Company: BOKF
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0000875357-25-000045
Chunk: 13

Company: BOK FINANCIAL CORP
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 2
Chunk 13
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 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.

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.

Net interest income in our segments reflects our internal funds transfer pricing methodology. The funds transfer pricing methodology is the process by which the Company allocates interest income and expense to the segments and transfers the primary interest rate risk and liquidity risk to the Funds Management unit. The funds transfer pricing methodology considers the interest rate and liquidity risk characteristics of assets and liabilities. Periodically, the methodology and assumptions utilized in transfer pricing are adjusted to reflect economic conditions and other factors, which may impact the allocation of net interest income to the segments.

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Non-personnel expense includes other segment items comprised of business promotion, charitable contributions to BOKF Foundation, professional fees and services, net occupancy and equipment, FDIC and other insurance, data processing and communications, printing, postage, and supplies, amortization of intangible assets, mortgage banking costs, and other miscellaneous expenses. Corporate allocations include centrally managed operational and administrative expenses that are allocated to segments.

Economic capital is assigned to the segments by a capital allocation model that reflects management's assessment of risk. This model assigns capital based upon credit, operating, interest rate, and other market risk inherent in our segments and recognizes the diversification benefits among the segments. The level of assigned economic capital is a combination of the risk taken by each segment based on its actual exposures and calibrated to its own loss history where possible. Average invested capital includes economic capital and amounts we have invested in the segment.

As shown in Table 8, net income before taxes attributable to our segments increased $12.2 million compared to the first quarter of 2025. Net interest income decreased $1.2 million, due to lower commercial deposit balances and lower spreads earned on deposits, partially offset by loan