BOK Financial Corporation (NASDAQ:BOKF) Q2 2023 Earnings Call Transcript

Matt Olney: Okay. And then I guess along with that the FHLB and the repo line, other borrowing lines, if you’re going to see some pretty strong loan growth it sounds like this quarter, should we see the FHLB and borrowing line come down? Is it a replacement, or do you think there’ll still be an increase there given the trade securities build that you expect?

Marty Grunst: Yes. So we’ll have good loan growth. We’ll have deposit growth that will fund a decent portion of that and then kind of whatever the net is from pluses or minuses in the trading portfolio that really drive the changes in FHLB or repo.

Stacy Kymes: Yes. But Matt, this really goes back to kind of reeducating the investor community and kind of how we fund the bank. Loans are funded by deposits. You saw a good loan growth this quarter. You saw good deposit growth this quarter that loan-to-deposit ratio stayed relatively consistent. And we see that as we move forward. On the security side, whether it’s the available-for-sale investment security to the trading portfolio, those are largely going to be funded wholesale, whether that’s repo or institutional or otherwise. And that’s entirely consistent with how we funded the bank forever pre-COVID. You’re seeing higher levels of FHLB borrowings and things like that, because that’s — we got down to none during COVID.

So as things kind of revert to the mean how we fund the bank is going to look like it did pre-COVID and that includes how we think about loans and deposits and how we think about institutional funding or wholesale funding for our securities portfolio and trading activities.

Matt Olney: Yes. Okay. That’s helpful, Stacy. And then just lastly I guess, I think you mentioned earlier in the call that the AFS securities yields could continue to climb as you get some — reinvest some of those cash flows. Any more color on just kind of the roll-off or on yields with an AFS book?

Marty Grunst: Yes. So we think about both AFS and held-to-maturity rolled together, because both have the same driver and the roll-off yield there’s always going to be roughly what the portfolio yield is. I think that was $274 million, if I’m right for this quarter. And then, current coupon, 15-year MBS or maybe a little bit less than that is kind of a good proxy for how to think about our repurchase yield on average over time. And so that gives you well over pretty good spread 200 basis point plus spread pickup.

Matt Olney: Yes. Okay. Okay, thanks guys. Appreciate your help.

Operator: There are no further questions at this time. I would now like to turn the floor back over to Marty Grunst for closing comments.

Marty Grunst: Thanks again everyone for joining us. And if you have further questions, please e-mail us at ir@bokf.com. Have a great day everyone.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.