BOKF Net Interest Income Jumps 10.9%

Key Points

• GAAP EPS of $2.19 and revenue of $525.5 million both exceeded analyst expectations for Q2 2025.

• Net interest income and fee revenue both increased from the prior quarter, while credit quality metrics remained among the best in the industry.

• Operating expenses (GAAP) rose 5.3% from Q2 2024 to Q2 2025, primarily due to higher technology and operational costs.

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Bok Financial (NASDAQ:BOKF), a regional banking and financial services company active across the Southwest and Midwest, delivered results that surpassed analyst expectations, reporting GAAP earnings per share of $2.19 versus an expected $1.99, and GAAP revenue of $525.5 million compared to the $520.06 million estimate. The results, released July 21, 2025, covered the quarter ending June 30. There was growth in both net interest and fee income, offset by rising operating costs, mainly in technology and professional services. On the whole, Bok Financial posted a solid quarter by expanding core business lines and maintaining strong asset quality, but cost discipline remains an area to monitor.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Strategic Priorities

Bok Financial is a diversified regional banking company, serving commercial, consumer, and wealth management clients. Its business spans major urban centers such as Tulsa, Dallas, Oklahoma City, and Houston, with a multi-state presence.

The company's core focus areas have centered on geographic expansion—particularly in growth markets like Texas—and diversification of revenue streams. Success for Bok Financial is tied to its ability to balance traditional banking activities with fee-based services such as asset management, along with maintaining regulatory compliance and robust risk management. Attracting and keeping skilled personnel is also flagged as a strategic priority.

Quarter in Review: Growth, Resiliency, and Select Expense Pressures

Bok Financial's headline results beat Wall Street expectations on both the top and bottom lines. Reported GAAP EPS was $2.19, outpacing the $1.99 estimate, and GAAP revenue reached $525.5 million, compared to the $520.06 million projection. However, GAAP EPS was down from the prior-year period, mainly due to margin compression and higher costs.

Net interest income, the core of a bank's earnings from lending and investment, rose to $328.2 million, up 10.9 % from the prior year. This growth was supported by higher average earning assets and a modest increase in loans, which ended the period at $24.3 billion, up $602 million from the previous quarter. Net interest margin—a measure of profit from lending minus funding costs—improved slightly, as asset yields inched up and funding costs declined. Fee and commission revenue (GAAP) was $197.3 million, with notable sequential growth in brokerage trading (up 22.7%) and asset management fees (up 4.9%). Transaction card and deposit service charges also grew quarter over quarter. Core fee businesses set new quarterly records, though total fee revenue (GAAP) was slightly below the prior year due to some weakness in mortgage banking.

Nonperforming assets were $81 million, or 0.33% of total loans and repossessed assets, while Net charge-offs—loans unlikely to be repaid—were $0.6 million. The allowance for credit losses stood at $330 million, representing 1.36% of loans and covering nonaccruing loans by more than fourfold, excluding government-guaranteed mortgages. Importantly, Bok Financial booked no provision for loan losses, as credit conditions improved faster than loan growth could offset.

On the cost side, total operating expenses (GAAP) were $354.5 million, an increase of 5.3% compared to Q2 2024. While Personnel costs remained mostly flat, while other expenses rose sharply due to technology initiatives and professional services, as well as higher operational losses. The efficiency ratio—a banking measure of cost to produce a dollar of revenue—was 65.4%, above Q2 2024’s 59.8%, though improved from the prior quarter. The company also benefited from a $523 thousand FDIC special assessment adjustment. Capital ratios remained strong, with tangible common equity (non-GAAP) at 9.63% and the Common Equity Tier 1 ratio at 13.59%.

Segment performance showed broad-based momentum. Commercial Banking contributed $141.6 million to net income before taxes, an increase of $1.6 million over the previous quarter. The consumer banking unit notched gains in both loans and deposits. Wealth management services, which includes asset management and trading of securities, reported a significant pickup in profitability and assets under management, now totaling $117.9 billion. Trading revenues, especially from mortgage-backed securities, rebounded sharply from a soft previous quarter.

Bok Financial showed continued progress in new business launches, including the development of a mortgage finance vertical expected to expand loan product offerings in later quarters, with the launch planned for the September to October 2025 time frame. Loan growth was strongest in commercial real estate and loans to individuals, offsetting declines in energy lending. The bank also stepped up capital returns to shareholders, repurchasing 663,298 shares at an average price of $93.99 per share and paying out $36.3 million in dividends with a payout ratio of 25.9%.

Outlook and What to Watch

Management has not provided explicit forward guidance in this release. However, there is also flexibility to adjust expense plans if there is a dip in revenues or economic activity. The company maintains strong capital levels to support both future growth and capital return activities, such as share buybacks or continued dividends.

Investors should keep a close eye on expense trends, especially in technology and operational areas, which have driven recent cost increases. Shifts in deposit mix and costs will also be important, as market competition for deposits could pressure funding margins. The concentration of loans in commercial real estate and energy, despite recent reductions and robust risk controls, also remains an ongoing area to monitor.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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