Bok Financial Corporation · NASDAQ:BOKF
Bok Financial — Investor Presentation (2018)
33 slides from Bok Financial's investor presentation, 2018
Slide 1: Investor Presentation
Investor Presentation NASDAQ: BOKF 1
Slide 2: Legal Disclaimers
Legal Disclaimers FORWARD LOOKING STATEMENTS This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, CoBiz Financial Inc.’s and BOK Financial Corporation’s expectations or predictions of future f
Slide 3: BOK Financial: A Regional Banking Powerhouse
BOK Financial: A Regional Banking Powerhouse One of the largest U.S. bank holding companies Valuable Midwest / Southwest franchise Seasoned management team Proven ability to deliver organic growth Consistent execution June 30, 2018 Assets $34 billion Consistent strategy: Loans $18 billio
Slide 4: Core Strategy: Build a recession-proof bank that will outperform peers across the economic cycle
Core Strategy: Build a recession-proof bank that will outperform peers across the economic cycle Consistent organic growth Robust portfolio of fee generating businesses provides balance in As of 7/31/18 10 Yr. TSR 15 Yr. TSR periods of economic instability BOKF 213% 249% Differentiated and gro
Slide 5: Acquisition of CoBiz Financial (COBZ)
Acquisition of CoBiz Financial (COBZ) “Best-in-Class” Performer ($ in billions) High Growth – Summary Loan Mix 2013–1Q18 CAGR Consumer Other 9% 3% Headquarters Denver, CO Constr. 9.7 % & Land Total Assets $ 3.8 7% 8.2 % &I C Branches 15 40% Total Loans $ 3.1 Investor RE 25% NPLs / Loans 0.59 %
Slide 6: Transaction Summary
Transaction Summary Buyer BOK Financial ( “BOKF”) Seller CoBiz Financial (“CoBiz” or “COBZ”) 0.17 shares of BOKF common stock and $5.70 cash for each share of CoBiz common stock Consideration Implies ~75% Stock / ~25% Cash Per Share: $23.02 Transaction Value¹ Aggregate: $977 million Pro
Slide 7: Pro Forma Financial Impact
Pro Forma Financial Impact Effective Use of Capital That Will Enhance Return Profile Strong Cash-on-Cash Return Enhances Return Profile (2020E) 20%+ 15% + IRR well in excess of cost of capital 1.40% + ~9 % IRR Cost of Capital ¹ ROAA ROATCE bps ∆ 10 220 Meaningful GAAP EPS Accretion Attractive Use of
Slide 8: BOK Financial: Diverse Revenue Sources
BOK Financial: Diverse Revenue Sources • 42% fee income is significant differentiator for BOKF compared to other midsized regional banks Brokerage and Trading 8% • Well diversified: no single component of fee income accounts for more than 10% of total revenue Transaction Card 6% Net Interest • Furth
Slide 9: Strong Balance Sheet
Strong Balance Sheet Pro-Forma for Metric: At 6/30/18 CoBiz Acquisition Period End Deposits $22.2 billion $25.4 billion Loan to Deposit Ratio 81% 81% Regulatory Pro-Forma for Capital Ratios: minimum for At 6/30/18 CoBiz well-capitalized: Acquisition Common Equity Tier 1 7.0% 11.9% 11.4% Tier 1 Capit
Slide 10: Strong Core Deposit Franchise
Strong Core Deposit Franchise BOKF CoBiz Combined CDs Other 2% 1% CDs CDs 10% 9% Non-Int. Non-Int. Non-Int. Bearing Bearing Bearing 42% MMDA 42% MMDA & Savings 46% MMDA & Savings 51% & Savings 48% 49% Total Deposits = $22.2bn Total Deposits = $3.2bn Total Deposits = $25.4bn Cost of Deposit
Slide 11: Diversified Loan Portfolio
Diversified Loan Portfolio Loan Portfolio Segmentation - Standalone Loan Portfolio by Collateral Location - Standalone: Personal 5% Non O-O CRE 20% OK TX Healthcare Resi 20% 34% 13% 11% Energy 18% Other NM Gen. C&I 20% 5% 33% CO AZ 9% 5% KS/MO 7% Loan Portfolio Segmentation – Pro-Forma w/ CoBiz Loan
Slide 12: A National Energy Banking Leader
A National Energy Banking Leader 100 year history in energy lending and a playbook Portfolio Composition at 6/30/18: that works: Focus on first lien, senior secured E&P lending – the “sweet spot” in energy lending Oil & Gas Internal staff of 13 petroleum engineers and Producers 83% engineering t
Slide 13: Healthcare Banking Expertise
Healthcare Banking Expertise Growing line of business within commercial banking As of June 30, 2018, outstandings totaled $2.4 billion across 31 states Healthcare portfolio characteristics: Favorable LIBOR spreads Above-average loan utilization rates Predominately BOK Financial originate
Slide 14: Commercial Real Estate
Commercial Real Estate $3.7 billion outstanding and $1.3 billion CRE Portfolio by Product Type unfunded commitments at 6/30/18 Primary focus is customers in the BOKF footprint. Multifamily BOKF allocates 175% of Tier 1 capital plus Retail reserves to CRE. Office Further controls and limitati
Slide 15: Wealth Management
Wealth Management Four primary lines of business: 500 Wealth Management Revenue The Private Bank 400 BOK Financial Advisors CAGR: 9.8% Institutional Wealth Management 300 Cavanal Hill Investment Management 200 Clients include high net worth individuals, corporations, pensions, foundation
Slide 16: Transaction Processing
Transaction Processing Debit Processing & ATM Network 800 EFT Transaction 700 Volumes (M) Among the top 10 networks in the US 600 CAGR: 7.2% Operates nationally with customers based in 26 500 states and the Virgin Islands; more than 65% of 400 clients outside Oklahoma 300 Clients: Banks / Cred
Slide 17: Mortgage Banking
Mortgage Banking 160,000 Top 50 U.S. mortgage originator 140,000 120,000 Three lines of business: 100,000 Direct mortgage origination through 80,000 BOKF branches 60,000 Growing online sales channel – 40,000 HomeDirect Mortgage 20,000 Mortgage Servicing - 2013 2014 2015 2016 2017 Annual
Slide 18: 2Q 2018 Financial Results
© BOK FINANCIAL ‘N 2Q 2018 Financial Results 18
Slide 19: Second Quarter Summary
Second Quarter Summary: Net Income $114.4 $105.6 Q2 2018 Q1 2018 Q2 2017 $85.6 $88.1 Diluted EPS $1.75 $1.61 $1.35 $72.5 $1.75 $1.61 Net income before $148.5 $136.3 $136.6 $1.35 $1.31 taxes ($M) $1.11 Net income $114.4 $105.6 $88.1 attributable to BOKF shareholders ($M) 2Q17 3Q17 4Q17 1Q18 2Q18 Net
Slide 20: Loan Portfolio
Loan Portfolio Seq. YOY Jun 30 Mar 31 Jun 30 Loan Loan ($mil) 2018 2018 2017 Growth Growth Energy $3,147.2 $2,969.6 $2,847.2 6.0% 10.5% Services 2,944.5 2,928.3 2,958.8 0.6% (0.5%) Healthcare 2,353.7 2,359.9 2,221.5 (0.3%) 6.0% Wholesale/retail 1,699.6 1,531.6 1,543.7 11.0% 10.1% Manufacturing 647.8
Slide 21: Net Interest Revenue and Net Interest Margin
Net Interest Revenue Net Interest Margin Q2 Q1 Q4 Q3 Q2 ($mil) 2018 2018 2017 2017 2017 Net Interest Revenue $238.6 $219.7 $216.9 $218.5 $205.2 Provision For Credit Losses $ -- ($5.0) ($7.0) $ -- $ -- Net Interest Revenue After Provision $238.6 $224.7 $223.9 $218.5 $205.2 Net Interest Margin 3.17% 2
Slide 22: Fees and Commissions
Fees and Commissions Revenue, $mil Change: Quarterly, Quarterly, Trailing Q2 18 Sequential Year over Year 12 Months Brokerage and Trading $26.5 (13.6%) (16.6%) (6.5%) Transaction Card 21.0 (0.1%) 4.8% 3.0% Fiduciary and Asset Management 41.7 (0.3%) (0.3%) 11.4% Deposit Service Charges and Fees 27.8
Slide 23: Expenses
Expenses %Incr. %Incr. ($mil) Q2 2018 Q1 2018 Q2 2017 Seq. YOY Personnel Expense $138.9 $139.9 $143.7 (0.7%) (3.3%) Other Operating Expense $107.5 $104.5 $96.9 2.9% 10.9% Total Operating Expense $246.5 $244.4 $240.7 0.8% 2.4% Efficiency Ratio 61.68% 65.09% 63.66% Personnel expense down in Q2 due t
Slide 24: Key Credit Quality Metrics
Key Credit Quality Metrics $245.4 $250.0 $225.6 1.50% $200.0 $187.9 Net charge offs (annualized) $180.1 $165.7 to average loans 1.00% $150.0 0.50% 0.27% $100.0 0.24% 0.04% 0.08% 0.03% 0.00% $50.0 $- -0.50% 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 Energy Non-Accruals Other Non-Accruals Combi
Slide 25: Forecast and Assumptions
Forecast and Assumptions 2018 Expectations High-single-digit loan growth Available-for-sale securities flat to slightly down Modest growth in net interest margin Assuming additional Fed rate hikes in September and December 2018 with continued active management and control of deposit pricing
Slide 26: Combination with CoBiz: Additional Details
Combination with Additional Details 26
Slide 27: Strong Strategic Rationale with Compelling Financial Impact
Strong Strategic Rationale with Compelling Financial Impact Highly aligned business models and culture Enhances presence in attractive Colorado and Phoenix markets Strong Strategic Provides incremental growth opportunities to utilize excess core funding Rationale Provides added commercial le
Slide 28: Highly Aligned Business Models
Highly Aligned Business Models Commercial-focused lending... Shared culture of low-risk, BOK Financial CoBiz commercially-focused lending Cons. & Cons. & Other Other 12% 17% Unique specialized business lending Commercial Commercial lines 83% 88% — BOK Financial: Energy, Healthcare — CoBiz: H
Slide 29: Enhancing Presence in Attractive Markets
Enhancing Presence in Attractive Markets Pro Forma Deposit Footprint Pro Forma Market Share BOKF Pro Forma ($bn) Deposits Mkt. Share Rank Deposits Mkt. Share Rank MSAs Denver, CO $ 1.4 1.8 % 12 $ 3.4 4.2 % 6
Slide 30: Leverages Investment to Drive Future Operating Leverage
Leverages Investment to Drive Future Operating Leverage BOKF Select 2018 Areas of Investment Allows combined entity to achieve scale and benefit from existing robust and developed infrastructure Information Technology Cloud-based Solutions Data Analytics Self-service Solutions Efficiency Ratio Opp
Slide 31: Transaction Multiples and Key Assumptions
Transaction Multiples and Key Assumptions 4% premium to CoBiz’s closing price of $22.15 Pricing¹ 18.6x 2018E EPS; 10.7x 2019E EPS with fully phased in cost synergies 2.9x tangible book value per share 40% of CoBiz’s noninterest expense: 75% realized in 2019, 100% thereafter Synergies Reven
Slide 32: Pro Forma Financial Impact: Earnback Perspectives
Pro Forma Financial Impact Earnback Perspectives CoBiz Merger Selected Metrics Merger 100% Stock 2020E EPS Accretion (GAAP) ~9% ~6% Merger 2020E EPS Accretion (Cash) ~10% ~7% TBVPS Dilution (8.7)% (5.1)% CET1 11.4% 12.2% ~4.75 years ~5.75 years earnback earnback (100% Stock) (Merger) Status Quo Pro
Slide 33: Comprehensive Due Diligence
Comprehensive Due Diligence Comprehensive due diligence coordinated and led by key executives Overview Ongoing dialogue throughout the process between both CEOs and CFOs Full engagement of external counsel and financial advisor Strong credit culture closely aligned with our underwriting — Un