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Fitch Affirms BOK Financial Corp's Ratings at 'A'/'F1' Following Mid-Tier Regional Bank Peer Review
February 5, 2014 / 9:42 PM / in 4 years

Fitch Affirms BOK Financial Corp's Ratings at 'A'/'F1' Following Mid-Tier Regional Bank Peer Review

(The following statement was released by the rating agency) NEW YORK, February 05 (Fitch) Fitch Ratings has affirmed BOK Financial Corporation's (BOKF) ratings at 'A'/'F1'. The Rating Outlook remains stable. The Stable Outlook incorporates the expectation that asset quality and capital levels will remain strong. A full list of rating actions follows at the end of this press release. KEY RATING DRIVERS - IDRS, VRs, AND SENIOR DEBT The affirmation of yhe ratings and Outlook reflect the company's stable asset quality, ample capital and liquidity, and steady earnings performance. The bank has consistently reported above peer average credit quality while building a sound capital base. BOKF's liquidity and funding profile is also strong relative to peers with total loans to deposits amongst the lowest in the group at 63%. BOKF's earnings are one of the strongest and most diverse of the mid-tier group. Return on average assets and return on average equity for the most recent year totalled 1.16% and 10.59%, respectively, with nearly half of revenue recurring from fee generating business. BOKF has continued to build capital levels while improving asset quality. Leverage and total risk based capital ratios grew to 10.05% and 15.52% at YE 2013, up from 9.01% and 15.13%, respectively, at YE 2012. The bank's tangible common equity and tier 1 common ratios were also above peer averages at 9.90% and 13.55%, respectively, for YE 2013. Nonperforming assets (not guaranteed by U.S. government agencies) totalled 1.23% of outstanding loans and repossessed assets at YE 2013. Net charge offs to average assets have remained under 1% since 2009 and totalled to just 2 bps in 2013. BOKF's sound credit quality and ample capital levels are offset partially by the bank's outsized exposure to the energy sector in Oklahoma and Texas. Fitch notes that BOKF has maintained relatively strong credit quality throughout the economic cycle with historic nonperforming and net charge off ratios remaining below Mid-Tier regional peer averages. BOKF's ratings incorporate the expectation of continued asset quality stability and ample capital reserves. RATING SENSITIVITIES - IDRS, VRs, AND SENIOR DEBT BOKF is currently one of the highest rated banks within the Fitch's Mid-Tier Bank Peer Group. As such, upward rating potential is limited. Conversely, negative rating action may ensue should BOKF's asset quality regress toward or below peer averages. Although BOKF does not have an outsized commercial loan portfolio in the energy industry, most of the economies the bank serves are considered to be highly correlated to the energy industry. Therefore, Fitch notes that structural stress within the energy industry could negatively pressure BOKF's asset quality, earnings or capital and result in a review of BOKF's ratings and Outlook. KEY RATING DRIVERS - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Subordinated debt and other hybrid capital issued by BOKF and its subsidiaries are all notched down from BOKF's VR of 'a' in accordance with Fitch's assessment of each instrument's respective non-performance and relative Loss Severity risk profiles, which vary considerably. RATING SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID SECURITIES BOKF's subordinated debt is sensitive to changes in BOKF's VR. Rating sensitivities for the VR are listed above. SUBSIDIARY AND AFFILIATED COMPANY KEY RATING DRIVERS BOKF, N.A. is a wholly owned subsidiary of BOKF. BOKF, N.A.'s ratings are aligned with BOKF reflecting Fitch's view that the bank subsidiary is core to the franchise. SUBSIDIARY AND AFFILIATED COMPANY RATING SENSITIVITIES BOKF, N.A.'s ratings are sensitive to changes to BOKF's VR or any changes to Fitch's view of structural subordination between bank subsidiary and holding company. Rating sensitivities for the VR are listed above. KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR BOKF's Support Rating and Support Rating Floor of '5' and 'NF' reflect Fitch's view that the company is unlikely to procure extraordinary support should such support be needed. KEY RATING SENSITIVITIES- SUPPORT RATING AND SUPPORT RATING FLOOR BOKF's Support Rating and Support Rating Floor are sensitive to Fitch's assumption around capacity to procure extraordinary support in case of need. Fitch reviewed BOKF's ratings as part of the mid-tier regional bank review. The 19 banks in today's review include: Associated Banc-Corp (ASBC), BOK Financial Corp (BOKF), Cathay General Bancorp (CATY), City National Bancorp (CYN),Cullen/Frost Bankers, Inc (CFR), East West Bancorp, Inc. (EWBC), First Horizon National Corp (FHN), First National of Nebraska, Inc. (FNNI), First Niagara Financial Group, Inc. (FNFG), First Republic Bank (FRC), First Merit (FMER), Fulton Financial Corp (FULT), Hancock Holding Company (HBHC), People's United Financial, Inc. (PBCT), Synovus Financial Corp (SNV), TCF Financial Corp (TCB), UMB Financial Corporation (UMB), Webster Financial Corp (WBS), Wintrust (WTFC). Fitch has affirmed the following ratings with a Stable Outlook: BOK Financial Corporation --Long-term IDR at 'A'; Outlook Stable; --Short-term IDR at 'F1'; --Viability Rating at 'a'; --Support Floor at 'NF'; --Support at '5'. BOKF, N.A. --Long-term IDR at 'A'; Outlook Stable; --Subordinated debt at 'A-'; --Long-term deposit at 'A+' --Short-term IDR at 'F1'; --Short-term deposit at 'F1'; --Viability Rating at 'a'; --Support Floor at 'NF'; --Support at '5'. Contact: Primary Analyst Ryan Doyle Director +1-212-908-9162 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Secondary Analyst Doriana Gamboa Director +1-212-908-0865 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Committee Chairperson Christopher Wolfe Managing Director +1-212-908-0771 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --2014 Outlook: U.S. Banks (Nov. 21, 2013) --U.S. Banks: Liquidity and Deposit Funding (Aug. 8, 2013) --U.S. Banks: Interest Rate Risks (What Happens When Rates Rise) (June 18, 2013) --U.S. Bank Mergers and Acquisitions -- When Will The Catalysts Kick In? (July 11, 2013) --Global Trading and Universal Banks - Periodic Review (Dec. 12, 2013) --Fitch Fundamentals Index - U.S.; Index Trend Analysis 4Q13 (Jan. 15, 2014) --Risk Radar Global - Q313 (Sept. 5, 2013) --Fitch Global Corporate Rating Activity – Third Quarter 2013 (Dec. 5, 2013) --U.S. Banking Quarterly Comment: 4Q13 (Earnings Continue to Tick Up, but Challenges Remain) (Jan. 27, 2014) --Global Financial Institutions Rating Criteria (Jan. 31, 2014) --Assessing and Rating Bank Subordinated and Hybrid Securities (Jan. 31, 2014) Applicable Criteria and Related Research: U.S. Banks: Interest Rate Risks (What Happens When Rates Rise) here U.S. Bank Mergers and Acquisitions -- When Will The Catalysts Kick In? here Global Trading and Universal Banks - Periodic Review here Fitch Fundamentals Index here Risk Radar Global - Q313 here Fitch Global Corporate Rating Activity —Third-Quarter 2013 here U.S. Banking Quarterly Comment: 4Q13 (Earnings Continue to Tick Up, but Challenges Remain) here Global Financial Institutions Rating Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities Criteria here 2014 Outlook: U.S. Banks here U.S. Banks: Liquidity and Deposit Funding here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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