BOK FINANCIAL CORP Q2 FY2024 earnings call

• Stacy Kymes: Reported earnings of $163.7 million or EPS of $2.54 per diluted share. Discussed strategy focusing on diversified loan portfolio, disciplined credit quality, industry-leading fee income, strong risk management, and attractive geographic footprint. Mentioned repurchasing over 400,000 shares. - Marc Maun: Elaborated on loan portfolio details, including C&I growth, CRE payoffs as part of healthy portfolio, energy loan hedging, general business/service loan growth, healthcare loan quality, and CRE concentration management. - Scott Grauer: Talked about launching a modernized wealth management platform, strong fee income contribution, details on trading fees, mortgage banking, customer hedging, and transaction card revenue. - Martin Grunst: Discussed capital and liquidity strength, net interest income growth, expense changes, and 2024 guidance including NII, fees, efficiency ratio, and provision expense.

Loan Portfolio: Loans increased $381 million or 1.6% quarter-over-quarter. C&I portfolio grew at approximately 13% annualized (excluding certain seasonal advances). CRE decreased 2.9% quarter-over-quarter. Energy loans increased 0.2% quarter-over-quarter. General business and service loans grew 6.7% quarter-over-quarter. Healthcare loans decreased 0.4% quarter-over-quarter. Fee Income: Total fee income contributed $200 million of revenue this quarter, representing 40% of total revenue. Trading fees decreased 26.1% to $27.7 million, mortgage banking revenue was $18.6 million, asset management revenue increased 4% to $57.6 million, and transaction card revenue increased 6.9% to $27.2 million.

• Net interest income guidance for 2024 is $1.2 billion, presuming 1 rate cut in November 2024. - Fees and commissions are expected to be around $825 million. - Efficiency ratio for the full year is expected to be near 64%. - Provision expense for 2024 is anticipated to be similar to or somewhat lower than 2023 levels. - Securities trading revenue trends and RMBS trading are factors influencing variability in fee guidance.

• Commercial real estate paydowns could impact loan growth. - Market volatility in trading fees, especially in fixed income and mortgage-backed securities trading. - Potential impact of interest rate changes on fee income businesses such as mortgage banking and customer hedging.

Q: Michael Rose asked about fee businesses, specifically trading and brokerage, and how they might perform with rate cuts.

A: Scott Grauer responded that fee businesses like mortgage banking are at low origination volumes but expect pickup with Fed rate cuts, as mortgage production increase would boost activity.

Q: Brett Rabatin inquired about NII guidance and margin outlook.

A: Martin Grunst said NII guidance reflects stable margin with denominator effect from AFS and trading accounts, expecting tailwind from DDA and deposit rate trends.

Q: Peter Winter asked about deposit growth, expense outlook, and deposit beta.

A: Stacy Kymes and Martin Grunst discussed deposit growth in Texas markets, focusing on averages over periods, and expenses being mid-single-digit growth on reported basis.

Q: Woody Lay asked about Texas deposits and buyback appetite.

A: Stacy Kymes talked about Texas market focus for deposit growth, and Martin Grunst noted buybacks are price-sensitive.

Q: Matt Olney asked about M&A appetite and capital uses.

A: Stacy Kymes said M&A is selective to fit profile, and capital deployment is patient.

Q: Timur Braziler asked about DDA pressures and bond yields.

A: Martin Grunst discussed DDA average leveling off and bond yield reinvestment gains.

Q: Woody Lay asked about Texas deposits.

A: Stacy Kymes discussed Texas market focus driving deposit growth.

Q: Timur Braziler asked about bond yields and CRE paydowns.

A: Martin Grunst talked about bond yield reinvestment gains and CRE paydowns as normal portfolio activity.