Q&A: Delving into the state of the banking industry

Stubbornly high UK inflation and worries about future central bank moves to tame rampant consumer prices helped drag down stocks across much of the world – Copyright GETTY IMAGES NORTH AMERICA/AFP/File JUSTIN SULLIVAN

Nearly a year after the U.S. banking crisis of 2023, the industry is back in the spotlight. Yet despite many issues, there remain real benefits to being a regional bank.  Stacy Kymes, CEO of BOK Financial, a top 25 U.S.-based bank discusses with Digital Journal the ability of banks better serve their communities.

Kymes also considers why her company’s diversified business units – from wealth to energy – put them at an advantage and the vision for what’s next. 

Digital Journal: A lot of attention is often paid to “the big banks” in the media. What are the benefits of being a regional bank?

Stacy Kymes: Being a regional bank allows us to provide the same depth of services as the “big banks” while providing a service level that is differentiated.  We live in the communities we serve.  We see our customers at our kids’ soccer games, houses of worship and at the grocery store.  The vitality of our community is critical because it is where we live and raise our children.  We don’t fly in to facilitate a transaction and leave.  We have deep relationships that matter to us.  All of our markets have local leadership who are empowered to deliver to each market what is important in that community.

As a bank specifically serving the middle of the US, we have core values that are aligned well with our communities. We are less vulnerable to the economic booms and busts that are more likely to happen on the coasts. We also have access to a deep pool of talented employees who are equally committed to making a positive impact on the communities we serve.

DJ:  For a bank of its size, BOKF has an outsized wealth division. What’s the genesis of that and how does it benefit the overall company?

Kymes: The roots of our bank trace back to 1910 when Harry Sinclair and other notable oilmen founded our predecessor bank to finance drilling activity in northeast Oklahoma.  Eight years later, they established Oklahoma’s first trust company (1918) and launched fee-based asset management in 1949.  The legacy wealth created in Oklahoma from the oil boom seeded what has become an exceptional division at our company.  Wealth provides a strong source of stable revenue to allow the company overall to have very diverse revenue streams.

The wealth division, itself, is diverse.  It includes investment management, private banking, trust and estate administration, personal investing, financial planning, specialty asset management, retirement plan services, hedging and risk management, and institutional sales and trading. 2023 was a record year in revenue for wealth driven by the majority of the business units that had record years including corporate trust, retirement plan services, private wealth, customer hedging, international services, and investment banking.

DJ:  BOKF started as an energy bank; is that who you still are today?

Kymes: We are proud of our energy foundation that traces back to 1910 and it remains an important core activity of our company.  We commit a higher percentage of our capital to energy than any other US domestic bank and we have several seasoned energy executives on our board of directors.  That said, we are much more than an energy bank.  We have broad diversification in our lending types and among our fee businesses.  Approximately 40% of our total revenue comes from fee businesses like our electronic funds business we brand as TransFund, our wealth platform, and our mortgage origination and servicing business.  This broad diversification allows the company to have a strong and sustainable earnings stream through different economic cycles.

DJ: In this tight labour market are you seeing any changes in your talent acquisition and retention efforts?

Kymes: While in some areas a tight labour market remains, our turnover in 2023 was much lower than in previous periods.  We are always seeking to hire talented people.  We have found that winning players want to play on a winning team and success opens the door to hiring talent.  Our strength of capital and liquidity were on display this year when some regional banks exhibited stress in the first quarter.  This further allowed us to add key talent in all our markets.  We are in the commoditized industry of financial services, but we differentiate ourselves through talent and service.

DJ:   BOKF has recently announced expansion in Texas. Is there more growth planned in 2024? What is the company’s growth strategy?

Kymes: We are very focused on topline revenue growth.  We have to grow the topline to give ourselves a chance to grow the bottom line.  Whether it is lending, depository services or the traditional fee business, we are very intentional about growing.

Texas is a critical market to our company.  If Texas were a country, it would have the 8th largest GDP in the world. We enjoy a strong presence in Dallas-Ft. Worth and Houston, but in 2023 announced our entry into San Antonio and Austin.  Our favourite way to grow is hiring talented revenue producers who live in the market, provide them with our broad product set and allow them to sell.  This has worked well for our entry into central Texas and applies to other markets in the country where we are growing through talent acquisition.

DJ:  It’s clear that BOKF is open for business. What is your biggest strength as a company?

Kymes: It is hard to pick one thing that has been key to our success.  Our people are a clear strength in a very commoditized financial services market.  We focus a lot of time and effort on talent development and building culture as we believe that is critical to sustaining success.  While we are a publicly traded company (ticker: BOKF), we have a majority shareholder which allows us to think long term and beyond what analysts may be expecting for next quarter.  It allows us to make investments for the future that may dilute near-term earnings but are important for long-term success.  We are also fortunate that the footprint of our company is in very vibrant and growing economies with in-migration and a favourable business climate.