BOK Financial CEO on Borrower Optimism, Fee Forecasts, and Market Volatility

Fee and Commission Guidance

• 📉 Fee and commission guidance was lowered due to volatility, particularly in trading revenue, with February and March being slow months.
• 📈 Despite the trading revenue miss, other fee-based businesses like fiduciary asset management (up over 10% YoY) and the transaction card business are growing strongly.
• 📊 Mortgage business is also showing growth, even in a challenging market.

Economic Outlook in Sun Belt Markets

• ☀️ BOK Financial's geographic footprint in growing metropolitan areas like Dallas, Houston, Denver, and Phoenix positions them well.
• ⚠️ While discussions around tariffs have created some uncertainty and a slight pause in economic activity, borrowers remain optimistic about the outlook.
• 🚫 The bank's base case is not for a recession, contrary to many companies discussing it on earnings calls.

Credit Strength and Provisions

• 🏦 BOK Financial maintains healthy reserves and strong credit underwriting discipline, evidenced by not participating in TARP historically due to strong credit outcomes.
• 📊 With only two basis points of charge-offs this quarter and a forward-looking unemployment forecast of 4.5-5%, the current allowance for credit losses is considered very strong.
• ✅ Credit conditions are described as unsustainably good, with no immediate reversion to normal expected.

Net Interest Margin Growth

• 💰 A key catalyst for expanding net interest margin was effective control over deposit costs, supported by a strong liquidity base.
• ⏱️ The bank's short-duration securities portfolio is repricing more rapidly than peers, further contributing to NIM expansion.

Trading Revenue and Client Advisory

• 🏦 Unlike larger money center banks, BOK Financial's trading revenue is primarily from mortgage-backed securities, not equity or foreign currency trading, explaining the weaker performance in this segment.
• 🤝 Customers increasingly value BOK Financial's advice and counsel in a volatile environment, particularly in the fiduciary side of managing retirement and other assets, where they manage $150 billion.