BOK Financial Corporation

Greetings and welcome to the BOK Financial Corporation third 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 would now like to turn the conference over to your host, Mr. Stephen Nell, Chief Financial Officer for BOK Financial Corporation. Thank you, sir. You may begin.

Good morning, and thanks for joining us. Today, our CEO, Steve Bradshaw, will provide opening comments, and Stacey Kimes, 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. PDFs of the slide presentation and third quarter press release are available on our website at BOKF.com. We refer you to the disclaimers on slide two regarding 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 third quarter 2021 financial results. This quarter was another in which our diversified revenue strategy was a key differentiator for us as we grew pre-tax, pre-provision earnings by 22% linked quarter and eclipsed $180 million in net income for the first time in the history of our company. Shown on slide four, third quarter net income was a record $188.3 million or $2.74 per diluted share That represents growth in net income of 13% from the record set last quarter, a result of our long-term commitment to our balanced earnings model and breadth of business capabilities. The key items that drove our success this quarter were, first, our fee-based business units continued to perform well, with total fees and commissions up $21 million, or 12% from last quarter. The contribution from our wealth management team continues to grow and impact results, achieving a new quarterly record for total revenues of $153 million for this quarter. This accounts for 30% of total revenues for the company and 51% of total fees and commissions for the quarter. Mortgage fees also increased $5.1 million, or 24% late quarter, primarily driven by a rebound in our reported margins from the lows recognized last quarter. Net interest revenue was unchanged on a late quarter basis with a slight improvement in loan fees, primarily due to non-use fees from low utilization levels, and our interest-bearing deposit cost of funds fell one more basis point this quarter. We continue to experience some compression in yields on our available-for-sale portfolio. However, that impact was more than offset by improved yields on our trading portfolio. Improving market conditions and credit trends allowed us to release $23 million of our loan loss reserve this quarter and $83 million for the year. Expense management remains excellent. Total expense is flat on a length quarter basis. We've managed expense growth to just slightly above 2% over the last two trailing 12-month periods, despite significant technology and cyber-related investments reflecting our disciplined approach. Turning to slide five, total loans are down $1.1 billion for the quarter, but Triple P loan forgiveness accounts for $586 million of that contraction. Core loan growth continues to remain a challenge this quarter as our energy and commercial real estate customers continue to pay down debt or refinance in the long-term markets. Loans attributed to our wealth segment grew $32 million this quarter, allowing them to surpass $2 billion in outstanding balances for the first time. Our core C&I book decreased at a pace similar to last quarter as our overall line utilization levels are at five-year lows. We believe this positions us for growth as the economy continues to rebound and supply chain disruptions are resolved. Average deposits increased another $344 million this quarter and are 9% higher than the same quarter a year ago. Assets under management are in custody and our wealth management business grew 2.3% link quarter to $98.8 billion, approaching the $100 billion milestone. largely due to new business acquisition and favorable market activity in the quarter. I'll provide additional perspective on the results before starting the question and answer session, but now Stacey Kynes will review the loan portfolio, our credit metrics, and the fee businesses in more detail. I'll turn the call over to Stacey.