The $50 billion-asset company owns Bank of Oklahoma as well as operations in major markets in Texas, Colorado and neighboring states. Its loans grew nearly 2% from the prior quarter to $24.6 billion, fueled by
BOK has continued to build its loan portfolio at a time when other banks have struggled to do so. Federal Reserve data shows flat lending volumes among large banks much of this year.
"I think our geographic footprint here is awfully helpful," President and CEO Stacy Kymes said Tuesday during a call with analysts.
But the growth "didn't happen by accident," Kymes said. "The C&I sales process is a long one, and our process wasn't created this quarter or last, but is rather a reflection of the fruits of our last few years of concentrated efforts to grow this portfolio."
"As you'll see from our credit metrics," he added, "we haven't done this at the expense of our disciplined credit underwriting profile."
BOK's second-quarter nonperforming assets totaled $93 million, or 0.38% of its outstanding loans, down from $122 million, or 0.51%, for the prior quarter. Historically, anything below 1% has been considered exceptional.
In another positive development, operating expenses decreased $3.7 million from the prior quarter to $336.7 million.
The bank's results also indicated that the adverse effects of high interest rates on its funding costs may have peaked.
Net interest income totaled $296 million, an increase of $2.4 million from the first quarter. The net interest margin clocked in at 2.56%, down five basis points due to lingering higher deposit costs. Still, the bank reported notable improvement with respect to funding costs for the first time in more than two years.
Total deposits at BOK increased more than 2% from the previous quarter to $36.2 billion, and the bank said it expects modest deposit growth through the year.
The deposit growth in the second quarter was driven by increases in both interest-bearing accounts and noninterest-bearing ones, according to Wedbush analyst David Chiaverini.
Interest-bearing deposits rose by $432 million, and noninterest-bearing ones climbed by $426 million. It was the first time since the Fed started hiking interest rates in early 2022 that noninterest-bearing deposits inflected higher, according to Chiaverini.
What's more, the ratio between noninterest-bearing deposits and total deposits held steady, which Chiaverini said suggests the bank is facing less pressure to pay up for funding.
Fee income for the second quarter was flat at $200 million, as increases in investment banking and asset management revenue offset lower trading revenue. Kymes said that steady overall fee income is key to the bank's strategy.
"Our fee income businesses remained strong at 40% of total revenue. You cannot find another regional bank that has the same level of fee income businesses that have been built over many decades and are all operating at scale," he said. "These businesses produce attractive returns and offer diversifying or countercyclical benefits to our net interest income streams regardless of challenging market conditions."
BOK reported second-quarter net income of $163.7 million, or $2.54 per share, up from $83.7 million, or $1.29, in the prior quarter.
The bottom line for the latest quarter was favorably impacted by BOK's sale of 50% of its stock in the payments giant Visa. Adjusting for notable items, including the Visa gain and a related charitable contribution, net income would have been $131.1 million, and earnings per share would have been $2.02, the company said.
