BOK Financial continued to diversify its lending, booking strong increases in health care, manufacturing and commercial real estate credits. Progress on that front, however, was overshadowed by ongoing deterioration in its energy portfolio.
The $31.4 billion-asset company reported first-quarter net income of $42.6 million, down 43% last year's first quarter. BOK, which announced its results Wednesday, blamed the drop-off on a number of headwinds, but energy was by far the most severe.
The Tulsa, Okla., company charged off $24 million of loans, the lion's share being energy-sector credits. It also recorded a $35 million provision for loan losses in response to a $273 million increase in potential problem energy loans. By contrast, in the first quarter of 2015, chargeoffs totaled $2.2 million and there was no provision for loan losses.
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Banks reassess the borrowing capacity of oil exploration and production companies twice a year. The spring round of energy loan redeterminations is scheduled to begin in April. Will banks successfully use this process to de-risk?
March 9 -
BOK Financial in Oklahoma plans to further increase its reserves to cover loan losses amid the energy slump, emphasize health care and other non-energy sectors, and expand in markets like Kansas City that are less reliant on oil.
January 27 -
BOK Financial in Tulsa, Okla., has acquired E-Spectrum Advisors, a Dallas investment bank that focuses on the energy sector.
January 14
At the end of the quarter, BOK's allowance for loan losses totaled $233.2 million, or 1.45% of total loans.
President and Chief Executive Steven G. Bradshaw focused on the positive, noting a 9% increase in pre-provision net interest income, powered by a 9% year-over-year increase in loans, to $16 billion. Growth in the health care portfolio was exceptionally strong. Health care loans rose 32% to $2 billion.
While first-quarter noninterest income was flat at $168 million, the jump in problem loans led to a $1.9 million increase in deposit-insurance costs. Personnel expenses rose 6% to $135.8 million. Overall, noninterest expenses totaled $245 million, up 12% year over year.