BOK Financial Corporation

Ladies and gentlemen, and welcome to the BOK Financial Corporation second quarter 2022 earnings conference 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 and then zero on your telephone keypad. As a reminder, the conference is being recorded. I would now like to turn the conference over to your host, Mr. Stephen Nell, Chief Financial Officer for BRK Financial Corporation. Please go ahead, sir.

Good morning, and thanks for joining us. Today, our CEO, Stacey Kimes, will provide opening comments, and Mark Mond, Executive Vice President for Regional Banking, will cover our loan portfolio and related credit metrics. Scott Grauer, Executive Vice President of Wealth Management, will cover our fee-based results. then I'll provide details regarding net interest income, net interest margin, expenses, and our overall balance sheet position from a liquidity and capital standpoint. PDFs of the slide presentation and second 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 the call. I'll now turn the call over to Stacey Kimes.

Good morning. and thanks for joining us to discuss BOK Financial's second quarter financial results. Starting on slide four, second quarter net income was $133 million, or $1.96 per diluted share. The quarter represented strong earnings performance from across the company, demonstrating both our diversity and breadth. Core average loan balances grew $714 million during the quarter, with growth spread among geography and loan types. More impactful to this quarter's results was a 35 basis point increase in our average loan yields. Our loan portfolio has begun to reprice in response to the recent increases in short-term rates. As we've noted previously, our balance sheet is asset sensitive, with the majority of our commercial and commercial real estate loans repricing in a year or less. Brokerage and trading revenues increased, led by institutional trading fees, and a new quarterly high in energy hedging. and the second-best quarter historically from commercial loan syndication fees. Fiduciary and asset management fees grew $3.4 million as our waivers and our money market funds declined as short-term rates increased. Transaction card and deposit service charges both grew link quarter $2.7 million and $1.5 million, respectively. Our period and core loan balances grew $711 million, or 3.5% link quarter, But even more impressive were their growth in unfunded loan commitments. Those grew $979 million, a 7.8% linked quarter. The overall credit quality of our loan book continues to be outstanding, with additional improvement again this quarter. Turning to slide five, C&I loan balances increased 5.4% linked quarter, with an increase in C&I commitments of 4.4%. Average deposits decreased $1.8 billion this quarter, with virtually all of that in interest-bearing balances. These declines were consistent with our expectations given the actions of the Federal Reserve to increase short-term rates. Compared to June 30, 2021, period-end balances are still $1.2 billion or 3.1% higher than last year, with a favorable mixed shift to non-interest-bearing balances. Assets under management or in custody in our wealth management group fell slightly this quarter, down 5% to $96 billion. The change was market value driven, primarily due to equities, which account for a third of the assets under management or administration. I'll provide additional perspective on the results before starting the Q&A session, but now Mark Maughan will review the loan portfolio and our credit metrics in more detail. I'll turn the call over to Mark.