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BOKF BOK Financial

Participants
Steve Bradshaw CEO
Steven Nell CFO
Stacy Kymes Chief Operating Officer
Peter Winter Wedbush Securities
Brandon King Truist Securities
Brady Gailey KBW
Gary Tenner D.A. Davidson
Matt Olney Stephens
Jon Arfstrom RBC Capital Markets
Scott Grauer EVP, Wealth Management
Call transcript
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Operator

Greetings. Welcome to BOK Financial Corporation Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note, being recorded. Please turn Nell, Chief now the Financial conference Steven host your to Financial over Corporation. I'll Officer BOK for

You begin. may

Steven Nell

CEO, and opening and Bradshaw, will our cover morning thanks portfolio, joining businesses. Officer, Today, Good credit loan metrics for Chief Operating will income and comments; our provide our Stacy fee Kymes, us. Steve

standpoint. position income, and our expenses I'll Lastly, from liquidity interest a net provide details regarding margin, and capital balance net sheet interest overall

at Marc Maun, metrics; Joining Chief the Executive us wealth session are PDFs the two, detailed Bradshaw. refer who on now credit bokf.com. for the disclaimers who slide call. our management during Officer, regarding Vice over regarding to to We Management, Steve are of answer our and and presentation our can quarter website expand Wealth question-and-answer Credit Grauer, press you Slide on first statements the call I'll release can activities. President this questions of Scott we forward-looking turn make our available on

Steve Bradshaw

and for quarter to financial us XXXX thanks joining discuss second the results. morning Good

net earnings $XXX.X this commissions which our impact from and team margins drove to another a another in constraints forgiveness income capabilities. items was $X.X by recognized This company. in commitment history was our Net Shown nearly the that last quarter. was or pretax, contribution for offsetting quarter on first earnings a of and million quarter model a $X.XX housing contribution million as income units record X.X% of we diluted on our quarter interest a for million in fees again mortgage diversified grew pre-provision revenue our per to that quarter XX% linked as time with our in a our result as a second of The long-term from up and quarter. key revenue wealth includes was $XXX differentiator BBB us, basis strategy breadth us last that the The our quarter this Slide net of growth business quarter income four, XX% was our be our differentiator share represents balanced business net of as fee-based for stabilized it inventory were this or from narrowing continues and company total amount QX. in similar outstanding key success from management

credit reserve. first quarter. the loan relatively And not remains contribution quarter yield sale Additionally, deposit favourable with million cost economic linked loan reduction release in The quarter the second expenses allowed million we that made excellent of $XX the trends our lastly, for when improving to management you portfolio. rate outpaced expense and available outlook did increasingly $X on compression us with mind are combined exclude reoccur total term loan flat in loss

nearly we customers That the five, see loan our cover this down same energy remain XX are that loans as The down long-term in core estate going for Turning rebound. XX% quarter loan continue year for that Core are did which C&I nearly $X.X billion to quarter saw said, from we and there past the ago from trend Slide this Average economy total a of million for to we as momentarily, belief our to for balances to and deposits X% is commercial continues the forgiveness refinancing continues. are book. Stacy growth that the opportunities quarter. accounts contraction. stable growth pay we months debt up quarter growth poised a were challenge our $XXX as real markets. loan the BBB

the more results quarter. metric our the to I'll Assets also business loan up. in now X% this were the perspective They and review session, starting Stacy. were I'll in Management our Wealth credit before up over on Q&A portfolio detail. under will in call or now management Stacy just the provide custody but in Kymes additional turn

Stacy Kymes

Steve. Thanks

period-end counts and Seven, continue have the rig for quarter increase to million under very the little growth metrics oil fund integral leverage. and decline credit outpaced pipeline $XX.X in albeit core for Synergy loan of moved in balances the were areas downs. saw half continue what pay up in borrowers swiftly to certain moving just specialty areas modestly pace that cash to down loans continue US pandemic. periods. our Turning are portfolio as at were see said to Slide That slower to portfolio prices winning reduce in improved up previous X% in and we XXXX before flow companies. a than and natural a over leading are Both gas material they providing just of

current balances are move investment budgets I see prices near business capital we As the when into Ancillary Healthcare and levels. good grew were more demand. housing loan organically should this begin sector. from all driven X.X% this as quarter senior This for established, fall our increase remain treasury suspect drilling activity hedging, quarter. banking we'll to very by

quarter out for at customer back it C&I online move well it without of this remain shows year and we bodes our us. Core year. C&I measure Commercial loan growth contracted back forward, remain market a returning a as demand today in the acquisition. a is this begin lowest we confident from to very of X.X% portfolio balances seeing ability to starts new at being real in to estate utilization up later growth credit to of period Overall this portfolio our Looking and positive XXXX, to stabilize next broad this any the portfolio mill March leader level have capacity in both the outlook quarter. on and predicated come perform is as for which for real coming

for the many of rate long-term was borrowers portfolio to of the non-recourse see environment markets to were XXXX years continue as fixed permanent market. We for one low rate turnover lowest the cautious. estate use this refinance real

healthy As we which substantial portfolio forgiven, those million some $XXX quarter see back quarter-to-quarter who portfolio create BBB of this the with opened some shrinking that's XX%. balance sign can by up was have activity loan the a inherently up, forgiveness catch nearly volatility a

forgiveness in it's period to We quarter vintage the the another expect remainder before activity from in third of BBB closed early have the of XXXX XXXX. in

capital. among in when positioned our in the activity next Looking well quarter remain ahead, our hopeful core for economic stability core trying we C&I markets. We're and signals book loan this demand borrowing year later for growth creates working the these this year we're

of $XX is points or million. in this XX in at our end points trailing basis with to both credit that's highs as saw us improve with quarter. basis XX GDP the from four improvement out Slide reserves the labor move broader significantly Net coupled quarter. forecast we for economic loss and BBB growth Turning portfolio, problem range. historic markets the second were last strong annualized million the to multiyear quarter, prices loans the $XX.X charge-offs factors release in which loan to We quality excluding essentially see over pandemic. million Eight, and quarter's quarters you further assets These with lower $XX.X credit this that quality last averaged meaningful from continues rebound to the down loans Net in non-performing charge-offs can flat across commodity

quarter the significantly non-accruing We're appropriate charge-offs expect reserve be results from of on to the general half loans As we commodity better about or loan quarter prior continue Non-accruing growth. excluding $XXX the than set problem as we $XX.X decreased losses positive at loans last the asset outstanding totaled $XXX remainder the From to loans. loans, first this energy, the energy latter of from at We'll loans and combined allowance modestly levels prices, March XX. and quality BBB totalled loans. we decreased business due million reduction forward at problem of allowance $XXX have. for half economic for will in year. by million Potential impacted credit end compared outlook activity, a year. of quarter, to net million always the Potential look be the Future loan XXXX, quarter. primarily X.XX% our to level generally services a down a of at all million the to end

total to deposits financial Turning from brokerage the XX% net as products that quarter. quarter. $XX.X a wealth group. $X XX% outstanding year loans our wealth quarter income interest institutional or interest see wealth strong brokerage another linked X%. strategy with $X.X team and quarter up fee clients linked see as and and the and and Total in shift includes This loans quarter. area group income XX% can million up our our the same be deposit of XX% ending from billion trading X% income quarter Total compared portfolio statement, our Nine, Total fiduciary as is institution particular to due brokerage generated highlight. net also private business trading revenues and Banking quarter sales asset had private billion This to product new nearly ago. largely The the management saw a trading $XXX.X previous in loan in The to year this continue the quarter and interest you our ago. X% management was and portfolio coupled trading wealth in a through that million and Slide corporate to up revenues increased investors line for were adding holding growth part services grew clients. this management well in income [ph] quarter quarter and and compared on and linked same a a to net

from asset growth up before quarter quarter, we assets the declines the we year ago. product fees fact the expanded the management. were seasonal charged sustainable still the revenue the A get customer is same in that the as in in and nearly a look and linked management of in we into portion quarter third you is fourth saw forward, quarter. from to base quarter as fees in Also are as annual quarter linked wealth second shift the space, strong but under believe well fiduciary Importantly, management as focus modest due X% growth this

the sales in space this as have benefit strong favourable activity balances, equity cap increasing well. remained We customer seen of market

rates last Mortgage credit rates move interest banking charges decreased impacting service to quarter. institutions were the This in Freddie the standard Industry-wide quarter. $XX.X both our is revenue and economic of to this purchase we quarter. the currently Increasing limits the were as factors commercial from Is funding quarter. Primarily increase largely merchant and to saw to housing mix economy million preferred deliberate quarter. in due $X.X properties Deposit from and seamless revenue business million perfectly to increased XX up mortgage relationship-driven this lower their quarter. retain XX% inventory due between today on and quarter. touch this rebuy in in Our months. advised homes resulted million average individuals last and the to needs industry. gain was recent the depreciation or interest agreement, particular the investment XX% continue see quarter service with that gains factors or charges stock due rebuy and ATM the Transaction rates initial Fannie broader earnings on quarter higher impacted measures businesses, as this US purchase is and the $X.X up our broader volumes this X%this linked in the client's transaction XX% second imposed rebuy we both the card constraints nearly model reopening lower

for In the to this impacted sale gain inventory increased levels competition addition closer quarter. which on pandemic were to margins, volume, pre

is managing due job mortgage team a year, We this a expected changing mortgage dip the good to doing purchase but market. to environment, transition revenues to our

are competitors most of purchase of We as financing. home market better to shifts positioned our the a more non-bank than

saw the to strategy we still unfolded. revenue forward. from a this ease our While rate year, the We the the significant past as throughout quarters pressure down was the business contributor diversified, quarter expect of this contribution did record going be levels to

by in higher mortgage hedges slide million was fair to servicing operating will revenue the a not also on rights repossessed know increased offset million net $X.X hedges quarter. positive and Other level economic Although due gas were largely included value which expenses. the properties, the X, related oil that economic for production of during and increased this I $X.X quarter,

to Steven will Looking properties sold. over now sheet our level expense and net I the are forward, as revenue Steven? and turn important items these call highlight of balance for margin dynamics will this the the quarter. diminish to interest

Steven Nell

Stacy. Thanks

decreased securities compared million interest The available income. the business. Non-interest revenue $XXX support average to backed second X.X, Average $XXX brokerage reinvestment Available and $XXX million Then from sale net million. margin to $XXX quarter. as our we as helps portfolio. our million Average for due Turning grew largely to the from deposits just Slide support stable prepayments last cash was the flows was portfolio quarter, of of X% points $XXX earning down and which two quarter. from to balances quarterly unchanged million most basis for this by XX, first decreased continue trading $XXX assets flows quarter net commercial previous compared quarter interest to grew sale also security mortgage quarter the securities. reinvest cash from securities million loan decreased was to trading interest

of re-investment environment. is the this pressure be that slight rate low the to expectation there will However, continued due

to deposit XX net quarter. BBB is there basis interest points loan XXXX could from now recall regional to but two interest then by three moving a rate last four begin margin top pressure felt wane. are average potentially how there but horizon, during sooner interest we on costs do quarter, margin, interest many hikes we quarter, since anticipated and the the bearing early We cycle migration town down well to banks. unchanged bottom rise from this net basis for think continued Additionally, on margins positive hike on not extensive the With expect be believe in the success performed to to parts than we basis points it's to the nearing until supported we important rate had XXXX last again. beginning points XXXX any driving Triple rates consider,

much that lead experience, While be repeat us we don't that we significantly to see can't be believe assured different. to will the would experience

before cycle, for In liquidity system to than need should today even diminish rates the in which fact, market up last quickly. more move increase the there's the the

quarter prudent total was incentive told, pandemic Non-personnel through increase decrease an we're in personnel efficiencies down earned compensation ability the essentially expenses to with so and quarter.A link X.X% Turning compensation was mostly forward. expect was to Slide XX, expense regular by million to down $X.X management expense with flatthis going remains expense. All hold expense a the personnel $X.X do our cost very happy million. offset

Other loan lower others. communication mitigation loss the related decrease This due to expense position in expense On Also expenses. expense we operating remains decreased banking quarter million servicing $X.X service increased last $X million mortgage BOK's note costs did to conversion a prepayments result our for million strong. due not drill liquidity Data this assets. that and as combined $X with slide default contribution decreased $X.X charitable repossessed foundation to of increased reoccur and accruals of processing costs system quarter. on million on quarter, a primarily very made reduction of XX,

decline nearly to us, from ratio the well This just leaves largely significant this very customer significant needs. Our triple meet on liquidity XXth, in XX% to June deposit to last at due loan balances XX% sheet positioned quarter. future balance over declined to quarter P

subordinated is remain Our capital per market. at redeem an well XX% optimistically open issue of with of ratio XXXX, strong nearly internal that debt well minimum. $XXX equity existing our One strong ahead With Tier additional $XX.XX thing with our capital note June at XXX,XXX average shares a share levels, once such of to plan of using in the price position repurchase levels in we repurchasing, we common capital. million again, as were share active operating X

of We On slide borrow impact second some level not XX position This believe by loan if strength the of the approximately you half this basis. improve decided we'll the our and for mid-term. levels, growth basis $X but annually XX, activity with will million the continue in outlook ratio will company reissue I a to total positive the year, general for save company at leave we to growth the on net demand only capital holding near points, and capital exists. debt. our Given with the have go-forward company

believe balances largely a move downward close basis levels. pro now. loan bottom in our price XX that We orders repricing get and sale seen we our in margin us points interest overall of margin are portfolio. as net said, migrate pre the there's loss We behind deposit to is reserve continue continue securities for continued may believe we expect available to on pandemic pressure percentage the to Then largely towards slightly, loan past to bearing that significant interest in down

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

the most remainder the of for grow expect modestly to XXXX. of We revenue categories

controlling without We and the technology approach service budgeted and our manageable to position. will line single sacrificing to continue focus competitive in of holding at with growth personnel multi-year our XXXX.Our improve be low will disciplined non-personnel digits costs expenses commitments customer

moment we our As I about mentioned feel capital strength. a good ago,

We dividend opportunities plan share the for back our commentary. Bradshaw now level. and current maintain Steve to call quarterly cash looking I'll to buyback will continue for turn closing over

Steve Bradshaw

Steven. Thanks

of mentioned I BOK quarter call, was at As the top financial. it another the exceptional for

way. value outcomes this long-term quarter, in We that to benefit way discipline witnessed the right things future. the or do and And right company's we the continue prudent investment to hinder that adding the forgoing do of compromising a by wealth the might our without investors, diversified outsized continue our credit credit management shareholder as for contribution

some quite from our driving based seen and as in While emerged improving again confidence a is the fee-based footprint haven't way businesses, vastly about quarter we is we time. contribution for customer growth once the our from pandemic this the for outlook

growth book your returning be and pandemic levels. our In the areas of pre for our pretends restart term, returning of growth supply With hampering healthcare to strong, near of areas the well in indicators to company. economic remain drivers disruptions the pipelines other which about in we While might chain were some future. workforce CNI, some very optimistic this quarter the and largest

we believe our quarter questions. half or company to With Additionally, welcome we're energy that this were will second that, take play as workers and expectations remote the Operator? our year. of the a to the quarter and teamwork pleased in growth your back in also pleased role

Operator

question. please instructions] time, Wedbush this at session. Peter conducting And a with question-and-answer proceed [Operator your question we'll is Securities, Winter first we from be with Our

Peter Winter

improving, Thanks. it Good you some talk some morning. about like does there's on I'm if I average still I'm wanted could takes? could the trends be just are just Obviously like growth. still talk the wondering and seems third pressure to the the seem but third quarter, growth. about you loan ask cause wondering loan could it quarter, if of down about some loans puts in And

Stacy Kymes

Peter is Stacy. this

the to this energy into think commercial year. about saw up June. actually in quarter, backed our was we story you something in as think, little stability get you're our really May see the we've then for and month I the quarter in and two of --for but core CNI began third had And CNI growth of really fun wealth if in you going then and think past the going to platform talk was I know, we we grow together quarter. we're And in could and downs second to we the But this pay a us story quarter lending get I think this that book hoping half now. continue for a have coursing latter we that can the We months for real year. next into in estate, that a string will into strong as about bit while real

those we seeing pay Energy reached stable And point. growth up really at there. real bottom it's more to the we've so have where We're but this and we're, we're the where are some months pop point reached we hard in balances -- downs, know when the CNI.

budgeted year much more real awfully lot companies into had the going pay down were on which even typically cash perspective capital credit higher consistent than think with but from real budgeting, at, -- worked the story. of at borrowers of see prices, are issues the will would commercial have EMP with in bit energy I their many to the through some there side, these think activity, of estate's flow a a that loan as flushed they levels, we price but create the what But, COVID. there, the you're activity. respects downturn, the drilling go little a generation we're we that a through That's created have more We've last Those the capital demand fall. when I close. with markets different closed do

so of properties that And a permanent things of to the lot side done that. those non-recourse move stabilized have can

rates, what demand. of and the that's borrowers certainly grow the rates close. more the utilization CNI this optimistic they're a to the about we've in time. create at quarter some you in organic remarks really, we The, core behind And it pay when so think But growth economic optimistic year, or in lumpiness. was very a the to was eye year I the very about not half really story long from remember we our some being how about We're about balances see optimism, the us. optimistic stable. bowling, But coursing us of it's and utilization had commercial were energy going it created that created borrow the, prepared real can't latter terms in about if at, guys when mentioned that it's to their downs was when for that the I to we which to estate, and close think we're ability been And looked corporate it, next seen looked and seeing pipelines, long, We the about and behind time lowest talk about portfolio. I headwind it's an

to have crave opportunity we to and capital, need to that's began as grow for going get So borrowed organic demand an well. as

of our share opportunity we because are. the think share well to going to or grow, the when, how get market So our, provides I positioned when disproportionate we're

Peter Winter

average was really planning I excess into were that's a very really If replacing on with not about --and lower, and even portfolio, gears securities rates assume just quarter and talk cash helpful. the if could securities? I I you Right, maturing wondering switch lot Steven outlook for of if securities could about you're securities. this interest helpful. the the moving securities just down right, All

Stacy Kymes

are Peter. We

around will I to bit of was have here, million, have We AFS still is continue think down, portfolio of for a rates plan $XXX quarter. down flows opportunities. in say would off to that little cash look $XXX quarter And reinvest now I moved our each the to but we'll million. continue The

was I strategy just There's balance think down. to really. particular that no timing move that

go-forward I we flows relatively on portfolio cash $XX.X kind to and this the continue keep portfolio. think to they And reinvest want level have billion $XX basis of range. to those that dollar around a

Peter Winter

new And what on And at are what new on yields today? are today? yields it going going

Stacy Kymes

XXX, roughly.

Operator

Our with next question your is with from Truist, Jennifer Demba question. proceed please

Brandon King

for Hey, Yes. morning. is Good Demba. Jennifer Brandon King off this

to the period half know and basis, the to I any growth. deposit up growth averages, there average of for on were for note the quarter, on And going was factors little down If are of wanted in there. the touch second bit. were balances I a seasonal on what in deposit to wanted balances saw year? but expectation I what is So a

Stacy Kymes

Sure.

and quarter-over-quarter. has industry -- from certainly that deposit one us seen in benefited year-over-year and system, liquidity of entire growth the enormous the think the that for we've I enormous

of things start balances numbers, there. and a deposit at between you look happened that fluctuation you to period and get if think I lot

for the funds we've had lot an of going things back are who that the course that come of some in a other out customers of go Those place the back done sheet. period of back have have had from customers of We than who goes benefited who've year. half cash out. stimulus the Those some We've first time out. over have where energy influx to balance will a

so the average more of really balances for that there. And core growth of us the kind because of focus really representative is kind -- the that is

us. what do balances that'd knew a all the positive XXXX, we thing be the to were if think to of I helpful going answer for in

-- liquidity struggle specifically, I think the what in system much just plans the the have experienced we in any industry so with XXXX for of beyond to is us formulate career. our it's as to going have weekend that we today,

be It's this when stickier. is the anybody or And that well relationship to think a there. of move not of lot ask. We've else's. we And as been think our investment to happened. hasn't third continues we the deposit The than question for driven don't of them were to fast deposits those and would it so will we're a crystal balances has that. do as It just different predicting a consumers' paying that mean, we system organic time the of last go not year, certainly not market quarter, timing it as to to to them quarter, fair grown out rate fourth begins system them as I would, able We're to -- sure, ball clearly as banking is back stimulus well. out to much above kind grown I will. probably into flow of pockets, out be tends begin that impact

Brandon King

Okay.

I And And I now. growth hopeful is this later the know to that to loan outpaced What just Is growth you year? know into my sub are and question. ratio XX% Okay. gauge this the that previous is next deposit deposit answered thought? how based loan hard you off

Stacy Kymes

have to over And you're to sides I if think when closer going to result have deposit both to I period of you're XX% the the a current than, much to and of long typically ratio the reflective That's going ratio. equation, more history you of we what my to going time. of at deposit mean, you're deposit be And get going loan than kind that our loan again, to growth been look have our think when, we've probably company that happens you economy is the moving is. outflows.

clearly to earnings. positive create that, it's momentum so around for opportunity And the going

know, remarks, alluded how to move. are the fed that in does is that's the positioned very you One well think think things we his of we to begin when I important Steven

the a I come net that you that is to think lot perspective, seen will when that And fee little into will of that. And wealth a to seems world think of kind I in analysis revenue there's into come bit. of interest through we a a lot focus does know, back environment been we've that on come. increasing There's an we've day modelling everybody move there's of Scott's back revenue whenever forefront, rates how began from that forefront. rate the our been lot

actual the a so that. many future into because are are indicator models everybody's that go there's how results probably different assumptions working, better think of the than I

And the so investment well there that think last community would was an ask the well, on once time rates cycle, rate we you'll and will show and exceptionally who find community up focused performed we we that earnings performed to I move. began would, increasing have really pinup

Brandon King

now. have I for That's Okay. Thanks questions. all for answering my

Operator

question question. Gailey next Our Please is proceed from with your with KBW. Brady

Brady Gailey

morning Hey, thank Good you. guys.

more have be? you in utilization So And that the tell quarter? still about, pretty normalized a what us, low. we've being rates talked CNI Can about just would or then what guys level you is talked percentage

Steven Nell

to and with the if inventory. based, of little XX kind core bit history you're, CNI And in even lot receivable Core to is a because driven you look accounts that, was XX%. you're segment, CNI and barring a closer that our something below misleading of in at XX%, that's

kind those borrowing see commitments it's to just in can well receivable inventory apples as utilization economic depending not those organically but those once know, environment a so the increase, increase apples basis, of upon you which not more will levels, perfect think you'll and exists. because a normal I levels commitments increase, So increase decrease once commitment

process once downplaying there's of focused growth of not will there's I So kind the opportunity. but the I show lot on loan lot the looks I'm we're up on the, organic a that very normal sheet economy of think balance national up customer acquisition a that, cause built think again.

Brady Gailey

the second stock expect a quarter guys forward? you you on the cheaper we buybacks and it's back so potentially it as more the see it, All when to excess right. step more going of where then is little should you up you know, expect we buy And then the guys quarter get you have this stock should, the in some a and cheap, aggressive capital, in backs bought buyback know, buyback kind should is great today

Steven Nell

or we Yeah, we know to that in we Scott don't it, we'll with up the the ha we're spending And capacity. but did, We together be out to and opportunistic figure active. we'll quarter, if a $XX have as do. the I, we we'll end I like we be second going this $XX daily did on do quarter. work think stay I active were basis what I million

Brady Gailey

that Okay. level? And pretty quarters, in from amount small a talked levels we able even yield last then of to finally the CoBiz that couple yield the mentioning haven't about it's, what's not for creatable you're Now-a-days? any or me, is CoBiz down worth accredit

Steven Nell

Yeah.

$XX million million we in and course XXXX, I first it come that of $X.XX have was it accredit about in, yield this able say. $X.X of would quarter of remaining years, will couple the of So the was over quarter and million

Brady Gailey

you guys. right. Great. Thank Okay. All

Operator

right. All

with is Davidson. Next Tenner with proceed D.A. Please your Gary question from question.

Gary Tenner

your Thanks. you'd Wanted more fair be growth the Good kind for discussion than is suggests the bit the of of my deck we're today? in it back that previously modest what's the on the maybe a revisit of interpretation the .it year, expressed might that is, interpretation loan half kind what to morning. from of outlook outlook, a comments about hearing

Steven Nell

cash debt predict, estate setting hard borrowers or and or use trying the when their an I budgets will headwind they flow in within have not what of from, drill quarter energy I so. think even into level when paying that and months communicate our capital mean, seeing we're customer's inside stability the to the to some and, commercial don't growth modest markets. seeing financing of think, I some is It's down a specific inside I and, going real and are than growth markets they were where driven kind factors quit non-recourse you anticipated, loan of public third really energy, by for was to of what you probably and was us party real to have higher plans a activity and when total of higher the begin know, positive would they level portfolio.

seeing would began of our you originate acquisition to real I commercial those growth new think good some shoot energy pace have of We're area. customer we a today. long to I some, inside this inside headwinds, absent good growth think there. were quarter. see Healthcare And positive continuing good real estate showed -- a

certainly bit that going would, I would growth, the core the that we to quarter me to to like there, tell stability And in see underlying the biggest think We're be or, activity little that, balances. the but, those that fourth you we quarter seeing, It we, the you what I'm I I were but We're CNI into the which, but, seems think of going up can't certainly quarter. with saw And that, optimistic. that, end or would positive may very that certainty, to as July. in so bit tell it's And so you to you in stable in to hard third going awfully loan show going which that see, or a but don't, June the is down fact, just great a and close. close. to, the was a it's real expect we're little thing real make it's

Gary Tenner

ago, us ratios. buy remind in you. capital And we're minutes optimize QX? you Great. Thank kind the would front, the a talked where target capital of of few then just the you to Can of on, on like or kind back just terms just about you

Steven Nell

bit than that that don't I where XX% lower move roughly they any today have to little or that. like kind at lower. it's of a idea are going Well,

pay market. sufficient dividend be think I have the continue we a in capital competitive to to

the As build on support market that earlier to growth on back. have, actively I in mentioned will comes loan that of buyback think plenty we'll I and capital

the, don't see ratios. capital in I a pull in So the down

level. think I stay they relatively

Operator

your is Please And proceed our with Stephens. question. with from question Matt Olney next

Matt Olney

I to morning Good want Thanks. guys. circle back on the PPP.

mentioned fees levels. the dollar PPP the think the of I amount one were similar in XQ Q this? to you've What's

Steven Nell

I million. The revenue fees, in that was first million that quarter $XX.X on well, And interest was notes about interest second the from, PPP recorded sorry, dollars the I'm the in it my net in can't $X.X $X.X $XX.X the million the we first find quarter PPP million. in and the quarter first second quarter.

taper, those you'll, out of their. forgiven to the as continue So that balances obviously or pay force are of see

Matt Olney

Steven fees dollar be amount And of recognized? the what's those to remaining

Steven Nell

think $XX million I there's remaining.

Matt Olney

mortgage think from guess And XQ in cubits side, guess the, we're or margin I to think continue at could then here you to do we over impacted sale by both I headwinds, believe lower switching you you. here? Thank a gain QX the and Okay. volume on do in bottom

Steven Nell

embedded Well, you in mortgage. there's seasonality know,

you to And quarter. better good in second know, I quarter, think be be your think, better a quarter, have quarters to quarter so a quarter tends third third we'll there. And a the third quarter tend I

the quarter of frankly, of I to is but we're will seen there's think, would some for that to tailwind you some as big environment. that help. the I seen bit charging creating similar kind And, rate different think seeing depending moves early that transpire addition that changes fee modest around there but a things backup well. some bit obviously some to and rates should the second the positive there, We've seasonality will will impacts believe in make rates there expect would were we've based difference fourth seasonality happen better third agencies are in what better. there a help. bit some, relative a quarter, mean, with you quarter which adverse quarter there's, little the quarter, four be in there, know against and a a there's the be quarter a and I I third or on on And little

Matt Olney

mentioned And that obviously more XX, for should margin this longer an a the release forecast? than around We I signal, realized G&A XX. more or think the, term you know, you higher is term Yeah. was was a $X the intermediate Are the $X level. of press it about to think which trying of

Steven Nell

declining. The looks net the over net influenced you whether you're sale the and, like pipeline margin know, what it's pipeline gain or whether is on awfully by, building and

think, what and year I think we so typical I early the you signalling industry. wider that this And much what is broader margins are than last were the for know, year is

the think managing was the I everybody pipeline.

that but are that will, to up in margins began coming in widen they think not a as are and, you're you that's we're moving If go were they I the pandemic know, manner and, you direction. what is margins that seeing down margins, to where signalling your pre rates

Matt Olney

Okay. Thank you.

Operator

with with Shaw please next Jeremy And proceed is our question. question Fargo, from Wells your

Unidentified Analyst

is cycle strategy? during cycle bank to Brazil, can the for similar be correctly first around employed BOK if in I employed how right starting you where neutral. This the to Timor hedges the remain the new in positioning Jeremy. Hi, Maybe liquidity similar that remember or outside sensitivity, morning. environment? each asset good going in environment added That's being filling how Is that you're future now term call last assets somewhat a on

Steve Bradshaw

said, and really we reason much cycle see of last believe sensitive Stacy we be as would to think out -- I don't did we any the were asset coming different.

when other our XX-Q. numbers you'll with hard of pack some middle think but is and land, we out frankly we're on to asset modelling where somewhere compare X% they the model. see to we that's sensitive banks, don't Our will think exactly come know around but kind I of calculation I our and will our be and

that we over think out different coming will believe that I actually last cycle it but not the last near I happen, I'm in reason rate it don’t lot that was bit, will but to a the than outperformed zero see little predicting environment. be any

Stacy Kymes

compelled up. that rates to move and rates as that the quickly even our move time industry rates starts did as to deposit not system so when and I the rates to our outperform liquidity even going system in to short-term last I to opportunity feel overall are performance the will so time lag strong an today think in inherent went morning because fed so and in is more think allow up overall liquidity the they this today is perhaps more than up There Arun banks the the last once rates the went

actually modelling and think near-term so think and the of that's is you everybody's to. then that's to I time how better varied deposit the around perform continue continue did guys I because focus look go point went results a what at on I assumptions rates actual I So where future period certainly up there back indicator a would and banks can last to

Unidentified Analyst

then and fact the confidence pockets the I of if That's have are that at specifically well much year helpful. And looking choose you I customer paying to the into what that commentary, debt as growth budgets one just the given end this balances are year. could than growth liquidity the initial borrowers just guess at to the borrow their borrowers refinancing, drive up capital confidence and that own on when established that the back start how energy more later period? and follow-up in your lever going rather down gives still that customer to up heading loan guess have and least digging energy are I

Steve Bradshaw

for a so believe case financial I amount their we'll I so they Well to see them. that long think been are begin savvy the I time and leverage that of that's think of return and the modest a people, capital investment enhance can

economic think look from know so much to first in our it's core you're I a Colorado, hey, we opportunity team A to I we I trade it's energy is footprint am cost There's I are. curve, to into and sure years folks latter this at the the level. year team who to that I and our drill grow hedging have back of get the I and we three going our of begin part how we're going and to know because committed because the US above we're three my dated very to of hedge would in lots can out next flow. you in that look strong. year. bank of I see almost every energy but seeing there can me what's hedge backward gets and can state to of in that big for cash money where and the share that space still exceptionally remain optimistic Texas our not that expectation half $XX in You at very for disproportionate out and going and development walk Oklahoma years

Unidentified Analyst

we more at talk average just Can looking balances is are question, was of towards you the a the something there end then balances down quarter? of the average, the dynamic NII where period just expect and that finally a higher during in higher quarter for trading a but me should and end. and how million balance couple in to versus modelling Okay. And dip security end entire that period impact coming

Steve Bradshaw

to generate trading to intentionally so, up I balances see quarter. be we don't go on in group the balances that. did you those those average some little higher of average really the that think take allow that market and revenue. Scott allow yes Yes higher traders during any than bit We advantage to the and

billion. terms of it I use average bit see we'll little much reap the balance $X.X and sheet that going too on the a group every of that more so we're that don’t we much than but look allowed could that we how the towards This think level, allocate at the We We I balance always businesses. market. want sheet billion with that look look decide quarter, at $X.X at capital we and the opportunities. and particular to comfortable but quarter, benefit evaluate and higher the around we they're

Scott Grauer

As Steven billion. just mentioned, finished $X under we

and $X.X billion cents. quarter and $X.X versus moderated it's that So previous about a

sustain and that the we've will that's increase think we quarter. there us believe that's can from some that the of that we sustain can think level big really But think quarter forward. had in customers strong move about fourth third third I quarter and level in product we seasonality we quarter, for the think a third feel for revenue mix we to good as there sustain is takeaway was the that that certainly as can the that would think that into that the added, that, the we quarter into we that pretty vote about. we but we that I and we impact level So the I

Operator

Arfstrom Capital RBC And your Please next is from Jon question. question proceed Markets. our with with

Jon Arfstrom

you talking for to migrating how us? you the going think one about that about the flagging on something Steven, on CECIL provision, for a you question reserve manage Is are there pandemic there? levels. Is else benchmark as the

Steven Nell

think right. In one I that CECIL Yeah to pretty XXX was much level. pre-pandemic that's kind that's day XXX of range

same we're in , the yes terms light. using those So two

direction. I think we migrate that

better. continues with to the as to our we're very continues long improve, credit get economy So quality comfortable

loans, don't Charge-offs lower of All see all areas criticized, potential historical at any levels continue right problem are change those nonaccruals, end of the metrics decline. of and really in internally that. to the all from

loan get then the added think you downward. if we percentage do migrate and to I mix, So growth the

when reserve see PPP who how half, don't it knows we're think X.XX have to long migrates takes. a We'll and believe. exclude I at we'll but I that that a you out just year year, migrate combined on we know direction and that

Jon Arfstrom

for differences next I but optimism business question, one, so of open growth. about you of on you're appreciate it's any long-term I You the a got you're in about lot ended, geographically the terms lines geography, in or that's what of seeing but in my of terms differences is Any talked that guess opening maybe another we that, terms seeing?

Steve Bradshaw

No, apparently. not that

footprint or great exists overall, for well geographic just in when in is Kansas same what to think growth. the you that similar a our got think long-term that about footprint economic dynamic a I City Dallas, we've

awfully well-positioned think growth states the disproportionate that that market the in but next are terms about we of nothing in years, Arizona, near-term, Texas those different XX and and Colorado themselves. there's You economic over think to we in have going we're the see

Jon Arfstrom

pull in environment all, back, you are that seeing at come competitive entrants really Stacy people back in? new Okay. changed energy, has

Stacy Kymes

but lot up, revenue ever clearly that energy in everybody's in good about at lead segment I come to at business seeing that, of revenue us. the where revenue and a seen We that speaking probably back is to this we're go going -- dollars we've point. and that our lending doing the about loan relook a us some investment some banking folks at with asking lot best entrants portfolio go new in, from up All have energy or seen discussion we go my of they're I've career think here you're think You're or growth our that opportunity just perspective, point customer hedging suite up that but fuller for and the another hedged a syndication not portfolio deals.

And been for we're wonderful clearly a being We're full we're opportunities not in a seeing for perspective, the so that's space. have rewarded back, and business to the business consistency continues us. from to seeing be and of may, who you some come but folks

Jon Arfstrom

you one, seeing last going question? lot to to that this it? guys but do you hate it, do subjectivity I [indiscernible] but through how to ask how through but a ask know ESG there you're am think One of respectfully, I answer I it, is for

Stacy Kymes

analysis kind There of today, the is corporate a at that of of it's couple the things. Most happens level. ESG

do doing, ways. from an our what BOKF necessary doing think is Not environment, of doing help ESG are will be you in to where is are we an our but is ESG well. provide to relationship evolves, your for terms today in doing perspective? one, from as part, most of about as state certainly what large respect there a So in what [indiscernible] what we capital are environment customers about customers in we and more different the those think but your couple that exist it Number

taxes who fish will you’ve and that plans same rigs positive the and drilling on those with energy on. energy deeply part They this most if and so where expensive areas, care clearly is, in one so environment people in some been is they Texas is a I've the of brackets and work they're a source energy about think that about on of and you Colorado evolve. lower if they're but been So gas Oklahoma, footprint inexpensive of our that exist natural is big been or in that an on and and drilling oil the with folks of income you’ve Permian the hunt on

that think about will energy the a lot respect that think carbon-based of impact to also we I energy. technology with

to things those peak that, think provide we're and to happy our a from capture, demand place who long methane for technology carbon the we're produce domestic it's to there if that or for that like will propel country. weather capital I is So you way that a away economy and

Operator

Nell end over the to Steven of question-and-answer our turn session. now remarks. And we've closing reached I'll the for call

Steven Nell

again everyone Thanks Okay. for us. joining

email day, have you thank XXX-XXX-XXXX Everyone a If me or please have at can questions, call you. us great you at further ir@bokf.com. a

Operator

at concludes conference This may you today's participation. lines this Thank your your you and for time. disconnect