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

Rhea-AI Summary

BOK Financial Corporation (BOKF) reported net income of $62.5 million or $0.91 per diluted share in Q1 2022, down from $117.3 million or $1.71 in Q4 2021. The results were affected by interest rate volatility and geopolitical tensions, leading to a $8.7 million decline in net interest revenue to $268.4 million and a decrease in fees and commissions revenue by $48.7 million. Loan growth continued, with outstanding loans increasing by $469 million to $20.7 billion. The company's common equity Tier 1 capital ratio was 11.30 percent.

Positive

• Period-end loans increased $469 million to $20.7 billion.
• The company is strategically positioned to benefit from rising interest rates, which should expand margins and revenue.
• No provision for expected credit losses was necessary, indicating strong credit quality.

Negative

• Net income decreased significantly from $117.3 million in Q4 2021 to $62.5 million in Q1 2022.
• Net interest revenue declined by $8.7 million from Q4 2021, with net interest margin dropping from 2.52 percent to 2.44 percent.
• Fees and commissions revenue decreased by $48.7 million compared to the previous quarter.

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	%

FAQ

What were BOKF's earnings for Q1 2022?

BOK Financial Corporation reported net income of $62.5 million or $0.91 per diluted share for Q1 2022.

How did interest rate volatility affect BOKF's financial results?

Interest rate volatility led to a significant decrease in trading revenue and impacted mortgage loan production volumes.

What is BOKF's loan portfolio performance?

BOKF's period-end loans increased by $469 million to $20.7 billion as of March 31, 2022.

What is the outlook for BOKF considering the current economic conditions?

BOKF believes it is well positioned to benefit from potential future interest rate hikes, which could improve margins and revenue.