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DATE

Oct. 20, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Heather King
• Chief Executive Officer - Stacy C. Kymes
• Executive Vice President of Wealth Management - Scott Bradley Grauer
• Chief Financial Officer - Martin E. Grunst

TAKEAWAYS

• Net Income -- $159.9 million, or $2.64 per diluted share, representing solid performance despite a challenging interest rate environment.
• Net Interest Margin -- 3%, an increase of 9 basis points driven by the repricing of fixed-rate assets.
• Core Net Interest Margin -- 3.21% excluding trading activities, a sequential increase of 8 basis points reflecting the benefits of loan growth.
• Total Loans -- $27.7 billion, representing 2.4% linked-quarter growth and 11.5% growth year over year.
• Energy Loans -- $3.3 billion, increasing 8.6% sequentially due to higher utilization across existing relationships and solid new production.
• Commercial Real Estate Loans -- $6.1 billion, growing 4.2% over the prior quarter with broad-based increases across industrial and retail sectors.
• Mortgage Finance Loans -- $589 million, an increase of $137 million supported by a $500 million increase in active warehouse commitments to $1.4 billion.
• Healthcare Loans -- $4.0 billion, a decline of 1.4% linked quarter but an increase of 3.8% year over year.
• General Business Loans -- $4.7 billion, increasing 1% sequentially and representing 17% of total loans.
• Fees and Commissions Revenue -- $188 million, declining $14 million sequentially primarily due to lower fixed-income trading volumes.
• Trading Revenue -- $15 million, down from $25 million in the prior quarter as the 10-year Treasury yield rose nearly 80 basis points.
• Fiduciary and Asset Management Revenue -- $69.9 million, the highest revenue quarter on record when excluding seasonal tax preparation fees.
• Transaction Card Revenue -- $32.2 million, representing a new quarterly record for the company.
• Nonperforming Assets -- $58 million excluding government-guaranteed loans, or 21 basis points of period-end loans and repossessed assets.
• Net Charge-offs -- $886,000, averaging 2 basis points over the trailing 12 months.
• Combined Allowance for Credit Losses -- $322 million, or 1.16% of outstanding loans, as loan growth offset improvements in economic forecast assumptions.
• Common Equity Tier 1 Capital Ratio -- 12.73%, maintaining a strong capital position relative to peers.
• Tangible Common Equity Ratio -- 9.16%, reflecting disciplined balance sheet management despite rapidly increasing interest rates.
• Net Interest Income Guidance -- $1.43 billion to $1.44 billion for the full year 2026, assuming one additional rate hike in the fourth quarter.
• Operating Expense Guidance -- Growth of approximately 1% versus the prior year, with an anticipated efficiency ratio of roughly 62%.
• Loan Growth Guidance -- Over 10% for the full year, supported by active hiring of revenue-producing talent.
• Provision for Credit Losses Guidance -- Expected to be below $10 million for the full year 2026.

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RISKS

• Kymes stated, "The higher rate environment is a headwind for our more rate sensitive fee-based businesses. Particularly fixed income trading and mortgage banking," noting that industry activity levels declined during the quarter.
• Grunst warned that competitive loan and deposit pricing environments are drivers that management recognizes as potential pressures on the margin.
• Management indicated that although credit remains strong, credit performance is expected to eventually normalize as the cycle progresses.

SUMMARY

BOK Financial Corporation (BOKF -0.05%) reported third quarter net income of $159.9 million, or $2.64 per diluted share, as solid loan growth and core margin expansion offset performance headwinds in market-sensitive fee businesses. Management reported that total loans increased 2.4% sequentially, driven primarily by energy lending and commercial real estate, while the net interest margin expanded to 3% due to the repricing of fixed-rate assets. The company reported record transaction card revenue and strong core fiduciary fees, though brokerage and trading revenue declined significantly following a rapid rise in long-term interest rates. Management maintained its full-year guidance for mid-single-digit total revenue growth and over 10% loan growth while noting continued strength in credit quality with net charge-offs of 2 basis points over the trailing 12 months.

• The securities portfolio provides a consistent reinvestment opportunity, with Martin E. Grunst stating, "we typically have the opportunity to reinvest between $600 million to $700 million of quarterly securities cash flows," achieving a yield pickup of more than 180 basis points in the third quarter.
• Stacy C. Kymes indicated that customers in the energy sector are beginning to implement broader drilling programs using debt, as the market begins to believe a political risk premium will remain embedded in oil prices.
• The mortgage warehouse business remains in a growth phase, with Stacy C. Kymes noting that utilization is currently in the low-30 percentile while a more mature business would typically target closer to 50%.
• The company continues to prioritize talent acquisition, adding revenue-producing personnel to capitalize on market disruptions across its eight-state footprint.
• Management stated that the stability of interest rates is a more significant driver for fixed-income trading activity than the absolute rate level, with trading business beginning to stabilize as the pace of 10-year Treasury yield changes slowed in October.
• Commercial real estate lending remains focused on recourse, with Stacy C. Kymes stating, "We focus on recourse. We are successful in getting that. it is a big part of how we think about that business."

INDUSTRY GLOSSARY

• AUMA: Assets Under Management or Administration, representing the total market value of all financial assets managed by the institution.
• CET1 Ratio: Common Equity Tier 1 capital ratio, a key measure of a bank's financial strength that compares its core equity capital to its total risk-weighted assets.
• C&I Loans: Commercial and Industrial loans, typically made to businesses for working capital or capital expenditures.
• KRX Index: The KBW Regional Banking Index, a benchmark index used to track the performance of regional banks in the United States.
• NIM: Net Interest Margin, the difference between the interest income generated by a bank and the amount of interest paid out to its lenders relative to its assets.
• NPA: Nonperforming Asset, a loan or other asset that is not currently accruing interest or is in default.
• TBA: To Be Announced, a term used for a contract for the purchase or sale of mortgage-backed securities to be delivered at a future date.
• TCE Ratio: Tangible Common Equity ratio, a measure of a bank's physical capital as a percentage of its tangible assets.

Full Conference Call Transcript

Operator: Again, as a reminder, this conference is being I would now like to turn the presentation over to Heather King, Director of Investor Relations for BOK Financial Corporation. Heather, please proceed.

Heather King: Good afternoon, and thank you for joining us to discuss BOK Financial's third quarter 2026 results. Our CEO, Stacy C. Kymes, will provide opening remarks, cover the loan portfolio, and related credit metrics. Scott Bradley Grauer, executive vice president of wealth management will review our fee-based businesses. Our CFO, Martin E. Grunst, will then walk through our financial performance for the quarter as well as our forward guidance. The slide presentation and press release are available on our website at bokf.com. We refer you to the disclaimers on slide 2 regarding any forward looking statements made during this call. I will now turn the call over to Stacy C. Kymes, who will begin on Slide 4.

Stacy C. Kymes: Thank you, Heather. We appreciate you joining the call this afternoon. We are pleased to report earnings of $159.9 million or EPS of $2.64 per diluted share for the third quarter, reflecting another period of solid performance despite a challenging interest rate environment. 4 key factors drove our results. First, quality loan growth. Growth remained a standout contributor again this quarter. Total loans grew 2.4% linked quarter. Representing annualized growth of 9.5% and grew 11.5% year over year. Second, meaningful margin expansion. Net interest margin increased 9 basis points to 3%. We continue to benefit from the repricing of fixed rate assets. Third, disciplined expense management.

We continue to invest where we see attractive opportunities for long term growth, and prudently manage our expense base. We are not managing the company for 1 quarter. We are focused on producing sustainable growth and profitability over time. And fourth, exceptional credit quality. We continue to see very strong performance across the portfolio with no meaningful deterioration that would change our view about the underlying credit environment. Together, these strengths demonstrate the durability of our business model. Reflect the benefits of decisions we have made over many years to diversify our business. Manage risk prudently, and position the company to perform well across a wide range of economic environments.

I also want to spend a moment on the rate environment. It highlights an important differentiator for BOK Financial. We have not seen a 10 year treasury yield at these levels since 2007. This rate move also happened very quickly with similar velocity to what the market experienced in 2023. Our securities portfolio has a relatively short duration of about 3 years, which helps limit our exposure to changes in interest rates. We have managed the balance sheet this way for decades, maintaining risk limits around tangible common equity and tangible common equity and stress. As part of that discipline, we regularly monitor how our capital would change if interest rates across the yield curve rose by 300 basis points.

Our current TCE is 9.2%. Well above the TCE for the broader KRX index. This is by design and reflects how we have managed the balance sheet over many years. That consistency gives us flexibility to continue serving clients and investing in growth across a range of market conditions. The higher rate environment is a headwind for our more rate sensitive fee-based businesses. Particularly fixed income trading and mortgage banking. Industry activity levels declined meaningfully during the quarter. Our results reflected that environment. Consistent with what other market participants experienced. We view those businesses through the cycle where they provide an important source of diversification to our overall earnings profile.

And now we will cover our loan portfolio in more detail starting on slide 6. Loan growth remains a particular source of strength. We have invested heavily in our people, markets, and capabilities those investments are and those investments are now contributing across the organization. As I mentioned before, total outstanding loans grew $646 million or 2.4% this quarter and were up 11.5% year over year. Importantly, this growth continues to be well balanced across our businesses and markets. Our core C and I loan portfolio which represents our combined services and general business portfolios, grew slightly linked quarter but is up 10.9% over the prior year. Energy lending experienced an outstanding quarter, increasing $264 million or 8.6%.

Driven by both higher utilization across existing relationships and solid new production. It is a business where we have deep expertise and long standing client relationships. The elevated payout activity we experienced last year was largely driven by industry consolidation and an accommodating debt capital markets environment. As market activity normalized, volumes returned, and we are benefiting from the strength of our relationships and reputation in the sector. Health care loans declined 1.4% this quarter but were still up 3.8% year over year with healthy future pipelines.

Mortgage finance also contributed meaningfully to loan growth during the quarter with current outstanding balances of $589 million, an increase of $137 million Active warehouse commitments increased more than $500 million during the quarter to $1.4 billion and loans funded on our warehouse lines grew 23%. This is a remarkable result given the challenging U.S. mortgage origination. Our commercial real estate portfolio grew 4.2% over the prior quarter. Growth in this portfolio was broad based spanning industrial, retail, and other real estate loans. We remain well below our internal concentration limits. Moving to slide 7. Once again, credit quality remains strong. Nonperforming assets not guaranteed by the U.S. increased $3.3 million to $58 million.

The resulting nonperforming assets to period end loans and repossessed assets increased 1 basis point to 21 basis points. Committed criticized assets increased this quarter but remained very low relative to historical standards. We had net charge offs of $886 thousand during the quarter, averaging 2 basis points over the last 12 months. We continue to have only de minimis exposure to private credit facilities and no direct lending to data centers. Consistent with the prior quarter, no provision was required. Improvement in economic forecast assumptions was offset by the impact of loan growth. Our combined allowance for credit losses is a healthy $322 million or 1.16% of outstanding loans.

In all, credit quality remains exceptionally strong, with no meaningful signs of broad based stress emerging in the portfolio Over time, we would expect credit performance to normalize. However, normalization should not be confused with deterioration. Our underwriting standards portfolio diversification, and risk management approach are designed to perform throughout the credit cycle. And we continue to feel very good about the quality of the book. And with that, I will turn it over to Scott Bradley Grauer.

Scott Bradley Grauer: Thank you, Stacy C. Kymes. Turning to our operating results for the quarter on slides 9 and 10. I want to start with the interest rate environment because it had a meaningful impact on several of our market sensitive businesses this quarter. During the quarter, interest rates moved up significantly. With the 10-year treasury increasing nearly 80 basis points. The increase in longer term rates creates a challenging back for both mortgage activity and fixed income markets. And importantly, this is a theme we have seen across the industry. Higher mortgage rates slow origination activity which in turn reduces the volumes that support both our mortgage production and fixed income trading businesses.

We take a long term view of these businesses and recognize that activity levels will fluctuate with market conditions. History has shown that these businesses can provide significant earnings momentum when rates decline and mortgage activity rebounds. That long term countercyclical benefit is a key component of our diversified business model. it is 1 of the reasons these businesses remain such an important part of our franchise. Against that backdrop, total fees and commissions were $188 million. declining $14 million sequentially.

The majority of that decline was concentrated in our markets and securities businesses, where revenue declined $15.2 million to $36.2 million Within trading, the best way to evaluate the business is to look at total trading revenue, which includes both trading fees and trading related net interest income. We have discussed this distinction over the last several quarters, as the shape of the yield curve has shifted revenue between those 2 categories. Total trading revenue was $15 million this quarter, compared to $25 million in the second quarter. Trading fees were negative $6.3 million while trading related net interest income was $21.3 million This quarter, you saw a decline in trading fees. Reflecting the market dynamics just discussed.

Partially offset with a small increase in trading related net interest income as the steeper curve shifted some revenue into that line item. It was a strong quarter for investment banking revenue. Which grew $4.3 million driven by municipal bond underwriting activity. This was partially offset by a reduction of $3.4 million in syndication fees. Which returned to more normal levels following a very strong second quarter. Turning to slide 10 to discuss our asset management and transactions businesses. These businesses continue to perform well, generating recurring fee income, broadening our revenue mix and reinforcing the earnings diversity that distinguishes our franchise. Our fiduciary and asset management business delivered another very strong quarter, contributing $69.9 million to revenue.

While that was down slightly linked quarter, second quarter benefited from seasonal tax preparation fees. Excluding that seasonal comparison, the third quarter represents our highest revenue quarter on record. AUMA was stable at $129.3 billion. Transaction card contributed $32.2 million to revenue this quarter. Representing a new quarterly record. Collectively, these businesses represent an important part of what makes our franchise unique. They are built on long term relationships, recurring sources of revenue, and specialized expertise that have consistently produced value across market environments. And with that, I will hand the call over to Martin E. Grunst to cover the financials.

Martin E. Grunst: Thank you, Scott Bradley Grauer. Turning to slide 12. Net interest income increased $18.1 million and net interest margin grew 9 basis points. Excluding trading, core net interest income increased $15.1 million and core margin increased 8 basis points. Core margin and net interest income continued to benefit from loan growth and fixed rate asset repricing. Given the short duration of our securities portfolio, we typically have the opportunity to reinvest between $600 million to $700 million of quarterly securities cash flows. This provides a durable benefit as lower yielding assets mature and are reinvested at current market rates. In the third quarter, portfolio runoff was $770 million at an average yield of approximately 3.3%.

Those cash flows were reinvested at an average yield slightly over 5.1%, representing a yield pickup of more than 180 basis points. Third quarter also benefited from loan fees, the portfolio restructure we completed back in the second quarter and a small improvement in energy derivative margin. Turning to slide 13, Total expenses were largely unchanged compared to the prior quarter. Excluding changes in deferred compensation, personnel expense increased $6.5 million This increase reflects strategic talent investments including the addition of proven revenue producers as we capitalize on recruiting opportunities from market disruption. In addition, strong loan production during the quarter resulted in higher incentive compensation and health care costs increased.

Total nonpersonnel expense was flat versus the prior quarter. slide 14 provides our outlook for full year 2026. Our guidance assumes 1 additional rate hike in the fourth quarter and longer term rates aligned with the current forward curve. Loan growth and pipelines are tracking well with our expectations, and our growth guidance remains over 10%. Our outlook for total revenue growth is unchanged at mid single digits. Net interest income is expected to be 1.43 to $1.44 billion while fee income is expected to exceed $800 million. As we commonly note, future variability and curve steepness can shift trading revenue between those 2 categories.

On expenses, we have tightened our guidance and anticipate growth to be roughly 1% versus the prior year. We continue to expect the full year efficiency ratio to be approximately 62%, reflecting the Visa gain we recognized in the second quarter. If adjusted for the Visa gain, our guidance for that ratio would be near 63%. Turning to credit. Portfolio credit quality remains very strong. We continue to see very low levels of nonperforming assets and no tangible evidence of broad based normalization at this point. We believe provision expense will be below $10 million for the full year 2026.

With that, I would like to hand the call back to the operator for Q and A, which will be followed by closing remarks from Stacy.

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Chiaverini. With Jefferies. David, your line is now open.

David Chiaverini: Hi. Thanks for taking the questions. So starting on the net interest margin, very strong bounce. in the third quarter. How should we think about the trajectory from here along with the drivers as well as touch on the rate sensitivity as we look forward.

Martin E. Grunst: Yes. Thanks for the question, David. Yes. We were with how the margin turned out. That was consistent with how we were thinking about a quarter ago. And the drivers from here as we think about finishing out the year you basically, the fixed rate asset repricing will be the big positive component there. So we will continue to see both the securities portfolio fixed rate loans add to that Energy derivative margin If you recall, that was a drag of 3 basis points in the second quarter turned out to be a drag of 2 basis points in the third.

We will still get that back. it is hard to tell if that will be a neutral or a drag going into next quarter. And then competitive loan and deposit pricing environments, those are still just competitive as they were And so far, that has not really shown up in the margin for us. But we certainly recognize that, that is that is a driver. From a rate risk perspective, we are very rate risk neutral, so we do not think that will be anything that changes things quarter to quarter. So all in, we think about the margin, stable as our near term outlook. While we are rate neutral.

Stacy C. Kymes: This is Stacy C. Kymes, David. The shape of the yield curve does matter. So if there was any steepening along the way or flattening, obviously, that could impact us a little bit too.

David Chiaverini: Brett. Thanks for that. And then shifting over to the loan side. You talk about the pipelines this quarter, growth driven by energy and mortgage finance? Should we expect similar areas to drive growth going forward? And a key theme this quarter is if higher rates are impacting loan demand.

Stacy C. Kymes: Thus far, I have not seen the impact of higher rates impacting loan demand. I think that in our footprint, you still have a lot of strong economic activity Keep in mind, all the rate movement has been you know, in the longer end of the curve. You know, a 25-basis-point move in short term rates is not gonna make a huge difference there, And I do not think the longer term view has a huge rate move even on the short end. So we are not seeing changes in borrower appetite at this point, understanding that could change. The nature of having a diverse portfolio is that, you know, some quarters, 1 area shines more than another.

And so this quarter, it was energy, and certainly mortgage finance has been a stalwart for us since inception. But we are very excited about what is happening in C and I. A little bit of a slowdown this quarter, but not we do not. We think that is just kind of a blip. We think we will continue to move forward and achieve the guidance that we provided to the Street as we move into the fourth quarter.

David Chiaverini: Very helpful. Thank you.

Operator: Your next question comes from the line of Michael Rose with Raymond James. Michael, your line is now open.

Michael Rose: Hey. Good afternoon, guys. Thanks for taking my questions. Maybe just following up on the NIM discussion. Obviously, very good NII growth this quarter. But it looks like based on the guide that is going to slow fairly materially quarter over quarter. And I really wanted to get into the deposit side because deposits did shrink. You guys obviously have a low loan to deposit ratio. Just how should we think about the progression of deposit growth from here as it relates to kind of the NIM discussion that you just laid out moving into next year. Along with you know, earning asset growth. Just trying to put it all together. as we set up for next year. Thanks.

Martin E. Grunst: Yeah, Michael. So let me just comment on the NII growth. I mean, we expect to continue to grow earning assets through growing loans and combine the earning asset growth and relatively stable net interest margin, we feel good about the NII trajectory as we finish out the year. And then I think it is it is an important point to look at on the deposit growth. So you are right. We certainly do have a very strong loan to deposit ratio, and that gives us the flexibility to be thoughtful about how we respond to market pricing pressures.

But if you spend a little extra time looking at the differences between Q2 and Q3 on an average and ending basis, it will help you see what signal and what noise. So if you look at average balance in Q3 and ending balance in Q3, for deposits, they are basically the same. If you look at ending balance in Q2 versus average balance, ending was over $600 million higher And so, you know, there is a little bit of a run up right at the end of June that affected that ending balance. So you look at average balances, you see a growth trend.

If you look at average balances in every single line of business that we disclose, you see growth quarter over quarter. So I think it is probably more accurate to say that fundamentally, we have got a growth trend going on in the deposits You have got a little signal versus noise issue when you look at the ending balances. But at the end of the day, we feel good about our ability to continue to grow the deposit portfolio. We have done a great job of that over the last several years. And we will maintain a very strong loan to deposit ratio going forward.

Michael Rose: I appreciate the color, Martin. And maybe just a follow-up on loan growth. I know, you have been fairly active in hiring. New producers. Do you have a sense for how much of this quarter's growth was maybe driven by some of those new producers versus maybe just draws on existing lines? And then what is the hiring outlook as we think about the next couple of quarters look like for you guys specifically? Obviously, we have had some bigger deals in Texas closed. And I think last quarter, you mentioned that I think 20 of the 25 hires in Texas. And so just trying to, you frame the opportunity as we move forward. Thanks.

Stacy C. Kymes: Sure. I mean, this quarter, if you think about the top of the house, utilization was essentially flat from the second quarter, so the growth really was not utilization driven. It was really continued to add customers to the base. I think that from a talent acquisition perspective, we continue to be focused on that. The talent the growth this quarter was not driven by the talent. We should expect to see that begin to show up in the fourth quarter. And then certainly, in 2027. But we continue to be very active there across all of our markets not just Texas, We continue to look to add talent.

We think that is the best way for us to grow in the current environment. And we have become an employer of choice for many who want to do business a certain way, very relationship driven, that is been effective for us. So I think that is that is part of the future story. For sure, we are excited about the people who have come on board but the results that they will drive are gonna be in the future, not reflected in the third quarter.

Operator: Your next question comes from the line of Jon Arfstrom with RBC Capital Markets. John, your line is now open.

Jon Arfstrom: Hey. Thanks. Good afternoon.

Stacy C. Kymes: Hey, Jon.

Jon Arfstrom: A couple of rate related questions. On slide 6, Stacy, that mortgage finance line it is up nicely, and I think we all get that it is growing. But my guess is the balances are probably somewhat depressed. And so I am just kind of curious if you can talk about what you are seeing in terms of new business wins there. And if the mortgage market normalizes a little bit, what kind of expectations do you have you know, for potential balances there, if that makes sense.

Stacy C. Kymes: Yeah. You know, I want to talk about it kind of in general terms. I mean, we are we are still pretty nascent in that business, and so you still have a lot of customer acquisition that is happening. And so utilization is not where we will be when the business is more mature. I would say our utilization there is kind of in the low-30 percentile. And some of that is just a factor of the time it takes to get customers onboarded and for systems to integrate and for if they become active from that perspective.

I think as you begin to mature out the business, you are probably looking at utilization closer to 50% And certainly, in this type of mortgage environment, you know, I am very impressed with the team and how they are continuing to grow and add commitments at a significant clip. Think if you think about a more normal mortgage environment, this business looks even better. So we are really happy with where it is at today in a difficult environment. But if you kind of -- whatever normal is for mortgage, if you if you find that, I think this business looks even better for us.

And I will tell you, we talk about it is about a relationship, not a transaction. For us. And this business is a really good example of that. We do not have a single customer who is a loan only inside of our mortgage warehouse business. Every single customer that we have has at least 1 other product with us. Whether that be they are an active trader in our TBA business or whether they are a treasury customer or both, we continue to be very good at selling the whole bank. And having a relationship and not just a transaction.

Martin E. Grunst: And, Jon, it is Martin. I would add 1 thing to that. Just note that business as we mature it out, there will be seasonality trends in there. Of course, summer versus winter is kind of the driver there. But given the momentum we have in originations, you know, we think we will be able to grow through the seasonality that we would see here in the near term quarter.

Jon Arfstrom: Yep. Okay. Good. And then, Scott, question for you. I kind of feel like I am picking on you periodically. On trading fees, but, obviously, you cannot control what interest rates do. But a couple of tougher quarters in a row, to the rate environment. What needs to happen for that business to get back to some normalcy? Is it just rates staying steady in the same range, or do rates have to come back down? Or how do you want to think through this?

Scott Bradley Grauer: Yeah. it is a great question. it is a fair question. And I would I would characterize really 2 things that need to happen to create a more optimal environment. Obviously, we continue to do business, continue to, you know, have significant trading volumes there. They are just not what we would like them to be with the with the rapid change in rates. And so what we need to see are 2 things, stability and acclimation.

You know, it. it is it is not the absolute rate and the rate levels because we, you know, have been in that business for over 25 years, and have seen these rates and in fact, higher in the past and generated you know, quite effectively and efficiently. So it is merely the uncertainty in the instability with the speed of change and the upward pressure on rates, I think, that has caused the biggest challenge to both buyers of the mortgage securities market as well as the origination piece. So as the mortgage buyers acclimate to this type of a rate range we will continue to take, you know, more than our share of that business.

But during this environment, it creates challenges both in the confidence levels of our asset buyers as well as the mortgage origination piece itself. So we need stability. And acclimation to this type of a rate range, which we do not find necessarily out of longer term historic norms.

Stacy C. Kymes: Jon, this is Stacy C. Kymes. I mean, think about, for us, the last 6 weeks of the quarter. So 10-year rose about 80 basis points. that is a pretty quick move in the long end of the curve. So if you are a buyer of fixed income instruments, you know, the last thing you wanna do is buy a bond today and it would be worth less tomorrow. And I think what we have seen over the last few weeks is the 10-year has kind of settled out, the pace of the change has changed and stabilized tremendously. That business will be just fine in a stable environment.

And so, if you think about where we are through the first 2 or 3 weeks of October, we like what we have seen there. So it is it is it is not about the rate. it is about the pace of change. And now that pace has stabilized quite a bit, we think that business will also stabilize. Now the mortgage business itself is a different story. it is gonna take longer. But the fixed income trading business will come back to us once the pace of change has slowed. And at least thus far this quarter, it has proven to be the case.

Jon Arfstrom: Yep. Okay. That. that is helpful. that is a good comment on the 10-year kind of rolling over. So I appreciate it. Thank you.

Operator: Your next question comes from the line of Peter Winter with D.A. Davidson. Peter, your line is now open.

Peter Winter: Thanks. Good afternoon. When I look at expenses, you guys have done really an excellent job managing expenses this year. Updated guidance is 1%. The question is, what would you consider a more normal growth rate? And is there room to further improve the efficiency ratio? I realize you operate a little higher than peers just given the mix of your fee income businesses.

Martin E. Grunst: Yeah. So, Peter, I think that, you know, long run, there is room for that efficiency ratio to improve from where it is. But we are not the sort of company, just given the strength and size of our fee businesses, you know, we are not somebody that is gonna be in the upper fifties. We are gonna be, you know, in the lower 60s as kind of the long run, you know, what would make sense for us. So but I think that ultimately, there is room there to make improvement.

I think that, you know, we appreciate the commentary about the year and we have done a tremendous job of being thoughtful about making investments in the company that ultimately drive greater efficiency, and that is important long run.

Stacy C. Kymes: Yeah. We are pretty proud of the fact that we brought the efficiency ratio down probably close to 300 basis points over the last 12 months while still making significant investment. In new revenue producers and key infrastructure investments that we think will propel us you know, for many years into the future. You know, the mix of the business that we have is unique for a regional bank, And so that results in a higher efficiency ratio than most, but we are each -- we look at each of those lines of business and each has a target efficiency ratio.

So we. it is easy for us to manage and kind of know where we are by each distinct line of business. But I think, Peter, you know us well, and you know that we do not manage to that ratio for the company because we are always thinking about long term investments. And if there is investments that are important to make that are really gonna pay off long term, we will make those And, you know, the efficiency ratio is ultimately something that comes out of that set of decisions in the short run.

Peter Winter: Got it. Got it. that is really helpful. And, also, just separately, nice to see another solid quarter of loan growth in the energy portfolio. Can you talk about the pipeline in energy? Are you starting to see more willingness to drill as energy prices really might be staying at these elevated levels for longer?

Stacy C. Kymes: I am not gonna be happy with you if you jinx me, Peter, but it appears that way. We just met with our team yesterday and talked about for a long time, I would say that the, you know, the severe backwardation of the curve did not make it very interesting. Because you really need a longer term price rise. But if you look out, you know, 12 months from now, you are still seeing pretty healthy prices. I think the market is beginning to believe that even post resumption of the. Or post resolution of the conflict, that there will continue to be a political risk premium embedded in the price of oil.

And as a result of that, we are starting to see customers begin to look at and begin to implement more broader drilling programs, which means the use of debt to be able to help them facilitate that. So you know, it will be lumpy. I wish it was, you know, always up into the right every quarter. Over the last 18 months, energy actually because of consolidation in the industry and much lower utilization. Had been a headwind for us. And so now it is great to have it as a tailwind and we are very hopeful that it will continue to be that way for a while.

Peter Winter: Great. Thanks, Stacy.

Operator: Thank you, Peter. Your next question comes from the line of Ed Najarian with Hovde Group. Ed, your line is now open.

Analyst: Yeah. Hi. Good afternoon, guys. I hate to beat a dead horse on the NIM, but just a question there. When I think about, you know, the investment securities portfolio runoff that you have outlined and the reinvestment there, the variability of the loan portfolio, the ability to lag deposit pricing. Even if we are using sort of that high sixties deposit beta that you have talked about previously.

It seems like there is still some opportunity for a little more margin expansion at least in the near term, especially if the Fed's going to tighten let's say, 1 or 2 more times in the near term, So are you have I guess the question is, you just being a little conservative in terms of your NIM outlook because the NIM is always very little difficult to fine tune and forecast specifically. Or would you agree that there is a little more opportunity for NIM expansion over the next quarter or 2 before it sort of settles out and stabilizes?

Martin E. Grunst: Yeah. Ed, I appreciate the question and you are right. If you look at the long run history over the last 9 quarters, core NIM has expanded 3 basis points per quarter, and that is been a function of fixed rate asset repricing and then some of the other items that you articulated. And when we think through where the margin really gravitates to over time, we have said in the past, if you just took the securities portfolio, replaced it with current market levels, you know, you would be north of 3.

And so you know, over long periods of time, you are always gonna gravitate to something that is kinda your natural level in any given year or quarter, you might be above or below that for various market. Mostly market driven reasons. I think that long run, we do see continued margin expansion as part of what is possible here. I would just note that there certainly will be some level of overlay of competitive pressure given that there is plenty of demand for loans within the industry And you know, we feel very comfortable talking about you know, stable in the near term as we round out the year.

But I think you are right on the long term message of where that ultimately goes.

Stacy C. Kymes: Think you are thinking about the short term dynamic. Probably correctly if you think about how deposit pricing tends to lag. We kind of would prefer to talk about the margin over a longer cycle so that you kind of even out those lags. But you are not wrong in how you think about it. I think that the other thing to think about, is that demand deposits are going to be a bit tougher in this environment given higher rates. And so you know, as we think about it collectively, we feel pretty optimistic, but we do not want to overpromise here either.

Analyst: Right. Okay. Great answer. Understood. And then just 2 really quick housekeeping questions. When you talk about the 1%, you know, expense growth, growth for this year, that is, like, all in for both years. You are not taking out any kind of deferred comp or anything like that. that is that is gap versus gap. Correct?

Martin E. Grunst: GAAP versus GAAP is right. Okay. And then on the NII guide, that is a non FTE number. Correct? That is an SEC, not FTE number. That is correct.

Analyst: Okay. Perfect. Thank you very much. Good quarter, guys. Yep. Thank you.

Operator: Your next question comes from the line of Woody Lay with KBW. Wood, your line is now open.

Woody Lay: Hey. Good afternoon. Wanted to touch on the CRE segment. You also saw nice growth. In the quarter. Could you just talk about the growth opportunities you are seeing in the segment? And is that a trend that could continue from here?

Stacy C. Kymes: Yeah. I think that you know, CRE is very difficult for us to forecast. I think that the nature of the portfolio is it is become multifamily. You identify a developer. They build a multifamily apartment. It seasons. It matures. It gets to occupancy, and then it sells, and that happens over a 3- to 4-year period of time. But rates have a pretty big impact there. So if you think about longer term rates running up, that could have an impact in folks may choose to use a mini perm structure or something like that. And not necessarily sell it on a, you know, nonrecourse fixed rate basis outside of the banking system.

And so that could make some of those loans a little stickier and then allow CRE to grow. We are still trying to figure out what that looks like as we think about next year. But we have got plenty of room to grow from a concentration limit. We really like the team that we have got on the field. We are smart about how we do it. We focus on recourse. We are successful in getting that. it is a big part of how we think about that business. So that is why our credit outcomes there have been so strong.

But we are we are optimistic and the only thing that ever makes us less optimistic is really understanding the impact of paydowns in the book, but with a higher level of the tenure that probably makes the book a little bit stickier and allows it to grow.

Woody Lay: I appreciate the color there. And just as a follow-up, maybe touching on credit. And as you mentioned, credit's been super clean. I guess as it relates to the reserve percentage, you know, you have. Y'all had close to 0 provision over the past couple years, and that is even in light of really strong growth. You know, given it sounds like growth could -- should continue strong here in the near term, how are you thinking about the reserve on a percentage basis? Are we close to a trough or given, you know, the expectations that mortgage finance should grow, would that naturally push the reserve down on a percentage basis?

Stacy C. Kymes: I mean, that is kind of a nuanced answer, and it is kind of facts and circumstances at the point of time that we make You know, it depends on what the economic outlook is. it depends on the level of charge offs and criticized and classified levels. I will tell you, as we think about next year, we will start to think about the reserve ex-mortgage warehouse I think that as that portfolio grows, we kind of have to think about that as a percentage of loans differently than we do the rest of the portfolio. But, you know, credit has been incredibly strong. We clearly cannot sustain a million dollars in charge offs a quarter.

But we will take it while it is here. And, obviously, when you have this stronger credit, you do not need to provide even when we have had this kind of growth. And as time goes along, we will continue to evaluate that and make the best decision in the quarter that we can based on the information that we have.

Woody Lay: Got it. Alright. Well, I appreciate you all taking my questions.

Operator: Your next question comes from the line of Terry McEvoy with Wells Fargo. Terry, your line is now open.

Terry McEvoy: Hi. Thanks for taking my question. Just 1 follow-up on the last 2 questions. If you look at the other side of higher rates, if rates go higher into next year, could you start to see some credit pressure within CRE? If so, how do you get ahead of that? What are your thoughts on loan modifications and term extension? And within those 4 larger segments of CRE that you call out on page 6, are there any specific areas that you think are most at risk to higher interest rates? Thank you.

Stacy C. Kymes: Yeah. I mean, obviously, you know, higher interest rates is a big input into debt repayment for a commercial real estate borrower and if rates go up, then that is an additional stress for them. I think it really depends on what happens with economic growth. And where are the projects. I mean, most all of our projects are in our footprint, whether it is economic net infill activity. that is positive. If you look at this is not the first time rates have gone up. You have seen us perform through that. You may get some credit migration.

But because we have such a large percentage of our portfolio that has recourse, You know, the project sponsors work through that, and work on it over time, and we. The outcomes are very strong. I mean, look at our you know, our real estate losses over the last 10 years. They are very, very, very low, and it certainly you know, we had a rising rate environment that was more substantial, frankly, than this 1. From a short term perspective, I think we went up 500 basis points the short term in a 15 month or less period of time. So we can work through that. We do not have any overt concerns about that portfolio.

But clearly, there could be some credit migration things that would have to be worked through if rates continue to migrate higher.

Terry McEvoy: Great. Appreciate you taking my questions. Thank you. Thank you.

Operator: Your next question comes from the line of Matt Olney with Stephens. Matt? Your line is now open.

Matt Olney: Hey. Thanks, guys. I will ask about capital. Do not think we saw any buyback activity this quarter. We are seeing a little pullback in evaluations in the industry. So curious about your appetite from here on the buyback. And then on the M&A front, it is been a while since we have talked about this. So just curious about your -- the opportunities that you see out there whether it is on the depository side or the nondepository side. Thanks.

Martin E. Grunst: Yeah. Matt, thanks for the question. Yes. And our commentary on capital and release share buyback more specifically is pretty consistent with the message that we talked about before. We are certainly aware of the fact that we have a very strong capital base and excess capital However, we are very thoughtful about the capital deployment decisions we make and making sure that those are ones that make sense over a very long period of time. And so we are very opportunistic about that and continue to be willing to be patient, but there is a point where that opportunity gets attractive, and we will just play that out through the quarter.

Stacy C. Kymes: From an M&A perspective, this is Stacy. Obviously, we are interested in using our capital in M and A, but it needs to be the right opportunity. We do not need. We are we are doing so well at acquiring talent and growing organically. We do not need M&A to, you know, continue to propel us forward. It really, for us, is kind of the cherry on top of the sundae. If there is something that is attractive and that works, we are going to be interested in it. But obviously, what we are focused on is not just buying something for the sake of buying something.

It has to have both strategic value and be financially inside of the metrics that we are important to us, particularly our cash on cash IRR. I would tell you, you know, there is not a large pipeline. We would look at bank deals. We would look at non bank deals. But the discipline around how we think about that and how we ensure that they are shareholder friendly and that the returns that are promised at the deal announcement are what is realized are very important to us. And so we will be thoughtful about that, but it is certainly something that we are interested in. But not just for the sake of doing it.

Matt Olney: Understood. Thank you, guys.

Operator: Thank you. Our last question comes from the line of Brett Rabatin with Stonex Group. Brett, your line is now open.

Brett Rabatin: Hey, guys. Good afternoon. The only question that I have not really heard an answer to is just wanting to talk about slide 19 on the securities portfolio. The duration is fairly short. At 3.4 years, which only extends to 3.8. If rates increase 200 basis points. So I was a little surprised with the AOCI quarter to quarter change. Any thoughts on that and just, you know, why the increase was fairly outsized relative to the duration of the portfolio?

Martin E. Grunst: Yeah. I think that the know, if you back into the math, I think that AOCI is consistent with the rates that apply to that part of the curve and the securities that we have. In fact, more broadly, you know, our AOCI change relative to other peers first of all, that is a more favorable outcome just because we do have a shorter securities portfolio and the proof is in the pudding of looking at the TCE ratios you look at our TCE at 9.2, you know, that is that is you know, the upper end of the pick.

Whatever peer group you wanna pick. that is at the upper end of the peer group both in terms of the amount of change and the absolute. More importantly, the absolute level of where that TCE landed. And that is a function of how we run that securities portfolio. So happy to talk with you more offline about the some of the puts and takes of that if you would like.

Stacy C. Kymes: Brett, the other piece of that is if you look particularly larger regionals is the you know, the use of held to maturity. Which shields these banks from know, the AOCI mark. I think that we have really stayed away from using held to maturity for the most part We continue to allow that portfolio and held to maturity to just run off. We like economic optionality we have, including things in AFS, And so I think we probably have a bigger percentage of our portfolio in AFS than most do. Because we think long term, that gives us the most optionality to do something if we wanna do that.

I think that is the other piece of that equation as you think about that.

Brett Rabatin: Okay. that is helpful. And then I guess the other quest. Related kinda question is just around the trading portfolio. Which the average size was just slightly higher linked quarter, but kinda figured it might decrease a little bit. Know, any thoughts on the size of that portfolio from here? And if you think it is it might be about the same or you any thoughts on size relative to the balance sheet?

Martin E. Grunst: Yeah. I think, if you look over the last couple quarters, it is been pretty steady in that 5% to 6 but closer to billion average balance. And I think it is important Brett, that you think about that portfolio in an average balance context. Not ending balance because just any 1 given day for a trading book is really not insightful. So kind of think of that 5 to 6 range on average and think about that, probably at the higher end.

Scott Bradley Grauer: And I would think that, you know, to tag on to Martin there, that is that is where it will be given a sustained environment that we have today. You know, should the environment change, as Stacy and I talked about earlier, then certainly that size could change.

Brett Rabatin: Yep. Okay. Appreciate the color, guys.

Operator: There are no further questions at this time. I will now turn the call back to Stacy C. Kymes, CEO, for closing remarks.

Stacy C. Kymes: I am proud of the grit and determination of our team to deliver another solid quarter, strong loan growth and expanding margin, disciplined expense management, and excellent credit quality all reflect the underlying strength of our franchise. Mark conditions will continue to evolve, but we will stay focused on what we can control. Serving our clients well, managing risk prudently, investing thoughtfully in growth, and creating long term value for our shareholders. Before we close today's call, I would like to take a moment to recognize our specialized industry banking executive, Brad A.

Vincent, who will retire next month after nearly 30 years with the company Throughout his career, Brad has been a trusted leader, an exceptional teammate, a mentor to many, and 1 of the finest examples of servant leadership. in our organization. On behalf of myself and the organization, Brad, thank you for your leadership, your friendship, your dedication to BOK Financial. Congratulations on an outstanding career. And a well deserved retirement. Thank you for your interest in BOK Financial. And for spending time with us this afternoon. You If you have any questions, please reach out to Heather King at [email protected].

Operator: This concludes today's call. Thank you for attending. You may now disconnect.