BOKF - Earnings call transcript Q4 2019 | BOK Financial Corporation

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Operator

Greetings and welcome to the BOK Financial Corporation Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Chief Financial Officer, Steven Nell. Mr. begin. may you Nell,

Steven Nell

and thanks for provide us. Executive opening Banking high our for loan of and provide guidance then Steve details level fourth some Vice our quarter Bradshaw Corporate regarding portfolio our cover will comments; statement will metrics for morning and Today, I’ll items joining income CEO President credit the Good XXXX. Stacy provide Kymes, and

statements as PDF presentation We make President well the call. are refer of and we’ll Scott of available call, Vice Wealth Vice during Slide release and available the Management, bokf.com. to slide forward-looking at Marc on At disclaimers website Credit the end pertains we fourth President you it press as Grauer, X have the Executive on of quarter Maun, Officer Executive Chief as our for any to the questions.

I’ll Steve Bradshaw. now call to turn over the

Steve Bradshaw

to financial concluded and for and quarter discuss in net joining fourth morning. income consecutive second earnings both a The Good results. BOK from record year a share us Thanks Financial, our perspective. for XXXX fourth per year full quarter

For over XX% year, million, $XXX up the XXXX. net full from income was

quarter $X.XX channels, year. while that expansion we also base lending for in share to accelerated $X.XX fee core compares – businesses in last our our of Diluted per each year earnings strengthen to XXXX specialty our were broad a deposit significant was XXXX for with and franchise. growth continues had

markets most integration drive growth going in acquisition CoBiz, help of our high XXXX momentum Additionally, our saw our of which achieve and forward. financial for business goals us two will critical

a up comparison million quarter, fourth we specifically, per closed CoBiz the quarter net at from share, the from light a And same $X.XX at on Looking or appropriate. quarter but so the our as is the of ago. diluted record year of fourth income start was quarter reminder, down XXXX, quarter $XXX.X third X% the

up fee was mortgage slightly quarter. revenue slowdowns our Fee XX% X% with and year-over-year, commission consumer from previous volumes and down and commission along left seasonal lower revenue charges those service the

management heading annual Expense to quarter units coupled serve. Foundation, though as elevated right-size into with business did communities this X% to increase contribution the we remains which XXXX we due work to our that the many our severance partners prudent support charitable to provides non-profit BOK in expenses expenses

Our this million will loan quarter, a Stacy to was our loss $XX more here migration moment. in energy portfolio that some due in detail in and provision cover

here up start year-over-year, Turning early we in last down the feel opportunity XXXX. portfolio. commercial Slide that’s X% X, anticipated large from pay in good the said Having pipeline though CI our downs quarter and billion, due down to real in average pay $XX.X general our year-end and loans were estate two about that, energy in

the X% deposit Average X.XX% third strong and the we previous over with interest-bearing year, down Even in a overall deposits were for emphasis loan to Growing up future to results. can significant loan fund our that of see and was will in quarter. fourth focus the fund growth. into X% growth quarter quarter, to were bring in BOKF a in that’s basis. able area deposits X.XX% to us allowing on continue from from costs XXXX, XXXX, growth you linked-quarter this This

equity key the year-over-year, this we BOKF at we saw the invest quarter market. with strong favorable in expansion. sales favorable open our in in the $XX.XX markets XXX,XXX under price back further really a shares over were And at bought to as per opportunity an drivers for of that activity X% coupled company or share than quarter up Assets more and management were custody X%

I’ll turn portfolio on perspective the loan and Kymes our over more will to call remarks, of conclusion but additional now the review Stacy detail. now the results provide I’ll the credit Stacy. at in

Stacy Kymes

Steve. Thanks,

you pay a down billion, BOKF quarter-end quarter, year-over-year. impacted more see X% than X% up numbers were our As for loan while on perspective, average the for $XX.X growth loans downs from year on Slide period-end XXXX can X, was a

expanded to the downs in down segment and and I engines, was XX%, remain in for total the Energy in growth pay full. our linked-quarter. C&I growing down XXXX, had pipelines fantastic discussed energy XXXX, to X% two the nearly though level industry growth our trends we remain as a head $XXX in into Total year million return X.X% C&I left quarter, true energy a the largest positive expect XXXX. we’ve while healthcare nearly

channel over and growth well healthcare our the quarter bodes senior expertise space for housing in another an growing was also for exceptional year XXXX, the commitment levels and steady Though healthcare great X%. XXXX. Our had flat, in

caused Future middle A clients. questions in of community. slowdown seems some the seems the regulatory environment arise point to to general segment. trade business reenergize in and trade economic general the that increase the our pause into market clarity disputes for have help C&I market in cautiousness an Tariffs, a cycle new middle to around election should heading

continue limits stringent selection commercial as pay high portfolio. we in X.X% segment space grade the still coupled the around is down manage to customer concentration estate, left discipline for the real in Commitment solid quarter. the downs Continued quarter through and we with volume late will

XX over million basis an the points on the with remains quarter, good. $XX.X X, or this consistent you Net quarter, or charge-offs million previous overall basis credit. quality to million increased due $XX.X Non-accruing annualized increase XX credit primarily $X.X were past loans Slide non-accruing we’ve all see a relatively in in points On from months. basis development XX what community $X.X can that million seen

situation and liquidity lead This the requiring capital impairments. through energy This which may million certain as the additional environment work are information from XXth. comes as known needs. borrower’s perform markets management non-accruals loans, the from defined September to million performing largely totaled based on cause to loans, concern as the $XXX to to increase portfolio at is to problem up that XXst Potential continue ability customers their some December at $XXX

However, secured as position collateral our we’ve previously, from content. protect discussed us material senior should loss

problem changes provision specific impairments factors, the non-accruing determined of XXXX. including loans, shared on and energy the as potential of all for the national credits, that lead in not $XX a are credit losses well credit million agent, Based quarter we fourth of two appropriate company as one which evaluation was for

I’ll turn to to Nell the statement cover the more detail. call over Steven? Steven in income

Steven Nell

Stacy. Thanks,

$X.X income the the rate net As noted realization for from last was million, Reserve million interest quarter, on $XXX.X as interest third down the Slide of full quarter Federal the two previous provided on quarter. to was I significant the margin in calculation. the interest X.XX% a items roll-forward X.XX% slide were felt cuts Net the the highlight NIM down impacting from quarter, XX,

which were reducing by accretion quarter this levels million X loan CoBiz First, $X.X lower points. the to NIM less due basis payoffs,

Second, quarter fourth higher in by fees improved X NIM loan basis the points.

interest-bearing a Third, from there in decrease and deposits in profile trading non was our receivables with a our demand an activity. basis in funding point decline X increase

In by addition, our basis earning costs. XX and in XX point asset of points yield funding effectively accretion declined, offset fees decline basis was excluding

going quarters, While income rate net XXXX interest in over projected moved some few allow down environment should and the forward. stability the margin interest flat have past

growth and fueled $XXX.X On and of and fees largely brokerage trading trading an quarterly over million, in business. were Slide our from and was $X.X brokerage the syndication quarterly by increase lower by overall Brokerage the year revenue trading increased hedging year-over-year, a trading XX% and XX, loan flat was but million, and our strength commissions same XX% and in fees. while comparison, was relatively quarter revenue up customer offset ago,

revenue an seasonal down slowdown. expected XX% Mortgage from was banking

XX% the compared mortgage year us great for XXXX rate channel, a XXXX. However, to was allowed environment the the favorable grow business as to

As capabilities, rate an remain enter even we XXXX, in our environment. confident we origination expected in flat

linked-quarter gas management asset from steady as equity sales of and asset item. growth. markets have that and and revenue nature down to in up and strong the activities favorable over gathering repossessed Fiduciary revenue that are revenues Other was certain contained properties year-over-year line oil variable was due X% fueled

from realignment XXXX. the operating and personnel million. into million in and increased increased incentive banking. incentive cash compensation largely expense increased quarter to compensation Slide the million due wealth the to total commercial based the sales linked due of $XXX.X operating $X to $X.X million, for expenses environment Turning Personnel XX, headed severance $X.X increase for a from quarter; primarily activity an to management million $X.X Regular compensation cost increased

year-end Non-personnel typical to expense $X million. to net was up interest BOKF efficiency $X.X of Foundation quarter. due charitable million from our contribution third revenues our quarter, XX% ratio the pressure this mentioned largely on back over moved the The

lower or forward. ratio our goal, be influenced XX% efficiency long-term While revenue going the mix it of still by is a will

to rate current Slide X% the comparable growth current loan year. levels the to XX Average has are in interest remain the loan XXXX. overall expected interest XXXX. is year. risk lower compared balances outlook XXXX, a as rates Average relatively security growth to around compared lower for X% to to we manage position. for flat Net with to our revenue deposits interest to for expected cover energy given Average remain relatively neutral growth

and net revenues revenues in current flat. assets slight interest with Fee towards with and above fee management XX% net environment a revenue. faster rate margin level, ratio brokerage under interest net the from if growth slightly bias wealth. the trading interest Stable improvement grow digits overall continued than grow remains and Efficiency mid-single as

changing will CECL loan will outlooks. growth X provision and levels Day by provide for be influenced economic

drive changes income. our in pre-tax loss Tax historic meaningful any expecting that models. not rates approximately the of XXXX rates during XX% We’re

expected We dividend course of ratios the will share are a loan to continue growth, balance improve repurchases. modest a XXXX. sheet provide payment competitive optimistic – for and capital slightly and level Capital of over sufficient to

between adjustment want X. and pre-tax CECL to test in I we on lastly, which to impact that range middle updated the transition transition of range we is day million, many million the the runs, to expect expect we last book quarter. And share provided $XX the After $XX of

phase CECL in impact a of We on the to have three-year over elected capital period. regulatory transition

over the closing turn Bradshaw for back I’ll to Steve now commentary. call

Steve Bradshaw

outstanding to faced more as starting whole for XXXX pretty significant when diversity challenging for an the in we mid Thanks, lower was moved Steven. XXXX interest revenue rates the compared as really proved one headwinds our a organization that’s some a revenue to model. the year of industry testament XXXX, year. and

no we pressure accident. from While declined. units This this regional of fee-based saw a rates financial strong contracts when was well revenue earnings of institutions, that exceedingly perform surge typically our the business potential

building any cycle. We perform economic are purposefully to under

national optimistic grow and lower well remain we exaggerated in the a that there’s to headwinds the prove in uncertainty our always ability may economic to XXXX, our business And in year of challenging. election rates continue

However, always and shareholder the our focus building a taken decisions to company value invest to we how and on guide will that in we where long-term forward. approach have continue going

Operator? take we’re questions. very to your pleased With that,

Operator

Ken of Zerbe be At Our Morgan proceed Instructions] we Thank question. conducting first time, Stanley. [Operator you. Please question with session. your line this question-and-answer from comes with will a the

Ken Zerbe

Good thanks. morning. Great,

Steve Bradshaw

Good morning.

Steven Nell

Good morning.

Stacy Kymes

Ken. morning Good

Ken Zerbe

wanted because amount hoping you charitable looks your And clarity in than XX% number start above maybe to even terms off dollar is, was little of what more be expected, amount and guidance to severance little higher but quarter expenses, the is a guidance it provide be thinking of to efficiency the like backing terms expenses, certainly this Just contribution. with you that know about I to out $X the it’s a here? get right like just going know more ratio, can in on the of

Steven Nell

the going you we interest that’s growth. higher create our fee going income like fee revenue at of that net XX% revenue one the because look the is XXXX of business to Well, when think more I our is I a in kind efficiency little and be growth is than the than be I will feel to reasons businesses, ratio think think

expense bit comes higher And and the percentage. with a it there little when just higher revenue bit efficiency in you other terms base, a have little that business activities fee drive growth, of commissions

point you to And so, the level. dollar exact to you a know, think I level want me

pretty it’s, think that know are I in for is going area a XXXX to where you expense adding know, million, I you minus probably forward to XXXX plus be here $XXX.X going is think know, use. the level or good we somewhere closer at you to one this

Steve Bradshaw

when those number Steve that and for year Yeah, incentive is fourth our now Bradshaw. becomes Ken, of a also businesses, the One it, that’s thing people becomes lending is quarter – in we it bit and you this but annual accrue lot an fee as a anomaly know, just that, areas the a have of have and there track of this in always in while certain targets more fourth it we throughout the in again quarter. we

side as the of year-end incentive comp always So we lumpiness bonuses. we’re a feel on accruing little for the bit

way incentive the with disagree cost Steven in has don’t characterized a I that, bit comp think incremental So do always it. but little QX of I

Ken Zerbe

questions you. understood. and two it, And Got really for then quick

you see go I guess of they question ratios first down going is I are course that? is, mean, they the capital whose The improve, when to your over the or year? perspective go up

Steven Nell

improve I know know, think what you just we’re just – those I you is ratios Well to modestly do okay trying

Ken Zerbe

that higher? Meaning you’ll go

Steven Nell

go They higher.

Ken Zerbe

Okay.

Steven Nell

go can the percentages I the lot bit, go little to opportunistically capital will advantage would a to talking good I think mentioned know, we’re of continue of The just But about you know, – stock buybacks. market the here a and you we’ll slightly as strong competitive up see dividend, ratio not where we take over accumulation pay a I just like

Ken Zerbe

– mean, I not the And what of Okay, how in last energy the the just energy are lead you percentage your credits question, in perfect. the then particularly SNCs? on portfolio quick many

Stacy Kymes

on we are of the on. that XX% about portfolio agent It’s SNC the the not portfolio

Ken Zerbe

And SNCs total? as percentage a of

Stacy Kymes

percentage As going of percentage. to it’s be relatively a – total energy high a

Steven Nell

XX%.

Stacy Kymes

Yeah, half.

Ken Zerbe

Perfect.

Okay, much. very thank you

Operator

Our from Brady come next KBW. proceed Please the question. questions with line Gailey your of of

Brady Gailey

Hey, morning, guys. good

Steve Bradshaw

Good morning.

Steven Nell

morning. Good

Stacy Kymes

Good Ken. morning

Brady Gailey

that level, the fourth stable you to XXXX, Is NIM that from current level of stable the way from you look that? When means, I’m quarter guidance a $XXX at read NIM assuming for say million. the

Steven Nell

That's correct. think. we That's what

Brady Gailey

here – trend level fourth how yield you the accretion that how look will think but ‘XX. accretable in levels, yield is the then I of XXXX? bucket, in million do know all and the when in Okay shrinking quarter you had at a you was lowest $X.X

Steven Nell

of I know, I to million fall $X.X of lower in range million And honestly that was little a expected. really somewhere kind think than bit XXXX accretable think You will I the $XX yield. $XX million

how know don’t but probably the I going you quarter, should to level know, that’s fall I You that it’s by expect. think

Brady Gailey

deposit guys could on we then know you little XX just days flat, were finally spoke a deposit bit. saying And I if up Okay. when ago, cost be costs. not

do the in saw talk deposit you costs level? about or reduce costs You think know, to know, you of you of at XQ deposit Maybe down option the fourth kind bottomed here quarter. continuing that this from

Stacy Kymes

where billion, I Stacy. I forward. terms we quarter, what reduced for win in a the continuing is I we us fourth if we at did $X.X deposit huge costs cost, look you deposits yet think mentioned, This think in to overall of mean but as look was increased you as deposit about that move down

improvement lag, opportunity still to think going continue to we moved they’re find lag I us going the move we hopefully the as well. costs. deposit to to translate going Fed of lower down. some part into continue opportunity you’re funding, improve costs LIBOR to lag as deposit as to and That immediately XXXX our move they into in as move deposit going gives up, cost into that our as NIM XXXX

Brady Gailey

Got it, thanks guys.

Operator

with Our Raymond with Michael next Rose line from questions of James. questions. your proceed come the Please

Michael Rose

Hey, guys.

as to X% the with looks loan average. guess pay and some I’m to some might difference some energy we like trying quarter and charge-offs obviously growing market that balance around And period-end the X% I the reconcile not the touch average with full been some softness to the the it for the or as to forward. at much of to end full growth your have like of the reconcile looks between there year you know, middle year. wanted the outlook, that on trying you comments balance know, around Just average downs move

can it. you me Thanks. that, square help just I’d if So appreciate

Stacy Kymes

growth outstanding downs we we’re those quarter energy really couple had pay saw that in rebound pretty come in will revolving nature in last the in that hopeful really nice was both throughout you we balances of it downs so and of some weeks loan Well quarter early Absolutely. a commercial the back. the January, seen We’ve pay saw estate. are that real in good and

look you at energy grew we XX%. year, where last grew If know, you a

we quarter-over-quarter you’ll being lumpiness in growth that move at don’t level at around in will that some look you X% something very We’re if have to growth, feel had good that about. We have we but previous as range, – we’ve X% grow long-term clearly forecasting it’s energy as you not forward. to periods

any of then don’t of paid was nature we and to businesses of in that’s pay a middle had of of year. we we here admittedly C&I true think we that in and trend what end has forward as this see declines We seasonality the looked the that very energy the quarter be those think respect the the on early we’re real in tend in new the there had don’t year, the was and fourth pay some the the they year at representative down move we as certainly commercial some going fund up of down estate, have to that side, the really at downs, to held in –

I that and that think – that about anything think today the I know range would certainly So see X% that’s we’ve that make in don't to very you X% provided feel achievable. guidance good not me

Michael Rose

the Okay, for to gears switching And energy, thanks color. Marc. maybe then just maybe for

You – caused I color know, assume these can what of company’s with running just it energy out the for some you these some know, probably maybe where give you SNCs, do cash. to on has of issues two greater

they If know, thoughts give your as relates asset some you can anything forward an gas color whether you related and move Thanks. as oil were we just there energy class? to it changed as And has around related? or then lending, then

Marc Maun

and from right in impact prices now. certain a Well, you the changed in first being NGL bit market how class, is really, natural and nothing’s the A&D market closed gas are lower as an and seeing prices circumstances we’re on on know we’re What the it. the really capital approaching markets a the tracking what’s, there energy is

for So we’re XX% customers some credits. is causing again that have deals form gas continuing perspective, some of price XX% to lien first from be secured our issues But hedging. E&P certain a of

at know, don’t of our You look seen on customer we on know, deals. as downside it you we’ve on hedging credit about get and a individual base particular a to know, basis way those so specific an are we portfolio protecting detailed that what’s but really don’t risk, monitor pleased we going basis, pursue it their really on kind of too you relates

that with all know, strongly minimize whatever you tell like to is And have such amount that, minimize forward in base in certain you necessary XX our Maybe is to getting the steps going XX-month but our little we going very taking exposure feel well we feel I had XX with don’t the have, a circumstances can we’ve first really in in know, basis quarter, is workout you basis the loss team of what of will the we XX had continue we in and lumpy points XXXX, whack that we’ve points, to which what see forward, - loss historically. consistent out it we past.

Michael Rose

taking for thanks my questions. Okay,

Operator

line Securities. questions come Winter question. proceed the Peter of Wedbush from your next Please with Our of

Peter Winter

Good morning.

Steve Bradshaw

Peter. morning, Good

Peter Winter

wondering the of the because a can going X% talk to bit drivers loan – XXXX of about cautious some main you energy just for was was which and there? I market growth, the caution general little to driver middle slow average X% with is especially to

Stacy Kymes

XX% mid-to-high energy, be going for next us. is grow This don’t we a there’s we want don’t think Stacy, going driver at will a grow Certainly I of which large it’s Peter. us. grow certainly grew portfolio we that to to energy opportunity can obviously indicate year, for is digits to think not XX%, I to continue inside but be think at I single we’ll there,

grow real estate We under to limits room have continue to ample commercial there. our

credit to point are to see Our a that opportunities reasonable positive and are we teams take this cycle. in at think continuing there risk from

we So there. think growth we’ll see

expectations healthcare, see where an team will the good have been see think area – we high we single that has continue grow and grow the end that may of to we we for business continue a Healthcare lower environment. XXXX that to and in growth more is have year owner in some a invest and who for in you you the about proprietor of macro kind softness sole on is, or bit of is little a there. C&I, cautious Where maybe the

strong side, we the But what grew and you we double-digits for we be if think as think year the about in clearly, that a last in our done on growth wealth us well. we’ve think wealth that side lending will you driver space, know, XXXX

roll of we that in is So for range us. as XXXX, you certainly forward X% something very the very feel add kind achievable the X% together and into to that confident pieces

Peter Winter

mortgage the income side, fee wondering, Steven And bit, you outlook and I’m brokerage XXXX? Okay. little talk just talked and on the for about a you trading about in can wealth. banking

Steven Nell

footprint, our good confident we so Yeah, have market. across to that and very feel there purchase I we think serve capability origination with ability market our the

And year it’ll and of XXXX, so, process the and we’ve for I we’ve think good a approach total got there. little be discipline a good do we’re in pricing lower got well, great I pretty a think but

sector. I can continued the so be know, rate that may confident in about results pretty it the revenue feel XXXX, achieved good at the And in same growth pretty I good level achieve that in environment. do given we that feel some you But different, not we mortgage,

Peter Winter

have then expenses Bank. just just expenses reducing guys you revenue you I I’m a with And question, know on are know, still my at Okay. of there done wondering, the environment at a last Bank? to tougher work the cut lot opportunities

Steve Bradshaw

really that that costs when severance quarter. that opportunities pressure just earnest the in and board. going you interest it over million where and actually see we have the we net was And on worked side more we revenue the across We fourth some identify to thought a fall, to Steve. is really were going rate ‘XX, this Peter, back the really cuts Yeah, take apparent had initiative into us $X little further on in in in saw became

well. of some new across the expansion the curtailing Bank also as of We’re positions

opportunity to improve always seeking an there’s well efficiency. we’re always opportunities So and

of expenses investment us from on commitment do XXXX. hyper to that’s We’re our important being on to really but continue backs throughout have make that a question will focus perspective, to competitively we technology no there, the strides not reducing and a careful

Peter Winter

Okay. Thanks taking questions. for my

Steve Bradshaw

Yeah.

Steven Nell

Thanks, Peter.

Operator

Our next questions. with proceed your line of come from of Tenner D.A. Davidson. the questions Gary Please

Gary Tenner

guys. Thanks. Good morning,

Stacy Kymes

Good morning.

Gary Tenner

quarter on two in they the deposit side, so give you in Hey, may in any deposit obviously, deposit you change us be sequential inter-quarter Could questions. December? costs. were gave One, the terms Steven, costs worth of color

Steven Nell

No, I down the Stacy are I mean we in what I just to me December. the that earlier, as that have of in front to go you were don’t know know exactly they happy X.XX%. for composite see from deposit quarter costs X.XX% mentioned

I As he wouldn’t bit. but, that mentioned, there further. continue drive I think And a know, that opportunity to – comment there’s you beyond to down probably

Gary Tenner

Okay. talk the know is Can for of perspectives there, you in receipts broader some the larger a companies hearing of some maybe And perspective it’s tax the that the economy you slow down there’s Oklahoma then know, state. Oklahoma the you cuts bit been broader kind about lower energy I on we’re a think of job economy?

Stacy Kymes

up is the have actually of a corporate slightly well, taxes tax very held as Oklahoma, been and personnel scoop in growth think by bit. taxes Oklahoma driven here stack income largely in production in taxes but there’s declines little and are and decline the in receipts less the I drilling is well kind in doing

a be period able the be time. absorbed being think We seem economy don’t to well. economy in the cuts of I by see Oklahoma really any is reasonable the to doing So weakness job

that’s time weakness there, that some certain kind to there understanding inherent seeing not that too there’s companies, of doing we’re well. dislocation time able but here So to job growth with absorb is and states from

Gary Tenner

you. All thank right,

Steve Nell

Thank you.

Operator

questions. Stephens, Olney please from Inc. Matt come line of with questions your next Our the of proceed

Matt Olney

Hey, thanks. Good morning guys.

Stacy Kymes

morning, Good Matt.

Matt Olney

think from XX% go I will the around this of Can asset to the with be first or drivers back of outstanding. just I we decent us charge-offs quarter loan driver, is book think a and are growing there your on what’s it any part this Thanks. to, sounds And that loans higher the XXXX. growth was energy Peter’s it pause in limits energy like saw want class? energy? Stacy, I on internal Is concern question in And you remind about future? this now

Stacy Kymes

Sure.

concentration inside grow on room the be constraint of ample have to it our ability other see that than our deals. anything You find a good opportunity We limits. would don’t to

quarter see quarter-over-fourth in as If at, identical. from been that know, quarter don’t million very actual anomaly back you think for year the net if quarter go a I per the $XX you while, consistent you fourth now perspective look fourth I quarter this an $XX last net actually, to and charge-offs at fourth million look charge-offs, we’ve almost it’s and

through range as kind some still will Marc year point So this basis we’re, calendar that, good these near-term space. to of of year. alluded we But XX next year There feel in issues you about we’re as charge-offs we XX the could to, themselves process. in work be the think be some that for basis the earlier that’s net of providing loaded some guidance point that front know, full very

together. than sector to points energy the we’re charge-offs to E&P XXX at so this basis net You than think while, we here, improve a teams but seen cycle, ebb opportunity in great and think a this XXXX, in this in longer-term we’ve through exposure are in a we working has have but talk you higher in points additional we industry or spread been about in team. XX if on see understand about XXX overall, the that business about about know, that but we The this you last as credit flow were great some their like continue year, we’ll others points year. line those They’re basis space, basis getting the to think loans, they the

and positioned shareholders staff. be engineering way great to a this We for manage able the that good it through is have for and think do good to we’re a in us. well We that

at be there the I quarter end will end the are non-accrual talked criticized and at and all even that were but some think than classified and our that and less non-accruals about see fourth loans happiness quarter. we’ve they the second you with the little of of bit, a

where it level is bit there’s there’s bit at flow it’s a that believe going a but little going down, little So manageable. and we we’re and to go out, to we’re ebb go very where will a

And to that’s you know, company, in for charge-offs our the that points full year, we for going very have compare we’re favorably going XX group. peer to think the to basis

very And there that and that. space that issues to through liquidity in extent, class well is asset we’re but media clearly lot, we’re so a in the the it’s manage around a with think large an positioned is working to

energized because energy as we continue around a offering we Financial. company as we ever as have think core part to you and as that our DNA to want product if important of it’s will, BOK that a still emphasize an We’re for been,

Matt Olney

thanks was for increase color, on the that credit a more from portfolio? us prior sticking loans and million pick about mentioned senior community tell non-accrual And then housing discussion. I release did development press is think multifamily Can up that credit. of point a Stacy. it the you that The part Okay, $X to this and

Stacy Kymes

fourth We slower but significant non-accrual to moving leasing slower is we loss, credit quarter. and been has housing just new of a commencing not part in serve. not our in pace. investment a of to that the It zero that made certainly is at low demonstrated I portfolio. income perceive is some weakness that but any we loss. deal since related real the tax This it a say the loan senior communities has that it’s lease up, It part any significant housing don’t as won’t

Matt Olney

Okay, guys, thank you.

Steven Nell

Thank you.

Steve Bradshaw

you. Thank

Operator

questions. come questions Markets. the Our line RBC Arfstrom of next of set of Please with Capital proceed your Jon from

Jon Arfstrom

Good morning Thanks. all.

Steven Nell

Good morning.

Steve Bradshaw

Hi, Jon.

Jon Arfstrom

realization the are just for NIM the pricing, asset we talked you the last was about saying I’m sending? that earning of about you’re the deposit on feel cuts. yield run maybe you the is course, it follow-ups, you Steven said two last early that message essentially when bit you you curious that but little its is that pressure like talked quarter We a saw full Two the

Steven Nell

in think loans is, the the think we based think re-priced – I number of yeah. the When a of majority effectively it of percentage the good numbers. LIBOR you is and so portion that about have that I

Jon Arfstrom

then a you think Obviously, term Okay, months for And maybe used I issue. talked and about seen confidence three slowdown of in three This Steve today. you C&I more the little a a maybe or good. that it it’s or general you months pause in that maybe bit ago and improve is the optimistic Stacy pessimistic was things confidence positive you. and more bit last more Have the a any same? just little are it

Stacy Kymes

middle think has and middle few side of the market relatively the consistent environment last I end the market over months. lower been on C&I

lot business, some we their of I a seen you’ll began that’s the GDP line, an continued think we’ve that people for get today invest things, I equipment, certainly around more in, not buy in and these expand to see a add certainty growth but piece think of business, opportunities as growth. area to grow of new outpacing been

and much we if know, You to able of you GDP kind careful. know, little not can but you it and consistently talked outpace you growth, many not for be being a then, bit, do, do a years about

I know, of growth digit in kind steady single think you high of of what slow just is And kind that space. we’re kind growth, seeing so not that’s

Jon Arfstrom

material Okay, good. year-end expected Talked downs, an pay those size two of us the about large idea of give you – can

Stacy Kymes

we and No in real wholesale three downs our broadly had sector. retail areas pay in and have, in in both – didn’t really commercial we energy estate

weren’t wholesale as their downs, they up fund of portfolio down in sector to one during of inventory Christmas sell that time. cash credits. some comes flow you they they of and they retail the and period go summer as know, through season They, large selling that buy in kind those tend tends cyclicality pay to of of the in Just

you in forward. to fourth the we strongly we know, real nice that you kind kinds those kind quarter companies of see of as you but commercial a rebound the see when certainly were, late optimistic sheet particularly, just see the that real of know nothing tend into XXXX and I’m at move unusual there know, we quarter we’ll and see I you are business, based nature know, for not if react part of on and of dressing, the move some not that just I so of things, was estate those dressing to it’s, and at a anomaly Jon, XXXX, a late there Energy as what that fourth but I sometimes not but don’t trend, the balance look early as

Jon Arfstrom

– Can right. the real limits and of bit all then commercial the just that? kind Okay, concentration in mentioned of on a And us times. a I guardrails estate, you like misheard remind still that you helps. have it sounds you but may you couple last one, room quite you themes of – but of have

Stacy Kymes

real estate’s both of tier are a of it’s know, XXX% we energy both So, in limits real are XXX% commercial for ample the commercial those based for joint spaces. provided XXX% - reserves and on of outstanding, with our to reserve capital in capital committed, it’s X commercial there room you energy, grow and not estate consistent based real on that we’ve that guidance got estate and the

we a our So concentration in guidelines growth have in way constraint any those meaningful will areas don’t that be for we’re – internal XXXX. not in overriding concerns a

Jon Arfstrom

all Thank you. Okay, right.

Operator

questions come of Fargo Securities. the final questions. of Jared Shaw proceed Our line Wells with your from Please

Timur Braziler

good Braziler Timur actually in is filling This Jared. Hi, for morning.

on in commentary energy. if of wondering driving in just is First middle of energy And the to weakness C&I? I’m some the how much market I some market itself sluggishness back want of the circle around other is the to manifesting at the question, industries? in that commentary so,

Stacy Kymes

of You’re economy? talking effect kind broader in just the Texas spillover and broader Colorado, Oklahoma a

Timur Braziler

Correct.

Stacy Kymes

to stage, we’re that and conclusion see at to natural saying. me wonder a what it’s that that’s about this not know, that. You It’s obvious

kind time. is know, about my think downturn of this more you pronounced the perspective, really period this that in you don’t from XXXX-XXXX. If that the I tale of it in of original – I was happened think

where think perspective. it’s from bit not I state we a and more steady are today, as it’s pronounced that nearly little

pronounced necessarily to – that C&I know not our issue. know, price in markets, think general the we’ve question, you seeing good tie I’m I that several in to stabilized of in an footprint [technical and but particularly oil, the a direct as weakness – demonstrated for obvious I’m to not a point less this of $XX that more I been think kind this slowdown you ago, but years it’s difficulty] that’s at necessarily $XX some has was weakness

Timur Braziler

still the gears have the deposit in growth been And growth Okay. we impressive. the XXXX? should hit and just into quarter. culmination of looking this at on that been some I And taking quarter. that switching the place, then going initiatives of maybe how that’s Pretty heading Was that to think deposit guess kind fourth of remaining what the work all about

Stacy Kymes

process, to So that kind is initiative an to in you XXXX. as fund out it’s effort something lot to that hard loan a growth It to the know turn that to growth through time opportunities. Steve a cultivate of laid – is grow go important immediately. takes ship doesn’t deposit identify you deposits try it's begin the for and a and of us And

the of driver were an in a kind at big deposit you fourth in while levels. They in in in the reasonable that’s with and on a the an bringing job prices a did result terms long-term effort for of going exceptional really culmination as look Grauer great businesses needle. that quarter. that for as deposit well. Really our of If But a great been of moving quarter, team commercial the Scott the the effort wealth growth did job fourth the just deposits

that deposits margin impact we’re doing can XXXX. as and growth we the continue our we our mindful really price, about about desire attention XXXX, think of to at growth the is those cost to a think fund very we want paying to net everything ensuring to the to interest minimize but we of we’re loan to As think deposits kind reasonable I in of growing grow,

Timur Braziler

versus looking for banking that there a And just that timing Okay, last mortgage year? incentive quarter. then the the revenue disconnect expense – was issue this or me and for and upon Is true strong at one a

Steven Nell

you and is more Yeah the the the know, expense revenue then biggest to is commitment tied loan fundings. levels side side driver of really

you And they’re level. at fundings, so, loan pretty if look

funding influenced year, revenue which commitment is side so costs of work the line had that is get place the And more completed to take in banking by off. loan did is at item to the the but the there, levels mortgage drop the end

kind timing. of that’s So disconnect the just

Timur Braziler

Great, thank you.

Operator

reached of now over call have Nell the closing will the I session. end for any turn back remarks. question-and-answer to Steven the We

Steven Nell

me or interest a Have at IR@bokf.com. questions any at everyone call XXX-XXX-XXXX day. thanks your you us in well a can for and Okay, today. BOK if us email joining We and Financial, give all questions, you have appreciate great further

Operator

This conference. concludes today’s

a for your this You and day. you may your disconnect lines time. have at Thank participation great

BOK Financial (BOKF) 22 Jan 202019 Q4 Earnings call transcript