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    05/26/2016 - 14:27
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Is This The Start: Regional Bank Tumbles After Admitting To Previously Underreserved Energy Loss

Tyler Durden's picture


While the energy carnage over the past year has impaired commodities, mostly oil, and increasingly the equity and bond prices of US energy companies, so far one industry has been left relatively unscathed: banks. The reason for this was that over the past year banks have, in filings, earnings calls and investor meetings, taken every possible opportunity to assure investors they all overly provisioned for any potential losses stemming from their exposure to impaired energy loans (despite not one but two consecutive quarters of Jefferies earnings fiascos).

All of this changed today when BOK financial, a $31 billion regional financial services company based in Tulsa, Oklahoma with a $3.4 billion market cap lender covering the West South Central States region of the United States, announced that not only was it overly optimistic with its "previously forecasted a provision for credit losses of $3.5 million to $8.5 million", and as a result of a major loan impairment on just one energy producer it would have to take a dramatic $22.5 million in credit losses, but that things are slowly going from great to not so great when it also admitted that "we continued to see credit grade migration and increased impairment in our energy portfolio. The combination of factors necessitated a higher level of provision expense."

BOK Financial is the first bank to admit its rose-colored glasses no longer fit: we expect many more banks with billions in energy exposure to admit they too have been overly optimistic and to send their credit loss reserves soaring even as they have no choice but to admit major charge offs on existing loan portfolios.

But it's just a $22.5 million loss, what's the big deal? That may be a good question for the shareholder, who have taken the axe to BOKF stock, which just today has wiped out $300 million in market cap.

Full 8-K below:

BOK Financial Corporation (NASDAQ:BOKF) today announced that its provision for credit losses for the fourth quarter of 2015 is expected to be $22.5 million. The company had previously forecasted a provision for credit losses of $3.5 million to $8.5 million for the quarter.


Stacy Kymes, executive vice president, Corporate Banking, commented, “A single borrower reported steeper than expected production declines and higher lease operating expenses, leading to an impairment on the loan. In addition, 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. As we are now into the second year of the downturn, during the fourth quarter we continued to see credit grade migration and increased impairment in our energy portfolio. The combination of factors necessitated a higher level of provision expense."


Steven Nell, chief financial officer, added, “Aside from the increased loan loss provision, fourth quarter results were softer than expected, largely due to lower fee income and expenses that were slightly above our forecasted range. As a result, net income for the fourth quarter, including the impact of the increased provision, is expected to be $58 million to $61 million, or $0.87 to $0.91 per diluted share. We will provide additional details on fourth quarter results, and update our guidance for the 2016 loan loss provision, when we announce earnings at the end of the month.”

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Wed, 01/13/2016 - 16:20 | 7041904 localsavage
localsavage's picture

How the fuck do you screw up running a bank?  It is a fucking license to print money.

Wed, 01/13/2016 - 16:22 | 7041920 yrad
yrad's picture

"we continued to see credit grade migration and increased impairment in our energy portfolio. The combination of factors necessitated a higher level of provision expense."


Dem is big, fancy words for "we aint got no money but we gots lots of checks left"

Wed, 01/13/2016 - 16:26 | 7041957 NoVa
NoVa's picture

well, on the positive side, at least the Accounting rules worked !



Wed, 01/13/2016 - 16:30 | 7041986 Deathrips
Deathrips's picture

No problem..ring the tribe up they will imagine more scheckles into reality for you to buy lives with.



Wed, 01/13/2016 - 16:37 | 7042019 NoDebt
NoDebt's picture

Not close enough to Wall St. and not enough impairment, apparently, to sink this bank and start the counterparty default chain.  Therefore, not the start.  But maybe the faint whisper in wind I've heard from time to time the last few months has gotten a little louder.  It's only a single word, over and over.  "Contagion."

Wed, 01/13/2016 - 16:40 | 7042055 CClarity
CClarity's picture

Oops - more of our depositors want their money back than other depositors want to put in for our 0% interest we pay them.  And oops, we lent out their money already to companies going BK, and what little we had left we paid ourselves some nice bonuses and gave our shareholders great dividends.  So sorry, the little peeps just lost - AGAIN!!

Wed, 01/13/2016 - 16:45 | 7042082 CheapBastard
CheapBastard's picture

" Awesome! "



Wed, 01/13/2016 - 17:00 | 7042170 Uchtdorf
Uchtdorf's picture

These banksters obviously need to buy back more of their own stock. Do what GM does, dude. It's a winning plan.

Wed, 01/13/2016 - 17:01 | 7042179 Richard Chesler
Richard Chesler's picture

There's strong support at zero.


Wed, 01/13/2016 - 17:04 | 7042189 Scooby Dooby Doo
Scooby Dooby Doo's picture

They should have played Powerball instead of their other gambling activities.

(Scooby;s going to win tonight!)

Wed, 01/13/2016 - 19:04 | 7042819 CapnJackDaniel
CapnJackDaniel's picture

aaand it's . . . 

Wed, 01/13/2016 - 17:05 | 7042192 mayhem_korner
mayhem_korner's picture



"BOIL-OUT" coming.

Thu, 01/14/2016 - 13:24 | 7046237 halfasleep
halfasleep's picture

For real. If the fedres could just go ahead and tell us which companies/banks they're going to bail out beforehand, that would be great.

Sat, 01/16/2016 - 14:19 | 7055469 bonderøven-farm ass
bonderøven-farm ass's picture

Dee-mutha'fukin-inflation, bitchezzzzz.........

Hedge accordingly. 

Wed, 01/13/2016 - 19:22 | 7042903 azusgm
azusgm's picture

Short at your own (great) risk.

Wed, 01/13/2016 - 16:41 | 7042059 pods
pods's picture


Bank Of Karl Fardman?

Wed, 01/13/2016 - 17:41 | 7042425 azusgm
azusgm's picture

Bank of Oklahoma Financial

The George Kaiser Foundation owns over 10% of the shares outstanding and has representation on the board. That would be as in Kaiser-Francis Oil Company (privately held).

Wed, 01/13/2016 - 16:44 | 7042074 curbjob
curbjob's picture

+ 1, there's clearly more to financials in lockstep with crude besides some algo's digitally superimposing a nanosecond chart.

Wed, 01/13/2016 - 17:07 | 7042138 NoVa
NoVa's picture

@ NoDebt

BOK is a relatively big player in Mortgage TBAs and hedging markets. 

It will be interesting to see if CP (counterparty) ripples come into my world -

Wed, 01/13/2016 - 16:31 | 7041991 Bangin7GramRocks
Bangin7GramRocks's picture

OMG! Not ShitKicker National Bank! aaaaaaaahhhhhhh!!!!

Wed, 01/13/2016 - 16:34 | 7042009 Took Red Pill
Took Red Pill's picture

Looks like were gonna need a bigger TARP

Wed, 01/13/2016 - 21:00 | 7043488 ThroxxOfVron
ThroxxOfVron's picture

That line is going to become increasingly less funny over the next several months..

Wed, 01/13/2016 - 16:38 | 7042036 Jack of All Trades
Jack of All Trades's picture

We will teach our twisted speech to the young believers

Wed, 01/13/2016 - 16:23 | 7041922 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

You lend to your 'friends' and the Board.

Wed, 01/13/2016 - 16:48 | 7042098 CheapBastard
CheapBastard's picture

Exactly. Those loans to insiders at the bank somehow get lost in the books when all the shtf.

Wed, 01/13/2016 - 17:07 | 7042216 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

IMO, banks can also get in trouble through the focus on relationships.  They all talk about managing relationships.  Loan officers are often now known as Relationship Managers.  Banks try hard not to lose customers to competition, hence the focus on building relationships.  Can lead to lending more to one principle than ordinarily would, or to 'stretching' a bit, to help secure the relationship.  Can lead  to good money after bad.

Wed, 01/13/2016 - 16:22 | 7041925 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Man, I must have missed it. Did NK test another H-bomb, that's the only explanation for this to have happened. 

Wed, 01/13/2016 - 16:22 | 7041927 bnbdnb
bnbdnb's picture

Leverage exceeds caps, but what the fuck do I care, I've got my golden parachute and lifetime tickets to the Thunder.

Wed, 01/13/2016 - 16:38 | 7042042 DirkDiggler11
DirkDiggler11's picture

You fuck up a bank by skimming too much off the top. I guaranfuckimgtee you that not a single officer in that bank has suffered an "earnings" decline.

Wed, 01/13/2016 - 16:51 | 7042116 CheapBastard
CheapBastard's picture

"And It's Gone" (The youtube video from south park)




still one of my favorites.

Wed, 01/13/2016 - 20:02 | 7043116 DukeMakewater
DukeMakewater's picture

Thanks for the link CB!  I can't believe I missed that show but I' glad for the context of the comments.

Wed, 01/13/2016 - 17:15 | 7042274 Professor Fate
Professor Fate's picture

Maybe they should claw back those hefty Christmas Bonuses that just got passed out.

Fate the Magnificent
"Push the Button, Max" 

Wed, 01/13/2016 - 17:01 | 7042174 WillyGroper
WillyGroper's picture



the tbtf's are going after the regionals.  next up CU's.

shades of 1982 PSB.

Wed, 01/13/2016 - 17:08 | 7042227 83_vf_1100_c
83_vf_1100_c's picture

  You embezzle a few mil here and there. You use the banks money to gamble on the market. You derivatize some stuff. You can kill an elephant with a BB gun if you work at it long enough. My town pop. 3500 had 4 banks a year ago. 2 more have opened the past 12 months. So, apparently 500 customers is enough to support a bank these days?

Wed, 01/13/2016 - 19:34 | 7042949 steelhead23
steelhead23's picture

"How the fuck do you screw up running a bank?  It is a fucking license to print money."  Local Savage

Very simple.  First, you must wear rose colored glasses.  That means you believe that if WTI is selling for $80 on the day you evaluate the loan, it will be selling for $80 the day the loan is paid off.  Second, you ignore that the value of the borrowers collateral (existing wells, rigs, leases, and permits) is directly correlated to the price of WTI - that is, the value of the company's collateral is correlated to its profitability.  Talib and others would say that the cheerleader nature of greedy banksters blinds them to tail risk - unlikely events that could have horrific financial effects.

But I posit that the bottom line is this - those so-called "animal spirits" of risk takers is really greed, not adventurousness and that lax regulation encourages excessive greediness, which tends to result in the behaviors Talib describes - a kind of risk denial.

Wed, 01/13/2016 - 21:03 | 7043502 ThroxxOfVron
ThroxxOfVron's picture

WHO is on the Board Of Directors?

Do any of them happen to also be connected to the company that the impaired loan is made out to?


Wed, 01/13/2016 - 16:23 | 7041905 db51
db51's picture

The Word Bank and Loss in the same sentence.   LMFAO   That's some funny shit right there.   Is that even possible.   bwhahhahahahaha

Wed, 01/13/2016 - 16:53 | 7042126 HardlyZero
HardlyZero's picture

Loss Angeles, might stick.

Wed, 01/13/2016 - 16:20 | 7041908 Squid Viscous
Squid Viscous's picture

bank of fucking your cousins?

Wed, 01/13/2016 - 16:20 | 7041909 firstdivision
firstdivision's picture

Someone got a margin call at 1pm, Freeport?  https://finviz.com/futures_charts.ashx?t=HG&p=m5

Wed, 01/13/2016 - 16:20 | 7041911 ToSoft4Truth
ToSoft4Truth's picture

"You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's house...right next to yours. And in the Kennedy house, and Mrs. Macklin's house, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?...Now wait...now listen...now listen to me. I beg of you not to do this thing. If Potter gets hold of this Building and Loan there'll never be another decent house built in this town. He's already got charge of the bank. He's got the bus line. He's got the department stores. And now he's after us. Why? Well, it's very simple. Because we're cutting in on his business, that's why. And because he wants to keep you living in his slums and paying the kind of rent he decides. Joe, you lived in one of his houses, didn't you? Well, have you forgotten? Have you forgotten what he charged you for that broken-down shack? Here, Ed. You know, you remember last year when things weren't going so well, and you couldn't make your payments. You didn't lose your house, did you? Do you think Potter would have let you keep it? Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicky and he's not. That's why. He's picking up some bargains. Now, we can get through this thing all right. We've got to stick together, though. We've got to have faith in each other."

Wed, 01/13/2016 - 16:32 | 7041995 Nothingman
Nothingman's picture

The "Mr Potters" of the world own everything in the 21st century.  It's not a wonderful life, anymore.

Wed, 01/13/2016 - 20:28 | 7043293 Iam_Silverman
Iam_Silverman's picture

"The "Mr Potters" of the world own everything in the 21st century.  It's not a wonderful life, anymore."

Well, except for the Potters.

Wed, 01/13/2016 - 17:38 | 7042380 Dig Deeper1
Dig Deeper1's picture

+1k...look closely at avatar.

Wed, 01/13/2016 - 17:51 | 7042489 buzzsaw99
buzzsaw99's picture

What have you been doing lately, George? Playing the market with the company's money?

George Bailey: No, of course not.

Or is it a woman you're involved with? It's all over town that you've been giving money to Violet Bick.

George Bailey: What?

Why don't you go to the riffraff you love so much and ask them to let you have $8,000? You know why? Because they'd run you out of town on a rail. But I'll tell you what I'm going to do for you, George. Since the state examiner is still here, as a stockholder of the Building and Loan, I'm going to swear out a warrant for your arrest. Misappropriation of funds, manipulation, malfeasance...

[sees George run off]

All right, George, go ahead! You can't hide in a little town like this! [/Mr. Potter]

Wed, 01/13/2016 - 16:25 | 7041915 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Would like nothing better than for The Great Purge to have now finally gotten underway.

Let the pus flow and the chips fall where they may.

Wed, 01/13/2016 - 16:25 | 7041948 HardlyZero
HardlyZero's picture

OOOOk-lahoma, where the wind comes sweepin' down the plain !

Wed, 01/13/2016 - 16:41 | 7042058 Montani Semper ...
Montani Semper Liberi's picture

 Mountaineers whipped up on dem boyz from Oklahomo last night!

Wed, 01/13/2016 - 16:43 | 7042069 Squid Viscous
Squid Viscous's picture

that was Kansas, time for your medz

Wed, 01/13/2016 - 16:48 | 7042099 Montani Semper ...
Montani Semper Liberi's picture

 Grab foot and insert in mouth.

 OU is next.

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