Second quarter 2024 financial highlights1
Net Income						Net income was $163.7 million or $2.54 per diluted share compared to $83.7 million or $1.29 per diluted share. Excluding the gain on conversion of Visa shares, the additional FDIC special assessment expense and the contribution of Visa shares to the BOKF Foundation, net income would have been $131.1 million or $2.02 per share for the second quarter of 2024.2
Net Interest Income & Margin						Net interest income totaled $296.0 million, an increase of $2.4 million. Net interest margin was 2.56% compared to 2.61%.
Fees & Commissions Revenue						Fees and commissions revenue was $200.0 million, consistent with the prior quarter. Higher fiduciary and asset management revenue and transaction card revenue was offset by lower brokerage and trading revenue.
Operating Expense						Operating expense decreased $3.7 million to $336.7 million, primarily due to a reduction in personnel expense with lower incentive compensation, including deferred compensation plans, regular compensation, and employee benefits. Non-personnel expense increased $7.9 million, largely due to our contribution of Visa shares valued at $10.0 million to the BOKF Foundation.
Loans						Period end loans grew by $381 million to $24.6 billion at June 30, 2024, mostly driven by growth in commercial loans, partially offset by a reduction in commercial real estate loans. Average outstanding loan balances were $24.4 billion, a $437 million increase.
Credit Quality						Nonperforming assets totaled $93 million or 0.38% of outstanding loans and repossessed assets at June 30, 2024, compared to $122 million or 0.51% at March 31, 2024. Net charge-offs were $6.9 million or 0.11% of average loans on an annualized basis in the second quarter.
Deposits						Period end deposits increased $858 million to $36.2 billion while average deposits increased $627 million to $35.7 billion. Average interest-bearing deposits increased $872 million while average demand deposits declined by $244 million. The loan to deposit ratio was 68% at June 30, 2024, unchanged from the prior quarter.
Capital						Tangible common equity ratio was 8.38% compared to 8.21% at March 31, 2024. Tier 1 capital ratio was 12.11%, Common equity Tier 1 capital ratio was 12.10%, and total capital ratio was 13.25%.

1 Comparisons are to prior quarter unless otherwise noted.

2 See Explanation and Reconciliation of Non-GAAP Measures - Unaudited section following.

“BOK Financial once again produced very strong quarterly results, led by our robust commercial and industrial loan growth — a result of our team’s sales efforts and a footprint in states with outstanding economic growth. We continue to grow thoughtfully, taking advantage of current market uncertainty and our robust capital and liquidity levels, while maintaining a disciplined credit culture. This credit culture is foundational to who we are and continues to yield exceptional performance. We also realized gains in our Visa B stock during the quarter, a positive outcome that highlights our patience and long-term approach to generating shareholder value. We have a sustainable business model with a leading mix of core fee businesses while also doing an exemplary job of risk management, evidenced by tangible capital, liquidity, and a commercial real estate concentration being meaningfully favorable to peers.”

Net interest income was $296.0 million for the second quarter of 2024 compared to $293.6 million for the prior quarter. Net interest margin was 2.56% compared to 2.61%. The pace of demand deposit migration and deposit repricing has slowed compared to the previous quarter and was offset by improving yields on the available for sale securities portfolio. For the second quarter of 2024, our core net interest margin excluding trading activities, a non-GAAP measure, was 2.94% compared to 2.97% in the prior quarter.

Average earning assets increased $1.2 billion. Average loan balances increased $437 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 $218 million while average trading securities increased $552 million. Average interest-bearing deposits increased $872 million, primarily from interest-bearing transaction accounts. Funds purchased and repurchase agreements grew $580 million while average other borrowings increased $307 million.

The yield on average earning assets was 5.80%, up 7 basis points. The yield on the available for sale securities portfolio increased 23 basis points to 3.71% while the loan portfolio yield increased 1 basis point to 7.41%. The yield on trading securities decreased 6 basis points to 5.06% and the yield on interest-bearing cash and cash equivalents increased 90 basis points to 5.86%.

Funding costs were 4.15%, up 7 basis points. The cost of interest-bearing deposits increased 7 basis points to 3.76%. The cost of funds purchased and repurchase agreements increased 23 basis points to 4.28%. The benefit to net interest margin from assets funded by non-interest liabilities was 91 basis points, a decrease of 5 basis points.

Fees and commissions revenue totaled $200.0 million for the second quarter of 2024, consistent with the prior quarter.

Brokerage and trading revenue decreased $6.2 million to $53.0 million. Trading revenue decreased $9.8 million to $27.7 million as margins compressed due to market conditions in the second quarter of 2024. Investment banking revenue grew $3.0 million from increased underwriting and syndication fees.

Fiduciary and asset management revenue increased $2.3 million to $57.6 million, led by higher seasonal tax preparation fee income. Transaction card revenue grew $1.8 million to $27.2 million, primarily due to an increase in the volume of transactions processed during the second quarter of 2024.

Other gains, net, increased $53.1 million to $57.4 million. The second quarter of 2024 included a $53.8 million pre-tax gain on the conversion of our Visa B shares under the recently announced exchange offer by Visa, Inc. The gain offsets losses of $45.2 million on the repositioning of the available for sale securities portfolio realized in the first quarter of 2024. We donated 35,620 of the converted Visa shares valued at $10.0 million to the BOKF Foundation during the second quarter of 2024, allowing us to further invest in the communities we serve.

Total operating expense was $336.7 million for the second quarter of 2024, a decrease of $3.7 million compared to the first quarter of 2024.

Personnel expense was $191.1 million, a decrease of $11.6 million. Incentive compensation expense decreased $7.7 million due to a decrease in deferred compensation expense and a shift in the timing of expense recognition as commercial incentive compensation plans move to being primarily share-based rather than cash-based awards. Employee benefits expense decreased $2.0 million due to a seasonal decrease in payroll taxes, partially offset by higher healthcare costs. Regular compensation decreased $1.9 million. A greater amount of compensation expense was capitalized during the second quarter due to an annual update of the standard costs for loan originations coupled with an increase in mortgage loan production volume.

Non-personnel expense was $145.6 million, an increase of $7.9 million. In addition to the $10 million share donation previously mentioned, we also made a $3.6 million contribution to the BOKF Foundation in the second quarter of 2024. Mortgage banking costs increased $2.2 million due to higher seasonal prepayments, and a rise in professional fees and services expense of $1.3 million was primarily due to project related expense. In the second quarter of 2024, we recognized $1.2 million of expense related to the FDIC special assessment estimate compared to $6.5 million of expense in the prior quarter. Other expense decreased $3.0 million, primarily due to lower operational losses.

Outstanding loans were $24.6 billion at June 30, 2024, growing $381 million over March 31, 2024, largely due to growth in commercial loans, partially offset by a reduction in commercial real estate loans. Unfunded loan commitments decreased $319 million compared to the first quarter of 2024.

Outstanding commercial loan balances, which includes healthcare, services, energy and general business loans, increased $491 million over the prior quarter.

General business loans increased $450 million to $4.4 billion or 18% of total loans. General business loans include $2.7 billion of wholesale/retail loans and $1.6 billion of loans from other commercial industries.

Services sector loan balances increased $48 million to $3.6 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 increased $7.8 million to $3.5 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 $4.4 billion at June 30, 2024, a $20 million increase over March 31, 2024.

Healthcare sector loan balances decreased $15 million, totaling $4.2 billion or 17% 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.

Commercial real estate loan balances decreased $153 million to $5.1 billion and represent 21% of total loans. Loans secured by industrial facilities decreased $129 million to $1.2 billion. Other real estate loans decreased $45 million to $358 million, and loans secured by office facilities decreased $24 million to $877 million. These decreases were partially offset by a $36 million increase in loans secured by multifamily properties. Unfunded commercial real estate loan commitments were $1.6 billion at June 30, 2024, an $88 million decrease compared to March 31, 2024. We take a disciplined approach to managing our concentration of commercial real estate loan commitments as a percentage of capital.

Loans to individuals increased $44 million and represent 16% of total loans. Residential mortgage loans increased $81 million while personal loans decreased $37 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 June 30, 2024, consistent with the prior quarter, providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.

Period end deposits totaled $36.2 billion at June 30, 2024, an $858 million increase. Demand deposits grew by $426 million due to elevated customer activity at quarter end. Interest-bearing transaction account balances increased $359 million while time deposits increased $97 million.

Average deposits were $35.7 billion at June 30, 2024, a $627 million increase. Average interest-bearing transaction account balances increased $742 million and average time deposits increased $140 million. Average demand deposit account balances decreased $244 million.

Average Commercial Banking deposits increased $459 million to $16.2 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 $313 million to $9.6 billion or 27% of total deposits. Consumer Banking deposits increased $173 million to $8.1 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 12.10% at June 30, 2024. In addition, the company's Tier 1 capital ratio was 12.11%, total capital ratio was 13.25%, and leverage ratio was 9.39% at June 30, 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 June 30, 2024. At March 31, 2024, the company's common equity Tier 1 capital ratio was 11.99%, Tier 1 capital ratio was 12.00%, total capital ratio was 13.15%, and leverage ratio was 9.42%.

The company's tangible common equity ratio, a non-GAAP measure, was 8.38% at June 30, 2024 and 8.21% at March 31, 2024. 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 8.06%.

The company repurchased 412,176 shares of common stock at an average price paid of $90.38 a share in the second quarter of 2024. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Nonperforming assets totaled $93 million or 0.38% of outstanding loans and repossessed assets at June 30, 2024, compared to $122 million or 0.51% at March 31, 2024. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $86 million or 0.35% of outstanding loans and repossessed assets at June 30, 2024, compared to $113 million or 0.47% at March 31, 2024.

Nonaccruing loans decreased $29 million compared to March 31, 2024. New nonaccruing loans identified in the second quarter totaled $24 million, offset by $42 million in payments received and $7.9 million of charge-offs. Nonaccruing healthcare loans decreased $28 million and nonaccruing commercial real estate loans decreased $9.2 million, partially offset by a $14 million increase in nonaccruing energy loans.

Net charge-offs were $6.9 million or 0.11% of average loans on an annualized basis in the second quarter. Charge-offs for the second quarter were primarily composed of a single healthcare loan. Net charge-offs were $5.5 million or 0.09% of average loans on an annualized basis in the first quarter of 2024.

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

At June 30, 2024, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $330 million or 1.34% of outstanding loans and 393% of nonaccruing loans. 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.

The fair value of the available for sale securities portfolio totaled $12.8 billion at June 30, 2024, a $141 million increase compared to March 31, 2024. At June 30, 2024, the available for sale securities portfolio consisted primarily of $8.1 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.6 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At June 30, 2024, the available for sale securities portfolio had a net unrealized loss of $649 million compared to $643 million at March 31, 2024.

We hold an inventory of trading securities in support of sales to a variety of customers. At June 30, 2024, the trading securities portfolio totaled $5.2 billion compared to $5.4 billion at March 31, 2024.

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 $755 thousand to $19.1 million at June 30, 2024.

Derivative contracts are carried at fair value. At June 30, 2024, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $339 million compared to $463 million at March 31, 2024. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $327 million at June 30, 2024 and $460 million at March 31, 2024.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $221 thousand during the second quarter of 2024, including a $3.6 million decrease in the fair value of securities and derivative contracts held as an economic hedge, a $3.5 million increase in the fair value of mortgage servicing rights, and $96 thousand of related net interest expense.

Commercial Banking contributed $119.6 million to net income in the second quarter of 2024, a decrease of $2.2 million compared to the first quarter of 2024. Combined net interest income and fee revenue increased $2.8 million. Net interest income was consistent with prior quarter and transaction card revenue increased $1.9 million driven by a rise in transaction volume processed during the second quarter of 2024. Net loans charged-off increased $2.0 million to $6.1 million in the second quarter of 2024. Non-personnel expense increased $5.4 million due to an increase in other expense. Personnel expense was consistent with the prior quarter. Average loans increased $337 million or 2% to $20.4 billion. Average deposits increased $459 million or 3% to $16.2 billion.

Consumer Banking contributed $24.1 million to net income in the second quarter of 2024, relatively unchanged compared to the prior quarter. Combined net interest income and fee revenue increased $1.1 million. Operating expense increased $1.7 million, primarily due to an increase in mortgage banking costs resulting from higher seasonal prepayments. Average loans increased $62 million or 3% to $2.0 billion. Average deposits increased $173 million or 2% to $8.1 billion.

Wealth Management contributed $27.5 million to net income in the second quarter of 2024, an increase of $2.3 million over the first quarter of 2024. Combined net interest income and fee revenue decreased $4.4 million. Total revenue from institutional trading activities decreased $7.9 million, largely due to compressed margins driven by market conditions during the second quarter. Other revenue decreased $2.0 million. Investment banking revenue increased $2.7 million, primarily due to increased underwriting fees. Fiduciary and asset management revenue grew $2.3 million due to seasonal tax preparation fee income. Non-personnel expense decreased $9.2 million as the prior quarter included an increased level of operational losses. Personnel expense was consistent with the prior quarter. Average loans were mostly unchanged from the previous quarter. Average deposits increased $313 million or 3% to $9.6 billion. Assets under management or administration were $107.5 billion, an increase of $1.9 billion.

The company will hold a conference call at noon Central time on Tuesday, July 23, 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.

BOK Financial Corporation is a $50 billion regional financial services company headquartered in Tulsa, Oklahoma with $107 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 June 30, 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 income 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.