BOK Financial Corporation Reports Quarterly Earnings of $162 million or $2.43 Per Share in the First Quarter


TULSA, Okla., April 26, 2023 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASD: BOKF) - 

CEO Commentary
Stacy Kymes, president and chief executive officer, stated, “The strong financial results in the first quarter are a testament to our diverse business model, strong operating geographies, and disciplined approach to risk management that has long been critical to our ability to sustain success. Our peer-leading tangible capital ratio paired with our balance sheet liquidity have served us well over the last 45 days with the disruptions in our sector. The disruptions and almost unprecedented level of rate volatility in the quarter have demonstrated our ability to both manage critical risks well while also continuing to post strong financial results for our shareholders. In fact, this quarter was the second highest pre-provision net revenue in our history. The first quarter showed sustained revenue in our non-interest income businesses, continued loan growth, and an efficiency ratio below 57 percent. While we cannot be totally immune from the macro economy, we believe this is exactly the environment where we can be most differentiated. Our interest rate, liquidity, and credit risk management are strong and we remain focused on increasing top line revenue in exceptional growth markets."


First Quarter 2023 Financial Highlights
(Unless indicated otherwise, all comparisons are to the prior quarter)
  • Net income was $162.4 million or $2.43 per diluted share for the first quarter of 2023 and $168.4 million or $2.51 per diluted share for the fourth quarter of 2022.
  • Net interest revenue totaled $352.3 million, consistent with the prior quarter. Net interest margin was 3.45 percent compared to 3.54 percent, driven by higher funding costs, as expected.
  • Fees and commissions revenue was $186.0 million, a decrease of $7.6 million. A $10.6 million reduction in brokerage and trading revenue related to lower trading volumes due to escalated market volatility was partially offset by a $4.3 million increase in mortgage banking revenue related to higher production volume and expanded mortgage servicing.
  • Due to interest rate volatility in the first quarter, the net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $10.5 million compared to $1.2 million for the fourth quarter of 2022.
  • Operating expense decreased $12.6 million to $305.8 million. Personnel expense decreased $4.3 million. Lower incentive compensation costs, driven largely by a one-time incentive given to employees in the fourth quarter of 2022, were partially offset by increased employee benefits costs related to higher seasonal payroll taxes. Non-personnel expense decreased $8.4 million, led by a reduction in professional fees and mortgage banking costs.
  • Period-end loans increased $193 million to $22.8 billion at March 31, 2023, primarily related to a $209 million increase in commercial real estate loans driven largely by loans secured by multifamily residential properties and industrial facilities. Average outstanding loan balances were $22.5 billion, a $500 million increase, primarily due to higher commercial and commercial real estate balances.
  • We recorded a $16.0 million provision for expected credit losses in the first quarter of 2023, as key economic assumptions in the base case, including projected West Texas Intermediate ("WTI") oil prices and projected commercial real estate vacancy rates, were less favorable to economic growth. We recorded a $15.0 million provision for expected credit losses in the fourth quarter of 2022, primarily as a result of growth in loans and loan commitments during the quarter. The combined allowance for credit losses totaled $312 million or 1.37 percent of outstanding loans at March 31, 2023. The combined allowance for credit losses was $297 million or 1.31 percent of outstanding loans at December 31, 2022. Net charge-offs were $769 thousand or 0.01 percent of average loans on an annualized basis in the first quarter compared to net charge-offs of $15.5 million or 0.28 percent of average loans on an annualized basis in the fourth quarter.
  • Average deposits decreased $2.0 billion to $33.5 billion and period-end deposits decreased $1.9 billion to $32.6 billion as customers redeployed resources and pursued investment alternatives following the savings trend during the height of the pandemic. The impact of recent events in the banking industry was not significant to our deposit trends. Average demand deposits were reduced by $1.8 billion and average interest-bearing deposits decreased $209 million. The loan to deposit ratio was 70 percent at March 31, 2023, up from 65 percent at December 31, 2022, representing a funding profile more consistent with, but still below, pre-pandemic levels.
  • The company's tangible common equity ratio, a non-GAAP measure, was 8.46 percent at March 31, 2023 and 7.63 percent at December 31, 2022. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. Adjusted for all unrealized securities portfolio gains and losses, including those in the investment portfolio, the tangible common equity ratio would be 8.22 percent.
  • The company's common equity Tier 1 capital ratio was 12.19 percent at March 31, 2023. In addition, the company's Tier 1 capital ratio was 12.20 percent, total capital ratio was 13.21 percent, and leverage ratio was 9.94 percent at March 31, 2023. At December 31, 2022, the company's common equity Tier 1 capital ratio was 11.69 percent, Tier 1 capital ratio was 11.71 percent, total capital ratio was 12.67 percent, and leverage ratio was 9.91 percent.
  • The company repurchased 447,071 shares of common stock at an average price paid of $98.64 a share in the first quarter of 2023.
First Quarter 2023 Segment Highlights
  • Commercial Banking contributed $176.5 million to net income in the first quarter of 2023, an increase of $37.2 million over the fourth quarter of 2022. Combined net interest revenue and fee revenue increased $30.7 million, primarily due to an increase in the spread on deposits sold to our Funds Management unit. Net loans charged-off decreased $14.3 million to $76 thousand in the first quarter of 2023. Personnel expense decreased $5.3 million, driven by incentive compensation costs. Average loans increased $496 million or 3 percent to $18.8 billion. Average deposits decreased $971 million or 6 percent to $15.9 billion.
  • Consumer Banking contributed $50.7 million to net income in the first quarter of 2023, an increase of $41.7 million over the prior quarter. Combined net interest revenue and fee revenue increased $59.0 million, largely due to an increase in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue increased $3.0 million. Mortgage banking revenue increased $4.3 million as mortgage production volumes grew $54.0 million, partially offset by decreases in deposit service charges and other revenue. Operating expense decreased $4.3 million. Mortgage banking costs decreased $3.2 million from lower prepayments combined with reduced accruals related to default servicing and loss mitigation costs on loans serviced for others. Personnel expense decreased $1.1 million. Average loans increased $22 million or 1 percent to $1.7 billion. Average deposits decreased $369 million or 4 percent to $8.2 billion.
  • Wealth Management contributed $52.4 million to net income in the first quarter of 2023, an increase of $11.0 million over the fourth quarter of 2022. Combined net interest and fee revenue increased $13.9 million, primarily due to an increase in the spread on deposits sold to our Funds Management unit, which was partially offset by a decrease of $9.0 million in total revenue from institutional trading activities from reduced U.S. agency residential mortgage-backed securities trading volumes. Average loans decreased $22 million or 1 percent to $2.2 billion. Average deposits decreased $456 million or 6 percent to $7.4 billion. Assets under management or administration were $102.3 billion, an increase of $2.6 billion.
Net Interest Revenue

Net interest revenue was $352.3 million for the first quarter of 2023, relatively unchanged from the prior quarter. Net interest margin was 3.45 percent compared to 3.54 percent, driven by expected deposit repricing activity. In recent prior quarters, the rapid pace of market interest rate increases grew net interest margin as our earning assets, led by our significant percentage of variable-rate loans, repriced at a higher rate and faster pace than our interest-bearing liabilities. In the current quarter, we saw margin compression as our interest-bearing liabilities began to catch up and reprice more quickly.

Average earning assets increased $1.5 billion. Average loan balances increased $500 million, largely due to growth in commercial and commercial real estate loans. Average available for sale securities increased $785 million as we reposition our balance sheet for the current rate environment. Average fair value option securities, held as an economic hedge of the changes in fair value of our mortgage servicing rights, increased $208 million while average restricted equity securities grew $100 million. Average interest-bearing deposits decreased $209 million as customers redeployed resources following the savings trend during the height of the pandemic. Average other borrowings increased $2.0 billion while funds purchased and repurchase agreements grew $713 million.

The yield on average earning assets was 5.06 percent, up 53 basis points. The loan portfolio yield increased 68 basis points to 6.67 percent while the yield on trading securities was up 82 basis points to 4.52 percent. The yield on the available for sale securities portfolio increased 33 basis points to 2.87 percent while the yield on the fair value option securities portfolio grew 77 basis points to 5.17 percent. The yield on interest-bearing cash and cash equivalents increased 22 basis points to 4.28 percent.

Funding costs were 2.43 percent, an 86 basis point increase. The cost of interest-bearing deposits increased 61 basis points to 1.83 percent. The cost of funds purchased and repurchase agreements increased 128 basis points to 3.33 percent while the cost of other borrowings was up 65 basis points to 4.73 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 82 basis points, an increase of 24 basis points.

Fees and Commissions Revenue

Fees and commissions revenue totaled $186.0 million for the first quarter of 2023, a decrease of $7.6 million from the prior quarter.

Brokerage and trading revenue decreased $10.6 million, with an $8.3 million reduction in trading revenue, largely due to a lower volume of U.S. agency residential mortgage-backed securities trading activity caused by high market volatility. Total investment banking revenue decreased $2.6 million with a reduction in syndication activity partially offset by higher underwriting fees. Transaction card revenue decreased $1.5 million, largely related to a decline in seasonal transaction volumes.

Mortgage banking revenue increased $4.3 million as mortgage originations were up following seasonal declines in the prior quarter. Mortgage production volume increased $54 million to $165 million.

Operating Expense

Total operating expense was $305.8 million for the first quarter of 2023, a decrease of $12.6 million compared to the fourth quarter of 2022.

Personnel expense was $182.1 million, including $1.7 million of deferred compensation expense. Excluding deferred compensation costs, personnel expense decreased $2.1 million. Cash-based incentive compensation decreased $12.6 million, largely due to a one-time incentive given to employees in the fourth quarter of 2022. Share-based compensation expense increased $2.2 million due to changes in assumptions of certain performance-based equity awards while regular compensation increased $2.2 million along with our annual merit increases in March. Employee benefits expense was up $6.1 million due to a seasonal increase in payroll taxes.

Non-personnel expense was $123.7 million, a decrease of $8.4 million. Professional fees and services expense decreased $5.3 million, largely related to reduced legal fees and lower technology project costs. Lower prepayments and decreased accruals related to default servicing and loss mitigations costs led to a $3.2 million reduction in mortgage banking costs. The fourth quarter of 2022 also included a $2.5 million charitable donation to the BOKF Foundation. These decreases were partially offset by $2.6 million more in FDIC insurance expenses from higher assessment rates.

Loans, Deposits and Capital

Loans

Outstanding loans were $22.8 billion at March 31, 2023, growing $193 million over December 31, 2022, largely due to growth in commercial real estate loans, primarily from loans secured by multifamily residential properties and industrial facilities. Unfunded loan commitments decreased $304 million compared to the fourth quarter.

Outstanding commercial loan balances, which includes services, general business, energy, and healthcare loans, were largely unchanged compared to the prior quarter.

General business loans decreased $155 million to $3.4 billion or 15 percent of total loans. General business loans include $2.0 billion of wholesale/retail loans and $1.4 billion of loans from other commercial industries.

Services sector loan balances increased $132 million to $3.6 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.

Healthcare sector loan balances increased $54 million, totaling $3.9 billion or 17 percent of total loans. Our healthcare sector loans primarily consist of $3.2 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.

Energy loan balances decreased $27 million to $3.4 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 $4.1 billion at March 31, 2023, an increase of $246 million over December 31, 2022.

Commercial real estate loan balances grew $209 million and represent 21 percent of total loans. Loans secured by multifamily residential properties increased $151 million to $1.4 billion. Loans secured by industrial facilities increased $88 million to $1.3 billion. This growth was partially offset by a $28 million decrease in other real estate loans. Unfunded commercial real estate loan commitments were $2.7 billion at March 31, 2023, a decrease of $397 million compared to December 31, 2022. We take a disciplined approach to managing our concentration of commercial real estate loan commitments as a percentage of Tier 1 Capital. While loan commitments are presently at the upper concentration limit, we expect continued growth in our commercial real estate balances as loans fund, primarily in the multifamily and industrial loan portfolios.

Loans to individuals decreased $20 million and represent 16 percent of total loans. Personal loans decreased $35 million while total residential mortgage loans increased $14 million.

Liquidity and Capital

Our funding sources, which primarily include deposits and borrowings from the Federal Home Loan Banks, provide adequate liquidity to meet our needs. The loan to deposit ratio was 70 percent at March 31, 2023, providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.

Period-end deposits totaled $32.6 billion at March 31, 2023, a $1.9 billion decrease, largely due to clients redeploying capital and seeking higher yielding alternatives following the savings trend during the pandemic. This trend is consistent with prior quarters and is in line with previous guidance. Demand deposits decreased $1.8 billion while interest-bearing transaction account balances decreased $225 million. Time deposits increased $115 million. Average deposits were $33.5 billion at March 31, 2023, a $2.0 billion decrease. Average demand deposit account balances decreased $1.8 billion and average interest-bearing transaction account balances decreased $258 million. Average Commercial Banking deposits decreased $971 million to $15.9 billion or 47 percent of total deposits. Our commercial deposit portfolio is highly diversified across industries and customers. The highest concentration by industry within our commercial deposit portfolio is with our energy customers at 7 percent. Wealth Management deposits decreased $456 million to $7.4 billion or 22 percent of total deposits and Consumer Banking deposits declined $369 million to $8.2 billion or 25 percent of total deposits.

The company's common equity Tier 1 capital ratio was 12.19 percent at March 31, 2023. In addition, the company's Tier 1 capital ratio was 12.20 percent, total capital ratio was 13.21 percent, and leverage ratio was 9.94 percent at March 31, 2023. At the beginning of 2020, we 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 6 basis points to the company's common equity tier 1 capital ratio at March 31, 2023. At December 31, 2022, the company's common equity Tier 1 capital ratio was 11.69 percent, Tier 1 capital ratio was 11.71 percent, total capital ratio was 12.67 percent, and leverage ratio was 9.91 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.46 percent at March 31, 2023 and 7.63 percent at December 31, 2022. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. Adjusted for all unrealized securities portfolio gains and losses, including those in the investment portfolio, the tangible common equity ratio would be 8.22 percent. 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 447,071 shares of common stock at an average price paid of $98.64 a share in the first quarter of 2023. 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 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 rates and WTI oil prices on a probability weighted basis.

A $16.0 million provision for credit losses was necessary for the first quarter of 2023, as key economic assumptions in the base case, including projected WTI oil prices and projected commercial real estate vacancy rates, were less favorable to economic growth.

The probability weighting of our base case reasonable and supportable forecast remained at 50 percent in the first quarter of 2023 as the level of uncertainty in economic forecasts remained high. Our base case reasonable and supportable forecast assumes inflation continues to improve from the peak experienced in 2022 and reaches 3.0 percent by the end of 2023. We expect the impact of the Russian-Ukraine conflict remains isolated and stress in the banking sector does not become widespread. Inflation pressures cause modest declines in real household income compared to pre-pandemic levels, resulting in below-trend GDP growth. GDP is projected to grow by 0.7 percent over the next twelve months. Job openings revert to more normalized levels and overall hiring levels decline, causing the national unemployment rate to modestly increase over the next four quarters. Our forecasted civilian unemployment rate is 3.8 percent for the second quarter of 2023, increasing to 4.1 percent by the first quarter of 2024. Our base case also assumes the Federal Reserve increases the federal funds rate once in the second quarter of 2023, resulting in a target range of 5.00 percent to 5.25 percent. No additional rate increases are anticipated for the remainder of the forecast horizon. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of March 31, 2023, averaging $69.18 per barrel over the next twelve months.

Our downside case, probability weighted at 40 percent, assumes that inflation moderates slightly from the peak experienced in 2022, but remains elevated through the forecast horizon ending 2023 at 5.0 percent. Higher levels of inflation force the Federal Reserve to adopt a more aggressive monetary policy as compared to the base case scenario. This results in a federal funds target range of 5.75 percent to 6.00 percent by the first quarter of 2024. The United States economy is pushed into a recession, with a contraction in economic activity and a sharp increase in the unemployment rate from 4.7 percent in the second quarter of 2023 to 6.0 percent in the first quarter of 2024. In this scenario, real GDP is expected to contract 2.0 percent over the next four quarters. WTI oil prices are projected to average $58.02 per barrel over the next twelve months, peaking at $62.53 in the second quarter of 2023 and falling 17 percent over the following three quarters.

Nonperforming assets totaled $133 million or 0.58 percent of outstanding loans and repossessed assets at March 31, 2023, compared to $300 million or 1.33 percent at December 31, 2022. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $119 million or 0.53 percent of outstanding loans and repossessed assets at March 31, 2023, compared to $121 million or 0.54 percent at December 31, 2022.

Nonaccruing loans were $120 million or 0.53 percent of outstanding loans at March 31, 2023. Nonaccruing commercial loans totaled $54 million or 0.38 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $22 million or 0.45 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $44 million or 1.19 percent of outstanding loans to individuals.

Nonaccruing loans decreased $1.5 million compared to December 31, 2022. Nonaccruing services loans decreased $8.1 million, nonaccruing healthcare loans decreased $3.8 million and nonaccruing energy loans decreased $1.3 million. These decreases were partially offset by a $7.3 million increase in nonaccruing general business loans and a $5.1 million increase in nonaccruing commercial real estate loans. New nonaccruing loans identified in the first quarter totaled $25 million, offset by $22 million in payments received.

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 $137 million at March 31, 2023, compared to $94 million at December 31, 2022. An increase in potential problem general business and services loans was offset by a decrease in energy, healthcare and commercial real estate potential problem loans.

At March 31, 2023, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $312 million or 1.37 percent of outstanding loans and 295 percent of nonaccruing loans. The allowance for loan losses totaled $249 million or 1.10 percent of outstanding loans and 235 percent of nonaccruing loans. At December 31, 2022, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $297 million or 1.31 percent of outstanding loans and 278 percent of nonaccruing loans. The allowance for loan losses was $236 million or 1.04 percent of outstanding loans and 221 percent of nonaccruing loans. The allowance to nonaccruing loan percentages referenced above omit residential mortgage loans guaranteed by U.S. government agencies.

Gross charge-offs were $3.7 million for the first quarter compared to $17.8 million for the fourth quarter of 2022. Gross charge-offs for the first quarter were primarily related to a single commercial real estate borrower. Recoveries totaled $2.9 million for the first quarter of 2023 and $2.3 million for the prior quarter. Net charge-offs were $769 thousand or 0.01 percent of average loans on an annualized basis in the first quarter compared to net charge-offs of $15.5 million or 0.28 percent of average loans on an annualized basis in the fourth quarter. Net charge-offs were 0.07 percent of average loans over the last four quarters.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $11.9 billion at March 31, 2023, a $444 million increase over December 31, 2022. At March 31, 2023, the available for sale securities portfolio consisted primarily of $6.0 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 March 31, 2023, the available for sale securities portfolio had a net unrealized loss of $742 million compared to $866 million at December 31, 2022.

We hold an inventory of trading securities in support of sales to a variety of customers. At March 31, 2023, the trading securities portfolio totaled $2.3 billion compared to $4.5 billion at December 31, 2022.

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 $30 million to $326 million at March 31, 2023.

Derivative contracts are carried at fair value. At March 31, 2023, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $572 million compared to $1.0 billion at December 31, 2022. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $578 million at March 31, 2023 and $1.0 billion at December 31, 2022.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $10.5 million during the first quarter of 2023, including a $6.1 million decrease in the fair value of mortgage servicing rights, $4.7 million decrease in the fair value of securities and derivative contracts held as an economic hedge, and $187 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 26, 2023 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 # 13737852.

About BOK Financial Corporation

BOK Financial Corporation is a $46 billion regional financial services company headquartered in Tulsa, Oklahoma with $102 billion in assets under management or 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, 2023 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, 2023 Dec. 31, 2022
ASSETS   
Cash and due from banks$792,371  $943,810 
Interest-bearing cash and cash equivalents 571,613   457,906 
Trading securities 2,294,358   4,464,161 
Investment securities, net of allowance 2,448,136   2,513,687 
Available for sale securities 11,937,841   11,493,860 
Fair value option securities 326,390   296,590 
Restricted equity securities 288,181   299,651 
Residential mortgage loans held for sale 74,175   75,272 
Loans:   
Commercial 14,217,349   14,212,499 
Commercial real estate 4,815,316   4,606,777 
Loans to individuals 3,717,388   3,737,874 
Total loans 22,750,053   22,557,150 
Allowance for loan losses (249,460)  (235,704)
Loans, net of allowance 22,500,593   22,321,446 
Premises and equipment, net 623,112   565,175 
Receivables 265,680   273,815 
Goodwill 1,044,749   1,044,749 
Intangible assets, net 72,689   76,131 
Mortgage servicing rights 299,803   277,608 
Real estate and other repossessed assets, net 12,651   14,304 
Derivative contracts, net 394,291   880,343 
Cash surrender value of bank-owned life insurance 408,614   406,751 
Receivable on unsettled securities sales 18,186   31,004 
Other assets 1,150,689   1,354,379 
TOTAL ASSETS$45,524,122  $47,790,642 
    
LIABILITIES AND EQUITY   
Deposits:   
Demand$11,606,975  $13,395,337 
Interest-bearing transaction 18,434,489   18,659,115 
Savings 962,673   964,411 
Time 1,576,610   1,461,842 
Total deposits 32,580,747   34,480,705 
Funds purchased and repurchase agreements 1,599,724   2,270,377 
Other borrowings 4,735,885   4,736,908 
Subordinated debentures 131,148   131,205 
Accrued interest, taxes and expense 268,449   296,870 
Due on unsettled securities purchases 262,492   147,470 
Derivative contracts, net 510,483   554,900 
Other liabilities 557,167   484,849 
TOTAL LIABILITIES 40,646,095   43,103,284 
Shareholders' equity:   
Capital, surplus and retained earnings 5,603,340   5,519,604 
Accumulated other comprehensive loss (728,554)  (836,955)
TOTAL SHAREHOLDERS' EQUITY 4,874,786   4,682,649 
Non-controlling interests 3,241   4,709 
TOTAL EQUITY 4,878,027   4,687,358 
TOTAL LIABILITIES AND EQUITY$45,524,122  $47,790,642 


AVERAGE BALANCE SHEETS UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

 Three Months Ended
 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
ASSETS         
Interest-bearing cash and cash equivalents$616,596  $568,307  $748,263  $843,619  $1,050,409 
Trading securities 3,031,969   3,086,985   3,178,068   4,166,954   8,537,390 
Investment securities, net of allowance 2,473,796   2,535,305   2,593,989   610,983   195,198 
Available for sale securities 11,738,693   10,953,851   10,306,257   12,258,072   13,092,422 
Fair value option securities 300,372   92,012   36,846   54,832   75,539 
Restricted equity securities 316,724   216,673   173,656   167,732   164,484 
Residential mortgage loans held for sale 65,769   98,613   132,685   148,183   179,697 
Loans:         
Commercial 14,046,237   13,846,339   13,508,325   13,472,488   12,887,816 
Commercial real estate 4,757,362   4,488,091   4,434,650   4,061,129   4,059,148 
Loans to individuals 3,672,648   3,641,574   3,656,257   3,524,097   3,516,698 
Total loans 22,476,247   21,976,004   21,599,232   21,057,714   20,463,662 
Allowance for loan losses (238,909)  (242,450)  (241,136)  (246,064)  (254,191)
Loans, net of allowance 22,237,338   21,733,554   21,358,096   20,811,650   20,209,471 
Total earning assets 40,781,257   39,285,300   38,527,860   39,062,025   43,504,610 
Cash and due from banks 857,771   865,796   821,801   822,599   790,440 
Derivative contracts, net 546,018   1,239,717   2,019,905   3,051,429   2,126,282 
Cash surrender value of bank-owned life insurance 408,124   406,826   410,667   408,489   406,379 
Receivable on unsettled securities sales 177,312   194,996   219,113   457,165   375,616 
Other assets 3,211,986   3,216,983   3,119,856   3,486,691   3,357,747 
TOTAL ASSETS$45,982,468  $45,209,618  $45,119,202  $47,288,398  $50,561,074 
          
LIABILITIES AND EQUITY         
Deposits:         
Demand$12,406,408  $14,176,189  $15,105,305  $15,202,597  $15,062,282 
Interest-bearing transaction 18,639,900   18,898,315   19,556,806   21,037,294   22,763,479 
Savings 958,443   969,275   978,596   981,493   947,407 
Time 1,477,720   1,417,606   1,409,069   1,373,036   1,589,039 
Total deposits 33,482,471   35,461,385   37,049,776   38,594,420   40,362,207 
Funds purchased and repurchase agreements 1,759,237   1,046,447   800,759   1,224,134   2,004,466 
Other borrowings 4,512,280   2,523,195   1,528,887   1,301,358   1,148,440 
Subordinated debentures 131,166   131,180   131,199   131,219   131,228 
Derivative contracts, net 428,023   445,105   105,221   535,574   682,435 
Due on unsettled securities purchases 316,738   575,957   331,428   380,332   519,097 
Other liabilities 511,530   408,029   396,510   389,031   565,350 
TOTAL LIABILITIES 41,141,445   40,591,298   40,343,780   42,556,068   45,413,223 
Total equity 4,841,023   4,618,320   4,775,422   4,732,330   5,147,851 
TOTAL LIABILITIES AND EQUITY$45,982,468  $45,209,618  $45,119,202  $47,288,398  $50,561,074 


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

 Three Months Ended
 March 31,
  2023   2022 
    
Interest revenue$516,729  $283,099 
Interest expense 164,381   14,688 
Net interest revenue 352,348   268,411 
Provision for credit losses 16,000    
Net interest revenue after provision for credit losses 336,348   268,411 
Other operating revenue:   
Brokerage and trading revenue 52,396   (27,079)
Transaction card revenue 25,621   24,216 
Fiduciary and asset management revenue 50,657   46,399 
Deposit service charges and fees 25,968   27,004 
Mortgage banking revenue 14,367   16,650 
Other revenue 16,970   10,445 
Total fees and commissions 185,979   97,635 
Other gains (losses), net 2,251   (1,644)
Loss on derivatives, net (1,344)  (46,981)
Loss on fair value option securities, net (2,962)  (11,201)
Change in fair value of mortgage servicing rights (6,059)  49,110 
Gain on available for sale securities, net    937 
Total other operating revenue 177,865   87,856 
Other operating expense:   
Personnel 182,145   159,228 
Business promotion 8,569   6,513 
Professional fees and services 13,048   11,413 
Net occupancy and equipment 28,459   30,855 
Insurance 7,315   4,283 
Data processing and communications 44,802   39,836 
Printing, postage and supplies 3,893   3,689 
Amortization of intangible assets 3,391   3,964 
Mortgage banking costs 5,782   7,877 
Other expense 8,408   9,960 
Total other operating expense 305,812   277,618 
    
Net income before taxes 208,401   78,649 
Federal and state income taxes 45,905   16,197 
    
Net income 162,496   62,452 
Net income (loss) attributable to non-controlling interests 128   (36)
Net income attributable to BOK Financial Corporation shareholders$162,368  $62,488 
    
Average shares outstanding:   
Basic 66,331,775   67,812,400 
Diluted 66,331,775   67,813,851 
    
Net income per share:   
Basic$2.43  $0.91 
Diluted$2.43  $0.91 


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

 Three Months Ended
 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
          
Interest revenue$516,729  $451,606  $363,150  $294,247  $283,099 
Interest expense 164,381   98,980   46,825   20,229   14,688 
Net interest revenue 352,348   352,626   316,325   274,018   268,411 
Provision for credit losses 16,000   15,000   15,000       
Net interest revenue after provision for credit losses 336,348   337,626   301,325   274,018   268,411 
Other operating revenue:         
Brokerage and trading revenue 52,396   63,008   61,006   44,043   (27,079)
Transaction card revenue 25,621   27,136   25,974   26,940   24,216 
Fiduciary and asset management revenue 50,657   49,899   50,190   49,838   46,399 
Deposit service charges and fees 25,968   26,429   28,703   28,500   27,004 
Mortgage banking revenue 14,367   10,065   11,282   11,368   16,650 
Other revenue 16,970   17,034   15,479   12,684   10,445 
Total fees and commissions 185,979   193,571   192,634   173,373   97,635 
Other gains (losses), net 2,251   8,427   979   (7,639)  (1,644)
Gain (loss) on derivatives, net (1,344)  4,548   (17,009)  (13,569)  (46,981)
Loss on fair value option securities, net (2,962)  (2,568)  (4,368)  (2,221)  (11,201)
Change in fair value of mortgage servicing rights (6,059)  (2,904)  16,570   17,485   49,110 
Gain (loss) on available for sale securities, net    (3,988)  892   1,188   937 
Total other operating revenue 177,865   197,086   189,698   168,617   87,856 
Other operating expense:         
Personnel 182,145   186,419   170,348   154,923   159,228 
Business promotion 8,569   7,470   6,127   6,325   6,513 
Charitable contributions to BOKF Foundation    2,500          
Professional fees and services 13,048   18,365   14,089   12,475   11,413 
Net occupancy and equipment 28,459   29,227   29,296   27,489   30,855 
Insurance 7,315   4,677   4,306   4,728   4,283 
Data processing and communications 44,802   43,048   41,743   41,280   39,836 
Printing, postage and supplies 3,893   3,890   4,349   3,929   3,689 
Amortization of intangible assets 3,391   3,736   3,943   4,049   3,964 
Mortgage banking costs 5,782   9,016   9,504   9,437   7,877 
Other expense 8,408   10,108   11,046   9,020   9,960 
Total other operating expense 305,812   318,456   294,751   273,655   277,618 
Net income before taxes 208,401   216,256   196,272   168,980   78,649 
Federal and state income taxes 45,905   47,864   39,681   36,122   16,197 
Net income 162,496   168,392   156,591   132,858   62,452 
Net income (loss) attributable to non-controlling interests 128   (37)  81   12   (36)
Net income attributable to BOK Financial Corporation shareholders$162,368  $168,429  $156,510  $132,846  $62,488 
          
Average shares outstanding:         
Basic 66,331,775   66,627,955   67,003,199   67,453,748   67,812,400 
Diluted 66,331,775   66,627,955   67,004,623   67,455,172   67,813,851 
Net income per share:         
Basic$2.43  $2.51  $2.32  $1.96  $0.91 
Diluted$2.43  $2.51  $2.32  $1.96  $0.91 


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

 Three Months Ended
 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
Capital:         
Period-end shareholders' equity$4,874,786  $4,682,649  $4,509,934  $4,737,339  $4,849,582 
Risk weighted assets$37,192,197  $38,142,231  $36,866,994  $36,787,092  $37,160,258 
Risk-based capital ratios:         
Common equity tier 1 12.19%  11.69%  11.80%  11.61%  11.30%
Tier 1 12.20%  11.71%  11.82%  11.63%  11.31%
Total capital 13.21%  12.67%  12.81%  12.59%  12.25%
Leverage ratio 9.94%  9.91%  9.76%  9.12%  8.47%
Tangible common equity ratio1 8.46%  7.63%  7.96%  8.16%  8.13%
Adjusted tangible common equity ratio1 8.22%  7.36%  7.66%  8.10%  8.15%
          
Common stock:         
Book value per share$73.19  $69.93  $67.06  $69.87  $71.21 
Tangible book value per share$56.42  $53.19  $50.34  $53.22  $54.58 
Market value per share:         
High$106.47  $110.28  $95.51  $94.76  $119.59 
Low$80.00  $88.46  $69.82  $74.03  $93.76 
Cash dividends paid$36,006  $36,188  $35,661  $35,892  $36,093 
Dividend payout ratio 22.18%  21.49%  22.79%  27.02%  57.76%
Shares outstanding, net 66,600,833   66,958,634   67,254,383   67,806,005   68,104,043 
Stock buy-back program:         
Shares repurchased 447,071   314,406   548,034   294,084   475,877 
Amount$44,100  $32,429  $49,980  $24,404  $48,074 
Average price paid per share2$98.64  $103.14  $91.20  $82.98  $101.02 
          
Performance ratios (quarter annualized):
Return on average assets 1.43%  1.48%  1.38%  1.13%  0.50%
Return on average equity 13.61%  14.48%  13.01%  11.27%  4.93%
Net interest margin 3.45%  3.54%  3.24%  2.76%  2.44%
Efficiency ratio 56.38%  57.87%  57.35%  60.65%  75.07%
          
Reconciliation of non-GAAP measures:
1 Tangible common equity ratio and adjusted tangible common equity ratio:
Total shareholders' equity$4,874,786  $4,682,649  $4,509,934  $4,737,339  $4,849,582 
Less: Goodwill and intangible assets, net 1,117,438   1,120,880   1,124,582   1,128,493   1,132,510 
Tangible common equity 3,757,348   3,561,769   3,385,352   3,608,846   3,717,072 
Add: Unrealized gain (loss) on investment securities, net (140,947)  (167,477)  (165,206)  (30,305)  6,778 
Add: Tax effect on unrealized gain (loss) on investment securities, net 33,149   39,196   38,665   7,093   (1,586)
Adjusted tangible common equity$3,649,550  $3,433,488  $3,258,811  $3,585,634  $3,722,264 
          
Total assets$45,524,122  $47,790,642  $43,645,446  $45,377,072  $46,826,507 
Less: Goodwill and intangible assets, net 1,117,438   1,120,880   1,124,582   1,128,493   1,132,510 
Tangible assets$44,406,684  $46,669,762  $42,520,864  $44,248,579  $45,693,997 
          
Tangible common equity ratio 8.46%  7.63%  7.96%  8.16%  8.13%
          
Adjusted tangible common equity ratio 8.22%  7.36%  7.66%  8.10%  8.15%
Pre-provision net revenue:          
Net income before taxes$208,401  $216,256  $196,272  $168,980  $78,649 
Provision for expected credit losses 16,000   15,000   15,000       
Net income (loss) attributable to non-controlling interests 128   (37)  81   12   (36)
Pre-provision net revenue$224,273  $231,293  $211,191  $168,968  $78,685 
          
Other data:         
Tax equivalent interest$2,285  $2,287  $2,163  $2,040  $1,973 
Net unrealized loss on available for sale securities$(741,508) $(865,553) $(935,788) $(522,812) $(546,598)
          
Mortgage banking:         
Mortgage production revenue$(633) $(3,983) $(2,406) $(504) $5,055 
          
Mortgage loans funded for sale$138,624  $141,090  $260,210  $360,237  $418,866 
Add: current period-end outstanding commitments 71,693   45,492   75,779   106,004   160,260 
Less: prior period end outstanding commitments 45,492   75,779   106,004   160,260   171,412 
Total mortgage production volume$164,825  $110,803  $229,985  $305,981  $407,714 
          
Mortgage loan refinances to mortgage loans funded for sale 9%  10%  10%  19%  45%
Realized margin on funded mortgage loans(1.25)% (1.10)% (0.41)%  0.88%  1.64%
Production revenue as a percentage of production volume(0.38)% (3.59)% (1.05)% (0.16)%  1.24%
          
Mortgage servicing revenue$15,000  $14,048  $13,688  $11,872  $11,595 
Average outstanding principal balance of mortgage loans serviced for others 21,121,319   18,923,078   19,070,221   17,336,596   16,155,329 
Average mortgage servicing revenue rates 0.29%  0.29%  0.28%  0.27%  0.29%
          
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net$(1,711) $4,373  $(17,027) $(13,639) $(46,694)
Loss on fair value option securities, net (2,962)  (2,568)  (4,368)  (2,221)  (11,201)
Gain (loss) on economic hedge of mortgage servicing rights (4,673)  1,805   (21,395)  (15,860)  (57,895)
Gain (loss) on changes in fair value of mortgage servicing rights (6,059)  (2,904)  16,570   17,485   49,110 
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue (10,732)  (1,099)  (4,825)  1,625   (8,785)
Net interest revenue on fair value option securities3 187   (118)  29   275   383 
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges$(10,545) $(1,217) $(4,796) $1,900  $(8,402)

2  Excludes 1 percent excise tax on corporate stock repurchases.
3  Actual interest earned on fair value option securities less internal transfer-priced cost of funds.


LOANS TREND UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

  Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
Commercial:          
Healthcare $3,899,341 $3,845,017 $3,826,623 $3,696,963 $3,441,732
Services  3,563,702  3,431,521  3,280,925  3,421,493  3,351,495
Energy  3,398,057  3,424,790  3,371,588  3,393,072  3,197,667
General business  3,356,249  3,511,171  3,148,783  3,110,309  3,029,660
Total commercial  14,217,349  14,212,499  13,627,919  13,621,837  13,020,554
           
Commercial real estate:          
Multifamily  1,363,881  1,212,883  1,126,700  878,565  867,288
Industrial  1,309,435  1,221,501  1,103,905  953,626  911,928
Office  1,045,700  1,053,331  1,086,615  1,100,115  1,097,516
Retail  618,264  620,518  635,021  637,304  667,561
Residential construction and land development  102,828  95,684  91,690  111,575  120,506
Other commercial real estate  375,208  402,860  429,980  424,963  436,157
Total commercial real estate  4,815,316  4,606,777  4,473,911  4,106,148  4,100,956
           
Loans to individuals:          
Residential mortgage  1,926,027  1,890,784  1,851,836  1,784,729  1,723,506
Residential mortgages guaranteed by U.S. government agencies  224,753  245,940  262,466  293,838  322,581
Personal  1,566,608  1,601,150  1,574,325  1,484,596  1,506,832
Total loans to individuals  3,717,388  3,737,874  3,688,627  3,563,163  3,552,919
           
Total $22,750,053 $22,557,150 $21,790,457 $21,291,148 $20,674,429


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

 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
          
Texas:         
Commercial$7,103,166 $6,878,618 $6,644,890 $6,645,698 $6,286,125
Commercial real estate 1,675,831  1,555,508  1,448,590  1,339,452  1,345,105
Loans to individuals 992,343  982,700  970,459  934,856  957,320
Total Texas 9,771,340  9,416,826  9,063,939  8,920,006  8,588,550
          
Oklahoma:         
Commercial 3,178,934  3,382,577  3,108,608  3,139,093  2,936,530
Commercial real estate 574,708  582,109  608,856  576,458  552,310
Loans to individuals 2,049,472  2,077,124  2,054,362  1,982,247  1,977,886
Total Oklahoma 5,803,114  6,041,810  5,771,826  5,697,798  5,466,726
          
Colorado:         
Commercial 2,148,066  2,149,199  2,117,181  2,082,688  2,006,357
Commercial real estate 646,537  613,912  565,057  473,231  480,740
Loans to individuals 231,368  241,902  237,981  234,105  236,125
Total Colorado 3,025,971  3,005,013  2,920,219  2,790,024  2,723,222
          
Arizona:         
Commercial 1,115,973  1,124,289  1,103,000  1,085,401  1,086,195
Commercial real estate 881,465  860,947  850,319  766,767  719,970
Loans to individuals 240,556  229,872  225,981  212,870  190,746
Total Arizona 2,237,994  2,215,108  2,179,300  2,065,038  1,996,911
          
Kansas/Missouri:         
Commercial 318,782  310,715  307,456  338,910  336,966
Commercial real estate 489,951  479,968  466,955  458,157  436,740
Loans to individuals 129,580  131,307  125,039  125,584  121,247
Total Kansas/Missouri 938,313  921,990  899,450  922,651  894,953
          
New Mexico:         
Commercial 280,945  263,349  258,754  253,825  272,246
Commercial real estate 449,715  417,008  426,367  431,606  504,632
Loans to individuals 65,770  67,163  68,095  67,026  63,299
Total New Mexico 796,430  747,520  753,216  752,457  840,177
          
Arkansas:         
Commercial 71,483  103,752  88,030  76,222  96,135
Commercial real estate 97,109  97,325  107,767  60,477  61,459
Loans to individuals 8,299  7,806  6,710  6,475  6,296
Total Arkansas 176,891  208,883  202,507  143,174  163,890
          
TOTAL BOK FINANCIAL$22,750,053 $22,557,150 $21,790,457 $21,291,148 $20,674,429

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, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
Oklahoma:         
Demand$4,369,944 $4,585,963 $5,143,405 $5,422,593 $5,205,806
Interest-bearing:         
Transaction 9,468,100  9,475,528  9,619,419  10,240,378  11,410,709
Savings 564,829  555,407  558,256  561,413  558,634
Time 942,787  794,002  776,306  678,127  817,744
Total interest-bearing 10,975,716  10,824,937  10,953,981  11,479,918  12,787,087
Total Oklahoma 15,345,660  15,410,900  16,097,386  16,902,511  17,992,893
          
Texas:         
Demand 3,154,789  3,873,759  4,609,255  4,670,535  4,552,001
Interest-bearing:         
Transaction 4,366,932  4,878,482  4,781,920  5,344,326  4,963,118
Savings 175,012  178,356  179,049  183,708  182,536
Time 321,774  356,538  343,015  333,038  329,931
Total interest-bearing 4,863,718  5,413,376  5,303,984  5,861,072  5,475,585
Total Texas 8,018,507  9,287,135  9,913,239  10,531,607  10,027,586
          
Colorado:         
Demand 1,869,194  2,462,891  2,510,179  2,799,798  2,673,352
Interest-bearing:         
Transaction 2,126,435  2,123,218  2,221,796  2,277,563  2,387,304
Savings 72,548  77,961  80,542  82,976  81,762
Time 128,583  135,043  151,064  160,795  165,401
Total interest-bearing 2,327,566  2,336,222  2,453,402  2,521,334  2,634,467
Total Colorado 4,196,760  4,799,113  4,963,581  5,321,132  5,307,819
          
New Mexico:         
Demand 997,364  1,141,958  1,296,410  1,347,600  1,271,264
Interest-bearing:         
Transaction 674,328  691,915  717,492  845,442  888,257
Savings 111,771  112,430  113,056  115,660  115,457
Time 137,875  133,625  142,856  148,532  156,140
Total interest-bearing 923,974  937,970  973,404  1,109,634  1,159,854
Total New Mexico 1,921,338  2,079,928  2,269,814  2,457,234  2,431,118
          
Arizona:         
Demand 780,051  844,327  903,296  901,543  947,775
Interest-bearing:         
Transaction 687,527  739,628  788,142  792,269  810,896
Savings 16,993  16,496  18,258  17,999  18,122
Time 27,755  24,846  26,704  28,774  27,259
Total interest-bearing 732,275  780,970  833,104  839,042  856,277
Total Arizona 1,512,326  1,625,297  1,736,400  1,740,585  1,804,052
          
Kansas/Missouri:         
Demand 393,321  436,259  479,459  537,143  553,345
Interest-bearing:         
Transaction 1,040,009  694,163  747,981  913,921  1,107,525
Savings 18,292  20,678  19,375  19,943  19,589
Time 13,061  12,963  13,258  13,962  11,527
Total interest-bearing 1,071,362  727,804  780,614  947,826  1,138,641
Total Kansas/Missouri 1,464,683  1,164,063  1,260,073  1,484,969  1,691,986
          
Arkansas:         
Demand 42,312  50,180  43,111  41,084  38,798
Interest-bearing:         
Transaction 71,158  56,181  123,273  130,300  122,020
Savings 3,228  3,083  3,098  3,125  3,265
Time 4,775  4,825  5,940  6,371  6,414
Total interest-bearing 79,161  64,089  132,311  139,796  131,699
Total Arkansas 121,473  114,269  175,422  180,880  170,497
          
TOTAL BOK FINANCIAL$32,580,747 $34,480,705 $36,415,915 $38,618,918 $39,425,951


NET INTEREST MARGIN TREND UNAUDITED
BOK FINANCIAL CORPORATION

 Three Months Ended
 Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
          
TAX-EQUIVALENT ASSETS YIELDS         
Interest-bearing cash and cash equivalents4.28% 4.06% 1.87% 0.83% 0.18%
Trading securities4.52% 3.70% 2.72% 2.00% 1.71%
Investment securities, net of allowance1.46% 1.46% 1.42% 2.35% 5.07%
Available for sale securities2.87% 2.54% 2.21% 1.84% 1.77%
Fair value option securities5.17% 4.40% 2.98% 2.92% 2.81%
Restricted equity securities7.34% 5.70% 6.23% 3.30% 2.69%
Residential mortgage loans held for sale5.79% 5.56% 5.05% 4.22% 3.11%
Loans6.67% 5.99% 4.89% 3.92% 3.57%
Allowance for loan losses         
Loans, net of allowance6.74% 6.06% 4.94% 3.96% 3.61%
Total tax-equivalent yield on earning assets5.06% 4.53% 3.71% 2.96% 2.58%
          
COST OF INTEREST-BEARING LIABILITIES        
Interest-bearing deposits:         
Interest-bearing transaction1.91% 1.28% 0.63% 0.22% 0.10%
Savings0.10% 0.08% 0.05% 0.03% 0.03%
Time1.95% 1.25% 0.93% 0.68% 0.56%
Total interest-bearing deposits1.83% 1.22% 0.63% 0.24% 0.12%
Funds purchased and repurchase agreements3.33% 2.05% 0.72% 0.53% 0.95%
Other borrowings4.73% 4.08% 2.33% 1.01% 0.38%
Subordinated debt6.40% 6.16% 5.07% 4.50% 4.02%
Total cost of interest-bearing liabilities2.43% 1.57% 0.76% 0.31% 0.21%
Tax-equivalent net interest revenue spread2.63% 2.96% 2.95% 2.65% 2.37%
Effect of noninterest-bearing funding sources and other0.82% 0.58% 0.29% 0.11% 0.07%
Tax-equivalent net interest margin3.45% 3.54% 3.24% 2.76% 2.44%

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, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022
Nonperforming assets:         
Nonaccruing loans:         
Commercial:         
Healthcare$37,247  $41,034  $41,438  $14,886  $15,076 
Services 8,097   16,228   27,315   15,259   16,535 
Energy 127   1,399   4,164   20,924   24,976 
General business 8,961   1,636   2,753   3,539   3,750 
Total commercial 54,432   60,297   75,670   54,608   60,337 
          
Commercial real estate 21,668   16,570   7,971   10,939   15,989 
          
Loans to individuals:         
Permanent mortgage 29,693   29,791   30,066   30,460   30,757 
Permanent mortgage guaranteed by U.S. government agencies 14,302   15,005   16,957   18,000   16,992 
Personal 200   134   136   132   171 
Total loans to individuals 44,195   44,930   47,159   48,592   47,920 
          
Total nonaccruing loans$120,295  $121,797  $130,800  $114,139  $124,246 
Accruing renegotiated loans guaranteed by U.S. government agencies1    163,535   176,022   196,420   204,121 
Real estate and other repossessed assets 12,651   14,304   29,676   22,221   24,492 
Total nonperforming assets$132,946  $299,636  $336,498  $332,780  $352,859 
Total nonperforming assets excluding those guaranteed by U.S. government agencies$118,644  $121,096  $143,519  $118,360  $131,746 
          
Accruing loans 90 days past due2$76  $510  $120  $3  $307 
          
Gross charge-offs$3,667  $17,807  $1,766  $1,368  $7,805 
Recoveries (2,898)  (2,301)  (1,309)  (2,167)  (1,824)
Net charge-offs (recoveries)$769  $15,506  $457  $(799) $5,981 
          
Provision for loan losses$14,525  $9,442  $1,111  $(6,158) $(3,967)
Provision for credit losses from off-balance sheet unfunded loan commitments 2,024   4,609   14,060   6,005   3,268 
Provision for expected credit losses from mortgage banking activities (488)  1,003   (66)  69   621 
Provision for credit losses related to held-to maturity (investment) securities portfolio (61)  (54)  (105)  84   78 
Total provision for credit losses$16,000  $15,000  $15,000  $  $ 
          
Allowance for loan losses to period end loans 1.10%  1.04%  1.11%  1.13%  1.19%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans 1.37%  1.31%  1.37%  1.33%  1.37%
Nonperforming assets to period end loans and repossessed assets 0.58%  1.33%  1.54%  1.56%  1.70%
Net charge-offs (annualized) to average loans 0.01%  0.28%  0.01% (0.02)%  0.12%
Allowance for loan losses to nonaccruing loans2  235.36%  220.71%  212.37%  250.80%  229.80%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans2 294.74%  277.76%  261.83%  294.74%  263.60%

1 The Company adopted FASB Accounting Standards Update No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates designation of these loans as troubled debt restructurings effective January 1, 2023.
2 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.


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

  Three Months Ended 1Q23 vs 4Q22 1Q23 vs 1Q22
  Mar. 31, 2023 Dec. 31, 2022 Mar. 31, 2022 $ change % change $ change % change
Commercial Banking              
Net interest revenue $266,545 $232,834 $137,011  $33,711  14.5% $129,534  94.5%
Fees and commissions revenue  55,835  58,881  56,964   (3,046) (5.2)%  (1,129)  (2.0)%
Combined net interest and fee revenue  322,380  291,715  193,975   30,665  10.5%  128,405  66.2%
Other operating expense  73,504  79,722  65,114   (6,218) (7.8)%  8,390  12.9%
Corporate expense allocations  17,729  18,007  16,246   (278) (1.5)%  1,483  9.1%
Net income  176,547  139,374  82,344   37,173  26.7%  94,203  114.4%
               
Average assets  28,162,934  28,373,856  29,823,905   (210,922) (0.7)%  (1,660,971)  (5.6)%
Average loans  18,750,426  18,254,559  16,696,428   495,867  2.7%  2,053,998  12.3%
Average deposits  15,861,285  16,832,244  19,595,260   (970,959) (5.8)%  (3,733,975)  (19.1)%
               
Consumer Banking              
Net interest revenue $109,381 $53,302 $27,207  $56,079  105.2% $82,174  302.0%
Fees and commissions revenue  30,581  27,618  33,977   2,963  10.7%  (3,396)  (10.0)%
Combined net interest and fee revenue  139,962  80,920  61,184   59,042  73.0%  78,778  128.8%
Other operating expense  50,198  54,526  48,789   (4,328) (7.9)%  1,409  2.9%
Corporate expense allocations  11,618  11,972  12,080   (354) (3.0)%  (462)  (3.8)%
Net income (loss)  50,687  8,996  (7,317)  41,691  463.4%  58,004  (792.7)%
               
Average assets  9,934,511  10,078,381  10,273,890   (143,870) (1.4)%  (339,379)  (3.3)%
Average loans  1,747,237  1,725,555  1,672,346   21,682  1.3%  74,891  4.5%
Average deposits  8,248,541  8,617,085  8,746,622   (368,544) (4.3)%  (498,081)  (5.7)%
               
Wealth Management              
Net interest revenue $54,106 $34,498 $55,766  $19,608  56.8% $(1,660)  (3.0)%
Fees and commissions revenue  108,911  114,630  25,023   (5,719) (5.0)%  83,888  335.2%
Combined net interest and fee revenue  163,017  149,128  80,789   13,889  9.3%  82,228  101.8%
Other operating expense  82,039  82,211  74,620   (172) (0.2)%  7,419  9.9%
Corporate expense allocations  12,386  12,733  12,071   (347) (2.7)%  315  2.6%
Net income (loss)  52,427  41,447  (4,521)  10,980  26.5%  56,948  (1,259.6)%
               
Average assets  11,663,096  12,912,630  21,323,795   (1,249,534) (9.7)%  (9,660,699)  (45.3)%
Average loans  2,201,622  2,223,275  2,118,780   (21,653) (1.0)%  82,842  3.9%
Average deposits  7,432,413  7,888,753  9,619,323   (456,340) (5.8)%  (2,186,910)  (22.7)%
Fiduciary assets  57,457,925  56,060,496  61,095,320   1,397,429  2.5%  (3,637,395)  (6.0)%
Assets under management or administration  102,310,126  99,735,040  101,081,355   2,575,086  2.6%  1,228,771  1.2%

 

 

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