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				13,408				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				6,110				5,005				6,100
Personal	319				252				233				277				287
Total loans to individuals	40,288				38,248				39,441				36,003				37,909
Total nonaccruing loans	$	234,693			$	221,153			$	255,396			$	163,172			$	180,951
Accruing renegotiated loans guaranteed by U.S. government agencies	151,775				142,770				114,571				91,757				92,452
Real estate and other repossessed assets	90,526				52,847				35,330				36,744				20,359
Total nonperforming assets	$	476,994			$	416,770			$	405,297			$	291,673			$	293,762
Total nonperforming assets excluding those guaranteed by U.S. government agencies	317,478				267,603				284,616				194,911				195,210
Accruing loans 90 days past due1	10,369				7,684				10,992				3,706				7,680
Gross charge-offs	$	18,251			$	26,661			$	15,570			$	18,917			$	14,268
Recoveries	(1,592		)		(4,232		)		(1,491		)		(1,696		)		(1,816		)
Net charge-offs	$	16,659			$	22,429			$	14,079			$	17,221			$	12,452
Provision for loan losses	$	(14,478	)		$	6,609			$	134,365			$	95,964			$	18,779
Provision for credit losses from off-balance sheet unfunded loan commitments	8,952				(4,950		)		4,405				3,377				221
Provision for expected credit losses from mortgage banking acitivities2	(923		)		(770		)		(3,575		)		(6,020		)		—
Provision for credit losses related to held-to maturity (investment) securities portfolio2	(51		)		(889		)		126				450				—
Total provision for credit losses	$	(6,500	)		$	—			$	135,321			$	93,771			$	19,000

	Three Months Ended
	Dec. 31, 2020			Sept. 30, 2020			June 30, 2020			Mar. 31, 2020			Dec. 31, 2019
Allowance for loan losses to period end loans	1.69	%		1.76	%		1.80	%		1.40	%		0.97	%
Allowance for loan losses to period end loans excluding PPP loans3	1.82	%		1.93	%		1.97	%		1.40	%		0.97	%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans	1.85	%		1.88	%		1.94	%		1.53	%		0.98	%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans excluding PPP loans3	2.00	%		2.06	%		2.12	%		1.53	%		0.98	%
Nonperforming assets to period end loans and repossessed assets	2.07	%		1.75	%		1.68	%		1.30	%		1.35	%
Net charge-offs (annualized) to average loans	0.28	%		0.37	%		0.23	%		0.31	%		0.22	%
Net charge-offs (annualized) to average loans excluding PPP loans3	0.31	%		0.41	%		0.25	%		0.31	%		0.22	%
Allowance for loan losses to nonaccruing loans1	171.24	%		195.47	%		174.74	%		199.35	%		120.54	%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans1	187.51	%		208.49	%		187.94	%		217.38	%		121.44	%

¹  Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
²  Included in Provision for credit losses effective with implementation of CECL on January 1, 2020.
³  Metric meaningful due to the unique characteristics and short-term nature of the PPP loans.

SEGMENTS -- UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratios)

	Three Months Ended						4Q20 vs 3Q20							Year Ended						2020 vs 2019
Commercial Banking	Dec. 31, 2020			Sept. 30, 2020			$ change				% change			Dec. 31, 2020			Dec. 31, 2019			$ change				% change
Net interest revenue	$	142,026		$	149,946		$	(7,920	)		(5.3	)%		$	588,488		$	676,241		$	(87,753	)		(13.0	)%
Fees and commissions revenue	49,060			50,085			(1,025		)		(2.0	)%		187,119			168,667			18,452				10.9	%
Combined net interest and fee revenue	191,086			200,031			(8,945		)		(4.5	)%		775,607			844,908			(69,301		)		(8.2	)%
Other operating expense	68,372			66,846			1,526				2.3	%		258,903			252,459			6,444				2.6	%
Corporate expense allocations	5,348			5,172			176				3.4	%		24,862			43,055			(18,193		)		(42.3	)%
Net income	74,941			75,097			(156		)		(0.2	)%		306,005			374,806			(68,801		)		(18.4	)%
Average assets	27,693,742			28,000,183			(306,441		)		(1.1	)%		26,994,075			22,807,589			4,186,486				18.4	%
Average loans	18,100,333			18,677,401			(577,068		)		(3.1	)%		18,711,372			18,090,224			621,148				3.4	%
Average deposits	15,373,673			15,375,450			(1,777		)		—	%		14,319,729			10,319,677			4,000,052				38.8	%
Consumer Banking
Net interest revenue	$	30,672		$	33,130		$	(2,458	)		(7.4	)%		$	147,004		$	195,454		$	(48,450	)		(24.8	)%
Fees and commissions revenue	55,326			67,974			(12,648		)		(18.6	)%		245,554			187,996			57,558				30.6	%
Combined net interest and fee revenue	85,998			101,104			(15,106		)		(14.9	)%		392,558			383,450			9,108				2.4	%
Other operating expense	59,857			59,839			18				—	%		233,425			230,916			2,509				1.1	%
Corporate expense allocations	10,527			10,812			(285		)		(2.6	)%		42,638			47,169			(4,531		)		(9.6	)%
Net income	14,283			26,256			(11,973		)		(45.6	)%		95,360			56,606			38,754				68.5	%
Average assets	9,700,466			9,898,119			(197,653		)		(2.0	)%		9,842,125			9,301,341			540,784				5.8	%
Average loans	1,840,492			1,825,865			14,627				0.8	%		1,764,682			1,762,915			1,767				0.1	%
Average deposits	7,993,971			7,940,973			52,998				0.7	%		7,599,937			6,876,676			723,261				10.5	%
Wealth Management
Net interest revenue	$	48,521		$	22,985		$	25,536			111.1	%		$	117,290		$	100,092		$	17,198			17.2	%
Fees and commissions revenue	82,936			111,655			(28,719		)		(25.7	)%		399,229			341,333			57,896				17.0	%
Combined net interest and fee revenue	131,457			134,640			(3,183		)		(2.4	)%		516,519			441,425			75,094				17.0	%
Other operating expense	83,981			82,868			1,113				1.3	%		325,608			277,267			48,341				17.4	%
Corporate expense allocations	9,465			9,397			68				0.7	%		35,331			36,239			(908		)		(2.5	)%
Net income	28,449			31,212			(2,763		)		(8.9	)%		115,628			95,331			20,297				21.3	%
Average assets	18,101,182			16,204,510			1,896,672				11.7	%		15,695,646			10,204,426			5,491,220				53.8	%
Average loans	1,839,695			1,777,008			62,687				3.5	%		1,758,226			1,609,464			148,762				9.2	%
Average deposits	9,589,814			9,090,116			499,698				5.5	%		8,676,047			6,447,987			2,228,060				34.6	%
Fiduciary assets	60,495,213			52,935,646			7,559,567				14.3	%		60,495,213			52,352,135			8,143,078				15.6	%
Assets under management or administration	91,592,247			82,419,932			9,172,315				11.1	%		91,592,247			82,740,961			8,851,286				10.7	%

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