
(168) $
—
The activity in the allowance for loan losses and the accrual for off-balance sheet credit risk related to loan commitments and
standby letters of credit for the year ended December 31, 2013 is summarized as follows (in thousands):
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:68)(cid:79)(cid:3)(cid:40)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)
(cid:53)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)
(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)
(cid:51)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)
(cid:49)(cid:82)(cid:81)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:29)
Beginning balance
Provision for loan losses
Loans charged off
Recoveries
Ending balance
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:73)(cid:16)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)
(cid:85)(cid:76)(cid:86)(cid:78)(cid:29)
Beginning balance
Provision for off-balance sheet credit
risk
Ending balance
Total provision for credit losses
$
$
$
$
$
65,280
$
54,884
$
41,703
$
9,453
$
44,187
$
215,507
12,747
(6,335)
7,488
(16,886)
(5,845)
9,420
(8,043)
(5,753)
1,558
83
(7,349)
4,778
(15,974)
—
—
(28,073)
(25,282)
23,244
79,180
$
41,573
$
29,465
$
6,965
$
28,213
$
185,396
475
$
1,353
$
78
$
9
$
— $
1,915
(356)
119
12,391
$
$
523
1,876
$
12
90
$
(16,363) $
(8,031) $
(6)
3
77
$
$
—
— $
173
2,088
(15,974) $
(27,900)
114
The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment
measurement method at December 31, 2015 is as follows (in thousands):
Commercial
Commercial real estate
Residential mortgage
Personal
Total
(cid:38)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:44)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:44)(cid:81)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:88)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:44)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:7) (cid:20)(cid:19)(cid:15)(cid:20)(cid:26)(cid:25)(cid:15)(cid:20)(cid:19)(cid:26)
(cid:7)
(cid:20)(cid:20)(cid:23)(cid:15)(cid:19)(cid:21)(cid:26)
(cid:7)
(cid:26)(cid:25)(cid:15)(cid:23)(cid:21)(cid:23)
(cid:7)
(cid:20)(cid:25)(cid:15)(cid:22)(cid:19)(cid:26)
(cid:7) (cid:20)(cid:19)(cid:15)(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:22)(cid:20)
(cid:7)
(cid:20)(cid:22)(cid:19)(cid:15)(cid:22)(cid:22)(cid:23)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:19)(cid:15)(cid:19)(cid:22)(cid:21)
(cid:20)(cid:15)(cid:27)(cid:20)(cid:24)(cid:15)(cid:25)(cid:24)(cid:22)
(cid:24)(cid:24)(cid:21)(cid:15)(cid:21)(cid:22)(cid:23)
(cid:23)(cid:20)(cid:15)(cid:22)(cid:26)(cid:22)
(cid:20)(cid:28)(cid:15)(cid:23)(cid:23)(cid:20)
(cid:23)(cid:15)(cid:20)(cid:25)(cid:23)
(cid:28)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:23)(cid:19)
(cid:23)(cid:25)(cid:22)
(cid:20)(cid:27)
(cid:25)(cid:27)
(cid:178)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:25)(cid:15)(cid:27)(cid:28)(cid:22)
(cid:24)(cid:24)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
(cid:23)(cid:20)(cid:15)(cid:22)(cid:28)(cid:20)
(cid:20)(cid:28)(cid:15)(cid:24)(cid:19)(cid:28)
(cid:23)(cid:15)(cid:20)(cid:25)(cid:23)
(cid:20)(cid:24)(cid:15)(cid:26)(cid:28)(cid:23)(cid:15)(cid:19)(cid:21)(cid:25)
(cid:20)(cid:26)(cid:28)(cid:15)(cid:19)(cid:19)(cid:24)
(cid:20)(cid:23)(cid:26)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:20)(cid:25)(cid:15)(cid:22)(cid:28)(cid:22)
(cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
(cid:20)(cid:28)(cid:24)(cid:15)(cid:22)(cid:28)(cid:27)
Nonspecific allowance
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:19)(cid:15)(cid:20)(cid:21)(cid:25)
Total
(cid:7) (cid:20)(cid:24)(cid:15)(cid:26)(cid:28)(cid:23)(cid:15)(cid:19)(cid:21)(cid:25)
(cid:7)
(cid:20)(cid:26)(cid:28)(cid:15)(cid:19)(cid:19)(cid:24)
(cid:7)
(cid:20)(cid:23)(cid:26)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:7)
(cid:20)(cid:25)(cid:15)(cid:22)(cid:28)(cid:22)
(cid:7) (cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
(cid:7)
(cid:21)(cid:21)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)
The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment
measurement method at December 31, 2014 is as follows (in thousands):
(cid:38)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:44)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:44)(cid:81)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:88)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:44)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)
Commercial
Commercial real estate
Residential mortgage
Personal
Total
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
9,082,143
$
$
2,709,593
1,901,391
434,139
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
90,709
42,404
23,353
4,233
14,127,266
160,699
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
13,527
$
$
18,557
48,121
566
80,771
Nonspecific allowance
—
—
—
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
166
41
105
—
312
—
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
9,095,670
$
$
2,728,150
1,949,512
434,705
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
90,875
42,445
23,458
4,233
14,208,037
161,011
—
28,045
Total
$ 14,127,266
$
160,699
$
80,771
$
312
$ 14,208,037
$
189,056
115
Credit Quality Indicators
The Company utilizes loan class and risk grading as primary credit quality indicators. Substantially all commercial and
commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on a quarterly
evaluation of the borrowers’ ability to repay the loans. Certain commercial loans and most residential mortgage and consumer
loans are small, homogeneous pools that are not risk graded.
The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk
graded loans at December 31, 2015 is as follows (in thousands):
Commercial
Commercial real estate
Residential mortgage
Personal
Total
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:49)(cid:82)(cid:81)(cid:16)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:7) (cid:20)(cid:19)(cid:15)(cid:21)(cid:21)(cid:26)(cid:15)(cid:22)(cid:19)(cid:22)
(cid:7)
(cid:20)(cid:21)(cid:28)(cid:15)(cid:23)(cid:21)(cid:25)
(cid:7)
(cid:21)(cid:24)(cid:15)(cid:21)(cid:21)(cid:27)
(cid:7)
(cid:28)(cid:19)(cid:27)
(cid:7) (cid:20)(cid:19)(cid:15)(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:22)(cid:20)
(cid:7)
(cid:20)(cid:22)(cid:19)(cid:15)(cid:22)(cid:22)(cid:23)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
(cid:20)(cid:28)(cid:25)(cid:15)(cid:26)(cid:19)(cid:20)
(cid:23)(cid:25)(cid:26)(cid:15)(cid:28)(cid:24)(cid:24)
(cid:23)(cid:20)(cid:15)(cid:22)(cid:28)(cid:20)
(cid:21)(cid:15)(cid:27)(cid:27)(cid:22)
(cid:20)(cid:15)(cid:22)(cid:28)(cid:19)
(cid:178)
(cid:20)(cid:15)(cid:25)(cid:27)(cid:19)(cid:15)(cid:20)(cid:28)(cid:21)
(cid:27)(cid:23)(cid:15)(cid:26)(cid:23)(cid:21)
(cid:20)(cid:23)(cid:15)(cid:20)(cid:24)(cid:19)(cid:15)(cid:28)(cid:28)(cid:21)
(cid:20)(cid:26)(cid:24)(cid:15)(cid:19)(cid:28)(cid:19)
(cid:20)(cid:15)(cid:26)(cid:28)(cid:19)(cid:15)(cid:20)(cid:25)(cid:21)
(cid:178)
(cid:20)(cid:25)(cid:15)(cid:25)(cid:21)(cid:25)
(cid:21)(cid:15)(cid:26)(cid:26)(cid:23)
(cid:21)(cid:19)(cid:15)(cid:22)(cid:19)(cid:27)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:25)(cid:15)(cid:27)(cid:28)(cid:22)
(cid:24)(cid:24)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
(cid:23)(cid:20)(cid:15)(cid:22)(cid:28)(cid:20)
(cid:20)(cid:28)(cid:15)(cid:24)(cid:19)(cid:28)
(cid:23)(cid:15)(cid:20)(cid:25)(cid:23)
(cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
(cid:20)(cid:28)(cid:24)(cid:15)(cid:22)(cid:28)(cid:27)
Nonspecific allowance
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:19)(cid:15)(cid:20)(cid:21)(cid:25)
Total
(cid:7) (cid:20)(cid:23)(cid:15)(cid:20)(cid:24)(cid:19)(cid:15)(cid:28)(cid:28)(cid:21)
(cid:7)
(cid:20)(cid:26)(cid:24)(cid:15)(cid:19)(cid:28)(cid:19)
(cid:7)
(cid:20)(cid:15)(cid:26)(cid:28)(cid:19)(cid:15)(cid:20)(cid:25)(cid:21)
(cid:7)
(cid:21)(cid:19)(cid:15)(cid:22)(cid:19)(cid:27)
(cid:7) (cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
(cid:7)
(cid:21)(cid:21)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)
The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk
graded loans at December 31, 2014 is as follows (in thousands):
Commercial
Commercial real estate
Residential mortgage
Personal
Total
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:49)(cid:82)(cid:81)(cid:16)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
9,073,030
$
$
2,728,150
192,303
343,227
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
90,085
42,445
2,996
1,506
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
22,640
$
$
—
1,757,209
91,478
12,336,710
137,032
1,871,327
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
790
—
20,462
2,727
23,979
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
9,095,670
$
$
2,728,150
1,949,512
434,705
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
90,875
42,445
23,458
4,233
14,208,037
161,011
Nonspecific allowance
—
—
—
—
—
28,045
Total
$ 12,336,710
$
137,032
$
1,871,327
$
23,979
$ 14,208,037
$
189,056
Loans are considered to be performing if they are in compliance with the original terms of the agreement which is consistent
with the regulatory guideline of “pass.” Performing also includes loans considered to be “other loans especially mentioned” by
regulatory guidelines. Other loans especially mentioned are in compliance with the original terms of the agreement but may
have a weakness that deserves management’s close attention. Performing loans also include past due residential mortgages that
are guaranteed by agencies of the U.S. government.
The risk grading process identified certain criticized loans as potential problem loans. These loans have a well-defined
weakness (e.g. inadequate debt service coverage or liquidity or marginal capitalization; repayment may depend on collateral or
other risk mitigation) that may jeopardize liquidation of the debt and represent a greater risk due to deterioration in the financial
condition of the borrower. This is consistent with the regulatory guideline for “substandard.” Because the borrowers are still
performing in accordance with the original terms of the loan agreements, these loans were not placed in nonaccruing
status. Known information does, however, cause concern as to the borrowers’ continued compliance with current repayment
terms. Nonaccruing loans represent loans for which full collection of principal and interest in accordance with the original
terms of the loan agreements is uncertain. This is substantially the same criteria used to determine whether a loan is impaired
and includes certain loans considered “substandard” and all loans considered “doubtful” by regulatory guidelines.
116
The following table summarizes the Company’s loan portfolio at December 31, 2015 by the risk grade categories (in
thousands):
Total commercial
(cid:20)(cid:19)(cid:15)(cid:19)(cid:19)(cid:25)(cid:15)(cid:21)(cid:21)(cid:25)
(cid:20)(cid:23)(cid:23)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:26)(cid:25)(cid:15)(cid:21)(cid:28)(cid:26)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:49)(cid:82)(cid:81)(cid:16)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)
(cid:51)(cid:82)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)
(cid:51)(cid:85)(cid:82)(cid:69)(cid:79)(cid:72)(cid:80)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:7)
(cid:21)(cid:15)(cid:28)(cid:19)(cid:25)(cid:15)(cid:22)(cid:24)(cid:26)
(cid:7)
(cid:20)(cid:21)(cid:28)(cid:15)(cid:26)(cid:27)(cid:21)
(cid:7)
(cid:25)(cid:20)(cid:15)(cid:20)(cid:27)(cid:28)
(cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:22)(cid:15)(cid:19)(cid:28)(cid:26)(cid:15)(cid:22)(cid:21)(cid:27)
(cid:21)(cid:15)(cid:26)(cid:25)(cid:26)(cid:15)(cid:21)(cid:21)(cid:24)
(cid:20)(cid:15)(cid:27)(cid:27)(cid:21)(cid:15)(cid:22)(cid:19)(cid:27)
(cid:20)(cid:15)(cid:23)(cid:20)(cid:21)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:24)(cid:24)(cid:23)(cid:15)(cid:24)(cid:21)(cid:25)
(cid:23)(cid:27)(cid:22)(cid:15)(cid:19)(cid:22)(cid:19)
(cid:25)(cid:15)(cid:26)(cid:25)(cid:20)
(cid:178)
(cid:25)(cid:15)(cid:22)(cid:25)(cid:24)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:21)
(cid:178)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:28)(cid:19)
(cid:20)(cid:15)(cid:19)(cid:26)(cid:21)
(cid:21)(cid:15)(cid:28)(cid:20)(cid:28)
(cid:22)(cid:22)(cid:20)
(cid:23)(cid:28)(cid:25)
(cid:26)(cid:28)(cid:23)(cid:15)(cid:26)(cid:24)(cid:23)
(cid:26)(cid:23)(cid:23)(cid:15)(cid:21)(cid:28)(cid:28)
(cid:25)(cid:22)(cid:25)(cid:15)(cid:24)(cid:19)(cid:20)
(cid:24)(cid:25)(cid:22)(cid:15)(cid:19)(cid:28)(cid:22)
(cid:20)(cid:24)(cid:24)(cid:15)(cid:26)(cid:21)(cid:23)
(cid:22)(cid:23)(cid:26)(cid:15)(cid:27)(cid:25)(cid:23)
(cid:22)(cid:15)(cid:21)(cid:23)(cid:21)(cid:15)(cid:21)(cid:22)(cid:24)
(cid:23)(cid:21)(cid:25)
(cid:25)(cid:15)(cid:24)(cid:20)(cid:21)
(cid:24)(cid:24)(cid:24)
(cid:178)
(cid:21)(cid:28)(cid:22)
(cid:20)(cid:20)
(cid:26)(cid:15)(cid:26)(cid:28)(cid:26)
(cid:20)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:21)(cid:26)(cid:23)
(cid:25)(cid:24)(cid:20)
(cid:26)(cid:25)
(cid:23)(cid:15)(cid:23)(cid:19)(cid:28)
(cid:21)(cid:15)(cid:21)(cid:26)(cid:21)
(cid:28)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:21)(cid:24)(cid:15)(cid:20)(cid:19)(cid:20)
(cid:21)(cid:24)(cid:15)(cid:20)(cid:19)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:21)(cid:26)
(cid:20)(cid:21)(cid:26)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:21)(cid:15)(cid:26)(cid:27)(cid:23)(cid:15)(cid:21)(cid:26)(cid:25)
(cid:20)(cid:15)(cid:27)(cid:27)(cid:22)(cid:15)(cid:22)(cid:27)(cid:19)
(cid:20)(cid:15)(cid:23)(cid:21)(cid:21)(cid:15)(cid:19)(cid:25)(cid:23)
(cid:24)(cid:24)(cid:25)(cid:15)(cid:26)(cid:21)(cid:28)
(cid:24)(cid:19)(cid:27)(cid:15)(cid:26)(cid:24)(cid:23)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:22)(cid:20)
(cid:26)(cid:28)(cid:25)(cid:15)(cid:23)(cid:28)(cid:28)
(cid:26)(cid:24)(cid:20)(cid:15)(cid:19)(cid:27)(cid:24)
(cid:25)(cid:22)(cid:26)(cid:15)(cid:26)(cid:19)(cid:26)
(cid:24)(cid:25)(cid:22)(cid:15)(cid:20)(cid:25)(cid:28)
(cid:20)(cid:25)(cid:19)(cid:15)(cid:23)(cid:21)(cid:25)
(cid:22)(cid:24)(cid:19)(cid:15)(cid:20)(cid:23)(cid:26)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land
development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgages guaranteed by
U.S. government agencies
Home equity
(cid:20)(cid:28)(cid:21)(cid:15)(cid:23)(cid:24)(cid:25)
(cid:20)(cid:15)(cid:28)(cid:22)(cid:21)
(cid:21)(cid:15)(cid:22)(cid:20)(cid:22)
(cid:26)(cid:21)(cid:20)(cid:15)(cid:28)(cid:25)(cid:23)
(cid:21)(cid:25)(cid:15)(cid:25)(cid:26)(cid:20)
(cid:28)(cid:23)(cid:24)(cid:15)(cid:22)(cid:22)(cid:25)
Total residential mortgage
(cid:20)(cid:28)(cid:21)(cid:15)(cid:23)(cid:24)(cid:25)
(cid:20)(cid:15)(cid:28)(cid:22)(cid:21)
(cid:21)(cid:15)(cid:22)(cid:20)(cid:22)
(cid:20)(cid:15)(cid:25)(cid:21)(cid:20)(cid:15)(cid:21)(cid:25)(cid:24)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:26)(cid:24)(cid:15)(cid:19)(cid:22)(cid:26)
(cid:26)(cid:21)(cid:23)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:21)(cid:20)(cid:15)(cid:28)(cid:19)(cid:19)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:24)(cid:25)
(cid:24)(cid:27)(cid:15)(cid:28)(cid:21)(cid:26)
(cid:20)(cid:28)(cid:25)(cid:15)(cid:28)(cid:22)(cid:26)
(cid:26)(cid:22)(cid:23)(cid:15)(cid:25)(cid:21)(cid:19)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:25)(cid:15)(cid:27)(cid:28)(cid:22)
Personal
Total
(cid:23)(cid:25)(cid:26)(cid:15)(cid:27)(cid:20)(cid:20)
(cid:20)(cid:23)
(cid:20)(cid:22)(cid:19)
(cid:27)(cid:23)(cid:15)(cid:23)(cid:19)(cid:28)
(cid:22)(cid:22)(cid:22)
(cid:24)(cid:24)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
(cid:7) (cid:20)(cid:22)(cid:15)(cid:28)(cid:19)(cid:27)(cid:15)(cid:26)(cid:21)(cid:27)
(cid:7)
(cid:20)(cid:24)(cid:23)(cid:15)(cid:24)(cid:21)(cid:22)
(cid:7)
(cid:27)(cid:26)(cid:15)(cid:26)(cid:23)(cid:20)
(cid:7)
(cid:20)(cid:15)(cid:26)(cid:22)(cid:19)(cid:15)(cid:26)(cid:26)(cid:24)
(cid:7)
(cid:24)(cid:28)(cid:15)(cid:22)(cid:27)(cid:26)
(cid:7) (cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
117
The following table summarizes the Company’s loan portfolio at December 31, 2014 by the risk grade categories (in thousands):
Total commercial
9,008,360
51,251
13,419
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:49)(cid:82)(cid:81)(cid:16)(cid:42)(cid:85)(cid:68)(cid:71)(cid:72)(cid:71)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)
(cid:51)(cid:82)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)
(cid:51)(cid:85)(cid:82)(cid:69)(cid:79)(cid:72)(cid:80)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$
2,843,093
$
15,919
$
1,416
$
— $
— $
2,860,428
2,371,189
1,449,024
1,427,725
527,951
389,378
15,140
4,565
8,141
4,193
3,293
5,201
1,380
4,149
450
823
662,335
691,053
411,548
428,817
127,437
362,375
2,683,565
628
13,245
576
—
10,855
724
26,028
3,926
—
3,420
—
5,299
5,912
18,557
—
—
—
—
22,532
22,532
—
—
—
—
—
—
—
—
—
—
—
108
108
—
—
—
—
—
—
—
2,391,530
1,454,969
1,440,015
532,594
416,134
9,095,670
666,889
704,298
415,544
428,817
143,591
369,011
2,728,150
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land
development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgages guaranteed by
U.S. government agencies
Home equity
187,520
1,773
3,010
745,813
31,835
969,951
—
—
—
—
—
—
202,238
764,047
3,712
9,564
205,950
773,611
Total residential mortgage
187,520
1,773
3,010
1,712,098
45,111
1,949,512
Personal
Total
343,041
19
167
91,079
399
434,705
$ 12,222,486
$
79,071
$
35,153
$
1,825,709
$
45,618
$ 14,208,037
118
Impaired Loans
Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due according
to the contractual terms of the loan agreement. This includes all nonaccruing loans, all loans modified in a troubled debt
restructuring and all loans repurchased from GNMA pools.
A summary of impaired loans follows (in thousands):
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:83)(cid:68)(cid:76)(cid:71)
(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:49)(cid:82)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:58)(cid:76)(cid:87)(cid:75)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)
(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and
industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and
land development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgage
guaranteed by U.S.
government agencies1
Home equity
Total residential mortgage
(cid:7)
(cid:7)
(cid:25)(cid:22)(cid:15)(cid:28)(cid:20)(cid:19)
(cid:20)(cid:22)(cid:15)(cid:23)(cid:23)(cid:28)
(cid:20)(cid:15)(cid:22)(cid:24)(cid:21)
(cid:27)(cid:15)(cid:24)(cid:27)(cid:21)
(cid:25)(cid:25)(cid:24)
(cid:27)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:28)(cid:25)(cid:15)(cid:21)(cid:25)(cid:21)
(cid:20)(cid:15)(cid:28)(cid:21)(cid:22)
(cid:20)(cid:15)(cid:20)(cid:28)(cid:21)
(cid:28)(cid:22)(cid:26)
(cid:26)(cid:25)
(cid:27)(cid:15)(cid:28)(cid:25)(cid:22)
(cid:27)(cid:15)(cid:22)(cid:25)(cid:22)
(cid:21)(cid:20)(cid:15)(cid:23)(cid:24)(cid:23)
(cid:7)
(cid:25)(cid:20)(cid:15)(cid:20)(cid:27)(cid:28)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:28)(cid:19)
(cid:20)(cid:15)(cid:19)(cid:26)(cid:21)
(cid:21)(cid:15)(cid:28)(cid:20)(cid:28)
(cid:22)(cid:22)(cid:20)
(cid:25)(cid:21)(cid:22)
(cid:26)(cid:25)(cid:15)(cid:23)(cid:21)(cid:23)
(cid:20)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:21)(cid:26)(cid:23)
(cid:25)(cid:24)(cid:20)
(cid:26)(cid:25)
(cid:23)(cid:15)(cid:23)(cid:19)(cid:28)
(cid:21)(cid:15)(cid:21)(cid:26)(cid:21)
(cid:28)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:20)(cid:27)(cid:15)(cid:22)(cid:22)(cid:19)
(cid:28)(cid:15)(cid:25)(cid:24)(cid:26)
(cid:28)(cid:22)(cid:20)
(cid:21)(cid:15)(cid:28)(cid:19)(cid:26)
(cid:22)(cid:22)(cid:20)
(cid:25)(cid:21)(cid:22)
(cid:22)(cid:21)(cid:15)(cid:26)(cid:26)(cid:28)
(cid:20)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:21)(cid:26)(cid:23)
(cid:25)(cid:24)(cid:20)
(cid:26)(cid:25)
(cid:23)(cid:15)(cid:23)(cid:19)(cid:28)
(cid:21)(cid:15)(cid:20)(cid:20)(cid:22)
(cid:27)(cid:15)(cid:27)(cid:23)(cid:21)
(cid:22)(cid:26)(cid:15)(cid:21)(cid:26)(cid:22)
(cid:21)(cid:27)(cid:15)(cid:28)(cid:27)(cid:23)
(cid:21)(cid:27)(cid:15)(cid:27)(cid:25)(cid:27)
(cid:21)(cid:19)(cid:21)(cid:15)(cid:28)(cid:27)(cid:23)
(cid:20)(cid:19)(cid:15)(cid:28)(cid:27)(cid:27)
(cid:21)(cid:24)(cid:20)(cid:15)(cid:21)(cid:23)(cid:24)
(cid:20)(cid:28)(cid:25)(cid:15)(cid:28)(cid:22)(cid:26)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:24)(cid:25)
(cid:21)(cid:22)(cid:25)(cid:15)(cid:21)(cid:26)(cid:26)
(cid:20)(cid:28)(cid:25)(cid:15)(cid:28)(cid:22)(cid:26)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:24)(cid:25)
(cid:21)(cid:22)(cid:25)(cid:15)(cid:20)(cid:25)(cid:20)
Personal
(cid:23)(cid:27)(cid:28)
(cid:23)(cid:25)(cid:22)
(cid:23)(cid:25)(cid:22)
(cid:7)
(cid:7)
(cid:23)(cid:21)(cid:15)(cid:27)(cid:24)(cid:28)
(cid:25)(cid:22)(cid:22)
(cid:20)(cid:23)(cid:20)
(cid:20)(cid:21)
(cid:178)
(cid:178)
(cid:23)(cid:22)(cid:15)(cid:25)(cid:23)(cid:24)
(cid:7)
(cid:20)(cid:25)(cid:15)(cid:20)(cid:20)(cid:24)
(cid:20)(cid:23)(cid:27)
(cid:22)(cid:24)
(cid:28)
(cid:178)
(cid:178)
(cid:20)(cid:25)(cid:15)(cid:22)(cid:19)(cid:26)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:24)(cid:28)
(cid:20)(cid:24)(cid:28)
(cid:20)(cid:20)(cid:25)
(cid:178)
(cid:178)
(cid:20)(cid:20)(cid:25)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:27)
(cid:20)(cid:27)
(cid:25)(cid:27)
(cid:178)
(cid:178)
(cid:25)(cid:27)
(cid:178)
(cid:7)
(cid:22)(cid:20)(cid:15)(cid:22)(cid:19)(cid:22)
(cid:26)(cid:15)(cid:26)(cid:23)(cid:25)
(cid:20)(cid:15)(cid:21)(cid:21)(cid:25)
(cid:22)(cid:15)(cid:24)(cid:22)(cid:23)
(cid:22)(cid:28)(cid:20)
(cid:26)(cid:26)(cid:26)
(cid:23)(cid:23)(cid:15)(cid:28)(cid:26)(cid:26)
(cid:21)(cid:15)(cid:25)(cid:21)(cid:21)
(cid:20)(cid:22)(cid:26)
(cid:21)(cid:15)(cid:19)(cid:22)(cid:24)
(cid:22)(cid:27)
(cid:23)(cid:15)(cid:27)(cid:24)(cid:23)
(cid:23)(cid:15)(cid:19)(cid:28)(cid:21)
(cid:20)(cid:22)(cid:15)(cid:26)(cid:26)(cid:27)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:20)(cid:23)
(cid:20)(cid:15)(cid:21)(cid:23)(cid:21)
(cid:20)(cid:28)(cid:25)(cid:15)(cid:27)(cid:21)(cid:26)
(cid:28)(cid:15)(cid:28)(cid:25)(cid:19)
(cid:21)(cid:22)(cid:27)(cid:15)(cid:26)(cid:19)(cid:20)
(cid:26)(cid:15)(cid:27)(cid:20)(cid:23)
(cid:178)
(cid:28)(cid:15)(cid:19)(cid:24)(cid:25)
(cid:24)(cid:20)(cid:24)
(cid:178)
Total
1 All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of
(cid:22)(cid:25)(cid:28)(cid:15)(cid:23)(cid:24)(cid:19)
(cid:21)(cid:28)(cid:26)(cid:15)(cid:28)(cid:26)(cid:20)
(cid:22)(cid:21)(cid:21)(cid:15)(cid:20)(cid:25)(cid:24)
(cid:21)(cid:26)(cid:27)(cid:15)(cid:21)(cid:23)(cid:24)
(cid:20)(cid:25)(cid:15)(cid:22)(cid:28)(cid:22)
(cid:23)(cid:22)(cid:15)(cid:28)(cid:21)(cid:19)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:28)(cid:15)(cid:19)(cid:24)(cid:25)
contractual principal and interest. At December 31, 2015, $22 million of these loans are nonaccruing and $175 million are accruing based
on the guarantee by U.S. government agencies.
Generally, no interest income is recognized on impaired loans until all principal balances, including amounts charged-off, have
been recovered.
119
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:83)(cid:68)(cid:76)(cid:71)
(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:49)(cid:82)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:58)(cid:76)(cid:87)(cid:75)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)
(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)
$
1,444
$
1,416
$
1,416
$
— $
— $
1,638
$
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and
industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and
land development
Other commercial real estate
Total commercial real
estate
Residential mortgage:
Permanent mortgage
Permanent mortgage
guaranteed by U.S.
government agencies1
Home equity
Total residential mortgage
8,068
2,432
9,457
737
8,604
30,742
5,406
—
5,959
—
10,071
11,954
5,201
1,380
4,149
450
931
13,527
3,926
—
3,420
—
5,299
5,912
4,487
1,380
4,117
450
931
12,781
3,926
—
3,420
—
5,192
5,739
33,390
18,557
18,277
43,463
34,845
34,675
212,684
9,767
265,914
205,950
9,564
250,359
205,950
9,564
250,189
714
—
32
—
—
746
—
—
—
—
107
173
280
170
—
—
170
—
157
—
9
—
—
166
—
—
—
—
23
18
41
5,061
1,483
5,559
521
881
15,143
4,392
3
4,905
126
11,338
8,939
29,703
—
—
—
—
—
—
—
—
—
—
—
—
—
—
105
34,561
1,418
—
—
105
—
194,017
8,414
236,992
8,342
—
9,760
893
—
Personal
584
566
566
Total
1 All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of
330,630
283,009
281,813
282,731
1,196
312
$
$
$
$
$
$
$
9,760
contractual principal and interest. At December 31, 2014, $3.7 million of these loans are nonaccruing and $202 million are accruing based
on the guarantee by U.S. government agencies.
120
Troubled Debt Restructurings
A summary of troubled debt restructurings ("TDRs") by accruing status as of December 31, 2015 is as follows (in thousands):
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)
(cid:76)(cid:81)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:48)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)
(cid:55)(cid:72)(cid:85)(cid:80)(cid:86)
(cid:49)(cid:82)(cid:87)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:76)(cid:81)(cid:3)
(cid:36)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)
(cid:48)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)
(cid:55)(cid:72)(cid:85)(cid:80)(cid:86)
(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)
(cid:38)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:71)(cid:16)(cid:50)(cid:73)(cid:73)
(cid:39)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:7)
(cid:21)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:7)
(cid:21)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:55)(cid:39)(cid:53)(cid:86)(cid:29)
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land
development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgage guaranteed by U.S.
government agencies
Home equity
Total residential mortgage
Personal
Total nonaccruing TDRs
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:55)(cid:39)(cid:53)(cid:86)(cid:29)
Residential mortgage:
Permanent mortgages guaranteed by U.S.
government agencies
Total residential mortgage
Total accruing TDRs
(cid:28)(cid:15)(cid:19)(cid:21)(cid:26)
(cid:25)(cid:26)(cid:22)
(cid:21)(cid:15)(cid:26)(cid:24)(cid:27)
(cid:21)(cid:27)(cid:21)
(cid:25)(cid:21)(cid:20)
(cid:20)(cid:24)(cid:15)(cid:25)(cid:25)(cid:24)
(cid:20)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:178)
(cid:20)(cid:25)(cid:24)
(cid:178)
(cid:21)(cid:15)(cid:22)(cid:21)(cid:27)
(cid:28)(cid:21)(cid:19)
(cid:23)(cid:15)(cid:26)(cid:22)(cid:21)
(cid:20)(cid:25)(cid:15)(cid:25)(cid:20)(cid:27)
(cid:20)(cid:20)(cid:15)(cid:20)(cid:22)(cid:25)
(cid:24)(cid:15)(cid:20)(cid:24)(cid:28)
(cid:22)(cid:21)(cid:15)(cid:28)(cid:20)(cid:22)
(cid:22)(cid:21)(cid:23)
(cid:24)(cid:22)(cid:15)(cid:25)(cid:22)(cid:23)
(cid:26)(cid:23)(cid:15)(cid:19)(cid:24)(cid:19)
(cid:26)(cid:23)(cid:15)(cid:19)(cid:24)(cid:19)
(cid:26)(cid:23)(cid:15)(cid:19)(cid:24)(cid:19)
(cid:27)(cid:15)(cid:21)(cid:20)(cid:19)
(cid:25)(cid:26)(cid:22)
(cid:21)(cid:15)(cid:26)(cid:19)(cid:25)
(cid:21)(cid:27)(cid:21)
(cid:27)(cid:28)
(cid:20)(cid:23)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:28)(cid:23)(cid:21)
(cid:178)
(cid:20)(cid:25)(cid:24)
(cid:178)
(cid:20)(cid:15)(cid:24)(cid:24)(cid:25)
(cid:23)(cid:26)(cid:27)
(cid:22)(cid:15)(cid:20)(cid:23)(cid:20)
(cid:28)(cid:15)(cid:19)(cid:23)(cid:22)
(cid:20)(cid:22)(cid:28)
(cid:23)(cid:15)(cid:21)(cid:20)(cid:27)
(cid:20)(cid:22)(cid:15)(cid:23)(cid:19)(cid:19)
(cid:21)(cid:28)(cid:26)
(cid:27)(cid:20)(cid:26)
(cid:178)
(cid:24)(cid:21)
(cid:178)
(cid:24)(cid:22)(cid:21)
(cid:20)(cid:15)(cid:23)(cid:19)(cid:20)
(cid:22)(cid:26)(cid:26)
(cid:178)
(cid:178)
(cid:178)
(cid:26)(cid:26)(cid:21)
(cid:23)(cid:23)(cid:21)
(cid:20)(cid:15)(cid:24)(cid:28)(cid:20)
(cid:26)(cid:15)(cid:24)(cid:26)(cid:24)
(cid:20)(cid:19)(cid:15)(cid:28)(cid:28)(cid:26)
(cid:28)(cid:23)(cid:20)
(cid:20)(cid:28)(cid:15)(cid:24)(cid:20)(cid:22)
(cid:21)(cid:26)
(cid:20)(cid:23)(cid:27)
(cid:178)
(cid:28)
(cid:178)
(cid:178)
(cid:20)(cid:24)(cid:26)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:25)(cid:27)
(cid:178)
(cid:178)
(cid:25)(cid:27)
(cid:178)
(cid:28)(cid:21)(cid:27)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:28)(cid:21)(cid:27)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:28)(cid:21)
(cid:178)
(cid:27)(cid:19)
(cid:21)(cid:26)(cid:21)
(cid:20)(cid:20)
(cid:22)(cid:20)(cid:15)(cid:20)(cid:19)(cid:21)
(cid:21)(cid:21)(cid:15)(cid:24)(cid:22)(cid:21)
(cid:21)(cid:21)(cid:24)
(cid:20)(cid:15)(cid:21)(cid:20)(cid:20)
(cid:21)(cid:22)(cid:15)(cid:19)(cid:21)(cid:28)
(cid:21)(cid:22)(cid:15)(cid:19)(cid:21)(cid:28)
(cid:21)(cid:22)(cid:15)(cid:19)(cid:21)(cid:28)
(cid:24)(cid:20)(cid:15)(cid:19)(cid:21)(cid:20)
(cid:24)(cid:20)(cid:15)(cid:19)(cid:21)(cid:20)
(cid:24)(cid:20)(cid:15)(cid:19)(cid:21)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
Total TDRs
(cid:7)
(cid:20)(cid:21)(cid:26)(cid:15)(cid:25)(cid:27)(cid:23)
(cid:7)
(cid:24)(cid:23)(cid:15)(cid:20)(cid:22)(cid:20)
(cid:7)
(cid:26)(cid:22)(cid:15)(cid:24)(cid:24)(cid:22)
(cid:7)
(cid:21)(cid:21)(cid:24)
(cid:7)
(cid:20)(cid:15)(cid:21)(cid:20)(cid:20)
121
A summary of troubled debt restructurings by accruing status as of December 31, 2014 is as follows (in thousands):
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)
(cid:76)(cid:81)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:48)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)
(cid:55)(cid:72)(cid:85)(cid:80)(cid:86)
(cid:49)(cid:82)(cid:87)
(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:76)(cid:81)(cid:3)
(cid:36)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)
(cid:48)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)
(cid:55)(cid:72)(cid:85)(cid:80)(cid:86)
(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)
(cid:38)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:71)(cid:16)(cid:82)(cid:73)(cid:73)
(cid:39)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)
(cid:36)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:55)(cid:39)(cid:53)(cid:86)(cid:29)
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land
development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgage guaranteed by U.S.
government agencies
Home equity
Total residential mortgage
Personal
Total nonaccuring TDRs
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:55)(cid:39)(cid:53)(cid:86)(cid:29)
Residential mortgage:
Permanent mortgages guaranteed by U.S.
government agencies
Total residential mortgage
Total accruing TDRs
$
— $
— $
— $
— $
1,666
—
3,381
340
674
6,061
3,600
—
2,324
—
3,140
1,647
10,711
16,393
1,597
5,184
23,174
419
40,365
73,985
73,985
73,985
706
—
3,284
340
93
4,423
2,432
—
—
—
641
1,647
4,720
11,134
179
3,736
15,049
253
960
—
97
—
581
1,638
1,168
—
2,324
—
2,499
—
5,991
5,259
1,418
1,448
8,125
166
24,445
15,920
17,274
17,274
17,274
56,711
56,711
56,711
148
—
9
—
—
157
—
—
—
—
23
—
23
105
—
—
105
—
285
—
—
—
—
—
—
—
3,000
—
3,000
—
—
—
—
1,597
—
1,597
262
—
247
509
1
5,107
—
—
—
Total TDRs
$
114,350
$
41,719
$
72,631
$
285
$
5,107
122
Troubled debt restructurings generally consist of interest rate concessions, payment stream concessions or a combination of
concessions to distressed borrowers. The following table details the recorded balance of loans at December 31, 2015 by class
that were restructured during the year ended December 31, 2015 by primary type of concession (in thousands):
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
(cid:51)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:54)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)
(cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:9)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:51)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:54)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)
(cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:9)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:21)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:7) (cid:21)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:7)
(cid:21)(cid:15)(cid:22)(cid:19)(cid:23)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:26)(cid:15)(cid:26)(cid:20)(cid:26)
(cid:178)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:21)(cid:27)(cid:15)(cid:20)(cid:19)(cid:20)
(cid:178)
(cid:178)
(cid:20)(cid:26)(cid:15)(cid:26)(cid:20)(cid:26)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:21)(cid:27)(cid:15)(cid:20)(cid:19)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:25)(cid:26)(cid:22)
(cid:178)
(cid:178)
(cid:178)
(cid:25)(cid:26)(cid:22)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:24)(cid:26)
(cid:24)(cid:26)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:26)(cid:15)(cid:24)(cid:26)(cid:26)
(cid:178)
(cid:178)
(cid:178)
(cid:24)(cid:26)
(cid:26)(cid:15)(cid:24)(cid:26)(cid:26)
(cid:25)(cid:26)(cid:22)
(cid:26)(cid:15)(cid:24)(cid:26)(cid:26)
(cid:25)(cid:26)(cid:22)
(cid:178)
(cid:178)
(cid:24)(cid:26)
(cid:178)
(cid:178)
(cid:24)(cid:26)
(cid:28)(cid:15)(cid:28)(cid:22)(cid:27)
(cid:20)(cid:19)(cid:15)(cid:25)(cid:20)(cid:20)
(cid:20)(cid:19)(cid:15)(cid:25)(cid:20)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:22)(cid:15)(cid:19)(cid:19)(cid:23)
(cid:20)(cid:15)(cid:19)(cid:24)(cid:20)
(cid:23)(cid:15)(cid:19)(cid:24)(cid:24)
(cid:23)(cid:15)(cid:19)(cid:24)(cid:24)
(cid:20)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:20)(cid:27)(cid:20)
(cid:23)(cid:15)(cid:23)(cid:23)(cid:28)
(cid:20)(cid:15)(cid:27)(cid:22)(cid:26)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:19)
(cid:22)(cid:15)(cid:20)(cid:19)(cid:20)
(cid:21)(cid:15)(cid:20)(cid:19)(cid:27)
(cid:22)(cid:20)(cid:15)(cid:21)(cid:19)(cid:21)
(cid:21)(cid:15)(cid:20)(cid:19)(cid:27)
(cid:23)(cid:15)(cid:26)(cid:24)(cid:27)
(cid:28)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:22)(cid:26)(cid:15)(cid:22)(cid:25)(cid:24)
(cid:178)
(cid:20)(cid:20)(cid:24)
(cid:20)(cid:20)(cid:24)
(cid:20)(cid:20)(cid:24)
(cid:7)
(cid:20)(cid:26)(cid:15)(cid:26)(cid:20)(cid:26)
(cid:7)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:7)
(cid:21)(cid:27)(cid:15)(cid:20)(cid:19)(cid:20)
(cid:7)
(cid:26)(cid:22)(cid:19)
(cid:7)
(cid:23)(cid:15)(cid:26)(cid:26)(cid:27)
(cid:7)
(cid:20)(cid:23)(cid:15)(cid:27)(cid:20)(cid:20)
(cid:7) (cid:21)(cid:19)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:7) (cid:23)(cid:27)(cid:15)(cid:23)(cid:21)(cid:19)
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and
industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction
and land development
Other commercial real
estate
Total commercial real
estate
Residential mortgage:
Permanent mortgage
Permanent mortgage
guaranteed by U.S.
government agencies
Home equity
Total residential
mortgage
Personal
Total
123
The following table details the recorded balance of loans by class that were restructured during the year ended December 31,
2014 by primary type of concession (in thousands):
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
(cid:51)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:54)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)
(cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:9)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:51)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:54)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)
(cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:9)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$
— $
— $
— $
— $
— $
— $ — $
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and
industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction
and land development
Other commercial real
estate
Total commercial real
estate
Residential mortgage:
Permanent mortgage
Permanent mortgage
guaranteed by U.S.
government agencies
Home equity
Total residential
mortgage
Personal
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15,386
—
17,293
32,679
—
—
15,386
17,293
32,679
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,261
—
396
3,657
—
—
—
—
—
—
—
586
—
—
586
—
—
—
—
—
81
81
—
—
—
—
—
—
—
—
—
3,261
—
477
3,738
—
—
—
—
—
—
—
—
—
—
3,261
—
477
3,738
—
—
—
—
—
—
—
3,538
4,124
4,124
1,059
2,534
1,059
2,534
33,738
2,534
7,131
7,717
40,396
76
76
76
$
15,386
$
17,293
$
32,679
$
— $
4,243
$
7,288
$ 11,531
$ 44,210
124
The following table summarizes, by loan class, the recorded investment at December 31, 2015 and 2014, respectively of loans
modified as TDRs within the previous 12 months and for which there was a payment default during the years ended
December 31, 2015 and 2014, respectively (in thousands):
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:36)(cid:70)(cid:70)(cid:85)(cid:88)(cid:76)(cid:81)(cid:74)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:178) $
— $
— $
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgage guaranteed by U.S. government
agencies
Home equity
Total residential mortgage
(cid:21)(cid:26)(cid:15)(cid:21)(cid:21)(cid:22)
(cid:178)
(cid:21)(cid:26)(cid:15)(cid:21)(cid:21)(cid:22)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:27)
(cid:22)(cid:27)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:27)
(cid:22)(cid:27)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:178)
(cid:22)(cid:21)(cid:28)
(cid:22)(cid:15)(cid:19)(cid:22)(cid:23)
(cid:22)(cid:15)(cid:19)(cid:22)(cid:23)
(cid:22)(cid:15)(cid:20)(cid:19)(cid:20)
(cid:24)(cid:21)(cid:23)
(cid:25)(cid:15)(cid:25)(cid:24)(cid:28)
(cid:22)(cid:19)(cid:15)(cid:22)(cid:21)(cid:23)
(cid:24)(cid:21)(cid:23)
(cid:22)(cid:22)(cid:15)(cid:27)(cid:27)(cid:21)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
29,585
—
29,585
—
—
—
—
13
13
—
—
—
—
—
—
—
—
—
—
—
—
13
13
—
—
—
—
—
—
—
2,836
2,836
1,047
1,101
4,984
30,632
1,101
34,569
Personal
Total
(cid:178)
(cid:20)(cid:22)
(cid:20)(cid:22)
—
25
25
(cid:7)
(cid:21)(cid:26)(cid:15)(cid:21)(cid:21)(cid:22)
(cid:7)
(cid:26)(cid:15)(cid:19)(cid:22)(cid:28)
(cid:7) (cid:22)(cid:23)(cid:15)(cid:21)(cid:25)(cid:21)
$
29,585
$
5,022
$ 34,607
A payment default is defined as being 30 days or more past due. The table above includes loans that experienced a payment
default during the period, but may be performing in accordance with the modified terms as of the balance sheet date.
125
Nonaccrual & Past Due Loans
Past due status for all loan classes is based on the actual number of days since the last payment was due according to the
contractual terms of the loans.
A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2015 is as follows
(in thousands):
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land development
Other commercial real estate
Total commercial real estate
Residential mortgage:
Permanent mortgage
Permanent mortgages guaranteed by U.S. government
agencies
Home equity
Total residential mortgage
Personal
Total
(cid:51)(cid:68)(cid:86)(cid:87)(cid:3)(cid:39)(cid:88)(cid:72)
(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)
(cid:22)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:27)(cid:28)
(cid:39)(cid:68)(cid:92)(cid:86)
(cid:28)(cid:19)(cid:3)(cid:39)(cid:68)(cid:92)(cid:86)
(cid:82)(cid:85)(cid:3)(cid:48)(cid:82)(cid:85)(cid:72)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:7)
(cid:22)(cid:15)(cid:19)(cid:22)(cid:22)(cid:15)(cid:24)(cid:19)(cid:23)
(cid:7)
(cid:21)(cid:15)(cid:25)(cid:22)(cid:24)
(cid:7)
(cid:178) (cid:7)
(cid:25)(cid:20)(cid:15)(cid:20)(cid:27)(cid:28)
(cid:7)
(cid:22)(cid:15)(cid:19)(cid:28)(cid:26)(cid:15)(cid:22)(cid:21)(cid:27)
(cid:21)(cid:15)(cid:26)(cid:25)(cid:28)(cid:15)(cid:27)(cid:28)(cid:24)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:28)(cid:15)(cid:27)(cid:26)(cid:22)
(cid:20)(cid:15)(cid:23)(cid:20)(cid:27)(cid:15)(cid:22)(cid:28)(cid:25)
(cid:24)(cid:24)(cid:25)(cid:15)(cid:22)(cid:28)(cid:27)
(cid:24)(cid:19)(cid:26)(cid:15)(cid:28)(cid:21)(cid:28)
(cid:20)(cid:19)(cid:15)(cid:20)(cid:25)(cid:24)(cid:15)(cid:28)(cid:28)(cid:24)
(cid:26)(cid:28)(cid:24)(cid:15)(cid:20)(cid:27)(cid:19)
(cid:26)(cid:23)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
(cid:25)(cid:22)(cid:26)(cid:15)(cid:19)(cid:24)(cid:25)
(cid:24)(cid:25)(cid:22)(cid:15)(cid:19)(cid:28)(cid:22)
(cid:20)(cid:24)(cid:25)(cid:15)(cid:19)(cid:20)(cid:26)
(cid:22)(cid:23)(cid:26)(cid:15)(cid:23)(cid:28)(cid:27)
(cid:23)(cid:15)(cid:19)(cid:28)(cid:20)
(cid:21)(cid:15)(cid:23)(cid:22)(cid:24)
(cid:23)(cid:28)
(cid:178)
(cid:20)(cid:19)(cid:19)
(cid:28)(cid:15)(cid:22)(cid:20)(cid:19)
(cid:178)
(cid:27)(cid:15)(cid:20)(cid:20)(cid:23)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:15)(cid:21)(cid:23)(cid:20)(cid:15)(cid:24)(cid:23)(cid:20)
(cid:27)(cid:15)(cid:20)(cid:20)(cid:23)
(cid:178)
(cid:178)
(cid:26)(cid:19)(cid:19)
(cid:178)
(cid:20)(cid:19)(cid:21)
(cid:27)(cid:19)(cid:21)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:26)(cid:26)
(cid:22)(cid:26)(cid:26)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:28)(cid:19)
(cid:20)(cid:15)(cid:19)(cid:26)(cid:21)
(cid:21)(cid:15)(cid:28)(cid:20)(cid:28)
(cid:22)(cid:22)(cid:20)
(cid:25)(cid:21)(cid:22)
(cid:21)(cid:15)(cid:26)(cid:27)(cid:23)(cid:15)(cid:21)(cid:26)(cid:25)
(cid:20)(cid:15)(cid:27)(cid:27)(cid:22)(cid:15)(cid:22)(cid:27)(cid:19)
(cid:20)(cid:15)(cid:23)(cid:21)(cid:21)(cid:15)(cid:19)(cid:25)(cid:23)
(cid:24)(cid:24)(cid:25)(cid:15)(cid:26)(cid:21)(cid:28)
(cid:24)(cid:19)(cid:27)(cid:15)(cid:26)(cid:24)(cid:23)
(cid:26)(cid:25)(cid:15)(cid:23)(cid:21)(cid:23)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:22)(cid:20)
(cid:20)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:21)(cid:26)(cid:23)
(cid:25)(cid:24)(cid:20)
(cid:26)(cid:25)
(cid:23)(cid:15)(cid:23)(cid:19)(cid:28)
(cid:21)(cid:15)(cid:21)(cid:26)(cid:21)
(cid:28)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:26)(cid:28)(cid:25)(cid:15)(cid:23)(cid:28)(cid:28)
(cid:26)(cid:24)(cid:20)(cid:15)(cid:19)(cid:27)(cid:24)
(cid:25)(cid:22)(cid:26)(cid:15)(cid:26)(cid:19)(cid:26)
(cid:24)(cid:25)(cid:22)(cid:15)(cid:20)(cid:25)(cid:28)
(cid:20)(cid:25)(cid:19)(cid:15)(cid:23)(cid:21)(cid:25)
(cid:22)(cid:24)(cid:19)(cid:15)(cid:20)(cid:23)(cid:26)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
(cid:28)(cid:20)(cid:22)(cid:15)(cid:19)(cid:25)(cid:21)
(cid:22)(cid:15)(cid:21)(cid:28)(cid:19)
(cid:178)
(cid:21)(cid:27)(cid:15)(cid:28)(cid:27)(cid:23)
(cid:28)(cid:23)(cid:24)(cid:15)(cid:22)(cid:22)(cid:25)
(cid:22)(cid:22)(cid:15)(cid:25)(cid:24)(cid:22)
(cid:26)(cid:21)(cid:20)(cid:15)(cid:20)(cid:23)(cid:28)
(cid:20)(cid:15)(cid:25)(cid:25)(cid:26)(cid:15)(cid:27)(cid:25)(cid:23)
(cid:22)(cid:19)(cid:15)(cid:22)(cid:27)(cid:22)
(cid:22)(cid:15)(cid:19)(cid:28)(cid:24)
(cid:22)(cid:25)(cid:15)(cid:26)(cid:25)(cid:27)
(cid:20)(cid:20)(cid:20)(cid:15)(cid:19)(cid:19)(cid:20)
(cid:21)(cid:19)
(cid:20)(cid:20)(cid:20)(cid:15)(cid:19)(cid:21)(cid:20)
(cid:21)(cid:20)(cid:15)(cid:28)(cid:19)(cid:19)
(cid:20)(cid:19)(cid:15)(cid:22)(cid:24)(cid:25)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:23)(cid:19)
(cid:20)(cid:28)(cid:25)(cid:15)(cid:28)(cid:22)(cid:26)
(cid:26)(cid:22)(cid:23)(cid:15)(cid:25)(cid:21)(cid:19)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:25)(cid:15)(cid:27)(cid:28)(cid:22)
(cid:24)(cid:24)(cid:20)(cid:15)(cid:24)(cid:22)(cid:22)
(cid:25)(cid:28)(cid:22)
(cid:27)
(cid:23)(cid:25)(cid:22)
(cid:24)(cid:24)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
(cid:7) (cid:20)(cid:24)(cid:15)(cid:25)(cid:21)(cid:25)(cid:15)(cid:28)(cid:22)(cid:22)
(cid:7)
(cid:24)(cid:23)(cid:15)(cid:27)(cid:27)(cid:24)
(cid:7)
(cid:20)(cid:20)(cid:21)(cid:15)(cid:21)(cid:19)(cid:27)
(cid:7)
(cid:20)(cid:23)(cid:26)(cid:15)(cid:20)(cid:21)(cid:27)
(cid:7) (cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
126
A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2014 is as
follows (in thousands):
(cid:51)(cid:68)(cid:86)(cid:87)(cid:3)(cid:39)(cid:88)(cid:72)
(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)
(cid:22)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:27)(cid:28)
(cid:39)(cid:68)(cid:92)(cid:86)
(cid:28)(cid:19)(cid:3)(cid:39)(cid:68)(cid:92)(cid:86)
(cid:82)(cid:85)(cid:3)(cid:48)(cid:82)(cid:85)(cid:72)
(cid:49)(cid:82)(cid:81)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:68)(cid:79)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$ 2,857,082
$
1,930
$
— $
1,416
$
2,860,428
Commercial:
Energy
Services
Healthcare
Wholesale/retail
Manufacturing
Other commercial and industrial
Total commercial
Commercial real estate:
Retail
Multifamily
Office
Industrial
Residential construction and land development
Other commercial real estate
Total commercial real estate
2,385,193
1,453,409
1,435,866
532,144
415,030
9,078,724
662,963
704,298
412,124
428,817
133,642
362,529
2,704,373
1,136
180
—
—
173
3,419
—
—
—
—
4,650
570
5,220
—
—
—
—
—
—
—
—
—
—
—
—
—
46
5,201
1,380
4,149
450
931
2,391,530
1,454,969
1,440,015
532,594
416,134
13,527
9,095,670
3,926
—
3,420
—
5,299
5,912
666,889
704,298
415,544
428,817
143,591
369,011
18,557
2,728,150
34,845
969,951
Residential mortgage:
Permanent mortgage
929,090
5,970
Permanent mortgages guaranteed by U.S. government
agencies
Home equity
Total residential mortgage
26,691
761,247
1,717,028
23,558
2,723
32,251
151,989
77
3,712
9,564
205,950
773,611
152,112
48,121
1,949,512
Personal
Total
433,590
547
2
566
434,705
$ 13,933,715
$
41,437
$
152,114
$
80,771
$ 14,208,037
127
(cid:11)(cid:24)(cid:12)(cid:3)(cid:51)(cid:85)(cid:72)(cid:80)(cid:76)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
Premises and equipment at December 31 are summarized as follows (in thousands):
Land
Buildings and improvements
Software
Furniture and equipment
Construction in progress
Subtotal
Less accumulated depreciation
Total
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:26)(cid:21)(cid:15)(cid:25)(cid:20)(cid:21)
$
(cid:21)(cid:21)(cid:24)(cid:15)(cid:20)(cid:27)(cid:20)
(cid:20)(cid:23)(cid:21)(cid:15)(cid:23)(cid:26)(cid:25)
(cid:20)(cid:28)(cid:23)(cid:15)(cid:26)(cid:20)(cid:24)
(cid:22)(cid:28)(cid:15)(cid:27)(cid:27)(cid:25)
(cid:25)(cid:26)(cid:23)(cid:15)(cid:27)(cid:26)(cid:19)
(cid:22)(cid:25)(cid:27)(cid:15)(cid:22)(cid:27)(cid:19)
(cid:22)(cid:19)(cid:25)(cid:15)(cid:23)(cid:28)(cid:19)
$
(cid:7)
71,371
225,008
120,010
179,513
21,805
617,707
343,874
273,833
Depreciation expense of premises and equipment was $34 million, $33 million and $30 million for the years ended
December 31, 2015, 2014 and 2013, respectively.
(cid:11)(cid:25)(cid:12)(cid:3)(cid:42)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)
On May 4, 2015, the Company acquired a majority voting interest in Heartland Food Products, LLC, a Kansas-based food
product and restaurant equipment company. The cash purchase price for this acquisition was $18 million. The preliminary
purchase price allocation included $14 million of identifiable intangible assets and $7.7 million of goodwill.
On February 28, 2014, the Company acquired GTRUST Financial Corporation ("GTRUST"), a Topeka-based independent trust
and asset management company with approximately $631 million of assets under management or custody at the date of
acquisition.
On April 30, 2014, the Company acquired MBM Advisors, a Houston-based independent, full service retirement and pension
plan investment firm and an SEC registered investment adviser with approximately $1.3 billion of assets under management at
the date of acquisition.
The purchase price for acquisitions in 2014 totaled approximately $27 million including $23 million paid in cash and $4
million of contingent consideration. The purchase price allocation included $14 million of identifiable intangible assets and $18
million of goodwill.
The pro-forma impact of these transactions was not material to the Company's consolidated financial statements.
On December 8, 2015, the Company announced the signing of a definitive purchase agreement with MBT Bancshares
(“MBT”). MBT is headquartered in Kansas City, Mo. and is the parent company of Missouri Bank and Trust of Kansas City
(“mobank”). mobank operates four banking branches in the Kansas City, Mo. area. At December 31, 2015, mobank has total
assets of $655 million, total loans of $463 million, and total deposits of $611 million. Under terms of the definitive agreement,
BOK Financial will pay $102.5 million in an all-cash deal for all outstanding shares of MBT stock, subject to certain conditions
and potential adjustments. The transaction has been approved by the boards of directors of both companies and is expected to
close in the third quarter of 2016, subject to customary closing conditions, including regulatory approval, and potential
adjustments.
On January 5, 2016, the Company announced that it had entered into an asset purchase agreement with Weaver and Tidwell
Financial Advisors LTD d/b/a Weaver Wealth Management, a registered investment advisor. The agreement includes hiring
Weaver Wealth Management’s team and transitioning its wealth management clients to The Milestone Group, a wholly owned
subsidiary of BOK Financial. Completion of the transaction is expected during the first quarter of 2016, upon regulatory
approval. The acquisition will increase BOK Financial’s assets under management and administration by approximately $340
million in Texas.
128
On January 14, 2016, the Company signed an asset purchase agreement with E-Spectrum Advisors, a boutique energy
investment banking firm based in Dallas that offers a broad range of oil and natural gas property sales and strategic advisory
services.
The following table presents the original cost and accumulated amortization of intangible assets (in thousands):
Core deposit premiums
Less accumulated amortization
Net core deposit premiums
Other identifiable intangible assets
Less accumulated amortization
Net other identifiable intangible assets
Total intangible assets, net
(cid:39)(cid:72)(cid:70)(cid:17)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:22)(cid:22)(cid:15)(cid:26)(cid:23)(cid:28)
$
(cid:22)(cid:22)(cid:15)(cid:23)(cid:27)(cid:20)
(cid:21)(cid:25)(cid:27)
(cid:25)(cid:22)(cid:15)(cid:25)(cid:27)(cid:28)
(cid:21)(cid:19)(cid:15)(cid:19)(cid:23)(cid:27)
(cid:23)(cid:22)(cid:15)(cid:25)(cid:23)(cid:20)
33,749
33,088
661
50,288
16,573
33,715
(cid:7)
(cid:23)(cid:22)(cid:15)(cid:28)(cid:19)(cid:28)
$
34,376
Expected amortization expense for intangible assets that will continue to be amortized (in thousands):
2016
2017
2018
2019
2020
Thereafter
(cid:38)(cid:82)(cid:85)(cid:72)
(cid:39)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)
(cid:51)(cid:85)(cid:72)(cid:80)(cid:76)(cid:88)(cid:80)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:44)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
$
247
$
3,967
$
21
—
—
—
—
3,735
3,078
2,816
2,816
27,229
$
268
$
43,641
$
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
4,214
3,756
3,078
2,816
2,816
27,229
43,909
129
The changes in the carrying value of goodwill by operating segment for the year ended December 31, 2015 are as follows (in
thousands):
Balance, December 31, 2013
Goodwill
Accumulated impairment losses
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)
(cid:58)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$
268,942
$
39,251
$
51,794
$
359,987
—
268,942
(228)
39,023
—
51,794
(228)
359,759
Goodwill acquired during 2014
421
—
17,600
18,021
Balance, December 31, 2014
Goodwill
Accumulated impairment losses
269,363
—
269,363
39,251
(228)
39,023
69,394
—
69,394
378,008
(228)
377,780
Goodwill acquired during 2015
(cid:26)(cid:15)(cid:25)(cid:27)(cid:20)
(cid:178)
(cid:178)
(cid:26)(cid:15)(cid:25)(cid:27)(cid:20)
Balance, December 31, 2015
Goodwill
Accumulated impairment losses
(cid:21)(cid:26)(cid:26)(cid:15)(cid:19)(cid:23)(cid:23)
(cid:178)
(cid:22)(cid:28)(cid:15)(cid:21)(cid:24)(cid:20)
(cid:11)(cid:21)(cid:21)(cid:27)(cid:12)
(cid:25)(cid:28)(cid:15)(cid:22)(cid:28)(cid:23)
(cid:178)
(cid:22)(cid:27)(cid:24)(cid:15)(cid:25)(cid:27)(cid:28)
(cid:11)(cid:21)(cid:21)(cid:27)(cid:12)
(cid:7)
(cid:21)(cid:26)(cid:26)(cid:15)(cid:19)(cid:23)(cid:23)
(cid:7)
(cid:22)(cid:28)(cid:15)(cid:19)(cid:21)(cid:22)
(cid:7)
(cid:25)(cid:28)(cid:15)(cid:22)(cid:28)(cid:23)
(cid:7)
(cid:22)(cid:27)(cid:24)(cid:15)(cid:23)(cid:25)(cid:20)
The annual goodwill evaluations for 2015 and 2014 did not indicate impairment for any reporting unit. Economic conditions
did not indicate that impairment existed for any identifiable intangible assets and therefore no impairment evaluation was
performed.
(cid:11)(cid:26)(cid:12)(cid:3)(cid:48)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)(cid:3)(cid:37)(cid:68)(cid:81)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
Residential Mortgage Loan Production
The Company originates, markets and services conventional and government-sponsored residential mortgage loans. Generally,
conforming fixed rate residential mortgage loans are held for sale in the secondary market and non-conforming and adjustable-
rate residential mortgage loans are held for investment. The volume of mortgage loans originated for sale and secondary market
prices are the primary drivers of originating and marketing revenue.
Residential mortgage loan commitments are generally outstanding for 60 to 90 days, which represents the typical period from
commitment to originate a residential mortgage loan to when the closed loan is sold to an investor. Residential mortgage loan
commitments are subject to both credit and interest rate risk. Credit risk is managed through underwriting policies and
procedures, including collateral requirements, which are generally accepted by the secondary loan markets. Exposure to interest
rate fluctuations is partially managed through forward sales of residential mortgage-backed securities and forward sales
contracts. These latter contracts set the price for loans that will be delivered in the next 60 to 90 days.
130
The unpaid principal balance of residential mortgage loans held for sale, notional amounts of derivative contracts related to
residential mortgage loan commitments and forward contract sales and their related fair values included in Mortgage loans held
for sale on the Consolidated Balance Sheets were (in thousands):
Residential mortgage loans held for sale
Residential mortgage loan commitments
Forward sales contracts
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:56)(cid:81)(cid:83)(cid:68)(cid:76)(cid:71)(cid:3)
(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)(cid:3)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:18)
(cid:49)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:56)(cid:81)(cid:83)(cid:68)(cid:76)(cid:71)(cid:3)
(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)(cid:3)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:18)
(cid:49)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)
(cid:7)
(cid:21)(cid:28)(cid:22)(cid:15)(cid:25)(cid:22)(cid:26)
(cid:7)
(cid:21)(cid:28)(cid:28)(cid:15)(cid:24)(cid:19)(cid:24)
$
291,537
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
298,212
$
(cid:25)(cid:19)(cid:20)(cid:15)(cid:20)(cid:23)(cid:26)
(cid:27)(cid:27)(cid:23)(cid:15)(cid:26)(cid:20)(cid:19)
(cid:27)(cid:15)(cid:20)(cid:22)(cid:23)
(cid:27)(cid:19)(cid:19)
627,505
701,066
9,971
(4,001)
(cid:7)
(cid:22)(cid:19)(cid:27)(cid:15)(cid:23)(cid:22)(cid:28)
$
304,182
No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of December 31, 2015 or
December 31, 2014. No credit losses were recognized on residential mortgage loans held for sale for the years ended
December 31, 2015, 2014 and 2013.
Mortgage banking revenue was as follows (in thousands):
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
Production revenue:
Net realized gains on sales of mortgage loans
(cid:7)
(cid:26)(cid:24)(cid:15)(cid:26)(cid:27)(cid:19)
$
56,696
$
Net change in unrealized gain on mortgage loans held for sale
Net change in the fair value of mortgage loan commitments
Net change in the fair value of forward sales contracts
Total production revenue
Servicing revenue
Total mortgage banking revenue
(cid:11)(cid:26)(cid:27)(cid:23)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:27)(cid:22)(cid:26)(cid:12)
(cid:23)(cid:15)(cid:27)(cid:19)(cid:20)
(cid:26)(cid:26)(cid:15)(cid:28)(cid:25)(cid:19)
(cid:24)(cid:25)(cid:15)(cid:23)(cid:20)(cid:24)
5,357
7,315
(8,307)
61,061
48,032
95,309
(10,899)
(10,077)
5,212
79,545
42,389
(cid:7)
(cid:20)(cid:22)(cid:23)(cid:15)(cid:22)(cid:26)(cid:24)
$
109,093
$
121,934
Mortgage production revenue includes gain (loss) on residential mortgage loans held for sale and changes in the fair value of
derivative contracts not designated as hedging instruments related to residential mortgage loan commitments and forward sales
contracts. Servicing revenue includes servicing fee income and late charges on loans serviced for others.
Residential Mortgage Servicing
The Company generally retains the right to service residential mortgage loans sold and may purchase mortgage servicing
rights. The unpaid principal balance of loans serviced for others is the primary driver of servicing revenue.
The following represents a summary of mortgage servicing rights (Dollars in thousands):
Number of residential mortgage loans serviced for others
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:20)(cid:22)(cid:20)(cid:15)(cid:27)(cid:24)(cid:28)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:23)
117,483
(cid:21)(cid:19)(cid:20)(cid:22)
106,137
Outstanding principal balance of residential mortgage loans serviced for others
(cid:7)
(cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:27)(cid:15)(cid:21)(cid:21)(cid:25)
$
16,162,887
$
13,718,942
Weighted average interest rate
Remaining contractual term (in months)
(cid:23)(cid:17)(cid:20)(cid:21)(cid:8)
(cid:22)(cid:19)(cid:19)
4.29%
296
4.40%
292
131
Activity in capitalized mortgage servicing rights during the three years ended December 31, 2015 is as follows (in thousands):
Balance, December 31, 2012
Additions, net
Change in fair value due to loan runoff
Change in fair value due to market changes
Balance, December 31, 2013
Additions, net
Change in fair value due to loan runoff
Change in fair value due to market changes
Balance, December 31, 2014
Additions, net
Change in fair value due to loan runoff
Change in fair value due to market changes
Balance, December 31, 2015
(cid:51)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:71)
$
12,976
(cid:50)(cid:85)(cid:76)(cid:74)(cid:76)(cid:81)(cid:68)(cid:87)(cid:72)(cid:71)
87,836
$
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
$
100,812
—
(3,029)
5,988
15,935
—
(2,357)
(2,464)
11,114
(cid:178)
(cid:11)(cid:21)(cid:15)(cid:25)(cid:23)(cid:24)(cid:12)
(cid:20)(cid:15)(cid:23)(cid:23)(cid:21)
49,431
(16,601)
16,732
137,398
54,413
(16,968)
(13,981)
160,862
(cid:26)(cid:28)(cid:15)(cid:24)(cid:23)(cid:25)
(cid:11)(cid:21)(cid:24)(cid:15)(cid:23)(cid:20)(cid:28)(cid:12)
(cid:11)(cid:25)(cid:15)(cid:21)(cid:28)(cid:24)(cid:12)
49,431
(19,630)
22,720
153,333
54,413
(19,325)
(16,445)
171,976
(cid:26)(cid:28)(cid:15)(cid:24)(cid:23)(cid:25)
(cid:11)(cid:21)(cid:27)(cid:15)(cid:19)(cid:25)(cid:23)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:27)(cid:24)(cid:22)(cid:12)
(cid:7)
(cid:28)(cid:15)(cid:28)(cid:20)(cid:20)
(cid:7)
(cid:21)(cid:19)(cid:27)(cid:15)(cid:25)(cid:28)(cid:23)
(cid:7)
(cid:21)(cid:20)(cid:27)(cid:15)(cid:25)(cid:19)(cid:24)
Changes in the fair value of mortgage servicing rights due to market changes are included in Other operating revenue in the
Consolidated Statements of Earnings. Changes in fair value due to loan runoff are included in Mortgage banking costs.
There is no active market for trading in mortgage servicing rights after origination. Fair value is determined by discounting the
projected net cash flows. Significant assumptions used to determine fair value considered to be significant unobservable inputs
were as follows:
Discount rate – risk-free rate plus a market premium
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:20)(cid:19)(cid:17)(cid:20)(cid:20)(cid:8)
(cid:21)(cid:19)(cid:20)(cid:23)
10.17%
Prepayment rate - based upon loan interest rate, original term and loan type
(cid:26)(cid:17)(cid:23)(cid:20)(cid:8)(cid:3)(cid:16)(cid:3)(cid:21)(cid:22)(cid:17)(cid:27)(cid:27)(cid:8)
7.70% - 30.44%
Loan servicing costs – annually per loan based upon loan type:
Performing loans
Delinquent loans
Loans in foreclosure
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average
life
(cid:7)(cid:25)(cid:22)(cid:3)(cid:16)(cid:3)(cid:7)(cid:20)(cid:19)(cid:24)
(cid:7)(cid:20)(cid:24)(cid:19)(cid:3)(cid:16)(cid:3)(cid:7)(cid:24)(cid:19)(cid:19)
$60 - $105
$150 - $500
(cid:7)(cid:25)(cid:24)(cid:19)(cid:3)(cid:16)(cid:3)(cid:7)(cid:23)(cid:15)(cid:21)(cid:24)(cid:19)
$1,000 - $4,250
(cid:20)(cid:17)(cid:26)(cid:22)(cid:8)
1.77%
Stratification of the residential mortgage loan servicing portfolio and outstanding principal of loans serviced for others by
interest rate at December 31, 2015 follows (in thousands):
Fair value
(cid:31)(cid:3)(cid:23)(cid:17)(cid:19)(cid:19)(cid:8)
104,302
$
(cid:23)(cid:17)(cid:19)(cid:19)(cid:8)(cid:3)(cid:16)(cid:3)(cid:23)(cid:17)(cid:28)(cid:28)(cid:8) (cid:24)(cid:17)(cid:19)(cid:19)(cid:8)(cid:3)(cid:16)(cid:3)(cid:24)(cid:17)(cid:28)(cid:28)(cid:8)
16,474
$
93,090
$
(cid:33)(cid:3)(cid:24)(cid:17)(cid:28)(cid:28)(cid:8)
4,739
$
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
218,605
$
Outstanding principal of loans serviced for others
Weighted average prepayment rate1
1 Annual prepayment estimates based upon loan interest rate, original term and loan type. Weighted average prepayment rate is determined
19,678,226
9,419,078
1,586,885
7,897,323
774,940
12.04%
23.88%
8.55%
7.41%
8.89%
by weighting the prepayment speed for each loan by its unpaid principal balance.
Changes in primary residential mortgage interest rates directly affect the prepayment speeds used in valuing our mortgage servicing
rights. A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated
loan curtailment, anticipated defaults and other relevant factors. The prepayment model is updated daily for changes in market
conditions and adjusted to better correlate with actual performance of BOK Financial’s servicing portfolio.
132
The interest rate sensitivity of our mortgage servicing rights net of securities and derivative contracts held as an economic hedge
is modeled over a range of +/- 50 basis points. At December 31, 2015, a 50 basis point increase in mortgage interest rates is
expected to increase the fair value of our mortgage servicing rights, net of economic hedge by $809 thousand. A 50 basis point
decrease in mortgage interest rates is expected to decrease the fair value of our mortgage servicing rights, net of economic hedge
by $4.1 million. In the model, changes in the value of servicing rights due to changes in interest rates assume stable relationships
between residential mortgage rates and prepayment speeds. Changes in market conditions can cause variations from these
assumptions. These factors and others may cause changes in the value of our mortgage servicing rights to differ from our
expectations.
The aging status of our mortgage loans serviced for others by investor at December 31, 2015 follows (in thousands):
FHLMC
FNMA
GNMA
Other
Total
(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)
$ 6,429,145
6,723,183
5,688,272
477,052
(cid:22)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:24)(cid:28)
(cid:39)(cid:68)(cid:92)(cid:86)
(cid:51)(cid:68)(cid:86)(cid:87)(cid:3)(cid:39)(cid:88)(cid:72)
(cid:25)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:27)(cid:28)
(cid:39)(cid:68)(cid:92)(cid:86)
(cid:28)(cid:19)(cid:3)(cid:39)(cid:68)(cid:92)(cid:86)(cid:3)(cid:82)(cid:85)
(cid:48)(cid:82)(cid:85)(cid:72)
$
37,962
$
12,553
$
24,373
$
35,813
147,499
5,932
5,128
47,971
970
19,930
18,975
3,468
66,746
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
6,504,033
6,784,054
5,902,717
487,422
$ 19,317,652
$
227,206
$
66,622
$
$ 19,678,226
The Company has off-balance sheet credit risk related to residential mortgage loans sold to U.S. government agencies with
recourse prior to 2008 under various community development programs. These loans consist of first lien, fixed-rate residential
mortgage loans underwritten to standards approved by the agencies including full documentation and originated under
programs available only for owner-occupied properties. However, these loans have a higher risk of delinquency and loss given
default than traditional residential mortgage loans. The Company no longer sells residential mortgage loans with recourse other
than obligations under standard representations and warranties. The recourse obligation relates to loan performance for the life
of the loan and the Company is obligated to repurchase the loan at the time of foreclosure for the unpaid principal balance plus
unpaid interest. The principal balance of residential mortgage loans sold subject to recourse obligations totaled $155 million at
December 31, 2015 and $180 million at December 31, 2014. At December 31, 2015, approximately 3% of the loans sold with
recourse with an outstanding principal balance of $4.5 million were either delinquent more than 90 days, in bankruptcy or in
foreclosure and 6% with an outstanding balance of $8.6 million were past due 30 to 89 days. A separate accrual for these off-
balance sheet commitments is included in Other liabilities in the Consolidated Balance Sheets. The provision for credit losses
on loans sold with recourse is included in Mortgage banking costs in the Consolidated Statements of Earnings.
The activity in the accrual for losses on loans sold with recourse included in Other liabilities in the Consolidated Balance
Sheets is summarized as follows (in thousands):
Beginning balance
Provision for recourse losses
Loans charged off, net
Ending balance
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:7)
(cid:26)(cid:15)(cid:21)(cid:28)(cid:28)
$
9,562
$
13,158
(cid:11)(cid:28)(cid:27)(cid:21)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:25)(cid:25)(cid:27)(cid:12)
354
(2,617)
(cid:23)(cid:15)(cid:25)(cid:23)(cid:28)
$
7,299
$
517
(4,113)
9,562
The Company also has off-balance sheet obligations to repurchase or provide indemnification for residential mortgage loans
sold to government sponsored entities due to standard representations and warranties made under contractual agreements. The
Company has established an accrual for credit losses related to potential loan repurchases under representations and warranties
that is included in Other liabilities in the Consolidated Balance Sheets and in Mortgage banking costs in the Consolidated
Statements of Earnings. For 2015, the Company has repurchased 83 loans from the agencies for $12.9 million and recognized
$219 thousand of related losses. In addition, the Company has paid indemnification for 4 loans and recognized $1 thousand of
related losses during 2015.
133
A summary of unresolved deficiency requests from the agencies follows (in thousands, except for number of unresolved
deficiency requests):
Number of unresolved deficiency requests
Aggregate outstanding principal balance subject to unresolved deficiency requests
Unpaid principal balance subject to indemnification by the Company
The activity in the accruals for mortgage losses is summarized as follows (in thousands).
Beginning balance
Provision for losses
Charge-offs, net
Ending balance
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:20)(cid:28)(cid:27)
(cid:7)
(cid:20)(cid:24)(cid:15)(cid:25)(cid:21)(cid:23)
$
(cid:23)(cid:15)(cid:22)(cid:25)(cid:24)
186
15,328
4,047
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:7)
(cid:20)(cid:20)(cid:15)(cid:27)(cid:25)(cid:27)
$
(cid:22)(cid:28)(cid:20)
(cid:11)(cid:23)(cid:15)(cid:24)(cid:21)(cid:26)(cid:12)
(cid:26)(cid:15)(cid:26)(cid:22)(cid:21)
$
12,716
7,200
(8,048)
11,868
134
(cid:11)(cid:27)(cid:12)(cid:3)(cid:39)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:86)(cid:3)
Interest expense on deposits is summarized as follows (in thousands):
Transaction deposits
Savings
Time:
Certificates of deposits under $100,000
Certificates of deposits $100,000 and over
Other time deposits
Total time
Total
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:27)(cid:15)(cid:27)(cid:21)(cid:20)
$
9,757
$
11,155
(cid:22)(cid:27)(cid:22)
401
442
(cid:20)(cid:20)(cid:15)(cid:27)(cid:28)(cid:23)
(cid:20)(cid:19)(cid:15)(cid:25)(cid:23)(cid:22)
(cid:20)(cid:21)(cid:15)(cid:23)(cid:21)(cid:28)
(cid:22)(cid:23)(cid:15)(cid:28)(cid:25)(cid:25)
14,278
11,878
14,369
40,525
16,234
12,273
15,460
43,967
(cid:7)
(cid:23)(cid:23)(cid:15)(cid:20)(cid:26)(cid:19)
$
50,683
$
55,564
The aggregate amounts of time deposits in denominations of $250,000 or more at December 31, 2015 and 2014 were $905
million and $994 million, respectively.
Time deposit maturities are as follows: 2016 – $1.4 billion, 2017 – $341 million, 2018 – $201 million, 2019 – $78 million,
2020 – $94 million and $284 million thereafter.
At December 31, 2015 and 2014, the Company had $358 million and $334 million, respectively, in fixed rate, brokered
certificates of deposits. The weighted-average interest rate paid on these certificates was 1.48% in 2015 and 2.59% in 2014.
The aggregate amount of overdrawn transaction deposits that have been reclassified as loan balances was $5.3 million at
December 31, 2015 and $6.2 million at December 31, 2014.
135
(cid:11)(cid:28)(cid:12)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:37)(cid:82)(cid:85)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)
Information relating to other borrowings is summarized as follows (dollars in thousands):
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:48)(cid:68)(cid:91)(cid:76)(cid:80)(cid:88)(cid:80)
(cid:50)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:87)(cid:3)(cid:36)(cid:81)(cid:92)
(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:3)(cid:40)(cid:81)(cid:71)
Parent Company and Other Non-Bank Subsidiaries:
Other
Total Parent Company and Other Non-Bank Subsidiaries
(cid:7)
(cid:178)
(cid:178)
(cid:7)
(cid:178)
(cid:178)
(cid:178)(cid:8) (cid:7)
(cid:178)(cid:8)
(cid:178)
Subsidiary Bank:
Funds purchased
Repurchase agreements
Other borrowings:
Federal Home Loan Bank advances
GNMA repurchase liability
Other
Total other borrowings
Subordinated debentures
Total subsidiary bank
(cid:23)(cid:28)(cid:20)(cid:15)(cid:20)(cid:28)(cid:21)
(cid:26)(cid:21)(cid:21)(cid:15)(cid:23)(cid:23)(cid:23)
(cid:19)(cid:17)(cid:20)(cid:24)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:21)(cid:8)
(cid:26)(cid:22)(cid:15)(cid:21)(cid:20)(cid:28)
(cid:25)(cid:21)(cid:22)(cid:15)(cid:28)(cid:21)(cid:20)
(cid:19)(cid:17)(cid:19)(cid:28)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:23)(cid:8)
(cid:23)(cid:15)(cid:27)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:19)(cid:17)(cid:23)(cid:27)(cid:8) (cid:23)(cid:15)(cid:28)(cid:21)(cid:20)(cid:15)(cid:26)(cid:22)(cid:28)
(cid:20)(cid:28)(cid:15)(cid:23)(cid:26)(cid:27)
(cid:20)(cid:27)(cid:15)(cid:23)(cid:19)(cid:21)
(cid:23)(cid:17)(cid:26)(cid:24)(cid:8)
(cid:21)(cid:17)(cid:26)(cid:19)(cid:8)
(cid:23)(cid:15)(cid:27)(cid:22)(cid:26)(cid:15)(cid:27)(cid:27)(cid:19)
(cid:20)(cid:25)(cid:15)(cid:25)(cid:25)(cid:27)
(cid:20)(cid:27)(cid:15)(cid:26)(cid:25)(cid:27)
(cid:23)(cid:15)(cid:28)(cid:24)(cid:26)(cid:15)(cid:20)(cid:26)(cid:24)
(cid:21)(cid:21)(cid:25)(cid:15)(cid:22)(cid:24)(cid:19)
(cid:20)(cid:17)(cid:19)(cid:24)(cid:8)
(cid:21)(cid:21)(cid:25)(cid:15)(cid:22)(cid:22)(cid:21)
(cid:25)(cid:15)(cid:21)(cid:26)(cid:26)(cid:15)(cid:27)(cid:25)(cid:25)
(cid:24)(cid:15)(cid:27)(cid:27)(cid:19)(cid:15)(cid:25)(cid:23)(cid:26)
(cid:19)(cid:17)(cid:21)(cid:27)(cid:8)
(cid:23)(cid:17)(cid:28)(cid:24)(cid:8)
(cid:21)(cid:17)(cid:22)(cid:24)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:22)(cid:8)
(cid:20)(cid:17)(cid:27)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:25)(cid:8)
(cid:23)(cid:28)(cid:20)(cid:15)(cid:20)(cid:28)(cid:21)
(cid:20)(cid:15)(cid:19)(cid:19)(cid:27)(cid:15)(cid:20)(cid:23)(cid:23)
(cid:24)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:20)(cid:28)(cid:15)(cid:23)(cid:26)(cid:27)
(cid:21)(cid:25)(cid:15)(cid:19)(cid:24)(cid:27)
(cid:22)(cid:23)(cid:27)(cid:15)(cid:19)(cid:26)(cid:25)
Total other borrowed funds
(cid:7)
(cid:25)(cid:15)(cid:21)(cid:26)(cid:26)(cid:15)(cid:27)(cid:25)(cid:25)
(cid:7) (cid:24)(cid:15)(cid:27)(cid:27)(cid:19)(cid:15)(cid:25)(cid:23)(cid:26)
(cid:19)(cid:17)(cid:22)(cid:25)(cid:8)
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
Parent Company and Other Non-Bank Subsidiaries:
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
Other
Total Parent Company and Other Non-Bank Subsidiaries
$
—
—
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
$
—
—
—% $
—%
(cid:48)(cid:68)(cid:91)(cid:76)(cid:80)(cid:88)(cid:80)
(cid:50)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:87)(cid:3)(cid:36)(cid:81)(cid:92)
(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:3)(cid:40)(cid:81)(cid:71)
—
Subsidiary Bank:
Funds purchased
Repurchase agreements
Other borrowings:
Federal Home Loan Bank advances
GNMA repurchase liability
Other
Total other borrowings
Subordinated debentures
Total subsidiary bank
57,031
1,187,489
0.05%
0.04%
494,220
928,767
0.07%
0.06%
2,103,400
0.25% 1,894,966
14,298
16,076
5.05%
2.73%
2,133,774
17,343
16,433
1,928,742
347,983
2.35%
347,892
3,726,277
3,699,621
0.24%
5.20%
2.32%
0.35%
2.50%
0.43%
1,548,676
1,187,489
3,453,400
24,980
16,582
347,983
Total other borrowed funds
$
3,726,277
$ 3,699,621
0.43%
136
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:48)(cid:68)(cid:91)(cid:76)(cid:80)(cid:88)(cid:80)
(cid:50)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:36)(cid:87)(cid:3)(cid:36)(cid:81)(cid:92)
(cid:48)(cid:82)(cid:81)(cid:87)(cid:75)(cid:3)(cid:40)(cid:81)(cid:71)
Parent Company and Other Non-Bank Subsidiaries:
Other
Total Parent Company and Other Non-Bank Subsidiaries
$
—
—
$
326
326
—% $
—%
—
Subsidiary Bank:
Funds purchased
Repurchase agreements
Other borrowings:
Federal Home Loan Bank advances
GNMA repurchase liability
Other
Total other borrowings
Subordinated debentures
Total subsidiary bank
868,081
813,454
0.04%
0.05%
866,062
811,996
0.10%
0.06%
1,005,650
0.19% 1,661,424
18,113
16,590
5.50%
2.73%
1,040,353
15,741
16,502
1,693,667
347,802
2.35%
347,717
3,069,690
3,719,442
0.20%
5.43%
2.54%
0.31%
2.51%
0.40%
997,536
881,033
2,451,197
21,055
17,092
347,802
Total other borrowed funds
$
3,069,690
$ 3,719,768
0.40%
Aggregate annual principal repayments at December 31, 2015 are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
Total
(cid:51)(cid:68)(cid:85)(cid:72)(cid:81)(cid:87)
(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)
(cid:49)(cid:82)(cid:81)(cid:16)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)
(cid:54)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)
$
(cid:54)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:92)
(cid:37)(cid:68)(cid:81)(cid:78)
6,033,638
— $
—
—
—
—
—
226,925
711
956
961
14,675
$
— $
6,277,866
Funds purchased are unsecured and generally mature within one to ninety days from the transaction date. Securities repurchase
agreements are recorded as secured borrowings that generally mature within ninety days and are secured by certain available
for sale securities. There was no outstanding accrued interest payable related to repurchase agreements at December 31, 2015
or December 31, 2014.
137
Additional information relating to securities sold under agreements to repurchase and related liabilities at December 31, 2015
and 2014 is as follows (dollars in thousands):
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:54)(cid:82)(cid:79)(cid:71)(cid:18)(cid:48)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:53)(cid:72)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:20)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
U.S. Agency Securities:
Overnight1
Long-term
Total Agency Securities
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:54)(cid:82)(cid:79)(cid:71)(cid:18)(cid:48)(cid:68)(cid:87)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)
U.S. Agency Securities:
Overnight1
Long-term
Total Agency Securities
(cid:7)
(cid:7)
(cid:25)(cid:27)(cid:24)(cid:15)(cid:23)(cid:24)(cid:27)
(cid:178)
(cid:25)(cid:27)(cid:24)(cid:15)(cid:23)(cid:24)(cid:27)
(cid:7)
(cid:7)
(cid:25)(cid:27)(cid:27)(cid:15)(cid:23)(cid:27)(cid:24)
(cid:178)
(cid:25)(cid:27)(cid:27)(cid:15)(cid:23)(cid:27)(cid:24)
(cid:7)
(cid:7)
(cid:26)(cid:21)(cid:21)(cid:15)(cid:23)(cid:23)(cid:23)
(cid:178)
(cid:26)(cid:21)(cid:21)(cid:15)(cid:23)(cid:23)(cid:23)
(cid:19)(cid:17)(cid:19)(cid:21)(cid:8)
(cid:178)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:21)(cid:8)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:53)(cid:72)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:20)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:53)(cid:68)(cid:87)(cid:72)
$
1,185,345
$ 1,192,361
—
—
$
1,185,345
$ 1,192,361
$
$
1,187,445
—
1,187,445
0.04 %
— %
0.04 %
1 BOK Financial maintains control over the securities underlying overnight repurchase agreements and generally transfers control over securities underlying
longer-term dealer repurchase agreements to the respective counterparty.
Borrowings from the Federal Home Loan Banks are used for funding purposes. In accordance with policies of the Federal
Home Loan Banks, BOK Financial has granted a blanket pledge of eligible assets (generally unencumbered U.S. Treasury and
residential mortgage-backed securities, 1-4 family loans and multifamily loans) as collateral for these advances. The Federal
Home Loan Banks have issued letters of credit totaling $340 million to secure BOK Financial’s obligations to depositors of
public funds. The unused credit available to BOK Financial at December 31, 2015 pursuant to the Federal Home Loan Bank’s
collateral policies is $491 million.
The Company had a $100 million senior unsecured 364 day revolving credit facility with Wells Fargo Bank, National
Association, administrative agent and other commercial banks (“the Credit Facility”) which matured on June 5, 2015 and was
not renewed by the Company.
BOSC may borrow funds from Pershing, LLC ("Pershing"), a clearing broker/dealer and a wholly owned subsidiary of Bank of
New York Mellon, for the purposes of financing securities purchases or to facilitate funding of investment banking activities,
on terms to be negotiated at the time of the borrowing. BOSC had no borrowings from Pershing outstanding at December 31,
2015 or December 31, 2014.
In 2007, the Bank issued $250 million of subordinated debt due May 15, 2017. Interest on this debt was based upon a fixed rate
of 5.75% through May 14, 2012 and is based on a floating rate of three-month LIBOR plus 0.69% thereafter. The proceeds of
this debt were used to fund the Worth National Bank and First United Bank acquisitions and to fund continued asset growth.
The outstanding balance of this subordinated debt was $226 million at both December 31, 2015 and 2014.
In 2005, the Bank issued $150 million of 10-year, fixed rate subordinated debt due June 1, 2015. The cost of this subordinated
debt, including issuance discounts and hedge loss is 5.56%. The proceeds of this debt were used to repay the unsecured
revolving line of credit and to provide additional capital to support asset growth. The remaining outstanding balance of this
subordinated debt of $122 million at December 31, 2014 matured on June 1, 2015.
The Company has a liability related to the repurchase of certain delinquent residential mortgage loans previously sold into
GNMA mortgage pools. Interest is payable at rates contractually due to investors.
138
(cid:11)(cid:20)(cid:19)(cid:12)(cid:3)(cid:41)(cid:72)(cid:71)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:55)(cid:68)(cid:91)(cid:72)(cid:86)(cid:3)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets
and liabilities are as follows (in thousands):
Deferred tax assets:
Share-based compensation
Credit loss allowances
Valuation adjustments
Deferred compensation
Unearned fees
Other
Total deferred tax assets
Deferred tax liabilities:
Available for sale securities mark to market
Depreciation
Mortgage servicing rights
Lease financing
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:20)(cid:19)(cid:15)(cid:24)(cid:21)(cid:21)
$
(cid:27)(cid:27)(cid:15)(cid:28)(cid:19)(cid:25)
(cid:25)(cid:15)(cid:28)(cid:24)(cid:26)
(cid:21)(cid:24)(cid:15)(cid:28)(cid:24)(cid:19)
(cid:20)(cid:20)(cid:15)(cid:20)(cid:21)(cid:23)
(cid:22)(cid:23)(cid:15)(cid:20)(cid:25)(cid:28)
9,414
74,362
8,851
22,977
11,820
39,307
(cid:20)(cid:26)(cid:26)(cid:15)(cid:25)(cid:21)(cid:27)
166,731
(cid:20)(cid:23)(cid:15)(cid:27)(cid:21)(cid:27)
(cid:21)(cid:21)(cid:15)(cid:19)(cid:27)(cid:19)
(cid:26)(cid:26)(cid:15)(cid:28)(cid:19)(cid:19)
(cid:21)(cid:21)(cid:15)(cid:22)(cid:19)(cid:20)
(cid:23)(cid:20)(cid:15)(cid:28)(cid:19)(cid:23)
(cid:20)(cid:26)(cid:28)(cid:15)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:11)(cid:20)(cid:15)(cid:22)(cid:27)(cid:24)(cid:12) $
37,719
18,601
58,733
24,429
34,478
173,960
(7,229)
The Company determined that no valuation allowance was necessary on deferred tax assets as of December 31, 2015 and 2014.
The significant components of the provision for income taxes attributable to continuing operations for BOK Financial are
shown below (in thousands):
Current income tax expense:
Federal
State
Total current income tax expense
Deferred income tax expense:
Federal
State
Total deferred income tax expense
Total income tax expense
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:20)(cid:20)(cid:26)(cid:15)(cid:24)(cid:25)(cid:25)
$
95,289
$
131,212
(cid:20)(cid:21)(cid:15)(cid:22)(cid:28)(cid:26)
(cid:20)(cid:21)(cid:28)(cid:15)(cid:28)(cid:25)(cid:22)
9,392
104,681
14,381
145,593
(cid:27)(cid:15)(cid:22)(cid:28)(cid:26)
(cid:20)(cid:15)(cid:19)(cid:21)(cid:23)
(cid:28)(cid:15)(cid:23)(cid:21)(cid:20)
36,521
2,949
39,470
15,915
1,590
17,505
(cid:7)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:22)(cid:27)(cid:23)
$
144,151
$
163,098
The Company adopted FASB Accounting Standards Updated No. 2014-01, Accounting for Investments in Qualified Affordable
Housing Projects, on January 1, 2015. This standard was retrospectively applied to all periods presented.
139
The reconciliations of income attributable to continuing operations at the U.S. federal statutory tax rate to income tax expense
are as follows (in thousands):
Amount:
Federal statutory tax
Tax exempt revenue
Effect of state income taxes, net of federal benefit
Utilization of tax credits:
Low-income housing tax credits, net of amortization
Other tax credits
Bank-owned life insurance
Other, net
Total income tax expense
Percent of pretax income:
Federal statutory tax
Tax exempt revenue
Effect of state income taxes, net of federal benefit
Utilization of tax credits:
Low-income housing tax credits, net of amortization
Other tax credits
Bank-owned life insurance
Other, net
Total
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:20)(cid:24)(cid:20)(cid:15)(cid:19)(cid:26)(cid:24)
$
153,870
$
168,710
(cid:11)(cid:28)(cid:15)(cid:24)(cid:24)(cid:22)(cid:12)
(cid:28)(cid:15)(cid:19)(cid:27)(cid:21)
(cid:11)(cid:22)(cid:15)(cid:27)(cid:26)(cid:23)(cid:12)
(cid:11)(cid:21)(cid:15)(cid:19)(cid:27)(cid:24)(cid:12)
(cid:11)(cid:22)(cid:15)(cid:21)(cid:25)(cid:23)(cid:12)
(cid:11)(cid:20)(cid:15)(cid:28)(cid:28)(cid:26)(cid:12)
(8,446)
9,054
(2,953)
(2,109)
(3,183)
(2,082)
(7,361)
10,937
(4,145)
(230)
(3,596)
(1,217)
(cid:7)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:22)(cid:27)(cid:23)
$
144,151
$
163,098
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:22)(cid:24)(cid:17)(cid:19)(cid:8)
(cid:11)(cid:21)(cid:17)(cid:21)(cid:12)
(cid:21)(cid:17)(cid:20)
(cid:11)(cid:19)(cid:17)(cid:28)(cid:12)
(cid:11)(cid:19)(cid:17)(cid:24)(cid:12)
(cid:11)(cid:19)(cid:17)(cid:26)(cid:12)
(cid:11)(cid:19)(cid:17)(cid:24)(cid:12)
35.0%
(1.9)
2.1
(0.7)
(0.5)
(0.7)
(0.5)
35.0%
(1.5)
2.3
(1.0)
—
(0.7)
(0.3)
(cid:22)(cid:21)(cid:17)(cid:22)(cid:8)
32.8%
33.8%
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Balance as of January 1
Additions for tax for current year positions
Settlements during the period
Lapses of applicable statute of limitations
Balance as of December 31
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:7)
(cid:20)(cid:22)(cid:15)(cid:22)(cid:26)(cid:23)
$
12,058
$
(cid:21)(cid:15)(cid:21)(cid:21)(cid:25)
(cid:178)
(cid:11)(cid:21)(cid:15)(cid:22)(cid:25)(cid:27)(cid:12)
3,813
—
(2,497)
(cid:20)(cid:22)(cid:15)(cid:21)(cid:22)(cid:21)
$
13,374
$
12,275
2,730
—
(2,947)
12,058
Of the above unrecognized tax benefits, $8.6 million, if recognized, would affect the effective tax rate.
BOK Financial recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The
Company recognized $1.0 million for 2015, $1.5 million for 2014 and $1.2 million for 2013 in interest and penalties. The
Company had approximately $3.3 million and $3.6 million accrued for the payment of interest and penalties at December 31,
2015 and 2014, respectively. Federal statutes remain open for federal tax returns filed in the previous three reporting periods.
Various state income tax statutes remain open for the previous three to six reporting periods.
140
(cid:11)(cid:20)(cid:20)(cid:12)(cid:3)(cid:40)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:3)(cid:37)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)
BOK Financial sponsors a defined benefit cash balance Pension Plan for all employees who satisfy certain age and service
requirements. Pension Plan benefits were curtailed as of April 1, 2006. No participants may be added to the plan and no
additional service benefits will be accrued. During 2015 and 2014, interest accrued on employees' account balances at a
variable rate tied to the five-year trailing average of five-year Treasury Securities plus 1.5%. The rate has a floor of 3.0% and a
ceiling of 5.0%. The 2015 quarterly variable rates remained steady at 3.00%.
The following table presents information regarding this plan (in thousands):
Change in projected benefit obligation:
Projected benefit obligation at beginning of year
Interest cost
Actuarial loss (gain)
Benefits paid
Projected benefit obligation at end of year1,2
Change in plan assets:
Plan assets at fair value at beginning of year
Actual return on plan assets
Benefits paid
Plan assets at fair value at end of year
Funded status of the plan
Components of net periodic benefit costs:
Interest cost
Expected return on plan assets
Other
Net benefit cost
1 Projected benefit obligation equals accumulated benefit obligation.
2 Projected benefit obligation is based on January 1 measurement date.
Weighted-average assumptions as of December 31:
Discount rate
Expected return on plan assets
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:23)(cid:24)(cid:15)(cid:21)(cid:21)(cid:23)
$
44,765
(cid:20)(cid:15)(cid:23)(cid:27)(cid:26)
(cid:11)(cid:21)(cid:15)(cid:26)(cid:19)(cid:21)(cid:12)
(cid:11)(cid:24)(cid:15)(cid:21)(cid:20)(cid:21)(cid:12)
(cid:22)(cid:27)(cid:15)(cid:26)(cid:28)(cid:26)
(cid:23)(cid:28)(cid:15)(cid:23)(cid:23)(cid:22)
(cid:11)(cid:23)(cid:20)(cid:12)
(cid:11)(cid:24)(cid:15)(cid:21)(cid:20)(cid:21)(cid:12)
(cid:23)(cid:23)(cid:15)(cid:20)(cid:28)(cid:19)
(cid:24)(cid:15)(cid:22)(cid:28)(cid:22)
(cid:20)(cid:15)(cid:23)(cid:27)(cid:26)
(cid:11)(cid:21)(cid:15)(cid:26)(cid:19)(cid:25)(cid:12)
(cid:20)(cid:15)(cid:27)(cid:23)(cid:28)
$
$
$
$
$
(cid:25)(cid:22)(cid:19)
$
1,685
2,878
(4,104)
45,224
48,812
4,735
(4,104)
49,443
4,219
1,685
(2,539)
1,409
555
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:22)(cid:17)(cid:24)(cid:23)(cid:8)
(cid:24)(cid:17)(cid:19)(cid:19)(cid:8)
3.42%
6.00%
As of December 31, 2015, expected future benefit payments related to the Pension Plan were as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
$
$
3,620
3,190
3,376
3,741
3,196
31,995
49,118
141
Assets of the Pension Plan consist primarily of shares in the Cavanal Hill Balanced Fund. The stated objective of this fund is to
provide an attractive total return through a broadly diversified mix of equities and bonds. The typical portfolio mix is
approximately 60% equities and 40% bonds. The net asset value of shares in the Cavanal Hill Funds is reported daily based on
market quotations for the Fund’s securities. The inception-to-date return on the fund, which is used as an indicator when setting
the expected return on plan assets, was 7.05%. As of December 31, 2015, the expected return on plan assets for 2016 is
5.00%. The maximum tax deductible Pension Plan contribution for 2015 was $15 million. No minimum contribution was
required for 2015, 2014 or 2013. We expect an insignificant amount of net pension costs currently in accumulated other
comprehensive income to be recognized as net periodic pension costs in 2016.
Employee contributions to the Thrift Plan are eligible for Company matching equal to 6% of base compensation, as defined in
the plan. The Company-provided matching contribution rates range from 50% for employees with less than four years of
service to 200% for employees with 15 or more years of service. Additionally, a maximum Company-provided, non-elective
annual contribution of up to $750 per participant is provided for employees whose annual base compensation is less than
$40,000. Total non-elective contributions were $605 thousand for 2015, $662 thousand for 2014 and $738 thousand for 2013.
Participants may direct investments in their accounts to a variety of options, including a BOK Financial common stock fund
and Cavanal Hill funds. Employer contributions, which are invested in accordance with the participant’s investment options,
vest over five years. Thrift Plan expenses were $20.6 million for 2015, $18.6 million for 2014 and $18.1 million for 2013.
BOK Financial offers numerous incentive compensation plans that are aligned with the Company’s growth
strategy. Compensation awarded under these plans may be based on defined formulas, other performance criteria or
discretionary. Incentive compensation is designed to motivate and reinforce sales and customer service behavior in all
markets. Earnings were charged $119.9 million in 2015, $111.7 million in 2014, and $110.9 million in 2013 for cash incentive
compensation.
142
(cid:11)(cid:20)(cid:21)(cid:12)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:16)(cid:37)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:86)(cid:3)
The shareholders and Board of Directors of BOK Financial have approved various share-based compensation plans. An
independent compensation committee of the Board of Directors determines the number of awards granted to the Chief
Executive Officer and other senior executives. Share-based compensation is granted to other officers and employees as
determined by the Chief Executive Officer.
The following table presents stock options outstanding during 2015, 2014 and 2013 under these plans (in thousands, except for
per share data):
Options outstanding at December 31, 2012
Options awarded
Options exercised
Options forfeited
Options expired
Options outstanding at December 31, 2013
Options awarded
Options exercised
Options forfeited
Options expired
Options outstanding at December 31, 2014
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:72)(cid:71)
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:72)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)(cid:71)
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:73)(cid:72)(cid:76)(cid:87)(cid:72)(cid:71)
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:76)(cid:85)(cid:72)(cid:71)
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:89)(cid:72)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:29)
December 31, 2013
December 31, 2014
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:16)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:40)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)
(cid:36)(cid:74)(cid:74)(cid:85)(cid:72)(cid:74)(cid:68)(cid:87)(cid:72)
(cid:44)(cid:81)(cid:87)(cid:85)(cid:76)(cid:81)(cid:86)(cid:76)(cid:70)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)
1,890,786
$
48.29
$
11,748
81,492
(608,663)
(219,342)
(9,168)
1,135,105
—
(323,004)
(15,509)
(2,701)
793,891
(cid:178)
(cid:11)(cid:21)(cid:27)(cid:25)(cid:15)(cid:25)(cid:26)(cid:27)(cid:12)
(cid:11)(cid:21)(cid:21)(cid:15)(cid:22)(cid:19)(cid:23)(cid:12)
(cid:11)(cid:23)(cid:15)(cid:27)(cid:26)(cid:23)(cid:12)
(cid:23)(cid:27)(cid:19)(cid:15)(cid:19)(cid:22)(cid:24)
424,459
347,633
(cid:21)(cid:23)(cid:22)(cid:15)(cid:22)(cid:28)(cid:24)
(cid:7)
$
55.74
48.00
47.65
50.61
49.09
—
49.17
45.71
47.98
49.05
(cid:178)
(cid:23)(cid:26)(cid:17)(cid:27)(cid:25)
(cid:23)(cid:27)(cid:17)(cid:28)(cid:19)
(cid:24)(cid:20)(cid:17)(cid:22)(cid:21)
(cid:23)(cid:28)(cid:17)(cid:26)(cid:24)
49.49
48.85
(cid:23)(cid:27)(cid:17)(cid:20)(cid:26)
(cid:7)
$
19,564
8,725
(cid:23)(cid:15)(cid:27)(cid:21)(cid:20)
7,146
3,889
(cid:21)(cid:15)(cid:27)(cid:21)(cid:28)
The following table summarizes information concerning currently outstanding and vested stock options:
(cid:3)
(cid:3)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)
(cid:40)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)
$36.65
45.15 - 47.34
48.30
48.46
54.33
55.74
55.94
58.76
(cid:3)
(cid:3)
(cid:3)
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:50)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)
(cid:3)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)
(cid:53)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)
(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:40)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)
(cid:50)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:47)(cid:76)(cid:73)(cid:72)(cid:3)(cid:11)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:12)
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)
(cid:3)
(cid:3)
(cid:3)
(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)
(cid:57)(cid:72)(cid:86)(cid:87)(cid:72)(cid:71)
(cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:57)(cid:72)(cid:86)(cid:87)(cid:72)(cid:71)
(cid:3)
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:40)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:53)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)
(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)
(cid:47)(cid:76)(cid:73)(cid:72)(cid:3)(cid:11)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:12)
115,858
3,066
27,897
82,217
30,221
71,990
84,851
63,935
2.27
0.01
2.67
1.51
0.88
4.38
3.21
3.80
$36.65
47.05
48.30
48.46
54.33
55.74
55.94
58.76
59,770
3,066
11,530
82,217
30,221
13,785
27,780
15,026
$36.65
47.05
48.30
48.46
54.33
55.74
55.94
58.76
1.56
0.01
1.43
1.51
0.88
1.63
1.50
1.42
The aggregate intrinsic value of options exercised was $5.1 million for 2015, $5.5 million for 2014 and $8.5 million for 2013.
143
The fair value of options was determined as of the date of grant using a Black-Scholes option pricing model with the following
weighted average assumptions:
Average risk-free interest rate1
Dividend yield
Volatility factors
Weighted average expected life
Weighted average fair value
(cid:21)(cid:19)(cid:20)(cid:22)
0.89%
2.80%
0.272
4.9 years
9.67
$
1 Average risk-free interest rate represents U.S. Treasury rates matched to the expected life of the options.
No options were granted in 2015 or 2014. Compensation expense recognized on stock options totaled $362 thousand for 2015,
$826 thousand for 2014 and $1.3 million for 2013. Compensation cost of stock options granted that may be recognized as
compensation expense in future years totaled $494 thousand at December 31, 2015. Subject to adjustments for forfeitures, we
expect to recognize compensation expense for current outstanding options of $266 thousand in 2016, $148 thousand in 2017,
$61 thousand in 2018, $18 thousand in 2019, and $1 thousand in 2020.
The following represents a summary of the non-vested stock awards as of December 31, 2015 (in thousands):
Non-vested at January 1, 2013
Granted
Vested
Forfeited
Non-vested at December 31, 2013
Granted
Vested
Forfeited
Non-vested at December 31, 2014
Granted
Vested
Forfeited
Non-vested at December 31, 2015
(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:42)(cid:85)(cid:68)(cid:81)(cid:87)(cid:3)(cid:39)(cid:68)(cid:87)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
$55.84
$35.93
$49.95
$64.96
$44.56
$56.26
$57.66
$50.15
$58.33
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)
592,831
211,791
(66,648)
(89,985)
647,989
206,621
(140,820)
(25,179)
688,611
312,755
(114,045)
(96,212)
791,109
Compensation expense recognized on non-vested shares totaled $12.0 million for 2015, $10.0 million for 2014 and $6.9 million
for 2013. Unrecognized compensation cost of non-vested shares totaled $13.7 million at December 31, 2015. Subject to
adjustment for forfeitures, we expect to recognize compensation expense of $7.5 million in 2016, $6.2 million in 2017, and
$65 thousand in 2018.
During January 2016, BOK Financial awarded 256,670 shares of non-vested stock with a fair value per award of $55.35. The
aggregate compensation cost of these awards totaled approximately $14.2 million. This cost will be recognized over the vesting
periods, subject to adjustments for forfeitures. Non-vested shares awarded in January 2016 generally cliff vest in 3 years and
are subject to a 2 holding period after vesting.
144
(cid:11)(cid:20)(cid:22)(cid:12)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:51)(cid:68)(cid:85)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
In compliance with applicable regulations, the Company may extend credit to certain executive officers, directors, principal
shareholders and their affiliates (collectively referred to as “related parties”) in the ordinary course of business. The Company’s
loans to related parties do not involve more than the normal credit risk and there are no nonaccruing or impaired related party
loans outstanding at December 31, 2015 or 2014.
Activity in loans to related parties is summarized as follows (in thousands):
Beginning balance
Advances
Payments
Adjustments1
Ending balance
1 Adjustments generally consist of changes in status as a related party.
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:20)(cid:19)(cid:22)(cid:15)(cid:22)(cid:28)(cid:24)
$
(cid:22)(cid:15)(cid:24)(cid:27)(cid:21)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:11)(cid:22)(cid:15)(cid:20)(cid:19)(cid:23)(cid:15)(cid:19)(cid:19)(cid:23)(cid:12)
(cid:20)(cid:21)(cid:15)(cid:23)(cid:24)(cid:19)
88,691
712,413
(698,149)
440
(cid:7)
(cid:24)(cid:28)(cid:23)(cid:15)(cid:21)(cid:21)(cid:24)
$
103,395
Certain related parties are customers of the Company for services other than loans, including consumer banking, corporate
banking, risk management, wealth management, brokerage and trading, or fiduciary/trust services. The Company engages in
transactions with related parties in the ordinary course of business in compliance with applicable regulations.
The Company rents office space in facilities owned by affiliates of Mr. Kaiser, its Chairman and principal shareholder. Lease
payments totaled $975 thousand for 2015, $1.1 million for 2014 and $952 thousand for 2013.
Cavanal Hill Investment Management, Inc., a wholly-owned subsidiary of the Bank, is the administrator to and investment
advisor for the Cavanal Hill Funds (the "Funds"), a diversified, open-ended investment company established as a business trust
under the Investment Company Act of 1940 (the "1940 Act"). The Bank is custodian and BOSC, Inc. is distributor for the
Funds. The Funds’ products are offered to customers, employee benefit plans, trusts and the general public in the ordinary
course of business. Approximately 99% of the Funds’ assets of $4.1 billion are held for the Company's clients. A Company
executive officer serves on the Funds' board of trustees and officers of the Bank serve as president and secretary of the Funds. A
majority of the members of the Funds’ board of trustees are, however, independent of the Company and the Funds are managed
by its board of trustees.
145
(cid:11)(cid:20)(cid:23)(cid:12)(cid:3)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:72)(cid:81)(cid:87)(cid:3)(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
Litigation Contingencies
As a member of Visa, BOK Financial is obligated for a proportionate share of certain covered litigation losses incurred by Visa
under a retrospective responsibility plan. A contingent liability was recognized for the Company’s share of Visa’s covered
litigation liabilities. Visa funded an escrow account to cover litigation claims, including covered litigation losses under the
retrospective responsibility plan, with proceeds from its initial public offering in 2008 and from available cash.
BOK Financial currently owns 251,837 Visa Class B shares which are convertible into 415,103 shares of Visa Class A shares
after the final settlement of all covered litigation. Class B shares may be diluted in the future if the escrow fund is not adequate
to cover future covered litigation costs. Therefore, no value has been currently assigned to the Class B shares and no value may
be assigned until the Class B shares are converted into a known number of Class A shares.
On March 3, 2015, the Bank and the Company were named as defendants in a putative class action alleging (1) that the manner
in which the Bank posted charges to its consumer deposit accounts was improper from September 1, 2011 through July 8, 2014,
the period after which the Bank and BOK Financial settled a class action respecting a similar claim, and before it made changes
to its posting order, and (2) that the manner in which the Bank posted charges to its small business deposit accounts was
improper from July 9, 2009 through July 8, 2014. The Court has denied the Bank’s motion to dismiss the claims as pre-empted
by federal law, but limited the plaintiffs’ claim to a breach of contract action involving only Oklahoma customers. Discovery is
on-going. A reasonable estimate of losses, if any, cannot be made at this time.
On April 8, 2015, the Bank was named as a defendant in a putative class action alleging that the Extended Overdraft Fee
charged customers who failed to pay overdrafts after five days constituted interest and exceeded permissible interest rates set
by state and federal law. The action was dismissed upon motion of the Bank and the time for appeal has expired.
On June 24, 2015, the Company received a complaint alleging that an employee had colluded with a borrower and an
individual in misusing revenues pledged to the municipal bonds for which the Company served as trustee under the bond
indenture. The Company conducted an investigation and concluded that the employee had, with respect to a single group of
affiliated bond issuances, violated Company policies and procedures by waiving financial covenants, granting forbearances and
accepting without disclosure to the bondholders, debt service payments from sources other than pledged revenues. The
employee was terminated. On December 28, 2015, the United States District Court for the District of New Jersey entered a
judgment against the principals involved in the issuances, precluding the principals from denying the alleged violations of the
federal securities laws and requiring the principals to pay all outstanding principal, accrued interest, and other amounts required
under the bond documents, subject to oversight by a court appointed monitor. The terminated employee has filed an action
against the Bank alleging the Bank defamed the employee and made a demand for indemnification respecting the SEC
investigation which demand the respective boards of directors of the Company and the Bank have denied. The Company has
been advised by its counsel that there is no basis for the employee’s action and that any recovery by the employee is remote.
The Director of the New Mexico Securities Division of the State of New Mexico Regulation and Licensing Department ("the
Director") has issued a Notice of Contemplated Action in connection with the purchase of various municipal bonds by the
elected County Treasurer of Bernalillo County, New Mexico, from the Company. The Director seeks to determine whether to
seek sanctions, which could include a fine and/or the suspension or revocation of registration, on the grounds that the Company
violated the suitability rule. The County of Bernalillo, New Mexico, has commenced arbitration pursuant to the Arbitration
Rules of FINRA seeking recovery of $5.6 million dollars arising out of the purchase. The Company has been advised by its
counsel that there is no basis to suggest the Director should make such a determination and that any recovery by the County is
remote.
In the ordinary course of business, BOK Financial and its subsidiaries are subject to legal actions and complaints. Management
believes, based upon the opinion of counsel, that the actions and liability or loss, if any, resulting from the final outcomes of the
proceedings, will not have a material effect on the Company’s financial condition, results of operations or cash flows.
146
Alternative Investment Commitments
The Company sponsors two private equity funds and invests in several tax credit entities and other funds as permitted by
banking regulations. Consolidation of these investments is based on the variable interest model determined by the nature of the
entity. Variable interest entities are generally defined as entities that either do not have sufficient equity to finance their
activities without support from other parties or whose equity investors lack a controlling financial interest. Variable interest
entities are consolidated based on the determination that the Company is the primary beneficiary including the power to direct
the activities that most significantly impact the variable interest's economic performance and the obligation to absorb losses of
the variable interest or the right to receive benefits of the variable interest that could be significant to the variable interest.
BOKF Equity, LLC, an indirect wholly-owned subsidiary, is the general partner of two consolidated private equity funds (“the
Funds”). The Funds provide alternative investment opportunities to certain customers, some of which are related parties,
through unaffiliated limited partnerships. These unaffiliated limited partnerships generally invest in distressed assets, asset buy-
outs or venture capital companies. As general partner, BOKF Equity, LLC has the power to direct activities that most
significantly affect the Funds' performance and contingent obligations to make additional investments totaling $4.9 million at
December 31, 2015. Substantially all of the obligations are offset by limited partner commitments. The Company does not
accrue its contingent liability to fund investments. The Volcker Rule in Title VI of the Dodd-Frank Act will limit both the
amount and structure of these type of investments.
Consolidated tax credit entities represent the Company's interest in entities earning federal new market tax credits related to
qualifying loans for which the Company has the power to direct the activities that most significantly impact the variable
interest's economic performance of the entity including being the primary beneficiary of or the obligation to absorb losses of
the variable interest that could be significant to the variable interest. The creditors underlying the other borrowings of
consolidated tax credit entities do not have recourse to the general credit of BOKF.
The Company also has interests in various unrelated alternative investments generally consisting of unconsolidated limited
partnership interests in or loans to entities for which investment return is in the form of tax credits or that invest in distressed
real estate loans and properties, energy development, venture capital and other activities. The Company is prohibited by
banking regulations from controlling or actively managing the activities of these investments and the Company's maximum
exposure to loss is restricted to its investment balance. The Company's obligation to fund alternative investments is included in
Other liabilities in the Consolidated Balance Sheets. The Company's ability to hold these investments will be curtailed by the
Volcker Rule.
A summary of consolidated and unconsolidated alternative investments as of December 31, 2015 and December 31, 2014 is as
follows (in thousands):
Consolidated:
Private equity funds
Tax credit entities
Other
Total consolidated
Unconsolidated:
Tax credit entities
Other
Total unconsolidated
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:37)(cid:82)(cid:85)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:86)
(cid:49)(cid:82)(cid:81)(cid:16)
(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:86)
(cid:7)
(cid:178) (cid:7)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:26)(cid:21)
(cid:7)
(cid:178) (cid:7)
(cid:178) (cid:7)
(cid:20)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:178)
(cid:20)(cid:21)(cid:15)(cid:21)(cid:19)(cid:25)
(cid:23)(cid:19)(cid:15)(cid:23)(cid:24)(cid:22)
(cid:178)
(cid:21)(cid:15)(cid:20)(cid:28)(cid:27)
(cid:20)(cid:19)(cid:15)(cid:28)(cid:25)(cid:23)
(cid:21)(cid:15)(cid:27)(cid:22)(cid:20)
(cid:7)
(cid:20)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:7)
(cid:26)(cid:24)(cid:15)(cid:20)(cid:22)(cid:20)
(cid:7)
(cid:21)(cid:15)(cid:20)(cid:28)(cid:27)
(cid:7)
(cid:20)(cid:22)(cid:15)(cid:26)(cid:28)(cid:24)
(cid:7)
(cid:20)(cid:26)(cid:15)(cid:27)(cid:21)(cid:22)
(cid:20)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:28)(cid:15)(cid:21)(cid:25)(cid:19)
(cid:22)(cid:26)(cid:15)(cid:19)(cid:27)(cid:22)
(cid:7)
(cid:7)
(cid:20)(cid:25)(cid:15)(cid:28)(cid:20)(cid:25)
(cid:7)
(cid:27)(cid:24)(cid:15)(cid:21)(cid:26)(cid:23)
(cid:178)
(cid:20)(cid:24)(cid:15)(cid:24)(cid:19)(cid:25)
(cid:20)(cid:25)(cid:15)(cid:28)(cid:20)(cid:25)
(cid:7) (cid:20)(cid:19)(cid:19)(cid:15)(cid:26)(cid:27)(cid:19)
(cid:7)
(cid:7)
(cid:20)(cid:23)(cid:15)(cid:24)(cid:26)(cid:21)
(cid:25)(cid:15)(cid:22)(cid:20)(cid:28)
(cid:21)(cid:19)(cid:15)(cid:27)(cid:28)(cid:20)
(cid:7)
(cid:7)
(cid:178) (cid:7)
(cid:178)
(cid:178) (cid:7)
(cid:178)
(cid:178)
(cid:178)
147
Consolidated:
Private equity funds
Tax credit entities
Other
Total consolidated
Unconsolidated:
Tax credit entities
Other
Total unconsolidated
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:47)(cid:82)(cid:68)(cid:81)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:37)(cid:82)(cid:85)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:86)
(cid:49)(cid:82)(cid:81)(cid:16)
(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)
(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:86)
$
— $
25,627
$
— $
— $
10,000
—
12,827
5,996
—
—
10,964
—
$
10,000
$
44,450
$
— $
10,964
$
21,921
10,000
2,106
34,027
$
$
18,192
$
96,721
—
9,471
18,192
$ 106,192
$
$
28,920
4,050
32,970
$
$
— $
—
— $
—
—
—
Other Commitments and Contingencies
Cavanal Hill Funds’ assets include U.S. Treasury, cash management and tax-free money market funds. Assets of these funds
consist of highly-rated, short-term obligations of the U.S. Treasury, corporate issuers and U.S. states and municipalities. The net
asset value of units in these funds was $1.00 at December 31, 2015. An investment in these funds is not insured by the Federal
Deposit Insurance Corporation or guaranteed by BOK Financial or any of its subsidiaries. BOK Financial may, but is not
obligated to purchase assets from these funds to maintain the net asset value at $1.00. No assets were purchased from the funds
in 2015 or 2014.
Cottonwood Valley Ventures, Inc. (“CVV, Inc.”), an indirectly wholly-owned subsidiary of BOK Financial, favorably resolved
its audit by the Oklahoma Tax Commission (“OTC”) for tax years 2007 through 2009. CVV, Inc. is a qualified venture capital
company under the applicable Oklahoma statute. As authorized by the statute, CVV, Inc. guarantees transferable Oklahoma
state income tax credits by providing direct debt financing to private companies which qualify as statutory business
ventures. Due to certain statutory limitations on utilization of such credits, CVV, Inc. must sell the majority of the credits to
provide the economic incentives provided for by the statute. CVV will now be allowed to resume selling qualified credits.
Total rent expense for BOK Financial was $25.2 million in 2015, $25.0 million in 2014 and $23.5 million in 2013. At
December 31, 2015, future minimum lease payments for premises under operating leases were as follows: $24.0 million in
2016, $21.5 million in 2017, $17.6 million in 2018, $16.6 million in 2019, $10.8 million in 2020 and $56.4 million thereafter.
The Bank is obligated under a long-term lease for its bank premises in downtown Tulsa. The lease term, which began
November 1, 1976, is for fifty-seven years with an option to terminate in 2024 with a two-year prior written notice. Premises
leases may include options to renew at then current market rates and may include escalation provisions based upon changes in
consumer price index or similar benchmarks.
The Federal Reserve Bank requires member banks to maintain certain minimum average cash balances. Member banks may
satisfy reserve balance requirements through holdings of vault cash and balances maintained directly with a Federal Reserve
Bank. The combined average balance of vault cash and balances held at the Federal Reserve Bank was $1.8 billion for the year
ended December 31, 2015 and $1.5 billion for the year ended December 31, 2014.
BOSC, Inc., a wholly-owned subsidiary of BOK Financial, is an introducing broker to Pershing, LLC for retail equity
investment transactions. As such, it has indemnified Pershing, LLC against losses due to a customer's failure to settle a
transaction or to repay a margin loan. All unsettled transaction and margin loans are secured as required by applicable
regulation. The amount of customer balances subject to indemnification totaled $3 thousand at December 31, 2015.
The Company agreed to guarantee rents totaling $28.7 million through September of 2017 to the City of Tulsa, Oklahoma as
owner of a building immediately adjacent to the Bank’s main office for space currently rented by third-party tenants in the
building. All rent payments are current. Remaining guaranteed rents totaled $5.6 million at December 31, 2015. In return for
this guarantee, the Company will receive 80% of net cash flow as defined in an agreement with the City of Tulsa through
September 2017 from rental of space that was vacant at the inception of the agreement. The maximum amount that the
Company may receive under this agreement is $4.5 million. Subsequent to December 31, 2015, the Company and the City of
Tulsa mutually agreed to terminate the agreement.
148
(cid:11)(cid:20)(cid:24)(cid:12)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)
Preferred Stock
One billion shares of preferred stock with a par value of $0.00005 per share are authorized. The Series A Preferred Stock has no
voting rights except as otherwise provided by Oklahoma corporate law and may be converted into one share of Common Stock
for each 36 shares of Series A Preferred Stock at the option of the holder. Dividends are cumulative at an annual rate of ten
percent of the $0.06 per share liquidation preference value when declared and are payable in cash. Aggregate liquidation
preference is $15 million. No Series A Preferred Stock was outstanding in 2015, 2014 or 2013.
Common Stock
Common stock consists of 2.5 billion authorized shares with a $0.00006 par value. Holders of common shares are entitled to
one vote per share at the election of the Board of Directors and on any question arising at any shareholders’ meeting and to
receive dividends when and as declared. Additionally, regulations restrict the ability of national(cid:3)banks and bank holding
companies to pay dividends.
Subsidiary Bank
The amounts of dividends that BOK Financial’s subsidiary bank can declare and the amounts of loans the subsidiary bank can
extend to affiliates are limited by various federal banking regulations and state corporate law. Generally, dividends declared
during a calendar year are limited to net profits, as defined, for the year plus retained profits for the preceding two years. The
amounts of dividends are further restricted by minimum capital requirements. Based on the most restrictive limitations as well
as management’s internal capital policy, at December 31, 2015, BOK Financial's subsidiary bank could declare up to $100
million of dividends without regulatory approval. The subsidiary bank declared and paid dividends of $150 million in 2015,
$75 million in 2014 and $225 million in 2013.
As defined by banking regulations, loan commitments and equity investments to a single affiliate may not exceed 10% of
unimpaired capital and surplus and loan commitments and equity investments to all affiliates may not exceed 20% of
unimpaired capital and surplus. All loans to affiliates must be fully secured by eligible collateral. At December 31, 2015, loan
commitments and equity investments were limited to $266 million to a single affiliate and $532 million to all affiliates. The
largest loan commitment and equity investment to a single affiliate was $220 million and the aggregate loan commitments and
equity investments to all affiliates were $330 million. The largest outstanding amount to a single affiliate at December 31, 2015
was $218 million and the total outstanding amounts to all affiliates were $244 million. At December 31, 2014, total loan
commitments and equity investments to all affiliates were $330 million and the total outstanding amounts to all affiliates were
$18 million.
149
Regulatory Capital
BOK Financial and the Bank are subject to various capital requirements administered by the federal banking agencies. Failure
to meet minimum capital requirements can initiate certain mandatory and additional discretionary actions by regulators that
could have a material effect on BOK Financial's operations. These capital requirements include quantitative measures of assets,
liabilities and certain off-balance sheet items. The capital standards are also subject to qualitative judgments by the regulators .
New capital rules were effective for BOK Financial on January 1, 2015. Components of these rules will phase in through
January 1, 2019. A bank following below the minimum capital requirements, including the capital conservation buffer, would
be subject to regulatory restrictions on capital distributions (including but not limited to dividends and share repurchases) and
executive bonus payments. For a banking institution to qualify as well capitalized, Common equity Tier 1, Tier I, Total and
Leverage capital ratios must be at least 6.5%, 8%, 10% and 5%, respectively. Tier I capital consists primarily of common
stockholders' equity, excluding unrealized gains or losses on available for sale securities, less goodwill, core deposit premiums
and certain other intangible assets. Total capital consists primarily of Tier I capital plus preferred stock, subordinated debt and
allowances for credit losses, subject to certain limitations. The Bank exceeded the regulatory definition of well capitalized as of
December 31, 2015 and December 31, 2014.
A summary of regulatory capital minimum requirements and levels follows (dollars in thousands):
(cid:48)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)
(cid:53)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:20)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
(cid:37)(cid:88)(cid:73)(cid:73)(cid:72)(cid:85)(cid:21)
(cid:48)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)
(cid:53)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:44)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:37)(cid:88)(cid:73)(cid:73)(cid:72)(cid:85)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:3)
(cid:3)
(cid:23)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:23)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:25)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:25)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:27)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:27)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:23)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:23)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:21)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:49)(cid:18)(cid:36)
(cid:21)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:49)(cid:18)(cid:36)
(cid:21)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:49)(cid:18)(cid:36)
(cid:49)(cid:18)(cid:36)
(cid:49)(cid:18)(cid:36)
(cid:26)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:23)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:7) (cid:22)(cid:15)(cid:20)(cid:20)(cid:25)(cid:15)(cid:20)(cid:23)(cid:23)
(cid:21)(cid:15)(cid:25)(cid:24)(cid:26)(cid:15)(cid:28)(cid:22)(cid:24)
(cid:20)(cid:22)(cid:17)(cid:22)(cid:19)(cid:8)
(cid:20)(cid:20)(cid:17)(cid:23)(cid:22)(cid:8)
(cid:27)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:25)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:21)(cid:15)(cid:27)(cid:23)(cid:21)(cid:15)(cid:20)(cid:28)(cid:22)
(cid:21)(cid:15)(cid:22)(cid:27)(cid:24)(cid:15)(cid:22)(cid:21)(cid:22)
(cid:20)(cid:21)(cid:17)(cid:20)(cid:22)(cid:8)
(cid:20)(cid:19)(cid:17)(cid:21)(cid:25)(cid:8)
(cid:20)(cid:19)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:7) (cid:21)(cid:15)(cid:27)(cid:23)(cid:21)(cid:15)(cid:20)(cid:28)(cid:22)
(cid:27)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:21)(cid:15)(cid:22)(cid:27)(cid:24)(cid:15)(cid:22)(cid:21)(cid:22)
(cid:20)(cid:21)(cid:17)(cid:20)(cid:22)(cid:8)
(cid:20)(cid:19)(cid:17)(cid:21)(cid:25)(cid:8)
(cid:23)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:23)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:7) (cid:21)(cid:15)(cid:27)(cid:23)(cid:21)(cid:15)(cid:20)(cid:28)(cid:22)
(cid:21)(cid:15)(cid:22)(cid:27)(cid:24)(cid:15)(cid:22)(cid:21)(cid:22)
(cid:28)(cid:17)(cid:21)(cid:24)(cid:8)
(cid:26)(cid:17)(cid:27)(cid:20)(cid:8)
Total Capital (to Risk Weighted Assets):
Consolidated
BOKF, NA
Common equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated
BOKF, NA
Tier I Capital (to Risk Weighted Assets):
Consolidated
BOKF, NA
Tier I Capital (to Average Assets):
Consolidated
BOKF, NA
1 Effective January 1, 2015
2 Effective January 1, 2016
A summary of regulatory capital levels under then current capital rules follows as of December 31, 2014 (dollars in thousands):
Total Capital (to Risk Weighted Assets):
Consolidated
BOKF, NA
Tier I Capital (to Risk Weighted Assets):
Consolidated
BOKF, NA
Tier I Capital (to Average Assets):
Consolidated
BOKF, NA
150
(cid:21)(cid:19)(cid:20)(cid:23)
$
3,120,223
2,449,078
$
2,838,129
2,168,161
$
2,838,129
2,168,161
14.66%
11.56%
13.33%
10.24%
9.96%
7.65%
Accumulated Other Comprehensive Income (Loss)
AOCI includes unrealized gains and losses on available for sale ("AFS") securities and non-credit related unrealized losses on
AFS securities for which an other-than-temporary impairment has been recorded in earnings. AOCI also includes unrealized
gains on AFS securities that were transferred from AFS to investment securities in the third quarter of 2011. Such amounts will
be amortized over the estimated remaining life of the security as an adjustment to yield. offsetting the related amortization of
premium on the transferred securities. Unrealized losses on employee benefit plans will be reclassified into income as pension
plan costs are recognized over the remaining service period of plan participants. Accumulated losses on the interest rate lock
hedge of the 2005 subordinated debt issuance were reclassified into income over the ten-year life of the debt. Gains and losses
in AOCI are net of deferred income taxes.
A rollforward of the components of accumulated other comprehensive income (loss) is included as follows (in thousands):
Balance, December 31, 2012
Net change in unrealized gain (loss)
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities
Interest expense, Subordinated debentures
Net impairment losses recognized in earnings
Gain on available for sale securities, net
Other comprehensive income (loss), before income taxes
Federal and state income tax1
Other comprehensive income (loss), net of income taxes
Balance, December 31, 2013
Net change in unrealized gain (loss)
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities
Interest expense, Subordinated debentures
Net impairment losses recognized in earnings
Gain on available for sale securities, net
Other comprehensive income (loss), before income taxes
Federal and state income tax1
Other comprehensive income (loss), net of income taxes
Balance, December 31, 2014
Net change in unrealized gain (loss)
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities
Interest expense, Subordinated debentures
Net impairment losses recognized in earnings
Gain on available for sale securities, net
Other comprehensive income (loss), before income taxes
Federal and state income tax1
Other comprehensive income (loss), net of income taxes
Balance, December 31, 2015
1 Calculated using 39% effective tax rate.
(cid:56)(cid:81)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:42)(cid:68)(cid:76)(cid:81)(cid:3)(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:82)(cid:81)
(cid:36)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:54)(cid:68)(cid:79)(cid:72)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
155,553
$
(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)
(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:36)(cid:41)(cid:54)
(cid:40)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)
(cid:37)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)
(cid:51)(cid:79)(cid:68)(cid:81)(cid:86)
(cid:47)(cid:82)(cid:86)(cid:86)(cid:3)(cid:82)(cid:81)
(cid:40)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)
(cid:43)(cid:72)(cid:71)(cid:74)(cid:72)(cid:86)
$
3,078
$
(8,296) $
(415) $
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
149,920
(284,104)
—
8,159
—
(275,945)
—
—
2,308
(10,720)
(292,516)
(113,788)
(178,728)
(23,175)
136,050
—
—
373
(1,539)
134,884
52,470
82,414
59,239
(cid:11)(cid:23)(cid:27)(cid:15)(cid:25)(cid:19)(cid:26)(cid:12)
(cid:178)
(cid:178)
(cid:20)(cid:15)(cid:27)(cid:20)(cid:28)
(cid:11)(cid:20)(cid:21)(cid:15)(cid:19)(cid:24)(cid:27)(cid:12)
(cid:11)(cid:24)(cid:27)(cid:15)(cid:27)(cid:23)(cid:25)(cid:12)
(cid:11)(cid:21)(cid:21)(cid:15)(cid:27)(cid:28)(cid:20)(cid:12)
(cid:11)(cid:22)(cid:24)(cid:15)(cid:28)(cid:24)(cid:24)(cid:12)
(3,210)
—
—
—
(3,210)
(1,250)
(1,960)
1,118
—
(1,216)
—
—
—
(1,216)
(474)
(742)
376
(cid:178)
(cid:11)(cid:24)(cid:19)(cid:22)(cid:12)
(cid:178)
(cid:178)
(cid:178)
(cid:11)(cid:24)(cid:19)(cid:22)(cid:12)
(cid:11)(cid:20)(cid:28)(cid:24)(cid:12)
(cid:11)(cid:22)(cid:19)(cid:27)(cid:12)
—
—
—
—
8,159
3,174
4,985
(3,311)
725
—
—
—
—
725
282
443
(2,868)
(cid:20)(cid:15)(cid:27)(cid:19)(cid:23)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:15)(cid:27)(cid:19)(cid:23)
(cid:26)(cid:19)(cid:20)
(cid:20)(cid:15)(cid:20)(cid:19)(cid:22)
—
262
—
—
262
102
160
(255)
—
—
296
—
—
296
115
181
(74)
(cid:178)
(cid:178)
(cid:20)(cid:21)(cid:20)
(cid:178)
(cid:178)
(cid:20)(cid:21)(cid:20)
(cid:23)(cid:26)
(cid:26)(cid:23)
(3,210)
262
2,308
(10,720)
(287,305)
(111,762)
(175,543)
(25,623)
136,775
(1,216)
296
373
(1,539)
134,689
52,393
82,296
56,673
(cid:11)(cid:23)(cid:25)(cid:15)(cid:27)(cid:19)(cid:22)(cid:12)
(cid:11)(cid:24)(cid:19)(cid:22)(cid:12)
(cid:20)(cid:21)(cid:20)
(cid:20)(cid:15)(cid:27)(cid:20)(cid:28)
(cid:11)(cid:20)(cid:21)(cid:15)(cid:19)(cid:24)(cid:27)(cid:12)
(cid:11)(cid:24)(cid:26)(cid:15)(cid:23)(cid:21)(cid:23)(cid:12)
(cid:11)(cid:21)(cid:21)(cid:15)(cid:22)(cid:22)(cid:27)(cid:12)
(cid:11)(cid:22)(cid:24)(cid:15)(cid:19)(cid:27)(cid:25)(cid:12)
(cid:7)
(cid:21)(cid:22)(cid:15)(cid:21)(cid:27)(cid:23)
(cid:7)
(cid:25)(cid:27)
(cid:7)
(cid:11)(cid:20)(cid:15)(cid:26)(cid:25)(cid:24)(cid:12) (cid:7)
(cid:178) (cid:7)
(cid:21)(cid:20)(cid:15)(cid:24)(cid:27)(cid:26)
151
(cid:11)(cid:20)(cid:25)(cid:12)(cid:3)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:51)(cid:72)(cid:85)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)
The following table presents the computation of basic and diluted earnings per share (dollars in thousands, except per share
data):
Numerator:
Net income attributable to BOK Financial Corp. shareholders
Less: Earnings allocated to participating securities
Numerator for basic earnings per share – income available to common shareholders
Effect of reallocating undistributed earnings of participating securities
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
$
292,435
$
316,609
(cid:22)(cid:15)(cid:22)(cid:27)(cid:22)
(cid:21)(cid:27)(cid:24)(cid:15)(cid:20)(cid:27)(cid:21)
(cid:22)
3,239
289,196
4
3,388
313,221
7
Numerator for diluted earnings per share – income available to common shareholders
(cid:7)
(cid:21)(cid:27)(cid:24)(cid:15)(cid:20)(cid:27)(cid:24)
$
289,200
$
313,228
Denominator:
Weighted average shares outstanding
Less: Participating securities included in weighted average shares outstanding
Denominator for basic earnings per common share
Dilutive effect of employee stock compensation plans1
Denominator for diluted earnings per common share
Basic earnings per share
Diluted earnings per share
1 Excludes employee stock options with exercise prices greater than current market price.
(cid:25)(cid:27)(cid:15)(cid:22)(cid:28)(cid:26)(cid:15)(cid:21)(cid:20)(cid:24)
69,159,902
68,719,069
(cid:27)(cid:19)(cid:21)(cid:15)(cid:24)(cid:21)(cid:25)
765,708
730,172
(cid:25)(cid:26)(cid:15)(cid:24)(cid:28)(cid:23)(cid:15)(cid:25)(cid:27)(cid:28)
68,394,194
67,988,897
(cid:28)(cid:25)(cid:15)(cid:28)(cid:25)(cid:28)
150,576
216,622
(cid:25)(cid:26)(cid:15)(cid:25)(cid:28)(cid:20)(cid:15)(cid:25)(cid:24)(cid:27)
68,544,770
68,205,519
(cid:7)
(cid:7)
$
$
(cid:23)(cid:17)(cid:21)(cid:21)
(cid:23)(cid:17)(cid:21)(cid:20)
(cid:178)
$
$
4.23
4.22
—
4.61
4.59
—
(cid:11)(cid:20)(cid:26)(cid:12)(cid:3)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:54)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
BOK Financial operates three principal lines of business: Commercial Banking, Consumer Banking and Wealth
Management. Commercial Banking includes lending, treasury and cash management services and customer risk management
products to small businesses, middle market and larger commercial customers. Commercial Banking also includes the
TransFund EFT network. Consumer Banking includes retail lending and deposit services, lending and deposit services to small
business customers served through the consumer branch network and all mortgage banking activities. Wealth Management
provides fiduciary services, private bank services and investment advisory services in all markets. Wealth Management also
underwrites state and municipal securities and engages in brokerage and trading activities.
In addition to its lines of business, BOK Financial has a Funds Management unit. The primary purpose of this unit is to manage
overall liquidity needs and interest rate risk. Each line of business borrows funds from and provides funds to the Funds
Management unit as needed to support their operations. Operating results for Funds Management and other include the effect of
interest rate risk positions and risk management activities, securities gains and losses including impairment charges, the
provision for credit losses in excess of net loans charged off, tax planning strategies and certain executive compensation costs
that are not attributed to the lines of business.
BOK Financial allocates resources and evaluates performance of its lines of business after allocation of funds, actual net credit
losses and capital costs. In addition, we measure the performance of our business lines after allocation of certain indirect
expenses and taxes on statutory rates. The allocation for the prior comparable periods have been revised on a comparable basis.
The cost of funds borrowed from the Funds Management unit by the operating lines of business is transfer priced at rates that
approximate market rates for funds with similar duration. Market rates are generally based on the applicable LIBOR or interest
rate swap rates, adjusted for prepayment risk. This method of transfer-pricing funds that support assets of the operating lines of
business tends to insulate them from interest rate risk.
152
The value of funds provided by the operating lines of business to the Funds Management unit is based on rates which
approximate the wholesale market rates for funds with similar duration and re-pricing characteristics. Market rates are
generally based on LIBOR or interest rate swap rates. The funds credit formula applied to deposit products with indeterminate
maturities is established based on their re-pricing characteristics reflected in a combination of the short-term LIBOR rates and a
moving average of an intermediate term swap rate, with an appropriate spread applied to both. Shorter duration products are
weighted towards the short-term LIBOR rate and longer duration products are weighted towards intermediate swap rates. The
expected duration ranges from 30 days for certain rate-sensitive deposits to five years.
Economic capital is assigned to the business units by a capital allocation model that reflects management's assessment of
risk. This model assigns capital based upon credit, operating, interest rate and market risk inherent in our business lines and
recognizes the diversification benefits among the units. The level of assigned economic capital is a combination of the risk
taken by each business line, based on its actual exposures and calibrated to its own loss history where possible. Average
invested capital includes economic capital and amounts we have invested in the lines of business.
Substantially all revenue is from domestic customers. No single external customer accounts for more than 10% of total
revenue.
Net loans charged off and provision for credit losses represents net loans charged off as attributed to the lines of business and
the provision for credit losses in excess of net charge-offs attributed to Funds Management and Other.
Reportable segments reconciliation to the Consolidated Financial Statements for the year ended December 31, 2015 is as
follows (in thousands):
Net interest revenue from external sources
(cid:7)
(cid:23)(cid:22)(cid:28)(cid:15)(cid:26)(cid:21)(cid:26)
(cid:7)
(cid:27)(cid:23)(cid:15)(cid:27)(cid:23)(cid:27)
(cid:7)
(cid:21)(cid:23)(cid:15)(cid:26)(cid:26)(cid:19)
(cid:7)
(cid:20)(cid:24)(cid:23)(cid:15)(cid:19)(cid:19)(cid:28)
(cid:7)
(cid:26)(cid:19)(cid:22)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)
(cid:58)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:41)(cid:88)(cid:81)(cid:71)(cid:86)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:37)(cid:50)(cid:46)
(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)
Net interest revenue (expense) from internal
sources
Net interest revenue
Provision for credit losses
Net interest revenue after provision for credit
losses
Other operating revenue
Other operating expense
Net direct contribution
Corporate expense allocations
Net income before taxes
Federal and state income taxes
Net income
Net income attributable to non-controlling
interests
Net income attributable to BOK Financial Corp.
shareholders
Average assets
Average invested capital
Performance measurements:
Return on average assets
Return on average invested capital
Efficiency ratio
(cid:11)(cid:24)(cid:19)(cid:15)(cid:25)(cid:26)(cid:27)(cid:12)
(cid:22)(cid:27)(cid:28)(cid:15)(cid:19)(cid:23)(cid:28)
(cid:11)(cid:25)(cid:15)(cid:19)(cid:20)(cid:27)(cid:12)
(cid:22)(cid:28)(cid:24)(cid:15)(cid:19)(cid:25)(cid:26)
(cid:20)(cid:26)(cid:26)(cid:15)(cid:24)(cid:21)(cid:21)
(cid:21)(cid:19)(cid:26)(cid:15)(cid:22)(cid:28)(cid:23)
(cid:22)(cid:25)(cid:24)(cid:15)(cid:20)(cid:28)(cid:24)
(cid:22)(cid:24)(cid:15)(cid:25)(cid:27)(cid:19)
(cid:22)(cid:21)(cid:28)(cid:15)(cid:24)(cid:20)(cid:24)
(cid:20)(cid:21)(cid:27)(cid:15)(cid:20)(cid:27)(cid:20)
(cid:21)(cid:19)(cid:20)(cid:15)(cid:22)(cid:22)(cid:23)
(cid:21)(cid:28)(cid:15)(cid:27)(cid:21)(cid:23)
(cid:20)(cid:20)(cid:23)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:25)(cid:15)(cid:20)(cid:19)(cid:27)
(cid:20)(cid:19)(cid:27)(cid:15)(cid:24)(cid:25)(cid:23)
(cid:21)(cid:20)(cid:25)(cid:15)(cid:26)(cid:26)(cid:21)
(cid:21)(cid:20)(cid:22)(cid:15)(cid:26)(cid:27)(cid:21)
(cid:20)(cid:20)(cid:20)(cid:15)(cid:24)(cid:24)(cid:23)
(cid:26)(cid:23)(cid:15)(cid:27)(cid:25)(cid:27)
(cid:22)(cid:25)(cid:15)(cid:25)(cid:27)(cid:25)
(cid:20)(cid:23)(cid:15)(cid:21)(cid:26)(cid:20)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:20)(cid:24)
(cid:21)(cid:20)(cid:15)(cid:24)(cid:21)(cid:23)
(cid:23)(cid:25)(cid:15)(cid:21)(cid:28)(cid:23)
(cid:11)(cid:27)(cid:28)(cid:20)(cid:12)
(cid:23)(cid:26)(cid:15)(cid:20)(cid:27)(cid:24)
(cid:21)(cid:24)(cid:19)(cid:15)(cid:28)(cid:23)(cid:21)
(cid:21)(cid:22)(cid:19)(cid:15)(cid:27)(cid:22)(cid:27)
(cid:25)(cid:26)(cid:15)(cid:21)(cid:27)(cid:28)
(cid:22)(cid:28)(cid:15)(cid:25)(cid:24)(cid:23)
(cid:21)(cid:26)(cid:15)(cid:25)(cid:22)(cid:24)
(cid:20)(cid:19)(cid:15)(cid:26)(cid:24)(cid:19)
(cid:20)(cid:25)(cid:15)(cid:27)(cid:27)(cid:24)
(cid:11)(cid:25)(cid:26)(cid:19)(cid:12)
(cid:20)(cid:24)(cid:22)(cid:15)(cid:22)(cid:22)(cid:28)
(cid:22)(cid:23)(cid:15)(cid:27)(cid:19)(cid:20)
(cid:20)(cid:20)(cid:27)(cid:15)(cid:24)(cid:22)(cid:27)
(cid:21)(cid:20)(cid:15)(cid:25)(cid:20)(cid:26)
(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:24)(cid:19)
(cid:11)(cid:20)(cid:20)(cid:21)(cid:15)(cid:22)(cid:28)(cid:24)(cid:12)
(cid:11)(cid:20)(cid:24)(cid:19)(cid:15)(cid:21)(cid:19)(cid:21)(cid:12)
(cid:22)(cid:26)(cid:15)(cid:27)(cid:19)(cid:26)
(cid:11)(cid:20)(cid:22)(cid:15)(cid:27)(cid:20)(cid:27)(cid:12)
(cid:24)(cid:20)(cid:15)(cid:25)(cid:21)(cid:24)
(cid:178)
(cid:26)(cid:19)(cid:22)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:22)(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:25)(cid:25)(cid:28)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:25)(cid:25)(cid:25)(cid:15)(cid:27)(cid:24)(cid:22)
(cid:28)(cid:19)(cid:23)(cid:15)(cid:24)(cid:25)(cid:23)
(cid:23)(cid:22)(cid:20)(cid:15)(cid:25)(cid:23)(cid:22)
(cid:178)
(cid:23)(cid:22)(cid:20)(cid:15)(cid:25)(cid:23)(cid:22)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:21)(cid:28)(cid:21)(cid:15)(cid:21)(cid:24)(cid:28)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:15)(cid:25)(cid:28)(cid:23)
(cid:22)(cid:15)(cid:25)(cid:28)(cid:23)
(cid:7)
(cid:21)(cid:19)(cid:20)(cid:15)(cid:22)(cid:22)(cid:23)
(cid:7)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:20)(cid:24)
(cid:7) (cid:20)(cid:22)(cid:15)(cid:22)(cid:23)(cid:21)(cid:15)(cid:24)(cid:27)(cid:24)
(cid:7) (cid:25)(cid:15)(cid:26)(cid:20)(cid:22)(cid:15)(cid:23)(cid:23)(cid:23)
(cid:20)(cid:15)(cid:19)(cid:24)(cid:19)(cid:15)(cid:26)(cid:24)(cid:28)
(cid:21)(cid:25)(cid:24)(cid:15)(cid:26)(cid:26)(cid:24)
(cid:7)
(cid:7)
(cid:20)(cid:25)(cid:15)(cid:27)(cid:27)(cid:24)
(cid:23)(cid:15)(cid:25)(cid:27)(cid:28)(cid:15)(cid:27)(cid:24)(cid:19)
(cid:21)(cid:21)(cid:24)(cid:15)(cid:28)(cid:25)(cid:27)
(cid:7)
(cid:7)
(cid:23)(cid:26)(cid:15)(cid:28)(cid:22)(cid:20)
(cid:7)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
(cid:24)(cid:15)(cid:27)(cid:21)(cid:27)(cid:15)(cid:27)(cid:26)(cid:25)
(cid:7) (cid:22)(cid:19)(cid:15)(cid:24)(cid:26)(cid:23)(cid:15)(cid:26)(cid:24)(cid:24)
(cid:20)(cid:15)(cid:26)(cid:28)(cid:23)(cid:15)(cid:21)(cid:24)(cid:19)
(cid:22)(cid:15)(cid:22)(cid:22)(cid:25)(cid:15)(cid:26)(cid:24)(cid:21)
(cid:20)(cid:17)(cid:24)(cid:20)(cid:8)
(cid:20)(cid:28)(cid:17)(cid:20)(cid:27)(cid:8)
(cid:22)(cid:25)(cid:17)(cid:24)(cid:20)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:22)(cid:8)
(cid:27)(cid:17)(cid:23)(cid:22)(cid:8)
(cid:25)(cid:21)(cid:17)(cid:24)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:23)(cid:20)(cid:8)
(cid:27)(cid:17)(cid:23)(cid:24)(cid:8)
(cid:26)(cid:26)(cid:17)(cid:19)(cid:24)(cid:8)
(cid:19)(cid:17)(cid:28)(cid:23)(cid:8)
(cid:27)(cid:17)(cid:25)(cid:24)(cid:8)
(cid:25)(cid:24)(cid:17)(cid:22)(cid:23)(cid:8)
153
Reportable segments reconciliation to the Consolidated Financial Statements for the year ended December 31, 2014 is as
follows (in thousands):
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
381,687
$
(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)
81,852
$
(cid:58)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
23,826
$
(cid:41)(cid:88)(cid:81)(cid:71)(cid:86)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
177,829
$
(cid:37)(cid:50)(cid:46)
(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)
665,194
$
Net interest revenue from external sources
Net interest revenue (expense) from internal
sources
Net interest revenue
Provision for credit losses
Net interest revenue after provision for credit
losses
Other operating revenue
Other operating expense
Net direct contribution
Corporate expense allocations
Net income before taxes
Federal and state income taxes
Net income
(43,939)
337,748
(7,447)
345,195
169,704
204,230
310,669
41,585
269,084
104,674
164,410
36,801
118,653
5,477
113,176
200,815
195,770
118,221
63,006
55,215
21,479
33,736
Net income attributable to non-controlling
interests
—
—
Net income attributable to BOK Financial Corp.
shareholders
$
164,410
$
33,736
Average assets
Average invested capital
$ 11,384,782
$ 6,584,157
946,383
277,404
20,578
44,404
213
44,191
239,045
217,049
66,187
31,465
34,722
13,507
21,215
—
21,215
4,518,511
215,089
$
$
(13,440)
164,389
1,757
162,632
12,394
230,473
(55,447)
(136,056)
80,609
4,491
76,118
3,044
—
665,194
—
665,194
621,958
847,522
439,630
—
439,630
144,151
295,479
3,044
$
$
73,074
$
292,435
5,511,408
$ 27,998,858
1,737,197
3,176,073
Performance measurements:
Return on average assets
Return on average invested capital
Efficiency ratio
1.45%
17.40%
40.06%
0.51%
12.16%
59.14%
0.51%
10.77%
76.00%
1.04%
9.21%
64.50%
154
Reportable segments reconciliation to the Consolidated Financial Statements for the year ended December 31, 2013 is as
follows (in thousands):
(cid:38)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)
363,961
$
(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)
85,813
$
(cid:58)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
25,478
$
(cid:41)(cid:88)(cid:81)(cid:71)(cid:86)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
199,225
$
(cid:37)(cid:50)(cid:46)
(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)
674,477
$
Net interest revenue from external sources
Net interest revenue (expense) from internal
sources
Net interest revenue
Provision for credit losses
Net interest revenue after provision for credit
losses
Other operating revenue
Other operating expense
Net direct contribution
Corporate expense allocations
Net income before taxes
Federal and state income taxes
Net income
(51,592)
312,369
(4,372)
316,741
163,206
192,629
287,318
44,107
243,211
94,609
148,602
39,628
125,441
5,622
119,819
225,336
188,745
156,410
56,957
99,453
38,687
60,766
Net income attributable to non-controlling
interests
—
—
Net income attributable to BOK Financial Corp.
shareholders
$
148,602
$
60,766
Average assets
Average invested capital
$ 10,386,502
$ 6,520,498
906,717
293,736
20,061
45,539
1,275
44,264
211,655
198,197
57,722
29,876
27,846
10,832
17,014
—
17,014
4,556,132
203,914
$
$
(8,097)
191,128
(30,425)
221,553
20,075
261,049
(19,421)
(130,940)
111,519
18,970
92,549
2,322
—
674,477
(27,900)
702,377
620,272
840,620
482,029
—
482,029
163,098
318,931
2,322
$
$
90,227
$
316,609
5,917,962
$ 27,381,094
1,571,059
2,975,426
Performance measurements:
Return on average assets
Return on average invested capital
Efficiency ratio
1.43%
16.39%
40.74%
0.93%
20.69%
53.22%
0.40%
8.95%
76.49%
1.16%
10.64%
64.60%
155
(cid:11)(cid:20)(cid:27)(cid:12)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
Fair value is defined by applicable accounting guidance as the price to sell an asset or transfer a liability in an orderly
transaction between market participants in the principal market for the given asset or liability at the measurement date based on
market conditions at that date. An orderly transaction assumes exposure to the market for a customary period for marketing
activities prior to the measurement date and not a forced liquidation or distressed sale. Certain assets and liabilities are recorded
in the Company’s financial statements at fair value. Some are recorded on a recurring basis and some on a non-recurring basis.
For some assets and liabilities, observable market transactions and market information might be available. For other assets and
liabilities, observable market transactions and market information might not be available. A hierarchy for fair value has been
established which categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels
are as follows:
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) - fair value is based on unadjusted quoted
prices in active markets for identical assets or liabilities.
Significant Other Observable Inputs (Level 2) - fair value is based on significant other observable inputs which are
generally determined based on a single price for each financial instrument provided to us by an applicable third-party
pricing service and is based on one or more of the following:
• Quoted prices for similar, but not identical, assets or liabilities in active markets;
• Quoted prices for identical or similar assets or liabilities in inactive markets;
•
Inputs other than quoted prices that are observable, such as interest rate and yield curves, volatilities, prepayment
speeds, loss severities, credit risks and default rates;
• Other inputs derived from or corroborated by observable market inputs.
Significant Unobservable Inputs (Level 3) - fair value is based upon model-based valuation techniques for which at least
one significant assumption is not observable in the market.
Transfers between levels are recognized as of the end of the reporting period. During 2015, $2.2 million of residential mortgage
loans held for sale were transferred from significant other observable inputs to significant unobservable inputs. These loans
cannot be sold to U.S. government agencies due to origination defects. An unobservable liquidity discount is applied to
determine fair value. There were no other transfers in or out of quoted prices in active markets for identical instruments,
significant other observable inputs or significant unobservable inputs during the year ended December 31, 2015 and 2014,
respectively.
The underlying methods used by the third-party pricing services are considered in determining the primary inputs used to
determine fair values. Management has evaluated the methodologies employed by the third-party pricing services by
comparing the price provided by the pricing service with other sources, including brokers' quotes, sales or purchases of similar
instruments and discounted cash flows to establish a basis for reliance on the pricing service values. Significant differences
between the pricing service provided value and other sources are discussed with the pricing service to understand the basis for
their values. Based on all observable inputs, management may adjust prices obtained from third-party pricing services to more
appropriately reflect the prices that would be received to sell assets or paid to transfer liabilities in orderly transactions in the
current market. No significant adjustments were made to prices provided by third-party pricing services at December 31, 2015
and 2014.
156
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:3)(cid:53)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:37)(cid:68)(cid:86)(cid:76)(cid:86)
The fair value of financial assets and liabilities that are measured on a recurring basis is as follows as of December 31, 2015 (in
thousands):
(cid:52)(cid:88)(cid:82)(cid:87)(cid:72)(cid:71)
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)
(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)
(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)
(cid:44)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)
(cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:50)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
Assets:
Trading securities:
U.S. government agency debentures
U.S. agency residential mortgage-backed securities
Municipal and other tax-exempt securities
Other trading securities
Total trading securities
Available for sale securities:
U.S. Treasury securities
Municipal and other tax-exempt securities
U.S. government agency residential mortgage-backed securities
Privately issued residential mortgage-backed securities
Commercial mortgage-backed securities guaranteed by U.S.
government agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
Total available for sale securities
Fair value option securities – U.S. government agency residential
mortgage-backed securities
Residential mortgage loans held for sale
Mortgage servicing rights, net1
Derivative contracts, net of cash margin2
Other assets – private equity funds
Liabilities:
Derivative contracts, net of cash margin2
(cid:7)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:28)(cid:24)
(cid:7)
(cid:178) (cid:7)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:28)(cid:24)
(cid:7)
(cid:20)(cid:19)(cid:15)(cid:28)(cid:27)(cid:28)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:19)(cid:20)
(cid:20)(cid:27)(cid:15)(cid:21)(cid:20)(cid:28)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:23)(cid:19)(cid:23)
(cid:3)
(cid:28)(cid:28)(cid:24)
(cid:24)(cid:25)(cid:15)(cid:27)(cid:20)(cid:26)
(cid:24)(cid:15)(cid:27)(cid:28)(cid:27)(cid:15)(cid:22)(cid:24)(cid:20)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:20)(cid:20)(cid:27)
(cid:21)(cid:15)(cid:28)(cid:19)(cid:24)(cid:15)(cid:26)(cid:28)(cid:25)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:20)(cid:26)(cid:15)(cid:27)(cid:22)(cid:22)
(cid:28)(cid:15)(cid:19)(cid:23)(cid:21)(cid:15)(cid:26)(cid:22)(cid:22)
(cid:23)(cid:23)(cid:23)(cid:15)(cid:21)(cid:20)(cid:26)
(cid:22)(cid:19)(cid:27)(cid:15)(cid:23)(cid:22)(cid:28)
(cid:21)(cid:20)(cid:27)(cid:15)(cid:25)(cid:19)(cid:24)
(cid:24)(cid:27)(cid:25)(cid:15)(cid:21)(cid:26)(cid:19)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:26)(cid:21)
(cid:3)
(cid:24)(cid:27)(cid:20)(cid:15)(cid:26)(cid:19)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:3)
(cid:28)(cid:28)(cid:24)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:22)(cid:15)(cid:21)(cid:25)(cid:24)
(cid:23)(cid:15)(cid:21)(cid:25)(cid:19)
(cid:178)
(cid:178)
(cid:178)
(cid:20)(cid:19)(cid:15)(cid:28)(cid:27)(cid:28)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:19)(cid:20)
(cid:20)(cid:27)(cid:15)(cid:21)(cid:20)(cid:28)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:23)(cid:19)(cid:23)
(cid:3)
(cid:178)
(cid:23)(cid:26)(cid:15)(cid:21)(cid:19)(cid:26)
(cid:24)(cid:15)(cid:27)(cid:28)(cid:27)(cid:15)(cid:22)(cid:24)(cid:20)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:20)(cid:20)(cid:27)
(cid:21)(cid:15)(cid:28)(cid:19)(cid:24)(cid:15)(cid:26)(cid:28)(cid:25)
(cid:178)
(cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:20)(cid:23)(cid:15)(cid:24)(cid:25)(cid:27)
(cid:23)(cid:23)(cid:23)(cid:15)(cid:21)(cid:20)(cid:26)
(cid:22)(cid:19)(cid:19)(cid:15)(cid:24)(cid:25)(cid:24)
(cid:178)
(cid:22)(cid:27)(cid:15)(cid:24)(cid:22)(cid:19)
(cid:24)(cid:23)(cid:26)(cid:15)(cid:26)(cid:23)(cid:19)
(cid:178)
(cid:3)
(cid:178)
(cid:178)
(cid:3)
(cid:24)(cid:27)(cid:20)(cid:15)(cid:26)(cid:19)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:3)
(cid:178)
(cid:28)(cid:15)(cid:25)(cid:20)(cid:19)
(cid:178)
(cid:178)
(cid:178)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:178)
(cid:178)
(cid:178)
(cid:26)(cid:15)(cid:27)(cid:26)(cid:23)
(cid:21)(cid:20)(cid:27)(cid:15)(cid:25)(cid:19)(cid:24)
(cid:178)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:26)(cid:21)
(cid:3)
(cid:178)
(cid:28)(cid:15)(cid:19)(cid:21)(cid:23)(cid:15)(cid:26)(cid:20)(cid:21)
(cid:20)(cid:22)(cid:15)(cid:26)(cid:25)(cid:20)
1 A reconciliation of the beginning and ending fair value of mortgage servicing rights and disclosures of significant assumptions used to
determine fair value are presented in Note 7, Mortgage Banking Activities.
2 See Note 3 for detail of fair value of derivative contracts by contract type. Derivative contracts in a net asset position that were valued
based on quoted prices in active markets or identical instruments (Level 1) are exchange-traded energy derivative contracts, net of cash
margin. Derivative contracts in a net liability position that were valued using quoted prices in active markets for identical instruments
(Level 1) are exchange-traded interest rate and agricultural derivative contracts fully offset by cash margin.
157
The fair value of financial assets and liabilities that are measured on a recurring basis is as follows as of December 31, 2014 (in
thousands):
(cid:52)(cid:88)(cid:82)(cid:87)(cid:72)(cid:71)
(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)
(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)
(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)
(cid:44)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)
(cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:50)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
Assets:
Trading securities:
U.S. Government agency debentures
$
85,092
$
— $
85,092
$
U.S. government agency residential mortgage-backed securities
Municipal and other tax-exempt securities
Other trading securities
Total trading securities
Available for sale securities:
U.S. Treasury securities
Municipal and other tax-exempt securities
U.S. government agency residential mortgage-backed securities
Privately issued residential mortgage-backed securities
Commercial mortgage-backed securities guaranteed by U.S.
government agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
Total available for sale securities
Fair value option securities – U.S. government agency residential
mortgage-backed securities
Residential mortgage loans held for sale
Mortgage servicing rights, net1
Derivative contracts, net of cash margin2
Other assets – private equity funds
Liabilities:
Derivative contracts, net of cash margin 2
31,199
38,951
33,458
188,700
1,005
63,557
6,646,884
165,957
2,048,609
9,212
24,277
19,444
8,978,945
311,597
304,182
171,976
361,874
25,627
—
—
—
—
1,005
—
—
—
—
—
—
4,927
5,932
—
—
—
31,199
38,951
33,458
188,700
—
53,464
6,646,884
165,957
2,048,609
5,062
24,277
14,517
8,958,770
311,597
292,326
—
17,607
344,267
—
—
—
—
—
—
—
—
10,093
—
—
—
4,150
—
—
14,243
—
11,856
171,976
—
25,627
354,554
541
354,013
—
1 A reconciliation of the beginning and ending fair value of mortgage servicing rights and disclosures of significant assumptions used to
determine fair value are presented in Note 7, Mortgage Banking Activities.
2 See Note 3 for detail of fair value of derivative contracts by contract type. Derivative contracts in a net asset position that were valued
based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded energy derivative contracts, net of cash
margin. Derivative contracts in a net liability position that were valued using quoted prices in active markets for identical instruments
based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded interest rate and agricultural derivative
contracts, net of cash margin.
158
Following is a description of the Company's valuation methodologies used for assets and liabilities measured on a recurring
basis:
Securities
The fair values of trading, available for sale and fair value option securities are based on quoted prices for identical instruments
in active markets, when available. If quoted prices for identical instruments are not available, fair values are based on
significant other observable inputs such as quoted prices of comparable instruments or interest rates and credit spreads, yield
curves, volatilities, prepayment speeds and loss severities.
The fair value of certain available for sale municipal and other debt securities may be based on significant unobservable inputs.
These significant unobservable inputs include limited observed trades, projected cash flows, current credit rating of the issuers
and, when applicable, the insurers of the debt and observed trades of similar debt. Discount rates are primarily based on
reference to interest rate spreads on comparable securities of similar duration and credit rating as determined by the nationally-
recognized rating agencies adjusted for a lack of trading volume. Significant unobservable inputs are developed by investment
securities professionals involved in the active trading of similar securities. A summary of significant inputs used to value these
securities follows. A management committee composed of senior members from the Company's Capital Markets, Risk
Management and Finance departments assess the appropriateness of these inputs monthly.
Derivatives
All derivative instruments are carried on the balance sheet at fair value. Fair values for exchange-traded contracts are based on
quoted prices. Fair values for over-the-counter interest rate, commodity and foreign exchange contracts are based on valuations
provided either by third-party dealers in the contracts, quotes provided by independent pricing services, or a third-party
provided pricing model that uses significant other observable market inputs.
Credit risk is considered in determining the fair value of derivative instruments. Management determines fair value adjustments
based on various risk factors including but not limited to counterparty credit rating or equivalent loan grading, derivative
contract notional size, price volatility of the underlying commodity, duration of the derivative contracts and expected loss
severity. Expected loss severity is based on historical losses for similarly risk graded commercial loan customers. Decreases in
counterparty credit rating or grading and increases in price volatility and expected loss severity all tend to increase the credit
quality adjustment which reduces the fair value of asset contracts. The reduction in fair value is recognized in earnings during
the current period.
We also consider our own credit risk in determining the fair value of derivative contracts. Changes in our credit rating would
affect the fair value of our derivative liabilities. In the event of a credit downgrade, the fair value of our derivative liabilities
would increase. The change in the fair value would be recognized in earnings in the current period.
Residential Mortgage Loans Held for Sale
Residential mortgage loans held for sale are carried on the balance sheet at fair value. The fair values of conforming residential
mortgage loans held for sale are based upon quoted market prices of such loans sold in securitization transactions, including
related unfunded loan commitments. The fair value of mortgage loans that are unable to be sold to U.S. government agencies is
determined using quoted prices of loans that are sold in securitization transactions with a liquidity discount applied.
Other Assets - Private Equity Funds
The fair value of the portfolio investments of the Company's two private equity funds are based upon net asset value reported
by the underlying funds, as adjusted by the general partner when necessary to represent the price that would be received to sell
the assets. The Company's private equity funds provide customers alternative investment opportunities as limited partners of
the funds. As fund of funds, the private equity funds invest in other limited partnerships or limited liability companies that
invest substantially all of their assets in U.S. companies pursuing diversified investment strategies including early-stage venture
capital, distressed securities and corporate or asset buy-outs. Private equity fund assets are long-term, illiquid investments. No
secondary market exists for these assets. The private equity funds typically invest in funds that provide no redemption rights to
investors. The fair value of the private equity investments may only be realized through cash distributions from the underlying
funds.
159
The following represents the changes related to assets measured at fair value on a recurring basis using significant
unobservable inputs (in thousands):
(cid:36)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:54)(cid:68)(cid:79)(cid:72)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Balance, December 31, 2013
Transfer to Level 3 from Level 2
Purchases and capital calls
Redemptions and distributions
Proceeds from sales
Gain (loss) recognized in earnings:
Mortgage banking revenue
Gain on assets, net
Gain on available for sale securities, net
Charitable contributions to BOKF Foundation
Other comprehensive income (loss):
Net change in unrealized gain (loss)
Balance, December 31, 2014
Transfer to Level 3 from Level 2
Purchases and capital calls
Redemptions and distributions
Proceeds from sales
Gain (loss) recognized in earnings:
Mortgage banking revenue
Gain on assets, net
Gain on available for sale securities, net
Charitable contributions to BOKF Foundation
Other comprehensive income (loss):
Net change in unrealized gain (loss)
Balance, December 31, 2015
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:71)(cid:72)(cid:69)(cid:87)
(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:88)(cid:87)(cid:88)(cid:68)(cid:79)
(cid:73)(cid:88)(cid:81)(cid:71)(cid:86)
(cid:53)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)
(cid:80)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)
(cid:79)(cid:82)(cid:68)(cid:81)(cid:86)(cid:3)(cid:75)(cid:72)(cid:79)(cid:71)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)
(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:177)
(cid:83)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)
(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
(cid:73)(cid:88)(cid:81)(cid:71)(cid:86)
(cid:48)(cid:88)(cid:81)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:87)(cid:68)(cid:91)(cid:16)(cid:72)(cid:91)(cid:72)(cid:80)(cid:83)(cid:87)
17,805
$
$
4,712
$
4,207
$
— $
27,341
—
—
—
—
(7,487)
(500)
—
—
—
(235)
—
10
(cid:20)(cid:19)(cid:15)(cid:19)(cid:28)(cid:22)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:11)(cid:23)(cid:27)(cid:22)(cid:12)
—
—
—
—
—
(62)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:19)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:20)
—
—
—
—
—
—
—
(2,420)
(1,787)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
13,644
—
—
(1,176)
(612)
—
—
—
—
(cid:20)(cid:20)(cid:15)(cid:27)(cid:24)(cid:25)
(cid:21)(cid:15)(cid:20)(cid:28)(cid:22)
(cid:178)
(cid:178)
(cid:11)(cid:25)(cid:15)(cid:21)(cid:27)(cid:22)(cid:12)
(cid:20)(cid:19)(cid:27)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
—
1,012
(7,473)
—
—
4,747
—
—
—
(cid:21)(cid:24)(cid:15)(cid:25)(cid:21)(cid:26)
(cid:178)
(cid:20)(cid:15)(cid:19)(cid:21)(cid:26)
(cid:11)(cid:25)(cid:15)(cid:28)(cid:24)(cid:24)(cid:12)
(cid:178)
(cid:178)
(cid:21)(cid:15)(cid:26)(cid:26)(cid:22)
(cid:178)
(cid:178)
(cid:178)
(cid:7)
(cid:28)(cid:15)(cid:25)(cid:20)(cid:19)
(cid:7)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:7)
(cid:178) (cid:7)
(cid:26)(cid:15)(cid:27)(cid:26)(cid:23)
(cid:7)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:26)(cid:21)
160
A summary of quantitative information about assets measured at fair value on a recurring basis using significant unobservable
inputs (Level 3) as of December 31, 2015 follows (in thousands):
(cid:52)(cid:88)(cid:68)(cid:81)(cid:87)(cid:76)(cid:87)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:22)(cid:3)(cid:53)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)(cid:18)
(cid:56)(cid:81)(cid:83)(cid:68)(cid:76)(cid:71)(cid:3)
(cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:68)(cid:79)(cid:3)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:51)(cid:68)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:76)(cid:84)(cid:88)(cid:72)(cid:11)(cid:86)(cid:12)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)
(cid:11)(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:12)
Available for sale securities:
Municipal and other tax-
exempt securities
$
10,370
$
10,311
$
9,610
Discounted cash flows
Other debt securities
4,400
4,400
4,151
Discounted cash flows
Residential mortgage loans
held for sale
N/A
8,395
7,874
Quoted prices of loans
sold in securitization
transactions, with a
liquidity discount
applied
1
1
Interest rate
spread
Interest rate
spread
Liquidity
discount applied
to the market
value of
mortgage loans
qualifying for
sale to U.S.
government
agencies
Other assets - private equity
funds
N/A
N/A
22,742
Net asset value reported
by underlying fund
Net asset value
reported by
underlying fund
5.47%-5.77% (5.73%)
92.34%-92.93% (92.67%)
5.80% - 5.92% (5.90%)
94.33% - 94.34% (94.34%)
2
3
4
3
93.79%
N/A
1 Discounted cash flows developed using discount rates primarily based on reference to interest rate spreads for comparable securities of similar duration and
credit rating as determined by the nationally-recognized rating agencies, adjusted for lack of trading volume.
2 Interest rate yields used to value investment grade tax-exempt securities represent a spread of 499 to 541 basis points over average yields for comparable
tax-exempt securities.
3 Represents fair value as a percentage of par value.
4 Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than
1%.
161
A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs
(Level 3) as of December 31, 2014 follows (in thousands):
(cid:52)(cid:88)(cid:68)(cid:81)(cid:87)(cid:76)(cid:87)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:22)(cid:3)(cid:53)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:51)(cid:68)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)
(cid:38)(cid:82)(cid:86)(cid:87)(cid:25)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:76)(cid:84)(cid:88)(cid:72)(cid:11)(cid:86)(cid:12)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)
(cid:11)(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:12)
Available for sale securities:
Municipal and other tax-
exempt securities
$
10,870
$
10,805
$
10,093
Discounted cash flows
Other debt securities
4,400
4,400
4,150
Discounted cash flows
1
1
Interest rate
spread
Interest rate
spread
4.96%-5.26% (5.21%)
92.65%-94.32% (93.09%)
5.62% - 5.67% (5.66%)
92.65% - 92.95% (92.77%)
2
3
4
3
Residential mortgage loans
held for sale
N/A
12,468
11,856
Liquidity
discount applied
to the market
value of
mortgage loans
qualifying for
sale to U.S.
government
agencies
Quoted prices of loans
sold in securitization
transactions, with a
liquidity discount
applied
Other assets - private equity
funds
N/A
N/A
25,627
Net asset value reported
by underlying fund
Net asset value
reported by
underlying fund
95.09%
N/A
1 Discounted cash flows developed using discount rates primarily based on reference to interest rate spreads for comparable securities of similar duration and
credit rating as determined by the nationally-recognized rating agencies, adjusted for lack of trading volume.
2 Interest rate yields used to value investment grade tax-exempt securities represent a spread of 488 to 516 basis points over average yields for comparable
tax-exempt securities.
3 Represents fair value as a percentage of par value.
4 Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than
1%.
162
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:3)(cid:49)(cid:82)(cid:81)(cid:16)(cid:53)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:37)(cid:68)(cid:86)(cid:76)(cid:86)
Assets measured at fair value on a non-recurring basis include pension plan assets, which are based on quoted prices in active
markets for identical instruments, collateral for certain impaired loans and real property and other assets acquired to satisfy
loans, which are based primarily on comparisons to completed sales of similar assets.
The following represents the carrying value of assets measured at fair value on a non-recurring basis and related losses
recorded during the year. The carrying value represents only those assets with the balance sheet date for which the fair value
was adjusted during the year:
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:44)(cid:81)(cid:29)
(cid:52)(cid:88)(cid:82)(cid:87)(cid:72)(cid:71)(cid:3)(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)
(cid:76)(cid:81)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)
(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)
(cid:44)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)
(cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:50)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:16)
(cid:82)(cid:73)(cid:73)(cid:86)(cid:3)(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)
(cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)
(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)
(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)
(cid:85)(cid:72)(cid:83)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:72)(cid:71)
(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)
Impaired loans
Real estate and other repossessed assets
(cid:7)
(cid:178) (cid:7)
(cid:178)
(cid:7)
(cid:21)(cid:24)(cid:21)
(cid:20)(cid:22)(cid:15)(cid:25)(cid:20)(cid:20)
(cid:7)
(cid:21)(cid:19)(cid:15)(cid:27)(cid:19)(cid:24)
(cid:21)(cid:23)(cid:24)
(cid:7)
(cid:23)(cid:15)(cid:19)(cid:23)(cid:21)
(cid:178)
(cid:178)
(cid:20)(cid:15)(cid:27)(cid:21)(cid:19)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)
(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:53)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:44)(cid:81)(cid:29)
(cid:52)(cid:88)(cid:82)(cid:87)(cid:72)(cid:71)(cid:3)(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)
(cid:76)(cid:81)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)
(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)
(cid:44)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)
(cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)
(cid:50)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)
(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)
(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)
(cid:42)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:16)
(cid:82)(cid:73)(cid:73)(cid:86)(cid:3)(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)
(cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)
(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)
(cid:49)(cid:72)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)
(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)
(cid:85)(cid:72)(cid:83)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:72)(cid:71)
(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)
Impaired loans
Real estate and other repossessed assets
$
— $
—
$
8,198
22,594
$
635
3,691
$
4,044
—
—
3,563
The fair value of collateral-dependent impaired loans and real estate and other repossessed assets and the related fair value
adjustments are generally based on unadjusted third-party appraisals. Our appraisal review policies require appraised values to
be supported by observed inputs derived principally from or corroborated by observable market data. Appraisals that are not
based on observable inputs or that require significant adjustments or fair value measurements that are not based on third-party
appraisals are considered to be based on significant unobservable inputs. Non-recurring fair value measurements of collateral-
dependent impaired loans and real estate and other repossessed assets based on significant unobservable inputs are generally
due to estimates of current fair values between appraisal dates. Significant unobservable inputs include listing prices for
comparable assets, uncorroborated expert opinions or management's knowledge of the collateral or industry. These inputs are
developed by asset management and workout professionals and approved by senior Credit Administration executives.
A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable
Inputs (Level 3) as of December 31, 2015 follows (in thousands):
(cid:52)(cid:88)(cid:68)(cid:81)(cid:87)(cid:76)(cid:87)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:22)(cid:3)(cid:49)(cid:82)(cid:81)(cid:16)(cid:85)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:76)(cid:84)(cid:88)(cid:72)(cid:11)(cid:86)(cid:12)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)
(cid:11)(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:12)
Impaired loans
$ 20,805
Appraised value,
as adjusted
Broker quotes and management's
knowledge of industry and collateral.
N/A
Real estate and other repossessed assets
1 Marketability adjustments include consideration of estimated costs to sell which is approximately 10% of the fair value.
245
Appraised value,
as adjusted
Marketability adjustments off
appraised value1
66%-81% (74%)
163
A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable
Inputs (Level 3) as of December 31, 2014 follows (in thousands):
(cid:52)(cid:88)(cid:68)(cid:81)(cid:87)(cid:76)(cid:87)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:22)(cid:3)(cid:49)(cid:82)(cid:81)(cid:16)(cid:85)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:76)(cid:84)(cid:88)(cid:72)(cid:11)(cid:86)(cid:12)
(cid:54)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:56)(cid:81)(cid:82)(cid:69)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:44)(cid:81)(cid:83)(cid:88)(cid:87)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)
(cid:11)(cid:58)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:12)
Impaired loans
$
635
Appraised value,
as adjusted
Broker quotes and management's
knowledge of industry and collateral.
Real estate and other repossessed assets
3,691
Appraised value,
as adjusted
Marketability adjustments off
appraised value
N/A
65%
The fair value of pension plan assets was approximately $44 million at December 31, 2015 and $49 million at December 31,
2014, determined by significant other observable inputs. Fair value adjustments of pension plan assets along with changes in
the projected benefit obligation are recognized in other comprehensive income.
164
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)
The following table presents the carrying values and estimated fair values of all financial instruments, including those financial
assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring (dollars in
thousands):
Cash and due from banks
Interest-bearing cash and cash equivalents
Trading securities:
U.S. Government agency debentures
U.S. government agency residential mortgage-backed securities
Municipal and other tax-exempt securities
Other trading securities
Total trading securities
Investment securities:
Municipal and other tax-exempt securities
U.S. government agency residential mortgage-backed securities
Other debt securities
Total investment securities
Available for sale securities:
U.S. Treasury securities
Municipal and other tax-exempt securities
U.S. government agency residential mortgage-backed securities
Privately issued residential mortgage-backed securities
Commercial mortgage-backed securities guaranteed by U.S.
government agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
Total available for sale securities
Fair value option securities – U.S. government agency residential
mortgage-backed securities
Residential mortgage loans held for sale
Loans:
Commercial
Commercial real estate
Residential mortgage
Personal
Total loans
Allowance for loan losses
Loans, net of allowance
Mortgage servicing rights
Derivative instruments with positive fair value, net of cash margin
Other assets – private equity funds
Deposits with no stated maturity
Time deposits
Other borrowings
Subordinated debentures
Derivative instruments with negative fair value, net of cash margin
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)
(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)(cid:86)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:53)(cid:72)(cid:16)(cid:83)(cid:85)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)
(cid:11)(cid:76)(cid:81)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:12)
(cid:39)(cid:76)(cid:86)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:40)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:7)
(cid:24)(cid:26)(cid:22)(cid:15)(cid:25)(cid:28)(cid:28)
(cid:21)(cid:15)(cid:19)(cid:25)(cid:28)(cid:15)(cid:28)(cid:19)(cid:19)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:28)(cid:24)
(cid:20)(cid:19)(cid:15)(cid:28)(cid:27)(cid:28)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:19)(cid:20)
(cid:20)(cid:27)(cid:15)(cid:21)(cid:20)(cid:28)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:23)(cid:19)(cid:23)
(cid:3)
(cid:22)(cid:25)(cid:27)(cid:15)(cid:28)(cid:20)(cid:19)
(cid:21)(cid:26)(cid:15)(cid:27)(cid:26)(cid:23)
(cid:21)(cid:22)(cid:21)(cid:15)(cid:22)(cid:26)(cid:24)
(cid:25)(cid:21)(cid:28)(cid:15)(cid:20)(cid:24)(cid:28)
(cid:3)
(cid:28)(cid:28)(cid:24)
(cid:24)(cid:25)(cid:15)(cid:27)(cid:20)(cid:26)
(cid:24)(cid:15)(cid:27)(cid:28)(cid:27)(cid:15)(cid:22)(cid:24)(cid:20)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:20)(cid:20)(cid:27)
(cid:21)(cid:15)(cid:28)(cid:19)(cid:24)(cid:15)(cid:26)(cid:28)(cid:25)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:20)(cid:26)(cid:15)(cid:27)(cid:22)(cid:22)
(cid:28)(cid:15)(cid:19)(cid:23)(cid:21)(cid:15)(cid:26)(cid:22)(cid:22)
(cid:23)(cid:23)(cid:23)(cid:15)(cid:21)(cid:20)(cid:26)
(cid:22)(cid:19)(cid:27)(cid:15)(cid:23)(cid:22)(cid:28)
(cid:3)
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
(cid:7)
(cid:24)(cid:26)(cid:22)(cid:15)(cid:25)(cid:28)(cid:28)
(cid:21)(cid:15)(cid:19)(cid:25)(cid:28)(cid:15)(cid:28)(cid:19)(cid:19)
(cid:25)(cid:20)(cid:15)(cid:21)(cid:28)(cid:24)
(cid:20)(cid:19)(cid:15)(cid:28)(cid:27)(cid:28)
(cid:22)(cid:20)(cid:15)(cid:28)(cid:19)(cid:20)
(cid:20)(cid:27)(cid:15)(cid:21)(cid:20)(cid:28)
(cid:20)(cid:21)(cid:21)(cid:15)(cid:23)(cid:19)(cid:23)
(cid:3)
(cid:22)(cid:25)(cid:24)(cid:15)(cid:21)(cid:24)(cid:27)
(cid:21)(cid:25)(cid:15)(cid:27)(cid:22)(cid:22)
(cid:21)(cid:19)(cid:24)(cid:15)(cid:26)(cid:23)(cid:24)
(cid:24)(cid:28)(cid:26)(cid:15)(cid:27)(cid:22)(cid:25)
(cid:3)
(cid:28)(cid:28)(cid:24)
(cid:24)(cid:25)(cid:15)(cid:27)(cid:20)(cid:26)
(cid:24)(cid:15)(cid:27)(cid:28)(cid:27)(cid:15)(cid:22)(cid:24)(cid:20)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:20)(cid:20)(cid:27)
(cid:21)(cid:15)(cid:28)(cid:19)(cid:24)(cid:15)(cid:26)(cid:28)(cid:25)
(cid:23)(cid:15)(cid:20)(cid:24)(cid:20)
(cid:20)(cid:28)(cid:15)(cid:25)(cid:26)(cid:21)
(cid:20)(cid:26)(cid:15)(cid:27)(cid:22)(cid:22)
(cid:28)(cid:15)(cid:19)(cid:23)(cid:21)(cid:15)(cid:26)(cid:22)(cid:22)
(cid:23)(cid:23)(cid:23)(cid:15)(cid:21)(cid:20)(cid:26)
(cid:22)(cid:19)(cid:27)(cid:15)(cid:23)(cid:22)(cid:28)
(cid:3)
(cid:20)(cid:19)(cid:15)(cid:21)(cid:24)(cid:21)(cid:15)(cid:24)(cid:22)(cid:20)
(cid:19)(cid:17)(cid:21)(cid:24)(cid:8)(cid:3)(cid:16) (cid:22)(cid:19)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:22)(cid:15)(cid:21)(cid:24)(cid:28)(cid:15)(cid:19)(cid:22)(cid:22)
(cid:19)(cid:17)(cid:22)(cid:27)(cid:8)(cid:3)(cid:16) (cid:20)(cid:27)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:20)(cid:15)(cid:27)(cid:26)(cid:25)(cid:15)(cid:27)(cid:28)(cid:22)
(cid:20)(cid:17)(cid:25)(cid:26)(cid:8)(cid:3)(cid:16) (cid:20)(cid:27)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:24)(cid:24)(cid:21)(cid:15)(cid:25)(cid:28)(cid:26)
(cid:19)(cid:17)(cid:22)(cid:27)(cid:8)(cid:3)(cid:16) (cid:21)(cid:20)(cid:17)(cid:19)(cid:19)(cid:8)
(cid:19)(cid:17)(cid:25)(cid:21)
(cid:19)(cid:17)(cid:26)(cid:22)
(cid:21)(cid:17)(cid:23)(cid:21)
(cid:19)(cid:17)(cid:22)(cid:26)
(cid:20)(cid:24)(cid:15)(cid:28)(cid:23)(cid:20)(cid:15)(cid:20)(cid:24)(cid:23)
(cid:11)(cid:21)(cid:21)(cid:24)(cid:15)(cid:24)(cid:21)(cid:23)(cid:12)
(cid:20)(cid:24)(cid:15)(cid:26)(cid:20)(cid:24)(cid:15)(cid:25)(cid:22)(cid:19)
(cid:21)(cid:20)(cid:27)(cid:15)(cid:25)(cid:19)(cid:24)
(cid:24)(cid:27)(cid:25)(cid:15)(cid:21)(cid:26)(cid:19)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:26)(cid:21)
(cid:20)(cid:27)(cid:15)(cid:25)(cid:27)(cid:21)(cid:15)(cid:19)(cid:28)(cid:23)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:19)(cid:17)(cid:24)(cid:21)(cid:8)(cid:3)(cid:16) (cid:23)(cid:17)(cid:22)(cid:23)(cid:8)
(cid:20)(cid:19)(cid:15)(cid:19)(cid:24)(cid:22)(cid:15)(cid:28)(cid:24)(cid:21)
(cid:19)(cid:17)(cid:28)(cid:24)(cid:8)(cid:3)(cid:16) (cid:22)(cid:17)(cid:28)(cid:22)(cid:8)
(cid:19)(cid:17)(cid:27)(cid:25)(cid:8)(cid:3)(cid:16) (cid:23)(cid:17)(cid:21)(cid:24)(cid:8)
(cid:20)(cid:17)(cid:20)(cid:28)(cid:8)(cid:3)(cid:16) (cid:23)(cid:17)(cid:20)(cid:20)(cid:8)
(cid:22)(cid:15)(cid:21)(cid:22)(cid:22)(cid:15)(cid:23)(cid:26)(cid:25)
(cid:20)(cid:15)(cid:28)(cid:19)(cid:21)(cid:15)(cid:28)(cid:26)(cid:25)
(cid:24)(cid:23)(cid:28)(cid:15)(cid:19)(cid:25)(cid:27)
(cid:20)(cid:24)(cid:15)(cid:26)(cid:22)(cid:28)(cid:15)(cid:23)(cid:26)(cid:21)
(cid:178)
(cid:20)(cid:24)(cid:15)(cid:26)(cid:22)(cid:28)(cid:15)(cid:23)(cid:26)(cid:21)
(cid:21)(cid:20)(cid:27)(cid:15)(cid:25)(cid:19)(cid:24)
(cid:24)(cid:27)(cid:25)(cid:15)(cid:21)(cid:26)(cid:19)
(cid:21)(cid:21)(cid:15)(cid:23)(cid:26)(cid:21)
(cid:20)(cid:27)(cid:15)(cid:25)(cid:27)(cid:21)(cid:15)(cid:19)(cid:28)(cid:23)
(cid:21)(cid:15)(cid:22)(cid:28)(cid:23)(cid:15)(cid:24)(cid:25)(cid:21)
(cid:24)(cid:15)(cid:25)(cid:19)(cid:19)(cid:15)(cid:28)(cid:22)(cid:21)
(cid:21)(cid:21)(cid:22)(cid:15)(cid:26)(cid:24)(cid:27)
(cid:24)(cid:27)(cid:20)(cid:15)(cid:26)(cid:19)(cid:20)
(cid:21)(cid:15)(cid:23)(cid:19)(cid:25)(cid:15)(cid:19)(cid:25)(cid:23)
(cid:19)(cid:17)(cid:19)(cid:21)(cid:8)(cid:3)(cid:16) (cid:24)(cid:17)(cid:24)(cid:19)(cid:8)
(cid:25)(cid:15)(cid:19)(cid:24)(cid:20)(cid:15)(cid:24)(cid:20)(cid:24)
(cid:19)(cid:17)(cid:21)(cid:24)(cid:8)(cid:3)(cid:16) (cid:22)(cid:17)(cid:23)(cid:19)(cid:8)
(cid:21)(cid:21)(cid:25)(cid:15)(cid:22)(cid:24)(cid:19)
(cid:24)(cid:27)(cid:20)(cid:15)(cid:26)(cid:19)(cid:20)
(cid:20)(cid:17)(cid:19)(cid:24)(cid:8)
(cid:20)(cid:17)(cid:26)(cid:27)
(cid:19)(cid:17)(cid:19)(cid:19)
(cid:20)(cid:17)(cid:22)(cid:26)
(cid:3)
(cid:20)(cid:17)(cid:20)(cid:20)(cid:8)(cid:3)(cid:16) (cid:20)(cid:17)(cid:24)(cid:26)(cid:8)
(cid:19)(cid:17)(cid:21)(cid:19)(cid:8)(cid:3)(cid:16) (cid:21)(cid:17)(cid:27)(cid:28)(cid:8)
(cid:21)(cid:17)(cid:20)(cid:21)(cid:8)
165
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:53)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)
(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)(cid:86)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:53)(cid:72)(cid:16)(cid:83)(cid:85)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)
(cid:11)(cid:76)(cid:81)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:12)
(cid:39)(cid:76)(cid:86)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)
Cash and due from banks
Interest-bearing cash and cash equivalents
Trading securities:
U.S. Government agency debentures
U.S. government agency residential mortgage-backed securities
Municipal and other tax-exempt securities
Other trading securities
Total trading securities
Investment securities:
Municipal and other tax-exempt
U.S. government agency residential mortgage-backed securities
Other debt securities
Total investment securities
Available for sale securities:
U.S. Treasury
Municipal and other tax-exempt
(cid:38)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
$
550,576
1,925,266
85,092
31,199
38,951
33,458
188,700
405,090
35,750
211,520
652,360
1,005
63,557
U.S. government agency residential mortgage-backed securities
6,646,884
Privately issued residential mortgage-backed securities
165,957
Commercial mortgage-backed securities guaranteed by U.S.
government agencies
Other debt securities
Perpetual preferred stock
Equity securities and mutual funds
Total available for sale securities
Fair value option securities – U.S. government agency residential
mortgage-backed securities
Residential mortgage loans held for sale
2,048,609
9,212
24,277
19,444
8,978,945
311,597
304,182
Loans:
Commercial
Commercial real estate
Residential mortgage
Personal
Total loans
Allowance for loan losses
Loans, net of allowance
Mortgage servicing rights
Derivative instruments with positive fair value, net of cash margin
Other assets – private equity funds
Deposits with no stated maturity
Time deposits
Other borrowings
Subordinated debentures
9,095,670
0.17% - 30.00%
2,728,150
0.38% - 18.00%
1,949,512
1.20% - 18.00%
434,705
0.38% - 21.00%
0.65
0.84
2.50
0.45
0.51% - 4.34%
1.09% - 3.78%
0.64% - 3.99%
1.04% - 3.98%
14,208,037
(189,056)
14,018,981
171,976
361,874
25,627
18,532,143
2,608,716
0.02% - 9.64%
3,378,294
0.21% - 1.52%
347,983
0.92% - 5.00%
1.92
0.12
1.67
0.76% - 1.33%
0.06% - 2.64%
2.14%
Derivative instruments with negative fair value, net of cash margin
354,554
(cid:40)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)
(cid:41)(cid:68)(cid:76)(cid:85)
(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)
$
550,576
1,925,266
85,092
31,199
38,951
33,458
188,700
408,344
37,463
227,819
673,626
1,005
63,557
6,646,884
165,957
2,048,609
9,212
24,277
19,444
8,978,945
311,597
304,182
8,948,870
2,704,454
1,985,870
431,274
14,070,468
—
14,070,468
171,976
361,874
25,627
18,532,143
2,612,576
3,331,771
344,687
354,554
Because no market exists for certain of these financial instruments and management does not intend to sell these financial
instruments, the fair values shown in the tables above may not represent values at which the respective financial instruments
could be sold individually or in the aggregate at the given reporting date.
166
The following methods and assumptions were used in estimating the fair value of these financial instruments:
Cash and Cash Equivalents
The book value reported in the consolidated balance sheet for cash and short-term instruments approximates those assets’ fair
values.
Securities
The fair values of securities are generally based on Significant Other Observable Inputs such as quoted prices for comparable
instruments or interest rates and credit spreads, yield curves, volatilities, prepayment speeds and loss severities.
Loans
The fair value of loans, excluding loans held for sale, are based on discounted cash flow analyses using interest rates and credit
and liquidity spreads currently being offered for loans with similar remaining terms to maturity and risk, adjusted for the impact
of interest rate floors and ceilings which are classified as Significant Unobservable Inputs. The fair values of loans were
estimated to approximate their discounted cash flows less loan loss allowances allocated to these loans of $195 million at
December 31, 2015 and $161 million at December 31, 2014.
Deposits
The fair values of time deposits are based on discounted cash flow analyses using interest rates currently being offered on
similar transactions which are considered Significant Unobservable Inputs. Estimated fair value of deposits with no stated
maturity, which includes demand deposits, transaction deposits, money market deposits and savings accounts, is equal to the
amount payable on demand. Although market premiums paid reflect an additional value for these low cost deposits, adjusting
fair value for the expected benefit of these deposits is prohibited. Accordingly, the positive effect of such deposits is not
included in the tables above.
Other Borrowings and Subordinated Debentures
The fair values of these instruments are based upon discounted cash flow analyses using interest rates currently being offered
on similar instruments which are considered Significant Unobservable Inputs.
Off-Balance Sheet Instruments
The fair values of commercial loan commitments are based on fees currently charged to enter into similar agreements, taking
into account the remaining terms of the agreements. The fair values of these off-balance sheet instruments were not significant
at December 31, 2015 or December 31, 2014.
(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)
As more fully disclosed in Note 2 and Note 7 to the Consolidated Financial Statements, the Company has elected to carry all
residential mortgage-backed securities which have been designated as economic hedges against changes in the fair value of
mortgage servicing rights, certain corporate debt securities economically hedged by derivative contracts to manage interest rate
risk and all residential mortgage loans originated for sale at fair value. Changes in the fair value of these financial instruments
are recognized in earnings.
167
(cid:11)(cid:20)(cid:28)(cid:12)(cid:3)(cid:51)(cid:68)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:50)(cid:81)(cid:79)(cid:92)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
Summarized financial information for BOK Financial – Parent Company Only follows:
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:75)(cid:72)(cid:72)(cid:87)(cid:86)
(In thousands)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
Cash and cash equivalents
Available for sale securities
Investment in subsidiaries
Other assets
Total assets
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Other liabilities
Total liabilities
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive income
Total shareholders’ equity
Total liabilities and shareholders’ equity
(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)
(In thousands)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:7)
(cid:21)(cid:27)(cid:21)(cid:15)(cid:20)(cid:25)(cid:28)
$
510,668
(cid:21)(cid:19)(cid:15)(cid:20)(cid:24)(cid:19)
(cid:21)(cid:15)(cid:28)(cid:22)(cid:22)(cid:15)(cid:19)(cid:27)(cid:20)
(cid:20)(cid:15)(cid:24)(cid:22)(cid:23)
24,794
2,774,276
1,637
(cid:7)
(cid:22)(cid:15)(cid:21)(cid:22)(cid:25)(cid:15)(cid:28)(cid:22)(cid:23)
$
3,311,375
(cid:7)
$
(cid:25)(cid:15)(cid:22)(cid:26)(cid:27)
(cid:25)(cid:15)(cid:22)(cid:26)(cid:27)
9,196
9,196
(cid:23)
(cid:28)(cid:27)(cid:21)(cid:15)(cid:19)(cid:19)(cid:28)
(cid:21)(cid:15)(cid:26)(cid:19)(cid:23)(cid:15)(cid:20)(cid:21)(cid:20)
(cid:11)(cid:23)(cid:26)(cid:26)(cid:15)(cid:20)(cid:25)(cid:24)(cid:12)
(cid:21)(cid:20)(cid:15)(cid:24)(cid:27)(cid:26)
4
954,644
2,530,837
(239,979)
56,673
(cid:22)(cid:15)(cid:21)(cid:22)(cid:19)(cid:15)(cid:24)(cid:24)(cid:25)
3,302,179
(cid:7)
(cid:22)(cid:15)(cid:21)(cid:22)(cid:25)(cid:15)(cid:28)(cid:22)(cid:23)
$
3,311,375
Dividends, interest and fees received from subsidiaries
Other revenue
Total revenue
Interest expense
Charitable contributions to BOKF Foundation
Professional fees and services
Other operating expense
Total expense
Income before taxes and equity in undistributed income of subsidiaries
Federal and state income taxes
Income before equity in undistributed income of subsidiaries
Equity in undistributed income of subsidiaries
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:7)
(cid:20)(cid:24)(cid:19)(cid:15)(cid:22)(cid:19)(cid:27)
$
75,412
$
225,340
(cid:20)(cid:15)(cid:21)(cid:26)(cid:28)
(cid:20)(cid:24)(cid:20)(cid:15)(cid:24)(cid:27)(cid:26)
(cid:20)(cid:22)(cid:20)
(cid:178)
(cid:22)(cid:26)(cid:27)
(cid:20)(cid:15)(cid:27)(cid:25)(cid:23)
(cid:21)(cid:15)(cid:22)(cid:26)(cid:22)
(cid:20)(cid:23)(cid:28)(cid:15)(cid:21)(cid:20)(cid:23)
(cid:11)(cid:22)(cid:26)(cid:24)(cid:12)
(cid:20)(cid:23)(cid:28)(cid:15)(cid:24)(cid:27)(cid:28)
(cid:20)(cid:22)(cid:27)(cid:15)(cid:28)(cid:26)(cid:25)
1,572
76,984
293
2,420
600
1,556
4,869
72,115
(1,702)
73,817
218,618
3,341
228,681
292
2,062
811
1,210
4,375
224,306
(1,578)
225,884
90,725
Net income attributable to BOK Financial Corp. shareholders
(cid:7)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
$
292,435
$
316,609
168
(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)
(In thousands)
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:41)(cid:85)(cid:82)(cid:80)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:29)
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed income of subsidiaries
Tax effect from equity compensation, net
Change in other assets
Change in other liabilities
Net cash provided by operating activities
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:41)(cid:85)(cid:82)(cid:80)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:29)
Proceeds from sales of available for sale securities
Investment in subsidiaries
Acquisitions, net of cash acquired
Net cash used in investing activities
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:41)(cid:85)(cid:82)(cid:80)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:29)
Issuance of common and treasury stock, net
Tax effect from equity compensation, net
Dividends paid
Repurchase of common stock
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:72)(cid:81)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)
(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:83)(cid:68)(cid:76)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)
(cid:44)(cid:86)(cid:86)(cid:88)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:72)(cid:87)(cid:87)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)
(cid:11)(cid:21)(cid:19)(cid:12)(cid:3)(cid:54)(cid:88)(cid:69)(cid:86)(cid:72)(cid:84)(cid:88)(cid:72)(cid:81)(cid:87)(cid:3)(cid:40)(cid:89)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)
(cid:21)(cid:19)(cid:20)(cid:23)
(cid:21)(cid:19)(cid:20)(cid:22)
(cid:21)(cid:19)(cid:20)(cid:24)
(cid:7)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
$
292,435
$
316,609
(cid:11)(cid:20)(cid:22)(cid:27)(cid:15)(cid:28)(cid:26)(cid:25)(cid:12)
(cid:11)(cid:28)(cid:21)(cid:24)(cid:12)
(cid:23)(cid:28)
(cid:11)(cid:21)(cid:15)(cid:27)(cid:20)(cid:27)(cid:12)
(cid:20)(cid:23)(cid:24)(cid:15)(cid:27)(cid:28)(cid:24)
(cid:23)(cid:15)(cid:26)(cid:25)(cid:19)
(cid:11)(cid:23)(cid:20)(cid:15)(cid:28)(cid:25)(cid:28)(cid:12)
(cid:178)
(218,618)
(8,258)
8,726
1,055
75,340
—
(15,336)
—
(cid:11)(cid:22)(cid:26)(cid:15)(cid:21)(cid:19)(cid:28)(cid:12)
(15,336)
(cid:25)(cid:15)(cid:26)(cid:20)(cid:20)
(cid:28)(cid:21)(cid:24)
(cid:11)(cid:20)(cid:20)(cid:24)(cid:15)(cid:21)(cid:27)(cid:20)(cid:12)
(cid:11)(cid:21)(cid:21)(cid:28)(cid:15)(cid:24)(cid:23)(cid:19)(cid:12)
(cid:11)(cid:22)(cid:22)(cid:26)(cid:15)(cid:20)(cid:27)(cid:24)(cid:12)
(cid:11)(cid:21)(cid:21)(cid:27)(cid:15)(cid:23)(cid:28)(cid:28)(cid:12)
(cid:24)(cid:20)(cid:19)(cid:15)(cid:25)(cid:25)(cid:27)
(cid:7)
(cid:7)
(cid:7)
(cid:21)(cid:27)(cid:21)(cid:15)(cid:20)(cid:25)(cid:28)
$
$
(cid:20)(cid:22)(cid:20)
(cid:178) $
4,472
8,258
(111,026)
(12,337)
(110,633)
(50,629)
561,297
510,668
293
8,352
$
$
$
(90,725)
(2,210)
(8,308)
4,263
219,629
13,600
(36,000)
(7,500)
(29,900)
16,566
2,210
(104,722)
—
(85,946)
103,783
457,514
561,297
292
—
The Company evaluated events from the date of the consolidated financial statements on December 31, 2015 through the
issuance of those consolidated financial statements included in this Annual Report on Form 10-K. Except as disclosed in Notes
6 and 14, no events were identified requiring recognition in and/or disclosure in the consolidated financial statements.
169
(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:54)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:177)(cid:3)(cid:56)(cid:81)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:72)(cid:71)
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in Thousands, Except Per Share Data)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
Interest-bearing cash and cash equivalents
Trading securities
Investment securities
Taxable
Tax-exempt
Total investment securities
Available for sale securities
Taxable
Tax-exempt
Total available for sale securities
Fair value option securities
Restricted equity securities
Residential mortgage loans held for sale
Loans
Allowance for loan losses
Loans, net of allowance
Total earning assets
Receivable on unsettled securities sales
Cash and other assets
Total assets
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Interest-bearing deposits:
Transaction
Savings
Time
Total interest-bearing deposits
Funds purchased
Repurchase agreements
Other borrowings
Subordinated debentures
Total interest-bearing liabilities
Non-interest bearing demand deposits
Due on unsettled securities purchases
Other liabilities
Total equity
Total liabilities and equity
(cid:55)(cid:68)(cid:91)(cid:16)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
(cid:55)(cid:68)(cid:91)(cid:16)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
Less tax-equivalent adjustment
(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
Provision for credit losses
Other operating revenue
Other operating expense
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)
Federal and state income taxes
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)
Net income attributable to non-controlling interests
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:37)(cid:50)(cid:46)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)
(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:51)(cid:72)(cid:85)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:29)
Net income:
Basic
Diluted
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:18)
(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)(cid:18)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:24)(cid:15)(cid:24)(cid:27)(cid:19)
(cid:22)(cid:15)(cid:19)(cid:24)(cid:24)
(cid:20)(cid:21)(cid:15)(cid:28)(cid:22)(cid:21)
(cid:24)(cid:15)(cid:28)(cid:26)(cid:20)
(cid:20)(cid:27)(cid:15)(cid:28)(cid:19)(cid:22)
(cid:20)(cid:26)(cid:21)(cid:15)(cid:24)(cid:27)(cid:21)
(cid:22)(cid:15)(cid:22)(cid:23)(cid:20)
(cid:20)(cid:26)(cid:24)(cid:15)(cid:28)(cid:21)(cid:22)
(cid:28)(cid:15)(cid:21)(cid:25)(cid:23)
(cid:20)(cid:22)(cid:15)(cid:24)(cid:22)(cid:21)
(cid:20)(cid:22)(cid:15)(cid:25)(cid:19)(cid:21)
(cid:24)(cid:22)(cid:28)(cid:15)(cid:23)(cid:21)(cid:25)
(cid:24)(cid:22)(cid:28)(cid:15)(cid:23)(cid:21)(cid:25)
(cid:26)(cid:26)(cid:28)(cid:15)(cid:21)(cid:27)(cid:24)
(cid:27)(cid:15)(cid:27)(cid:21)(cid:20)
(cid:22)(cid:27)(cid:22)
(cid:22)(cid:23)(cid:15)(cid:28)(cid:25)(cid:25)
(cid:23)(cid:23)(cid:15)(cid:20)(cid:26)(cid:19)
(cid:25)(cid:24)
(cid:21)(cid:27)(cid:21)
(cid:20)(cid:22)(cid:15)(cid:27)(cid:24)(cid:26)
(cid:24)(cid:15)(cid:20)(cid:19)(cid:19)
(cid:25)(cid:22)(cid:15)(cid:23)(cid:26)(cid:23)
(cid:19)(cid:17)(cid:21)(cid:26)(cid:8)
(cid:21)(cid:17)(cid:23)(cid:28)(cid:8)
(cid:24)(cid:17)(cid:23)(cid:27)(cid:8)
(cid:20)(cid:17)(cid:24)(cid:24)(cid:8)
(cid:22)(cid:17)(cid:19)(cid:23)(cid:8)
(cid:20)(cid:17)(cid:28)(cid:26)(cid:8)
(cid:23)(cid:17)(cid:21)(cid:24)(cid:8)
(cid:20)(cid:17)(cid:28)(cid:28)(cid:8)
(cid:21)(cid:17)(cid:21)(cid:25)(cid:8)
(cid:24)(cid:17)(cid:27)(cid:27)(cid:8)
(cid:22)(cid:17)(cid:24)(cid:28)(cid:8)
(cid:22)(cid:17)(cid:24)(cid:27)(cid:8)
(cid:22)(cid:17)(cid:25)(cid:22)(cid:8)
(cid:21)(cid:17)(cid:27)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:28)(cid:8)
(cid:19)(cid:17)(cid:20)(cid:19)(cid:8)
(cid:20)(cid:17)(cid:22)(cid:24)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:28)(cid:8)
(cid:19)(cid:17)(cid:19)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:22)(cid:8)
(cid:20)(cid:17)(cid:27)(cid:23)(cid:8)
(cid:19)(cid:17)(cid:22)(cid:24)(cid:8)
(cid:7)
(cid:21)(cid:15)(cid:19)(cid:22)(cid:20)(cid:15)(cid:23)(cid:19)(cid:22)
(cid:20)(cid:23)(cid:28)(cid:15)(cid:24)(cid:26)(cid:21)
(cid:7)
(cid:21)(cid:22)(cid:25)(cid:15)(cid:20)(cid:28)(cid:22)
(cid:22)(cid:27)(cid:25)(cid:15)(cid:20)(cid:21)(cid:21)
(cid:25)(cid:21)(cid:21)(cid:15)(cid:22)(cid:20)(cid:24)
(cid:27)(cid:15)(cid:28)(cid:22)(cid:26)(cid:15)(cid:23)(cid:20)(cid:27)
(cid:27)(cid:20)(cid:15)(cid:23)(cid:25)(cid:28)
(cid:28)(cid:15)(cid:19)(cid:20)(cid:27)(cid:15)(cid:27)(cid:27)(cid:26)
(cid:23)(cid:21)(cid:25)(cid:15)(cid:23)(cid:25)(cid:20)
(cid:21)(cid:22)(cid:19)(cid:15)(cid:20)(cid:23)(cid:19)
(cid:22)(cid:27)(cid:19)(cid:15)(cid:28)(cid:26)(cid:28)
(cid:20)(cid:24)(cid:15)(cid:19)(cid:25)(cid:22)(cid:15)(cid:19)(cid:19)(cid:21)
(cid:11)(cid:21)(cid:19)(cid:19)(cid:15)(cid:27)(cid:26)(cid:21)(cid:12)
(cid:20)(cid:23)(cid:15)(cid:27)(cid:25)(cid:21)(cid:15)(cid:20)(cid:22)(cid:19)
(cid:21)(cid:26)(cid:15)(cid:26)(cid:21)(cid:20)(cid:15)(cid:27)(cid:27)(cid:26)
(cid:27)(cid:19)(cid:15)(cid:19)(cid:26)(cid:28)
(cid:21)(cid:15)(cid:26)(cid:26)(cid:21)(cid:15)(cid:26)(cid:27)(cid:28)
(cid:22)(cid:19)(cid:15)(cid:24)(cid:26)(cid:23)(cid:15)(cid:26)(cid:24)(cid:24)
(cid:28)(cid:15)(cid:28)(cid:20)(cid:28)(cid:15)(cid:28)(cid:20)(cid:22)
(cid:22)(cid:26)(cid:26)(cid:15)(cid:23)(cid:28)(cid:26)
(cid:21)(cid:15)(cid:24)(cid:27)(cid:26)(cid:15)(cid:22)(cid:25)(cid:26)
(cid:20)(cid:21)(cid:15)(cid:27)(cid:27)(cid:23)(cid:15)(cid:26)(cid:26)(cid:26)
(cid:25)(cid:28)(cid:15)(cid:20)(cid:23)(cid:28)
(cid:26)(cid:25)(cid:25)(cid:15)(cid:23)(cid:20)(cid:19)
(cid:23)(cid:15)(cid:21)(cid:20)(cid:21)(cid:15)(cid:23)(cid:20)(cid:26)
(cid:21)(cid:26)(cid:25)(cid:15)(cid:25)(cid:25)(cid:21)
(cid:20)(cid:27)(cid:15)(cid:21)(cid:19)(cid:28)(cid:15)(cid:23)(cid:20)(cid:24)
(cid:27)(cid:15)(cid:19)(cid:23)(cid:27)(cid:15)(cid:23)(cid:25)(cid:28)
(cid:20)(cid:26)(cid:22)(cid:15)(cid:26)(cid:23)(cid:22)
(cid:26)(cid:25)(cid:28)(cid:15)(cid:27)(cid:21)(cid:22)
(cid:22)(cid:15)(cid:22)(cid:26)(cid:22)(cid:15)(cid:22)(cid:19)(cid:24)
(cid:22)(cid:19)(cid:15)(cid:24)(cid:26)(cid:23)(cid:15)(cid:26)(cid:24)(cid:24)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:7)
(cid:26)(cid:20)(cid:24)(cid:15)(cid:27)(cid:20)(cid:20)
(cid:21)(cid:17)(cid:23)(cid:28)(cid:8)
(cid:21)(cid:17)(cid:25)(cid:19)(cid:8)
(cid:20)(cid:21)(cid:15)(cid:23)(cid:24)(cid:26)
(cid:26)(cid:19)(cid:22)(cid:15)(cid:22)(cid:24)(cid:23)
(cid:22)(cid:23)(cid:15)(cid:19)(cid:19)(cid:19)
(cid:25)(cid:25)(cid:25)(cid:15)(cid:27)(cid:24)(cid:22)
(cid:28)(cid:19)(cid:23)(cid:15)(cid:24)(cid:25)(cid:23)
(cid:23)(cid:22)(cid:20)(cid:15)(cid:25)(cid:23)(cid:22)
(cid:20)(cid:22)(cid:28)(cid:15)(cid:22)(cid:27)(cid:23)
(cid:21)(cid:28)(cid:21)(cid:15)(cid:21)(cid:24)(cid:28)
(cid:22)(cid:15)(cid:25)(cid:28)(cid:23)
(cid:21)(cid:27)(cid:27)(cid:15)(cid:24)(cid:25)(cid:24)
(cid:23)(cid:17)(cid:21)(cid:21)
(cid:23)(cid:17)(cid:21)(cid:20)
(cid:7)
(cid:7)
(cid:7)
Yield calculations are shown on a tax equivalent 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 include 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.
170
(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:54)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:177)(cid:3)(cid:56)(cid:81)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:11)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:12)
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in Thousands, Except Per Share Data)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)
(cid:60)(cid:72)(cid:68)(cid:85)(cid:3)(cid:40)(cid:81)(cid:71)(cid:72)(cid:71)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:18)
(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)(cid:18)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)
(cid:37)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)
(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)
(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:18)
(cid:40)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)
(cid:60)(cid:76)(cid:72)(cid:79)(cid:71)(cid:18)
(cid:53)(cid:68)(cid:87)(cid:72)
(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
Interest-bearing cash and cash equivalents
Trading securities
Investment securities
$
1,127,664
120,415
$
Taxable
Tax-exempt
Total investment securities
Available for sale securities
Taxable
Tax-exempt
Total available for sale securities
Fair value option securities
Restricted equity securities
Residential mortgage loans held for sale
Loans
Allowance for loan losses
Loans, net of allowance
Total earning assets
Receivable on unsettled securities sales
Cash and other assets
Total assets
(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Interest-bearing deposits:
Transaction
Savings
Time
Total interest-bearing deposits
Funds purchased
Repurchase agreements
Other borrowings
Subordinated debentures
Total interest-bearing liabilities
Non-interest bearing demand deposits
Due on unsettled securities purchases
Other liabilities
Total equity
$
$
Total liabilities and equity
$
(cid:55)(cid:68)(cid:91)(cid:16)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
(cid:55)(cid:68)(cid:91)(cid:16)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)
(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)
Less tax-equivalent adjustment
(cid:49)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)
Provision for credit losses
Other operating revenue
Other operating expense
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)
Federal and state income taxes
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)
Net income attributable to non-controlling
interests
(cid:49)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:37)(cid:50)(cid:46)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)
(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)
(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:51)(cid:72)(cid:85)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)
(cid:40)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:29)
Net income:
Basic
Diluted
2,749
2,520
13,183
6,785
19,968
182,923
3,321
186,244
3,611
7,040
10,143
510,916
510,916
743,191
9,757
401
40,525
50,683
341
583
6,748
8,690
67,045
233,105
422,507
655,612
9,546,366
92,438
9,638,804
183,206
127,161
259,809
13,406,118
(189,574)
13,216,544
25,329,215
88,784
2,580,859
27,998,858
9,737,795
345,183
2,644,847
12,727,825
494,220
928,767
1,928,742
347,892
16,427,446
7,687,333
136,360
536,958
3,210,761
27,998,858
$
$
676,146
10,952
665,194
—
621,958
847,522
439,630
144,151
295,479
3,044
292,435
4.23
4.22
$
$
$
171
0.21%
1.81%
5.83%
1.82%
3.48%
1.96%
3.13%
1.97%
1.97%
4.02%
3.73%
4.10%
4.16%
3.09%
0.12%
0.14%
1.57%
0.44%
0.10%
0.06%
0.31%
2.51%
0.43%
2.66%
2.80%
0.24% $
2.57%
503,603
148,816
$
5.66%
1.61%
3.05%
244,750
365,543
610,293
1.94% 10,717,416
3.73%
116,066
1.95% 10,833,482
200,888
2.05%
126,127
5.54%
3.93%
230,588
3.81% 12,342,333
(203,874)
3.87% 12,138,459
2.95% 24,792,256
121,540
2,467,298
$ 27,381,094
0.10% $ 9,524,008
313,280
0.12%
1.53%
2,795,676
0.40% 12,632,964
866,062
0.07%
811,996
0.06%
1,693,993
0.35%
2.50%
347,717
0.41% 16,352,732
7,090,319
313,082
613,879
3,011,082
$ 27,381,094
2.54%
2.68%
1,075
2,696
14,260
6,324
20,584
204,830
3,498
208,328
3,907
5,071
8,505
505,503
505,503
755,669
$
11,155
442
43,967
55,564
848
503
5,238
8,741
70,894
$
684,775
10,298
674,477
(27,900)
614,472
840,620
476,229
157,298
318,931
2,322
$
316,609
$
$
4.61
4.59
Quarterly Financial Summary – Unaudited
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands, Except Per Share Data)
Three Months Ended
Average
Balance
December 31, 2015
Revenue/
Expense
Yield/
Rate
Average
Balance
September 30, 2015
Revenue/
Expense
Yield/
Rate
Assets
Interest-bearing cash and cash equivalents
Trading securities
Investment securities
$
1,995,945
150,402
$
Taxable
Tax-exempt
Total investment securities
Available for sale securities
Taxable
Tax-exempt
Total available for sale securities
Fair value option securities
Restricted equity securities
Residential mortgage loans held for sale
Loans
Allowance for loan losses
Loans, net of allowance
Total earning assets
Receivable on unsettled securities sales
Cash and other assets
Total assets
Liabilities and equity
Interest-bearing deposits:
Transaction
Savings
Time
Total interest-bearing deposits
Funds purchased
Repurchase agreements
Other borrowings
Subordinated debentures
Total interest-bearing liabilities
Non-interest bearing demand deposits
Due on unsettled securities purchases
Other liabilities
Total equity
Total liabilities and equity
Tax-equivalent Net Interest Revenue
Tax-equivalent Net Interest Revenue to Earning
Assets
Less tax-equivalent adjustment
Net Interest Revenue
Provision for credit losses
Other operating revenue
Other operating expense
Net income before taxes
Federal and state income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to BOK Financial Corp.
shareholders
Earnings Per Average Common Share Equivalent:
Net income:
Basic
Diluted
232,566
369,803
602,369
8,894,019
77,071
8,971,090
435,449
262,461
310,425
15,586,998
(207,156)
15,379,842
28,107,983
62,228
2,909,965
$ 31,080,176
$
9,527,491
382,284
2,482,714
12,392,489
73,220
623,921
4,957,175
226,332
18,273,137
8,312,961
248,811
884,652
3,360,615
$ 31,080,176
$
1,466
840
3,144
1,413
4,557
43,649
786
44,435
2,461
3,905
2,968
139,372
139,372
200,004
2,098
89
7,881
10,068
21
68
4,720
644
15,521
$
184,483
3,222
181,261
22,500
161,115
232,558
87,318
26,242
61,076
1,475
59,601
0.89
0.89
$
$
$
1,442
945
3,211
1,468
4,679
43,473
796
44,269
2,480
3,802
3,793
135,498
135,498
196,908
2,061
97
8,573
10,731
15
49
3,637
596
15,028
0.29% $
2.86%
2,038,611
179,098
$
5.41%
1.53%
3.03%
233,914
382,177
616,091
2.02%
8,862,917
4.22%
79,344
2.04%
8,942,261
2.32%
429,951
5.95%
255,610
3.85%
401,359
3.55% 15,192,311
(202,829)
3.60% 14,989,482
2.86% 27,852,463
64,591
2,852,679
$ 30,769,733
0.09% $
9,760,839
0.09%
379,828
1.26%
2,557,874
0.32% 12,698,541
0.11%
70,281
0.04%
672,085
0.38%
4,779,981
1.13%
226,296
0.34% 18,447,184
7,994,607
90,135
838,612
3,399,195
$ 30,769,733
2.52%
2.64%
$
$
181,880
3,244
178,636
7,500
163,436
224,628
109,944
34,128
75,816
925
74,891
1.09
1.09
$
$
$
0.28%
2.70%
5.49%
1.54%
3.04%
1.99%
4.15%
2.01%
2.30%
5.95%
3.79%
3.54%
3.59%
2.83%
0.08%
0.10%
1.33%
0.34%
0.08%
0.03%
0.30%
1.04%
0.32%
2.51%
2.61%
Yield calculations are shown on a tax equivalent 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 include 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
172
Quarterly Financial Summary – Unaudited (continued)
Consolidated Daily Average Balances, Average Yields and Rates
Average Balance
June 30, 2015
Revenue /
Expense
Yield /
Rate
Three Months Ended
March 31, 2015
Revenue /
Expense
Average Balance
December 31, 2014
Yield /
Rate
Average Balance
Revenue /
Expense
Yield /
Rate
0.25% $
1.85%
2,089,546
140,968
$
0.27% $
2.55%
2,090,176
164,502
$
1,250
585
3,251
1,526
4,777
42,355
838
43,193
2,320
3,228
3,892
135,603
135,603
194,848
2,197
103
8,966
11,266
13
61
3,047
1,695
16,082
$
2,002,456
127,391
$
236,956
391,533
628,489
8,980,312
82,694
9,063,006
435,294
221,911
464,269
14,905,352
(198,400)
14,706,952
27,649,768
94,374
2,719,930
30,464,072
10,063,589
381,833
2,651,820
13,097,242
63,312
773,977
4,001,479
307,903
18,243,913
7,996,717
151,369
690,604
3,381,469
30,464,072
$
$
$
$
$
178,766
3,035
175,731
4,000
176,285
227,113
120,903
40,630
80,273
1,043
79,230
1.15
1.15
$
$
$
241,458
401,367
642,825
9,014,566
86,899
9,101,464
404,775
179,385
348,054
14,554,582
(194,948)
14,359,634
27,266,651
99,706
2,604,347
29,970,704
10,338,396
365,835
2,659,323
13,363,554
69,730
1,000,839
3,084,214
348,007
17,866,344
7,885,485
205,096
662,218
3,351,561
29,970,704
$
5.49%
1.56%
3.05%
1.92%
4.21%
1.94%
2.17%
5.82%
3.37%
3.65%
3.70%
2.84%
$
0.09% $
0.11%
1.36%
0.35%
0.08%
0.03%
0.31%
2.21%
0.35%
$
2.49%
2.61%
1,422
685
3,326
1,564
4,890
43,105
921
44,026
2,003
2,597
2,949
128,953
128,953
187,525
2,465
94
9,546
12,105
16
104
2,453
2,165
16,843
$
170,682
2,956
167,726
—
166,017
220,265
113,478
38,384
75,094
251
74,843
1.08
1.08
$
$
$
173
0.28%
2.48%
5.68%
1.56%
3.11%
1.97%
4.23%
1.99%
2.18%
5.77%
3.87%
3.73%
3.78%
2.86%
0.09%
0.11%
1.47%
0.38%
0.08%
0.04%
0.32%
2.50%
0.39%
2.47%
2.61%
244,395
406,516
650,911
9,073,467
88,434
9,161,901
221,773
182,737
321,746
13,882,005
(190,787)
13,691,218
26,484,964
69,109
2,578,124
29,132,197
9,730,564
346,132
2,647,147
12,723,843
71,728
996,308
3,021,094
347,960
17,160,933
7,974,165
137,566
549,388
3,310,145
29,132,197
$
5.51%
1.56%
3.04%
1.95%
4.40%
1.98%
2.28%
5.79%
3.41%
3.59%
3.64%
2.80%
$
0.10% $
0.10%
1.46%
0.37%
0.09%
0.04%
0.32%
2.52%
0.38%
$
2.42%
2.55%
1,500
901
3,468
1,586
5,054
43,953
904
44,857
1,053
2,635
3,101
130,378
130,378
189,479
2,328
96
9,777
12,201
14
109
2,443
2,189
16,956
$
172,523
2,859
169,664
—
151,903
225,877
95,690
30,109
65,581
1,263
64,318
0.93
0.93
$
$
$
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
As of the end of the period covered by this report and pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the
“Exchange Act”), the Company's management, including the Chief Executive Officer and Chief Financial Officer, conducted an
evaluation of the effectiveness and design of the Company's disclosure controls and procedures (as that term is defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company's Chief Executive Officer and Chief
Financial Officer concluded, as of the end of the period covered by this report, that the Company's disclosure controls and
procedures were effective in recording, processing, summarizing and reporting information required to be disclosed by the
Company, within the time periods specified in the Securities and Exchange Commission's rules and forms.
In addition and as of the end of the period covered by this report, there have been no changes in internal control over financial
reporting (as defined in Rule 13a-15(f) and 15d-15(f), as amended, of the Exchange Act) during the Company's fourth fiscal
quarter that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.
The Report of Management on Financial Statements and Management's Report on Internal Control over Financial Reporting
appear within Item 8, “Financial Statements and Supplementary Data.” The independent registered public accounting firm,
Ernst & Young LLP, has audited the financial statements included in Item 8 and has issued an audit report on the Company's
internal control over financial reporting, which appears therein.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information set forth under the headings “Election of Directors,” “Executive Officers, “Insider Reporting,” “Director
Nominations,” and “Risk Oversight and Audit Committee” in BOK Financial's 2016 Annual Proxy Statement is incorporated
herein by reference.
The Company has a Code of Ethics which is applicable to all Directors, officers and employees of the Company, including the
Chief Executive Officer and the Chief Financial Officer, the principal executive officer and principal financial and accounting
officer, respectively. A copy of the Code of Ethics will be provided without charge to any person who requests it by writing to
the Company's headquarters at Bank of Oklahoma Tower, P.O. Box 2300, Tulsa, Oklahoma 74192 or telephoning the Chief
Auditor at (918) 588-6000. The Company will also make available amendments to or waivers from its Code of Ethics
applicable to Directors or executive officers, including the Chief Executive Officer and the Chief Financial Officer, in
accordance with all applicable laws and regulations.
There are no material changes to the procedures by which security holders may recommend nominees to the Company's board
of directors since the Company's 2015 Annual Proxy Statement to Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the heading “Compensation Discussion and Analysis,” “Compensation Committee Interlocks
and Insider Participation, “Compensation Committee Report,” “Executive Compensation Tables,” and “Director
Compensation” in BOK Financial's 2016 Annual Proxy Statement is incorporated herein by reference.
174
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information set forth under the headings “Security Ownership of Certain Beneficial Owners and Management” and
“Election of Directors” in BOK Financial's 2016 Annual Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information regarding related parties is set forth in Note 13 of the Company's Notes to Consolidated Financial Statements,
which appears elsewhere herein. Additionally, the information set forth under the headings “Certain Transactions,” “Director
Independence” and “Related Party Transaction Review and Approval Process” in BOK Financial's 2016 Annual Proxy
Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information set forth under the heading “Principal Accountant Fees and Services” in BOK Financial's 2016 Annual Proxy
Statement is incorporated herein by reference.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements
The following financial statements of BOK Financial Corporation are filed as part of this Form 10-K in Item 8:
Consolidated Statements of Earnings for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013
Consolidated Balance Sheets as of December 31, 2015 and 2014
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Changes in Equity for the years ended December 31, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
Annual Financial Summary - Unaudited
Quarterly Financial Summary - Unaudited
Reports of Independent Registered Public Accounting Firm
(a) (2) Financial Statement Schedules
The schedules to the consolidated financial statements required by Regulation S-X are not required under the related
instructions or are inapplicable and are therefore omitted.
175
(a) (3) Exhibits
Exhibit
Number
Description of Exhibit
3.0
3.1
3.1(a)
4.0
10.0
10.1
10.2
10.3
10.4
10.4.2
10.4.2 (a)
10.4.2 (b)
10.4.2 (c)
10.4.5
10.4.5 (a)
10.4.5 (b)
10.4.5 (c)
10.4.7
10.4.7 (a)
The Articles of Incorporation of BOK Financial, incorporated by reference to (i) Amended and Restated
Certificate of Incorporation of BOK Financial filed with the Oklahoma Secretary of State on May 28, 1991,
filed as Exhibit 3.0 to S-1 Registration Statement No. 33-90450, and (ii) Amendment attached as Exhibit A to
Information Statement and Prospectus Supplement filed November 20, 1991.
Bylaws of BOK Financial, incorporated by reference to Exhibit 3.1 of S-1 Registration Statement No.
33-90450.
Bylaws of BOK Financial, as amended and restated as of October 30, 2007, incorporated by reference to
Exhibit 3.1 of Form 8-K filed on November 5, 2007.
The rights of the holders of the Common Stock and Preferred Stock of BOK Financial are set forth in its
Certificate of Incorporation.
Purchase and Sale Agreement dated October 25, 1990, among BOK Financial, Kaiser, and the FDIC,
incorporated by reference to Exhibit 2.0 of S-1 Registration Statement No. 33-90450.
Amendment to Purchase and Sale Agreement effective March 29, 1991, among BOK Financial, Kaiser, and the
FDIC, incorporated by reference to Exhibit 2.2 of S-1 Registration Statement No. 33-90450.
Letter agreement dated April 12, 1991, among BOK Financial, Kaiser, and the FDIC, incorporated by
reference to Exhibit 2.3 of S-1 Registration Statement No. 33-90450.
Second Amendment to Purchase and Sale Agreement effective April 15, 1991, among BOK Financial, Kaiser,
and the FDIC, incorporated by reference to Exhibit 2.4 of S-1 Registration Statement No. 33-90450.
Employment and Compensation Agreements.
Amended and Restated Deferred Compensation Agreement (Amended as of December 1, 2003) between
Steven G. Bradshaw and BOK Financial Corporation, incorporated by reference to Exhibit 10.4.2 of Form 10-
K for the fiscal year ended December 31, 2003.
409A Deferred Compensation Agreement between Steven G. Bradshaw and BOK Financial Corporation dated
December 31, 2004, incorporated by reference to Exhibit 10.4.2 (a) of Form 8-K filed on January 5, 2005.
Employment Agreement between BOK Financial and Steven G. Bradshaw dated September 29, 2003,
incorporated by reference to Exhibit 10.4.2 (b) of Form 10-K for the fiscal year ended December 31, 2004.
Amended and Restated Employment Agreement (amended as of June 30, 2013) between BOK Financial and
Steven G. Bradshaw, incorporated by reference to Exhibit 99.A of Form 8-K filed August 20, 2013.
409A Deferred Compensation Agreement between Daniel H. Ellinor and BOK Financial Corporation dated
December 31, 2004, incorporated by reference to Exhibit 10.4.5 of Form 8-K filed on January 5, 2005.
Employment Agreement between BOK Financial and Dan H. Ellinor dated August 29, 2003, incorporated by
reference to Exhibit 10.4.5 (a) of Form 10-K for the fiscal year ended December 31, 2004.
Deferred Compensation Agreement dated November 28, 2003 between Daniel H. Ellinor and BOK Financial
Corporation, incorporated by reference to Exhibit 10.4.5 (b) of Form 10-K for the fiscal year ended December
31, 2004.
Amended and Restated Employment Agreement (amended as of June 15, 2013) between BOK Financial and
Daniel Ellinor, incorporated by reference to Exhibit 99.B of Form 8-K filed August 20, 2013.
409A Deferred Compensation Agreement between Steven E. Nell and BOK Financial Corporation dated
December 31, 2004, incorporated by reference to Exhibit 10.4.7 of Form 8-K filed on January 5, 2005.
Amended and Restated Deferred Compensation Agreement (Amended as of December 1, 2003) between
Steven E. Nell and BOK Financial Corporation, incorporated by reference to Exhibit 10.4.7 (a) of Form 10-K
for the fiscal year ended December 31, 2004.
176
Exhibit
Number
10.4.7 (b)
10.4.8
10.4.8 (a)
10.4.9
10.4.9 (a)
10.4.9 (b)
10.4.10
10.6
10.7.7
10.7.8
10.7.9
10.7.10
10.7.11
10.7.12
10.7.13
10.7.14
10.7.16
10.8
10.9
21
23
Description of Exhibit
Amended and Restated Employment Agreement (amended June 15, 2013) between BOK Financial and Steven
Nell incorporated by reference to Exhibit 99.B of Form 8-K filed September 4, 2013.
Employment Agreement dated August 1, 2005 between BOK Financial Corporation and Donald T. Parker,
incorporated by reference to Exhibit 99 (a) of Form 8-K filed on February 1, 2006.
Amended and Restated Employment Agreement Dated June 15, 2013 between BOK Financial and Donald T.
Parker, incoporated by reference to Exhibit 10.4.8(a) of Form 10-K filed on February 27, 2015.
Employment Agreement dated April 4, 2008 between Bank of Texas, NA, and Norman P. Bagwell,
incorporated by reference to Exhibit 10.4.9 of Form 10-K filed on February 27, 2013.
First Amendment of Employment Agreement dated June 30, 2011 between Bank of Texas, a division of BOKF,
NA, and Norman P. Bagwell, incorporated by reference to Exhibit 10.4.9 (a) of Form 10-K filed on February
27, 2013.
Amended and Restated Employment Agreement (amended as of June 15, 2013) between BOK Financial and
Norman Bagwell, incorporated by reference to Exhibit 99.A of Form 8-K filed September 4, 2013.
Amended and Restated Employment Agreement (amended as of June 15, 2013) between BOK Financial and
Stacy C. Kymes, filed herewith.
Capitalization and Stock Purchase Agreement dated May 20, 1991, between BOK Financial and Kaiser,
incorporated by reference to Exhibit 10.6 of S-1 Registration Statement No. 33-90450.
BOK Financial Corporation 2001 Stock Option Plan, incorporated by reference to Exhibit 4.0 of S-8
Registration Statement No. 333-62578.
BOK Financial Corporation Directors' Stock Compensation Plan, incorporated by reference to Exhibit 4.0 of
S-8 Registration Statement No. 33-79836.
Bank of Oklahoma Thrift Plan (Amended and Restated Effective as of January 1, 1995), incorporated by
reference to Exhibit 10.7.6 of Form 10-K for the year ended December 31, 1994.
Trust Agreement for the Bank of Oklahoma Thrift Plan (December 30, 1994), incorporated by reference to
Exhibit 10.7.7 of Form 10-K for the year ended December 31, 1994.
BOK Financial Corporation 2003 Stock Option Plan, incorporated by reference to Exhibit 4.0 of S-8
Registration Statement No. 333-106531.
BOK Financial Corporation 2003 Executive Incentive Plan, incorporated by reference to Exhibit 4.0 of S-8
Registration Statement No. 333-106530.
10b5-1 Repurchase Plan between BOK Financial Corporation and BOSC, Inc. dated May 27, 2008,
incorporated by reference to Exhibit 10.1 of Form 8-K filed May 27, 2008.
BOK Financial Corporation 2003 Executive Incentive Plan, as amended and restated, for the Chief Executive
Officer and for Direct Reports to the Chief Executive Officer, incorporated by reference to the Schedule 14 A
Definitive Proxy Statement filed on March 15, 2011.
BOK Financial Corporation 2009 Omnibus Incentive Plan, Amended and Restated effective April 30, 2013,
incorporated by reference to the Schedule 14A Definitive Proxy Statement filed on March 20, 2013.
Lease Agreement between One Williams Center Co. and National Bank of Tulsa (predecessor to BOk) dated
June 18, 1974, incorporated by reference to Exhibit 10.9 of S-1 Registration Statement No. 33-90450.
Lease Agreement between Security Capital Real Estate Fund and BOk dated January 1, 1988, incorporated by
reference to Exhibit 10.10 of S-1 Registration Statement No. 33-90450.
Subsidiaries of BOK Financial, filed herewith.
Consent of independent registered public accounting firm - Ernst & Young LLP, filed herewith.
177
Exhibit
Number
31.1
31.2
32
99
101
Description of Exhibit
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
Additional Exhibits.
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Earnings, (iii) the Consolidated Statements of Changes in Equity, (iv) the
Consolidated Statement of Cash Flows and (v) the Notes to the Consolidated Financial Statements, filed
herewith.
(b)
Exhibits
See Item 15 (a) (3) above.
(c)
Financial Statement Schedules
See Item 15 (a) (2) above.
178
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
BOK FINANCIAL CORPORATION
DATE: February 29, 2016 BY: /s/ George B. Kaiser
George B. Kaiser
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 29, 2016,
by the following persons on behalf of the registrant and in the capacities indicated.
OFFICERS
/s/ George B. Kaiser
George B. Kaiser
Chairman of the Board of Directors
/s/ Steven G. Bradshaw
Steven G. Bradshaw
Director, President and Chief Executive Officer
/s/ Steven E. Nell
Steven E. Nell
Executive Vice President and
Chief Financial Officer
/s/ John C. Morrow
John C. Morrow
Senior Vice President and
Chief Accounting Officer
179
/s/ Alan S. Armstrong
Alan S. Armstrong
C. Frederick Ball, Jr.
/s/ Sharon J. Bell
Sharon J. Bell
/s/ Peter C. Boylan, III
Peter C. Boylan, III
/s/ Chester E. Cadieux, III
Chester E. Cadieux, III
/s/ Joseph W. Craft, III
Joseph W. Craft, III
/s/ John W. Gibson
John W. Gibson
/s/ David F. Griffin
David F. Griffin
/s/ V. Burns Hargis
V. Burns Hargis
Douglas D. Hawthorne
DIRECTORS
/s/ Kimberley D. Henry
Kimberley D. Henry
/s/ E. Carey Joullian, IV
E. Carey Joullian, IV
/s/ Robert J. LaFortune
Robert J. LaFortune
Stanley A. Lybarger
/s/ Steven J. Malcolm
Steven J. Malcolm
/s/ Emmet C. Richards
Emmet C. Richards
John Richels
Michael C. Turpen
R.A. Walker
180
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
June 15, 2013
Exhibit 10.4.10
This Amended and Restated Employment Agreement (“Agreement”) is made this 15th day of June, 2013 (the “Agreement
Date”) between the following parties (“Parties”):
(i)
BOK Financial Corporation, an Oklahoma corporation (“BOK Financial”); and,
(ii)
Stacy C. Kymes, an individual currently residing in Tulsa, Oklahoma (the “Executive”).
BOK Financial and Executive, in consideration of the promises and covenants set forth herein (the receipt and adequacy
of which are hereby acknowledged) and intending to be legally bound hereby, agree as follows:
(1)
Purpose of This Agreement. The purpose of this Agreement is as follows:
(a)
(b)
(c)
BOK Financial is a financial holding company, subject to regulation by the Board of Governors of the Federal
Reserve System. The subsidiaries of BOK Financial include BOKF, NA, a national association engaged in
banking and BOSC, Inc., a registered broker-dealer.
The Executive has extensive prior experience in financial services and banking and is currently employed as an
Executive Vice-President of BOK Financial and BOKF, NA, reporting to the Chief Executive Officer.
The purpose of this Agreement is to set forth the terms and conditions on which BOK Financial shall employ
the Executive and the Executive shall serve as an officer of BOK Financial, BOKF, NA, and other of their
affiliates.
(2)
Prior Agreement Superseded. This agreement supersedes, from and after the Effective Date, any employment agreement
between Executive and BOK Financial and/or BOKF, NA (excluding, for avoidance of doubt, any rights of Executive
arising under the BOK Financial 2003 Stock Option Plan, the BOK Financial 2009 Omnibus Incentive Plan, and the
BOK Financial 2011 True-Up Plan).
(3)
Employment. Effective as of the Agreement Date, BOK Financial hereby employs the Executive, and the Executive
hereby accepts employment with BOK Financial, on the following terms and conditions:
(a)
(b)
(c)
(d)
Executive shall serve as Executive Vice-President, Chief Credit Officer of BOK Financial and BOKF, NA.
Executive shall be responsible for those divisions and business lines of BOK Financial and BOKF, NA as the
Chief Executive has heretofore established and as may hereafter be established by the Chief Executive Officer
from time to time.
Executive shall devote all time and attention reasonably necessary to the affairs of BOK Financial and BOKF,
NA and shall serve BOK Financial and BOKF, NA diligently, loyally, and to the best of his ability.
Executive shall serve in such other or additional positions as an officer and/or director of BOK Financial and
BOKF, NA or any of their affiliates as the Chief Executive Officer of BOK Financial may reasonably request;
provided, however, Executive’s residence and place of work shall be in the Tulsa, Oklahoma area.
Notwithstanding anything herein to the contrary, Executive shall not be precluded from engaging in any
charitable, civic, political or community activity or membership in any professional organization.
(4)
Compensation. As the sole, full and complete compensation to the Executive for the performance of all duties of
Executive under this Agreement and for all services rendered by Executive to BOK Financial and/or to any affiliate of
BOK Financial:
(a)
BOK Financial shall pay the Executive an annual salary (the “Annual Salary”) equal to Executive’s Annual
Salary in effect as of the Agreement Date during the Term (as hereafter defined). The Annual Salary shall be
payable in installments in arrears, less usual and customary payroll deductions for FICA, federal and state
withholding, and the like, at the times and in the manner in effect in accordance with the usual and customary
payroll policies generally in effect from time to time at BOK Financial.
Exhibit 10.4.10
(b)
(c)
(d)
(e)
(f)
(g)
(h)
The Annual Salary shall not be decreased at any time during the Term of this Agreement. The Annual Salary
may be increased annually in accordance with BOK Financial’s compensation review practices in effect from
time to time for senior executives.
BOK Financial shall pay and provide to Executive pension, thrift, medical insurance, disability insurance plan
benefits, and other fringe benefits, on the same terms and conditions generally in effect for senior executive
employees of the BOK Financial and its affiliates (the “Additional Benefits”).
BOK Financial may, from time to time in BOK Financial’s sole discretion consistent with the practices generally
in effect for senior executive employees of the BOK Financial and its affiliates, pay or provide, or agree to pay
or provide Executive a bonus, stock option, restricted stock, other incentive or performance based compensation.
(i)
(ii)
BOKF Financial shall provide annual incentive and long term incentive awards to Executive in
accordance with BOK Financial’s Executive Incentive Compensation Plan as adopted by the BOK
Financial’s Board of Directors from time to time and BOK Financial’s existing True-Up Plan.
All such bonus, stock option, restricted stock, or other incentive or performance based compensation,
regardless of its nature (hereinafter called “Performance Compensation”) shall not constitute Annual
Salary.
BOK Financial shall reimburse Executive for reasonable and necessary entertainment, travel and other expenses
in accordance with BOK Financial’s standard policies in general effect for senior executives of BOK Financial.
Executive shall be allowed vacation, holidays, and other employee benefits not described above in accordance
with BOK Financial’s standard policy in general effect for BOK Financial’s senior executives. Executive shall
be entitled to four weeks paid vacation each year.
BOK Financial shall permit Executive to participate in a deferred compensation plan on the terms and conditions
established by BOK Financial for senior executives.
Executive hereby agrees to accept the foregoing compensation as the sole, full and complete compensation to
Executive for the performance of all duties of Executive under this Agreement and for all services rendered by
Executive to BOK Financial or any affiliate of BOK Financial.
(5)
(6)
Term of Employment. The term (the “Term”) of Executive’s employment (“Employment”) pursuant to this Agreement
shall commence on the Agreement Date (the “Commencement”) and shall continue thereafter provided that upon ninety
days prior written notice, either Party may terminate this Agreement.
Termination of Employment. Notwithstanding the provisions of paragraph 5 of this Agreement, the Employment may
be terminated on the following terms and conditions:
(a)
Termination by BOK Financial Without Cause. In the event BOK Financial terminates Employment of Executive
without cause during the Term or upon termination of this Agreement as provided in Paragraph 5:
(i)
BOK Financial shall forthwith upon such termination (A) pay to Executive BOK Financial’s standard
severance pay for senior executives in effect at the time of termination and, in addition, an amount
equal to Executive’s then Annual Salary payable in one lump sum payment, (B) the Executive shall be
entitled to receive any Additional Benefits accrued through, but not beyond the effective date of such
termination which are payable under the terms and provisions of benefit plans then in effect in
accordance with paragraph 4(c) above, (C) Executive shall be entitled to receive pay for vacation in
accordance with BOK Financial’s then existing policy for terminating senior executives, (D) options
held by Executive under the BOKF 2003 Stock Option Plan and the BOKF 2009 Omnibus Incentive
Plan shall vest shall be exercisable for a period of ninety days following such termination as provided
in such plans, (E) Restricted stock held by Executive shall continue to be owned by the Executive, but
shall remain subject to all restrictions applicable to the restricted stock as provided under the Executive
Incentive Plan and the 2009 Omnibus Incentive Plan, and (F) Executive shall be entitled to receive
those amounts due Executive pursuant to paragraph 8(b) and shall be bound by the Non-Solicitation
Agreement (as hereafter defined).
Exhibit 10.4.10
(ii)
If Executive is terminated for any reason other than for cause following a Change of Control (as hereafter
defined), BOK Financial shall pay Executive upon such termination in one lump sum payment an
amount equal to two times Executive’s then Annual Salary at the time of termination in addition to an
amount equal to Executive’s then Annual Salary through, but not beyond the effective date of the
termination. This payment shall be in lieu of any payment that would otherwise be paid pursuant to
paragraph 6(a)(i)(A), but Executive shall be entitled to the benefit of the other provisions of paragraph
6(a)(i). As used herein, a Change of Control shall be deemed to have occurred if, and only if:
(A)
George B. Kaiser, affiliates of George B. Kaiser, George B. Kaiser Foundation, George Kaiser
Family Foundation, and/or members of the family of George B. Kaiser collectively cease to
own more shares of the voting capital stock of BOK Financial than any other shareholder (or
group of shareholders acting in concert to control BOK Financial to the exclusion of George
B. Kaiser, affiliates of George B. Kaiser, George B. Kaiser Foundation, George Kaiser Family
Foundation, and/or members of the family of George B. Kaiser); or,
(B)
BOK Financial shall cease to own directly and indirectly more than fifty percent (50%) of the
voting capital stock of BOKF, NA.
(b)
Termination by BOK Financial for Cause. BOK Financial may terminate the Employment for cause on the
following terms and conditions:
(i)
BOK Financial shall be deemed to have cause to terminate Executive’s Employment only in one or
more of the following events:
(A)
The Executive shall fail to substantially perform his obligations under this Agreement (except
as a result of Executive’s incapacity due to physical or mental illness) after having first received
notice of such failure and thirty days within which to correct the failure;
(B)
(C)
(D)
(E)
The Executive commits any act which is reasonably deemed to have been intended by
Executive to injure BOK Financial or any of its affiliates;
The Executive is charged, indicted or convicted of any criminal act or act involving moral
turpitude which BOK Financial reasonably deems adversely affects the suitability of Executive
to serve BOK Financial or any of its affiliates;
The Executive commits any dishonest or fraudulent act which BOK Financial reasonably
deems material to BOK Financial or any of its affiliates, including the reputation of BOK
Financial or any of its affiliates; or,
Any refusal by Executive to obey orders or instructions of the Chief Executive Officer of BOK
Financial or BOKF, NA, unless such instructions would require Executive to commit an illegal
act, could subject Executive to personal liability, would require Executive to violate the terms
of this Agreement, are inconsistent with recognized ethical standards, or would otherwise be
inconsistent with the duties of an officer of a bank.
(ii)
(iii)
BOK Financial shall be deemed to have cause to terminate Executive’s Employment only when a
majority of the members of the Board of Directors of BOK Financial finds that, in the good faith opinion
of such majority, the Executive committed one or more of the acts set forth in clauses (A) through (E)
of the preceding subparagraph, such finding to have been made after at least twenty (20) business days’
notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard
before such majority. The determination of such majority, made as set forth above, shall be binding
upon BOK Financial and the Executive.
The effective date of a termination for cause shall be the date of the action of such majority finding the
termination was with cause. In the event BOK Financial terminates Executive’s Employment for cause,
(A) BOK Financial shall pay Executive the Executive’s then Annual Salary through, but not beyond,
the effective date of the termination and (B) the Executive shall receive those Additional Benefits
accrued through but not beyond the effective date of such termination which are payable under the
terms and provisions of benefit plans then in effect in accordance with paragraph 4(c) above, (C) BOK
Financial shall pay the Executive for vacation in accordance with BOK Financial’s then existing policy
Exhibit 10.4.10
for senior executives, and (D)Executive shall be entitled to receive those amounts due Executive
pursuant to paragraph 8(b) and Executive shall be bound by the provisions of the Non-Solicitation
Agreement.
(7)
Provisions Respecting Illness and Death. In the event Executive becomes disabled as defined in Section 409A(a)(2)
(C) of the Internal Revenue Code, BOK Financial may terminate Executive’s Employment without further or additional
compensation being due the Executive from BOK Financial except Annual Salary accrued through the date of termination,
Additional Benefits accrued through the date of such termination under benefit plans then in effect in accordance with
paragraph 4(c) above, and vacation in accordance with BOK Financial’s then existing policy for senior executives, and
the provisions of paragraph 8 shall apply. Without limiting the generality of paragraph 4(c), Executive shall upon such
termination receive those benefits provided in BOK Financial’s long term disability policy then in effect. In the event of
the death of the Executive, the Employment of the Executive shall automatically terminate as of the date of death without
further or additional compensation being due the Executive, except BOK Financial shall pay to the estate of the Executive
the Annual Salary in effect on the date of death and accrued through the date of termination and the Additional Benefits
accrued through the date of such termination under benefit plans then in effect in accordance with paragraph 4(c) above.
BOK Financial shall make the payments due Executive in one lump sum within forty-five days following the date of
termination.
(8)
Agreement Not to Solicit. The provisions of this paragraph are hereafter called the “Non-Solicitation Agreement”.
(a)
(b)
(c)
(d)
Executive agrees that, for a period of two (2) years following any termination of the Employment for cause, and
for a period of one (1) year following any termination of the Employment for any reason other than cause
(including expiration of the Term), Executive shall not directly or indirectly (whether as an officer, director,
employee, partner, stockholder, creditor or agent, or representative of other persons or entities) contact or solicit,
in any manner indirectly or directly, individuals or entities who were at any time during the original or any
extended Term clients of BOK Financial or any of its affiliates for the purpose of providing banking, trust,
investment, or other services provided by BOK Financial or any of its affiliates during the Term or contact or
solicit employees of BOK Financial or any affiliates of BOK Financial to seek employment with any person or
entity except BOK Financial and its affiliates. This Non-Solicitation Agreement shall not apply to ownership
by Executive of up to ten percent (10%) of the common stock of a corporation traded on the facilities of a national
securities exchange engaged in the banking business of which Executive is not a director, officer, employee,
agent or representative.
BOK Financial shall pay Executive, in addition to any other amounts which may be due Executive, during each
year in which the Non-Solicitation Agreement is in effect, $3,000 payable in installments in arrears, less usual
and customary payroll deductions for FICA, federal and state withholding, and the like, at the times and in the
manner in effect in accordance with the usual and customary payroll policies generally in effect from time to
time at BOK Financial. Notwithstanding the foregoing, the amounts due for the first six months of the Non-
Competition Agreement shall be paid in a lump sum as soon administratively possible following such six month
period if Executive is determined to be a "specified employee as defined in Section 409A(a)(2)(B)(i).
Executive agrees that the Non-Solicitation Agreement and all the restrictions set forth in this Non-Solicitation
Agreement are fair and reasonable.
Executive agrees that (i) any remedy at law for any breach of this Non- Agreement would be inadequate, (ii) in
the event of any breach of this Non-Solicitation Agreement, the terms of this Non-Solicitation Agreement shall
constitute incontrovertible evidence of irreparable injury to BOK Financial, and (iii) BOK Financial shall be
entitled to both immediate and permanent injunctive relief without the necessity of establishing or posting any
bond therefor to preclude any such breach (in addition to any remedies of law to which BOK Financial may be
entitled).
(9)
Confidential Information. All references in this Section 9 to BOK Financial shall include BOK Financial’s affiliates.
(a)
Executive acknowledges that, during the Term and prior to the Term, Executive has had and will have access
to Confidential Information (as hereinafter defined), all of which shall be made accessible to Executive only in
strict confidence; that unauthorized disclosure of Confidential Information will damage BOK Financial’s
business; that Confidential Information would be susceptible to immediate competitive application by a
competitor of BOK Financial; that BOK Financial’s business is substantially dependent on access to and the
continuing secrecy of Confidential Information; that Confidential Information is unique to BOK Financial and
(b)
(c)
(d)
Exhibit 10.4.10
known only to Executive and certain key employees and contractors of BOK Financial; that BOK Financial
shall at all times retain ownership and control of all Confidential Information; and that the restrictions contained
in this Section 9 are reasonable and necessary for the protection of BOK Financial’s business.
All documents or other records containing or reflecting Confidential Information (“Confidential Documents”)
prepared by or to which Executive has access are and shall remain the property of BOK Financial. Executive
shall not copy or use any Confidential Document for any purpose not relating directly to Executive’s Employment
on BOK Financial’s behalf, or use or disclose any Confidential Document to any party other than BOK Financial
or its employees and shall not sell Confidential Documents to any party. Upon the termination of this Agreement
or upon BOK Financial’s request before or after such termination, Executive shall immediately deliver to BOK
Financial or its designee (and shall not keep in Executive’s possession or deliver to anyone else) all Confidential
Documents and all other property belonging to BOK Financial. This paragraph shall not bar Employee from
complying with any subpoena or court order, provided that Executive shall at the earliest practicable date provide
a copy of the subpoena or court order to BOK Financial’s Chief Executive Officer.
During the Term and for a period of four (4) years thereafter, regardless of the reason for termination of Executive’s
employment, (i) Executive shall not disclose any Confidential Information to any third party and (ii) Executive
shall use Confidential Information only in connection with and in furtherance of Executive’s Employment by
BOK Financial and on behalf of its affiliates.
As used herein, Confidential Information means all nonpublic information concerning or arising from BOK
Financial’s business, including particularly but not by way of limitation trade secrets used, developed or acquired
by BOK Financial in connection with its business; information concerning the manner and details of BOK
Financial’s operations, organization and management; financial information and/or documents and nonpublic
policies, procedures and other printed or written material generated or used in connection with BOK Financial’s
business; BOK Financial’s business plans and strategies; electronic files or documents prepared by BOK
Financial or Executive containing the identities of BOK Financial’s customers (including their addresses and
telephone numbers), the nature and amounts of their assets and liabilities, and the specific individual customer
needs being addressed by BOK Financial; the nature of fees and charges assessed by BOK Financial; nonpublic
forms, contracts and other documents used in BOK Financial’s business; the nature and content of any proprietary
computer software used in BOK Financial’s business, whether owned by BOK Financial or used by BOK
Financial under license from a third party; and all other nonpublic information concerning BOK Financial’s
concepts, prospects, customers, employees, contractors, earnings, products, services, equipment, systems, and/
or prospective and executed contracts and other business arrangements. Confidential Information shall not
include (i) general skills and general knowledge of the industry obtained by reason of Executive’s association
with BOK Financial; (ii) information that is or becomes public knowledge through no fault or action of Executive;
(iii) any information received from an independent third party who is under no duty of confidentiality with
respect to the information; or (iv) any information that, on advice of counsel, Executive is required to disclose
by law or regulation.
(10)
Surrender of Records and Property. Upon termination of Executive’s employment with BOK Financial for whatever
reason, in addition to Executive’s obligations pursuant to Paragraph 9(b), Executive shall deliver promptly to BOK
Financial all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables,
calculations or copies thereof that relate in any way to the business, products, practices or techniques of BOK Financial
or any of its affiliates, and all other information of BOK Financial or any of its affiliates, including, but not limited to,
all documents that in whole or in part contain any information which is defined in this Agreement as Confidential
Information and which is in the possession or under the control of Executive.
(11)
Compliance with Section 409A. This Agreement is subject to the following provisions in order to ensure compliance
with Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A”).
(a)
If any payment, compensation or other benefit provided to the Executive in connection with his
employment termination is determined, in whole or in part, to constitute “nonqualified deferred
compensation” within the meaning of Section 409A and the Executive is a specified employee as defined
in Section 409A(2)(B)(i), no part of such payments shall be paid before the day that is six (6) months
plus one (1) day after the date of termination.
(b)
The Parties acknowledge and agree that Section 409A and its application, if any, to the terms of this
Agreement may be subject to change as additional guidance and regulations become available. Anything
Exhibit 10.4.10
to the contrary herein notwithstanding, all benefits or payments provided by the Company to the
Executive that would be deemed to constitute “nonqualified deferred compensation” within the meaning
of Section 409A are intended to comply with Section 409A. If, however, any such benefit or payment
is deemed to not comply with Section 409A, the Company and the Executive agree to renegotiate in
good faith any such benefit or payment (including, without limitation, as to the timing of any severance
payments payable hereof) so that either (i) Section 409A will not apply or (ii) compliance with Section
409A will be achieved.
(c)
All payments required to be made by Bank hereunder to the Executive may be adjusted to the withholding
of such amounts, if any, relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
(12) Miscellaneous Provisions. The following miscellaneous provisions shall apply to this Agreement:
(a)
All notices or advices required or permitted to be given by or pursuant to this Agreement, shall be given in
writing. All such notices and advices shall be (i) delivered personally or (ii) delivered for overnight delivery
by a nationally recognized overnight courier service. Such notices and advices shall be deemed to have been
given (i) the first business day following the date of delivery if delivered personally or (ii) on the date of receipt
if delivered for overnight delivery by a nationally recognized overnight courier service. All such notices and
advices and all other communications related to this Agreement shall be given as follows:
If to BOK Financial:
BOK Financial Corporation
Attn: Stanley A. Lybarger
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
Telephone No.: (918) 588-6000
Facsimile No.: (918) 295-6379
slybarger@mail.bok.com
and
Chief Human Resources Officer
Attn: Stephen D. Grossi
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
Telephone No. 918- 595-3153
With a Copy to: Frederic Dorwart
Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
Telephone No.: (918) 583-9945
Facsimile No.: (918) 583-8251
FDorwart@FDLaw.com
If to Executive: Stacy C. Kymes
11220 South 72nd East Avenue
Tulsa, Oklahoma 74136
Telephone No.: (918) 588-6542
skymes@mail.bok.com
or to such other address as the Party may have furnished to the other Parties in accordance herewith, except that
notice of change of addresses shall be effective only upon receipt.
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
Exhibit 10.4.10
This Agreement is made and executed in Tulsa, Oklahoma and all actions or proceedings with respect to, arising
directly or indirectly in connection with, out of, related to or from this Agreement, shall be litigated in courts
having situs in Tulsa, Oklahoma.
This Agreement shall be subject to, and interpreted by and in accordance with, the laws of the State of Oklahoma
without regard to its conflict of law provisions.
This Agreement is the entire Agreement of the Parties respecting the subject matter hereof. There are no other
agreements, representations or warranties, whether oral or written, respecting the subject matter hereof, except
as stated in this Agreement.
This Agreement, and all the provisions of this Agreement, shall be deemed drafted by all of the Parties hereto.
This Agreement shall not be interpreted strictly for or against any Party, but solely in accordance with the fair
meaning of the provisions hereof to effectuate the purposes and interest of this Agreement.
Each Party hereto has entered into this Agreement based solely upon the agreements, representations and
warranties expressly set forth herein and upon her or his own knowledge and investigation. Neither Party has
relied upon any representation or warranty of any other Party hereto except any such representations or warranties
as are expressly set forth herein.
Each of the persons signing below on behalf of a Party hereto represents and warrants that he or she has full
requisite power and authority to execute and deliver this Agreement on behalf of the Parties for whom he or she
is signing and to bind such Party to the terms and conditions of this Agreement.
This Agreement may be executed in counterparts, each of which shall be deemed an original. This Agreement
shall become effective only when all of the Parties hereto shall have executed the original or counterpart hereof.
This Agreement may be executed and delivered by a facsimile transmission of a counterpart signature page
hereof.
In any action brought by a Party hereto to enforce the obligations of any other Party hereto, the prevailing Party
shall be entitled to collect from the opposing Party to such action such Party’s reasonable litigation costs and
attorneys fees and expenses (including court costs, reasonable fees of accountants and experts, and other expenses
incidental to the litigation).
This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective heirs,
personal representatives, successors and assigns.
This is not a third party beneficiary contract, except BOK Financial (including each affiliate thereof) shall be a
third party beneficiary of this Agreement.
This Agreement may be amended or modified only in a writing, as agreed to by the Parties hereto, which
specifically references this Agreement.
A Party to this Agreement may decide or fail to require full or timely performance of any obligation arising
under this Agreement. The decision or failure of a Party hereto to require full or timely performance of any
obligation arising under this Agreement (whether on a single occasion or on multiple occasions) shall not be
deemed a waiver of any such obligation. No such decisions or failures shall give rise to any claim of estoppel,
laches, course of dealing, amendment of this Agreement by course of dealing, or other defense of any nature to
any obligation arising hereunder.
In the event any provision of this Agreement, or the application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful, or unenforceable to any extent for any reason, the
remainder of this Agreement, and the application of such provision to persons or circumstances other than those
as to which it is determined to be invalid, unlawful, or unenforceable, shall not be affected and shall continue
to be enforceable to the fullest extent permitted by law.
(p)
None of the compensation or other payments to Executive provided for in, or that may be made pursuant to, this
Agreement are intended by the Parties to be deferred compensation within the meaning of Section 409A. If,
however, the Executive is a " specified employee" as defined in Section 409A(a)(2)(B)(i), then the other
provisions of this Agreement notwithstanding, no compensation that is "deferred compensation" within the
meaning of Section 409A shall be paid to Executive sooner than six months and one day following the date of
Executive s separation from service from the Company, as such date is determined in accordance with Section
409A.
Exhibit 10.4.10
Dated as of the Agreement Date.
BOK Financial Corporation
/s/ Stanley A. Lybarger
Name: Stanley A. Lybarger
Title: President and Chief Executive
Officer
Executive
/s/ Stacy C. Kymes
Individually
Exhibit 21
BOK FINANCIAL CORPORATION
SUBSIDIARIES OF THE REGISTRANT
Banking Subsidiaries
BOKF, National Association (1)
Other subsidiaries of BOK Financial Corporation
BOK Capital Service Corporation
BOKC Real Estate Corporation (7)
BOKF Capital Corporation
BOKF-CC (Aimbridge), LLC
BOKF-CC (FSE), LLC
BOKF-CS (Global Holdings), LLC
BOKF-CC (Heartland), LLC
BOKF-CS (Newco Valves), LLC
BOKF-CC (02 Concepts), LLC
BOKF-CC (QAA), LLC (3)
BOKF, Equity LLC
BOKF Private Equity Limited Partnership
BOKF Private Equity Limited Partnership II
BOSC, Inc.
Cavanal Hill Distributors, Inc.
Heartland Food Products, LLC (7)
HFP II, LLC
Lakeland Operating Company, LLC (6)
The Milestone Group, Inc. (5)
Quality Aircraft Accessories Holding Corporation (3)
Quality Aircraft Accessories, Inc. (3)
Subsidiaries of BOKF, National Association (1)
4525-4527 Fairway, LLC
Affiliated BancServices, Inc.
Affiliated Financial Holding Company
Affiliated Financial Insurance Agency, Inc.
BancOklahoma Agri-Service Corporation
BancOklahoma Mortage Corporation
BOK Delaware, Inc. (3)
BOK Financial Asset Management, Inc. (2)
BOK Financial Equipment Finance, Inc.
BOK Funding Trust (3)
BOKFCDF Fund I, LLC
BOKF Community Development Fund, LLC
BOKF Community Development Corporation
BOKF Special Assets I, LLC
BOSC Agency, Inc. (Oklahoma)
BOSC Agency, Inc. (New Mexico) (4)
BOSC Agency, Inc.. (Texas) (2)
Cavanal Hill Investment Management, Inc.
CVV Management, Inc.
CVV Partnership, an Oklahoma General Partnership
Calicotte Ranch HOA, LLC
Cottonwood Valley Ventures, Inc.
NGV Fleet Leasing, LLC
NGV Investment Fund, LLC
Oklahoma New Markets Fund I, LLC
Oklahoma New Markets Fund II, LLC
Oklahoma New Markets Fund III, LLC
Oklahoma New Markets Fund IV, LLC
Pacesetter Leasing Company
All Subsidiaries listed above were incorporated in Oklahoma, except as noted.
(1) Chartered by the United States Government
(2) Incorporated in Texas
(3) Incorporated in Delaware
(4) Incorporated in New Mexico
(5) Incorporated in Colorado
(6) Incorporated in California
(7) Incorporated in Kansas
Exhibit 23
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
• Registration Statement (Form S-8, No. 33-44121) pertaining to the Reoffer Prospectus of the Bank of Oklahoma Master
Thrift Plan and Trust Agreement as amended October 6, 2008.
• Registration Statement (Form S-8, No. 333-40280) pertaining to the Reoffer Prospectus of the BOK Financial Corporation
Master Thrift Plan for Hourly Employees as amended October 6, 2008.
• Registration Statement (Form S-8, No. 33-79836) pertaining to the Reoffer Prospectus of the BOK Financial Corporation
Directors' Stock Compensation Plan.
• Registration Statement (Form S-8, No. 333-32649) pertaining to the Reoffer Prospectus of the BOK Financial Corporation
1997 Stock Option Plan.
• Registration Statement (Form S-8, No. 333-93957) pertaining to the Reoffer Prospectus of the BOK Financial Corporation
2000 Stock Option Plan.
• Registration Statement (Form S-8, No. 333-62578) pertaining to the Reoffer Prospectus of the BOK Financial Corporation
2001 Stock Option Plan.
• Registration Statement (Form S-8, No. 333-106530) pertaining to the Reoffer Prospectus of the BOK Financial
Corporation 2003 Executive Incentive Plan.
• Registration Statement (Form S-8, No. 333-106531) pertaining to the Reoffer Prospectus of the BOK Financial
Corporation 2003 Stock Option Plan.
• Registration Statement (Form S-8, No. 333-135224) pertaining to the Reoffer Prospectus of the BOK Financial
Corporation 2003 Stock Option Plan.
• Registration Statement (Form S-8, No. 333-158846) pertaining to the Reoffer Prospectus of the BOK Financial
Corporation 2009 Omnibus Incentive Plan.
of our reports dated February 29, 2016, with respect to the consolidated financial statements of BOK Financial Corporation and
the effectiveness of internal control over financial reporting of BOK Financial Corporation included in this Annual Report (10-
K) of BOK Financial Corporation for the year ended December 31, 2015.
/s/ Ernst & Young LLP
Tulsa, Oklahoma
February 29, 2016
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
FOR THE CHIEF EXECUTIVE OFFICER
I, Steven G. Bradshaw, President and Chief Executive Officer of BOK Financial Corporation (“BOK Financial”), certify that:
1.
I have reviewed this Annual Report on Form 10-K of BOK Financial;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: February 29, 2016
/s/ Steven G. Bradshaw
Steven G. Bradshaw
President
Chief Executive Officer
BOK Financial Corporation
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
FOR THE CHIEF FINANCIAL OFFICER
I, Steven E. Nell, Chief Financial Officer of BOK Financial Corporation (“BOK Financial”), certify that:
1.
I have reviewed this Annual Report on Form 10-K of BOK Financial;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
5. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
d.
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
6. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing
the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial
information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: February 29, 2016
/s/ Steven E. Nell
Steven E. Nell
Executive Vice President and Chief Financial Officer
BOK Financial Corporation
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of BOK Financial Corporation (“BOK Financial”) on Form 10-K for the fiscal year
ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we,
Steven G. Bradshaw and Steven E. Nell, Chief Executive Officer and Chief Financial Officer, respectively, of BOK Financial,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of BOK Financial as of, and for, the periods presented.
February 29, 2016
/s/ Steven G. Bradshaw
Steven G. Bradshaw
President
Chief Executive Officer
BOK Financial Corporation
/s/ Steven E. Nell
Steven E. Nell
Executive Vice President
Chief Financial Officer
BOK Financial Corporation
RETAIL AND COMMERCIAL BANKING:
WEALTH MANAGEMENT:
TRANSACTION PROCESSING:
MORTGAGE BANKING:
CORPORATE HEADQUARTERS:
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
918.588.6000
GE-BA-7006