BOK Financial Corp (NASDAQ:BOKF) Q2 2019 Earnings Conference Call Transcript

Jul 24, 2019 • 10:00 am ET

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BOK Financial Corp (NASDAQ:BOKF) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings and welcome to the BOK Financial Corporation Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the presentation over to Steven Nell, Chief Financial Officer for BOK Financial Corporation. Please proceed.

Executive
Steven E. Nell

Good morning, and thanks for joining us. Today we'll hear from Steve Bradshaw, our CEO; Stacy Kymes, Executive Vice President of Corporate Banking, and I'll also provide some remarks about the quarter. Scott Grauer, Executive Vice President of Wealth Management, and Marc Maun, our Chief Credit Officer, have also joined us for the question-and-answer session. PDF of the slide presentation and second quarter press release are available on our website at www.bokf.com. We refer you to disclaimers on Slide 2 as it pertains to forward-looking statements we make during this call.

I'll now turn the call over to Steve Bradshaw.

Executive
Steven G. Bradshaw

Good morning. Thanks for joining us to discuss the second quarter 2019 financial results. We are pleased to report another strong quarter for BOK Financial. In fact, we achieved the highest level of quarterly earnings in the history of the Company, both from a net income and an EPS perspective. I'm incredibly proud of the effort of the entire BOK financial team. The power of our diversified business model, as well as our efforts to gain greater efficiencies across the Company really showed themselves this quarter.

As shown on Slide 4, second quarter net income was $137.6 million or $1.93 per diluted share, that's up 24% from the previous quarter and up 20% from the same quarter a year ago. The growth was driven by a number of key factors. Low growth continued its strength this quarter, particularly in our specialty lines of business and commercial real estate. Our focus on our energy and healthcare segments continues to deliver above market loan growth for the Company, while a reload in commercial real estate following the wave of paydowns in the first quarter was also a large contributor. Net interest revenue expanded 3% this quarter, though net interest margin remain flat at 3.3%.

Steven will cover the underlying factors in more detail momentarily. We added $1.2 billion of short duration fixed income mortgage backed securities this quarter to help support net interest income as we expect interest rates to continue to decline in the near term. Fee and commission revenue continued its upward trajectory this quarter, expanding nearly 10%. Our brokerage in trading and mortgage banking revenues were the main contributors on strong mortgage backed securities trading and mortgage loan production volumes, all triggered by lower mortgage interest rates during the quarter.

Our multi-year effort to gain greater efficiencies has held expenses in check, which continues to drive earnings leverage across the Company. Following the integration of CoBiz last quarter, expenses returned to a more normal level this quarter. The credit environment continues to be stable, consistent with our results for last several quarters. Our continued loan growth was the primary driver of our $5 million loan loss provision.

Turning to Slide 5, period-end loans