BOK Financial in Tulsa, Oklahoma, is bullish on oil and gas lending amid strong commodity prices and robust global demand for fossil fuels.
The $43.6 billion-asset bank said its energy portfolio in the third quarter swelled 20% from a year earlier to nearly $3.4 billion, bolstered by
"How we're viewed in the marketplace as an energy lender has helped us. But really, the growth there has been widespread,"
U.S. oil production during the quarter hovered near a 2022 peak of about 12 million barrels per day, according to federal data, while natural gas production approached an all-time high in September and eclipsed the record in October. Much of this work gets done in BOK Financial's territory, which spans energy-rich Texas, Oklahoma, Colorado and neighboring states.
While the specter of a national recession looms amid high inflation and soaring interest rates, BOK Financial executives are confident energy demand will help it sidestep any downturn.
"Our geographic footprint remains very strong and may outperform in this cycle given the high level of business migration from other markets and the role energy plays in our footprint," Chief Financial Officer Steven Nell said on the call.
Over the summer, oil prices reached a high for the decade and natural gas prices approached a 14-year high. U.S. oil and gas producers are borrowing to invest in continued growth both to meet demand and to capitalize on favorable pricing.
This is in turn feeding broader, ongoing activity in BOK Financial's markets, generating economic strength and loan demand, Kymes said. This stands apart from other regions of the country and the national headlines warning of economic gloom on the horizon, Kymes said.
"Borrower sentiment is very, very positive," Kymes said. "So there's a real shift in sentiment, I think, between what we hear from people on the ground who are running their businesses every day in our markets, versus perhaps what the financial press would have us believe is a near-recession or recessionary environment."
The bank's continued strong credit quality supported this view, he said. Nonperforming assets totaled 1.54% of outstanding loans in the third quarter, down from 1.71% a year earlier.
BOK Financial reported third-quarter net income of $156.5 million, or $2.32 per share, down from $188.3 million, or $2.74 per share, a year earlier. The year-earlier profit was driven in large part by growth in fee-based businesses, including mortgage banking, that have since pulled back amid higher interest rates.
