BOK Financial Corporation Reports Quarterly Earnings of $62 million or $0.91 Per Share in the First Quarter

Tulsa, Oklahoma, UNITED STATES


TULSA, Okla., April 27, 2022 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASD: BOKF) -

CEO Commentary

Stacy Kymes, president and chief executive officer, stated, “BOK Financial has an enviable mix of business segments that are core to our strategy focused on long-term, sustainable success. Over a long period of time the company has benefited from the diversity of these segments. The overall results this quarter did not meet our expectations as the markets experienced extraordinary interest rate volatility. The markets had to digest high levels of inflation, changing sentiment around the magnitude of interest rate hikes, and the first meaningful geopolitical conflict in Europe since WWII. Several of our market segments experienced impacts as the markets appeared to reset. As we move forward, we believe we are well positioned for this new environment. We have strong momentum growing our loan portfolio with both solid actual results and strong loan pipelines. We have been intentional about positioning our balance sheet to benefit from rising interest rates and should the Federal Reserve move to hike more aggressively, we will see expanding margins and revenue. Credit quality has long been a differentiator for BOK Financial and we are well-positioned should the credit markets begin to show weakness, though there is no sign of that today.”

First Quarter 2022 Financial Highlights

  • Net income was $62.5 million or $0.91 per diluted share for the first quarter of 2022 and $117.3 million or $1.71 per diluted share for the fourth quarter of 2021. Interest rate volatility driven by expectations of future Federal Reserve actions to address rising inflation as well as the deepening conflict in Ukraine combined to significantly decrease our trading revenue, mortgage loan production volumes, and the net fair value of our mortgage servicing rights valuation.
  • Net interest revenue totaled $268.4 million, a decrease of $8.7 million. Net interest margin was 2.44 percent compared to 2.52 percent in the fourth quarter of 2021.
  • Fees and commissions revenue decreased $48.7 million to $97.6 million. Brokerage and trading revenue decreased $41.9 million while mortgage banking revenue decreased $4.6 million.
  • The net cost of the changes in fair value of mortgage servicing rights and related economic hedges was $8.4 million for the first quarter of 2022 compared to a net benefit of $4.7 million for the fourth quarter of 2021.
  • Operating expense decreased $21.9 million to $277.6 million. Personnel expense decreased $15.2 million, primarily due to lower incentive compensation expense, partially offset by a seasonal increase in employee benefits expense. Non-personnel expense decreased $6.6 million. The fourth quarter of 2021 included a $5.0 million charitable donation to the BOKF Foundation that did not recur in the first quarter of 2022.
  • Period-end loans increased $469 million to $20.7 billion at March 31, 2022. Commercial loans increased $377 million and commercial real estate loans increased $270 million while period-end Paycheck Protection Program (“PPP”) loans decreased $139 million to $137 million. Average loans were $20.5 billion, a $221 million increase compared to the fourth quarter of 2021.
  • No provision for expected credit losses was necessary for the first quarter of 2022. A $17.0 million negative provision for expected credit losses was recorded in the prior quarter. The impact of continued strength in commodity prices and improved credit quality metrics was offset by higher required provision due to loan growth and changes in our economic outlook. The combined allowance for credit losses totaled $283 million or 1.37 percent of outstanding loans at March 31, 2022. The combined allowance for credit losses was $289 million or 1.43 percent of outstanding loans at December 31, 2021.
  • Average deposits increased $560 million to $40.4 billion while period-end deposits decreased $1.8 billion to $39.4 billion due to expected seasonal activity from 2021 year-end balances. Average interest-bearing deposits increased $317 million and average demand deposits grew $243 million.
  • The company’s common equity Tier 1 capital ratio was 11.30 percent at March 31, 2022. In addition, the company’s Tier 1 capital ratio was 11.31 percent, total capital ratio was 12.25 percent, and leverage ratio was 8.47 percent at March 31, 2022. At December 31, 2021, the company’s common equity Tier 1 capital ratio was 12.24 percent, Tier 1 capital ratio was 12.25 percent, total capital ratio was 13.29 percent, and leverage ratio was 8.55 percent.
  • The company repurchased 475,877 shares of common stock at an average price of $101.02 a share in the first quarter of 2022.

First Quarter 2022 Segment Highlights

  • Commercial Banking contributed $82.3 million to net income in the first quarter of 2022, a decrease of $1.2 million compared to the fourth quarter of 2021. Combined net interest revenue and fee revenue decreased $4.2 million, primarily due to two fewer days in the quarter and a reduction in loan fees. Net loans charged-off increased $7.3 million. Personnel expense decreased $8.3 million, primarily due to reduced incentive compensation costs. Corporate expense allocations increased $3.3 million, largely related to project resources. Average Commercial Banking loans increased $362 million or 2 percent to $16.7 billion. Average Commercial Banking deposits were consistent with prior quarter.
  • Consumer Banking had a net loss of $7.3 million in the first quarter of 2022 compared to prior quarter net income of $6.8 million. Combined net interest revenue and fee revenue decreased $8.1 million. Net interest revenue decreased $3.2 million, mainly due to a 14 basis point reduction in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue decreased $5.0 million due to lower mortgage production volumes combined with narrowing margins. The net cost of the changes in fair value of mortgage servicing rights and related economic hedges was $8.4 million for the first quarter of 2022 compared to a net benefit of $4.7 million for the fourth quarter of 2021. Interest rate volatility affected the effectiveness of our mortgage servicing rights hedging strategy. Operating expense decreased $3.2 million, primarily due to decreased professional fees and services expense. Average Consumer Banking loans decreased $32.9 million or 2 percent to $1.7 billion. Average Consumer Banking deposits increased $64.2 million or 1 percent to $8.7 billion in the first quarter of 2022.
  • Wealth Management had a net loss of $4.4 million in the first quarter of 2022 compared to net income of $21.7 million in the fourth quarter of 2021. Our diverse set of investment-focused businesses including fixed income trading, private wealth, institutional wealth, financial risk management, and multiple fiduciary businesses combined to provide total net interest and fee revenues of $80.8 million, a decrease of $33.7 million compared to the fourth quarter of 2021. Total revenue from trading activities decreased $43.3 million primarily due to reduced demand for U.S. government agency residential mortgage-backed securities. Investment banking and insurance brokerage revenue increased over the previous quarter. Fiduciary and asset management revenue and retail brokerage revenue were relatively consistent with the prior quarter. Decreases in revenue related to assets under management or administration were offset by improved money market fund fees. Operating expense was consistent with the prior quarter. Average Wealth Management loans increased $53.5 million or 3 percent to $2.1 billion. Average Wealth Management deposits increased $425 million or 5 percent to $9.6 billion. Deposit balances began to decline in the second half of March 2022. Assets under management were $101.1 billion, a decrease of $3.8 billion compared to the prior quarter.

Net Interest Revenue

Average earning assets decreased $744 million compared to the fourth quarter of 2021. Average trading securities decreased $723 million. Average loan balances increased $221 million, largely due to growth in commercial and commercial real estate loans, partially offset by a decrease in PPP loans. Average interest bearing cash and cash equivalents were reduced by $158 million. Available for sale securities decreased $155 million. Funds purchased and repurchase agreements decreased $889 million, while other borrowings increased $268 million. Net interest revenue was $268.4 million for the first quarter of 2022 compared to $277.1 million for the fourth quarter of 2021. Net interest margin was 2.44 percent compared to 2.52 percent in the prior quarter. PPP loan fees of $3.9 million were recognized in the first quarter of 2022 compared to $7.7 million in the previous quarter. PPP loan fees remaining to be recognized were $3.5 million as of March 31, 2022.

The yield on average earning assets was 2.58 percent, an 8 basis point decrease from the prior quarter. The loan portfolio yield decreased 13 basis points to 3.57 percent. Yields related to loan fees decreased 17 points from the prior quarter while core loan yields increased 4 basis points. The yield on trading securities was down 18 basis points to 1.71 percent, largely due to a decrease in the weighted average coupon rate. The yield on the available for sale securities portfolio increased 5 basis points to 1.77 percent.

Funding costs were 0.21 percent, consistent with the prior quarter. The cost of interest-bearing deposits was unchanged at 0.12 percent. The cost of funds purchased and repurchase agreements increased 22 basis points to 0.95 percent while the cost of other borrowings decreased 11 basis points to 0.38 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 7 basis points for the first quarter of 2022, consistent with the prior quarter.

Operating Revenue

Brokerage and trading revenue decreased $41.9 million to a net loss of $27.1 million. Beginning in the second quarter of 2021, to meet customer demand in response to expected tightening by the Federal Reserve and increasing rates, we increased the trading volume of short duration, low coupon U.S. government agency residential mortgage-backed securities. These actions led to record trading revenues in the third quarter of 2021. As inflation pressure increased in the first quarter of 2022 and the conflict in Ukraine intensified, fixed income markets were disrupted reducing the demand for these securities. As of March 31, 2022, we have reduced our exposure to these securities by approximately 70 percent compared to December 31, 2021. Customer hedging revenue increased $1.8 million, primarily related to interest rate contracts, partially offset by a decline in energy contracts. Investment banking revenue decreased $3.9 million, largely due to the timing of syndication activity. Fees and commissions revenue totaled $97.6 million for the first quarter of 2022, a $48.7 million decrease compared to the fourth quarter of 2021.

Mortgage banking revenue decreased $4.6 million compared to the prior quarter due to lower loan production volume combined with narrowing margins. Interest rate volatility and continued inventory shortages have resulted in fewer refinance opportunities and heightened competitive pricing pressure. Mortgage loan production volume decreased $93 million to $408 million. Production revenue as a percentage of production volume, which includes unrealized gains and losses on our mortgage commitment pipeline and related hedges, decreased 76 basis points to 1.24 percent.

Other gains and losses, net decreased $7.7 million compared to the prior quarter, primarily related to the change in fair value of the rabbi trust investments, which is offset by a decrease in related deferred compensation expense.

Operating Expense

Personnel expense decreased $15.2 million. Cash-based incentive compensation expense decreased $11.2 million from elevated levels in the fourth quarter of 2021. Deferred compensation expense, which is largely offset by a decrease in the value of related rabbi trust investments, decreased $4.2 million. Share-based incentive compensation expense decreased $3.8 million resulting from changes in vesting assumptions. Employee benefits expense increased $3.2 million due to a seasonal increase in payroll taxes and retirement plan costs, partially offset by a decrease in employee healthcare costs. Total operating expense was $277.6 million for the first quarter of 2022, a decrease of $21.9 million compared to the fourth quarter of 2021.

Non-personnel expense decreased $6.6 million compared to the fourth quarter of 2021. The fourth quarter of 2021 included a $5.0 million charitable donation to the BOKF Foundation that did not recur in the first quarter of 2022. Decreases in professional fees and services expense and other expense were partially offset by an increase in net occupancy and equipment expense.

Loans, Deposits and Capital

Loans

Outstanding loans were $20.7 billion at March 31, 2022, a $469 million increase compared to December 31, 2021 due to growth in both commercial and commercial real estate loans.

Outstanding commercial loan balances increased $377 million compared to December 31, 2021, led by growth in energy and general business loans. Although the primary source of repayment of our commercial loan portfolio is the ongoing cash flow from operations of the customer’s business, loans are generally governed by a borrowing base and secured by the customer’s assets.

Energy loan balances increased $191 million to $3.2 billion or 15 percent of total loans. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 72 percent of committed production loans are secured by properties primarily producing oil. The remaining 28 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $3.0 billion at March 31, 2022, an increase of $23 million over December 31, 2021.

General business loans increased $175 million to $2.9 billion or 14 percent of total loans. General business loans include $1.5 billion of wholesale/retail loans and $1.4 billion of loans from other commercial industries.

Healthcare sector loan balances increased $27 million compared to the prior quarter, totaling $3.4 billion or 17 percent of total loans. Our healthcare sector loans primarily consist of $2.7 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally we loan to borrowers with a portfolio of multiple facilities, which serves to help diversify risks specific to a single facility.

Services sector loan balances decreased $16 million to $3.4 billion or 16 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, foundations and not-for-profit organizations, educational services and specialty trade contractors.

Commercial real estate loan balances increased $270 million compared to December 31, 2021 and represent 20 percent of total loans at March 31, 2022. Loans secured by industrial facilities increased $146 million to $912 million. Multifamily residential loans increased $81 million to $867 million at March 31, 2022. Loans secured by office facilities increased $57 million to $1.1 billion.

PPP loan balances decreased $139 million to $137 million or less than 1 percent of total loans. PPP loan balances have decreased $2.0 billion since their peak in the third quarter of 2020.

Loans to individuals decreased $39 million and represent 17 percent of total loans at March 31, 2022. Personal loans decreased $8.4 million while residential mortgage loans guaranteed by U.S. government agencies decreased $32 million, largely due to the re-sale of loans previously sold into GNMA mortgage pools that the company repurchased when certain defined delinquency criteria were met. Many loans repurchased during the pandemic have since been cured and meet the re-sale qualifications. The balance of these loans peaked in the second quarter of 2021 at $421 million and since have been reduced by a total of $98 million.

Deposits

Period-end deposits totaled $39.4 billion at March 31, 2022, a $1.8 billion decrease compared to December 31, 2021 due to expected seasonal activity. Interest-bearing transaction account balances decreased by $1.6 billion. Period-end Commercial Banking deposits decreased $909 million and Wealth Management deposits reduced $1.2 billion while Consumer Banking deposits grew $208 million. Average deposits were $40.4 billion at March 31, 2022, a $560 million increase compared to December 31, 2021. Interest-bearing transaction account balances increased $437 million and demand deposit account balances increased $243 million.

Capital

The company’s common equity Tier 1 capital ratio was 11.30 percent at March 31, 2022. In addition, the company’s Tier 1 capital ratio was 11.31 percent, total capital ratio was 12.25 percent, and leverage ratio was 8.47 percent at March 31, 2022. We have elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period. This election added 11 basis points to the company’s common equity tier 1 capital ratio at March 31. At December 31, 2021, the company’s common equity Tier 1 capital ratio was 12.24 percent, Tier 1 capital ratio was 12.25 percent, total capital ratio was 13.29 percent, and leverage ratio was 8.55 percent.

The company’s tangible common equity ratio, a non-GAAP measure, was 8.13 percent at March 31, 2022 and 8.61 percent at December 31, 2021. This decrease is primarily due to unrealized losses related to available for sale securities. The tangible common equity ratio is primarily based on total shareholders’ equity, which includes unrealized gains and losses on available for sale securities. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

The company repurchased 475,877 shares of common stock at an average price of $101.02 a share in the first quarter of 2022. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

No provision for credit losses was necessary for the first quarter of 2022. Changes in our reasonable and supportable forecasts of macroeconomic variables resulted in a $7.3 million decrease in the allowance for credit losses related to lending activities. Continued strength in commodity prices was partially offset by changes in our economic outlook. Changes in loan portfolio characteristics, primarily related to growth in loan balances resulted in a $6.6 million increase in the allowance for credit losses related to lending activities. Continued improvements in credit quality metrics were offset by net charge-offs and changes in specific impairment and payment profile characteristics. Expected credit losses on assets carried at amortized cost are recognized over their projected lives based on models that measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Our models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product (“GDP”) growth, civilian unemployment rate and West Texas Intermediate (“WTI”) oil prices on a probability weighted basis.

Our base case reasonable and supportable forecast assumes inflation peaks in the second quarter of 2022 and begins to normalize thereafter. We expect the Russian-Ukraine conflict remains isolated and conditions improve by mid-year 2022. We expect a 2.2 percent increase in GDP over the next twelve months as labor force participants will continue to re-enter the job market to help meet record job openings. This increase in employment helps maintain household income above its pre-pandemic trend and supports consumer spending and GDP growth consistent with pre-pandemic levels. Our forecasted civilian unemployment rate is 3.9 percent for the second quarter of 2022, improving to 3.8 percent by the first quarter of 2023. Our base case also assumes the Federal Reserve begins balance sheet reduction in mid-year 2022 and increases federal funds rates at each meeting through March 2023, which results in a target range of 2.75 percent to 3.00 percent. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of March 2022, averaging $94.98 per barrel over the next twelve months.

The probability weighting of our base case reasonable and supportable forecast decreased to 60 percent in the first quarter of 2022 compared to 65 percent in the fourth quarter of 2021 as the level of uncertainty in economic forecasts increased. Our downside case, probability weighted at 30 percent, assumes the Russia-Ukraine conflict persists through 2022, but does remain isolated. Additional surges in commodity prices and exacerbated supply chain dislocations create higher levels of inflation forcing the Federal Reserve to adopt a more aggressive monetary policy to combat the inflationary environment. This results in a federal funds target range of 4.00 percent to 4.25 percent. This pushes the United States into a recession with a contraction in economic activity and a sharp increase in the unemployment rate. Real GDP is expected to contract 1.3 percent over the next four quarters in this scenario. WTI oil prices are projected to average $109.67 per barrel over the next twelve months in this scenario.

At March 31, 2022, the allowance for loan losses totaled $246 million or 1.19 percent of outstanding loans and 230 percent of nonaccruing loans excluding residential mortgage loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $283 million or 1.37 percent of outstanding loans and 264 percent of nonaccruing loans at March 31, 2022.

At December 31, 2021, the allowance for loan losses was $256 million or 1.27 percent of outstanding loans and 213 percent of nonaccruing loans excluding loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $289 million or 1.43 percent of outstanding loans and 241 percent of nonaccruing loans.

Nonperforming assets totaled $353 million or 1.70 percent of outstanding loans and repossessed assets at March 31, 2022, compared to $369 million or 1.83 percent at December 31, 2021. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $132 million or 0.65 percent of outstanding loans and repossessed assets at March 31, 2022, compared to $145 million or 0.74 percent at December 31, 2021.

Nonaccruing loans were $124 million or 0.60 percent of outstanding loans at March 31, 2022. Nonaccruing commercial loans totaled $60 million or 0.47 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $16 million or 0.39 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $48 million or 1.35 percent of outstanding loans to individuals.

Nonaccruing loans decreased $9.8 million compared to December 31, 2021 primarily related to nonaccruing general business and energy loans. New nonaccruing loans identified in the first quarter totaled $12 million, offset by $14 million in payments received and $7.8 million in gross charge-offs.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers’ ability to continue to perform, totaled $169 million at March 31, 2022, down from $222 million at December 31. Potential problem energy loans decreased $37 million. Potential problem commercial real estate loans decreased $8.8 million and potential problem services loans decreased $6.1 million.

Net charge-offs were $6.0 million or 0.12 percent of average loans on an annualized basis for the first quarter of 2022. Net charge-offs were 0.14 percent of average loans over the last four quarters. Net recoveries were $714 thousand or (0.01) percent of average loans on an annualized basis for the fourth quarter of 2021. Gross charge-offs were $7.8 million for the first quarter compared to $6.6 million for the previous quarter. Recoveries totaled $1.8 million for the first quarter of 2022 and $7.3 million for the fourth quarter of 2021.

Securities and Derivatives

The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities increased $141 million to $185 million at March 31, 2022 as hedges that were previously held as derivatives were settled into the fair value option securities portfolio. The fair value of the available for sale securities portfolio totaled $12.9 billion at March 31, 2022, a $263 million decrease compared to December 31, 2021. At March 31, 2022, the available for sale securities portfolio consisted primarily of $7.6 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.4 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At March 31, 2022, the available for sale securities portfolio had a net unrealized loss of $547 million compared to a net unrealized gain of $93 million at December 31, 2021.

The net fair values of derivative contracts, before consideration of cash margin, totaled $2.7 billion at March 31, 2022, a $1.6 billion increase compared to December 31, 2021. Energy contracts increased $1.3 billion driven by recent increases in oil and gas prices.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $8.4 million during the first quarter of 2022, including a $57.9 million decrease in the fair value of securities and derivative contracts held as an economic hedge, $49.1 million increase in the fair value of mortgage servicing rights, and $383 thousand of related net interest revenue.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, April 27, 2022 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-844-512-2921 and referencing conference ID # 13728424.

About BOK Financial Corporation

BOK Financial Corporation is a $47 billion regional financial services company headquartered in Tulsa, Oklahoma with $101 billion in assets under management and administration. The company’s stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation’s holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA’s holdings include TransFund, Cavanal Hill Investment Management, Inc. and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Wisconsin and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of March 31, 2022 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

This news release contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about BOK Financial Corporation, the financial services industry, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” “will,” “intends,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that acquisitions and growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These various forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in government, consumer or business responses to, and ability to treat or prevent further outbreak of the COVID-19 pandemic, changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial Corporation and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.


BALANCE SHEETS — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

 Mar. 31, 2022 Dec. 31, 2021
ASSETS   
Cash and due from banks$767,805  $712,067 
Interest-bearing cash and cash equivalents 599,976   2,125,343 
Trading securities 4,891,096   9,136,813 
Investment securities, net of allowance 183,824   210,444 
Available for sale securities 12,894,534   13,157,817 
Fair value option securities 185,003   43,770 
Restricted equity securities 77,389   83,113 
Residential mortgage loans held for sale 169,474   192,295 
Loans:   
Commercial 12,883,189   12,506,465 
Commercial real estate 4,100,956   3,831,325 
Paycheck protection program 137,365   276,341 
Loans to individuals 3,552,919   3,591,549 
Total loans 20,674,429   20,205,680 
Allowance for loan losses (246,473)  (256,421)
Loans, net of allowance 20,427,956   19,949,259 
Premises and equipment, net 574,786   574,148 
Receivables 238,694   223,021 
Goodwill 1,044,749   1,044,749 
Intangible assets, net 87,761   91,778 
Mortgage servicing rights 209,563   163,198 
Real estate and other repossessed assets, net 24,492   24,589 
Derivative contracts, net 2,680,207   1,097,297 
Cash surrender value of bank-owned life insurance 407,763   405,607 
Receivable on unsettled securities sales 229,404   56,172 
Other assets 1,132,031   957,951 
TOTAL ASSETS$46,826,507  $50,249,431 
    
LIABILITIES AND EQUITY   
Deposits:   
Demand$15,242,341  $15,344,423 
Interest-bearing transaction 21,689,829   23,268,573 
Savings 979,365   924,735 
Time 1,514,416   1,704,328 
Total deposits 39,425,951   41,242,059 
Funds purchased and repurchase agreements 1,068,329   2,326,449 
Other borrowings 36,246   36,753 
Subordinated debentures 131,209   131,226 
Accrued interest, taxes and expense 238,048   273,041 
Due on unsettled securities purchases 81,016   160,686 
Derivative contracts, net 557,834   275,625 
Other liabilities 434,350   435,221 
TOTAL LIABILITIES 41,972,983   44,881,060 
Shareholders’ equity:   
Capital, surplus and retained earnings 5,267,408   5,291,361 
Accumulated other comprehensive gain (loss) (417,826)  72,371 
TOTAL SHAREHOLDERS’ EQUITY 4,849,582   5,363,732 
Non-controlling interests 3,942   4,639 
TOTAL EQUITY 4,853,524   5,368,371 
TOTAL LIABILITIES AND EQUITY$46,826,507  $50,249,431 


AVERAGE BALANCE SHEETS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

 Three Months Ended
 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
ASSETS         
Interest-bearing cash and cash equivalents$1,050,409  $1,208,552  $682,788  $659,312  $711,047 
Trading securities 8,537,390   9,260,778   7,617,236   7,430,217   6,963,617 
Investment securities, net of allowance 195,198   213,188   218,117   221,401   237,313 
Available for sale securities 13,092,422   13,247,607   13,446,095   13,243,542   13,433,767 
Fair value option securities 75,539   46,458   56,307   64,864   104,662 
Restricted equity securities 164,484   137,874   245,485   208,692   189,921 
Residential mortgage loans held for sale 179,697   163,433   167,620   218,200   207,013 
Loans:         
Commercial 12,677,706   12,401,935   12,231,230   12,402,925   12,908,461 
Commercial real estate 4,059,148   3,838,336   4,218,190   4,395,848   4,547,945 
Paycheck protection program 210,110   404,261   792,728   1,668,047   1,741,534 
Loans to individuals 3,516,698   3,598,121   3,606,460   3,700,269   3,559,067 
Total loans 20,463,662   20,242,653   20,848,608   22,167,089   22,757,007 
Allowance for loan losses (254,191)  (271,794)  (306,125)  (345,269)  (382,734)
Loans, net of allowance 20,209,471   19,970,859   20,542,483   21,821,820   22,374,273 
Total earning assets 43,504,610   44,248,749   42,976,131   43,868,048   44,221,613 
Cash and due from banks 790,440   783,670   766,688   763,393   760,691 
Derivative contracts, net 2,126,282   1,441,869   1,501,736   1,022,137   873,712 
Cash surrender value of bank-owned life insurance 406,379   404,149   401,926   401,760   399,830 
Receivable on unsettled securities sales 375,616   585,901   632,539   716,700   735,482 
Other assets 3,357,747   3,139,718   3,220,129   3,424,884   3,319,305 
TOTAL ASSETS$50,561,074  $50,604,056  $49,499,149  $50,196,922  $50,310,633 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$15,062,282  $14,818,841  $13,670,656  $13,189,954  $12,312,629 
Interest-bearing transaction 22,763,479   22,326,401   21,435,736   21,491,145   21,433,406 
Savings 947,407   909,131   888,011   872,618   789,656 
Time 1,589,039   1,747,715   1,839,983   1,936,510   1,986,425 
Total deposits 40,362,207   39,802,088   37,834,386   37,490,227   36,522,116 
Funds purchased and repurchase agreements 2,004,466   2,893,128   1,448,800   1,790,490   2,830,378 
Other borrowings 1,148,440   880,837   2,546,083   3,608,369   3,392,346 
Subordinated debentures 131,228   131,224   214,654   276,034   276,015 
Derivative contracts, net 682,435   320,757   434,334   366,202   428,488 
Due on unsettled securities purchases 519,097   629,642   957,538   701,495   915,410 
Other liabilities 565,350   578,091   619,913   634,460   671,715 
TOTAL LIABILITIES 45,413,223   45,235,767   44,055,708   44,867,277   45,036,468 
Total equity 5,147,851   5,368,289   5,443,441   5,329,645   5,274,165 
TOTAL LIABILITIES AND EQUITY$50,561,074  $50,604,056  $49,499,149  $50,196,922  $50,310,633 


STATEMENTS OF EARNINGS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)

 Three Months Ended
 March 31,
  2022   2021 
    
Interest revenue$283,099  $298,239 
Interest expense 14,688   17,819 
Net interest revenue 268,411   280,420 
Provision for credit losses    (25,000)
Net interest revenue after provision for credit losses 268,411   305,420 
Other operating revenue:   
Brokerage and trading revenue (27,079)  20,782 
Transaction card revenue 24,216   22,430 
Fiduciary and asset management revenue 46,399   41,322 
Deposit service charges and fees 27,004   24,209 
Mortgage banking revenue 16,650   37,113 
Other revenue 10,445   16,296 
Total fees and commissions 97,635   162,152 
Other gains (losses), net (1,644)  10,121 
Loss on derivatives, net (46,981)  (27,650)
Loss on fair value option securities, net (11,201)  (1,910)
Change in fair value of mortgage servicing rights 49,110   33,874 
Gain on available for sale securities, net 937   467 
Total other operating revenue 87,856   177,054 
Other operating expense:   
Personnel 159,228   173,010 
Business promotion 6,513   2,154 
Charitable contributions to BOKF Foundation    4,000 
Professional fees and services 11,413   11,980 
Net occupancy and equipment 30,855   26,662 
Insurance 4,283   4,620 
Data processing and communications 39,836   37,467 
Printing, postage and supplies 3,689   3,440 
Amortization of intangible assets 3,964   4,807 
Mortgage banking costs 7,877   13,943 
Other expense 9,960   13,701 
Total other operating expense 277,618   295,784 
    
Net income before taxes 78,649   186,690 
Federal and state income taxes 16,197   42,382 
    
Net income 62,452   144,308 
Net loss attributable to non-controlling interests (36)  (1,752)
Net income attributable to BOK Financial Corporation shareholders$62,488  $146,060 
    
Average shares outstanding:   
Basic 67,812,400   69,137,375 
Diluted 67,813,851   69,141,710 
    
Net income per share:   
Basic$0.91  $2.10 
Diluted$0.91  $2.10 


FINANCIAL HIGHLIGHTS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)

 Three Months Ended
 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
Capital:         
Period-end shareholders’ equity$4,849,582  $5,363,732  $5,388,973  $5,332,977  $5,239,462 
Risk weighted assets$37,160,258  $34,575,277  $33,916,456  $33,824,860  $32,623,108 
Risk-based capital ratios:         
Common equity tier 1 11.30%  12.24%  12.26%  11.95%  12.14%
Tier 1 11.31%  12.25%  12.29%  12.01%  12.21%
Total capital 12.25%  13.29%  13.38%  13.61%  13.98%
Leverage ratio 8.47%  8.55%  8.77%  8.58%  8.42%
Tangible common equity ratio1 8.13%  8.61%  9.28%  9.09%  8.82%
          
Common stock:         
Book value per share$71.21  $78.34  $78.56  $77.20  $75.33 
Tangible book value per share$54.58  $61.74  $61.93  $60.50  $58.67 
Market value per share:         
High$119.59  $110.21  $92.97  $93.00  $98.95 
Low$93.76  $89.01  $77.20  $83.59  $67.57 
Cash dividends paid$36,093  $36,256  $35,725  $35,925  $36,038 
Dividend payout ratio 57.76%  30.90%  18.97%  21.59%  24.67%
Shares outstanding, net 68,104,043   68,467,772   68,596,764   69,078,458   69,557,873 
Stock buy-back program:         
Shares repurchased 475,877   128,522   478,141   492,994   260,000 
Amount$48,074  $13,426  $40,644  $43,797  $20,071 
Average price per share$101.02  $104.46  $85.00  $88.84  $77.20 
          
Performance ratios (quarter annualized):
Return on average assets 0.50%  0.92%  1.51%  1.33%  1.18%
Return on average equity 4.93%  8.68%  13.78%  12.58%  11.28%
Net interest margin 2.44%  2.52%  2.66%  2.60%  2.62%
Efficiency ratio 75.07%  70.14%  61.23%  64.20%  66.26%
          
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio:         
Total shareholders’ equity$4,849,582  $5,363,732  $5,388,973  $5,332,977  $5,239,462 
Less: Goodwill and intangible assets, net 1,132,510   1,136,527   1,140,935   1,153,785   1,158,676 
Tangible common equity$3,717,072  $4,227,205  $4,248,038  $4,179,192  $4,080,786 
          
Total assets$46,826,507  $50,249,431  $46,923,409  $47,154,375  $47,442,513 
Less: Goodwill and intangible assets, net 1,132,510   1,136,527   1,140,935   1,153,785   1,158,676 
Tangible assets$45,693,997  $49,112,904  $45,782,474  $46,000,590  $46,283,837 
          
Tangible common equity ratio 8.13%  8.61%  9.28%  9.09%  8.82%
          
          
          
Pre-provision net revenue:          
Net income before taxes$78,649  $152,025  $241,782  $215,603  $186,690 
Provision for expected credit losses    (17,000)  (23,000)  (35,000)  (25,000)
Net income (loss) attributable to non-controlling interests (36)  (129)  (601)  686   (1,752)
Pre-provision net revenue$78,685  $135,154  $219,383  $179,917  $163,442 
          
Other data:         
Tax equivalent interest$1,973  $2,104  $2,217  $2,320  $2,301 
Net unrealized gain (loss) on available for sale securities$(546,598) $93,381  $221,487  $297,267  $290,217 
          
Mortgage banking:         
Mortgage production revenue$5,055  $10,018  $15,403  $10,004  $25,287 
          
Mortgage loans funded for sale$418,866  $568,507  $652,336  $754,893  $843,053 
Add: current period-end outstanding commitments 160,260   171,412   239,066   276,154   387,465 
Less: prior period end outstanding commitments 171,412   239,066   276,154   387,465   380,637 
Total mortgage production volume$407,714  $500,853  $615,248  $643,582  $849,881 
          
Mortgage loan refinances to mortgage loans funded for sale 45%  51%  48%  48%  65%
Realized margin on funded mortgage loans 1.64%  2.34%  2.48%  2.75%  3.10%
Production revenue as a percentage of production volume 1.24%  2.00%  2.50%  1.55%  2.98%
          
Mortgage servicing revenue$11,595  $11,260  $10,883  $11,215  $11,826 
Average outstanding principal balance of mortgage loans serviced for others 16,155,329   15,930,480   14,899,306   15,065,173   15,723,231 
Average mortgage servicing revenue rates 0.29%  0.28%  0.29%  0.30%  0.31%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$(46,694) $(4,862) $(5,829) $18,764  $(27,705)
Gain (loss) on fair value option securities, net (11,201)  1,418   (120)  (1,627)  (1,910)
Gain (loss) on economic hedge of mortgage servicing rights (57,895)  (3,444)  (5,949)  17,137   (29,615)
Gain (loss) on changes in fair value of mortgage servicing rights 49,110   7,859   12,945   (13,041)  33,874 
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue (8,785)  4,415   6,996   4,096   4,259 
Net interest revenue on fair value option securities2 383   259   286   341   393 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$(8,402) $4,674  $7,282  $4,437  $4,652 

2         Actual interest earned on fair value option securities less internal transfer-priced cost of funds.


QUARTERLY EARNINGS TREND — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)

 Three Months Ended
 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
          
Interest revenue$283,099  $292,334  $293,463  $295,893  $298,239 
Interest expense 14,688   15,257   13,236   15,584   17,819 
Net interest revenue 268,411   277,077   280,227   280,309   280,420 
Provision for credit losses    (17,000)  (23,000)  (35,000)  (25,000)
Net interest revenue after provision for credit losses 268,411   294,077   303,227   315,309   305,420 
Other operating revenue:         
Brokerage and trading revenue (27,079)  14,869   47,930   29,408   20,782 
Transaction card revenue 24,216   24,998   24,632   24,923   22,430 
Fiduciary and asset management revenue 46,399   46,872   45,248   44,832   41,322 
Deposit service charges and fees 27,004   26,718   27,429   25,861   24,209 
Mortgage banking revenue 16,650   21,278   26,286   21,219   37,113 
Other revenue 10,445   11,586   18,896   23,172   16,296 
Total fees and commissions 97,635   146,321   190,421   169,415   162,152 
Other gains (losses), net (1,644)  6,081   31,091   16,449   10,121 
Gain (loss) on derivatives, net (46,981)  (4,788)  (5,760)  18,820   (27,650)
Gain (loss) on fair value option securities, net (11,201)  1,418   (120)  (1,627)  (1,910)
Change in fair value of mortgage servicing rights 49,110   7,859   12,945   (13,041)  33,874 
Gain on available for sale securities, net 937   552   1,255   1,430   467 
Total other operating revenue 87,856   157,443   229,832   191,446   177,054 
Other operating expense:         
Personnel 159,228   174,474   175,863   172,035   173,010 
Business promotion 6,513   6,452   4,939   2,744   2,154 
Charitable contributions to BOKF Foundation    5,000         4,000 
Professional fees and services 11,413   14,129   12,436   12,361   11,980 
Net occupancy and equipment 30,855   26,897   28,395   26,633   26,662 
Insurance 4,283   3,889   3,712   3,660   4,620 
Data processing and communications 39,836   39,358   38,371   36,418   37,467 
Printing, postage and supplies 3,689   2,935   3,558   4,285   3,440 
Amortization of intangible assets 3,964   4,438   4,488   4,578   4,807 
Mortgage banking costs 7,877   8,667   8,962   11,126   13,943 
Other expense 9,960   13,256   10,553   17,312   13,701 
Total other operating expense 277,618   299,495   291,277   291,152   295,784 
Net income before taxes 78,649   152,025   241,782   215,603   186,690 
Federal and state income taxes 16,197   34,836   54,061   48,496   42,382 
Net income 62,452   117,189   187,721   167,107   144,308 
Net income (loss) attributable to non-controlling interests (36)  (129)  (601)  686   (1,752)
Net income attributable to BOK Financial Corporation shareholders$62,488  $117,318  $188,322  $166,421  $146,060 
          
Average shares outstanding:         
Basic 67,812,400   68,069,160   68,359,125   68,815,666   69,137,375 
Diluted 67,813,851   68,070,910   68,360,871   68,817,442   69,141,710 
Net income per share:         
Basic$0.91  $1.71  $2.74  $2.40  $2.10 
Diluted$0.91  $1.71  $2.74  $2.40  $2.10 


LOANS TREND — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

  Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
Commercial:          
Healthcare $3,441,732 $3,414,940 $3,347,641 $3,381,261 $3,290,758
Services  3,351,495  3,367,193  3,323,422  3,389,756  3,421,948
Energy  3,197,667  3,006,884  2,814,059  3,011,331  3,202,488
General business  2,892,295  2,717,448  2,690,018  2,690,559  2,742,590
Total commercial  12,883,189  12,506,465  12,175,140  12,472,907  12,657,784
           
Commercial real estate:          
Office  1,097,516  1,040,963  1,030,755  1,073,346  1,094,060
Industrial  911,928  766,125  890,316  824,577  789,437
Multifamily  867,288  786,404  875,586  964,824  1,227,915
Retail  667,561  679,917  766,402  784,445  787,648
Residential construction and land development  120,506  120,016  118,416  128,939  119,079
Other commercial real estate  436,157  437,900  435,417  470,861  485,208
Total commercial real estate  4,100,956  3,831,325  4,116,892  4,246,992  4,503,347
           
Paycheck protection program  137,365  276,341  536,052  1,121,583  1,848,550
           
Loans to individuals:          
Residential mortgage  1,723,506  1,722,170  1,747,243  1,772,627  1,797,478
Residential mortgages guaranteed by U.S. government agencies  322,581  354,173  376,986  413,806  420,051
Personal  1,506,832  1,515,206  1,395,623  1,388,534  1,306,637
Total loans to individuals  3,552,919  3,591,549  3,519,852  3,574,967  3,524,166
           
Total $20,674,429 $20,205,680 $20,347,936 $21,416,449 $22,533,847


LOANS MANAGED BY PRINCIPAL MARKET AREA — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
          
Texas:         
Commercial$6,254,883 $6,068,700 $5,815,562 $5,690,901 $5,748,345
Commercial real estate 1,345,105  1,253,439  1,383,871  1,403,751  1,511,714
Paycheck protection program 31,242  81,654  115,623  342,933  537,899
Loans to individuals 957,320  942,982  901,121  885,619  848,194
Total Texas 8,588,550  8,346,775  8,216,177  8,323,204  8,646,152
          
Oklahoma:         
Commercial 2,883,663  2,633,014  2,590,887  2,840,560  2,975,477
Commercial real estate 552,310  546,021  552,184  552,673  597,840
Paycheck protection program 52,867  69,817  192,474  242,880  468,002
Loans to individuals 1,977,886  2,024,404  2,014,099  2,063,419  2,043,705
Total Oklahoma 5,466,726  5,273,256  5,349,644  5,699,532  6,085,024
          
Colorado:         
Commercial 1,977,773  1,936,149  1,874,613  1,904,182  1,910,826
Commercial real estate 480,740  470,937  526,653  656,521  777,786
Paycheck protection program 28,584  82,781  140,470  299,712  436,540
Loans to individuals 236,125  256,533  249,298  262,796  264,759
Total Colorado 2,723,222  2,746,400  2,791,034  3,123,211  3,389,911
          
Arizona:         
Commercial 1,074,551  1,130,798  1,194,801  1,239,270  1,207,089
Commercial real estate 719,970  674,309  734,174  705,497  667,766
Paycheck protection program 11,644  21,594  42,815  104,946  208,481
Loans to individuals 190,746  186,528  182,506  178,481  179,031
Total Arizona 1,996,911  2,013,229  2,154,296  2,228,194  2,262,367
          
Kansas/Missouri:         
Commercial 334,371  338,697  336,414  388,291  421,974
Commercial real estate 436,740  382,761  408,001  406,055  395,590
Paycheck protection program 2,595  4,718  6,920  41,954  60,741
Loans to individuals 121,247  110,889  100,920  103,092  104,954
Total Kansas/Missouri 894,953  837,065  852,255  939,392  983,259
          
New Mexico:         
Commercial 262,533  306,964  287,695  304,804  307,395
Commercial real estate 504,632  442,128  437,302  437,996  448,298
Paycheck protection program 9,713  13,510  31,444  86,716  124,059
Loans to individuals 63,299  63,930  66,651  68,177  70,491
Total New Mexico 840,177  826,532  823,092  897,693  950,243
          
Arkansas:         
Commercial 95,415  92,143  75,168  104,899  86,678
Commercial real estate 61,459  61,730  74,707  84,499  104,353
Paycheck protection program 720  2,267  6,306  2,442  12,828
Loans to individuals 6,296  6,283  5,257  13,383  13,032
Total Arkansas 163,890  162,423  161,438  205,223  216,891
          
TOTAL BOK FINANCIAL$20,674,429 $20,205,680 $20,347,936 $21,416,449 $22,533,847

Loans attributed to a principal market may not always represent the location of the borrower or the collateral.


DEPOSITS BY PRINCIPAL MARKET AREA — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
Oklahoma:         
Demand$5,205,806 $5,433,405 $5,080,162 $4,985,542 $4,823,436
Interest-bearing:         
Transaction 11,410,709  12,689,367  11,692,679  12,065,844  12,828,070
Savings 558,634  521,439  510,906  500,344  487,862
Time 817,744  978,822  1,039,866  1,139,980  1,197,517
Total interest-bearing 12,787,087  14,189,628  13,243,451  13,706,168  14,513,449
Total Oklahoma 17,992,893  19,623,033  18,323,613  18,691,710  19,336,885
          
Texas:         
Demand 4,552,001  4,552,983  3,987,503  3,752,790  3,592,969
Interest-bearing:         
Transaction 4,963,118  5,345,461  4,985,465  4,335,113  4,257,234
Savings 182,536  178,458  165,043  160,805  154,406
Time 329,931  337,559  337,389  346,577  368,086
Total interest-bearing 5,475,585  5,861,478  5,487,897  4,842,495  4,779,726
Total Texas 10,027,586  10,414,461  9,475,400  8,595,285  8,372,695
          
Colorado:         
Demand 2,673,352  2,526,855  2,158,596  1,991,343  2,115,354
Interest-bearing:         
Transaction 2,387,304  2,334,371  2,337,354  2,159,819  2,100,135
Savings 81,762  78,636  79,873  73,990  73,446
Time 165,401  174,351  184,002  193,787  204,973
Total interest-bearing 2,634,467  2,587,358  2,601,229  2,427,596  2,378,554
Total Colorado 5,307,819  5,114,213  4,759,825  4,418,939  4,493,908
          
New Mexico:         
Demand 1,271,264  1,196,057  1,222,895  1,197,412  1,131,713
Interest-bearing:         
Transaction 888,257  858,394  837,630  723,757  736,923
Savings 115,457  107,963  107,615  105,837  103,591
Time 156,140  163,871  168,879  174,665  181,863
Total interest-bearing 1,159,854  1,130,228  1,114,124  1,004,259  1,022,377
Total New Mexico 2,431,118  2,326,285  2,337,019  2,201,671  2,154,090
          
Arizona:         
Demand 947,775  934,282  1,110,884  943,511  915,439
Interest-bearing:         
Transaction 810,896  834,491  784,614  820,901  835,795
Savings 18,122  16,182  16,468  13,496  13,235
Time 27,259  31,274  30,862  30,012  30,997
Total interest-bearing 856,277  881,947  831,944  864,409  880,027
Total Arizona 1,804,052  1,816,229  1,942,828  1,807,920  1,795,466
          
          
Kansas/Missouri:         
Demand 553,345  658,342  488,595  463,339  478,370
Interest-bearing:         
Transaction 1,107,525  1,086,946  965,757  978,160  991,510
Savings 19,589  18,844  17,303  17,539  18,686
Time 11,527  12,255  13,040  13,509  13,898
Total interest-bearing 1,138,641  1,118,045  996,100  1,009,208  1,024,094
Total Kansas/Missouri 1,691,986  1,776,387  1,484,695  1,472,547  1,502,464
          
Arkansas:         
Demand 38,798  42,499  41,594  46,472  45,889
Interest-bearing:         
Transaction 122,020  119,543  149,611  195,125  141,207
Savings 3,265  3,213  3,289  3,445  3,000
Time 6,414  6,196  6,677  6,819  7,022
Total interest-bearing 131,699  128,952  159,577  205,389  151,229
Total Arkansas 170,497  171,451  201,171  251,861  197,118
          
TOTAL BOK FINANCIAL$39,425,951 $41,242,059 $38,524,551 $37,439,933 $37,852,626


NET INTEREST MARGIN TREND — UNAUDITED
BOK FINANCIAL CORPORATION

 Three Months Ended
 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents0.18% 0.16% 0.14% 0.10% 0.10%
Trading securities1.71% 1.89% 2.04% 1.95% 2.06%
Investment securities, net of allowance5.07% 4.99% 5.02% 5.01% 4.88%
Available for sale securities1.77% 1.72% 1.80% 1.85% 1.84%
Fair value option securities2.81% 2.71% 2.62% 2.60% 1.95%
Restricted equity securities2.69% 2.98% 2.55% 3.36% 2.86%
Residential mortgage loans held for sale3.11% 3.06% 3.06% 2.91% 2.71%
Loans3.57% 3.70% 3.68% 3.54% 3.55%
Allowance for loan losses         
Loans, net of allowance3.61% 3.75% 3.73% 3.60% 3.62%
Total tax-equivalent yield on earning assets2.58% 2.66% 2.78% 2.75% 2.78%
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
Interest-bearing transaction0.10% 0.09% 0.09% 0.10% 0.12%
Savings0.03% 0.04% 0.04% 0.04% 0.04%
Time0.56% 0.53% 0.55% 0.58% 0.70%
Total interest-bearing deposits0.12% 0.12% 0.13% 0.14% 0.17%
Funds purchased and repurchase agreements0.95% 0.73% 0.20% 0.16% 0.19%
Other borrowings0.38% 0.49% 0.37% 0.34% 0.39%
Subordinated debt4.02% 4.02% 4.63% 4.87% 4.92%
Total cost of interest-bearing liabilities0.21% 0.21% 0.19% 0.21% 0.24%
Tax-equivalent net interest revenue spread2.37% 2.45% 2.59% 2.54% 2.54%
Effect of noninterest-bearing funding sources and other0.07% 0.07% 0.07% 0.06% 0.08%
Tax-equivalent net interest margin2.44% 2.52% 2.66% 2.60% 2.62%

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


CREDIT QUALITY INDICATORS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)

 Three Months Ended
 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021
Nonperforming assets:         
Nonaccruing loans:         
Commercial:         
Energy$24,976  $31,091  $45,500  $70,341  $101,800 
Services 16,535   17,170   25,714   29,913   28,033 
Healthcare 15,076   15,762   509   527   3,187 
General business 3,750   10,081   8,951   11,823   14,053 
Total commercial 60,337   74,104   80,674   112,604   147,073 
          
Commercial real estate 15,989   14,262   21,223   26,123   27,243 
          
Loans to individuals:         
Permanent mortgage 30,757   31,574   30,674   31,473   32,884 
Permanent mortgage guaranteed by U.S. government agencies 16,992   13,861   9,188   9,207   8,564 
Personal 171   258   188   229   255 
Total loans to individuals 47,920   45,693   40,050   40,909   41,703 
          
Total nonaccruing loans$124,246  $134,059  $141,947  $179,636  $216,019 
Accruing renegotiated loans guaranteed by U.S. government agencies 204,121   210,618   178,554   171,324   154,591 
Real estate and other repossessed assets 24,492   24,589   28,770   57,337   70,911 
Total nonperforming assets$352,859  $369,266  $349,271  $408,297  $441,521 
Total nonperforming assets excluding those guaranteed by U.S. government agencies$131,746  $144,787  $161,529  $227,766  $278,366 
          
Accruing loans 90 days past due1$307  $313  $223  $252  $395 
          
Gross charge-offs$7,805  $6,558  $9,584  $18,304  $16,905 
Recoveries (1,824)  (7,272)  (1,769)  (2,856)  (2,437)
Net charge-offs (recoveries)$5,981  $(714) $7,815  $15,448  $14,468 
          
Provision for loan losses$(3,967) $(20,973) $(27,395) $(25,064) $(21,770)
Provision for credit losses from off-balance sheet unfunded loan commitments 3,268   3,738   4,952   (8,590)  (4,044)
Provision for expected credit losses from mortgage banking activities 621   150   (534)  (1,222)  885 
Provision for credit losses related to held-to maturity (investment) securities portfolio 78   85   (23)  (124)  (71)
Total provision for credit losses$  $(17,000) $(23,000) $(35,000) $(25,000)
          
Allowance for loan losses to period end loans 1.19%  1.27%  1.36%  1.46%  1.56%
Allowance for loan losses to period end loans excluding PPP loans2 1.20%  1.29%  1.40%  1.54%  1.70%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans 1.37%  1.43%  1.50%  1.57%  1.71%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans2 1.38%  1.45%  1.54%  1.66%  1.86%
Nonperforming assets to period end loans and repossessed assets 1.70%  1.83%  1.71%  1.90%  1.95%
Net charge-offs (annualized) to average loans 0.12%  (0.01)%  0.15%  0.28%  0.25%
Net charge-offs (annualized) to average loans excluding PPP loans2 0.12%  (0.01)%  0.16%  0.30%  0.28%
Allowance for loan losses to nonaccruing loans1 229.80%  213.33%  208.41%  183.00%  169.87%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1 263.60%  240.77%  230.43%  197.25%  185.72%

1  Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
2  Metric meaningful due to the unique characteristics and short-term nature of the PPP loans.


SEGMENTS — UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)

  Three Months Ended 1Q22 vs 4Q21 1Q22 vs 1Q21
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021 $ change % change $ change % change
Commercial Banking              
Net interest revenue $137,011  $140,723 $130,005 $(3,712) (2.6)% $7,006  5.4%
Fees and commissions revenue  56,964   57,414  49,847  (450) (0.8)%  7,117  14.3%
Combined net interest and fee revenue  193,975   198,137  179,852  (4,162) (2.1)%  14,123  7.9%
Other operating expense  65,114   74,459  66,979  (9,345) (12.6)%  (1,865) (2.8)%
Corporate expense allocations  16,246   12,926  12,734  3,320  25.7%  3,512  27.6%
Net income  82,344   83,514  69,673  (1,170) (1.4)%  12,671  18.2%
               
Average assets  29,823,905   29,451,007  28,047,052  372,898  1.3%  1,776,853  6.3%
Average loans  16,696,428   16,334,695  17,522,520  361,733  2.2%  (826,092) (4.7)%
Average deposits  19,595,260   19,537,285  16,130,168  57,975  0.3%  3,465,092  21.5%
               
Consumer Banking              
Net interest revenue $27,207  $30,385 $20,974 $(3,178) (10.5)% $6,233  29.7%
Fees and commissions revenue  33,977   38,944  52,300  (4,967) (12.8)%  (18,323) (35.0)%
Combined net interest and fee revenue  61,184   69,329  73,274  (8,145) (11.7)%  (12,090) (16.5)%
Other operating expense  48,789   52,036  55,622  (3,247) (6.2)%  (6,833) (12.3)%
Corporate expense allocations  12,080   11,420  11,475  660  5.8%  605  5.3%
Net income (loss)  (7,317)  6,810  6,948  (14,127) (207.4)%  (14,265) (205.3)%
               
Average assets  10,273,890   10,186,797  9,755,539  87,093  0.9%  518,351  5.3%
Average loans  1,672,346   1,705,222  1,823,732  (32,876) (1.9)%  (151,386) (8.3)%
Average deposits  8,746,622   8,682,437  8,082,443  64,185  0.7%  664,179  8.2%
               
Wealth Management              
Net interest revenue $55,766  $58,229 $48,354 $(2,463) (4.2)% $7,412  15.3%
Fees and commissions revenue  25,023   56,275  65,684  (31,252) (55.5)%  (40,661) (61.9)%
Combined net interest and fee revenue  80,789   114,504  114,038  (33,715) (29.4)%  (33,249) (29.2)%
Other operating expense  74,495   74,947  78,565  (452) (0.6)%  (4,070) (5.2)%
Corporate expense allocations  12,062   9,971  9,887  2,091  21.0%  2,175  22.0%
Net income (loss)  (4,419)  21,700  19,382  (26,119) (120.4)%  (23,801) (122.8)%
               
Average assets  19,526,382   20,725,903  18,645,865  (1,199,521) (5.8)%  880,517  4.7%
Average loans  2,118,780   2,065,261  1,917,973  53,519  2.6%  200,807  10.5%
Average deposits  9,619,323   9,194,019  9,706,295  425,304  4.6%  (86,972) (0.9)%
Fiduciary assets  61,095,320   64,536,833  56,227,268  (3,441,513) (5.3)%  4,868,052  8.7%
Assets under management or administration  101,081,355   104,917,721  91,956,188  (3,836,366) (3.7)%  9,125,167  9.9%
 

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