BOK Financial Corporation Reports Quarterly Earnings of $62

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

CEO Commentary

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

First Quarter 2022 Financial Highlights

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

First Quarter 2022 Segment Highlights

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

Net Interest Revenue

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

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

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

Operating Revenue

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

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

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

Operating Expense

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

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

Loans, Deposits and Capital

Loans

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

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

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

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

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

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

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

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

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

Deposits

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

Capital

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

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

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

Credit Quality

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

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

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

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

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

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

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

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

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

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

Securities and Derivatives

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

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

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

Conference Call and Webcast

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

About BOK Financial Corporation

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

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

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

BALANCE SHEETS — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

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

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

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

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

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

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

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

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

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

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

LOANS TREND — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

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

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

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

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

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

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

NET INTEREST MARGIN TREND — UNAUDITED
BOK FINANCIAL CORPORATION

  Three Months Ended
  Mar. 31, 2022   Dec. 31, 2021   Sept. 30, 2021   June 30, 2021   Mar. 31, 2021
                   
TAX-EQUIVALENT ASSETS YIELDS                  
Interest-bearing cash and cash equivalents 0.18 %   0.16 %   0.14 %   0.10 %   0.10 %
Trading securities 1.71 %   1.89 %   2.04 %   1.95 %   2.06 %
Investment securities, net of allowance 5.07 %   4.99 %   5.02 %   5.01 %   4.88 %
Available for sale securities 1.77 %   1.72 %   1.80 %   1.85 %   1.84 %
Fair value option securities 2.81 %   2.71 %   2.62 %   2.60 %   1.95 %
Restricted equity securities 2.69 %   2.98 %   2.55 %   3.36 %   2.86 %
Residential mortgage loans held for sale 3.11 %   3.06 %   3.06 %   2.91 %   2.71 %
Loans 3.57 %   3.70 %   3.68 %   3.54 %   3.55 %
Allowance for loan losses                  
Loans, net of allowance 3.61 %   3.75 %   3.73 %   3.60 %   3.62 %
Total tax-equivalent yield on earning assets 2.58 %   2.66 %   2.78 %   2.75 %   2.78 %
                   
COST OF INTEREST-BEARING LIABILITIES                
Interest-bearing deposits:                  
Interest-bearing transaction 0.10 %   0.09 %   0.09 %   0.10 %   0.12 %
Savings 0.03 %   0.04 %   0.04 %   0.04 %   0.04 %
Time 0.56 %   0.53 %   0.55 %   0.58 %   0.70 %
Total interest-bearing deposits 0.12 %   0.12 %   0.13 %   0.14 %   0.17 %
Funds purchased and repurchase agreements 0.95 %   0.73 %   0.20 %   0.16 %   0.19 %
Other borrowings 0.38 %   0.49 %   0.37 %   0.34 %   0.39 %
Subordinated debt 4.02 %   4.02 %   4.63 %   4.87 %   4.92 %
Total cost of interest-bearing liabilities 0.21 %   0.21 %   0.19 %   0.21 %   0.24 %
Tax-equivalent net interest revenue spread 2.37 %   2.45 %   2.59 %   2.54 %   2.54 %
Effect of noninterest-bearing funding sources and other 0.07 %   0.07 %   0.07 %   0.06 %   0.08 %
Tax-equivalent net interest margin 2.44 %   2.52 %   2.66 %   2.60 %   2.62 %

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

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

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

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

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

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

        

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