Bok Financial Corporation · NASDAQ:BOKF
Bok Financial — BOK Financial Corp ET AL — Morgan Stanley Financials Conference 2011
38 slides from Bok Financial's conference presentation, Feb 3, 2011
Slide 1: Morgan Stanley Financials Conference
Morgan Stanley Financials Conference February 1-2, 2011
Slide 2: BOK Financial at 12/31/10: Strong Markets, Superior Results
ü 21st largest U.S. based publicly traded bank holding company by asset size ü Total Assets $23.9B ü Loans $10.6B ü Reserve for Loan Losses 2.89% ü Deposits $17.2B ü Tangible Common Equity 9.21% ü 2010 Net Income $247MM ü Market Cap on 1/26/11 $3.6B Banking services provided by Bank of Oklahoma, Ban
Slide 3: Market Growth Opportunity
Source: SNL, deposit data as of 6/30/10 Market Growth Opportunity
Slide 4: Consistent Strategies
Consistent Strategies Proven to Deliver Solid Results Through All Cycles 4 Strategic, Long-Term View 4 Utilize a decision making framework based on long-term economic benefit 4 Actively pursue talent acquisition 4 Build the franchise through organic growth and disciplined acquisition strategies 4 Cu
Slide 5: Earnings History: EPS CAGR 13%
EPS CAGR: 13% Source: SNL Financial EPS have been restated for stock dividends and for a 2-for-1 split Earnings History Outperform Through Economic Cycles
Slide 6: Components of 2010 Revenue
Net Interest Revenue = 58% of Total Revenue Other Operating Revenue = 42% of Total Revenue Deposit Service Charges 8% Transaction Card 9% Brokerage & Trading 8% Mortgage Banking 7% Trust Fees 6% Other 4% Components of 2010 Revenue Fee Revenue Consistently Exceeds 40% of Total Revenue
Slide 7: Peer Comparison: BOKF vs Peer Median
Note: Peers are defined as 20 US publicly traded banks, 10 immediately larger and 10 immediately smaller as measured by total assets at 12/31/10. Source: SNL Results are preliminary as one peer had not yet reported. BOKF Peer Median
Slide 8: © BOK FINANCIAL CORPORATION
© BOK FINANCIAL CORPORATION
Slide 9: Record Earnings
4 Record earnings of $246.8 million or $3.61 per diluted share, up 23% over 2009 4 Net interest revenue totaled $709 million, down $1.3 million from 2009; Net interest margin declined during 2H10 due to a decline in the yield on the securities portfolio 4 Fees and commissions increased $36 million o
Slide 10: Fourth Quarter Financial Results
4 NIM decline primarily due to lower securities yield resulting from accelerated premium amortization and lower reinvestment rates 4 Loans declined slightly as runoff continued to outpace loan demand 4 Credit quality continued to improve and we lowered the provision for loan losses for the fifth con
Slide 11: Low Rates in 2H10 Pressured NIM
Select Components of NIM: Net Interest Margin Low Rates in 2H10 Pressured NIM
Slide 12: Annual Fees and Commissions
© BOK FINANCIAL CORPORATION Annual Fees and Commissions $800 ‘Quarterly Revenue Trends (S in 000s) _ 3a10 4Q10____$ Changs Brokerage & trading $ 27072 § 2610 $ 1838 2 sn | ‘ranean reese 29500 ots = so Trust fees and commissions 16,774 18,145 43am Deposit service charges, 24200 23,732 (658) aiid Mort
Slide 13: Financial Reform: Revenue At Risk
Mortgage Banking Among the rules pending are uniform lending and servicing standards; consumer protection measures; and several reforms affecting loan originators Based on the $0.12 cap proposed in December, our interchange revenue would decline $12MM-$15MM in 2011; rules will go into effect July 21
Slide 14: Quarterly Expense Trends
© BOK FINANCIAL CORPORATION $1,400 a a ae $1,000 er $800 $600 $400 ee $200 — ee * $0 2006 = 2007-—«S 2008 = 2009-2010 Personnel Expense _-=-Non-personnel Expense! Total Revenue ‘Quarterly Expense Trends ($ in 000s) 3010 4010 ____$ Change Personnel S 101216 § 106770 $ 5554 Net occupancy 16,436 16.331
Slide 15: © BOK FINANCIAL CORPORATION
© BOK FINANCIAL CORPORATION
Slide 16: Consistent Portfolio Mix
Consistent Portfolio Mix C&I 56% CRE 21% Resi 17% Consumer 6% Regional Diversity OK 46% TX 28% NM 7% CO 7% AZ 5% KS/MO 4% AR 3% $10.6 Billion Loan Portfolio Diversified by Sector and Geography
Slide 17: 2010 Average Loan Trends
2010 Average Loan Trends ($305) ($395) ($216) ($110) ($194) Continued soft loan demand through 4Q 4 C&I: Declines in energy, services and manufacturing; recent growth in integrated food service and healthcare 4 CRE: C&D loans declined $197 million in 2010; recent growth in multifamily 4 Residential
Slide 18: Energy Portfolio: Core Competency
4 52% of the energy portfolio is attributed to OK, 36% to TX and 12% to CO Energy Portfolio Core Competency
Slide 19: Shared National Credit Relationships
4 193 SNCs at 12/31/10 with $3.6 billion committed and $1.4 billion outstanding (13% of loan portfolio) 4 Committed amounts increased $207 million during 4Q 4 88% of outstanding dollars are attributed to relationships in local markets 4 5 relationships were on non-accrual at 12/31 with balances tota
Slide 20: CRE Portfolio Changes
CRE Portfolio Changes Reduced C&D Exposure $197MM in 2010
Slide 21: Community Development Loans Sold with Recourse
Outstanding principal of community development loans sold with recourse declined $42 million during 2010 to $289 million
Slide 22: Non performing Assets
Source: SNL Non performing Assets ($ in millions) Reduce Level But Maximize Total Return
Slide 23: Loans by Type and Market
© BOK FINANCIAL CORPORATION By Loan Type Wholesaler Retail 4% Consumer 2% Residential RE 16% All Other C&l 8% Other CRE 11% Office 9% Construction & Multifamily CRE Land Dev 3% 42% By Market AR 3%
Slide 24: Net Charge-Offs: Consistently Below Peers
2010 NCOs to Average Loans in Basis Points: C&I CRE Resi Consumer Total Loans 30 238 106 145 95 Net Charge-Offs $ in millions Consistently Below Peers’ During the Recession
Slide 25: $141MM OREO
$141MM OREO AZ 32% TX 26% OK 18%* CO 8% NM 6% KS/MO 5% AR 5% * Includes $12MM equity interest in post- bankrupt company 4 Approx. half of the 1-4 Family homes are in Texas and Oklahoma 4 Generally sell homes within 1 year; will reduce listing price (and book value) if property is not moving 4 May re
Slide 26: © BOK FINANCIAL CORPORATION
© BOK FINANCIAL CORPORATION
Slide 27: High Quality Securities Portfolio
High Quality 4 No securities backed by sub-prime mortgages, collateralized debt obligations or collateralized commercial real estate loans 4 At December 31, the estimated duration of the MBS portfolio was 2.2 years; duration would extend to 3.5 years with a 300 basis point increase in rates * Includ
Slide 28: Net Interest Revenue
Net Interest Revenue Source: SNL data as of 1/27/11. One peer had not yet reported. 4 BOKF’s ALM philosophy produces a more stable long term net interest margin through varying interest rate cycles 4 Growth in deposits and securities has mitigated the NIR impact of the decline in loans since
Slide 29: Recent NIM Trends
4 Low rates during 2H10 increased prepayment speeds on MBS which reduced yields through purchase premium amortization and reinvestment rates 4 Recent 100bp curve steepening should support a partial recovery of security yields and net interest margin Recent NIM Trends
Slide 30: Interest Rate Risk Position
Interest Rate Risk Position Portfolio is our Primary Rate Risk Management Instrument 4 Securities portfolio offsets asset sensitive core balance sheet 4 Majority of loans are floating 4 Core deposits provide stable-rate funding 4 Securities balance the rate risk position 4 Very low term interest rat
Slide 31: Other Than Temporary Impairment on Debt Securities
4 OTTI expense of $6.3 million in 4Q 4 Increased default severity assumptions 4 Slowed prepayment speed assumptions with curve steepening 4 Majority of loss content is in the $205 million of Below Investment Grade ALT A portfolio Other Than Temporary Impairment on Debt Securities
Slide 32: Deposits: Dominated by Core Deposit Relationships
25% 54% 20% 4 Consumer & Wealth Management account for ~60% of total deposits 4 #1 market share in OK, #4 in Albuquerque; deposits outside OK have grown at a 9% CAGR over the last 5 years 4 62% loan to deposit ratio Deposits Dominated by Core Deposit Relationships
Slide 33: Capital Strength
Regulatory: Non-GAAP Measures: Capital Strong without TARP or Dilutive Stock Issuance Capital Strength 4 12.69% Tier 1 4 9.21% TCE 4 Considerable excess capital above proposed Basel III thresholds Capital Deployment 4 Organic growth 4 Capacity to fund acquisitions without additional debt or equity 4
Slide 34: © BOK FINANCIAL CORPORATION
© BOK FINANCIAL CORPORATION
Slide 35: 2011 Strategic Focus
2011 Strategic Focus 1. Restore high quality, profitable loan growth 2. Generate additional fee revenue in all markets 3. Control expense growth in relation to revenue growth 4. Seek growth through pro-active approach to traditional bank and fee business acquisitions 5. Maintain positive trends in c
Slide 36: Maintaining Shareholder Value
Maintaining Shareholder Value
Slide 37: Q & A
Q & A Steven E. Nell, EVP & Chief Financial Officer Charles E. Cotter, EVP & Chief Credit Officer Marty Grunst, SVP & Treasurer
Slide 38: 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
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