Bok Financial Corporation · NASDAQ:BOKF
Bok Financial — Q4 2020 Earnings Presentation
26 slides from Bok Financial's earnings presentation, Oct 7, 2020
Slide 1: Q4 2020 Economic & Market Outlook
Q4 2020 ECONOMIC & MARKET OUTLOOK October 7, 2020 Webex Meeting J. Brian Henderson, CFA EVP, Chief Investment Officer Carrie Clasen Porter SVP, Director of Strategic Initiatives – Investment Management Matt Stephani, CFA President, Cavanal Hill – Investment Management © BOK Financial. Member FDIC. S
Slide 2: The Race to Get America Back to Work
THE RACE TO GET AMERICA BACK TO WORK • The pace of recovery in 20,000 16% the labor market has exceeded expectations. 18,000 14% • The rehiring of temporarily laid off 16,000 workers has driven the 12% robust recovery. 14,000 • A prolonged virus 10% 12,000 impact risks more In Thousands permanently
Slide 3: The U.S. Housing Sector Has Been a Bright Spot for the Economic Recovery
THE U.S. HOUSING SECTOR HAS BEEN A BRIGHT SPOT FOR THE ECONOMIC RECOVERY • Home sales strongest In Thousands In Millions since housing boom in SAAR SAAR 2006. 1600 8 • Supply of houses low. 1400 7 • Home prices rising. 1200 6 Exsting Home Sales 1000 5 New Home Sales 800 4 600 3 400 2 200 1 0 0 New H
Slide 4: Consumers Are Building Savings
CONSUMERS ARE BUILDING SAVINGS • Historic low mortgage Conventional 30Y Mortgage Rate vs. Refinancing Index rates allowing 6% 6,000 homeowners to refinance. 30Y Conventional Mortgage Rate 5% 5,000 4% 4,000 Refinancing Index 3% 3,000 2% 2,000 1% 1,000 0% 0 2014 2015 2016 2017 2018 2019 2020 30Y Conve
Slide 5: Uneven Recovery in Stock Market
UNEVEN RECOVERY IN STOCK MARKET • Investors have preferred 140 secular growth stocks with strong balance sheets. 120 • Cyclical sectors are down 20% YTD while 100 Tech is up more than Index Normalized at 100 20%. • Lower long-term rates 80 have supported elevated growth stock valuations. 60 • Broadl
Slide 6: A COVID-19 Vaccine Would Help Broaden the Recovery
A COVID-19 VACCINE WOULD HELP BROADEN THE RECOVERY 800 • Over 120 potential vaccine Vaccine Supply Agreement - Initial Doses Ordered candidates in the pipeline. 700 • Several in phase III trials 600 that are expected to 300 announce results in 2020. Doses (Millions) 500 • U.S. has pre-ordered millio
Slide 7: Federal Reserve's New Monetary Policy Framework
FEDERAL RESERVE’S NEW MONETARY POLICY FRAMEWORK • Short term rates expected 16% to remain near 0% until three conditions met: 14% Inflation Target 1. Economy reaches maximum sustainable Unemployment (U3) employment. 12% Core PCE 2. Inflation has risen to 2%. 10% 3. Inflation is on track to moderatel
Slide 8: Base Case Outlook: Invest in the U.S. Economic Recovery
BASE CASE OUTLOOK: INVEST IN THE U.S. ECONOMIC RECOVERY Economy Policy Markets U.S. GDP is on a Monetary and fiscal U.S. equity market gradually improving policymakers continue outperforms. trend with near full to provide a safety net recovery by end of for economy and 2022. markets. Risk: Prolonged
Slide 9: Carrie Clasen Porter
Carrie Clasen Porter SVP, Director of Strategic Initiatives – Investment Management
Slide 10: A New Approach to How You Invest
Invest in more. Align your values. Make an impact. A New Approach to How You Invest 10
Slide 11: The Evolution of Values-Based Investing
The Evolution of Values-Based Investing A style of investing that started long ago and has evolved over the years to what it is today. 1960s 2016 1990 Religious U.S. SIF Foundation 2019 MSCI KLD 400 organizations reports $8.7 trillion in Business Roundtable Social Index avoid sin stocks sustainable
Slide 12: What is ESG?
What is ESG? Examples of environmental, social and governance (ESG) factors Environmental Social Governance Climate and Well-being of Transparency, environmental multiple capacity, purpose stewardship stakeholders • Environmental impact • Employee diversity • Business ethics of supply chains • Emplo
Slide 13: Measuring the Impact
Measuring the Impact SUSTAINABLE DEVELOPMENT GEGALS & 13
Slide 14: Catalysts Driving the Shift to Values-Based Investing
Catalysts Driving the Shift to Values-Based Investing Access to data, providing investors with insights to 1 materiality and risk. Increasing availability of investment strategies and 2 solutions. Performance of ESG strategies have proven to be 3 competitive. Investor interest has grown significantl
Slide 15: Values-Based Investing at BOKF
Values-Based Investing at BOKF At BOK Financial, bridging your investment objectives with your personal values is a foundation of our investment philosophy. Relationships are Our process leads built on knowledge. to objective advice. By understanding your values, we can select investments that help
Slide 16: Matt Stephani, CFA
Matt Stephani, CFA President, Cavanal Hill Investment Management
Slide 17: Equity Market Returns
EQUITY MARKET RETURNS 3 Month 1 Year 3 Year Value Core Growth Value Core Growth Value Core Growth Large Large Large 5.6 8.9 13.2 -5.0 15.1 37.5 2.6 12.3 21.7 Mid Mid Mid 6.4 7.5 9.4 -7.3 4.6 23.2 0.8 7.1 16.2 Small Small Small 2.6 4.9 7.2 -14.9 0.4 15.7 -5.1 1.8 8.2 Int'l Int'l Int'l 2.3 6.3 10.2 -1
Slide 18: U.S. Equity Market Volatility
U.S. EQUITY MARKET VOLATILITY S&P 500 Index 3,800 • Fear resulted in a market drop of 3,500 34% from peak to trough. 3,386 3,200 • Off the bottom, the market has rallied 50%+. 2,900 2,600 • Why? 2,300 2,237 2,000 18 Source: Morningstar. Data shown as of September 30, 2020.
Slide 19: Why Did Markets Recover?
WHY DID MARKETS RECOVER? Federal Reserve Total Assets $8,000 • Federal Reserve launched massive balance sheet expansion and lowered rates to tighten $7,000 corporate bond spreads. $6,000 • In addition, the Fed announced a Billions USD number of measures to help improve market liquidity. $5,000 • Exp
Slide 20: Borrowing the Money to Pay for the Recovery
BORROWING THE MONEY TO PAY FOR THE RECOVERY Federal Government Surplus/Deficit (12 Mo. Rolling Window, $BN) Budget Sequestration Relaxed • Fiscal stimulus and delayed tax collections 0 have widened the budget deficit dramatically. -500 • U.S. Treasury issuance -1000 will hit record highs. -1500 • Fe
Slide 21: Equity Market Opportunities & Risks
EQUITY MARKET OPPORTUNITIES & RISKS Equities still remain attractive though they are not without risk. The economic damage from COVID remains severe, but recoveries are occurring in economies globally. Equity Market Opportunities Equity Market Risks • The Fed remains accommodative for • A significan
Slide 22: Opportunity for 2021
OPPORTUNITY FOR 2021 Personal Savings Rate • Limited ability to spend along with rising incomes meant the savings 40% rate exploded higher. 35% 34% 30% • Dry powder: record $4.5 trillion held in U.S. money market funds. 25% 20% • Bank deposits have increased nearly $2 trillion since February 15% 202
Slide 23: Political Uncertainty Is Near-Term Risk
POLITICAL UNCERTAINTY IS NEAR-TERM RISK Odds of Winning the 2020 Election Biden • The odds of a Biden Presidency are now more than 50/50. 60 50 40 30 Trump 20 10 0 6/2019 8/2019 10/2019 12/2019 2/2020 4/2020 6/2020 8/2020 23 Source: PredictIt as of 9/30/2020
Slide 24: 2020 Congressional Election Equally Important
2020 CONGRESSIONAL ELECTION EQUALLY IMPORTANT Partisan Control, Avg. Annual S&P Performance (1933-2019, Excl. 2001-2002) 16.00% • Historically, returns have been strongest with a divided Congress. 14.00% 13.60% 13.40% 13.00% 12.90% • The market appears most 12.00% vulnerable to a Democrat Congress r
Slide 25: 2020 Presidential Election
2020 PRESIDENTIAL ELECTION IF BIDEN WINS IF TRUMP WINS Markets will likely respond negatively at first Markets will likely respond positively to a to a Biden election as it likely results in higher Trump re-election, as it removes tax-rate corporate tax rates, dampening earnings. increases from the
Slide 26: Disclosures
Disclosures The information provided herein was prepared by the Investment Management team of BOKF, NA. BOKF, NA is the bank subsidiary of BOK Financial Corporation (BOKF), a financial services holding company (NASDAQ:BOKF). BOKF offers trust and wealth management services through its subsidiaries i