Full year 2024 financial highlights2
Net income was $523.6 million, or $8.14 per diluted share, for 2024, compared to $530.7 million, or $8.02 per diluted share, for the prior year. Net interest income totaled $1.2 billion, a decrease of $61.4 million. Net interest margin was 2.65% compared to 2.93%. Fees and commissions revenue grew $28.9 million to $810.0 million and operating expense increased $32.9 million to $1.4 billion. Net charge-offs were $12.9 million, or 0.05% of average loans in 2024, compared to $18.1 million, or 0.08% of average loans in 2023.

1 Comparisons are to prior quarter unless otherwise noted.     2 Comparisons are to prior year unless otherwise noted.

Stacy Kymes, President and CEO, stated, “I am very proud of the BOKF team and the exceptional results we’ve reported this year. We have a talented team with an award-winning culture that focuses on driving long-term success for our organization. It is good to see the investments we are making to grow Core C&I loans are paying off with 8.1 percent year over year growth. Net interest income has expanded every quarter throughout 2024. We’ve done this while capital and asset quality are historically strong. Once again, our diverse business model coupled with our extraordinary team, has shown BOKF is built to perform through diverse business cycles." Net interest income was $313.0 million for the fourth quarter of 2024, an increase of $4.9 million over the prior quarter.

Net interest margin expanded to 2.75% from 2.68%, primarily attributable to liabilities re-pricing lower more quickly than assets during the quarter. For the fourth quarter of 2024, our core net interest margin excluding trading activities, a non-GAAP measure, expanded 7 basis points to 3.09% compared to 3.02% in the prior quarter.

Average earning assets decreased $536 million. Average loan balances decreased $280 million, largely due to decreases in commercial loans and commercial real estate loan balances. Average trading securities decreased $165 million. Average interest-bearing deposits increased $954 million, primarily from interest-bearing transaction accounts. Funds purchased and repurchase agreements increased $60 million, while average other borrowings decreased $1.9 billion.

The yield on average earning assets was 5.59%, a 30 basis point decrease from the prior quarter, in response to the rate cuts by the Federal Reserve. The loan portfolio yield decreased 46 basis points to 7.01%, while the yield on the available for sale securities portfolio increased 6 basis points to 3.82% due to repricing at higher rates. The yield on trading securities decreased 46 basis points to 4.90% and the yield on interest-bearing cash and cash equivalents decreased 73 basis points to 4.60%.

Funding costs were 3.69%, down 42 basis points. The cost of interest-bearing deposits decreased 31 basis points to 3.48%. The cost of funds purchased and repurchase agreements decreased 11 basis points to 3.78%, while the cost of other borrowings decreased 60 basis points to 4.95%. The benefit to net interest margin from assets funded by non-interest liabilities was 85 basis points, a decrease of 5 basis points.

Fees and commissions revenue totaled $206.9 million for the fourth quarter of 2024, an increase of $4.4 million over the prior quarter.

Brokerage and trading revenue increased $5.1 million to $55.5 million. Trading revenue increased $9.4 million to $33.1 million, driven by growth in U.S. agency residential mortgage-backed securities trading volumes and increased industry turnover as client demand returned to more normal levels following rate cuts in the prior quarter. Investment banking revenue decreased $4.1 million following an elevated quarter, primarily due to timing and volume of transactions.

Fiduciary and asset management revenue increased $3.2 million led by growth in trust fees related to increased market valuations and continued growth in client relationships.

Other revenue decreased $2.4 million to $15.0 million following seasonal highs in letter of credit fees in the third quarter.

Other gains, net, were $5.0 million for the fourth quarter of 2024, compared to $13.1 million in the third quarter of 2024. The prior quarter included a pre-tax gain of $3.1 million related to the sale of converted Visa shares. Unrealized gain on merchant banking investments was $2.2 million and gain on investments related to deferred compensation was $2.5 million for the fourth quarter of 2024, compared to $5.0 million and $3.8 million, respectively, in the prior quarter.

Total operating expense was $347.7 million for the fourth quarter of 2024, an increase of $6.6 million compared to the third quarter of 2024.

Personnel expense was $210.7 million, an increase of $3.9 million. Cash-based incentive compensation expense increased $6.1 million, primarily driven by increased trading activity. Deferred compensation expense decreased $1.5 million to $2.4 million; however, this was largely offset by a decrease in the value of related investments included in Other gains, net.

Non-personnel expense was $137.0 million, an increase of $2.8 million. Professional fees and services expenses increased $1.8 million due to ongoing technology project related expenses. Business promotion expense grew $1.7 million, primarily due to increased travel costs. Mortgage banking costs increased $1.6 million. Other expense decreased by $2.9 million due to lower operational losses.

Outstanding loans were $24.1 billion at December 31, 2024, an increase of $130 million over September 30, 2024, largely due to growth in commercial loans and loans to individuals, partially offset by a decrease in commercial real estate loans. Unfunded loan commitments increased $180 million compared to the third quarter of 2024.

Outstanding commercial loan balances, which includes healthcare, services, energy, and general business loans, increased $152 million compared to the prior quarter.

General business loans increased $136 million to $4.2 billion, or 17% of total loans. General business loans include $2.6 billion of wholesale/retail loans and $1.6 billion of loans from other commercial industries.

Energy loan balances increased $128 million to $3.3 billion, or 13% 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 December 31, 2024, a $103 million decrease compared to September 30, 2024.

Services sector loan balances increased $70 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.

Healthcare sector loan balances decreased $182 million, totaling $4.0 billion, or 16% of total loans. Our healthcare sector loans primarily consist of $3.2 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 $130 million to $5.1 billion, representing 21% of total loans. Loans secured by industrial facilities decreased $143 million to $1.1 billion, and loans secured by office facilities decreased $60 million to $756 million. Loans secured by retail facilities decreased $36 million to $486 million, and other real estate loans decreased $23 million to $343 million. The decreases in these portfolios were partially offset by a $128 million increase in loans secured by multifamily properties to $2.2 billion. Unfunded commercial real estate loan commitments were $1.9 billion at December 31, 2024, a $206 million increase over September 30, 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 $108 million to $4.0 billion and represent 17% of total loans. Residential mortgage loans increased $76 million while personal loans increased $32 million.

Our funding sources, which primarily include deposits and wholesale borrowings, provide adequate liquidity to meet our needs. The loan to deposit ratio was 63% at December 31, 2024, compared to 64% at September 30, 2024, providing significant on-balance sheet liquidity to meet future loan demand and contractual obligations.

Period end deposits totaled $38.2 billion at December 31, 2024, a $964 million increase. Interest-bearing transaction account balances increased $1.1 billion while demand deposits increased $112 million. Time deposits decreased $303 million.

Average deposits were $37.8 billion at December 31, 2024, a $1.1 billion increase. Average interest-bearing transaction account balances increased $1.0 billion, and average demand deposit account balances increased $105 million. Average time deposits decreased $49 million.

Average Commercial Banking deposits grew by $811 million over the prior quarter to $17.9 billion, or 47% 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 9% of our total deposits. Wealth Management deposits increased by $145 million to $10.0 billion, or 26% of total deposits. Consumer Banking deposits increased $61 million to $8.2 billion, or 22% of total deposits.

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

The company's common equity Tier 1 capital ratio was 13.03% at December 31, 2024. In addition, the company's Tier 1 capital ratio was 13.04%, total capital ratio was 14.21%, and leverage ratio was 9.97% at December 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 December 31, 2024. At September 30, 2024, the company's common equity Tier 1 capital ratio was 12.73%, Tier 1 capital ratio was 12.74%, total capital ratio was 13.91%, and leverage ratio was 9.67%.

The company's tangible common equity ratio, a non-GAAP measure, was 9.17% at December 31, 2024, and 9.22% at September 30, 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 8.86%.

No shares were repurchased during the fourth quarter of 2024. We view share buybacks opportunistically, but within the context of maintaining our strong capital position.

Nonperforming assets were at a historic low, totaling $49 million, or 0.20% of outstanding loans and repossessed assets, at December 31, 2024, compared to $87 million, or 0.36%, at September 30, 2024. Excluding loans guaranteed by U.S. government agencies, nonperforming assets totaled $42 million, or 0.18% of outstanding loans and repossessed assets, at December 31, 2024, compared to $80 million, or 0.34%, at September 30, 2024.

Nonaccruing loans decreased $38 million compared to September 30, 2024. New nonaccruing loans identified in the fourth quarter totaled $5.6 million, offset by $41 million in payments received and $1.3 million in charge-offs. Nonaccruing energy loans decreased $29 million and nonaccruing general business loans decreased $5.2 million.

Net charge-offs remained muted at $528 thousand, or 0.01% of average loans on an annualized basis, in the fourth quarter. Net recoveries were $54 thousand, or less than 0.01% of average loans on an annualized basis, in the third quarter of 2024.

No provision for expected credit losses was necessary for the fourth quarter of 2024. The provision for credit losses was $2.0 million in the third quarter of 2024.

At December 31, 2024, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $332 million, or 1.38% of outstanding loans and 831% of nonaccruing loans, excluding residential mortgage loans guaranteed by U.S. government agencies. At September 30, 2024, the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $332 million, or 1.39% of outstanding loans and 427% of nonaccruing loans.

The fair value of the available for sale securities portfolio totaled $12.9 billion at December 31, 2024, a $164 million decrease compared to September 30, 2024. At December 31, 2024, the available for sale securities portfolio consisted primarily of $8.6 billion of residential mortgage-backed securities fully backed by U.S. government agencies and $3.2 billion of commercial mortgage-backed securities fully backed by U.S. government agencies. At December 31, 2024, the available for sale securities portfolio had a net unrealized loss of $537 million, compared to $307 million at September 30, 2024.

We hold an inventory of trading securities in support of sales to a variety of customers. At December 31, 2024, the trading securities portfolio totaled $4.9 billion, compared to $5.1 billion at September 30, 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 $1.3 million to $17.9 million at December 31, 2024.

Derivative contracts are carried at fair value. At December 31, 2024, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under our customer derivative programs totaled $242 million, compared to $415 million at September 30, 2024. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $205 million at December 31, 2024, and $393 million at September 30, 2024.

The net cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $2.2 million during the fourth quarter of 2024, including a $22.5 million decrease in the fair value of securities and derivative contracts held as an economic hedge, a $20.5 million increase in the fair value of mortgage servicing rights, and $79 thousand of related net interest expense.

Commercial Banking contributed $160.4 million to net income before taxes in the fourth quarter of 2024, a decrease of $12.3 million compared to the third quarter of 2024. Combined net interest income and fee revenue decreased $7.2 million due to a decline in loan balances, along with reduced loan fees and loan spreads. Net loans recovered decreased $1.2 million to $115 thousand in the fourth quarter of 2024. Personnel expense increased $1.4 million due to increased incentive compensation costs during the quarter, and non-personnel expense increased $1.0 million due to ongoing project costs. Other gains, net, declined $1.9 million related to decreased gains on merchant banking investments. Average loans decreased $344 million, or 2%, to $20.0 billion. Average deposits grew $811 million, or 5%, to $17.9 billion.

Consumer Banking contributed $23.6 million to net income before taxes in the fourth quarter of 2024, a decrease of $1.2 million compared to the prior quarter. Combined net interest income and fee revenue was consistent with the prior quarter. Other operating expenses increased $2.1 million, primarily due to higher mortgage costs. Average loans increased $89 million, or 4%, to $2.1 billion. Average deposits increased $61 million, or 1%, to $8.2 billion.

Wealth Management contributed $48.9 million to net income before taxes in the fourth quarter of 2024, an increase of $10.1 million over the third quarter of 2024. Combined net interest income and fee revenue increased $10.8 million. Total revenue from institutional trading activities increased $10.8 million, primarily driven by growth in U.S. agency residential mortgage-backed securities trading volumes and increased industry turnover as client demand returned to more normal levels following rate cuts in the prior quarter. Fiduciary and asset management revenue increased $3.2 million led by growth in trust fees, while investment banking revenue decreased $5.6 million following an elevated quarter and other revenue decreased $1.7 million. Other operating expense increased $1.7 million, largely due to growth in sales-based incentive compensation expense driven by increased trading activity, partially offset by lower operational losses. Average loans were consistent with the previous quarter at $2.2 billion. Average deposits increased $145 million, or 1%, to $10.0 billion. Assets under management or administration were $114.6 billion, an increase of $3.9 billion, or 4%.

The company will hold a conference call at noon Central time on Tuesday, January 21, 2025, 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: 6617678. A webcast replay will also be available shortly after the conclusion of the live call at bokf.com or by dialing 1-800-770-2030 and referencing replay PIN: 6617678.

BOK Financial Corporation is a $50 billion regional financial services company headquartered in Tulsa, Oklahoma with $115 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 December 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 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.

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.