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BOK FINANCIAL CORP (BOKF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 EPS of $1.86 and total revenue of $502.3M missed Wall Street consensus (EPS $1.99, revenue $520.4M), driven by a sharp decline in trading fee income and lower loan fees; core NIM ex‑trading compressed 4bps even as headline NIM rose 3bps. EPS: $1.86 vs $1.99*, Revenue: $502.3M vs $520.4M*
  • Net interest income increased $3.2M q/q to $316.3M and headline NIM improved to 2.78% (up 3bps), reflecting liability repricing and growth in trading-related NII; fees and commissions fell $22.8M q/q largely on lower MBS trading volumes and compressed spreads amid policy uncertainty .
  • Credit quality remains strong: net charge-offs were $1.1M (≈2bps), allowance coverage held at 1.40% of loans, CET1 rose to 13.31% and TCE to 9.48%; loan-to-deposit ratio declined to 62%, enhancing liquidity .
  • FY25 guidance: NII unchanged ($1.325–$1.375B), but fees & commissions range widened lower to $775–$825M (from $810–$830M), citing fixed income trading uncertainty; management signaled potential Q2 share repurchases and a mortgage finance (warehouse) launch in Sep–Oct 2025 .
  • Stock narrative: near-term pressure from fee volatility is offset by expanding NII, robust capital/liquidity, and new growth vectors (mortgage finance), with deposit betas managed aggressively (75% in Q1), supporting margin sustainability .

What Went Well and What Went Wrong

What Went Well

  • Net interest income and margin expanded: NII +$3.2M q/q to $316.3M; NIM up 3bps to 2.78%, aided by liability repricing and trading-related NII growth .
  • Capital and liquidity strengthened: CET1 13.31%, TCE 9.48%, loan-to-deposit ratio 61.9%; uninsured deposit coverage ~175% .
  • Mortgage banking revenue rose $1.7M q/q to $19.8M on higher production and improved realized margins; AUMA was resilient (down modestly with market moves) .
  • Management tone: “Net interest income continues to expand, our loan pipeline is strong, credit quality remains excellent and we have incredibly strong capital and liquidity levels” — Stacy Kymes, CEO .

What Went Wrong

  • Fees & commissions fell $22.8M q/q to $184.1M; brokerage/trading revenue declined $24.4M on lower MBS volumes and compressed spreads due to policy/geopolitical uncertainty .
  • Core NIM (ex‑trading) decreased 4bps to 3.05% on lower loan fees, mix shift (energy run‑off replaced by narrower-spread C&I), and fewer days vs Q4 .
  • Loans contracted 1.8% q/q to $23.69B, primarily from energy paydowns (−12.1% q/q) and healthcare payoffs to non-bank fixed-rate options; NPAs rose to $85M (0.36% of loans), still low historically .
  • FY25 fees guidance was widened lower ($775–$825M) vs Q4 guide ($810–$830M), reflecting uncertainty in fixed income trading activity .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Diluted EPS ($)$2.18 $2.12 $1.86
Net Interest Income ($M)$308.1 $313.0 $316.3
Total Other Operating Revenue ($M)$208.2 $210.0 $186.0
Total Revenue ($M)$516.3 $523.1 $502.3
Net Interest Margin (%)2.68% 2.75% 2.78%
Core NIM ex‑Trading (%)3.02% 3.09% 3.05%
Fees & Commissions ($M)$202.5 $206.9 $184.1
Efficiency Ratio (%)65.11% 65.61% 68.31%

Segment breakdown (Q1 2025):

SegmentNet Interest Income + Fee Revenue ($K)Net Income Before Taxes ($K)
Commercial Banking$233,415 $139,983
Consumer Banking$94,047 $22,122
Wealth Management$140,838 $32,726

Key KPIs:

KPIQ3 2024Q4 2024Q1 2025
Loans (Period End, $K)$23,985,061 $24,114,724 $23,690,488
Deposits (Period End, $K)$37,227,118 $38,191,230 $38,281,673
Loan-to-Deposit Ratio (%)64.4% 63.1% 61.9%
Nonperforming Assets / Loans & REO (%)0.36% 0.20% 0.36%
Net Charge-offs ($K)$(54) $528 $1,105
CET1 Ratio (%)12.73% 13.03% 13.31%
Tangible Common Equity Ratio (%)9.22% 9.17% 9.48%

Estimates comparison (Q1 2025):

MetricConsensus (S&P Global)Actual
EPS ($)1.99*1.86
Total Revenue ($M)520.4*502.3

Values with asterisks (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (as of 01/21/25)Current Guidance (as of 04/22/25)Change
Net Interest IncomeFY 2025$1.325–$1.375B $1.325–$1.375B Maintained
Fees & CommissionsFY 2025$810–$830M $775–$825M Lowered/Widened
Total RevenueFY 2025Mid to upper single-digit growth Mid to upper single-digit growth Maintained
ExpensesFY 2025Mid single-digit growth Mid single-digit growth Maintained
Efficiency Ratio (Non-GAAP)FY 2025~65% ~65% Maintained
Provision ExpenseFY 2025$20–$40M $20–$40M Maintained
EOP LoansFY 2025Mid to upper single-digit growth Mid to upper single-digit growth; launch mortgage finance in H2 Maintained with initiative timing
EOP Investment SecuritiesFY 2025Flat Flat Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Trading revenue mix shift (fees → NII)Total trading revenue $27.4M; curve steepening began; fees −14.6% q/q Trading fees rebounded; trading NII $4.6M; curve steepening expected to shift mix Trading fees −$25.0M; trading NII +$10.6M; management expects activity rebound Mix shifting to NII; near-term fee softness improving
Deposit pricing & betasL/D fell to 64%; deposits +$1.1B; competitive pricing stabilizing Deposit betas leveraged; interest-bearing deposits +$1.0B 75% quarterly deposit beta, 74% cumulative liability beta; scope to further manage pricing Favorable beta trajectory supports margin
Energy & Healthcare loansEnergy −9.4% q/q; healthcare −1.9% q/q; paydowns/M&A impacts Energy +4.1% q/q; healthcare −4.4% q/q; HUD refinancing Energy −12.1% q/q (industry consolidation payoffs); healthcare −4.5% q/q (refinance/payoffs) Near-term contraction; mgmt sees headwinds moderating
Mortgage finance (warehouse) initiativeNot discussedAnnounced focus in mortgage; hiring underway Launch targeted Sep–Oct 2025; integrated with hedging/structured finance New growth vector arriving H2
Credit qualityNPAs 0.36%; net recoveries; allowance 1.39% NPAs 0.20% (lowest in 20 years); allowance 1.38% NPAs increased to 0.36% off very low base; net charge-offs $1.1M; allowance 1.40% Still strong; slight normalization

Management Commentary

  • CEO (prepared remarks): “Net interest income continues to expand... loan pipeline is strong, credit quality remains excellent... strong capital and liquidity levels.” — Stacy Kymes .
  • CFO (prepared): “Headline NIM expanded 3bps... core NIM ex‑trading decreased 4bps... loan fees normalized... mix shift with narrower‑spread core C&I replacing higher‑spread energy” — Marty Grunst .
  • Wealth Management EVP: “$10.6M of fee revenue shifted from fees to NII as the yield curve steepened... municipal pipelines seasonally weaker” — Scott Grauer .
  • CFO (Q&A): “We had a 75% deposit beta for Q1... cumulative interest‑bearing liability beta is 74%... scope to continue working on deposit pricing” — Marty Grunst .
  • CFO (Q&A): “We do expect to be active share repurchasers in the second quarter” — Marty Grunst .
  • CEO (Q&A): Mortgage finance to launch Sep–Oct 2025; broad relationship benefits across deposits, hedging, structured finance .

Q&A Highlights

  • Trading normalization and mix: Management expects total trading activity to rebound in Q2; mix to remain more NII‑weighted in a steeper curve environment; focus on total trading revenue rather than fee vs NII splits .
  • Loan growth outlook: Pipelines are strong; mgmt sees energy and healthcare headwinds moderating; mortgage finance vertical included in FY25 loan guide starting this quarter .
  • ACL coverage and provisioning: Reserve model suggested a release, but mgmt held provision at zero given macro uncertainty; no expectation to raise coverage ratio over the year .
  • Deposit strategy: Aggressive deposit pricing management with high down‑rate betas; deposits expected to grow through the year while preserving NII accretion .
  • Rate path sensitivity: NII guide largely insensitive to whether cuts are two or four; shifts between trading fees/NII offset overall revenue .

Estimates Context

  • Q1 2025 EPS of $1.86 missed consensus $1.99 by ~$0.13; total revenue of $502.3M missed $520.4M by ~$18.1M, primarily due to lower trading fees and compressed spreads amidst policy/geopolitical uncertainty, plus lower loan fees and narrower spreads as mix shifted . EPS consensus 1.99*, revenue consensus $520.4M*; actual EPS $1.86 ; actual revenue $502.3M .
  • Expect estimate revisions: Fees & commissions likely revised down (management lowered FY range to $775–$825M), while NII trajectory remains intact; headline NIM improving but core NIM ex‑trading slightly softer .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • NII and headline NIM are expanding despite fee volatility; margin sustainability supported by deposit beta management (75% in Q1) and liability repricing .
  • Fee pressure is concentrated in trading; management expects activity to rebound and the fee/NII mix to normalize with curve steepness, while widening FY25 fee guidance acknowledges uncertainty .
  • Credit remains best‑in‑class: NPAs still at low levels and net charge‑offs minimal; allowance steady at ~1.40% supports benign loss expectations .
  • Loan contraction was driven by energy consolidation and healthcare payoffs; mgmt signals moderation and growth in H2 aided by CRE fund‑ups and mortgage finance launch .
  • Capital and liquidity are robust (CET1 13.31%, TCE 9.48%, L/D 61.9%); potential Q2 buybacks provide downside support to the stock .
  • Near-term trading setups: If rate cuts proceed and curve steepens further, expect total trading revenue stability with higher NII share; beneficial to margin even if fees remain variable .
  • Positioning: Lean into NII‑sensitive drivers and capital return optionality; monitor fee trajectory and mortgage finance ramp for H2 contribution .