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BOK Financial Corporation Reports Annual Earnings of $531 million or $8.02 Per Share and Quarterly Earnings of $83 million or $1.26 Per Share in the Fourth Quarter

TULSA, OK / ACCESSWIRE / January 24, 2024 /

CEO Commentary

Stacy Kymes, president and chief executive officer, stated, "I am exceptionally proud of the BOKF team and our results this year - the second highest earnings we have ever achieved. Our focus at BOKF has always been on providing long-term shareholder value driven by our diverse business model and talented team, both of which empower us to perform well during any economic environment. This was once again proven when the industry faced stress in the first half the year and our company was well prepared. Our disciplined risk management, which extends beyond the credit risk management that has long been a strength, resulted in strong levels of capital and liquidity at a critical time. We took advantage of this position to thoughtfully grow when others were pulling back. We have made real investments in growing our core C&I loans, while also investing in people and new markets like central Texas. While the fourth quarter was exceptionally noisy with numerous non-recurring items, our core results were very strong serving as a great starting point for 2024."

Fourth Quarter 2023 Financial Highlights

(Unless indicated otherwise, all comparisons are to the prior quarter)

  • Net income was $82.6 million or $1.26 per diluted share for the fourth quarter of 2023 compared to $134.5 million or $2.04 per diluted share for the third quarter of 2023. The fourth quarter included a 52 cent per share reduction as a result of the FDIC special assessment.
  • Net interest revenue totaled $296.7 million, a decrease of $4.2 million compared to the prior quarter. Net interest margin was 2.64 percent compared to 2.69 percent, primarily due to deposit repricing activity and liability mix-shift. For the fourth quarter of 2023, our core net interest margin excluding trading activities, a non-GAAP measure, was 3.03 percent compared to 3.14 percent in the prior quarter.
  • Fees and commissions revenue was $196.8 million, largely consistent with the prior quarter. Lower brokerage and trading revenue and other revenue was offset by increased transaction card revenue.
  • Operating expense increased $59.8 million to $384.1 million. Personnel expense grew $12.2 million with higher regular compensation, incentive compensation, including deferred compensation plans, and employee benefits expense. Non-personnel expense increased $47.5 million including the FDIC special assessment of $43.8 million. Increased professional fees and services, business promotion, and charitable expenses were partially offset by lower occupancy and equipment costs.
  • Other gains and losses, net increased $39.0 million to $40.5 million. This quarter included a $31.0 million pre-tax gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. The value of our deferred compensation investments also increased $5.9 million versus a decline of $427 thousand in the prior quarter.
  • Losses on available for sale securities totaled $27.6 million in the fourth quarter. The gain on sale received from the disposition of BOKF Insurance was used to reposition a small portion of our available for sale securities portfolio.
  • The effective tax rate was 26.0 percent for the fourth quarter of 2023, an increase from 19.8 percent for the prior quarter. The fourth quarter of 2023 included an acceleration of $3.1 million of tax expense as a result of exiting three low income housing tax credit investments. The third quarter of 2023 included a reduction in tax expense resulting from decreases in uncertain tax positions.
  • Period-end loans grew by $181 million to $23.9 billion at December 31, 2023, mostly driven by growth in commercial loans and commercial real estate loans secured by multifamily properties. Average outstanding loan balances were $23.7 billion, a $291 million increase.
  • The provision for credit losses of $6.0 million in the fourth quarter of 2023 reflects a stable economic forecast and continued loan growth. Net charge-offs were $4.1 million or 0.07 percent of average loans on an annualized basis in the fourth quarter. The resulting combined allowance for credit losses totaled $326 million or 1.36 percent of outstanding loans at December 31, 2023 compared to $325 million or 1.37 percent of outstanding loans at September 30, 2023.
  • Period-end deposits increased $367 million to $34.0 billion while average deposits increased $388 million to $33.7 billion. Average interest-bearing deposits increased $1.2 billion while average demand deposits declined by $779 million. The loan to deposit ratio was 70 percent at December 31, 2023, consistent with September 30, 2023.
  • The company's tangible common equity ratio, a non-GAAP measure, was 8.29 percent at December 31, 2023 and 7.74 percent at September 30, 2023. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. Adjusted for all unrealized securities portfolio gains and losses, including those in the investment portfolio, the tangible common equity ratio would be 8.02 percent.
  • The company's common equity Tier 1 capital ratio was 12.06 percent at December 31, 2023. In addition, the company's Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.16 percent, and leverage ratio was 9.45 percent at December 31, 2023. At September 30, 2023, the company's common equity Tier 1 capital ratio was 12.06 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.16 percent, and leverage ratio was 9.52 percent.
  • The company repurchased 700,237 shares of common stock at an average price paid of $70.99 a share in the fourth quarter of 2023.

Fourth Quarter 2023 Segment Highlights

  • Commercial Banking contributed $159.0 million to net income in the fourth quarter of 2023, an increase of $1.1 million over the prior quarter. Combined net interest revenue and fee revenue was consistent with the third quarter of 2023. A decrease in net interest revenue resulting from a shift in deposit balances from demand to interest-bearing transaction accounts was largely offset by a $2.5 million increase in transaction card revenue driven by fourth quarter activity. Net loans charged-off decreased $1.9 million to $3.0 million in the fourth quarter of 2023. Personnel expense increased $3.0 million led by higher cash-based incentive compensation and regular compensation. Non-personnel expense decreased $4.3 million driven by the retirement of certain ATMs in the prior quarter. Average loans increased $283 million or 1 percent to $19.9 billion. Average deposits increased $374 million or 2 percent to $15.5 billion.
  • Consumer Banking contributed $53.7 million to net income in the fourth quarter of 2023, a decrease of $4.3 million compared to the prior quarter. The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $5.2 million compared to $1.3 million for the third quarter of 2023. Combined net interest revenue and fee revenue increased $1.1 million, largely due to an increase in the funds credit on deposit balances. Net loans charged-off were $1.4 million in the fourth quarter of 2023 compared to recoveries of $73 thousand in the third quarter of 2023. Operating expense totaled $55.1 million, consistent with the prior quarter. Average loans increased $65 million or 4 percent to $1.9 billion. Average deposits were mostly unchanged from the previous quarter.
  • Wealth Management contributed $62.7 million to net income in the fourth quarter of 2023, an increase of $19.7 million compared to the third quarter of 2023. This quarter included a pre-tax gain of $31.0 million, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. Combined net interest and fee revenue increased $1.5 million. Total revenue from institutional trading activities increased $4.1 million due to favorable market opportunities, largely related to our municipal bond trading activity. Investment banking revenue decreased $3.3 million following a record quarter from our Public and Corporate Finance group. Personnel expense increased $2.4 million due to increased cash-based incentive compensation, driven by growth in trading activities and transaction related employee costs on the BOKF Insurance sale. Non-personnel expense increased $4.5 million with $2.5 million in professional fees directly related to the sale of BOKF Insurance and the remainder primarily resulting from settlement of certain disputed matters. Average loans decreased $65 million or 3 percent to $2.2 billion. Average deposits increased $199 million or 3 percent to $8.1 billion. Assets under management or administration were $104.7 billion, an increase of $5.7 billion.

Annual 2023 Financial Highlights

(Unless indicated otherwise, all comparisons are to the prior year)

  • Net income was $530.7 million or $8.02 per diluted share for the year ended December 31, 2023 compared to $520.3 million or $7.68 per diluted share for the year ended December 31, 2022.
  • Net interest revenue totaled $1.3 billion, an increase of $60.8 million compared to the prior year. Net interest margin was 2.93 percent compared to 2.98 percent, primarily due to competitive deposit pricing and liability mix-shift.
  • Fees and commissions revenue increased $123.9 million to $781.1 million. Brokerage and trading revenue increased $99.6 million. Trading revenue in the prior year was negatively affected by disruption in the fixed income markets in the first quarter of 2022. Fiduciary and asset management revenue grew $11.0 million along with increased Cavanal Hill fund fees, mutual fund fees, and trust business line fees.
  • Operating expense increased $168.4 million to $1.3 billion. Personnel expense grew $95.7 million, reflecting a combination of annual merit increases and salary adjustments, higher sales activity, and business expansion. Non-personnel expense increased $72.7 million including the FDIC special assessment of $43.8 million. Increased data processing and communications, business promotion, ongoing FDIC assessment costs, and occupancy and equipment expenses were partially offset by lower mortgage banking costs.
  • Other gains and losses, net increased $56.7 million to $56.8 million. The fourth quarter of 2023 included a pre-tax $31.0 million gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. We also recognized a $17.3 million increase in the value of deferred compensation investments, which are held to offset the cost of various employee benefit programs.
  • Losses on available for sale securities totaled $30.6 million for the year ended December 31, 2023. We strategically repositioned a small portion of our portfolio throughout the year, mostly in the fourth quarter.
  • Period-end loans grew by $1.3 billion to $23.9 billion at December 31, 2023, mostly driven by growth in commercial loans and commercial real estate loans secured by multifamily properties. Average outstanding loan balances were $23.1 billion, a $1.8 billion or 9 percent increase.
  • The provision for credit losses was $46.0 million in 2023, primarily due to loan growth and changes in our economic forecast during the year, including a more challenging commercial real estate environment. Net charge-offs were $18.1 million or 0.08 percent of average loans on an annualized basis in 2023. The resulting combined allowance for credit losses totaled $326 million or 1.36 percent of outstanding loans at December 31, 2023 compared to $297 million or 1.31 percent of outstanding loans at December 31, 2022.
  • Period-end deposits decreased $461 million to $34.0 billion while average deposits decreased $4.6 billion to $33.2 billion. Average interest-bearing deposits decreased $487 million while average demand deposits decreased by $4.2 billion. The loan to deposit ratio was 70 percent at December 31, 2023 and was 65 percent at December 31, 2022.

2023 Annual Segment Highlights

  • Commercial Banking contributed $664.5 million to net income in 2023, an increase of $202.9 million compared to 2022. Combined net interest revenue and fee revenue increased $288.4 million, primarily due to an increase in the spread on deposits combined with loan growth. Net loans charged-off decreased $3.8 million to $14.0 million in 2023. Personnel expense increased $16.1 million led by higher regular compensation and cash-based incentive compensation. Non-personnel expense increased $7.4 million, driven primarily by ongoing technology projects, retirement of certain ATMs, and increased insurance assessment costs. Corporate expense allocations increased $7.7 million. Average loans increased $1.8 billion or 10 percent to $19.4 billion. Average deposits decreased $3.0 billion or 16 percent to $15.3 billion.
  • Consumer Banking contributed $222.7 million to net income in 2023, an increase of $216.8 million compared to the prior year. Combined net interest revenue and fee revenue increased $293.3 million, largely due to an increase in the spread on deposits. Mortgage banking revenue increased $6.7 million, primarily due to growth in mortgage servicing revenue driven by recent purchases of mortgage servicing rights, partially offset by a decline in mortgage production volumes due to a combination of factors including rising mortgage interest rates, industry-wide housing inventory constraints, and overall market conditions. Deposit service charges and fees decreased $3.7 million as non-sufficient funds fees were eliminated and consumer overdraft fees were reduced in the fourth quarter of 2022. Operating expense increased $2.9 million led by higher regular compensation costs. Average loans increased $112 million or 7 percent to $1.8 billion. Average deposits decreased $749 million or 9 percent to $8.0 billion.
  • Wealth Management contributed $215.5 million to net income in 2023, an increase of $109.5 million compared to 2022. The current year included a pre-tax gain of $31.0 million, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. Combined net interest and fee revenue increased $155.9 million, primarily driven by an increase in the spread on deposits combined with growth in brokerage and trading revenues and customer hedging revenues. The prior year was negatively affected by the disruption in the fixed income markets. Fiduciary and asset management revenue increased $10.8 million led by higher Cavanal Hill fund fees, mutual fund fees, and trust business line fees. Personnel expense increased $27.9 million due to a combination of higher trading volumes and business expansion. Non-personnel expense increased $12.2 million due to increased professional fees and services from the sale of BOKF Insurance combined with higher data processing and communications expense from ongoing technology projects. Average loans increased $35.4 million or 2 percent to $2.2 billion. Average deposits decreased $752 million or 9 percent to $7.7 billion. Assets under management or administration increased $5.0 billion or 5 percent compared to the prior year.

Net Interest Revenue

Net interest revenue was $296.7 million for the fourth quarter of 2023 compared to $300.9 million for the prior quarter. Net interest margin was 2.64 percent compared to 2.69 percent, primarily driven by deposit price competition and liability mix-shift. For the fourth quarter of 2023, our core net interest margin excluding trading activities, a non-GAAP measure, was 3.03 percent compared to 3.14 percent in the prior quarter.

Average earning assets increased $315 million. Average loan balances increased $291 million, largely due to growth in commercial and commercial real estate loans. Average available for sale securities increased $138 million while average investment securities decreased $67 million. Average interest-bearing deposits increased $1.2 billion. Funds purchased and repurchase agreements declined $222 million while average other borrowings increased $153 million.

The yield on average earning assets was 5.64 percent, up 15 basis points. The loan portfolio yield increased 11 basis points to 7.36 percent while the yield on the available for sale securities portfolio increased 16 basis points to 3.27 percent. The yield on trading securities grew 29 basis points to 5.05 percent.

Funding costs were 3.98 percent, up 17 basis points. The cost of interest-bearing deposits increased 26 basis points to 3.43 percent. The cost of other borrowings was up 7 basis points to 5.55 percent while the cost of funds purchased and repurchase agreements decreased 2 basis points to 4.79 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 98 basis points, a decrease of 3 basis points.

Fees and Commissions Revenue

Fees and commissions revenue totaled $196.8 million for the fourth quarter of 2023, largely unchanged compared to the prior quarter.

Brokerage and trading revenue decreased $1.4 million to $60.9 million. Investment banking revenue decreased $2.4 million to $11.5 million following a record quarter from our Public and Corporate Finance group, which underwrites municipal bonds. Trading revenue grew $1.1 million to $35.5 million, largely related to our municipal bond trading activity. Insurance brokerage fees decreased $890 thousand to $1.8 million in conjunction with the sale of this business in the fourth quarter.

Transaction card revenue increased $2.5 million to $28.8 million as a result of fourth quarter activity. All other fee businesses performed consistently with the prior quarter.

Operating Expense

Total operating expense was $384.1 million for the fourth quarter of 2023, an increase of $59.8 million compared to the third quarter of 2023, primarily driven by the $43.8 million FDIC special assessment.

Personnel expense was $203.0 million, including $5.4 million of deferred compensation expense. Excluding deferred compensation costs, personnel expense increased $6.9 million over the prior quarter. Regular compensation increased $3.2 million, primarily due to compensation related to business expansion and transaction related employee costs on the BOKF Insurance sale. Higher sales activity led to a $4.0 million increase in cash based incentive compensation. Employee benefits expense increased $1.1 million, primarily due to seasonal employee healthcare costs.

Excluding the FDIC special assessment, non-personnel expense was $137.3 million, an increase of $3.8 million. Professional fees and services expense increased $3.1 million with $2.5 million related to the sale of BOKF Insurance. Business promotion expense grew $1.7 million. We also made a $1.5 million charitable donation to the BOKF Foundation as we continue to support the communities we serve. Occupancy and equipment costs decreased $2.2 million driven by the retirement of certain ATMs in the prior quarter.

Loans, Deposits and Capital

Loans

Outstanding loans were $23.9 billion at December 31, 2023, growing $181 million over September 30, 2023, largely due to growth in commercial and commercial real estate loans. Unfunded loan commitments increased $388 million compared to the third quarter of 2023.

Outstanding commercial loan balances, which includes healthcare, services, energy and general business loans, increased $84 million over the prior quarter.

General business loans increased $67 million to $3.6 billion or 15 percent of total loans. General business loans include $2.2 billion of wholesale/retail loans and $1.4 billion of loans from other commercial industries.

Healthcare sector loan balances increased $60 million, totaling $4.1 billion or 17 percent of total loans. Our healthcare sector loans primarily consist of $3.4 billion of senior housing and care facilities, including independent living, assisted living and skilled nursing. Generally, we loan to borrowers with a portfolio of multiple facilities, which serves to help diversify risks specific to a single facility.

Services sector loan balances increased $9.9 million to $3.6 billion or 15 percent of total loans. Services loans consist of a large number of loans to a variety of businesses, including Native American tribal and state and local municipal government entities, Native American tribal casino operations, foundations and not-for-profit organizations, educational services and specialty trade contractors.

Energy loan balances decreased $54 million to $3.4 billion or 14 percent of total loans. The majority of this portfolio is first lien, senior secured, reserve-based lending to oil and gas producers, which we believe is the lowest risk form of energy lending. Approximately 69 percent of committed production loans are secured by properties primarily producing oil. The remaining 31 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $4.5 billion at December 31, 2023, a $436 million increase compared September 30, 2023.

Commercial real estate loan balances grew by $96 million and represent 22 percent of total loans. Loans secured by multifamily properties increased $138 million to $1.9 billion. Loans secured by industrial facilities increased $43 million to $1.5 billion. This growth was partially offset by a $72 million decrease in loans secured by office facilities and a $15 million decrease in loans secured by retail properties. Unfunded commercial real estate loan commitments were $1.8 billion at December 31, 2023, a decrease of $147 million compared to September 30, 2023. We take a disciplined approach to managing our concentration of commercial real estate loan commitments as a percentage of Tier 1 Capital.

Loans to individuals were largely unchanged compared to September 30, 2023 and represent 16 percent of total loans. An increase of $58 million in residential mortgage loans was offset by a decrease in personal loans.

Liquidity and Capital

Our funding sources, which primarily include deposits and borrowings from the Federal Home Loan Banks, provide adequate liquidity to meet our needs. The loan to deposit ratio was 70 percent at December 31, 2023, consistent with the prior quarter, providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.

Period-end deposits totaled $34.0 billion at December 31, 2023, a $367 million increase. Interest-bearing transaction account balances increased $1.1 billion while time deposits increased $85 million. Demand deposits decreased $778 million.

Average deposits were $33.7 billion at December 31, 2023, a $388 million increase. Average interest-bearing transaction account balances increased $1.0 billion and average time deposits increased $162 million. Average demand deposit account balances decreased $779 million. Average Commercial Banking deposits increased $374 million to $15.5 billion or 46 percent of total deposits.Wealth Management deposits increased $199 million to $8.1 billion or 24 percent of total deposits. Consumer Banking deposits decreased $46 million to $7.9 billion or 23 percent of total deposits.

The company's common equity Tier 1 capital ratio was 12.06 percent at December 31, 2023. In addition, the company's Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.16 percent, and leverage ratio was 9.45 percent at December 31, 2023. At the beginning of 2020, we elected to delay the regulatory capital impact of the transition of the allowance for credit losses from the incurred loss methodology to CECL for two years, followed by a three-year transition period. This election added 6 basis points to the company's common equity tier 1 capital ratio at December 31, 2023. At September 30, 2023, the company's common equity Tier 1 capital ratio was 12.06 percent, Tier 1 capital ratio was 12.07 percent, total capital ratio was 13.16 percent, and leverage ratio was 9.52 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 8.29 percent at December 31, 2023 and 7.74 percent at September 30, 2023. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities. Adjusted for all unrealized securities portfolio gains and losses, including those in the investment portfolio, the tangible common equity ratio would be 8.02 percent. The company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital for regulatory capital purposes, consistent with the treatment under the previous capital rules.

The company repurchased 700,237 shares of common stock at an average price paid of $70.99 a share in the fourth quarter of 2023. We pursue share buybacks opportunistically, but within the context of maintaining our strong capital position.

Credit Quality

Nonperforming assets totaled $148 million or 0.62 percent of outstanding loans and repossessed assets at December 31, 2023, compared to $123 million or 0.52 percent at September 30, 2023. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $139 million or 0.58 percent of outstanding loans and repossessed assets at December 31, 2023, compared to $113 million or 0.48 percent at September 30, 2023.

Nonaccruing loans increased $26 million compared to September 30, 2023. New nonaccruing loans identified in the fourth quarter totaled $55 million, offset by $12 million in payments received and $5.0 million of charge-offs. Nonaccruing healthcare loans increased $40 million, partially offset by a $13 million decrease in nonaccruing residential real estate mortgage loans.

Net charge-offs were $4.1 million or 0.07 percent of average loans on an annualized basis in the fourth quarter. Charge-offs for the fourth quarter were primarily composed of a single $2.5 million healthcare loan.

The provision for credit losses of $6.0 million in the fourth quarter of 2023 reflects a stable economic forecast and continued loan growth. The provision for credit losses was $7.0 million in the third quarter of 2023.

At December 31, 2023, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $326 million or 1.36 percent of outstanding loans and 240 percent of nonaccruing loans.

Securities and Derivatives

The fair value of the available for sale securities portfolio totaled $12.3 billion at December 31, 2023, a $380 million increase over September 30, 2023. At December 31, 2023, the available for sale securities portfolio consisted primarily of $6.8 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.1 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2023, the available for sale securities portfolio had a net unrealized loss of $617 million compared to $1.0 billion at September 30, 2023.

We hold an inventory of trading securities in support of sales to a variety of customers. At December 31, 2023, the trading securities portfolio totaled $5.2 billion compared to $4.7 billion at September 30, 2023.

The company also maintains a portfolio of residential mortgage-backed securities issued by U.S. government agencies and interest rate derivative contracts as an economic hedge of the changes in the fair value of our mortgage servicing rights. This portfolio of fair value option securities increased $456 thousand to $20.7 million at December 31, 2023.

Derivative contracts are carried at fair value. At December 31, 2023, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $593 million compared to $594 million at September 30, 2023. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $587 million at December 31, 2023 and $582 million at September 30, 2023.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $5.2 million during the fourth quarter of 2023, including a $14.4 million decrease in the fair value of mortgage servicing rights, a $9.3 million increase in the fair value of securities and derivative contracts held as an economic hedge and $101 thousand of related net interest expense.

Conference Call and Webcast

The company will hold a conference call at 9 a.m. Central time on Wednesday, January 24, 2024 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company's website at www.bokf.com . The conference call can also be accessed by dialing 1-877-407-4018 or 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-844-512-2921 or 1-412-317-6671 and referencing conference ID # 13743529.

About BOK Financial Corporation

BOK Financial Corporation is a $50 billion regional financial services company headquartered in Tulsa, Oklahoma with $105 billion in assets under management or administration. The company's stock is publicly traded on NASDAQ under the Global Select market listings (BOKF). BOK Financial Corporation's holdings include BOKF, NA; BOK Financial Securities, Inc., and BOK Financial Private Wealth, Inc. BOKF, NA's holdings include TransFund, and Cavanal Hill Investment Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Wisconsin, Connecticut and Tennessee. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com .

The company will continue to evaluate critical assumptions and estimates, such as the appropriateness of the allowance for credit losses and asset impairment as of December 31, 2023 through the date its financial statements are filed with the Securities and Exchange Commission and will adjust amounts reported if necessary.

This news release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about BOK Financial Corporation, the financial services industry and the economy generally. 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, changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans. BOK Financial Corporation and its affiliates undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

BALANCE SHEETS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)


Dec. 31, 2023 Sep. 30, 2023
ASSETS
Cash and due from banks
$ 947,613 $ 854,161
Interest-bearing cash and cash equivalents
400,652 520,774
Trading securities
5,193,505 4,748,101
Investment securities, net of allowance
2,244,153 2,298,418
Available for sale securities
12,286,681 11,906,647
Fair value option securities
20,671 20,215
Restricted equity securities
423,099 435,112
Residential mortgage loans held for sale
56,935 72,489
Loans:
Commercial
14,803,769 14,719,839
Commercial real estate
5,337,647 5,241,300
Loans to individuals
3,763,552 3,762,879
Total loans
23,904,968 23,724,018
Allowance for loan losses
(277,123 ) (272,114 )
Loans, net of allowance
23,627,845 23,451,904
Premises and equipment, net
622,223 616,439
Receivables
317,922 255,164
Goodwill
1,044,749 1,044,749
Intangible assets, net
59,979 65,804
Mortgage servicing rights
293,884 311,382
Real estate and other repossessed assets, net
2,875 3,753
Derivative contracts, net
410,304 546,109
Cash surrender value of bank-owned life insurance
409,548 406,623
Receivable on unsettled securities sales
391,910 28,707
Other assets
1,070,282 1,344,846
TOTAL ASSETS
$ 49,824,830 $ 48,931,397
LIABILITIES AND EQUITY
Deposits:
Demand
$ 9,196,493 $ 9,974,223
Interest-bearing transaction
20,964,101 19,897,179
Savings
847,085 853,933
Time
3,012,022 2,927,217
Total deposits
34,019,701 33,652,552
Funds purchased and repurchase agreements
1,122,748 2,722,998
Other borrowings
7,701,552 6,201,644
Subordinated debentures
131,150 131,152
Accrued interest, taxes and expense
338,996 244,105
Due on unsettled securities purchases
254,057 235,473
Derivative contracts, net
587,473 403,947
Other liabilities
523,734 522,318
TOTAL LIABILITIES
44,679,411 44,114,189
Shareholders' equity:
Capital, surplus and retained earnings
5,741,542 5,743,004
Accumulated other comprehensive loss
(599,100 ) (928,985 )
TOTAL SHAREHOLDERS' EQUITY
5,142,442 4,814,019
Non-controlling interests
2,977 3,189
TOTAL EQUITY
5,145,419 4,817,208
TOTAL LIABILITIES AND EQUITY
$ 49,824,830 $ 48,931,397

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

Three Months Ended
Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022
ASSETS
Interest-bearing cash and cash equivalents
$ 605,839 $ 598,734 $ 708,475 $ 616,596 $ 568,307
Trading securities
5,448,403 5,444,587 4,274,803 3,031,969 3,086,985
Investment securities, net of allowance
2,264,194 2,331,595 2,408,122 2,473,796 2,535,305
Available for sale securities
12,063,398 11,925,800 12,033,597 11,738,693 10,953,851
Fair value option securities
20,086 41,741 245,469 300,372 92,012
Restricted equity securities
432,780 445,532 351,944 316,724 216,673
Residential mortgage loans held for sale
61,146 77,208 72,959 65,769 98,613
Loans:
Commercial
14,680,001 14,527,676 14,316,474 14,046,237 13,846,339
Commercial real estate
5,293,021 5,172,876 4,896,230 4,757,362 4,488,091
Loans to individuals
3,732,086 3,713,756 3,676,350 3,672,648 3,641,574
Total loans
23,705,108 23,414,308 22,889,054 22,476,247 21,976,004
Allowance for loan losses
(273,717 ) (267,205 ) (252,890 ) (238,909 ) (242,450 )
Loans, net of allowance
23,431,391 23,147,103 22,636,164 22,237,338 21,733,554
Total earning assets
44,327,237 44,012,300 42,731,533 40,781,257 39,285,300
Cash and due from banks
883,858 799,291 875,280 857,771 865,796
Derivative contracts, net
372,789 412,707 410,793 546,018 1,239,717
Cash surrender value of bank-owned life insurance
407,665 408,295 409,313 408,124 406,826
Receivable on unsettled securities sales
276,856 268,344 163,903 177,312 194,996
Other assets
3,445,265 3,418,615 3,317,285 3,211,986 3,216,983
TOTAL ASSETS
$ 49,713,670 $ 49,319,552 $ 47,908,107 $ 45,982,468 $ 45,209,618
LIABILITIES AND EQUITY
Deposits:
Demand
$ 9,378,886 $ 10,157,821 $ 10,998,201 $ 12,406,408 $ 14,176,189
Interest-bearing transaction
20,449,370 19,415,599 18,368,592 18,639,900 18,898,315
Savings
845,705 874,530 926,882 958,443 969,275
Time
3,002,252 2,839,947 2,076,037 1,477,720 1,417,606
Total deposits
33,676,213 33,287,897 32,369,712 33,482,471 35,461,385
Funds purchased and repurchase agreements
2,476,973 2,699,027 3,670,994 1,759,237 1,046,447
Other borrowings
7,120,963 6,968,309 5,275,291 4,512,280 2,523,195
Subordinated debentures
131,151 131,151 131,153 131,166 131,180
Derivative contracts, net
524,101 429,989 576,558 428,023 445,105
Due on unsettled securities purchases
363,358 435,927 436,353 316,738 575,957
Other liabilities
483,934 461,686 503,134 511,530 408,029
TOTAL LIABILITIES
44,776,693 44,413,986 42,963,195 41,141,445 40,591,298
Total equity
4,936,977 4,905,566 4,944,912 4,841,023 4,618,320
TOTAL LIABILITIES AND EQUITY
$ 49,713,670 $ 49,319,552 $ 47,908,107 $ 45,982,468 $ 45,209,618

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

Three Months Ended Year Ended
December 31, December 31,
2023 2022 2023 2022
Interest revenue
$ 638,324 $ 451,606 $ 2,342,464 $ 1,392,102
Interest expense
341,649 98,980 1,070,284 180,722
Net interest revenue
296,675 352,626 1,272,180 1,211,380
Provision for credit losses
6,000 15,000 46,000 30,000
Net interest revenue after provision for credit losses
290,675 337,626 1,226,180 1,181,380
Other operating revenue:
Brokerage and trading revenue
60,896 63,008 240,610 140,978
Transaction card revenue
28,847 27,136 106,858 104,266
Fiduciary and asset management revenue
51,408 49,899 207,318 196,326
Deposit service charges and fees
27,770 26,429 108,514 110,636
Mortgage banking revenue
12,834 10,065 55,698 49,365
Other revenue
15,035 17,034 62,120 55,642
Total fees and commissions
196,790 193,571 781,118 657,213
Other gains, net
40,452 8,427 56,795 123
Gain (loss) on derivatives, net
8,592 4,548 (9,921 ) (73,011 )
Gain (loss) on fair value option securities, net
1,031 (2,568 ) (4,292 ) (20,358 )
Change in fair value of mortgage servicing rights
(14,356 ) (2,904 ) (3,115 ) 80,261
Loss on available for sale securities, net
(27,626 ) (3,988 ) (30,636 ) (971 )
Total other operating revenue
204,883 197,086 789,949 643,257
Other operating expense:
Personnel
203,022 186,419 766,610 670,918
Business promotion
8,629 7,470 31,796 26,435
Charitable contributions to BOKF Foundation
1,542 2,500 2,707 2,500
Professional fees and services
16,288 18,365 55,337 56,342
Net occupancy and equipment
30,355 29,227 121,502 116,867
Insurance
8,495 4,677 30,780 17,994
FDIC special assessment
43,773 - 43,773 -
Data processing and communications
45,584 43,048 181,365 165,907
Printing, postage and supplies
3,844 3,890 15,225 15,857
Amortization of intangible assets
3,543 3,736 13,882 15,692
Mortgage banking costs
8,085 9,016 30,524 35,834
Other expense
10,923 10,108 39,380 40,134
Total other operating expense
384,083 318,456 1,332,881 1,164,480
Net income before taxes
111,475 216,256 683,248 660,157
Federal and state income taxes
28,953 47,864 152,115 139,864
Net income
82,522 168,392 531,133 520,293
Net income (loss) attributable to non-controlling interests
(53 ) (37 ) 387 20
Net income attributable to BOK Financial Corporation shareholders
$ 82,575 $ 168,429 $ 530,746 $ 520,273
Average shares outstanding:
Basic
64,750,171 66,627,955 65,651,569 67,212,728
Diluted
64,750,171 66,627,955 65,651,569 67,212,735
Net income per share:
Basic
$ 1.26 $ 2.51 $ 8.02 $ 7.68
Diluted
$ 1.26 $ 2.51 $ 8.02 $ 7.68

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

Three Months Ended
Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022
Interest revenue
$ 638,324 $ 617,044 $ 570,367 $ 516,729 $ 451,606
Interest expense
341,649 316,148 248,106 164,381 98,980
Net interest revenue
296,675 300,896 322,261 352,348 352,626
Provision for credit losses
6,000 7,000 17,000 16,000 15,000
Net interest revenue after provision for credit losses
290,675 293,896 305,261 336,348 337,626
Other operating revenue:
Brokerage and trading revenue
60,896 62,312 65,006 52,396 63,008
Transaction card revenue
28,847 26,387 26,003 25,621 27,136
Fiduciary and asset management revenue
51,408 52,256 52,997 50,657 49,899
Deposit service charges and fees
27,770 27,676 27,100 25,968 26,429
Mortgage banking revenue
12,834 13,356 15,141 14,367 10,065
Other revenue
15,035 15,865 14,250 16,970 17,034
Total fees and commissions
196,790 197,852 200,497 185,979 193,571
Other gains, net
40,452 1,474 12,618 2,251 8,427
Gain (loss) on derivatives, net
8,592 (9,010 ) (8,159 ) (1,344 ) 4,548
Gain (loss) on fair value option securities, net
1,031 (203 ) (2,158 ) (2,962 ) (2,568 )
Change in fair value of mortgage servicing rights
(14,356 ) 8,039 9,261 (6,059 ) (2,904 )
Loss on available for sale securities, net
(27,626 ) - (3,010 ) - (3,988 )
Total other operating revenue
204,883 198,152 209,049 177,865 197,086
Other operating expense:
Personnel
203,022 190,791 190,652 182,145 186,419
Business promotion
8,629 6,958 7,640 8,569 7,470
Charitable contributions to BOKF Foundation
1,542 23 1,142 - 2,500
Professional fees and services
16,288 13,224 12,777 13,048 18,365
Net occupancy and equipment
30,355 32,583 30,105 28,459 29,227
Insurance
8,495 7,996 6,974 7,315 4,677
FDIC special assessment
43,773 - - - -
Data processing and communications
45,584 45,672 45,307 44,802 43,048
Printing, postage and supplies
3,844 3,760 3,728 3,893 3,890
Amortization of intangible assets
3,543 3,474 3,474 3,391 3,736
Mortgage banking costs
8,085 8,357 8,300 5,782 9,016
Other expense
10,923 11,475 8,574 8,408 10,108
Total other operating expense
384,083 324,313 318,673 305,812 318,456
Net income before taxes
111,475 167,735 195,637 208,401 216,256
Federal and state income taxes
28,953 33,256 44,001 45,905 47,864
Net income
82,522 134,479 151,636 162,496 168,392
Net income (loss) attributable to non-controlling interests
(53 ) (16 ) 328 128 (37 )
Net income attributable to BOK Financial Corporation shareholders
$ 82,575 $ 134,495 $ 151,308 $ 162,368 $ 168,429
Average shares outstanding:
Basic
64,750,171 65,548,307 65,994,132 66,331,775 66,627,955
Diluted
64,750,171 65,548,307 65,994,132 66,331,775 66,627,955
Net income per share:
Basic
$ 1.26 $ 2.04 $ 2.27 $ 2.43 $ 2.51
Diluted
$ 1.26 $ 2.04 $ 2.27 $ 2.43 $ 2.51
FINANCIAL HIGHLIGHTS - UNAUDITED

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

Three Months Ended
Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022
Capital:
Period-end shareholders' equity
$ 5,142,442 $ 4,814,019 $ 4,863,854 $ 4,874,786 $ 4,682,649
Risk weighted assets
$ 38,820,979 $ 38,791,023 $ 38,218,164 $ 37,192,197 $ 38,142,231
Risk-based capital ratios:
Common equity tier 1
12.06 % 12.06 % 12.13 % 12.19 % 11.69 %
Tier 1
12.07 % 12.07 % 12.13 % 12.20 % 11.71 %
Total capital
13.16 % 13.16 % 13.24 % 13.21 % 12.67 %
Leverage ratio
9.45 % 9.52 % 9.75 % 9.94 % 9.91 %
Tangible common equity ratio1
8.29 % 7.74 % 7.79 % 8.46 % 7.63 %
Adjusted tangible common equity ratio1
8.02 % 7.35 % 7.49 % 8.22 % 7.36 %
Common stock:
Book value per share
$ 79.15 $ 73.31 $ 73.28 $ 73.19 $ 69.93
Tangible book value per share
$ 62.15 $ 56.40 $ 56.50 $ 56.42 $ 53.19
Market value per share:
High
$ 87.52 $ 92.41 $ 90.91 $ 106.47 $ 110.28
Low
$ 62.42 $ 77.61 $ 74.40 $ 80.00 $ 88.46
Cash dividends paid
$ 35,739 $ 35,655 $ 35,879 $ 36,006 $ 36,188
Dividend payout ratio
43.28 % 26.51 % 23.71 % 22.18 % 21.49 %
Shares outstanding, net
64,967,177 65,664,840 66,369,208 66,600,833 66,958,634
Stock buy-back program:
Shares repurchased
700,237 700,500 266,000 447,071 314,406
Amount
$ 49,710 $ 58,961 $ 22,366 $ 44,100 $ 32,429
Average price paid per share2
$ 70.99 $ 84.17 $ 84.08 $ 98.64 $ 103.14
Performance ratios (quarter annualized):
Return on average assets
0.66 % 1.08 % 1.27 % 1.43 % 1.48 %
Return on average equity
6.64 % 10.88 % 12.28 % 13.61 % 14.48 %
Return on average tangible common equity1
8.56 % 14.08 % 15.86 % 17.71 % 19.14 %
Net interest margin
2.64 % 2.69 % 3.00 % 3.45 % 3.54 %
Efficiency ratio1,3
71.62 % 64.01 % 58.75 % 56.79 % 56.61 %
Other data:
Tax equivalent interest
$ 2,112 $ 2,214 $ 2,200 $ 2,285 $ 2,287
Net unrealized loss on available for sale securities
$ (616,624 ) $ (1,034,520 ) $ (898,906 ) $ (741,508 ) $ (865,553 )
Mortgage banking:
Mortgage production revenue
$ (2,535 ) $ (1,887 ) $ (284 ) $ (633 ) $ (3,983 )
Mortgage loans funded for sale
$ 139,255 $ 173,727 $ 214,785 $ 138,624 $ 141,090
Add: Current period-end outstanding commitments
34,783 49,284 55,031 71,693 45,492
Less: Prior period end outstanding commitments
49,284 55,031 71,693 45,492 75,779
Total mortgage production volume
$ 124,754 $ 167,980 $ 198,123 $ 164,825 $ 110,803
Mortgage loan refinances to mortgage loans funded for sale
10 % 9 % 8 % 9 % 10 %
Realized margin on funded mortgage loans
(0.98 )% (0.94 )% (0.14 )% (1.25 )% (1.10 )%
Production revenue as a percentage of production volume
(2.03 )% (1.12 )% (0.14 )% (0.38 )% (3.59 )%

Mortgage servicing revenue
$ 15,369 $ 15,243 $ 15,425 $ 15,000 $ 14,048
Average outstanding principal balance of mortgage loans serviced for others
20,471,030 20,719,116 20,807,044 21,121,319 18,923,078
Average mortgage servicing revenue rates
0.30 % 0.29 % 0.30 % 0.29 % 0.29 %
Gain (loss) on mortgage servicing rights, net of economic hedge:
Gain (loss) on mortgage hedge derivative contracts, net
$ 8,275 $ (8,980 ) $ (8,099 ) $ (1,711 ) $ 4,373
Gain (loss) on fair value option securities, net
1,031 (203 ) (2,158 ) (2,962 ) (2,568 )
Gain (loss) on economic hedge of mortgage servicing rights
9,306 (9,183 ) (10,257 ) (4,673 ) 1,805
Gain (loss) on changes in fair value of mortgage servicing rights
(14,356 ) 8,039 9,261 (6,059 ) (2,904 )
Loss on changes in fair value of mortgage servicing rights, net of economic hedges, included in other operating revenue
(5,050 ) (1,144 ) (996 ) (10,732 ) (1,099 )
Net interest revenue (expense) on fair value option securities4
(101 ) (112 ) (232 ) 187 (118 )
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges
$ (5,151 ) $ (1,256 ) $ (1,228 ) $ (10,545 ) $ (1,217 )

1 See Reconciliation of Non-GAAP Measures following.
2 Excludes 1 percent excise tax on corporate stock repurchases.
3 Prior period ratios have been adjusted to be consistent with the current period presentation.
4 Actual interest earned on fair value option securities less internal transfer-priced cost of funds.

EXPLANATION AND RECONCILIATION OF NON-GAAP MEASURES - UNAUDITED
BOK FINANCIAL CORPORATION
(in thousands, except ratio and share data)

Three Months Ended
Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022
Reconciliation of tangible common equity ratio and adjusted tangible common equity ratio:
Total shareholders' equity
$ 5,142,442 $ 4,814,019 $ 4,863,854 $ 4,874,786 $ 4,682,649
Less: Goodwill and intangible assets, net
1,104,728 1,110,553 1,113,995 1,117,438 1,120,880
Tangible common equity
4,037,714 3,703,466 3,749,859 3,757,348 3,561,769
Add: Unrealized gain (loss) on investment securities, net
(171,903 ) (246,395 ) (189,152 ) (140,947 ) (167,477 )
Add: Tax effect on unrealized gain (loss) on investment securities, net
40,430 57,949 44,486 33,149 39,196
Adjusted tangible common equity
$ 3,906,241 $ 3,515,020 $ 3,605,193 $ 3,649,550 $ 3,433,488
Total assets
$ 49,824,830 $ 48,931,397 $ 49,237,920 $ 45,524,122 $ 47,790,642
Less: Goodwill and intangible assets, net
1,104,728 1,110,553 1,113,995 1,117,438 1,120,880
Tangible assets
$ 48,720,102 $ 47,820,844 $ 48,123,925 $ 44,406,684 $ 46,669,762
Tangible common equity ratio
8.29 % 7.74 % 7.79 % 8.46 % 7.63 %
Adjusted tangible common equity ratio
8.02 % 7.35 % 7.49 % 8.22 % 7.36 %
Reconciliation of return on average tangible common equity:
Total average shareholders' equity
$ 4,933,917 $ 4,902,119 $ 4,941,352 $ 4,837,567 $ 4,613,929
Less: Average goodwill and intangible assets, net
1,107,949 1,112,217 1,115,652 1,119,123 1,122,680
Average tangible common equity
$ 3,825,968 $ 3,789,902 $ 3,825,700 $ 3,718,444 $ 3,491,249
Net Income
82,575 134,495 151,308 162,368 168,429
Return on average tangible common equity
8.56 % 14.08 % 15.86 % 17.71 % 19.14 %
Reconciliation of pre-provision net revenue:
Net income before taxes
$ 111,475 $ 167,735 $ 195,637 $ 208,401 $ 216,256
Provision for expected credit losses
6,000 7,000 17,000 16,000 15,000
Net income (loss) attributable to non-controlling interests
(53 ) (16 ) 328 128 (37 )
Pre-provision net revenue
$ 117,528 $ 174,751 $ 212,309 $ 224,273 $ 231,293
Calculation of efficiency ratio and efficiency ratio excluding infrequent items:
Total other operating expense
$ 384,083 $ 324,313 $ 318,673 $ 305,812 $ 318,456
Less: Amortization of intangible assets
3,543 3,474 3,474 3,391 3,736
Adjusted total other operating expense
$ 380,540 $ 320,839 $ 315,199 $ 302,421 $ 314,720
Less: FDIC special assessment
43,773 - - - -
Less: Expenses related to sale of BOKF Insurance
3,436 - - - -
Adjusted total other operating expense excluding infrequent items
$ 333,331 $ 320,839 $ 315,199 $ 302,421 $ 314,720
Net interest revenue
$ 296,675 $ 300,896 $ 322,261 $ 352,348 $ 352,626
Tax-equivalent adjustment
2,112 2,214 2,200 2,285 2,287
Tax-equivalent net interest revenue
298,787 303,110 324,461 354,633 354,913
Total other operating revenue
204,883 198,152 209,049 177,865 197,086
Less: Loss on available for sale securities, net
(27,626 ) - (3,010 ) - (3,988 )
Adjusted revenue
531,296 501,262 536,520 532,498 555,987
Less: Gain on sale of BOK Financial Insurance
31,007 - - - -
Adjusted revenue excluding infrequent item
$ 500,289 $ 501,262 $ 536,520 $ 532,498 $ 555,987
Efficiency ratio
71.62 % 64.01 % 58.75 % 56.79 % 56.61 %
Efficiency ratio excluding infrequent items
66.63 % 64.01 % 58.75 % 56.79 % 56.61 %
Information on net interest revenue and net interest margin excluding trading activities:
Net interest revenue
$ 296,675 $ 300,896 $ 322,261 $ 352,348 $ 352,626
Less: Trading activities net interest revenue
(3,305 ) (7,343 ) (3,461 ) 70 (860 )
Net interest revenue excluding trading activities
299,980 308,239 325,722 352,278 353,486
Tax-equivalent adjustment
2,112 2,214 2,200 2,285 2,287
Tax-equivalent net interest revenue excluding trading activities
$ 302,092 $ 310,453 $ 327,922 $ 354,563 $ 355,773

Average total earning assets
$ 44,327,237 $ 44,012,300 $ 42,731,533 $ 40,781,257 $ 39,285,300
Less: Average trading activities interest-earning assets
5,448,403 5,444,587 4,274,803 3,031,969 3,086,985
Average interest-earning assets excluding trading activities
$ 38,878,834 $ 38,567,713 $ 38,456,730 $ 37,749,288 $ 36,198,315
Net interest margin on average interest-earning assets
2.64 % 2.69 % 3.00 % 3.45 % 3.54 %
Net interest margin on average trading activities interest-earning assets
(0.20 )% (0.49 )% (0.34 )% - % (0.12 )%
Net interest margin on average interest-earning assets excluding trading activities
3.03 % 3.14 % 3.36 % 3.72 % 3.84 %

Explanation of Non-GAAP Measure

The tangible common equity ratio and return on average tangible common equity are primarily based on total shareholders' equity, which includes unrealized gains and losses on available for sale securities, less intangible assets and equity that does not benefit common shareholders. The adjusted tangible common equity ratio also includes unrealized gains and losses on the investment portfolio. These measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from shareholders' equity and retain the effect of unrealized losses on securities and other components of accumulated other comprehensive income in shareholders' equity.

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 and enables 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.

The efficiency ratio measures the company's ability to use its assets and manage its liabilities effectively in the current period.

Net interest revenue and net interest margin excluding trading activities removes the effect of trading activities on these metrics allowing management and investors to assess the performance of the company's core lending and deposit activities without the associated volatility from trading activities.

LOANS TREND - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)


Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022
Commercial:
Healthcare
$ 4,143,233 $ 4,083,134 $ 3,991,387 $ 3,899,341 $ 3,845,017
Services
3,576,223 3,566,361 3,585,169 3,563,702 3,431,521
Energy
3,437,101 3,490,602 3,508,752 3,398,057 3,424,790
General business
3,647,212 3,579,742 3,449,208 3,356,249 3,511,171
Total commercial
14,803,769 14,719,839 14,534,516 14,217,349 14,212,499
Commercial real estate:
Multifamily
1,872,760 1,734,688 1,502,971 1,363,881 1,212,883
Industrial
1,475,165 1,432,629 1,349,709 1,309,435 1,221,501
Office
909,442 981,876 1,005,660 1,045,700 1,053,331
Retail
592,632 608,073 617,886 618,264 620,518
Residential construction and land development
95,052 100,465 106,370 102,828 95,684
Other commercial real estate
392,596 383,569 388,205 375,208 402,860
Total commercial real estate
5,337,647 5,241,300 4,970,801 4,815,316 4,606,777
Loans to individuals:
Residential mortgage
2,160,640 2,090,992 1,993,690 1,926,027 1,890,784
Residential mortgages guaranteed by U.S. government agencies
149,807 161,092 186,170 224,753 245,940
Personal
1,453,105 1,510,795 1,552,482 1,566,608 1,601,150
Total loans to individuals
3,763,552 3,762,879 3,732,342 3,717,388 3,737,874
Total
$ 23,904,968 $ 23,724,018 $ 23,237,659 $ 22,750,053 $ 22,557,150

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

Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022

Texas:
Commercial
$ 7,384,107 $ 7,249,963 $ 7,223,820 $ 7,103,166 $ 6,878,618
Commercial real estate
1,987,037 1,873,477 1,748,796 1,675,831 1,555,508
Loans to individuals
914,134 961,299 974,911 992,343 982,700
Total Texas
10,285,278 10,084,739 9,947,527 9,771,340 9,416,826
Oklahoma:
Commercial
3,275,907 3,384,627 3,251,547 3,178,934 3,382,577
Commercial real estate
606,515 601,087 573,559 574,708 582,109
Loans to individuals
2,147,782 2,100,974 2,079,311 2,049,472 2,077,124
Total Oklahoma
6,030,204 6,086,688 5,904,417 5,803,114 6,041,810
Colorado:
Commercial
2,273,179 2,219,460 2,179,473 2,148,066 2,149,199
Commercial real estate
769,329 710,552 683,973 646,537 613,912
Loans to individuals
228,257 227,569 223,200 231,368 241,902
Total Colorado
3,270,765 3,157,581 3,086,646 3,025,971 3,005,013
Arizona:
Commercial
1,143,682 1,173,491 1,177,778 1,115,973 1,124,289
Commercial real estate
1,003,331 1,014,151 926,750 881,465 860,947
Loans to individuals
248,873 260,282 242,102 240,556 229,872
Total Arizona
2,395,886 2,447,924 2,346,630 2,237,994 2,215,108
Kansas/Missouri:
Commercial
331,179 307,725 309,148 318,782 310,715
Commercial real estate
511,947 547,708 516,299 489,951 479,968
Loans to individuals
144,958 132,137 138,960 129,580 131,307
Total Kansas/Missouri
988,084 987,570 964,407 938,313 921,990
New Mexico:
Commercial
291,736 297,714 287,443 280,945 263,349
Commercial real estate
389,106 405,989 425,472 449,715 417,008
Loans to individuals
67,485 69,418 64,803 65,770 67,163
Total New Mexico
748,327 773,121 777,718 796,430 747,520
Arkansas:
Commercial
103,979 86,859 105,307 71,483 103,752
Commercial real estate
70,382 88,336 95,952 97,109 97,325
Loans to individuals
12,063 11,200 9,055 8,299 7,806
Total Arkansas
186,424 186,395 210,314 176,891 208,883
TOTAL BOK FINANCIAL
$ 23,904,968 $ 23,724,018 $ 23,237,659 $ 22,750,053 $ 22,557,150

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

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

Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022
Oklahoma:
Demand
$ 3,586,091 $ 4,019,019 $ 4,273,136 $ 4,369,944 $ 4,585,963
Interest-bearing:
Transaction
10,929,704 9,970,955 9,979,534 9,468,100 9,475,528
Savings
500,313 508,619 531,536 564,829 555,407
Time
1,984,336 2,019,749 1,945,916 942,787 794,002
Total interest-bearing
13,414,353 12,499,323 12,456,986 10,975,716 10,824,937
Total Oklahoma
17,000,444 16,518,342 16,730,122 15,345,660 15,410,900
Texas:
Demand
2,306,334 2,599,998 2,876,568 3,154,789 3,873,759
Interest-bearing:
Transaction
5,035,856 5,046,288 4,532,093 4,366,932 4,878,482
Savings
155,652 154,863 162,704 175,012 178,356
Time
492,753 436,218 377,424 321,774 356,538
Total interest-bearing
5,684,261 5,637,369 5,072,221 4,863,718 5,413,376
Total Texas
7,990,595 8,237,367 7,948,789 8,018,507 9,287,135
Colorado:
Demand
1,633,672 1,598,622 1,726,130 1,869,194 2,462,891
Interest-bearing:
Transaction
1,921,605 1,888,026 1,825,295 2,126,435 2,123,218
Savings
67,646 63,129 66,968 72,548 77,961
Time
201,393 185,030 148,840 128,583 135,043
Total interest-bearing
2,190,644 2,136,185 2,041,103 2,327,566 2,336,222
Total Colorado
3,824,316 3,734,807 3,767,233 4,196,760 4,799,113
New Mexico:
Demand
794,467 853,571 912,218 997,364 1,141,958
Interest-bearing:
Transaction
886,089 1,049,903 712,541 674,328 691,915
Savings
95,453 97,753 102,729 111,771 112,430
Time
258,195 217,535 179,548 137,875 133,625
Total interest-bearing
1,239,737 1,365,191 994,818 923,974 937,970
Total New Mexico
2,034,204 2,218,762 1,907,036 1,921,338 2,079,928
Arizona:
Demand
524,167 522,142 592,144 780,051 844,327
Interest-bearing:
Transaction
1,174,715 903,535 800,970 687,527 739,628
Savings
11,636 12,340 14,489 16,993 16,496
Time
41,884 36,689 31,248 27,755 24,846
Total interest-bearing
1,228,235 952,564 846,707 732,275 780,970
Total Arizona
1,752,402 1,474,706 1,438,851 1,512,326 1,625,297
Kansas/Missouri:
Demand
326,496 351,236 363,534 393,321 436,259
Interest-bearing:
Transaction
966,166 981,091 1,014,247 1,040,009 694,163
Savings
13,821 14,331 16,316 18,292 20,678
Time
23,955 22,437 16,176 13,061 12,963
Total interest-bearing
1,003,942 1,017,859 1,046,739 1,071,362 727,804
Total Kansas/Missouri
1,330,438 1,369,095 1,410,273 1,464,683 1,164,063
Arkansas:
Demand
25,266 29,635 38,818 42,312 50,180
Interest-bearing:
Transaction
49,966 57,381 43,301 71,158 56,181
Savings
2,564 2,898 3,195 3,228 3,083
Time
9,506 9,559 7,225 4,775 4,825
Total interest-bearing
62,036 69,838 53,721 79,161 64,089
Total Arkansas
87,302 99,473 92,539 121,473 114,269
TOTAL BOK FINANCIAL
$ 34,019,701 $ 33,652,552 $ 33,294,843 $ 32,580,747 $ 34,480,705

NET INTEREST MARGIN TREND - UNAUDITED
BOK FINANCIAL CORPORATION

Three Months Ended
Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31, 2022
TAX-EQUIVALENT ASSETS YIELDS
Interest-bearing cash and cash equivalents
5.30 % 5.43 % 5.41 % 4.28 % 4.06 %
Trading securities
5.05 % 4.76 % 4.50 % 4.52 % 3.70 %
Investment securities, net of allowance
1.42 % 1.43 % 1.44 % 1.46 % 1.46 %
Available for sale securities
3.27 % 3.11 % 3.00 % 2.87 % 2.54 %
Fair value option securities
3.57 % 4.61 % 5.07 % 5.17 % 4.40 %
Restricted equity securities
8.01 % 7.88 % 7.31 % 7.34 % 5.70 %
Residential mortgage loans held for sale
6.59 % 6.27 % 5.85 % 5.79 % 5.56 %
Loans
7.36 % 7.25 % 7.03 % 6.67 % 5.99 %
Allowance for loan losses
Loans, net of allowance
7.45 % 7.33 % 7.10 % 6.74 % 6.06 %
Total tax-equivalent yield on earning assets
5.64 % 5.49 % 5.29 % 5.06 % 4.53 %
COST OF INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest-bearing transaction
3.44 % 3.18 % 2.60 % 1.91 % 1.28 %
Savings
0.53 % 0.47 % 0.21 % 0.10 % 0.08 %
Time
4.13 % 3.96 % 3.27 % 1.95 % 1.25 %
Total interest-bearing deposits
3.43 % 3.17 % 2.56 % 1.83 % 1.22 %
Funds purchased and repurchase agreements
4.79 % 4.81 % 4.58 % 3.33 % 2.05 %
Other borrowings
5.55 % 5.48 % 5.12 % 4.73 % 4.08 %
Subordinated debt
7.09 % 7.02 % 6.79 % 6.40 % 6.16 %
Total cost of interest-bearing liabilities
3.98 % 3.81 % 3.27 % 2.43 % 1.57 %
Tax-equivalent net interest revenue spread
1.66 % 1.68 % 2.02 % 2.63 % 2.96 %
Effect of noninterest-bearing funding sources and other
0.98 % 1.01 % 0.98 % 0.82 % 0.58 %
Tax-equivalent net interest margin
2.64 % 2.69 % 3.00 % 3.45 % 3.54 %

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

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

Three Months Ended
Dec. 31, 2023 Sep. 30, 2023 June 30, 2023 Mar. 31, 2023 Dec. 31 2022
Nonperforming assets:
Nonaccruing loans:
Commercial:
Healthcare
$ 81,529 $ 41,836 $ 36,753 $ 37,247 $ 41,034
Energy
17,843 19,559 20,037 127 1,399
Services
3,616 2,820 4,541 8,097 16,228
General business
7,143 6,483 11,946 8,961 1,636
Total commercial
110,131 70,698 73,277 54,432 60,297
Commercial real estate
7,320 7,418 17,395 21,668 16,570
Loans to individuals:
Permanent mortgage
18,056 30,954 29,973 29,693 29,791
Permanent mortgage guaranteed by U.S. government agencies
9,709 10,436 11,473 14,302 15,005
Personal
253 79 133 200 134
Total loans to individuals
28,018 41,469 41,579 44,195 44,930
Total nonaccruing loans
$ 145,469 $ 119,585 $ 132,251 $ 120,295 $ 121,797
Accruing renegotiated loans guaranteed by U.S. government agencies 1
- - - - 163,535
Real estate and other repossessed assets
2,875 3,753 4,227 12,651 14,304
Total nonperforming assets
$ 148,344 $ 123,338 $ 136,478 $ 132,946 $ 299,636
Total nonperforming assets excluding those guaranteed by U.S. government agencies
$ 138,635 $ 112,902 $ 125,005 $ 118,644 $ 121,096
Accruing loans 90 days past due 2
$ 170 $ 64 $ 220 $ 76 $ 510
Gross charge-offs
$ 5,007 $ 10,593 $ 8,049 $ 3,667 $ 17,807
Recoveries
(911 ) (4,062 ) (1,346 ) (2,898 ) (2,301 )
Net charge-offs (recoveries)
$ 4,096 $ 6,531 $ 6,703 $ 769 $ 15,506
Provision for loan losses
$ 9,105 $ 15,931 $ 19,957 $ 14,525 $ 9,442
Provision for credit losses from off-balance sheet unfunded loan commitments
(3,627 ) (7,336 ) (3,003 ) 2,024 4,609
Provision for expected credit losses from mortgage banking activities
530 (1,474 ) 78 (488 ) 1,003
Provision for credit losses related to held-to maturity (investment) securities portfolio
(8 ) (121 ) (32 ) (61 ) (54 )
Total provision for credit losses
$ 6,000 $ 7,000 $ 17,000 $ 16,000 $ 15,000
Allowance for loan losses to period end loans
1.16 % 1.15 % 1.13 % 1.10 % 1.04 %
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to period end loans
1.36 % 1.37 % 1.39 % 1.37 % 1.31 %
Nonperforming assets to period end loans and repossessed assets
0.62 % 0.52 % 0.59 % 0.58 % 1.33 %
Net charge-offs (annualized) to average loans
0.07 % 0.11 % 0.12 % 0.01 % 0.28 %
Allowance for loan losses to nonaccruing loans 2
204.13 % 249.31 % 217.52 % 235.36 % 220.71 %
Combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments to nonaccruing loans 2
240.20 % 297.50 % 267.15 % 294.74 % 277.76 %

1 The Company adopted FASB Accounting Standards Update No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates designation of these loans as troubled debt restructurings effective January 1, 2023.
2 Excludes residential mortgage loans guaranteed by agencies of the U.S. government.

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

Three Months Ended 4Q23 vs 3Q23 Year Ended 2023 vs 2022
Dec. 31, 2023 Sep. 30, 2023 $ change % change Dec. 31, 2023 Dec. 31, 2022 $ change % change
Commercial Banking
Net interest revenue
$ 250,651 $ 254,464 $ (3,813 ) (1.5 )% $ 1,032,371 $ 744,449 $ 287,922 38.7 %
Fees and commissions revenue
60,937 57,858 3,079 5.3 % 234,334 233,873 461 0.2 %
Combined net interest and fee revenue
311,588 312,322 (734 ) (0.2 )% 1,266,705 978,322 288,383 29.5 %
Other operating expense
80,430 81,751 (1,321 ) (1.6 )% 312,794 289,243 23,551 8.1 %
Corporate expense allocations
18,020 17,834 186 1.0 % 74,976 67,278 7,698 11.4 %
Net income
159,046 157,930 1,116 0.7 % 664,461 461,536 202,925 44.0 %
Average assets
29,324,296 28,849,597 474,699 1.6 % 28,630,716 29,084,957 (454,241 ) (1.6 )%
Average loans
19,928,574 19,645,259 283,315 1.4 % 19,374,791 17,553,398 1,821,393 10.4 %
Average deposits
15,471,827 15,098,038 373,789 2.5 % 15,311,654 18,323,412 (3,011,758 ) (16.4 )%
Consumer Banking
Net interest revenue
$ 114,396 $ 112,608 $ 1,788 1.6 % $ 449,776 $ 158,249 $ 291,527 184.2 %
Fees and commissions revenue
30,075 30,715 (640 ) (2.1 )% 123,732 121,926 1,806 1.5 %
Combined net interest and fee revenue
144,471 143,323 1,148 0.8 % 573,508 280,175 293,333 104.7 %
Other operating expense
55,079 54,497 582 1.1 % 212,114 209,210 2,904 1.4 %
Corporate expense allocations
12,705 11,920 785 6.6 % 48,565 44,965 3,600 8.0 %
Net income
53,695 58,009 (4,314 ) (7.4 )% 222,719 5,889 216,830 3,681.9 %
Average assets
9,342,840 9,379,478 (36,638 ) (0.4 )% 9,561,512 10,230,437 (668,925 ) (6.5 )%
Average loans
1,877,303 1,812,606 64,697 3.6 % 1,800,320 1,688,697 111,623 6.6 %
Average deposits
7,890,032 7,936,186 (46,154 ) (0.6 )% 8,014,159 8,763,046 (748,887 ) (8.5 )%
Wealth Management
Net interest revenue
$ 41,643 $ 36,437 $ 5,206 14.3 % $ 181,538 $ 161,597 $ 19,941 12.3 %
Fees and commissions revenue
119,872 123,614 (3,742 ) (3.0 )% 475,447 339,538 135,909 40.0 %
Combined net interest and fee revenue
161,515 160,051 1,464 0.9 % 656,985 501,135 155,850 31.1 %
Other operating expense
96,275 89,367 6,908 7.7 % 352,540 312,377 40,163 12.9 %
Corporate expense allocations
14,198 14,331 (133 ) (0.9 )% 53,463 50,241 3,222 6.4 %
Net income
62,690 43,029 19,661 45.7 % 215,483 106,020 109,463 103.2 %
Average assets
14,879,450 14,740,641 138,809 0.9 % 13,570,153 16,209,684 (2,639,531 ) (16.3 )%
Average loans
2,154,416 2,219,829 (65,413 ) (2.9 )% 2,201,614 2,166,231 35,383 1.6 %
Average deposits
8,085,643 7,886,962 198,681 2.5 % 7,739,490 8,491,377 (751,887 ) (8.9 )%
Fiduciary assets
59,798,693 56,380,009 3,418,684 6.1 % 59,798,693 56,060,496 3,738,197 6.7 %
Assets under management or administration
104,736,999 99,004,179 5,732,820 5.8 % 104,736,999 99,735,040 5,001,959 5.0 %

Contact:

Sue Hermann
Chief Marketing Officer
303-312-3488

SOURCE: BOK Financial Corp



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