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BOK Financial Corporation Reports Annual Earnings of $520 million or $7.68 Per Share and Quarterly Earnings of $168 million or $2.51 Per Share in the Fourth Quarter
Press Releases

BOK Financial Corporation Reports Annual Earnings of $520 million or $7.68 Per Share and Quarterly Earnings of $168 million or $2.51 Per Share in the Fourth Quarter

TULSA, Okla., Jan. 25, 2023 (GLOBE NEWSWIRE) —

CEO Commentary
Stacy Kymes, president and chief executive officer, stated, “The strong results of the fourth quarter continue to build on the earnings momentum we have been developing throughout 2022. This quarter was the highest pre-provision net revenue in our history. We enjoyed loan growth, net interest margin expansion, strong capital levels and balance sheet liquidity while asset quality remains very strong. We also took actions in the fourth quarter to move toward a more neutral interest rate position. Our fee businesses remained strong for the quarter and for the year in spite of the worst combined equity and fixed income markets since the late 1960’s. I am proud of the results our team is delivering. Our thoughtful growth, diverse business mix, resilient geographic footprint, and proven credit discipline have BOK Financial well-positioned as we begin 2023."

Fourth Quarter 2022 Financial Highlights
(Unless indicated otherwise, all comparisons are to the prior quarter)
  • Net income was $168.4 million or $2.51 per diluted share for the fourth quarter of 2022 and $156.5 million or $2.32 per diluted share for the third quarter of 2022.
  • Net interest revenue totaled $352.6 million, an increase of $36.3 million. Net interest margin was 3.54 percent compared to 3.24 percent. In response to rising inflation, the Federal Reserve increased the federal funds rate another 125 basis points in the fourth quarter. The resulting impact on market interest rates increased our net interest margin.
  • Fees and commissions revenue was relatively consistent with the prior quarter at $193.6 million. Increased brokerage and trading revenue, transaction card revenue, and other revenue was offset by lower revenue from mortgage banking and deposit service charges.
  • The net cost of the changes in fair value of mortgage servicing rights and related economic hedges was $1.2 million for the fourth quarter of 2022 compared to $4.8 million for the third quarter of 2022.
  • Operating expense increased $23.7 million to $318.5 million. Personnel expense increased $16.1 million, largely driven by higher incentive compensation expense. Non-personnel expense increased $7.6 million, primarily related to project-related professional fees and data processing and communications costs.
  • Period-end loans increased $767 million to $22.6 billion at December 31, 2022. Of this increase, commercial loans increased $591 million, commercial real estate loans grew $133 million, and loans to individuals increased $49 million. In addition, unfunded loan commitments grew by $839 million. Average outstanding loan balances were $22.0 billion, a $377 million increase.
  • We recorded a $15.0 million provision for expected credit losses in the fourth quarter of 2022, primarily due to strong growth in loans and loan commitments. The level of uncertainty in the economic outlook remained high and key economic factors were slightly less favorable to economic growth across all scenarios. We also recorded a $15.0 million provision for expected credit losses in the third quarter of 2022, primarily as a result of growth in loans and loan commitments during the quarter. The combined allowance for credit losses totaled $297 million or 1.31 percent of outstanding loans at December 31, 2022. The combined allowance for credit losses was $298 million or 1.37 percent of outstanding loans at September 30, 2022.
  • Average deposits decreased $1.6 billion to $35.5 billion and period-end deposits decreased $1.9 billion to $34.5 billion, consistent with industry trends as customers redeploy resources following the savings trend during the height of the pandemic. Average demand deposits were reduced by $929 million and average interest-bearing deposits decreased $659 million. The loan to deposit ratio was 65 percent at December 31, 2022 and 60 percent at September 30, 2022.
  • The company’s common equity Tier 1 capital ratio was 11.69 percent at December 31, 2022. In addition, the company’s Tier 1 capital ratio was 11.71 percent, total capital ratio was 12.67 percent, and leverage ratio was 9.91 percent at December 31, 2022. At September 30, 2022, the company’s common equity Tier 1 capital ratio was 11.80 percent, Tier 1 capital ratio was 11.82 percent, total capital ratio was 12.81 percent, and leverage ratio was 9.76 percent.
  • The company repurchased 314,406 shares of common stock at an average price of $103.14 a share in the fourth quarter of 2022.
Fourth Quarter 2022 Segment Highlights
  • Commercial Banking contributed $139.4 million to net income in the fourth quarter of 2022, an increase of $5.5 million. Combined net interest revenue and fee revenue increased $25.5 million, primarily due to the increase in the spread on deposits sold to our Funds Management unit. Net loans charged-off increased $14.9 million. Personnel expense increased $3.4 million, driven by incentive compensation costs associated with growth in revenue. Average loans increased $350 million or 2 percent to $18.3 billion. Average deposits decreased $1.1 billion or 6 percent to $16.8 billion.
  • Consumer Banking contributed $9.0 million to net income in the fourth quarter of 2022, an increase of $6.0 million over the prior quarter. Combined net interest revenue and fee revenue increased $6.7 million. Net interest revenue increased $9.4 million, largely due to an increase in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue decreased $2.6 million. Deposit service charges decreased $1.5 million from reduced consumer overdraft charges as expected from changes implemented in the fourth quarter. Mortgage banking revenue decreased $1.2 million due to reduced mortgage production volume combined with narrowing margins. Operating expense increased $1.3 million. Average loans increased $39 million or 2 percent to $1.7 billion. Average deposits decreased $196 million or 2 percent to $8.6 billion.
  • Wealth Management contributed $41.6 million to net income in the fourth quarter of 2022, consistent with the third quarter of 2022. Our diverse set of investment-focused businesses, which include trading in fixed income securities and other financial instruments and providing wealth management services to institutional and private wealth clients, produced total net interest and fee revenues of $149.1 million, an increase of $2.4 million. Total revenue from institutional trading activities increased $2.7 million, primarily due to a higher volume of residential mortgage-backed securities trading activity. Other revenue decreased $2.3 million due to lower energy hedging in the fourth quarter. Operating expense increased $2.9 million, mainly due to increased volume-driven incentive compensation costs. Average loans increased $59 million or 3 percent to $2.2 billion. Average deposits decreased $110 million or 1 percent to $7.9 billion. Assets under management were $99.7 billion, an increase of $4.3 billion.
Annual 2022 Financial Highlights
(Unless indicated otherwise, all comparisons are to the prior year)
  • Net income was $520.3 million or $7.68 per diluted share for the year ended December 31, 2022 and $618.1 million or $8.95 per diluted share for the year ended December 31, 2021.
  • Net interest revenue totaled $1.2 billion, an increase of $93.3 million. Net interest margin was 2.98 percent compared to 2.60 percent. In response to rising inflation, the Federal Reserve increased the federal funds rate 425 basis points since the beginning of 2022. The resulting impact on market interest rates has increased net interest margin.
  • Fees and commissions revenue decreased $11.1 million to $657.2 million. A $56.5 million decrease in mortgage banking revenue due to increasing mortgage interest rates and continued inventory shortages was largely offset by increased customer hedging, investment banking, and fiduciary and asset management revenues.
  • The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $12.5 million for the year ended December 31, 2022 compared to a net benefit of $21.0 million for the year ended December 31, 2021, due to increased market volatility throughout 2022.
  • Other gains and losses, net, decreased $63.6 million due to sales of an alternative investment and repossessed assets in the prior year.
  • Operating expense decreased $13.2 million to $1.2 billion. Personnel expense decreased $24.5 million, largely driven by lower incentive compensation expense, partially offset by an increase in regular compensation. Non-personnel expense increased $11.2 million, primarily related to additional business promotion fees and project-related data processing and communications and professional fees. These were partially offset by lower mortgage banking costs and expenses on repossessed assets.
  • Period-end loans increased $2.4 billion to $22.6 billion at December 31, 2022. Of this increase, commercial loans increased $1.7 billion, commercial real estate loans increased $775 million, and loans to individuals grew by $146 million. Paycheck Protection Program loans decreased $262 million. Average outstanding loan balances were $21.3 billion, a $216 million decrease.
  • We recorded a $30.0 million provision for expected credit losses in 2022, primarily due to strong growth in loans and loan commitments, partially offset by improvement in credit quality metrics. The uncertainty in our economic forecast increased and some key economic factors were less favorable to growth across all scenarios. A negative $100.0 million provision for expected credit losses was recorded in 2021. The combined allowance for credit losses totaled $297 million or 1.31 percent of outstanding loans at December 31, 2022. The combined allowance for credit losses was $289 million or 1.43 percent of outstanding loans at December 31, 2021.
  • Average deposits decreased $70 million to $37.9 billion and period-end deposits decreased $6.8 billion to $34.5 billion. In the first half of the year, the majority of deposit outflows were driven by institutional clients moving to off-balance sheet alternatives seeking higher yields. Starting in the third quarter, deposit outflows were largely attributed to commercial clients redeploying capital. The fourth quarter also saw seasonal declines due to mortgage tax disbursements.
2022 Annual Segment Highlights
  • Commercial Banking contributed $460.4 million to net income in 2022, an increase of $131.8 million compared to 2021. Combined net-interest revenue and fee revenue increased $215.5 million. Net interest revenue increased $208.7 million, primarily due to growth in average deposit balances and an increase in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue increased $6.8 million as increases in customer hedging revenue and transaction card revenue were largely offset by a decline in other revenue. Operating expense increased $9.6 million, primarily due to incentive compensation costs. The prior year also included the sale of an alternative investment that resulted in a $31.1 million pre-tax gain, net of non-controlling interest. Net loans charged-off decreased $13.4 million. Average Commercial Banking loans increased $700 million or 4 percent to $17.6 billion. Average Commercial Banking deposits grew $664 million or 4 percent to $18.3 billion.
  • Consumer Banking contributed $5.9 million to net income in 2022, a decrease of $21.8 million compared to the prior year. Combined net interest revenue and fee revenue increased $3.3 million. Net interest revenue increased $54.7 million, primarily due to an increase in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue decreased $51.4 million, largely attributable to reduced mortgage production volume and margin compression. The net cost of the changes in fair value of mortgage servicing rights and related economic hedges was $12.5 million for the year ended December 31, 2022 compared to a net benefit of $21.0 million for the year ended December 31, 2021. Interest rate volatility affected the effectiveness of our mortgage servicing rights hedging strategy. Operating expense was consistent with the prior year. Average Consumer Banking loans decreased $81 million or 5 percent to $1.7 billion. Average Consumer Banking deposits increased $323 million or 4 percent to $8.8 billion.
  • Wealth Management contributed $106.2 million to net income in 2022, a decrease of $7.1 million compared to 2021. Total Wealth Management revenue decreased $11.7 million. Total revenue from trading activities decreased $89.5 million compared to the year ended December 31, 2021, largely due to disruption in the fixed income markets due to economic uncertainty, primarily in the first quarter, combined with narrowing margins and lower trading volumes. This decrease was partially offset by an increase in the spread on deposits sold to our Funds Management unit. Fiduciary and asset management revenue also increased $18.0 million. Growth in mutual fund fees and decreased waivers were partially offset by lower trust fees and managed account fees due to market driven declines in assets under management or administration. Other revenue increased $26.7 million, largely due to higher derivative margin use fees. Operating expense decreased $8.5 million due to incentive compensation costs related to reduced trading activity. Average Wealth Management loans grew $185 million or 9 percent to $2.2 billion. Average Wealth Management deposits decreased $935 million or 10 percent to $8.5 billion. Average assets under management decreased $5.2 billion or 5 percent compared to the prior year.
(Unless indicated otherwise, comparisons are to the prior quarter)
Net Interest Revenue

Net interest revenue was $352.6 million for the fourth quarter of 2022, an increase of $36.3 million. The rapid increase in interest rates, combined with our strong loan growth and our asset sensitive position, drove a linked quarter increase in net interest revenue and a 30 basis point increase in net interest margin to 3.54 percent. In response to rising inflation, the Federal Reserve increased the federal funds rate 125 basis points in the fourth quarter bringing the year-to-date total rate increases to 425 basis points. The resulting impact on market interest rates has increased net interest margin as our earning assets, led by our significant percentage of variable-rate commercial loans, reprice at a higher rate and faster pace than our interest-bearing liabilities.

Average earning assets increased $757 million. Average loan balances increased $377 million, largely due to growth in commercial and commercial real estate loans. Average available for sale securities increased $648 million as we reposition our balance for the current rate environment. Average interest bearing cash and cash equivalents decreased $180 million while average trading securities decreased $91 million. Average interest-bearing deposits decreased $659 million as customers redeploy resources following the savings trend during the height of the pandemic. Average other borrowings increased $994 million while funds purchased and repurchase agreements increased $246 million.

The yield on average earning assets was 4.53 percent, up 82 basis points. The loan portfolio yield increased 110 basis points to 5.99 percent while the yield on trading securities was up 98 basis points to 3.70 percent. The yield on the available for sale securities portfolio increased 33 basis points to 2.54 percent. The yield on interest-bearing cash and cash equivalents increased 219 basis points to 4.06 percent.

Funding costs were 1.57 percent, an 81 basis point increase. The cost of interest-bearing deposits increased 59 basis points to 1.22 percent. The cost of other borrowings was up 175 basis points to 4.08 percent while the cost of funds purchased and repurchase agreements increased 133 basis points to 2.05 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 58 basis points, an increase of 29 basis points.

Operating Revenue

Fees and commissions revenue totaled $193.6 million for the fourth quarter of 2022, relatively unchanged from the prior quarter.

Brokerage and trading revenue increased $2.0 million. Trading revenue grew $9.5 million, largely due to an increase in volume and higher margins on U.S. agency residential mortgage-backed securities trading activity driven by favorable market conditions and increased market volatility. A decline from heightened energy derivative activity in the third quarter led to a $4.7 million decrease in customer hedging revenue. Total investment banking revenue decreased $2.4 million, following record levels in the third quarter. Other revenue increased $1.6 million, largely due to higher revenue on repossessed assets while transaction card revenue grew $1.2 million along with a rise in seasonal transaction volumes.

Deposit service charges decreased $2.3 million. In the fourth quarter, we implemented changes to eliminate non-sufficient funds fees and reduce consumer overdraft fees. Mortgage banking revenue decreased $1.2 million with a reduction in mortgage production revenue partially offset by an increase in mortgage servicing revenue. Mortgage production volume decreased $119 million to $111 million as rising mortgage interest rates and continued inventory constraints place pressure on mortgage loan originations.

Other gains and losses, net, increased $7.4 million, primarily driven by the sale of a repossessed entity combined with a change in the value of deferred compensation investments, which are held to offset the cost of various employee benefit programs. We also recognized a $4.0 million loss on the sale of available for sale securities in the fourth quarter as we repositioned our balance sheet for the current rate environment.

Operating Expense

Total operating expense was $318.5 million for the fourth quarter of 2022, an increase of $23.7 million compared to the third quarter of 2022.

Personnel expense increased $16.1 million. Cash-based incentive compensation increased $9.9 million due to increased sales activity combined with a one-time incentive given to all employees in the fourth quarter. Deferred compensation expense, which is offset by deferred compensation investments in other revenue, increased $4.9 million.

Non-personnel expense was $132.0 million, up $7.6 million. A $4.3 million increase in professional fees and services and $1.3 million increase in data processing and communications expense was largely attributed to ongoing technology projects. The fourth quarter of 2022 also included a $2.5 million charitable donation to the BOKF Foundation as we continue to focus on the communities we serve.

Loans, Deposits and Capital

Loans

Outstanding loans were $22.6 billion at December 31, 2022, growing $767 million over September 30, 2022, largely due to growth in commercial and commercial real estate loans. Unfunded loan commitments were also up $839 million over the third quarter.

Outstanding commercial loan balances, which includes services, general business, energy, and healthcare loans, increased $591 million with strong growth in all categories.

Services sector loan balances increased $151 million to $3.4 billion or 15 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.

General business loans increased $368 million to $3.5 billion or 16 percent of total loans. General business loans include $2.1 billion of wholesale/retail loans and $1.4 billion of loans from other commercial industries.

Energy loan balances increased $53 million to $3.4 billion or 15 percent of total loans. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 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 $3.8 billion at December 31, 2022, an increase of $334 million over September 30, 2022.

Healthcare sector loan balances increased $18 million, totaling $3.8 billion or 17 percent of total loans. Our healthcare sector loans primarily consist of $3.2 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally, we loan to borrowers with a portfolio of multiple facilities, which serves to help diversify risks specific to a single facility.

Commercial real estate loan balances grew $133 million and represent 20 percent of total loans. Loans secured by industrial facilities increased $118 million to $1.2 billion. Loans secured by multifamily residential properties increased $86 million to 1.2 billion. This growth was partially offset by a $33 million decrease in loans secured by office buildings and $27 million decrease in other real estate loans. Unfunded commercial real estate loan commitments were $3.1 billion at December 31, 2022, an increase of $144 million over September 30, 2022.

Loans to individuals increased $49 million and represent 17 percent of total loans. Total residential mortgage loans increased $22 million while personal loans increased $27 million.

Liquidity and Capital

Our funding sources, which primarily include deposits and borrowings from the Federal Home Loan Banks, provide adequate liquidity to meet our needs. The loan to deposit ratio was 65 percent at December 31, 2022 providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.

Period-end deposits totaled $34.5 billion at December 31, 2022, a $1.9 billion decrease, largely due to commercial clients redeploying capital following the savings trend during the pandemic combined with seasonal mortgage tax disbursements. Demand deposits decreased $1.6 billion while interest-bearing transaction account balances decreased $341 million. Period-end Commercial Banking deposits decreased $1.4 billion, Consumer Banking deposits declined $354 million, and Wealth Management deposits were largely unchanged. Average deposits were $35.5 billion at December 31, 2022, a $1.6 billion decrease. Average demand deposit account balances decreased $929 million and average interest-bearing transaction account balances decreased $658 million.

The company’s common equity Tier 1 capital ratio was 11.69 percent at December 31, 2022. In addition, the company’s Tier 1 capital ratio was 11.71 percent, total capital ratio was 12.67 percent, and leverage ratio was 9.91 percent at December 31, 2022. At the beginning of 2020, we elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period. This election added 8 basis points to the company’s common equity tier 1 capital ratio at December 31, 2022. At September 30, 2022, the company’s common equity Tier 1 capital ratio was 11.80 percent, Tier 1 capital ratio was 11.82 percent, total capital ratio was 12.81 percent, and leverage ratio was 9.76 percent.

The company’s tangible common equity ratio, a non-GAAP measure, was 7.63 percent at December 31, 2022 and 7.96 percent at September 30, 2022. 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 314,406 shares of common stock at an average price of $103.14 a share in the fourth quarter of 2022. The company repurchased a total of 1,632,401 shares of common stock at an average price of $94.88 a share in 2022. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

Expected credit losses on assets carried at amortized cost are recognized over their projected lives based on models that measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Our models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rates and West Texas Intermediate ("WTI") oil prices on a probability weighted basis.

A $15.0 million provision for credit losses was necessary for the fourth quarter of 2022, primarily related to strong growth in loans and unfunded commitments during the quarter. The level of uncertainty in the economic outlook of our reasonable and supportable forecast remained high, and key economic factors were slightly less favorable to economic growth across all scenarios.

The probability weighting of our base case reasonable and supportable forecast remained at 50 percent in the fourth quarter of 2022 as the level of uncertainty in economic forecasts remained high. Our base case reasonable and supportable forecast assumes inflation continues to improve from the peak experienced in the third quarter of 2022 and slowly normalizes. We expect the impact of the Russian-Ukraine conflict remains isolated. Inflation pressures cause modest declines in real household income compared to pre-pandemic levels, resulting in below-trend GDP growth. GDP is projected to grow by 0.9 percent over the next twelve months. Job openings revert to more normalized levels and overall hiring levels decline, causing the national unemployment rate to modestly increase over the next four quarters. Our forecasted civilian unemployment rate is 3.9 percent for the first quarter of 2023, increasing to 4.1 percent by the fourth quarter of 2023. Our base case also assumes the Federal Reserve increases the federal funds rate twice in the first quarter of 2023, resulting in a target range of 4.75 percent to 5.00 percent. No additional rate increases in 2023 are anticipated. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of December 2022, averaging $75.05 per barrel over the next twelve months.

Our downside case, probability weighted at 40 percent, assumes that inflation moderates slightly from the peak experienced in the third quarter of 2022, but remains elevated through the forecast horizon ending 2023 at 5.0 percent. Higher levels of inflation force the Federal Reserve to adopt a more aggressive monetary policy as compared to the base case scenario. This results in a federal funds target range of 5.75 percent to 6.00 percent by December 2023. The United States economy is pushed into a recession, with a contraction in economic activity and a sharp increase in the unemployment rate from 4.8 percent in the first quarter of 2023 to 6.0 percent in the fourth quarter of 2023. In this scenario, real GDP is expected to contract 1.3 percent over the next four quarters. WTI oil prices are projected to average $65.87 per barrel over the next twelve months, peaking at $70.78 in the first quarter of 2023 and falling 15 percent over the following three quarters.

Nonperforming assets totaled $300 million or 1.33 percent of outstanding loans and repossessed assets at December 31, 2022, compared to $336 million or 1.54 percent at September 30, 2022. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $121 million or 0.54 percent of outstanding loans and repossessed assets at December 31, 2022, compared to $144 million or 0.67 percent at September 30, 2022.

Nonaccruing loans were $122 million or 0.54 percent of outstanding loans at December 31, 2022. Nonaccruing commercial loans totaled $60 million or 0.42 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $17 million or 0.36 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $45 million or 1.20 percent of outstanding loans to individuals.

Nonaccruing loans decreased $9.0 million compared to September 30, 2022, primarily related to nonaccruing services, energy and loans to individuals, partially offset by an increase in nonaccruing commercial real estate loans. New nonaccruing loans identified in the fourth quarter totaled $32 million, offset by $9.1 million in payments received.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers’ ability to continue to perform, totaled $94 million at December 31, 2022, compared to $95 million at September 30, 2022. A decrease in potential problem services, energy and general business loans was offset by an increase in healthcare and commercial real estate potential problem loans.

At December 31, 2022, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $297 million or 1.31 percent of outstanding loans and 278 percent of nonaccruing loans. The allowance for loan losses totaled $236 million or 1.04 percent of outstanding loans and 221 percent of nonaccruing loans. At September 30, 2022, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $298 million or 1.37 percent of outstanding loans and 262 percent of nonaccruing loans. The allowance for loan losses was $242 million or 1.11 percent of outstanding loans and 212 percent of nonaccruing loans. The allowance to nonaccruing loan percentages referenced above omit residential mortgage loans guaranteed by U.S. government agencies.

Gross charge-offs were $17.8 million for the fourth quarter compared to $1.8 million for the third quarter of 2022. Gross charge-offs for the fourth quarter were primarily related to a single services borrower. Recoveries totaled $2.3 million for the fourth quarter of 2022 and $1.3 million for the prior quarter. Net charge-offs were $15.5 million or 0.28 percent of average loans on an annualized basis in the fourth quarter compared to net charge-offs of $457 thousand or 0.01 percent of average loans on an annualized basis in the third quarter. Net charge-offs were 0.10 percent of average loans over the last four quarters.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $11.5 billion at December 31, 2022, a $1.5 billion increase compared to September 30, 2022. At December 31, 2022, the available for sale securities portfolio consisted primarily of $5.8 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.5 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2022, the available for sale securities portfolio had a net unrealized loss of $866 million compared to $936 million at September 30, 2022.

We hold an inventory of trading securities in support of sales to a variety of customers. At December 31, 2022, the trading securities portfolio totaled $4.5 billion compared to $2.2 billion at September 30, 2022.

The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities increased $263 million to $297 million at December 31, 2022.

Derivative contracts are carried at fair value. At December 31, 2022, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $1.0 billion compared to $1.5 billion at September 30, 2022. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $1.0 billion at December 31, 2022 and $1.5 billion at September 30, 2022.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $1.2 million during the fourth quarter of 2022, including a $2.9 million decrease in the fair value of mortgage servicing rights, $1.8 million increase in the fair value of securities and derivative contracts held as an economic hedge, and $118 thousand of related net interest expense.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, January 25, 2023 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-877-407-4018 and referencing conference ID # 13735343.

About BOK Financial Corporation

BOK Financial Corporation is a $48 billion regional financial services company headquartered in Tulsa, Oklahoma with $100 billion in assets under management or administration. The company’s stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation’s holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA’s holdings include TransFund, Cavanal Hill Investment Management, Inc. and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Wisconsin and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of December 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)

  Dec. 31, 2022   Sep. 30, 2022
ASSETS      
Cash and due from banks $ 943,810     $ 804,110  
Interest-bearing cash and cash equivalents   457,906       804,799  
Trading securities   4,464,161       2,194,618  
Investment securities, net of allowance   2,513,687       2,572,360  
Available for sale securities   11,493,860       10,040,894  
Fair value option securities   296,590       33,966  
Restricted equity securities   299,651       100,356  
Residential mortgage loans held for sale   75,272       148,121  
Loans:      
Commercial   14,198,187       13,607,686  
Commercial real estate   4,606,777       4,473,911  
Paycheck protection program   14,312       20,233  
Loans to individuals   3,737,874       3,688,627  
Total loans   22,557,150       21,790,457  
Allowance for loan losses   (235,704 )     (241,768 )
Loans, net of allowance   22,321,446       21,548,689  
Premises and equipment, net   565,175       569,379  
Receivables   273,815       200,343  
Goodwill   1,044,749       1,044,749  
Intangible assets, net   76,131       79,833  
Mortgage servicing rights   277,608       283,806  
Real estate and other repossessed assets, net   14,304       29,676  
Derivative contracts, net   880,343       1,693,742  
Cash surrender value of bank-owned life insurance   406,751       407,722  
Receivable on unsettled securities sales   31,004       49,089  
Other assets   1,354,379       1,039,194  
TOTAL ASSETS $ 47,790,642     $ 43,645,446  
       
LIABILITIES AND EQUITY      
Deposits:      
Demand $ 13,395,337     $ 14,985,115  
Interest-bearing transaction   18,659,115       19,000,023  
Savings   964,411       971,634  
Time   1,461,842       1,459,143  
Total deposits   34,480,705       36,415,915  
Funds purchased and repurchase agreements   2,270,377       626,952  
Other borrowings   4,736,908       234,933  
Subordinated debentures   131,205       131,168  
Accrued interest, taxes and expense   296,870       212,342  
Due on unsettled securities purchases   147,470       205,388  
Derivative contracts, net   554,900       821,275  
Other liabilities   484,849       483,165  
TOTAL LIABILITIES   43,103,284       39,131,138  
Shareholders’ equity:      
Capital, surplus and retained earnings   5,519,604       5,414,879  
Accumulated other comprehensive loss   (836,955 )     (904,945 )
TOTAL SHAREHOLDERS’ EQUITY   4,682,649       4,509,934  
Non-controlling interests   4,709       4,374  
TOTAL EQUITY   4,687,358       4,514,308  
TOTAL LIABILITIES AND EQUITY $ 47,790,642     $ 43,645,446  


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

  Three Months Ended
  Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
ASSETS                  
Interest-bearing cash and cash equivalents $ 568,307     $ 748,263     $ 843,619     $ 1,050,409     $ 1,208,552  
Trading securities   3,086,985       3,178,068       4,166,954       8,537,390       9,260,778  
Investment securities, net of allowance   2,535,305       2,593,989       610,983       195,198       213,188  
Available for sale securities   10,953,851       10,306,257       12,258,072       13,092,422       13,247,607  
Fair value option securities   92,012       36,846       54,832       75,539       46,458  
Restricted equity securities   216,673       173,656       167,732       164,484       137,874  
Residential mortgage loans held for sale   98,613       132,685       148,183       179,697       163,433  
Loans:                  
Commercial   13,827,517       13,481,961       13,382,176       12,677,706       12,401,935  
Commercial real estate   4,488,091       4,434,650       4,061,129       4,059,148       3,838,336  
Paycheck protection program   18,822       26,364       90,312       210,110       404,261  
Loans to individuals   3,641,574       3,656,257       3,524,097       3,516,698       3,598,121  
Total loans   21,976,004       21,599,232       21,057,714       20,463,662       20,242,653  
Allowance for loan losses   (242,450 )     (241,136 )     (246,064 )     (254,191 )     (271,794 )
Loans, net of allowance   21,733,554       21,358,096       20,811,650       20,209,471       19,970,859  
Total earning assets   39,285,300       38,527,860       39,062,025       43,504,610       44,248,749  
Cash and due from banks   865,796       821,801       822,599       790,440       783,670  
Derivative contracts, net   1,239,717       2,019,905       3,051,429       2,126,282       1,441,869  
Cash surrender value of bank-owned life insurance   406,826       410,667       408,489       406,379       404,149  
Receivable on unsettled securities sales   194,996       219,113       457,165       375,616       585,901  
Other assets   3,216,983       3,119,856       3,486,691       3,357,747       3,139,718  
TOTAL ASSETS $ 45,209,618     $ 45,119,202     $ 47,288,398     $ 50,561,074     $ 50,604,056  
                   
LIABILITIES AND EQUITY                  
Deposits:                  
Demand $ 14,176,189     $ 15,105,305     $ 15,202,597     $ 15,062,282     $ 14,818,841  
Interest-bearing transaction   18,898,315       19,556,806       21,037,294       22,763,479       22,326,401  
Savings   969,275       978,596       981,493       947,407       909,131  
Time   1,417,606       1,409,069       1,373,036       1,589,039       1,747,715  
Total deposits   35,461,385       37,049,776       38,594,420       40,362,207       39,802,088  
Funds purchased and repurchase agreements   1,046,447       800,759       1,224,134       2,004,466       2,893,128  
Other borrowings   2,523,195       1,528,887       1,301,358       1,148,440       880,837  
Subordinated debentures   131,180       131,199       131,219       131,228       131,224  
Derivative contracts, net   445,105       105,221       535,574       682,435       320,757  
Due on unsettled securities purchases   575,957       331,428       380,332       519,097       629,642  
Other liabilities   408,029       396,510       389,031       565,350       578,091  
TOTAL LIABILITIES   40,591,298       40,343,780       42,556,068       45,413,223       45,235,767  
Total equity   4,618,320       4,775,422       4,732,330       5,147,851       5,368,289  
TOTAL LIABILITIES AND EQUITY $ 45,209,618     $ 45,119,202     $ 47,288,398     $ 50,561,074     $ 50,604,056  


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

  Three Months Ended   Year Ended
  December 31,   December 31,
    2022       2021       2022       2021  
               
Interest revenue $ 451,606     $ 292,334     $ 1,392,102     $ 1,179,929  
Interest expense   98,980       15,257       180,722       61,896  
Net interest revenue   352,626       277,077       1,211,380       1,118,033  
Provision for credit losses   15,000       (17,000 )     30,000       (100,000 )
Net interest revenue after provision for credit losses   337,626       294,077       1,181,380       1,218,033  
Other operating revenue:              
Brokerage and trading revenue   63,008       14,869       140,978       112,989  
Transaction card revenue   27,136       24,998       104,266       96,983  
Fiduciary and asset management revenue   49,899       46,872       196,326       178,274  
Deposit service charges and fees   26,429       26,718       110,636       104,217  
Mortgage banking revenue   10,065       21,278       49,365       105,896  
Other revenue   17,034       11,586       55,642       69,950  
Total fees and commissions   193,571       146,321       657,213       668,309  
Other gains, net   8,427       6,081       123       63,742  
Gain (loss) on derivatives, net   4,548       (4,788 )     (73,011 )     (19,378 )
Gain (loss) on fair value option securities, net   (2,568 )     1,418       (20,358 )     (2,239 )
Change in fair value of mortgage servicing rights   (2,904 )     7,859       80,261       41,637  
Gain (loss) on available for sale securities, net   (3,988 )     552       (971 )     3,704  
Total other operating revenue   197,086       157,443       643,257       755,775  
Other operating expense:              
Personnel   186,419       174,474       670,918       695,382  
Business promotion   7,470       6,452       26,435       16,289  
Charitable contributions to BOKF Foundation   2,500       5,000       2,500       9,000  
Professional fees and services   18,365       14,129       56,342       50,906  
Net occupancy and equipment   29,227       26,897       116,867       108,587  
Insurance   4,677       3,889       17,994       15,881  
Data processing and communications   43,048       39,358       165,907       151,614  
Printing, postage and supplies   3,890       2,935       15,857       14,218  
Amortization of intangible assets   3,736       4,438       15,692       18,311  
Mortgage banking costs   9,016       8,667       35,834       42,698  
Other expense   10,108       13,256       40,134       54,822  
Total other operating expense   318,456       299,495       1,164,480       1,177,708  
               
Net income before taxes   216,256       152,025       660,157       796,100  
Federal and state income taxes   47,864       34,836       139,864       179,775  
               
Net income   168,392       117,189       520,293       616,325  
Net income (loss) attributable to non-controlling interests   (37 )     (129 )     20       (1,796 )
Net income attributable to BOK Financial Corporation shareholders $ 168,429     $ 117,318     $ 520,273     $ 618,121  
               
Average shares outstanding:              
Basic   66,627,955       68,069,160       67,212,728       68,591,920  
Diluted   66,627,955       68,070,910       67,212,735       68,594,322  
               
Net income per share:              
Basic $ 2.51     $ 1.71     $ 7.68     $ 8.95  
Diluted $ 2.51     $ 1.71     $ 7.68     $ 8.95  


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

  Three Months Ended
  Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
Capital:                  
Period-end shareholders’ equity $ 4,682,649     $ 4,509,934     $ 4,737,339     $ 4,849,582     $ 5,363,732  
Risk weighted assets $ 38,142,231     $ 36,866,994     $ 36,787,092     $ 37,160,258     $ 34,575,277  
Risk-based capital ratios:                  
Common equity tier 1   11.69 %     11.80 %     11.61 %     11.30 %     12.24 %
Tier 1   11.71 %     11.82 %     11.63 %     11.31 %     12.25 %
Total capital   12.67 %     12.81 %     12.59 %     12.25 %     13.29 %
Leverage ratio   9.91 %     9.76 %     9.12 %     8.47 %     8.55 %
Tangible common equity ratio1   7.63 %     7.96 %     8.16 %     8.13 %     8.61 %
                   
Common stock:                  
Book value per share $ 69.93     $ 67.06     $ 69.87     $ 71.21     $ 78.34  
Tangible book value per share $ 53.19     $ 50.34     $ 53.22     $ 54.58     $ 61.74  
Market value per share:                  
High $ 110.28     $ 95.51     $ 94.76     $ 119.59     $ 110.21  
Low $ 88.46     $ 69.82     $ 74.03     $ 93.76     $ 89.01  
Cash dividends paid $ 36,188     $ 35,661     $ 35,892     $ 36,093     $ 36,256  
Dividend payout ratio   21.49 %     22.79 %     27.02 %     57.76 %     30.90 %
Shares outstanding, net   66,958,634       67,254,383       67,806,005       68,104,043       68,467,772  
Stock buy-back program:                  
Shares repurchased   314,406       548,034       294,084       475,877       128,522  
Amount $ 32,429     $ 49,980     $ 24,404     $ 48,074     $ 13,426  
Average price per share $ 103.14     $ 91.20     $ 82.98     $ 101.02     $ 104.46  
                   
Performance ratios (quarter annualized):
Return on average assets   1.48 %     1.38 %     1.13 %     0.50 %     0.92 %
Return on average equity   14.48 %     13.01 %     11.27 %     4.93 %     8.68 %
Net interest margin   3.54 %     3.24 %     2.76 %     2.44 %     2.52 %
Efficiency ratio   57.87 %     57.35 %     60.65 %     75.07 %     70.14 %
                   
Reconciliation of non-GAAP measures:
1Tangible common equity ratio:                  
Total shareholders’ equity $ 4,682,649     $ 4,509,934     $ 4,737,339     $ 4,849,582     $ 5,363,732  
Less: Goodwill and intangible assets, net   1,120,880       1,124,582       1,128,493       1,132,510       1,136,527  
Tangible common equity $ 3,561,769     $ 3,385,352     $ 3,608,846     $ 3,717,072     $ 4,227,205  
                   
Total assets $ 47,790,642     $ 43,645,446     $ 45,377,072     $ 46,826,507     $ 50,249,431  
Less: Goodwill and intangible assets, net   1,120,880       1,124,582       1,128,493       1,132,510       1,136,527  
Tangible assets $ 46,669,762     $ 42,520,864     $ 44,248,579     $ 45,693,997     $ 49,112,904  
                   
Tangible common equity ratio   7.63 %     7.96 %     8.16 %     8.13 %     8.61 %
                   
Pre-provision net revenue:                  
Net income before taxes $ 216,256     $ 196,272     $ 168,980     $ 78,649     $ 152,025  
Provision for expected credit losses   15,000       15,000                   (17,000 )
Net income (loss) attributable to non-controlling interests   (37 )     81       12       (36 )     (129 )
Pre-provision net revenue $ 231,293     $ 211,191     $ 168,968     $ 78,685     $ 135,154  
                   
Other data:                  
Tax equivalent interest $ 2,287     $ 2,163     $ 2,040     $ 1,973     $ 2,104  
Net unrealized gain (loss) on available for sale securities $ (865,553 )   $ (935,788 )   $ (522,812 )   $ (546,598 )   $ 93,381  
                   
Mortgage banking:                  
Mortgage production revenue $ (3,983 )   $ (2,406 )   $ (504 )   $ 5,055     $ 10,018  
                   
Mortgage loans funded for sale $ 141,090     $ 260,210     $ 360,237     $ 418,866     $ 568,507  
Add: current period-end outstanding commitments   45,492       75,779       106,004       160,260       171,412  
Less: prior period end outstanding commitments   75,779       106,004       160,260       171,412       239,066  
Total mortgage production volume $ 110,803     $ 229,985     $ 305,981     $ 407,714     $ 500,853  
                   
Mortgage loan refinances to mortgage loans funded for sale   10 %     10 %     19 %     45 %     51 %
Realized margin on funded mortgage loans (1.10)%   (0.41)%     0.88 %     1.64 %     2.34 %
Production revenue as a percentage of production volume (3.59)%   (1.05)%   (0.16)%     1.24 %     2.00 %
                   
Mortgage servicing revenue $ 14,048     $ 13,688     $ 11,872     $ 11,595     $ 11,260  
Average outstanding principal balance of mortgage loans serviced for others   18,923,078       19,070,221       17,336,596       16,155,329       15,930,480  
Average mortgage servicing revenue rates   0.29 %     0.28 %     0.27 %     0.29 %     0.28 %
                   
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net $ 4,373     $ (17,027 )   $ (13,639 )   $ (46,694 )   $ (4,862 )
Gain (loss) on fair value option securities, net   (2,568 )     (4,368 )     (2,221 )     (11,201 )     1,418  
Gain (loss) on economic hedge of mortgage servicing rights   1,805       (21,395 )     (15,860 )     (57,895 )     (3,444 )
Gain (loss) on changes in fair value of mortgage servicing rights   (2,904 )     16,570       17,485       49,110       7,859  
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue   (1,099 )     (4,825 )     1,625       (8,785 )     4,415  
Net interest revenue on fair value option securities2   (118 )     29       275       383       259  
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges $ (1,217 )   $ (4,796 )   $ 1,900     $ (8,402 )   $ 4,674  

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

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

  Three Months Ended
  Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
                   
Interest revenue $ 451,606     $ 363,150     $ 294,247     $ 283,099     $ 292,334  
Interest expense   98,980       46,825       20,229       14,688       15,257  
Net interest revenue   352,626       316,325       274,018       268,411       277,077  
Provision for credit losses   15,000       15,000                   (17,000 )
Net interest revenue after provision for credit losses   337,626       301,325       274,018       268,411       294,077  
Other operating revenue:                  
Brokerage and trading revenue   63,008       61,006       44,043       (27,079 )     14,869  
Transaction card revenue   27,136       25,974       26,940       24,216       24,998  
Fiduciary and asset management revenue   49,899       50,190       49,838       46,399       46,872  
Deposit service charges and fees   26,429       28,703       28,500       27,004       26,718  
Mortgage banking revenue   10,065       11,282       11,368       16,650       21,278  
Other revenue   17,034       15,479       12,684       10,445       11,586  
Total fees and commissions   193,571       192,634       173,373       97,635       146,321  
Other gains (losses), net   8,427       979       (7,639 )     (1,644 )     6,081  
Gain (loss) on derivatives, net   4,548       (17,009 )     (13,569 )     (46,981 )     (4,788 )
Gain (loss) on fair value option securities, net   (2,568 )     (4,368 )     (2,221 )     (11,201 )     1,418  
Change in fair value of mortgage servicing rights   (2,904 )     16,570       17,485       49,110       7,859  
Gain (loss) on available for sale securities, net   (3,988 )     892       1,188       937       552  
Total other operating revenue   197,086       189,698       168,617       87,856       157,443  
Other operating expense:                  
Personnel   186,419       170,348       154,923       159,228       174,474  
Business promotion   7,470       6,127       6,325       6,513       6,452  
Charitable contributions to BOKF Foundation   2,500                         5,000  
Professional fees and services   18,365       14,089       12,475       11,413       14,129  
Net occupancy and equipment   29,227       29,296       27,489       30,855       26,897  
Insurance   4,677       4,306       4,728       4,283       3,889  
Data processing and communications   43,048       41,743       41,280       39,836       39,358  
Printing, postage and supplies   3,890       4,349       3,929       3,689       2,935  
Amortization of intangible assets   3,736       3,943       4,049       3,964       4,438  
Mortgage banking costs   9,016       9,504       9,437       7,877       8,667  
Other expense   10,108       11,046       9,020       9,960       13,256  
Total other operating expense   318,456       294,751       273,655       277,618       299,495  
Net income before taxes   216,256       196,272       168,980       78,649       152,025  
Federal and state income taxes   47,864       39,681       36,122       16,197       34,836  
Net income   168,392       156,591       132,858       62,452       117,189  
Net income (loss) attributable to non-controlling interests   (37 )     81       12       (36 )     (129 )
Net income attributable to BOK Financial Corporation shareholders $ 168,429     $ 156,510     $ 132,846     $ 62,488     $ 117,318  
                   
Average shares outstanding:                  
Basic   66,627,955       67,003,199       67,453,748       67,812,400       68,069,160  
Diluted   66,627,955       67,004,623       67,455,172       67,813,851       68,070,910  
Net income per share:                  
Basic $ 2.51     $ 2.32     $ 1.96     $ 0.91     $ 1.71  
Diluted $ 2.51     $ 2.32     $ 1.96     $ 0.91     $ 1.71  


LOANS TREND — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

    Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
Commercial:                    
Healthcare   $ 3,845,017   $ 3,826,623   $ 3,696,963   $ 3,441,732   $ 3,414,940
Energy     3,424,790     3,371,588     3,393,072     3,197,667     3,006,884
Services     3,431,521     3,280,925     3,421,493     3,351,495     3,367,193
General business     3,496,859     3,128,550     3,067,169     2,892,295     2,717,448
Total commercial     14,198,187     13,607,686     13,578,697     12,883,189     12,506,465
                     
Commercial real estate:                    
Industrial     1,221,501     1,103,905     953,626     911,928     766,125
Multifamily     1,212,883     1,126,700     878,565     867,288     786,404
Office     1,053,331     1,086,615     1,100,115     1,097,516     1,040,963
Retail     620,518     635,021     637,304     667,561     679,917
Residential construction and land development     95,684     91,690     111,575     120,506     120,016
Other commercial real estate     402,860     429,980     424,963     436,157     437,900
Total commercial real estate     4,606,777     4,473,911     4,106,148     4,100,956     3,831,325
                     
Paycheck protection program     14,312     20,233     43,140     137,365     276,341
                     
Loans to individuals:                    
Residential mortgage     1,890,784     1,851,836     1,784,729     1,723,506     1,722,170
Residential mortgages guaranteed by U.S. government agencies     245,940     262,466     293,838     322,581     354,173
Personal     1,601,150     1,574,325     1,484,596     1,506,832     1,515,206
Total loans to individuals     3,737,874     3,688,627     3,563,163     3,552,919     3,591,549
                     
Total   $ 22,557,150   $ 21,790,457   $ 21,291,148   $ 20,674,429   $ 20,205,680


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

  Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
                   
Texas:                  
Commercial $ 6,869,979   $ 6,632,610   $ 6,631,658   $ 6,254,883   $ 6,068,700
Commercial real estate   1,555,508     1,448,590     1,339,452     1,345,105     1,253,439
Paycheck protection program   8,639     12,280     14,040     31,242     81,654
Loans to individuals   982,700     970,459     934,856     957,320     942,982
Total Texas   9,416,826     9,063,939     8,920,006     8,588,550     8,346,775
                   
Oklahoma:                  
Commercial   3,379,468     3,104,037     3,125,764     2,883,663     2,633,014
Commercial real estate   582,109     608,856     576,458     552,310     546,021
Paycheck protection program   3,109     4,571     13,329     52,867     69,817
Loans to individuals   2,077,124     2,054,362     1,982,247     1,977,886     2,024,404
Total Oklahoma   6,041,810     5,771,826     5,697,798     5,466,726     5,273,256
                   
Colorado:                  
Commercial   2,147,969     2,115,883     2,074,455     1,977,773     1,936,149
Commercial real estate   613,912     565,057     473,231     480,740     470,937
Paycheck protection program   1,230     1,298     8,233     28,584     82,781
Loans to individuals   241,902     237,981     234,105     236,125     256,533
Total Colorado   3,005,013     2,920,219     2,790,024     2,723,222     2,746,400
                   
Arizona:                  
Commercial   1,123,569     1,101,917     1,080,228     1,074,551     1,130,798
Commercial real estate   860,947     850,319     766,767     719,970     674,309
Paycheck protection program   720     1,083     5,173     11,644     21,594
Loans to individuals   229,872     225,981     212,870     190,746     186,528
Total Arizona   2,215,108     2,179,300     2,065,038     1,996,911     2,013,229
                   
Kansas/Missouri:                  
Commercial   310,715     307,446     338,337     334,371     338,697
Commercial real estate   479,968     466,955     458,157     436,740     382,761
Paycheck protection program       10     573     2,595     4,718
Loans to individuals   131,307     125,039     125,584     121,247     110,889
Total Kansas/Missouri   921,990     899,450     922,651     894,953     837,065
                   
New Mexico:                  
Commercial   262,735     257,763     252,033     262,533     306,964
Commercial real estate   417,008     426,367     431,606     504,632     442,128
Paycheck protection program   614     991     1,792     9,713     13,510
Loans to individuals   67,163     68,095     67,026     63,299     63,930
Total New Mexico   747,520     753,216     752,457     840,177     826,532
                   
Arkansas:                  
Commercial   103,752     88,030     76,222     95,415     92,143
Commercial real estate   97,325     107,767     60,477     61,459     61,730
Paycheck protection program               720     2,267
Loans to individuals   7,806     6,710     6,475     6,296     6,283
Total Arkansas   208,883     202,507     143,174     163,890     162,423
                   
TOTAL BOK FINANCIAL $ 22,557,150   $ 21,790,457   $ 21,291,148   $ 20,674,429   $ 20,205,680

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

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

  Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
Oklahoma:                  
Demand $ 4,585,963   $ 5,143,405   $ 5,422,593   $ 5,205,806   $ 5,433,405
Interest-bearing:                  
Transaction   9,475,528     9,619,419     10,240,378     11,410,709     12,689,367
Savings   555,407     558,256     561,413     558,634     521,439
Time   794,002     776,306     678,127     817,744     978,822
Total interest-bearing   10,824,937     10,953,981     11,479,918     12,787,087     14,189,628
Total Oklahoma   15,410,900     16,097,386     16,902,511     17,992,893     19,623,033
                   
Texas:                  
Demand   3,873,759     4,609,255     4,670,535     4,552,001     4,552,983
Interest-bearing:                  
Transaction   4,878,482     4,781,920     5,344,326     4,963,118     5,345,461
Savings   178,356     179,049     183,708     182,536     178,458
Time   356,538     343,015     333,038     329,931     337,559
Total interest-bearing   5,413,376     5,303,984     5,861,072     5,475,585     5,861,478
Total Texas   9,287,135     9,913,239     10,531,607     10,027,586     10,414,461
                   
Colorado:                  
Demand   2,462,891     2,510,179     2,799,798     2,673,352     2,526,855
Interest-bearing:                  
Transaction   2,123,218     2,221,796     2,277,563     2,387,304     2,334,371
Savings   77,961     80,542     82,976     81,762     78,636
Time   135,043     151,064     160,795     165,401     174,351
Total interest-bearing   2,336,222     2,453,402     2,521,334     2,634,467     2,587,358
Total Colorado   4,799,113     4,963,581     5,321,132     5,307,819     5,114,213
                   
New Mexico:                  
Demand   1,141,958     1,296,410     1,347,600     1,271,264     1,196,057
Interest-bearing:                  
Transaction   691,915     717,492     845,442     888,257     858,394
Savings   112,430     113,056     115,660     115,457     107,963
Time   133,625     142,856     148,532     156,140     163,871
Total interest-bearing   937,970     973,404     1,109,634     1,159,854     1,130,228
Total New Mexico   2,079,928     2,269,814     2,457,234     2,431,118     2,326,285
                   
Arizona:                  
Demand   844,327     903,296     901,543     947,775     934,282
Interest-bearing:                  
Transaction   739,628     788,142     792,269     810,896     834,491
Savings   16,496     18,258     17,999     18,122     16,182
Time   24,846     26,704     28,774     27,259     31,274
Total interest-bearing   780,970     833,104     839,042     856,277     881,947
Total Arizona   1,625,297     1,736,400     1,740,585     1,804,052     1,816,229
                   
                   
Kansas/Missouri:                  
Demand   436,259     479,459     537,143     553,345     658,342
Interest-bearing:                  
Transaction   694,163     747,981     913,921     1,107,525     1,086,946
Savings   20,678     19,375     19,943     19,589     18,844
Time   12,963     13,258     13,962     11,527     12,255
Total interest-bearing   727,804     780,614     947,826     1,138,641     1,118,045
Total Kansas/Missouri   1,164,063     1,260,073     1,484,969     1,691,986     1,776,387
                   
Arkansas:                  
Demand   50,180     43,111     41,084     38,798     42,499
Interest-bearing:                  
Transaction   56,181     123,273     130,300     122,020     119,543
Savings   3,083     3,098     3,125     3,265     3,213
Time   4,825     5,940     6,371     6,414     6,196
Total interest-bearing   64,089     132,311     139,796     131,699     128,952
Total Arkansas   114,269     175,422     180,880     170,497     171,451
                   
TOTAL BOK FINANCIAL $ 34,480,705   $ 36,415,915   $ 38,618,918   $ 39,425,951   $ 41,242,059


NET INTEREST MARGIN TREND — UNAUDITED
BOK FINANCIAL CORPORATION

  Three Months Ended
  Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
                   
TAX-EQUIVALENT ASSETS YIELDS                  
Interest-bearing cash and cash equivalents 4.06 %   1.87 %   0.83 %   0.18 %   0.16 %
Trading securities 3.70 %   2.72 %   2.00 %   1.71 %   1.89 %
Investment securities, net of allowance 1.46 %   1.42 %   2.35 %   5.07 %   4.99 %
Available for sale securities 2.54 %   2.21 %   1.84 %   1.77 %   1.72 %
Fair value option securities 4.40 %   2.98 %   2.92 %   2.81 %   2.71 %
Restricted equity securities 5.70 %   6.23 %   3.30 %   2.69 %   2.98 %
Residential mortgage loans held for sale 5.56 %   5.05 %   4.22 %   3.11 %   3.06 %
Loans 5.99 %   4.89 %   3.92 %   3.57 %   3.70 %
Allowance for loan losses                  
Loans, net of allowance 6.06 %   4.94 %   3.96 %   3.61 %   3.75 %
Total tax-equivalent yield on earning assets 4.53 %   3.71 %   2.96 %   2.58 %   2.66 %
                   
COST OF INTEREST-BEARING LIABILITIES                
Interest-bearing deposits:                  
Interest-bearing transaction 1.28 %   0.63 %   0.22 %   0.10 %   0.09 %
Savings 0.08 %   0.05 %   0.03 %   0.03 %   0.04 %
Time 1.25 %   0.93 %   0.68 %   0.56 %   0.53 %
Total interest-bearing deposits 1.22 %   0.63 %   0.24 %   0.12 %   0.12 %
Funds purchased and repurchase agreements 2.05 %   0.72 %   0.53 %   0.95 %   0.73 %
Other borrowings 4.08 %   2.33 %   1.01 %   0.38 %   0.49 %
Subordinated debt 6.16 %   5.07 %   4.50 %   4.02 %   4.02 %
Total cost of interest-bearing liabilities 1.57 %   0.76 %   0.31 %   0.21 %   0.21 %
Tax-equivalent net interest revenue spread 2.96 %   2.95 %   2.65 %   2.37 %   2.45 %
Effect of noninterest-bearing funding sources and other 0.58 %   0.29 %   0.11 %   0.07 %   0.07 %
Tax-equivalent net interest margin 3.54 %   3.24 %   2.76 %   2.44 %   2.52 %

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

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

  Three Months Ended
  Dec. 31, 2022   Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021
Nonperforming assets:                  
Nonaccruing loans:                  
Commercial:                  
Healthcare $ 41,034     $ 41,438     $ 14,886     $ 15,076     $ 15,762  
Services   16,228       27,315       15,259       16,535       17,170  
Energy   1,399       4,164       20,924       24,976       31,091  
General business   1,636       2,753       3,539       3,750       10,081  
Total commercial   60,297       75,670       54,608       60,337       74,104  
                   
Commercial real estate   16,570       7,971       10,939       15,989       14,262  
                   
Loans to individuals:                  
Permanent mortgage   29,791       30,066       30,460       30,757       31,574  
Permanent mortgage guaranteed by U.S. government agencies   15,005       16,957       18,000       16,992       13,861  
Personal   134       136       132       171       258  
Total loans to individuals   44,930       47,159       48,592       47,920       45,693  
                   
Total nonaccruing loans $ 121,797     $ 130,800     $ 114,139     $ 124,246     $ 134,059  
Accruing renegotiated loans guaranteed by U.S. government agencies   163,535       176,022       196,420       204,121       210,618  
Real estate and other repossessed assets   14,304       29,676       22,221       24,492       24,589  
Total nonperforming assets $ 299,636     $ 336,498     $ 332,780     $ 352,859     $ 369,266  
Total nonperforming assets excluding those guaranteed by U.S. government agencies $ 121,096     $ 143,519     $ 118,360     $ 131,746     $ 144,787  
                   
Accruing loans 90 days past due1 $ 510     $ 120     $ 3     $ 307     $ 313  
                   
Gross charge-offs $ 17,807     $ 1,766     $ 1,368     $ 7,805     $ 6,558  
Recoveries   (2,301 )     (1,309 )     (2,167 )     (1,824 )     (7,272 )
Net charge-offs (recoveries) $ 15,506     $ 457     $ (799 )   $ 5,981     $ (714 )
                   
Provision for loan losses $ 9,442     $ 1,111     $ (6,158 )   $ (3,967 )   $ (20,973 )
Provision for credit losses from off-balance sheet unfunded loan commitments   4,609       14,060       6,005       3,268       3,738  
Provision for expected credit losses from mortgage banking activities   1,003       (66 )     69       621       150  
Provision for credit losses related to held-to maturity (investment) securities portfolio   (54 )     (105 )     84       78       85  
Total provision for credit losses $ 15,000     $ 15,000     $     $     $ (17,000 )
                   
Allowance for loan losses to period end loans   1.04 %     1.11 %     1.13 %     1.19 %     1.27 %
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans   1.31 %     1.37 %     1.33 %     1.37 %     1.43 %
Nonperforming assets to period end loans and repossessed assets   1.33 %     1.54 %     1.56 %     1.70 %     1.83 %
Net charge-offs (annualized) to average loans   0.28 %     0.01 %   (0.02)%     0.12 %   (0.01)%
Allowance for loan losses to nonaccruing loans1   220.71 %     212.37 %     250.80 %     229.80 %     213.33 %
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1   277.76 %     261.83 %     294.74 %     263.60 %     240.77 %

1  Excludes residential mortgage loans guaranteed by agencies of the U.S. government.

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

    Three Months Ended   4Q22 vs 3Q22   Year Ended   2022 vs 2021
    Dec. 31, 2022   Sep. 30, 2022   $ change   % change   Dec. 31, 2022   Dec. 31, 2021   $ change   % change
Commercial Banking                                
Net interest revenue   $ 232,834   $ 208,065   $ 24,769     11.9 %   $ 744,449   $ 535,735   $ 208,714     39.0 %
Fees and commissions revenue     58,881     58,147     734     1.3 %     233,873     227,081     6,792     3.0 %
Combined net interest and fee revenue     291,715     266,212     25,503     9.6 %     978,322     762,816     215,506     28.3 %
Other operating expense     79,722     75,872     3,850     5.1 %     290,717     281,089     9,628     3.4 %
Corporate expense allocations     18,007     16,451     1,556     9.5 %     67,337     49,941     17,396     34.8 %
Net income     139,374     133,830     5,544     4.1 %     460,361     328,516     131,845     40.1 %
                                 
Average assets     28,373,856     28,890,429     (516,573 )   (1.8)%     29,084,957     28,536,881     548,076     1.9 %
Average loans     18,254,559     17,904,779     349,780     2.0 %     17,553,398     16,853,006     700,392     4.2 %
Average deposits     16,832,244     17,966,661     (1,134,417 )   (6.3)%     18,323,412     17,659,695     663,717     3.8 %
                                 
Consumer Banking                                
Net interest revenue   $ 53,302   $ 43,951   $ 9,351     21.3 %   $ 158,249   $ 103,527   $ 54,722     52.9 %
Fees and commissions revenue     27,618     30,230     (2,612 )   (8.6)%     121,926     173,364     (51,438 )   (29.7)%
Combined net interest and fee revenue     80,920     74,181     6,739     9.1 %     280,175     276,891     3,284     1.2 %
Other operating expense     54,526     53,236     1,290     2.4 %     209,210     209,596     (386 )   (0.2)%
Corporate expense allocations     11,972     10,792     1,180     10.9 %     44,965     46,010     (1,045 )   (2.3)%
Net income     8,996     2,970     6,026     202.9 %     5,889     27,643     (21,754 )   (78.7)%
                                 
Average assets     10,078,381     10,233,401     (155,020 )   (1.5)%     10,230,437     10,029,687     200,750     2.0 %
Average loans     1,725,555     1,686,498     39,057     2.3 %     1,688,697     1,769,384     (80,687 )   (4.6)%
Average deposits     8,617,085     8,812,884     (195,799 )   (2.2)%     8,763,046     8,439,577     323,469     3.8 %
                                 
Wealth Management                                
Net interest revenue   $ 34,498   $ 33,584   $ 914     2.7 %   $ 161,597   $ 214,072   $ (52,475 )   (24.5)%
Fees and commissions revenue     114,630     113,113     1,517     1.3 %     339,538     298,765     40,773     13.6 %
Combined net interest and fee revenue     149,128     146,697     2,431     1.7 %     501,135     512,837     (11,702 )   (2.3)%
Other operating expense     82,011     79,151     2,860     3.6 %     312,177     320,726     (8,549 )   (2.7)%
Corporate expense allocations     12,733     12,934     (201 )   (1.6)%     50,241     40,341     9,900     24.5 %
Net income     41,600     41,808     (208 )   (0.5)%     106,173     113,246     (7,073 )   (6.2)%
                                 
Average assets     12,912,630     13,818,299     (905,669 )   (6.6)%     16,209,684     19,425,475     (3,215,791 )   (16.6)%
Average loans     2,223,275     2,163,975     59,300     2.7 %     2,166,231     1,981,159     185,072     9.3 %
Average deposits     7,888,753     7,999,074     (110,321 )   (1.4)%     8,491,377     9,426,771     (935,394 )   (9.9)%
Fiduciary assets     56,060,496     54,714,705     1,345,791     2.5 %     56,060,496     64,536,833     (8,476,337 )   (13.1)%
Assets under management or administration     99,735,041     95,401,638     4,333,403     4.5 %     99,735,041     104,917,721     (5,182,680 )   (4.9)%

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