BOKF 10-K & 10-Q changes, risk factors and insider trading

Banking is a competitive business. BOK Financial competes actively for loan, deposit, and other financial services business in the southwest region of the United States. BOK Financial's competitors include a large number of small and large local and national banks, savings and loan associations, credit unions, trust companies, broker-dealersbroker-dealers, and underwriters, as well as many financial and non-financial firms that offer services similar to those of BOK Financial. Large national financial institutions have substantial capital, technology, and marketing resources. Such large financial institutions may have greater access to capital at a lower cost than BOK Financial does, which may adversely affect BOK Financial's ability to compete effectively.

The increasingly competitive environment is in part a result of changes in regulation, changes in technology and product delivery systems, and the accelerating pace of consolidation among financial service providers. Our success depends on our ability to respond to the threats and opportunities of financial technology innovations. Developments in "fintech" and crypto-currenciescryptocurrencies have the potential to disrupt the financial industry and change the way banks do business. Investment in new technology to stay competitive could result in significant costs and increased cybersecurity risk. Our success depends on our ability to adapt to the pace of the rapidly changing technological environment, which is important to retention and acquisition of customers.

Regulatory authorities may change their interpretation of these statutes and regulations, including the OCC, our primary regulator, and the CFPB, our regulator for certain designated consumer laws and regulations. Violations of laws and regulations could limit the growth potential of BOK Financial's businesses. As we growhave grown in asset size to above $50 billion, increases in regulatory expectations and requirements could result in additional compliance and capital costs and regulatory risk.

Political developments, including recent Federal executive and legislative changes, add additional uncertainty to the implementation, scopescope, and timing of changes in the regulatory environment for the banking industry and for the broader economy. WeIt expectis difficult to predict the legislative, executive, and regulatory changes that will result from the current presidentialCongress administrationand willPresidential seekAdministration, which may cause broader economic changes due to implementvarious achanges regulatory reform agenda that is notably different than that of the prior administration, impacting rule-making, supervision, examination, and enforcement priorities ofin the federal bankinggovernment's agencies.approach to regulation and administration. Concern regarding government policies such as federal budgetary matters, including the debt ceiling or prolonged stalemates leading to total or partial governmental shutdowns, may also have adverse economic consequences and create the risk of economic instability or market volatility, with potential negative consequences to our business and financial performance. Additionally, changes in fiscal, monetary, or regulatory policy, including as a result of labor shortages, wage pressures, supply chain disruptions, tariffs, and higher inflation, could increase our compliance costs and adversely affect our business operations and results of operations.

•Significant damages to real properties securing our loans could cause the value of the loan portfolio to contract. Borrowers may be unable to make payments on loansloans, increasing delinquency rates and average loan loss severity.

At December 31, 2024,2025, 13%11% of BOK Financial's total loan portfolio iswas comprised of loans to borrowers in the energy industry. The energy industry is historically cyclical, and prolonged periods of low oil and gas commodity prices could negatively impact borrowers' ability to pay. In addition, the Company does business in several major oil and natural gas producing states including Oklahoma, Texas, and Colorado. The economies of these states could be negatively impacted by prolonged periods of low oil and gas commodity prices resulting in increased credit migration to classified and nonaccruing categories, higher loan loss provisionsprovisions, and risk of credit losses from both energy borrowers and businesses and individuals in those regional economies.

A significant increase in market interest rates, or the perception that an increase may occur, could adversely affect both BOK Financial's ability to originate new loans and BOK Financial's ability to grow. Conversely, a decrease in interest rates could result in acceleration in the payment of loans, including loans underlying BOK Financial's holdings of residential mortgage-backed securities and termination of BOK Financial's mortgage servicing rights.MSR. In addition, changes in market interest rates, changes in the relationships between short-term and long-term market interest ratesrates, or changes in the relationships between different interest rate indices,indices could affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest revenue, which would reduce the Company's net interest income. In a rising interest rate environment, the composition of the deposit portfolio could shiftshift, resulting in a mix that is more sensitive to changes in interest rates than is the current mix. Deposit repricing behavior may also differ from our models or from previous rate increases. An increase in market interest rates also could adversely affect the ability of BOK Financial's floating-rate borrowers to meet their higher payment obligations. If this occurred, it could cause an increase in nonperforming assets and net charge-offscharge-offs, which could adversely affect BOK Financial's business.

Changes in mortgage interest rates could adversely affect mortgage banking operations along withand mortgage servicing rightsrights, as well as BOK Financial's substantial holdings of residential mortgage-backed securities,securities and brokerage and trading revenue.

BOK Financial derives a substantial amount of revenue from mortgage banking activities, the production and sale of mortgage loans, and the servicing of mortgage loans. In addition, as part of BOK Financial's mortgage banking business, BOK Financial has substantial holdings of mortgage servicing rights.MSR. Revenue generated from the production and sale of mortgage loans is affected by mortgage interest rates and government policies related to economic stimulus and home ownership. Falling interest rates tend to increase mortgage lending activities and related revenue while rising interest rates have an opposite effect.

Mortgage servicing revenue is a fee earned over the life of the related loan. However, mortgage servicing rightsMSR are assets that are carried at fair value, which are very sensitive to numerous factors with the primary factor being changes in market interest rates. Falling interest rates tend to increase loan prepayments, which may lead to a decrease in the value of related servicing rights. We attempt to manage this risk by maintaining an active hedging program. The primary objective of the Company's hedging program is to provide an offset to changes in the fair value of these rights due to hedgeable risks, primarily changes in market interest rates. Due to numerous unhedgeable factors, hedging strategies may not offset all changes in the fair value of the asset. Such unhedgeable factors include, but are not limited to, changes in customer prepayment or delinquency behavior that is inconsistent with historical actual performance in a similar market environment; changes in the long-term or short-term primary/secondary mortgage spreads; and changes in survey-driven assumptions such as the cost of servicing and discount rates.

We also hold a substantial portfolio of residential mortgage-backed securities issued by U.S. government agencies. The fair value of residential mortgage-backed securities is highly sensitive to changes in interest rates. A significant decrease in interest rates may lead mortgage holders to refinance the mortgages constituting the pool backing the securitiessecurities, subjecting BOK Financial to a risk of prepayment and decreased return on investment due to subsequent reinvestment at lower interest rates. A significant decrease in interest rates may also accelerate premium amortization. Conversely, a significant increase in interest rates may cause mortgage holders to extend the term over which they repay their loans, which delays the Company's opportunity to reinvest funds at higher rates. We mitigate this risk somewhat by investing principally in shorter duration mortgage productsproducts, which are less sensitive to changes in interest rates; howeverhowever, this strategy may not be successful.

Models may fail to reasonably predict changes in values caused by changes in interest rates, prepayment speedsspeeds, and other relevant stimuli, which could adversely affect our business or results of operations.

We use quantitative models to assist in measuring risk and predicting changes in the value of financial instruments. The outputs of these models are used to determine hedging strategy related to mortgage servicing rights,MSR, mortgage production pipeline, and trading securities. We also use models to estimate the effects of changing interest rates and other market measures in order to adequately structure assets and liabilities to manage interest rate sensitivity. Inaccurate information obtained from these models could result in poor management decisions that lead to an elevated exposure to interest rates which could adversely affect our results of operations.

BOK Financial's subsidiary bank may rely on other financial institutions and the Federal Home Loan Bank of Topeka as a significant source of funds. Our ability to fund loans, manage our interest rate risk, and meet other obligations depends on funds borrowed from these sources. The inability to borrow funds at market interest rates could have a material adverse effect on our operations. In addition, idiosyncratic factors, as well as other factors outside of BOK Financial’s control, such as a general market disruption or an operational problem that affects third parties, could impair the Company’s ability to access short-term funding or create an unforeseen outflow of cash due to, among other factors, draws on unfunded commitments or deposit attrition. Withdrawals of brokered or institutional deposits could require us to pay significantly higher interest rates on our retail deposits or on other wholesale funding sources, which would have an adverse impact on our net interest income and net income. Furthermore, changes to the FHLB’s underwriting guidelines for wholesale borrowings or lending policies may limit or restrict our ability to borrow, and therefore could have a significant adverse impact on our liquidity. In the event of future turmoil in the banking industry or other idiosyncratic events, there is no guarantee that the U.S. government will invoke the systemic risk exception, create additional liquidity programs, or take any other action to stabilize the banking industry or provide liquidity. The Company’s inability to monetize liquid assets or to access short-term funding or capital markets could constrain the Company’s ability to make new loans or meet existing lending commitments and could ultimately jeopardize BOK Financial’s overall liquidity and capitalization.

In addition, recent events impacting the banking industry, including the bank failures in March and April 2023, have resulted in significant disruption and volatility in the capital markets, reduced current valuations of bank securities, and decreased confidence in banks among depositors and other counterparties as well as investors. A decrease in the supply of deposits or significant increase in competition for deposits could result in substantial increases in costs to retain and service deposits. Increased adoption of consumer banking technology can result in reduced deposit stickiness due to the relative ease with which depositors may transfer deposits to a different depository institution in the event that confidence is lost in BOKF, NA. The cost of resolving the recent bank failures has also prompted the FDIC to issue a special assessment to recover costs to the Deposit Insurance Fund. For information on the FDIC’s special assessment, refer to the "Management’s Discussion and Analysis of Financial Condition and Results of Operations."

We are regularly evaluated by ratings agencies. Our credit ratings are based on a number of factors such as the financial strength of BOKFBOK Financial and BOKF, NA and conditions generally affecting the financial services industry. Many qualitative and quantitative factors are used by the ratings agencies including capital adequacy, liquidity, asset quality, business mix, and earnings. These ratings are subject to change at any time and we may not be able to maintain our current credit ratings. Reductions in one or more of our credit ratings could adversely affect our ability to borrow funds andfunds, increase our cost of capitalcapital, and limit the number of investors or counterparties willing to do business with or lend to us. This could also affect our ability to attract or retain customers, including deposits. In addition, if we were downgraded below investment grade, certain counterparty contracts may require renegotiation or require additional posting of collateral.

Cybersecurity risks for financial institutions have increased significantly in recent years in part because of the proliferation of new technologies, the increased use of the internet and mobile technologies to conduct financial transactions, and the increased sophistication and ever changing cyberattack techniques used by organized crime, hackers, terrorists, hostile foreign governments, and other external parties to obtain confidential customer information and misappropriate customer funds, and may disrupt operations through Ransomware.ransomware. Such parties may seek to gain access to our systems directly or use equipment or security passwords belonging to employees, customers, third-party services providers, or other users of our systems. Accordingly, our operational systems and infrastructure must continue to be safeguarded and monitored for potential failures, disruptions, breakdowns, and cyber attacks.cyberattacks.

Our business, financial, accounting, data processing systems, and other operating systems and facilities may stop operating properly or become disabled as a result of a number of factors that may be wholly or partially beyond our control. In addition to cyber attacks,cyberattacks, there could be sudden increases in customer transaction volume, electrical or telecommunications outages, extended disruptions in operations or technology, natural disasters, pandemics, and events arising from political or social matters, including terrorist attacks. Third parties with whom we do business or that facilitate our business activities including exchanges, clearing houses, financial intermediaries, or vendors that provide services or security solutions for our operations, could also be sources of operational or information security risk to the Company including breakdowns or failures of their own systems, capacity constraints, or cyber attacks.cyberattacks.

Cybersecurity risk management programs are expensive to maintain and will not protect the Company from all risks associated with maintaining the security of customer data from external and internal intrusions, disaster recoveryrecovery, and failures in controls used by our vendors. A material breach of customer data security or operational or system failure may negatively impact our business reputation and cause a loss of customers, result in increased expense to contain the event and/or require that we provide credit monitoring services for or reimburse affected customers, result in regulatory fines, penalties or intervention, or result in litigation, all of which could have a materially adverse effect on our results of operations and financial condition.

Although to date we have not experienced any material losses relating to cyber attackscyberattacks or other information security breaches or operational failures, there can be no assurance that we will not suffer such losses in the future. Attempts to compromise our cybersecurity are regular and frequent. Our risk and exposure to these matters remains heightened, and as a resultresult, the continued development and enhancement of our controls, processesprocesses, and practices designed to protect and facilitate the recovery of our systems, computers, software, datadata, and networks from attack, damagedamage, or unauthorized access remains a high priority for us. As an additional layer of protection, we have purchased network and privacy liability risk insurance coverage. Our cybersecurity insurance may not provide sufficient coverage in the event of a breach or may not be available in the future on acceptable terms.

We continue to evaluate and selectively deploy emerging technologies like AI, machine learning, and generative AI for incorporation into our business. AI refers to a broad field of computer science that enables machines to perform tasks that typically require human intelligence, such as reasoning, problem-solving, decision-making, and language understanding. Machine learning is a subset of AI that uses statistical and computational methods to train algorithms so they can automatically learn patterns from data and improve performance without explicit programming. The Board receives periodic updates on our overall governance structure and risk management approach for these technologies, but does not approve individual AI capabilities. Each initiative is subject to a specific internal governance process designed to assess risks related to data quality, bias, regulatory compliance, and ethical considerations. The Company's use of AI and machine learning is subject to risks that algorithms and data sets are flawed or may be insufficient or contain biased information. The legal and regulatory environment relating to these emerging technologies is uncertain and rapidly evolving and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of these technologies. These evolving laws and regulations could require changes in our implementation of these emerging technologies and increase our compliance costs and the risk of non-compliance. These same risks apply to our use of third-party service providers who are implementing these tools into the products or services they provide to us.

EconomicGlobal economic conditions globally could impact BOK Financial’s customers and counterparties with which we do business. Global health pandemics, such as the COVID-19 pandemic, may affect economies around the world. TheGeopolitical Russia-Ukraine conflicttensions and Israel-Hamas conflict resultedconflicts in volatilevarious regions have historically contributed to volatility in oil prices in 2023, which have stabilized somewhat in 2024,prices, as well as affected other global economic factors. Recent developments in Iran and Venezuela highlight the susceptibility of global oil markets to geopolitical shocks. Continuation of these, and any other geopolitical conflicts that might arise, could negatively affect our financial results.

The Company, its customers and counterparties may also be adversely affected by global events, such as natural disasters, and other external events beyond our control, including public health issues, terrorist attacks, and acts of war. These global events may significantly affect long-term and short-term interest rates, energy prices, the value of financial assets, and ultimately economic activity in our primary markets. The adverse effect of these events on the Company may include narrowing of the spread between interest income and interest expense, a reduction in fee income, an increase in credit losses, and a decrease in demand for loans and other products and services.

Our business, financial condition, liquidityliquidity, and results of operations could be adversely affected by a health pandemic or other health crisis.

After experiencing continued economic volatility in 2023,Reflecting the U.S.Federal economyReserve's has shown signs of stabilizing in 2024. Due to greatercautious confidence that inflation is moving sustainably towardmoderating, the Federalfederal Reserve's target, the Federal Fundsfunds rate was reduced by 10075 basis points over the last four months of 2024.2025 to balance between inflation progress and emerging labor-market risks. The housing market showed some signs of recovery, with slight increases in sales and inventory. However,Homeownership affordability is being significantly impacted by the marketcombination remainedof challenged by highhigher mortgage interest rates and limitedelevated housinghome supply.prices, which has greatly affected first-time homebuyers. Consumer spending also continues to remain steadystable despitebut theconstrained, Federalsupported Reserve'sby effortcontinued todemand decreasefor essential services while discretionary spending withsoftened higheramid rateselevated forprices theand majorityincreased ofbudget the year.sensitivity. Unemployment increased slightly to 4.0%4.4% for December 2024.2025. See "Summary of Credit Loss Experience" section of Management's Discussion and Analysis for additional discussion around our economic forecast.

•Net interest income totaled $1.2$1.3 billion for 2024,2025, a $61.4$116.6 million decreaseincrease compared toover the prior year. Net interest margin was 2.87% for 2025, compared to 2.65% for 2024, comparedreflecting the funding shift from wholesale borrowings to 2.93% for 2023, primarily due to deposit repricing activity and demand deposit migration into interest-bearing accounts.deposits, along with improving yields on the AFS securities portfolio. Average earning assets were $45.5$46.4 billion for 2024,2025, up $2.6$866 billionmillion comparedover to 2023,2024, largely due to increased trading securities and loan balances, as well as expansion of the available for saleAFS securities portfolio.portfolio and growth in loan portfolio balances.

•Other gains, net, were $79.7$43.8 million for 2024,2025, including a $23.5 million pre-tax gain on the sale of a merchant banking investment. Other gains, net, for 2024 were $79.7 million, which included 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.

•LossesGains on available for saleAFS securities totaled $45.8$2.0 million for the year ended December 31, 2024,2025, compared to $30.6a loss of $45.8 million in the prior year,year dueresulting tofrom the strategic repositioning of our portfolio.

•Other operating expense increased $32.9$67.1 million to $1.4 billion. Personnel expense grew $44.6$66.7 million, reflecting a combination of annual merit increases, salary adjustments, and business expansion. Non-personnel expense decreasedwas $11.8consistent million.with the prior year. The current year included $5.5a benefit of $10.7 million relatedfrom toFDIC updates to the special assessment estimateestimate, byalong thewith FDIC.other Non-personnel expense for 2023 included $43.8 million relatedadjustments to the initialspecial estimateassessment, ofcompared to a $5.5 million expense in the FDICprior specialyear. assessmentThe expense.prior Charitableyear included $13.6 million in charitable contributions to the BOKF Foundation increased $10.9 million,Foundation, largely duedriven toby the $10.0 million donation of converted Visa shares to the foundation. IncreasedThese decreases in expense for 2025 were largely offset by higher costs for data processing and communications, mortgageprofessional banking costs,fees and services, business promotion, and net occupancy and equipment expenses were partially offset by lower intangible asset amortization.equipment.

•The net economic costbenefit of the changes in the fair value of mortgage servicing rightsMSR and related economic hedges was $1.1 million during 2025, compared to a net economic cost of $5.7 million during 2024, compared to $18.2 million during 2023, due to reduced market volatility throughout 2024.2025.

•The provision for credit losses was $18.0$2.0 million in 2024.2025. ImprovementThe impact of loan growth was partially offset by an improvement in credit quality and the forecasted economic outlook during the year was offset by the impact of loan growth and some risk grade migration.year. Credit quality remained strong with net charge-offs of $6.7 million, or 0.03% of average loans in 2025, compared to $12.9 millionmillion, or 0.05% of average loans in 2024 compared to $18.1 million or 0.08% of average loans in 2023.2024. We recorded aan $46.0$18.0 million provision for expected credit losses in 2023.2024. The combined allowance for credit losses totaled $327 million or 1.28% of outstanding loans at December 31, 2025. The combined allowance for credit losses was $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.

•Nonperforming assets not guaranteed by U.S. government agencies weretotaled $66 million at December 31, 2025, up from a historic low,low totalingof $42 million at December 31, 2024,2024. aAccruing $96 million decrease compared to December 31, 2023. Potential problemsubstandard loans increaseddecreased $164$71 millionmillion, andwhile other loans especially mentioned increased $76$29 million and nonaccrual loans increased $28 million.

•Average outstanding loan balances were $24.2$24.6 billion, growing $1.0$416 billionmillion over the prior year,year. mostly driven by growth in commercial loans and loans to individuals. Commercial loans increased $741 million andAverage loans to individuals increased $394$468 million and commercial real estate loans grew $366 million, while commercial loans decreased $418 million. Period end outstanding loan balances increased $210$1.5 millionbillion to $24.1$25.7 billion at December 31, 2024.2025.

•Average deposits increased $3.1$2.4 billion to $36.3$38.7 billion. Average interest-bearing deposits increased $5.4$2.8 billionbillion, while average demand deposits decreased $2.3$413 billion.million. Period end deposits increased $4.2$1.2 billion to $38.2$39.4 billion. The loan to deposit ratio was 65% at December 31, 2025, compared to 63% at December 31, 2024, compared to 70% at December 31, 2023.2024.

•Assets under management or administration totaled $114.6$126.6 billion at December 31, 2024,2025, increasing $9.9$12.0 billion over December 31, 2023.2024, primarily driven by improvements in the equity markets and growth in customer relationships during 2025.

•The Company's tangible common equity ratio1, a non-GAAP measure, was 9.46% at December 31, 2025, and 9.17% at December 31, 2024, and 8.29% at December 31, 2023.2024. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on available for saleAFS 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.

•Net interest income totaled $313.0$345.3 million, an increase of $4.9$7.6 million over the prior quarter. Net interest margin expanded 7 basis points to 2.75%2.98% comparedfrom to 2.68%, primarily attributable to liabilities re-pricing lower more quickly than assets during the quarter.2.91%. For the fourth quarter of 2024,2025, our core net interest margin excluding trading activities1, a non-GAAP measure, expandedgrew 76 basis points to 3.09%3.22% compared to 3.02%3.16% in the prior quarter.

•Fees and commissions revenue was $206.9$214.9 million, anup increase$10.4 ofmillion, $4.4led millionby overgrowth the prior quarter. Higherin brokerage and trading revenue andrevenue, fiduciary and asset management revenuerevenue, wasand partiallytransaction offset by a decrease in othercard revenue.

•Other gains, net, were $5.0$28.1 million for the fourth quarter of 2024,2025, compared to $13.1$8.3 million in the third quarter of 2024.2025. The thirdfourth quarter included a $3.1$23.5 million pre-tax gain related toon the sale of converted Visa shares. Unrealized gain ona 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.investment.

•Operating expense increaseddecreased $6.6$8.7 million to $347.7$361.1 million. PersonnelExcluding the FDIC special assessment benefit, personnel expense grewdecreased $3.9$3.6 million due to commissions related to increased trading revenue and business expansion. Non-personnelnon-personnel expense increased $2.8$3.2 million due to higher professional fees and services, business promotion expense, and mortgage banking costs.million.

•No provision for credit losses was necessary for the fourth quarter of 2024.2025. The provision for credit losses was $2.0 million in the third quarter of 2024.2025. Net charge-offs remainedwere muted$1.4 at $528 thousand,million, or 0.01%0.02% of average loans on an annualized basis, in the fourth quarter.

•The forecast for each relevant economic loss driver and the probability weighting of economic scenarios are overseen by a senior management Economic Forecast Committee which includes members independent of the allowance process. These estimates may differ from future economic conditions.

•The Allowance Committee may increase or decrease the allowance to reflect risks not captured in the quantitative component. Examples of circumstances that may result in adjustments include, but are not limited to, new lines of business, market conditions that have not been previously encountered, observed changes in credit risk that are not yet reflected in macroeconomic factors, or economic conditions that impact loss given default assumptions. These estimates may differ from actual credit losses.

We have a significant investment in MSRs.MSR. Our MSRsMSR are primarily retained from sales in the secondary market of residential mortgage loans we have originated or purchased from correspondent lenders. MSRsMSR may be purchased from other lenders. Both originated and purchased MSRsMSR are initially recognized at fair value. We have elected to carry all MSRsMSR at fair value. Changes in fair value are recognized in earnings as they occur.

MSRsMSR are not traded in active markets. The fair value of MSRsthe MSR is determined by discounting the projected cash flows. Certain significant assumptions and estimates used in valuing MSRsMSR are based on current market sources including projected prepayment speeds, assumed servicing costs, earnings on escrow deposits, ancillary income and discount rates. Assumptions used to value our MSRsMSR are considered significant unobservable inputs and represent our best estimate of assumptions that market participants would use to value this asset. A separate third-party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults, and other relevant factors. The prepayment model is updated periodically for changes in market conditions and adjusted to better correlate with actual performance of our servicing portfolio. The discount rate is based on benchmark rates for mortgage loans plus a market spread expected by investors in servicing rights. Significant assumptions used to determine the fair value of our MSRsMSR are presented in Note 7 to the Consolidated Financial Statements. At least quarterly,annually, we request estimates of fair value from outside sources to corroborate the results of the valuation model.

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$14.1 million. We expect a $12.0$17.8 million decrease in the fair value of our MSRsMSR from a 50 basis point parallel rate decrease.

Tax-equivalent net interest income totaled $1.2$1.3 billion for 2024,2025, aan decreaseincrease of $61.1$117.7 million compared toover the prior year. Net interest income wasgrew reduced $58.0$81.5 million due to changes in interest rates. Net interest income decreasedincreased $3.1$36.2 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, average yields and rates as shown in Table 2.

Funding costs increaseddecreased 5871 basis points compared to 2023.2024. The cost of interest-bearing deposits increaseddecreased 8957 basis points. The cost of other short-term borrowings increased 17 basis points while the cost of funds purchased and repurchase agreements decreased 4592 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 72 basis points for 2025, compared to 91 basis points for 2024, compared to 98 basis points for 2023.2024.

Average earning assets for 20242025 increased $2.6$866 billion,million, or 6%,2%, over 2023. Average trading securities increased $1.1 billion.2024. Average loans, net of allowance for loan losses, increased $1.0$421 billion,million, largely due to growth in commercial loans and loans to individuals.individuals and commercial real estate loans, partially offset by lower average commercial loans. The average balance of available for saleAFS securities, which consists largely of residential and commercial mortgage-backed securities guaranteed by U.S. government agencies, increased $860$484 million. Average trading securities increased $228 million while average investment securities decreased $232 million.

Total average deposits increasedgrew $3.1by $2.4 billion over the prior year, including a $5.4$2.8 billion increase in interest-bearing deposits, partially offset by a $2.3$413 billionmillion decrease in average demand deposit balances. Average short-term borrowings decreased $1.1$1.9 billion.

Tax-equivalent net interest income totaled $315.5$347.8 million for the fourth quarter of 2024,2025, an increase of $5.0$7.6 million over the third quarter of 2024.2025. Net interest margin expanded 7 basis pointpoints to 2.75%2.98% for the fourth quarter of 2024,2025, compared to 2.68%2.91% for the third quarter of 2024, primarily attributable to liabilities repricing lower more quickly than assets during the quarter.2025. For the fourth quarter of 2024,2025, our core net interest margin excluding trading activities1, a non-GAAP measure, expanded 76 basis points to 3.09%3.22% compared to 3.02%3.16% in the prior quarter.

Average earning assets for the fourth quarter of 20242025 decreasedincreased $536$161 million compared to the third quarter of 2024.2025. Average loans, net of allowance for loan losses, decreasedincreased $277$416 million, largelyprimarily due to reducedgrowth in the commercial and commercial real estate loan balances.portfolio. Average AFS securities grew $178 million, while trading securities decreased $165$308 million and restricted equity securities decreased $87 million. Average interest-bearing deposits increased $954$1.4 million,billion, primarily from growth in interest-bearing transaction accounts. FundsAverage purchased and repurchase agreements grew $60 million, while average othershort-term borrowings decreased $1.9$1.7 billion. On November 6, 2025, $400 million of 6.108% fixed rate reset subordinated notes were issued.

The tax-equivalent yield on earning assets was 5.59%5.36% for the fourth quarter of 2024,2025, a decrease of 3017 basis pointspoint decrease compared to the third quarter of 2024,2025. inThe responseyield on the AFS securities portfolio increased 1 basis point to the3.94%, rate cuts made bywhile the Federalyield Reserve.on trading securities decreased 42 basis points to 4.83%. The loan portfolio yield decreased 4622 basis points to 7.01%,6.48%. while theThe yield on availablerestricted for saleequity securities increaseddecreased 662 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%.7.22%.

Funding costs were 3.69%,3.06%, adown decrease of 4227 basis points compared to the third quarter of 2024.points. The cost of interest-bearing deposits decreased 3123 basis points to 3.48%.2.91%. The cost of fundsshort-term purchased and repurchase agreementsborrowings decreased 1134 basis points to 3.78%,4.01%. while theThe cost of othersubordinated borrowingsdebentures decreasedwas 606.12%, basisentirely pointsdriven toby 4.95%.the subordinated debt issuance in the fourth quarter. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 8568 basis pointspoints, ina the fourth quarterdecrease of 2024 and 903 basis points in the third quarter of 2024.points.

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 accruedaccrued.

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 accruedaccrued.

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$59.0 million for 2024,2025, a decrease of $12.7$62.9 million compared to 2023,2024, primarily due to a shift from fee revenue to net interest income on trading securities.securities and compressed trading margins. See additional discussion in "Reportable Segments" section of Management's Discussion and Analysis.

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 DerivativeRisk Management 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$28.3 million for 2024,2025, aan decreaseincrease of $8.8$548 million,thousand, or 24%,2%, comparedover to 2023,2024, and was primarily attributed to our energy derivative customers.customers partially offset by interest rate derivatives. Customer hedging revenue includes credit valuation adjustments of the fair value of derivatives to reflect the risk of counterparty default.

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$117.7 million for 2024,2025, aan $2.0$8.8 million, or 2%,8%, increase over 2023.2024. Revenues from the processing of transactions on behalf of the members of our TransFund EFT network totaled $91.1$97.7 million, up $1.6$6.6 million, or 2%,7%, over 2023.2024. The number of TransFund ATM locations totaled 2,909 at December 31, 2025, compared to 2,872 at December 31, 2024,2024. comparedCorporate tocard 2,713revenue attotaled December$10.2 31,million, 2023.an increase of $1.8 million, or 22%, over 2024. Merchant services fees paid by customers for account management and electronic processing of card transactions totaled $9.4$9.8 million, an increase of $197$403 thousand, or 2%. Corporate card revenue totaled $8.3 million, up $184 thousand, or 2%, over 2023.4%.

Deposit service charges and fees totaled $118.7$125.5 million for 2024,2025, a $10.2$6.8 million, or 9%,6%, increase comparedover to 2023.2024. Service charges earned primarily on commercial deposit accounts totaled $66.3$73.0 million, ana $8.6$6.7 million, or 15%,10%, increase over the previous year. Overdraft fees and non-sufficient fund fees earned primarily on consumer deposit accounts totaled $22.4$22.9 million for 2024,2025, an increase of $1.3$525 million,thousand, or 6%,2%, compared to 2023.2024. Check card revenue totaled $23.9$23.8 million, relativelyconsistent unchangedwith fromthe 2023.prior year.

Mortgage banking revenue totaled $74.1$77.6 million for 2024,2025, ana $18.4$3.5 million, or 33%,5%, increase over 2023.2024. Mortgage servicing revenue was $65.4$68.9 million, a $4.3$3.5 million increase compared to the prior year. The average outstanding principal balance of mortgage loans serviced for others totaled $21.9$22.5 billion at December 31, 2024,2025, a $1.2$533 billionmillion increase compared toover December 31, 2023. During 2024, we acquired $3.2 billion in unpaid principal balance of mortgage servicing rights, which led to higher mortgage servicing revenue.2024. Mortgage production revenue was $8.7 million, increasingconsistent $14.1with million,the largelyprior due to higher mortgage production volume.year. Production volume was up $158$38 millionmillion, andwhile production revenue as a percentage of production volume alsodecreased increased 1895 basis points to 1.07%. Production revenue as a percentage of production volume for 2023 was impacted by qualifying residential mortgage loans guaranteed by U.S. government agencies previously in forbearance that were resold into GNMA pools following the applicable performance period specified by those programs.0.91%. Mortgage refinancing activity was 11%18% of total production in 2024,2025, compared to 9%11% in 2023.2024.

Other revenue totaled $59.4$63.0 million for 2024,2025, aan decreaseincrease of $2.8$3.7 million, or 4%,6%, compared to 2023,2024, led by reducedhigher fees earned on derivative counterparty margin.

Other gains, net, were $43.8 million for the year ended December 31, 2025, compared to $79.7 million for the year ended December 31, 2024,2024. comparedWe recognized a $23.5 million pre-tax gain on the sale of a merchant banking investment during 2025, slightly offset by a loss of $956 thousand realized on the redemption of our subordinated debentures in the second quarter of 2025. Net unrealized gains on merchant banking investments were $11.4 million and gain on investments related to $56.8deferred compensation plans were $10.4 million for the2025. The prior year ended December 31, 2023. Included in the 2024 other gains isincluded 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 investmentinvestments waswere $8.4 million and gain on investments related to deferred compensation wasplans were $12.0 million for 2024, compared to $12.5 million and $8.9 million, respectively, in 2023.2024.

We also recognized a $45.8$2.0 million lossgain on the sale of available for saleAFS securities in 2024,2025, compared to a loss of $30.6$45.8 million in 2023.2024 resulting from the strategic repositioning of our portfolio.

As discussed in the Market Risk section following, the fair value of our MSRsMSR changes in response to changes in primary mortgage loan rates and other assumptions. We attempt to mitigate the earnings volatility caused by changes in the fair value of MSRsMSR by designating certain financial instruments, generally U.S. government agency residential mortgage-backed securities for which we have elected the fair value option, as an economic hedge. Changes in the fair value of these instruments are generally expected to partially offset changes in the fair value of MSRs.MSR.

Brokerage and trading revenue increased $5.1$4.1 million, or 10%,9%, to $55.5$47.3 million. Trading revenue grew $9.4$5.4 million to $33.1$20.9 millionmillion. driven by growth inHigher U.S. agency residential mortgage-backed securities trading volumesactivity driven by a more favorable rate environment and increasedan industryimproved turnoverfuture aseconomic clientoutlook, demandincluding returneda tosteepening moreyield normal levels following rate cuts at the end of the third quarter and through the fourth quarter.curve. Investment banking revenue decreased $4.1$1.9 million to $10.3$14.3 millionmillion. Municipal underwriting activity resumed a more normal level following ana elevatedstrong third quarter, primarilypartially dueoffset toby timinggrowth andin volumeloan ofsyndication transactions.fees.

Fiduciary and asset management revenue increased $3.2$4.5 million led by growth in trust feesfees, relatedprimarily tofrom increasedhigher transaction-related fees, improved market valuationsvaluations, 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.

Other gains, net, were $5.0$28.1 million for the fourth quarter of 2024,2025, compared to $13.1$8.3 million in the third quarter of 2024.2025. The priorfourth quarter included a $23.5 million pre-tax gain of $3.1 million related toon the sale of converted Visa shares. Net unrealized gains ona 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.investment.

Other operating expense for 20242025 totaled $1.4 billion, a $32.9$67.1 million, or 2%,5%, increase compared toover the prior year. Personnel expense increased $44.6$66.7 million, or 6%.8%, Non-personnelwhile non-personnel expense decreasedwas $11.8consistent 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 inwith the prior year.year at $554.9 million. Our efficiency ratio1 was 64.32%65.13% for 2024,2025, compared to 62.76%64.32% in the prior year.

Personnel expense was $811.2$878.0 million in 2024,2025, an increase of $44.6$66.7 million, or 6%.8%. Regular compensation increased $17.9$33.3 million, or 4%,7%, due to a combination of annual merit increases commencing in the first quarter, salary adjustmentsadjustments, and business expansion. Changes in assumptions of certain performance-based equity awards and an increase in the quantity of share-based awards granted led to a $7.3 million, or 48%, increase in share-based compensation expense. Cash-based incentive compensation plans, which are either intended to provide current rewards to employees who generate long-term business opportunities for the Company based on growth in loans, deposits, customer relationships, and other measurable metrics or intended to compensate employees with commissions on completed transactions, increased $3.9$18.5 million, or 2%,9%, compared to 2023,2024, primarily related to higher loan volumes. Changes in assumptions of certain performance-based equity awards led to a $2.5 million, or 11%, increase in share-based compensation expense. Employee benefits expense increased $14.8 million, or 13%, primarily related to increased employee healthcare costs combined with smaller increases in payroll tax expense and retirement plan costs. Deferred compensation expense increaseddecreased $3.2$2.3 million as the deferred compensation liabilities mirror the performance of the deferred compensation investments, which increaseddecreased due to performance of the equity markets in 2024. Employee benefits expense increased $12.3 million, or 12%, related to increased employee healthcare costs, retirement plan costs, and payroll tax expense.2025.

Other operating expense for the fourth quarter of 20242025 totaled $347.7$361.1 million, ana increasedecrease of $6.6$8.7 million, or 2%, overcompared to the third quarter of 2024.2025.

Personnel expense was $210.7$222.7 million, ana increasedecrease of $3.9$3.6 million, or 2%. HigherEmployee salesbenefits activityexpense leddecreased $4.4 million related to alower $6.1employee million,healthcare orcosts, 12%,retirement increaseplan incosts, cashand basedpayroll tax expense. Cash-based incentive compensation. Regular compensation increased $2.4$3.6 million, or 2%, primarily duedriven toby compensationstrong relatedloan toorigination business expansion and continued investment in our businesses.activity. Deferred compensation expense decreased $1.5$3.4 million to $2.4 million;million. however,The thisimpact wasof largelydeferred compensation expense is offset by athe decreasechange in the fair value of related investments included in Other gains,gains (losses), 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.

BOK Financial reported net income of $176.5 million, or $2.92 per diluted share, for the second quarter of 2026 compared to $155.8 million, or $2.58 per diluted share, for the first quarter of 2026 compared to $177.3 million, or $2.89 per diluted share, for the fourth quarter of 2025.2026. Excluding the net gain recognizedrelated onto the saleexchange of aour merchantVisa banking investmentshares and the FDICloss specialfrom assessmentrepositioning benefit1,of the available-for-sale securities portfolio1, net income would have been $152.1$156.5 million, or $2.48$2.59 per diluted share, in the fourthsecond quarter of 2025.2026. PPNR1, a non-GAAP measure, was $199.7$227.7 million for the firstsecond quarter of 2026, compared to $228.5$199.7 million in the fourthfirst quarter of 2025.2026.

Highlights of the firstsecond quarter of 2026 compared to the fourthfirst quarter of 20252026 included:

•Net interest income totaled $342.6$351.8 million, aan decreaseincrease of $2.7$9.3 million compared toover the prior quarter. Net interest margin was 2.90%2.91% for the firstsecond quarter of 2026, compared to 2.98%2.90% for the prior quarter. For the firstsecond quarter of 2026, our core net interest margin excluding trading activities1, a non-GAAP measure, was 3.15%3.13% compared to 3.22%3.15% in the prior quarter.

•Fees and commissions revenue totaled $209.8$202.0 million, a decrease of $5.1$7.8 million,million. primarilyLower duetrading tofees lowerand commissions revenue was partially offset by growth in fiduciary and asset management revenue and increased investment banking revenue driven by seasonality and volume of transactions.revenue.

•Other operating expense totaled $354.2$361.7 million, aan decreaseincrease of $6.9$7.5 million compared to the prior quarter. Excluding the FDIC special assessment benefit from fourth quarter of 2025, operating expense decreased $16.4 million. Personnel expense decreasedincreased $11.6$2.9 million and non-personnel expense increased $4.6 million. Excluding the impact of deferred compensation, personnel expense decreased $4.8$6.0 million, reflecting our continued focus on managing our core cost structure.million.

•Period end outstanding loan balances totaled $26.2$27.1 billion at June 30, 2026, up $896 million over March 31, 2026, growing by $536 million over December 31, 2025, with broad-based growth across the loan portfolio, led by general business, energy, and multifamily commercial real estate loans.portfolio. Average loan balances increased $683$844 million to $25.9$26.8 billion.

•No provision for expected credit losses was necessary for the firstsecond quarter of 2026. TheAn favorableimprovement impactin ofeconomic higherforecast projectedassumptions, oilincluding pricesGDP ongrowth, ourlower energy loan portfoliounemployment, and improved creditvacancy quality was offset by loan growth and a slight downward revision to economic forecast assumptionsrates compared to the prior quarter, was offset by the impact of loan growth during the quarter. Net charge-offs in the firstsecond quarter were $1.9$500 million,thousand, or 0.03%0.01% of average loans on an annualized basis. The resulting combined allowance for credit losses totaled $323 million, or 1.23%1.19% of outstanding loans at MarchJune 31,30, 2026. The combined allowance for credit losses was $327$323 million, or 1.28%1.23% of outstanding loans at DecemberMarch 31, 2025.2026.

•Nonperforming assets not guaranteed by U.S. government agencies were $52$55 million, a $14$2.8 million decreaseincrease compared to DecemberMarch 31, 2025.2026. Accruing substandard loans decreased by $5.5$19 million while other loans especially mentioned decreased by $31$8.3 million compared to DecemberMarch 31, 2025.2026.

•Period end deposits decreasedincreased by $758$1.2 millionbillion to $38.7$39.9 billion at MarchJune 31,30, 2026. Average deposits decreasedincreased $1.0$250 billion,million, including a $692$261 million decreaseincrease in average interest-bearing deposits and aan $315$11 million reductiondecrease in average demand deposit balances. The loan to deposit ratio was 68% at MarchJune 31,30, 2026, comparedconsistent towith 65%the atprior December 31, 2025.quarter.

•Assets under management or administration totaled $123.6$129.3 billion at June 30, 2026, increasing $5.7 billion over March 31, 2026, decreasing $3.0 billion compared to December 31, 2025, primarily drivenled by changesincreased inmarket thevaluations equityand markets.continued customer expansion.

•The Company's tangible common equity ratio1, a non-GAAP measure, was 9.61% at June 30, 2026, and 9.29% at March 31, 2026, and 9.46% at December 31, 2025.2026. The tangible common equity ratio is primarily based on total shareholders' equity, which includes unrealized gains and losses on AFS securities.

•The Company paid a regular cash dividend of $38.1 million, or $0.63 per common share, during the firstsecond quarter of 2026. On MayAugust 5,4, 2026, the Board approved a quarterly cash dividend of $0.63 per common share payable on or about MaySeptember 27,2, 2026, to shareholders of record as of MayAugust 13,19, 2026.

Highlights of the threesix months ended MarchJune 31,30, 2026, compared to the threesix months ended MarchJune 31,30, 2025 included:

•Net income for the threesix months ended MarchJune 31,30, 2026 totaled $155.8$332.3 million, or $2.58$5.49 per diluted share, compared to $119.8$259.8 million, or $1.86$4.05 per diluted share, for the threesix months ended MarchJune 31,30, 2025.

•Net interest income totaled $342.6$694.4 million for the threesix months ended MarchJune 31,30, 2026, and $316.3$644.4 million for the threesix months ended MarchJune 31,30, 2025. Net interest income increased $16.5$31.4 million from changes in interest rates and increased $9.9$18.7 million from changes in earning assets. Net interest margin was 2.90%2.91% compared to 2.78%.2.79%. The AFS securities portfolio yield increased 1110 basis points, while the yield on trading securities decreased 4331 basis points. The loan portfolio yield decreased 49 basis points. Funding costs decreased 5049 basis points. The cost of interest-bearing deposits was down 5351 basis points. Average earning assets increased $2.2$2.0 billion to $47.8$48.3 billion, largely driven by higher average balances for loans and AFS securities, partially offset by a decrease in average trading securities. Total interest-bearing deposits increased $1.1$1.2 billion, partially offset by a decrease of $462$369 million in demand deposit balances. Other borrowed funds increased $711$676 million and average subordinated debentures increased $265$281 million.

•Fees and commissions revenue totaled $209.8$411.8 million for the threesix months ended MarchJune 31,30, 2026, a $25.7$30.3 million increase over the threesix months ended MarchJune 31,30, 2025. Brokerage and trading revenue increased $12.5 million, largely due to higher trading volumes and improved trading margins on U.S. agency residential mortgage-backed securities. Fiduciary and asset management revenue increased $5.5$12.6 million led by growth in trust fees related to higher market valuations and continued growth in client relationships. Brokerage and trading revenue increased $6.9 million. Trading revenue increased $3.4 million led by higher municipal bond and government agency trading activities, partially offset by decreased U.S. agency residential mortgage-backed securities trading volumes. Investment banking revenue increased $2.8 million driven by growth in syndication fees. Transaction card revenue increased $4.9$6.9 million due to disciplined pricing strategies, targeted customer acquisition efforts, and an increase in the volume of transactions processed during the period. Deposit service charges increased $1.9$4.0 millionmillion, primarily due to growth in commercial service charges.

•Total operating expense was $354$715.8 million for the threesix months ended MarchJune 31,30, 2026, an increase of $6.6$13.8 million over the threesix months ended MarchJune 31,30, 2025. Personnel expense decreased $3.0$3.6 million. Employee benefits expense decreased $5.3$9.4 million due to a combination of lower retirement plan costs and employee healthcare costs. RegularDeferred compensation expense increased $1.9$6.7 million, largelywhile relatedshare-based compensation costs decreased $2.0 million due to annual merit increases given to most employeeschanges in March.assumptions of certain performance-based equity awards. Non-personnel expense increased $9.6$17.4 million. Mortgage banking costs grew $9.2 million due to increased prepayments. Data processing and communications expense was up $4.2$6.3 million, largely driven by costs associated with ongoing projects. Mortgage banking costs grew $4.1 million due to increased prepayments.

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 revenue earned on assets funded by non-interest bearingnoninterest-bearing liabilities such as demand deposits and equity.

Tax-equivalent net interest income totaled $345.2$354.5 million for the firstsecond quarter of 2026, compared to $347.8$345.2 million in the prior quarter. Net interest income increased $464$5.7 thousandmillion from changes in interest rates and decreasedincreased $3.1$3.7 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.

Average earning assets increased $1.2$1.0 billion over the fourthfirst quarter of 2025.2026. Average loan balances increased $683$844 million, primarily fromwith broad-based growth across the loan portfolio. The average balance of trading securities increased $322$259 million and average restricted equity securities increased $111$100 million.

Total average deposits decreasedincreased $1.0$250 billionmillion compared to the fourthfirst quarter of 2025,2026, including a $692$261 million decreaseincrease in interest-bearing deposits and aan $315$11 million decrease in demand deposits. Average funds purchased and repurchase agreements decreased $261$403 million, while average other borrowings increased $2.3$1.6 billion. Average subordinated debentures increased $155 million, driven by the full quarter impact of the subordinated debt issued in the fourth quarter.

Net interest margin was 2.90%2.91% compared to 2.98%2.90% in the fourthfirst quarter of 2025.2026. For the firstsecond quarter of 2026, our core net interest margin excluding trading activities1, a non-GAAP measure, was 3.15%3.13% compared to 3.22%3.15% in the prior quarter. TheNet tax-equivalentinterest yieldmargin benefited from favorable repricing of fixed-rate assets and deposits. During the quarter, these positive drivers were partially offset by a 3 basis point impact from cash margin posted on average earning assets was 5.23%, a decreasebehalf of 13our basisenergy points.customers Theas loanoil portfolioprices yieldincreased decreased 23 basis points to 6.25%. The yield on trading securities decreased 19 basis points to 4.64%, whileduring the yield on restricted equity securities increased 17 basis points to 7.39%.quarter.

Funding costs were 2.92%,2.93%, a 141 basis point decreaseincrease compared toover the prior quarter. The cost of interest-bearing deposits decreased 204 basis points to 2.71%.2.67%. The cost of funds purchased and repurchase agreements decreasedincreased 5719 basis points to 2.90%,3.09%, while the cost of other borrowings decreased 322 basis points to 3.90%.3.88%. The benefit to net interest margin from assets funded by non-interestnoninterest-bearing liabilities was 5957 basis points, a decrease of 92 basis points.

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. ApproximatelyAt June 30, 2026, approximately 84% 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,noninterest-bearing or that reprice more slowly than the loans. The result is a balance sheet that is asset sensitive, meaning that assets generally reprice more quickly than the 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.

Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 38%36% of combined net interest income before provision for expected credit losses and fees and commissions revenue for the firstsecond quarter of 2026. 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.

Brokerage and trading revenue, which includes revenues from trading, customer hedging, retail brokerage, and investment banking, decreased $3.7$11.2 million compared to the fourthfirst quarter of 2025.2026.

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 decreased $1.6$12.7 million to $19.3$6.7 million, primarily due to alower shifttrading volumes resulting from fee revenue to net interest incomerate onmarket tradingvolatility securities.during the quarter. Interest rate levels and curve steepness can result in a shift between trading revenue and 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 - Reportable Segments following.

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 $7.8$6.7 million for the firstsecond quarter of 2026, ana increasedecrease of $1.1 million overcompared to the prior quarter, asprimarily due to a decline in hedging activity from our energy customers increased hedging activity in response to the rapid rise in crude oil prices during the quarter.customers. Customer hedging revenue includes credit valuation adjustments of the fair value of derivatives to reflect the risk of counterparty default.

Investment banking revenue, which includes fees earned upon completion of underwriting, financial advisory services, and loan syndication fees, totaled $10.2$13.4 million, aan decreaseincrease of $4.1$3.2 million compared to the prior quarter, drivenlargely by lower syndication fees and municipal underwriting activity, primarily duerelated to seasonalitythe timing and volume of completed loan syndication transactions.

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 $32.0$31.6 million for the firstsecond quarter of 2026, consistent with the prior quarter.

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 $66.5$71.0 million for the firstsecond quarter of 2026, aan decreaseincrease of $1.9$4.5 millionmillion, asprimarily therelated priorto quarterseasonal includedtax transaction-relatedpreparation fee income combined with increased trust fees thatfrom didhigher notmarket recurvaluations and growth in theclient current quarter.relationships.

1 Assets under management or administration balance excludes certain assets under custody held by a sub-custodian where minimal revenue is recognized. $22$24 billion, $23$22 billion, and $20$22 billion of such assets are excluded from assets under management or administration at June 30, 2026, March 31, 2026, December 31, 2025, and MarchJune 31,30, 2025, respectively.

A summary of changes in assets under management or administration for the three and six months ended MarchJune 31,30, 2026, and 2025 follows:

Assets under management or administration as of MarchJune 31,30, 2026, consist of 42%41% fixed income, 35%37% equities, 15%14% cash, and 8% alternative investments.

Deposit service charges and fees totaledincreased $32.2$1.1 million, to $33.3 million for the firstsecond quarter of 2026, consistentlargely withdue to an increase in the priorvolume of transactions during the quarter.

Mortgage banking revenue increaseddecreased $2.0 million overcompared to the fourthfirst quarter of 20252026, primarily due to an increase in mortgage production volumes and higherlower refinancing activity. Mortgage production volume increaseddecreased $53.9$2.8 million to $265$263 million. Production revenue as a percentage of production volume, which includes unrealized gains and losses on our mortgage commitment pipeline and related hedges, was 0.83% for the second quarter of 2026, compared to 1.48% for the first quarter of 2026, compared to 0.93% for the fourth quarter of 2025.2026.

Other gains (losses), net, were a net lossgain of $216$42.4 thousandmillion for the firstsecond quarter of 2026, compared to a net gainloss of $28.1$216 millionthousand in the prior quarter. The fourthsecond quarter of 2026 included a $23.5$30.9 million pre-tax gaingain, onnet of economic hedge, related to the saleexchange of aour merchantVisa bankingshares investment.under the recently announced Exchange Offer by Visa, Inc. See further discussion in the Securities section of Management's Discussion and Analysis of Financial Condition and Results of Operations. The current quarter also included a net lossgain on investments related to deferred compensation of $1.8$8.8 million compared to a net gainloss of $3.7$1.8 million in the prior quarter.

Other operating expense for the firstsecond quarter of 2026 totaled $354.2$361.7 million, aan decreaseincrease of $6.9$7.5 million compared to the fourthfirst quarter of 2025.2026. The second quarter included $9.1 million of deferred compensation expense fully offset by gains on related investments in Other gains (losses), net. Excluding the impact of deferred compensation, total operating expense decreased $1.4 million. Our efficiency ratio1 was 63.21%60.21% for the firstsecond quarter of 2026, compared to 60.71%63.21% in the prior quarter. Our efficiency ratio as adjusted for the gain related to the exchange of Visa shares1 was 63.49% for the second quarter of 2026.

The effective tax rate was 22.46% for the second quarter of 2026, 22.01% for the first quarter of 2026, 22.42%and 22.51% for the fourth quarter of 2025, and 22.61% for the firstsecond quarter of 2025. The effective rate for the second quarter of 2026 increased compared to the first quarter of 2026 decreased compared to the fourth quarter of 2025 primarily due to the increasedecrease in excess tax benefits from vested share-based compensation.

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.

As shown in Table 8, net income before taxes attributable to our segments was $194.7 million in the second quarter of 2026 compared to $191.5 million in the first quarter of 2026 compared to $219.9 million in the fourth quarter of 2025.2026. Net interest income decreasedincreased $9.7$9.8 million due to lower deposit spreads and a shift away from demand deposits, partially offset by increased loan volumes.volumes and beneficial repricing of deposits. Other operating revenue decreased $27.2$9.7 million. Brokerage and trading revenue was down $12.7 million, primarily due to lower trading volumes resulting from interest rate market volatility during the salequarter. ofThis adecrease merchantwas bankingpartially investmentoffset by growth in thefiduciary fourthand quarterasset ofmanagement 2025.revenue related to seasonal tax preparation fee income combined with increased trust fees from higher market valuations and growth in client relationships. Other operating expense decreased $11.7$4.2 million. Personnel expense decreased $8.0$5.1 million. The decrease wasmillion, primarily due to lower cash-based incentive compensation costs driven by lowerthe incentive compensation expenses following strong prior quarter resultsdecrease in bothtrading commercialactivity. and wealth production volumes. In addition, regular compensationNon-personnel expense normalizedwas thisconsistent quarter, as the majority of transitional personnel costs from talent base alignment were recognized inwith the prior quarter. Non-personnel expense decreased $3.7 million. Corporate expense allocations increased $2.6 million.

Commercial Banking contributed $134.8$146.2 million to consolidated net income before taxes in the firstsecond quarter of 2026, comparedan toincrease $162.1of $11.4 million inover the fourthfirst quarter of 2025.2026.