Bok Financial Corporation · NASDAQ:BOKF
Bok Financial — BOK Financial Corp ET AL — Investor Day (April 2009)
67 slides from Bok Financial's investor day presentation, Apr 29, 2009
Slide 1: BOK Financial Corporation Analyst Day April 29, 2009
BOK Financial Corporation Analyst Day April 29, 2009
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking 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. Words such as “anticipat
Slide 3: Agenda
Agenda 7:30-8:00 a.m. Continental Breakfast – Doubletree Hotel at Warren Place Tulsa Learning Center 8:00-8:15 a.m. Welcome – Stan Lybarger, President & CEO 8:15-9:00 a.m. Review of 1st Quarter Earnings – Steven Nell, Chief Financial Officer 9:00-9:45 a.m. Loan Portfolio & Asset Quality – Chuck Cott
Slide 4: Review of 1st Quarter Earnings
Review of 1 st Quarter Earnings Steven Nell Chief Financial Officer Executive Vice President
Slide 5: BOK Financial Today
12/31/08 3/31/09 Change* BOK Financial Today *annualized Total assets 22,734,648 $ 23,333,442 $ 10.54 % Average loans 12,826,696 $ 12,784,765 $ (1.31) % Combined Reserve for Loan Losses/Pd End Loans 1.93% 2.07% bps Average deposits 14,093,936 $ 14,850,184 $ 21.46 % Shareholder's equity 1,846,257 $ 1
Slide 6: First Quarter Results
Earnings of $55 million or $0.81 per diluted share The net interest margin of 3.47%, down 10 basis points from 4Q08 due primarily to the spread between LIBOR and federal funds returning to a historically normal level Fees and commissions revenue totaled $121.5 million, an increase of nearly $11 mill
Slide 7: Quarterly Results ($ In 000s)
Quarterly Results ($ In 000s) 3/31/2008 6/30/2008 9/30/2008 12/31/2008 3/31/2009 Net interest revenue 147,128 $ 158,939 $ 164,348 $ 176,447 $ 169,845 $ Net interest margin 3.31% 3.44% 3.48% 3.57% 3.47% Other operating revenue 113,857 124,449 119,958 110,930 121,507 Other operating expense 151,642 15
Slide 8: Net Interest Margin
Net interest revenue was down $6.6 million compared to 4Q08 due primarily to the spread between LIBOR and the federal funds rate returning to a historically normal level Average earning assets increased $477 million from the previous quarter Average interest bearing deposits increased $604 million w
Slide 9: Fee Revenue and Components of Revenue
Fee Revenue in Millions 4Q08 1Q09 Brokerage & Trading $23.50 $24.70 Transaction Card 25.18 25.43 Trust Fees 17.14 16.51 Deposit Svc Charges 29.24 27.40 Mortgage Banking 7.22 18.50 Margin Asset Fees .19 .06 Other 8.46 8.90 Total $110.93 $121.50 The 156% increase in mortgage banking revenue was primar
Slide 10: Expense Management
, $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 Revenue Personnel Expense Revenue & Personnel Expense Trends Expense Management Higher FDIC insurance premiums resulted in a $2.2 million increase over 4Q08 Personnel expense increased in 1Q09 primarily due to seaso
Slide 11: Loans
Loans Loan Trends Commercial loans decreased $310 million in 1Q09; decrease was generally consistent across nearly all sectors CRE increased $31 million; increases in retail, office and multifamily offset the decrease in construction & land development Residential mortgages increased $67 million due
Slide 12: Deposits
Deposits Cost of Deposits Deposits BOKF has placed a special focus on growing deposits and maximizing liquidity Deposits increased $288 million during 1Q09 primarily due to growth in Consumer and Wealth Management accounts Texas and Arkansas experienced the largest deposit growth, though deposits in
Slide 13: $7.7B Investment Portfolio
$7.7B Investment Portfolio Current portfolio has an effective duration of approximately 1.9 years and would extend less than one year if rates increase 300bp The $665 million increase in the portfolio in 1Q09 included purchases and a $69 million increase in the fair value of AFS securities At 3/31,
Slide 14: OTTI Evaluation of Debt Securities
Debt securities rated below investment grade were evaluated for other-than-temporary impairment The evaluation was based on projections of estimated cash flows using current and anticipated unemployment and default rates, decreasing housing prices and increasing default rates 14 MBS totaling approx.
Slide 15: OTTI Evaluation of Equities
BOKF owns preferred stocks issued by six financial institutions Preferred stocks have a current carrying value of $24 million including $22 million in cumulative other-than-temporary impairment charges In 1Q09, we recognized an $8 million other- than temporary impairment on the preferred stock of on
Slide 16: Solid Capital
Solid Capital BOKF elected not to participate in the Capital Purchase Program (an element of TARP) as current capital sufficient to support planned growth Current uses of capital include organic growth, dividends, acquisitions within our footprint and periodic stock buyback BOKF’s capital levels far
Slide 17: Net Income by Line of Business and Region
7 First Quarter Results LOB’s performance includes allocation of funds, direct and indirect expenses, taxes and net charge-offs Funds Management unit manages overall liquidity and interest rate risk, and contains impairment charges and excess provision over net charge-offs 62,265 $ 55,032 $ Total 3,
Slide 18: Market Update
Market Update March Unemployment Rates US unemployment rate (8.5%) In OK, loan demand has slowed, but spreads and fees are improving; record syndication fees and solid deposit growth In the regional markets we have seen an increase in employees and customers in play due to competitors downsizing or
Slide 19: Current Focus
Current Focus Aggressively address credit quality, including continuous evaluation of the loan portfolio Continue to focus on growing loans at higher spreads Increase fee revenue in regional markets Grow deposits at the lowest cost possible and actively manage liquidity Control expense growth in rel
Slide 20: Loan Portfolio and Asset Quality
Loan Portfolio and Asset Quality Chuck Cotter Chief Credit Officer Executive Vice President
Slide 21: Credit Administration
Credit Administration Re-examined our loan and risk management policies in 2008, adding some additional controls to limit and identify risk Expanded the list of unacceptable loan types Added required approvals to new loans, renewals and extensions for CRE loans Revised the hedging policies, adding c
Slide 22: Asset Quality – Net Charge-Offs
Net Charge-Offs Basis Points 0 20 40 60 80 100 120 140 2Q08 3Q08 4Q08 1Q09 Coml CRE Res RE Consumer Asset Quality – Net Charge-Offs Subsidiary banks are governed by the same credit policies and a strong centralized credit administration staff and loan review team 2Q08 included a $26 million write- o
Slide 23: Asset Quality – Nonperforming Assets
Nonperforming Assets 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 1Q08 2Q08 3Q08 4Q08 1Q09 Coml CRE Res RE Consumer OREO Renegotiated Loans Asset Quality – Non performing Assets Beginning in 2Q08, NPAs include approx $47 million related to a midstream company - this represents 1/3 of the original exposur
Slide 24: Non-Accruing Loans
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% OK TX NM AR CO AZ^ KS As A Percent of Loans in the Market Non-Accruing Loans Office CRE 7% Construction & Land Dev 29% Healthcare 4% Residential RE 10% Other CRE 7% All Others 3% Multifamily CRE 8% Energy* 15% Services 9% Wholesale/ Retail 3% Manufacturing 5% By Loan Se
Slide 25: C&I Portfolio By Industry
C&I Portfolio By Industry Commercial & Industrial Loans The services sector includes a large number of loans to a variety of businesses including communications, gaming and recreation, transportation and financial services Outstanding loans in the services sector decreased $76 million during 1Q09 Ov
Slide 26: Energy Portfolio
Approximately $1.1 billion of the energy portfolio is attributed to OK, $761 million to TX and $426 million to CO 50-60% loan to value 54% gas concentration Energy production portfolio has been one of the best performing portfolios for the last 20+ years Sensitivity analysis is performed for each cr
Slide 27: Energy Futures
Energy Futures Source: Bloomberg/pricing date of 4/24/09
Slide 28: Commercial Real Estate
CRE by Market Market $ in 000s % of Total Oklahoma 881,620 32% Texas 816,830 30 New Mexico 315,511 12 Arkansas 133,227 5 Colorado 267,035 10 Arizona 285,841 10 Kansas 32,017 1 Commercial Real Estate Of the $879 million in construction and development loans, approximately $246 million are attributed
Slide 29: Shared National Credits
Shared National Credits Shared National Credits ($ in millions): December March 2009 Nu mber of Relationships Commt ($) O/S ($) Commt ($) O/S ($) Shared Natio nal Credit Volume 3,479 2,250 3, 2, Agented by BOKF Percent of Total 23.73 % 23.42 % 22. % 22.8 % Relationships in Local Markets 3,097 1,976
Slide 30: Additional Loan Detail
Additional Loan Detail Residential Mortgage Loans, excluding loans held for sale totaled $1.8B $1.6 billion or 86% of the residential mortgage loan portfolio is attributed to Oklahoma and Texas where home values have been more stable BOKF has no concentration in sub-prime residential mortgage loans
Slide 31: Commercial Banking Oklahoma, Arkansas, Arizona, New Mexico
Commercial Banking Oklahoma, Arkansas, Arizona, New Mexico Energy and Real Estate Banking BOKF Footprint Dan Ellinor Senior Executive Vice President
Slide 32: Loan Growth & Distribution
Average Total Loans $4.0 $5.0 $6.0 $7.0 $8.0 2004 2005 2006 2007 2008 2009 Q1 March 2009 Portfolio Distribution Middle Market, 20.23% Commercial RE BOKF, 26.64% Agribusiness, 2.46% Arkansas, 3.14% Business Banking OK, 6.40% Energy BOKF, 25.59% Arizona Commercial & BBG, 2.63% Dealer Financial, 8.41%
Slide 33: Deposit Growth & Distribution
Deposit Growth & Distribution 5 Year CAGR of 8.44% 3 Year CAGR of 5.70% The higher growth rate products continue to be the higher rate investor fund and sweep products Demand Deposits continue to grow at a nice pace 6.42% over the last 3 years. New tiered pricing for analyzed balances has move dolla
Slide 34: Fee Based Revenue
Service Fee Revenue & Percent of Total Revenue w/o $43.2MM SemGroup Loss 2008 $0 $25 $50 $75 $100 $125 2004 2005 2006 2007 2008 30% 31% 32% 33% 34% Fee Based Revenue Distribution 2008 excludes Derivative Credit Quality Losses International, 7.54% Other, 2.09% Transaction Card, 56.80% Service Charges
Slide 35: Net Direct Income Results
Net Direct Income Results Adding Back SemGroup Loss Net direct income from the operation of this business group has produced a CAGR of 4.99% over the last 5 years (8.95% without the impact of the SemGroup loss in 2008) Fee based revenue contributes around 30% of total revenue Expenses were held in c
Slide 36: Oklahoma Commercial Banking
Oklahoma Commercial Banking Loan Balances and Spreads $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 2009 Q1 2.00% 2.25% 2.50% 2.75% Net Direct Income & Efficiency Ratio w/o $43.2MM SemGroup Loss 2008 $50 $70 $90 $110 $130 $150 $170 $190 14.00% 14.50% 15.00% 15.50% 16.00% 16.50% 17.00% Deposit Growth $50 $250 $450 $
Slide 37: Bank of Arizona
Bank of Arizona Deposit Growth $0 $20 $40 $60 $80 2009 Q1 Demand Dep. Interest Trans. Accts. Cert. of Deposit Loan Balances and Spreads $0 $150 $300 $450 $600 2009 Q1 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% Net Direct Income and Efficiency Ratio -$1 $0 $1 $2 $3 $4 $5 $6 0% 30% 60% 90% 0.5% 100,175 Inter
Slide 38: Bank of Albuquerque
Bank of Albuquerque Loan Balances and Spreads $50 $250 $450 $650 $850 2009 Q1 2.35% 2.55% 2.75% 2.95% Net Direct Income & Efficiency Ratio $15 $25 $35 $45 $55 32% 34% 36% 38% 40% 42% Deposit Growth $50 $150 $250 $350 $450 $550 $650 2009 Q1 Demand Dep. Interest Trans. Accts. Cert. of Deposit 0.7% 552
Slide 39: Bank of Arkansas
Bank of Arkansas Loan Balances and Spreads $100 $200 $300 $400 $500 2009 Q1 2.00% 2.20% 2.40% 2.60% 2.80% Net Direct Income and Efficiency Ratio $0 $3 $6 $9 $12 $15 0% 10% 20% 30% Deposit Growth $0 $30 $60 $90 $120 2009 Q1 Demand Dep. Interest Trans. Accts. Cert. of Deposit 0.7% 114,090 Internationa
Slide 40: Loan Distribution By Market Q1 2009
© BOK FINANCIAL CORPORATION Loan Distribution By Market Q1 2009 Loan Balances and Spreads $2,600 2.70% Colorado, 364,991,366 $2000 2.80% 5 ‘Appalachis s Oklahoma, 5 91,500 2.80% 197,796, arenes $1,000 2.40% 9600 2.30% Texas, mos 2005-2008 2007-2008 20091 626,935,109 . Net Direct Income & Efficiency
Slide 41: Loan Distribution by Market Q1 2009
© BOK FINANCIAL CORPORATION Loan Distribution by Market Q1 2009 fS in 000s) Loan Balances and Spreads 92,800 2.80% Colorado, $267,035 92,300 an Oklahoma, 2 2.80% $881520 = v0 ato New Mexico, $1,300 $315511 3800 2.20% 200 2005 «2008-2007 200820091 Texas, $816 830 Total Deposits Net Direct Income and
Slide 42: TransFund Revenue and Transaction Volume
TransFund Revenue and Transaction Volume TransFund is the 9 th largest ATM network in the nation. Transaction volumes have produced a 17.4% CAGR over the last five years, resulting in an 10.4% CAGR for revenue recognized. Customer base consists of 385 financial institutions, 1,933 ATMs, and 2.2 mill
Slide 43: TransFund Expansion to New Markets
TransFund Expansion to New Markets In the past year, 97% of all new business sold was outside the state of Oklahoma. TransFund now has relationships with major convenience store chains in a 6 state area (QuikTrip, 7-Eleven, Kum & Go, etc.), offering convenient, surcharge-free access to TransFund car
Slide 44: TransFund Network Revenue & Percent Spent on Data Processing
$45 $35 $25 $15 TransFund Network Revenue & Percent Spent on Data Processing 2004 2005 2006 2007 2008 18.0% 17.0% 16.0% 15.0% ‘22000 0 Financial Corporation, © BOK FINANCIAL CORPORATION Merchant Processing Revenue & Percent Spent on Data Processing 2004 Net Direct Income and Efficiency Ratio
Slide 45: Consumer Banking, Wealth Management, Treasury, International, Mortgage, Colorado, Kansas City
Consumer Banking & Corporate Marketing, Wealth Management, Treasury Services, International, Mortgage Banking, Colorado and Kansas City Steve Bradshaw Senior Executive Vice President
Slide 46: Consumer Banking 2008 Highlights
Consumer Banking 2008 Highlights: Branch Expansion – Organic & Acquisition ExpressBank Relocation to the Business Technology Center Deposit Growth During Market Unrest CAGR 6.3%
Slide 47: Consumer Banking 2009 Strategies
Consumer Banking 2009 Strategies: Optimization Projects – SmarterPay & Deposit Pricing Financial Needs Analysis Profile Certification Program Deposit Account Acquisition Initiatives – QuickSave & Online Deposit Application Enhanced Brand Marketing Initiatives
Slide 48: Wealth Management 2008 Highlights
Wealth Management 2008 Highlights: Added Record Volume of New Assets Under Management Maximized Fixed Income Trading Opportunities Completed Comprehensive Rebranding Initiatives CAGR: 6.8%
Slide 49: Wealth Management 2009 Strategies
Wealth Management 2009 Strategies: Successfully complete Texas Private Bank Expansion Project Maximize Municipal Finance Financial Advisory and Underwriting Opportunities Significantly grow Cavanal Hill Assets Under Management
Slide 50: Treasury Services 2008 Highlights
Treasury Services 2008 Highlights: Received “A” Rating in 2008 Phoenix-Hecht Middle Market Monitor Launched Treasury Services Healthcare Vertical Achieved modest (3%) Growth in Low Rate Turbulent Market
Slide 51: Treasury Services 2009 Strategies
Treasury Services 2009 Strategies: Targeted effort to grow Commercial DDA 10% across footprint Increase top line revenue growth at least 4% Launch Targeted Commercial Credit Card Sales Effort Strong regional growth goal alignment
Slide 52: International Services 2008 Highlights
International Services 2008 Highlights: Focused on supporting the International Services & Trade Finance needs of BOKF Clients Continued to enhance product and technology platforms Bolstered Management and Sales Teams Increased Revenue to $17.1M, 24% growth
Slide 53: International Revenues 2009 Strategies
International Revenues 2009 Strategies: Strategically expand and enhance Correspondent Bank network Product & Sales training initiative Enhance International Branding
Slide 54: Mortgage Banking 2008 Highlights
Mortgage Banking 2008 Highlights: Continued Sales Force Growth Continued increase in Mortgage Referrals from Consumer Branches Mortgage Servicing Delinquencies Remain Well Below National Average
Slide 55: Mortgage Banking 2009 Strategies
Mortgage Banking 2009 Strategies: Maintain and grow Servicing Portfolio during period of low interest rates Continue to build sales force and sales leadership outside of Oklahoma Streamline processes end to end to cut costs and create scalability
Slide 56: Colorado Market 2008 Highlights
Colorado Market 2008 Highlights: Loans Grew 18% and Operating Revenue Grew 5%; Exceeded NDO Plan Added Key Talent Achieved Integration of First United Bank Acquisition 2.1% 1,290,266 International Revenue .8% 459,567 Other Revenue 4.1% 2,483,625 Trading Revenue 3.8% 2,339,357 Service Charge Revenue
Slide 57: Colorado Market 2009 Strategies
Colorado Market 2009 Strategies: Intensify focus on growth areas Enhance credit quality Develop Market Wide Performance System
Slide 58: Kansas City Market 2008 Highlights
Kansas City Market 2008 Highlights: Exceptional Growth in Fee based Lines of Business due in part to Strong Cross Sale/Team Selling Culture Expansion through Talent Acquisition Identified and Managed Asset Quality Issues 11.8% 2,118,290 International Revenue 1.3% 232,823 Other Revenue 51.1% 9,208,13
Slide 59: Kansas City Market 2009 Strategies
Kansas City Market 2009 Strategies: Targeted Market Expansion Talent Acquisition and Board Development Bank of Kansas City Brand Identification Long Term Strategic Planning Initiative
Slide 60: Bank of Texas
Bank of Texas Norm Bagwell Chairman & CEO Bank of Texas
Slide 61: Net Direct Operating Income
Net Direct Operating Income 5 year CAGR of 14.8%
Slide 62: Loan Growth & Distribution
Loan Growth & Distribution 5 Year CAGR 16.7% Largest Segments are Middle Market - 25% Business Banking - 24% Energy - 17% Real Estate - 15% Consumer/Wealth - 14%
Slide 63: Deposit Growth & Product Type
Deposit Growth & Product Type 5 Year CAGR 9.3% Heavy focus on deposit generation and migration of book to high margin products Demand Deposits have grown at a CAGR of 10.5% over the last 5 years, from $610M in 2003 to ~$1 Billion today .
Slide 64: Fee Based Revenue
Fee Based Revenue 5 year CAGR of 11.0% Service Charge Revenues from Consumer NSF fees and Treasury have been a strong driver and account for 42% of the mix Trust Fees & Commissions have a five-year CAGR of 8.3% Trading & Brokerage has a five-year CAGR of 53%
Slide 65: Components of Fee Based Revenue
Components of Fee Based Revenue 5 year CAGR of 11.0%
Slide 66: Qualitative Outcomes for Texas 2008
Qualitative Outcomes for Texas 2008 Common Business Model Evolution of Eight Banking Charters into One Commercial, Consumer, and Wealth Segments Dallas, Ft. Worth, and Houston Markets Launched Wealth Management Initiative Rapid build enabled by market conditions Significant investment and opportunit
Slide 67: Areas of Focus in Texas 2009
Areas of Focus in Texas 2009 Portfolio Management Diversification of revenue with focus on fee generating businesses Build of core deposits Improved margin on loans and deposits Expense discipline balancing investment with expense leverage Talent acquisition across all lines