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BOK Financial Corporation Reports Quarterly Earnings of $133 million or $1.96 Per Share in the Second Quarter
ソース: Nasdaq GlobeNewswire / 27 7 2022 07:55:01 America/New_York
TULSA, Okla., July 27, 2022 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASD: BOKF) -
CEO Commentary
Stacy Kymes, president and chief executive officer, stated, “The quarter represented strong earnings performance from across the company, demonstrating both our diversity and breadth. Loans are on a pace to exceed a 10 percent growth rate for the year, excluding the PPP program. While loan growth was exceptional, new loan commitments for the quarter grew at an even faster pace and broadly across our business region. Our net interest margin improved from the mix of earning assets and a balance sheet structure that is currently positioned to benefit from rising rates. Our trading businesses rebounded from the volatile first quarter. We had a strong quarter in commodity hedging and syndication activity as our market share in the energy space continues to expand. Despite market volatility and the resulting decrease in the value of assets under management and administration, our fiduciary fees increased. Transaction card revenues accelerated. We entered the year focused on growing top-line revenue and our team has responded, delivering those results across the board. While we understand these are unusual economic times, we are committed to prudent growth. The business profile of our geographic footprint remains exceptional and, when combined with BOKF's long-held credit discipline, will serve us well if the economy slows in future periods.”
Second Quarter 2022 Financial Highlights
(Unless indicated otherwise, all comparisons are to the prior quarter)- Net income was $132.8 million or $1.96 per diluted share for the second quarter of 2022 and $62.5 million or $0.91 per diluted share for the first quarter of 2022.
- Net interest revenue totaled $274.0 million, an increase of $5.6 million. Net interest margin was 2.76 percent compared to 2.44 percent. In response to rising inflation, the Federal Reserve has increased the federal funds rate 150 basis points since the beginning of 2022. The resulting impact on market interest rates has started to increase net interest margin.
- Fees and commissions revenue increased $75.7 million to $173.4 million. Brokerage and trading revenue increased $71.1 million following trading losses in the prior quarter. Revenue growth in all other fee-generating business activities was partially offset by a $5.3 million decrease in mortgage banking revenue.
- The net benefit of the changes in fair value of mortgage servicing rights and related economic hedges was $1.9 million for the second quarter of 2022 compared to a net cost of $8.4 million for the first quarter of 2022 due to reduced price sensitivity in the second quarter.
- Operating expense decreased $4.0 million to $273.7 million. Personnel expense decreased $4.3 million, primarily due to lower share-based compensation expense. Non-personnel expense was consistent with the prior quarter.
- Period-end loans increased $617 million to $21.3 billion at June 30, 2022. Commercial loans increased $696 million while period-end Paycheck Protection Program (“PPP”) loans decreased $94 million to $43 million. In addition, unfunded loan commitments grew by $979 million. Average outstanding loan balances were $21.1 billion, a $594 million increase.
- No provision for expected credit losses was necessary for the second quarter of 2022, consistent with the prior quarter. An increase in required provision due to loan growth and changes in our economic outlook was offset by a sustained trend of improving credit quality metrics. The combined allowance for credit losses totaled $283 million or 1.33 percent of outstanding loans at June 30, 2022. The combined allowance for credit losses was $283 million or 1.37 percent of outstanding loans at March 31, 2022.
- Average deposits decreased $1.8 billion to $38.6 billion while period-end deposits decreased $807 million to $38.6 billion. Average interest-bearing deposits decreased $1.9 billion and average demand deposits grew $140 million.
- The company's common equity Tier 1 capital ratio was 11.61 percent at June 30, 2022. In addition, the company's Tier 1 capital ratio was 11.63 percent, total capital ratio was 12.59 percent, and leverage ratio was 9.12 percent at June 30, 2022. At March 31, 2022, the company's common equity Tier 1 capital ratio was 11.30 percent, Tier 1 capital ratio was 11.31 percent, total capital ratio was 12.25 percent, and leverage ratio was 8.47 percent.
- The company repurchased 294,084 shares of common stock at an average price of $82.98 a share in the second quarter of 2022.
Second Quarter 2022 Segment Highlights
- Commercial Banking contributed $104.8 million to net income in the second quarter of 2022, an increase of $22.5 million. Combined net interest revenue and fee revenue increased $32.4 million due to loan growth, increased spreads on deposits sold to the Funds Management unit, and loan syndication fees. Net loans charged-off decreased $6.8 million. Transaction card revenue increased $2.7 million due to elevated transaction volumes in the second quarter. Personnel expense increased $3.3 million, primarily due to increased incentive compensation costs with growth in loans and syndication activity. The second quarter also included a $5.8 million write-down of a repossessed equity interest in a midstream energy entity. Average loans increased $640 million or 4 percent to $17.3 billion. Average deposits decreased $661 million or 3 percent.
- Consumer Banking contributed $1.2 million to net income in the second quarter of 2022 compared to a prior quarter net loss of $7.3 million. The net benefit of the changes in fair value of mortgage servicing rights and related economic hedges was $1.9 million for the second quarter of 2022 compared to a net cost of $8.4 million for the first quarter of 2022. Combined net interest revenue and fee revenue increased $2.7 million. Net interest revenue increased $6.6 million, primarily due to an increase in the spread on deposits sold to our Funds Management unit. Fees and commissions revenue decreased $3.9 million due to lower mortgage production volumes combined with narrowing margins. Operating expense increased $3.9 million due to a combination of increased business promotion expense and increased accruals for mortgage loan default servicing and loss mitigation costs. Average loans were relatively consistent with the previous quarter. Average deposits increased $130 million or 1 percent to $8.9 billion.
- Wealth Management contributed $27.3 million to net income in the second quarter of 2022 compared to a net loss of $4.5 million in the first 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 $124.5 million, an increase of $43.7 million. Total revenue from trading activities increased $47.4 million. Market disruptions during the first quarter of 2022 reduced demand for low-coupon, fixed-rate U.S. government agency residential mortgage-backed securities. These securities were fully sold during the second quarter. Growth in money market fund revenue, seasonal tax preparation fees and a reduction in fee waivers combined to increase fiduciary and asset management revenue $6.6 million. This increase was partially offset by a $3.2 million reduction in asset under management billable fees, consistent with market driven declines in assets under management. Operating expense increased $1.8 million, primarily due to increased volume-driven incentive compensation costs and a full quarter's impact of annual merit increases. Average loans increased $39 million or 2 percent to $2.2 billion. Average deposits decreased $1.1 billion or 12 percent to $8.5 billion as customers redeployed deposits into higher yielding alternatives. Assets under management were $96.0 billion, a decrease of $5.1 billion.
Net Interest Revenue
Net interest revenue was $274.0 million for the second quarter of 2022 compared to $268.4 million for the first quarter of 2022. Net interest margin was 2.76 percent compared to 2.44 percent. In response to rising inflation, the Federal Reserve has increased the federal funds rate 150 basis points since the beginning of 2022. The resulting impact on market interest rates has started to increase net interest margin as our earning assets reprice at a higher rate and faster pace than our interest-bearing liabilities.
Average earning assets decreased $4.4 billion. Average trading securities decreased $4.4 billion as we reduced our inventory of low-coupon mortgage-backed securities and repositioned the trading portfolio in response to rising mortgage interest rates. Average loan balances increased $594 million, largely due to growth in commercial loans, partially offset by a decrease in PPP loans. Average available for sale securities decreased $834 million while investment securities increased $416 million. We transferred $2.4 billion in U.S. government agency mortgage-backed securities from available for sale to investment securities late in the second quarter to limit the effect of future rate increases on the tangible common equity ratio. The transfer of securities did not significantly affect net interest revenue or net interest margin. Average interest bearing cash and cash equivalents decreased $207 million. Funds purchased and repurchase agreements decreased $780 million while other borrowings increased $153 million.
The yield on average earning assets was 2.96 percent, a 38 basis point increase. The loan portfolio yield increased 35 basis points to 3.92 percent. The yield on trading securities was up 29 basis points to 2.00 percent. The yield on the available for sale securities portfolio increased 7 basis points to 1.84 percent. The yield on investment securities decreased 272 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 65 basis points.
Funding costs were 0.31 percent, a 10 basis point increase. The cost of interest-bearing deposits increased 12 basis points to 0.24 percent. The cost of funds purchased and repurchase agreements decreased 42 basis points to 0.53 percent while the cost of other borrowings increased 63 basis points to 1.01 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 11 basis points, an increase of 4 basis points.
Operating Revenue
Fees and commissions revenue totaled $173.4 million for the second quarter of 2022, a $75.7 million increase compared to the first quarter of 2022.
Brokerage and trading revenue increased $71.1 million to $44.0 million, rebounding from a net loss of $27.1 million. Trading revenue increased $66.0 million. Disruption in the fixed income markets related to uncertainty around rising inflation and interest rates adversely affected the value of trading securities during the first quarter of 2022. During the second quarter, we fully sold our inventory of low-coupon, U.S. government agency residential mortgage-backed securities. Trading activity in current-coupon instruments has returned to more normal levels. Investment banking revenue increased $4.2 million, largely due to the timing of commercial loan syndication activity.
Fiduciary and asset management revenue increased $3.4 million, primarily due to an increase in money market fund revenue, a reduction of fee waivers, and seasonal tax preparation fees. These increases were partially offset by a reduction in asset under management billable fees, consistent with market-driven declines in assets under management. We voluntarily waived certain administration fees on the Cavanal Hill money market funds in order to maintain positive yields during the low short-term interest rate environment.
Transaction card revenue increased $2.7 million and deposit service charges increased $1.5 million, both largely affected by changes in customer activity as transaction volumes recover from the pandemic.
Mortgage banking revenue decreased $5.3 million. Rapidly rising mortgage interest rates and continued inventory shortages have adversely affected both loan production volume and margins. Mortgage loan production volume, which includes funded loans and changes in unfunded commitments, decreased $102 million to $306 million. Competitive pricing pressure and a significant decrease in refinancing opportunities, down to 19 percent of total production, have reduced margins. Production revenue, which includes realized gains on loans sold and unrealized gains and losses on our mortgage commitment pipeline and related hedges, as a percentage of production volume, decreased 140 basis points to (0.16) percent.
Other gains and losses, net decreased $6.0 million, primarily related to a write-down of a repossessed equity interest in a midstream entity.
Operating Expense
Total operating expense was $273.7 million for the second quarter of 2022, a decrease of $4.0 million compared to the first quarter of 2022.
Personnel expense decreased $4.3 million. Deferred compensation expense, which is largely offset by a decrease in the value of related rabbi trust investments, decreased $4.8 million. Share-based incentive compensation expense decreased $3.9 million resulting from changes in vesting assumptions. Employee benefits expense decreased $2.4 million primarily due to a seasonal decrease in payroll taxes. These decreases were partially offset by an increase of $5.0 million in cash-based incentive compensation largely related to growing commercial activity and an increase of $1.8 million in regular compensation expense as we recognized a full quarter of expense related to annual merit increases.
Non-personnel expense was $118.7 million, consistent with the first quarter of 2022. Increases in mortgage banking expense, data processing and communications expense, and professional fees and services expense were offset by a decline in net occupancy and equipment expense and other expense.
Loans, Deposits and Capital
Loans
Outstanding loans were $21.3 billion at June 30, 2022, a $617 million increase compared to March 31, 2022 due to growth in commercial loans. Unfunded loan commitments also grew by $979 million during the second quarter.
Outstanding commercial loan balances increased $696 million, with growth in all categories.
Healthcare sector loan balances increased $255 million, totaling $3.7 billion or 17 percent of total loans. Our healthcare sector loans primarily consist of $3.0 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 increased $195 million to $3.4 billion or 16 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 $3.4 billion at June 30, 2022, an increase of $342 million over March 31, 2022.
General business loans increased $175 million to $3.1 billion or 14 percent of total loans. General business loans include $1.6 billion of wholesale/retail loans and $1.5 billion of loans from other commercial industries.
Services sector loan balances increased $70 million to $3.4 billion or 16 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, foundations and not-for-profit organizations, educational services and specialty trade contractors.
Commercial real estate loan balances increased $5.2 million and represent 19 percent of total loans. Loans secured by industrial facilities increased $42 million to $954 million while loans secured by retail facilities decreased $30 million to $637 million. Other changes include an increase of $11 million in multifamily residential loans, fully offset by a decrease in other real estate loans.
PPP loan balances decreased $94 million to $43 million, or less than 1 percent of the total loans balance.
Loans to individuals increased $10 million and represent 17 percent of total loans. Total residential mortgage loans increased $32 million while personal loans decreased $22 million.
Deposits
Period-end deposits totaled $38.6 billion at June 30, 2022, an $807 million decrease as customers begin to deploy cash resources following the savings trend during the pandemic. Interest-bearing transaction account balances decreased by $1.1 billion while demand deposits increased $478 million. Period-end Wealth Management deposits decreased $587 million, Commercial Banking deposits decreased $104 million, and Consumer Banking deposits declined by $138 million. Average deposits were $38.6 billion at June 30, 2022, a $1.8 billion decrease. Average interest-bearing transaction account balances decreased $1.7 billion, and average demand deposit account balances increased $140 million.
Capital
The company's common equity Tier 1 capital ratio was 11.61 percent at June 30, 2022. In addition, the company's Tier 1 capital ratio was 11.63 percent, total capital ratio was 12.59 percent, and leverage ratio was 9.12 percent at June 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 10 basis points to the company's common equity tier 1 capital ratio at June 30. At March 31, 2022, the company's common equity Tier 1 capital ratio was 11.30 percent, Tier 1 capital ratio was 11.31 percent, total capital ratio was 12.25 percent, and leverage ratio was 8.47 percent.
The company's tangible common equity ratio, a non-GAAP measure, was 8.16 percent at June 30, 2022 and 8.13 percent at March 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. 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 294,084 shares of common stock at an average price of $82.98 a share in the second 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.
No provision for credit losses was necessary for the second quarter of 2022. An increase in allowance related to our lending activities from the strong loan growth during the quarter and changes in our reasonable and supportable forecast, primarily related to the economic outlook from the Federal Reserve's actions to control inflation, were 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 normalize thereafter. We expect the Russian-Ukraine conflict remains isolated and conditions improve in the fourth quarter of 2022. GDP is projected to increase 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, but is offset by a drawdown in savings. This results in below-trend GDP growth. Our forecasted civilian unemployment rate is 3.7 percent for the third quarter of 2022, increasing to 4.0 percent by the second quarter of 2023. Our base case also assumes the Federal Reserve increases federal funds rates at each meeting through June 2023, which results in a target range of 3.50 percent to 3.75 percent. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of June 2022, averaging $98.15 per barrel over the next twelve months.
The probability weighting of our base case reasonable and supportable forecast decreased to 55 percent in the second quarter of 2022 compared to 60 percent in the first quarter of 2022 as the level of uncertainty in economic forecasts continued to increase. Our downside case, probability weighted at 35 percent, assumes the Russia-Ukraine conflict persists through the second quarter of 2023, but does remain isolated. Additional surges in commodity prices and exacerbated supply chain dislocations create higher levels of inflation forcing the Federal Reserve to adopt a more aggressive monetary policy to combat the inflationary environment. This results in a federal funds target range of 4.50 percent to 4.75 percent. The United States economy is pushed into a recession, with a contraction in economic activity and a sharp increase in the unemployment rate from 4.2 percent in the third quarter of 2022 to 6.9 percent in the second quarter of 2023. In this scenario, real GDP is expected to contract 1.8 percent over the next four quarters. WTI oil prices are projected to average $105.36 per barrel over the next twelve months, peaking at $130.37 in the fourth quarter of 2022 and falling 39 percent over the following two quarters.
Nonperforming assets totaled $333 million or 1.56 percent of outstanding loans and repossessed assets at June 30, 2022, compared to $353 million or 1.70 percent at March 31, 2022. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $118 million or 0.56 percent of outstanding loans and repossessed assets at June 30, 2022, compared to $132 million or 0.65 percent at March 31, 2022.
Nonaccruing loans were $114 million or 0.54 percent of outstanding loans at June 30, 2022. Nonaccruing commercial loans totaled $55 million or 0.40 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $11 million or 0.27 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $49 million or 1.36 percent of outstanding loans to individuals.
Nonaccruing loans decreased $10 million compared to March 31, 2022, primarily related to nonaccruing commercial real estate, energy and services loans. New nonaccruing loans identified in the second quarter totaled $4.4 million, offset by $8.4 million in payments received, $4.0 million in foreclosures and $1.4 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 $131 million at June 30, 2022, down from $169 million at March 31. Potential problem energy loans decreased $36 million. Potential problem services loans increased $16 million, offset by a $14 million decrease in potential problem commercial real estate 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 totaled $241 million or 1.13 percent of outstanding loans and 251 percent of nonaccruing loans excluding residential mortgage loans guaranteed by U.S. government agencies.
At March 31, 2022, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $283 million or 1.37 percent of outstanding loans and 264 percent of nonaccruing loans. The allowance for loan losses was $246 million or 1.19 percent of outstanding loans and 230 percent of nonaccruing loans excluding residential mortgage loans guaranteed by U.S. government agencies.
Gross charge-offs were $1.4 million for the second quarter compared to $7.8 million for the first quarter of 2022. Recoveries totaled $2.2 million for the second quarter of 2022 and $1.8 million for the prior quarter leading to net recoveries of $799 thousand or 0.02 percent of average loans on an annualized basis and net charge-offs of $6.0 million or 0.12 percent of average loans on an annualized basis, respectively. Net charge-offs were 0.06 percent of average loans over the last four quarters.
Securities and Derivatives
The fair value of the available for sale securities portfolio totaled $10.2 billion at June 30, 2022, a $2.7 billion decrease compared to March 31, 2022. During the second quarter of 2022, certain U.S. government agency residential mortgage-backed securities were transferred from the available for sale portfolio to the investment securities portfolio. At the time of transfer, the fair value totaled $2.4 billion, amortized cost totaled $2.7 billion and the pretax unrealized loss totaled $268 million. At June 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 $4.1 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At June 30, 2022, the available for sale securities portfolio had a net unrealized loss of $523 million compared to $547 million at March 31, 2022.
We hold an inventory of trading securities in support of sales to a variety of customers. At June 30, 2022, the trading securities portfolio totaled $2.9 billion compared to $4.9 billion at March 31, 2022. During the second quarter of 2022, we sold our low-coupon, fixed rate U.S. government agency residential mortgage-backed securities inventory.
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 $147 million to $38 million at June 30, 2022.
Derivative contracts are carried at fair value. At June 30, 2022, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $2.0 billion compared to $2.4 billion at March 31, 2022. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $2.0 billion at June 30, 2022 and $2.4 billion at March 31, 2022.
The net benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $1.9 million during the second quarter of 2022, including a $17.5 million increase in the fair value of mortgage servicing rights, $15.9 million decrease in the fair value of securities and derivative contracts held as an economic hedge, and $275 thousand of related net interest revenue. Three bulk mortgage servicing rights portfolios were acquired during the second quarter of 2022. These acquisitions added $3.5 billion in unpaid principal balance comprised of conventional, low note rate, strong performing loans.
Conference Call and Webcast
The company will hold a conference call at 9 a.m. Central time on Wednesday, July 27, 2022 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company's website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-877-407-4018 and referencing conference ID # 13731240.
About BOK Financial Corporation
BOK Financial Corporation is a $45 billion regional financial services company headquartered in Tulsa, Oklahoma with $96 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 June 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)June 30, 2022 Mar. 31, 2022 ASSETS Cash and due from banks $ 1,313,563 $ 767,805 Interest-bearing cash and cash equivalents 723,787 599,976 Trading securities 2,859,444 4,891,096 Investment securities, net of allowance 2,637,345 183,824 Available for sale securities 10,152,663 12,894,534 Fair value option securities 37,927 185,003 Restricted equity securities 95,130 77,389 Residential mortgage loans held for sale 182,726 169,474 Loans: Commercial 13,578,697 12,883,189 Commercial real estate 4,106,148 4,100,956 Paycheck protection program 43,140 137,365 Loans to individuals 3,563,163 3,552,919 Total loans 21,291,148 20,674,429 Allowance for loan losses (241,114 ) (246,473 ) Loans, net of allowance 21,050,034 20,427,956 Premises and equipment, net 573,605 574,786 Receivables 176,672 238,694 Goodwill 1,044,749 1,044,749 Intangible assets, net 83,744 87,761 Mortgage servicing rights 270,312 209,563 Real estate and other repossessed assets, net 22,221 24,492 Derivative contracts, net 1,992,977 2,680,207 Cash surrender value of bank-owned life insurance 409,937 407,763 Receivable on unsettled securities sales 60,168 229,404 Other assets 1,690,068 1,132,031 TOTAL ASSETS $ 45,377,072 $ 46,826,507 LIABILITIES AND EQUITY Deposits: Demand $ 15,720,296 $ 15,242,341 Interest-bearing transaction 20,544,199 21,689,829 Savings 984,824 979,365 Time 1,369,599 1,514,416 Total deposits 38,618,918 39,425,951 Funds purchased and repurchase agreements 677,030 1,068,329 Other borrowings 35,505 36,246 Subordinated debentures 131,223 131,209 Accrued interest, taxes and expense 211,419 238,048 Due on unsettled securities purchases 297,352 81,016 Derivative contracts, net 214,576 557,834 Other liabilities 449,507 434,350 TOTAL LIABILITIES 40,635,530 41,972,983 Shareholders' equity: Capital, surplus and retained earnings 5,339,967 5,267,408 Accumulated other comprehensive income (loss) (602,628 ) (417,826 ) TOTAL SHAREHOLDERS' EQUITY 4,737,339 4,849,582 Non-controlling interests 4,203 3,942 TOTAL EQUITY 4,741,542 4,853,524 TOTAL LIABILITIES AND EQUITY $ 45,377,072 $ 46,826,507 AVERAGE BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)Three Months Ended June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 ASSETS Interest-bearing cash and cash equivalents $ 843,619 $ 1,050,409 $ 1,208,552 $ 682,788 $ 659,312 Trading securities 4,166,954 8,537,390 9,260,778 7,617,236 7,430,217 Investment securities, net of allowance 610,983 195,198 213,188 218,117 221,401 Available for sale securities 12,258,072 13,092,422 13,247,607 13,446,095 13,243,542 Fair value option securities 54,832 75,539 46,458 56,307 64,864 Restricted equity securities 167,732 164,484 137,874 245,485 208,692 Residential mortgage loans held for sale 148,183 179,697 163,433 167,620 218,200 Loans: Commercial 13,382,176 12,677,706 12,401,935 12,231,230 12,402,925 Commercial real estate 4,061,129 4,059,148 3,838,336 4,218,190 4,395,848 Paycheck protection program 90,312 210,110 404,261 792,728 1,668,047 Loans to individuals 3,524,097 3,516,698 3,598,121 3,606,460 3,700,269 Total loans 21,057,714 20,463,662 20,242,653 20,848,608 22,167,089 Allowance for loan losses (246,064 ) (254,191 ) (271,794 ) (306,125 ) (345,269 ) Loans, net of allowance 20,811,650 20,209,471 19,970,859 20,542,483 21,821,820 Total earning assets 39,062,025 43,504,610 44,248,749 42,976,131 43,868,048 Cash and due from banks 822,599 790,440 783,670 766,688 763,393 Derivative contracts, net 3,051,429 2,126,282 1,441,869 1,501,736 1,022,137 Cash surrender value of bank-owned life insurance 408,489 406,379 404,149 401,926 401,760 Receivable on unsettled securities sales 457,165 375,616 585,901 632,539 716,700 Other assets 3,486,691 3,357,747 3,139,718 3,220,129 3,424,884 TOTAL ASSETS $ 47,288,398 $ 50,561,074 $ 50,604,056 $ 49,499,149 $ 50,196,922 LIABILITIES AND EQUITY Deposits: Demand $ 15,202,597 $ 15,062,282 $ 14,818,841 $ 13,670,656 $ 13,189,954 Interest-bearing transaction 21,037,294 22,763,479 22,326,401 21,435,736 21,491,145 Savings 981,493 947,407 909,131 888,011 872,618 Time 1,373,036 1,589,039 1,747,715 1,839,983 1,936,510 Total deposits 38,594,420 40,362,207 39,802,088 37,834,386 37,490,227 Funds purchased and repurchase agreements 1,224,134 2,004,466 2,893,128 1,448,800 1,790,490 Other borrowings 1,301,358 1,148,440 880,837 2,546,083 3,608,369 Subordinated debentures 131,219 131,228 131,224 214,654 276,034 Derivative contracts, net 535,574 682,435 320,757 434,334 366,202 Due on unsettled securities purchases 380,332 519,097 629,642 957,538 701,495 Other liabilities 389,031 565,350 578,091 619,913 634,460 TOTAL LIABILITIES 42,556,068 45,413,223 45,235,767 44,055,708 44,867,277 Total equity 4,732,330 5,147,851 5,368,289 5,443,441 5,329,645 TOTAL LIABILITIES AND EQUITY $ 47,288,398 $ 50,561,074 $ 50,604,056 $ 49,499,149 $ 50,196,922 STATEMENTS OF EARNINGS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except per share data)Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Interest revenue $ 294,247 $ 295,893 $ 577,346 $ 594,132 Interest expense 20,229 15,584 34,917 33,403 Net interest revenue 274,018 280,309 542,429 560,729 Provision for credit losses — (35,000 ) — (60,000 ) Net interest revenue after provision for credit losses 274,018 315,309 542,429 620,729 Other operating revenue: Brokerage and trading revenue 44,043 29,408 16,964 50,190 Transaction card revenue 26,940 24,923 51,156 47,353 Fiduciary and asset management revenue 49,838 44,832 96,237 86,154 Deposit service charges and fees 28,500 25,861 55,504 50,070 Mortgage banking revenue 11,368 21,219 28,018 58,332 Other revenue 12,684 23,172 23,129 39,468 Total fees and commissions 173,373 169,415 271,008 331,567 Other gains (losses), net (7,639 ) 16,449 (9,283 ) 26,570 Gain (loss) on derivatives, net (13,569 ) 18,820 (60,550 ) (8,830 ) Loss on fair value option securities, net (2,221 ) (1,627 ) (13,422 ) (3,537 ) Change in fair value of mortgage servicing rights 17,485 (13,041 ) 66,595 20,833 Gain on available for sale securities, net 1,188 1,430 2,125 1,897 Total other operating revenue 168,617 191,446 256,473 368,500 Other operating expense: Personnel 154,923 172,035 314,151 345,045 Business promotion 6,325 2,744 12,838 4,898 Charitable contributions to BOKF Foundation — — — 4,000 Professional fees and services 12,475 12,361 23,888 24,341 Net occupancy and equipment 27,489 26,633 58,344 53,295 Insurance 4,728 3,660 9,011 8,280 Data processing and communications 41,280 36,418 81,116 73,885 Printing, postage and supplies 3,929 4,285 7,618 7,725 Amortization of intangible assets 4,049 4,578 8,013 9,385 Mortgage banking costs 9,437 11,126 17,314 25,069 Other expense 9,020 17,312 18,980 31,013 Total other operating expense 273,655 291,152 551,273 586,936 Net income before taxes 168,980 215,603 247,629 402,293 Federal and state income taxes 36,122 48,496 52,319 90,878 Net income 132,858 167,107 195,310 311,415 Net loss attributable to non-controlling interests 12 686 (24 ) (1,066 ) Net income attributable to BOK Financial Corporation shareholders $ 132,846 $ 166,421 $ 195,334 $ 312,481 Average shares outstanding: Basic 67,453,748 68,815,666 67,616,396 68,975,743 Diluted 67,455,172 68,817,442 67,617,834 68,978,798 Net income per share: Basic $ 1.96 $ 2.40 $ 2.87 $ 4.50 Diluted $ 1.96 $ 2.40 $ 2.87 $ 4.50 FINANCIAL HIGHLIGHTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)Three Months Ended June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 Capital: Period-end shareholders' equity $ 4,737,339 $ 4,849,582 $ 5,363,732 $ 5,388,973 $ 5,332,977 Risk weighted assets $ 36,792,067 $ 37,160,258 $ 34,575,277 $ 33,916,456 $ 33,824,860 Risk-based capital ratios: Common equity tier 1 11.61 % 11.30 % 12.24 % 12.26 % 11.95 % Tier 1 11.63 % 11.31 % 12.25 % 12.29 % 12.01 % Total capital 12.59 % 12.25 % 13.29 % 13.38 % 13.61 % Leverage ratio 9.12 % 8.47 % 8.55 % 8.77 % 8.58 % Tangible common equity ratio1 8.16 % 8.13 % 8.61 % 9.28 % 9.09 % Common stock: Book value per share $ 69.87 $ 71.21 $ 78.34 $ 78.56 $ 77.20 Tangible book value per share $ 53.22 $ 54.58 $ 61.74 $ 61.93 $ 60.50 Market value per share: High $ 94.76 $ 119.59 $ 110.21 $ 92.97 $ 93.00 Low $ 74.03 $ 93.76 $ 89.01 $ 77.20 $ 83.59 Cash dividends paid $ 35,892 $ 36,093 $ 36,256 $ 35,725 $ 35,925 Dividend payout ratio 27.02 % 57.76 % 30.90 % 18.97 % 21.59 % Shares outstanding, net 67,806,005 68,104,043 68,467,772 68,596,764 69,078,458 Stock buy-back program: Shares repurchased 294,084 475,877 128,522 478,141 492,994 Amount $ 24,404 $ 48,074 $ 13,426 $ 40,644 $ 43,797 Average price per share $ 82.98 $ 101.02 $ 104.46 $ 85.00 $ 88.84 Performance ratios (quarter annualized): Return on average assets 1.13 % 0.50 % 0.92 % 1.51 % 1.33 % Return on average equity 11.27 % 4.93 % 8.68 % 13.78 % 12.58 % Net interest margin 2.76 % 2.44 % 2.52 % 2.66 % 2.60 % Efficiency ratio 60.65 % 75.07 % 70.14 % 61.23 % 64.20 % Reconciliation of non-GAAP measures: 1 Tangible common equity ratio: Total shareholders' equity $ 4,737,339 $ 4,849,582 $ 5,363,732 $ 5,388,973 $ 5,332,977 Less: Goodwill and intangible assets, net 1,128,493 1,132,510 1,136,527 1,140,935 1,153,785 Tangible common equity $ 3,608,846 $ 3,717,072 $ 4,227,205 $ 4,248,038 $ 4,179,192 Total assets $ 45,377,072 $ 46,826,507 $ 50,249,431 $ 46,923,409 $ 47,154,375 Less: Goodwill and intangible assets, net 1,128,493 1,132,510 1,136,527 1,140,935 1,153,785 Tangible assets $ 44,248,579 $ 45,693,997 $ 49,112,904 $ 45,782,474 $ 46,000,590 Tangible common equity ratio 8.16 % 8.13 % 8.61 % 9.28 % 9.09 % Pre-provision net revenue: Net income before taxes $ 168,980 $ 78,649 $ 152,025 $ 241,782 $ 215,603 Provision for expected credit losses — — (17,000 ) (23,000 ) (35,000 ) Net income (loss) attributable to non-controlling interests 12 (36 ) (129 ) (601 ) 686 Pre-provision net revenue $ 168,968 $ 78,685 $ 135,154 $ 219,383 $ 179,917 Other data: Tax equivalent interest $ 2,040 $ 1,973 $ 2,104 $ 2,217 $ 2,320 Net unrealized gain (loss) on available for sale securities $ (522,812 ) $ (546,598 ) $ 93,381 $ 221,487 $ 297,267 Mortgage banking: Mortgage production revenue $ (504 ) $ 5,055 $ 10,018 $ 15,403 $ 10,004 Mortgage loans funded for sale $ 360,237 $ 418,866 $ 568,507 $ 652,336 $ 754,893 Add: current period-end outstanding commitments 106,004 160,260 171,412 239,066 276,154 Less: prior period end outstanding commitments 160,260 171,412 239,066 276,154 387,465 Total mortgage production volume $ 305,981 $ 407,714 $ 500,853 $ 615,248 $ 643,582 Mortgage loan refinances to mortgage loans funded for sale 19 % 45 % 51 % 48 % 48 % Realized margin on funded mortgage loans 0.88 % 1.64 % 2.34 % 2.48 % 2.75 % Production revenue as a percentage of production volume (0.16 )% 1.24 % 2.00 % 2.50 % 1.55 % Mortgage servicing revenue $ 11,872 $ 11,595 $ 11,260 $ 10,883 $ 11,215 Average outstanding principal balance of mortgage loans serviced for others 17,336,596 16,155,329 15,930,480 14,899,306 15,065,173 Average mortgage servicing revenue rates 0.27 % 0.29 % 0.28 % 0.29 % 0.30 % Gain (loss) on mortgage servicing rights, net of economic hedge: Gain (loss) on mortgage hedge derivative contracts, net $ (13,639 ) $ (46,694 ) $ (4,862 ) $ (5,829 ) $ 18,764 Gain (loss) on fair value option securities, net (2,221 ) (11,201 ) 1,418 (120 ) (1,627 ) Gain (loss) on economic hedge of mortgage servicing rights (15,860 ) (57,895 ) (3,444 ) (5,949 ) 17,137 Gain (loss) on changes in fair value of mortgage servicing rights 17,485 49,110 7,859 12,945 (13,041 ) Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue 1,625 (8,785 ) 4,415 6,996 4,096 Net interest revenue on fair value option securities2 275 383 259 286 341 Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges $ 1,900 $ (8,402 ) $ 4,674 $ 7,282 $ 4,437 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 June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 Interest revenue $ 294,247 $ 283,099 $ 292,334 $ 293,463 $ 295,893 Interest expense 20,229 14,688 15,257 13,236 15,584 Net interest revenue 274,018 268,411 277,077 280,227 280,309 Provision for credit losses — — (17,000 ) (23,000 ) (35,000 ) Net interest revenue after provision for credit losses 274,018 268,411 294,077 303,227 315,309 Other operating revenue: Brokerage and trading revenue 44,043 (27,079 ) 14,869 47,930 29,408 Transaction card revenue 26,940 24,216 24,998 24,632 24,923 Fiduciary and asset management revenue 49,838 46,399 46,872 45,248 44,832 Deposit service charges and fees 28,500 27,004 26,718 27,429 25,861 Mortgage banking revenue 11,368 16,650 21,278 26,286 21,219 Other revenue 12,684 10,445 11,586 18,896 23,172 Total fees and commissions 173,373 97,635 146,321 190,421 169,415 Other gains (losses), net (7,639 ) (1,644 ) 6,081 31,091 16,449 Gain (loss) on derivatives, net (13,569 ) (46,981 ) (4,788 ) (5,760 ) 18,820 Gain (loss) on fair value option securities, net (2,221 ) (11,201 ) 1,418 (120 ) (1,627 ) Change in fair value of mortgage servicing rights 17,485 49,110 7,859 12,945 (13,041 ) Gain on available for sale securities, net 1,188 937 552 1,255 1,430 Total other operating revenue 168,617 87,856 157,443 229,832 191,446 Other operating expense: Personnel 154,923 159,228 174,474 175,863 172,035 Business promotion 6,325 6,513 6,452 4,939 2,744 Charitable contributions to BOKF Foundation — — 5,000 — — Professional fees and services 12,475 11,413 14,129 12,436 12,361 Net occupancy and equipment 27,489 30,855 26,897 28,395 26,633 Insurance 4,728 4,283 3,889 3,712 3,660 Data processing and communications 41,280 39,836 39,358 38,371 36,418 Printing, postage and supplies 3,929 3,689 2,935 3,558 4,285 Amortization of intangible assets 4,049 3,964 4,438 4,488 4,578 Mortgage banking costs 9,437 7,877 8,667 8,962 11,126 Other expense 9,020 9,960 13,256 10,553 17,312 Total other operating expense 273,655 277,618 299,495 291,277 291,152 Net income before taxes 168,980 78,649 152,025 241,782 215,603 Federal and state income taxes 36,122 16,197 34,836 54,061 48,496 Net income 132,858 62,452 117,189 187,721 167,107 Net income (loss) attributable to non-controlling interests 12 (36 ) (129 ) (601 ) 686 Net income attributable to BOK Financial Corporation shareholders $ 132,846 $ 62,488 $ 117,318 $ 188,322 $ 166,421 Average shares outstanding: Basic 67,453,748 67,812,400 68,069,160 68,359,125 68,815,666 Diluted 67,455,172 67,813,851 68,070,910 68,360,871 68,817,442 Net income per share: Basic $ 1.96 $ 0.91 $ 1.71 $ 2.74 $ 2.40 Diluted $ 1.96 $ 0.91 $ 1.71 $ 2.74 $ 2.40 LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 Commercial: Healthcare $ 3,696,963 $ 3,441,732 $ 3,414,940 $ 3,347,641 $ 3,381,261 Services 3,421,493 3,351,495 3,367,193 3,323,422 3,389,756 Energy 3,393,072 3,197,667 3,006,884 2,814,059 3,011,331 General business 3,067,169 2,892,295 2,717,448 2,690,018 2,690,559 Total commercial 13,578,697 12,883,189 12,506,465 12,175,140 12,472,907 Commercial real estate: Office 1,100,115 1,097,516 1,040,963 1,030,755 1,073,346 Industrial 953,626 911,928 766,125 890,316 824,577 Multifamily 878,565 867,288 786,404 875,586 964,824 Retail 637,304 667,561 679,917 766,402 784,445 Residential construction and land development 111,575 120,506 120,016 118,416 128,939 Other commercial real estate 424,963 436,157 437,900 435,417 470,861 Total commercial real estate 4,106,148 4,100,956 3,831,325 4,116,892 4,246,992 Paycheck protection program 43,140 137,365 276,341 536,052 1,121,583 Loans to individuals: Residential mortgage 1,784,729 1,723,506 1,722,170 1,747,243 1,772,627 Residential mortgages guaranteed by U.S. government agencies 293,838 322,581 354,173 376,986 413,806 Personal 1,484,596 1,506,832 1,515,206 1,395,623 1,388,534 Total loans to individuals 3,563,163 3,552,919 3,591,549 3,519,852 3,574,967 Total $ 21,291,148 $ 20,674,429 $ 20,205,680 $ 20,347,936 $ 21,416,449 LOANS MANAGED BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 Texas: Commercial $ 6,631,658 $ 6,254,883 $ 6,068,700 $ 5,815,562 $ 5,690,901 Commercial real estate 1,339,452 1,345,105 1,253,439 1,383,871 1,403,751 Paycheck protection program 14,040 31,242 81,654 115,623 342,933 Loans to individuals 934,856 957,320 942,982 901,121 885,619 Total Texas 8,920,006 8,588,550 8,346,775 8,216,177 8,323,204 Oklahoma: Commercial 3,125,764 2,883,663 2,633,014 2,590,887 2,840,560 Commercial real estate 576,458 552,310 546,021 552,184 552,673 Paycheck protection program 13,329 52,867 69,817 192,474 242,880 Loans to individuals 1,982,247 1,977,886 2,024,404 2,014,099 2,063,419 Total Oklahoma 5,697,798 5,466,726 5,273,256 5,349,644 5,699,532 Colorado: Commercial 2,074,455 1,977,773 1,936,149 1,874,613 1,904,182 Commercial real estate 473,231 480,740 470,937 526,653 656,521 Paycheck protection program 8,233 28,584 82,781 140,470 299,712 Loans to individuals 234,105 236,125 256,533 249,298 262,796 Total Colorado 2,790,024 2,723,222 2,746,400 2,791,034 3,123,211 Arizona: Commercial 1,080,228 1,074,551 1,130,798 1,194,801 1,239,270 Commercial real estate 766,767 719,970 674,309 734,174 705,497 Paycheck protection program 5,173 11,644 21,594 42,815 104,946 Loans to individuals 212,870 190,746 186,528 182,506 178,481 Total Arizona 2,065,038 1,996,911 2,013,229 2,154,296 2,228,194 Kansas/Missouri: Commercial 338,337 334,371 338,697 336,414 388,291 Commercial real estate 458,157 436,740 382,761 408,001 406,055 Paycheck protection program 573 2,595 4,718 6,920 41,954 Loans to individuals 125,584 121,247 110,889 100,920 103,092 Total Kansas/Missouri 922,651 894,953 837,065 852,255 939,392 New Mexico: Commercial 252,033 262,533 306,964 287,695 304,804 Commercial real estate 431,606 504,632 442,128 437,302 437,996 Paycheck protection program 1,792 9,713 13,510 31,444 86,716 Loans to individuals 67,026 63,299 63,930 66,651 68,177 Total New Mexico 752,457 840,177 826,532 823,092 897,693 Arkansas: Commercial 76,222 95,415 92,143 75,168 104,899 Commercial real estate 60,477 61,459 61,730 74,707 84,499 Paycheck protection program — 720 2,267 6,306 2,442 Loans to individuals 6,475 6,296 6,283 5,257 13,383 Total Arkansas 143,174 163,890 162,423 161,438 205,223 TOTAL BOK FINANCIAL $ 21,291,148 $ 20,674,429 $ 20,205,680 $ 20,347,936 $ 21,416,449 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)June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 Oklahoma: Demand $ 5,422,593 $ 5,205,806 $ 5,433,405 $ 5,080,162 $ 4,985,542 Interest-bearing: Transaction 10,240,378 11,410,709 12,689,367 11,692,679 12,065,844 Savings 561,413 558,634 521,439 510,906 500,344 Time 678,127 817,744 978,822 1,039,866 1,139,980 Total interest-bearing 11,479,918 12,787,087 14,189,628 13,243,451 13,706,168 Total Oklahoma 16,902,511 17,992,893 19,623,033 18,323,613 18,691,710 Texas: Demand 4,670,535 4,552,001 4,552,983 3,987,503 3,752,790 Interest-bearing: Transaction 5,344,326 4,963,118 5,345,461 4,985,465 4,335,113 Savings 183,708 182,536 178,458 165,043 160,805 Time 333,038 329,931 337,559 337,389 346,577 Total interest-bearing 5,861,072 5,475,585 5,861,478 5,487,897 4,842,495 Total Texas 10,531,607 10,027,586 10,414,461 9,475,400 8,595,285 Colorado: Demand 2,799,798 2,673,352 2,526,855 2,158,596 1,991,343 Interest-bearing: Transaction 2,277,563 2,387,304 2,334,371 2,337,354 2,159,819 Savings 82,976 81,762 78,636 79,873 73,990 Time 160,795 165,401 174,351 184,002 193,787 Total interest-bearing 2,521,334 2,634,467 2,587,358 2,601,229 2,427,596 Total Colorado 5,321,132 5,307,819 5,114,213 4,759,825 4,418,939 New Mexico: Demand 1,347,600 1,271,264 1,196,057 1,222,895 1,197,412 Interest-bearing: Transaction 845,442 888,257 858,394 837,630 723,757 Savings 115,660 115,457 107,963 107,615 105,837 Time 148,532 156,140 163,871 168,879 174,665 Total interest-bearing 1,109,634 1,159,854 1,130,228 1,114,124 1,004,259 Total New Mexico 2,457,234 2,431,118 2,326,285 2,337,019 2,201,671 Arizona: Demand 901,543 947,775 934,282 1,110,884 943,511 Interest-bearing: Transaction 792,269 810,896 834,491 784,614 820,901 Savings 17,999 18,122 16,182 16,468 13,496 Time 28,774 27,259 31,274 30,862 30,012 Total interest-bearing 839,042 856,277 881,947 831,944 864,409 Total Arizona 1,740,585 1,804,052 1,816,229 1,942,828 1,807,920 Kansas/Missouri: Demand 537,143 553,345 658,342 488,595 463,339 Interest-bearing: Transaction 913,921 1,107,525 1,086,946 965,757 978,160 Savings 19,943 19,589 18,844 17,303 17,539 Time 13,962 11,527 12,255 13,040 13,509 Total interest-bearing 947,826 1,138,641 1,118,045 996,100 1,009,208 Total Kansas/Missouri 1,484,969 1,691,986 1,776,387 1,484,695 1,472,547 Arkansas: Demand 41,084 38,798 42,499 41,594 46,472 Interest-bearing: Transaction 130,300 122,020 119,543 149,611 195,125 Savings 3,125 3,265 3,213 3,289 3,445 Time 6,371 6,414 6,196 6,677 6,819 Total interest-bearing 139,796 131,699 128,952 159,577 205,389 Total Arkansas 180,880 170,497 171,451 201,171 251,861 TOTAL BOK FINANCIAL $ 38,618,918 $ 39,425,951 $ 41,242,059 $ 38,524,551 $ 37,439,933 NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATIONThree Months Ended June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 TAX-EQUIVALENT ASSETS YIELDS Interest-bearing cash and cash equivalents 0.83 % 0.18 % 0.16 % 0.14 % 0.10 % Trading securities 2.00 % 1.71 % 1.89 % 2.04 % 1.95 % Investment securities, net of allowance 2.35 % 5.07 % 4.99 % 5.02 % 5.01 % Available for sale securities 1.84 % 1.77 % 1.72 % 1.80 % 1.85 % Fair value option securities 2.92 % 2.81 % 2.71 % 2.62 % 2.60 % Restricted equity securities 3.30 % 2.69 % 2.98 % 2.55 % 3.36 % Residential mortgage loans held for sale 4.22 % 3.11 % 3.06 % 3.06 % 2.91 % Loans 3.92 % 3.57 % 3.70 % 3.68 % 3.54 % Allowance for loan losses Loans, net of allowance 3.96 % 3.61 % 3.75 % 3.73 % 3.60 % Total tax-equivalent yield on earning assets 2.96 % 2.58 % 2.66 % 2.78 % 2.75 % COST OF INTEREST-BEARING LIABILITIES Interest-bearing deposits: Interest-bearing transaction 0.22 % 0.10 % 0.09 % 0.09 % 0.10 % Savings 0.03 % 0.03 % 0.04 % 0.04 % 0.04 % Time 0.68 % 0.56 % 0.53 % 0.55 % 0.58 % Total interest-bearing deposits 0.24 % 0.12 % 0.12 % 0.13 % 0.14 % Funds purchased and repurchase agreements 0.53 % 0.95 % 0.73 % 0.20 % 0.16 % Other borrowings 1.01 % 0.38 % 0.49 % 0.37 % 0.34 % Subordinated debt 4.50 % 4.02 % 4.02 % 4.63 % 4.87 % Total cost of interest-bearing liabilities 0.31 % 0.21 % 0.21 % 0.19 % 0.21 % Tax-equivalent net interest revenue spread 2.65 % 2.37 % 2.45 % 2.59 % 2.54 % Effect of noninterest-bearing funding sources and other 0.11 % 0.07 % 0.07 % 0.07 % 0.06 % Tax-equivalent net interest margin 2.76 % 2.44 % 2.52 % 2.66 % 2.60 % 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 June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 June 30, 2021 Nonperforming assets: Nonaccruing loans: Commercial: Energy $ 20,924 $ 24,976 $ 31,091 $ 45,500 $ 70,341 Services 15,259 16,535 17,170 25,714 29,913 Healthcare 14,886 15,076 15,762 509 527 General business 3,539 3,750 10,081 8,951 11,823 Total commercial 54,608 60,337 74,104 80,674 112,604 Commercial real estate 10,939 15,989 14,262 21,223 26,123 Loans to individuals: Permanent mortgage 30,460 30,757 31,574 30,674 31,473 Permanent mortgage guaranteed by U.S. government agencies 18,000 16,992 13,861 9,188 9,207 Personal 132 171 258 188 229 Total loans to individuals 48,592 47,920 45,693 40,050 40,909 Total nonaccruing loans $ 114,139 $ 124,246 $ 134,059 $ 141,947 $ 179,636 Accruing renegotiated loans guaranteed by U.S. government agencies 196,420 204,121 210,618 178,554 171,324 Real estate and other repossessed assets 22,221 24,492 24,589 28,770 57,337 Total nonperforming assets $ 332,780 $ 352,859 $ 369,266 $ 349,271 $ 408,297 Total nonperforming assets excluding those guaranteed by U.S. government agencies $ 118,360 $ 131,746 $ 144,787 $ 161,529 $ 227,766 Accruing loans 90 days past due1 $ 3 $ 307 $ 313 $ 223 $ 252 Gross charge-offs $ 1,368 $ 7,805 $ 6,558 $ 9,584 $ 18,304 Recoveries (2,167 ) (1,824 ) (7,272 ) (1,769 ) (2,856 ) Net charge-offs (recoveries) $ (799 ) $ 5,981 $ (714 ) $ 7,815 $ 15,448 Provision for loan losses $ (6,158 ) $ (3,967 ) $ (20,973 ) $ (27,395 ) $ (25,064 ) Provision for credit losses from off-balance sheet unfunded loan commitments 6,005 3,268 3,738 4,952 (8,590 ) Provision for expected credit losses from mortgage banking activities 69 621 150 (534 ) (1,222 ) Provision for credit losses related to held-to maturity (investment) securities portfolio 84 78 85 (23 ) (124 ) Total provision for credit losses $ — $ — $ (17,000 ) $ (23,000 ) $ (35,000 ) Allowance for loan losses to period end loans 1.13 % 1.19 % 1.27 % 1.36 % 1.46 % Allowance for loan losses to period end loans excluding PPP loans2 1.13 % 1.20 % 1.29 % 1.40 % 1.54 % Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans 1.33 % 1.37 % 1.43 % 1.50 % 1.57 % Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans2 1.33 % 1.38 % 1.45 % 1.54 % 1.66 % Nonperforming assets to period end loans and repossessed assets 1.56 % 1.70 % 1.83 % 1.71 % 1.90 % Net charge-offs (annualized) to average loans (0.02 )% 0.12 % (0.01 )% 0.15 % 0.28 % Net charge-offs (annualized) to average loans excluding PPP loans2 (0.02 )% 0.12 % (0.01 )% 0.16 % 0.30 % Allowance for loan losses to nonaccruing loans1 250.80 % 229.80 % 213.33 % 208.41 % 183.00 % Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1 294.74 % 263.60 % 240.77 % 230.43 % 197.25 % 1 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
2 Metric meaningful due to the unique characteristics and short-term nature of the PPP loans.SEGMENTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)Three Months Ended 2Q22 vs 1Q22 2Q22 vs 2Q21 June 30, 2022 Mar. 31, 2022 June 30, 2021 $ change % change $ change % change Commercial Banking Net interest revenue $ 166,522 $ 137,011 $ 130,901 $ 29,511 21.5 % $ 35,621 27.2 % Fees and commissions revenue 59,881 56,964 63,368 2,917 5.1 % (3,487 ) (5.5 )% Combined net interest and fee revenue 226,403 193,975 194,269 32,428 16.7 % 32,134 16.5 % Other operating expense 70,009 65,114 71,351 4,895 7.5 % (1,342 ) (1.9 )% Corporate expense allocations 16,634 16,246 12,512 388 2.4 % 4,122 32.9 % Net income 104,797 82,344 72,632 22,453 27.3 % 32,165 44.3 % Average assets 29,269,712 29,823,905 28,160,594 (554,193 ) (1.9 )% 1,109,118 3.9 % Average loans 17,336,841 16,696,428 16,981,888 640,413 3.8 % 354,953 2.1 % Average deposits 18,933,766 19,595,260 17,049,772 (661,494 ) (3.4 )% 1,883,994 11.0 % Consumer Banking Net interest revenue $ 33,786 $ 27,207 $ 24,945 $ 6,579 24.2 % $ 8,841 35.4 % Fees and commissions revenue 30,101 33,977 37,714 (3,876 ) (11.4 )% (7,613 ) (20.2 )% Combined net interest and fee revenue 63,887 61,184 62,659 2,703 4.4 % 1,228 2.0 % Other operating expense 52,660 48,789 52,453 3,871 7.9 % 207 0.4 % Corporate expense allocations 10,120 12,080 11,599 (1,960 ) (16.2 )% (1,479 ) (12.8 )% Net income (loss) 1,239 (7,317 ) 1,698 8,556 116.9 % (459 ) (27.0 )% Average assets 10,338,191 10,273,890 10,087,488 64,301 0.6 % 250,703 2.5 % Average loans 1,669,830 1,672,346 1,786,242 (2,516 ) (0.2 )% (116,412 ) (6.5 )% Average deposits 8,876,469 8,746,622 8,469,043 129,847 1.5 % 407,426 4.8 % Wealth Management Net interest revenue $ 37,747 $ 55,766 $ 52,293 $ (18,019 ) (32.3 )% $ (14,546 ) (27.8 )% Fees and commissions revenue 86,771 25,023 78,841 61,748 246.8 % 7,930 10.1 % Combined net interest and fee revenue 124,518 80,789 131,134 43,729 54.1 % (6,616 ) (5.0 )% Other operating expense 76,393 74,619 79,518 1,774 2.4 % (3,125 ) (3.9 )% Corporate expense allocations 12,503 12,072 10,352 431 3.6 % 2,151 20.8 % Net income (loss) 27,287 (4,521 ) 30,988 31,808 703.6 % (3,701 ) (11.9 )% Average assets 16,902,721 21,323,795 19,201,041 (4,421,074 ) (20.7 )% (2,298,320 ) (12.0 )% Average loans 2,157,771 2,118,780 1,968,513 38,991 1.8 % 189,258 9.6 % Average deposits 8,482,785 9,619,323 9,695,319 (1,136,538 ) (11.8 )% (1,212,534 ) (12.5 )% Fiduciary assets 55,972,584 61,095,320 58,654,788 (5,122,736 ) (8.4 )% (2,682,204 ) (4.6 )% Assets under management or administration 95,981,289 101,081,355 96,632,748 (5,100,066 ) (5.0 )% (651,459 ) (0.7 )% Contact: Sue Hermann Director, Corporate Communications 303-312-3488