form10q.htm
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As filed with the Securities and Exchange Commission on May 8, 2012
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2012
OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _____________ to ______________
Commission File No. 0-19341
BOK FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
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Oklahoma
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73-1373454
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(State or other jurisdiction
of Incorporation or Organization)
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(IRS Employer
Identification No.)
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Bank of Oklahoma Tower
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P.O. Box 2300
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Tulsa, Oklahoma
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74192
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(Address of Principal Executive Offices)
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(Zip Code)
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(918) 588-6000
(Registrant’s telephone number, including area code)
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 subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
,
,Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 68,116,893 shares of common stock ($.00006 par value) as of March 31, 2012.
BOK Financial Corporation
Form 10-Q
Quarter Ended March 31, 2012
Index
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Part I. Financial Information
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Management’s Discussion and Analysis (Item 2)
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1
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Market Risk (Item 3)
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47
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Controls and Procedures (Item 4)
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49
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Consolidated Financial Statements – Unaudited (Item 1)
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50
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Quarterly Financial Summary – Unaudited (Item 2)
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105
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Quarterly Earnings Trend – Unaudited
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107
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Part II. Other Information
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Item 1. Legal Proceedings
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108
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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108
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Item 6. Exhibits
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108
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Signatures
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109
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
Performance Summary
BOK Financial Corporation (“the Company”) reported net income of $83.6 million or $1.22 per diluted share for the first quarter of 2012, compared to $64.8 million or $0.94 per diluted share for the first quarter of 2011 and $67.0 million or $0.98 per diluted share for the fourth quarter of 2011.
Highlights of the first quarter of 2012 included:
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·
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Net interest revenue totaled $173.6 million for the first quarter of 2012, compared to $170.6 million for the first quarter of 2011 and $171.5 million for the fourth quarter of 2011. Net interest margin was 3.19% for the first quarter of 2012, 3.47% for the first quarter of 2011 and 3.20% for the fourth quarter of 2011. The decrease in net interest margin compared with the first quarter of 2011 was largely due to lower yield on available for sale securities, partially offset by growth in average earning assets.
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·
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Fees and commissions revenue totaled $144.3 million for the first quarter of 2012 compared to $123.3 million for the first quarter of 2011 and $131.8 million for the fourth quarter of 2011. The increase in fees and commissions revenue was primarily due to higher mortgage-banking revenue, partially offset by lower interchange fees.
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·
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Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $192.4 million, up $10.8 million over the first quarter of 2011 and down $21.6 million compared to the fourth quarter of 2011. Personnel costs were up $14.8 million and non-personnel expenses were down $4.0 million compared to the first quarter of 2011.
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·
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No provision for credit losses was recorded in the first quarter of 2012 compared to a $6.3 million provision for credit losses in the first quarter of 2011 and a $15.0 million negative provision in the fourth quarter of 2011. Net loans charged off totaled $8.5 million or 0.30% of average loans on an annualized basis for the first quarter of 2012 compared to $10.3 million or 0.39% of average loans on an annualized basis in the first quarter of 2011 and $9.5 million or 0.34% on an annualized basis in the fourth quarter of 2011.
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·
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The combined allowance for credit losses totaled $254 million or 2.20% of outstanding loans at March 31, 2012, down from $263 million or 2.33% of outstanding loans at December 31, 2011. Nonperforming assets totaled $336 million or 2.87% of outstanding loans and repossessed assets at March 31, 2012 compared to $357 million or 3.13% of outstanding loans and repossessed assets at December 31, 2011.
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·
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Outstanding loan balances were $11.6 billion at March 31, 2012, up $308 million over December 31, 2011. Commercial loan balances increased $371 million over December 31, 2011. Consumer loans decreased $38 million, commercial real estate loans decreased $16 million and residential mortgage loans decreased $9.6 million.
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·
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Period-end deposits totaled $18.5 billion at March 31, 2012 compared to $18.8 billion at December 31, 2011. Demand deposit accounts increased $389 million offset by a $446 million decrease in interest-bearing transaction accounts and a $216 million decrease in time deposits.
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·
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The tangible common equity ratio was 9.75% at March 31, 2012 and 9.56% at December 31, 2011. The tangible common equity ratio is a non-GAAP measure of capital strength used by the Company and investors based on shareholders’ equity as defined by generally accepted accounting principles in the United States of America (“GAAP”) minus intangible assets and equity that does not benefit common shareholders.
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·
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The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company’s Tier 1 capital ratios as defined by banking regulations were 13.03% at March 31, 2012 and 13.27% at December 31, 2011.
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·
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The Company paid a cash dividend of $23 million or $0.33 per common share during the first quarter of 2012. On April 24, 2012, the board of directors declared a cash dividend of $0.38 per common share payable on or about May 29, 2012 to shareholders of record as of May 15, 2012.
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Results of Operations
Net Interest Revenue and Net Interest Margin
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 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.
Net interest revenue totaled $173.6 million for the first quarter of 2012 compared to $170.6 million for the first quarter 2011 and $171.5 million for the fourth quarter of 2011. Net interest margin was 3.19% for the first quarter of 2012, 3.47% for the first quarter of 2011 and 3.20% for the fourth quarter of 2011.
The tax-equivalent yield on earning assets was 3.64% for the first quarter of 2012, down 46 basis points from the first quarter of 2011. The available for sale securities portfolio yield decreased 67 basis points to 2.50%. Cash flows from these securities were then reinvested at current lower rates. In addition, loan yields decreased 25 basis points to 4.50% due to a combination of narrowing credit spreads and changes in market interest rates. Funding costs were down 17 basis points compared to the first quarter of 2011. Interest-bearing deposits decreased 17 basis points and the cost of other borrowed funds decreased 12 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 18 basis points in the first quarter of 2012 compared to 17 basis points in the first quarter of 2011.
Average earning assets for the first quarter of 2012 increased $1.7 billion or 8% over first quarter of 2011. Average loans, net of allowance for loan losses, increased $826 million primarily due to growth in average commercial and residential mortgage loans. The average balance of available for sale securities, which consist largely of U.S. government agency issued residential mortgage-backed securities, increased $571 million. We purchased these securities to supplement earnings, especially in a period of declining loan demand, and to manage interest rate risk.
Average deposits increased $937 million over the first quarter of 2011, including a $1.6 billion increase in average demand deposit balances, partially offset by a $371 million decrease in average time deposits and a $313 million decrease in average interest-bearing transaction accounts. Average borrowed funds increased $565 million compared over the first quarter of 2011.
Net interest margin decreased 1 basis point from the fourth quarter of 2011. Yield on average earning assets decreased 5 basis points to 3.64%. Yield on the available for sale securities portfolio increased 12 basis points due to slower prepayment speeds on residential mortgage-backed securities which reduced premium amortization. Yield on the loan portfolio decreased 15 basis points. The cost of interest-bearing liabilities decreased 3 basis points compared to the previous quarter.
Average earning assets were up $192 million over the fourth quarter of 2011. Average outstanding loans, net of allowance for loan losses, increased $298 million due largely to growth in average commercial loan balances. Average fair value option securities decreased $105 million and available for sale securities were essentially flat compared to the prior quarter. Average deposits increased by $85 million during the first quarter of 2012, including a $259 million increase in demand deposits and a $43 million increase in interest-bearing transaction accounts, partially offset by a $239 million decrease in time deposits. The average balances of borrowed funds increased $119 million.
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. Approximately two-thirds of our commercial and commercial real estate loan portfolios are either variable rate or fixed rate 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 1 and in the interest rate sensitivity projections as shown in the Market Risk section of this report.
Table 1 – Volume / Rate Analysis
(In thousands)
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Three Months Ended
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March 31, 2012 / 2011
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Change Due To1
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Yield /
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Change
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Volume
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Rate
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Tax-equivalent interest revenue:
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Funds sold and resell agreements
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$ |
(2 |
) |
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$ |
(2 |
) |
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$ |
– |
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Trading securities
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(130 |
) |
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246 |
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(376 |
) |
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Investment securities:
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Taxable securities
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2,089 |
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2,220 |
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(131 |
) |
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Tax-exempt securities
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(665 |
) |
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(670 |
) |
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5 |
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Total investment securities
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1,424 |
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1,550 |
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(126 |
) |
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Available for sale securities:
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|
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Taxable securities
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(9,358 |
) |
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5,652 |
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(15,010 |
) |
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Tax-exempt securities
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(13 |
) |
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68 |
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(81 |
) |
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Total available for sale securities
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(9,371 |
) |
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5,720 |
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(15,091 |
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Fair value option securities
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257 |
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1,243 |
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(986 |
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Residential mortgage loans held for sale
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429 |
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584 |
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(155 |
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Loans
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3,285 |
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9,464 |
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(6,179 |
) |
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Total tax-equivalent interest revenue
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(4,108 |
) |
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18,805 |
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(22,913 |
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Interest expense:
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Transaction deposits
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(3,758 |
) |
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(171 |
) |
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(3,587 |
) |
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Savings deposits
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(45 |
) |
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29 |
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(74 |
) |
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Time deposits
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(2,741 |
) |
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(1,544 |
) |
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(1,197 |
) |
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Funds purchased
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(8 |
) |
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162 |
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(170 |
) |
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Repurchase agreements
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(776 |
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74 |
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(850 |
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Other borrowings
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542 |
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(609 |
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1,151 |
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Subordinated debentures
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(25 |
) |
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5 |
|
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(30 |
) |
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Total interest expense
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|
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(6,811 |
) |
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|
(2,054 |
) |
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|
(4,757 |
) |
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Tax-equivalent net interest revenue
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|
|
2,703 |
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|
$ |
20,859 |
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|
$ |
(18,156 |
) |
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Change in tax-equivalent adjustment
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|
|
227 |
|
|
|
|
|
|
|
|
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Net interest revenue
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|
$ |
2,930 |
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|
|
|
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|
|
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1 Changes attributable to both volume and yield/rate are allocated to both volume and yield/rate on an equal basis.
Other Operating Revenue
Other operating revenue was $140.4 million for the first quarter of 2012 compared to $117.6 million for the first quarter of 2011 and $138.0 million for the fourth quarter of 2011. Fees and commissions revenue increased $21.1 million over the first quarter of 2011. Net gains on securities, derivatives and other assets increased $1.7 million. Other-than-temporary impairment charges recognized in earnings in the first quarter of 2012 were $877 thousand less than charges recognized in the first quarter of 2011.
Other operating revenue increased $2.4 million over the fourth quarter of 2011. Fees and commissions revenue increased $12.5 million. Net gains on securities, derivatives and other assets decreased $10.2 million. Other-than-temporary impairment charges recognized in earnings were $938 thousand more than charges recognized in the fourth quarter of 2011.
Table 2 – Other Operating Revenue
(In thousands)
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Three Months Ended
March 31,
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Increase
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% Increase
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|
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Three Months Ended
|
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Increase
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% Increase
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|
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2012
|
|
|
2011
|
|
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(Decrease)
|
|
|
(Decrease)
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|
|
Dec. 31, 2011
|
|
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(Decrease)
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(Decrease)
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|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Brokerage and trading revenue
|
|
$ |
31,111 |
|
|
$ |
25,376 |
|
|
$ |
5,735 |
|
|
|
23 |
% |
|
$ |
25,629 |
|
|
$ |
5,482 |
|
|
|
21 |
% |
|
Transaction card revenue
|
|
|
25,430 |
|
|
|
28,445 |
|
|
|
(3,015 |
) |
|
|
(11 |
) |
|
|
25,960 |
|
|
|
(530 |
) |
|
|
(2 |
) |
|
Trust fees and commissions
|
|
|
18,438 |
|
|
|
18,422 |
|
|
|
16 |
|
|
|
– |
|
|
|
17,865 |
|
|
|
573 |
|
|
|
3 |
|
|
Deposit service charges and fees
|
|
|
24,379 |
|
|
|
22,480 |
|
|
|
1,899 |
|
|
|
8 |
|
|
|
24,921 |
|
|
|
(542 |
) |
|
|
(2 |
) |
|
Mortgage banking revenue
|
|
|
33,078 |
|
|
|
17,356 |
|
|
|
15,722 |
|
|
|
91 |
|
|
|
25,438 |
|
|
|
7,640 |
|
|
|
30 |
|
|
Bank-owned life insurance
|
|
|
2,871 |
|
|
|
2,863 |
|
|
|
8 |
|
|
|
– |
|
|
|
2,784 |
|
|
|
87 |
|
|
|
3 |
|
|
Other revenue
|
|
|
9,027 |
|
|
|
8,332 |
|
|
|
695 |
|
|
|
8 |
|
|
|
9,189 |
|
|
|
(162 |
) |
|
|
(2 |
) |
|
Total fees and commissions revenue
|
|
|
144,334 |
|
|
|
123,274 |
|
|
|
21,060 |
|
|
|
17 |
|
|
|
131,786 |
|
|
|
12,548 |
|
|
|
10 |
|
|
Gain (loss) on other assets, net
|
|
|
(356 |
) |
|
|
(68 |
) |
|
|
(288 |
) |
|
|
424 |
|
|
|
1,897 |
|
|
|
(2,253 |
) |
|
|
(119 |
) |
|
Loss on derivatives, net
|
|
|
(2,473 |
) |
|
|
(2,413 |
) |
|
|
(60 |
) |
|
|
2 |
|
|
|
(174 |
) |
|
|
(2,299 |
) |
|
|
1,321 |
|
|
Gain (loss) on fair value option securities, net
|
|
|
(1,733 |
) |
|
|
(3,518 |
) |
|
|
1,785 |
|
|
|
(51 |
) |
|
|
222 |
|
|
|
(1,955 |
) |
|
|
(881 |
) |
|
Gain on available for sale securities
|
|
|
4,331 |
|
|
|
4,902 |
|
|
|
(571 |
) |
|
|
(12 |
) |
|
|
7,080 |
|
|
|
(2,749 |
) |
|
|
(39 |
) |
|
Total other-than-temporary impairment
|
|
|
(505 |
) |
|
|
– |
|
|
|
(505 |
) |
|
|
N/A |
|
|
|
(1,037 |
) |
|
|
532 |
|
|
|
(51 |
) |
|
Portion of loss recognized in (reclassified from) other comprehensive income
|
|
|
(3,217 |
) |
|
|
(4,599 |
) |
|
|
1,382 |
|
|
|
(30 |
) |
|
|
(1,747 |
) |
|
|
(1,470 |
) |
|
|
84 |
|
|
Net impairment losses recognized in earnings
|
|
|
(3,722 |
) |
|
|
(4,599 |
) |
|
|
877 |
|
|
|
(19 |
) |
|
|
(2,784 |
) |
|
|
(938 |
) |
|
|
34 |
|
|
Total other operating revenue
|
|
$ |
140,381 |
|
|
$ |
117,578 |
|
|
$ |
22,803 |
|
|
|
19 |
% |
|
$ |
138,027 |
|
|
$ |
2,354 |
|
|
|
2 |
% |
Certain percentage increases (decreases) in non-fees and commissions revenue are not meaningful for comparison purposes based on the nature of the item.
Fees and commissions revenue
Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 45% of total revenue for the first quarter of 2012, excluding provision for credit losses and gains and losses on other assets, securities and derivatives. 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. We expect continued growth in other operating revenue through offering new products and services and by expanding into markets outside of Oklahoma. 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 includes revenues from securities trading, retail brokerage, customer derivatives and investment banking. Brokerage and trading revenue increased $5.7 million or 23% over the first quarter of 2011. Securities trading revenue totaled $15.9 million for the first quarter of 2012, up $1.3 million over the first quarter of 2011. 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, activities which we believe will be permitted under the Volcker Rule of the Dodd-Frank Act.
Revenue earned from retail brokerage transactions increased $446 thousand or 6% over the first quarter of 2011 to $7.6 million. 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 growth was primarily due to increased market volatility which increased customer demand.
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 $4.6 million for the first quarter of 2012, up $3.5 million over the first quarter of 2011. Customer hedging revenue in the first quarter of 2011 was reduced by a $2.6 million credit loss on certain interest rate derivative contracts. Revenue from to be announced (“TBA”) residential mortgage backed securities which are classified as interest rate derivative contracts sold to our mortgage banking customers increased $1.6 million over the first quarter of 2011, excluding last year’s credit loss. Revenue from energy derivative contracts decreased $1.2 million compared to the first quarter of 2011.
Investment banking includes fees earned upon completion of underwriting and financial advisory service which totaled $3.0 million for the first quarter of 2012, a $486 thousand increase over the first quarter of 2011 related to the timing and volume of completed transactions.
Brokerage and trading revenue increased $5.5 million over the fourth quarter of 2011. Customer derivative revenues increased $4.9 million including the effect of a $1.7 million credit loss on unsettled contracts with MF Global recognized in the fourth quarter. Revenues from TBA securities sold to our mortgage banking customers were up $2.4 million. Retail brokerage fees were up $1.3 million over the fourth quarter of 2011, partially offset by a $598 thousand decrease in investment banking revenues. Securities trading revenue was largely unchanged compared to the fourth quarter of 2011.
We continue to monitor the on-going development of rules to implement the Volcker Rule in Title VI of the Dodd-Frank Act which prohibits banking entities from engaging in proprietary trading as defined by the Dodd-Frank Act and which restricts sponsorship of, or investment in, private equity funds and hedge funds, subject to limited exceptions. On October 11, 2011, regulators of financial institutions released a proposal for implementation of the Volcker Rule scheduled to take effect by July 21, 2012. On April 19, 2012 the Federal Reserve Board issued a statement clarifying that banking entities have until July 21, 2014 (two years from the July 21, 2012 effective date of the Volcker Rule) to conform all of their activities and investments to the requirements of the Volcker Rule. During this two year conformance period, banking entities are required to engage in good faith planning efforts, to enable them to conform their activities and investments to Volcker Rule requirements. Based on the proposed rules, we expect the Company’s trading activity to be largely unaffected, as our trading activities are all done for the benefit of customers and securities traded are mostly exempted under the proposed rules. The Company’s private equity investment activity may be curtailed, but is not expected to result in a material impact to the Company’s financial statements. Final regulations will likely impose additional operating and compliance costs as presently proposed.
Title VII of the Dodd-Frank Act subjects nearly all derivative transactions to Commodity Futures Trading Commission (“CFTC”) or Securities and Exchange Commission (“SEC”) regulations. Title VII, among other things, imposes registration, recordkeeping, reporting, capital and margin, as well as business conduction requirements on swap dealers and major swap participants. The CFTC and SEC delayed the effective dates of a large portion of the proposed regulations under Title VII until December 31, 2012. On April 18, 2012, the CFTC and SEC both approved interim final rules on the definition of swaps dealers. The interim final rule has not yet been made publicly available by the CFTC and the SEC. Based on summaries of the interim final rule issued by the Commissions, however, we currently understand that the interim final rule provides that entities transacting less than $8 billion in swaps over a 12 month period, or a de minimis volume, will be exempt from the definition of swaps dealer, that swaps entered into for hedging purposes or in connection with originating a loan will not be considered dealing activity, and that the rule allows for “limited purpose” swap dealers, subject to registration and regulation as swap dealers only for specified categories of swaps. If these descriptions of the interim final rule are accurate, if the interim final rule does not contain other provisions that would negate or limit the foregoing elements of the rule, and if the interim final rule goes into effect as approved by the Commissions, then the Company anticipates that one or more of its subsidiaries may be required to register as a “limited purpose swap dealer” by December 31, 2012 with the CFTC, and that, though the ultimate impact of Title VII remains uncertain, its full implementation is likely not to impose significantly higher compliance costs on the Company.
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 for the first quarter of 2012 decreased $3.0 million or 11% compared to the first quarter of 2011. Revenues from the processing of
transactions on behalf of the members of our TransFund electronic funds transfer (“EFT”) network totaled $13.3 million, up $1.3 million or 11% over the first quarter of 2011, due primarily to increased transaction volumes. Merchant services fees paid by customers for account management and electronic processing of transactions totaled $7.9 million, largely unchanged compared to the prior year.
Revenue from interchange fees paid by merchant banks for transactions processed from debit cards issued by the Company totaled $4.2 million for the first quarter of 2012 compared to $8.6 million for the first quarter of 2011. This decrease was primarily due to the impact of interchange fee regulations, commonly referred to as the Durbin Amendment, which became effective on October 1, 2011, partially offset by increased transaction volumes. Our experience in the first quarter of 2012 was consistent with our previously disclosed expectation of a decline of $20 million to $25 million annually in our transaction card revenue based on the final rule.
Transaction card revenue decreased $530 thousand compared to the fourth quarter of 2011. Revenues from processing transactions on behalf of members of our TransFund EFT network decreased $468 thousand, merchant services fees decreased $121 thousand and revenue from interchange fees paid by merchant banks for transactions processed from debit cards issued by the Company increased $59 thousand.
Trust fees and commissions totaled $18.4 million, consistent with the first quarter of 2011. We continue to voluntarily waive 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 $2.6 million for the first quarter of 2012, $1.2 million for the first quarter of 2011 and $2.4 million for the fourth quarter of 2011. The fair value of trust assets administered by the Company totaled $35.1 billion at March 31, 2012, $32.0 billion at March 31, 2011 and $34.4 billion at December 31, 2011. Trust fees and commissions increased $573 thousand over the fourth quarter of 2011 primarily due to an increase in the fair value of trust assets and the timing of fees.
Deposit service charges and fees increased $1.9 million or 8% over the first quarter of 2011. Commercial account service charge revenue totaled $8.5 million, up $1.3 million or 17% over the prior year. The average earnings credit, a non-cash method for commercial customers to avoid incurring charges for deposit services based on account balances, decreased 25 basis points compared to the prior year consistent with the movement in market interest rates. Overdraft fees totaled $13.5 million for the first quarter of 2012, up $478 thousand or 4% over the first quarter of 2011. Service charges on deposit accounts with a standard monthly fee increased $187 thousand or 13% to $1.6 million.
Deposit service charges and fees were down $542 thousand compared to the previous quarter. Overdraft fees were down $1.9 million, partially offset by a $1.3 million increase in commercial account service charges. Service charges on deposit accounts with a standard monthly fee were flat compared to the fourth quarter of 2011.
Mortgage banking revenue grew by $15.7 million over the first quarter of 2011. Revenue from originating and marketing residential mortgage loans totaled $23.1 million, up $15.6 million or 207% over the first quarter of 2011. The unpaid principal balance of residential mortgage loans held for sale increased $109 million or 90% and unfunded mortgage loan commitments increased $143 million or 90%. Mortgage loans funded for sale totaled $746 million in the first quarter of 2012 compared to $420 million in the first quarter of 2011. A 93 basis point decrease in mortgage loan interest rates and expanded government programs such as Home Affordable Refinance Program (“HARP II”) have stimulated mortgage loan production. In addition, the Company has increased the number of mortgage loan officers by approximately 18% during the first quarter of 2011, focusing on growth in Texas, Colorado and Kansas/Missouri markets. We have expanded our mortgage banking operations to include correspondent lending. All mortgages originated by correspondent lenders are evaluated for compliance with our underwriting standards. Mortgage loans funded for sale of $746 million includes $48 million originated by correspondent lenders. Mortgage servicing revenue increased $171 thousand or 2% over the first quarter of 2011 to $10.0 million. The outstanding principal balance of residential mortgage loans serviced for others totaled $11.4 billion, a $176 million decrease compared to the first quarter 2011.
Mortgage banking revenue increased $7.6 million over the fourth quarter of 2011 due primarily to a $7.7 million increase in revenue from originating and marketing residential mortgage loans. Residential mortgage loans funded for sale decreased $55 million compared to the previous quarter. The unpaid principal balance of residential mortgage loans held for sale increased $53 million or 30% over the fourth quarter of 2011 and unfunded mortgage loan commitments increased $113 million or 59%.
Table 3 – Mortgage Banking Revenue
(In thousands)
| |
|
Three Months Ended
March 31,
|
|
|
|
|
|
%
|
|
|
Three Months
|
|
|
|
|
|
%
|
|
| |
|
2012
|
|
|
2011
|
|
|
Increase
(Decrease)
|
|
|
Increase
(Decrease)
|
|
|
Ended
Dec. 31, 2011
|
|
|
Increase
(Decrease)
|
|
|
Increase
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originating and marketing revenue
|
|
$ |
23,081 |
|
|
$ |
7,529 |
|
|
$ |
15,552 |
|
|
|
207 |
% |
|
$ |
15,342 |
|
|
$ |
7,739 |
|
|
|
50 |
% |
|
Servicing revenue
|
|
|
9,997 |
|
|
|
9,827 |
|
|
|
170 |
|
|
|
2 |
|
|
|
10,096 |
|
|
|
(99 |
) |
|
|
(1 |
) |
|
Total mortgage revenue
|
|
|
33,078 |
|
|
$ |
17,356 |
|
|
$ |
15,722 |
|
|
|
91 |
% |
|
$ |
25,438 |
|
|
$ |
7,640 |
|
|
|
30 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans funded for sale
|
|
$ |
746,241 |
|
|
$ |
419,684 |
|
|
$ |
326,557 |
|
|
|
78 |
% |
|
$ |
753,215 |
|
|
$ |
(6,974 |
) |
|
|
(1 |
)% |
|
Residential mortgage loan refinances to total funded
|
|
|
|
|
|
|
67 |
% |
|
|
|
|
|
|
|
|
|
|
66 |
% |
|
|
|
|
|
|
|
|
| |
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012
|
|
|
2011
|
|
|
Increase
|
|
|
% Increase
|
|
|
Dec. 31, 2011
|
|
|
Increase
|
|
|
% Increase
|
|
|
Outstanding principal balance of residential mortgage loans serviced for others
|
|
$ |
11,378,806 |
|
|
$ |
11,202,626 |
|
|
$ |
176,180 |
|
|
|
2 |
% |
|
$ |
11,300,986 |
|
|
$ |
77,820 |
|
|
|
1 |
% |
Net gains on securities, derivatives and other assets
The Company sold $892 million of U.S government agency mortgage-backed securities held as available for sale and recognized a gain of $11.7 million in the first quarter of 2012. We recognized $4.9 million of gains on sales of $793 million of available for sale securities in the first quarter of 2011 and $7.1 million of net gains on sales of $667 million of available for sale securities in the fourth quarter of 2011. In each of these periods, securities were sold either because they had reached their expected maximum potential return or to mitigate exposure to prepayment risk.
We also sold $107 million of privately issued residential mortgage-backed securities at a $7.4 million loss in March 2012. The fair value of these securities increased nearly 10% between December 31, 2011 and February 29, 2012. In response to this increase in fair value, management evaluated all privately-issued residential mortgage-backed securities to determine which securities we did not intend to sell based on their expected performance. All securities which we believe to have reached their expected maximum potential were sold in March. We do not intend to sell the remaining $371 million of privately issued residential mortgage-backed securities.
We also maintain a portfolio of residential mortgage backed securities issued by U.S. government agencies and interest rate derivative contracts designated as an economic hedge of the changes in the fair value of our mortgage servicing rights. The fair value of our mortgage servicing rights fluctuate due to changes in prepayment speeds and other assumptions as more fully described in Note 5 to the Consolidated Financial Statements. As benchmark mortgage interest rates increase, prepayment speeds slow and the value of our mortgage servicing rights increase. As benchmark mortgage rates fall, prepayment speeds increase and the value of our mortgage servicing rights decrease.
Changes in the fair value of mortgage servicing rights are highly dependent on changes in rates offered to borrowers or primary mortgage rates and assumptions about servicing revenue, servicing costs and discount rates. Changes in the fair value of residential mortgage backed securities and derivative contracts are highly dependent on changes in rates required by investors or secondary mortgage rates. 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 assumptions and the spread between the primary and secondary rate can cause significant quarterly earnings volatility as shown in Table 4.
Table 4 following shows the relationship between changes in the fair value of mortgage servicing rights and financial instruments designated as an economic hedge.
Table 4 – Gain (Loss) on Mortgage Servicing Rights
(In thousands)
| |
|
Three Months Ended
|
|
| |
|
March 31, 2012
|
|
|
Dec. 31,
2011
|
|
|
March 31, 2011
|
|
| |
|
|
|
|
|
|
|
|
|
|
Gain (loss) on mortgage hedge derivative contracts, net
|
|
$ |
(2,445 |
) |
|
$ |
121 |
|
|
$ |
(2,419 |
) |
|
Gain (loss) on fair value option securities, net
|
|
|
(2,393 |
) |
|
|
222 |
|
|
|
(3,518 |
) |
|
Gain (loss) on economic hedge of mortgage servicing rights
|
|
|
(4,838 |
) |
|
|
343 |
|
|
|
(5,937 |
) |
|
Gain (loss) on change in fair value of mortgage servicing rights
|
|
|
7,127 |
|
|
|
(5,261 |
) |
|
|
3,129 |
|
|
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges
|
|
$ |
2,289 |
|
|
$ |
(4,918 |
) |
|
$ |
(2,808 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest revenue on mortgage trading securities
|
|
$ |
3,165 |
|
|
$ |
4,436 |
|
|
$ |
3,058 |
|
As more fully discussed in Note 2 to the Consolidated Financial Statements, we recognized other-than-temporary impairment losses on certain privately issued residential mortgage-backed securities of $3.7 million during the first quarter of 2012. These losses primarily related to additional declines in projected cash flows as a result of increased home price depreciation on the remaining privately issued residential mortgage-backed securities that we do not intend to sell. We recognized other-than-temporary impairment losses in earnings of $4.6 million in the first quarter of 2011 and $2.8 million in the fourth quarter of 2011.
Other Operating Expense
Other operating expense for the first quarter of 2012 totaled $185.2 million, up $6.8 million or 4% over the first quarter of 2011. Changes in the fair value of mortgage servicing rights decreased operating expense $7.1 million in the first quarter of 2012 and $3.1 million in the first quarter of 2011. Excluding changes in the fair value of mortgage servicing rights, operating expenses were up $10.8 million or 6% over the first quarter of 2011. Personnel expenses increased $14.8 million or 15%. Non-personnel expenses decreased $4.0 million or 5%.
Excluding changes in the fair value of mortgage servicing rights, operating expenses were down $21.6 million compared to the previous quarter. Personnel expenses decreased $6.4 million and non-personnel expenses decreased $15.2 million.
Table 5 – Other Operating Expense
(In thousands)
| |
|
Three Months Ended
|
|
|
|
|
|
%
|
|
|
Three Months Ended
|
|
|
|
|
|
%
|
|
| |
|
March 31,
|
|
|
Increase
|
|
|
Increase
|
|
|
Dec. 31,
|
|
|
Increase
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
2011
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular compensation
|
|
$ |
63,132 |
|
|
$ |
60,804 |
|
|
$ |
2,328 |
|
|
|
4 |
% |
|
$ |
63,759 |
|
|
$ |
(627 |
) |
|
|
(1 |
)% |
|
Incentive compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash-based
|
|
|
26,241 |
|
|
|
19,555 |
|
|
|
6,686 |
|
|
|
34 |
|
|
|
27,882 |
|
|
|
(1,641 |
) |
|
|
(6 |
) |
|
Stock-based
|
|
|
6,625 |
|
|
|
3,431 |
|
|
|
3,194 |
|
|
|
93 |
|
|
|
14,598 |
|
|
|
(7,973 |
) |
|
|
(55 |
) |
|
Total incentive compensation
|
|
|
32,866 |
|
|
|
22,986 |
|
|
|
9,880 |
|
|
|
43 |
|
|
|
42,480 |
|
|
|
(9,614 |
) |
|
|
(23 |
) |
|
Employee benefits
|
|
|
18,771 |
|
|
|
16,204 |
|
|
|
2,567 |
|
|
|
16 |
|
|
|
14,890 |
|
|
|
3,881 |
|
|
|
26 |
|
|
Total personnel expense
|
|
|
114,769 |
|
|
|
99,994 |
|
|
|
14,775 |
|
|
|
15 |
|
|
|
121,129 |
|
|
|
(6,360 |
) |
|
|
(5 |
) |
|
Business promotion
|
|
|
4,388 |
|
|
|
4,624 |
|
|
|
(236 |
) |
|
|
(5 |
) |
|
|
5,868 |
|
|
|
(1,480 |
) |
|
|
(25 |
) |
|
Professional fees and services
|
|
|
7,599 |
|
|
|
7,458 |
|
|
|
141 |
|
|
|
2 |
|
|
|
7,664 |
|
|
|
(65 |
) |
|
|
(1 |
) |
|
Net occupancy and equipment
|
|
|
16,023 |
|
|
|
15,604 |
|
|
|
419 |
|
|
|
3 |
|
|
|
16,826 |
|
|
|
(803 |
) |
|
|
(5 |
) |
|
Insurance
|
|
|
3,866 |
|
|
|
6,186 |
|
|
|
(2,320 |
) |
|
|
(38 |
) |
|
|
3,636 |
|
|
|
230 |
|
|
|
6 |
|
|
Data processing & communications
|
|
|
22,144 |
|
|
|
22,503 |
|
|
|
(359 |
) |
|
|
(2 |
) |
|
|
26,599 |
|
|
|
(4,455 |
) |
|
|
(17 |
) |
|
Printing, postage and supplies
|
|
|
3,311 |
|
|
|
3,082 |
|
|
|
229 |
|
|
|
7 |
|
|
|
3,637 |
|
|
|
(326 |
) |
|
|
(9 |
) |
|
Net losses & operating expenses of repossessed assets
|
|
|
2,245 |
|
|
|
6,015 |
|
|
|
(3,770 |
) |
|
|
(63 |
) |
|
|
6,180 |
|
|
|
(3,935 |
) |
|
|
(64 |
) |
|
Amortization of intangible assets
|
|
|
575 |
|
|
|
896 |
|
|
|
(321 |
) |
|
|
(36 |
) |
|
|
895 |
|
|
|
(320 |
) |
|
|
(36 |
) |
|
Mortgage banking costs
|
|
|
7,573 |
|
|
|
6,471 |
|
|
|
1,102 |
|
|
|
17 |
|
|
|
10,154 |
|
|
|
(2,581 |
) |
|
|
(25 |
) |
|
Change in fair value of mortgage servicing rights
|
|
|
(7,127 |
) |
|
|
(3,129 |
) |
|
|
(3,998 |
) |
|
|
128 |
|
|
|
5,261 |
|
|
|
(12,388 |
) |
|
|
(235 |
) |
|
Other expense
|
|
|
9,871 |
|
|
|
8,745 |
|
|
|
1,126 |
|
|
|
13 |
|
|
|
11,348 |
|
|
|
(1,477 |
) |
|
|
(13 |
) |
|
Total other operating expense
|
|
$ |
185,237 |
|
|
$ |
178,449 |
|
|
$ |
6,788 |
|
|
|
4 |
% |
|
$ |
219,197 |
|
|
$ |
(33,960 |
) |
|
|
(15 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees (full-time equivalent)
|
|
|
4,630 |
|
|
|
4,533 |
|
|
|
97 |
|
|
|
2 |
% |
|
|
4,511 |
|
|
|
119 |
|
|
|
3 |
% |
Certain percentage increases (decreases) are not meaningful for comparison purposes.
Personnel expense
Regular compensation, which consists of salaries and wages, overtime pay and temporary personnel costs, increased $2.3 million or 4% over the first quarter of 2011 primarily due to standard annual merit increases which were effective in the second quarter of 2011. In addition, the Company changed the timing of annual merit increases to March 1 from April 1 for a majority of its staff beginning in 2012.
Incentive compensation increased $9.9 million or 43% over the first quarter of 2011. 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 $6.7 million or 34% compared to the first quarter of 2011. Cash-based incentive compensation related to brokerage and trading revenue was up $6.3 million over the first quarter of 2011. Cash-based incentive compensation for other business lines was essentially flat compared to the first quarter of 2011.
The Company also provides stock-based incentive compensation plans. Stock-based compensation plans include both equity and liability awards. Compensation expense for equity awards decreased $532 thousand compared to the first quarter of 2012. Expense for equity awards is based on the grant-date fair value of the awards and is unaffected by subsequent changes in fair value. Stock-based compensation expense also includes incentive compensation that will ultimately be settled in cash indexed to investment performance or changes in earnings per share. Compensation expense for liability awards increased $3.7 million over the first quarter of 2011 primarily due to a $3.0 million increase related to the BOK Financial Corp. True-Up Plan. Approved by shareholders on April 26, 2011, the True-Up Plan is designed to adjust annual and long-term performance-based incentive compensation for certain senior executives either upward or downward based on the earnings per share performance and compensation of comparable senior executives at peer banks.
Employee benefit expense increased $2.6 million or 16% over the first quarter of 2011 due primarily to increased medical insurance costs and payroll taxes.
Personnel expense decreased $6.4 million compared to the fourth quarter of 2011 due primarily to reduced incentive compensation expense, partially offset by a seasonal increase in payroll taxes. Incentive compensation decreased $9.6 million. Stock-based incentive compensation decreased $8.0 million due primarily to the timing of accruals for the BOK Financial Corporation 2011 True-Up Plan and first quarter performance of BOK Financial stock and other investments. Cash based incentive compensation decreased $1.6 million. Employee benefits expense increased $3.9 million due primarily to seasonal changes in payroll taxes.
Non-personnel operating expenses
Non-personnel operating expenses, excluding changes in the fair value of mortgage servicing rights, decreased $4.0 million compared to the first quarter of 2011. Net losses and operating expenses of repossessed assets decreased $3.8 million compared to the first quarter of 2011. FDIC insurance expense decreased $2.3 million due to the impact of a change to a risk-sensitive assessment based on assets rather than deposits. Mortgage banking costs increased $1.1 million and other expenses increased $1.1 million.
Excluding changes in the fair value of mortgage servicing rights, non-personnel operating expenses decreased $15.2 million compared to the fourth quarter of 2011 across most non-personnel expense categories. Data processing and communications expense decreased $4.5 million due to the favorable resolution of a dispute with a service provider. Net losses and operating expenses of repossessed assets were down $3.9 million due primarily to decreased write-downs and net losses on sales of repossessed assets. Mortgage banking costs were down $2.6 million due primarily to lower foreclosure costs on residential mortgage loans serviced for others.
Income Taxes
Income tax expense was $45.5 million or 35% of book taxable income for the first quarter of 2012 compared to $38.8 million or 37% of book taxable income for the first quarter of 2011 and $37.4 million or 36% of book taxable income for the fourth quarter of 2011. The decrease in the effective tax rate over the first quarter of 2011 was due to the increased utilization of income tax credits and the decrease in the accrual for state uncertain tax positions.
During the first quarter of 2012, the Internal Revenue Service completed an audit of our federal income tax return for the year ended December 31, 2008. No changes were required.
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. The reserve for uncertain tax positions was $13 million at March 31, 2012, $12 million at December 31, 2011 and $14 million at March 31, 2011.
Lines of Business
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 and all mortgage banking activities. Wealth management provides fiduciary services, brokerage and trading, private bank services and investment advisory services in all markets. Wealth management also originates loans for high net worth clients.
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 after allocation of funds, certain indirect expenses, taxes based on statutory rates, actual net credit losses and capital costs. 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 is 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 6, net income attributable to our lines of business increased $17.0 million over the first quarter of 2011. The increase in net income attributed to our lines of business was due primarily to our Consumer Banking segment. Increased mortgage banking revenue was partially offset by decreased transaction card revenue due to changes as a result of debit card interchange fee revenue effective in the third quarter of 2011. In addition, brokerage and trading revenue attributed mostly to the Wealth Management segment was up and net interest revenue increased for all of our lines of business. Net income attributed to funds management and other also increased $1.8 million over the first quarter of 2011 primarily due to increased gains on securities in excess of other-than-temporary charges and a decrease in operating expenses attributed to the funds management unit. Decreased provision for credit losses in excess of net charge-offs was partially offset by a decline in net interest revenue due to lower interest rates.
Table 6 – Net Income by Line of Business
(In thousands)
| |
|
Three Months Ended March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Commercial banking
|
|
$ |
33,029 |
|
|
$ |
28,733 |
|
|
Consumer banking
|
|
|
19,540 |
|
|
|
6,518 |
|
|
Wealth management
|
|
|
3,921 |
|
|
|
4,195 |
|
|
Subtotal
|
|
|
56,490 |
|
|
|
39,446 |
|
|
Funds management and other
|
|
|
27,125 |
|
|
|
25,328 |
|
|
Total
|
|
$ |
83,615 |
|
|
$ |
64,774 |
|
Commercial Banking
Commercial Banking contributed $33.0 million to consolidated net income in the first quarter of 2012, up $4.3 million or 15% over the first quarter of 2011. Net interest revenue increased $3.4 million or 5% primarily due to a $783 million increase in average loan balances, partially offset by a decrease in the loan yield compared to the first quarter of 2011. Fees and commissions revenue increased $3.3 million or 9%. Other operating expenses were flat compared to the first quarter of 2011.
Table 7 – Commercial Banking
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue from external sources
|
|
$ |
89,731 |
|
|
$ |
83,686 |
|
|
$ |
6,045 |
|
|
Net interest expense from internal sources
|
|
|
(12,126 |
) |
|
|
(9,436 |
) |
|
|
(2,690 |
) |
|
Total net interest revenue
|
|
|
77,605 |
|
|
|
74,250 |
|
|
|
3,355 |
|
|
Net loans charged off
|
|
|
6,416 |
|
|
|
6,776 |
|
|
|
(360 |
) |
|
Net interest revenue after net loans charged off
|
|
|
71,189 |
|
|
|
67,474 |
|
|
|
3,715 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
38,769 |
|
|
|
35,430 |
|
|
|
3,339 |
|
|
Gain on financial instruments and other assets, net
|
|
|
44 |
|
|
|
– |
|
|
|
44 |
|
|
Other operating revenue
|
|
|
38,813 |
|
|
|
35,430 |
|
|
|
3,383 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
24,866 |
|
|
|
23,227 |
|
|
|
1,639 |
|
|
Net losses and expenses of repossessed assets
|
|
|
667 |
|
|
|
4,700 |
|
|
|
(4,033 |
) |
|
Other non-personnel expense
|
|
|
17,739 |
|
|
|
17,852 |
|
|
|
(113 |
) |
|
Corporate allocations
|
|
|
12,672 |
|
|
|
10,099 |
|
|
|
2,573 |
|
|
Total other operating expense
|
|
|
55,944 |
|
|
|
55,878 |
|
|
|
66 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
54,058 |
|
|
|
47,026 |
|
|
|
7,032 |
|
|
Federal and state income tax
|
|
|
21,029 |
|
|
|
18,293 |
|
|
|
2,736 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
33,029 |
|
|
$ |
28,733 |
|
|
$ |
4,296 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
10,131,453 |
|
|
$ |
8,992,933 |
|
|
$ |
1,138,520 |
|
|
Average loans
|
|
|
8,892,639 |
|
|
|
8,109,495 |
|
|
|
783,144 |
|
|
Average deposits
|
|
|
8,403,643 |
|
|
|
7,494,839 |
|
|
|
908,804 |
|
|
Average invested capital
|
|
|
867,690 |
|
|
|
861,980 |
|
|
|
5,710 |
|
|
Return on average assets
|
|
|
1.31 |
% |
|
|
1.30 |
% |
|
|
1 |
bp |
|
Return on invested capital
|
|
|
15.31 |
% |
|
|
13.52 |
% |
|
|
179 |
bp |
|
Efficiency ratio
|
|
|
48.07 |
% |
|
|
50.95 |
% |
|
|
(288 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.29 |
% |
|
|
0.34 |
% |
|
|
(5 |
) bp |
The Company has focused on development of banking services for small business. As part of this initiative, small business banking activities were transferred to the Commercial Banking segment from the Consumer Banking segment in the second quarter of 2011. This transfer increased Commercial Banking net income by approximately $1.0 million in the first quarter of 2012 compared to the first quarter of 2011. Net interest revenue increased $1.6 million. Average deposits increased $469 million and average loans increased $12 million primarily due to the transfer. Other operating revenue increased $810 thousand and operating expenses increased $1.4 million.
Other operating revenue increased $3.4 million or 10% over the first quarter of 2011 due primarily to increased deposit service charge and transaction card revenues. The increase in deposit service charge revenue related to additional service charge revenue from the transfer of the small business banking activities and increased service charges as a result of
decreased earnings credit available to our treasury services customers.
Operating expenses were flat compared to the first quarter of 2011. Personnel costs increased $1.6 million or 7% due primarily to increased incentive compensation and standard annual merit increases. Net losses and operating expenses on repossessed assets decreased $4.0 million compared to the first quarter of 2011, primarily due to decreased write-downs and losses on sales of repossessed assets. Other non-personnel expenses were primarily flat compared to the prior year. Corporate expense allocations increased due primarily to increased customer loan and deposit activity.
The average outstanding balance of loans attributed to Commercial Banking was $8.9 billion for the first quarter of 2012, up $783 million over the first quarter of 2011. 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. Net Commercial Banking loans charged off decreased $360 thousand compared to the first quarter of 2011 to $6.4 million or 0.29% of average loans attributed to this line of business on an annualized basis. The decrease in net loans charged off was primarily due to a decrease in losses on commercial real estate loans.
Average deposits attributed to commercial banking were $8.4 billion, up $909 million or 12% over the first quarter of 2011. The transfer of small business banking activities to the Commercial Banking segment contributed $469 million to this increase. Average balances attributed to our energy customers increased $499 million or 67% and average balances attributed to our commercial & industrial loan customers increased $268 million or 9%. Average balances attributed to our treasury services customers decreased $340 million or 16% due primarily to a $220 million or 24% increase in average balances held by states and local municipalities offset by a $561 million or 46% decrease in average balances held by our other treasury services customers.
Consumer Banking
Consumer Banking services are provided through five primary distribution channels: traditional branches, supermarket branches, the 24-hour ExpressBank call center, internet banking and mobile banking.
The Consumer Banking segment contributed $19.5 million to consolidated net income for the first quarter of 2012, up $13.0 million over the first quarter of 2011 due primarily to growth in mortgage banking revenues. Revenue from mortgage loan production grew $15.5 million over the first quarter of 2011. Changes in fair value of our mortgage servicing rights, net of economic hedge, increased net income attributed to Consumer Banking by $1.4 million in the first quarter of 2012 and decreased net income attributed to Consumer Banking by $1.7 million in the first quarter of 2011.
Table 8 – Consumer Banking
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue from external sources
|
|
$ |
23,947 |
|
|
$ |
18,664 |
|
|
$ |
5,283 |
|
|
Net interest revenue from internal sources
|
|
|
6,120 |
|
|
|
9,405 |
|
|
|
(3,285 |
) |
|
Total net interest revenue
|
|
|
30,067 |
|
|
|
28,069 |
|
|
|
1,998 |
|
|
Net loans charged off
|
|
|
1,432 |
|
|
|
2,682 |
|
|
|
(1,250 |
) |
|
Net interest revenue after net loans charged off
|
|
|
28,635 |
|
|
|
25,387 |
|
|
|
3,248 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
55,934 |
|
|
|
43,419 |
|
|
|
12,515 |
|
|
Loss on financial instruments and other assets, net
|
|
|
(4,838 |
) |
|
|
(5,937 |
) |
|
|
1,099 |
|
|
Other operating revenue
|
|
|
51,096 |
|
|
|
37,482 |
|
|
|
13,614 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
21,123 |
|
|
|
21,046 |
|
|
|
77 |
|
|
Net losses and expenses of repossessed assets
|
|
|
215 |
|
|
|
570 |
|
|
|
(355 |
) |
|
Change in fair value of mortgage servicing rights
|
|
|
(7,127 |
) |
|
|
(3,129 |
) |
|
|
(3,998 |
) |
|
Other non-personnel expense
|
|
|
23,221 |
|
|
|
20,645 |
|
|
|
2,576 |
|
|
Corporate allocations
|
|
|
10,318 |
|
|
|
13,069 |
|
|
|
(2,751 |
) |
|
Total other operating expense
|
|
|
47,750 |
|
|
|
52,201 |
|
|
|
(4,451 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
31,981 |
|
|
|
10,668 |
|
|
|
21,313 |
|
|
Federal and state income tax
|
|
|
12,441 |
|
|
|
4,150 |
|
|
|
8,291 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
19,540 |
|
|
$ |
6,518 |
|
|
$ |
13,022 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
5,819,073 |
|
|
$ |
6,120,855 |
|
|
$ |
(301,782 |
) |
|
Average loans
|
|
|
2,131,316 |
|
|
|
1,995,123 |
|
|
|
136,193 |
|
|
Average deposits
|
|
|
5,615,055 |
|
|
|
5,938,691 |
|
|
|
(323,636 |
) |
|
Average invested capital
|
|
|
286,392 |
|
|
|
271,192 |
|
|
|
15,200 |
|
|
Return on average assets
|
|
|
1.35 |
% |
|
|
0.43 |
% |
|
|
92 |
bp |
|
Return on invested capital
|
|
|
27.44 |
% |
|
|
9.75 |
% |
|
|
1,769 |
bp |
|
Efficiency ratio
|
|
|
63.81 |
% |
|
|
77.40 |
% |
|
|
(1,359 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.27 |
% |
|
|
0.55 |
% |
|
|
(28 |
) bp |
|
Mortgage loans funded for sale
|
|
$ |
746,241 |
|
|
$ |
419,684 |
|
|
$ |
326,557 |
|
| |
|
March 31, 2012
|
|
|
March 31, 2011
|
|
|
Increase
(Decrease)
|
|
|
Banking locations
|
|
|
212 |
|
|
|
208 |
|
|
|
4 |
|
|
Mortgage loans servicing portfolio1
|
|
$ |
12,442,937 |
|
|
$ |
12,075,328 |
|
|
$ |
367,609 |
|
|
1
|
Includes outstanding principal for loans serviced for affiliates
|
Net interest revenue from Consumer Banking activities increased $2.0 million or 7% compared to the first quarter of 2011 primarily due to growth in average loans. Average loan balances were up $136 million or 7% of the prior year. Other consumer loans increased, partially offset by decreased balances of indirect automobile loans. The Company previously disclosed its decision to exit the indirect automobile loan business in the first quarter of 2009.
Fees and commissions revenue increased $12.5 million over the first quarter of 2011. Mortgage banking revenue was up $15.7 million or 90% over the prior year due primarily to increased residential mortgage loan originations and commitments. Transaction card revenues were down $4.0 million or 43% compared to the prior year due primarily to the impact of interchange fee regulations which became effective on October 1, 2011. Deposit service charges decreased $875 thousand primarily related to service fees on small business deposits transferred to the Commercial Banking segment.
Excluding the change in the fair value of mortgage servicing rights, operating expenses were flat compared to the first quarter of 2011.
Net loans charged off by the Consumer Banking unit decreased $1.3 million compared to the first quarter of 2011. Net consumer banking charge-offs include residential mortgage loans, indirect automobile loans, overdrawn deposit accounts and other direct consumer loans.
Average consumer deposits decreased $324 million or 5% compared to the first quarter of 2011 primarily due to the transfer of small business banking to the Commercial Banking segment, offset by some growth in Consumer Banking deposits. Average time deposits decreased $269 million or 12% and average demand deposits decreased $143 million. Average interest-bearing transaction accounts increased $54 million or 2%.
Our Consumer Banking division originates, markets and services conventional and government-sponsored residential mortgage loans for all of our geographical markets. We funded $814 million of mortgage loans in the first quarter of 2012 and $457 million in the first quarter of 2011. Approximately 34% of our mortgage loans funded were in the Oklahoma market, 15% in the New Mexico market, 13% in the Texas market and 13% in the Colorado market. In addition, 6% of our mortgage loan fundings came from correspondent lenders. Mortgage loan fundings included $746 million of mortgage loans funded for sale in the secondary market and $68 million funded for retention within the consolidated group. At March 31, 2012, we have $230 million of residential mortgage loans held for sale and outstanding commitments to originate $302 million of residential mortgage loans. A 93 basis point decrease in mortgage loan interest rates and government programs such as HARP II have stimulated mortgage loan production. We increased the number of mortgage loan officers by approximately 18% during the first quarter of 2011, focusing on growth in Texas, Colorado and Kansas/Missouri markets.
At March 31, 2012, the Consumer Banking division services $11.4 billion of mortgage loans serviced for others and $1.0 billion of loans retained within the consolidated group. Approximately 97% of the mortgage loans serviced was to borrowers in our primary geographical market areas. The performance of residential mortgage loans serviced for others continues to improve. Loan past due 90 days or more decreased to $109 million or 0.96% of loans serviced for others at March 31, 2012 from $136 million or 1.20% of loans serviced for others at December 31, 2011. Mortgage servicing revenue increased $115 thousand or 1% over the first quarter of 2011 to $10.0 million.
Wealth Management
Wealth Management contributed $3.9 million to consolidated net income in first quarter of 2012 compared to $4.2 million in first quarter of 2011.
Table 9 – Wealth Management
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue from external sources
|
|
$ |
6,747 |
|
|
$ |
7,796 |
|
|
$ |
(1,049 |
) |
|
Net interest revenue from internal sources
|
|
|
5,113 |
|
|
|
3,134 |
|
|
|
1,979 |
|
|
Total net interest revenue
|
|
|
11,860 |
|
|
|
10,930 |
|
|
|
930 |
|
|
Net loans charged off
|
|
|
626 |
|
|
|
439 |
|
|
|
187 |
|
|
Net interest revenue after net loans charged off
|
|
|
11,234 |
|
|
|
10,491 |
|
|
|
743 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
46,424 |
|
|
|
39,911 |
|
|
|
6,513 |
|
|
Gain (loss) on financial instruments and other assets, net
|
|
|
(52 |
) |
|
|
42 |
|
|
|
(94 |
) |
|
Other operating revenue
|
|
|
46,372 |
|
|
|
39,953 |
|
|
|
6,419 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
35,228 |
|
|
|
28,272 |
|
|
|
6,956 |
|
|
Net (gains) losses and expenses of repossessed assets
|
|
|
4 |
|
|
|
(41 |
) |
|
|
45 |
|
|
Other non-personnel expense
|
|
|
6,931 |
|
|
|
7,078 |
|
|
|
(147 |
) |
|
Corporate allocations
|
|
|
9,026 |
|
|
|
8,269 |
|
|
|
757 |
|
|
Other operating expense
|
|
|
51,189 |
|
|
|
43,578 |
|
|
|
7,611 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
6,417 |
|
|
|
6,866 |
|
|
|
(449 |
) |
|
Federal and state income tax
|
|
|
2,496 |
|
|
|
2,671 |
|
|
|
(175 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
3,921 |
|
|
$ |
4,195 |
|
|
$ |
(274 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
4,147,907 |
|
|
$ |
3,810,143 |
|
|
$ |
337,764 |
|
|
Average loans
|
|
|
895,640 |
|
|
|
1,016,786 |
|
|
|
(121,146 |
) |
|
Average deposits
|
|
|
4,057,342 |
|
|
|
3,709,656 |
|
|
|
347,686 |
|
|
Average invested capital
|
|
|
175,013 |
|
|
|
175,478 |
|
|
|
(465 |
) |
|
Return on average assets
|
|
|
0.38 |
% |
|
|
0.45 |
% |
|
|
(7 |
) bp |
|
Return on invested capital
|
|
|
9.01 |
% |
|
|
9.70 |
% |
|
|
(69 |
) bp |
|
Efficiency ratio
|
|
|
87.83 |
% |
|
|
85.71 |
% |
|
|
212 |
bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.28 |
% |
|
|
0.18 |
% |
|
|
10 |
bp |
| |
|
March 31, 2012
|
|
|
March 31, 2011
|
|
|
Increase
(Decrease)
|
|
|
Trust assets in custody for which BOKF has sole or joint discretionary authority
|
|
$ |
10,351,742 |
|
|
$ |
9,570,725 |
|
|
$ |
781,017 |
|
|
Trust assets not in custody for which BOKF has sole or joint discretionary authority
|
|
|
227,987 |
|
|
|
206,303 |
|
|
|
21,684 |
|
|
Non-managed trust assets in custody
|
|
|
13,195,059 |
|
|
|
12,279,752 |
|
|
|
915,307 |
|
|
Trust assets held in safekeeping
|
|
|
11,876,010 |
|
|
|
10,163,010 |
|
|
|
1,713,000 |
|
|
Trust assets
|
|
|
35,650,798 |
|
|
|
32,219,790 |
|
|
|
3,431,008 |
|
|
Other assets held in safekeeping
|
|
|
8,026,619 |
|
|
|
6,889,523 |
|
|
|
1,137,096 |
|
|
Brokerage accounts under BOKF administration
|
|
|
4,318,795 |
|
|
|
3,269,111 |
|
|
|
1,049,684 |
|
|
Assets under management or in custody
|
|
$ |
47,996,212 |
|
|
$ |
42,378,424 |
|
|
$ |
5,617,788 |
|
Net interest revenue for the first quarter of 2012 was up $930 thousand or 9% over the first quarter of 2011. Average loan balances were down $121 million. Net loans charged off decreased $187 thousand compared to the first quarter of 2011 to $626 thousand or 0.28% of average loans on an annualized basis. Average deposit balances were up $348 million or 9% over the prior year. Loan yields were up and funding costs related to deposits decreased compared to the first quarter of 2011.
Other operating revenue was up $6.4 million or 16% over the first quarter of 2011, primarily due to a $6.3 million or 31% increase in brokerage and trading revenues. Trust fees and commission were flat compared to the prior year.
Other operating revenue includes fees earned from state and municipal bond underwriting and financial advisory services, primarily in the Oklahoma and Texas markets. In the first quarter of 2012, the Wealth Management division participated in 90 underwritings that totaled $1.4 billion. As a participant, the Wealth Management division was responsible for facilitating the sale of approximately $549 million of these underwritings. In the first quarter of 2011, the Wealth Management division participated in 35 underwritings that totaled approximately $774 million. Our interest in these underwritings totaled approximately $212 million.
Operating expenses increased $7.6 million or 17% over the first quarter of 2011. Personnel expenses increased $7.0 million or 25%. Incentive compensation increased $5.4 million over the prior year and regular compensation costs increased $1.3 million primarily due to increased headcount and annual merit increases. Non-personnel expenses decreased $147 thousand or 2% compared to the prior year. Corporate expense allocations were up $757 thousand or 9% due primarily to expansion of the Wealth Management business line.
Growth in average assets was largely due to funds sold to the Funds Management unit. Average deposits attributed to the Wealth Management division increased $348 million or 9% over the first quarter of 2011 including a $294 million or 72% increase in average demand deposit accounts and a $102 million or 4% increase in interest-bearing transaction accounts. Average time deposit balances decreased $50 million or 7% compared to the first quarter of 2011.
Geographical Market Distribution
The Company also secondarily evaluates performance by primary geographical market. Loans are generally attributed to geographical markets based on the location of the customer and may not reflect the location of the underlying collateral. Brokered deposits and other wholesale funds are not attributed to a geographical market. Funds management and other include insignificant results of operations in locations outside our primary geographic regions.
Table 10 – Net Income by Geographic Region
(In thousands)
| |
|
Three Months Ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Oklahoma
|
|
$ |
33,449 |
|
|
$ |
25,047 |
|
|
Texas
|
|
|
12,947 |
|
|
|
10,167 |
|
|
New Mexico
|
|
|
4,530 |
|
|
|
2,910 |
|
|
Arkansas
|
|
|
2,169 |
|
|
|
833 |
|
|
Colorado
|
|
|
2,490 |
|
|
|
2,412 |
|
|
Arizona
|
|
|
(1,791 |
) |
|
|
(3,068 |
) |
|
Kansas / Missouri
|
|
|
2,040 |
|
|
|
969 |
|
|
Subtotal
|
|
|
55,834 |
|
|
|
39,270 |
|
|
Funds management and other
|
|
|
27,781 |
|
|
|
25,504 |
|
|
Total
|
|
$ |
83,615 |
|
|
$ |
64,774 |
|
Oklahoma Market
Our Oklahoma offices are located primarily in the Tulsa and Oklahoma City metropolitan areas. Oklahoma is a significant market to the Company, representing 47% of our average loans, 55% of our average deposits and 40% of our consolidated net income in the first quarter of 2012. In addition, all mortgage servicing activity, TransFund EFT network and 72% of our trust assets is attributed to the Oklahoma market.
Table 11 – Oklahoma
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$ |
58,030 |
|
|
$ |
55,008 |
|
|
$ |
3,022 |
|
|
Net loans charged off
|
|
|
1,032 |
|
|
|
6,420 |
|
|
|
(5,388 |
) |
|
Net interest revenue after net loans charged off
|
|
|
56,998 |
|
|
|
48,588 |
|
|
|
8,410 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
77,455 |
|
|
|
71,780 |
|
|
|
5,675 |
|
|
Loss on financial instruments and other assets, net
|
|
|
(4,890 |
) |
|
|
(5,896 |
) |
|
|
1,006 |
|
|
Other operating revenue
|
|
|
72,565 |
|
|
|
65,884 |
|
|
|
6,681 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
36,542 |
|
|
|
33,640 |
|
|
|
2,902 |
|
|
Net losses and expenses of repossessed assets
|
|
|
417 |
|
|
|
584 |
|
|
|
(167 |
) |
|
Change in fair value of mortgage servicing rights
|
|
|
(7,127 |
) |
|
|
(3,129 |
) |
|
|
(3,998 |
) |
|
Other non-personnel expense
|
|
|
35,383 |
|
|
|
32,893 |
|
|
|
2,490 |
|
|
Corporate allocations
|
|
|
9,604 |
|
|
|
9,491 |
|
|
|
113 |
|
|
Total other operating expense
|
|
|
74,819 |
|
|
|
73,479 |
|
|
|
1,340 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
54,744 |
|
|
|
40,993 |
|
|
|
13,751 |
|
|
Federal and state income tax
|
|
|
21,295 |
|
|
|
15,946 |
|
|
|
5,349 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
33,449 |
|
|
$ |
25,047 |
|
|
$ |
8,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
11,553,806 |
|
|
$ |
10,442,761 |
|
|
$ |
1,111,045 |
|
|
Average loans
|
|
|
5,365,299 |
|
|
|
5,188,424 |
|
|
|
176,875 |
|
|
Average deposits
|
|
|
10,342,861 |
|
|
|
9,461,918 |
|
|
|
880,943 |
|
|
Average invested capital
|
|
|
543,759 |
|
|
|
531,392 |
|
|
|
12,367 |
|
|
Return on average assets
|
|
|
1.16 |
% |
|
|
0.97 |
% |
|
|
19 |
bp |
|
Return on invested capital
|
|
|
24.74 |
% |
|
|
19.12 |
% |
|
|
562 |
bp |
|
Efficiency ratio
|
|
|
60.48 |
% |
|
|
60.42 |
% |
|
|
6 |
bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.08 |
% |
|
|
0.50 |
% |
|
|
(42 |
) bp |
Net income generated in the Oklahoma market in the first quarter of 2012 increased $8.4 million or 34% over the first quarter of 2011 due primarily to growth in net interest and fee revenue, a decrease in net loans charged off and improvement in the fair value of mortgage loan servicing rights.
Net interest revenue increased $3.0 million or 5%. Average loan balances increased $176 million or 3%. The favorable net interest impact of the $881 million increase in average deposit balances was partially offset by lower yield on funds sold to the Funds Management unit.
Fees and commission revenue increased $5.7 million over the first quarter of 2011. Mortgage banking revenue increased $5.6 million due to increased mortgage loan origination and commitment volumes. Increased brokerage and trading and deposit service charge revenue were largely offset by decreased transaction card revenues.
Changes in the fair value of mortgage servicing rights, net of economic hedges, increased net income $1.4 million in the first quarter of 2012 and decreased net income $1.7 million in the first quarter of 2011.
Excluding the change in the fair value of mortgage servicing rights, other operating expenses increased $5.3 million or 7% over the prior year. Personnel expenses were up $2.9 million or 9% over the prior year. Incentive compensation expense increased $1.7 million and regular compensation expense was up $1.1 million. Non-personnel expenses increased $2.5 million or 8%.
Net loans charged off decreased to $1.0 million or 0.08% of average loans on an annualized basis for first quarter of 2012 compared with $6.4 million or 0.50% of average loans on an annualized basis for the first quarter of 2011.
Average deposits in the Oklahoma market increased $881 million over the first quarter of 2011. Commercial Banking deposit balances increased $588 million or 14% over the prior year. Increased deposits related to energy and commercial & industrial customers were partially offset by decreased deposits related to treasury services customers. Wealth Management deposits increased $356 million or 17% over the prior year in the private banking division, trust and broker/dealer divisions. Consumer Banking deposits decreased and Commercial Banking deposits increased compared to the prior year primarily due to the transfer of small business banking activities from the Consumer Banking segment to the Commercial Banking segment.
Texas Market
Our Texas offices are located primarily in the Dallas, Fort Worth and Houston metropolitan areas. Texas is our second largest market with 33% of our average loans, 24% of our average deposits and 15% of our consolidated net income in the first quarter of 2012.
Table 12 – Texas
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$ |
34,848 |
|
|
$ |
33,165 |
|
|
$ |
1,683 |
|
|
Net loans charged off
|
|
|
444 |
|
|
|
928 |
|
|
|
(484 |
) |
|
Net interest revenue after net loans charged off
|
|
|
34,404 |
|
|
|
32,237 |
|
|
|
2,167 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
19,268 |
|
|
|
16,038 |
|
|
|
3,230 |
|
|
Gain on financial instruments and other assets, net
|
|
|
44 |
|
|
|
– |
|
|
|
44 |
|
|
Other operating revenue
|
|
|
19,312 |
|
|
|
16,038 |
|
|
|
3,274 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
19,078 |
|
|
|
16,804 |
|
|
|
2,274 |
|
|
Net (gains) losses and expenses of repossessed assets
|
|
|
(577 |
) |
|
|
144 |
|
|
|
(721 |
) |
|
Other non-personnel expense
|
|
|
5,717 |
|
|
|
5,753 |
|
|
|
(36 |
) |
|
Corporate allocations
|
|
|
9,269 |
|
|
|
9,688 |
|
|
|
(419 |
) |
|
Total other operating expense
|
|
|
33,487 |
|
|
|
32,389 |
|
|
|
1,098 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
20,229 |
|
|
|
15,886 |
|
|
|
4,343 |
|
|
Federal and state income tax
|
|
|
7,282 |
|
|
|
5,719 |
|
|
|
1,563 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
12,947 |
|
|
$ |
10,167 |
|
|
$ |
2,780 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
5,066,051 |
|
|
$ |
4,942,289 |
|
|
$ |
123,762 |
|
|
Average loans
|
|
|
3,782,795 |
|
|
|
3,262,960 |
|
|
|
519,835 |
|
|
Average deposits
|
|
|
4,482,885 |
|
|
|
4,356,711 |
|
|
|
126,174 |
|
|
Average invested capital
|
|
|
478,977 |
|
|
|
465,208 |
|
|
|
13,769 |
|
|
Return on average assets
|
|
|
1.03 |
% |
|
|
0.83 |
% |
|
|
20 |
bp |
|
Return on invested capital
|
|
|
10.87 |
% |
|
|
8.86 |
% |
|
|
201 |
bp |
|
Efficiency ratio
|
|
|
61.88 |
% |
|
|
65.83 |
% |
|
|
(395 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.05 |
% |
|
|
0.12 |
% |
|
|
(7 |
) bp |
Net income in the Texas market increased $2.8 million or 27% over the first quarter of 2011 primarily due to increased net interest and fees and commission revenue.
Net interest revenue increased $1.7 million or 5% over the first quarter of 2011. Average outstanding loans grew by $520 million or 16% and average deposits increased $126 million or 3% over the first quarter of 2011.
Fees and commission revenue increased $3.2 million or 20% over the first quarter of 2011 due primarily to increased mortgage banking revenue. In addition, brokerage and trading revenue, deposit service charges and trust fees and commissions revenue all increased over the prior year. Transaction card revenue was down compared to the prior year due primarily to debit card interchange fee regulations which became effective in the third quarter of 2011.
Operating expenses increased $1.1 million or 3% over the prior year. Personnel costs were up $2.3 million or 14% due primarily to incentive compensation expense and increased headcount related to higher mortgage origination activity. Net losses (gains) and operating expenses of repossessed assets improved by $721 thousand compared first quarter of 2011. Non-
personnel expenses were flat compared to the prior year and corporate expense allocations were down $419 thousand or 4% compared to the first quarter of 2011.
Net loans charged off totaled $444 thousand or 0.05% of average loans for the first quarter of 2012 on an annualized basis, down from $928 thousand or 0.12% of average loans for the first quarter of 2011 on an annualized basis.
New Mexico
Net income attributable to our New Mexico market totaled $4.5 million or 5% of consolidated net income, an increase of $1.6 million or 56% over the first quarter of 2011. Net interest income increased $163 thousand or 2% over the first quarter of 2011. Average loan balances increased $5.9 million over the first quarter of 2011. Average demand deposit balances were down $29 million or 2% compared to the prior year. Time deposit balances decreased $52 million and interest-bearing transaction deposit balance decreased $26 million, partially offset by a $48 million increase in demand deposit balances. Net charge-offs totaled $885 thousand or 0.50% of average loans attributed to the New Mexico market for the first quarter of 2012, compared to $411 thousand or 0.24% of average loans for the first quarter of 2011. Fees and commissions revenue was up $2.8 million or 37% due primarily to growth in mortgage banking revenue over the first quarter of 2011. Deposit service charges, brokerage and trading and trust fees and commission were also all up over the prior year, partially offset by a decrease in transaction card revenue due to debit card interchange fee regulations. Other operating expenses were down $129 thousand or 1% compared to the first quarter of 2011. Personnel costs increased $687 thousand, partially offset by a $606 thousand decrease in net (gains) losses and expenses of repossessed assets and a $262 thousand decrease in non-personnel expenses.
Table 13 – New Mexico
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$ |
8,484 |
|
|
$ |
8,321 |
|
|
$ |
163 |
|
|
Net loans charged off
|
|
|
885 |
|
|
|
411 |
|
|
|
474 |
|
|
Net interest revenue after net loans charged off
|
|
|
7,599 |
|
|
|
7,910 |
|
|
|
(311 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
10,414 |
|
|
|
7,580 |
|
|
|
2,834 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
4,885 |
|
|
|
4,198 |
|
|
|
687 |
|
|
Net (gains) losses and expenses of repossessed assets
|
|
|
(191 |
) |
|
|
415 |
|
|
|
(606 |
) |
|
Other non-personnel expense
|
|
|
1,977 |
|
|
|
2,239 |
|
|
|
(262 |
) |
|
Corporate allocations
|
|
|
3,928 |
|
|
|
3,876 |
|
|
|
52 |
|
|
Total other operating expense
|
|
|
10,599 |
|
|
|
10,728 |
|
|
|
(129 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
7,414 |
|
|
|
4,762 |
|
|
|
2,652 |
|
|
Federal and state income tax
|
|
|
2,884 |
|
|
|
1,852 |
|
|
|
1,032 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
4,530 |
|
|
$ |
2,910 |
|
|
$ |
1,620 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
1,375,861 |
|
|
$ |
1,376,750 |
|
|
$ |
(889 |
) |
|
Average loans
|
|
|
708,803 |
|
|
|
702,932 |
|
|
|
5,871 |
|
|
Average deposits
|
|
|
1,227,265 |
|
|
|
1,255,773 |
|
|
|
(28,508 |
) |
|
Average invested capital
|
|
|
79,317 |
|
|
|
81,776 |
|
|
|
(2,459 |
) |
|
Return on average assets
|
|
|
1.32 |
% |
|
|
0.86 |
% |
|
|
46 |
bp |
|
Return on invested capital
|
|
|
22.97 |
% |
|
|
14.43 |
% |
|
|
854 |
bp |
|
Efficiency ratio
|
|
|
56.09 |
% |
|
|
67.47 |
% |
|
|
(1,138 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.50 |
% |
|
|
0.24 |
% |
|
|
26 |
bp |
Arkansas Market
Net income attributable to our Arkansas market increased $1.3 million or 161% over the first quarter of 2011 to $2.2 million. Net interest revenue decreased $330 thousand or 14% primarily due to a $28 million decrease in average loans. Loans in the Arkansas market continued to decrease due to the run-off of indirect automobile loans. Average deposits in our Arkansas market were down $7.0 million or 3% compared to the first quarter of 2011. Time deposits decreased $31 million, offset by a $19 million increase in interest-bearing transaction deposits and a $4.0 million increase in demand deposits. Net loans charged off decreased $272 thousand to $64 thousand or 0.10% of average loans on an annualized basis. Fees and commission revenue increased $2.8 million primarily due to increased securities trading revenue at our Little Rock office and higher mortgage banking revenues. Other operating expenses were up $565 thousand or 6% over the prior year. Personnel expense increased $259 thousand or 5% primarily due to increased incentive compensation costs related to trading activity. Non-personnel expenses were up $348 thousand over the prior year.
Table 14 – Arkansas
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$ |
1,967 |
|
|
$ |
2,297 |
|
|
$ |
(330 |
) |
|
Net loans charged off
|
|
|
64 |
|
|
|
336 |
|
|
|
(272 |
) |
|
Net interest revenue after net loans charged off
|
|
|
1,903 |
|
|
|
1,961 |
|
|
|
(58 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
11,249 |
|
|
|
8,439 |
|
|
|
2,810 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
5,485 |
|
|
|
5,226 |
|
|
|
259 |
|
|
Net losses and expenses of repossessed assets
|
|
|
7 |
|
|
|
19 |
|
|
|
(12 |
) |
|
Other non-personnel expense
|
|
|
1,356 |
|
|
|
1,008 |
|
|
|
348 |
|
|
Corporate allocations
|
|
|
2,754 |
|
|
|
2,784 |
|
|
|
(30 |
) |
|
Total other operating expense
|
|
|
9,602 |
|
|
|
9,037 |
|
|
|
565 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
3,550 |
|
|
|
1,363 |
|
|
|
2,187 |
|
|
Federal and state income tax
|
|
|
1,381 |
|
|
|
530 |
|
|
|
851 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
2,169 |
|
|
$ |
833 |
|
|
$ |
1,336 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
275,643 |
|
|
$ |
303,346 |
|
|
$ |
(27,703 |
) |
|
Average loans
|
|
|
259,587 |
|
|
|
287,813 |
|
|
|
(28,226 |
) |
|
Average deposits
|
|
|
221,254 |
|
|
|
228,226 |
|
|
|
(6,972 |
) |
|
Average invested capital
|
|
|
21,051 |
|
|
|
22,571 |
|
|
|
(1,520 |
) |
|
Return on average assets
|
|
|
3.16 |
% |
|
|
1.11 |
% |
|
|
205 |
bp |
|
Return on invested capital
|
|
|
41.44 |
% |
|
|
14.97 |
% |
|
|
2,647 |
bp |
|
Efficiency ratio
|
|
|
72.65 |
% |
|
|
84.17 |
% |
|
|
(1,152 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.10 |
% |
|
|
0.47 |
% |
|
|
(37 |
) bp |
Colorado Market
Net income attributed to our Colorado market totaled $2.5 million compared to $2.4 million in the first quarter of 2011. Net loans charged off totaled $1.9 million or 0.92% of average loans on an annualized basis compared with a net recovery of $50 thousand in the first quarter of 2011. Net interest revenue increased $699 thousand or 9% over the prior year. Average loans outstanding increased $61 million or 8% over the prior year. Average deposits were up $83 million or 7% due primarily to a $91 million increase in demand deposit balances partially offset by a $15 million decrease in time deposit balances. Fees and commission revenue increased $1.8 million or 30% over the prior year due primarily to increased mortgage banking revenue partially offset by decreased brokerage and trading and transaction card revenues. Operating expenses were up $426 thousand or 4% over the prior year. Personnel costs increased $723 thousand primarily due to increased incentive compensation related to increased mortgage activity. Net losses and operating expenses of repossessed assets were down $324 thousand compared to the prior year. Decreased non-personnel expenses were largely offset by increased corporate expense allocations.
Table 15 – Colorado
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$ |
8,773 |
|
|
$ |
8,074 |
|
|
$ |
699 |
|
|
Net loans charged off
|
|
|
1,884 |
|
|
|
(50 |
) |
|
|
1,934 |
|
|
Net interest revenue after net loans charged off
|
|
|
6,889 |
|
|
|
8,124 |
|
|
|
(1,235 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
7,724 |
|
|
|
5,933 |
|
|
|
1,791 |
|
|
Gain on financial instruments and other assets, net
|
|
|
– |
|
|
|
1 |
|
|
|
(1 |
) |
|
Other operating revenue
|
|
|
7,724 |
|
|
|
5,934 |
|
|
|
1,790 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
5,776 |
|
|
|
5,053 |
|
|
|
723 |
|
|
Net (gains) losses and expenses of repossessed assets
|
|
|
(18 |
) |
|
|
306 |
|
|
|
(324 |
) |
|
Other non-personnel expense
|
|
|
1,340 |
|
|
|
1,552 |
|
|
|
(212 |
) |
|
Corporate allocations
|
|
|
3,439 |
|
|
|
3,200 |
|
|
|
239 |
|
|
Total other operating expense
|
|
|
10,537 |
|
|
|
10,111 |
|
|
|
426 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
4,076 |
|
|
|
3,947 |
|
|
|
129 |
|
|
Federal and state income tax
|
|
|
1,586 |
|
|
|
1,535 |
|
|
|
51 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
2,490 |
|
|
$ |
2,412 |
|
|
$ |
78 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
1,380,459 |
|
|
$ |
1,299,938 |
|
|
$ |
80,521 |
|
|
Average loans
|
|
|
826,268 |
|
|
|
765,448 |
|
|
|
60,820 |
|
|
Average deposits
|
|
|
1,316,079 |
|
|
|
1,232,873 |
|
|
|
83,206 |
|
|
Average invested capital
|
|
|
115,272 |
|
|
|
117,244 |
|
|
|
(1,972 |
) |
|
Return on average assets
|
|
|
0.73 |
% |
|
|
0.75 |
% |
|
|
(2 |
) bp |
|
Return on invested capital
|
|
|
8.69 |
% |
|
|
8.34 |
% |
|
|
35 |
bp |
|
Efficiency ratio
|
|
|
63.87 |
% |
|
|
72.19 |
% |
|
|
(832 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.92 |
% |
|
|
(0.03 |
)% |
|
|
95 |
bp |
Arizona Market
The Arizona market incurred a net loss of $1.8 million for the first quarter of 2012 compared to a net loss of $3.1 million in the first quarter of 2011. Net interest revenue increased $768 thousand or 22% over the prior year. Average loan balances were flat compared to the prior year. Average deposits increased $8.8 million or 4% due primarily to a $22 million or 25% increase in demand deposit balances, partially offset by a $15 million or 31% decrease in time deposits. Growth was primarily related to commercial loans and deposits. Net loans charged off totaled $3.6 million or 2.62% of average loans on an annualized basis in the first quarter of 2012 compared to $1.9 million or 1.38% of average loans on an annualized basis for the first quarter of 2011. The increase in net loans charged off was largely due to resolution of loans from the Tucson market which we exited in 2009. Fees and commission revenue were flat compared to the prior year. Operating expense was down $3.0 million compared to the first quarter of 2011 due primarily to a $2.3 million decrease in net losses and operating expenses on repossessed assets. Personnel and other non-personnel costs were both down compared to the prior year.
We continue to focus on growth in commercial and small business lending in the Arizona market and have significantly scaled back commercial real estate lending activities which were not contemplated in our initial expansion into this market. Loan and repossessed asset losses are largely due to commercial real estate lending. Growth was primarily related to commercial loans and deposits. Assets attributable to the Arizona market included $16 million of goodwill that may be impaired in future periods if our commercial and small business lending growth plans are unsuccessful.
Table 16 – Arizona
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$ |
4,335 |
|
|
$ |
3,567 |
|
|
$ |
768 |
|
|
Net loans charged off
|
|
|
3,619 |
|
|
|
1,889 |
|
|
|
1,730 |
|
|
Net interest revenue after net loans charged off
|
|
|
716 |
|
|
|
1,678 |
|
|
|
(962 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions revenue
|
|
|
1,845 |
|
|
|
1,820 |
|
|
|
25 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
2,354 |
|
|
|
2,828 |
|
|
|
(474 |
) |
|
Net losses and expenses of repossessed assets
|
|
|
1,231 |
|
|
|
3,568 |
|
|
|
(2,337 |
) |
|
Other non-personnel expense
|
|
|
761 |
|
|
|
978 |
|
|
|
(217 |
) |
|
Corporate allocations
|
|
|
1,147 |
|
|
|
1,145 |
|
|
|
2 |
|
|
Total other operating expense
|
|
|
5,493 |
|
|
|
8,519 |
|
|
|
(3,026 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxes
|
|
|
(2,932 |
) |
|
|
(5,021 |
) |
|
|
2,089 |
|
|
Federal and state income tax
|
|
|
(1,141 |
) |
|
|
(1,953 |
) |
|
|
812 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(1,791 |
) |
|
$ |
(3,068 |
) |
|
$ |
1,277 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
609,510 |
|
|
$ |
620,793 |
|
|
$ |
(11,283 |
) |
|
Average loans
|
|
|
554,666 |
|
|
|
553,309 |
|
|
|
1,357 |
|
|
Average deposits
|
|
|
247,313 |
|
|
|
238,561 |
|
|
|
8,752 |
|
|
Average invested capital
|
|
|
58,573 |
|
|
|
64,688 |
|
|
|
(6,115 |
) |
|
Return on average assets
|
|
|
(1.18 |
)% |
|
|
(2.00 |
)% |
|
|
82 |
bp |
|
Return on invested capital
|
|
|
(12.30 |
)% |
|
|
(19.23 |
)% |
|
|
693 |
bp |
|
Efficiency ratio
|
|
|
88.88 |
% |
|
|
158.14 |
% |
|
|
(6,926 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
2.62 |
% |
|
|
1.38 |
% |
|
|
124 |
bp |
Kansas / Missouri Market
Net income attributed to the Kansas / Missouri market increased by $1.1 million over the first quarter of 2011. Net interest revenue increased $278 thousand or 10%. Average loan balances increased $62 million or 17% over the first quarter of 2011. Average deposits balances were down $131 million or 35%. Interest-bearing transaction deposits decreased $121 million and time deposits decreased $23 million, partially offset by a $13 million increase in demand deposits. Fees and commission revenue increased $3.7 million or 74% primarily due to increased mortgage banking and brokerage and trading revenues. Operating expenses were up $1.9 million or 31% over the prior year. Personnel costs were up $1.4 million primarily due to increased incentive compensation related to mortgage and brokerage and trading activity and increased headcount. Non-personnel expenses were flat compared to the prior year and corporate expense allocations increased due to increased transaction activity.
Table 17 – Kansas / Missouri
(Dollars in thousands)
| |
|
Three Months Ended
March 31,
|
|
|
Increase
|
|
| |
|
2012
|
|
|
2011
|
|
|
(Decrease)
|
|
| |
|
|
|
|
|
|
|
|
|
|
Net interest revenue
|
|
$ |
3,111 |
|
|
$ |
2,833 |
|
|
$ |
278 |
|
|
Net loans charged off (recovered)
|
|
|
544 |
|
|
|
213 |
|
|
|
331 |
|
|
Net interest revenue after net loans charged off (recovered)
|
|
|
2,567 |
|
|
|
2,620 |
|
|
|
(53 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commission revenue
|
|
|
8,696 |
|
|
|
4,996 |
|
|
|
3,700 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expense
|
|
|
4,800 |
|
|
|
3,430 |
|
|
|
1,370 |
|
|
Net losses and expenses of repossessed assets
|
|
|
18 |
|
|
|
194 |
|
|
|
(176 |
) |
|
Other non-personnel expense
|
|
|
991 |
|
|
|
976 |
|
|
|
15 |
|
|
Corporate allocations
|
|
|
2,116 |
|
|
|
1,430 |
|
|
|
686 |
|
|
Total other operating expense
|
|
|
7,925 |
|
|
|
6,030 |
|
|
|
1,895 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
3,338 |
|
|
|
1,586 |
|
|
|
1,752 |
|
|
Federal and state income tax
|
|
|
1,298 |
|
|
|
617 |
|
|
|
681 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
2,040 |
|
|
$ |
969 |
|
|
$ |
1,071 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
439,302 |
|
|
$ |
370,773 |
|
|
$ |
68,529 |
|
|
Average loans
|
|
|
422,176 |
|
|
|
360,517 |
|
|
|
61,659 |
|
|
Average deposits
|
|
|
238,383 |
|
|
|
369,124 |
|
|
|
(130,741 |
) |
|
Average invested capital
|
|
|
31,474 |
|
|
|
25,321 |
|
|
|
6,153 |
|
|
Return on average assets
|
|
|
1.87 |
% |
|
|
1.06 |
% |
|
|
81 |
bp |
|
Return on invested capital
|
|
|
26.07 |
% |
|
|
15.52 |
% |
|
|
1,055 |
bp |
|
Efficiency ratio
|
|
|
67.12 |
% |
|
|
77.02 |
% |
|
|
(990 |
) bp |
|
Net charge-offs (annualized) to average loans
|
|
|
0.52 |
% |
|
|
0.24 |
% |
|
|
28 |
bp |
Financial Condition
Securities
We maintain a securities portfolio to enhance profitability, support customer transactions, 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 March 31, 2012, December 31, 2011 and March 31, 2011.
At March 31, 2012, the carrying value of investment (held-to-maturity) securities was $427 million and the fair value was $451 million. Investment securities consist primarily of long-term, fixed-rate Oklahoma municipal bonds, taxable Texas school construction bonds and U.S. residential mortgage-backed securities. The investment security portfolio is diversified among issuers. Excluding U.S. government agencies, the largest obligation of any single issuer is $30 million. Substantially all of the municipal bonds are general obligations of the issuer. Approximately $89 million of the taxable 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 $9.9 billion at March 31, 2012, down $48 million from December 31, 2011. At March 31, 2012, residential mortgage-backed securities represented 98% of total available for sale 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. Current interest rates are historically low and prices for residential mortgage-backed securities are historically high resulting in low effective durations. Our best estimate of the duration of the residential mortgage-backed securities portfolio at March 31, 2012 is 1.6 years. Management estimates that the duration would extend to approximately 3.5 years assuming an immediate 200 basis point upward rate shock. The estimated duration contracts to 0.9 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 March 31, 2012, $9.4 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 $9.7 billion at March 31, 2012.
We also hold amortized cost of $371 million in residential mortgage-backed securities privately issued by publicly-owned financial institutions. The amortized costs of these securities decreased $132 million from December 31, 2011. In response to price increases during the first quarter of 2012, the Company sold $107 million of privately issued residential mortgage-backed securities at a $7.4 million loss. The remaining decrease from December 31, 2011 was due primarily to $22 million of cash received and $3.7 million of other-than-temporary impairment losses charged against earnings during the first quarter of 2012. The fair value of our portfolio of privately issued residential mortgage-backed securities totaled $327 million at March 31, 2012.
The amortized cost of our portfolio of privately issued residential mortgage-backed securities included $231 million of Jumbo-A residential mortgage loans and $140 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. Credit risk on residential mortgage-backed securities originated by private issuers is mitigated by investment in senior tranches with additional collateral support. All of our Alt-A residential mortgage-backed securities were issued with credit support from additional layers of loss-absorbing subordinated tranches, including all Alt-A residential mortgage backed securities held that were originated in 2007 and 2006. The weighted average original credit enhancement of the Alt-A residential mortgage-backed securities was 10.2% and currently stands at 1.9%. The Jumbo-A residential mortgage-backed securities had original credit enhancement of 9.4% and the current level is 6.6%. Approximately 78% of our Alt-A mortgage-backed securities represents pools of fixed-rate residential mortgage loans. None of the adjustable rate mortgages are payment option adjustable rate mortgages (“ARMs”). Approximately 25% 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 $49 million at March 31, 2012. 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 $3.7 million were recognized in earnings in the first quarter of 2012 related to certain privately issued residential mortgage-backed securities that we do not intend to sell.
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.
Bank-Owned Life Insurance
We have approximately $266 million of bank-owned life insurance at March 31, 2012. This investment is expected to provide a long-term source of earnings to support existing employee benefit programs. Approximately $235 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 March 31, 2012, the cash surrender value represented by the underlying fair value of investments held in separate accounts was approximately $256 million. As the underlying fair value of the investments held in a separate account at March 31, 2012 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.
Loans
The aggregate loan portfolio before allowance for loan losses totaled $11.6 billion at March 31, 2012, a $308 million increase since December 31, 2011.
Table 18 – Loans
(In thousands)
| |
|
March 31,
|
|
|
Dec. 31,
|
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
2,206,490 |
|
|
$ |
2,015,619 |
|
|
$ |
1,797,609 |
|
|
$ |
1,682,842 |
|
|
$ |
1,759,452 |
|
|
Services
|
|
|
1,881,079 |
|
|
|
1,745,189 |
|
|
|
1,857,478 |
|
|
|
1,713,057 |
|
|
|
1,586,785 |
|
|
Wholesale/retail
|
|
|
1,002,780 |
|
|
|
962,984 |
|
|
|
1,026,229 |
|
|
|
1,068,186 |
|
|
|
984,273 |
|
|
Healthcare
|
|
|
987,436 |
|
|
|
976,481 |
|
|
|
907,147 |
|
|
|
869,308 |
|
|
|
840,809 |
|
|
Manufacturing
|
|
|
362,061 |
|
|
|
350,834 |
|
|
|
370,729 |
|
|
|
367,151 |
|
|
|
380,043 |
|
|
Integrated food services
|
|
|
209,642 |
|
|
|
208,738 |
|
|
|
199,852 |
|
|
|
195,774 |
|
|
|
211,637 |
|
|
Other commercial and industrial
|
|
|
293,153 |
|
|
|
311,609 |
|
|
|
316,645 |
|
|
|
282,278 |
|
|
|
285,258 |
|
|
Total commercial
|
|
|
6,942,641 |
|
|
|
6,571,454 |
|
|
|
6,475,689 |
|
|
|
6,178,596 |
|
|
|
6,048,257 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
311,708 |
|
|
|
327,480 |
|
|
|
355,215 |
|
|
|
367,092 |
|
|
|
394,337 |
|
|
Retail
|
|
|
481,815 |
|
|
|
509,743 |
|
|
|
445,794 |
|
|
|
438,494 |
|
|
|
420,193 |
|
|
Office
|
|
|
386,025 |
|
|
|
406,508 |
|
|
|
425,743 |
|
|
|
482,505 |
|
|
|
488,515 |
|
|
Multifamily
|
|
|
432,546 |
|
|
|
368,519 |
|
|
|
387,468 |
|
|
|
335,662 |
|
|
|
355,240 |
|
|
Industrial
|
|
|
287,462 |
|
|
|
277,733 |
|
|
|
225,353 |
|
|
|
162,167 |
|
|
|
177,807 |
|
|
Other real estate
|
|
|
364,547 |
|
|
|
389,926 |
|
|
|
420,329 |
|
|
|
397,795 |
|
|
|
386,890 |
|
|
Total commercial real estate
|
|
|
2,264,103 |
|
|
|
2,279,909 |
|
|
|
2,259,902 |
|
|
|
2,183,715 |
|
|
|
2,222,982 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
1,133,191 |
|
|
|
1,150,321 |
|
|
|
1,151,168 |
|
|
|
1,151,176 |
|
|
|
1,153,269 |
|
|
Permanent mortgages guaranteed by U.S. government agencies
|
|
|
180,862 |
|
|
|
184,973 |
|
|
|
168,690 |
|
|
|
134,458 |
|
|
|
63,552 |
|
|
Home equity
|
|
|
646,835 |
|
|
|
635,167 |
|
|
|
592,038 |
|
|
|
582,363 |
|
|
|
560,500 |
|
|
Total residential mortgage
|
|
|
1,960,888 |
|
|
|
1,970,461 |
|
|
|
1,911,896 |
|
|
|
1,867,997 |
|
|
|
1,777,321 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
81,791 |
|
|
|
105,149 |
|
|
|
130,296 |
|
|
|
162,500 |
|
|
|
198,663 |
|
|
Other consumer
|
|
|
328,021 |
|
|
|
342,770 |
|
|
|
346,786 |
|
|
|
344,736 |
|
|
|
342,612 |
|
|
Total consumer
|
|
|
409,812 |
|
|
|
447,919 |
|
|
|
477,082 |
|
|
|
507,236 |
|
|
|
541,275 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
11,577,444 |
|
|
$ |
11,269,743 |
|
|
$ |
11,124,569 |
|
|
$ |
10,737,544 |
|
|
$ |
10,589,835 |
|
Outstanding commercial loan balances continued to grow in most geographic regions, increasing $371 million over December 31, 2011. Commercial real estate loans decreased $16 million during the first quarter of 2012. Residential mortgage loans decreased $9.6 million from December 31, 2011. Consumer loans decreased $38 million from December 31, 2011 primarily related to the continued runoff of indirect automobile loans related to the previously announced decision to curtail that business in favor of a customer-focused direct approach to consumer lending.
A breakdown of geographical market follows on Table 19 with discussion of changes in the balance by portfolio and geography. This breakdown may not always represent the location of the borrower or the collateral.
Table 19 – Loans by Principal Market
(In thousands)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
March 31,
|
|
|
Dec. 31,
|
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
Oklahoma:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
2,953,637 |
|
|
$ |
2,697,623 |
|
|
$ |
2,807,979 |
|
|
$ |
2,594,502 |
|
|
$ |
2,618,045 |
|
|
Commercial real estate
|
|
|
667,503 |
|
|
|
600,703 |
|
|
|
624,990 |
|
|
|
619,201 |
|
|
|
661,254 |
|
|
Residential mortgage
|
|
|
1,436,766 |
|
|
|
1,429,069 |
|
|
|
1,366,953 |
|
|
|
1,309,110 |
|
|
|
1,219,237 |
|
|
Consumer
|
|
|
210,361 |
|
|
|
236,056 |
|
|
|
248,851 |
|
|
|
267,550 |
|
|
|
291,412 |
|
|
Total Oklahoma
|
|
|
5,268,267 |
|
|
|
4,963,451 |
|
|
|
5,048,773 |
|
|
|
4,790,363 |
|
|
|
4,789,948 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
2,304,162 |
|
|
|
2,214,462 |
|
|
|
2,069,117 |
|
|
|
2,003,847 |
|
|
|
1,916,270 |
|
|
Commercial real estate
|
|
|
812,209 |
|
|
|
830,831 |
|
|
|
741,984 |
|
|
|
711,906 |
|
|
|
687,817 |
|
|
Residential mortgage
|
|
|
259,173 |
|
|
|
266,050 |
|
|
|
273,025 |
|
|
|
282,934 |
|
|
|
283,925 |
|
|
Consumer
|
|
|
123,604 |
|
|
|
126,280 |
|
|
|
133,286 |
|
|
|
140,044 |
|
|
|
141,199 |
|
|
Total Texas
|
|
|
3,499,148 |
|
|
|
3,437,623 |
|
|
|
3,217,412 |
|
|
|
3,138,731 |
|
|
|
3,029,211 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Mexico:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
274,224 |
|
|
|
252,367 |
|
|
|
269,690 |
|
|
|
280,306 |
|
|
|
262,597 |
|
|
Commercial real estate
|
|
|
282,966 |
|
|
|
316,853 |
|
|
|
314,701 |
|
|
|
311,565 |
|
|
|
326,104 |
|
|
Residential mortgage
|
|
|
104,495 |
|
|
|
100,581 |
|
|
|
93,444 |
|
|
|
95,021 |
|
|
|
90,466 |
|
|
Consumer
|
|
|
18,185 |
|
|
|
18,519 |
|
|
|
18,142 |
|
|
|
18,536 |
|
|
|
19,242 |
|
|
Total New Mexico
|
|
|
679,870 |
|
|
|
688,320 |
|
|
|
695,977 |
|
|
|
705,428 |
|
|
|
698,409 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arkansas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
74,364 |
|
|
|
86,111 |
|
|
|
89,262 |
|
|
|
74,677 |
|
|
|
75,889 |
|
|
Commercial real estate
|
|
|
129,980 |
|
|
|
127,687 |
|
|
|
124,393 |
|
|
|
121,286 |
|
|
|
124,875 |
|
|
Residential mortgage
|
|
|
13,778 |
|
|
|
14,511 |
|
|
|
14,428 |
|
|
|
13,939 |
|
|
|
14,114 |
|
|
Consumer
|
|
|
28,932 |
|
|
|
36,061 |
|
|
|
44,163 |
|
|
|
52,439 |
|
|
|
61,746 |
|
|
Total Arkansas
|
|
|
247,054 |
|
|
|
264,370 |
|
|
|
272,246 |
|
|
|
262,341 |
|
|
|
276,624 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
555,703 |
|
|
|
559,127 |
|
|
|
508,222 |
|
|
|
515,829 |
|
|
|
514,100 |
|
|
Commercial real estate
|
|
|
143,753 |
|
|
|
153,855 |
|
|
|
188,659 |
|
|
|
167,414 |
|
|
|
172,416 |
|
|
Residential mortgage
|
|
|
60,527 |
|
|
|
64,437 |
|
|
|
65,327 |
|
|
|
66,985 |
|
|
|
67,975 |
|
|
Consumer
|
|
|
19,813 |
|
|
|
21,651 |
|
|
|
22,024 |
|
|
|
19,507 |
|
|
|
20,145 |
|
|
Total Colorado
|
|
|
779,796 |
|
|
|
799,070 |
|
|
|
784,232 |
|
|
|
769,735 |
|
|
|
774,636 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
284,353 |
|
|
|
288,536 |
|
|
|
283,867 |
|
|
|
291,515 |
|
|
|
251,390 |
|
|
Commercial real estate
|
|
|
178,633 |
|
|
|
192,731 |
|
|
|
222,249 |
|
|
|
205,269 |
|
|
|
213,442 |
|
|
Residential mortgage
|
|
|
73,704 |
|
|
|
82,202 |
|
|
|
85,243 |
|
|
|
86,415 |
|
|
|
89,384 |
|
|
Consumer
|
|
|
5,381 |
|
|
|
5,505 |
|
|
|
6,625 |
|
|
|
6,772 |
|
|
|
5,266 |
|
|
Total Arizona
|
|
|
542,071 |
|
|
|
568,974 |
|
|
|
597,984 |
|
|
|
589,971 |
|
|
|
559,482 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kansas / Missouri:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
496,198 |
|
|
|
473,228 |
|
|
|
447,552 |
|
|
|
417,920 |
|
|
|
409,966 |
|
|
Commercial real estate
|
|
|
49,059 |
|
|
|
57,249 |
|
|
|
42,926 |
|
|
|
47,074 |
|
|
|
37,074 |
|
|
Residential mortgage
|
|
|
12,445 |
|
|
|
13,611 |
|
|
|
13,476 |
|
|
|
13,593 |
|
|
|
12,220 |
|
|
Consumer
|
|
|
3,536 |
|
|
|
3,847 |
|
|
|
3,991 |
|
|
|
2,388 |
|
|
|
2,265 |
|
|
Total Kansas / Missouri
|
|
|
561,238 |
|
|
|
547,935 |
|
|
|
507,945 |
|
|
|
480,975 |
|
|
|
461,525 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total BOK Financial loans
|
|
$ |
11,577,444 |
|
|
$ |
11,269,743 |
|
|
$ |
11,124,569 |
|
|
$ |
10,737,544 |
|
|
$ |
10,589,835 |
|
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.
Commercial loan growth was primarily concentrated in the energy and services sectors of the portfolio. Energy sector loans increased $191 million over December 31, 2011 primarily in the Oklahoma, Texas and Colorado markets. Service sector loans increased $136 million primarily in the Oklahoma market. Service sector loans also grew in the New Mexico and Texas markets mostly offset by a decrease in service sector loans in the Colorado market. In addition, wholesale/retail sector loans increased $40 million primarily in the Oklahoma, Texas and Kansas/Missouri markets. In addition, growth in manufacturing and wholesale/retail sector loans primarily in the Oklahoma market was partially offset by a decrease in other commercial and industrial loans primarily in the Arkansas, Texas and New Mexico markets.
The commercial sector of our loan portfolio is distributed as follows in Table 20.
Table 20 – Commercial Loans by Principal Market
(In thousands)
| |
|
Oklahoma
|
|
|
Texas
|
|
|
New Mexico
|
|
|
Arkansas
|
|
|
Colorado
|
|
|
Arizona
|
|
|
Kansas/
Missouri
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
1,051,344 |
|
|
$ |
854,569 |
|
|
$ |
5,018 |
|
|
$ |
246 |
|
|
$ |
294,434 |
|
|
$ |
– |
|
|
$ |
879 |
|
|
$ |
2,206,490 |
|
|
Services
|
|
|
636,277 |
|
|
|
609,371 |
|
|
|
180,845 |
|
|
|
13,155 |
|
|
|
156,082 |
|
|
|
123,741 |
|
|
|
161,608 |
|
|
|
1,881,079 |
|
|
Wholesale/retail
|
|
|
407,943 |
|
|
|
385,269 |
|
|
|
51,547 |
|
|
|
24,631 |
|
|
|
19,218 |
|
|
|
74,367 |
|
|
|
39,805 |
|
|
|
1,002,780 |
|
|
Healthcare
|
|
|
582,417 |
|
|
|
250,736 |
|
|
|
10,776 |
|
|
|
5,674 |
|
|
|
64,118 |
|
|
|
45,384 |
|
|
|
28,331 |
|
|
|
987,436 |
|
|
Manufacturing
|
|
|
176,572 |
|
|
|
110,422 |
|
|
|
7,143 |
|
|
|
1,153 |
|
|
|
15,768 |
|
|
|
25,269 |
|
|
|
25,734 |
|
|
|
362,061 |
|
|
Integrated food services
|
|
|
15,803 |
|
|
|
7,269 |
|
|
|
– |
|
|
|
29 |
|
|
|
1,848 |
|
|
|
– |
|
|
|
184,693 |
|
|
|
209,642 |
|
|
Other commercial and industrial
|
|
|
83,281 |
|
|
|
86,526 |
|
|
|
18,895 |
|
|
|
29,476 |
|
|
|
4,235 |
|
|
|
15,592 |
|
|
|
55,148 |
|
|
|
293,153 |
|
|
Total commercial loans
|
|
$ |
2,953,637 |
|
|
$ |
2,304,162 |
|
|
$ |
274,224 |
|
|
$ |
74,364 |
|
|
$ |
555,703 |
|
|
$ |
284,353 |
|
|
$ |
496,198 |
|
|
$ |
6,942,641 |
|
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. Based on our most recent evaluation of changes in energy prices on our loan portfolio, a decrease in natural gas prices to $2.00 per MMBTUS in 2012 and oil prices to $55.00 per barrel in 2012 would not significantly impact the credit quality of our energy loan portfolio.
Energy loans totaled $2.2 billion or 19% of total loans. Unfunded energy loan commitments increased by $71 million to $2.0 billion at March 31, 2012. Energy loans to oil and gas producers totaled $1.9 billion, up $204 million over December 31, 2011. Approximately 53% of the committed production loans are secured by properties primarily producing oil and 47% of the committed production loans are secured by properties primarily producing natural gas. Loans to borrowers engaged in wholesale or retail energy sales decreased $12 million to $157 million. Loans to borrowers that provide services to the energy industry totaled $93 million, essentially flat with December 31, 2011. Loans to borrowers that manufacture equipment primarily for the energy industry increased $11 million during the first quarter of 2012 to $35 million.
The services sector of the loan portfolio totaled $1.9 billion or 16% of total loans and consists of a large number of loans to a variety of businesses, including community foundations, communications, educational, gaming and transportation services.
Service sector loans increased $136 million over December 31, 2011. Approximately $1.1 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. Loans in this sector may also be secured by personal guarantees of the owners or related parties.
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 March 31, 2012, the outstanding principal balance of these loans totaled $2.2 billion. Substantially all of these loans are to borrowers with local market relationships. We serve as the agent lender in approximately 20% 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, grading of shared national credits is provided annually by banking regulators.
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 generally 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.
Commercial real estate loans totaled $2.3 billion or 20% of the loan portfolio at March 31, 2012. Over the past five years, the percentage of commercial real estate loans to our total loan portfolio ranged from 20% to 23%. The outstanding balance of commercial real estate loans decreased $16 million during the first quarter of 2012. The commercial real estate sector of our loan portfolio is distributed as follows in Table 21.
Table 21 – Commercial Real Estate Loans by Principal Market
(In thousands)
| |
|
Oklahoma
|
|
|
Texas
|
|
|
New Mexico
|
|
|
Arkansas
|
|
|
Colorado
|
|
|
Arizona
|
|
|
Kansas/
Missouri
|
|
|
Total
|
|
|
Construction and land development
|
|
$ |
111,700 |
|
|
$ |
54,507 |
|
|
$ |
58,132 |
|
|
$ |
11,073 |
|
|
$ |
49,878 |
|
|
$ |
18,386 |
|
|
$ |
8,032 |
|
|
$ |
311,708 |
|
|
Retail
|
|
|
140,351 |
|
|
|
185,379 |
|
|
|
57,024 |
|
|
|
12,015 |
|
|
|
20,851 |
|
|
|
55,779 |
|
|
|
10,416 |
|
|
|
481,815 |
|
|
Office
|
|
|
96,299 |
|
|
|
159,734 |
|
|
|
73,783 |
|
|
|
12,565 |
|
|
|
11,337 |
|
|
|
32,246 |
|
|
|
61 |
|
|
|
386,025 |
|
|
Multifamily
|
|
|
135,241 |
|
|
|
160,137 |
|
|
|
21,676 |
|
|
|
63,377 |
|
|
|
22,323 |
|
|
|
18,261 |
|
|
|
11,531 |
|
|
|
432,546 |
|
|
Industrial
|
|
|
55,458 |
|
|
|
173,454 |
|
|
|
29,338 |
|
|
|
543 |
|
|
|
1,020 |
|
|
|
17,108 |
|
|
|
10,541 |
|
|
|
287,462 |
|
|
Other real estate
|
|
|
128,454 |
|
|
|
78,998 |
|
|
|
43,013 |
|
|
|
30,407 |
|
|
|
38,344 |
|
|
|
36,853 |
|
|
|
8,478 |
|
|
|
364,547 |
|
|
Total commercial real estate loans
|
|
$ |
667,503 |
|
|
$ |
812,209 |
|
|
$ |
282,966 |
|
|
$ |
129,980 |
|
|
$ |
143,753 |
|
|
$ |
178,633 |
|
|
$ |
49,059 |
|
|
$ |
2,264,103 |
|
Construction and land development loans, which consist primarily of residential construction properties and developed building lots, decreased $16 million from December 31, 2011 to $312 million at March 31, 2012 primarily due to payments. In addition, $4.1 million of construction and land development loans were charged-off and $415 thousand were transferred to other real estate owned in the first quarter of 2012. This sector of the loan portfolio is expected to continue to decrease as construction projects currently in process are completed.
Loans secured by multifamily residential properties increased $64 million, primarily concentrated in the Texas and Colorado markets. Loans secured by retail properties decreased $28 million from December 31, 2011 due primarily to decreases in the Texas and Kansas/Missouri markets, partially offset by an increase in the Oklahoma market. Loans secured by other commercial real estate decreased $25 million from December 31, 2011, primarily in the New Mexico market. Loans secured by office buildings decreased $20 million during the first quarter, primarily in the Texas and Colorado markets, partially offset by an increase in the Oklahoma market.
Residential Mortgage and Consumer
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. Consumer loans include direct loans secured by and for the purchase of automobiles, recreational and marine equipment as well as other unsecured loans. Consumer loans also include indirect automobile loans made through primary dealers. Residential mortgage and consumer 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 $2.0 billion, down $9.6 million compared to December 31, 2011. In general, we sell the majority of our conforming fixed-rate loan originations 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.
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. The aggregate outstanding balance of loans in these programs is approximately $970 million at March 31, 2012. Jumbo loans may be fixed or variable rate and are fully amortizing. The size of jumbo loans exceeds maximums set under government sponsored entity standards. Otherwise jumbo loans 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.
Approximately $82 million or 7% of the non-guaranteed portion of the permanent mortgage loans at March 31, 2012 consist of first lien, fixed rate residential mortgage loans originated under various community development programs, down $2.5 million from December 31, 2011. These loans were underwritten to standards approved by various U.S. government agencies under these programs and include full documentation. However, these loans do have a higher risk of delinquency and losses in the event of default than traditional residential mortgage loans. The initial maximum LTV of loans in these programs was 103%.
At March 31, 2012, $181 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 $38 million of residential mortgage loans previously sold into GNMA mortgage pools. The Company 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 on the Consolidated Balance Sheet. The remaining amount represents loans that the Company has repurchased from GNMA mortgage pools. Permanent residential mortgage loans guaranteed by U.S. government agencies decreased $4.1 million compared to December 31, 2011.
Home equity loans totaled $647 million at March 31, 2012, a $12 million increase over December 31, 2011. Approximately 40% of the home equity loan portfolio is comprised of junior lien loans and 60% of the home equity loans portfolio is comprised of first lien loans. Junior lien loans are distributed 75% to amortizing term loans and 25% 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.
Indirect automobile loans decreased $23 million from December 31, 2011, primarily due to the previously-disclosed decision by the Company to exit the business in the first quarter of 2009 in favor of a customer-focused direct lending approach. Approximately $82 million of indirect automobile loans remain outstanding at March 31, 2012. Other consumer loans decreased $15 million during the first quarter of 2012.
The composition of residential mortgage and consumer loans at March 31, 2012 is as follows in Table 22. All permanent residential mortgage loans originated and serviced by our mortgage banking unit and retained within the consolidated group are attributed to the Oklahoma market. Other permanent residential mortgage loans originated by the Company subsidiary bank are attributed to their respective principal market.
Table 22 – Residential Mortgage and Consumer Loans by Principal Market
(In thousands)
| |
|
Oklahoma
|
|
|
Texas
|
|
|
New Mexico
|
|
|
Arkansas
|
|
|
Colorado
|
|
|
Arizona
|
|
|
Kansas/
Missouri
|
|
|
Total
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
$ |
859,954 |
|
|
$ |
152,133 |
|
|
$ |
10,196 |
|
|
$ |
8,856 |
|
|
$ |
36,628 |
|
|
$ |
59,217 |
|
|
$ |
6,207 |
|
|
$ |
1,133,191 |
|
|
Permanent mortgages guaranteed by U.S. government agencies
|
|
|
180,862 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
180,862 |
|
|
Home equity
|
|
|
395,950 |
|
|
|
107,040 |
|
|
|
94,299 |
|
|
|
4,922 |
|
|
|
23,899 |
|
|
|
14,487 |
|
|
|
6,238 |
|
|
|
646,835 |
|
|
Total residential mortgage
|
|
$ |
1,436,766 |
|
|
$ |
259,173 |
|
|
$ |
104,495 |
|
|
$ |
13,778 |
|
|
$ |
60,527 |
|
|
$ |
73,704 |
|
|
$ |
12,445 |
|
|
$ |
1,960,888 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
$ |
43,750 |
|
|
$ |
14,098 |
|
|
$ |
– |
|
|
$ |
23,943 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
81,791 |
|
|
Other consumer
|
|
|
166,611 |
|
|
|
109,506 |
|
|
|
18,185 |
|
|
|
4,989 |
|
|
|
19,813 |
|
|
|
5,381 |
|
|
|
3,536 |
|
|
|
328,021 |
|
|
Total consumer
|
|
$ |
210,361 |
|
|
$ |
123,604 |
|
|
$ |
18,185 |
|
|
$ |
28,932 |
|
|
$ |
19,813 |
|
|
$ |
5,381 |
|
|
$ |
3,536 |
|
|
$ |
409,812 |
|
Loan Commitments
We enter into certain off-balance sheet arrangements in the normal course of business. These arrangements included unfunded loan commitments which totaled $6.0 billion and standby letters of credit which totaled $556 million at March 31, 2012. 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 $3.1 million of the outstanding standby letters of credit were issued on behalf of customers whose loans are nonperforming at March 31, 2012.
As more fully described in Note 5 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 March 31, 2012, the principal balance of residential mortgage loans sold subject to recourse obligations totaled $248 million, down from $259 million from December 31, 2011. Substantially all of these loans are to borrowers in our primary markets including $177 million to borrowers in Oklahoma, $22 million to borrowers in Arkansas, $15 million to borrowers in New Mexico, $14 million to borrowers in the Kansas/Missouri area and $12 million to borrowers in Texas.
Under certain conditions, we also have an off-balance sheet obligation to repurchase residential mortgage loans sold to government sponsored entities through our mortgage banking activities. These obligation arise from standard representations and warranties made under contractual agreements. At March 31, 2012, we have unresolved deficiency requests from the agencies on 280 loans with an aggregate outstanding balance of $36 million. At December 31, 2011, we had unresolved deficiency requests from the agencies on 247 loans with an aggregate outstanding balance of $37 million. For all of 2012, 2011 and 2010 combined, 10% of repurchase requests have currently resulted in actual repurchases or indemnification by the Company. We repurchased 15 loans from the agencies during the first quarter of 2012 for $2.0 million and recognized minimal losses. At March 31, 2012, we have a $2.1 million accrual for credit losses related to potential loan repurchases under representations and warranties.
Customer Derivative Programs
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, or to take positions in derivative contracts. 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 to minimize the risk to us of 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 margin collateral 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 counterparties 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 supported 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 March 31, 2012, the net fair value of derivative contracts reported as assets under these programs totaled $379 million, up from $287 million at December 31, 2011. Derivative contracts carried as assets included foreign exchange contracts with fair values of $190 million, energy contracts with fair values of $91 million and interest rate contracts with fair values of $90 million. The aggregate net fair values of derivative contracts held under these programs reported as liabilities totaled $280 million.
At March 31, 2012, total derivative assets were reduced by $12 million of cash collateral received from counterparties and total derivative liabilities were reduced by $116 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 March 31, 2012 follows in Table 23.
Table 23 – Fair Value of Derivative Contracts
(In thousands)
|
Customers
|
|
$ |
228,533 |
|
|
Banks and other financial institutions
|
|
|
135,373 |
|
|
Exchanges
|
|
|
5,097 |
|
|
Energy companies
|
|
|
10,273 |
|
|
Fair value of customer hedge asset derivative contracts, net
|
|
$ |
379,276 |
|
At March 31, 2012, the largest exposure to a single counterparty, an energy customer, totaled $16 million. This amount was fully secured by cash and securities as of March 31, 2012.
Our aggregate gross exposure to all European banks totaled $7.4 million at March 31, 2012. In addition, $8.5 million is owed to us by MF Global which filed for bankruptcy protection on October 31, 2011 after partial distributions from the bankruptcy trustee. The remaining amount due was written down during the fourth quarter of 2011 to $6.8 million based on our evaluation of the amount we expect to recover.
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 $36.89 per barrel of oil would increase the fair value of derivative assets by $82 million. An increase in prices equivalent to $171.23 per barrel of oil would increase the fair value of derivative assets by $368 million as current prices move away from the fixed prices embedded in our existing contracts. Liquidity requirements of this program are also affected by our credit rating. A decrease in credit rating from A1 to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $42 million.
Summary of Loan Loss Experience
We maintain an allowance for loan losses and an accrual for off-balance sheet credit risk. The combined allowance for loan losses and accrual for off-balance sheet credit losses totaled $254 million or 2.20% of outstanding loans and 138% of nonaccruing loans at March 31, 2012. The allowance for loans losses was $244 million and the accrual for off-balance sheet credit losses was $10 million. The combined allowance for loan losses and accrual for off-balance sheet credit losses totaled $263 million or 2.33% of outstanding loans and 130% of nonaccruing loans at December 31, 2011. The allowance for loans losses was $253 million and the accrual for off-balance sheet credit losses was $9.3 million. The accrual for off-balance sheet losses for both March 31, 2012 and December 31, 2011 included $7.1 million related to an Oklahoma Supreme Court ruling that reversed a loan settlement agreement between the Company and the City of Tulsa. The refund of this settlement will increase future net charge-offs.
The provision for credit losses is the amount necessary to maintain the allowance for loan losses and 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 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 and after the exhaustion of collection efforts. No provision for credit losses was recorded in the first quarter of 2012 based on a continued trend of declining charge-offs, reduced nonaccruing loans and improvement in other credit quality factors. A negative provision for credit losses of $15 million was recorded in the fourth quarter of 2011 and the provision for credit losses totaled $6.3 million in the first quarter of 2011.
Table 24 – Summary of Loan Loss Experience
(In thousands)
| |
|
Three Months Ended
|
|
| |
|
March 31,
|
|
|
Dec. 31,
|
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$ |
253,481 |
|
|
$ |
271,456 |
|
|
$ |
286,611 |
|
|
$ |
289,549 |
|
|
$ |
292,971 |
|
|
Loans charged off:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
2,934 |
|
|
|
4,099 |
|
|
|
5,083 |
|
|
|
3,302 |
|
|
|
2,352 |
|
|
Commercial real estate
|
|
|
6,725 |
|
|
|
3,365 |
|
|
|
2,335 |
|
|
|
3,380 |
|
|
|
6,893 |
|
|
Residential mortgage
|
|
|
1,786 |
|
|
|
4,375 |
|
|
|
3,403 |
|
|
|
3,381 |
|
|
|
2,948 |
|
|
Consumer
|
|
|
2,229 |
|
|
|
2,932 |
|
|
|
3,202 |
|
|
|
2,711 |
|
|
|
3,039 |
|
|
Total
|
|
|
13,674 |
|
|
|
14,771 |
|
|
|
14,023 |
|
|
|
12,774 |
|
|
|
15,232 |
|
|
Recoveries of loans previously charged off:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1,946 |
|
|
|
2,316 |
|
|
|
1,404 |
|
|
|
2,187 |
|
|
|
1,571 |
|
|
Commercial real estate
|
|
|
1,312 |
|
|
|
1,220 |
|
|
|
911 |
|
|
|
306 |
|
|
|
343 |
|
|
Residential mortgage
|
|
|
411 |
|
|
|
715 |
|
|
|
283 |
|
|
|
254 |
|
|
|
1,082 |
|
|
Consumer
|
|
|
1,520 |
|
|
|
1,060 |
|
|
|
1,271 |
|
|
|
1,509 |
|
|
|
1,918 |
|
|
Total
|
|
|
5,189 |
|
|
|
5,311 |
|
|
|
3,869 |
|
|
|
4,256 |
|
|
|
4,914 |
|
|
Net loans charged off
|
|
|
8,485 |
|
|
|
9,460 |
|
|
|
10,154 |
|
|
|
8,518 |
|
|
|
10,318 |
|
|
Provision for (reduction of ) allowance for loan losses
|
|
|
(787 |
) |
|
|
(8,515 |
) |
|
|
(5,001 |
) |
|
|
5,580 |
|
|
|
6,896 |
|
|
Ending balance
|
|
$ |
244,209 |
|
|
$ |
253,481 |
|
|
$ |
271,456 |
|
|
$ |
286,611 |
|
|
$ |
289,549 |
|
|
Allowance for off-balance sheet credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$ |
9,261 |
|
|
$ |
15,746 |
|
|
$ |
10,745 |
|
|
$ |
13,625 |
|
|
$ |
14,271 |
|
|
Provision for (reduction of) accrual for off-balance sheet credit losses
|
|
|
787 |
|
|
|
(6,485 |
) |
|
|
5,001 |
|
|
|
(2,880 |
) |
|
|
(646 |
) |
|
Ending balance
|
|
$ |
10,048 |
|
|
$ |
9,261 |
|
|
$ |
15,746 |
|
|
$ |
10,745 |
|
|
$ |
13,625 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for (reduction of ) allowance for credit losses
|
|
$ |
– |
|
|
$ |
(15,000 |
) |
|
$ |
– |
|
|
$ |
2,700 |
|
|
$ |
6,250 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to loans outstanding at period-end
|
|
|
2.11 |
% |
|
|
2.25 |
% |
|
|
2.44 |
% |
|
|
2.67 |
% |
|
|
2.73 |
% |
|
Net charge-offs (annualized) to average loans
|
|
|
0.30 |
|
|
|
0.34 |
|
|
|
0.37 |
|
|
|
0.32 |
|
|
|
0.39 |
|
|
Total provision for (reduction of) allowance for credit losses (annualized) to average loans
|
|
|
– |
|
|
|
(0.54 |
) |
|
|
– |
|
|
|
0.10 |
|
|
|
0.23 |
|
|
Recoveries to gross charge-offs
|
|
|
37.95 |
|
|
|
35.96 |
|
|
|
27.59 |
|
|
|
33.32 |
|
|
|
32.26 |
|
|
Accrual for off-balance sheet credit losses to off-balance sheet credit commitments
|
|
|
0.15 |
|
|
|
0.14 |
|
|
|
0.25 |
|
|
|
0.18 |
|
|
|
0.24 |
|
|
Combined allowance for loan losses and accrual for off-balance sheet credit losses to loans outstanding at period-end
|
|
|
2.20 |
|
|
|
2.33 |
|
|
|
2.58 |
|
|
|
2.77 |
|
|
|
2.86 |
|
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 expected loss rates by loan class and non-specific allowances based on general economic, risk concentration and related factors.
At March 31, 2012, impaired loans totaled $160 million, including $8.8 million of impaired loans with specific allowances of $2.3 million and $152 million with no specific allowances because the loan balances represent the amounts we expect to recover. At December 31, 2011, impaired loans totaled $176 million, including $22 million of impaired loans with specific allowances of $5.8 million and $155 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 $198 million at March 31, 2012 and $201 million at December 31, 2011. The decrease in the aggregate amount of general allowance for unimpaired loans was primarily due to the declining trend of charge-offs.
Nonspecific allowances are maintained for risks beyond factors specific to a particular loan 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 $44 million at March 31, 2012 and $46 million at December 31, 2011. At March 31, 2012 the nonspecific allowance includes consideration of the recent bankruptcy filing by a major employer in the Tulsa, Dallas/Ft. Worth and Kansas City markets. Although, we have no direct exposure, the secondary effect on employees, retirees, vendors, suppliers and other business partners could be significant. The nonspecific allowance also considers the possible impact of the European debt crisis and similar economic factors on our loan portfolio.
An allocation of the allowance for loan losses by loan category is included in Note 4 to the Consolidated Financial Statements.
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’ ability to comply with current repayment terms. These potential problem loans totaled $173 million at March 31, 2012. The composition of potential problem loans by loan class included: services - $39 million, construction and land development - $28 million, wholesale / retail - $23 million, other commercial real estate - $14 million, residential mortgage - $14 million, commercial real estate secured by office buildings - $12 million and manufacturing - $10 million. Potential problem loans totaled $161 million at December 31, 2011.
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. Commercial and commercial real estate loans are evaluated quarterly and charge-offs are taken in the quarter in which the loss is identified. Residential mortgage and consumer loans are generally charged off when payments are between 90 days and 180 days past due, depending on the loan class.
Net loans charged off during the first quarter of 2012 totaled $8.5 million compared to $9.5 million in the fourth quarter of 2011 and $10.3 million in the first quarter of 2011. The ratio of net loans charged off (annualized) to average outstanding loans was 0.30% for the first quarter of 2012 compared to 0.34% for the fourth quarter of 2011 and 0.39% for the first quarter of 2011. Net loans charged off in the first quarter of 2012 decreased $975 thousand compared to the previous quarter.
Net loans charged off by loan portfolio and principal market area during the first quarter of 2012 follow in Table 25.
Table 25 – Net Loans Charged Off
(In thousands)
| |
|
Oklahoma
|
|
|
Texas
|
|
|
Colorado
|
|
|
Arkansas
|
|
|
New
Mexico
|
|
|
Arizona
|
|
|
Kansas/
Missouri
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
633 |
|
|
$ |
(47 |
) |
|
$ |
64 |
|
|
$ |
– |
|
|
$ |
(42 |
) |
|
$ |
381 |
|
|
$ |
(1 |
) |
|
$ |
988 |
|
|
Commercial real estate
|
|
|
(426 |
) |
|
|
(62 |
) |
|
|
1,804 |
|
|
|
– |
|
|
|
776 |
|
|
|
3,321 |
|
|
|
– |
|
|
|
5,413 |
|
|
Residential mortgage
|
|
|
1,143 |
|
|
|
193 |
|
|
|
– |
|
|
|
34 |
|
|
|
54 |
|
|
|
(122 |
) |
|
|
73 |
|
|
|
1,375 |
|
|
Consumer
|
|
|
304 |
|
|
|
200 |
|
|
|
20 |
|
|
|
29 |
|
|
|
98 |
|
|
|
43 |
|
|
|
15 |
|
|
|
709 |
|
|
Total net loans charged off
|
|
$ |
1,654 |
|
|
$ |
284 |
|
|
$ |
1,888 |
|
|
$ |
63 |
|
|
$ |
886 |
|
|
$ |
3,623 |
|
|
$ |
87 |
|
|
$ |
8,485 |
|
Net commercial loans charged off during the first quarter of 2012 decreased $795 thousand compared to fourth quarter of 2011 and were composed primarily of $1.0 million from the retail sector of the commercial loan portfolio in the Oklahoma market.
Net charge-offs of commercial real estate loans increased $3.3 million over the fourth quarter of 2011 and included $3.4 million of land and residential construction sector loans primarily in the Arizona, Colorado and New Mexico markets and $2.2 million of loans secured by other commercial real estate properties primarily in the Arizona market.
Residential mortgage net charge-offs were down $2.3 million compared to the fourth quarter of 2011. Consumer loan net charge-offs, which includes indirect auto loan and deposit account overdraft losses, decreased $1.2 million compared to the previous quarter. All residential mortgage net charge-offs related to loans serviced by our mortgage company across our geographical footprint are attributed to the Oklahoma market.
Nonperforming Assets
Table 26 – Nonperforming Assets
(In thousands)
| |
|
Mar. 31,
|
|
|
Dec. 31,
|
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
Mar. 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
Nonaccrual loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
61,750 |
|
|
$ |
68,811 |
|
|
$ |
83,736 |
|
|
$ |
53,365 |
|
|
$ |
57,449 |
|
|
Commercial real estate
|
|
|
86,475 |
|
|
|
99,193 |
|
|
|
110,048 |
|
|
|
110,363 |
|
|
|
125,504 |
|
|
Residential mortgage
|
|
|
27,462 |
|
|
|
29,767 |
|
|
|
31,731 |
|
|
|
31,693 |
|
|
|
37,824 |
|
|
Consumer
|
|
|
7,672 |
|
|
|
3,515 |
|
|
|
3,960 |
|
|
|
4,749 |
|
|
|
5,185 |
|
|
Total nonaccrual loans
|
|
|
183,359 |
|
|
|
201,286 |
|
|
|
229,475 |
|
|
|
200,170 |
|
|
|
225,962 |
|
|
Renegotiated loans2
|
|
|
36,764 |
|
|
|
32,893 |
|
|
|
30,477 |
|
|
|
22,261 |
|
|
|
21,705 |
|
|
Total nonperforming loans
|
|
|
220,123 |
|
|
|
234,179 |
|
|
|
259,952 |
|
|
|
222,431 |
|
|
|
247,667 |
|
|
Other nonperforming assets
|
|
|
115,790 |
|
|
|
122,753 |
|
|
|
127,943 |
|
|
|
129,026 |
|
|
|
131,420 |
|
|
Total nonperforming assets
|
|
$ |
335,913 |
|
|
$ |
356,932 |
|
|
$ |
387,895 |
|
|
$ |
351,457 |
|
|
$ |
379,087 |
|
|
Nonaccrual loans by principal market:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oklahoma
|
|
$ |
64,097 |
|
|
$ |
65,261 |
|
|
$ |
73,794 |
|
|
$ |
41,411 |
|
|
$ |
49,585 |
|
|
Texas
|
|
|
29,745 |
|
|
|
28,083 |
|
|
|
29,783 |
|
|
|
32,385 |
|
|
|
34,404 |
|
|
New Mexico
|
|
|
15,029 |
|
|
|
15,297 |
|
|
|
17,242 |
|
|
|
17,244 |
|
|
|
17,510 |
|
|
Arkansas
|
|
|
18,066 |
|
|
|
23,450 |
|
|
|
26,831 |
|
|
|
24,842 |
|
|
|
29,769 |
|
|
Colorado
|
|
|
28,990 |
|
|
|
33,522 |
|
|
|
36,854 |
|
|
|
37,472 |
|
|
|
40,629 |
|
|
Arizona
|
|
|
27,397 |
|
|
|
35,673 |
|
|
|
44,929 |
|
|
|
43,307 |
|
|
|
54,065 |
|
|
Kansas / Missouri
|
|
|
35 |
|
|
|
– |
|
|
|
42 |
|
|
|
3,509 |
|
|
|
– |
|
|
Total nonaccrual loans
|
|
$ |
183,359 |
|
|
$ |
201,286 |
|
|
$ |
229,475 |
|
|
$ |
200,170 |
|
|
$ |
225,962 |
|
|
Nonaccrual loans by loan portfolio sector:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
336 |
|
|
$ |
336 |
|
|
$ |
3,900 |
|
|
$ |
345 |
|
|
$ |
415 |
|
|
Manufacturing
|
|
|
23,402 |
|
|
|
23,051 |
|
|
|
27,691 |
|
|
|
4,366 |
|
|
|
4,545 |
|
|
Wholesale / retail
|
|
|
15,388 |
|
|
|
21,180 |
|
|
|
27,088 |
|
|
|
25,138 |
|
|
|
30,411 |
|
|
Integrated food services
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
6 |
|
|
Services
|
|
|
12,890 |
|
|
|
16,968 |
|
|
|
18,181 |
|
|
|
16,254 |
|
|
|
15,720 |
|
|
Healthcare
|
|
|
7,946 |
|
|
|
5,486 |
|
|
|
5,715 |
|
|
|
5,962 |
|
|
|
2,574 |
|
|
Other
|
|
|
1,788 |
|
|
|
1,790 |
|
|
|
1,161 |
|
|
|
1,300 |
|
|
|
3,778 |
|
|
Total commercial
|
|
|
61,750 |
|
|
|
68,811 |
|
|
|
83,736 |
|
|
|
53,365 |
|
|
|
57,449 |
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land development and construction
|
|
|
52,416 |
|
|
|
61,874 |
|
|
|
72,207 |
|
|
|
76,265 |
|
|
|
90,707 |
|
|
Retail
|
|
|
6,193 |
|
|
|
6,863 |
|
|
|
6,492 |
|
|
|
4,642 |
|
|
|
5,276 |
|
|
Office
|
|
|
10,733 |
|
|
|
11,457 |
|
|
|
11,967 |
|
|
|
11,473 |
|
|
|
14,628 |
|
|
Multifamily
|
|
|
3,414 |
|
|
|
3,513 |
|
|
|
4,036 |
|
|
|
4,717 |
|
|
|
1,900 |
|
|
Other commercial real estate
|
|
|
13,719 |
|
|
|
15,486 |
|
|
|
15,346 |
|
|
|
13,266 |
|
|
|
12,993 |
|
|
Total commercial real estate
|
|
|
86,475 |
|
|
|
99,193 |
|
|
|
110,048 |
|
|
|
110,363 |
|
|
|
125,504 |
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
22,822 |
|
|
|
25,366 |
|
|
|
27,486 |
|
|
|
27,991 |
|
|
|
33,466 |
|
|
Home equity
|
|
|
4,640 |
|
|
|
4,401 |
|
|
|
4,245 |
|
|
|
3,702 |
|
|
|
4,358 |
|
|
Total residential mortgage
|
|
|
27,462 |
|
|
|
29,767 |
|
|
|
31,731 |
|
|
|
31,693 |
|
|
|
37,824 |
|
|
Consumer
|
|
|
7,672 |
|
|
|
3,515 |
|
|
|
3,960 |
|
|
|
4,749 |
|
|
|
5,185 |
|
|
Total nonaccrual loans
|
|
$ |
183,359 |
|
|
$ |
201,286 |
|
|
$ |
229,475 |
|
|
$ |
200,170 |
|
|
$ |
225,962 |
|
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to nonaccruing loans
|
|
|
133.19 |
% |
|
|
125.93 |
% |
|
|
118.29 |
% |
|
|
143.18 |
% |
|
|
128.14 |
% |
|
Nonaccruing loans to period-end loans
|
|
|
1.58 |
% |
|
|
1.79 |
% |
|
|
2.06 |
% |
|
|
1.86 |
% |
|
|
2.13 |
% |
|
Accruing loans 90 days or more past due1
|
|
$ |
6,140 |
|
|
$ |
2,496 |
|
|
$ |
1,401 |
|
|
$ |
2,341 |
|
|
$ |
8,043 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Excludes residential mortgages guaranteed by agencies of the U.S. Government.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2Includes residential mortgages guaranteed by agencies of the U.S. Government. These loans have been modified to extend payment terms and/or reduce interest rates.
|
|
$ |
32,770 |
|
|
|
28,974 |
|
|
|
26,670 |
|
|
|
18,716 |
|
|
|
18,304 |
|
Nonperforming assets decreased $21 million during the first quarter of 2012 to $336 million or 2.87% of outstanding loans and repossessed assets at March 31, 2012. Nonaccruing loans totaled $183 million, renegotiated residential mortgage loans totaled $37 million (composed primarily of $33 million of residential mortgage loans guaranteed by U.S. government agencies) and real estate and other repossessed assets totaled $116 million. The Company generally retains nonperforming assets to maximize potential recovery which may cause future nonperforming assets to decrease more slowly.
Loans are 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 nonaccruing commercial and commercial real estate loans in troubled debt restructurings. Modifications may include extension of payment terms and rate concessions. We do not forgive principal or accrued but unpaid interest. We may also renew matured nonaccruing loans. 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. Nonaccruing loans generally remain on nonaccrual 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 modify consumer loans to troubled borrowers.
Renegotiated loans represent accruing residential mortgage loans 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. We do not initiate foreclosure on residential mortgage loans with pending modifications. Interest continues to accrue based on the modified terms of the loan. If it becomes probable that we will not be able to collect all amounts due according to the modified loan terms, the loan is placed on nonaccrual status and included in nonaccrual loans. 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 first quarter of 2012 follows in Table 27.
Table 27 – Rollforward of Nonperforming Assets
(In thousands)
| |
|
For the Three Months Ended March 31, 2012
|
|
| |
|
Nonaccruing Loans
|
|
|
Renegotiated Loans
|
|
|
Real Estate and Other Repossessed Assets
|
|
|
Total Nonperforming Assets
|
|
|
Balance, December 31, 2011
|
|
$ |
201,286 |
|
|
$ |
32,893 |
|
|
$ |
122,753 |
|
|
$ |
356,932 |
|
|
Additions
|
|
|
21,096 |
|
|
|
6,828 |
|
|
|
– |
|
|
|
27,924 |
|
|
Payments
|
|
|
(19,569 |
) |
|
|
(342 |
) |
|
|
– |
|
|
|
(19,911 |
) |
|
Charge-offs
|
|
|
(13,674 |
) |
|
|
– |
|
|
|
– |
|
|
|
(13,674 |
) |
|
Net write-downs and losses
|
|
|
– |
|
|
|
– |
|
|
|
(520 |
) |
|
|
(520 |
) |
|
Foreclosure of nonaccruing loans
|
|
|
(8,293 |
) |
|
|
– |
|
|
|
8,293 |
|
|
|
– |
|
|
Foreclosure of loans guaranteed by U.S. government agencies
|
|
|
– |
|
|
|
– |
|
|
|
17,748 |
|
|
|
17,748 |
|
|
Proceeds from sales
|
|
|
– |
|
|
|
(2,699 |
) |
|
|
(33,432 |
) |
|
|
(36,131 |
) |
|
Net transfers from nonaccruing loans
|
|
|
(182 |
) |
|
|
182 |
|
|
|
– |
|
|
|
– |
|
|
Other, net
|
|
|
2,695 |
|
|
|
(98 |
) |
|
|
948 |
|
|
|
3,545 |
|
|
Balance, March 31, 2012
|
|
$ |
183,359 |
|
|
$ |
36,764 |
|
|
$ |
115,790 |
|
|
$ |
335,913 |
|
We foreclose on loans guaranteed by U.S. government agencies in accordance with agency guidelines. Generally these loans are not eligible for modification programs. 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. During the first quarter of 2012, $18 million of properties guaranteed by U.S. government agencies were foreclosed on. In addition, Proceeds from sales above include $15 million of properties conveyed to the applicable U.S. government agencies during the first quarter.
Nonaccruing loans totaled $183 million or 1.58% of outstanding loans at March 31, 2012 compared to $201 million or 1.79% of outstanding loans at December 31, 2011. Nonaccruing loans decreased $18 million from December 31, 2011 primarily due to $20 million of payments, $14 million of charge-offs and $8.3 million of foreclosures. Newly identified nonaccruing loans totaled $21 million for the first quarter of 2012.
The distribution of nonaccruing loans among our various markets follows in Table 28.
Table 28 – Nonaccruing Loans by Principal Market
(Dollars In thousands)
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
Change
|
|
| |
|
Amount
|
|
|
% of outstanding loans
|
|
|
Amount
|
|
|
% of outstanding loans
|
|
|
Amount
|
|
|
% of outstanding loans
|
|
|
Oklahoma
|
|
$ |
64,097 |
|
|
|
1.22 |
% |
|
$ |
65,261 |
|
|
|
1.31 |
% |
|
$ |
(1,164 |
) |
|
|
(9 |
) bp |
|
Texas
|
|
|
29,745 |
|
|
|
0.85 |
|
|
|
28,083 |
|
|
|
0.82 |
|
|
|
1,662 |
|
|
|
3 |
|
|
New Mexico
|
|
|
15,029 |
|
|
|
2.21 |
|
|
|
15,297 |
|
|
|
2.22 |
|
|
|
(268 |
) |
|
|
(1 |
) |
|
Arkansas
|
|
|
18,066 |
|
|
|
7.31 |
|
|
|
23,450 |
|
|
|
8.87 |
|
|
|
(5,384 |
) |
|
|
(156 |
) |
|
Colorado
|
|
|
28,990 |
|
|
|
3.72 |
|
|
|
33,522 |
|
|
|
4.20 |
|
|
|
(4,532 |
) |
|
|
(48 |
) |
|
Arizona
|
|
|
27,397 |
|
|
|
5.05 |
|
|
|
35,673 |
|
|
|
6.27 |
|
|
|
(8,276 |
) |
|
|
(122 |
) |
|
Kansas / Missouri
|
|
|
35 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
35 |
|
|
|
– |
|
|
Total
|
|
$ |
183,359 |
|
|
|
1.58 |
% |
|
$ |
201,286 |
|
|
|
1.79 |
% |
|
$ |
(17,927 |
) |
|
|
(21 |
) bp |
Nonaccruing loans in the Oklahoma market are primarily composed of $22 million of manufacturing sector loans, $20 million of permanent residential mortgage loans and $16 million of commercial real estate loans. All residential loans originated and serviced by our mortgage company across our geographical footprint are attributed to the Oklahoma market. Nonaccruing loans in the Arizona and Colorado markets consisted primarily of commercial real estate loans. Nonaccruing loans attributed to the Texas market included $10 million of commercial real estate loans, $4.6 million of healthcare sector loans, $4.1 million of residential mortgage loans, and $3.4 million of service sector loans. Nonaccruing loans attributed to the Colorado market are primarily composed of commercial real estate loans. Nonaccruing loans attributed to the Arizona market are primarily composed of $19 million of commercial real estate loans and $4.7 million of service sector loans.
Commercial
Nonaccruing commercial loans totaled $62 million or 0.89% of total commercial loans at March 31, 2012, down from $69 million or 1.05% of total commercial loans at December 31, 2011. At March 31, 2012, nonaccruing commercial loans were primarily composed of $23 million or 6.46% of total manufacturing sector loans, $15 million or 1.53% of total wholesale/retail sector loans and $13 million or 0.69% of total services sector loans. Nonaccruing manufacturing sector loans were primarily composed of a single customer in the Oklahoma market totaling $21 million at March 31, 2012 and $16 million at December 31, 2011. Nonaccruing wholesale/retail sector loans were primarily composed of a single customer relationship in the Arkansas market totaling $11 million at March 31, 2012 and $16 million at December 31, 2011.
Nonaccruing commercial loans decreased $7.1 million during the first quarter primarily due to $11 million of payments and $2.9 million of charge-offs, partially offset by $6.9 million of newly identified nonaccruing commercial loans.
The distribution of nonaccruing commercial loans among our various markets was as follows in Table 29.
Table 29 – Nonaccruing Commercial Loans by Principal Market
(Dollars in thousands)
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
Change
|
|
| |
|
Amount
|
|
|
% of outstanding loans
|
|
|
Amount
|
|
|
% of outstanding loans
|
|
|
Amount
|
|
|
% of outstanding loans
|
|
|
Oklahoma
|
|
$ |
26,456 |
|
|
|
0.90 |
% |
|
$ |
26,722 |
|
|
|
0.99 |
% |
|
$ |
(266 |
) |
|
|
(9 |
) bp |
|
Texas
|
|
|
11,751 |
|
|
|
0.51 |
|
|
|
12,037 |
|
|
|
0.54 |
|
|
|
(286 |
) |
|
|
(3 |
) |
|
New Mexico
|
|
|
2,854 |
|
|
|
1.04 |
|
|
|
3,056 |
|
|
|
1.21 |
|
|
|
(202 |
) |
|
|
(17 |
) |
|
Arkansas
|
|
|
11,369 |
|
|
|
15.29 |
|
|
|
16,648 |
|
|
|
19.33 |
|
|
|
(5,279 |
) |
|
|
(404 |
) |
|
Colorado
|
|
|
3,037 |
|
|
|
0.55 |
|
|
|
3,446 |
|
|
|
0.62 |
|
|
|
(409 |
) |
|
|
(7 |
) |
|
Arizona
|
|
|
6,283 |
|
|
|
2.21 |
|
|
|
6,902 |
|
|
|
2.39 |
|
|
|
(619 |
) |
|
|
(18 |
) |
|
Kansas / Missouri
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total commercial
|
|
$ |
61,750 |
|
|
|
0.89 |
% |
|
$ |
68,811 |
|
|
|
1.05 |
% |
|
$ |
(7,061 |
) |
|
|
(16 |
) bp |
Commercial Real Estate
Nonaccruing commercial real estate loans totaled $86 million or 3.82% of outstanding commercial real estate loans at March 31, 2012 compared to $99 million or 4.35% of outstanding commercial real estate loans at December 31, 2011. Nonaccruing commercial real estate loans continue to be largely concentrated in land development and residential construction loans. Nonaccruing commercial real estate loans were down $12.7 million compared to the prior quarter. Newly identified nonaccruing commercial real estate loans totaled $2.8 million, offset by $8.4 million of cash payments received, $6.7 million of charge-offs and $1.3 million of foreclosures. The distribution of our nonaccruing commercial real estate loans among our geographic markets follows in Table 30.
Table 30 – Nonaccruing Commercial Real Estate Loans by Principal Market
(Dollars in thousands)
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
Change
|
|
| |
|
Amount
|
|
|
% of outstanding loans
|
|
|
Amount
|
|
|
% of outstanding loans
|
|
|
Amount
|
|
|
% of outstanding loans
|
|
|
Oklahoma
|
|
$ |
15,519 |
|
|
|
2.32 |
% |
|
$ |
15,475 |
|
|
|
2.58 |
% |
|
$ |
44 |
|
|
|
(26 |
) bp |
|
Texas
|
|
|
9,914 |
|
|
|
1.22 |
|
|
|
11,491 |
|
|
|
1.38 |
|
|
|
(1,577 |
) |
|
|
(16 |
) bp |
|
New Mexico
|
|
|
10,651 |
|
|
|
3.76 |
|
|
|
10,590 |
|
|
|
3.34 |
|
|
|
61 |
|
|
|
42 |
bp |
|
Arkansas
|
|
|
5,588 |
|
|
|
4.30 |
|
|
|
5,638 |
|
|
|
4.42 |
|
|
|
(50 |
) |
|
|
(12 |
) bp |
|
Colorado
|
|
|
25,780 |
|
|
|
17.93 |
|
|
|
29,899 |
|
|
|
19.43 |
|
|
|
(4,119 |
) |
|
|
(150 |
) bp |
|
Arizona
|
|
|
19,023 |
|
|
|
10.65 |
|
|
|
26,100 |
|
|
|
13.54 |
|
|
|
(7,077 |
) |
|
|
(289 |
) bp |
|
Kansas / Missouri
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total commercial real estate
|
|
$ |
86,475 |
|
|
|
3.82 |
% |
|
$ |
99,193 |
|
|
|
4.35 |
% |
|
$ |
(12,718 |
) |
|
|
(53 |
) bp |
Nonaccruing commercial real estate loans were primarily concentrated in the Arizona and Colorado markets. Nonaccruing commercial real estate loans attributed to the Colorado market consist primarily of nonaccruing residential construction and land development loans. Nonaccruing commercial real estate loans attributed to the Arizona market consist primarily of $7.6 million of other commercial real estate loans, $6.8 million nonaccruing residential construction and land development loans, and $3.4 million of loans secured by office buildings.
Residential Mortgage and Consumer
Nonaccruing residential mortgage loans totaled $27 million or 1.40% of outstanding residential mortgage loans at March 31, 2012 compared to $30 million or 1.51% of outstanding residential mortgage loans at December 31, 2011. Newly identified nonaccrual residential mortgage loans totaled $4.8 million, offset by $1.8 million of loans charged off and $4.5 million of foreclosures during the quarter. Nonaccruing residential mortgage loans primarily consist of permanent residential mortgage loans which totaled $23 million or 1.74% of outstanding permanent residential mortgage loans at March 31, 2012. Nonaccruing home equity loans continued to perform well with only $4.6 million or 0.72% of total home equity loans in nonaccrual status.
Payments on accruing residential mortgage loans and consumer loans may be delinquent. The composition of residential mortgage loans and consumer loans that are past due but still accruing interest is included the following Table 31. Principally all non-guaranteed residential loans past due 90 days or more are nonaccruing. Residential mortgage loans 30 to 89 days past due decreased $5.5 million to $15 million at March 31, 2012. Consumer loans past due 30 to 89 days decreased $3.2 million from December 31, 2011. Residential mortgage loans past due 90 days or more decreased $589 thousand in the first quarter. Consumer loans past due 90 days or more increased $13 thousand in the first quarter of 2012.
Table 31 – Residential Mortgage and Consumer Loans Past Due
(In thousands)
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
| |
|
90 Days or More
|
|
|
30 to 89 Days
|
|
|
90 Days or More
|
|
|
30 to 89 Days
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage1
|
|
$ |
54 |
|
|
$ |
12,705 |
|
|
$ |
601 |
|
|
$ |
17,259 |
|
|
Home equity
|
|
|
– |
|
|
|
2,087 |
|
|
|
42 |
|
|
|
3,036 |
|
|
Total residential mortgage
|
|
$ |
54 |
|
|
$ |
14,792 |
|
|
$ |
643 |
|
|
$ |
20,295 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
$ |
– |
|
|
$ |
2,231 |
|
|
$ |
29 |
|
|
$ |
4,581 |
|
|
Other consumer
|
|
|
42 |
|
|
|
1,467 |
|
|
|
– |
|
|
|
2,286 |
|
|
Total consumer
|
|
$ |
42 |
|
|
$ |
3,698 |
|
|
$ |
29 |
|
|
$ |
6,867 |
|
|
1
|
Excludes past due residential mortgage loans guaranteed by agencies of the U.S. government.
|
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 $116 million at March 31, 2012, a $7.0 million decrease from December 31, 2011. The distribution of real estate and other repossessed assets attributed by geographical market is included in Table 32 following.
Table 32 – Real Estate and Other Repossessed Assets by Principal Market
(In thousands)
| |
|
Oklahoma
|
|
|
Texas
|
|
|
Colorado
|
|
|
Arkansas
|
|
|
New
Mexico
|
|
|
Arizona
|
|
|
Kansas/
Missouri
|
|
|
Other
|
|
|
Total
|
|
|
Developed commercial real estate properties
|
|
$ |
2,356 |
|
|
$ |
7,522 |
|
|
$ |
2,433 |
|
|
$ |
1,498 |
|
|
$ |
4,186 |
|
|
$ |
14,901 |
|
|
$ |
425 |
|
|
$ |
3,060 |
|
|
$ |
36,381 |
|
|
1-4 family residential properties
|
|
|
5,965 |
|
|
|
4,296 |
|
|
|
2,786 |
|
|
|
2,474 |
|
|
|
1,175 |
|
|
|
2,602 |
|
|
|
569 |
|
|
|
2,039 |
|
|
|
21,906 |
|
|
1-4 family residential properties guaranteed by U.S. government agencies
|
|
|
4,955 |
|
|
|
1,812 |
|
|
|
214 |
|
|
|
846 |
|
|
|
9,378 |
|
|
|
516 |
|
|
|
1,872 |
|
|
|
428 |
|
|
|
20,021 |
|
|
Undeveloped land
|
|
|
361 |
|
|
|
4,808 |
|
|
|
2,903 |
|
|
|
149 |
|
|
|
242 |
|
|
|
5,980 |
|
|
|
4,515 |
|
|
|
– |
|
|
|
18,958 |
|
|
Residential land development properties
|
|
|
840 |
|
|
|
5,305 |
|
|
|
2,305 |
|
|
|
92 |
|
|
|
– |
|
|
|
8,253 |
|
|
|
174 |
|
|
|
– |
|
|
|
16,969 |
|
|
Oil and gas properties
|
|
|
– |
|
|
|
734 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
734 |
|
|
Vehicles
|
|
|
150 |
|
|
|
77 |
|
|
|
– |
|
|
|
91 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
318 |
|
|
Construction equipment
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
317 |
|
|
|
– |
|
|
|
317 |
|
|
Multifamily residential properties
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
– |
|
|
|
153 |
|
|
|
– |
|
|
|
– |
|
|
|
153 |
|
|
Other
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
33 |
|
|
|
33 |
|
|
Total real estate and other repossessed assets
|
|
$ |
14,627 |
|
|
$ |
24,554 |
|
|
$ |
10,641 |
|
|
$ |
5,150 |
|
|
$ |
14,981 |
|
|
$ |
32,405 |
|
|
$ |
7,872 |
|
|
$ |
5,560 |
|
|
$ |
115,790 |
|
Undeveloped land is primarily zoned for commercial development. Developed commercial real estate properties are primarily completed with no additional construction necessary for sale.
Liquidity and Capital
Subsidiary Bank
Deposits and borrowed funds are the primary sources of liquidity for the subsidiary bank. Based on the average balances for the first quarter of 2012, approximately 73% of our funding was provided by deposit accounts, 10% from borrowed funds, 2% 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.
Average deposits for the first quarter of 2012 totaled $18.7 billion and represented approximately 73% of total liabilities and capital compared with $18.6 billion and 72% of total liabilities and capital for the fourth quarter of 2011. Average deposits increased $85 million over the fourth quarter of 2011. Average demand deposits increased $259 million due primarily to a $243 million increase in commercial demand deposits from energy and commercial and industrial customers. Average interest-bearing transaction deposit accounts increased $43 million. Increases in Consumer Banking deposits and Commercial Banking deposits were partially offset by a decrease in Wealth Management deposits. Average time deposits were down $239 million compared to the fourth quarter of 2011. Average commercial deposit balances increased $244 million primarily due to a $145 million increase in average deposits attributable to our energy customers and a $134 million increase in average deposits attributable to our treasury services customers. Commercial customers continue to retain large cash reserves primarily due to continued economic uncertainty.
Brokered deposits, which are included in time deposits, averaged $62 million for the first quarter of 2012, a $57 million decrease compared to the fourth quarter of 2011.
The distribution of our period-end deposit account balances among principal markets follows in Table 33.
Table 33 – Period-end Deposits by Principal Market Area
(In thousands)
| |
|
March 31,
|
|
|
Dec. 31,
|
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
Oklahoma:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
$ |
3,445,424 |
|
|
$ |
3,223,201 |
|
|
$ |
2,953,410 |
|
|
$ |
2,486,671 |
|
|
$ |
2,420,210 |
|
|
Interest-bearing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
5,889,625 |
|
|
|
6,050,986 |
|
|
|
6,038,770 |
|
|
|
5,916,784 |
|
|
|
6,068,304 |
|
|
Savings
|
|
|
148,556 |
|
|
|
126,763 |
|
|
|
122,829 |
|
|
|
120,278 |
|
|
|
120,020 |
|
|
Time
|
|
|
1,370,868 |
|
|
|
1,450,571 |
|
|
|
1,489,486 |
|
|
|
1,462,137 |
|
|
|
1,465,506 |
|
|
Total interest-bearing
|
|
|
7,409,049 |
|
|
|
7,628,320 |
|
|
|
7,651,085 |
|
|
|
7,499,199 |
|
|
|
7,653,830 |
|
|
Total Oklahoma
|
|
|
10,854,473 |
|
|
|
10,851,521 |
|
|
|
10,604,495 |
|
|
|
9,985,870 |
|
|
|
10,074,040 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
|
1,876,133 |
|
|
|
1,808,491 |
|
|
|
1,710,315 |
|
|
|
1,528,772 |
|
|
|
1,405,892 |
|
|
Interest-bearing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
1,734,655 |
|
|
|
1,940,819 |
|
|
|
1,820,116 |
|
|
|
1,741,176 |
|
|
|
1,977,850 |
|
|
Savings
|
|
|
50,331 |
|
|
|
45,872 |
|
|
|
42,272 |
|
|
|
42,185 |
|
|
|
40,313 |
|
|
Time
|
|
|
789,860 |
|
|
|
867,664 |
|
|
|
938,200 |
|
|
|
992,366 |
|
|
|
1,015,754 |
|
|
Total interest-bearing
|
|
|
2,574,846 |
|
|
|
2,854,355 |
|
|
|
2,800,588 |
|
|
|
2,775,727 |
|
|
|
3,033,917 |
|
|
Total Texas
|
|
|
4,450,979 |
|
|
|
4,662,846 |
|
|
|
4,510,903 |
|
|
|
4,304,499 |
|
|
|
4,439,809 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Mexico:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
|
333,707 |
|
|
|
319,269 |
|
|
|
325,612 |
|
|
|
299,305 |
|
|
|
282,708 |
|
|
Interest-bearing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
503,015 |
|
|
|
491,068 |
|
|
|
480,816 |
|
|
|
483,026 |
|
|
|
498,355 |
|
|
Savings
|
|
|
32,688 |
|
|
|
27,487 |
|
|
|
26,127 |
|
|
|
24,613 |
|
|
|
24,455 |
|
|
Time
|
|
|
392,234 |
|
|
|
410,722 |
|
|
|
431,436 |
|
|
|
449,618 |
|
|
|
453,580 |
|
|
Total interest-bearing
|
|
|
927,937 |
|
|
|
929,277 |
|
|
|
938,379 |
|
|
|
957,257 |
|
|
|
976,390 |
|
|
Total New Mexico
|
|
|
1,261,644 |
|
|
|
1,248,546 |
|
|
|
1,263,991 |
|
|
|
1,256,562 |
|
|
|
1,259,098 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arkansas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
|
22,843 |
|
|
|
18,513 |
|
|
|
21,809 |
|
|
|
17,452 |
|
|
|
15,144 |
|
|
Interest-bearing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
151,708 |
|
|
|
131,181 |
|
|
|
181,486 |
|
|
|
138,954 |
|
|
|
130,613 |
|
|
Savings
|
|
|
2,358 |
|
|
|
1,727 |
|
|
|
1,735 |
|
|
|
1,673 |
|
|
|
1,514 |
|
|
Time
|
|
|
54,157 |
|
|
|
61,329 |
|
|
|
74,163 |
|
|
|
82,112 |
|
|
|
94,889 |
|
|
Total interest-bearing
|
|
|
208,223 |
|
|
|
194,237 |
|
|
|
257,384 |
|
|
|
222,739 |
|
|
|
227,016 |
|
|
Total Arkansas
|
|
|
231,066 |
|
|
|
212,750 |
|
|
|
279,193 |
|
|
|
240,191 |
|
|
|
242,160 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
|
311,057 |
|
|
|
272,565 |
|
|
|
217,394 |
|
|
|
196,915 |
|
|
|
197,579 |
|
|
Interest-bearing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
476,718 |
|
|
|
511,993 |
|
|
|
520,743 |
|
|
|
509,738 |
|
|
|
528,948 |
|
|
Savings
|
|
|
23,409 |
|
|
|
22,771 |
|
|
|
22,599 |
|
|
|
21,406 |
|
|
|
21,655 |
|
|
Time
|
|
|
498,124 |
|
|
|
523,969 |
|
|
|
547,481 |
|
|
|
563,642 |
|
|
|
546,586 |
|
|
Total interest-bearing
|
|
|
998,251 |
|
|
|
1,058,733 |
|
|
|
1,090,823 |
|
|
|
1,094,786 |
|
|
|
1,097,189 |
|
|
Total Colorado
|
|
|
1,309,308 |
|
|
|
1,331,298 |
|
|
|
1,308,217 |
|
|
|
1,291,701 |
|
|
|
1,294,768 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arizona:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
|
131,539 |
|
|
|
106,741 |
|
|
|
138,971 |
|
|
|
150,194 |
|
|
|
106,880 |
|
|
Interest-bearing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
95,010 |
|
|
|
104,961 |
|
|
|
101,933 |
|
|
|
107,961 |
|
|
|
102,089 |
|
|
Savings
|
|
|
1,772 |
|
|
|
1,192 |
|
|
|
1,366 |
|
|
|
1,364 |
|
|
|
984 |
|
|
Time
|
|
|
34,199 |
|
|
|
37,641 |
|
|
|
40,007 |
|
|
|
44,619 |
|
|
|
50,060 |
|
|
Total interest-bearing
|
|
|
130,981 |
|
|
|
143,794 |
|
|
|
143,306 |
|
|
|
153,944 |
|
|
|
153,133 |
|
|
Total Arizona
|
|
|
262,520 |
|
|
|
250,535 |
|
|
|
282,277 |
|
|
|
304,138 |
|
|
|
260,013 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kansas / Missouri:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
|
68,469 |
|
|
|
51,004 |
|
|
|
46,773 |
|
|
|
46,668 |
|
|
|
28,774 |
|
|
Interest-bearing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
57,666 |
|
|
|
123,449 |
|
|
|
108,973 |
|
|
|
115,684 |
|
|
|
222,705 |
|
|
Savings
|
|
|
505 |
|
|
|
545 |
|
|
|
503 |
|
|
|
358 |
|
|
|
323 |
|
|
Time
|
|
|
26,657 |
|
|
|
30,086 |
|
|
|
33,697 |
|
|
|
40,206 |
|
|
|
51,236 |
|
|
Total interest-bearing
|
|
|
84,828 |
|
|
|
154,080 |
|
|
|
143,173 |
|
|
|
156,248 |
|
|
|
274,264 |
|
|
Total Kansas / Missouri
|
|
|
153,297 |
|
|
|
205,084 |
|
|
|
189,946 |
|
|
|
202,916 |
|
|
|
303,038 |
|
|
Total BOK Financial deposits
|
|
$ |
18,523,287 |
|
|
$ |
18,762,580 |
|
|
$ |
18,439,022 |
|
|
$ |
17,585,877 |
|
|
$ |
17,872,926 |
|
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 federal funds purchased totaled $319 million at March 31, 2012. 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 Banks of Topeka averaged $8.3 million during the quarter.
At March 31, 2012, the estimated unused credit available to the subsidiary bank from collateralized sources was approximately $7.7 billion.
Table 34 – Other borrowings
(In thousands)
| |
|
|
|
|
For the three months ended
March 31, 2012
|
|
|
|
|
|
For the three months ended
December 31, 2011
|
|
| |
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
| |
|
|
|
|
Average
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
Average
|
|
|
|
|
|
Outstanding
|
|
| |
|
As of
|
|
|
Balance
|
|
|
|
|
|
At Any Month
|
|
|
As of
|
|
|
Balance
|
|
|
|
|
|
At Any Month
|
|
| |
|
March 31,
|
|
|
During the
|
|
|
|
|
|
End During
|
|
|
Dec. 31,
|
|
|
During the
|
|
|
|
|
|
End During
|
|
| |
|
2012
|
|
|
Quarter
|
|
|
Rate
|
|
|
the Quarter
|
|
|
2011
|
|
|
Quarter
|
|
|
Rate
|
|
|
the Quarter
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent Company and Other Non-Bank Subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust preferred debt
|
|
$ |
– |
|
|
$ |
– |
|
|
|
– |
% |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
6,861 |
|
|
|
– |
% |
|
$ |
7,217 |
|
|
Other
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
232 |
|
|
|
– |
|
|
|
1,546 |
|
|
Total Parent Company and other Non-Bank Subsidiaries
|
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
– |
|
|
|
7,093 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiary Bank:,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds purchased
|
|
|
1,784,940 |
|
|
|
1,337,614 |
|
|
|
0.09 |
|
|
|
1,784,940 |
|
|
|
1,063,318 |
|
|
|
1,046,114 |
|
|
|
0.07 |
|
|
|
1,706,893 |
|
|
Repurchase agreements
|
|
|
1,162,546 |
|
|
|
1,183,778 |
|
|
|
0.10 |
|
|
|
1,272,151 |
|
|
|
1,233,064 |
|
|
|
1,096,615 |
|
|
|
0.12 |
|
|
|
1,393,237 |
|
|
Federal Home Loan Bank advances
|
|
|
155,087 |
|
|
|
8,296 |
|
|
|
0.03 |
|
|
|
155,087 |
|
|
|
4,837 |
|
|
|
45,110 |
|
|
|
0.38 |
|
|
|
201,674 |
|
|
Subordinated debentures
|
|
|
394,760 |
|
|
|
397,440 |
|
|
|
5.67 |
|
|
|
398,897 |
|
|
|
398,881 |
|
|
|
398,790 |
|
|
|
5.74 |
|
|
|
398,881 |
|
|
GNMA repurchase liability
|
|
|
37,504 |
|
|
|
48,012 |
|
|
|
7.07 |
|
|
|
47,840 |
|
|
|
53,082 |
|
|
|
56,142 |
|
|
|
5.79 |
|
|
|
118,595 |
|
|
Other
|
|
|
16,640 |
|
|
|
16,603 |
|
|
|
4.65 |
|
|
|
16,640 |
|
|
|
16,566 |
|
|
|
28,777 |
|
|
|
3.23 |
|
|
|
45,366 |
|
|
Total Subsidiary Bank
|
|
|
3,551,477 |
|
|
|
2,991,743 |
|
|
|
0.81 |
|
|
|
|
|
|
|
2,769,748 |
|
|
|
2,671,548 |
|
|
|
1.06 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Borrowings
|
|
$ |
3,551,477 |
|
|
$ |
2,991,743 |
|
|
|
0.81 |
% |
|
|
|
|
|
$ |
2,769,748 |
|
|
$ |
2,678,641 |
|
|
|
1.07 |
% |
|
|
|
|
Parent Company
The primary sources of liquidity for BOK Financial are cash on hand and dividends from the subsidiary bank. 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 March 31, 2012, based on the most restrictive limitations as well as management’s internal capital policy, the subsidiary bank could declare up to $61 million of dividends without regulatory approval. Future losses or increases in required regulatory capital at the subsidiary bank could affect its ability to pay dividends to the parent company.
The Company has 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”). Interest on amounts outstanding under the Credit Facility is to be paid at a defined base rate minus 1.25% or LIBOR plus 1.50% based upon the Company’s option. A commitment fee equal to 0.20% shall be paid quarterly on the unused portion of the credit commitment under the Credit Facility and there are no prepayment penalties. Any amounts outstanding at the end of the Credit Facility term shall be converted into a term loan which, except for amounts borrowed for certain acquisitions, shall be payable June 7, 2012. The Credit Agreement contains customary representations and warranties, as well as affirmative and negative covenants including limits on the Company’s ability to borrow additional funds, make investments and sell assets. These covenants also require BOKF to maintain minimum capital levels. No amounts were outstanding under the Credit Facility at March 31, 2012 and the Company met all of the covenants.
Our equity capital at March 31, 2012 was $2.8 billion, up $84 million over December 31, 2011. Net income less cash dividend paid increased equity $61 million during the first quarter of 2012. 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 our 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 in the open market or through privately negotiated transactions. The repurchase program may be suspended or discontinued at any time without prior notice. As of March 31, 2012, the Company has repurchased 1,691,398 shares for $84 million under a previously approved authorization, including 345,300 shares repurchased for $18 million in the first quarter of 2012.
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 possibly 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.
For a banking institution to qualify as well capitalized, its Tier 1, Total and Leverage capital ratios must be at least 6%, 10% and 5%, respectively. The Company’s banking subsidiary exceeded the regulatory definitions of well capitalized. The capital ratios for BOK Financial on a consolidated basis are presented in Table 35.
Table 35 – Capital Ratios
|
|
|
Well Capitalized
|
|
|
March 31,
|
|
|
Dec. 31,
|
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
| |
|
Minimums
|
|
|
2012
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total equity to average assets
|
|
|
– |
|
|
|
11.11 |
% |
|
|
10.81 |
% |
|
|
11.12 |
% |
|
|
11.05 |
% |
|
|
10.80 |
% |
|
Tangible common equity ratio
|
|
|
– |
|
|
|
9.75 |
|
|
|
9.56 |
|
|
|
9.65 |
|
|
|
9.71 |
|
|
|
9.54 |
|
|
Tier 1 common equity ratio
|
|
|
– |
|
|
|
12.83 |
|
|
|
13.06 |
|
|
|
12.93 |
|
|
|
13.15 |
|
|
|
12.84 |
|
|
Risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital
|
|
|
6.00 |
% |
|
|
13.03 |
|
|
|
13.27 |
|
|
|
13.14 |
|
|
|
13.30 |
|
|
|
12.97 |
|
|
Total capital
|
|
|
10.00 |
|
|
|
16.16 |
|
|
|
16.49 |
|
|
|
16.55 |
|
|
|
16.80 |
|
|
|
16.48 |
|
|
Leverage
|
|
|
5.00 |
|
|
|
9.35 |
|
|
|
9.15 |
|
|
|
9.37 |
|
|
|
9.29 |
|
|
|
9.14 |
|
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”) less intangible assets and equity which does not benefit common shareholders. Equity that does not benefit common shareholders includes preferred equity and equity provided by the U.S. Treasury’s TARP program. Tier 1 common equity is tier 1 equity as defined by banking regulations, adjusted for other comprehensive income (loss) and equity which does not benefit common shareholders. These non-GAAP measures are valuable indicators 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 (loss) in shareholders’ equity.
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. We expect to be subject to such regulations when they are finalized and effective. The resulting capital stress test process may place constraints on capital distributions or increases in required regulatory capital under certain circumstances.
Table 36 following provides a reconciliation of the non-GAAP measures with financial measures defined by GAAP.
Table 36 – Non-GAAP Measures
(Dollars in thousands)
| |
|
March 31,
|
|
|
Dec. 31,
|
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
$ |
2,834,419 |
|
|
$ |
2,750,468 |
|
|
$ |
2,732,592 |
|
|
$ |
2,667,717 |
|
|
$ |
2,576,133 |
|
|
Less: Goodwill and intangible assets, net
|
|
|
345,246 |
|
|
|
345,820 |
|
|
|
346,716 |
|
|
|
347,611 |
|
|
|
348,507 |
|
|
Tangible common equity
|
|
|
2,489,173 |
|
|
|
2,404,648 |
|
|
|
2,385,876 |
|
|
|
2,320,106 |
|
|
|
2,227,626 |
|
|
Total assets
|
|
|
25,884,173 |
|
|
|
25,493,946 |
|
|
|
25,066,265 |
|
|
|
24,238,182 |
|
|
|
23,701,023 |
|
|
Less: Goodwill and intangible assets, net
|
|
|
345,246 |
|
|
|
345,820 |
|
|
|
346,716 |
|
|
|
347,611 |
|
|
|
348,507 |
|
|
Tangible assets
|
|
$ |
25,538,927 |
|
|
$ |
25,148,126 |
|
|
$ |
24,719,549 |
|
|
$ |
23,890,571 |
|
|
$ |
23,352,516 |
|
|
Tangible common equity ratio
|
|
|
9.75 |
% |
|
|
9.56 |
% |
|
|
9.65 |
% |
|
|
9.71 |
% |
|
|
9.54 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 common equity ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital
|
|
$ |
2,344,779 |
|
|
$ |
2,295,061 |
|
|
$ |
2,247,576 |
|
|
$ |
2,188,199 |
|
|
$ |
2,129,998 |
|
|
Less: Non-controlling interest
|
|
|
35,982 |
|
|
|
36,184 |
|
|
|
34,958 |
|
|
|
24,457 |
|
|
|
21,555 |
|
|
Tier 1 common equity
|
|
|
2,308,797 |
|
|
|
2,258,877 |
|
|
|
2,212,618 |
|
|
|
2,163,742 |
|
|
|
2,108,443 |
|
|
Risk weighted assets
|
|
$ |
17,993,379 |
|
|
$ |
17,291,105 |
|
|
$ |
17,106,533 |
|
|
$ |
16,452,305 |
|
|
$ |
16,416,387 |
|
|
Tier 1 common equity ratio
|
|
|
12.83 |
% |
|
|
13.06 |
% |
|
|
12.93 |
% |
|
|
13.15 |
% |
|
|
12.84 |
% |
Off-Balance Sheet Arrangements
See Note 7 to the Consolidated Financial Statements for a discussion of the Company’s significant off-balance sheet commitments.
Market Risk
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 prices, 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 and 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.
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 over the next 12 months and longer time periods based on multiple interest rate scenarios. Two specified interest rate scenarios are used to evaluate interest rate risk against policy guidelines. The first assumes a sustained parallel 200 basis point increase and the second assumes a sustained parallel 50 basis point decrease in interest rates. Management historically evaluated interest rate sensitivity for a sustained 200 basis point decrease in interest rates. However, the results of a 200 basis point decrease in interest rates in the current low-rate environment are not meaningful.
The Company’s primary interest rate exposures included 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. The model incorporates assumptions regarding the effects of changes in interest rates and account balances on indeterminable maturity deposits 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 37 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 5 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.
Table 37 – Interest Rate Sensitivity
(Dollars in thousands)
| |
|
200 bp Increase
|
|
|
50 bp Decrease
|
|
| |
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Anticipated impact over the next twelve months on net interest revenue
|
|
$ |
23,635 |
|
|
$ |
(426 |
) |
|
$ |
(24,418 |
) |
|
$ |
(10,292 |
), |
| |
|
|
3.46 |
% |
|
|
(0.06 |
)% |
|
|
(3.57 |
)% |
|
|
(1.4 |
)% |
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, municipal bonds and derivative contracts for its own account. These positions are taken with the objective of generating trading profits. Both of these activities involve interest rate risk.
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 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. It represents an amount of market loss that is likely to be exceeded 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. At March 31, 2012, the VAR was $3.0 million. The greatest value at risk during the first quarter of 2012 was $3.8 million.
As required by Rule 13a-15(b), BOK Financial’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by their report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report. As required by Rule 13a-15(d), BOK Financial’s management, including the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal controls over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.
Forward-Looking Statements
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 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.
|
Consolidated Statements of Earnings (Unaudited)
|
|
|
|
|
|
|
|
(In thousands, except share and per share data)
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31,
|
|
|
Interest revenue
|
|
2012
|
|
|
2011
|
|
|
Loans
|
|
$ |
126,983 |
|
|
$ |
123,740 |
|
|
Residential mortgage loans held for sale
|
|
|
1,768 |
|
|
|
1,339 |
|
|
Trading securities
|
|
|
300 |
|
|
|
414 |
|
|
Taxable securities
|
|
|
4,434 |
|
|
|
2,345 |
|
|
Tax-exempt securities
|
|
|
977 |
|
|
|
1,396 |
|
|
Total investment securities
|
|
|
5,411 |
|
|
|
3,741 |
|
|
Taxable securities
|
|
|
59,656 |
|
|
|
69,014 |
|
|
Tax-exempt securities
|
|
|
601 |
|
|
|
607 |
|
|
Total available for sale securities
|
|
|
60,257 |
|
|
|
69,621 |
|
|
Fair value option securities
|
|
|
3,487 |
|
|
|
3,230 |
|
|
Funds sold and resell agreements
|
|
|
2 |
|
|
|
4 |
|
|
Total interest revenue
|
|
|
198,208 |
|
|
|
202,089 |
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
17,498 |
|
|
|
24,042 |
|
|
Borrowed funds
|
|
|
1,589 |
|
|
|
1,831 |
|
|
Subordinated debentures
|
|
|
5,552 |
|
|
|
5,577 |
|
|
Total interest expense
|
|
|
24,639 |
|
|
|
31,450 |
|
|
Net interest revenue
|
|
|
173,569 |
|
|
|
170,639 |
|
|
Provision for credit losses
|
|
|
– |
|
|
|
6,250 |
|
|
Net interest revenue after provision for credit losses
|
|
|
173,569 |
|
|
|
164,389 |
|
|
Other operating revenue
|
|
|
|
|
|
|
|
|
|
Brokerage and trading revenue
|
|
|
31,111 |
|
|
|
25,376 |
|
|
Transaction card revenue
|
|
|
25,430 |
|
|
|
28,445 |
|
|
Trust fees and commissions
|
|
|
18,438 |
|
|
|
18,422 |
|
|
Deposit service charges and fees
|
|
|
24,379 |
|
|
|
22,480 |
|
|
Mortgage banking revenue
|
|
|
33,078 |
|
|
|
17,356 |
|
|
Bank-owned life insurance
|
|
|
2,871 |
|
|
|
2,863 |
|
|
Other revenue
|
|
|
9,027 |
|
|
|
8,332 |
|
|
Total fees and commissions
|
|
|
144,334 |
|
|
|
123,274 |
|
|
Loss on sales of assets, net
|
|
|
(356 |
) |
|
|
(68 |
) |
|
Loss on derivatives, net
|
|
|
(2,473 |
) |
|
|
(2,413 |
) |
|
Loss on fair value option securities, net
|
|
|
(1,733 |
) |
|
|
(3,518 |
) |
|
Gain on available for sale securities, net
|
|
|
4,331 |
|
|
|
4,902 |
|
|
Total other-than-temporary impairment losses
|
|
|
(505 |
) |
|
|
– |
|
|
Portion of loss reclassified from other comprehensive income
|
|
|
(3,217 |
) |
|
|
(4,599 |
) |
|
Net impairment losses recognized in earnings
|
|
|
(3,722 |
) |
|
|
(4,599 |
) |
|
Total other operating revenue
|
|
|
140,381 |
|
|
|
117,578 |
|
|
Other operating expense
|
|
|
|
|
|
|
|
|
|
Personnel
|
|
|
114,769 |
|
|
|
99,994 |
|
|
Business promotion
|
|
|
4,388 |
|
|
|
4,624 |
|
|
Professional fees and services
|
|
|
7,599 |
|
|
|
7,458 |
|
|
Net occupancy and equipment
|
|
|
16,023 |
|
|
|
15,604 |
|
|
Insurance
|
|
|
3,866 |
|
|
|
6,186 |
|
|
Data processing and communications
|
|
|
22,144 |
|
|
|
22,503 |
|
|
Printing, postage and supplies
|
|
|
3,311 |
|
|
|
3,082 |
|
|
Net losses and expenses of repossessed assets
|
|
|
2,245 |
|
|
|
6,015 |
|
|
Amortization of intangible assets
|
|
|
575 |
|
|
|
896 |
|
|
Mortgage banking costs
|
|
|
7,573 |
|
|
|
6,471 |
|
|
Change in fair value of mortgage servicing rights
|
|
|
(7,127 |
) |
|
|
(3,129 |
) |
|
Other expense
|
|
|
9,871 |
|
|
|
8,745 |
|
|
Total other operating expense
|
|
|
185,237 |
|
|
|
178,449 |
|
|
Income before taxes
|
|
|
128,713 |
|
|
|
103,518 |
|
|
Federal and state income tax
|
|
|
45,520 |
|
|
|
38,752 |
|
|
Net income
|
|
|
83,193 |
|
|
|
64,766 |
|
|
Net loss attributable to non-controlling interest
|
|
|
(422 |
) |
|
|
(8 |
) |
|
Net income attributable to BOK Financial Corp. shareholders
|
|
$ |
83,615 |
|
|
$ |
64,774 |
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
1.22 |
|
|
$ |
0.95 |
|
|
Diluted
|
|
$ |
1.22 |
|
|
$ |
0.94 |
|
|
Average shares used in computation:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
67,665,300 |
|
|
|
67,901,722 |
|
|
Diluted
|
|
|
67,941,895 |
|
|
|
68,176,527 |
|
|
Dividends declared per share
|
|
$ |
0.33 |
|
|
$ |
0.25 |
|
See accompanying notes to consolidated financial statements.
|
Consolidated Statements of Comprehensive Income (Unaudited)
|
|
|
(In thousands, except share and per share data)
|
|
|
|
|
|
|
| |
|
Three Months Ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Net income
|
|
$ |
83,193 |
|
|
$ |
64,766 |
|
|
Other comprehensive income before income taxes:
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gain (loss)
|
|
|
55,435 |
|
|
|
1,441 |
|
|
Other –than-temporary impairment losses recognized in earnings
|
|
|
3,722 |
|
|
|
4,599 |
|
|
Reclassification adjustment for net (gains) losses realized and included in earnings
|
|
|
(1,788 |
) |
|
|
(4,819 |
) |
|
Amortization of unrealized gain on investment securities transferred from available for sale
|
|
|
(4,279 |
) |
|
|
– |
|
|
Other comprehensive income before income taxes
|
|
|
53,090 |
|
|
|
1,221 |
|
|
Income tax expense
|
|
|
20,651 |
|
|
|
747 |
|
|
Other comprehensive income, net of income taxes
|
|
|
32,439 |
|
|
|
474 |
|
|
Comprehensive income
|
|
|
115,632 |
|
|
|
65,240 |
|
|
Comprehensive income (loss) attributable to non-controlling interests
|
|
|
(422 |
) |
|
|
(8 |
) |
|
Comprehensive income attributed to BOK Financial Corp. shareholders
|
|
$ |
116,054 |
|
|
$ |
65,248 |
|
See accompanying notes to consolidated financial statements.
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
(In thousands except share data)
|
|
|
|
|
|
|
|
|
|
| |
|
March 31,
|
|
|
Dec. 31,
|
|
|
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
2011
|
|
| |
|
(Unaudited)
|
|
|
(Footnote 1)
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$ |
691,697 |
|
|
$ |
976,191 |
|
|
$ |
805,928 |
|
|
Funds sold and resell agreements
|
|
|
14,609 |
|
|
|
10,174 |
|
|
|
2,462 |
|
|
Trading securities
|
|
|
128,376 |
|
|
|
76,800 |
|
|
|
80,719 |
|
|
Investment securities (fair value: March 31, 2012 – $451,443; December 31, 2011 – $462,657; March 31, 2011 – $355,052)
|
|
|
427,259 |
|
|
|
439,236 |
|
|
|
343,401 |
|
|
Available for sale securities
|
|
|
10,186,597 |
|
|
|
10,179,365 |
|
|
|
9,665,901 |
|
|
Fair value option securities
|
|
|
347,952 |
|
|
|
651,226 |
|
|
|
326,624 |
|
|
Residential mortgage loans held for sale
|
|
|
247,039 |
|
|
|
188,125 |
|
|
|
127,119 |
|
|
Loans
|
|
|
11,577,444 |
|
|
|
11,269,743 |
|
|
|
10,589,835 |
|
|
Less allowance for loan losses
|
|
|
(244,209 |
) |
|
|
(253,481 |
) |
|
|
(289,549 |
) |
|
Loans, net of allowance
|
|
|
11,333,235 |
|
|
|
11,016,262 |
|
|
|
10,300,286 |
|
|
Premises and equipment, net
|
|
|
263,579 |
|
|
|
262,735 |
|
|
|
265,532 |
|
|
Receivables
|
|
|
138,325 |
|
|
|
123,257 |
|
|
|
113,060 |
|
|
Goodwill
|
|
|
335,601 |
|
|
|
335,601 |
|
|
|
335,601 |
|
|
Intangible assets, net
|
|
|
9,645 |
|
|
|
10,219 |
|
|
|
12,906 |
|
|
Mortgage servicing rights, net
|
|
|
98,138 |
|
|
|
86,783 |
|
|
|
120,345 |
|
|
Real estate and other repossessed assets
|
|
|
115,790 |
|
|
|
122,753 |
|
|
|
131,420 |
|
|
Bankers’ acceptances
|
|
|
3,493 |
|
|
|
1,881 |
|
|
|
1,884 |
|
|
Derivative contracts
|
|
|
384,996 |
|
|
|
293,859 |
|
|
|
245,124 |
|
|
Cash surrender value of bank-owned life insurance
|
|
|
266,227 |
|
|
|
263,318 |
|
|
|
258,322 |
|
|
Receivable on unsettled securities trades
|
|
|
511,288 |
|
|
|
75,151 |
|
|
|
242,828 |
|
|
Other assets
|
|
|
380,327 |
|
|
|
381,010 |
|
|
|
321,561 |
|
|
Total assets
|
|
$ |
25,884,173 |
|
|
$ |
25,493,946 |
|
|
$ |
23,701,023 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits
|
|
$ |
6,189,172 |
|
|
$ |
5,799,785 |
|
|
$ |
4,457,187 |
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
|
8,908,397 |
|
|
|
9,354,456 |
|
|
|
9,528,864 |
|
|
Savings
|
|
|
259,619 |
|
|
|
226,357 |
|
|
|
209,264 |
|
|
Time
|
|
|
3,166,099 |
|
|
|
3,381,982 |
|
|
|
3,677,611 |
|
|
Total deposits
|
|
|
18,523,287 |
|
|
|
18,762,580 |
|
|
|
17,872,926 |
|
|
Funds purchased
|
|
|
1,784,940 |
|
|
|
1,063,318 |
|
|
|
466,749 |
|
|
Repurchase agreements
|
|
|
1,162,546 |
|
|
|
1,233,064 |
|
|
|
1,006,051 |
|
|
Other borrowings
|
|
|
209,230 |
|
|
|
74,485 |
|
|
|
36,864 |
|
|
Subordinated debentures
|
|
|
394,760 |
|
|
|
398,881 |
|
|
|
398,744 |
|
|
Accrued interest, taxes and expense
|
|
|
180,840 |
|
|
|
149,508 |
|
|
|
135,486 |
|
|
Bankers’ acceptances
|
|
|
3,493 |
|
|
|
1,881 |
|
|
|
1,884 |
|
|
Due on unsettled securities trades
|
|
|
305,166 |
|
|
|
653,371 |
|
|
|
843,904 |
|
|
Derivative contracts
|
|
|
305,290 |
|
|
|
236,522 |
|
|
|
156,038 |
|
|
Other liabilities
|
|
|
144,220 |
|
|
|
133,684 |
|
|
|
184,689 |
|
|
Total liabilities
|
|
|
23,013,772 |
|
|
|
22,707,294 |
|
|
|
21,103,335 |
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: March 31, 2012 – 71,902,099; December 31, 2011 – 71,533,354; March 31, 2011 – 71,073,780)
|
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
Capital surplus
|
|
|
829,991 |
|
|
|
818,817 |
|
|
|
790,852 |
|
|
Retained earnings
|
|
|
2,014,599 |
|
|
|
1,953,332 |
|
|
|
1,791,698 |
|
|
Treasury stock (shares at cost: March 31, 2012 – 3,785,206; December 31, 2011 – 3,380,310; March 31, 2011 – 2,635,358)
|
|
|
(171,593 |
) |
|
|
(150,664 |
) |
|
|
(114,734 |
) |
|
Accumulated other comprehensive income
|
|
|
161,418 |
|
|
|
128,979 |
|
|
|
108,313 |
|
|
Total shareholders’ equity
|
|
|
2,834,419 |
|
|
|
2,750,468 |
|
|
|
2,576,133 |
|
|
Non-controlling interest
|
|
|
35,982 |
|
|
|
36,184 |
|
|
|
21,555 |
|
|
Total equity
|
|
|
2,870,401 |
|
|
|
2,786,652 |
|
|
|
2,597,688 |
|
|
Total liabilities and equity
|
|
$ |
25,884,173 |
|
|
$ |
25,493,964 |
|
|
$ |
23,701,023 |
|
See accompanying notes to consolidated financial statements.
Consolidated Statements of Changes in Equity (Unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Common Stock
|
|
|
Other
Comprehensive
|
|
|
Capital
|
|
|
Retained
|
|
|
Treasury Stock
|
|
|
Total
Shareholders’
|
|
|
Non-
Controlling
|
|
|
Total
|
|
| |
|
Shares
|
|
|
Amount
|
|
|
Income
|
|
|
Surplus
|
|
|
Earnings
|
|
|
Shares
|
|
|
Amount
|
|
|
Equity
|
|
|
Interest
|
|
|
Equity
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
|
70,816 |
|
|
$ |
4 |
|
|
$ |
107,839 |
|
|
$ |
782,805 |
|
|
$ |
1,743,880 |
|
|
|
2,608 |
|
|
$ |
(112,802 |
) |
|
$ |
2,521,726 |
|
|
$ |
22,152 |
|
|
$ |
2,543,878 |
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
64,774 |
|
|
|
– |
|
|
|
– |
|
|
|
64,774 |
|
|
|
(8 |
) |
|
|
64,766 |
|
|
Other comprehensive income
|
|
|
– |
|
|
|
– |
|
|
|
474 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
474 |
|
|
|
– |
|
|
|
474 |
|
|
Exercise of stock options
|
|
|
258 |
|
|
|
– |
|
|
|
– |
|
|
|
4,887 |
|
|
|
– |
|
|
|
27 |
|
|
|
(1,932 |
) |
|
|
2,955 |
|
|
|
– |
|
|
|
2,955 |
|
|
Tax benefit on exercise of stock options
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
545 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
545 |
|
|
|
– |
|
|
|
545 |
|
|
Stock-based compensation
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,615 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,615 |
|
|
|
– |
|
|
|
2,615 |
|
|
Cash dividends on common stock
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(16,956 |
) |
|
|
– |
|
|
|
– |
|
|
|
(16,956 |
) |
|
|
– |
|
|
|
(16,956 |
) |
|
Capital calls and distributions, net
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(589 |
) |
|
|
(589 |
) |
|
Balances at March 31, 2011
|
|
|
71,074 |
|
|
$ |
4 |
|
|
$ |
108,313 |
|
|
$ |
790,852 |
|
|
$ |
1,791,698 |
|
|
|
2,635 |
|
|
$ |
(114,734 |
) |
|
$ |
2,576,133 |
|
|
$ |
21,555 |
|
|
$ |
2,597,688 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
|
71,533 |
|
|
$ |
4 |
|
|
$ |
128,979 |
|
|
$ |
818,817 |
|
|
$ |
1,953,332 |
|
|
|
3,380 |
|
|
$ |
(150,664 |
) |
|
$ |
2,750,468 |
|
|
$ |
36,184 |
|
|
$ |
2,786,652 |
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
83,615 |
|
|
|
– |
|
|
|
– |
|
|
|
83,615 |
|
|
|
(422 |
) |
|
|
83,193 |
|
|
Other comprehensive income
|
|
|
– |
|
|
|
– |
|
|
|
32,439 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
32,439 |
|
|
|
– |
|
|
|
32,439 |
|
|
Treasury stock purchases
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
345 |
|
|
|
(18,432 |
) |
|
|
(18,432 |
) |
|
|
– |
|
|
|
(18,432 |
) |
|
Exercise of stock options
|
|
|
369 |
|
|
|
– |
|
|
|
– |
|
|
|
9,598 |
|
|
|
– |
|
|
|
60 |
|
|
|
(2,497 |
) |
|
|
7,101 |
|
|
|
– |
|
|
|
7,101 |
|
|
Tax benefit on exercise of stock options, net
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(428 |
) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(428 |
) |
|
|
– |
|
|
|
(428 |
) |
|
Stock-based compensation
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,004 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,004 |
|
|
|
– |
|
|
|
2,004 |
|
|
Cash dividends on common stock
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(22,348 |
) |
|
|
– |
|
|
|
– |
|
|
|
(22,348 |
) |
|
|
– |
|
|
|
(22,348 |
) |
|
Capital calls and distributions, net
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
220 |
|
|
|
220 |
|
|
Balances at March 31, 2012
|
|
|
71,902 |
|
|
$ |
4 |
|
|
$ |
161,418 |
|
|
$ |
829,991 |
|
|
$ |
2,014,599 |
|
|
|
3,785 |
|
|
$ |
(171,593 |
) |
|
$ |
2,834,419 |
|
|
$ |
35,982 |
|
|
$ |
2,870,401 |
|
See accompanying notes to consolidated financial statements.
|
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
| |
|
Three Months Ended
|
|
| |
|
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
Net income
|
|
$ |
83,193 |
|
|
$ |
64,766 |
|
|
Adjustments to reconcile net income before non-controlling interest to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Provision for credit losses
|
|
|
– |
|
|
|
6,250 |
|
|
Change in fair value of mortgage servicing rights
|
|
|
(7,127 |
) |
|
|
(3,129 |
) |
|
Unrealized (gains) losses from derivatives
|
|
|
(4,874 |
) |
|
|
7,694 |
|
|
Tax benefit on exercise of stock options
|
|
|
428 |
|
|
|
(545 |
) |
|
Change in bank-owned life insurance
|
|
|
(2,871 |
) |
|
|
(2,863 |
) |
|
Stock-based compensation
|
|
|
2,004 |
|
|
|
2,615 |
|
|
Depreciation and amortization
|
|
|
12,326 |
|
|
|
12,369 |
|
|
Net amortization of securities discounts and premiums
|
|
|
23,850 |
|
|
|
24,098 |
|
|
Net realized gains on financial instruments and other assets
|
|
|
(18,313 |
) |
|
|
(9,722 |
) |
|
Mortgage loans originated for sale
|
|
|
(747,435 |
) |
|
|
(418,754 |
) |
|
Proceeds from sale of mortgage loans held for sale
|
|
|
711,602 |
|
|
|
562,576 |
|
|
Capitalized mortgage servicing rights
|
|
|
(8,372 |
) |
|
|
(4,969 |
) |
|
Change in trading and fair value option securities
|
|
|
250,562 |
|
|
|
76,145 |
|
|
Change in receivables
|
|
|
(18,487 |
) |
|
|
35,880 |
|
|
Change in other assets
|
|
|
(1,720 |
) |
|
|
9,391 |
|
|
Change in accrued interest, taxes and expense
|
|
|
31,332 |
|
|
|
1,379 |
|
|
Change in other liabilities
|
|
|
10,787 |
|
|
|
(4,838 |
) |
|
Net cash provided by operating activities
|
|
|
316,885 |
|
|
|
358,343 |
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from maturities of investment securities
|
|
|
12,083 |
|
|
|
3,610 |
|
|
Proceeds from maturities or redemptions of available for sale securities
|
|
|
1,374,819 |
|
|
|
738,921 |
|
|
Purchases of investment securities
|
|
|
(146 |
) |
|
|
(7,495 |
) |
|
Purchases of available for sale securities
|
|
|
(2,346,849 |
) |
|
|
(1,939,500 |
) |
|
Proceeds from sales of available for sale securities
|
|
|
991,941 |
|
|
|
793,152 |
|
|
Change in amount receivable on unsettled securities transactions
|
|
|
(436,137 |
) |
|
|
(107,769 |
) |
|
Loans originated net of principal collected
|
|
|
(319,043 |
) |
|
|
21,873 |
|
|
Net payments on derivative asset contracts
|
|
|
(116,683 |
) |
|
|
(65,861 |
) |
|
Proceeds from disposition of assets
|
|
|
38,761 |
|
|
|
15,233 |
|
|
Purchases of assets
|
|
|
(31,799 |
) |
|
|
(7,443 |
) |
|
Net cash used in investing activities
|
|
|
(833,053 |
) |
|
|
(555,279 |
) |
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
Net change in demand deposits, transaction deposits and savings accounts
|
|
|
(23,410 |
) |
|
|
525,422 |
|
|
Net change in time deposits
|
|
|
(215,883 |
) |
|
|
168,603 |
|
|
Net change in other borrowings
|
|
|
762,665 |
|
|
|
(1,607,694 |
) |
|
Net payments or proceeds on derivative liability contracts
|
|
|
110,679 |
|
|
|
64,182 |
|
|
Net change in derivative margin accounts
|
|
|
(15,630 |
) |
|
|
(84,614 |
) |
|
Change in amount due on unsettled security transactions
|
|
|
(348,205 |
) |
|
|
683,479 |
|
|
Issuance of common and treasury stock, net
|
|
|
7,101 |
|
|
|
2,955 |
|
|
Tax benefit on exercise of stock options
|
|
|
(428 |
) |
|
|
545 |
|
|
Repurchase of common stock
|
|
|
(18,432 |
) |
|
|
– |
|
|
Dividends paid
|
|
|
(22,348 |
) |
|
|
(16,956 |
) |
|
Net cash provided by (used in) financing activities
|
|
|
236,109 |
|
|
|
(264,078 |
) |
|
Net decrease in cash and cash equivalents
|
|
|
(280,059 |
) |
|
|
(461,014 |
) |
|
Cash and cash equivalents at beginning of period
|
|
|
986,365 |
|
|
|
1,269,404 |
|
|
Cash and cash equivalents at end of period
|
|
$ |
706,306 |
|
|
$ |
808,390 |
|
| |
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
17,817 |
|
|
$ |
26,239 |
|
|
Cash paid for taxes
|
|
$ |
3,765 |
|
|
$ |
9,265 |
|
|
Net loans and bank premises transferred to repossessed real estate and other assets
|
|
$ |
26,041 |
|
|
$ |
21,010 |
|
|
Increase (decrease) in U.S. government guaranteed loans eligible for repurchase
|
|
$ |
23,184 |
|
|
$ |
(8,833 |
) |
|
Increase in receivables from conveyance of other real estate owned guaranteed by U.S. government agencies
|
|
$ |
18,425 |
|
|
$ |
17,419 |
|
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements (Unaudited)
(1) Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of BOK Financial Corporation (“BOK Financial” or “the Company”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
The unaudited consolidated financial statements include accounts of BOK Financial and its subsidiaries, principally BOKF, NA (“the Bank”), BOSC, Inc. and Cavanal Hill Investment Management Inc. Operating divisions of the Bank include Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust, Bank of Kansas City and the TransFund electronic funds network.
Certain reclassifications have been made to conform to the current period presentation.
The financial information should be read in conjunction with BOK Financial’s 2011 Form 10-K filed with the Securities and Exchange Commission, which contains audited financial statements. Amounts presented as of December 31, 2011 have been derived from the audited financial statements included in BOK Financial’s 2011 Form 10-K but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month period ended March 31, 2012 is not necessarily indicative of the results that may be expected for the year ending December 31, 2012.
Newly Adopted and Pending Accounting Policies
Financial Accounting Standards Board (“FASB”)
FASB Accounting Standards Update No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements (“ASU 2011-03”)
On April 29, 2011, the FASB issued ASU 2011-03 that eliminates the collateral maintenance requirement under GAAP for entities to consider in determining whether a transfer of financial assets subject to a repurchase agreement is accounted for as a sale or as a secured borrowing. ASU 2011-03 was effective for the Company January 1, 2012 and did not have a material impact on the Company’s consolidated financial statements.
FASB Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04’)
On May 12, 2011, the FASB issued ASU 2011-04 to provide clarified and converged guidance on fair value measurement and expand disclosures concerning fair value measurements. ASU 2011-04 is largely consistent with the existing fair value measurement principles contained in ASC 820, Fair Value Measurement. ASU 2011-04 was effective for the Company January 1, 2012.
FASB Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”)
On June 16, 2011 the FASB issued ASU 2011-05 which revises the manner in which entities present comprehensive income in their financial statements by removing the presentation option in ASC 220, Comprehensive Income, and requires entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. ASU 2011-05 was effective for the Company January 1, 2012.
FASB Accounting Standards Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”)
On December 16, 2011, the FASB issued ASU 2011-11 which contains new disclosure requirements regarding the nature of an entity right of setoff and related arrangements associated with its financial instruments and derivative instruments. The new disclosures are anticipated to facilitate comparison between financial statements prepared under generally accepted accounting principles in the United States of America and financial statements prepared under International Financial Reporting Standards by providing information about gross and net exposures. The new disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013.
FASB Accounting Standards Update No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards No. 2011-05 (“ASU 2011-12”)
On December 23, 2011, FASB issued ASU 2011-12, which defers the requirement in ASU 2011-05 for presentation of reclassification adjustments for each component of accumulated other comprehensive income (“AOCI”) in both net income and other comprehensive income on the face of the financial statements. This deferral will enable FASB to address certain concerns raised with regards to presentation requirements for reclassification adjustments. The amendment is effective at the same time as ASU 2011-05 which was effective for the Company on January 1, 2012.
(2) Securities
Trading Securities
The fair value and net unrealized gain (loss) included in trading securities is as follows (in thousands):
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
March 31, 2011
|
|
| |
|
Fair Value
|
|
|
Net Unrealized Gain (Loss)
|
|
|
Fair Value
|
|
|
Net Unrealized Gain (Loss)
|
|
|
Fair
Value
|
|
|
Net Unrealized Gain (Loss)
|
|
|
U.S. Government agency debentures
|
|
$ |
27,430 |
|
|
$ |
2 |
|
|
$ |
22,203 |
|
|
$ |
63 |
|
|
$ |
6,952 |
|
|
$ |
23 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
35,111 |
|
|
|
57 |
|
|
|
12,379 |
|
|
|
59 |
|
|
|
18,109 |
|
|
|
120 |
|
|
Municipal and other tax-exempt securities
|
|
|
60,230 |
|
|
|
158 |
|
|
|
39,345 |
|
|
|
652 |
|
|
|
53,731 |
|
|
|
(262 |
) |
|
Other trading securities
|
|
|
5,605 |
|
|
|
– |
|
|
|
2,873 |
|
|
|
9 |
|
|
|
1,927 |
|
|
|
(4 |
) |
|
Total
|
|
$ |
128,376 |
|
|
$ |
217 |
|
|
$ |
76,800 |
|
|
$ |
783 |
|
|
$ |
80,719 |
|
|
$ |
(123 |
) |
Investment Securities
The amortized cost and fair values of investment securities are as follows (in thousands):
| |
|
March 31, 2012
|
|
| |
|
Amortized
|
|
|
Carrying
|
|
|
Fair
|
|
|
Gross Unrealized2
|
|
| |
|
Cost
|
|
|
Value1
|
|
|
Value
|
|
|
Gain
|
|
|
Loss
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
$ |
130,919 |
|
|
$ |
130,919 |
|
|
$ |
135,314 |
|
|
$ |
4,402 |
|
|
$ |
(7 |
) |
|
U.S. agency residential mortgage-backed securities – Other
|
|
|
103,055 |
|
|
|
112,909 |
|
|
|
113,958 |
|
|
|
1,587 |
|
|
|
(538 |
) |
|
Other debt securities
|
|
|
183,431 |
|
|
|
183,431 |
|
|
|
202,171 |
|
|
|
18,740 |
|
|
|
– |
|
|
Total
|
|
$ |
417,405 |
|
|
$ |
427,259 |
|
|
$ |
451,443 |
|
|
$ |
24,729 |
|
|
$ |
(545 |
) |
|
1
|
Carrying value at March 31, 2012 includes $9.9 million of net unrealized gain which remains in AOCI related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio. At the time of transfer in the third quarter of 2011, the fair value of these securities totaled $131 million, amortized cost totaled $118 million and the pre-tax unrealized gain totaled $13 million. No gain or loss was recognized in the Consolidated Statement of Earnings at the time of transfer.
|
|
2
|
Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.
|
| |
|
December 31, 2011
|
|
| |
|
Amortized
|
|
|
Carrying
|
|
|
Fair
|
|
|
Gross Unrealized2
|
|
| |
|
Cost
|
|
|
Value1
|
|
|
Value
|
|
|
Gain
|
|
|
Loss
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
$ |
128,697 |
|
|
$ |
128,697 |
|
|
$ |
133,670 |
|
|
$ |
4,975 |
|
|
$ |
(2 |
) |
|
U.S. agency residential mortgage-backed securities – Other
|
|
|
110,062 |
|
|
|
121,704 |
|
|
|
120,536 |
|
|
|
602 |
|
|
|
(1,770 |
) |
|
Other debt securities
|
|
|
188,835 |
|
|
|
188,835 |
|
|
|
208,451 |
|
|
|
19,616 |
|
|
|
– |
|
|
Total
|
|
$ |
427,594 |
|
|
$ |
439,236 |
|
|
$ |
462,657 |
|
|
$ |
25,193 |
|
|
$ |
(1,772 |
) |
|
1
|
Carrying value includes $12 million of net unrealized gain which remains in AOCI related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio. At the time of transfer in the third quarter of 2011, the fair value of these securities totaled $131 million, amortized cost totaled $118 million and the pre-tax unrealized gain totaled $13 million. No gain or loss was recognized in the Consolidated Statement of Earnings at the time of transfer.
|
|
2
|
Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.
|
| |
|
March 31, 2011
|
|
| |
|
Amortized
|
|
|
Fair
|
|
|
Gross Unrealized1
|
|
| |
|
Cost
|
|
|
Value
|
|
|
Gain
|
|
|
Loss
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
$ |
185,272 |
|
|
$ |
189,518 |
|
|
$ |
4,303 |
|
|
$ |
(57 |
) |
|
Other debt securities
|
|
|
158,129 |
|
|
|
165,534 |
|
|
|
7,665 |
|
|
|
(260 |
) |
|
Total
|
|
$ |
343,401 |
|
|
$ |
355,052 |
|
|
$ |
11,968 |
|
|
$ |
(317 |
) |
|
1
|
Gross unrealized gains and losses are not recognized in AOCI.
|
The amortized cost and fair values of investment securities at March 31, 2012, by contractual maturity, are as shown in the following table (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
| |
|
Less than
|
|
|
One to
|
|
|
Six to
|
|
|
Over
|
|
|
|
|
|
Average
|
|
| |
|
One Year
|
|
|
Five Years
|
|
|
Ten Years
|
|
|
Ten Years
|
|
|
Total
|
|
|
Maturity²
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
$ |
34,639 |
|
|
$ |
69,246 |
|
|
$ |
23,512 |
|
|
$ |
3,522 |
|
|
$ |
130,919 |
|
|
|
2.82 |
|
|
Fair value
|
|
|
34,814 |
|
|
|
71,828 |
|
|
|
24,928 |
|
|
|
3,744 |
|
|
|
135,314 |
|
|
|
|
|
|
Nominal yield¹
|
|
|
4.62 |
|
|
|
4.60 |
|
|
|
5.44 |
|
|
|
6.50 |
|
|
|
4.80 |
|
|
|
|
|
|
Other debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
$ |
10,021 |
|
|
$ |
30,147 |
|
|
$ |
34,806 |
|
|
$ |
108,457 |
|
|
$ |
183,431 |
|
|
|
9.96 |
|
|
Fair value
|
|
|
10,091 |
|
|
|
31,126 |
|
|
|
37,163 |
|
|
|
123,791 |
|
|
|
202,171 |
|
|
|
|
|
|
Nominal yield
|
|
|
3.96 |
|
|
|
5.41 |
|
|
|
5.58 |
|
|
|
6.24 |
|
|
|
5.86 |
|
|
|
|
|
|
Total fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
$ |
44,660 |
|
|
$ |
99,393 |
|
|
$ |
58,318 |
|
|
$ |
111,979 |
|
|
$ |
314,350 |
|
|
|
6.99 |
|
|
Fair value
|
|
|
44,905 |
|
|
|
102,954 |
|
|
|
62,091 |
|
|
|
127,535 |
|
|
|
337,485 |
|
|
|
|
|
|
Nominal yield
|
|
|
4.47 |
|
|
|
4.84 |
|
|
|
5.52 |
|
|
|
6.25 |
|
|
|
5.42 |
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
112,909 |
|
|
|
|
3 |
|
Fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,958 |
|
|
|
|
|
|
Nominal yield4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.71 |
|
|
|
|
|
|
Total investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
427,259 |
|
|
|
|
|
|
Fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
451,443 |
|
|
|
|
|
|
Nominal yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.70 |
|
|
|
|
|
|
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 3.4 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 disclosure of current yields on investment securities portfolio.
|
Available for Sale Securities
The amortized cost and fair value of available for sale securities are as follows (in thousands):
| |
|
March 31, 2012
|
|
| |
|
Amortized
|
|
|
Fair
|
|
|
Gross Unrealized1
|
|
|
|
|
| |
|
Cost
|
|
|
Value
|
|
|
Gain
|
|
|
Loss
|
|
|
OTTI²
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
$ |
1,001 |
|
|
$ |
1,004 |
|
|
$ |
3 |
|
|
$ |
– |
|
|
$ |
– |
|
|
Municipal and other tax-exempt
|
|
|
70,286 |
|
|
|
72,234 |
|
|
|
2,426 |
|
|
|
(206 |
) |
|
|
(272 |
) |
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA
|
|
|
5,352,645 |
|
|
|
5,521,695 |
|
|
|
171,892 |
|
|
|
(2,842 |
) |
|
|
– |
|
|
FHLMC
|
|
|
3,038,083 |
|
|
|
3,128,573 |
|
|
|
91,304 |
|
|
|
(814 |
) |
|
|
– |
|
|
GNMA
|
|
|
780,001 |
|
|
|
812,484 |
|
|
|
32,893 |
|
|
|
(410 |
) |
|
|
– |
|
|
Other
|
|
|
207,849 |
|
|
|
214,850 |
|
|
|
7,001 |
|
|
|
– |
|
|
|
– |
|
|
Total U.S. agencies
|
|
|
9,378,578 |
|
|
|
9,677,602 |
|
|
|
303,090 |
|
|
|
(4,066 |
) |
|
|
– |
|
|
Privately issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
140,142 |
|
|
|
120,187 |
|
|
|
– |
|
|
|
– |
|
|
|
(19,955 |
) |
|
Jumbo-A loans
|
|
|
230,903 |
|
|
|
206,326 |
|
|
|
– |
|
|
|
(1,132 |
) |
|
|
(23,445 |
) |
|
Total privately issued
|
|
|
371,045 |
|
|
|
326,513 |
|
|
|
– |
|
|
|
(1,132 |
) |
|
|
(43,400 |
) |
|
Total residential mortgage-backed securities
|
|
|
9,749,623 |
|
|
|
10,004,115 |
|
|
|
303,090 |
|
|
|
(5,198 |
) |
|
|
(43,400 |
) |
|
Other debt securities
|
|
|
36,269 |
|
|
|
36,777 |
|
|
|
508 |
|
|
|
– |
|
|
|
– |
|
|
Perpetual preferred stock
|
|
|
19,171 |
|
|
|
21,024 |
|
|
|
1,862 |
|
|
|
(9 |
) |
|
|
– |
|
|
Equity securities and mutual funds
|
|
|
32,970 |
|
|
|
51,443 |
|
|
|
18,801 |
|
|
|
(328 |
) |
|
|
– |
|
|
Total
|
|
$ |
9,909,320 |
|
|
$ |
10,186,597 |
|
|
$ |
326,690 |
|
|
$ |
(5,741 |
) |
|
$ |
(43,672 |
) |
|
¹
|
Gross unrealized gain/ loss recognized in AOCI.
|
|
²
|
Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.
|
| |
|
December 31, 2011
|
|
| |
|
Amortized
|
|
|
Fair
|
|
|
Gross Unrealized¹
|
|
|
|
|
| |
|
Cost
|
|
|
Value
|
|
|
Gain
|
|
|
Loss
|
|
|
OTTI²
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
$ |
1,001 |
|
|
$ |
1,006 |
|
|
$ |
5 |
|
|
$ |
– |
|
|
$ |
– |
|
|
Municipal and other tax-exempt
|
|
|
66,435 |
|
|
|
68,837 |
|
|
|
2,543 |
|
|
|
(141 |
) |
|
|
– |
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA
|
|
|
5,823,972 |
|
|
|
5,987,287 |
|
|
|
163,319 |
|
|
|
(4 |
) |
|
|
– |
|
|
FHLMC
|
|
|
2,756,180 |
|
|
|
2,846,215 |
|
|
|
90,035 |
|
|
|
– |
|
|
|
– |
|
|
GNMA
|
|
|
647,569 |
|
|
|
678,924 |
|
|
|
31,358 |
|
|
|
(3 |
) |
|
|
– |
|
|
Other
|
|
|
69,668 |
|
|
|
75,751 |
|
|
|
6,083 |
|
|
|
– |
|
|
|
– |
|
|
Total U.S. agencies
|
|
|
9,297,389 |
|
|
|
9,588,177 |
|
|
|
290,795 |
|
|
|
(7 |
) |
|
|
– |
|
|
Privately issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
168,461 |
|
|
|
132,242 |
|
|
|
– |
|
|
|
– |
|
|
|
(36,219 |
) |
|
Jumbo-A loans
|
|
|
334,607 |
|
|
|
286,924 |
|
|
|
– |
|
|
|
(11,096 |
) |
|
|
(36,587 |
) |
|
Total privately issued
|
|
|
503,068 |
|
|
|
419,166 |
|
|
|
– |
|
|
|
(11,096 |
) |
|
|
(72,806 |
) |
|
Total residential mortgage-backed securities
|
|
|
9,800,457 |
|
|
|
10,007,343 |
|
|
|
290,795 |
|
|
|
(11,103 |
) |
|
|
(72,806 |
) |
|
Other debt securities
|
|
|
36,298 |
|
|
|
36,495 |
|
|
|
197 |
|
|
|
– |
|
|
|
– |
|
|
Perpetual preferred stock
|
|
|
19,171 |
|
|
|
18,446 |
|
|
|
1,030 |
|
|
|
(1,755 |
) |
|
|
– |
|
|
Equity securities and mutual funds
|
|
|
33,843 |
|
|
|
47,238 |
|
|
|
13,727 |
|
|
|
(332 |
) |
|
|
– |
|
|
Total
|
|
$ |
9,957,205 |
|
|
$ |
10,179,365 |
|
|
$ |
308,297 |
|
|
$ |
(13,331 |
) |
|
$ |
(72,806 |
) |
|
¹
|
Gross unrealized gain/loss recognized in AOCI.
|
|
²
|
Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.
|
| |
|
March 31, 2011
|
|
| |
|
Amortized
|
|
|
Fair
|
|
|
Gross Unrealized1
|
|
|
|
|
| |
|
Cost
|
|
|
Value
|
|
|
Gain
|
|
|
Loss
|
|
|
OTTI²
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
$ |
69,039 |
|
|
$ |
69,859 |
|
|
$ |
1,401 |
|
|
$ |
(225 |
) |
|
$ |
(356 |
) |
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA
|
|
|
5,351,388 |
|
|
|
5,470,100 |
|
|
|
128,500 |
|
|
|
(9,788 |
) |
|
|
– |
|
|
FHLMC
|
|
|
2,533,322 |
|
|
|
2,603,754 |
|
|
|
77,362 |
|
|
|
(6,930 |
) |
|
|
– |
|
|
GNMA
|
|
|
728,643 |
|
|
|
760,432 |
|
|
|
31,882 |
|
|
|
(93 |
) |
|
|
– |
|
|
Other
|
|
|
85,298 |
|
|
|
91,304 |
|
|
|
6,006 |
|
|
|
– |
|
|
|
– |
|
|
Total U.S. agencies
|
|
|
8,698,651 |
|
|
|
8,925,590 |
|
|
|
243,750 |
|
|
|
(16,811 |
) |
|
|
– |
|
|
Privately issue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
208,550 |
|
|
|
181,979 |
|
|
|
58 |
|
|
|
(188 |
) |
|
|
(26,441 |
) |
|
Jumbo-A loans
|
|
|
421,315 |
|
|
|
391,306 |
|
|
|
1,033 |
|
|
|
(9,562 |
) |
|
|
(21,480 |
) |
|
Total privately issued
|
|
|
629,865 |
|
|
|
573,285 |
|
|
|
1,091 |
|
|
|
(9,750 |
) |
|
|
(47,921 |
) |
|
Total residential mortgage-backed securities
|
|
|
9,328,516 |
|
|
|
9,498,875 |
|
|
|
244,841 |
|
|
|
(26,561 |
) |
|
|
(47,921 |
) |
|
Other debt securities
|
|
|
5,900 |
|
|
|
5,899 |
|
|
|
– |
|
|
|
(1 |
) |
|
|
– |
|
|
Perpetual preferred stock
|
|
|
19,511 |
|
|
|
22,574 |
|
|
|
3,063 |
|
|
|
– |
|
|
|
– |
|
|
Equity securities and mutual funds
|
|
|
41,595 |
|
|
|
68,694 |
|
|
|
27,105 |
|
|
|
(6 |
) |
|
|
– |
|
|
Total
|
|
$ |
9,464,561 |
|
|
$ |
9,665,901 |
|
|
$ |
276,410 |
|
|
$ |
(26,793 |
) |
|
$ |
(48,277 |
) |
|
¹
|
Gross unrealized gain/loss recognized in AOCI.
|
|
²
|
Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.
|
The amortized cost and fair values of available for sale securities at March 31, 2012, by contractual maturity, are as shown in the following table (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
| |
|
Less than
|
|
|
One to
|
|
|
Six to
|
|
|
Over
|
|
|
|
|
|
Average
|
|
| |
|
One Year
|
|
|
Five Years
|
|
|
Ten Years
|
|
|
Ten Years6
|
|
|
Total
|
|
|
Maturity5
|
|
|
U.S. Treasuries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
– |
|
|
$ |
1,001 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,001 |
|
|
|
1.11 |
|
|
Fair value
|
|
|
– |
|
|
|
1,004 |
|
|
|
– |
|
|
|
– |
|
|
|
1,004 |
|
|
|
|
|
|
Nominal yield¹
|
|
|
– |
|
|
|
0.55 |
|
|
|
– |
|
|
|
– |
|
|
|
0.55 |
|
|
|
|
|
|
Municipal and other tax-exempt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
581 |
|
|
$ |
14,747 |
|
|
$ |
9,433 |
|
|
$ |
45,525 |
|
|
$ |
70,286 |
|
|
|
17.99 |
|
|
Fair value
|
|
|
588 |
|
|
|
15,904 |
|
|
|
10,325 |
|
|
|
45,417 |
|
|
|
72,234 |
|
|
|
|
|
|
Nominal yield¹
|
|
|
0.09 |
|
|
|
0.57 |
|
|
|
1.13 |
|
|
|
2.78 |
|
|
|
2.07 |
|
|
|
|
|
|
Other debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
– |
|
|
$ |
30,369 |
|
|
$ |
– |
|
|
$ |
5,900 |
|
|
$ |
36,269 |
|
|
|
7.44 |
|
|
Fair value
|
|
|
– |
|
|
|
30,877 |
|
|
|
– |
|
|
|
5,900 |
|
|
|
36,777 |
|
|
|
|
|
|
Nominal yield¹
|
|
|
– |
|
|
|
1.80 |
|
|
|
– |
|
|
|
1.87 |
|
|
|
1.82 |
|
|
|
|
|
|
Total fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
581 |
|
|
$ |
46,117 |
|
|
$ |
9,433 |
|
|
$ |
51,425 |
|
|
$ |
107,556 |
|
|
|
|
|
|
Fair value
|
|
|
588 |
|
|
|
47,785 |
|
|
|
10,325 |
|
|
|
51,317 |
|
|
|
110,015 |
|
|
|
|
|
|
Nominal yield
|
|
|
0.09 |
|
|
|
1.38 |
|
|
|
1.13 |
|
|
|
2.67 |
|
|
|
1.97 |
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,749,623 |
|
|
|
² |
|
|
Fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,004,115 |
|
|
|
|
|
|
Nominal yield4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.97 |
|
|
|
|
|
|
Equity securities and mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
52,141 |
|
|
|
³ |
|
|
Fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,467 |
|
|
|
|
|
|
Nominal yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.00 |
|
|
|
|
|
|
Total available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,909,320 |
|
|
|
|
|
|
Fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,186,597 |
|
|
|
|
|
|
Nominal yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.95 |
|
|
|
|
|
|
¹
|
Calculated on a taxable equivalent basis using a 39% effective tax rate.
|
|
²
|
The average expected lives of mortgage-backed securities were 2.3 years based upon current prepayment assumptions.
|
|
³
|
Primarily restricted common stock of U.S. government agencies 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 disclosure of 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.
|
Sales of available for sale securities are recognized on a trade date basis. Realized gains and losses on sales of securities are based upon specific identification of the security sold. Sales of available for sale securities resulted in gains and losses as follows (in thousands):
| |
|
Three Months Ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Proceeds
|
|
$ |
991,941 |
|
|
$ |
793,152 |
|
|
Gross realized gains
|
|
|
11,685 |
|
|
|
10,480 |
|
|
Gross realized losses
|
|
|
(7,354 |
) |
|
|
(5,578 |
) |
|
Related federal and state income tax expense
|
|
|
1,685 |
|
|
|
1,907 |
|
Securities with an amortized cost of $4.0 billion at March 31, 2012, $4.4 billion at December 31, 2011 and $3.9 billion at March 31, 2011 have been pledged as collateral for repurchase agreements, public and trust funds on deposit and for other purposes, as required by law. The secured parties do not have the right to sell or re-pledge these securities.
Temporarily Impaired Securities as of March 31, 2012
(In thousands)
| |
|
Number
|
|
|
Less Than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
| |
|
of
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
| |
|
Securities
|
|
|
Value
|
|
|
Loss
|
|
|
Value
|
|
|
Loss
|
|
|
Value
|
|
|
Loss
|
|
|
Investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
2 |
|
|
$ |
619 |
|
|
$ |
7 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
619 |
|
|
$ |
7 |
|
|
U.S. agency residential mortgage-backed securities – Other
|
|
|
2 |
|
|
|
45,668 |
|
|
|
538 |
|
|
|
– |
|
|
|
– |
|
|
|
45,668 |
|
|
|
538 |
|
|
Total investment
|
|
|
4 |
|
|
$ |
46,287 |
|
|
$ |
545 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
46,287 |
|
|
$ |
545 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
60 |
|
|
$ |
25,284 |
|
|
$ |
395 |
|
|
$ |
19,970 |
|
|
$ |
83 |
|
|
$ |
45,254 |
|
|
$ |
478 |
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA
|
|
|
10 |
|
|
|
453,557 |
|
|
|
2,842 |
|
|
|
– |
|
|
|
– |
|
|
|
453,557 |
|
|
|
2,842 |
|
|
FHLMC
|
|
|
17 |
|
|
|
518,483 |
|
|
|
814 |
|
|
|
– |
|
|
|
– |
|
|
|
518,483 |
|
|
|
814 |
|
|
GNMA
|
|
|
8 |
|
|
|
175,409 |
|
|
|
410 |
|
|
|
– |
|
|
|
– |
|
|
|
175,409 |
|
|
|
410 |
|
|
Total U.S. agencies
|
|
|
35 |
|
|
|
1,147,449 |
|
|
|
4,066 |
|
|
|
– |
|
|
|
– |
|
|
|
1,147,449 |
|
|
|
4,066 |
|
|
Privately issued1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
16 |
|
|
|
– |
|
|
|
– |
|
|
|
120,187 |
|
|
|
19,955 |
|
|
|
120,187 |
|
|
|
19,955 |
|
|
Jumbo-A loans
|
|
|
33 |
|
|
|
3,050 |
|
|
|
94 |
|
|
|
203,276 |
|
|
|
24,483 |
|
|
|
206,326 |
|
|
|
24,577 |
|
|
Total privately issued
|
|
|
49 |
|
|
|
3,050 |
|
|
|
94 |
|
|
|
323,463 |
|
|
|
44,438 |
|
|
|
326,513 |
|
|
|
44,532 |
|
|
Total residential mortgage-backed securities
|
|
|
84 |
|
|
|
1,150,499 |
|
|
|
4,160 |
|
|
|
323,463 |
|
|
|
44,438 |
|
|
|
1,473,962 |
|
|
|
48,598 |
|
|
Perpetual preferred stocks
|
|
|
1 |
|
|
|
1,941 |
|
|
|
9 |
|
|
|
– |
|
|
|
– |
|
|
|
1,941 |
|
|
|
9 |
|
|
Equity securities and mutual funds
|
|
|
3 |
|
|
|
2,642 |
|
|
|
328 |
|
|
|
– |
|
|
|
– |
|
|
|
2,642 |
|
|
|
328 |
|
|
Total available for sale
|
|
|
148 |
|
|
$ |
1,180,366 |
|
|
$ |
4,892 |
|
|
$ |
343,433 |
|
|
$ |
44,521 |
|
|
$ |
1,523,799 |
|
|
$ |
49,413 |
|
|
¹
|
Includes the following securities for which an unrealized loss remains in OCI after an other-than-temporary credit loss has been recognized in income:
|
|
Municipal and other tax-exempt
|
|
|
21 |
|
|
$ |
12,754 |
|
|
$ |
272 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
12,754 |
|
|
$ |
272 |
|
|
Alt-A loans
|
|
|
16 |
|
|
|
– |
|
|
|
– |
|
|
|
120,187 |
|
|
|
19,955 |
|
|
|
120,187 |
|
|
|
19,955 |
|
|
Jumbo-A loans
|
|
|
29 |
|
|
|
3,050 |
|
|
|
94 |
|
|
|
182,766 |
|
|
|
23,351 |
|
|
|
185,816 |
|
|
|
23,445 |
|
Temporarily Impaired Securities as of December 31, 2011
(In thousands)
| |
|
Number
|
|
|
Less Than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
| |
|
of
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
| |
|
Securities
|
|
|
Value
|
|
|
Loss
|
|
|
Value
|
|
|
Loss
|
|
|
Value
|
|
|
Loss
|
|
|
Investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
1 |
|
|
$ |
479 |
|
|
$ |
2 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
479 |
|
|
$ |
2 |
|
|
U.S. agency residential mortgage-backed securities – Other
|
|
|
5 |
|
|
|
92,571 |
|
|
|
1,770 |
|
|
|
– |
|
|
|
– |
|
|
|
92,571 |
|
|
|
1,770 |
|
|
Total investment
|
|
|
6 |
|
|
$ |
93,050 |
|
|
$ |
1,772 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
93,050 |
|
|
$ |
1,772 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
26 |
|
|
$ |
5,008 |
|
|
$ |
7 |
|
|
$ |
21,659 |
|
|
$ |
134 |
|
|
$ |
26,667 |
|
|
$ |
141 |
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA
|
|
|
2 |
|
|
|
68,657 |
|
|
|
4 |
|
|
|
– |
|
|
|
– |
|
|
|
68,657 |
|
|
|
4 |
|
|
GNMA
|
|
|
1 |
|
|
|
2,072 |
|
|
|
3 |
|
|
|
– |
|
|
|
– |
|
|
|
2,072 |
|
|
|
3 |
|
|
Total U.S. agencies
|
|
|
3 |
|
|
|
70,729 |
|
|
|
7 |
|
|
|
– |
|
|
|
– |
|
|
|
70,729 |
|
|
|
7 |
|
|
Privately issued1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
19 |
|
|
|
– |
|
|
|
– |
|
|
|
132,242 |
|
|
|
36,219 |
|
|
|
132,242 |
|
|
|
36,219 |
|
|
Jumbo-A loans
|
|
|
48 |
|
|
|
8,142 |
|
|
|
842 |
|
|
|
278,781 |
|
|
|
46,841 |
|
|
|
286,923 |
|
|
|
47,683 |
|
|
Total privately issued
|
|
|
67 |
|
|
|
8,142 |
|
|
|
842 |
|
|
|
411,023 |
|
|
|
83,060 |
|
|
|
419,165 |
|
|
|
83,902 |
|
|
Total residential mortgage-backed securities
|
|
|
70 |
|
|
|
78,871 |
|
|
|
849 |
|
|
|
411,023 |
|
|
|
83,060 |
|
|
|
489,894 |
|
|
|
83,909 |
|
|
Perpetual preferred stocks
|
|
|
6 |
|
|
|
11,147 |
|
|
|
1,755 |
|
|
|
– |
|
|
|
– |
|
|
|
11,147 |
|
|
|
1,755 |
|
|
Equity securities and mutual funds
|
|
|
7 |
|
|
|
221 |
|
|
|
5 |
|
|
|
2,551 |
|
|
|
327 |
|
|
|
2,772 |
|
|
|
332 |
|
|
Total available for sale
|
|
|
109 |
|
|
$ |
95,247 |
|
|
$ |
2,616 |
|
|
$ |
435,233 |
|
|
$ |
83,521 |
|
|
$ |
530,480 |
|
|
$ |
86,137 |
|
|
¹
|
Includes the following securities for which an unrealized loss remains in OCI after an other-than-temporary credit loss has been recognized in income:
|
|
Alt-A loans
|
|
|
19 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
132,242 |
|
|
$ |
36,219 |
|
|
$ |
132,242 |
|
|
$ |
36,219 |
|
|
Jumbo-A loans
|
|
|
36 |
|
|
|
3,809 |
|
|
|
256 |
|
|
|
202,874 |
|
|
|
36,331 |
|
|
|
206,683 |
|
|
|
36,587 |
|
Temporarily Impaired Securities as of March 31, 2011
(In thousands)
| |
|
Number
|
|
|
Less Than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
| |
|
of
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
| |
|
Securities
|
|
|
Value
|
|
|
Loss
|
|
|
Value
|
|
|
Loss
|
|
|
Value
|
|
|
Loss
|
|
|
Investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax- exempt
|
|
|
14 |
|
|
$ |
3,931 |
|
|
$ |
45 |
|
|
$ |
1,559 |
|
|
$ |
12 |
|
|
$ |
5,490 |
|
|
$ |
57 |
|
|
Other
|
|
|
15 |
|
|
|
34,384 |
|
|
|
260 |
|
|
|
– |
|
|
|
– |
|
|
|
34,384 |
|
|
|
260 |
|
|
Total investment
|
|
|
29 |
|
|
|
38,315 |
|
|
|
305 |
|
|
|
1,559 |
|
|
|
12 |
|
|
|
39,874 |
|
|
|
317 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt1
|
|
|
49 |
|
|
|
13,508 |
|
|
|
121 |
|
|
|
30,516 |
|
|
|
460 |
|
|
|
44,024 |
|
|
|
581 |
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA
|
|
|
25 |
|
|
|
1,518,826 |
|
|
|
9,788 |
|
|
|
– |
|
|
|
– |
|
|
|
1,518,826 |
|
|
|
9,788 |
|
|
FHLMC
|
|
|
17 |
|
|
|
621,004 |
|
|
|
6,930 |
|
|
|
– |
|
|
|
– |
|
|
|
621,004 |
|
|
|
6,930 |
|
|
GNMA
|
|
|
3 |
|
|
|
6,747 |
|
|
|
93 |
|
|
|
– |
|
|
|
– |
|
|
|
6,747 |
|
|
|
93 |
|
|
Total U.S. agencies
|
|
|
45 |
|
|
|
2,146,577 |
|
|
|
16,811 |
|
|
|
– |
|
|
|
– |
|
|
|
2,146,577 |
|
|
|
16,811 |
|
|
Privately issued1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
21 |
|
|
|
– |
|
|
|
– |
|
|
|
175,166 |
|
|
|
26,629 |
|
|
|
175,166 |
|
|
|
26,629 |
|
|
Jumbo-A loans
|
|
|
37 |
|
|
|
– |
|
|
|
– |
|
|
|
308,901 |
|
|
|
31,042 |
|
|
|
308,901 |
|
|
|
31,042 |
|
|
Total privately issued
|
|
|
58 |
|
|
|
– |
|
|
|
– |
|
|
|
484,067 |
|
|
|
57,671 |
|
|
|
484,067 |
|
|
|
57,671 |
|
|
Total residential mortgage-backed securities
|
|
|
103 |
|
|
|
2,146,577 |
|
|
|
16,811 |
|
|
|
484,067 |
|
|
|
57,671 |
|
|
|
2,630,644 |
|
|
|
74,482 |
|
|
Other debt securities
|
|
|
1 |
|
|
|
499 |
|
|
|
1 |
|
|
|
– |
|
|
|
– |
|
|
|
499 |
|
|
|
1 |
|
|
Equity securities and mutual funds
|
|
|
1 |
|
|
|
304 |
|
|
|
5 |
|
|
|
180 |
|
|
|
1 |
|
|
|
484 |
|
|
|
6 |
|
|
Total available for sale
|
|
|
154 |
|
|
$ |
2,160,888 |
|
|
$ |
16,938 |
|
|
$ |
514,763 |
|
|
$ |
58,132 |
|
|
$ |
2,675,651 |
|
|
$ |
75,070 |
|
|
¹
|
Includes the following securities for which an unrealized loss remains in OCI after an other-than-temporary credit loss has been recognized in income:
|
|
Municipal and other tax-exempt
|
|
|
18 |
|
|
$ |
417 |
|
|
$ |
14 |
|
|
$ |
10,275 |
|
|
$ |
342 |
|
|
$ |
10,692 |
|
|
$ |
356 |
|
|
Alt-A loans
|
|
|
19 |
|
|
|
– |
|
|
|
– |
|
|
|
167,892 |
|
|
|
26,441 |
|
|
|
167,892 |
|
|
|
26,441 |
|
|
Jumbo-A loans
|
|
|
25 |
|
|
|
– |
|
|
|
– |
|
|
|
159,624 |
|
|
|
21,479 |
|
|
|
159,624 |
|
|
|
21,479 |
|
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.
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 March 31, 2012, the Company did not intend to sell and it is more-likely-than-not that the Company will not be required to sell impaired securities before fair value recovers to amortized cost, which may be maturity.
Impairment of debt securities rated investment grade by all nationally-recognized rating agencies are 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 March 31, 2012.
At March 31, 2012, 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):
| |
|
U.S. Govt / GSE 1
|
|
|
AAA - AA
|
|
|
A - BBB
|
|
|
Below Investment Grade
|
|
|
Not Rated
|
|
|
Total
|
|
| |
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
| |
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Value
|
|
|
Investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
50,244 |
|
|
$ |
51,805 |
|
|
$ |
25,449 |
|
|
$ |
26,183 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
55,226 |
|
|
$ |
57,326 |
|
|
$ |
130,919 |
|
|
$ |
135,314 |
|
|
U.S. agency residential mortgage-backed securities – Other
|
|
|
112,909 |
|
|
|
113,958 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
112,909 |
|
|
|
113,958 |
|
|
Other debt securities
|
|
|
– |
|
|
|
– |
|
|
|
174,572 |
|
|
|
193,207 |
|
|
|
600 |
|
|
|
600 |
|
|
|
– |
|
|
|
– |
|
|
|
8,259 |
|
|
|
8,364 |
|
|
|
183,431 |
|
|
|
202,171 |
|
|
Total
|
|
$ |
112,909 |
|
|
$ |
113,958 |
|
|
$ |
224,816 |
|
|
$ |
245,012 |
|
|
$ |
26,049 |
|
|
$ |
26,783 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
63,485 |
|
|
$ |
65,690 |
|
|
$ |
427,259 |
|
|
$ |
451,443 |
|
| |
|
U.S. Govt / GSE 1
|
|
|
AAA - AA
|
|
|
A - BBB
|
|
|
Below Investment Grade
|
|
|
Not Rated
|
|
|
Total
|
|
| |
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
| |
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Available for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
$ |
1,001 |
|
|
$ |
1,004 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,001 |
|
|
$ |
1,004 |
|
|
Municipal and other tax-exempt
|
|
|
– |
|
|
|
– |
|
|
|
43,876 |
|
|
|
45,868 |
|
|
|
11,598 |
|
|
|
11,696 |
|
|
|
13,396 |
|
|
|
13,124 |
|
|
|
1,416 |
|
|
|
1,546 |
|
|
|
70,286 |
|
|
|
72,234 |
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. agencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA
|
|
|
5,352,645 |
|
|
|
5,521,695 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
5,352,645 |
|
|
|
5,521,695 |
|
|
FHLMC
|
|
|
3,038,083 |
|
|
|
3,128,573 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
3,038,083 |
|
|
|
3,128,573 |
|
|
GNMA
|
|
|
780,001 |
|
|
|
812,484 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
780,001 |
|
|
|
812,484 |
|
|
Other
|
|
|
207,849 |
|
|
|
214,850 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
207,849 |
|
|
|
214,850 |
|
|
Total U.S. agencies
|
|
|
9,378,578 |
|
|
|
9,677,602 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
9,378,578 |
|
|
|
9,677,602 |
|
|
Privately issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
140,142 |
|
|
|
120,187 |
|
|
|
– |
|
|
|
– |
|
|
|
140,142 |
|
|
|
120,187 |
|
|
Jumbo-A loans
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
230,903 |
|
|
|
206,326 |
|
|
|
– |
|
|
|
– |
|
|
|
230,903 |
|
|
|
206,326 |
|
|
Total privately issued
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
371,045 |
|
|
|
326,513 |
|
|
|
– |
|
|
|
– |
|
|
|
371,045 |
|
|
|
326,513 |
|
|
Total residential mortgage-backed securities
|
|
|
9,378,578 |
|
|
|
9,677,602 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
371,045 |
|
|
|
326,513 |
|
|
|
– |
|
|
|
– |
|
|
|
9,749,623 |
|
|
|
10,004,115 |
|
|
Other debt securities
|
|
|
– |
|
|
|
– |
|
|
|
5,900 |
|
|
|
5,900 |
|
|
|
30,369 |
|
|
|
30,877 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
36,269 |
|
|
|
36,777 |
|
|
Perpetual preferred stock
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
19,171 |
|
|
|
21,024 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
19,171 |
|
|
|
21,024 |
|
|
Equity securities and mutual funds
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
32,970 |
|
|
|
51,443 |
|
|
|
32,970 |
|
|
|
51,443 |
|
|
Total
|
|
$ |
9,379,579 |
|
|
$ |
9,678,606 |
|
|
$ |
49,776 |
|
|
$ |
51,768 |
|
|
$ |
61,138 |
|
|
$ |
63,597 |
|
|
$ |
384,441 |
|
|
$ |
339,637 |
|
|
$ |
34,386 |
|
|
$ |
52,989 |
|
|
$ |
9,909,320 |
|
|
$ |
10,186,597 |
|
|
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 government-sponsored enterprises.
|
At March 31, 2012, all $371 million of the portfolio of privately issued residential mortgage-backed securities (based on amortized cost after impairment charges) was rated below investment grade by at least one of the nationally-recognized rating agencies. The aggregate unrealized loss on these securities totaled $45 million. 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, decreases in housing prices and estimated liquidation costs at foreclosure.
The primary assumptions used in this evaluation were:
|
·
|
Unemployment rates – increasing to 9.5% over the next 12 months, dropping to 8% over the following 21 months, and holding at 8% thereafter.
|
|
·
|
Housing price depreciation – starting with current depreciated housing prices based on information derived from the Federal Housing Finance Agency (“FHFA”) data, decreasing by an additional 6% over the next twelve months and then growing at 2% per year thereafter. At December 31, 2011, we assumed that housing prices would decrease and additional 8% over the next twelve months and then grow at 2% per year thereafter.
|
|
·
|
Estimated Liquidation Costs – reflect actual historical liquidation costs observed on Jumbo and Alt-A residential mortgage loans in the securities owned by the Company
|
|
·
|
Discount rates – 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 residential 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 effectively doubled 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 losses and the estimated credit losses on these securities was charged against other comprehensive income, net of deferred taxes.
Based upon projected declines in expected cash flows from certain privately issued residential mortgage-backed securities, the Company recognized $3.7 million of credit loss impairments in earnings during the first quarter of 2012.
A distribution of the amortized costs (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):
| |
|
|
|
|
|
|
|
|
|
|
Credit Loss Impairments Recognized
|
|
| |
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2012
|
|
|
Life-to-date
|
|
| |
|
Number of Securities
|
|
|
Amortized
Cost
|
|
|
Fair Value
|
|
|
Number of
Securities
|
|
|
Amount
|
|
|
Number of Securities
|
|
|
Amount
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A loans
|
|
|
16 |
|
|
$ |
140,142 |
|
|
$ |
120,187 |
|
|
|
9 |
|
|
$ |
2,959 |
|
|
|
16 |
|
|
$ |
46,678 |
|
|
Jumbo-A loans
|
|
|
33 |
|
|
|
230,903 |
|
|
|
206,326 |
|
|
|
12 |
|
|
|
763 |
|
|
|
31 |
|
|
|
22,802 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
49 |
|
|
$ |
371,045 |
|
|
$ |
326,513 |
|
|
|
21 |
|
|
$ |
3,722 |
|
|
|
47 |
|
|
$ |
69,480 |
|
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 prospect 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. Accordingly, all impairment of equity securities was considered temporary at March 31, 2012.
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):
| |
|
Three Months Ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Balance of credit-related OTTI recognized on available for sale debt, beginning of period
|
|
$ |
76,131 |
|
|
$ |
52,624 |
|
|
Additions for credit-related OTTI not previously recognized
|
|
|
113 |
|
|
|
– |
|
|
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
|
|
|
3,609 |
|
|
|
4,599 |
|
|
Sales
|
|
|
(7,796 |
) |
|
|
– |
|
|
Balance of credit-related OTTI recognized on available for sale debt securities, end of period
|
|
$ |
72,057 |
|
|
$ |
57,223 |
|
Fair Value Option Securities
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 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. In addition, certain corporate debt securities are economically hedged by derivative contracts to manage interest rate risk. Derivative contracts that have not been designated as hedging instruments effectively modify these fixed rate securities into variable rate securities.
The fair value and net unrealized gain (loss) included in Fair value option securities is as follows (in thousands):
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
March 31, 2011
|
|
| |
|
Fair Value
|
|
|
Net Unrealized Gain (Loss)
|
|
|
Fair Value
|
|
|
Net Unrealized Gain (Loss)
|
|
|
Fair Value
|
|
|
Net Unrealized Gain (Loss)
|
|
|
U.S. agency residential mortgage-backed securities
|
|
$ |
322,180 |
|
|
$ |
1,593 |
|
|
$ |
626,109 |
|
|
$ |
19,233 |
|
|
$ |
326,624 |
|
|
$ |
(3,698 |
) |
|
Corporate debt securities
|
|
|
25,772 |
|
|
|
678 |
|
|
|
25,117 |
|
|
|
18 |
|
|
|
– |
|
|
|
– |
|
|
Total
|
|
$ |
347,952 |
|
|
$ |
2,271 |
|
|
$ |
651,226 |
|
|
$ |
19,251 |
|
|
$ |
326,624 |
|
|
$ |
(3,698 |
) |
(3) Derivatives
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at March 31, 2012 (in thousands):
| |
|
Gross Basis
|
|
|
Net Basis²
|
|
| |
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
| |
|
Notional¹
|
|
|
Fair Value
|
|
|
Notional¹
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Customer risk management programs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts3
|
|
$ |
12,433,054 |
|
|
$ |
117,633 |
|
|
$ |
12,142,598 |
|
|
$ |
115,118 |
|
|
$ |
90,163 |
|
|
$ |
87,648 |
|
|
Energy contracts
|
|
|
1,846,932 |
|
|
|
180,548 |
|
|
|
1,899,205 |
|
|
|
187,991 |
|
|
|
91,363 |
|
|
|
98,806 |
|
|
Agricultural contracts
|
|
|
116,575 |
|
|
|
5,664 |
|
|
|
122,979 |
|
|
|
5,597 |
|
|
|
1,060 |
|
|
|
993 |
|
|
Foreign exchange contracts
|
|
|
190,306 |
|
|
|
190,306 |
|
|
|
189,926 |
|
|
|
189,926 |
|
|
|
190,306 |
|
|
|
189,926 |
|
|
Equity options
|
|
|
217,169 |
|
|
|
18,244 |
|
|
|
217,169 |
|
|
|
18,244 |
|
|
|
18,244 |
|
|
|
18,244 |
|
|
Total customer derivative before cash collateral
|
|
|
14,804,036 |
|
|
|
512,395 |
|
|
|
14,571,877 |
|
|
|
516,876 |
|
|
|
391,136 |
|
|
|
395,617 |
|
|
Less: cash collateral
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(11,860 |
) |
|
|
(91,362 |
) |
|
Total customer derivatives
|
|
|
14,804,036 |
|
|
|
512,395 |
|
|
|
14,571,877 |
|
|
|
516,876 |
|
|
|
379,276 |
|
|
|
304,255 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk management programs
|
|
|
69,000 |
|
|
|
5,720 |
|
|
|
72,000 |
|
|
|
1,035 |
|
|
|
5,720 |
|
|
|
1,035 |
|
|
Total derivative contracts
|
|
$ |
14,873,036 |
|
|
$ |
518,115 |
|
|
$ |
14,643,877 |
|
|
$ |
517,911 |
|
|
$ |
384,996 |
|
|
$ |
305,290 |
|
|
¹
|
Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.
|
|
²
|
Derivative contracts are recorded on a net basis in the balance sheet in recognition of master netting agreements that enable the Company to settle all derivative positions with a given counterparty in total and to offset the net derivative position with the related cash collateral.
|
|
3
|
Includes interest rate swaps used by borrowers to modify interest rate terms of their loans and to be announced securities used by mortgage banking customers to hedge their loan production.
|
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.
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. As of March 31, 2012, a decrease in credit rating from A1 to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $42 million.
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2011 (in thousands):
| |
|
Gross Basis
|
|
|
Net Basis²
|
|
| |
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
| |
|
Notional¹
|
|
|
Fair Value
|
|
|
Notional¹
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Customer risk management programs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts3
|
|
$ |
10,391,244 |
|
|
$ |
182,450 |
|
|
$ |
10,324,244 |
|
|
$ |
181,102 |
|
|
$ |
149,780 |
|
|
$ |
148,432 |
|
|
Energy contracts
|
|
|
1,554,400 |
|
|
|
158,625 |
|
|
|
1,799,367 |
|
|
|
171,050 |
|
|
|
62,945 |
|
|
|
75,370 |
|
|
Agricultural contracts
|
|
|
146,252 |
|
|
|
4,761 |
|
|
|
148,924 |
|
|
|
4,680 |
|
|
|
782 |
|
|
|
701 |
|
|
Foreign exchange contracts
|
|
|
73,153 |
|
|
|
73,153 |
|
|
|
72,928 |
|
|
|
72,928 |
|
|
|
73,153 |
|
|
|
72,928 |
|
|
Equity options
|
|
|
208,647 |
|
|
|
12,508 |
|
|
|
208,647 |
|
|
|
12,508 |
|
|
|
12,508 |
|
|
|
12,508 |
|
|
Total customer derivatives before cash collateral
|
|
|
12,373,696 |
|
|
|
431,497 |
|
|
|
12,554,110 |
|
|
|
442,268 |
|
|
|
299,168 |
|
|
|
309,939 |
|
|
Less: cash collateral
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(11,690 |
) |
|
|
(73,712 |
) |
|
Total customer derivatives
|
|
|
12,373,696 |
|
|
|
431,497 |
|
|
|
12,554,110 |
|
|
|
442,268 |
|
|
|
287,478 |
|
|
|
236,227 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk management programs
|
|
|
44,000 |
|
|
|
6,381 |
|
|
|
25,000 |
|
|
|
295 |
|
|
|
6,381 |
|
|
|
295 |
|
|
Total derivative contracts
|
|
$ |
12,417,696 |
|
|
$ |
437,878 |
|
|
$ |
12,579,110 |
|
|
$ |
442,563 |
|
|
$ |
293,859 |
|
|
$ |
236,522 |
|
|
¹
|
Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.
|
|
²
|
Derivative contracts are recorded on a net basis in the balance sheet in recognition of master netting agreements that enable the Company to settle all derivative positions with a given counterparty in total and to offset the net derivative position with the related cash collateral.
|
|
3
|
Includes interest rate swaps used by borrowers to modify interest rate terms of their loans and to be announced securities used by mortgage banking customers to hedge their loan production.
|
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at March 31, 2011 (in thousands):
| |
|
Gross Basis
|
|
|
Net Basis²
|
|
| |
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
| |
|
Notional¹
|
|
|
Fair Value
|
|
|
Notional¹
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Customer risk management programs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
$ |
9,774,337 |
|
|
$ |
124,120 |
|
|
$ |
9,526,697 |
|
|
$ |
124,651 |
|
|
$ |
74,003 |
|
|
$ |
74,534 |
|
|
Energy contracts
|
|
|
2,052,150 |
|
|
|
220,170 |
|
|
|
2,199,841 |
|
|
|
220,021 |
|
|
|
108,841 |
|
|
|
108,692 |
|
|
Agricultural contracts
|
|
|
157,611 |
|
|
|
13,510 |
|
|
|
168,439 |
|
|
|
13,428 |
|
|
|
9,355 |
|
|
|
9,273 |
|
|
Foreign exchange contracts
|
|
|
57,222 |
|
|
|
57,222 |
|
|
|
57,222 |
|
|
|
57,222 |
|
|
|
57,222 |
|
|
|
57,222 |
|
|
Equity options
|
|
|
166,409 |
|
|
|
18,464 |
|
|
|
166,409 |
|
|
|
18,464 |
|
|
|
18,464 |
|
|
|
18,464 |
|
|
Total customer derivative before cash collateral
|
|
|
12,207,729 |
|
|
|
433,486 |
|
|
|
12,118,608 |
|
|
|
433,786 |
|
|
|
267,885 |
|
|
|
268,185 |
|
|
Less: cash collateral
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(23,749 |
) |
|
|
(112,148 |
) |
|
Total customer derivatives
|
|
|
12,207,729 |
|
|
|
433,486 |
|
|
|
12,118,608 |
|
|
|
433,786 |
|
|
|
244,136 |
|
|
|
156,037 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk management programs
|
|
|
44,000 |
|
|
|
988 |
|
|
|
144 |
|
|
|
1 |
|
|
|
988 |
|
|
|
1 |
|
|
Total derivative contracts
|
|
$ |
12,251,729 |
|
|
$ |
434,474 |
|
|
$ |
12,118,752 |
|
|
$ |
433,787 |
|
|
$ |
245,124 |
|
|
$ |
156,038 |
|
|
¹
|
Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.
|
|
²
|
Derivative contracts are recorded on a net basis in the balance sheet in recognition of master netting agreements that enable the Company to settle all derivative positions with a given counterparty in total and to offset the net derivative position with the related cash collateral.
|
|
3
|
Includes interest rate swaps used by borrowers to modify interest rate terms of their loans and to be announced securities used by mortgage banking customers to hedge their loan production.
|
The following summarizes the pre-tax net gains (losses) on derivative instruments and where they are recorded in the income statement (in thousands):
| |
|
Three Months Ended
March 31, 2012
|
|
|
Three Months Ended
March 31, 2011
|
|
| |
|
Brokerage
and Trading Revenue
|
|
|
Gain (Loss)
on Derivatives, Net
|
|
|
Brokerage
and Trading
Revenue
|
|
|
Gain (Loss)
on Derivatives,
Net
|
|
|
Customer Risk Management Programs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
$ |
2,034 |
|
|
$ |
– |
|
|
$ |
(2,536 |
) |
|
$ |
– |
|
|
Energy contracts
|
|
|
2,310 |
|
|
|
– |
|
|
|
3,487 |
|
|
|
– |
|
|
Agricultural contracts
|
|
|
91 |
|
|
|
– |
|
|
|
68 |
|
|
|
– |
|
|
Foreign exchange contracts
|
|
|
206 |
|
|
|
– |
|
|
|
108 |
|
|
|
– |
|
|
Equity options
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total Customer Derivatives
|
|
|
4,641 |
|
|
|
– |
|
|
|
1,127 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Risk Management Programs
|
|
|
– |
|
|
|
(2,473 |
) |
|
|
– |
|
|
|
(2,573 |
) |
|
Total Derivative Contracts
|
|
$ |
4,641 |
|
|
$ |
(2,473 |
) |
|
$ |
1,127 |
|
|
$ |
(2,573 |
) |
Customer Risk Management Programs
BOK Financial offers programs to permit its customers to manage various risks, including fluctuations in energy, cattle and other agricultural products, interest rates and foreign exchange rates, or to take positions in 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 its risk of 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.
Interest Rate Risk Management Programs
BOK Financial may use interest rate swaps in managing its interest rate sensitivity and as part of its economic hedge of the change in the fair value of mortgage servicing rights. Interest rate swaps are generally used to reduce overall asset sensitivity by converting specific fixed rate liabilities to floating rate based on LIBOR. Net interest revenue was not significantly impacted by the settlement of amounts receivable or payable on interest rate swaps for the three months ended March 31, 2012 and 2011, respectively. As of March 31, 2012, BOK Financial had interest rate swaps with a notional value of $66 million used as part of the economic hedge of the change in the fair value of the mortgage servicing rights.
As discussed in Note 5, 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 5, for additional discussion of notional, fair value and impact on earnings of these contracts.
None of these derivative contracts have been designated as hedging instruments.
(4) Loans and Allowances for Credit Losses
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 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.
Performing loans may be renewed under then current collateral value, debt service ratio and other underwriting standards. Nonperforming loans may be renewed and will remain on nonaccrual status. Nonperforming loans renewed will be evaluated and may be charged off if 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.
Interest is accrued at the applicable interest rate on the principal amount outstanding. Loans are placed on nonaccrual status when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are individually evaluated for nonaccrual status quarterly. Non-risk graded loans are generally placed on nonaccrual status when more than 90 days past due. Interest previously accrued but not collected is charged against interest income when the loan is placed on nonaccrual status. Payments on nonaccrual loans are applied to principal or reported 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.
All distressed commercial and commercial real estate loans are placed on nonaccrual status. Modification of nonaccruing loans to distressed borrowers generally consists of extension of payment terms, renewal of matured nonaccruing loans or interest rate concessions. Principal and accrued but unpaid interest is not forgiven. Renewed or modified nonaccruing loans are charged-off when the loan balance is no longer covered by the paying capacity of the borrower based on a quarterly evaluation of cash resources and collateral value. Renewed or modified nonperforming loans generally remain on nonaccrual status until full collection of principal and interest in accordance with original terms, including principal previously charged off, is probable. Consumer loans to troubled borrowers are not voluntarily modified.
Residential mortgage loans are primarily modified in accordance with U.S. government agency guidelines by reducing interest rates and extending the number of payments. No unpaid principal or interest is forgiven. Interest guaranteed by U.S. government agencies under residential mortgage loan programs continues to accrue based on the modified terms of the loan. Renegotiated loans may be sold after a period of satisfactory performance. If it becomes probable that all amounts due according to the modified loan terms will not be collected, the loan is placed on nonaccrual status and included in nonaccrual loans.
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.
Certain residential mortgage loans originated by the Company are held for sale and are carried at fair value based on sales commitments or market quotes and are reported separately in the Consolidated Balance Sheets. Changes in fair value are recorded in other operating revenue – mortgage banking revenue in the Consolidated Statements of Earnings.
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 credit losses. Classes are a further disaggregation of portfolio segments based on the risk characteristics of the loans and
the Company’s method for monitoring and assessing credit risk. The portfolio segments of the loan portfolio are as follows (in thousands):
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
| |
|
Fixed
|
|
|
Variable
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
Variable
|
|
|
|
|
|
|
|
| |
|
Rate
|
|
|
Rate
|
|
|
Nonaccrual
|
|
|
Total
|
|
|
Rate
|
|
|
Rate
|
|
|
Nonaccrual
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
3,488,440 |
|
|
$ |
3,392,451 |
|
|
$ |
61,750 |
|
|
$ |
6,942,641 |
|
|
$ |
3,272,862 |
|
|
$ |
3,229,781 |
|
|
$ |
68,811 |
|
|
$ |
6,571,454 |
|
|
Commercial real estate
|
|
|
863,423 |
|
|
|
1,314,205 |
|
|
|
86,475 |
|
|
|
2,264,103 |
|
|
|
887,923 |
|
|
|
1,292,793 |
|
|
|
99,193 |
|
|
|
2,279,909 |
|
|
Residential mortgage
|
|
|
982,943 |
|
|
|
950,483 |
|
|
|
27,462 |
|
|
|
1,960,888 |
|
|
|
992,556 |
|
|
|
948,138 |
|
|
|
29,767 |
|
|
|
1,970,461 |
|
|
Consumer
|
|
|
214,656 |
|
|
|
187,484 |
|
|
|
7,672 |
|
|
|
409,812 |
|
|
|
241,955 |
|
|
|
202,449 |
|
|
|
3,515 |
|
|
|
447,919 |
|
|
Total
|
|
$ |
5,549,462 |
|
|
$ |
5,844,623 |
|
|
$ |
183,359 |
|
|
$ |
11,577,444 |
|
|
$ |
5,395,296 |
|
|
$ |
5,673,161 |
|
|
$ |
201,286 |
|
|
$ |
11,269,743 |
|
|
Accruing loans past due (90 days)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,496 |
|
| |
|
March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fixed
|
|
|
Variable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Rate
|
|
|
Rate
|
|
|
Nonaccrual
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
2,813,571 |
|
|
$ |
3,177,237 |
|
|
$ |
57,449 |
|
|
$ |
6,048,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
834,856 |
|
|
|
1,262,622 |
|
|
|
125,504 |
|
|
|
2,222,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
837,556 |
|
|
|
901,941 |
|
|
|
37,824 |
|
|
|
1,777,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
327,706 |
|
|
|
208,384 |
|
|
|
5,185 |
|
|
|
541,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
4,813,689 |
|
|
$ |
5,550,184 |
|
|
$ |
225,962 |
|
|
$ |
10,589,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans past due (90 days)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Excludes residential mortgage loans guaranteed by agencies of the U.S. government
|
At March 31, 2012, approximately $5.3 billion or 46% of the total loan portfolio was to businesses and individuals in Oklahoma and $3.5 billion or 30% of the total loan portfolio was to businesses and individuals in Texas. These geographic concentrations subject the loan portfolio to the general economic conditions within these areas. At March 31, 2011, approximately $4.8 billion or 45% of the total loan portfolio was to businesses and individuals in Oklahoma and $3.0 billion or 29% of the total loans portfolio was to businesses and individuals in Texas.
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 March 31, 2012, commercial loans to businesses in Oklahoma totaled $3.0 billion or 43% of the commercial loan portfolio and loans to businesses in Texas totaled $2.3 billion or 33% of the commercial loan portfolio segment. The commercial loan portfolio segment is further divided into loan classes. The energy loan class totaled $2.2 billion or 19% of total loans at March 31, 2012, including $1.9 billion of outstanding loans to energy producers. Approximately 53% of the committed production loans are secured by properties primarily producing oil and 47% are secured by properties primarily producing natural gas. The services loan class totaled $1.9 billion at March 31, 2012. Approximately $1.1 billion of loans in the services category consisted of loans with individual balances of less than $10 million. Businesses included in the service class include community foundations, communications, education, gaming and transportation.
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 March 31, 2012, 36% of commercial real estate loans were secured by properties primarily located in the Dallas, Fort Worth and Houston metropolitan areas of Texas and 29% of commercial real estate loans were secured by properties located primarily in the Tulsa and Oklahoma City metropolitan areas of Oklahoma.
Residential Mortgage and Consumer
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. Consumer loans include direct loans secured by and for the purchase of automobiles, recreational and marine equipment as well as other unsecured loans. Consumer loans also include indirect automobile loans made through primary dealers. Residential mortgage and consumer 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, with exception 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 March 31, 2012, residential mortgage loans included $181 million of loans guaranteed by agencies of the U.S. government previously sold into Ginnie Mae (“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 $647 million at March 31, 2012. Approximately, 40% of the home equity loan portfolio is comprised of junior lien loans and 60% of the home equity loan portfolio is comprised of first lien loans. The increase in first lien loans generally results from refinancing of existing loans at terms of 15 years or less. Junior lien loans are distributed 75% to amortizing term loans and 25% 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.
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 March 31, 2012, outstanding commitments totaled $6.0 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.
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 March 31, 2012, outstanding standby letters of credit totaled $45 million. Commercial letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is consummated. At March 31, 2012, outstanding commercial
letters of credit totaled $7.1 million.
Allowances for Credit Losses
BOK Financial maintains an allowance for loan losses and an accrual for off-balance sheet credit risk related to commitments to extend credit and standby letters of credit. As discussed in greater detail in Note 5, the Company also has separate accruals for off-balance sheet credit risk related to residential mortgage loans sold with full or partial recourse and for residential mortgage loans sold to government sponsored agencies under standard representations and warranties.
The appropriateness of the allowance for loan losses and accrual for off-balance sheet credit losses is assessed by management based on an ongoing quarterly evaluation of the probable estimated losses inherent in the portfolio, including probable losses on both outstanding loans and unused commitments.
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, risk concentration and related factors. 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 losses for the three months ended March 31, 2012.
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 an evaluation of the borrowers’ ability to repay. Risk grades are updated quarterly. Non-risk graded loans are collectively evaluated for impairment. Certain commercial loans and most residential mortgage and consumer loans are small balance, homogeneous pools of loans that are not risk graded.
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. This is substantially the same criteria used to determine when a loan should be placed on nonaccrual status. All commercial and commercial real estate loans that have been modified in a troubled debt restructuring are considered to be impaired and remain classified as nonaccrual. Specific allowances for impaired loans are measured by an evaluation of estimated future cash flows discounted at the loans’ 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 are not adjusted by the Company. 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. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values have declined. Historical statistics may be used in limited situations to assist in estimating future cash flows or collateral values, such as when an impaired collateral dependent loan is identified at the end of a reporting period. Historical statistics are a practical way to estimate impairment 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 are subject to volatility.
General allowances for unimpaired loans are based on estimated loss rates by loan class. For risk-graded loans, loss rate are developed using historical gross loss rates, as adjusted for changes in risk grading and inherent risk identified by loan class. Loss rates for each loan class are determined by the current loss rate based on the most recent twelve months or a long-term gross loss rate that most appropriately represents the current economic environment. For each loan class, current average risk grades are compared to long-term average risk grades to determine if risk is increasing or decreasing. Loss rates are accordingly adjusted upward or downward in proportion to increasing or decreasing risk. Historical loss rates may be further adjusted for inherent risks identified for the given loan class which have not yet been captured in the actual gross loss rates or risk gradings.
Nonspecific allowances are maintained for risks beyond factors specific to a particular loan 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.
An accrual for off-balance sheet credit losses is included in Other liabilities. The appropriateness of the accrual is determined in the same manner as the allowance for loan losses. Changes in the accrual for off-balance sheet credit losses are recognized through the provision for credit losses.
A provision for credit losses is charged against earnings in amounts necessary to maintain appropriate allowances for loan and off-balance sheet credit losses. All loans are charged off 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 90 days and 180 days past due, depending on the loan class. Recoveries of loans previously charged off are added to the allowance.
The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at March 31, 2012 is as follows (in thousands):
| |
|
Collectively Measured
for Impairment
|
|
|
Individually Measured
for Impairment
|
|
|
Total
|
|
| |
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related
Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
6,880,964 |
|
|
$ |
85,508 |
|
|
$ |
61,677 |
|
|
$ |
464 |
|
|
$ |
6,942,641 |
|
|
$ |
85,972 |
|
|
Commercial real estate
|
|
|
2,177,628 |
|
|
|
61,098 |
|
|
|
86,475 |
|
|
|
1,644 |
|
|
|
2,264,103 |
|
|
|
62,742 |
|
|
Residential mortgage
|
|
|
1,953,376 |
|
|
|
34,484 |
|
|
|
7,512 |
|
|
|
229 |
|
|
|
1,960,888 |
|
|
|
34,713 |
|
|
Consumer
|
|
|
405,041 |
|
|
|
16,432 |
|
|
|
4,771 |
|
|
|
– |
|
|
|
409,812 |
|
|
|
16,432 |
|
|
Total
|
|
|
11,417,009 |
|
|
|
197,522 |
|
|
|
160,435 |
|
|
|
2,337 |
|
|
|
11,577,444 |
|
|
|
199,859 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonspecific allowance
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
44,350 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
11,417,009 |
|
|
$ |
197,522 |
|
|
$ |
160,435 |
|
|
$ |
2,337 |
|
|
$ |
11,577,444 |
|
|
$ |
244,209 |
|
The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 2011 is as follows (in thousands):
| |
|
Collectively Measured
for Impairment
|
|
|
Individually Measured
for Impairment
|
|
|
Total
|
|
| |
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related
Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
6,502,695 |
|
|
$ |
81,907 |
|
|
$ |
68,759 |
|
|
$ |
1,536 |
|
|
$ |
6,571,454 |
|
|
$ |
83,443 |
|
|
Commercial real estate
|
|
|
2,180,716 |
|
|
|
63,092 |
|
|
|
99,193 |
|
|
|
3,942 |
|
|
|
2,279,909 |
|
|
|
67,034 |
|
|
Residential mortgage
|
|
|
1,963,020 |
|
|
|
38,909 |
|
|
|
7,441 |
|
|
|
298 |
|
|
|
1,970,461 |
|
|
|
39,207 |
|
|
Consumer
|
|
|
446,823 |
|
|
|
17,447 |
|
|
|
1,096 |
|
|
|
– |
|
|
|
447,919 |
|
|
|
17,447 |
|
|
Total
|
|
|
11,093,254 |
|
|
|
201,355 |
|
|
|
176,489 |
|
|
|
5,776 |
|
|
|
11,269,743 |
|
|
|
207,131 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonspecific allowance
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
46,350 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
11,093,254 |
|
|
$ |
201,355 |
|
|
$ |
176,489 |
|
|
$ |
5,776 |
|
|
$ |
11,269,743 |
|
|
$ |
253,481 |
|
The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at March 31, 2011 is as follows (in thousands):
| |
|
Collectively Measured
for Impairment
|
|
|
Individually Measured
for Impairment
|
|
|
Total
|
|
| |
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related
Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
5,990,958 |
|
|
$ |
109,020 |
|
|
$ |
57,299 |
|
|
$ |
4,686 |
|
|
$ |
6,048,257 |
|
|
$ |
113,706 |
|
|
Commercial real estate
|
|
|
2,097,478 |
|
|
|
90,661 |
|
|
|
125,504 |
|
|
|
3,874 |
|
|
|
2,222,982 |
|
|
|
94,535 |
|
|
Residential mortgage
|
|
|
1,765,249 |
|
|
|
44,540 |
|
|
|
12,072 |
|
|
|
1,109 |
|
|
|
1,777,321 |
|
|
|
45,649 |
|
|
Consumer
|
|
|
538,708 |
|
|
|
10,321 |
|
|
|
2,567 |
|
|
|
89 |
|
|
|
541,275 |
|
|
|
10,410 |
|
|
Total
|
|
|
10,392,393 |
|
|
|
254,542 |
|
|
|
197,442 |
|
|
|
9,758 |
|
|
|
10,589,835 |
|
|
|
264,300 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonspecific allowance
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
25,249 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
10,392,393 |
|
|
$ |
254,542 |
|
|
$ |
197,442 |
|
|
$ |
9,758 |
|
|
$ |
10,589,835 |
|
|
$ |
289,549 |
|
The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended March 31, 2012 is summarized as follows (in thousands):
| |
|
Commercial
|
|
|
Commercial Real Estate
|
|
|
Residential Mortgage
|
|
|
Consumer
|
|
|
Nonspecific allowance
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loans losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$ |
83,443 |
|
|
$ |
67,034 |
|
|
$ |
39,207 |
|
|
$ |
17,447 |
|
|
$ |
46,350 |
|
|
$ |
253,481 |
|
|
Provision for loan losses
|
|
|
3,517 |
|
|
|
1,121 |
|
|
|
(3,119 |
) |
|
|
(306 |
) |
|
|
(2,000 |
) |
|
|
(787 |
) |
|
Loans charged off
|
|
|
(2,934 |
) |
|
|
(6,725 |
) |
|
|
(1,786 |
) |
|
|
(2,229 |
) |
|
|
– |
|
|
|
(13,674 |
) |
|
Recoveries
|
|
|
1,946 |
|
|
|
1,312 |
|
|
|
411 |
|
|
|
1,520 |
|
|
|
– |
|
|
|
5,189 |
|
|
Ending balance
|
|
$ |
85,972 |
|
|
$ |
62,742 |
|
|
$ |
34,713 |
|
|
$ |
16,432 |
|
|
$ |
44,350 |
|
|
$ |
244,209 |
|
|
Allowance for off-balance sheet credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$ |
7,906 |
|
|
$ |
1,250 |
|
|
$ |
91 |
|
|
$ |
14 |
|
|
$ |
– |
|
|
$ |
9,261 |
|
|
Provision for off-balance sheet credit losses
|
|
|
456 |
|
|
|
325 |
|
|
|
(9 |
) |
|
|
15 |
|
|
|
– |
|
|
|
787 |
|
|
Ending balance
|
|
$ |
8,362 |
|
|
$ |
1,575 |
|
|
$ |
82 |
|
|
$ |
29 |
|
|
$ |
– |
|
|
$ |
10,048 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for credit losses
|
|
$ |
3,973 |
|
|
$ |
1,446 |
|
|
$ |
(3,128 |
) |
|
$ |
(291 |
) |
|
$ |
(2,000 |
) |
|
$ |
– |
|
The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended March 31, 2011 is summarized as follows (in thousands):
| |
|
Commercial
|
|
|
Commercial Real Estate
|
|
|
Residential Mortgage
|
|
|
Consumer
|
|
|
Nonspecific allowance
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loans losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$ |
104,631 |
|
|
$ |
98,709 |
|
|
$ |
50,281 |
|
|
$ |
12,614 |
|
|
$ |
26,736 |
|
|
$ |
292,971 |
|
|
Provision for loan losses
|
|
|
9,856 |
|
|
|
2,376 |
|
|
|
(2,766 |
) |
|
|
(1,083 |
) |
|
|
(1,487 |
) |
|
|
6,896 |
|
|
Loans charged off
|
|
|
(2,352 |
) |
|
|
(6,893 |
) |
|
|
(2,948 |
) |
|
|
(3,039 |
) |
|
|
– |
|
|
|
(15,232 |
) |
|
Recoveries
|
|
|
1,571 |
|
|
|
343 |
|
|
|
1,082 |
|
|
|
1,918 |
|
|
|
– |
|
|
|
4,914 |
|
|
Ending balance
|
|
$ |
113,706 |
|
|
$ |
94,535 |
|
|
$ |
45,649 |
|
|
$ |
10,410 |
|
|
$ |
25,249 |
|
|
$ |
289,549 |
|
|
Allowance for off-balance sheet credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$ |
13,456 |
|
|
$ |
443 |
|
|
$ |
131 |
|
|
$ |
241 |
|
|
$ |
– |
|
|
$ |
14,271 |
|
|
Provision for off-balance sheet credit losses
|
|
|
(1,200 |
) |
|
|
432 |
|
|
|
24 |
|
|
|
98 |
|
|
|
– |
|
|
|
(646 |
) |
|
Ending balance
|
|
$ |
12,256 |
|
|
$ |
875 |
|
|
$ |
155 |
|
|
$ |
339 |
|
|
$ |
– |
|
|
$ |
13,625 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for credit losses
|
|
$ |
8,656 |
|
|
$ |
2,808 |
|
|
$ |
(2,742 |
) |
|
$ |
(985 |
) |
|
$ |
(1,487 |
) |
|
$ |
6,250 |
|
Credit Quality Indicators
The Company utilizes loan class and risk grading as a 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 March 31, 2012 is as follows (in thousands):
| |
|
Internally Risk Graded
|
|
|
Non-Graded
|
|
|
Total
|
|
| |
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related
Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
6,925,059 |
|
|
$ |
84,853 |
|
|
$ |
17,582 |
|
|
$ |
1,119 |
|
|
$ |
6,942,641 |
|
|
$ |
85,972 |
|
|
Commercial real estate
|
|
|
2,264,103 |
|
|
|
62,742 |
|
|
|
– |
|
|
|
– |
|
|
|
2,264,103 |
|
|
|
62,742 |
|
|
Residential mortgage
|
|
|
292,891 |
|
|
|
7,482 |
|
|
|
1,667,997 |
|
|
|
27,231 |
|
|
|
1,960,888 |
|
|
|
34,713 |
|
|
Consumer
|
|
|
206,610 |
|
|
|
2,676 |
|
|
|
203,202 |
|
|
|
13,756 |
|
|
|
409,812 |
|
|
|
16,432 |
|
|
Total
|
|
|
9,688,663 |
|
|
|
157,753 |
|
|
|
1,888,781 |
|
|
|
42,106 |
|
|
|
11,577,444 |
|
|
|
199,859 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonspecific allowance
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
44,350 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
9,688,663 |
|
|
$ |
157,753 |
|
|
$ |
1,888,781 |
|
|
$ |
42,106 |
|
|
$ |
11,577,444 |
|
|
$ |
244,209 |
|
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, 2011 is as follows (in thousands):
| |
|
Internally Risk Graded
|
|
|
Non-Graded
|
|
|
Total
|
|
| |
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related
Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
6,552,986 |
|
|
$ |
82,263 |
|
|
$ |
18,468 |
|
|
$ |
1,180 |
|
|
$ |
6,571,454 |
|
|
$ |
83,443 |
|
|
Commercial real estate
|
|
|
2,279,909 |
|
|
|
67,034 |
|
|
|
– |
|
|
|
– |
|
|
|
2,279,909 |
|
|
|
67,034 |
|
|
Residential mortgage
|
|
|
314,475 |
|
|
|
8,262 |
|
|
|
1,655,986 |
|
|
|
30,945 |
|
|
|
1,970,461 |
|
|
|
39,207 |
|
|
Consumer
|
|
|
216,271 |
|
|
|
2,527 |
|
|
|
231,648 |
|
|
|
14,920 |
|
|
|
447,919 |
|
|
|
17,447 |
|
|
Total
|
|
|
9,363,641 |
|
|
|
160,086 |
|
|
|
1,906,102 |
|
|
|
47,045 |
|
|
|
11,269,743 |
|
|
|
207,131 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonspecific allowance
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
46,350 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
9,363,641 |
|
|
$ |
160,086 |
|
|
$ |
1,906,102 |
|
|
$ |
47,045 |
|
|
$ |
11,269,743 |
|
|
$ |
253,481 |
|
The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at March 31, 2011 is as follows (in thousands):
| |
|
Internally Risk Graded
|
|
|
Non-Graded
|
|
|
Total
|
|
| |
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related Allowance
|
|
|
Recorded Investment
|
|
|
Related
Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$ |
6,029,226 |
|
|
$ |
111,561 |
|
|
$ |
19,031 |
|
|
$ |
2,145 |
|
|
$ |
6,048,257 |
|
|
$ |
113,706 |
|
|
Commercial real estate
|
|
|
2,222,982 |
|
|
|
94,535 |
|
|
|
– |
|
|
|
– |
|
|
|
2,222,982 |
|
|
|
94,535 |
|
|
Residential mortgage
|
|
|
403,264 |
|
|
|
8,611 |
|
|
|
1,374,057 |
|
|
|
37,038 |
|
|
|
1,777,321 |
|
|
|
45,649 |
|
|
Consumer
|
|
|
228,179 |
|
|
|
1,984 |
|
|
|
313,096 |
|
|
|
8,426 |
|
|
|
541,275 |
|
|
|
10,410 |
|
|
Total
|
|
|
8,883,651 |
|
|
|
216,691 |
|
|
|
1,706,184 |
|
|
|
47,609 |
|
|
|
10,589,835 |
|
|
|
264,300 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonspecific allowance
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
25,249 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
8,883,651 |
|
|
$ |
216,691 |
|
|
$ |
1,706,184 |
|
|
$ |
47,609 |
|
|
$ |
10,589,835 |
|
|
$ |
289,549 |
|
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 nonaccrual status. Known information does, however, cause concern as to the borrowers’ continued compliance with current repayment terms. Nonaccrual loans represent loans for which full collection of principal and interest 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.
The following table summarizes the Company’s loan portfolio at March 31, 2012 by the risk grade categories (in thousands):
| |
|
Internally Risk Graded
|
|
|
Non-Graded
|
|
|
|
|
| |
|
Performing
|
|
|
Potential Problem
|
|
|
Nonaccrual
|
|
|
Performing
|
|
|
Nonaccrual
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
2,197,167 |
|
|
$ |
8,987 |
|
|
$ |
336 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
2,206,490 |
|
|
Services
|
|
|
1,829,140 |
|
|
|
39,049 |
|
|
|
12,890 |
|
|
|
– |
|
|
|
– |
|
|
|
1,881,079 |
|
|
Wholesale/retail
|
|
|
964,288 |
|
|
|
23,104 |
|
|
|
15,388 |
|
|
|
– |
|
|
|
– |
|
|
|
1,002,780 |
|
|
Manufacturing
|
|
|
328,542 |
|
|
|
10,117 |
|
|
|
23,402 |
|
|
|
– |
|
|
|
– |
|
|
|
362,061 |
|
|
Healthcare
|
|
|
978,484 |
|
|
|
1,006 |
|
|
|
7,946 |
|
|
|
– |
|
|
|
– |
|
|
|
987,436 |
|
|
Integrated food services
|
|
|
208,892 |
|
|
|
750 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
209,642 |
|
|
Other commercial and industrial
|
|
|
273,850 |
|
|
|
6 |
|
|
|
1,715 |
|
|
|
17,509 |
|
|
|
73 |
|
|
|
293,153 |
|
|
Total commercial
|
|
|
6,780,363 |
|
|
|
83,019 |
|
|
|
61,677 |
|
|
|
17,509 |
|
|
|
73 |
|
|
|
6,942,641 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
230,854 |
|
|
|
28,438 |
|
|
|
52,416 |
|
|
|
– |
|
|
|
– |
|
|
|
311,708 |
|
|
Retail
|
|
|
466,983 |
|
|
|
8,639 |
|
|
|
6,193 |
|
|
|
– |
|
|
|
– |
|
|
|
481,815 |
|
|
Office
|
|
|
362,855 |
|
|
|
12,437 |
|
|
|
10,733 |
|
|
|
– |
|
|
|
– |
|
|
|
386,025 |
|
|
Multifamily
|
|
|
419,732 |
|
|
|
9,400 |
|
|
|
3,414 |
|
|
|
– |
|
|
|
– |
|
|
|
432,546 |
|
|
Industrial
|
|
|
287,185 |
|
|
|
277 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
287,462 |
|
|
Other commercial real estate
|
|
|
336,857 |
|
|
|
13,971 |
|
|
|
13,719 |
|
|
|
– |
|
|
|
– |
|
|
|
364,547 |
|
|
Total commercial real estate
|
|
|
2,104,466 |
|
|
|
73,162 |
|
|
|
86,475 |
|
|
|
– |
|
|
|
– |
|
|
|
2,264,103 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
271,644 |
|
|
|
13,735 |
|
|
|
7,512 |
|
|
|
824,990 |
|
|
|
15,310 |
|
|
|
1,133,191 |
|
|
Permanent mortgages guaranteed by U.S. government agencies
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
180,862 |
|
|
|
– |
|
|
|
180,862 |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
642,195 |
|
|
|
4,640 |
|
|
|
646,835 |
|
|
Total residential mortgage
|
|
|
271,644 |
|
|
|
13,735 |
|
|
|
7,512 |
|
|
|
1,648,047 |
|
|
|
19,950 |
|
|
|
1,960,888 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
79,183 |
|
|
|
2,608 |
|
|
|
81,791 |
|
|
Other consumer
|
|
|
199,203 |
|
|
|
2,636 |
|
|
|
4,771 |
|
|
|
121,118 |
|
|
|
293 |
|
|
|
328,021 |
|
|
Total consumer
|
|
|
199,203 |
|
|
|
2,636 |
|
|
|
4,771 |
|
|
|
200,301 |
|
|
|
2,901 |
|
|
|
409,812 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
9,355,676 |
|
|
$ |
172,552 |
|
|
$ |
160,435 |
|
|
$ |
1,865,857 |
|
|
$ |
22,924 |
|
|
$ |
11,577,444 |
|
The following table summarizes the Company’s loan portfolio at December 31, 2011 by the risk grade categories (in thousands):
| |
|
Internally Risk Graded
|
|
|
Non-Graded
|
|
|
|
|
| |
|
Performing
|
|
|
Potential Problem
|
|
|
Nonaccrual
|
|
|
Performing
|
|
|
Nonaccrual
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
2,013,866 |
|
|
$ |
1,417 |
|
|
$ |
336 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
2,015,619 |
|
|
Services
|
|
|
1,696,883 |
|
|
|
31,338 |
|
|
|
16,968 |
|
|
|
– |
|
|
|
– |
|
|
|
1,745,189 |
|
|
Wholesale/retail
|
|
|
907,648 |
|
|
|
34,156 |
|
|
|
21,180 |
|
|
|
– |
|
|
|
– |
|
|
|
962,984 |
|
|
Manufacturing
|
|
|
325,393 |
|
|
|
2,390 |
|
|
|
23,051 |
|
|
|
– |
|
|
|
– |
|
|
|
350,834 |
|
|
Healthcare
|
|
|
967,581 |
|
|
|
3,414 |
|
|
|
5,486 |
|
|
|
– |
|
|
|
– |
|
|
|
976,481 |
|
|
Integrated food services
|
|
|
207,982 |
|
|
|
756 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
208,738 |
|
|
Other commercial and industrial
|
|
|
291,393 |
|
|
|
10 |
|
|
|
1,738 |
|
|
|
18,416 |
|
|
|
52 |
|
|
|
311,609 |
|
|
Total commercial
|
|
|
6,410,746 |
|
|
|
73,481 |
|
|
|
68,759 |
|
|
|
18,416 |
|
|
|
52 |
|
|
|
6,571,454 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
238,362 |
|
|
|
27,244 |
|
|
|
61,874 |
|
|
|
– |
|
|
|
– |
|
|
|
327,480 |
|
|
Retail
|
|
|
499,636 |
|
|
|
3,244 |
|
|
|
6,863 |
|
|
|
– |
|
|
|
– |
|
|
|
509,743 |
|
|
Office
|
|
|
382,503 |
|
|
|
12,548 |
|
|
|
11,457 |
|
|
|
– |
|
|
|
– |
|
|
|
406,508 |
|
|
Multifamily
|
|
|
356,927 |
|
|
|
8,079 |
|
|
|
3,513 |
|
|
|
– |
|
|
|
– |
|
|
|
368,519 |
|
|
Industrial
|
|
|
277,453 |
|
|
|
280 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
277,733 |
|
|
Other commercial real estate
|
|
|
358,597 |
|
|
|
15,843 |
|
|
|
15,486 |
|
|
|
– |
|
|
|
– |
|
|
|
389,926 |
|
|
Total commercial real estate
|
|
|
2,113,478 |
|
|
|
67,238 |
|
|
|
99,193 |
|
|
|
– |
|
|
|
– |
|
|
|
2,279,909 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
291,155 |
|
|
|
15,879 |
|
|
|
7,441 |
|
|
|
817,921 |
|
|
|
17,925 |
|
|
|
1,150,321 |
|
|
Permanent mortgages guaranteed by U.S. government agencies
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
184,973 |
|
|
|
– |
|
|
|
184,973 |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
630,766 |
|
|
|
4,401 |
|
|
|
635,167 |
|
|
Total residential mortgage
|
|
|
291,155 |
|
|
|
15,879 |
|
|
|
7,441 |
|
|
|
1,633,660 |
|
|
|
22,326 |
|
|
|
1,970,461 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
102,955 |
|
|
|
2,194 |
|
|
|
105,149 |
|
|
Other consumer
|
|
|
211,226 |
|
|
|
3,949 |
|
|
|
1,096 |
|
|
|
126,274 |
|
|
|
225 |
|
|
|
342,770 |
|
|
Total consumer
|
|
|
211,226 |
|
|
|
3,949 |
|
|
|
1,096 |
|
|
|
229,229 |
|
|
|
2,419 |
|
|
|
447,919 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
9,026,605 |
|
|
$ |
160,547 |
|
|
$ |
176,489 |
|
|
$ |
1,881,305 |
|
|
$ |
24,797 |
|
|
$ |
11,269,743 |
|
The following table summarizes the Company’s loan portfolio at March 31, 2011 by the risk grade categories (in thousands):
| |
|
Internally Risk Graded
|
|
|
Non-Graded
|
|
|
|
|
| |
|
Performing
|
|
|
Potential Problem
|
|
|
Nonaccrual
|
|
|
Performing
|
|
|
Nonaccrual
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
1,754,327 |
|
|
$ |
4,710 |
|
|
$ |
415 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,759,452 |
|
|
Services
|
|
|
1,535,177 |
|
|
|
35,888 |
|
|
|
15,720 |
|
|
|
– |
|
|
|
– |
|
|
|
1,586,785 |
|
|
Wholesale/retail
|
|
|
902,603 |
|
|
|
51,259 |
|
|
|
30,411 |
|
|
|
– |
|
|
|
– |
|
|
|
984,273 |
|
|
Manufacturing
|
|
|
372,557 |
|
|
|
2,941 |
|
|
|
4,545 |
|
|
|
– |
|
|
|
– |
|
|
|
380,043 |
|
|
Healthcare
|
|
|
834,837 |
|
|
|
3,398 |
|
|
|
2,574 |
|
|
|
– |
|
|
|
– |
|
|
|
840,809 |
|
|
Integrated food services
|
|
|
210,258 |
|
|
|
1,373 |
|
|
|
6 |
|
|
|
– |
|
|
|
– |
|
|
|
211,637 |
|
|
Other commercial and industrial
|
|
|
262,599 |
|
|
|
– |
|
|
|
3,628 |
|
|
|
18,881 |
|
|
|
150 |
|
|
|
285,258 |
|
|
Total commercial
|
|
|
5,872,358 |
|
|
|
99,569 |
|
|
|
57,299 |
|
|
|
18,881 |
|
|
|
150 |
|
|
|
6,048,257 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
285,438 |
|
|
|
18,192 |
|
|
|
90,707 |
|
|
|
– |
|
|
|
– |
|
|
|
394,337 |
|
|
Retail
|
|
|
409,917 |
|
|
|
5,000 |
|
|
|
5,276 |
|
|
|
– |
|
|
|
– |
|
|
|
420,193 |
|
|
Office
|
|
|
450,424 |
|
|
|
23,463 |
|
|
|
14,628 |
|
|
|
– |
|
|
|
– |
|
|
|
488,515 |
|
|
Multifamily
|
|
|
347,637 |
|
|
|
5,703 |
|
|
|
1,900 |
|
|
|
– |
|
|
|
– |
|
|
|
355,240 |
|
|
Industrial
|
|
|
177,516 |
|
|
|
291 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
177,807 |
|
|
Other commercial real estate
|
|
|
364,375 |
|
|
|
9,522 |
|
|
|
12,993 |
|
|
|
– |
|
|
|
– |
|
|
|
386,890 |
|
|
Total commercial real estate
|
|
|
2,035,307 |
|
|
|
62,171 |
|
|
|
125,504 |
|
|
|
– |
|
|
|
– |
|
|
|
2,222,982 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
374,699 |
|
|
|
16,493 |
|
|
|
12,072 |
|
|
|
728,611 |
|
|
|
21,394 |
|
|
|
1,153,269 |
|
|
Permanent mortgages guaranteed by U.S. government agencies
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
63,552 |
|
|
|
– |
|
|
|
63,552 |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
556,142 |
|
|
|
4,358 |
|
|
|
560,500 |
|
|
Total residential mortgage
|
|
|
374,699 |
|
|
|
16,493 |
|
|
|
12,072 |
|
|
|
1,348,305 |
|
|
|
25,752 |
|
|
|
1,777,321 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
196,199 |
|
|
|
2,464 |
|
|
|
198,663 |
|
|
Other consumer
|
|
|
221,124 |
|
|
|
4,488 |
|
|
|
2,567 |
|
|
|
114,279 |
|
|
|
154 |
|
|
|
342,612 |
|
|
Total consumer
|
|
|
221,124 |
|
|
|
4,488 |
|
|
|
2,567 |
|
|
|
310,478 |
|
|
|
2,618 |
|
|
|
541,275 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
8,503,488 |
|
|
$ |
182,721 |
|
|
$ |
197,442 |
|
|
$ |
1,677,664 |
|
|
$ |
28,520 |
|
|
$ |
10,589,835 |
|
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.
A summary of risk-graded impaired loans follows (in thousands):
| |
|
As of March 31, 2012
|
|
|
For the three months
|
|
| |
|
|
|
|
Recorded Investment
|
|
|
|
|
|
ended March 31, 2012
|
|
| |
|
Unpaid
Principal
Balance
|
|
|
Total
|
|
|
With No
Allowance
|
|
|
With Allowance
|
|
|
Related Allowance
|
|
|
Average Recorded
Investment
|
|
|
Interest Income Recognized
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
336 |
|
|
$ |
336 |
|
|
$ |
336 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
336 |
|
|
$ |
– |
|
|
Services
|
|
|
22,318 |
|
|
|
12,890 |
|
|
|
12,237 |
|
|
|
653 |
|
|
|
307 |
|
|
|
14,929 |
|
|
|
– |
|
|
Wholesale/retail
|
|
|
19,085 |
|
|
|
15,388 |
|
|
|
15,300 |
|
|
|
88 |
|
|
|
22 |
|
|
|
18,284 |
|
|
|
– |
|
|
Manufacturing
|
|
|
26,536 |
|
|
|
23,402 |
|
|
|
23,402 |
|
|
|
– |
|
|
|
– |
|
|
|
23,227 |
|
|
|
– |
|
|
Healthcare
|
|
|
9,529 |
|
|
|
7,946 |
|
|
|
6,671 |
|
|
|
1,275 |
|
|
|
135 |
|
|
|
6,716 |
|
|
|
– |
|
|
Integrated food services
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other commercial and industrial
|
|
|
9,214 |
|
|
|
1,715 |
|
|
|
1,715 |
|
|
|
– |
|
|
|
– |
|
|
|
1,727 |
|
|
|
– |
|
|
Total commercial
|
|
|
87,018 |
|
|
|
61,677 |
|
|
|
59,661 |
|
|
|
2,016 |
|
|
|
464 |
|
|
|
65,219 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
86,435 |
|
|
|
52,416 |
|
|
|
51,615 |
|
|
|
801 |
|
|
|
206 |
|
|
|
57,145 |
|
|
|
– |
|
|
Retail
|
|
|
7,680 |
|
|
|
6,193 |
|
|
|
3,761 |
|
|
|
2,432 |
|
|
|
1,062 |
|
|
|
6,528 |
|
|
|
– |
|
|
Office
|
|
|
13,888 |
|
|
|
10,733 |
|
|
|
10,508 |
|
|
|
225 |
|
|
|
21 |
|
|
|
11,095 |
|
|
|
– |
|
|
Multifamily
|
|
|
3,414 |
|
|
|
3,414 |
|
|
|
3,414 |
|
|
|
– |
|
|
|
– |
|
|
|
3,464 |
|
|
|
– |
|
|
Industrial
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other real estate loans
|
|
|
16,273 |
|
|
|
13,719 |
|
|
|
11,104 |
|
|
|
2,615 |
|
|
|
355 |
|
|
|
14,603 |
|
|
|
– |
|
|
Total commercial real estate
|
|
|
127,690 |
|
|
|
86,475 |
|
|
|
80,402 |
|
|
|
6,073 |
|
|
|
1,644 |
|
|
|
92,835 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
8,821 |
|
|
|
7,512 |
|
|
|
6,832 |
|
|
|
680 |
|
|
|
229 |
|
|
|
7,477 |
|
|
|
– |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total residential mortgage
|
|
|
8,821 |
|
|
|
7,512 |
|
|
|
6,832 |
|
|
|
680 |
|
|
|
229 |
|
|
|
7,477 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other consumer
|
|
|
5,402 |
|
|
|
4,771 |
|
|
|
4,771 |
|
|
|
– |
|
|
|
– |
|
|
|
2,934 |
|
|
|
– |
|
|
Total consumer
|
|
|
5,402 |
|
|
|
4,771 |
|
|
|
4,771 |
|
|
|
– |
|
|
|
– |
|
|
|
2,934 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
228,931 |
|
|
$ |
160,435 |
|
|
$ |
151,666 |
|
|
$ |
8,769 |
|
|
$ |
2,337 |
|
|
$ |
168,465 |
|
|
$ |
– |
|
Generally, no interest income is recognized on impaired loans until all principal balances, including amounts charged-off, have been recovered.
A summary of risk-graded impaired loans at December 31, 2011 follows (in thousands):
| |
|
As of December 31, 2011
|
|
| |
|
|
|
|
Recorded Investment
|
|
|
|
|
| |
|
Unpaid
Principal
Balance
|
|
|
Total
|
|
|
With No
Allowance
|
|
|
With Allowance
|
|
|
Related Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
336 |
|
|
$ |
336 |
|
|
$ |
336 |
|
|
$ |
– |
|
|
$ |
– |
|
|
Services
|
|
|
26,916 |
|
|
|
16,968 |
|
|
|
16,200 |
|
|
|
768 |
|
|
|
360 |
|
|
Wholesale/retail
|
|
|
24,432 |
|
|
|
21,180 |
|
|
|
19,702 |
|
|
|
1,478 |
|
|
|
1,102 |
|
|
Manufacturing
|
|
|
26,186 |
|
|
|
23,051 |
|
|
|
23,051 |
|
|
|
– |
|
|
|
– |
|
|
Healthcare
|
|
|
6,825 |
|
|
|
5,486 |
|
|
|
5,412 |
|
|
|
74 |
|
|
|
74 |
|
|
Integrated food services
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other commercial and industrial
|
|
|
9,237 |
|
|
|
1,738 |
|
|
|
1,738 |
|
|
|
– |
|
|
|
– |
|
|
Total commercial
|
|
|
93,932 |
|
|
|
68,759 |
|
|
|
66,439 |
|
|
|
2,320 |
|
|
|
1,536 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
98,053 |
|
|
|
61,874 |
|
|
|
56,740 |
|
|
|
5,134 |
|
|
|
1,777 |
|
|
Retail
|
|
|
8,645 |
|
|
|
6,863 |
|
|
|
4,373 |
|
|
|
2,490 |
|
|
|
1,062 |
|
|
Office
|
|
|
14,588 |
|
|
|
11,457 |
|
|
|
9,567 |
|
|
|
1,890 |
|
|
|
291 |
|
|
Multifamily
|
|
|
3,512 |
|
|
|
3,513 |
|
|
|
3,513 |
|
|
|
– |
|
|
|
– |
|
|
Industrial
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other real estate loans
|
|
|
16,702 |
|
|
|
15,486 |
|
|
|
7,887 |
|
|
|
7,599 |
|
|
|
812 |
|
|
Total commercial real estate
|
|
|
141,500 |
|
|
|
99,193 |
|
|
|
82,080 |
|
|
|
17,113 |
|
|
|
3,942 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
8,697 |
|
|
|
7,441 |
|
|
|
4,980 |
|
|
|
2,461 |
|
|
|
298 |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total residential mortgage
|
|
|
8,697 |
|
|
|
7,441 |
|
|
|
4,980 |
|
|
|
2,461 |
|
|
|
298 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other consumer
|
|
|
1,727 |
|
|
|
1,096 |
|
|
|
1,096 |
|
|
|
– |
|
|
|
– |
|
|
Total consumer
|
|
|
1,727 |
|
|
|
1,096 |
|
|
|
1,096 |
|
|
|
– |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
245,856 |
|
|
$ |
176,489 |
|
|
$ |
154,595 |
|
|
$ |
21,894 |
|
|
$ |
5,776 |
|
A summary of risk-graded impaired loans at March 31, 2011 follows (in thousands):
| |
|
As of March 31, 2011
|
|
|
For the three months
|
|
| |
|
|
|
|
Recorded Investment
|
|
|
|
|
|
ended March 31, 2011
|
|
| |
|
Unpaid
Principal
Balance
|
|
|
Total
|
|
|
With No
Allowance
|
|
|
With Allowance
|
|
|
Related Allowance
|
|
|
Average Recorded Investment
|
|
|
Interest Income Recognized
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
415 |
|
|
$ |
415 |
|
|
$ |
– |
|
|
$ |
415 |
|
|
$ |
60 |
|
|
$ |
440 |
|
|
$ |
– |
|
|
Services
|
|
|
25,195 |
|
|
|
15,720 |
|
|
|
9,062 |
|
|
|
6,658 |
|
|
|
327 |
|
|
|
17,491 |
|
|
|
– |
|
|
Wholesale/retail
|
|
|
37,223 |
|
|
|
30,411 |
|
|
|
1,644 |
|
|
|
28,767 |
|
|
|
3,841 |
|
|
|
19,449 |
|
|
|
– |
|
|
Manufacturing
|
|
|
9,400 |
|
|
|
4,545 |
|
|
|
1,215 |
|
|
|
3,330 |
|
|
|
276 |
|
|
|
3,331 |
|
|
|
– |
|
|
Healthcare
|
|
|
4,018 |
|
|
|
2,574 |
|
|
|
523 |
|
|
|
2,051 |
|
|
|
182 |
|
|
|
3,054 |
|
|
|
– |
|
|
Integrated food services
|
|
|
165 |
|
|
|
6 |
|
|
|
6 |
|
|
|
– |
|
|
|
– |
|
|
|
10 |
|
|
|
– |
|
|
Other commercial and industrial
|
|
|
12,189 |
|
|
|
3,628 |
|
|
|
3,628 |
|
|
|
– |
|
|
|
– |
|
|
|
4,037 |
|
|
|
– |
|
|
Total commercial
|
|
|
88,605 |
|
|
|
57,299 |
|
|
|
16,078 |
|
|
|
41,221 |
|
|
|
4,686 |
|
|
|
47,812 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
129,332 |
|
|
|
90,707 |
|
|
|
37,651 |
|
|
|
53,056 |
|
|
|
2,768 |
|
|
|
95,143 |
|
|
|
– |
|
|
Retail
|
|
|
6,676 |
|
|
|
5,276 |
|
|
|
1,690 |
|
|
|
3,586 |
|
|
|
599 |
|
|
|
5,127 |
|
|
|
– |
|
|
Office
|
|
|
16,861 |
|
|
|
14,628 |
|
|
|
4,968 |
|
|
|
9,660 |
|
|
|
144 |
|
|
|
17,141 |
|
|
|
– |
|
|
Multifamily
|
|
|
3,096 |
|
|
|
1,900 |
|
|
|
1,900 |
|
|
|
– |
|
|
|
– |
|
|
|
4,313 |
|
|
|
– |
|
|
Industrial
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,044 |
|
|
|
– |
|
|
Other real estate loans
|
|
|
14,095 |
|
|
|
12,993 |
|
|
|
369 |
|
|
|
12,624 |
|
|
|
363 |
|
|
|
14,168 |
|
|
|
– |
|
|
Total commercial real estate
|
|
|
170,060 |
|
|
|
125,504 |
|
|
|
46,578 |
|
|
|
78,926 |
|
|
|
3,874 |
|
|
|
137,936 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
14,541 |
|
|
|
12,072 |
|
|
|
3,205 |
|
|
|
8,867 |
|
|
|
1,109 |
|
|
|
12,068 |
|
|
|
– |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total residential mortgage
|
|
|
14,541 |
|
|
|
12,072 |
|
|
|
3,205 |
|
|
|
8,867 |
|
|
|
1,109 |
|
|
|
12,068 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other consumer
|
|
|
2,725 |
|
|
|
2,567 |
|
|
|
22 |
|
|
|
2,545 |
|
|
|
89 |
|
|
|
2,159 |
|
|
|
– |
|
|
Total consumer
|
|
|
2,725 |
|
|
|
2,567 |
|
|
|
22 |
|
|
|
2,545 |
|
|
|
89 |
|
|
|
2,159 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
275,931 |
|
|
$ |
197,442 |
|
|
$ |
65,883 |
|
|
$ |
131,559 |
|
|
$ |
9,758 |
|
|
$ |
199,975 |
|
|
$ |
– |
|
Troubled Debt Restructurings
Troubled debt restructurings of internally risk graded impaired loans at March 31, 2012 were as follows (in thousands):
| |
|
As of March 31, 2012
|
|
|
|
|
| |
|
Recorded
Investment
|
|
|
Performing in Accordance With Modified Terms
|
|
|
Not
Performing in Accordance With Modified Terms
|
|
|
Specific
Allowance
|
|
|
Amounts Charged-off During the
Three months ended
Mar. 31, 2012
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
Services
|
|
|
3,199 |
|
|
|
992 |
|
|
|
2,207 |
|
|
|
– |
|
|
|
– |
|
|
Wholesale/retail
|
|
|
1,676 |
|
|
|
1,480 |
|
|
|
196 |
|
|
|
22 |
|
|
|
– |
|
|
Manufacturing
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Healthcare
|
|
|
82 |
|
|
|
82 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Integrated food services
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other commercial and industrial
|
|
|
957 |
|
|
|
– |
|
|
|
957 |
|
|
|
– |
|
|
|
– |
|
|
Total commercial
|
|
|
5,914 |
|
|
|
2,554 |
|
|
|
3,360 |
|
|
|
22 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
21,834 |
|
|
|
10,413 |
|
|
|
11,421 |
|
|
|
76 |
|
|
|
2,692 |
|
|
Retail
|
|
|
3,635 |
|
|
|
1,200 |
|
|
|
2,435 |
|
|
|
– |
|
|
|
– |
|
|
Office
|
|
|
3,419 |
|
|
|
1,133 |
|
|
|
2,286 |
|
|
|
– |
|
|
|
269 |
|
|
Multifamily
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Industrial
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other real estate loans
|
|
|
7,483 |
|
|
|
2,039 |
|
|
|
5,444 |
|
|
|
259 |
|
|
|
2,205 |
|
|
Total commercial real estate
|
|
|
36,371 |
|
|
|
14,785 |
|
|
|
21,586 |
|
|
|
335 |
|
|
|
5,166 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
4,831 |
|
|
|
4,575 |
|
|
|
256 |
|
|
|
79 |
|
|
|
24 |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total residential mortgage
|
|
|
4,831 |
|
|
|
4,575 |
|
|
|
256 |
|
|
|
79 |
|
|
|
24 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other consumer
|
|
|
3,553 |
|
|
|
3,545 |
|
|
|
8 |
|
|
|
– |
|
|
|
– |
|
|
Total consumer
|
|
|
3,553 |
|
|
|
3,545 |
|
|
|
8 |
|
|
|
– |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
50,669 |
|
|
$ |
25,459 |
|
|
$ |
25,210 |
|
|
$ |
436 |
|
|
$ |
5,190 |
|
The financial impact of troubled debt restructurings primarily consist of specific allowances for credit losses and principal amounts charged off. Internally risk graded loans that have been modified in troubled debt restructurings generally remain classified as nonaccruing. Other financial impacts, such as foregone interest, are not material to the financial statements.
Non-risk graded residential mortgage loans that are modified in troubled debt restructurings primarily consist of loans that are guaranteed by U.S. government agencies. At March 31, 2012, approximately $20.3 million of the renegotiated residential mortgage loans are currently performing in accordance with the modified terms, $4.8 million are 30 to 89 days past due and $11.7 million are past due 90 days or more. Restructured residential mortgage loans guaranteed by agencies of the U.S. government in accordance with agency guidelines represent $33 million of our $37 million portfolio of renegotiated loans. All renegotiated loans past due 90 days or more are guaranteed by U.S. government agencies.
Troubled debt restructurings of internally risk graded impaired loans at December 31, 2011 were as follows (in thousands):
| |
|
As of December 31, 2011
|
|
| |
|
Recorded
Investment
|
|
|
Performing
in Accordance With Modified Terms
|
|
|
Not Performing
in Accordance
With Modified Terms
|
|
|
Specific
Allowance
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
Services
|
|
|
3,529 |
|
|
|
1,907 |
|
|
|
1,622 |
|
|
|
– |
|
|
Wholesale/retail
|
|
|
1,739 |
|
|
|
961 |
|
|
|
778 |
|
|
|
24 |
|
|
Manufacturing
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Healthcare
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Integrated food services
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other commercial and industrial
|
|
|
960 |
|
|
|
– |
|
|
|
960 |
|
|
|
– |
|
|
Total commercial
|
|
|
6,228 |
|
|
|
2,868 |
|
|
|
3,360 |
|
|
|
24 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
25,890 |
|
|
|
3,585 |
|
|
|
22,305 |
|
|
|
1,577 |
|
|
Retail
|
|
|
1,070 |
|
|
|
– |
|
|
|
1,070 |
|
|
|
– |
|
|
Office
|
|
|
2,496 |
|
|
|
1,134 |
|
|
|
1,362 |
|
|
|
215 |
|
|
Multifamily
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Industrial
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other real estate loans
|
|
|
8,171 |
|
|
|
387 |
|
|
|
7,784 |
|
|
|
662 |
|
|
Total commercial real estate
|
|
|
37,627 |
|
|
|
5,106 |
|
|
|
32,521 |
|
|
|
2,454 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
4,103 |
|
|
|
1,396 |
|
|
|
2,707 |
|
|
|
282 |
|
|
Home equity
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Total residential mortgage
|
|
|
4,103 |
|
|
|
1,396 |
|
|
|
2,707 |
|
|
|
282 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other consumer
|
|
|
168 |
|
|
|
168 |
|
|
|
– |
|
|
|
– |
|
|
Total consumer
|
|
|
168 |
|
|
|
168 |
|
|
|
– |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
48,126 |
|
|
$ |
9,538 |
|
|
$ |
38,588 |
|
|
$ |
2,760 |
|
At December 31, 2011, approximately $13 million of the renegotiated residential mortgage loans are currently performing in accordance with the modified terms, $5.8 million are 30 to 89 days past due and $14 million are past due 90 days or more. Restructured residential mortgage loans guaranteed by agencies of the U.S. government in accordance with agency guidelines represent $29 million of our $33 million portfolio of renegotiated loans. All renegotiated loans past due 90 days or more are guaranteed by U.S. government agencies.
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 30 to 89 days past due and accruing, loans 90 days or more past due and accruing and nonaccrual loans as of March 31, 2012 is as follows (in thousands):
| |
|
|
|
|
Past Due
|
|
|
|
|
|
|
|
| |
|
Current
|
|
|
30 to 89
Days
|
|
|
90 Days
or More
|
|
|
Nonaccrual
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
2,206,076 |
|
|
$ |
78 |
|
|
$ |
– |
|
|
$ |
336 |
|
|
$ |
2,206,490 |
|
|
Services
|
|
|
1,854,760 |
|
|
|
11,646 |
|
|
|
1,783 |
|
|
|
12,890 |
|
|
|
1,881,079 |
|
|
Wholesale/retail
|
|
|
984,794 |
|
|
|
897 |
|
|
|
1,701 |
|
|
|
15,388 |
|
|
|
1,002,780 |
|
|
Manufacturing
|
|
|
337,932 |
|
|
|
– |
|
|
|
727 |
|
|
|
23,402 |
|
|
|
362,061 |
|
|
Healthcare
|
|
|
978,611 |
|
|
|
730 |
|
|
|
149 |
|
|
|
7,946 |
|
|
|
987,436 |
|
|
Integrated food services
|
|
|
209,642 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
209,642 |
|
|
Other commercial and industrial
|
|
|
290,827 |
|
|
|
538 |
|
|
|
– |
|
|
|
1,788 |
|
|
|
293,153 |
|
|
Total commercial
|
|
|
6,862,642 |
|
|
|
13,889 |
|
|
|
4,360 |
|
|
|
61,750 |
|
|
|
6,942,641 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
256,007 |
|
|
|
3,285 |
|
|
|
– |
|
|
|
52,416 |
|
|
|
311,708 |
|
|
Retail
|
|
|
473,750 |
|
|
|
340 |
|
|
|
1,532 |
|
|
|
6,193 |
|
|
|
481,815 |
|
|
Office
|
|
|
374,114 |
|
|
|
1,178 |
|
|
|
– |
|
|
|
10,733 |
|
|
|
386,025 |
|
|
Multifamily
|
|
|
428,596 |
|
|
|
500 |
|
|
|
36 |
|
|
|
3,414 |
|
|
|
432,546 |
|
|
Industrial
|
|
|
287,462 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
287,462 |
|
|
Other real estate loans
|
|
|
348,931 |
|
|
|
1,781 |
|
|
|
116 |
|
|
|
13,719 |
|
|
|
364,547 |
|
|
Total commercial real estate
|
|
|
2,168,860 |
|
|
|
7,084 |
|
|
|
1,684 |
|
|
|
86,475 |
|
|
|
2,264,103 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
1,097,610 |
|
|
|
12,705 |
|
|
|
54 |
|
|
|
22,822 |
|
|
|
1,133,191 |
|
|
Permanent mortgages guaranteed by U.S. government agencies
|
|
|
28,750 |
|
|
|
13,281 |
|
|
|
138,831 |
|
|
|
– |
|
|
|
180,862 |
|
|
Home equity
|
|
|
640,108 |
|
|
|
2,087 |
|
|
|
– |
|
|
|
4,640 |
|
|
|
646,835 |
|
|
Total residential mortgage
|
|
|
1,766,468 |
|
|
|
28,073 |
|
|
|
138,885 |
|
|
|
27,462 |
|
|
|
1,960,888 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
76,952 |
|
|
|
2,231 |
|
|
|
– |
|
|
|
2,608 |
|
|
|
81,791 |
|
|
Other consumer
|
|
|
321,448 |
|
|
|
1,467 |
|
|
|
42 |
|
|
|
5,064 |
|
|
|
328,021 |
|
|
Total consumer
|
|
|
398,400 |
|
|
|
3,698 |
|
|
|
42 |
|
|
|
7,672 |
|
|
|
409,812 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
11,196,370 |
|
|
$ |
52,744 |
|
|
$ |
144,971 |
|
|
$ |
183,359 |
|
|
$ |
11,577,444 |
|
A summary of loans currently performing, loans 30 to 89 days past due and accruing, loans 90 days or more past due and accruing and nonaccrual loans as of December 31, 2011 is as follows (in thousands):
| |
|
|
|
|
Past Due
|
|
|
|
|
|
|
|
| |
|
Current
|
|
|
30 to 89
Days
|
|
|
90 Days
or More
|
|
|
Nonaccrual
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
2,013,770 |
|
|
$ |
1,065 |
|
|
$ |
448 |
|
|
$ |
336 |
|
|
$ |
2,015,619 |
|
|
Services
|
|
|
1,713,426 |
|
|
|
13,608 |
|
|
|
1,187 |
|
|
|
16,968 |
|
|
|
1,745,189 |
|
|
Wholesale/retail
|
|
|
941,334 |
|
|
|
470 |
|
|
|
– |
|
|
|
21,180 |
|
|
|
962,984 |
|
|
Manufacturing
|
|
|
327,129 |
|
|
|
654 |
|
|
|
– |
|
|
|
23,051 |
|
|
|
350,834 |
|
|
Healthcare
|
|
|
969,586 |
|
|
|
1,362 |
|
|
|
47 |
|
|
|
5,486 |
|
|
|
976,481 |
|
|
Integrated food services
|
|
|
208,733 |
|
|
|
– |
|
|
|
5 |
|
|
|
– |
|
|
|
208,738 |
|
|
Other commercial and industrial
|
|
|
307,853 |
|
|
|
1,966 |
|
|
|
– |
|
|
|
1,790 |
|
|
|
311,609 |
|
|
Total commercial
|
|
|
6,481,831 |
|
|
|
19,125 |
|
|
|
1,687 |
|
|
|
68,811 |
|
|
|
6,571,454 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
264,327 |
|
|
|
1,279 |
|
|
|
– |
|
|
|
61,874 |
|
|
|
327,480 |
|
|
Retail
|
|
|
502,508 |
|
|
|
372 |
|
|
|
– |
|
|
|
6,863 |
|
|
|
509,743 |
|
|
Office
|
|
|
394,812 |
|
|
|
239 |
|
|
|
– |
|
|
|
11,457 |
|
|
|
406,508 |
|
|
Multifamily
|
|
|
364,968 |
|
|
|
38 |
|
|
|
– |
|
|
|
3,513 |
|
|
|
368,519 |
|
|
Industrial
|
|
|
277,733 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
277,733 |
|
|
Other real estate loans
|
|
|
370,859 |
|
|
|
3,444 |
|
|
|
137 |
|
|
|
15,486 |
|
|
|
389,926 |
|
|
Total commercial real estate
|
|
|
2,175,207 |
|
|
|
5,372 |
|
|
|
137 |
|
|
|
99,193 |
|
|
|
2,279,909 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
1,107,095 |
|
|
|
17,259 |
|
|
|
601 |
|
|
|
25,366 |
|
|
|
1,150,321 |
|
|
Permanent mortgages guaranteed by U.S. government agencies
|
|
|
17,509 |
|
|
|
12,163 |
|
|
|
155,301 |
|
|
|
– |
|
|
|
184,973 |
|
|
Home equity
|
|
|
627,688 |
|
|
|
3,036 |
|
|
|
42 |
|
|
|
4,401 |
|
|
|
635,167 |
|
|
Total residential mortgage
|
|
|
1,752,292 |
|
|
|
32,458 |
|
|
|
155,944 |
|
|
|
29,767 |
|
|
|
1,970,461 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
98,345 |
|
|
|
4,581 |
|
|
|
29 |
|
|
|
2,194 |
|
|
|
105,149 |
|
|
Other consumer
|
|
|
339,163 |
|
|
|
2,286 |
|
|
|
– |
|
|
|
1,321 |
|
|
|
342,770 |
|
|
Total consumer
|
|
|
437,508 |
|
|
|
6,867 |
|
|
|
29 |
|
|
|
3,515 |
|
|
|
447,919 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
10,846,838 |
|
|
$ |
63,822 |
|
|
$ |
157,797 |
|
|
$ |
201,286 |
|
|
$ |
11,269,743 |
|
A summary of loans currently performing, loans 30 to 89 days past due and accruing, loans 90 days or more past due and accruing and nonaccrual loans as of March 31, 2011 is as follows (in thousands):
| |
|
|
|
|
Past Due
|
|
|
|
|
|
|
|
| |
|
Current
|
|
|
30 to 89
Days
|
|
|
90 Days
or More
|
|
|
Nonaccrual
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
$ |
1,758,876 |
|
|
$ |
161 |
|
|
$ |
– |
|
|
$ |
415 |
|
|
$ |
1,759,452 |
|
|
Services
|
|
|
1,563,924 |
|
|
|
5,629 |
|
|
|
1,512 |
|
|
|
15,720 |
|
|
|
1,586,785 |
|
|
Wholesale/retail
|
|
|
950,505 |
|
|
|
2,761 |
|
|
|
596 |
|
|
|
30,411 |
|
|
|
984,273 |
|
|
Manufacturing
|
|
|
375,461 |
|
|
|
37 |
|
|
|
– |
|
|
|
4,545 |
|
|
|
380,043 |
|
|
Healthcare
|
|
|
835,789 |
|
|
|
1,484 |
|
|
|
962 |
|
|
|
2,574 |
|
|
|
840,809 |
|
|
Integrated food services
|
|
|
210,875 |
|
|
|
756 |
|
|
|
– |
|
|
|
6 |
|
|
|
211,637 |
|
|
Other commercial and industrial
|
|
|
275,895 |
|
|
|
5,585 |
|
|
|
– |
|
|
|
3,778 |
|
|
|
285,258 |
|
|
Total commercial
|
|
|
5,971,325 |
|
|
|
16,413 |
|
|
|
3,070 |
|
|
|
57,449 |
|
|
|
6,048,257 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
302,648 |
|
|
|
982 |
|
|
|
– |
|
|
|
90,707 |
|
|
|
394,337 |
|
|
Retail
|
|
|
409,999 |
|
|
|
4,161 |
|
|
|
757 |
|
|
|
5,276 |
|
|
|
420,193 |
|
|
Office
|
|
|
472,891 |
|
|
|
996 |
|
|
|
– |
|
|
|
14,628 |
|
|
|
488,515 |
|
|
Multifamily
|
|
|
348,715 |
|
|
|
1,434 |
|
|
|
3,191 |
|
|
|
1,900 |
|
|
|
355,240 |
|
|
Industrial
|
|
|
177,376 |
|
|
|
431 |
|
|
|
– |
|
|
|
– |
|
|
|
177,807 |
|
|
Other real estate loans
|
|
|
370,100 |
|
|
|
2,905 |
|
|
|
892 |
|
|
|
12,993 |
|
|
|
386,890 |
|
|
Total commercial real estate
|
|
|
2,081,729 |
|
|
|
10,909 |
|
|
|
4,840 |
|
|
|
125,504 |
|
|
|
2,222,982 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent mortgage
|
|
|
1,107,130 |
|
|
|
12,673 |
|
|
|
– |
|
|
|
33,466 |
|
|
|
1,153,269 |
|
|
Permanent mortgage guaranteed by U.S. government agencies
|
|
|
11,424 |
|
|
|
3,737 |
|
|
|
48,391 |
|
|
|
– |
|
|
|
63,552 |
|
|
Home equity
|
|
|
554,896 |
|
|
|
1,246 |
|
|
|
– |
|
|
|
4,358 |
|
|
|
560,500 |
|
|
Total residential mortgage
|
|
|
1,673,450 |
|
|
|
17,656 |
|
|
|
48,391 |
|
|
|
37,824 |
|
|
|
1,777,321 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect automobile
|
|
|
188,261 |
|
|
|
7,865 |
|
|
|
73 |
|
|
|
2,464 |
|
|
|
198,663 |
|
|
Other consumer
|
|
|
338,184 |
|
|
|
1,647 |
|
|
|
60 |
|
|
|
2,721 |
|
|
|
342,612 |
|
|
Total consumer
|
|
|
526,445 |
|
|
|
9,512 |
|
|
|
133 |
|
|
|
5,185 |
|
|
|
541,275 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
10,252,949 |
|
|
$ |
54,490 |
|
|
$ |
56,434 |
|
|
$ |
225,962 |
|
|
$ |
10,589,835 |
|
(5) Mortgage Banking Activities
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. All residential mortgage loans originated for sale by the Company are carried at fair value based on sales commitments and market quotes. Changes in the fair value of mortgage loans held for sale are included in Other operating revenue – Mortgage banking revenue in the Consolidated Statements of Earnings. Residential mortgage loans held for sale in the Consolidated Balance Sheets also include the fair value of residential mortgage loan commitments and forward sale commitments which are considered derivative contracts that have not been designated as hedging instruments. The volume and rate spread of mortgage loans originated for sale 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.
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 in the Consolidated Balance Sheets were (in thousands):
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
March 31, 2011
|
|
| |
|
Unpaid Principal Balance/
Notional
|
|
|
Fair
Value
|
|
|
Unpaid Principal Balance/
Notional
|
|
|
Fair
Value
|
|
|
Unpaid
Principal
Balance/
Notional
|
|
|
Fair
Value
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans held for sale
|
|
$ |
230,241 |
|
|
$ |
237,741 |
|
|
$ |
177,319 |
|
|
$ |
184,816 |
|
|
$ |
120,939 |
|
|
$ |
124,182 |
|
|
Residential mortgage loan commitments
|
|
|
302,303 |
|
|
|
8,907 |
|
|
|
189,770 |
|
|
|
6,597 |
|
|
|
158,946 |
|
|
|
3,495 |
|
|
Forward sales contracts
|
|
|
520,165 |
|
|
|
391 |
|
|
|
349,447 |
|
|
|
(3,288 |
) |
|
|
262,977 |
|
|
|
(558 |
) |
| |
|
|
|
|
|
$ |
247,039 |
|
|
|
|
|
|
$ |
188,125 |
|
|
|
|
|
|
$ |
127,119 |
|
No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of March 31, 2012, December 31, 2011 or March 31, 2011. No credit losses were recognized on residential mortgage loans held for sale for the three months ended March 31, 2012 and 2011.
Mortgage banking revenue was as follows (in thousands):
| |
|
Three months ended
|
|
| |
|
March 31, 2012
|
|
|
March 31, 2011
|
|
|
Originating and marketing revenue:
|
|
|
|
|
|
|
|
Residential mortgages loan held for sale
|
|
$ |
17,092 |
|
|
$ |
13,336 |
|
|
Residential mortgage loan commitments
|
|
|
2,310 |
|
|
|
1,244 |
|
|
Forward sales contracts
|
|
|
3,679 |
|
|
|
(7,051 |
) |
|
Total originating and marketing revenue
|
|
|
23,081 |
|
|
|
7,529 |
|
|
Servicing revenue
|
|
|
9,997 |
|
|
|
9,827 |
|
|
Total mortgage banking revenue
|
|
$ |
33,078 |
|
|
$ |
17,356 |
|
Originating and market 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
Mortgage servicing rights 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. Mortgage servicing rights may also be purchased. Both originated or purchased mortgage servicing rights are initially recognized at fair value. The Company has elected to carry all mortgage servicing rights at fair value. Changes in the fair value are recognized in earnings as they occur. 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):
| |
|
March 31,
2012
|
|
|
Dec. 31,
2011
|
|
|
March 31,
2011
|
|
|
Number of residential mortgage loans serviced for others
|
|
|
95,944 |
|
|
|
95,841 |
|
|
|
96,256 |
|
|
Outstanding principal balance of residential mortgage loans serviced for others
|
|
$ |
11,378,806 |
|
|
$ |
11,300,986 |
|
|
$ |
11,202,626 |
|
|
Weighted average interest rate
|
|
|
5.09 |
% |
|
|
5.19 |
% |
|
|
5.40 |
% |
|
Remaining term (in months)
|
|
|
289 |
|
|
|
290 |
|
|
|
294 |
|
Activity in capitalized mortgage servicing rights during the three months ended March 31, 2012 is as follows (in thousands):
| |
|
Purchased
|
|
|
Originated
|
|
|
Total
|
|
|
Balance at December 31, 2011
|
|
$ |
18,903 |
|
|
$ |
67,880 |
|
|
$ |
86,783 |
|
|
Additions, net
|
|
|
– |
|
|
|
8,372 |
|
|
|
8,372 |
|
|
Change in fair value due to loan runoff
|
|
|
(1,010 |
) |
|
|
(3,134 |
) |
|
|
(4,144 |
) |
|
Change in fair value due to market changes
|
|
|
3,311 |
|
|
|
3,816 |
|
|
|
7,127 |
|
|
Balance at March 31, 2012
|
|
$ |
21,204 |
|
|
$ |
76,934 |
|
|
$ |
98,138 |
|
Activity in capitalized mortgage servicing rights during the three months ended March 31, 2011 is as follows (in thousands):
| |
|
Purchased
|
|
|
Originated
|
|
|
Total
|
|
|
Balance at December 31, 2010
|
|
$ |
37,900 |
|
|
$ |
77,823 |
|
|
$ |
115,723 |
|
|
Additions, net
|
|
|
– |
|
|
|
4,969 |
|
|
|
4,969 |
|
|
Change in fair value due to loan runoff
|
|
|
(1,333 |
) |
|
|
(2,143 |
) |
|
|
(3,476 |
) |
|
Change in fair value due to market changes
|
|
|
1,776 |
|
|
|
1,353 |
|
|
|
3,129 |
|
|
Balance at March 31, 2011
|
|
$ |
38,343 |
|
|
$ |
82,002 |
|
|
$ |
120,345 |
|
Changes in the fair value of mortgage servicing rights are included in Other operating expense in the Consolidated Statements of Earnings. Changes in fair value due to loan runoff are included in Mortgage banking costs. Changes in fair value due to market changes are reported separately. Changes in fair value due to market changes during the period relate to assets held at the reporting date.
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, considered significant unobservable inputs, used to determine fair value are:
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
March 31, 2011
|
|
|
Discount rate – risk-free rate plus a market premium
|
|
|
10.33 |
% |
|
|
10.34 |
% |
|
|
10.36 |
% |
|
Prepayment rate – based upon loan interest rate, original term and loan type
|
|
|
10.01% - 45.98 |
% |
|
|
10.88% - 49.68 |
% |
|
|
6.69% - 39.69 |
% |
|
Loan servicing costs – annually per loan based upon loan type
|
|
$ |
55 - $105 |
|
|
$ |
55 - $105 |
|
|
$ |
55 - $105 |
|
|
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life
|
|
|
1.28 |
% |
|
|
1.21 |
% |
|
|
2.43 |
% |
The Company is exposed to interest rate risk as benchmark mortgage interest rates directly affect the prepayment speeds used in valuing our mortgage servicing rights, which is partially managed through forward sales of residential mortgage-backed securities and forward sales contracts. 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.
Stratification of the mortgage loan servicing portfolio, outstanding principal of loans serviced for others and weighted average prepayment rate by interest rate at March 31, 2012 follows (in thousands):
| |
|
< 4.50%
|
|
|
|
4.50% - 5.49 |
% |
|
|
5.50% - 6.49 |
% |
|
> 6.49%
|
|
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
$ |
27,456 |
|
|
$ |
50,561 |
|
|
$ |
16,586 |
|
|
$ |
3,535 |
|
|
$ |
98,138 |
|
|
Outstanding principal of loans serviced for others
|
|
$ |
2,760,780 |
|
|
$ |
4,977,754 |
|
|
$ |
2,602,343 |
|
|
$ |
1,037,929 |
|
|
$ |
11,378,806 |
|
|
Weighted average prepayment rate1
|
|
|
10.01 |
% |
|
|
12.54 |
% |
|
|
29.20 |
% |
|
|
45.98 |
% |
|
|
18.79 |
% |
|
1
|
Annual prepayment estimates based upon loan interest rate, original term and loan type
|
The interest rate sensitivity of our mortgage servicing rights and securities and derivative contracts held as an economic hedge is modeled over a range of +/- 50 basis points. At March 31, 2012, 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 $1.2 million. 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 $2.4 million. In the model, changes in the value of our servicing rights due to changes in interest rates assume stable relationships between 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 March 31, 2012 (in thousands):
| |
|
|
|
|
Past Due
|
|
|
|
|
| |
|
Current
|
|
|
30 to 59
Days
|
|
|
60 to 89 Days
|
|
|
90 Days or More
|
|
|
Total
|
|
|
FHLMC
|
|
$ |
5,147,454 |
|
|
$ |
40,600 |
|
|
$ |
13,421 |
|
|
$ |
49,144 |
|
|
$ |
5,250,619 |
|
|
FNMA
|
|
|
1,730,185 |
|
|
|
19,654 |
|
|
|
5,789 |
|
|
|
22,987 |
|
|
|
1,778,615 |
|
|
GNMA
|
|
|
3,687,899 |
|
|
|
109,478 |
|
|
|
24,522 |
|
|
|
25,117 |
|
|
|
3,847,016 |
|
|
Other
|
|
|
479,161 |
|
|
|
8,553 |
|
|
|
3,131 |
|
|
|
11,711 |
|
|
|
502,556 |
|
|
Total
|
|
$ |
11,044,699 |
|
|
$ |
178,285 |
|
|
$ |
46,863 |
|
|
$ |
108,959 |
|
|
$ |
11,378,806 |
|
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 $248 million at March 31, 2012, $259 million at December 31, 2011 and $284 million at March 31, 2011. A separate accrual for these off-balance sheet commitments is included in Other liabilities in the Consolidated Balance Sheets totaling $19 million at March 31, 2012, $19 million at December 31, 2011 and $16 million at March 31, 2011. At March 31, 2012, approximately 5% of the loans sold with recourse with an outstanding principal balance of $12 million were either delinquent more than 90 days, in bankruptcy or in foreclosure and 4% with an outstanding balance of $11 million were past due 30 to 89 days. 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 allowance for losses on loans sold with recourse included in Other liabilities in the Consolidated Balance Sheets is summarized as follows (in thousands):
| |
|
Three Months ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Beginning balance
|
|
$ |
18,683 |
|
|
$ |
16,667 |
|
|
Provision for recourse losses
|
|
|
1,672 |
|
|
|
794 |
|
|
Loans charged off, net
|
|
|
(1,704 |
) |
|
|
(974 |
) |
|
Ending balance
|
|
$ |
18,651 |
|
|
$ |
16,487 |
|
The Company also has off-balance sheet credit risk for residential mortgage loans sold to U.S. government agencies due to standard representations and warranties made under contractual agreements. At March 31, 2012, the Company had unresolved deficiency requests from the agencies on 280 loans with an aggregate outstanding balance of $36 million. At December 31, 2011, the Company had unresolved deficiency requests from the agencies on 247 loans with an aggregate outstanding balance of $37 million. The Company’s level of repurchases and indemnifications related to standard representation and warranties has remained low. For the three months ended March 31, 2012, the Company repurchased 15 loans from the agencies for $2.0 million and recognized minimal losses. For the three month ended March 31, 2011, the Company repurchased 2 loans for approximately $267 thousand. The Company has an accrual for credit losses related to potential loan repurchases under representations and warranties which is included in Other liabilities in the Consolidated Balance Sheets and in Mortgage banking costs in the Consolidated Statement of Earnings. The accrual totaled $2.1 million at March 31, 2012, $2.2 million at December 31, 2011 and $2.1 million at March 31, 2011.
(6) Employee Benefits
BOK Financial sponsors a defined benefit cash balance Pension Plan for all employees who satisfied certain age and service requirements. Pension Plan benefits were curtailed as of April 1, 2006. The Company recognized periodic pension expense of $965 thousand and $778 thousand for the three months ended March 31, 2012 and 2011, respectively. The Company made no Pension Plan contributions during the three months ended March 31, 2012 and 2011 and expects no minimum contribution to be required for 2012.
(7) Commitments and Contingent Liabilities
Litigation Contingencies
In 2010, the Bank was named as a defendant in three putative class actions alleging that the manner in which the bank posted charges to its consumer deposit accounts was improper. The three actions have been consolidated for settlement purposes in Multi-District Litigation pending in the United States District Court for the Southern District of Florida. On November 23, 2011, the Company settled the class action lawsuits for $19 million, subject to court approval for which application has been made. Management was advised by counsel that, in its opinion, the Company’s overdraft policies meet all requirements of law and the Bank has not agreed to change its overdraft practices. The company settled the litigation to avoid further expense and distraction. The amount of the settlement was fully accrued at March 31, 2012.
In an opinion dated October 11, 2011, the Oklahoma Supreme Court invalidated, pursuant to a petition brought by certain taxpayers, a $7.1 million settlement agreement between the Bank and the City of Tulsa (“the City”). The agreement settled claims asserted by the Bank against the City and against the Tulsa Airports Improvement Trust (“the Trust”) related to a defaulted loan made by the Bank to a start-up airline. The Trust agreed to purchase the loan and its collateral from the Bank in the event of a default by the airline. Counsel to the taxpayers has filed a motion to reconsider the opinion related to a claim by such counsel for attorney fees and the matter is still pending in the Supreme Court. If and when a mandate is issued on the opinion without material change, the Company intends to return the $7.1 million to the City and pursue its claims against the Trust. The settlement amount is included in the accrual for off-balance sheet credit risk.
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’ covered litigation liabilities. The contingent liability totaled $581 thousand at March 31, 2012. 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 recognized a $581 thousand receivable for its proportionate share of this escrow account.
BOK Financial currently owns 251,837 Visa Class B shares which are convertible into Visa Class A shares at the later of three years after the date of Visa’s initial public offering or the final settlement of all covered litigation. The current exchange rate is approximately 0.4881 Class A shares for each Class B share. However, the Company’s 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.
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.
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 either 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 $9.3 million at March 31, 2012. Substantially all of the obligations are offset by limited partner commitments. The Company does not accrue its contingent liability to fund 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 Company also has interests in various unrelated alternative investments generally consisting of unconsolidated limited partnership interest 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.
A summary of consolidated and unconsolidated alternative investments as of March 31, 2012, December 31, 2011 and March 31, 2011 is as follows (in thousands):
| |
|
March 31, 2012
|
|
| |
|
Loans
|
|
|
Other
assets
|
|
|
Other
liabilities
|
|
|
Other
borrowings
|
|
|
Non-controlling
interest
|
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity funds
|
|
$ |
– |
|
|
$ |
30,993 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
25,842 |
|
|
Tax credit entities
|
|
|
10,000 |
|
|
|
14,353 |
|
|
|
– |
|
|
|
10,964 |
|
|
|
10,000 |
|
|
Other
|
|
|
– |
|
|
|
7,029 |
|
|
|
– |
|
|
|
– |
|
|
|
140 |
|
|
Total consolidated
|
|
$ |
10,000 |
|
|
$ |
52,375 |
|
|
$ |
– |
|
|
$ |
10,964 |
|
|
$ |
35,982 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax credit entities
|
|
$ |
– |
|
|
$ |
51,737 |
|
|
$ |
29,093 |
|
|
$ |
– |
|
|
$ |
– |
|
|
Other
|
|
|
– |
|
|
|
10,200 |
|
|
|
2,075 |
|
|
|
– |
|
|
|
– |
|
|
Total unconsolidated
|
|
$ |
– |
|
|
$ |
61,937 |
|
|
$ |
31,168 |
|
|
$ |
– |
|
|
$ |
– |
|
| |
|
December 31, 2011
|
|
| |
|
Loans
|
|
|
Other
assets
|
|
|
Other
liabilities
|
|
|
Other
borrowings
|
|
|
Non-controlling
interest
|
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity funds
|
|
$ |
– |
|
|
$ |
30,902 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
26,042 |
|
|
Tax credit entities
|
|
|
10,000 |
|
|
|
14,483 |
|
|
|
– |
|
|
|
10,964 |
|
|
|
10,000 |
|
|
Other
|
|
|
– |
|
|
|
7,206 |
|
|
|
– |
|
|
|
– |
|
|
|
142 |
|
|
Total consolidated
|
|
$ |
10,000 |
|
|
$ |
52,591 |
|
|
$ |
– |
|
|
$ |
10,964 |
|
|
$ |
36,184 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax credit entities
|
|
$ |
– |
|
|
$ |
37,890 |
|
|
$ |
16,084 |
|
|
$ |
– |
|
|
$ |
– |
|
|
Other
|
|
|
– |
|
|
|
10,950 |
|
|
|
2,194 |
|
|
|
– |
|
|
|
– |
|
|
Total unconsolidated
|
|
$ |
– |
|
|
$ |
48,840 |
|
|
$ |
18,278 |
|
|
$ |
– |
|
|
$ |
– |
|
| |
|
March 31, 2011
|
|
| |
|
Loans
|
|
|
Other
assets
|
|
|
Other
liabilities
|
|
|
Other
borrowings
|
|
|
Non-controlling
interest
|
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private equity funds
|
|
$ |
– |
|
|
$ |
25,046 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
21,356 |
|
|
Tax credit entities
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other
|
|
|
– |
|
|
|
8,401 |
|
|
|
– |
|
|
|
– |
|
|
|
199 |
|
|
Total consolidated
|
|
$ |
– |
|
|
$ |
33,447 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
21,555 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax credit entities
|
|
$ |
– |
|
|
$ |
25,684 |
|
|
$ |
14,464 |
|
|
$ |
– |
|
|
$ |
– |
|
|
Other
|
|
|
– |
|
|
|
17,637 |
|
|
|
3,516 |
|
|
|
– |
|
|
|
– |
|
|
Total unconsolidated
|
|
$ |
– |
|
|
$ |
43,321 |
|
|
$ |
17,980 |
|
|
$ |
– |
|
|
$ |
– |
|
Other Commitments and Contingencies
At March 31, 2012, Cavanal Hill Funds’ assets included $1.3 billion of U.S. Treasury, $857 million of cash management and $412 million of 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 March 31, 2012. 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 2012 or 2011.
Cottonwood Valley Ventures, Inc. (“CVV, Inc.”), an indirectly wholly-owned subsidiary of BOK Financial, is being audited 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. In the event that the OTC successfully disallows any of the credits, CVV, Inc. would be required to indemnify purchasers for the tax credits disallowed. Management does not anticipate that this audit will have a material adverse impact to the financial statements.
The Company agreed to guarantee rents totaling $28.7 million through September of 2017 to the City 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 $16.4 million at March 31, 2012. Current leases expire or are subject to lessee termination options at various dates in 2012 and 2014. Our obligation under the agreement would be affected by lessee decisions to exercise these options. In return for this guarantee, the Company will receive 80% of net cash flow as defined in an agreement with the City 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.
(8) Shareholders’ Equity
On April 24, 2012, the Board of Directors of BOK Financial approved a quarterly cash dividend of $0.38 per common share. The quarterly cash dividend will be payable on or about May 29, 2012 to shareholders of record as of May 15, 2012.
Dividends declared during the three month periods ended March 31, 2012 and 2011 were $0.33 and $0.25 per common share, respectively.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) (“AOCI”) includes unrealized gains and losses on available for sale (“AFS”) securities. Unrealized gain (loss) on available for sale securities also includes 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 during 2011. Such amounts will be amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related accretion of discount 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 rate lock hedge of the 2005 subordinated debenture issuance will be reclassified into income over the ten-year life of the debt. Gains and losses in AOCI are net of deferred income taxes.
| |
|
Unrealized Gain (Loss) on
|
|
|
|
|
|
|
|
| |
|
|
|
|
Investment
|
|
|
|
|
|
Loss on
|
|
|
|
|
| |
|
Available for
|
|
|
Securities
|
|
|
|
|
|
Effective
|
|
|
|
|
| |
|
Sale
|
|
|
Transferred
|
|
|
Employee
|
|
|
Cash Flow
|
|
|
|
|
| |
|
Securities
|
|
|
from AFS
|
|
|
Benefit Plans
|
|
|
Hedges
|
|
|
Total
|
|
|
Balance at December 31, 2010
|
|
$ |
122,494 |
|
|
$ |
– |
|
|
$ |
(13,777 |
) |
|
$ |
(878 |
) |
|
$ |
107,839 |
|
|
Net change in unrealized gain (loss)
|
|
|
1,440 |
|
|
|
– |
|
|
|
1 |
|
|
|
– |
|
|
|
1,441 |
|
|
Other-than-temporary impairment losses recognized in earnings
|
|
|
4,599 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
4,599 |
|
|
Reclassification adjustment for net (gains) losses realized and included in earnings
|
|
|
(4,902 |
) |
|
|
– |
|
|
|
– |
|
|
|
83 |
|
|
|
(4,819 |
) |
|
Income tax expense (benefit)
|
|
|
(715 |
) |
|
|
– |
|
|
|
– |
|
|
|
(32 |
) |
|
|
(747 |
) |
|
Balance at March 31, 2011
|
|
$ |
122,916 |
|
|
$ |
– |
|
|
$ |
(13,776 |
) |
|
$ |
(827 |
) |
|
$ |
108,313 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
$ |
135,740 |
|
|
$ |
6,673 |
|
|
$ |
(12,742 |
) |
|
$ |
(692 |
) |
|
$ |
128,979 |
|
|
Net change in unrealized gain (loss)
|
|
|
55,726 |
|
|
|
– |
|
|
|
(291 |
) |
|
|
– |
|
|
|
55,435 |
|
|
Other-than-temporary impairment losses recognized in earnings
|
|
|
3,722 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
3,722 |
|
|
Amortization of unrealized gain on investment securities transferred from AFS
|
|
|
– |
|
|
|
(1,788 |
) |
|
|
– |
|
|
|
– |
|
|
|
(1,788 |
) |
|
Reclassification adjustment for net (gains) losses realized and included in earnings
|
|
|
(4,331 |
) |
|
|
– |
|
|
|
– |
|
|
|
52 |
|
|
|
(4,279 |
) |
|
Income tax benefit (expense)
|
|
|
(21,441 |
) |
|
|
697 |
|
|
|
113 |
|
|
|
(20 |
) |
|
|
(20,651 |
) |
|
Balance at March 31, 2012
|
|
$ |
169,416 |
|
|
$ |
5,582 |
|
|
$ |
(12,920 |
) |
|
$ |
(660 |
) |
|
$ |
161,418 |
|
(9) Earnings Per Share
| |
|
Three Months Ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net income attributable to BOK Financial Corp.
|
|
$ |
83,615 |
|
|
$ |
64,774 |
|
|
Earnings allocated to participating securities
|
|
|
(740 |
) |
|
|
(461 |
) |
|
Numerator for basic earnings per share – income available to common shareholders
|
|
|
82,875 |
|
|
|
64,313 |
|
|
Effect of reallocating undistributed earnings of participating securities
|
|
|
2 |
|
|
|
1 |
|
|
Numerator for diluted earnings per share – income available to common shareholders
|
|
|
82,877 |
|
|
$ |
64,314 |
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
68,268,458 |
|
|
|
68,387,617 |
|
|
Less: Participating securities included in weighted average shares outstanding
|
|
|
(603,158 |
) |
|
|
(485,895 |
) |
|
Denominator for basic earnings per common share
|
|
|
67,665,300 |
|
|
|
67,901,722 |
|
|
Dilutive effect of employee stock compensation plans1
|
|
|
276,595 |
|
|
|
274,805 |
|
|
Denominator for diluted earnings per common share
|
|
|
67,941,895 |
|
|
|
68,176,527 |
|
|
Basic earnings per share
|
|
$ |
1.22 |
|
|
$ |
0.95 |
|
|
Diluted earnings per share
|
|
$ |
1.22 |
|
|
$ |
0.94 |
|
|
1Excludes employee stock options with exercise prices greater than current market price.
|
|
|
356,708 |
|
|
|
756,999 |
|
(10) Reportable Segments
Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended March 31, 2012 is as follows (in thousands):
|
|
|
Commercial
|
|
|
Consumer
|
|
|
Wealth
Management
|
|
|
Funds Management and Other
|
|
|
BOK
Financial
Consolidated
|
|
|
Net interest revenue from external sources
|
|
$ |
89,731 |
|
|
$ |
23,947 |
|
|
$ |
6,747 |
|
|
$ |
53,144 |
|
|
$ |
173,569 |
|
|
Net interest revenue (expense) from internal sources
|
|
|
(12,126 |
) |
|
|
6,120 |
|
|
|
5,113 |
|
|
|
893 |
|
|
|
– |
|
|
Net interest revenue
|
|
|
77,605 |
|
|
|
30,067 |
|
|
|
11,860 |
|
|
|
54,037 |
|
|
|
173,569 |
|
|
Provision for (reduction of) allowance for credit losses
|
|
|
6,416 |
|
|
|
1,432 |
|
|
|
626 |
|
|
|
(8,474 |
) |
|
|
– |
|
|
Net interest revenue after provision for allowances for credit losses
|
|
|
71,189 |
|
|
|
28,635 |
|
|
|
11,234 |
|
|
|
62,511 |
|
|
|
173,569 |
|
|
Other operating revenue
|
|
|
38,813 |
|
|
|
51,096 |
|
|
|
46,372 |
|
|
|
4,100 |
|
|
|
140,381 |
|
|
Other operating expense
|
|
|
43,272 |
|
|
|
37,432 |
|
|
|
42,163 |
|
|
|
62,370 |
|
|
|
185,237 |
|
|
Corporate allocations
|
|
|
12,672 |
|
|
|
10,318 |
|
|
|
9,026 |
|
|
|
(32,016 |
) |
|
|
– |
|
|
Income before taxes
|
|
|
54,058 |
|
|
|
31,981 |
|
|
|
6,417 |
|
|
|
36,257 |
|
|
|
128,713 |
|
|
Federal and state income tax
|
|
|
21,029 |
|
|
|
12,441 |
|
|
|
2,496 |
|
|
|
9,554 |
|
|
|
45,520 |
|
|
Net income
|
|
|
33,029 |
|
|
|
19,540 |
|
|
|
3,921 |
|
|
|
26,703 |
|
|
|
83,193 |
|
|
Net income attributable to non-controlling interest
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(422 |
) |
|
|
(422 |
) |
|
Net income attributable to BOK Financial Corp.
|
|
$ |
33,029 |
|
|
$ |
19,540 |
|
|
$ |
3,921 |
|
|
$ |
27,125 |
|
|
$ |
83,615 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
10,131,453 |
|
|
$ |
5,819,073 |
|
|
$ |
4,147,907 |
|
|
$ |
5,418,150 |
|
|
$ |
25,516,583 |
|
|
Average invested capital
|
|
|
867,690 |
|
|
|
286,392 |
|
|
|
175,013 |
|
|
|
1,506,138 |
|
|
|
2,835,233 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
1.31 |
% |
|
|
1.35 |
% |
|
|
0.38 |
% |
|
|
|
|
|
|
1.32 |
% |
|
Return on average invested capital
|
|
|
15.31 |
% |
|
|
27.44 |
% |
|
|
9.01 |
% |
|
|
|
|
|
|
11.86 |
% |
|
Efficiency ratio
|
|
|
48.07 |
% |
|
|
63.81 |
% |
|
|
87.83 |
% |
|
|
|
|
|
|
59.77 |
% |
Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended March 31, 2011 is as follows (in thousands):
| |
|
Commercial
|
|
|
Consumer
|
|
|
Wealth
Management
|
|
|
Funds Management and Other
|
|
|
BOK
Financial
Consolidated
|
|
|
Net interest revenue from external sources
|
|
$ |
83,686 |
|
|
$ |
18,664 |
|
|
$ |
7,796 |
|
|
$ |
60,493 |
|
|
$ |
170,639 |
|
|
Net interest revenue (expense) from internal sources
|
|
|
(9,436 |
) |
|
|
9,405 |
|
|
|
3,134 |
|
|
|
(3,103 |
) |
|
|
– |
|
|
Net interest revenue
|
|
|
74,250 |
|
|
|
28,069 |
|
|
|
10,930 |
|
|
|
57,390 |
|
|
|
170,639 |
|
|
Provision for (reduction of) allowance for credit losses
|
|
|
6,776 |
|
|
|
2,682 |
|
|
|
439 |
|
|
|
(3,647 |
) |
|
|
6,250 |
|
|
Net interest revenue after provision for credit losses
|
|
|
67,474 |
|
|
|
25,387 |
|
|
|
10,491 |
|
|
|
61,037 |
|
|
|
164,389 |
|
|
Other operating revenue
|
|
|
35,430 |
|
|
|
37,482 |
|
|
|
39,953 |
|
|
|
4,713 |
|
|
|
117,578 |
|
|
Other operating expense
|
|
|
45,779 |
|
|
|
39,132 |
|
|
|
35,309 |
|
|
|
58,229 |
|
|
|
178,449 |
|
|
Corporate allocations
|
|
|
10,099 |
|
|
|
13,069 |
|
|
|
8,269 |
|
|
|
(31,437 |
) |
|
|
– |
|
|
Income before taxes
|
|
|
47,026 |
|
|
|
10,668 |
|
|
|
6,866 |
|
|
|
38,958 |
|
|
|
103,518 |
|
|
Federal and state income tax
|
|
|
18,293 |
|
|
|
4,150 |
|
|
|
2,671 |
|
|
|
13,638 |
|
|
|
38,752 |
|
|
Net income
|
|
|
28,733 |
|
|
|
6,518 |
|
|
|
4,195 |
|
|
|
25,320 |
|
|
|
64,766 |
|
|
Net income attributable to non-controlling interest
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(8 |
) |
|
|
(8 |
) |
|
Net income attributable to BOK Financial Corp.
|
|
$ |
28,733 |
|
|
$ |
6,518 |
|
|
$ |
4,195 |
|
|
$ |
25,328 |
|
|
$ |
64,774 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
8,992,933 |
|
|
$ |
6,120,855 |
|
|
$ |
3,810,143 |
|
|
$ |
4,815,843 |
|
|
$ |
23,739,774 |
|
|
Average invested capital
|
|
|
861,980 |
|
|
|
271,192 |
|
|
|
175,478 |
|
|
|
1,256,147 |
|
|
|
2,564,797 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
1.30 |
% |
|
|
0.43 |
% |
|
|
0.45 |
% |
|
|
|
|
|
|
1.11 |
% |
|
Return on average invested capital
|
|
|
13.52 |
% |
|
|
9.75 |
% |
|
|
9.70 |
% |
|
|
|
|
|
|
10.24 |
% |
|
Efficiency ratio
|
|
|
50.95 |
% |
|
|
77.40 |
% |
|
|
85.71 |
% |
|
|
|
|
|
|
61.15 |
% |
(11) Fair Value Measurements
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. 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 transaction 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.
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 this evaluation, we determined that the results represent prices that would be received to sell assets or paid to transfer liabilities in orderly transactions in the current market.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The fair value of assets and liabilities that are measured on a recurring basis as of March 31, 2012 are as follows (in thousands):
| |
|
Total
|
|
|
Quoted Prices in Active Markets for Identical Instruments
|
|
|
Significant Other Observable Inputs
|
|
|
Significant Unobservable Inputs
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government agency debentures
|
|
$ |
27,430 |
|
|
$ |
– |
|
|
$ |
27,430 |
|
|
$ |
– |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
35,111 |
|
|
|
– |
|
|
|
35,111 |
|
|
|
– |
|
|
Municipal and other tax-exempt securities
|
|
|
60,230 |
|
|
|
– |
|
|
|
60,230 |
|
|
|
– |
|
|
Other trading securities
|
|
|
5,605 |
|
|
|
– |
|
|
|
5,481 |
|
|
|
124 |
|
|
Total trading securities
|
|
|
128,376 |
|
|
|
– |
|
|
|
128,252 |
|
|
|
124 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
|
1,004 |
|
|
|
1,004 |
|
|
|
– |
|
|
|
– |
|
|
Municipal and other tax-exempt
|
|
|
72,234 |
|
|
|
– |
|
|
|
30,257 |
|
|
|
41,977 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
9,677,602 |
|
|
|
– |
|
|
|
9,677,602 |
|
|
|
– |
|
|
Privately issued residential mortgage-backed securities
|
|
|
326,513 |
|
|
|
– |
|
|
|
326,513 |
|
|
|
– |
|
|
Other debt securities
|
|
|
36,777 |
|
|
|
– |
|
|
|
30,877 |
|
|
|
5,900 |
|
|
Perpetual preferred stock
|
|
|
21,024 |
|
|
|
– |
|
|
|
21,024 |
|
|
|
– |
|
|
Equity securities and mutual funds
|
|
|
51,443 |
|
|
|
25,278 |
|
|
|
26,165 |
|
|
|
– |
|
|
Total available for sale securities
|
|
|
10,186,597 |
|
|
|
26,282 |
|
|
|
10,112,438 |
|
|
|
47,877 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value option securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency residential mortgage-backed securities
|
|
|
322,180 |
|
|
|
– |
|
|
|
322,180 |
|
|
|
– |
|
|
Corporate debt securities
|
|
|
25,772 |
|
|
|
– |
|
|
|
25,772 |
|
|
|
– |
|
|
Fair value option securities
|
|
|
347,952 |
|
|
|
– |
|
|
|
347,952 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans held for sale
|
|
|
247,039 |
|
|
|
– |
|
|
|
247,039 |
|
|
|
– |
|
|
Mortgage servicing rights1
|
|
|
98,138 |
|
|
|
– |
|
|
|
– |
|
|
|
98,138 |
1 |
|
Derivative contracts, net of cash margin2
|
|
|
384,996 |
|
|
|
– |
|
|
|
384,996 |
|
|
|
– |
|
|
Other assets – private equity funds
|
|
|
30,993 |
|
|
|
– |
|
|
|
– |
|
|
|
30,993 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts, net of cash margin2
|
|
|
305,290 |
|
|
|
|
|
|
|
305,290 |
|
|
|
– |
|
|
|
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 5, Mortgage Banking Activities.
|
|
|
2
|
See Note 3 for detail of fair value of derivative contracts by contract type.
|
The fair value of financial assets and liabilities that are measured on a recurring basis are as follows as of December 31, 2011 (in thousands):
| |
|
Total
|
|
|
Quoted Prices in Active Markets for Identical Instruments
|
|
|
Significant Other Observable Inputs
|
|
|
Significant Unobservable Inputs
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities
|
|
$ |
76,800 |
|
|
$ |
– |
|
|
$ |
76,623 |
|
|
$ |
177 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
|
1,006 |
|
|
|
1,006 |
|
|
|
– |
|
|
|
– |
|
|
Municipal and other tax-exempt
|
|
|
68,837 |
|
|
|
– |
|
|
|
26,484 |
|
|
|
42,353 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
9,588,177 |
|
|
|
– |
|
|
|
9,588,177 |
|
|
|
– |
|
|
Privately issued residential mortgage-backed securities
|
|
|
419,166 |
|
|
|
– |
|
|
|
419,166 |
|
|
|
– |
|
|
Other debt securities
|
|
|
36,495 |
|
|
|
– |
|
|
|
30,595 |
|
|
|
5,900 |
|
|
Perpetual preferred stock
|
|
|
18,446 |
|
|
|
– |
|
|
|
18,446 |
|
|
|
– |
|
|
Equity securities and mutual funds
|
|
|
47,238 |
|
|
|
23,596 |
|
|
|
23,642 |
|
|
|
– |
|
|
Total available for sale securities
|
|
|
10,179,365 |
|
|
|
24,602 |
|
|
|
10,106,510 |
|
|
|
48,253 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value option securities
|
|
|
651,226 |
|
|
|
– |
|
|
|
651,226 |
|
|
|
– |
|
|
Residential mortgage loans held for sale
|
|
|
188,125 |
|
|
|
– |
|
|
|
188,125 |
|
|
|
– |
|
|
Mortgage servicing rights
|
|
|
86,783 |
|
|
|
– |
|
|
|
– |
|
|
|
86,783 |
1 |
|
Derivative contracts, net of cash margin2
|
|
|
293,859 |
|
|
|
457 |
|
|
|
293,402 |
|
|
|
– |
|
|
Other assets – private equity funds
|
|
|
30,902 |
|
|
|
– |
|
|
|
– |
|
|
|
30,902 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts, net of cash margin2
|
|
|
236,522 |
|
|
|
– |
|
|
|
236,522 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 5, Mortgage Banking Activities.
|
|
|
2
|
See Note 3 for detail of fair value of derivative contracts by contract type.
|
The fair value of financial assets and liabilities that are measured on a recurring basis are as follows as of March 31, 2011 (in thousands):
| |
|
Total
|
|
|
Quoted Prices in Active Markets for Identical Instruments
|
|
|
Significant Other Observable Inputs
|
|
|
Significant Unobservable Inputs
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities
|
|
$ |
80,719 |
|
|
$ |
1,848 |
|
|
$ |
78,871 |
|
|
$ |
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
69,859 |
|
|
|
– |
|
|
|
26,092 |
|
|
|
43,767 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
8,925,590 |
|
|
|
– |
|
|
|
8,925,590 |
|
|
|
– |
|
|
Privately issue residential mortgage-backed securities
|
|
|
573,285 |
|
|
|
– |
|
|
|
573,285 |
|
|
|
– |
|
|
Other debt securities
|
|
|
5,899 |
|
|
|
– |
|
|
|
– |
|
|
|
5,899 |
|
|
Perpetual preferred stock
|
|
|
22,574 |
|
|
|
– |
|
|
|
22,574 |
|
|
|
– |
|
|
Equity securities and mutual funds
|
|
|
68,694 |
|
|
|
47,303 |
|
|
|
21,391 |
|
|
|
– |
|
|
Total available for sale securities
|
|
|
9,665,901 |
|
|
|
47,303 |
|
|
|
9,568,932 |
|
|
|
49,666 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value option securities
|
|
|
326,624 |
|
|
|
– |
|
|
|
326,624 |
|
|
|
– |
|
|
Residential mortgage loans held for sale
|
|
|
127,119 |
|
|
|
– |
|
|
|
127,119 |
|
|
|
– |
|
|
Mortgage servicing rights
|
|
|
120,345 |
|
|
|
– |
|
|
|
– |
|
|
|
120,345 |
1 |
|
Derivative contracts, net of cash margin2
|
|
|
245,124 |
|
|
|
– |
|
|
|
245,124 |
|
|
|
– |
|
|
Other assets – private equity funds
|
|
|
25,046 |
|
|
|
– |
|
|
|
– |
|
|
|
25,046 |
|
| |
|
|
|
|
|
|
|
|
|
|
– |
|
|
|
– |
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
– |
|
|
|
– |
|
|
Derivative contracts, net of cash margin2
|
|
|
156,038 |
|
|
|
– |
|
|
|
156,038 |
|
|
|
– |
|
|
|
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 5, Mortgage Banking Activities.
|
|
|
2
|
See Note 3 for detail of fair value of derivative contracts by contract type.
|
The following represents the changes for the three months ended March 31, 2012 related to assets measured at fair value on a recurring basis using significant unobservable inputs (in thousands):
| |
|
Available for Sale Securities
|
|
|
|
|
| |
|
Municipal and other tax-exempt
|
|
|
Other debt securities
|
|
|
Other assets – private equity funds
|
|
| |
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
$ |
42,353 |
|
|
$ |
5,900 |
|
|
$ |
30,902 |
|
|
Purchases and capital calls
|
|
|
– |
|
|
|
– |
|
|
|
1,089 |
|
|
Redemptions and distributions
|
|
|
(100 |
) |
|
|
– |
|
|
|
(607 |
) |
|
Gain (loss) recognized in earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on other assets, net
|
|
|
– |
|
|
|
– |
|
|
|
(391 |
) |
|
Gain on available for sale securities, net
|
|
|
1 |
|
|
|
– |
|
|
|
– |
|
|
Other-than-temporary impairment losses
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Other comprehensive gain (loss)
|
|
|
(277 |
) |
|
|
– |
|
|
|
– |
|
|
Balance, March 31, 2012
|
|
$ |
41,977 |
|
|
$ |
5,900 |
|
|
$ |
30,993 |
|
The following represents the changes for the three months ended March 31, 2011 related to assets measured at fair value on a recurring basis using significant unobservable inputs (in thousands):
| |
|
Available for Sale Securities
|
|
|
|
|
| |
|
Municipal and other tax-exempt
|
|
|
Other debt securities
|
|
|
Other assets – private equity funds
|
|
| |
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
$ |
47,093 |
|
|
$ |
6,400 |
|
|
$ |
25,436 |
|
|
Purchases and contributions
|
|
|
7,520 |
|
|
|
– |
|
|
|
906 |
|
|
Redemptions and distributions
|
|
|
(9,975 |
) |
|
|
(500 |
) |
|
|
(1,320 |
) |
|
Gain (loss) recognized in earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage and trading revenue
|
|
|
(576 |
) |
|
|
– |
|
|
|
– |
|
|
Gain (loss) on other assets, net
|
|
|
– |
|
|
|
– |
|
|
|
24 |
|
|
Gain on securities, net
|
|
|
18 |
|
|
|
– |
|
|
|
– |
|
|
Other comprehensive (loss)
|
|
|
(313 |
) |
|
|
(1 |
) |
|
|
– |
|
|
Balance March 31, 2011
|
|
$ |
43,767 |
|
|
$ |
5,899 |
|
|
$ |
25,046 |
|
Following is a description of the Company’s valuation methodologies used for assets and liabilities measured on recurring basis:
Securities
The fair values of trading, available for sale and fair value options 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.
These securities may be either investment grade or below investment grade. As of March 31, 2012, taxable securities rated investment grade by all nationally recognized rating agencies are generally valued to yield 1.30% to 1.74%. Average yields on comparable short-term taxable securities are generally less than 1%. Tax-exempt securities rated investment grade by all nationally recognized rating agencies are generally valued to yield a range of 1.00% to 1.50%, which represents a spread of 75 to 80 basis points over average yields of comparable tax-exempt securities as of March 31, 2012. The resulting estimated fair value of securities rated investment grade ranges from 98.88% to 100% of par value and totaled $35 million at March 31, 2012. The fair value of these securities is sensitive primarily to changes in interest rate spreads. At March 31, 2012, a 100 basis point increase in the spreads over average yields for comparable taxable and tax-exempt securities would result in an additional decrease in the fair value of these securities of $341 thousand.
Approximately $12 million of our municipal and other tax-exempt securities are rated below investment grade by at least one of the three nationally recognized rating agencies. The fair value of these securities was determined based
on yields ranging from 6.18% to 9.37%. These yields were determined using a spread of 600 basis points over comparable municipal securities of varying durations. The resulting estimated fair value of securities rated below investment grade ranges from 74.96% to 75.19% of par value as of March 31, 2012.
The fair value of these certain municipal and other debt securities based on significant other unobservable inputs are primarily sensitive to changes in interest rate spreads. At March 31, 2012, a 100 basis point increase in the spreads over average yields for comparable securities would result in an additional decrease in the fair value of these securities of $722 thousand.
Taxable securities rated investment grade by all nationally recognized rating agencies were generally valued at par to yield 1.60% to 1.80% at December 31, 2011 and 1.75% at March 31, 2011. Average yields on comparable short-term taxable securities were less than 1% at both December 31, 2011 and March 31, 2011. Tax-exempt investment grade securities were valued to yield a range of 1.00% to 1.50% at December 31, 2011 and 1.12% to 1.42% at March 31, 2011. This represents a spread of 75 to 80 basis points over average yields for comparable securities. The resulting estimated fair value of securities rated investment grade ranged from 98.79% to 100% of par at December 31, 2011 and 98.95% to 99.39% of par at March 31, 2011.
After other-than-temporary impairment charges, municipal and other tax-exempt securities rated below investment grade by at least one of the nationally recognized rating agencies totaled $13 million at December 31, 2011 and $14 million at March 31, 2011. These below investment grade municipal and other tax-exempt securities were valued based on a range of 6.25% to 9.58% at December 31, 2011 and 5.57% to 10.04% at March 31, 2011. This represented a spread of 600 basis points over comparable municipal securities of varying durations at December 31, 2011 and 525 basis points over comparable securities of varying durations at March 31, 2011. The resulting estimated fair value of securities rated below investment grade ranged from 76.45% to 76.92% at December 31, 2011 and 83.12% to 83.39% of par value at March 31, 2011.
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 use 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 residential mortgage loans held for sale are based upon quoted market prices of such loans sold in securitization transactions, including related unfunded loan commitments.
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. Private equity fund assets are long-term, illiquid investments. No secondary market exists for these assets. They may only be realized through cash distributions from the underlying funds.
There were no transfers in or out of quoted prices in active markets for identical instruments, significant other observable inputs or significant unobservable input during the three months ended March 31, 2012 and 2011,
respectively.
Fair Value of Assets and Liabilities Measured on a Non-Recurring Basis
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. In addition, goodwill impairment is evaluated based on the fair value of the Company’s reporting units.
The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets adjusted to fair value during the three months ended March 31, 2012:
| |
|
Carrying Value at March 31, 2012
|
|
|
Fair Value Adjustments for the Three Months Ended March 31, 2012 Recognized In:
|
|
| |
|
Quoted Prices
in Active Markets for Identical Instruments
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
Gross charge-offs against allowance for loan losses
|
|
|
Gross charge-offs against allowance for recourse loans
|
|
|
Net losses and expenses of repossessed assets, net
|
|
|
Impaired loans
|
|
$ |
– |
|
|
$ |
21,718 |
|
|
$ |
1,982 |
|
|
$ |
8,325 |
|
|
$ |
1,020 |
|
|
$ |
– |
|
|
Real estate and other repossessed assets
|
|
|
– |
|
|
|
15,155 |
|
|
|
3,948 |
|
|
|
– |
|
|
|
– |
|
|
|
2,406 |
|
The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets adjusted to fair value during the three months ended March 31, 2011:
| |
|
Carrying Value at March 31, 2011
|
|
|
Fair Value Adjustments for the Three Months Ended March 31, 2011 Recognized In:
|
|
| |
|
Quoted Prices
in Active Markets for Identical Instruments
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Unobservable
Inputs
|
|
|
Gross charge-offs against allowance for loan loss
|
|
|
Gross charge-offs against allowance for recourse loans
|
|
|
Net losses and expenses of repossessed assets, net
|
|
|
Impaired loans
|
|
$ |
– |
|
|
$ |
19,751 |
|
|
$ |
– |
|
|
$ |
4,246 |
|
|
$ |
775 |
|
|
$ |
– |
|
|
Real estate and other repossessed assets
|
|
|
– |
|
|
|
30,615 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
5,552 |
|
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.
Fair Value of Financial Instruments
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 basis as of March 31, 2012 (dollars in thousands):
| |
|
|
|
|
Range of
|
|
|
Average
|
|
|
|
|
|
Estimated
|
|
| |
|
Carrying
|
|
|
Contractual
|
|
|
Re-pricing
|
|
|
Discount
|
|
|
Fair
|
|
| |
|
Value
|
|
|
Yields
|
|
|
(in years)
|
|
|
Rate
|
|
|
Value
|
|
|
Cash and cash equivalents
|
|
$ |
706,306 |
|
|
|
|
|
|
|
|
|
|
|
$ |
706,306 |
|
|
Trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of the U.S. government
|
|
|
27,430 |
|
|
|
|
|
|
|
|
|
|
|
|
27,430 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
35,111 |
|
|
|
|
|
|
|
|
|
|
|
|
35,111 |
|
|
Municipal and other tax-exempt securities
|
|
|
60,230 |
|
|
|
|
|
|
|
|
|
|
|
|
60,230 |
|
|
Other trading securities
|
|
|
5,605 |
|
|
|
|
|
|
|
|
|
|
|
|
5,605 |
|
|
Total trading securities
|
|
|
128,376 |
|
|
|
|
|
|
|
|
|
|
|
|
128,376 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
130,919 |
|
|
|
|
|
|
|
|
|
|
|
|
135,314 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
112,909 |
|
|
|
|
|
|
|
|
|
|
|
|
113,958 |
|
|
Other debt securities
|
|
|
183,431 |
|
|
|
|
|
|
|
|
|
|
|
|
202,171 |
|
|
Total investment securities
|
|
|
427,259 |
|
|
|
|
|
|
|
|
|
|
|
|
451,443 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
|
1,004 |
|
|
|
|
|
|
|
|
|
|
|
|
1,004 |
|
|
Municipal and other tax-exempt
|
|
|
72,234 |
|
|
|
|
|
|
|
|
|
|
|
|
72,234 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
9,677,602 |
|
|
|
|
|
|
|
|
|
|
|
|
9,677,602 |
|
|
Privately issued residential mortgage-backed securities
|
|
|
326,513 |
|
|
|
|
|
|
|
|
|
|
|
|
326,513 |
|
|
Other debt securities
|
|
|
36,777 |
|
|
|
|
|
|
|
|
|
|
|
|
36,777 |
|
|
Perpetual preferred stock
|
|
|
21,024 |
|
|
|
|
|
|
|
|
|
|
|
|
21,024 |
|
|
Equity securities and mutual funds
|
|
|
51,443 |
|
|
|
|
|
|
|
|
|
|
|
|
51,443 |
|
|
Total available for sale securities
|
|
|
10,186,597 |
|
|
|
|
|
|
|
|
|
|
|
|
10,186,597 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value option securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency residential mortgage-backed securities
|
|
|
322,180 |
|
|
|
|
|
|
|
|
|
|
|
|
322,180 |
|
|
Corporate debt securities
|
|
|
25,772 |
|
|
|
|
|
|
|
|
|
|
|
|
25,772 |
|
|
Total fair value option securities
|
|
|
347,952 |
|
|
|
|
|
|
|
|
|
|
|
|
347,952 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans held for sale
|
|
|
247,039 |
|
|
|
|
|
|
|
|
|
|
|
|
247,039 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
6,942,641 |
|
|
|
0.25 – 30.00 |
% |
|
|
0.52 |
|
|
|
0.58 – 3.92 |
% |
|
|
6,879,803 |
|
|
Commercial real estate
|
|
|
2,264,103 |
|
|
|
0.38 – 18.00 |
% |
|
|
1.30 |
|
|
|
0.29 – 3.45 |
% |
|
|
2,254,289 |
|
|
Residential mortgage
|
|
|
1,960,888 |
|
|
|
0.38 – 18.00 |
% |
|
|
3.52 |
|
|
|
1.06 – 3.86 |
% |
|
|
2,002,946 |
|
|
Consumer
|
|
|
409,812 |
|
|
|
0.38 – 21.00 |
% |
|
|
0.38 |
|
|
|
1.73 – 3.78 |
% |
|
|
398,149 |
|
|
Total loans
|
|
|
11,577,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,535,188 |
|
|
Allowance for loan losses
|
|
|
(244,209 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– |
|
|
Net loans
|
|
|
11,333,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,535,188 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights
|
|
|
98,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,138 |
|
|
Derivative instruments with positive fair value, net of cash margin
|
|
|
384,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
384,996 |
|
|
Other assets – private equity funds
|
|
|
30,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,993 |
|
|
Deposits with no stated maturity
|
|
|
15,357,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,357,188 |
|
|
Time deposits
|
|
|
3,166,099 |
|
|
|
0.01 – 9.64 |
% |
|
|
2.24 |
|
|
|
0.94 – 1.44 |
% |
|
|
3,221,842 |
|
|
Other borrowings
|
|
|
3,156,716 |
|
|
|
0.25 – 5.25 |
% |
|
|
0.00 |
|
|
|
0.09 – 2.70 |
% |
|
|
3,153,280 |
|
|
Subordinated debentures
|
|
|
394,760 |
|
|
|
5.19 – 5.82 |
% |
|
|
1.22 |
|
|
|
2.99 |
% |
|
|
405,589 |
|
|
Derivative instruments with negative fair value, net of cash margin
|
|
|
305,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
305,290 |
|
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 basis as of December 31, 2011 (dollars in thousands):
| |
|
|
|
|
Range of
|
|
|
Average
|
|
|
|
|
|
Estimated
|
|
| |
|
Carrying
|
|
|
Contractual
|
|
|
Re-pricing
|
|
|
Discount
|
|
|
Fair
|
|
| |
|
Value
|
|
|
Yields
|
|
|
(in years)
|
|
|
Rate
|
|
|
Value
|
|
|
Cash and cash equivalents
|
|
$ |
986,365 |
|
|
|
|
|
|
|
|
|
|
|
$ |
986,365 |
|
|
Trading securities
|
|
|
76,800 |
|
|
|
|
|
|
|
|
|
|
|
|
76,800 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
128,697 |
|
|
|
|
|
|
|
|
|
|
|
|
133,670 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
121,704 |
|
|
|
|
|
|
|
|
|
|
|
|
120,536 |
|
|
Other debt securities
|
|
|
188,835 |
|
|
|
|
|
|
|
|
|
|
|
|
208,451 |
|
|
Total investment securities
|
|
|
439,236 |
|
|
|
|
|
|
|
|
|
|
|
|
462,657 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
|
1,006 |
|
|
|
|
|
|
|
|
|
|
|
|
1,006 |
|
|
Municipal and other tax-exempt
|
|
|
68,837 |
|
|
|
|
|
|
|
|
|
|
|
|
68,837 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
9,588,177 |
|
|
|
|
|
|
|
|
|
|
|
|
9,588,177 |
|
|
Privately issued residential mortgage-backed securities
|
|
|
419,166 |
|
|
|
|
|
|
|
|
|
|
|
|
419,166 |
|
|
Other debt securities
|
|
|
36,495 |
|
|
|
|
|
|
|
|
|
|
|
|
36,495 |
|
|
Perpetual preferred stock
|
|
|
18,446 |
|
|
|
|
|
|
|
|
|
|
|
|
18,446 |
|
|
Equity securities and mutual funds
|
|
|
47,238 |
|
|
|
|
|
|
|
|
|
|
|
|
47,238 |
|
|
Total available for sale securities
|
|
|
10,179,365 |
|
|
|
|
|
|
|
|
|
|
|
|
10,179,365 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value option securities
|
|
|
651,226 |
|
|
|
|
|
|
|
|
|
|
|
|
651,226 |
|
|
Residential mortgage loans held for sale
|
|
|
188,125 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
188,125 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
6,571,454 |
|
|
|
0.25 –30.00 |
% |
|
|
0.57 |
|
|
|
0.63 – 3.85 |
% |
|
|
6,517,795 |
|
|
Commercial real estate
|
|
|
2,279,909 |
|
|
|
0.38 –18.00 |
|
|
|
1.26 |
|
|
|
0.28 – 3.51 |
|
|
|
2,267,375 |
|
|
Residential mortgage
|
|
|
1,970,461 |
|
|
|
0.38 –18.00 |
|
|
|
3.26 |
|
|
|
1.14 – 3.70 |
|
|
|
2,034,898 |
|
|
Consumer
|
|
|
447,919 |
|
|
|
0.38 –21.00 |
|
|
|
0.42 |
|
|
|
1.88 – 3.88 |
|
|
|
436,490 |
|
|
Total loans
|
|
|
11,269,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,256,558 |
|
|
Allowance for loan losses
|
|
|
(253,481 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– |
|
|
Net loans
|
|
|
11,016,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,256,558 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights
|
|
|
86,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,783 |
|
|
Derivative instruments with positive fair value, net of cash margin
|
|
|
293,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
293,859 |
|
|
Other assets – private equity funds
|
|
|
30,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,902 |
|
|
Deposits with no stated maturity
|
|
|
15,380,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,380,598 |
|
|
Time deposits
|
|
|
3,381,982 |
|
|
|
0.01 –9.64 |
|
|
|
2.07 |
|
|
|
1.02 – 1.43 |
|
|
|
3,441,610 |
|
|
Other borrowings
|
|
|
2,370,867 |
|
|
|
0.25 –6.58 |
|
|
|
0.00 |
|
|
|
0.04 – 2.76 |
|
|
|
2,369,224 |
|
|
Subordinated debentures
|
|
|
398,881 |
|
|
|
5.19 –5.82 |
|
|
|
1.44 |
|
|
|
3.29 |
|
|
|
411,243 |
|
|
Derivative instruments with negative fair value, net of cash margin
|
|
|
236,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
236,522 |
|
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 basis as of March 31, 2011 (dollars in thousands):
| |
|
|
|
|
Range of
|
|
|
Average
|
|
|
|
|
|
Estimated
|
|
| |
|
Carrying
|
|
|
Contractual
|
|
|
Re-pricing
|
|
|
Discount
|
|
|
Fair
|
|
| |
|
Value
|
|
|
Yields
|
|
|
(in years)
|
|
|
Rate
|
|
|
Value
|
|
|
Cash and cash equivalents
|
|
$ |
808,390 |
|
|
|
|
|
|
|
|
|
|
|
$ |
808,390 |
|
|
Trading securities
|
|
|
80,719 |
|
|
|
|
|
|
|
|
|
|
|
|
80,719 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
185,272 |
|
|
|
|
|
|
|
|
|
|
|
|
189,518 |
|
|
Other debt securities
|
|
|
158,129 |
|
|
|
|
|
|
|
|
|
|
|
|
165,534 |
|
|
Total investment securities
|
|
|
343,401 |
|
|
|
|
|
|
|
|
|
|
|
|
355,052 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal and other tax-exempt
|
|
|
69,859 |
|
|
|
|
|
|
|
|
|
|
|
|
69,859 |
|
|
U.S. agency residential mortgage-backed securities
|
|
|
8,925,590 |
|
|
|
|
|
|
|
|
|
|
|
|
8,925,590 |
|
|
Private issue residential mortgage-backed securities
|
|
|
573,285 |
|
|
|
|
|
|
|
|
|
|
|
|
573,285 |
|
|
Other debt securities
|
|
|
5,899 |
|
|
|
|
|
|
|
|
|
|
|
|
5,899 |
|
|
Perpetual preferred stock
|
|
|
22,574 |
|
|
|
|
|
|
|
|
|
|
|
|
22,574 |
|
|
Equity securities and mutual funds
|
|
|
68,694 |
|
|
|
|
|
|
|
|
|
|
|
|
68,694 |
|
|
Total available for sale securities
|
|
|
9,665,901 |
|
|
|
|
|
|
|
|
|
|
|
|
9,665,901 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value option securities
|
|
|
326,624 |
|
|
|
|
|
|
|
|
|
|
|
|
326,624 |
|
|
Residential mortgage loans held for sale
|
|
|
127,119 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
127,119 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
6,048,257 |
|
|
|
0.25 – 18.00 |
% |
|
|
0.58 |
|
|
|
0.68 – 4.84 |
% |
|
|
5,949,213 |
|
|
Commercial real estate
|
|
|
2,222,982 |
|
|
|
0.38 – 18.00 |
% |
|
|
1.20 |
|
|
|
0.28 – 3.90 |
% |
|
|
2,166,320 |
|
|
Residential mortgage
|
|
|
1,777,321 |
|
|
|
0.38 – 18.00 |
% |
|
|
3.81 |
|
|
|
0.79 – 4.63 |
% |
|
|
1,805,631 |
|
|
Consumer
|
|
|
541,275 |
|
|
|
0.38 – 21.00 |
% |
|
|
0.60 |
|
|
|
2.07 – 3.98 |
% |
|
|
541,880 |
|
|
Total loans
|
|
|
10,589,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,463,044 |
|
|
Allowance for loan losses
|
|
|
(289,549 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– |
|
|
Net loans
|
|
|
10,300,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,463,044 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights
|
|
|
120,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,345 |
|
|
Derivative instruments with positive fair value, net of cash margin
|
|
|
245,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,124 |
|
|
Other assets – private equity funds
|
|
|
25,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,046 |
|
|
Deposits with no stated maturity
|
|
|
14,195,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,195,315 |
|
|
Time deposits
|
|
|
3,677,611 |
|
|
|
0.01 – 9.64 |
% |
|
|
1.80 |
|
|
|
0.80 – 1.59 |
% |
|
|
3,679,337 |
|
|
Other borrowings
|
|
|
1,509,664 |
|
|
|
0.25 – 6.58 |
% |
|
|
0.00 |
|
|
|
0.10 – 2.71 |
% |
|
|
1,509,688 |
|
|
Subordinated debentures
|
|
|
398,744 |
|
|
|
5.19 – 5.82 |
% |
|
|
2.08 |
|
|
|
3.78 |
% |
|
|
410,835 |
|
|
Derivative instruments with negative fair value, net of cash margin
|
|
|
156,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,038 |
|
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.
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 value of investment are generally 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.
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 $200 million at March 31, 2012, $207 million at December 31, 2011 and $264 million at March 31, 2011.
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 Input. 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 this table.
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 March 31, 2012, December 31, 2011 or March 31, 2011.
Fair Value Election
As more fully disclosed in Note 2 and Note 5 to the Consolidated Financial Statements, the Company has elected to carry all mortgage-backed securities which have been designated as economic hedges against changes in the fair value of mortgage servicing rights and all residential mortgage loans originated for sale at fair value. Changes in the fair value of these financial instruments are recognized in earnings.
(12) Federal and State Income Taxes
The reconciliations of income (loss) attributable to continuing operations at the U.S. federal statutory tax rate to income tax expense are as follows (in thousands):
| |
|
Three Months Ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Amount:
|
|
|
|
|
|
|
|
Federal statutory tax
|
|
$ |
45,050 |
|
|
$ |
36,231 |
|
|
Tax exempt revenue
|
|
|
(1,264 |
) |
|
|
(1,363 |
) |
|
Effect of state income taxes, net of federal benefit
|
|
|
2,998 |
|
|
|
2,638 |
|
|
Utilization of tax credits
|
|
|
(1,097 |
) |
|
|
(499 |
) |
|
Bank-owned life insurance
|
|
|
(979 |
) |
|
|
(985 |
) |
|
Other, net
|
|
|
812 |
|
|
|
2,730 |
|
|
Total
|
|
$ |
45,520 |
|
|
$ |
38,752 |
|
| |
|
Three Months Ended
March 31,
|
|
| |
|
2012
|
|
|
2011
|
|
|
Percent of pretax income:
|
|
|
|
|
|
|
|
Federal statutory tax
|
|
|
35 |
% |
|
|
35 |
% |
|
Tax exempt revenue
|
|
|
(1 |
) |
|
|
(1 |
) |
|
Effect of state income taxes, net of federal benefit
|
|
|
2 |
|
|
|
2 |
|
|
Utilization of tax credits
|
|
|
(1 |
) |
|
|
– |
|
|
Bank-owned life insurance
|
|
|
(1 |
) |
|
|
(1 |
) |
|
Other, net
|
|
|
1 |
|
|
|
2 |
|
|
Total
|
|
|
35 |
% |
|
|
37 |
% |
During the first quarter of 2012, the Internal Revenue Service completed an audit of the Company’s federal income tax return for the year ended December 31, 2008. No changes were required.
(13) Subsequent Events
The Company evaluated events from the date of the consolidated financial statements on March 31, 2012 through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q. No events were identified requiring recognition in and/or disclosure in the consolidated financial statements.
Quarterly Financial Summary – Unaudited
Consolidated Daily Average Balances,
Average Yields and Rates
(Dollars in Thousands Except Per Share Data)
| |
|
Three Months Ended
|
|
| |
|
March 31, 2012
|
|
|
December 31, 2011
|
|
| |
|
Average
|
|
|
Revenue/
|
|
|
Yield/
|
|
|
Average
|
|
|
Revenue/
|
|
|
Yield/
|
|
| |
|
Balance
|
|
|
Expense1
|
|
|
Rate
|
|
|
Balance
|
|
|
Expense1
|
|
|
Rate
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds sold and resell agreements
|
|
$ |
11,385 |
|
|
$ |
2 |
|
|
|
0.07 |
% |
|
$ |
12,035 |
|
|
$ |
3 |
|
|
|
0.10 |
% |
|
Trading securities
|
|
|
95,293 |
|
|
|
446 |
|
|
|
1.88 |
|
|
|
97,972 |
|
|
|
689 |
|
|
|
2.79 |
|
|
Investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable3
|
|
|
302,861 |
|
|
|
4,434 |
|
|
|
5.89 |
|
|
|
314,217 |
|
|
|
4,677 |
|
|
|
5.91 |
|
|
Tax-exempt3
|
|
|
128,029 |
|
|
|
1,549 |
|
|
|
4.87 |
|
|
|
129,109 |
|
|
|
1,565 |
|
|
|
4.81 |
|
|
Total investment securities
|
|
|
430,890 |
|
|
|
5,983 |
|
|
|
5.59 |
|
|
|
443,326 |
|
|
|
6,242 |
|
|
|
5.59 |
|
|
Available for sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable3
|
|
|
9,876,508 |
|
|
|
59,656 |
|
|
|
2.48 |
|
|
|
9,845,351 |
|
|
|
54,839 |
|
|
|
2.37 |
|
|
Tax-exempt3
|
|
|
70,719 |
|
|
|
893 |
|
|
|
5.17 |
|
|
|
69,172 |
|
|
|
896 |
|
|
|
5.14 |
|
|
Total available for sale securities3
|
|
|
9,947,227 |
|
|
|
60,549 |
|
|
|
2.50 |
|
|
|
9,914,523 |
|
|
|
55,735 |
|
|
|
2.39 |
|
|
Mortgage trading securities
|
|
|
555,233 |
|
|
|
3,487 |
|
|
|
2.79 |
|
|
|
660,025 |
|
|
|
4,877 |
|
|
|
2.98 |
|
|
Residential mortgage loans held for sale
|
|
|
182,372 |
|
|
|
1,768 |
|
|
|
3.90 |
|
|
|
201,242 |
|
|
|
2,032 |
|
|
|
4.01 |
|
|
Loans2
|
|
|
11,436,811 |
|
|
|
128,067 |
|
|
|
4.50 |
|
|
|
11,152,315 |
|
|
|
130,736 |
|
|
|
4.65 |
|
|
Less allowance for loan losses
|
|
|
252,538 |
|
|
|
– |
|
|
|
|
|
|
|
266,473 |
|
|
|
– |
|
|
|
|
|
|
Loans, net of allowance
|
|
|
11,184,273 |
|
|
|
128,067 |
|
|
|
4.61 |
|
|
|
10,885,842 |
|
|
|
130,736 |
|
|
|
4.76 |
|
|
Total earning assets3
|
|
|
22,406,673 |
|
|
|
200,302 |
|
|
|
3.64 |
|
|
|
22,214,965 |
|
|
|
200,314 |
|
|
|
3.69 |
|
|
Cash and other assets
|
|
|
3,109,910 |
|
|
|
|
|
|
|
|
|
|
|
3,422,475 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
25,516,583 |
|
|
|
|
|
|
|
|
|
|
$ |
25,637,440 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
|
$ |
9,319,978 |
|
|
$ |
3,826 |
|
|
|
0.17 |
% |
|
$ |
9,276,608 |
|
|
$ |
4,213 |
|
|
|
0.18 |
% |
|
Savings
|
|
|
241,442 |
|
|
|
142 |
|
|
|
0.24 |
|
|
|
220,236 |
|
|
|
146 |
|
|
|
0.26 |
|
|
Time
|
|
|
3,246,362 |
|
|
|
13,530 |
|
|
|
1.68 |
|
|
|
3,485,059 |
|
|
|
14,922 |
|
|
|
1.70 |
|
|
Total interest-bearing deposits
|
|
|
12,807,782 |
|
|
|
17,498 |
|
|
|
0.55 |
|
|
|
12,981,903 |
|
|
|
19,281 |
|
|
|
0.59 |
|
|
Funds purchased
|
|
|
1,337,614 |
|
|
|
312 |
|
|
|
0.09 |
|
|
|
1,197,154 |
|
|
|
186 |
|
|
|
0.06 |
|
|
Repurchase agreements
|
|
|
1,183,778 |
|
|
|
265 |
|
|
|
0.09 |
|
|
|
1,189,861 |
|
|
|
404 |
|
|
|
0.13 |
|
|
Other borrowings
|
|
|
72,911 |
|
|
|
1,012 |
|
|
|
5.58 |
|
|
|
88,489 |
|
|
|
1,059 |
|
|
|
4.75 |
|
|
Subordinated debentures
|
|
|
397,440 |
|
|
|
5,552 |
|
|
|
5.62 |
|
|
|
398,858 |
|
|
|
5,640 |
|
|
|
5.61 |
|
|
Total interest-bearing liabilities
|
|
|
15,799,525 |
|
|
|
24,639 |
|
|
|
0.63 |
|
|
|
15,856,265 |
|
|
|
26,570 |
|
|
|
0.66 |
|
|
Non-interest bearing demand deposits
|
|
|
5,847,682 |
|
|
|
|
|
|
|
|
|
|
|
5,588,596 |
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
1,034,143 |
|
|
|
|
|
|
|
|
|
|
|
1,422,092 |
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,835,233 |
|
|
|
|
|
|
|
|
|
|
|
2,770,487 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$ |
25,516,583 |
|
|
|
|
|
|
|
|
|
|
$ |
25,637,440 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent Net Interest Revenue3
|
|
|
|
|
|
$ |
175,663 |
|
|
|
3.01 |
% |
|
|
|
|
|
$ |
173,744 |
|
|
|
3.03 |
% |
|
Tax-equivalent Net Interest Revenue to Earning Assets3
|
|
|
|
|
|
|
|
|
|
|
3.19 |
|
|
|
|
|
|
|
|
|
|
|
3.20 |
|
|
Less tax-equivalent adjustment1
|
|
|
|
|
|
|
2,094 |
|
|
|
|
|
|
|
|
|
|
|
2,274 |
|
|
|
|
|
|
Net Interest Revenue
|
|
|
|
|
|
|
173,569 |
|
|
|
|
|
|
|
|
|
|
|
171,470 |
|
|
|
|
|
|
Provision for credit losses
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
(15,000 |
) |
|
|
|
|
|
Other operating revenue
|
|
|
|
|
|
|
140,381 |
|
|
|
|
|
|
|
|
|
|
|
138,027 |
|
|
|
|
|
|
Other operating expense
|
|
|
|
|
|
|
185,237 |
|
|
|
|
|
|
|
|
|
|
|
219,197 |
|
|
|
|
|
|
Income before taxes
|
|
|
|
|
|
|
128,713 |
|
|
|
|
|
|
|
|
|
|
|
105,300 |
|
|
|
|
|
|
Federal and state income tax
|
|
|
|
|
|
|
45,520 |
|
|
|
|
|
|
|
|
|
|
|
37,396 |
|
|
|
|
|
|
Net income before non-controlling interest
|
|
|
|
|
|
|
83,193 |
|
|
|
|
|
|
|
|
|
|
|
67,904 |
|
|
|
|
|
|
Net income (loss) attributable to non-controlling interest
|
|
|
|
|
|
|
(422 |
) |
|
|
|
|
|
|
|
|
|
|
911 |
|
|
|
|
|
|
Net income attributable to BOK Financial Corp.
|
|
|
|
|
|
$ |
83,615 |
|
|
|
|
|
|
|
|
|
|
$ |
66,993 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Average Common Share Equivalent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
$ |
1.22 |
|
|
|
|
|
|
|
|
|
|
$ |
0.98 |
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
$ |
1.22 |
|
|
|
|
|
|
|
|
|
|
$ |
0.98 |
|
|
|
|
|
|
|
1
|
Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments shown are for comparative purposes.
|
|
|
2
|
The loan averages included loans on which the accrual of interest has been discontinued and are stated net of unearned income.
|
|
|
3
|
Yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income.
|
|
Three Months Ended
|
|
|
September 30, 2011
|
|
|
June 30, 2011
|
|
|
March 31, 2011
|
|
|
Average
|
|
|
Revenue/
|
|
|
Yield/
|
|
|
Average
|
|
|
Revenue/
|
|
|
Yield/
|
|
|
Average
|
|
|
Revenue/
|
|
|
Yield/
|
|
|
Balance
|
|
|
Expense1
|
|
|
Rate
|
|
|
Balance
|
|
|
Expense1
|
|
|
Rate
|
|
|
Balance
|
|
|
Expense1
|
|
|
Rate
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
12,344 |
|
|
$ |
5 |
|
|
|
0.16 |
% |
|
$ |
8,814 |
|
|
$ |
3 |
|
|
|
0.14 |
% |
|
$ |
20,680 |
|
|
$ |
4 |
|
|
|
0.08 |
% |
| |
88,576 |
|
|
|
637 |
|
|
|
2.85 |
|
|
|
80,113 |
|
|
|
584 |
|
|
|
2.92 |
|
|
|
60,768 |
|
|
|
576 |
|
|
|
3.84 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
194,371 |
|
|
|
2,759 |
|
|
|
5.63 |
|
|
|
183,084 |
|
|
|
2,800 |
|
|
|
6.13 |
|
|
|
154,562 |
|
|
|
2,345 |
|
|
|
6.15 |
|
| |
135,256 |
|
|
|
1,683 |
|
|
|
4.94 |
|
|
|
174,614 |
|
|
|
2,100 |
|
|
|
4.82 |
|
|
|
184,684 |
|
|
|
2,214 |
|
|
|
4.88 |
|
| |
329,627 |
|
|
|
4,442 |
|
|
|
5.35 |
|
|
|
357,698 |
|
|
|
4,900 |
|
|
|
5.49 |
|
|
|
339,246 |
|
|
|
4,559 |
|
|
|
5.46 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
9,586,411 |
|
|
|
66,040 |
|
|
|
2.82 |
|
|
|
9,473,401 |
|
|
|
69,978 |
|
|
|
3.02 |
|
|
|
9,311,980 |
|
|
|
69,014 |
|
|
|
3.15 |
|
| |
70,181 |
|
|
|
870 |
|
|
|
4.92 |
|
|
|
70,081 |
|
|
|
894 |
|
|
|
5.12 |
|
|
|
64,694 |
|
|
|
906 |
|
|
|
5.68 |
|
| |
9,656,592 |
|
|
|
66,910 |
|
|
|
2.83 |
|
|
|
9,543,482 |
|
|
|
70,872 |
|
|
|
3.04 |
|
|
|
9,376,674 |
|
|
|
69,920 |
|
|
|
3.17 |
|
| |
594,629 |
|
|
|
5,299 |
|
|
|
3.66 |
|
|
|
518,073 |
|
|
|
5,243 |
|
|
|
4.42 |
|
|
|
397,093 |
|
|
|
3,230 |
|
|
|
3.74 |
|
| |
156,621 |
|
|
|
1,616 |
|
|
|
4.09 |
|
|
|
134,876 |
|
|
|
1,505 |
|
|
|
4.48 |
|
|
|
125,494 |
|
|
|
1,339 |
|
|
|
4.33 |
|
| |
10,872,805 |
|
|
|
129,073 |
|
|
|
4.71 |
|
|
|
10,680,755 |
|
|
|
124,871 |
|
|
|
4.69 |
|
|
|
10,653,756 |
|
|
|
124,782 |
|
|
|
4.75 |
|
| |
285,570 |
|
|
|
– |
|
|
|
– |
|
|
|
291,308 |
|
|
|
– |
|
|
|
– |
|
|
|
295,014 |
|
|
|
– |
|
|
|
– |
|
| |
10,587,235 |
|
|
|
129,073 |
|
|
|
4.84 |
|
|
|
10,389,447 |
|
|
|
124,871 |
|
|
|
4.82 |
|
|
|
10,358,742 |
|
|
|
124,782 |
|
|
|
4.89 |
|
| |
21,425,624 |
|
|
|
207,982 |
|
|
|
3.91 |
|
|
|
21,032,503 |
|
|
|
207,978 |
|
|
|
4.01 |
|
|
|
20,678,697 |
|
|
|
204,410 |
|
|
|
4.09 |
|
| |
3,196,114 |
|
|
|
|
|
|
|
|
|
|
|
2,946,732 |
|
|
|
|
|
|
|
|
|
|
|
3,061,077 |
|
|
|
|
|
|
|
|
|
| $ |
24,621,738 |
|
|
|
|
|
|
|
|
|
|
$ |
23,979,235 |
|
|
|
|
|
|
|
|
|
|
$ |
23,739,774 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
9,310,046 |
|
|
$ |
5,488 |
|
|
|
0.23 |
|
|
$ |
9,184,141 |
|
|
$ |
6,130 |
|
|
|
0.27 |
|
|
$ |
9,632,595 |
|
|
$ |
7,584 |
|
|
|
0.32 |
|
| |
214,979 |
|
|
|
183 |
|
|
|
0.34 |
|
|
|
210,707 |
|
|
|
203 |
|
|
|
0.39 |
|
|
|
203,638 |
|
|
|
187 |
|
|
|
0.37 |
|
| |
3,617,731 |
|
|
|
16,736 |
|
|
|
1.84 |
|
|
|
3,632,130 |
|
|
|
16,827 |
|
|
|
1.86 |
|
|
|
3,616,991 |
|
|
|
16,271 |
|
|
|
1.82 |
|
| |
13,142,756 |
|
|
|
22,407 |
|
|
|
0.68 |
|
|
|
13,026,978 |
|
|
|
23,160 |
|
|
|
0.71 |
|
|
|
13,453,224 |
|
|
|
24,042 |
|
|
|
0.72 |
|
| |
994,099 |
|
|
|
135 |
|
|
|
0.05 |
|
|
|
1,168,670 |
|
|
|
276 |
|
|
|
0.09 |
|
|
|
820,969 |
|
|
|
320 |
|
|
|
0.16 |
|
| |
1,128,275 |
|
|
|
495 |
|
|
|
0.17 |
|
|
|
1,004,217 |
|
|
|
513 |
|
|
|
0.20 |
|
|
|
1,062,359 |
|
|
|
1,041 |
|
|
|
0.40 |
|
| |
128,288 |
|
|
|
1,701 |
|
|
|
5.26 |
|
|
|
187,441 |
|
|
|
2,226 |
|
|
|
4.76 |
|
|
|
144,987 |
|
|
|
470 |
|
|
|
1.31 |
|
| |
398,812 |
|
|
|
5,627 |
|
|
|
5.60 |
|
|
|
398,767 |
|
|
|
5,541 |
|
|
|
5.57 |
|
|
|
398,723 |
|
|
|
5,577 |
|
|
|
5.67 |
|
| |
15,792,230 |
|
|
|
30,365 |
|
|
|
0.76 |
|
|
|
15,786,073 |
|
|
|
31,716 |
|
|
|
0.81 |
|
|
|
15,880,262 |
|
|
|
31,450 |
|
|
|
0.80 |
|
| |
5,086,538 |
|
|
|
|
|
|
|
|
|
|
|
4,554,000 |
|
|
|
|
|
|
|
|
|
|
|
4,265,657 |
|
|
|
|
|
|
|
|
|
| |
1,004,564 |
|
|
|
|
|
|
|
|
|
|
|
988,273 |
|
|
|
|
|
|
|
|
|
|
|
1,029,058 |
|
|
|
|
|
|
|
|
|
| |
2,738,406 |
|
|
|
|
|
|
|
|
|
|
|
2,650,889 |
|
|
|
|
|
|
|
|
|
|
|
2,564,797 |
|
|
|
|
|
|
|
|
|
| $ |
24,621,738 |
|
|
|
|
|
|
|
|
|
|
$ |
23,979,235 |
|
|
|
|
|
|
|
|
|
|
$ |
23,739,774 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
$ |
177,617 |
|
|
|
3.15 |
% |
|
|
|
|
|
$ |
176,262 |
|
|
|
3.20 |
% |
|
|
|
|
|
$ |
72,960 |
|
|
|
3.29 |
% |
| |
|
|
|
|
|
|
|
|
3.34 |
|
|
|
|
|
|
|
|
|
|
|
3.40 |
|
|
|
|
|
|
|
|
|
|
|
3.47 |
|
| |
|
|
|
|
2,233 |
|
|
|
|
|
|
|
|
|
|
|
2,261 |
|
|
|
|
|
|
|
|
|
|
|
2,321 |
|
|
|
|
|
| |
|
|
|
|
175,384 |
|
|
|
|
|
|
|
|
|
|
|
174,001 |
|
|
|
|
|
|
|
|
|
|
|
170,639 |
|
|
|
|
|
| |
|
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
2,700 |
|
|
|
|
|
|
|
|
|
|
|
6,250 |
|
|
|
|
|
| |
|
|
|
|
173,977 |
|
|
|
|
|
|
|
|
|
|
|
142,960 |
|
|
|
|
|
|
|
|
|
|
|
117,578 |
|
|
|
|
|
| |
|
|
|
|
220,896 |
|
|
|
|
|
|
|
|
|
|
|
203,209 |
|
|
|
|
|
|
|
|
|
|
|
178,449 |
|
|
|
|
|
| |
|
|
|
|
128,465 |
|
|
|
|
|
|
|
|
|
|
|
111,052 |
|
|
|
|
|
|
|
|
|
|
|
103,518 |
|
|
|
|
|
| |
|
|
|
|
43,006 |
|
|
|
|
|
|
|
|
|
|
|
39,357 |
|
|
|
|
|
|
|
|
|
|
|
38,752 |
|
|
|
|
|
| |
|
|
|
|
85,459 |
|
|
|
|
|
|
|
|
|
|
|
71,695 |
|
|
|
|
|
|
|
|
|
|
|
64,766 |
|
|
|
|
|
| |
|
|
|
|
358 |
|
|
|
|
|
|
|
|
|
|
|
2,688 |
|
|
|
|
|
|
|
|
|
|
|
(8 |
) |
|
|
|
|
| |
|
|
|
$ |
85,101 |
|
|
|
|
|
|
|
|
|
|
$ |
69,007 |
|
|
|
|
|
|
|
|
|
|
$ |
64,774 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
$ |
1.24 |
|
|
|
|
|
|
|
|
|
|
$ |
1.01 |
|
|
|
|
|
|
|
|
|
|
$ |
0.95 |
|
|
|
|
|
| |
|
|
|
$ |
1.24 |
|
|
|
|
|
|
|
|
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
|
$ |
0.94 |
|
|
|
|
|
Quarterly Earnings Trends – Unaudited
(In thousands, except share and per share data)
| |
|
Three Months Ended
|
|
| |
|
March 31,
2012
|
|
|
Dec. 31,
2011
|
|
|
Sept. 30,
2011
|
|
|
June 30,
2011
|
|
|
March 31, 2011
|
|
|
Interest revenue
|
|
$ |
198,208 |
|
|
$ |
198,040 |
|
|
$ |
205,749 |
|
|
$ |
205,717 |
|
|
$ |
202,089 |
|
|
Interest expense
|
|
|
24,639 |
|
|
|
26,570 |
|
|
|
30,365 |
|
|
|
31,716 |
|
|
|
31,450 |
|
|
Net interest revenue
|
|
|
173,569 |
|
|
|
171,470 |
|
|
|
175,384 |
|
|
|
174,001 |
|
|
|
170,639 |
|
|
Provision for (reduction of) allowance for credit losses
|
|
|
– |
|
|
|
(15,000 |
) |
|
|
– |
|
|
|
2,700 |
|
|
|
6,250 |
|
|
Net interest revenue after provision for credit losses
|
|
|
173,569 |
|
|
|
186,470 |
|
|
|
175,384 |
|
|
|
171,301 |
|
|
|
164,389 |
|
|
Other operating revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage and trading revenue
|
|
|
31,111 |
|
|
|
25,629 |
|
|
|
29,451 |
|
|
|
23,725 |
|
|
|
25,376 |
|
|
Transaction card revenue
|
|
|
25,430 |
|
|
|
25,960 |
|
|
|
31,328 |
|
|
|
31,024 |
|
|
|
28,445 |
|
|
Trust fees and commissions
|
|
|
18,438 |
|
|
|
17,865 |
|
|
|
17,853 |
|
|
|
19,150 |
|
|
|
18,422 |
|
|
Deposit service charges and fees
|
|
|
24,379 |
|
|
|
24,921 |
|
|
|
24,614 |
|
|
|
23,857 |
|
|
|
22,480 |
|
|
Mortgage banking revenue
|
|
|
33,078 |
|
|
|
25,438 |
|
|
|
29,493 |
|
|
|
19,356 |
|
|
|
17,356 |
|
|
Bank-owned life insurance
|
|
|
2,871 |
|
|
|
2,784 |
|
|
|
2,761 |
|
|
|
2,872 |
|
|
|
2,863 |
|
|
Other revenue
|
|
|
9,027 |
|
|
|
9,189 |
|
|
|
10,535 |
|
|
|
7,842 |
|
|
|
8,332 |
|
|
Total fees and commissions
|
|
|
144,334 |
|
|
|
131,786 |
|
|
|
146,035 |
|
|
|
127,826 |
|
|
|
123,274 |
|
|
Gain (loss) on other assets, net
|
|
|
(356 |
) |
|
|
1,897 |
|
|
|
712 |
|
|
|
3,344 |
|
|
|
(68 |
) |
|
Gain (loss) on derivatives, net
|
|
|
(2,473 |
) |
|
|
(174 |
) |
|
|
4,048 |
|
|
|
1,225 |
|
|
|
(2,413 |
) |
|
Gain (loss) on mortgage trading securities
|
|
|
(1,733 |
) |
|
|
222 |
|
|
|
17,788 |
|
|
|
9,921 |
|
|
|
(3,518 |
) |
|
Gain on available for sale securities, net
|
|
|
4,331 |
|
|
|
7,080 |
|
|
|
16,694 |
|
|
|
5,468 |
|
|
|
4,902 |
|
|
Total other-than-temporary impairment losses
|
|
|
(505 |
) |
|
|
(1,037 |
) |
|
|
(9,467 |
) |
|
|
(74 |
) |
|
|
– |
|
|
Portion of loss reclassified from other comprehensive income
|
|
|
(3,217 |
) |
|
|
(1,747 |
) |
|
|
(1,833 |
) |
|
|
(4,750 |
) |
|
|
(4,599 |
) |
|
Net impairment losses recognized in earnings
|
|
|
(3,722 |
) |
|
|
(2,784 |
) |
|
|
(11,300 |
) |
|
|
(4,824 |
) |
|
|
(4,599 |
) |
|
Total other operating revenue
|
|
|
140,381 |
|
|
|
138,027 |
|
|
|
173,977 |
|
|
|
142,960 |
|
|
|
117,578 |
|
|
Other operating expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel
|
|
|
114,769 |
|
|
|
121,129 |
|
|
|
103,260 |
|
|
|
105,603 |
|
|
|
99,994 |
|
|
Business promotion
|
|
|
4,388 |
|
|
|
5,868 |
|
|
|
5,280 |
|
|
|
4,777 |
|
|
|
4,624 |
|
|
Contribution to BOKF Charitable Foundation
|
|
|
– |
|
|
|
– |
|
|
|
4,000 |
|
|
|
– |
|
|
|
– |
|
|
Professional fees and services
|
|
|
7,599 |
|
|
|
7,664 |
|
|
|
7,418 |
|
|
|
6,258 |
|
|
|
7,458 |
|
|
Net occupancy and equipment
|
|
|
16,023 |
|
|
|
16,826 |
|
|
|
16,627 |
|
|
|
15,554 |
|
|
|
15,604 |
|
|
Insurance
|
|
|
3,866 |
|
|
|
3,636 |
|
|
|
2,206 |
|
|
|
4,771 |
|
|
|
6,186 |
|
|
Data processing and communications
|
|
|
22,144 |
|
|
|
26,599 |
|
|
|
24,446 |
|
|
|
24,428 |
|
|
|
22,503 |
|
|
Printing, postage and supplies
|
|
|
3,311 |
|
|
|
3,637 |
|
|
|
3,780 |
|
|
|
3,586 |
|
|
|
3,082 |
|
|
Net losses and operating expenses of repossessed assets
|
|
|
2,245 |
|
|
|
6,180 |
|
|
|
5,939 |
|
|
|
5,859 |
|
|
|
6,015 |
|
|
Amortization of intangible assets
|
|
|
575 |
|
|
|
895 |
|
|
|
896 |
|
|
|
896 |
|
|
|
896 |
|
|
Mortgage banking costs
|
|
|
7,573 |
|
|
|
10,154 |
|
|
|
9,349 |
|
|
|
8,968 |
|
|
|
6,471 |
|
|
Change in fair value of mortgage servicing rights
|
|
|
(7,127 |
) |
|
|
5,261 |
|
|
|
24,822 |
|
|
|
13,493 |
|
|
|
(3,129 |
) |
|
Other expense
|
|
|
9,871 |
|
|
|
11,348 |
|
|
|
12,873 |
|
|
|
9,016 |
|
|
|
8,745 |
|
|
Total other operating expense
|
|
|
185,237 |
|
|
|
219,197 |
|
|
|
220,896 |
|
|
|
203,209 |
|
|
|
178,449 |
|
|
Income before taxes
|
|
|
128,713 |
|
|
|
105,300 |
|
|
|
128,465 |
|
|
|
111,052 |
|
|
|
103,518 |
|
|
Federal and state income tax
|
|
|
45,520 |
|
|
|
37,396 |
|
|
|
43,006 |
|
|
|
39,357 |
|
|
|
38,752 |
|
|
Net income before non-controlling interest
|
|
|
83,193 |
|
|
|
67,904 |
|
|
|
85,459 |
|
|
|
71,695 |
|
|
|
64,766 |
|
|
Net income (loss) attributable to non-controlling interest
|
|
|
(422 |
) |
|
|
911 |
|
|
|
358 |
|
|
|
2,688 |
|
|
|
(8 |
) |
|
Net income attributable to BOK Financial Corp.
|
|
$ |
83,615 |
|
|
$ |
66,993 |
|
|
$ |
85,101 |
|
|
$ |
69,007 |
|
|
$ |
64,774 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
1.22 |
|
|
$ |
0.98 |
|
|
$ |
1.24 |
|
|
$ |
1.01 |
|
|
$ |
0.95 |
|
|
Diluted
|
|
$ |
1.22 |
|
|
$ |
0.98 |
|
|
$ |
1.24 |
|
|
$ |
1.00 |
|
|
$ |
0.94 |
|
|
Average shares used in computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
67,665,300 |
|
|
|
67,526,009 |
|
|
|
67,827,591 |
|
|
|
67,898,483 |
|
|
|
67,901,722 |
|
|
Diluted
|
|
|
67,941,895 |
|
|
|
67,774,721 |
|
|
|
68,037,419 |
|
|
|
68,169,485 |
|
|
|
68,176,527 |
|
PART II. Other Information
Item 1. Legal Proceedings
See discussion of legal proceedings at Note 7 to the Consolidated Financial Statements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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 March 31, 2012.
|
Period
|
|
Total Number of Shares Purchased2
|
|
|
Average Price Paid per Share
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1
|
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans
|
|
|
Jaunary 1, 2012 to January 31, 2012
|
|
|
58,025 |
|
|
$ |
57.96 |
|
|
|
– |
|
|
|
653,902 |
|
|
February 1, 2012 to February 29, 2012
|
|
|
246,614 |
|
|
$ |
53.35 |
|
|
|
246,000 |
|
|
|
407,902 |
|
|
March 1, 2012 to March 31, 2012
|
|
|
100,257 |
|
|
$ |
53.47 |
|
|
|
99,300 |
|
|
|
308,602 |
|
|
Total
|
|
|
404,896 |
|
|
|
|
|
|
|
345,300 |
|
|
|
|
|
|
1
|
On April 26, 2005, the Company’s board of directors authorizing the Company to repurchase up to two million shares of the Company’s common stock. As of March 31, 2012, the Company had repurchased 1,691,398 shares under this plan.
|
|
2
|
The Company routinely repurchases mature shares from employees to cover the exercise price and taxes in connection with employee stock option exercises.
|
Item 6. Exhibits
|
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32
|
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
|
|
|
101*
|
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 Consolidated Financial Statements
|
Items 1A, 3, 4 and 5 are not applicable and have been omitted.
|
*
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
|
Signatures
Pursuant to the requirements 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
(Registrant)
Date: May 8, 2012
/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
- 109 -