Exhibit 99.1(a)
NASD: BOKF
BOK Financial Corporation Reports Quarterly Earnings of $162 million or $2.43 Per Share in the First Quarter
| 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.
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•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.
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| 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.
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| 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.
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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.
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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.
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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.
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| 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.
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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.
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Exhibit 99.1(b)
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 | |||||||
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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 | |||||||||||||||||||
11
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 | |||||||
12
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 | |||||||||||||||||||
13
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 | % | |||||||||||||||||||
14
| Three Months Ended | |||||||||||||||||||||||||||||
| Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | |||||||||||||||||||||||||
| 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.
15
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 | ||||||||||||||||||||||
16
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.
17
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 | ||||||||||||||||||||||||
18
| Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | |||||||||||||||||||||||||
| 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 | |||||||||||||||||||
19
NET INTEREST MARGIN TREND – UNAUDITED
BOK FINANCIAL CORPORATION
| Three 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.
20
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 | $ | — | $ | — | |||||||||||||||||||
21
| Three Months Ended | |||||||||||||||||||||||||||||
| Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | |||||||||||||||||||||||||
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.
22
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 | % | |||||||||||||||||||||||||||||||||||
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