BOK Financial in Tulsa, Okla., is the latest banking company to warn about deepening credit issues in the energy sector.
The $30.6 billion-asset company said in a press release Wednesday that it will report a $22.5 million loan-loss provision for its fourth quarter. BOK Financial had previously indicated that its provision would fall between $3.5 million to $8.5 million.
BOK Financial also warned that that fourth quarter results were "softer than expected" due to lower fee income and expenses that were "slightly" higher than expected. The company said it will report earnings of $58 million to $61 million for the quarter, which compares to $45 million in the third quarter and $64.3 million a year earlier.
The company said a loan became impaired after a borrower reported "steeper-than-expected production declines and higher lease operating expenses."
"As we noted at the start of the commodities downturn in late 2014, we expected credit migration in the energy portfolio throughout the cycle and an increased risk of loss if commodity prices did not recover to a normalized level within one year," Stacy Kymes, the company's executive vice president for corporate banking, said in the release. "As we are now into the second year of the downturn … we continued to see credit grade migration and increased impairment in our energy portfolio."
BOK Financial said it would provide more details when it announces its quarterly earnings on Jan. 27.