Using Veritas to Construct the "Per…

29-04-2017 Hits:87156 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:81086 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:80925 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:85397 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:81900 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:84087 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:55145 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:83338 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:83083 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:82975 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:89223 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:86945 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Here is my review of the BOKF 3rd quarter results. BOKF has performed relatively well in comparison to other regionals, but the caveats and basis of the orignal thesis that we warned about in the forensic preview are still valid. See:

BOK 1Q09 BOK 1Q09 2009-05-07 06:34:52 460.74 Kb

BOK 2Q09 review BOK 2Q09 review 2009-08-01 05:04:06 1.05 Mb

March Actionable Note - Banking Sector BK March Actionable Note - Banking Sector BK 2009-03-03 11:58:22 184.25 Kb

March 2nd Actionable Note Preview - banking March 2nd Actionable Note Preview - banking 2009-03-02 09:44:20 61.88 Kb

and an off topic piece that BOKF just happened to be involved in... Deposit Insurance Arbitrage

The 3rd quarter of 2009

BOK Financial Corporation (BOKF) reported a decline in earnings for 3Q09 (y-o-y) off lower fee and commission income and increased provisioning for loan losses, even as net interest income grew.

3Q2009 earnings declined versus 3Q2008, but beats consensus estimates: 

The Company's net income per diluted share declined to $0.75 for 3Q-09 compared with $0.84 per share in the same quarter last year. The analysts, however, estimated a lower per share earnings of $0.69. Included in the 3Q09 earnings is the impact of gains (net) on securities realized from the sale of $377 million of MBS securities, which contributed $0.08 to EPS in 3Q09.

BOKF's net interest income increased 9.8% y-o-y to $180.5 million in 3Q09 primarily due to margin improvement which grew 15bps (y-o-y) to 3.63%, reflecting improved loan pricing and decline in funding costs. Further, an increase in average earning assets (up 6.4% y-o-y) to $20.2 billion further stimulated the net interest income in 3Q09. However, on q-o-q basis average earning assets declined 1.2%, the impact of which was more than offset by net interest margin expansion to result into a 2.8% increase in net interest income over the previous quarter.

Non-interest income contracted 5.3% y-o-y to $120 million in 3Q09 compared with $126.7 million in 3Q08 due to decline in brokerage and commission fees while on sequential basis the non-interest income reduced 2.6% off significant decline in mortgage banking revenues due to lower loan volumes.

Operating expenses grew 8.8% y-o-y to $178.7 million in 3Q09 due to higher personnel costs which increased 12.0% to $98.0 million compared with $87.6 million in 3Q2008. The bank's efficiency ratio, as a result, deteriorated to 58.1% in 3Q09 compared with 54.2% in corresponding quarter last year.

 

3Q 09

q-o-q change (%)

2Q 09

y-o-y change (%)

3Q 08

figures in $millions

Interest revenue

             226

-1.9%

            231

-14.1%

                263

Interest expense

               46

-16.9%

              55

-53.8%

                  99

Net interest income

             180

2.8%

            176

9.8%

                164

 

 

   

 

 

Provision for credit losses

               55

17.0%

              47

4.6%

                  53

 

 

   

 

 

Net interest revenue after provision for credit losses (A)

             125

-2.4%

            128

12.3%

                112

 

 

   

 

 

Brokerage and trading revenue

               25

14.5%

              22

-19.1%

                  31

Transaction card revenue

               26

-4.6%

              28

2.5%

                  26

Trust fees and commissions

               16

-3.2%

              17

-18.8%

                  20

Deposit service charges and fees

               30

7.2%

              28

0.2%

                  30

Mortgage banking revenue

               13

-33.6%

              20

84.7%

                    7

Bank-owned life insurance

                 3

8.9%

                2

-6.9%

                    3

Margin asset fees

                 0

-25.0%

                0

-97.4%

                    2

Other revenue

                 6

-0.6%

                6

-21.6%

                    8

Total fees and commissions

             120

-2.6%

            123

-5.3%

                127

Gain (loss) on other assets

                 3

231.2%

                1

-483.2%

                   (1)

Gain (loss) on derivatives, net

               (0)

-71.6%

              (1)

-106.7%

                    4

Gain (loss) on securities, net

               12

89.6%

                6

483.3%

                    2

Net impairment losses recognized in earnings

               (3)

119.3%

              (2)

 

 

Others

               12

142.8%

                5

109.9%

                    6

Total operating revenue including impairament losses (B)

             132

3.0%

            128

 

                132

 

 

   

 

 

Total operating expenses, including others (C)

             179

1.7%

            176

8.8%

                164

 

 

   

 

 

Income before taxes (A+B-C)

               78

-2.8%

              81

-1.6%

                  80

Federal and state income tax

               25

 

              28

 

                  23

Net income, before non-controlling interest

               54

 

              52

 

                  57

Net income (loss) attributable to non-controlling interest

                 3

 

                0

 

                   (0)

Net income available to common shareholders

               51

-2.8%

              52

-10.6%

                  57

Net income available to common shareholders declined to $50.7 million in 3Q09 over $56.7 million in 3Q08.

 

Asset Quality deteriorated as NPAs continue to spike, as we anticipated:

BOKF's net charge-offs increased 3.0% q-o-q and 78.0% y-o-y to $36.0 million or 1.21% of average loans at the end of September 30, 2009. Further, non-performing assets increased to $489.7 million or 4.19% of total loans in 3Q09 led by increase in nonaccrual commercial real estate loans.

bok_financial_3q09_results_update_13823_image001.png

The credit losses in 3Q09 adversely impacted BOKF's performance with gross charge offs increasing to $38.6 million (annualized charge off rate - 1.30%) in 3Q09 from $37.4 million (annualized charge off rate -1.21%) in 2Q09 and $33.9 million (annualized charge off rate - 1.10%) in 3Q08. In addition to this, provisions for loan losses increased in 3Q09 to $55.1 million (annualized rate -1.86%) against $47.1 million (annualized rate - 1.53%) in 2Q09 and $52.7 million (annualized rate - 1.71%) in 3Q08 driven by growth in non-performing assets. Total non-performing assets increased stood at $489.7 million (4.22% of total loans) compared with $445.7 million (3.67% of total loans) at the end of 2Q09 and $252.2 million (2.01% of total loans) at the end of 3Q08.

Non-accruing loans increased 8.4% q-o-q to $382.8 million (3.30% of total loans) at the end of 3Q09 from $353.0 million (2.91% of total loans) at the end of 2Q09 and relatively lower when compared with $211.8 million (1.69% of total loans) at the end of 3Q08.

bok_financial_3q09_results_update_13823_image003.png

However, the 90 days past due loans declined to $24.2 million in 3Q09 from $32.5 million in 2Q09. A drop in 90 days past due loans and growth in tangible equity was more than offset by higher NPAs, which led to an increase in the Texas ratio to 24.4% against 24.3% in 2Q09 and 15.5% in 3Q08.

Loan portfolio - credit quality metrics

3Q08

4Q08

1Q09

2Q09

3Q09

90 days past due loans to total loans

0.16%

0.15%

0.37%

0.27%

0.21%

Non performing assets to total loans

2.03%

2.71%

3.31%

3.67%

4.22%

Non performing assets to allowance for loan losses

138.0%

163.5%

163.9%

163.1%

174.1%

Texas ratio

15.5%

21.3%

25.2%

24.3%

24.4%

 

Lower commercial and consumer lending contracted loans portfolio in 3Q09:

The total loan portfolio declined to $11.6 billion in 3Q09 compared with $12.1 billion in 2Q09 due to lower demand for loans across sectors, with significant contribution in decline coming from commercial and consumer loans. However, the total deposits increased to $15.1 billion in 3Q09 from $14.7billion in 2Q09, resulting in loan-to-deposit ratio of 76.9% compared with 82.8% in 2Q09.

 

3Q08

4Q08

1Q09

2Q09

3Q09

Total loans (in $millions)

        12,414

        12,617

       12,532

        12,130

           11,606

Total deposits (in $millions)

        14,586

        14,983

       15,270

        14,655

           15,095

Loan to deposit ratio

85.1%

84.2%

82.1%

82.8%

76.9%