BOK Financial Corporation (BOKF): PESTLE Analysis [Nov-2025 Updated]

You're trying to figure out if BOK Financial Corporation (BOKF) is a buy, hold, or sell in a market where regional banks are under the microscope. The short answer is: their deep roots in the pro-energy Southwest and Midwest are a shield, but the Commercial Real Estate (CRE) debt cliff is a massive headwind. While the Federal Reserve's rate cut to 3.75% to 4.00% in late 2025 is a tailwind for Net Interest Income (NII)-projected between $1.325 billion and $1.375 billion-the bank must defintely navigate a record 20.4% national office vacancy rate that pressures their loan book. We need to look past the Q3 2025 net income of $140.89 million and map the six macro forces-Political, Economic, Sociological, Technological, Legal, and Environmental-that will truly shape their next move.

BOK Financial Corporation (BOKF) - PESTLE Analysis: Political factors

Pro-business administration seeks to streamline federal regulatory processes.

The political environment in 2025 is defintely shifting toward a less restrictive federal regulatory framework, which is a clear opportunity for regional institutions like BOK Financial Corporation. With nearly $50 billion in total assets as of Q3 2025, BOK Financial Corporation is poised to benefit from this shift, which aims to reduce compliance costs and bureaucratic friction.

In November 2025, the Federal Reserve released new supervisory operating principles, instructing its bank supervisors to pivot away from excessive focus on 'processes, procedures and documentation' and instead concentrate on material financial risks. Also, the Office of the Comptroller of the Currency (OCC) is broadening eligibility for expedited licensing procedures for community banks, tailoring requirements to the size and risk profile of an institution. This means BOK Financial Corporation can allocate more of its operational budget-which saw expenses rise to $369.8 million in Q3 2025-toward strategic growth instead of compliance overhead.

The administration's move in July 2025 to remove reputational risk from supervisory exams is a significant win, reducing pressure on banks to cut ties with controversial clients, which directly supports BOK Financial Corporation's core energy lending business. Less bureaucracy means more capital for lending.

Oklahoma's anti-ESG laws favor BOKF's significant fossil fuel lending business.

The state-level political climate in Oklahoma is highly favorable to BOK Financial Corporation's specialization in the energy sector. Oklahoma's Energy Discrimination Elimination Act (EDEA), an anti-Environmental, Social, and Governance (ESG) law, prohibits state entities from contracting with financial institutions that allegedly boycott the fossil fuel industry.

While the enforcement of the EDEA is currently paused due to a lawsuit before the Oklahoma Supreme Court as of November 2025, the law's intent creates a competitive advantage for BOK Financial Corporation. Major national firms like BlackRock, Wells Fargo, and JPMorgan Chase have been blacklisted from managing billions in state pension funds, which effectively funnels energy-sector clients and related business opportunities to regional, energy-focused banks. BOK Financial Corporation has capitalized on this environment, becoming one of the world's 30 busiest dealmakers in fossil fuels, with regional banks seeing combined fossil fuel loans jump over 70% on an average annualized basis since early 2022.

Tax policy certainty expected, with assumptions of extending the Tax Cuts and Jobs Act.

Uncertainty around the expiration of the 2017 Tax Cuts and Jobs Act (TCJA) was largely resolved in mid-2025, providing a stable tax backdrop for BOK Financial Corporation's commercial and wealth management clients. The passage of the 'One Big Beautiful Bill Act' made many of the key TCJA provisions permanent.

This certainty is crucial for long-term business planning and investment decisions among the bank's clients, who now face predictable individual and business tax rates. For instance, the lower individual tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are now permanent.

Here is the quick math on the key individual tax changes impacting the bank's high-net-worth wealth management clients:

Tax Provision	Status for 2025 Fiscal Year	Key Amount/Value
Individual Income Tax Brackets	Made Permanent	10% to 37% (7 brackets)
Standard Deduction (Married Filing Jointly)	Made Permanent and Increased	$31,500
Alternative Minimum Tax (AMT) Exemption (Married Filing Jointly)	Adjusted and Indexed for Inflation	$137,300

Geopolitical uncertainty and trade policies create volatility for regional business clients.

While the regulatory environment is easing, geopolitical uncertainty, particularly around trade policy, is creating headwinds for BOK Financial Corporation's regional commercial and industrial (C&I) loan clients in Oklahoma and Texas. This volatility translates into higher credit risk for the bank's loan portfolio, which totaled $24.9 billion in Q3 2025.

The intensifying U.S.-China trade tensions and new tariff policies are directly impacting the region's core industries:

• Agriculture: Oklahoma's wheat exports to China have dropped by over 58% year-over-year due to retaliatory tariffs of 34%, creating financial stress for farm clients.
• Texas Business: A November 2025 Dallas Fed analysis indicated that nearly half of surveyed businesses in Texas are seeing their costs rise because of tariffs, with over a quarter passing those costs to consumers.
• Manufacturing/Energy Supply: Companies in Oklahoma's growing aerospace and electronics manufacturing sectors, and even energy firms, face supply constraints and higher costs due to Chinese rare earth mineral export controls, impacting components like high-efficiency turbines.

This trade uncertainty could cost the Texas economy alone about $46 billion in annual gross product and the loss of 370,000 jobs, which is a significant risk factor for BOK Financial Corporation's regional loan quality.

BOK Financial Corporation (BOKF) - PESTLE Analysis: Economic factors

Federal Reserve benchmark rate cut to 3.75% to 4.00% in October 2025 signals easing monetary policy

The Federal Reserve's pivot to easing monetary policy is a major factor for BOK Financial Corporation (BOKF), directly impacting its Net Interest Margin (NIM). The Federal Open Market Committee (FOMC) cut the federal funds rate by 25 basis points on October 29, 2025, setting the new target range at 3.75%-4.00%. This was the second cut of the year, a move signaling the Fed's priority shift toward supporting a softening economy and labor market, even with the Consumer Price Index (CPI) still elevated at 3% as of September 2025. For BOKF, a regional bank with a strong deposit base, a falling rate environment can compress NIM over time, but the immediate effect is often a stabilization of funding costs. Still, the overall direction of lower rates helps alleviate pressure on borrowers, particularly in the Commercial Real Estate (CRE) segment, which is a key part of BOKF's loan portfolio.

Net Interest Income (NII) is projected to be between $1.325 billion and $1.375 billion for 2025

Despite the rate cuts, BOK Financial Corporation's core earnings engine remains strong for the 2025 fiscal year. The company's management provided an updated full-year Net Interest Income (NII) guidance in Q3 2025, projecting a range of $1.33 billion to $1.35 billion. This is a strong increase from the $1.2 billion reported in 2024, reflecting effective asset-liability management and loan growth. The initial, broader projection was between $1.325 billion and $1.375 billion, based on an assumption of two 25-basis-point rate cuts in 2025. The bank's strategy of reinvesting securities and fixed-rate loan cash flows at higher current market yields has helped maintain margin expansion, even as deposit pricing pressures ease slightly. Total loans as of September 30, 2025, stood at $24.8 billion.

Here's the quick math on the NII outlook:

Financial Metric	2024 Actual (Approx.)	2025 Guidance (Updated)	Year-over-Year Change (Midpoint)
Net Interest Income (NII)	$1.2 billion	$1.33 billion to $1.35 billion	+11.7% to +12.5%
Total Loans (as of Sept 30, 2025)	N/A	$24.8 billion	+2.3% sequentially
Fees and Commissions	$810 million	$775 million to $810 million	-4.3% to 0.0%

Commercial Real Estate (CRE) debt cliff: nearly $1 trillion in loans maturing, forcing refinancing at higher rates

The looming Commercial Real Estate (CRE) debt cliff presents the single biggest near-term credit risk to BOKF and the broader regional banking sector. Nearly $1 trillion in CRE loans are scheduled to mature in 2025, with specific estimates citing $957 billion in debt coming due. This volume is almost triple the 20-year average of about $350 billion. The problem is that many of these loans were underwritten when interest rates were significantly lower, and now refinancing requires borrowers to secure new debt at current, higher rates, often with lower property valuations. For example, the average interest rate on a maturing CRE loan was around 4.3%, while a new loan in 2024 was closer to 6.2%. This interest rate shock will force defaults, loan modifications, or the need for new equity capital. BOKF has a significant CRE portfolio, and while its overall loan-to-deposit ratio is a healthy mid-60s percent range, the stress is real, especially in the office sector, where national vacancy rates are near 20%. You defintely need to track BOKF's non-performing assets, which were $74 million as of September 30, 2025.

Sticky inflation, particularly in labor costs, pressures the bank's operating expenses

While the Fed is cutting rates, core inflation remains 'sticky,' meaning price pressures are embedded, particularly in the service and labor sectors. This directly impacts BOKF's operating expenses. The Core Personal Consumption Expenditures (PCE) inflation is projected to be around 3.4% by year-end 2025, well above the Fed's 2% target. For a bank, the largest component of operating expense is personnel. BOKF's total other operating expenses for the third quarter of 2025 rose 8.4% year-over-year, with the primary driver being higher personnel expenses. This cost pressure is a major headwind to profitability, evidenced by the bank's efficiency ratio rising to 66.66% in Q3 2025, up from 65.11% in the prior year. The bank's full-year 2025 guidance for the efficiency ratio is in the 65% to 66% range. This means for every dollar of revenue, up to 66 cents is spent on operating costs-a high figure that persistent wage inflation makes hard to reduce.

• CPI (October 2025): 2.9% annual rate.
• Core PCE Projection (Year-End 2025): 3.4%.
• BOKF Q3 2025 Operating Expense Increase: 8.4% year-over-year.
• Primary Driver: Higher personnel expenses.

Next step: Finance needs to model the NII impact of a third 25-basis-point rate cut in December 2025 against the projected increase in personnel expenses for Q4.

BOK Financial Corporation (BOKF) - PESTLE Analysis: Social factors

Hybrid work models push national office vacancy rates to a record 20.4% in Q1 2025, impacting CRE loan portfolio risk.

The long-term social shift toward hybrid work continues to pressure Commercial Real Estate (CRE) values, but BOK Financial Corporation is defintely better insulated than many peers. The national office vacancy rate hit a new record of 20.4% in the first quarter of 2025, reflecting a significant market-wide risk.

However, BOK Financial Corporation's exposure to this troubled sector is contained. As of March 31, 2025, the bank's total office loan balance was $704.7 million, which represents a manageable 3% of its total outstanding loans. This is a strategic advantage; the bank has actively reduced its exposure, with the office loan portfolio decreasing by 6.8% sequentially in Q1 2025. This limited exposure means the national social trend, while a headwind for the CRE market overall, is not a major systemic risk for BOK Financial Corporation's balance sheet.

Customer behavior shifts deposits from non-interest-bearing to higher-cost interest-bearing accounts.

You are seeing a clear, sustained shift in how customers hold their money, a direct result of higher interest rates making cash accounts attractive again. This social trend impacts a bank's cost of funds (the money it pays out to depositors). In the third quarter of 2025, BOK Financial Corporation saw average interest-bearing deposits increase by a substantial $408 million.

At the same time, customers pulled funds out of non-interest-bearing accounts (demand deposits), which decreased by $64 million in Q3 2025. This migration means the bank is paying more for its funding, pushing the cost of interest-bearing deposits to 3.14% in Q3 2025. The good news is that the bank's net interest margin (NIM) still expanded to 2.91% in Q3 2025, showing they are managing the cost of funds well enough to offset the deposit shift.

Deposit Shift Metric (Q3 2025)	Amount (in Millions)	Sequential Change
Average Interest-Bearing Deposits	N/A	+$408 million
Average Demand Deposits (Non-Interest-Bearing)	N/A	-$64 million
Cost of Interest-Bearing Deposits	N/A	3.14% (down 3 basis points)

Strong regional population growth supports the resilient multifamily and industrial CRE sectors in the Southwest/Midwest.

The demographic migration to the Sun Belt and parts of the Midwest is a powerful tailwind for BOK Financial Corporation's core markets, which include states like Texas, Oklahoma, and Arizona. Texas, a key operating state, is seeing one of the highest population growth rates in the nation, estimated at approximately 1.6% for 2024-2025. This influx of residents and businesses directly supports demand for non-office commercial real estate.

The bank's loan portfolio reflects this positive social trend, showing growth in the resilient sectors that house these new populations and their supporting logistics:

• Multifamily loans grew 4.4% sequentially to $2.3363 billion in Q1 2025.
• Industrial loans grew 3.1% sequentially to $1.1631 billion in Q1 2025.

This focus on high-demand property types in growing regions is a smart defensive play against the broader CRE downturn.

Wealth assets grew to $122.7 billion in Q3 2025, reflecting a strong high-net-worth client base.

The continued growth of BOK Financial Corporation's Wealth Management segment highlights the affluence and trust of its client base, which is a key stability factor for a regional bank. Wealth assets reached $122.7 billion by the end of Q3 2025.

Here's the quick math: this represents an $8.7 billion increase in assets over just the last six months, demonstrating successful client acquisition and strong market performance in their trust and investment businesses. This segment's fee-based revenue provides a crucial counter-cyclical buffer, meaning it performs well even when traditional lending income is under pressure. The Wealth Management division generated $36.6 million in net income before taxes in Q3 2025, underscoring its importance to the overall business model.

BOK Financial Corporation (BOKF) - PESTLE Analysis: Technological factors

You are defintely right to focus on technology; it's the single biggest swing factor for a regional bank's profitability and risk profile in 2025. BOK Financial Corporation's (BOKF) technological strategy is a classic two-pronged approach: aggressively adopting advanced automation to drive down its efficiency ratio while simultaneously boosting investment in defensive technologies to counter escalating cyber threats.

The firm is actively managing its expense base, with a full-year 2025 efficiency ratio target of approximately 65-66%, down from 68.3% in Q1 2025 and 66.66% in Q3 2025, which is a direct measure of how well technology spending translates into revenue. Here's the quick math: lower expenses relative to revenue means a better ratio, and technology is the primary tool for that reduction.

Generative AI (GenAI) adoption is a 2025 strategic imperative for operational efficiency and risk management

Generative AI (GenAI) is no longer a pilot program; it is a core strategic imperative for BOK Financial. The focus is on using this technology to enhance both the front-office experience and back-office efficiency, but the immediate, critical application is risk management.

The financial services industry faces a massive headwind from AI-enabled fraud, which the Deloitte Center for Financial Services estimates will enable $40 billion in losses by 2027, up from $12.3 billion in 2023. BOK Financial is responding by embedding AI into its core fraud detection systems to identify subtle anomalies in user behavior and transaction timing that traditional rules-based systems miss. This shift is about moving from simply reacting to fraud to predicting and preventing it in real time.

Increased investment in AI for fraud detection and cybersecurity to combat rising cybercrime

The threat landscape is forcing BOK Financial to increase its defensive technology spending. The cost of a cyber breach for a small organization-a key client segment for the bank-is estimated by IBM to be between $120,000 and $1.24 million, making the bank's investment in protecting its commercial clients a critical value proposition.

The company's non-personnel expenses reflect this investment cadence. For instance, the Q2 2025 earnings call noted a $6.4 million increase in non-personnel expense, driven primarily by increased technology project costs and operational losses. This is a clear signal of capital allocation toward system upgrades and new project rollouts. The bank is deploying layered security measures:

• Implementing AI-powered fraud detection systems.
• Deploying multi-factor authentication (MFA) across platforms.
• Continuously monitoring transaction patterns for anomalies.

Digital transformation focus is on high-friction workflows like document automation and loan processing

Digital transformation efforts are squarely aimed at high-friction, document-heavy workflows, particularly in lending. Automating loan origination and servicing is an industry-wide trend that can cut approval times from days to hours, and BOK Financial is actively pursuing this efficiency gain. A concrete example of this strategic focus is the Q2 2025 launch of their re-engineered mortgage finance business, an area historically burdened by paper and manual processes.

The goal is to use Optical Character Recognition (OCR) and AI to instantly scan, extract, and validate data from documents like tax statements and financial statements. This not only speeds up the process but also reduces the human error that leads to costly rework and compliance issues. This is a direct play to improve the bank's operational efficiency and boost its net interest margin (NIM) by accelerating loan deployment.

BOKF subsidiary TransFund is a Top 10 Electronic Funds Transfer (EFT) processor, a key fee-based asset

The technology factor for BOK Financial is not just an expense line item; it's a significant revenue generator through its subsidiary, TransFund. TransFund is confirmed as a Top 10 Electronic Funds Transfer (EFT) processor in the U.S., a key non-interest income asset that provides Debit and Credit Issuing Processing for nearly 500 Banks & Credit Unions.

This fee-based business provides revenue diversification and stability, which is vital in a fluctuating interest rate environment. The strength of this technology platform is a core component of the company's overall non-interest revenue forecast for the year.

2025 Financial Metric (as of Q3 2025)	Value/Projection	Technological Relevance
Total Fees and Commissions Revenue (FY 2025 Projection)	$775 million - $810 million	TransFund (EFT Processing) is a core component of this stable, fee-based revenue stream.
Q3 2025 Efficiency Ratio	66.66%	Technology and automation efforts are directly aimed at lowering this ratio toward the target of 65-66%.
Q1 2025 Data Processing and Communications Expense	$47.6 million	Represents the baseline quarterly operational cost of BOKF's core technology infrastructure.
Q2 2025 Increase in Technology Project Costs (Non-Personnel Expense)	$6.4 million	Tangible increase in spending on new technology projects, including cybersecurity and digital transformation initiatives.
Assets Under Management and Administration (AUMA) (Q3 2025)	$122.7 billion	Technology platforms are essential for managing and scaling the Wealth Management division, a major non-interest revenue source.

The key next step is for the Technology Steering Committee to provide the Board with a quantified return on investment (ROI) model for the GenAI initiatives by the end of Q4, showing how the $6.4 million in project costs will lead to a measurable reduction in the 2026 efficiency ratio.

BOK Financial Corporation (BOKF) - PESTLE Analysis: Legal factors

Basel III Endgame capital requirements reproposal is expected to exempt most stringent rules for regional banks like BOKF.

The regulatory environment for regional banks is defintely shifting in a favorable direction as of late 2025. The revised approach to the Basel III Endgame capital requirements is expected to exempt BOK Financial Corporation from the most stringent new rules. The original proposal would have significantly increased capital requirements for banks with $100 billion or more in total consolidated assets. BOK Financial Corporation, with total consolidated assets of approximately $50 billion in late 2025, falls below this critical threshold.

What this means is that BOK Financial Corporation will likely avoid the complex, costly, and capital-intensive changes that will hit the largest, most internationally active U.S. banks. This exemption preserves capital flexibility and avoids the need for a major overhaul of risk-weighting calculations. It's a huge competitive advantage for a regional player. The new draft of the rule is anticipated by early 2026, but the consensus points to a less severe impact on institutions of BOK Financial Corporation's size.

• Avoids capital increase of up to 9% seen by larger banks.
• Maintains current capital ratios, like the Common Equity Tier 1 ratio of 13.60% as of September 30, 2025.
• Frees up capital for strategic growth, not just compliance.

Consumer Financial Protection Bureau (CFPB) activities were suspended in early 2025, easing consumer compliance pressure.

The regulatory pressure from the Consumer Financial Protection Bureau (CFPB) saw a dramatic, near-total halt in early 2025. In February 2025, the new administration ordered the CFPB to suspend nearly all operations, including new rulemaking, enforcement actions, and active litigation. This directive immediately eased the compliance burden on financial institutions like BOK Financial Corporation.

The suspension of CFPB activities means a temporary pause on new consumer protection rules that could have required significant investment in compliance infrastructure and staff training. For BOK Financial Corporation, this translates into lower non-interest expenses in the near-term and a clearer focus on existing compliance frameworks. However, this relief is temporary; the core laws remain, and other regulators still enforce them. You still have to follow the rules, but the threat of new, complex rules is gone for now.

Federal Reserve removed reputational risk as a component of bank examination programs in June 2025.

In a significant shift toward objective, metrics-driven supervision, the Federal Reserve Board announced on June 23, 2025, that reputational risk would no longer be a component of its bank examination programs. This move follows similar actions by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).

This change is a win for transparency. It means that supervisory ratings will now hinge solely on measurable risk metrics-financial, operational, legal, and compliance risks-rather than subjective, perception-based concerns. For BOK Financial Corporation, this reduces the risk of a supervisory downgrade based on an examiner's interpretation of public sentiment or political issues. The focus is now firmly on quantifiable financial risk. This makes the supervisory process more predictable and consistent, which is always better for business planning.

Past bank failures cost BOK Financial Corporation over $50 million in special FDIC assessments, highlighting ongoing insurance fund risk.

The failures of Silicon Valley Bank and Signature Bank in 2023 resulted in a substantial, multi-quarter special assessment levied on the industry to replenish the Deposit Insurance Fund (DIF). BOK Financial Corporation, as an institution with over $50 billion in assets, is one of the approximately 114 banks subject to this fee.

The total cost to BOK Financial Corporation for this special FDIC assessment is projected to be over $50 million, collected over nine quarterly assessment periods beginning in 2024 and extending into 2026. This significant, unexpected expense directly impacts non-interest expenses and net income throughout the 2025 fiscal year. Here's the quick math on the assessment base: BOK Financial Corporation's estimated uninsured deposits at December 31, 2022, were $21.3 billion. The assessment base, after the $5 billion exclusion, is $16.3 billion.

Metric	Value (as of Dec. 31, 2022)	Notes
Estimated Uninsured Deposits	$21.3 billion	Base for FDIC Special Assessment
Assessment Exclusion	$5.0 billion	Standard exclusion amount
Assessment Base	$16.3 billion	$21.3B - $5.0B
Quarterly Assessment Rate	3.36 basis points (0.000336)	Applied to the Assessment Base
Total Assessment (Projected 9 Quarters)	Over $50 million	Represents an ongoing, non-core operating expense through 2026

What this estimate hides is the potential for further adjustments to the total cost, as the FDIC continues to resolve the failed bank assets and update its loss estimate. The risk of future, similar special assessments remains a long-term legal and financial risk for all regional banks with high levels of uninsured deposits.

BOK Financial Corporation (BOKF) - PESTLE Analysis: Environmental factors

BOK Financial Corporation's (BOKF) environmental profile is defined by its deep, historical ties to the fossil fuel industry, which creates a dual reality: a stable, politically-supported core business but a high concentration risk in a sector facing long-term transition. The bank's operating footprint across Oklahoma and Texas provides a significant political shield against many Environmental, Social, and Governance (ESG) pressures, but it does not eliminate the physical and transitional risks inherent in its loan book.

Here's the quick math: Q3 2025 net income was $140.9 million, so the growth story is there, but it hinges on managing that Commercial Real Estate (CRE) debt and leveraging technology. Finance: draft a 13-week cash view focusing on CRE maturities by Friday.

Deep, long-standing commitment to oil and gas lending, positioning BOKF as a major fossil fuel dealmaker.

BOK Financial's foundation is rooted in energy, having been established in 1910 as a capital source for the industry. This legacy continues to shape its loan portfolio, creating a significant concentration risk. While the bank is actively managing this exposure, the energy loan commitments surpassed $6 billion in 2022 [cite: 9 in step 1's results], underscoring its role as a major fossil fuel dealmaker. In the near-term, the energy portfolio has actually seen a contraction, decreasing by $53 million in Q3 2025 [cite: 4 in step 2's results] due to elevated payoff activity, which slightly reduces the immediate concentration but highlights the volatility of the sector.

The exposure to the energy sector is a double-edged sword: it provides a high-yield, specialized revenue stream but exposes the bank to the price volatility of crude oil and natural gas. The bank's total outstanding loans were $24.9 billion at the end of Q3 2025 [cite: 6 in step 3's results], making the energy sector a disproportionately large factor in credit quality discussions, even with non-performing assets at a low 0.30% of outstanding loans [cite: 6 in step 3's results].

Pro-energy political climate in core operating states (Oklahoma, Texas) shields the bank from many ESG (Environmental, Social, and Governance) pressures.

The political environment in BOK Financial's core markets of Oklahoma and Texas is defintely a buffer against the growing national anti-fossil fuel sentiment and ESG mandates. These states have actively legislated against the use of ESG factors in state investment decisions. Texas's anti-ESG laws, for example, were estimated to have cost the state $668.7 million in lost economic activity and over 3,000 full-time jobs [cite: 7 in step 2's results], demonstrating the political commitment to protecting the oil and gas industry.

This political climate means BOKF faces minimal shareholder or regulatory pressure from its state-level stakeholders to divest from energy. The focus remains on core financial stewardship, rather than on climate-related transition risk (the risk associated with shifting to a low-carbon economy). This unique regional dynamic allows the bank to maintain its specialized energy lending without the immediate threat of being blacklisted from state and municipal contracts, unlike some larger national institutions.

Climate risk exposure exists through loan portfolio concentration in energy and commercial real estate vulnerable to extreme weather events.

While the bank is shielded from some ESG transition risks, it remains highly exposed to physical climate risks, primarily through its Commercial Real Estate (CRE) portfolio and its energy clients. Extreme weather events common to the Southwest and Midwest, such as severe flooding, droughts, and heat waves, pose a direct threat to the collateral securing these loans.

The bank's CRE loan balance was a substantial $5.8 billion at September 30, 2025 [cite: 2 in step 2's results], representing 23% of its total loan portfolio [cite: 2 in step 2's results]. Unfunded CRE loan commitments add another $2.1 billion in potential exposure [cite: 2 in step 2's results]. A major weather event could cause significant property damage and business interruption, translating directly into credit quality deterioration.

Energy loan commitments surpassed $6 billion in 2022, underscoring the concentration risk in a single sector.

The sheer scale of the energy commitment highlights the concentration risk. As of Q3 2025, the energy portfolio continued to see a contraction, including a 4.4% sequential decrease in Q2 2025 [cite: 8 in step 3's results], yet its overall size remains a dominant factor in the bank's risk profile. The exposure is diversified across upstream (exploration and production) and midstream (transportation and storage) companies, but the underlying commodity price risk is pervasive. This is a classic concentration risk: great for returns when oil is high, but a single-point failure for credit quality when the market turns.

The following table breaks down the exposure of BOK Financial's major commercial loan categories as of Q3 2025, illustrating the scale of the CRE-related climate risk.

Loan Portfolio Segment	Q3 2025 Balance (in billions)	% of Total Loans (approx.)	Primary Environmental Risk
Commercial Real Estate (CRE)	$5.8 [cite: 2 in step 2's results]	23% [cite: 2 in step 2's results]	Physical Risk (Extreme Weather, Flooding)
Energy (Specialty Lending)	Not explicitly stated, but contracting	High concentration (Commitments > $6B)	Transition Risk (Low-Carbon Shift) & Commodity Price Volatility
Total Loans Outstanding	$24.9 [cite: 6 in step 3's results]	100%	Systemic Risk from Regional Economic Downturns

• Monitor the $2.1 billion in unfunded CRE commitments [cite: 2 in step 2's results] for climate-related draw-down risk.
• Note the Q3 2025 loan growth was $573 million [cite: 6 in step 3's results], driven in part by CRE, increasing overall physical risk exposure.