BOK Financial Corporation Reports Annual Earnings of $618 million or $8.95 Per Share and Quarterly Earnings of $117 million or $1.71 Per Share in the Fourth Quarter

Tulsa, Oklahoma, UNITED STATES


TULSA, Okla., Jan. 19, 2022 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASD: BOKF) -

CEO Commentary

Stacy Kymes, president and chief executive officer, stated, “Our record earnings in 2021 are a testament to our diversified business model focused on revenue growth from long-term commitments and investments. It also reflects extraordinary dedication from our employees serving our clients in all areas of our business in a very difficult environment. While there were facets to our financial performance in 2021 that are non-recurring, the business activities that created those opportunistic gains are core to our franchise. Our diversified Wealth Management business achieved significant milestones this year, assets under management grew just over 14 percent, to over $100 billion, period end loan balances surpassed $2.1 billion, growing $250 million or 13 percent, while trust fees grew $11 million or 6 percent.”

Kymes continued, “Although our Commercial Lending segment experienced net payoffs this past year, the fourth quarter has been a bright spot as we’ve realized annualized growth above 10 percent in our Commercial and Industrial category. Also encouraging is that outstanding C&I loan commitments increased, with the resulting C&I utilization levels actually decreasing linked quarter. This further underscores the capacity we have for future loan growth. Although Commercial Real Estate payoffs continued in the fourth quarter, we expect these balances to grow in 2022 after the first quarter.”

Kymes added, “As I look forward, I am excited about BOK Financial's prospects for 2022. We believe we have turned the corner on loan growth, our overall asset quality is better than pre-pandemic, we have strong fundamental growth in assets under management in our Wealth Management business, and we are well positioned for a rising rate environment. Based on our history during the last rising rate cycle, we believe that we can deliver net interest revenue growth that will perform exceptionally well in the regional bank space.”

2021 Financial Highlights

  • Net income was $618.1 million or $8.95 per diluted share for the year ended December 31, 2021, and $435.0 million or $6.19 per diluted share for the year ended December 31, 2020. Improving economic conditions related to the COVID-19 pandemic and massive government stimulus drove a $100.0 million reversal in 2021 of the $222.6 million provision for credit losses recorded in 2020.
  • Net interest revenue totaled $1.1 billion, consistent with the prior year. Net interest margin was 2.60 percent compared to 2.83 percent for 2020. The full impact of the reduction of the federal funds rate by the Federal Reserve in 2020 was realized in 2021. The following reduction in other short-term market interest rates reduced the yield on floating-rate assets by more than the amount by which funding costs could be reduced, compressing the margin.
  • Fees and commissions revenue totaled $668.3 million, a decrease of $142.0 million. Brokerage and trading revenues decreased $108.8 million, largely due to a shift from fee revenue to net interest revenue. Mortgage banking revenue decreased $76.5 million due to a decrease in mortgage production volume combined with a reduction in production revenue as a percentage of production volume. Other revenue increased $18.3 million, largely due to higher revenue on repossessed oil and gas properties, which was largely offset by related operating expenses.
  • Other gains and losses, net increased $57.7 million to $63.7 million due to sales of an alternative investment and repossessed assets.
  • Operating expense increased $13.4 million to $1.2 billion. Personnel expense increased $6.9 million while non-personnel expense increased $6.5 million, including an increase of $10.8 million of operating expenses on repossessed assets.
  • Period-end loans decreased $2.8 billion to $20.2 billion at December 31, 2021. Period-end Paycheck Protection Program ("PPP") loans decreased $1.4 billion to $276.3 million while commercial real estate loans decreased $867 million and commercial loans decreased $571 million. Average loans were $21.5 billion, a $1.9 billion decrease compared to the prior year.
  • The combined allowance for credit losses totaled $289 million or 1.45 percent of outstanding loans, excluding PPP loans, at December 31, 2021. The combined allowance for credit losses was $426 million or 2.00 percent of outstanding loans, excluding PPP loans, at December 31, 2020.
  • Average deposits increased $5.2 billion to $37.9 billion and period-end deposits increased $5.1 billion to $41.2 billion as customers maintained higher deposit balances during this time of economic uncertainty. Average interest bearing deposits increased by $2.9 billion and average demand deposits grew by $2.3 billion.
  • Commercial Banking contributed $328.5 million to net income in 2021, an increase of $22.5 million compared to 2020. The sale of an alternative investment in the third quarter resulted in a $31.1 million pre-tax gain, net of non-controlling interest. Combined net interest revenue and fee revenue decreased $12.8 million, largely due to a reduction in outstanding loan balances and lower yields on deposits sold to our Funds Management unit. Production revenue from oil and gas properties increased $17.1 million, which was partially offset by an increase in related operating expenses. Revenue growth was supplemented by increases in syndication fees, transaction card revenue, and deposit service charges and fees. Personnel expense increased $9.1 million, primarily due to incentive compensation costs. Net loan charge-offs decreased $38.3 million. Average Commercial Banking loans decreased $1.9 billion due to purposeful deleveraging by our customers. Average Commercial Banking deposits grew 23 percent to $17.7 billion in 2021.
  • Consumer Banking contributed $27.6 million to net income in 2021, a decrease of $70.3 million compared to 2020. Combined net interest revenue and fee revenue decreased $115.7 million. Net interest revenue decreased $43.5 million, mainly due to lower yields on deposits sold to our Funds Management unit. Fees and commissions revenue decreased $72.2 million, largely due to reduced mortgage production volume and margin compression. Operating expense decreased $20.8 million, due to lower mortgage banking costs and incentive compensation expense. Average Consumer Banking deposits increased 11 percent to $8.4 billion in 2021.
  • Wealth Management contributed $113.6 million to net income in 2021, a decrease of $2.1 million compared to record earnings in 2020. Total wealth management revenue decreased $3.7 million. Revenue primarily from agency residential mortgage-backed securities trading activity decreased $10.8 million due to narrowing margins and a reduction in trading volumes. Fiduciary and asset management revenue increased $10.8 million. Growth in trust fees and managed account fees as a result of growth in assets under management and administration was partially offset by lower mutual fund fees and increased waivers. Operating expense decreased $5.3 million, primarily due to incentive compensation costs related to reduced trading activity. Average Wealth Management loans grew by 13 percent to $2.0 billion. Average Wealth Management deposits increased 9 percent to $9.4 billion in 2021, led by growth in interest-bearing transaction deposits.

Fourth Quarter 2021 Financial Highlights

  • Net income was $117.3 million or $1.71 per diluted share for the fourth quarter of 2021 and $188.3 million or $2.74 per diluted share for the third quarter of 2021.
  • Net interest revenue totaled $277.1 million, a decrease of $3.2 million. Net interest margin was 2.52 percent compared to 2.66 percent in the third quarter of 2021.
  • Operating revenue totaled $157.4 million, a decrease of $72.4 million. Brokerage and trading revenues decreased $33.1 million. Uncertainty in the markets led to reduced transaction activity and tighter margins compared to the elevated volumes in the third quarter. Lower mortgage loan production volume and lower margins also reduced mortgage banking revenue by $5.0 million. The prior quarter also included a $31.1 million pre-tax gain on the sale of an alternative investment.
  • Operating expense increased $8.2 million to $299.5 million. The fourth quarter of 2021 included a $5.0 million charitable donation to the BOKF Foundation. Increases in business promotion costs, professional fees, and other expenses were partially offset by lower personnel expense.
  • Period-end loans decreased $142 million to $20.2 billion at December 31, 2021. Period-end PPP loans decreased $260 million to $276 million. Excluding PPP loans, period-end loans grew $117 million with growth in commercial loans partially offset by paydowns in commercial real estate loans. Average loans were $20.2 billion, a $606 million decrease compared to the third quarter of 2021.
  • Continued strength in commodity prices coupled with an outlook for moderate growth in gross domestic product and the labor markets, improving credit quality metrics and lower loan balances resulted in a $17.0 million negative provision for expected credit losses in the fourth quarter of 2021. A $23.0 million negative provision for expected credit losses was recorded in the prior quarter. The combined allowance for credit losses totaled $289 million or 1.45 percent of outstanding loans, excluding PPP loans, at December 31, 2021. The combined allowance for credit losses was $306 million or 1.54 percent of outstanding loans, excluding PPP loans, at September 30, 2021.
  • Average deposits increased $2.0 billion to $39.8 billion and period-end deposits increased $2.7 billion to $41.2 billion, largely due to growth in commercial balances. Average demand deposits grew by $1.1 billion and average interest bearing deposits increased by $820 million.
  • The company's common equity Tier 1 capital ratio was 12.23 percent at December 31, 2021. In addition, the company's Tier 1 capital ratio was 12.24 percent, total capital ratio was 13.28 percent, and leverage ratio was 8.55 percent at December 31, 2021. At September 30, 2021, the company's common equity Tier 1 capital ratio was 12.26 percent, Tier 1 capital ratio was 12.29 percent, total capital ratio was 13.38 percent, and leverage ratio was 8.77 percent.
  • The company repurchased 128,522 shares of common stock at an average price of $104.46 a share in the fourth quarter of 2021.
  • Commercial Banking contributed $83.5 million to net income in the fourth quarter of 2021, a decrease of $19.2 million compared to the third quarter of 2021 as the prior quarter included a pre-tax gain of $31.1 million from the sale of an alternative investment. Combined net interest revenue and fee revenue increased $7.6 million, largely driven by increased deposit balances and improved spreads, and was partially offset by an increase in personnel expense. Average Commercial Banking loans decreased $254 million due to purposeful deleveraging by our customers. Average Commercial Banking deposits grew 9 percent to $19.5 billion in the fourth quarter of 2021.
  • Consumer Banking contributed $6.8 million to net income in the fourth quarter of 2021, a decrease of $5.6 million compared to the prior quarter. Combined net interest revenue and fee revenue decreased $2.3 million. Net interest revenue increased $3.2 million, mainly due to increased deposit balances and improved spreads. Fees and commissions revenue decreased $5.5 million due to normal seasonality in mortgage loan production volume and margin compression. Operating expense increased $2.6 million, due to increases in professional fees and other expenses. Average Consumer Banking deposits increased 2 percent to $8.7 billion in the fourth quarter of 2021.
  • Wealth Management contributed $21.7 million to net income in the fourth quarter of 2021, a decrease of $19.7 million compared to the prior quarter. 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 $114.5 million, a decrease of $38.7 million compared to the third quarter of 2021. Revenue, primarily from trading activity, decreased $39.1 million to $38.2 million. Uncertainty around tapering by the Federal Reserve combined with year-end balance sheet management and concerns over yield curve steepening, resulted in decreased transaction activity and tighter margins. Operating expense decreased $12.5 million, primarily due to incentive compensation costs related to reduced trading activity. Average Wealth Management deposits were consistent with the prior quarter. Assets under management were $104.9 billion, an increase of $6.1 billion compared to the prior quarter.

Net Interest Revenue

Net interest revenue was $277.1 million for the fourth quarter of 2021 compared to $280.2 million for the third quarter of 2021. Net interest margin was 2.52 percent compared to 2.66 percent in the prior quarter. PPP loan fees of $7.7 million were recognized in the fourth quarter of 2021 compared to $12.7 million in the previous quarter. PPP loan fees remaining to be recognized were $7.5 million.

Average earning assets increased $1.2 billion compared to the third quarter of 2021. Average loan balances decreased $606 million, largely due to paydowns of PPP and commercial real estate loans, partially offset by growth in commercial loans. Average trading securities increased by $1.6 billion. Average interest bearing cash and cash equivalents grew by $526 million. Available for sale securities decreased $198 million. Other borrowings decreased $1.7 billion while funds purchased and repurchase agreements increased $1.4 billion.

The yield on average earning assets was 2.62 percent, a 16 basis point decrease from the prior quarter. The yield on trading securities was down 35 basis points to 1.69 percent, largely due to a decrease in the weighted average coupon rate. The yield on the available for sale securities portfolio decreased 8 basis points to 1.72 percent. The loan portfolio yield increased 2 basis points to 3.70 percent. Excluding PPP loan fees, the loan portfolio yield increased 11 basis points, primarily due to the timing of loan fees.

Funding costs were 0.15 percent, down 4 basis points. The cost of interest-bearing deposits decreased 1 basis point to 0.12 percent. The cost of other borrowed funds decreased 11 basis points to 0.19 percent. The cost of subordinated debentures decreased 61 basis points due to the redemption of $150 million in the third quarter. The benefit to net interest margin from assets funded by non-interest liabilities was 5 basis points for the fourth quarter of 2021, compared to 7 basis points for the prior quarter.

Operating Revenue

Fees and commissions revenue totaled $146.3 million for the fourth quarter of 2021, a $44.1 million decrease compared to the third quarter of 2021. Brokerage and trading revenue decreased $33.1 million to $14.9 million. Uncertainty around tapering by the Federal Reserve combined with year-end balance sheet management and concerns over yield curve steepening, resulted in decreased transaction activity and tighter margins for trading activities in the market. These factors combined to decrease trading revenue by $37.3 million. Customer hedging revenue increased $2.2 million, primarily attributed to energy customers. Investment banking revenue increased $2.6 million, largely due to the timing and increase of syndication activity.

Mortgage banking revenue decreased $5.0 million compared to the prior quarter due to lower production volume combined with narrowing margins. Mortgage production volume decreased $114 million to $501 million due to normal seasonal decline and continued inventory constraints. Production revenue as a percentage of production volume, which includes unrealized gains and losses on our mortgage commitment pipeline and related hedges, decreased 50 basis points to 2.00 percent.

Other revenue decreased $7.3 million as a result of lower operating revenue from repossessed oil and gas assets due to the sale of a property, which was largely offset by a reduction of expenses on the same properties.

Other gains and losses, net decreased $25.0 million compared to the prior quarter. The third quarter of 2021 included a $31.1 million gain on the sale of an alternative investment, which was partially offset by a $5.2 million loss on the extinguishment of subordinated debentures and a $3.9 million loss on the sale of a repossessed oil and gas asset.

Operating Expense

Total operating expense was $299.5 million for the fourth quarter of 2021, an increase of $8.2 million compared to the third quarter of 2021.

Personnel expense decreased $1.4 million. Cash based incentive compensation decreased $8.8 million due to reduced trading volumes, and was partially offset by an increase of $5.9 million in share based incentive compensation resulting from changes in vesting assumptions. Employee benefits expense increased $1.1 million due to an increase in employee healthcare costs, partially offset by a seasonal decrease in retirement costs and payroll taxes.

Non-personnel expense increased $9.6 million over the third quarter of 2021. The fourth quarter of 2021 included a $5.0 million charitable donation to the BOKF Foundation as we continue to focus on the communities we serve and the extreme need created by the pandemic. Smaller increases in business promotion costs, professional fees and services expense, and other expense supplemented the overall rise in non-personnel expense.

Loans, Deposits and Capital

Loans

Outstanding loans were $20.2 billion at December 31, 2021, a $142 million decrease compared to September 30, 2021. A reduction in PPP and commercial real estate loan balances was partially offset by growth in commercial and personal loan balances.

Outstanding commercial loan balances increased $331 million compared to September 30, 2021, with growth in all categories led by energy. 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 $193 million to $3.0 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 67 percent of committed production loans are secured by properties primarily producing oil. The remaining 33 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $3.0 billion at December 31, 2021, an increase of $248 million over September 30, 2021.

Healthcare sector loan balances increased $67 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 loan balances increased $44 million to $3.4 billion or 17 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 decreased $286 million compared to September 30, 2021 and represent 19 percent of total loans at December 31, 2021, largely due to refinancing in the long term, non-recourse markets. Loans secured by industrial facilities decreased $124 million to $766 million. Multifamily residential loans decreased $89 million to $786 million at December 31, 2021. Loans secured by retail facilities decreased $86 million to $680 million.

PPP loan balances decreased $260 million to $276 million or 1 percent of total loans.

Loans to individuals increased $72 million and represent 18 percent of total loans at December 31, 2021. Personal loans increased $120 million while residential mortgage loans decreased $48 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.

Deposits

Period-end deposits totaled $41.2 billion at December 31, 2021, a $2.7 billion increase compared to September 30, 2021. Interest-bearing transaction account balances increased by $1.5 billion and demand deposit account balances grew by $1.3 billion. Average deposits were $39.8 billion at December 31, 2021, a $2.0 billion increase compared to September 30, 2021. Demand deposit account balances increased $1.1 billion primarily from deposits attributed to the Commercial Banking segment while interest-bearing deposits increased $820 million.

Capital

The company's common equity Tier 1 capital ratio was 12.23 percent at December 31, 2021. In addition, the company's Tier 1 capital ratio was 12.24 percent, total capital ratio was 13.28 percent, and leverage ratio was 8.55 percent at December 31, 2021. 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, which added 19 basis points to the company's common equity tier 1 capital ratio at December 31. At September 30, 2021, the company's common equity Tier 1 capital ratio was 12.26 percent, Tier 1 capital ratio was 12.29 percent, total capital ratio was 13.38 percent, and leverage ratio was 8.77 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.83 percent at December 31, 2021 and 9.28 percent at September 30, 2021. 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 128,522 shares of common stock at an average price of $104.46 a share in the fourth quarter of 2021. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

Expected credit losses on assets carried at amortized cost are recognized over their expected 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.

We recorded a $17.0 million negative provision for credit losses in the fourth quarter of 2021. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to continued strength in commodity prices and an outlook for moderate growth in GDP and labor markets resulted in a $12.6 million decrease in the allowance for credit losses related to lending activities. Changes in loan portfolio characteristics, primarily from net recoveries and changes in specific impairment, improving credit quality metrics and lower loan balances resulted in a $4.7 million decrease in the allowance for credit losses related to lending activities.

Our base case reasonable and supportable forecast assumes that the COVID-19 cases will increase due to the Omicron and Delta variants during the winter months in the U.S., though global virus immunity continues to be more widespread and vaccines prove to be effective against severe virus outcomes. Elevated consumer consumption and the need for inventory restocking is expected to result in GDP growth consistent with pre-pandemic levels. We expect a 2.9 percent increase in GDP over the next twelve months. We expect 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 prevents a sharp drop-off in spending. Our forecasted civilian unemployment rate is 4.0 percent for the first quarter of 2022, improving to 3.7 percent by the fourth quarter of 2022. Our base case also assumes the Federal Reserve completes the tapering of their bond purchases in March 2022 and one federal funds rate increase in 2022 with the target range ending the year at 0.25 percent to 0.50 percent. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of December 2021, averaging $68.75 per barrel over the next twelve months.

Our downside case assumes new COVID-19 variants continue to emerge and spread rapidly in areas of the country with lower vaccination rates as the U.S. enters the winter months. This results in a relatively mild recession with conditions beginning to improve in the summer of 2022.

The allowance for loan losses totaled $256 million or 1.27 percent of outstanding loans and 213 percent of nonaccruing loans at December 31, 2021, 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 $289 million or 1.43 percent of outstanding loans and 241 percent of nonaccruing loans at December 31, 2021. Excluding PPP loans, the allowance for loan losses was 1.29 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 1.45 percent.

At September 30, 2021, the allowance for loan losses was $277 million or 1.36 percent of outstanding loans and 208 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 $306 million or 1.50 percent of outstanding loans and 230 percent of nonaccruing loans.

Nonperforming assets totaled $369 million or 1.83 percent of outstanding loans and repossessed assets at December 31, 2021, compared to $349 million or 1.71 percent at September 30, 2021. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $145 million or 0.74 percent of outstanding loans and repossessed assets at December 31, 2021, compared to $162 million or 0.83 percent at September 30, 2021.

Nonaccruing loans were $134 million or 0.67 percent of outstanding loans, excluding PPP loans, at December 31, 2021. Nonaccruing commercial loans totaled $74 million or 0.59 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $14 million or 0.37 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $46 million or 1.27 percent of outstanding loans to individuals.

Nonaccruing loans decreased $7.9 million compared to September 30, 2021. A decrease in nonaccruing energy, services, and commercial real estate loans, was partially offset by an increase in nonaccruing healthcare sector loans. New nonaccruing loans identified in the fourth quarter totaled $28 million, offset by $32 million in payments received and $6.6 million in 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 $222 million at December 31, 2021, down significantly from $333 million at September 30, primarily due to a decrease in potential problem energy loans. Potential problem healthcare, services and general business loans also decreased compared to the prior quarter.

Net recoveries for the fourth quarter of 2021 were $714 thousand or 0.01 percent of average loans on an annualized basis for the fourth quarter of 2021, excluding PPP loans. Net charge-offs were 0.18 percent of average loans over the last four quarters. Net charge-offs were $7.8 million or 0.16 percent of average loans on an annualized basis for the third quarter of 2021, excluding PPP loans. Gross charge-offs were $6.6 million for the fourth quarter compared to $9.6 million for the previous quarter. Recoveries totaled $7.3 million for the fourth quarter of 2021 and $1.8 million for the third quarter of 2021.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $13.2 billion at December 31, 2021, a $184 million decrease compared to September 30, 2021. At December 31, 2021, the available for sale securities portfolio consisted primarily of $8.0 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.6 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2021, the available for sale securities portfolio had a net unrealized gain of $93 million compared to $221 million at September 30, 2021.

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 decreased $7.2 million to $44 million at December 31, 2021.

The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $4.7 million during the fourth quarter of 2021, including a $7.9 million increase in the fair value of mortgage servicing rights, a $3.4 million decrease in the fair value of securities and derivative contracts held as an economic hedge, and $259 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, January 19, 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 # 13725961.

About BOK Financial Corporation

BOK Financial Corporation is a $49 billion regional financial services company headquartered in Tulsa, Oklahoma with $105 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 December 31, 2021 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)

 Dec. 31, 2021 Sept. 30, 2021
ASSETS   
Cash and due from banks$712,067  $729,285 
Interest-bearing cash and cash equivalents 2,125,343   1,162,477 
Trading securities 9,136,813   5,554,040 
Investment securities, net of allowance 210,444   215,592 
Available for sale securities 13,157,817   13,342,113 
Fair value option securities 43,770   51,019 
Restricted equity securities 83,113   77,542 
Residential mortgage loans held for sale 192,295   176,813 
Loans:   
Commercial 12,506,465   12,175,140 
Commercial real estate 3,831,325   4,116,892 
Paycheck protection program 276,341   536,052 
Loans to individuals 3,591,549   3,519,852 
Total loans 20,205,680   20,347,936 
Allowance for loan losses (256,421)  (276,680)
Loans, net of allowance 19,949,259   20,071,256 
Premises and equipment, net 574,148   558,126 
Receivables 223,021   171,505 
Goodwill 1,044,749   1,044,749 
Intangible assets, net 91,778   96,186 
Mortgage servicing rights 163,198   133,308 
Real estate and other repossessed assets, net 24,589   28,770 
Derivative contracts, net 1,097,297   1,901,136 
Cash surrender value of bank-owned life insurance 405,607   403,369 
Receivable on unsettled securities sales 56,172   215,755 
Other assets 957,951   990,368 
TOTAL ASSETS$50,249,431  $46,923,409 
    
LIABILITIES AND EQUITY   
Deposits:   
Demand$15,344,423  $14,090,229 
Interest-bearing transaction 23,268,573   21,753,110 
Savings 924,735   900,497 
Time 1,704,328   1,780,715 
Total deposits 41,242,059   38,524,551 
Funds purchased and repurchase agreements 2,326,449   843,273 
Other borrowings 36,753   37,426 
Subordinated debentures 131,226   131,220 
Accrued interest, taxes and expense 273,041   220,266 
Due on unsettled securities purchases 160,686   614,598 
Derivative contracts, net 275,625   739,641 
Other liabilities 435,221   415,986 
TOTAL LIABILITIES 44,881,060   41,526,961 
Shareholders' equity:   
Capital, surplus and retained earnings 5,291,361   5,219,801 
Accumulated other comprehensive gain 72,371   169,172 
TOTAL SHAREHOLDERS' EQUITY 5,363,732   5,388,973 
Non-controlling interests 4,639   7,475 
TOTAL EQUITY 5,368,371   5,396,448 
TOTAL LIABILITIES AND EQUITY$50,249,431  $46,923,409 


AVERAGE BALANCE SHEETS -- UNAUDITED

BOK FINANCIAL CORPORATION
(in thousands)

 Three Months Ended
 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
ASSETS         
Interest-bearing cash and cash equivalents$1,208,552  $682,788  $659,312  $711,047  $643,926 
Trading securities 9,260,778   7,617,236   7,430,217   6,963,617   6,888,189 
Investment securities, net of allowance 213,188   218,117   221,401   237,313   251,863 
Available for sale securities 13,247,607   13,446,095   13,243,542   13,433,767   12,949,702 
Fair value option securities 46,458   56,307   64,864   104,662   122,329 
Restricted equity securities 137,874   245,485   208,692   189,921   280,428 
Residential mortgage loans held for sale 163,433   167,620   218,200   207,013   229,631 
Loans:         
Commercial 12,401,935   12,231,230   12,402,925   12,908,461   13,113,449 
Commercial real estate 3,838,336   4,218,190   4,395,848   4,547,945   4,788,393 
Paycheck protection program 404,261   792,728   1,668,047   1,741,534   1,928,665 
Loans to individuals 3,598,121   3,606,460   3,700,269   3,559,067   3,617,011 
Total loans 20,242,653   20,848,608   22,167,089   22,757,007   23,447,518 
Allowance for loan losses (271,794)  (306,125)  (345,269)  (382,734)  (414,225)
Loans, net of allowance 19,970,859   20,542,483   21,821,820   22,374,273   23,033,293 
Total earning assets 44,248,749   42,976,131   43,868,048   44,221,613   44,399,361 
Cash and due from banks 783,670   766,688   763,393   760,691   742,432 
Derivative contracts, net 1,465,506   1,501,736   1,022,137   873,712   553,779 
Cash surrender value of bank-owned life insurance 404,149   401,926   401,760   399,830   397,354 
Receivable on unsettled securities sales 585,901   632,539   716,700   735,482   1,094,198 
Other assets 3,116,081   3,220,129   3,424,884   3,319,305   3,200,040 
TOTAL ASSETS$50,604,056  $49,499,149  $50,196,922  $50,310,633  $50,387,164 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$14,818,841  $13,670,656  $13,189,954  $12,312,629  $12,136,071 
Interest-bearing transaction 22,326,401   21,435,736   21,491,145   21,433,406   20,718,390 
Savings 909,131   888,011   872,618   789,656   737,360 
Time 1,747,715   1,839,983   1,936,510   1,986,425   1,930,808 
Total deposits 39,802,088   37,834,386   37,490,227   36,522,116   35,522,629 
Funds purchased and repurchase agreements 2,880,230   1,448,800   1,790,490   2,830,378   2,153,254 
Other borrowings 880,837   2,546,083   3,608,369   3,392,346   5,193,656 
Subordinated debentures 131,224   214,654   276,034   276,015   275,998 
Derivative contracts, net 320,757   434,334   366,202   428,488   399,476 
Due on unsettled securities purchases 629,642   957,538   701,495   915,410   957,642 
Other liabilities 578,091   619,913   634,460   671,715   656,147 
TOTAL LIABILITIES 45,222,869   44,055,708   44,867,277   45,036,468   45,158,802 
Total equity 5,381,187   5,443,441   5,329,645   5,274,165   5,228,362 
TOTAL LIABILITIES AND EQUITY$50,604,056  $49,499,149  $50,196,922  $50,310,633  $50,387,164 


STATEMENTS OF EARNINGS -- UNAUDITED

BOK FINANCIAL CORPORATION
(in thousands, except per share data)

 Three Months Ended Year Ended
 December 31, December 31,
  2021   2020   2021   2020 
        
Interest revenue$292,334  $319,020  $1,179,929  $1,269,000 
Interest expense 15,257   21,790   61,896   160,556 
Net interest revenue 277,077   297,230   1,118,033   1,108,444 
Provision for credit losses (17,000)  (6,500)  (100,000)  222,592 
Net interest revenue after provision for credit losses 294,077   303,730   1,218,033   885,852 
Other operating revenue:       
Brokerage and trading revenue 14,869   39,506   112,989   221,833 
Transaction card revenue 24,998   21,896   96,983   90,182 
Fiduciary and asset management revenue 46,872   41,799   178,274   167,445 
Deposit service charges and fees 26,718   24,343   104,217   96,805 
Mortgage banking revenue 21,278   39,298   105,896   182,360 
Other revenue 11,586   14,209   69,950   51,695 
Total fees and commissions 146,321   181,051   668,309   810,320 
Other gains, net 6,081   7,394   63,742   6,046 
Gain (loss) on derivatives, net (4,788)  (339)  (19,378)  42,320 
Gain (loss) on fair value option securities, net 1,418   68   (2,239)  53,248 
Change in fair value of mortgage servicing rights 7,859   6,276   41,637   (79,524)
Gain on available for sale securities, net 552   4,339   3,704   9,910 
Total other operating revenue 157,443   198,789   755,775   842,320 
Other operating expense:       
Personnel 174,474   176,198   695,382   688,474 
Business promotion 6,452   3,728   16,289   14,511 
Charitable contributions to BOKF Foundation 5,000   6,000   9,000   9,000 
Professional fees and services 14,129   14,254   50,906   53,437 
Net occupancy and equipment 26,897   27,875   108,587   112,722 
Insurance 3,889   4,006   15,881   19,990 
Data processing and communications 39,358   35,061   151,614   135,497 
Printing, postage and supplies 2,935   3,805   14,218   15,061 
Amortization of intangible assets 4,438   5,088   18,311   20,443 
Mortgage banking costs 8,667   14,765   42,698   56,711 
Other expense 13,256   11,892   54,822   38,462 
Total other operating expense 299,495   302,672   1,177,708   1,164,308 
        
Net income before taxes 152,025   199,847   796,100   563,864 
Federal and state income taxes 34,836   45,138   179,775   128,793 
        
Net income 117,189   154,709   616,325   435,071 
Net income (loss) attributable to non-controlling interests (129)  485   (1,796)  41 
Net income attributable to BOK Financial Corporation shareholders$117,318  $154,224  $618,121  $435,030 
        
Average shares outstanding:       
Basic 68,069,160   69,489,597   68,591,920   69,840,977 
Diluted 68,070,910   69,493,050   68,594,322   69,844,172 
        
Net income per share:       
Basic$1.71  $2.21  $8.95  $6.19 
Diluted$1.71  $2.21  $8.95  $6.19 


FINANCIAL HIGHLIGHTS -- UNAUDITED

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

 Three Months Ended
 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
Capital:         
Period-end shareholders' equity$5,363,732  $5,388,973  $5,332,977  $5,239,462  $5,266,266 
Risk weighted assets$34,606,309  $33,916,456  $33,824,860  $32,623,108  $32,492,277 
Risk-based capital ratios:         
Common equity tier 1 12.23%  12.26%  11.95%  12.14%  11.95%
Tier 1 12.24%  12.29%  12.01%  12.21%  11.95%
Total capital 13.28%  13.38%  13.61%  13.98%  13.82%
Leverage ratio 8.55%  8.77%  8.58%  8.42%  8.28%
Tangible common equity ratio1 8.83%  9.28%  9.09%  8.82%  9.02%
          
Common stock:         
Book value per share$78.34  $78.56  $77.20  $75.33  $75.62 
Tangible book value per share$61.74  $61.93  $60.50  $58.67  $58.94 
Market value per share:         
High$110.21  $92.97  $93.00  $98.95  $73.07 
Low$89.01  $77.20  $83.59  $67.57  $50.09 
Cash dividends paid$36,256  $35,725  $35,925  $36,038  $36,219 
Dividend payout ratio 30.90%  18.97%  21.59%  24.67%  23.48%
Shares outstanding, net 68,467,772   68,596,764   69,078,458   69,557,873   69,637,600 
Stock buy-back program:         
Shares repurchased 128,522   478,141   492,994   260,000   665,100 
Amount$13,426  $40,644  $43,797  $20,071  $42,450 
Average price per share$104.46  $85.00  $88.84  $77.20  $63.82 
          
Performance ratios (quarter annualized):
Return on average assets 0.92%  1.51%  1.33%  1.18%  1.22%
Return on average equity 8.66%  13.78%  12.58%  11.28%  11.75%
Net interest margin 2.52%  2.66%  2.60%  2.62%  2.72%
Efficiency ratio 70.14%  61.23%  64.20%  66.26%  62.77%
          
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio:         
Total shareholders' equity$5,363,732  $5,388,973  $5,332,977  $5,239,462  $5,266,266 
Less: Goodwill and intangible assets, net 1,136,527   1,140,935   1,153,785   1,158,676   1,161,527 
Tangible common equity$4,227,205  $4,248,038  $4,179,192  $4,080,786  $4,104,739 
          
Total assets$49,007,431  $46,923,409  $47,154,375  $47,442,513  $46,671,088 
Less: Goodwill and intangible assets, net 1,136,527   1,140,935   1,153,785   1,158,676   1,161,527 
Tangible assets$47,870,904  $45,782,474  $46,000,590  $46,283,837  $45,509,561 
          
Tangible common equity ratio 8.83%  9.28%  9.09%  8.82%  9.02%


Pre-provision net revenue:          
Net income before taxes$152,025  $241,782  $215,603  $186,690  $199,847 
Provision for expected credit losses (17,000)  (23,000)  (35,000)  (25,000)  (6,500)
Net income (loss) attributable to non-controlling interests (129)  (601)  686   (1,752)  485 
Pre-provision net revenue$135,154  $219,383  $179,917  $163,442  $192,862 
          
Other data:         
Tax equivalent interest$2,104  $2,217  $2,320  $2,301  $2,414 
Net unrealized gain on available for sale securities$93,381  $221,487  $297,267  $290,217  $440,814 
          
Mortgage banking:         
Mortgage production revenue$10,018  $15,403  $10,004  $25,287  $26,662 
          
Mortgage loans funded for sale$568,507  $652,336  $754,893  $843,053  $998,435 
Add: current period-end outstanding commitments 171,412   239,066   276,154   387,465   380,637 
Less: prior period end outstanding commitments 239,066   276,154   387,465   380,637   560,493 
Total mortgage production volume$500,853  $615,248  $643,582  $849,881  $818,579 
          
Mortgage loan refinances to mortgage loans funded for sale 51%  48%  48%  65%  58%
Realized margin on funded mortgage loans 1.76%  2.48%  2.75%  3.10%  3.78%
Production revenue as a percentage of production volume 2.00%  2.50%  1.55%  2.98%  3.26%
          
Mortgage servicing revenue$11,260  $10,883  $11,215  $11,826  $12,636 
Average outstanding principal balance of mortgage loans serviced for others 15,930,480   14,899,306   15,065,173   15,723,231   16,518,208 
Average mortgage servicing revenue rates 0.28%  0.29%  0.30%  0.31%  0.30%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$(4,862) $(5,829) $18,764  $(27,705) $(385)
Gain (loss) on fair value option securities, net 1,418   (120)  (1,627)  (1,910)  68 
Gain (loss) on economic hedge of mortgage servicing rights (3,444)  (5,949)  17,137   (29,615)  (317)
Gain (loss) on changes in fair value of mortgage servicing rights 7,859   12,945   (13,041)  33,874   6,276 
Gain on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue 4,415   6,996   4,096   4,259   5,959 
Net interest revenue on fair value option securities2 259   286   341   393   550 
Total economic benefit of changes in the fair value of mortgage servicing rights, net of economic hedges$4,674  $7,282  $4,437  $4,652  $6,509 

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
 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
          
Interest revenue$292,334  $293,463  $295,893  $298,239  $319,020 
Interest expense 15,257   13,236   15,584   17,819   21,790 
Net interest revenue 277,077   280,227   280,309   280,420   297,230 
Provision for credit losses (17,000)  (23,000)  (35,000)  (25,000)  (6,500)
Net interest revenue after provision for credit losses 294,077   303,227   315,309   305,420   303,730 
Other operating revenue:         
Brokerage and trading revenue 14,869   47,930   29,408   20,782   39,506 
Transaction card revenue 24,998   24,632   24,923   22,430   21,896 
Fiduciary and asset management revenue 46,872   45,248   44,832   41,322   41,799 
Deposit service charges and fees 26,718   27,429   25,861   24,209   24,343 
Mortgage banking revenue 21,278   26,286   21,219   37,113   39,298 
Other revenue 11,586   18,896   23,172   16,296   14,209 
Total fees and commissions 146,321   190,421   169,415   162,152   181,051 
Other gains, net 6,081   31,091   16,449   10,121   7,394 
Gain (loss) on derivatives, net (4,788)  (5,760)  18,820   (27,650)  (339)
Gain (loss) on fair value option securities, net 1,418   (120)  (1,627)  (1,910)  68 
Change in fair value of mortgage servicing rights 7,859   12,945   (13,041)  33,874   6,276 
Gain on available for sale securities, net 552   1,255   1,430   467   4,339 
Total other operating revenue 157,443   229,832   191,446   177,054   198,789 
Other operating expense:         
Personnel 174,474   175,863   172,035   173,010   176,198 
Business promotion 6,452   4,939   2,744   2,154   3,728 
Charitable contributions to BOKF Foundation 5,000         4,000   6,000 
Professional fees and services 14,129   12,436   12,361   11,980   14,254 
Net occupancy and equipment 26,897   28,395   26,633   26,662   27,875 
Insurance 3,889   3,712   3,660   4,620   4,006 
Data processing and communications 39,358   38,371   36,418   37,467   35,061 
Printing, postage and supplies 2,935   3,558   4,285   3,440   3,805 
Amortization of intangible assets 4,438   4,488   4,578   4,807   5,088 
Mortgage banking costs 8,667   8,962   11,126   13,943   14,765 
Other expense 13,256   10,553   17,312   13,701   11,892 
Total other operating expense 299,495   291,277   291,152   295,784   302,672 
Net income before taxes 152,025   241,782   215,603   186,690   199,847 
Federal and state income taxes 34,836   54,061   48,496   42,382   45,138 
Net income 117,189   187,721   167,107   144,308   154,709 
Net income (loss) attributable to non-controlling interests (129)  (601)  686   (1,752)  485 
Net income attributable to BOK Financial Corporation shareholders$117,318  $188,322  $166,421  $146,060  $154,224 
          
Average shares outstanding:         
Basic 68,069,160   68,359,125   68,815,666   69,137,375   69,489,597 
Diluted 68,070,910   68,360,871   68,817,442   69,141,710   69,493,050 
Net income per share:         
Basic$1.71  $2.74  $2.40  $2.10  $2.21 
Diluted$1.71  $2.74  $2.40  $2.10  $2.21 


LOANS TREND -- UNAUDITED

BOK FINANCIAL CORPORATION
(In thousands)

  Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
Commercial:          
Healthcare $3,414,940 $3,347,641 $3,381,261 $3,290,758 $3,305,990
Services  3,367,193  3,323,422  3,389,756  3,421,948  3,508,583
Energy  3,006,884  2,814,059  3,011,331  3,202,488  3,469,194
General business  2,717,448  2,690,018  2,690,559  2,742,590  2,793,768
Total commercial  12,506,465  12,175,140  12,472,907  12,657,784  13,077,535
           
Commercial real estate:          
Office  1,040,963  1,030,755  1,073,346  1,094,060  1,085,257
Industrial  766,125  890,316  824,577  789,437  810,510
Multifamily  786,404  875,586  964,824  1,227,915  1,328,045
Retail  679,917  766,402  784,445  787,648  796,223
Residential construction and land development  120,016  118,416  128,939  119,079  119,394
Other commercial real estate  437,900  435,417  470,861  485,208  559,109
Total commercial real estate  3,831,325  4,116,892  4,246,992  4,503,347  4,698,538
           
Paycheck protection program  276,341  536,052  1,121,583  1,848,550  1,682,310
           
Loans to individuals:          
Residential mortgage  1,722,170  1,747,243  1,772,627  1,797,478  1,863,003
Residential mortgages guaranteed by U.S. government agencies  354,173  376,986  413,806  420,051  408,687
Personal  1,515,206  1,395,623  1,388,534  1,306,637  1,277,447
Total loans to individuals  3,591,549  3,519,852  3,574,967  3,524,166  3,549,137
           
Total $20,205,680 $20,347,936 $21,416,449 $22,533,847 $23,007,520


LOANS MANAGED BY PRINCIPAL MARKET AREA -- UNAUDITED

BOK FINANCIAL CORPORATION
(in thousands)

 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
          
Texas:         
Commercial$6,068,700 $5,815,562 $5,690,901 $5,748,345 $5,926,534
Commercial real estate 1,253,439  1,383,871  1,403,751  1,511,714  1,519,217
Paycheck protection program 81,654  115,623  342,933  537,899  501,079
Loans to individuals 942,982  901,121  885,619  848,194  855,410
Total Texas 8,346,775  8,216,177  8,323,204  8,646,152  8,802,240
          
Oklahoma:         
Commercial 2,633,014  2,590,887  2,840,560  2,975,477  3,144,782
Commercial real estate 546,021  552,184  552,673  597,840  597,733
Paycheck protection program 69,817  192,474  242,880  468,002  413,108
Loans to individuals 2,024,404  2,014,099  2,063,419  2,043,705  2,052,784
Total Oklahoma 5,273,256  5,349,644  5,699,532  6,085,024  6,208,407
          
Colorado:         
Commercial 1,936,149  1,874,613  1,904,182  1,910,826  1,929,320
Commercial real estate 470,937  526,653  656,521  777,786  879,648
Paycheck protection program 82,781  140,470  299,712  436,540  377,111
Loans to individuals 256,533  249,298  262,796  264,759  264,295
Total Colorado 2,746,400  2,791,034  3,123,211  3,389,911  3,450,374
          
Arizona:         
Commercial 1,130,798  1,194,801  1,239,270  1,207,089  1,219,072
Commercial real estate 674,309  734,174  705,497  667,766  726,111
Paycheck protection program 21,594  42,815  104,946  208,481  211,725
Loans to individuals 186,528  182,506  178,481  179,031  177,948
Total Arizona 2,013,229  2,154,296  2,228,194  2,262,367  2,334,856
          
Kansas/Missouri:         
Commercial 338,697  336,414  388,291  421,974  455,914
Commercial real estate 382,761  408,001  406,055  395,590  366,821
Paycheck protection program 4,718  6,920  41,954  60,741  56,011
Loans to individuals 110,889  100,920  103,092  104,954  105,995
Total Kansas/Missouri 837,065  852,255  939,392  983,259  984,741
          
New Mexico:         
Commercial 306,964  287,695  304,804  307,395  303,833
Commercial real estate 442,128  437,302  437,996  448,298  473,204
Paycheck protection program 13,510  31,444  86,716  124,059  109,881
Loans to individuals 63,930  66,651  68,177  70,491  75,665
Total New Mexico 826,532  823,092  897,693  950,243  962,583
          
Arkansas:         
Commercial 92,143  75,168  104,899  86,678  98,080
Commercial real estate 61,730  74,707  84,499  104,353  135,804
Paycheck protection program 2,267  6,306  2,442  12,828  13,395
Loans to individuals 6,283  5,257  13,383  13,032  17,040
Total Arkansas 162,423  161,438  205,223  216,891  264,319
          
TOTAL BOK FINANCIAL$20,205,680 $20,347,936 $21,416,449 $22,533,847 $23,007,520

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)

 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
Oklahoma:         
Demand$5,433,405 $5,080,162 $4,985,542 $4,823,436 $4,329,205
Interest-bearing:         
Transaction 12,689,367  11,692,679  12,065,844  12,828,070  12,603,658
Savings 521,439  510,906  500,344  487,862  420,996
Time 978,822  1,039,866  1,139,980  1,197,517  1,134,453
Total interest-bearing 14,189,628  13,243,451  13,706,168  14,513,449  14,159,107
Total Oklahoma 19,623,033  18,323,613  18,691,710  19,336,885  18,488,312
          
Texas:         
Demand 4,552,983  3,987,503  3,752,790  3,592,969  3,449,882
Interest-bearing:         
Transaction 5,345,461  4,985,465  4,335,113  4,257,234  3,800,427
Savings 178,458  165,043  160,805  154,406  139,173
Time 337,559  337,389  346,577  368,086  383,062
Total interest-bearing 5,861,478  5,487,897  4,842,495  4,779,726  4,322,662
Total Texas 10,414,461  9,475,400  8,595,285  8,372,695  7,772,544
          
Colorado:         
Demand 2,526,855  2,158,596  1,991,343  2,115,354  2,168,404
Interest-bearing:         
Transaction 2,334,371  2,337,354  2,159,819  2,100,135  2,170,485
Savings 78,636  79,873  73,990  73,446  69,384
Time 174,351  184,002  193,787  204,973  208,778
Total interest-bearing 2,587,358  2,601,229  2,427,596  2,378,554  2,448,647
Total Colorado 5,114,213  4,759,825  4,418,939  4,493,908  4,617,051
          
New Mexico:         
Demand 1,196,057  1,222,895  1,197,412  1,131,713  941,074
Interest-bearing:         
Transaction 858,394  837,630  723,757  736,923  733,007
Savings 107,963  107,615  105,837  103,591  91,646
Time 163,871  168,879  174,665  181,863  186,307
Total interest-bearing 1,130,228  1,114,124  1,004,259  1,022,377  1,010,960
Total New Mexico 2,326,285  2,337,019  2,201,671  2,154,090  1,952,034
          
Arizona:         
Demand 934,282  1,110,884  943,511  915,439  905,201
Interest-bearing:         
Transaction 834,491  784,614  820,901  835,795  768,220
Savings 16,182  16,468  13,496  13,235  12,174
Time 31,274  30,862  30,012  30,997  32,721
Total interest-bearing 881,947  831,944  864,409  880,027  813,115
Total Arizona 1,816,229  1,942,828  1,807,920  1,795,466  1,718,316
          
Kansas/Missouri:         
Demand 658,342  488,595  463,339  478,370  426,738
Interest-bearing:         
Transaction 1,086,946  965,757  978,160  991,510  960,237
Savings 18,844  17,303  17,539  18,686  16,286
Time 12,255  13,040  13,509  13,898  14,610
Total interest-bearing 1,118,045  996,100  1,009,208  1,024,094  991,133
Total Kansas/Missouri 1,776,387  1,484,695  1,472,547  1,502,464  1,417,871
          
Arkansas:         
Demand 42,499  41,594  46,472  45,889  45,834
Interest-bearing:         
Transaction 119,543  149,611  195,125  141,207  122,388
Savings 3,213  3,289  3,445  3,000  2,333
Time 6,196  6,677  6,819  7,022  7,197
Total interest-bearing 128,952  159,577  205,389  151,229  131,918
Total Arkansas 171,451  201,171  251,861  197,118  177,752
          
TOTAL BOK FINANCIAL$41,242,059 $38,524,551 $37,439,933 $37,852,626 $36,143,880


NET INTEREST MARGIN TREND -- UNAUDITED

BOK FINANCIAL CORPORATION

 Three Months Ended
 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents0.16% 0.14% 0.10% 0.10% 0.10%
Trading securities1.69% 2.04% 1.95% 2.06% 2.02%
Investment securities, net of allowance4.99% 5.02% 5.01% 4.88% 4.88%
Available for sale securities1.72% 1.80% 1.85% 1.84% 1.98%
Fair value option securities2.71% 2.62% 2.60% 1.95% 2.27%
Restricted equity securities2.98% 2.55% 3.36% 2.86% 3.25%
Residential mortgage loans held for sale3.06% 3.06% 2.91% 2.71% 2.75%
Loans3.70% 3.68% 3.54% 3.55% 3.68%
Allowance for loan losses         
Loans, net of allowance3.75% 3.73% 3.60% 3.62% 3.75%
Total tax-equivalent yield on earning assets2.62% 2.78% 2.75% 2.78% 2.92%
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
Interest-bearing transaction0.09% 0.09% 0.10% 0.12% 0.14%
Savings0.04% 0.04% 0.04% 0.04% 0.05%
Time0.53% 0.55% 0.58% 0.70% 0.89%
Total interest-bearing deposits0.12% 0.13% 0.14% 0.17% 0.19%
Funds purchased and repurchase agreements0.10% 0.20% 0.16% 0.19% 0.28%
Other borrowings0.49% 0.37% 0.34% 0.39% 0.42%
Subordinated debt4.02% 4.63% 4.87% 4.92% 4.87%
Total cost of interest-bearing liabilities0.15% 0.19% 0.21% 0.24% 0.28%
Tax-equivalent net interest revenue spread2.47% 2.59% 2.54% 2.54% 2.64%
Effect of noninterest-bearing funding sources and other0.05% 0.07% 0.06% 0.08% 0.08%
Tax-equivalent net interest margin2.52% 2.66% 2.60% 2.62% 2.72%

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 
 Dec. 31, 2021  Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020
Nonperforming assets:          
Nonaccruing loans:          
Commercial:          
Energy$31,091   $45,500  $70,341  $101,800  $125,059 
Services 17,170    25,714   29,913   28,033   25,598 
Healthcare 15,762    509   527   3,187   3,645 
General business 10,081    8,951   11,823   14,053   12,857 
Total commercial 74,104    80,674   112,604   147,073   167,159 
           
Commercial real estate 14,262    21,223   26,123   27,243   27,246 
           
Loans to individuals:          
Permanent mortgage 31,574    30,674   31,473   32,884   32,228 
Permanent mortgage guaranteed by U.S. government agencies 13,861    9,188   9,207   8,564   7,741 
Personal 258    188   229   255   319 
Total loans to individuals 45,693    40,050   40,909   41,703   40,288 
           
Total nonaccruing loans$134,059   $141,947  $179,636  $216,019  $234,693 
Accruing renegotiated loans guaranteed by U.S. government agencies 210,618    178,554   171,324   154,591   151,775 
Real estate and other repossessed assets 24,589    28,770   57,337   70,911   90,526 
Total nonperforming assets$369,266   $349,271  $408,297  $441,521  $476,994 
Total nonperforming assets excluding those guaranteed by U.S. government agencies$144,787   $161,529  $227,766  $278,366  $317,478 
           
Accruing loans 90 days past due1$313   $223  $252  $395  $10,369 
           
Gross charge-offs$6,558   $9,584  $18,304  $16,905  $18,251 
Recoveries (7,272)   (1,769)  (2,856)  (2,437)  (1,592)
Net charge-offs (recoveries)$(714)  $7,815  $15,448  $14,468  $16,659 
           
Provision for loan losses$(20,973)  $(27,395) $(25,064) $(21,770) $(14,478)
Provision for credit losses from off-balance sheet unfunded loan commitments 3,738    4,952   (8,590)  (4,044)  8,952 
Provision for expected credit losses from mortgage banking activities 150    (534)  (1,222)  885   (923)
Provision for credit losses related to held-to maturity (investment) securities portfolio 85    (23)  (124)  (71)  (51)
Total provision for credit losses$(17,000)  $(23,000) $(35,000) $(25,000) $(6,500)
           
Allowance for loan losses to period end loans 1.27 %  1.36%  1.46%  1.56%  1.69%
Allowance for loan losses to period end loans excluding PPP loans2 1.29 %  1.40%  1.54%  1.70%  1.82%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans 1.43 %  1.50%  1.57%  1.71%  1.85%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans2 1.45 %  1.54%  1.66%  1.86%  2.00%
Nonperforming assets to period end loans and repossessed assets 1.83 %  1.71%  1.90%  1.95%  2.07%
Net charge-offs (annualized) to average loans (0.01)%  0.15%  0.28%  0.25%  0.28%
Net charge-offs (annualized) to average loans excluding PPP loans2 (0.01) %  0.16%  0.30%  0.28%  0.31%
Allowance for loan losses to nonaccruing loans1 213.33 %  208.41%  183.00%  169.87%  171.24%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1 240.77 %  230.43%  197.25%  185.72%  187.51%

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 4Q21 vs 3Q21  Year Ended 2021 vs 2020 
  Dec. 31, 2021 Sept. 30, 2021 $ change % change  Dec. 31, 2021 Dec. 31, 2020 $ change % change 
Commercial Banking                  
Net interest revenue $140,723 $134,104 $6,619  4.9 % $535,735 $588,488 $(52,753) (9.0)%
Fees and commissions revenue  57,414  56,452  962  1.7 %  227,081  187,119  39,962  21.4 %
Combined net interest and fee revenue  198,137  190,556  7,581  4.0 %  762,816  775,607  (12,791) (1.6)%
Other operating expense  74,459  68,301  6,158  9.0 %  281,089  258,903  22,186  8.6 %
Corporate expense allocations  12,926  11,769  1,157  9.8 %  49,941  24,862  25,079  100.9 %
Net income  83,514  102,694  (19,180) (18.7)%  328,516  306,005  22,511  7.4 %
                   
Average assets  29,451,007  28,474,132  976,875  3.4 %  28,536,881  26,994,075  1,542,806  5.7 %
Average loans  16,334,695  16,588,875  (254,180) (1.5) %  16,853,006  18,711,372  (1,858,366) (9.9)%
Average deposits  19,537,285  17,881,673  1,655,612  9.3 %  17,659,695  14,319,729  3,339,966  23.3 %
                   
Consumer Banking                  
Net interest revenue $30,385 $27,222 $3,163  11.6 % $103,527 $147,004 $(43,477) (29.6)%
Fees and commissions revenue  38,944  44,405  (5,461) (12.3) %  173,364  245,554  (72,190) (29.4)%
Combined net interest and fee revenue  69,329  71,627  (2,298) (3.2) %  276,891  392,558  (115,667) (29.5)%
Other operating expense  52,036  49,483  2,553  5.2 %  209,596  230,402  (20,806) (9.0)%
Corporate expense allocations  11,420  11,516  (96) (0.8) %  46,010  42,155  3,855  9.1 %
Net income  6,810  12,432  (5,622) (45.2) %  27,643  97,974  (70,331) (71.8)%
                   
Average assets  10,186,797  10,083,593  103,204  1.0 %  10,029,687  9,842,114  187,573  1.9 %
Average loans  1,705,222  1,763,705  (58,483) (3.3) %  1,769,384  1,764,682  4,702  0.3 %
Average deposits  8,682,437  8,516,942  165,495  1.9 %  8,439,577  7,599,937  839,640  11.0 %
                   
Wealth Management                  
Net interest revenue $58,229 $55,196 $3,033  5.5 % $214,072 $117,290 $96,782  82.5 %
Fees and commissions revenue  56,275  97,966  (41,691) (42.6) %  298,765  399,229  (100,464) (25.2)%
Combined net interest and fee revenue  114,504  153,162  (38,658) (25.2) %  512,837  516,519  (3,682) (0.7)%
Other operating expense  74,947  87,417  (12,470) (14.3) %  320,357  325,627  (5,270) (1.6)%
Corporate expense allocations  9,971  10,101  (130) (1.3) %  40,301  35,331  4,970  14.1 %
Net income  21,700  41,406  (19,706) (47.6) %  113,550  115,614  (2,064) (1.8)%
                   
Average assets  19,526,382  19,109,704  416,678  2.2 %  19,123,130  15,695,646  3,427,484  21.8 %
Average loans  2,065,261  1,971,380  93,881  4.8 %  1,981,159  1,758,226  222,933  12.7 %
Average deposits  9,194,019  9,120,446  73,573  0.8 %  9,426,771  8,676,047  750,724  8.7 %
Fiduciary assets  64,536,833  60,497,576  4,039,257  6.7 %  64,536,833  55,486,492  9,050,341  16.3 %
Assets under management or administration  104,917,721  98,842,789  6,074,932  6.1 %  104,917,721  91,592,247  13,325,474  14.5 %
                             

Contact:

Sue Hermann
Senior Vice President, Corporate Communications, BOK Financial
303-312-3488