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MarketScreener Homepage  >  Equities  >  Nasdaq  >  BOK Financial Corporation    BOKF

BOK FINANCIAL CORPORATION

(BOKF)
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Delayed Quote. Delayed Nasdaq - 12/02 04:00:00 pm
69.75 USD   +1.68%
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BOK Financial : Third Quarter 2020 Update

10/30/2020 | 04:10pm EST

Third Quarter 2020

Earnings Conference Call

October 21, 2020

1

Legal Disclaimers

Forward-LookingStatements: 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, the economy generally and the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, and others, on our business, financial condition and results of operations. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "plans," "projects," "will," "intends," variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for credit losses, allowance for uncertain tax positions, accruals for loss contingencies and valuation of mortgage servicing rights involve judgments as to expected events and are inherently forward-looking statements. Assessments that acquisitions and growth endeavors will be profitable are necessary statements of belief as to the outcome of future events based in part on information provided by others which BOK Financial has not independently verified. These various forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expected, implied or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to changes in government, consumer or business responses to, and ability to treat or prevent further outbreak of, the COVID-19 pandemic, changes in commodity prices, interest rates and interest rate relationships, inflation, demand for products and services, the degree of competition by traditional and nontraditional competitors, changes in banking regulations, tax laws, prices, levies and assessments, the impact of technological advances, and trends in customer behavior as well as their ability to repay loans.

For a discussion of risk factors that may cause actual results to differ from expectations, please refer to BOK Financial Corporation's most recent annual and quarterly reports. BOK Financial Corporation and its affiliates undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Non-GAAPFinancial Measures: This presentation may refer to non-GAAP financial measures. Additional information on these financial measures is available in BOK Financial's 10-Q and 10-K filings with the Securities and Exchange Commission which can be accessed at www.BOKF.com.

All data is presented as of September 30, 2020 unless otherwise noted.

2

Steven G. Bradshaw Chief Executive Officer

3

Third Quarter Summary

Net Income

$154.0

Q3

Q2

Q3

($mil, exc. EPS)

2020

2020

2019

$142.2

Net Income

$154.0

$64.7

$142.2

$110.4

$2.19

Diluted EPS

$2.19

$0.92

$2.00

$2.00

Net income before taxes

$204.6

$80.1

$174.3

$1.56

$62.1

$64.7

$0.88

$0.92

Provision for credit losses

$-

$135.3

$12.0

Pre-provision net revenue*

$204.6

$215.0

$185.9

3Q19

4Q19

1Q20

2Q20

3Q20

Net income attributable to shareholders

*Non-GAAP measure

Net income per share - diluted

Noteworthy items impacting profitability:

  • Another strong showing from Wealth Management and Mortgage teams
  • No credit loss provision was needed this quarter
  • Net interest margin was stable due primarily to an accretion acceleration, with additional support from highly disciplined deposit pricing and an increase in the effectiveness of floors in our commercial loan book
  • Expense management remains excellent

4

Additional Details

Quarterly

Year over

($bil)

Q3 2020

Growth

Year Growth

Period-End Loans

$23.8

(1.5)%

6.8%

Average Loans

$24.1

-%

7.6%

Period-End Deposits

$35.0

3.2%

33.6%

Average Deposits

$34.6

6.1%

34.8%

Fiduciary Assets

$52.9

4.7%

7.5%

Assets Under Management or in Custody

$82.4

3.7%

2.0%

  • Average quarterly loan growth flat in current economic environment
  • Average deposit growth largely reflects customers retaining elevated balances in the current economic environment
  • Assets under management or in custody up significantly on positive market moves and sales and asset retention efforts

5

Stacy Kymes EVP-Corporate Banking

6

Loan Portfolio

Seq.

Sep 30,

June 30,

Sep 30,

Loan

YOY Loan

($mil)

2020

2020

2019

Growth

Growth

Energy

$3,717.1

$3,974.2

$4,114.3

(6.5)%

(9.7)%

Services

3,545.8

3,779.9

4,011.1

(6.2)%

(11.6)%

Healthcare

3,325.8

3,289.3

3,033.0

1.1%

9.6%

General business

2,977.0

3,115.1

3,266.3

(4.4)%

(8.9)%

Total C&I

$13,565.7

$14,158.5

$14,424.6

(4.2)%

(6.0)%

Commercial Real Estate

4,693.7

4,554.1

4,626.1

3.1%

1.5%

Paycheck Protection Program

2,097.3

2,081.4

--

0.8%

--

Loans to Individuals

3,446.6

3,361.8

3,234.7

2.5%

6.5%

Total Loans

$23,803.3

$24,155.9

$22,285.4

(1.5)%

6.8%

  • Healthcare balances increased primarily due to growth in balances from senior housing and care facilities
  • Commercial Real Estate increased as paydowns from refinances into the permanent market slowed during the quarter
  • New energy deals remain difficult in current environment, while borrowers continue to pay down debt

7

COVID-19

Loan Deferrals

In Deferral

Exited Deferral

# of loans

Amount ($mil)

% of

# of loans

Amount ($mil)

% of

segment

segment

Business Market*

62

$229.4

1.2%

392

$1,312.7

6.6%

Individual Market**

294

$34.5

2.1%

378

$36.6

2.2%

Total

356

$263.9

1.2%

770

$1,349.3

6.3%

  • Includes C&I, Energy, Healthcare, CRE and Private Wealth
  • Includes Consumer and Mortgage

COVID-19 Impacted Areas

Total

Percent of

($mil)

Outstanding

Portfolio

Entertainment and Recreation

$574.2

2.41%

Gaming Industries

375.7

1.58%

• All other Entertainment and Recreation

198.5

0.83%

Retail

596.3

2.51%

Convenience Stores & Gas Stations

96.6

0.41%

Restaurants

278.2

1.17%

Specialty Stores

35.2

0.15%

All Other Retail

186.4

0.78%

Hotels

67.0

0.28%

Churches and Religious Organizations

135.2

0.57%

Colleges and Universtities

178.0

0.75%

Airlines

27.2

0.11%

Total COVID-19 Impact Areas

$1,577.9

6.63%

  • Deferred loans declined more than 80% from peak
  • Identified businesses most impacted by COVID-19 related mitigation efforts less than 7% of the total BOKF portfolio
  • Close monitoring in place for these areas

8

Key Credit Quality Metrics

Non-accruals (mil)

$255.4

$221.2

$172.5 $181.0 $163.2

3Q19

4Q19

1Q20

2Q20

3Q20

Energy

Healthcare

CRE

Residential and Other

  • Total non-accrual loans down $34.2 million
  • A decrease of $36.2 million in Energy non- accruals
  • Potential problem loans (substandard, accruing) totaled $623 million at 09/30, compared to $626 million at 06/30.

Net charge-offs (annualized) to average loans

0.60%

0.40%

0.37%

0.31%

0.22%

0.23%

0.20%

0.19%

0.00%

3Q19

4Q19

1Q20

2Q20

3Q20

  • Net charge-offs increased slightly to 37 basis points, in-line with historical averages
    (41 basis points excluding PPP loans)
  • Last five quarter average net charge-offs at 27 basis points continues to be well below historic range of 30 to 40 basis points
  • Appropriately reserved with an ALLL of 1.76% and combined allowance of 1.88% including unfunded commitments
  • Excluding PPP loans, ALLL was 1.93% and combined allowance of 2.06% including unfunded commitments

9

Steven Nell

Chief Financial Officer

10

Net Interest Revenue and Margin

($mil)

Q3 2020 Q2 2020 Q1 2020 Q4 2019

Q3 2019

Net interest revenue

$271.8

$278.1

$261.4

$270.2

$279.1

Net interest margin

2.81%

2.83%

2.80%

2.88%

3.01%

Yield on loans

3.60%

3.63%

4.50%

4.75%

5.12%

Cost of int-bearing deposits

0.26%

0.34%

0.98%

1.09%

1.17%

Cost of wholesale borrowings

0.51%

0.44%

1.57%

1.92%

2.39%

  • Net interest income decreased $6.3 million from the previous quarter
  • Net interest margin down only two basis points from previous quarter. Supporting factors include:
    • An increase in CoBiz discount accretion, which supported the margin by approximately 11bp this quarter. Could normalize in Q4.
    • Interest-bearingdeposit costs down 8 basis points for the quarter
    • Loan floors in our commercial book more effective as average LIBOR declined 19 basis points
  • A bit more room to lower the cost of interest-bearing deposits. LIBOR has largely normalized, reducing near-term pressure on loan yields

11

Fees and Commissions

Revenue ($mil)

Growth:

Q3 2020

Quarterly,

Quarterly,

Trailing 12

Sequential

Year over Year

Months

Brokerage and Trading

$69.5

12.1%

58.6%

12.8%

Transaction Card

23.5

2.3%

6.6%

1.6%

Fiduciary and Asset Management

39.9

(3.2)%

(8.5)%

(2.1)%

Deposit Service Charges and Fees

24.3

10.2%

(15.8)%

(4.4)%

Mortgage Banking

52.0

(3.7)%

72.2%

14.8%

Other Revenue

13.7

19.3%

(22.3)%

(6.9)%

Total Fees and Commissions

$222.9

4.3%

19.7%

4.8%

  • Brokerage and Trading continued outperformance due to market volatility and continued strength in the mortgage sector
  • Fiduciary and Asset Management down largely due to a decrease from seasonal tax preparation fees collected in the second quarter
  • Mortgage Banking lower rate environment spurred continued strong refinance and purchase volumes following a record quarter
  • Other Revenue up largely due to comparability with last quarter's waived overdraft protection fees and fees for excessive withdrawals, along with other fees for our clients in light of the pandemic

12

Expenses

%Incr.

%Incr.

($mil)

Q3 2020

Q2 2020

Q3 2019

Seq.

YOY

Personnel expense

$179.9

$176.2

$162.6

2.1%

10.6%

Other operating expense

$121.4

$119.2

$116.7

1.9%

4.0%

Total operating expense

$301.3

$295.4

$279.3

2.0%

7.9%

Efficiency Ratio

60.41%

59.57%

59.31%

  • Personnel expense up only $3.6 million, even with large increases in incentive- based compensation
  • Non-personnelexpense up primarily due to net losses on repossessed assets
  • Nearly 3% of personnel base company-wide absorbed since March due simply to attrition and increased efficiency
  • Adds to staff and replacement positions scrutinized at executive level

13

Liquidity & Capital

Q3 2020

Q2 2020

Q3 2019

Loan to Deposit Ratio

68.1%

71.3%

85.2%

Period End Deposits

$35.0 billion

$33.9 billion

$26.2 billion

Available secured wholesale

$12.5 billion

$14.6 billion

$10.1 billion

borrowing capacity

Common Equity Tier 1

12.1%

11.4%

11.1%

Total Capital Ratio

14.1%

13.4%

12.6%

Tangible Common Equity Ratio

9.0%

8.8%

8.7%

  • Deposit growth continues to be strong
  • Over $12 billion of secured borrowing capacity and over $5 billion of unsecured and contingent liquidity capacity
  • CET1 and Total Capital are 510bp and 360bp above well-capitalized, respectively

14

Forecast and Assumptions

  • Loan growth to remain soft, though we'll be looking for opportunities to grow loans once again in 2021
  • Available-for-salesecurity portfolio yield expected to decrease as prepayments force reinvestment at lower rates
  • Incremental deposit cost lowering possible, though nearing a bottom. LIBOR has largely normalized, reducing near-term pressure on loan yields
  • The combination of pressure on asset yields and less room to lower deposit costs will put some pressure on net interest margin
  • Fee revenues to continue to show strength, and projected to continue at elevated levels in the near to intermediate term, with perhaps some normal seasonal slowdown in mortgage
  • Operating expenses should remain at relatively same levels as has been seen the past few quarters
  • Significant loan loss reserve building remains behind us
  • Quarterly cash dividend will remain in place
  • Opportunistic share repurchase activity likely to resume in the fourth quarter

15

Steven G. Bradshaw Chief Executive Officer

16

Question and Answer Session

17

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

BOK Financial Corporation published this content on 21 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2020 21:09:03 UTC


© Publicnow 2020
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Financials (USD)
Sales 2020 1 940 M - -
Net income 2020 417 M - -
Net Debt 2020 - - -
P/E ratio 2020 11,7x
Yield 2020 2,97%
Capitalization 4 823 M 4 823 M -
Capi. / Sales 2020 2,49x
Capi. / Sales 2021 2,56x
Nbr of Employees 4 926
Free-Float 41,0%
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Mean consensus HOLD
Number of Analysts 10
Average target price 68,83 $
Last Close Price 68,60 $
Spread / Highest target 13,7%
Spread / Average Target 0,34%
Spread / Lowest Target -9,62%
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Managers
NameTitle
Steven Glen Bradshaw President, Chief Executive Officer & Director
George B. Kaiser Chairman
Steven E. Nell Chief Financial Officer, Director & Executive VP
Joseph A. Gottron Chief Information Officer & Executive VP
Steven J. Malcolm Independent Director
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