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

Rhea-AI Summary

BOKF President and CEO Stacy Kymes expressed pride in the company's second-highest earnings ever. BOKF's disciplined risk management resulted in strong levels of capital and liquidity, allowing the company to grow during a challenging economic environment. However, net income for Q4 2023 was $82.6 million, a decrease from $134.5 million in Q3 2023, largely due to a 52 cent per share reduction from the FDIC special assessment. The company's core net interest margin, excluding trading activities, was 3.03%, down from 3.14% in the prior quarter.

Positive

• None.

Negative

• Net income for Q4 2023 was $82.6 million, a decrease from $134.5 million in Q3 2023
• The company's core net interest margin, excluding trading activities, was 3.03%, down from 3.14% in the prior quarter
• Losses on available for sale securities totaled $27.6 million in Q4 2023

Insights

Financial Analyst

The reported net income for BOKF in Q4 2023 shows a significant decrease from the previous quarter, attributed in part to a one-time FDIC special assessment. This drop in earnings per share from $2.04 to $1.26 is a critical metric for investors as it impacts the company's valuation and dividend-paying capacity. The reduction in net interest revenue, coupled with a slight contraction in net interest margin, suggests pressure from deposit repricing and liability mix-shift, which could signal an increasingly competitive environment for deposits.

Operating expenses have risen, primarily due to personnel costs and the aforementioned FDIC assessment. This uptick in expenses may raise concerns about cost management and its effect on profitability, especially if such increases are not accompanied by proportional revenue growth. The company's strategy of investing in growth during economic stress, as indicated by the increase in C&I loans, is a positive sign of proactive management, but the associated risks must be closely monitored.

Lastly, the share repurchase program indicates confidence by management in the company's intrinsic value, although the timing and price of these repurchases should be scrutinized to assess capital allocation efficiency.

Market Research Analyst

The strategic expansion into new markets like central Texas and the growth in core C&I loans suggest that BOKF is focused on diversifying its revenue streams and geographic footprint. However, the banking sector is sensitive to economic cycles and BOKF's performance in a stressed industry environment, as mentioned by the CEO, will be a key factor for investors to watch. The company's disciplined risk management approach, resulting in strong capital and liquidity levels, is reassuring in this context.

The sale of BOKF Insurance and the subsequent gain is a noteworthy event, as it represents a shift in business strategy and potential redeployment of capital into more profitable or strategic areas. The impact of this divestiture on the company's overall revenue mix and future earnings potential will be a point of interest for stakeholders.

Economist

The reported increase in the effective tax rate from 19.8% to 26.0% due to accelerated tax expenses from exiting low-income housing tax credit investments is an important consideration for understanding the company's after-tax profitability. Furthermore, the consistent common equity Tier 1 capital ratio and slight increase in the tangible common equity ratio reflect a stable and potentially resilient capital position against economic headwinds.

The shift in deposit balances from demand to interest-bearing accounts could be indicative of broader economic trends, such as rising interest rates prompting changes in consumer behavior. This shift, along with the growth in commercial and multifamily real estate loans, should be evaluated in the context of potential changes in monetary policy and the real estate market's cyclical nature.

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

View the original press release on accesswire.com

FAQ

What was BOKF's net income for Q4 2023?

Net income for Q4 2023 was $82.6 million, a decrease from $134.5 million in Q3 2023, largely due to a 52 cent per share reduction from the FDIC special assessment.

What was BOKF's core net interest margin for Q4 2023?

The company's core net interest margin, excluding trading activities, was 3.03%, down from 3.14% in the prior quarter.

What were the losses on available for sale securities in Q4 2023?

Losses on available for sale securities totaled $27.6 million in Q4 2023