BOK Financial Corporation · NASDAQ:BOKF
BOK Financial — Q4 2014 Earnings Presentation
34 slides from BOK Financial's earnings presentation, Jan 28, 2015
Slide 1: Fourth Quarter 2014 Earnings Conference Call
Fourth Quarter 2014 Earnings Conference Call January 28, 2015 Steven G. Bradshaw Steven Nell Chief Executive Officer Chief Financial Officer Daniel H. Ellinor Stacy Kymes Chief Operating Officer Chief Credit Officer BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by B
Slide 2: Forward-Looking Statements
Forward-Looking Statements: This presentation contains statements that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about BOK Financial Corporation, the financial services industry, and the economy generally. These remarks constitute forward-lookin
Slide 3: Steven G. Bradshaw, Chief Executive Officer
Steven G. Bradshaw Chief Executive Officer BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust. 3
Slide 4: 2014 Highlights
2014 Highlights FY 2014 FY 2013 Net Income $292.4 $316.6 Diluted EPS $4.22 $4.59 Robust loan growth – 11.1% for the year Repositioned balance sheet – under 1 percent liability sensitive at 12/31/14, down over 100 basis points from 12/31/13 Strong revenue growth from brokerage and trading, tran
Slide 5: Q4 2014 Highlights
Q4 2014 Highlights Q4 2014 Q3 2014 Net Income $64.3 $75.6 Diluted EPS $0.93 $1.09 Double digit annualized loan growth Stable NIM (excluding impact of Fed/FHLB trade) Strong g revenue g growth from transaction card ((YOY), ), fiduciary y and asset management, and mortgage banking businesses I
Slide 6: Additional Fourth Quarter Highlights
Additional Fourth Quarter Highlights % Growth, % Growth, $billions Q4 2014 Q3 2014 Q4 2013 Seq. YOY Period-End $14.2 $13.7 $12.8 3.8% 11.1% (15 2% ann (15.2% ann.)) Loans Avg. Loans 13.9 13.5 12.5 2.7% 11.4% (10.8% ann.) Fiduciary $36.0 $34.0 $30.0 5.8% 19.4% Assets Drivers: • Strong loan growth acr
Slide 7: Steven Nell, Financial Overview
Steven Nell Chief Financial Officer Financial Overview BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and T
Slide 8: Net Interest Revenue and Margin
Net Interest Revenue and Margin Q4 2014 Q Q3 2014 Q Q2 2014 Q Q1 2014 Q Q4 2013 Q Net Interest $169.7 $166.8 $166.1 $162.6 $166.2 Revenue ($mil) Net Interest 2.61% 2.67% 2.75% 2.71% 2.74% Margin NIM dilutive 0.14% 0.06% --- --- --- impact of FHLB/Fed trade Normalized NIM 2.75% 2.73% 2.75% 2.71% 2.74
Slide 9: Fees and Commissions
F Fees and d Commissions C i i ($millions) 12 Mos % Q4 2014 % Growth, % Growth, 2014 Growth, Seq. YOY YOY Brokerage and trading $134.4 7.1% $30.6 (13.2%) 7.3% Transaction card 123.7 5.9% 31.5 (0.4%) 8.0% Fiduciary y and asset management g 115.7 20.4% 30.6 3.1% 22.2% Deposit service charges and fees
Slide 10: Change in Fair Value of Mortgage Servicing Rights
Change in Fair Value of Mortgage Servicing Rights $ $10.8 0 8 million o dec decrease ease in MSR S value a ue at quarter qua te end e d driven d e by ssignificant g ca t decdecrease ease in interest rates during the quarter Net of hedges P&L impact $6.1 million Compared to $4.8 million positive
Slide 11: Expense Review
Expense Review (($millions)) 2014 2013 %Incr Q4 2014 Q3 2014 %Incr. Total operating $847.5 $840.6 0.8% $225.9 $221.8 1.8% expense • Personnel upp $800,000 due to costs associated with Instore branch closures • Includes $1.8 million charitable contribution in Q4 (1 cents/share EPS impact) • Professio
Slide 12: Balance Sheet
Balance Sheet Q4 2014 Q3 2014 Q4 2013 Period End AFS Securities $9.0 billion $9.3 billion $10.1 billion Average AFS securities $9.2 billion $9.5 billion $10.4 billion P i dE Period End d Deposits D it $21 1 billion $21.1 billi $20 3 billion $20.3 billi $20 3 billion $20.3 billi Average deposits $20.
Slide 13: 2015 Assumptions
2015 Assumptions C ti Continued d llow-double-digit d bl di it lloan growth th NII will increase in 2015 from earning asset composition and stable to improving NIM Provision for credit losses of $15-$20 million Continued mid-single-digit revenue growth from fee-generating businesses Mid-single
Slide 14: Dan Ellinor, Chief Operating Officer
Dan Ellinor Chief Operating Officer BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust. 14
Slide 15: Commercial Loan Growth
Commercial Loan Growth Sequential YOY Dec 31, Sep 30, Loan Dec 31, Dec 31, Loan ($millions)) ($ 2014 2014 Growth 2014 2013 Growth Energy $2,860.4 $2,551.7 12.1% $2,860.4 $2,351.8 21.6% Services 2,518.2 2,487.8 1.2% 2,518.2 2,282.2 10.3% Wholesale/retail 1 313 3 1,313.3 1 273 2 1,273.2 3 1% 3.1% 1 31
Slide 16: Commercial Real Estate
Commercial Real Estate Sequential YOY Dec 31, Sep 30, Loan Dec 31, Dec 31, Loan ($millions)) ($ 2014 2014 Growth 2014 2013 Growth Residential $143.6 $175.2 (18.0%) $143.6 $206.3 (30.4%) construction and land development Retail 666 9 666.9 611 3 611.3 9 1% 9.1% 666 9 666.9 586 0 586.0 13 8% 13.8% Off
Slide 17: Total Loans
Total Loans ($millions) Dec 31, Sep 30, Sequential Dec 31, Dec 31, YOY 2014 2014 Loan 2014 2013 Loan Growth Growth Total Commercial $9,095.7 $8,572.0 6.1% $9,095.7 $7,943.2 14.5% Total CRE 2,728.2 2,724.2 0.1% 2,728.2 2,415.4 13.0% Total Residential 1,949.5 1,979.7 (1.5%) 1,949.5 2,052.0 (5.0%) Mort
Slide 18: Loan Portfolio by Geography
Loan Portfolio by Geography ($millions) Dec 31, Sep 30, Sequential Dec 31, Dec 31, YOY 2014 2014 Loan 2014 2013 Loan Growth Growth Oklahoma $5,419.5 $5,373.6 0.9% $5,419.5 $5,220.6 3.8% Texas 4,967.3 4,611.9 7.7% 4,967.3 4,260.7 16.6% Albuquerque 818.7 834.3 (1.9%) 818.7 798.9 2.5% Arkansas 196.2 18
Slide 19: Loan Yields
Loan Yields Three Months Ended Dec 31 31, Sep 30 30, Jun 30 30, Mar 31 31, Dec 31 31, 2014 2014 2014 2014 2013 3.73% 3.78% 3.85% 3.89% 4.01% Additional slight decrease in Q4 loan yields Intensely competitive year, but seeing price competition subside, especially in energy lending BOK Financial Cor
Slide 20: Stacy Kymes, Chief Credit Officer
Stacy Kymes Chief Credit Officer BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust. 20
Slide 21: Solid Credit Quality at December 31, 2014
Solid Credit Quality at December 31, 2014 Continued Positive Trends Net annualized charge-offs charge offs to ALL to period end loans: average loans: 0.06% 1.33% (Net recoveries for the full year of 0.02%) Allowance for loan losses to Non-performing assets to period nonaccruing loans: end loans
Slide 22: Commercial Banking: Energy Lending
Commercial Banking $2.9 billion energy portfolio at 12/31/14 Energy Lending Core competency of BOK for over 100 years 50-60% loan to value on proved producing reserves Wholesale/ Energy Retail Services Approximately 59% of production loans 3% 8% are secured by oil Midstream 3% Regionally d
Slide 23: Energy Price Volatility & Loss Rates
Energy Price Volatility & Loss Rates • At 12/31/14, BOKF’s 20 year average gross loss rate on energy production loans (gross charge-offs as a percent of period end loans) is 6.4 basis points • Over the last 20 years, NG prices ranged from $1.05 to $15.38 and oil prices ranged from $10.72 to $145.29
Slide 24: Energy Lending – Credit Perspective
Energy Lending – Credit Perspective E&P lending is our single best performing portfolio from an asset quality standpoint over the past 20 years Commodity price volatility is inherent in energy lending. As recently as 2008 oil p prices decreased by y 77%,, from $145.29 $ to $ $33.87,, over a six- m
Slide 25: Energy Lending – Credit Perspective
Energy Lending – Credit Perspective As prices declined we performed internal reviews in three major areas: All energy services companies All borrowers with high total cash flow leverage Stress St ttestt results lt $45 oil / $2.50 gas stress test conducted in Q4 - results not materially differen
Slide 26: Oil and Gas Price Volatility Since 2000
Oil and Gas Price Volatility Since 2000 Peak Peak Trough Trough % # Normalized Normalized Days to Date Price Date Price Decline Days Date Price Recovery Gas 12/27/2000 9.98 9/26/2001 1.83 ‐82% 273 9/27/2002 4.00 366 Gas 12/31/2005 15.38 9/27/2006 4.2 ‐73% 270 11/15/2006 8.00 49 Gas 7/3/2008 13 58 13
Slide 27: Two Distinct Risk Periods in Current Oil and Gas Environment
Two Distinct Risk Periods in Current Oil and Gas Environment 12 Months or Less 12-24 months or more Some migration of energy credits Some loss content in portfolio to problem loans Minimal, if any, losses Greater spillover impact on economic growth in footprint If the current oil and gas downturn be
Slide 28: The 1980s vs. the 2010s
The 1980s vs. the 2010s The 1980s The 2010s Energy = 22% of OK economy in 1982 Energy = 15% of OK economy in 2013 Energy = 19% of TX economy in 1982 Energy = 13% of TX economy in 2013 S&L crisis exacerbates downturn Financial system largely sound Tax Reform Act of 1986 causes collapse in No signific
Slide 29: Energy Lending Takeaways
Energy Lending Takeaways Our customers are sophisticated p businesses that will take the right g action in the downturn: reduce rig counts, reduce G&A, reduce CAPEX, and consolidate Oil and gas reserves are depleting assets. We believe that as rig counts decline, production and supply will decline
Slide 30: Closing Remarks
Steven G. Bradshaw Chief Executive Officer Closing Remarks BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank a
Slide 31: Question and Answer Session
Question and Answer Session BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust. 31
Slide 32: Appendix
Appendix BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust. 32
Slide 33: Oil Price Volatility Since 2000 (NYMEX WTI)
Oil Price Volatility Since 2000 (NYMEX WTI) 160.00 140.00 From 7/3/2008 to 12/19/2008 (169 days), the price of oil fell from $145.29 to $33.87 (a 77% drop). 172 days after this bottom, oil closed above $70. After an additional 120.00 134 days, oil closed above $80. 100.00 From 9/20/2000 to 11/15/200
Slide 34: Natural Gas Price Volatility Since 2000 (NYMEX Henry Hub)
Natural 18.00 Gas Price Volatility Since 2000 (NYMEX Henry Hub) 16.00 From 12/13/2005 to 9/27/2006 / / (288 days), the 14.00 price of gas fell from $15.38 to From 7/3/2008 to From 12/27/2000 $4.20 (a 73% 9/3/2009 (427 to 9/26/2001 drop). 49 days days), the price of 12.00 (273 days), the gas fell fro