BOK Financial Gains 16% in 3 Months: How to Play the Stock Now?

Core Viewpoint - BOK Financial Corporation (BOKF) has outperformed its peers and the industry with a 16% increase in share price over the past three months, compared to the industry's 9.2% growth [1][8] Performance Summary - BOKF's stock performance has been strong, with significant gains compared to peers like Cullen/Frost Bankers, Inc. (CFR) and First Horizon Corporation (FHN), which saw increases of 1.9% and 16.9%, respectively [1][8] Growth Factors - Organic growth is driven by continuous loan growth, particularly in diverse sectors such as energy, healthcare, and service lending, with a compound annual growth rate (CAGR) of 2% in loans from 2018 to 2024 and a 7.1% CAGR in deposits during the same period [5] - The Federal Reserve's expected interest rate cuts are anticipated to further enhance BOKF's net interest income (NII) and net interest margin (NIM), with management projecting NII to rise to between $1.33 billion and $1.38 billion in 2025, up from $1.2 billion in 2024 [6][7] Asset Quality - BOKF has shown improved asset quality, with non-performing assets declining at a CAGR of 24.6% over five years, and net charge-offs decreasing at a CAGR of 40.9% during the same period [9] - Management expects provisions for 2025 to remain below $18 million, indicating strong credit quality [9] Capital Distribution - BOKF has a consistent capital distribution strategy, increasing dividends annually, with a recent hike of 3.6% to 57 cents per share in October 2024, resulting in a current dividend yield of 2.07% [10] - The company has also authorized a share repurchase program of up to 5 million shares, reflecting confidence in its earnings strength [12] Concerns - Rising operating expenses have been noted, with a CAGR of 3.4% from 2018 to 2024, and expectations for non-interest expenses to increase at a mid-single-digit rate in 2025 [13] - A significant portion of BOKF's loan portfolio is concentrated in commercial loans, which accounted for 59.2% of total loans as of June 30, 2025, posing risks if economic conditions deteriorate [14] Future Outlook - BOKF's strong fundamentals, including loan and deposit growth, improving NIM, and high asset quality, position the company well for continued expansion, with expected year-over-year increases in earnings and revenues for 2025 and 2026 [15]