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BOK Financial Reports Quarterly Earnings of $43 Million

TULSA, Okla., April 27, 2016 (GLOBE NEWSWIRE) -- BOK Financial Corporation (Nasdaq:BOKF) reported net income of $42.6 million or $0.64 per diluted share for the first quarter of 2016. Net income was $59.6 million or $0.89 per diluted share for the fourth quarter of 2015 and $74.8 million or $1.08 per diluted share for the first quarter of 2015.

Steven G. Bradshaw, president and chief executive officer, stated, “We earned $43 million in the first quarter despite a number of challenges including a higher loan loss provision necessitated by the extended commodities downturn and its impact on our energy loan portfolio. In addition, a significant decrease in primary mortgage interest rates during the quarter resulted in a higher-than-expected net decrease in the fair value of our mortgage servicing right asset. Finally, expenses were elevated due to a number of noteworthy items in the quarter including accruals for legal matters, higher deposit insurance expense, and a purchase accounting adjustment in one of our merchant banking investments. Despite these challenges, our business fundamentals remained strong and we continued to grow loans, assets under management, net interest income, and operating revenue during the quarter."

Stacy Kymes, executive vice president, Corporate Banking, added, “We expect total loan loss provision for the full year at the high end of our $60 to $80 million guidance range, with the majority of this expected in the first half of the year. This is due to continued credit migration in the energy portfolio, as anticipated. In addition, while loan growth was muted in the first quarter, we continue to have strong new business development pipelines and believe that our targeted loan growth of mid single digits for the full year remains achievable."

First Quarter 2016 Highlights

  • Net interest revenue totaled $182.6 million for the first quarter of 2016, up $1.3 million over the fourth quarter of 2015. Net interest margin increased to 2.65 percent for the first quarter of 2016, compared to 2.64 percent for the fourth quarter of 2015. Average earning assets increased $464 million during the first quarter of 2016, primarily related to a $405 million increase in average loan balances.
  • Fees and commissions revenue totaled $165.6 million for the first quarter of 2016, an increase of $9.8 million over the prior quarter. Mortgage banking revenue increased $9.4 million due to higher loan production volume.
  • Changes in the fair value of mortgage servicing rights, net of economic hedges, decreased pre-tax net income in the first quarter of 2016 by $11.4 million and increased pre-tax net income in the fourth quarter of 2015 by $2.6 million.
  • Operating expense was $244.9 million for the first quarter, an increase of $12.3 million over the previous quarter. Non-personnel expense increased $9.7 million primarily due to several litigation accruals, a post-acquisition valuation adjustment to a consolidated merchant banking investment and higher deposit insurance costs. Personnel expense increased $2.7 million.
  • A $35.0 million provision for credit losses was recorded in the first quarter of 2016 compared to a $22.5 million provision in the fourth quarter of 2015. The additional provision was largely a result of the extended decline in commodity prices and its impact on the energy loan portfolio. Net loans charged off totaled $22.5 million in the first quarter of 2016, compared to $3.0 million in the previous quarter.
  • The combined allowance for credit losses totaled $240 million or 1.50 percent of outstanding loans at March 31, 2016 compared to $227 million or 1.43 percent of outstanding loans at December 31, 2015. The portion of the combined allowance attributed to the energy portfolio totaled 3.19 percent of outstanding energy loans at March 31, 2016, an increase from 2.89 percent of outstanding energy loans at December 31, 2015.
  • Nonperforming assets that are not guaranteed by U.S. government agencies totaled $252 million or 1.59 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at March 31, 2016 and $156 million or 0.99 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at December 31, 2015. Nonperforming energy loans increased $98 million during the first quarter.
  • Average loans increased by $405 million over the previous quarter, primarily due to growth in commercial and commercial real estate loans. Period-end outstanding loan balances increased $81 million to $16.0 billion at March 31, 2016.
  • Average deposits were largely unchanged compared to the previous quarter. Decreased demand and time deposit balances were offset by growth in interest-bearing transaction accounts. Period-end deposits were $20.4 billion at March 31, 2016, a decrease of $670 million from December 31, 2015.
  • The common equity Tier 1 capital ratio at March 31, 2016 was 12.00 percent. Other regulatory capital ratios were Tier 1 capital ratio, 12.00 percent, total capital ratio, 13.21 percent and leverage ratio, 9.12 percent. At December 31, 2015, the common equity Tier 1 capital ratio was 12.13 percent, the Tier 1 capital ratio was 12.13 percent, total capital ratio was 13.30 percent, and leverage ratio was 9.25 percent.
  • The company paid a regular quarterly cash dividend of $28 million or $0.43 per common share during the first quarter of 2016. On April 26, 2016, the board of directors approved a quarterly cash dividend of $0.43 per common share payable on or about May 27, 2016 to shareholders of record as of May 13, 2016.

Net Interest Revenue

Net interest revenue was $182.6 million for the first quarter of 2016, up $1.3 million over the fourth quarter of 2015.

Net interest margin was 2.65 percent for the first quarter of 2016, an increase of one basis point over the fourth quarter of 2015. The yield on average earning assets was 2.92 percent, an increase of 6 basis points over the prior quarter. The loan portfolio yield increased 2 basis points to 3.57 percent. The yield on the available for sale securities portfolio increased 4 basis points to 2.08 percent. Funding costs were 0.40 percent, up 6 basis points compared to the prior quarter. Increased earning asset yields and funding costs were primarily related to the full quarter impact of the increase in the federal funds rate by the Federal Reserve in the fourth quarter of 2015.

Average earning assets increased $464 million during the first quarter of 2016. Average loan balances increased $405 million, primarily due to growth in commercial and commercial real estate balances. The average balance of interest-bearing cash and cash equivalents increased $57 million over the prior quarter. Average interest-bearing deposit balances increased $128 million compared to the fourth quarter of 2015. The average balance of borrowed funds increased $704 million.

Fees and Commissions Revenue

Fees and commissions revenue totaled $165.6 million for the first quarter of 2016, an increase of $9.8 million over the fourth quarter of 2015, primarily due to an increase in mortgage banking revenue.

Mortgage banking revenue totaled $34.4 million for the first quarter of 2016, a $9.4 million increase over the fourth quarter of 2015. Revenue from mortgage loan production increased $8.9 million primarily due to increased volume of mortgage loan commitments during the quarter. Outstanding mortgage loan commitments at March 31 increased $302 million or 50 percent over December 31 as average primary mortgage interest rates were 15 basis points lower than in the fourth quarter of 2015. Total mortgage loans originated during the first quarter decreased $121 million or 9 percent compared to the previous quarter.

Brokerage and trading revenue increased $2.1 million as growth in securities trading, investment banking and retail brokerage fees was partially offset by lower customer hedging revenue. Fiduciary and asset management revenue increased $891 thousand.

Operating Expense

Total operating expense was $244.9 million for the first quarter of 2016, an increase of $12.3 million compared to the fourth quarter of 2015.

Personnel costs increased by $2.7 million compared to the fourth quarter of 2015. Payroll tax expense increased $4.2 million, partially offset by a $2.5 million decrease in incentive compensation expense.

Non-personnel expense increased $9.7 million compared to the fourth quarter of 2015. Other expense increased $6.5 million. We increased litigation accruals by $4.1 million during the quarter for matters previously disclosed in the notes to our financial statements. The additional accruals were based on information received in the first quarter. We also recorded a $2.7 million post-acquisition valuation adjustment to a consolidated merchant banking investment, $1.1 million of which is attributable to non-controlling interests. Deposit insurance expense increased $1.9 million, primarily due to an increase in criticized and classified asset levels, an input to the deposit insurance assessment, related to falling energy prices. Professional fees and services expense also increased $1.4 million. These increases were partially offset by a $2.7 million seasonal decrease in business promotion expense.

Loans, Deposits and Capital

Loans

Outstanding loans were $16.0 billion at March 31, 2016, an increase of $81 million over the previous quarter, primarily due to growth in commercial real estate and commercial balances. Residential mortgage balances were largely unchanged and personal loan balances decreased compared to the prior quarter.

Outstanding commercial loan balances increased $36 million over December 31, 2015. Healthcare sector loans grew by $112 million, manufacturing sector loans were up $44 million and wholesale/retail sector loans increased $30 million. Service sector loans decreased $55 million and energy loan balances decreased $68 million compared to December 31, 2015. Unfunded energy loan commitments decreased by $269 million during the first quarter to $2.1 billion.

Commercial real estate loans grew by $111 million over December 31, 2015. Loans secured by office buildings increased $58 million primarily in the Colorado and Oklahoma markets. Other commercial real estate balances grew by $44 million. Retail sector and residential construction and land development loan balances also increased, partially offset by a decrease in multifamily residential loans.

Deposits

Period-end deposits totaled $20.4 billion at March 31, 2016, a decrease of $670 million compared to December 31, 2015. Demand deposit balances decreased $346 million, interest-bearing transaction deposits decreased $289 million and time deposits decreased $65 million. Among the lines of business, Commercial Banking deposits decreased $519 million and Wealth Management deposits decreased $177 million compared to December 31, 2015. Consumer Banking deposits increased $55 million. The overall decrease in deposits was due to normal post-year-end activity and reductions by our energy-related customers.

Capital

The company's common equity Tier 1 capital ratio was 12.00 percent at March 31, 2016. In addition, the company's Tier 1 capital ratio was 12.00 percent, total capital ratio was 13.21 percent and leverage ratio was 9.12 percent at March 31, 2016. At December 31, 2015, the company's common equity Tier 1 capital ratio was 12.13 percent, Tier 1 capital ratio was 12.13 percent, total capital ratio was 13.30 percent, and leverage ratio was 9.25 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 9.34 percent at March 31, 2016 and 9.02 percent at December 31, 2015. The tangible common equity ratio is primarily based on total shareholders' equity which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

Credit Quality

Nonperforming assets totaled $349 million or 2.18 percent of outstanding loans and repossessed assets at March 31, 2016 compared to $252 million or 1.58 percent at December 31, 2015. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $252 million or 1.59 percent of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at March 31, 2016 and $156 million or 0.99 percent at December 31, 2015, an increase of $96 million.

Nonaccruing loans totaled $242 million or 1.51 percent of outstanding loans at March 31, 2016, up from $147 million or 0.92 percent of outstanding loans at December 31, 2015, primarily due to a $98 million increase in nonaccruing energy loans. New nonaccruing loans identified in the first quarter totaled $179 million, offset by $55 million in payments received, $24 million in charge-offs and $2.2 million in foreclosures and repossessions. At March 31, 2016, nonaccruing commercial loans totaled $175 million or 1.70 percent of outstanding commercial loans, nonaccruing commercial real estate loans totaled $9.3 million or 0.28 percent of outstanding commercial real estate loans and nonaccruing residential mortgage loans totaled $58 million or 3.08 percent of outstanding residential mortgage loans.

Potential problem loans, which are defined as performing loans that based on known information cause management concern as to the borrowers' ability to continue to perform, increased to $460 million at March 31 from $155 million at December 31. The increase largely resulted from a $273 million increase in potential problem energy loans.

Net loans charged off totaled $22.5 million for the first quarter of 2016, up from $3.0 million in the fourth quarter of 2015. Gross charge-offs totaled $24.0 million for the first quarter, compared to $4.9 million for the previous quarter. First quarter charge-offs largely came from the energy loan portfolio. Recoveries totaled $1.5 million for the first quarter of 2016 and $1.9 million for the fourth quarter of 2015.

After evaluating all credit factors, the company recorded a $35.0 million provision for credit losses during the first quarter of 2016, primarily due to continued credit migration in the energy portfolio. Low energy prices have now extended beyond one year and no meaningful recovery is expected in the near term. The company recorded a $22.5 million provision for credit losses in the previous quarter.

The combined allowance for credit losses totaled $240 million or 1.50 percent of outstanding loans and 108 percent of nonaccruing loans at March 31, 2016. The allowance for loan losses was $233 million and the accrual for off-balance sheet credit losses was $6.6 million.

Energy Portfolio Credit Quality

The company's $3.0 billion energy portfolio consists of 82 percent of loans to exploration and production companies, 9 percent to energy services companies and 9 percent to midstream and other energy borrowers. Substantially all of the loans to exploration and production companies are secured by first lien positions in established energy reserves. Only $10 million of these loans are in junior lien positions. None represent higher-risk mezzanine financing or subordinated debt and none are high-yield debt.

The updated OCC Oil and Gas Lending Handbook and the recently completed 2016 shared national credit review heavily weighted loan grading by the ability to repay a borrower's total debt, regardless of collateral position. This change in grading methodology significantly increased nonaccruing and potential problem energy loans during the first quarter. Loss measurement guidance still considers collateral position in each credit. Because substantially all of our energy credits are supported by senior lien positions, the historic relationship between loan classification and loss exposure may be more difficult to correlate. The portion of the combined allowance attributed to the energy portfolio totaled $97 million or 3.19 percent of outstanding energy loans at March 31, 2016. Management believes this is appropriate based on the current risk characteristics of the energy portfolio.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $8.9 billion at March 31, 2016, a decrease of $157 million compared to December 31, 2015. At March 31, 2016, the available for sale portfolio consisted primarily of $5.7 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $2.9 billion of commercial mortgage-backed securities fully backed by U.S. government agencies.

At March 31, 2016, the available for sale securities portfolio had a net unrealized gain of $155 million compared to a net unrealized gain of $38 million at December 31, 2015 primarily due to changes in interest rates during the quarter. Net unrealized gains on residential mortgage-backed securities issued by U.S. government agencies at March 31, 2016 increased $67 million during the first quarter to $104 million. Commercial mortgage-backed securities had a net unrealized gain of $38 million at March 31, 2016, compared to a net unrealized loss of $13 million at December 31, 2015.

In the first quarter of 2016, the company recognized a $4.0 million net gain from the sale of $469 million of available for sale securities. Securities were sold either because they had reached their expected maximum potential return or to move into securities that will perform better in the current rate environment. The company recognized $2.1 million of net gains from sales of $436 million of available for sale securities in the fourth quarter of 2015.

The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. Changes in the fair value of mortgage servicing rights are highly dependent on primary mortgage interest rates offered to borrowers and other factors. Changes in the fair value of securities and interest rate derivatives are highly dependent on secondary mortgage rates, or rates required by investors. Changes in the spread between primary and secondary mortgage rates cannot be effectively hedged and can cause significant earnings volatility.

The fair value of mortgage servicing rights decreased by $28.0 million during the first quarter of 2016. Primary mortgage rates fell during the quarter and we narrowed the forward-looking spread between primary mortgage interest rates and yields on mortgage-backed securities. The fair value of securities and interest rate derivative contracts held as an economic hedge increased by $16.6 million during the quarter due to increases in secondary mortgage rates. The fair value of mortgage servicing rights, net of economic hedges, increased $2.6 million in the fourth quarter of 2015, primarily due to an increase in residential mortgage interest rates.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, April 27, 2016 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-412-902-6611. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-412-317-0088 and referencing conference ID # 10083650.

About BOK Financial Corporation

BOK Financial Corporation is a $31 billion regional financial services company based in Tulsa, Oklahoma. The company's stock is publicly traded on NASDAQ under the Global Select market listings (symbol: BOKF). BOK Financial's holdings include BOKF, NA, BOSC, Inc. and The Milestone Group, Inc. BOKF, NA operates TransFund, Cavanal Hill Investment Management, BOK Financial Asset Management, Inc. and seven banking divisions: Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas and Colorado State Bank and Trust. Through its subsidiaries, the company provides commercial and consumer banking, investment and trust services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of March 31, 2016 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial, the financial services industry and the economy generally. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses involve judgments as to future events and are inherently forward-looking statements. Assessments that BOK Financial's acquisitions and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to (1) the ability to fully realize expected cost savings from mergers within the expected time frames, (2) the ability of other companies on which BOK Financial relies to provide goods and services in a timely and accurate manner, (3) changes in interest rates and interest rate relationships, (4) demand for products and services, (5) the degree of competition by traditional and nontraditional competitors, (6) changes in banking regulations, tax laws, prices, levies and assessments, (7) the impact of technological advances and (8) trends in consumer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
March 31, 2016 Dec. 31, 2015 March 31, 2015
ASSETS
Cash and due from banks$481,510 $573,699 $490,683
Interest-bearing cash and cash equivalents1,831,162 2,069,900 2,119,987
Trading securities279,539 122,404 118,044
Investment securities576,047 597,836 634,587
Available for sale securities8,886,036 9,042,733 9,158,175
Fair value option securities418,887 444,217 434,077
Restricted equity securities314,590 273,684 212,685
Residential mortgage loans held for sale332,040 308,439 513,196
Loans:
Commercial10,288,425 10,252,531 9,391,163
Commercial real estate3,370,507 3,259,033 2,935,464
Residential mortgage1,869,309 1,876,893 1,926,999
Personal494,325 552,697 430,510
Total loans16,022,566 15,941,154 14,684,136
Allowance for loan losses(233,156) (225,524) (197,686)
Loans, net of allowance15,789,410 15,715,630 14,486,450
Premises and equipment, net311,161 306,490 279,075
Receivables167,209 163,480 183,447
Goodwill383,789 385,461 377,780
Intangible assets, net44,944 43,909 33,286
Mortgage servicing rights196,055 218,605 175,051
Real estate and other repossessed assets, net29,896 30,731 45,551
Derivative contracts, net790,146 586,270 462,386
Cash surrender value of bank-owned life insurance305,510 303,335 296,192
Receivable on unsettled securities sales5,640 40,193 9,598
Other assets270,374 249,112 269,728
TOTAL ASSETS$31,413,945 $31,476,128 $30,299,978
LIABILITIES AND EQUITY
Deposits:
Demand$7,950,675 $8,296,888 $8,009,577
Interest-bearing transaction9,709,766 9,998,954 10,108,202
Savings416,505 386,252 383,790
Time2,341,374 2,406,064 2,651,778
Total deposits20,418,320 21,088,158 21,153,347
Funds purchased62,755 491,192 66,320
Repurchase agreements630,101 722,444 897,663
Other borrowings5,633,862 4,837,879 3,727,050
Subordinated debentures226,385 226,350 348,030
Accrued interest, taxes and expense148,711 119,584 147,184
Due on unsettled securities purchases19,508 16,897 25,935
Derivative contracts, net705,578 581,701 419,351
Other liabilities212,460 124,284 124,846
TOTAL LIABILITIES28,057,680 28,208,489 26,909,726
Shareholders' equity:
Capital, surplus and retained earnings3,228,446 3,208,969 3,266,858
Accumulated other comprehensive income93,109 21,587 90,303
TOTAL SHAREHOLDERS' EQUITY3,321,555 3,230,556 3,357,161
Non-controlling interests34,710 37,083 33,091
TOTAL EQUITY3,356,265 3,267,639 3,390,252
TOTAL LIABILITIES AND EQUITY$31,413,945 $31,476,128 $30,299,978


AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
Three Months Ended
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
ASSETS
Interest-bearing cash and cash equivalents$2,052,840 $1,995,945 $2,038,611 $2,002,456 $2,089,546
Trading securities188,100 150,402 179,098 127,391 140,968
Investment securities587,465 602,369 616,091 628,489 642,825
Available for sale securities8,951,435 8,971,090 8,942,261 9,063,006 9,101,464
Fair value option securities450,478 435,449 429,951 435,294 404,775
Restricted equity securities294,529 262,461 255,610 221,911 179,385
Residential mortgage loans held for sale289,743 310,425 401,359 464,269 348,054
Loans:
Commercial10,268,793 10,024,756 9,685,768 9,634,306 9,308,307
Commercial real estate3,364,076 3,186,629 3,198,200 2,989,615 2,909,565
Residential mortgage1,865,742 1,835,195 1,847,696 1,857,464 1,909,998
Personal493,382 540,418 460,647 423,967 426,712
Total loans15,991,993 15,586,998 15,192,311 14,905,352 14,554,582
Allowance for loan losses(234,116) (207,156) (202,829) (198,400) (194,948)
Total loans, net15,757,877 15,379,842 14,989,482 14,706,952 14,359,634
Total earning assets28,572,467 28,107,983 27,852,463 27,649,768 27,266,651
Cash and due from banks505,522 514,629 487,283 492,737 513,734
Derivative contracts, net632,102 657,780 669,264 475,687 447,565
Cash surrender value of bank-owned life insurance304,141 301,793 299,424 297,022 294,803
Receivable on unsettled securities sales115,101 62,228 64,591 94,374 99,706
Other assets1,379,138 1,435,763 1,396,708 1,454,484 1,348,245
TOTAL ASSETS$31,508,471 $31,080,176 $30,769,733 $30,464,072 $29,970,704
LIABILITIES AND EQUITY
Deposits:
Demand$8,105,756 $8,312,961 $7,994,607 $7,996,717 $7,885,485
Interest-bearing transaction9,756,843 9,527,491 9,760,839 10,063,589 10,338,396
Savings397,479 382,284 379,828 381,833 365,835
Time2,366,543 2,482,714 2,557,874 2,651,820 2,659,323
Total deposits20,626,621 20,705,450 20,693,148 21,093,959 21,249,039
Funds purchased112,211 73,220 70,281 63,312 69,730
Repurchase agreements662,640 623,921 672,085 773,977 1,000,839
Other borrowings5,583,917 4,957,175 4,779,981 4,001,479 3,084,214
Subordinated debentures226,368 226,332 226,296 307,903 348,007
Derivative contracts, net544,722 632,699 597,908 455,431 418,848
Due on unsettled securities purchases158,050 248,811 90,135 151,369 205,096
Other liabilities268,705 251,953 240,704 235,173 243,370
TOTAL LIABILITIES28,183,234 27,719,561 27,370,538 27,082,603 26,619,143
Total equity3,325,237 3,360,615 3,399,195 3,381,469 3,351,561
TOTAL LIABILITIES AND EQUITY$31,508,471 $31,080,176 $30,769,733 $30,464,072 $29,970,704


STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)
Three Months Ended
March 31,
2016 2015
Interest revenue$201,796 $184,569
Interest expense19,224 16,843
Net interest revenue182,572 167,726
Provision for credit losses35,000
Net interest revenue after provision for credit losses147,572 167,726
Other operating revenue:
Brokerage and trading revenue32,341 31,707
Transaction card revenue32,354 31,010
Fiduciary and asset management revenue32,056 31,469
Deposit service charges and fees22,542 21,684
Mortgage banking revenue34,430 39,320
Other revenue11,904 10,801
Total fees and commissions165,627 165,991
Other gains, net1,560 755
Gain on derivatives, net7,138 911
Gain on fair value option securities, net9,443 2,647
Change in fair value of mortgage servicing rights(27,988) (8,522)
Gain on available for sale securities, net3,964 4,327
Total other-than-temporary impairment losses (781)
Portion of loss recognized in other comprehensive income 689
Net impairment losses recognized in earnings (92)
Total other operating revenue159,744 166,017
Other operating expense:
Personnel135,843 128,548
Business promotion5,696 5,748
Professional fees and services11,759 10,059
Net occupancy and equipment18,766 19,044
Insurance7,265 4,980
Data processing and communications32,017 29,772
Printing, postage and supplies3,907 3,461
Net losses and operating expenses of repossessed assets1,070 613
Amortization of intangible assets1,159 1,090
Mortgage banking costs12,379 10,167
Other expense15,039 6,783
Total other operating expense244,900 220,265
Net income before taxes62,416 113,478
Federal and state income taxes21,428 38,384
Net income40,988 75,094
Net income (loss) attributable to non-controlling interests(1,576) 251
Net income attributable to BOK Financial Corporation shareholders$42,564 $74,843
Average shares outstanding:
Basic65,296,541 68,254,780
Diluted65,331,428 68,344,886
Net income per share:
Basic$0.64 $1.08
Diluted$0.64 $1.08


FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)
Three Months Ended
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
Capital:
Period-end shareholders' equity$3,321,555 $3,230,556 $3,377,226 $3,375,632 $3,357,161
Risk weighted assets$23,707,824 $23,429,897 $22,706,537 $22,533,295 $22,053,246
Risk-based capital ratios:
Common equity tier 112.00% 12.13% 12.78% 13.01% 13.07%
Tier 112.00% 12.13% 12.78% 13.01% 13.07%
Total capital13.21% 13.30% 13.89% 14.11% 14.39%
Leverage ratio9.12% 9.25% 9.55% 9.75% 9.74%
Tangible common equity ratio19.34% 9.02% 9.78% 9.72% 9.86%
Common stock:
Book value per share$50.21 $49.03 $49.88 $48.96 $48.71
Market value per share:
High$60.16 $74.73 $70.26 $71.66 $61.78
Low$43.74 $58.25 $57.04 $59.59 $52.63
Cash dividends paid$28,294 $28,967 $28,766 $28,841 $28,952
Dividend payout ratio66.47% 48.60% 38.41% 36.40% 38.68%
Shares outstanding, net66,155,103 65,894,032 67,713,031 68,945,139 68,922,314
Stock buy-back program:
Shares repurchased 1,874,074 1,258,348 502,156
Amount$ $119,780 $80,276 $ $29,484
Average price per share$ $63.91 $63.79 $ $58.71
Performance ratios (quarter annualized):
Return on average assets0.54% 0.76% 0.97% 1.04% 1.01%
Return on average equity5.21% 7.12% 8.84% 9.50% 9.15%
Net interest margin2.65% 2.64% 2.61% 2.61% 2.55%
Efficiency ratio69.05% 67.93% 64.34% 64.21% 64.91%
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio:
Total shareholders' equity$3,321,555 $3,230,556 $3,377,226 $3,375,632 $3,357,161
Less: Goodwill and intangible assets, net428,733 429,370 430,460 431,515 411,066
Tangible common equity$2,892,822 $2,801,186 $2,946,766 $2,944,117 $2,946,095
Total assets$31,413,945 $31,476,128 $30,566,905 $30,725,563 $30,299,978
Less: Goodwill and intangible assets, net428,733 429,370 430,460 431,515 411,066
Tangible assets$30,985,212 $31,046,758 $30,136,445 $30,294,048 $29,888,912
Tangible common equity ratio9.34% 9.02% 9.78% 9.72% 9.86%
Other data:
Fiduciary assets$39,113,305 $38,333,638 $37,780,669 $38,772,018 $37,511,746
Tax equivalent adjustment$4,385 $3,222 $3,244 $3,035 $2,956
Net unrealized gain on available for sale securities$155,236 $38,109 $144,884 $89,158 $152,107
Mortgage banking:
Mortgage servicing portfolio$20,294,662 $19,678,226 $18,928,726 $17,979,623 $16,937,128
Mortgage commitments$902,986 $601,147 $742,742 $849,619 $824,036
Mortgage loans funded for sale$1,244,015 $1,365,431 $1,614,225 $1,828,230 $1,565,016
Mortgage loan refinances to total fundings49% 41% 30% 40% 56%
Mortgage loans sold$1,239,391 $1,424,527 $1,778,099 $1,861,968 $1,382,042
Net realized gains on mortgage loans sold$10,779 $15,705 $18,968 $23,856 $17,251
Change in net unrealized gain on mortgage loans held for sale8,198 (5,615) (251) (743) 8,789
Total production revenue18,977 10,090 18,717 23,113 26,040
Servicing revenue15,453 14,949 14,453 13,733 13,280
Total mortgage banking revenue$34,430 $25,039 $33,170 $36,846 $39,320
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$7,138 $(732) $1,460 $(1,005) $911
Gain (loss) on fair value option securities, net9,443 (4,127) 5,926 (8,130) 2,647
Gain (loss) on economic hedge of mortgage servicing rights16,581 (4,859) 7,386 (9,135) 3,558
Gain (loss) on changes in fair value of mortgage servicing rights(27,988) 7,416 (11,757) 8,010 (8,522)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges$(11,407) $2,557 $(4,371) $(1,125) $(4,964)
Net interest revenue on fair value option securities$2,033 $2,137 $2,140 $1,985 $1,739



QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)
Three Months Ended
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
Interest revenue$201,796 $196,782 $193,664 $191,813 $184,569
Interest expense19,224 15,521 15,028 16,082 16,843
Net interest revenue182,572 181,261 178,636 175,731 167,726
Provision for credit losses35,000 22,500 7,500 4,000
Net interest revenue after provision for credit losses147,572 158,761 171,136 171,731 167,726
Other operating revenue:
Brokerage and trading revenue32,341 30,255 31,582 36,012 31,707
Transaction card revenue32,354 32,319 32,514 32,778 31,010
Fiduciary and asset management revenue32,056 31,165 30,807 32,712 31,469
Deposit service charges and fees22,542 22,813 23,606 22,328 21,684
Mortgage banking revenue34,430 25,039 33,170 36,846 39,320
Other revenue11,904 14,233 12,978 11,871 10,801
Total fees and commissions165,627 155,824 164,657 172,547 165,991
Other gains, net1,560 2,329 1,161 1,457 755
Gain (loss) on derivatives, net7,138 (732) 1,283 (1,032) 911
Gain (loss) on fair value option securities, net9,443 (4,127) 5,926 (8,130) 2,647
Change in fair value of mortgage servicing rights(27,988) 7,416 (11,757) 8,010 (8,522)
Gain on available for sale securities, net3,964 2,132 2,166 3,433 4,327
Total other-than-temporary impairment losses (2,114) (781)
Portion of loss recognized in other comprehensive income 387 689
Net impairment losses recognized in earnings (1,727) (92)
Total other operating revenue159,744 161,115 163,436 176,285 166,017
Other operating expense:
Personnel135,843 133,182 129,062 132,695 128,548
Business promotion5,696 8,416 5,922 7,765 5,748
Charitable contributions to BOKF Foundation 796
Professional fees and services11,759 10,357 10,147 9,560 10,059
Net occupancy and equipment18,766 19,356 18,689 18,927 19,044
Insurance7,265 5,415 4,864 5,116 4,980
Data processing and communications32,017 31,248 30,708 30,655 29,772
Printing, postage and supplies3,907 3,108 3,376 3,553 3,461
Net losses and operating expenses of repossessed assets1,070 343 267 223 613
Amortization of intangible assets1,159 1,090 1,089 1,090 1,090
Mortgage banking costs12,379 11,496 9,107 8,227 10,167
Other expense15,039 8,547 10,601 9,302 6,783
Total other operating expense244,900 232,558 224,628 227,113 220,265
Net income before taxes62,416 87,318 109,944 120,903 113,478
Federal and state income taxes21,428 26,242 34,128 40,630 38,384
Net income40,988 61,076 75,816 80,273 75,094
Net income (loss) attributable to non-controlling interests(1,576) 1,475 925 1,043 251
Net income attributable to BOK Financial Corporation shareholders$42,564 $59,601 $74,891 $79,230 $74,843
Average shares outstanding:
Basic65,296,541 66,378,380 67,668,076 68,096,341 68,254,780
Diluted65,331,428 66,467,729 67,762,483 68,210,353 68,344,886
Net income per share:
Basic$0.64 $0.89 $1.09 $1.15 $1.08
Diluted$0.64 $0.89 $1.09 $1.15 $1.08


LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
Commercial:
Energy $3,029,420 $3,097,328 $2,838,167 $2,902,143 $2,902,994
Services 2,728,891 2,784,276 2,706,624 2,681,126 2,592,876
Healthcare 1,995,425 1,883,380 1,741,680 1,646,025 1,511,177
Wholesale/retail 1,451,846 1,422,064 1,461,936 1,533,730 1,405,800
Manufacturing 600,645 556,729 555,677 579,549 560,925
Other commercial and industrial 482,198 508,754 493,338 433,148 417,391
Total commercial 10,288,425 10,252,531 9,797,422 9,775,721 9,391,163
Commercial real estate:
Retail 810,522 796,499 769,449 688,447 658,860
Multifamily 733,689 751,085 758,658 711,333 749,986
Office 695,552 637,707 626,151 563,085 513,862
Industrial 564,467 563,169 563,871 488,054 478,584
Residential construction and land development 171,949 160,426 153,510 148,574 139,152
Other commercial real estate 394,328 350,147 363,428 434,004 395,020
Total commercial real estate 3,370,507 3,259,033 3,235,067 3,033,497 2,935,464
Residential mortgage:
Permanent mortgage 948,405 945,336 937,664 946,324 964,264
Permanent mortgages guaranteed by U.S. government agencies 197,350 196,937 192,712 190,839 200,179
Home equity 723,554 734,620 738,619 747,565 762,556
Total residential mortgage 1,869,309 1,876,893 1,868,995 1,884,728 1,926,999
Personal 494,325 552,697 465,957 430,190 430,510
Total $16,022,566 $15,941,154 $15,367,441 $15,124,136 $14,684,136



LOANS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
Bank of Oklahoma:
Commercial$3,656,034 $3,782,687 $3,514,391 $3,529,406 $3,276,553
Commercial real estate747,689 739,829 677,372 614,995 612,639
Residential mortgage1,411,409 1,409,114 1,405,235 1,413,690 1,442,340
Personal204,158 255,387 185,463 190,909 205,496
Total Bank of Oklahoma6,019,290 6,187,017 5,782,461 5,749,000 5,537,028
Bank of Texas:
Commercial3,936,809 3,908,425 3,752,193 3,738,742 3,709,467
Commercial real estate1,211,978 1,204,202 1,257,741 1,158,056 1,130,973
Residential mortgage217,539 219,126 222,395 228,683 237,985
Personal210,456 203,496 194,051 156,260 149,827
Total Bank of Texas5,576,782 5,535,249 5,426,380 5,281,741 5,228,252
Bank of Albuquerque:
Commercial402,082 375,839 368,027 392,362 388,005
Commercial real estate323,059 313,422 312,953 291,953 296,696
Residential mortgage117,655 120,507 121,232 123,376 127,326
Personal10,823 11,557 10,477 11,939 12,095
Total Bank of Albuquerque853,619 821,325 812,689 819,630 824,122
Bank of Arkansas:
Commercial79,808 92,359 76,044 99,086 91,485
Commercial real estate66,674 69,320 82,225 85,997 87,034
Residential mortgage7,212 8,169 8,063 6,999 6,807
Personal918 819 4,921 5,189 5,114
Total Bank of Arkansas154,612 170,667 171,253 197,271 190,440
Colorado State Bank & Trust:
Commercial1,030,348 987,076 1,029,694 1,019,454 1,008,316
Commercial real estate219,078 223,946 229,835 229,721 209,272
Residential mortgage52,961 53,782 50,138 54,135 55,925
Personal24,497 23,384 30,683 30,373 27,792
Total Colorado State Bank & Trust1,326,884 1,288,188 1,340,350 1,333,683 1,301,305
Bank of Arizona:
Commercial656,527 606,733 608,235 572,477 519,767
Commercial real estate605,383 507,523 482,918 472,061 432,269
Residential mortgage40,338 44,047 41,722 37,493 36,161
Personal18,372 31,060 17,609 12,875 12,394
Total Bank of Arizona1,320,620 1,189,363 1,150,484 1,094,906 1,000,591
Bank of Kansas City:
Commercial526,817 499,412 448,838 424,194 397,570
Commercial real estate196,646 200,791 192,023 180,714 166,581
Residential mortgage22,195 22,148 20,210 20,352 20,455
Personal25,101 26,994 22,753 22,645 17,792
Total Bank of Kansas City770,759 749,345 683,824 647,905 602,398
TOTAL BOK FINANCIAL$16,022,566 $15,941,154 $15,367,441 $15,124,136 $14,684,136

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

DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
Bank of Oklahoma:
Demand$3,813,128 $4,133,520 $3,834,145 $4,068,088 $3,982,534
Interest-bearing:
Transaction5,706,067 5,971,819 5,783,258 6,018,381 6,199,468
Savings246,122 226,733 225,580 225,694 227,855
Time1,198,022 1,202,274 1,253,137 1,380,566 1,372,250
Total interest-bearing7,150,211 7,400,826 7,261,975 7,624,641 7,799,573
Total Bank of Oklahoma10,963,339 11,534,346 11,096,120 11,692,729 11,782,107
Bank of Texas:
Demand2,571,883 2,627,764 2,689,493 2,565,234 2,511,032
Interest-bearing:
Transaction2,106,905 2,132,099 1,996,223 2,020,817 2,062,063
Savings83,263 77,902 74,674 74,373 76,128
Time530,657 549,740 554,106 536,844 547,371
Total interest-bearing2,720,825 2,759,741 2,625,003 2,632,034 2,685,562
Total Bank of Texas5,292,708 5,387,505 5,314,496 5,197,268 5,196,594
Bank of Albuquerque:
Demand557,200 487,286 520,785 508,224 537,466
Interest-bearing:
Transaction560,684 563,723 529,862 537,156 535,791
Savings47,187 43,672 41,380 41,802 42,088
Time259,630 267,821 281,426 285,890 290,706
Total interest-bearing867,501 875,216 852,668 864,848 868,585
Total Bank of Albuquerque1,424,701 1,362,502 1,373,453 1,373,072 1,406,051
Bank of Arkansas:
Demand31,318 27,252 25,397 19,731 31,002
Interest-bearing:
Transaction265,803 202,857 290,728 284,349 253,691
Savings1,929 1,747 1,573 1,712 1,677
Time21,035 24,983 26,203 28,220 28,277
Total interest-bearing288,767 229,587 318,504 314,281 283,645
Total Bank of Arkansas320,085 256,839 343,901 334,012 314,647
Colorado State Bank & Trust:
Demand413,506 497,318 430,675 403,491 412,532
Interest-bearing:
Transaction610,077 616,697 655,206 601,741 604,665
Savings33,108 31,927 31,398 31,285 31,524
Time271,475 296,224 320,279 322,432 340,006
Total interest-bearing914,660 944,848 1,006,883 955,458 976,195
Total Colorado State Bank & Trust1,328,166 1,442,166 1,437,558 1,358,949 1,388,727
Bank of Arizona:
Demand341,828 326,324 306,425 352,024 271,091
Interest-bearing:
Transaction313,825 358,556 293,319 298,073 295,480
Savings3,277 2,893 4,121 2,726 2,900
Time29,053 29,498 26,750 28,165 28,086
Total interest-bearing346,155 390,947 324,190 328,964 326,466
Total Bank of Arizona687,983 717,271 630,615 680,988 597,557
Bank of Kansas City:
Demand221,812 197,424 234,847 239,609 263,920
Interest-bearing:
Transaction146,405 153,203 150,253 139,260 157,044
Savings1,619 1,378 1,570 1,580 1,618
Time31,502 35,524 36,630 42,262 45,082
Total interest-bearing179,526 190,105 188,453 183,102 203,744
Total Bank of Kansas City401,338 387,529 423,300 422,711 467,664
TOTAL BOK FINANCIAL$20,418,320 $21,088,158 $20,619,443 $21,059,729 $21,153,347


NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
Three Months Ended
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
TAX-EQUIVALENT ASSETS YIELDS
Interest-bearing cash and cash equivalents0.53% 0.29% 0.28% 0.25% 0.27%
Trading securities2.47% 2.86% 2.70% 1.85% 2.55%
Investment securities:
Taxable5.53% 5.41% 5.49% 5.49% 5.51%
Tax-exempt2.22% 1.53% 1.54% 1.56% 1.56%
Total investment securities3.51% 3.03% 3.04% 3.05% 3.04%
Available for sale securities:
Taxable2.06% 2.02% 1.99% 1.92% 1.95%
Tax-exempt4.95% 4.22% 4.15% 4.21% 4.40%
Total available for sale securities2.08% 2.04% 2.01% 1.94% 1.98%
Fair value option securities2.38% 2.32% 2.30% 2.17% 2.28%
Restricted equity securities5.85% 5.95% 5.95% 5.82% 5.79%
Residential mortgage loans held for sale3.75% 3.85% 3.79% 3.37% 3.41%
Loans3.57% 3.55% 3.54% 3.65% 3.59%
Allowance for loan losses
Loans, net of allowance3.63% 3.60% 3.59% 3.70% 3.64%
Total tax-equivalent yield on earning assets2.92% 2.86% 2.83% 2.84% 2.80%
COST OF INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest-bearing transaction0.14% 0.09% 0.08% 0.09% 0.10%
Savings0.09% 0.09% 0.10% 0.11% 0.10%
Time1.21% 1.26% 1.33% 1.36% 1.46%
Total interest-bearing deposits0.34% 0.32% 0.34% 0.35% 0.37%
Funds purchased0.27% 0.11% 0.08% 0.08% 0.09%
Repurchase agreements0.05% 0.04% 0.03% 0.03% 0.04%
Other borrowings0.56% 0.38% 0.30% 0.31% 0.32%
Subordinated debt1.26% 1.13% 1.04% 2.21% 2.52%
Total cost of interest-bearing liabilities0.40% 0.34% 0.32% 0.35% 0.38%
Tax-equivalent net interest revenue spread2.52% 2.52% 2.51% 2.49% 2.42%
Effect of noninterest-bearing funding sources and other0.13% 0.12% 0.10% 0.12% 0.13%
Tax-equivalent net interest margin2.65% 2.64% 2.61% 2.61% 2.55%

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

CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)
Three Months Ended
March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015
Nonperforming assets:
Nonaccruing loans:
Commercial$174,652 $76,424 $33,798 $24,233 $13,880
Commercial real estate9,270 9,001 10,956 20,139 19,902
Residential mortgage57,577 61,240 44,099 45,969 46,487
Personal331 463 494 550 464
Total nonaccruing loans241,830 147,128 89,347 90,891 80,733
Accruing renegotiated loans guaranteed by U.S. government agencies77,597 74,049 81,598 82,368 80,287
Real estate and other repossessed assets29,896 30,731 33,116 35,499 45,551
Total nonperforming assets$349,323 $251,908 $204,061 $208,758 $206,571
Total nonperforming assets excluding those guaranteed by U.S. government agencies$252,176 $155,959 $118,578 $122,673 $123,028
Nonaccruing loans by loan class:
Commercial:
Energy$159,553 $61,189 $17,880 $6,841 $1,875
Services9,512 10,290 10,692 10,944 4,744
Wholesale / retail3,685 2,919 3,058 4,166 4,401
Manufacturing312 331 352 379 417
Healthcare1,023 1,072 1,218 1,278 1,558
Other commercial and industrial567 623 598 625 885
Total commercial174,652 76,424 33,798 24,233 13,880
Commercial real estate:
Residential construction and land development4,789 4,409 4,748 9,367 9,598
Retail1,302 1,319 1,648 3,826 3,857
Office629 651 684 2,360 2,410
Multifamily250 274 185 195
Industrial76 76 76 76 76
Other commercial real estate2,224 2,272 3,615 4,315 3,961
Total commercial real estate9,270 9,001 10,956 20,139 19,902
Residential mortgage:
Permanent mortgage27,497 28,984 30,660 32,187 33,365
Permanent mortgage guaranteed by U.S. government agencies19,550 21,900 3,885 3,717 3,256
Home equity10,530 10,356 9,554 10,065 9,866
Total residential mortgage57,577 61,240 44,099 45,969 46,487
Personal331 463 494 550 464
Total nonaccruing loans$241,830 $147,128 $89,347 $90,891 $80,733
Performing loans 90 days past due1$8,019 $1,207 $101 $99 $523
Gross charge-offs$(23,991) $(4,851) $(5,274) $(2,877) $(2,169)
Recoveries1,519 1,870 3,521 2,206 10,523
Net recoveries (charge-offs)$(22,472) $(2,981) $(1,753) $(671) $8,354
Provision for credit losses$35,000 $22,500 $7,500 $4,000 $
Allowance for loan losses to period end loans1.46% 1.41% 1.33% 1.33% 1.35%
Combined allowance for credit losses to period end loans1.50% 1.43% 1.35% 1.34% 1.35%
Nonperforming assets to period end loans and repossessed assets2.18% 1.58% 1.33% 1.38% 1.40%
Net charge-offs (annualized) to average loans0.56% 0.08% 0.05% 0.02% (0.23)%
Allowance for loan losses to nonaccruing loans1104.89% 180.09% 238.84% 230.67% 255.15%
Combined allowance for credit losses to nonaccruing loans1107.87% 181.46% 243.05% 231.68% 256.39%

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


For Further Information Contact: Joseph Crivelli Investor Relations (918) 595-3027 Andrea Myers Corporate Communications (918) 588-7794

Source:BOK Financial Corporation