BOK Financial Corporation Reports Annual Earnings of $435 million or $6.19 Per Share and Record Quarterly Earnings of $154 million or $2.21 Per Share in the Fourth Quarter

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TULSA, Okla., Jan. 20, 2021 (GLOBE NEWSWIRE) -- BOK Financial (NASDAQ: BOKF) today reported net earnings applicable to common shareholders for the fourth quarter of 2020 of $154.2 million, or $2.21 per diluted common share.

CEO Commentary

Steven G. Bradshaw, president and chief executive officer stated, “Despite the macroeconomic challenges in the first half of the year, BOK Financial ended 2020 on a high note. The fourth quarter was the second-consecutive, record earnings quarter for the company, and ultimately culminated in record annual revenue in our wealth management and mortgage businesses, proving the value of our diversified revenue earnings model during times of economic uncertainty.”

Bradshaw continued, “In addition to our earnings success, our differentiated credit culture was also a standout in the fourth quarter and throughout 2020. We once again proved the depth of our energy expertise as we navigated another steep commodities downturn with net charge-off performance near the top of our peer group of energy banks. Our success in 2020 proves why diversified revenue and strong credit culture have been the company’s defining hallmarks for decades. These guiding principles give us confidence for continued success in 2021.”

2020 Financial Highlights

  • Net income for the year ended December 31, 2020 totaled $435.0 million or $6.19 per diluted share compared to $500.8 million or $7.03 per diluted share for the year ended December 31, 2019. A pre-tax provision for expected credit losses of $222.6 million was included in 2020 while a pre-tax provision for incurred losses of $44.0 million was included in 2019. The Company adopted the current expected credit loss ("CECL") model on January 1, 2020.

  • Net interest revenue totaled $1.1 billion, consistent with the prior year. Net interest margin was 2.83 percent for 2020 compared to 3.11 percent for 2019. The Federal Reserve reduced the federal funds rate to near zero early in the year putting pressure on the margin in 2020.

  • Fees and commissions revenue increased $108.1 million to $810.3 million in 2020, led by strong growth in mortgage banking revenue and brokerage and trading revenue. Declining mortgage interest rates have propelled mortgage production and related trading activities.

  • Operating expense totaled $1.2 billion in 2020, an increase of $33.6 million. Incentive compensation expense increased $41.7 million, largely related to the increase in trading and mortgage activity in 2020. This increase was partially offset by decreased business promotion expenses of $21.2 million related to lower advertising and travel and entertainment costs as a result of the ongoing pandemic.

  • The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $24.9 million during 2020 compared to an economic cost of $17.9 million during 2019.

  • Period-end loans were up $1.3 billion to $23.0 billion while average loans increased $1.3 billion to $23.4 billion. We are actively participating in programs initiated by the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), including the Small Business Administration's Paycheck Protection Program ("PPP"). PPP loans accounted for $1.7 billion at December 31, 2020 and averaged $1.4 billion for 2020.

  • Period-end deposits increased $8.5 billion to $36.1 billion and average deposits increased $7.1 billion to $32.8 billion. Deposit growth was largely due to customers retaining higher balances in the current economic environment combined with increases due to various COVID-19 related government program stimulus payments.

  • Commercial Banking added $306.0 million to net income in 2020 compared to $374.8 million in 2019. Combined net interest and fee revenue decreased $69.3 million compared to the prior year. A decrease in net interest revenue, largely due to compressed loan spreads, was partially offset by growth in customer energy hedging revenue. Transaction card revenue also increased $3.7 million. An increase in financial institution customer contracts during 2020 provides opportunities for future growth. Operating expense increased $6.4 million. Increased non-personnel expense was partially offset by decreased incentive compensation costs. Charge-offs increased $30.5 million, primarily due to energy loans. Average loans for 2020 increased $621 million to $18.7 billion. Average deposits increased $4.0 billion to $14.3 billion. Government stimulus payments were received during the year from the PPP and other government programs and customers are retaining higher cash balances due to the uncertain economic environment.

  • Consumer Banking added a record $95.4 million to net income during the year compared to $56.6 million in the prior year. Combined net interest and fee revenue increased $9.1 million over the prior year. Net interest revenue was significantly affected by lower yields on deposits sold to our Funds Management unit and compressed loan spreads. However, mortgage production revenue increased $83.1 million due to lower mortgage interest rates. Service charges declined $15.4 million as we waived certain fees in the midst of the pandemic. The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $24.9 million during 2020 compared to an economic cost of $17.9 million in 2019.

  • With revenues surpassing $500 million, Wealth Management produced a record year, contributing $115.6 million to net income in 2020 compared to $95.3 million in 2019. Combined net interest and fee revenue increased $75.1 million over the prior year. Low mortgage interest rates significantly increased mortgage trading activity, which led to an increase in both trading interest income and brokerage and trading revenue. This increase was partially offset by lower yields on deposits sold to our Funds Management unit. We increased our trading pipeline to provide greater liquidity to the housing market during a time of record loan production volumes. Fiduciary and asset management revenue decreased $7.9 million compared to 2019. The low rate environment has put pressure on our mutual fund revenue streams, partially offset by increased trust and managed account fees from higher client asset balances. Operating expense increased $48.3 million, primarily due to incentive compensation driven by growth in our trading business. Average deposits grew $2.2 billion to $8.7 billion in 2020, led by growth in interest-bearing transaction deposits.

Fourth Quarter 2020 Financial Highlights

  • Net income was $154.2 million or $2.21 per diluted share for the fourth quarter of 2020 and $154.0 million or $2.19 per diluted share for the third quarter of 2020. A negative pre-tax provision for expected credit losses of $6.5 million was recorded in the fourth quarter of 2020 compared to no provision in the prior quarter.

  • Net interest revenue totaled $297.2 million, an increase of $25.5 million, largely due to a $5.1 billion increase in average trading securities. Net interest margin was 2.72 percent compared to 2.81 percent in the third quarter of 2020. The increase in the trading securities portfolio combined with the repricing of our available for sale securities portfolio at current interest rates decreased the net interest margin in the fourth quarter. The company has been proactive in reducing deposit costs and implementing LIBOR floors in loan agreements to support the margin.

  • Fees and commissions revenue totaled $181.1 million, a decrease of $41.8 million. Brokerage and trading revenue decreased $30.0 million, largely due to a shift from trading revenue to interest income on trading securities. While still strong, mortgage banking revenue decreased $12.7 million compared to the prior quarter, primarily the result of seasonal declines in production coupled with market driven margin compression.

  • Operating expense was $300.7 million, consistent with the prior quarter. Personnel expense decreased $3.7 million, primarily due to lower incentive compensation and a seasonal decrease in employee benefits costs. Non-personnel expense increased $3.1 million compared to the third quarter of 2020. We made a $6.0 million charitable contribution to the BOKF Foundation in the fourth quarter. This increase, along with an increase in business promotion expense, was partially offset by lower FDIC insurance expense and net losses and expenses on repossessed assets.

  • Period-end loans decreased $796 million to $23.0 billion at December 31, 2020, primarily due to paydowns of commercial loans and PPP loans. Average loans were $23.4 billion, a $663 million decrease compared to the third quarter.

  • The allowance for loan losses totaled $389 million or 1.69 percent of outstanding loans at December 31, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $426 million or 1.85 percent of outstanding loans at December 31, 2020. Excluding PPP loans, the allowance for loan losses was 1.82 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.00 percent. Excluding PPP loans, the allowance for loan losses was $420 million or 1.93 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 2.06 percent of outstanding loans at September 30, 2020.

  • Average deposits increased $883 million to $35.5 billion and period-end deposits increased $1.2 billion to $36.1 billion, largely due to growth in wealth management balances. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment.

  • The company's common equity Tier 1 capital ratio was 11.94 percent at December 31, 2020. In addition, the company's Tier 1 capital ratio was 11.94 percent, total capital ratio was 13.81 percent, and leverage ratio was 8.28 percent at December 31, 2020. At September 30, 2020, the company's common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent.

  • The company repurchased 665,100 shares of common stock at an average price of $63.82 a share in the fourth quarter.

  • Commercial Banking contributed $74.9 million to net income in the fourth quarter of 2020, consistent with the third quarter. Combined net interest revenue decreased $8.9 million, primarily due to compressed loan spreads. This was partially offset by a decrease in net loans charged off of $6.4 million. Average Commercial Banking loans decreased $577 million due to purposeful deleveraging by our customers.

  • Consumer Banking contributed $14.3 million to net income in the fourth quarter of 2020, a decrease of $12.0 million compared to the third quarter. Combined net interest and fee revenue decreased $15.1 million. Net interest revenue decreased $2.5 million, mainly due to lower yields on deposits sold to our Funds Management unit and compressed loan spreads. Fees and commissions revenue decreased $12.6 million due to normal seasonality in mortgage production combined with reduced gain on sale margins. While mortgage production revenue decreased, it remained a strong quarter for our mortgage banking business.

  • Wealth Management contributed $28.4 million to net income in the fourth quarter of 2020, a decrease of $2.8 million compared to the third quarter. Combined net interest and fee revenue decreased $3.2 million. Deposit growth remains strong with total average deposits growing $500 million compared to the previous quarter. Assets under management or administration totaled $91.6 billion compared to $82.4 billion in the prior quarter.

Net Interest Revenue

Net interest revenue was $297.2 million for the fourth quarter of 2020, a $25.5 million increase compared to the third quarter of 2020, primarily due to the increase in average trading securities.

Average earning assets increased $4.8 billion compared to the third quarter of 2020. Average trading securities balances increased $5.1 billion due to continued growth in our trading of U.S. government issued mortgage-backed securities and timing of settlements. Average loan balances decreased $663 million, primarily from commercial loan payments. Available for sale securities increased $369 million and restricted equity securities increased $136 million. Average interest-bearing deposits grew by $676 million, primarily due to higher interest-bearing transaction deposits, partially offset by lower time deposits. Other borrowings increased $1.8 billion while funds purchased and repurchase agreements decreased $629 million.Net interest revenue was $297.2 million for the fourth quarter of 2020, a $25.5 million increase compared to the third quarter of 2020, primarily due to the increase in average trading securities.

Net interest margin was 2.72 percent compared to 2.81 percent in the third quarter of 2020. Growth in our trading securities portfolio contributed approximately $25.1 million to net interest revenue, but diluted the net interest margin by approximately 9 basis points. This, combined with the repricing of our available for sale securities portfolio to current interest rates has resulted in a decrease to net interest margin in the fourth quarter. However, the company has been proactive in reducing deposit costs and implementing LIBOR floors in loan agreements to support the margin.

The yield on average earning assets was 2.92 percent, a 12 basis point decrease from the prior quarter. The yield on the available for sale securities portfolio decreased 13 basis points to 1.98 percent. The loan portfolio yield increased 8 basis points to 3.68 percent due to the timing of loan fees and recovery of non-accrual interest. In addition, net purchase accounting discount accretion added $5.3 million or 9 basis points to the loan portfolio yield in the fourth quarter and $13.3 million or 22 basis points to the third quarter. Approximately $48 million of purchase accounting discount remains to be accreted.

Funding costs were 0.28 percent, down 3 basis points. The cost of interest-bearing deposits decreased 7 basis points to 0.19 percent. The cost of other borrowed funds was up 7 basis points to 0.38 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 8 basis points for the fourth quarter of 2020, consistent with the prior quarter.

Fees and Commissions Revenue

Fees and commissions revenue totaled $181.1 million for the fourth quarter of 2020, a decrease of $41.8 million compared to the third quarter of 2020. Brokerage and trading revenue decreased $30.0 million to $39.5 million, largely due to the shift of brokerage and trading fee revenue to net interest revenue. In addition, customer hedging revenue decreased $4.0 million, primarily due to decreased energy customer hedging activities. Investment banking revenue grew by $1.9 million, mainly due to timing of loan syndication activity.

Mortgage banking revenue decreased $12.7 million compared to the prior quarter. While mortgage interest rates remain at record low levels, mortgage production experienced a normal seasonal decline and margins also started to compress. The gain on sale margin decreased 41 basis points to 3.26 percent. Transaction card revenue decreased $1.6 million, primarily due to lower transaction volumes.Fees and commissions revenue totaled $181.1 million for the fourth quarter of 2020, a decrease of $41.8 million compared to the third quarter of 2020. Brokerage and trading revenue decreased $30.0 million to $39.5 million, largely due to the shift of brokerage and trading fee revenue to net interest revenue. In addition, customer hedging revenue decreased $4.0 million, primarily due to decreased energy customer hedging activities. Investment banking revenue grew by $1.9 million, mainly due to timing of loan syndication activity.

Fiduciary and asset management revenue increased $1.9 million, primarily driven by the increase in the fair value of assets under management in the fourth quarter.

Operating Expense

Total operating expense was $300.7 million for the fourth quarter of 2020, consistent with the third quarter of 2020.

Personnel expense decreased $3.7 million. Share based incentive compensation decreased $7.4 million from elevated levels in the prior quarter due to vesting assumption changes. This decrease was partially offset by growth in cash based incentive compensation and deferred compensation, which is largely offset by a decrease in the value of related investments included in Other gains (losses).

Non-personnel expense increased $3.1 million over the third quarter of 2020. We made a charitable contribution of $6.0 million to the BOKF Foundation in the fourth quarter as we continue to focus on the communities we serve and the extreme needs created by the pandemic. Business promotion expense increased $1.1 million, largely due to increased advertising expense, while other expense increased $3.3 million.

Net losses and expenses on repossessed assets decreased $5.1 million, primarily due to write-downs on a set of oil and gas properties and a retail commercial real estate property in the third quarter. Insurance expense also decreased $1.8 million while mortgage banking costs dropped by $1.0 million.

Loans, Deposits and Capital

Loans

Outstanding loans were $23.0 billion at December 31, 2020, a $796 million decrease compared to September 30, 2020, primarily due to payoffs of commercial loans and PPP loans.

Outstanding core commercial loan balances decreased $488 million or 4 percent compared to September 30, 2020, primarily due to continued pay downs as borrowers continue to reduce leverage during the time of economic uncertainty. Although the primary source of repayment of our commercial loan portfolio is the on-going cash flow from operations of the customer's business, loans are generally governed by a borrowing base and secured by the customer’s assets.

Energy loan balances decreased $248 million to $3.5 billion or 15 percent of total loans. Although the commodity price environment has improved considerably over the past few months, sourcing new loans remains a challenge in this environment and existing borrowers continue to pay down debt to reduce leverage. 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 $2.4 billion at December 31, 2020, a $136 million increase over September 30, 2020, and a $524 million decrease compared to December 31, 2019, largely as a result of the semi-annual borrowing base redetermination process in the second and fourth quarters.

Healthcare sector loan balances decreased $20 million to $3.3 billion or 14 percent of total loans. Growth in loans to senior housing and care facilities was offset by a decrease in loans to hospital systems. Our healthcare sector loans primarily consist of $2.6 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 that serves to help diversify risks specific to a single facility. The most recent stimulus bill passed last month, like the CARES Act, has multiple revenue enhancement measures for both hospitals and skilled nursing facilities as they manage through the risks of the virus.

General business loans decreased $183 million to $2.8 billion or 12 percent of total loans. General business loans include $1.6 billion of wholesale/retail loans and $701 million of loans from other commercial industries. Broad pay downs across our core commercial and industrial loan book contracted the portfolio.

Services loan balances decreased $37 million to $3.5 billion or 15 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, educational services, foundations and not-for-profit organizations and specialty trade contractors.

Although not a significant portion of our commercial portfolio, our services and general business loans also include areas we consider to be more exposed to the economic slowdown as a result of the social distancing measures in place to combat the COVID-19 pandemic such as entertainment and recreation, retail, hotels, churches, airline travel, and higher education that are dependent on large social gatherings to remain profitable. This represents less than 7 percent of our total portfolio. Some of these borrowers have participated in the PPP, which has provided some measure of relief. We will continue to monitor these areas closely in the coming months.

Commercial real estate loan balances were largely unchanged compared to September 30, 2020 and represent 20 percent of total loans at December 31, 2020. Loans secured by other commercial real estate properties increased $52 million to $559 million. Loans secured by industrial facilities increased $18 million to $811 million. Multifamily residential loans, our largest exposure in commercial real estate, decreased $59 million to $1.3 billion at December 31, 2020. Loans secured by office buildings decreased $14 million to $1.1 billion. Loans secured by retail facilities were $796 million at December 31, 2020, a $10 million increase over September 30. Loans secured by retail facilities and office buildings may be impacted by measures being taken to hinder the spread of the virus as well as changes in consumer behavior.

PPP loan balances decreased $415 million to $1.7 billion or 7 percent of total loans. The complexity of the forgiveness process and borrowers' reluctance to apply for forgiveness in hopes of further legislative action that would relax the requirements has made the forgiveness process slower than initially anticipated. The recent Economic Aid Act will provide substantial forgiveness process relief, particularly for those clients with existing loans of less than $150 thousand, which represents more the 70 percent of our total PPP loan volume. The Company expects to participate in the newest round of PPP, with largely the same strategy of focusing on our existing client base in order to timely meet our existing clients' needs.

Loans to individuals increased $103 million and represent 15 percent of total loans at December 31, 2020. Personal loans were up $64 million and residential mortgage loans guaranteed by U.S. government agencies increased $24 million. The Company may repurchase loans previously sold into GNMA mortgage pools when certain defined delinquency criteria are met. Because of this repurchase right, the Company is deemed to have regained effective control over these loans and must include them on the Consolidated Balance Sheet.

Deposits

Period-end deposits totaled $36.1 billion at December 31, 2020, a $1.2 billion increase over September 30, 2020. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment. Interest-bearing transaction account balances grew by $1.0 billion. Average deposits were $35.5 billion at December 31, 2020, an $883 million increase compared to September 30, 2020. Interest-bearing transaction deposits increased $1.0 billion.

Capital

The company's common equity Tier 1 capital ratio was 11.94 percent at December 31, 2020. In addition, the company's Tier 1 capital ratio was 11.94 percent, total capital ratio was 13.81 percent, and leverage ratio was 8.28 percent at December 31, 2020. We have 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, which added 27 basis points to the company's common equity tier 1 capital ratio at December 31. At September 30, 2020, the company's common equity Tier 1 capital ratio was 12.07 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 9.02 percent at December 31, 2020 and 9.02 percent at September 30, 2020. 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 665,100 shares of common stock at an average price of $63.82 a share in the fourth quarter. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

The Company adopted FASB Accounting Standard Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Assets Measured at Amortized Cost ("CECL") on January 1, 2020. CECL requires recognition of expected credit losses on assets carried at amortized cost over their expected lives. Our CECL models measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rate and West Texas Intermediate ("WTI") oil prices on a probability weighted basis.

We recorded a $6.5 million negative provision for credit losses in the fourth quarter of 2020. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to an improved economic outlook related to the anticipated impact of the on-going COVID-19 pandemic offset by changes in the probability weighting of the economic scenarios and other assumptions, resulted in a $3.0 million increase in the provision for credit losses from lending activities. Changes in the loan portfolio characteristics, including specific impairment and losses, risk grading and loan balances resulted in an $8.6 million decrease in the provision for credit losses from lending activities.

Our base case reasonable and supportable forecast assumes that the COVID-19 pandemic maintains its current trajectory with localized and state-level hotspots. This scenario assumes approval of several more vaccines through the first half of 2021, with a large share of the U.S. population vaccinated by the end of the third quarter of 2021. Regional shutdown and consumer risk aversion weigh negatively on the economic and employment recovery in the first quarter of 2021. However, widespread vaccine distribution helps boost consumer confidence and GDP recovers to pre-COVID levels by the third quarter of 2021. We expect a 4.1 percent increase in GDP over the next twelve months. Our forecasted civilian unemployment rate is 6.8 percent for the first quarter of 2021, improving to 6.3 percent by the fourth quarter of 2021. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of December 2020, averaging $46.80 per barrel over the next twelve months. The probability weighting of our base case reasonable and supportable forecast increased to 60 percent for the fourth quarter compared to 50 percent in the third quarter.

The probability weighting of our downside case reasonable and supportable forecast increased to 30 percent from 25 percent, while the probability weighting of our upside case reasonable and supportable forecast decreased to 10 percent from 25 percent in the third quarter. There continues to be a high level of uncertainty in the current economic outlook. Our downside case assumes additional waves and hotspot emerge throughout the first half of 2021 and more constrained distribution of vaccines not reaching widespread distribution until the first quarter of 2022. This results in no GDP growth over the next twelve months and unemployment rates remaining elevated throughout 2021.

The allowance for loan losses totaled $389 million or 1.69 percent of outstanding loans and 171 percent of nonaccruing loans at December 31, 2020, excluding residential mortgage loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $426 million or 1.85 percent of outstanding loans and 188 percent of nonaccruing loans at December 31, 2020. The combined allowance for credit losses attributed to energy was 3.61 percent of outstanding energy loans at December 31 compared to 4.30 at September 30. Excluding PPP loans, the allowance for loan losses was 1.82 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.00 percent.

At September 30, 2020, the allowance for loan losses was $420 million or 1.76 percent of outstanding loans and 195 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 1.88 percent of outstanding loans and 208 percent of nonaccruing loans.

Nonperforming assets totaled $477 million or 2.07 percent of outstanding loans and repossessed assets at December 31, 2020, compared to $417 million or 1.75 percent at September 30, 2020. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $317 million or 1.51 percent of outstanding loans and repossessed assets at December 31, 2020, up from $268 million or 1.25 percent at September 30, 2020.

Nonaccruing loans were $235 million or 1.10 percent of outstanding loans, excluding PPP loans, at December 31, 2020. Nonaccruing commercial loans totaled $167 million or 1.28 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $27 million or 0.58 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $40 million or 1.14 percent of outstanding loans to individuals.

Nonaccruing loans increased $14 million over September 30, 2020, primarily due to an increase in nonaccruing commercial real estate loans. New nonaccruing loans identified in the fourth quarter totaled $99 million, offset by $13 million in payments received, $18 million in charge-offs and $43 million of foreclosures.

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 $478 million at December 31, down from $623 million at September 30. Almost all potential problem loan classes were down compared to the prior quarter, led by potential problem energy and general business loans.

Net charge-offs were $16.7 million or 0.31 percent of average loans on an annualized basis for the fourth quarter of 2020, excluding PPP loans. Net charge-offs were 0.32 percent of average loans over the last four quarters. Net charge-offs were $22.4 million or 0.41 percent of average loans on an annualized basis for the third quarter of 2020, excluding PPP loans. Gross charge-offs were $18.3 million for the fourth quarter compared to $26.7 million for the previous quarter. Recoveries totaled $1.6 million for the fourth quarter of 2020 and $4.2 million for the third quarter of 2020.

Loans in deferral status have dropped to just below 1 percent of total loans from a peak of more than 7 percent. More than 90 percent of the loans that were deferred have now moved back to payment status.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $13.1 billion at December 31, 2020, a $233 million increase compared to September 30, 2020. At December 31, 2020, the available for sale securities portfolio consisted primarily of $9.3 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.5 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2020, the available for sale securities portfolio had a net unrealized gain of $441 million compared to $481 million at September 30, 2020.

We hold an inventory of trading securities in support of sales to a variety of customers. At December 31, 2020, the trading securities portfolio totaled $4.7 billion compared to $2.2 billion in the prior quarter. We have increased our bond trading pipeline to provide greater liquidity to the housing market during a time of high mortgage loan production volumes.

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 $20 million to $115 million at December 31, 2020.

The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $6.5 million during the fourth quarter of 2020, including a $6.3 million increase in the fair value of mortgage servicing rights, $317 thousand decrease in the fair value of securities and derivative contracts held as an economic hedge, and $550 thousand of related net interest revenue.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on January 20, 2021 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 1-412-317-6671 and referencing conference ID # 13714612.

About BOK Financial Corporation

BOK Financial Corporation is a $47 billion regional financial services company headquartered in Tulsa, Oklahoma with $92 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 operates TransFund, Cavanal Hill Investment Management 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, Milwaukee 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 December 31, 2020 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial Corporation, the financial services industry, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” “will,” “intends,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that acquisitions and growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These various forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in government, consumer or business responses to, and ability to treat or prevent further outbreak of the COVID-19 pandemic, changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial Corporation and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

BALANCE SHEETS -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

Dec. 31, 2020

Sept. 30, 2020

ASSETS

Cash and due from banks

$

798,757

$

658,612

Interest-bearing cash and cash equivalents

381,816

347,759

Trading securities

4,707,975

2,245,480

Investment securities, net of allowance

244,843

256,001

Available for sale securities

13,050,665

12,817,269

Fair value option securities

114,982

134,756

Restricted equity securities

171,391

111,656

Residential mortgage loans held for sale

252,316

295,290

Loans:

Commercial

13,077,535

13,565,706

Commercial real estate

4,698,538

4,693,700

Paycheck protection program

1,682,310

2,097,325

Loans to individuals

3,549,137

3,446,569

Total loans

23,007,520

23,803,300

Allowance for loan losses

(388,640

)

(419,777

)

Loans, net of allowance

22,618,880

23,383,523

Premises and equipment, net

551,308

542,625

Receivables

245,880

245,514

Goodwill

1,048,091

1,048,091

Intangible assets, net

113,436

118,524

Mortgage servicing rights

101,172

97,644

Real estate and other repossessed assets, net

90,526

52,847

Derivative contracts, net

810,688

593,568

Cash surrender value of bank-owned life insurance

398,758

396,497

Receivable on unsettled securities sales

62,386

1,934,495

Other assets

907,218

787,073

TOTAL ASSETS

$

46,671,088

$

46,067,224

LIABILITIES AND EQUITY

Deposits:

Demand

$

12,266,338

$

12,047,338

Interest-bearing transaction

21,158,422

20,196,740

Savings

751,992

720,949

Time

1,967,128

2,007,973

Total deposits

36,143,880

34,973,000

Funds purchased and repurchase agreements

1,662,386

973,652

Other borrowings

1,882,970

2,771,429

Subordinated debentures

276,005

275,986

Accrued interest, taxes and expense

323,667

335,914

Due on unsettled securities purchases

257,627

641,817

Derivative contracts, net

405,779

446,328

Other liabilities

427,213

422,989

TOTAL LIABILITIES

41,379,527

40,841,115

Shareholders' equity:

Capital, surplus and retained earnings

4,930,398

4,853,617

Accumulated other comprehensive gain

335,868

365,170

TOTAL SHAREHOLDERS' EQUITY

5,266,266

5,218,787

Non-controlling interests

25,295

7,322

TOTAL EQUITY

5,291,561

5,226,109

TOTAL LIABILITIES AND EQUITY

$

46,671,088

$

46,067,224


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

Three Months Ended

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

ASSETS

Interest-bearing cash and cash equivalents

$

643,926

$

553,070

$

619,737

$

721,659

$

573,203

Trading securities

6,888,189

1,834,160

1,871,647

1,690,104

1,672,426

Investment securities, net of allowance

251,863

258,965

268,947

282,265

298,567

Available for sale securities

12,949,702

12,580,850

12,480,065

11,664,521

11,333,524

Fair value option securities

122,329

387,784

786,757

1,793,480

1,521,528

Restricted equity securities

280,428

144,415

273,922

429,133

479,687

Residential mortgage loans held for sale

229,631

213,125

288,588

129,708

203,535

Loans:

Commercial

13,113,449

13,772,217

14,502,652

14,452,851

14,344,534

Commercial real estate

4,788,393

4,754,269

4,543,511

4,346,886

4,532,649

Paycheck protection program

1,928,665

2,092,933

1,699,369

Loans to individuals

3,617,011

3,491,044

3,353,960

3,143,286

3,358,817

Total loans

23,447,518

24,110,463

24,099,492

21,943,023

22,236,000

Allowance for loan losses

(414,225

)

(441,831

)

(367,583

)

(250,338

)

(205,417

)

Loans, net of allowance

23,033,293

23,668,632

23,731,909

21,692,685

22,030,583

Total earning assets

44,399,361

39,641,001

40,321,572

38,403,555

38,113,053

Cash and due from banks

742,432

723,826

678,878

669,369

690,806

Derivative contracts, net

553,779

581,839

642,969

376,621

311,542

Cash surrender value of bank-owned life insurance

397,354

394,680

391,951

390,009

388,012

Receivable on unsettled securities sales

1,094,198

4,563,301

4,626,307

3,046,111

1,973,604

Other assets

3,200,040

3,027,108

3,095,354

2,834,953

2,736,337

TOTAL ASSETS

$

50,387,164

$

48,931,755

$

49,757,031

$

45,720,618

$

44,213,354

LIABILITIES AND EQUITY

Deposits:

Demand

$

12,136,071

$

11,929,694

$

11,489,322

$

9,232,859

$

9,612,533

Interest-bearing transaction

20,718,390

19,752,106

18,040,170

16,159,654

14,685,385

Savings

737,360

707,121

656,669

563,821

554,605

Time

1,930,808

2,251,012

2,464,793

2,239,234

2,247,717

Total deposits

35,522,629

34,639,933

32,650,954

28,195,568

27,100,240

Funds purchased and repurchase agreements

2,153,254

2,782,150

5,816,484

3,815,941

4,120,610

Other borrowings

5,193,656

3,382,688

3,527,303

6,542,325

6,247,194

Subordinated debentures

275,998

275,980

275,949

275,932

275,916

Derivative contracts, net

399,476

458,390

836,667

379,342

276,078

Due on unsettled securities purchases

957,642

1,516,880

887,973

960,780

784,174

Other liabilities

656,147

712,674

690,087

642,764

561,654

TOTAL LIABILITIES

45,158,802

43,768,695

44,685,417

40,812,652

39,365,866

Total equity

5,228,362

5,163,060

5,071,614

4,907,966

4,847,488

TOTAL LIABILITIES AND EQUITY

$

50,387,164

$

48,931,755

$

49,757,031

$

45,720,618

$

44,213,354


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

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

2020

2019

Interest revenue

$

319,020

$

369,857

$

1,269,000

$

1,531,958

Interest expense

21,790

99,608

160,556

419,079

Net interest revenue

297,230

270,249

1,108,444

1,112,879

Provision for credit losses

(6,500

)

19,000

222,592

44,000

Net interest revenue after provision for credit losses

303,730

251,249

885,852

1,068,879

Other operating revenue:

Brokerage and trading revenue

39,506

43,843

221,833

159,826

Transaction card revenue

21,896

22,548

90,182

87,216

Fiduciary and asset management revenue

41,799

45,021

167,445

177,025

Deposit service charges and fees

24,343

27,331

96,805

112,485

Mortgage banking revenue

39,298

25,396

182,360

107,541

Other revenue

14,209

15,283

51,695

58,108

Total fees and commissions

181,051

179,422

810,320

702,201

Other gains (losses), net

5,383

(1,649

)

7,675

9,351

Gain (loss) on derivatives, net

(339

)

(4,644

)

42,320

14,951

Gain (loss) on fair value option securities, net

68

(8,328

)

53,248

15,787

Change in fair value of mortgage servicing rights

6,276

9,297

(79,524

)

(53,517

)

Gain on available for sale securities, net

4,339

4,487

9,910

5,597

Total other operating revenue

196,778

178,585

843,949

694,370

Other operating expense:

Personnel

176,198

168,422

688,474

660,565

Business promotion

3,728

8,787

14,511

35,662

Charitable contributions to BOKF Foundation

6,000

2,000

9,000

3,000

Professional fees and services

14,254

53,437

54,861

Net occupancy and equipment

27,875

26,316

112,722

110,275

Insurance

4,006

5,393

19,990

20,906

Data processing and communications

35,061

31,884

135,497

124,983

Printing, postage and supplies

3,805

3,700

15,061

16,517

Net losses and operating expenses of repossessed assets

1,168

2,403

10,709

6,707

Amortization of intangible assets

5,088

5,225

20,443

20,618

Mortgage banking costs

14,765

14,259

56,711

50,685

Other expense

8,713

6,998

29,382

27,602

Total other operating expense

300,661

288,795

1,165,937

1,132,381

Net income before taxes

199,847

141,039

563,864

630,868

Federal and state income taxes

45,138

30,257

128,793

130,183

Net income

154,709

110,782

435,071

500,685

Net income (loss) attributable to non-controlling interests

485

430

41

(73

)

Net income attributable to BOK Financial Corporation shareholders

$

154,224

$

110,352

$

435,030

$

500,758

Average shares outstanding:

Basic

69,489,597

70,295,899

69,840,977

70,787,700

Diluted

69,493,050

70,309,644

69,844,172

70,802,612

Net income per share:

Basic

$

2.21

$

1.56

$

6.19

$

7.03

Diluted

$

2.21

$

1.56

$

6.19

$

7.03


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

Three Months Ended

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Capital:

Period-end shareholders' equity

$

5,266,266

$

5,218,787

$

5,096,995

$

5,026,248

$

4,855,795

Risk weighted assets

$

32,501,807

$

31,529,826

$

32,180,602

$

32,973,242

$

31,673,425

Risk-based capital ratios:

Common equity tier 1

11.94

%

12.07

%

11.44

%

10.98

%

11.39

%

Tier 1

11.94

%

12.07

%

11.44

%

10.98

%

11.39

%

Total capital

13.81

%

14.05

%

13.43

%

12.65

%

12.94

%

Leverage ratio

8.28

%

8.39

%

7.74

%

8.15

%

8.40

%

Tangible common equity ratio1

9.02

%

9.02

%

8.79

%

8.39

%

8.98

%

Common stock:

Book value per share

$

75.62

$

74.23

$

72.50

$

71.49

$

68.80

Tangible book value per share

58.94

57.64

55.83

54.85

52.17

Market value per share:

High

$

73.07

$

62.86

$

67.62

$

87.40

$

88.28

Low

$

50.09

$

48.41

$

37.80

$

34.57

$

71.85

Cash dividends paid

$

36,219

$

35,799

$

35,769

$

35,949

$

36,011

Dividend payout ratio

23.48

%

23.24

%

55.29

%

57.91

%

32.63

%

Shares outstanding, net

69,637,600

70,305,833

70,306,690

70,308,532

70,579,598

Stock buy-back program:

Shares repurchased

665,100

442,000

280,000

Amount

$

42,450

$

$

$

33,380

$

22,844

Average price per share

$

63.82

$

$

$

75.52

$

81.59

Performance ratios (quarter annualized):

Return on average assets

1.22

%

1.25

%

0.52

%

0.55

%

0.99

%

Return on average equity

11.75

%

11.89

%

5.14

%

5.10

%

9.05

%

Net interest margin

2.72

%

2.81

%

2.83

%

2.80

%

2.88

%

Efficiency ratio

62.36

%

60.41

%

59.57

%

58.62

%

63.65

%

Reconciliation of non-GAAP measures:

1

Tangible common equity ratio:

Total shareholders' equity

$

5,266,266

$

5,218,787

$

5,096,995

$

5,026,248

$

4,855,795

Less: Goodwill and intangible assets, net

1,161,527

1,166,615

1,171,686

1,169,898

1,173,362

Tangible common equity

$

4,104,739

$

4,052,172

$

3,925,309

$

3,856,350

$

3,682,433

Total assets

$

46,671,088

$

46,067,224

$

45,819,874

$

47,119,162

$

42,172,021

Less: Goodwill and intangible assets, net

1,161,527

1,166,615

1,171,686

1,169,898

1,173,362

Tangible assets

$

45,509,561

$

44,900,609

$

44,648,188

$

45,949,264

$

40,998,659

Tangible common equity ratio

9.02

%

9.02

%

8.79

%

8.39

%

8.98

%


Three Months Ended

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Pre-provision net revenue:

Net income before taxes

$

199,847

$

204,644

$

80,089

$

79,284

$

141,039

Provision for expected credit losses

(6,500

)

135,321

93,771

19,000

Net income (loss) attributable to non-controlling interests

485

58

(407

)

(95

)

430

Pre-provision net revenue

$

192,862

$

204,586

$

215,817

$

173,150

$

159,609

Other data:

Tax equivalent interest

$

2,414

$

2,457

$

2,630

$

2,715

$

2,726

Net unrealized gain on available for sale securities

$

440,814

$

480,563

$

487,334

$

435,989

$

138,149

Mortgage banking:

Mortgage production revenue

$

26,662

$

38,431

$

39,185

$

21,570

$

9,169

Mortgage loans funded for sale

$

998,435

$

1,032,472

$

1,184,249

$

548,956

$

855,643

Add: current period-end outstanding commitments

380,637

560,493

546,304

657,570

158,460

Less: prior period end outstanding commitments

560,493

546,304

657,570

158,460

379,377

Total mortgage production volume

$

818,579

$

1,046,661

$

1,072,983

$

1,048,066

$

634,726

Mortgage loan refinances to mortgage loans funded for sale

58

%

54

%

71

%

57

%

57

%

Gain on sale margin

3.26

%

3.67

%

3.65

%

2.06

%

1.44

%

Mortgage servicing revenue

$

12,636

$

13,528

$

14,751

$

15,597

$

16,227

Average outstanding principal balance of mortgage loans serviced for others

16,518,208

17,434,215

19,319,872

20,416,546

20,856,446

Average mortgage servicing revenue rates

0.30

%

0.31

%

0.31

%

0.31

%

0.31

%

Gain (loss) on mortgage servicing rights, net of economic hedge:

Gain (loss) on mortgage hedge derivative contracts, net

$

(385

)

$

2,295

$

21,815

$

18,371

$

(4,714

)

Gain (loss) on fair value option securities, net

68

(754

)

(14,459

)

68,393

(8,328

)

Gain (loss) on economic hedge of mortgage servicing rights

(317

)

1,541

7,356

86,764

(13,042

)

Gain (loss) on changes in fair value of mortgage servicing rights

6,276

3,441

(761

)

(88,480

)

9,297

Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue

5,959

4,982

6,595

(1,716

)

(3,745

)

Net interest revenue on fair value option securities2

550

1,565

2,702

4,268

1,544

Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges

$

6,509

$

6,547

$

9,297

$

2,552

$

(2,201

)

2 Actual interest earned on fair value option securities less internal transfer-priced cost of funds.

QUARTERLY EARNINGS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and per share data)

Three Months Ended

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Interest revenue

$

319,020

$

294,659

$

306,384

$

348,937

$

369,857

Interest expense

21,790

22,909

28,280

87,577

99,608

Net interest revenue

297,230

271,750

278,104

261,360

270,249

Provision for credit losses

(6,500

)

135,321

93,771

19,000

Net interest revenue after provision for credit losses

303,730

271,750

142,783

167,589

251,249

Other operating revenue:

Brokerage and trading revenue

39,506

69,526

62,022

50,779

43,843

Transaction card revenue

21,896

23,465

22,940

21,881

22,548

Fiduciary and asset management revenue

41,799

39,931

41,257

44,458

45,021

Deposit service charges and fees

24,343

24,286

22,046

26,130

27,331

Mortgage banking revenue

39,298

51,959

53,936

37,167

25,396

Other revenue

14,209

13,698

11,479

12,309

15,283

Total fees and commissions

181,051

222,865

213,680

192,724

179,422

Other gains (losses), net

5,383

6,265

6,768

(10,741

)

(1,649

)

Gain (loss) on derivatives, net

(339

)

2,354

21,885

18,420

(4,644

)

Gain (loss) on fair value option securities, net

68

(754

)

(14,459

)

68,393

(8,328

)

Change in fair value of mortgage servicing rights

6,276

3,441

(761

)

(88,480

)

9,297

Gain (loss) on available for sale securities, net

4,339

(12

)

5,580

3

4,487

Total other operating revenue

196,778

234,159

232,693

180,319

178,585

Other operating expense:

Personnel

176,198

179,860

176,235

156,181

168,422

Business promotion

3,728

2,633

1,935

6,215

8,787

Charitable contributions to BOKF Foundation

6,000

3,000

2,000

Professional fees and services

14,254

14,074

12,161

12,948

13,408

Net occupancy and equipment

27,875

28,111

30,675

26,061

26,316

Insurance

4,006

5,848

5,156

4,980

5,393

Data processing and communications

35,061

34,751

32,942

32,743

31,884

Printing, postage and supplies

3,805

3,482

3,502

4,272

3,700

Net losses and operating expenses of repossessed assets

1,168

6,244

1,766

1,531

2,403

Amortization of intangible assets

5,088

5,071

5,190

5,094

5,225

Mortgage banking costs

14,765

15,803

15,598

10,545

14,259

Other expense

8,713

5,388

7,227

8,054

6,998

Total other operating expense

300,661

301,265

295,387

268,624

288,795

Net income before taxes

199,847

204,644

80,089

79,284

141,039

Federal and state income taxes

45,138

50,552

15,803

17,300

30,257

Net income

154,709

154,092

64,286

61,984

110,782

Net income (loss) attributable to non-controlling interests

485

58

(407

)

(95

)

430

Net income attributable to BOK Financial Corporation shareholders

$

154,224

$

154,034

$

64,693

$

62,079

$

110,352

Average shares outstanding:

Basic

69,489,597

69,877,866

69,876,043

70,123,685

70,295,899

Diluted

69,493,050

69,879,290

69,877,467

70,130,166

70,309,644

Net income per share:

Basic

$

2.21

$

2.19

$

0.92

$

0.88

$

1.56

Diluted

$

2.21

$

2.19

$

0.92

$

0.88

$

1.56


LOANS TREND -- UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Commercial:

Services

$

3,508,583

$

3,545,825

$

3,779,881

$

3,955,748

$

3,832,031

Energy

3,469,194

3,717,101

3,974,174

4,111,676

3,973,377

Healthcare

3,305,990

3,325,790

3,289,343

3,165,096

3,033,916

General business

2,793,768

2,976,990

3,115,112

3,563,455

3,192,326

Total commercial

13,077,535

13,565,706

14,158,510

14,795,975

14,031,650

Commercial real estate:

Multifamily

1,328,045

1,387,461

1,407,107

1,282,457

1,265,562

Office

1,085,257

1,099,563

973,995

962,004

928,379

Industrial

810,510

792,389

723,005

728,026

856,117

Retail

796,223

786,211

780,467

774,198

775,521

Residential construction and land development

119,394

121,258

136,911

138,958

150,879

Other commercial real estate

559,109

506,818

532,659

564,442

457,325

Total commercial real estate

4,698,538

4,693,700

4,554,144

4,450,085

4,433,783

Paycheck protection program

1,682,310

2,097,325

2,081,428

Loans to individuals:

Residential mortgage

1,863,003

1,849,144

1,813,442

1,844,555

1,886,378

Residential mortgages guaranteed by U.S. government agencies

408,687

384,247

322,269

197,889

197,794

Personal

1,277,447

1,213,178

1,226,097

1,175,466

1,201,382

Total loans to individuals

3,549,137

3,446,569

3,361,808

3,217,910

3,285,554

Total

$

23,007,520

$

23,803,300

$

24,155,890

$

22,463,970

$

21,750,987


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

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Texas:

Commercial

$

5,445,132

$

5,545,158

$

5,771,691

$

6,350,690

$

6,174,894

Commercial real estate

1,500,250

1,499,630

1,389,547

1,296,266

1,259,117

Paycheck protection program

501,079

614,970

612,133

Loans to individuals

854,700

792,994

748,474

756,634

727,175

Total Texas

8,301,161

8,452,752

8,521,845

8,403,590

8,161,186

Oklahoma:

Commercial

4,381,569

4,901,666

5,086,934

3,886,086

3,454,825

Commercial real estate

628,727

647,228

636,021

593,473

631,026

Paycheck protection program

413,108

487,247

442,518

Loans to individuals

2,054,205

2,036,452

1,967,665

1,788,518

1,854,864

Total Oklahoma

7,477,609

8,072,593

8,133,138

6,268,077

5,940,715

Colorado:

Commercial

1,554,670

1,501,821

1,600,382

2,181,309

2,169,598

Commercial real estate

877,610

890,746

937,742

955,608

927,826

Paycheck protection program

377,111

494,910

488,279

Loans to individuals

263,872

257,345

264,872

268,674

276,939

Total Colorado

3,073,263

3,144,822

3,291,275

3,405,591

3,374,363

Arizona:

Commercial

1,014,958

956,047

1,036,862

1,396,582

1,307,073

Commercial real estate

718,548

692,987

689,121

714,161

728,832

Paycheck protection program

211,725

272,114

318,961

Loans to individuals

177,900

166,115

177,066

181,821

186,539

Total Arizona

2,123,131

2,087,263

2,222,010

2,292,564

2,222,444

Kansas/Missouri:

Commercial

400,555

414,038

404,860

556,255

527,872

Commercial real estate

366,409

352,241

314,504

310,799

322,541

Paycheck protection program

56,011

80,230

76,724

Loans to individuals

105,755

96,358

102,577

116,734

131,069

Total Kansas/Missouri

928,730

942,867

898,665

983,788

981,482

New Mexico:

Commercial

195,846

157,322

182,688

327,164

305,320

Commercial real estate

471,310

471,505

455,574

434,150

402,148

Paycheck protection program

109,881

133,244

128,058

Loans to individuals

75,665

79,890

83,470

87,110

90,257

Total New Mexico

852,702

841,961

849,790

848,424

797,725

Arkansas:

Commercial

84,805

89,654

75,093

97,889

92,068

Commercial real estate

135,684

139,363

131,635

145,628

162,293

Paycheck protection program

13,395

14,610

14,755

Loans to individuals

17,040

17,415

17,684

18,419

18,711

Total Arkansas

250,924

261,042

239,167

261,936

273,072

TOTAL BOK FINANCIAL

$

23,007,520

$

23,803,300

$

24,155,890

$

22,463,970

$

21,750,987

Loans attributed to a principal market may not always represent the location of the borrower or the collateral.

DEPOSITS BY PRINCIPAL MARKET AREA -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands)

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Oklahoma:

Demand

$

4,328,619

$

4,493,691

$

4,378,559

$

3,669,558

$

3,257,337

Interest-bearing:

Transaction

12,603,603

12,586,401

11,438,489

9,955,697

8,574,912

Savings

420,996

401,062

387,557

329,631

306,194

Time

1,134,453

1,081,176

1,330,619

1,137,802

1,125,446

Total interest-bearing

14,159,052

14,068,639

13,156,665

11,423,130

10,006,552

Total Oklahoma

18,487,671

18,562,330

17,535,224

15,092,688

13,263,889

Texas:

Demand

3,450,468

3,152,393

3,070,955

2,767,399

2,757,376

Interest-bearing:

Transaction

3,800,482

3,482,603

3,358,090

2,874,362

2,911,731

Savings

139,173

136,787

128,892

115,039

102,456

Time

383,062

438,337

476,867

505,565

495,343

Total interest-bearing

4,322,717

4,057,727

3,963,849

3,494,966

3,509,530

Total Texas

7,773,185

7,210,120

7,034,804

6,262,365

6,266,906

Colorado:

Demand

2,168,404

2,057,603

2,096,075

1,579,764

1,729,674

Interest-bearing:

Transaction

2,170,485

1,861,763

1,816,604

1,759,384

1,769,037

Savings

69,384

68,230

67,477

58,000

53,307

Time

208,778

226,780

254,845

279,105

283,517

Total interest-bearing

2,448,647

2,156,773

2,138,926

2,096,489

2,105,861

Total Colorado

4,617,051

4,214,376

4,235,001

3,676,253

3,835,535

New Mexico:

Demand

941,074

964,908

965,877

750,052

623,722

Interest-bearing:

Transaction

733,007

713,418

752,565

563,891

558,493

Savings

91,646

85,463

80,242

67,553

63,999

Time

186,307

200,525

222,370

235,778

238,140

Total interest-bearing

1,010,960

999,406

1,055,177

867,222

860,632

Total New Mexico

1,952,034

1,964,314

2,021,054

1,617,274

1,484,354

Arizona:

Demand

905,201

928,671

985,757

665,396

681,268

Interest-bearing:

Transaction

768,220

771,319

780,500

729,603

684,929

Savings

12,174

11,498

15,669

8,832

10,314

Time

32,721

36,929

42,318

47,081

49,676

Total interest-bearing

813,115

819,746

838,487

785,516

744,919

Total Arizona

1,718,316

1,748,417

1,824,244

1,450,912

1,426,187


Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Kansas/Missouri:

Demand

426,738

405,360

427,795

318,985

384,533

Interest-bearing:

Transaction

960,237

616,797

526,635

537,552

784,574

Savings

16,286

15,520

15,033

12,888

12,169

Time

14,610

16,430

17,746

19,137

17,877

Total interest-bearing

991,133

648,747

559,414

569,577

814,620

Total Kansas/Missouri

1,417,871

1,054,107

987,209

888,562

1,199,153

Arkansas:

Demand

45,834

44,712

67,147

70,428

27,381

Interest-bearing:

Transaction

122,388

164,439

177,535

175,803

108,076

Savings

2,333

2,389

2,101

1,862

1,837

Time

7,197

7,796

7,995

8,005

7,850

Total interest-bearing

131,918

174,624

187,631

185,670

117,763

Total Arkansas

177,752

219,336

254,778

256,098

145,144

TOTAL BOK FINANCIAL

$

36,143,880

$

34,973,000

$

33,892,314

$

29,244,152

$

27,621,168


NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

Three Months Ended

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

TAX-EQUIVALENT ASSETS YIELDS

Interest-bearing cash and cash equivalents

0.10

%

0.12

%

0.07

%

1.33

%

1.62

%

Trading securities

2.02

%

1.92

%

2.46

%

2.89

%

3.19

%

Investment securities, net of allowance

4.88

%

4.85

%

4.77

%

4.73

%

4.69

%

Available for sale securities

1.98

%

2.11

%

2.29

%

2.48

%

2.52

%

Fair value option securities

2.27

%

1.92

%

2.00

%

2.67

%

2.62

%

Restricted equity securities

3.25

%

2.53

%

2.75

%

5.49

%

5.37

%

Residential mortgage loans held for sale

2.75

%

3.01

%

3.10

%

3.50

%

3.55

%

Loans

3.68

%

3.60

%

3.63

%

4.50

%

4.75

%

Allowance for loan losses

Loans, net of allowance

3.75

%

3.67

%

3.69

%

4.55

%

4.80

%

Total tax-equivalent yield on earning assets

2.92

%

3.04

%

3.12

%

3.73

%

3.93

%

COST OF INTEREST-BEARING LIABILITIES

Interest-bearing deposits:

Interest-bearing transaction

0.14

%

0.17

%

0.21

%

0.89

%

1.00

%

Savings

0.05

%

0.05

%

0.05

%

0.09

%

0.11

%

Time

0.89

%

1.13

%

1.36

%

1.83

%

1.94

%

Total interest-bearing deposits

0.19

%

0.26

%

0.34

%

0.98

%

1.09

%

Funds purchased and repurchase agreements

0.28

%

0.17

%

0.14

%

1.14

%

1.56

%

Other borrowings

0.42

%

0.43

%

0.56

%

1.66

%

2.01

%

Subordinated debt

4.87

%

4.89

%

5.16

%

5.30

%

5.40

%

Total cost of interest-bearing liabilities

0.28

%

0.31

%

0.37

%

1.19

%

1.40

%

Tax-equivalent net interest revenue spread

2.64

%

2.73

%

2.75

%

2.54

%

2.53

%

Effect of noninterest-bearing funding sources and other

0.08

%

0.08

%

0.08

%

0.26

%

0.35

%

Tax-equivalent net interest margin

2.72

%

2.81

%

2.83

%

2.80

%

2.88

%

Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.

CREDIT QUALITY INDICATORS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)

Three Months Ended

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Nonperforming assets:

Nonaccruing loans:

Commercial:

Energy

$

125,059

$

126,816

$

162,989

$

96,448

$

91,722

Services

25,598

25,817

21,032

8,425

7,483

Healthcare

3,645

3,645

3,645

4,070

4,480

General business

12,857

13,675

14,333

9,681

11,731

Total commercial

167,159

169,953

201,999

118,624

115,416

Commercial real estate

27,246

12,952

13,956

8,545

27,626

Loans to individuals:

Permanent mortgage

32,228

31,599

33,098

30,721

31,522

Permanent mortgage guaranteed by U.S. government agencies

7,741

6,397