BOK Financial Corporation

Greetings. Welcome to BOK Financial Corporation fourth 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. Financial Corporation, please proceed.

Good morning, and thank you for joining us to discuss BOK Financial's fourth quarter financial results. Our CEO, Stacey Kimes, will provide opening comments. Mark Maughan, Executive Vice President for Regional Banking, will cover our loan portfolio and related credit metrics. And Scott Brower, Executive Vice President of Wealth Management, will cover our fee-based results. I will then discuss financial performance for the quarter and our forward guidance. PDFs of the slide presentation and fourth 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 Stacy Kimes.

Thank you, Marty. Good morning, everyone. Beginning on slide four, we reported net income of $82.6 million, or $1.26 per diluted share for the fourth quarter. which includes a 52 cent per share impact from the FDIC special assessment. I'm exceptionally proud of the BOKF team and our results this year. Our focus at BOKF has always been on providing long-term shareholder value driven by our diverse business model and talented team, both of which empower us to perform well relative to our industry during any economic environment. This was once again proven when the industry faced stress in the first half of the year and our company was well prepared. Our discipline in risk management, which extends beyond the credit risk management that has long been a strength, resulted in strong levels of capital and liquidity at an important time. We took advantage of this position to thoughtfully grow when others are pulling back. We've made real investments in growing our core C&I, while also investing in people and new markets like Central Texas. While the fourth quarter was exceptionally noisy with numerous non-recurring items, Our core results were very strong, resulting in a great starting point for 2024. We continue to make strategic decisions to buoy our capital where growth and returns are highest. This was reflected in our decision to exit our insurance brokerage and consulting business in the fourth quarter. This resulted in a pre-tax gain of $28 million after transaction expense, which we used to opportunistically restructure a small portion of our available for sale securities portfolio which will be accretive to the interest revenue and the margin in the months ahead. Staying on this slide, our efficiency ratio was 72% for the quarter. This falls to 67%, excluding the impact of the FDIC Special Assessment and the activity related to the sale of our insurance brokerage and consulting business, which Marty will highlight later. Let me briefly diverge and comment on the FDIC Special Assessment. which I understand most will see as non-recurring and normalized for the period. The FDIC's methodology was flawed and did not use the root cause of the issues, which was low levels of fully loaded tangible capital caused by poor asset liability risk management decisions. The final rule was disappointing as they ignored many thoughtful comment letters, including our own. They announced the public hearing, subsequently canceled the public hearing, before voted 3-2 along partisan lines to adopt the final rule. This continues a disconcerting trend of increasing partisanship in banking regulation. The U.S. is the only country that has allowed partisanship to invade the banking regulatory process. Banking is a noble profession. We are well aligned with our customers. Collaboration with our industry is necessary and a missing element today. Moving on, we believe the strategic decisions and investments we've made this year have us well-positioned for success in the long term, and our diverse operating model will continue to operate successfully in any market environment going forward. Turning to slide five, period-end loan balances increased $181 million, or approximately 1% in the quarter, with growth in both C&I and commercial real estate. Loan growth did slow in the fourth quarter, but our teams remain confident in our pipelines as we move forward. Both period and average deposits continue to grow this quarter. Our loan-to-deposit ratio was stable at 70.3%, remaining well below our peers and providing significant unbalanced liquidity to meet future loan or other liquidity demands. While our cost of deposits continue to increase this quarter, the pace was less than half the level we've experienced the previous three quarters, allowing our net interest margins to stabilize. Marty will comment more about net interest revenues, but we believe we are very close to the trough. Our credit remains very strong and we have a combined reserve of $326 million, or 1.36% of outstanding loans at quarter end, which is considerably above the median of our peer group. Finally, we repurchased 700,237 shares this quarter to reflect our long-term confidence in the company and to take advantage of attractive repurchase valuations. I'll provide additional perspective on the results before starting the Q&A session, but now Mark Vaughn will review the loan portfolio and our credit metrics in more detail. I'll turn the call over to him.