BOK Financial Corp (NASDAQ:BOKF) Q2 2020 Earnings Conference Call - Final Transcript

Jul 22, 2020 • 10:00 am ET

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BOK Financial Corp (NASDAQ:BOKF) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings. And welcome to the BOK Financial Corporation Second Quarter 2020 Conference Call.

[Operator Instruction]

A question-and-answer session will follow the formal presentation.

[Operator Instruction]

It is now my pleasure to introduce your host, Mr. Steven Nell, Chief Financial Officer for BOK Financial Corporation. Thank you. You may begin.

Executive
Steven E. Nell

Good morning and thanks for joining us. Today our CEO, Steve Bradshaw, will provide opening comments and Stacy Kymes, Executive Vice President of Corporate Banking will cover our loan portfolio, including detail around our energy, healthcare and commercial real estate portfolios. Marc Maun, our Chief Credit Officer will cover credit metrics and Scott Grauer, our Executive Vice President of Wealth Management will cover the outstanding results from his team this quarter. Lastly, I'll provide second quarter details regarding net interest income, net interest margin, additional fee revenues, expenses and our overall balance sheet position from a liquidity and capital standpoint. In addition, I will provide a few thoughts regarding expectations for future quarters. PDFs of the slide presentation and second quarter press release are available on our website at bokf.com. We refer you to the disclaimers on Slide 2 as it pertains to any forward-looking statements we make during the call.

I will now turn the call over to Steve Bradshaw.

Executive
Steven G. Bradshaw

Good morning. Thanks for joining us to discuss the second quarter 2020 financial results. We are pleased to report a record quarter for BOK Financial in terms of pre-provision net revenue, despite the many economic challenges due to COVID-19.

Shown on Slide 4, second quarter net income was $64.7 million or $0.92 per diluted share. That's up 4% from last quarter, despite another quarter of elevated provision for credit losses. Earnings this quarter were bolstered dramatically by $214 million in revenues from our fee businesses, as our Wealth Management and Mortgage teams have continued their momentum to post simultaneous record quarters for the Company. Focusing on pre-provision net revenue, it's clear to see the significant benefit we drive for our company with our long-term commitment to balanced revenue and breadth of business capabilities. Pre-provision net revenue was $216 million this quarter, the highest level in the history of our Company. Considering the environment we find ourselves in today, this is truly a remarkable outcome that all of our high performing and talented employees should be proud of.

Fee and commission revenue was up nearly 11% from the previous quarter and an incredible 21% quarterly year-over-year on continued strong Wealth Management and Mortgage revenues. Fee revenue now represents 43% of total revenue. That's up from 38% in the same quarter a year ago. This once again demonstrates an important differentiating characteristic of BOK Financial. We have long had a diverse revenue mix that provides an earnings buffer in economic downturns because of the counter cyclical nature of some of these fee revenue streams. Expense management remains prudent with an efficiency ratio below 60% for the quarter, even with the shift in the mix of revenue towards fee income. It should also be