BOK Financial Corporation (NASDAQ:BOKF) Q3 2022 Results Conference Call October 26, 2022 10:00 AM ET
Company Participants
Steven Nell - Chief Financial Officer
Stacy Kymes - CEO
Marc Maun - Executive Vice President, Regional Banking
Scott Grauer - Executive Vice President, Wealth Management
Conference Call Participants
Jared Shaw - Wells Fargo Securities
Brady Gailey - KBW
Brett Rabatin - Hovde Group
Jennifer Demba - Truist Securities
Matt Olney - Stephens
Operator
I would now like to turn the conference over to Steven Nell, Chief Financial Officer for BOK Financial Corporation. Please proceed.
Steven Nell
Good morning, and thanks for joining us. Today, our CEO, Stacy Kymes, will provide opening comments; Marc Maun, Executive Vice President for Regional Banking, will cover our loan portfolio and related credit metrics; Scott Grauer, Executive Vice President of Wealth Management, will cover our fee-based results; and then I'll provide details regarding key financial metrics. PDFs of the slide presentation and third quarter press release are available on our Web site at bokf.com. We refer you to the disclaimers on Slide 2 regarding any forward-looking statements we make during the call. I'll now turn the call over to Stacy Kymes.
Stacy Kymes
Thank you, Steven. Good morning. And thanks for joining us to discuss BOK Financial's third quarter financial results. Starting on Slide 4, third quarter net income was $156 million or $2.32 per diluted share. Results reflected another very strong quarter that demonstrates our diverse earnings mix. The third quarter ranks as the third highest in the Bank's earnings history trailing only the second and third quarters of 2021, both of which had negative loan loss provisions. Pre-provision net revenue increased $42 million linked quarter as we grew core loans, experienced significant margin expansion and benefited from our diverse fee income base. Short term interest rates continue to rise during the quarter and our asset sensitive balance sheet responded accordingly. Our net interest margin increased 48 basis points linked quarter due to loan portfolio that is heavily weighted to variable rate loans. Fee income increased linked quarter as institutional trading took advantage of favorable market conditions, and investment banking set a quarterly record for fee income, primarily in municipals. Our asset quality credit trends remain unsustainably good but we did add to our credit loss reserve this quarter in recognition of the loan growth and less certainty in the economic outlook.
Turning to Slide 5, period end core loan balances increased $522 million or 2.5% linked quarter with commercial real estate, the primary driver. Overall, unfunded loan commitments continue to grow up $1.1 billion linked quarter, with utilization rates still low. While average deposits continued to remain high compared to pre-pandemic levels, we saw a decrease of $1.5 billion or 4% this quarter with virtually all of that in interest bearing balances. These declines were consistent or even better than our expectations given the rapid actions of the Federal Reserve to move short term rates higher. The third quarter loan to deposit ratio increased to 59.8% from 55.1% last quarter. Assets under management or administration were relatively flat linked quarter at $95.4 billion and are down 3.5% compared to last year, driven by market impact on equities, which comprise approximately a third of the total. I'll provide additional perspective on the results before starting the Q&A session. But now Marc Maun will review the loan portfolio and our credit metrics in more detail. I'll turn the call over to Marc.