BOK FINANCIAL CORP

Previous wording

BOK Financial reported net income of $119.8 million, or $1.86 per diluted share, for the first quarter of 2025 compared to $136.2 million, or $2.12 per diluted share, for the fourth quarter of 2024. PPNR 1, a non-GAAP measure, was $154.8 million for the first quarter of 2025, compared to $175.4 million in the fourth quarter of 2024.

Current wording

BOK Financial reported net income of $140.0 million, or $2.19 per diluted share, for the second quarter of 2025 compared to $119.8 million, or $1.86 per diluted share, for the first quarter of 2025. PPNR 1, a non-GAAP measure, was $180.7 million for the second quarter of 2025, compared to $154.8 million in the first quarter of 2025.

Previous wording

Highlights of the first quarter of 2025 compared to the fourth quarter of 2024 included:

Current wording

Highlights of the second quarter of 2025 compared to the first quarter of 2025 included:

Previous wording

•Net interest income totaled $316.3 million, an increase of $3.2 million over the prior quarter. Net interest margin expanded to 2.78% for the first quarter of 2025, compared to 2.75% for the prior quarter, primarily due to liabilities re-pricing lower more quickly than assets during the quarter. For the first quarter of 2025, our core net interest margin excluding trading activities 1, a non-GAAP measure, was 3.05% compared to 3.09% in the prior quarter.

Current wording

•Net interest income totaled $328.2 million, an increase of $11.9 million over the prior quarter. Net interest margin expanded to 2.80% for the second quarter of 2025, compared to 2.78% for the prior quarter. For the second quarter of 2025, our core net interest margin excluding trading activities 1, a non-GAAP measure, was 3.12% compared to 3.05% in the prior quarter.

Previous wording

•No provision for expected credit losses was necessary for the first quarter of 2025. A worse economic outlook compared to the prior quarter was offset by decreased loan balances and further improvements in portfolio credit quality during the quarter. Net charge-offs were $1.1 million, or 0.02% of average loans on an annualized basis, in the first quarter. The resulting combined allowance for credit losses totaled $331 million, or 1.40% of outstanding loans, at March 31, 2025. The combined allowance for credit losses was $332 million, or 1.38% of outstanding loans, at December 31, 2024.

Current wording

•No provision for expected credit losses was necessary for the second quarter of 2025, primarily due to further improvements in portfolio credit quality offset by the impact of loan growth during the quarter. Net charge-offs in the second quarter remained historically low at $561 thousand, or less than 0.01% of average loans on an annualized basis. The resulting combined allowance for credit losses totaled $330 million, or 1.36% of outstanding loans, at June 30, 2025. The combined allowance for credit losses was $331 million, or 1.40% of outstanding loans, at March 31, 2025.

Previous wording

•Nonperforming assets not guaranteed by U.S. government agencies were $79 million, a $36 million increase compared to December 31, 2024. Potential problem loans decreased by $23 million while other loans especially mentioned decreased by $83 million compared to December 31, 2024.

Current wording

•Nonperforming assets not guaranteed by U.S. government agencies were $74 million, a $4.4 million decrease compared to March 31, 2025. Potential problem loans decreased by $10 million while other loans especially mentioned increased by $22 million compared to March 31, 2025.

Previous wording

•Period end deposits were $38.3 billion at March 31, 2025, growing $90 million over December 31, 2024. Average deposits increased $540 million, including a $762 million increase in average interest-bearing deposits, partially offset by a $222 million reduction in demand deposit balances. The loan to deposit ratio was 62% at March 31, 2025, compared to 63% at December 31, 2024.

Current wording

•Period end deposits were relatively unchanged at $38.2 billion at June 30, 2025. Average deposits decreased $222 million, including a $198 million reduction in demand deposit balances and a $25 million decrease in average interest-bearing deposits. The loan to deposit ratio was 64% at June 30, 2025, compared to 62% at March 31, 2025.

Previous wording

•The Company's tangible common equity ratio 1, a non-GAAP measure, was 9.48% at March 31, 2025, and 9.17% at December 31, 2024. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on AFS securities. Adjusted for all securities portfolio losses, including the tax adjusted losses in the investment portfolio, the tangible common equity ratio 1 would be 9.23% at March 31, 2025, and 8.86% at December 31, 2024.

Current wording

•The Company's tangible common equity ratio 1, a non-GAAP measure, was 9.63% at June 30, 2025, and 9.48% at March 31, 2025. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on AFS securities. Adjusted for all securities portfolio losses, including the tax adjusted losses in the investment portfolio, the tangible common equity ratio 1 would be 9.40% at June 30, 2025, and 9.23% at March 31, 2025.

Previous wording

•The common equity Tier 1 capital ratio at March 31, 2025, was 13.31%. Other regulatory capital ratios include the Tier 1 capital ratio at 13.31%, total capital ratio at 14.54%, and leverage ratio at 10.02%. At December 31, 2024, the common equity Tier 1 capital ratio was 13.03%, the Tier 1 capital ratio was 13.04%, the total capital ratio was 14.21%, and the leverage ratio was 9.97%.

Current wording

•The common equity Tier 1 capital ratio at June 30, 2025, was 13.59%. Other regulatory capital ratios include the Tier 1 capital ratio at 13.60%, total capital ratio at 14.48%, and leverage ratio at 9.88%. At March 31, 2025, the common equity Tier 1 capital ratio was 13.31%, the Tier 1 capital ratio was 13.31%, the total capital ratio was 14.54%, and the leverage ratio was 10.02%.

Previous wording

•The Company paid a regular cash dividend of $36.5 million, or $0.57 per common share, during the first quarter of 2025. On April 29, 2025, the board of directors approved a quarterly cash dividend of $0.57 per common share payable on or about May 28, 2025, to shareholders of record as of May 15, 2025.

Current wording

•The Company paid a regular cash dividend of $36.3 million, or $0.57 per common share, during the second quarter of 2025. On July 29, 2025, the board of directors approved a quarterly cash dividend of $0.57 per common share payable on or about August 27, 2025, to shareholders of record as of August 13, 2025.

Previous wording

•Net interest income totaled $316.3 million for the three months ended March 31, 2025, and $293.6 million for the three months ended March 31, 2024. Net interest income increased $16.5 million from changes in interest rates and increased $6.6 million from changes in earning assets. Net interest margin was 2.78% compared to 2.61% reflecting the funding shift from wholesale borrowings to interest-bearing deposits, along with improving yields on the AFS securities portfolio. The AFS securities portfolio yield increased 34 basis points and loan yields decreased 69 basis points, while funding costs decreased 66 basis points. Average earning assets increased $759 million to $45.6 billion, driven largely by higher average trading securities and AFS securities balances, along with growth in loan balances. Total interest-bearing deposits increased $3.8 billion, partially offset by a decrease of $475 million in demand deposit balances. Other borrowed funds decreased $2.5 billion.

Current wording

•Net interest income totaled $644.4 million for the six months ended June 30, 2025, and $589.6 million for the six months ended June 30, 2024. Net interest income increased $41.6 million from changes in interest rates and increased $14.1 million from changes in earning assets. Net interest margin was 2.79% compared to 2.59% reflecting the funding shift from wholesale borrowings to interest-bearing deposits, along with improving yields on the AFS securities portfolio. The AFS securities portfolio yield increased 26 basis points while loan yields decreased 69 basis points. Funding costs decreased 71 basis points. Average earning assets increased $866 million to $46.3 billion, driven largely by higher average trading securities and AFS securities balances. Total interest-bearing deposits increased $3.4 billion, partially offset by a decrease of $452 million in demand deposit balances. Other borrowed funds decreased $2.4 billion.

Previous wording

•Fees and commissions revenue totaled $184.1 million for the three months ended March 31, 2025, a $16.4 million decrease compared to the three months ended March 31, 2024. Brokerage and trading revenue decreased $28.1 million, largely due to lower trading volumes and compressed trading margins. Fiduciary and asset management revenue increased $5.7 million led by growth in trust fees related to higher market valuations and continued growth in client relationships. Other revenue increased $2.0 million, primarily related to higher fees earned on derivative counterparty margin. Deposit service charges increased $1.6 million due to growth in commercial service charges and transaction card revenue grew $1.6 million, primarily due to an increase in the volume of transactions processed during the quarter.

Current wording

•Fees and commissions revenue totaled $381.4 million for the six months ended June 30, 2025, a $19.1 million decrease compared to the six months ended June 30, 2024. Brokerage and trading revenue decreased $43.0 million, largely due to a shift in fee revenue to interest income combined with lower trading volumes and compressed trading margins. Fiduciary and asset management revenue increased $12.1 million led by growth in trust fees related to higher market valuations and continued growth in client relationships. Transaction card revenue increased $3.9 million led by growth in the volume of transactions processed. Other revenue increased $3.3 million, primarily related to higher fees earned on derivative counterparty margin and deposit service charges increased $3.3 million due to growth in commercial service charges.

Previous wording

•Other gains (losses), net, were a net loss of $725 thousand for the three months ended March 31, 2025, compared to a net gain of $4.3 million for the three months ended March 31, 2024. Unrealized gains on merchant banking investments was $678 thousand and losses on investments related to deferred compensation were $1.1 million for the three months ended March 31, 2025, compared to a net loss on merchant banking investments of $918 thousand and a gain of $4.4 million on investments related to deferred compensation for the three months ended March 31, 2024. The first quarter of 2024 also included a loss of $45.2 million on the repositioning of the AFS securities portfolio.

Current wording

•Other gains (losses), net, were a net gain of $7.4 million for the six months ended June 30, 2025, compared to a net gain of $61.6 million for the six months ended June 30, 2024. The six months ended June 30, 2024 included a $53.8 million pre-tax gain on the conversion of our Visa B shares. Gain on merchant banking investments was $5.9 million and gains on investments related to deferred compensation were $2.3 million for the six months ended June 30, 2025. The six months ended June 30, 2024, included net gains on merchant banking investments of $1.3 million and a gain of $5.7 million on investments related to deferred compensation. The six months ended June 30, 2024 also included a loss of $45.1 million on the repositioning of the AFS securities portfolio.

Previous wording

•Total operating expense was $347.5 million for the three months ended March 31, 2025, an increase of $7.1 million over the three months ended March 31, 2024. Personnel expense increased $11.5 million. Regular compensation increased $6.4 million, largely related to annual merit increases, salary adjustments, and business expansion. Employee benefits expense increased $5.1 million related to higher employee healthcare costs and an increase in payroll taxes. Non-personnel expense decreased $4.4 million to $133.3 million. FDIC insurance special assessment costs were $523 thousand for the three months ended March 31, 2025, compared to $6.5 million for the three months ended March 31, 2024, while other expense decreased $3.7 million due to lower operational losses. These decreases were partially offset by increases in net occupancy and equipment expense, data processing expense, and mortgage banking costs.

Current wording

•Total operating expense was $702.0 million for the six months ended June 30, 2025, an increase of $25.0 million compared to the six months ended June 30, 2024. Personnel expense increased $35.2 million. Regular compensation increased $15.9 million, largely related to annual merit increases, salary adjustments, and business expansion. Incentive compensation expense was up $10.1 million, primarily due to cash-based incentive compensation costs. Employee benefits expense increased $9.2 million related to higher employee healthcare costs and an increase in payroll taxes. Non-personnel expense decreased $10.2 million to $273.1 million. The six months ended June 30, 2024 included charitable contributions to the BOKF Foundation of $13.6 million and FDIC insurance special assessment costs of $7.6 million. These decreases in expense were partially offset by increases in data processing expense, net occupancy and equipment expense, and professional fees and services expense.

Previous wording

•No provision for expected credit losses was necessary for the three months ended March 31, 2025. An $8.0 million provision for expected credit losses was recorded for the three months ended March 31, 2024.

Current wording

•No provision for expected credit losses was necessary for the six months ended June 30, 2025. A $16.0 million provision for expected credit losses was recorded for the six months ended June 30, 2024.

Previous wording

Tax-equivalent net interest income totaled $318.8 million for the first quarter of 2025, compared to $315.5 million for the prior quarter. Net interest income increased $6.8 million from changes in interest rates and decreased $3.6 million from changes in earning assets. Table 1 shows the effect on net interest income from changes in average balances and interest rates for various types of earning assets and interest-bearing liabilities.

Current wording

Tax-equivalent net interest income totaled $330.7 million for the second quarter of 2025, up from $318.8 million in the prior quarter. Net interest income increased $7.9 million from changes in interest rates and increased $4.0 million from changes in earning assets. Table 1 shows the effect on net interest income from changes in average balances and interest rates for various types of earning assets and interest-bearing liabilities.

Previous wording

Average earning assets increased $231 million over the fourth quarter of 2024. The average balance of trading securities increased $245 million. Average loan balances increased $44 million due to growth in commercial real estate loans and loans to individuals, largely offset by a decrease in commercial loan balances.

Current wording

Average earning assets increased $1.4 billion over the first quarter of 2025. The average balance of trading securities increased $995 million, while average AFS securities grew by $256 million. Average loan balances increased $108 million due to growth in commercial real estate loans and loans to individuals, largely offset by a decrease in commercial loan balances. Average fair value options securities increased $71 million and restricted equity securities increased $42 million.

Previous wording

Total average deposits increased $540 million over the fourth quarter of 2024, including a $762 million increase in interest-bearing deposits, partially offset by a $222 million decrease in demand deposits. Funds purchased and repurchase agreements decreased $141 million while other borrowings increased $137 million.

Current wording

Total average deposits decreased $222 million compared to the first quarter of 2025, including a $198 million decrease in demand deposits and a $25 million decrease in interest-bearing deposits. Average funds purchased and repurchase agreements decreased $154 million, while average other borrowings increased $1.4 billion.

Previous wording

Net interest margin was 2.78% compared to 2.75% in the fourth quarter of 2024, primarily due to liabilities re-pricing lower more quickly than assets during the quarter. For the first quarter of 2025, our core net interest margin excluding trading activities 1, a non-GAAP measure, was 3.05% compared to 3.09% in the prior quarter. The tax-equivalent yield on earning assets was 5.45%, a decrease of 14 basis points. Loan yields decreased 30 basis points to 6.71% as the majority of our portfolio is floating rate and realized a full quarter impact of the fed funds rate cuts in the latter half of 2024. The yield on trading securities was up 17 basis points to 5.07%.

Current wording

Net interest margin was 2.80% compared to 2.78% in the first quarter of 2025. For the second quarter of 2025, our core net interest margin excluding trading activities 1, a non-GAAP measure, was 3.12% compared to 3.05% in the prior quarter. The tax-equivalent yield on earning assets was 5.47%, an increase of 2 basis points. The yield on the AFS securities portfolio increased 7 basis points to 3.89%. Loan yields were unchanged at 6.71%. The yield on trading securities decreased 2 basis points to 5.05%. The yield on fair value option securities increased 218 basis points to 5.90% and the yield on restricted equity securities expanded 22 basis points to 7.73%.

Previous wording

Funding costs were 3.42%, a 27 basis point decrease compared to the prior quarter. The cost of interest-bearing deposits decreased 24 basis points to 3.24%. The cost of funds purchased and repurchase agreements decreased 73 basis points to 3.05% while the cost of other borrowings decreased 38 basis points to 4.57%. The benefit to net interest margin from assets funded by non-interest liabilities was 75 basis points, a decrease of 10 basis points.

Current wording

Funding costs were 3.40%, a 2 basis point decrease compared to the prior quarter. The cost of interest-bearing deposits decreased 7 basis points to 3.17%. The cost of funds purchased and repurchase agreements increased 45 basis points to 3.50% while the cost of other borrowings decreased 8 basis points to 4.49%. The cost of subordinated debentures was down 6 basis points to 6.38%. All outstanding subordinated debentures were called during the second quarter. The benefit to net interest margin from assets funded by non-interest liabilities was 73 basis points, a decrease of 2 basis points.

Previous wording

Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 37% of combined net interest income before provision for credit losses and fees and commissions revenue for the first quarter of 2025. 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 the 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.

Current wording

Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 38% of combined net interest income before provision for credit losses and fees and commissions revenue for the second quarter of 2025. 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 the 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, decreased $24.4 million compared to the fourth quarter of 2024.

Current wording

Brokerage and trading revenue, which includes revenues from trading, customer hedging, retail brokerage, and investment banking, increased $7.1 million compared to the first quarter of 2025.

Previous wording

Trading revenue includes net realized and unrealized gains and losses primarily related to 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 $8.1 million, a $25.0 million decrease compared to the prior quarter, driven by lower trading volumes and compressed spreads for U.S. agency residential mortgage-backed securities, as demand slowed due to market volatility from major geopolitical risks. We also experienced seasonally weaker municipal pipelines during the first quarter of 2025.

Current wording

Trading revenue includes net realized and unrealized gains and losses primarily related to 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 $14.4 million, a $6.3 million increase compared to the prior quarter, driven by steady customer demand and higher mortgage origination volumes from seasonal production. Interest rate levels and curve steepness can result in a shift from trading revenue to net interest income from trading securities. See further discussion on a total revenue basis in the Wealth Management discussion in Management's Discussion and Analysis - Segment Reporting following.

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 Risk Management Programs in Note 3 of the Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange, and equity derivatives to our customers. Customer hedging revenue totaled $8.4 million for the first quarter of 2025, an increase of $1.2 million, 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.

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 Risk Management Programs in Note 3 of the Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange, and equity derivatives to our customers. Customer hedging revenue totaled $7.5 million for the second quarter of 2025, a decrease of $879 thousand compared to the prior quarter, 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 $9.6 million, a decrease of $638 thousand compared to the prior quarter, 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 $11.1 million, an increase of $1.5 million over the prior quarter, largely related to the timing and volume of completed loan syndication transactions.

Previous wording

Transaction card revenue includes revenues from processing transactions on behalf of members of our TransFund electronic fund transfer network, merchant services fees paid by customers for account management and electronic processing of card transactions, and interchange fees from our corporate card program. Transaction card revenue totaled $27.1 million for the first quarter of 2025, a $539 thousand decrease, led by seasonally lower transaction volumes processed during the quarter.

Current wording

Transaction card revenue includes revenues from processing transactions on behalf of members of our TransFund electronic fund transfer network, merchant services fees paid by customers for account management and electronic processing of card transactions, and interchange fees from our corporate card program. Transaction card revenue totaled $29.6 million for the second quarter of 2025, a $2.5 million increase, primarily due to growth in transaction volumes processed during the quarter.

Previous wording

Fiduciary and asset management revenue is earned through managing or holding of assets for customers and executing transactions or providing related services. Fiduciary and asset management revenue is largely based on the fair value of assets. Rates applied to asset values vary based on the nature of the relationship. Fiduciary relationships and managed asset relationships generally have higher fee rates than non-fiduciary and/or managed relationships. Fiduciary and asset management revenue was $61.0 million for the first quarter of 2025, consistent with the fourth quarter of 2024.

Current wording

Fiduciary and asset management revenue is earned through managing or holding of assets for customers and executing transactions or providing related services. Fiduciary and asset management revenue is largely based on the fair value of assets. Rates applied to asset values vary based on the nature of the relationship. Fiduciary relationships and managed asset relationships generally have higher fee rates than non-fiduciary and/or non-managed relationships. Fiduciary and asset management revenue was $64.0 million for the second quarter of 2025, an increase of $3.0 million over the first quarter of 2025, led by higher seasonal tax preparation fee income.

Previous wording

1 Assets under management or administration balance excludes certain assets under custody held by a sub-custodian where minimal revenue is recognized. $14 billion, $21 billion, and $20 billion of such assets are excluded from assets under management or administration at March 31, 2025, December 31, 2024, and March 31, 2024, 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. $22 billion, $20 billion, and $21 billion of such assets are excluded from assets under management or administration at June 30, 2025, March 31, 2025, and June 30, 2024, respectively.

Previous wording

3 Annualized revenue divided by period end balance.

Current wording

3 Annualized revenue divided by period end asset balance.

Previous wording

A summary of changes in assets under management or administration for the three months ended March 31, 2025, and 2024 follows:

Current wording

A summary of changes in assets under management or administration for the three and six months ended June 30, 2025, and 2024 follows:

Previous wording

Assets under management as of March 31, 2025, consist of 43% fixed income, 34% equities, 15% cash, and 8% alternative investments.

Current wording

Assets under management as of June 30, 2025, consist of 42% fixed income, 36% equities, 14% cash, and 8% alternative investments.

Previous wording

Mortgage banking revenue increased $1.7 million over the fourth quarter of 2024, led by higher production as client demand begins to grow and inventory constraints start to ease. Mortgage production volume increased $8.9 million to $184 million. Production revenue as a percentage of production volume, which includes unrealized gains and losses on our mortgage commitment pipeline and related hedges, increased 70 basis points to 1.43%.

Current wording

Mortgage banking revenue was relatively unchanged from the first quarter of 2025. Mortgage production volume increased $39.6 million to $223 million. Production revenue as a percentage of production volume, which includes unrealized gains and losses on our mortgage commitment pipeline and related hedges, was 0.76% for the second quarter of 2025, compared to 1.43% for the first quarter of 2025.

Previous wording

Other operating expense for the first quarter of 2025 totaled $347.5 million, consistent with the fourth quarter of 2024. Our efficiency ratio 1 was 68.31% for the first quarter of 2025, compared to 65.61% in the prior quarter.

Current wording

Other operating expense for the second quarter of 2025 totaled $354.5 million, an increase of $7.0 million over the first quarter of 2025. Our efficiency ratio 1 was 65.42% for the second quarter of 2025, compared to 68.31% in the prior quarter.

Previous wording

Personnel expense increased $3.5 million compared to the fourth quarter of 2024. Employee benefits expense increased $7.7 million, primarily due to a seasonal increase in payroll taxes. Regular compensation costs grew $3.2 million due to standard annual merit increases effective for most employees in March. Cash-based incentive compensation decreased $4.6 million, primarily driven by reduced trading activity. Deferred compensation, which is offset by changes in the fair value of deferred compensation investments included in Other gains (losses), net, decreased $3.2 million, directly related to market movements.

Current wording

Personnel expense was $214.7 million, consistent with the first quarter of 2025. Employee benefits expense decreased $3.1 million, primarily due to a seasonal decrease in payroll taxes. Cash-based incentive compensation decreased $1.4 million. Regular compensation costs grew $1.2 million reflecting the full quarter impact of standard annual merit increases effective for most employees in March. Deferred compensation, which is offset by changes in the fair value of deferred compensation investments included in Other gains (losses), net, increased $4.0 million.

Previous wording

The effective tax rate was 22.61% for the first quarter of 2025, 22.39% for the fourth quarter of 2024, and 21.70% for the first quarter of 2024. When compared to the first and fourth quarter of 2024, the effective tax rate increased due to higher forecasted and actual pre-tax income.

Current wording

The effective tax rate was 22.51% for the second quarter of 2025, 22.61% for the first quarter of 2025, and 22.41% for the second quarter of 2024. When compared to the first quarter of 2025, the effective tax rate decreased due to a decrease in forecasted pre-tax income. The effective tax rate for the six months ended June 30, 2025 and June 30, 2024 was 22.56% and 22.17%, respectively.

Previous wording

In addition to our reportable segments, we have a Funds Management unit. The primary purpose of this unit is to manage our overall liquidity needs and interest rate risk. Each segment borrows funds from and provides funds to the Funds Management unit as needed to support their operations. Operating results for Funds Management and other include the effect of interest rate risk positions and risk management activities, securities gains and losses including impairment charges, the provision for credit losses in excess of net loans charged off, tax planning strategies, and certain executive compensation costs that are not attributed to the segment. The Funds Management unit also initially recognizes accruals for loss contingencies when losses become probable. Actual losses are recognized by the segment if the accruals are settled.

Current wording

In addition to our reportable segments, we have a Funds Management unit. The primary purpose of this unit is to manage our overall liquidity needs and interest rate risk. Each segment borrows funds from and provides funds to the Funds Management unit as needed to support their operations. Operating results for Funds Management and other include the effect of interest rate risk positions and risk management activities, securities gains and losses including impairment charges, the provision for credit losses in excess of net loans charged off, tax planning strategies, and certain executive compensation costs that are not attributed to the segments. The Funds Management unit also initially recognizes accruals for loss contingencies when losses become probable. Actual losses are recognized by the applicable segment if the accruals are settled.

Previous wording

We allocate resources and evaluate the performance of our reportable segments using net income before taxes, which includes the allocation of cost of funds, capital costs, and certain indirect allocations. Credit costs are attributed to the segments based on net loans charged off or recovered. The difference between credit costs attributed to the segment and the consolidated provision for credit losses is attributed to Funds Management.

Current wording

We allocate resources and evaluate the performance of our reportable segments using net income before taxes, which includes the allocation of cost of funds, capital costs, and certain indirect allocations. Credit costs are attributed to the segments based on net loans charged off or recovered. The difference between credit costs attributed to the segments and the consolidated provision for credit losses is attributed to Funds Management.

Previous wording

Commercial Banking contributed $140.0 million to consolidated net income before taxes in the first quarter of 2025, a decrease of $20.4 million, or 13%, compared to the fourth quarter of 2024.

Current wording

Commercial Banking contributed $141.6 million to consolidated net income before taxes in the second quarter of 2025, an increase of $1.6 million, or 1%, over the first quarter of 2025.

Previous wording

Other operating expense decreased $4.6 million, or 6%, compared to the fourth quarter of 2024. Personnel expense decreased $1.5 million, or 3%, primarily due to lower incentive compensation costs during the quarter, and non-personnel expense decreased $3.1 million, or 10%, largely related to technology project costs.

Current wording

Other operating expense increased $2.9 million, or 4%, compared to the first quarter of 2025. Personnel expense increased $1.5 million, or 3%, primarily attributable to increased incentive compensation and the full quarter impact of annual merit increases that were effective for most employees in March. Non-personnel expense increased $1.4 million, or 5%, largely related to ongoing technology project costs.

Previous wording

Average outstanding loan balances attributed to Commercial Banking were relatively consistent with the prior quarter at $20.0 billion. See the Loans section of Management's Discussion and Analysis of Financial Condition and Results of Operations following for additional discussion of changes in commercial and commercial real estate loans, which are primarily attributed to the Commercial Banking segment.

Current wording

Average outstanding loan balances attributed to Commercial Banking were consistent with the prior quarter at $19.9 billion. See the Loans section of Management's Discussion and Analysis of Financial Condition and Results of Operations following for additional discussion of changes in commercial and commercial real estate loans, which are primarily attributed to the Commercial Banking segment.

Previous wording

Average deposits attributed to Commercial Banking declined by $173 million, or 1%, compared to the fourth quarter of 2024, to $17.8 billion. See Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital for further discussion of changes.

Current wording

Average deposits attributed to Commercial Banking declined by $344 million, or 2%, compared to the first quarter of 2025, to $17.4 billion. See Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital for further discussion of changes.