BOKF 10-Q Quarterly Report Sept. 30, 2013

BOK FINANCIAL CORP ET AL

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10-Q 1 bokf-20130930x10q.htm 10-Q BOKF-2013.09.30-10Q

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 September 30, 2013



¨		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
Boston Avenue at Second Street
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: 68,787,584 shares of common stock ($.00006 par value) as of September 30, 2013 .

BOK Financial Corporation

Form 10-Q

Quarter Ended September 30, 2013

Index



Part I. Financial Information
Management’s Discussion and Analysis (Item 2)	1
Market Risk (Item 3)	57
Controls and Procedures (Item 4)	59
Consolidated Financial Statements – Unaudited (Item 1)	61
Six Month Financial Summary – Unaudited (Item 2)	145
Quarterly Financial Summary – Unaudited (Item 2)	146
Quarterly Earnings Trend – Unaudited	148

Part II. Other Information
Item 1. Legal Proceedings	149
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	149
Item 6. Exhibits	149
Signatures	150

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

Performance Summary

BOK Financial Corporation (“the Company”) reported net income of $75.7 million or $1.10 per diluted share for the third quarter of 2013 , compared to $87.4 million or $1.27 per diluted share for the third quarter of 2012 and $79.9 million or $1.16 per diluted share for the second quarter of 2013 .

Net income for the nine months ended September 30, 2013 totaled $243.6 million or $3.54 per diluted share compared with $268.6 million or $3.92 per diluted share for the nine months ended September 30, 2012 .

Highlights of the third quarter of 2013 included:


•	Net interest revenue totaled $166.4 million for the third quarter of 2013 , compared to $176.0 million for the third quarter of 2012 and $167.2 million for the second quarter of 2013 . Net interest margin was 2.80% for the third quarter of 2013 . Net interest margin was 3.12% for the third quarter of 2012 and 2.81% for the second quarter of 2013 .

•

Fees and commissions revenue totaled $146.8 million for the third quarter of 2013 , compared to $166.0 million for the third quarter of 2012 and $160.9 million for the second quarter of 2013 . Mortgage banking revenue decreased $26.8 million compared to the third quarter of 2012 and $13.1 million compared to the second quarter of 2013 primarily due to a narrowed gain on sale margin and a change in product mix. Mortgage production volumes also decreased. Nearly all other fee-based revenue sources grew over the prior year and were largely unchanged compared to prior quarter.

•

Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $210.3 million for the third quarter of 2013 , a decrease of $2.5 million compared to the third quarter of 2012 and largely unchanged compared to the previous quarter. Personnel costs increase d $3.0 million over the third quarter of 2012 primarily annual merit increases and incentive compensation. Personnel costs decrease d $2.3 million compared to the second quarter of 2013 primarily due to a seasonal decrease in payroll taxes. Non-personnel expense decrease d $5.5 million compared to the third quarter of 2012 . Lower repossessed asset impairment charges and mortgage banking expense, were partially offset by a $2.1 million discretionary contribution to the BOKF Foundation during the third quarter of 2013 . Non-personnel expenses increase d $1.7 million over the prior quarter primarily due to the discretionary contribution to the BOKF Foundation.

•

An $8.5 million negative provision for credit losses was recorded in the third quarter of 2013 compared to no provision for credit losses in both the third quarter of 2012 and the second quarter of 2013 . Gross charge-offs were $4.7 million in the third quarter of 2013 , $8.9 million in the third quarter of 2012 and $8.6 million in the second quarter of 2013 . Recoveries were $4.4 million in the third quarter of 2013 , compared to $3.2 million in the third quarter of 2012 and $6.2 million in the second quarter of 2013 .

•

The combined allowance for credit losses totaled $196 million or 1.59% of outstanding loans at September 30, 2013 compared to $205 million or 1.65% of outstanding loans at June 30, 2013 . Nonperforming assets that are not guaranteed by U.S. government agencies totaled $183 million or 1.49% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at September 30, 2013 and $200 million or 1.62% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at June 30, 2013 .


•	Outstanding loan balances were $12.4 billion at September 30, 2013 , a decrease of $91 million compared to June 30, 2013 . Commercial loan balances decrease d $137 million during the third quarter, partially offset by a $32 million increase in commercial real estate loans. Residential mortgage loans decrease d by $5.0 million and consumer loans were up $19 million over June 30, 2013 .


•	Period end deposits totaled $19.5 billion at September 30, 2013 , largely unchanged compared to June 30, 2013 . Demand deposit account balances increase d $187 million during the third quarter, offset by a $147 million decrease in interest-bearing transaction accounts and a $48 million decrease in time deposits.

•

The tangible common equity ratio was 9.73% at September 30, 2013 and 9.38% at June 30, 2013 . The tangible common equity ratio is a non-GAAP measure of capital strength used by the Company and investors based on shareholders’ equity 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.

- 1 -


•	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 13.51% at September 30, 2013 and 13.37% at June 30, 2013 .


•	The Company paid a regular quarterly cash dividend of $26 million or $0.38 per common share during the third quarter of 2013 . On October 29, 2013 , the board of directors approved an increase in the quarterly cash dividend to $0.40 per common share payable on or about November 29, 2013 to shareholders of record as of November 16, 2013 .

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 $166.4 million for the third quarter of 2013 compared to $176.0 million for the third quarter of 2012 and $167.2 million for the second quarter of 2013 . Net interest margin was 2.80% for the third quarter of 2013 , 3.12% for the third quarter of 2012 and 2.81% for the second quarter of 2013 .

Net interest revenue decrease d $9.7 million compared to the third quarter of 2012 . Net interest revenue decreased $11.7 million due to lower interest rates. Cash flows from the securities portfolio were reinvested at lower current market rates and loan yields decreased due to renewal of maturing fixed-rate loans at current lower rates and narrowing credit spreads. The decrease in yield on earning assets was partially offset by lower funding costs. Net interest revenue increased $2.1 million primarily due to the growth in average loan and securities balances, partially offset by an increase in the average balance of other borrowings.

Net interest margin also declined compared to the third quarter of 2012 . The tax-equivalent yield on earning assets was 3.09% for the third quarter of 2013 , down 38 basis points from the third quarter of 2012 . The available for sale securities portfolio yield decrease d 46 basis points to 1.92% . Cash flows received from payments on residential mortgage-backed securities are currently being reinvested in short-duration securities that yield nearly 1.75%. Loan yields decreased 27 basis points. Credit spreads have narrowed due to market pricing pressure and improved credit quality in our loan portfolio. Funding costs were down 10 basis points from the third quarter of 2012 . The cost of interest-bearing deposits decreased 10 basis points and the cost of other borrowed funds decreased 4 basis points . The average rate of interest paid on subordinated debentures decreased 27 basis points compared to the third quarter of 2012 . Additionally, the benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 13 basis points in the third quarter of 2013 compared to 17 basis points in the third quarter of 2012 .

Average earning assets for the third quarter of 2013 increased $219 million or 1% over the third quarter of 2012 . Average loans, net of allowance for loan losses, increased $692 million over the third quarter of 2012 due primarily to growth in average commercial loans. The average balance of available for sale securities decreased $499 million over the prior year. Available for sale securities consists largely of U.S. government agency issued residential mortgage-backed securities and U.S. agency commercial mortgage-backed securities that are purchased to supplement earnings and to manage interest rate risk. Growth was primarily in U.S. government agency commercial mortgage-backed securities, partially offset by a decrease in U.S. agency mortgage-backed securities. The average balance of investment securities was up over the prior year, partially offset by a decrease in the average balance of fair value option securities primarily held as an economic hedge of our mortgage servicing rights.

Average deposits increased $673 million over the third quarter of 2012 , including a $392 million increase in average demand deposit balances and a $556 million increase in average interest-bearing transaction accounts, partially offset by a $326 million decrease in average time deposits. Average borrowed funds increased $863 million over the third quarter of 2012 due primarily to increased borrowing from the Federal Home Loan Banks.

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Net interest margin decreased 1 basis point from the second quarter of 2013 . The yield on average earning assets decrease d 2 basis points. The yield on the available for sale securities portfolio decrease d 1 basis point to 1.92% . The loan portfolio yield decreased to 4.06% from 4.12% in the previous quarter primarily due to market pricing pressure. Funding costs decreased 1 basis point to 0.42% . Rates paid on time deposits and savings accounts each decrease d 2 basis points. Rates paid on interest-bearing transaction accounts decrease d a basis point. The cost of other borrowed funds and the benefit to net interest margin from earning assets funded by non-interest bearing liabilities was unchanged compared to the second quarter.

Average earning assets decreased $500 million during the third quarter of 2013 . The available for sale securities portfolio decrease d $502 million compared to the second quarter of 2013 . Average outstanding loans increased $125 million . Average commercial loan balances were largely unchanged. Average commercial real estate loan balances increase d $72 million , residential mortgage loan balances increase d $30 million and consumer balances increase d $26 million . Growth in average loan balances was offset by a $57 million decrease in trading securities, a $47 million decrease in fair value option securities and a $36 million decrease in the average balance of residential mortgage loans held for sale.

Average deposits decreased $80 million compared to the previous quarter. Demand deposit balances increased $221 million . Interest-bearing transaction account balances decrease d $228 million and time deposit account balances decreased $76 million . The average balance of borrowed funds decreased $30 million over the second quarter of 2013 .

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.

Net interest margin may continue to decline. Our ability to further decrease funding costs is limited and our ability to provide near-term net interest revenue support through continued securities portfolio growth may be constrained by our conservative interest rate risk policies. Although we have sufficient capital and liquidity, further securities portfolio growth may result in unacceptable risk as interest rates rise. This interest rate risk policy constraint does not affect our ability to continue loan portfolio growth.

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Table 1 -- Volume/Rate Analysis

(In thousands)



	Three Months Ended Sept. 30, 2013 / 2012									Nine Months Ended Sept. 30, 2013 / 2012
				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	$	3		$	4		$	(1	)	$	3		$	9		$	(6	)
Trading securities	(15		)	(39		)	24			527			451			76
Investment securities:
Taxable securities	(690		)	(635		)	(55		)	(2,004		)	(1,967		)	(37		)
Tax-exempt securities	289			1,856			(1,567		)	330			5,199			(4,869		)
Total investment securities	(401		)	1,221			(1,622		)	(1,674		)	3,232			(4,906		)
Available for sale securities:
Taxable securities	(9,303		)	2,303			(11,606		)	(24,152		)	13,623			(37,775		)
Tax-exempt securities	(216		)	66			(282		)	(132		)	8,024			(8,156		)
Total available for sale securities	(9,519		)	2,369			(11,888		)	(24,284		)	21,647			(45,931		)
Fair value option securities	(1,084		)	(823		)	(261		)	(4,704		)	(3,266		)	(1,438		)
Residential mortgage loans held for sale	(142		)	(348		)	206			392			597			(205		)
Loans	(967		)	7,126			(8,093		)	(8,688		)	22,474			(31,162		)
Total tax-equivalent interest revenue	(12,125		)	9,510			(21,635		)	(38,428		)	45,144			(83,572		)
Interest expense:
Transaction deposits	(725		)	299			(1,024		)	(2,215		)	625			(2,840		)
Savings deposits	(20		)	22			(42		)	(69		)	74			(143		)
Time deposits	(1,646		)	(1,252		)	(394		)	(5,205		)	(3,919		)	(1,286		)
Funds purchased	(498		)	(250		)	(248		)	(915		)	(611		)	(304		)
Repurchase agreements	(158		)	(62		)	(96		)	(413		)	(179		)	(234		)
Other borrowings	808			8,678			(7,870		)	1,429			27,097			(25,668		)
Subordinated debentures	(266		)	(30		)	(236		)	(4,971		)	(542		)	(4,429		)
Total interest expense	(2,505		)	7,405			(9,910		)	(12,359		)	22,545			(34,904		)
Tax-equivalent net interest revenue	(9,620		)	2,105			(11,725		)	(26,069		)	22,599			(48,668		)
Change in tax-equivalent adjustment	56									976
Net interest revenue	$	(9,676	)							$	(27,045	)

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 $145.3 million for the third quarter of 2013 compared to $179.9 million for the third quarter of 2012 and $150.8 million for the second quarter of 2013 . Fees and commissions revenue decreased $19.2 million compared to the third quarter of 2012 . Net gains (losses) on securities, derivatives and other assets decrease d $15.0 million compared to the third quarter of 2012 . Other-than temporary impairment charges were $405 thousand less than the prior year.

Other operating revenue decreased $5.4 million compared to the second quarter of 2013 . Fees and commissions revenue decrease d $14.1 million . Net gains on securities, derivatives and other assets increase d $9.6 million . Other-than-temporary impairment charges were $957 thousand less than the previous quarter.

Table 2 – Other Operating Revenue

(In thousands)



	Three Months Ended Sept. 30,											Three Months Ended June 30, 2013
	2013			2012			Increase(Decrease)			% Increase(Decrease)		Three Months Ended June 30, 2013			Increase(Decrease)			% Increase(Decrease)
Brokerage and trading revenue	$	32,338		$	31,261		$	1,077		3	%	$	32,874		$	(536	)	(2	)%
Transaction card revenue	30,055			27,788			2,267			8	%	29,942			113			—	%
Trust fees and commissions	23,892			19,654			4,238			22	%	24,803			(911		)	(4	)%
Deposit service charges and fees	24,742			25,148			(406		)	(2	)%	23,962			780			3	%
Mortgage banking revenue	23,486			50,266			(26,780		)	(53	)%	36,596			(13,110		)	(36	)%
Bank-owned life insurance	2,408			2,707			(299		)	(11	)%	2,236			172			8	%
Other revenue	9,852			9,149			703			8	%	10,496			(644		)	(6	)%
Total fees and commissions revenue	146,773			165,973			(19,200		)	(12	)%	160,909			(14,136		)	(9	)%
Gain (loss) on other assets, net	(377		)	452			(829		)	N/A		(1,666		)	1,289			N/A
Gain (loss) on derivatives, net	31			464			(433		)	N/A		(2,527		)	2,558			N/A
Gain (loss) on fair value option securities, net	(80		)	6,192			(6,272		)	N/A		(9,156		)	9,076			N/A
Gain on available for sale securities	478			7,967			(7,489		)	N/A		3,753			(3,275		)	N/A
Total other-than-temporary impairment	(1,436		)	—			(1,436		)	N/A		(1,138		)	(298		)	N/A
Portion of loss recognized in (reclassified from) other comprehensive income	(73		)	(1,104		)	1,031			N/A		586			(659		)	N/A
Net impairment losses recognized in earnings	(1,509		)	(1,104		)	(405		)	N/A		(552		)	(957		)	N/A
Total other operating revenue	$	145,316		$	179,944		$	(34,628	)	(19	)%	$	150,761		$	(5,445	)	(4	)%

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 47% of total revenue for the third quarter of 2013 , 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. As an example of this strength, many of the economic factors that cause net interest revenue compression also may drive growth in our mortgage banking revenue. 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.

Brokerage and trading revenue, which includes revenues from securities trading, retail brokerage, customer hedging and investment banking increased $1.1 million or 3% over the third quarter of 2012 .

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Securities trading revenue totaled $17.3 million for the third quarter of 2013 , down $1.6 million or 8% compared to the third quarter of 2012 . 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.

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 decrease d $1.5 million compared to the prior year to $545 thousand for the third quarter of 2013 primarily due to decreased activity by our mortgage banking customers.

Revenue earned from retail brokerage transactions increased $3.1 million or 46% over the third quarter of 2012 to $9.8 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 is primarily based on the volume of customer transactions during the quarter. The number of transactions typically increases with market volatility and decreases with market stability.

Investment banking, which includes fees earned upon completion of underwriting and financial advisory services and loan syndication fees, totaled $4.7 million for the third quarter of 2013 , a $1.0 million or 29% increase over the third quarter of 2012 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 decreased $536 thousand compared to the second quarter of 2013 . Customer hedging revenue decrease d $4.6 million primarily from decreased activity by our mortgage banking customers. Securities trading revenue increase d $3.1 million primarily due to municipal securities and U.S. government agency securities. Retail brokerage fees were up $674 thousand and investment banking fees were up $273 thousand .

The proposed Volcker Rule in Title VI of the Dodd-Frank Act 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. 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. A compliance program will be required for activities permitted under the proposed rules resulting in additional operating and compliance costs by the Company.

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. This includes registration, recordkeeping, reporting, capital, margin and business conduct requirements on major swap dealers and major swap participants. These regulations, which are now largely complete, are comprehensive and establish a wide range of compliance and reporting obligations. However, in the Company's view, these new regulations do not appear to materially limit the Company's ability to effect derivative trades for its customers or materially increase compliance costs.

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 third quarter of 2013 increased $2.3 million or 8% over the third quarter of 2012 . Revenues from the processing of transactions on behalf of the members of our TransFund electronic funds transfer ("EFT") network totaled $15.3 million , up $800 thousand or 6% , due to increased transaction volumes and increased dollar amount per transaction. Merchant services fees totaled $10.0 million , up $1.1 million or 12% on increased transaction activity. Revenue from interchange fees paid by merchants for transactions processed from debit cards issued by the Company totaled $4.8 million , up $364 thousand or 8% over the third quarter of 2012 .

Transaction card revenue was largely unchanged compared to the second quarter of 2013 .

Effective October 1, 2011, the Federal Reserve issued its final rule that established a cap on interchange fees banks with more than $10 billion can charge merchants for certain debit card transaction, commonly known as the Durbin Amendment. The final rule has been successfully challenged by retail merchants and merchant trade groups and is currently on appeal. The ultimate resolution of this legal challenge is uncertain.

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Trust fees and commissions grew by $4.2 million or 22% over the third quarter of 2012 . The acquisition of the Milestone Group by BOK Financial in the third quarter of 2012 added $1.6 billion of fiduciary assets as of September 30, 2013 . Trust fees and commissions generated by the Milestone Group were up $1.6 million over the third quarter of 2012 . The remaining increase was primarily due to the growth in the fair value of fiduciary assets administered by the Company. Fiduciary assets are assets for which the Company possesses investment discretion on behalf of another or any other similar capacity. The fair value of fiduciary assets administered by the Company totaled $29.6 billion at September 30, 2013 , $25.2 billion at September 30, 2012 and $28.3 billion at June 30, 2013 . Trust fees and commissions were down $911 thousand compared to the second quarter of 2013 primarily due to the seasonal timing of tax service fees.

In addition to trust fees and commissions where we served as a fiduciary, we also earn fees as administrator to and investment adviser for the Cavanal Hill Funds, a diversified, open-ended investment company established as a business trust under the Investment Company Act of 1940. The Bank is custodian and BOSC, Inc. is distributor for the Cavanal Hill Funds. Products of the Cavanal Hill Funds are offered to customers, employee benefit plans, trusts and the general public in the ordinary course of business. We have voluntarily waived 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 $2.3 million for the third quarter of 2013 compared to $1.9 million for the third quarter of 2012 and $1.9 million for the second quarter of 2013 .

Deposit service charges and fees decreased $406 thousand or 2% compared to the third quarter of 2012 . Overdraft fees totaled $13.2 million for the third quarter of 2013 , a decrease of $1.1 million or 8% compared to the third quarter of 2012 . Consumers are generally maintaining higher average balances and better managing their accounts to reduce overdraft fees. Commercial account service charge revenue totaled $9.5 million , up $740 thousand or 8% over the prior year. Service charges on deposit accounts with a standard monthly fee were $2.1 million , down $63 thousand or 3% compared to the third quarter of 2012 . Deposit service charges and fees increase d $780 thousand over the prior quarter on increased overdraft fee volumes.

Mortgage banking revenue decreased $26.8 million compared to the third quarter of 2012 . Revenue from originating and marketing mortgage loans totaled $12.5 million , down $27.8 million or 69% compared to the third quarter of 2012 . Mortgage loans funded for sale totaled $1.1 billion in the third quarter of 2013 , up $34 million over the third quarter of 2012 . Outstanding commitments to originate mortgage loans were down $101 million or 22% compared to September 30, 2012 . The decrease in mortgage banking revenue compared to third quarter of 2012 was primarily due to an overall narrowing of gain on sale margins and a shift in product mix toward loans with narrower margins. Approximately 39% of loans originated in the third quarter of 2013 were through correspondent channels, up from 9% for the third quarter of 2012 . Refinanced mortgage loans decreased to 30% of loans originated in third quarter of 2013 compared to 61% of loans originated in third quarter of 2012 .

We expect that the recent increase in mortgage interest rates will decrease future mortgage loan production volume and continue to narrow gain on sale margins. Some of the cost structure of our mortgage banking division is variable related to changes in production volume.

Mortgage servicing revenue increase d $1.0 million or 10% over the third quarter of 2012 . The outstanding principal balance of mortgage loans serviced for others totaled $13.3 billion , an increase of $1.5 billion over September 30, 2012 .

Mortgage banking revenue decrease d $13.1 million compared to the second quarter of 2013 . Residential mortgage loans funded for sale decrease d $116 million over the previous quarter. Outstanding commitments to originate mortgage loans decrease d $196 million or 36% compared to June 30, 2013 .

Mortgage servicing revenue increase d $698 thousand over the prior quarter. The outstanding balance of mortgage loans serviced for others increase d $557 million over June 30, 2013 .

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Table 3 – Mortgage Banking Revenue

(In thousands)



	Three Months Ended Sept. 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2013			Increase (Decrease)			% Increase (Decrease)
	2013			2012			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2013			Increase (Decrease)			% Increase (Decrease)
Originating and marketing revenue:
Residential mortgages loan held for sale	$	31,047		$	40,463		$	(9,416	)	(23	)%	$	17,763		$	13,284		75	%
Residential mortgage loan commitments	12,668			6,512			6,156			95	%	(15,052		)	27,720			(184	)%
Forward sales contracts	(31,167		)	(6,618		)	(24,549		)	371	%	23,645			(54,812		)	(232	)%
Total originating and marketing revenue	12,548			40,357			(27,809		)	(69	)%	26,356			(13,808		)	(52	)%
Servicing revenue	10,938			9,909			1,029			10	%	10,240			698			7	%
Total mortgage revenue	$	23,486		$	50,266		$	(26,780	)	(53	)%	$	36,596		$	(13,110	)	(36	)%

Mortgage loans funded for sale	$	1,080,167		$	1,046,608		$	33,559		3	%	$	1,196,038		$	(115,871	)	(10	)%
Mortgage loan refinances to total funded	30		%	61		%						48		%



	September 30,				Increase (Decrease)			% Increase (Decrease)				Increase (Decrease)			% Increase (Decrease)
	2013		2012		Increase (Decrease)			% Increase (Decrease)		June 30, 2013		Increase (Decrease)			% Increase (Decrease)
Period end outstanding mortgage commitments	$	351,196	$	452,129	$	(100,933	)	(22	)%	$	547,508	$	(196,312	)	(36	)%
Outstanding principal balance of mortgage loans serviced for others	$	13,298,479	$	11,756,350	$	1,542,129		13	%	$	12,741,651	$	556,828		4	%

Net gains on securities, derivatives and other assets

In the third quarter of 2013 , we recognized a $478 thousand gain from sales of $356 million of available for sale securities. Securities were sold either because they had reached their expected maximum potential return or sold to reinvest those proceeds into shorter average life securities. In the third quarter of 2012 , we recognized an $8.0 million gain from sales of $209 million of available for sale securities and a $3.8 million gain on sales of $1.1 billion of available for sale securities in the second quarter of 2013 .

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 increases. As benchmark mortgage rates fall, prepayment speeds increase and the value of our mortgage servicing rights decreases.

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 the fair value of fair value option residential mortgage-backed securities 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
	September 30, 2013			June 30, 2013			September 30, 2012
Gain (loss) on mortgage hedge derivative contracts, net	$	31		$	(2,526	)	$	645
Gain (loss) on fair value option securities, net	(89		)	(9,102		)	5,455
Gain (loss) on economic hedge of mortgage servicing rights	(58		)	(11,628		)	6,100
Gain (loss) on change in fair value of mortgage servicing rights	(346		)	14,315			(9,576		)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges	$	(404	)	$	2,687		$	(3,476	)

Net interest revenue on fair value option securities	$	741		$	910		$	1,750

Average primary residential mortgage interest rate	4.44		%	3.67		%	3.55		%
Average secondary residential mortgage interest rate	3.51		%	2.72		%	2.28		%

Primary rates disclosed in Table 4 above represent rates generally available to borrowers on 30 year conforming mortgage loans and affect the value of our mortgage servicing rights. Secondary rates represent rates generally paid on 30 year residential mortgage-backed securities guaranteed by U.S. government agencies and affect the value of securities and derivative contracts used as an economic hedge of our mortgage servicing rights. The difference between average primary and secondary rates for the third quarter of 2013 was 93 basis points compared to 95 basis points for the second quarter of 2013 and 127 basis points for the third quarter of 2012 .

As more fully discussed in Note 2 to the Consolidated Financial Statements, we recognized $1.5 million of other-than-temporary impairment losses in earnings during the third quarter of 2013 including a $1.4 million impairment on certain municipal securities and a $140 thousand impairment on certain private-label residential mortgage-backed securities we do not intend to sell. We recognized other-than-temporary impairment losses in earnings of $1.1 million in the third quarter of 2012 and $552 thousand in the second quarter of 2013 .

- 9 -

Other Operating Expense

Other operating expense for the third quarter of 2013 totaled $210.6 million , down $11.7 million or 5% compared to the third quarter of 2012 . Changes in the fair value of mortgage servicing rights increased operating expense $346 thousand in the third quarter of 2013 and increased operating expense $9.6 million in the third quarter of 2012 . Excluding changes in the fair value of mortgage servicing rights, operating expenses decrease d $2.5 million or 1% compared to the third quarter of 2012 . Personnel expenses increase d $3.0 million or 2% . Non-personnel expenses decrease d $5.5 million or 6% .

Excluding changes in the fair value of mortgage servicing rights, operating expenses were down $623 thousand compared to the previous quarter. Personnel expenses decrease d $2.3 million and non-personnel expenses increase d $1.7 million .

Table 5 -- Other Operating Expense

(In thousands)



	Three Months Ended Sept. 30,				Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2013			Increase (Decrease)			% Increase (Decrease)
	2013		2012		Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2013			Increase (Decrease)			% Increase (Decrease)
Regular compensation	$	68,483	$	66,708	$	1,775		3	%	$	68,319		$	164		—	%
Incentive compensation:
Cash-based	28,276		30,756		(2,480		)	(8	)%	31,081			(2,805		)	(9	)%
Stock-based	11,461		7,214		4,247			59	%	9,500			1,961			21	%
Total incentive compensation	39,737		37,970		1,767			5	%	40,581			(844		)	(2	)%
Employee benefits	17,579		18,097		(518		)	(3	)%	19,210			(1,631		)	(8	)%
Total personnel expense	125,799		122,775		3,024			2	%	128,110			(2,311		)	(2	)%
Business promotion	5,355		6,054		(699		)	(12	)%	5,770			(415		)	(7	)%
Charitable contribution to BOKF Foundation	2,062		—		2,062			—	%	—			2,062			—	%
Professional fees and services	7,183		7,991		(808		)	(10	)%	8,381			(1,198		)	(14	)%
Net occupancy and equipment	17,280		16,914		366			2	%	16,909			371			2	%
Insurance	3,939		3,690		249			7	%	4,044			(105		)	(3	)%
Data processing and communications	25,695		26,486		(791		)	(3	)%	26,734			(1,039		)	(4	)%
Printing, postage and supplies	3,505		3,611		(106		)	(3	)%	3,580			(75		)	(2	)%
Net losses and operating expenses of repossessed assets	2,014		5,706		(3,692		)	(65	)%	282			1,732			614	%
Amortization of intangible assets	835		742		93			13	%	875			(40		)	(5	)%
Mortgage banking costs	8,753		13,036		(4,283		)	(33	)%	7,910			843			11	%
Change in fair value of mortgage servicing rights	346		9,576		(9,230		)	(96	)%	(14,315		)	14,661			(102	)%
Other expense	7,878		5,759		2,119			37	%	8,326			(448		)	(5	)%
Total other operating expense	$	210,644	$	222,340	$	(11,696	)	(5	)%	$	196,606		$	14,038		7	%

Number of employees (full-time equivalent)	4,626		4,627		(1		)	—	%	4,712			(86		)	(2	)%

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

Personnel expense

The increase in personnel expense was primarily due to standard annual merit increases in regular compensation which were effective for the majority of our staff March 1 and increased incentive compensation. Regular compensation, which consists of salaries and wages, overtime pay and temporary personnel costs increase d $1.8 million or 3% over the third quarter of 2012 .

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Incentive compensation increased $1.8 million or 5% over the third quarter of 2012 . 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 decreased $2.5 million or 8% over the third quarter of 2012 .

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 $1.7 million over the third quarter of 2012 . Expense for equity awards is based on the grant-date fair value of the awards and is unaffected by subsequent changes in fair value. Stock-based compensation expense also includes deferred compensation that will ultimately be settled in cash indexed to the investment performance or changes in earnings per share. Certain executive officers are permitted to defer recognition of taxable income from their stock-based compensation. Deferred compensation may also be diversified into investments other than BOK Financial common stock. Compensation expense reflects changes in the market value of BOK Financial common stock and other investments. Expense based on changes in the fair value of BOK Financial common stock and other investments decreased $304 thousand compared to the the third quarter of 2012 . In addition, $7.4 million was accrued in third quarter of 2013 and $4.5 million was accrued in the third quarter of 2012 for the BOK Financial Corp. 2011 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 for 2006 through 2013. The accrual for the 2011 True-Up Plan totaled $64 million at September 30, 2013 . Based on currently available information, amounts estimated to be payable under the 2011 True-Up Plans are approximately $72 million. The final amount due under the 2011 True-Up Plan will be determined as of December 31, 2013 and distributed in 2014. Performance measurement through 2013 may result in future upward or downward adjustments to compensation expense.

Employee benefit expense decrease d $518 thousand or 3% compared to the third quarter of 2012 primarily due to decreased employee retirement plan and other benefit costs.

Personnel costs decrease d $2.3 million over the second quarter of 2013 primarily due to a seasonal decrease in payroll taxes. Regular compensation expensed was unchanged compared to the prior quarter. Incentive compensation expense decreased $844 thousand . Cash-based incentive compensation, which rewards employees as they generate business opportunities for the Company by growing loans, deposits, customer relationships or other measurable metrics, decreased $2.8 million . Stock-based incentive compensation expense increased $2.0 million . Employee benefits expense decrease d $1.6 million primarily due to a $2.1 million seasonal decrease in payroll taxes. Increased employee medical costs were partially offset by a decrease in employee retirement plan costs. The Company self-insures a portion of its employee health care coverage and these costs may be volatile.

Non-personnel operating expenses

Non-personnel operating expenses, excluding changes in the fair value of mortgage servicing rights, decrease d $5.5 million compared to the third quarter of 2012 . Mortgage banking costs were down $4.3 million primarily due to a lower provision for potential losses on loans sold to U.S. government agencies under standard representations and warranties. Net losses and operating expenses of repossessed assets were down $3.7 million primarily due to decreased impairment charges based on regularly scheduled appraisal updates. During the third quarter of 2013 , the Company made a $2.1 million discretionary contribution to the BOKF Foundation. The BOKF Foundation partners with various charitable organizations to support needs within our communities. All other expenses were up $423 thousand over the third quarter of 2012 .

Excluding changes in the fair value of mortgage servicing rights, non-personnel operating expenses increase d $1.7 million over the second quarter of 2013 primarily due to the discretionary contribution to the BOKF Foundation during the third quarter. Net losses and operating expenses of repossessed assets increase d $1.7 million due to increased impairment charges as a result of regularly scheduled appraisal updates. Professional fees and services were down $1.2 million . Data processing and communications expense decrease d $1.0 million compared to the prior quarter due to the benefit from service contract repricings. All other non-personnel expenses increased $171 thousand.

- 11 -

Income Taxes

Income tax expense was $33.5 million or 31% of book taxable income for the third quarter of 2013 compared to $45.8 million or 34% of book taxable income for the third quarter of 2012 and $41.4 million or 34% of book taxable income for the second quarter of 2013 . The statute of limitations expired on uncertain income tax positions and the Company adjusted its current income tax liability to amounts on filed tax returns for 2012 during the third quarter of 2013. These adjustments reduced income tax expense by $1.4 million in the third quarter of 2013 and $1.0 million in the third quarter of 2012. The Company also made a charitable contribution to the BOKF Foundation and purchased state transferable tax credits in the third quarter of 2013, which reduced income tax expense by $1.1 million and $860 thousand, respectively. Excluding these items, income tax expense would have been 34% of book taxable income for the third quarter of 2013 and 35% of book taxable income for the third 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 September 30, 2013 , $13 million at June 30, 2013 and $12 million at September 30, 2012 .

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 rates are 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 decrease d $4.9 million or 8% compared to the third quarter of 2012 . The decrease was primarily due to lower mortgage banking revenue, partially offset by growth in other fee-based revenue and lower credit losses.

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Table 6 -- Net Income by Line of Business

(In thousands)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Commercial Banking	$	39,716	$	33,351	$	117,775	$	109,651
Consumer Banking	11,830		22,050		52,575		57,603
Wealth Management	3,965		5,038		10,724		15,130
Subtotal	55,511		60,439		181,074		182,384
Funds Management and other	20,227		26,943		62,559		86,242
Total	$	75,738	$	87,382	$	243,633	$	268,626

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Commercial Banking

Commercial Banking contributed $39.7 million to consolidated net income in the third quarter of 2013 , up $6.4 million or 19% over the third quarter of 2012 . Growth in commercial banking net income was largely due to a decrease in net loans charged off and lower repossessed asset costs.

Table 7 -- Commercial Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue from external sources	$	91,540		$	91,381		$	159			$	272,889		$	274,423		$	(1,534	)
Net interest expense from internal sources	(9,405		)	(11,002		)	1,597				(27,907		)	(34,491		)	6,584
Total net interest revenue	82,135			80,379			1,756				244,982			239,932			5,050
Net loans charged off (recovered)	(1,326		)	3,253			(4,579		)		(219		)	10,393			(10,612		)
Net interest revenue after net loans charged off (recovered)	83,461			77,126			6,335				245,201			229,539			15,662

Fees and commissions revenue	42,507			40,091			2,416				127,269			116,635			10,634
Gain on financial instruments and other assets, net	2			—			2				83			14,407			(14,324		)
Other operating revenue	42,509			40,091			2,418				127,352			131,042			(3,690		)

Personnel expense	27,011			25,655			1,356				79,214			76,003			3,211
Net losses and expenses of repossessed assets	2,157			4,908			(2,751		)		3,111			10,577			(7,466		)
Other non-personnel expense	19,084			19,571			(487		)		59,858			56,131			3,727
Corporate allocations	12,717			12,499			218				37,612			38,408			(796		)
Total other operating expense	60,969			62,633			(1,664		)		179,795			181,119			(1,324		)

Income before taxes	65,001			54,584			10,417				192,758			179,462			13,296
Federal and state income tax	25,285			21,233			4,052				74,983			69,811			5,172

Net income	$	39,716		$	33,351		$	6,365			$	117,775		$	109,651		$	8,124

Average assets	$	10,460,986		$	10,065,208		$	395,778			$	10,470,800		$	9,981,793		$	489,007
Average loans	9,722,064			9,117,263			604,801				9,640,823			9,001,334			639,489
Average deposits	9,150,841			8,446,680			704,161				9,141,123			8,338,034			803,089
Average invested capital	911,229			865,157			46,072				900,789			880,777			20,012
Return on average assets	1.51		%	1.32		%	19			bp	1.50		%	1.47		%	3			bp
Return on invested capital	17.29		%	15.34		%	195			bp	17.48		%	16.63		%	85			bp
Efficiency ratio	48.92		%	51.99		%	(307		)	bp	48.30		%	50.80		%	(250		)	bp
Net charge-offs (annualized) to average loans	(0.05		)%	0.14		%	(19		)	bp	—		%	0.15		%	(15		)	bp

Net interest revenue increase d $1.8 million or 2% over the prior year. Growth in net interest revenue was primarily due to a $605 million increase in average loan balances and a $704 million increase in average deposits over the third quarter of 2012 , partially offset by reduced yields on loans and deposits sold to our Funds Management unit.

- 14 -

Fees and commissions revenue increased $2.4 million or 6% over the third quarter of 2012 primarily due to a $1.8 million increase in transaction card revenues. Commercial deposit service charges and fees increase d $613 thousand over the prior year.

Operating expenses decrease d $1.7 million or 3% compared to the third quarter of 2012 . Personnel costs increased $1.4 million or 5% primarily due to standard annual merit increases and headcount. Net losses and operating expenses on repossessed assets decreased $2.8 million compared to the third quarter of 2012 , primarily due to a decrease in impairment charges based on regularly scheduled appraisal updates. Other non-personnel expenses and corporate expense allocations were largely unchanged.

The average outstanding balance of loans attributed to Commercial Banking increase d $605 million to $9.7 billion for the third quarter of 2013 . 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.

Average deposits attributed to Commercial Banking were $9.2 billion for the third quarter of 2013 , up $704 million or 8% over the third quarter of 2012 . Average balances attributed to our commercial & industrial loan customers increased $248 million or 9%, treasury services customers were up $175 million or 12%, energy customers increased $135 million or 11% and small business customers grew by $117 million or 6% over the third quarter of 2012 . Commercial customers continue to maintain high account balances due to continued economic uncertainty and persistently low yields available on high quality investments.

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 also conducts mortgage banking activities through offices located outside of our consumer banking markets and through correspondent loan originators.

Consumer Banking contributed $11.8 million to consolidated net income for the third quarter of 2013 , down $10.2 million compared to the third quarter of 2012 primarily due to a decrease in mortgage banking revenue, partially offset by lower mortgage banking costs. Excluding the impact of mortgage banking, net interest revenue was up. Non-personnel expenses and corporate expense allocations were also lower compared to the prior year. Changes in fair value of our mortgage servicing rights, net of economic hedge, increased net income attributed to consumer banking by $247 thousand in the third quarter of 2013 , compared to decreasing net income attributed to Consumer Banking by $2.1 million in the third quarter of 2012 .

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Table 8 -- Consumer Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue from external sources	$	25,131		$	24,862		$	269			$	74,056		$	77,173		$	(3,117	)
Net interest revenue from internal sources	5,060			5,410			(350		)		15,711			15,093			618
Total net interest revenue	30,191			30,272			(81		)		89,767			92,266			(2,499		)
Net loans charged off	1,331			338			993				3,663			5,991			(2,328		)
Net interest revenue after net loans charged off	28,860			29,934			(1,074		)		86,104			86,275			(171		)

Fees and commissions revenue	48,220			75,942			(27,722		)		172,761			196,163			(23,402		)
Gain (loss) on financial instruments and other assets, net	(1,288		)	4,698			(5,986		)		(20,695		)	9,237			(29,932		)
Other operating revenue	46,932			80,640			(33,708		)		152,066			205,400			(53,334		)

Personnel expense	22,357			23,270			(913		)		68,445			67,481			964
Net losses (gains) and expenses of repossessed assets	(437		)	379			(816		)		(480		)	774			(1,254		)
Change in fair value of mortgage servicing rights	346			9,576			(9,230		)		(16,627		)	13,899			(30,526		)
Other non-personnel expense	23,956			29,608			(5,652		)		70,070			81,378			(11,308		)
Corporate allocations	10,209			11,653			(1,444		)		30,714			33,867			(3,153		)
Total other operating expense	56,431			74,486			(18,055		)		152,122			197,399			(45,277		)

Income before taxes	19,361			36,088			(16,727		)		86,048			94,276			(8,228		)
Federal and state income tax	7,531			14,038			(6,507		)		33,473			36,673			(3,200		)

Net income	$	11,830		$	22,050		$	(10,220	)		$	52,575		$	57,603		$	(5,028	)

Average assets	$	5,655,914		$	5,671,356		$	(15,442	)		$	5,691,406		$	5,705,411		$	(14,005	)
Average loans	2,343,673			2,381,416			(37,743		)		2,353,721			2,390,019			(36,298		)
Average deposits	5,607,710			5,586,485			21,225				5,631,838			5,592,910			38,928
Average invested capital	293,716			292,280			1,436				295,394			287,888			7,506
Return on average assets	0.83		%	1.55		%	(72		)	bp	1.24		%	1.35		%	(11		)	bp
Return on invested capital	15.98		%	30.01		%	(1,403		)	bp	23.80		%	26.73		%	(293		)	bp
Efficiency ratio	71.53		%	61.11		%	1,042			bp	64.28		%	63.62		%	66			bp
Net charge-offs (annualized) to average loans	0.23		%	0.06		%	17			bp	0.21		%	0.33		%	(12		)	bp
Residential mortgage loans funded for sale	$	1,080,167		$	1,046,608		$	33,559			$	3,232,520		$	2,634,809		$	597,711



	September 30, 2013		September 30, 2012		Increase (Decrease)
Banking locations	220		213		7
Residential mortgage loans servicing portfolio ¹	$	14,395,227	$	12,853,987	$	1,541,240


¹	Includes outstanding principal for loans serviced for affiliates

- 16 -

Net interest revenue from Consumer Banking activities was essentially unchanged compared to the third quarter of 2012 . Average loan balances were largely unchanged compared to the third quarter of 2012 . Decreased balances of indirect automobile loans were offset by growth in other consumer loans. Net loans charged off by the Consumer Banking unit increased $1.0 million over the third quarter of 2012 .

Fees and commissions revenue decreased $27.7 million or 37% compared to the third quarter of 2012 primarily due to a $26.8 million decrease in mortgage banking revenue as a result of narrowed gains on sale margins. Deposit service charges and fees also decreased $1.0 million compared to the prior year primarily due to lower overdraft fees.

Excluding the change in the fair value of mortgage servicing rights, operating expenses decreased $8.8 million compared to the third quarter of 2012 . Personnel expenses were down $913 thousand or 4% . Net losses and operating expenses of repossessed assets were down $816 thousand compared to the prior year. Non-personnel expense decrease d $5.7 million or 19% primarily due to decreased mortgage banking expenses. Accruals for potential credit losses on loans sold to U.S. government agencies under standard representations and warranties were higher in the prior year. Corporate expense allocations were down $1.4 million compared to the third quarter of 2012 .

Average consumer deposits were unchanged compared to the third quarter of 2012 . Average demand deposits balances were unchanged. Average interest-bearing transaction accounts increased $161 million or 6% . Average time deposit balances were down $182 million or 10% 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 $1.1 billion of residential mortgage loans in the third quarter of 2013 and $1.1 billion in the third quarter of 2012 . Mortgage loan fundings included $1.1 billion of mortgage loans funded for sale in the secondary market and $38 million funded for retention within the consolidated group. Approximately 21% of our mortgage loans funded were in the Oklahoma market, 13% in the Texas market and 11% in the Colorado market. In addition, 37% of our mortgage loan fundings came from correspondent lenders compared to 8% in the third quarter of 2012 .

At September 30, 2013 , the Consumer Banking division serviced $13.3 billion of mortgage loans for others and $1.1 billion of loans retained within the consolidated group. Approximately 95% 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 $76 million or 0.57% of loans serviced for others at September 30, 2013 compared to $68 million or 0.54% of loans serviced for others at June 30, 2013 . Mortgage servicing revenue, including revenue on loans serviced for the consolidated group, totaled $11.4 million, up $789 thousand or 7% over the third quarter of 2012 .

- 17 -

Wealth Management

Wealth Management contributed $4.0 million to consolidated net income in third quarter of 2013 , down $1.1 million or 21% compared to the third quarter of 2012 .

Table 9 -- Wealth Management

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue from external sources	$	6,300		$	7,064		$	(764	)		$	19,373		$	21,340		$	(1,967	)
Net interest revenue from internal sources	4,837			5,452			(615		)		15,209			15,503			(294		)
Total net interest revenue	11,137			12,516			(1,379		)		34,582			36,843			(2,261		)
Net loans charged off	255			509			(254		)		1,704			1,680			24
Net interest revenue after net loans charged off	10,882			12,007			(1,125		)		32,878			35,163			(2,285		)

Fees and commissions revenue	55,530			49,979			5,551				162,720			147,653			15,067
Gain on financial instruments and other assets, net	71			177			(106		)		648			452			196
Other operating revenue	55,601			50,156			5,445				163,368			148,105			15,263

Personnel expense	40,891			36,967			3,924				121,483			108,734			12,749
Net losses and expenses of repossessed assets	38			19			19				87			39			48
Other non-personnel expense	9,126			7,789			1,337				27,118			22,041			5,077
Corporate allocations	9,938			9,142			796				30,006			27,691			2,315
Other operating expense	59,993			53,917			6,076				178,694			158,505			20,189

Income before taxes	6,490			8,246			(1,756		)		17,552			24,763			(7,211		)
Federal and state income tax	2,525			3,208			(683		)		6,828			9,633			(2,805		)

Net income	$	3,965		$	5,038		$	(1,073	)		$	10,724		$	15,130		$	(4,406	)

Average assets	$	4,385,941		$	4,273,386		$	112,555			$	4,537,922		$	4,202,977		$	334,945
Average loans	931,894			926,197			5,697				934,338			927,016			7,322
Average deposits	4,176,390			4,193,744			(17,354		)		4,373,562			4,129,188			244,374
Average invested capital	206,872			188,755			18,117				204,592			179,772			24,820
Return on average assets	0.36		%	0.47		%	(11		)	bp	0.32		%	0.48		%	(16		)	bp
Return on invested capital	7.62		%	10.59		%	(297		)	bp	7.00		%	11.25		%	(425		)	bp
Efficiency ratio	89.99		%	86.27		%	372			bp	90.57		%	85.91		%	466			bp
Net charge-offs (annualized) to average loans	0.11		%	0.22		%	(11		)	bp	0.24		%	0.24		%	—			bp

- 18 -



	September 30, 2013		September 30, 2012		Increase (Decrease)
Fiduciary assets in custody for which BOKF has sole or joint discretionary authority	$	12,144,305	$	10,946,350	$	1,197,955
Fiduciary assets not in custody for which BOKF has sole or joint discretionary authority	2,039,644		1,588,625		451,019
Non-managed trust assets in custody	15,409,191		12,673,301		2,735,890
Total fiduciary assets	29,593,140		25,208,276		4,384,864
Assets held in safekeeping	21,974,293		20,890,178		1,084,115
Brokerage accounts under BOKF administration	4,782,980		4,329,872		453,108
Assets under management or in custody	$	56,350,413	$	50,428,326	$	5,922,087

Net interest revenue for the third quarter of 2013 was down $1.4 million or 11% compared to the third quarter of 2012 . Growth in average assets was largely due to funds sold to the Funds Management unit and was offset by lower yields. Average deposit balances were unchanged compared to the prior year. Interest-bearing transaction account balances grew by $23 million and non-interest bearing demand deposits were up $7 million . Higher-costing time deposit balances decrease d $51 million . Average loan balances were largely unchanged compared to the prior year. Residential mortgage loans previously originated by our Wealth Management division decreased, offset by growth in lower yielding consumer loan balances. Net loans charged off decreased $254 thousand over the third quarter of 2012 to $255 thousand or 0.11% of average loans on an annualized basis.

Fees and commissions revenue was up $5.6 million or 11% over the third quarter of 2012 . Trust fees and commissions were up $4.2 million or 22% . The acquisition of The Milestone Group, a Denver based investment adviser to high net worth clients in the third quarter of 2012 added $1.6 million of revenue in the third quarter of 2013 compared to $1.1 million in the third quarter of 2012 . The remaining increase was primarily due to the growth in the fair value of fiduciary assets administered by the Company. Brokerage and trading revenue increase d $1.5 million or 5% . Growth in retail brokerage revenue and investment banking was partially offset by the effect of decreased hedging activity by mortgage banking customers.

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 third quarter of 2013 , the Wealth Management division participated in 129 underwritings that totaled $2.0 billion. As a participant, the Wealth Management division was responsible for facilitating the sale of approximately $718 million of these underwritings. In the third quarter of 2012 , the Wealth Management division participated in 132 underwritings that totaled approximately $1.8 billion. Our interest in these underwritings totaled approximately $542 million.

Operating expenses increased $6.1 million or 11% over the third quarter of 2012 . Operating expenses were up $1.5 million related to The Milestone Group acquisition, including a $971 thousand increase in personnel expenses and a $553 thousand increase in non-personnel expenses. Excluding the impact of the Milestone acquisition, personnel expenses increased $3.0 million including a $1.8 million increase in regular compensation and $678 thousand increase in incentive compensation. Non-personnel expenses increased $801 thousand, including amortization of identifiable intangible assets, and corporate expense allocations increase d $796 thousand .

- 19 -

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. Mortgage origination and marketing revenue is attributed to the geography where the mortgage was originated. Mortgage origination and marketing revenue related to correspondent banking is attributed to the Bank of Oklahoma. All interest revenue on mortgage loans retained by BOKF and servicing revenue for mortgage loans sold in the secondary market and serviced for others is also attributed to the Bank of Oklahoma.

Table 10 -- Net Income (Loss) by Geographic Region

(In thousands)



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013		2012			2013		2012
Bank of Oklahoma	$	28,689	$	27,662		$	88,180	$	99,053
Bank of Texas	13,668		12,596			39,917		36,948
Bank of Albuquerque	4,133		6,623			14,366		15,987
Bank of Arkansas	979		2,012			6,092		9,635
Colorado State Bank & Trust	4,506		6,317			16,559		12,076
Bank of Arizona	1,080		(76		)	4,239		(2,854		)
Bank of Kansas City	1,446		2,782			5,733		7,363
Subtotal	54,501		57,916			175,086		178,208
Funds Management and other	21,238		29,468			68,547		90,418
Total	$	75,739	$	87,384		$	243,633	$	268,626

Bank of Oklahoma

Our Oklahoma offices are located primarily in the Tulsa and Oklahoma City metropolitan areas. Oklahoma is a significant market to the Company, representing 44% of our average loans, 53% of our average deposits and 38% of our consolidated net income in the third quarter of 2013 . In addition, all of our mortgage servicing activity, TransFund EFT network and 63% of our fiduciary assets are attributed to the Oklahoma market.

Net income generated by the Bank of Oklahoma in the third quarter of 2013 increased $1.0 million or 4% over the third quarter of 2012 . Changes in the fair value of our mortgage servicing rights, net of economic hedge, decreased net income attributed to the Bank of Oklahoma by $247 thousand in the third quarter of 2013 compared to decreasing net income attributed to the Bank of Oklahoma by $2.1 million in the third quarter of 2012 .

- 20 -

Table 11 -- Bank of Oklahoma

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue	$	55,939		$	60,135		$	(4,196	)		$	168,868		$	179,600		$	(10,732	)
Net loans charged off (recovered)	(120		)	6,486			(6,606		)		(246		)	11,566			(11,812		)
Net interest revenue after net loans charged off (recovered)	56,059			53,649			2,410				169,114			168,034			1,080

Fees and commissions revenue	77,127			85,699			(8,572		)		230,430			246,188			(15,758		)
Gain (loss) on financial instruments and other assets, net	(1,215		)	4,876			(6,091		)		(20,354		)	25,446			(45,800		)
Other operating revenue	75,912			90,575			(14,663		)		210,076			271,634			(61,558		)

Personnel expense	40,423			37,378			3,045				117,695			112,452			5,243
Net losses (gains) and expenses of repossessed assets	(10		)	257			(267		)		146			2,252			(2,106		)
Change in fair value of mortgage servicing rights	346			9,577			(9,231		)		(16,627		)	13,900			(30,527		)
Other non-personnel expense	37,798			43,410			(5,612		)		115,707			121,785			(6,078		)
Corporate allocations	6,460			8,329			(1,869		)		17,948			27,162			(9,214		)
Total other operating expense	85,017			98,951			(13,934		)		234,869			277,551			(42,682		)

Income before taxes	46,954			45,273			1,681				144,321			162,117			(17,796		)
Federal and state income tax	18,265			17,611			654				56,141			63,064			(6,923		)

Net income	$	28,689		$	27,662		$	1,027			$	88,180		$	99,053		$	(10,873	)

Average assets	$	11,024,084		$	11,347,373		$	(323,289	)		$	11,339,495		$	11,423,645		$	(84,150	)
Average loans	5,516,005			5,724,825			(208,820		)		5,569,385			5,725,743			(156,358		)
Average deposits	10,267,229			10,241,120			26,109				10,509,664			10,256,584			253,080
Average invested capital	553,274			548,057			5,217				552,590			549,533			3,057
Return on average assets	1.03		%	0.97		%	6			bp	1.04		%	1.16		%	(12		)	bp
Return on invested capital	20.57		%	20.08		%	49			bp	21.34		%	24.08		%	(274		)	bp
Efficiency ratio	63.63		%	61.28		%	235			bp	62.98		%	61.92		%	106			bp
Net charge-offs (annualized) to average loans	(0.01		)%	0.45		%	(46		)	bp	(0.01		)%	0.27		%	(28		)	bp
Residential mortgage loans funded for sale	$	639,328		$	459,368		$	179,960			$	1,697,095		$	1,189,222		$	507,873

Net interest revenue decreased $4.2 million or 7% compared to the third quarter of 2012 . Average loan balances were down $209 million and loan yields decreased. Net interest earned on residential mortgage-backed securities held as an economic hedge of mortgage servicing rights declined by $881 thousand due to a $106 million reduction in the average balance of this portfolio. The favorable net interest impact of the $26 million increase in average deposit balances was offset by lower yields on funds sold to the Funds Management unit.

- 21 -

Fees and commission revenue was down $8.6 million compared to the third quarter of 2012 largely due to a decrease in mortgage banking revenue. Revenue growth from increased loan production was offset by an overall narrowing of gain on sale margins and a shift in product mix. Transaction card revenue was up $1.5 million on increased transaction volumes. Brokerage and trading revenue was up $1.4 million primarily due to growth in retail brokerage revenue.

Excluding the change in the fair value of mortgage servicing rights, other operating expenses were down $4.7 million compared to the prior year. Personnel expenses were up $3.0 million or 8% primarily due to increased incentive compensation expense and annual merit increases. Non-personnel expenses were down $5.6 million or 13% due primarily to decreased mortgage banking costs and data processing expenses. Accruals for potential losses on loans sold to U.S. government agencies under standard representations and warranties were higher in the prior year. Net losses and operating expenses of repossessed assets were down $267 thousand compared to the third quarter of 2012 . Corporate expense allocations were down $1.9 million compared to the prior year.

Oklahoma had a net recovery of $120 thousand for third quarter of 2013 compared to net charge-offs of $6.5 million or 0.45% of average loans on an annualized basis for the third quarter of 2012 .

Average deposits attributed to the Bank of Oklahoma for the third quarter of 2013 increase d $26 million compared to the prior year. Commercial Banking deposit balances increased $148 million or 3% over the prior year. Increased deposits related to energy and treasury services customers were partially offset by decreased average balances from commercial & industrial and healthcare customers. Consumer deposits also increased $34 million over the third quarter of 2012 . Wealth Management deposits decreased $156 million compared to the third quarter of 2012 primarily due to decreased trust deposits.

- 22 -

Bank of Texas

Our Texas offices are located primarily in the Dallas, Fort Worth and Houston metropolitan areas. Texas is our second largest market with 35% of our average loans, 25% of our average deposits and 18% of our consolidated net income in the third quarter of 2013 .

Table 12 -- Bank of Texas

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue	$	37,496		$	35,562		$	1,934			$	112,234		$	106,545		$	5,689
Net loans charged off (recovered)	(70		)	1,780			(1,850		)		2,958			4,911			(1,953		)
Net interest revenue after net loans charged off (recovered)	37,566			33,782			3,784				109,276			101,634			7,642

Fees and commissions revenue	23,296			23,033			263				72,470			64,303			8,167
Gain on financial instruments and other assets, net	—			—			—				81			188			(107		)
Other operating revenue	23,296			23,033			263				72,551			64,491			8,060

Personnel expense	21,755			20,470			1,285				64,909			60,528			4,381
Net losses and expenses of repossessed assets	217			1,125			(908		)		647			1,542			(895		)
Other non-personnel expense	6,027			6,076			(49		)		19,045			18,190			855
Corporate allocations	11,507			9,463			2,044				34,855			28,134			6,721
Total other operating expense	39,506			37,134			2,372				119,456			108,394			11,062

Income before taxes	21,356			19,681			1,675				62,371			57,731			4,640
Federal and state income tax	7,688			7,085			603				22,454			20,783			1,671

Net income	$	13,668		$	12,596		$	1,072			$	39,917		$	36,948		$	2,969

Average assets	$	5,332,851		$	5,060,350		$	272,501			$	5,330,539		$	5,016,112		$	314,427
Average loans	4,291,909			3,827,175			464,734				4,222,012			3,786,717			435,295
Average deposits	4,849,171			4,538,400			310,771				4,839,832			4,500,972			338,860
Average invested capital	503,829			476,027			27,802				497,541			481,220			16,321
Return on average assets	1.02		%	0.99		%	3			bp	1.00		%	0.98		%	2			bp
Return on invested capital	10.76		%	10.53		%	23			bp	10.73		%	10.26		%	47			bp
Efficiency ratio	64.99		%	63.37		%	162			bp	64.67		%	63.44		%	123			bp
Net charge-offs (annualized) to average loans	(0.01		)%	0.19		%	(20		)	bp	0.09		%	0.17		%	(8		)	bp
Residential mortgage loans funded for sale	$	132,836		$	145,638		$	(12,802	)		$	423,156		$	358,144		$	65,012

Net income for the Bank of Texas increased $1.1 million or 9% over the third quarter of 2012 . Net interest revenue was up and net loans charged off declined from the prior year, partially offset by an increase in operating expenses.

Net interest revenue increased $1.9 million or 5% over the third quarter of 2012 primarily due to decreased deposit costs and growth of the loan portfolio and average deposit balances. Average outstanding loans grew by $465 million or 12% over the third quarter of 2012 and average deposits increase d by $311 million or 7% .

- 23 -

Fees and commissions revenue increased $263 thousand or 1% over the third quarter of 2012 . Mortgage banking revenue decreased $2.8 million or 39% compared to the prior year on lower gains on sale margins. Brokerage and trading revenue grew by $1.9 million or 49% primarily due to increased retail brokerage fees and investment banking revenue. Trust fees and commissions, transaction card revenue and deposit service charges and fees all increased over the prior year.

Operating expenses increased $2.4 million or 6% over the third quarter of 2012 . Personnel costs were up $1.3 million or 6% primarily due to increased incentive compensation in addition to growth in head count and annual merit increases. Net losses and operating expenses of repossessed assets decreased $908 thousand compared to the third quarter of 2012 due primarily to lower impairment charges based on regularly scheduled appraisal updates. Non-personnel expenses were unchanged and corporate expense allocations were up $2.0 million on increased customer transaction activity.

Texas had a $70 thousand net recovery for the third quarter of 2013 , compared to net charge-offs of $1.8 million or 0.19% of average loans for the third quarter of 2012 on an annualized basis.

- 24 -

Bank of Albuquerque

Net income attributable to the Bank of Albuquerque totaled $4.1 million or 5% of consolidated net income, down $2.5 million or 38% from the third quarter of 2012 primarily due to decreased mortgage banking revenue and increased net loans charged off, partially offset by decreased operating expenses. Net interest revenue was up $305 thousand over the third quarter of 2012 . Average loan balances grew by $69 million over the prior year, primarily due to commercial loan growth. Average deposit balances were up $33 million or 3% over the prior year. Net loans charged off totaled $1.0 million or 0.50% of average loans on annualized basis in the third quarter of 2013 compared to net loans charged off of $232 thousand or 0.13% of average loans on an annualized basis in the third quarter of 2012 .

Fees and commissions revenue decreased $4.6 million or 34% over the prior year primarily due to a $5.0 million decrease in mortgage banking revenue. Other operating expense decreased $982 thousand or 9% . Personnel expenses were down $498 thousand primarily due to decreased regular compensation expense. Net losses and operating expenses of repossessed assets and non-personnel expenses were largely unchanged compared to the prior year. Corporate expense allocations were down $728 thousand .

Table 13 -- Bank of Albuquerque

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue	$	9,177		$	8,872		$	305			$	26,912		$	25,737		$	1,175
Net loans charged off	985			232			753				5,373			888			4,485
Net interest revenue after net loans charged off	8,192			8,640			(448		)		21,539			24,849			(3,310		)

Other operating revenue – fees and commission	9,075			13,685			(4,610		)		35,545			34,793			752

Personnel expense	4,770			5,268			(498		)		15,678			15,013			665
Net losses (gains) and expenses of repossessed assets	126			22			104				271			(112		)	383
Other non-personnel expense	2,129			1,989			140				6,347			6,067			280
Corporate allocations	3,478			4,206			(728		)		11,276			12,508			(1,232		)
Total other operating expense	10,503			11,485			(982		)		33,572			33,476			96

Income before taxes	6,764			10,840			(4,076		)		23,512			26,166			(2,654		)
Federal and state income tax	2,631			4,217			(1,586		)		9,146			10,179			(1,033		)

Net income	$	4,133		$	6,623		$	(2,490	)		$	14,366		$	15,987		$	(1,621	)

Average assets	$	1,465,981		$	1,415,978		$	50,003			$	1,426,032		$	1,377,440		$	48,592
Average loans	777,449			708,760			68,689				763,416			707,809			55,607
Average deposits	1,328,049			1,295,201			32,848				1,302,380			1,251,766			50,614
Average invested capital	80,226			78,457			1,769				80,217			79,688			529
Return on average assets	1.12		%	1.86		%	(74		)	bp	1.35		%	1.55		%	(20		)	bp
Return on invested capital	20.43		%	33.58		%	(1,315		)	bp	23.94		%	26.80		%	(286		)	bp
Efficiency ratio	57.54		%	50.92		%	662			bp	53.75		%	55.30		%	(155		)	bp
Net charge-offs (recovered) to average loans (annualized)	0.50		%	0.13		%	37			bp	0.94		%	0.17		%	77			bp
Residential mortgage loans funded for sale	$	90,462		$	153,460		$	(62,998	)		$	399,125		$	394,701		$	4,424

- 25 -

Bank of Arkansas

Net income attributable to the Bank of Arkansas decreased $1.0 million compared to the third quarter of 2012 . Net interest revenue decreased $400 thousand . Average loan balances were down $28 million or 14% primarily due to a decrease in multifamily residential sector loans and the continued runoff of indirect automobile loans. Average deposits grew $18 million or 9% over the prior year.

Fees and commissions revenue was down $750 thousand compared to the prior year primarily due to decreased securities trading revenue at our Little Rock office and decreased mortgage banking revenue. Other operating expenses were up $1.6 million primarily due to increased corporate expense allocations.

Table 14 -- Bank of Arkansas

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue	$	1,358		$	1,758		$	(400	)		$	4,295		$	8,267		$	(3,972	)
Net loans charged off (recovered)	(85		)	934			(1,019		)		(224		)	(1,168		)	944
Net interest revenue after net loans charged off (recovered)	1,443			824			619				4,519			9,435			(4,916		)

Other operating revenue – fees and commissions	11,927			12,677			(750		)		38,597			36,428			2,169

Personnel expense	6,397			6,100			297				19,094			17,731			1,363
Net losses and expenses of repossessed assets	1,045			85			960				1,277			160			1,117
Other non-personnel expense	1,110			1,125			(15		)		3,412			3,708			(296		)
Corporate allocations	3,216			2,898			318				9,362			8,494			868
Total other operating expense	11,768			10,208			1,560				33,145			30,093			3,052

Income before taxes	1,602			3,293			(1,691		)		9,971			15,770			(5,799		)
Federal and state income tax	623			1,281			(658		)		3,879			6,135			(2,256		)

Net income	$	979		$	2,012		$	(1,033	)		$	6,092		$	9,635		$	(3,543	)

Average assets	$	324,481		$	226,898		$	97,583			$	272,821		$	249,117		$	23,704
Average loans	176,318			204,278			(27,960		)		171,820			229,222			(57,402		)
Average deposits	226,704			208,229			18,475				219,916			210,193			9,723
Average invested capital	18,689			18,306			383				18,207			20,258			(2,051		)
Return on average assets	1.20		%	3.53		%	(233		)	bp	2.99		%	5.17		%	(218		)	bp
Return on invested capital	20.78		%	43.72		%	(2,294		)	bp	44.74		%	63.53		%	(1,879		)	bp
Efficiency ratio	88.58		%	70.72		%	1,786			bp	77.28		%	67.33		%	995			bp
Net recoveries to average loans (annualized)	(0.19		)%	1.82		%	(201		)	bp	(0.17		)%	(0.68		)%	51			bp
Residential mortgage loans funded for sale	$	28,621		$	28,789		$	(168	)		$	86,800		$	79,543		$	7,257

- 26 -

Colorado State Bank & Trust

Net income attributed to Colorado State Bank & Trust decrease d $1.8 million or 29% compared to the third quarter of 2012 to $4.5 million . Colorado State Bank & Trust experienced a net recovery of $699 thousand in the third quarter of 2013 , compared to a net recovery of $2.4 million in the third quarter of 2012 . Net interest revenue increased $691 thousand due primarily to a $57 million or 6% increase in average loans outstanding and lower deposit costs, partially offset by decreased yield on funds sold to the Funds Management unit. Average deposits grew $59 million or 5% over the third quarter of 2012 . Interest-bearing transaction deposits grew by $64 million and demand deposits were up $35 million , partially offset by a $44 million decrease in time deposits.

Fees and commissions revenue was down $1.2 million over the third quarter of 2012 . Trust fees and commissions increased $1.9 million due primarily to the acquisition of the Milestone Group during the third quarter of 2012. The Milestone Group is a Denver-based registered investment adviser which provides wealth management services to high net worth clients in Colorado and Nebraska. Mortgage banking revenue decreased $3.2 million due to lower gains on sale margins. Operating expenses were up $824 thousand over the prior year primarily due to the Milestone Group acquisition. Personnel expenses were up $790 thousand , and non-personnel expenses were up $268 thousand .

- 27 -

Table 15 -- Colorado State Bank & Trust

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue	$	9,869		$	9,178		$	691			$	29,774		$	26,678		$	3,096
Net loans charged off (recovered)	(699		)	(2,367		)	1,668				(2,710		)	(70		)	(2,640		)
Net interest revenue after net loans charged off (recovered)	10,568			11,545			(977		)		32,484			26,748			5,736

Other operating revenue – fees and commissions revenue	11,115			12,277			(1,162		)		36,526			28,846			7,680

Personnel expense	7,875			7,085			790				23,479			19,123			4,356
Net losses and expenses of repossessed assets	196			144			52				28			216			(188		)
Other non-personnel expense	2,314			2,046			268				6,770			4,823			1,947
Corporate allocations	3,923			4,209			(286		)		11,631			11,667			(36		)
Total other operating expense	14,308			13,484			824				41,908			35,829			6,079

Income before taxes	7,375			10,338			(2,963		)		27,102			19,765			7,337
Federal and state income tax	2,869			4,021			(1,152		)		10,543			7,689			2,854

Net income	$	4,506		$	6,317		$	(1,811	)		$	16,559		$	12,076		$	4,483

Average assets	$	1,376,419		$	1,294,910		$	81,509			$	1,380,544		$	1,300,638		$	79,906
Average loans	1,016,173			958,842			57,331				1,048,439			890,021			158,418
Average deposits	1,334,937			1,276,068			58,869				1,343,124			1,288,010			55,114
Average invested capital	147,463			130,633			16,830				147,860			123,235			24,625
Return on average assets	1.30		%	1.94		%	(64		)	bp	1.60		%	1.24		%	36			bp
Return on invested capital	12.12		%	19.24		%	(712		)	bp	14.97		%	13.09		%	188			bp
Efficiency ratio	68.19		%	62.85		%	534			bp	63.21		%	64.53		%	(132		)	bp
Net charge-offs (recoveries) to average loans (annualized)	(0.27		)%	(0.98		)%	71			bp	(0.35		)%	(0.01		)%	(34		)	bp
Residential mortgage loans funded for sale	$	111,079		$	145,306		$	(34,227	)		$	348,914		$	338,121		$	10,793

- 28 -

Bank of Arizona

Bank of Arizona had net income of $1.1 million for the third quarter of 2013 compared to a net loss of $76 thousand for the third quarter of 2012 . Net loans charged off totaled $345 thousand or 0.20% of average loans on an annualized basis for the third quarter of 2013 compared to a net recovery of $1.4 million in the third quarter of 2012 .

Net interest revenue increase d $1.3 million or 31% over the third quarter of 2012 . Average loan balances were up $124 million or 22% over the third quarter of 2012 . Average deposits were up $206 million or 58% over the third quarter of 2012 . Interest-bearing transaction account balances increase d $165 million and demand deposit balances increase d $37 million both primarily due to growth in commercial and wealth management deposits.

Fees and commissions revenue was down $353 thousand primarily due to increased mortgage banking revenue. Trust fees and commissions and transaction card revenues both increased over the prior year. Other operating expense decrease d $2.6 million or 32% compared to the third quarter of 2012 . Personnel expenses increased due to increased headcount and annual merit increases. Net losses and operating expenses of repossessed assets totaled $163 thousand in the third quarter of 2013 compared to $3.6 million in the third quarter of 2012 . Impairment charges against repossessed assets based on regularly scheduled appraisal updates were less than the prior year. Non-personnel expenses were unchanged and corporate allocations increased due to increased customer transaction activity.

- 29 -

Table 16 -- Bank of Arizona

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue	$	5,605		$	4,270		$	1,335			$	15,573		$	12,497		$	3,076
Net loans charged off (recovered)	345			(1,391		)	1,736				(249		)	3,029			(3,278		)
Net interest revenue after net loans charged off (recovered)	5,260			5,661			(401		)		15,822			9,468			6,354

Fees and commissions revenue	2,243			2,596			(353		)		8,362			6,949			1,413
Gain on financial instruments and other assets, net	—			—			—				310			—			310
Other operating revenue	2,243			2,596			(353		)		8,672			6,949			1,723

Personnel expense	3,009			2,639			370				9,200			7,634			1,566
Net losses and expenses of repossessed assets	163			3,616			(3,453		)		293			7,284			(6,991		)
Other non-personnel expense	876			860			16				2,814			2,484			330
Corporate allocations	1,687			1,267			420				5,249			3,686			1,563
Total other operating expense	5,735			8,382			(2,647		)		17,556			21,088			(3,532		)

Income (loss) before taxes	1,768			(125		)	1,893				6,938			(4,671		)	11,609
Federal and state income tax	688			(49		)	737				2,699			(1,817		)	4,516

Net income (loss)	$	1,080		$	(76	)	$	1,156			$	4,239		$	(2,854	)	$	7,093

Average assets	$	731,940		$	625,593		$	106,347			$	690,075		$	609,923		$	80,152
Average loans	690,975			567,198			123,777				643,790			553,260			90,530
Average deposits	560,638			354,865			205,773				565,362			288,533			276,829
Average invested capital	66,442			60,261			6,181				64,160			60,835			3,325
Return on average assets	0.59		%	(0.05		)%	64			bp	0.82		%	(0.63		)%	145			bp
Return on invested capital	6.45		%	(0.50		)%	695			bp	8.83		%	(6.27		)%	1,510			bp
Efficiency ratio	73.08		%	122.08		%	(4,900		)	bp	73.35		%	108.44		%	(3,509		)	bp
Net charge-offs (recoveries) to average loans (annualized)	0.20		%	(0.98		)%	118			bp	(0.05		)%	0.73		%	(78		)	bp
Residential mortgage loans funded for sale	$	27,154		$	29,340		$	(2,186	)		$	101,002		$	70,261		$	30,741

- 30 -

Bank of Kansas City

Net income attributed to the Bank of Kansas City was $1.4 million for the third quarter of 2013 compared to $2.8 million for the third quarter of 2012 . Net interest revenue increase d $630 thousand or 19% . Average loan balances increase d $95 million or 22% and average deposit balances were up $55 million or 18% . Demand deposit balances grew $89 million due primarily to commercial account balances. Interest-bearing transaction account balances were down $27 million and higher costing time deposit balances decrease d by $6.8 million . Bank of Kansas City had a net recovery of $57 thousand for the third quarter of 2013 compared to net charge-offs of $43 thousand for the third quarter of 2012 .

Fees and commissions revenue decrease d $3.6 million or 34% compared the prior year primarily due to decreased mortgage banking revenue and brokerage and trading revenue. Trust fees and commissions and deposit service charges and fees grew over the prior year. Personnel costs were down $578 thousand primarily due to reduced incentive compensation expense, partially offset by annual merit increases and growth in headcount. Non-personnel expense increased $297 thousand and corporate expense allocations decrease d by $395 thousand .

Table 17 -- Bank of Kansas City

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Nine Months Ended						Increase (Decrease)
	September 30,										September 30,
	2013			2012							2013			2012
Net interest revenue	$	4,032		$	3,402		$	630			$	11,663		$	9,755		$	1,908
Net loans charged off (recovered)	(57		)	43			(100		)		91			(113		)	204
Net interest revenue after net loans charged off (recovered)	4,089			3,359			730				11,572			9,868			1,704

Other operating revenue – fees and commission	7,168			10,798			(3,630		)		25,036			28,729			(3,693		)

Personnel expense	4,884			5,462			(578		)		15,007			15,018			(11		)
Net losses and expenses of repossessed assets	22			58			(36		)		54			49			5
Other non-personnel expense	1,500			1,203			297				4,471			3,287			1,184
Corporate allocations	2,485			2,880			(395		)		7,693			8,193			(500		)
Total other operating expense	8,891			9,603			(712		)		27,225			26,547			678

Income before taxes	2,366			4,554			(2,188		)		9,383			12,050			(2,667		)
Federal and state income tax	920			1,772			(852		)		3,650			4,687			(1,037		)

Net income	$	1,446		$	2,782		$	(1,336	)		$	5,733		$	7,363		$	(1,630	)

Average assets	$	544,304		$	460,744		$	83,560			$	528,303		$	446,770		$	81,533
Average loans	528,801			433,798			95,003				510,020			425,597			84,423
Average deposits	368,212			313,024			55,188				366,244			264,073			102,171
Average invested capital	40,619			33,460			7,159				39,059			32,800			6,259
Return on average assets	1.05		%	2.40		%	(135		)	bp	1.45		%	2.20		%	(75		)	bp
Return on invested capital	14.12		%	33.08		%	(1,896		)	bp	19.62		%	29.99		%	(1,037		)	bp
Efficiency ratio	79.38		%	67.63		%	1,175			bp	74.18		%	68.98		%	520			bp
Net charge-offs (annualized) to average loans	(0.04		)%	0.04		%	(8		)	bp	0.02		%	(0.04		)%	6			bp
Residential mortgage loans funded for sale	$	50,687		$	84,707		$	(34,020	)		$	176,428		$	204,817		$	(28,389	)

- 31 -

Financial Condition

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 September 30, 2013 , December 31, 2012 and September 30, 2012 .

At September 30, 2013 , the carrying value of investment (held-to-maturity) securities was $644 million and the fair value was $654 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 $83 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 $10.4 billion at September 30, 2013 , a decrease of $290 million from June 30, 2013 . The decrease was primarily in U.S. government agency residential mortgage-backed securities partially offset by an increase in U.S. government agency backed commercial mortgage-backed securities. Commercial mortgage-backed securities have prepayment penalties similar to commercial loans. At September 30, 2013 , residential mortgage-backed securities represented 79% 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. Our best estimate of the duration of the residential mortgage-backed securities portfolio at September 30, 2013 is 3.3 years. Management estimates the duration extends to 3.8 years assuming an immediate 200 basis point upward shock. The estimated duration contracts to 3.1 years assuming a 50 basis point decline in the current 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 September 30, 2013 , approximately $7.9 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 $8.0 billion at September 30, 2013 .

We also hold amortized cost of $228 million in residential mortgage-backed securities privately issued by publicly-owned financial institutions, a decrease of $65 million from June 30, 2013 . The decrease was due to the sale of approximately $45 million in amortized cost during the third quarter and cash received from paydowns. Other-than-temporary impairment losses charged against earnings related to privately issued mortgage-backed securities totaled $140 thousand during the third quarter of 2013 . The fair value of our portfolio of privately issued residential mortgage-backed securities totaled $231 million at September 30, 2013 .

The amortized cost of our portfolio of privately issued residential mortgage-backed securities included $118 million of Jumbo-A residential mortgage loans and $109 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 has been fully absorbed as of September 30, 2013 . The Jumbo-A residential mortgage-backed securities had original credit enhancement of 9.7% and the current level is 4.0%. Approximately 80% 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 33% 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.

- 32 -

The aggregate gross amount of unrealized losses on available for sale securities totaled $132 million at September 30, 2013 , compared to $99 million at June 30, 2013 . 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 charges of $1.5 million were recognized in earnings in the third quarter of 2013 including $140 thousand of credit impairment related to certain privately issued residential mortgage-backed securities that we do not intend to sell and $1.4 million related to certain municipal securities which the Company now intends to sell prior to recovery of its amortized cost based on a tentative settlement offer from the securities issuer.

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 $282 million of bank-owned life insurance at September 30, 2013 . This investment is expected to provide a long-term source of earnings to support existing employee benefit programs. Approximately $251 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 September 30, 2013 , the cash surrender value represented by the underlying fair value of investments held in separate accounts was approximately $263 million. As the underlying fair value of the investments held in a separate account at September 30, 2013 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.

- 33 -

Loans

The aggregate loan portfolio before allowance for loan losses totaled $12.4 billion at September 30, 2013 , a decrease of $91 million compared to June 30, 2013 .

Table 18 -- Loans

(In thousands)



	September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012		September 30, 2012
Commercial:
Energy	$	2,311,991	$	2,384,746	$	2,349,432	$	2,460,659	$	2,416,877
Services	2,148,551		2,204,253		2,114,799		2,164,186		1,967,568
Wholesale/retail	1,181,806		1,175,543		1,085,000		1,106,439		1,060,061
Manufacturing	382,460		386,133		399,818		348,484		343,360
Healthcare	1,160,212		1,118,810		1,081,636		1,081,406		1,022,851
Integrated food services	141,440		163,551		173,800		191,106		200,453
Other commercial and industrial	244,615		275,084		213,820		289,632		255,737
Total commercial	7,571,075		7,708,120		7,418,305		7,641,912		7,266,907

Commercial real estate:
Construction and land development	216,456		225,654		237,829		253,093		293,733
Retail	556,918		553,412		584,279		522,786		535,456
Office	422,043		459,558		420,644		427,872		414,246
Multifamily	520,454		500,452		460,474		402,896		393,129
Industrial	245,022		253,990		237,049		245,994		183,846
Other real estate	388,336		324,030		344,885		376,358		356,862
Total commercial real estate	2,349,229		2,317,096		2,285,160		2,228,999		2,177,272

Residential mortgage:
Permanent mortgage	1,078,661		1,095,871		1,091,575		1,123,965		1,138,960
Permanent mortgages guaranteed by U.S. government agencies	163,919		156,887		162,419		160,444		162,271
Home equity	792,185		787,027		758,456		760,631		715,072
Total residential mortgage	2,034,765		2,039,785		2,012,450		2,045,040		2,016,303

Consumer:
Indirect automobile	10,757		16,555		24,368		34,735		47,281
Other consumer	384,274		359,226		353,281		360,770		324,604
Total consumer	395,031		375,781		377,649		395,505		371,885

Total	$	12,350,100	$	12,440,782	$	12,093,564	$	12,311,456	$	11,832,367

Outstanding commercial loan balances decrease d $137 million compared to June 30, 2013 . Commercial loan balances grew in all the geographical markets except for Oklahoma and Colorado. Commercial real estate loans grew by $32 million during the third quarter of 2013 , primarily in the Texas and Colorado markets. Residential mortgage loans were down $5.0 million compared to June 30, 2013 . Consumer loans were up $19 million over June 30, 2013 primarily due to the growth in other consumer loans in the Texas market.

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.

- 34 -

Table 19 -- Loans by Principal Market

(In thousands)



	September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012		September 30, 2012
Bank of Oklahoma:
Commercial	$	2,801,979	$	2,993,247	$	2,853,608	$	3,089,686	$	3,015,621
Commercial real estate	564,141		569,780		568,500		580,694		598,667
Residential mortgage	1,497,027		1,503,457		1,468,434		1,488,486		1,466,590
Consumer	207,360		211,744		207,662		220,096		197,457
Total Bank of Oklahoma	5,070,507		5,278,228		5,098,204		5,378,962		5,278,335

Bank of Texas:
Commercial	2,858,970		2,849,888		2,718,050		2,726,925		2,572,928
Commercial real estate	853,857		813,659		800,577		771,796		712,899
Residential mortgage	263,945		263,916		272,406		275,408		268,250
Consumer	129,144		105,390		110,060		116,252		108,854
Total Bank of Texas	4,105,916		4,032,853		3,901,093		3,890,381		3,662,931

Bank of Albuquerque:
Commercial	325,542		296,036		271,075		265,830		267,467
Commercial real estate	306,914		314,871		332,928		326,135		316,040
Residential mortgage	131,756		133,058		129,727		130,337		120,606
Consumer	14,583		14,364		14,403		15,456		15,883
Total Bank of Albuquerque	778,795		758,329		748,133		737,758		719,996

Bank of Arkansas:
Commercial	73,063		61,414		54,191		62,049		48,097
Commercial real estate	84,364		85,546		88,264		90,821		119,306
Residential mortgage	10,466		10,691		11,285		13,046		12,939
Consumer	9,426		11,819		13,943		15,421		19,720
Total Bank of Arkansas	177,319		169,470		167,683		181,337		200,062

Colorado State Bank & Trust:
Commercial	748,331		786,262		822,942		776,610		708,223
Commercial real estate	158,320		146,137		171,251		173,327		158,387
Residential mortgage	66,475		62,490		56,052		59,363		59,395
Consumer	22,592		23,148		20,990		19,333		19,029
Total Colorado State Bank & Trust	995,718		1,018,037		1,071,235		1,028,633		945,034

Bank of Arizona:
Commercial	379,817		355,698		326,266		313,296		300,544
Commercial real estate	250,129		258,938		229,020		201,760		204,164
Residential mortgage	49,109		51,774		54,285		57,803		65,513
Consumer	7,059		4,947		5,664		4,686		6,150
Total Bank of Arizona	686,114		671,357		615,235		577,545		576,371

Bank of Kansas City:
Commercial	383,373		365,575		372,173		407,516		354,027
Commercial real estate	131,504		128,165		94,620		84,466		67,809
Residential mortgage	15,987		14,399		20,261		20,597		23,010
Consumer	4,867		4,369		4,927		4,261		4,792
Total Bank of Kansas City	535,731		512,508		491,981		516,840		449,638

Total BOK Financial loans	$	12,350,100	$	12,440,782	$	12,093,564	$	12,311,456	$	11,832,367

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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 healthcare sector loans grew $41 million over June 30, 2013 . This growth was offset by decreases of $73 million in energy sector loans, $56 million in service sector loans, $30 million in integrated food service sector loans and $30 million in other commercial and industrial sector loans. Commercial loans attributed to the New Mexico market were up $30 million and commercial loans attributed to the Arizona market were up $24 million over June 30, 2013 . Commercial loans also grew in the Kansas/Missouri, Arkansas and Texas markets. This loan growth was offset by a $191 million decrease in loans attributed to the Oklahoma market and a $38 million decrease in loans attributed to the Colorado market.

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

Table 20 -- Commercial Loans by Principal Market

(In thousands)



	Bank of Oklahoma		Bank of Texas		Bank of Albuquerque		Bank of Arkansas		Colorado State Bank & Trust		Bank of Arizona		Bank of Kansas City		Total
Energy	$	873,257	$	1,010,919	$	6,208	$	196	$	421,411	$	—	$	—	$	2,311,991
Services	658,874		748,855		208,961		13,811		211,930		163,803		142,317		2,148,551
Wholesale/retail	402,098		548,067		28,019		43,064		12,777		93,484		54,297		1,181,806
Healthcare	576,577		320,526		63,920		3,653		79,647		86,957		28,932		1,160,212
Manufacturing	200,784		117,880		3,768		5,101		7,982		32,240		14,705		382,460
Integrated food services	3,574		5,102		—		—		12,059		—		120,705		141,440
Other commercial and industrial	86,815		107,621		14,666		7,238		2,525		3,333		22,417		244,615
Total commercial loans	$	2,801,979	$	2,858,970	$	325,542	$	73,063	$	748,331	$	379,817	$	383,373	$	7,571,075

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.

Outstanding energy loans totaled $2.3 billion or 19% of total loans at September 30, 2013 . Unfunded energy loan commitments increase d by $124 million to $2.6 billion at September 30, 2013 . Approximately $2.0 billion of energy loans were to oil and gas producers, down $65 million compared to June 30, 2013 . Approximately 59% of the committed production loans are secured by properties primarily producing oil and 41% of the committed production loans are secured by properties primarily producing natural gas. Loans to borrowers engaged in wholesale or retail energy sales decreased $31 million to $209 million . At September 30, 2013 , loans to borrowers that provide services to the energy industry were $56 million and loans to borrowers that manufacture equipment primarily for the energy industry were $21 million , largely unchanged compared to the prior quarter.

- 36 -

The services sector of the loan portfolio totaled $2.1 billion or 17% of total loans and consists of a large number of loans to a variety of businesses, including gaming, educational, public finance, insurance and community foundations. Service sector loans decreased $56 million from June 30, 2013 . Approximately $1.1 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.

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 September 30, 2013 , the outstanding principal balance of these loans totaled $2.3 billion. Substantially all of these loans are to borrowers with local market relationships. We serve as the agent lender in approximately 15% 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, banking regulators annually review a sample of shared national credits for proper risk grading.

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 $2.3 billion or 19% of the loan portfolio at September 30, 2013 . The outstanding balance of commercial real estate loans increased $32 million over the second quarter of 2013 . Loans secured by multifamily residential properties grew by $20 million , primarily growing in the Texas market and offset by decreases in loans attributed to the Arizona market. Other real estate loans increase d $64 million primarily in the New Mexico and Texas markets. Loans secured by office buildings decrease d $38 million primarily in the New Mexico market. Retail sector loans grew in the Arizona market, partially offset by decreases in the Oklahoma and Texas markets. The commercial real estate loan balance as a percentage of our total loan portfolio has ranged from 18% to 22% 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)



	Bank of Oklahoma		Bank of Texas		Bank of Albuquerque		Bank of Arkansas		Colorado State Bank & Trust		Bank of Arizona		Bank of Kansas City		Total
Construction and land development	$	70,988	$	37,588	$	45,956	$	14,656	$	32,755	$	7,005	$	7,508	$	216,456
Retail	121,683		225,759		64,490		12,226		22,876		94,859		15,025		556,918
Office	84,765		186,570		55,552		8,658		25,822		47,773		12,903		422,043
Multifamily	145,766		185,429		40,056		21,088		17,052		52,129		58,934		520,454
Industrial	44,932		111,790		36,770		407		6,494		22,933		21,696		245,022
Other real estate	96,007		106,721		64,090		27,329		53,321		25,430		15,438		388,336
Total commercial real estate loans	$	564,141	$	853,857	$	306,914	$	84,364	$	158,320	$	250,129	$	131,504	$	2,349,229

Construction and land development loans, which consist primarily of residential construction properties and developed building lots, decreased $9.2 million from June 30, 2013 to $216 million at September 30, 2013 primarily due to payments.

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Residential Mortgage and Consumer

Residential mortgage loans totaled $2.0 billion , a decrease of $5.0 million compared to June 30, 2013 . 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 $1.0 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 $61 million or 6% 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 $64 million at June 30, 2013 . 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 September 30, 2013 , $164 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 residential mortgage loans previously sold into GNMA mortgage pools that the Company may repurchase 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. Permanent residential mortgage loans guaranteed by U.S. government agencies increased $7.0 million over June 30, 2013 .

Home equity loans totaled $792 million at September 30, 2013 , a $5.2 million increase over June 30, 2013 . Our home equity loan portfolio is primarily composed of first-lien, fully amortizing home equity loans. 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. Revolving loans have a 5 year revolving period followed by 15 year term of amortizing repayment. Interest-only home equity loans may not be extended for any additional revolving time. All other home equity loans may be extended at management's discretion for an additional 5 year revolving term subject to an update of certain credit information. A summary of our home equity loan portfolio at September 30, 2013 by lien position and amortizing status follows in Table 22.

Table 22 -- Home Equity Loans

(In thousands)



	Revolving		Amortizing		Total
First lien	$	38,786	$	516,101	$	554,887
Junior lien	58,854		178,444		237,298
Total home equity	$	97,640	$	694,545	$	792,185

- 38 -

Indirect automobile loans decreased $5.8 million from June 30, 2013 , primarily due to the previously-disclosed decision by the Company to exit the business in the first quarter of 2009. Approximately $11 million of indirect automobile loans remain outstanding at September 30, 2013 . Other consumer loans increased $25 million , primarily in the Texas market, during the third quarter of 2013 .

The composition of residential mortgage and consumer loans at September 30, 2013 is as follows in Table 23. 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.

Table 23 -- Residential Mortgage and Consumer Loans by Principal Market

(In thousands)



	Bank of Oklahoma		Bank of Texas		Bank of Albuquerque		Bank of Arkansas		Colorado State Bank & Trust		Bank of Arizona		Bank of Kansas City		Total
Residential mortgage:
Permanent mortgage	$	864,317	$	122,379	$	5,568	$	5,365	$	34,983	$	38,963	$	7,086	$	1,078,661
Permanent mortgages guaranteed by U.S. government agencies	163,919		—		—		—		—		—		—		163,919
Home equity	468,791		141,566		126,188		5,101		31,492		10,146		8,901		792,185
Total residential mortgage	$	1,497,027	$	263,945	$	131,756	$	10,466	$	66,475	$	49,109	$	15,987	$	2,034,765

Consumer:
Indirect automobile	$	4,973	$	2,222	$	—	$	3,562	$	—	$	—	$	—	$	10,757
Other consumer	202,387		126,922		14,583		5,864		22,592		7,059		4,867		384,274
Total consumer	$	207,360	$	129,144	$	14,583	$	9,426	$	22,592	$	7,059	$	4,867	$	395,031

Loan Commitments

We enter into certain off-balance sheet arrangements in the normal course of business. These arrangements included unfunded loan commitments which totaled $7.2 billion and standby letters of credit which totaled $440 million at September 30, 2013 . 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 $629 thousand of the outstanding standby letters of credit were issued on behalf of customers whose loans are nonperforming at September 30, 2013 .

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 September 30, 2013 , the principal balance of residential mortgage loans sold subject to recourse obligations totaled $198 million , down from $212 million at June 30, 2013 . Substantially all of these loans are to borrowers in our primary markets including $138 million to borrowers in Oklahoma, $21 million to borrowers in Arkansas, $13 million to borrowers in New Mexico and $11 million to borrowers in the Kansas/Missouri market.

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 as described further in Note 5 to the Consolidated Financial Statements. For the period from 2010 through the third quarter of 2013 combined, approximately 12% of repurchase requests have currently resulted in actual repurchases or indemnification by the Company. The accrual for credit losses related to potential loan repurchases under representations and warranties totaled $7.9 million at September 30, 2013 and $6.2 million at June 30, 2013 .

- 39 -

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 market risk due to 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 cash margin or other collateral in conjunction with our credit agreements 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 September 30, 2013 , the net fair values of derivative contracts, before consideration of cash margin, reported as assets under these programs totaled $386 million compared to $551 million at June 30, 2013 . 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 $124 million , interest rate swaps sold to loan customers with fair values of $49 million , energy contracts with fair values of $31 million and foreign exchange contracts with fair values of $165 million . The aggregate net fair values of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $382 million at September 30, 2013 and $545 million at June 30, 2013 .

At September 30, 2013 , total derivative assets were reduced by $9.2 million of cash collateral received from counterparties and total derivative liabilities were reduced by $152 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 September 30, 2013 follows in Table 24 .

Table 24 -- Fair Value of Derivative Contracts

(In thousands)



Customers	$	247,717
Banks and other financial institutions	127,535
Energy companies	1,419
Exchanges and clearing organizations	654
Fair value of customer risk management program asset derivative contracts, net	$	377,325

- 40 -

At September 30, 2013 , our largest exposure was to a loan customer for an interest rate swap which totaled $8.5 million at September 30, 2013 . We have no direct exposure to European sovereign debt and our aggregate gross exposure to European financial institutions totaled $6.7 million at September 30, 2013 . In addition, we have an aggregate gross exposure to internationally active domestic financial institutions of approximately $218 million at September 30, 2013 .

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 $32.43 per barrel of oil would increase the fair value of derivative assets by $10 million. An increase in prices equivalent to $159.60 per barrel of oil would increase the fair value of derivative assets by $351 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 our credit rating to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $27 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 September 30, 2013 , 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 $196 million or 1.59% of outstanding loans and 174% of nonaccruing loans at September 30, 2013 . The allowance for loans losses was $194 million and the accrual for off-balance sheet credit losses was $1.6 million . At June 30, 2013 , the combined allowance for credit losses was $205 million or 1.65% of outstanding loans and 168% of nonaccruing loans at June 30, 2013 . The allowance for loan losses was $203 million and the accrual for off-balance sheet credit losses was $1.6 million .

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. After evaluating all credit factors, the Company determined that an $8.5 million negative provision for credit losses was necessary during the third quarter of 2013 primarily due to a decrease in gross loss rates. No provision for credit losses was recorded in both the second quarter of 2013 and the third quarter of 2012 .

- 41 -

Table 25 -- Summary of Loan Loss Experience

(In thousands)



	Three Months Ended
	September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012
Allowance for loan losses:
Beginning balance	$	203,124		$	205,965		$	215,507		$	233,756		$	231,669
Loans charged off:
Commercial	(1,354		)	(4,538		)	(298		)	(1,501		)	(812		)
Commercial real estate	(419		)	(450		)	(4,800		)	(1,094		)	(2,607		)
Residential mortgage	(961		)	(2,057		)	(1,779		)	(2,600		)	(1,600		)
Consumer	(1,974		)	(1,507		)	(2,032		)	(2,805		)	(3,902		)
Total	(4,708		)	(8,552		)	(8,909		)	(8,000		)	(8,921		)
Recoveries of loans previously charged off:
Commercial	864			1,940			3,393			947			(890		)	¹
Commercial real estate	2,073			2,727			1,124			1,166			2,684
Residential mortgage	188			444			572			469			298
Consumer	1,284			1,099			1,468			1,141			1,112
Total	4,409			6,210			6,557			3,723			3,204
Net loans charged off	(299		)	(2,342		)	(2,352		)	(4,277		)	(5,717		)
Provision for loan losses	(8,500		)	(499		)	(7,190		)	(13,972		)	7,804
Ending balance	$	194,325		$	203,124		$	205,965		$	215,507		$	233,756
Accrual for off-balance sheet credit losses:
Beginning balance	$	1,604		$	1,105		$	1,915		$	1,943		$	9,747
Provision for off-balance sheet credit losses	—			499			(810		)	(28		)	(7,804		)
Ending balance	$	1,604		$	1,604		$	1,105		$	1,915		$	1,943
Total combined provision for credit losses	$	(8,500	)	$	—		$	(8,000	)	$	(14,000	)	$	—
Allowance for loan losses to loans outstanding at period-end	1.57		%	1.63		%	1.70		%	1.75		%	1.98		%
Net charge-offs (annualized) to average loans	0.01		%	0.08		%	0.08		%	0.14		%	0.19		%	¹
Total provision for credit losses (annualized) to average loans	(0.27		)%	—		%	(0.26		)%	(0.47		)%	—		%
Recoveries to gross charge-offs	93.65		%	72.61		%	73.60		%	46.54		%	35.92		%
Accrual for off-balance sheet credit losses to off-balance sheet credit commitments	0.02		%	0.02		%	0.02		%	0.03		%	0.03		%
Combined allowance for credit losses to loans outstanding at period-end	1.59		%	1.65		%	1.71		%	1.77		%	1.99		%


¹	Includes $7.1 million of negative recovery related to a refund of a settlement between BOK Financial and the City of Tulsa invalidated by the Oklahoma Supreme Court. Excluding this refund, BOK Financial had net charge-offs (recoveries) to average loans of (0.05%) on an annualized basis.

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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 estimated loss rates by loan class and non-specific allowances based on general economic conditions, concentration in loans with large balances and other relevant factors.

Loans are considered to be impaired when it is probable that we will not collect all amounts due according to the contractual terms of the loan agreement. This includes all nonaccruing loans, all loans modified in troubled debt restructurings and all government guaranteed loans repurchased from GNMA pools. At September 30, 2013 , impaired loans totaled $276 million , including $2.5 million with specific allowances of $1.3 million and $274 million with no specific allowances because the loan balances represent the amounts we expect to recover. At June 30, 2013 , impaired loans totaled $279 million , including $5.7 million of impaired loans with specific allowances of $2.0 million and $273 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-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 $152 million at September 30, 2013 compared to $159 million at June 30, 2013 . The general allowance related to commercial loans decreased $2.3 million and the general allowance related to commercial real estate loans decreased $3.9 million primarily due to the continued downward trend of loss rates.

Nonspecific allowances are maintained for risks beyond factors specific to a particular portfolio segment 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 September 30, 2013 , largely unchanged from June 30, 2013 . The nonspecific allowance at both September 30, 2013 and June 30, 2013 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. Risks related to the European debt crisis and domestic economic risks remain stable compared to the previous quarter. An identified risk related to the rapid rise in interest rates during the year is also considered. As interest rates increase and variable rate loans re-price, borrowers are impacted as their debt service increases.

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 loan 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 $75 million at September 30, 2013 , primarily composed of $17 million of construction and land development loans, $12 million of loans secured by multifamily residential properties, $11 million of service sector loans and $11 million of other commercial real estate loans. Potential problem loans totaled $91 million at June 30, 2013 .

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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 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 60 days and 180 days past due, depending on loan class. In addition, non-risk graded loans are generally charged-down to collateral value within 60 days of being notified of a borrower's bankruptcy filing, regardless of payment status.

Net loans charged off during the third quarter of 2013 totaled $299 thousand compared to $2.3 million in the second quarter of 2013 and $5.7 million in the third quarter of 2012 . The ratio of net loans charged off to average loans on an annualized basis was 0.01% for the third quarter of 2013 compared with 0.08% for the second quarter of 2013 and 0.19% for the third quarter of 2012 . Net loans charged off in the third quarter of 2013 decrease d $2.0 million compared to the previous quarter.

Net loans charged off (recovered) by portfolio segment category and principal market area during the third quarter of 2013 follow in Table 26 .

Table 26 -- Net Loans Charged Off (Recovered)

(In thousands)



	Oklahoma			Texas			Colorado			Arkansas			New Mexico		Arizona			Kansas/ Missouri			Total
Commercial	$	(506	)	$	(238	)	$	(4	)	$	(17	)	$	143	$	1,114		$	(2	)	$	490
Commercial real estate	(518		)	(1		)	(715		)	—			352		(772		)	—			(1,654		)
Residential mortgage	520			(37		)	—			5			304		(12		)	(7		)	773
Consumer	384			206			20			(73		)	186		15			(48		)	690
Total net loans charged off (recovered)	$	(120	)	$	(70	)	$	(699	)	$	(85	)	$	985	$	345		$	(57	)	$	299

Net commercial loans charged off during the third quarter of 2013 decrease d $2.1 million . The impact of a $4.0 million charge-off related to a single wholesale/retail sector customer in the New Mexico market in the second quarter of 2013 was partially offset by a $1.1 million charge-off of a single service sector loan in the Arizona market during the third quarter.

Net charge-offs of commercial real estate loans increase d $623 thousand over the second quarter of 2013 . The second quarter of 2013 included $1.8 million recovery from a single construction and land development relationship attributed to the Colorado market. Net charge-offs in the New Mexico market were primarily composed of a $380 thousand loan to a single multifamily residential borrower.

Residential mortgage net charge-offs were down $840 thousand compared to the previous quarter and consumer loan net charge-offs, which include indirect auto loan and deposit account overdraft losses, increase d $282 thousand . Net charge-offs related to residential mortgage loans serviced by the our mortgage banking division that were originated across the geographical footprint and retained by the Company are attributed to the Oklahoma market.

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Nonperforming Assets

Table 27 -- Nonperforming Assets

(In thousands)



	September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012		September 30, 2012
Nonaccruing loans:
Commercial	$	19,522	$	20,869	$	19,861	$	24,467	$	21,762
Commercial real estate	52,502		58,693		65,175		60,626		75,761
Residential mortgage	39,256		40,534		45,426		46,608		29,267
Consumer	1,624		2,037		2,171		2,709		5,109
Total nonaccruing loans	112,904		122,133		132,633		134,410		131,899
Accruing renegotiated loans:
Guaranteed by U.S. government agencies	50,099		48,733		47,942		38,515		24,590
Other	—		—		—		—		3,402
Total accruing renegotiated loans	50,099		48,733		47,942		38,515		27,992
Total nonperforming loans	163,003		170,866		180,575		172,925		159,891
Real estate and other repossessed assets:
Guaranteed by U.S. government agencies	37,906		32,155		27,864		22,365		22,819
Other	70,216		77,957		74,837		81,426		81,309
Real estate and other repossessed assets	108,122		110,112		102,701		103,791		104,128
Total nonperforming assets	$	271,125	$	280,978	$	283,276	$	276,716	$	264,019
Total nonperforming assets excluding those guaranteed by U.S. government agencies	$	182,543	$	200,007	$	207,256	$	215,347	$	216,610

Nonaccruing loans by principal market:
Bank of Oklahoma	$	49,245	$	52,541	$	54,392	$	56,424	$	41,599
Bank of Texas	20,127		21,620		37,571		31,623		28,046
Bank of Albuquerque	21,369		24,134		12,479		13,401		13,233
Bank of Arkansas	896		998		1,008		1,132		5,958
Colorado State Bank & Trust	8,754		9,510		11,771		14,364		22,878
Bank of Arizona	12,507		13,323		15,392		17,407		20,145
Bank of Kansas City	6		7		20		59		40
Total nonaccruing loans	$	112,904	$	122,133	$	132,633	$	134,410	$	131,899

Nonaccruing loans by loan portfolio segment and class:
Commercial:
Energy	$	1,953	$	2,277	$	2,377	$	2,460	$	3,063
Manufacturing	843		876		1,848		2,007		2,283
Wholesale / retail	7,223		6,700		2,239		3,077		2,007
Integrated food services	—		—		—		684		—
Services	6,927		7,448		9,474		12,090		10,099
Healthcare	1,733		2,670		2,962		3,166		3,305
Other	843		898		961		983		1,005
Total commercial	19,522		20,869		19,861		24,467		21,762

- 45 -



	September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012
Commercial real estate:
Land development and construction	20,784			21,135			23,462			26,131			38,143
Retail	7,914			8,406			8,921			8,117			6,692
Office	6,838			7,828			12,851			6,829			9,833
Multifamily	4,350			6,447			4,501			2,706			3,145
Industrial	—			—			2,198			3,968			4,064
Other commercial real estate	12,616			14,877			13,242			12,875			13,884
Total commercial real estate	52,502			58,693			65,175			60,626			75,761
Residential mortgage:
Permanent mortgage	31,797			32,747			38,153			39,863			23,207
Permanent mortgage guaranteed by U.S. government agencies	577			83			214			489			510
Home equity	6,882			7,704			7,059			6,256			5,550
Total residential mortgage	39,256			40,534			45,426			46,608			29,267
Consumer	1,624			2,037			2,171			2,709			5,109
Total nonaccruing loans	$	112,904		$	122,133		$	132,633		$	134,410		$	131,899

Ratios:
Allowance for loan losses to nonaccruing loans	172.12		%	166.31		%	155.29		%	160.34		%	177.22		%
Nonaccruing loans to period-end loans	0.91		%	0.98		%	1.10		%	1.09		%	1.11		%
Accruing loans 90 days or more past due ¹	$	188		$	2,460		$	4,229		$	3,925		$	1,181


¹	Excludes residential mortgages guaranteed by agencies of the U.S. Government

Nonperforming assets totaled $271 million or 2.18% of outstanding loans and repossessed assets at September 30, 2013 . Nonaccruing loans totaled $113 million , accruing renegotiated residential mortgage loans totaled $50 million and real estate and other repossessed assets totaled $108 million . All accruing renegotiated residential mortgage loans, $577 thousand of nonaccruing loans and $38 million of real estate and other repossessed assets are guaranteed by U.S. government agencies. Excluding assets guaranteed by U.S. government agencies, nonperforming assets decrease d $17 million during the third quarter. The Company generally retains nonperforming assets to maximize potential recovery which may cause future nonperforming assets to decrease more slowly.

Loans are generally 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 loans in troubled debt restructurings. Modifications may include extension of payment terms and rate concessions. We do not forgive principal or accrued but unpaid interest. All loans modified in troubled debt restructurings, except for residential mortgage loans guaranteed by U.S. government agencies, are classified as nonaccruing. We may also renew matured nonaccruing loans. All 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. All 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. Consumer loans modified at the direction of bankruptcy court orders are identified as troubled debt restructurings and classified as nonaccruing.

At September 30, 2013 , renegotiated loans consist solely of accruing residential mortgage loans guaranteed by U.S. government agencies that have been modified in troubled debt restructurings. See Note 4 to the Consolidated Financial Statements 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. Modified loans guaranteed by U.S. government agencies under residential mortgage loan programs may be sold once they become eligible according to U.S. government agency guidelines.

A rollforward of nonperforming assets for the third quarter of 2013 follows in Table 28 .

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Table 28 -- Rollforward of Nonperforming Assets

(In thousands)



	Three Months Ended
	September 30, 2013
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, June 30, 2013	$	122,133		$	48,733		$	110,112		$	280,978
Additions	24,425			10,492			—			34,917
Transfers from premises and equipment	—			—			—			—
Payments	(9,257		)	(332		)	—			(9,589		)
Charge-offs	(4,708		)	—			—			(4,708		)
Net gains and write-downs	—			—			(438		)	(438		)
Foreclosure of nonperforming loans	(5,243		)	—			5,243			—
Foreclosure of loans guaranteed by U.S. government agencies	(14,865		)	—			14,865			—
Proceeds from sales	—			(8,193		)	(12,490		)	(20,683		)
Conveyance to U.S. government agencies	—			—			(9,114		)	(9,114		)
Net transfers to nonaccruing loans	(4		)	4			—			—
Return to accrual status	(802		)	—			—			(802		)
Other, net	1,225			(605		)	(56		)	564
Balance, Sept. 30, 2013	$	112,904		$	50,099		$	108,122		$	271,125



	Nine Months Ended
	September 30, 2013
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, Dec. 31, 2012	$	134,410		$	38,515		$	103,791		$	276,716
Additions	105,997			39,538			—			145,535
Transfers from premises and equipment	—			—			668			668
Payments	(35,002		)	(1,213		)	—			(36,215		)
Charge-offs	(22,169		)	—			—			(22,169		)
Net gains and write-downs	—			—			948			948
Foreclosure of nonperforming loans	(25,224		)	—			25,224			—
Foreclosure of loans guaranteed by U.S. government agencies	(47,183		)	—			47,183			—
Proceeds from sales	—			(26,852		)	(37,870		)	(64,722		)
Conveyance to U.S. government agencies	—			—			(31,641		)	(31,641		)
Net transfers to nonaccruing loans	344			(344		)	—			—
Return to accrual status	(931		)	—			—			(931		)
Other, net	2,662			455			(181		)	2,936
Balance, Sept. 30, 2013	$	112,904		$	50,099		$	108,122		$	271,125

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 third quarter of 2013 , $15 million of properties guaranteed by U.S. government agencies were foreclosed on and $9.1 million of properties were conveyed to the applicable U.S. government agencies.

- 47 -

Nonaccruing loans totaled $113 million or 0.91% of outstanding loans at September 30, 2013 and $122 million or 0.98% of outstanding loans at June 30, 2013 . Nonaccruing loans decrease d $9.2 million from June 30, 2013 due primarily to $9.3 million of payments, $4.7 million of charge-offs and $20 million of foreclosures. Newly identified nonaccruing loans totaled $24 million for the third quarter of 2013 .

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

Table 29 -- Nonaccruing Loans by Principal Market

(Dollars in thousands)



	September 30, 2013				June 30, 2013				Change
	Amount		% of outstanding loans		Amount		% of outstanding loans		Amount			% of outstanding loans
Bank of Oklahoma	$	49,245	0.97	%	$	52,541	1.00	%	$	(3,296	)	(3	)	bp
Bank of Texas	20,127		0.49	%	21,620		0.54	%	(1,493		)	(5	)
Bank of Albuquerque	21,369		2.74	%	24,134		3.18	%	(2,765		)	(44	)
Bank of Arkansas	896		0.51	%	998		0.59	%	(102		)	(8	)
Colorado State Bank & Trust	8,754		0.88	%	9,510		0.93	%	(756		)	(5	)
Bank of Arizona	12,507		1.82	%	13,323		1.98	%	(816		)	(16	)
Bank of Kansas City	6		—	%	7		—	%	(1		)	—
Total	$	112,904	0.91	%	$	122,133	0.98	%	$	(9,229	)	(7	)	bp

Nonaccruing loans attributed to the Bank of Oklahoma are primarily composed of $31 million of residential mortgage loans and $12 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 Bank of Oklahoma. Nonaccruing loans attributed to the Bank of Texas included $12 million of commercial real estate loans and $4.4 million of residential mortgage loans. Nonaccruing loans attributed to the Bank of Albuquerque included $13 million of commercial real estate loans and $6.2 million of commercial loans. Nonaccruing loans attributed to the Bank of Arizona and Colorado State Bank & Trust both consisted primarily of commercial real estate loans.

Commercial

Nonaccruing commercial loans totaled $20 million or 0.26% of total commercial loans at September 30, 2013 , compared to $21 million or 0.27% of total commercial loans at June 30, 2013 . Nonaccruing commercial loans at September 30, 2013 were primarily composed of $7.2 million or 0.61% of wholesale/retail sector loans primarily attributed to Bank of Albuquerque and Bank of Oklahoma and $6.9 million or 0.32% of total services sector loans primarily attributed to the Bank of Arizona and Bank of Texas. Nonaccruing commercial loans attributed to the Bank of Albuquerque were primarily composed of a single wholesale/retail sector loan. Nonaccruing commercial loans decrease d $1.3 million in the third quarter of 2013 . Newly identified nonaccruing commercial loans of $1.8 million were partially offset by $1.4 million of charge-offs and $2.4 million in payments during the third quarter.

The distribution of nonaccruing commercial loans among our various markets was as follows in Table 30.

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Table 30 -- Nonaccruing Commercial Loans by Principal Market

(Dollars in thousands)



	September 30, 2013				June 30, 2013				Change
	Amount		% of outstanding loans		Amount		% of outstanding loans		Amount			% of outstanding loans
Bank of Oklahoma	$	5,663	0.20	%	$	5,166	0.17	%	$	497		3		bp
Bank of Texas	3,007		0.11	%	4,475		0.16	%	(1,468		)	(5	)
Bank of Albuquerque	6,219		1.91	%	6,106		2.06	%	113			(15	)
Bank of Arkansas	285		0.39	%	298		0.49	%	(13		)	(10	)
Colorado State Bank & Trust	597		0.08	%	632		0.08	%	(35		)	—
Bank of Arizona	3,751		0.99	%	4,192		1.18	%	(441		)	(19	)
Bank of Kansas City	—		—	%	—		—	%	—			—
Total commercial	$	19,522	0.26	%	$	20,869	0.27	%	$	(1,347	)	(1	)	bp

Commercial Real Estate

Nonaccruing commercial real estate loans decreased to $53 million or 2.23% of outstanding commercial real estate loans at September 30, 2013 from $59 million or 2.53% of outstanding commercial real estate loans at June 30, 2013 . Nonaccruing commercial real estate loans continue to be largely concentrated in land development and residential construction loans. Newly identified nonaccruing commercial real estate loans totaled $2.4 million , offset by $5.7 million of cash payments received, $1.7 million of foreclosures and $419 thousand of charge-offs. The distribution of our nonaccruing commercial real estate loans among our geographic markets follows in Table 31.

Table 31 -- Nonaccruing Commercial Real Estate Loans by Principal Market

(Dollars in thousands)



	September 30, 2013				June 30, 2013				Change
	Amount		% of outstanding loans		Amount		% of outstanding loans		Amount			% of outstanding loans
Bank of Oklahoma	$	11,504	2.04	%	$	14,404	2.53	%	$	(2,900	)	(49	)	bp
Bank of Texas	12,337		1.44	%	12,213		1.50	%	124			(6	)
Bank of Albuquerque	13,155		4.29	%	15,590		4.95	%	(2,435		)	(66	)
Bank of Arkansas	—		—	%	—		—	%	—			—
Colorado State Bank & Trust	8,009		5.06	%	8,697		5.95	%	(688		)	(89	)
Bank of Arizona	7,497		3.00	%	7,789		3.01	%	(292		)	(1	)
Bank of Kansas City	—		—	%	—		—	%	—			—
Total commercial real estate	$	52,502	2.23	%	$	58,693	2.53	%	$	(6,191	)	(30	)	bp

Nonaccruing land development and residential construction loans totaled $21 million at September 30, 2013 , primarily concentrated in the New Mexico and Texas markets. Other nonaccruing commercial real estate loans totaled $13 million primarily concentrated in the Arizona and Colorado markets.

Residential Mortgage and Consumer

Nonaccruing residential mortgage loans totaled $39 million or 1.93% of outstanding residential mortgage loans at September 30, 2013 compared to $41 million or 1.99% of outstanding residential mortgage loans at June 30, 2013 . Newly identified nonaccruing residential mortgage loans totaled $18 million , partially offset by $17 million of foreclosures, $1.1 million of payments and $1.0 million of loans charged off during the quarter. Nonaccruing residential mortgage loans primarily consist of non-guaranteed permanent residential mortgage loans which totaled $32 million or 2.95% of outstanding non-guaranteed permanent residential mortgage loans at September 30, 2013 . Nonaccruing home equity loans totaled $6.9 million or 0.87% of total home equity loans.

- 49 -

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 32. Substantially all non-guaranteed residential loans past due 90 days or more are nonaccruing. Residential mortgage loans 30 to 89 days past due decreased $2.6 million in the third quarter to $9 million at September 30, 2013 . Consumer loans past due 30 to 89 days decreased $754 thousand from June 30, 2013 .

Table 32 -- Residential Mortgage and Consumer Loans Past Due

(In thousands)



	September 30, 2013				June 30, 2013
	90 Days or More		30 to 89 Days		90 Days or More		30 to 89 Days
Residential mortgage:
Permanent mortgage ¹	$	—	$	6,248	$	—	$	8,689
Home equity	28		2,321		—		2,451
Total residential mortgage	$	28	$	8,569	—		$	11,140
Consumer:
Indirect automobile	$	—	$	384	$	—	$	540
Other consumer	75		1,344		19		1,942
Total consumer	$	75	$	1,728	$	19	$	2,482


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 $108 million at September 30, 2013 , largely unchanged compared to June 30, 2013 . The distribution of real estate and other repossessed assets attributed by geographical market is included in Table 33 following.

Table 33 -- Real Estate and Other Repossessed Assets by Principal Market

(In thousands)

	Oklahoma		Texas		Colorado		Arkansas		New Mexico		Arizona		Kansas/ Missouri		Other		Total
1-4 family residential properties guaranteed by U.S. government agencies	$	9,333	$	2,031	$	1,181	$	1,246	$	20,242	$	493	$	2,517	$	862	$	37,905
Developed commercial real estate properties	2,185		693		2,151		1,050		8,460		1,471		731		7,198		23,939
1-4 family residential properties	5,244		1,005		826		857		1,826		6,545		535		1,451		18,289
Undeveloped land	999		4,446		3,961		68		132		6,164		1,294		—		17,064
Residential land development properties	366		68		1,827		1,292		—		5,100		136		—		8,789
Multifamily residential properties	—		—		—		—		1,650		—		—		—		1,650
Oil and gas properties	—		151		—		—		—		—		—		—		151
Vehicles	8		—		—		—		—		—		—		—		8
Other	—		—		—		—		—		324		—		4		328
Total real estate and other repossessed assets	$	18,135	$	8,394	$	9,946	$	4,513	$	32,310	$	20,097	$	5,213	$	9,515	$	108,123

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 third quarter of 2013 , approximately 71% of our funding was provided by deposit accounts, 14% 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 third quarter of 2013 totaled $19.4 billion and represented approximately 71% of total liabilities and capital compared with $19.5 billion and 71% of total liabilities and capital for the second quarter of 2013 . Average deposits decreased $80 million from the second quarter of 2013 . Interest-bearing transaction deposit accounts decrease d $228 million , demand deposits increased $221 million and average time deposits decreased $76 million .

Average Commercial Banking deposit balances increase d $123 million over the second quarter of 2013 . Balances related to commercial & industrial customers increase d $168 million , balances related to our small business customers grew by $99 million and balances related to our healthcare customers increase d $24 million over the second quarter of 2013 . Balances related to energy customers decrease d $87 million and treasury services customer balances were down $71 million . Commercial customers continue to retain large cash reserves primarily due to low yields available on other high quality investment alternatives and to minimize deposit service charges through the earnings credit. The earnings credit is a non-cash method that enables commercial customers to offset deposit service charges based on account balances. Average Consumer Banking deposit balances decrease d $38 million . Interest-bearing transaction deposits grew by $42 million , offset by a $56 million decrease in time deposits and a $23 million decrease in demand deposits. Average Wealth Management deposits decrease d $160 million compared to the second quarter of 2013 primarily due to a decrease in interest-bearing transaction deposit account balances.

Brokered deposits included in time deposits averaged $141 million for the third quarter of 2013 , a decrease of $3.4 million compared to the second quarter of 2013 . Average interest-bearing transaction accounts for the third quarter include $271 million of brokered deposits, an increase of $6.2 million over the second quarter of 2013 .

The distribution of our period end deposit account balances among principal markets follows in Table 34.

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Table 34 -- Period End Deposits by Principal Market Area

(In thousands)



	September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012		September 30, 2012
Bank of Oklahoma:
Demand	$	3,458,114	$	3,561,255	$	3,602,581	$	4,223,923	$	3,734,901
Interest-bearing:
Transaction	5,574,615		5,653,062		6,140,899		6,031,541		5,496,724
Savings	189,411		185,345		185,363		163,512		155,276
Time	1,198,507		1,180,265		1,264,415		1,267,904		1,274,336
Total interest-bearing	6,962,533		7,018,672		7,590,677		7,462,957		6,926,336
Total Bank of Oklahoma	10,420,647		10,579,927		11,193,258		11,686,880		10,661,237

Bank of Texas:
Demand	2,499,021		2,299,631		2,098,891		2,606,176		1,983,678
Interest-bearing:
Transaction	1,853,586		1,931,758		1,979,318		2,129,084		1,782,296
Savings	63,368		63,745		63,218		58,429		52,561
Time	667,873		692,888		717,974		762,233		789,725
Total interest-bearing	2,584,827		2,688,391		2,760,510		2,949,746		2,624,582
Total Bank of Texas	5,083,848		4,988,022		4,859,401		5,555,922		4,608,260

Bank of Albuquerque:
Demand	491,894		455,580		446,841		427,510		416,796
Interest-bearing:
Transaction	541,565		525,481		513,611		511,593		526,029
Savings	34,003		34,096		35,560		31,926		31,940
Time	334,946		346,506		354,303		364,928		375,611
Total interest-bearing	910,514		906,083		903,474		908,447		933,580
Total Bank of Albuquerque	1,402,408		1,361,663		1,350,315		1,335,957		1,350,376

Bank of Arkansas:
Demand	32,621		31,108		31,957		38,935		29,254
Interest-bearing:
Transaction	205,420		186,689		155,571		101,366		168,827
Savings	1,919		1,974		2,642		2,239		2,246
Time	35,184		37,272		41,613		42,573		45,719
Total interest-bearing	242,523		225,935		199,826		146,178		216,792
Total Bank of Arkansas	275,144		257,043		231,783		185,113		246,046

Colorado State Bank & Trust:
Demand	373,200		365,161		295,067		331,157		330,641
Interest-bearing:
Transaction	536,730		519,580		528,056		676,140		627,015
Savings	27,782		27,948		27,187		25,889		24,689
Time	424,225		451,168		461,496		472,305		476,564
Total interest-bearing	988,737		998,696		1,016,739		1,174,334		1,128,268
Total Colorado State Bank & Trust	1,361,937		1,363,857		1,311,806		1,505,491		1,458,909

- 52 -



	September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012		September 30, 2012
Bank of Arizona:
Demand	184,454		186,381		157,754		161,094		151,738
Interest-bearing:
Transaction	338,068		376,305		378,421		360,275		298,048
Savings	2,286		2,238		2,122		1,978		2,201
Time	35,791		35,490		34,690		31,371		33,169
Total interest-bearing	376,145		414,033		415,233		393,624		333,418
Total Bank of Arizona	560,599		600,414		572,987		554,718		485,156

Bank of Kansas City:
Demand	292,672		246,207		267,769		249,491		201,393
Interest-bearing:
Transaction	69,826		73,685		46,426		78,039		103,628
Savings	1,080		1,029		983		771		660
Time	23,494		24,383		25,563		26,678		27,202
Total interest-bearing	94,400		99,097		72,972		105,488		131,490
Total Bank of Kansas City	387,072		345,304		340,741		354,979		332,883
Total BOK Financial deposits	$	19,491,655	$	19,496,230	$	19,860,291	$	21,179,060	$	19,142,867

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 $319 million at September 30, 2013 . 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 $2.1 billion during the quarter, unchanged compared to the second quarter of 2013 .

At September 30, 2013 , the estimated unused credit available to the subsidiary bank from collateralized sources was approximately $8.3 billion.

A summary of other borrowing by the subsidiary bank follows in Table 35.

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Table 35 -- Borrowed Funds

(In thousands)



			Three Months Ended								Three Months Ended
			September 30, 2013								June 30, 2013
	September 30, 2013		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter		June 30, 2013		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter

Parent Company and Other Non-Bank Subsidiaries:
Other borrowings - Other	$	—	$	—	—	%	$	—	$	—	$	—	—	%	$	—

Subsidiary Bank:
Funds purchased	992,345		776,356		0.07	%	997,536		747,165		789,302		0.10	%	747,165
Repurchase agreements	782,418		799,175		0.06	%	855,797		845,106		819,373		0.06	%	845,106
Other borrowings:
Federal Home Loan Bank advances	1,805,622		2,144,532		0.19	%	2,304,622		2,451,197		2,144,513		0.19	%	2,451,197
GNMA repurchase liability	15,014		14,704		5.45	%	16,543		13,973		11,464		5.50	%	13,973
Other	16,545		16,511		2.84	%	16,545		16,474		16,440		2.93	%	16,475
Total other borrowings	1,837,181		2,175,747		0.25	%			2,481,644		2,172,417		0.24	%
Subordinated debentures	347,758		347,737		2.52	%	347,758		347,716		347,695		2.54	%	347,716
Total Subsidiary Bank	3,959,702		4,099,015		0.38	%			4,421,631		4,128,787		0.38	%

Total Borrowed Funds	$	3,959,702	$	4,099,015	0.38	%			$	4,421,631	$	4,128,787	0.38	%

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 September 30, 2013 , $226 million of this subordinated debt remains outstanding.

In 2005, the Bank issued $150 million of 10-year, fixed rate subordinated debt. The cost of this subordinated debt, including issuance discounts and hedge loss is 5.56%. The proceeds of this debt were used to repay $95 million of BOK Financial's unsecured revolving line of credit and to provide additional capital to support assets growth. At September 30, 2013 , $122 million of this subordinated debt remains outstanding.

The Bank also has a liability related to the repurchase of certain delinquent residential mortgage loans previously sold in GNMA mortgage pools. Interest is payable monthly at rates contractually due to investors.

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 September 30, 2013 , based on the most restrictive limitations as well as management’s internal capital policy, the subsidiary bank could declare up to $314 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.

- 54 -

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 1.00% 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 1.25%. 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 5, 2014. 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 September 30, 2013 and the Company met all of the covenants.

Our equity capital at September 30, 2013 was $3.0 billion , an increase of $34 million over June 30, 2013 . Net income less cash dividends paid increase d equity $50 million during the third quarter of 2013 . This was offset by a $22 million decrease in accumulated other comprehensive income primarily related to the change in unrealized gains on available for sale securities. Capital is managed to maximize long-term value to the 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 September 30, 2013 , the Company has repurchased 39,496 shares for $2.1 million under this program. No shares were repurchased in the third quarter of 2013 .

BOK Financial and the 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 36.

Table 36 -- Capital Ratios



	Well Capitalized Minimums		September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012		September 30, 2012
Average total equity to average assets	—		10.88	%	10.95	%	10.90	%	10.81	%	11.08	%
Tangible common equity ratio	—		9.73	%	9.38	%	9.70	%	9.25	%	9.67	%
Tier 1 common equity ratio	—		13.33	%	13.19	%	13.16	%	12.59	%	13.01	%
Risk-based capital:
Tier 1 capital	6.00	%	13.51	%	13.37	%	13.35	%	12.78	%	13.21	%
Total capital	10.00	%	15.35	%	15.28	%	15.68	%	15.13	%	15.71	%
Leverage	5.00	%	9.80	%	9.43	%	9.28	%	9.01	%	9.34	%

In July 2013, banking regulators issued the final rule revising regulatory capital rules for substantially all U.S. banking organizations. The new capital rule will be effective for BOK Financial on January 1, 2015 and components of the rule will phase in through January 1, 2019. The new capital rule establishes a 7% threshold for the Tier 1 common equity ratio consisting of a minimum level plus capital conservation buffer. The Company expects to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital, consistent with the treatment under current capital rules. BOK Financial's Tier 1 common equity ratio based on the existing Basel I standards was 13.33% as of September 30, 2013 . Based on our interpretation of the new capital rule, our estimated Tier 1 common equity ratio is approximately 12.35%, nearly 535 basis points above the 7% regulatory threshold.

- 55 -

The rule also changes both the Tier 1 risk based capital requirements and the total risk based requirements to a minimum of 6% and 8%, respectively, plus a capital conservation buffer of 2.5% totaling 8.5% and 10.5%, respectively. The leverage ratio requirements under the rule is 5%. A bank which falls below these levels, including the capital conservation buffer, would be subject to regulatory restrictions on capital distributions (including but not limited to dividends and share repurchases) and executive bonus payments.

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. The requirements for annual capital stress tests will become effective for the Company in the fourth quarter of 2013 with public disclosure of specified results to occur in June of 2015. The resulting capital stress test process may place constraints on capital distributions or increases in required regulatory capital under certain circumstances.

Table 37 following provides a reconciliation of the non-GAAP measures with financial measures defined by GAAP.

Table 37 -- Non-GAAP Measures

(Dollars in thousands)



	September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012
Tangible common equity ratio:
Total shareholders' equity	$	2,991,244		$	2,957,637		$	3,011,958		$	2,957,860		$	2,975,657
Less: Goodwill and intangible assets, net	385,166			386,001			386,876			390,171			392,158
Tangible common equity	2,606,078			2,571,636			2,625,082			2,567,689			2,583,499
Total assets	27,166,367			27,808,200			27,447,158			28,148,631			27,117,641
Less: Goodwill and intangible assets, net	385,166			386,001			386,876			390,171			392,158
Tangible assets	$	26,781,201		$	27,422,199		$	27,060,282		$	27,758,460		$	26,725,483
Tangible common equity ratio	9.73		%	9.38		%	9.70		%	9.25		%	9.67		%

Tier 1 common equity ratio:
Tier 1 capital	$	2,616,610		$	2,561,399		$	2,503,892		$	2,430,671		$	2,436,791
Less: Non-controlling interest	35,730			35,245			35,934			35,821			36,818
Tier 1 common equity	2,580,880			2,526,154			2,467,958			2,394,850			2,399,973
Risk weighted assets	$	19,361,429		$	19,157,978		$	18,756,648		$	19,016,673		$	18,448,854
Tier 1 common equity ratio	13.33		%	13.19		%	13.16		%	12.59		%	13.01		%

Off-Balance Sheet Arrangements

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

- 56 -

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 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 include 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 38 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.

- 57 -

Table 38 -- Interest Rate Sensitivity

(Dollars in thousands)



	200 bp Increase						50 bp Decrease
	2013			2012			2013			2012
Anticipated impact over the next twelve months on net interest revenue	$	(16,193	)	$	31,403		$	(13,699	)	$	(15,663	)
	(2.38		)%	4.76		%	(1.93		)%	(2.38		)%

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. BOK Financial has an insignificant exposure to foreign exchange risk and does not take positions in commodity derivatives.

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 and Value at Risk ("VAR") 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.

VAR is calculated based upon historical simulations over the past five years using a variance / covariance matrix of interest rate changes, a 10 business day holding period and a 99% confidence interval. It represents an amount of market loss that is likely to be exceeded in only one out of every 100 two-week periods. Trading activities are managed within guidelines approved by the Board of Directors. These guidelines limit the VAR to $7.3 million. There were no instances of VAR being exceeded during the three months ended September 30, 2013 , June 30, 2013 and September 30, 2012 .

Effective June 30, 2013, the Company became subject to the Federal Reserve Bank’s market risk rule. This rule was established to ensure banks hold enough capital to cover market risks. It requires banks to measure VAR and stressed VAR for Covered Positions. A Covered Position includes trading assets or trading liabilities held by the bank for the purpose of short-term resale or with the intent of benefiting from actual or expected shot-term price movement or to lock in arbitrage profits, as reported to banking regulators. Covered Positions also include transaction used to hedge th Company's mortgage servicing rights and mortgage pipeline. Consequently, the VAR calculated for Covered Positions exceeds that calculated for trading activities alone. The market risk rule also requires specific regulatory capital charges for certain issuers of trading securities. The Company’s Covered Positions entail minimal market risk. Consequently, the impact of this rule on our capital ratios is a negligible decline of 10 basis points.

Table 39 following includes the required quarterly disclosure of (1) the high, low, and mean VAR-based measures over the reporting period and the VAR-based measure at period-end; (2) the high, low, and mean stressed VAR-based measures over the reporting period and the stressed VAR-based measure at period-end; and (3) a comparison of VAR-based measures with actual results. The estimated monthly changes from market risk are below the total VAR calculated. Virtually all market risk stems from interest rate risk, with a modicum due to foreign exchange risk.

- 58 -

Table 39 -- Market Risk

(In thousands)



	September 30, 2013						September 30, 2012
	VAR		Stressed VAR		Total VAR		VAR		Stressed VAR		Total VAR
Period End	$	4,117	$	6,852	$	10,968	$	12,846	$	20,029	$	32,876
For the Three Months Ended:
High	5,323		8,428		13,751		12,846		20,029		32,876
Low	4,117		6,757		10,874		5,608		6,894		12,502
Mean	4,635		7,345		11,981		8,186		11,397		19,583
For the Nine Months Ended:
High	10,142		11,756		21,897		12,846		20,471		32,876
Low	4,116		6,757		10,968		4,369		3,974		8,343
Mean	5,870		8,627		14,497		8,213		12,067		20,281
Estimated Monthly Change in Value from Market Risk					4,916						13,363



	June 30, 2013
	VAR		Stressed VAR		Total VAR
Period End	$	4,648	$	7,569	$	12,217
For the Three Months Ended:
High	6,722		11,357		18,080
Low	4,648		7,569		12,217
Mean	5,682		8,866		14,548
Estimated Monthly Change in Value from Market Risk					8,947



	VAR		Stressed VAR
Interest Rate Changes Used
Swap Curve	3.35	%	4.64	%
Mortgage	2.48	%	8.85	%
Treasury	5.30	%	6.49	%

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 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.

- 59 -

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.

- 60 -



Consolidated Statement of Earnings (Unaudited)
(In thousands, except share and per share data)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Interest revenue	2013			2012			2013			2012
Loans	$	125,069		$	126,248		$	374,479		$	384,406
Residential mortgage loans held for sale	2,168			2,310			6,254			5,862
Trading securities	509			555			1,608			1,219
Taxable securities	3,434			4,124			10,836			12,840
Tax-exempt securities	1,163			764			3,341			2,662
Total investment securities	4,597			4,888			14,177			15,502
Taxable securities	50,179			59,482			156,569			180,721
Tax-exempt securities	560			699			1,851			1,931
Total available for sale securities	50,739			60,181			158,420			182,652
Fair value option securities	802			1,886			2,980			7,684
Funds sold and resell agreements	6			3			12			9
Total interest revenue	183,890			196,071			557,930			597,334
Interest expense
Deposits	13,526			15,917			42,316			49,805
Borrowed funds	1,804			1,652			5,134			5,033
Subordinated debentures	2,209			2,475			6,568			11,539
Total interest expense	17,539			20,044			54,018			66,377
Net interest revenue	166,351			176,027			503,912			530,957
Provision for credit losses	(8,500		)	—			(16,500		)	(8,000		)
Net interest revenue after provision for credit losses	174,851			176,027			520,412			538,957
Other operating revenue
Brokerage and trading revenue	32,338			31,261			96,963			94,972
Transaction card revenue	30,055			27,788			87,689			79,976
Trust fees and commissions	23,892			19,654			71,008			58,023
Deposit service charges and fees	24,742			25,148			71,670			74,743
Mortgage banking revenue	23,486			50,266			100,058			122,892
Bank-owned life insurance	2,408			2,707			7,870			8,416
Other revenue	9,852			9,149			30,535			27,273
Total fees and commissions	146,773			165,973			465,793			466,295
Gain (loss) on assets, net	(377		)	452			(1,576		)	(1,552		)
Gain (loss) on derivatives, net	31			464			(3,437		)	336
Gain (loss) on fair value option securities, net	(80		)	6,192			(12,407		)	11,311
Gain on available for sale securities, net	478			7,967			9,086			32,779
Total other-than-temporary impairment losses	(1,436		)	—			(2,574		)	(640		)
Portion of loss recognized in (reclassified from) other comprehensive income	(73		)	(1,104		)	266			(5,044		)
Net impairment losses recognized in earnings	(1,509		)	(1,104		)	(2,308		)	(5,684		)
Total other operating revenue	145,316			179,944			455,151			503,485
Other operating expense
Personnel	125,799			122,775			379,563			359,841
Business promotion	5,355			6,054			16,578			17,188
Contribution to BOKF Foundation	2,062			—			2,062			—
Professional fees and services	7,183			7,991			22,549			23,933
Net occupancy and equipment	17,280			16,914			50,670			49,843
Insurance	3,939			3,690			11,728			11,567
Data processing and communications	25,695			26,486			77,879			73,894
Printing, postage and supplies	3,505			3,611			10,759			10,825
Net losses and operating expenses of repossessed assets	2,014			5,706			3,542			13,863
Amortization of intangible assets	835			742			2,586			1,862
Mortgage banking costs	8,753			13,036			24,017			33,792
Change in fair value of mortgage servicing rights	346			9,576			(16,627		)	13,899
Other expense	7,878			5,759			23,268			16,980
Total other operating expense	210,644			222,340			608,574			627,487
Net income before taxes	109,523			133,631			366,989			414,955
Federal and state income taxes	33,461			45,778			121,980			144,447
Net income	76,062			87,853			245,009			270,508
Net income attributable to non-controlling interest	324			471			1,376			1,882
Net income attributable to BOK Financial Corporation shareholders	$	75,738		$	87,382		$	243,633		$	268,626
Earnings per share:
Basic	$	1.10		$	1.28		$	3.55		$	3.94
Diluted	$	1.10		$	1.27		$	3.54		$	3.92
Average shares used in computation:
Basic	68,049,179			67,966,700			67,953,253			67,704,343
Diluted	68,272,861			68,334,989			68,175,915			67,981,558
Dividends declared per share	$	0.38		$	0.38		$	1.14		$	1.09
See accompanying notes to consolidated financial statements.

- 61 -



Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net income	$	76,062		$	87,853		$	245,009		$	270,508
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)	(35,839		)	46,064			(240,384		)	86,098
Reclassification adjustments included in earnings:
Interest revenue, Investments securities, Taxable securities	(696		)	(2,009		)	(2,717		)	(5,430		)
Interest expense, Subordinated debentures	85			68			209			399
Net impairment losses recognized in earnings	1,509			1,104			2,308			5,684
Gain on available for sale securities, net	(478		)	(7,967		)	(9,086		)	(32,779		)
Other comprehensive income (loss) before income taxes	(35,419		)	37,260			(249,670		)	53,972
Income tax benefit (expense)	13,779			(14,057		)	97,124			(20,558		)
Other comprehensive income (loss), net of income taxes	(21,640		)	23,203			(152,546		)	33,414
Comprehensive income	54,422			111,056			92,463			303,922
Comprehensive income attributable to non-controlling interests	324			471			1,376			1,882
Comprehensive income attributed to BOK Financial Corp. shareholders	$	54,098		$	110,585		$	91,087		$	302,040

See accompanying notes to consolidated financial statements.

- 62 -

Consolidated Balance Sheets

(In thousands, except share data)
	September 30, 2013			Dec 31, 2012			September 30, 2012
	(Unaudited)			(Footnote 1)			(Unaudited)
Assets
Cash and due from banks	$	1,133,771		$	1,266,834		$	596,590
Funds sold and resell agreements	27,214			19,405			18,904
Trading securities	150,887			214,102			204,242
Investment securities (fair value : Sept. 30, 2013 – $654,479; December 31, 2012 – $528,458; Sept. 30, 2012 – $460,358)	644,225			499,534			432,114
Available for sale securities	10,372,903			11,287,221			11,506,434
Fair value option securities	167,860			284,296			331,887
Residential mortgage loans held for sale	230,511			293,762			325,102
Loans	12,350,100			12,311,456			11,832,367
Allowance for loan losses	(194,325		)	(215,507		)	(233,756		)
Loans, net of allowance	12,155,775			12,095,949			11,598,611
Premises and equipment, net	275,347			265,920			259,195
Receivables	108,435			114,185			116,243
Goodwill	359,759			361,979			358,962
Intangible assets, net	25,407			28,192			33,196
Mortgage servicing rights, net	140,863			100,812			89,653
Real estate and other repossessed assets, net of allowance ( Sept. 30, 2013 – $26,910 ; December 31, 2012 – $36,873; Sept. 30, 2012 – $35,979)	108,122			103,791			104,128
Bankers’ acceptances	748			605			1,605
Derivative contracts	377,325			338,106			435,653
Cash surrender value of bank-owned life insurance	282,490			274,531			271,830
Receivable on unsettled securities sales	93,020			211,052			32,480
Other assets	511,705			388,355			400,812
Total assets	$	27,166,367		$	28,148,631		$	27,117,641

Noninterest-bearing demand deposits	$	7,331,976		$	8,038,286		$	6,848,401
Interest-bearing deposits:
Transaction	9,119,810			9,888,038			9,002,567
Savings	319,849			284,744			269,573
Time	2,720,020			2,967,992			3,022,326
Total deposits	19,491,655			21,179,060			19,142,867
Funds purchased	992,345			1,167,416			1,680,626
Repurchase agreements	782,418			887,030			1,109,696
Other borrowings	1,837,181			651,775			639,254
Subordinated debentures	347,758			347,633			347,592
Accrued interest, taxes and expense	182,076			176,678			182,410
Bankers’ acceptances	748			605			1,605
Derivative contracts	232,544			283,589			254,422
Due on unsettled securities purchases	114,259			297,453			556,998
Other liabilities	158,409			163,711			189,696
Total liabilities	24,139,393			25,154,950			24,105,166
Shareholders' equity:
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: Sept. 30, 2013 – 73,089,764; December 31, 2012 – 72,415,346; Sept. 30, 2012 – 72,223,473)	4			4			4
Capital surplus	890,433			859,278			849,390
Retained earnings	2,303,688			2,137,541			2,148,292
Treasury stock (shares at cost: Sept. 30, 2013 – 4,302,180; December 31, 2012 – 4,087,995; Sept. 30, 2012 – 4,008,119)	(200,255		)	(188,883		)	(184,422		)
Accumulated other comprehensive income (loss)	(2,626		)	149,920			162,393
Total shareholders’ equity	2,991,244			2,957,860			2,975,657
Non-controlling interest	35,730			35,821			36,818
Total equity	3,026,974			2,993,681			3,012,475
Total liabilities and equity	$	27,166,367		$	28,148,631		$	27,117,641

See accompanying notes to consolidated financial statements.

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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, 2011	71,533	$	4	$	128,979		$	818,817		$	1,953,332		3,380	$	(150,664	)	$	2,750,468		$	36,184		$	2,786,652
Net income	—	—		—			—			268,626			—	—			268,626			1,882			270,508
Other comprehensive income	—	—		33,414			—			—			—	—			33,414			—			33,414
Treasury stock purchases	—	—		—			—			—			384	(20,558		)	(20,558		)	—			(20,558		)
Exercise of stock options	690	—		—			24,726			—			244	(13,200		)	11,526			—			11,526
Tax benefit on exercise of stock options	—	—		—			(487		)	—			—	—			(487		)	—			(487		)
Stock-based compensation	—	—		—			6,334			—			—	—			6,334			—			6,334
Cash dividends on common stock	—	—		—			—			(73,666		)	—	—			(73,666		)	—			(73,666		)
Issuance of non-controlling interest in subsidiary	—	—		—			—			—			—	—			—			1,645			1,645
Capital calls and distributions, net	—	—		—			—			—			—	—			—			(2,893		)	(2,893		)

Balance, Sept. 30, 2012	72,223	$	4	$	162,393		$	849,390		$	2,148,292		4,008	$	(184,422	)	$	2,975,657		$	36,818		$	3,012,475

Balances at December 31, 2012	72,415	$	4	$	149,920		$	859,278		$	2,137,541		4,088	$	(188,883	)	$	2,957,860		$	35,821		$	2,993,681
Net income	—	—		—			—			243,633			—	—			243,633			1,376			245,009
Other comprehensive loss	—	—		(152,546		)	—			—			—	—			(152,546		)	—			(152,546		)
Treasury stock purchases	—	—		—			—			—			—	—			—			—			—
Exercise of stock options	675	—		—			26,317			—			214	(11,372		)	14,945			—			14,945
Tax benefit on exercise of stock options	—	—		—			301			—			—	—			301			—			301
Stock-based compensation	—	—		—			4,537			—			—	—			4,537			—			4,537
Cash dividends on common stock	—	—		—			—			(77,486		)	—	—			(77,486		)	—			(77,486		)
Issuance of non-controlling interest in subsidiary	—	—		—			—			—			—	—			—			—			—
Capital calls and distributions, net	—	—		—			—			—			—	—			—			(1,467		)	(1,467		)

Balance, Sept. 30, 2013	73,090	$	4	$	(2,626	)	$	890,433		$	2,303,688		4,302	$	(200,255	)	$	2,991,244		$	35,730		$	3,026,974

See accompanying notes to consolidated financial statements.

- 64 -

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)	Nine Months Ended
	September 30,
	2013			2012
Cash Flows From Operating Activities:
Net income	$	245,009		$	270,508
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(16,500		)	(8,000		)
Change in fair value of mortgage servicing rights	(16,627		)	13,899
Unrealized (gains) losses from derivatives	23,270			(2,665		)
Tax benefit on exercise of stock options	(301		)	487
Change in bank-owned life insurance	(7,870		)	(8,416		)
Stock-based compensation	4,537			6,334
Depreciation and amortization	40,820			37,452
Net amortization of securities discounts and premiums	47,468			68,579
Net realized gains on financial instruments and other assets	(7,917		)	(19,631		)
Net gain on mortgage loans held for sale	(79,045		)	(85,262		)
Mortgage loans originated for sale	(3,232,520		)	(2,634,809		)
Proceeds from sale of mortgage loans held for sale	3,364,095			2,590,960
Capitalized mortgage servicing rights	(39,157		)	(29,754		)
Change in trading and fair value option securities	177,953			189,182
Change in receivables	7,716			7,328
Change in other assets	58,311			(5,747		)
Change in accrued interest, taxes and expense	5,398			29,220
Change in other liabilities	(5,676		)	28,980
Net cash provided by operating activities	568,964			448,645
Cash Flows From Investing Activities:
Proceeds from maturities or redemptions of investment securities	113,570			67,571
Proceeds from maturities or redemptions of available for sale securities	2,197,656			3,444,670
Purchases of investment securities	(261,629		)	(60,542		)
Purchases of available for sale securities	(3,708,188		)	(6,412,356		)
Proceeds from sales of available for sale securities	2,140,531			1,660,876
Change in amount receivable on unsettled securities transactions	118,032			42,671
Loans originated net of principal collected	(27,426		)	(594,261		)
Net payments on derivative asset contracts	(67,707		)	(108,296		)
Acquisitions, net of cash acquired	—			(28,671		)
Proceeds from disposition of assets	80,678			135,760
Purchases of assets	(120,539		)	(77,032		)
Net cash provided by (used in) investing activities	464,978			(1,929,610		)
Cash Flows From Financing Activities:
Net change in demand deposits, transaction deposits and savings accounts	(1,439,433		)	739,943
Net change in time deposits	(247,972		)	(359,656		)
Net change in other borrowed funds	817,105			974,189
Repayment of subordinated debt	—			(53,787		)
Net proceeds on derivative liability contracts	61,764			90,646
Net change in derivative margin accounts	(105,226		)	(101,683		)
Change in amount due on unsettled security transactions	(183,194		)	(96,373		)
Issuance of common and treasury stock, net	14,945			11,526
Tax benefit on exercise of stock options	301			(487		)
Repurchase of common stock	—			(20,558		)
Dividends paid	(77,486		)	(73,666		)
Net cash provided by (used in) financing activities	(1,159,196		)	1,110,094
Net decrease in cash and cash equivalents	(125,254		)	(370,871		)
Cash and cash equivalents at beginning of period	1,286,239			986,365
Cash and cash equivalents at end of period	$	1,160,985		$	615,494

Cash paid for interest	$	51,689		$	66,819
Cash paid for taxes	$	104,589		$	113,663
Net loans and bank premises transferred to repossessed real estate and other assets	$	73,075		$	97,142
Residential mortgage loans guaranteed by U.S. government agencies that became eligible for repurchase during the period	$	88,618		$	84,520
Conveyance of other real estate owned guaranteed by U.S. government agencies	$	31,641		$	65,344

See accompanying notes to consolidated financial statements.

- 65 -

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., The Milestone Group, 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, BOK Financial Mortgage 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 2012 Form 10-K filed with the Securities and Exchange Commission, which contains audited financial statements. Amounts presented as of December 31, 2012 have been derived from the audited financial statements included in BOK Financial’s 2012 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 nine -month periods ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 .

Newly Adopted and Pending Accounting Policies

Financial Accounting Standards Board (“FASB”)

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's 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 were effective for the Company for interim and annual reporting period beginning January 1, 2013.

FASB Accounting Standards Update No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (ASU 2013-01)

On January 31, 2013, FASB issued ASU 2013-01 which clarified the scope of ASU 2011-11 applied for derivative contracts accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements and securities borrowing and lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 was effective for the Company on January 1, 2013.

FASB Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02")

On February 7, 2013 the FASB issued ASU 2013-02 which sets the requirements for presentation of significant reclassifications out of accumulated other comprehensive income for both items reclassified in their entirety and the respective line items in Statement of Earnings they are being reclassified into and for other amounts that are not reclassified in their entirety to net income during the reporting period, such as items being reclassified to balance sheet accounts. ASU 2013-02 was effective for the Company on January 1, 2013 and is to be applied prospectively.

- 66 -

( 2 ) Securities

Trading Securities

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



	September 30, 2013					December 31, 2012					September 30, 2012
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. Government agency debentures	$	74,632	$	(598	)	$	16,545	$	(57	)	$	3,100	$	1
U.S. agency residential mortgage-backed securities	26,129		456			86,361		447			119,835		566
Municipal and other tax-exempt securities	37,057		81			90,326		(226		)	58,150		118
Other trading securities	13,069		(25		)	20,870		(13		)	23,157		(1		)
Total	$	150,887	$	(86	)	$	214,102	$	151		$	204,242	$	684

Investment Securities

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



	September 30, 2013
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value ¹		Value		Gain		Loss
Municipal and other tax-exempt	$	409,542	$	409,542	$	407,562	$	2,316	$	(4,296	)
U.S. agency residential mortgage-backed securities – Other	53,858		56,182		58,442		2,260		—
Other debt securities	178,501		178,501		188,475		10,094		(120		)
Total	$	641,901	$	644,225	$	654,479	$	14,670	$	(4,416	)


¹	Carrying value includes $2.3 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.



	December 31, 2012
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value ¹		Value		Gain		Loss
Municipal and other tax-exempt	$	232,700	$	232,700	$	235,940	$	3,723	$	(483	)
U.S. agency residential mortgage-backed securities – Other	77,726		82,767		85,943		3,176		—
Other debt securities	184,067		184,067		206,575		22,528		(20		)
Total	$	494,493	$	499,534	$	528,458	$	29,427	$	(503	)


¹	Carrying value includes $5.0 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.

- 67 -



	September 30, 2012
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value ¹		Value		Gain		Loss
Municipal and other tax-exempt	$	155,144	$	155,144	$	159,464	$	4,329	$	(9	)
U.S. agency residential mortgage-backed securities – Other	85,699		91,911		95,128		3,356		(139		)
Other debt securities	185,059		185,059		205,766		20,737		(30		)
Total	$	425,902	$	432,114	$	460,358	$	28,422	$	(178	)


¹	Carrying value includes $6.2 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 .

The amortized cost and fair values of investment securities at September 30, 2013 , 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	$	28,674		$	277,808		$	93,703		$	9,357		$	409,542		3.92
Fair value	28,928			276,908			92,195			9,531			407,562
Nominal yield¹	3.35		%	1.52		%	2.29		%	2.74		%	1.85		%
Other debt securities:
Carrying value	9,631			32,542			35,539			100,789			178,501			8.78
Fair value	9,647			32,883			36,445			109,500			188,475
Nominal yield	3.98		%	5.08		%	5.51		%	6.27		%	5.78		%
Total fixed maturity securities:
Carrying value	$	38,305		$	310,350		$	129,242		$	110,146		$	588,043		5.39
Fair value	38,575			309,791			128,640			119,031			596,037
Nominal yield	3.51		%	1.90		%	3.17		%	5.97		%	3.04		%
Residential mortgage-backed securities:
Carrying value													$	56,182		³
Fair value													58,442
Nominal yield ⁴													2.73		%
Total investment securities:
Carrying value													$	644,225
Fair value													654,479
Nominal yield													3.02		%


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 4.2 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.

- 68 -

Available for Sale Securities

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



	September 30, 2013
	Amortized		Fair		Gross Unrealized ¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,052	$	1,052	$	—	$	—		$	—
Municipal and other tax-exempt	93,897		95,440		2,792		(1,249		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,513,161		4,544,505		81,984		(50,640		)	—
FHLMC	2,412,948		2,412,116		30,673		(31,505		)	—
GNMA	978,361		984,065		11,054		(5,350		)	—
Other	38,979		40,701		1,722		—			—
Total U.S. government agencies	7,943,449		7,981,387		125,433		(87,495		)	—
Private issue:
Alt-A loans	109,234		109,592		2,970		—			(2,612		)
Jumbo-A loans	118,312		121,308		3,816		(138		)	(682		)
Total private issue	227,546		230,900		6,786		(138		)	(3,294		)
Total residential mortgage-backed securities	8,170,995		8,212,287		132,219		(87,633		)	(3,294		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,985,924		1,946,295		354		(39,983		)	—
Other debt securities	35,091		35,362		459		(188		)	—
Perpetual preferred stock	22,171		23,680		1,534		(25		)	—
Equity securities and mutual funds	56,348		58,787		2,479		(40		)	—
Total	$	10,365,478	$	10,372,903	$	139,837	$	(129,118	)	$	(3,294	)

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.

- 69 -



	December 31, 2012
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,000	$	1,002	$	2	$	—		$	—
Municipal and other tax-exempt	84,892		87,142		2,414		(164		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	5,308,463		5,453,549		146,247		(1,161		)	—
FHLMC	2,978,608		3,045,564		66,956		—			—
GNMA	1,215,554		1,237,041		21,487		—			—
Other	148,025		153,667		5,642		—			—
Total U.S. government agencies	9,650,650		9,889,821		240,332		(1,161		)	—
Private issue:
Alt-A loans	124,314		123,174		1,440		—			(2,580		)
Jumbo-A loans	198,588		201,989		5,138		(134		)	(1,603		)
Total private issue	322,902		325,163		6,578		(134		)	(4,183		)
Total residential mortgage-backed securities	9,973,552		10,214,984		246,910		(1,295		)	(4,183		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	890,746		895,075		5,006		(677		)	—
Other debt securities	35,680		36,389		709		—			—
Perpetual preferred stock	22,171		25,072		2,901		—			—
Equity securities and mutual funds	24,593		27,557		3,242		(278		)	—
Total	$	11,032,634	$	11,287,221	$	261,184	$	(2,414	)	$	(4,183	)

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.



	September 30, 2012
	Amortized		Fair		Gross Unrealized ¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,000	$	1,002	$	2	$	—		$	—
Municipal and other tax-exempt	86,326		87,969		2,760		(152		)	(965		)
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	5,740,232		5,900,174		161,314		(1,372		)	—
FHLMC	3,322,692		3,400,215		77,523		—			—
GNMA	1,151,058		1,181,134		30,076		—			—
Other	167,262		173,298		6,036		—			—
Total U.S. government agencies	10,381,244		10,654,821		274,949		(1,372		)	—
Private issue:
Alt-A loans	128,090		123,583		663		—			(5,170		)
Jumbo-A loans	208,900		208,139		3,617		(152		)	(4,226		)
Total private issue	336,990		331,722		4,280		(152		)	(9,396		)
Total residential mortgage-backed securities	10,718,234		10,986,543		279,229		(1,524		)	(9,396		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	336,130		339,095		3,271		(306		)	—
Other debt securities	35,710		36,456		746		—			—
Perpetual preferred stock	22,170		25,288		3,118		—			—
Equity securities and mutual funds	25,409		30,081		4,998		(326		)	—
Total	$	11,224,979	$	11,506,434	$	294,124	$	(2,308	)	$	(10,361	)


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.

- 70 -

The amortized cost and fair values of available for sale securities at September 30, 2013 , 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 Maturity ⁵
U.S. Treasuries:
Amortized cost	$	1,052		$	—		$	—		$	—			$	1,052		1.42
Fair value	1,052			—			—			—				1,052
Nominal yield	0.24		%	—		%	—		%	—		%		0.24		%
Municipal and other tax-exempt:
Amortized cost	$	1,379		$	34,349		$	5,446		$	52,723			$	93,897		14.50
Fair value	1,404			35,542			5,689			52,805				95,440
Nominal yield¹	—		%	0.97		%	0.51		%	2.62		%	⁶	1.85		%
Commercial mortgage-backed securities:
Amortized cost	$	—		$	520,499		$	1,150,637		$	314,788			$	1,985,924		10.18
Fair value	—			514,668			1,121,936			309,691				1,946,295
Nominal yield	—		%	1.11		%	1.37		%	1.36		%		1.30		%
Other debt securities:
Amortized cost	$	—		$	30,191		$	—		$	4,900			$	35,091		5.56
Fair value	—			30,650			—			4,712				35,362
Nominal yield	—		%	1.80		%	—		%	1.54		%	⁶	1.77		%
Total fixed maturity securities:
Amortized cost	$	2,431		$	585,039		$	1,156,083		$	372,411			$	2,115,964		10.29
Fair value	2,456			580,860			1,127,625			367,208				2,078,149
Nominal yield	—		%	1.13		%	1.36		%	1.54		%		1.33		%
Residential mortgage-backed securities:
Amortized cost														$	8,170,995		²
Fair value														8,212,287
Nominal yield ⁴														1.92		%
Equity securities and mutual funds:
Amortized cost														$	78,519		³
Fair value														82,467
Nominal yield														0.70		%
Total available-for-sale securities:
Amortized cost														$	10,365,478
Fair value														10,372,903
Nominal yield														1.79		%


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


²	The average expected lives of mortgage-backed securities were 3.5 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 .

- 71 -

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



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013			2012		2013			2012
Proceeds	$	355,650		$	209,325	$	2,140,531		$	1,660,876
Gross realized gains	3,164			7,967		18,948			40,133
Gross realized losses	(2,686		)	—		(9,862		)	(7,354		)
Related federal and state income tax expense	184			3,099		3,533			12,751

A summary of investment and available for sale securities that have been pledged as collateral for repurchase agreements, public trust funds on deposit and for other purposes, as required by law was as follows (in thousands):



	September 30, 2013		December 31, 2012		September 30, 2012
Investment:
Carrying value	$	92,442	$	117,346	$	153,224
Fair value	95,658		121,647		158,899

Available for sale:
Amortized cost	5,020,732		4,070,250		3,634,955
Fair value	5,009,611		4,186,390		3,763,664

The secured parties do not have the right to sell or re-pledge these securities. At December 31, 2012 , municipal trading securities with a fair value of $13 million were pledged as collateral on a line of credit for the trading activities of BOSC, Inc. Under the terms of the credit agreement, the creditor has the right to sell or repledge the collateral. There were no securities pledged under this line of credit at September 30, 2013 or September 30, 2012 .

- 72 -

Temporarily Impaired Securities as of September 30, 2013

(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	136	$	257,359	$	4,292	$	803	$	4	$	258,162	$	4,296
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	29	1,326		59		780		61		2,106		120
Total investment	165	$	258,685	$	4,351	$	1,583	$	65	$	260,268	$	4,416



	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
Available for sale:
U.S. Treasury	—	$	—	$	—	$	—	$	—	$	—	$	—
Municipal and other tax-exempt ¹	46	$	20,274	$	352	$	19,575	$	897	$	39,849	$	1,249
Residential mortgage-backed securities:
U. S. agencies:
FNMA	79	2,328,213		50,640		—		—		2,328,213		50,640
FHLMC	46	1,402,010		31,505		—		—		1,402,010		31,505
GNMA	23	674,512		5,350		—		—		674,512		5,350
Total U.S. agencies	148	4,404,735		87,495		—		—		4,404,735		87,495
Private issue ¹ :
Alt-A loans	10	11,336		707		48,849		1,905		60,185		2,612
Jumbo-A loans	10	15,326		682		11,742		138		27,068		820
Total private issue	20	26,662		1,389		60,591		2,043		87,253		3,432
Total residential mortgage-backed securities	168	4,431,397		88,884		60,591		2,043		4,491,988		90,927
Commercial mortgage-backed securities guaranteed by U.S. government agencies	116	1,803,008		39,983		—		—		1,803,008		39,983
Other debt securities	3	4,712		188		—		—		4,712		188
Perpetual preferred stocks	1	4,975		25		—		—		4,975		25
Equity securities and mutual funds	97	1,529		40		—		—		1,529		40
Total available for sale	431	$	6,265,895	$	129,472	$	80,166	$	2,940	$	6,346,061	$	132,412

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	—	$	—	$	—	$	—	$	—	$	—	$	—
Alt-A loans	10	11,336		707		48,849		1,905		60,185		2,612
Jumbo-A loans	9	15,326		682		—		—		15,326		682

- 73 -

Temporarily Impaired Securities as of December 31, 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	53	$	92,768	$	483	$	—	$	—	$	92,768	$	483
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	14	881		20		—		—		881		20
Total investment	67	$	93,649	$	503	$	—	$	—	$	93,649	$	503



	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
Available for sale:
Municipal and other tax-exempt	38	$	6,150	$	11	$	26,108	$	153	$	32,258	$	164
Residential mortgage-backed securities:
U. S. agencies:
FNMA	12	161,828		1,161		—		—		161,828		1,161
FHLMC	—	—		—		—		—		—		—
GNMA	—	—		—		—		—		—		—
Total U.S. agencies	12	161,828		1,161		—		—		161,828		1,161
Private issue ¹ :
Alt-A loans	12	—		—		87,907		2,580		87,907		2,580
Jumbo-A loans	11	—		—		43,252		1,737		43,252		1,737
Total private issue	23	—		—		131,159		4,317		131,159		4,317
Total residential mortgage-backed securities	35	161,828		1,161		131,159		4,317		292,987		5,478
Commercial mortgage-backed securities guaranteed by U.S. government agencies	8	275,065		677		—		—		275,065		677
Other debt securities	3	4,899		—		—		—		4,899		—
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	22	202		1		2,161		277		2,363		278
Total available for sale	106	$	448,144	$	1,850	$	159,428	$	4,747	$	607,572	$	6,597


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	—	$	—	$	—	$	—	$	—	$	—	$	—
Alt-A loans	12	$	—	$	—	$	87,907	$	2,580	$	87,907	$	2,580
Jumbo-A loans	10	—		—		29,128		1,602		29,128		1,602

- 74 -

Temporarily Impaired Securities as of September 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	$	7,548	$	9	$	—	$	—	$	7,548	$	9
U.S. Agency residential mortgage-backed securities – Other	1	—		—		19,066		139		19,066		139
Other debt securities	14	871		30		—		—		871		30
Total investment	21	$	8,419	$	39	$	19,066	$	139	$	27,485	$	178



	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
Available for sale:
Municipal and other tax-exempt ¹	51	$	13,492	$	970	$	27,485	$	147	$	40,977	$	1,117
Residential mortgage-backed securities:
U. S. agencies:
FNMA	12	483,258		1,372		—		—		483,258		1,372
FHLMC	—	—		—		—		—		—		—
GNMA	—	—		—		—		—		—		—
Total U.S. agencies	12	483,258		1,372		—		—		483,258		1,372
Private issue ¹ :
Alt-A loans	13	—		—		105,862		5,170		105,862		5,170
Jumbo-A loans	15	—		—		121,746		4,378		121,746		4,378
Total private issue	28	—		—		227,608		9,548		227,608		9,548
Total residential mortgage-backed securities	40	483,258		1,372		227,608		9,548		710,866		10,920
Commercial mortgage-backed securities guaranteed by U.S. government agencies	8	42,445		306		—		—		42,445		306
Other debt securities	—	—		—		—		—		—		—
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	2	2,551		326		—		—		2,551		326
Total available for sale	101	$	541,746	$	2,974	$	255,093	$	9,695	$	796,839	$	12,669


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	$	12,431	$	965	$	—	$	—	$	12,431	$	965
Alt-A loans	13	—		—		105,862		5,170		105,862		5,170
Jumbo-A loans	14	—		—		107,071		4,226		107,071		4,226

On a quarterly basis, the Company performs separate evaluations of impaired debt and equity investments 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

- 75 -

and securities portfolio management. Based on this evaluation as of September 30, 2013, the Company recorded a $1.4 million impairment related to certain municipal securities, which the Company now intends to sell prior to recovery of its amortized cost based on a tentative settlement offer from the securities issuer. We do not intend to sell any other 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 September 30, 2013 .

- 76 -

At September 30, 2013 , 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	$	—	$	—	$	275,067	$	271,781	$	21,162	$	21,405	$	—	$	—	$	113,313	$	114,376	$	409,542	$	407,562
Mortgage-backed securities -- other	56,182		58,442		—		—		—		—		—		—		—		—		56,182		58,442
Other debt securities	—		—		167,463		177,502		—		—		—		—		11,038		10,973		178,501		188,475
Total investment securities	$	56,182	$	58,442	$	442,530	$	449,283	$	21,162	$	21,405	$	—	$	—	$	124,351	$	125,349	$	644,225	$	654,479



	U.S. Govt / GSE ¹				AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for Sale:
U.S. Treasury	$	1,052	$	1,052	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,052	$	1,052
Municipal and other tax-exempt	—		—		47,747		48,564		15,819		15,525		17,924		19,140		12,407		12,211		93,897		95,440
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,513,161		4,544,505		—		—		—		—		—		—		—		—		4,513,161		4,544,505
FHLMC	2,412,948		2,412,116		—		—		—		—		—		—		—		—		2,412,948		2,412,116
GNMA	978,361		984,065		—		—		—		—		—		—		—		—		978,361		984,065
Other	38,979		40,701		—		—		—		—		—		—		—		—		38,979		40,701
Total U.S. government agencies	7,943,449		7,981,387		—		—		—		—		—		—		—		—		7,943,449		7,981,387
Private issue:
Alt-A loans	—		—		—		—		—		—		109,234		109,592		—		—		109,234		109,592
Jumbo-A loans	—		—		—		—		—		—		118,312		121,308		—		—		118,312		121,308
Total private issue	—		—		—		—		—		—		227,546		230,900		—		—		227,546		230,900
Total residential mortgage-backed securities	7,943,449		7,981,387		—		—		—		—		227,546		230,900		—		—		8,170,995		8,212,287
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,985,924		1,946,295		—		—		—		—		—		—		—		—		1,985,924		1,946,295
Other debt securities	—		—		4,900		4,712		30,191		30,650		—		—		—		—		35,091		35,362
Perpetual preferred stock	—		—		—		—		11,406		11,822		10,765		11,858		—		—		22,171		23,680
Equity securities and mutual funds	—		—		4		441		—		—		—		—		56,344		58,346		56,348		58,787
Total available for sale securities	$	9,930,425	$	9,928,734	$	52,651	$	53,717	$	57,416	$	57,997	$	256,235	$	261,898	$	68,751	$	70,557	$	10,365,478	$	10,372,903


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.

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At September 30, 2013 , the entire portfolio of privately issued residential mortgage-backed securities was rated below investment grade. The gross unrealized loss on these securities totaled $3.4 million . Ratings by the nationally-recognized rating agencies are subjective in nature 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 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:



	September 30, 2013	December 31, 2012	September 30, 2012

Unemployment rate	Increasing to 7.5% over the next 12 months and remain at 7.5% thereafter	Increasing to 8.5% over the next 12 months, dropping to 8% over the following 21 months and holding at 8% thereafter.	Increasing to 8.5% over the next 12 months, dropping to 8% over the following 21 months and holding at 8% thereafter.
Housing price appreciation/depreciation	Starting with current depreciated housing prices based on information derived from the FHFA ¹ , appreciating 5% over the next 12 months, then flat for the following 12 months and then appreciating at 2% per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA ¹ , depreciating 2% over the next 12 months, then flat for the following 12 months and then appreciating at 2% per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA ¹ , depreciating 2% over the next 12 months and then appreciating at 2% per year thereafter.
Estimated liquidation costs	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in 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.	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.	Estimated cash flows were discounted at rates that range from 2.00% to 6.25% based on our current expected yields.


¹	Federal Housing Finance Agency

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 senior or 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 senior or super-senior tranches which effectively increased 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 is 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 $139 thousand of additional credit loss impairments in earnings during the three months ended September 30, 2013 .

- 78 -

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
						September 30, 2013			Life-to-date
	Number of Securities	Amortized Cost		Fair Value		Number of Securities	Amount		Number of Securities	Amount
Alt-A	16	$	109,234	$	109,592	1	$	139	16	$	49,126
Jumbo-A	29	118,312		121,308		—	—		29	18,220
Total	45	$	227,546	$	230,900	1	$	139	45	$	67,346

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 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 September 30, 2013 .

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					Nine Months Ended
	September 30,					September 30,
	2013			2012		2013			2012
Balance of credit-related OTTI recognized on available for sale debt, beginning of period	$	76,027		$	72,915	$	75,228		$	76,131
Additions for credit-related OTTI not previously recognized	67			—		619			248
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	73			1,104		320			5,436
Reductions for change in intent to hold before recovery	(3,589		)	—		(3,589		)	—
Sales	(5,232		)	—		(5,232		)	(7,796		)
Balance of credit-related OTTI recognized on available for sale debt securities, end of period	$	67,346		$	74,019	$	67,346		$	74,019

Additions above exclude other-than-temporary impairment recorded due to change in intent to hold before recovery.

- 79 -

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):



	September 30, 2013					December 31, 2012				September 30, 2012
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain		Fair Value		Net Unrealized Gain
U.S. agency residential mortgage-backed securities	$	163,567	$	(5,365	)	$	257,040	$	3,314	$	305,445	$	13,827
Corporate debt securities	—		—			26,486		1,409		26,442		1,359
Other securities	4,293		1			770		47		—		—
Total	$	167,860	$	(5,364	)	$	284,296	$	4,770	$	331,887	$	15,186

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( 3 ) Derivatives

Derivative instruments may be used by the Company as part of its interest rate risk management programs or may be offered to customers. All derivative instruments are carried at fair value and changes in fair value are reported in earnings as they occur. Credit risk is also considered in determining fair value.

When bilateral netting agreements or similar arrangements 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 derivative contract type by counterparty basis.

Derivative contracts may 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. In addition, derivative contracts executed with customers under Customer Risk Management Programs may be secured by non-cash collateral in conjunction with a credit agreement with that customer. Access to collateral, in the event of default is reasonably assured. As of September 30, 2013 , a decrease in BOK Financial's credit rating to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $27 million .

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

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, and foreign exchange rates, or to take positions in derivative contracts. Customers may also manage interest rate risk through interest rate swaps used by borrowers to modify interest rate terms of their loans or to-be-announced securities used by mortgage banking customers to hedge their loan production. 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 derivative contracts 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. As of September 30, 2013 , BOK Financial had interest rate swaps with a notional value of $47 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.

- 81 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at September 30, 2013 (in thousands):



	Assets
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	12,455,689	$	224,392	$	(99,970	)	$	124,422	$	(5,191	)	$	119,231
Interest rate swaps	1,361,499		49,183		—			49,183		—			49,183
Energy contracts	1,412,238		73,293		(42,078		)	31,215		(606		)	30,609
Agricultural contracts	262,770		5,783		(3,430		)	2,353		—			2,353
Foreign exchange contracts	164,970		164,970		—			164,970		—			164,970
Equity option contracts	212,452		14,339		—			14,339		(3,360		)	10,979
Total customer risk management programs	15,869,618		531,960		(145,478		)	386,482		(9,157		)	377,325
Interest rate risk management programs	—		—		—			—		—			—
Total derivative contracts	$	15,869,618	$	531,960	$	(145,478	)	$	386,482	$	(9,157	)	$	377,325

	Liabilities
	Notional¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	12,529,704	$	221,720	$	(99,970	)	$	121,750	$	(118,166	)	$	3,584
Interest rate swaps	1,361,499		49,518		—			49,518		(21,240		)	28,278
Energy contracts	1,400,542		71,971		(42,078		)	29,893		(10,762		)	19,131
Agricultural contracts	261,782		5,731		(3,430		)	2,301		(2,242		)	59
Foreign exchange contracts	164,455		164,455		—			164,455		—			164,455
Equity option contracts	212,452		14,339		—			14,339		—			14,339
Total customer risk management programs	15,930,434		527,734		(145,478		)	382,256		(152,410		)	229,846
Interest rate risk management programs	47,000		2,698		—			2,698		—			2,698
Total derivative contracts	$	15,977,434	$	530,432	$	(145,478	)	$	384,954	$	(152,410	)	$	232,544


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

- 82 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2012 (in thousands):



	Assets
	Notional		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	12,850,805	$	46,113	$	(15,656	)	$	30,457	$	—		$	30,457
Interest rate swaps	1,319,827		72,201		—			72,201		—			72,201
Energy contracts	1,346,780		82,349		(44,485		)	37,864		(3,464		)	34,400
Agricultural contracts	212,434		3,638		(3,164		)	474		—			474
Foreign exchange contracts	180,318		180,318		—			180,318		—			180,318
Equity option contracts	211,941		12,593		—			12,593		—			12,593
Total customer risk management programs	16,122,105		397,212		(63,305		)	333,907		(3,464		)	330,443
Interest rate risk management programs	66,000		7,663		—			7,663		—			7,663
Total derivative contracts	$	16,188,105	$	404,875	$	(63,305	)	$	341,570	$	(3,464	)	$	338,106

	Liabilities
	Notional		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	13,239,078	$	43,064	$	(15,656	)	$	27,408	$	(15,467	)	$	11,941
Interest rate swaps	1,319,827		72,724		—			72,724		(31,945		)	40,779
Energy contracts	1,334,349		83,654		(44,485		)	39,169		(1,769		)	37,400
Agricultural contracts	212,135		3,571		(3,164		)	407		(188		)	219
Foreign exchange contracts	179,852		179,852		—			179,852		—			179,852
Equity option contracts	211,941		12,593		—			12,593		—			12,593
Total customer risk management programs	16,497,182		395,458		(63,305		)	332,153		(49,369		)	282,784
Interest rate risk management programs	50,000		805		—			805		—			805
Total derivative contracts	$	16,547,182	$	396,263	$	(63,305	)	$	332,958	$	(49,369	)	$	283,589


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

- 83 -

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



	Assets
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	14,858,520	$	276,678	$	(121,573	)	$	155,105	$	(7,287	)	$	147,818
Interest rate swaps	1,301,109		79,350		—			79,350		—			79,350
Energy contracts	1,556,164		105,588		(67,030		)	38,558		(3,866		)	34,692
Agricultural contracts	198,735		6,835		(6,011		)	824		—			824
Foreign exchange contracts	150,232		150,232		—			150,232		—			150,232
Equity option contracts	217,283		14,460		—			14,460		—			14,460
Total customer risk management programs	18,282,043		633,143		(194,614		)	438,529		(11,153		)	427,376
Interest rate risk management programs	66,000		8,277		—			8,277		—			8,277
Total derivative contracts	$	18,348,043	$	641,420	$	(194,614	)	$	446,806	$	(11,153	)	$	435,653

	Liabilities
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	14,738,232	$	274,195	$	(121,573	)	$	152,622	$	(143,945	)	$	8,677
Interest rate swaps	1,301,109		79,937		—			79,937		(37,841		)	42,096
Energy contracts	1,596,791		107,556		(67,030		)	40,526		(2,836		)	37,690
Agricultural contracts	195,068		6,750		(6,011		)	739		—			739
Foreign exchange contracts	149,977		149,977		—			149,977		—			149,977
Equity option contracts	217,283		14,460		—			14,460		—			14,460
Total customer risk management programs	18,198,460		632,875		(194,614		)	438,261		(184,622		)	253,639
Interest rate risk management programs	25,000		783		—			783		—			783
Total derivative contracts	$	18,223,460	$	633,658	$	(194,614	)	$	439,044	$	(184,622	)	$	254,422


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

- 84 -

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
	September 30, 2013					September 30, 2012
	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	$	(2,078	)	$	—	$	(803	)	$	—
Interest rate swaps	679			—		706			—
Energy contracts	1,682			—		1,856			—
Agricultural contracts	69			—		115			—
Foreign exchange contracts	192			—		124			—
Equity option contracts	—			—		—			—
Total customer risk management programs	544			—		1,998			—
Interest Rate Risk Management Programs	—			31		—			464
Total Derivative Contracts	$	544		$	31	$	1,998		$	464



	Nine Months Ended
	September 30, 2013						September 30, 2012
	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	$	(377	)	$	—		$	504	$	—
Interest rate swaps	2,214			—			2,850		—
Energy contracts	5,901			—			6,754		—
Agricultural contracts	254			—			298		—
Foreign exchange contracts	552			—			455		—
Equity option contracts	—			—			—		—
Total customer risk management programs	8,544			—			10,861		—
Interest Rate Risk Management Programs	—			(3,437		)	—		336
Total Derivative Contracts	$	8,544		$	(3,437	)	$	10,861	$	336

Net interest revenue was not significantly impacted by the settlement of amounts receivable or payable on interest rate swaps for the nine months ended September 30, 2013 and 2012 , respectively.

- 85 -

( 4 ) Loans and Allowances for Credit Losses

Loans

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. Accounting policies for all loans, excluding residential mortgage loans guaranteed by U.S. government agencies, are as follows.

Interest is accrued at the applicable interest rate on the principal amount outstanding. Loans are placed on nonaccruing status when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are individually evaluated for nonaccruing status quarterly. Non-risk graded loans are generally placed on nonaccruing status when more than 90 days past due or within 60 days of being notified of the borrower bankruptcy filing. Interest previously accrued but not collected is charged against interest income when the loan is placed on nonaccruing status. Payments on nonaccruing loans are applied to principal or recognized 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.

Loans to borrowers experiencing financial difficulties may be modified in troubled debt restructurings ("TDRs"). All TDRs are classified as nonaccruing. Modifications generally consist of extension of payment terms or interest rate concessions and may result either voluntarily through negotiations with the borrower or involuntarily through court order. Generally, principal and accrued but unpaid interest is not voluntarily forgiven.

Performing loans may be renewed under then current collateral value, debt service ratio and other underwriting standards. Nonaccruing loans may be renewed and will remain classified as nonaccruing.

All loans are charged off when the loan balance or a portion of the loan balance is no longer supported by the paying capacity of the borrower or when the required cash flow is reduced in a TDR. The charge-off amount is determined through a quarterly evaluation of available cash resources and collateral value and charge-offs are taken in the quarter in which the loss is identified. Non-risk graded loans that are past due between 60 and 180 days , based on the loan product type, are charged off. Loans to borrowers whose personal obligation has been discharged through Chapter 7 bankruptcy proceedings are charged off within 60 days of notice of the bankruptcy filing, regardless of payment status.

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.

Qualifying residential mortgage loans guaranteed by U.S. government agencies have been sold into GNMA pools. Under certain performance conditions specified in government programs, the Company may have the right, but not the obligation to repurchase loans from GNMA pools. These loans no longer qualify for sale accounting and are recognized in the Consolidated Balance Sheet. Guaranteed loans are considered impaired because we do not expect to receive all principal and interest based on the loan's contractual terms. The principal balance continues to be guaranteed; however, interest accrues at a curtailed rate as specified in the programs. The carrying value of these loans is reduced based on an estimate of the expected cash flows discounted at the original note rate plus a liquidity spread. Guaranteed loans may be modified in TDRs in accordance with U.S. government agency guidelines. Interest continues to accrue based on the modified rate. Guaranteed loans may either be resold into GNMA pools after a performance period specified by the programs or foreclosed and conveyed to the guarantors.

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):



	September 30, 2013								December 31, 2012
	Fixed Rate		Variable Rate		Non-accrual		Total		Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	4,209,349	$	3,342,204	$	19,522	$	7,571,075	$	4,158,548	$	3,458,897	$	24,467	$	7,641,912
Commercial real estate	869,346		1,427,381		52,502		2,349,229		845,023		1,323,350		60,626		2,228,999
Residential mortgage	1,766,819		228,690		39,256		2,034,765		1,747,038		251,394		46,608		2,045,040
Consumer	137,193		256,214		1,624		395,031		175,412		217,384		2,709		395,505
Total	$	6,982,707	$	5,254,489	$	112,904	$	12,350,100	$	6,926,021	$	5,251,025	$	134,410	$	12,311,456
Accruing loans past due (90 days) ¹							$	188							$	3,925



	September 30, 2012
	Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	3,889,382	$	3,355,763	$	21,762	$	7,266,907
Commercial real estate	880,535		1,220,976		75,761		2,177,272
Residential mortgage	1,728,220		258,816		29,267		2,016,303
Consumer	181,614		185,162		5,109		371,885
Total	$	6,679,751	$	5,020,717	$	131,899	$	11,832,367
Accruing loans past due (90 days) ¹							$	1,181


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

At September 30, 2013 , $5.1 billion or 41% of the total loan portfolio is to businesses and individuals attributed to the Oklahoma market and $4.1 billion or 33% of our total loan portfolio is to businesses and individuals attributed to the Texas market. 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 September 30, 2013 , commercial loans attributed to the Oklahoma market totaled $2.8 billion or 37% of the commercial loan portfolio segment and commercial loans attributed to the Texas market totaled $2.9 billion or 38% of the commercial loan portfolio segment.

The commercial loan portfolio segment is further divided into loan classes. The energy loan class totaled $2.3 billion or 19% of total loans at September 30, 2013 , including $2.0 billion of outstanding loans to energy producers. Approximately 59% of committed production loans are secured by properties primarily producing oil and 41% are secured by properties producing natural gas. The services loan class totaled $2.1 billion at September 30, 2013 . Approximately $1.1 billion of loans in the services category consist of loans with individual balances of less than $10 million . Businesses included in the services class include gaming, educational, public finance, insurance and community foundations.

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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 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 September 30, 2013 , 36% of commercial real estate loans are secured by properties primarily located in the Dallas and Houston areas of Texas. An additional 24% 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 September 30, 2013 , residential mortgage loans included $164 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 $792 million at September 30, 2013 . Approximately, 70% of the home equity loan portfolio is comprised of first lien loans and 30% of the home equity portfolio is comprised of junior lien loans. Junior lien loans are distributed 75% to amortizing term loans and 25% 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 . Revolving loans have a 5 year revolving period followed by a 15 year term of amortizing repayments. Interest-only home equity loans may not be extended for any additional revolving time. All other home equity loans may be extended at management's discretion for an additional 5 year revolving term, subject to an update of certain credit information.

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 September 30, 2013 , outstanding commitments totaled $7.2 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.

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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 September 30, 2013 , outstanding standby letters of credit totaled $440 million . Commercial letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is consummated. At September 30, 2013 , outstanding commercial letters of credit totaled $12 million .

Allowances for Credit Losses

BOK Financial maintains an allowance for loan losses and an accrual for off-balance sheet credit risk. The accrual for off-balance sheet credit risk is maintained at a level that is appropriate to cover estimated losses associated with credit instruments that are not currently recognized as assets such as loan commitments, standby letters of credit or guarantees. As discussed in greater detail in Note 5 , the Company also has separate accruals for 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 (collectively "allowance for 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 nine months ended September 30, 2013 .

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. 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. Non-risk graded loans are identified as impaired based on performance status. Generally, non-risk graded loans 90 days or more past due or modified in a TDR or in bankruptcy are considered to be impaired.

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 generally not adjusted by the Company. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values have declined. 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. Historical statistics may be used as a practical way to estimate impairment in limited situations, such as when a collateral dependent loan is identified as impaired at the end of a reporting period, 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 may be volatile.

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General allowances for unimpaired loans are based on estimated loss rates by loan class. The gross loss rate for each loan class is determined by the greater of the current gross loss rate based on the most recent twelve months or a ten-year gross loss rate. Recoveries are not directly considered in the estimation of loss rates. Recoveries generally do not follow predictable patterns and are not received until well after the charge-off date as a result of protracted legal actions. For risk graded loans, gross loss rates are adjusted for changes in risk grading. For each loan class, the current weighted average risk grade is compared to the long-term average risk grade. This comparison determines whether credit risk in each loan class is increasing or decreasing. Loss rates are adjusted upward or downward in proportion to changes in average risk grading. General allowances for unimpaired loans also consider inherent risks identified for each loan class. Inherent risks consider loss rates that most appropriately represent the current credit cycle and other factors attributable to specific loan classes which have not yet been represented in the gross loss rates or risk grading. These factors include changes in commodity prices or engineering imprecision, which may affect the value of reserves that secure our energy loan portfolio, construction risk that may affect commercial real estate loans, changes in regulations and public policy that may disproportionately impact health care loans and changes in loan products.

Nonspecific allowances are maintained for risks beyond factors specific to a particular loan or loan class. These factors include trends in the economy of our primary lending areas, concentrations in large balance loans and other relevant factors.

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.

A provision for credit losses is charged against or credited to earnings in amounts necessary to maintain an appropriate allowance for credit losses. Recoveries of loans previously charged off are added to the allowance when received.

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 September 30, 2013 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	64,044		$	49,687		$	39,206		$	7,738		$	42,449		$	203,124
Provision for loan losses	(1,774		)	(6,279		)	(136		)	1,256			(1,567		)	(8,500		)
Loans charged off	(1,354		)	(419		)	(961		)	(1,974		)	—			(4,708		)
Recoveries	864			2,073			188			1,284			—			4,409
Ending balance	$	61,780		$	45,062		$	38,297		$	8,304		$	40,882		$	194,325
Allowance for off-balance sheet credit losses:
Beginning balance	$	402		$	1,178		$	6		$	18		$	—		$	1,604
Provision for off-balance sheet credit losses	(228		)	202			42			(16		)	—			—
Ending balance	$	174		$	1,380		$	48		$	2		$	—		$	1,604

Total provision for credit losses	$	(2,002	)	$	(6,077	)	$	(94	)	$	1,240		$	(1,567	)	$	(8,500	)

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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 nine months ended September 30, 2013 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	65,280		$	54,884		$	41,703		$	9,453		$	44,187		$	215,507
Provision for loan losses	(3,507		)	(10,077		)	187			513			(3,305		)	(16,189		)
Loans charged off	(6,190		)	(5,669		)	(4,797		)	(5,513		)	—			(22,169		)
Recoveries	6,197			5,924			1,204			3,851			—			17,176
Ending balance	$	61,780		$	45,062		$	38,297		$	8,304		$	40,882		$	194,325
Allowance for off-balance sheet credit losses:
Beginning balance	$	475		$	1,353		$	78		$	9		$	—		$	1,915
Provision for off-balance sheet credit losses	(301		)	27			(30		)	(7		)	—			(311		)
Ending balance	$	174		$	1,380		$	48		$	2		$	—		$	1,604

Total provision for credit losses	$	(3,808	)	$	(10,050	)	$	157		$	506		$	(3,305	)	$	(16,500	)



	Commercial				Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	83,477			$	55,806		$	42,688		$	8,840		$	40,858	$	231,669
Provision for loan losses	4				4,821			(370		)	3,293			56		7,804
Loans charged off	(812		)		(2,607		)	(1,600		)	(3,902		)	—		(8,921		)
Recoveries	(890		)	¹	2,684			298			1,112			—		3,204
Ending balance	$	81,779			$	60,704		$	41,016		$	9,343		$	40,914	$	233,756
Allowance for off-balance sheet credit losses:
Beginning balance	$	8,224			$	1,425		$	80		$	18		$	—	$	9,747
Provision for off-balance sheet credit losses	(7,823		)		18			(4		)	5			—		(7,804		)
Ending balance	$	401			$	1,443		$	76		$	23		$	—	$	1,943

Total provision for credit losses	$	(7,819	)		$	4,839		$	(374	)	$	3,298		$	56	$	—


¹	Includes $7.1 million of negative recovery related to a refund of a settlement between BOK Financial and the City of Tulsa by the Oklahoma Supreme Court. Excluding this refund, BOK Financial had net charge-offs (recoveries) to average loans of (0.05%) on an annualized basis.

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	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	995				(322		)	528			3,553			(5,436		)	(682		)
Loans charged off	(7,840		)		(10,548		)	(7,447		)	(8,303		)	—			(34,138		)
Recoveries	5,181			¹	4,540			1,459			3,915			—			15,095
Ending balance	$	81,779			$	60,704		$	41,016		$	9,343		$	40,914		$	233,756
Allowance for off-balance sheet credit losses:
Beginning balance	$	7,906			$	1,250		$	91		$	14		$	—		$	9,261
Provision for off-balance sheet credit losses	(7,505		)		193			(15		)	9			—			(7,318		)
Ending balance	$	401			$	1,443		$	76		$	23		$	—		$	1,943

Total provision for credit losses	$	(6,510	)		$	(129	)	$	513		$	3,562		$	(5,436	)	$	(8,000	)


¹	Includes $7.1 million of negative recovery related to a refund of a settlement between BOK Financial and the City of Tulsa by the Oklahoma Supreme Court. Excluding this refund, BOK Financial had net charge-offs (recoveries) to average loans of (0.05%) on an annualized basis.

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at September 30, 2013 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	$	7,551,553	$	61,208	$	19,522	$	572	$	7,571,075	$	61,780
Commercial real estate	2,296,727		44,574		52,502		488		2,349,229		45,062
Residential mortgage	1,996,086		38,083		38,679		214		2,034,765		38,297
Consumer	393,407		8,304		1,624		—		395,031		8,304
Total	12,237,773		152,169		112,327		1,274		12,350,100		153,443

Nonspecific allowance	—		—		—		—		—		40,882

Total	$	12,237,773	$	152,169	$	112,327	$	1,274	$	12,350,100	$	194,325

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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 December 31, 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	$	7,617,445	$	65,050	$	24,467	$	230	$	7,641,912	$	65,280
Commercial real estate	2,168,373		51,775		60,626		3,109		2,228,999		54,884
Residential mortgage	1,998,921		40,934		46,119		769		2,045,040		41,703
Consumer	392,796		9,328		2,709		125		395,505		9,453
Total	12,177,535		167,087		133,921		4,233		12,311,456		171,320

Nonspecific allowance	—		—		—		—		—		44,187

Total	$	12,177,535	$	167,087	$	133,921	$	4,233	$	12,311,456	$	215,507

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at September 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	$	7,245,145	$	81,575	$	21,762	$	204	$	7,266,907	$	81,779
Commercial real estate	2,101,511		57,587		75,761		3,117		2,177,272		60,704
Residential mortgage	1,987,546		40,799		28,757		217		2,016,303		41,016
Consumer	366,776		9,214		5,109		129		371,885		9,343
Total	11,700,978		189,175		131,389		3,667		11,832,367		192,842

Nonspecific allowance	—		—		—		—		—		40,914

Total	$	11,700,978	$	189,175	$	131,389	$	3,667	$	11,832,367	$	233,756

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Credit Quality Indicators

The Company utilizes loan class and risk grading as primary credit quality indicators. 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 September 30, 2013 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	7,553,151	$	60,570	$	17,924	$	1,210	$	7,571,075	$	61,780
Commercial real estate	2,349,229		45,062		—		—		2,349,229		45,062
Residential mortgage	236,399		3,764		1,798,366		34,533		2,034,765		38,297
Consumer	268,690		2,797		126,341		5,507		395,031		8,304
Total	10,407,469		112,193		1,942,631		41,250		12,350,100		153,443

Nonspecific allowance	—		—		—		—		—		40,882

Total	$	10,407,469	$	112,193	$	1,942,631	$	41,250	$	12,350,100	$	194,325

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, 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	$	7,624,442	$	64,181	$	17,470	$	1,099	$	7,641,912	$	65,280
Commercial real estate	2,228,999		54,884		—		—		2,228,999		54,884
Residential mortgage	265,503		5,270		1,779,537		36,433		2,045,040		41,703
Consumer	231,376		2,987		164,129		6,466		395,505		9,453
Total	10,350,320		127,322		1,961,136		43,998		12,311,456		171,320

Nonspecific allowance	—		—		—		—		—		44,187

Total	$	10,350,320	$	127,322	$	1,961,136	$	43,998	$	12,311,456	$	215,507

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The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at September 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	$	7,249,429	$	80,676	$	17,478	$	1,103	$	7,266,907	$	81,779
Commercial real estate	2,177,235		60,704		37		—		2,177,272		60,704
Residential mortgage	275,490		6,416		1,740,813		34,600		2,016,303		41,016
Consumer	202,897		2,711		168,988		6,632		371,885		9,343
Total	9,905,051		150,507		1,927,316		42,335		11,832,367		192,842

Nonspecific allowance	—		—		—		—		—		40,914

Total	$	9,905,051	$	150,507	$	1,927,316	$	42,335	$	11,832,367	$	233,756

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 guidelines. 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 nonaccruing status. Known information does, however, cause concern as to the borrowers’ continued compliance with current repayment terms. Nonaccruing 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.

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The following table summarizes the Company’s loan portfolio at September 30, 2013 by the risk grade categories (in thousands):



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,305,225	$	4,813	$	1,953	$	—	$	—	$	2,311,991
Services	2,130,169		11,455		6,927		—		—		2,148,551
Wholesale/retail	1,171,923		2,660		7,223		—		—		1,181,806
Manufacturing	378,723		2,894		843		—		—		382,460
Healthcare	1,158,436		43		1,733		—		—		1,160,212
Integrated food services	136,650		4,790		—		—		—		141,440
Other commercial and industrial	225,895		—		796		17,877		47		244,615
Total commercial	7,507,021		26,655		19,475		17,877		47		7,571,075

Commercial real estate:
Construction and land development	178,278		17,394		20,784		—		—		216,456
Retail	548,197		807		7,914		—		—		556,918
Office	413,083		2,122		6,838		—		—		422,043
Multifamily	504,548		11,556		4,350		—		—		520,454
Industrial	244,768		254		—		—		—		245,022
Other commercial real estate	365,051		10,669		12,616		—		—		388,336
Total commercial real estate	2,253,925		42,802		52,502		—		—		2,349,229

Residential mortgage:
Permanent mortgage	222,630		4,633		5,441		819,601		26,356		1,078,661
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		163,342		577		163,919
Home equity	3,695		—		—		781,608		6,882		792,185
Total residential mortgage	226,325		4,633		5,441		1,764,551		33,815		2,034,765

Consumer:
Indirect automobile	—		—		—		9,800		957		10,757
Other consumer	267,564		846		280		115,197		387		384,274
Total consumer	267,564		846		280		124,997		1,344		395,031

Total	$	10,254,835	$	74,936	$	77,698	$	1,907,425	$	35,206	$	12,350,100

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The following table summarizes the Company’s loan portfolio at December 31, 2012 by the risk grade categories (in thousands):



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,448,954	$	9,245	$	2,460	$	—	$	—	$	2,460,659
Services	2,119,734		32,362		12,090		—		—		2,164,186
Wholesale/retail	1,093,413		9,949		3,077		—		—		1,106,439
Manufacturing	337,132		9,345		2,007		—		—		348,484
Healthcare	1,077,773		467		3,166		—		—		1,081,406
Integrated food services	190,422		—		684		—		—		191,106
Other commercial and industrial	266,329		4,914		919		17,406		64		289,632
Total commercial	7,533,757		66,282		24,403		17,406		64		7,641,912

Commercial real estate:
Construction and land development	204,010		22,952		26,131		—		—		253,093
Retail	508,342		6,327		8,117		—		—		522,786
Office	405,763		15,280		6,829		—		—		427,872
Multifamily	393,566		6,624		2,706		—		—		402,896
Industrial	241,761		265		3,968		—		—		245,994
Other commercial real estate	351,663		11,820		12,875		—		—		376,358
Total commercial real estate	2,105,105		63,268		60,626		—		—		2,228,999

Residential mortgage:
Permanent mortgage	242,823		10,271		12,409		831,008		27,454		1,123,965
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		159,955		489		160,444
Home equity	—		—		—		754,375		6,256		760,631
Total residential mortgage	242,823		10,271		12,409		1,745,338		34,199		2,045,040

Consumer:
Indirect automobile	—		—		—		33,157		1,578		34,735
Other consumer	229,570		1,091		715		128,978		416		360,770
Total consumer	229,570		1,091		715		162,135		1,994		395,505

Total	$	10,111,255	$	140,912	$	98,153	$	1,924,879	$	36,257	$	12,311,456

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



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,403,364	$	10,450	$	3,063	$	—	$	—	$	2,416,877
Services	1,923,017		34,452		10,099		—		—		1,967,568
Wholesale/retail	1,053,813		4,241		2,007		—		—		1,060,061
Manufacturing	330,608		10,469		2,283		—		—		343,360
Healthcare	1,019,362		184		3,305		—		—		1,022,851
Integrated food services	199,769		684		—		—		—		200,453
Other commercial and industrial	231,890		5,437		932		17,405		73		255,737
Total commercial	7,161,823		65,917		21,689		17,405		73		7,266,907

Commercial real estate:
Construction and land development	230,022		25,568		38,143		—		—		293,733
Retail	520,568		8,196		6,692		—		—		535,456
Office	391,859		12,554		9,833		—		—		414,246
Multifamily	383,317		6,667		3,145		—		—		393,129
Industrial	175,339		4,443		4,064		—		—		183,846
Other commercial real estate	329,659		13,319		13,847		—		37		356,862
Total commercial real estate	2,030,764		70,747		75,724		—		37		2,177,272

Residential mortgage:
Permanent mortgage	253,859		11,776		9,855		850,118		13,352		1,138,960
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		161,761		510		162,271
Home equity	—		—		—		709,522		5,550		715,072
Total residential mortgage	253,859		11,776		9,855		1,721,401		19,412		2,016,303

Consumer:
Indirect automobile	—		—		—		45,349		1,932		47,281
Other consumer	198,419		1,663		2,815		121,345		362		324,604
Total consumer	198,419		1,663		2,815		166,694		2,294		371,885

Total	$	9,644,865	$	150,103	$	110,083	$	1,905,500	$	21,816	$	11,832,367

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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. This includes all nonaccruing loans, all loans modified in a TDR and all loans repurchased from GNMA pools.

A summary of impaired loans follows (in thousands):



	As of										For the				For the
	September 30, 2013										Three Months Ended				Nine Months Ended
			Recorded Investment								September 30, 2013				September 30, 2013
	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	$	1,954	$	1,953	$	1,953	$	—	$	—	$	2,115	$	—	$	2,207	$	—
Services	9,105		6,927		5,789		1,138		515		7,188		—		9,509		—
Wholesale/retail	11,262		7,223		7,188		35		9		6,962		—		5,150		—
Manufacturing	1,051		843		843		—		—		860		—		1,425		—
Healthcare	2,340		1,733		1,685		48		48		2,202		—		2,450		—
Integrated food services	—		—		—		—		—		—		—		342		—
Other commercial and industrial	8,535		843		843		—		—		871		—		913		—
Total commercial	34,247		19,522		18,301		1,221		572		20,198		—		21,996		—

Commercial real estate:
Construction and land development	24,219		20,784		20,395		389		148		20,960		—		23,458		—
Retail	9,380		7,914		7,914		—		—		8,160		—		8,016		—
Office	8,254		6,838		6,830		8		8		7,333		—		6,834		—
Multifamily	4,351		4,350		4,350		—		—		5,399		—		3,528		—
Industrial	—		—		—		—		—		—		—		1,984		—
Other real estate loans	14,868		12,616		12,020		596		332		13,747		—		12,746		—
Total commercial real estate	61,072		52,502		51,509		993		488		55,599		—		56,566		—

Residential mortgage:
Permanent mortgage	39,648		31,797		31,527		270		214		32,272		539		35,829		1,142
Permanent mortgage guaranteed by U.S. government agencies ¹	171,935		163,919		163,919		—		—		162,497		1,722		162,337		5,130
Home equity	7,091		6,882		6,882		—		—		7,293		—		6,569		—
Total residential mortgage	218,674		202,598		202,328		270		214		202,062		2,261		204,735		6,272

Consumer:
Indirect automobile	960		957		957		—		—		1,073		—		1,268		—
Other consumer	677		667		667		—		—		758		—		899		—
Total consumer	1,637		1,624		1,624		—		—		1,831		—		2,167		—

Total	$	315,630	$	276,246	$	273,762	$	2,484	$	1,274	$	279,690	$	2,261	$	285,464	$	6,272


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At September 30, 2013 , $577 thousand of these loans were nonaccruing and $163 million were accruing based on the guarantee by U.S. government agencies.

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

A summary of impaired loans at December 31, 2012 follows (in thousands):



			Recorded Investment
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance
Commercial:
Energy	$	2,460	$	2,460	$	2,460	$	—	$	—
Services	15,715		12,090		11,940		150		149
Wholesale/retail	9,186		3,077		3,016		61		15
Manufacturing	2,447		2,007		2,007		—		—
Healthcare	4,256		3,166		2,050		1,116		66
Integrated food services	684		684		684		—		—
Other commercial and industrial	8,482		983		983		—		—
Total commercial	43,230		24,467		23,140		1,327		230

Commercial real estate:
Construction and land development	44,721		26,131		25,575		556		155
Retail	9,797		8,117		8,117		—		—
Office	8,949		6,829		6,604		225		21
Multifamily	3,189		2,706		2,706		—		—
Industrial	3,968		3,968		—		3,968		2,290
Other real estate loans	15,377		12,875		10,049		2,826		643
Total commercial real estate	86,001		60,626		53,051		7,575		3,109

Residential mortgage:
Permanent mortgage	51,153		39,863		37,564		2,299		769
Permanent mortgage guaranteed by U.S. government agencies ¹	170,740		160,444		160,444		—		—
Home equity	6,256		6,256		6,256		—		—
Total residential mortgage	228,149		206,563		204,264		2,299		769

Consumer:
Indirect automobile	1,578		1,578		1,578		—		—
Other consumer	1,300		1,131		1,006		125		125
Total consumer	2,878		2,709		2,584		125		125

Total	$	360,258	$	294,365	$	283,039	$	11,326	$	4,233


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At December 31, 2012 , $489 thousand of these loans were nonaccruing and $160 million were accruing based on the guarantee by U.S. government agencies.

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A summary of impaired loans at September 30, 2012 follows (in thousands):



	As of										For the				For the
	As of September 30, 2012										Three Months Ended				Nine Months Ended
			Recorded Investment								September 30, 2012				September 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	$	3,273	$	3,063	$	3,063	$	—	$	—	$	3,075	$	—	$	1,700	$	—
Services	13,135		10,099		9,978		121		120		10,111		—		13,534		—
Wholesale/retail	8,039		2,007		1,937		70		18		3,091		—		11,594		—
Manufacturing	6,548		2,283		2,283		—		—		7,257		—		12,667		—
Healthcare	4,395		3,305		2,159		1,146		66		3,308		—		4,396		—
Integrated food services	—		—		—		—		—		—		—		—		—
Other commercial and industrial	8,504		1,005		1,005		—		—		1,305		—		1,398		—
Total commercial	43,894		21,762		20,425		1,337		204		28,147		—		45,289		—

Commercial real estate:
Construction and land development	67,087		38,143		37,579		564		155		42,097		—		50,009		—
Retail	8,372		6,692		6,692		—		—		7,300		—		6,778		—
Office	13,736		9,833		9,608		225		21		10,211		—		10,645		—
Multifamily	3,259		3,145		3,145		—		—		3,182		—		3,329		—
Industrial	4,064		4,064		—		4,064		2,290		2,032		—		2,032		—
Other real estate loans	16,473		13,884		11,454		2,430		651		13,166		—		14,685		—
Total commercial real estate	112,991		75,761		68,478		7,283		3,117		77,988		—		87,478		—

Residential mortgage:
Permanent mortgage	31,068		23,207		22,906		301		217		20,672		398		24,287		1,193
Permanent mortgage guaranteed by U.S. government agencies ¹	169,622		162,271		162,271		—		—		163,863		1,680		178,542		5,039
Home equity	5,550		5,550		5,550		—		—		5,071		—		4,976		—
Total residential mortgage	206,240		191,028		190,727		301		217		189,606		2,078		207,805		6,232

Consumer:
Indirect automobile	1,932		1,932		1,932		—		—		2,095		—		2,063		—
Other consumer	5,219		3,177		3,048		129		129		3,967		—		2,249		—
Total consumer	7,151		5,109		4,980		129		129		6,062		—		4,312		—

Total	$	370,276	$	293,660	$	284,610	$	9,050	$	3,667	$	301,803	$	2,078	$	344,884	$	6,232


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At September 30, 2012 , $510 thousand of these loans were nonaccruing and $162 million were accruing based on the guarantee by U.S. government agencies.

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Troubled Debt Restructurings

A summary of troubled debt restructurings ("TDRs") by accruing status as of September 30, 2013 were as follows (in thousands):



	As of September 30, 2013								Amounts Charged Off During
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended September 30, 2013		Nine Months Ended Sept. 30, 2013
Nonaccruing TDRs:

Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	3,791		1,274		2,517		250		—		—
Wholesale/retail	275		141		134		9		—		—
Manufacturing	396		—		396		—		154		154
Healthcare	—		—		—		—		—		—
Integrated food services	—		—		—		—		—		—
Other commercial and industrial	772		30		742		—		—		—
Total commercial	5,234		1,445		3,789		259		154		154

Commercial real estate:
Construction and land development	10,673		1,776		8,897		148		—		54
Retail	6,030		2,032		3,998		—		—		627
Office	5,448		1,294		4,154		—		—		77
Multifamily	980		980		—		—		—		—
Industrial	—		—		—		—		—		—
Other real estate loans	8,482		6,874		1,608		—		—		—
Total commercial real estate	31,613		12,956		18,657		148		—		758

Residential mortgage:
Permanent mortgage	17,319		9,579		7,740		13		73		450
Home equity	3,782		3,219		563		—		61		127
Total residential mortgage	21,101		12,798		8,303		13		134		577

Consumer:
Indirect automobile	817		737		80		—		—		1
Other consumer	471		287		184		—		2		2
Total consumer	1,288		1,024		264		—		2		3

Total nonaccruing TDRs	$	59,236	$	28,223	$	31,013	$	420	$	290	$	1,492

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	As of September 30, 2013								Amounts Charged Off During
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended September 30, 2013		Nine Months Ended Sept. 30, 2013
Accruing TDRs:

Residential mortgage:
Permanent mortgage	—		—		—		—		—		—
Permanent mortgages guaranteed by U.S. government agencies	50,099		11,975		38,124		—		—		—
Total residential mortgage	50,099		11,975		38,124		—		—		—

Total accruing TDRs	50,099		11,975		38,124		—		—		—

Total TDRs	$	109,335	$	40,198	$	69,137	$	420	$	290	$	1,492

- 103 -

A summary of troubled debt restructurings by accruing status as of December 31, 2012 were as follows (in thousands):



	As of
	December 31, 2012
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance
Nonaccruing TDRs:

Commercial:
Energy	$	—	$	—	$	—	$	—
Services	2,492		2,099		393		45
Wholesale/retail	2,290		1,362		928		15
Manufacturing	—		—		—		—
Healthcare	64		64		—		—
Integrated food services	—		—		—		—
Other commercial and industrial	675		—		675		—
Total commercial	5,521		3,525		1,996		60

Commercial real estate:
Construction and land development	14,898		9,989		4,909		76
Retail	6,785		5,735		1,050		—
Office	3,899		1,920		1,979		—
Multifamily	—		—		—		—
Industrial	—		—		—		—
Other real estate loans	5,017		3,399		1,618		—
Total commercial real estate	30,599		21,043		9,556		76

Residential mortgage:
Permanent mortgage	20,490		12,214		8,276		54
Home equity	—		—		—		—
Total residential mortgage	20,490		12,214		8,276		54

Consumer:
Indirect automobile	532		492		40		—
Other consumer	2,328		2,097		231		83
Total consumer	2,860		2,589		271		83

Total nonaccuring TDRs	$	59,470	$	39,371	$	20,099	$	273

- 104 -



	As of
	December 31, 2012
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance

Accruing TDRs:

Residential mortgage:
Permanent mortgage	—		—		—		—
Permanent mortgages guaranteed by U.S. government agencies	38,515		8,755		29,760		—
Total residential mortgage	38,515		8,755		29,760		—

Total accruing TDRs	38,515		8,755		29,760		—

Total TDRs	$	97,985	$	48,126	$	49,859	$	273

- 105 -

A summary of troubled debt restructurings by accruing status as of September 30, 2012 were as follows (in thousands):



	As of September 30, 2012								Amounts Charged Off During
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended Sept. 30, 2012		Nine Months Ended Sept. 30, 2012
Nonaccruing TDRs:

Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	2,594		2,109		485		—		—		—
Wholesale/retail	1,557		1,385		172		18		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	72		72		—		—		—		—
Integrated food services	—		—		—		—		—		—
Other commercial and industrial	678		—		678		—		—		—
Total commercial	4,901		3,566		1,335		18		—		—

Commercial real estate:
Construction and land development	18,406		9,842		8,564		76		982		3,252
Retail	3,448		3,448		—		—		150		150
Office	3,376		1,368		2,008		—		—		269
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other real estate loans	5,310		3,574		1,736		55		87		2,269
Total commercial real estate	30,540		18,232		12,308		131		1,219		5,940

Residential mortgage:
Permanent mortgage	6,925		4,245		2,680		54		—		24
Home equity	—		—		—		—		—		—
Total residential mortgage	6,925		4,245		2,680		54		—		24

Consumer:
Indirect automobile	—		—		—		—		—		—
Other consumer	2,213		443		1,770		88		1,345		1,345
Total consumer	2,213		443		1,770		88		1,345		1,345

Total nonaccruing TDRs	$	44,579	$	26,486	$	18,093	$	291	$	2,564	$	7,309

- 106 -



	As of September 30, 2012								Amounts Charged Off During
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended Sept. 30, 2012		Nine Months Ended Sept. 30, 2012
Nonaccruing TDRs:

Accruing TDRs:

Residential mortgage:
Permanent mortgage	3,402		2,225		1,177		—		—		83
Permanent mortgages guaranteed by U.S. government agencies	24,590		7,684		16,906		—		—		—
Total residential mortgage	27,992		9,909		18,083		—		—		83

Total accruing TDRs	27,992		9,909		18,083		—		—		83

Total TDRs	$	72,571	$	36,395	$	36,176	$	291	$	2,564	$	7,392

- 107 -

Troubled debt restructurings generally consist of interest rates concessions, payment stream concessions or a combination of concessions to distressed borrowers. The following tables detail the recorded balance of loans at September 30, 2013 by class that were restructured during the three and nine months ended September 30, 2013 by primary type of concession (in thousands):



	Three Months Ended Sept. 30, 2013
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		610		228		—		838		838
Wholesale/retail	—		—		—		—		—		—		—		—
Manufacturing	—		—		—		—		396		—		396		396
Healthcare	—		—		—		—		—		—		—		—
Integrated food services	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—		—		—
Total commercial	—		—		—		610		624		—		1,234		1,234

Commercial real estate:
Construction and land development	—		—		—		—		—		—		—		—
Retail	—		—		—		—		498		—		498		498
Office	—		—		—		—		—		—		—		—
Multifamily	—		—		—		—		—		—		—		—
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		—		—		—		—
Total commercial real estate	—		—		—		—		498		—		498		498

Residential mortgage:
Permanent mortgage	—		—		—		—		—		222		222		222
Permanent mortgage guaranteed by U.S. government agencies	1,971		2,892		4,863		—		—		—		—		4,863
Home equity	—		—		—		—		—		515		515		515
Total residential mortgage	1,971		2,892		4,863		—		—		737		737		5,600

Consumer:
Indirect automobile	—		—		—		—		—		58		58		58
Other consumer	—		—		—		—		—		58		58		58
Total consumer	—		—		—		—		—		116		116		116

Total	$	1,971	$	2,892	$	4,863	$	610	$	1,122	$	853	$	2,585	$	7,448

- 108 -



	Nine Months Ended September 30, 2013
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		610		1,351		—		1,961		1,961
Wholesale/retail	—		—		—		—		—		—		—		—
Manufacturing	—		—		—		—		396		—		396		396
Healthcare	—		—		—		—		—		—		—		—
Integrated food services	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		145		—		—		145		145
Total commercial	—		—		—		755		1,747		—		2,502		2,502

Commercial real estate:
Construction and land development	—		—		—		—		—		—		—		—
Retail	—		—		—		—		1,110		—		1,110		1,110
Office	—		—		—		—		3,173		—		3,173		3,173
Multifamily	—		—		—		—		980		—		980		980
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		3,870		—		3,870		3,870
Total commercial real estate	—		—		—		—		9,133		—		9,133		9,133

Residential mortgage:
Permanent mortgage	—		—		—		—		132		864		996		996
Permanent mortgage guaranteed by U.S. government agencies	9,817		9,589		19,406		—		—		—		—		19,406
Home equity	—		—		—		—		—		2,490		2,490		2,490
Total residential mortgage	9,817		9,589		19,406		—		132		3,354		3,486		22,892

Consumer:
Indirect automobile	—		—		—		—		—		633		633		633
Other consumer	—		—		—		81		—		130		211		211
Total consumer	—		—		—		81		—		763		844		844

Total	$	9,817	$	9,589	$	19,406	$	836	$	11,012	$	4,117	$	15,965	$	35,371

- 109 -

Troubled debt restructurings generally consist of interest rates concessions, payment stream concessions or a combination of concessions to distressed borrowers. The following tables detail the recorded balance of loans by class that were restructured during the three and nine months ended September 30, 2012 by primary type of concession (in thousands):



	Three Months Ended Sept. 30, 2012
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		875		—		—		875		875
Wholesale/retail	—		—		—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—		—
Integrated food services	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—		—		—
Total commercial	—		—		—		875		—		—		875		875

Commercial real estate:
Construction and land development	—		—		—		—		6,598		—		6,598		6,598
Retail	—		—		—		—		—		—		—		—
Office	—		—		—		—		—		—		—		—
Multifamily	—		—		—		—		—		—		—		—
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		—		—		—		—
Total commercial real estate	—		—		—		—		6,598		—		6,598		6,598

Residential mortgage:
Permanent mortgage	—		—		—		—		—		—		—		—
Permanent mortgage guaranteed by U.S. government agencies	—		961		961		—		—		—		—		961
Home equity	—		—		—		—		—		—		—		—
Total residential mortgage	—		961		961		—		—		—		—		961

Consumer:
Indirect automobile	—		—		—		—		—		—		—		—
Other consumer	—		—		—		87		—		—		87		87
Total consumer	—		—		—		87		—		—		87		87

Total	$	—	$	961	$	961	$	962	$	6,598	$	—	$	7,560	$	8,521

- 110 -



	Nine Months Ended September 30, 2012
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		875		70		—		945		945
Wholesale/retail	—		—		—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		72		72		72
Integrated food services	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—		—		—
Total commercial	—		—		—		875		70		72		1,017		1,017

Commercial real estate:
Construction and land development	—		—		—		1,280		6,598		—		7,878		7,878
Retail	—		—		—		2,398		—		—		2,398		2,398
Office	—		—		—		1,368		—		—		1,368		1,368
Multifamily	—		—		—		—		—		—		—		—
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		1,605		—		1,605		1,605
Total commercial real estate	—		—		—		5,046		8,203		—		13,249		13,249

Residential mortgage:
Permanent mortgage	—		151		151		—		—		781		781		932
Permanent mortgage guaranteed by U.S. government agencies	—		4,465		4,465		—		—		—		—		4,465
Home equity	—		—		—		—		—		—		—		—
Total residential mortgage	—		4,616		4,616		—		—		781		781		5,397

Consumer:
Indirect automobile	—		—		—		—		—		—		—		—
Other consumer	—		—		—		452		—		1,630		2,082		2,082
Total consumer	—		—		—		452		—		1,630		2,082		2,082

Total	$	—	$	4,616	$	4,616	$	6,373	$	8,273	$	2,483	$	17,129	$	21,745

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The following table summarizes, by loan class, the recorded investment at September 30, 2013 of loans modified as TDRs within the previous 12 months and for which there was a payment default during the three and nine months ended September 30, 2013 (in thousands):



	Three Months Ended Sept. 30, 2013						Nine Months Ended Sept. 30, 2013
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		1,338		1,338		—		1,948		1,948
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		396		396		—		396		396
Healthcare	—		—		—		—		—		—
Integrated food services	—		—		—		—		—		—
Other commercial and industrial	—		145		145		—		168		168
Total commercial	—		1,879		1,879		—		2,512		2,512

Commercial real estate:
Construction and land development	—		257		257		—		257		257
Retail	—		1,110		1,110		—		1,110		1,110
Office	—		3,173		3,173		—		3,173		3,173
Multifamily	—		—		—		—		980		980
Industrial	—		—		—		—		—		—
Other real estate loans	—		—		—		—		3,870		3,870
Total commercial real estate	—		4,540		4,540		—		9,390		9,390

Residential mortgage:
Permanent mortgage	—		820		820		—		941		941
Permanent mortgage guaranteed by U.S. government agencies	22,359		—		22,359		26,636		—		26,636
Home equity	—		563		563		—		630		630
Total residential mortgage	22,359		1,383		23,742		26,636		1,571		28,207

Consumer:
Indirect automobile	—		81		81		—		116		116
Other consumer	—		53		53		—		53		53
Total consumer	—		134		134		—		169		169

Total	$	22,359	$	7,936	$	30,295	$	26,636	$	13,642	$	40,278

A payment default is defined as being 30 days or more past due. The table above includes loans that experienced a payment default during the period, but may be performing in accordance with the modified terms as of the balance sheet date.

- 112 -

The following table summarizes, by loan class, the recorded investment at September 30, 2012 of loans modified as TDRs within the previous 12 months and for which there was a payment default during the three and nine months ended September 30, 2012 (in thousands):



	Three Months Ended Sept. 30, 2012						Nine Months Ended Sept. 30, 2012
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		70		70		—		70		70
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	—		—		—		—		—		—
Integrated food services	—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—
Total commercial	—		70		70		—		70		70

Commercial real estate:
Construction and land development	—		1,183		1,183		—		1,183		1,183
Retail	—		—		—		—		2,398		2,398
Office	—		—		—		—		1,368		1,368
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other real estate loans	—		—		—		—		—		—
Total commercial real estate	—		1,183		1,183		—		4,949		4,949

Residential mortgage:
Permanent mortgage	151		—		151		151		—		151
Permanent mortgage guaranteed by U.S. government agencies	3,946		—		3,946		4,635		—		4,635
Home equity	—		—		—		—		—		—
Total residential mortgage	4,097		—		4,097		4,786		—		4,786

Consumer:
Indirect automobile	—		—		—		—		—		—
Other consumer	—		1,770		1,770		—		1,770		1,770
Total consumer	—		1,770		1,770		—		1,770		1,770

Total	$	4,097	$	3,023	$	7,120	$	4,786	$	6,789	$	11,575

- 113 -

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 September 30, 2013 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,308,639	$	1,399	$	—	$	1,953	$	2,311,991
Services	2,140,835		704		85		6,927		2,148,551
Wholesale/retail	1,173,628		955		—		7,223		1,181,806
Manufacturing	381,048		569		—		843		382,460
Healthcare	1,158,340		139		—		1,733		1,160,212
Integrated food services	141,440		—		—		—		141,440
Other commercial and industrial	243,656		116		—		843		244,615
Total commercial	7,547,586		3,882		85		19,522		7,571,075

Commercial real estate:
Construction and land development	195,672		—		—		20,784		216,456
Retail	548,810		194		—		7,914		556,918
Office	415,205		—		—		6,838		422,043
Multifamily	516,104		—		—		4,350		520,454
Industrial	244,415		607		—		—		245,022
Other real estate loans	375,250		470		—		12,616		388,336
Total commercial real estate	2,295,456		1,271		—		52,502		2,349,229

Residential mortgage:
Permanent mortgage	1,040,616		6,248		—		31,797		1,078,661
Permanent mortgages guaranteed by U.S. government agencies	20,985		18,639		123,718		577		163,919
Home equity	782,954		2,321		28		6,882		792,185
Total residential mortgage	1,844,555		27,208		123,746		39,256		2,034,765

Consumer:
Indirect automobile	9,416		384		—		957		10,757
Other consumer	382,188		1,344		75		667		384,274
Total consumer	391,604		1,728		75		1,624		395,031

Total	$	12,079,201	$	34,089	$	123,906	$	112,904	$	12,350,100

- 114 -

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2012 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,454,928	$	3,071	$	200	$	2,460	$	2,460,659
Services	2,150,386		1,710		—		12,090		2,164,186
Wholesale/retail	1,103,307		5		50		3,077		1,106,439
Manufacturing	346,442		35		—		2,007		348,484
Healthcare	1,077,022		1,040		178		3,166		1,081,406
Integrated food services	190,416		6		—		684		191,106
Other commercial and industrial	288,522		127		—		983		289,632
Total commercial	7,611,023		5,994		428		24,467		7,641,912

Commercial real estate:
Construction and land development	226,962		—		—		26,131		253,093
Retail	514,252		349		68		8,117		522,786
Office	417,866		3,177		—		6,829		427,872
Multifamily	400,151		39		—		2,706		402,896
Industrial	242,026		—		—		3,968		245,994
Other real estate loans	358,030		2,092		3,361		12,875		376,358
Total commercial real estate	2,159,287		5,657		3,429		60,626		2,228,999

Residential mortgage:
Permanent mortgage	1,075,687		8,366		49		39,863		1,123,965
Permanent mortgages guaranteed by U.S. government agencies	26,560		13,046		120,349		489		160,444
Home equity	752,100		2,275		—		6,256		760,631
Total residential mortgage	1,854,347		23,687		120,398		46,608		2,045,040

Consumer:
Indirect automobile	31,869		1,273		15		1,578		34,735
Other consumer	358,308		1,327		4		1,131		360,770
Total consumer	390,177		2,600		19		2,709		395,505

Total	$	12,014,834	$	37,938	$	124,274	$	134,410	$	12,311,456

- 115 -

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



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,408,812	$	5,002	$	—	$	3,063	$	2,416,877
Services	1,956,190		741		538		10,099		1,967,568
Wholesale/retail	1,056,730		1,324		—		2,007		1,060,061
Manufacturing	340,243		834		—		2,283		343,360
Healthcare	1,014,771		4,775		—		3,305		1,022,851
Integrated food services	200,453		—		—		—		200,453
Other commercial and industrial	254,167		240		325		1,005		255,737
Total commercial	7,231,366		12,916		863		21,762		7,266,907

Commercial real estate:
Construction and land development	245,258		10,297		35		38,143		293,733
Retail	528,396		368		—		6,692		535,456
Office	403,223		1,190		—		9,833		414,246
Multifamily	389,949		35		—		3,145		393,129
Industrial	177,951		1,831		—		4,064		183,846
Other real estate loans	340,586		2,391		1		13,884		356,862
Total commercial real estate	2,085,363		16,112		36		75,761		2,177,272

Residential mortgage:
Permanent mortgage	1,097,550		17,953		250		23,207		1,138,960
Permanent mortgages guaranteed by U.S. government agencies	19,786		16,629		125,346		510		162,271
Home equity	706,561		2,961		—		5,550		715,072
Total residential mortgage	1,823,897		37,543		125,596		29,267		2,016,303

Consumer:
Indirect automobile	43,588		1,729		32		1,932		47,281
Other consumer	319,549		1,878		—		3,177		324,604
Total consumer	363,137		3,607		32		5,109		371,885

Total	$	11,503,763	$	70,178	$	126,527	$	131,899	$	11,832,367

- 116 -

( 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 loan 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):



	September 30, 2013					December 31, 2012					September 30, 2012
	Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value
Residential mortgage loans held for sale	$	220,800	$	228,926		$	269,718	$	281,935		$	294,794	$	313,927
Residential mortgage loan commitments	351,196		10,948			356,634		12,733			452,129		22,319
Forward sales contracts	560,069		(9,363		)	598,442		(906		)	722,043		(11,144		)
			$	230,511				$	293,762				$	325,102

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of September 30, 2013 , December 31, 2012 or September 30, 2012 . No credit losses were recognized on residential mortgage loans held for sale for the nine month periods ended September 30, 2013 and 2012 .

Mortgage banking revenue was as follows (in thousands):



	Three Months Ended						Nine Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Originating and marketing revenue:
Residential mortgages loan held for sale	$	31,047		$	40,463		$	79,045		$	85,262
Residential mortgage loan commitments	12,668			6,512			(1,774		)	15,722
Forward sales contracts	(31,167		)	(6,618		)	(8,457		)	(7,856		)
Total originating and marketing revenue	12,548			40,357			68,814			93,128
Servicing revenue	10,938			9,909			31,244			29,764
Total mortgage banking revenue	$	23,486		$	50,266		$	100,058		$	122,892

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):



	September 30, 2013			December 31, 2012			September 30, 2012
Number of residential mortgage loans serviced for others	104,115			98,246			97,465
Outstanding principal balance of residential mortgage loans serviced for others	$	13,298,479		$	11,981,624		$	11,756,350
Weighted average interest rate	4.42		%	4.71		%	4.85		%
Remaining term (in months)	292			289			289

Activity in capitalized mortgage servicing rights during the three months ended September 30, 2013 was as follows (in thousands):



	Purchased			Originated			Total
Balance, June 30, 2013	$	15,582		$	117,307		$	132,889
Additions, net	—			13,225			13,225
Change in fair value due to loan runoff	(693		)	(4,212		)	(4,905		)
Change in fair value due to market changes	(76		)	(270		)	(346		)
Balance, Sept. 30, 2013	$	14,813		$	126,050		$	140,863

Activity in capitalized mortgage servicing rights during the nine months ended September 30, 2013 was as follows (in thousands):



	Purchased			Originated			Total
Balance, December 31, 2012	$	12,976		$	87,836		$	100,812
Additions, net	—			39,157			39,157
Change in fair value due to loan runoff	(2,504		)	(13,229		)	(15,733		)
Change in fair value due to market changes	4,341			12,286			16,627
Balance, Sept. 30, 2013	$	14,813		$	126,050		$	140,863

Activity in capitalized mortgage servicing rights during the three months ended September 30, 2012 was as follows (in thousands):



	Purchased			Originated			Total
Balance, June 30, 2012	$	16,361		$	75,422		$	91,783
Additions, net	—			12,107			12,107
Change in fair value due to loan runoff	(998		)	(3,663		)	(4,661		)
Change in fair value due to market changes	(2,648		)	(6,928		)	(9,576		)
Balance, Sept. 30, 2012	$	12,715		$	76,938		$	89,653

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Activity in capitalized mortgage servicing rights during the nine months ended September 30, 2012 was as follows (in thousands):



	Purchased			Originated			Total
Balance, December 31, 2011	$	18,903		$	67,880		$	86,783
Additions, net	—			29,754			29,754
Change in fair value due to loan runoff	(2,958		)	(10,027		)	(12,985		)
Change in fair value due to market changes	(3,230		)	(10,669		)	(13,899		)
Balance, Sept. 30, 2012	$	12,715		$	76,938		$	89,653

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 used to determine fair value based on significant unobservable inputs were as follows:



	September 30, 2013	December 31, 2012	September 30, 2012
Discount rate – risk-free rate plus a market premium	10.23%	10.29%	10.32%
Prepayment rate – based upon loan interest rate, original term and loan type	7.03% - 30.92%	8.38% - 43.94%	9.14% - 46.42
Loan servicing costs – annually per loan based upon loan type:
Performing loans	$58 - $105	$55 - $105	$55 - $105
Delinquent loans	$135 - $500	$135 - $500	$135 - $500
Loans in foreclosure	$875 - $4,250	$875 - $4,250	$875 - $3,750
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life	1.54%	0.87%	0.77%

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 September 30, 2013 follows (in thousands):



	< 4.00%			4.00% - 4.99%			5.00% - 5.99%			> 5.99%			Total
Fair value	$	60,587		$	47,954		$	25,965		$	6,357		$	140,863
Outstanding principal of loans serviced for others	$	5,367,632		$	4,214,910		$	2,436,350		$	1,279,587		$	13,298,479
Weighted average prepayment rate ¹	7.03		%	8.26		%	12.05		%	30.92		%	10.64		%


¹	Annual prepayment estimates based upon loan interest rate, original term and loan type. Weighted average prepayment rate is determined by weighting the prepayment speed for each loan by its unpaid principal balance.

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 September 30, 2013 , 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 $1.7 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 $2.1 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.

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The aging status of our mortgage loans serviced for others by investor at September 30, 2013 follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	4,603,938	$	38,363	$	9,870	$	35,126	$	4,687,297
FNMA	3,787,198		22,249		5,441		20,040		3,834,928
GNMA	4,381,908		127,465		36,463		14,793		4,560,629
Other	208,047		1,588		18		5,972		215,625
Total	$	12,981,091	$	189,665	$	51,792	$	75,931	$	13,298,479

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 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 $198 million at September 30, 2013 , $227 million at December 31, 2012 and $238 million at September 30, 2012 . A separate accrual for these off-balance sheet commitments is included in Other liabilities in the Consolidated Balance Sheets totaling $9.3 million at September 30, 2013 , $11 million at December 31, 2012 and $18 million at September 30, 2012 . At September 30, 2013 , approximately 6% of the loans sold with recourse with an outstanding principal balance of $11 million were either delinquent more than 90 days, in bankruptcy or in foreclosure and 6% with an outstanding balance of $12 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						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Beginning balance	$	9,665		$	17,832		$	11,359		$	18,683
Provision for recourse losses	601			1,055			270			3,495
Loans charged off, net	(981		)	(1,255		)	(2,344		)	(4,546		)
Ending balance	$	9,285		$	17,632		$	9,285		$	17,632

The Company also has an off-balance sheet obligation to repurchase or provide indemnification for residential mortgage loans sold to government sponsored entities due to standard representations and warranties made under contractual agreements.The Company has established an accrual for credit losses related to potential loan repurchases under representations and warranties that is included in Other liabilities in the Consolidated Balance Sheets and in Mortgage banking costs in the Consolidated Statements of Earnings. The level of repurchases and indemnifications related to standard representations and warranties has remained low. The Company repurchased 5 loans from the agencies for $232 thousand during the third quarter of 2013 and had no related losses. There were two indemnification on loans paid during third quarter of 2013 .

A summary of unresolved deficiency requests from the agencies and related accrual for credit losses follows (in thousands, except for number of unresolved deficiency requests):



	September 30, 2013		December 31, 2012
Number of unresolved deficiency requests	524		389
Aggregate outstanding principal balance subject to unresolved deficiency requests	$	64,428	$	44,831
Unpaid principal balance subject to indemnification by the Company	2,440		1,233
Accrual for credit losses related to potential loan repurchases under representations and warranties	7,903		5,291

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( 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 $500 thousand and $965 thousand for the three months ended September 30, 2013 and 2012 , respectively and $1.5 million and $2.9 million for the nine months ended September 30, 2013 and 2012 , respectively. The Company made no Pension Plan contributions during the three and nine months ended September 30, 2013 and 2012 .

Management has been advised that the maximum allowable contribution for 2013 is $ 23 million . No minimum contribution is required for 2013.

( 7 ) Commitments and Contingent Liabilities

Litigation Contingencies

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 $6.4 million at September 30, 2013 . 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 types of investments. As a result, the Company's private equity activity might be curtailed.

Consolidated tax credit investment entities represent the Company's interest in entities earning federal new market tax credits related to qualifying loans. 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.

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The Company also has interests in various unrelated alternative investments generally consisting of unconsolidated limited partnership interests in or loans to entities for which investment return is primarily 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.

A summary of consolidated and unconsolidated alternative investments as of September 30, 2013 , December 31, 2012 and September 30, 2012 is as follows (in thousands):



	September 30, 2013
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interest
Consolidated:
Private equity funds	$	—	$	27,799	$	—	$	—	$	23,710
Tax credit entities	10,000		13,577		—		10,964		10,000
Other	—		9,510		—		—		2,020
Total consolidated	$	10,000	$	50,886	$	—	$	10,964	$	35,730

Unconsolidated:
Tax credit entities	$	30,345	$	92,039	$	44,285	$	—	$	—
Other	—		9,596		1,698		—		—
Total unconsolidated	$	30,345	$	101,635	$	45,983	$	—	$	—



	December 31, 2012
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interest
Consolidated:
Private equity funds	$	—	$	28,169	$	—	$	—	$	23,691
Tax credit entities	10,000		13,965		—		10,964		10,000
Other	—		8,952		—		—		2,130
Total consolidated	$	10,000	$	51,086	$	—	$	10,964	$	35,821

Unconsolidated:
Tax credit entities	$	22,354	$	78,109	$	43,052	$	—	$	—
Other	—		9,113		1,802		—		—
Total unconsolidated	$	22,354	$	87,222	$	44,854	$	—	$	—

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	September 30, 2012
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interest
Consolidated:
Private equity funds	$	—	$	28,792	$	—	$	—	$	24,777
Tax credit entities	10,000		14,094		—		10,964		10,000
Other	—		9,024		—		—		2,041
Total consolidated	$	10,000	$	51,910	$	—	$	10,964	$	36,818

Unconsolidated:
Tax credit entities	$	17,486	$	69,717	$	36,433	$	—	$	—
Other	—		9,902		2,062		—		—
Total unconsolidated	$	17,486	$	79,619	$	38,495	$	—	$	—

Other Commitments and Contingencies

At September 30, 2013 , Cavanal Hill Funds’ assets included $843 million of U.S. Treasury, $1.2 billion of cash management and $273 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 September 30, 2013 . 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 2013 or 2012 .

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. During the third quarter of 2012, CVV, Inc. and credit purchasers settled the assessment related to the 2008 tax credits disallowed with no material adverse impact to the consolidated financial statements. Management does not anticipate that the remaining issue under audit will have a material adverse impact to the consolidated financial statements.

The Company agreed to guarantee rents totaling $28.7 million through September of 2017 to the City of Tulsa 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 $12.0 million at September 30, 2013 . Current leases expire or are subject to lessee termination options in 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 of Tulsa 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 .

The Company has agreed to purchase approximately $13 million of Oklahoma income tax credits from certain operators of zero emission power facilities during 2013. Tax credits are generated based on power sold to unrelated third parties and are transferable for a period of ten years following the year of creation. Tax credits will be sold to qualifying taxpayers as BOK Financial is limited by statute on the amount of credits that may be utilized. Oklahoma statutes were amended in May 2013, so that beginning in the year 2014, transferable credits will no longer be generated by zero emission power facilities. Prior to the amended statute, the Company anticipated credits would be purchased through 2022 under long term contracts with the producers. The agreements contained provisions that they may be terminated in the event of changes in federal law or Oklahoma statutes invalidating the tax credits or their transferability.

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( 8 ) Shareholders' Equity

On October 29, 2013 , the Company declared a a quarterly cash dividend of $0.40 per common share on or about November 29, 2013 to shareholders of record as of November 16, 2013 .

Dividends declared during the three and nine months ended September 30, 2013 were $0.38 and $1.14 per share, respectively. Dividends declared during the three and nine months ended September 30, 2012 were $0.38 and $1.09 per share, respectively.

Accumulated Other Comprehensive Income (Loss)

AOCI includes unrealized gains and losses on available for sale ("AFS") securities and 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 are being amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related amortization of premium 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 are being reclassified into income over the ten-year life of the debt. Gains and losses in AOCI are net of deferred income taxes.

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, 2011	$	135,740		$	6,673		$	(12,742	)	$	(692	)	$	128,979
Net change in unrealized gain (loss)	86,390			—			(292		)	—			86,098
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			(5,430		)	—			—			(5,430		)
Interest expense, Subordinated debentures	—			—			—			399			399
Net impairment losses recognized in earnings	5,684			—			—			—			5,684
Gain on available for sale securities, net	(32,779		)	—			—			—			(32,779		)
Other comprehensive income (loss), before income taxes	59,295			(5,430		)	(292		)	399			53,972
Income tax benefit (expense) ¹	(23,066		)	2,550			113			(155		)	(20,558		)
Other comprehensive income (loss), net of income taxes	36,229			(2,880		)	(179		)	244			33,414
Balance, Sept. 30, 2012	$	171,969		$	3,793		$	(12,921	)	$	(448	)	$	162,393

Balance, December 31, 2012	$	155,553		$	3,078		$	(8,296	)	$	(415	)	$	149,920
Net change in unrealized gains (losses)	(240,384		)	—			—			—			(240,384		)
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			(2,717		)	—			—			(2,717		)
Interest expense, Subordinated debentures	—			—			—			209			209
Net impairment losses recognized in earnings	2,308			—			—			—			2,308
Gain on available for sale securities, net	(9,086		)	—			—			—			(9,086		)
Other comprehensive income (loss), before income taxes	(247,162		)	(2,717		)	—			209			(249,670		)
Income tax benefit (expense) ¹	96,146			1,059			—			(81		)	97,124
Other comprehensive income (loss), net of income taxes	(151,016		)	(1,658		)	—			128			(152,546		)
Balance, Sept. 30, 2013	$	4,537		$	1,420		$	(8,296	)	$	(287	)	$	(2,626	)


¹	Calculated using a 39% effective tax rate.

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( 9 ) Earnings Per Share



(In thousands, except share and per share amounts)	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to BOK Financial Corp. shareholders	$	75,738	$	87,382	$	243,633	$	268,626
Less: Earnings allocated to participating securities	799		278		2,623		1,994
Numerator for basic earnings per share – income available to common shareholders	74,939		87,104		241,010		266,632
Effect of reallocating undistributed earnings of participating securities	2		1		6		6
Numerator for diluted earnings per share – income available to common shareholders	$	74,941	$	87,105	$	241,016	$	266,638

Denominator:
Weighted average shares outstanding	68,770,950		68,183,171		68,687,609		68,204,078
Less: Participating securities included in weighted average shares outstanding	721,771		216,471		734,356		499,735
Denominator for basic earnings per common share	68,049,179		67,966,700		67,953,253		67,704,343
Dilutive effect of employee stock compensation plans ¹	223,682		368,289		222,662		277,215
Denominator for diluted earnings per common share	68,272,861		68,334,989		68,175,915		67,981,558

Basic earnings per share	$	1.10	$	1.28	$	3.55	$	3.94
Diluted earnings per share	$	1.10	$	1.27	$	3.54	$	3.92
¹ Excludes employee stock options with exercise prices greater than current market price.	—		87,749		—		270,288

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( 10 ) Reportable Segments

Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended September 30, 2013 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	91,540		$	25,131		$	6,300		$	43,380		$	166,351
Net interest revenue (expense) from internal sources	(9,405		)	5,060			$	4,837		(492		)	—
Net interest revenue	82,135			30,191			11,137			42,888			166,351
Provision for credit losses	(1,326		)	1,331			255			(8,760		)	(8,500		)
Net interest revenue after provision for credit losses	83,461			28,860			10,882			51,648			174,851
Other operating revenue	42,509			46,932			55,601			274			145,316
Other operating expense	60,969			56,431			59,993			33,251			210,644
Net income before taxes	65,001			19,361			6,490			18,671			109,523
Federal and state income taxes	25,285			7,531			2,525			(1,880		)	33,461
Net income	39,716			11,830			3,965			20,551			76,062
Net loss attributable to non-controlling interest	—			—			—			324			324
Net income attributable to BOK Financial Corp. shareholders	$	39,716		$	11,830		$	3,965		$	20,227		$	75,738

Average assets	$	10,460,986		$	5,655,914		$	4,385,941		$	6,751,891		$	27,254,732
Average invested capital	911,229			293,716			206,872			1,553,106			2,964,923

Performance measurements:
Return on average assets	1.51		%	0.83		%	0.36		%				1.10		%
Return on average invested capital	17.29		%	15.98		%	7.62		%				10.13		%
Efficiency ratio	48.92		%	71.53		%	89.99		%				66.03		%

- 126 -

Reportable segments reconciliation to the Consolidated Financial Statements for the nine months ended September 30, 2013 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	272,889		$	74,056		$	19,373		$	137,594		$	503,912
Net interest revenue (expense) from internal sources	(27,907		)	15,711			$	15,209		(3,013		)	—
Net interest revenue	244,982			89,767			34,582			134,581			503,912
Provision for credit losses	(219		)	3,663			1,704			(21,648		)	(16,500		)
Net interest revenue after provision for credit losses	245,201			86,104			32,878			156,229			520,412
Other operating revenue	127,352			152,066			163,368			12,365			455,151
Other operating expense	179,795			152,122			178,694			97,963			608,574
Net income before taxes	192,758			86,048			17,552			70,631			366,989
Federal and state income taxes	74,983			33,473			6,828			6,696			121,980
Net income	117,775			52,575			10,724			63,935			245,009
Net income attributable to non-controlling interest	—			—			—			1,376			1,376
Net income attributable to BOK Financial Corp. shareholders	$	117,775		$	52,575		$	10,724		$	62,559		$	243,633

Average assets	$	10,470,800		$	5,691,406		$	4,537,922		$	6,774,754		$	27,474,882
Average invested capital	900,789			295,394			204,592			1,595,910			2,996,685

Performance measurements:
Return on average assets	1.50		%	1.24		%	0.32		%				1.19		%
Return on average invested capital	17.48		%	23.80		%	7.00		%				10.87		%
Efficiency ratio	48.30		%	64.28		%	90.57		%				63.35		%

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	91,381		$	24,862		$	7,064		$	52,720		$	176,027
Net interest revenue (expense) from internal sources	(11,002		)	5,410			5,452			140			—
Net interest revenue	80,379			30,272			12,516			52,860			176,027
Provision for credit losses	3,253			338			509			(4,100		)	—
Net interest revenue after provision for credit losses	77,126			29,934			12,007			56,960			176,027
Other operating revenue	40,091			80,640			50,156			9,057			179,944
Other operating expense	62,633			74,486			53,917			31,304			222,340
Net income before taxes	54,584			36,088			8,246			34,713			133,631
Federal and state income taxes	21,233			14,038			3,208			7,299			45,778
Net income	33,351			22,050			5,038			27,414			87,853
Net loss attributable to non-controlling interest	—			—			—			471			471
Net income attributable to BOK Financial Corp. shareholders	$	33,351		$	22,050		$	5,038		$	26,943		$	87,382

Average assets	$	10,065,208		$	5,671,356		$	4,273,386		$	6,578,222		$	26,588,172
Average invested capital	865,157			292,280			188,755			1,601,000			2,947,192

Performance measurements:
Return on average assets	1.32		%	1.55		%	0.47		%				1.31		%
Return on average invested capital	15.34		%	30.01		%	10.59		%				11.80		%
Efficiency ratio	51.99		%	61.11		%	86.27		%				61.18		%

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	274,423		$	77,173		$	21,340		$	158,021		$	530,957
Net interest revenue (expense) from internal sources	(34,491		)	15,093			15,503			3,895			—
Net interest revenue	239,932			92,266			36,843			161,916			530,957
Provision for credit losses	10,393			5,991			1,680			(26,064		)	(8,000		)
Net interest revenue after provision for credit losses	229,539			86,275			35,163			187,980			538,957
Other operating revenue	131,042			205,400			148,105			18,938			503,485
Other operating expense	181,119			197,399			158,505			90,464			627,487
Net income before taxes	179,462			94,276			24,763			116,454			414,955
Federal and state income taxes	69,811			36,673			9,633			28,330			144,447
Net income	109,651			57,603			15,130			88,124			270,508
Net income attributable to non-controlling interest	—			—			—			1,882			1,882
Net income attributable to BOK Financial Corp. shareholders	$	109,651		$	57,603		$	15,130		$	86,242		$	268,626

Average assets	$	9,981,793		$	5,705,411		$	4,202,977		$	5,993,489		$	25,883,670
Average invested capital	880,777			287,888			179,772			1,535,515			2,883,952

Performance measurements:
Return on average assets	1.47		%	1.35		%	0.48		%				1.39		%
Return on average invested capital	16.63		%	26.73		%	11.25		%				12.44		%
Efficiency ratio	50.80		%	63.62		%	85.91		%				60.68		%

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( 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 transactions 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;


•	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. There were no transfers in or out of quoted prices in active markets for identical instruments, significant other observable inputs or significant unobservable inputs during the nine months ended September 30, 2013 and 2012 , respectively.

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 all observable inputs, management may adjust prices obtained from third-party pricing services to more appropriately reflect the prices that would be received to sell assets or paid to transfer liabilities in orderly transactions in the current market. No significant adjustments were made to prices provided by third-party pricing services at September 30, 2013 , December 31, 2012 or September 30, 2012 .

- 130 -

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 September 30, 2013 (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	$	74,632	$	—	$	74,632	$	—
U.S. agency residential mortgage-backed securities	26,129		—		26,129		—
Municipal and other tax-exempt securities	37,057		—		37,057		—
Other trading securities	13,069		—		13,069		—
Total trading securities	150,887		—		150,887		—
Available for sale securities:
U.S. Treasury	1,052		1,052		—		—
Municipal and other tax-exempt	95,440		—		55,769		39,671
U.S. agency residential mortgage-backed securities	7,981,387		—		7,981,387		—
Privately issued residential mortgage-backed securities	230,900		—		230,900		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,946,295		—		1,946,295		—
Other debt securities	35,362		—		30,650		4,712
Perpetual preferred stock	23,680		—		23,680		—
Equity securities and mutual funds	58,787		—		54,580		4,207
Total available for sale securities	10,372,903		1,052		10,323,261		48,590
Fair value option securities:
U.S. agency residential mortgage-backed securities	163,567		—		163,567		—
Other securities	4,293		—		4,293		—
Total fair value option securities	167,860		—		167,860		—
Residential mortgage loans held for sale	230,511		—		230,511		—
Mortgage servicing rights ¹	140,863		—		—		140,863
Derivative contracts, net of cash margin ²	377,325		644		376,681		—
Other assets – private equity funds	27,799		—		—		27,799
Liabilities:
Derivative contracts, net of cash margin ²	232,544		—		232,544		—


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. Derivative contracts based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded energy and agricultural derivative contacts, net of cash margin.

- 131 -

The fair value of financial assets and liabilities that are measured on a recurring basis are as follows as of December 31, 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	$	16,545	$	—	$	16,545	$	—
U.S. agency residential mortgage-backed securities	86,361		—		86,361		—
Municipal and other tax-exempt securities	90,326		—		90,326		—
Other trading securities	20,870		—		20,870		—
Total trading securities	214,102		—		214,102		—
Available for sale securities:
U.S. Treasury	1,002		1,002		—		—
Municipal and other tax-exempt	87,142		—		46,440		40,702
U.S. agency residential mortgage-backed securities	9,889,821		—		9,889,821		—
Privately issued residential mortgage-backed securities	325,163		—		325,163		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	895,075		—		895,075		—
Other debt securities	36,389		—		30,990		5,399
Perpetual preferred stock	25,072		—		25,072		—
Equity securities and mutual funds	27,557		4,165		21,231		2,161
Total available for sale securities	11,287,221		5,167		11,233,792		48,262
Fair value option securities:
U.S. agency residential mortgage-backed securities	257,040		—		257,040		—
Corporate debt securities	26,486		—		26,486		—
Other securities	770		—		770		—
Total fair value option securities	284,296		—		284,296		—
Residential mortgage loans held for sale	293,762		—		293,762		—
Mortgage servicing rights ¹	100,812		—		—		100,812
Derivative contracts, net of cash margin ²	338,106		11,597		326,509		—
Other assets – private equity funds	28,169		—		—		28,169
Liabilities:
Derivative contracts, net of cash margin ²	283,589		—		283,589		—


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. Derivative contracts based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded energy and agricultural derivative contacts, net of cash margin.

- 132 -

The fair value of financial assets and liabilities that are measured on a recurring basis are as follows as of September 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	$	3,100	$	—	$	3,100	$	—
U.S. agency residential mortgage-backed securities	119,835		—		119,835		—
Municipal and other tax-exempt securities	58,150		—		58,150		—
Other trading securities	23,157		—		23,157		—
Total trading securities	204,242		—		204,242		—
Available for sale securities:
U.S. Treasury	1,002		1,002		—		—
Municipal and other tax-exempt	87,969		—		46,690		41,279
U.S. agency residential mortgage-backed securities	10,654,821		—		10,654,821		—
Privately issued residential mortgage-backed securities	331,722		—		331,722		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	339,095		—		339,095		—
Other debt securities	36,456		—		31,056		5,400
Perpetual preferred stock	25,288		—		25,288		—
Equity securities and mutual funds	30,081		6,912		23,169		—
Total available for sale securities	11,506,434		7,914		11,451,841		46,679
Fair value option securities:
U.S. agency residential mortgage-backed securities	305,445		—		305,445		—
Corporate debt securities	26,442		—		26,442		—
Total fair value option securities	331,887		—		331,887		—
Residential mortgage loans held for sale	325,102		—		325,102		—
Mortgage servicing rights ¹	89,653		—		—		89,653
Derivative contracts, net of cash margin ²	472,783		8,301		464,482		—
Other assets – private equity funds	28,792		—		—		28,792
Liabilities:
Derivative contracts, net of cash margin ²	435,497		—		435,497		—


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. Derivative contracts based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded energy and agricultural derivative contacts, net of cash margin.

- 133 -

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. Significant unobservable inputs are developed by investment securities professionals involved in the active trading of similar securities. A summary of significant inputs used to value these securities follows. A management committee composed of senior members from the Company's Capital Markets, Risk Management and Finance departments assess the appropriateness of these inputs monthly.

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 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. The Company's private equity funds provide customers alternative investment opportunities as limited partners of the funds. As fund of funds, the private equity funds invest in other limited partnerships or limited liability companies that invest substantially all of their assets in U.S. companies pursuing diversified investment strategies including early-stage venture capital, distressed securities and corporate or asset buy-outs. Private equity fund assets are long-term, illiquid investments. No secondary market exists for these assets. The private equity funds typically invest in funds that provide no redemption rights to investors. The fair value of the private equity investments may only be realized through cash distributions from the underlying funds.

- 134 -

The following represents the changes for the three months ended September 30, 2013 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			Equity securities and mutual funds		Other assets – private equity funds
Balance, June 30, 2013	$	38,847		$	5,193		$	2,247	$	28,379
Purchases and capital calls	—			—			—		567
Redemptions and distributions	—			(500		)	—		(1,589		)
Gain (loss) recognized in earnings:
Gain on other assets, net	—			—			—		442
Gain on available for sale securities, net	—			—			—		—
Other-than-temporary impairment losses	(1,369		)	—			—		—
Other comprehensive gain (loss)	2,193			19			1,960		—
Balance, Sept. 30, 2013	$	39,671		$	4,712		$	4,207	$	27,799

The following represents the changes for the nine months ended September 30, 2013 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			Equity securities and mutual funds		Other assets – private equity funds
Balance, Dec. 31, 2012	$	40,702		$	5,399		$	2,161	$	28,169
Purchases and capital calls	—			—			—		1,207
Redemptions and distributions	(98		)	(500		)	—		(3,424		)
Gain (loss) recognized in earnings:
Gain on other assets, net	—			—			—		1,847
Gain on available for sale securities, net	—			—			—		—
Other-than-temporary impairment losses	(1,369		)	—			—		—
Other comprehensive gain (loss)	436			(187		)	2,046		—
Balance, Sept. 30, 2013	$	39,671		$	4,712		$	4,207	$	27,799

The following represents the changes for the three months ended September 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, June 30, 2012	$	41,662		$	5,388	$	31,492
Purchases, and capital calls	—			—		476
Redemptions and distributions	1			—		(3,906		)
Gain (loss) recognized in earnings
Gain on other assets, net	—			—		730
Gain on available for sale securities, net	—			—		—
Other-than-temporary impairment losses	—			—		—
Other comprehensive (loss)	(384		)	12		—
Balance, Sept. 30, 2012	$	41,279		$	5,400	$	28,792

- 135 -

The following represents the changes for the nine months ended September 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, Dec. 31, 2011	$	42,353		$	5,900		$	30,902
Purchases, and capital calls	—			—			2,385
Redemptions and distributions	(462		)	(500		)	(7,072		)
Gain (loss) recognized in earnings
Gain on other assets, net	—			—			2,577
Gain on available for sale securities, net	1			—			—
Other-than-temporary impairment losses	—			—			—
Other comprehensive (loss)	(613		)	—			—
Balance, Sept. 30, 2012	$	41,279		$	5,400		$	28,792

A summary of quantitative information about assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2013 follows (in thousands):

Quantitative Information about Level 3 Recurring Fair Value Measurements

Par

Value

Amortized

Cost ⁶

Fair

Value

Valuation Technique(s)

Unobservable Input

Range

(Weighted Average)

Available for sale securities

Municipal and other tax-exempt securities

Investment grade

21,545

21,467

20,531

Discounted cash flows

Interest rate spread

4.98%-5.28% (5.15%)

95.02%-95.55% (95.29%)

Below investment grade

23,925

17,924

19,140

Proposed settlement agreement

⁴

Discount for settlement uncertainty

80.00% (80.00%)

Total municipal and other tax-exempt securities

45,470

39,391

39,671

Other debt securities

4,900

4,712

Discounted cash flows

Interest rate spread

5.60%-5.68% (5.67%)

⁵

96.16%-96.16% (96.16%)

Equity securities and mutual funds

N/A

2,420

4,207

Publicly announced preliminary purchase price information from acquirer.

Discount for settlement uncertainty

N/A

⁷

Other assets - private equity funds

N/A

27,799

Net asset value reported by underlying fund

N/A


¹	Discounted cash flows developed using discount rates primarily based on reference to interest rate spreads for comparable securities of similar duration and credit rating as determined by the nationally-recognized rating agencies, adjusted for lack of trading volume


²	Interest rate yields used to value investment grade tax-exempt securities represent a spread of 462 to 517 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value


⁴	Fair value based on proposed settlement agreement between bond holders and issuer.


⁵	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 1% .


⁶	Amortized cost reduced by other-than-temporary impairments recorded in earnings. See Note 2 for additional discussion.


⁷	Fair value of shares of a smaller privately-held financial institution were valued using preliminary announced purchase information by a publicly-traded acquirer.

- 136 -

The fair value of these securities measured at fair value using significant unobservable inputs are sensitive primarily to changes in interest rate spreads. At September 30, 2013 , for tax-exempt securities rated investment grade by all nationally-recognized rating agencies, a 100 basis point increase in the spreads over average yields for comparable securities would result in an additional decrease in the fair value of $199 thousand . For taxable securities rated investment grade by all nationally-recognized rating agencies, a 100 basis point increase in the spreads over average yield for comparable securities would result in an additional decrease in the fair value of $45 thousand . For municipal and other tax-exempt securities rated below investment grade by at least one of the nationally-recognized rating agencies, a 100 basis point increase in the spread over average yields for comparable securities would significant change the fair value of these securities.

A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of December 31, 2012 follows (in thousands):

Quantitative Information about Level 3 Recurring Fair Value Measurements

Par

Value

Amortized

Cost ⁶

Fair

Value

Valuation Technique(s)

Unobservable Input

Range

(Weighted Average)

Available for sale securities

Municipal and other tax-exempt securities

Investment grade

28,570

28,473

28,318

Discounted cash flows

Interest rate spread

1.00%-1.50% (1.25%)

98.83%-99.43% (99.12%)

Below investment grade

17,000

12,384

Discounted cash flows

Interest rate spread

7.21%-9.83% (7.82%)

⁴

72.79%-73.00% (72.85%)

Total municipal and other tax-exempt securities

45,570

40,857

40,702

Other debt securities

5,400

5,399

Discounted cash flows

Interest rate spread

1.65%-1.71% (1.70%)

⁵

100% (100%)

Equity securities and mutual funds

N/A

2,161

Tangible book value per share of publicly traded financial institutions of similar size, less liquidity discount.

Peer group tangible book per share and liquidity discount.

N/A

⁷

Other assets - private equity funds

N/A

28,169

Net asset value reported by underlying fund

N/A


¹	Discounted cash flows developed using discount rates primarily based on reference to interest rate spreads for comparable securities of similar duration and credit rating as determined by the nationally-recognized rating agencies, adjusted for lack of trading volume


²	Interest rate yields used to value investment grade tax-exempt securities represent a spread of 75 to 80 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value


⁴	Interest rate yields determined using a spread of 700 basis points over comparable municipal securities of varying durations.


⁵	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 1% .


⁶	Amortized cost reduced by other-than-temporary impairments recorded in earnings. See Note 2 for additional discussion.


⁷	Fair value of shares of a smaller privately-held financial institution were valued using the tangible book value per share of similarly sized financial institutions within the immediate geographical market with a discount of 20% due to the liquidity of the shares.

- 137 -

A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of September 30, 2012 follows (in thousands):

Quantitative Information about Level 3 Recurring Fair Value Measurements

Par

Value

Amortized

Cost ⁶

Fair

Value

Valuation Technique(s)

Unobservable Input

Range

(Weighted Average)

Available for sale securities

Municipal and other tax-exempt securities

Investment grade

29,100

28,999

28,848

Discounted cash flows

Interest rate spread

1.00%-1.50% (1.25%)

98.85%-99.47% (99.13%)

Below investment grade

17,000

13,396

12,431

Discounted cash flows

Interest rate spread

7.20%-9.88% (7.77%)

⁴

73.06%-73.30% (73.13%)

Total municipal and other tax-exempt securities

46,100

42,395

41,279

Other debt securities

5,400

Discounted cash flows

Interest rate spread

1.70%-1.73% (1.71%)

⁵

100.00%-100.00% (100.00%)

Other assets - private equity funds

N/A

28,792

Net asset value reported by underlying fund

N/A


¹	Discounted cash flows developed using discount rates primarily based on reference to interest rate spreads for comparable securities of similar duration and credit rating as determined by the nationally-recognized rating agencies, adjusted for lack of trading volume


²	Interest rate yields used to value investment grade tax-exempt securities represent a spread of 75 to 80 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value


⁴	Interest rate yields determined using a spread of 700 basis points over comparable municipal securities of varying durations.


⁵	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 1% .


⁶	Amortized cost reduced by other-than-temporary impairments recorded in earnings. See Note 2 for additional discussion.

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

Assets measured at fair value on a non-recurring basis include 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.

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 September 30, 2013 for which the fair value was adjusted during the nine months ended September 30, 2013 :



							Fair Value Adjustments for the
	Carrying Value at September 30, 2013						Three Months Ended September 30, 2013 Recognized in:				Nine Months Ended September 30, 2013 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		Net losses and expenses of repossessed assets, net		Gross charge-offs against allowance for loan losses		Net losses and expenses of repossessed assets, net
Impaired loans	$	—	$	10,607	$	4,787	$	660	$	—	$	6,900	$	—
Real estate and other repossessed assets	—		14,901		170		—		1,767		—		2,560

- 138 -

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 September 30, 2012 for which the fair value was adjusted during the nine months ended September 30, 2012 :



							Fair Value Adjustments for the
	Carrying Value at September 30, 2012						Three Months Ended September 30, 2012 Recognized in:				Nine Months Ended September 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		Net losses and expenses of repossessed assets, net		Gross charge-offs against allowance for loan losses		Net losses and expenses of repossessed assets, net
Impaired loans	$	—	$	25,521	$	1,655	$	3,915	$	—	$	10,797	$	—
Real estate and other repossessed assets	—		38,386		6,617		—		4,398		—		11,068

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. Non-recurring fair value measurements of collateral-dependent impaired loans and real estate and other repossessed assets based on significant unobservable inputs are generally due to estimate of current fair values between appraisal dates. Significant unobservable inputs include listing prices for the same or comparable assets, uncorroborated expert opinions or management's knowledge of the collateral or industry. These inputs are developed by asset management and workout professional and approved by senior Credit Administration executives.

A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of September 30, 2013 follows (in thousands):



Quantitative Information about Level 3 Non-recurring Fair Value Measurements
	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)

Impaired loans	$	4,787	Appraised value, as adjusted	Broker quotes and management's knowledge of industry and collateral.	N/A
Real estate and other repossessed assets	170		Listing value, less cost to sell	Marketability adjustments off appraised value	82%-85% (83%) ¹


¹	Marketability adjustments include consideration of estimated costs to sell which is approximately 15% of fair value.

A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of September 30, 2012 follows (in thousands):



Quantitative Information about Level 3 Non-recurring Fair Value Measurements
	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)

Impaired loans	$	1,655	Appraised value, as adjusted	Broker quotes and management's knowledge of industry and collateral.	N/A
Real estate and other repossessed assets	6,617		Listing value, less cost to sell	Marketability adjustments off appraised value	68%-100% (85%) ¹


¹	Marketability adjustments include consideration of estimated costs to sell which is approximately 15% of fair value. In addition, $796 thousand of real estate and other repossessed assets at September 30, 2012 are based on expert opinions or management's knowledge of the collateral or industry and do not have and independently appraised value.

- 139 -

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 September 30, 2013 (dollars in thousands):



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and cash equivalents	$	1,133,771						$	1,133,771
Trading securities:
U.S. Government agency debentures	74,632							74,632
U.S. agency residential mortgage-backed securities	26,129							26,129
Municipal and other tax-exempt securities	37,057							37,057
Other trading securities	13,069							13,069
Total trading securities	150,887							150,887
Investment securities:
Municipal and other tax-exempt	409,542							407,562
U.S. agency residential mortgage-backed securities	56,182							58,442
Other debt securities	178,501							188,475
Total investment securities	644,225							654,479
Available for sale securities:
U.S. Treasury	1,052							1,052
Municipal and other tax-exempt	95,440							95,440
U.S. agency residential mortgage-backed securities	7,981,387							7,981,387
Privately issued residential mortgage-backed securities	230,900							230,900
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,946,295							1,946,295
Other debt securities	35,362							35,362
Perpetual preferred stock	23,680							23,680
Equity securities and mutual funds	58,787							58,787
Total available for sale securities	10,372,903							10,372,903
Fair value option securities:
U.S. agency residential mortgage-backed securities	163,567							163,567
Other securities	4,293							4,293
Total fair value option securities	167,860							167,860
Residential mortgage loans held for sale	230,511							230,511
Loans:
Commercial	7,571,075			0.25% - 30.00%	0.46	0.50% - 4.19%		7,493,143
Commercial real estate	2,349,229			0.38% - 18.00%	0.79	1.20% - 3.42%		2,326,908
Residential mortgage	2,034,765			0.38% - 18.00%	2.56	0.64% - 4.40%		2,056,072
Consumer	395,031			0.38% - 21.00%	0.55	1.24% - 3.71%		388,490
Total loans	12,350,100							12,264,613
Allowance for loan losses	(194,325		)					—
Net loans	12,155,775							12,264,613
Mortgage servicing rights	140,863							140,863
Derivative instruments with positive fair value, net of cash margin	377,325							377,325
Other assets – private equity funds	27,799							27,799
Deposits with no stated maturity	16,771,635							16,771,635
Time deposits	2,720,020			0.01% - 9.64%	2.08	0.75% - 1.28%		2,739,764
Other borrowed funds	3,611,944			0.25% - 4.78%	—	0.06% - 2.65%		3,570,228
Subordinated debentures	347,758			0.95% - 5.00%	2.87	2.22	%	344,854
Derivative instruments with negative fair value, net of cash margin	232,544							232,544

- 140 -



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and cash equivalents	$	1,286,239						$	1,286,239
Trading securities:
U.S. Government agency debentures	16,545							16,545
U.S. agency residential mortgage-backed securities	86,361							86,361
Municipal and other tax-exempt securities	90,326							90,326
Other trading securities	20,870							20,870
Total trading securities	214,102							214,102
Investment securities:
Municipal and other tax-exempt	232,700							235,940
U.S. agency residential mortgage-backed securities	82,767							85,943
Other debt securities	184,067							206,575
Total investment securities	499,534							528,458
Available for sale securities:
U.S. Treasury	1,002							1,002
Municipal and other tax-exempt	87,142							87,142
U.S. agency residential mortgage-backed securities	9,889,821							9,889,821
Privately issued residential mortgage-backed securities	325,163							325,163
Commercial mortgage-backed securities guaranteed by U.S. government agencies	895,075							895,075
Other debt securities	36,389							36,389
Perpetual preferred stock	25,072							25,072
Equity securities and mutual funds	27,557							27,557
Total available for sale securities	11,287,221							11,287,221
Fair value option securities:
U.S. agency residential mortgage-backed securities	257,040							257,040
Corporate debt securities	26,486							26,486
Other securities	770							770
Total fair value option securities	284,296							284,296
Residential mortgage loans held for sale	293,762							293,762
Loans:
Commercial	7,641,912			0.21% - 30.00%	0.69	0.51% - 3.59%		7,606,505
Commercial real estate	2,228,999			0.21% - 18.00%	0.92	1.26% - 3.18%		2,208,217
Residential mortgage	2,045,040			0.38% - 18.00%	3.34	0.86% - 3.09%		2,110,773
Consumer	395,505			0.38% - 21.00%	0.32	1.37% - 3.60%		388,748
Total loans	12,311,456							12,314,243
Allowance for loan losses	(215,507		)					—
Net loans	12,095,949							12,314,243
Mortgage servicing rights	100,812							100,812
Derivative instruments with positive fair value, net of cash margin	338,106							338,106
Other assets – private equity funds	28,169							28,169
Deposits with no stated maturity	18,211,068							18,211,068
Time deposits	2,967,992			0.01% - 9.64%	2.15	0.80% - 1.15%		3,037,708
Other borrowed funds	2,706,221			0.09% - 5.25%	—	0.09% - 2.67%		2,696,574
Subordinated debentures	347,633			1.00% - 5.00%	3.56	2.40	%	345,675
Derivative instruments with negative fair value, net of cash margin	283,589							283,589

- 141 -



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and cash equivalents	$	615,494						$	615,494
Trading securities:
U.S. Government agency debentures	3,100							3,100
U.S. agency residential mortgage-backed securities	119,835							119,835
Municipal and other tax-exempt securities	58,150							58,150
Other trading securities	23,157							23,157
Total trading securities	204,242							204,242
Investment securities:
Municipal and other tax-exempt	155,144							159,464
U.S. agency residential mortgage-backed securities	91,911							95,128
Other debt securities	185,059							205,766
Total investment securities	432,114							460,358
Available for sale securities:
U.S. Treasury	1,002							1,002
Municipal and other tax-exempt	87,969							87,969
U.S. agency residential mortgage-backed securities	10,654,821							10,654,821
Privately issued residential mortgage-backed securities	331,722							331,722
Commercial mortgage-backed securities guaranteed by U.S. government agencies	339,095							339,095
Other debt securities	36,456							36,456
Perpetual preferred stock	25,288							25,288
Equity securities and mutual funds	30,081							30,081
Total available for sale securities	11,506,434							11,506,434
Fair value option securities:
U.S. agency residential mortgage-backed securities	305,445							305,445
Corporate debt securities	26,442							26,442
Total fair value option securities	331,887							331,887
Residential mortgage loans held for sale	325,102							325,102
Loans:
Commercial	7,266,907			0.25% - 30.00%	0.64	0.58% - 3.50%		7,232,761
Commercial real estate	2,177,272			0.38% - 18.00%	0.93	1.30% - 3.17%		2,142,239
Residential mortgage	2,016,303			0.38% - 18.00%	3.31	0.99% - 3.17%		2,084,251
Consumer	371,885			0.38% - 21.00%	0.32	1.43% - 3.69%		368,546
Total loans	11,832,367							11,827,797
Allowance for loan losses	(233,756		)					—
Net loans	11,598,611							11,827,797
Mortgage servicing rights	89,653							89,653
Derivative instruments with positive fair value, net of cash margin	472,783							472,783
Other assets – private equity funds	28,791							28,791
Deposits with no stated maturity	16,120,541							16,120,541
Time deposits	3,022,326			0.01% - 9.64%	2.14	0.85% - 1.15%		3,099,183
Other borrowed funds	3,429,575			0.09% - 5.25%	—	0.09% - 2.67%		3,420,135
Subordinated debentures	347,592			1.12% - 5.00%	3.79	2.26	%	345,852
Derivative instruments with negative fair value, net of cash margin	435,497							435,497

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.

- 142 -

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 $153 million at September 30, 2013 , $171 million at December 31, 2012 and $193 million at September 30, 2012 .

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 September 30, 2013 , December 31, 2012 or September 30, 2012 .

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.

- 143 -

( 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						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Amount:
Federal statutory tax	$	38,333		$	46,771		$	128,446		$	145,234
Tax exempt revenue	(1,860		)	(1,398		)	(5,405		)	(3,996		)
Effect of state income taxes, net of federal benefit	2,072			3,640			8,572			10,210
Utilization of tax credits	(1,669		)	(718		)	(5,217		)	(3,282		)
Bank-owned life insurance	(871		)	(931		)	(2,749		)	(2,886		)
Reduction of tax accrual	(1,400		)	(950		)	(1,400		)	(950		)
Charitable Contribution to BOKF Foundation	(1,115		)	—			(1,115		)	—
Other, net	(29		)	(636		)	848			117
Total	$	33,461		$	45,778		$	121,980		$	144,447



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Percent of pretax income:
Federal statutory tax	35	%	35	%	35	%	35	%
Tax exempt revenue	(2	)	(1	)	(1	)	(1	)
Effect of state income taxes, net of federal benefit	2		3		2		2
Utilization of tax credits	(1	)	(1	)	(1	)	(1	)
Bank-owned life insurance	(1	)	(1	)	(1	)	(1	)
Reduction of tax accrual	(1	)	(1	)	(1	)	—
Charitable Contribution to BOKF Foundation	(1	)	—		—		—
Other, net	—		—		—		1
Total	31	%	34	%	33	%	35	%

( 13 ) Subsequent Events

The Company evaluated events from the date of the consolidated financial statements on September 30, 2013 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.

- 144 -

Nine-Month Financial Summary – Unaudited

Consolidated Daily Average Balances, Average Yields and Rates



(Dollars in Thousands, Except Per Share Data)	Nine Months Ended
	September 30, 2013							September 30, 2012
	Average Balance		Revenue/ Expense ¹			Yield/ Rate		Average Balance		Revenue/ Expense ¹			Yield/ Rate
Assets
Funds sold and resell agreements	$	37,603	$	12		0.04	%	$	16,142	$	9		0.07	%
Trading securities	156,165		2,224			1.90	%	123,790		1,697			1.83	%
Investment securities
Taxable ³	246,922		10,836			5.87	%	291,551		12,840			5.88	%
Tax-exempt ³	342,333		4,552			1.91	%	127,019		4,222			4.64	%
Total investment securities	589,255		15,388			3.63	%	418,570		17,062			5.52	%
Available for sale securities
Taxable ³	10,876,172		156,569			1.96	%	10,286,996		180,721			2.46	%
Tax-exempt ³	91,661		2,748			4.05	%	81,052		2,880			4.83	%
Total available for sale securities ³	10,967,833		159,317			1.98	%	10,368,048		183,601			2.47	%
Fair value option securities	212,143		2,980			1.94	%	408,853		7,684			2.59	%
Residential mortgage loans held for sale	234,894		6,254			3.56	%	212,757		5,862			3.68	%
Loans ²	12,302,149		379,586			4.13	%	11,597,586		388,274			4.47	%
Less: allowance for loan losses	207,435							242,067
Loans, net of allowance	12,094,714		379,586			4.20	%	11,355,519		388,274			4.57	%
Total earning assets ³	24,292,607		565,761			3.14	%	22,903,679		604,189			3.60	%
Receivable on unsettled securities sales	134,522							166,115
Cash and other assets	3,047,753							2,813,878
Total assets	$	27,474,882						$	25,883,672

Liabilities and equity
Interest-bearing deposits:
Transaction	$	9,536,771	$	8,589		0.12	%	$	8,938,958	$	10,804		0.16	%
Savings	309,963		347			0.15	%	256,151		416			0.22	%
Time	2,824,541		33,380			1.58	%	3,148,858		38,585			1.64	%
Total interest-bearing deposits	12,671,275		42,316			0.45	%	12,343,967		49,805			0.54	%
Funds purchased	905,823		703			0.10	%	1,585,663		1,618			0.14	%
Repurchase agreements	832,118		398			0.06	%	1,130,576		811			0.10	%
Other borrowings	1,741,982		4,033			0.31	%	85,569		2,604			4.06	%
Subordinated debentures	347,696		6,568			2.53	%	369,099		11,539			4.18	%
Total interest-bearing liabilities	16,498,894		54,018			0.44	%	15,514,874		66,377			0.57	%
Non-interest bearing demand deposits	7,000,765							6,283,126
Due on unsettled securities	367,340							636,971
Other liabilities	611,198							564,749
Total equity	2,996,685							2,883,952
Total liabilities and equity	$	27,474,882						$	25,883,672

Tax-equivalent Net Interest Revenue ³			$	511,743		2.71	%			$	537,812		3.03	%
Tax-equivalent Net Interest Revenue to Earning Assets ³						2.84	%						3.20	%
Less tax-equivalent adjustment ¹			7,831							6,855
Net Interest Revenue			503,912							530,957
Provision for credit losses			(16,500		)					(8,000		)
Other operating revenue			455,151							503,485
Other operating expense			608,574							627,487
Income before taxes			366,989							414,955
Federal and state income tax			121,980							144,447
Net income before non-controlling interest			245,009							270,508
Net income attributable to non-controlling interest			1,376							1,882
Net income attributable to BOK Financial Corp. shareholders			$	243,633						$	268,626
Earnings Per Average Common Share Equivalent:
Net income:
Basic			$	3.55						$	3.94
Diluted			$	3.54						$	3.92

- 145 -

Quarterly Financial Summary – Unaudited

Consolidated Daily Average Balances, Average Yields and Rates



(In Thousands, Except Per Share Data)	Three Months Ended
	September 30, 2013							June 30, 2013
	Average Balance		Revenue/ Expense ¹			Yield/ Rate		Average Balance		Revenue/ Expense ¹			Yield/ Rate
Assets
Funds sold and resell agreements	$	44,578	$	6		0.05	%	$	42,604	$	4		0.04	%
Trading securities	124,689		688			2.19	%	181,866		829			1.83	%
Investment securities
Taxable ³	237,487		3,434			5.74	%	245,311		3,604			5.89	%
Tax-exempt ³	383,617		1,501			1.59	%	365,629		1,568			1.89	%
Total investment securities	621,104		4,935			3.20	%	610,940		5,172			3.59	%
Available for sale securities
Taxable ³	10,463,957		50,179			1.91	%	10,967,141		51,371			1.91	%
Tax-exempt ³	94,720		828			3.47	%	93,559		1,013			4.46	%
Total available for sale securities ³	10,558,677		51,007			1.92	%	11,060,700		52,384			1.93	%
Fair value option securities	169,299		802			1.85	%	216,312		1,013			1.91	%
Residential mortgage loans held for sale	225,789		2,168			3.81	%	261,977		2,294			3.51	%
Loans ²	12,402,096		126,849			4.06	%	12,277,444		125,992			4.12	%
Less allowance for loan losses	201,616							206,807
Loans, net of allowance	12,200,480		126,849			4.12	%	12,070,637		125,992			4.19	%
Total earning assets ³	23,944,616		186,455			3.09	%	24,445,036		187,688			3.11	%
Receivable on unsettled securities sales	90,014							135,964
Cash and other assets	3,220,102							3,078,324
Total assets	$	27,254,732						$	27,659,324
Liabilities and equity
Interest-bearing deposits:
Transaction	$	9,276,136	$	2,681		0.11	%	$	9,504,128	$	2,762		0.12	%
Savings	317,912		107			0.13	%	315,421		120			0.15	%
Time	2,742,970		10,738			1.55	%	2,818,533		11,027			1.57	%
Total interest-bearing deposits	12,337,018		13,526			0.43	%	12,638,082		13,909			0.44	%
Funds purchased	776,356		134			0.07	%	789,302		205			0.10	%
Repurchase agreements	799,175		123			0.06	%	819,373		129			0.06	%
Other borrowings	2,175,747		1,547			0.28	%	2,172,417		1,442			0.27	%
Subordinated debentures	347,737		2,209			2.52	%	347,695		2,200			2.54	%
Total interest-bearing liabilities	16,436,033		17,539			0.42	%	16,766,869		17,885			0.43	%
Non-interest bearing demand deposits	7,110,079							6,888,983
Due on unsettled securities	111,998							330,926
Other liabilities	631,699							644,892
Total equity	2,964,923							3,027,654
Total liabilities and equity	$	27,254,732						$	27,659,324
Tax-equivalent Net Interest Revenue ³			$	168,916		2.67	%			$	169,803		2.68	%
Tax-equivalent Net Interest Revenue to Earning Assets ³						2.80	%						2.81	%
Less tax-equivalent adjustment ¹			2,565							2,647
Net Interest Revenue			166,351							167,156
Reduction of allowance for credit losses			(8,500		)					—
Other operating revenue			145,316							150,761
Other operating expense			210,644							196,606
Income before taxes			109,523							121,311
Federal and state income tax			33,461							41,423
Net income before non-controlling interest			76,062							79,888
Net income (loss) attributable to non-controlling interest			324							(43		)
Net income attributable to BOK Financial Corp. shareholders			$	75,738						$	79,931
Earnings Per Average Common Share Equivalent:
Net income:
Basic			$	1.10						$	1.16
Diluted			$	1.10						$	1.16


^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.

- 146 -



Three Months Ended
March 31, 2013							December 31, 2012							September 30, 2012
Average Balance		Revenue /Expense ¹			Yield / Rate		Average Balance		Revenue / Expense ¹			Yield / Rate		Average Balance		Revenue / Expense ¹		Yield / Rate

$	25,418	$	2		0.03	%	$	19,553	$	3		0.06	%	$	17,837	$	3	0.07	%
162,353		707			1.77	%	165,109		441			1.06	%	132,213		703		2.12	%

258,196		3,798			5.97	%	271,957		4,008			5.86	%	281,347		4,124		5.83	%
276,576		1,483			2.42	%	202,128		1,379			2.93	%	127,299		1,212		4.12	%
534,772		5,281			4.22	%	474,085		5,387			4.67	%	408,646		5,336		5.33	%

11,205,566		55,019			2.07	%	11,394,797		56,514			2.08	%	10,969,610		59,482		2.36	%
86,615		907			4.25	%	87,415		836			3.80	%	88,445		1,044		4.70	%
11,292,181		55,926			2.09	%	11,482,212		57,350			2.10	%	11,058,055		60,526		2.38	%
251,725		1,165			2.05	%	292,490		772			1.58	%	336,160		1,886		2.27	%
216,816		1,792			3.35	%	272,581		2,323			3.39	%	264,024		2,310		3.48	%
12,224,960		126,745			4.20	%	11,989,319		130,510			4.33	%	11,739,662		127,816		4.33	%
214,017							229,095							231,177
12,010,943		126,745			4.28	%	11,760,224		130,510			4.41	%	11,508,485		127,816		4.42	%
24,494,208		191,618			3.24	%	24,466,254		196,786			3.30	%	23,725,420		198,580		3.47	%
178,561							144,077							99,355
2,840,662							2,886,445							2,763,397
$	27,513,431						$	27,496,776						$	26,588,172


$	9,836,204	$	3,146		0.13	%	$	9,343,421	$	3,496		0.15	%	$	8,719,648	$	3,406	0.16	%
296,319		120			0.16	%	278,714		124			0.18	%	267,498		127		0.19	%
2,913,999		11,615			1.62	%	3,010,367		13,588			1.80	%	3,068,870		12,384		1.61	%
13,046,522		14,881			0.46	%	12,632,502		17,208			0.54	%	12,056,016		15,917		0.53	%
1,155,983		364			0.13	%	1,295,442		477			0.15	%	1,678,006		632		0.15	%
878,679		146			0.07	%	900,131		197			0.09	%	1,112,847		281		0.10	%
863,360		1,044			0.49	%	364,425		824			0.90	%	97,003		739		3.03	%
347,654		2,159			2.52	%	347,613		2,239			2.56	%	352,432		2,475		2.79	%
16,292,198		18,594			0.46	%	15,540,113		20,945			0.54	%	15,296,304		20,044		0.52	%
7,002,046							7,505,074							6,718,572
665,175							854,474							1,054,239
556,173							625,628							571,865
2,997,839							2,971,487							2,947,192
$	27,513,431						$	27,496,776						$	26,588,172
		$	173,024		2.78	%			$	175,841		2.76	%			$	178,536	2.95	%
					2.92	%						2.95	%					3.12	%
		2,619							2,472							2,509
		170,405							173,369							176,027
		(8,000		)					(14,000		)					—
		159,074							162,626							179,944
		201,324							222,085							222,340
		136,155							127,910							133,631
		47,096							44,293							45,778
		89,059							83,617							87,853
		1,095							1,051							471
		$	87,964						$	82,566						$	87,382


		$	1.28						$	1.21						$	1.28
		$	1.28						$	1.21						$	1.27

- 147 -

Quarterly Earnings Trends – Unaudited

(In thousands, except share and per share data)



	Three Months Ended
	September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012

Interest revenue	$	183,890		$	185,041		$	188,999		$	194,314		$	196,071
Interest expense	17,539			17,885			18,594			20,945			20,044
Net interest revenue	166,351			167,156			170,405			173,369			176,027
Provision for credit losses	(8,500		)	—			(8,000		)	(14,000		)	—
Net interest revenue after provision for credit losses	174,851			167,156			178,405			187,369			176,027
Other operating revenue
Brokerage and trading revenue	32,338			32,874			31,751			31,958			31,261
Transaction card revenue	30,055			29,942			27,692			28,009			27,788
Trust fees and commissions	23,892			24,803			22,313			22,030			19,654
Deposit service charges and fees	24,742			23,962			22,966			24,174			25,148
Mortgage banking revenue	23,486			36,596			39,976			46,410			50,266
Bank-owned life insurance	2,408			2,236			3,226			2,673			2,707
Other revenue	9,852			10,496			10,187			10,554			9,149
Total fees and commissions	146,773			160,909			158,111			165,808			165,973
Gain (loss) on other assets, net	(377		)	(1,666		)	467			137			452
Gain (loss) on derivatives, net	31			(2,527		)	(941		)	(637		)	464
Gain (loss) on fair value option securities, net	(80		)	(9,156		)	(3,171		)	(2,081		)	6,192
Gain on available for sale securities, net	478			3,753			4,855			1,066			7,967
Total other-than-temporary impairment losses	(1,436		)	(1,138		)	—			(504		)	—
Portion of loss recognized in (reclassified from) other comprehensive income	(73		)	586			(247		)	(1,163		)	(1,104		)
Net impairment losses recognized in earnings	(1,509		)	(552		)	(247		)	(1,667		)	(1,104		)
Total other operating revenue	145,316			150,761			159,074			162,626			179,944
Other operating expense
Personnel	125,799			128,110			125,654			131,192			122,775
Business promotion	5,355			5,770			5,453			6,150			6,054
Contribution to BOKF Charitable Foundation	2,062			—			—			2,062			—
Professional fees and services	7,183			8,381			6,985			10,082			7,991
Net occupancy and equipment	17,280			16,909			16,481			16,883			16,914
Insurance	3,939			4,044			3,745			3,789			3,690
Data processing and communications	25,695			26,734			25,450			25,010			26,486
Printing, postage and supplies	3,505			3,580			3,674			3,403			3,611
Net losses and operating expenses of repossessed assets	2,014			282			1,246			6,665			5,706
Amortization of intangible assets	835			875			876			1,065			742
Mortgage banking costs	8,753			7,910			7,354			10,542			13,036
Change in fair value of mortgage servicing rights	346			(14,315		)	(2,658		)	(4,689		)	9,576
Other expense	7,878			8,326			7,064			9,931			5,759
Total other operating expense	210,644			196,606			201,324			222,085			222,340
Net income before taxes	109,523			121,311			136,155			127,910			133,631
Federal and state income taxes	33,461			41,423			47,096			44,293			45,778
Net income before non-controlling interest	76,062			79,888			89,059			83,617			87,853
Net income (loss) attributable to non-controlling interest	324			(43		)	1,095			1,051			471
Net income attributable to BOK Financial Corporation	$	75,738		$	79,931		$	87,964		$	82,566		$	87,382

Earnings per share:
Basic	$1.10			$1.16			$1.28			$1.21			$1.28
Diluted	$1.10			$1.16			$1.28			$1.21			$1.27
Average shares used in computation:
Basic	68,049,179			67,993,822			67,814,550			67,622,777			67,966,700
Diluted	68,272,861			68,212,497			68,040,180			67,914,717			68,334,989

- 148 -

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 September 30, 2013 .



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
July 1 to July 31, 2013	12,137	$	47.39	—	1,960,504
August 1 to August 31, 2013	150	$	45.89	—	1,960,504
September 1 to September 30, 2013	—	$	—	—	1,960,504
Total	12,287			—


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 September 30, 2013 , 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.

- 149 -

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: November 1, 2013

/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

- 150 -

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 Sept. 30, 2013