(17) Reportable Segments

BOK Financial operates three principal lines of business: Commercial Banking, Consumer Banking and Wealth Management. Commercial Banking includes lending, treasury and cash management services and customer risk management products to small businesses, middle market and larger commercial customers. Commercial Banking also includes the TransFund EFT network. Consumer Banking includes retail lending and deposit services, lending and deposit services to small business customers served through the consumer branch network and all mortgage banking activities. Wealth Management provides fiduciary services, private bank services and investment advisory services in all markets. Wealth Management also underwrites state and municipal securities and engages in brokerage and trading activities.

In addition to its lines of business, BOK Financial has a Funds Management unit. The primary purpose of this unit is to manage overall liquidity needs and interest rate risk. Each line of business borrows funds from and provides funds to the Funds Management unit as needed to support their operations. Operating results for Funds Management and other include the effect of interest rate risk positions and risk management activities, securities gains and losses including impairment charges, the provision for credit losses in excess of net loans charged off, tax planning strategies and certain executive compensation costs that are not attributed to the lines of business.

BOK Financial allocates resources and evaluates performance of its lines of business after allocation of funds, actual net credit losses and capital costs. In addition, we measure the performance of our business lines after allocation of certain indirect expenses and taxes on statutory rates. The allocation for the prior comparable periods have been revised on a comparable basis.

The cost of funds borrowed from the Funds Management unit by the operating lines of business is transfer priced at rates that approximate market rates for funds with similar duration. Market rates are generally based on the applicable LIBOR or interest rate swap rates, adjusted for prepayment risk. This method of transfer-pricing funds that support assets of the operating lines of business tends to insulate them from interest rate risk.

The value of funds provided by the operating lines of business to the Funds Management unit is based on rates which approximate the wholesale market rates for funds with similar duration and re-pricing characteristics. Market rates are generally based on LIBOR or interest rate swap rates. The funds credit formula applied to deposit products with indeterminate maturities is established based on their re-pricing characteristics reflected in a combination of the short-term LIBOR rates and a moving average of an intermediate term swap rate, with an appropriate spread applied to both. Shorter duration products are weighted towards the short-term LIBOR rate and longer duration products are weighted towards intermediate swap rates. The expected duration ranges from 30 days for certain rate-sensitive deposits to five years.

Economic capital is assigned to the business units by a capital allocation model that reflects management's assessment of risk. This model assigns capital based upon credit, operating, interest rate and market risk inherent in our business lines and recognizes the diversification benefits among the units. The level of assigned economic capital is a combination of the risk taken by each business line, based on its actual exposures and calibrated to its own loss history where possible. Average invested capital includes economic capital and amounts we have invested in the lines of business.

Substantially all revenue is from domestic customers. No single external customer accounts for more than 10% of total revenue.

Net loans charged off and provision for credit losses represents net loans charged off as attributed to the lines of business and the provision for credit losses in excess of net charge-offs attributed to Funds Management and Other.

Reportable segments reconciliation to the Consolidated Financial Statements for the year ended December 31, 2015 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	439,727		$	84,848		$	24,770		$	154,009		$	703,354
Net interest revenue (expense) from internal sources	(50,678		)	29,824			21,524			(670		)	—
Net interest revenue	389,049			114,672			46,294			153,339			703,354
Provision for credit losses	(6,018		)	6,108			(891		)	34,801			34,000
Net interest revenue after provision for credit losses	395,067			108,564			47,185			118,538			669,354
Other operating revenue	177,522			216,772			250,942			21,617			666,853
Other operating expense	207,394			213,782			230,838			252,550			904,564
Net direct contribution	365,195			111,554			67,289			(112,395		)	431,643
Corporate expense allocations	35,680			74,868			39,654			(150,202		)	—
Net income before taxes	329,515			36,686			27,635			37,807			431,643
Federal and state income taxes	128,181			14,271			10,750			(13,818		)	139,384
Net income	201,334			22,415			16,885			51,625			292,259
Net income attributable to non-controlling interests	—			—			—			3,694			3,694
Net income attributable to BOK Financial Corp. shareholders	$	201,334		$	22,415		$	16,885		$	47,931		$	288,565

Average assets	$	13,342,585		$	6,713,444		$	4,689,850		$	5,828,876		$	30,574,755
Average invested capital	1,050,759			265,775			225,968			1,794,250			3,336,752

Performance measurements:
Return on average assets	1.51		%	0.33		%	0.41		%				0.94		%
Return on average invested capital	19.18		%	8.43		%	8.45		%				8.65		%
Efficiency ratio	36.51		%	62.54		%	77.05		%				65.34		%

Reportable segments reconciliation to the Consolidated Financial Statements for the year ended December 31, 2014 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	381,687		$	81,852		$	23,826		$	177,829		$	665,194
Net interest revenue (expense) from internal sources	(43,939		)	36,801			20,578			(13,440		)	—
Net interest revenue	337,748			118,653			44,404			164,389			665,194
Provision for credit losses	(7,447		)	5,477			213			1,757			—
Net interest revenue after provision for credit losses	345,195			113,176			44,191			162,632			665,194
Other operating revenue	169,704			200,815			239,045			12,394			621,958
Other operating expense	204,230			195,770			217,049			230,473			847,522
Net direct contribution	310,669			118,221			66,187			(55,447		)	439,630
Corporate expense allocations	41,585			63,006			31,465			(136,056		)	—
Net income before taxes	269,084			55,215			34,722			80,609			439,630
Federal and state income taxes	104,674			21,479			13,507			4,491			144,151
Net income	164,410			33,736			21,215			76,118			295,479
Net income attributable to non-controlling interests	—			—			—			3,044			3,044
Net income attributable to BOK Financial Corp. shareholders	$	164,410		$	33,736		$	21,215		$	73,074		$	292,435

Average assets	$	11,384,782		$	6,584,157		$	4,518,511		$	5,511,408		$	27,998,858
Average invested capital	946,383			277,404			215,089			1,737,197			3,176,073

Performance measurements:
Return on average assets	1.45		%	0.51		%	0.51		%				1.04		%
Return on average invested capital	17.40		%	12.16		%	10.77		%				9.21		%
Efficiency ratio	40.06		%	59.14		%	76.00		%				64.50		%

Reportable segments reconciliation to the Consolidated Financial Statements for the year ended December 31, 2013 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	363,961		$	85,813		$	25,478		$	199,225		$	674,477
Net interest revenue (expense) from internal sources	(51,592		)	39,628			20,061			(8,097		)	—
Net interest revenue	312,369			125,441			45,539			191,128			674,477
Provision for credit losses	(4,372		)	5,622			1,275			(30,425		)	(27,900		)
Net interest revenue after provision for credit losses	316,741			119,819			44,264			221,553			702,377
Other operating revenue	163,206			225,336			211,655			20,075			620,272
Other operating expense	192,629			188,745			198,197			261,049			840,620
Net direct contribution	287,318			156,410			57,722			(19,421		)	482,029
Corporate expense allocations	44,107			56,957			29,876			(130,940		)	—
Net income before taxes	243,211			99,453			27,846			111,519			482,029
Federal and state income taxes	94,609			38,687			10,832			18,970			163,098
Net income	148,602			60,766			17,014			92,549			318,931
Net income attributable to non-controlling interests	—			—			—			2,322			2,322
Net income attributable to BOK Financial Corp. shareholders	$	148,602		$	60,766		$	17,014		$	90,227		$	316,609

Average assets	$	10,386,502		$	6,520,498		$	4,556,132		$	5,917,962		$	27,381,094
Average invested capital	906,717			293,736			203,914			1,571,059			2,975,426

Performance measurements:
Return on average assets	1.43		%	0.93		%	0.40		%				1.16		%
Return on average invested capital	16.39		%	20.69		%	8.95		%				10.64		%
Efficiency ratio	40.74		%	53.22		%	76.49		%				64.60		%