BOKF 10-Q Quarterly Report June 30, 2012

BOK FINANCIAL CORP ET AL

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10-Q 1 bokf-20120630x10q.htm FORM 10-Q 06/30/12 BOKF-2012.06.30-10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012



¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________

Commission File No. 0-19341

BOK FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)



Oklahoma		73-1373454
(State or other jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma		74192
(Address of Principal Executive Offices)		(Zip Code)

(918) 588-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 68,144,159 shares of common stock ($.00006 par value) as of June 30, 2012 .

BOK Financial Corporation

Form 10-Q

Quarter Ended June 30, 2012

Index



Part I. Financial Information
Management’s Discussion and Analysis (Item 2)	1
Market Risk (Item 3)	54
Controls and Procedures (Item 4)	55
Consolidated Financial Statements – Unaudited (Item 1)	56
Six Month Financial Summary – Unaudited (Item 2)	122
Quarterly Financial Summary – Unaudited (Item 2)	124
Quarterly Earnings Trend – Unaudited	125

Part II. Other Information
Item 1. Legal Proceedings	127
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	127
Item 6. Exhibits	127
Signatures	128

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Performance Summary

BOK Financial Corporation (“the Company”) reported net income of $97.6 million or $1.43 per diluted share for the second quarter of 2012 , compared to $69.0 million or $1.00 per diluted share for the second quarter of 2011 and $83.6 million or $1.22 per diluted share for the first quarter of 2012 . Net income for the six months ended June 30, 2012 totaled $181.2 million or $2.65 per diluted share compared with net income of $133.8 million or $1.95 per diluted share for the six months ended June 30, 2011 .

Improvement in credit quality increased net income by more than $14 million or $0.21 per diluted share during the second quarter of 2012. The Company recognized a $14 million pretax gain on the sale of common stock received in settlement of a defaulted loan and recorded an $8 million negative provision for credit losses.

Highlights of the second quarter of 2012 included:

•

Net interest revenue totaled $181.4 million for the second quarter of 2012 , compared to $174.0 million for the second quarter of 2011 and $173.6 million for the first quarter of 2012 . Net interest margin was 3.30% for the second quarter of 2012 . Net interest margin was 3.40% for the second quarter of 2011 and 3.19% for the first quarter of 2012 . Net interest revenue in the second quarter of 2012 included $2.9 million from the full recovery of a nonaccruing commercial loan. Excluding this recovery, net interest margin was 3.25%. The increase in net interest revenue compared to the second quarter of 2011 was due primarily to lower funding costs. Interest expense decreased $10.0 million due primarily to lower rates paid on interest bearing deposits. Net interest earned from the increase in average loan and securities balances was offset by the reinvestment of cash flows from the securities portfolio at lower current market rates and decreased loan yield.

•

Fees and commissions revenue totaled $154.5 million for the second quarter of 2012 compared to $127.8 million for the second quarter of 2011 and $144.3 million for the first quarter of 2012 . Mortgage banking revenue increased $20.2 million over the second quarter of 2011 and $6.5 million over the first quarter of 2012 due primarily to an increase in loan production volume and improved pricing of loans sold which resulted from continued low interest rates. Nearly all other fee-based revenue sources increased over the prior year and quarter.

•

Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $212.3 million , up $22.6 million over the second quarter of 2011 and up $20.0 million over the previous quarter. Personnel costs increased $16.7 million over the second quarter of 2011 and increased $7.5 million over the first quarter of 2012 due largely to incentive compensation. Non-personnel expenses increased $5.9 million over the second quarter of 2011 and increased $12.4 million over the prior quarter.

•

An $8.0 million negative provision for credit losses was recorded in the second quarter of 2012 . No provision for loan losses was recorded in the first quarter of 2012 and a $2.7 million provision for credit losses was recorded in the second quarter of 2011 . Net loans charged off totaled $4.8 million or 0.17% of average loans on an annualized basis for the second quarter of 2012 compared to $8.5 million or 0.30% on an annualized basis in the first quarter of 2012 and $8.5 million or 0.32% of average loans on an annualized basis in the second quarter of 2011 .


•	The combined allowance for credit losses totaled $241 million or 2.09% of outstanding loans at June 30, 2012 , down from $254 million or 2.20% of outstanding loans at March 31, 2012 . Nonperforming assets totaled $279 million or 2.38% of outstanding loans and repossessed assets at June 30, 2012 compared to $336 million or 2.87% of outstanding loans and repossessed assets at March 31, 2012 .


•	Outstanding loan balances were $11.6 billion at June 30, 2012 , flat compared to March 31, 2012 . Commercial loan balances increase d $93 million and residential mortgage loans were up $37 million over March 31, 2012 . Commercial real estate loans decreased $107 million and consumer loans decreased $24 million .


•	Period-end deposits totaled $18.3 billion at June 30, 2012 compared to $18.5 billion at March 31, 2012 . Demand deposit accounts increase d $251 million , offset by a $357 million decrease in interest-bearing transaction accounts and a $58 million decrease in time deposits.


•	The tangible common equity ratio was 10.07% at June 30, 2012 and 9.75% at March 31, 2012 . The tangible common equity ratio is a non-GAAP measure of capital strength used by the Company and investors based on shareholders’ equity

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as defined by generally accepted accounting principles in the United States of America (“GAAP”) minus intangible assets and equity that does not benefit common shareholders.


•	The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company’s Tier 1 capital ratios as defined by banking regulations were 13.62% at June 30, 2012 and 13.03% at March 31, 2012 .


•	The Company paid a cash dividend of $26 million or $0.38 per common share during the second quarter of 2012 . On July 31, 2012 the board of directors approved a quarterly cash dividend of $0.38 per common share payable on or about August 31, 2012 to shareholders of record as of August 17, 2012.

Results of Operations

Net Interest Revenue and Net Interest Margin

Net interest revenue is the interest earned on debt securities, loans and other interest-earning assets less interest paid for interest-bearing deposits and other borrowings. The net interest margin is calculated by dividing net interest revenue by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. Net interest margin is typically greater than net interest spread due to interest income earned on assets funded by non-interest bearing liabilities such as demand deposits and equity.

Net interest revenue totaled $181.4 million for the second quarter of 2012 compared to $174.0 million for the second quarter of 2011 and $173.6 million for the first quarter of 2012 . Net interest margin was 3.30% for the second quarter of 2012 , 3.19% for the first quarter of 2012 and 3.40% for the second quarter of 2011 . Net interest revenue for the second quarter of 2012 included $2.9 million from a full recovery of a nonaccruing commercial loan. Excluding this recovery, net interest margin was 3.25% for the second quarter of 2012. Net interest revenue increased over the second quarter of 2011 primarily due to lower funding costs. Interest expense on deposit accounts decrease d $6.8 million . Interest expense on other borrowed funds decrease d $1.2 million and interest expense on subordinated debentures decreased $2.0 million . Net interest earned from the increase in average loan and securities balances was offset by the reinvestment of cash flows from the securities portfolio at lower rates and decreased loan yield.

Net interest margin declined compared to the the second quarter of 2011 due primarily to lower yields on our available for sale securities portfolio, partially offset by lower funding costs. The tax-equivalent yield on earning assets was 3.69% for the second quarter of 2012 , down 32 basis points from the second quarter of 2011 . Excluding the interest recovery, the tax equivalent yield on earning assets was 3.64% and loan yields decreased 21 basis points to 4.48%. Loan yields decreased due primarily to a combination of narrowing credit spreads and changes in market interest rates. The available for sale securities portfolio yield decreased 50 basis points to 2.54% . Cash flows from these securities were reinvested at current lower rates. Funding costs were down 25 basis points from the second quarter of 2011 . The cost of interest-bearing deposits decreased 17 basis points and the cost of other borrowed funds decreased 26 basis points . The average rate of interest paid on subordinated debentures decreased 162 basis points compared to the second quarter of 2011 . The interest rate on $233 million of these subordinated debentures converted from a fixed rate of interest of 5.75% to a floating interest rate based on LIBOR plus 0.69% as of May 15, 2012. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 18 basis points in the second quarter of 2012 compared to 20 basis points in the second quarter of 2011 .

Average earning assets for the second quarter of 2012 increased $1.5 billion or 7% over the second quarter of 2011 . Average loans, net of allowance for loan losses, increased $983 million over the second quarter of 2011 due primarily to growth in average commercial and residential loans. The average balance of available for sale securities, which consist largely of U.S. government agency issued residential mortgage-backed securities, increased $548 million . We purchased these securities to supplement earnings, especially in a period of declining loan demand, and to manage interest rate risk.

Average deposits increased $869 million over the second quarter of 2011 , including a $1.7 billion increase in average demand deposit balances, partially offset by a $500 million decrease in average time deposits and a $404 million decrease in average interest-bearing transaction accounts. Average borrowed funds increased $562 million over the second quarter of 2011 .

Net interest margin increased 11 basis points over the first quarter of 2012 . Excluding the impact of the interest recovery, net interest margin increased 6 basis points. The yield on average assets was flat compared to the prior quarter. The loan portfolio yield decreased 2 basis points. The yield on the available for sale securities portfolio increased 4 basis points primarily due to efforts to reduce our prepayment risk on our mortgage-backed securities portfolio. The cost of interest-bearing liabilities

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decreased 7 basis points from the previous quarter, including a 167 basis point decrease in the average rate paid on subordinated debentures due to the change from a fixed to floating rate of interest.

Average earning assets for the second quarter of 2012 increased $163 million over the first quarter of 2012 . Average outstanding loans, net of allowance for loan losses, increased $188 million largely due to growth in average commercial loan balances. The average balance of the available for sale securities portfolio increased $144 million and the average balance of the fair value option securities portfolio decreased $219 million . Fair value option securities include residential mortgage-backed securities guaranteed by U.S. government agencies that we have elected to carry at fair value held as an economic hedge on our mortgage servicing rights. The balance of these securities can fluctuate significantly. Average deposits decreased by $206 million during the second quarter of 2012 , including a $431 million increase in demand deposits partially offset by a $540 million decrease in interest-bearing transaction accounts and a $114 million decrease in time deposits. The average balance of borrowed funds increased $328 million and the average balance of subordinated debentures decrease d by $40 million .

Our overall objective is to manage the Company’s balance sheet to be relatively neutral to changes in interest rates as is further described in the Market Risk section of this report. Approximately two-thirds of our commercial and commercial real estate loan portfolios are either variable rate or fixed rate that will re-price within one year. These loans are funded primarily by deposit accounts that are either non-interest bearing, or that re-price more slowly than the loans. The result is a balance sheet that would be asset sensitive, which means that assets generally re-price more quickly than liabilities. Among the strategies that we use to manage toward a relatively rate-neutral position, we purchase fixed-rate residential mortgage-backed securities issued primarily by U.S. government agencies and fund them with market rate sensitive liabilities. The liability-sensitive nature of this strategy provides an offset to the asset-sensitive characteristics of our loan portfolio. We also may use derivative instruments to manage our interest rate risk.

The effectiveness of these strategies is reflected in the overall change in net interest revenue due to changes in interest rates as shown in Table 1 and in the interest rate sensitivity projections as shown in the Market Risk section of this report.

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Table 1 – Volume / Rate Analysis (In thousands)

	Three Months Ended June 30, 2012 / 2011									Six Months Ended June 30, 2012 / 2011
				Change Due To ¹									Change Due To ¹
	Change			Volume			Yield / Rate			Change			Volume			Yield /Rate
Tax-equivalent interest revenue:
Funds sold and resell agreements	$	1		$	3		$	(2	)	$	(1	)	$	—		$	(1	)
Trading securities	(37		)	353			(390		)	(165		)	450			(615		)
Investment securities:
Taxable securities	1,482			1,610			(128		)	3,571			3,273			298
Tax-exempt securities	(638		)	(665		)	27			(1,303		)	(1,237		)	(66		)
Total investment securities	844			945			(101		)	2,268			2,036			232
Available for sale securities:
Taxable securities	(8,395		)	3,651			(12,046		)	(17,753		)	6,495			(24,248		)
Tax-exempt securities	49			130			(81		)	35			129			(94		)
Total available for sale securities	(8,346		)	3,781			(12,127		)	(17,718		)	6,624			(24,342		)
Fair value option securities	(2,932		)	(1,064		)	(1,868		)	(2,675		)	(729		)	(1,946		)
Residential mortgage loans held for sale	279			576			(297		)	708			1,045			(337		)
Loans	7,528			10,615			(3,087		)	10,805			19,758			(8,953		)
Total tax-equivalent interest revenue	(2,663		)	15,209			(17,872		)	(6,778		)	29,184			(35,962		)
Interest expense:
Transaction deposits	(2,558		)	(222		)	(2,336		)	(6,316		)	(145		)	(6,171		)
Savings deposits	(56		)	37			(93		)	(101		)	60			(161		)
Time deposits	(4,156		)	(2,189		)	(1,967		)	(6,897		)	(3,795		)	(3,102		)
Funds purchased	398			178			220			390			214			176
Repurchase agreements	(248		)	34			(282		)	(1,024		)	137			(1,161		)
Other borrowings	(1,373		)	(1,097		)	(276		)	(831		)	(2,026		)	1,195
Subordinated debentures	(2,029		)	(493		)	(1,536		)	(2,054		)	(538		)	(1,516		)
Total interest expense	(10,022		)	(3,752		)	(6,270		)	(16,833		)	(6,093		)	(10,740		)
Tax-equivalent net interest revenue	7,359			18,961			(11,602		)	10,055			35,277			(25,222		)
Change in tax-equivalent adjustment	(9		)							(236		)
Net interest revenue	$	7,368								$	10,291

¹ Changes attributable to both volume and yield/rate are allocated to both volume and yield/rate on an equal basis.

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Other Operating Revenue

Other operating revenue was $187.0 million for the second quarter of 2012 compared to $143.0 million for the second quarter of 2011 and $140.4 million for the first quarter of 2012 . Fees and commissions revenue increased $26.6 million over the second quarter of 2011 . Net gains on securities, derivatives and other assets increased $13.5 million due primarily to a $14.2 million gain from the sale of $26 million of stock received received in settlement of a defaulted loan. Other-than-temporary impairment charges recognized in earnings in the second quarter of 2012 were $4.0 million less than charges recognized in the second quarter of 2011 .

Other operating revenue increased $46.7 million compared to the first quarter of 2012 . Fees and commissions revenue increased $10.1 million . Net gains on securities, derivatives and other assets increased $33.7 million . Other-than-temporary impairment charges recognized in earnings were $2.9 million less than charges recognized in the first quarter of 2012 .

Table 2 – Other Operating Revenue

(In thousands)



	Three Months Ended June 30,											Three Months Ended
	2012			2011			Increase(Decrease)			% Increase(Decrease)		March 31, 2012			Increase(Decrease)			% Increase(Decrease)
Brokerage and trading revenue	$	32,600		$	23,725		$	8,875		37	%	$	31,111		$	1,489		5	%
Transaction card revenue	26,758			31,024			(4,266		)	(14	)%	25,430			1,328			5	%
Trust fees and commissions	19,931			19,150			781			4	%	18,438			1,493			8	%
Deposit service charges and fees	25,216			23,857			1,359			6	%	24,379			837			3	%
Mortgage banking revenue	39,548			19,356			20,192			104	%	33,078			6,470			20	%
Bank-owned life insurance	2,838			2,872			(34		)	(1	)%	2,871			(33		)	(1	)%
Other revenue	7,559			7,842			(283		)	(4	)%	9,027			(1,468		)	(16	)%
Total fees and commissions revenue	154,450			127,826			26,624			21	%	144,334			10,116			7	%
Gain (loss) on other assets, net	3,765			3,344			421			N/A		(356		)	4,121			N/A
Gain (loss) on derivatives, net	2,345			1,225			1,120			N/A		(2,473		)	4,818			N/A
Gain (loss) on fair value option securities, net	6,852			9,921			(3,069		)	N/A		(1,733		)	8,585			N/A
Gain on available for sale securities	20,481			5,468			15,013			N/A		4,331			16,150			N/A
Total other-than-temporary impairment	(135		)	(74		)	(61		)	N/A		(505		)	370			N/A
Portion of loss recognized in (reclassified from) other comprehensive income	(723		)	(4,750		)	4,027			N/A		(3,217		)	2,494			N/A
Net impairment losses recognized in earnings	(858		)	(4,824		)	3,966			N/A		(3,722		)	2,864			N/A
Total other operating revenue	$	187,035		$	142,960		$	44,075		31	%	$	140,381		$	46,654		33	%

Certain percentage increases (decreases) in non-fees and commissions revenue are not meaningful for comparison purposes based on the nature of the item.

Fees and commissions revenue

Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 46% of total revenue for the second quarter of 2012 , excluding provision for credit losses and gains and losses on asset sales, securities and derivatives. We believe that a variety of fee revenue sources provide an offset to changes in interest rates, values in the equity markets, commodity prices and consumer spending, all of which can be volatile. We expect continued growth in other operating revenue through offering new products and services and by further development of our presence in markets outside of Oklahoma. However, current and future economic conditions, regulatory constraints, increased competition and saturation in our existing markets could affect the rate of future increases.

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Brokerage and trading revenue, which includes revenues from securities trading, retail brokerage, customer derivative and investment banking increased $8.9 million or 37% compared to the second quarter of 2011 . Securities trading revenue totaled $16.1 million for the second quarter of 2012 , up $2.8 million over the second quarter of 2011 . Securities trading revenue represents net realized and unrealized gains primarily related to sales of U.S. government securities, residential mortgage-backed securities guaranteed by U.S. government agencies and municipal securities to institutional customers. We believe these activities will be permitted under the Volcker Rule of the Dodd-Frank Act.

Revenue earned from retail brokerage transactions increased $713 thousand or 10% over the second quarter of 2011 to $8.1 million . Retail brokerage revenue is primarily based on fees and commissions earned on sales of fixed income securities, annuities and mutual funds to retail customers. Revenue growth was primarily due to increased market volatility which increased customer demand.

Customer hedging revenue is based primarily on realized and unrealized changes in the fair value of derivative contracts held for customer risk management programs. As more fully discussed under Customer Derivative Programs in Note 3 of the Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange and equity derivatives to our customers. Customer hedging revenue totaled $4.2 million for the second quarter of 2012 , up $3.1 million over the second quarter of 2011 . The Company received a $2.9 million recovery from the Lehman Brothers bankruptcy in the second quarter of 2012 related to derivative contract losses incurred in 2008. In addition, revenue from to be announced (“TBA”) residential mortgage backed securities which are classified as interest rate derivative contracts sold to our mortgage banking customers increased over the second quarter of 2011 .

Investment banking includes fees earned upon completion of underwriting and financial advisory services totaled $4.2 million for the second quarter of 2012 , a $2.3 million or 116% increase over the second quarter of 2011 related to the timing and volume of completed transactions. The increased volume of transactions is primarily the result of the Company's expansion of its municipal financial advisory service capacity, particularly in the Texas market.

Brokerage and trading revenue increased $1.5 million over the first quarter of 2012 . Investment banking fees were up $1.2 million over the first quarter of 2012 . Retail brokerage fees were up $512 thousand over the first quarter of 2012 . Securities trading and customer hedging revenue were both flat compared to the prior quarter. The impact of the Lehman recovery was offset by a $1.2 million decrease in revenue from energy derivative contracts due to a decline in contract volumes. Revenue from interest rate derivative contracts decreased $616 thousand primarily due to changes in the fair value of TBA securities sold to our mortgage banking customers compared to the first quarter of 2012.

We continue to monitor the on-going development of rules to implement the Volcker Rule in Title VI of the Dodd-Frank Act which prohibits banking entities from engaging in proprietary trading as defined by the Dodd-Frank Act and restricts sponsorship of, or investment in, private equity funds and hedge funds, subject to limited exceptions. Based on the proposed rules, we expect the Company's trading activity to be largely unaffected, as our trading activities are all done for the benefit of the customers and securities traded are mostly exempted under the proposed rules. The Company's private equity investment activity may be curtailed, but is not expected to result in a material impact to the Company's financial statements. Final regulations will likely impose additional operating and compliance costs as presently proposed.

Title VII of the Dodd-Frank Act subjects nearly all derivative transactions to Commodity Futures Trading Commission (“CFTC”) or Securities and Exchange Commission (“SEC”) regulations. Title VII, among other things, imposes registration, recordkeeping, reporting, capital and margin, as well as business conduction requirements on major swap dealers and major swap participants. The CFTC and SEC delayed the effective dates of a large portion of the proposed regulations under Title VII until December 31, 2012. On April 18, 2012, the CFTC and SEC both approved interim final rules on the definition of swaps dealers. Under these rules, entities transacting, as a dealer, less than $8 billion in notional value of swaps over any 12 month period during the first three years after the rules are effective will be exempt from the definition of swaps dealer; after that three year period, the $8 billion amount may become $3 billion, subject to the results of studies the commissions intend to undertake once the derivatives rules are effective. For purposes of the foregoing test, certain derivatives transactions entered into by a customer in connection with a loan from the Company are not considered dealing activity. The “swap dealer” definitional rules are scheduled to go into effect in October 2012. The Company currently estimates that its volume of swap activities (excluding transactions entered into in connection with a loan from the Company to its customers) are unlikely to require it to register as a “swap dealer”, at least at any time prior to October 2015 (the minimum period for which the $8 billion notional value threshold will be in effect). Although the ultimate impact of Title VII remains uncertain, we currently believe its full implementation is likely not to impose significantly higher compliance costs on the Company.

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Transaction card revenue depends largely on the volume and amount of transactions processed, the number of TransFund automated teller machine (“ATM”) locations and the number of merchants served. Transaction card revenue for the second quarter of 2012 decreased $4.3 million or 14% compared to the second quarter of 2011 . Revenues from the processing of transactions on behalf of the members of our TransFund electronic funds transfer ("EFT") network totaled $13.5 million , up $1.0 million or 8% over the second quarter of 2011 , due primarily to increased transaction volumes. Merchant services fees paid by customers for account management and electronic processing of card transactions and revenue from interchange fees from debit cards issued by the Company were both down primarily due to the impact of interchange fee regulations, commonly referred to as the Durbin Amendment, which became effective on October 1, 2011. Merchant services fees totaled $8.8 million , down $366 thousand or 4% compared to the prior year. Revenue from interchange fees paid by merchant banks for transactions processed from debit cards issued by the Company totaled $4.5 million for the second quarter of 2012 compared to $9.3 million for the second quarter of 2011 .

Transaction card revenue increased $1.3 million over the first quarter of 2012 . Merchant services fees for account management and electronic processing of card transactions increase d $885 thousand , revenue from interchange fees paid by merchant banks for transactions processed from debit cards issued by the Company increased $253 thousand and revenue from processing transactions on behalf of members of our TransFund EFT network increased $190 thousand .

Trust fees and commissions increased $781 thousand or 4% compared to the second quarter of 2011 . We continue to voluntarily waive administration fees on the Cavanal Hill money market funds in order to maintain positive yields on these funds in the current low short-term interest rate environment. Waived fees totaled $2.2 million for the second quarter of 2012 , $1.6 million for the second quarter of 2011 and $2.6 million for the first quarter of 2012 . The fair value of trust assets administered by the Company totaled $35.3 billion at June 30, 2012 , $33.1 billion at June 30, 2011 and $35.7 billion at March 31, 2012 . Trust fees and commissions increased $1.5 million compared to the first quarter of 2012 primarily due to the timing of annual tax service fees.

Deposit service charges and fees increased $1.4 million or 6% over the second quarter of 2011 . Overdraft fees totaled $14.3 million for the second quarter of 2012 , down $384 thousand or 3% compared to the second quarter of 2011 . Commercial account service charge revenue totaled $8.7 million , up $929 thousand or 12% over the prior year. The average earnings credit, a non-cash method for commercial customers to avoid incurring charges for deposit services based on account balances, decreased 23 basis points compared to the prior year to better align with market interest rates. Service charges on deposit accounts with a standard monthly fee also increased $810 thousand or 58% over the second quarter of 2011 .

Deposit service charges and fees increased $837 thousand over the prior quarter. Overdraft fees increased $748 thousand and service charges on deposit accounts with a standard monthly fee increase d $596 thousand , partially offset by a $457 thousand decrease in commercial account service charges.

Mortgage banking revenue increased $20.2 million over the second quarter of 2011 primarily due to increased mortgage loan production volume and improved pricing of loans sold which resulted from continued low interest rates. Revenue from originating and marketing mortgage loans totaled $29.7 million , up $20.3 million or 216% over the second quarter of 2011 . Mortgage loans funded for sale totaled $842 million in the second quarter of 2012 and $484 million in the second quarter of 2011 . Outstanding commitments to originate mortgage loans were up $236 million or 151% over June 30, 2011 . Mortgage servicing revenue decreased $88 thousand or 1% compared to the second quarter of 2011 . The outstanding principal balance of mortgage loans serviced for others totaled $11.6 billion , up $281 million over June 30, 2011 .

Mortgage banking revenue increased $6.5 million compared to the first quarter of 2012 primarily due to a $6.6 million increase in revenue from originating and marketing residential mortgage loans. Residential mortgage loans funded for sale increased $96 million compared to the previous quarter. Outstanding commitments to originate mortgage loans were up $90 million or 30% over March 31, 2012 . Mortgage servicing revenue was largely unchanged compared to the prior quarter. The outstanding balance of mortgage loans serviced for others was up $186 million over March 31, 2012 .

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Table 3 – Mortgage Banking Revenue

(In thousands)



	Three Months Ended June 30,									%		Three Months Ended						%
	2012			2011			Increase (Decrease)			Increase (Decrease)		March 31, 2012			Increase (Decrease)			Increase (Decrease)
Originating and marketing revenue	$	29,689		$	9,409		$	20,280		216	%	$	23,081		$	6,608		29	%
Servicing revenue	9,859			9,947			(88		)	(1	)%	9,997			(138		)	(1	)%
Total mortgage revenue	$	39,548		$	19,356		$	20,192		104	%	$	33,078		$	6,470		20	%

Mortgage loans funded for sale	$	841,959		$	483,808		$	358,151		74	%	$	746,241		$	95,718		13	%
Mortgage loan refinances to total funded	51		%	36		%						67		%



	June 30,
	2012		2011		Increase		% Increase		March 31, 2012		Increase		% Increase
Outstanding principal balance of mortgage loans serviced for others	$	11,564,643	$	11,283,442	$	281,201	2	%	$	11,378,806	$	185,837	2	%

Net gains on securities, derivatives and other assets

In the second quarter of 2012 , we recognized a $14.2 million gain on the sale of $26 million of common stock received in 2009 in partial satisfaction of a defaulted commercial loan. In addition, we recognized $6.1 million in gains on sales of $433 million of residential mortgage-backed securities guaranteed by U.S. government agencies. Securities were sold either because they had reached their expected maximum potential return or to mitigate exposure to prepayment risk. We recognized $5.5 million of gains on sales of $654 million of available for sale securities in the second quarter of 2011 and $11.7 million of net gains on sales of $892 million of U.S. government agency mortgage-backed securities held as available for sale in the first quarter of 2012 .

We also sold $107 million of privately issued residential mortgage-backed securities at a $7.4 million loss in March 2012. The fair value of these securities increased nearly 10% between December 31, 2011 and February 29, 2012. In response to this increase in fair value, management evaluated all privately issued residential mortgage-backed securities to determine which securities we did not intend to sell based on their expected performance. All securities which we believed to have reached their expected maximum potential at that time were sold in March.

We also maintain a portfolio of residential mortgage backed securities issued by U.S. government agencies and interest rate derivative contracts designated as an economic hedge of the changes in the fair value of our mortgage servicing rights. The fair value of our mortgage servicing rights fluctuate due to changes in prepayment speeds and other assumptions as more fully described in Note 5 to the Consolidated Financial Statements. As benchmark mortgage rates increase, prepayment speeds slow and the value of our mortgage servicing rights increase. As benchmark mortgage rates fall, prepayment speeds increase and the value of our mortgage servicing rights decrease.

Changes in the fair value of mortgage servicing rights are highly dependent on changes in primary mortgage rates, rates offered to borrowers, and assumptions about servicing revenues, servicing costs and discount rates. Changes in the fair value of residential mortgage-backed securities and interest rate derivative contracts are highly dependent on changes in secondary mortgage rates, or rates required by investors. While primary and secondary mortgage rates generally move in the same direction, the spread between them may widen and narrow due to market conditions and government intervention. Changes in assumptions and the spread between the primary and secondary rates can cause significant quarterly earnings volatility.

Table 4 following shows the relationship between changes in the fair value of mortgage servicing rights and interest rate derivative contracts designated as an economic hedge.

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Table 4 – Gain (Loss) on Mortgage Servicing Rights

(In thousands)



	Three Months Ended
	June 30, 2012			March 31, 2012			June 30, 2011
Gain (loss) on mortgage hedge derivative contracts, net	$	2,623		$	(2,445	)	$	1,224
Gain (loss) on fair value option securities, net	6,908			(2,393		)	9,921
Gain (loss) on economic hedge of mortgage servicing rights	9,531			(4,838		)	11,145
Gain (loss) on change in fair value of mortgage servicing rights	(11,450		)	7,127			(13,493		)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges	$	(1,919	)	$	2,289		$	(2,348	)

Net interest revenue on fair value option securities	$	2,148		$	3,165		$	5,120

As more fully discussed in Note 2 to the Consolidated Financial Statements, we recognized other-than-temporary impairment losses on certain private-label residential mortgage-backed securities of $858 thousand in earnings during the second quarter of 2012 . These losses primarily related to additional declines in projected cash flows of private-label mortgage backed securities as a result of increased home price depreciation on privately issued residential mortgage-backed securities that we do not intend to sell. We recognized other-than-temporary impairment losses in earnings of $4.8 million in the second quarter of 2011 and $3.7 million in the first quarter of 2012 .

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Other Operating Expense

Other operating expense for the second quarter of 2012 totaled $223.8 million , up $20.6 million or 10% over the second quarter of 2011 . Changes in the fair value of mortgage servicing rights increased operating expense $11.5 million in the second quarter of 2012 and $13.5 million in the second quarter of 2011 . Excluding changes in the fair value of mortgage servicing rights, operating expenses were up $22.6 million or 12% over the second quarter of 2011 . Personnel expenses increased $16.7 million or 16% . Non-personnel expenses increased $5.9 million or 7% .

Excluding changes in the fair value of mortgage servicing rights, operating expenses were up $20.0 million over the previous quarter. Personnel expenses increased $7.5 million and non-personnel expenses increased $12.4 million .

Table 5 – Other Operating Expense

(In thousands)



	Three Months Ended June 30,				Increase			% Increase		Three Months Ended March 31,			Increase			% Increase
	2012		2011		(Decrease)			(Decrease)		2012			(Decrease)			(Decrease)
Regular compensation	$	65,218	$	61,380	$	3,838		6	%	$	63,132		$	2,086		3	%
Incentive compensation:
Cash-based	27,950		23,530		4,420			19	%	26,241			1,709			7	%
Stock-based	11,349		3,122		8,227			264	%	6,625			4,724			71	%
Total incentive compensation	39,299		26,652		12,647			47	%	32,866			6,433			20	%
Employee benefits	17,780		17,571		209			1	%	18,771			(991		)	(5	)%
Total personnel expense	122,297		105,603		16,694			16	%	114,769			7,528			7	%
Business promotion	6,746		4,777		1,969			41	%	4,388			2,358			54	%
Professional fees and services	8,343		6,258		2,085			33	%	7,599			744			10	%
Net occupancy and equipment	16,906		15,554		1,352			9	%	16,023			883			6	%
Insurance	4,011		4,771		(760		)	(16	)%	3,866			145			4	%
Data processing & communications	25,264		24,428		836			3	%	22,144			3,120			14	%
Printing, postage and supplies	3,903		3,586		317			9	%	3,311			592			18	%
Net losses & operating expenses of repossessed assets	5,912		5,859		53			1	%	2,245			3,667			163	%
Amortization of intangible assets	545		896		(351		)	(39	)%	575			(30		)	(5	)%
Mortgage banking costs	11,173		8,968		2,205			25	%	7,573			3,600			48	%
Change in fair value of mortgage servicing rights	11,450		13,493		(2,043		)	(15	)%	(7,127		)	18,577			(261	)%
Other expense	7,236		9,016		(1,780		)	(20	)%	9,871			(2,635		)	(27	)%
Total other operating expense	$	223,786	$	203,209	$	20,577		10	%	$	185,237		$	38,549		21	%

Number of employees (full-time equivalent)	4,585		4,530		55			1	%	4,630			(45		)	(1	)%

Certain percentage increases (decreases) are not meaningful for comparison purposes.

Personnel expense

Regular compensation, which consists of salaries and wages, overtime pay and temporary personnel costs increased $3.8 million or 6% over the second quarter of 2011 primarily due to standard annual merit increases which were effective in the second quarter of 2012. The Company generally awards annual merit increases during the first quarter for a majority of its staff.

Incentive compensation increased $12.6 million or 47% over the second quarter of 2011 . Cash-based incentive compensation plans are either intended to provide current rewards to employees who generate long-term business opportunities for the Company based on growth in loans, deposits, customer relationships and other measurable metrics or intended to compensate employees with commissions on completed transactions. Total cash-based incentive compensation increased $4.4 million or

- 10 -

19% over the second quarter of 2011 . Cash-based incentive compensation related to brokerage and trading revenue was up $4.6 million over the second quarter of 2011 and all other cash-based incentive compensation was essentially flat compared to the prior year.

The Company also provides stock-based incentive compensation plans. Stock-based compensation plans include both equity and liability awards. Compensation expense for equity awards increased $712 thousand over the second quarter of 2011 . Expense for equity awards is based on the grant-date fair value of the awards and is unaffected by subsequent changes in fair value. Compensation expense related to liability awards increased $7.5 million over the second quarter of 2011 primarily due to the timing of accruals related to the BOK Financial Corp. True-Up Plan. Approved by shareholders on April 26, 2011, the True-Up Plan is designed to adjust annual and long-term performance-based incentive compensation for certain senior executives either upward or downward based on the earnings per share performance and compensation of comparable senior executives at peer banks.

Employee benefit expense was essentially flat compared to the second quarter of 2011 . Increased expenses related to payroll tax were offset by lower employee medical insurance costs.

Personnel expense increased $7.5 million compared to the first quarter of 2012 . Incentive compensation increased $6.4 million over the first quarter of 2012 . Stock-based compensation increased $4.7 million due to the timing of accruals and cash-based incentive compensation increased $1.7 million . Regular compensation expense increased $2.1 million over the first quarter of 2012 due to standard annual merit increases which were fully effective in the second quarter of 2012.

Employee benefit expenses decreased $1.0 million compared to the first quarter of 2012 due to seasonal decreases in payroll tax expense and lower employee medical costs.

Non-personnel operating expenses

Non-personnel operating expenses, excluding changes in the fair value of mortgage servicing rights, increased $5.9 million over the second quarter of 2011 . Mortgage banking costs increase d $2.2 million due primarily to a $3.7 million increase in the provision for potential losses on loans sold to government sponsored entities under standard representation and warranties. While the number of actual repurchases has remained low, the loss severity has trended higher. The accrual for potential losses totaled $5.0 million at June 30, 2012 . Professional fees and services increased $2.1 million primarily due to increased loan volumes and business promotion expense increased $2.0 million due to the timing of marketing expenses. Net losses and operating expenses of repossessed assets were flat compared to the second quarter of 2011 .

Excluding changes in the fair value of mortgage servicing rights, non-personnel operating expenses increased $12.4 million compared to the first quarter of 2012 . Net losses and operating expenses on repossessed properties were up $3.7 million over the first quarter of 2012 . Losses on sales and write-downs of repossessed assets increase d by $2.7 million . Write-downs of repossessed assets were up primarily due to the timing of regularly scheduled appraisal updates, partially offset by decrease d losses on sales of repossessed assets. Operating expenses of repossessed assets were up $945 thousand over the first quarter. Mortgage banking costs were up $3.6 million primarily due to increased provision for potential losses on loans sold to government sponsored entities under standard representations and warranties. Data processing and communication expense increase d $3.1 million . Data processing and communications expense in the first quarter was lower due to the favorable resolution of a dispute with a service provider. Business promotion expense was up $2.4 million due primarily to timing of marketing expenses.

Income Taxes

Income tax expense was $53.1 million or 35% of book taxable income for the second quarter of 2012 compared to $39.4 million or 35% of book taxable income for the second quarter of 2011 and $45.5 million or 35% of book taxable income for the first quarter of 2012 .

BOK Financial operates in numerous jurisdictions, which requires judgment regarding the allocation of income, expense and earnings under various laws and regulations of each of these taxing jurisdictions. Each jurisdiction may audit our tax returns and may take different positions with respect to these allocations. The reserve for uncertain tax positions was $13 million at June 30, 2012 , March 31, 2012 and June 30, 2011 .

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Lines of Business

We operate three principal lines of business: Commercial Banking, Consumer Banking and Wealth Management. Commercial Banking includes lending, treasury and cash management services and customer risk management products for small businesses, middle market and larger commercial customers. Commercial banking also includes the TransFund EFT network. Consumer Banking includes retail lending and deposit services and all mortgage banking activities. Wealth Management provides fiduciary services, brokerage and trading, private bank services and investment advisory services in all markets. Wealth Management also originates loans for high net worth clients.

In addition to our lines of business, we have a Funds Management unit. The primary purpose of this unit is to manage our overall liquidity needs and interest rate risk. Each line of business borrows funds from and provides funds to the funds management unit as needed to support their operations. Operating results for funds management and other include the effect of interest rate risk positions and risk management activities, securities gains and losses including impairment charges, the provision for credit losses in excess of net loans charged off, tax planning strategies and certain executive compensation costs that are not attributed to the lines of business.

We allocate resources and evaluate the performance of our lines of business after allocation of funds, certain indirect expenses, taxes based on statutory rates, actual net credit losses and capital costs. The cost of funds borrowed from the funds management unit by the operating lines of business is transfer priced at rates that approximate market rates for funds with similar duration. Market is generally based on the applicable LIBOR or interest rate swap rates, adjusted for prepayment risk. This method of transfer-pricing funds that support assets of the operating lines of business tends to insulate them from interest rate risk.

The value of funds provided by the operating lines of business to the funds management unit is also based on rates which approximate wholesale market rates for funds with similar duration and re-pricing characteristics. Market rates are generally based on LIBOR or interest rate swap rates. The funds credit formula applied to deposit products with indeterminate maturities is established based on their re-pricing characteristics reflected in a combination of the short-term LIBOR rate and a moving average of an intermediate term swap rate, with an appropriate spread applied to both. Shorter duration products are weighted towards the short term LIBOR rate and longer duration products are weighted towards the intermediate swap rates. The expected duration ranges from 30 days for certain rate-sensitive deposits to five years.

Economic capital is assigned to the business units by a capital allocation model that reflects management’s assessment of risk. This model assigns capital based upon credit, operating, interest rate and market risk inherent in our business lines and recognizes the diversification benefits among the units. The level of assigned economic capital is a combination of the risk taken by each business line, based on its actual exposures and calibrated to its own loss history where possible. Average invested capital includes economic capital and amounts we have invested in the lines of business.

As shown in Table 6, net income attributable to our lines of business increased $21.8 million over the second quarter of 2011 . The increase in net income attributed to our lines of business was due primarily to growth in mortgage banking revenue and a gain on the sale of stock received in partial satisfaction of a defaulted loan, along with a decrease in net loans charged off.

Table 6 – Net Income by Line of Business (In thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Commercial Banking	$	43,369	$	31,539	$	76,438	$	60,179
Consumer Banking	14,726		7,099		34,184		13,616
Wealth Management	6,274		3,904		10,295		8,194
Subtotal	64,369		42,542		120,917		81,989
Funds Management and other	33,259		26,465		60,326		51,792
Total	$	97,628	$	69,007	$	181,243	$	133,781

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Commercial Banking

Commercial Banking contributed $43.4 million to consolidated net income in the second quarter of 2012 , up $11.8 million or 38% over the second quarter of 2011 . A gain on the sale of stock received in partial satisfaction of a defaulted loan and the full recovery of a nonaccruing commercial loan added $11.7 million to net income provided by Commercial Banking in the second quarter of 2012.

Table 7 – Commercial Banking (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue from external sources	$	93,360		$	85,325		$	8,035			$	182,698		$	168,583		$	14,115
Net interest expense from internal sources	(11,164		)	(7,444		)	(3,720		)		(22,920		)	(16,718		)	(6,202		)
Total net interest revenue	82,196			77,881			4,315				159,778			151,865			7,913
Net loans charged off	748			4,829			(4,081		)		7,140			11,605			(4,465		)
Net interest revenue after net loans charged off	81,448			73,052			8,396				152,638			140,260			12,378

Fees and commissions revenue	37,795			36,005			1,790				76,543			71,421			5,122
Gain on financial instruments and other assets, net	14,363			9			14,354				14,407			9			14,398
Other operating revenue	52,158			36,014			16,144				90,950			71,430			19,520

Personnel expense	25,504			23,918			1,586				50,348			47,095			3,253
Net losses and expenses of repossessed assets	5,002			4,490			512				5,669			9,190			(3,521		)
Other non-personnel expense	18,835			18,271			564				36,560			36,104			456
Corporate allocations	13,284			10,768			2,516				25,908			20,809			5,099
Total other operating expense	62,625			57,447			5,178				118,485			113,198			5,287

Income before taxes	70,981			51,619			19,362				125,103			98,492			26,611
Federal and state income tax	27,612			20,080			7,532				48,665			38,313			10,352

Net income	$	43,369		$	31,539		$	11,830			$	76,438		$	60,179		$	16,259

Average assets	$	9,934,469		$	9,174,216		$	760,253			$	10,008,708		$	9,068,308		$	940,400
Average loans	9,024,239			8,172,263			851,976				8,942,490			8,122,664			819,826
Average deposits	8,211,478			7,620,542			590,936				8,283,114			7,542,159			740,955
Average invested capital	862,816			867,491			(4,675		)		864,167			865,439			(1,272		)
Return on average assets	1.76		%	1.38		%	38			bp	1.54		%	1.34		%	20			bp
Return on invested capital	20.22		%	14.58		%	564			bp	17.79		%	14.02		%	377			bp
Efficiency ratio	52.19		%	50.44		%	175			bp	50.14		%	50.70		%	(56		)	bp
Net charge-offs (annualized) to average loans	0.03		%	0.24		%	(21		)	bp	0.16		%	0.29		%	(13		)	bp

Net interest revenue increased $4.3 million or 6% over the second quarter of 2011 , including $2.9 million from the recovery of foregone interest and fees on a nonaccruing loan. The remaining increase in net interest revenue was primarily due to an $852 million increase in average loan balances, partially offset by a decrease in loan yield compared to the second quarter of 2011 . Net interest earned on deposits sold to our funds management unit decreased $3.4 million primarily due to lower yields on funds invested, partially offset by a $591 million increase in the average balance of deposits attributed to Commercial Banking.

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Fees and commissions revenue increased $1.8 million or 5% primarily due to increased commercial deposits service charges and fees as average earnings credit, a non-cash method for commercial customers to avoid incurring charges for deposit services based on account balances, decreased 23 basis points compared to the prior year to better align with market interest rates.

Operating expenses increase d $5.2 million or 9% over the second quarter of 2011 . Personnel costs increased $1.6 million or 7% primarily due to increased incentive compensation and standard annual merit increases. Net losses and operating expenses on repossessed assets increased $512 thousand over the second quarter of 2011 , primarily due to write-downs as the result of the timing of regularly scheduled appraisal updates. Other non-personnel expenses increase d $564 thousand or 3% over the prior year. Corporate expense allocations increased $2.5 million primarily due to increased customer loan and deposit activity.

The average outstanding balance of loans attributed to Commercial Banking increase d $852 million to $9.0 billion for the second quarter of 2012 . See the Loans section of Management’s Discussion and Analysis of Financial Condition following for additional discussion of changes in commercial and commercial real estate loans which are primarily attributed to the Commercial Banking segment. Net Commercial Banking loans charged off decreased $4.1 million compared to the second quarter of 2011 to $748 thousand or 0.03% of average loans attributed to this line of business on an annualized basis. The decrease in net loans charged off was primarily due to full recovery of a nonaccruing commercial loan and a decrease in losses on commercial real estate loans.

Average deposits attributed to Commercial Banking were $8.2 billion for the second quarter of 2012 , up $591 million or 8% over the second quarter of 2011 . Average balances attributed to our energy customers increased $399 million or 49% and average balances attributed to our commercial & industrial loan customers increased $388 million or 14%. Average balances held by treasury services customers were down $264 million compared to the second quarter of 2011 . Commercial customers continue to maintain high account balances due to continued economic uncertainty and persistently low yields available on high quality investments.

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Consumer Banking

Consumer banking services are provided through five primary distribution channels: traditional branches, supermarket branches, the 24-hour ExpressBank call center, Internet banking and mobile banking.

Consumer banking contributed $14.7 million to consolidated net income for the second quarter of 2012 , up $7.6 million primarily due to growth in mortgage banking revenue. Revenue from mortgage loan production was up $20.3 million over the second quarter of 2011 . Changes in fair value of our mortgage servicing rights, net of economic hedge, decreased net income attributed to consumer banking by $1.2 million in the second quarter of 2012 and $1.4 million in the second quarter of 2011 .

Table 8 – Consumer Banking (Dollars in thousands)

	Three Months Ended											Six Months Ended
	June 30,							Increase				June 30,						Increase
	2012				2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue from external sources	$	23,125			$	21,358		$	1,767			$	46,939		$	40,022		$	6,917
Net interest revenue from internal sources	5,885				7,675			(1,790		)		12,005			17,080			(5,075		)
Total net interest revenue	29,010				29,033			(23		)		58,944			57,102			1,842
Net loans charged off	4,221				3,049			1,172				5,653			5,731			(78		)
Net interest revenue after net loans charged off	24,789				25,984			(1,195		)		53,291			51,371			1,920

Fees and commissions revenue	64,286				46,298			17,988				120,221			89,717			30,504
Gain on financial instruments and other assets, net	10,914				11,188			(274		)		6,076			5,251			825
Other operating revenue	75,200				57,486			17,714				126,297			94,968			31,329

Personnel expense	23,088				20,890			2,198				44,212			41,936			2,276
Net losses and expenses of repossessed assets	179				1,086			(907		)		394			1,657			(1,263		)
Change in fair value of mortgage servicing rights	11,450				13,493			(2,043		)		4,323			10,364			(6,041		)
Other non-personnel expense	30,086				23,814			6,272				53,308			44,459			8,849
Corporate allocations	11,085				12,569			(1,484		)		21,403			25,638			(4,235		)
Total other operating expense	75,888				71,852			4,036				123,640			124,054			(414		)

Income before taxes	24,101				11,618			12,483				55,948			22,285			33,663
Federal and state income tax	9,375				4,519			4,856				21,764			8,669			13,095

Net income	$	14,726			$	7,099		$	7,627			$	34,184		$	13,616		$	20,568

Average assets	$	5,695,019			$	5,864,942		$	(169,923	)		$	5,757,046		$	5,992,191		$	(235,145	)
Average loans	2,129,408				2,038,866			90,542				2,130,362			2,017,115			113,247
Average deposits	5,577,262				5,640,794			(63,532		)		5,596,158			5,788,920			(192,762		)
Average invested capital	289,443				271,353			18,090				288,351			272,301			16,050
Return on average assets	1.04		%		0.49		%	55			bp	1.19		%	0.46		%	73			bp
Return on invested capital	20.46		%		10.49		%	997			bp	23.91		%	10.08		%	1,383			bp
Efficiency ratio	69.07		%		77.47		%	(840		)	bp	66.60		%	77.44		%	(1,084		)	bp
Net charge-offs (annualized) to average loans	0.80		%		0.60		%	20			bp	0.53		%	0.57		%	(4		)	bp
Residential mortgage loans funded for sale	$	841,959		483,808,000	$	483,808		$	358,151			$	1,588,200		$	903,492		$	684,708

- 15 -



	June 30, 2012		June 30, 2011		Increase (Decrease)
Banking locations	213		207		6
Residential mortgage loans servicing portfolio ¹	$	12,635,324	$	12,177,661	$	457,663


¹	Includes outstanding principal for loans serviced for affiliates

Net interest revenue from consumer banking activities was flat compared to the second quarter of 2011 . Net interest earned on residential mortgage-backed securities held as an economic hedge of mortgage servicing rights declined by $3.2 million due to a $208 million reduction in the average balance of this portfolio. Average loan balances were up $91 million or 4% over the second quarter of 2011 . Other consumer loans increased, partially offset by decreased balances of indirect automobile loans due to paydowns. The Company previously disclosed its decision to exit the indirect automobile loan business in the first quarter of 2009. Net interest earned on deposits sold to our funds management unit decreased $886 thousand primarily due to lower yields on funds invested.

Net loans charged off by the Consumer Banking unit increased $1.2 million compared to the second quarter of 2011 primarily due to increased residential mortgage loan charge-offs. Net consumer banking charge-offs also includes indirect automobile loans, overdrawn deposit accounts and other direct consumer loans.

Fees and commissions revenue increased $18.0 million or 39% over the second quarter of 2011 . Mortgage banking revenue was up $20.7 million or 106% compared to the prior year primarily due to increased residential mortgage loan originations and commitments and improved pricing of loans sold. Transaction card revenues were down $4.5 million or 44% from the prior year primarily due to the impact of interchange fee regulations which became effective on October 1, 2011.

Excluding the change in the fair value of mortgage servicing rights, operating expenses increased $6.1 million over the second quarter of 2011 . Personnel expenses were up $2.2 million or 11% primarily due to expansion of our mortgage banking division which positioned us to benefit from increased demand as the result of continued low mortgage interest rates. Non-personnel expense increase d $6.3 million or 26% due primarily to increased mortgage banking activity and included a $2.2 million increase in mortgage banking costs primarily related to increasing our accrual for potential credit losses on loans sold to U.S. government agencies under standard representations and warranties. Our level of repurchases to date has remained low relative to the size of our servicing portfolio and we expect it to remain low; however, the loss severity of loans we have had to repurchase from the agencies has trended higher. See additional discussion of the repurchase level in Note 5 to the Consolidated Financial Statements. Corporate expense allocations were down $1.5 million compared to the second quarter of 2011 . Net losses and operating expenses of repossessed assets were down $907 thousand compared to the prior year.

Average consumer deposits decreased $64 million or 1% compared to the second quarter of 2011 . Average interest-bearing transaction accounts increased $146 million or 5% and average demand deposits increase d $92 million or 16% . Average time deposit balances were down $344 million or 16% compared to the prior year.

Our Consumer Banking division originates, markets and services conventional and government-sponsored residential mortgage loans for all of our geographical markets. We funded $918 million of residential mortgage loans in the second quarter of 2012 and $533 million in the second quarter of 2011 . Mortgage loan fundings included $842 million of mortgage loans funded for sale in the secondary market and $76 million funded for retention within the consolidated group. Approximately 36% of our mortgage loans funded were in the Oklahoma market, 16% in the New Mexico market, 14% in the Texas market and 14% in the Colorado market. In addition, 6% of our mortgage loan fundings came from correspondent lenders. Expansion of our mortgage banking division in the Texas, Colorado and Kansas markets positioned us to benefit from increased demand as the result of continued low mortgage interest rates.

At June 30, 2012 , the Consumer Banking division services $11.6 billion of mortgage loans serviced for others and $1.1 billion of loans retained within the consolidated group. Approximately 97% of the mortgage loans serviced by the Consumer Banking division were to borrowers in our primary geographical market areas. Loans past due 90 days or more totaled $109 million or 0.94% of loans serviced for others at June 30, 2012 compared to $109 million or 0.96% of loans serviced for others at March 31, 2012 . Mortgage servicing revenue, including revenue on loans serviced for the the consolidated group, increased $422 thousand or 4% over the second quarter of 2011 to $10.4 million.

- 16 -

Wealth Management

Wealth Management contributed $6.3 million to consolidated net income in second quarter of 2012 , up $2.4 million or 61% over the second quarter of 2011 .

Table 9 – Wealth Management (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue from external sources	$	7,137		$	7,926		$	(789	)		$	14,277		$	16,150		$	(1,873	)
Net interest revenue from internal sources	5,306			3,696			1,610				10,279			6,667			3,612
Total net interest revenue	12,443			11,622			821				24,556			22,817			1,739
Net loans charged off	521			623			(102		)		1,171			1,061			110
Net interest revenue after net loans charged off	11,922			10,999			923				23,385			21,756			1,629

Fees and commissions revenue	51,229			42,266			8,963				97,674			82,191			15,483
Gain on financial instruments and other assets, net	327			522			(195		)		275			565			(290		)
Other operating revenue	51,556			42,788			8,768				97,949			82,756			15,193

Personnel expense	36,682			31,954			4,728				71,933			60,275			11,658
Net losses (gains) and expenses of repossessed assets	15			37			(22		)		20			(4		)	24
Other non-personnel expense	7,381			6,990			391				14,326			14,087			239
Corporate allocations	9,131			8,416			715				18,205			16,744			1,461
Other operating expense	53,209			47,397			5,812				104,484			91,102			13,382

Income before taxes	10,269			6,390			3,879				16,850			13,410			3,440
Federal and state income tax	3,995			2,486			1,509				6,555			5,216			1,339

Net income	$	6,274		$	3,904		$	2,370			$	10,295		$	8,194		$	2,101

Average assets	$	4,194,153		$	3,883,815		$	310,338			$	4,195,283		$	3,862,949		$	332,334
Average loans	927,321			1,016,942			(89,621		)		927,429			1,035,253			(107,824		)
Average deposits	4,086,874			3,784,131			302,743				4,096,555			3,762,978			333,577
Average invested capital	176,704			176,070			634				176,149			175,506			643
Return on average assets	0.60		%	0.40		%	20			bp	0.49		%	0.43		%	6			bp
Return on invested capital	14.28		%	8.89		%	539			bp	11.75		%	9.41		%	234			bp
Efficiency ratio	83.57		%	87.95		%	(438		)	bp	85.48		%	86.76		%	(128		)	bp
Net charge-offs (annualized) to average loans	0.23		%	0.25		%	(2		)	bp	0.25		%	0.21		%	4			bp

- 17 -



	June 30, 2012		June 30, 2011		Increase (Decrease)
Trust assets in custody for which BOKF has sole or joint discretionary authority	$	10,225,038	$	9,687,621	$	537,417
Trust assets not in custody for which BOKF has sole or joint discretionary authority	231,167		195,751		35,416
Non-managed trust assets in custody	12,680,420		12,450,949		229,471
Trusts assets held in safekeeping	12,612,094		10,936,886		1,675,208
Trust assets	35,748,719		33,271,207		2,477,512
Other assets held in safekeeping	8,325,723		6,771,439		1,554,284
Brokerage accounts under BOKF administration	4,109,662		3,392,134		717,528
Assets under management or in custody	$	48,184,104	$	43,434,780	$	4,749,324

Net interest revenue for the second quarter of 2012 was up $821 thousand or 7% over the second quarter of 2011 . Average loan balances were down $90 million . Average deposit balances were up $303 million or 8% over the prior year. The impact of this increase on net interest revenue was partially offset by decreased yield on deposits sold to the fund management unit. Net loans charged off decreased $102 thousand from the second quarter of 2011 to $521 thousand or 0.23% of average loans on an annualized basis.

Fees and commission revenue was up $9.0 million or 21% over the second quarter of 2011 , primarily due to a $7.9 million or 36% increase in brokerage and trading revenues and a $780 thousand or 4% increase in trust fees primarily due to timing of fees.

Other operating revenue includes fees earned from state and municipal bond underwriting and financial advisory services, primarily in the Oklahoma and Texas markets. In the second quarter of 2012 , the Wealth Management division participated in 137 underwritings that totaled $1.7 billion. As a participant, the Wealth Management division was responsible for facilitating the sale of approximately $719 million of these underwritings. In the second quarter of 2011 , the Wealth Management division participated in 61 underwritings that totaled approximately $961 million. Our interest in these underwritings totaled approximately $286 million.

Operating expenses increased $5.8 million or 12% over the second quarter of 2011 . Personnel expenses increased $4.7 million . Incentive compensation increased $3.3 million over the prior year. Regular compensation costs increased $1.2 million primarily due to increased headcount and annual merit increases. Non-personnel expenses increased $391 thousand or 6% due primarily to additional expenses incurred related to expansion of the Wealth Management business line.

Growth in average assets was largely due to funds sold to the funds management unit. Average deposits attributed to the Wealth Management division were up $303 million or 8% over the second quarter of 2011 primarily due to a $302 million increase in average demand deposits accounts. Average interest-bearing transaction accounts increase d $81 million offset by an $81 million decrease in average time deposit balances.

- 18 -

Geographical Market Distribution

The Company secondarily evaluates performance by primary geographical market. Loans are generally attributed to geographical markets based on the location of the customer and may not reflect the location of the underlying collateral. Brokered deposits and other wholesale funds are not attributed to a geographical market. Funds management and other also includes insignificant results of operations in locations outside our primary geographic regions.

Table 10 – Net Income by Geographic Region (In thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Oklahoma	$	36,442		$	27,818		$	69,810		$	52,865
Texas	11,664			10,163			24,758			20,330
New Mexico	5,137			2,856			9,667			5,765
Arkansas	5,453			19			7,621			850
Colorado	3,507			1,457			5,996			3,869
Arizona	(910		)	(902		)	(2,702		)	(3,970		)
Kansas / Missouri	2,106			958			4,145			1,927
Subtotal	63,399			42,369			119,295			81,636
Funds management and other	34,229			26,638			61,948			52,145
Total	$	97,628		$	69,007		$	181,243		$	133,781

- 19 -

Oklahoma Market

Our Oklahoma offices are located primarily in the Tulsa and Oklahoma City metropolitan areas. Oklahoma is a significant market to the Company, representing 48% of our average loans, 55% of our average deposits and 37% of our consolidated net income in the second quarter of 2012 . In addition, all of our mortgage servicing activity, TransFund EFT network and 67% of our trust assets are attributed to the Oklahoma market.

Table 11 – Oklahoma (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue	$	58,065		$	59,295		$	(1,230	)		$	115,963		$	114,303		$	1,660
Net loans charged off	4,191			1,825			2,366				5,223			8,245			(3,022		)
Net interest revenue after net loans charged off	53,874			57,470			(3,596		)		110,740			106,058			4,682

Fees and commissions revenue	83,226			76,607			6,619				160,681			148,387			12,294
Gain on financial instruments and other assets, net	25,460			11,799			13,661				20,570			5,903			14,667
Other operating revenue	108,686			88,406			20,280				181,251			154,290			26,961

Personnel expense	38,697			37,559			1,138				75,239			71,198			4,041
Net losses and expenses of repossessed assets	1,578			2,334			(756		)		1,994			2,918			(924		)
Change in fair value of mortgage servicing rights	11,450			13,493			(2,043		)		4,323			10,364			(6,041		)
Other non-personnel expense	43,067			36,438			6,629				78,451			69,331			9,120
Corporate allocations	8,125			10,523			(2,398		)		17,729			20,015			(2,286		)
Total other operating expense	102,917			100,347			2,570				177,736			173,826			3,910

Income before taxes	59,643			45,529			14,114				114,255			86,522			27,733
Federal and state income tax	23,201			17,711			5,490				44,445			33,657			10,788

Net income	$	36,442		$	27,818		$	8,624			$	69,810		$	52,865		$	16,945

Average assets	$	11,375,404		$	10,691,211		$	684,193			$	11,464,605		$	10,567,673		$	896,932
Average loans	5,558,617			5,156,338			402,279				5,461,958			5,172,292			289,666
Average deposits	10,186,558			9,585,364			601,194				10,264,709			9,523,982			740,727
Average invested capital	546,064			534,579			11,485				544,440			533,747			10,693
Return on average assets	1.29		%	1.04		%	25			bp	1.22		%	1.01		%	21			bp
Return on invested capital	26.84		%	20.87		%	597			bp	25.79		%	19.97		%	582			bp
Efficiency ratio	64.74		%	63.91		%	83			bp	62.68		%	62.23		%	45			bp
Net charge-offs (annualized) to average loans	0.30		%	0.14		%	16			bp	0.19		%	0.32		%	(13		)	bp

Net income generated in the Oklahoma market in the second quarter of 2012 increased $8.6 million or 31% over the second quarter of 2011 . Gains on financial instruments and other assets, net include a $14.2 million gain from the sale of common stock received in settlement of a defaulted loan. Increased fees and commission revenue was partially offset by increased operating expenses, excluding changes in the fair value of mortgage servicing rights. Net loans charged off increased $2.4 million to 0.30% of average loans on an annualized basis.

- 20 -

Net interest revenue decreased $1.2 million or 2% compared to the second quarter of 2011 . Lower funding costs were offset by decreased yield on residential mortgage-backed securities held as an economic hedge of mortgage servicing rights. The average balance of these securities decreased $208 million compared to the second quarter of 2011 . Average loan balances were up $402 million and loan yields were down. The favorable net interest impact of the $601 million increase in average deposit balances was offset by lower yield on funds sold to the funds management unit.

Fees and commission revenue increased $6.6 million compared to the second quarter of 2011 . Mortgage banking revenue was up $7.1 million over the second quarter of 2011 primarily due to increased mortgage loan origination and commitment volumes and increased gains on sales of residential mortgage loans in the secondary market. Brokerage and trading revenue was up $2.1 million primarily due to increased retail brokerage fees. Securities trading revenue and investment banking revenue all increased over the prior year as well. Deposit service charges and fees increased $1.1 million over the second quarter of 2011 . Deposits accounts with a standard monthly fee and commercial account service charges were up over the prior year. Transaction card revenue was down $2.8 million primarily due to changes in interchange fee regulations which were effective October 1, 2011.

Change in the fair value of the mortgage servicing rights, net of economic hedge, decreased net income by $1.2 million for the second quarter of 2012 and decreased net income by $1.4 million in the second quarter of 2011 .

Excluding the change in the fair value of mortgage servicing rights, other operating expenses increased $4.6 million or 5% over the prior year. Personnel expenses were up $1.1 million or 3% over the prior year primarily due to annual merit increases. Incentive compensation was down compared to the prior year, offset by increased employee benefit costs. Non-personnel expenses were up $6.6 million or 18% due primarily to increased mortgage banking costs, professional fees and services and business promotion expenses. Corporate expense allocations were down $2.4 million compared to the prior year. Net losses and operating expenses of repossessed assets were down $756 thousand or 32% compared to the second quarter of 2011 .

Net loans charged off increased to $4.2 million or 0.30% of average loans on an annualized basis for second quarter of 2012 compared with $1.8 million or 0.14% of average loans on an annualized basis for the second quarter of 2011 . Charge-offs of residential mortgage and commercial real estate loans increased over the prior quarter.

Average deposits in the Oklahoma market for the second quarter of 2012 increase d $601 million over the second quarter of 2011 . Commercial Banking deposit balances increased $282 million or 6% over the prior year. Deposits related to commercial and industrial customers and energy customers increased over the prior year, partially offset by decreased average balances related to treasury services customers. Wealth Management deposits increased $207 million over the prior year in the private banking division, broker/dealer division and in trust. Consumer deposits also increased $112 million over the second quarter of 2011 .

- 21 -

Texas Market

Our Texas offices are located primarily in the Dallas, Fort Worth and Houston metropolitan areas. Texas is our second largest market with 32% of our average loans, 24% of our average deposits and 12% of our consolidated net income in the second quarter of 2012 .

Table 12 – Texas (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue	$	36,138		$	33,775		$	2,363			$	71,216		$	66,940		$	4,276
Net loans charged off	2,840			716			2,124				3,284			1,643			1,641
Net interest revenue after net loans charged off	33,298			33,059			239				67,932			65,297			2,635

Fees and commissions revenue	22,003			16,452			5,551				41,270			32,490			8,780
Gain (loss) on financial instruments and other assets, net	143			(70		)	213				188			(70		)	258
Other operating revenue	22,146			16,382			5,764				41,458			32,420			9,038

Personnel expense	19,987			17,451			2,536				39,066			34,254			4,812
Net losses and expenses of repossessed assets	994			1,130			(136		)		416			1,275			(859		)
Other non-personnel expense	6,242			5,756			486				11,959			11,509			450
Corporate allocations	9,996			9,224			772				19,265			18,914			351
Total other operating expense	37,219			33,561			3,658				70,706			65,952			4,754

Income before taxes	18,225			15,880			2,345				38,684			31,765			6,919
Federal and state income tax	6,561			5,717			844				13,926			11,435			2,491

Net income	$	11,664		$	10,163		$	1,501			$	24,758		$	20,330		$	4,428

Average assets	$	5,005,622		$	4,743,725		$	261,897			$	5,035,837		$	4,842,458		$	193,379
Average loans	3,749,737			3,386,030			363,707				3,766,266			3,324,835			441,431
Average deposits	4,481,221			4,210,294			270,927				4,482,053			4,283,098			198,955
Average invested capital	475,484			467,716			7,768				476,863			467,238			9,625
Return on average assets	0.94		%	0.86		%	8			bp	0.99		%	0.85		%	14			bp
Return on invested capital	9.87		%	8.72		%	115			bp	10.44		%	8.77		%	167			bp
Efficiency ratio	64.02		%	66.82		%	(280		)	bp	62.86		%	66.33		%	(347		)	bp
Net charge-offs (annualized) to average loans	0.30		%	0.08		%	22			bp	0.18		%	0.10		%	8			bp

Net income in the Texas market increased $1.5 million or 15% over the second quarter of 2011 primarily due to increased mortgage banking revenue partially offset by increased personnel expenses. Increased net interest revenue was offset by an increase in net loans charged off.

Net interest revenue increased $2.4 million or 7% over the second quarter of 2011 . Average outstanding loans grew by $364 million or 11% over the second quarter of 2011 and average deposits increase d by $271 million or 6% . Decreased deposit costs were mostly offset by lower yield on funds sold to the funds management unit.

Fees and commissions revenue increased $5.6 million or 34% over the second quarter of 2011 primarily due to increased mortgage banking revenue. Brokerage and trading revenue was up $1.4 million over the prior quarter primarily due to a $2.0 million increase in investment banking revenue as a result of expansion of our municipal financial advisory services in the

- 22 -

Texas market. This increase was partially offset by decreased securities trading revenue and retail brokerage fees. In addition, deposit service charge and trust fees and commissions all increased over the prior year. Transaction card revenue was down compared to the prior year primarily due to debit card interchange fee regulations which became effective in the third quarter of 2011.

Operating expenses increased $3.7 million or 11% over the second quarter of 2011 . Personnel costs were up $2.5 million or 15% primarily due to incentive compensation expense and increased head count related to higher residential mortgage loan origination activity. Corporate expense allocations were up $772 thousand on increased customer transaction activity and non-personnel expenses increased $486 thousand . Net losses and operating expense of repossessed assets improved by $136 thousand compared to second quarter of 2011 .

Net loans charged off totaled $2.8 million or 0.30% of average loans for the second quarter of 2012 on an annualized basis, compared to $716 thousand or 0.08% of average loans for the second quarter of 2011 on an annualized basis.

- 23 -

New Mexico

Net income attributable to our New Mexico market totaled $5.1 million or 5% of consolidated net income, a $2.3 million or 80% increase over the second quarter of 2011 . Net interest income was flat compared to the second quarter of 2011 . Average loan and deposit balances were essentially flat compared to the prior year. The New Mexico market had a net recovery of $545 thousand in the second quarter of 2012 compared to a net charge-off of $589 thousand or 0.33% of average loans on an annualized basis in the second quarter of 2011 .

Fees and commission revenue increased $2.9 million or 37% over the prior year primarily due to growth in mortgage banking revenue. Transaction card revenue was down due to debit card interchange fee regulations. Other operating expense increased $414 thousand or 4% . Net losses and operating expenses of repossessed assets were down $892 thousand . Corporate allocation expense increased $846 thousand . Personnel expenses were up $588 thousand primarily due to increased incentive compensation and non-personnel expenses were down $128 thousand .

Table 13 – New Mexico (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue	$	8,484		$	8,334		$	150			$	16,968		$	16,654		$	314
Net loans charged off (recovered)	(545		)	589			(1,134		)		340			1,000			(660		)
Net interest revenue after net loans charged off (recovered)	9,029			7,745			1,284				16,628			15,654			974

Other operating revenue – fees and commission	10,694			7,830			2,864				21,108			15,409			5,699

Personnel expense	4,791			4,203			588				9,676			8,402			1,274
Net losses (gains) and expenses of repossessed assets	57			949			(892		)		(134		)	1,363			(1,497		)
Other non-personnel expense	2,092			2,220			(128		)		4,070			4,457			(387		)
Corporate allocations	4,375			3,529			846				8,302			7,406			896
Total other operating expense	11,315			10,901			414				21,914			21,628			286

Income before taxes	8,408			4,674			3,734				15,822			9,435			6,387
Federal and state income tax	3,271			1,818			1,453				6,155			3,670			2,485

Net income	$	5,137		$	2,856		$	2,281			$	9,667		$	5,765		$	3,902

Average assets	$	1,370,603		$	1,381,021		$	(10,418	)		$	1,373,232		$	1,378,897		$	(5,665	)
Average loans	705,853			705,529			324				707,328			704,238			3,090
Average deposits	1,232,354			1,238,514			(6,160		)		1,229,809			1,247,096			(17,287		)
Average invested capital	77,793			81,281			(3,488		)		78,664			81,535			(2,871		)
Return on average assets	1.51		%	0.83		%	68			bp	1.42		%	0.84		%	58			bp
Return on invested capital	26.56		%	14.09		%	1,247			bp	24.71		%	14.26		%	1,045			bp
Efficiency ratio	59.00		%	67.44		%	(844		)	bp	57.55		%	67.45		%	(990		)	bp
Net charge-offs (recoveries) to average loans (annualized)	(0.31		)%	0.33		%	(64		)	bp	0.10		%	0.29		%	(19		)	bp

- 24 -

Arkansas Market

Net income attributable to our Arkansas market increased $5.4 million over the prior year. Net interest revenue increased $2.6 million due primarily to a $2.9 million full recovery of a nonaccruing commercial loan. Loans in the Arkansas market continued to decrease primarily due to the run-off of indirect automobile loans. Average deposits in our Arkansas market were up $19 million or 10% over the second quarter of 2011 . Interest-bearing transaction deposits increased $34 million and demand deposits increased $8.1 million , partially offset by a $24 million decrease in higher costing time deposits. The net recovery of $2.2 million in the second quarter of 2012 was due primarily to the full recovery of an amount charged off in the second quarter of 2011.

Fees and commissions revenue was up $4.0 million over the prior year primarily due to increased securities trading revenue at our Little Rock office and higher mortgage banking revenue. Other operating expenses were up $2.0 million primarily due to increased incentive compensation costs related to trading activity. Net losses and operating expenses on repossessed assets were $407 thousand less than in the prior year. Corporate expense allocations increased $329 thousand and non-personnel expenses were flat compared to the prior year.

Table 14 – Arkansas (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue	$	4,541		$	1,928		$	2,613			$	6,508		$	4,224		$	2,284
Net loans charged off (recovered)	(2,165		)	2,153			(4,318		)		(2,101		)	2,490			(4,591		)
Net interest revenue after net loans charged off (recovered)	6,706			(225		)	6,931				8,609			1,734			6,875

Other operating revenue – fees and commissions	12,502			8,523			3,979				23,751			16,961			6,790

Personnel expense	6,146			4,074			2,072				11,631			9,300			2,331
Net losses and expenses of repossessed assets	68			475			(407		)		76			494			(418		)
Other non-personnel expense	1,228			1,205			23				2,584			2,212			372
Corporate allocations	2,842			2,513			329				5,596			5,298			298
Total other operating expense	10,284			8,267			2,017				19,887			17,304			2,583

Income before taxes	8,924			31			8,893				12,473			1,391			11,082
Federal and state income tax	3,471			12			3,459				4,852			541			4,311

Net income	$	5,453		$	19		$	5,434			$	7,621		$	850		$	6,771

Average assets	$	245,034		$	286,998		$	(41,964	)		$	260,339		$	295,126		$	(34,787	)
Average loans	224,074			270,832			(46,758		)		241,830			279,276			(37,446		)
Average deposits	201,116			182,166			18,950				211,185			205,069			6,116
Average invested capital	19,387			23,081			(3,694		)		20,128			23,068			(2,940		)
Return on average assets	8.95		%	0.03		%	892			bp	5.89		%	0.58		%	531			bp
Return on invested capital	113.13		%	0.33		%	11,280			bp	76.14		%	7.43		%	6,871			bp
Efficiency ratio	60.34		%	79.10		%	(1,876		)	bp	65.72		%	81.68		%	(1,596		)	bp
Net charge-offs (recoveries) to average loans (annualized)	(3.89		)%	3.19		%	(708		)	bp	(1.75		)%	1.80		%	(355		)	bp

- 25 -

Colorado Market

Net income attributed to our Colorado market increased $2.1 million over the second quarter of 2011 to $3.5 million . Net loans charged off decreased $1.2 million compared to the second quarter of 2011 to $471 thousand or 0.21% on an annualized basis. Net loans charged off in the second quarter of 2011 totaled $1.7 million or 0.89% of loans on an annualized basis. Net interest revenue increased $845 thousand due primarily to a $111 million or 14% increase in average loans outstanding and lower deposit costs, partially offset by decreased yield on funds sold to the funds management unit. Average deposits attributable to the Colorado market were down $12 million compared to the second quarter of 2011 . Demand deposits grew by $89 million during the second quarter due primarily to increased commercial account balances, offset by a $59 million decrease in time deposits and a $45 million decrease in interest-bearing transaction deposit account balances.

Fees and commissions revenue was up $3.1 million over the second quarter of 2011 primarily related to growth in mortgage banking revenue. Operating expenses were up $1.8 million over the prior year. Personnel expenses were up $966 thousand and corporate expense allocations increased $731 thousand . Net losses and operating expenses of repossessed assets increased $118 thousand . Non-personnel expenses were flat compared to the prior year.

Table 15 – Colorado (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue	$	9,170		$	8,325		$	845			$	17,944		$	16,399		$	1,545
Net loans charged off	471			1,705			(1,234		)		2,354			1,655			699
Net interest revenue after net loans charged off	8,699			6,620			2,079				15,590			14,744			846

Fees and commissions revenue	8,845			5,740			3,105				16,569			11,674			4,895
Gain on financial instruments and other assets, net	—			—			—				—			1			(1		)
Other operating revenue	8,845			5,740			3,105				16,569			11,675			4,894

Personnel expense	6,262			5,296			966				12,038			10,348			1,690
Net losses (gains) and expenses of repossessed assets	90			(28		)	118				72			278			(206		)
Other non-personnel expense	1,437			1,422			15				2,777			2,974			(197		)
Corporate allocations	4,016			3,285			731				7,458			6,487			971
Total other operating expense	11,805			9,975			1,830				22,345			20,087			2,258

Income before taxes	5,739			2,385			3,354				9,814			6,332			3,482
Federal and state income tax	2,232			928			1,304				3,818			2,463			1,355

Net income	$	3,507		$	1,457		$	2,050			$	5,996		$	3,869		$	2,127

Average assets	$	1,337,832		$	1,351,710		$	(13,878	)		$	1,359,146		$	1,325,967		$	33,179
Average loans	884,198			772,800			111,398				855,233			769,144			86,089
Average deposits	1,272,015			1,284,000			(11,985		)		1,294,047			1,258,578			35,469
Average invested capital	117,673			116,653			1,020				116,711			116,884			(173		)
Return on average assets	1.05		%	0.43		%	62			bp	0.89		%	0.59		%	30			bp
Return on invested capital	11.99		%	5.01		%	698			bp	10.33		%	6.68		%	365			bp
Efficiency ratio	65.53		%	70.92		%	(539		)	bp	64.74		%	71.55		%	(681		)	bp
Net charge-offs (annualized) to average loans	0.21		%	0.89		%	(67		)	bp	0.55		%	0.43		%	12			bp

- 26 -

Arizona Market

The Arizona market had a net loss of $910 thousand for the second quarter of 2012 compared to a net loss of $902 thousand for the second quarter of 2011 . Net loans charged off improved to $807 thousand or 0.60% of average loans on an annualized basis compared to $1.5 million or 1.03% of average loans on an annualized basis for the second quarter of 2011 . Net losses and operating expenses on repossessed assets remain elevated totaling $2.4 million in the second quarter of 2012 compared to $814 thousand in the second quarter of 2011 . Write-downs of repossessed assets increased compared to the prior year primarily due to regularly scheduled appraisal updates.

Net interest revenue decrease d $119 thousand or 3% compared to the second quarter of 2011 . Average loan balances were down $43 million or 7% . Average deposits were down $8.2 million or 3% . Higher costing time deposits balances were down $16 million compared to the prior year. Demand deposit balances increase d $9.5 million primarily due to growth in commercial and wealth management demand deposits.

Fees and commissions revenue was up $808 thousand primarily due to increased mortgage banking revenue. Personnel expenses decrease d $122 thousand , non-personnel expenses decrease d $161 thousand and corporate expense allocations were up $48 thousand .

We continue to focus on growth in commercial and small business lending in the Arizona market and have significantly scaled back commercial real estate lending activities which were not contemplated in our initial expansion into this market. Loan and repossessed asset losses are largely due to commercial real estate lending. Growth is primarily related to commercial loans and deposits. Assets attributable to the Arizona market included $16 million of goodwill that may be impaired in future periods if our commercial and small business lending growth plans are unsuccessful.

- 27 -

Table 16 – Arizona (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue	$	4,022		$	4,141		$	(119	)		$	8,356		$	7,708		$	648
Net loans charged off	807			1,495			(688		)		4,427			3,384			1,043
Net interest revenue after net loans charged off	3,215			2,646			569				3,929			4,324			(395		)

Other operating revenue – fees and commissions	2,508			1,700			808				4,353			3,520			833

Personnel expense	2,640			2,762			(122		)		4,995			5,590			(595		)
Net losses and expenses of repossessed assets	2,438			814			1,624				3,667			4,382			(715		)
Other non-personnel expense	862			1,023			(161		)		1,623			2,001			(378		)
Corporate allocations	1,272			1,224			48				2,420			2,369			51
Total other operating expense	7,212			5,823			1,389				12,705			14,342			(1,637		)

Loss before taxes	(1,489		)	(1,477		)	(12		)		(4,423		)	(6,498		)	2,075
Federal and state income tax	(579		)	(575		)	(4		)		(1,721		)	(2,528		)	807

Net loss	$	(910	)	$	(902	)	$	(8	)		$	(2,702	)	$	(3,970	)	$	1,268

Average assets	$	594,492		$	648,926		$	(54,434	)		$	602,001		$	634,937		$	(32,936	)
Average loans	537,763			580,373			(42,610		)		546,214			566,916			(20,702		)
Average deposits	262,692			270,926			(8,234		)		255,002			254,833			169
Average invested capital	59,061			65,579			(6,518		)		58,979			64,885			(5,906		)
Return on average assets	(0.62		)%	(0.56		)%	(6		)	bp	(0.90		)%	(1.26		)%	36			bp
Return on invested capital	(6.20		)%	(5.52		)%	(68		)	bp	(9.21		)%	(12.34		)%	313			bp
Efficiency ratio	110.44		%	99.69		%	1,075			bp	99.97		%	127.73		%	(2,776		)	bp
Net charge-offs (annualized) to average loans	0.60		%	1.03		%	(43		)	bp	1.63		%	1.20		%	43			bp

- 28 -

Kansas/Missouri Market

Net income attributed to the Kansas / Missouri market increase d by $1.1 million over the second quarter of 2011 . Net interest revenue increase d $491 thousand or 18% . Average loan balances increase d $65 million or 18% and average deposits balances were down $35 million or 13% . Demand deposit balances grew $67 million due primarily to commercial account balances. Interest-bearing transaction account balances were down $82 million and higher costing time deposit balances decrease d by $19 million .

Fees and commissions revenue increase d $3.9 million or 77% over the prior year primarily due to increased mortgage banking revenue and brokerage and trading revenue. Trust fees and commissions and deposit service charges and fees were also up over the prior year. Personnel costs were up $867 thousand primarily due to increase d incentive compensation related to brokerage and trading activity and increased headcount. Corporate expense allocations increase d by $1.5 million on higher customer transaction volume and non-personnel expense increased $241 thousand .

Table 17 – Kansas / Missouri (Dollars in thousands)

	Three Months Ended										Six Months Ended
	June 30,						Increase				June 30,						Increase
	2012			2011			(Decrease)				2012			2011			(Decrease)
Net interest revenue	$	3,239		$	2,748		$	491			$	6,351		$	5,581		$	770
Net loans charged off (recovered)	(130		)	18			(148		)		414			231			183
Net interest revenue after net loans charged off (recovered)	3,369			2,730			639				5,937			5,350			587

Other operating revenue – fees and commission	9,043			5,121			3,922				17,739			10,117			7,622

Personnel expense	4,756			3,889			867				9,556			7,319			2,237
Net losses (gains) and expenses of repossessed assets	(27		)	(61		)	34				(8		)	132			(140		)
Other non-personnel expense	1,092			851			241				2,083			1,827			256
Corporate allocations	3,145			1,604			1,541				5,261			3,035			2,226
Total other operating expense	8,966			6,283			2,683				16,892			12,313			4,579

Income before taxes	3,446			1,568			1,878				6,784			3,154			3,630
Federal and state income tax	1,340			610			730				2,639			1,227			1,412

Net income	$	2,106		$	958		$	1,148			$	4,145		$	1,927		$	2,218

Average assets	$	440,109		$	366,349		$	73,760			$	439,706		$	367,670		$	72,036
Average loans	420,727			356,160			64,567				421,451			358,327			63,124
Average deposits	239,658			274,202			(34,544		)		239,021			321,401			(82,380		)
Average invested capital	32,729			25,507			7,222				32,157			25,397			6,760
Return on average assets	1.92		%	1.05		%	87			bp	1.90		%	1.06		%	84			bp
Return on invested capital	25.88		%	15.06		%	1,082			bp	25.92		%	15.30		%	1,062			bp
Efficiency ratio	73.00		%	79.84		%	(684		)	bp	70.12		%	78.44		%	(832		)	bp
Net charge-offs (annualized) to average loans	(0.12		)%	0.02		%	(14		)	bp	0.20		%	0.13		%	7			bp

Financial Condition

- 29 -

Securities

We maintain a securities portfolio to enhance profitability, support customer transactions, manage interest rate risk, provide liquidity and comply with regulatory requirements. Securities are classified as trading, held for investment, or available for sale. See Note 2 to the consolidated financial statements for the composition of the securities portfolio as of June 30, 2012 , December 31, 2011 and June 30, 2011 .

At June 30, 2012 , the carrying value of investment (held-to-maturity) securities was $412 million and the fair value was $441 million . Investment securities consist primarily of long-term, fixed-rate Oklahoma municipal bonds, taxable Texas school construction bonds and residential mortgage backed securities issued by U.S. government agencies. The investment security portfolio is diversified among issuers. The largest obligation of any single issuer is $30 million. Substantially all of these bonds are general obligations of the issuers. Approximately $89 million of the Texas school construction bonds are also guaranteed by the Texas Permanent School Fund Guarantee Program supervised by the State Board of Education for the State of Texas.

Available for sale securities, which may be sold prior to maturity, are carried at fair value. Unrealized gains or losses, net of deferred taxes, are recorded as accumulated other comprehensive income in shareholders’ equity. The amortized cost of available for sale securities totaled $10.2 billion at June 30, 2012 , an increase of $244 million over March 31, 2012 . At June 30, 2012 , residential mortgage-backed securities represented 98% of total available for sale securities.

A primary risk of holding residential mortgage-backed securities comes from extension during periods of rising interest rates or prepayment during periods of falling interest rates. We evaluate this risk through extensive modeling of risk both before making an investment and throughout the life of the security. Current interest rates are historically low and prices for residential mortgage-backed securities are historically high resulting in low effective durations. Our best estimate of the duration of the residential mortgage-backed securities portfolio at June 30, 2012 is 2.1 years. Management estimates the duration extends to 3.5 years assuming an immediate 200 basis point upward shock. The estimated duration contracts to 1.4 years assuming a 50 basis point decline in the current low rate environment. Net unamortized premiums are less than 1% of the available for sale securities portfolio amortized cost.

Residential mortgage-backed securities also have credit risk from delinquency or default of the underlying loans. We mitigate this risk by primarily investing in securities issued by U.S. government agencies. Principal and interest payments on the underlying loans are fully guaranteed. At June 30, 2012 , approximately $9.6 billion of the amortized cost of the Company’s residential mortgage-backed securities were issued by U.S. government agencies. The fair value of these residential mortgage-backed securities totaled $9.9 billion at June 30, 2012 .

We also hold amortized cost of $354 million in residential mortgage-backed securities privately issued by publicly-owned financial institutions, a decrease of $17 million from March 31, 2012 . The decline was primarily due to $16 million of cash received and $858 thousand of other-than-temporary impairment losses charged against earnings during the second quarter of 2012 . The fair value of our portfolio of privately issued residential mortgage-backed securities totaled $318 million at June 30, 2012 .

The amortized cost of our portfolio of privately issued residential mortgage-backed securities included $220 million of Jumbo-A residential mortgage loans and $134 million of Alt-A residential mortgage loans. Jumbo-A residential mortgage loans generally meet government underwriting standards, but have loan balances that exceed agency maximums. Alt-A mortgage loans generally do not have sufficient documentation to meet government agency underwriting standards. Credit risk on residential mortgage-backed securities originated by private issuers is mitigated by investment in senior tranches with additional collateral support. All of our Alt-A residential mortgage-backed securities were issued with credit support from additional layers of loss-absorbing subordinated tranches, including all Alt-A residential mortgage backed securities held that were originated in 2007 and 2006. The weighted average original credit enhancement of the Alt-A residential mortgage-backed securities was 10.2% and currently stands at 1.9%. The Jumbo-A residential mortgage-backed securities had original credit enhancement of 9.4% and the current level is 6.6%. Approximately 79% of our Alt-A mortgage-backed securities represent pools of fixed-rate residential mortgage loans. None of the adjustable rate mortgages are payment option adjustable rate mortgages (“ARMs”). Approximately 25% of our Jumbo-A residential mortgage-backed securities represent pools of fixed rate residential mortgage loans and none of the adjustable rate mortgages are payment option ARMs.

The aggregate gross amount of unrealized losses on available for sale securities totaled $41 million at June 30, 2012 . On a quarterly basis, we perform separate evaluations on debt and equity securities to determine if the unrealized losses are temporary as more fully described in Note 2 of the Consolidated Financial Statements. Other-than-temporary impairment

- 30 -

charges of $858 thousand were recognized in earnings in the second quarter of 2012 related to certain privately issued residential mortgage-backed securities that we do not intend to sell.

Certain residential mortgage-backed securities issued by U.S. government agencies and included in fair value option securities on the Consolidated Balance Sheets, have been segregated and designated as economic hedges of changes in the fair value of our mortgage servicing rights. We have elected to carry these securities at fair value with changes in fair value recognized in current period income. These securities are held with the intent that gains or losses will offset changes in the fair value of mortgage servicing rights and related derivative contracts.

Bank-Owned Life Insurance

We have approximately $269 million of bank-owned life insurance at June 30, 2012 . This investment is expected to provide a long-term source of earnings to support existing employee benefit programs. Approximately $238 million is held in separate accounts. Our separate account holdings are invested in diversified portfolios of investment-grade fixed income securities and cash equivalents, including U.S. Treasury and Agency securities, residential mortgage-backed securities, corporate debt, asset-backed and commercial mortgage-backed securities. The portfolios are managed by unaffiliated professional managers within parameters established in the portfolio’s investment guidelines. The cash surrender value of certain life insurance policies is further supported by a stable value wrap, which protects against changes in the fair value of the investments. At June 30, 2012 , the cash surrender value represented by the underlying fair value of investments held in separate accounts was approximately $260 million. As the underlying fair value of the investments held in a separate account at June 30, 2012 exceeded the net book value of the investments, no cash surrender value was supported by the stable value wrap. The stable value wrap is provided by a domestic financial institution. The remaining cash surrender value of $31 million primarily represents the cash surrender value of policies held in general accounts and other amounts due from various insurance companies.

- 31 -

Loans

The aggregate loan portfolio before allowance for loan losses totaled $11.6 billion at June 30, 2012 , largely unchanged compared to March 31, 2012 .

Table 18 – Loans (In thousands)

	June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011		June 30, 2011
Commercial:
Energy	$	2,278,336	$	2,166,406	$	2,005,041	$	1,749,203	$	1,710,106
Services	1,931,520		1,912,537		1,761,538		1,872,947		1,725,289
Wholesale/retail	960,184		1,027,170		967,426		1,021,070		1,054,149
Manufacturing	362,877		352,297		336,733		373,074		367,414
Healthcare	1,009,128		1,000,854		978,160		914,346		855,744
Integrated food services	216,978		211,288		204,311		192,200		187,833
Other commercial and industrial	293,521		288,540		301,861		298,762		269,710
Total commercial	7,052,544		6,959,092		6,555,070		6,421,602		6,170,245

Commercial real estate:
Construction and land development	287,059		318,539		342,054		370,465		372,225
Retail	492,377		466,444		509,402		457,176		449,784
Office	384,392		369,179		405,923		422,284		485,731
Multifamily	362,165		435,946		369,028		388,304		334,541
Industrial	231,033		288,650		278,186		224,222		159,806
Other real estate	369,188		354,925		386,710		410,382		385,944
Total commercial real estate	2,126,214		2,233,683		2,291,303		2,272,833		2,188,031

Residential mortgage:
Permanent mortgage	1,141,371		1,134,934		1,153,644		1,180,310		1,155,291
Permanent mortgages guaranteed by U.S. government agencies	168,059		186,119		188,462		173,540		134,458
Home equity	695,667		647,319		632,421		596,051		582,205
Total residential mortgage	2,005,097		1,968,372		1,974,527		1,949,901		1,871,954

Consumer:
Indirect automobile	62,924		81,792		105,149		130,296		162,500
Other consumer	329,652		334,505		343,694		349,937		344,814
Total consumer	392,576		416,297		448,843		480,233		507,314

Total	$	11,576,431	$	11,577,444	$	11,269,743	$	11,124,569	$	10,737,544

Outstanding commercial loan balances increase d $93 million over March 31, 2012 primarily due to growth in the Colorado and Texas markets, partially offset by a decrease in loan balances attributed to the Arkansas market. Commercial real estate loans decreased $107 million during the second quarter of 2012 primarily due to improved market conditions for permanent financing. Residential mortgage loans were up $37 million over March 31, 2012 . Consumer loans decreased $24 million from March 31, 2012 primarily related to the continued runoff of indirect automobile loans related to the previously announced decision to curtail that business.

A breakdown by geographical market follows on Table 19 with discussion of changes in the balance by portfolio and geography. This breakdown may not always represent the location of the borrower or the collateral. The previous periods have been reclassified to conform to the current period loan classification and market attribution.

- 32 -

Table 19 – Loans by Principal Market (In thousands)

	June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011		June 30, 2011
Oklahoma:
Commercial	$	3,098,651	$	3,107,726	$	2,826,649	$	2,865,740	$	2,722,370
Commercial real estate	644,761		631,891		607,030		615,848		607,100
Residential mortgage	1,332,319		1,303,486		1,320,051		1,251,874		1,180,502
Consumer	205,436		215,693		235,909		250,048		267,993
Total Oklahoma	5,281,167		5,258,796		4,989,639		4,983,510		4,777,965

Texas:
Commercial	2,414,824		2,354,593		2,249,888		2,116,377		2,050,112
Commercial real estate	678,745		802,979		830,642		759,574		727,940
Residential mortgage	295,972		288,751		285,091		294,310		303,538
Consumer	115,602		124,692		126,570		133,454		138,713
Total Texas	3,505,143		3,571,015		3,492,191		3,303,715		3,220,303

New Mexico:
Commercial	262,144		273,284		258,668		279,319		283,760
Commercial real estate	285,871		282,834		303,500		302,980		307,190
Residential mortgage	144,944		144,180		132,772		139,922		131,943
Consumer	15,828		18,378		19,369		19,393		19,120
Total New Mexico	708,787		718,676		714,309		741,614		742,013

Arkansas:
Commercial	49,305		64,595		76,199		80,304		73,287
Commercial real estate	119,895		139,670		136,170		134,028		122,749
Residential mortgage	23,510		23,350		22,593		22,172		23,975
Consumer	24,270		28,783		35,911		44,445		52,572
Total Arkansas	216,980		256,398		270,873		280,949		272,583

Colorado:
Commercial	610,384		541,280		544,020		495,429		500,442
Commercial real estate	149,541		144,757		156,013		189,948		167,414
Residential mortgage	89,428		89,861		85,689		104,572		92,769
Consumer	20,612		19,790		21,598		22,183		19,619
Total Colorado	869,965		795,688		807,320		812,132		780,244

Arizona:
Commercial	278,119		269,099		271,914		269,381		275,469
Commercial real estate	181,513		180,830		198,160		227,085		207,300
Residential mortgage	76,616		81,281		94,363		100,132		103,657
Consumer	6,227		5,381		5,633		6,670		6,813
Total Arizona	542,475		536,591		570,070		603,268		593,239

Kansas / Missouri:
Commercial	339,117		348,515		327,732		315,052		264,805
Commercial real estate	65,888		50,722		59,788		43,370		48,338
Residential mortgage	42,308		37,463		33,968		36,919		35,570
Consumer	4,601		3,580		3,853		4,040		2,484
Total Kansas / Missouri	451,914		440,280		425,341		399,381		351,197

Total BOK Financial loans	$	11,576,431	$	11,577,444	$	11,269,743	$	11,124,569	$	10,737,544

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Commercial

Commercial loans represent loans for working capital, facilities acquisition or expansion, purchases of equipment and other needs of commercial customers primarily located within our geographical footprint. Commercial loans are underwritten individually and represent on-going relationships based on a thorough knowledge of the customer, the customer’s industry and market. While commercial loans are generally secured by the customer’s assets including real property, inventory, accounts receivable, operating equipment, interests in mineral rights and other property and may also include personal guarantees of the owners and related parties, the primary source of repayment of the loans is the on-going cash flow from operations of the customer’s business. Inherent lending risks are centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with commercial lending policies.

The commercial loan portfolio grew by $93 million during the second quarter of 2012 . Energy sector loans increased $112 million over March 31, 2012 , growing in the Colorado, Oklahoma and Texas markets. Service sector loans increased $19 million . Service sector loans in the Texas market grew by $43 million offset by a $46 million decrease in service sector loans in the Oklahoma market. Service sector loans in both the Colorado and Arizona market grew in the second quarter. Wholesale/retail sector loans were down $67 million primarily due to a decrease in loans attributed to the Texas and Oklahoma markets. Wholesale/retail sector loans in the Arkansas market were down $11 million due to the payoff of a nonaccruing loan related to a single customer. Manufacturing sector loans increase d $11 million over March 31, 2012 . Growth in the Texas and Oklahoma markets was partially offset by decreased loan balances in the Kansas/Missouri and Colorado markets. Healthcare sector loans were up $8.3 million with the Colorado market growing by $16 million , offset by decreased balances in the Oklahoma and Texas markets.

The commercial sector of our loan portfolio is distributed as follows in Table 20.

Table 20 – Commercial Loans by Principal Market

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/ Missouri		Total
Energy	$	1,060,774	$	869,905	$	4,421	$	238	$	342,949	$	—	$	49	$	2,278,336
Services	689,014		686,898		175,599		12,788		162,853		135,791		68,577		1,931,520
Wholesale/retail	406,032		360,582		46,062		30,370		16,074		69,638		31,426		960,184
Healthcare	612,726		259,081		13,010		4,584		74,560		44,158		1,009		1,009,128
Manufacturing	188,752		112,378		6,256		1,165		8,266		27,122		18,938		362,877
Integrated food services	9,773		7,333		—		2		2,752		—		197,118		216,978
Other commercial and industrial	131,580		118,647		16,796		158		2,930		1,410		22,000		293,521
Total commercial loans	$	3,098,651	$	2,414,824	$	262,144	$	49,305	$	610,384	$	278,119	$	339,117	$	7,052,544

Supporting the energy industry with loans to producers and other energy-related entities has been a hallmark of the Company since its founding and represents a large portion of our commercial loan portfolio. In addition, energy production and related industries have a significant impact on the economy in our primary markets. Loans collateralized by oil and gas properties are subject to a semi-annual engineering review by our internal staff of petroleum engineers. This review is utilized as the basis for developing the expected cash flows supporting the loan amount. The projected cash flows are discounted according to risk characteristics of the underlying oil and gas properties. Loans are evaluated to demonstrate with reasonable certainty that crude oil, natural gas and natural gas liquids can be recovered from known oil and gas reservoirs under existing economic and operating conditions at current pricing levels and with existing conventional equipment and operating methods and costs. As part of our evaluation of credit quality, we analyze rigorous stress tests over a range of commodity prices and take proactive steps to mitigate risk when appropriate.

Energy loans totaled $2.3 billion or 20% of total loans at June 30, 2012 . Outstanding energy loans increased $112 million during the second quarter of 2012 . Unfunded energy loan commitments increased by $220 million to $2.1 billion at June 30, 2012 . Approximately $2.0 billion of energy loans were to oil and gas producers, up $143 million over March 31, 2012 . Approximately 55% of the committed production loans are secured by properties primarily producing natural gas and 45% of the committed production loans are secured by properties primarily producing oil. Loans to borrowers engaged in wholesale or retail energy sales decreased $44 million to $138 million . Loans to borrowers that provide services to the energy

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industry decreased $21 million during the second quarter of 2012 to $66 million and loans to borrowers that manufacture equipment primarily for the energy industry decreased $1.7 million during the second quarter of 2012 to $34 million .

The services sector of the loan portfolio totaled $1.9 billion or 17% of total loans and consists of a large number of loans to a variety of businesses, including community foundations, communications, educational, gaming and transportation services. Service sector loans increased $19 million over March 31, 2012 . Approximately $1.0 billion of the services category is made up of loans with individual balances of less than $10 million. Service sector loans are generally secured by the assets of the borrower with repayment coming from the cash flows of ongoing operations of the customer’s business. Loans in this sector may also be secured by personal guarantees of the owners or related parties.

We participate in shared national credits when appropriate to obtain or maintain business relationships with local customers. Shared national credits are defined by banking regulators as credits of more than $20 million and with three or more non-affiliated banks as participants. At June 30, 2012 , the outstanding principal balance of these loans totaled $2.2 billion. Substantially all of these loans are to borrowers with local market relationships. We serve as the agent lender in approximately 31% of our shared national credits, based on dollars committed. We hold shared credits to the same standard of analysis and perform the same level of review as internally originated credits. Our lending policies generally avoid loans in which we do not have the opportunity to maintain or achieve other business relationships with the customer. In addition to management’s quarterly assessment of credit risk, grading of shared national credits is provided annually by banking regulators.

Commercial Real Estate

Commercial real estate represents loans for the construction of buildings or other improvements to real estate and property held by borrowers for investment purposes generally within our geographical footprint. We require collateral values in excess of the loan amounts, demonstrated cash flows in excess of expected debt service requirements, equity investment in the project and a portion of the project already sold, leased or permanent financing already secured. The expected cash flows from all significant new or renewed income producing property commitments are stress tested to reflect the risks in varying interest rates, vacancy rates and rental rates. As with commercial loans, inherent lending risks are centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with applicable lending policies.

Commercial real estate loans totaled $2.1 billion or 18% of the loan portfolio at June 30, 2012 . The outstanding balance of commercial real estate loans decreased $107 million over the first quarter of 2012 primarily due to improved market conditions for permanent financing such as commercial mortgage-backed securities or with insurance companies. The trend in decreasing commercial real estate loan balances has reduced the percentage of commercial real estate loans to our total loan portfolio below its historical range of 20% to 23% over the past five years. The commercial real estate sector of our loan portfolio is distributed as follows in Table 21.

Table 21 – Commercial Real Estate Loans by Principal Market

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/ Missouri		Total
Construction and land development	$	95,024	$	48,989	$	55,387	$	18,295	$	44,779	$	16,519	$	8,066	$	287,059
Retail	136,916		191,124		61,954		12,162		19,361		58,282		12,578		492,377
Office	93,794		169,169		66,440		12,233		13,397		29,299		60		384,392
Multifamily	147,143		86,181		22,128		45,135		24,510		21,667		15,401		362,165
Industrial	58,053		102,790		34,779		1,725		6,938		15,337		11,411		231,033
Other real estate	113,831		80,492		45,183		30,345		40,556		40,409		18,372		369,188
Total commercial real estate loans	$	644,761	$	678,745	$	285,871	$	119,895	$	149,541	$	181,513	$	65,888	$	2,126,214

Construction and land development loans, which consist primarily of residential construction properties and developed building lots, decreased $31 million from March 31, 2012 to $287 million at June 30, 2012 primarily due to payments. Only $181 thousand of construction and land development loans were charged-off in the second quarter of 2012 and $1.6 million were transferred to other real estate owned. This sector of the loan portfolio is expected to continue to decrease as construction projects currently in process are completed.

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Loans secured by multifamily residential properties decreased $74 million and loans secured by industrial properties decreased $58 million from March 31, 2012 , both primarily in the Texas market. Loans secured by offices increased $15 million during the second quarter of 2012 , primarily in the Texas market.

Residential Mortgage and Consumer

Residential mortgage loans totaled $2.0 billion , up $37 million over March 31, 2012 . In general, we sell the majority of our conforming fixed-rate loan originations in the secondary market and retain the majority of our non-conforming and adjustable-rate mortgage loans. We have no concentration in sub-prime residential mortgage loans. Our mortgage loan portfolio does not include payment option adjustable rate mortgage loans or adjustable rate mortgage loans with initial rates that are below market.

The majority of our permanent mortgage loan portfolio is primarily composed of various non-conforming mortgage programs to support customer relationships including jumbo mortgage loans, non-builder construction loans and special loan programs for high net worth individuals or certain professionals. The aggregate outstanding balance of loans in these programs is $1.1 billion. Jumbo loans may be fixed or variable rate and are fully amortizing. The size of jumbo loans exceed maximums set under government sponsored entity standards, but otherwise generally conform to those standards. These loans generally require a minimum FICO score of 720 and a maximum debt-to-income ratio (“DTI”) of 38%. Loan-to-value ratios (“LTV”) are tiered from 60% to 100%, depending on the market. Special mortgage programs include fixed and variable rate fully amortizing loans tailored to the needs of certain healthcare professionals. Variable rate loans are fully indexed at origination and may have fixed rates for three to ten years, then adjust annually thereafter.

Approximately $78 million or 7% of the non-guaranteed portion of the permanent mortgage loans consist of first lien, fixed rate residential mortgage loans originated under various community development programs. The outstanding balance of these loans is down from $82 million at March 31, 2012 . These loans were underwritten to standards approved by various U.S. government agencies under these programs and include full documentation. However, these loans do have a higher risk of delinquency and losses in the event of default than traditional residential mortgage loans. The initial maximum LTV of loans in these programs was 103%.

At June 30, 2012 , $168 million of permanent residential mortgage loans are guaranteed by U.S. government agencies. We have minimal credit exposure on loans guaranteed by the agencies. This amount includes $36 million of residential mortgage loans previously sold into GNMA mortgage pools. The Company may repurchase these loans when certain defined delinquency criteria are met. Because of this repurchase right, the Company is deemed to have regained effective control over these loans and must include them on the Consolidated Balance Sheet. The remaining amount represents loans that the Company has repurchased from GNMA mortgage pools. Permanent residential mortgage loans guaranteed by U.S. government agencies decreased $18 million compared to March 31, 2012 .

Home equity loans totaled $696 million at June 30, 2012 , a $48 million increase over March 31, 2012 . Approximately 39% of the home equity portfolio is comprised of junior lien loans and 61% of the home equity portfolio is comprised of first lien loans. Junior lien loans are distributed 79% to amortizing term loans and 21% to revolving lines of credit. Home equity loans generally require a minimum FICO score of 700 and a maximum DTI of 40%. The maximum loan amount available for our home equity loan products is generally $400 thousand.

Indirect automobile loans decreased $19 million from March 31, 2012 , primarily due to the previously-disclosed decision by the Company to exit the business in the first quarter of 2009. Approximately $63 million of indirect automobile loans remain outstanding at June 30, 2012 . Other consumer loans decreased $4.9 million during the second quarter of 2012 .

The composition of residential mortgage and consumer loans at June 30, 2012 is as follows in Table 22. All permanent residential mortgage loans originated and serviced by our mortgage banking unit are attributed to the Oklahoma market. Other permanent residential mortgage loans originated by the Bank are attributed to their respective principal market.

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Table 22 – Residential Mortgage and Consumer Loans by Principal Market

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/ Missouri		Total
Residential mortgage:
Permanent mortgage	$	743,509	$	178,404	$	40,974	$	17,837	$	63,552	$	62,702	$	34,393	$	1,141,371
Permanent mortgages guaranteed by U.S. government agencies	168,059		—		—		—		—		—		—		168,059
Home equity	420,751		117,568		103,970		5,673		25,876		13,914		7,915		695,667
Total residential mortgage	$	1,332,319	$	295,972	$	144,944	$	23,510	$	89,428	$	76,616	$	42,308	$	2,005,097

Consumer:
Indirect automobile	$	32,920	$	11,244	$	—	$	18,760	$	—	$	—	$	—	$	62,924
Other consumer	172,516		104,358		15,828		5,510		20,612		6,227		4,601		329,652
Total consumer	$	205,436	$	115,602	$	15,828	$	24,270	$	20,612	$	6,227	$	4,601	$	392,576

Loan Commitments

We enter into certain off-balance sheet arrangements in the normal course of business. These arrangements included unfunded loan commitments which totaled $6.1 billion and standby letters of credit which totaled $449 million at June 30, 2012 . Loan commitments may be unconditional obligations to provide financing or conditional obligations that depend on the borrower’s financial condition, collateral value or other factors. Standby letters of credit are unconditional commitments to guarantee the performance of our customer to a third party. Since some of these commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Approximately $2.9 million of the outstanding standby letters of credit were issued on behalf of customers whose loans are nonperforming at June 30, 2012 .

As more fully described in Note 5 to the Consolidated Financial Statements, we have off-balance sheet commitments related to certain residential mortgage loans originated under community development loan programs that were sold to a U.S. government agency with full recourse. These mortgage loans were underwritten to standards approved by the agencies, including full documentation and originated under programs available only for owner-occupied properties. The Company no longer sells residential mortgage loans with recourse other than obligations under standard representations and warranties. We are obligated to repurchase these loans for the life of these loans in the event of foreclosure for the unpaid principal and interest at the time of foreclosure. At June 30, 2012 , the principal balance of residential mortgage loans sold subject to recourse obligations totaled $241 million, down from $248 million at March 31, 2012 . Substantially all of these loans are to borrowers in our primary markets including $170 million to borrowers in Oklahoma, $24 million to borrowers in Arkansas, $15 million to borrowers in New Mexico, $14 million to borrowers in the Kansas/Missouri area and $11 million to borrowers in Texas.

Under certain conditions, we also have an off-balance sheet obligation to repurchase residential mortgage loans sold to government sponsored entities through our mortgage banking activities due to standard representations and warranties made under contractual agreements. At June 30, 2012 , we have unresolved deficiency requests from the agencies on 303 loans with an aggregate outstanding balance of $40 million . At March 31, 2012 , we had unresolved deficiency requests from the agencies on 280 loans with an aggregate outstanding balance of $36 million. For all of 2012, 2011 and 2010 combined, less than 10% of repurchase requests have currently resulted in actual repurchases or indemnification by the Company. We repurchased 15 loans from the agencies during the second quarter of 2012 for $1.4 million and recognized minimal losses. We also provided indemnification to the agencies on 3 additional loans with an unpaid balance of $58 thousand during the second quarter of 2012 . While the level of repurchase requests resulting in actual repurchases or indemnifications by the Company has remained low, the loss severity has trended higher. As such, we increased our accrual for credit losses related to potential loan repurchases under representations and warranties to $5.0 million at June 30, 2012 from $2.1 million at March 31, 2012 .

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Customer Derivative Programs

We offer programs that permit our customers to hedge various risks, including fluctuations in energy, cattle and other agricultural product prices, interest rates and foreign exchange rates, or to take positions in derivative contracts. Each of these programs work essentially the same way. Derivative contracts are executed between the customers and the Company. Offsetting contracts are executed between the Company and selected counterparties to minimize the risk to us of changes in commodity prices, interest rates or foreign exchange rates. The counterparty contracts are identical to the customer contracts, except for a fixed pricing spread or a fee paid to us as compensation for administrative costs, credit risk and profit.

The customer derivative programs create credit risk for potential amounts due to the Company from our customers and from the counterparties. Customer credit risk is monitored through existing credit policies and procedures. The effects of changes in commodity prices, interest rates or foreign exchange rates are evaluated across a range of possible options to determine the maximum exposure we are willing to have individually to any customer. Customers may also be required to provide margin collateral to further limit our credit risk.

Counterparty credit risk is evaluated through existing policies and procedures. This evaluation considers the total relationship between BOK Financial and each of the counterparties. Individual limits are established by management, approved by Credit Administration and reviewed by the Asset / Liability Committee. Margin collateral is required if the exposure between the Company and any counterparty exceeds established limits. Based on declines in the counterparties’ credit ratings, these limits may be reduced and additional margin collateral may be required.

A deterioration of the credit standing of one or more of the customers or counterparties to these contracts may result in BOK Financial recognizing a loss as the fair value of the affected contracts may no longer move in tandem with the offsetting contracts. This occurs if the credit standing of the customer or counterparty deteriorated such that either the fair value of underlying collateral no longer supported the contract or the customer or counterparty’s ability to provide margin collateral was impaired. Credit losses on customer derivatives reduce brokerage and trading revenue in the Consolidated Statement of Earnings.

Derivative contracts are carried at fair value. At June 30, 2012 , the net fair values of derivative contracts reported as assets under these programs totaled $359 million , compared to $379 million at March 31, 2012 . Derivative contracts carried as assets included to-be-announced residential mortgage backed securities sold to our mortgage banking customers considered interest rate derivative contracts with fair values of $105 million , interest rate swaps sold to loan customers with fair values of $77 million , energy contracts with fair values of $76 million and foreign exchange contracts with fair values of $137 million . The aggregate net fair values of derivative contracts held under these programs reported as liabilities totaled $369 million .

At June 30, 2012 , total derivative assets were reduced by $51 million of cash collateral received from counterparties and total derivative liabilities were reduced by $43 million of cash collateral paid to counterparties related to instruments executed with the same counterparty under a master netting agreement.

A table showing the notional and fair value of derivative assets and liabilities on both a gross and net basis is presented in Note 3 to the Consolidated Financial Statements.

The fair value of derivative contracts reported as assets under these programs, net of cash margin held by the Company, by category of debtor at June 30, 2012 follows in Table 23.

Table 23 – Fair Value of Derivative Contracts

(In thousands)



Customers	$	199,805
Banks and other financial institutions	122,678
Exchanges	30,806
Energy companies	5,282
Fair value of customer hedge asset derivative contracts, net	$	358,571

The largest exposure to a single counterparty was to a loan customer for an interest rate swap which totaled $13 million at June 30, 2012 used to convert their variable rate loan to a fixed rate.

Our aggregate gross exposure to all European banks totaled $4.5 million at June 30, 2012. In addition, $8.5 million is owed to

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us by MF Global which filed for bankruptcy protection on October 31, 2011 after partial distributions from the bankruptcy trustee. The remaining amount due was written down in the fourth quarter of 2011 to $6.8 million based on our evaluation of the amount we expect to recover.

Our customer derivative program also introduces liquidity and capital risk. We are required to provide cash margin to certain counterparties when the net negative fair value of the contracts exceeds established limits. Also, changes in commodity prices affect the amount of regulatory capital we are required to hold as support for the fair value of our derivative assets. These risks are modeled as part of the management of these programs. Based on current prices, a decrease in market prices equivalent to $19.65 per barrel of oil would increase the fair value of derivative assets by $42 million. An increase in prices equivalent to $153.99 per barrel of oil would increase the fair value of derivative assets by $294 million as current prices move away from the fixed prices embedded in our existing contracts. Liquidity requirements of this program are also affected by our credit rating. A decrease in credit rating from A1 to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $38 million. The fair value of our to-be-announced residential mortgage backed securities and interest rate swap derivative contracts is affected by changes in interest rates. Based on our assessment as of June 30, 2012, changes in interest rate would not materially impact regulatory capital or liquidity needed to support this portion of our customer derivative program.

Summary of Loan Loss Experience

We maintain an allowance for loan losses and an accrual for off-balance sheet credit risk. The combined allowance for loan losses and off-balance sheet credit losses totaled $241 million or 2.09% of outstanding loans and 167.09% of nonaccruing loans at June 30, 2012 . The allowance for loans losses was $232 million and the accrual for off-balance sheet credit losses was $9.7 million . At March 31, 2012 , the combined allowance for credit losses was $254 million or 2.20% of outstanding loans and 139% of nonaccruing loans at March 31, 2012 . The allowance for loan losses was $244 million and the accrual for off-balance sheet credit losses was $10 million . The accruals for off-balance sheet credit losses for June 30, 2012, March 31, 2012 and December 31, 2011 included $7.1 million which was refunded to the City of Tulsa subsequent to June 30, 2012, related to an Oklahoma Supreme Court ruling that reversed a loan settlement agreement between the Company and the City of Tulsa. The refund of this settlement will increase third quarter net charge-offs.

The provision for credit losses is the amount necessary to maintain the allowance for loan losses and an accrual for off-balance sheet credit risk at an amount determined by management to be appropriate based on its evaluation. The provision includes the combined charge to expense for both the allowance for loan losses and the accrual for off-balance sheet credit risk. All losses incurred from lending activities will ultimately be reflected in charge-offs against the allowance for loan losses following funds advanced against outstanding commitments and after exhaustion of collection efforts. An $8.0 million negative provision for credit losses was recorded in the second quarter of 2012 based on a continued trend of declining charge-offs, reduced nonaccruing loans and improvements in other credit quality factors. No provision for credit losses was recorded in the first quarter of 2012 and the provision for credit losses totaled $2.7 million in the second quarter of 2011 .

- 39 -

Table 24 – Summary of Loan Loss Experience

(In thousands)



	Three Months Ended
	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011
Allowance for loan losses:
Beginning balance	$	244,209		$	253,481		$	271,456		$	286,611		$	289,549
Loans charged off:
Commercial	(4,094		)	(2,934		)	(4,099		)	(5,083		)	(3,302		)
Commercial real estate	(1,216		)	(6,725		)	(3,365		)	(2,335		)	(3,380		)
Residential mortgage	(4,061		)	(1,786		)	(4,375		)	(3,403		)	(3,381		)
Consumer	(2,172		)	(2,229		)	(2,932		)	(3,202		)	(2,711		)
Total	(11,543		)	(13,674		)	(14,771		)	(14,023		)	(12,774		)
Recoveries of loans previously charged off:
Commercial	4,125			1,946			2,316			1,404			2,187
Commercial real estate	544			1,312			1,220			911			306
Residential mortgage	750			411			715			283			254
Consumer	1,283			1,520			1,060			1,271			1,509
Total	6,702			5,189			5,311			3,869			4,256
Net loans charged off	(4,841		)	(8,485		)	(9,460		)	(10,154		)	(8,518		)
Provision for loan losses	(7,699		)	(787		)	(8,515		)	(5,001		)	5,580
Ending balance	$	231,669		$	244,209		$	253,481		$	271,456		$	286,611
Accrual for off-balance sheet credit losses:
Beginning balance	$	10,048		$	9,261		$	15,746		$	10,745		$	13,625
Provision for off-balance sheet credit losses	(301		)	787			(6,485		)	5,001			(2,880		)
Ending balance	$	9,747		$	10,048		$	9,261		$	15,746		$	10,745
Total combined provision for credit losses	$	(8,000	)	$	—		$	(15,000	)	$	—		$	2,700
Allowance for loan losses to loans outstanding at period-end	2.00		%	2.11		%	2.25		%	2.44		%	2.67		%
Net charge-offs (annualized) to average loans	0.17		%	0.30		%	0.34		%	0.37		%	0.32		%
Total provision for credit losses (annualized) to average loans	(0.28		)%	—		%	(0.54		)%	—		%	0.10		%
Recoveries to gross charge-offs	58.06		%	37.95		%	35.96		%	27.59		%	33.32		%
Accrual for off-balance sheet credit losses to off-balance sheet credit commitments	0.15		%	0.15		%	0.14		%	0.25		%	0.18		%
Combined allowance for credit losses to loans outstanding at period-end	2.09		%	2.20		%	2.33		%	2.58		%	2.77		%

Allowance for Loan Losses

The appropriateness of the allowance for loan losses is assessed by management based on an ongoing quarterly evaluation of the probable estimated losses inherent in the portfolio. The allowance consists of specific allowances attributed to certain impaired loans, general allowances based on expected loss rates by loan class and non-specific allowances based on general economic, risk concentration and related factors.

At June 30, 2012 , risk-graded impaired loans totaled $126 million , including $6.2 million with specific allowances of $1.8 million and $120 million with no specific allowances because the loans balances represent the amounts we expect to recover. At March 31, 2012 , risk-graded impaired loans totaled $160 million , including $8.8 million of impaired loans with specific allowances of $2.3 million and $152 million with no specific allowances.

General allowances for unimpaired loans are based on an estimated loss rate by loan class. Estimated loss rates for risk graded loans are either increased or decreased based on changes in risk grading for each loan class. Estimated loss rates for both risk

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graded and non-risk graded loans may be further adjusted for inherent risk identified for the given loan class which have not yet been captured in the loss rate.

The aggregate amount of general allowances for all unimpaired loans totaled $189 million at June 30, 2012 and $198 million at March 31, 2012 . The decrease in the aggregate amount of general allowance for unimpaired loans was primarily due to the declining trend of charge-offs.

Nonspecific allowances are maintained for risks beyond factors specific to a particular loan or loan class. These factors include trends in the economy in our primary lending areas, concentrations in loans with large balances and other relevant factors. Nonspecific allowances totaled $41 million at June 30, 2012 and $44 million at March 31, 2012 . The nonspecific allowance at both June 30, 2012 and March 31, 2012 includes consideration of the bankruptcy filing by a major employer in the Tulsa, Dallas/Ft. Worth and Kansas City markets. Although, we have no direct exposure, the secondary effect on employees, retirees, vendors, suppliers and other business partners could be significant. The nonspecific allowance also considers the possible impact of the European debt crisis and similar economic factors on our loan portfolio.

An allocation of the allowance for loan losses by loan category is included in Note 4 to the Consolidated Financial Statements.

Our loan monitoring process also identified loans that possess more than the normal amount of risk due to deterioration in the financial condition of the borrower or the value of the collateral. Because the borrowers are still performing in accordance with the original terms of the loans agreements, and no loss of principal or interest is anticipated, these loans were not included in nonperforming assets. Known information does, however, cause management concern as to the borrowers’ ability to comply with current repayment terms. The potential problem loans totaled $159 million at June 30, 2012 . The current composition of potential problem loans by primary industry included services - $40 million , construction and land development - $27 million , other commercial real estate - $14 million , residential mortgage - $13 million , wholesale / retail - $12 million , commercial real estate secured by office buildings - $12 million , and energy - $11 million . Potential problem loans totaled $173 million at March 31, 2012 .

Net Loans Charged Off

Loans are charged off against the allowance for loan losses when the loan balance or a portion of the loan balance is no longer covered by the paying capacity of the borrower based on an evaluation of available cash resources and collateralvalue. Commercial and commercial real estate loans are evaluated quarterly and charge-offs are taken in the quarter in which the loss is identified. Residential mortgage and consumer loans are generally charged off when payments are between 90 days and 180 days past due, depending on loan class.

Net loans charged off during the second quarter of 2012 totaled $4.8 million compared to $8.5 million in the previous quarter and $8.5 million in the second quarter of 2011 . The ratio of net loans charged off (annualized) to average outstanding loans was 0.17% for the second quarter of 2012 compared with 0.30% for the first quarter of 2012 and 0.32% for the second quarter of 2011 . Net loans charged off in the second quarter of 2012 decrease d $3.6 million compared to the previous quarter.

Net loans charged off (recovered) by category and principal market area during the second quarter of 2012 follow in Table 25.

Table 25 – Net Loans Charged Off (Recovered)

(In thousands)



	Oklahoma		Texas		Colorado		Arkansas			New Mexico			Arizona		Kansas/ Missouri			Total
Commercial	$	20	$	2,325	$	—	$	(2,094	)	$	(139	)	$	106	$	(249	)	$	(31	)
Commercial real estate	258		—		367		—			(292		)	339		—			672
Residential mortgage	2,667		222		18		(4		)	75			333		—			3,311
Consumer	481		300		24		(67		)	126			19		6			889
Total net loans charged off (recovered)	$	3,426	$	2,847	$	409	$	(2,165	)	$	(230	)	$	797	$	(243	)	$	4,841

Net commercial loans charged off during the second quarter of 2012 decrease d $1.0 million compared to the prior quarter and were comprised primarily of a gross charge-off of $3.0 million from a single healthcare sector loan in the Texas market offset by a $2.0 million recovery from a single wholesale/retail sector customer in the Arkansas market and $1.1 million recovery from the service sector of the loan portfolio, primarily in the Texas market.

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Net charge-offs of commercial real estate loans decrease d $4.7 million from the first quarter of 2012 and were primarily comprised of net charge-offs of land and residential construction sector loans in the Arizona and Colorado markets.

Residential mortgage net charge-offs were up $1.9 million over the previous quarter and consumer loan net charge-offs, which include indirect auto loan and deposit account overdraft losses, increase d $180 thousand over the previous quarter. All residential mortgage net charge-offs related to loans serviced by our mortgage company across our geographical footprint are attributed to the Oklahoma market.

Nonperforming Assets

Table 26 – Nonperforming Assets (In thousands)

	June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011		June 30, 2011
Nonaccruing loans:
Commercial	$	34,529	$	61,750	$	68,811	$	83,736	$	53,365
Commercial real estate	80,214		86,475		99,193		110,048		110,363
Residential mortgage	22,727		27,462		29,767		31,731		31,693
Consumer	7,012		7,672		3,515		3,960		4,749
Total nonaccruing loans	144,482		183,359		201,286		229,475		200,170
Renegotiated loans ²	28,415		36,764		32,893		30,477		22,261
Total nonperforming loans	172,897		220,123		234,179		259,952		222,431
Real estate and other repossessed assets	105,708		115,790		122,753		127,943		129,026
Total nonperforming assets	$	278,605	$	335,913	$	356,932	$	387,895	$	351,457

Nonaccruing loans by principal market:
Oklahoma	$	49,931	$	64,097	$	65,261	$	73,794	$	41,411
Texas	24,553		29,745		28,083		29,783		32,385
New Mexico	13,535		15,029		15,297		17,242		17,244
Arkansas	6,865		18,066		23,450		26,831		24,842
Colorado	28,239		28,990		33,522		36,854		37,472
Arizona	21,326		27,397		35,673		44,929		43,307
Kansas / Missouri	33		35		—		42		3,509
Total nonaccruing loans	$	144,482	$	183,359	$	201,286	$	229,475	$	200,170

Nonaccruing loans by loan portfolio sector:
Commercial:
Energy	$	3,087	$	336	$	336	$	3,900	$	345
Manufacturing	12,230		23,402		23,051		27,691		4,366
Wholesale / retail	4,175		15,388		21,180		27,088		25,138
Integrated food services	—		—		—		—		—
Services	10,123		12,890		16,968		18,181		16,254
Healthcare	3,310		7,946		5,486		5,715		5,962
Other	1,604		1,788		1,790		1,161		1,300
Total commercial	34,529		61,750		68,811		83,736		53,365

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Table 26 – Nonperforming Assets (In thousands)

	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011
Commercial real estate:
Land development and construction	46,050			52,416			61,874			72,207			76,265
Retail	7,908			6,193			6,863			6,492			4,642
Office	10,589			10,733			11,457			11,967			11,473
Multifamily	3,219			3,414			3,513			4,036			4,717
Industrial	—			—			—			—			—
Other commercial real estate	12,448			13,719			15,486			15,346			13,266
Total commercial real estate	80,214			86,475			99,193			110,048			110,363
Residential mortgage:
Permanent mortgage	18,136			22,822			25,366			27,486			27,991
Home equity	4,591			4,640			4,401			4,245			3,702
Total residential mortgage	22,727			27,462			29,767			31,731			31,693
Consumer	7,012			7,672			3,515			3,960			4,749
Total nonaccrual loans	$	144,482		$	183,359		$	201,286		$	229,475		$	200,170

Ratios:
Allowance for loan losses to nonaccruing loans	160.34		%	133.19		%	125.93		%	118.29		%	143.18		%
Nonaccruing loans to period-end loans	1.25		%	1.58		%	1.79		%	2.06		%	1.86		%
Accruing loans 90 days or more past due ¹	$	691		$	6,140		$	2,496		$	1,401		$	2,341

¹ Excludes residential mortgages guaranteed by agencies of the U.S. Government.
² Includes residential mortgages guaranteed by agencies of the U.S. Government. These loans have been modified to extend payment terms and/or reduce interest rates.	$	24,760		$	32,770		$	28,974		$	26,670		$	18,716

Nonperforming assets decrease d $57 million during the second quarter of 2012 to $279 million or 2.38% of outstanding loans and repossessed assets at June 30, 2012 . Nonaccruing loans totaled $144 million , renegotiated residential mortgage loans totaled $28 million (composed primarily of $25 million of residential mortgage loans guaranteed by U.S. government agencies) and real estate and other repossessed assets totaled $106 million . The Company generally retains nonperforming assets to maximize potential recovery which may cause future nonperforming assets to decrease more slowly.

Loans are classified as nonaccruing when it becomes probable that we will not collect the full contractual principal and interest. As more fully discussed in Note 4 to the Consolidated Financial Statements, we may modify nonaccruing commercial and commercial real estate loans in troubled debt restructuring. Modifications may include extension of payment terms and rate concessions. We do not forgive principal or accrued but unpaid interest. We may also renew matured nonaccruing loans. Nonaccuring loans, including those renewed or modified in troubled debt restructurings, are charged off when the loan balance is no longer covered by the paying capacity of the borrower based on a quarterly evaluation of available cash resources and collateral value. Nonaccruing loans generally remain on nonaccrual status until full collection of principal and interest in accordance with the original terms, including principal previously charged off, is probable.

We generally do not voluntarily modify consumer loans to troubled borrowers.

Renegotiated loans consist primarily of accruing residential mortgage loans modified in troubled debt restructurings. See Note 4 to the Consolidated Financial Statement for additional discussion of troubled debt restructurings. Generally, we modify residential mortgage loans primarily by reducing interest rates and extending the number of payments in accordance with U.S. government agency guidelines. No unpaid principal or interest is forgiven. Interest continues to accrue based on the modified terms of the loan. If it becomes probable that we will not be able to collect all amounts due according to the modified loan terms, the loan is placed on nonaccrual status and included in nonaccrual loans. Modified loans guaranteed by U.S. government agencies under residential mortgage loan programs may be sold once they become eligible according to U.S. agency guidelines.

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A rollforward of nonperforming assets for the second quarter of 2012 follows in Table 27.

Table 27 – Rollforward of Nonperforming Assets (In thousands)

	Three Months Ended
	June 30, 2012
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, March 31, 2012	$	183,359		$	36,764		$	115,790		$	335,913
Additions	18,164			2,274			—			20,438
Payments	(37,977		)	(144		)	—			(38,121		)
Charge-offs	(11,543		)	—			—			(11,543		)
Net write-downs and losses	—			—			(3,242		)	(3,242		)
Foreclosure of nonperforming loans	(6,235		)	(2,593		)	8,828			—
Foreclosure of loans guaranteed by U.S. government agencies	—			—			20,952			20,952
Proceeds from sales	—			(4,993		)	(17,147		)	(22,140		)
Conveyance to U.S. government agencies	—			—			(19,568		)	(19,568		)
Net transfers to nonaccruing loans	414			(414		)	—			—
Return to accrual status	(950		)	—			—			(950		)
Other, net	(750		)	(2,479		)	95			(3,134		)
Balance, June 30, 2012	$	144,482		$	28,415		$	105,708		$	278,605



	Six Months Ended
	June 30, 2012
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, December 31, 2011	$	201,286		$	32,893		$	122,753		$	356,932
Additions	39,260			9,102			—			48,362
Payments	(57,546		)	(486		)	—			(58,032		)
Charge-offs	(25,217		)	—			—			(25,217		)
Net writedowns and losses	—			—			(3,762		)	(3,762		)
Foreclosure of nonperforming loans	(13,156		)	(3,965		)	17,121			—
Foreclosure of loans guaranteed by U.S. government agencies	—			—			38,700			38,700
Proceeds from sales	—			(6,320		)	(35,900		)	(42,220		)
Conveyance to U.S. government agencies	—			—			(34,247		)	(34,247		)
Net transfers to nonaccruing loans	232			(232		)	—			—
Return to accrual status	(950		)	—			—			(950		)
Other, net	573			(2,577		)	1,043			(961		)
Balance, June 30, 2012	$	144,482		$	28,415		$	105,708		$	278,605

We foreclose on loans guaranteed by U.S. government agencies in accordance with agency guidelines. Generally these loans are not eligible for modification programs or have failed to comply with modified loan terms. Principal is guaranteed by agencies of the U.S. government, subject to limitations and credit risk is minimal. These properties will be conveyed to the agencies once applicable criteria have been met. During the second quarter of 2012 , $21 million of properties guaranteed by U.S. government agencies were foreclosed on and $20 million of properties were conveyed to the applicable U.S. government agencies during the second quarter of 2012 . For the six months ended June 30, 2012 , $39 million of properties guaranteed by U.S. government agencies were foreclosed on and $34 million of properties conveyed.

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Nonaccruing loans totaled $144 million or 1.25% of outstanding loans at June 30, 2012 and $183 million or 1.58% of outstanding loans at March 31, 2012 . Nonaccruing loans decrease d $39 million from March 31, 2012 due primarily to $38 million of payments, $12 million of charge-offs and $6.2 million of foreclosures. Newly identified nonaccruing loans totaled $18 million for the second quarter of 2012 .

The distribution of nonaccruing loans among our various markets follows in Table 28.

Table 28 – Nonaccruing Loans by Principal Market (Dollars In thousands)

	June 30, 2012				March 31, 2012				Change
	Amount		% of outstanding loans		Amount		% of outstanding loans		Amount			% of outstanding loans
Oklahoma	$	49,931	0.95	%	$	64,097	1.22	%	$	(14,166	)	(27	)	bp
Texas	24,553		0.70	%	29,745		0.83	%	(5,192		)	(13	)
New Mexico	13,535		1.91	%	15,029		2.09	%	(1,494		)	(18	)
Arkansas	6,865		3.16	%	18,066		7.05	%	(11,201		)	(389	)
Colorado	28,239		3.25	%	28,990		3.64	%	(751		)	(39	)
Arizona	21,326		3.93	%	27,397		5.11	%	(6,071		)	(118	)
Kansas / Missouri	33		0.01	%	35		0.01	%	(2		)	—
Total	$	144,482	1.25	%	$	183,359	1.58	%	$	(38,877	)	(33	)	bp

Nonaccruing loans in the Oklahoma market are primarily composed of $10 million of manufacturing sector loans, $15 million of residential mortgage loans and $15 million of commercial real estate loans. All residential mortgage loans retained by the Company that were originated across our geographical footprint and serviced by our mortgage company are attributed to the Oklahoma market. Nonaccruing loans in the Arizona and Colorado markets consisted primarily of commercial real estate loans. Nonaccruing loans attributed to the Texas market included $9.0 million of commercial real estate loans, $3.9 million of residential mortgage loans and $4.0 million of consumer loans.

Commercial

Nonaccruing commercial loans totaled $35 million or 0.49% of total commercial loans at June 30, 2012 , down from $62 million or 0.89% of total commercial loans at March 31, 2012 . Nonaccruing commercial loans at June 30, 2012 were primarily composed of $12 million or 3.37% of total manufacturing sector loans and $10 million or 0.52% of total services sector loans. Nonaccruing manufacturing sectors loans were primarily composed of a single customer in the Oklahoma market totaling $9.5 million at June 30, 2012 , down from $21 million at March 31, 2012 on payments received during the second quarter. Nonaccruing wholesale/retail sector loans were primarily composed of a single customer relationship in the Arkansas market totaling $11 million at March 31, 2012 . This loan was fully paid off during the second quarter including a recovery of $2.0 million of amounts previously charged off and $2.9 million of foregone interest and fees.

Nonaccruing commercial loans decrease d $27 million in the second quarter of 2012 primarily due to $29 million in payments and $4 million in charge-offs, partially offset by $8 million of newly identified nonaccruing commercial loans during the quarter.

The distribution of nonaccruing commercial loans among our various markets was as follows in Table 29.

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Table 29 – Nonaccruing Commercial Loans by Principal Market (Dollars in thousands)

	June 30, 2012				March 31, 2012				Change
	Amount		% of outstanding loans		Amount		% of outstanding loans		Amount			% of outstanding loans
Oklahoma	$	17,320	0.56	%	$	26,456	0.85	%	$	(9,136	)	(29	)	bp
Texas	7,682		0.32	%	11,751		0.50	%	(4,069		)	(18	)
New Mexico	2,137		0.82	%	2,854		1.04	%	(717		)	(22	)
Arkansas	358		0.73	%	11,369		17.60	%	(11,011		)	(1,687	)
Colorado	2,008		0.33	%	3,037		0.56	%	(1,029		)	(23	)
Arizona	5,024		1.81	%	6,283		2.33	%	(1,259		)	(52	)
Kansas / Missouri	—		—	%	—		—	%	—			—
Total commercial	$	34,529	0.49	%	$	61,750	0.89	%	$	(27,221	)	(40	)	bp

Commercial Real Estate

Nonaccruing commercial real estate loans totaled $80 million or 3.77% of outstanding commercial real estate loans at June 30, 2012 compared to $86 million or 3.87% of outstanding commercial real estate loans at March 31, 2012 . Nonaccruing commercial real estate loans continue to be largely concentrated in land development and residential construction loans. Nonaccruing commercial real estate loans were down $6.3 million compared to the prior quarter. Newly identified nonaccruing commercial real estate loans totaled $5.0 million , offset by $8.5 million of cash payments received, $1.2 million of charge-offs and $1.6 million of foreclosures. The distribution of our nonaccruing commercial real estate loans among our geographic markets follows in Table 30.

Table 30 – Nonaccruing Commercial Real Estate Loans by Principal Market (Dollars in thousands)

	June 30, 2012				March 31, 2012				Change
	Amount		% of outstanding loans		Amount		% of outstanding loans		Amount			% of outstanding loans
Oklahoma	$	15,180	2.35	%	$	15,519	2.46	%	$	(339	)	(11	)	bp
Texas	8,955		1.32	%	9,914		1.23	%	(959		)	9
New Mexico	9,843		3.44	%	10,651		3.77	%	(808		)	(33	)
Arkansas	5,588		4.66	%	5,588		4.00	%	—			66
Colorado	26,064		17.43	%	25,780		17.81	%	284			(38	)
Arizona	14,584		8.03	%	19,023		10.52	%	(4,439		)	(249	)
Kansas / Missouri	—		—	%	—		—	%	—			—
Total commercial real estate	$	80,214	3.77	%	$	86,475	3.87	%	$	(6,261	)	(10	)	bp

Nonaccruing commercial real estate loans are primarily concentrated in the Colorado, Oklahoma and Arizona markets. Nonaccruing commercial real estate loans attributed to the Colorado market consist primarily of nonaccruing residential construction and land development loans. Nonaccruing commercial real estate loans in the Oklahoma market consisted primarily of $5.3 million of residential construction and land development loans, $3.2 million of loans secured by multifamily residential properties, $2.5 million of other commercial real estate loans and $2.4 million of loans secured by retail facilities. Nonaccruing commercial real estate loans in the Arizona market primarily consist of $5.5 million of other commercial real estate loans, $4.5 million of residential construction and land development loans and $3.4 million of loans secured by office buildings.

Residential Mortgage and Consumer

Nonaccruing residential mortgage loans totaled $23 million or 1.13% of outstanding residential mortgage loans at June 30, 2012 compared to $27 million or 1.40% of outstanding residential mortgage loans at March 31, 2012 . Newly identified nonaccrual residential mortgage loans totaled $2.9 million , offset by $4.1 million of loans charged off and $3.7 million of foreclosures during the quarter. Nonaccruing residential mortgage loans primarily consist of permanent residential mortgage

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loans which totaled $18 million or 1.39% of outstanding permanent residential mortgage loans at June 30, 2012 . Nonaccruing home equity loans totaled $4.6 million or 0.66% of total home equity loans.

Payments of accruing residential mortgage loans and consumer loans may be delinquent. The composition of residential mortgage loans and consumer loans past due but still accruing is included in the following Table 31. Principally all non-guaranteed residential loans past due 90 days or more are nonaccruing. Residential mortgage loans 30 to 89 days past due increased $2.5 million to $17 million at June 30, 2012 . Consumer loans past due 30 to 89 days decreased $1.2 million from March 31, 2012 .

Table 31 – Residential Mortgage and Consumer Loans Past Due (In thousands)

	June 30, 2012				March 31, 2012
	90 Days or More		30 to 89 Days		90 Days or More		30 to 89 Days
Residential mortgage:
Permanent mortgage ¹	$	495	$	15,130	$	54	$	12,705
Home equity	44		2,211		—		2,087
Total residential mortgage	$	539	$	17,341	54		$	14,792
Consumer:
Indirect automobile	$	1	$	1,771	$	—	$	2,231
Other consumer	14		718		42		1,467
Total consumer	$	15	$	2,489	$	42	$	3,698


¹	Excludes past due residential mortgage loans guaranteed by agencies of the U.S. government.

Real Estate and Other Repossessed Assets

Real estate and other repossessed assets are assets acquired in partial or total forgiveness of loans. The assets are carried at the lower of cost as determined by fair value at date of foreclosure or current fair value, less estimated selling costs.

Real estate and other repossessed assets totaled $106 million at June 30, 2012 , a $10.1 million decrease from March 31, 2012 . The distribution of real estate and other repossessed assets attributed by geographical market is included in Table 32 following.

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Table 32 – Real Estate and Other Repossessed Assets by Principal Market (In thousands)

	Oklahoma		Texas		Colorado		Arkansas		New Mexico		Arizona		Kansas/ Missouri		Other		Total
Developed commercial real estate properties	$	2,356	$	8,066	$	2,380	$	1,506	$	3,103	$	14,633	$	404	$	—	$	32,448
1-4 family residential properties	6,438		3,621		2,342		1,541		1,826		1,785		687		595		18,835
1-4 family residential properties guaranteed by U.S. government agencies	4,919		1,685		229		326		12,208		283		1,068		687		21,405
Undeveloped land	361		4,417		2,903		123		200		5,720		3,679		—		17,403
Residential land development properties	702		3,769		2,139		46		1,360		5,839		153		—		14,008
Oil and gas properties	—		709		—		—		—		—		—		—		709
Construction equipment	—		—		—		—		—		—		178		—		178
Vehicles	115		39		—		85		—		—		—		—		239
Multifamily residential properties	—		—		—		323		—		136		—		—		459
Other	—		—		—		—		—		—		—		24		24
Total real estate and other repossessed assets	$	14,891	$	22,306	$	9,993	$	3,950	$	18,697	$	28,396	$	6,169	$	1,306	$	105,708

Undeveloped land is primarily zoned for commercial development. Developed commercial real estate properties are primarily completed with no additional construction necessary for sale.

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Liquidity and Capital

Subsidiary Bank

Deposits and borrowed funds are the primary sources of liquidity for the subsidiary bank. Based on the average balances for the second quarter of 2012 , approximately 72% of our funding was provided by deposit accounts, 11% from borrowed funds, 1% from long-term subordinated debt and 11% from equity. Our funding sources, which primarily include deposits and borrowings from the Federal Home Loan Banks and other banks, provide adequate liquidity to meet our operating needs.

Deposit accounts represent our largest funding source. We compete for retail and commercial deposits by offering a broad range of products and services and focusing on customer convenience. Retail deposit growth is supported through our Perfect Banking sales and customer service program, free checking, online bill paying services, mobile banking services, an extensive network of branch locations and ATMs and a 24-hour Express Bank call center. Commercial deposit growth is supported by offering treasury management and lockbox services. We also acquire brokered deposits when the cost of funds is advantageous to other funding sources.

Average deposits for the second quarter of 2012 totaled $18.4 billion and represented approximately 72% of total liabilities and capital compared with $18.7 billion and 73% of total liabilities and capital for the first quarter of 2012 . Average deposits decreased $206 million compared to the first quarter of 2012 . Average demand deposits increased $431 million . Average interest-bearing transaction deposit accounts decreased $540 million and average time deposits decreased $114 million .

Average Commercial Banking deposit balances were down $143 million compared to the first quarter of 2012 . Growth in demand deposits was offset by decreased balances in interest-bearing transaction deposit accounts. Balances attributed to our treasury services customers were down $131 million, balances related to our integrated food services customers were down $70 million and balances related to our energy customers were down $26 million. Small business customer balances grew by $30 million, balances attributed to our commercial real estate customers were up $25 million, and average deposits attributable to our commercial and industrial customers were up $18 million. Commercial customers continue to retain large cash reserves primarily due to continued economic uncertainty and low yields available on other high quality investment alternatives. Average Consumer Banking deposit balances were down $38 million compared to the first quarter of 2012 . Time deposits balances were down $77 million, partially offset by a $17 million increase in saving accounts and a $16 million increase in interest-bearing deposits accounts. Consumer demand deposit accounts were essentially flat compared to the first quarter of 2012 . Wealth Management Deposits were down $19 million compared to the first quarter of 2012 primarily due to a decrease in time deposits. Growth in demand deposits attributed to Wealth Management was largely offset by a decrease in interest-bearing deposit accounts.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”) provided temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts at all FDIC-insured depository institutions effective December 31, 2010. This temporary program is set to expire on December 31, 2012 although an extension of this program is currently under consideration. Upon expiration, noninterest-bearing transaction accounts will be insured only up to $250,000. Demand deposits represent 34% of total average deposits for the second quarter of 2012. The impact of the expiration of this temporary program is uncertain, but could result in a decrease in average demand deposits held by customers.

Brokered deposits, which are included in time deposits, averaged $187 million for the second quarter of 2012 , flat compared to the first quarter of 2012 .

The distribution of our period-end deposit account balances among principal markets follows in Table 33.

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Table 33 – Period-end Deposits by Principal Market Area (In thousands)

	June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011		June 30, 2011
Oklahoma:
Demand	$	3,499,834	$	3,445,424	$	3,223,201	$	2,953,410	$	2,486,671
Interest-bearing:
Transaction	5,412,002		5,889,625		6,050,986		6,038,770		5,916,784
Savings	150,353		148,556		126,763		122,829		120,278
Time	1,354,148		1,370,868		1,450,571		1,489,486		1,462,137
Total interest-bearing	6,916,503		7,409,049		7,628,320		7,651,085		7,499,199
Total Oklahoma	10,416,337		10,854,473		10,851,521		10,604,495		9,985,870

Texas:
Demand	1,966,465		1,876,133		1,808,491		1,710,315		1,528,772
Interest-bearing:
Transaction	1,813,209		1,734,655		1,940,819		1,820,116		1,741,176
Savings	51,114		50,331		45,872		42,272		42,185
Time	772,809		789,860		867,664		938,200		992,366
Total interest-bearing	2,637,132		2,574,846		2,854,355		2,800,588		2,775,727
Total Texas	4,603,597		4,450,979		4,662,846		4,510,903		4,304,499

New Mexico:
Demand	357,367		333,707		319,269		325,612		299,305
Interest-bearing:
Transaction	506,165		503,015		491,068		480,816		483,026
Savings	31,215		32,688		27,487		26,127		24,613
Time	383,350		392,234		410,722		431,436		449,618
Total interest-bearing	920,730		927,937		929,277		938,379		957,257
Total New Mexico	1,278,097		1,261,644		1,248,546		1,263,991		1,256,562

Arkansas:
Demand	16,921		22,843		18,513		21,809		17,452
Interest-bearing:
Transaction	172,829		151,708		131,181		181,486		138,954
Savings	2,220		2,358		1,727		1,735		1,673
Time	48,517		54,157		61,329		74,163		82,112
Total interest-bearing	223,566		208,223		194,237		257,384		222,739
Total Arkansas	240,487		231,066		212,750		279,193		240,191

Colorado:
Demand	301,646		311,057		272,565		217,394		196,915
Interest-bearing:
Transaction	465,276		476,718		511,993		520,743		509,738
Savings	24,202		23,409		22,771		22,599		21,406
Time	491,280		498,124		523,969		547,481		563,642
Total interest-bearing	980,758		998,251		1,058,733		1,090,823		1,094,786
Total Colorado	1,282,404		1,309,308		1,331,298		1,308,217		1,291,701

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Table 33 – Period-end Deposits by Principal Market Area (In thousands)

	June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011		June 30, 2011
Arizona:
Demand	137,313		131,539		106,741		138,971		150,194
Interest-bearing:
Transaction	113,310		95,010		104,961		101,933		107,961
Savings	2,313		1,772		1,192		1,366		1,364
Time	31,539		34,199		37,641		40,007		44,619
Total interest-bearing	147,162		130,981		143,794		143,306		153,944
Total Arizona	284,475		262,520		250,535		282,277		304,138

Kansas / Missouri:
Demand	160,829		68,469		51,004		46,773		46,668
Interest-bearing:
Transaction	69,083		57,666		123,449		108,973		115,684
Savings	581		505		545		503		358
Time	26,307		26,657		30,086		33,697		40,206
Total interest-bearing	95,971		84,828		154,080		143,173		156,248
Total Kansas / Missouri	256,800		153,297		205,084		189,946		202,916
Total BOK Financial deposits	$	18,362,197	$	18,523,287	$	18,762,580	$	18,439,022	$	17,585,877

In addition to deposits, subsidiary bank liquidity is provided primarily by federal funds purchased, securities repurchase agreements and Federal Home Loan Bank borrowings. Federal funds purchased consist primarily of unsecured, overnight funds acquired from other financial institutions. Funds are primarily purchased from bankers’ banks and Federal Home Loan banks from across the country. The largest single source of federal funds purchased totaled $330 million at June 30, 2012 . Securities repurchase agreements generally mature within 90 days and are secured by certain available for sale securities. Federal Home Loan Bank borrowings are generally short term and are secured by a blanket pledge of eligible collateral (generally unencumbered U.S. Treasury and mortgage-backed securities, 1-4 family residential mortgage loans, multifamily and other qualifying commercial real estate loans). Amounts borrowed from the Federal Home Loan Bank of Topeka averaged $32 million during the quarter.

At June 30, 2012 , the estimated unused credit available to the subsidiary bank from collateralized sources was approximately $7.5 billion.

A summary of other borrowing by the subsidiary bank follows in Table 34.

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Table 34 – Other borrowings (In thousands)

			Three Months Ended								Three Months Ended
			June 30, 2012								March 31, 2012
	June 30, 2012		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter		March 31, 2012		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter
Parent Company and Other Non-Bank Subsidiaries - Other debt	$	—	$	279	—	%	$	—	$	—	$	—	—	%	$	—

Subsidiary Bank:
Funds purchased	1,453,750		1,740,354		0.16	%	1,675,049		1,784,940		1,337,614		0.09	%	1,784,940
Repurchase agreements	1,136,948		1,095,298		0.10	%	1,136,948		1,162,546		1,183,778		0.09	%	1,272,151
Federal Home Loan Bank advances	3,947		32,198		0.39	%	253,647		155,087		8,296		0.36	%	155,087
Subordinated debentures	353,378		357,609		3.95	%	355,452		394,760		397,440		5.62	%	398,897
GNMA repurchase liability	37,397		37,513		5.98	%	37,864		37,504		48,012		7.07	%	47,840
Other	16,712		16,677		4.58	%	16,713		16,640		16,603		4.65	%	16,640
Total Subsidiary Bank	3,002,132		3,279,649		0.65	%							0.96	%

Total Other Borrowings	3,002,132		3,279,928		0.65	%			$	3,551,477	$	2,991,743	0.96	%

In 2007, the Company issued $250 million of subordinated debt due May 15, 2017 to fund the Worth National Bank and First United Bank acquisitions and fund continued asset growth. Interest on this debt was based on a fixed rate of 5.75% through May 14, 2012 which then converted to a floating rate of three-month LIBOR plus 0.69%. At June 30, 2012, $233 million of this subordinated debt remains outstanding.

Parent Company

The primary sources of liquidity for BOK Financial are cash on hand and dividends from the subsidiary bank. Dividends from the subsidiary bank are limited by various banking regulations to net profits, as defined, for the year plus retained profits for the two preceding years. Dividends are further restricted by minimum capital requirements. At June 30, 2012 , based on the most restrictive limitations as well as management’s internal capital policy, the subsidiary bank could declare up to $157 million of dividends without regulatory approval. Future losses or increases in required regulatory capital at the subsidiary bank could affect its ability to pay dividends to the parent company.

The Company has a $100 million senior unsecured 364 day revolving credit facility with Wells Fargo Bank, National Association, administrative agent and other commercial banks (“the Credit Facility”).Interest on amounts outstanding under the Credit Facility is to be paid at a defined base rate minus 1.25% or LIBOR plus 1.25% based upon the Company’s option. Interest on amounts borrowed for certain acquisitions converted to a term loan at the Company's option is to be paid at a defined base rate minus 1.25% or LIBOR plus 1.50%. A commitment fee equal to 0.20% shall be paid quarterly on the unused portion of the credit commitment under the Credit Facility and there are no prepayment penalties. Any amounts outstanding at the end of the Credit Facility term shall be converted into a term loan which, except for amounts borrowed for certain acquisitions, shall be payable June 7, 2013. The Credit Agreement contains customary representations and warranties, as well as affirmative and negative covenants including limits on the Company’s ability to borrow additional funds, make investments and sell assets. These covenants also require BOKF to maintain minimum capital levels. No amounts were outstanding under the Credit Facility at June 30, 2012 and the Company met all of the covenants.

Our equity capital at June 30, 2012 was $2.9 billion , up $52 million over March 31, 2012 . Net income less cash dividends paid increased equity $72 million during the second quarter of 2012 . Capital is managed to maximize long-term value to the

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shareholders. Factors considered in managing capital include projections of future earnings, asset growth and acquisition strategies, and regulatory and debt covenant requirements. Capital management may include subordinated debt issuance, share repurchase and stock and cash dividends.

On April 24, 2012, the Board of Directors authorized the Company to purchase up to two million shares of our common stock. The specific timing and amount of shares repurchased will vary based on market conditions, regulatory limitations and other factors. Repurchases may be made over time in open market or privately negotiated transactions. The repurchase program may be suspended or discontinued at any time without prior notice. As of June 30, 2012 , the Company has repurchased 39,496 shares for $2.1 million under this program. The Company repurchased 345,300 shares for $18.4 million in the first quarter of 2012 under a previously approved program. No shares were repurchased in the second quarter of 2011.

BOK Financial and subsidiary bank are subject to various capital requirements administered by federal agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that could have a material impact on operations. These capital requirements include quantitative measures of assets, liabilities and off-balance sheet items. The capital standards are also subject to qualitative judgments by the regulators.

For a banking institution to qualify as well capitalized, its Tier 1, Total and Leverage capital ratios must be at least 6%, 10% and 5%, respectively. The Company’s banking subsidiary exceeded the regulatory definitions of well capitalized. The capital ratios for BOK Financial on a consolidated basis are presented in Table 35.

Table 35 – Capital Ratios

	Well Capitalized Minimums		June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011		June 30, 2011
Average total equity to average assets	—		11.23	%	11.11	%	10.81	%	11.12	%	11.05	%
Tangible common equity ratio	—		10.07	%	9.75	%	9.56	%	9.65	%	9.71	%
Tier 1 common equity ratio	—		13.41	%	12.83	%	13.06	%	12.93	%	13.15	%
Risk-based capital:
Tier 1 capital	6.00	%	13.62	%	13.03	%	13.27	%	13.14	%	13.30	%
Total capital	10.00	%	16.19	%	16.16	%	16.49	%	16.55	%	16.80	%
Leverage	5.00	%	9.64	%	9.35	%	9.15	%	9.37	%	9.29	%

In June, banking regulators issued a Notice of Proposed Rulemaking that will incorporate Basel III capital changes for substantially all U.S. banking organizations. If adopted as proposed, these changes will establish a 7% threshold for the Tier 1 common equity ratio consisting of a minimum level plus capital conservation buffer. BOK Financial's Tier 1 common equity ratio based on the existing Basel I standards was 13.41% as of June 30, 2012. Our estimated Tier 1 common equity ratio under a fully phased in Basel III framework is approximately 12.75%, nearly 575 basis points above the 7% regulatory threshold. This estimate is subject to interpretation of rules that are not yet final. Additionally, the proposed definition of Tier 1 common equity includes unrealized gains and losses on available for sale securities which are subject to changes from market conditions and inherently volatile.

Capital resources of financial institutions are also regularly measured by the tangible common shareholders’ equity ratio. Tangible common shareholders’ equity is shareholders’ equity as defined by generally accepted accounting principles in the United States of America (“GAAP”) less intangible assets and equity which does not benefit common shareholders. Equity that does not benefit common shareholders includes preferred equity. Tier 1 common equity is tier 1 equity as defined by banking regulations, adjusted for other comprehensive income (loss) and equity which does not benefit common shareholders. These non-GAAP measures are valuable indicators of a financial institution’s capital strength since it eliminates intangible assets from shareholders’ equity and retains the effect of unrealized losses on securities and other components of accumulated other comprehensive income in shareholders’ equity.

In accordance with the Dodd-Frank Act, the Federal Reserve must publish regulations that require bank holding companies with $10 billion to $50 billion in assets to perform annual capital stress tests. We expect to be subject to such regulations when they are finalized and effective. The resulting capital stress test process may place constraints on capital distributions or increases in required regulatory capital under certain circumstances.

Table 36 following provides a reconciliation of the non-GAAP measures with financial measures defined by GAAP.

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Table 36 – Non-GAAP Measures (Dollars in thousands)

	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011
Tangible common equity ratio:
Total shareholders' equity	$	2,885,934		$	2,834,419		$	2,750,468		$	2,732,592		$	2,667,717
Less: Goodwill and intangible assets, net	344,699			345,246			345,820			346,716			347,611
Tangible common equity	2,541,235			2,489,173			2,404,648			2,385,876			2,320,106
Total assets	25,576,046			25,884,173			25,493,946			25,066,265			24,238,182
Less: Goodwill and intangible assets, net	344,699			345,246			345,820			346,716			347,611
Tangible assets	$	25,231,347		$	25,538,927		$	25,148,126		$	24,719,549		$	23,890,571
Tangible common equity ratio	10.07		%	9.75		%	9.56		%	9.65		%	9.71		%
Tier 1 common equity ratio:
Tier 1 capital	$	2,418,985		$	2,344,779		$	2,295,061		$	2,247,576		$	2,188,199
Less: Non-controlling interest	36,787			35,982			36,184			34,958			24,457
Tier 1 common equity	2,382,198			2,308,797			2,258,877			2,212,618			2,163,742
Risk weighted assets	$	17,758,118		$	17,993,379		$	17,291,105		$	17,106,533		$	16,452,305
Tier 1 common equity ratio	13.41		%	12.83		%	13.06		%	12.93		%	13.15		%

Off-Balance Sheet Arrangements

See Note 7 to the Consolidated Financial Statements for a discussion of the Company’s significant off-balance sheet commitments.

Market Risk

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices or equity prices. Financial instruments that are subject to market risk can be classified either as held for trading or held for purposes other than trading. Market risk excludes changes in fair value due to credit of the individual issuers of financial instruments.

BOK Financial is subject to market risk primarily through the effect of changes in interest rates on both its assets held for purposes other than trading and trading assets. The effects of other changes, such as foreign exchange rates, commodity prices or equity prices do not pose significant market risk to BOK Financial. BOK Financial has no material investments in assets that are affected by changes in foreign exchange rates or equity prices. Energy and agricultural product derivative contracts, which are affected by changes in commodity prices, are matched against offsetting contracts as previously discussed.

The Asset / Liability Committee is responsible for managing market risk in accordance with policy guidelines established by the Board of Directors. The Committee monitors projected variation in net interest revenue, net interest income and economic value of equity due to specified changes in interest rates. The internal policy limit for net interest revenue variation is a maximum decline of 5% to an up or down 200 basis point change over twelve months. These guidelines also set maximum levels for short-term borrowings, short-term assets, public funds and brokered deposits and establish minimum levels for unpledged assets, among other things. Compliance with these internal guidelines is reviewed monthly.

Interest Rate Risk – Other than Trading

As previously noted in the Net Interest Revenue section of this report, management has implemented strategies to manage the Company’s balance sheet to have relatively limited exposure to changes in interest rates over a twelve month period. The effectiveness of these strategies in managing the overall interest rate risk is evaluated through the use of an asset/liability model. BOK Financial performs a sensitivity analysis to identify more dynamic interest rate risk exposures, including embedded option positions, on net interest revenue, net income and economic value of equity. A simulation model is used to estimate the effect of changes in interest rates over the next 12 months and longer time periods based on multiple interest rate scenarios. Two specified interest rate scenarios are used to evaluate interest rate risk against policy guidelines. The first assumes a sustained parallel 200 basis point increase and the second assumes a sustained parallel 50 basis point decrease in interest rates. Management historically evaluated interest rate sensitivity for a sustained 200 basis point decrease in interest

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rates. However, the results of a 200 basis point decrease in interest rates in the current low-rate environment are not meaningful.

The Company’s primary interest rate exposures included the Federal Funds rate, which affects short-term borrowings, and the prime lending rate and LIBOR, which are the basis for much of the variable-rate loan pricing. Additionally, residential mortgage rates directly affect the prepayment speeds for residential mortgage-backed securities and mortgage servicing rights. Derivative financial instruments and other financial instruments used for purposes other than trading are included in this simulation. The model incorporates assumptions regarding the effects of changes in interest rates and account balances on indeterminable maturity deposits based on a combination of historical analysis and expected behavior. The impact of planned growth and new business activities is factored into the simulation model. The effects of changes in interest rates on the value of mortgage servicing rights are excluded from Table 37 due to the extreme volatility over such a large rate range and our active risk management approach for that asset. The effects of interest rate changes on the value of mortgage servicing rights and financial instruments identified as economic hedges are presented in Note 5 to the Consolidated Financial Statements.

The simulations used to manage market risk are based on numerous assumptions regarding the effects of changes in interest rates on the timing and extent of re-pricing characteristics, future cash flows and customer behavior. These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest revenue, net income or economic value of equity or precisely predict the impact of higher or lower interest rates on net interest revenue, net income or economic value of equity. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes, market conditions and management strategies, among other factors.

Table 37 – Interest Rate Sensitivity (Dollars in thousands)

	200 bp Increase						50 bp Decrease
	2012			2011			2012			2011
Anticipated impact over the next twelve months on net interest revenue	$	27,360		$	3,552		$	(16,658	)	$	(17,884	)
	4.11		%	0.50		%	(2.50		)%	(2.50		)%

Trading Activities

BOK Financial enters into trading activities both as an intermediary for customers and for its own account. As an intermediary, BOK Financial will take positions in securities, generally residential mortgage-backed securities, government agency securities and municipal bonds. These securities are purchased for resale to customers, which include individuals, corporations, foundations and financial institutions. On a limited basis, BOK Financial may also take trading positions in U.S. Treasury securities, residential mortgage-backed securities, municipal bonds and derivative contracts to enhance returns on its securities portfolios. Both of these activities involve interest rate risk.

A variety of methods are used to manage the interest rate risk of trading activities. These methods include daily marking of all positions to market value, independent verification of inventory pricing, and position limits for each trading activity. Hedges in either the futures or cash markets may be used to reduce the risk associated with some trading programs.

Management uses a Value at Risk (“VAR”) methodology to measure the market risk inherent in its trading activities. VAR is calculated based upon historical simulations over the past five years using a variance / covariance matrix of interest rate changes. It represents an amount of market loss that is likely to be exceeded only one out of every 100 two-week periods. Trading positions are managed within guidelines approved by the Board of Directors. These guidelines limit the VAR to $7.3 million. At June 30, 2012 , the VAR was $2.3 million. The greatest value at risk during the second quarter of 2012 was $4.3 million. At June 30, 2012, there were no trading positions for the purposes of enhancing returns on the Company's securities portfolio.

Controls and Procedures

As required by Rule 13a-15(b), BOK Financial’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by their report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the

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period covered by this report. As required by Rule 13a-15(d), BOK Financial’s management, including the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal controls over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

Forward-Looking Statements

This report contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about BOK Financial, the financial services industry and the economy in general. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the provision and allowance for loan losses involve judgments as to expected events and are inherently forward-looking statements. Assessments that BOK Financial’s acquisitions and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events, based in part on information provided by others that BOK Financial has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expressed, implied, or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to: (1) the ability to fully realize expected cost savings from mergers within the expected time frames, (2) the ability of other companies on which BOK Financial relies to provide goods and services in a timely and accurate manner, (3) changes in interest rates and interest rate relationships, (4) demand for products and services, (5) the degree of competition by traditional and nontraditional competitors, (6) changes in banking regulations, tax laws, prices, levies, and assessments, (7) the impact of technological advances and (8) trends in customer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

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Consolidated Statements of Earnings (Unaudited)

(In thousands, except share and per share data)	Three Months Ended						Six Months Ended
	June 30,						June 30,
Interest revenue	2012			2011			2012			2011
Loans	$	131,175		$	123,830		$	258,158		$	247,570
Residential mortgage loans held for sale	1,784			1,505			3,552			2,844
Trading securities	364			434			664			848
Taxable securities	4,282			2,800			8,716			5,145
Tax-exempt securities	921			1,324			1,898			2,720
Total investment securities	5,203			4,124			10,614			7,865
Taxable securities	61,583			69,978			121,239			138,992
Tax-exempt securities	631			600			1,232			1,207
Total available for sale securities	62,214			70,578			122,471			140,199
Fair value option securities	2,311			5,243			5,798			8,473
Funds sold and resell agreements	4			3			6			7
Total interest revenue	203,055			205,717			401,263			407,806
Interest expense
Deposits	16,390			23,160			33,888			47,202
Borrowed funds	1,792			3,015			3,381			4,846
Subordinated debentures	3,512			5,541			9,064			11,118
Total interest expense	21,694			31,716			46,333			63,166
Net interest revenue	181,361			174,001			354,930			344,640
Provision for credit losses	(8,000		)	2,700			(8,000		)	8,950
Net interest revenue after provision for credit losses	189,361			171,301			362,930			335,690
Other operating revenue
Brokerage and trading revenue	32,600			23,725			63,711			49,101
Transaction card revenue	26,758			31,024			52,188			59,469
Trust fees and commissions	19,931			19,150			38,369			37,572
Deposit service charges and fees	25,216			23,857			49,595			46,337
Mortgage banking revenue	39,548			19,356			72,626			36,712
Bank-owned life insurance	2,838			2,872			5,709			5,735
Other revenue	7,559			7,842			16,586			16,174
Total fees and commissions	154,450			127,826			298,784			251,100
Gain on sales of assets, net	3,765			3,344			3,409			3,276
Gain (loss) on derivatives, net	2,345			1,225			(128		)	(1,188		)
Gain on fair value option securities, net	6,852			9,921			5,119			6,403
Gain on available for sale securities, net	20,481			5,468			24,812			10,370
Total other-than-temporary impairment losses	(135		)	(74		)	(640		)	(74		)
Portion of loss reclassified from other comprehensive income	(723		)	(4,750		)	(3,940		)	(9,349		)
Net impairment losses recognized in earnings	(858		)	(4,824		)	(4,580		)	(9,423		)
Total other operating revenue	187,035			142,960			327,416			260,538
Other operating expense
Personnel	122,297			105,603			237,066			205,597
Business promotion	6,746			4,777			11,134			9,401
Professional fees and services	8,343			6,258			15,942			13,716
Net occupancy and equipment	16,906			15,554			32,929			31,158
Insurance	4,011			4,771			7,877			10,957
Data processing and communications	25,264			24,428			47,408			46,931
Printing, postage and supplies	3,903			3,586			7,214			6,668
Net losses and expenses of repossessed assets	5,912			5,859			8,157			11,874
Amortization of intangible assets	545			896			1,120			1,792
Mortgage banking costs	11,173			8,968			18,746			15,439
Change in fair value of mortgage servicing rights	11,450			13,493			4,323			10,364
Other expense	7,236			9,016			17,107			17,761
Total other operating expense	223,786			203,209			409,023			381,658
Income before taxes	152,610			111,052			281,323			214,570
Federal and state income tax	53,149			39,357			98,669			78,109
Net income	99,461			71,695			182,654			136,461
Net income attributable to non-controlling interest	1,833			2,688			1,411			2,680
Net income attributable to BOK Financial Corp. shareholders	$	97,628		$	69,007		$	181,243		$	133,781
Earnings per share:
Basic	$	1.43		$	1.01		$	2.66		$	1.96
Diluted	$	1.43		$	1.00		$	2.65		$	1.95
Average shares used in computation:
Basic	67,472,665			67,898,483			67,573,280			67,900,279
Diluted	67,744,828			68,169,485			67,847,659			68,173,182
Dividends declared per share	$	0.38		$	0.275		$	0.71		$	0.525

See accompanying notes to consolidated financial statements.

- 57 -



Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net income	$	99,461		$	71,695		$	182,654		$	136,461
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)	(15,401		)	62,502			40,034			63,943
Other–than–temporary impairment losses recognized in earnings	858			4,824			4,580			9,423
Reclassification adjustment for net (gains) losses realized and included in earnings	(20,202		)	(5,395		)	(24,481		)	(10,214		)
Amortization of unrealized gain on investment securities transferred from available for sale	(1,633		)	—			(3,421		)	—
Other comprehensive income (loss) before income taxes	(36,378		)	61,931			16,712			63,152
Income tax expense	14,150			(23,989		)	(6,501		)	(24,736		)
Other comprehensive income (loss), net of income taxes	(22,228		)	37,942			10,211			38,416
Comprehensive income	77,233			109,637			192,865			174,877
Comprehensive income (loss) attributable to non-controlling interests	1,833			2,688			1,411			2,680
Comprehensive income attributed to BOK Financial Corp. shareholders	75,400			106,949			191,454			172,197

- 58 -

Consolidated Balance Sheets

(In thousands, except share data)
	Jun 30, 2012			Dec 31, 2011			Jun 30, 2011
	(Unaudited)			(Footnote 1)			(Unaudited)
Assets
Cash and due from banks	$	628,092		$	976,191		$	1,098,721
Funds sold and resell agreements	11,171			10,174			12,040
Trading securities	149,317			76,800			99,846
Investment securities (fair value : June 30, 2012 – $440,638; December 31, 2011 - $462,657; June 30, 2011 – $369,247)	412,479			439,236			349,583
Available for sale securities	10,395,415			10,179,365			9,567,008
Fair value option securities	325,177			651,226			553,231
Residential mortgage loans held for sale	259,174			188,125			169,609
Loans	11,576,431			11,269,743			10,737,544
Less allowance for loan losses	(231,669		)	(253,481		)	(286,611		)
Loans, net of allowance	11,344,762			11,016,262			10,450,933
Premises and equipment, net	261,508			262,735			265,057
Receivables	121,944			123,257			129,944
Goodwill	335,601			335,601			335,601
Intangible assets, net	9,098			10,219			12,010
Mortgage servicing rights, net	91,783			86,783			109,192
Real estate and other repossessed assets	105,708			122,753			129,026
Bankers’ acceptances	2,873			1,881			1,661
Derivative contracts	366,204			293,859			229,887
Cash surrender value of bank-owned life insurance	269,093			263,318			261,203
Receivable on unsettled securities trades	32,876			75,151			170,600
Other assets	453,771			381,010			293,030
Total assets	$	25,576,046		$	25,493,946		$	24,238,182

Noninterest-bearing demand deposits	$	6,440,375		$	5,799,785		$	4,725,977
Interest-bearing deposits:
Transaction	8,551,874			9,354,456			9,013,323
Savings	261,998			226,357			211,877
Time	3,107,950			3,381,982			3,634,700
Total deposits	18,362,197			18,762,580			17,585,877
Funds purchased	1,453,750			1,063,318			1,706,893
Repurchase agreements	1,136,948			1,233,064			1,106,163
Other borrowings	58,056			74,485			149,703
Subordinated debentures	353,378			398,881			398,788
Accrued interest, taxes and expense	140,434			149,508			104,493
Bankers’ acceptances	2,873			1,881			1,661
Derivative contracts	370,053			236,522			173,917
Due on unsettled securities trades	603,800			653,371			166,607
Other liabilities	171,836			133,684			151,906
Total liabilities	22,653,325			22,707,294			21,546,008
Shareholders' equity:
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: June 30, 2012 – 72,006,628; December 31, 2011 – 71,533,354; June 30, 2011 – 71,100,444)	4			4			4
Capital surplus	836,065			818,817			794,292
Retained earnings	2,086,565			1,953,332			1,842,022
Treasury stock (shares at cost: June 30, 2012 – 3,862,469; December 31, 2011 – 3,380,310; June 30, 2011 – 2,637,575)	(175,890		)	(150,664		)	(114,856		)
Accumulated other comprehensive income	139,190			128,979			146,255
Total shareholders’ equity	2,885,934			2,750,468			2,667,717
Non-controlling interest	36,787			36,184			24,457
Total equity	2,922,721			2,786,652			2,692,174
Total liabilities and equity	$	25,576,046		$	25,493,946		$	24,238,182

See accompanying notes to consolidated financial statements.

- 59 -

Consolidated Statements of Changes in Equity (Unaudited)

(In thousands)
	Common Stock			Accumulated Other Comprehensive Income(Loss)		Capital Surplus			Retained Earnings			Treasury Stock				Total Shareholders’ Equity			Non- Controlling Interest			Total
	Shares	Amount		Accumulated Other Comprehensive Income(Loss)		Capital Surplus			Retained Earnings			Shares	Amount			Total Shareholders’ Equity			Non- Controlling Interest			Equity

Balance, December 31, 2010	70,816	$	4	$	107,839	$	782,805		$	1,743,880		2,608	$	(112,802	)	$	2,521,726		$	22,152		$	2,543,878
Comprehensive income:
Net income	—	—		—		—			133,781			—	—			133,781			2,680			136,461
Other comprehensive income	—	—		38,416		—			—			—	—			38,416			—			38,416
Exercise of stock options	284	—		—		6,345			—			30	(2,054		)	4,291			—			4,291
Tax benefit on exercise of stock options	—	—		—		339			—			—	—			339			—			339
Stock-based compensation	—	—		—		4,803			—			—	—			4,803			—			4,803
Cash dividends on common stock	—	—		—		—			(35,639		)	—	—			(35,639		)	—			(35,639		)
Capital calls and distributions, net	—	—		—		—			—			—	—			—			(375		)	(375		)

Balance, June 30, 2011	71,100	$	4	$	146,255	$	794,292		$	1,842,022		2,638	$	(114,856	)	$	2,667,717		$	24,457		$	2,692,174


Balances at December 31, 2011	71,533	$	4	$	128,979	$	818,817		$	1,953,332		3,380	$	(150,664	)	$	2,750,468		$	36,184		$	2,786,652
Comprehensive income:
Net income	—	—		—		—			181,243			—	—			181,243			1,411			182,654
Other comprehensive income	—	—		10,211		—			—			—	—			10,211			—			10,211
Treasury stock purchases	—	—		—		—			—			384	(20,558		)	(20,558		)	—			(20,558		)
Exercise of stock options	473	—		—		13,122			—			98	(4,668		)	8,454			—			8,454
Tax benefit on exercise of stock options	—	—		—		(677		)	—			—	—			(677		)	—			(677		)
Stock-based compensation	—	—		—		4,803			—			—	—			4,803			—			4,803
Cash dividends on common stock	—	—		—		—			(48,010		)	—	—			(48,010		)	—			(48,010		)
Capital calls and distributions, net	—	—		—		—			—			—	—			—			(808		)	(808		)

Balance, June 30, 2012	72,006	$	4	$	139,190	$	836,065		$	2,086,565		3,862	$	(175,890	)	$	2,885,934		$	36,787		$	2,922,721

See accompanying notes to consolidated financial statements.

- 60 -

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)	Six Months Ended
	June 30,
	2012			2011
Cash Flows From Operating Activities:
Net income	$	182,654		$	136,461
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(8,000		)	8,950
Change in fair value of mortgage servicing rights	4,323			10,364
Unrealized (gains) losses from derivatives	(7,626		)	5,834
Tax benefit on exercise of stock options	677			(339		)
Change in bank-owned life insurance	(5,709		)	(5,735		)
Stock-based compensation	4,803			4,803
Depreciation and amortization	24,636			24,529
Net amortization of securities discounts and premiums	47,789			48,751
Net realized gains on financial instruments and other assets	(60,122		)	(16,789		)
Mortgage loans originated for resale	(1,588,200		)	(902,774		)
Proceeds from sale of mortgage loans held for resale	1,569,921			1,013,516
Capitalized mortgage servicing rights	(17,647		)	(10,767		)
Change in trading and fair value option securities	251,682			(169,581		)
Change in receivables	(9,667		)	18,996
Change in other assets	2,838			17,073
Change in accrued interest, taxes and expense	(9,074		)	(29,614		)
Change in other liabilities	7,888			(35,125		)
Net cash provided by operating activities	391,166			118,553
Cash Flows From Investing Activities:
Proceeds from maturities or redemptions of investment securities	43,678			26,986
Proceeds from maturities or redemptions of available for sale securities	2,486,198			1,216,168
Purchases of investment securities	(16,971		)	(37,085		)
Purchases of available for sale securities	(4,162,486		)	(2,967,565		)
Proceeds from sales of available for sale securities	1,451,551			1,447,073
Change in amount receivable on unsettled securities transactions	42,275			(35,541		)
Loans originated net of principal collected	(327,349		)	(87,541		)
Proceeds from derivative asset contracts	(119,495		)	55,877
Proceeds from disposition of assets	101,550			62,060
Purchases of assets	(40,991		)	(19,984		)
Net cash used in investing activities	(542,040		)	(339,552		)
Cash Flows From Financing Activities:
Net change in demand deposits, transaction deposits and savings accounts	(126,351		)	281,284
Net change in time deposits	(274,032		)	125,692
Net change in other borrowings	229,401			(214,296		)
Repayment of subordinated debt	(46,882		)	—
Net payments or proceeds on derivative liability contracts	110,249			(58,891		)
Net change in derivative margin accounts	21,749			(46,606		)
Change in amount due on unsettled security transactions	(49,571		)	6,182
Issuance of common and treasury stock, net	8,454			4,291
Tax benefit on exercise of stock options	(677		)	339
Repurchase of common stock	(20,558		)	—
Dividends paid	(48,010		)	(35,639		)
Net cash provided by (used in) financing activities	(196,228		)	62,356
Net decrease in cash and cash equivalents	(347,102		)	(158,643		)
Cash and cash equivalents at beginning of period	986,365			1,269,404
Cash and cash equivalents at end of period	$	639,263		$	1,110,761

Cash paid for interest	$	48,536		$	63,563
Cash paid for taxes	$	81,738		$	87,888
Net loans and bank premises transferred to repossessed real estate and other assets	$	55,821		$	33,894
Increase in U.S. government guaranteed loans eligible for repurchase	$	48,486		$	59,697
Increase in receivables from conveyance of other real estate owned guaranteed by U.S. government agencies	$	34,247		$	—

See accompanying notes to consolidated financial statements.

- 61 -

Notes to Consolidated Financial Statements (Unaudited)

(1) Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of BOK Financial Corporation (“BOK Financial” or “the Company”) have been prepared in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The unaudited consolidated financial statements include accounts of BOK Financial and its subsidiaries, principally BOKF, NA (“the Bank”), BOSC, Inc., and Cavanal Hill Investment Management Inc. Operating divisions of the Bank include Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust, Bank of Kansas City and the TransFund electronic funds network.

Certain reclassifications have been made to conform to the current period presentation.

The financial information should be read in conjunction with BOK Financial’s 2011 Form 10-K filed with the Securities and Exchange Commission, which contains audited financial statements. Amounts presented as of December 31, 2011 have been derived from the audited financial statements included in BOK Financial’s 2011 Form 10-K but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month and six-month periods ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 .

Newly Adopted and Pending Accounting Policies

Financial Accounting Standards Board (“FASB”)

FASB Accounting Standards Update No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements (“ASU 2011-03”)

On April 29, 2011, the FASB issued ASU 2011-03 that eliminates the collateral maintenance requirement under GAAP for entities to consider in determining whether a transfer of financial assets subject to a repurchase agreement is accounted for as a sale or as a secured borrowing. ASU 2011-03 was effective for the Company January 1, 2012 and did not have a material impact on the Company’s consolidated financial statements.

FASB Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04")

On May 12, 2011, the FASB issued ASU 2011-04 to provide clarified and converged guidance on fair value measurement and expand disclosures concerning fair value measurements. ASU 2011-04 is largely consistent with the existing fair value measurement principles contained in ASC 820, Fair Value Measurement . ASU 2011-04 was effective for the Company January 1, 2012.

FASB Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”)

On June 16, 2011 the FASB issued ASU 2011-05 which revises the manner in which entities present comprehensive income in their financial statements by removing the presentation option in ASC 220, Comprehensive Income , and requires entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. ASU 2011-05 was effective for the Company January 1, 2012.

- 62 -

FASB Accounting Standards Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”)

On December 16, 2011, the FASB issued ASU 2011-11 which contains new disclosure requirements regarding the nature of an entity right of setoff and related arrangements associated with its financial instruments and derivative instruments. The new disclosures are anticipated to facilitate comparison between financial statements prepared under generally accepted accounting principles in the United States of America and financial statements prepared under International Financial Reporting Standards by providing information about gross and net exposures. The new disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013.

FASB Accounting Standards Update No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards No. 2011-05 (“ASU 2011-12”)

On December 23, 2011, FASB issued ASU 2011-12, which defers the requirement in ASU 2011-05 for presentation of reclassification adjustments for each component of accumulated other comprehensive income (“AOCI”) in both net income and other comprehensive income on the face of the financial statements. This deferral will enable FASB to address certain concerns raised with regards to presentation requirements for reclassification adjustments. The amendment is effective at the same time as ASU 2011-05 which was effective for the Company on January 1, 2012.

(2) Securities

Trading Securities

The fair value and net unrealized gain (loss) included in trading securities is as follows (in thousands):



	June 30, 2012					December 31, 2011				June 30, 2011
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)		Fair Value		Net Unrealized Gain (Loss)
U.S. Government agency obligations	$	53,514	$	23		$	22,203	$	63	$	11,825	$	(37	)
U.S. agency residential mortgage-backed securities	46,502		222			12,379		59		22,739		9
Municipal and other tax-exempt securities	44,632		9			39,345		652		62,285		(249		)
Other trading securities	4,669		(14		)	2,873		9		2,997		(13		)
Total	$	149,317	$	240		$	76,800	$	783	$	99,846	$	(290	)

Investment Securities

The amortized cost and fair values of investment securities are as follows (in thousands):



	June 30, 2012
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value ¹		Value		Gain		Loss
Municipal and other tax-exempt	$	126,168	$	126,168	$	130,308	$	4,165	$	(25	)
U.S. agency residential mortgage-backed securities – Other	94,126		102,347		105,535		3,188		—
Other debt securities	183,964		183,964		204,795		20,831		—
Total	$	404,258	$	412,479	$	440,638	$	28,184	$	(25	)


¹	Carrying value includes $7.5 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.


²	Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

- 63 -



	December 31, 2011
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value		Value		Gain		Loss
Municipal and other tax-exempt	$	128,697	$	128,697	$	133,670	$	4,975	$	(2	)
U.S. agency residential mortgage-backed securities – Other	110,062		121,704		120,536		602		(1,770		)
Other debt securities	188,835		188,835		208,451		19,616		—
Total	$	427,594	$	439,236	$	462,657	$	25,193	$	(1,772	)


¹	Carrying value includes $12 million of net unrealized gain which remains in Accumulated other comprehensive income (“AOCI”) in the Consolidated Balance Sheets related to certain securities transferred from the Available for Sale securities portfolio to the Investment securities portfolio as discussed in greater detail following.


²	Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

During the three months ended September 30, 2011 , the Company transferred certain U.S. government agency residential mortgage-backed securities from the available for sale portfolio to the investment securities (held-to-maturity) portfolio as the Company has the positive intent and ability to hold these securities to maturity. No gains or losses were recognized in the Consolidated Statement of Earnings at the time of the transfer. Transfers of debt securities into the investment securities portfolio (held-to-maturity) are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the investment securities portfolio. Such amounts are amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related amortization of the premium or accretion of the discount on the transferred securities. At the time of transfer, the fair value totaled $131 million , amortized cost totaled $118 million and the pretax unrealized gain totaled $13 million .



	June 30, 2011
	Amortized		Fair		Gross Unrealized ¹
	Cost		Value		Gain		Loss
U.S. agency residential mortgage-backed securities – Other	$	160,870	$	165,449	$	4,583	$	(4	)
Other debt securities	188,713		203,798		15,085		—
Total	$	349,583	$	369,247	$	19,668	$	(4	)


¹	Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

- 64 -

The amortized cost and fair values of investment securities at June 30, 2012 , by contractual maturity, are as shown in the following table (dollars in thousands):



	Less than One Year		One to Five Years		Six to Ten Years		Over Ten Years		Total		Weighted Average Maturity²
Municipal and other tax-exempt:
Carrying value	$	36,814	$	64,881	$	21,162	$	3,311	$	126,168	2.93
Fair value	37,171		67,131		22,456		3,550		130,308
Nominal yield¹	4.38		3.91		4.79		6.49		4.26
Other debt securities:
Carrying value	9,553		31,148		28,970		114,293		183,964		9.70
Fair value	9,612		32,223		31,160		131,800		204,795
Nominal yield	4.02		5.25		5.58		6.21		5.83
Total fixed maturity securities:
Carrying value	$	46,367	$	96,029	$	50,132	$	117,604	$	310,132	6.94
Fair value	46,783		99,354		53,616		135,350		335,103
Nominal yield	4.31		4.34		5.25		6.22		5.19
Residential mortgage-backed securities:
Carrying value									$	102,347	³
Fair value									105,535
Nominal yield ⁴									2.71
Total investment securities:
Carrying value									$	412,479
Fair value									440,638
Nominal yield									4.58


^1.	Calculated on a taxable equivalent basis using a 39% effective tax rate.


^2.	Expected maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without penalty.


^3.	The average expected lives of residential mortgage-backed securities were 3.8 years based upon current prepayment assumptions.


^4.	The nominal yield on residential mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary - Unaudited for current yields on the investment securities portfolio.

- 65 -

Available for Sale Securities

The amortized cost and fair value of available for sale securities are as follows (in thousands):



	June 30, 2012
	Amortized		Fair		Gross Unrealized ¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,001	$	1,003	$	3	$	—		$	—
Municipal and other tax-exempt	86,808		88,458		2,430		(187		)	(593		)
Residential mortgage-backed securities:
U. S. agencies:
FNMA	5,270,918		5,426,832		156,699		(785		)	—
FHLMC	3,527,123		3,607,060		81,679		(1,742		)	—
GNMA	645,103		674,006		28,973		(70		)	—
Other	188,831		195,634		6,803		—			—
Total U.S. agencies	9,631,975		9,903,532		274,154		(2,597		)	—
Private issue:
Alt-A loans	134,266		118,414		—		—			(15,852		)
Jumbo-A loans	219,917		199,347		618		(943		)	(20,245		)
Total private issue	354,183		317,761		618		(943		)	(36,097		)
Total residential mortgage-backed securities	9,986,158		10,221,293		274,772		(3,540		)	(36,097		)
Other debt securities	35,739		36,286		559		(12		)	—
Perpetual preferred stock	22,171		23,431		1,811		(552		)	—
Equity securities and mutual funds	21,285		24,944		3,989		(330		)	—
Total	$	10,153,162	$	10,395,415	$	283,564	$	(4,621	)	$	(36,690	)

¹ Gross unrealized gain/ loss recognized in AOCI in the consolidated balance sheet.

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.



	December 31, 2011
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,001	$	1,006	$	5	$	—		$	—
Municipal and other tax-exempt	66,435		68,837		2,543		(141		)	—
Residential mortgage-backed securities:
U. S. agencies:
FNMA	5,823,972		5,987,287		163,319		(4		)	—
FHLMC	2,756,180		2,846,215		90,035		—			—
GNMA	647,569		678,924		31,358		(3		)	—
Other	69,668		75,751		6,083		—			—
Total U.S. agencies	9,297,389		9,588,177		290,795		(7		)	—
Private issue:
Alt-A loans	168,461		132,242		—		—			(36,219		)
Jumbo-A loans	334,607		286,924		—		(11,096		)	(36,587		)
Total private issue	503,068		419,166		—		(11,096		)	(72,806		)
Total residential mortgage-backed securities	9,800,457		10,007,343		290,795		(11,103		)	(72,806		)
Other debt securities	36,298		36,495		197		—			—
Perpetual preferred stock	19,171		18,446		1,030		(1,755		)	—
Equity securities and mutual funds	33,843		47,238		13,727		(332		)	—
Total	$	9,957,205	$	10,179,365	$	308,297	$	(13,331	)	$	(72,806	)

¹ Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

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	June 30, 2011
	Amortized		Fair		Gross Unrealized ¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,001	$	1,003	$	2	$	—		$	—
Municipal and other tax-exempt	68,502		70,210		2,375		(146		)	(521		)
Residential mortgage-backed securities:
U. S. agencies:
FNMA	5,359,939		5,524,849		166,016		(1,106		)	—
FHLMC	2,447,830		2,544,684		97,575		(721		)	—
GNMA	704,168		742,411		38,243		—			—
Other	76,971		81,845		4,874		—			—
Total U.S. agencies	8,588,908		8,893,789		306,708		(1,827		)	—
Private issue:
Alt-A loans	195,932		166,757		46		(104		)	(29,117		)
Jumbo-A loans	385,371		346,465		513		(11,949		)	(27,470		)
Total private issue	581,303		513,222		559		(12,053		)	(56,587		)
Total residential mortgage-backed securities	9,170,211		9,407,011		307,267		(13,880		)	(56,587		)
Other debt securities	5,900		5,893		—		(7		)	—
Perpetual preferred stock	19,511		22,694		3,183		—			—
Equity securities and mutual funds	38,683		60,197		21,516		(2		)	—
Total	$	9,303,808	$	9,567,008	$	334,343	$	(14,035	)	$	(57,108	)


^1.	Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet


^2.	Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

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The amortized cost and fair values of available for sale securities at June 30, 2012 , by contractual maturity, are as shown in the following table (dollars in thousands):



	Less than One Year		One to Five Years		Six to Ten Years		Over Ten Years ⁶		Total		Weighted Average Maturity ⁵
U.S. Treasuries:
Amortized cost	$	1,001							$	1,001	0.86
Fair value	1,003								1,003
Nominal yield¹	0.55								0.55
Municipal and other tax-exempt:
Amortized cost	587		25,541		15,146		45,534		86,808		15.20
Fair value	589		26,729		16,049		45,091		88,458
Nominal yield¹	0.09		0.71		1.23		2.78		1.88
Other debt securities:
Amortized cost			30,339				5,400		35,739		6.96
Fair value			30,898				5,388		36,286
Nominal yield¹			1.80				1.71		1.79
Total fixed maturity securities:
Amortized cost	$	1,588	$	55,880	$	15,146	$	50,934	$	123,548	12.63
Fair value	1,592		57,627		16,049		50,479		125,747
Nominal yield	0.38		1.30		1.23		2.67		1.85
Residential mortgage-backed securities:
Amortized cost									9,986,158		²
Fair value									10,221,293
Nominal yield ⁴									2.72
Equity securities and mutual funds:
Amortized cost									43,456		³
Fair value									48,375
Nominal yield									1.20
Total available-for-sale securities:
Amortized cost									$	10,153,162
Fair value									10,395,415
Nominal yield									2.70


¹	Calculated on a taxable equivalent basis using a 39% effective tax rate.


²	The average expected lives of mortgage-backed securities were 2.0 years based upon current prepayment assumptions.


³	Primarily common stock and preferred stock of corporate issuers with no stated maturity.


⁴	The nominal yield on mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary –– Unaudited following for current yields on available for sale securities portfolio.


⁵	Expected maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without penalty.


⁶	Nominal yield on municipal and other tax-exempt securities and other debt securities with contractual maturity dates over ten years are based on variable rates which generally are reset within 35 days .

Sales of available for sale securities resulted in gains and losses as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2012		2011			2012			2011
Proceeds	$	459,610	$	653,921		$	1,451,551		$	1,447,073
Gross realized gains	20,481		9,122			32,166			19,602
Gross realized losses	—		(3,654		)	(7,354		)	(9,232		)
Related federal and state income tax expense	7,967		2,127			9,652			4,034

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Securities with an amortized cost of $3.7 billion at June 30, 2012 , $4.4 billion at December 31, 2011 and $3.6 billion at June 30, 2011 have been pledged as collateral for repurchase agreements, public and trust funds on deposit and for other purposes, as required by law. The secured parties do not have the right to sell or re-pledge these securities.

Temporarily Impaired Securities as of June 30, 2012

(in thousands):



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	6	$	9,321	$	25	$	—	$	—	$	9,321	$	25
U.S. Agency residential mortgage-backed securities – Other	—	$	—	$	—	$	—	$	—	$	—	$	—
Total investment	6	9,321		25		—		—		9,321		25

Available for sale:
Municipal and other tax-exempt ¹	66	21,950		640		27,864		140		49,814		780
Residential mortgage-backed securities:
U. S. agencies:
FNMA	13	528,649		785		—		—		528,649		785
FHLMC	10	438,190		1,742		—		—		438,190		1,742
GNMA	2	74,789		70		—		—		74,789		70
Total U.S. agencies	25	1,041,628		2,597		—		—		1,041,628		2,597
Private issue ¹ :
Alt-A loans	16	—		—		118,414		15,852		118,414		15,852
Jumbo-A loans	27	—		—		174,234		21,188		174,234		21,188
Total private issue	43	—		—		292,648		37,040		292,648		37,040
Total residential mortgage-backed securities	68	1,041,628		2,597		292,648		37,040		1,334,276		39,637
Other debt securities	2	—		—		988		12		988		12
Perpetual preferred stocks	5	10,717		552		—		—		10,717		552
Equity securities and mutual funds	12	2,579		330		—		—		2,579		330
Total available for sale	153	1,076,874		4,119		321,500		37,192		1,398,374		41,311

¹ Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:



Municipal and other tax-exempt	21	$	12,804	$	593	$	—	$	—	$	12,804	$	593
Alt-A loans	16	—		—		118,414		15,852		118,414		15,852
Jumbo-A loans	27	—		—		162,754		20,245		162,754		20,245

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Temporarily Impaired Securities as of December 31, 2011

(In thousands)



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax- exempt	1	$	479	$	2	$	—	$	—	$	479	$	2
U.S. Agency residential mortgage-backed securities – Other	5	92,571		1,770		—		—		92,571		1,770
Total investment	6	93,050		1,772		—		—		93,050		1,772

Available for sale:
Municipal and other tax-exempt ¹	26	5,008		7		21,659		134		26,667		141
Residential mortgage-backed securities:
U. S. agencies:
FNMA	2	68,657		4		—		—		68,657		4
FHLMC	—	—		—		—		—		—		—
GNMA	1	2,072		3		—		—		2,072		3
Total U.S. agencies	3	70,729		7		—		—		70,729		7
Private issue ¹ :
Alt-A loans	19	—		—		132,242		36,219		132,242		36,219
Jumbo-A loans	48	8,142		842		278,781		46,841		286,923		47,683
Total private issue	67	8,142		842		411,023		83,060		419,165		83,902
Total residential mortgage-backed securities	70	78,871		849		411,023		83,060		489,894		83,909
Perpetual preferred stocks	6	11,147		1,755		—		—		11,147		1,755
Equity securities and mutual funds	7	221		5		2,551		327		2,772		332
Total available for sale	109	95,247		2,616		435,233		83,521		530,480		86,137


^1.	Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:



Alt-A loans	19	$	—	$	—	$	132,242	$	36,219	$	132,242	$	36,219
Jumbo-A loans	36	3,809		256		202,874		36,331		206,683		36,587

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Temporarily Impaired Securities as of June 30, 2011

(In thousands)



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax- exempt	2	$	619	$	4	$	—	$	—	$	619	$	4
Other debt securities	—	$	—	$	—	$	—	$	—	$	—	$	—
Total investment	2	619		4		—		—		619		4

Available for sale:
Municipal and other tax-exempt ¹	51	24,065		301		19,593		366		43,658		667
Residential mortgage-backed securities:
U. S. agencies:
FNMA	7	230,949		1,106		—		—		230,949		1,106
FHLMC	2	98,169		721		—		—		98,169		721
GNMA	—	—		—		—		—		—		—
Total U.S. agencies	9	329,118		1,827		—		—		329,118		1,827
Private issue ¹ :
Alt-A loans	20	—		—		156,796		29,221		156,796		29,221
Jumbo-A loans	39	—		—		301,397		39,419		301,397		39,419
Total private issue	59	—		—		458,193		68,640		458,193		68,640
Total residential mortgage-backed securities	68	329,118		1,827		458,193		68,640		787,311		70,467
Other debt securities	2	—		—		993		7		993		7
Equity securities and mutual funds	1	213		2		—		—		213		2
Total available for sale	122	353,396		2,130		478,779		69,013		832,175		71,143


^1.	Includes the following securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income:



Municipal and other tax-exempt	21	6,948	244	7,115	277	14,063	521
Alt-A loans	19	—	—	153,632	29,117	153,632	29,117
Jumbo-A loans	21	—	—	138,205	27,470	138,205	27,470

On a quarterly basis, the Company performs separate evaluations of impaired debt and equity investment and available for sale securities to determine if the unrealized losses are temporary.

For debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be required to sell impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and securities portfolio management. Based on this evaluation as of June 30, 2012 , we do not intend to sell any impaired available for sale securities before fair value recovers to our current amortized cost and it is more-likely-than-not that we will not be required to sell impaired securities before fair value recovers, which may be maturity.

Impairment of debt securities rated investment grade by all nationally-recognized rating agencies are considered temporary unless specific contrary information is identified. None of the debt securities rated investment grade were considered to be other-than-temporarily impaired at June 30, 2012 .

- 71 -

At June 30, 2012 , the composition of the Company’s investment and available for sale securities portfolios by the lowest current credit rating assigned by any of the three nationally-recognized rating agencies is as follows (in thousands):



	U.S. Govt / GSE ¹				AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Investment:
Municipal and other tax-exempt	$	—	$	—	$	42,921	$	44,351	$	29,500	$	30,177	$	—	$	—	$	53,747	$	55,780	$	126,168	$	130,308
Mortgage-backed securities -- other	102,347		105,535		—		—		—		—		—		—		—		—		102,347		105,535
Other debt securities	—		—		174,573		195,264		600		600		—		—		8,791		8,931		183,964		204,795
Total investment securities	$	102,347	$	105,535	$	217,494	$	239,615	$	30,100	$	30,777	$	—	$	—	$	62,538	$	64,711	$	412,479	$	440,638

	U.S. Govt / GSE ¹				AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value
Available for Sale:
U.S. Treasury	$	1,001	$	1,003	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,001	$	1,003
Municipal and other tax-exempt	—		—		60,374		62,365		11,618		11,730		13,396		12,804		1,420		1,559		86,808		88,458
Residential mortgage-backed securities:
U. S. agencies:
FNMA	5,270,918		5,426,832		—		—		—		—		—		—		—		—		5,270,918		5,426,832
FHLMC	3,527,123		3,607,060		—		—		—		—		—		—		—		—		3,527,123		3,607,060
GNMA	645,103		674,006		—		—		—		—		—		—		—		—		645,103		674,006
Other	188,831		195,634		—		—		—		—		—		—		—		—		188,831		195,634
Total U.S. agencies	9,631,975		9,903,532		—		—		—		—		—		—		—		—		9,631,975		9,903,532
Private issue:
Alt-A loans	—		—		—		—		—		—		134,266		118,414		—		—		134,266		118,414
Jumbo-A loans	—		—		—		—		—		—		219,917		199,347		—		—		219,917		199,347
Total private issue	—		—		—		—		—		—		354,183		317,761		—		—		354,183		317,761
Total residential mortgage-backed securities	9,631,975		9,903,532		—		—		—		—		354,183		317,761		—		—		9,986,158		10,221,293
Other debt securities	—		—		5,400		5,388		30,339		30,898		—		—		—		—		35,739		36,286
Perpetual preferred stock	—		—		—		—		22,171		23,431		—		—		—		—		22,171		23,431
Equity securities and mutual funds	—		—		—		—		—		—		—		—		21,285		24,944		21,285		24,944
Total available for sale securities	$	9,632,976	$	9,904,535	$	65,774	$	67,753	$	64,128	$	66,059	$	367,579	$	330,565	$	22,705	$	26,503	$	10,153,162	$	10,395,415


¹	U.S. government and government sponsored enterprises are not rated by the nationally-recognized rating agencies as these securities are guaranteed by agencies of the U.S. government or government-sponsored enterprises.

At June 30, 2012 , the entire $354 million portfolio of privately issued residential mortgage-backed securities (based on amortized cost after impairment charges) was rated below investment grade by at least one of the nationally-recognized rating agencies. The net unrealized loss on these securities totaled $36 million . Ratings by the nationally recognized rating agencies are subjective in nature

- 72 -

and accordingly ratings can vary significantly amongst the agencies. Limitations generally expressed by the rating agencies include statements that ratings do not predict the specific percentage default likelihood over any given period of time and that ratings do not opine on expected loss severity of an obligation should the issuer default. As such, the impairment of securities rated below investment grade by at least one of the nationally-recognized rating agencies was evaluated to determine if we expect not to recover the entire amortized cost basis of the security. This evaluation was based on projections of estimated cash flows based on individual loans underlying each security using current and anticipated increases in unemployment and default rates, decreases in housing prices and estimated liquidation costs at foreclosure.

The primary assumptions used in this evaluation were:


•	Unemployment rates – increasing to 9.5% over the next 12 months, dropping to 8% over the following 21 months , and holding at 8% thereafter.

•

Housing price depreciation – starting with current depreciated housing prices based on information derived from the Federal Housing Finance Agency (“FHFA”) data, decreasing by an additional 6% over the next twelve months and then growing at 2% per year thereafter. At December 31, 2011, we assumed that housing prices would decrease an additional 8% over the next twelve months and then grow at 2% per year thereafter.


•	Estimated Liquidation Costs – reflect actual historical liquidation costs observed on Jumbo and Alt-A residential mortgage loans in the securities owned by the Company.


•	Discount rates – estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.

We also consider the current loan-to-value ratio and remaining credit enhancement as part of the assessment of the cash flows available to recover the amortized cost of the debt securities. Each factor is considered in the evaluation.

The Company calculates the current loan-to-value ratio for each mortgage-backed security using loan-level data. Current loan-to-value ratio is the current outstanding loan amount divided by an estimate of the current home value. The current home value is derived from FHFA data. FHFA provides historical information on home price depreciation at both the Metropolitan Statistical Area and state level. This information is matched to each loan to estimate the home price depreciation. Data is accumulated from the loan level to determine the current loan-to-value ratio for the security as a whole.

Remaining credit enhancement is the amount of credit enhancement available to absorb current projected losses within the pool of loans that support the security. The Company acquires the benefit of credit enhancement by investing in super-senior tranches for many of our residential mortgage-backed securities. Subordinated tranches held by other investors are specifically designed to absorb losses before the super-senior tranches which effectively doubled the typical credit support for these types of bonds. Current projected losses consider depreciation of home prices based on FHFA data, estimated costs and additional losses to liquidate collateral and delinquency status of the individual loans underlying the security.

Credit loss impairment is recorded as a charge to earnings. Additional impairment based on the difference between the total unrealized loss and the estimated credit loss on these securities was charged against other comprehensive income, net of deferred taxes.

Based upon projected declines in expected cash flows from certain private-label residential mortgage-backed securities, the Company recognized $858 thousand of additional credit loss impairments in earnings during the three months ended June 30, 2012 .

A distribution of the amortized cost (after recognition of the other-than-temporary impairment), fair value and credit loss impairments recognized on our privately issued residential mortgage-backed securities is as follows (in thousands, except for number of securities):

						Credit Losses Recognized
						Three months ended
						June 30, 2012			Life-to-date
Current LTV Ratio	Number of Securities	Amortized Cost		Fair Value		Number of Securities	Amount		Number of Securities	Amount
Alt-A	16	$	134,266	$	118,414	3	$	739	16	$	47,417
Jumbo-A	33	219,917		199,347		2	119		31	22,921
Total	49	$	354,183	$	317,761	5	$	858	47	$	70,338

Impaired equity securities, including perpetual preferred stocks, are evaluated based on management's ability and intent to hold the securities until fair value recovers over periods not to exceed three years. The assessment of the ability and intent to hold these

- 73 -

securities focuses on the liquidity needs, asset/liability management objectives and securities portfolio objectives. Factors considered when assessing recovery include forecasts of general economic conditions and specific performance of the issuer, analyst ratings and credit spreads for preferred stocks which have debt-like characteristics. The Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and based on that evaluation has the ability and intent to hold these investments until a recovery in fair value. Accordingly, all impairment of equity securities was considered temporary at June 30, 2012 .

The following is a tabular roll forward of the amount of credit-related OTTI recognized on available for sale debt securities in earnings (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012			2011
Balance of credit-related OTTI recognized on available for sale debt, beginning of period	$	72,057	$	57,223	$	76,131		$	52,624
Additions for credit-related OTTI not previously recognized	135		37		248			37
Additions for increases in credit-related OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost	723		4,787		4,332			9,386
Sales	—		—		(7,796		)	—
Balance of credit-related OTTI recognized on available for sale debt securities, end of period	$	72,915	$	62,047	$	72,915		$	62,047

Fair Value Option Securities

Fair value option securities represent securities which the Company has elected to carry at fair value and separately identified on the Consolidated Balance Sheets with changes in the fair value recognized in earnings as they occur. Certain residential mortgage-backed securities issued by U.S. government agencies and derivative contracts are held as an economic hedge of the mortgage servicing rights. In addition, certain corporate debt securities are economically hedged by derivative contracts to manage interest rate risk. Derivative contracts that have not been designated as hedging instruments effectively modify these fixed rate securities into variable rate securities.

The fair value and net unrealized gain (loss) included in Fair value option securities is as follows (in thousands):



	June 30, 2012				December 31, 2011				June 30, 2011
	Fair Value		Net Unrealized Gain		Fair Value		Net Unrealized Gain		Fair Value		Net Unrealized Gain
U.S. agency residential mortgage-backed securities	$	299,467	$	8,373	$	626,109	$	19,233	$	553,231	$	5,731
Corporate debt securities	25,710		621		25,117		18		—		—
Total	$	325,177	$	8,994	$	651,226	$	19,251	$	553,231	$	5,731

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(3) Derivatives

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at June 30, 2012 (in thousands):



	Gross Basis								Net Basis ²
	Assets				Liabilities				Assets			Liabilities
	Notional¹		Fair Value		Notional¹		Fair Value		Fair Value			Fair Value
Customer risk management programs:
Interest rate contracts ³
To-be-announced mortgage-backed securities	$	13,724,514	$	144,158	$	13,579,184	$	140,873	$	104,781		$	101,496
Interest rate swaps	1,271,138		77,121		1,271,138		77,671		77,121			77,671
Energy contracts	1,667,819		150,754		1,653,592		156,690		75,625			81,561
Agricultural contracts	140,722		4,655		140,255		4,604		1,125			1,074
Foreign exchange contracts	136,815		136,815		136,483		136,483		136,815			136,483
Equity option contracts	218,149		13,726		218,149		13,726		13,726			13,726
Total customer derivative before cash collateral	17,159,157		527,229		16,998,801		530,047		409,193			412,011
Less: cash collateral	—		—		—		—		(50,622		)	(42,559		)
Total customer derivatives	17,159,157		527,229		16,998,801		530,047		358,571			369,452
Interest rate risk management programs	66,000		7,633		25,000		601		7,633			601
Total derivative contracts	$	17,225,157	$	534,862	$	17,023,801	$	530,648	$	366,204		$	370,053


¹	Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.


²	Derivative contracts are recorded on a net basis in the balance sheet in recognition of master netting agreements that enable the Company to settle all derivative positions with a given counterparty in total and to offset the net derivative position with the related cash collateral.


³	Includes interest rate swaps used by borrowers to modify interest rate terms of their loans and to be announced securities used by mortgage banking customers to hedge their loan production.

When bilateral netting agreements exist between the Company and its counterparties that create a single legal claim or obligation to pay or receive the net amount in settlement of the individual derivative contracts, the Company reports derivative assets and liabilities on a net by counterparty basis.

Derivative contracts may also require the Company to provide or receive cash margin as collateral for derivative assets and liabilities. Derivative assets and liabilities are reported net of cash margin when certain conditions are met. As of June 30, 2012 , a decrease in credit rating from A1 to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $38 million .

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The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2011 (in thousands):



	Gross Basis								Net Basis ²
	Assets				Liabilities				Assets			Liabilities
	Notional¹		Fair Value		Notional¹		Fair Value		Fair Value			Fair Value
Customer risk management programs:
Interest rate contracts ³
To-be-announced residential mortgage-backed securities	$	9,118,627	$	101,189	$	9,051,627	$	99,211	$	68,519		$	66,541
Interest rate swaps	1,272,617		81,261		1,272,617		81,891		81,261			81,891
Energy contracts	1,554,400		158,625		1,799,367		171,050		62,945			75,370
Agricultural contracts	146,252		4,761		148,924		4,680		782			701
Foreign exchange contracts	73,153		73,153		72,928		72,928		73,153			72,928
Equity option contracts	208,647		12,508		208,647		12,508		12,508			12,508
Total customer derivative before cash collateral	12,373,696		431,497		12,554,110		442,268		299,168			309,939
Less: cash collateral	—		—		—		—		(11,690		)	(73,712		)
Total customer derivatives	12,373,696		431,497		12,554,110		442,268		287,478			236,227
Interest rate risk management programs	44,000		6,381		25,000		295		6,381			295
Total derivative contracts	$	12,417,696	$	437,878	$	12,579,110	$	442,563	$	293,859		$	236,522


¹	Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.


²	Derivative contracts are recorded on a net basis in the balance sheet in recognition of master netting agreements that enable the Company to settle all derivative positions with a given counterparty in total and to offset the net derivative position with the related cash collateral.


³	Includes interest rate swaps used by borrowers to modify interest rate terms of their loans and to be announced securities used by mortgage banking customers to hedge their loan production.

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at June 30, 2011 (in thousands):



	Gross Basis								Net Basis ²
	Assets				Liabilities				Assets			Liabilities
	Notional¹		Fair Value		Notional¹		Fair Value		Fair Value			Fair Value
Customer risk management programs:
Interest rate contracts ³
To-be-announced residential mortgage-backed securities	$	7,060,740	$	51,503	$	6,899,052	$	49,483	$	27,997		$	25,977
Interest rate swaps	1,197,499		64,051		1,197,499		64,051		63,442			64,051
Energy contracts	1,917,521		158,922		2,094,878		157,998		51,820			50,896
Agricultural contracts	125,644		6,025		132,573		5,961		1,847			1,783
Foreign exchange contracts	78,471		78,471		78,572		78,572		78,471			78,572
Equity option contracts	181,964		18,112		181,964		18,112		18,112			18,112
Total customer derivative before cash collateral	10,561,839		377,084		10,584,538		374,177		241,689			239,391
Less: cash collateral	—		—		—		—		(14,014		)	(65,474		)
Total customer derivatives	10,561,839		377,084		10,584,538		374,177		227,675			173,917
Interest rate risk management programs	44,000		2,212		—		—		2,212			—
Total derivative contracts	$	10,605,839	$	379,296	$	10,584,538	$	374,177	$	229,887		$	173,917


¹	Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract.


²	Derivative contracts are recorded on a net basis in the balance sheet in recognition of master netting agreements that enable the Company to settle all derivative positions with a given counterparty in total and to offset the net derivative position with the related cash collateral.


³	Includes interest rate swaps used by borrowers to modify interest rate terms of their loans and to be announced securities used by mortgage banking customers to hedge their loan production.

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The following summarizes the pre-tax net gains (losses) on derivative instruments and where they are recorded in the income statement (in thousands):

	Three Months Ended				Three Months Ended
	June 30, 2012				June 30, 2011
	Brokerage and Trading Revenue		Gain (Loss) on Derivatives, Net		Brokerage and Trading Revenue			Gain (Loss) on Derivatives, Net
Customer Risk Management Programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	186	$	—	$	(648	)	$	—
Interest rate swaps	1,231		—		672			—
Energy contracts	2,588		—		912			—
Agricultural contracts	92		—		92			—
Foreign exchange contracts	125		—		118			—
Equity option contracts	—		—		—			—
Total Customer Derivatives	4,222		—		1,146			—
Interest Rate Risk Management Programs	—		2,345		—			1,225
Total Derivative Contracts	$	4,222	$	2,345	$	1,146		$	1,225



	Six Months Ended					Six Months Ended
	June 30, 2012					June 30, 2011
	Brokerage and Trading Revenue		Gain (Loss) on Derivatives, Net			Brokerage and Trading Revenue			Gain (Loss) on Derivatives, Net
Customer Risk Management Programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	1,307	$	—		$	(4,055	)	$	—
Interest rate swaps	2,144		—			1,542			—
Energy contracts	4,898		—			4,399			—
Agricultural contracts	183		—			160			—
Foreign exchange contracts	331		—			227			—
Equity option contracts	—		—			—			—
Total Customer Derivatives	8,863		—			2,273			—
Interest Rate Risk Management Programs	—		(128		)	—			(1,348		)
Total Derivative Contracts	$	8,863	$	(128	)	$	2,273		$	(1,348	)

Customer Risk Management Programs

BOK Financial offers programs to permit its customers to manage various risks, including fluctuations in energy, cattle and other agricultural products, interest rates and foreign exchange rates, or to take positions in derivative contracts. Derivative contracts are executed between the customers and BOK Financial. Offsetting contracts are executed between BOK Financial and other selected counterparties to minimize its risk of changes in commodity prices, interest rates or foreign exchange rates. The counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to BOK Financial as profit and compensation for administrative costs and credit risk which is recognized over the life of the contracts and included in other operating revenue – brokerage and trading revenue in the Consolidated Statements of Earnings.

Interest Rate Risk Management Programs

BOK Financial may use interest rate swaps in managing its interest rate sensitivity and as part of its economic hedge of the change in the fair value of mortgage servicing rights. Interest rate swaps are generally used to reduce overall asset sensitivity by converting specific fixed rate liabilities to floating rate based on LIBOR. Net interest revenue was not significantly impacted by the settlement of amounts receivable or payable on interest rate swaps for the three and six months ended June 30, 2012 and

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2011 , respectively. As of June 30, 2012 , BOK Financial had interest rate swaps with a notional value of $66 million used as part of the economic hedge of the change in the fair value of the mortgage servicing rights.

As discussed in Note 5, certain derivative contracts not designated as hedging instruments related to mortgage loan commitments and forward sales contracts are included in Residential mortgage loans held for sale on the Consolidated Balance Sheets. See Note 5, for additional discussion of notional, fair value and impact on earnings of these contracts. Forward sales contracts are not considered swaps under the Commodity and Futures Trading Commission final rules.

None of these derivative contracts have been designated as hedging instruments.

(4) Loans and Allowances for Credit Losses

Loans are either secured or unsecured based on the type of loan and the financial condition of the borrower. Repayment is generally expected from cash flow or proceeds from the sale of selected assets of the borrower. BOK Financial is exposed to risk of loss on loans due to the borrower’s difficulties, which may arise from any number of factors, including problems within the respective industry or local economic conditions. Access to collateral, in the event of borrower default, is reasonably assured through adherence to applicable lending laws and through sound lending standards and credit review procedures.

Performing loans may be renewed under then current collateral value, debt service ratio and other underwriting standards. Nonperforming loans may be renewed and will remain on nonaccrual status. Nonperforming loans renewed will be evaluated and may be charged off if the loan balance is no longer covered by the paying capacity of the borrower based on an evaluation of available cash resources and collateral value.

Interest is accrued at the applicable interest rate on the principal amount outstanding. Loans are placed on nonaccrual status when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are individually evaluated for nonaccrual status quarterly. Non-risk graded loans are generally placed on nonaccrual status when more than 90 days past due. Interest previously accrued but not collected is charged against interest income when the loan is placed on nonaccrual status. Payments on nonaccrual loans are applied to principal or reported as interest income, according to management’s judgment as to the collectability of principal. Loans may be returned to accruing status when, in the opinion of management, full collection of principal and interest, including principal previously charged off, is probable based on improvements in the borrower’s financial condition or a sustained period of performance.

All distressed commercial and commercial real estate loans are placed on nonaccrual status. Modifications of nonaccruing loans to distressed borrowers generally consists of extension of payment terms, renewal of matured nonaccruing loans or interest rate concession. Principal and accrued but unpaid interest is not forgiven. Renewed or modified nonaccruing loans are charged off when the loan balance is no longer covered by the paying capacity of the borrower based on a quarterly evaluation of cash resources and collateral value. Renewed or modified nonperforming loans generally remain on nonaccrual status until full collection of principal and interest in accordance with original terms, including principal previously charged off, is probable. Consumer loans to troubled borrowers are not voluntarily modified.

Residential mortgage loans are modified in accordance with U.S. government agency guidelines by reducing interest rates and extending the number of payments. No unpaid principal or interest is forgiven. Interest guaranteed by U.S. government agencies under residential mortgage loan programs continues to accrue based on the modified terms of the loan. Renegotiated loans may be sold after a period of satisfactory performance. If it becomes probable that all amounts due according to the modified loan terms will not be collected, the loan is placed on nonaccrual status and included in nonaccrual loans.

Loan origination and commitment fees and direct loan acquisition and origination costs are deferred and amortized as an adjustment to yield over the life of the loan or over the commitment period, as applicable.

Certain residential mortgage loans originated by the Company are held for sale and are carried at fair value based on sales commitments or market quotes and reported separately in the Consolidated Balance Sheets. Changes in fair value are recorded in other operating revenue – mortgage banking revenue in the Consolidated Statements of Earnings.

Loans are disaggregated into portfolio segments and further disaggregated into classes. The portfolio segment is the level at which the Company develops and documents a systematic method for determining its allowance for credit losses. Classes are a further disaggregation of portfolio segments based on the risk characteristics of the loans and the Company’s method for monitoring and assessing credit risk.

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Portfolio segments of the loan portfolio are as follows (in thousands):



	June 30, 2012								December 31, 2011
	Fixed Rate		Variable Rate		Non-accrual		Total		Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	3,536,199	$	3,481,816	$	34,529	$	7,052,544	$	3,261,344	$	3,224,915	$	68,811	$	6,555,070
Commercial real estate	864,077		1,181,923		80,214		2,126,214		896,820		1,295,290		99,193		2,291,303
Residential mortgage	1,708,252		274,118		22,727		2,005,097		1,646,554		298,206		29,767		1,974,527
Consumer	200,897		184,667		7,012		392,576		245,711		199,617		3,515		448,843
Total	$	6,309,425	$	5,122,524	$	144,482	$	11,576,431	$	6,050,429	$	5,018,028	$	201,286	$	11,269,743
Accruing loans past due (90 days) ¹							$	691							$	2,496



	June 30, 2011
	Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	2,847,559	$	3,269,321	$	53,365	$	6,170,245
Commercial real estate	868,513		1,209,155		110,363		2,188,031
Residential mortgage	1,517,676		322,585		31,693		1,871,954
Consumer	296,595		205,970		4,749		507,314
Total	$	5,530,343	$	5,007,031	$	200,170	$	10,737,544
Accruing loans past due (90 days) ¹							$	2,341


¹	Excludes residential mortgage loans guaranteed by agencies of the U.S. government

At June 30, 2012 , $5.3 billion or 46% of the total loan portfolio is to businesses and individuals in Oklahoma and $3.5 billion or 30% of our total loan portfolio is to businesses and individuals in Texas. These geographic concentrations subject the loan portfolio to the general economic conditions within these areas.

Commercial

Commercial loans represent loans for working capital, facilities acquisition or expansion, purchases of equipment and other needs of commercial customers primarily located within our geographical footprint. Commercial loans are underwritten individually and represent on-going relationships based on a thorough knowledge of the customer, the customer’s industry and market. While commercial loans are generally secured by the customer’s assets including real property, inventory, accounts receivable, operating equipment, interest in mineral rights and other property and may also include personal guarantees of the owners and related parties, the primary source of repayment of the loans is the on-going cash flow from operations of the customer’s business. Inherent lending risk is centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with commercial lending policies.

At June 30, 2012 , commercial loans to businesses in Oklahoma totaled $3.1 billion or 44% of the commercial loan portfolio segment and loans to businesses in Texas totaled $2.4 billion or 34% of the commercial loan portfolio segment. The commercial loan portfolio segment is further divided into loan classes. The energy loan class totaled $2.2 billion or 20% of total loans at June 30, 2012 , including $2.0 billion of outstanding loans to energy producers. Approximately 55% of committed production loans are secured by properties primarily producing oil and 45% are secured by properties producing natural gas. The services loan class totaled $1.9 billion at June 30, 2012 . Approximately $1.0 billion of loans in the services category consists of loans with individual balances of less than $10 million . Businesses included in the services class include community foundations, communications, education, gaming and transportation.

Commercial Real Estate

Commercial real estate loans are for the construction of buildings or other improvements to real estate and property held by borrowers for investment purposes primarily within our geographical footprint. We require collateral values in excess of the loan amounts, demonstrated cash flows in excess of expected debt service requirements, equity investment in the project and a

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portion of the project already sold, leased or permanent financing already secured. The expected cash flows from all significant new or renewed income producing property commitments are stress tested to reflect the risks in varying interest rates, vacancy rates and rental rates. As with commercial loans, inherent lending risks are centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with applicable lending policies.

At June 30, 2012 , 32% of commercial real estate loans are secured by properties primarily located in the Dallas and Houston areas of Texas. An additional 30% of commercial real estate loans are secured by properties located primarily in the Tulsa and Oklahoma City metropolitan areas of Oklahoma.

Residential Mortgage and Consumer

Residential mortgage loans provide funds for our customers to purchase or refinance their primary residence or to borrow against the equity in their home. Residential mortgage loans are secured by a first or second-mortgage on the customer’s primary residence. Consumer loans include direct loans secured by and for the purchase of automobiles, recreational and marine equipment as well as other unsecured loans. Consumer loans also include indirect automobile loans made through primary dealers. Residential mortgage and consumer loans are made in accordance with underwriting policies we believe to be conservative and are fully documented. Credit scoring is assessed based on significant credit characteristics including credit history, residential and employment stability. Residential mortgage loans retained in the Company’s portfolio are primarily composed of various mortgage programs to support customer relationships including jumbo mortgage loans, non-builder construction loans and special loan programs for high net worth individuals and certain professionals. Jumbo loans may be fixed or variable rate and are fully amortizing. Jumbo loans generally conform to government sponsored entity standards, except that the loan size exceeds maximums required under these standards. These loans generally require a minimum FICO score of 720 and a maximum debt-to-income ratio (“DTI”) of 38% . Loan-to-value (“LTV”) ratios are tiered from 60% to 100% , depending on the market. Special mortgage programs include fixed and variable fully amortizing loans tailored to the needs of certain healthcare professionals. Variable rate loans are fully indexed at origination and may have fixed rates for three to ten years, then adjust annually thereafter.

At June 30, 2012 , residential mortgage loans included $168 million of loans guaranteed by U.S. government agencies previously sold into GNMA mortgage pools. These loans either have been repurchased or are eligible to be repurchased by the Company when certain defined delinquency criteria are met. Although payments on these loans generally are past due more than 90 days, interest continues to accrue based on the government guarantee.

Home equity loans totaled $696 million at June 30, 2012 . Approximately, 39% of the home equity portfolio is comprised of junior lien loans and 61% of the home equity loan portfolio is comprised of first lien loans. Junior lien loans are distributed 79% to amortizing term loans and 21% to revolving lines of credit. Home equity loans generally require a minimum FICO score of 700 and a maximum DTI of 40%. The maximum loan amount available for our home equity loan products is generally $400 thousand .

Credit Commitments

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At June 30, 2012 , outstanding commitments totaled $6.1 billion . Because some commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial uses the same credit policies in making commitments as it does loans.

The amount of collateral obtained, if deemed necessary, is based upon management’s credit evaluation of the borrower.

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally, BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the underlying loan commitment. At June 30, 2012 , outstanding standby letters of credit totaled $449 million . Commercial letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is consummated. At June 30, 2012 , outstanding commercial letters of credit totaled $8 million .

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Allowances for Credit Losses

BOK Financial maintains an allowance for loan losses and an accrual for off-balance sheet credit risk related to commitments to extend credit and standby letters of credit. As discussed in greater detail in Note 5, the Company also has separate accruals related to off-balance sheet credit risk related to residential mortgage loans previously sold with full or partial recourse and for residential mortgage loans sold to government sponsored agencies under standard representations and warranties.

The appropriateness of the allowance for loan losses and accrual for off-balance sheet credit losses is assessed by management based on an on-going quarterly evaluation of the probable estimated losses inherent in the portfolio, including probable losses on both outstanding loans and unused commitments.

The allowance for loan losses consists of specific allowances attributed to impaired loans that have not yet been charged down to amounts we expect to recover, general allowances for unimpaired loans based on estimated loss rates by loan class and nonspecific allowances based on general economic conditions, risk concentration and related factors. There have been no material changes in the approach or techniques utilized in developing the allowance for loan losses and the accrual for off-balance sheet credit losses for the three and six months ended June 30, 2012 .

Internally risk graded loans are evaluated individually for impairment. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on evaluation of the borrowers' ability to repay. Certain commercial loans and most residential mortgage and consumer loans are small balance, homogeneous pools of loans that are not risk graded.

Loans are considered to be impaired when it becomes probable that BOK Financial will be unable to collect all amounts due according to the contractual terms of the loan agreements. This is substantially the same criteria used to determine when a loan should be placed on nonaccrual status. All commercial and commercial real estate loans that have been modified in a troubled debt restructuring are considered to be impaired and remain classified as nonaccrual. Specific allowances for impaired loans are measured by an evaluation of estimated future cash flows discounted at the loans’ initial effective interest rate or the fair value of collateral for certain collateral dependent loans. Collateral value of real property is generally based on third party appraisals that conform to Uniform Standards of Professional Appraisal Practice, less estimated selling costs. Appraised values are on an "as-is" basis and are not adjusted by the Company. Collateral value of mineral rights is generally determined by our internal staff of engineers based on projected cash flows under current market conditions. Collateral values and available cash resources that support impaired loans are evaluated quarterly. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values have declined. Historical statistics may be used in limited situations to assist in estimating future cash flows or collateral values, such as when an impaired collateral dependent loan is identified at the end of a reporting period. Historical statistics are a practical way to estimate impairment until an updated appraisal of collateral value is received or a full assessment of future cash flows is completed. Estimates of future cash flows and collateral values require significant judgments and are subject to volatility.

General allowances for unimpaired loans are based on estimated loss rates by loan class. For risk-graded loans, loss rates are developed using historical gross loss rates, as adjusted for changes in risk grading and inherent risks identified by loan class. Loss rates for each loan class are determined by the current loss rate based on the most recent twelve months or a long-term gross loss rate that most appropriately represents the current economic environment. For each loan class, current average risk grades are compared to long-term average risk grades to determine if risk is increasing or decreasing. Loss rates are accordingly adjusted upward or downward in proportion to increasing or decreasing risk. Historical loss rates may be further adjusted for inherent risks identified for the given loan class which have not yet been captured in the actual gross loss rates or risk gradings.

An accrual for off-balance sheet credit losses is included in Other liabilities in the Consolidated Balance Sheets. The appropriateness of this accrual is determined in the same manner as the allowance for loan losses. Changes in the accrual for off-balance sheet credit losses are recognized through the provision for credit losses in the Consolidated Statements of Earnings.

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The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended June 30, 2012 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific allowance			Total
Allowance for loan losses:
Beginning balance	$	85,972		$	62,742		$	41,628		$	9,517		$	44,350		$	244,209
Provision for loan losses	(2,526		)	(6,264		)	4,371			212			(3,492		)	(7,699		)
Loans charged off	(4,094		)	(1,216		)	(4,061		)	(2,172		)	—			(11,543		)
Recoveries	4,125			544			750			1,283			—			6,702
Ending balance	$	83,477		$	55,806		$	42,688		$	8,840		$	40,858		$	231,669
Allowance for off-balance sheet credit losses:
Beginning balance	$	8,362		$	1,575		$	82		$	29		$	—		$	10,048
Provision for off-balance sheet credit losses	(138		)	(150		)	(2		)	(11		)	—			(301		)
Ending balance	$	8,224		$	1,425		$	80		$	18		$	—		$	9,747

Total provision for credit losses	$	(2,664	)	$	(6,414	)	$	4,369		$	201		$	(3,492	)	$	(8,000	)

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the six months ended June 30, 2012 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific allowance			Total
Allowance for loan losses:
Beginning balance	$	83,443		$	67,034		$	46,476		$	10,178		$	46,350		$	253,481
Provision for loan losses	991			(5,143		)	898			260			(5,492		)	(8,486		)
Loans charged off	(7,028		)	(7,941		)	(5,847		)	(4,401		)	—			(25,217		)
Recoveries	6,071			1,856			1,161			2,803			—			11,891
Ending balance	$	83,477		$	55,806		$	42,688		$	8,840		$	40,858		$	231,669
Allowance for off-balance sheet credit losses:
Beginning balance	$	7,906		$	1,250		$	91		$	14		$	—		$	9,261
Provision for off-balance sheet credit losses	318			175			(11		)	4			—			486
Ending balance	$	8,224		$	1,425		$	80		$	18		$	—		$	9,747

Total provision for credit losses	$	1,309		$	(4,968	)	$	887		$	264		$	(5,492	)	$	(8,000	)

- 82 -



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific allowance		Total
Allowance for loan losses:
Beginning balance	$	113,706		$	94,535		$	45,649		$	10,410		$	25,249	$	289,549
Provision for loan losses	980			289			2,721			(286		)	1,876		5,580
Loans charged off	(3,302		)	(3,380		)	(3,381		)	(2,711		)	—		(12,774		)
Recoveries	2,187			306			254			1,509			—		4,256
Ending balance	$	113,571		$	91,750		$	45,243		$	8,922		$	27,125	$	286,611
Allowance for off-balance sheet credit losses:
Beginning balance	$	12,256		$	875		$	155		$	339		$	—	$	13,625
Provision for off-balance sheet credit losses	(3,020		)	145			25			(30		)	—		(2,880		)
Ending balance	$	9,236		$	1,020		$	180		$	309		$	—	$	10,745

Total provision for credit losses	$	(2,040	)	$	434		$	2,746		$	(316	)	$	1,876	$	2,700



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific allowance		Total
Allowance for loan losses:
Beginning balance	$	104,631		$	98,709		$	50,281		$	12,614		$	26,736	$	292,971
Provision for loan losses	10,836			2,665			(45		)	(1,369		)	389		12,476
Loans charged off	(5,654		)	(10,273		)	(6,329		)	(5,750		)	—		(28,006		)
Recoveries	3,758			649			1,336			3,427			—		9,170
Ending balance	$	113,571		$	91,750		$	45,243		$	8,922		$	27,125	$	286,611
Allowance for off-balance sheet credit losses:
Beginning balance	$	13,456		$	443		$	131		$	241		$	—	$	14,271
Provision for off-balance sheet credit losses	(4,220		)	577			49			68			—		(3,526		)
Ending balance	$	9,236		$	1,020		$	180		$	309		$	—	$	10,745

Total provision for credit losses	$	6,616		$	3,242		$	4		$	(1,301	)	$	389	$	8,950

A provision for credit losses is charged against earnings in amounts necessary to maintain an appropriate allowance for loan and accrual for off-balance sheet credit losses. All loans are charged off when the loan balance or a portion of the loan balance is no longer covered by the paying capacity of the borrower based on an evaluation of available cash resources and collateral value. Internally risk graded loans are evaluated quarterly and charge-offs are taken in the quarter in which the loss is identified. Non-risk graded loans are generally charged off when payments are between 90 days and 180 days past due, depending on loan class. Recoveries of loans previously charged off are added to the allowance.

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The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 30, 2012 is as follows (in thousands):



	Collectively Measured for Impairment				Individually Measured for Impairment				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	7,018,115	$	83,199	$	34,429	$	278	$	7,052,544	$	83,477
Commercial real estate	2,046,006		54,526		80,208		1,280		2,126,214		55,806
Residential mortgage	1,997,887		42,453		7,210		235		2,005,097		42,688
Consumer	388,106		8,798		4,470		42		392,576		8,840
Total	11,450,114		188,976		126,317		1,835		11,576,431		190,811

Nonspecific allowance	—		—		—		—		—		40,858

Total	$	11,450,114	$	188,976	$	126,317	$	1,835	$	11,576,431	$	231,669

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 2011 is as follows (in thousands):



	Collectively Measured for Impairment				Individually Measured for Impairment				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	6,486,311	$	81,907	$	68,759	$	1,536	$	6,555,070	$	83,443
Commercial real estate	2,192,110		63,092		99,193		3,942		2,291,303		67,034
Residential mortgage	1,967,086		46,178		7,441		298		1,974,527		46,476
Consumer	447,747		10,178		1,096		—		448,843		10,178
Total	11,093,254		201,355		176,489		5,776		11,269,743		207,131

Nonspecific allowance	—		—		—		—		—		46,350

Total	$	11,093,254	$	201,355	$	176,489	$	5,776	$	11,269,743	$	253,481

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 30, 2011 is as follows (in thousands):



	Collectively Measured for Impairment				Individually Measured for Impairment				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	6,117,083	$	111,131	$	53,162	$	2,440	$	6,170,245	$	113,571
Commercial real estate	2,077,668		88,611		110,363		3,139		2,188,031		91,750
Residential mortgage	1,861,069		44,254		10,885		989		1,871,954		45,243
Consumer	505,393		8,807		1,921		115		507,314		8,922
Total	10,561,213		252,803		176,331		6,683		10,737,544		259,486

Nonspecific allowance	—		—		—		—		—		27,125

Total	$	10,561,213	$	252,803	$	176,331	$	6,683	$	10,737,544	$	286,611

- 84 -

Credit Quality Indicators

The Company utilizes loan class and risk grading as a primary credit quality indicator. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on a quarterly evaluation of the borrowers’ ability to repay the loans. Certain commercial loans and most residential mortgage and consumer loans are small, homogeneous pools that are not risk graded.

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at June 30, 2012 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	7,034,934	$	82,357	$	17,610	$	1,120	$	7,052,544	$	83,477
Commercial real estate	2,126,208		55,806		6		—		2,126,214		55,806
Residential mortgage	283,031		6,987		1,722,066		35,701		2,005,097		42,688
Consumer	201,044		1,895		191,532		6,945		392,576		8,840
Total	9,645,217		147,045		1,931,214		43,766		11,576,431		190,811

Nonspecific allowance	—		—		—		—		—		40,858

Total	$	9,645,217	$	147,045	$	1,931,214	$	43,766	$	11,576,431	$	231,669

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at December 31, 2011 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	6,536,602	$	82,263	$	18,468	$	1,180	$	6,555,070	$	83,443
Commercial real estate	2,291,303		67,034		—		—		2,291,303		67,034
Residential mortgage	317,798		8,262		1,656,729		38,214		1,974,527		46,476
Consumer	217,195		2,527		231,648		7,651		448,843		10,178
Total	9,362,898		160,086		1,906,845		47,045		11,269,743		207,131

Nonspecific allowance	—		—		—		—		—		46,350

Total	$	9,362,898	$	160,086	$	1,906,845	$	47,045	$	11,269,743	$	253,481

- 85 -

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at June 30, 2011 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	6,151,384	$	111,392	$	18,861	$	2,179	$	6,170,245	$	113,571
Commercial real estate	2,188,031		91,750		—		—		2,188,031		91,750
Residential mortgage	355,102		7,911		1,516,852		37,332		1,871,954		45,243
Consumer	220,300		1,877		287,014		7,045		507,314		8,922
Total	8,914,817		212,930		1,822,727		46,556		10,737,544		259,486

Nonspecific allowance	—		—		—		—		—		27,125

Total	$	8,914,817	$	212,930	$	1,822,727	$	46,556	$	10,737,544	$	286,611

Loans are considered to be performing if they are in compliance with the original terms of the agreement which is consistent with the regulatory guideline of “pass.” Performing also includes loans considered to be “other loans especially mentioned” by regulatory guideline. Other loans especially mentioned are in compliance with the original terms of the agreement but may have a weakness that deserves management’s close attention. Performing loans also include past due residential mortgages that are guaranteed by agencies of the U.S. government.

The risk grading process identified certain criticized loans as potential problem loans. These loans have a well-defined weakness (e.g. inadequate debt service coverage or liquidity or marginal capitalization; repayment may depend on collateral or other risk mitigation) that may jeopardize liquidation of the debt and represent a greater risk due to deterioration in the financial condition of the borrower. This is consistent with the regulatory guideline for “substandard.” Because the borrowers are still performing in accordance with the original terms of the loan agreements, these loans were not placed in nonaccrual status. Known information does, however, cause concern as to the borrowers’ continued compliance with current repayment terms. Nonaccrual loans represent loans for which full collection of principal and interest is uncertain. This is substantially the same criteria used to determine whether a loan is impaired and includes certain loans considered “substandard” and all loans considered “doubtful” by regulatory guidelines.

- 86 -

The following table summarizes the Company’s loan portfolio at June 30, 2012 by the risk grade categories (in thousands):



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,264,290	$	10,959	$	3,087	$	—	$	—	$	2,278,336
Services	1,881,143		40,254		10,123		—		—		1,931,520
Wholesale/retail	944,412		11,597		4,175		—		—		960,184
Manufacturing	340,815		9,832		12,230		—		—		362,877
Healthcare	1,004,773		1,045		3,310		—		—		1,009,128
Integrated food services	216,282		696		—		—		—		216,978
Other commercial and industrial	274,082		325		1,504		17,510		100		293,521
Total commercial	6,925,797		74,708		34,429		17,510		100		7,052,544

Commercial real estate:
Construction and land development	214,263		26,746		46,050		—		—		287,059
Retail	476,179		8,290		7,908		—		—		492,377
Office	361,451		12,352		10,589		—		—		384,392
Multifamily	352,269		6,677		3,219		—		—		362,165
Industrial	230,760		273		—		—		—		231,033
Other commercial real estate	342,815		13,925		12,442		—		6		369,188
Total commercial real estate	1,977,737		68,263		80,208		—		6		2,126,214

Residential mortgage:
Permanent mortgage	262,423		13,398		7,210		847,414		10,926		1,141,371
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		168,059		—		168,059
Home equity	—		—		—		691,076		4,591		695,667
Total residential mortgage	262,423		13,398		7,210		1,706,549		15,517		2,005,097

Consumer:
Indirect automobile	—		—		—		60,667		2,257		62,924
Other consumer	193,521		3,053		4,470		128,323		285		329,652
Total consumer	193,521		3,053		4,470		188,990		2,542		392,576

Total	$	9,359,478	$	159,422	$	126,317	$	1,913,049	$	18,165	$	11,576,431

- 87 -

The following table summarizes the Company’s loan portfolio at December 31, 2011 by the risk grade categories (in thousands):



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,003,288	$	1,417	$	336	$	—	$	—	$	2,005,041
Services	1,713,232		31,338		16,968		—		—		1,761,538
Wholesale/retail	912,090		34,156		21,180		—		—		967,426
Manufacturing	311,292		2,390		23,051		—		—		336,733
Healthcare	969,260		3,414		5,486		—		—		978,160
Integrated food services	203,555		756		—		—		—		204,311
Other commercial and industrial	281,645		10		1,738		18,416		52		301,861
Total commercial	6,394,362		73,481		68,759		18,416		52		6,555,070

Commercial real estate:
Construction and land development	252,936		27,244		61,874		—		—		342,054
Retail	499,295		3,244		6,863		—		—		509,402
Office	381,918		12,548		11,457		—		—		405,923
Multifamily	357,436		8,079		3,513		—		—		369,028
Industrial	277,906		280		—		—		—		278,186
Other commercial real estate	355,381		15,843		15,486		—		—		386,710
Total commercial real estate	2,124,872		67,238		99,193		—		—		2,291,303

Residential mortgage:
Permanent mortgage	294,478		15,879		7,441		817,921		17,925		1,153,644
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		188,462		—		188,462
Home equity	—		—		—		628,020		4,401		632,421
Total residential mortgage	294,478		15,879		7,441		1,634,403		22,326		1,974,527

Consumer:
Indirect automobile	—		—		—		102,955		2,194		105,149
Other consumer	212,150		3,949		1,096		126,274		225		343,694
Total consumer	212,150		3,949		1,096		229,229		2,419		448,843

Total	$	9,025,862	$	160,547	$	176,489	$	1,882,048	$	24,797	$	11,269,743

- 88 -

The following table summarizes the Company’s loan portfolio at June 30, 2011 by the risk grade categories (in thousands):



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	1,705,073	$	4,688	$	345	$	—	$	—	$	1,710,106
Services	1,675,545		33,490		16,254		—		—		1,725,289
Wholesale/retail	988,076		40,935		25,138		—		—		1,054,149
Manufacturing	360,221		2,827		4,366		—		—		367,414
Healthcare	846,790		2,992		5,962		—		—		855,744
Integrated food services	186,573		1,260		—		—		—		187,833
Other commercial and industrial	246,342		3,410		1,097		18,658		203		269,710
Total commercial	6,008,620		89,602		53,162		18,658		203		6,170,245

Commercial real estate:
Construction and land development	280,210		15,750		76,265		—		—		372,225
Retail	438,129		7,013		4,642		—		—		449,784
Office	459,507		14,751		11,473		—		—		485,731
Multifamily	323,964		5,860		4,717		—		—		334,541
Industrial	159,518		288		—		—		—		159,806
Other commercial real estate	351,640		21,038		13,266		—		—		385,944
Total commercial real estate	2,012,968		64,700		110,363		—		—		2,188,031

Residential mortgage:
Permanent mortgage	330,464		13,752		10,885		783,084		17,106		1,155,291
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		134,458		—		134,458
Home equity	—		—		—		578,503		3,702		582,205
Total residential mortgage	330,464		13,752		10,885		1,496,045		20,808		1,871,954

Consumer:
Indirect automobile	—		—		—		159,771		2,729		162,500
Other consumer	215,056		3,245		1,921		124,493		99		344,814
Total consumer	215,056		3,245		1,921		284,264		2,828		507,314

Total	$	8,567,108	$	171,299	$	176,331	$	1,798,967	$	23,839	$	10,737,544

- 89 -

Impaired Loans

Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement.

A summary of risk-graded impaired loans follows (in thousands):

	As of										For the				For the
	June 30, 2012										Three Months Ended				Six Months Ended
			Recorded Investment								June 30, 2012				June 30, 2012
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial:
Energy	$	3,297	$	3,087	$	3,087	$	—	$	—	$	1,712	$	—	$	1,712	$	—
Services	18,858		10,123		9,996		127		127		11,507		—		13,546		—
Wholesale/retail	5,763		4,175		4,096		79		20		9,782		—		12,678		—
Manufacturing	15,864		12,230		12,230		—		—		17,816		—		17,641		—
Healthcare	4,400		3,310		2,069		1,241		131		5,628		—		4,398		—
Integrated food services	—		—		—		—		—		—		—		—		—
Other commercial and industrial	9,003		1,504		1,504		—		—		1,609		—		1,621		—
Total commercial	57,185		34,429		32,982		1,447		278		48,054		—		51,596		—

Commercial real estate:
Construction and land development	78,447		46,050		45,477		573		155		49,233		—		53,962		—
Retail	9,395		7,908		5,541		2,367		905		7,051		—		7,386		—
Office	13,744		10,589		10,364		225		21		10,661		—		11,023		—
Multifamily	3,333		3,219		3,219		—		—		3,317		—		3,366		—
Industrial	—		—		—		—		—		—		—		—		—
Other real estate loans	14,744		12,442		11,518		924		199		13,081		—		13,964		—
Total commercial real estate	119,663		80,208		76,119		4,089		1,280		83,343		—		89,701		—

Residential mortgage:
Permanent mortgage	8,421		7,210		6,593		617		235		7,361		—		7,326		—
Home equity	—		—		—		—		—		—		—		—		—
Total residential mortgage	8,421		7,210		6,593		617		235		7,361		—		7,326		—

Consumer:
Indirect automobile	—		—		—		—		—		—		—		—		—
Other consumer	5,056		4,470		4,428		42		42		4,621		—		2,784		—
Total consumer	5,056		4,470		4,428		42		42		4,621		—		2,784		—

Total	$	190,325	$	126,317	$	120,122	$	6,195	$	1,835	$	143,379	$	—	$	151,407	$	—

Generally, no interest income is recognized on impaired loans until all principal balances, including amounts charged-off, have been recovered.

- 90 -

A summary of risk-graded impaired loans at December 31, 2011 follows (in thousands):



			Recorded Investment
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance
Commercial:
Energy	$	336	$	336	$	336	$	—	$	—
Services	26,916		16,968		16,200		768		360
Wholesale/retail	24,432		21,180		19,702		1,478		1,102
Manufacturing	26,186		23,051		23,051		—		—
Healthcare	6,825		5,486		5,412		74		74
Integrated food services	—		—		—		—		—
Other commercial and industrial	9,237		1,738		1,738		—		—
Total commercial	93,932		68,759		66,439		2,320		1,536

Commercial real estate:
Construction and land development	98,053		61,874		56,740		5,134		1,777
Retail	8,645		6,863		4,373		2,490		1,062
Office	14,588		11,457		9,567		1,890		291
Multifamily	3,512		3,513		3,513		—		—
Industrial	—		—		—		—		—
Other real estate loans	16,702		15,486		7,887		7,599		812
Total commercial real estate	141,500		99,193		82,080		17,113		3,942

Residential mortgage:
Permanent mortgage	8,697		7,441		4,980		2,461		298
Home equity	—		—		—		—		—
Total residential mortgage	8,697		7,441		4,980		2,461		298

Consumer:
Indirect automobile	—		—		—		—		—
Other consumer	1,727		1,096		1,096		—		—
Total consumer	1,727		1,096		1,096		—		—

Total	$	245,856	$	176,489	$	154,595	$	21,894	$	5,776

- 91 -

A summary of risk-graded impaired loans follows (in thousands):

	As of										For the				For the
	June 30, 2011										Three Months Ended				Six Months Ended
			Recorded Investment								June 30, 2011				June 30, 2011
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial:
Energy	$	345	$	345	$	345	$	—	$	—	$	380	$	—	$	405	$	—
Services	26,441		16,254		15,525		729		273		15,987		—		17,758		—
Wholesale/retail	31,770		25,138		22,751		2,387		1,742		27,775		—		16,812		—
Manufacturing	9,259		4,366		2,012		2,354		259		4,456		—		3,241		—
Healthcare	7,659		5,962		5,103		859		166		4,268		—		4,748		—
Integrated food services	—		—		—		—		—		3		—		7		—
Other commercial and industrial	8,596		1,097		1,097		—		—		2,363		—		2,772		—
Total commercial	84,070		53,162		46,833		6,329		2,440		55,232		—		45,743		—

Commercial real estate:
Construction and land development	115,337		76,265		65,094		11,171		1,966		83,486		—		87,922		—
Retail	5,652		4,642		1,855		2,787		612		4,959		—		4,810		—
Office	14,749		11,473		9,713		1,760		207		13,051		—		15,564		—
Multifamily	5,381		4,717		4,717		—		—		3,309		—		5,721		—
Industrial	—		—		—		—		—		—		—		2,044		—
Other real estate loans	15,203		13,266		11,755		1,511		354		13,130		—		14,305		—
Total commercial real estate	156,322		110,363		93,134		17,229		3,139		117,935		—		130,366		—

Residential mortgage:
Permanent mortgage	12,122		10,885		5,016		5,869		989		11,479		—		11,475		—
Home equity	—		—		—		—		—		—		—		—		—
Total residential mortgage	12,122		10,885		5,016		5,869		989		11,479		—		11,475		—

Consumer:
Indirect automobile	—		—		—		—		—		—		—		—		—
Other consumer	2,449		1,921		1,348		573		115		2,244		—		1,836		—
Total consumer	2,449		1,921		1,348		573		115		2,244		—		1,836		—

Total	$	254,963	$	176,331	$	146,331	$	30,000	$	6,683	$	186,890	$	—	$	189,420	$	—

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Troubled Debt Restructurings

Troubled debt restructurings of internally risk graded impaired loans at June 30, 2012 were as follows (in thousands):



	As of								Amounts Charged-off
	June 30, 2012								During:
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three months ended June 30, 2012		Six months ended June 30, 2012
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	2,700		1,381		1,319		—		—		—
Wholesale/retail	1,612		1,428		184		20		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	77		77		—		—		—		—
Integrated food services	—		—		—		—		—		—
Other commercial and industrial	779		—		779		—		—		—
Total commercial	5,168		2,886		2,282		20		—		—

Commercial real estate:
Construction and land development	18,217		4,238		13,979		76		769		2,579
Retail	3,618		3,618		—		—		—		—
Office	3,387		2,489		898		—		—		269
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other real estate loans	5,730		1,933		3,797		103		—		2,182
Total commercial real estate	30,952		12,278		18,674		179		769		5,030

Residential mortgage:
Permanent mortgage	4,646		4,327		319		54		121		145
Home equity	—		—		—		—		—		—
Total residential mortgage	4,646		4,327		319		54		121		145

Consumer:
Indirect automobile	—		—		—		—		—		—
Other consumer	3,502		3,502		—		—		—		—
Total consumer	3,502		3,502		—		—		—		—

Total	$	44,268	$	22,993	$	21,275	$	253	$	890	$	5,175

The financial impact of troubled debt restructurings primarily consist of specific allowances for credit losses and principal amounts charged off. Internally risk graded loans that have been modified in troubled debt restructurings generally remain classified as nonaccruing. Other financial impacts, such as foregone interest, are not material to the financial statements.

In addition to risk graded loans discussed above, non-risk graded residential mortgage loans may be modified in troubled debt restructurings primarily consist of loans that are guaranteed by U.S. government agencies. At June 30, 2012 , approximately $11 million of the renegotiated residential mortgage loans are currently performing in accordance with the modified terms, $7.0 million are 30 to 89 days past due and $10 million are past due 90 days or more. Restructured residential mortgage loans guaranteed by agencies of the U.S. government in accordance with agency guidelines represent $25 million of our $28 million

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portfolio of renegotiated loans. All renegotiated loans past due 90 days or more are guaranteed by U.S. government agencies.

Troubled debt restructurings of internally risk graded impaired loans at December 31, 2011 were as follows (in thousands):



	As of
	December 31, 2011
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance
Commercial:
Energy	$	—	$	—	$	—	$	—
Services	3,529		1,907		1,622		—
Wholesale/retail	1,739		961		778		24
Manufacturing	—		—		—		—
Healthcare	—		—		—		—
Integrated food services	—		—		—		—
Other commercial and industrial	960		—		960		—
Total commercial	6,228		2,868		3,360		24

Commercial real estate:
Construction and land development	25,890		3,585		22,305		1,577
Retail	1,070		—		1,070		—
Office	2,496		1,134		1,362		215
Multifamily	—		—		—		—
Industrial	—		—		—		—
Other real estate loans	8,171		387		7,784		662
Total commercial real estate	37,627		5,106		32,521		2,454

Residential mortgage:
Permanent mortgage	4,103		1,396		2,707		282
Home equity	—		—		—		—
Total residential mortgage	4,103		1,396		2,707		282

Consumer:
Indirect automobile	—		—		—		—
Other consumer	168		168		—		—
Total consumer	168		168		—		—

Total	$	48,126	$	9,538	$	38,588	$	2,760

At December 31, 2011 , approximately $13 million of the renegotiated residential mortgage loans are currently performing in accordance with the modified terms, $5.8 million are 30 to 89 days past due and $14 million are past due 90 days or more. Restructured residential mortgage loans guaranteed by agencies of the U.S. government in accordance with agency guidelines represent $29 million of our $33 million portfolio of renegotiated loans. All renegotiated loans past due 90 days or more are guaranteed by U.S. government agencies.

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Nonaccrual & Past Due Loans

Past due status for all loan classes is based on the actual number of days since the last payment was due according to the contractual terms of the loans.

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2012 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,272,989	$	2,260	$	—	$	3,087	$	2,278,336
Services	1,917,655		3,705		37		10,123		1,931,520
Wholesale/retail	954,475		1,534		—		4,175		960,184
Manufacturing	350,647		—		—		12,230		362,877
Healthcare	1,005,538		180		100		3,310		1,009,128
Integrated food services	212,075		4,903		—		—		216,978
Other commercial and industrial	291,328		589		—		1,604		293,521
Total commercial	7,004,707		13,171		137		34,529		7,052,544

Commercial real estate:
Construction and land development	240,208		801		—		46,050		287,059
Retail	478,843		5,626		—		7,908		492,377
Office	373,278		525		—		10,589		384,392
Multifamily	358,204		742		—		3,219		362,165
Industrial	230,641		392		—		—		231,033
Other real estate loans	353,412		3,328		—		12,448		369,188
Total commercial real estate	2,034,586		11,414		—		80,214		2,126,214

Residential mortgage:
Permanent mortgage	1,107,610		15,130		495		18,136		1,141,371
Permanent mortgages guaranteed by U.S. government agencies	26,460		14,473		127,126		—		168,059
Home equity	688,821		2,211		44		4,591		695,667
Total residential mortgage	1,822,891		31,814		127,665		22,727		2,005,097

Consumer:
Indirect automobile	58,895		1,771		1		2,257		62,924
Other consumer	324,165		718		14		4,755		329,652
Total consumer	383,060		2,489		15		7,012		392,576

Total	$	11,245,244	$	58,888	$	127,817	$	144,482	$	11,576,431

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A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2011 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,003,192	$	1,065	$	448	$	336	$	2,005,041
Services	1,729,775		13,608		1,187		16,968		1,761,538
Wholesale/retail	945,776		470		—		21,180		967,426
Manufacturing	313,028		654		—		23,051		336,733
Healthcare	971,265		1,362		47		5,486		978,160
Integrated food services	204,306		—		5		—		204,311
Other commercial and industrial	298,105		1,966		—		1,790		301,861
Total commercial	6,465,447		19,125		1,687		68,811		6,555,070

Commercial real estate:
Construction and land development	278,901		1,279		—		61,874		342,054
Retail	502,167		372		—		6,863		509,402
Office	394,227		239		—		11,457		405,923
Multifamily	365,477		38		—		3,513		369,028
Industrial	278,186		—		—		—		278,186
Other real estate loans	367,643		3,444		137		15,486		386,710
Total commercial real estate	2,186,601		5,372		137		99,193		2,291,303

Residential mortgage:
Permanent mortgage	1,110,418		17,259		601		25,366		1,153,644
Permanent mortgages guaranteed by U.S. government agencies	20,998		12,163		155,301		—		188,462
Home equity	624,942		3,036		42		4,401		632,421
Total residential mortgage	1,756,358		32,458		155,944		29,767		1,974,527

Consumer:
Indirect automobile	98,345		4,581		29		2,194		105,149
Other consumer	340,087		2,286		—		1,321		343,694
Total consumer	438,432		6,867		29		3,515		448,843

Total	$	10,846,838	$	63,822	$	157,797	$	201,286	$	11,269,743

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A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2011 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	1,709,608	$	153	$	—	$	345	$	1,710,106
Services	1,703,683		3,759		1,593		16,254		1,725,289
Wholesale/retail	1,027,827		697		487		25,138		1,054,149
Manufacturing	363,048		—		—		4,366		367,414
Healthcare	849,605		177		—		5,962		855,744
Integrated food services	187,833		—		—		—		187,833
Other commercial and industrial	268,161		192		57		1,300		269,710
Total commercial	6,109,765		4,978		2,137		53,365		6,170,245

Commercial real estate:
Construction and land development	293,627		2,333		—		76,265		372,225
Retail	442,231		2,911		—		4,642		449,784
Office	471,938		2,320		—		11,473		485,731
Multifamily	329,824		—		—		4,717		334,541
Industrial	159,422		384		—		—		159,806
Other real estate loans	370,110		2,393		175		13,266		385,944
Total commercial real estate	2,067,152		10,341		175		110,363		2,188,031

Residential mortgage:
Permanent mortgage	1,108,565		18,735		—		27,991		1,155,291
Permanent mortgages guaranteed by U.S. government agencies	8,426		3,728		122,304		—		134,458
Home equity	576,045		2,450		8		3,702		582,205
Total residential mortgage	1,693,036		24,913		122,312		31,693		1,871,954

Consumer:
Indirect automobile	152,496		7,256		19		2,729		162,500
Other consumer	341,761		1,031		2		2,020		344,814
Total consumer	494,257		8,287		21		4,749		507,314

Total	$	10,364,210	$	48,519	$	124,645	$	200,170	$	10,737,544

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(5) Mortgage Banking Activities

Residential Mortgage Loan Production

The Company originates, markets and services conventional and government-sponsored residential mortgage loans. Generally, conforming fixed-rate residential mortgage loans are held for sale in the secondary market and non-conforming and adjustable-rate residential mortgage loans are held for investment. All residential mortgage loans originated for sale by the Company are carried at fair value based on sales commitments and market quotes. Changes in the fair value of mortgage loans held for sale are included in Other operating revenue – Mortgage banking revenue. Residential mortgage loans held for sale also includes the fair value of residential mortgage loan commitments and forward sale commitments which are considered derivative contracts that have not been designated as hedging instruments. The volume of mortgage loans originated for sale and secondary market prices are the primary drivers of originating and marketing revenue.

Residential mortgage loan commitments are generally outstanding for 60 to 90 days, which represents the typical period from commitment to originate a residential mortgage loan to when the closed loan is sold to an investor. Residential mortgage loan commitments are subject to both credit and interest rate risk. Credit risk is managed through underwriting policies and procedures, including collateral requirements, which are generally accepted by the secondary loan markets. Exposure to interest rate fluctuations is partially managed through forward sales of residential mortgage-backed securities and forward sales contracts. These latter contracts set the price for loans that will be delivered in the next 60 to 90 days.

The unpaid principal balance of residential mortgage loans held for sale, notional amounts of derivative contracts related to residential mortgage loans commitments and forward contract sales and their related fair values included in Mortgage loans held for sale on the Consolidated Balance Sheets were (in thousands):

	June 30, 2012					December 31, 2011					June 30, 2011
	Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value
Residential mortgage loans held for sale	$	236,160	$	247,893		$	177,319	$	184,816		$	162,579	$	167,300
Residential mortgage loan commitments	392,247		15,807			189,770		6,597			156,209		2,793
Forward sales contracts	605,856		(4,526		)	349,447		(3,288		)	302,526		(484		)
			$	259,174				$	188,125				$	169,609

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of June 30, 2012 , December 31, 2011 or June 30, 2011 . No credit losses were recognized on residential mortgage loans held for sale for the three and six month periods ended June 30, 2012 and 2011 .

Mortgage banking revenue was follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Originating and marketing revenue:
Residential mortgages loan held for sale	$	27,706		$	10,037		$	44,798		$	23,373
Residential mortgage loan commitments	6,900			(702		)	9,210			542
Forward sales contracts	(4,917		)	74			(1,238		)	(6,977		)
Total originating and marketing revenue	29,689			9,409			52,770			16,938
Servicing revenue	9,859			9,947			19,856			19,774
Total mortgage banking revenue	$	39,548		$	19,356		$	72,626		$	36,712

Originating and marketing revenue includes gain (loss) on residential mortgage loans held for sale and changes in the fair value of derivative contracts not designated as hedging instruments related to residential mortgage loan commitments and forward sales contracts. Servicing revenue includes servicing fee income and late charges on loans serviced for others.

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Residential Mortgage Servicing

Mortgage servicing rights may be recognized when mortgage loans are originated pursuant to an existing plan for sale or, if no such plan exists, when the mortgage loans are sold. Mortgage servicing rights may also be purchased. Both originated or purchased mortgage servicing rights are initially recognized at fair value. The Company has elected to carry all mortgage servicing rights at fair value. Changes in the fair value are recognized in earnings as they occur. The unpaid principal balance of loans serviced for others is the primary driver of servicing revenue.

The following represents a summary of mortgage servicing rights (Dollars in thousands):

	June 30, 2012			December 31, 2011			June 30, 2011
Number of residential mortgage loans serviced for others	96,772			95,841			96,578
Outstanding principal balance of residential mortgage loans serviced for others	$	11,564,643		$	11,300,986		$	11,283,442
Weighted average interest rate	4.99		%	5.19		%	5.36		%
Remaining term (in months)	289			290			291

Activity in capitalized mortgage servicing rights during the three months ended June 30, 2012 is as follows

(in thousands):



	Purchased			Originated			Total
Balance at March 31, 2012	$	21,204		$	76,934		$	98,138
Additions, net	—			9,275			9,275
Change in fair value due to loan runoff	(950		)	(3,230		)	(4,180		)
Change in fair value due to market changes	(3,893		)	(7,557		)	(11,450		)
Balance, June 30, 2012	$	16,361		$	75,422		$	91,783

Activity in capitalized mortgage servicing rights during the six months ended June 30, 2012 is as follows (in thousands):



	Purchased			Originated			Total
Balance, December 31, 2011	$	18,903		$	67,880		$	86,783
Additions, net	—			17,647			17,647
Change in fair value due to loan runoff	(1,960		)	(6,364		)	(8,324		)
Change in fair value due to market changes	(582		)	(3,741		)	(4,323		)
Balance, June 30, 2012	$	16,361		$	75,422		$	91,783

Activity in capitalized mortgage servicing rights during the three months ended June 30, 2011 is as follows (in thousands):



	Purchased			Originated			Total
Balance at March 31, 2011	$	38,343		$	82,002		$	120,345
Additions, net	—			5,798			5,798
Change in fair value due to loan runoff	(1,218		)	(2,240		)	(3,458		)
Change in fair value due to market changes	(4,259		)	(9,234		)	(13,493		)
Balance, June 30, 2011	$	32,866		$	76,326		$	109,192

Activity in capitalized mortgage servicing rights during the six months ended June 30, 2011 is as follows (in thousands):



	Purchased			Originated			Total
Balance, December 31, 2010	$	37,900		$	77,823		$	115,723
Additions, net	—			10,767			10,767
Change in fair value due to loan runoff	(2,551		)	(4,383		)	(6,934		)
Change in fair value due to market changes	(2,483		)	(7,881		)	(10,364		)
Balance, June 30, 2011	$	32,866		$	76,326		$	109,192

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Changes in the fair value of mortgage servicing rights are included in Other operating expense in the Consolidated Statements of Earnings. Changes in fair value due to loan runoff are included in Mortgage banking costs. Changes in fair value due to market changes are reported separately. Changes in fair value due to market changes during the period relate to assets held at the reporting date.

There is no active market for trading in mortgage servicing rights after origination. Fair value is determined by discounting the projected net cash flows. Significant assumptions considered significant unobservable inputs used to determine fair value are:



	June 30, 2012	December 31, 2011	June 30, 2011
Discount rate – risk-free rate plus a market premium	10.33%	10.34%	10.4%
Prepayment rate – based upon loan interest rate, original term and loan type	11.44% - 53.10%	10.88% - 49.68%	10.26% - 38.37%
Loan servicing costs – annually per loan based upon loan type	$55 - $105	$55 - $105	$55 - $105
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life	0.97%	1.21%	2.02%

The Company is exposed to interest rate risk as benchmark residential mortgage interest rates directly affect the prepayment speeds used in valuing our mortgage servicing rights, which is partially managed through forward sales of residential mortgage-backed securities and forward sales contracts. A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults and other relevant factors. The prepayment model is updated daily for changes in market conditions and adjusted to better correlate with actual performance of BOK Financial’s servicing portfolio.

Stratification of the residential mortgage loan servicing portfolio and outstanding principal of loans serviced for others by interest rate at June 30, 2012 follows (in thousands):



	< 5.00%			5.00% - 5.99%			6.00% - 6.99			> 6.99%			Total
Fair value	$	56,754		$	28,724		$	5,152		$	1,153		$	91,783
Outstanding principal of loans serviced for others	$	5,976,173		$	3,652,815		$	1,558,553		$	377,102		$	11,564,643
Weighted average prepayment rate ¹	11.44		%	23.88		%	20.00		%	46.08		%	21.50		%


¹	Annual prepayment estimates based upon loan interest rate, original term and loan type

The interest rate sensitivity of our mortgage servicing rights and securities and derivative contracts held as an economic hedge is modeled over a range of +/- 50 basis points. At June 30, 2012 , a 50 basis point increase in mortgage interest rates is expected to increase the fair value of our mortgage servicing rights, net of economic hedge by $3.3 million . A 50 basis point decrease in mortgage interest rates is expected to decrease the fair value of our mortgage servicing rights, net of economic hedge by $7.8 million . In the model, changes in the value of servicing rights due to changes in interest rates assume stable relationships between residential mortgage rates and prepayment speeds. Changes in market conditions can cause variations from these assumptions. These factors and others may cause changes in the value of our mortgage servicing rights to differ from our expectations.

The aging status of our mortgage loans serviced for others by investor at June 30, 2012 follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	5,000,735	$	47,486	$	13,663	$	46,600	$	5,108,484
FNMA	1,961,099		21,050		5,632		20,711		2,008,492
GNMA	3,764,570		129,482		34,188		27,953		3,956,193
Other	464,850		9,930		3,056		13,638		491,474
Total	$	11,191,254	$	207,948	$	56,539	$	108,902	$	11,564,643

The Company has off-balance sheet credit risk related to residential mortgage loans sold to U.S. government agencies with recourse prior to 2008 under various community development programs. These loans consist of first lien, fixed rate residential mortgage loans underwritten to standards approved by the agencies including full documentation and originated under programs available only for owner-occupied properties. However, these loans have a higher risk of delinquency and loss given

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default than traditional residential mortgage loans. The Company no longer sells residential mortgage loans with recourse other than obligations under standard representations and warranties. The recourse obligation relates to loan performance for the life of the loan and the Company is obligated to repurchase the loan at the time of foreclosure for the unpaid principal balance plus unpaid interest. The principal balance of residential mortgage loans sold subject to recourse obligations totaled $241 million at June 30, 2012 , $259 million at December 31, 2011 and $274 million at June 30, 2011 . A separate accrual for these off-balance sheet commitments is included in Other liabilities in the Consolidated Balance Sheets totaling $18 million at June 30, 2012 , $19 million at December 31, 2011 and $18 million at June 30, 2011 . At June 30, 2012 , approximately 5% of the loans sold with recourse with an outstanding principal balance of $12 million were either delinquent more than 90 days, in bankruptcy or in foreclosure and 6% with an outstanding balance of $14 million were past due 30 to 89 days. The provision for credit losses on loans sold with recourse is included in Mortgage banking costs in the Consolidated Statements of Earnings.

The activity in the allowance for losses on loans sold with recourse included in Other liabilities in the Consolidated Balance Sheets is summarized as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Beginning balance	$	18,651		$	16,487		$	18,683		$	16,667
Provision for recourse losses	768			2,532			2,440			3,326
Loans charged off, net	(1,587		)	(1,479		)	(3,291		)	(2,453		)
Ending balance	$	17,832		$	17,540		$	17,832		$	17,540

The Company also has off-balance sheet credit risk for residential mortgage loans sold to government sponsored entities due to standard representations and warranties made under contractual agreements. At June 30, 2012 , we have unresolved deficiency requests from the agencies on 303 loans with an aggregate outstanding principal balance of $40 million . At December 31, 2011, the Company had unresolved deficiency requests from the agencies on 247 loans with an aggregate principal balance of $37 million . For the six months ended June 30, 2012 , the Company has repurchased 30 loans for $3.0 million from the agencies and provided indemnification for 3 loans for $58 thousand . Losses incurred on these loans as of June 30, 2012 totaled $1.0 million . The Company has established an accrual for credit losses related to potential loan repurchases under representations and warranties is included in Other liabilities in the Consolidated Balance Sheets and in Mortgage banking costs in the Consolidated Statement of Earnings. While the level of repurchases and indemnifications related to standard representations and warranties has remained low, the severity of the losses have trended higher. Accordingly, the Company increased its accrual for credit losses related to potential loan repurchases under representations and warranties to $5.0 million at June 30, 2012 . The accrual was $2.2 million at December 31, 2011.

(6) Employee Benefits

BOK Financial has sponsored a defined benefit Pension Plan for all employees who satisfied certain age and service requirements. Pension Plan benefits were curtailed as of April 1, 2006. The Company recognized periodic pension expense of $1.0 million and $1.2 million for the three months ended June 30, 2012 and 2011 , respectively, and $1.9 million for each of the six months ended June 30, 2012 and 2011 . The Company made no Pension Plan contributions during the six months ended June 30, 2012 and 2011 .

Management has been advised that the maximum allowable contribution for 2012 is $28 million. No minimum contribution is required for 2012.

(7) Commitments and Contingent Liabilities

Litigation Contingencies

In 2010, the Bank was named as a defendant in three class actions alleging that the manner in which the bank posted charges to its consumer deposit accounts was improper. These actions were consolidated and settled on November 23, 2011 in Multi-District Litigation pending in the United States District Court for the Southern District of Florida. The settlement is scheduled for approval by the Court on August 29, 2012. The settlement amount of $19 million was paid to the plaintiff class pending

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Court approval and had been fully accrued as of March 31, 2012.

In an opinion dated October 11, 2011, the Oklahoma Supreme Court invalidated, pursuant to a petition brought by certain taxpayers, a $7.1 million settlement agreement between the Bank and the City of Tulsa (“the City”). The agreement settled claims asserted by the Bank against the City and against the Tulsa Airports Improvement Trust ("the Trust") related to a defaulted loan made by the Bank to a start-up airline. The Trust agreed to purchase the loan and its collateral from the Bank in the event of a default by the airline. As of June 30, 2012, the $7.1 million settlement amount was included in the accrual for off-balance sheet credit risk. On July 18, 2012, the Company paid the $7.1 million to the City and is pursuing its claims against the Trust.

As a member of Visa, BOK Financial is obligated for a proportionate share of certain covered litigation losses incurred by Visa under a retrospective responsibility plan. A contingent liability was recognized for the Company’s share of Visa’s covered litigation liabilities. Visa funded an escrow account to cover litigation claims, including covered litigation losses under the retrospective responsibility plan, with proceeds from its initial public offering in 2008 and from available cash.

BOK Financial currently owns 251,837 Visa Class B shares which are convertible into Visa Class A shares after the final settlement of all covered litigation. Class B shares may be diluted in the future if the escrow fund is not adequate to cover future covered litigation costs. Therefore, no value has been currently assigned to the Class B shares and no value may be assigned until the Class B shares are converted into a known number of Class A shares.

In July 2012, Visa announced it had reached an agreement in principle to resolve pending litigation and provide for settlement payments from the previously funded litigation escrow account. In conjunction with this agreement, Visa deposited an additional $150 million to the litigation escrow account which reduced the exchange rate to approximately 0.4206 Class A shares for each Class B share.

In the ordinary course of business, BOK Financial and its subsidiaries are subject to legal actions and complaints. Management believes, based upon the opinion of counsel, that the actions and liability or loss, if any, resulting from the final outcomes of the proceedings, will not have a material effect on the Company’s financial condition, results of operations or cash flows.

Alternative Investment Commitments

The Company sponsors two private equity funds and invests in several tax credit entities and other funds as permitted by banking regulations. Consolidation of these investments is based on the variable interest model determined by the nature of the entity. Variable interest entities are generally defined as entities that either do not have sufficient equity to finance their activities without support from other parties or whose equity investors lack a controlling financial interest. Variable interest entities are consolidated based on the determination that the Company is the primary beneficiary including the power to direct the activities that most significantly impact the variable interest's economic performance and the obligation to absorb losses of the variable interest or the right to receive benefits of the variable interest that could be significant to the variable interest.

BOKF Equity, LLC, an indirect wholly-owned subsidiary, is the general partner of two consolidated private equity funds (“the Funds”). The Funds provide alternative investment opportunities to certain customers, some of which are related parties, through unaffiliated limited partnerships. These unaffiliated limited partnerships generally invest in distressed assets, asset buy-outs or venture capital companies. As general partner, BOKF Equity, LLC has the power to direct activities that most significantly affect the Funds' performance and contingent obligations to make additional investments totaling $10 million at June 30, 2012 . Substantially all of the obligations are offset by limited partner commitments. The Company does not accrue its contingent liability to fund investments. The Volcker Rule in Title VI of the Dodd-Frank Act limits both the amount and structure of these type of investments. As a result, the Company's private equity activity might be curtailed.

Consolidated tax credit entities represent the Company's interest in entities earning federal new market tax credits related to qualifying loans for which the Company has the power to direct the activities that most significantly impact the variable interest's economic performance of the entity including being the primary beneficiary of or the obligation to absorb losses of the variable interest that could be significant to the variable interest.

The Company also has interests in various unrelated alternative investments generally consisting of unconsolidated limited partnership interest in or loans to entities for which investment return is in the form of tax credits or that invest in distressed real estate loans and properties, energy development, venture capital and other activities. The Company is prohibited by banking regulations from controlling or actively managing the activities of these investments and the Company's maximum exposure to loss is restricted to its investment balance. The Company's obligation to fund alternative investments is included in Other liabilities in the Consolidated Balance Sheets.

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A summary of consolidated and unconsolidated alternative investments as of June 30, 2012 , December 31, 2011 and June 30, 2011 is as follows (in thousands):



	June 30, 2012
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interest
Consolidated:
Private equity funds	$	—	$	31,492	$	—	$	—	$	26,648
Tax credit entities	10,000		14,224		—		10,964		10,000
Other	—		7,031		—		—		139
Total consolidated	$	10,000	$	52,747	$	—	$	10,964	$	36,787

Unconsolidated:
Tax credit entities	$	—	$	71,298	$	39,510	$	—	$	—
Other	—		9,298		1,943		—		—
Total unconsolidated	$	—	$	80,596	$	41,453	$	—	$	—



	December 31, 2011
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interest
Consolidated:
Private equity funds	$	—	$	30,902	$	—	$	—	$	26,042
Tax credit entities	10,000		14,483		—		10,964		10,000
Other	—		7,206		—		—		143
Total consolidated	$	10,000	$	52,591	$	—	$	10,964	$	36,185

Unconsolidated:
Tax credit entities	$	—	$	37,890	$	16,084	$	—	$	—
Other	—		10,950		2,194		—		—
Total unconsolidated	$	—	$	48,840	$	18,278	$	—	$	—



	June 30, 2011
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interest
Consolidated:
Private equity funds	$	—	$	30,991	$	—	$	—	$	24,264
Tax credit entities	—		—		—		—		—
Other	—		8,298		—		—		192
Total consolidated	$	—	$	39,289	$	—	$	—	$	24,456

Unconsolidated:
Tax credit entities	$	—	$	25,684	$	14,464	$	—	$	—
Other	—		17,637		3,516		—		—
Total unconsolidated	$	—	$	43,321	$	17,980	$	—	$	—

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Other Commitments and Contingencies

At June 30, 2012 , Cavanal Hill Funds’ assets included $1.1 billion of U.S. Treasury, $935 million of cash management and $430 million of tax-free money market funds. Assets of these funds consist of highly-rated, short-term obligations of the U.S. Treasury, corporate issuers and U.S. states and municipalities. The net asset value of units in these funds was $1.00 at June 30, 2012 . An investment in these funds is not insured by the Federal Deposit Insurance Corporation or guaranteed by BOK Financial or any of its subsidiaries. BOK Financial may, but is not obligated to purchase assets from these funds to maintain the net asset value at $1.00 . No assets were purchased from the funds in 2012 or 2011 .

Cottonwood Valley Ventures, Inc. (“CVV, Inc.”), an indirectly wholly-owned subsidiary of BOK Financial, is being audited by the Oklahoma Tax Commission (“OTC”) for tax years 2007 through 2009. CVV, Inc. is a qualified venture capital company under the applicable Oklahoma statute. As authorized by the statute, CVV, Inc. guarantees transferable Oklahoma state income tax credits by providing direct debt financing to private companies which qualify as statutory business ventures. Due to certain statutory limitations on utilization of such credits, CVV, Inc. must sell the majority of the credits to provide the economic incentives provided for by the statute. In the event that the OTC successfully disallows any of the credits, CVV, Inc. would be required to indemnify purchasers for the tax credits disallowed. Management does not anticipate that this audit will have a material adverse impact to the financial statements.

The Company agreed to guarantee rents totaling $28.7 million through September of 2017 to the City as owner of a building immediately adjacent to the Bank’s main office for space currently rented by third-party tenants in the building. All rent payments are current. Remaining guaranteed rents totaled $15.7 million at June 30, 2012 . Current leases expire or are subject to lessee termination options at various dates in 2013 and 2014. Our obligation under the agreement would be affected by lessee decisions to exercise these options. In return for this guarantee, the Company will receive 80% of net cash flow as defined in an agreement with the City through September 2017 from rental of space that was vacant at the inception of the agreement. The maximum amount that the Company may receive under this agreement is $4.5 million .

(8) Shareholders’ Equity

On July 31, 2012, the Board of Directors of BOK Financial approved a quarterly common stock dividend of $0.38 per share. The quarterly dividend will be payable on or about August 31, 2012 to shareholders of record as of August 17, 2012.

Dividends declared during the three and six months ended June 30, 2012 were $0.38 per share and $0.71 per share, respectively. Dividends declared during the three and six months ended June 30, 2011 were $0.275 per share and $0.525 per share, respectively.

Accumulated Other Comprehensive Income (Loss)

AOCI includes unrealized gains and losses on available for sale ("AFS") securities. Unrealized gain (loss) on AFS securities also includes non-credit related unrealized losses on AFS securities for which an other-than temporary impairment has been recorded in earnings. AOCI also includes unrealized gains on AFS securities that were transferred from AFS to investment securities in the third quarter of 2011. Such amounts will be amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related accretion of discount on the transferred securities. Unrealized losses on employee benefit plans will be reclassified into income as pension plan costs are recognized over the remaining service period of plan participants. Accumulated losses on the interest rate lock hedge of the 2005 subordinated debt issuance will be reclassified into income over the ten-year life of the debt. Gains and losses in AOCI are net of deferred income taxes.

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A rollforward of the components of accumulated other comprehensive income (loss) is included as follows (in thousands):

	Unrealized Gain (Loss) on
	Available for Sale Securities			Investment Securities Transferred from AFS			Employee Benefit Plans			Loss on Effective Cash Flow Hedges			Total
Balance, December 31, 2010	$	122,494		$	—		$	(13,777	)	$	(878	)	$	107,839
Net change in unrealized gains (losses)	63,944			—			(1		)	—			63,943
Other-than-temporary impairment losses recognized in earnings	9,423			—			—			—			9,423
Reclassification adjustment for net (gains) losses realized and included in earnings	(10,370		)	—			—			156			(10,214		)
Income tax expense (benefit)	(24,676		)	—			—			(60		)	(24,736		)
Balance, June 30, 2011	$	160,815		$	—		$	(13,778	)	$	(782	)	$	146,255

Balance, December 31, 2011	$	135,740		$	6,673		$	(12,742	)	$	(692	)	$	128,979
Net change in unrealized gains (losses)	40,325			—			(291		)	—			40,034
Other-than-temporary impairment losses recognized in earnings	4,580			—			—			—			4,580
Amortization of unrealized gain on investments securities transferred from AFS	—			(3,421		)	—			—			(3,421		)
Reclassification adjustment for net(gains) losses realized and included in earnings	(24,812		)	—			—			331			(24,481		)
Income tax benefit (expense)	(7,816		)	1,331			113			(129		)	(6,501		)
Balance, June 30, 2012	$	148,017		$	4,583		$	(12,920	)	$	(490	)	$	139,190

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(9) Earnings Per Share



(In thousands, except share and per share amounts)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Numerator:
Net income attributable to BOK Financial Corp.	$	97,628		$	69,007		$	181,243		$	133,781
Earnings allocated to participating securities	(977		)	(559		)	(1,716		)	(1,020		)
Numerator for basic earnings per share – income available to common shareholders	96,651			68,448			179,527			132,761
Effect of reallocating undistributed earnings of participating securities	3			2			5			3
Numerator for diluted earnings per share – income available to common shareholders	$	96,654		$	68,450		$	179,532		$	132,764

Denominator:
Weighted average shares outstanding	68,152,242			68,451,428			68,214,648			68,419,699
Less: Participating securities included in weighted average shares outstanding	(679,577		)	(552,945		)	(641,368		)	(519,420		)
Denominator for basic earnings per common share	67,472,665			67,898,483			67,573,280			67,900,279
Dilutive effect of employee stock compensation plans ¹	272,163			271,002			274,379			272,903
Denominator for diluted earnings per common share	67,744,828			68,169,485			67,847,659			68,173,182

Basic earnings per share	$	1.43		$	1.01		$	2.66		$	1.96
Diluted earnings per share	$	1.43		$	1.00		$	2.65		$	1.95
¹ Excludes employee stock options with exercise prices greater than current market price.	366,407			785,686			361,558			771,343

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(10) Reportable Segments

Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended June 30, 2012 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	93,360		$	23,125		$	7,137		$	57,739		$	181,361
Net interest revenue (expense) from internal sources	(11,164		)	5,885			5,306			(27		)	—
Net interest revenue	82,196			29,010			12,443			57,712			181,361
Provision for (reduction of ) allowances for credit losses	748			4,221			521			(13,490		)	(8,000		)
Net interest revenue after provision for (reduction of) allowances for credit losses	81,448			24,789			11,922			71,202			189,361
Other operating revenue	52,158			75,200			51,556			8,121			187,035
Other operating expense	62,625			75,888			53,209			32,064			223,786
Income before taxes	70,981			24,101			10,269			47,259			152,610
Federal and state income tax	27,612			9,375			3,995			12,167			53,149
Net income	43,369			14,726			6,274			35,092			99,461
Net income attributable to non-controlling interest	—			—			—			1,833			1,833
Net income attributable to BOK Financial Corp.	$	43,369		$	14,726		$	6,274		$	33,259		$	97,628

Average assets	$	9,934,469		$	5,695,019		$	4,194,153		$	5,714,876		$	25,538,517
Average invested capital	862,816			289,443			176,704			1,539,770			2,868,733

Performance measurements:
Return on average assets	1.76		%	1.04		%	0.60		%				1.54		%
Return on average invested capital	20.22		%	20.46		%	14.28		%				13.69		%
Efficiency ratio	52.19		%	69.07		%	83.57		%				62.45		%

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Reportable segments reconciliation to the Consolidated Financial Statements for the six months ended June 30, 2012 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	182,698		$	46,939		$	14,277		$	111,016		$	354,930
Net interest revenue (expense) from internal sources	(22,920		)	12,005			10,279			636			—
Net interest revenue	159,778			58,944			24,556			111,652			354,930
Provision for (reduction of) allowances for credit losses	7,140			5,653			1,171			(21,964		)	(8,000		)
Net interest revenue after provision for (reduction of) allowances for credit losses	152,638			53,291			23,385			133,616			362,930
Other operating revenue	90,950			126,297			97,949			12,220			327,416
Other operating expense	118,485			123,640			104,484			62,414			409,023
Income before taxes	125,103			55,948			16,850			83,422			281,323
Federal and state income tax	48,665			21,764			6,555			21,685			98,669
Net income	76,438			34,184			10,295			61,737			182,654
Net income attributable to non-controlling interest	—			—			—			1,411			1,411
Net income attributable to BOK Financial Corp.	$	76,438		$	34,184		$	10,295		$	60,326		$	181,243

Average assets	$	10,008,708		$	5,757,046		$	4,195,283		$	5,566,513		$	25,527,550
Average invested capital	864,167			288,351			176,149			1,523,316			2,851,983

Performance measurements:
Return on average assets	1.54		%	1.19		%	0.49		%				1.43		%
Return on average invested capital	17.79		%	23.91		%	11.75		%				12.78		%
Efficiency ratio	50.14		%	66.60		%	85.48		%				61.14		%

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Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended June 30, 2011 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	85,325		$	21,358		$	7,926		$	59,392		$	174,001
Net interest revenue (expense) from internal sources	(7,444		)	7,675			3,696			(3,927		)	—
Net interest revenue	77,881			29,033			11,622			55,465			174,001
Provision for (reduction of) allowances for credit losses	4,829			3,049			623			(5,801		)	2,700
Net interest revenue after provision for (reduction of) allowances for credit losses	73,052			25,984			10,999			61,266			171,301
Other operating revenue	36,014			57,486			42,788			6,672			142,960
Other operating expense	57,447			71,852			47,397			26,513			203,209
Income before taxes	51,619			11,618			6,390			41,425			111,052
Federal and state income tax	20,080			4,519			2,486			12,272			39,357
Net income	31,539			7,099			3,904			29,153			71,695
Net income attributable to non-controlling interest	—			—			—			2,688			2,688
Net income attributable to BOK Financial Corp.	$	31,539		$	7,099		$	3,904		$	26,465		$	69,007
Average assets	$	9,174,216		$	5,864,942		$	3,883,815		$	5,056,262		$	23,979,235
Average invested capital	867,491			271,353			176,070			1,335,975			2,650,889
Performance measurements:
Return on average assets	1.38		%	0.49		%	0.40		%				1.15		%
Return on average invested capital	14.58		%	10.49		%	8.89		%				10.44		%
Efficiency ratio	50.44		%	77.47		%	87.95		%				62.23		%

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Reportable segments reconciliation to the Consolidated Financial Statements for the six months ended June 30, 2011 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	168,583		$	40,022		$	16,150		$	119,885		$	344,640
Net interest revenue (expense) from internal sources	(16,718		)	17,080			6,667			(7,029		)	—
Net interest revenue	151,865			57,102			22,817			112,856			344,640
Provision for (reduction of) allowances for credit losses	11,605			5,731			1,061			(9,447		)	8,950
Net interest revenue after provision for (reduction of) allowances for credit losses	140,260			51,371			21,756			122,303			335,690
Other operating revenue	71,430			94,968			82,756			11,384			260,538
Other operating expense	113,198			124,054			91,102			53,304			381,658
Income before taxes	98,492			22,285			13,410			80,383			214,570
Federal and state income tax	38,313			8,669			5,216			25,911			78,109
Net income	60,179			13,616			8,194			54,472			136,461
Net income attributable to non-controlling interest	—			—			—			2,680			2,680
Net income attributable to BOK Financial Corp.	$	60,179		$	13,616		$	8,194		$	51,792		$	133,781

Average assets	$	9,068,308		$	5,992,191		$	3,862,949		$	4,926,163		$	23,849,611
Average invested capital	865,439			272,301			175,506			1,294,835			2,608,081

Performance measurements:
Return on average assets	1.34		%	0.46		%	0.43		%				1.13		%
Return on average invested capital	14.02		%	10.08		%	9.41		%				10.34		%
Efficiency ratio	50.70		%	77.44		%	86.76		%				61.70		%

(11) Fair Value Measurements

Fair value is defined by applicable accounting guidance as the price to sell an asset or transfer a liability in an orderly transaction between market participants in the principal market for the given asset or liability at the measurement date based on market conditions at that date. Certain assets and liabilities are recorded in the Company’s financial statements at fair value. Some are recorded on a recurring basis and some on a non-recurring basis.

For some assets and liabilities, observable market transaction and market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. A hierarchy for fair value has been established which categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels are as follows:

Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) - fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities.

Significant Other Observable Inputs (Level 2) - Fair value is based on significant other observable inputs which are generally determined based on a single price for each financial instrument provided to us by an applicable third-party pricing service and is based on one or more of the following:


•	Quoted prices for similar, but not identical, assets or liabilities in active markets;


•	Quoted prices for identical or similar assets or liabilities in inactive markets;

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•	Inputs other than quoted prices that are observable, such as interest rate and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates;


•	Other inputs derived from or corroborated by observable market inputs.

Significant Unobservable Inputs (Level 3) - Fair value is based upon model-based valuation techniques for which at least one significant assumption is not observable in the market.

Transfers between levels are recognized as of the end of the reporting period.

The underlying methods used by the third-party pricing services are considered in determining the primary inputs used to determine fair values. Management has evaluated the methodologies employed by the third-party pricing services by comparing the price provided by the pricing service with other sources, including brokers' quotes, sales or purchases of similar instruments and discounted cash flows to establish a basis for reliance on the pricing service values. Significant differences between the pricing service provided value and other sources are discussed with the pricing service to understand the basis for their values. Based on this evaluation, we determined that the results represent prices that would be received to sell assets or paid to transfer liabilities in orderly transactions in the current market.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value of financial assets and liabilities that are measured on a recurring basis are as follows as of June 30, 2012 (in thousands):



	Total		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:
Trading securities:
U.S. Government agency debentures	$	53,514	$	992	$	52,522	$	—
U.S. agency residential mortgage-backed securities	46,502		—		46,502		—
Municipal and other tax-exempt securities	44,632		—		44,632		1,852
Other trading securities	4,669		—		4,545		124
Total trading securities	$	149,317	992		148,201		1,976
Available for sale securities:
U.S. Treasury	1,003		1,003		—		—
Municipal and other tax-exempt	88,458		—		46,796		41,662
U.S. agency residential mortgage-backed securities	9,903,532		—		9,903,532		—
Privately issued residential mortgage-backed securities	317,761		—		317,761		—
Other debt securities	36,286		—		30,898		5,388
Perpetual preferred stock	23,431		—		23,431		—
Equity securities and mutual funds	24,944		6,912		18,032		—
Total available for sale securities	10,395,415		7,915		10,340,450		47,050
Fair value option securities:
U.S. agency residential mortgage-backed securities	299,467		—		299,467		—
Corporate debt securities	25,710		—		25,710		—
Total fair value option securities	325,177		—		325,177		—
Residential mortgage loans held for sale	259,174		—		259,174		—
Mortgage servicing rights ¹	91,783		—		—		91,783
Derivative contracts, net of cash margin ²	366,204		802		365,402		—
Other assets – private equity funds	31,492		—		—		31,492
Liabilities:
Derivative contracts, net of cash margin ²	370,053		251		369,802		—


¹	A reconciliation of the beginning and ending fair value of mortgage servicing rights and disclosures of significant assumptions used to determine fair value are presented in Note 5, Mortgage Banking Activities.


²	See Note 3 for detail of fair value of derivative contracts by contract type.

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The fair value of financial assets and liabilities that are measured on a recurring basis are as follows as of December 31, 2011 (in thousands):



	Total		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:
Trading securities	$	76,800	$	—	$	76,623	$	177

Available for sale securities:
U.S. Treasury	1,006		1,006		—		—
Municipal and other tax-exempt	68,837		—		26,484		42,353
U.S. agency residential mortgage-backed securities	9,588,177		—		9,588,177		—
Privately issued residential mortgage-backed securities	419,166		—		419,166		—
Other debt securities	36,495		—		30,595		5,900
Perpetual preferred stock	18,446		—		18,446		—
Equity securities and mutual funds	47,238		23,596		23,642		—
Total available for sale securities	10,179,365		24,602		10,106,510		48,253

Fair value option securities	651,226		—		651,226		—
Residential mortgage loans held for sale	188,125		—		188,125		—
Mortgage servicing rights	86,783		—		—		86,783		¹
Derivative contracts, net of cash margin ²	293,859		457		293,402		—
Other assets – private equity funds	30,902		—		—		30,902

Liabilities:
Derivative contracts, net of cash margin ²	236,522		—		236,522		—


¹	A reconciliation of the beginning and ending fair value of mortgage servicing rights and disclosures of significant assumptions used to determine fair value are presented in Note 5, Mortgage Banking Activities.


²	See Note 3 for detail of fair value of derivative contracts by contract type.

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The fair value of financial assets and liabilities that are measured on a recurring basis are as follows as of June 30, 2011 (in thousands):



	Total		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs
Assets:
Trading securities	$	99,846	$	2,327	$	97,519	$	—

Available for sale securities:
U.S. Treasury	1,003		1,003		—		—
Municipal and other tax-exempt	70,210		—		26,552		43,658
U.S. agency residential mortgage-backed securities	8,893,789		—		8,893,789		—
Privately issued residential mortgage-backed securities	513,222		—		513,222		—
Other debt securities	5,893		—		—		5,893
Perpetual preferred stock	22,694		—		22,694		—
Equity securities and mutual funds	60,197		41,557		18,640		—
Total available for sale securities	9,567,008		42,560		9,474,897		49,551

Fair value option securities	553,231		—		553,231		—
Residential mortgage loans held for sale	169,609		—		169,609		—
Mortgage servicing rights	109,192		—		—		109,192		¹
Derivative contracts, net of cash margin ²	229,887		—		229,887		—
Other assets – private equity funds	28,313		—				28,313

Liabilities:
Derivative contracts, net of cash margin ²	173,917		—		173,917		—


¹	A reconciliation of the beginning and ending fair value of mortgage servicing rights and disclosures of significant assumptions used to determine fair value are presented in Note 5, Mortgage Banking Activities.


²	See Note 3 for detail of fair value of derivative contracts by contract type.

The following represents the changes for the three months ended June 30, 2012 related to assets measured at fair value on a recurring basis using significant unobservable inputs (in thousands):



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities			Other assets – private equity funds
Balance at March 31, 2012	$	41,977		$	5,900		$	30,993
Purchases and capital calls	—			—			820
Redemptions and distributions	(363		)	(500		)	(2,559		)
Gain (loss) recognized in earnings:
Gain on other assets, net	—			—			2,238
Gain on available for sale securities, net	—			—			—
Other-than-temporary impairment losses	—			—			—
Other comprehensive gain (loss)	48			(12		)	—
Balance, June 30, 2012	$	41,662		$	5,388		$	31,492

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The following represents the changes for the six months ended June 30, 2012 related to assets measured at fair value on a recurring basis using significant unobservable inputs (in thousands):



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities			Other assets – private equity funds
Balance, December 31, 2011	$	42,353		$	5,900		$	30,902
Purchases and capital calls	—			—			1,909
Redemptions and distributions	(463		)	(500		)	(3,166		)
Gain (loss) recognized in earnings:
Brokerage and trading revenue	—			—			—
Gain on other assets, net	—			—			1,847
Gain on securities, net	1			—			—
Other-than-temporary impairment losses	—			—			—
Other comprehensive (loss)	(229		)	(12		)	—
Balance, June 30, 2012	$	41,662		$	5,388		$	31,492

The following represents the changes for the three months ended June 30, 2011 related to assets measured at fair value on a recurring basis using significant unobservable inputs (in thousands):



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities			Other assets – private equity funds
Balance at March 31, 2011	$	43,767		$	5,899		$	25,046
Purchases, sales, issuances and settlements, net	—			—			746
Redemptions and distributions	—			—			(783		)
Gain (loss) recognized in earnings
Brokerage and trading revenue	—			—			—
Gain (loss) on other assets, net	—			—			3,304
Gain on securities, net	—			—			—
Other-than-temporary impairment losses	(521		)	—			—
Other comprehensive (loss)	412			(6		)	—
Balance, June 30, 2011	$	43,658		$	5,893		$	28,313

The following represents the changes for the six months ended June 30, 2011 related to assets measured at fair value on a recurring basis using significant unobservable inputs (in thousands):



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities			Other assets – private equity funds
Balance, December 31, 2010	$	47,093		$	6,400		$	25,436
Purchases, sales, issuances and settlements, net	7,520			—			1,652
Redemptions and distributions	(9,975		)	(500		)	(2,185		)
Gain (loss) recognized in earnings
Brokerage and trading revenue	(576		)	—			—
Gain (loss) on other assets, net	—			—			3,410
Gain on securities, net	18			—			—
Other-than-temporary impairment losses	(521		)	—			—
Other comprehensive (loss)	99			(7		)	—
Balance, June 30, 2011	$	43,658		$	5,893		$	28,313

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Following is a description of the Company's valuation methodologies used for assets and liabilities measured on a recurring basis:

Securities

The fair values of trading, available for sale and fair value options securities are based on quoted prices for identical instruments in active markets, when available. If quoted prices for identical instruments are not available, fair values are based on significant other observable inputs such as quoted prices of comparable instruments or interest rates and credit spreads, yield curves, volatilities, prepayment speeds and loss severities.

The fair value of certain available for sale municipal and other debt securities may be based on significant unobservable inputs. These significant unobservable inputs include limited observed trades, projected cash flows, current credit rating of the issuers and, when applicable, the insurers of the debt and observed trades of similar debt. Discount rates are primarily based on reference to interest rate spreads on comparable securities of similar duration and credit rating as determined by the nationally recognized rating agencies adjusted for a lack of trading volume.

These securities may be either investment grade or below investment grade. As of June 30, 2012 , taxable securities rated investment grade by all nationally recognized rating agencies are generally valued to yield 1.30% to 1.75% . Average yields on comparable short-term taxable securities are generally less than 1% . Tax-exempt securities rated investment grade by all nationally recognized rating agencies are generally valued to yield a range of 1.00% to 1.50% , which represents a spread of 75 to 80 basis points over average yields of comparable tax-exempt securities as of June 30, 2012 . The resulting estimated fair value of securities rated investment grade ranges from 98.88% to 99.49% of par value at June 30, 2012 . The fair value of these securities is sensitive primarily to changes in interest rate spreads. At June 30, 2012 , a 100 basis point increase in the spreads over average yields for comparable taxable and tax-exempt securities would result in an additional decrease in the fair value of these securities of $337 thousand.

Approximately $13 million of our municipal and other tax-exempt securities are rated below investment grade by at least one of the three nationally recognized rating agencies. The fair value of these securities was determined based on yields ranging from 6.20% to 9.16% . These yields were determined using a spread of 600 basis points over comparable municipal securities of varying durations. The resulting estimated fair value of securities rated below investment grade ranges from 75.21% to 75.49% of par value as of June 30, 2012 . The fair value of these municipal and other debt securities based on Significant Other Unobservable Inputs is primarily sensitive to changes in interest rate spreads. At June 30, 2012 , a 100 basis point increase in the spread over average yields for comparable securities would result in an additional decrease in the fair value of these securities of $384 thousand.

Taxable securities rated investment grade by all nationally recognized rating agencies were generally valued at par to yield 1.60% to 1.80% at December 31, 2011 and 1.69% to 1.75% at June 30, 2011 . Average yields on comparable short-term taxable securities were less than 1% at both December 31, 2011 and June 30, 2011 . Tax-exempt investment grade securities were valued to yield a range of 1.00% to 1.50% at December 31, 2011 and 1.05% to 1.35% at June 30, 2011 . This represents a spread of 75 to 80 basis points over average yields for comparable securities. The resulting estimated fair value of securities rated investment grade ranged from 98.79% to 100.00% of par at December 31, 2011 and 98.89% to 99.34% of par at June 30, 2011 .

After other-than-temporary impairment charges, municipal and other tax-exempt securities rated below investment grade by at least one of the nationally recognized rating agencies totaled $13 million at December 31, 2011 and $14 million at June 30, 2011 . These below investment grade municipal and other tax-exempt securities were valued based on a range of 6.25% to 9.58% at December 31, 2011 and 6.23% to 10.30% at June 30, 2011 . This represented a spread of 600 basis points over comparable municipal securities of varying durations. The resulting estimated fair value of securities rated below investment grade ranged from 76.45% to 76.99% at December 31, 2011 and 82.66% to 82.83% of par value at June 30, 2011

Derivatives

All derivative instruments are carried on the balance sheet at fair value. Fair values for exchange-traded contracts are based on quoted prices. Fair values for over-the-counter interest rate, commodity and foreign exchange contracts are based on valuations provided either by third-party dealers in the contracts, quotes provided by independent pricing services, or a third-party provided pricing model that use significant other observable market inputs.

Credit risk is considered in determining the fair value of derivative instruments. Management determines fair value adjustments based on various risk factors including but not limited to counterparty credit rating or equivalent loan grading, derivative contract notional size, price volatility of the underlying commodity, duration of the derivative contracts and expected loss

- 115 -

severity. Expected loss severity is based on historical losses for similarly risk-graded commercial loan customers. Decreases in counterparty credit rating or grading and increases in price volatility and expected loss severity all tend to increase the credit quality adjustment which reduces the fair value of asset contracts. The reduction in fair value is recognized in earnings during the current period.

We also consider our own credit risk in determining the fair value of derivative contracts. Changes in our credit rating would affect the fair value of our derivative liabilities. In the event of a credit downgrade, the fair value of our derivative liabilities would increase. The change in the fair value would be recognized in earnings in the current period.

Residential Mortgage Loans Held for Sale

Residential mortgage loans held for sale are carried on the balance sheet at fair value. The fair values of residential mortgage loans held for sale are based upon quoted market prices of such loans sold in securitization transactions, including related unfunded loan commitments.

Other Assets - Private Equity Funds

The fair value of the portfolio investments of the Company's two private equity funds are based upon net asset value reported by the underlying funds, as adjusted by the general partner when necessary to represent the price that would be received to sell the assets. Private equity fund assets are long-term, illiquid investments. No secondary market exists for these assets. They may only be realized through cash distributions from the underlying funds.

There were no transfers in or out of quoted prices in active markets for identical instruments, significant other observable inputs or significant unobservable input during the six months ended June 30, 2012 and 2011 , respectively.

Fair Value of Assets and Liabilities Measured on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis include pension plan assets, which are based on quoted prices in active markets for identical instruments, collateral for certain impaired loans and real property and other assets acquired to satisfy loans, which are based primarily on comparisons to completed sales of similar assets. In addition, goodwill impairment is evaluated based on the fair value of the Company's reporting units.

The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets with a balance at June 30, 2012 for which the fair value was adjusted during the six months ended June 30, 2012 :



	Carrying Value at June 30, 2012						Fair Value Adjustments for the three months ended June 30, 2012 Recognized in:						Fair Value Adjustments for the six months ended June 30, 2012 Recognized in:
	Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Gross charge-offs against allowance for loan losses		Gross charge-offs against accrual for recourse loans		Net losses and expenses of repossessed assets, net		Gross charge-offs against allowance for loan losses		Gross charge-offs against accrual for recourse loans		Net losses and expenses of repossessed assets, net
Impaired loans	$	—	$	29,369	$	2,881	$	4,406	$	311	$	—	$	10,826	$	311	$	—
Real estate and other repossessed assets	—		27,474		3,035		—		—		4,488		—		—		6,876

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The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. he carrying value represents only those assets with a balance at June 30, 2011 for which the fair value was adjusted during the six months ended June 30, 2011 :



	Carrying Value at June 30, 2011						Fair Value Adjustments for the Three Months Ended June 30, 2011 Recognized in:						Fair Value Adjustments for the Six Months Ended June 30, 2011 Recognized in:
	Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Gross charge-offs against allowance for loan losses		Gross charge-offs against accrual for recourse loans		Net losses and expenses of repossessed assets, net		Gross charge-offs against allowance for loan losses		Gross charge-offs against accrual for recourse loans		Net losses and expenses of repossessed assets, net
Impaired loans	$	—	$	17,949	$	—	$	4,071	$	146	$	—	$	4,719	$	146	$	—
Real estate and other repossessed assets	—		50,885		—		—		—		4,127		—		—		8,863

The fair value of collateral-dependent impaired loans and real estate and other repossessed assets and the related fair value adjustments are generally based on unadjusted third-party appraisals. Our appraisal review policies require appraised values to be supported by observed inputs derived principally from or corroborated by observable market data. Appraisals that are not based on observable inputs or that require significant adjustments or fair value measurements that are not based on third-party appraisals are considered to be based on significant unobservable inputs.

- 117 -

Fair Value of Financial Instruments

The following table presents the carrying values and estimated fair values of all financial instruments, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis as of June 30, 2012 (dollars in thousands):



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and cash equivalents	$	639,263						$	639,263
Trading securities:
Obligations of the U.S. government	53,514							53,514
U.S. agency residential mortgage-backed securities	46,502							46,502
Municipal and other tax-exempt securities	44,632							44,632
Other trading securities	4,669							4,669
Total trading securities	149,317							149,317
Investment securities:
Municipal and other tax-exempt	126,168							130,308
U.S. agency residential mortgage-backed securities	102,347							105,535
Other debt securities	183,964							204,795
Total investment securities	412,479							440,638
Available for sale securities:
U.S. Treasury	1,003							1,003
Municipal and other tax-exempt	88,458							88,458
U.S. agency residential mortgage-backed securities	9,903,532							9,903,532
Privately issued residential mortgage-backed securities	317,761							317,761
Other debt securities	36,286							36,286
Perpetual preferred stock	23,431							23,431
Equity securities and mutual funds	24,944							24,944
Total available for sale securities	10,395,415							10,395,415
Fair value option securities:
U.S. agency residential mortgage-backed securities	299,467							299,467
Corporate debt securities	25,710							25,710
Total fair value option securities	325,177							325,177
Residential mortgage loans held for sale	259,174							259,174
Loans:
Commercial	7,052,544			0.25 - 30.00%	0.70	0.63 - 3.68%		7,010,486
Commercial real estate	2,126,214			0.38 - 18.00%	0.92	1.33 - 3.33%		2,105,823
Residential mortgage	2,005,097			0.38 - 18.00%	3.10	1.08 - 3.52%		2,042,362
Consumer	392,576			0.38 - 21.00%	0.34	1.59 - 3.79%		387,423
Total loans	11,576,431							11,546,094
Allowance for loan losses	(231,669		)					—
Net loans	11,344,762							11,546,094
Mortgage servicing rights	91,783							91,783
Derivative instruments with positive fair value, net of cash margin	366,204							366,204
Other assets – private equity funds	31,492							31,492
Deposits with no stated maturity	15,254,247							15,157,587
Time deposits	3,107,950			0.01 - 9.64%	2.17	0.92 - 1.31%		3,175,687
Other borrowings	2,648,753			0.09 - 5.25%	—	0.09 - 2.70%		2,642,598
Subordinated debentures	353,378			1.16 - 5.00%	4.02	2.40	%	350,813
Derivative instruments with negative fair value, net of cash margin	370,053							370,053

- 118 -



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and cash equivalents	$	986,365						$	986,365
Trading securities	76,800							76,800
Investment securities:
Municipal and other tax-exempt	128,697							133,670
U.S. agency residential mortgage-backed securities	121,704							120,536
Other debt securities	188,835							208,451
Total investment securities	439,236							462,657

Available for sale securities:
U.S. Treasury	1,006							1,006
Municipal and other tax-exempt	68,837							68,837
U.S. agency residential mortgage-backed securities	9,588,177							9,588,177
Privately issued residential mortgage-backed securities	419,166							419,166
Other debt securities	36,495							36,495
Perpetual preferred stock	18,446							18,446
Equity securities and mutual funds	47,238							47,238
Total available for sale securities	10,179,365							10,179,365

Fair value option securities	651,226							651,226
Residential mortgage loans held for sale	188,125							188,125
Loans:
Commercial	6,571,454			0.25 - 30.00%	0.57	0.63 - 3.85%		6,517,795
Commercial real estate	2,279,909			0.38 - 18.00%	1.26	0.28 - 3.51%		2,267,375
Residential mortgage	1,970,461			0.38 - 18.00%	3.26	1.14 - 3.70%		2,034,898
Consumer	447,919			0.38 - 21.00%	0.42	1.88 - 3.88%		436,490
Total loans	11,269,743							11,256,558
Allowance for loan losses	(253,481		)					—
Net loans	11,016,262							11,256,558

Mortgage servicing rights	86,783							86,783
Derivative instruments with positive fair value, net of cash margin	293,859							293,859
Other assets – private equity funds	30,902							30,902
Deposits with no stated maturity	15,380,598							15,380,598
Time deposits	3,381,982			0.01 - 9.64%	2.07	1.02 - 1.43%		3,441,610
Other borrowings	2,370,867			0.25 - 6.58%	—	0.04 - 2.76%		2,369,224
Subordinated debentures	398,881			5.19 - 5.82%	1.44	3.29	%	411,243
Derivative instruments with negative fair value, net of cash margin	236,522							236,522

A1pha-509

- 119 -



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and cash equivalents	$	1,110,761						$	1,110,761
Trading securities	99,846							99,846
Investment securities:
Municipal and other tax-exempt	160,870							165,449
Other debt securities	188,713							203,798
Total investment securities	349,583							369,247

Available for sale securities:
U.S. Treasury	1,003							1,003
Municipal and other tax-exempt	70,210							70,210
U.S. agency residential mortgage-backed securities	8,893,789							8,893,789
Privately issued residential mortgage-backed securities	513,222							513,222
Other debt securities	5,893							5,893
Perpetual preferred stock	22,694							22,694
Equity securities and mutual funds	60,197							60,197
Total available for sale securities	9,567,008							9,567,008

Fair value option securities	553,231							553,231
Residential mortgage loans held for sale	169,609							169,609

Loans:
Commercial	6,178,596			0.25 - 18.00%	0.60	0.72 - 4.50%		6,085,941
Commercial real estate	2,183,715			0.38 - 18.00%	1.18	0.28 - 3.66%		2,134,950
Residential mortgage	1,867,997			0.38 - 18.00%	3.32	0.74 - 4.31%		1,915,710
Consumer	507,236			0.38 - 21.00%	0.53	1.96 - 3.74%		507,831
Total loans	10,737,544							10,644,432
Allowance for loan losses	(286,611		)					—
Net loans	10,450,933							10,644,432

Mortgage servicing rights	109,192							109,192
Derivative instruments with positive fair value, net of cash margin	229,887							229,887
Other assets – private equity funds	28,313							28,313
Deposits with no stated maturity	13,951,177							13,951,177
Time deposits	3,634,700			0.01 - 9.64%	1.91	0.76 - 1.45%		3,655,527
Other borrowings	2,962,759			0.07 - 6.58%	—	0.07 - 2.65%		2,962,773
Subordinated debentures	398,788			5.19 - 5.82%	1.87	3.50	%	412,242
Derivative instruments with negative fair value, net of cash margin	173,917							173,917

Because no market exists for certain of these financial instruments and management does not intend to sell these financial instruments, the fair values shown in the tables above may not represent values at which the respective financial instruments could be sold individually or in the aggregate at the given reporting date.

- 120 -

The following methods and assumptions were used in estimating the fair value of these financial instruments:

Cash and Cash Equivalents

The book value reported in the consolidated balance sheet for cash and short-term instruments approximates those assets’ fair values.

Securities

The fair values of securities are generally based on Significant Other Observable Inputs such as quoted prices for comparable instruments or interest rates and credit spreads, yield curves, volatilities prepayment speeds and loss severities.

Loans

The fair value of loans, excluding loans held for sale, are based on discounted cash flow analyses using interest rates and credit and liquidity spreads currently being offered for loans with similar remaining terms to maturity and risk, adjusted for the impact of interest rate floors and ceilings which are classified as Significant Unobservable Inputs. The fair values of loans were estimated to approximate their discounted cash flows less loan loss allowances allocated to these loans of $191 million at June 30, 2012 , $207 million at December 31, 2011 and $259 million at June 30, 2011 .

Deposits

The fair values of time deposits are based on discounted cash flow analyses using interest rates currently being offered on similar transactions which are considered Significant Unobservable Inputs. Estimated fair value of deposits with no stated maturity, which includes demand deposits, transaction deposits, money market deposits and savings accounts, is equal to the amount payable on demand. Although market premiums paid reflect an additional value for these low cost deposits, adjusting fair value for the expected benefit of these deposits is prohibited. Accordingly, the positive effect of such deposits is not included in the tables above.

Other Borrowings and Subordinated Debentures

The fair values of these instruments are based upon discounted cash flow analyses using interest rates currently being offered on similar instruments which are considered Significant Unobservable Inputs

Off-Balance Sheet Instruments

The fair values of commercial loan commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements. The fair values of these off-balance sheet instruments were not significant at June 30, 2012 , December 31, 2011 or June 30, 2011 .

Fair Value Election

As more fully disclosed in Note 2 and Note 5 to the Consolidated Financial Statements, the Company has elected to carry all residential mortgage-backed securities which have been designated as economic hedges against changes in the fair value of mortgage servicing rights, certain corporate debt securities economically hedged by derivative contracts to manage interest rate risk and all residential mortgage loans originated for sale at fair value. Changes in the fair value of these financial instruments are recognized in earnings.

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(12) Federal and State Income Taxes

The reconciliations of income (loss) attributable to continuing operations at the U.S. federal statutory tax rate to income tax expense are as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Amount:
Federal statutory tax	$	53,414		$	38,868		$	98,463		$	75,100
Tax exempt revenue	(1,334		)	(1,331		)	(2,598		)	(2,694		)
Effect of state income taxes, net of federal benefit	3,572			2,738			6,570			5,376
Utilization of tax credits	(1,467		)	(594		)	(2,564		)	(1,093		)
Bank-owned life insurance	(976		)	(979		)	(1,955		)	(1,964		)
Other, net	(60		)	655			753			3,384
Total	$	53,149		$	39,357		$	98,669		$	78,109



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Percent of pretax income:
Federal statutory tax	35	%	35	%	35	%	35	%
Tax exempt revenue	(1	)	(1	)	(1	)	(1	)
Effect of state income taxes, net of federal benefit	3		3		2		3
Utilization of tax credits	(1	)	(1	)	(1	)	(1	)
Bank-owned life insurance	(1	)	(1	)	(1	)	(1	)
Other, net	—		—		1		1
Total	35	%	35	%	35	%	36	%

During the first quarter of 2012, the Internal Revenue Service completed an audit of the Company's federal income tax return for the year ended December 31, 2008 with no adjustments.

(13) Subsequent Events

The Company evaluated events from the date of the consolidated financial statements on June 30, 2012 through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q. No events were identified requiring recognition in and/or disclosure in the consolidated financial statements other than those previously discussed in Note 7.

- 122 -

Six-Month Financial Summary – Unaudited

Consolidated Daily Average Balances, Average Yields and Rates



(Dollars in Thousands, Except Per Share Data)	Six Months Ended
	June 30, 2012							June 30, 2011
	Average Balance		Revenue/ Expense ¹			Yield/ Rate		Average Balance		Revenue/ Expense ¹		Yield/ Rate
Assets
Funds sold and resell agreements	$	15,286	$	6		0.08	%	$	14,714	$	7	0.10	%
Trading securities	119,532		994			1.67	%	70,494		1,159		3.32	%
Investment securities
Taxable ³	296,709		8,716			5.91	%	168,902		5,145		6.14	%
Tax-exempt ³	126,878		3,010			4.89	%	179,621		4,314		4.85	%
Total investment securities	423,587		11,726			5.61	%	348,523		9,459		5.48	%
Available for sale securities
Taxable ³	9,941,938		121,239			2.50	%	9,393,136		138,992		3.09	%
Tax-exempt ³	77,315		1,836			4.91	%	67,402		1,801		5.39	%
Total available for sale securities ³	10,019,253		123,075			2.52	%	9,460,538		140,793		3.10	%
Fair value option securities	445,599		5,798			2.72	%	457,917		8,473		4.14	%
Residential mortgage loans held for sale	186,842		3,552			3.82	%	130,211		2,844		4.40	%
Loans ²	11,525,766		260,458			4.54	%	10,667,329		249,653		4.72	%
Less: allowance for loan losses	247,571							293,151
Loans, net of allowance	11,278,195		260,458			4.64	%	10,374,178		249,653		4.85	%
Total earning assets ³	22,488,294		405,609			3.66	%	20,856,575		412,388		4.06	%
Cash and other assets	3,039,256							2,993,036
Total assets	$	25,527,550						$	23,849,611

Liabilities and equity
Interest-bearing deposits:
Transaction	$	9,049,819	$	7,398		0.16	%	$	9,407,130	$	13,714	0.29	%
Savings	250,414		289			0.23	%	207,192		390		0.38	%
Time	3,189,291		26,201			1.65	%	3,624,602		33,098		1.84	%
Total interest-bearing deposits	12,489,524		33,888			0.55	%	13,238,924		47,202		0.72	%
Funds purchased	1,538,984		986			0.13	%	995,780		596		0.12	%
Repurchase agreements	1,139,538		530			0.09	%	1,033,127		1,554		0.30	%
Other borrowings	79,789		1,865			4.70	%	166,331		2,696		3.27	%
Subordinated debentures	377,525		9,064			4.83	%	398,745		11,118		5.62	%
Total interest-bearing liabilities	15,625,360		46,333			0.60	%	15,832,907		63,166		0.80	%
Non-interest bearing demand deposits	6,063,012							4,410,625
Other liabilities	987,195							997,998
Total equity	2,851,983							2,608,081
Total liabilities and equity	$	25,527,550						$	23,849,611

Tax-equivalent Net Interest Revenue ³			$	359,276		3.07	%			$	349,222	3.26	%
Tax-equivalent Net Interest Revenue to Earning Assets ³						3.25	%					3.43	%
Less tax-equivalent adjustment ¹			4,346							4,582
Net Interest Revenue			354,930							344,640
Provision for (reduction of) allowance for credit losses			(8,000		)					8,950
Other operating revenue			327,416							260,538
Other operating expense			409,023							381,658
Income before taxes			281,323							214,570
Federal and state income tax			98,669							78,109
Net income before non-controlling interest			182,654							136,461
Net income attributable to non-controlling interest			1,411							2,680
Net income attributable to BOK Financial Corp.			$	181,243						$	133,781
Earnings Per Average Common Share Equivalent:
Net income:
Basic			$	2.66						$	1.96
Diluted			$	2.65						$	1.95


^1.	Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments shown are for comparative purposes.


^2.	The loan averages included loans on which the accrual of interest has been discontinued and are stated net of unearned income.


^3.	Yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income.

- 123 -

Quarterly Financial Summary – Unaudited

Consolidated Daily Average Balances, Average Yields and Rates



(In Thousands, Except Per Share Data)	Three Months Ended
	June 30, 2012							March 31, 2012
	Average Balance		Revenue/ Expense ¹			Yield/ Rate		Average Balance		Revenue/ Expense ¹			Yield/ Rate
Assets
Funds sold and resell agreements	$	19,187	$	4		0.08	%	$	11,385	$	2		0.07	%
Trading securities	143,770		548			1.53	%	95,293		446			1.88	%
Investment securities
Taxable ³	290,557		4,282			5.93	%	302,861		4,434			5.89	%
Tax-exempt ³	125,727		1,461			4.90	%	128,029		1,549			4.87	%
Total investment securities	416,284		5,743			5.63	%	430,890		5,983			5.59	%
Available for sale securities
Taxable ³	10,007,368		61,583			2.52	%	9,876,508		59,656			2.48	%
Tax-exempt ³	83,911		943			4.69	%	70,719		893			5.17	%
Total available for sale securities ³	10,091,279		62,526			2.54	%	9,947,227		60,549			2.50	%
Fair value option securities	335,965		2,311			2.62	%	555,233		3,487			2.79	%
Residential mortgage loans held for sale	191,311		1,784			3.75	%	182,372		1,768			3.90	%
Loans ²	11,614,722		132,391			4.58	%	11,436,811		128,067			4.50	%
Less allowance for loan losses	242,605							252,538
Loans, net of allowance	11,372,117		132,391			4.68	%	11,184,273		128,067			4.61	%
Total earning assets ³	22,569,913		205,307			3.69	%	22,406,673		200,302			3.64	%
Cash and other assets	2,968,604							3,109,910
Total assets	$	25,538,517						$	25,516,583
Liabilities and equity
Interest-bearing deposits:
Transaction	$	8,779,659	$	3,572		0.16	%	$	9,319,978	$	3,826		0.17	%
Savings	259,386		147			0.23	%	241,442		142			0.24	%
Time	3,132,220		12,671			1.63	%	3,246,362		13,530			1.68	%
Total interest-bearing deposits	12,171,265		16,390			0.54	%	12,807,782		17,498			0.55	%
Funds purchased	1,740,354		674			0.16	%	1,337,614		312			0.09	%
Repurchase agreements	1,095,298		265			0.10	%	1,183,778		265			0.09	%
Other borrowings	86,667		853			3.96	%	72,911		1,012			5.58	%
Subordinated debentures	357,609		3,512			3.95	%	397,440		5,552			5.62	%
Total interest-bearing liabilities	15,451,193		21,694			0.56	%	15,799,525		24,639			0.63	%
Non-interest bearing demand deposits	6,278,342							5,847,682
Other liabilities	940,249							1,034,143
Total equity	2,868,733							2,835,233
Total liabilities and equity	$	25,538,517						$	25,516,583
Tax-equivalent Net Interest Revenue ³			$	183,613		3.13	%			$	175,663		3.01	%
Tax-equivalent Net Interest Revenue to Earning Assets ³						3.30	%						3.19	%
Less tax-equivalent adjustment ¹			2,252							2,094
Net Interest Revenue			181,361							173,569
Provision for (reduction of ) allowance for credit losses			(8,000		)					—
Other operating revenue			187,035							140,381
Other operating expense			223,786							185,237
Income before taxes			152,610							128,713
Federal and state income tax			53,149							45,520
Net income before non-controlling interest			99,461							83,193
Net income (loss) attributable to non-controlling interest			1,833							(422		)
Net income attributable to BOK Financial Corp.			$	97,628						$	83,615
Earnings Per Average Common Share Equivalent:
Net income:
Basic			$	1.43						$	1.22
Diluted			$	1.43						$	1.22


^1.	Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments shown are for comparative purposes.


^2.	The loan averages included loans on which the accrual of interest has been discontinued and are stated net of unearned income.


^3.	Yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income.

- 124 -



Three Months Ended
December 31, 2011							September 30, 2011						June 30, 2011
Average Balance		Revenue /Expense ¹			Yield / Rate		Average Balance		Revenue / Expense ¹		Yield / Rate		Average Balance		Revenue / Expense ¹		Yield / Rate

$	12,035	$	3		0.10	%	$	12,344	$	5	0.16	%	$	8,814	$	3	0.14	%
97,972		689			2.79	%	88,576		637		2.85	%	80,113		584		2.92	%

314,217		4,677			5.91	%	194,371		2,759		5.63	%	183,084		2,800		6.13	%
129,109		1,565			4.81	%	135,256		1,683		4.94	%	174,614		2,100		4.82	%
443,326		6,242			5.59	%	329,627		4,442		5.35	%	357,698		4,900		5.49	%

9,845,351		54,839			2.36	%	9,586,411		66,040		2.82	%	9,473,401		69,978		3.02	%
69,172		896			5.14	%	70,181		870		4.92	%	70,081		894		5.12	%
9,914,523		55,735			2.38	%	9,656,592		66,910		2.83	%	9,543,482		70,872		3.04	%
660,025		4,877			2.98	%	594,629		5,299		3.66	%	518,073		5,243		4.42	%
201,242		2,032			4.01	%	156,621		1,616		4.09	%	134,876		1,505		4.48	%
11,152,315		130,736			4.65	%	10,872,805		129,073		4.71	%	10,680,755		124,871		4.69	%
266,473							285,570						291,308
10,885,842		130,736			4.76	%	10,587,235		129,073		4.84	%	10,389,447		124,871		4.82	%
22,214,965		200,314			3.69	%	21,425,624		207,982		3.91	%	21,032,503		207,978		4.01	%
3,422,475							3,196,114						2,946,732
$	25,637,440						$	24,621,738					$	23,979,235


$	9,276,608	$	4,213		0.18	%	$	9,310,046	$	5,488	0.23	%	$	9,184,141	$	6,130	0.27	%
220,236		146			0.26	%	214,979		183		0.34	%	210,707		203		0.39	%
3,485,059		14,922			1.70	%	3,617,731		16,736		1.84	%	3,632,130		16,827		1.86	%
12,981,903		19,281			0.59	%	13,142,756		22,407		0.68	%	13,026,978		23,160		0.71	%
1,197,154		186			0.06	%	994,099		135		0.05	%	1,168,670		276		0.09	%
1,189,861		404			0.13	%	1,128,275		495		0.17	%	1,004,217		513		0.20	%
88,489		1,059			4.75	%	128,288		1,701		5.26	%	187,441		2,226		4.76	%
398,858		5,640			5.61	%	398,812		5,627		5.60	%	398,767		5,541		5.57	%
15,856,265		26,570			0.66	%	15,792,230		30,365		0.76	%	15,786,073		31,716		0.81	%
5,588,596							5,086,538						4,554,000
1,422,092							1,004,564						988,273
2,770,487							2,738,406						2,650,889
$	25,637,440						$	24,621,738					$	23,979,235
		$	173,744		3.03	%			$	177,617	3.15	%			$	176,262	3.20	%
					3.20	%					3.34	%					3.40	%
		2,274							2,233						2,261
		171,470							175,384						174,001
		(15,000		)					—						2,700
		138,027							173,977						142,960
		219,197							220,896						203,209
		105,300							128,465						111,052
		37,396							43,006						39,357
		67,904							85,459						71,695
		911							358						2,688
		$	66,993						$	85,101					$	69,007


		$	0.98						$	1.24					$	1.01
		$	0.98						$	1.24					$	1.00

- 125 -

Quarterly Earnings Trends – Unaudited

(In thousands, except share and per share data)



	Three Months Ended
	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011

Interest revenue	$	203,055		$	198,208		$	198,040		$	205,749		$	205,717
Interest expense	21,694			24,639			26,570			30,365			31,716
Net interest revenue	181,361			173,569			171,470			175,384			174,001
Provision for (reduction of) allowance for credit losses	(8,000		)	—			(15,000		)	—			2,700
Net interest revenue after provision for (reduction of) credit losses	189,361			173,569			186,470			175,384			171,301
Other operating revenue
Brokerage and trading revenue	32,600			31,111			25,629			29,451			23,725
Transaction card revenue	26,758			25,430			25,960			31,328			31,024
Trust fees and commissions	19,931			18,438			17,865			17,853			19,150
Deposit service charges and fees	25,216			24,379			24,921			24,614			23,857
Mortgage banking revenue	39,548			33,078			25,438			29,493			19,356
Bank-owned life insurance	2,838			2,871			2,784			2,761			2,872
Other revenue	7,559			9,027			9,189			10,535			7,842
Total fees and commissions	154,450			144,334			131,786			146,035			127,826
Gain (loss) on other assets, net	3,765			(356		)	1,897			712			3,344
Gain (loss) on derivatives, net	2,345			(2,473		)	(174		)	4,048			1,225
Gain (loss) on fair value option securities, net	6,852			(1,733		)	222			17,788			9,921
Gain on available for sale securities, net	20,481			4,331			7,080			16,694			5,468
Total other-than-temporary impairment losses	(135		)	(505		)	(1,037		)	(9,467		)	(74		)
Portion of loss reclassified from other comprehensive income	(723		)	(3,217		)	(1,747		)	(1,833		)	(4,750		)
Net impairment losses recognized in earnings	(858		)	(3,722		)	(2,784		)	(11,300		)	(4,824		)
Total other operating revenue	187,035			140,381			138,027			173,977			142,960
Other operating expense
Personnel	122,297			114,769			121,129			103,260			105,603
Business promotion	6,746			4,388			5,868			5,280			4,777
Contribution to BOKF Charitable Foundation	—			—			—			4,000			—
Professional fees and services	8,343			7,599			7,664			7,418			6,258
Net occupancy and equipment	16,906			16,023			16,826			16,627			15,554
Insurance	4,011			3,866			3,636			2,206			4,771
Data processing and communications	25,264			22,144			26,599			24,446			24,428
Printing, postage and supplies	3,903			3,311			3,637			3,780			3,586
Net losses and operating expenses of repossessed assets	5,912			2,245			6,180			5,939			5,859
Amortization of intangible assets	545			575			895			896			896
Mortgage banking costs	11,173			7,573			10,154			9,349			8,968
Change in fair value of mortgage servicing rights	11,450			(7,127		)	5,261			24,822			13,493
Other expense	7,236			9,871			11,348			12,873			9,016
Total other operating expense	223,786			185,237			219,197			220,896			203,209
Income before taxes	152,610			128,713			105,300			128,465			111,052
Federal and state income tax	53,149			45,520			37,396			43,006			39,357
Net income before non-controlling interest	99,461			83,193			67,904			85,459			71,695
Net income (loss) attributable to non-controlling interest	1,833			(422		)	911			358			2,688
Net income attributable to BOK Financial Corp.	$	97,628		$	83,615		$	66,993		$	85,101		$	69,007

Earnings per share:
Basic	$1.43			$1.22			$0.98			$1.24			$1.01
Diluted	$1.43			$1.22			$0.98			$1.24			$1.00
Average shares used in computation:
Basic	67,472,665			67,665,300			67,526,009			67,827,591			67,898,483
Diluted	67,744,828			67,941,895			67,774,721			68,037,419			68,169,485

- 126 -

PART II. Other Information

Item 1. Legal Proceedings

See discussion of legal proceedings at Note 7 to the Consolidated Financial Statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended June 30, 2012.



Period	Total Number of Shares Purchased ²	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ¹	Maximum Number of Shares that May Yet Be Purchased Under the Plans
April 1 to April 30, 2012	—	$	—	—	2,000,000
May 1 to May 31, 2012	—	$	—	—	2,000,000
June 1 to June 30, 2012	77,263	$	55.30	39,496	1,960,504
Total	77,263			39,496


¹	On April 24, 2012, the Company’s board of directors authorizing the Company to repurchase up to two million shares of the Company’s common stock. As of June 30, 2012, the Company had repurchased 39,496 shares under this plan.


²	The Company routinely repurchases mature shares from employees to cover the exercise price and taxes in connection with employee stock option exercises.

Item 6. Exhibits


31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


101*	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated Statements of Changes in Equity, (iv) the Consolidated Statement of Cash Flows and (v) the Notes to Consolidated Financial Statements

Items 1A, 3, 4 and 5 are not applicable and have been omitted.

* As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

- 127 -

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BOK FINANCIAL CORPORATION

(Registrant)

Date: August 7, 2012

/s/ Steven E. Nell

Steven E. Nell

Executive Vice President and

Chief Financial Officer

/s/ John C. Morrow

John C. Morrow

Senior Vice President and

Chief Accounting Officer

- 128 -

TABLE OF CONTENTS

Part II. Other Information Item 1. Legal Proceedings Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 6. Exhibits

BOKF 10-Q Quarter ended June 30, 2012