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BOK Financial Corporation Reports Quarterly Earnings of $162 million or $2.43 Per Share in the First Quarter
ソース: Nasdaq GlobeNewswire / 26 4 2023 06:55:01 America/Chicago
TULSA, Okla., April 26, 2023 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASD: BOKF) -
CEO Commentary Stacy Kymes, president and chief executive officer, stated, “The strong financial results in the first quarter are a testament to our diverse business model, strong operating geographies, and disciplined approach to risk management that has long been critical to our ability to sustain success. Our peer-leading tangible capital ratio paired with our balance sheet liquidity have served us well over the last 45 days with the disruptions in our sector. The disruptions and almost unprecedented level of rate volatility in the quarter have demonstrated our ability to both manage critical risks well while also continuing to post strong financial results for our shareholders. In fact, this quarter was the second highest pre-provision net revenue in our history. The first quarter showed sustained revenue in our non-interest income businesses, continued loan growth, and an efficiency ratio below 57 percent. While we cannot be totally immune from the macro economy, we believe this is exactly the environment where we can be most differentiated. Our interest rate, liquidity, and credit risk management are strong and we remain focused on increasing top line revenue in exceptional growth markets." First Quarter 2023 Financial Highlights (Unless indicated otherwise, all comparisons are to the prior quarter) - Net income was $162.4 million or $2.43 per diluted share for the first quarter of 2023 and $168.4 million or $2.51 per diluted share for the fourth quarter of 2022.
- Net interest revenue totaled $352.3 million, consistent with the prior quarter. Net interest margin was 3.45 percent compared to 3.54 percent, driven by higher funding costs, as expected.
- Fees and commissions revenue was $186.0 million, a decrease of $7.6 million. A $10.6 million reduction in brokerage and trading revenue related to lower trading volumes due to escalated market volatility was partially offset by a $4.3 million increase in mortgage banking revenue related to higher production volume and expanded mortgage servicing.
- Due to interest rate volatility in the first quarter, the net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $10.5 million compared to $1.2 million for the fourth quarter of 2022.
- Operating expense decreased $12.6 million to $305.8 million. Personnel expense decreased $4.3 million. Lower incentive compensation costs, driven largely by a one-time incentive given to employees in the fourth quarter of 2022, were partially offset by increased employee benefits costs related to higher seasonal payroll taxes. Non-personnel expense decreased $8.4 million, led by a reduction in professional fees and mortgage banking costs.
- Period-end loans increased $193 million to $22.8 billion at March 31, 2023, primarily related to a $209 million increase in commercial real estate loans driven largely by loans secured by multifamily residential properties and industrial facilities. Average outstanding loan balances were $22.5 billion, a $500 million increase, primarily due to higher commercial and commercial real estate balances.
- We recorded a $16.0 million provision for expected credit losses in the first quarter of 2023, as key economic assumptions in the base case, including projected West Texas Intermediate ("WTI") oil prices and projected commercial real estate vacancy rates, were less favorable to economic growth. We recorded a $15.0 million provision for expected credit losses in the fourth quarter of 2022, primarily as a result of growth in loans and loan commitments during the quarter. The combined allowance for credit losses totaled $312 million or 1.37 percent of outstanding loans at March 31, 2023. The combined allowance for credit losses was $297 million or 1.31 percent of outstanding loans at December 31, 2022. Net charge-offs were $769 thousand or 0.01 percent of average loans on an annualized basis in the first quarter compared to net charge-offs of $15.5 million or 0.28 percent of average loans on an annualized basis in the fourth quarter.
- Average deposits decreased $2.0 billion to $33.5 billion and period-end deposits decreased $1.9 billion to $32.6 billion as customers redeployed resources and pursued investment alternatives following the savings trend during the height of the pandemic. The impact of recent events in the banking industry was not significant to our deposit trends. Average demand deposits were reduced by $1.8 billion and average interest-bearing deposits decreased $209 million. The loan to deposit ratio was 70 percent at March 31, 2023, up from 65 percent at December 31, 2022, representing a funding profile more consistent with, but still below, pre-pandemic levels.
- The company's tangible common equity ratio, a non-GAAP measure, was 8.46 percent at March 31, 2023 and 7.63 percent at December 31, 2022. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. Adjusted for all unrealized securities portfolio gains and losses, including those in the investment portfolio, the tangible common equity ratio would be 8.22 percent.
- The company's common equity Tier 1 capital ratio was 12.19 percent at March 31, 2023. In addition, the company's Tier 1 capital ratio was 12.20 percent, total capital ratio was 13.21 percent, and leverage ratio was 9.94 percent at March 31, 2023. At December 31, 2022, the company's common equity Tier 1 capital ratio was 11.69 percent, Tier 1 capital ratio was 11.71 percent, total capital ratio was 12.67 percent, and leverage ratio was 9.91 percent.
- The company repurchased 447,071 shares of common stock at an average price paid of $98.64 a share in the first quarter of 2023.
First Quarter 2023 Segment Highlights - Commercial Banking contributed $176.5 million to net income in the first quarter of 2023, an increase of $37.2 million over the fourth quarter of 2022. Combined net interest revenue and fee revenue increased $30.7 million, primarily due to an increase in the spread on deposits sold to our Funds Management unit. Net loans charged-off decreased $14.3 million to $76 thousand in the first quarter of 2023. Personnel expense decreased $5.3 million, driven by incentive compensation costs. Average loans increased $496 million or 3 percent to $18.8 billion. Average deposits decreased $971 million or 6 percent to $15.9 billion.
- Consumer Banking contributed $50.7 million to net income in the first quarter of 2023, an increase of $41.7 million over the prior quarter. Combined net interest revenue and fee revenue increased $59.0 million, largely due to an increase in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue increased $3.0 million. Mortgage banking revenue increased $4.3 million as mortgage production volumes grew $54.0 million, partially offset by decreases in deposit service charges and other revenue. Operating expense decreased $4.3 million. Mortgage banking costs decreased $3.2 million from lower prepayments combined with reduced accruals related to default servicing and loss mitigation costs on loans serviced for others. Personnel expense decreased $1.1 million. Average loans increased $22 million or 1 percent to $1.7 billion. Average deposits decreased $369 million or 4 percent to $8.2 billion.
- Wealth Management contributed $52.4 million to net income in the first quarter of 2023, an increase of $11.0 million over the fourth quarter of 2022. Combined net interest and fee revenue increased $13.9 million, primarily due to an increase in the spread on deposits sold to our Funds Management unit, which was partially offset by a decrease of $9.0 million in total revenue from institutional trading activities from reduced U.S. agency residential mortgage-backed securities trading volumes. Average loans decreased $22 million or 1 percent to $2.2 billion. Average deposits decreased $456 million or 6 percent to $7.4 billion. Assets under management or administration were $102.3 billion, an increase of $2.6 billion.
Net Interest Revenue Net interest revenue was $352.3 million for the first quarter of 2023, relatively unchanged from the prior quarter. Net interest margin was 3.45 percent compared to 3.54 percent, driven by expected deposit repricing activity. In recent prior quarters, the rapid pace of market interest rate increases grew net interest margin as our earning assets, led by our significant percentage of variable-rate loans, repriced at a higher rate and faster pace than our interest-bearing liabilities. In the current quarter, we saw margin compression as our interest-bearing liabilities began to catch up and reprice more quickly.
Average earning assets increased $1.5 billion. Average loan balances increased $500 million, largely due to growth in commercial and commercial real estate loans. Average available for sale securities increased $785 million as we reposition our balance sheet for the current rate environment. Average fair value option securities, held as an economic hedge of the changes in fair value of our mortgage servicing rights, increased $208 million while average restricted equity securities grew $100 million. Average interest-bearing deposits decreased $209 million as customers redeployed resources following the savings trend during the height of the pandemic. Average other borrowings increased $2.0 billion while funds purchased and repurchase agreements grew $713 million.
The yield on average earning assets was 5.06 percent, up 53 basis points. The loan portfolio yield increased 68 basis points to 6.67 percent while the yield on trading securities was up 82 basis points to 4.52 percent. The yield on the available for sale securities portfolio increased 33 basis points to 2.87 percent while the yield on the fair value option securities portfolio grew 77 basis points to 5.17 percent. The yield on interest-bearing cash and cash equivalents increased 22 basis points to 4.28 percent.
Funding costs were 2.43 percent, an 86 basis point increase. The cost of interest-bearing deposits increased 61 basis points to 1.83 percent. The cost of funds purchased and repurchase agreements increased 128 basis points to 3.33 percent while the cost of other borrowings was up 65 basis points to 4.73 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 82 basis points, an increase of 24 basis points.
Fees and Commissions Revenue Fees and commissions revenue totaled $186.0 million for the first quarter of 2023, a decrease of $7.6 million from the prior quarter.
Brokerage and trading revenue decreased $10.6 million, with an $8.3 million reduction in trading revenue, largely due to a lower volume of U.S. agency residential mortgage-backed securities trading activity caused by high market volatility. Total investment banking revenue decreased $2.6 million with a reduction in syndication activity partially offset by higher underwriting fees. Transaction card revenue decreased $1.5 million, largely related to a decline in seasonal transaction volumes.
Mortgage banking revenue increased $4.3 million as mortgage originations were up following seasonal declines in the prior quarter. Mortgage production volume increased $54 million to $165 million.
Operating Expense Total operating expense was $305.8 million for the first quarter of 2023, a decrease of $12.6 million compared to the fourth quarter of 2022.
Personnel expense was $182.1 million, including $1.7 million of deferred compensation expense. Excluding deferred compensation costs, personnel expense decreased $2.1 million. Cash-based incentive compensation decreased $12.6 million, largely due to a one-time incentive given to employees in the fourth quarter of 2022. Share-based compensation expense increased $2.2 million due to changes in assumptions of certain performance-based equity awards while regular compensation increased $2.2 million along with our annual merit increases in March. Employee benefits expense was up $6.1 million due to a seasonal increase in payroll taxes.
Non-personnel expense was $123.7 million, a decrease of $8.4 million. Professional fees and services expense decreased $5.3 million, largely related to reduced legal fees and lower technology project costs. Lower prepayments and decreased accruals related to default servicing and loss mitigations costs led to a $3.2 million reduction in mortgage banking costs. The fourth quarter of 2022 also included a $2.5 million charitable donation to the BOKF Foundation. These decreases were partially offset by $2.6 million more in FDIC insurance expenses from higher assessment rates.
Loans, Deposits and Capital Loans
Outstanding loans were $22.8 billion at March 31, 2023, growing $193 million over December 31, 2022, largely due to growth in commercial real estate loans, primarily from loans secured by multifamily residential properties and industrial facilities. Unfunded loan commitments decreased $304 million compared to the fourth quarter.
Outstanding commercial loan balances, which includes services, general business, energy, and healthcare loans, were largely unchanged compared to the prior quarter.
General business loans decreased $155 million to $3.4 billion or 15 percent of total loans. General business loans include $2.0 billion of wholesale/retail loans and $1.4 billion of loans from other commercial industries.
Services sector loan balances increased $132 million to $3.6 billion or 16 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, foundations and not-for-profit organizations, educational services and specialty trade contractors.
Healthcare sector loan balances increased $54 million, totaling $3.9 billion or 17 percent of total loans. Our healthcare sector loans primarily consist of $3.2 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally, we loan to borrowers with a portfolio of multiple facilities, which serves to help diversify risks specific to a single facility.
Energy loan balances decreased $27 million to $3.4 billion or 15 percent of total loans. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 67 percent of committed production loans are secured by properties primarily producing oil. The remaining 33 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $4.1 billion at March 31, 2023, an increase of $246 million over December 31, 2022.
Commercial real estate loan balances grew $209 million and represent 21 percent of total loans. Loans secured by multifamily residential properties increased $151 million to $1.4 billion. Loans secured by industrial facilities increased $88 million to $1.3 billion. This growth was partially offset by a $28 million decrease in other real estate loans. Unfunded commercial real estate loan commitments were $2.7 billion at March 31, 2023, a decrease of $397 million compared to December 31, 2022. We take a disciplined approach to managing our concentration of commercial real estate loan commitments as a percentage of Tier 1 Capital. While loan commitments are presently at the upper concentration limit, we expect continued growth in our commercial real estate balances as loans fund, primarily in the multifamily and industrial loan portfolios.
Loans to individuals decreased $20 million and represent 16 percent of total loans. Personal loans decreased $35 million while total residential mortgage loans increased $14 million.
Liquidity and Capital
Our funding sources, which primarily include deposits and borrowings from the Federal Home Loan Banks, provide adequate liquidity to meet our needs. The loan to deposit ratio was 70 percent at March 31, 2023, providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.
Period-end deposits totaled $32.6 billion at March 31, 2023, a $1.9 billion decrease, largely due to clients redeploying capital and seeking higher yielding alternatives following the savings trend during the pandemic. This trend is consistent with prior quarters and is in line with previous guidance. Demand deposits decreased $1.8 billion while interest-bearing transaction account balances decreased $225 million. Time deposits increased $115 million. Average deposits were $33.5 billion at March 31, 2023, a $2.0 billion decrease. Average demand deposit account balances decreased $1.8 billion and average interest-bearing transaction account balances decreased $258 million. Average Commercial Banking deposits decreased $971 million to $15.9 billion or 47 percent of total deposits. Our commercial deposit portfolio is highly diversified across industries and customers. The highest concentration by industry within our commercial deposit portfolio is with our energy customers at 7 percent. Wealth Management deposits decreased $456 million to $7.4 billion or 22 percent of total deposits and Consumer Banking deposits declined $369 million to $8.2 billion or 25 percent of total deposits.
The company's common equity Tier 1 capital ratio was 12.19 percent at March 31, 2023. In addition, the company's Tier 1 capital ratio was 12.20 percent, total capital ratio was 13.21 percent, and leverage ratio was 9.94 percent at March 31, 2023. At the beginning of 2020, we elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period. This election added 6 basis points to the company's common equity tier 1 capital ratio at March 31, 2023. At December 31, 2022, the company's common equity Tier 1 capital ratio was 11.69 percent, Tier 1 capital ratio was 11.71 percent, total capital ratio was 12.67 percent, and leverage ratio was 9.91 percent.
The company's tangible common equity ratio, a non-GAAP measure, was 8.46 percent at March 31, 2023 and 7.63 percent at December 31, 2022. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. Adjusted for all unrealized securities portfolio gains and losses, including those in the investment portfolio, the tangible common equity ratio would be 8.22 percent. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.
The company repurchased 447,071 shares of common stock at an average price paid of $98.64 a share in the first quarter of 2023. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.
Credit Quality Expected credit losses on assets carried at amortized cost are recognized over their projected lives based on models that measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Our models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rates and WTI oil prices on a probability weighted basis.
A $16.0 million provision for credit losses was necessary for the first quarter of 2023, as key economic assumptions in the base case, including projected WTI oil prices and projected commercial real estate vacancy rates, were less favorable to economic growth.
The probability weighting of our base case reasonable and supportable forecast remained at 50 percent in the first quarter of 2023 as the level of uncertainty in economic forecasts remained high. Our base case reasonable and supportable forecast assumes inflation continues to improve from the peak experienced in 2022 and reaches 3.0 percent by the end of 2023. We expect the impact of the Russian-Ukraine conflict remains isolated and stress in the banking sector does not become widespread. Inflation pressures cause modest declines in real household income compared to pre-pandemic levels, resulting in below-trend GDP growth. GDP is projected to grow by 0.7 percent over the next twelve months. Job openings revert to more normalized levels and overall hiring levels decline, causing the national unemployment rate to modestly increase over the next four quarters. Our forecasted civilian unemployment rate is 3.8 percent for the second quarter of 2023, increasing to 4.1 percent by the first quarter of 2024. Our base case also assumes the Federal Reserve increases the federal funds rate once in the second quarter of 2023, resulting in a target range of 5.00 percent to 5.25 percent. No additional rate increases are anticipated for the remainder of the forecast horizon. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of March 31, 2023, averaging $69.18 per barrel over the next twelve months.
Our downside case, probability weighted at 40 percent, assumes that inflation moderates slightly from the peak experienced in 2022, but remains elevated through the forecast horizon ending 2023 at 5.0 percent. Higher levels of inflation force the Federal Reserve to adopt a more aggressive monetary policy as compared to the base case scenario. This results in a federal funds target range of 5.75 percent to 6.00 percent by the first quarter of 2024. The United States economy is pushed into a recession, with a contraction in economic activity and a sharp increase in the unemployment rate from 4.7 percent in the second quarter of 2023 to 6.0 percent in the first quarter of 2024. In this scenario, real GDP is expected to contract 2.0 percent over the next four quarters. WTI oil prices are projected to average $58.02 per barrel over the next twelve months, peaking at $62.53 in the second quarter of 2023 and falling 17 percent over the following three quarters.
Nonperforming assets totaled $133 million or 0.58 percent of outstanding loans and repossessed assets at March 31, 2023, compared to $300 million or 1.33 percent at December 31, 2022. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $119 million or 0.53 percent of outstanding loans and repossessed assets at March 31, 2023, compared to $121 million or 0.54 percent at December 31, 2022.
Nonaccruing loans were $120 million or 0.53 percent of outstanding loans at March 31, 2023. Nonaccruing commercial loans totaled $54 million or 0.38 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $22 million or 0.45 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $44 million or 1.19 percent of outstanding loans to individuals.
Nonaccruing loans decreased $1.5 million compared to December 31, 2022. Nonaccruing services loans decreased $8.1 million, nonaccruing healthcare loans decreased $3.8 million and nonaccruing energy loans decreased $1.3 million. These decreases were partially offset by a $7.3 million increase in nonaccruing general business loans and a $5.1 million increase in nonaccruing commercial real estate loans. New nonaccruing loans identified in the first quarter totaled $25 million, offset by $22 million in payments received.
Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $137 million at March 31, 2023, compared to $94 million at December 31, 2022. An increase in potential problem general business and services loans was offset by a decrease in energy, healthcare and commercial real estate potential problem loans.
At March 31, 2023, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $312 million or 1.37 percent of outstanding loans and 295 percent of nonaccruing loans. The allowance for loan losses totaled $249 million or 1.10 percent of outstanding loans and 235 percent of nonaccruing loans. At December 31, 2022, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $297 million or 1.31 percent of outstanding loans and 278 percent of nonaccruing loans. The allowance for loan losses was $236 million or 1.04 percent of outstanding loans and 221 percent of nonaccruing loans. The allowance to nonaccruing loan percentages referenced above omit residential mortgage loans guaranteed by U.S. government agencies.
Gross charge-offs were $3.7 million for the first quarter compared to $17.8 million for the fourth quarter of 2022. Gross charge-offs for the first quarter were primarily related to a single commercial real estate borrower. Recoveries totaled $2.9 million for the first quarter of 2023 and $2.3 million for the prior quarter. Net charge-offs were $769 thousand or 0.01 percent of average loans on an annualized basis in the first quarter compared to net charge-offs of $15.5 million or 0.28 percent of average loans on an annualized basis in the fourth quarter. Net charge-offs were 0.07 percent of average loans over the last four quarters.
Securities and Derivatives The fair value of the available for sale securities portfolio totaled $11.9 billion at March 31, 2023, a $444 million increase over December 31, 2022. At March 31, 2023, the available for sale securities portfolio consisted primarily of $6.0 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.6 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At March 31, 2023, the available for sale securities portfolio had a net unrealized loss of $742 million compared to $866 million at December 31, 2022.
We hold an inventory of trading securities in support of sales to a variety of customers. At March 31, 2023, the trading securities portfolio totaled $2.3 billion compared to $4.5 billion at December 31, 2022.
The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities increased $30 million to $326 million at March 31, 2023.
Derivative contracts are carried at fair value. At March 31, 2023, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $572 million compared to $1.0 billion at December 31, 2022. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $578 million at March 31, 2023 and $1.0 billion at December 31, 2022.
The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $10.5 million during the first quarter of 2023, including a $6.1 million decrease in the fair value of mortgage servicing rights, $4.7 million decrease in the fair value of securities and derivative contracts held as an economic hedge, and $187 thousand of related net interest revenue.
Conference Call and Webcast The company will hold a conference call at 9 a.m. Central time on Wednesday, April 26, 2023 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-844-512-2921 and referencing conference ID # 13737852.
About BOK Financial Corporation BOK Financial Corporation is a $46 billion regional financial services company headquartered in Tulsa, Oklahoma with $102 billion in assets under management or administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA's holdings include TransFund, Cavanal Hill Investment Management, Inc. and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Wisconsin and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.
The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of March 31, 2023 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.
This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial Corporation, the financial services industry, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” “will,” “intends,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that acquisitions and growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These various forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in government, consumer or business responses to, and ability to treat or prevent further outbreak of the COVID-19 pandemic, changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial Corporation and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
BALANCE SHEETS – UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)Mar. 31, 2023 Dec. 31, 2022 ASSETS Cash and due from banks $ 792,371 $ 943,810 Interest-bearing cash and cash equivalents 571,613 457,906 Trading securities 2,294,358 4,464,161 Investment securities, net of allowance 2,448,136 2,513,687 Available for sale securities 11,937,841 11,493,860 Fair value option securities 326,390 296,590 Restricted equity securities 288,181 299,651 Residential mortgage loans held for sale 74,175 75,272 Loans: Commercial 14,217,349 14,212,499 Commercial real estate 4,815,316 4,606,777 Loans to individuals 3,717,388 3,737,874 Total loans 22,750,053 22,557,150 Allowance for loan losses (249,460 ) (235,704 ) Loans, net of allowance 22,500,593 22,321,446 Premises and equipment, net 623,112 565,175 Receivables 265,680 273,815 Goodwill 1,044,749 1,044,749 Intangible assets, net 72,689 76,131 Mortgage servicing rights 299,803 277,608 Real estate and other repossessed assets, net 12,651 14,304 Derivative contracts, net 394,291 880,343 Cash surrender value of bank-owned life insurance 408,614 406,751 Receivable on unsettled securities sales 18,186 31,004 Other assets 1,150,689 1,354,379 TOTAL ASSETS $ 45,524,122 $ 47,790,642 LIABILITIES AND EQUITY Deposits: Demand $ 11,606,975 $ 13,395,337 Interest-bearing transaction 18,434,489 18,659,115 Savings 962,673 964,411 Time 1,576,610 1,461,842 Total deposits 32,580,747 34,480,705 Funds purchased and repurchase agreements 1,599,724 2,270,377 Other borrowings 4,735,885 4,736,908 Subordinated debentures 131,148 131,205 Accrued interest, taxes and expense 268,449 296,870 Due on unsettled securities purchases 262,492 147,470 Derivative contracts, net 510,483 554,900 Other liabilities 557,167 484,849 TOTAL LIABILITIES 40,646,095 43,103,284 Shareholders' equity: Capital, surplus and retained earnings 5,603,340 5,519,604 Accumulated other comprehensive loss (728,554 ) (836,955 ) TOTAL SHAREHOLDERS' EQUITY 4,874,786 4,682,649 Non-controlling interests 3,241 4,709 TOTAL EQUITY 4,878,027 4,687,358 TOTAL LIABILITIES AND EQUITY $ 45,524,122 $ 47,790,642 AVERAGE BALANCE SHEETS – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)Three Months Ended Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 ASSETS Interest-bearing cash and cash equivalents $ 616,596 $ 568,307 $ 748,263 $ 843,619 $ 1,050,409 Trading securities 3,031,969 3,086,985 3,178,068 4,166,954 8,537,390 Investment securities, net of allowance 2,473,796 2,535,305 2,593,989 610,983 195,198 Available for sale securities 11,738,693 10,953,851 10,306,257 12,258,072 13,092,422 Fair value option securities 300,372 92,012 36,846 54,832 75,539 Restricted equity securities 316,724 216,673 173,656 167,732 164,484 Residential mortgage loans held for sale 65,769 98,613 132,685 148,183 179,697 Loans: Commercial 14,046,237 13,846,339 13,508,325 13,472,488 12,887,816 Commercial real estate 4,757,362 4,488,091 4,434,650 4,061,129 4,059,148 Loans to individuals 3,672,648 3,641,574 3,656,257 3,524,097 3,516,698 Total loans 22,476,247 21,976,004 21,599,232 21,057,714 20,463,662 Allowance for loan losses (238,909 ) (242,450 ) (241,136 ) (246,064 ) (254,191 ) Loans, net of allowance 22,237,338 21,733,554 21,358,096 20,811,650 20,209,471 Total earning assets 40,781,257 39,285,300 38,527,860 39,062,025 43,504,610 Cash and due from banks 857,771 865,796 821,801 822,599 790,440 Derivative contracts, net 546,018 1,239,717 2,019,905 3,051,429 2,126,282 Cash surrender value of bank-owned life insurance 408,124 406,826 410,667 408,489 406,379 Receivable on unsettled securities sales 177,312 194,996 219,113 457,165 375,616 Other assets 3,211,986 3,216,983 3,119,856 3,486,691 3,357,747 TOTAL ASSETS $ 45,982,468 $ 45,209,618 $ 45,119,202 $ 47,288,398 $ 50,561,074 LIABILITIES AND EQUITY Deposits: Demand $ 12,406,408 $ 14,176,189 $ 15,105,305 $ 15,202,597 $ 15,062,282 Interest-bearing transaction 18,639,900 18,898,315 19,556,806 21,037,294 22,763,479 Savings 958,443 969,275 978,596 981,493 947,407 Time 1,477,720 1,417,606 1,409,069 1,373,036 1,589,039 Total deposits 33,482,471 35,461,385 37,049,776 38,594,420 40,362,207 Funds purchased and repurchase agreements 1,759,237 1,046,447 800,759 1,224,134 2,004,466 Other borrowings 4,512,280 2,523,195 1,528,887 1,301,358 1,148,440 Subordinated debentures 131,166 131,180 131,199 131,219 131,228 Derivative contracts, net 428,023 445,105 105,221 535,574 682,435 Due on unsettled securities purchases 316,738 575,957 331,428 380,332 519,097 Other liabilities 511,530 408,029 396,510 389,031 565,350 TOTAL LIABILITIES 41,141,445 40,591,298 40,343,780 42,556,068 45,413,223 Total equity 4,841,023 4,618,320 4,775,422 4,732,330 5,147,851 TOTAL LIABILITIES AND EQUITY $ 45,982,468 $ 45,209,618 $ 45,119,202 $ 47,288,398 $ 50,561,074 STATEMENTS OF EARNINGS – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)Three Months Ended March 31, 2023 2022 Interest revenue $ 516,729 $ 283,099 Interest expense 164,381 14,688 Net interest revenue 352,348 268,411 Provision for credit losses 16,000 — Net interest revenue after provision for credit losses 336,348 268,411 Other operating revenue: Brokerage and trading revenue 52,396 (27,079 ) Transaction card revenue 25,621 24,216 Fiduciary and asset management revenue 50,657 46,399 Deposit service charges and fees 25,968 27,004 Mortgage banking revenue 14,367 16,650 Other revenue 16,970 10,445 Total fees and commissions 185,979 97,635 Other gains (losses), net 2,251 (1,644 ) Loss on derivatives, net (1,344 ) (46,981 ) Loss on fair value option securities, net (2,962 ) (11,201 ) Change in fair value of mortgage servicing rights (6,059 ) 49,110 Gain on available for sale securities, net — 937 Total other operating revenue 177,865 87,856 Other operating expense: Personnel 182,145 159,228 Business promotion 8,569 6,513 Professional fees and services 13,048 11,413 Net occupancy and equipment 28,459 30,855 Insurance 7,315 4,283 Data processing and communications 44,802 39,836 Printing, postage and supplies 3,893 3,689 Amortization of intangible assets 3,391 3,964 Mortgage banking costs 5,782 7,877 Other expense 8,408 9,960 Total other operating expense 305,812 277,618 Net income before taxes 208,401 78,649 Federal and state income taxes 45,905 16,197 Net income 162,496 62,452 Net income (loss) attributable to non-controlling interests 128 (36 ) Net income attributable to BOK Financial Corporation shareholders $ 162,368 $ 62,488 Average shares outstanding: Basic 66,331,775 67,812,400 Diluted 66,331,775 67,813,851 Net income per share: Basic $ 2.43 $ 0.91 Diluted $ 2.43 $ 0.91 QUARTERLY EARNINGS TREND – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)Three Months Ended Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 Interest revenue $ 516,729 $ 451,606 $ 363,150 $ 294,247 $ 283,099 Interest expense 164,381 98,980 46,825 20,229 14,688 Net interest revenue 352,348 352,626 316,325 274,018 268,411 Provision for credit losses 16,000 15,000 15,000 — — Net interest revenue after provision for credit losses 336,348 337,626 301,325 274,018 268,411 Other operating revenue: Brokerage and trading revenue 52,396 63,008 61,006 44,043 (27,079 ) Transaction card revenue 25,621 27,136 25,974 26,940 24,216 Fiduciary and asset management revenue 50,657 49,899 50,190 49,838 46,399 Deposit service charges and fees 25,968 26,429 28,703 28,500 27,004 Mortgage banking revenue 14,367 10,065 11,282 11,368 16,650 Other revenue 16,970 17,034 15,479 12,684 10,445 Total fees and commissions 185,979 193,571 192,634 173,373 97,635 Other gains (losses), net 2,251 8,427 979 (7,639 ) (1,644 ) Gain (loss) on derivatives, net (1,344 ) 4,548 (17,009 ) (13,569 ) (46,981 ) Loss on fair value option securities, net (2,962 ) (2,568 ) (4,368 ) (2,221 ) (11,201 ) Change in fair value of mortgage servicing rights (6,059 ) (2,904 ) 16,570 17,485 49,110 Gain (loss) on available for sale securities, net — (3,988 ) 892 1,188 937 Total other operating revenue 177,865 197,086 189,698 168,617 87,856 Other operating expense: Personnel 182,145 186,419 170,348 154,923 159,228 Business promotion 8,569 7,470 6,127 6,325 6,513 Charitable contributions to BOKF Foundation — 2,500 — — — Professional fees and services 13,048 18,365 14,089 12,475 11,413 Net occupancy and equipment 28,459 29,227 29,296 27,489 30,855 Insurance 7,315 4,677 4,306 4,728 4,283 Data processing and communications 44,802 43,048 41,743 41,280 39,836 Printing, postage and supplies 3,893 3,890 4,349 3,929 3,689 Amortization of intangible assets 3,391 3,736 3,943 4,049 3,964 Mortgage banking costs 5,782 9,016 9,504 9,437 7,877 Other expense 8,408 10,108 11,046 9,020 9,960 Total other operating expense 305,812 318,456 294,751 273,655 277,618 Net income before taxes 208,401 216,256 196,272 168,980 78,649 Federal and state income taxes 45,905 47,864 39,681 36,122 16,197 Net income 162,496 168,392 156,591 132,858 62,452 Net income (loss) attributable to non-controlling interests 128 (37 ) 81 12 (36 ) Net income attributable to BOK Financial Corporation shareholders $ 162,368 $ 168,429 $ 156,510 $ 132,846 $ 62,488 Average shares outstanding: Basic 66,331,775 66,627,955 67,003,199 67,453,748 67,812,400 Diluted 66,331,775 66,627,955 67,004,623 67,455,172 67,813,851 Net income per share: Basic $ 2.43 $ 2.51 $ 2.32 $ 1.96 $ 0.91 Diluted $ 2.43 $ 2.51 $ 2.32 $ 1.96 $ 0.91 FINANCIAL HIGHLIGHTS – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)Three Months Ended Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 Capital: Period-end shareholders' equity $ 4,874,786 $ 4,682,649 $ 4,509,934 $ 4,737,339 $ 4,849,582 Risk weighted assets $ 37,192,197 $ 38,142,231 $ 36,866,994 $ 36,787,092 $ 37,160,258 Risk-based capital ratios: Common equity tier 1 12.19 % 11.69 % 11.80 % 11.61 % 11.30 % Tier 1 12.20 % 11.71 % 11.82 % 11.63 % 11.31 % Total capital 13.21 % 12.67 % 12.81 % 12.59 % 12.25 % Leverage ratio 9.94 % 9.91 % 9.76 % 9.12 % 8.47 % Tangible common equity ratio1 8.46 % 7.63 % 7.96 % 8.16 % 8.13 % Adjusted tangible common equity ratio1 8.22 % 7.36 % 7.66 % 8.10 % 8.15 % Common stock: Book value per share $ 73.19 $ 69.93 $ 67.06 $ 69.87 $ 71.21 Tangible book value per share $ 56.42 $ 53.19 $ 50.34 $ 53.22 $ 54.58 Market value per share: High $ 106.47 $ 110.28 $ 95.51 $ 94.76 $ 119.59 Low $ 80.00 $ 88.46 $ 69.82 $ 74.03 $ 93.76 Cash dividends paid $ 36,006 $ 36,188 $ 35,661 $ 35,892 $ 36,093 Dividend payout ratio 22.18 % 21.49 % 22.79 % 27.02 % 57.76 % Shares outstanding, net 66,600,833 66,958,634 67,254,383 67,806,005 68,104,043 Stock buy-back program: Shares repurchased 447,071 314,406 548,034 294,084 475,877 Amount $ 44,100 $ 32,429 $ 49,980 $ 24,404 $ 48,074 Average price paid per share2 $ 98.64 $ 103.14 $ 91.20 $ 82.98 $ 101.02 Performance ratios (quarter annualized): Return on average assets 1.43 % 1.48 % 1.38 % 1.13 % 0.50 % Return on average equity 13.61 % 14.48 % 13.01 % 11.27 % 4.93 % Net interest margin 3.45 % 3.54 % 3.24 % 2.76 % 2.44 % Efficiency ratio 56.38 % 57.87 % 57.35 % 60.65 % 75.07 % Reconciliation of non-GAAP measures: 1 Tangible common equity ratio and adjusted tangible common equity ratio: Total shareholders' equity $ 4,874,786 $ 4,682,649 $ 4,509,934 $ 4,737,339 $ 4,849,582 Less: Goodwill and intangible assets, net 1,117,438 1,120,880 1,124,582 1,128,493 1,132,510 Tangible common equity 3,757,348 3,561,769 3,385,352 3,608,846 3,717,072 Add: Unrealized gain (loss) on investment securities, net (140,947 ) (167,477 ) (165,206 ) (30,305 ) 6,778 Add: Tax effect on unrealized gain (loss) on investment securities, net 33,149 39,196 38,665 7,093 (1,586 ) Adjusted tangible common equity $ 3,649,550 $ 3,433,488 $ 3,258,811 $ 3,585,634 $ 3,722,264 Total assets $ 45,524,122 $ 47,790,642 $ 43,645,446 $ 45,377,072 $ 46,826,507 Less: Goodwill and intangible assets, net 1,117,438 1,120,880 1,124,582 1,128,493 1,132,510 Tangible assets $ 44,406,684 $ 46,669,762 $ 42,520,864 $ 44,248,579 $ 45,693,997 Tangible common equity ratio 8.46 % 7.63 % 7.96 % 8.16 % 8.13 % Adjusted tangible common equity ratio 8.22 % 7.36 % 7.66 % 8.10 % 8.15 % Pre-provision net revenue: Net income before taxes $ 208,401 $ 216,256 $ 196,272 $ 168,980 $ 78,649 Provision for expected credit losses 16,000 15,000 15,000 — — Net income (loss) attributable to non-controlling interests 128 (37 ) 81 12 (36 ) Pre-provision net revenue $ 224,273 $ 231,293 $ 211,191 $ 168,968 $ 78,685 Other data: Tax equivalent interest $ 2,285 $ 2,287 $ 2,163 $ 2,040 $ 1,973 Net unrealized loss on available for sale securities $ (741,508 ) $ (865,553 ) $ (935,788 ) $ (522,812 ) $ (546,598 ) Mortgage banking: Mortgage production revenue $ (633 ) $ (3,983 ) $ (2,406 ) $ (504 ) $ 5,055 Mortgage loans funded for sale $ 138,624 $ 141,090 $ 260,210 $ 360,237 $ 418,866 Add: current period-end outstanding commitments 71,693 45,492 75,779 106,004 160,260 Less: prior period end outstanding commitments 45,492 75,779 106,004 160,260 171,412 Total mortgage production volume $ 164,825 $ 110,803 $ 229,985 $ 305,981 $ 407,714 Mortgage loan refinances to mortgage loans funded for sale 9 % 10 % 10 % 19 % 45 % Realized margin on funded mortgage loans (1.25)% (1.10)% (0.41)% 0.88 % 1.64 % Production revenue as a percentage of production volume (0.38)% (3.59)% (1.05)% (0.16)% 1.24 % Mortgage servicing revenue $ 15,000 $ 14,048 $ 13,688 $ 11,872 $ 11,595 Average outstanding principal balance of mortgage loans serviced for others 21,121,319 18,923,078 19,070,221 17,336,596 16,155,329 Average mortgage servicing revenue rates 0.29 % 0.29 % 0.28 % 0.27 % 0.29 % Gain (loss) on mortgage servicing rights, net of economic hedge: Gain (loss) on mortgage hedge derivative contracts, net $ (1,711 ) $ 4,373 $ (17,027 ) $ (13,639 ) $ (46,694 ) Loss on fair value option securities, net (2,962 ) (2,568 ) (4,368 ) (2,221 ) (11,201 ) Gain (loss) on economic hedge of mortgage servicing rights (4,673 ) 1,805 (21,395 ) (15,860 ) (57,895 ) Gain (loss) on changes in fair value of mortgage servicing rights (6,059 ) (2,904 ) 16,570 17,485 49,110 Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue (10,732 ) (1,099 ) (4,825 ) 1,625 (8,785 ) Net interest revenue on fair value option securities3 187 (118 ) 29 275 383 Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges $ (10,545 ) $ (1,217 ) $ (4,796 ) $ 1,900 $ (8,402 ) 2 Excludes 1 percent excise tax on corporate stock repurchases.
3 Actual interest earned on fair value option securities less internal transfer-priced cost of funds.LOANS TREND – UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 Commercial: Healthcare $ 3,899,341 $ 3,845,017 $ 3,826,623 $ 3,696,963 $ 3,441,732 Services 3,563,702 3,431,521 3,280,925 3,421,493 3,351,495 Energy 3,398,057 3,424,790 3,371,588 3,393,072 3,197,667 General business 3,356,249 3,511,171 3,148,783 3,110,309 3,029,660 Total commercial 14,217,349 14,212,499 13,627,919 13,621,837 13,020,554 Commercial real estate: Multifamily 1,363,881 1,212,883 1,126,700 878,565 867,288 Industrial 1,309,435 1,221,501 1,103,905 953,626 911,928 Office 1,045,700 1,053,331 1,086,615 1,100,115 1,097,516 Retail 618,264 620,518 635,021 637,304 667,561 Residential construction and land development 102,828 95,684 91,690 111,575 120,506 Other commercial real estate 375,208 402,860 429,980 424,963 436,157 Total commercial real estate 4,815,316 4,606,777 4,473,911 4,106,148 4,100,956 Loans to individuals: Residential mortgage 1,926,027 1,890,784 1,851,836 1,784,729 1,723,506 Residential mortgages guaranteed by U.S. government agencies 224,753 245,940 262,466 293,838 322,581 Personal 1,566,608 1,601,150 1,574,325 1,484,596 1,506,832 Total loans to individuals 3,717,388 3,737,874 3,688,627 3,563,163 3,552,919 Total $ 22,750,053 $ 22,557,150 $ 21,790,457 $ 21,291,148 $ 20,674,429 LOANS MANAGED BY PRINCIPAL MARKET AREA – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 Texas: Commercial $ 7,103,166 $ 6,878,618 $ 6,644,890 $ 6,645,698 $ 6,286,125 Commercial real estate 1,675,831 1,555,508 1,448,590 1,339,452 1,345,105 Loans to individuals 992,343 982,700 970,459 934,856 957,320 Total Texas 9,771,340 9,416,826 9,063,939 8,920,006 8,588,550 Oklahoma: Commercial 3,178,934 3,382,577 3,108,608 3,139,093 2,936,530 Commercial real estate 574,708 582,109 608,856 576,458 552,310 Loans to individuals 2,049,472 2,077,124 2,054,362 1,982,247 1,977,886 Total Oklahoma 5,803,114 6,041,810 5,771,826 5,697,798 5,466,726 Colorado: Commercial 2,148,066 2,149,199 2,117,181 2,082,688 2,006,357 Commercial real estate 646,537 613,912 565,057 473,231 480,740 Loans to individuals 231,368 241,902 237,981 234,105 236,125 Total Colorado 3,025,971 3,005,013 2,920,219 2,790,024 2,723,222 Arizona: Commercial 1,115,973 1,124,289 1,103,000 1,085,401 1,086,195 Commercial real estate 881,465 860,947 850,319 766,767 719,970 Loans to individuals 240,556 229,872 225,981 212,870 190,746 Total Arizona 2,237,994 2,215,108 2,179,300 2,065,038 1,996,911 Kansas/Missouri: Commercial 318,782 310,715 307,456 338,910 336,966 Commercial real estate 489,951 479,968 466,955 458,157 436,740 Loans to individuals 129,580 131,307 125,039 125,584 121,247 Total Kansas/Missouri 938,313 921,990 899,450 922,651 894,953 New Mexico: Commercial 280,945 263,349 258,754 253,825 272,246 Commercial real estate 449,715 417,008 426,367 431,606 504,632 Loans to individuals 65,770 67,163 68,095 67,026 63,299 Total New Mexico 796,430 747,520 753,216 752,457 840,177 Arkansas: Commercial 71,483 103,752 88,030 76,222 96,135 Commercial real estate 97,109 97,325 107,767 60,477 61,459 Loans to individuals 8,299 7,806 6,710 6,475 6,296 Total Arkansas 176,891 208,883 202,507 143,174 163,890 TOTAL BOK FINANCIAL $ 22,750,053 $ 22,557,150 $ 21,790,457 $ 21,291,148 $ 20,674,429 Loans attributed to a principal market may not always represent the location of the borrower or the collateral.
DEPOSITS BY PRINCIPAL MARKET AREA – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 Oklahoma: Demand $ 4,369,944 $ 4,585,963 $ 5,143,405 $ 5,422,593 $ 5,205,806 Interest-bearing: Transaction 9,468,100 9,475,528 9,619,419 10,240,378 11,410,709 Savings 564,829 555,407 558,256 561,413 558,634 Time 942,787 794,002 776,306 678,127 817,744 Total interest-bearing 10,975,716 10,824,937 10,953,981 11,479,918 12,787,087 Total Oklahoma 15,345,660 15,410,900 16,097,386 16,902,511 17,992,893 Texas: Demand 3,154,789 3,873,759 4,609,255 4,670,535 4,552,001 Interest-bearing: Transaction 4,366,932 4,878,482 4,781,920 5,344,326 4,963,118 Savings 175,012 178,356 179,049 183,708 182,536 Time 321,774 356,538 343,015 333,038 329,931 Total interest-bearing 4,863,718 5,413,376 5,303,984 5,861,072 5,475,585 Total Texas 8,018,507 9,287,135 9,913,239 10,531,607 10,027,586 Colorado: Demand 1,869,194 2,462,891 2,510,179 2,799,798 2,673,352 Interest-bearing: Transaction 2,126,435 2,123,218 2,221,796 2,277,563 2,387,304 Savings 72,548 77,961 80,542 82,976 81,762 Time 128,583 135,043 151,064 160,795 165,401 Total interest-bearing 2,327,566 2,336,222 2,453,402 2,521,334 2,634,467 Total Colorado 4,196,760 4,799,113 4,963,581 5,321,132 5,307,819 New Mexico: Demand 997,364 1,141,958 1,296,410 1,347,600 1,271,264 Interest-bearing: Transaction 674,328 691,915 717,492 845,442 888,257 Savings 111,771 112,430 113,056 115,660 115,457 Time 137,875 133,625 142,856 148,532 156,140 Total interest-bearing 923,974 937,970 973,404 1,109,634 1,159,854 Total New Mexico 1,921,338 2,079,928 2,269,814 2,457,234 2,431,118 Arizona: Demand 780,051 844,327 903,296 901,543 947,775 Interest-bearing: Transaction 687,527 739,628 788,142 792,269 810,896 Savings 16,993 16,496 18,258 17,999 18,122 Time 27,755 24,846 26,704 28,774 27,259 Total interest-bearing 732,275 780,970 833,104 839,042 856,277 Total Arizona 1,512,326 1,625,297 1,736,400 1,740,585 1,804,052 Kansas/Missouri: Demand 393,321 436,259 479,459 537,143 553,345 Interest-bearing: Transaction 1,040,009 694,163 747,981 913,921 1,107,525 Savings 18,292 20,678 19,375 19,943 19,589 Time 13,061 12,963 13,258 13,962 11,527 Total interest-bearing 1,071,362 727,804 780,614 947,826 1,138,641 Total Kansas/Missouri 1,464,683 1,164,063 1,260,073 1,484,969 1,691,986 Arkansas: Demand 42,312 50,180 43,111 41,084 38,798 Interest-bearing: Transaction 71,158 56,181 123,273 130,300 122,020 Savings 3,228 3,083 3,098 3,125 3,265 Time 4,775 4,825 5,940 6,371 6,414 Total interest-bearing 79,161 64,089 132,311 139,796 131,699 Total Arkansas 121,473 114,269 175,422 180,880 170,497 TOTAL BOK FINANCIAL $ 32,580,747 $ 34,480,705 $ 36,415,915 $ 38,618,918 $ 39,425,951 NET INTEREST MARGIN TREND – UNAUDITED
BOK FINANCIAL CORPORATIONThree Months Ended Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 TAX-EQUIVALENT ASSETS YIELDS Interest-bearing cash and cash equivalents 4.28% 4.06% 1.87% 0.83% 0.18% Trading securities 4.52% 3.70% 2.72% 2.00% 1.71% Investment securities, net of allowance 1.46% 1.46% 1.42% 2.35% 5.07% Available for sale securities 2.87% 2.54% 2.21% 1.84% 1.77% Fair value option securities 5.17% 4.40% 2.98% 2.92% 2.81% Restricted equity securities 7.34% 5.70% 6.23% 3.30% 2.69% Residential mortgage loans held for sale 5.79% 5.56% 5.05% 4.22% 3.11% Loans 6.67% 5.99% 4.89% 3.92% 3.57% Allowance for loan losses Loans, net of allowance 6.74% 6.06% 4.94% 3.96% 3.61% Total tax-equivalent yield on earning assets 5.06% 4.53% 3.71% 2.96% 2.58% COST OF INTEREST-BEARING LIABILITIES Interest-bearing deposits: Interest-bearing transaction 1.91% 1.28% 0.63% 0.22% 0.10% Savings 0.10% 0.08% 0.05% 0.03% 0.03% Time 1.95% 1.25% 0.93% 0.68% 0.56% Total interest-bearing deposits 1.83% 1.22% 0.63% 0.24% 0.12% Funds purchased and repurchase agreements 3.33% 2.05% 0.72% 0.53% 0.95% Other borrowings 4.73% 4.08% 2.33% 1.01% 0.38% Subordinated debt 6.40% 6.16% 5.07% 4.50% 4.02% Total cost of interest-bearing liabilities 2.43% 1.57% 0.76% 0.31% 0.21% Tax-equivalent net interest revenue spread 2.63% 2.96% 2.95% 2.65% 2.37% Effect of noninterest-bearing funding sources and other 0.82% 0.58% 0.29% 0.11% 0.07% Tax-equivalent net interest margin 3.45% 3.54% 3.24% 2.76% 2.44% Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.
CREDIT QUALITY INDICATORS – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)Three Months Ended Mar. 31, 2023 Dec. 31, 2022 Sep. 30, 2022 June 30, 2022 Mar. 31, 2022 Nonperforming assets: Nonaccruing loans: Commercial: Healthcare $ 37,247 $ 41,034 $ 41,438 $ 14,886 $ 15,076 Services 8,097 16,228 27,315 15,259 16,535 Energy 127 1,399 4,164 20,924 24,976 General business 8,961 1,636 2,753 3,539 3,750 Total commercial 54,432 60,297 75,670 54,608 60,337 Commercial real estate 21,668 16,570 7,971 10,939 15,989 Loans to individuals: Permanent mortgage 29,693 29,791 30,066 30,460 30,757 Permanent mortgage guaranteed by U.S. government agencies 14,302 15,005 16,957 18,000 16,992 Personal 200 134 136 132 171 Total loans to individuals 44,195 44,930 47,159 48,592 47,920 Total nonaccruing loans $ 120,295 $ 121,797 $ 130,800 $ 114,139 $ 124,246 Accruing renegotiated loans guaranteed by U.S. government agencies1 — 163,535 176,022 196,420 204,121 Real estate and other repossessed assets 12,651 14,304 29,676 22,221 24,492 Total nonperforming assets $ 132,946 $ 299,636 $ 336,498 $ 332,780 $ 352,859 Total nonperforming assets excluding those guaranteed by U.S. government agencies $ 118,644 $ 121,096 $ 143,519 $ 118,360 $ 131,746 Accruing loans 90 days past due2 $ 76 $ 510 $ 120 $ 3 $ 307 Gross charge-offs $ 3,667 $ 17,807 $ 1,766 $ 1,368 $ 7,805 Recoveries (2,898 ) (2,301 ) (1,309 ) (2,167 ) (1,824 ) Net charge-offs (recoveries) $ 769 $ 15,506 $ 457 $ (799 ) $ 5,981 Provision for loan losses $ 14,525 $ 9,442 $ 1,111 $ (6,158 ) $ (3,967 ) Provision for credit losses from off-balance sheet unfunded loan commitments 2,024 4,609 14,060 6,005 3,268 Provision for expected credit losses from mortgage banking activities (488 ) 1,003 (66 ) 69 621 Provision for credit losses related to held-to maturity (investment) securities portfolio (61 ) (54 ) (105 ) 84 78 Total provision for credit losses $ 16,000 $ 15,000 $ 15,000 $ — $ — Allowance for loan losses to period end loans 1.10 % 1.04 % 1.11 % 1.13 % 1.19 % Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans 1.37 % 1.31 % 1.37 % 1.33 % 1.37 % Nonperforming assets to period end loans and repossessed assets 0.58 % 1.33 % 1.54 % 1.56 % 1.70 % Net charge-offs (annualized) to average loans 0.01 % 0.28 % 0.01 % (0.02)% 0.12 % Allowance for loan losses to nonaccruing loans2 235.36 % 220.71 % 212.37 % 250.80 % 229.80 % Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans2 294.74 % 277.76 % 261.83 % 294.74 % 263.60 % 1 The Company adopted FASB Accounting Standards Update No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates designation of these loans as troubled debt restructurings effective January 1, 2023.
2 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
SEGMENTS – UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)Three Months Ended 1Q23 vs 4Q22 1Q23 vs 1Q22 Mar. 31, 2023 Dec. 31, 2022 Mar. 31, 2022 $ change % change $ change % change Commercial Banking Net interest revenue $ 266,545 $ 232,834 $ 137,011 $ 33,711 14.5% $ 129,534 94.5% Fees and commissions revenue 55,835 58,881 56,964 (3,046 ) (5.2)% (1,129) (2.0)% Combined net interest and fee revenue 322,380 291,715 193,975 30,665 10.5% 128,405 66.2% Other operating expense 73,504 79,722 65,114 (6,218 ) (7.8)% 8,390 12.9% Corporate expense allocations 17,729 18,007 16,246 (278 ) (1.5)% 1,483 9.1% Net income 176,547 139,374 82,344 37,173 26.7% 94,203 114.4% Average assets 28,162,934 28,373,856 29,823,905 (210,922 ) (0.7)% (1,660,971) (5.6)% Average loans 18,750,426 18,254,559 16,696,428 495,867 2.7% 2,053,998 12.3% Average deposits 15,861,285 16,832,244 19,595,260 (970,959 ) (5.8)% (3,733,975) (19.1)% Consumer Banking Net interest revenue $ 109,381 $ 53,302 $ 27,207 $ 56,079 105.2% $ 82,174 302.0% Fees and commissions revenue 30,581 27,618 33,977 2,963 10.7% (3,396) (10.0)% Combined net interest and fee revenue 139,962 80,920 61,184 59,042 73.0% 78,778 128.8% Other operating expense 50,198 54,526 48,789 (4,328 ) (7.9)% 1,409 2.9% Corporate expense allocations 11,618 11,972 12,080 (354 ) (3.0)% (462) (3.8)% Net income (loss) 50,687 8,996 (7,317 ) 41,691 463.4% 58,004 (792.7)% Average assets 9,934,511 10,078,381 10,273,890 (143,870 ) (1.4)% (339,379) (3.3)% Average loans 1,747,237 1,725,555 1,672,346 21,682 1.3% 74,891 4.5% Average deposits 8,248,541 8,617,085 8,746,622 (368,544 ) (4.3)% (498,081) (5.7)% Wealth Management Net interest revenue $ 54,106 $ 34,498 $ 55,766 $ 19,608 56.8% $ (1,660) (3.0)% Fees and commissions revenue 108,911 114,630 25,023 (5,719 ) (5.0)% 83,888 335.2% Combined net interest and fee revenue 163,017 149,128 80,789 13,889 9.3% 82,228 101.8% Other operating expense 82,039 82,211 74,620 (172 ) (0.2)% 7,419 9.9% Corporate expense allocations 12,386 12,733 12,071 (347 ) (2.7)% 315 2.6% Net income (loss) 52,427 41,447 (4,521 ) 10,980 26.5% 56,948 (1,259.6)% Average assets 11,663,096 12,912,630 21,323,795 (1,249,534 ) (9.7)% (9,660,699) (45.3)% Average loans 2,201,622 2,223,275 2,118,780 (21,653 ) (1.0)% 82,842 3.9% Average deposits 7,432,413 7,888,753 9,619,323 (456,340 ) (5.8)% (2,186,910) (22.7)% Fiduciary assets 57,457,925 56,060,496 61,095,320 1,397,429 2.5% (3,637,395) (6.0)% Assets under management or administration 102,310,126 99,735,040 101,081,355 2,575,086 2.6% 1,228,771 1.2% Contact: Sue Hermann Director, Corporate Communications 303-312-3488
- Net income was $162.4 million or $2.43 per diluted share for the first quarter of 2023 and $168.4 million or $2.51 per diluted share for the fourth quarter of 2022.