BOKF - Earnings call transcript Q2 2024 | BOK Financial Corporation

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Operator

Greetings. Welcome to the BOK Financial Corporation's Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Thank you.

As a reminder, this conference is being recorded. I would now like to turn the presentation over to Heather King, Director of Investor Relations for BOK Financial Corporation. proceed. Please

Heather Worley

thank XXXX our financial and Financial's of for quarter second results. you afternoon, discussion joining BOK Good

Our CEO, cover Stacy Grauer, cover Maun, and Executive our Kymes, credit Executive will provide President related Wealth Retail opening Vice of fee-based President Banking, Management, and results. will metrics; our of portfolio Vice loan Scott comments. will Marc

on bokf.com. We presentation performance call who will and Kymes, our quarter you CFO, Grunst, begin and release disclaimers X Our press the on Marty at turn this Stacy will statements regarding for then I our are the Slide to any the on available guidance. will to now refer made discuss Slide website call. financial Slide over forward during forward-looking X.

Stacy Kymes

you, Heather. Thank

our risk among levels driving commercial portfolio, including years, fee attractive capital and net lowest well-diversified for practices to $XXX.X income than earnings long-term real peers been focusing a more quarter loan management such disciplined per strategy, been are new our equity with operating footprint Last quarter, that report top-tier value well-controlled of and of $X.XX I tangible enabled of asset loan-to-deposit as second core levels with were income paired of XX a the high-growth related returns per with welcome us of EPS million share. in compared net allowed business time surfaced a which and seen on practices the industry-leading market would our performed XX% stress produce others that common a would and estate share. which [indiscernible] financial during giving shareholder and a Every an one gain EPS all to an unmatched. total being issue based XX% led charitable during has pleased of Adjusting notable over overview largest produced stresses as of diluted periods industry, by on peers to attractive disciplined shared is in business contribution, traditional concentration others management the the have on great the We all dynamic market well not bank focus for items, TCE, together the loans, million when $X.XX markets. These to or are $XXX.X quality, ratio to have hold, which at Visa of credit you've we charge-offs on mix, versus have us philosophy crisis, credit outperformed, us in of participate incredibly attractive in have time liquidity we in resilience to liability or below to event TAR. geographic

lower book moved Our strong performance during XXXX COVID. and again, was loan and when XXXX, in also prices energy

last point shows March arose well one an basis again, XXX in risk of year, year, ample almost of When rates in levels issues as higher increase interest TCE And now than rate liquidity. and were in with of the more positioned basis. Tier X with percentage XXX% the management market less after Tier and real one XX% X of loans, and commercial a lowest a an than has as over concentration, of exposure and capital concern the basis X on estate on total of committed of we BOKF reserves XXX% levels reserves outstanding capital

positioned shareholders, growth produce for for and Importantly, are to well we returns. our attractive

a we've of over median had the the KRX we've meaningfully XX growing X, EPS rate at index versus CAGR Slide Over an years. Index on see that X.X%. the outgrown only last you As time, versus X.X%

banks were there only fact, In grew EPS BOKF. a at that faster X than rate

The both risk some into having conditions. management an diverse and company want provides longer-term can lower banks top this higher risk. talking be history banks risk we intend that It X to growth are capitalize last strong, to a rate flight attractive are This others a about and Since long also we growth graph stable how spent high them. in time our tempting market I can lower I groupings. a stability and profitably and strategy, put We've quarter to long-term we at highlight ability quarter that produce over see our illustrates the culture on proven and be grow while X during opportunities growth a profile. to market of higher

Slide to Moving X.

good starting Our and quality credit loan portfolio point. a is

data, industry Looking generally loans you at that the for HX flat were will see the the Federal broader during Reserve's quarter.

commercial they linked may CRE a by loans However, X.X% growth quarter slow despite with increased in BOKF growth healthy or real portfolio. part activity are a loan of $XXX payoff driven commercial estate. loans million while payoffs nonetheless

quarter All this rather payoff of excluding C&I but concentrated fruits lending our in XX% a process is few one, the portfolio. by This has sales the at our annualized of reflection to portfolio or activity. process last annualized, that years didn't and normal C&I of is The of our X.X% been certain The advances. happen a efforts wasn't of activity grew this approximately last, created course seasonal accident. grow long or

low. from pre-pandemic credit this lowest but moved play the lower. we criticized geography underwriting the Nonperforming our in loans classified XX.X% largest of metrics, which see our haven't and a credit our disciplined are at profile. Net critical are Mark of done our charge-offs of that levels. CRE guarantors banks on believe still And have Tier among you'll we well below and performance of X the As elaborate expense levels role very is and will portfolio. strong reserves, this, again the

process, underwriting overall our normal long-term will toward the are metrics of sustainable levels and a economic understand the change. part revert credit environment. We for conditions rate below we rising origination interest their and as loan stress each As

remained Our fee XX% income at of businesses revenue. total strong

returns of of attractive challenging and another income conditions. produce are that or over find offer have all businesses scale. bank streams diversifying These decades benefit income net regardless You many the our has market built level regional that at interest been countercyclical cannot same fee businesses and operating to

saw now before this at You recent stock other of their discounts. also monetize us Many banks our asset XX% deep program. well in Visa exchange liquidated

long-term our focus, quarter, on The produced repositioning than less first AFS payback for to the and these year achieve this period. given losses offsets take full investment NII saw gain you value $XX in million However, with the generated a assets. which to held us we benefit a X-year

which We remain projections. ahead impressed pro Texas, by still San in operating their Antonio Central the forma progress are seeing we and of are

continue for We in to all talent our markets. add look of opportunities to

in that, our repurchase to we put BOKF Finally, afternoon. repurchased XXX,XXX proud the with confidence call long-term the and to take quarter that has the I'm over and quarter review it to appreciate to turn of of the And reflect attractive I'll together team over company this Marc. this with valuation. shares advantage you time

Marc Maun

Stacy. Thanks,

than our year. that commitment this one isn't focused our reflect view, you performance of ability X a effort. is and what seasonal Turning accounts, up the segment. for concern ago, that We was The muted business opportunities. one. been good X.X%. or slightly we For from of credit increased to by Overall ], increased moment The linked growth long X.X% the management we CRE this space. about deposits C&I loan outcome. Overall, down wanted opening a was X.X% loan there growing our emphasis is CRE operational Portfolio on greater is for cycle C&I This growth few Stacy's point grew oftentimes and growing seeing growth certain solid to years with you're intentional the C&I Slide some We've coming on after last about X. with C&I a many quarter. several sustain especially revenue quarters know for today us. loans relationship to think yields growing businesses. When is Even over about loans most there feel be and [ on we commentary. In our This the of X.X% and will for of payoffs. still other expanding a C&I C&I, CRE remainder sales a the commercial just treasury this our to X.X% many I with results core by during annualized. the advances, X.X% see experienced market's loans basis adjusting quarter spend profitable good the QX.

The normal of providing involves CRE the bank sponsor the has then once funding and cycle construction the under portfolio book been reflects the of selling payoff it life of is activity while our business. this This a property project developed. health

of in sponsored Importantly, as life in this business. Previous somewhat activity the payoff primarily the and all were CMBS rate the the course insurance which permanent agencies, environment levels payoff lending dampened companies rise in limited activity space, overall well normal the the market. as during is by of was

activity elevated with levels historical classes. of valuation and normal to returned the has asset activity the payoff within space, recent bulk However, permanent CRE in stable

linked to Loan different the balances quarter. segments. X.X% in our Turning loan business Energy increased

energy of our natural reminder, a book composed XX% oil-weighted borrowers gas-weighted As borrowers. and approximately is XX%

Our customers are year, levels collateral in last use this on the customers these outstanding of loans. still the which grow commodity at lowers commitments meaningfully which space, continued hedged at several leverage of least We've the current well energy this over seeing in lower next for pricing are risk kept our years business, has to levels. but

for focus X.X% business us. growth This and from general seasonal combined or core for linked quarter a loans loan adjusted X.X% grew advances. Our perspective service remains a

this in remains Our X.X% decreased portfolio quarter. quality strong. Credit Healthcare business loans linked

a skilled roughly Medicaid-based facilities other the specialized integrated is systems diversified reminder, in Medicare, nursing senior pay equivalent As investment-grade with that of living, X/X portfolio senior a housing, private predominantly of providers. ratings are mix combining and stabilized health

business but diversity of knowledge for with regional footprint, locations line a care focused their health operators deep of markets. The multiple on has national and is

underwriting We space. in of this history a long have strong

X.X% decreased quarter-over-quarter. Our CRE business

We X continue reserves capital of and XXX% restrict Tier a limit, to concentration basis. committed to which on manage is

were that and and XXX%. know down time, We over we to quarter, ebbs this flows

have the time to to concentration. to lend are we client XXXX in have with CRE the find have fourth a leading do numbers in And selection the You space. not this in role We quarter afraid chasing plays others capacity We space, look not lower we product. exposure performance believe are not but of a the while this of deals do that that to back this outsized the on board.

in subjected tests including stress underwriting and to interest shock. rates payment with the are process, stress multiple Loans those

the above in key role also standard and performance over underwriting believe factors few critical product. the a a of play this We

support. is First guarantor

With have support known transaction. of and their time have all we over We to supporting commitment demonstrated that long meaningful have a CRE XX% in loans. for counterparties

of within is the prices. and in Second most the that pullback very exposure geographically strong the in little seen geographic country in portfolio exposure areas with largest economies location. diverse, but we is importantly, the our This footprint have

our way discussed that the we do As quarter, to last fundamental is credit we business. culture

experience in of business disciplined of a our approach to strong consistent, economic on Our calibrated each our to underwriting process is based are avoid standards designed conditions. and our lines standards fluctuating

Approximately are the XX% in reprice of year. or portfolios floating our CRE commercial and next rate loan

always So credit been norms. historical this portfolio XX, a principal and variable quality the us. factor notice below has across remains exceptional will On for well loan you Slide

by assets, to excluding and million The million repossessed Nonperforming $XX resulting exceptional assets loans end guaranteed an loans quarter. linked quarter, basis points this nonaccruing agencies, period assets outcome. those decreased U.S. X.XX%, government and to decreased $XX nonperforming XX decreased

our second or XX Committed performance XX the have a for basis the percentage well $X.X over X loss last points. averaged Net basis below million the annualized of and below as months, basis trend XX pre-pandemic remain points to far XX extending charge-offs range of levels of criticized assets points were historic capital. quarter

comparative net quarter to or million at $XXX reserved charge-offs levels. a end reflecting historical want most with remain for expectations. reserve combined the view provision, remain stable of We the We holistic outstanding appropriate norms. losses and the metric consider reserve well credit growth million a expect if below we $X loans loan X.XX% is allowance believe forward, to of with environment operating of combined Looking you a credit

reserves maintain of to expect appropriate conditions. We loan book [or reflective economic an ] and

Scott. credit should the slowdown outperformed an And cycles well turn during over now are positioned I'll to economic call challenging materialize. We have and traditionally

Scott Grauer

Marc. you, Thank

Slide patiently both that customers. transition project the positive. and find very modernized is positive of our team to required initiatives the We and outcome has to platform our with launched the a and but our like experience company, thank the planning thought. posted and rush solution, turning employees July been planning complicated Now proud of strategic client this the quarter much And X. been XX. who results I'm didn't results to accomplished. involved. a I'd on a This everyone After have and we has most we encouraging a is orchestrated management wealth readiness, organizational importantly, Initial for excellent years successfully

these results represents of by income our total revenue securities Total I'll franchise businesses, to quarter. quarter. this is in and covering That and from our revenue, turning a again fee reflects for this $XXX contributed which the our of of strength space. peer-leading businesses Now million on operating XX% contribution XX. Slide the begin markets

decreased slightly the fees for to versus lower the million broader consistent by industry XX.X% trading Our with quarter. during trends driven prior this activity, spreads quarter, trading $XX.X

will origination be volume line of volume. When originators. is production primarily is business trading business mortgage for and, the as mortgages trading lesser and in a our volume more of facilitate business mortgage mortgage-backed This influenced item composed will fixed hedging income extent, this We unique This municipal a we our both and securities changes than trading. higher, XXX to increase. franchise bond and most by spreads in found

Importantly, results this business. of we're we're levels origination low seeing in very volume, and at attractive still

While produces volumes of income increased often streams. banking improvement existing countercyclical this revenue reflecting XXXX. interest $XX.X origination million, remained the in from quarter market businesses diversification and with revenue Mortgage consistent net continued good this at it's mortgage be our volatile, may our and relatively

part production. facilitate natural This this rates on take steady agreement. our those prices Customer hedging at in energy When hedging and to half XXXX, we loan income of revenue offer the The energy commodities, prices tends the putting To $X.X increased associated we examples, is exchange. lock to customers million production and customers. We driven ability us. become few revenue higher and as required a more of has advantage their foreign first customers oil on this markets give to their with cases, hedge interest volatile, with hedge are stream many more our by of when behalf largest quarter. customers customers of of hedging by component their gas in activity In increase. oil saw hedges of protection remained energy on the

a result, income in that this our time. As increased segment at

in is when during COVID example XXXX. Another rates substantially decreased

to item. line Our in to explains year-over-year rate year, our most was engage insurance with customers rate to in previously that use of an floating interest sold we rate of this included loans perceived fixed. it convert fourth time that participate business desk hedging the decrease which The swaps fee to item and interest quarter attractive last brokerage line

experienced at specifically looking in However, we've in growth this brokerage, segment. excluding insurance, solid

cover asset our and Turning businesses. management to to Slide XX transactions

as revenue fee are driven management this is business. in drive primary to $XX.X increased Asset that increased results X% This of million. $X.X a AUMA income. primarily by increased. There seasonal billion preparation couple by valuations factors tax

first value accounts. bond at management sales This and or valuations is portfolios change The under equity of can result assets clients' a the in of amount decrease administration. and of as our new growing increase the team our

management. Second assets the under on earn we is spread

we XX quarter, This AUMA. on earned points basis total

XX will earned earned. under amount For the segments, we of type administration, of customer the points. earned also and XX fees of we've influence points, basis managed basis each funds these for funds, Within

Our within change see our you revenue migration will mix. business as

revenue and $XX.X to States in of volume And XX This card solutions over the over issuing quarter. processed and call institutions hand financial XXX increase financials. funds a business is almost I'll processing for for United this electronic of driven Virgin the transactions by business, to businesses by cover throughout X,XXX results and the provides Marty the proud or I'm the Transaction which debit EFT transfer merchant solutions credit to for Islands. Again, now during increased million, X.X% an top processing quarter.

Martin Grunst

you, Thank Scott.

to gain. loss serve. monetize us gain the further took program in of first the call. This the our we by us we Visa me Foundation start a quarter This recognized donate Let we those [indiscernible] earnings to our quarter the worth shares of communities on covered shares in converted $XX allowed and million million in invest in securities to the and million vis-a-vis exchange XX% $XX program second last commenting enabled BOKF to pretax

adjusted to capital the securities recent the and all liquidity The losses and well X.XX%. XX.X% we continue and over have strong. processes displayed regulatory ratios for TCE is TCE be portfolio Turning very testing is is XX. environments. Capital is capital stress years to and Slide CETX strength in of that us serves all as the particular, planning in economic most as include year, the well TCE result and in X.XX%.

to $XXX deposit Our quarter's current loan-to-deposit growth XX% XXX% stands coverage at with ratio noncollateralized deposits uninsured increased of and our million. this and of

position approach capital our strong Our enables to buyback. opportunistic share

price During at repurchased just shares $XX.XX over the of second XXX,XXX average quarter, share. per an we

to Turning XX. Slide

was versus interest interest-bearing what prior growth less the less item basis behind was The in X balances Net basis NII abate. The sequentially decline of it the the this but support of income X X also was for that portfolio the the that points $X.X prior quarter, us. of headwinds trough grew to driven was than in and than what higher quarter. average effect the by for of denominator net is increase securities was AFS portfolio. continued You X/X the prior and in loan balance X of continue by DDA million quarter. pricing this basis cost interest line will deposit margin Strong to growth it average deposit points, see demonstrating trading X/X and asset points lower were the quarter

to We of repricing or loan our increasing portion net continue interest securities-related growth fixed income. to net modestly remain was the sequentially rate sheet and That will balance growth stable grow net driven income that by confident neutral margin. a interest largely with interest the of

$XX.X such not, were and $X.X compensation were the number the million expense. of decreased of or which incentive items some timing driven Linked to some the related, as Turning XX. and such expense expenses X.X%. as fell a payroll taxes factors, more benefits Slide by total million, quarter Personnel

we In addition million donation $X.X contribution the the BOKF earlier million also share made $XX to mentioned the call, a to Visa quarter. on this Foundation

$X.X expense with million related recognized $X.X in the expenses million quarter of to remaining were QX. consistent in assessment FDIC the compared estimate We to activity. QX special All prior

to Turning outlook provides XXXX. Slide our XX. for This

income of November. in cut interest for net XXXX billion X $X.X presumes Our guidance rate

commissions We to neighborhood of the expect $XXX and fees in million. be

assuming of trading trading persist primary the revenue potential that We and trends recent is MBS in guidance. are into driver of securities variability QX element

nonperforming near the somewhat for be ratio of efficiency XXXX be stable I XX%. our by anticipate economic that, would to back the to the hand to Q&A, our given expect level assets operator for call than levels outlook. With very Stacy. lower XXXX remarks closing expense full and the like similar or be which will year to to from We provision low We followed

Operator

[Operator the from Raymond Instructions] Michael James. with Rose question comes first Our of line

Michael Rose

maybe guidance I we appreciate and item. brokerage the in Scott, that expect in we maybe relates the how on color least businesses. start Can and you fee can at the you what's like we bake really just really rate takedown here, few It off. line results you, talk year, trading all perform? forward next quarter business second if the would to the in get hopefully a cuts just into for looks then curve as to the

some get seems we do some explanations as especially of businesses some some we me in And low that like year cuts. of and point just look into on they or those fee next it have a the near around mortgage if at that move tailwind businesses, probably to we're based your

Scott Grauer

bet. You

And essence, so how exactly your would. you in question answered I

agree As with I I mentioned, you.

mortgage we current and rate think into settled environment levels. I the the that production current have

there, seeing which up variable we we're stimulate which TBA What is is production, that mortgage which Marty biggest not Fed that picks the further bottomed. increased a volume mentioned think piece activity specifically, there. us cut, rate greater will whether -- activity the for hedging stimulate us MBS help -- piece, is or will the get mortgage will in we in essence, there has, that what So the originator

clarity on financial of out MBS once activity get our product the our move. the portfolios some that their downstream managing to out we of Additionally, move serve we Fed actively intermediaries will with curve

we as will and move an and that we'll cuts, So into a flows. we increase do think activity, the environment see pickup Fed in mortgage production the where then that volume

Michael Rose

as maybe seeing of It move But those I follow-up given loan just paydowns CRE a companies it. pretty banks? you generally we some other particularly And sounds the C&I Appreciate how are the then delever Marc. this a just at would would would at half of pipelines we year. we're for color as bit, back reconcile point. kind of on expect to X love in the growth, good into are And the this some strong based seeing like clients just just little what you some do that serve quarter's there. and slow

Marc Maun

the it's quite of here while we C&I I not thing think take doing capital and time. loans a to for driven transactions is side this actively around Well, the more main C&I obtain been we've asset have some doing on because a and by acquisition. been business relationship-oriented

been And existing but able customers. new so a we've usage obtain it's customer, of not been to by lower matter our

growth we've broader than for so time. had actually quite had we've a And some pattern

we we maybe think continue rest on new slow, and similar expect the kind right, take will at to add seasonal will phase, year. for And level they'll time to have we see we we the deals, look so fund that, opportunity but expect that but -- to of we deals, those the quarter, to to up, of of the that to next be advances, we for in in mostly to something months. but the we XX expect over -- the the payoffs right look be sustain for see some not construction CRE, -- can we saw the at kind second to not the So you're do excluding the

Stacy Kymes

helpful. here But really but here, Stacy. we've we up. focused this, think on footprint mean, I this come the were is is Michael, original to back gearing time, the I been geographic at thesis our same awfully

disruption. last markets felt here spring Our when is a sales was when year the ago, effort

are others back manage there to different so capital pulling in seeing that, not a way. who are and their who liquidity those may And ostensibly be

And and so being really grow is the from. we're part market growth adding in of talent, share to markets seeing adding that great

kind confluence it's those are growth for outsized us of And of so quarter. all creating this the that the

Michael Rose

And on upcoming helpful. color. I retirement. congratulations appreciate Marc, your Very all the

Marc Maun

Thanks you.

Operator

comes the Our from Brett with next line Rabatin Group. of question Hovde

Brett Rabatin

of start wanted -- with know -- XX that I to you NII there you basis into -- give and a wanted back that just margin on? the just basically the I maybe points take to you implies for I the focused to guys about with look I are see for half I the there the guide I'm start outlook thesis change about year, -- the if don't guidance, that was full might explicit if but it that 'XX. to wanted at variables wanted margin is up if that are thinking going that right that Is and anything

Martin Grunst

Yes.

Let the I me margin it to and about good just and talk about a and that's that question. the then variability, how NII think we guidance connects think how

that, and because account, to and the that So our changes -- effect AFS yes, large. we was there. out took QX the pretty very view made of that in denominator just knew decline the trading -- good the pretty portfolio underlying so stable really only driven really CRE the and X this cut stability the was do margin we QX. by really rate quarter the We was I saw outlook, payoffs we the reflected And small one

the deposit in down you to do and that, what incrementally see that the But slow trends do And both that QX expect percentage, giving we [indiscernible]. on naturally just DDA even get. minus just quarter-to-quarter the trend, the usual continue we a net we up ends rate interest that us tailwind noise as saw margin that plus as or underlying from

we NII being question around positive incorporated we could the the And trajectory guidance. to what we in certainly be than the the your if end be the growth the we're we got think then of that quite about that as on and how outlook our DDA on be positive negative be we've out pluses don't about trends of how cut. then get those when are thinking rate Could CRE relative minuses QX positive kind or or really have and of up better pluses loan thinking interest-bearing pan payoffs side And expect, minuses. about or higher

Brett Rabatin

expense kind That's second guidance, little just And wanted a just you that sticking anything in -- And see back for of probably what obviously that if just there's the year in go the tweak that surprised full of back line number then there to salary wanted the know growth to given I but year the helpful. see quarter. from Okay. and didn't down on prior keeping mid-single-digit was I raises, the from half inflation guidance. on the merit some was unchanged else particular was that to

Martin Grunst

it in this quarter, Well, Brett, was the keep in quarter, last mind, we did bring down XX. efficiency ratio from guide XX,

do a as we good of of the I'd you being the just That's you mean little bit that rate, probably we the guide. did run good decline have control rest comp think that some of should to that the have able feel a note add a quarter-over-quarter. focus good I'd I quarter. But through on through about not really year. So expense incentive back.

data some got projects we've IT a bring that going are Now up processing to the bit. line just

Operator

Our next Capital. with the of Jon question RBC Arfstrom line comes from

Jon Arfstrom

But Just middle get question. of fair here understand the pretty look pace back the I to from net your to you're I I at on at way guidance consistent it? when loan growth Michael's Is it is growth a think suggests of want that guidance, the a range. to what make guide look sure saying to

Marc Maun

Yes.

it. way look right to that's at think I the

Stacy Kymes

C&I growth question you going John, in what outperforming go I was our know paydowns. to really the January, say loan happen commercial we that were there. didn't case. And that's if back January We and estate back us for still mean, We exactly was the from perspective. said would I real expectations a to real still

we're I But paydowns think we're optimistic. very C&I quarter of don't quarter there, third but if getting that's side, in second the trough know on there. terms we net closer or to the

just a guided in although We is pipeline will And feel and rebuild that it's probably we begin little term, the provided, uncertainty only portfolio. guidance the headwind if was very good near XXXX there. the as we that it bit. that that really we tailwind the But to XXXX a for up about C&I CRE create

Jon Arfstrom

that you Stacy And about of would I comments, loan-to-deposit be Can bit on the Yes, deposit other growth earlier can a this your the drivers question ratio. your deposits. Slide quarter? low sure Okay. in little side more guess talk on see on about you X. you another talked

how Do curious just bring that you try look at you continue time? than I'm over up to to philosophically faster do ratio back loans? grow you Or somehow deposits So that.

Stacy Kymes

Let ways, a couple of answer John. me it

one and think is of for securities and book most deposits way funding funding, that's we loan I bank about portfolio is here. the wholesale we run the the largely the through think my self-funded typically career

where for from deposits. will incrementally look we book wholesale we perspective than However, a can we the fund can opportunities cheaper securities with

And so funding. we're than seeing the wholesale incrementally incremental opportunities that better deposits are to grow

and strong up, capable funding opportunities We're deposit And marketplace. to that. We're think comfortable for happen that I letting you opportunities well incremental see other sense. we see and to from us positioned the about we're feel makes ample and those us. to maintain we've that's a displace People we to perspective, so allowed it us and the liquidity. to in continue where But wholesale, grow of created context so to positioned as as loan-to-deposit good do we'll ratio slide want but think in continue that where growth

where those continuing exist we're take advantage to for so opportunities of us. And that

Operator

of Our next Peter the D.A. Davidson. with from question comes Winter line

Peter Winter

the with going for the some rates. increase finally it the rate outlook deposit the end we're I'm look in been peers what's beta, does at just to upper of Because But downrate get beta? on like wondering the it's cuts.

Martin Grunst

right. you're And Peter. Yes,

Our deposit that beta fact got in commercial the just simply a more wealth deposit we've our reflects base. and mix

easily a And have so see confident the downright effect up, you you're the We're down. very the rates in come mid-XXs and beta to when scenarios. going exactly when going able deposit play We're went be rates that how to will that's same out. know in saw to effect

coming cuts start once through. for helpful we be will rate that see So us to

Peter Winter

it XXs, think, in high be beta? the down a you Would rate

Martin Grunst

flat. learned, the As we've stay get-go and from those linear just necessarily all they aren't

So the as rate might something possible. definitely continue, migrate it's I using up, And in think I that higher that mid-XXs start mean to with. increases that's beta.

as the rates increase as [indiscernible]. can saw beta we that on So just decline,

Peter Winter

just then just maintained of they're deposits, lot deposit right? in deposit stronger growth that X% thinking Got thought. half growth. [indiscernible] And then So would I quarter. the year-over-year about you how the modest for you're it. in up back But on have second And deposits, year? Certainly, outlook the a than

Martin Grunst

clear DDA to, the one of you help will was the thinking and to forward should that Peter, think right end the you're ending attention the up. thing question. DDA about customer average just DDA, balance of attention Pay pay your as drove balance up activity high at I that the that quarter looking

Stacy Kymes

the That's right answer, Peter.

You happens want on deposit side. that period. one volatility a the focus averages of to any in on There's lot

averages So are better deposits perspective. our way from a at look to

Peter Winter

hear the I but -- as period I give end guidance, if follow-up could It's Okay. one your then on get you just you. question. more just And just

assessment charitable the Do exclude mid-single-digit for and FDI on just using base the I'm 'XX? growth. contributions. the what's Just wondering expenses, you're you outlook

Martin Grunst

Yes.

are the growth think on as efficiency leaving when we we And that about rate. the is -- we're ratio, it the especially in just the as I was. think all we thing So leaving in -- true that

Peter Winter

rate a basis. on really expenses is growth the for reported So

Stacy Kymes

not That's year ratio. for special assessment normalizing correct. the efficiency for charitable or for the whole We're the contributions

Operator

line Our Wood from next question KBW. the of with comes Lay

Wood Lay

deposits. on question quick A

out the growth period broken interest-bearing on But average with end. and a in side Texas saw just that your demand markets, volatility just like there's the on looking you in really and some market, on looks deposits what between could Just by deposits? strong give specifically side color seeing maybe and both -- market, at Texas the some you it you're

Stacy Kymes

think growth -- I you the of our years is If for one several -- of objectives Texas. our for grow company been last to mean, Stacy, the key this have

San in wealth and Antonio And the we're in the saw on side, so Austin. you expansion with us

focus Worth of Texas, focused we talent market very deposit we're in is we've acquisition. and through So on are but that on Fort really had Dallas, the and in growing Central how Houston, a part

our there. expect. clearly, of something And fruits so we And of that perspective, labor that you're from it's seeing the kind

Wood Lay

remains up strong. price Got it. maybe seen were over And move lastly, to really The Capital But shifting capital. the obviously, from then here. we've stock good to just buybacks see.

the Just further current appetite stock for buybacks with price?

Martin Grunst

well Yes. you how share we about think as in know, note that sensitive I'd price just we're buyback.

Our incrementally very goal the We're have a that. is from prices, -- about to happy should done that expect But higher been see scale us value. to cooling and you add through activity over shareholder has see very accretive year and prices. higher value shareholder effect with you'll the incrementally buyback we've back share past us to that

Operator

line Our next Olney from the Stephens comes question Matt of Inc. with

Matt Olney

M&A. might of footprint? in We've the just in been around the around of you appetite ask and We the and bank's see Most for opportunities about love seen M&A around footprint. thoughts I'll handful better transactions have some a your kind addressed. and just

Stacy Kymes

Yes, in, going and really and I opportunity, a of levels fit for to the type that that don't we fit Matt, profile. significantly strength is things core going be the want important. that concentrations want have to which don't filter. we even to value we to both like our start to of the that, we're loans by interested good expand have running right it's estate, that -- is M&A in so run footprint. but of would mean, off the with the bank our acquired something we've don't deposits real characteristics strong franchise of outside find We before, talked capital, hard diminish We we it's culturally, those would want you be our us, to spend But be that

that really the lot we is just a that would So for filters fits answer look the practical there. there's not

see in got it's us. fit the to you profile appetite, do that so fits for us that it's like And what something an We for our unlikely would have do term. but near

Matt Olney

on valuations, in with potentially build kind the Makes uses Or to attractive less these buyback of sense, near we is think capital I with the current about? be And If okay just past. capital. there the guess lastly should consistent Okay. of are allowing sounds other it capital term? sounds levels you'd like

Martin Grunst

got making thoughtful we capital. where being deploy about and when of sure We've we're and patient a Yes. history that

right So patient opportunities. be I'd happy we're watch the to to say continue recognize that and for

Operator

Timur Instructions] next with question Braziler Wells [Operator of the line comes Our Fargo. from

Timur Braziler

circling the of way maybe inflow see when of it? pressures be back DDA around thinking whether deposits. And just Maybe the those questioning just the kind line late Maybe quarter some average DDA you right to of into is about down starting abate? if to you quantify X% the can and to

Martin Grunst

the was think I about to the The QX average Timur, think exactly was Yes, average DDA easy an billion. same way June for number. almost that is $X.XX

be really And So we've about feeling seen of at not off pretty since good we trajectory bottom, the a nice just really while there. activity leveling we're February. we've the exactly may seen

Timur Braziler

given restructuring bond And looking just the and kind being and Kind give Great. at like bond you the both yields reinvestment in of then bond activities? done yield some the on a of XQ, those Okay. where flows reinvestments, work can quarter? ended opportunities looking with all sense of the what's the book, cash us the of

Martin Grunst

Yes.

that's the at was of restructuring the because yield in the I think end right for portfolio activity, mean the if bond at average QX, you that representative -- I all fair the QX. look

QX So fairly was clean.

-- the still the $XXX probably think average thing a to is important about we're so getting million And quarter.

flows a was we durably $XXX were what quarter, off and gain XXX cash quarter. And points came XXX, the XXX, basis what reinvest able to quarter $XXX we of This get able quarter, flows were kind cash that in. at reinvested million each but to this million, between it of

keep going an to that driver coming quarters. will that's just margin continuing, multiple over the so be And trend important and of expansion

Timur Braziler

Great. And then just last for me.

with But wondering categories I messaging other of paydowns driving the in are bit year anything and just the be I the CRE -- maybe there's payoff [indiscernible]. Or I'm what are wondering your been seeing what what's geographies that I'm that guess the back driving if little lumpier paydowns, we're elevated mixed classes? a the Your bit has in from industry. other book. your CRE Is just the what your comments throughout guess the driving a exposure activity? are end And around little uncertainty in insulated asset that might

Stacy Kymes

just we nonrecourse it portfolio happening. And a be the once function occupancy is and there's level largely that's permanent a really that it of It's that in with refinanced starts a of market can have what's construction.

as to to What -- to has worked. agency, prepared behind comments start more about, that's of have just bit that lifecos, his those Marc, it's So permanent borrowers we some being financing. talked project or going nonreports slower new it's that portfolio in to a to the cautious. going lower it's little And going CMBS, it are it's rebuild the way

rebuild offsetting that And of this portfolio so begins don't you periods But today. the just emerge. that think portfolio, very sector very paydowns typical the is confidence as advances and I more behind around future that. of in have really our to you'll then see are healthy kind the But

Operator

Kymes Stacy our over concludes for call I turn remarks. to the will back That now session. Q&A closing

Stacy Kymes

Thank appreciate the future an achieved these being you, us, always concepts proud we We're which and of excited of if this questions Heather optimistic We to We're everyone, exclusive. for we have what spending King organization on us many. Please example capitalizing in stable, in are have BOK ahead and mutually We're joining interest growing time past. you Financial at reach about of and our discussion the with the we've not afternoon. any think h.king@bokf.com. a strong, today. about opportunities your out

Operator

This call. concludes today's

may You now disconnect.

BOK Financial (BOKF) 23 Jul 242024 Q2 Earnings call transcript