Regional banking company BOK Financial (NASDAQ: BOKF) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 10.3% year on year to $502.3 million. Its non-GAAP profit of $1.86 per share was 6.3% below analysts’ consensus estimates.
Is now the time to buy BOKF? Find out in our full research report (it’s free).
BOK Financial (BOKF) Q1 CY2025 Highlights:
- Revenue: $502.3 million vs analyst estimates of $518.9 million (10.3% year-on-year growth, 3.2% miss)
- Adjusted EPS: $1.86 vs analyst expectations of $1.99 (6.3% miss)
- Market Capitalization: $6.08 billion
StockStory’s Take
BOK Financial’s first quarter results were met with a negative market reaction, as revenue and non-GAAP earnings both came in below Wall Street expectations. Management attributed the underperformance primarily to a sharp decline in trading fees, which was driven by market volatility, compressed spreads, and muted client demand, especially in February and March. CEO Stacy Kymes emphasized that, despite these headwinds, the bank’s net interest income benefited from a shift in trading-related revenue, and core fee businesses such as mortgage banking and asset management continued to perform well. Kymes noted, “Our diverse business model has performed well, even as we saw fluctuating results in some lines during unstable conditions.”
Looking ahead, BOK Financial’s management expects improved performance as market volatility recedes and trading activity normalizes, while the launch of its new mortgage finance and warehouse lending business is anticipated to support loan growth later this year. CFO Marty Grunst acknowledged ongoing economic and policy uncertainty, but maintained the company’s net interest income outlook, adding, “We widened the range of our guidance for fees and commissions given the impact of economic and market uncertainty on activity within our fixed income trading business.” Management believes that continued strength in core fee income, disciplined expense controls, and robust credit quality will help offset remaining headwinds.
Key Insights from Management’s Remarks
Management pointed to trading fee volatility, ongoing strength in core fee businesses, and a strategic loan portfolio mix as the main influences on first quarter results.
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Trading fee volatility: The bank’s trading business, focused primarily on mortgage-backed securities, experienced a significant decline in fee income due to lower trading volumes and compressed spreads. Management explained that the steepening of the yield curve contributed to a shift in revenue from trading fees to net interest income, partially offsetting the fee shortfall.
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Stable core fee income: Despite trading headwinds, other fee-based businesses such as mortgage banking, asset management, brokerage, and transaction cards delivered consistent or growing revenue. Management reported that mortgage banking revenue increased as client demand improved, and asset management fees held steady due to portfolio diversification, even amid volatile markets.
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Loan portfolio mix shift: Contraction in the energy loan book, driven by industry consolidation and payoffs, was only partially offset by stable core commercial and industrial (C&I) loans and growth in commercial real estate, especially multifamily and industrial lending. Management expects energy-related headwinds to moderate in coming quarters.
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Credit quality remains strong: The company maintained peer-leading credit metrics, with nonperforming assets at low levels and minimal net charge-offs. Management highlighted a healthy allowance for credit losses and expects credit quality to remain a competitive advantage.
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Expense discipline and capital strength: Expenses were largely flat, with variable compensation adjusting to revenue trends. Strong capital and liquidity positions provide flexibility for share repurchases and future growth investments, as well as the upcoming launch of the mortgage finance business.
Drivers of Future Performance
Management expects a return to more balanced trading activity, new business launches, and stable credit quality to shape results for the rest of 2025.
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Mortgage finance launch: The new mortgage warehouse lending business is expected to begin operations later this year, broadening BOK Financial’s offerings and potentially driving both loan and deposit growth from over 500 independent mortgage originators.
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Trading business normalization: As market volatility subsides, management anticipates trading activity and revenues to recover, with the yield curve’s shape increasingly determining the mix between fee income and net interest income. Early signs in April suggest improvement, but management cautions that results remain sensitive to macroeconomic shifts.
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Expense and credit management: The bank plans to maintain disciplined expense controls, adjusting variable costs to revenue performance, while targeting continued strong credit outcomes. Management views its low loan-to-deposit ratio and robust capital as key enablers for navigating uncertain rate and policy environments.
Catalysts in Upcoming Quarters
In the next few quarters, our analyst team will monitor (1) the ramp-up of the mortgage finance and warehouse lending business and its impact on loan growth, (2) normalization of trading revenues as market volatility abates, and (3) sustained credit quality performance amid evolving macroeconomic conditions. Execution on these fronts will be crucial for achieving management’s growth and profitability goals.
BOK Financial currently trades at $94.66, up from $89.59 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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