BOK Financial Corporation Reports Quarterly Earnings of $151 million or $2.27 Per Share in the Second Quarter

•Net income was $151.3 million or $2.27 per diluted share for the second quarter of 2023 compared to $162.4 million or $2.43 per diluted share for the first quarter of 2023.

•Net interest revenue totaled $322.3 million, a decrease of $30.1 million compared to the prior quarter. Net interest margin was 3.00 percent compared to 3.45 percent. Growth in low-spread trading assets drove a 9 basis point decline in net interest margin with deposit repricing activity primarily driving the remaining 36 basis point reduction.

•Fees and commissions revenue was $200.5 million, an increase of $14.5 million. Brokerage and trading revenue grew $12.6 million, driven largely by higher U.S. government agency mortgage-backed securities and related derivative contracts trading volumes.

•The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $1.2 million compared to $10.5 million for the first quarter of 2023.

•Operating expense increased $12.9 million to $318.7 million. Personnel expense increased $8.5 million. Growth in regular compensation related to our annual merit increases and higher cash-based incentive compensation reflecting sales activity was partially offset by lower seasonal employee benefits costs. Non-personnel expense increased $4.4 million, led by higher mortgage banking costs.

•Period-end loans grew by $488 million to $23.2 billion at June 30, 2023, primarily driven by growth in commercial loans and commercial real estate loans secured by multifamily residential properties. Average outstanding loan balances were $22.9 billion, a $413 million increase.

•We recorded a $17.0 million provision for expected credit losses in the second quarter of 2023, primarily related to higher assumed commercial real estate vacancy rates during the forecast period and overall loan portfolio growth during the quarter. We recorded a $16.0 million provision for expected credit losses in the first quarter of 2023 as key economic assumptions in the base case, including projected West Texas Intermediate ("WTI") oil prices and projected commercial real estate vacancy rates, were less favorable to economic growth. The combined allowance for credit losses totaled $323 million or 1.39 percent of outstanding loans at June 30, 2023. The combined allowance for credit losses was $312 million or 1.37 percent of outstanding loans at March 31, 2023. Net charge-offs were $6.7 million or 0.12 percent of average loans on an annualized basis in the second quarter compared to net charge-offs of $769 thousand or 0.01 percent of average loans on an annualized basis in the first quarter.

•Period-end deposits increased $714 million to $33.3 billion while average deposits decreased $1.1 billion to $32.4 billion. Average demand deposits declined by $1.4 billion and average interest-bearing deposits increased $295 million. The loan to deposit ratio was 70 percent at June 30, 2023, consistent with March 31, 2023.

•The company's tangible common equity ratio, a non-GAAP measure, was 7.79 percent at June 30, 2023 and 8.46 percent at March 31, 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 7.49 percent.

•The company's common equity Tier 1 capital ratio was 12.13 percent at June 30, 2023. In addition, the company's Tier 1 capital ratio was 12.13 percent, total capital ratio was 13.24 percent, and leverage ratio was 9.75 percent at June 30, 2023. At March 31, 2023, the company's common equity Tier 1 capital ratio was 12.19 percent, Tier 1 capital ratio was 12.20 percent, total capital ratio was 13.21 percent, and leverage ratio was 9.94 percent.

•The company repurchased 266,000 shares of common stock at an average price paid of $84.08 a share in the second quarter of 2023.

•Commercial Banking contributed $170.2 million to net income in the second quarter of 2023, a decrease of $7.1 million compared to the first quarter of 2023. Combined net interest revenue and fee revenue decreased $3.2 million due to a decline in demand deposit balances, partially offset by increased customer hedging revenue, primarily related to our energy customers. Net loans charged-off increased $5.9 million to $6.0 million in the second quarter of 2023. Personnel expense increased $3.3 million, driven primarily by incentive compensation costs. The second quarter of 2023 included a gain on alternative investments of $8.1 million resulting from merchant banking activities. Average loans increased $409 million or 2 percent to $19.2 billion. Average deposits decreased $1.0 billion or 7 percent to $14.8 billion.

•Consumer Banking contributed $60.3 million to net income in the second quarter of 2023, an increase of $9.6 million over the prior quarter. The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $1.2 million compared to $10.5 million for the first quarter of 2023. Combined net interest revenue and fee revenue increased $5.8 million, largely due to an increase in the spread on deposits, partially offset by a decline in deposit balances. Operating expense increased $2.1 million. Increases in mortgage banking costs of $2.5 million driven by higher seasonal prepayments and personnel expense of $1.1 million were partially offset by a decline in business promotion expense. Average loans increased $15 million or 1 percent to $1.8 billion. Average deposits decreased $262 million or 3 percent to $8.0 billion.

•Wealth Management contributed $57.3 million to net income in the second quarter of 2023, an increase of $4.9 million over the first quarter of 2023. Combined net interest and fee revenue increased $9.4 million, primarily due to an increase of $5.1 million in total revenue from institutional trading activities from higher U.S. agency residential mortgage-backed securities trading volumes and increases in other revenue and fiduciary and asset management revenue. These increases were partially offset by a decrease in the spread on deposits. Personnel expense increased $2.7 million due to increased cash-based incentive compensation, driven by higher trading activities, combined with higher regular compensation related to annual merit increases. Average loans increased $29 million or 1 percent to $2.2 billion. Average deposits increased $112 million or 2 percent to $7.5 billion. Assets under management or administration were $103.6 billion, an increase of $1.3 billion.

Net interest revenue was $322.3 million for the second quarter of 2023 compared to $352.3 million for the prior quarter. Net interest margin was 3.00 percent compared to 3.45 percent. Growth in low-spread trading assets drove a 9 basis point decline in net interest margin with deposit repricing activity primarily driving the remaining 36 basis point reduction. Deposit price competition and liability mix shift have driven compression in the net interest margin.

Average earning assets increased $2.0 billion. Average trading securities grew $1.2 billion due to favorable market opportunities. Average loan balances increased $413 million, largely due to growth in commercial and commercial real estate loans. Average available for sale securities increased $295 million. Average interest-bearing cash and cash equivalents increased $92 million. Average interest-bearing deposits increased $295 million. Average funds purchased and repurchase agreements grew $1.9 billion while other borrowings increased $763 million.

The yield on average earning assets was 5.29 percent, up 23 basis points. The loan portfolio yield increased 36 basis points to 7.03 percent while the yield on the available for sale securities portfolio increased 13 basis points to 3.00 percent. The yield on interest-bearing cash and cash equivalents increased 113 basis points to 5.41 percent.

Funding costs were 3.27 percent, an 84 basis point increase. The cost of interest-bearing deposits increased 73 basis points to 2.56 percent. The cost of funds purchased and repurchase agreements increased 125 basis points to 4.58 percent while the cost of other borrowings was up 39 basis points to 5.12 percent. The benefit to net interest margin from assets funded by non-interest liabilities was 98 basis points, an increase of 16 basis points.

Fees and commissions revenue totaled $200.5 million for the second quarter of 2023, an increase of $14.5 million over the prior quarter.

Brokerage and trading revenue increased $12.6 million, with a $9.3 million increase in trading revenue, largely due to a higher volume of U.S. agency residential mortgage-backed securities and related derivatives contracts trading activity. Customer hedging revenue grew $5.3 million, primarily driven by energy customer activity. Fiduciary and asset management revenue increased $2.3 million, largely due to seasonal tax preparation fee income.

Total operating expense was $318.7 million for the second quarter of 2023, an increase of $12.9 million compared to the first quarter of 2023.

Personnel expense was $190.7 million, including $2.7 million of deferred compensation expense. Excluding deferred compensation costs, personnel expense increased $7.5 million. Cash-based incentive compensation increased $6.6 million, driven by sales activities. Regular compensation increased $4.1 million, representing the full quarter impact of our annual merit increases in March. Employee benefits expense decreased $2.5 million due to a seasonal decrease in payroll taxes, partially offset by higher healthcare costs.

Non-personnel expense was $128.0 million, an increase of $4.4 million. Higher seasonal prepayments led to a $2.5 million increase in mortgage banking costs. Occupancy and equipment costs grew $1.6 million, largely related to seasonal increases in general building operating costs.

Outstanding loans were $23.2 billion at June 30, 2023, growing $488 million over March 31, 2023, largely due to growth in commercial and commercial real estate loans. Unfunded loan commitments decreased $141 million compared to the first quarter of 2023.

Outstanding commercial loan balances, which includes healthcare, services, energy and general business loans, increased $317 million over the prior quarter.

Energy loan balances increased $111 million to $3.5 billion or 15 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 67 percent of committed production loans are secured by properties primarily producing oil. The remaining 33 percent is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $4.3 billion at June 30, 2023, an increase of $224 million over March 31, 2023.

General business loans increased $93 million to $3.4 billion or 15 percent of total loans. General business loans include $2.0 billion of wholesale/retail loans and $1.4 billion of loans from other commercial industries.

Healthcare sector loan balances increased $92 million, totaling $4.0 billion or 17 percent of total loans. Our healthcare sector loans primarily consist of $3.3 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 $21 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.

Commercial real estate loan balances grew $155 million and represent 21 percent of total loans. Loans secured by multifamily residential properties increased $139 million to $1.5 billion. Loans secured by industrial facilities increased $40 million to $1.3 billion. This growth was partially offset by a $40 million decrease in loans secured by office facilities. Unfunded commercial real estate loan commitments were $2.4 billion at June 30, 2023, a decrease of $306 million compared to March 31, 2023. We take a disciplined approach to managing our concentration of commercial real estate loan commitments as a percentage of Tier 1 Capital. While loan commitments are presently at the upper concentration limit, we expect continued growth in our commercial real estate balances as loans fund, primarily in the multifamily and industrial loan portfolios.

Loans to individuals increased $15 million and represent 16 percent of total loans. Residential mortgage loans increased $29 million while personal loans decreased $14 million.

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 June 30, 2023, consistent with the prior quarter, providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.

Period-end deposits totaled $33.3 billion at June 30, 2023, a $714 million increase. Time deposits increased $1.1 billion while interest-bearing transaction account balances increased $473 million. Demand deposits decreased $824 million. Average deposits were $32.4 billion at June 30, 2023, a $1.1 billion decrease. Average demand deposit account balances decreased $1.4 billion and average interest-bearing transaction account balances decreased $271 million. Average time deposits increased $598 million. Average Commercial Banking deposits decreased $1.0 billion to $14.8 billion or 46 percent of total deposits. Our commercial deposit portfolio is highly diversified across industries and customers. The highest concentration by industry within our commercial deposit portfolio is with our energy customers representing 6 percent of our total deposits. Wealth Management deposits increased $112 million to $7.5 billion or 23 percent of total deposits. Consumer Banking deposits decreased $262 million to $8.0 billion or 25 percent of total deposits.

The company's common equity Tier 1 capital ratio was 12.13 percent at June 30, 2023. In addition, the company's Tier 1 capital ratio was 12.13 percent, total capital ratio was 13.24 percent, and leverage ratio was 9.75 percent at June 30, 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 7 basis points to the company's common equity tier 1 capital ratio at June 30, 2023. At March 31, 2023, the company's common equity Tier 1 capital ratio was 12.19 percent, Tier 1 capital ratio was 12.20 percent, total capital ratio was 13.21 percent, and leverage ratio was 9.94 percent.

The company's tangible common equity ratio, a non-GAAP measure, was 7.79 percent at June 30, 2023 and 8.46 percent at March 31, 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 7.49 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 266,000 shares of common stock at an average price paid of $84.08 a share in the second quarter of 2023. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

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

A $17.0 million provision for credit losses was necessary for the second quarter of 2023, primarily related to higher assumed commercial real estate vacancy rates during the forecast period and loan growth during the quarter.

The probability weighting of our base case reasonable and supportable forecast remained at 50 percent in the second quarter of 2023 as the level of uncertainty in economic forecasts remained high. Our base case reasonable and supportable forecast assumes inflation continues to improve from the peak experienced in 2022 and reaches 3.1 percent by the second quarter of 2024. We expect the impact of the Russian-Ukraine conflict remains isolated. Inflation pressures cause modest declines in real household income compared to pre-pandemic levels, resulting in below-trend GDP growth. GDP is projected to grow by 1.0 percent over the next twelve months. Job openings revert to more normalized levels and overall hiring levels decline, causing the national unemployment rate to modestly increase over the next four quarters. Our forecasted civilian unemployment rate is 3.8 percent for the third quarter of 2023, increasing to 4.2 percent by the second quarter of 2024. Our base case also assumes the Federal Reserve increases the federal funds rate once in the third quarter of 2023, resulting in a target range of 5.25 percent to 5.50 percent. No additional rate increases are anticipated for the remainder of the forecast horizon. WTI oil prices are projected to generally follow the NYMEX forward curve that existed at the end of June 30, 2023, averaging $69.39 per barrel over the next twelve months.

Our downside case, probability weighted at 40 percent, assumes that inflation moderates from the peak experienced in 2022, but remains elevated through the forecast horizon ending at 3.8 percent by the second quarter of 2024. Higher levels of inflation force the Federal Reserve to adopt a more aggressive monetary policy as compared to the base case scenario. This results in a federal funds target range of 6.00 to 6.25 percent by the second quarter of 2024. The United States economy is pushed into a recession, with a contraction in economic activity and a sharp increase in the unemployment rate from 4.7 percent in the third quarter of 2023 to 6.1 percent in the second quarter of 2024. In this scenario, real GDP is expected to contract 2.0 percent over the next four quarters. WTI oil prices are projected to average $55.78 per barrel over the next twelve months, peaking at $62.31 in the third quarter of 2023 and falling 19 percent over the following three quarters.

Nonperforming assets totaled $136 million or 0.59 percent of outstanding loans and repossessed assets at June 30, 2023, compared to $133 million or 0.58 percent at March 31, 2023. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $125 million or 0.54 percent of outstanding loans and repossessed assets at June 30, 2023, compared to $119 million or 0.53 percent at March 31, 2023.

Nonaccruing loans were $132 million or 0.57 percent of outstanding loans at June 30, 2023. Nonaccruing commercial loans totaled $73 million or 0.50 percent of outstanding commercial loans. Nonaccruing commercial real estate loans totaled $17 million or 0.35 percent of outstanding commercial real estate loans. Nonaccruing loans to individuals totaled $42 million or 1.11 percent of outstanding loans to individuals.

Nonaccruing loans increased $12.0 million compared to March 31, 2023. Nonaccruing energy loans increased $20 million and nonaccruing general business loans increased $3.0 million. These increases were partially offset by a $4.3 million decrease in nonaccruing commercial real estate loans and a $3.6 million decrease in nonaccruing services loans. New nonaccruing loans identified in the second quarter totaled $28 million, offset by $5.9 million in payments received and $8.0 million of charge-offs.

Potential problem loans, which are defined as performing loans that, based on known information, cause management concern as to the borrowers' ability to continue to perform, totaled $109 million at June 30, 2023. The $28 million decrease compared to March 31, 2023 was primarily related to potential problem energy and general business loans.

At June 30, 2023, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $323 million or 1.39 percent of outstanding loans and 267 percent of nonaccruing loans. The allowance for loan losses totaled $263 million or 1.13 percent of outstanding loans and 218 percent of nonaccruing loans. At March 31, 2023, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $312 million or 1.37 percent of outstanding loans and 295 percent of nonaccruing loans. The allowance for loan losses was $249 million or 1.10 percent of outstanding loans and 235 percent of nonaccruing loans. The allowance to nonaccruing loan percentages referenced above omit residential mortgage loans guaranteed by U.S. government agencies.

Gross charge-offs were $8.0 million for the second quarter compared to $3.7 million for the first quarter of 2023. Gross charge-offs for the second quarter were primarily related to a single commercial real estate borrower and a single commercial services borrower. Recoveries totaled $1.3 million for the second quarter of 2023 and $2.9 million for the prior quarter. Net charge-offs were $6.7 million or 0.12 percent of average loans on an annualized basis in the second quarter compared to net charge-offs of $769 thousand or 0.01 percent of average loans on an annualized basis in the first quarter. Net charge-offs were 0.10 percent of average loans over the last four quarters.

The fair value of the available for sale securities portfolio totaled $11.9 billion at June 30, 2023, largely unchanged compared to March 31, 2023. At June 30, 2023, the available for sale securities portfolio consisted primarily of $6.1 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $4.6 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At June 30, 2023, the available for sale securities portfolio had a net unrealized loss of $899 million compared to $742 million at March 31, 2023.

We hold an inventory of trading securities in support of sales to a variety of customers. At June 30, 2023, the trading securities portfolio totaled $5.4 billion compared to $2.3 billion at March 31, 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 decreased $114 million to $212 million at June 30, 2023.

Derivative contracts are carried at fair value. At June 30, 2023, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $538 million compared to $572 million at March 31, 2023. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $526 million at June 30, 2023 and $578 million at March 31, 2023.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $1.2 million during the second quarter of 2023, including a $10.3 million decrease in the fair value of securities and derivative contracts held as an economic hedge, a $9.3 million increase in the fair value of mortgage servicing rights and $232 thousand of related net interest expense.

The company will hold a conference call at 9 a.m. Central time on Wednesday, July 26, 2023 to discuss the financial results with investors. The live audio webcast and presentation slides will be available on the company’s website at www.bokf.com. The conference call can also be accessed by dialing 1-201-689-8471. A conference call and webcast replay will also be available shortly after conclusion of the live call at www.bokf.com or by dialing 1-844-512-2921 and referencing conference ID # 13739748.

BOK Financial Corporation is a $49 billion regional financial services company headquartered in Tulsa, Oklahoma with $104 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., BOK Financial Private Wealth, Inc. and BOK Financial Insurance, Inc. BOKF, NA's holdings include TransFund, Cavanal Hill Investment Management, Inc. and BOK Financial Asset Management, Inc. BOKF, NA operates banking divisions across eight states as: Bank of Albuquerque; Bank of Oklahoma; Bank of Texas; and BOK Financial in Arizona, Arkansas, Colorado, Kansas and Missouri; as well as having limited purpose offices in Nebraska, Wisconsin, Connecticut and Tennessee. Through its subsidiaries, BOK Financial Corporation provides commercial and consumer banking, brokerage trading, investment, trust and insurance services, mortgage origination and servicing, and an electronic funds transfer network. For more information, visit www.bokf.com.

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

AVERAGE BALANCE SHEETS – UNAUDITED

STATEMENTS OF EARNINGS – UNAUDITED

(in thousands, except per share data)

QUARTERLY EARNINGS TREND – UNAUDITED

(in thousands, except ratio and per share data)

FINANCIAL HIGHLIGHTS – UNAUDITED

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.

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. Prior to the second quarter of 2023, the efficiency ratio did not exclude amortization of intangible assets and only included tax-equivalent net interest revenue and fees and commissions as part of total revenue. All prior periods were adjusted to conform with the current methodology.

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.

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LOANS MANAGED BY PRINCIPAL MARKET AREA – UNAUDITED

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

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