BOK FINANCIAL CORP Q4 FY2024 earnings call

• Earnings for the fourth quarter were $136.2 million or EPS of $2.12 per diluted share, and full year earnings were $523.6 million or EPS of $8.14, the second highest full year EPS in history.
• Credit performance of the loan portfolio remained exceptional with criticized classified levels below pre-pandemic norms and combined allowance at 1.38% of outstanding loans.
• Net interest income was solid with deposit pricing leverage evidenced in the fourth quarter, and confidence in margin outlook.
• Core C&I portfolio grew 8.1% year-over-year, with Texas C&I loan growth at 9.8% year-over-year.
• Fee income segments contributed 40% to revenue, ranking top of regional banks.
• Invested in future growth by welcoming new revenue generating teammates.

Loan Portfolio: Period end loan balances increased 0.5% linked quarter. Commercial loan balances grew 1%, loans to individuals were up 2.7%, while commercial real-estate balances fell 2.5%. Credit quality remained exceptional with NPAs not guaranteed by the US government decreasing $38 million to $42 million, the lowest in 20 years, and minimal net charge-offs. Fee Based Results: Total fee income grew $4.4 million, contributing $206.9 million to revenue and accounting for 40% of total revenue. Trading fees rebounded 39.8% to $33.1 million, mortgage banking revenue was steady at $18.1 million, and asset management revenue grew $3.2 million or 5.6% linked quarter with AUMA eclipsing $114 billion.

• Loan balance projections reflect growth in C&I and specialty lending businesses with ample headroom vs concentration limits.
• Total revenue expected to grow in mid to upper-single digit range, unaffected by mix shift between trading NII and trading fees.
• Net interest income growth expected above single digit, driven by mix shift from trading fees to trading NII.
• Core NII ex-trading expected mid to upper single-digit, fees and commissions growth lower single-digit but unaffected by trading mix shift.

• Potential impact of incoming administration on energy lending and borrower behavior.
• Deposit balance growth could mute deposit beta but result in better liability beta.
• Economic conditions affecting loan growth in certain segments like healthcare and CRE.
• Uncertainty around short-term market rate movements affecting margin and NII.

Q: Can you talk a little bit more about the payoff activity and expected changes in '25?

A: Payoffs in core specialty businesses like healthcare and CRE were due to interest rate environment creating refinancing opportunities, and expect these activities to taper off with growth resuming. Energy business saw new relationships in Q4 with potential for continued growth.

Q: How about the guidance for net interest income in 2025?

A: Core margin ex-trading supported by fixed-rate asset repricing and deposit growth, while trading component benefits from yield curve steepening and funding cost reduction leading to net interest income growth above single digit.

Q: Any color on deposit growth in Q4 and strategy for 2025?

A: Deposit growth was across all business lines, strategy remains to continue growing deposits next year though rate may not be as high as 2024, with price competitiveness settled down.