BOK FINANCIAL CORP
For the period ended Dec 31, 2024. Filed Feb 19, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 19, 2025
BOKF$129.48-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-21.
0000875357-24-000008
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-19.
0000875357-25-000013
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 304 previous paragraphs and 306 current paragraphs.
147 unchanged; 110 reworded; 49 added; 45 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 37 previous and 37 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (49)
Current report
After experiencing continued economic volatility in 2023, the U.S. economy has shown signs of stabilizing in 2024. Due to greater confidence that inflation is moving sustainably toward the Federal Reserve's target, the Federal Funds rate was reduced by 100 basis points over the last four months of 2024. The housing market showed some signs of recovery, with slight increases in sales and inventory. However, the market remained challenged by high mortgage rates and limited housing supply. Consumer spending also continues to remain steady despite the Federal Reserve's effort to decrease spending with higher rates for the majority of the year. Unemployment increased slightly to 4.0% for December 2024. See "Summary of Credit Loss Experience" section of Management's Discussion and Analysis for additional discussion around our economic forecast.
Current report
•Fees and commissions revenue was $810.0 million for 2024, growing $28.9 million over 2023. Fiduciary and asset management revenue increased $23.5 million led by growth in trust fees related to higher market valuations and continued growth in client relationships. Mortgage banking revenue increased $18.4 million due to higher loan origination volumes. Deposit service charges increased $10.2 million due to growth in commercial service charges. Brokerage and trading revenue decreased $22.5 million, largely due to a shift from trading revenue to net interest income on trading securities and decreased customer hedging revenue, primarily attributed to our energy customers. The prior period also included $10.7 million of insurance brokerage revenue recognized prior to the sale of BOKFI. This decrease was partially offset by a $6.1 million increase in investment banking revenue driven by growth in underwriting fees and financial advisory fees.
Current report
•Other gains, net, were $79.7 million for 2024, including a $56.9 million pre-tax gain recognized in connection with the receipt and disposition of Visa C shares received as a result of the Exchange Offer announced by Visa, Inc. in the second quarter of 2024. Other gains, net, for 2023 were $56.8 million. The fourth quarter of 2023 included a pre-tax $31.0 million gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKFI.
Current report
•Losses on available for sale securities totaled $45.8 million for the year ended December 31, 2024, compared to $30.6 million in the prior year, due to the strategic repositioning of our portfolio.
Current report
•Net interest income totaled $313.0 million, an increase of $4.9 million over the prior quarter. Net interest margin expanded 7 basis points to 2.75% compared to 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 1, a non-GAAP measure, expanded 7 basis points to 3.09% compared to 3.02% in the prior quarter.
Current report
•Fees and commissions revenue was $206.9 million, an increase of $4.4 million over the prior quarter. Higher brokerage and trading revenue and fiduciary and asset management revenue was partially offset by a decrease in other revenue.
Current report
•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 third quarter included a $3.1 million pre-tax gain 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.
Current report
•Operating expense increased $6.6 million to $347.7 million. Personnel expense grew $3.9 million due to commissions related to increased trading revenue and business expansion. Non-personnel expense increased $2.8 million due to higher professional fees and services, business promotion expense, and mortgage banking costs.
Current report
2024 Net Interest Income
Current report
Total average deposits increased $3.1 billion over the prior year, including a $5.4 billion increase in interest-bearing deposits, partially offset by a $2.3 billion decrease in average demand deposit balances. Average short-term borrowings decreased $1.1 billion.
Current report
1 Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.
Current report
Tax-equivalent net interest income totaled $315.5 million for the fourth quarter of 2024, an increase of $5.0 million over the third quarter of 2024. Net interest margin expanded 7 basis point to 2.75% for the fourth quarter of 2024, compared to 2.68% for the third quarter of 2024, primarily attributable to liabilities repricing lower more quickly than assets during the quarter. For the fourth quarter of 2024, our core net interest margin excluding trading activities 1, a non-GAAP measure, expanded 7 basis points to 3.09% compared to 3.02% in the prior quarter.
Current report
1 Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued
Current report
1 Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued
Current report
Other operating revenue was $839.6 million for 2024, an increase of $49.7 million, or 6%, compared to 2023.
Current report
The prior year included $10.7 million of insurance brokerage revenue recognized prior to the sale of BOKFI in the fourth quarter of 2023.
Current report
Fiduciary and asset management revenue increased $23.5 million, or 11%, compared to 2023, led by growth in trust fees related to increased market valuations and continued growth in client relationships.
Current report
Other revenue totaled $59.4 million for 2024, a decrease of $2.8 million, or 4%, compared to 2023, led by reduced fees earned on derivative counterparty margin.
Current report
Other gains, net, were $79.7 million for the year ended December 31, 2024, compared to $56.8 million for the year ended December 31, 2023. Included in the 2024 other gains is a $56.9 million pre-tax gain recognized in connection with the receipt and disposition of Visa C shares received as a result of the Exchange Offer announced by Visa, Inc. in the second quarter of 2024. The prior year included a pre-tax $31.0 million gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. Net unrealized gains on merchant banking investment was $8.4 million and gain on investments related to deferred compensation was $12.0 million for 2024, compared to $12.5 million and $8.9 million, respectively, in 2023.
Current report
Other operating revenue was $210.0 million for the fourth quarter of 2024, a $1.9 million, or 1%, increase over the third quarter of 2024.
Current report
Brokerage and trading revenue increased $5.1 million, or 10%, to $55.5 million. Trading revenue grew $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 at the end of the third quarter and through the fourth quarter. Investment banking revenue decreased $4.1 million to $10.3 million following an elevated third quarter, primarily due to timing and volume of transactions.
Current report
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. All other fee businesses performed consistently with the prior quarter.
Current report
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. Net unrealized gains on merchant banking investments were $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.
Current report
Other operating expense for 2024 totaled $1.4 billion, a $32.9 million, or 2%, increase compared to the prior year. Personnel expense increased $44.6 million, or 6%. Non-personnel expense decreased $11.8 million, or 2%. The FDIC updated their estimate of the special assessment during 2024, resulting in $5.5 million of additional net expense, compared to $43.8 million for the initial assessment in the prior year. Our efficiency ratio 1 was 64.32% for 2024, compared to 62.76% in the prior year.
Current report
Non-personnel expense decreased $11.8 million, or 2%, compared to the prior year. Expense related to the FDIC special assessment totaled $5.5 million for 2024, compared to $43.8 million for the prior year. Charitable contributions to the BOKF Foundation increased $10.9 million, largely due to the donation of converted Visa shares to the foundation. Data processing and communications expense increased $5.9 million, or 3%, and net occupancy and equipment expense grew $3.8 million, or 3%, primarily due to ongoing projects. Mortgage banking costs increased $4.1 million, or 13%, primarily due to an increase in prepayments. Other expense increased $3.8 million, or 10%, due to higher operational losses.
Current report
Fourth Quarter 2024 Operating Expense
Current report
Personnel expense was $210.7 million, an increase of $3.9 million, or 2%. Higher sales activity led to a $6.1 million, or 12%, increase in cash based incentive compensation. Regular compensation increased $2.4 million, or 2%, primarily due to compensation related to business expansion and continued investment in our businesses. 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. Share-based compensation was $2.7 million, or 31%, lower than the prior quarter due to a full quarter impact of changes in assumptions made in the prior quarter.
Current report
Non-personnel expense was $137.0 million, an increase of $2.8 million, or 2%. 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 while other expense decreased by $2.9 million due to lower operational losses.
Current report
Reportable Segments
Current report
Non-personnel expense includes other segment items comprised of Business promotion, Charitable contributions to BOKF Foundation, Professional fees and services, Net occupancy and equipment, FDIC and other insurance, Data processing and communications, Printing, postage, and supplies, Amortization of intangible assets, Mortgage banking costs, and other miscellaneous expenses. Corporate allocations include centrally managed operational and administrative expenses that are allocated to segments.
Current report
Table 14 – Net Income Before Taxes by Segment
Current report
Commercial Banking contributed $653.4 million to consolidated net income before taxes in 2024, a decrease of $62.2 million, or 9%, compared to the prior year.
Current report
Net interest income and fee revenue decreased $58.3 million, or 7%, primarily due to a shift in deposit balances from demand to interest-bearing accounts along with decreased spreads from a change in market conditions. Net loans charged off decreased $5.1 million to $8.9 million in 2024.
Current report
Other operating revenue decreased $24.4 million, or 10%. Customer hedging revenue decreased $18.3 million due to a reduction in energy customer hedging. A decrease of $10.0 million in other revenue was completely offset by growth in deposit service charges and fees of $8.2 million and increased transaction card revenue of $2.6 million. Other gains, net, included $5.2 million related to gains on merchant banking investments, compared to a gain of $12.3 million in the prior year.
Current report
Other operating expense decreased $10.4 million, or 3%, compared to 2023. Personnel expense decreased $2.7 million, or 1%, largely driven by lower incentive compensation costs, partially offset by a combination of annual merit increases and salary adjustments. Non-personnel expense decreased $7.7 million, or 6%, driven primarily by reduced operational losses. Corporate allocations decreased $5.0 million, or 7%, compared to the prior year.
Current report
Commercial Banking contributed $160.4 million to consolidated net income before taxes in the fourth quarter of 2024, a decrease of $12.3 million, or 7%, compared to the third quarter of 2024. Net interest income decreased $7.9 million, or 4%, primarily due to lower average loan balances, along with reduced loan fees and loan spreads. Other operating revenue was relatively consistent with the prior quarter. Net loans recovered decreased $1.2 million to $115 thousand in the fourth quarter of 2024. Personnel expense increased $1.4 million, or 3%, due to increased incentive compensation costs during the quarter, and non-personnel expense increased $1.0 million, or 3%, related to ongoing project costs.
Current report
Net interest income from Consumer Banking activities decreased by $7.0 million, or 3%, compared to 2023, largely due to increased customer demand for time deposits and a decrease in deposit spreads from a change in market conditions.
Current report
Other operating expense increased $14.2 million, or 7%, led by higher incentive compensation and regular compensation. Corporate allocations increased $7.2 million, or 15%, compared to the prior year.
Current report
Combined net interest income and fees and commission revenue attributed to the Wealth Management segment totaled $591.9 million for 2024, a decrease of $2.6 million. Total revenue from institutional trading activities was consistent with the prior year.
Current report
Other operating expense increased $26.8 million, or 8%, over the prior year. Personnel expense increased $13.0 million, or 5%, largely due to growth in incentive compensation expense. Non-personnel expense increased $13.8 million, or 14%, primarily due to an increased level of operational losses. FDIC insurance expense increased $2.4 million driven by increased deposits in 2024. Data processing and communications expense increased $1.9 million, or 6%, and net occupancy and equipment expense grew $2.0 million, or 8%, primarily due to ongoing projects. Corporate allocations increased $2.7 million, or 5%, over the prior year.
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Removed paragraphs (45)
Previous report
Economic conditions continued to be volatile in 2023 with inflationary concerns, fluctuating oil prices caused by the Russia-Ukraine conflict and instability in the geopolitical environment. In order to combat rising inflation, the Federal Reserve began increasing the Federal Funds rate in March 2022 and continued to do so through the end of 2023 for a total 525 basis point increase. This has slowed the housing market, but home prices remain elevated. Consumer spending also continues to remain steady despite the Federal Reserve's effort to decrease spending with higher rates. Unemployment remains low, coming in at 3.7% for December 2023. See "Summary of Credit Loss Experience" section of Management's Discussion and Analysis for additional discussion around our economic forecast.
Previous report
•Fees and commissions revenue was $781.1 million for 2023, an increase of $123.9 million compared to 2022 led by a $99.6 million increase in brokerage and trading revenue. Trading revenue in 2022 was negatively affected by disruption in the fixed income markets. Fiduciary and asset management revenue increased $11.0 million with growth in Cavanal Hill fund fees, mutual fund fees, and trust business line fees.
Previous report
•Other gains and losses, net increased $56.7 million. The fourth quarter of 2023 included a pre-tax $31.0 million gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. We also recognized a $17.3 million increase in the value of deferred compensation investments, which are held to offset the cost of various employee benefit programs.
Previous report
•Losses on available for sale securities totaled $30.6 million for the year ended December 31, 2023. We strategically repositioned a small portion of our portfolio throughout the year, mostly in the fourth quarter.
Previous report
•Net interest revenue totaled $296.7 million, a decrease of $4.2 million compared to the prior quarter. Net interest margin was 2.64% compared to 2.69%, primarily due to deposit repricing activity and liability mix-shift. For the fourth quarter of 2023, our core net interest margin excluding trading activities, a non-GAAP measure, was 3.03% compared to 3.14% in the prior quarter.
Previous report
•Fees and commissions revenue was $196.8 million, largely consistent with the prior quarter. Lower brokerage and trading revenue and other revenue was offset by increased transaction card revenue.
Previous report
•Other gains and losses, net increased $39.0 million to $40.5 million. The fourth quarter included a $31.0 million pre-tax gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. The value of our deferred compensation investments also increased $5.9 million versus a decline of $427 thousand in the prior quarter.
Previous report
•Losses on available for sale securities totaled $27.6 million in the fourth quarter. The gain on sale received from the disposition of BOKF Insurance was used to reposition a small portion of our available for sale securities portfolio.
Previous report
•Operating expense increased $59.8 million to $384.1 million. Personnel expense grew $12.2 million with higher regular compensation, incentive compensation, including deferred compensation plans, and employee benefits expense. Non-personnel expense increased $47.5 million including the FDIC special assessment of $43.8 million. Increased professional fees and services, business promotion, and charitable expenses were partially offset by lower occupancy and equipment costs.
Previous report
2023 Net Interest Revenue
Previous report
Total average deposits decreased $4.6 billion compared to the prior year as customers redeploy capital. Lower average demand deposit balances of $4.2 billion and average interest-bearing transaction account balances of $1.3 billion were partially offset by higher average time deposits of $908 million. Average short-term borrowings increased $5.7 billion.
Previous report
Tax-equivalent net interest revenue totaled $298.8 million for the fourth quarter of 2023, a decrease of $4.3 million compared to the third quarter of 2023. Net interest margin was 2.64% for the fourth quarter of 2023 compared to 2.69% for the third quarter of 2023. For the fourth quarter of 2023, our core net interest margin excluding trading activities, a non-GAAP measure, was 3.03% compared to 3.14% in the prior quarter. The Federal Reserve increased the federal funds rate 100 basis points in 2023 following a 425 basis point increase in 2022. While the resulting market interest rates increased net interest margin in the beginning of the rising rate cycle, largely due to our significant percentage of variable-rate commercial loans, deposit and funding repricing outpaced the increase in net interest income in the fourth quarter.
Previous report
Other operating revenue was $789.9 million for 2023, an increase of $146.7 million or 23% compared to 2022.
Previous report
Insurance brokerage fees were $10.7 million for 2023, a decrease of $2.2 million or 17% compared to 2022, reflecting lower revenue trends combined with the sale of this business in the fourth quarter of 2023.
Previous report
Fiduciary and asset management revenue increased $11.0 million or 6% compared to 2022, primarily due to increases in Cavanal Hill fund fees, mutual fund fees, and trust business line fees. During the height of the COVID-19 pandemic, we voluntarily waived certain administration fees on the Cavanal Hill money market funds in order to maintain positive yields on these funds in the low short-term interest rate environment. This practice subsided in 2022 with $3.1 million in fee waivers during 2022.
Previous report
Other revenue totaled $62.1 million for 2023, an increase of $6.5 million or 12% compared to 2022, largely due to increased revenue on bank-owned life insurance and increased margin interest fees.
Previous report
Other gains, net increased $56.7 million compared to 2022. The fourth quarter of 2023 included a pre-tax $31.0 million gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. We also recognized a $17.3 million increase in the value of deferred compensation investments, which are held to offset the cost of various employee benefit programs. The increase was principally due to improvements in the equity markets in 2023.
Previous report
Other operating revenue was $204.9 million for the fourth quarter of 2023, a $6.7 million or 3% increase over the third quarter of 2023.
Previous report
Brokerage and trading revenue decreased $1.4 million to $60.9 million. Investment banking revenue decreased $2.4 million to $11.5 million following a record third quarter from our Public and Corporate Finance group, which underwrites municipal bonds. Trading revenue grew $1.1 million to $35.5 million, largely related to our municipal bond trading activity. Insurance brokerage fees decreased $890 thousand to $1.8 million in conjunction with the sale of this business in the fourth quarter. Transaction card revenue grew $2.5 million to $28.8 million as a result of fourth quarter transaction activity. All other fee businesses performed consistently with the prior quarter.
Previous report
Other gains, net, increased $39.0 million to $40.5 million. The fourth quarter included a $31.0 million pre-tax gain, before related professional fees, on the sale of our insurance brokerage and consulting business, BOKF Insurance. The value of our deferred compensation investments also increased $5.9 million versus a decline of $427 thousand in the prior quarter due to performance of the equity markets in the fourth quarter. We also recognized a $27.6 million loss on the sale of available for sale securities in the fourth quarter. The gain on sale received from the disposition of BOKF Insurance was used to reposition a small portion of our available for sale securities portfolio.
Previous report
Other operating expense for 2023 totaled $1.3 billion, a $168.4 million or 14% increase compared to the prior year. Personnel expense increased $95.7 million or 14%. Excluding the $43.8 million impact from the FDIC special assessment, non-personnel expense increased $28.9 million or 6% over the prior year.
Previous report
Excluding the FDIC special assessment, non-personnel expense was $52.5 million, an increase of $28.9 million or 6% over the prior year.
Previous report
Data processing and communications expense increased $15.5 million or 9%, largely affected by on-going technology project costs. Insurance expense increased $12.8 million or 71% due to higher ongoing assessment costs. On October 18, 2022, the FDIC finalized a rule that increased the initial base deposit insurance assessment rates by 2 basis points beginning with the first quarterly assessment period of 2023. Higher travel and advertising costs driven largely by business expansion led to a $5.4 million or 20% increase in business promotion expense. Occupancy and equipment expense was also up $4.6 million or 4%, primarily driven by the retirement of certain ATMs as we upgrade our network.
Previous report
Mortgage banking costs decreased $5.3 million or 15%, primarily due to a decrease in prepayments.
Previous report
Fourth Quarter 2023 Operating Expenses
Previous report
Personnel expense was $203.0 million, including $5.4 million of deferred compensation expense. Excluding deferred compensation costs, personnel expense increased $6.9 million or 4% over the prior quarter. Regular compensation increased $3.2 million or 3%, primarily due to compensation related to business expansion and transaction related employee costs on the BOKF Insurance sale. Higher sales activity led to a $4.0 million or 8% increase in cash based incentive compensation. Employee benefits expense increased $1.1 million or 5%, primarily due to seasonal employee healthcare costs.
Previous report
Excluding the FDIC special assessment, non-personnel expense was $137.3 million, an increase of $3.8 million or 3%. A $3.1 million or 23% increase in professional fees and services was largely attributable to fees associated with the sale of BOKF Insurance. The fourth quarter of 2023 included a $1.5 million charitable donation to the BOKF Foundation as we continue to focus on the communities we serve. Occupancy and equipment costs decreased $2.2 million driven by the retirement of certain ATMs in the third quarter.
Previous report
Lines of Business
Previous report
As a result of the rising interest rate environment that began in 2022 and continued into 2023, the cost of funds for assets and the credits earned for liabilities have generally increased, impacting the business lines' net interest revenue. During the period ended December 31, 2023, this has resulted in a higher cost of funds for loans and contributed to margin expansion on deposits.
Previous report
Table 14 – Net Income by Line of Business
Previous report
Commercial Banking contributed $664.5 million to consolidated net income in 2023, an increase of $202.9 million or 44% compared to the prior year.
Previous report
Net interest revenue and fee revenue increased $287.9 million or 39%, primarily due to an increase in the spread on deposits combined with loan growth. Net loans charged off decreased $3.8 million to $14.0 million in 2023.
Previous report
Fees and commissions revenue was consistent with the prior year. Growth in other revenue of $6.1 million and transaction card revenue of $2.3 million was completely offset by decreases in underwriting fees and customer hedging revenue.
Previous report
Operating expense increased $23.6 million or 8% over 2022. Personnel expense increased $16.1 million or 9%, reflecting a combination of annual merit increases and salary adjustments, along with increased incentive compensation costs associated with growth in loans. Non-personnel expense increased $7.4 million or 6%, driven primarily by ongoing technology projects, retirement of certain ATMs and increased insurance assessment costs. Corporate expense allocations increased $7.7 million or 11% compared to the prior year due to growth in lending activity.
Previous report
Commercial Banking contributed $159.0 million to consolidated net income in the fourth quarter of 2023, an increase of $1.1 million over the third quarter of 2023. Net interest revenue decreased $3.8 million resulting from a shift in deposit balances from demand to interest-bearing transaction accounts. Fees and commissions revenue increased $3.1 million, primarily driven by growth in transaction card revenue. Net loans charged off decreased $1.9 million to $3.0 million in the fourth quarter of 2023. Personnel expense increased $3.0 million led by increases in cash-based incentive compensation and regular compensation. Non-personnel expense decreased $4.3 million as the prior quarter included the retirement of certain ATMs.
Previous report
Net interest revenue from Consumer Banking activities increased by $291.5 million or 184% compared to 2022, largely due to an increase in the spread on deposits sold to our Funds Management unit.
Previous report
Operating expense increased $2.9 million or 1% led by higher regular compensation. Corporate expense allocations increased $3.6 million or 8% compared to the prior year.
Previous report
Combined net interest revenue and fees and commission revenue attributed to the Wealth Management segment totaled $657.0 million for 2023, an increase of $155.9 million, primarily driven by an increase in the spread on deposits combined with growth in brokerage and trading revenues. The prior year was negatively affected by the disruption in the fixed income markets. Fiduciary and asset management revenue increased $10.8 million led by higher Cavanal Hill fund fees, mutual fund fees, and trust business line fees. Other revenue increased $8.9 million, largely due to higher derivative margin use fees.
Previous report
Operating expense increased $40.2 million or 13% over the prior year. Personnel expense increased $27.9 million or 12% due to a combination of higher trading volumes and business expansion. Non-personnel expense increased $12.2 million or 14% due to increased professional fees and services from the sale of BOKF Insurance combined with higher data processing and communications expense from ongoing technology projects. Corporate expense allocations increased $3.2 million or 6% over the prior year.
Previous report
Wealth Management contributed $62.7 million to net income in the fourth quarter of 2023, an increase of $19.7 million compared to the third quarter of 2023. The fourth quarter included a pre-tax gain of $31.0 million, before related professional fees, on the sale of BOKF Insurance. Combined net interest and fee revenue totaled $161.5 million, an increase of $1.5 million. Total revenue from institutional trading activities increased $4.1 million due to favorable market opportunities, largely related to our municipal bond trading activity. Investment banking revenue decreased $3.3 million following a record third quarter from our Public and Corporate Finance group. Operating expense increased $6.9 million. Personnel expense increased $2.4 million due to increased cash-based incentive compensation driven by growth in trading activities and transaction related employee costs on the BOKF Insurance sale. Non-personnel expense increased $4.5 million with $2.5 million in professional fees directly related to the sale of BOKF Insurance and the remainder primarily resulting from settlement of certain disputed matters.
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Reworded paragraphs (110)
Previous wording
Net income for the year ended December 31, 2023 totaled $530.7 million or $8.02 per diluted share compared with net income of $520.3 million or $7.68 per diluted share for the year ended December 31, 2022. PPNR, a non-GAAP measure, was $728.9 million for 2023 compared to $690.1 million in the prior year. 2023 included a 52 cent per share reduction as a result of the FDIC special assessment.
Current wording
Net income for the year ended December 31, 2024, totaled $523.6 million, or $8.14 per diluted share, compared with net income of $530.7 million, or $8.02 per diluted share, for the year ended December 31, 2023. PPNR 1, a non-GAAP measure, was $684.7 million for 2024, compared to $728.9 million in the prior year.
Previous wording
•Net interest revenue totaled $1.3 billion for 2023, an increase of $60.8 million over the prior year. Net interest margin was 2.93% for 2023 compared to 2.98% for 2022, primarily due to deposit repricing activity and liability mix-shift. Average earning assets were $43.0 billion for 2023, up $2.9 billion compared to 2022, largely due to higher loan balances.
Current wording
•Net interest income totaled $1.2 billion for 2024, a $61.4 million decrease compared to the prior year. Net interest margin was 2.65% for 2024, compared to 2.93% for 2023, primarily due to deposit repricing activity and demand deposit migration into interest-bearing accounts. Average earning assets were $45.5 billion for 2024, up $2.6 billion compared to 2023, largely due to increased trading securities and loan balances, as well as expansion of the available for sale securities portfolio.
Previous wording
•Other operating expense increased $168.4 million to $1.3 billion. Personnel expense grew $95.7 million, reflecting a combination of annual merit increases and salary adjustments, higher sales activity, and business expansion. Non-personnel expense increased $72.7 million including the FDIC special assessment of $43.8 million. Increased data processing and communications, business promotion, ongoing FDIC assessment costs, and occupancy and equipment expenses were partially offset by lower mortgage banking costs.
Current wording
•Other operating expense increased $32.9 million to $1.4 billion. Personnel expense grew $44.6 million, reflecting a combination of annual merit increases, salary adjustments, and business expansion. Non-personnel expense decreased $11.8 million. The current year included $5.5 million related to updates to the special assessment estimate by the FDIC. Non-personnel expense for 2023 included $43.8 million related to the initial estimate of the FDIC special assessment expense. Charitable contributions to the BOKF Foundation increased $10.9 million, largely due to the donation of converted Visa shares to the foundation. Increased data processing and communications, mortgage banking costs, and occupancy and equipment expenses were partially offset by lower intangible asset amortization.
Previous wording
•The net economic cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $18.2 million during 2023 compared to $12.5 million during 2022 due to continued market volatility throughout 2023.
Current wording
•The net economic cost of the changes in the fair value of mortgage servicing rights and related economic hedges was $5.7 million during 2024, compared to $18.2 million during 2023, due to reduced market volatility throughout 2024.
Previous wording
•The provision for credit losses was $46.0 million in 2023, primarily due to loan growth and changes in our economic forecast during the year, including a more challenging commercial real estate environment. Net charge-offs were $18.1 million or 0.08% of average loans on an annualized basis in 2023. We recorded a $30.0 million provision for expected credit losses in 2022. The combined allowance for credit losses totaled $326 million or 1.36% of outstanding loans at December 31, 2023. The combined allowance for credit losses was $297 million or 1.31% of outstanding loans at December 31, 2022.
Current wording
•The provision for credit losses was $18.0 million in 2024. Improvement in the forecasted economic outlook during the year was offset by the impact of loan growth and some risk grade migration. Credit quality remained strong with net charge-offs of $12.9 million or 0.05% of average loans in 2024 compared to $18.1 million or 0.08% of average loans in 2023. We recorded a $46.0 million provision for expected credit losses in 2023. The combined allowance for credit losses totaled $332 million or 1.38% of outstanding loans at December 31, 2024. The combined allowance for credit losses was $326 million or 1.36% of outstanding loans at December 31, 2023.
Previous wording
•Nonperforming assets not guaranteed by U.S. government agencies increased $18 million over December 31, 2022. Potential problem loans increased $65 million and other loans especially mentioned increased $43 million.
Current wording
•Nonperforming assets not guaranteed by U.S. government agencies were at a historic low, totaling $42 million at December 31, 2024, a $96 million decrease compared to December 31, 2023. Potential problem loans increased $164 million and other loans especially mentioned increased $76 million.
Previous wording
•Average outstanding loan balances were $23.1 billion, a $1.8 billion increase, mostly driven by growth in commercial loans and commercial real estate loans secured by multifamily properties. Commercial loans increased $914 million and commercial real estate loans increased $818 million. Period-end outstanding loan balances increased $1.3 billion to $23.9 billion at December 31, 2023.
Current wording
•Average outstanding loan balances were $24.2 billion, growing $1.0 billion over the prior year, mostly driven by growth in commercial loans and loans to individuals. Commercial loans increased $741 million and loans to individuals increased $394 million. Period end outstanding loan balances increased $210 million to $24.1 billion at December 31, 2024.
Previous wording
•Average deposits decreased $4.6 billion to $33.2 billion. Average demand deposits decreased $4.2 billion while average interest-bearing deposits decreased $487 million. Period-end deposits decreased $461 million to $34.0 billion. The loan to deposit ratio was 70% at December 31, 2023 and was 65% at December 31, 2022.
Current wording
•Average deposits increased $3.1 billion to $36.3 billion. Average interest-bearing deposits increased $5.4 billion while average demand deposits decreased $2.3 billion. Period end deposits increased $4.2 billion to $38.2 billion. The loan to deposit ratio was 63% at December 31, 2024, compared to 70% at December 31, 2023.
Previous wording
•Assets under management or administration totaled $104.7 billion at December 31, 2023, increasing $5.0 billion compared to December 31, 2022.
Current wording
•Assets under management or administration totaled $114.6 billion at December 31, 2024, increasing $9.9 billion over December 31, 2023.
Previous wording
•The Company's tangible common equity ratio, a non-GAAP measure, was 8.29% at December 31, 2023 and 7.63% at December 31, 2022. 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 securities portfolio losses, including the tax adjusted losses in the investment portfolio, the tangible common equity ratio would be 8.02% at December 31, 2023 and 7.36% at December 31, 2022.
Current wording
•The Company's tangible common equity ratio 1, a non-GAAP measure, was 9.17% at December 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 securities portfolio losses, including the tax adjusted losses in the investment portfolio, the tangible common equity ratio would be 8.86% at December 31, 2024, and 8.02% at December 31, 2023.
Previous wording
•The Company's common equity Tier 1 capital ratio was 12.06% at December 31, 2023. In addition, the Tier 1 capital ratio was 12.07%, total capital ratio was 13.16% and leverage ratio was 9.45% at December 31, 2023. At December 31, 2022, the Tier 1 capital ratio was 11.71%, the total capital ratio was 12.67% and the leverage ratio was 9.91%.
Current wording
•The Company's common equity Tier 1 capital ratio was 13.03% at December 31, 2024. In addition, the Tier 1 capital ratio was 13.04%, total capital ratio was 14.21% and leverage ratio was 9.97% at December 31, 2024. At December 31, 2023, the Tier 1 capital ratio was 12.07%, the total capital ratio was 13.16% and the leverage ratio was 9.45%.
Previous wording
•The Company repurchased 2,113,808 common shares at an average price of $82.85 per share during 2023 and 1,632,401 common shares at an average price of $94.88 during 2022.
Current wording
•The Company repurchased 1,028,806 common shares at an average price of $86.49 per share during 2024 and 2,113,808 common shares at an average price of $82.85 during 2023.
Previous wording
•The Company paid cash dividends of $2.17 per common share during 2023 and $2.13 per common share in 2022.
Current wording
•The Company paid cash dividends of $2.22 per common share during 2024, and $2.17 per common share in 2023.
Previous wording
Net income for the fourth quarter of 2023 totaled $82.6 million or $1.26 per diluted share, compared to $134.5 million or $2.04 per diluted share for the third quarter of 2023. The fourth quarter included a 52 cent per share reduction as a result of the FDIC special assessment.
Current wording
Net income for the fourth quarter of 2024 totaled $136.2 million, or $2.12 per diluted share, compared to $140.0 million, or $2.18 per diluted share, for the third quarter of 2024.
Previous wording
•The provision for credit losses of $6.0 million in the fourth quarter of 2023 reflects a stable economic forecast and continued loan growth. Net charge-offs were $4.1 million or 0.07% of average loans on an annualized basis in the fourth quarter.
Current wording
•No provision for 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. Net charge-offs remained muted at $528 thousand, or 0.01% of average loans on an annualized basis, in the fourth quarter.
Previous wording
We describe critical elements affecting our estimate of expected credit loss in the "Summary of Credit Loss Experience" section of Management's Discussion and Analysis. While it is challenging to evaluate the allowance impact for a change in a particular input, results of such an analysis demonstrate how the quantitative element of the allowance behaves under different conditions. The sensitivity to management's economic scenario weighting may be quantified by comparing the results of weighting each economic scenario at 100%. For example, compared to a 100% Base Case scenario, a 100% Downside case would result in an additional $172 million in quantitative reserve, while a 100% Upside Case would result in $19 million less in quantitative reserve at December 31, 2023. Such sensitivity calculations do not necessarily reflect the nature and extent of future changes in the related allowance for a number of reasons including (1) management's weighting of multiple forecasted economic scenarios in estimating expected credit losses; (2) management's predictions of future economic trends and relationships among the scenarios may differ from actual events; and (3) management's application of subjective measures to modeled results when appropriate.
Current wording
We describe critical elements affecting our estimate of expected credit loss in the "Summary of Credit Loss Experience" section of Management's Discussion and Analysis. While it is challenging to evaluate the allowance impact for a change in a particular input, results of such an analysis demonstrate how the quantitative element of the allowance behaves under different conditions. The sensitivity to management's economic scenario weighting may be quantified by comparing the results of weighting each economic scenario at 100%. For example, compared to a 100% Base Case scenario, a 100% Downside case would result in an additional $192 million in quantitative reserve, while a 100% Upside Case would result in $24 million less in quantitative reserve at December 31, 2024. Such sensitivity calculations do not necessarily reflect the nature and extent of future changes in the related allowance for a number of reasons including (1) management's weighting of multiple forecasted economic scenarios in estimating expected credit losses; (2) management's predictions of future economic trends and relationships among the scenarios may differ from actual events; and (3) management's application of subjective measures to modeled results when appropriate.
Previous wording
The assumptions used in this model are primarily based on mortgage interest rates. Evaluation of the effect of a change in one assumption without considering the effect of that change on other assumptions is not meaningful. Considering all related assumptions, we expect a 50 basis point parallel rate shock to increase the fair value of our servicing rights by $8.0 million. We expect a $9.9 million decrease in the fair value of our MSRs from a 50 basis point parallel rate shock.
Current wording
The assumptions used in this model are primarily based on mortgage interest rates. Evaluation of the effect of a change in one assumption without considering the effect of that change on other assumptions is not meaningful. Considering all related assumptions, we expect a 50 basis point parallel rate increase to increase the fair value of our servicing rights by $9.7 million. We expect a $12.0 million decrease in the fair value of our MSRs from a 50 basis point parallel rate decrease.
Previous wording
Net Interest Revenue and Net Interest Margin
Current wording
Net Interest Income and Net Interest Margin
Previous wording
Net interest revenue is the interest earned on debt securities, loans and other interest-earning assets less interest paid for interest-bearing deposits and other borrowings. The net interest margin is calculated by dividing tax-equivalent net interest revenue by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. Net interest margin is typically greater than net interest spread due to interest income earned on assets funded by non-interest bearing liabilities such as demand deposits and equity.
Current wording
Net interest income is the interest earned on debt securities, loans, and other interest-earning assets less interest paid for interest-bearing deposits and other borrowings. The net interest margin is calculated by dividing tax-equivalent net interest income by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. Net interest margin is typically greater than net interest spread due to interest income earned on assets funded by non-interest bearing liabilities such as demand deposits and equity.
Previous wording
Tax-equivalent net interest revenue totaled $1.3 billion for 2023, an increase of $61.1 million over the prior year. Net interest revenue increased $139.6 million due to changes in interest rates and decreased $78.5 million from increased average borrowing levels partially offset by growth in earning assets. Table 3 shows the effects on net interest revenue due to changes in average balances and interest rates for the various types of earning assets and interest-bearing liabilities. In addition, see the Annual Financial Summary of consolidated daily average balances, yields and rates as shown in Table 2.
Current wording
Tax-equivalent net interest income totaled $1.2 billion for 2024, a decrease of $61.1 million compared to the prior year. Net interest income was reduced $58.0 million due to changes in interest rates. Net interest income decreased $3.1 million from growth in average assets and interest-bearing deposit balances, partially offset by lower wholesale borrowings. Table 3 shows the effects on net interest income due to changes in average balances and interest rates for the various types of earning assets and interest-bearing liabilities. In addition, see the Annual Financial Summary of consolidated daily average balances, yields and rates as shown in Table 2.
Previous wording
Net interest margin was 2.93% for 2023 and 2.98% for 2022. Our core net interest margin excluding trading activities, a non-GAAP measure, was 3.31% compared to 3.26% in the prior year. In response to rising inflation, the Federal Reserve increased the federal funds rate 525 basis points since the beginning of 2022. The resulting impact on market interest rates increased net interest margin at first as our earning assets, led by our significant percentage of variable-rate commercial loans, repriced at a higher rate and faster pace than our interest-bearing liabilities. Throughout 2023, we have experienced margin compression reflecting deposit repricing activity. The tax-equivalent yield on earning assets was 5.38% for 2023 compared to 3.42% in 2022. Loan yields increased 246 basis points to 7.08%. The available for sale securities portfolio yield increased 99 basis points to 3.06%. The yield on trading securities grew 250 basis points to 4.74% and the yield on interest-bearing cash and cash equivalents increased 368 basis points to 5.12%.
Current wording
Net interest margin was 2.65% for 2024 and 2.93% for 2023. Our core net interest margin excluding trading activities 1, a non-GAAP measure, was 3.01% compared to 3.31% in the prior year. In response to rising inflation, the Federal Reserve increased the federal funds rate 525 basis points during 2022 and 2023. The resulting impact on market interest rates increased net interest margin at first as our earning assets, led by our significant percentage of variable-rate commercial loans, repriced at a higher rate and faster pace than our interest-bearing liabilities. Throughout 2023 and 2024, we have experienced margin compression reflecting deposit repricing activity and demand deposit migration into interest-bearing accounts. This compression began to slow in September 2024, following a series of rate cuts totaling 100 basis points through the end of the year. The tax-equivalent yield on earning assets was 5.75% for 2024, compared to 5.38% in 2023. Loan yields increased 24 basis points to 7.32%. The available for sale securities portfolio yield increased 63 basis points to 3.69%, and the yield on trading securities grew 37 basis points to 5.11%.
Previous wording
Funding costs increased 273 basis points compared to 2022. The cost of interest-bearing deposits increased 226 basis points. The cost of other short-term borrowings increased 322 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 98 basis points for 2023, up from 26 basis points for 2022.
Current wording
Funding costs increased 58 basis points compared to 2023. The cost of interest-bearing deposits increased 89 basis points. The cost of other short-term borrowings increased 17 basis points while the cost of funds purchased and repurchase agreements decreased 45 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 91 basis points for 2024, compared to 98 basis points for 2023.
Previous wording
Average earning assets for 2023 increased $2.9 billion or 7% compared 2022. Average loans, net of allowance for loan losses, increased $1.8 billion, largely due to growth in commercial and commercial real estate loans. The average balance of investment securities increased $875 million while the average balance of available for sale securities, which consists largely of residential and commercial mortgage-backed securities guaranteed by U.S. government agencies, increased $298 million. In the second quarter 2022, we transferred $2.4 billion of U.S. government agency mortgage-backed securities from available for sale to the investment securities portfolio to limit the effect of future rate increases on the tangible common equity ratio. Average interest-bearing cash and cash equivalents decreased $169 million and average trading securities balances decreased $164 million.
Current wording
Average earning assets for 2024 increased $2.6 billion, or 6%, over 2023. Average trading securities increased $1.1 billion. Average loans, net of allowance for loan losses, increased $1.0 billion, largely due to growth in commercial loans and loans to individuals. The average balance of available for sale securities, which consists largely of residential and commercial mortgage-backed securities guaranteed by U.S. government agencies, increased $860 million.
Previous wording
Our overall objective is to manage the Company's balance sheet for changes in interest rates as described in the Market Risk section of this report. Approximately 81% of our commercial and commercial real estate loan portfolios are either variable rate loans or fixed rate loans that will reprice within one year. These loans are funded primarily by deposit accounts that are either non-interest bearing or that reprice more slowly than the loans. The result is a balance sheet that would be asset-sensitive which means that assets generally reprice more quickly than liabilities. One of the strategies that we use to manage toward a relative rate-neutral position is to purchase fixed rate residential mortgage-backed securities issued primarily by U.S. government agencies and fund them with market rate sensitive liabilities. The liability-sensitive nature of this strategy provides an offset to the asset-sensitive characteristics of our loan portfolio. We also may use derivative instruments to manage our interest rate risk.
Current wording
Our overall objective is to manage the Company's balance sheet for changes in interest rates as described in the Market Risk section of this report. Approximately 82% of our commercial and commercial real estate loan portfolios are either variable rate loans or fixed rate loans that will reprice within one year. These loans are funded primarily by deposit accounts that are either non-interest bearing or that reprice more slowly than the loans. The result is a balance sheet that would be asset-sensitive which means that assets generally reprice more quickly than liabilities. One of the strategies that we use to manage toward a relative rate-neutral position is to purchase fixed rate residential mortgage-backed securities issued primarily by U.S. government agencies and fund them with market rate sensitive liabilities. The liability-sensitive nature of this strategy provides an offset to the asset-sensitive characteristics of our loan portfolio. We also may use derivative instruments to manage our interest rate risk.
Previous wording
The effectiveness of these strategies is reflected in the overall change in net interest revenue due to changes in interest rates as shown in Table 3 and in the interest rate sensitivity projections as shown in the Market Risk section of this report.
Current wording
The effectiveness of these strategies is reflected in the overall change in net interest income due to changes in interest rates as shown in Table 3 and in the interest rate sensitivity projections as shown in the Market Risk section of this report.
Previous wording
Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.
Current wording
1 Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued.
Previous wording
Fourth Quarter 2023 Net Interest Revenue
Current wording
Fourth Quarter 2024 Net Interest Income
Previous wording
Average earning assets for the fourth quarter of 2023 increased $315 million over the third quarter of 2023. Average loans, net of allowance for loan losses, increased $284 million, largely due to growth in commercial and commercial real estate loans. Available for sale securities increased $138 million while investment securities decreased $67 million. Average interest-bearing deposits increased $1.2 billion as deposits continue to shift from demand to interest-bearing. Funds purchased and repurchase agreements declined $222 million while average other borrowings increased $153 million.
Current wording
Average earning assets for the fourth quarter of 2024 decreased $536 million compared to the third quarter of 2024. Average loans, net of allowance for loan losses, decreased $277 million, largely due to reduced commercial 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 grew $60 million, while average other borrowings decreased $1.9 billion.
Previous wording
The tax-equivalent yield on earning assets was 5.64% for the fourth quarter of 2023, an increase of 15 basis points compared to the third quarter of 2023. Loan yields increased 11 basis points to 7.36% while the yield on available for sale securities increased 16 basis points to 3.27%. The yield on trading securities was up 29 basis points to 5.05%.
Current wording
The tax-equivalent yield on earning assets was 5.59% for the fourth quarter of 2024, a decrease of 30 basis points compared to the third quarter of 2024, in response to the rate cuts made by the Federal Reserve. The loan portfolio yield decreased 46 basis points to 7.01%, while the yield on available for sale securities 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%.
Previous wording
Funding costs were 3.98%, an increase of 17 basis points compared to the third quarter of 2023. The cost of interest-bearing deposits increased 26 basis points to 3.43% while the cost of other short-term borrowings increased 6 basis points to 5.35%. The cost of other borrowings was up 7 basis points to 5.55%. The cost of funds purchased and repurchase agreements decreased 2 basis points to 4.79%. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 98 basis points in the fourth quarter of 2023 and 101 basis points in the third quarter of 2023.
Current wording
Funding costs were 3.69%, a decrease of 42 basis points compared to the third quarter of 2024. 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 earning assets funded by non-interest bearing liabilities was 85 basis points in the fourth quarter of 2024 and 90 basis points in the third quarter of 2024.
Previous wording
Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 38% of combined net interest revenue before provision for credit losses and fees and commission revenue. We believe that a variety of fee revenue sources provides diversification to changes resulting from market or economic conditions such as interest rates, values in the equity markets, commodity prices and consumer spending, all of which can be volatile. Many of these economic factors, such as decreasing interest rates, that we expect will result in a decline in net interest revenue or fiduciary and asset management revenue may also increase mortgage banking production volumes and related trading. The velocity of changes in market conditions and interest rates may result in timing differences between when offsetting impacts and benefits are realized. Generally, for operating revenues not as directly related to movement in interest rates, we expect growth to come through offering new products and services and by further development of our presence in other markets. However, current and future economic conditions, regulatory constraints, increased competition and saturation in our existing markets could affect the rate of future increases.
Current wording
Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 40% of combined net interest income before provision for credit losses and fees and commission revenue. We believe that a variety of fee revenue sources provides diversification to changes resulting from market or economic conditions such as interest rates, values in the equity markets, commodity prices and consumer spending, all of which can be volatile. Many of these economic factors, such as decreasing interest rates, that we expect will result in a decline in net interest income or fiduciary and asset management revenue may also increase mortgage banking production volumes and related trading. The velocity of changes in market conditions and interest rates may result in timing differences between when offsetting impacts and benefits are realized. Generally, for operating revenues not as directly related to movement in interest rates, we expect growth to come through offering new products and services and by further development of our presence in other markets. However, current and future economic conditions, regulatory constraints, increased competition, and saturation in our existing markets could affect the rate of future increases.
Previous wording
Brokerage and trading revenue, which includes revenues from trading, customer hedging, retail brokerage and investment banking, increased $99.6 million or 71% over the prior year.
Current wording
Brokerage and trading revenue, which includes revenues from trading, customer hedging, retail brokerage and investment banking, decreased $22.5 million, or 9%, compared to the prior year.
Previous wording
Trading revenue includes net realized and unrealized gains and losses primarily related to sales of residential mortgage-backed securities guaranteed by U.S. government agencies and related derivative instruments that enable our mortgage banking customers to manage their production risk. Trading revenue also includes net realized and unrealized gains and losses on municipal securities and other financial instruments that we sell to institutional customers, along with changes in the fair value of financial instruments we hold as economic hedges against market risk of our trading securities. Trading revenue was $134.5 million for 2023, an increase of $114.2 million compared to 2022. Trading revenue was negatively affected by the disruption of the fixed income markets early in 2022. See additional discussion in "Lines of Business" section of Management's Discussion and Analysis.
Current wording
Trading revenue includes net realized and unrealized gains and losses primarily related to sales of residential mortgage-backed securities guaranteed by U.S. government agencies and related derivative instruments that enable our mortgage banking customers to manage their production risk. Trading revenue also includes net realized and unrealized gains and losses on municipal securities and other financial instruments that we sell to institutional customers, along with changes in the fair value of financial instruments we hold as economic hedges against market risk of our trading securities. Trading revenue was $121.9 million for 2024, a decrease of $12.7 million compared to 2023, primarily due to a shift from fee revenue to net interest income on trading securities. See additional discussion in "Reportable Segments" section of Management's Discussion and Analysis.
Previous wording
Customer hedging revenue is based primarily on realized and unrealized changes in the fair value of derivative contracts held for customer risk management programs. As more fully discussed under Customer Derivative Programs in Note 6 to the Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange and equity derivatives to our customers. Derivative contracts executed with customers are offset with contracts between selected counterparties and exchanges to minimize market risk from changes in commodity prices, interest rates or foreign exchange rates. Customer hedging revenue, which is largely volume driven, totaled $36.5 million for 2023, a decrease of $9.2 million or 20% compared to 2022 and was primarily attributed to our energy and interest rate derivative customers. Customer hedging revenue includes credit valuation adjustments of the fair value of derivatives to reflect the risk of counterparty default.
Current wording
Customer hedging revenue is based primarily on realized and unrealized changes in the fair value of derivative contracts held for customer risk management programs. As more fully discussed under Customer Derivative Programs in Note 6 to the Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange, and equity derivatives to our customers. Derivative contracts executed with customers are offset with contracts between selected counterparties and exchanges to minimize market risk from changes in commodity prices, interest rates, or foreign exchange rates. Customer hedging revenue, which is largely volume driven, totaled $27.7 million for 2024, a decrease of $8.8 million, or 24%, compared to 2023, and was primarily attributed to our energy derivative customers. Customer hedging revenue includes credit valuation adjustments of the fair value of derivatives to reflect the risk of counterparty default.
Previous wording
Investment banking, which includes fees earned upon completion of underwriting, financial advisory services and loan syndication fees, totaled $43.0 million for 2023, a decrease of $2.7 million or 6% compared to 2022, largely related to the timing and volume of transactions.
Current wording
Investment banking, which includes fees earned upon completion of underwriting, financial advisory services and loan syndication fees, totaled $49.1 million for 2024, an increase of $6.1 million, or 14%, over 2023, largely related to the timing and volume of transactions.
Previous wording
Revenue earned from retail brokerage transactions totaled $15.9 million for 2023, consistent with prior year. Retail brokerage revenue is primarily based on fees and commissions earned on sales of fixed income securities, annuities, mutual funds and other financial instruments to retail customers. Revenue is primarily based on the volume of customer transactions and applicable commission rate for each type of product.
Current wording
Revenue earned from retail brokerage transactions totaled $19.4 million for 2024, an increase of $3.5 million, or 22%, over 2023. Retail brokerage revenue is primarily based on fees and commissions earned on sales of fixed income securities, annuities, mutual funds, and other financial instruments to retail customers. Revenue is primarily based on the volume of customer transactions and applicable commission rate for each type of product.
Previous wording
Transaction card revenue depends largely on the volume and amount of transactions processed, the number of TransFund ATM locations and the number of merchants served. Transaction card revenue totaled $106.9 million for 2023, a $2.6 million or 2% increase over 2022. Revenues from the processing of transactions on behalf of the members of our TransFund EFT network totaled $89.5 million, up $4.9 million or 6% over 2022. The number of TransFund ATM locations totaled 2,713 at December 31, 2023 compared to 2,774 at December 31, 2022. Merchant services fees paid by customers for account management and electronic processing of card transactions totaled $9.2 million, a decrease of $3.2 million or 26%.
Current wording
Transaction card revenue depends largely on the volume and amount of transactions processed, the number of TransFund ATM locations, and the number of merchants served. Transaction card revenue totaled $108.9 million for 2024, a $2.0 million, or 2%, increase over 2023. Revenues from the processing of transactions on behalf of the members of our TransFund EFT network totaled $91.1 million, up $1.6 million, or 2%, over 2023. The number of TransFund ATM locations totaled 2,872 at December 31, 2024, compared to 2,713 at December 31, 2023. Merchant services fees paid by customers for account management and electronic processing of card transactions totaled $9.4 million, an increase of $197 thousand, or 2%. Corporate card revenue totaled $8.3 million, up $184 thousand, or 2%, over 2023.
Previous wording
1 Assets under management or administration balance excludes certain assets under custody held by a sub-custodian where minimal revenue is recognized. $19 billion, $17 billion and $22 billion of such assets are excluded from the 2023, 2022 and 2021 assets under management or administration balances, respectively.
Current wording
1 Assets under management or administration balance excludes certain assets under custody held by a sub-custodian where minimal revenue is recognized. $21 billion, $19 billion, and $17 billion of such assets are excluded from the 2024, 2023, and 2022 assets under management or administration balances, respectively.
Previous wording
Assets under management as of December 31, 2023 consist of 42% fixed income, 33% equities, 16% cash and 9% alternative investments. Net outflows from assets under management increased during 2023, largely due to larger disbursements related to retirement plans. The increase in fair value of $8.1 billion mainly resulted from improvements in the equity markets in 2023.
Current wording
Assets under management as of December 31, 2024 consist of 42% fixed income, 35% equities, 14% cash, and 9% alternative investments. Net inflows to assets under management increased during 2024, largely due to continued growth in client relationships. The increase in fair value of $7.7 billion mainly resulted from improvements in the equity markets in 2024.
Previous wording
Deposit service charges and fees totaled $108.5 million for 2023, a $2.1 million or 2% decrease compared to 2022. Overdraft fees and non-sufficient fund fees earned primarily on consumer deposit accounts totaled $21.0 million for 2023, a decrease of $4.4 million or 17% compared to 2022. Changes were implemented in the fourth quarter of 2022 to eliminate non-sufficient funds fees and reduce consumer overdraft fees. Service charges earned primarily on commercial deposit accounts totaled $57.7 million, a $1.1 million or 2% increase over the previous year. Automated service charges totaled $6.3 million, a $1.1 million or 20% increase over 2022. Check card revenue totaled $23.5 million, relatively unchanged from 2022.
Current wording
Deposit service charges and fees totaled $118.7 million for 2024, a $10.2 million, or 9%, increase compared to 2023. Service charges earned primarily on commercial deposit accounts totaled $66.3 million, an $8.6 million, or 15%, increase over the previous year. Overdraft fees and non-sufficient fund fees earned primarily on consumer deposit accounts totaled $22.4 million for 2024, an increase of $1.3 million, or 6%, compared to 2023. Check card revenue totaled $23.9 million, relatively unchanged from 2023.
Showing the first 40 of 110 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Yield calculations are shown on a tax equivalent basis at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield/rate calculations are generally based on the conventions that determine how interest income and expense is accrued
Previous report — wording carried elsewhere
The net cost of the change in fair value of mortgage servicing rights and related economic hedges, as more fully presented in Table 10, was $18.2 million for 2023 compared to a net cost of $12.5 million in 2022.