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BOK Financial Corporation Reports Quarterly Earnings of $157 million or $2.32 Per Share in the Third Quarter
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BOK Financial Corporation Reports Quarterly Earnings of $157 million or $2.32 Per Share in the Third Quarter

TULSA, Okla., Oct. 26, 2022 (GLOBE NEWSWIRE) — BOK Financial Corporation (NASD: BOKF) 

CEO Commentary

Stacy Kymes, president and chief executive officer, stated, “The third quarter was another very strong quarter as we sustain our momentum around top-line revenue growth. I am proud to see the hard work of our team show up in consistent loan growth, net interest margin improvement and non-interest revenue growth while our efficiency ratio has moved well below 60 percent. Although our asset quality trends remain unsustainably good, we added to our loan loss reserves this quarter in recognition of the loan growth and less certain economic forecast. While the longer-term economic outlook is less certain, we remain optimistic about our ability to grow earnings from current levels in the near-term."

Third Quarter 2022 Financial Highlights
(Unless indicated otherwise, all comparisons are to the prior quarter)

  • Net income was $156.5 million or $2.32 per diluted share for the third quarter of 2022 and $132.8 million or $1.96 per diluted share for the second quarter of 2022.
  • Net interest revenue totaled $316.3 million, an increase of $42.3 million. Net interest margin was 3.24 percent compared to 2.76 percent. In response to rising inflation, the Federal Reserve increased the federal funds rate another 150 basis points in the third quarter to a total of 300 basis points since the beginning of 2022. The resulting impact on market interest rates has increased net interest margin.
  • Fees and commissions revenue increased $19.3 million to $192.6 million. Brokerage and trading revenue increased $17.0 million, largely due to higher margins on trading activity driven by favorable market conditions and increased market volatility. Additionally, the third quarter was a record quarter for investment banking revenue.
  • The net cost of the changes in fair value of mortgage servicing rights and related economic hedges was $4.8 million for the third quarter of 2022 compared to a net benefit of $1.9 million for the second quarter of 2022, due to increased market volatility in the third quarter.
  • Operating expense increased $21.1 million to $294.8 million. Personnel expense increased $15.4 million, largely driven by higher incentive compensation expense. Non-personnel expense increased $5.7 million, primarily related to project-related professional fees and seasonal occupancy costs.
  • Period-end loans increased $499 million to $21.8 billion at September 30, 2022. Of this increase, commercial real estate loans grew $368 million, while loans to individuals increased $125 million. In addition, unfunded loan commitments grew by $1.1 billion. Average outstanding loan balances were $21.6 billion, a $542 million increase.
  • A $15.0 million provision for expected credit losses was recorded in the third quarter of 2022, primarily due to loan growth and increased uncertainty in the economic outlook, partially offset by improving credit quality metrics. No provision for expected credit losses was necessary for the second quarter of 2022. The combined allowance for credit losses totaled $298 million or 1.37 percent of outstanding loans at September 30, 2022. The combined allowance for credit losses was $283 million or 1.33 percent of outstanding loans at June 30, 2022.
  • Average deposits decreased $1.5 billion to $37.0 billion and period-end deposits decreased $2.2 billion to $36.4 billion, consistent with industry trends as customers redeploy resources following the savings trend during the height of the pandemic. Average interest-bearing deposits decreased $1.4 billion and average demand deposits were reduced by $97 million.
  • The company’s common equity Tier 1 capital ratio was 11.80 percent at September 30, 2022. In addition, the company’s Tier 1 capital ratio was 11.82 percent, total capital ratio was 12.81 percent, and leverage ratio was 9.76 percent at September 30, 2022. At June 30, 2022, the company’s common equity Tier 1 capital ratio was 11.61 percent, Tier 1 capital ratio was 11.63 percent, total capital ratio was 12.59 percent, and leverage ratio was 9.12 percent.
  • The company repurchased 548,034 shares of common stock at an average price of $91.20 a share in the third quarter of 2022.

Third Quarter 2022 Segment Highlights

  • Commercial Banking contributed $132.9 million to net income in the third quarter of 2022, an increase of $28.1 million. Combined net interest revenue and fee revenue increased $38.6 million due to loan growth and increased spreads on deposits sold to the Funds Management unit. Net loans recovered were $976 thousand less than the prior quarter. Personnel expense increased $2.8 million, driven by incentive compensation costs associated with growth in loans. Linked quarter performance also improved due to a $5.8 million write-down of a repossessed equity interest in a midstream energy entity in the prior quarter. Average loans increased $568 million or 3 percent to $17.9 billion. Average deposits decreased $967 million or 5 percent to $18.0 billion.
  • Consumer Banking contributed $3.0 million to net income in the third quarter of 2022, an increase of $1.7 million over the prior quarter. The net cost of the changes in fair value of mortgage servicing rights and related economic hedges was $4.8 million for the third quarter of 2022 compared to a net benefit of $1.9 million for the second quarter of 2022. Combined net interest revenue and fee revenue increased $10.3 million, primarily due to an increase in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue and operating expense were consistent with the prior quarter. Both average loans and average deposits were also relatively consistent with the previous quarter.
  • Wealth Management contributed $41.8 million to net income in the third quarter of 2022, an increase of $14.5 million over the second 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 $146.7 million, an increase of $22.2 million. Total revenue from trading activities increased $5.0 million, primarily due to higher margins on residential mortgage-backed securities trading activity. Investment banking revenue grew $3.2 million due to increased underwriting fees and financial advisory fees. Other revenue increased $8.3 million, largely due to higher derivative margin use fees. Operating expense increased $2.8 million, mainly due to increased volume-driven incentive compensation costs. Average loans were consistent with the prior quarter. Average deposits decreased $484 million or 6 percent to $8.0 billion. Assets under management were $95.4 billion, a decrease of $580 million.

Net Interest Revenue

Net interest revenue was $316.3 million for the third quarter of 2022 compared to $274.0 million for the second quarter of 2022. Net interest margin was 3.24 percent compared to 2.76 percent. In response to rising inflation, the Federal Reserve increased the federal funds rate 150 basis points in the third quarter bringing the year-to-date total rate increases to 300 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 decreased $534 million. Average trading securities decreased $989 million in response to lower origination volumes in the residential mortgage industry driven by increases in interest rates. Average loan balances increased $542 million, largely due to growth in commercial real estate loans and loans to individuals. Average available for sale securities decreased $2.0 billion while investment securities increased $2.0 billion. Late in the second quarter, $2.4 billion in U.S. government agency mortgage-backed securities were transferred from available for sale to investment securities to limit the effect of future rate increases on the tangible common equity ratio. Average interest bearing cash and cash equivalents decreased $95 million. Average interest-bearing deposits decreased $2.2 billion as customers redeploy resources following the height of the pandemic. Average funds purchased and repurchase agreements decreased $423 million while other borrowings increased $228 million.

The yield on average earning assets was 3.71 percent, up 75 basis points. The loan portfolio yield increased 97 basis points to 4.89 percent while the yield on trading securities was up 72 basis points to 2.72 percent. The yield on the available for sale securities portfolio increased 37 basis points to 2.21 percent. The yield on investment securities decreased 93 basis points due to the transfer of securities from the available for sale portfolio to the investment portfolio. The yield on interest-bearing cash and cash equivalents increased 104 basis points.

Funding costs were 0.76 percent, a 45 basis point increase. The cost of interest-bearing deposits increased 39 basis points to 0.63 percent. The cost of other borrowings was up 132 basis points to 2.33 percent while the cost of funds purchased and repurchase agreements increased 19 basis points to 0.72 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 29 basis points, an increase of 18 basis points.

Operating Revenue

Fees and commissions revenue totaled $192.6 million for the third quarter of 2022, up $19.3 million, led by a $17.0 million increase in brokerage and trading revenue. Trading revenue increased $14.5 million, largely due to higher margins on residential mortgage-backed securities trading activity driven by favorable market conditions and increased market volatility. Total investment banking revenue increased $2.4 million, primarily due to growth in the size and number of municipal bond transactions.

Mortgage banking revenue remained consistent with the prior quarter with growth in mortgage servicing revenue offsetting a reduction in mortgage production revenue. Two acquisitions of mortgage servicing rights at the end of the second quarter led to an increase in mortgage servicing revenue of $1.8 million. Mortgage production revenue decreased $1.9 million as rising mortgage interest rates and inventory constraints continue to place pressure on mortgage loan originations. Mortgage production volume decreased $76.0 million to $230.0 million. Refinance activity as percentage of total production declined to 10 percent, the lowest in recent history.

All other fee revenue was relatively consistent with the prior quarter, increasing $2.4 million in total.

Other gains and losses, net, increased $8.6 million, primarily driven by a write-down of a repossessed equity interest in a midstream entity in the prior quarter combined with a change in the value of deferred compensation investments, which are held to offset the cost of various employee benefit programs.

Operating Expense

Total operating expense was $294.8 million for the third quarter of 2022, an increase of $21.1 million compared to the second quarter of 2022.

Personnel expense increased $15.4 million. Deferred compensation expense increased $6.0 million and share-based incentive compensation expense increased $4.3 million. These expenses are influenced by market valuations and forecasted annual results compared to a peer group, both of which can be volatile. Strong sales results in our Commercial and Wealth segments led to a $4.9 million increase in cash-based incentive compensation.

Non-personnel expense was $124.4 million, up $5.7 million. Higher seasonal operating costs on leases led to a $1.8 million increase in net occupancy and equipment expense while project-related professional fees led to a $1.6 million increase in professional fees and services.

Loans, Deposits and Capital

Loans

Outstanding loans were $21.8 billion at September 30, 2022, growing $499 million over June 30, 2022, due to growth in commercial real estate loans and loans to individuals. Unfunded loan commitments also were up $1.1 billion over the second quarter.

Outstanding commercial loan balances were largely unchanged compared to the prior quarter. Growth in healthcare and general business loans were offset by a decrease in services and energy loan balances.

Healthcare sector loan balances increased $130 million, totaling $3.8 billion or 18 percent of total loans. Our healthcare sector loans primarily consist of $3.1 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.

General business loans increased $61 million to $3.1 billion or 14 percent of total loans. General business loans include $1.8 billion of wholesale/retail loans and $1.3 billion of loans from other commercial industries.

Services sector loan balances decreased $141 million to $3.3 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.

Energy loan balances decreased $21 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 $3.5 billion at September 30, 2022, an increase of $107 million over June 30, 2022.

Commercial real estate loan balances grew $368 million and represent 21 percent of total loans. Loans secured by multifamily residential properties increased $248 million to 1.1 billion. Loans secured by industrial facilities increased $150 million to $1.1 billion. This growth was partially offset by a $20 million decrease in construction and land development loans and a $14 million decrease in loans secured by office buildings.

PPP loan balances decreased $23 million to $20 million, or less than 1 percent of the total loans balance.

Loans to individuals increased $125 million and represent 17 percent of total loans. Total residential mortgage loans increased $36 million while personal loans increased $90 million.

Deposits

Period-end deposits totaled $36.4 billion at September 30, 2022, a $2.2 billion decrease, consistent with industry trends as customers redeploy cash resources following the savings trend during the pandemic. Interest-bearing transaction account balances decreased $1.5 billion while demand deposits decreased $735 million. Period-end Commercial Banking deposits decreased $1.8 billion, Wealth Management deposits decreased $237 million, and Consumer Banking deposits were largely unchanged. Average deposits were $37.0 billion at September 30, 2022, a $1.5 billion decrease. Average interest-bearing transaction account balances decreased $1.5 billion and average demand deposit account balances decreased $97 million.

Capital

The company’s common equity Tier 1 capital ratio was 11.80 percent at September 30, 2022. In addition, the company’s Tier 1 capital ratio was 11.82 percent, total capital ratio was 12.81 percent, and leverage ratio was 9.76 percent at September 30, 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 9 basis points to the company’s common equity tier 1 capital ratio at September 30, 2022. At June 30, 2022, the company’s common equity Tier 1 capital ratio was 11.61 percent, Tier 1 capital ratio was 11.63 percent, total capital ratio was 12.59 percent, and leverage ratio was 9.12 percent.

The company’s tangible common equity ratio, a non-GAAP measure, was 7.96 percent at September 30, 2022 and 8.16 percent at June 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 548,034 shares of common stock at an average price of $91.20 a share in the third quarter of 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 third quarter of 2022, primarily related to strong loan growth in loans and unfunded commitments during the quarter. The level of uncertainty in the economic outlook of our reasonable and supportable forecast continued to increase, offset by the impact of a sustained trend of improving credit quality metrics.

Our base case reasonable and supportable forecast assumes inflation peaks in the third quarter of 2022 and begins to slowly normalize thereafter. We expect the Russian-Ukraine conflict remains isolated and conditions improve in the fourth quarter of 2022. GDP is projected to grow by 1.4 percent over the next twelve months as labor force participants will continue to re-enter the job market to help meet record job openings. Inflation pressures cause modest declines in real household income compared to pre-pandemic levels, resulting in below-trend GDP growth. Our forecasted civilian unemployment rate is 3.9 percent for the fourth quarter of 2022, increasing to 4.1 percent by the third quarter of 2023. Our base case also assumes the Federal Reserve increases federal funds rates resulting in a target range of 4.00 percent to 4.25 percent by December 2022. 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 September 2022, averaging $81.86 per barrel over the next twelve months.

The probability weighting of our base case reasonable and supportable forecast decreased to 50 percent in the third quarter of 2022 compared to 55 percent in the second quarter of 2022 as the level of uncertainty in economic forecasts continued to increase. Our downside case, probability weighted at 40 percent, assumes the Russia-Ukraine conflict persists through the third quarter of 2023, but does remain isolated. Higher levels of inflation force the Federal Reserve to adopt a more aggressive monetary policy to combat the inflationary environment. This results in a federal funds target range of 4.75 percent to 5.00 percent by September 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 4.5 percent in the fourth quarter of 2022 to 6.4 percent in the third 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 $72.58 per barrel over the next twelve months, peaking at $92.87 in the fourth quarter of 2022 and falling 39 percent over the following three quarters.

Nonperforming assets totaled $336 million or 1.54 percent of outstanding loans and repossessed assets at September 30, 2022, compared to $333 million or 1.56 percent at June 30, 2022. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $144 million or 0.67 percent of outstanding loans and repossessed assets at September 30, 2022, compared to $118 million or 0.56 percent at June 30, 2022.

Nonaccruing loans were $131 million or 0.60 percent of outstanding loans at September 30, 2022. Nonaccruing commercial loans totaled $76 million or 0.56 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $8.0 million or 0.18 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $47 million or 1.28 percent of outstanding loans to individuals.

Nonaccruing loans increased $17 million over June 30, 2022, primarily related to nonaccruing healthcare and services loans, partially offset by a decrease in nonaccruing energy loans. New nonaccruing loans identified in the third quarter totaled $54 million, offset by $24 million in payments received, $8.2 million in foreclosures and $1.8 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 $95 million at September 30, 2022, down from $131 million at June 30. Potential problem healthcare loans decreased $27 million and potential problem services loans decreased $10 million.

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 totaled $242 million or 1.11 percent of outstanding loans and 212 percent of nonaccruing loans. At June 30, 2022, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $283 million or 1.33 percent of outstanding loans and 295 percent of nonaccruing loans. The allowance for loan losses was $241 million or 1.13 percent of outstanding loans and 251 percent of nonaccruing loans. Allowance percentages referenced above omit residential mortgage loans guaranteed by U.S. government agencies.

Gross charge-offs were $1.8 million for the third quarter compared to $1.4 million for the second quarter of 2022. Recoveries totaled $1.3 million for the third quarter of 2022 and $2.2 million for the prior quarter. Net charge-offs were $457 thousand or 0.01 percent of average loans on an annualized basis in the third quarter compared to net recoveries of $799 thousand or (0.02) percent of average loans on an annualized basis in the second quarter. Net charge-offs were 0.02 percent of average loans over the last four quarters.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $10.0 billion at September 30, 2022, a $112 million decrease compared to June 30, 2022. At September 30, 2022, the available for sale securities portfolio consisted primarily of $4.9 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.0 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At September 30, 2022, the available for sale securities portfolio had a net unrealized loss of $936 million compared to $523 million at June 30, 2022.

We hold an inventory of trading securities in support of sales to a variety of customers. At September 30, 2022, the trading securities portfolio totaled $2.2 billion compared to $2.9 billion at June 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 decreased $4.0 million to $34 million at September 30, 2022.

Derivative contracts are carried at fair value. At September 30, 2022, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $1.5 billion compared to $2.0 billion at June 30, 2022. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $1.5 billion at September 30, 2022 and $2.0 billion at June 30, 2022.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $4.8 million during the third quarter of 2022, including a $16.6 million increase in the fair value of mortgage servicing rights, $21.4 million decrease in the fair value of securities and derivative contracts held as an economic hedge, and $29 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, October 26, 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 1-877-407-4018 and referencing conference ID # 13733709.

About BOK Financial Corporation

BOK Financial Corporation is a $44 billion regional financial services company headquartered in Tulsa, Oklahoma with $95 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 September 30, 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)

  Sep. 30, 2022   June 30, 2022
ASSETS      
Cash and due from banks $ 804,110     $ 1,313,563  
Interest-bearing cash and cash equivalents   804,799       723,787  
Trading securities   2,194,618       2,859,444  
Investment securities, net of allowance   2,572,360       2,637,345  
Available for sale securities   10,040,894       10,152,663  
Fair value option securities   33,966       37,927  
Restricted equity securities   100,356       95,130  
Residential mortgage loans held for sale   148,121       182,726  
Loans:      
Commercial   13,607,686       13,578,697  
Commercial real estate   4,473,911       4,106,148  
Paycheck protection program   20,233       43,140  
Loans to individuals   3,688,627       3,563,163  
Total loans   21,790,457       21,291,148  
Allowance for loan losses   (241,768 )     (241,114 )
Loans, net of allowance   21,548,689       21,050,034  
Premises and equipment, net   569,379       573,605  
Receivables   200,343       176,672  
Goodwill   1,044,749       1,044,749  
Intangible assets, net   79,833       83,744  
Mortgage servicing rights   283,806       270,312  
Real estate and other repossessed assets, net   29,676       22,221  
Derivative contracts, net   1,693,742       1,992,977  
Cash surrender value of bank-owned life insurance   407,722       409,937  
Receivable on unsettled securities sales   49,089       60,168  
Other assets   1,039,194       1,690,068  
TOTAL ASSETS $ 43,645,446     $ 45,377,072  
       
LIABILITIES AND EQUITY      
Deposits:      
Demand $ 14,985,115     $ 15,720,296  
Interest-bearing transaction   19,000,023       20,544,199  
Savings   971,634       984,824  
Time   1,459,143       1,369,599  
Total deposits   36,415,915       38,618,918  
Funds purchased and repurchase agreements   626,952       677,030  
Other borrowings   234,933       35,505  
Subordinated debentures   131,168       131,223  
Accrued interest, taxes and expense   212,342       211,419  
Due on unsettled securities purchases   205,388       297,352  
Derivative contracts, net   821,275       214,576  
Other liabilities   483,165       449,507  
TOTAL LIABILITIES   39,131,138       40,635,530  
Shareholders’ equity:      
Capital, surplus and retained earnings   5,414,879       5,339,967  
Accumulated other comprehensive loss   (904,945 )     (602,628 )
TOTAL SHAREHOLDERS’ EQUITY   4,509,934       4,737,339  
Non-controlling interests   4,374       4,203  
TOTAL EQUITY   4,514,308       4,741,542  
TOTAL LIABILITIES AND EQUITY $ 43,645,446     $ 45,377,072  


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

  Three Months Ended
  Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
ASSETS                  
Interest-bearing cash and cash equivalents $ 748,263     $ 843,619     $ 1,050,409     $ 1,208,552     $ 682,788  
Trading securities   3,178,068       4,166,954       8,537,390       9,260,778       7,617,236  
Investment securities, net of allowance   2,593,989       610,983       195,198       213,188       218,117  
Available for sale securities   10,306,257       12,258,072       13,092,422       13,247,607       13,446,095  
Fair value option securities   36,846       54,832       75,539       46,458       56,307  
Restricted equity securities   173,656       167,732       164,484       137,874       245,485  
Residential mortgage loans held for sale   132,685       148,183       179,697       163,433       167,620  
Loans:                  
Commercial   13,481,961       13,382,176       12,677,706       12,401,935       12,231,230  
Commercial real estate   4,434,650       4,061,129       4,059,148       3,838,336       4,218,190  
Paycheck protection program   26,364       90,312       210,110       404,261       792,728  
Loans to individuals   3,656,257       3,524,097       3,516,698       3,598,121       3,606,460  
Total loans   21,599,232       21,057,714       20,463,662       20,242,653       20,848,608  
Allowance for loan losses   (241,136 )     (246,064 )     (254,191 )     (271,794 )     (306,125 )
Loans, net of allowance   21,358,096       20,811,650       20,209,471       19,970,859       20,542,483  
Total earning assets   38,527,860       39,062,025       43,504,610       44,248,749       42,976,131  
Cash and due from banks   821,801       822,599       790,440       783,670       766,688  
Derivative contracts, net   2,019,905       3,051,429       2,126,282       1,441,869       1,501,736  
Cash surrender value of bank-owned life insurance   410,667       408,489       406,379       404,149       401,926  
Receivable on unsettled securities sales   219,113       457,165       375,616       585,901       632,539  
Other assets   3,119,856       3,486,691       3,357,747       3,139,718       3,220,129  
TOTAL ASSETS $ 45,119,202     $ 47,288,398     $ 50,561,074     $ 50,604,056     $ 49,499,149  
                   
LIABILITIES AND EQUITY                  
Deposits:                  
Demand $ 15,105,305     $ 15,202,597     $ 15,062,282     $ 14,818,841     $ 13,670,656  
Interest-bearing transaction   19,556,806       21,037,294       22,763,479       22,326,401       21,435,736  
Savings   978,596       981,493       947,407       909,131       888,011  
Time   1,409,069       1,373,036       1,589,039       1,747,715       1,839,983  
Total deposits   37,049,776       38,594,420       40,362,207       39,802,088       37,834,386  
Funds purchased and repurchase agreements   800,759       1,224,134       2,004,466       2,893,128       1,448,800  
Other borrowings   1,528,887       1,301,358       1,148,440       880,837       2,546,083  
Subordinated debentures   131,199       131,219       131,228       131,224       214,654  
Derivative contracts, net   105,221       535,574       682,435       320,757       434,334  
Due on unsettled securities purchases   331,428       380,332       519,097       629,642       957,538  
Other liabilities   396,510       389,031       565,350       578,091       619,913  
TOTAL LIABILITIES   40,343,780       42,556,068       45,413,223       45,235,767       44,055,708  
Total equity   4,775,422       4,732,330       5,147,851       5,368,289       5,443,441  
TOTAL LIABILITIES AND EQUITY $ 45,119,202     $ 47,288,398     $ 50,561,074     $ 50,604,056     $ 49,499,149  


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

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
    2022       2021       2022       2021  
               
Interest revenue $ 363,150     $ 293,463     $ 940,496     $ 887,595  
Interest expense   46,825       13,236       81,742       46,639  
Net interest revenue   316,325       280,227       858,754       840,956  
Provision for credit losses   15,000       (23,000 )     15,000       (83,000 )
Net interest revenue after provision for credit losses   301,325       303,227       843,754       923,956  
Other operating revenue:              
Brokerage and trading revenue   61,006       47,930       77,970       98,120  
Transaction card revenue   25,974       24,632       77,130       71,985  
Fiduciary and asset management revenue   50,190       45,248       146,427       131,402  
Deposit service charges and fees   28,703       27,429       84,207       77,499  
Mortgage banking revenue   11,282       26,286       39,300       84,618  
Other revenue   15,479       18,896       38,608       58,364  
Total fees and commissions   192,634       190,421       463,642       521,988  
Other gains (losses), net   979       31,091       (8,304 )     57,661  
Loss on derivatives, net   (17,009 )     (5,760 )     (77,559 )     (14,590 )
Loss on fair value option securities, net   (4,368 )     (120 )     (17,790 )     (3,657 )
Change in fair value of mortgage servicing rights   16,570       12,945       83,165       33,778  
Gain on available for sale securities, net   892       1,255       3,017       3,152  
Total other operating revenue   189,698       229,832       446,171       598,332  
Other operating expense:              
Personnel   170,348       175,863       484,499       520,908  
Business promotion   6,127       4,939       18,965       9,837  
Charitable contributions to BOKF Foundation                     4,000  
Professional fees and services   14,089       12,436       37,977       36,777  
Net occupancy and equipment   29,296       28,395       87,640       81,690  
Insurance   4,306       3,712       13,317       11,992  
Data processing and communications   41,743       38,371       122,859       112,256  
Printing, postage and supplies   4,349       3,558       11,967       11,283  
Amortization of intangible assets   3,943       4,488       11,956       13,873  
Mortgage banking costs   9,504       8,962       26,818       34,031  
Other expense   11,046       10,553       30,026       41,566  
Total other operating expense   294,751       291,277       846,024       878,213  
               
Net income before taxes   196,272       241,782       443,901       644,075  
Federal and state income taxes   39,681       54,061       92,000       144,939  
               
Net income   156,591       187,721       351,901       499,136  
Net income (loss) attributable to non-controlling interests   81       (601 )     57       (1,667 )
Net income attributable to BOK Financial Corporation shareholders $ 156,510     $ 188,322     $ 351,844     $ 500,803  
               
Average shares outstanding:              
Basic   67,003,199       68,359,125       67,409,789       68,768,044  
Diluted   67,004,623       68,360,871       67,411,222       68,770,663  
               
Net income per share:              
Basic $ 2.32     $ 2.74     $ 5.18     $ 7.23  
Diluted $ 2.32     $ 2.74     $ 5.18     $ 7.23  


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

  Three Months Ended
  Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
Capital:                  
Period-end shareholders’ equity $ 4,509,934     $ 4,737,339     $ 4,849,582     $ 5,363,732     $ 5,388,973  
Risk weighted assets $ 36,866,994     $ 36,787,092     $ 37,160,258     $ 34,575,277     $ 33,916,456  
Risk-based capital ratios:                  
Common equity tier 1   11.80 %     11.61 %     11.30 %     12.24 %     12.26 %
Tier 1   11.82 %     11.63 %     11.31 %     12.25 %     12.29 %
Total capital   12.81 %     12.59 %     12.25 %     13.29 %     13.38 %
Leverage ratio   9.76 %     9.12 %     8.47 %     8.55 %     8.77 %
Tangible common equity ratio1   7.96 %     8.16 %     8.13 %     8.61 %     9.28 %
                   
Common stock:                  
Book value per share $ 67.06     $ 69.87     $ 71.21     $ 78.34     $ 78.56  
Tangible book value per share $ 50.34     $ 53.22     $ 54.58     $ 61.74     $ 61.93  
Market value per share:                  
High $ 95.51     $ 94.76     $ 119.59     $ 110.21     $ 92.97  
Low $ 69.82     $ 74.03     $ 93.76     $ 89.01     $ 77.20  
Cash dividends paid $ 35,661     $ 35,892     $ 36,093     $ 36,256     $ 35,725  
Dividend payout ratio   22.79 %     27.02 %     57.76 %     30.90 %     18.97 %
Shares outstanding, net   67,254,383       67,806,005       68,104,043       68,467,772       68,596,764  
Stock buy-back program:                  
Shares repurchased   548,034       294,084       475,877       128,522       478,141  
Amount $ 49,980     $ 24,404     $ 48,074     $ 13,426     $ 40,644  
Average price per share $ 91.20     $ 82.98     $ 101.02     $ 104.46     $ 85.00  
                   
Performance ratios (quarter annualized):
Return on average assets   1.38 %     1.13 %     0.50 %     0.92 %     1.51 %
Return on average equity   13.01 %     11.27 %     4.93 %     8.68 %     13.78 %
Net interest margin   3.24 %     2.76 %     2.44 %     2.52 %     2.66 %
Efficiency ratio   57.35 %     60.65 %     75.07 %     70.14 %     61.23 %
                   
Reconciliation of non-GAAP measures:
1     Tangible common equity ratio:                  
Total shareholders’ equity $ 4,509,934     $ 4,737,339     $ 4,849,582     $ 5,363,732     $ 5,388,973  
Less: Goodwill and intangible assets, net   1,124,582       1,128,493       1,132,510       1,136,527       1,140,935  
Tangible common equity $ 3,385,352     $ 3,608,846     $ 3,717,072     $ 4,227,205     $ 4,248,038  
                   
Total assets $ 43,645,446     $ 45,377,072     $ 46,826,507     $ 50,249,431     $ 46,923,409  
Less: Goodwill and intangible assets, net   1,124,582       1,128,493       1,132,510       1,136,527       1,140,935  
Tangible assets $ 42,520,864     $ 44,248,579     $ 45,693,997     $ 49,112,904     $ 45,782,474  
                   
Tangible common equity ratio   7.96 %     8.16 %     8.13 %     8.61 %     9.28 %
                   
                   
Pre-provision net revenue:                  
Net income before taxes $ 196,272     $ 168,980     $ 78,649     $ 152,025     $ 241,782  
Provision for expected credit losses   15,000                   (17,000 )     (23,000 )
Net income (loss) attributable to non-controlling interests   81       12       (36 )     (129 )     (601 )
Pre-provision net revenue $ 211,191     $ 168,968     $ 78,685     $ 135,154     $ 219,383  
                   
Other data:                  
Tax equivalent interest $ 2,163     $ 2,040     $ 1,973     $ 2,104     $ 2,217  
Net unrealized gain (loss) on available for sale securities $ (935,788 )   $ (522,812 )   $ (546,598 )   $ 93,381     $ 221,487  
                   
Mortgage banking:                  
Mortgage production revenue $ (2,406 )   $ (504 )   $ 5,055     $ 10,018     $ 15,403  
                   
Mortgage loans funded for sale $ 260,210     $ 360,237     $ 418,866     $ 568,507     $ 652,336  
Add: current period-end outstanding commitments   75,779       106,004       160,260       171,412       239,066  
Less: prior period end outstanding commitments   106,004       160,260       171,412       239,066       276,154  
Total mortgage production volume $ 229,985     $ 305,981     $ 407,714     $ 500,853     $ 615,248  
                   
Mortgage loan refinances to mortgage loans funded for sale   10 %     19 %     45 %     51 %     48 %
Realized margin on funded mortgage loans (0.41 )%     0.88 %     1.64 %     2.34 %     2.48 %
Production revenue as a percentage of production volume (1.05 )%   (0.16 )%     1.24 %     2.00 %     2.50 %
                   
Mortgage servicing revenue $ 13,688     $ 11,872     $ 11,595     $ 11,260     $ 10,883  
Average outstanding principal balance of mortgage loans serviced for others   19,070,221       17,336,596       16,155,329       15,930,480       14,899,306  
Average mortgage servicing revenue rates   0.28 %     0.27 %     0.29 %     0.28 %     0.29 %
                   
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net $ (17,027 )   $ (13,639 )   $ (46,694 )   $ (4,862 )   $ (5,829 )
Gain (loss) on fair value option securities, net   (4,368 )     (2,221 )     (11,201 )     1,418       (120 )
Loss on economic hedge of mortgage servicing rights   (21,395 )     (15,860 )     (57,895 )     (3,444 )     (5,949 )
Gain on changes in fair value of mortgage servicing rights   16,570       17,485       49,110       7,859       12,945  
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue   (4,825 )     1,625       (8,785 )     4,415       6,996  
Net interest revenue on fair value option securities2   29       275       383       259       286  
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges $ (4,796 )   $ 1,900     $ (8,402 )   $ 4,674     $ 7,282  

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
  Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
                   
Interest revenue $ 363,150     $ 294,247     $ 283,099     $ 292,334     $ 293,463  
Interest expense   46,825       20,229       14,688       15,257       13,236  
Net interest revenue   316,325       274,018       268,411       277,077       280,227  
Provision for credit losses   15,000                   (17,000 )     (23,000 )
Net interest revenue after provision for credit losses   301,325       274,018       268,411       294,077       303,227  
Other operating revenue:                  
Brokerage and trading revenue   61,006       44,043       (27,079 )     14,869       47,930  
Transaction card revenue   25,974       26,940       24,216       24,998       24,632  
Fiduciary and asset management revenue   50,190       49,838       46,399       46,872       45,248  
Deposit service charges and fees   28,703       28,500       27,004       26,718       27,429  
Mortgage banking revenue   11,282       11,368       16,650       21,278       26,286  
Other revenue   15,479       12,684       10,445       11,586       18,896  
Total fees and commissions   192,634       173,373       97,635       146,321       190,421  
Other gains (losses), net   979       (7,639 )     (1,644 )     6,081       31,091  
Loss on derivatives, net   (17,009 )     (13,569 )     (46,981 )     (4,788 )     (5,760 )
Gain (loss) on fair value option securities, net   (4,368 )     (2,221 )     (11,201 )     1,418       (120 )
Change in fair value of mortgage servicing rights   16,570       17,485       49,110       7,859       12,945  
Gain on available for sale securities, net   892       1,188       937       552       1,255  
Total other operating revenue   189,698       168,617       87,856       157,443       229,832  
Other operating expense:                  
Personnel   170,348       154,923       159,228       174,474       175,863  
Business promotion   6,127       6,325       6,513       6,452       4,939  
Charitable contributions to BOKF Foundation                     5,000        
Professional fees and services   14,089       12,475       11,413       14,129       12,436  
Net occupancy and equipment   29,296       27,489       30,855       26,897       28,395  
Insurance   4,306       4,728       4,283       3,889       3,712  
Data processing and communications   41,743       41,280       39,836       39,358       38,371  
Printing, postage and supplies   4,349       3,929       3,689       2,935       3,558  
Amortization of intangible assets   3,943       4,049       3,964       4,438       4,488  
Mortgage banking costs   9,504       9,437       7,877       8,667       8,962  
Other expense   11,046       9,020       9,960       13,256       10,553  
Total other operating expense   294,751       273,655       277,618       299,495       291,277  
Net income before taxes   196,272       168,980       78,649       152,025       241,782  
Federal and state income taxes   39,681       36,122       16,197       34,836       54,061  
Net income   156,591       132,858       62,452       117,189       187,721  
Net income (loss) attributable to non-controlling interests   81       12       (36 )     (129 )     (601 )
Net income attributable to BOK Financial Corporation shareholders $ 156,510     $ 132,846     $ 62,488     $ 117,318     $ 188,322  
                   
Average shares outstanding:                  
Basic   67,003,199       67,453,748       67,812,400       68,069,160       68,359,125  
Diluted   67,004,623       67,455,172       67,813,851       68,070,910       68,360,871  
Net income per share:                  
Basic $ 2.32     $ 1.96     $ 0.91     $ 1.71     $ 2.74  
Diluted $ 2.32     $ 1.96     $ 0.91     $ 1.71     $ 2.74  


LOANS TREND — UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

    Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
Commercial:                    
Healthcare   $ 3,826,623   $ 3,696,963   $ 3,441,732   $ 3,414,940   $ 3,347,641
Energy     3,371,588     3,393,072     3,197,667     3,006,884     2,814,059
Services     3,280,925     3,421,493     3,351,495     3,367,193     3,323,422
General business     3,128,550     3,067,169     2,892,295     2,717,448     2,690,018
Total commercial     13,607,686     13,578,697     12,883,189     12,506,465     12,175,140
                     
Commercial real estate:                    
Multifamily     1,126,700     878,565     867,288     786,404     875,586
Industrial     1,103,905     953,626     911,928     766,125     890,316
Office     1,086,615     1,100,115     1,097,516     1,040,963     1,030,755
Retail     635,021     637,304     667,561     679,917     766,402
Residential construction and land development     91,690     111,575     120,506     120,016     118,416
Other commercial real estate     429,980     424,963     436,157     437,900     435,417
Total commercial real estate     4,473,911     4,106,148     4,100,956     3,831,325     4,116,892
                     
Paycheck protection program     20,233     43,140     137,365     276,341     536,052
                     
Loans to individuals:                    
Residential mortgage     1,851,836     1,784,729     1,723,506     1,722,170     1,747,243
Residential mortgages guaranteed by U.S. government agencies     262,466     293,838     322,581     354,173     376,986
Personal     1,574,325     1,484,596     1,506,832     1,515,206     1,395,623
Total loans to individuals     3,688,627     3,563,163     3,552,919     3,591,549     3,519,852
                     
Total   $ 21,790,457   $ 21,291,148   $ 20,674,429   $ 20,205,680   $ 20,347,936


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

  Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
                   
Texas:                  
Commercial $ 6,632,610   $ 6,631,658   $ 6,254,883   $ 6,068,700   $ 5,815,562
Commercial real estate   1,448,590     1,339,452     1,345,105     1,253,439     1,383,871
Paycheck protection program   12,280     14,040     31,242     81,654     115,623
Loans to individuals   970,459     934,856     957,320     942,982     901,121
Total Texas   9,063,939     8,920,006     8,588,550     8,346,775     8,216,177
                   
Oklahoma:                  
Commercial   3,104,037     3,125,764     2,883,663     2,633,014     2,590,887
Commercial real estate   608,856     576,458     552,310     546,021     552,184
Paycheck protection program   4,571     13,329     52,867     69,817     192,474
Loans to individuals   2,054,362     1,982,247     1,977,886     2,024,404     2,014,099
Total Oklahoma   5,771,826     5,697,798     5,466,726     5,273,256     5,349,644
                   
Colorado:                  
Commercial   2,115,883     2,074,455     1,977,773     1,936,149     1,874,613
Commercial real estate   565,057     473,231     480,740     470,937     526,653
Paycheck protection program   1,298     8,233     28,584     82,781     140,470
Loans to individuals   237,981     234,105     236,125     256,533     249,298
Total Colorado   2,920,219     2,790,024     2,723,222     2,746,400     2,791,034
                   
Arizona:                  
Commercial   1,101,917     1,080,228     1,074,551     1,130,798     1,194,801
Commercial real estate   850,319     766,767     719,970     674,309     734,174
Paycheck protection program   1,083     5,173     11,644     21,594     42,815
Loans to individuals   225,981     212,870     190,746     186,528     182,506
Total Arizona   2,179,300     2,065,038     1,996,911     2,013,229     2,154,296
                   
Kansas/Missouri:                  
Commercial   307,446     338,337     334,371     338,697     336,414
Commercial real estate   466,955     458,157     436,740     382,761     408,001
Paycheck protection program   10     573     2,595     4,718     6,920
Loans to individuals   125,039     125,584     121,247     110,889     100,920
Total Kansas/Missouri   899,450     922,651     894,953     837,065     852,255
                   
New Mexico:                  
Commercial   257,763     252,033     262,533     306,964     287,695
Commercial real estate   426,367     431,606     504,632     442,128     437,302
Paycheck protection program   991     1,792     9,713     13,510     31,444
Loans to individuals   68,095     67,026     63,299     63,930     66,651
Total New Mexico   753,216     752,457     840,177     826,532     823,092
                   
Arkansas:                  
Commercial   88,030     76,222     95,415     92,143     75,168
Commercial real estate   107,767     60,477     61,459     61,730     74,707
Paycheck protection program           720     2,267     6,306
Loans to individuals   6,710     6,475     6,296     6,283     5,257
Total Arkansas   202,507     143,174     163,890     162,423     161,438
                   
TOTAL BOK FINANCIAL $ 21,790,457   $ 21,291,148   $ 20,674,429   $ 20,205,680   $ 20,347,936

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)

  Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
Oklahoma:                  
Demand $ 5,143,405   $ 5,422,593   $ 5,205,806   $ 5,433,405   $ 5,080,162
Interest-bearing:                  
Transaction   9,619,419     10,240,378     11,410,709     12,689,367     11,692,679
Savings   558,256     561,413     558,634     521,439     510,906
Time   776,306     678,127     817,744     978,822     1,039,866
Total interest-bearing   10,953,981     11,479,918     12,787,087     14,189,628     13,243,451
Total Oklahoma   16,097,386     16,902,511     17,992,893     19,623,033     18,323,613
                   
Texas:                  
Demand   4,609,255     4,670,535     4,552,001     4,552,983     3,987,503
Interest-bearing:                  
Transaction   4,781,920     5,344,326     4,963,118     5,345,461     4,985,465
Savings   179,049     183,708     182,536     178,458     165,043
Time   343,015     333,038     329,931     337,559     337,389
Total interest-bearing   5,303,984     5,861,072     5,475,585     5,861,478     5,487,897
Total Texas   9,913,239     10,531,607     10,027,586     10,414,461     9,475,400
                   
Colorado:                  
Demand   2,510,179     2,799,798     2,673,352     2,526,855     2,158,596
Interest-bearing:                  
Transaction   2,221,796     2,277,563     2,387,304     2,334,371     2,337,354
Savings   80,542     82,976     81,762     78,636     79,873
Time   151,064     160,795     165,401     174,351     184,002
Total interest-bearing   2,453,402     2,521,334     2,634,467     2,587,358     2,601,229
Total Colorado   4,963,581     5,321,132     5,307,819     5,114,213     4,759,825
                   
New Mexico:                  
Demand   1,296,410     1,347,600     1,271,264     1,196,057     1,222,895
Interest-bearing:                  
Transaction   717,492     845,442     888,257     858,394     837,630
Savings   113,056     115,660     115,457     107,963     107,615
Time   142,856     148,532     156,140     163,871     168,879
Total interest-bearing   973,404     1,109,634     1,159,854     1,130,228     1,114,124
Total New Mexico   2,269,814     2,457,234     2,431,118     2,326,285     2,337,019
                   
Arizona:                  
Demand   903,296     901,543     947,775     934,282     1,110,884
Interest-bearing:                  
Transaction   788,142     792,269     810,896     834,491     784,614
Savings   18,258     17,999     18,122     16,182     16,468
Time   26,704     28,774     27,259     31,274     30,862
Total interest-bearing   833,104     839,042     856,277     881,947     831,944
Total Arizona   1,736,400     1,740,585     1,804,052     1,816,229     1,942,828
                   
Kansas/Missouri:                  
Demand   479,459     537,143     553,345     658,342     488,595
Interest-bearing:                  
Transaction   747,981     913,921     1,107,525     1,086,946     965,757
Savings   19,375     19,943     19,589     18,844     17,303
Time   13,258     13,962     11,527     12,255     13,040
Total interest-bearing   780,614     947,826     1,138,641     1,118,045     996,100
Total Kansas/Missouri   1,260,073     1,484,969     1,691,986     1,776,387     1,484,695
                   
Arkansas:                  
Demand   43,111     41,084     38,798     42,499     41,594
Interest-bearing:                  
Transaction   123,273     130,300     122,020     119,543     149,611
Savings   3,098     3,125     3,265     3,213     3,289
Time   5,940     6,371     6,414     6,196     6,677
Total interest-bearing   132,311     139,796     131,699     128,952     159,577
Total Arkansas   175,422     180,880     170,497     171,451     201,171
                   
TOTAL BOK FINANCIAL $ 36,415,915   $ 38,618,918   $ 39,425,951   $ 41,242,059   $ 38,524,551


NET INTEREST MARGIN TREND — UNAUDITED
BOK FINANCIAL CORPORATION

  Three Months Ended
  Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
                   
TAX-EQUIVALENT ASSETS YIELDS                  
Interest-bearing cash and cash equivalents 1.87 %   0.83 %   0.18 %   0.16 %   0.14 %
Trading securities 2.72 %   2.00 %   1.71 %   1.89 %   2.04 %
Investment securities, net of allowance 1.42 %   2.35 %   5.07 %   4.99 %   5.02 %
Available for sale securities 2.21 %   1.84 %   1.77 %   1.72 %   1.80 %
Fair value option securities 2.98 %   2.92 %   2.81 %   2.71 %   2.62 %
Restricted equity securities 6.23 %   3.30 %   2.69 %   2.98 %   2.55 %
Residential mortgage loans held for sale 5.05 %   4.22 %   3.11 %   3.06 %   3.06 %
Loans 4.89 %   3.92 %   3.57 %   3.70 %   3.68 %
Allowance for loan losses                  
Loans, net of allowance 4.94 %   3.96 %   3.61 %   3.75 %   3.73 %
Total tax-equivalent yield on earning assets 3.71 %   2.96 %   2.58 %   2.66 %   2.78 %
                   
COST OF INTEREST-BEARING LIABILITIES                
Interest-bearing deposits:                  
Interest-bearing transaction 0.63 %   0.22 %   0.10 %   0.09 %   0.09 %
Savings 0.05 %   0.03 %   0.03 %   0.04 %   0.04 %
Time 0.93 %   0.68 %   0.56 %   0.53 %   0.55 %
Total interest-bearing deposits 0.63 %   0.24 %   0.12 %   0.12 %   0.13 %
Funds purchased and repurchase agreements 0.72 %   0.53 %   0.95 %   0.73 %   0.20 %
Other borrowings 2.33 %   1.01 %   0.38 %   0.49 %   0.37 %
Subordinated debt 5.07 %   4.50 %   4.02 %   4.02 %   4.63 %
Total cost of interest-bearing liabilities 0.76 %   0.31 %   0.21 %   0.21 %   0.19 %
Tax-equivalent net interest revenue spread 2.95 %   2.65 %   2.37 %   2.45 %   2.59 %
Effect of noninterest-bearing funding sources and other 0.29 %   0.11 %   0.07 %   0.07 %   0.07 %
Tax-equivalent net interest margin 3.24 %   2.76 %   2.44 %   2.52 %   2.66 %

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
  Sep. 30, 2022   June 30, 2022   Mar. 31, 2022   Dec. 31, 2021   Sep. 30, 2021
Nonperforming assets:                  
Nonaccruing loans:                  
Commercial:                  
Healthcare $ 41,438     $ 14,886     $ 15,076     $ 15,762     $ 509  
Services   27,315       15,259       16,535       17,170       25,714  
Energy   4,164       20,924       24,976       31,091       45,500  
General business   2,753       3,539       3,750       10,081       8,951  
Total commercial   75,670       54,608       60,337       74,104       80,674  
                   
Commercial real estate   7,971       10,939       15,989       14,262       21,223  
                   
Loans to individuals:                  
Permanent mortgage   30,066       30,460       30,757       31,574       30,674  
Permanent mortgage guaranteed by U.S. government agencies   16,957       18,000       16,992       13,861       9,188  
Personal   136       132       171       258       188  
Total loans to individuals   47,159       48,592       47,920       45,693       40,050  
                   
Total nonaccruing loans $ 130,800     $ 114,139     $ 124,246     $ 134,059     $ 141,947  
Accruing renegotiated loans guaranteed by U.S. government agencies   176,022       196,420       204,121       210,618       178,554  
Real estate and other repossessed assets   29,676       22,221       24,492       24,589       28,770  
Total nonperforming assets $ 336,498     $ 332,780     $ 352,859     $ 369,266     $ 349,271  
Total nonperforming assets excluding those guaranteed by U.S. government agencies $ 143,519     $ 118,360     $ 131,746     $ 144,787     $ 161,529  
                   
Accruing loans 90 days past due1 $ 120     $ 3     $ 307     $ 313     $ 223  
                   
Gross charge-offs $ 1,766     $ 1,368     $ 7,805     $ 6,558     $ 9,584  
Recoveries   (1,309 )     (2,167 )     (1,824 )     (7,272 )     (1,769 )
Net charge-offs (recoveries) $ 457     $ (799 )   $ 5,981     $ (714 )   $ 7,815  
                   
Provision for loan losses $ 1,111     $ (6,158 )   $ (3,967 )   $ (20,973 )   $ (27,395 )
Provision for credit losses from off-balance sheet unfunded loan commitments   14,060       6,005       3,268       3,738       4,952  
Provision for expected credit losses from mortgage banking activities   (66 )     69       621       150       (534 )
Provision for credit losses related to held-to maturity (investment) securities portfolio   (105 )     84       78       85       (23 )
Total provision for credit losses $ 15,000     $     $     $ (17,000 )   $ (23,000 )
                   
Allowance for loan losses to period end loans   1.11 %     1.13 %     1.19 %     1.27 %     1.36 %
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans   1.37 %     1.33 %     1.37 %     1.43 %     1.50 %
Nonperforming assets to period end loans and repossessed assets   1.54 %     1.56 %     1.70 %     1.83 %     1.71 %
Net charge-offs (annualized) to average loans   0.01 %   (0.02 )%     0.12 %   (0.01 )%     0.15 %
Allowance for loan losses to nonaccruing loans1   212.37 %     250.80 %     229.80 %     213.33 %     208.41 %
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1   261.83 %     294.74 %     263.60 %     240.77 %     230.43 %

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   3Q22 vs 2Q22   3Q22 vs 3Q21
    Sep. 30, 2022   June 30, 2022   Sep. 30, 2021   $ change   % change   $ change   % change
Commercial Banking                            
Net interest revenue   $ 206,904   $ 166,542   $ 134,104   $ 40,362     24.2 %   $ 72,800     54.3 %
Fees and commissions revenue     58,147     59,881     56,452     (1,734 )   (2.9 )%     1,695     3.0 %
Combined net interest and fee revenue     265,051     226,423     190,556     38,628     17.1 %     74,495     39.1 %
Other operating expense     75,872     70,009     68,301     5,863     8.4 %     7,571     11.1 %
Corporate expense allocations     16,451     16,634     11,769     (183 )   (1.1 )%     4,682     39.8 %
Net income     132,941     104,813     102,694     28,128     26.8 %     30,247     29.5 %
                             
Average assets     28,890,429     29,269,712     28,474,132     (379,283 )   (1.3 )%     416,297     1.5 %
Average loans     17,904,779     17,336,841     16,588,875     567,938     3.3 %     1,315,904     7.9 %
Average deposits     17,966,661     18,933,766     17,881,673     (967,105 )   (5.1 )%     84,988     0.5 %
                             
Consumer Banking                            
Net interest revenue   $ 43,951   $ 33,786   $ 27,222   $ 10,165     30.1 %   $ 16,729     61.5 %
Fees and commissions revenue     30,230     30,101     44,405     129     0.4 %     (14,175 )   (31.9 )%
Combined net interest and fee revenue     74,181     63,887     71,627     10,294     16.1 %     2,554     3.6 %
Other operating expense     53,236     52,660     49,483     576     1.1 %     3,753     7.6 %
Corporate expense allocations     10,792     10,120     11,516     672     6.6 %     (724 )   (6.3 )%
Net income     2,970     1,239     12,432     1,731     139.7 %     (9,462 )   (76.1 )%
                             
Average assets     10,233,401     10,338,191     10,083,593     (104,790 )   (1.0 )%     149,808     1.5 %
Average loans     1,686,498     1,669,830     1,763,705     16,668     1.0 %     (77,207 )   (4.4 )%
Average deposits     8,812,884     8,876,469     8,516,942     (63,585 )   (0.7 )%     295,942     3.5 %
                             
Wealth Management                            
Net interest revenue   $ 33,584   $ 37,747   $ 55,196   $ (4,163 )   (11.0 )%   $ (21,612 )   (39.2 )%
Fees and commissions revenue     113,113     86,771     97,966     26,342     30.4 %     15,147     15.5 %
Combined net interest and fee revenue     146,697     124,518     153,162     22,179     17.8 %     (6,465 )   (4.2 )%
Other operating expense     79,151     76,393     87,498     2,758     3.6 %     (8,347 )   (9.5 )%
Corporate expense allocations     12,934     12,503     10,110     431     3.4 %     2,824     27.9 %
Net income     41,808     27,287     41,339     14,521     53.2 %     469     1.1 %
                             
Average assets     13,818,299     16,902,721     19,109,704     (3,084,422 )   (18.2 )%     (5,291,405 )   (27.7 )%
Average loans     2,163,975     2,157,771     1,971,380     6,204     0.3 %     192,595     9.8 %
Average deposits     7,999,074     8,482,785     9,120,446     (483,711 )   (5.7 )%     (1,121,372 )   (12.3 )%
Fiduciary assets     54,714,705     55,972,584     60,497,576     (1,257,879 )   (2.2 )%     (5,782,871 )   (9.6 )%
Assets under management or administration     95,401,638     95,981,289     98,842,789     (579,651 )   (0.6 )%     (3,441,151 )   (3.5 )%

 


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