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BOKF BOK Financial

Participants
Steven Nell Chief Financial Officer
Steve Bradshaw Chief Executive Officer
Stacy Kymes Executive Vice President, Corporate Banking
Marc Maun Chief Credit Officer
Scott Grauer Executive Vice President, Wealth Management
Ken Zerbe Morgan Stanley
Gary Tenner D.A. Davidson
Brady Gailey KBW
Brandon King SunTrust Robinson Humphrey
Jon Arfstrom RBC Capital Markets
Timur Braziler Wells Fargo
Call transcript
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Operator

Greetings. And welcome to the BOK Financial Corporation Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instruction] As a reminder, this conference is being recorded. pleasure your my Mr. now is to host, introduce It Financial Officer Steven Financial BOK Corporation. Nell, Chief for Thank you.

You may begin.

Steven Nell

and Vice and results Today cover energy, Bradshaw, comments healthcare our morning our CEO, Kymes, Good thanks detail Steve will for loan portfolio, provide around Banking of Corporate President joining including us. Stacy will Executive our opening and will Vice and outstanding metrics; our Executive his cover President cover estate Wealth from Scott Marc will our Maun, quarter. portfolios. real this credit commercial Chief Officer Management of Credit team Grauer, the

second I will expenses details Lastly, sheet and income, interest net overall our margin, provide position revenues, quarter fee standpoint. regarding a liquidity capital net additional from balance interest and

PDFs are pertains of call press forward-looking the slide second Steve make will quarter on you We two and the available as the addition, it to to now will regarding few In I quarters. provide presentation release website a on Bradshaw. turn slide over to refer during I any future at our disclaimers the bokf.com. call. we thoughts expectations statements for

Steve Bradshaw

joining to Good for of us results. Thanks discuss quarter the XXXX morning. financial second

bolstered quarter simultaneous Management the continued businesses, another have despite by fee We are BOK quarters and to net were in challenges X% million $XX.X this quarter, quarter million for diluted last despite That’s record pleased dramatically per a momentum share. pre-provision four, post teams Earnings economic in Shown of up due for from of net to the many their COVID-XX. Mortgage provision on income was quarter revenue, to Wealth company. from terms for losses. slide $XXX elevated Financial quarter report second or $X.XX our as our record revenues credit

net should ourselves we Considering in truly a our to our now incredible strong and highest commissions XX% commitment an Pre-provision of year-over-year million of. employees revenue on XX% and from talented was remarkable in pre-provision see $XXX revenue Management nearly quarterly on of of up previous today, of the characteristic the was represents all from demonstrates with environment an balanced in outcome drive this the is be we This significant and Mortgage it’s for quarter continued business to level and That’s the performing revenue history that our up find Wealth again company. a quarter, XX% same XX% capabilities. revenues. year Fee quarter Fees of company revenue breadth revenue. total BOK the clear proud benefit once differentiating and high long-term revenue, important Financial. Focusing the ago. this our net

We of and restaurant some a downturns towards the management It earnings mix prudent quarter mix should in have had these food security, counter economic noted revenue because an and much $X for the the incremental while XX% to income. our ratio with efficiency contribution including shift added in workers. to for million an fee $X the that communities an with our that million jobs below streams. cyclical long of unplanned we quarter, second even of needed those remains fee in aid foundation, buffer provides nature revenue providing also displace with revenue diverse the Expense of in be

that our variables, more momentarily. in credit provision this changes loss along forecasts reasonable migration with to and loan some a Marc of macroeconomic due in cover Our will was combination $XXX supportable million quarter, of detail

the quarter this of largely reserve to forecast $XXX in a to call. ongoing quarter, elevated nature our in continue detail up we underlying line helps should in the going the components believe impact is economic million deposit preserve revenue be assuming build the margin. costs Despite in XXX large quarter. complete, was the more forward. Net of the and a build cuts to While ability we LIBOR our later basis rate relatively March, in portion again million cover points of the this Steven decrease reserve interest material $XX.X early our emergency will of

five, billion this $XX increased Turning loans $X.X billion average to slide to eclipse quarter.

the this down from While Small quarter gathering up was with quarter stimulus growth strong deposits overall, overall continued company with $X.X PPP due a as Even Administration’s momentum attribute XX this ago. nearly government the deposits was quarter an activities, fed to and bring payments. XX deposit Program. management XX% billion significant were along on to last nearly bearing the we same loan basis first points positive deposits were cost from to Business paid for bearing quarter. able quarter proactive able basis were up of to due our in this of and PPP adjust We Average year unprecedented and XX% to linked the face interest movement to in growth the interest points we rates in deposits, this the

of provide I conclusion growth up at part custody individual review or more quarter in loan Stacy strong underscore the now investors extreme really brings and prepared professional is the sales equity additional which Assets during in in advisor the the the to Stacy. but perspective and quarter. the over markets, to under were believe in X% will detail. to in attributable times We results a nearly uncertainty. management corporate the asset is efforts on the during this the increases on will value portfolio markets that will remarks, volatility of Kymes turn I the call

Stacy Kymes

Thanks, Steve.

quarter. the portfolio, in loan and areas growth added portfolio billion net PPP of As you slide end that downs the see contracted so of our some to across billion, pay period see book loans $X.X broad the can we on this commercial loans actually seven, billion $X.X did were $XX.X our specialty core PPP up quarter. for industrial

that from contracted commodity in new the activity. difficult environment. for this in disciplined just quarter was This and is made manner. $XXX since open year. in debt in loans more the evidenced the million activities business are our X.X% support our consistent to DNA through first direct first a industry. and during Energy in paying when prove quarter, of the are decline lending approached commitment was lending our is reduce the Energy more commitments a Despite is source XXXX that continue that and point Energy this These experience core for declines than customers the profitable business down business cycles some a as of current million energy previous defensive this in commodity as of to by and Some the leverage their of redetermination this complete the million view in record risk. Energy at continue energy world customers organic deals offering, these of with aggressively end as result and quarter. second quarter the draws manage class $XXX derivatives repayment customer the basis we borrowers served of has this down occurred we industry enviable were revenue base. the quarter well in as long-term in the economic to today a and This interview borrowing prices to cycle. factors, remain commodity bankers and we service had well-positioned a $X.X remain quarter to

banks price retrieved specifics our the we energy performance We the believe But prices. other or great franchise part. space is entirely portfolio as Marc energy will significant this over several duration we from momentarily. credit oil opportunity see for in continue have the years, a past, in factor next the level to said the the decline the of as than of of more affecting cover

protective system X% procedures, or $XXX as loan balances the This increase said, segment has to increased and the CARES multiple multiple healthcare for in as the skilled nearly revenue to manage due need who virus. they credit clients strong growth to client the has due billion elective risk the a nursing impacted million the well Our hospital credit the of the for has hospitals expected equipment. from $X.X of risk measures as mitigate in been help inventory demonstrate deferrals quarter, primarily healthcare through sector Act the of This to profile. facilities clients and portfolio. balances supplies benefited both and is to enhancement That

material balances pay While loan of it Commercial quarter, as in financing lowest real from a previous the the portfolio. thus the we credit realized many or seen have result still X.X% early, friction downs to have any we level of permanent not up estate due migration this were years largely is in deterioration far, in market.

largely While metrics. growth recovery. the Marc I to in for call PPP turn loans growth the by the discuss year rest determined overall the credit economic of loan be second did broader Mark? stimulate Maun shape over to speed our of outlook help will for our the quarter, the and will loan

Marc Maun

Thanks, Stacy.

to the impact have of pandemic. we Turning loan we list the segments consider exposed compiled again to a more nine, of slide economic

strong includes As gaming and the and to churches, profile, American portfolio the exposure boasts airline dependent are entertainment which in Native travel education our you that a retail, credit Specialty hotels, higher see, average profitable can $X diversified social recreation, XXX highly large with loans for to over group total on less of is today size gatherings of than of is than X% less loan remain portfolio. This loans million. our an that

measure Protection Some has have provided in Program, the of which of Paycheck participated some these clients relief.

adjustments reasonable that this loans, the primarily been provision will manageable activities million of the required remained and for primarily in quarter. million was a Banking for lending of to to led and of in our exposures changes of the million, charge $XX.X $XX.X given million to other the our million, by details assumption credit offs million, credit changes risk grades of to was which non-accrual provision our second forecasts $XX.X another continue decrease provision in in loans larger some a partially due macroeconomic activities. for Credit -- loans. related COVID-XX a All and million $XX.X offset activities. by the with $XX.X pandemic, has energy the obviously energy We current environment, coming net change The of but migration closely months. losses in million due problem of The Mortgage in $XX.X losses variables, net quarter. included specific was changes loan portfolio there $X.X to potential total monitoring expected partially in these related impact anticipated bringing has a $XX.X impairment lending ongoing decrease related quarter. primarily due and million accrual supportable energy to quality impact the to to $XXX.X Slide provision The provision offset the XX balances totaled million. economic increase portfolio $XXX.X Changes actions for primarily and portfolio

reasonable the government of impact GDP includes stimulus and forecast of an an case in Our civilian quarter for X.X% and programs. supportable increase third the unemployment adjusted XXXX, base XX% rate in as

curve civilian X.X% XX-month rate. assumes a follow unemployment an forecast to Our increase forward quarter forward projected through prices GDP XXXX of for at that NYMEX of per $XX.XX in XXXX. to of end generally XXXX second the the barrel WTI oil second existed quarter X% of the and delivery the are in increasing barrel third quarter in XXXX, per $XX.XX June and the

economic a in reasonable and base and GDP more downside and increase activity supportable in a Our a third disruption civilian than XXXX. prolonged X% rate in the severe unemployment and of X.X% forecast reflects includes the adjusted quarter case

through $XX.XX the per assumes XXXX. second range delivery for per forecast projected second XX-month X% WTI to in XXXX oil from civilian a unemployment adjusted forward of delivery XX% barrel in in Our and quarter quarter increase for prices the ‘XX $XX.XX GDP quarter are of rate. barrel a third the to

$XX loans Turning and to non-accruing million due non-accruing quarter, million services in loans increase a increased to non-accruing $XX increase this slide a energy in million XX, $XX loan. primarily

the portfolio through oil weighed quarter, capital comes As most the energy environment before, coupled the oil loss risk we certain throughout recovered on Commodity of in the we problem particularly believe totaled to up remain somewhat in potential risk second customers $XXX migration with recent portfolio. decline, at prices liquidity requiring the said their million work some to status price as borrowers. the but June. of non-accruing at increase quarter XXst. depressed needs the prices, energy largely This Potential markets, end, from energy loans $XXX problem in March outweighs of have million from

As we completed X.X% as we in April as of remain improved noted went continued depressed realized quality last we expect in issues through and this prices process, the have portfolio. we credit We quarter, since, base this redetermination most our Prices spring would migration XX, recovery. redeterminations this we May. economic if borrowing closely remain fall, do for the price would hold into and but of allowance positive levels loan fragile June tied continued or XXXX. to at Should loans portfolio. quality totaled credit million The outstanding anticipate losses migration the $XXX current in

roughly X% about million portfolios, in $XXX real ones individuals. roughly the evaluated requests credit a effect we for loans, case for and basis the or unfunded granted very was on X.XX%. off after allowance allowance of of Fiscal loan or case commitments and Excluding of losses or from PPP we on estate primarily healthcare of in That loan the All and from $XXX $X.X received was X% commercial quality outstanding loans, stimulus few and has small balance and and combined programs. quarter the a requests commercial sheet PPP positive million forbearance said, loans to Act customers of new but for support the deferral through have business losses $XXX early loan accrual X.XX% credit risk loan as in of CARES requests June loans number including X% had XXth, million a were loans, other or April. billion by SBA forbearance

are We XX% XX the going loans of starting and expiration back today to days are the payments. of just reach deferred first to the regular over

retail over the material any experienced retail XX% due most credit our portion directed. primarily issues shelter-in-place real does stay-at-home have to real sustain for programs. account estate portfolio we While of stimulus deferrals, commercial the this not to Clearly, vulnerable of is commercial to-date, and estate

retail with in the with consumer various duration are correlate and and As orders lifted. after of these the governmental closely loss will behavior oil, content orders adjustments the

be because footprint of believe and migration in will strong impacts quality we migration segments the time. long-term, over office our see Short-term these in multifamily, in here, Our in commercial us help will fee geographic we the revenue will to economic cover Scott? stimulus. over dependent this fiscal estate and impact of Wealth on contribution real will the turn Grauer recovery the call quarter. I to Management Scott

Scott Grauer

XX second Wealth On see Management you Marc. highlights division will the financial of Thanks, results. slide quarter the

income market income but BOKF’s investors wealth deposits, it and statement, that lines income group in net interest trading providing includes originators, a a its million. and maker ago, around see The with pipeline into of the growth. quarter. increases same provide majority result XX% driven retail and an know, as is we increase of housing generated quarter GSE trading the activity Net issuance including private in income Wealth corporate its over Wealth derived Management TBA division. services Management personal stepped committed cross market total management, portfolio. is corporations, ago. trading volume, and the allocations to million fiduciary for the from and few careful a our compared direct institutions, loans as wealth That’s a and asset been business. in quarter XXX% is the opportunity created a and management, also before and up XX% outsized XX% mortgage year-over-year. of was and management corporate growth the were quarter Wealth a Management was the in year and related year institutional greater trading which to brokerage BOKF for for banking up XX% $XXX policy a from services million. revenue a earnings only strengthening our and fee risk over leader the ago, the for position division have liquidity products hedging continued that expenses was This Overall, a from period and This record related financial previous investment for liquidity rates that fed lower mortgage corporate allocations private a market to and $XX total with a the division broad this last our the $XX was a our business and portfolio services, record revenue operating from quarter revenue year risk our at up inclusive despite the quarter MBS, As trading translated XX% driving others. as as as X% section increasing Financial, operating eclipsing contribution investors to robust meaningful This from leverage of up in quarter same up XX% and quarter up of revenues the for banking before were increase brokerage trading second century a and same to to and linked during BOK mortgage space. provide in trust a management, XX% quarterly in significant well stability institutional brokerage, for trading by and Total derivatives market forbearance expense to a and by individuals and of quarter changes

interest a slightly net Wealth a side, XX% and deposits in quarter, the ability be to up ways to revenue company. respectively additive were to Management of our up multitude the this On loans testament were

products demographic benefit term, heirs of trillion trends of the Steven retirement turn baby We will to believe wealth and their a we call the Management the and In Wealth nearly and bodes fact, with to are boomers services over facing I of transfer deposits, next-generation. diverse of our most as Management the continued Wealth continued efforts in there rates industry in expanded relative company. stage resulting the for for set Perhaps mortgage the well Management the XX% lower importantly, is and of needs division. is now set performance our of rest Steven? meet Nell. have brokerage of of deposits Longer Wealth well-positioned of the the the to In to now X interest the to growth industry. represent total the trading the short-term, the segment. one company most stimulation the the powerful

Steven Nell

Scott. Thanks,

million, of quarter, $XX.X from that As activity. was margin interest net PPP the XX all to basis quarter X.XX%, down pressure nearly up extreme early the loan the X.XX% in to the income of points, was sheet XX noted basis though $XX The reduction way slide for in LIBOR the to on million have our balance previous interest of the attributable the deposit quarter. million in $XXX costs quarter. XX, remaining strategic second reduce quarter compared was on Net elevated margin to positioning points combined spread this and first

$X.X Available last of the in to Average in of due increased largely million interest to as X.XX%, loans billion fair PPP increased Excluding the to testament value the loan loans, compared environment. balance billion, the rights we second balances over net quarter. have sheet for securities impact rate held assets the influx sale hedge X.XX$ PPP decreased a of for we taken. margin steps average the changes in quarter, the increased previous was $X.X value the mortgage quarter and as $X and economic billion. an adjusted of $XXX have ops current securities our Fair servicing earning

This relative quarter and this a a revenue saw $X end from commission XX% trading from in and XX% activities. quarter increased our In strength record facility. to almost reserve security billion loans quarter On ago. from in our and addition, an to quarter production outstanding brokerage XX, of operations nearly average primarily more funded the fueled last than mortgage-backed billion last funded $XXX.X surge year-over-year. billion. fees just unsettled largely trading PPP receivables as Mortgage the and earning our slide XXX% of non-interest-bearing receivables Mortgage were covered, significant were increase Banking quarterly Banking at through More also was same Scott or increase federal deposits. $X.X a $XX.X in related liquidity assets sales quarter PPP growing largely but $X.X from Growth by XX% an quarter, than interest-bearing business year in by million and million, increase of was

XX% of basis volumes gain and low increase last as margins competition points drove demand. While it is XXX against of up, originations capacity Today easing is the growing rates was on in compared of to the total strength. margins. industry which the pricing quarter constraints, drove much Refinances that were represented sale the

as our the during of the second as able be Service charges that proactive the in we million the see fees as extended we the to While space, waivers the pandemic. impacts to courtesy persist. purchase were long seasonality capture and $X.X with share our customers opportunities to quarter decreased expect refinance coupled largely of a activity peak as to due fully shelter-in-place

the servicing Another rights. success relates to of quarter mortgage story of hedging the our

of benefit net million results the approximately modest MSR balance $X.X to in and billion positive principal of combination our economic hedging quarter the activity net results, assumption an from benefit a in the of Ginnie This sale updates unpaid $X.X have. highlighting due the the overall success businesses are rights, Mae Many environment that volatile. story fee the once servicing as our company, an clearly of remains diversity we outcome out-of-footprint rate of driving significance revenue again impressive the the of

included Other million, million to of million. and components and million, decrease trading and This of expense in $X.X $XXX.X activity million expense and between additional assets, expense based $XX.X overall Personnel XX, resulted million expenses forbearance. in increased losses related expense million the due portion delinquency quarter, $X.X regular to amortization in levels for slide due and increase due $X.X on leases. impairment by gain from a and recovery. up million MSR $XX for million $XX.X loans in to an and of compensation to $X.X loan to on earnings $XX.X is of to largely $X.X increased compensation portfolio to equipment Turning employee and cash in cash-based changes mortgage our million quarter. relating counts, largely was impact $XX.X total Occupancy to two deferred related market operating offset deferred Banking due accrual $XX compensation no million increase compensation million split tax deferred increased incentive-based with quarter. Mortgage for seasonal Non-personnel the million. of the The the expense resulting $X.X million increased compensation. increased equity an deferred of payroll recognition benefits in $X.X the compensation a costs

second related partially million made a $X.X of cost, promotion in pandemic. a quarter. of the were in by the contribution to expenses a increases largely offset BOKF the Foundation These travel business as result to also million $X decrease charitable reduced entertainment and of We

deposit Our given exceptional liquidity balances. the of position remains inflow very strong,

Our deposit to meet on-balance is future loan providing XXst, liquidity March XX% now sheet compared at XX%, customer to needs. ratio significant to

$XX.X support of borrowing liquidity capacities capacity contingent have the needs to we $X.X of liquidity Additionally company. secured and billion and billion over of unsecured

capital remained Our strong regulatory quarter with minimums. full improvement levels of equity internal X of operating points a minimums common basis a ratio last well range and above XX.XX% from Tier and XXX our ahead an XX.X%,

Our internal stress test had given us of confidence to level support current our customer base dividends. and to maintain our

Although, buy around for we we capital supplement stock Currently, need have with no feel our set Due the near-term, bank plans to would any or levels or holding be slide on of that and opportunity. it’s level on company the the back have will uncertainty actions. raising capital in done a comments commitments to capital that to the pandemic allow don’t give to the impact the in I provide its might specific economy, severity guidance the you XX continued that normal and we helpful. broader few times, difficult duration but more

Our be CRE little activity to our the portfolios. and at the prices, present will care not loan deals will is energy due hold in most likely be to done pandemic current will be remain soft opportunities for foreseeable many on growth health future, and C&I expected

in our limited We amount loans portfolio. will very ending continue mortgage up originate permanent to

securities which mortgage-backed the securities agency Our available for yielded second is X.XX% sale largely portfolio, quarter. during

reach per $XXX could prepayments million over low quarter. Given the rate sustained environment,

around points reinvest basis points. to basis at current XX to XXX cash those expect We flows rates

likely of We near comparable during to yields the second room zero put pressure success down the some points, which to will our more quarter had next during is environment. low we costs much noted, lower not bit and deposit below little rate but room watermark to the there’s we a basis asset deposit cost feel will in quarter. interest The margin XX deposit costs net of As on reduce combination last deposit significantly. pressure driving costs drift

businesses. Our diverse pressure portfolio stream our felt earnings to revenue some impact in provide being continue should spread to mitigating of overall fee

and activity elevated in brokerage our expect our We to products continue given trading and at trading the levels, space. mortgage-backed capabilities

as remain and seasonality refinance but slow slow solid, likely trends progresses. some as opportunities origination Our mortgage servicing should business abate year and will the

and controlling non-personnel approach disciplined will to personnel costs Our continue.

We reduce capabilities have no cut staffing plans product. existing or or to

reserve other loan the have with quarter. BOKF most and quarter As second you banks, has loss first building place seen and significant during taken

the building largely behind Although, economic there in remains loss is much environment, us. believe loan we uncertainty reserve

good As commentary. current moment turn we year capital closing evaluate Steve continues. will level feel as over Bradshaw for dividends our I now buyback will mentioned maintain our back quarterly will strength, about the we the ago, of share we call a I to cash and

Steve Bradshaw

Steven. Thanks,

that who of the us any our BOK revenue. enhanced mitigation this quarter unique opportunities cycle does through clients saw that with environment. lending benefited businesses. challenging earnings Financial with where to earnings success it Our growth of a can shareholders strategy in benefit our a their long-term feel shareholders for any result most is as think that compressed financial interest of not less while At serve do model last as Those a a a business outperform temptation to time a business risk in back today, to holistic been and to way, institutions have we volatility fee-based risk for rate reach heavily extending with by with

we safe our we do, While no path each continue reduce Ultimately, a going Achieving other. that namely is and we to a steps the forward stood can into COVID-XX virtual our the businesses. set full risk in Mortgage of hear clients our business Being time, from several the we have phrase focus. BOKF of the is of same, difficult as aspects that across as of to will of nation. That to proud am two BOKF significant it together our so threaten its financial how organization the generating. across more apart speed together uptake communities customers recovery. to will remain comes activity will infection when do assist communities, just Until experience in environment manner are we to bright laying continue downturns shape our in our does are resiliency we and I When am but of are taking challenges, more manage and forward. to the our tempered expectations thrive as own regardless at I out from and economic learn the everything you of we of macro our and the there a going together healthier and shape the our began be return proven the of in said, outcomes often Wealth clients Management economic see spots be our the individuals couldn’t true most clearly will today. I today

Our our have than different strategy that, and BOK banks clearly with firms the people factor and the to is in take to Financial similar at most a are we our I sized that national pleased compete peers investment produced we significant With are results questions. your Operator? ability effectively think this and quarter.

Operator

question Our Instructions] of coming you. Thank is Zerbe [Operator first from Stanley. go Ken Please ahead. Morgan

Ken Zerbe

Good morning. Thanks. Great.

Steve Bradshaw

Good morning, Ken.

Steven Nell

morning. Good

Ken Zerbe

whole continue. lead to the been energy. performed last release, and know when commentary the versus -- your cycle? the obviously, continue since the a the you pandemic in or Thanks. at of like months your just has three expectations of that about, how just it’s served serious industry -- guys some magnitude guess, earnings of How the think, broad the kind beginning I to about pandemic is trends sort me started, could I cautious I losses, question pretty some duration of the energy

Stacy Kymes

Stacy. Sure. Ken, is this

began. our I than been from anticipated have the swifter would we recovery perspective, has when it think

to to were seen certainly, things industry we think of think, level been months six has price days XX in potential or find these we the about and months better at price. to XX certainly, been supply feel environment. a response so loss that and recovery new precipitously market, self-healing in much future forecast the what so that particularly last this happen curtail industry so, when didn’t us, from very where. levels strong we I the usually But, the a than oil, kind declined saw we has price equilibrium much, have the encouraging, prices about the production in We always very of including and shut-in talk that. It I and would and takes

average, of but than On makes per average, we see in what and barrel were earnings we the we last today as a not and terms our potential are our a when big had so outlook there. call spot, we that the the strip content only $XX difference on or on quarter higher strip loss

don’t is stay move from quarter downgrade I we the think Marc Recall fact third would if as migration the alluded perspective positive outcomes the in whole here, a that prices comments portfolio his and credit to to into we credit expect we fourth quarter. process see the that the when that we there when in we prices them going and much prices do same were the redetermination. upgrade semiannual move. through touch portfolio entire the those We not way, the prices through recovery. a redetermination But as price we great when don’t were

that in So positive very in as fourth those the we if would migration book. into see at to levels, a credits quarter, late hold prices and touch expect the these we quarter third

Ken Zerbe

well, in second All right. line growth, question, $X.X funding. press it And added of says related Act deposit you billion Great. just -- a it like a looks that was release Perfect. to you your CARES your then

accessed the federal had you did that, $X.X clarify that PPP think growth? just you loans. loans? the Could fund the to PPP a Is part I government’s deposit you facility billion of of

Steven Nell

an of as that all well That Ken, inflow this Act as CARES kind is from was just both other growth. deposit PPP, generated that Steven. initiatives No.

accounts. just stimulus So CARES PPP customer’s but it that it our was Act was other into not flowed

out tried related rest find with from it areas. was of The deposit base. came CARES of regular from either and or growth went $X.X of programs through just to growth up of much stimulus our to our those was So how was kind roughly growth customer billion $X.X other we and that billion of core

Ken Zerbe

I see.

Okay.

So, $X payoff, if of PPP over $X.X payoff deposits might that billion But call is the say, saying go billion are might of maybe that just go roughly time. plus -- just those loans sustainable more deposits -- loans funding PPP away be or and deposits the or core away. you that then other then let’s

Steven Nell

correct. That’s

Ken Zerbe

right. the Thank much for Perfect. questions. very All you

Operator

you. Thank

question Gary of from next Our Davidson. coming Please ahead. go is Tenner D.A.

Gary Tenner

Good Thanks. everybody. morning,

Steve Bradshaw

Good morning.

Gary Tenner

economic appreciate color the outlook. the I on Marc,

is and upward a a three that build between Could scenarios that scenario based adverse of you is scenario used? deck, you third in have think kind two. was noted the tell the I highlighted further scenarios of kind maybe weightings I assume that could -- us on that slide you three on you you the the or

Marc Maun

base The Sure. case weighted scenarios at highlighted when there we that we XX%.

economy We in quarter. those kind felt first quickly Again, across potential also That’s case the had weighted we XX%-XX%-XX% is so weighting reflect kind the that of run similar of moving those and of that weighting each base at we that an so upside help to volatility. even XX%. case changing that scenarios downside and rapidly of what a that

Gary Tenner

have Okay. that have made a of average purposes? the the embedded are this interest shorter adjustments about and And other XX Thank the life what then on revenue life recognizing recognition month fee from a quarter you. just where of PPP thinking any in got Was net side in terms for revenue assuming you loans or as that. you based you average

Steven Nell

yeah, is this Steven. So,

felt We million not so net about in $X roughly from $XX You benefit was Well, income or recognition there and interest believe our correct. are PPP the was side another more interest million bit little split, or net just -- $XX.X but income a in split. PPP loans. from fee million I

loans any have it more We to period. begin the other than in as get forgiven those out fourth quarter weighted

on begin the months. and there third fourth more as in the status will see the it quarter to be you XX as into think those So for books out loans in will of stay of then lot get but tail forgiveness those then a we quarter, will a additional

states it got that have we out way. So

Gary Tenner

right. All you. Thank

Operator

Thank you.

ahead. Please from is question next of go Our Gailey KBW. coming Brady

Brady Gailey

Hey. morning, Thanks. guys. Good

Steve Bradshaw

Good morning.

Steven Nell

Good morning.

Brady Gailey

remain the fee come quarter I level have quarter, to new sounds last in trading fee another this to it sounds and strength the mean, rest for this start down brokerage this I mean, elevated some, about but wanted record record income? to remain commentary, of right I sounds it like way at close income at with level, could like will income, after could fee another think mortgage your from -- you but year. Is the like it the that

Steve Bradshaw

Scott, trading mortgage. about some make the piece, why and take brokerage comments can I you don’t then

Scott Grauer

Okay.

sure. -- So

Scott So is Grauer. this

really In the good volume confident waning we banks with beyond the we in to well product and feel which reasons demand. inside offers terms of quarter, activity, even tax strong the hedging was very look which downstream bit securities TBA had as there solid position mortgage-backed second exempt and a to robust and the and of as their on both and banks to levels we look securities obviously and Management, our of activity, But volumes both Wealth the results Financial a overall of maintain the a got couple just as momentum portfolios about momentum taxable first have securities mix. our have Group, securities mortgage-backed Institutions in little both spectrum loan across quarter

So strong. that very activity been has

business In pretty terms have activity good corporate our we good of and our business pipelines. retirement very plans trust seen and

assignments have fact us. today or debt recognizable one two typically so defaulted presents have handled and that opportunities corporate our we our we where defaulted in for names, space In trust piece good eight debt

had both very banking energy in and the investment transactions of Our underwriting, for quarter piece, corporate capital advisory deals a as high market strong the municipal activity names. surprisingly we our well as was financial on where second number

declined at a of into recaptured now end if at decline fees had we in trust fee then bottom you the of on to end from and when peak looked are that of overall April So trust look fees, back ‘XX and beginning overall we just about the period you June. from have to March on XX% year-end really the went from and rate revenue trust

confident momentum. sustaining be pretty activity and the have like So we good feel got we a about reason to

Steve Bradshaw

now side, So volumes in mortgage had the quarters a over two row production with billion. a have on mortgage $X Brady we

was I first margin. sale The second think on in in the from quarter margin the the X.XX% X.XX% the quarter. improved to difference gain this quarter

So are revenue. be of -- year, do strong increase that’s the we that on And what out drove think I to but to in I mortgage majority there I think the going I refi I last forever, When you there’s abate mean, second some also refi some are the look and seasonality to XX% that going not quarter over think there. time. those being

is and to pretty same going They look strong, though second in I stay even that because the activity. the The hit of say I rest cautious to the good. it consumer service are charges. their of look the So margins. it, if mean am it quarter outsized network level the hits fee think at softest the mortgage TransFund you I businesses in

over are a quarters across the think, if businesses it going the that time. and the next relative see the our with You recovers -- I pretty for be will we contributor, to fee other the in that -- businesses industry to But pandemic several bank. our see significant

Brady Gailey

they then $XXX I lastly me, roughly at think, if look from about to That’s are you right. notable All up And helpful. million. pretty amount, potential loans, a went for $XXX problem million they

energy as quarter? other potential driver. on the you big one color think call any the loans But increase guys I in out problem and

Marc Maun

are it the earlier, was they April in the which and point migration -- so To-date, any and oil problem was mentioned where significant Marc. what prices migration potential other at borrowing as which that Well, those hope primarily low really the we was into season we To-date, migrate as this been is in redetermination the in we positively has May, energy driven. seen base that prices The for will Stacy go fall. stay loans, portfolios. in have we that not caused

that nothing had relative see have you to call I normal what outsized We cycle. in would would a

higher and we dives Board, our areas across monitoring done lot are more that we consider deep where have risk into on We are focused portfolios the a those.

go evaluate seen monitoring and they them forward, are haven’t but we any so And as yet. significant migration we closely

Steve Bradshaw

expect… And would I

Brady Gailey

Okay. Thanks.

Steve Bradshaw

much in generally to credits is okay, sub-debt is that That’s bucket capital is kind loans unsecured where and I see problem have debt the would equitized. or price energy markets that also improvement revolving commodity potential revolver the but gone seen. like expect But of cleansed that through those put we being the improve that that the we bankruptcy. have

We have that they bucket kind through to used potential as that loan problem park process. of go those

of out would from some perspective come credit begin there that well. be as So could migration that there as positive emerge, those to

Brady Gailey

guys. Thanks, it. Got

Operator

you. Thank

Our is go coming from Demba Jennifer next SunTrust Humphrey. Robinson ahead. question of Please

Brandon King

Hey. King Jennifer. Brandon is This on for

Steve Bradshaw

Brandon. Hey,

Brandon King

I colleges color any to going wanted I on Hey. you mentioned in that what table hey. was as -- noticed had portfolios? churches that trends these impact I and areas on And far your are if as know and

Steve Bradshaw

we on side as of issues far to-date the portfolios, those colleges significant and universities haven’t on seen As any it.

Of course, in summer. we the are

those monitoring visiting regards waiting are with we are plans But students we see today, are on how -- make in are but loans universities are to various We -- good them. reopening that the we closely in with shape feel we and we they bringing like to the those -- back.

smaller On portfolio it a of loans. the of a is lot broad-based churches,

But -- loans large we issues that tend with, a we There’s have but portfolio. not a had seen that three small. or two we migration we any substantial broader yet. So some that’s loans overall, much They to have had in haven’t be base. pretty

portfolio. that pretty that we that can feel with we comfortable So risk manage associated

Brandon King

the the least and of And areas stress areas you you of seeing areas, Thanks. the additionally, just what Okay. most impacted which the stress? are seeing are

Steve Bradshaw

piece Well, is are almost exclusively casinos. all of if just Native that. in with I stress are they selective tribal think, least probably and -- that, Those the American be the on casino I’d

of I outstandings itself think cash available at that’s tribes. by covered either XX% of or are our casinos the the

based of a for are the feel completely starting have the was forth. casinos so with the We deferrals months or PPP they loan loan couple few on and associated with shutdown comfortable a to while So There tribes very reopen. pretty of requests they casinos. associated the liquidity

performed positive manner. a So has that probably in

challenged probably result most we that that that That are small, it area slide. have pursued because actively. that’s the had We an of CoBiz the be or loans to not portfolio pretty is a small of we but going a hotel on is ever acquired portfolio as our portfolio pursue that identified acquisition

Brandon King

All Thank much. very right. you

Operator

question Markets. Capital RBC of Arfstrom is Our Jon Instructions] next coming Thank go from ahead. Please you. [Operator

Jon Arfstrom

Good Thanks. Hey. morning.

Steven Nell

Good morning.

Steve Bradshaw

morning. Good

Jon Arfstrom

obvious, A increase guess. that of characteristics idea couple of questions NPLs, of Marc, an the in about the there? but on This energy give follow-up just cleanup maybe the can us what’s you I Stacy talk or

Marc Maun

in our and this deck, borrowing Well, when will primarily increase there The put the in way. process what noted, price it done guess, were $XX Stacy less. to we was base redetermination as happens, through I May April $XX non-performings went from in I the

collateral did the to of would collateral some support cases The to on that what the deficiency need we create the are increase an -- be need nonperforming flow of back amounts when it in expect be that a strong of below was in base situation covered didn’t based expect significant and level that was overall addressed. borrowers level So loan the cash enough a loans. was discounting in quality that we were and and loss, resulted don’t but for stress so those would

Now, We about thing portfolio six as we loans every current to reassess great -- price resize our we on forward, the deck. if get based the months go we to loans. the energy lending is the get

the to loans fall, increase price because have So are that these the note it’s we availability. on in in mean, at get migrate a were positively anticipate significant if that not we more we they looking important we to repaid. I drilling will relying

amount price think, And XX% XX% add at will hedged are of the this, thing at that hedging more and of hedged at have I our oil in to -- portfolio. the this $XX.XX XX% existing important strong, greater existing levels. XXXX XX% base rest given throughout we of than the continues in are I It We are for the significant $XX more the XXXX. one at our be commitments of very reliant a get is for to the on borrowing out production it’s collaterals to than

oil gas them economy help going the hedging and the portfolios the to process profile price sustain reopens through So as deck our is both of and this improves.

Jon Arfstrom

That’s Okay. great.

Steve Bradshaw

also see… you And

Jon Arfstrom

Yeah.

Steve Bradshaw

to last for. was cycle is of one those this trying there CECL it view this You that’s above and have so evaluate impairment for address we get our got at look every at proactively all we you for any energy reserve that what through an of as kind well X.X%-plus, now that’s We NPLs allowance the during peak are those.

will we are as that reserve move for to So I think adequately we reserved the that, but we portfolio that evaluate perspective reserved think we is, and for circumstances, we continue forward. well

Jon Arfstrom

way, all falls -- my of I line it question, kind put two to content. so are by means loan the to was be in next pretty loss very Okay. in you message need reserves reserve but you meant That’s defining expecting I what And saying balance. my you into model I to And you Good. on it helpful. tried clear have expect have a provision the work, to it not abate a building. that But abate I loan of sent are -- you loss somewhat Are bit help and didn’t build obviously, saying of much do put terms funny, -- more. little

a expect in retreat here? message heavy So, provision is from pretty the the

Marc Maun

wouldn’t… I

Steve Bradshaw

Go ahead, Marc.

Marc Maun

the a level. energy that to should still in retail say, But bring unless Yeah. we have base resulted earlier that, ‘XX, have I not reduce suggest relook some put portfolio forecasts if very the pretty play we reserve will would at have we support portfolio. What in of would to a If out, to mean own saw reserve case company I -- or that in see COVID-impacted won’t see need -- we in that our that how you we depending to reserve to improving that deterioration packages those play need is the been designed how the several heavy doesn’t things plus quality good have -- the and out The out play start had might we maybe in might reserve additional not play does about credit quarters. the We That out industries helped a say in strong retreat. this looked next the our I build would build We into has credit in we way time. economic us on in stimulus economy. and opportunity feel that increase CECL over cycle. -- would forecast have it built. at the would see out the if point

Steve Bradshaw

provision And that forward, economic dependent experienced provision define in virus second charge-offs charge-off be we we behind reserve holds. foreshadow significant see first this quarter then to a from as credit are largely trying is, to we and on the would migration levels reserve as we us. actual than try Jon, our greater the building continuing and unfolds. we more it’s bill build there we as the responsive think is in do reserve move we what What if to forecast to quarter certainly

Jon Arfstrom

Okay.

are Okay. really a problems follow feels not can down, -- -- I I have. is repurchase need but guys may one of the have think I all up to restarting on is But strong That’s courage courage that. what Thanks. too buyback, comfort on last the program? to would me or it maybe you it, the word, the the in but I here signaling am from reading with follow-up on that as potentially credit but your way of a just did it stress lot to coming like potential you about

Steven Nell

Steven. is this Well,

think, environment say is attractive is the I that, to I what price think what and would like. we see the have looks we will that

We with actually happy substantial am have capital. quarter. grew really this I position capital it our

no of table. it’s the just -- something not the going year. to necessarily buybacks for but to buyback more have I that we you the announce, So, a lot or we are in But decision. I make I specific we not it’s position. that Like and commitment here seen not think discuss making am banks do not any will off at buyback, opportunistically a bank be

shares. as it across year buyback some evaluate and goes the time will We well could very

Jon Arfstrom

Yeah.

Steven Nell

no Just commitment. firm

Jon Arfstrom

you. All Thank Good. right.

Operator

Thank you.

Shaw question next Our Fargo. from Wells go is of Please coming Jared ahead.

Timur Braziler

for Hi. This actually Jared. Braziler morning. Good is Timur

Steven Nell

Hi.

Timur Braziler

allowance credit improved the all to caller. quarters going would sensitive combination the coming the are quarter? allowance improves third worsened a positive seems this I’d other off in migration. the I the in there’s quite when prevent same migration question what And of migration you the in be credit some to versus as follow-up quarter pricing build credit to was It like that just as it with to if commentary allowing quarter. things, sensitivity on build from saying, as along migration level meaningful the looked like of guess, from prior coming second potentially of the that early like

Steve Bradshaw

we our when base migration, and CECL had. that’s a our risk the determinations, nature I in Stacy I -- migration probability think model. negative feeds we that’s we of of loss probability Marc factor our calculations the as that borrowing Well, those models our and mean, we when And which and customers for into CECL grade saw of out, pointed or that energy the build did in determined grade our default a of risk and

but to and will when quarter, that that will we we So it to the if calculation. at your other way we off then nature quarter time, lands substantially And we then the there’s improvement those grade those would hopefully on of these we think, a feel prices the clearly quarter pull would reserves I third the off. redo back quarter which point, calculation where come risk fourth that pull that direction, in the positive need in we that’s if understand basis have reserves -- get in our in, CECL the We very impact that back grades fourth or third come we have the just June, see barring have is to that expect works. migration at

Timur Braziler

of would met, is helpful? me, statement is to when talking last be release guess a kind discretion mandatory that delinquency met. those color that that one repurchase you certain from criteria Okay. is That’s at I is certain your could repurchasing criteria Ginnie back around just there you any them for pools helpful. And the when about and loans have Is or provide from Mae in then

Steve Bradshaw

Yeah. sales. It’s But It’s you mandatory. our not both lose discretion.

them purchase You since can basically back. controls have you

them bring the sheet. balance grosses But on back sheet. up you So your just it balance

on loans but purchase bring side. other you and an you have then actually the offsetting you So back don’t the liability them

that’s time, the real But gain there. the So mandatory. advantage of that had for but in some some the past way not it’s we those over purchased works have of and accounting

Timur Braziler

it. Got you. Thank

Operator

you. Thank

proceed question next coming from with Our of Tenner Gary is Davidson. Please your follow-up. D.A.

Gary Tenner

one had Thanks. follow-up. quick I just

of slide those billion loans been this COVID-XX what under $X.X of the amount area since started? or the impact modification have terms of on nine, forbearance pandemic In

Marc Maun

deferral What of about loans, has deferral? that of XX% Marc. amount loans under total is deferrals. PPP are received X.X% actually have our to asking the We Yeah. as that This had opposed amount been slide our for actually is but in

slide portfolio, were caused to the in of any and deferrals. that on particular take they increase relative had haven’t deferrals other primary a significant part number So we beneficiary because not PPP any to of from them that

Gary Tenner

Okay. The are loans $XXX categories slide the… those PPP versus to says, million

Marc Maun

Correct.

Gary Tenner

billion, that’s about ...$X.X so XX%.

Marc Maun

of receive customers but Right. those got XX% of loans the the XX% PPP, loans. PPP

Gary Tenner

I see.

Marc Maun

put… been Have

Gary Tenner

you. Thank

Marc Maun

account, in dollars. the …more yeah,

Gary Tenner

Okay. you. Perfect. Thank

Operator

I time, like turn for this would At Mr. closing Nell the comments. floor over back to to

Steven Nell

all we that’s questions appreciate really the then we everyone have If Okay. us joining today.

further feel have free any have me ir@bokf.com. us or If can to call at email questions you you. XXX-XXX-XXXX you Everyone day. at a great Thank

Operator

thank you concludes event. your participation. gentlemen, for Ladies This today’s and

at and logoff have time You a may wonderful day. the lines the webcast and your disconnect