BOK Financial Corporation

Greetings, and welcome to the BOK Financial Corporation's first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief 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 presentation over to Marty Gruntz Chief Financial Officer for BOK Financial Corporation. Please proceed.

Good morning, and thanks for joining us. Today, our CEO, Stacey Kimes, will provide opening comments. I will highlight current capital and liquidity strengths. Mark Maughan, Executive Vice President for Regional Banking, will cover our loan portfolio and related credit metrics. And Scott Grauer, Executive Vice President of Wealth Management, will cover our fee-based results. I will then provide details regarding financial performance metrics for the quarter and comments regarding our forward guidance. PDFs 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 regarding any forward-looking statements we make during this call. I will now turn the call over to Stacey Kynes.

Good morning. Thanks for joining us to discuss BOK Financial's first quarter financial results. Starting on slide four, First quarter net income was $162 million, or $2.43 per diluted share. The strong results of the first quarter continued the earnings momentum we developed throughout 2022. This quarter was the second highest pre-provisioned net revenue in our history and would have been the highest absent the extraordinary market volatility impacting the net mortgage servicing results. The strong financial results in the first quarter are a testament to our diverse business model strong operating geographies, and disciplined approach to risk management that has long been critical to our ability to sustain success. Our peer leading tangible capital ratio paired with our balance sheet liquidity have served us well over the last 45 days with the disruption in our sector. The disruptions and almost unprecedented level of rate volatility in the quarter have demonstrated our ability to both manage critical risk well while also continuing to post strong financial results for our shareholders. The first quarter showed sustained revenue in our non-interest income businesses, continued loan growth, and an efficiency ratio below 57%. While no bank can be totally immune from the macro economy, we believe this is precisely the environment that positively differentiates our diversified business model, robust risk management framework, and strong financial performance. Our interest rate, liquidity, and credit risk management are strong, and we remain focused on increasing top-line revenue in exceptional growth markets. We had very strong financial results during the first quarter that we're proud to discuss, but today we'll break our prepared comments in two sections. In the first section, we'll focus on many of the key metrics around capital, liquidity, and deposit diversity that have been in the focus for the markets over the last 45 days. In the second section, we will focus on the core results for the quarter, which was the second best pre-provisioned net revenue quarter in BOKF's history. We want to address the issues that are top of mind early so that the good financial results do not get lost in the noise of the recent market disruptions. Before Marty walks us through the metrics that are top of mind for you, I'd like to make a few broader comments. The failures of Silicon Valley Bank and Signature Bank were idiosyncratic and do not represent broad weakness in the banking sector. Banks are better capitalized than at any time in my banking career. Regional banks specifically play an important role in our communities and play a broad role in our business and economic activity that cannot be filled by the largest U.S. banks. At BOK Financial, we take managing interest rate, liquidity, and credit risk seriously. And those in risk management roles rightfully create natural tension with those in risk-taking roles to ensure the proper balance exists. We ended the quarter with a neutral interest rate risk posture. A loan to deposit ratio of less than 70% compared to a pre-pandemic loan to deposit mean in the 80% range and high capital levels. In fact, as of December 31st, our tangible common equity inclusive of tax-affected unrealized securities net losses, placed us in the top 17% of publicly traded banks with assets greater than $25 billion. By that measure, we ended the first quarter with an adjusted ratio of 8.2% versus 7.4% last quarter. While liquidity and rate risk have come to the forefront, managing credit risk is also a core competency. We are the largest traditional bank that did not participate in TARP during the financial crisis because of our disciplined approach to credit risk management. In good times, we have remained disciplined to the same credit fairway that allowed us to meaningfully outperform the last time there was a credit cycle. We have an internal limit of 185% of Tier 1 capital and reserves for our commercial real estate exposure that we take seriously. While our asset quality levels, including net charge-offs, potential problem loans, and non-performing loans remain near historic lows, we are building a strong combined reserve for credit losses at 1.37%. Our earnings performance is even more impressive considering our current earnings include meaningful provision expense. Finally, our diverse business model is unique for a bank our size. While the market focuses on net interest revenue and related margins, our operating revenue is very diverse and is a big reason for both the resiliency of our earnings and a key driver of growth for the company. I will now turn the call over to Marty to discuss key aspects of our liquidity and capital before we review the first quarter results.