Bok Financial Corporation · NASDAQ:BOKF
Bok Financial — Investor Presentation (February 2015)
40 slides from Bok Financial's investor presentation, February 2015
Slide 1: Investor Presentation February 2015
Investor Presentation February 2015 NASDAQ: BOKF 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.
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: BOK Financial Corp. at a Glance
BOK Financial Corp. at a Glance Top 25 bank holding company Strong franchise throughout the Midwest and Southwest Leading energy and healthcare lender nationwide Seasoned management team with consistent execution and solid performance across all economic cycles At 12/31/14: NASDAQ: BOKF Assets
Slide 4: BOKF Investment Attributes
BOKF Investment Attributes Attribute Evidence Focused on long-term shareholder value 14.5% compounded annual return from January 1992 through January 2015 Management alignment with Insiders own 69% of outstanding shares shareholders Industry-leading performance across all 24-year track record of pro
Slide 5: Driving Long Term Shareholder Value
Driving Long Term Shareholder Value As of 12/31/14 5 Yr. TSR 10 Yr. TSR 15 Yr. TSR BOKF 45% 52% 312% Peer average 82% 12% 171% Peer median 70% 4% 116% NASDAQ Bank Index 105% 109% 86% KBW Bank Index 90% -8% 43% “There is no principle more emphasized in our organization than managing for long-term val
Slide 6: Diversified Business Platform
Diversified Business Platform Retail and Commercial Banking Wealth Management Transaction Processing Mortgage Banking 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 C
Slide 7: Balanced Revenue
Balanced Revenue Fee Businesses Provide Stability and Growth Opportunity Brokerage & Trading 10.4% CAGR 2009- LT Growth Rates 2014 Brokerage and 8.0% Transaction Card Trading 9.6% Transaction Card (1) 3.2% Net Interest Trust Fees 11.8% 51.7% Trust Fees Service Charges (1) (4.7%) 9.0% Mortgage Bankin
Slide 8: Deposit Franchise
Deposit Franchise Market Branches Deposit Share Tulsa, OK 36 29.99% Dallas-Ft. Worth- 24 1.73% Arlington, TX TX Oklahoma City, OK 31 12.35% OK Houston-The Woodlands- 13 0.74% NM Sugar Land, TX AR Albuquerque, NM 20 10.05% CO Denver-Aurora- 11 2.06% AZ Lakewood, CO KC Phoenix-Mesa- 4 0.99% Total: $21
Slide 9: Commercial Banking
Commercial Banking Diversified by Sector and Geography Loan Portfolio Breakdown - by Sector: Loans by Principal Market: Commercial (In Millions) 12/31/2014 (In Millions) 12/31/2014 Energy $ 2,860.4 20.1% Oklahoma 5,419.5 38.1% Services $ 2,518.2 17.7% Texas 4,967.3 35.0% Wholesale/Retail $ 1,313.3 9
Slide 10: 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 11: 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 12: 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 prices decreased by 77%, from $145.29 to $33.87, over a six- month perio
Slide 13: 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 test results $45 oil / $2.50 gas stress test conducted in Q4 - results not materially different from $
Slide 14: 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 9/
Slide 15: 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 criticized/classified Minimal, if any, losses Greater spillover impact on economic growth in footprint If the current oil and gas dow
Slide 16: 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 No significant
Slide 17: Energy Lending Takeaways
Energy Lending Takeaways Our customers are sophisticated businesses that will take the right action in the downturn: reduce rig counts, reduce G&A, reduce CAPEX, and consolidate Oil and gas, especially from fracked wells, is a depleting asset. We believe that as rig counts decline, production and
Slide 18: Commercial Banking: Healthcare Lending
Commercial Banking Healthcare Lending Growing line of business within Healthcare Commitments commercial $1.5 billion portfolio at 12/31/14 Medical Skilled Svcs Nursing Portfolio increased at a compound 25% Facilities 33% annual rate of 10% since 2007 National expertise in skilled Specialty n
Slide 19: Commercial Real Estate Portfolio Trends
Commercial Banking Commercial Real Estate Portfolio Trends CRE By Market $750 KS/MO 6% OK AZ 22% $600 13% Millions $450 CO 7% $300 AR 3% $150 NM TX 11% 38% $0 C&D Retail Office Multifamily Industrial Other CRE 3/31/2014 6/30/2014 9/30/2014 12/31/2014 BOK Financial Corporation. Member FDIC. Equal Hou
Slide 20: Wealth Management
Wealth Management Fiduciary and Asset Management Revenue $115.7 ($millions) $64 billion in assets under management or custody $96.1 $34 billion in fiduciary assets $80.1 $73.3 $66.2 $69.0 More than $1 trillion in traded securities annually Clients include high net worth individuals, corporations
Slide 21: ATM Network and Merchant Payment Processing
ATM Network 600 EFT Transaction Among the top 10 networks in the US 500 Volumes (M) Operates in 22 states; more than 50% of clients 400 CAGR: 9.93% outside Oklahoma 300 Clients: 211 Banks, 139 Credit Unions, 6 C- 200 Store partners 100 In 2014, processed 496 million EFT transactions 0 Mercha
Slide 22: Mortgage Banking
Mortgage Banking Building a Recurring Revenue Model Housed within the retail banking business 180,000 Several key strategic Mortgage Banking initiatives: 160,000 Revenue 140,000 ($000s) Build servicing portfolio 120,000 100,000 Expand correspondent 80,000 network 60,000 40,000 Build platfo
Slide 23: Mortgage Banking
Mortgage Banking Building a Recurring Revenue Model Servicing Portfolio ($B) Servicing Revenue ($MM) Continued 20.0 15.0 expansion of 14.0 15.0 13.0 recurring 12.0 servicing 10.0 11.0 10.0 revenue 5.0 9.0 8.0 - 7.0 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 2013 2013 2014 2014 2014 2014 2013 2013 2014 20
Slide 24: 2014 Results
2014 Results 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. 24
Slide 25: 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 26: 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 revenue growth from transaction card (YOY), fiduciary and asset management, and mortgage banking businesses Items impac
Slide 27: 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.) Loans Avg. Loans 13.9 13.5 12.5 2.7% 11.4% (10.8% ann.) Fiduciary $36.0 $34.0 $30.0 5.8% 19.4% Assets Drivers: • Strong loan growth across the comm
Slide 28: Commercial Loan Growth
Commercial Loan Growth Sequential YOY Dec 31, Sep 30, Loan Dec 31, Dec 31, Loan ($millions) 2014 2014 Growth 2014 2013 Growth Energy $2,860.4 $2,551.7 12.1% $2,860.4 $2,351.8 21.6% Services 2,518.2 2,487.8 1.2% 2,518.2 2,282.2 10.3% Wholesale/retail 1,313.3 1,273.2 3.1% 1,313.3 1,201.4 9.3% Manufact
Slide 29: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio Sequential YOY Dec 31, Sep 30, Loan Dec 31, Dec 31, Loan ($millions) 2014 2014 Growth 2014 2013 Growth Residential $143.6 $175.2 (18.0%) $143.6 $206.3 (30.4%) construction and land development Retail 666.9 611.3 9.1% 666.9 586.0 13.8% Office 415.5 438.9 (5.3%) 415.5
Slide 30: Total Loans
Total Loans ($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 31: Net Interest Revenue and Margin
Net Interest Revenue and Margin Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 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% • Strong
Slide 32: Fees and Commissions
Fees and Commissions ($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 and asset management 115.7 20.4% 30.6 3.1% 22.2% Deposit service charges and fees 90.9 (4.4%) 22
Slide 33: Change in Fair Value of Mortgage Servicing Rights
Change in Fair Value of Mortgage Servicing Rights $10.8 million decrease in MSR value at quarter end driven by significant decrease in interest rates during the quarter Net of hedges P&L impact $6.1 million Compared to $4.8 million positive revenue impact in Q3 10-year treasury rate 2.17% at
Slide 34: Expense Review
Expense Review ($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 up $800,000 due to costs associated with In-Store branch closures • Includes $1.8 million charitable contribution in Q4 (1 cents/share EPS impact) • Professiona
Slide 35: 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 Period End Deposits $21.1 billion $20.3 billion $20.3 billion Average deposits $20.7 billion $20.2 billion $19.9 billion Tier 1 Capit
Slide 36: Capital
Capital Tier 1 common equity ratio 13.13% as of December 31, 2014. Based on our interpretation of the new Basel III rules, our estimated Tier 1 common equity ratio is approximately 12.25%, or 525 basis points above the 7% regulatory threshold. Capital deployment Organic growth Acquisitions
Slide 37: Solid Credit Quality at December 31, 2014
Solid Credit Quality at December 31, 2014 Continued Positive Trends Net annualized 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 and reposses
Slide 38: 2015 Assumptions
2015 Assumptions Continued low-double-digit loan growth 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-digit expense growth •
Slide 39: $9.0B AFS Portfolio
$9.0B AFS Portfolio High Quality, Actively Managed Securities portfolio used primarily to manage interest rate risk and generate incremental net Agency interest revenue CMBS, $2.0 Other, Consistent strategy; $0.5 actively managed for total return Total AFS portfolio estimated duration of 2.9 A
Slide 40: Summary
Summary Diverse sources of revenue Capital and willingness to make accretive acquisitions Deep and experienced Sound financial condition management team Exceptional bench strength Differentiated business model Multiple growth drivers BOK Financial is a tenacious competitor BOK Financ
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