BOK FINANCIAL CORP - Quarter Report: 2021 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________

Commission File No. 0-19341

BOK FINANCIAL CORP

(Exact name of registrant as specified in its charter)


Oklahoma		73-1373454
(State or other jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

Bank of Oklahoma Tower
Boston Avenue at Second Street
Tulsa,	Oklahoma	74192
(Address of Principal Executive Offices)		(Zip Code)

(918) 588-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 69,557,873 shares of common stock ($.00006 par value) as of March 31, 2021.

BOK Financial Corporation

Form 10-Q

Quarter Ended March 31, 2021

Index


Part I. Financial Information
Management’s Discussion and Analysis (Item 2)			1
Market Risk (Item 3)			37
Controls and Procedures (Item 4)			40
Consolidated Financial Statements – Unaudited (Item 1)			41

Quarterly Financial Summary – Unaudited (Item 2)			90
Quarterly Earnings Trend – Unaudited			92

Part II. Other Information
Item 1. Legal Proceedings			93

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			93
Item 6. Exhibits			93
Signatures			94

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Performance Summary

BOK Financial Corporation (“the Company”) reported net income of $146.1 million or $2.10 per diluted share for the first quarter of 2021. Net income was $62.1 million or $0.88 per diluted share for the first quarter of 2020 and $154.2 million or $2.21 per diluted share for the fourth quarter of 2020. Forecasts for improving macroeconomic factors as the pace of COVID-19 vaccinations accelerates and energy prices stabilize resulted in a negative provision for expected credit losses of $25.0 million and $6.5 million in the first quarter of 2021 and fourth quarter of 2020, respectively. A provision for expected credit losses of $93.8 million was recorded in the first quarter of 2020.

Pre-provision net revenue ("PPNR"), a non-GAAP measure, was $163.4 million for the first quarter of 2021, $173.2 million for the first quarter of 2020, and $192.9 million for the fourth quarter of 2020. The decrease in PPNR for the first quarter of 2021 compared to the previous periods was due to lower combined net interest revenue and fees and commission revenue. This was largely driven by a shift in average earning assets from loans to trading securities, narrowing net interest margin, and compressed margins on mortgage loans and mortgage-backed trading assets.

Highlights of the first quarter of 2021 included:

•Net interest revenue totaled $280.4 million, an increase of $19.1 million over the first quarter of 2020. Average earning assets were $44.2 billion for the first quarter of 2021 compared to $38.4 billion for the first quarter of 2020, largely driven by growth in trading securities. Net interest margin was 2.62 percent for the first quarter of 2021 compared to 2.80 percent for the first quarter of 2020. The Federal Reserve reduced the federal funds rate to near zero in March 2020. Other short-term market interest rates followed, reducing the yield on floating-rate assets by more than the amount by which funding costs could be reduced, compressing the margin. Net interest revenue decreased $16.8 million compared to the fourth quarter of 2020. Net interest margin decreased 10 basis points.

•Fees and commissions revenue totaled $162.2 million, a decrease of $30.6 million compared to the first quarter of 2020. Brokerage and trading revenue decreased $30.0 million, largely due to a shift from trading revenue to net interest revenue on trading securities. Fees and commissions revenue decreased $18.9 million compared to the fourth quarter of 2020, including a $15.4 million reduction in trading revenue due to lower volumes and margin compression.

•Other operating expense totaled $282.6 million, an increase of $14.0 million over the first quarter of 2020. Personnel expense increased $16.8 million due to growth in incentive compensation expense and deferred compensation costs. Non-personnel expense decreased $2.8 million compared to the first quarter of 2020. A gain on the sale of repossessed oil and gas assets and lower business promotion costs were largely offset by an increase in charitable contributions, data processing and mortgage banking expenses. Operating expense decreased $18.0 million compared to the fourth quarter of 2020. Personnel expense decreased $3.2 million, primarily due to lower incentive compensation costs, partially offset by a seasonal increase in employee benefits expense. Non-personnel expense decreased $14.8 million compared to the fourth quarter of 2020, primarily due to the $14.1 million gain on the sale of repossessed oil and gas assets.

•Period-end outstanding loan balances totaled $22.5 billion at March 31, 2021, a decrease of $474 million compared to December 31, 2020, largely due to paydowns of energy loans and commercial real estate loans. Loans originated as part of the Small Business Administration's Paycheck Protection Program ("PPP") increased $166 million to $1.8 billion. Average loan balances decreased $691 million to $22.8 billion compared to December 31, 2020.

•The allowance for loan losses totaled $352 million or 1.70 percent of outstanding loans, excluding PPP loans, at March 31, 2021. The allowance for loan losses was $389 million or 1.82 percent of outstanding loans, excluding PPP loans, at December 31, 2020.

•Nonperforming assets not guaranteed by U.S. government agencies decreased $39 million compared to December 31, 2020. Potential problem loans decreased $55 million while other loans especially mentioned decreased $90 million. Net charge-offs were $14.5 million or 0.28 percent of average loans on an annualized basis for the first quarter of 2021, excluding PPP loans. Net charge-offs were 0.31 percent of average loans, excluding PPP loans, over the last four quarters. 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.

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•Period-end deposits were $37.9 billion at March 31, 2021, a $1.7 billion increase compared to December 31, 2020, largely due to growth in commercial balances. Average deposits increased $1.0 billion, including a $715 million increase in interest-bearing transaction deposits. Clients across all of our business segments continued to maintain higher deposit balances during this period of economic uncertainty, supplemented by inflows from government stimulus.

•The common equity Tier 1 capital ratio at March 31, 2021 was 12.14 percent. Other regulatory capital ratios were Tier 1 capital ratio, 12.21 percent, total capital ratio, 13.98 percent, and leverage ratio, 8.42 percent. At December 31, 2020, the common equity Tier 1 capital ratio was 11.95 percent, the Tier 1 capital ratio was 11.95 percent, total capital ratio was 13.82 percent, and leverage ratio was 8.28 percent.

•The Company repurchased 260,000 shares of common stock at an average price of $77.20 per share in the first quarter of 2021 and 665,100 shares at an average price of $63.82 in the fourth quarter of 2020. We view share buybacks opportunistically but within the context of maintaining our strong capital position.

•The Company paid a regular cash dividend of $36.0 million or $0.52 per common share during the first quarter of 2021. On May 4, 2021, the board of directors approved a quarterly cash dividend of $0.52 per common share payable on or about May 27, 2021 to shareholders of record as of May 17, 2021.

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Results of Operations

Net Interest Revenue and Net Interest Margin

Net interest revenue is the interest earned on debt securities, loans and other interest-earning assets less interest paid for interest-bearing deposits and other borrowings. The net interest margin is calculated by dividing tax-equivalent net interest revenue by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. Net interest margin is typically greater than net interest spread due to interest income earned on assets funded by non-interest bearing liabilities such as demand deposits and equity.

Tax-equivalent net interest revenue totaled $282.7 million for the first quarter of 2021 and $264.1 million in the first quarter of 2020. Net interest revenue decreased $20.7 million due to changes in interest rates and increased $39.3 million from growth in earning assets, largely due to the increase in trading securities balances. Table 1 shows the effect on net interest revenue from changes in average balances and interest rates for various types of earning assets and interest-bearing liabilities.

Net interest margin was 2.62 percent for the first quarter of 2021, compared to 2.80 percent for the first quarter of 2020. In response to the anticipated impact to the economy from the COVID-19 pandemic, the Federal Reserve reduced the federal funds rate to near zero in March, 2020. Other short-term market interest rates followed, reducing the yield on floating-rate assets by more than the amount by which funding costs could be reduced, compressing the margin. The tax-equivalent yield on earning assets was 2.78 percent, a decrease of 95 basis points compared to the first quarter of 2020. Loan yields decreased 95 basis points to 3.55 percent, largely due to the decrease in short-term interest rates partially offset by the addition of PPP loan fees. PPP loan fees of $11.2 million were recognized in the first quarter of 2021 and $34.2 million remains to be recognized in future periods. The available for sale securities portfolio yield decreased 64 basis points to 1.84 percent as principal cash flows received from maturities of the available for sale securities portfolio continue to be reinvested at lower rates. Cash flows received from these securities are currently being reinvested at 95-105 basis points. The yield on trading securities decreased 83 basis points to 2.06 percent.

Funding costs decreased 95 basis points compared to the first quarter of 2020. The cost of other borrowed funds decreased 117 basis points and the cost of interest-bearing deposits decreased 81 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 8 basis points for the first quarter of 2021, a decrease of 18 basis points compared to the first quarter of 2020.

Average earning assets for the first quarter of 2021 increased $5.8 billion or 15 percent over the first quarter of 2020, largely due to an increase in our trading of U.S. government issued mortgage-backed securities, the expansion of the available for sale securities portfolio, and PPP loans. Average trading securities increased $5.3 billion.The average balance of available for sale securities, which consists largely of residential and commercial mortgage-backed securities guaranteed by U.S. government agencies, increased $1.8 billion. We purchase securities to supplement earnings and to manage interest rate risk. Average loans, net of allowance for loan losses, increased $682 million, largely due to the inflow of PPP loans, partially offset by purposeful deleveraging by our customers as borrowers continue to pay down during this time of economic uncertainty. Fair vale option securities that we hold as an economic hedge against changes in the fair value of mortgage servicing rights decreased $1.7 billion.

Average deposits increased $8.3 billion compared to the first quarter of 2020. Deposit growth is largely due to customers retaining elevated balances in the current economic environment, supplemented by the most recent government stimulus payments. Interest-bearing deposits increased $5.2 billion while demand deposit balances increased $3.1 billion.

Tax-equivalent net interest revenue decreased $16.9 million compared to the fourth quarter of 2020. Net interest margin was 2.62 percent compared to 2.72 percent in the fourth quarter of 2020. The decrease in net interest revenue was primarily driven by lower average outstanding loan balances. Reinvestment of cash flows from the available for sale securities portfolio to current interest rates and timing of PPP and other loan fees also contributed to a decrease in net interest revenue and net interest margin in the first quarter.

Average earning assets decreased $178 million compared to the fourth quarter of 2020. Average loan balances decreased $691 million, primarily from commercial and commercial real estate loan pay downs. Available for sale securities increased $484 million. Average interest-bearing deposits grew by $823 million, primarily due to higher interest-bearing transaction deposits in the wake of the most recent government stimulus program. Other borrowings decreased $1.8 billion while funds purchased and repurchase agreements increased $677 million.

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The yield on average earning assets was 2.78 percent, a 14 basis point decrease from the prior quarter. The yield on the available for sale securities portfolio decreased 14 basis points to 1.84 percent and the loan portfolio yield decreased 13 basis points to 3.55 percent.

Funding costs were 0.24 percent, down 4 basis points. The cost of interest-bearing deposits decreased 2 basis points to 0.17 percent. The cost of other borrowed funds was down 8 basis points to 0.30 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 8 basis points for the first quarter of 2021, consistent with the prior quarter.

Our overall objective is to manage the Company’s balance sheet to be relatively neutral to changes in interest rates as is further described in the Market Risk section of this report. Approximately 76% of our commercial and commercial real estate loan portfolios are either variable rate or fixed rate that will reprice within one year. These loans are funded primarily by deposit accounts that are either non-interest bearing, or that reprice more slowly than the loans. The result is a balance sheet that would be asset sensitive, which means that assets generally reprice more quickly than liabilities. One of the strategies that we use to manage toward a relative rate-neutral position is to purchase fixed rate residential mortgage-backed securities issued primarily by U.S. government agencies and fund them with market-rate-sensitive liabilities. The liability-sensitive nature of this strategy provides an offset to the asset-sensitive characteristics of our loan portfolio. We also may use derivative instruments to manage our interest rate risk.

The effectiveness of these strategies is reflected in the overall change in net interest revenue due to changes in interest rates as shown in Table 1 and in the interest rate sensitivity projections as shown in the Market Risk section of this report.

Table 1 -- Volume/Rate Analysis

(In thousands)


	Three Months Ended Mar. 31, 2021 / 2020
			Change Due To1
	Change		Volume		Yield/Rate
Tax-equivalent interest revenue:
Interest-bearing cash and cash equivalents	$	(2,219)	$	(33)	$	(2,186)
Trading securities	24,114		32,760		(8,646)
Investment securities	(445)		(505)		60
Available for sale securities	(11,048)		8,149		(19,197)
Fair value option securities	(11,212)		(9,487)		(1,725)
Restricted equity securities	(4,535)		(3,470)		(1,065)
Residential mortgage loans held for sale	257		577		(320)
Loans	(46,024)		7,204		(53,228)
Total tax-equivalent interest revenue	(51,112)		35,195		(86,307)
Interest expense:
Transaction deposits	(29,534)		6,360		(35,894)
Savings deposits	(40)		40		(80)
Time deposits	(6,735)		(818)		(5,917)
Funds purchased and repurchase agreements	(9,490)		(1,661)		(7,829)
Other borrowings	(23,673)		(8,040)		(15,633)
Subordinated debentures	(286)		(13)		(273)
Total interest expense	(69,758)		(4,132)		(65,626)
Tax-equivalent net interest revenue	18,646		39,327		(20,681)
Change in tax-equivalent adjustment	(414)
Net interest revenue	$	19,060

1 Changes attributable to both volume and yield/rate are allocated to both volume and yield/rate on an equal basis.

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Other Operating Revenue

Other operating revenue was $163.9 million for the first quarter of 2021, a decrease of $16.4 million compared to the first quarter of 2020, largely due to a shift of trading revenue to interest income from trading securities.

Other operating revenue decreased $32.9 million compared to the fourth quarter of 2020. Brokerage and trading revenue decreased $18.7 million. Margin compression and reduced residential mortgage-backed securities trading volumes have negatively affected our brokerage and trading revenue.

Table 2 – Other Operating Revenue

(In thousands)


	Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)		Three Months Ended Dec. 31, 2020		Increase (Decrease)		% Increase (Decrease)
	2021		2020
Brokerage and trading revenue	$	20,782	$	50,779	$	(29,997)	(59)	%	$	39,506	$	(18,724)	(47)	%
Transaction card revenue	22,430		21,881		549		3	%	21,896		534		2	%
Fiduciary and asset management revenue	41,322		44,458		(3,136)		(7)	%	41,799		(477)		(1)	%
Deposit service charges and fees	24,209		26,130		(1,921)		(7)	%	24,343		(134)		(1)	%
Mortgage banking revenue	37,113		37,167		(54)		—	%	39,298		(2,185)		(6)	%
Other revenue	16,296		12,309		3,987		32	%	14,209		2,087		15	%
Total fees and commissions revenue	162,152		192,724		(30,572)		(16)	%	181,051		(18,899)		(10)	%
Other gains (losses), net	(3,036)		(10,741)		7,705		N/A		5,383		(8,419)		N/A
Gain (loss) on derivatives, net	(27,650)		18,420		(46,070)		N/A		(339)		(27,311)		N/A
Gain (loss) on fair value option securities, net	(1,910)		68,393		(70,303)		N/A		68		(1,978)		N/A
Change in fair value of mortgage servicing rights	33,874		(88,480)		122,354		N/A		6,276		27,598		N/A
Gain (loss) on available for sale securities, net	467		3		464		N/A		4,339		(3,872)		N/A



Total other operating revenue	$	163,897	$	180,319	$	(16,422)	(9)	%	$	196,778	$	(32,881)	(17)	%

Certain percentage increases (decreases) in non-fees and commissions revenue are not meaningful for comparison purposes based on the nature of the item.

Fees and commissions revenue

Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 37 percent of total revenue for the first quarter of 2021, excluding provision for credit losses and gains and losses on other assets, securities and derivatives and the change in the fair value of mortgage servicing rights. We believe that a variety of fee revenue sources provides an offset to changes in interest rates, values in the equity markets, commodity prices and consumer spending, all of which can be volatile. As an example of this strength, many of the economic factors such as rising interest rates resulting in growth in net interest revenue or fiduciary and asset management revenue may also decrease mortgage banking production volumes and related trading. We expect growth in other operating revenue to come through offering new products and services and by further development of our presence in other markets. However, current and future economic conditions, including the recent impact of the COVID-19 pandemic, regulatory constraints, increased competition and saturation in our existing markets could affect the rate of future increases.

Brokerage and Trading Revenue

Brokerage and trading revenue, which includes revenues from trading, customer hedging, retail brokerage and investment banking, decreased $30.0 million or 59 percent compared to the first quarter of 2020.

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Trading revenue includes net realized and unrealized gains and losses primarily related to sales of residential mortgage-backed securities guaranteed by U.S. government agencies and related derivative instruments that enable our mortgage banking customers to manage their production risk. Trading revenue also includes net realized and unrealized gains and losses on municipal securities and other financial instruments that we sell to institutional customers, along with changes in the fair value of financial instruments we hold as economic hedges against market risk of our trading securities. Trading revenue was $3.7 million for the first quarter of 2021, a $30.7 million or 89 percent decrease compared to the first quarter of 2020, primarily due to a shift from fee revenue to net interest revenue on trading securities. See additional discussion in "Lines of Business" section of Management's Discussion and Analysis.

Customer hedging revenue is based primarily on realized and unrealized changes in the fair value of derivative contracts held for customer risk management programs. As more fully discussed under Customer Derivative Programs in Note 3 of the Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange and equity derivatives to our customers. Customer hedging revenue totaled $2.6 million for the first quarter of 2021, a $631 thousand or 20 percent decrease compared to the first quarter of 2020.

Investment banking, which includes fees earned upon completion of underwriting, financial advisory services and loan syndication fees, totaled $6.8 million for the first quarter of 2021, an increase of $1.8 million or 35 percent compared to the first quarter of 2020, related to timing and volume of completed transactions.

Brokerage and trading revenue decreased $18.7 million compared to the previous quarter, including a $15.4 million decrease in trading revenue, largely due to margin compression and reduction of residential mortgage-backed securities trading volumes from record levels in the fourth quarter of 2020. Customer hedging revenue also decreased $2.1 million as energy customers decreased hedging activities. Investment banking revenue decreased $2.1 million mainly due to timing of loan syndication activity.

Fiduciary and Asset Management Revenue

Fiduciary and asset management revenue is earned through managing or holding of assets for customers and executing transactions or providing related services. Approximately 90 percent of fiduciary and asset management revenue is primarily based on the fair value of assets. Rates applied to asset values vary based on the nature of the relationship. Fiduciary relationships and managed asset relationships generally have higher fee rates than non-fiduciary and/or managed relationships. Fiduciary and asset management revenue decreased $3.1 million or 7 percent compared to the first quarter of 2020. The low rate environment has put pressure on our mutual fund revenue streams. We also had approximately $2.8 million in fee waivers during the first quarter of 2021 that did not exist in the first quarter of 2020. We have voluntarily waived certain administration fees on the Cavanal Hill money market funds in order to maintain positive yields on these funds in the current short-term interest rate environment. These decreases were partially offset by increased trust and managed account fees from higher client asset balances. A distribution of assets under management or administration and related fiduciary and asset management revenue follows:

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Table 3 -- Assets Under Management or Administration

(In thousands)


	Three Months Ended
	March 31, 2021						March 31, 2020						December 31, 2020
	Balance		Revenue1		Margin2		Balance		Revenue1		Margin2		Balance		Revenue1		Margin2
Managed fiduciary assets:
Personal	$	11,369,467	$	23,608	0.83	%	$	8,796,030	$	23,606	1.07	%	$	11,172,457	$	25,349	0.91	%
Institutional	15,144,797		6,818		0.18	%	12,186,588		6,654		0.22	%	15,364,387		7,200		0.19	%
Total managed fiduciary assets	26,514,264		30,426		0.46	%	20,982,618		30,260		0.58	%	26,536,844		32,549		0.49	%

Non-managed assets:
Fiduciary	29,713,004		9,286		0.13	%	22,705,419		12,379		0.22	%	28,949,648		7,585		0.10	%
Non-fiduciary	18,421,279		1,610		0.03	%	16,541,786		1,819		0.04	%	18,599,156		1,665		0.04	%
Safekeeping and brokerage assets under administration	17,307,641		—		—	%	15,554,006		—		—	%	17,506,599		—		—	%
Total non-managed assets	65,441,924		10,896		0.07	%	54,801,211		14,198		0.10	%	65,055,403		9,250		0.06	%

Total assets under management or administration	$	91,956,188	$	41,322	0.18	%	$	75,783,829	$	44,458	0.23	%	$	91,592,247	$	41,799	0.18	%

1 Fiduciary and asset management revenue includes asset-based and other fees associated with the assets.

2 Annualized revenue divided by period-end balance.

A summary of changes in assets under management or administration for the three months ended March 31, 2021 and 2020 follows:

Table 4 -- Changes in Assets Under Management or Administration

(In thousands)


	Three Months Ended March 31,
	2021		2020
Beginning balance	$	91,592,247	$	82,740,961
Net inflows (outflows)	(1,328,296)		(1,846,865)

Net change in fair value	1,692,237		(5,110,267)
Ending balance	$	91,956,188	$	75,783,829

Mortgage Banking Revenue

Mortgage banking revenue was consistent with the first quarter of 2020. Mortgage loan production volumes decreased $198 million or 19 percent as average primary mortgage interest rates began to increase in the first quarter of 2021. The gain on sale margin was 2.98 percent in the first quarter of 2021, 92 basis points higher than first quarter of 2020.

Mortgage banking revenue decreased $2.2 million or 6 percent compared to the fourth quarter of 2020. While mortgage production volume remained consistent with prior quarter, mortgage interest rates began to increase and margins compressed. While still elevated, industry-wide capacity constraint is beginning to wane, which is putting pressure on margin.

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Table 5 – Mortgage Banking Revenue

(In thousands)


	Three Months Ended March 31,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended Dec. 31, 2020			Increase (Decrease)			% Increase (Decrease)
	2021			2020
Mortgage production revenue	$	25,287		$	21,570		$	3,717		17	%	$	26,662		$	(1,375)		(5)	%

Mortgage loans funded for sale	$	843,053		$	548,956							$	998,435
Add: Current period end outstanding commitments	387,465			657,570								380,637
Less: Prior period end outstanding commitments	380,637			158,460								560,493
Total mortgage production volume	$	849,881		$	1,048,066		$	(198,185)		(19)	%	$	818,579		$	31,302		4	%

Mortgage loan refinances to mortgage loans funded for sale	65		%	57		%	800		bps			58		%	700		bps
Gains on sale margin	2.98		%	2.06		%	92		bps			3.26		%	(28)		bps
Primary mortgage interest rates:
Average	2.88		%	3.51		%	(63)		bps			2.76		%	12		bps
Period end	3.17		%	3.33		%	(16)		bps			2.67		%	50		bps

Mortgage servicing revenue	$	11,826		$	15,597		$	(3,771)		(24)	%	$	12,636		$	(810)		(6)	%
Average outstanding principal balance of mortgage loans serviced for others	15,723,231			20,416,546			(4,693,315)			(23)	%	16,518,208			(794,977)			(5)	%

Average mortgage servicing revenue rates	0.31		%	0.31		%	—		bp			0.30		%	1		bp

Primary rates disclosed in Table 5 above represent rates generally available to borrowers on 30 year conforming mortgage loans.

Deposit Service Charges and Fees

Deposit service charges and fees decreased $1.9 million compared to the first quarter of 2020.The stimulus programs enacted as a result of the pandemic have led to customers retaining higher cash balances. This, combined with lower levels of spending during the pandemic, has resulted in decreased overdraft fees compared to the prior year. Deposit service charges were relatively consistent with the fourth quarter of 2020.

Net gains on other assets, securities and derivatives

Other net losses totaled $3.0 million in the first quarter of 2021 compared to other net losses of $10.7 million in the first quarter of 2020 and other net gains of $5.4 million in the fourth quarter of 2020. These fluctuations are primarily related to changes in the fair value of investments related to deferred compensation that are largely offset in deferred compensation expense. The first quarter of 2021 included a $3.6 million impairment of a merchant banking investment. The first quarter of 2020 included a $3.1 million impairment of an energy fund investment.

As discussed in the Market Risk section following, the fair value of our mortgage servicing rights ("MSRs") changes in response to changes in primary mortgage loan rates and other assumptions. We attempt to mitigate the earnings volatility caused by changes in the fair value of MSRs by designating certain financial instruments as an economic hedge. Changes in the fair value of these instruments are generally expected to partially offset changes in the fair value of MSRs.

Historically low mortgage rates in 2020 and early 2021 resulted in a favorable risk profile for our MSRs that supported hedge performance during that time period. A sharp increase in longer-term interest rates during the first quarter has returned the risk profile of our MSRs to a more balanced profile, as can be seen in Table 25 of the Market Risk section.

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Table 6 - Gain (Loss) on Mortgage Servicing Rights

(In thousands)


	Three Months Ended
	Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2020
Gain (loss) on mortgage hedge derivative contracts, net	$	(27,705)	$	(385)	$	18,371
Gain (loss) on fair value option securities, net	(1,910)		68		68,393
Gain (loss) on economic hedge of mortgage servicing rights, net	(29,615)		(317)		86,764
Gain (loss) on change in fair value of mortgage servicing rights	33,874		6,276		(88,480)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges included in other operating revenue	4,259		5,959		(1,716)
Net interest revenue on fair value option securities1	393		550		4,268
Total economic benefit of changes in the fair value of mortgage servicing rights, net of economic hedges	$	4,652	$	6,509	$	2,552

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

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Other Operating Expense

Other operating expense for the first quarter of 2021 totaled $282.6 million, an increase of $14.0 million over the first quarter of 2020 and a decrease of $18.0 million compared to the fourth quarter of 2020.

Table 7 – Other Operating Expense

(In thousands)


	Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)		Three Months Ended Dec. 31, 2020		Increase (Decrease)		% Increase (Decrease)
	2021		2020
Regular compensation	$	97,211	$	97,760	$	(549)	(1)	%	$	96,552	$	659	1	%
Incentive compensation:
Cash-based	42,259		36,465		5,794		16	%	51,351		(9,092)		(18)	%
Share-based	4,570		2,832		1,738		61	%	2,344		2,226		(95)	%
Deferred compensation	2,263		(5,673)		7,936		N/A		5,692		(3,429)		N/A
Total incentive compensation	49,092		33,624		15,468		46	%	59,387		(10,295)		(17)	%
Employee benefits	26,707		24,797		1,910		8	%	20,259		6,448		32	%
Total personnel expense	173,010		156,181		16,829		11	%	176,198		(3,188)		(2)	%
Business promotion	2,154		6,215		(4,061)		(65)	%	3,728		(1,574)		(42)	%
Charitable contributions to BOKF Foundation	4,000		—		4,000		N/A		6,000		(2,000)		N/A
Professional fees and services	11,980		12,948		(968)		(7)	%	14,254		(2,274)		(16)	%
Net occupancy and equipment	26,662		26,061		601		2	%	27,875		(1,213)		(4)	%
Insurance	4,620		4,980		(360)		(7)	%	4,006		614		15	%
Data processing and communications	37,467		32,743		4,724		14	%	35,061		2,406		7	%
Printing, postage and supplies	3,440		4,272		(832)		(19)	%	3,805		(365)		(10)	%
Net losses and operating expenses of repossessed assets	(6,588)		1,531		(8,119)		(530)	%	1,168		(7,756)		(664)	%
Amortization of intangible assets	4,807		5,094		(287)		(6)	%	5,088		(281)		(6)	%
Mortgage banking costs	13,943		10,545		3,398		32	%	14,765		(822)		(6)	%
Other expense	7,132		8,054		(922)		(11)	%	8,713		(1,581)		(18)	%
Total other operating expense	$	282,627	$	268,624	$	14,003	5	%	$	300,661	$	(18,034)	(6)	%

Average number of employees (full-time equivalent)	4,902		5,075		(173)		(3)	%	4,915		(13)		—	%

Certain percentage increases (decreases) are not meaningful for comparison purposes.

Personnel expense

Personnel expense increased $16.8 million compared to the first quarter of 2020. Incentive compensation increased $15.5 million. Cash based incentive compensation expense increased $5.8 million, largely attributed to incentives on lending and trading activity. Deferred compensation expense increased $7.9 million; however, this is largely offset by an increase in the value of related investments included in Other gains (losses), net. Employee benefits increased $1.9 million primarily due to increased healthcare costs. Regular compensation was relatively consistent with the first quarter of 2020 as the impact of annual standard merit increases was dampened by a decrease in the number of employees.

Personnel expense decreased $3.2 million compared to the fourth quarter of 2020. Cash based incentive compensation expense decreased $9.1 million, primarily in relation to decreased trading activity. Deferred compensation, which is largely offset by a decrease in the value of related investments included in Other gains (losses), net, decreased $3.4 million. Employee benefits increased $6.4 million as a seasonal increase in payroll taxes and retirement plan expenses was partially offset by a decrease in employee healthcare costs.

- 10 -

Non-personnel operating expense

Non-personnel operating expense decreased $2.8 million compared to the first quarter of 2020. Net losses and expenses on repossessed assets decreased $8.1 million due to a $14.1 million gain on the sale of an equity interest received as part of the workout of a defaulted energy loan, partially offset by additional operating expenses and a write-down of a repossessed oil and gas property. Business promotion expense decreased $4.1 million primarily related to decreased travel and entertainment expense due to the pandemic. These decreases were partially offset by an increase of $4.7 million in data processing and communications expense, primarily due to technology project costs, and a $3.4 million increase in mortgage banking costs due to an increase in prepayments.

Non-personnel expense decreased $14.8 million compared to the fourth quarter of 2020. Net losses and expenses of repossessed assets decreased $7.8 million due to a gain on sale of repossessed oil and gas assets, partially offset by additional expenses and a write-down on repossessed oil and gas properties. Smaller reductions in expenses in professional fees and services, business promotion, and occupancy and equipment were partially offset by an increase in data processing and communications expense as we continue to invest in technology. We also made a charitable contribution of $4.0 million in the first quarter of 2021 and a contribution of $6.0 million in the prior quarter to the BOKF Foundation.

Income Taxes

The effective tax rate was 22.7 percent for the first quarter of 2021, 21.8 percent for the first quarter of 2020 and 22.6 percent for the fourth quarter of 2020. Income tax expense for the first quarter of 2021 decreased $2.8 million compared to the fourth quarter of 2020, primarily due to the decrease in net income before tax for the first quarter of 2021.

Lines of Business

We operate three principal lines of business: Commercial Banking, Consumer Banking and Wealth Management. Commercial Banking includes lending, treasury and cash management services and customer risk management products for small businesses, middle market and larger commercial customers. Commercial Banking also includes the TransFund EFT network. Consumer Banking includes retail lending and deposit services, lending and deposit services to small business customers served through our consumer branch network and all mortgage banking activities. Wealth Management provides fiduciary services, private banking services, insurance and investment advisory services in all markets. Wealth Management also underwrites state and municipal securities and engages in brokerage and trading activities.

In addition to our lines of business, we have a Funds Management unit. The primary purpose of this unit is to manage our overall liquidity needs and interest rate risk. Each line of business borrows funds from and provides funds to the Funds Management unit as needed to support their operations. Operating results for Funds Management and other include the effect of interest rate risk positions and risk management activities, securities gains and losses including impairment charges, the provision for credit losses in excess of net loans charged off, tax planning strategies and certain executive compensation costs that are not attributed to the lines of business.

We allocate resources and evaluate the performance of our lines of business using the net direct contribution, which includes the allocation of funds, actual net credit losses and capital costs. In addition, we measure the performance of our business lines after allocation of certain indirect expenses and taxes based on statutory rates.

The cost of funds borrowed from the Funds Management unit by the operating lines of business is updated annually at the beginning of the year and transfer priced at rates that approximate market rates for funds with similar repricing and cash flow characteristics. Market rates are generally based on the applicable LIBOR or interest rate swap rates, adjusted for prepayment and liquidity risk. This method of transfer-pricing funds that supports assets of the operating lines of business tends to insulate them from interest rate risk.

- 11 -

The value of funds provided by the operating lines of business to the Funds Management unit is also updated annually at the beginning of the year and is based on rates that approximate wholesale market rates for funds with similar repricing and cash flow characteristics. Market rates are generally based on LIBOR or interest rate swap rates. The funds credit formula applied to deposit products with indeterminate maturities is established based on their repricing characteristics reflected in a combination of the short-term LIBOR rate and a moving average of an intermediate-term swap rate, with an appropriate spread applied to both. Shorter duration products are weighted towards the short-term LIBOR rate and longer duration products are weighted towards the intermediate-term swap rates. The expected duration ranges from 30 days for certain rate-sensitive deposits to five years.

Economic capital is assigned to the business units by a capital allocation model that reflects management’s assessment of risk. This model assigns capital based upon credit, operating, interest rate and other market risk inherent in our business lines and recognizes the diversification benefits among the units. The level of assigned economic capital is a combination of the risk taken by each business line, based on its actual exposures and calibrated to its own loss history where possible. Average invested capital includes economic capital and amounts we have invested in the lines of business.

As shown in Table 8, net income attributable to our lines of business decreased $25.3 million compared to the first quarter of 2020. Net interest revenue decreased by $14.9 million compared to the prior year, primarily driven by lower average outstanding loan balances and lower yields on deposits sold to the Funds Management unit. Net charge-offs decreased $3.0 million compared to the first quarter of 2020. Other operating revenue decreased by $26.2 million primarily due to a shift from trading revenue from our agency residential mortgage trading activities to net interest revenue. Operating expense increased $8.5 million compared to the first quarter of 2020, primarily in Commercial Banking.

Net interest revenue decreased $21.9 million compared to the fourth quarter of 2020, primarily due to lower loan balances and lower earnings from deposits sold to the Funds Management unit. Other operating revenue decreased $21.0 million primarily related to a reversion of our agency mortgage trading volumes from elevated levels experienced in the fourth quarter of 2020 and narrowing margins. Other operating expense decreased $10.4 million.

Net income attributable to our Funds Management unit was impacted by the negative provision for credit losses in the first quarter of 2021, compared to a provision for credit losses in excess of charge-offs in the first quarter of 2020.

Table 8 -- Net Income by Line of Business

(In thousands)


	Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)		Three Months Ended Dec. 31, 2020		Increase (Decrease)		% Increase (Decrease)
	2021		2020
Commercial Banking	$	69,673	$	74,975	$	(5,302)	(7)	%	$	74,941	$	(5,268)	(7)	%
Consumer Banking	6,849		23,701		(16,852)		(71)	%	14,768		(7,919)		(54)	%
Wealth Management	19,382		22,573		(3,191)		(14)	%	28,435		(9,053)		(32)	%
Subtotal	95,904		121,249		(25,345)		(21)	%	118,144		(22,240)		(19)	%
Funds Management and other	50,156		(59,170)		109,326		N/A		36,080		14,076		N/A
Total	$	146,060	$	62,079	$	83,981	135	%	$	154,224	$	(8,164)	(5)	%

Certain percentage increases (decreases) in non-fees and commissions revenue are not meaningful for comparison purposes based on the nature of the item.

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Commercial Banking

Commercial Banking contributed $69.7 million to consolidated net income in the first quarter of 2021, a decrease of $5.3 million or 7 percent compared to the first quarter of 2020.

Table 9 -- Commercial Banking

(Dollars in thousands)


	Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)		Three Months Ended Dec. 31, 2020		Increase (Decrease)		% Increase (Decrease)
	2021		2020
Net interest revenue from external sources	$	155,799	$	201,902	$	(46,103)	(23)	%	$	165,468	$	(9,669)	(6)	%
Net interest expense from internal sources	(25,794)		(50,495)		24,701		(49)	%	(23,442)		(2,352)		10	%
Total net interest revenue	130,005		151,407		(21,402)		(14)	%	142,026		(12,021)		(8)	%
Net loans charged off	13,985		16,880		(2,895)		(17)	%	16,234		(2,249)		(14)	%
Net interest revenue after net loans charged off	116,020		134,527		(18,507)		(14)	%	125,792		(9,772)		(8)	%

Fees and commissions revenue	49,847		41,459		8,388		20	%	49,060		787		2	%
Other gains (losses), net	(3,268)		(3,239)		(29)		N/A		162		(3,430)		N/A
Other operating revenue	46,579		38,220		8,359		22	%	49,222		(2,643)		(5)	%

Personnel expense	39,252		37,020		2,232		6	%	41,311		(2,059)		(5)	%
Non-personnel expense	27,727		23,732		3,995		17	%	27,061		666		2	%
Other operating expense	66,979		60,752		6,227		10	%	68,372		(1,393)		(2)	%

Net direct contribution	95,620		111,995		(16,375)		(15)	%	106,642		(11,022)		(10)	%
Gain on financial instruments, net	33		49		(16)		N/A		58		(25)		N/A
Gain on repossessed assets, net	12,737		9		12,728		N/A		1,455		11,282		N/A
Corporate expense allocations	12,734		8,905		3,829		43	%	5,348		7,386		138	%
Income before taxes	95,656		103,148		(7,492)		(7)	%	102,807		(7,151)		(7)	%
Federal and state income tax	25,983		28,173		(2,190)		(8)	%	27,866		(1,883)		(7)	%
Net income	$	69,673	$	74,975	$	(5,302)	(7)	%	$	74,941	$	(5,268)	(7)	%

Average assets	$	28,047,052	$	24,687,976	$	3,359,076	14	%	$	27,693,742	$	353,310	1	%
Average loans	17,522,520		18,812,015		(1,289,495)		(7)	%	18,100,333		(577,813)		(3)	%
Average deposits	16,130,168		11,907,386		4,222,782		35	%	15,373,673		756,495		5	%
Average invested capital	2,157,062		2,188,242		(31,180)		(1)	%	2,209,648		(52,586)		(2)	%

Certain percentage increases (decreases) in non-fees and commissions revenue are not meaningful for comparison purposes based on the nature of the item.

Net interest revenue decreased $21.4 million compared to the first quarter of 2020. Net interest revenue from external sources decreased due to a reduction in loan volumes and lower loan yields. Net interest expense from internal sources decreased due to the impact of deposit growth, partially offset by lower yields paid for deposits sold to the Funds Management unit. Net loans charged-off decreased $2.9 million.

Fees and commissions revenue increased $8.4 million or 20 percent while operating expenses increased $6.2 million or 10 percent. An increase in production revenue from repossessed assets was largely offset by higher operating expenses on those assets. Customer hedging revenue and incentive compensation expense were also up over the first quarter of 2020.

During first quarter of 2021, a gain of $14.1 million was realized on the sale of an equity interest received as part of the workout of a defaulted energy loan. Corporate expense allocations increased $3.8 million or 43 percent compared to the prior year primarily due to PPP loan activity.

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The average outstanding balance of loans attributed to Commercial Banking decreased $1.3 billion or 7 percent to $17.5 billion compared to the first quarter of 2020. See the Loans section of Management’s Discussion and Analysis of Financial Condition following for additional discussion of changes in commercial and commercial real estate loans, which are primarily attributed to the Commercial Banking segment.

Average deposits attributed to Commercial Banking were $16.1 billion for the first quarter of 2021, a $4.2 billion or 35 percent increase over the first quarter of 2020. Continued deposit growth is primarily due to higher balance retention by customers in the current economic environment. See Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital for further discussion of change.

Net interest revenue decreased $12.0 million or 8 percent compared to the fourth quarter of 2020, largely due to a reduction in loan volumes and lower loan yields. Fees and commissions revenue was relatively consistent with fourth quarter of 2020. Operating expense decreased $1.4 million or 2 percent compared to the fourth quarter of 2020, primarily due to incentive compensation costs. Net gain on repossessed assets also increased $11.3 million due to the gain on sale of repossessed oil and gas assets.

Average loan balances decreased $578 million or 3 percent and average customer deposits increased $756 million or 5 percent over the fourth quarter of 2020.

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Consumer Banking

Consumer Banking provides retail banking services through four primary distribution channels: traditional branches, the 24-hour ExpressBank call center, Internet banking and mobile banking. Consumer Banking also conducts mortgage banking activities through offices located outside of our Consumer Banking markets.

Consumer Banking contributed $6.8 million to consolidated net income for the first quarter of 2021, a decrease of $16.9 million compared to the first quarter of 2020. Net interest revenue decreased by $23.0 million.

Table 10 -- Consumer Banking

(Dollars in thousands)


	Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)		Three Months Ended Dec. 31, 2020		Increase (Decrease)		% Increase (Decrease)
	2021		2020
Net interest revenue from external sources	$	16,686	$	25,876	$	(9,190)	(36)	%	$	17,512	$	(826)	(5)	%
Net interest revenue from internal sources	4,288		18,056		(13,768)		(76)	%	13,160		(8,872)		(67)	%
Total net interest revenue	20,974		43,932		(22,958)		(52)	%	30,672		(9,698)		(32)	%
Net loans charged off	1,136		1,256		(120)		(10)	%	935		201		21	%
Net interest revenue after net loans charged off	19,838		42,676		(22,838)		(54)	%	29,737		(9,899)		(33)	%

Fees and commissions revenue	52,300		55,062		(2,762)		(5)	%	55,326		(3,026)		(5)	%
Other losses, net	(18)		—		(18)		N/A		(1,669)		1,651		N/A
Other operating revenue	52,282		55,062		(2,780)		(5)	%	53,657		(1,375)		(3)	%

Personnel expense	22,026		23,044		(1,018)		(4)	%	22,904		(878)		(4)	%
Non-personnel expense	33,717		30,800		2,917		9	%	36,402		(2,685)		(7)	%
Total other operating expense	55,743		53,844		1,899		4	%	59,306		(3,563)		(6)	%

Net direct contribution	16,377		43,894		(27,517)		(63)	%	24,088		(7,711)		(32)	%
Gain (loss) on financial instruments, net	(29,616)		86,764		(116,380)		N/A		(316)		(29,300)		N/A
Change in fair value of mortgage servicing rights	33,874		(88,480)		122,354		N/A		6,276		27,598		N/A
Gain on repossessed assets, net	41		13		28		N/A		195		(154)		N/A
Corporate expense allocations	11,487		10,389		1,098		11	%	10,428		1,059		10	%
Income before taxes	9,189		31,802		(22,613)		(71)	%	19,815		(10,626)		(54)	%
Federal and state income tax	2,340		8,101		(5,761)		(71)	%	5,047		(2,707)		(54)	%
Net income	$	6,849	$	23,701	$	(16,852)	(71)	%	$	14,768	$	(7,919)	(54)	%

Average assets	$	9,755,539	$	9,850,853	$	(95,314)	(1)	%	$	9,700,428	$	55,111	1	%
Average loans	1,823,732		1,711,703		112,029		7	%	1,840,492		(16,760)		(1)	%
Average deposits	8,082,443		6,869,481		1,212,962		18	%	7,993,971		88,472		1	%
Average invested capital	256,188		274,384		(18,196)		(7)	%	260,108		(3,920)		(2)	%

Certain percentage increases (decreases) in non-fees and commissions revenue are not meaningful for comparison purposes based on the nature of the item.

Net interest revenue from Consumer Banking activities declined by $23.0 million or 52 percent compared to the first quarter of 2020, primarily due to a decrease in the yield on deposits sold to our Funds Management unit and a decrease in volume of securities held as an economic hedge of our mortgage servicing rights. Average consumer deposits grew $1.2 billion over the first quarter of 2020 with demand deposit balances increasing $720 million or 34 percent.

- 15 -

Fees and commissions revenue decreased $2.8 million or 5 percent compared to the first quarter of 2020. Mortgage banking revenue was unchanged from the first quarter of 2020. Production revenue increased due to widened gain on sale margins due to industry-wide capacity constraints. Servicing revenue was lower due to a decrease in servicing volume. The outstanding principal balance of loans serviced was lower due to increased prepayment rates and the impact of servicing rights sold last summer. Deposit service charges decreased $2.7 million. The stimulus programs enacted as a result of the pandemic have led to customers retaining higher cash levels. This, combined with lower spending levels, has decreased overdraft fees compared to the prior year. Operating expense increased $1.9 million due to increased mortgage banking costs, partially offset by lower personnel expense. Corporate expense allocations were $1.1 million or 11 percent higher than the prior year.

Changes in the fair value of mortgage servicing rights, net of economic hedges, increased pre-tax net income for the first quarter of 2021 by $4.3 million compared to a $1.7 million decrease in pre-tax net income in the first quarter of 2020.

Net interest revenue from Consumer Banking activities decreased $9.7 million or 32 percent compared to the fourth quarter of 2020, largely due to lower yields on deposits sold to our Funds Management unit. Operating revenue decreased $1.4 million compared to the fourth quarter of 2020. A decrease in mortgage banking revenue was partially offset by an increase in other income. Operating expense decreased $3.6 million, primarily due to decreases in regular compensation expense, business promotion expense and mortgage banking costs.

Average consumer loans decreased $17 million or 1 percent. Average deposits increased $88 million or 1 percent.

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Wealth Management

Wealth Management contributed $19.4 million to consolidated net income in the first quarter of 2021, a decrease of $3.2 million or 14 percent compared to the first quarter of 2020. Revenue attributed to the Wealth Management segment totaled $114.5 million for the first quarter of 2021, a $2.3 million or 2 percent decrease compared to the first quarter of 2020. Revenue from our agency mortgage trading activities grew by $5.2 million or 15 percent over the prior year. This growth was offset by lower revenue from deposits sold to our Funds Management unit, loan yields and decreased fiduciary and asset management revenue.

Table 11 -- Wealth Management

(Dollars in thousands)


	Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)		Three Months Ended Dec. 31, 2020		Increase (Decrease)		% Increase (Decrease)
	2021		2020
Net interest revenue from external sources	$	48,554	$	14,366	$	34,188	238	%	$	47,995	$	559	1	%
Net interest revenue from internal sources	(200)		4,538		(4,738)		(104)	%	526		(726)		(138)	%
Total net interest revenue	48,354		18,904		29,450		156	%	48,521		(167)		—	%
Net loans charged off (recovered)	(29)		(48)		19		(40)	%	(21)		(8)		38	%
Net interest revenue after net loans charged off (recovered)	48,383		18,952		29,431		155	%	48,542		(159)		—	%

Fees and commissions revenue	65,684		97,881		(32,197)		(33)	%	82,936		(17,252)		(21)	%
Other gains, net	439		—		439		N/A		191		248		N/A
Other operating revenue	66,123		97,881		(31,758)		(32)	%	83,127		(17,004)		(20)	%

Personnel expense	57,414		56,443		971		2	%	62,600		(5,186)		(8)	%
Non-personnel expense	21,151		21,749		(598)		(3)	%	21,400		(249)		(1)	%
Other operating expense	78,565		78,192		373		—	%	84,000		(5,435)		(6)	%

Net direct contribution	35,941		38,641		(2,700)		(7)	%	47,669		(11,728)		(25)	%


Corporate expense allocations	9,887		8,265		1,622		20	%	9,465		422		4	%
Income before taxes	26,054		30,383		(4,329)		(14)	%	38,201		(12,147)		(32)	%
Federal and state income tax	6,672		7,810		(1,138)		(15)	%	9,766		(3,094)		(32)	%
Net income	$	19,382	$	22,573	$	(3,191)	(14)	%	$	28,435	$	(9,053)	(32)	%

Average assets	$	18,645,865	$	12,723,412	$	5,922,453	47	%	$	18,101,182	$	544,683	3	%
Average loans	1,917,973		1,705,735		212,238		12	%	1,839,695		78,278		4	%
Average deposits	9,706,295		7,623,986		2,082,309		27	%	9,589,814		116,481		1	%
Average invested capital	313,355		288,264		25,091		9	%	306,475		6,880		2	%

Net interest revenue increased $29.5 million, largely due to growth in U.S. agency mortgage-backed trading volumes. The growth in net interest revenue due to increased earning assets was muted by a reduction in the value of deposits sold to our Funds Management unit. Fees and commissions revenue decreased $32.2 million. Trading revenue decreased $30.7 million, largely due to a shift in the timing of settlements, which results in more interest revenue, but less fee revenue, accompanied by margin compression.

Fiduciary and asset management revenue declined $3.2 million related to a combination of lower mutual fund fees and $2.8 million in waived administration fees on the Cavanal Hill money market funds as a result of the significant decline in short-term interest rates. These were partially offset by increases in trust fees and managed account fees from high client asset balances.

Operating expense and corporate expense allocations were relatively consistent compared to the first quarter of 2020.

- 17 -

Average loans attributed to the Wealth Management segment increased $212 million or 12 percent. Average deposits increased $2.1 billion or 27 percent, largely due to core growth as customers are retaining higher balances in the current economic environment.

Net income for Wealth Management decreased $9.1 million or 32 percent compared to the fourth quarter of 2020. Combined net interest revenue and fee revenue decreased $17.4 million. Net interest revenue was relatively consistent with the previous quarter. However, brokerage and trading revenue decreased $15.0 million due to narrowing margins and a reduction in trading volumes.

Average loans grew 4 percent to $1.9 billion and average deposits increased $116 million or 1 percent to $9.7 billion.

Financial Condition

Securities

We maintain a securities portfolio to enhance profitability, manage interest rate risk, provide liquidity and comply with regulatory requirements. Securities are classified as trading, held for investment, or available for sale. See Note 2 to the Consolidated Financial Statements for the composition of the securities portfolio as of March 31, 2021 and December 31, 2020.

We hold an inventory of trading securities in support of sales to a variety of customers, including banks, corporations, insurance companies, money managers and others. Trading securities increased $378 million to $5.1 billion during the first quarter of 2021. As discussed in the Market Risk section of this report, trading activities involve risk of loss from adverse price movement. We mitigate this risk within board-approved limits through the use of derivative contracts, short-sales and other techniques. These limits remain relatively unchanged from levels set before our expanded trading activities.

At March 31, 2021, the carrying value of investment (held-to-maturity) securities was $226 million, including a $617 thousand allowance for expected credit losses compared to $245 million at December 31, 2020 with a $688 thousand allowance for expected credit losses. The fair value of investment securities was $253 million at March 31, 2021 and $272 million at December 31, 2020. Investment securities consist primarily of residential mortgage-backed securities issued by U.S. government agencies, long-term, fixed rate Oklahoma and Texas municipal bonds, and taxable Texas school construction bonds.

Available for sale securities, which may be sold prior to maturity, are carried at fair value. Unrealized gains or losses, net of deferred taxes, are recorded as accumulated other comprehensive income in shareholders’ equity. The amortized cost of available for sale securities totaled $13.1 billion at March 31, 2021, a $510 million increase compared to December 31, 2020. At March 31, 2021, the available for sale securities portfolio consisted primarily of U.S. government agency residential mortgage-backed securities and U.S. government agency commercial mortgage-backed securities. Both residential and commercial mortgage-backed securities have credit risk from delinquency or default of the underlying loans. We mitigate this risk by primarily investing in securities issued by U.S. government agencies. Principal and interest payments on the underlying loans are fully guaranteed. Commercial mortgage-backed securities have prepayment penalties similar to commercial loans.

A primary risk of holding residential mortgage-backed securities comes from extension during periods of rising interest rates or prepayment during periods of falling interest rates. We evaluate this risk through extensive modeling of risk both before making an investment and throughout the life of the security. Our best estimate of the duration of the combined residential mortgage-backed securities portfolio held in investment and available for sale securities at March 31, 2021 is 3.3 years. Management estimates the duration extends to 4.5 years assuming an immediate 200 basis point upward shock. The estimated duration contracts to 2.3 years assuming a 100 basis point decline in the current low rate environment.

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Loans

The aggregate loan portfolio before allowance for loan losses totaled $22.5 billion at March 31, 2021, a $474 million decrease compared to December 31, 2020, primarily due to paydowns in the commercial and commercial real estate portfolios, partially offset by an increase in PPP loans.

Table 12 -- Loans

(In thousands)


	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		Jun. 30, 2020		Mar. 31, 2020
Commercial:
Energy	$	3,202,488	$	3,469,194	$	3,717,101	$	3,974,174	$	4,111,676
Services	3,421,948		3,508,583		3,545,825		3,779,881		3,955,748
Healthcare	3,290,758		3,305,990		3,325,790		3,289,343		3,165,096
General business	2,742,590		2,793,768		2,976,990		3,115,112		3,563,455
Total commercial	12,657,784		13,077,535		13,565,706		14,158,510		14,795,975

Commercial real estate:
Multifamily	1,227,915		1,328,045		1,387,461		1,407,107		1,282,457
Office	1,094,060		1,085,257		1,099,563		973,995		962,004
Retail	787,648		796,223		786,211		780,467		774,198
Industrial	789,437		810,510		792,389		723,005		728,026
Residential construction and land development	119,079		119,394		121,258		136,911		138,958
Other commercial real estate	485,208		559,109		506,818		532,659		564,442
Total commercial real estate	4,503,347		4,698,538		4,693,700		4,554,144		4,450,085

Paycheck protection program	1,848,550		1,682,310		2,097,325		2,081,428		—

Loans to individuals:
Residential mortgage	1,797,478		1,863,003		1,849,144		1,813,442		1,844,555
Residential mortgage guaranteed by U.S. government agencies	420,051		408,687		384,247		322,269		197,889
Personal	1,306,637		1,277,447		1,213,178		1,226,097		1,175,466
Total loans to individuals	3,524,166		3,549,137		3,446,569		3,361,808		3,217,910

Total	$	22,533,847	$	23,007,520	$	23,803,300	$	24,155,890	$	22,463,970

Commercial

Commercial loans represent loans for working capital, facilities acquisition or expansion, purchases of equipment and other needs of commercial customers primarily located within our geographical footprint. These loans are underwritten individually and represent ongoing relationships based on a thorough knowledge of the customer, the customer’s industry and market. While commercial loans are generally secured by the customer’s assets including real property, inventory, accounts receivable, operating equipment, interests in mineral rights and other property and may also include personal guarantees of the owners and related parties, the primary source of repayment of the loans is the ongoing cash flow from operations of the customer’s business. In addition, revolving lines of credit are generally governed by a borrowing base. Inherent lending risks are centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with commercial lending policies.

Commercial loans totaled $12.7 billion or 56 percent of the loan portfolio at March 31, 2021, a $420 million decrease compared to December 31, 2020, primarily due to continued paydowns as borrowers continue to reduce leverage in this time of economic uncertainty.

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Approximately 77 percent of loans in this segment are located within our geographic footprint, based on collateral location. Loans for which the collateral location is less relevant, such as unsecured loans and reserve-based energy loans are categorized by the borrower's primary operating location. The largest concentration of loans in this segment outside of our footprint is California, totaling 5 percent of the segment.

Supporting the energy industry with loans to producers and other energy-related entities has been a hallmark of the Company since its founding and represents a large portion of our commercial loan portfolio. In addition, energy production and related industries have a significant impact on the economy in our primary markets. Loans collateralized by oil and gas properties are subject to a semi-annual engineering review by our internal staff of petroleum engineers. This review is used as the basis for developing the expected cash flows supporting the loan amount. The projected cash flows are discounted according to risk characteristics of the underlying oil and gas properties. Loans are evaluated to demonstrate with reasonable certainty that crude oil, natural gas and natural gas liquids can be recovered from known oil and gas reservoirs under existing economic and operating conditions at current pricing levels and with existing conventional equipment and operating methods and costs. As part of our evaluation of credit quality, we analyze rigorous stress tests over a range of commodity prices and take proactive steps to mitigate risk when appropriate.

Outstanding energy loans totaled $3.2 billion or 14 percent of total loans at March 31, 2021, a $267 million decrease compared to December 31, 2020. Approximately $2.4 billion of energy loans were to oil and gas producers, a $239 million decrease compared to December 31, 2020. While commodity prices have continued to improve and stabilize, sourcing new loans sufficient to offset paydowns remains a challenge as existing borrowers continue to reduce leverage. The majority of this portfolio is first lien, senior secured, reserve-based lending, which we believe is the lowest risk form of energy lending. Approximately 66 percent of the committed production loans are secured by properties primarily producing oil and 34 percent of the committed production loans are secured by properties primarily producing natural gas.

Loans to midstream oil and gas companies totaled $648 million at March 31, 2021, a decrease of $52 million compared to December 31, 2020. Loans to borrowers that provide services to the energy industry totaled $135 million at March 31, 2021, an increase of $26 million. Loans to other energy borrowers, including those engaged in wholesale or retail energy sales, totaled $34 million, a $1.7 million decrease compared to the prior quarter.

Unfunded energy loan commitments were $2.4 billion at March 31, 2021, a $34 million decrease compared to December 31, 2020.

The healthcare sector of the loan portfolio totaled $3.3 billion or 15 percent of total loans. Healthcare loans decreased $15 million compared to December 31, 2020. Healthcare sector loans consist primarily of loans for the development and operation 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. Healthcare also includes loans to hospitals and other medical service providers impacted by a deferral of elective procedures. The CARES Act includes multiple revenue enhancement measures for both hospitals and skilled nursing facilities as they manage through the risks of the virus.

The services sector of the loan portfolio decreased $87 million to $3.4 billion or 15 percent of total loans. Service sector loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local governments, Native American tribal casino operations, foundations and not-for-profit organizations, educational services and specialty trade contractors. Approximately $1.8 billion of the services category is made up of loans with individual balances of less than $10 million. Services sector loans are generally secured by the assets of the borrower with repayment coming from the cash flows of ongoing operations of the customer’s business.

General business loans decreased $51 million to $2.7 billion or 12 percent of total loans. General business loans consist of $1.5 billion of wholesale/retail loans and $1.2 billion of loans from other commercial industries.

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We participate in shared national credits when appropriate to obtain or maintain business relationships with local customers. Shared national credits are defined by banking regulators as credits of $100 million or more and with three or more non-affiliated banks as participants. At March 31, 2021, the outstanding principal balance of these loans totaled $3.8 billion, including $1.6 billion of energy loans. Substantially all of these loans are to borrowers with local market relationships. We serve as the agent lender in approximately 20 percent of our shared national credits, based on dollars committed. We hold shared national credits to the same standard of analysis and perform the same level of review as internally originated credits. Our lending policies generally avoid loans in which we do not have the opportunity to maintain or achieve other business relationships with the customer. In addition to management’s quarterly assessment of credit risk, banking regulators annually review a sample of shared national credits for proper risk grading.

Commercial Real Estate

Commercial real estate represents loans for the construction of buildings or other improvements to real estate and property held by borrowers for investment purposes generally within our geographical footprint. We require collateral values in excess of the loan amounts, demonstrated cash flows in excess of expected debt service requirements, equity investment in the project and a portion of the project already sold, leased or permanent financing already secured. The expected cash flows from all significant new or renewed income producing property commitments are stress tested to reflect the risks in varying interest rates, vacancy rates and rental rates. As with commercial loans, inherent lending risks are centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with applicable lending policies.

The commercial real estate loan balance as a percentage of our total loan portfolio has ranged from 20 percent to 22 percent over the past five years. The outstanding balance of commercial real estate loans decreased $195 million compared to December 31, 2020. Multifamily residential loans, our largest exposure in commercial real estate, decreased $100 million to $1.2 billion at March 31, 2021. Loans secured by other commercial real estate properties decreased $74 million to $485 million. Loans secured by industrial facilities decreased $21 million to $789 million. Loans secured by retail facilities and office buildings were largely unchanged compared to December 31, 2020.

Approximately 68 percent of loans in this segment are in our geographic footprint based on collateral location. The largest concentration of loans in this segment outside our footprint is Utah, totaling 8 percent of the segment, followed by California at 6 percent. All other states represent less than 5 percent individually.

Paycheck Protection Program

We are actively participating in programs initiated by the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), including the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") that began on April 3, 2020. PPP provided fully forgivable loans when utilized for qualified expenditures, including to help small businesses maintain payrolls during the COVID-19 pandemic. These loans have a contractual term of two years, though most are expected to be forgiven prior to maturity after completion of a compliance period. Loans are guaranteed and amounts forgiven will be reimbursed to the Company by the SBA. The loans carry a rate of 1 percent. Interest plus loan fees, which vary depending on loan size, are accrued over the contractual life of the loan. Any unaccreted origination fees will be recognized when the loan is paid. The pace of forgiveness activity has been slower than initially anticipated.

The Company participated in the current round of PPP, originating $544 million of new PPP loans this quarter, maintaining a focus on our existing client base to timely support their needs. The newest round of loans has a contractual term of five years, but are expected to be forgiven prior to maturity.

Loans to Individuals

Loans to individuals include residential mortgage and personal loans. Residential mortgage loans provide funds for our customers to purchase or refinance their primary residence or to borrow against the equity in their home. These loans are secured by a first or second mortgage on the customer's primary residence. These loans are made in accordance with underwriting policies we believe to be conservative and are fully documented. Loans may be individually underwritten or credit scored based on size and other criteria. Credit scoring is assessed based on significant credit characteristics including credit history, residential and employment stability.

In general, we sell the majority of our conforming fixed rate loan originations in the secondary market and retain the majority of our non-conforming and adjustable-rate mortgage loans. Our mortgage loan portfolio does not include payment option adjustable rate mortgage loans or adjustable rate mortgage loans with initial rates that are below market. Home equity loans are primarily first-lien and fully amortizing.

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Residential mortgage, which includes home equity loans, and personal loans are made in accordance with underwriting policies we believe to be conservative and are fully documented. Loans may be individually underwritten or credit scored based on size and other criteria. Credit scoring is assessed based on significant credit characteristics including credit history, residential and employment stability.

Personal loans consist primarily of loans to Wealth Management clients secured by the cash surrender value of insurance policies and marketable securities. It also includes direct loans secured by and for the purchase of automobiles, recreational and marine equipment as well as unsecured loans.

Approximately 91 percent of the loans in this segment are secured by collateral located within our geographical footprint. Loans for which the collateral location is less relevant, such as unsecured loans are categorized by the borrower’s primary operating location.

Residential mortgage loans guaranteed by U.S. government agencies have limited credit exposure because of the agency guarantee. This amount includes residential mortgage loans previously sold into GNMA mortgage pools that the Company may repurchase 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.

The Company secondarily evaluates loan portfolio performance based on the primary geographical market managing the loan. Loans attributed to a geographical market may not represent the location of the borrower or the collateral. All permanent mortgage loans serviced by our mortgage banking unit and held for investment by the Company are centrally managed by the Oklahoma market.

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Table 13-- Loans Managed by Primary Geographical Market

(In thousands)


	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
Texas:
Commercial	$	5,748,345	$	5,926,534	$	6,135,471	$	6,359,206	$	6,350,690
Commercial real estate	1,511,714		1,519,217		1,523,226		1,413,108		1,296,266
Paycheck protection program	537,899		501,079		614,970		612,133		—
Loans to individuals	848,194		855,410		794,055		749,531		756,634
Total Texas	8,646,152		8,802,240		9,067,722		9,133,978		8,403,590

Oklahoma:
Commercial	2,975,477		3,144,782		3,332,244		3,489,259		3,886,086
Commercial real estate	597,840		597,733		608,448		596,419		593,473
Paycheck protection program	468,002		413,108		487,247		442,518		—
Loans to individuals	2,043,705		2,052,784		2,034,576		1,966,032		1,788,518
Total Oklahoma	6,085,024		6,208,407		6,462,515		6,494,228		6,268,077

Colorado:
Commercial	1,910,826		1,929,320		1,993,364		2,085,294		2,181,309
Commercial real estate	777,786		879,648		893,626		940,622		955,608
Paycheck protection program	436,540		377,111		494,910		488,279		—
Loans to individuals	264,759		264,295		257,832		265,359		268,674
Total Colorado	3,389,911		3,450,374		3,639,732		3,779,554		3,405,591

Arizona:
Commercial	1,207,089		1,219,072		1,218,769		1,346,037		1,396,582
Commercial real estate	667,766		726,111		702,291		698,818		714,161
Paycheck protection program	208,481		211,725		272,114		318,961		—
Loans to individuals	179,031		177,948		166,203		177,155		181,821
Total Arizona	2,262,367		2,334,856		2,359,377		2,540,971		2,292,564

Kansas/Missouri:
Commercial	421,974		455,914		493,606		481,162		556,255
Commercial real estate	395,590		366,821		352,663		314,926		310,799
Paycheck protection program	60,741		56,011		80,230		76,724		—
Loans to individuals	104,954		105,995		96,598		102,577		116,734
Total Kansas/Missouri	983,259		984,741		1,023,097		975,389		983,788

New Mexico:
Commercial	307,395		303,833		288,374		308,090		327,164
Commercial real estate	448,298		473,204		473,697		458,230		434,150
Paycheck protection program	124,059		109,881		133,244		128,058		—
Loans to individuals	70,491		75,665		79,890		83,470		87,110
Total New Mexico	950,243		962,583		975,205		977,848		848,424

Arkansas:
Commercial	86,678		98,080		103,878		89,462		97,889
Commercial real estate	104,353		135,804		139,749		132,021		145,628
Paycheck protection program	12,828		13,395		14,610		14,755		—
Loans to individuals	13,032		17,040		17,415		17,684		18,419
Total Arkansas	216,891		264,319		275,652		253,922		261,936

Total BOK Financial loans	$	22,533,847	$	23,007,520	$	23,803,300	$	24,155,890	$	22,463,970

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Off-Balance Sheet Commitments

We enter into certain off-balance sheet arrangements in the normal course of business as shown in Table 14. Loan commitments may be unconditional obligations to provide financing or conditional obligations that depend on the borrower’s financial condition, collateral value or other factors. Standby letters of credit are unconditional commitments to guarantee the performance of our customer to a third party. Since some of these commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

We have off-balance sheet commitments related to certain residential mortgage loans sold into mortgage-backed securities as part of our mortgage banking activities. We retain off-balance sheet credit risk related to losses in excess of amounts guaranteed by the U.S. Department of Veteran's Affairs ("VA").

We also have off-balance sheet credit risk related to certain residential mortgage loans primarily originated under community development loan programs that were sold to a U.S. government agency with full recourse prior to 2007. We are obligated to repurchase these loans for the life of these loans in the event of foreclosure for the unpaid principal and interest at the time of foreclosure. The majority of our conforming fixed rate loan originations are sold in the secondary market and we only retain repurchase obligations under standard underwriting representations and warranties.

Table 14 – Off-Balance Sheet Credit Commitments

(In thousands)


	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
Loan commitments	$	11,151,650	$	10,967,546	$	10,430,106	$	10,298,572	$	9,960,678
Standby letters of credit	713,834		681,467		678,136		693,177		683,516
Unpaid principal balance of residential mortgage loans sold with recourse	68,393		73,055		77,225		82,305		86,336
Unpaid principal balance of residential mortgage loans transferred into mortgage-backed securities guaranteed by U.S. Dept. of Veteran's Affairs	1,326,300		1,442,504		1,574,272		1,715,025		3,217,567

Customer Derivative Programs

We offer programs that permit our customers to hedge various risks, including fluctuations in energy, cattle and other agricultural product prices, interest rates and foreign exchange rates. Each of these programs work essentially the same way. Derivative contracts are executed between the customers and the Company. Offsetting contracts are executed between the Company and selected counterparties to minimize market risk due to changes in commodity prices, interest rates or foreign exchange rates. The counterparty contracts are identical to the customer contracts, except for a fixed pricing spread or a fee paid to us as compensation for administrative costs, credit risk and profit.

The customer derivative programs create credit risk for potential amounts due to the Company from our customers and from the counterparties. Customer credit risk is monitored through existing credit policies and procedures. The effects of changes in commodity prices, interest rates or foreign exchange rates are evaluated across a range of possible scenarios to determine the maximum exposure we are willing to have individually to any customer. Customers may also be required to provide cash margin or other collateral in conjunction with our credit agreements to further limit our credit risk.

Counterparty credit risk is evaluated through existing policies and procedures. This evaluation considers the total relationship between BOK Financial and each of the counterparties. Individual limits are established by management, approved by Credit Administration and reviewed by the Asset/Liability Committee. Margin collateral is required if the exposure between the Company and any counterparty exceeds established limits. Based on declines in the counterparties’ credit ratings, these limits may be reduced and additional margin collateral may be required.

A deterioration of the credit standing of one or more of the customers or counterparties to these contracts may result in BOK Financial recognizing a loss as the fair value of the affected contracts may no longer move in tandem with the offsetting contracts. This occurs if the credit standing of the customer or counterparty deteriorated such that either the fair value of underlying collateral no longer supported the contract or the customer or the counterparty’s ability to provide margin collateral was impaired. Credit losses on customer derivatives reduce brokerage and trading revenue in the Consolidated Statements of Earnings.

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Derivative contracts are carried at fair value. At March 31, 2021, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under these programs totaled $880 million compared to $625 million at December 31, 2020. At March 31, 2021, the net fair value of our derivative contracts included $466 million for energy contracts, $343 million for foreign exchange contracts and $70 million for interest rate swaps. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $865 million at March 31, 2021 and $600 million at December 31, 2020.

At March 31, 2021, total derivative assets were reduced by $840 thousand of cash collateral received from counterparties and total derivative liabilities were reduced by $504 million of cash collateral paid to counterparties related to instruments executed with the same counterparty under a master netting agreement.

A table showing the notional and fair value of derivative assets and liabilities on both a gross and net basis is presented in Note 3 to the Consolidated Financial Statements.

The fair value of derivative contracts reported as assets under these programs, net of cash margin held by the Company, by category of debtor at March 31, 2021 follows in Table 15.

Table 15 -- Fair Value of Derivative Contracts

(In thousands)


Customers	$	659,036
Banks and other financial institutions	220,462
Exchanges and clearing organizations	116
Fair value of customer risk management program asset derivative contracts, net	$	879,614

At March 31, 2021, our largest derivative exposure was to a customer for an energy contract of $56 million.

Our customer derivative program also introduces liquidity and capital risk. We are required to provide cash margin to certain counterparties when the net negative fair value of the contracts exceeds established limits. Also, changes in commodity prices affect the amount of regulatory capital we are required to hold as support for the fair value of our derivative assets. These risks are modeled as part of the management of these programs. Based on current prices, a decrease in market prices equivalent to $47.17 per barrel of oil would decrease the fair value of derivative assets by $230 million, with dealer counterparties comprising the bulk of the assets. An increase in prices equivalent to $73.93 per barrel of oil would increase the fair value of derivative assets by $711 million as margin received falls faster than the asset values. Liquidity requirements of this program may also be affected by our credit rating. At March 31, 2021, a decrease in our credit rating to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $10 million. The fair value of our to-be-announced residential mortgage-backed securities and interest rate swap derivative contracts is affected by changes in interest rates. Based on our assessment as of March 31, 2021, changes in interest rates would not materially impact regulatory capital or liquidity needed to support this portion of our customer derivative program.

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Summary of Credit Loss Experience

Table 16 -- Summary of Credit Loss Experience

(In thousands)


	Three Months Ended
	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
Allowance for loan losses:
Beginning balance	$	388,640	$	419,777	435,597		315,311		210,759
CECL transition adjustment1	—		—		—		—		25,809
Beginning balance, adjusted	388,640		419,777		435,597		315,311		236,568
Loans charged off	(16,905)		(18,251)		(26,661)		(15,570)		(18,917)
Recoveries of loans previously charged off	2,437		1,592		4,232		1,491		1,696
Net loans charged off	(14,468)		(16,659)		(22,429)		(14,079)		(17,221)
Provision for credit losses	(21,770)		(14,478)		6,609		134,365		95,964
Ending balance	$	352,402	$	388,640	419,777		435,597		315,311

Accrual for off-balance sheet credit risk from unfunded loan commitments:
Beginning balance	$	36,921	$	27,969	32,919		28,514		1,585
CECL transition adjustment	—		—		—		—		23,552
Beginning balance, adjusted	36,921		27,969		32,919		28,514		25,137
Provision for credit losses	(4,044)		8,952		(4,950)		4,405		3,377
Ending balance	$	32,877	$	36,921	27,969		32,919		28,514

Accrual for off-balance sheet credit risk associated with mortgage banking activities:
Beginning balance	$	4,282	$	5,246	6,041		9,660		4,820
CECL transition adjustment	—		—		—		—		10,915
Beginning balance, adjusted	4,282		5,246		6,041		9,660		15,735
Loans charged off	(32)		(41)		(25)		(44)		(55)
Provision for credit losses	885		(923)		(770)		(3,575)		(6,020)
Ending balance	$	5,135	$	4,282	5,246		6,041		9,660

Allowance for credit losses related to held-to-maturity (investment) securities:
Beginning balance	$	688	$	739	$	1,628	$	1,502	$	—
CECL transition adjustment	—		—		—		—		1,052
Beginning balance, adjusted	688		739		1,628		1,502		1,052
Provision for credit losses	(71)		(51)		(889)		126		450
Ending balance	$	617	$	688	$	739	$	1,628	$	1,502

Total provision for credit losses	$	(25,000)	$	(6,500)	$	—	$	135,195	$	93,321

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	Three Months Ended
	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
Net charge-offs (annualized) to average loans	0.25	%	0.28	%	0.37	%	0.23	%	0.31	%
Net charge-offs (annualized) to average loans excluding PPP loans2	0.28	%	0.31	%	0.41	%	0.25	%	0.31	%
Recoveries to gross charge-offs	14.42	%	8.72	%	15.87	%	9.58	%	8.97	%
Provision for loan losses (annualized) to average loans	(0.38)	%	(0.25)	%	0.11	%	2.23	%	1.75	%
Allowance for loan losses to loans outstanding at period-end	1.56	%	1.69	%	1.76	%	1.80	%	1.40	%
Allowance for loan losses to loans outstanding at period-end excluding PPP loans2	1.70	%	1.82	%	1.93	%	1.97	%	1.40	%
Accrual for unfunded loan commitments to loan commitments	0.29	%	0.34	%	0.27	%	0.32	%	0.29	%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to loans outstanding at period-end	1.71	%	1.85	%	1.88	%	1.94	%	1.53	%
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to loans outstanding at period-end excluding PPP loans2	1.86	%	2.00	%	2.06	%	2.12	%	1.53	%

1 Included $1.3 million related to measurement changes to the allowance attributed to outstanding loan balances and $24.5 million related to recognition of expected credit losses on acquired loans.

2 Metric meaningful due to the unique characteristics and short-term nature of the PPP loans.

Allowance for Loan Losses and Accrual for Off-Balance Sheet Credit Risk from Unfunded Loan Commitments

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. 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. See Note 4 to the consolidated financial statements for additional discussion of methodology of allowance for loan losses.

A $25.0 million negative provision for credit losses was recorded the first quarter of 2021. 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, and other assumptions, resulted in a $31.1 million decrease in the allowance for credit losses from lending activities. Changes in the loan portfolio characteristics, including specific impairment and losses, loan balances and risk grading resulted in a $5.2 million increase in the allowance for credit losses from lending activities.

- 27 -

Our reasonable and supportable forecast of macroeconomic variables are significantly influenced by the COVID-19 pandemic developments and related government stimulus policies, which remain highly uncertain. A summary of macroeconomic variables considered in developing our estimate of expected credit losses at March 31, 2021 follows:


	Base	Downside	Upside
Scenario probability weighting	60%	30%	10%
COVID-19 trajectory	COVID-19 case levels continue to improve as virus immunity becomes more widespread and proves effective against new virus strains. Vaccine distribution continues to accelerate through the first half of 2021, with large share of U.S. population vaccinated by end of third quarter of 2021.	Trajectory of COVID-19 pandemic worsens as country experiences additional surges stemming from new virus strains; hotspots emerge throughout the second and third quarter of 2021 resulting in state/regional shutdowns, though a nation-wide shutdown is not re-implemented. The pace of vaccine distribution slows from current levels with widespread vaccination in the U.S. by the end of 2021.	COVID-19 case levels continue to improve as virus immunity becomes more widespread and proves effective against new virus strains. Vaccine distribution continues to accelerate through the first half of 2021, with large share of U.S. population vaccinated by end of third quarter of 2021.
Economic recovery (driven by COVID-19 trajectory)	Continued easing of restrictions and the release of pent-up consumer demand results in GDP growth above historical averages, recovering to pre-COVID levels in the second quarter of 2021.	Deteriorated COVID-19 situation, slow vaccine distribution and lack of additional fiscal stimulus in 2021 cause the economy to fall back into recession. GDP does not recover to pre-COVID-19 levels until second quarter of 2022.	Continued easing of restrictions and the release of pent-up consumer demand results in GDP growth above historical averages, recovering to pre-COVID levels in the second quarter of 2021.
Fiscal stimulus (driven by economic recovery)	No additional major COVID-focused relief packages are enacted in 2021.	No additional major COVID-focused relief packages are enacted in 2021.	No additional major COVID-focused relief packages are enacted in 2021.
Macro-economic factors	–GDP is forecasted to grow by 5.6 percent over the next 12 months. –Civilian unemployment rate of 6.0 percent in the second quarter of 2021 improves to 5.0 percent by the first quarter of 2022. –WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of March 2021 and are expected to average $57.87 per barrel over the next 12 months.	–No GDP growth is forecasted over the next 12 months. –Civilian unemployment rate of 6.8 percent in the second quarter of 2021 increases in the next two quarters then improving to 7.8 percent by the first quarter of 2022. –WTI oil prices are projected to average $44.15 over the next 12 months.	–GDP is forecasted to grow by 7.1 percent over the next 12 months. –Civilian unemployment rate of 5.7 percent in the second quarter of 2021 improves to 4.3 percent by the first quarter of 2022. –WTI oil prices are projected to average $63.28 per barrel over the next 12 months.

- 28 -

Net charge-offs and changes in specific impairments attributed to certain credits required a $12.1 million provision during the first quarter of 2021. This provision was partially offset by a decrease in allowance related to lower outstanding loan balances. There was a slight increase in the provision for credit losses related to risk grading during the quarter. A summary of outstanding loan balances by risk grade is included in Note 4 to the Consolidated Financial Statements. Non-pass grade loans include other loans especially mentioned, defined by regulatory guidelines as loans that are currently performing in compliance with original terms but may have a potential weakness that deserves management’s close attention, accruing substandard loans, and nonaccruing loans. Non-pass grade loans totaled $860 million at March 31, a $164 million decrease from December 31. Non-pass graded loans were primarily composed of $524 million or 16 percent of energy loans, $108 million or 3 percent of services loans, $76 million or 3 percent of general business loans and $60 million or 1 percent of commercial real state loans.

The allowance for loan losses totaled $352 million or 1.56 percent of outstanding loans and 170 percent of nonaccruing loans at March 31, 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 $385 million or 1.71 percent of outstanding loans and 186 percent of nonaccruing loans at March 31, 2021. Excluding PPP loans, the allowance for loan losses was 1.70 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 1.86 percent.

The allowance for credit losses attributed to energy was 3.29 percent of outstanding energy loans at March 31. Our semi-annual borrowing base redeterminations during the fourth quarter of 2020 were based on forward pricing curves that existed at that time, which resulted in credit quality migration at that time. While forward prices subsequently improved, the pricing environment remains fragile and tied to the continued economic recovery from the impact of the COVID-19 pandemic. We believe the duration of the downturn is a more significant factor affecting performance than the level of prices.

The company recorded a $6.5 million negative provision for credit losses in the fourth quarter of 2020. The allowance for loan losses was $389 million or 1.69 percent of outstanding loans and 171 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies 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 and 188 percent of nonaccruing loans. 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.

Net Loans Charged Off

Net charge-offs of commercial loans were $13.7 million in the first quarter of 2021, primarily related to two energy production borrowers. Net commercial real estate loan charge-offs were $233 thousand and net charge-offs of loans to individuals were $566 thousand. Net charge-offs of loans to individuals include deposit account overdraft losses.

Accrual for Off-Balance Sheet Credit Risk Associated with Mortgage Banking Activities

The accrual for off-balance sheet credit risk associated with mortgage banking activities includes consideration of credit risk related to certain residential mortgage loans sold into mortgage-backed securities in excess of amounts guaranteed by the U.S. Department of Veteran's Affairs ("VA") and mortgage loans originated under community development loan programs that were sold to a U.S. government agency with full recourse.

We use publicly available long-term national data to estimate total loss given default for our off-balance sheet credit risk related to losses in excess of amounts guaranteed by the VA. This result is combined with probability of default output from our mortgage servicing rights model to estimate total expected loss. Then, we estimate the VA's guarantee percentage to determine our portion of the credit risk. Qualitative adjustment may be used, if necessary.

Allowance for Credit Losses Related to Held-to-Maturity (Investment) Securities

The expected credit losses principles apply to all financial assets measured at cost, including our held-to-maturity (investment) debt securities portfolio. Our investment portfolio includes municipal and other tax-exempt securities and other debt securities. Expected credit losses for these assets is based on probability of default and loss given default assumptions that align with similarly graded loans. Qualitative adjustment may be used, if necessary.

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Nonperforming Assets

As more fully described in Note 4 to the Consolidated Financial Statements, loans are generally classified as nonaccruing when it becomes probable that we will not collect the full contractual principal and interest. Accruing renegotiated loans guaranteed by U.S. government agencies represent residential mortgage loans that have been modified in troubled debt restructurings. Interest continues to accrue based on the modified terms of the loan and loans may be sold once they become eligible according to U.S. government agency guidelines. Real estate and other repossessed assets are assets acquired in partial or total forgiveness of loans. The assets are carried at the lower of cost as determined by fair value at the date of foreclosure or current fair value, less estimated selling costs. A summary of nonperforming assets follows in Table 17:

Table 17 -- Nonperforming Assets

(In thousands)


	Mar. 31, 2021			Dec. 31, 2020			Sept. 30, 2020			June 30, 2020			Mar. 31, 2020
Nonaccruing loans:
Commercial:
Energy	$	101,800		$	125,059		$	126,816		$	162,989		$	96,448
Healthcare	3,187			3,645			3,645			3,645			4,070
Services	28,033			25,598			25,817			21,032			8,425
General business	14,053			12,857			13,675			14,333			9,681
Total commercial	147,073			167,159			169,953			201,999			118,624

Commercial real estate	27,243			27,246			12,952			13,956			8,545

Loans to individuals:
Residential mortgage	32,884			32,228			31,599			33,098			30,721
Residential mortgage guaranteed by U.S. government agencies	8,564			7,741			6,397			6,110			5,005
Personal	255			319			252			233			277
Total loans to individuals	41,703			40,288			38,248			39,441			36,003
Total nonaccruing loans	216,019			234,693			221,153			255,396			163,172
Accruing renegotiated loans guaranteed by U.S. government agencies	154,591			151,775			142,770			114,571			91,757
Real estate and other repossessed assets	70,911			90,526			52,847			35,330			36,744
Total nonperforming assets	$	441,521		$	476,994		$	416,770		$	405,297		$	291,673
Total nonperforming assets excluding those guaranteed by U.S. government agencies	$	278,366		$	317,478		$	267,603		$	284,616		$	194,911

Allowance for loan losses to nonaccruing loans1	169.87		%	171.24		%	195.47		%	174.74		%	199.35		%
Nonperforming assets to outstanding loans and repossessed assets	1.95		%	2.07		%	1.75		%	1.68		%	1.30		%
Nonperforming assets to outstanding loans and repossessed assets excluding residential mortgage and PPP loans guaranteed by U.S. government agencies1,2	1.37		%	1.51		%	1.25		%	1.31		%	0.87		%
Nonaccruing commercial loans to outstanding commercial loans	1.16		%	1.28		%	1.25		%	1.43		%	0.80		%
Nonaccruing commercial real estate loans to outstanding commercial real estate loans	0.60		%	0.58		%	0.28		%	0.31		%	0.19		%
Nonaccruing loans to individuals to outstanding loans to individuals1	1.07		%	1.04		%	1.04		%	1.10		%	1.03		%

1 Excludes residential mortgages guaranteed by U.S. government agencies.

2 Excludes residential mortgage and PPP loans guaranteed by U.S. government agencies.

- 30 -

Excluding assets guaranteed by U.S. government agencies, nonperforming assets decreased $39 million from December 31, 2020, primarily due to a $23 million decrease in nonaccruing energy loans and a $20 million decrease in real estate and other repossessed assets. Newly identified nonaccruing loans totaled $25 million, offset by $26 million of payments and $17 million of charge-offs. The Company generally retains nonperforming assets to maximize potential recovery, which may cause future nonperforming assets to decrease more slowly.

A rollforward of nonperforming assets for the three months ended March 31, 2021 follows in Table 18.

Table 18 -- Rollforward of Nonperforming Assets

(In thousands)


	Three Months Ended
	March 31, 2021
	Nonaccruing Loans
	Commercial		Commercial Real Estate		Loan to Individuals		Total		Renegotiated Loans		Real Estate and Other Repossessed Assets		Total Nonperforming Assets
Balance, December 31, 2020	$	167,159	$	27,246	$	40,288	$	234,693	$	151,775	$	90,526	$	476,994
Additions	18,928		327		5,330		24,585		12,700		8,688		45,973

Payments	(23,669)		(67)		(2,522)		(26,258)		(699)		—		(26,957)
Charge-offs	(15,345)		(263)		(1,297)		(16,905)		—		—		(16,905)
Net gains (losses) and write-downs	—		—		—		—		—		13,158		13,158
Foreclosure of nonperforming loans	—		—		(147)		(147)		—		147		—
Foreclosure of loans guaranteed by U.S. government agencies	—		—		(226)		(226)		(122)		—		(348)
Proceeds from sales	—		—		—		—		(8,914)		(41,608)		(50,522)

Net transfers to nonaccruing loans	—		—		424		424		(424)		—		—
Return to accrual status	—		—		(147)		(147)		—		—		(147)
Other, net	—		—		—		—		275		—		275
Balance, March 31, 2021	$	147,073	$	27,243	$	41,703	$	216,019	$	154,591	$	70,911	$	441,521

We foreclose on loans guaranteed by U.S. government agencies in accordance with agency guidelines. Generally these loans are not eligible for modification programs or have failed to comply with modified loan terms. Principal is guaranteed by agencies of the U.S. government, subject to limitations and credit risk is limited. At foreclosure, these amounts are transferred to claims receivable accounts. These properties will be conveyed to the agencies once applicable criteria have been met.

Real Estate and Other Repossessed Assets

Real estate and other repossessed assets totaled $71 million at March 31, 2021, composed primarily of $48 million of oil and gas properties, including a consolidated limited liability corporation that is 60% owned by the Company and 40% owned by an unrelated financial institution. The remaining balance of real estate and repossessed assets included $18 million of developed commercial real estate, $2.4 million of undeveloped land primarily zoned for commercial development, $1.7 million of equipment and $498 thousand of 1-4 family residential properties. Real estate and other repossessed assets totaled $91 million at December 31, 2020. The decrease compared to December 31 was primarily due to the sale of certain repossessed oil and gas properties.

- 31 -

Liquidity and Capital

Based on the average balances for the first quarter of 2021, approximately 73 percent of our funding was provided by deposit accounts, 12 percent from borrowed funds, less than 1 percent from long-term subordinated debt and 10 percent from equity. Our funding sources, which primarily include deposits and borrowings from the Federal Home Loan Banks and other banks, provide adequate liquidity to meet our operating needs.

Subsidiary Bank

Deposits and borrowed funds are the primary sources of liquidity for BOKF, NA, the wholly owned subsidiary bank of BOK Financial. We compete for retail and commercial deposits by offering a broad range of products and services and focusing on customer convenience. Retail deposit growth is supported through personal and small business checking, online bill paying services, mobile banking services, an extensive network of branch locations and ATMs and our ExpressBank call center. Commercial deposit growth is supported by offering treasury management and lockbox services. We also acquire brokered deposits when the cost of funds is advantageous to other funding sources.

Average deposits for the first quarter of 2021 totaled $36.5 billion, a $1.0 billion increase over the fourth quarter of 2020. Continued deposit growth was primarily due to customers maintaining higher balances in the current economic environment, supplemented by inflows from government stimulus payments. Interest-bearing transaction account balances increased $715 million. Demand deposits increased $177 million while certificate of deposit balances increased $56 million.

Table 19 - Average Deposits by Line of Business

(In thousands)


	Three Months Ended
	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
Commercial Banking	$	16,130,168	$	15,373,673	$	15,375,450	$	14,599,225	$	11,907,386
Consumer Banking	8,082,443		7,993,971		7,940,973		7,587,246		6,869,481
Wealth Management	9,706,295		9,589,814		9,090,116		8,385,681		7,623,986
Subtotal	33,918,906		32,957,458		32,406,539		30,572,152		26,400,853
Funds Management and other	2,603,210		2,565,171		2,233,394		2,078,802		1,794,715
Total	$	36,522,116	$	35,522,629	$	34,639,933	$	32,650,954	$	28,195,568

Average Commercial Banking deposit balances increased $756 million over the fourth quarter of 2020. Interest-bearing transaction account balances increased $472 million. Demand deposit balances were up $134 million. Time deposits increased $152 million compared to the prior quarter. Commercial customers continue to retain large cash reserves primarily due to a combination of factors including uncertainty about the economic environment and potential for growth, lack of preferable liquid alternatives and a desire to minimize deposit service charges through the earnings credit. The earnings credit is a non-cash method that enables commercial customers to offset deposit service charges based on account balances. Commercial deposit balances may decrease as the economic outlook improves and if short-term rates move higher, enhancing their investment alternatives.

Average Consumer Banking deposit balances increased $88 million over the prior quarter. A $64 million increase in interest-bearing transaction deposit balances and a $52 million increase in savings account balances were partially offset by a $31 million decrease in time deposit balances. Demand deposit balances were largely unchanged compared to the prior quarter.

Average Wealth Management deposits increased $116 million over the fourth quarter of 2020, primarily due to interest-bearing transaction accounts. Demand deposit balances were also up, offset by lower time deposit balances.

Average time deposits for the first quarter of 2021 included $91 million of brokered deposits, an $8.4 million increase compared to the fourth quarter of 2020. Average interest-bearing transaction accounts for the first quarter included $2.3 billion of brokered deposits, a $37 million decrease compared to the fourth quarter of 2020.

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The distribution of our period end deposit account balances among principal markets follows in Table 20.

Table 20 -- Period End Deposits by Principal Market Area

(In thousands)


	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
Oklahoma:
Demand	$	4,822,895	$	4,328,619	$	4,493,691	$	4,378,559	$	3,669,558
Interest-bearing:
Transaction	12,827,914		12,603,603		12,586,401		11,438,489		9,955,697
Savings	487,862		420,996		401,062		387,557		329,631
Time	1,197,517		1,134,453		1,081,176		1,330,619		1,137,802
Total interest-bearing	14,513,293		14,159,052		14,068,639		13,156,665		11,423,130
Total Oklahoma	19,336,188		18,487,671		18,562,330		17,535,224		15,092,688

Texas:
Demand	3,593,510		3,450,468		3,152,393		3,070,955		2,767,399
Interest-bearing:
Transaction	4,257,390		3,800,482		3,482,603		3,358,090		2,874,362
Savings	154,406		139,173		136,787		128,892		115,039
Time	368,086		383,062		438,337		476,867		505,565
Total interest-bearing	4,779,882		4,322,717		4,057,727		3,963,849		3,494,966
Total Texas	8,373,392		7,773,185		7,210,120		7,034,804		6,262,365

Colorado:
Demand	2,115,354		2,168,404		2,057,603		2,096,075		1,579,764
Interest-bearing:
Transaction	2,100,135		2,170,485		1,861,763		1,816,604		1,759,384
Savings	73,446		69,384		68,230		67,477		58,000
Time	204,973		208,778		226,780		254,845		279,105
Total interest-bearing	2,378,554		2,448,647		2,156,773		2,138,926		2,096,489
Total Colorado	4,493,908		4,617,051		4,214,376		4,235,001		3,676,253

New Mexico:
Demand	1,131,713		941,074		964,908		965,877		750,052
Interest-bearing:
Transaction	736,923		733,007		713,418		752,565		563,891
Savings	103,591		91,646		85,463		80,242		67,553
Time	181,863		186,307		200,525		222,370		235,778
Total interest-bearing	1,022,377		1,010,960		999,406		1,055,177		867,222
Total New Mexico	2,154,090		1,952,034		1,964,314		2,021,054		1,617,274

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	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020
Arizona:
Demand	915,439		905,201		928,671		985,757		665,396
Interest-bearing:
Transaction	835,795		768,220		771,319		780,500		729,603
Savings	13,235		12,174		11,498		15,669		8,832
Time	30,997		32,721		36,929		42,318		47,081
Total interest-bearing	880,027		813,115		819,746		838,487		785,516
Total Arizona	1,795,466		1,718,316		1,748,417		1,824,244		1,450,912

Kansas/Missouri:
Demand	478,370		426,738		405,360		427,795		318,985
Interest-bearing:
Transaction	991,510		960,237		616,797		526,635		537,552
Savings	18,686		16,286		15,520		15,033		12,888
Time	13,898		14,610		16,430		17,746		19,137
Total interest-bearing	1,024,094		991,133		648,747		559,414		569,577
Total Kansas/Missouri	1,502,464		1,417,871		1,054,107		987,209		888,562

Arkansas:
Demand	45,889		45,834		44,712		67,147		70,428
Interest-bearing:
Transaction	141,207		122,388		164,439		177,535		175,803
Savings	3,000		2,333		2,389		2,101		1,862
Time	7,022		7,197		7,796		7,995		8,005
Total interest-bearing	151,229		131,918		174,624		187,631		185,670
Total Arkansas	197,118		177,752		219,336		254,778		256,098
Total BOK Financial deposits	$	37,852,626	$	36,143,880	$	34,973,000	$	33,892,314	$	29,244,152

In addition to deposits, liquidity is provided primarily by federal funds purchased, securities repurchase agreements and Federal Home Loan Bank borrowings. Federal funds purchased consist primarily of unsecured, overnight funds acquired from other financial institutions. Funds are primarily purchased from bankers’ banks and Federal Home Loan banks from across the country. The Company has no wholesale federal funds purchased at March 31, 2021. Securities repurchase agreements generally mature within 90 days and are secured by certain available for sale and trading securities. Federal Home Loan Bank borrowings are generally short-term and are secured by a blanket pledge of eligible collateral (generally unencumbered U.S. Treasury and agency mortgage-backed securities, 1-4 family residential mortgage loans, multifamily and other qualifying commercial real estate loans). Amounts borrowed from the Federal Home Loan Bank of Topeka averaged $1.8 billion during the quarter, compared to $3.2 billion in the fourth quarter of 2020.

On April 13, 2020, the banking agencies published an interim final rule which permits banking organizations to exclude from regulatory capital requirements PPP covered loans pledged to the Federal Reserve's Paycheck Protection Program Liquidity Facility ("PPLF"). The Company initially funded PPP loans from deposits and Federal Home Loan Bank borrowings, but transitioned to the PPLF in June 2020 in order to realize this regulatory capital relief.

At March 31, 2021, the estimated unused credit available to BOKF, NA from collateralized sources was approximately $17.6 billion.

A summary of other borrowings for BOK Financial on a consolidated basis follows in Table 21.

- 34 -

Table 21 -- Borrowed Funds

(In thousands)


			Three Months Ended March 31, 2021							Three Months Ended Dec. 31, 2020
	Mar. 31, 2021		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter	Dec. 31, 2020		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter







Funds purchased	236,151		874,576		0.39	%	542,465	769,365		1,270,485		0.40	%	916,171
Repurchase agreements	559,010		1,955,801		0.11	%	1,073,237	893,021		882,769		0.11	%	893,021
Other borrowings:
Federal Home Loan Bank advances	—		1,836,667		0.29	%	1,400,000	200,000		3,240,217		0.35	%	1,500,000
GNMA repurchase liability	14,044		20,979		4.08	%	23,856	19,500		26,096		3.98	%	27,482

Paycheck protection program liquidity facility	1,662,598		1,505,930		0.35	%	1,662,598	1,635,963		1,897,932		0.35	%	1,995,322
Other	31,875		28,771		5.59	%	31,875	27,507		29,411		5.99	%	30,907
Total other borrowings	1,708,517		3,392,347		0.39	%		1,882,970		5,193,656		0.42	%
Subordinated debentures1	276,024		276,015		4.92	%	276,024	276,005		275,998		4.87	%	276,005


Total other borrowed funds and subordinated debentures	$	2,779,702	$	6,498,739	0.50	%		$	3,821,361	$	7,622,908	0.54	%

1 Parent Company only.

BOKF, NA also has a liability related to the repurchase of certain delinquent residential mortgage loans previously sold in GNMA mortgage pools. Interest is payable monthly at rates contractually due to investors.

Parent Company

At March 31, 2021, cash and interest-bearing cash and cash equivalents held by the parent company totaled $140 million. The primary sources of liquidity for BOK Financial are cash on hand and dividends from BOKF, NA. Dividends from the bank are limited by various banking regulations to net profits, as defined, for the year plus retained profits for the two preceding years. Dividends are further restricted by minimum capital requirements. At March 31, 2021, based upon the most restrictive limitations as well as management's internal capital policy, BOKF, NA could declare up to $474 million of dividends without regulatory approval. Dividend constraints may be alleviated through increases in retained earnings, capital issuances or changes in risk weighted assets. Future losses or increases in required regulatory capital at the bank could affect its ability to pay dividends to the parent company.

Our equity capital at March 31, 2021 was $5.3 billion, a $29 million decrease compared to December 31, 2020. Net income less cash dividends paid increased equity $110 million during the first quarter of 2021. Changes in interest rates resulted in a $114 million decrease in accumulated other comprehensive gain compared to December 31, 2020. We also repurchased $20 million of common stock during the first quarter of 2021. Capital is managed to maximize long-term value to the shareholders. Factors considered in managing capital include projections of future earnings including expected benefits from lower federal income tax rates, asset growth and acquisition strategies, and regulatory and debt covenant requirements. Capital management may include subordinated debt or perpetual preferred stock issuance, share repurchase and stock and cash dividends.

On April 30, 2019, the board of directors authorized the Company to purchase up to five million common shares, subject to market conditions, securities law and other regulatory compliance limitations. As of March 31, 2021, 2,233,813 shares have been repurchased under this authorization. The Company repurchased 260,000 shares of common stock at an average price of $77.20 a share in the first quarter of 2021. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

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BOK Financial and BOKF, NA are subject to various capital requirements administered by federal agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that could have a material impact on operations. These capital requirements include quantitative measures of assets, liabilities and off-balance sheet items. The capital standards are also subject to qualitative judgments by the regulators.

A summary of minimum capital requirements, including capital conservation buffer follows in Table 22. A bank which falls below these levels, including the capital conservation buffer, would be subject to regulatory restrictions on capital distributions (including but not limited to dividends and share repurchases) and executive bonus payments.

In March 2020, in response to the impact on the financial markets by the COVID-19 pandemic, the banking agencies issued an interim final rule permitting banking organizations that implement CECL the option to delay for two years an estimate of the CECL methodology's effect on regulatory capital, followed by a three-year transition period. The estimate includes the implementation date adjustment as of January 1, 2020 plus an estimate of the impact of the change for a two year period following implementation of CECL. We have elected to delay the regulatory capital impact of the transition in accordance with the interim final rule. Deferral of the impact of CECL added 23 basis points to the Company's Common equity Tier 1 capital at March 31, 2021.

The capital ratios for BOK Financial on a consolidated basis are presented in Table 22.

Table 22 -- Capital Ratios


	Minimum Capital Requirement		Capital Conservation Buffer		Minimum Capital Requirement Including Capital Conservation Buffer		Mar. 31, 2021		Dec. 31, 2020		Mar. 31, 2020
Risk-based capital:
Common equity Tier 1	4.50	%	2.50	%	7.00	%	12.14	%	11.95	%	10.98	%
Tier 1 capital	6.00	%	2.50	%	8.50	%	12.21	%	11.95	%	10.98	%
Total capital	8.00	%	2.50	%	10.50	%	13.98	%	13.82	%	12.65	%
Tier 1 Leverage	4.00	%	N/A		4.00	%	8.42	%	8.28	%	8.15	%

Average total equity to average assets							10.48	%	10.38	%	10.73	%
Tangible common equity ratio							8.82	%	9.02	%	8.39	%

Capital resources of financial institutions are also regularly measured by the tangible common shareholders’ equity ratio. Tangible common shareholders’ equity is shareholders’ equity as defined by generally accepted accounting principles in the United States of America (“GAAP”) less intangible assets and equity which does not benefit common shareholders. Equity that does not benefit common shareholders includes preferred equity. This non-GAAP measure is a valuable indicator of a financial institution’s capital strength since it eliminates intangible assets from shareholders’ equity and retains the effect of unrealized losses on securities and other components of accumulated other comprehensive income in shareholders’ equity.

Table 23 provides a reconciliation of the non-GAAP measures with financial measures defined by GAAP.

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Table 23 -- Non-GAAP Measure

(Dollars in thousands)


	Mar. 31, 2021			Dec. 31, 2020			Sept. 30, 2020			June 30, 2020			Mar. 31, 2020
Tangible common equity ratio:
Total shareholders' equity	$	5,239,462		$	5,266,266		$	5,218,787		$	5,096,995		$	5,026,248
Less: Goodwill and intangible assets, net	1,158,676			1,161,527			1,166,615			1,171,686			1,169,898
Tangible common equity	4,080,786			4,104,739			4,052,172			3,925,309			3,856,350
Total assets	47,442,513			46,671,088			46,067,224			45,819,874			47,119,162
Less: Goodwill and intangible assets, net	1,158,676			1,161,527			1,166,615			1,171,686			1,169,898
Tangible assets	$	46,283,837		$	45,509,561		$	44,900,609		$	44,648,188		$	45,949,264
Tangible common equity ratio	8.82		%	9.02		%	9.02		%	8.79		%	8.39		%

Pre-provision net revenue:
Net income before taxes	$	186,690		$	199,847		$	204,644		$	80,089		$	79,284
Provision for expected credit losses	(25,000)			(6,500)			—			135,321			93,771
Net income (loss) attributable to non-controlling interests	(1,752)			485			58			(407)			(95)
Pre-provision net revenue	$	163,442		$	192,862		$	204,586		$	215,817		$	173,150

Pre-provision net revenue is a measure of revenue less expenses, and is calculated before provision for credit losses and income tax expense. This financial measure is frequently used by investors and analysts to enable them to assess a company's ability to generate earnings to cover credit losses through a credit cycle. It also provides an additional basis for comparing the results of operations between periods by isolating the impact of the provision for credit losses, which can vary significantly between periods.

Off-Balance Sheet Arrangements

See Note 4 to the Consolidated Financial Statements for a discussion of the Company’s significant off-balance sheet commitments.

Market Risk

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices or equity prices. Financial instruments that are subject to market risk can be classified either as held for trading or held for purposes other than trading. Market risk excludes changes in fair value due to the credit of the individual issuers of financial instruments.

BOK Financial is subject to market risk primarily through the effect of changes in interest rates on both its assets held for purposes other than trading and trading assets. The effects of other changes, such as foreign exchange rates, commodity prices or equity prices do not pose significant market risk to BOK Financial. BOK Financial has no material investments in assets that are affected by changes in foreign exchange rates or equity prices. Energy and agricultural product derivative contracts, which are affected by changes in commodity prices, are matched against offsetting contracts as previously discussed.

The Asset/Liability Committee is responsible for managing market risk in accordance with policy limits established by the Board of Directors. The Committee monitors projected variation in net interest revenue, net income and economic value of equity due to specified changes in interest rates. These limits also set maximum levels for short-term borrowings, short-term assets, public funds and brokered deposits and establish minimum levels for un-pledged assets, among other things. Further, the Board approved market risk limits for fixed income trading, mortgage pipeline and mortgage servicing assets inclusive of economic hedge benefits. Exposure is measured daily and compliance is reviewed monthly. Deviations from the Board approved limits, which periodically occur throughout the reporting period, may require management to develop and execute plans to reduce exposure. These plans are subject to escalation to and approval by the Board.

The simulations used to manage market risk are based on numerous assumptions regarding the effects of changes in interest rates on the timing and extent of repricing characteristics, future cash flows and customer behavior. These assumptions are inherently uncertain and, as a result, models cannot precisely estimate or precisely predict the impact of higher or lower interest

- 37 -

rates. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes, market conditions and management strategies, among other factors.

Interest Rate Risk – Other than Trading

As previously noted in the Net Interest Revenue section of this report, management has implemented strategies to manage the Company’s balance sheet to have relatively limited exposure to changes in interest rates over a twelve-month period. The effectiveness of these strategies in managing the overall interest rate risk is evaluated through the use of an asset/liability model. BOK Financial performs a sensitivity analysis to identify more dynamic interest rate risk exposures, including embedded option positions, on net interest revenue. A simulation model is used to estimate the effect of changes in interest rates on our performance across multiple interest rate scenarios. Our current internal policy limit for net interest revenue variation due to a 200 basis point parallel change in market interest rates over twelve months is a maximum decline of 5 percent. The results of a decrease in interest rates in the current low-rate environment are not meaningful.

The Company’s primary interest rate exposures include the Federal Funds rate, which affects short-term borrowings, and the prime lending rate and LIBOR, which are the basis for much of the variable rate loan pricing. Additionally, residential mortgage rates directly affect the prepayment speeds for residential mortgage-backed securities and mortgage servicing rights. Derivative financial instruments and other financial instruments used for purposes other than trading are included in this simulation. In addition, the impact on the level and composition of demand deposit accounts and other core deposit balances resulting from a significant increase in short-term market interest rates and the overall interest rate environment is likely to be material. The simulation incorporates assumptions regarding the effects of such changes based on a combination of historical analysis and expected behavior. The impact of planned growth and new business activities is factored into the simulation model.

Table 24 -- Interest Rate Sensitivity

(Dollars in thousands)


	200 bp Increase						100 bp Decrease1
	March 31,						March 31,
	2021			2020			2021	2020
Anticipated impact over the next twelve months on net interest revenue	$	27,784		$	(10,523)		N/A	N/A
	2.64		%	(1.02)		%	N/A	N/A

1 The results of a decrease in the current low-rate environment are not meaningful.

BOK Financial is also subjected to market risk through changes in the fair value of mortgage servicing rights. Changes in the fair value of mortgage servicing rights are highly dependent on changes in primary mortgage rates offered to borrowers, intermediate-term interest rates that affect the value of custodial funds, and assumptions about servicing revenues, servicing costs and discount rates. As primary mortgage rates increase, prepayment speeds slow and the value of our mortgage servicing rights increases. As primary mortgage rates fall, prepayment speeds increase and the value of our mortgage servicing rights decreases.

We maintain a portfolio of financial instruments, which may include debt securities issued by the U.S. government or its agencies and interest rate derivative contracts, held as an economic hedge of the changes in the fair value of our mortgage servicing rights. Composition of this portfolio will change based on our assessment of market risk. Changes in the fair value of residential mortgage-backed securities are highly dependent on changes in secondary mortgage rates required by investors, and interest rate derivative contracts are highly dependent on changes in other market interest rates. While primary and secondary mortgage rates generally move in the same direction, the spread between them may widen and narrow due to market conditions and government intervention. Changes in the forward-looking spread between the primary and secondary rates can cause significant earnings volatility.

Management performs a stress test to measure market risk due to changes in interest rates inherent in its MSR portfolio and hedges. The stress test shocks applicable interest rates up and down 50 basis points and calculates an estimated change in fair value, net of economic hedging activity, that may result. The Board has approved a $20 million market risk limit for mortgage servicing rights, net of economic hedges.

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Table 25 -- MSR Asset and Hedge Sensitivity Analysis

(Dollars in thousands)


	March 31,
	2021				2020
	Up 50 bp		Down 50 bp		Up 50 bp		Down 50 bp
MSR Asset	$	26,731	$	(33,289)	$	36,430	$	(18,051)
MSR Hedge	(31,621)		29,949		(27,134)		26,900
Net Exposure	(4,890)		(3,340)		9,296		8,849

Trading Activities

The Company bears market risk by originating residential mortgages held for sale ("RMHFS"). RMHFS are generally outstanding for 60 to 90 days, which represents the typical period from commitment to originate a loan to sale of the closed loan to an investor. Primary mortgage interest rate changes during this period affect the value of RMHFS commitments and loans. We use forward sale contracts to mitigate market risk on all closed mortgage loans held for sale and on an estimate of mortgage loan commitments that are expected to result in closed loans.

A variety of methods are used to monitor market risk of mortgage origination activities. These methods include daily marking of all positions to market value, independent verification of inventory pricing, and revenue sensitivity limits.

Management performs a stress test to measure market risk due to changes in interest rates inherent in the mortgage production pipeline. The stress test shocks applicable interest rates up and down 50 basis points and calculates an estimated change in fair value, net of economic hedging activity that may result. The Board has approved a $7 million market risk limit for the mortgage production pipeline, net of forward sale contracts.

Table 26 -- Mortgage Pipeline Sensitivity Analysis

(Dollars in thousands)


	Three Months Ended March 31,
	2021				2020
	Up 50 bp		Down 50 bp		Up 50 bp		Down 50 bp
Average1	$	(647)	$	(612)	$	(211)	$	(166)
Low2	(17)		(58)		582		998
High3	(1,244)		(1,097)		(1,344)		(1,483)
Period End	(564)		(422)		(758)		(262)

1 Average represents the simple average of each daily value observed during the reporting period.

2 Low represents least risk of loss in fair value measured as the smallest negative value or the largest positive value observed daily during the reporting period.

3 High represents the greatest risk of loss in fair value measured as the largest negative value or the smallest positive value observed daily during the reporting period.

BOK Financial engages in trading activities both as an intermediary for customers and for its own account. As an intermediary, we take positions in securities, generally U.S. government agency residential mortgage-backed securities, government agency securities and municipal bonds. These securities are purchased for resale to customers, which include individuals, corporations, foundations and financial institutions. On a limited basis, we may also take trading positions in U.S. Treasury securities, residential mortgage-backed securities, and municipal bonds to enhance returns on securities portfolios. Both of these activities involve interest rate, liquidity and price risk. BOK Financial has an insignificant exposure to foreign exchange risk and does not take positions in commodity derivatives.

A variety of methods are used to monitor the interest rate risk of trading activities. These methods include daily marking of all positions to market value, independent verification of inventory pricing, and position limits for each trading activity. Economic hedges in either the futures or cash markets may be used to reduce the risk associated with some trading programs.

Management performs a stress test to measure market risk from changes in interest rates on its trading portfolio. The stress test shocks applicable interest rates up and down 50 basis points and calculates an estimated change in fair value, net of economic hedging activity that may result. The Board has approved an $11 million market risk limit for the trading portfolio, net of economic hedges.

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Table 27 -- Trading Sensitivity Analysis

(Dollars in thousands)


	Three Months Ended March 31,
	2021				2020
	Up 50 bp		Down 50 bp		Up 50 bp		Down 50 bp
Average1	$	(2,572)	$	3,553	$	(4,663)	$	7,326
Low2	5,818		8,801		(638)		15,309
High3	(7,054)		(4,618)		(11,506)		2,891
Period End	(6,548)		7,756		(5,987)		6,400

1 Average represents the simple average of each daily value observed during the reporting period.

2 Low represents least risk of loss in fair value measured as the smallest negative value or the largest positive value observed daily during the reporting period.

3 High represents the greatest risk of loss in fair value measured as the largest negative value or the smallest positive value observed daily during the reporting period.

We have a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that are either directly or indirectly dependent on LIBOR. In 2017, the U.K. Financial Conduct Authority announced that it would no longer persuade or compel banks to submit to LIBOR after 2021. U.S. regulatory authorities have voiced similar support for phasing out LIBOR. The Federal Reserve Bank of New York’s Alternative Reference Rate Committee has recommended the Secured Overnight Financing Rate (“SOFR”) as an alternative for LIBOR. However, for two key reasons, SOFR is a secured rate while LIBOR is an unsecured rate and SOFR is an overnight rate while LIBOR is published for different maturities, SOFR is not the economic equivalent of LIBOR.

On March 5, 2021, the Financial Conduct Authority officially confirmed the adoption of recommendations made in November of 2020 by the ICE Benchmark Administration (IBA), the FCA-regulated and authorized administrator of LIBOR. At that time, the IBA had announced its intention to cease USD LIBOR for one-week and two-month tenors at the end of 2021, but to extend the anticipated cessation date for the remaining USD LIBOR tenors to the end of June 2023. Regulators were supportive and issued a joint statement that communicated their expectation for banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021.

Management has established a LIBOR Transition Working Group (the “Group”) whose purpose is to guide the overall transition process for the company. The Group is an internal, cross-functional team with representatives from all business lines, support and control functions and legal counsel. Key loan provisions have been modified to ensure that new and renewed loans include appropriate LIBOR fallback language to ensure the smoothest possible transition from LIBOR to the new benchmark when such transition occurs. All direct exposures resulting from existing financial contracts that mature after planned cessation dates have been inventoried and are monitored on an ongoing basis. Remediation of these exposures will be consistent with industry timing. The Group has also inventoried indirect LIBOR exposures within the Company's systems, models and processes, and remediation of critical items is well underway.

Consistent with the regulatory guidance, the Company plans to cease originating loans indexed to LIBOR later this year, and in any event, no later than December 31, 2021. There are currently several viable alternative reference rates that we are evaluating to replace LIBOR. We do not currently expect there to be a material financial impact to the Company or our customers regardless of which index or indices the Company selects to replace LIBOR later this year.

Controls and Procedures

As required by Rule 13a-15(b), BOK Financial’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by their report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report. As required by Rule 13a-15(d), BOK Financial’s management, including the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal controls over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are

- 40 -

reasonably likely to materially affect, the Company’s internal controls over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

Forward-Looking Statements

This report 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 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.

Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

In this report we may sometimes use non-GAAP financial measures. Please note that although non-GAAP financial measures provide useful insight to analysts, investors and regulators, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures. If applicable, we provide GAAP reconciliations for non-GAAP financial measures.

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Consolidated Statements of Earnings (Unaudited)
(In thousands, except share and per share data)	Three Months Ended
	March 31,
Interest revenue	2021		2020
Loans	$	197,574	$	243,218
Residential mortgage loans held for sale	1,380		1,123
Trading securities	35,922		11,760
Investment securities	2,726		3,121
Available for sale securities	58,608		69,720
Fair value option securities	496		11,708
Restricted equity securities	1,359		5,894
Interest-bearing cash and cash equivalents	174		2,393
Total interest revenue	298,239		348,937
Interest expense
Deposits	9,850		46,159
Borrowed funds	4,622		37,785
Subordinated debentures	3,347		3,633
Total interest expense	17,819		87,577
Net interest revenue	280,420		261,360
Provision for credit losses	(25,000)		93,771
Net interest revenue after provision for credit losses	305,420		167,589
Other operating revenue
Brokerage and trading revenue	20,782		50,779
Transaction card revenue	22,430		21,881
Fiduciary and asset management revenue	41,322		44,458
Deposit service charges and fees	24,209		26,130
Mortgage banking revenue	37,113		37,167
Other revenue	16,296		12,309
Total fees and commissions	162,152		192,724
Other gains (losses), net	(3,036)		(10,741)
Gain (loss) on derivatives, net	(27,650)		18,420
Gain (loss) on fair value option securities, net	(1,910)		68,393
Change in fair value of mortgage servicing rights	33,874		(88,480)
Gain on available for sale securities, net	467		3



Total other operating revenue	163,897		180,319
Other operating expense
Personnel	173,010		156,181
Business promotion	2,154		6,215
Charitable contributions to BOKF Foundation	4,000		—
Professional fees and services	11,980		12,948
Net occupancy and equipment	26,662		26,061
Insurance	4,620		4,980
Data processing and communications	37,467		32,743
Printing, postage and supplies	3,440		4,272
Net losses (gains) and operating expenses of repossessed assets	(6,588)		1,531
Amortization of intangible assets	4,807		5,094
Mortgage banking costs	13,943		10,545
Other expense	7,132		8,054
Total other operating expense	282,627		268,624
Net income before taxes	186,690		79,284
Federal and state income taxes	42,382		17,300
Net income	144,308		61,984
Net loss attributable to non-controlling interests	(1,752)		(95)
Net income attributable to BOK Financial Corporation shareholders	$	146,060	$	62,079
Earnings per share:
Basic	$	2.10	$	0.88
Diluted	$	2.10	$	0.88
Average shares used in computation:
Basic	69,137,375		70,123,685
Diluted	69,141,710		70,130,166
Dividends declared per share	$	0.52	$	0.51

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
	Three Months Ended
	March 31,
	2021		2020
Net income	$	144,308	$	61,984
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)	(150,131)		297,843
Reclassification adjustments included in earnings:


Gain on available for sale securities, net	(467)		(3)
Other comprehensive income (loss) before income taxes	(150,598)		297,840
Federal and state income taxes	(36,139)		71,471
Other comprehensive income (loss), net of income taxes	(114,459)		226,369
Comprehensive income	29,849		288,353
Comprehensive loss attributable to non-controlling interests	(1,752)		(95)
Comprehensive income attributable to BOK Financial Corp. shareholders	$	31,601	$	288,448

See accompanying notes to consolidated financial statements.

- 43 -

Consolidated Balance Sheets

(In thousands, except share data)


	Mar. 31, 2021		Dec. 31, 2020
	(Unaudited)		(Footnote 1)
Assets
Cash and due from banks	$	723,983	$	798,757
Interest-bearing cash and cash equivalents	695,213		381,816
Trading securities	5,085,949		4,707,975
Investment securities, net of allowance (fair value: March 31, 2021 – $252,707; December 31, 2020 – $272,431)	226,121		244,843
Available for sale securities	13,410,057		13,050,665
Fair value option securities	72,498		114,982
Restricted equity securities	139,614		171,391
Residential mortgage loans held for sale	284,447		252,316
Loans	22,533,847		23,007,520
Allowance for loan losses	(352,402)		(388,640)
Loans, net of allowance	22,181,445		22,618,880
Premises and equipment, net	555,455		551,308
Receivables	250,852		245,880
Goodwill	1,048,091		1,048,091
Intangible assets, net	110,585		113,436
Mortgage servicing rights	132,915		101,172
Real estate and other repossessed assets, net of allowance (March 31, 2021 – $15,507; December 31, 2020 – $15,060)	70,911		90,526
Derivative contracts, net	1,289,156		810,688
Cash surrender value of bank-owned life insurance	401,320		398,758
Receivable on unsettled securities sales	67,759		62,386
Other assets	696,142		907,218
Total assets	$	47,442,513	$	46,671,088

Liabilities and Equity
Liabilities:
Noninterest-bearing demand deposits	$	13,103,170	$	12,266,338
Interest-bearing deposits:
Transaction	21,890,874		21,158,422
Savings	854,226		751,992
Time	2,004,356		1,967,128
Total deposits	37,852,626		36,143,880
Funds purchased and repurchase agreements	795,161		1,662,386
Other borrowings	1,708,517		1,882,970
Subordinated debentures	276,024		276,005
Accrued interest, taxes and expense	290,328		323,667
Derivative contracts, net	719,556		405,779
Due on unsettled securities purchases	106,835		257,627
Other liabilities	431,122		427,213
Total liabilities	42,180,169		41,379,527
Shareholders' equity:
Common stock ($0.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: March 31, 2021 – 76,244,164; December 31, 2020 – 75,995,205)	5		5
Capital surplus	1,371,735		1,368,062
Retained earnings	4,083,543		3,973,675
Treasury stock (shares at cost: March 31, 2021 – 6,686,291; December 31, 2020 – 6,357,605)	(437,230)		(411,344)
Accumulated other comprehensive gain	221,409		335,868
Total shareholders’ equity	5,239,462		5,266,266
Non-controlling interests	22,882		25,295
Total equity	5,262,344		5,291,561
Total liabilities and equity	$	47,442,513	$	46,671,088

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Changes in Equity (Unaudited)

(In thousands)


	Common Stock			Capital Surplus		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity		Non- Controlling Interests		Total Equity
	Shares	Amount						Shares	Amount



Balance, December 31, 2020	75,995	$	5	$	1,368,062	$	3,973,675	6,358	$	(411,344)	$	335,868	$	5,266,266	$	25,295	$	5,291,561
Net income (loss)	—	—		—		146,060		—	—		—		146,060		(1,752)		144,308
Other comprehensive loss	—	—		—		—		—	—		(114,459)		(114,459)		—		(114,459)
Repurchase of common stock	—	—		—		—		260	(20,071)		—		(20,071)		—		(20,071)
Share-based compensation plans:
Stock options exercised	17	—		949		—		—	—		—		949		—		949
Non-vested shares awarded, net	232	—		—		—		—	—		—		—		—		—
Vesting of non-vested shares	—	—		—		—		68	(5,815)		—		(5,815)		—		(5,815)
Share-based compensation	—	—		2,724		—		—	—		—		2,724		—		2,724
Cash dividends on common stock	—	—		—		(36,192)		—	—		—		(36,192)		—		(36,192)
Capital calls and distributions, net	—	—		—		—		—	—		—		—		(661)		(661)


Balance, March 31, 2021	76,244	$	5	$	1,371,735	$	4,083,543	6,686	$	(437,230)	$	221,409	$	5,239,462	$	22,882	$	5,262,344


















Balance, December 31, 2019	75,759	$	5	$	1,350,995	$	3,729,778	5,179	$	(329,906)	$	104,923	$	4,855,795	$	8,124	$	4,863,919
Transition adjustment - CECL	—	—		—		(46,696)		—	—		—		(46,696)		—		(46,696)
Balance, January 1, 2020	75,759	$	5	$	1,350,995	$	3,683,082	5,179	$	(329,906)	$	104,923	$	4,809,099	$	8,124	$	4,817,223
Net income (loss)	—	—		—		62,079		—	—		—		62,079		(95)		61,984
Other comprehensive income	—	—		—		—		—	—		226,369		226,369		—		226,369
Repurchase of common stock	—	—		—		—		442	(33,380)		—		(33,380)		—		(33,380)
Share-based compensation plans:
Stock options exercised	10	—		586		—		—	—		—		586		—		586
Non-vested shares awarded, net	232	—		—		—		—	—		—		—		—		—
Vesting of non-vested shares	—	—		—		—		71	(5,608)		—		(5,608)		—		(5,608)
Share-based compensation	—	—		3,245		—		—	—		—		3,245		—		3,245
Cash dividends on common stock	—	—		—		(36,142)		—	—		—		(36,142)		—		(36,142)
Capital calls and distributions, net	—	—		—		—		—	—		—		—		(117)		(117)


Balance, March 31, 2020	76,001	$	5	$	1,354,826	$	3,709,019	5,692	$	(368,894)	$	331,292	$	5,026,248	$	7,912	$	5,034,160

See accompanying notes to consolidated financial statements.

- 45 -

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Three Months Ended
	March 31,
	2021		2020
Cash Flows From Operating Activities:
Net income	$	144,308	$	61,984
Adjustments to reconcile net income to net cash provided used in operating activities:
Provision for credit losses	(25,000)		93,771
Change in fair value of mortgage servicing rights due to market assumption changes	(33,874)		88,480
Change in the fair value of mortgage servicing rights due to principal payments	11,961		8,019
Net unrealized (gains) losses from derivative contracts	92,502		15,369
Share-based compensation	2,724		3,245
Depreciation and amortization	24,918		23,198
Net amortization of discounts and premiums	4,853		2,013
Net losses (gains) on financial instruments and other losses (gains), net	(10,587)		10,742
Net gain on mortgage loans held for sale	(19,045)		(13,278)
Mortgage loans originated for sale	(843,053)		(548,956)
Proceeds from sale of mortgage loans held for sale	836,209		548,077
Capitalized mortgage servicing rights	(9,830)		(5,441)

Change in trading and fair value option securities	(335,624)		(1,092,249)
Change in receivables	15,650		(1,107,130)
Change in other assets	(24,991)		(24,503)
Change in other liabilities	(49,998)		193,857
Net cash used in operating activities	(218,877)		(1,742,802)
Cash Flows From Investing Activities:
Proceeds from maturities or redemptions of investment securities	18,624		19,079
Proceeds from maturities or redemptions of available for sale securities	877,257		394,205

Purchases of available for sale securities	(1,451,909)		(1,552,914)
Proceeds from sales of available for sale securities	56,037		26,894
Change in amount receivable on unsettled available for sale securities transactions	(26,130)		(22,113)
Loans originated, net of principal collected	498,667		(729,881)
Net payments on derivative asset contracts	(7,016)		(98,215)

Net change in restricted equity securities	31,777		70,510
Proceeds from disposition of assets	43,739		15,282
Purchases of assets	(63,110)		(40,295)
Net cash used in investing activities	(22,064)		(1,917,448)
Cash Flows From Financing Activities:
Net change in demand deposits, transaction deposits and savings accounts	1,671,518		1,608,360
Net change in time deposits	37,228		14,624
Net change in other borrowed funds	(1,078,174)		1,747,640


Net proceeds on derivative liability contracts	8,437		82,126
Net change in derivative margin accounts	2,995		(163,911)
Change in amount due on unsettled available for sale securities transactions	(101,311)		160,211
Issuance of common and treasury stock, net	(4,866)		(5,022)

Repurchase of common stock	(20,071)		(33,380)
Dividends paid	(36,192)		(36,142)
Net cash provided by financing activities	479,564		3,374,506
Net increase (decrease) in cash and cash equivalents	238,623		(285,744)
Cash and cash equivalents at beginning of period	1,180,573		1,258,821
Cash and cash equivalents at end of period	$	1,419,196	$	973,077

Supplemental Cash Flow Information:
Cash paid for interest	$	16,743	$	87,468
Cash paid for taxes	$	852	$	853
Net loans and bank premises transferred to repossessed real estate and other assets	$	147	$	18,474
Residential mortgage loans guaranteed by U.S. government agencies that became eligible for repurchase during the period	$	36,496	$	20,277
Conveyance of other real estate owned guaranteed by U.S. government agencies	$	1,448	$	5,694
Right-of-use assets obtained in exchange for operating lease liabilities	$	1,191	$	7,108

See accompanying notes to consolidated financial statements.

- 46 -

Notes to Consolidated Financial Statements (Unaudited)

(1) Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of BOK Financial Corporation (“BOK Financial” or “the Company”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The unaudited consolidated financial statements include accounts of BOK Financial and its subsidiaries, principally BOKF, NA (“the Bank”), BOK Financial Securities, Inc., and BOK Financial Private Wealth, Inc. Operating divisions of the Bank include Bank of Albuquerque, Bank of Oklahoma, Bank of Texas, BOK Financial in Arizona, Arkansas, Colorado and Kansas/Missouri, BOK Financial Mortgage and the TransFund electronic funds network.

Certain reclassifications have been made to conform to the current period presentation.

The financial information should be read in conjunction with BOK Financial’s 2020 Form 10-K filed with the Securities and Exchange Commission, which contains audited financial statements. Amounts presented as of December 31, 2020 have been derived from the audited financial statements included in BOK Financial’s 2020 Form 10-K but do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Newly Adopted and Pending Accounting Policies

Financial Accounting Standards Board (“FASB”)

FASB Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04")

On March 12, 2020, the FASB issued ASU 2020-04 which provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued, subject to meeting certain criteria. Under the new guidance, an entity can elect by accounting topic or industry subtopic to account for the modification of a contract affected by reference rate reform as a continuation of the existing contract, if certain conditions are met. In addition, the new guidance allows an entity to elect on a hedge-by-hedge basis to continue to apply hedge accounting for hedging relationships in which the critical terms change due to reference rate reform, if certain conditions are met. A one-time election to sell and/or transfer held-to-maturity debt securities that reference a rate affected by reference rate reform is also allowed. ASU 2020-04 became effective for all entities as of March 12, 2020 and will apply to all LIBOR reference rate modifications through December 31, 2022. Management is currently evaluating the impact of ASU 2020-04 on the Company's financial statements.

FASB Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic 848): Scope ("ASU 2021-01")

On January 7, 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in this update are elective and apply to all entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments also optionally apply to all entities that designate receive-variable rate, pay-variable-rate cross-currency interest rate swaps as hedging instruments in net investment hedges that are modified as a result of reference rate reform. ASU 2021-01 is effective immediately for all entities and amendments may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. Management is currently evaluating the impact of ASU 2021-01 on the Company's financial statements.

- 47 -

(2) Securities

Trading Securities

The fair value and net unrealized gain (loss) included in trading securities are as follows (in thousands):


	March 31, 2021				December 31, 2020
	Fair Value		Net Unrealized Gain (Loss)		Fair Value		Net Unrealized Gain (Loss)
U.S. government securities	$	33,613	$	(239)	$	9,183	$	—
Residential agency mortgage-backed securities	5,003,163		(10,647)		4,669,148		(3,624)
Municipal securities	27,047		(49)		19,172		42

Other debt securities	22,126		(30)		10,472		22
Total trading securities	$	5,085,949	$	(10,965)	$	4,707,975	$	(3,560)

Investment Securities

The amortized cost and fair values of investment securities are as follows (in thousands):


	March 31, 2021
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss
Municipal securities	$	216,047	$	241,278	$	25,395	$	(164)
Residential agency mortgage-backed securities	8,477		9,216		739		—
Other debt securities	2,214		2,213		—		(1)
Total investment securities	226,738		252,707		26,134		(165)
Allowance for credit losses	(617)
Investment securities, net of allowance	$	226,121	$	252,707	$	26,134	$	(165)


	December 31, 2020
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss
Municipal securities	$	229,245	$	255,270	$	26,169	$	(144)
Residential agency mortgage-backed securities	8,913		9,790		877		—
Other debt securities	7,373		7,371		—		(2)
Total investment securities	245,531		272,431		27,046		(146)
Allowance for credit losses	(688)
Investment securities, net of allowance	$	244,843	$	272,431	$	27,046	$	(146)

- 48 -

The amortized cost and fair values of investment securities at March 31, 2021, by contractual maturity, are as shown in the following table (dollars in thousands):


	Less than One Year		One to Five Years		Six to Ten Years		Over Ten Years		Total		Weighted Average Maturity1
Fixed maturity debt securities:
Amortized cost	$	27,143	$	76,456	$	106,311	$	8,351	$	218,261	4.95
Fair value	27,866		85,490		121,763		8,372		243,491
Residential mortgage-backed securities:
Amortized cost									$	8,477	2
Fair value									9,216
Total investment securities:
Amortized cost									$	226,738
Fair value									252,707

1Expected maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without penalty.

2The average expected lives of residential mortgage-backed securities were 4.4 years based upon current prepayment assumptions.

Temporarily Impaired Investment Securities

(in thousands):


	March 31, 2021
	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal securities	6	$	2,440	$	51	$	2,035	$	113	$	4,475	$	164

Other debt securities	1	25		1		—		—		25		1
Total investment securities	7	$	2,465	$	52	$	2,035	$	113	$	4,500	$	165


	December 31, 2020
	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal securities	6	$	2,451	$	40	$	2,043	$	104	$	4,494	$	144

Other debt securities	2	250		1		25		1		275		2
Total investment securities	8	$	2,701	$	41	$	2,068	$	105	$	4,769	$	146

- 49 -

Available for Sale Securities

The amortized cost and fair value of available for sale securities are as follows (in thousands):


	March 31, 2021
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss
U.S. Treasury	$	500	$	506	$	6	$	—
Municipal securities	248,016		245,657		1,422		(3,781)
Mortgage-backed securities:
Residential agency	9,483,601		9,705,314		266,968		(45,255)
Residential non-agency	15,890		31,382		15,492		—
Commercial agency	3,371,333		3,426,727		74,722		(19,328)
Other debt securities	500		471		—		(29)
Total available for sale securities	$	13,119,840	$	13,410,057	$	358,610	$	(68,393)


	December 31, 2020
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss
U.S. Treasury	$	500	$	508	$	8	$	—
Municipal securities	165,318		167,979		2,666		(5)
Mortgage-backed securities:
Residential agency	9,019,013		9,340,471		328,183		(6,725)
Residential non-agency	17,563		32,770		15,207		—
Commercial agency	3,406,956		3,508,465		103,590		(2,081)
Other debt securities	500		472		—		(28)
Total available for sale securities	$	12,609,850	$	13,050,665	$	449,654	$	(8,839)

The amortized cost and fair values of available for sale securities at March 31, 2021, by contractual maturity, are as shown in the following table (dollars in thousands):


	Less than One Year		One to Five Years		Six to Ten Years		Over Ten Years		Total		Weighted Average Maturity1
Fixed maturity debt securities:
Amortized cost	$	71,119	$	1,562,072	$	1,379,950	$	607,208	$	3,620,349	7.76
Fair value	71,223		1,610,227		1,373,270		618,641		3,673,361
Residential mortgage-backed securities:
Amortized cost									$	9,499,491	2
Fair value									9,736,696
Total available-for-sale securities:
Amortized cost									$	13,119,840
Fair value									13,410,057

1Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.

2The average expected lives of residential mortgage-backed securities were 3.9 years based upon current prepayment assumptions.

- 50 -

Sales of available for sale securities resulted in gains and losses as follows (in thousands):


	Three Months Ended March 31,
	2021		2020
Proceeds	$	56,037	$	26,894
Gross realized gains	473		3
Gross realized losses	(6)		—
Related federal and state income tax expense (benefit)	119		1

The fair value of debt securities pledged as collateral for repurchase agreements, public trust funds on deposit and for other purposes, as required by law was $11.2 billion at March 31, 2021 and $11.6 billion at December 31, 2020. The secured parties do not have the right to sell or repledge these securities.

Temporarily Impaired Available for Sale Securities

(in thousands)


	March 31, 2021
	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:

Municipal securities	81	$	186,267	$	3,781	$	—	$	—	$	186,267	$	3,781
Mortgage-backed securities:
Residential agency	90	3,005,975		44,828		139,714		427		3,145,689		45,255

Commercial agency	60	711,113		18,623		305,406		705		1,016,519		19,328
Other debt securities	1	—		—		471		29		471		29
Total available for sale securities	232	$	3,903,355	$	67,232	$	445,591	$	1,161	$	4,348,946	$	68,393


	December 31, 2020
	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:

Municipal securities	1	$	6,166	$	5	$	—	$	—	$	6,166	$	5
Mortgage-backed securities:
Residential agency	38	786,890		6,605		160,747		120		947,637		6,725

Commercial agency	37	350,506		1,587		277,627		494		628,133		2,081
Other debt securities	1	—		—		472		28		472		28
Total available for sale securities	77	$	1,143,562	$	8,197	$	438,846	$	642	$	1,582,408	$	8,839

Based on evaluations of impaired securities as of March 31, 2021, the Company does not intend to sell any impaired available for sale debt securities before fair value recovers to the current amortized cost and it is more-likely-than-not that the Company will not be required to sell impaired securities before fair value recovers, which may be maturity.

- 51 -

Fair Value Option Securities

Fair value option securities represent securities which the Company has elected to carry at fair value and are separately identified on the Consolidated Balance Sheets. Changes in the fair value are recognized in earnings as they occur. Certain securities are held as an economic hedge of the mortgage servicing rights.

The fair value and net unrealized gain (loss) included in fair value option securities is as follows (in thousands):


	March 31, 2021				December 31, 2020
	Fair Value		Net Unrealized Gain (Loss)		Fair Value		Net Unrealized Gain (Loss)

Residential agency mortgage-backed securities	$	72,498	$	3,233	$	114,982	$	4,463

- 52 -

(3) Derivatives

Derivative instruments may be used by the Company as part of its internal risk management programs or may be offered to customers. All derivative instruments are carried at fair value and changes in fair value are reported in earnings as they occur. Credit risk is also considered in determining fair value. Deterioration in the credit rating of customer or other counterparties reduced the fair value of asset contracts. Deterioration of our credit rating could decrease the fair value of our derivative liabilities.

When bilateral netting agreements or similar arrangements exist between the Company and its counterparties that create a single legal claim or obligation to pay or receive the net amount in settlement of the individual derivative contracts, the Company reports derivative assets and liabilities on a net by derivative contract type by counterparty basis.

Derivative contracts may require the Company to provide or receive cash margin as collateral for derivative assets and liabilities. Derivative assets and liabilities are reported net of cash margin when certain conditions are met. In addition, derivative contracts executed with customers under Customer Risk Management Programs may be secured by non-cash collateral in conjunction with a credit agreement with that customer. Access to collateral in the event of default is reasonably assured.

None of these derivative contracts have been designated as hedging instruments for accounting purposes.

Customer Risk Management Programs

BOK Financial offers programs to permit its customers to manage various risks, including fluctuations in energy, cattle and other agricultural products, interest rates and foreign exchange rates with derivative contracts. Customers may also manage interest rate risk through interest rate swaps used by borrowers to modify interest rate terms of their loans. Derivative contracts are executed between the customers and BOK Financial. Offsetting contracts are executed between BOK Financial and other selected counterparties to minimize the risk of changes in commodity prices, interest rates or foreign exchange rates. The counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to BOK Financial as profit and compensation for administrative costs and credit risk which is recognized over the life of the contracts and included in Other operating revenue – Brokerage and trading revenue in the Consolidated Statements of Earnings.

Trading

BOK Financial may offer derivative instruments such as to-be-announced securities to mortgage banking customers to enable them to manage their market risk or to mitigate the Company's market risk of holding trading securities. Changes in the fair value of derivative instruments for trading purposes or used to mitigate the market risk of holding trading securities are included in Other operating revenue – Brokerage and trading revenue.

Internal Risk Management Programs

BOK Financial may use derivative contracts in managing its interest rate sensitivity, as part of its economic hedge of the change in the fair value of mortgage servicing rights. Changes in the fair value of derivative instruments used in managing interest rate sensitivity and as part of the economic hedge of changes in the fair value of mortgage servicing rights are included in Other operating revenue – Gain (loss) on derivatives, net in the Consolidated Statements of Earnings.

As discussed in Note 5, certain derivative contracts not designated as hedging instruments related to mortgage loan commitments and forward sales contracts are included in Residential mortgage loans held for sale on the Consolidated Balance Sheets. See Note 5 for additional discussion of notional, fair value and impact on earnings of these contracts.

- 53 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at March 31, 2021 (in thousands):


	Assets
	Notional1		Gross Fair Value		Netting Adjustments		Net Fair Value Before Cash Collateral		Cash Collateral		Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts	$	3,221,571	$	79,353	$	(9,135)	$	70,218	$	—	$	70,218
Energy contracts	3,930,367		618,401		(152,837)		465,564		—		465,564
Agricultural contracts	32,893		1,629		(1,513)		116		—		116
Foreign exchange contracts	346,897		343,101		—		343,101		(540)		342,561
Equity option contracts	65,678		1,455		—		1,455		(300)		1,155
Total customer risk management programs	7,597,406		1,043,939		(163,485)		880,454		(840)		879,614
Trading	67,796,867		785,765		(380,313)		405,452		(774)		404,678
Internal risk management programs	801,025		17,301		(12,437)		4,864		—		4,864
Total derivative contracts	$	76,195,298	$	1,847,005	$	(556,235)	$	1,290,770	$	(1,614)	$	1,289,156

	Liabilities
	Notional1		Gross Fair Value		Netting Adjustments		Net Fair Value Before Cash Collateral		Cash Collateral		Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts	$	3,221,571	$	79,619	$	(9,135)	$	70,484	$	(60,429)	$	10,055
Energy contracts	3,897,430		602,728		(152,837)		449,891		(443,933)		5,958
Agricultural contracts	32,893		1,609		(1,513)		96		—		96
Foreign exchange contracts	347,166		343,134		—		343,134		(24)		343,110
Equity option contracts	65,678		1,455		—		1,455		—		1,455
Total customer risk management programs	7,564,738		1,028,545		(163,485)		865,060		(504,386)		360,674
Trading	66,746,760		834,430		(380,313)		454,117		(99,371)		354,746
Internal risk management programs	1,064,473		21,036		(12,437)		8,599		(4,463)		4,136
Total derivative contracts	$	75,375,971	$	1,884,011	$	(556,235)	$	1,327,776	$	(608,220)	$	719,556

1 Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.

- 54 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2020 (in thousands):


	Assets
	Notional 1		Gross Fair Value		Netting Adjustments		Net Fair Value Before Cash Collateral		Cash Collateral		Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts	$	3,212,469	$	113,524	$	(144)	$	113,380	$	—	$	113,380
Energy contracts	3,791,565		386,008		(211,468)		174,540		—		174,540
Agricultural contracts	14,765		3,859		—		3,859		—		3,859
Foreign exchange contracts	337,001		332,257		—		332,257		(420)		331,837
Equity option contracts	70,199		1,222		—		1,222		(285)		937
Total customer risk management programs	7,425,999		836,870		(211,612)		625,258		(705)		624,553
Trading	84,997,593		440,627		(240,655)		199,972		(26,958)		173,014
Internal risk management programs	995,123		17,352		(4,231)		13,121		—		13,121
Total derivative contracts	$	93,418,715	$	1,294,849	$	(456,498)	$	838,351	$	(27,663)	$	810,688

	Liabilities
	Notional 1		Gross Fair Value		Netting Adjustments		Net Fair Value Before Cash Collateral		Cash Collateral		Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts	$	3,212,469	$	113,900	$	(144)	$	113,756	$	(104,202)	$	9,554
Energy contracts	3,617,678		361,334		(211,468)		149,866		(114,070)		35,796
Agricultural contracts	14,781		3,844		—		3,844		(3,844)		—
Foreign exchange contracts	336,223		331,035		—		331,035		(1,165)		329,870
Equity option contracts	70,199		1,222		—		1,222		—		1,222
Total customer risk management programs	7,251,350		811,335		(211,612)		599,723		(223,281)		376,442
Trading	88,929,916		414,801		(240,655)		174,146		(145,692)		28,454
Internal risk management programs	145,256		5,529		(4,231)		1,298		(415)		883
Total derivative contracts	$	96,326,522	$	1,231,665	$	(456,498)	$	775,167	$	(369,388)	$	405,779

1 Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.

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The following summarizes the pre-tax net gains (losses) on derivative instruments and where they are recorded in the income statement (in thousands):


	Three Months Ended
	March 31, 2021				March 31, 2020
	Brokerage and Trading Revenue		Gain (Loss) on Derivatives, Net		Brokerage and Trading Revenue		Gain (Loss)on Derivatives, Net
Customer risk management programs:
Interest rate contracts	$	1,388	$	—	$	942	$	—
Energy contracts	1,020		—		2,007		—
Agricultural contracts	18		—		15		—
Foreign exchange contracts	166		—		258		—
Equity option contracts	—		—		—		—
Total customer risk management programs	2,592		—		3,222		—
Trading1	(71,259)		—		(40,655)		—
Internal risk management programs	—		(27,650)		—		18,420
Total derivative contracts	$	(68,667)	$	(27,650)	$	(37,433)	$	18,420

1 Represents changes in fair value of to-be-announced securities and other derivative instruments held to mitigate market risk of trading securities portfolio, which is offset by changes in fair value of trading securities also include in Brokerage and Trading Revenue in the Consolidated Statements of Earnings.

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(4) Loans and Allowances for Credit Losses

Loans

Loans are either secured or unsecured based on the type of loan and the financial condition of the borrower. Repayment is generally expected from cash flow or proceeds from the sale of selected assets of the borrower. BOK Financial is exposed to risk of loss on loans due to the borrower’s difficulties, which may arise from any number of factors, including problems within the respective industry or local economic conditions. Access to collateral, in the event of borrower default, is reasonably assured through adherence to applicable lending laws and through sound lending standards and credit review procedures. Accounting policies for all loans, excluding residential mortgage loans guaranteed by U.S. government agencies, are as follows.

Interest is accrued at the applicable interest rate on the principal amount outstanding. Loans are placed on nonaccruing status when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are individually evaluated for nonaccruing status quarterly. Non-risk graded loans are generally placed on nonaccruing status when more than 90 days past due or within 60 days of being notified of the borrower's bankruptcy filing. Interest previously accrued but not collected is charged against interest income when the loan is placed on nonaccruing status. Accrued but not paid interest receivable is included in Receivables in the Consolidated Balance Sheets. Payments on nonaccruing loans are applied to principal or recognized as interest income, according to management’s judgment as to the collectability of principal. Loans may be returned to accruing status when, in the opinion of management, full collection of principal and interest, including principal previously charged off, is probable based on improvements in the borrower’s financial condition or a sustained period of performance.

For loans acquired with no evidence of credit deterioration, discounts are accreted on either an individual basis for loans with unique characteristics or on a pool basis for groups of homogeneous loans. Accretion is discontinued when a loan with an individually attributed discount is placed on nonaccruing status.

Loans to borrowers experiencing financial difficulties may be modified in troubled debt restructurings ("TDRs"). Primarily all TDRs are classified as nonaccruing, excluding loans guaranteed by U.S. government agencies. Modifications generally consist of extension of payment terms or interest rate concessions and may result either voluntarily through negotiations with the borrower or involuntarily through court order. Payment deferrals up to six months are generally considered to be short-term modifications. Generally, principal and accrued but unpaid interest is not voluntarily forgiven.

Performing loans may be renewed under the current collateral value, debt service ratio and other underwriting standards. Nonaccruing loans may be renewed and will remain classified as nonaccruing.

Occasionally, loans, other than residential mortgage loans, may be held for sale in order to manage credit concentration. These loans are carried at the lower of cost or fair value with gains or losses recognized in Other gains (losses), net in the Consolidated Statements of Earnings.

All loans are charged off when the loan balance or a portion of the loan balance is no longer supported by the paying capacity of the borrower or when the required cash flow is reduced in a TDR. The charge-off amount is determined through a quarterly evaluation of available cash resources and collateral value. Internally risk graded loans are evaluated quarterly and charge-offs are taken in the quarter in which the loss is identified. Non-risk graded loans that are past due between 60 days and 180 days, based on the loan product type, are charged off. Loans to borrowers whose personal obligation has been discharged through Chapter 7 bankruptcy proceedings are charged off within 60 days of notice of the bankruptcy filing, regardless of payment status.

Loan origination and commitment fees and direct loan acquisition and origination costs are deferred and amortized as an adjustment to yield over the life of the loan or over the commitment period, as applicable. Amortization does not anticipate loan prepayments. Net unamortized fees are recognized in full at time of payoff.

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Qualifying residential mortgage loans guaranteed by U.S. government agencies have been sold into GNMA pools. Under certain performance conditions specified in government programs, the Company may have the right, but not the obligation to repurchase loans from GNMA pools. These loans no longer qualify for sale accounting and are recognized in the Consolidated Balance Sheets. Guaranteed loans are considered to be impaired because we do not expect to receive all principal and interest based on the loan's contractual terms. A portion of the principal balance continues to be guaranteed; however, interest accrues at a curtailed rate as specified in the programs. The carrying value of these loans is reduced based on an estimate of the expected cash flows discounted at the original note rate plus a liquidity spread. Guaranteed loans may be modified in TDRs in accordance with U.S. government agency guidelines. Interest continues to accrue based on the modified rate. Guaranteed loans may either be resold into GNMA pools after a performance period specified by the programs or foreclosed and conveyed to the guarantors.

Loans are disaggregated into portfolio segments and further disaggregated into classes. The portfolio segment is the level at which the Company develops and documents a systematic method for determining its allowance for credit losses. Classes are a further disaggregation of portfolio segments based on the risk characteristics of the loans and the Company’s method for monitoring and assessing credit risk.

Portfolio segments of the loan portfolio are as follows (in thousands):


	March 31, 2021								December 31, 2020
	Fixed Rate		Variable Rate		Non-accrual		Total		Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	3,264,973	$	9,245,738	$	147,073	$	12,657,784	$	3,174,203	$	9,736,173	$	167,159	$	13,077,535
Commercial real estate	1,019,531		3,456,573		27,243		4,503,347		1,047,486		3,623,806		27,246		4,698,538
Paycheck protection program	1,848,550		—		—		1,848,550		1,682,310		—		—		1,682,310
Loans to individuals	2,146,671		1,335,792		41,703		3,524,166		2,174,874		1,333,975		40,288		3,549,137
Total	$	8,279,725	$	14,038,103	$	216,019	$	22,533,847	$	8,078,873	$	14,693,954	$	234,693	$	23,007,520

Credit Commitments

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At March 31, 2021, outstanding commitments totaled $11.2 billion. Because some commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial uses the same credit policies in making commitments as it does loans.

The amount of collateral obtained, if deemed necessary, is based upon management’s credit evaluation of the borrower.

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally, BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the underlying loan commitment. At March 31, 2021, outstanding standby letters of credit totaled $714 million.

Allowances for Credit Losses and Accrual for Off-balance Sheet Credit Risk from Unfunded Loans Commitments

The allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments represent the portion of the amortized cost basis of loans that we do not expect to collect over the asset’s contractual life, considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions. The appropriateness of the allowance for credit losses, including industry and product adjustments, is assessed quarterly by a senior management Allowance Committee. This review is based on an on-going evaluation of the estimated expected credit losses in the portfolio and on unused commitments to provide financing. A well-documented methodology has been developed and is applied by an independent Credit Administration department to assure consistency across the Company.

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The allowance for loan losses consists of specific allowances attributed to certain individual loans, generally nonaccruing loans, with dissimilar risk characteristics that have not yet been charged down to amounts we expect to recover and general allowances for estimated credit losses on pools of loans that share similar risk characteristics.

When full collection of principal or interest is uncertain, the loan’s risk characteristics have changed, and we exclude the loan from the general allowance pool, typically designating it as nonaccruing. For these loans, a specific allowance reflects the expected credit loss.

We measure specific allowances for loans excluded from the general allowance pool by an evaluation of estimated future cash flows discounted at the loan's initial effective interest rate or the fair value of collateral for certain collateral dependent loans. For a non-collateral dependent loan, the specific allowance is the amount by which the loan’s amortized cost basis exceeds its net realizable value. We measure the specific allowance for collateral dependent loans as the amount by which the loan’s amortized cost basis exceeds its fair value. When repayment is expected to be provided substantially through the sale of collateral, we deduct estimated selling costs from the collateral’s fair value. Generally, third party appraisals that conform to Uniform Standards of Professional Appraisal Practice serve as the basis for the fair value of real property held as collateral. These appraised values are on an “as-is” basis and generally are not adjusted by the Company. We obtain updated appraisals at least annually or more frequently if market conditions indicate collateral values may have declined. For energy loans, our internal staff of engineers generally determines collateral value of mineral rights based on projected cash flows from proven oil and gas reserves under existing economic and operating conditions. For real property held as collateral for other loans, third party appraisals that conform to Uniform Standards of Professional Appraisal Practice generally serve as the basis for the fair value. These appraised values are on an “as-is” basis and generally are not adjusted by the Company. We obtain updated appraisals at least annually or more frequently if market conditions indicate collateral values may have declined. Our special assets staff generally determines the value of other collateral based on projected liquidation cash flows under current market conditions. We evaluate collateral values and available cash resources quarterly. Historical statistics may be used to estimate specific allowances in limited situations, such as when a collateral dependent loan is removed from the general allowance pool near the end of a reporting period until an appraisal of collateral value is received or a full assessment of future cash flows is completed.

General allowances estimate expected credit losses on pools of loans sharing similar risk characteristics that are expected to occur over the loan’s estimated remaining life. The loan’s estimated remaining life represents the contractual term adjusted for amortization, estimates of prepayments, and borrower-owned extension options. Approximately 90 percent of the committed dollars in the loan portfolio is risk graded loans with general allowance model inputs that include probability of default, loss given default, and exposure at default. Probability of default is based on the migration of loans from performing to nonperforming using historical life of loan analysis periods. Loss given default is based on the aggregate losses incurred, net of estimated recoveries. Exposure at default represents an estimate of the outstanding amount of credit exposure at the time a default may occur.

Charge-off migration is used to calculate the general allowance for the majority of non-risk graded loans to individuals. The expected credit loss on less than 10 percent of the committed dollars in the portfolio is calculated using charge-off migration.

The expected credit loss on approximately 1 percent of the committed dollars in the portfolio is calculated using a non-modeled approach. Specifically, the calculation applies a long-term net charge-off rate to the loan balances, adjusted for the weighted average remaining maturity of each portfolio.

In estimating the expected credit losses for general allowances on performing risk-graded loans, each portfolio class is assigned relevant economic loss drivers which best explain variations in portfolio net loss rates. The probability of default estimates for each portfolio class are adjusted for current and forecasted economic conditions. The result is applied to the exposure at default and loss given default to calculate the lifetime expected credit loss estimate. Selection of relevant economic loss drivers is re-evaluated periodically and involves statistical analysis as well as management judgment. The unemployment rate factors significantly in the allowance for loan losses calculation, affecting commercial and loans to individuals segments. Other primary factors impacting the commercial portfolio include BBB corporate spreads, real gross domestic product growth rate, and energy commodity prices. The primary commercial real estate variables are vacancy rate and BBB corporate spreads. In addition to the unemployment rate, the forecast for loans to individuals is tied to home price index. The forecasts may include regional economic factors when localized conditions diverge from national conditions.

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An Economic Forecast Committee, consisting of senior management with members largely independent of the allowance process develops a twelve-month forward-looking forecast for the relevant economic loss drivers. Management develops these forecasts based on external data as well as a view of future economic conditions, which may include adjustments for regional conditions. The forecast includes three economic scenarios and probability weights for each scenario. The base forecast represents management's view of the most likely outcome, while the downside forecast reflects reasonably possible worsening economic conditions, and the upside forecast projects reasonably possible improving conditions.

At the end of the one-year reasonable and supportable forecast period, we transition from shorter-term expected losses to long-term loss averages for the loan’s estimated remaining life. The difference between short-term loss forecasts and long-term loss averages is run-off over the reversion horizon, up to three years, depending on the forecasted economic scenarios.

General allowances also consider the estimated impact of factors that are not captured in the modeled results or historical experience. These factors may increase or decrease modeled results by amounts determined by the Allowance Committee. Factors not captured in modeled results or historical experience may include for example, new lines of business, market conditions that have not been previously encountered, observed changes in credit risk that are not yet reflected in macro-economic factors, or economic conditions that impact loss given default assumptions.

The accrual for off-balance sheet credit risk is maintained at a level that is appropriate to cover estimated losses associated with credit instruments that are not currently recognized as assets such as loan commitments, standby letters of credit or guarantees that are not unconditionally cancelable by the bank. This accrual is included in other liabilities in the Consolidated Balance Sheets. The appropriateness of the accrual is determined in the same manner as the allowance for loan losses, with the added consideration of commitment usage over the remaining life for those loans that the bank can not unconditionally cancel.

A provision for credit losses is charged against or credited to earnings in amounts necessary to maintain an appropriate Allowance for Credit Losses. Recoveries of loans previously charged off are added to the allowance when received.

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit is summarized as follows (in thousands):


	Three Months Ended
	March 31, 2021
	Commercial		Commercial Real Estate		Paycheck Protection Program		Loans to Individuals		Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	254,934	$	86,558	$	—	$	47,148	$	—	$	388,640


Provision for loan losses	(9,893)		(4,579)		—		(7,298)		—		(21,770)
Loans charged off	(15,345)		(263)		—		(1,297)		—		(16,905)
Recoveries of loans previously charged off	1,676		30		—		731		—		2,437
Ending Balance	$	231,372	$	81,746	$	—	$	39,284	—		$	352,402

Allowance for off-balance sheet credit risk from unfunded loan commitments:
Beginning balance	$	14,422	$	20,571	$	—	$	1,928	$	—	$	36,921


Provision for off-balance sheet credit risk	(1,686)		(2,273)		—		(85)		—		(4,044)
Ending Balance	$	12,736	$	18,298	$	—	$	1,843	$	—	$	32,877

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	Three Months Ended
	March 31, 2020
	Commercial		Commercial Real Estate		Paycheck Protection Program		Loans to Individuals		Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	118,187	$	51,805	$	—	$	23,572	$	17,195	$	210,759
Transition adjustment	33,681		(4,620)		—		13,943		(17,195)		25,809
Beginning balance, adjusted	151,868		47,185		—		37,515		—		236,568
Provision for loan losses	77,723		5,115		—		13,126		—		95,964
Loans charged off	(16,615)		(886)		—		(1,416)		—		(18,917)
Recoveries of loans previously charged off	462		47		—		1,187		—		1,696
Ending Balance	$	213,438	$	51,461	$	—	$	50,412	—		$	315,311

Allowance for off-balance sheet credit risk from unfunded loan commitments:
Beginning balance	$	1,434	$	107	$	—	$	44	$	—	$	1,585
Transition adjustment	10,144		11,660		—		1,748		—		23,552
Beginning balance, adjusted	11,578		11,767		—		1,792		—		25,137
Provision for off-balance sheet credit risk	2,462		808		—		107		—		3,377
Ending Balance	$	14,040	$	12,575	$	—	$	1,899	—		$	28,514

Changes in our reasonable and supportable forecasts of macroeconomic variables, primarily due to the anticipated impact of the on-going COVID-19 pandemic, and other assumptions, resulted in a $31.1 million reduction in the allowance for lending activities during the first quarter of 2021. Changes in the loan portfolio characteristics, including specific impairment and losses, loan balances and risk grading resulted in a $5.2 million increase in the allowance for lending activities.

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each measurement method at March 31, 2021 is as follows (in thousands):


	Collectively Measured for General Allowances				Individually Measured for Specific Allowances				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	12,510,711	$	214,711	$	147,073	$	16,661	$	12,657,784	$	231,372
Commercial real estate	4,476,104		78,356		27,243		3,390		4,503,347		81,746
Paycheck protection program	1,848,550		—		—		—		1,848,550		—
Loans to individuals	3,482,463		39,284		41,703		—		3,524,166		39,284
Total	$	22,317,828	$	332,351	$	216,019	$	20,051	$	22,533,847	$	352,402

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The allowance for loan losses and recorded investment of the related loans by portfolio segment for each measurement method at December 31, 2020 is as follows (in thousands):


	Collectively Measured for General Allowances				Individually Measured for Specific Allowances				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	12,910,376	$	235,882	$	167,159	$	19,052	$	13,077,535	$	254,934
Commercial real estate	4,671,292		83,169		27,246		3,389		4,698,538		86,558
Paycheck protection program	1,682,310		—		—		—		1,682,310		—
Loans to individuals	3,508,849		47,148		40,288		—		3,549,137		47,148
Total	$	22,772,827	$	366,199	$	234,693	$	22,441	$	23,007,520	$	388,640

Credit Quality Indicators

The Company utilizes risk grading as primary credit quality indicators as it influences the probability of default which is a key attribute in the expected credit losses calculation. Substantially all commercial as well as commercial real estate loans and certain loans to individuals are risk graded based on a quarterly evaluation of the borrowers’ ability to repay the loans. Certain commercial loans and most loans to individuals are small, homogeneous pools that are not risk-graded. The credit quality of these loans is based on past due days in accordance with regulatory guidelines.

We have included in the credit quality indicator “pass” loans that are in compliance with the original terms of the agreement and currently exhibit no factors that cause management to have doubts about the borrowers’ ability to remain in compliance with the original terms of the agreement, which is consistent with the regulatory guideline of “pass.” This also includes past due residential mortgages that are guaranteed by agencies of the U.S. government that continue to accrue interest based on criteria of the guarantors’ programs.

Other loans especially mentioned ("Special Mention") are currently performing in compliance with the original terms of the agreement but may have a potential weakness that deserves management’s close attention, consistent with regulatory guidelines. Non-graded loans 30 to 59 days past due are categorized as Special Mention.

The risk grading process identified certain loans that have a well-defined weakness (for example, inadequate debt service coverage or liquidity or marginal capitalization; repayment may depend on collateral or other risk mitigation) that may jeopardize liquidation of the debt and represent a greater risk due to deterioration in the financial condition of the borrower. This is consistent with the regulatory guideline for “substandard.” Because the borrowers are still performing in accordance with the original terms of the loan agreements, these loans remain on accruing status. Non-graded loans 60 to 89 days past due are categorized as Accruing Substandard.

Nonaccruing loans represent loans for which full collection of principal and interest is uncertain. This includes certain loans considered “substandard” and all loans considered “doubtful” by regulatory guidelines. Non-graded loans 90 or more days past due are categorized as Nonaccrual.

Probability of default is lowest for pass graded loans and increases for each credit quality indicator, Special Mention, and Accruing Substandard.

Vintage represents the year of origination, except for revolving loans which are considered in aggregate. Loans that were once revolving but have converted to term loans without additional underwriting appear in a separate vintage column.

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The following table summarizes the Company’s loan portfolio at March 31, 2021 by the risk grade categories and vintage (in thousands):


	Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Commercial:
Energy
Pass	$	63,102	$	81,658	$	51,881	$	78,812	$	6,731	$	8,019	$	2,388,115	$	—	$	2,678,318
Special Mention	17,000		—		—		—		—		—		144,976		—		161,976
Accruing Substandard	—		24,051		1,319		1,337		—		11,922		221,765		—		260,394
Nonaccrual	—		21,008		2,488		—		—		13,340		64,964		—		101,800
Total energy	80,102		126,717		55,688		80,149		6,731		33,281		2,819,820		—		3,202,488



Healthcare
Pass	114,646		570,755		617,791		615,371		394,541		780,397		153,973		—		3,247,474
Special Mention	—		—		—		—		—		504		5		—		509
Accruing Substandard	—		—		27,500		1,032		—		11,056		—		—		39,588
Nonaccrual	—		—		18		—		—		2,660		509		—		3,187
Total healthcare	114,646		570,755		645,309		616,403		394,541		794,617		154,487		—		3,290,758



Services
Pass	182,186		542,579		381,122		327,241		300,688		1,005,483		574,095		627		3,314,021
Special Mention	—		138		1,446		1,008		7		1,844		1,971		—		6,414
Accruing Substandard	—		421		11,238		18,435		5,288		9,471		28,627		—		73,480
Nonaccrual	—		4,732		448		766		14,369		7,033		685		—		28,033
Total services	182,186		547,870		394,254		347,450		320,352		1,023,831		605,378		627		3,421,948



General business
Pass	118,267		361,002		370,674		274,644		209,218		297,857		1,032,658		2,305		2,666,625
Special Mention	—		189		4,850		3,401		7,469		1,781		4,903		—		22,593
Accruing Substandard	—		1,392		2,575		12,901		8,738		10,287		3,408		18		39,319
Nonaccrual	—		1,675		3,887		5,893		1,430		565		558		45		14,053
Total general business	118,267		364,258		381,986		296,839		226,855		310,490		1,041,527		2,368		2,742,590



Total commercial	495,201		1,609,600		1,477,237		1,340,841		948,479		2,162,219		4,621,212		2,995		12,657,784

Commercial real estate:
Pass	73,306		812,635		1,215,895		796,047		430,066		951,180		163,737		37		4,442,903
Special Mention	—		—		—		3,201		14,110		6,900		—		—		24,211
Accruing Substandard	—		—		—		—		4,454		4,509		27		—		8,990
Nonaccrual	—		—		8,300		—		—		18,943		—		—		27,243
Total commercial real estate	73,306		812,635		1,224,195		799,248		448,630		981,532		163,764		37		4,503,347

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	Origination Year
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Paycheck protection program:
Pass	544,128		1,304,422		—		—		—		—		—		—		1,848,550
Total paycheck protection program	544,128		1,304,422		—		—		—		—		—		—		1,848,550
Loans to individuals:
Residential mortgage
Pass	124,830		534,781		119,866		100,259		103,645		433,347		318,319		23,567		1,758,614
Special Mention	—		22		—		1,851		—		3,429		204		74		5,580
Accruing Substandard	—		—		—		—		—		—		400		—		400
Nonaccrual	—		626		124		1,913		728		24,658		4,013		822		32,884
Total residential mortgage	124,830		535,429		119,990		104,023		104,373		461,434		322,936		24,463		1,797,478



Residential mortgage guaranteed by U.S. government agencies
Pass	—		7,101		32,171		35,189		45,744		291,282		—		—		411,487


Nonaccrual	—		—		—		873		—		7,691		—		—		8,564
Total residential mortgage guaranteed by U.S. government agencies	—		7,101		32,171		36,062		45,744		298,973		—		—		420,051



Personal:
Pass	44,298		215,962		192,533		73,230		97,757		155,714		524,716		1,370		1,305,580
Special Mention	—		28		14		21		2		474		12		—		551
Accruing Substandard	—		—		215		—		—		17		19		—		251
Nonaccrual	—		2		11		60		73		81		28		—		255
Total personal	44,298		215,992		192,773		73,311		97,832		156,286		524,775		1,370		1,306,637



Total loans to individuals	169,128		758,522		344,934		213,396		247,949		916,693		847,711		25,833		3,524,166
Total loans	$	1,281,763	$	4,485,179	$	3,046,366	$	2,353,485	$	1,645,058	$	4,060,444	$	5,632,687	$	28,865	$	22,533,847

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The following table summarizes the Company’s loan portfolio at December 31, 2020 by the risk grade categories and vintage (in thousands):


	Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Commercial:
Energy
Pass	$	112,614	$	51,863	$	89,346	$	7,178	$	1,148	$	7,956	$	2,548,663	$	—	$	2,818,768
Special Mention	—		—		—		—		—		—		202,590		—		202,590
Accruing Substandard	24,000		1,363		1,453		—		12,667		—		283,294		—		322,777
Nonaccrual	21,076		2,607		—		—		—		21,064		80,312		—		125,059
Total energy	157,690		55,833		90,799		7,178		13,815		29,020		3,114,859		—		3,469,194



Healthcare
Pass	536,745		615,221		638,302		422,834		234,399		658,286		147,132		—		3,252,919
Special Mention	—		27,500		—		—		—		8,282		5		—		35,787
Accruing Substandard	—		—		1,191		929		132		11,387		—		—		13,639
Nonaccrual	—		18		183		—		—		2,935		509		—		3,645
Total healthcare	536,745		642,739		639,676		423,763		234,531		680,890		147,646		—		3,305,990



Services
Pass	534,853		436,384		372,867		307,374		373,785		683,936		665,491		682		3,375,372
Special Mention	150		9,057		389		291		2,038		2,000		3,063		—		16,988
Accruing Substandard	429		6,380		26,008		6,027		5,030		7,954		38,797		—		90,625
Nonaccrual	4,833		448		—		12,590		1,049		6,138		540		—		25,598
Total services	540,265		452,269		399,264		326,282		381,902		700,028		707,891		682		3,508,583



General business
Pass	419,756		394,985		310,273		236,222		103,987		186,600		1,055,878		2,316		2,710,017
Special Mention	197		4,519		9,713		7,803		2,511		3,159		2,483		19		30,404
Accruing Substandard	1,432		3,069		6,694		10,935		10,042		3,729		4,449		140		40,490
Nonaccrual	1,675		3,728		4,863		1,436		530		107		477		41		12,857
Total general business	423,060		406,301		331,543		256,396		117,070		193,595		1,063,287		2,516		2,793,768



Total commercial	1,657,760		1,557,142		1,461,282		1,013,619		747,318		1,603,533		5,033,683		3,198		13,077,535

Commercial real estate:
Pass	725,577		1,211,338		954,226		489,193		314,899		722,475		223,131		38		4,640,877
Special Mention	—		—		259		12,311		2,725		5,831		—		—		21,126
Accruing Substandard	—		—		—		4,410		—		4,852		27		—		9,289
Nonaccrual	—		8,300		—		232		7,468		11,246		—		—		27,246
Total commercial real estate	725,577		1,219,638		954,485		506,146		325,092		744,404		223,158		38		4,698,538

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	Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Paycheck protection program:
Pass	1,682,310		—		—		—		—		—		—		—		1,682,310
Total paycheck protection program	1,682,310		—		—		—		—		—		—		—		1,682,310
Loans to individuals:
Residential mortgage
Pass	564,325		149,832		120,875		124,930		158,801		348,292		335,259		24,553		1,826,867
Special Mention	33		11		2,094		—		59		318		950		10		3,475
Accruing Substandard	—		—		51		—		—		34		272		76		433
Nonaccrual	648		104		1,658		784		2,010		22,415		3,835		774		32,228
Total residential mortgage	565,006		149,947		124,678		125,714		160,870		371,059		340,316		25,413		1,863,003



Residential mortgage guaranteed by U.S. government agencies
Pass	4,859		33,880		34,464		43,099		58,264		226,380		—		—		400,946


Nonaccrual	—		—		545		—		309		6,887		—		—		7,741
Total residential mortgage guaranteed by U.S. government agencies	4,859		33,880		35,009		43,099		58,573		233,267		—		—		408,687



Personal:
Pass	219,873		200,580		76,246		100,229		64,104		102,126		510,571		1,510		1,275,239
Special Mention	39		55		66		—		469		31		965		—		1,625
Accruing Substandard	11		214		10		—		—		—		29		—		264
Nonaccrual	28		17		57		73		50		49		45		—		319
Total personal	219,951		200,866		76,379		100,302		64,623		102,206		511,610		1,510		1,277,447



Total loans to individuals	789,816		384,693		236,066		269,115		284,066		706,532		851,926		26,923		3,549,137
Total loans	$	4,855,463	$	3,161,473	$	2,651,833	$	1,788,880	$	1,356,476	$	3,054,469	$	6,108,767	$	30,159	$	23,007,520

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Nonaccruing Loans

A summary of nonaccruing loans at March 31, 2021 follows (in thousands):


	As of March 31, 2021
	Total		With No Allowance		With Allowance		Related Allowance
Commercial:
Energy	$	101,800	$	48,042	$	53,758	$	13,893
Healthcare	3,187		3,187		—		—
Services	28,033		24,046		3,987		2,650
General business	14,053		13,935		118		118
Total commercial	147,073		89,210		57,863		16,661

Commercial real estate	27,243		13,642		13,601		3,390

Loans to individuals:
Residential mortgage	32,884		32,884		—		—
Residential mortgage guaranteed by U.S. government agencies	8,564		8,564		—		—
Personal	255		255		—		—
Total loans to individuals	41,703		41,703		—		—

Total	$	216,019	$	144,555	$	71,464	$	20,051

A summary of nonaccruing loans at December 31, 2020 follows (in thousands):


	As of December 31, 2020
	Total		With No Allowance		With Allowance		Related Allowance
Commercial:
Energy	$	125,059	$	76,633	$	48,426	$	16,478
Healthcare	3,645		3,645		—		—
Services	25,598		20,810		4,788		2,574
General business	12,857		12,857		—		—
Total commercial	167,159		113,945		53,214		19,052

Commercial real estate	27,246		13,645		13,601		3,389

Loans to individuals:
Residential mortgage	32,228		32,228		—		—
Residential mortgage guaranteed by U.S. government agencies	7,741		7,741		—		—
Personal	319		319		—		—
Total loans to individuals	40,288		40,288		—		—

Total	$	234,693	$	167,878	$	66,815	$	22,441

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Troubled Debt Restructurings

At March 31, 2021 the Company had $186 million in troubled debt restructurings ("TDRs"), of which $155 million were accruing residential mortgage loans guaranteed by U.S. government agencies and $17 million were nonaccruing residential mortgage loans with no specific allowance necessary. Approximately $103 million of TDRs were performing in accordance with the modified terms.

At December 31, 2020, the Company had $187 million in TDRs, of which $152 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $95 million of TDRs were performing in accordance with the modified terms.

TDRs generally consist of interest rate concessions, payment stream concessions or a combination of concessions to distressed borrowers. During the three months ended March 31, 2021, $13 million of loans were restructured and $306 thousand of loans designated as TDRs were charged off. During the three months ended March 31, 2020, $28 million of loans were restructured and $2.0 million of loans designated as TDRs were charged off.

Past Due Loans

Past due status for all loan classes is based on the actual number of days since the last payment was due according to the contractual terms of the loans, as modified for short-term payment deferral forbearance.

A summary of loans currently performing and past due as of March 31, 2021 is as follows (in thousands):


			Past Due								Past Due 90 Days or More and Accruing
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
Commercial:
Energy	$	3,183,861	$	—	$	—	$	18,627	$	3,202,488	$	—
Healthcare	3,287,571		—		—		3,187		3,290,758		—
Services	3,404,154		1,791		208		15,795		3,421,948		—
General business	2,722,467		7,712		1,843		10,568		2,742,590		145
Total commercial	12,598,053		9,503		2,051		48,177		12,657,784		145

Commercial real estate	4,482,750		134		—		20,463		4,503,347		—

Paycheck protection program	1,848,550		—		—		—		1,848,550		—

Loans to individuals:
Residential mortgage	1,782,825		7,215		415		7,023		1,797,478		250
Residential mortgage guaranteed by U.S. government agencies	274,265		50,175		13,059		82,552		420,051		77,009
Personal	1,306,435		90		40		72		1,306,637		—
Total loans to individuals	3,363,525		57,480		13,514		89,647		3,524,166		77,259

Total	$	22,292,878	$	67,117	$	15,565	$	158,287	$	22,533,847	$	77,404

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A summary of loans currently performing and past due as of December 31, 2020 is as follows (in thousands):


			Past Due								Past Due 90 Days or More and Accruing
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
Commercial:
Energy	$	3,410,995	$	12,735	$	4,050	$	41,414	$	3,469,194	$	—
Healthcare	3,302,345		—		—		3,645		3,305,990		—
Services	3,489,423		3,278		177		15,705		3,508,583		326
General business	2,776,038		1,206		6,277		10,247		2,793,768		4,495
Total commercial	12,978,801		17,219		10,504		71,011		13,077,535		4,821

Commercial real estate	4,672,279		276		5,310		20,673		4,698,538		5,126

Paycheck protection program	1,682,310		—		—		—		1,682,310		—

Loans to individuals:
Residential mortgage	1,849,304		5,812		837		7,050		1,863,003		181
Residential mortgage guaranteed by U.S. government agencies	262,102		41,389		22,041		83,155		408,687		78,349
Personal	1,273,702		3,317		90		338		1,277,447		241
Total loans to individuals	3,385,108		50,518		22,968		90,543		3,549,137		78,771

Total	$	22,718,498	$	68,013	$	38,782	$	182,227	$	23,007,520	$	88,718

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(5) Mortgage Banking Activities

Residential Mortgage Loan Production

The Company originates, markets and services conventional and government-sponsored residential mortgage loans. Generally, conforming fixed rate residential mortgage loans are held for sale in the secondary market and non-conforming and adjustable-rate residential mortgage loans are retained for investment. Residential mortgage loans originated for sale by the Company are carried at fair value based on sales commitments and market quotes. Changes in the fair value of mortgage loans held for sale are included in Other operating revenue – Mortgage banking revenue. Residential mortgage loans held for sale also includes the fair value of residential mortgage loan commitments and forward sales commitments, which are considered derivative contracts that have not been designated as hedging instruments for accounting purposes. The volume of mortgage loans originated for sale and secondary market prices are the primary drivers of originating and marketing revenue.

Residential mortgage loan commitments are generally outstanding for 60 to 90 days, which represents the typical period from commitment to originate a residential mortgage loan to when the closed loan is sold to an investor. Residential mortgage loan commitments are subject to both credit and interest rate risk. Credit risk is managed through underwriting policies and procedures, including collateral requirements, which are generally accepted by the secondary loan markets. Exposure to interest rate fluctuations is partially managed through forward sales of residential mortgage-backed securities and forward sales contracts. These latter contracts set the price for loans that will be delivered in the next 60 to 90 days.

The unpaid principal balance of residential mortgage loans held for sale, notional amounts of derivative contracts related to residential mortgage loan commitments and forward contract sales and their related fair values included in Mortgage loans held for sale on the Consolidated Balance Sheets were (in thousands):


	March 31, 2021				December 31, 2020
	Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value
Residential mortgage loans held for sale	$	260,005	$	262,333	$	227,161	$	236,444
Residential mortgage loan commitments	387,465		11,455		380,637		20,435
Forward sales contracts	584,743		10,659		549,414		(4,563)
			$	284,447			$	252,316

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of March 31, 2021 or December 31, 2020. No credit losses were recognized on residential mortgage loans held for sale for the three month period ended March 31, 2021 and 2020.

Mortgage banking revenue was as follows (in thousands):


	Three Months Ended March 31,
	2021		2020
Production revenue:
Net realized gains on sale of mortgage loans	$	26,000	$	9,717
Net change in unrealized gain (loss) on mortgage loans held for sale	(6,955)		3,561
Net change in the fair value of mortgage loan commitments	(8,980)		19,017
Net change in the fair value of forward sales contracts	15,222		(10,725)
Total production revenue	25,287		21,570
Servicing revenue	11,826		15,597
Total mortgage banking revenue	$	37,113	$	37,167

Production revenue includes gain (loss) on residential mortgage loans held for sale and changes in the fair value of derivative contracts not designated as hedging instruments for accounting purposes related to residential mortgage loan commitments and forward sales contracts. Servicing revenue includes servicing fee income and late charges on loans serviced for others.

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Residential Mortgage Servicing

Mortgage servicing rights may be originated or purchased. Both originated and purchased mortgage servicing rights are initially recognized at fair value. The Company has elected to carry all mortgage servicing rights at fair value. Changes in the fair value are recognized in earnings as they occur. The unpaid principal balance of loans serviced for others is the primary driver of servicing revenue.

The following represents a summary of mortgage servicing rights (dollars in thousands):


	March 31, 2021			December 31, 2020
Number of residential mortgage loans serviced for others	101,912			106,201
Outstanding principal balance of residential mortgage loans serviced for others	$	15,458,772		$	16,228,449
Weighted average interest rate	3.78		%	3.84		%
Remaining term (in months)	279			280

The following represents activity in capitalized mortgage servicing rights (in thousands):


	Three Months Ended March 31,
	2021		2020
Beginning Balance	$	101,172	$	201,886
Additions	9,830		5,441

Change in fair value due to principal payments	(11,961)		(8,019)
Change in fair value due to market assumption changes	33,874		(88,480)
Ending Balance	$	132,915	$	110,828

Changes in the fair value of mortgage servicing rights due to market assumption changes are included in Other operating revenue in the Consolidated Statements of Earnings. Changes in fair value due to principal payments are included in Mortgage banking costs.

Mortgage servicing rights are not traded in active markets. Fair value is determined by discounting the projected net cash flows. Significant market assumptions used to determine fair value based on significant unobservable inputs were as follows:


	March 31, 2021	December 31, 2020
Discount rate – risk-free rate plus a market premium	9.13%	9.14%
Prepayment rate - based upon loan interest rate, original term and loan type	6.37% - 17.80%	9.41% - 21.87%
Loan servicing costs – annually per loan based upon loan type:
Performing loans	$69 - $94	$69 - $94
Delinquent loans	$150 - $500	$150 - $500
Loans in foreclosure	$1,000 - $4,000	$1,000 - $4,000
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life	1.04%	0.43%
Primary/secondary mortgage rate spread	105 bps	105 bps
Delinquency rate	2.77%	3.54%

Changes in primary residential mortgage interest rates directly affect the prepayment speeds used in valuing our mortgage servicing rights. A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults and other relevant factors. The prepayment model is updated periodically for changes in market conditions and adjusted to better correlate with actual performance of BOK Financial’s servicing portfolio.

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(6) Commitments and Contingent Liabilities

Litigation Contingencies

On June 24, 2015, BOKF, NA received a complaint alleging that an employee had colluded with a bond issuer and an individual in misusing revenues pledged to municipal bonds for which BOKF, NA served as trustee under the bond indenture. The Company conducted an investigation and concluded that employees in one of its Corporate Trust offices had, with respect to a single group of affiliated bond issuances, violated Company policies and procedures by waiving financial covenants, granting forbearances and accepting without disclosure to the bondholders, debt service payments from sources other than pledged revenues. The relationship manager was terminated. The Company reported the circumstances to, and cooperated with an investigation by, the Securities and Exchange Commission ("SEC"). On September 7, 2016, BOKF, NA agreed, and the SEC entered, a consent order finding that BOKF, NA had violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act and requiring BOKF, NA to disgorge $1,067,721 of fees and pay a civil penalty of $600,000. BOKF, NA disgorged the fees and paid the penalty.

On December 28, 2015, in an action brought by the SEC, the United States District Court for the District of New Jersey entered a judgment against the principals involved in issuing the bonds, precluding the principals from denying the alleged violations of the federal securities laws and requiring the principals to pay all outstanding principal, accrued interest, and other amounts required under the bond documents, less the value of the facilities securing repayment of the bonds, subject to oversight by a court appointed monitor (“Payment Plan”).

On August 26, 2016, BOKF, NA was sued in the United States District Court for New Jersey by two bondholders in a putative class action on behalf of all holders of the bonds alleging BOKF, NA participated in the fraudulent sale of securities by the principals. The New Jersey Federal District Action remains stayed with no current deadlines pending. On September 14, 2016, BOKF, NA was sued in the District Court of Tulsa County, Oklahoma by 19 bondholders alleging BOKF, NA participated in the fraudulent sale of securities by the principals. The Tulsa County District Court Action is pending on BOKF, NA’s motion to dismiss the plaintiff's Third Amended Petition.

On January 8, 2020, the New Jersey District Court entered judgment against the principal individual and his wife for $36,805,051 in principal amount and $10,937,831 in pre-judgment interest. On January 17, 2020, the New Jersey Federal District Court formally terminated the Payment Plan. Management is no longer able to conclude that the individual principal and his wife will be successful in paying the obligations they have to pay the bonds in full but such obligations remain and are not dischargeable in bankruptcy. Beginning September 2020, the SEC filed multiple garnishments on entities either related to or holding assets for the debtor. If the individual principal and his wife do not have the financial ability to pay the bonds in full, a bondholder loss could become probable. Management has been advised by counsel that BOKF, NA has valid defenses to claims of bondholders and that no loss to the company is probable. No provision for losses has been made at this time. BOKF, NA estimates that, upon sale of all remaining collateral securing payment of the bonds, approximately $20 million will remain outstanding. A reasonable estimate cannot be made of the amount of any bondholder loss, though the amount of bondholder loss could be material to the company in the event a loss to the company becomes probable.

On March 5, 2018, BOKF, NA was sued in the Fulton, Georgia County District Court by a Wrongful Death Judgment Creditor of one of the operators of a nursing home financed by one of the bonds which are the subject of the litigation discussed above. The judgment is alleged to total approximately $8 million in principal and interest at this time. Plaintiff alleges that this conduct prevented her from collecting on her judgment. On April 19, 2019, the Court granted BOKF, NA's Motion to Dismiss. On May 3, 2019, the plaintiff filed a Motion for Reconsideration which remains pending. BOKF, NA is advised by counsel that BOKF, NA has valid defenses to the plaintiffs’ claims and no loss is probable.

On March 7, 2017, a plaintiff filed a putative class action in the United States District Court for the Northern District of Texas alleging an extended overdraft fee charged by BOKF, NA is interest and exceeds permitted rates. On September 18, 2018, the District Court dismissed the Texas action and the plaintiff appealed the dismissal to the United States Court of Appeals for the Fifth Circuit which heard argument on October 8, 2019. On August 22, 2018, a plaintiff filed a second putative class action in the United States District Court for New Mexico making the same allegations as the Texas action. The District Court dismissed the plaintiff's action. The plaintiff has appealed to the United States Court of Appeals for the Tenth Circuit. Management is advised by counsel that a loss is not probable in either the now dismissed Texas action or the New Mexico action and that the loss, if any, cannot be reasonably estimated.

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On March 7, 2020, three former employees sued BOKF, NA, the Plan Committee of the BOKF, NA 401k Plan, and Cavanal Hill Investment Management, Inc., a subsidiary of BOKF, NA, alleging that the Defendants included proprietary investment products as investment options in the BOKF, NA 401k Plan, whose fees were too high and performance too low, for the purpose of earning fees. The action is brought as a putative class action on behalf of all Plan Participants. The action is pending on the defendants' motion to dismiss. Management is advised by counsel that a loss is not probable and that the loss, if any, cannot be reasonably estimated.

In 2019, a limited liability partnership sued BOKF, NA in Colorado District Court alleging that the Bank breached various fiduciary duties acting in its capacity as trustee of a trust that was a co-general partner of the partnership, claiming in excess of $60 million in damages. From 2000 to 2009, BOKF was serving as personal representative of the estate of the creator of the trust. In 2009, BOKF moved to close the probate of the estate in the Colorado Probate Court. The members of the partnership who now sue BOKF objected to the closing of the estate, making the same allegations in 2009 in probate as they now make in 2019 in the Colorado District Court. In 2009, the Colorado Probate Court entered summary judgment against the beneficiaries and the estate was closed. In the current action, the Colorado District Court has now denied BOKF’s motions for summary judgment and the matter will proceed to trial. Management is advised by counsel that a loss is not probable and that the loss, if any, cannot be reasonably estimated.

In the ordinary course of business, BOK Financial and its subsidiaries are subject to legal actions and complaints. Management believes, based upon the opinion of counsel, that the actions and liability or loss, if any, resulting from the final outcomes of the proceedings, will not have a material effect on the Company’s financial condition, results of operations or cash flows.

Alternative Investment Commitments

The Company sponsors a private equity fund and invests in several tax credit entities and other funds as permitted by banking regulations. Consolidation of these investments is based on the variable interest model.

At March 31, 2021, the Company has $319 million in interests in various alternative investments generally consisting of unconsolidated limited partnership interests in entities for which investment return is in the form of low income housing tax credits or other investments in merchant banking activities. This investment balance also includes $104 million of unfunded commitments included in Other liabilities on the Consolidated Balance Sheets.

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(7) Shareholders' Equity

On May 4, 2021, the Company declared a quarterly cash dividend of $0.52 per common share payable on or about May 27, 2021 to shareholders of record as of May 17, 2021.

Dividends declared were $0.52 per share during the three months ended March 31, 2021 and $0.51 per share during the three months ended March 31, 2020.

Accumulated Other Comprehensive Income (Loss)

AOCI includes unrealized gains and losses on available for sale ("AFS") securities and non-credit related unrealized losses on AFS securities for which an other-than-temporary impairment has been recorded in earnings. Unrealized losses on employee benefit plans will be reclassified into income as pension plan costs are recognized over the remaining service period of plan participants. Gains and losses in AOCI are net of deferred income taxes.

A rollforward of the components of accumulated other comprehensive income (loss) is included as follows (in thousands):


	Unrealized Gain (Loss) on
	Available for Sale Securities		Employee Benefit Plans		Total
Balance, Dec. 31, 2019	$	104,996	$	(73)	$	104,923
Net change in unrealized gain (loss)	297,843		—		297,843
Reclassification adjustments included in earnings:

Gain on available for sale securities, net	(3)		—		(3)
Other comprehensive income, before income taxes	297,840		—		297,840
Federal and state income taxes	71,471		—		71,471
Other comprehensive income, net of income taxes	226,369		—		226,369
Balance, March 31, 2020	$	331,365	$	(73)	$	331,292

Balance, Dec. 31, 2020	$	335,032	$	836	$	335,868
Net change in unrealized gain (loss)	(150,131)		—		(150,131)
Reclassification adjustments included in earnings:
Gain on available for sale securities, net	(467)		—		(467)
Other comprehensive income, before income taxes	(150,598)		—		(150,598)
Federal and state income taxes	(36,139)		—		(36,139)
Other comprehensive income (loss), net of income taxes	(114,459)		—		(114,459)
Balance, March 31, 2021	$	220,573	$	836	$	221,409

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(8) Earnings Per Share


(In thousands, except share and per share amounts)	Three Months Ended March 31,
	2021		2020
Numerator:
Net income attributable to BOK Financial Corp. shareholders	$	146,060	$	62,079
Less: Earnings allocated to participating securities	937		343
Numerator for basic earnings per share – income available to common shareholders	145,123		61,736
Effect of reallocating undistributed earnings of participating securities	—		—
Numerator for diluted earnings per share – income available to common shareholders	$	145,123	$	61,736

Denominator:
Weighted average shares outstanding	69,583,788		70,513,807
Less: Participating securities included in weighted average shares outstanding	446,413		390,122
Denominator for basic earnings per common share	69,137,375		70,123,685
Dilutive effect of employee stock compensation plans	4,335		6,481
Denominator for diluted earnings per common share	69,141,710		70,130,166

Basic earnings per share	$	2.10	$	0.88
Diluted earnings per share	$	2.10	$	0.88

- 75 -

(9) Reportable Segments

Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended March 31, 2021 is as follows (in thousands):


	Commercial		Consumer		Wealth Management		Funds Management and Other		BOK Financial Consolidated
Net interest revenue from external sources	$	155,799	$	16,686	$	48,554	$	59,381	$	280,420
Net interest revenue (expense) from internal sources	(25,794)		4,288		(200)		21,706		—
Net interest revenue	130,005		20,974		48,354		81,087		280,420
Provision for credit losses	13,985		1,136		(29)		(40,092)		(25,000)
Net interest revenue after provision for credit losses	116,020		19,838		48,383		121,179		305,420
Other operating revenue	46,579		52,282		66,123		(1,087)		163,897
Other operating expense	66,979		55,743		78,565		81,340		282,627
Net direct contribution	95,620		16,377		35,941		38,752		186,690
Gain (loss) on financial instruments, net	33		(29,616)		—		29,583		—
Change in fair value of mortgage servicing rights	—		33,874		—		(33,874)		—
Gain (loss) on repossessed assets, net	12,737		41		—		(12,778)		—
Corporate expense allocations	12,734		11,487		9,887		(34,108)		—
Net income before taxes	95,656		9,189		26,054		55,791		186,690
Federal and state income taxes	25,983		2,340		6,672		7,387		42,382
Net income	69,673		6,849		19,382		48,404		144,308
Net income (loss) attributable to non-controlling interests	—		—		—		(1,752)		(1,752)
Net income attributable to BOK Financial Corp. shareholders	$	69,673	$	6,849	$	19,382	$	50,156	$	146,060

Average assets	$	28,047,052	$	9,755,539	$	18,645,865	$	(6,137,823)	$	50,310,633

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Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended March 31, 2020 is as follows (in thousands):


	Commercial		Consumer		Wealth Management		Funds Management and Other		BOK Financial Consolidated
Net interest revenue from external sources	$	201,902	$	25,876	$	14,366	$	19,216	$	261,360
Net interest revenue (expense) from internal sources	(50,495)		18,056		4,538		27,901		—
Net interest revenue	151,407		43,932		18,904		47,117		261,360
Provision for credit losses	16,880		1,256		(48)		75,683		93,771
Net interest revenue after provision for credit losses	134,527		42,676		18,952		(28,566)		167,589
Other operating revenue	38,220		55,062		97,881		(10,844)		180,319
Other operating expense	60,752		53,844		78,192		75,836		268,624
Net direct contribution	111,995		43,894		38,641		(115,246)		79,284
Gain (loss) on financial instruments, net	49		86,764		7		(86,820)		—
Change in fair value of mortgage servicing rights	—		(88,480)		—		88,480		—
Gain (loss) on repossessed assets, net	9		13		—		(22)		—
Corporate expense allocations	8,905		10,389		8,265		(27,559)		—
Net income before taxes	103,148		31,802		30,383		(86,049)		79,284
Federal and state income taxes	28,173		8,101		7,810		(26,784)		17,300
Net income	74,975		23,701		22,573		(59,265)		61,984
Net income (loss) attributable to non-controlling interests	—		—		—		(95)		(95)
Net income attributable to BOK Financial Corp. shareholders	$	74,975	$	23,701	$	22,573	$	(59,170)	$	62,079

Average assets	$	24,687,976	$	9,850,853	$	12,723,412	$	(1,541,623)	$	45,720,618

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(10) Fees and Commissions Revenue

Fees and commissions revenue is generated through the sales of products, consisting primarily of financial instruments, and the performance of services for customers under contractual obligations. Revenue from providing services for customers is recognized at the time services are provided in an amount that reflects the consideration we expect to be entitled to for those services. Revenue is recognized based on the application of five steps:

•Identify the contract with a customer

•Identify the performance obligations in the contract

•Determine the transaction price

•Allocate the transaction price to the performance obligations in the contract

•Recognize revenue when (or as) the Company satisfies a performance obligation

For contracts with multiple performance obligations, individual performance obligations are accounted for separately if the customer can benefit from the good or service on its own or with other resources readily available to the customer and the promise to transfer goods and services to the customer is separately identifiable in the contract. The transaction price is allocated to the performance obligations based on relative standalone selling prices.

Revenue is recognized on a gross basis whenever we have primary responsibility and risk in providing the services or products to our customers and have discretion in establishing the price for the services or products. Revenue is recognized on a net basis whenever we act as an agent for products or services of others.

Brokerage and trading revenue includes revenues from trading, customer hedging, retail brokerage and investment banking. Trading revenue includes net realized and unrealized gains primarily related to sales of securities to institutional customers and related derivative contracts. Customer hedging revenue includes realized and unrealized changes in the fair value of derivative contracts held for customer risk management programs including credit valuation adjustments, as necessary. We offer commodity, interest rate, foreign exchange and equity derivatives to our customers. These customer contracts are offset with contracts with selected counterparties and exchanges to minimize changes in market risk from changes in commodity prices, interest rates or foreign exchange rates. Retail brokerage revenue represents fees and commissions earned on sales of fixed income securities, annuities, mutual funds and other financial instruments to retail customers. Investment banking revenue includes fees earned upon completion of underwriting and financial advisory services. Investment banking revenue also includes fees earned in conjunction with loan syndications. Insurance brokerage revenues represents fees and commissions earned on placement of insurance products with carriers for property and casualty and health coverage.

Transaction card revenue includes merchant discount fees and electronic funds transfer network fees, net of interchange fees paid to card issuers and assessments paid to card networks. Merchant discount fees represent fees paid by customers for account management and electronic processing of card transactions. Merchant discount fees are recognized at the time the customer’s transactions are processed or other services are performed. The Company also maintains the TransFund electronic funds transfer network for the benefit of its members, which includes the Bank. Electronic funds transfer fees are recognized as electronic transactions processed on behalf of its members.

Fiduciary and asset management revenue includes fees from asset management, custody, recordkeeping, investment advisory and administration services. Revenue is recognized on an accrual basis at the time the services are performed and may be based on either the fair value of the account or the service provided.

Deposit service charges and fees include commercial account service charges, overdraft fees, check card fee revenue and automated service charge and other deposit service fees. Fees are recognized at least quarterly in accordance with published deposit account agreements and disclosure statements for retail accounts or contractual agreements for commercial accounts. Item charges for overdraft or non-sufficient funds items are recognized as items are presented for payment. Account balance charges and activity fees are accrued monthly and collected in arrears. Commercial account activity fees may be offset by an earnings credit based on account balances. Check card fees represent interchange fees paid by a merchant bank for transactions processed from cards issued by the Company. Check card fees are recognized when transactions are processed.

Mortgage banking revenue includes revenues recognized in conjunction with the origination, marketing and servicing of conventional and government-sponsored residential mortgage loans. Mortgage production revenue includes net realized gains (losses) on sales of residential mortgage loans in the secondary market and the net change in unrealized gains (losses) on residential mortgage loans held for sale. Mortgage production revenue also includes changes in the fair value of derivative contracts not designated as hedging instruments related to residential mortgage loan commitments and forward sales contracts. Mortgage servicing revenue includes servicing fee income and late charges on loans serviced for others.

- 78 -

Fees and commissions revenue by reportable segment and primary service line is as follows for the three months ended March 31, 2021.


	Commercial		Consumer		Wealth Management		Funds Management & Other		Consolidated		Out of Scope1		In Scope2
Trading revenue	$	—	$	—	$	3,716	$	—	$	3,716	$	3,716	$	—
Customer hedging revenue	4,207		—		91		(1,706)		2,592		2,592		—
Retail brokerage revenue	—		—		4,741		—		4,741		—		4,741
Insurance brokerage revenue	—		—		2,916		—		2,916		—		2,916
Investment banking revenue	2,258		—		4,768		(209)		6,817		2,049		4,768
Brokerage and trading revenue	6,465		—		16,232		(1,915)		20,782		8,357		12,425
TransFund EFT network revenue	18,443		834		(13)		2		19,266		—		19,266
Merchant services revenue	2,266		16		—		(1)		2,281		—		2,281
Corporate card revenue	804		—		28		51		883		—		883
Transaction card revenue	21,513		850		15		52		22,430		—		22,430
Personal trust revenue	—		—		21,977		—		21,977		—		21,977
Corporate trust revenue	—		—		3,789		—		3,789		—		3,789
Institutional trust & retirement plan services revenue	—		—		12,610		—		12,610		—		12,610
Investment management services and other revenue	—		—		2,903		43		2,946		—		2,946
Fiduciary and asset management revenue	—		—		41,279		43		41,322		—		41,322
Commercial account service charge revenue	11,988		434		581		1		13,004		—		13,004
Overdraft fee revenue	26		4,635		19		—		4,680		—		4,680
Check card revenue	—		5,327		—		—		5,327		—		5,327
Automated service charge and other deposit fee revenue	26		1,150		23		(1)		1,198		—		1,198
Deposit service charges and fees	12,040		11,546		623		—		24,209		—		24,209
Mortgage production revenue	—		25,287		—		—		25,287		25,287		—
Mortgage servicing revenue	—		12,277		—		(451)		11,826		11,826		—
Mortgage banking revenue	—		37,564		—		(451)		37,113		37,113		—
Other revenue	9,829		2,340		7,535		(3,408)		16,296		13,143		3,153
Total fees and commissions revenue	$	49,847	$	52,300	$	65,684	$	(5,679)	$	162,152	$	58,613	$	103,539

1 Out of scope revenue generally relates to financial instruments or contractual rights and obligations within the scope of other applicable accounting guidance.

2 In scope revenue represents revenue subject to FASB ASC Topic 606, Revenue from Contracts with Customers.

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Fees and commissions revenue by reportable segment and primary service line is as follows for the three months ended March 31, 2020.


	Commercial		Consumer		Wealth Management		Funds Management & Other		Consolidated		Out of Scope1		In Scope2
Trading revenue	$	—	$	—	$	34,384	$	—	$	34,384	$	34,384	$	—
Customer hedging revenue	2,525		—		135		563		3,223		3,223		—
Retail brokerage revenue	—		—		4,343		—		4,343		—		4,343
Insurance brokerage revenue	—		—		3,789		—		3,789		—		3,789
Investment banking revenue	1,880		—		3,160		—		5,040		1,828		3,212
Brokerage and trading revenue	4,405		—		45,811		563		50,779		39,435		11,344
TransFund EFT network revenue	18,212		831		(19)		2		19,026		—		19,026
Merchant services revenue	2,305		14		—		—		2,319		—		2,319
Corporate card revenue	520		—		16		—		536		—		536
Transaction card revenue	21,037		845		(3)		2		21,881		—		21,881
Personal trust revenue	—		—		20,649		—		20,649		—		20,649
Corporate trust revenue	—		—		6,362		—		6,362		—		6,362
Institutional trust & retirement plan services revenue	—		—		11,896		—		11,896		—		11,896
Investment management services and other revenue	—		—		5,592		(41)		5,551		—		5,551
Fiduciary and asset management revenue	—		—		44,499		(41)		44,458		—		44,458
Commercial account service charge revenue	11,039		410		545		(1)		11,993		—		11,993
Overdraft fee revenue	49		7,205		22		2		7,278		—		7,278
Check card revenue	—		5,229		—		—		5,229		—		5,229
Automated service charge and other deposit fee revenue	229		1,386		13		2		1,630		—		1,630
Deposit service charges and fees	11,317		14,230		580		3		26,130		—		26,130
Mortgage production revenue	—		21,569		—		—		21,569		21,569		—
Mortgage servicing revenue	—		16,042		—		(444)		15,598		15,598		—
Mortgage banking revenue	—		37,611		—		(444)		37,167		37,167		—
Other revenue	4,700		2,376		6,994		(1,761)		12,309		8,408		3,901
Total fees and commissions revenue	$	41,459	$	55,062	$	97,881	$	(1,678)	$	192,724	$	85,010	$	107,714

1 Out of scope revenue generally relates to financial instruments or contractual rights and obligations within the scope of other applicable accounting guidance.

2 In scope revenue represents revenue subject to FASB ASC Topic 606, Revenue from Contracts with Customers.

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(11) Fair Value Measurements

Fair value is defined by applicable accounting guidance as the price to sell an asset or transfer a liability in an orderly transaction between market participants in the principal market for the given asset or liability at the measurement date based on market conditions at that date. An orderly transaction assumes exposure to the market for a customary period for marketing activities prior to the measurement date and not a forced liquidation or distressed sale. Certain assets and liabilities are recorded in the Company’s financial statements at fair value. Some are recorded on a recurring basis and some on a non-recurring basis.

For some assets and liabilities, observable market transactions and market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. A hierarchy for fair value has been established which categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels are as follows:

Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) - Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities.

Significant Other Observable Inputs (Level 2) - Fair value is based on significant other observable inputs which are generally determined based on a single price for each financial instrument provided to us by an applicable third-party pricing service and is based on one or more of the following:

•Quoted prices for similar, but not identical, assets or liabilities in active markets;

•Quoted prices for identical or similar assets or liabilities in inactive markets;

•Inputs other than quoted prices that are observable, such as interest rate and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates;

•Other inputs derived from or corroborated by observable market inputs.

Significant Unobservable Inputs (Level 3) - Fair value is based upon model-based valuation techniques for which at least one significant assumption is not observable in the market.

Transfers between levels are recognized as of the end of the reporting period. There were no transfers in or out of quoted prices in active markets for identical instruments to significant other observable inputs or significant unobservable inputs during the three months ended March 31, 2021 and 2020, respectively. Transfers between significant other observable inputs and significant unobservable inputs during the three months ended March 31, 2021 and 2020 are included in the summary of changes in recurring fair values measured using unobservable inputs.

The underlying methods used by the third-party pricing services are considered in determining the primary inputs used to determine fair values. Management has evaluated the methodologies employed by the third-party pricing services by comparing the price provided by the pricing service with other sources, including brokers' quotes, sales or purchases of similar instruments and discounted cash flows to establish a basis for reliance on the pricing service values. Significant differences between the pricing service provided value and other sources are discussed with the pricing service to understand the basis for their values. Based on all observable inputs, management may adjust prices obtained from third-party pricing services to more appropriately reflect the prices that would be received to sell assets or paid to transfer liabilities in orderly transactions in the current market. No significant adjustments were made to prices provided by third-party pricing services at March 31, 2021 or December 31, 2020.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value of financial assets and liabilities measured on a recurring basis was as follows as of March 31, 2021 (in thousands):


	Total		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading securities:
U.S. government securities	$	33,613	$	2,070	$	31,543	$	—
Residential agency mortgage-backed securities	5,003,163		—		5,003,163		—
Municipal securities	27,047		—		27,047		—

Other trading securities	22,126		—		22,126		—
Total trading securities	5,085,949		2,070		5,083,879		—
Available for sale securities:
U.S. Treasury	506		506		—		—
Municipal securities	245,657		—		245,657		—
Residential agency mortgage-backed securities	9,705,314		—		9,705,314		—
Residential non-agency mortgage-backed securities	31,382		—		31,382		—
Commercial agency mortgage-backed securities	3,426,727		—		3,426,727		—
Other debt securities	471		—		—		471
Total available for sale securities	13,410,057		506		13,409,080		471


Fair value option securities – Residential agency mortgage-backed securities	72,498		—		72,498		—

Residential mortgage loans held for sale1	284,447		—		279,151		5,296
Mortgage servicing rights2	132,915		—		—		132,915
Derivative contracts, net of cash collateral3	1,289,156		2,772		1,286,384		—
Liabilities:
Derivative contracts, net of cash collateral3	719,556		2,721		716,835		—

1Residential mortgage loans held for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) consist of residential mortgage loans intended for sale to U.S. government agencies that fail to meet conforming standards and are valued at 94.55% of the unpaid principal balance.

2A reconciliation of the beginning and ending fair value of mortgage servicing rights and disclosures of significant assumptions used to determine fair value are presented in Note 5, Mortgage Banking Activities.

3See Note 3 for detail of fair value of derivative contracts by contract type. Derivative contracts in asset positions that were valued based on quoted prices in active markets for identical instruments (Level 1) are primarily exchange-traded interest rate and agricultural derivative contracts. Derivative contracts in liability positions that were valued using quoted prices in active markets for identical instruments are exchange-traded interest rate and energy derivative contracts, net of cash margin.

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The fair value of financial assets and liabilities measured on a recurring basis was as follows as of December 31, 2020 (in thousands):


	Total		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading securities:
U.S. government securities	$	9,183	$	4,999	$	4,184	$	—
Residential agency mortgage-backed securities	4,669,148		—		4,669,148		—
Municipal securities	19,172		—		19,172		—

Other trading securities	10,472		—		10,472		—
Total trading securities	4,707,975		4,999		4,702,976		—
Available for sale securities:
U.S. Treasury	508		508		—		—
Municipal securities	167,979		—		167,979		—
Residential agency mortgage-backed securities	9,340,471		—		9,340,471		—
Residential non-agency mortgage-backed securities	32,770		—		32,770		—
Commercial agency mortgage-backed securities	3,508,465		—		3,508,465		—
Other debt securities	472		—		—		472
Total available for sale securities	13,050,665		508		13,049,685		472



Fair value option securities — Residential agency mortgage-backed securities	114,982		—		114,982		—
Residential mortgage loans held for sale1	252,316		—		245,299		7,017
Mortgage servicing rights2	101,172		—		—		101,172
Derivative contracts, net of cash collateral3	810,688		10,780		799,908		—
Liabilities:
Derivative contracts, net of cash collateral3	405,779		—		405,779		—

3See Note 3 for detail of fair value of derivative contracts by contract type. Derivative contracts based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded interest rate contracts. Derivative contracts in liability positions that were valued using quoted prices in active markets for identical instruments (Level 1) are exchange-traded interest rate, energy and agricultural contracts, fully offset by cash margin.

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Following is a description of the Company's valuation methodologies used for assets and liabilities measured on a recurring basis:

Securities

The fair values of trading, available for sale and fair value option securities are based on quoted prices for identical instruments in active markets, when available. If quoted prices for identical instruments are not available, fair values are based on significant other observable inputs such as quoted prices of comparable instruments or interest rates and credit spreads, yield curves, volatilities, prepayment speeds and loss severities. The Company has elected to carry all residential mortgage-backed securities guaranteed by U.S. government agencies held as economic hedges against changes in the fair value of mortgage servicing rights at fair value with changes in the fair value recognized in earnings.

The fair value of certain available for sale municipal and other debt securities may be based on significant unobservable inputs. These significant unobservable inputs include limited observed trades, projected cash flows, current credit rating of the issuers and, when applicable, the insurers of the debt and observed trades of similar debt. Discount rates are primarily based on references to interest rate spreads on comparable securities of similar duration and credit rating as determined by the nationally-recognized rating agencies adjusted for a lack of trading volume. Significant unobservable inputs are developed by investment securities professionals involved in the active trading of similar securities. A summary of significant inputs used to value these securities follows. A management committee composed of senior members from the Company's Capital Markets, Risk Management and Finance departments assesses the appropriateness of these inputs quarterly.

Derivatives

All derivative instruments are carried on the balance sheet at fair value. Fair values for exchange-traded contracts are based on quoted prices. Fair values for over-the-counter interest rate, commodity and foreign exchange contracts are based on valuations provided either by third-party dealers in the contracts, quotes provided by independent pricing services, or a third-party provided pricing model that uses significant other observable market inputs.

Credit risk is considered in determining the fair value of derivative instruments. Management determines fair value adjustments based on various risk factors including but not limited to current fair value, probability of default and loss given default.

We also consider our own credit risk in determining the fair value of derivative contracts. Changes in our credit rating would affect the fair value of our derivative liabilities. In the event of a credit downgrade, the fair value of our derivative liabilities would increase.

Residential Mortgage Loans Held for Sale

Residential mortgage loans held for sale are carried on the balance sheet at fair value. The Company has elected to carry all residential mortgage loans originated for sale at fair value. Changes in the fair value of these financial instruments are recognized in earnings. The fair values of residential mortgage loans held for sale are based upon quoted market prices of such loans sold in securitization transactions, including related unfunded loan commitments and forward sales contracts. The fair value of mortgage loans that were unable to be sold to U.S. government agencies were determined using quoted prices of loans that are sold in securitization transactions with a liquidity discount applied.

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Fair Value of Assets and Liabilities Measured on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis include collateral for certain nonaccruing loans and real property and other assets acquired to satisfy loans, which are based primarily on comparisons to completed sales of similar assets.

The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets with a balance at March 31, 2021 for which the fair value was adjusted during the three months ended March 31, 2021:


							Fair Value Adjustments for the
	Carrying Value at March 31, 2021						Three Months Ended Mar. 31, 2021 Recognized in:
	Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Gross charge-offs against allowance for loan losses		Net losses (gains) and operating expenses of repossessed assets
Nonaccruing loans	$	—	$	259	$	34,046	$	15,049	$	—
Real estate and other repossessed assets	—		1,706		300		—		2,200

The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets with a balance at March 31, 2020 for which the fair value was adjusted during the three months ended March 31, 2020:


							Fair Value Adjustments for the
	Carrying Value at March 31, 2020						Three Months Ended Mar. 31, 2020 Recognized in:
	Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Gross charge-offs against allowance for loan losses		Net losses (gains) and operating expenses of repossessed assets
Nonaccruing loans	$	—	$	293	$	22,746	$	15,789	$	—
Real estate and other repossessed assets	—		1,066		400		—		226

The fair value of collateral-dependent nonaccruing loans secured by real estate and real estate and other repossessed assets and the related fair value adjustments are generally based on unadjusted third-party appraisals. Our appraisal review policies require appraised values to be supported by observed inputs derived principally from or corroborated by observable market data. Appraisals that are not based on observable inputs or that require significant adjustments or fair value measurements that are not based on third-party appraisals are considered to be based on significant unobservable inputs. Non-recurring fair value measurements of collateral-dependent nonaccruing loans and real estate and other repossessed assets based on significant unobservable inputs are generally due to estimates of current fair values between appraisal dates. Significant unobservable inputs include listing prices for the same or comparable assets, uncorroborated expert opinions or management's knowledge of the collateral or industry. Non-recurring fair value measurements of collateral dependent loans secured by mineral rights are generally determined by our internal staff of engineers on projected cash flows under current market conditions and are based on significant unobservable inputs. Projected cash flows are discounted according to risk characteristics of the underlying oil and gas properties. Assets are evaluated to demonstrate with reasonable certainty that crude oil, natural gas and natural gas liquids can be recovered from known oil and gas reservoirs under existing economic and operating conditions at current prices with existing conventional equipment, operating methods and costs. Significant unobservable inputs are developed by asset management and workout professionals and approved by senior Credit Administration executives.

- 85 -

A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of March 31, 2021 follows (in thousands):

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Nonaccruing loans

34,046

Discounted cash flows

Management knowledge of industry and non-real estate collateral including but not limited to recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs

10% - 91% (47%)1

Real estate and other repossessed assets

300

Discounted cash flows

Management knowledge of industry and non-real estate collateral including but not limited to recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs

N/A

1 Represents fair value as a percentage of the unpaid principal balance.

A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of March 31, 2020 follows (in thousands):

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Nonaccruing loans

22,746

Discounted cash flows

Management knowledge of industry and non-real estate collateral including but not limited to recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs

6% - 71% (36%)1

Real estate and other repossessed assets

400

Appraised value, as adjusted

Marketability adjustments off appraised value2

87% - 87% (87%)

1 Represents fair value as a percentage of the unpaid principal balance.

2 Marketability adjustments include consideration of estimated costs to sell which is approximately 10% of the fair value.

- 86 -

Fair Value of Financial Instruments

The following table presents the carrying values and estimated fair values of all financial instruments, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis as of March 31, 2021 (dollars in thousands):


	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and due from banks	$	723,983	$	723,983	$	723,983	$	—	$	—
Interest-bearing cash and cash equivalents	695,213		695,213		695,213		—		—
Trading securities:
U.S. government securities	33,613		33,613		2,070		31,543		—
Residential agency mortgage-backed securities	5,003,163		5,003,163		—		5,003,163		—
Municipal securities	27,047		27,047		—		27,047		—

Other trading securities	22,126		22,126		—		22,126		—
Total trading securities	5,085,949		5,085,949		2,070		5,083,879		—
Investment securities:
Municipal securities	216,047		241,278		—		67,510		173,768
Residential agency mortgage-backed securities	8,477		9,216		—		9,216		—
Other debt securities	2,214		2,213		—		2,213		—
Total investment securities	226,738		252,707		—		78,939		173,768
Allowance for credit losses	(617)		—		—		—		—
Investment securities, net of allowance	226,121		252,707		—		78,939		173,768
Available for sale securities:
U.S. Treasury	506		506		506		—		—
Municipal securities	245,657		245,657		—		245,657		—
Residential agency mortgage-backed securities	9,705,314		9,705,314		—		9,705,314		—
Residential non-agency mortgage-backed securities	31,382		31,382		—		31,382		—
Commercial agency mortgage-backed securities	3,426,727		3,426,727		—		3,426,727		—
Other debt securities	471		471		—		—		471
Total available for sale securities	13,410,057		13,410,057		506		13,409,080		471


Fair value option securities – Residential agency mortgage-backed securities	72,498		72,498		—		72,498		—

Residential mortgage loans held for sale	284,447		284,447		—		279,151		5,296
Loans:
Commercial	12,657,784		12,546,069		—		—		12,546,069
Commercial real estate	4,503,347		4,435,740		—		—		4,435,740
Paycheck protection program	1,848,550		1,820,749		—		—		1,820,749
Loans to individuals	3,524,166		3,528,950		—		—		3,528,950
Total loans	22,533,847		22,331,508		—		—		22,331,508
Allowance for loan losses	(352,402)		—		—		—		—
Loans, net of allowance	22,181,445		22,331,508		—		—		22,331,508
Mortgage servicing rights	132,915		132,915		—		—		132,915
Derivative instruments with positive fair value, net of cash collateral	1,289,156		1,289,156		2,772		1,286,384		—
Deposits with no stated maturity	35,848,270		35,848,270		—		—		35,848,270
Time deposits	2,004,356		2,008,294		—		—		2,008,294
Other borrowed funds	2,503,678		2,500,771		—		—		2,500,771
Subordinated debentures	276,024		288,109		—		288,109		—
Derivative instruments with negative fair value, net of cash collateral	719,556		719,556		2,721		716,835		—

- 87 -


	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and due from banks	$	798,757	$	798,757	$	798,757	$	—	$	—
Interest-bearing cash and cash equivalents	381,816		381,816		381,816		—		—
Trading securities:
U.S. government securities	9,183		9,183		4,999		4,184		—
Residential agency mortgage-backed securities	4,669,148		4,669,148		—		4,669,148		—
Municipal securities	19,172		19,172		—		19,172		—

Other trading securities	10,472		10,472		—		10,472		—
Total trading securities	4,707,975		4,707,975		4,999		4,702,976		—
Investment securities:
Municipal securities	229,245		255,270		—		69,404		185,866
Residential agency mortgage-backed securities	8,913		9,790		—		9,790		—
Other debt securities	7,373		7,371		—		7,371		—
Total investment securities	245,531		272,431		—		86,565		185,866
Allowance for credit losses	(688)		0		—		0		0
Investment securities, net of allowance	244,843		272,431		—		86,565		185,866
Available for sale securities:
U.S. Treasury	508		508		508		—		—
Municipal securities	167,979		167,979		—		167,979		—
Residential agency mortgage-backed securities	9,340,471		9,340,471		—		9,340,471		—
Residential non-agency mortgage-backed securities	32,770		32,770		—		32,770		—
Commercial agency mortgage-backed securities	3,508,465		3,508,465		—		3,508,465		—
Other debt securities	472		472		—		—		472
Total available for sale securities	13,050,665		13,050,665		508		13,049,685		472



Fair value option securities — Residential agency mortgage-backed securities	114,982		114,982		—		114,982		—
Residential mortgage loans held for sale	252,316		252,316		—		245,299		7,017
Loans:
Commercial	13,077,535		13,003,383		—		—		13,003,383
Commercial real estate	4,698,538		4,649,763		—		—		4,649,763
Paycheck protection program	1,682,310		1,669,461		—		—		1,669,461
Loans to individuals	3,549,137		3,563,199		—		—		3,563,199
Total loans	23,007,520		22,885,806		—		—		22,885,806
Allowance for loan losses	(388,640)		—		—		—		—
Loans, net of allowance	22,618,880		22,885,806		—		—		22,885,806
Mortgage servicing rights	101,172		101,172		—		—		101,172
Derivative instruments with positive fair value, net of cash collateral	810,688		810,688		10,780		799,908		—
Deposits with no stated maturity	34,176,752		34,176,752		—		—		34,176,752
Time deposits	1,967,128		1,976,936		—		—		1,976,936
Other borrowed funds	3,545,356		3,542,489		—		—		3,542,489
Subordinated debentures	276,005		269,544		—		269,544		—
Derivative instruments with negative fair value, net of cash collateral	405,779		405,779		—		405,779		—

Because no market exists for certain of these financial instruments and management does not intend to sell these financial instruments, the fair values shown in the tables above may not represent values at which the respective financial instruments could be sold individually or in the aggregate at the given reporting date.

- 88 -

(12) Subsequent Events

The Company evaluated events from the date of the consolidated financial statements on March 31, 2021 through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q. No events were identified requiring recognition in and/or disclosure in the consolidated financial statements.

- 89 -

Quarterly Financial Summary – Unaudited

Consolidated Daily Average Balances, Average Yields and Rates


(In Thousands, Except Per Share Data)	Three Months Ended
	March 31, 2021						December 31, 2020
	Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	711,047	$	174	0.10	%	$	643,926	$	158	0.10	%
Trading securities	6,963,617		35,969		2.06	%	6,888,189		35,848		2.02	%
Investment securities, net of allowance	237,313		2,893		4.88	%	251,863		3,071		4.88	%
Available for sale securities	13,433,767		58,680		1.84	%	12,949,702		60,885		1.98	%
Fair value option securities	104,662		496		1.95	%	122,329		671		2.27	%
Restricted equity securities	189,921		1,359		2.86	%	280,428		2,276		3.25	%
Residential mortgage loans held for sale	207,013		1,380		2.71	%	229,631		1,549		2.75	%
Loans	22,757,007		199,589		3.55	%	23,447,518		216,976		3.68	%
Allowance for loan losses	(382,734)						(414,225)
Loans, net of allowance	22,374,273		199,589		3.62	%	23,033,293		216,976		3.75	%
Total earning assets	44,221,613		300,540		2.78	%	44,399,361		321,434		2.92	%
Receivable on unsettled securities sales	735,482						1,094,198
Cash and other assets	5,353,538						4,893,605
Total assets	$	50,310,633					$	50,387,164
Liabilities and equity
Interest-bearing deposits:
Transaction	$	21,433,406	$	6,323	0.12	%	$	20,718,390	$	7,047	0.14	%
Savings	789,656		86		0.04	%	737,360		87		0.05	%
Time	1,986,425		3,441		0.70	%	1,930,808		4,300		0.89	%
Total interest-bearing deposits	24,209,487		9,850		0.17	%	23,386,558		11,434		0.19	%
Funds purchased and repurchase agreements	2,830,378		1,348		0.19	%	2,153,254		1,526		0.28	%
Other borrowings	3,392,346		3,274		0.39	%	5,193,656		5,453		0.42	%
Subordinated debentures	276,015		3,347		4.92	%	275,998		3,377		4.87	%
Total interest-bearing liabilities	30,708,226		17,819		0.24	%	31,009,466		21,790		0.28	%
Non-interest bearing demand deposits	12,312,629						12,136,071
Due on unsettled securities purchases	915,410						957,642
Other liabilities	1,100,203						1,055,623
Total equity	5,274,165						5,228,362
Total liabilities and equity	$	50,310,633					$	50,387,164
Tax-equivalent Net Interest Revenue			$	282,721	2.54	%			$	299,644	2.64	%
Tax-equivalent Net Interest Revenue to Earning Assets					2.62	%					2.72	%
Less tax-equivalent adjustment			2,301						2,414
Net Interest Revenue			280,420						297,230
Provision for credit losses			(25,000)						(6,500)
Other operating revenue			163,897						196,778
Other operating expense			282,627						300,661
Income before taxes			186,690						199,847
Federal and state income taxes			42,382						45,138
Net income			144,308						154,709
Net income (loss) attributable to non-controlling interests			(1,752)						485
Net income attributable to BOK Financial Corp. shareholders			$	146,060					$	154,224
Earnings Per Average Common Share Equivalent:
Basic			$	2.10					$	2.21
Diluted			$	2.10					$	2.21

Yield calculations are shown on a tax equivalent 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.

- 90 -


Three Months Ended
September 30, 2020						June 30, 2020						March 31, 2020
Average Balance		Revenue /Expense		Yield / Rate		Average Balance		Revenue / Expense		Yield / Rate		Average Balance		Revenue / Expense		Yield / Rate

$	553,070	$	167	0.12	%	$	619,737	$	112	0.07	%	$	721,659	$	2,393	1.33	%
1,834,160		8,766		1.92	%	1,871,647		11,473		2.46	%	1,690,104		11,855		2.89	%
258,965		3,141		4.85	%	268,947		3,210		4.77	%	282,265		3,338		4.73	%
12,580,850		62,433		2.11	%	12,480,065		68,358		2.29	%	11,664,521		69,728		2.48	%
387,784		1,986		1.92	%	786,757		4,110		2.00	%	1,793,480		11,708		2.67	%
144,415		913		2.53	%	273,922		1,880		2.75	%	429,133		5,894		5.49	%
213,125		1,585		3.01	%	288,588		2,140		3.10	%	129,708		1,123		3.50	%
24,110,463		218,125		3.60	%	24,099,492		217,731		3.63	%	21,943,023		245,613		4.50	%
(441,831)						(367,583)						(250,338)
23,668,632		218,125		3.67	%	23,731,909		217,731		3.69	%	21,692,685		245,613		4.55	%
39,641,001		297,116		3.04	%	40,321,572		309,014		3.12	%	38,403,555		351,652		3.73	%
4,563,301						4,626,307						3,046,111
4,727,453						4,809,152						4,270,952
$	48,931,755					$	49,757,031					$	45,720,618


$	19,752,106	$	8,199	0.17	%	$	18,040,170	$	9,321	0.21	%	$	16,159,654	$	35,857	0.89	%
707,121		88		0.05	%	656,669		84		0.05	%	563,821		126		0.09	%
2,251,012		6,371		1.13	%	2,464,793		8,340		1.36	%	2,239,234		10,176		1.83	%
22,710,239		14,658		0.26	%	21,161,632		17,745		0.34	%	18,962,709		46,159		0.98	%
2,782,150		1,199		0.17	%	5,816,484		2,042		0.14	%	3,815,941		10,838		1.14	%
3,382,688		3,657		0.43	%	3,527,303		4,954		0.56	%	6,542,325		26,947		1.66	%
275,980		3,395		4.89	%	275,949		3,539		5.16	%	275,932		3,633		5.30	%
29,151,057		22,909		0.31	%	30,781,368		28,280		0.37	%	29,596,907		87,577		1.19	%
11,929,694						11,489,322						9,232,859
1,516,880						887,973						960,780
1,171,064						1,526,754						1,022,106
5,163,060						5,071,614						4,907,966
$	48,931,755					$	49,757,031					$	45,720,618
		$	274,207	2.73	%			$	280,734	2.75	%			$	264,075	2.54	%
				2.81	%					2.83	%					2.80	%
		2,457						2,630						2,715
		271,750						278,104						261,360
		—						135,321						93,771
		234,159						232,693						180,319
		301,265						295,387						268,624
		204,644						80,089						79,284
		50,552						15,803						17,300
		154,092						64,286						61,984
		58						(407)						(95)
		$	154,034					$	64,693					$	62,079

		$	2.19					$	0.92					$	0.88
		$	2.19					$	0.92					$	0.88

- 91 -

Quarterly Earnings Trends – Unaudited

(In thousands, except share and per share data)


	Three Months Ended
	Mar. 31, 2021		Dec. 31, 2020		Sept. 30, 2020		June 30, 2020		Mar. 31, 2020

Interest revenue	$	298,239	$	319,020	$	294,659	$	306,384	$	348,937
Interest expense	17,819		21,790		22,909		28,280		87,577
Net interest revenue	280,420		297,230		271,750		278,104		261,360
Provision for credit losses	(25,000)		(6,500)		—		135,321		93,771
Net interest revenue after provision for credit losses	305,420		303,730		271,750		142,783		167,589
Other operating revenue
Brokerage and trading revenue	20,782		39,506		69,526		62,022		50,779
Transaction card revenue	22,430		21,896		23,465		22,940		21,881
Fiduciary and asset management revenue	41,322		41,799		39,931		41,257		44,458
Deposit service charges and fees	24,209		24,343		24,286		22,046		26,130
Mortgage banking revenue	37,113		39,298		51,959		53,936		37,167
Other revenue	16,296		14,209		13,698		11,479		12,309
Total fees and commissions	162,152		181,051		222,865		213,680		192,724
Other gains (losses), net	(3,036)		5,383		6,265		6,768		(10,741)
Gain (loss) on derivatives, net	(27,650)		(339)		2,354		21,885		18,420
Gain (loss) on fair value option securities, net	(1,910)		68		(754)		(14,459)		68,393
Change in fair value of mortgage servicing rights	33,874		6,276		3,441		(761)		(88,480)
Gain (loss) on available for sale securities, net	467		4,339		(12)		5,580		3



Total other operating revenue	163,897		196,778		234,159		232,693		180,319
Other operating expense
Personnel	173,010		176,198		179,860		176,235		156,181
Business promotion	2,154		3,728		2,633		1,935		6,215
Charitable contributions to BOKF Foundation	4,000		6,000		—		3,000		—
Professional fees and services	11,980		14,254		14,074		12,161		12,948
Net occupancy and equipment	26,662		27,875		28,111		30,675		26,061
Insurance	4,620		4,006		5,848		5,156		4,980
Data processing and communications	37,467		35,061		34,751		32,942		32,743
Printing, postage and supplies	3,440		3,805		3,482		3,502		4,272
Net losses (gains) and operating expenses of repossessed assets	(6,588)		1,168		6,244		1,766		1,531
Amortization of intangible assets	4,807		5,088		5,071		5,190		5,094
Mortgage banking costs	13,943		14,765		15,803		15,598		10,545
Other expense	7,132		8,713		5,388		7,227		8,054
Total other operating expense	282,627		300,661		301,265		295,387		268,624
Net income before taxes	186,690		199,847		204,644		80,089		79,284
Federal and state income taxes	42,382		45,138		50,552		15,803		17,300
Net income	144,308		154,709		154,092		64,286		61,984
Net income (loss) attributable to non-controlling interests	(1,752)		485		58		(407)		(95)
Net income attributable to BOK Financial Corporation shareholders	$	146,060	$	154,224	$	154,034	$	64,693	$	62,079

Earnings per share:
Basic	$2.10		$2.21		$2.19		$0.92		$0.88
Diluted	$2.10		$2.21		$2.19		$0.92		$0.88
Average shares used in computation:
Basic	69,137,375		69,489,597		69,877,866		69,876,043		70,123,685
Diluted	69,141,710		69,493,050		69,879,290		69,877,467		70,130,166

- 92 -

PART II. Other Information

Item 1. Legal Proceedings

See discussion of legal proceedings at Note 6 to the Consolidated Financial Statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended March 31, 2021.


Period	Total Number of Shares Purchased2	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1	Maximum Number of Shares that May Yet Be Purchased Under the Plans
January 1 to January 31, 2021	197,902	$	77.36	170,000	2,856,187
February 1 to February 28, 2021	130,784	$	80.87	90,000	2,766,187
March 1 to March 31, 2021	—	$	—	—	2,766,187
Total	328,686			260,000

1On April 30, 2019, the Company's board of directors authorized the Company to repurchase up to five million shares of the Company's common stock. As of March 31, 2021, the Company had repurchased 2,233,813 shares under this plan. Future repurchases of the Company's common stock will vary based on market conditions, regulatory limitations and other factors.

2The Company may repurchase mature shares from employees to cover the exercise price and taxes in connection with employee equity compensation.

Item 6. Exhibits

31.1Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated Statements of Changes in Equity, (iv) the Consolidated Statement of Cash Flows and (v) the Notes to Consolidated Financial Statements. The XBRL instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104 Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)

Items 3, 4 and 5 are not applicable and have been omitted.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BOK FINANCIAL CORPORATION

(Registrant)

Date: May 5, 2021


/s/ Steven E. Nell
Steven E. Nell
Executive Vice President and
Chief Financial Officer


/s/ John C. Morrow
John C. Morrow
Senior Vice President and
Chief Accounting Officer

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