Good morning and welcome to the BOK Financial Corporation’s Fourth Quarter 2014 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. I would now like to turn the conference over to Joe Crivelli, Senior Vice President of Investor Relations. Please go ahead Sir.

Good morning, everyone and thank you for joining us to discuss BOK Financial Corporation’s fourth quarter 2014 financial results. Today we’ll hear remarks about the financial results and outlook from Steve Bradshaw, CEO; Dan Ellinor, COO; Steven Nell, CFO; and Stacy Kymes, Chief Credit Officer, also joins us today to discuss the impact of the recent decrease in oil prices on our VOD energy lending business. In addition, PDFs of the slide presentation and press release that accompanies this call are available on our website at www.bokf.com. Before we begin, I'd like to remind everyone that during this conference call management will make certain forward-looking statements about its outlook for 2015 and beyond that involve risks and uncertainties. Forward-looking statements are generally preceded by word such as believes, plans, intents, expects, anticipates or similar expressions. Forward-looking statements are protected by the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995. Factors that cause actual results to differ from expectations include, but are not limited to those factors set forth in our SEC filings. BOK Financial is making these statements as of January 28, 2015 and assumes no obligation to publicly update or revise any of the forward-looking information in this announcement. I’ll now turn the call over to Steve Bradshaw.

Thanks, Joe. Good morning, everyone and thanks for joining us. I trust everyone has seen our earnings release for the fourth quarter and full year, which was issued earlier this morning. On Slide 4, you will see that 2014 earnings were $293.4 million, or $4.22 per diluted share is down from $316.6 million and $4.59 in 2013. While there were some noise in the numbers as we will discuss in a moment, in general, this was a good year for the in an extremely challenging environment. At the start of 2014 we faced a number of headwinds. We were planning to make a significant investment in risk and compliance infrastructure to meet regulatory mandates; we were likewise planning to significantly reduce the size of our bond portfolio, to position our balance sheet for an expected rising rate environment in 2015 and beyond. The overall competitive market was extremely tough with intense price competition which really did not abate throughout the year and we were coming off of a 2013 in which loan growth was muted in the low single digits. We also faced a revenue headwind in our mortgage business where production volume had fallen considerably after long term rates spiked in mid-2013 and choked off the refinancing band. Finally in 2013 we realized $28 million of benefit from reversal of loan loss reserves, something that we did not anticipate reoccurring in 2014. In the phase of these challenges we're extremely proud of how our team and our bank executed in 2014. We accomplished all of these strategic objectives outlined at the start of the year. Loan growth accelerates at low double-digits and we believe we gained market share with commercial borrowers. We completed two small but important acquisitions in the wealth management business. We completed a build out of…

Thanks, Steve, and good morning everyone. I'll highlight few items from the full year and fourth quarter financial results, and improvise some details in our financial forecast. Slide 8 highlights net interest revenue, net interest margin for the past five quarters. As you can see net interest revenue for the fourth quarter was up 2.1% compared to the fourth quarter of 2013, and up 1.7% compared to the third quarter 2014. We indicated the shareholders in mid-2014 that we expected net interest income to begin to respond favorably to the ongoing remix of earning assets as we have continued to grow our loan growth and reduce the size of our security portfolio, we are starting to see this benefit take hold. As indicated on this slide, when normalizing out the impact of the Federal Home Loan Bank, Federal Reserve trade that we put on the books in mid third quarter, you can see that net interest margin has steadied and actually climbed a bit from the third quarter to the fourth, up 2 basis points from 2.73% to 2.75%. When looking at the last five quarters you can see the impact net interest margin has remained relatively stable. This is in large part due to the earning asset remix as loan yields have continue to decline slightly due to the overall competitive environment. We do think the worst of the loan deal decline is behind us at this point and with more prudence industry wide around energy lending and better pricing on new deals we could see some benefit to loan deals over the next several quarters. On Slide 9, fees and commissions were $621.3 million for the full year, up 2.9% from 2013 reflecting strong growth in the brokerage and trading, transaction card, and fiduciary and asset management businesses.…

Thank you, Steven. It was a busy quarter in the year for the commercial lending team as reflected in the robust loan growth. Let me highlight some of the key areas of strength. As indicated on Slide 15 of the presentation, commercial loans were up 6.1% for the quarter, from $8.6 billion to $9.1 billion. With t exception of services all sectors registered double-digit annualized growth in the quarter. Energy was up 12.1% for the quarter, and given the reason different commodity prices we executed a detail clarity of the largest advances in the portfolio, those customers who were the top contributors for the energy loan growth. Stacy will talk more about this review in a moment, but in a nutshell, we liked what we saw. About half of the loan growth was due to net new business with new customers, with remainder attributed to business related drawdowns by existing customers with sound correct profiles. For the year commercial loan growth was 14.5%, with the exception of wholesale retail and other category, all our lines of business posted double-digit growth during the year, and sure, it was a great year, one of the most consistent production environments we've seen in our careers. As shown on Slide 16, commercial real estate lending was relatively flat for the fourth quarter; growth was centered in retail and industrial which we're happy with. We had nice decreases in residential construction portfolio, a line of business we've been deemphasizing and reducing over the past several years. However the full year picture tells a much different story; excellent loan growth in 2014 of 13%, with strength in retail, multi-family and industrial, all great sectors of the market that performed better across the economic cycle. As a reminder we've been stress testing all new commercial real estate…

Thanks, Dan. I'm pleased to join all of you this morning, I'm happy to reengage in the investor relations effort and give you an overview on credit and our perspective on the energy lending business. First let me address credit quality for the bank as a whole. As shown on Slide 21 credit quality continues to be very strong, the allowance for loan losses was 1.33% a period in loans and represented 234% of non-accrual loans. Nonperforming assets excluding those guaranteed by government agencies were down to less than 1% of period in loans and reposed asset. We had annualized net charge offs of 6 basis points for $2.2 million in the fourth quarter, and for the full year had net recoveries of 2 basis points or $2.8 million. With that let’s discuss energy lending. You have all seen Slide 22 before which shows the composition of our energy lending portfolio but it's worth reviewing to level set. At quarter end our energy portfolio was $2.9 billion, of this 86% or $2.5 billion was exploration and production or E&P. 8% or $222 million was energy services, 3% was midstream, and 3% was wholesale and retail energy. We've long focused on E&P as the safest place to land in the energy sector. As we have discussed with investors we had a long track record of strong asset quality in this business. We typically advanced only on proving producing reserves, not up and developed reserves. We have a team of nine reservoir engineers and four engineering techs on-staff perform our own independent analysis of the declined turfs and the underlying collateral value. Our policy requires a minimum of 10 wells in the collateral package; it does not permit any single well to equal more than 20% of the total collateral. During the…

Thanks, Stacy. 2014 was a busy and challenging year but also really a very fulfilling one. We proved ourselves that our business model is the right one for the long haul, that the diversity of our business is of significant benefit to shareholders, that our franchise is solid and that our team, perhaps most importantly can manage through any headwinds. Net interest income was relatively stable throughout the year and up nicely in the fourth quarter and then has now been steady for five quarters. Fees and commissions were likewise up nicely for the full year. Some of our businesses are lumpier than others on a quarter-to-quarter basis but we've delivered fee revenue growth in 2014 and unfavorable year-over-year comps in the mortgage business. From an expense standpoint we made a significant eight figure investment in risk and compliance for doing the right things internally to manage expense growth. As a result, total expenses were only up 0.8% for the full year. We also made the necessary changes in our balance sheet to prepare for rising rate environment, improved our risk in compliance capabilities, and refocused our M&A efforts to make acquisitions part of our future growth story. We are confident in our energy business, if the cycle behaves like the past cycles that Stacy mentioned, and energy prices recover in the six to twelve month timeframe to a new equilibrium price, there should be no material impact on our business. But we're also cognizant of the potential impact on the economy and our footprint if the downturn does extend beyond those twelve months. This could potentially reduce loan demand for the company's tie to the energy industry and have some impact on the consumer environment in Oklahoma and in Texas. In fact, we're already seeing some layoff as Stacy mentioned by companies in the oil and gas industry. We do think this will be balanced at least in part by the positive impact of lower fuel prices on consumer spending and the overall business environment as well. In any of that if the recent commodity price declines start of a new long term normal then we certainly like our portfolios position to withstand any migration of credit. The corporate objectives I share with our Board of Directors earlier this week are designed to deliver continued momentum for loan growth, drive improved profitability from key fee generating lines of business, and reach steady state expense growth in our operational areas. Longer term our objectives are to be recognized as an effective and efficient risk manager among peer banks, invest in technology and talent, and where possible making strategic acquisitions to drive sustainable growth over the long term and improving the employee experience so we can continue to attract the brightest and the best talent. I look forward to keep you updated of our progress on these initiatives throughout 2015. With that I will open the call for your questions. Operator?

And our first question will come from Jennifer Demba of SunTrust Robinson Humphrey.

Thank you, good morning. Stacy, thanks for all that detail, so a follow-up on the energy book. What percentage of your energy loans in total are shared national credits roughly?

Roughly 50% of the outstanding are shared national credits.

Okay. And can you talk to us assuming oil prices stay at roughly around the levels they are at now. Can you talk to us about what you foresee in terms of progression, in terms of downgrades of credits? Would those likely come sometime this summer after you get year-end financials and perhaps that coincides a little bit with the annual sneak exam?

Yes, although I would tell you that we make our own determination of the grade independent from the sneak exam, so if we think our loan should be downgraded, we don't wait until the sneak exam to identify and downgrade it. I think your timing is pretty close to right, if you think about when the fall of the price began it was really the day after Thanksgiving and in terms of the most precipitous amount of the fall, so it's kind of be probably during the borrowing base redetermination season early in the second quarter, as well as looking at the financial statements that more fully reflect the revenue impact to energy borrowers from the price decline. So your timing of how they will migrate is probably pretty close. I would suspect in the first quarter there maybe a few that are identified but I would suspect the preponderance would be in the second quarter.

You might have covered this and I missed it Stacy, but when we look at historical losses in energy services loans, oil field services, can you talk about what the worst was that you've seen either of to be okay or for players in the industry?

Sure. Our ten-year loss in everything except energy production, so energy all other including services and midstream, if you exclude the same group loss that was in my view more broad related in the summer of 2008, our ten-year loss history and kind of all other energy is about 4 basis points, so it's pretty low as well.

Okay. And with the downgrade timeline for energy services or the other non-ENT loans would that be faster?

I would say so, we're hearing from many of our services borrowing that they are anticipating revenue declines of EBITDA declines associated with the downturn in the 35% to 40% range. And I suspect that we'll begin to see that reflective in financials as we look at that - as we get year-end financials, the discussion won’t be just what the historical was but what do you project, and we'll tend to be more focused on the forward-looking projections than the trailing twelve months because of different environments.

And our next question comes from Brady Gailey of KBW.

Good morning, guys. So if you look at the energy portfolio in the 4Q, it seems like most of the energy related banks are seeing some pretty strong energy growth in the fourth quarter. I thought that this might happen in near term but longer term it would be a negative for energy balances. When do you think the tables will turn and depressed oil pricing will be a negative for loan growth?

Brady, this is Dan, thanks for the question. Just to step back a little bit, solicitation in this industry take years and years to develop and so you actually saw a great momentum building for our company in 2014 on multi-year solicitation, and you look at the funding’s in the fourth quarter, over half of that or roughly half of that was from new clients to the bank, very high quality clients by the way. Our thoughts are that if you look historically for BOKF we roughly average 50% utilization, we took them just a little bit in the fourth quarter, we started the year at 51%, we finished the year at 53%. And all likely you would probably see the existing book starts at shrink in the second half of 2015 as you did commit reductions, bond based reductions in normal flow of business. So goal is to make sure we're bringing in sufficient new business so we kind of balance out that book, so we end the year in a positive note.

Okay. Again on a separate topic, I know you all have been talking about being hopeful for announcing a bank deal by year end which obviously did not happen due to the oil issue and your stock is not as valuable now. So when you look at bank M&A going forward how does this oil issue affect that for 2015 and 2016?

Brady, this is Steve. What we had talked about last fall in our investor meeting was that we are really targeting 2015 as an opportunity to announce the deal so that's still in our sites and it's something that we're very focused on. I think it's little early to determine whether we'll see pricing in the energy driven states, Texas and Oklahoma, primarily but we see bank pricing come down and we see the gap narrow between sellers and buyers. I think there is some anticipation that that could occur but I think it's extremely early to call that. So from our standpoint it's not changing the way that we're approaching M&A, we're still actively discussing and working to identify organizations throughout our footprint that we think would be additive and we would expect those conversations to continue throughout 2015 as well. We still believe longer term that we'll be in a consolidation environment and we expect to be a player there.

Okay. Great, thanks for the color.

I was just going to add Brady that you talked a little bit about stock price weakness, we generally in terms of our acquisition preference would be to use cash, we've got significant amount of cash and are only company available for M&A activity, although we wouldn’t long term dismiss using our stock for currency, certainly we would rather use cash in 2015.

Okay, thanks Steven.

And our next question will come from Ken Zerbe of Morgan Stanley.

Great, thank you. Good morning guys. First, quick clarification question. In your press release you mentioned souvenir [ph] of $0.16 but the way I calculate that it looks like you're actually giving yourself credit for getting back to a $5 million positive change in the MSR as you have in third quarter. Just trying to think - I get a number that's less than $0.16 by routing about unusual items. I just want to make sure I'm thinking about that correctly.

Yes, if you read out closely that says it's between the two quarters. So don't be confused it is not 2016 complete normal, just for this quarter, as you're right it's about $0.11 a share but between the two you have five positive overall in the third quarter and then a negative $0.06 a share over on the fourth quarter, so you add the two together, that's $0.11 just for the MSR plus the nickel we'll share on the in-store accruals and that gets you to $0.16.

Sure. But you guys won’t expect to have a positive MSR change each quarter would you?

Well the way we have our bench set up today if rates rise, some it's longer term rates rise in the first quarter and second quarter, the way our heads are set up which we would benefit from a ride up in the net MSR position.

And do you expect roughly zero is my concern.

Correct, that's exactly right.

Okay. And the other question I have is the first thing I've heard that actually he has talked about competition getting more rational. Are you guys actually seeing higher loan yields that you did three months ago or would you commentary more than just not compressing as much as they were?

Ken, this is Dan. It's probably a little bit of both, it's tough to call a bottom on first impression but we definitely saw some leveling out as specifically in the last two months of the year. So it would appear less the pricing rationalization is starting to occur which is going to be a good thing and hopefully that helps our aim in 2015. Now this is really different in the first quarter of the year in 2014.

Got it. And Steven that comment you made on the benefits in them, sometimes into 2015, is that just simply from a remix and then roughly state…

Yes, it's largely from the remix of - from securities over the loans with some hopeful stabilization of our loan yields.

Okay, good. Okay, thank you very much.

And next we have a question from .

Thanks, good morning guys.

Good morning.

Couple of points of clarification on Slide 13. When you talk about the provision of $15 million to $20 million for 2015, Stacy how much of that is just for the expected growth in the portfolio and how much of that is for the potential downgrades issues that you might see as you get updated financials or changes in grades?

There is so many moving parts in the allowance methodology it's hard to separate those two out cleanly but I think as you look at the strength of the portfolio going into this price decline and maybe some of the energy loans working themselves through problem loan status, I think that estimate does account for our view that there could be some downward pressure on asset quality as a result of the energy price decline, but it also considers the guidance that we're providing with respect to loan growth as well.

Okay, that's helpful. I guess so that's the variability, that's the $5 million variability you're talking about is potentially what happens when the number start to come in from clients and how long this lasts?

That's right, I mean it's just an estimate at this stage, obviously as we see how the year plays out in terms of both loan growth, loan growth by type, as well as what happens with the energy portfolio that will influence what we actually provide as we go throughout the year.

Okay, good. You mentioned loan growth by type, I'm not sure if this is a Dan or Steve question but - things changed from late November when you laid out your last guidance at the end of Q3 for more double-digit growth expectations things obviously changed in terms of energy prices, is the mix changed in terms of what you expect to drive that low double-digit loan growth?

The beauty of our franchise is that we're in multiple states and we've got significant business specialization across the sector, so we still feel very good about the healthcare book, you saw a strong growth in the fourth quarter, year-over-year almost 14%, manufacturing almost 36%, wholesale retail up 9%, services up 10%. So the nice thing about our model is that it's very diversified, both by asset class and by geography. Frankly, the momentum that we started to have a great first quarter, solid business second quarter and the momentum really started to build with the second half of the year, at the same time oil prices started to decline more rapidly. So we took a step back actually and took a more granular look at the entire franchise from an economic standpoint, we looked at GDP drivers, we looked at employment growth, we looked at sectors that were moving with each of our states and how that might impact each one of the businesses that we operate. We did that pretty early, a couple of weeks ago, as you know we've got a great Chief Investment Officer, Jim [ph] that keeps us on point. We feel pretty good about the rest of the book, and if you look at year-over-year growth for 2014, over two-thirds of it was non-energy related. So there seems to be a very strong pipeline, good momentum and we feel really good where we are geographically.

Okay, great. And then, just two more quick things, Steven on Slide 13, the mid-single digit fee growth and mid-single digit expense growth, can you give us the baseline numbers that we should be using for those?

You're talking about the dollar numbers?

Yes. There is moving parts, I'm just wondering if it's $621 million for net interest income and the $847 million for trances [ph], that's the question.

It is close to that, let’s talk with the expenses. Expenses were in the $225 million range per quarter, that's a little high because we had some unusual items I think that affected the fourth quarter. But I do think you will see a little expense bill through 2015. Some of the investments we've made in our infrastructure for risk management compliance, some of those areas, you will see some build there. And so I'm thinking somewhere in that 225 to kind of building towards the 230 level by the end of next year is probably pretty good guidance. I think the fee sign is little more volatile and I think you can expect some growth in most of the categories. I think we expect actually mortgage to grow some in 2015, we feel like our broker dealer even thought they had a soft, fourth quarter. We've got great capability there, they will continue to grow. Our trust business and assets under management will continue to grow, you will still see softness in deposit, services charges. So most of those categories I think you're going to do fairly well and contribute towards that mid-single digit.

Okay. And then just last question, you've touched on it but I think Brady brought up the M&A comment, why not just aggressively buy yourself, buyback your own stock, you have the float issues but if you believe - if we're supposed to believe what you're saying on energy and I think most of us give you the benefit of doubt why not just get aggressive here and use some of your cash.

Well, we have a little bit. You saw on the fourth quarter we've got 200,000 shares, well it doesn't sound like a lot. It's still in our minds down the list because we want to use our capital for organic growth first. As Steve talked about, we think we have some opportunities in 2015 to utilize some of the cash on the balance sheet for M&A deals. We still want to grow the franchise and create revenue streams, and you don't really do that, buying back stock, now today the internal rate of return calculation we do at the stock price it's a pretty good return and we're going to be involved in that. I think going forward to the extent the price stays down but we worked very hard till the last decade to try to get enough float out there. For investors to participate in our stock, I think that's important, and continue to be important going forward. And ultimately we will have other uses for that capital, either through organic growth or through an M&A deal and that we continue to think - really proud from a standpoint.

Okay, alright. Thanks for the help.

And next we have a question from Brett Rabatin of Sterne Agee.

Hi guys, good morning. I wanted to reiterate, as you may talk a little bit but there is something about the growth that you guys had in the energy book this quarter. Can you talk a little bit more about what drove the growth, like quarter was a new client ads and then within that was any of the existing clients that were down on lines of credit, were they decided to do something else or was it because they wanted more cash can you go into little more color?

Sure Brett, this is Dan. I hope I answered the same while I did it first time. So it's a good question, I appreciate you asking it. Half of the growth in the fourth quarter in the energy book were new clients to the bank and the other half would draw down for an existing client base. And as Stacy mentioned in his review comments, we actually took a deep dive in each one of those drawdowns to make sure we still felt good which we did feel good. As a backdrop to the question, solicitations in this business are multi-year in length, many of the names that we brought in the bank in the late third quarter, fourth quarter, were three/four/five years solicitation, so - a great calling effort, a great ability to bring in new clients, next goal for 2015 is that as the portfolio might migrate downward in the second half beyond energy we want to make sure we bring in enough new clients to balance it out. So that's the strategy.

Okay. And with existing clients, just curious thinking about the portfolio - as you're looking at rebuilding your borrowing base with your contel [ph], how does that work if we have a line of credit and haven't drawdown and we want to drawdown on the line but you have a rebuild borrowing base. Can you talk a little bit more about that process and if you're able to do so, you haven't done a rebuild with the borrowing things.

Sure, this is Stacy. We mainly have a committed borrowing to that borrower and so they certainly have the ability to draw on that line. What's different about energy borrowers is that generally semiannually, sometimes more frequently you get an opportunity to re-examine that borrowing base and why did the price decline? In most cases going forward that borrowing base will then be reduced as a result of the lower value associated with the reserves. But in between borrowing based redeterminations the bank has committed line and the borrower has the ability to draw down on that line. We did - as Dan alluded to, we obviously - I wanted to make sure that we didn't have borrowers who are either window dressing, to show good liquidity on their balance sheet that your end or otherwise we're concerned about folks drawing down and our review indicated that looked to us like everything was either from a new customer or I draw down in the ordinary course of business but that's something that we'll continue to watch as we move forward.

Okay, thanks for the color.

Our next question is from John Moran of Macquarie.

Guys, maybe just a follow-up on that, we heard from another bank that has a sizeable energy presence, on Monday they have actually initiated some of these interim redetermination, have you guys done that or you’re really kind of waiting to see happens and in the normal cause come April.

I mean there is season but there are also opportunities throughout, if the borrower has the request, and other things, acquisitions and things like that. We get an opportunity to revisit that borrowing base. But typically absent - or some other reason that you have to go back and revisit that, you can certainly have proactive discussions with your borrowers and we have absolutely done that. But your ability to go back and reduce that borrowing base outside of the borrowing base redetermination as defined in your loan agreement.

Okay, got it. And then Stacey, you guys stress tested down to 45, I mean it's all kind of limited. Is it fair to say that Brian any kind of recovery in the commodity between now and April that the price itself when you come into these predetermination period, would be below that stressed level just to give some kind of cushion, again kind of [indiscernible].

I mean if you look today, there are trading desk today you can do swaps for $16 and $58 for oil and $17 and $62 for oil and execute that today. So relative to what the curve is telling you that $45 stress test is pretty meaningful, particularly when you hold it low, we hold it at $45 flat for the first two years, so we do think that gives us a very meaningful result when we perform that stress test.

Got it, and so the price tag would obviously incorporate at least 12 months’ worth of forward curve and sort of an average of that, right?

That's right. Our price through - I think one of the things that if we're a little bit different, we do our price tag no less frequently than monthly and in fact we have some parameters where we will redo the price mid-month if prices continue to fall. And so that allows us to be pretty fluid with respect to moving prices and making sure that our price tag maps well and doesn't get out of date quickly.

Okay. And then just the other one - on the direct impact in the energy book, going back to the last cycle, how many folks ended up overdrawn and then my understanding of how you would cure that would be - first, if the client has liquidity you just gave down the line, if they didn't have liquidity they could fetch more assets. And then lastly and probably, not all that comment would be basically hyperamortizate me over the overdrawn balance. And I'm just kind of curious if - I mean this is probably a tricky type of question, but if you have stats going back to the last downturn in 2008/2009, how many folks ended up overdrawn?

I don't know how many ended up over advanced, I'm sure that there were several. I think that you've identified correctly kind of the actions that you take when you do a redetermination at the borrowers end over advance, they can amortize the over advance, they can pay it down, they can provide additional collateral, and the borrower have collateral, it's not a part of our borrowing base, it's going to add to the borrowing base. In addition there is a lot of conservatism in how we comprise our borrowing base and often there are assets embedded in the customer - what the customer owns that we haven't provided any significant value to in the borrowing base if they can sell for more value in the market than we gave them for in the borrowing base. Those are all the things that the customer can do to right size that borrowing base over a period of time.

That's really helpful. I've just got one more and then I'll hop out. Just - you guys sort of alluded to the second order impact. Can you keys out - maybe difficult to do but what the feeling - sort of impact could be from lower oil prices in some of the brokerage or trust or anything like that? And then the other one is really on commercial real estate which grew up a bunches year, it was a good outcome for you, up 13% with multi-family up, 22%, some of those markets that you're in - we hear from others little bit [ph] so just thoughts around how you think about the multi-family exposure. Thanks very much.

Sure, this is Dan, let me address the fee based types, the energy book that I have send - our derivative book which is on a grinder scheme it is strategic for us because we won’t be able to provide risk mitigation to the loan book through hedging, both on a single bank deal and a multi-bank deal but in the grand scheme of things it's an insignificant line item in the energy book. The real estate question is a good one, back in 2009 when we all had a chance to step back and look at performance the real estate book, we designed a system that stress test each real estate loan at origination. The feat is here is that we didn't want to get through with valuations again with hyper inflated appraisal. And we wanted to make sure we had equity in the portfolio, so the last several year's originations had averaged just north of 30% cash equity in the portfolio, we stress test interest rates 500 basis points over 24 months, we normalized vacancy and we used a normalized cap rate that we can expect to achieve over a long period of time, and sometimes that could be upward to 200 basis points delta to the current cap rates trading the market. So we feel like we've been having embedded excellent discipline. Further we have concentration limits, both by product type and by geography, and our strategy has been relatively limited to retail, multi-family, office and industrial and we deemphasize for last four year single family residential and A&D which is where we experienced our worst performance. So we look at that several times during the year, we look forward two years in terms of employment growth and occupancy and things like that on a sub-market basis. When we look at each loan we look at a sub-market basis and so what that has created is a very well diversified, both geographically and product type real estate portfolio. The real estate group did have a good year, they originate over $1.4 billion in new commitments, the portfolio has high level of volatility to it, so we underwrite to the permanent market and it's been working really good for the last couple of years and we still see good growth in the portfolio.

Great. I really appreciate. Thanks guys.

[Operator Instructions] And our next question is a follow-up from Jennifer Demba.

Sorry, if you've covered this as I got out of the call for just a couple of minutes. Stacy, what level of energy loans to total loans are you comfortable taking it to for the company as you pick up new customers as others might trend?

Sure, today we're at about 20% of total loans. We look at it really as a percent of capital and reserves and we tend to focus on somewhere around 200% of Tier-1 capital and reserves is our concentration limit. And we'll look at that as we approach that and make determinations around our comfort level. Certainly the loss history here impacts our view of this lending segment but we manage that, we report to the Board on a regular basis where we stand with respect to that and historically been pretty disciplined about our approach to concentrations.

And without naming any names obviously when you're seeing others retrench of these in larger bank, regional banks, community banks, foreign banks, what are you seeing, is there a general trend there?

From my perspective, I think the energy, the core energy lending as a group of probably 10 to 12 banks who have been doing this for long time and those banks are not reacting much differently than we are, they are all doing the right things, they are sensitive to what needs to be done and are reacting accordingly. I think we are beginning to see some retrenchment, maybe some of the smaller players who are new to the business and have less stomach for the price volatility and the impact that creates on their lending rate.

Okay. And just a follow-up to previous question, you said 50% of your energy are sneaked, how many of those are ageing ideally?

We agent 13% of those, it includes the club deals which are little smaller.

Okay, thank you.

Thank you.

And this concludes our question-and-answer session. I would like to turn the conference back over to Joe Crivelli for any closing remarks.

Thank everybody for joining us this morning. As always, if you have any further questions please give me a call at 918-595-3027, or send me an e-mail jcrivelli@bokf.com. Look forward to talking to you again. Thanks.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.