BOK FINANCIAL Q1 FY26 earnings call BOKF

BOK Financial reported robust loan growth in Q1 FY26, with total loans increasing $536 million or 2.1% sequentially. This growth was broad-based, with core C&I loans expanding 2.1% sequentially, marking the fourth consecutive quarter of growth. Geographically, Texas grew $208 million (8% annualized), Oklahoma $163 million (9% annualized), and Arizona $236 million. Energy loans increased 4.3% sequentially, reversing prior payout trends, while CRE business grew 3.7% sequentially, remaining within concentration limits. Healthcare loans decreased 1.3% due to cyclical payoffs, despite record production and a strong pipeline.

Credit quality remained exceptionally strong, with nonperforming assets decreasing $14 million to $52 million, resulting in nonperforming assets to period-end loans and repossessed assets of 20 basis points, down 6 basis points. Net charge-offs were minimal at $1.9 million for the quarter, averaging 3 basis points over the last 12 months, with no concerning patterns or concentrations. No provision for credit losses was required, benefiting from higher projected oil prices and improved credit quality, offset by loan growth and modest economic forecast revisions. The combined allowance for credit losses stands at a healthy $323 million, or 1.23% of outstanding loans.

Fee income remained solid at $209.8 million, exceeding results from three of the past four quarters, despite a $5.1 million sequential decline from a strong Q4. Fiduciary and asset management revenue contributed $66.5 million, the second strongest quarter on record. Transaction card revenue continued its record-setting trend, contributing $32 million. Investment banking revenue decreased $4.1 million due to normal seasonality, though Q1 FY26 marked the strongest first quarter for syndication activity on record, up 40% year-over-year. Customer hedging revenue also grew $1.1 million, driven by increased energy customer activity.

Total expenses decreased $6.9 million sequentially, leading to an efficiency ratio of 63.2% for the quarter. Personnel expenses were down $11.6 million, primarily due to lower incentive compensation and the benefits of realignment actions taken in late 2025, which more than offset normal increases from payroll taxes and merit. Non-personnel expense decreased $4.8 million (excluding a prior-quarter FDIC special assessment benefit), largely driven by lower professional fees. This quarter provides a clean view of a more typical expense profile, reflecting continued focus on managing the core cost structure.

Net interest income decreased $0.7 million, and reported net interest margin declined 8 basis points to 2.90%. This compression was attributed to several small negative factors, including a decline in noninterest DDA (seasonal low), lower loan fees, normalization of SOFR spreads, funding costs for counterparty margin, and the full quarter impact of sub debt issued in November. These factors collectively offset positive drivers like fixed-rate asset repricing and loan growth. Management expects margin expansion over the course of 2026, driven by durable fixed-rate asset repricing and seasonal increases in loan fees and DDA in the latter half of the year.

The company maintains very strong capital levels, with tangible common equity at 9.3% and CET1 at 12.6%. BOK Financial announced the commencement of Visa's second exchange program for Visa Class B shares, allowing the monetization of 50% of its remaining position. This could equate to a roughly $29 million pretax benefit based on current market values, with the gain expected to be recognized in Q2. The disposition of these proceeds remains under consideration, with options including reinvestment, debt paydown, share repurchases, or contributions to the foundation.