CORRESP 1 filename1.htm Document


August 30, 2016


Via EDGAR

Mr. Gus Rodriguez
Accounting Branch Chief
US Securities and Exchange Commission
Division of Corporate Finance
Office of Financial Services
100 F Street, NE
Washington, DC 20549

RE:     BOK Financial Corporation
Form 10-K for Fiscal Year Ended December 31, 2015
Filed February 29, 2016
Form 10-Q for Fiscal Quarter Ended June 30, 2016
Filed July 29, 2016
File No. 001-37811

Dear Mr. Rodriguez:

This letter is submitted by BOK Financial Corporation ("the Company" or "BOK Financial) in response to the comments received from the Securities and Exchange Commission staff letter dated August 17, 2016 regarding the Company's filings referenced above. Additions to our previous disclosures are underlined to facilitate your review. We appreciate the staff's efforts to assist us in our compliance with applicable disclosure requirements and to enhance disclosure in our filings.

Form 10-Q for Fiscal Quarter Ended June 30, 2016

Note (4) Loans and Allowances for Credit Losses

Credit Quality Indicators, page 78

1.
We note the disclosed increases in the levels of classified and criticized asset levels during the first six months of 2016. In order to give the reader an improved understanding of the trends within your lending portfolio and the potential impacts of increases to specific loan categories, please consider expanding your disclosures, in future filings, to disclose the levels of "special mention," "substandard" and "doubtful" loans by loan type for each period presented. Further, indicate, in future filings, whether all criticized loans identified in the risk grading process are considered potential problem loans and whether all such loans are included within your current and potentially revised disclosures.

The Company will revise future filings to breakout special mention loans from our performing loan category and clarify that our potential problem loan category consists of accruing substandard loans. In addition, we will clarify in Management's Discussion and Analysis that only accruing substandard loans meet the definition of potential problem loans. We have considered separate disclosure of loans classified as "doubtful" and do not believe that disclosure provides any meaningful information. All loans classified as doubtful are included in the nonaccrual disclosure. They are considered impaired and subject to specific allowance measurement as disclosed in our accounting policy footnote.

We propose the following revisions to our Credit Quality Indicators disclosure in Note 4 to the consolidated financial statements:

Loans are considered to be performing if they are in compliance with the original terms of the agreement and currently exhibit no factors that cause management to have doubts about the borrowers' ability to remain 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. Performing loans also include past due residential mortgage loans that are guaranteed by agencies of the U.S. government that continue to accrue interest based on criteria of the guarantors' programs. Other loans especially mentioned are in compliance with the original terms of the agreement, but may have a potential weakness that deserves management’s close attention, consistent with regulatory guidelines. 





The risk grading process identified certain criticized loans as potential problem loans. These loans that have a well-defined weakness (e.g. inadequate debt service coverage or liquidity or marginal capitalization; repayment may depend on collateral or other risk mitigation) that may jeopardize liquidation of the debt and represent a greater risk due to deterioration in the financial condition of the borrower. This is consistent with the regulatory guideline for “substandard.” Because the borrowers are still performing in accordance with the original terms of the loan agreements, these loans were not placed in nonaccruing status. Known information does, however cause concern as to the borrowers' continued compliance with current repayment terms.

Nonaccruing loans represent loans for which full collection of principal and interest 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 June 30, 2016 by the risk grade categories (in thousands): 
 
 
Internally Risk Graded
 
Non-Graded
 
 
 
 
Performing
 
Other Loans Especially Mentioned
 
Accruing Substandard
 
Nonaccrual
 
Performing
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
2,031,955

 
$
197,531

 
$
421,025

 
$
168,145

 
$
—

 
$
—

 
$
2,818,656

Services
 
2,805,307

 
6,253

 
9,916

 
9,388

 
—

 
—

 
2,830,864

Wholesale/retail
 
1,478,966

 
24,595

 
26,624

 
2,772

 
—

 
—

 
1,532,957

Manufacturing
 
556,741

 
18,757

 
19,612

 
293

 
—

 
—

 
595,403

Healthcare
 
2,011,934

 
29,420

 
8,917

 
875

 
—

 
—

 
2,051,146

Other commercial and industrial
 
478,169

 
24,053

 
—

 
453

 
24,673

 
63

 
527,411

Total commercial
 
9,363,072

 
300,609

 
486,094

 
181,926

 
24,673

 
63

 
10,356,437

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Residential construction and land development
 
152,343

 
—

 
972

 
4,261

 
—

 
—

 
157,576

Retail
 
787,779

 
5,962

 
413

 
1,265

 
—

 
—

 
795,419

Office
 
767,296

 
906

 
304

 
606

 
—

 
—

 
769,112

Multifamily
 
781,058

 
—

 
6,077

 
65

 
—

 
—

 
787,200

Industrial
 
645,510

 
—

 
—

 
76

 
—

 
—

 
645,586

Other commercial real estate
 
425,558

 
—

 
8

 
1,507

 
—

 
—

 
427,073

Total commercial real estate
 
3,559,544

 
6,868

 
7,774

 
7,780

 
—

 
—

 
3,581,966

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 
 
 

 
 

 
 

 
 

 
 

Permanent mortgage
 
194,962

 
1,197

 
3,406

 
2,955

 
742,214

 
24,273

 
969,007

Permanent mortgages guaranteed by U.S. government agencies
 
—

 
—

 
—

 
—

 
172,991

 
19,741

 
192,732

Home equity
 
—

 
—

 
—

 
—

 
709,092

 
10,092

 
719,184

Total residential mortgage
 
194,962

 
1,197

 
3,406

 
2,955

 
1,624,297

 
54,106

 
1,880,923

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
496,534

 
—

 
3,590

 
116

 
86,945

 
238

 
587,423

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
13,614,112

 
$
308,674

 
$
500,864

 
$
192,777

 
$
1,735,915

 
$
54,407

 
$
16,406,749






Nonaccrual and Past Due Loans, page 95

2.
Please revise your disclosures, in future filings, to breakout the "30-89" day category into the "30-59" days and "60-89" day categories.

The Company will provide a breakout of the "30-89" day category into the "30-59" days and "60-89" day categories in future filings. Following is our proposed disclosure as of June 30, 2016:

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2016 is as follows (in thousands):
 
 
 
 
Past Due
 
 
 
 
 
 
Current
 
30 to 59
Days
 
60 to 89 Days
 
90 Days
or More
 
Nonaccrual
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
$
2,647,678

 
$
—

 
$
—

 
$
2,833

 
$
168,145

 
$
2,818,656

Services
 
2,817,217

 
494

 
3,765

 
—

 
9,388

 
2,830,864

Wholesale/retail
 
1,530,110

 
75

 
—

 
—

 
2,772

 
1,532,957

Manufacturing
 
595,110

 
—

 
—

 
—

 
293

 
595,403

Healthcare
 
2,050,271

 
—

 
—

 
—

 
875

 
2,051,146

Other commercial and industrial
 
526,691

 
76

 
82

 
46

 
516

 
527,411

Total commercial
 
10,167,077

 
645

 
3,847

 
2,879

 
181,989

 
10,356,437

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 

 
 

 
 
 
 

 
 

 
 

Residential construction and land development
 
153,315

 
—

 
—

 
—

 
4,261

 
157,576

Retail
 
794,154

 
—

 
—

 
—

 
1,265

 
795,419

Office
 
768,506

 
—

 
—

 
—

 
606

 
769,112

Multifamily
 
784,826

 
2,309

 
—

 
—

 
65

 
787,200

Industrial
 
645,510

 
—

 
—

 
—

 
76

 
645,586

Other real estate loans
 
425,566

 
—

 
—

 
—

 
1,507

 
427,073

Total commercial real estate
 
3,571,877

 
2,309

 
—

 
—

 
7,780

 
3,581,966

 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage:
 
 

 
 

 
 
 
 

 
 

 
 

Permanent mortgage
 
935,857

 
5,798

 
124

 
—

 
27,228

 
969,007

Permanent mortgages guaranteed by U.S. government agencies
 
42,019

 
15,349

 
11,869

 
103,754

 
19,741

 
192,732

Home equity
 
707,024

 
1,889

 
159

 
20

 
10,092

 
719,184

Total residential mortgage
 
1,684,900

 
23,036

 
12,152

 
103,774

 
57,061

 
1,880,923

 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
586,611

 
400

 
58

 
—

 
354

 
587,423

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
16,010,465

 
$
26,390

 
$
16,057

 
$
106,653

 
$
247,184

 
$
16,406,749






We acknowledge that:
•
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
•
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
•
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Sincerely,

BOK Financial Corporation

/s/ Steven E. Nell
Steven E. Nell
Executive Vice President and
Chief Financial Officer

cc:
John Morrow, BOK Financial Corporation
Tamara Wagman, Dorwart Lawyers
Ernst & Young, LLP