BOK Financial Corporation Reports Quarterly Earnings of $133 million or $1.96 Per Share in the Second Quarter

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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK FINANCIAL CORPORATION

	Three 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 -- UNAUDITEDBOK 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 -- UNAUDITEDBOK 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

Source: BOK Financial Corporation