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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
Segment breakdown (Q1 2025):
Key KPIs:
Estimates comparison (Q1 2025):
Values with asterisks (*) retrieved from S&P Global.
Guidance Changes
Earnings Call Themes & Trends
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 .