Bok Financial Corporation · NASDAQ:BOKF
Bok Financial — Q3 2013 Earnings Presentation
37 slides from Bok Financial's earnings presentation, November 2013
Slide 1: Investor Presentation November 2013
Investor Presentation November 2013 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 21st largest bank holding company in the United States Strong franchise throughout the Midwest and Southwest Leading energy and healthcare lender nationwide Seasoned management team with consistent execution and solid performance across all At 9/30/13: economic cy
Slide 4: BOKF Investment Attributes
BOKF Investment Attributes Attribute Evidence Focused on long-term shareholder value ~13% annual stock price appreciation since 1991 Management alignment with Insiders own 62.4% of outstanding shares shareholders Industry-leading performance across all 22-year track record of profitability market cy
Slide 5: 22-Year Track Record of Profitability
22-Year Track Record of Profitability Driven Largely by Organic Growth 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
Slide 6: Driving Long Term Shareholder Value
Driving Long Term Shareholder Value As of 9/30/13 5 Year TSR 10 Year TSR 15 Year TSR BOKF 33.1% 105.1% 306.2% Peer group average 10.2% 35.1% 160.8% Peer group median 5.3% 18.8% 133.9% KBW Bank Index -5.6% -9.4% 47.5% S&P 500 Index 61.8% 102.8% 124.6% “There is no principle more emphasized in our org
Slide 7: 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 8: Balanced Revenue
Balanced Revenue Fee Businesses Provide Stability and Growth Opportunity CAGR 2010- LT Growth Rates Present Brokerage and 10.0% Trading Transaction Card 8.3% Trust Fees 11.8% Service Charges (1) (3.5%) Mortgage Banking 17.0% Check Card (1) (17.7%) Overall CAGR 7.8% (1) Impacted by Regulation E and D
Slide 9: Retail and Commercial Banking: Strong Core Deposit Base
Retail and Commercial Banking Strong Core Deposit Base Company Deposit Percent of Number Deposits Market National Market of in Market Share Franchise MSA Rank Branches ($000) (%) (%) Tulsa, OK 1 38 6,839,818 31.11 35.63 Dallas-Fort Worth-Arlington, TX 8 29 3,289,074 1.78 17.13 Oklahoma City, OK 3 31
Slide 10: Retail and Commercial Banking: Strong Core Deposit Base
Retail and Commercial Banking Strong Core Deposit Base AZ Other CO 3% $24 Markets 7% 3% $18 Billions NM 7% $12 $6 OK $0 TX 54% 3Q12 4Q12 1Q13 2Q13 3Q13 26% Demand Interest-bearing Trans Savings Time BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing bus
Slide 11: Commercial Banking: Diversified by Sector and Geography
Commercial Banking Diversified by Sector and Geography Loan Portfolio Breakdown - by Sector: Loans by Principal Market: Commercial (In Millions) 9/30/2013 (In Millions) 9/30/2013 Energy $ 2,311.9 18.7% Oklahoma 5,070.5 41.1% Services $ 2,148.6 17.4% Texas 4,105.9 33.2% Wholesale/Retail $ 1,181.8 9.6
Slide 12: Commercial Banking: Energy Lending
Commercial Banking $2.3 billion energy portfolio at 9/30/13 Energy Lending Core competency of BOK for over 100 years 50-60% loan to value on proved producing reserves Approximately 59% of production loans are Wholesale/ Energy Retail secured by oil Services 9% 2% Regionally diverse oil and
Slide 13: Commercial Banking: Healthcare Lending
Commercial Banking Healthcare Lending Healthcare Commitments Growing line of business within commercial Medical Skilled Nursing $1.2 billion portfolio at 9/30/13 Svcs Facilities 25% 33% Portfolio increased at a compound annual rate of 10% since 2007 Specialty National expertise in skilled Ho
Slide 14: Commercial Real Estate Portfolio Trends
Commercial Banking Commercial Real Estate Portfolio Trends $600 CRE By Market $450 KS/MO AZ 6% OK Millions 11% 24% $300 CO 7% $150 AR 3% $0 TX C&D Retail Office Multifamily Industrial Other CRE NM 36% 13% 12/31/2012 3/31/2013 6/30/2013 9/30/2013 BOK Financial Corporation. Member FDIC. Equal Housing
Slide 15: Mortgage Banking: Building a Recurring Revenue Model
Mortgage Banking Building a Recurring Revenue Model Housed within the retail banking business Several key strategic initiatives: 200,000 Build servicing portfolio Mortgage Banking Revenue ($000s) 150,000 Expand correspondent network 100,000 Build platform that 50,000 reaches homebuyers and
Slide 16: Mortgage Banking: Building a Recurring Revenue Model
Mortgage Banking Building a Recurring Revenue Model Servicing Portfolio ($B) Servicing Revenue ($MM) Consistent 13.5 11.5 growth in 13.0 11.0 servicing 12.5 10.5 portfolio drives 12.0 11.5 10.0 recurring 11.0 9.5 servicing 10.5 9.0 revenue Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2012 2012 2013 2013 2013 201
Slide 17: Wealth Management
Wealth Management Comprehensive wealth management services $56.4 billion in assets under management or custody Trust Fees and Commissions $29.6 billion in fiduciary assets 29,000 Clients include high net worth 27,000 individuals, corporations, pensions, 25,000 foundations, government entities, 23
Slide 18: Transfund
Transfund 35,000 Transaction Processing 30,000 Transaction Card Revenue and ATM Network 25,000 20,000 15,000 Among the top 10 EFT networks 10,000 in the US 5,000 - Operates in 17 states Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Clients include 213 banks, 149 TransFund EFT Merchant Service Fees cred
Slide 19: Third Quarter Results
Third Quarter 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. 19
Slide 20: Third Quarter Highlights
Third Quarter Highlights Net income of $75.7 million or $1.10 per share Reduced mortgage refinance activity was a headwind to revenue and earnings growth Net interest margins stable compared to Q2 2013 Negative provision for credit losses added 8 cents per share to EPS Other operating expen
Slide 21: Linked Quarter Summary
Linked Quarter Summary $millions Q3 2013 Q2 2013 $ Change % Change Comments Average AFS Securities $10,558.7 $11,060.7 ($502.0) -4.5% Reducing bond portfolio to manage interest rate sensitivity Average Loans $12,402.1 $12,277.4 $124.7 1.0% Growth driven by healthcare, real estate Average Comm'l Loan
Slide 22: Loan Portfolio Trends
Loan Portfolio Trends C&I down $135 million compared to C&I Loans Q2 2013. $8.0 Energy portfolio down $72 million due $7.5 to customer M&A and capital markets Billions activity $7.0 Competition for LBO transactions $6.5 heating up, covenants softening. 3Q12 4Q12 1Q13 2Q13 3Q13 CRE increased
Slide 23: Largest C&I Sectors
Largest C&I Sectors $2.5 $1.2 $2.3 $1.1 $2.1 $1.0 $1.9 $0.9 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 Energy Services Wholesale/Retail Healthcare $ in billions BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque, B
Slide 24: Select Markets
Select Markets Trends in Regional Markets $6.0 $1.1 $5.0 $0.9 $4.0 $0.7 $3.0 $0.5 $2.0 $0.3 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 OK TX CO AZ KC $ in billions BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF, NA doing business as Bank of Albuquerque
Slide 25: Net Interest Revenue: Low Interest Rates Pressure NIR
Net Interest Revenue Low Interest Rates Pressure NIR Yields (%) 5 Net Interest Revenue & Margin $185 3.50 4 3 3.25 2 NIR ($ in millions) 1 $175 3.00 Margin (%) 3Q12 4Q12 1Q13 2Q13 3Q13 AFS Loans 2.75 Cost of Int Bearing Liab (%) $165 2.50 0.75 2.25 0.50 $155 2.00 3Q12 4Q12 1Q13 2Q13 3Q13 0.25 0.00 N
Slide 26: $10.4B AFS Portfolio
$10.4B AFS Portfolio High Quality, Actively Managed Securities portfolio used primarily to manage interest rate risk and generate Private incremental net interest Issue MBS, revenue $230.9 Consistent strategy; actively Agency managed for total return CMBS, $1,946.3 Other, Total AFS portfolio e
Slide 27: Operating Revenue
Operating Revenue Diverse Revenue Provides Stability & Growth Opportunity Three Months Ended September 30, Fees and commissions 2013 2012 % Change Brokerage and trading revenue 32,338 31,261 3.4% Transaction card revenue 30,055 27,788 8.2% Trust fees and commissions 23,892 19,654 21.6% Deposit servi
Slide 28: Solid Credit Quality
Solid Credit Quality Continued Positive Trends ALL to period end loans: Net annualized charge-offs to average loans: 1.57% .01% Allowance for loan losses to Non-performing assets* to period nonaccruing loans: end loans and repossessed assets: 172.12% 1.49% All metrics as of 9/30/13 *Excluding go
Slide 29: Capital
Capital BOK Financial's Tier 1 common equity ratio based on the existing Basel I Tangible Common Equity Ratio standards was 13.33% as of September 30, 2013. SNV KEY Based on our interpretation of the new CMA capital rule, our estimated Tier 1 common FITB BOKF equity ratio is approximately 12.20%
Slide 30: Superior Balanced Strategy
Superior Balanced Strategy Management alignment with shareholders Industry-leading performance across all market cycles Strong recurring revenue model Sound capital base Pristine credit quality Returning cash to shareholders BOK Financial Corporation. Member FDIC. Equal Housing Lender. Service
Slide 31: 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. 31
Slide 32: Regional Economic Trends
Regional Economic Trends 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: Merger & Acquisitions
Merger & Acquisitions History and Strategy 12 bank acquisitions during the last 15 years Target strong niche banks Emphasize layering on BOKF products and services rather than cutting expenses Several non-bank acquisitions Mortgage servicing rights, trust companies, bank branches, institut
Slide 34: Shared National Credit Relationships
Shared National Credit Relationships Integrated CRE Food Svcs 1% Other Manufact 3% 3% 264 SNCs at 9/30/13 with $5.3 billion 5% committed and $2.4 billion outstanding (19% of loan portfolio) Healthcare 6% 86% of outstanding loans are attributed to relationships in local markets Wholesale & Retail
Slide 35: Other Real Estate and Other Assets
Other Real Estate and Other Assets Maximize Total Return Residential Land Other Development 1% $70 MM Core OREO 13% AZ 28% NM 17% OK 13% CO 12% Developed CRE Other 12% 35% Undeveloped TX 9% Land 25% AR 5% KS/MO 4% 1-4 Family Properties 26% Carrying value of OREO evaluated quarterly 1-4 family ho
Slide 36: Expense Management
Expense Management Maintaining Expense Discipline Expense & Revenue Trends $400 $300 Millions $200 $100 $0 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Personnel Expense Non-personnel Expense Net Interest Revenue + Fee Revenue BOK Financial Corporation. Member FDIC. Equal Housing Lender. Services provided by BOKF,
Slide 37: Credit Quality
Credit Quality Allowance Coverage of Annual Net Charge-Offs - in years Net Charge-Offs (%) 20 2.25 15 10 5 1.50 0 2007 2008 2009 2010 2011 2012 3Q13 Allowance to Loans (%) 0.75 3.00 2.25 1.50 0.00 2007 2008 2009 2010 2011 2012 3Q13 0.75 BOKF Peer Median 2007 2008 2009 2010 2011 2012 3Q13 Source: SNL