BOK Financial Corporation Steers Through Volatile Markets with Strong Capital and Credit Discipline
BOK Financial Corporation has demonstrated its stability and resilience in the face of market volatility, showcasing a strong capital position and disciplined approach to credit.
During their First Quarter 2025 Earnings Conference Call, executives highlighted the company's ability to navigate through extraordinary market conditions. CEO Stacy Kymes emphasized that BOK Financial's reputation as a stable and growing financial services provider is evident in today's volatile market environment. The stability of their franchise was further underscored by consistent risk management frameworks built to weather various economic cycles.
The company's capital levels remained strong, with Total Capital to Risk-Weighted Assets (TCE) reaching 9.5% and Common Equity Tier 1 (CET1) capital at 13.3%. These robust capital levels not only protected the company from market disruptions but also enabled them to plan confidently for future growth. In addition, BOK Financial's liquidity position is one of the lowest in their peer group, with a loan-to-deposit ratio of 62%.
BOK Financial's disciplined approach to credit has driven solid performance in their loan portfolio. The company's criticized classified levels are low, and their combined allowance for loan losses stands at a healthy 1.4% of outstanding loans. Furthermore, their long-term credit performance is peer-leading, with charge-offs totaling 26 basis points.
The executives also discussed the challenges faced by the company's commercial real estate (CRE) business, which can be sensitive to market conditions. However, BOK Financial's CRE concentration is well below limits, reflecting a cautious approach to this area. Despite recent market disruptions and geopolitical events, the company's diverse business model has performed well.
The executives noted that their strategy at BOK Financial is centered on producing long-term sustainable value for shareholders. While fluctuations in some business lines may be observed during unstable conditions, these businesses are designed for long-term success. In fact, net interest income was strong this quarter, and the company continues to see net interest margin expansion.
However, fee income from trading activities was impacted by market uncertainty, with trading fees compressed during February and March. Despite this, BOK Financial's strategy to capture a mix shift in revenue from trading to net interest income has come to fruition, resulting in some of the lost fee income being recaptured in net interest income growth.
