BOK Financial Thrives on Loan & Credit Quality Amid Rising Expenses

BOK Financial Corporation BOKF is well-poised to grow organically, given its steady loan demand. Robust deposit balance and solid credit quality will continue to support its financials. However, the rise in expenses remains a concern for the company.Factors Aiding BOKFLoan & Deposits Growth: BOK Financial has been witnessing continuous loan growth on a diverse business model and an increase in loans to individuals. It has been focused on diversifying its loan portfolio to energy, healthcare and service lending. Though loans declined in 2021, the metric witnessed a compound annual growth rate (CAGR) of 2% in the last six years (2018-2024). Deposits have showcased a rising trend, at a six-year CAGR of 7.1% through 2018-2024. Given the strong loan pipeline and deposit balance, the company will be well-poised for organic growth.Improving Asset Quality: Improved asset quality trends at BOKF seem to be encouraging as its credit quality metrics have been better than the pre-pandemic levels. The company has been witnessing a sharp decline in its non-performing assets, with a five-year (ended 2024) negative CAGR of 24.6%. Likewise, net charge-offs (NCOs) also witnessed a negative CAGR of 40.9% during the same period. With a history of outperformance during credit cycles, BOK Financial is believed to be well-positioned amid expectations of an economic slowdown.Steady Capital Distribution: BOK Financial has a steady capital distribution plan in place. The company has been hiking dividends every year. It hiked its dividend by 3.6% to 57 cents per share in October 2024. Also, the company has a repurchase authorization of 5 million shares (announced in November 2022). As of Dec. 31, 2024, 1.54 million shares remain available under the authorization. Management plans to execute the remaining share buyback opportunistically while maintaining its strong capital position. Given the favorable payout ratio and earnings strength, such capital distribution activities seem sustainable.What’s Hurting BOK Financial    Escalating Expenses: BOK Financial has been witnessing a steady rise in expenses. Operating expenses witnessed a CAGR of 3.4% over the last six years (2018-2024). The expense base is expected to remain elevated due to its ongoing investments in technological advancements and an increase in employee-based compensation.Loan Concentration: The majority of BOKF’s loan portfolio comprises total commercial loans (62.3% of the total loans as of Dec. 31, 2024). The current rapidly changing macroeconomic backdrop is affecting commercial lending activity and the asset quality of the loan category. Thus, the lack of loan portfolio diversification is likely to hurt its financials if the economic situation worsens.BOKF Price Performance & Zacks RankShares of the company have gained 29.1% over the past year compared with the industry’s rise of 28.8%.Image Source: Zacks Investment ResearchBOKF currently sports a Zacks Rank #1 (Strong Buy).BOKF Peers Worth consideringSome other top-ranked bank stocks worth mentioning are BancFirst Corporation BANF and Cullen/Frost Bankers, Inc. CFR.BANF’s earnings estimates for 2025 have been revised upward to $6.52 per share in the past 30 days. The company’s shares have gained 37.1% over the past year. At present, BANF sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.CFR’s 2025 earnings estimates have been revised upward to $8.86 per share in the past 30 days. The stock has gained 29.2% over the past year. Currently, CFR also sports a Zacks Rank #1. Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BOK Financial Corporation (BOKF): Free Stock Analysis Report BancFirst Corporation (BANF): Free Stock Analysis Report Cullen/Frost Bankers, Inc. (CFR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks