First quarter 2024 financial highlights1
Net Income						Net income was $83.7 million or $1.29 per diluted share compared to $82.6 million or $1.26 per diluted share. Excluding the loss from repositioning of the available for sale securities portfolio and the additional FDIC special assessment expense, net income would have been $123.2 million or $1.91 per share for the first quarter of 2024.
Net Interest Revenue & Margin						Net interest revenue totaled $293.6 million, a decrease of $3.1 million. Net interest margin was 2.61% compared to 2.64%.
Fees & Commissions Revenue						Fees and commissions revenue was $200.6 million, an increase of $3.8 million. Higher mortgage banking and fiduciary and asset management revenue was partially offset by lower brokerage and trading and transaction card revenue.
Operating Expense						Operating expense decreased $43.7 million to $340.4 million, primarily due to a reduction in non-personnel expense resulting from the FDIC special assessment recognized in the fourth quarter of 2023. Personnel expense was relatively consistent with the prior quarter.
Loans						Period end loans grew by $268 million to $24.2 billion at March 31, 2024, mostly driven by growth in commercial loans, partially offset by a reduction in commercial real estate loans. Average outstanding loan balances were $23.9 billion, a $243 million increase.
Credit Quality						Nonperforming assets totaled $122 million or 0.51% of outstanding loans and repossessed assets at March 31, 2024, compared to $148 million or 0.62% at December 31, 2023. Net charge-offs were $5.5 million or 0.09% of average loans on an annualized basis in the first quarter.
Deposits						Period end deposits increased $1.4 billion to $35.4 billion while average deposits increased $1.3 billion to $35.0 billion. Average interest-bearing deposits increased $2.1 billion while average demand deposits declined by $747 million. The loan to deposit ratio was 68% at March 31, 2024 compared to 70% at December 31, 2023.
Capital						Tangible common equity ratio was 8.21% compared to 8.29% at December 31, 2023. Tier 1 capital ratio was 12.00%, Common equity Tier 1 capital ratio was 11.99%, and total capital ratio was 13.15%.

1 Comparisons are to prior quarter unless otherwise noted.

First quarter results were characterized by a stabilizing net interest margin, strong asset quality, continued strong operating revenue growth, and well-managed expenses. It is also another reflection of our long-term focus and efforts to create sustainable earnings. While many banks sold their VISA B shares at a considerable discount, we chose to retain the shares we received in 2008 and expect to receive full value in VISA’s announced exchange offer. Given our perception of market spreads, we took an opportunity to reposition the securities portfolio in the first quarter in anticipation of a gain in the second quarter this year from monetizing our VISA B shares. The net result is expected to further improve our net interest margin and net interest revenue outlook in future periods. Commercial loans grew almost 9% annualized as we focus on growth to utilize our strong capital and liquidity levels as others retrench. Our credit metrics remain very strong and are a direct reflection of the focus we put on disciplined risk management. I am also exceptionally proud we were recognized as one of only 60 organizations to receive the 2024 Gallup Exceptional Workplace Award. This is independent validation of our culture of inspiration, ambition, collaboration, and tenacity.

Net interest revenue was $293.6 million for the first quarter of 2024 compared to $296.7 million for the prior quarter. Net interest margin was 2.61% compared to 2.64%, reflective of continued demand deposit migration and deposit repricing. For the first quarter of 2024, our core net interest margin excluding trading activities, a non-GAAP measure, was 2.97% compared to 3.03% in the prior quarter.

Average earning assets increased $520 million. Average loan balances increased $243 million, largely due to growth in commercial loans, partially offset by a reduction in commercial real estate loan balances. Average available for sale securities grew $475 million while average trading securities decreased $77 million. Average interest-bearing deposits increased $2.1 billion, primarily from interest-bearing transaction accounts. Funds purchased and repurchase agreements declined $1.2 billion while average other borrowings decreased $276 million.

The yield on average earning assets was 5.73%, up 9 basis points. The yield on the available for sale securities portfolio increased 21 basis points to 3.48% while the loan portfolio yield increased 4 basis points to 7.40%. The yield on trading securities grew 7 basis points to 5.12% and the yield on interest-bearing cash and cash equivalents decreased 34 basis points to 4.96%.

Funding costs were 4.08%, up 10 basis points. The cost of interest-bearing deposits increased 26 basis points to 3.69%. The cost of funds purchased and repurchase agreements decreased 74 basis points to 4.05% from the beneficial mix shift enabled by the growth of interest-bearing deposits. The benefit to net interest margin from assets funded by non-interest liabilities was 96 basis points, a decrease of 2 basis points.

Fees and commissions revenue totaled $200.6 million for the first quarter of 2024, an increase of $3.8 million over the prior quarter.

Mortgage banking revenue increased $6.1 million. Mortgage production volume increased $47.6 million and realized margin on funded mortgage loans improved 244 basis points to 1.46%.

Fiduciary and asset management revenue increased $3.9 million to $55.3 million, primarily due to growth in trust business line fees resulting from movement in the equity markets.

Brokerage and trading revenue decreased $1.7 million to $59.2 million. Trading revenue grew $1.9 million to $37.5 million reflecting increased trading activity primarily in U.S. government agency residential mortgage-backed securities.

Insurance brokerage fees decreased $1.8 million in conjunction with the sale of our insurance brokerage and consulting business, BOK Financial Insurance (“BOKFI”) in the fourth quarter. Customer hedging revenue decreased $1.3 million, largely as result of reduced energy customer hedging volumes.

Transaction card revenue decreased $3.4 million to $25.5 million, primarily due to seasonally elevated fourth quarter activity and one less day in the quarter.

Other revenue decreased $2.1 million, largely due to a reduction in fees earned on derivative counterparty margin.

Other gains, net decreased $36.2 million to $4.3 million. The fourth quarter of 2023 included a $31.0 million pre-tax gain, before related professional fees, on the sale of BOKFI.

Losses on available for sale securities were $45.2 million in the first quarter of 2024 as we repositioned the available for sale securities portfolio by selling approximately $783 million of lower-yielding debt securities. We expect the gain on conversion of our Visa B shares under the recently announced exchange offer by Visa, Inc. will offset the realized losses on the repositioning. The Visa Exchange Offer opened on April 8 and is scheduled to expire at end of day on May 3, 2024.

Total operating expense was $340.4 million for the first quarter of 2024, a decrease of $43.7 million compared to the fourth quarter of 2023.

Personnel expense was $202.7 million, consistent with the prior quarter. Higher seasonal employee benefits costs were offset by reduced incentive compensation expense while regular compensation remained flat compared to the prior quarter.

Non-personnel expense was $137.7 million, a decrease of $43.3 million. In the fourth quarter of 2023, we recognized $43.8 million of expense related to the FDIC special assessment. During the first quarter of 2024, we received notification from the FDIC that the previous assessed losses attributable to the protection of Silicon Valley Bank and Signature Bank uninsured depositors had increased, so an additional $6.5 million of estimated expense related to the special assessment was recognized.

Professional fees and services expense decreased $4.3 million. The previous quarter included $2.2 million in expenses related to the sale of BOKFI.

Other expense was up $2.4 million, primarily due to increased operational losses.

Outstanding loans were $24.2 billion at March 31, 2024, growing $268 million over December 31, 2023, largely due to growth in commercial loans, partially offset by a reduction in commercial real estate loans. Unfunded loan commitments decreased $359 million compared to the fourth quarter of 2023.

Outstanding commercial loan balances, which includes healthcare, services, energy and general business loans, increased $329 million over the prior quarter.

Healthcare sector loan balances increased $103 million, totaling $4.2 billion or 18% of total loans. Our healthcare sector loans primarily consist of $3.5 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.

General business loans increased $267 million to $3.9 billion or 16% of total loans. General business loans include $2.4 billion of wholesale/retail loans and $1.5 billion of loans from other commercial industries.

Services sector loan balances decreased $47 million to $3.5 billion or 15% 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 were largely unchanged compared to the prior quarter at $3.4 billion or 14% 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 70% of committed production loans are secured by properties primarily producing oil. The remaining 30% is secured by properties primarily producing natural gas. Unfunded energy loan commitments were $4.3 billion at March 31, 2024, a $147 million decrease compared to December 31, 2023.

Commercial real estate loan balances decreased $101 million to $5.2 billion and represent 22% of total loans. Loans secured by industrial facilities decreased $131 million to $1.3 billion and loans secured by retail facilities decreased $49 million to $544 million. These decreases were partially offset by an $88 million increase in loans secured by multifamily properties. Unfunded commercial real estate loan commitments were $1.7 billion at March 31, 2024, a decrease of $147 million compared to December 31, 2023. We take a disciplined approach to managing our concentration of commercial real estate loan commitments as a percentage of capital.

Loans to individuals increased $39 million and represent 16% of total loans. Residential mortgage loans increased $22 million while personal loans increased $18 million.

Our funding sources, which primarily include deposits and wholesale borrowings, provide adequate liquidity to meet our needs. The loan to deposit ratio was 68% at March 31, 2024, compared to 70% at December 31, 2023, providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.

Period end deposits totaled $35.4 billion at March 31, 2024, a $1.4 billion increase. Interest-bearing transaction account balances increased $1.8 billion while time deposits increased $355 million. Demand deposits decreased $782 million.

Average deposits were $35.0 billion at March 31, 2024, a $1.3 billion increase. Average interest-bearing transaction account balances increased $1.8 billion and average time deposits increased $285 million. Average demand deposit account balances decreased $747 million.

Average Commercial Banking deposits increased $237 million to $15.7 billion or 45% 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 8% of our total deposits. Wealth Management deposits increased $1.2 billion to $9.2 billion or 26% of total deposits. Consumer Banking deposits were largely unchanged at $7.9 billion or 23% of total deposits.

1 See Explanation and Reconciliation of Non-GAAP Measures following.

The company's common equity Tier 1 capital ratio was 11.99% at March 31, 2024. In addition, the company's Tier 1 capital ratio was 12.00%, total capital ratio was 13.15%, and leverage ratio was 9.42% at March 31, 2024. 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 3 basis points to the company's common equity tier 1 capital ratio at March 31, 2024. At December 31, 2023, the company's common equity Tier 1 capital ratio was 12.06%, Tier 1 capital ratio was 12.07%, total capital ratio was 13.16%, and leverage ratio was 9.45%.

The company's tangible common equity ratio, a non-GAAP measure, was 8.21% at March 31, 2024 and 8.29% at December 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 7.92%. 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 616,630 shares of common stock at an average price paid of $83.89 a share in the first quarter of 2024. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Nonperforming assets totaled $122 million or 0.51% of outstanding loans and repossessed assets at March 31, 2024, compared to $148 million or 0.62% at December 31, 2023. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $113 million or 0.47% of outstanding loans and repossessed assets at March 31, 2024, compared to $139 million or 0.58% at December 31, 2023.

Nonaccruing loans decreased $26 million compared to December 31, 2023. New nonaccruing loans identified in the first quarter totaled $24 million, offset by $34 million of loans that returned to accruing status, $8.6 million in payments received and $7.1 million of charge-offs. Nonaccruing healthcare loans decreased $32 million, partially offset by a $15 million increase in nonaccruing commercial real estate loans.

Net charge-offs were $5.5 million or 0.09% of average loans on an annualized basis in the first quarter. Charge-offs for the first quarter were primarily composed of a $3.2 million general business loan and a $1.3 million commercial real estate loan.

The provision for credit losses of $8.0 million in the first quarter of 2024 reflects continued loan growth and a stable economic forecast. The provision for credit losses was $6.0 million in the fourth quarter of 2023.

At March 31, 2024, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $329 million or 1.36% of outstanding loans and 298% of nonaccruing loans. 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% of outstanding loans and 240% of nonaccruing loans.

The fair value of the available for sale securities portfolio totaled $12.7 billion at March 31, 2024, a $366 million increase compared to December 31, 2023. At March 31, 2024, the available for sale securities portfolio consisted primarily of $7.8 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.7 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At March 31, 2024, the available for sale securities portfolio had a net unrealized loss of $643 million compared to $617 million at December 31, 2023.

We hold an inventory of trading securities in support of sales to a variety of customers. At March 31, 2024, the trading securities portfolio totaled $5.4 billion compared to $5.2 billion at December 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 $866 thousand to $19.8 million at March 31, 2024.

Derivative contracts are carried at fair value. At March 31, 2024, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $463 million compared to $593 million at December 31, 2023. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $460 million at March 31, 2024 and $587 million at December 31, 2023.

The net benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $1.2 million during the first quarter of 2024, including an $11.0 million increase in the fair value of mortgage servicing rights, a $9.7 million decrease in the fair value of securities and derivative contracts held as an economic hedge and $155 thousand of related net interest expense.

Commercial Banking contributed $153.3 million to net income in the first quarter of 2024, a decrease of $17.8 million compared to the fourth quarter of 2023. Combined net interest revenue and fee revenue decreased $33.1 million. Net interest revenue declined due to a shift in deposit balances from demand to interest-bearing transaction accounts along with decreased spreads due to a change in market conditions. Customer hedging revenue fell due to a reduction in customer energy hedging and transaction card revenue decreased following elevated fourth quarter transaction activity. Net loans charged-off increased $1.2 million to $4.2 million in the first quarter of 2024. Personnel expense decreased $7.7 million primarily due to lower incentive compensation costs. Non-personnel expense decreased $4.1 million due to decreases in other expense and professional fees.

Average loans increased $139 million or 1% to $20.1 billion. Average deposits increased $237 million or 2% to $15.7 billion.

Consumer Banking contributed $53.8 million to net income in the first quarter of 2024, consistent with the prior quarter. Combined net interest revenue and fee revenue decreased $6.1 million, largely due to increased customer demand for time deposits and a reduction in deposit spreads from a change in market conditions, partially offset by an increase in mortgage banking revenue from higher production volumes. Operating expense decreased $1.6 million. The net benefit of the changes in the fair value of mortgage servicing rights and related economic hedges was $1.2 million compared to a net cost of $5.2 million for the fourth quarter of 2023. Average loans increased $36 million or 2% to $1.9 billion. Average deposits were mostly unchanged from the previous quarter.

Wealth Management contributed $34.2 million to net income in the first quarter of 2024, a decrease of $28.5 million compared to the fourth quarter of 2023. The prior quarter included a pre-tax gain of $31.0 million, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKFI. Combined net interest and fee revenue decreased $2.7 million due to declining spread on deposits. Total revenue from institutional trading activities increased $1.4 million, primarily in U.S. government residential mortgage-backed securities trading activity. Personnel expense decreased $2.4 million as the prior quarter included transaction related employee costs on the BOKFI sale. Non-personnel expense increased $5.6 million, primarily due to an increased level of operational losses, partially offset by a $2.7 million decrease in professional fees. Average loans increased $44 million or 2% to $2.2 billion. Average deposits increased $1.2 billion or 14% to $9.2 billion. Assets under management or administration were $105.5 billion, an increase of $794 million.

The company will hold a conference call at 9 a.m. Central time on Wednesday, April 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 bokf.com. The conference call can also be accessed by dialing 1-800-715-9871 toll free, or 1-646-307-1963, conference ID: 5365153. A webcast replay will also be available shortly after conclusion of the live call at bokf.com or by dialing 1-800-770-2030 and referencing playback ID: 5365153 followed by # key.

BOK Financial Corporation is a $50 billion regional financial services company headquartered in Tulsa, Oklahoma with $106 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 and 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 March 31, 2024 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,” “outlook,” “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.

1 See Reconciliation of Non-GAAP Measures following.

2 Excludes 1% 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.

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.

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.

We believe adjusting net income and earnings per share for notable non-core items enhances comparability of results with prior periods, demonstrates the impact of significant items and provides a useful measure for determining the company's expenses that are core to our business operations and are expected to recur over time.