BOK Financial was not immune to high interest rates and elevated deposit competition. Increased funding costs cut into its bottom line.
But, unlike many other banks, the company is upbeat on the economy and playing offense on the lending front.
"All the things that were really within our control… we did exceptionally well" in the second quarter, Stacy Kymes, president and CEO, said in an interview after the company reported earnings Wednesday.
Kymes said that, as competitors pull back amid the uncertainty created by regional bank failures earlier this year and forecasts for a recession, the
The $49.2 billion-asset bank said its loans at the end of the second quarter were up $488 million, to $23.2 billion, bolstered by demand across its business lending operations, including commercial real estate, energy, health care and commercial and industrial more broadly.
"We aren't seeing any signs of an economic slowdown," Kymes said. He defined sentiment among business owners across the bank's footprint — which spans its home state, Texas, Missouri, Kansas, Colorado and Arizona — as "thoughtful but positive."
Many remain in growth mode and need credit to finance expansions. New customers are also increasingly appearing on BOK's radar, Kymes said, because other banks have grown reluctant to lend. For one, some bankers are
That concern is reflected in a survey from IntraFi released on Wednesday that showed almost three-quarters of bankers don't believe the Federal Reserve will be able to raise rates and reduce inflation
Other lenders are "inwardly focused" on shoring up their core deposit bases after
As it grows, BOK is not seeing signs of credit quality deterioration. Second-quarter nonperforming assets totaled $136 million, or 0.59% of the overall portfolio, compared to $133 million, or 0.58%, the prior quarter.
"Credit is incredibly clean right now," Kymes said.
He also emphasized growth in wealth management. This segment of the company's business contributed $57.3 million to net income in the second quarter, an increase of $4.9 million from the prior quarter. The business helped to boost fee income.
Fee and commission revenue totaled $200.5 million for the second quarter, up $14.5 million. Increased brokerage and trading revenue also proved an important contributor.
Kymes said BOK customers are pursuing higher rates on their deposits, and he said the recent failures, which were hastened by deposit runs, accelerated competition. Higher funding costs offset increases in interest income on loans and contributed to pressure on BOK's net interest margin. The company's NIM contracted 45 basis points during the second quarter to 3.00%.
BOK said its second-quarter net income was $151.3 million, or $2.27 per share, compared to $162.4 million, or $2.43, for the first quarter.
While it is having to pay higher interest rates, BOK is also growing deposits steadily. Its second-quarter deposits increased $714 million to $33.3 billion. Its loan-to-deposit ratio was 70%, consistent with the prior quarter, leaving it plenty of runway to fund future loan growth.
The bank recently expanded banking services into San Antonio, Texas, and it opened a new office in Memphis, Tennessee, to extend its wealth management services into the Southeast.
"We have lots of liquidity, lots of capital, so let's use it," Kymes said of the company's organic growth mindset.
