Bok Financial Corp

AI Artificial Intelligence

Economic outlook Geopolitical conflicts remain isolated. Inflation measures move higher during the third quarter of 2026 due to temporary energy-related pressures, but improve as oil prices normalize. Core inflation remains elevated, reaching 2.7% by the second quarter of 2027. There are no rate cuts over the next four quarters, leaving the federal funds target range unchanged at 3.50% to 3.75% at the end of the second quarter of 2027. Higher energy prices negatively offset the One Big Beautiful Bill fiscal stimulus, and the labor market remains in its current low hire/low fire state. Geopolitical conflicts remain isolated. Inflation reaccelerates and reduces real wages. This results in a significant decrease in consumer spending, which is compounded by a restrictive credit environment and declines in private sector investment. This pushes the United States into a recession with a contraction in economic activity and a sharp increase in the unemployment rate. The Federal Reserve is forced to adopt an accommodative monetary policy compared to the base case scenario and cut the federal funds rate significantly to encourage economic activity and job creation. In total, there are seven rate cuts over the next four quarters bringing the target range to 1.75% to 2.00% by the end of the second quarter of 2027. The continued conflict in the Middle East causes WTI prices to surge higher in the third quarter of 2026. This is followed by significant demand destruction for domestic oil combined with record levels of production, which leads to a sharp decline in oil prices beginning in the fourth quarter of 2026. Geopolitical conflicts remain isolated. Inflation measures that moved higher during the second quarter of 2026 due to temporary energy-related pressures improve as oil prices quickly normalize through the second quarter of 2027. The impact of tariffs and restrictive immigration policies is minor. Core inflation improves and reaches 2.3% by the second quarter of 2027. There is one rate cut over the next four quarters, bringing the target range to 3.25% to 3.50% by the end of the second quarter of 2027. Benefits from the One Big Beautiful Bill and AI investments help lift consumer spending levels and labor force productivity, resulting in above-trend GDP growth.

AI Artificial Intelligence

Economic outlook Geopolitical conflicts remain isolated. Inflation measures move higher during the second quarter of 2026 due to temporary energy-related pressures, but improve as oil prices slowly decrease beginning in the third quarter of 2026. Core inflation remains elevated, reaching 2.7% by the first quarter of 2027. There are no rate cuts over the next four quarters, leaving the federal funds target range unchanged at 3.50% to 3.75% at the end of the first quarter of 2027. Higher energy prices negatively offset the One Big Beautiful Bill fiscal stimulus, and the labor market remains in its current low hire/low fire state. Geopolitical conflicts remain isolated. Inflation reaccelerates and reduces real wages. This results in a significant decrease in consumer spending, which is compounded by a restrictive credit environment and declines in private sector investment. This pushes the United States into a recession with a contraction in economic activity and a sharp increase in the unemployment rate. The Federal Reserve is forced to adopt an accommodative monetary policy compared to the base case scenario and cut the federal funds rate significantly to encourage economic activity and job creation. In total, there are seven rate cuts over the next four quarters bringing the target range to 1.75% to 2.00% by the end of the first quarter of 2027. Significant demand destruction for domestic oil, combined with record levels of production, lead to a sharp decline in oil prices beginning in the third quarter of 2026. Geopolitical conflicts remain isolated. Inflation measures that moved higher during the first quarter of 2026 due to temporary energy-related pressures improve as oil prices quickly normalize through the first quarter of 2027. The impact of tariffs and restrictive immigration policies is minor. Core inflation improves and reaches 2.3% by the first quarter of 2027. There is one rate cut over the next four quarters, bringing the target range to 3.25% to 3.50% by the end of the first quarter of 2027. Benefits from the One Big Beautiful Bill and AI investments help lift consumer spending levels and labor force productivity, resulting in above-trend GDP growth.

AI Artificial Intelligence

The development and use of emerging technologies like artificial intelligence, machine learning, and generative artificial intelligence presents risks and challenges that may adversely impact our business.

We continue to evaluate and selectively deploy emerging technologies like AI, machine learning, and generative AI for incorporation into our business. AI refers to a broad field of computer science that enables machines to perform tasks that typically require human intelligence, such as reasoning, problem-solving, decision-making, and language understanding. Machine learning is a subset of AI that uses statistical and computational methods to train algorithms so they can automatically learn patterns from data and improve performance without explicit programming. The Board receives periodic updates on our overall governance structure and risk management approach for these technologies, but does not approve individual AI capabilities. Each initiative is subject to a specific internal governance process designed to assess risks related to data quality, bias, regulatory compliance, and ethical considerations. The Company's use of AI and machine learning is subject to risks that algorithms and data sets are flawed or may be insufficient or contain biased information. The legal and regulatory environment relating to these emerging technologies is uncertain and rapidly evolving and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of these technologies. These evolving laws and regulations could require changes in our implementation of these emerging technologies and increase our compliance costs and the risk of non-compliance. These same risks apply to our use of third-party service providers who are implementing these tools into the products or services they provide to us.

Economic outlook Inflation levels continue to normalize, but remain elevated throughout 2026, reaching 2.6% by the fourth quarter of 2026. Above average inflation is largely offset by strong wage growth and generates on-trend GDP growth. Businesses avoid broad layoffs due to the elevated expense of hiring which results in only a slight increase to the national unemployment rate. There are two rate cuts over the next four quarters, bringing the federal funds target range to 3.00% to 3.25% by the end of the fourth quarter of 2026. Widespread tariffs and restrictive immigration policies accelerate inflation and reduce real wages. This results in a significant decrease in consumer spending, which is compounded by a restrictive credit environment and declines in private sector investment, pushing the United States into a recession with a contraction in economic activity and a sharp increase in the unemployment rate. The Federal Reserve is forced to adopt an accommodative monetary policy and cut the federal funds rate significantly to encourage economic activity and job creation to help limit the depth of the recession. In total, there are seven rate cuts over the next four quarters, bringing the target range to 1.75% to 2.00% by the end of the fourth quarter of 2026. Core inflation improves, reaching 2.2% by the fourth quarter of 2026. The impact of tariffs and restrictive immigration policies is minor. Labor force participation increases to help lift consumer spending levels and gains in productivity, which are benefitted by effective use of AI, resulting in above-trend GDP growth. There is one rate cut over the next four quarters, bringing the federal funds target range to 3.25% to 3.50% by the fourth quarter of 2026.

AI Artificial Intelligence

The development and use of emerging technologies like artificial intelligence, machine learning, and generative artificial intelligence presents risks and challenges that may adversely impact our business.

We continue to evaluate and selectively deploy emerging technologies like AI, machine learning, and generative AI for incorporation into our business. The Company's use of AI and machine learning is subject to risks that algorithms and data sets are flawed or may be insufficient or contain biased information. The legal and regulatory environment relating to these emerging technologies is uncertain and rapidly evolving and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of these technologies. These evolving laws and regulations could require changes in our implementation of these emerging technologies and increase our compliance costs and the risk of non-compliance. These same risks apply to our use of third-party service providers who are implementing these tools into the products or services they provide to us.