BOK Financial Corporation

Greetings and welcome to the BLK Financial Corporation first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Mr. Stephen Nell, Chief Financial Officer of BLK Financial Corporation. Thank you. You may begin.

Good morning, and thanks for joining us. Today, our CEO, Steve Bradshaw, will provide opening comments, and Stacey Kynes, our Chief Operating Officer, will cover our loan portfolio, credit metrics, and fee income businesses. Lastly, I'll provide details regarding net interest income, net interest margin, expenses, and our overall balance sheet position from a liquidity and capital standpoint. Joining us for the question and answer session are Mark Maughan, our Chief Credit Officer, who can answer detailed questions regarding credit metrics, and Scott Grauer, Executive Vice President of Wealth Management, who can expand on our wealth management activities. PDF of the slide presentation and first quarter press release are available on our website at BOKF.com. We refer you to the disclaimers on slide two as it pertains to any forward-looking statements we make during this call. I'll now turn the call over to Steve Bradshaw.

Good morning. Thanks for joining us to discuss the first quarter 2021 financial results. But before we get started, I'll offer a few thoughts regarding the announcement earlier this month about my plans to retire March 31st of next year. You know, after three decades with BOK Financial and more than seven years as president and CEO, this certainly wasn't an easy decision. I take a tremendous amount of pride in leading what I believe to be the best regional financial institution in the country. one with a very clear focus on long-term shareholder value. However, I'm confident BOKF has never been better positioned for this change. Our performance through the pandemic and my leadership team's resiliency and cohesiveness throughout 2020 demonstrated expertise and synergy that stems from the true hallmarks of our organization, experience, and collaboration. Over the next year, I'll be focusing on ensuring a smooth transition for my successor when that individual is formally named by the board in the coming months. Those familiar with our company know that leadership decisions are very intentional at BOKF. We run the company with a long-term perspective, which includes significant work on developing internal talent, and I fully expect the board to name an internal successor for CEO at the appropriate time. We are well-positioned to choose a successor soon, and I can reassure you that the next leader will continue the same intentional, long-term shareholder focus we are known for. In the meantime, I'll be focused on the slate of goals and objectives we develop for 2021, which will continue to improve our competitive position and our growth prospects into 2022 and beyond. With that, let's look at the most recent quarterly results. Shown on slide four, first quarter net income was $146.1 million, or $2.10 per diluted share. While that's down modestly from the record earnings performance last quarter, the difference between the first quarter of 2021 and that of 2020 could not be more stark. The key items that drove the quarter were... Another outstanding earnings result for our mortgage business as activity remained elevated this quarter despite rising rates. The contribution from our wealth management team continues to be a differentiator for us, though results were off from the consecutive record quarters in late 2020 as we had expected. The improving economic outlook combined with improving credit trends allowed us to release $25 million of our loan loss reserve. And lastly, expense management remains excellent as it has really throughout the past year. Turning to slide five, loan growth continues to be a challenge this quarter as our commercial and commercial real estate customers continue to pay down debt. While all borrowers continue to understandably reduce leverage in the challenging economic environment, we believe we are poised for growth opportunities in the latter half of 2021 as the economy continues to rebound. Deposit growth remains excellent, up nearly 3% link quarter and up nearly 30% from the same quarter a year ago, as we began to see the most recent wave of stimulus late in the quarter. Assets under management or in custody in our wealth management business continue to grow as the protracted low-rate environment encourages market investment for yield-seeking clients. Investments in equities is now 40% of our total assets under management or in custody, and that's up approximately $2 billion from year-end, which positions us to materially grow fees in our fiduciary and asset management business. I'll provide additional perspective on the results before the start of the Q&A session, but now Stacey Kynes will review the loan portfolio, our credit metrics, and our key businesses in more detail. I'll turn the call over to Stacey.