BOK Financial Corporation Reports Quarterly Earnings of $188 million or $2.74 Per Share in the Third Quarter

TULSA, Okla., Oct. 20, 2021 (GLOBE NEWSWIRE) -- BOK Financial Corporation (NASD: BOKF) -

CEO Commentary

Steven G. Bradshaw, president and chief executive officer, stated, “The third quarter was BOKF’s second-consecutive record quarter with net income of $188 million or $2.74 per share. This quarter exhibits many of the benefits achieved from our strategy to generate revenue growth through long-term commitments and investments. Our diversified Wealth Management business, built over 30+ years, largely through organic growth, led the way with a record $153 million in total revenues, a 14% increase from their previous high set during the same quarter last year. Our alternative investment practice, which began in 2005 and provides equity and debt capital to growing businesses, experienced significant gains during the third quarter adding $31 million to pretax revenue. These types of long-term differentiators set us apart and demonstrate the force of a diversified business model.”

Bradshaw continued, “Equally impressive to our revenue generating opportunities this year has been our firm hold on expense management, which has grown at a rate just slightly above 2% over the last two trailing twelve month periods, despite significant technology and cyber-related investments.

“While loan growth continues to be a challenge, and our line utilization levels at five year lows, we believe that the inevitable return to normalized levels will result in significant earnings growth potential. Our strong results today leave us well-positioned to aggressively add customers throughout our loan portfolio.”

Third Quarter 2021 Financial Highlights

• Net income was $188.3 million or $2.74 per diluted share for the third quarter of 2021 and $166.4 million or $2.40 per diluted share for the second quarter of 2021.
• Net interest revenue totaled $280.2 million, consistent with the prior quarter. Net interest margin was 2.66 percent compared to 2.60 percent in the second quarter of 2021.
• Operating revenue totaled $229.8 million, an increase of $38.4 million. Growth in much of our fee-based businesses, led by brokerage and trading and mortgage banking revenues, was partially offset by lower operating revenues from repossessed assets related to oil and gas properties sold during the quarter. In addition, we recognized a $31.1 million pre-tax gain on the sale of an alternative investment. This gain was partially offset by losses on the extinguishment of subordinated debt and sale of repossessed assets.
• Operating expense totaled $291.3 million, consistent with the prior quarter, as a $3.8 million increase in personnel expense was offset by a $3.7 million decrease in non-personnel expense, primarily due to a reduction of operating expenses related to oil and gas properties sold during the quarter.
• Period-end loans decreased $1.1 billion to $20.3 billion at September 30, 2021. Period-end Paycheck Protection Program ("PPP") loans decreased $586 million to $536 million. The remaining decrease was primarily due to paydowns of commercial energy loans and commercial real estate loans. Average loans were $20.8 billion, a $1.3 billion decrease compared to the second quarter of 2021.
• Continued improvement in credit quality metrics and lower loan balances coupled with strength in commodity prices and a continued optimistic outlook for growth in gross domestic product and the labor markets resulted in a $23.0 million negative provision for expected credit losses in the third quarter of 2021. A $35.0 million negative provision for expected credit losses was recorded in the prior quarter. The combined allowance for credit losses totaled $306 million or 1.54 percent of outstanding loans, excluding PPP loans, at September 30, 2021. The combined allowance for credit losses was $336 million or 1.66 percent of outstanding loans, excluding PPP loans, at June 30, 2021.
• Average deposits increased $344 million to $37.8 billion and period-end deposits increased $1.1 billion to $38.5 billion, largely due to growth in commercial balances. Average demand deposits grew by $481 million and average interest bearing deposits decreased by $137 million.
• The company's common equity Tier 1 capital ratio was 12.26 percent at September 30, 2021. In addition, the company's Tier 1 capital ratio was 12.29 percent, total capital ratio was 13.38 percent, and leverage ratio was 8.77 percent at September 30, 2021. At June 30, 2021, the company's common equity Tier 1 capital ratio was 11.95 percent, Tier 1 capital ratio was 12.01 percent, total capital ratio was 13.61 percent, and leverage ratio was 8.58 percent.
• The company repurchased 478,141 shares of common stock at an average price of $85.00 a share in the third quarter of 2021.
• On August 23, 2021, the company redeemed the subordinated debt issued in June of 2016 at the interest rate of 5.375 percent using existing capital, saving approximately $8.0 million per year in interest payments. The repayment resulted in a realized loss on extinguishment of debt of $5.2 million.
• Commercial Banking contributed $102.7 million to net income in the third quarter of 2021, an increase of $30.1 million compared to the second quarter of 2021. The sale of an alternative investment resulted in a $31.1 million pre-tax gain, net of non-controlling interest. Combined net interest revenue and fee revenue decreased $3.7 million, largely due to a decrease of $6.0 million in production revenue from repossessed oil and gas properties, which was partially offset by a decrease in expenses on the same properties. In addition, favorable yields on deposits sold to our Funds Management unit dampened the reduction of total revenue. Average Commercial Banking loans decreased $393 million due to purposeful deleveraging by our customers. Average Commercial Banking deposits grew 5 percent to $17.9 billion in the third quarter of 2021.
• Consumer Banking contributed $12.4 million to net income in the third quarter of 2021, an increase of $10.7 million compared to the prior quarter. Combined net interest revenue and fee revenue increased $9.0 million. Net interest revenue increased $2.3 million, mainly due to favorable yields on deposits sold to our Funds Management unit. Fees and commissions revenue increased $6.7 million, largely due to mortgage production revenue. Lower mortgage banking costs largely drove a $3.0 million decrease in operating expense. Average Consumer Banking deposits were consistent with the prior quarter.
• Wealth Management contributed a record $41.4 million to net income in the third quarter of 2021, an increase of $10.3 million compared to the prior quarter. Our diverse set of investment-focused businesses including fixed income trading, private wealth, institutional wealth, financial risk management, and multiple fiduciary businesses combined to provide total net interest and fee revenues of $153.2 million, an increase of $22.0 million over the second quarter of 2021. Revenue primarily from agency residential mortgage trading activity increased $15.4 million to $77.3 million due to higher margin market opportunities. Operating expense increased $8.0 million, primarily due to incentive compensation costs related to increased trading activity. Average Wealth Management deposits decreased 6 percent to $9.1 billion in the third quarter of 2021. Assets under management were $98.8 billion, an increase of $2.2 billion compared to the prior quarter.

Net Interest Revenue

Net interest revenue was $280.2 million for the third quarter of 2021, largely unchanged compared to the second quarter of 2021. Net interest margin was 2.66 percent compared to 2.60 percent in the prior quarter.

Average earning assets decreased $892 million compared to the second quarter of 2021. Average loan balances decreased $1.3 billion, largely due to paydowns of PPP loans. Available for sale securities increased $203 million. Average trading securities grew by $187 million. Other borrowings decreased $1.1 billion while funds purchased and repurchase agreements decreased $342 million.

The yield on average earning assets was 2.78 percent, a 3 basis point increase from the prior quarter. The loan portfolio yield increased 14 basis points to 3.68 percent, primarily due to non-use fees related to lower credit line utilization. The yield on the available for sale securities portfolio decreased 5 basis points to 1.80 percent.

Funding costs were 0.19 percent, down 2 basis points. The cost of interest-bearing deposits decreased 1 basis point to 0.13 percent. The cost of other borrowed funds increased 2 basis points to 0.30 percent. The cost of subordinated debentures decreased 24 basis points due to the redemption of $150 million in the third quarter. The benefit to net interest margin from assets funded by non-interest liabilities was 7 basis points for the third quarter of 2021, compared to 6 basis points for the prior quarter.

Operating Revenue

Growing $21.0 million over the prior quarter, fees and commissions revenue totaled $190.4 million for the third quarter of 2021. Brokerage and trading revenue increased $18.5 million to $47.9 million. Higher margin market opportunities led to an $11.1 million increase in trading revenue. Customer hedging revenue increased $5.1 million, primarily attributed to energy customers. Investment banking revenue increased $1.9 million, largely due to the timing of financial advisory fees.

Mortgage banking revenue increased $5.1 million compared to the prior quarter. While mortgage production volume decreased $28 million to $615 million, production revenue as a percentage of production volume, which includes unrealized gains and losses on our mortgage commitment pipeline and related hedges, increased to 2.50 percent. An increase in consumer activity following the pandemic shut downs resulted in a $1.6 million increase in deposit service charges.

Other gains and losses, net increased $14.6 million over the prior quarter. The sale of an alternative investment resulted in a $31.1 million gain, net of non-controlling interest, which was partially offset by a $5.2 million loss on the extinguishment of subordinated debentures and a $3.9 million loss on the sale of a repossessed oil and gas asset. The prior quarter included a $7.4 million gain on the sale of a repossessed asset.

Other revenue decreased $4.3 million as a result of lower operating revenue from repossessed oil and gas assets due to the sale of a property, which was largely offset by a reduction of expenses on the same properties.

Operating Expense

Total operating expense remained consistent with the prior quarter at $291.3 million with a $3.8 million increase in personnel expense offset by a $3.7 million decrease in non-personnel expense.

Cash based incentive compensation increased $8.8 million, primarily in relation to increased trading revenue. Deferred compensation expense, which is largely offset by a decrease in the value of related investments included in Other gains (losses), net, decreased $2.4 million. Employee benefits expense decreased $3.3 million due to reduced payroll taxes and employee healthcare costs.

Other expense decreased $6.8 million as a result of lower operating expenses on repossessed assets. Mortgage banking costs decreased $2.2 million due to a decrease in prepayments. These decreases were partially offset by a $2.2 million increase in business promotion costs, a $2.0 million increase in data processing and communications expense and a $1.8 million increase in occupancy and equipment expense.

Loans, Deposits and Capital

Loans

Outstanding loans were $20.3 billion at September 30, 2021, a $1.1 billion decrease compared to June 30, 2021, led by lower PPP loan balances and to a lesser extent, energy and commercial real estate loans.

Outstanding commercial loan balances decreased $298 million compared to June 30, 2021, primarily due to lower energy loan balances. 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 $197 million to $2.8 billion or 14 percent of total loans. While commodity prices have continued to improve and stabilize, sourcing new loans sufficient to offset paydowns remains a challenge. 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 $2.8 billion at September 30, 2021, an increase of $109 million over June 30, 2021.

Services loan balances decreased $66 million to $3.3 billion or 16 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, foundations and not-for-profit organizations, educational services and specialty trade contractors.

Healthcare sector loan balances decreased $34 million compared to the prior quarter, totaling $3.3 billion or 16 percent of total loans. 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.

Commercial real estate loan balances decreased $130 million compared to June 30, 2021 and represent 20 percent of total loans at September 30, 2021, largely due to refinancing in the long term, non-recourse markets. Multifamily residential loans, decreased $89 million to $876 million at September 30, 2021. Loans secured by office facilities decreased $43 million to $1.0 billion. Loans secured by other commercial real estate properties decreased $35 million to $435 million. Loans secured by industrial facilities increased $66 million to $890 million.

PPP loan balances decreased $586 million to $536 million or 3 percent of total loans.

Loans to individuals decreased $55 million and represent 17 percent of total loans at September 30, 2021. Residential mortgage loans decreased $62 million, largely due to the re-sale of loans previously sold into GNMA mortgage pools that the Company repurchased when certain defined delinquency criteria were met. Many loans repurchased during the pandemic have since been cured and meet the re-sale qualifications. Personal loans were up $7.1 million.

Deposits

Period-end deposits totaled $38.5 billion at September 30, 2021, a $1.1 billion increase compared to June 30, 2021. Demand deposit account balances grew by $710 million and interest-bearing transaction account balances increased by $474 million. Average deposits were $37.8 billion at September 30, 2021, a $344 million increase compared to June 30, 2021. Demand deposit account balances increased $481 million primarily from deposits attributed to the Commercial Banking segment while interest-bearing deposits decreased $137 million.

Capital

The company's common equity Tier 1 capital ratio was 12.26 percent at September 30, 2021. In addition, the company's Tier 1 capital ratio was 12.29 percent, total capital ratio was 13.38 percent, and leverage ratio was 8.77 percent at September 30, 2021. 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 20 basis points to the company's common equity tier 1 capital ratio at September 30. At June 30, 2021, the company's common equity Tier 1 capital ratio was 11.95 percent, Tier 1 capital ratio was 12.01 percent, total capital ratio was 13.61 percent, and leverage ratio was 8.58 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 9.28 percent at September 30, 2021 and 9.09 percent at June 30, 2021. 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 478,141 shares of common stock at an average price of $85.00 a share in the third quarter of 2021. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

Expected credit losses on assets carried at amortized cost are recognized over their expected lives based on models that measure the probability of default and loss given default over a 12-month reasonable and supportable forecast period. Our models incorporate base case, downside and upside macroeconomic variables such as real gross domestic product ("GDP") growth, civilian unemployment rate and West Texas Intermediate ("WTI") oil prices on a probability weighted basis.

We recorded a $23.0 million negative provision for credit losses in the third quarter of 2021. Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to continued strength in commodity prices and a continued optimistic outlook for economic growth in GDP and labor markets resulted in a $12.3 million decrease in the allowance for credit losses related to lending activities. Changes in loan portfolio characteristics, primarily related to improving credit quality metrics and lower loan balances resulted in a $10.1 million decrease in the allowance for credit losses related to lending activities.

Our base case reasonable and supportable forecast assumes that the COVID-19 pandemic continues to improve from the Delta variant as global virus immunity continues to be more widespread and vaccines prove to be effective against severe virus outcomes as well as new virus strains. Elevated consumer consumption and the need for inventory restocking is expected to result in GDP growth above historical averages throughout mid-year 2022, but begins to moderate thereafter. We expect a 4.1 percent increase in GDP over the next twelve months. We expect labor force participants will continue to re-enter the job market to help meet record job openings. This increase in employment helps maintain household income above its pre-pandemic trend and prevents a sharp drop-off in spending. Our forecasted civilian unemployment rate is 4.9 percent for the fourth quarter of 2021, improving to 4.5 percent by the third quarter of 2022. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of September 2021, averaging $68.38 per barrel over the next twelve months.

The probability weighting of our base case reasonable and supportable forecast decreased to 65 percent in the third quarter of 2021 compared to 70 percent in the second quarter of 2021 as the level of uncertainty in the current economic outlook worsened slightly. Our downside case, probability weighted at 25 percent, assumes additional waves and hotspots emerge in areas of the country with lower vaccination rates stemming from the impact of new virus strains, such as the current Delta variant, as the U.S. enters the fall and winter months. This results in a relatively mild recession with conditions beginning to improve in the summer of 2022.

The allowance for loan losses totaled $277 million or 1.36 percent of outstanding loans and 208 percent of nonaccruing loans at September 30, 2021, 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 $306 million or 1.50 percent of outstanding loans and 230 percent of nonaccruing loans at September 30, 2021. Excluding PPP loans, the allowance for loan losses was 1.40 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 1.54 percent.

At June 30, 2021, the allowance for loan losses was $312 million or 1.46 percent of outstanding loans and 183 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 $336 million or 1.57 percent of outstanding loans and 197 percent of nonaccruing loans.

Nonperforming assets totaled $349 million or 1.71 percent of outstanding loans and repossessed assets at September 30, 2021, down from $408 million or 1.90 percent at June 30, 2021. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $162 million or 0.83 percent of outstanding loans and repossessed assets at September 30, 2021, compared to $228 million or 1.14 percent at June 30, 2021. The decrease in nonperforming assets was primarily related to a decrease in nonaccruing energy loans and sales of energy-related repossessed assets during the third quarter of 2021.

Nonaccruing loans were $142 million or 0.72 percent of outstanding loans, excluding PPP loans, at September 30, 2021. Nonaccruing commercial loans totaled $81 million or 0.66 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $21 million or 0.52 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 decreased $38 million compared to June 30, 2021, primarily due to a decrease in nonaccruing energy loans. New nonaccruing loans identified in the third quarter totaled $22 million, offset by $42 million in payments received and $10 million in charge-offs.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $333 million at September 30, 2021, down significantly from $384 million at June 30. Potential problem energy and services loans decreased compared to the prior quarter, partially offset by an increase in potential problem commercial real estate loans.

Net charge-offs were $7.8 million or 0.16 percent of average loans on an annualized basis for the third quarter of 2021, excluding PPP loans. Net charge-offs were 0.26 percent of average loans over the last four quarters. Net charge-offs were $15.4 million or 0.30 percent of average loans on an annualized basis for the second quarter of 2021, excluding PPP loans. Gross charge-offs were $9.6 million for the third quarter compared to $18.3 million for the previous quarter. Recoveries totaled $1.8 million for the third quarter of 2021 and $2.9 million for the second quarter of 2021.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $13.3 billion at September 30, 2021, a $24 million increase compared to June 30, 2021. At September 30, 2021, the available for sale securities portfolio consisted primarily of $8.2 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.7 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At September 30, 2021, the available for sale securities portfolio had a net unrealized gain of $221 million compared to $297 million at June 30, 2021.

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 $9.4 million to $51 million at September 30, 2021.

The net economic benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $7.3 million during the third quarter of 2021, including a $12.9 million increase in the fair value of mortgage servicing rights, a $5.9 million decrease in the fair value of securities and derivative contracts held as an economic hedge, and $286 thousand of related net interest revenue.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, October 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 # 13723814.

About BOK Financial Corporation

BOK Financial Corporation is a $47 billion regional financial services company headquartered in Tulsa, Oklahoma with $99 billion in assets under management and administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA's holdings include TransFund, Cavanal Hill Investment Management, Inc. and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Wisconsin and Connecticut. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of September 30, 2021 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)

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

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

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

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)

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

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

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)

NET INTEREST MARGIN TREND -- UNAUDITED
BOK FINANCIAL CORPORATION

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)

1 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.
2 Metric meaningful due to the unique characteristics and short-term nature of the PPP loans.

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