BOKF 10-Q Quarterly Report June 30, 2014

BOK FINANCIAL CORP ET AL

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10-Q 1 bokf-20140630x10q.htm 10-Q BOKF-2014.06.30-10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2014



¨		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: 69,286,001 shares of common stock ($.00006 par value) as of June 30, 2014 .

BOK Financial Corporation

Form 10-Q

Quarter Ended June 30, 2014

Index



Part I. Financial Information
Management’s Discussion and Analysis (Item 2)	1
Market Risk (Item 3)	45
Controls and Procedures (Item 4)	47
Consolidated Financial Statements – Unaudited (Item 1)	48
Six Month Financial Summary – Unaudited (Item 2)
Quarterly Financial Summary – Unaudited (Item 2)	131
Quarterly Earnings Trend – Unaudited	134

Part II. Other Information
Item 1. Legal Proceedings	134
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	134
Item 6. Exhibits	134
Signatures	135

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

Performance Summary

BOK Financial Corporation (“the Company”) reported net income of $75.9 million or $1.10 per diluted share for the second quarter of 2014 , compared to $79.9 million or $1.16 per diluted share for the second quarter of 2013 and $76.6 million or $1.11 per diluted share for the first quarter of 2014 .

Highlights of the second quarter of 2014 included:


•	Net interest revenue totaled $166.1 million for the second quarter of 2014 , compared to $168.9 million for the second quarter of 2013 and $162.6 million for the first quarter of 2014 . Net interest margin was 2.75% for the second quarter of 2014 . Net interest margin was 2.80% for the second quarter of 2013 and 2.71% for the first quarter of 2014 .

•

Fees and commissions revenue totaled $164.1 million for the second quarter of 2014 , a $4.9 million or 3% increase over the second quarter of 2013 . Growth in brokerage and trading, fiduciary and asset management and transaction card revenues, was partially offset by a $7.3 million decrease in mortgage banking revenue. Mortgage production volume was lower than the second quarter of 2013 as mortgage interest rates have trended higher. Fees and commissions revenue increase d $23.2 million over the first quarter of 2014 . All fees and commissions revenue categories experienced growth over the first quarter of 2014 .

•

Operating expenses totaled $214.7 million for the second quarter of 2014 , an increase of $3.8 million over the second quarter of 2013 . Personnel costs decrease d $4.4 million primarily due to lower incentive compensation expense, partially offset by increased regular compensation expense. Non-personnel expense increase d $8.2 million . Professional fees and services, data processing and communications and net occupancy expense increased over the prior year. Operating expenses increase d $29.6 million over the previous quarter. Personnel costs increase d $19.3 million . The Company reversed $17.2 million primarily related to amounts payable to certain executive officers accrued during 2011 through 2013 under the 2011 True-Up Plan in the first quarter of 2014. Non-personnel expense increase d $10.3 million over the prior quarter. Mortgage banking expenses were up $4.3 million primarily due to increased accruals for loan servicing costs. The Company made a $2.4 million discretionary contribution of appreciated stock to the BOKF Foundation during the first quarter of 2014. Professional fees and services, data processing and communications and net occupancy expense also increased over the prior quarter.

•

No provision for credit losses was recorded in the second quarter of 2014 or the second quarter of 2013 and first quarter of 2014 . Gross charge-offs were $3.5 million in the second quarter of 2014 , $8.6 million in the second quarter of 2013 and $2.8 million in the first quarter of 2014 . Recoveries were $5.5 million in the second quarter of 2014 , compared to $6.2 million in the second quarter of 2013 and $5.4 million in the first quarter of 2014 .

•

The combined allowance for credit losses totaled $192 million or 1.43% of outstanding loans at June 30, 2014 compared to $190 million or 1.45% of outstanding loans at March 31, 2014 . Nonperforming assets that are not guaranteed by U.S. government agencies totaled $145 million or 1.09% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at June 30, 2014 and $153 million or 1.18% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at March 31, 2014 .


•	Outstanding loan balances were $13.4 billion at June 30, 2014 , an increase of $349 million over March 31, 2014 . Commercial loan balances grew by $316 million and commercial real estate loan balances were up $24 million . Residential mortgage loans decrease d by $10 million and consumer loan balances increase d $20 million .


•	Period end deposits totaled $20.6 billion at June 30, 2014 , a $182 million increase over March 31, 2014 . Demand deposit account balances increase d $436 million , partially offset by a $201 million decrease in interest-bearing transaction accounts and a $46 million decrease in time deposits.

•

The Company's Tier 1 common equity ratio, as defined by banking regulations, was 13.46% at June 30, 2014 and 13.59% at March 31, 2014 . The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company's Tier 1 capital ratio was 13.63% at June 30, 2014 and 13.77% at March 31, 2014 . Total capital ratio was 15.38% at June 30, 2014 and 15.55% at March 31, 2014 . The Company's leverage ratio was 10.26% at June 30, 2014 and 10.17% at March 31, 2014 .

- 1 -


•	The Company paid a regular quarterly cash dividend of $28 million or $0.40 per common share during the second quarter of 2014 . On July 29, 2014 , the board of directors approved a quarterly cash dividend of $0.40 per common share payable on or about August 29, 2014 to shareholders of record as of August 15, 2014 .

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 $166.1 million for the second quarter of 2014 compared to $168.9 million for the second quarter of 2013 and $162.6 million for the first quarter of 2014 . Net interest margin was 2.75% for the second quarter of 2014 , 2.80% for the second quarter of 2013 and 2.71% for the first quarter of 2014 .

Net interest revenue decrease d $2.8 million compared to the second quarter of 2013 . Net interest revenue decreased $7.4 million primarily due to continued narrowing of interest rate spreads. Net interest revenue increased $4.8 million over the previous quarter primarily due to the growth in average outstanding loans and a decrease in the average balance of other borrowings, partially offset by a decrease in average securities balances.

The tax-equivalent yield on earning assets was 3.02% for the second quarter of 2014 , down 8 basis points from the second quarter of 2013 . Loan yields decreased 27 basis points. Credit spreads have narrowed due to market pricing pressure in our loan portfolio. The available for sale securities portfolio yield was unchanged at 1.96% . Cash flows received from payments on residential mortgage-backed securities are currently being reinvested in short-duration securities that yield nearly 2%. Funding costs were down 1 basis point from the second quarter of 2013 . The cost of interest-bearing deposits decreased 4 basis points and the cost of other borrowed funds increased 4 basis points largely due to the mix of funding sources. Additionally, the benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 15 basis points in the second quarter of 2014 compared to 13 basis points in the second quarter of 2013 .

Average earning assets for the second quarter of 2014 decreased $188 million or 1% compared to the second quarter of 2013 . Average loans, net of allowance for loan losses, increased $1.0 billion due primarily to growth in average commercial and commercial real estate loans. The average balance of available for sale securities decreased $1.3 billion . We intend to allow the size of our bond portfolio to decrease to better position the balance sheet for a longer-term rising rate environment. We anticipate a $600 million reduction in our bond portfolio over the remainder of 2014. This reduction in earning assets is expected to be partially offset by quarterly loan growth in low double-digits for the balance of the year. The resulting shift in earning asset mix should be supportive of net interest margin. The average balance of interest-bearing cash and cash equivalents and investment securities was up over the prior year, offset by a decrease in the average balances of our trading portfolio, fair value option securities primarily held as an economic hedge of our mortgage servicing rights and residential mortgage loans held for sale.

Average deposits increased $970 million over the second quarter of 2013 , including a $765 million increase in average demand deposit balances and a $347 million increase in average interest-bearing transaction accounts, partially offset by a $182 million decrease in average time deposits. Average borrowed funds decreased $996 million compared to the second quarter of 2013 primarily due to decreased borrowings from the Federal Home Loan Banks and funds purchased and repurchase agreements.

Net interest margin increased 4 basis point s over the first quarter of 2014 . The yield on average earning assets increase d 3 basis points. The yield on the available for sale securities portfolio increase d 5 basis point s to 1.96% . The loan portfolio yield decreased 4 basis points to 3.85% primarily due to market pricing pressure. Funding costs were up 1 basis point to 0.42% . Rates paid on time deposits decrease d 1 basis point. The cost of other borrowed funds increase d 4 basis points over the first quarter. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities increase d 2 basis points.

- 2 -

Average earning assets increase d $180 million during the second quarter of 2014 . Growth in average outstanding loans of $317 million was partially offset by a $276 million decrease in the available for sale securities portfolio. Average commercial loan balances were up $295 million and average commercial real estate loan balances increase d $18 million . The average balance of interest-bearing cash and cash equivalents increase d $86 million , the average balance of residential mortgage loans held for sale increase d $34 million , the average trading securities balance increase d $24 million and the average balance of restricted equity securities increase d $12 million .

Average deposits increase d $262 million over the previous quarter. Demand deposit balances increased $342 million . Interest-bearing transaction account balances decrease d $50 million and time deposit account balances decreased $50 million . The average balance of borrowed funds decrease d $49 million compared to the first quarter of 2014 .

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 ¾ 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.

- 3 -

Table 1 -- Volume/Rate Analysis

(In thousands)



	Three Months Ended June 30, 2014 / 2013									Six Months Ended June 30, 2014 / 2013
				Change Due To ¹									Change Due To ¹
	Change			Volume			Yield / Rate			Change			Volume			Yield /Rate
Tax-equivalent interest revenue:
Interest-bearing cash and cash equivalents	$	105		$	144		$	(39	)	$	186		$	154		$	32
Trading securities	(302		)	(302		)	—			(478		)	(449		)	(29		)
Investment securities:
Taxable securities	(409		)	(269		)	(140		)	(925		)	(550		)	(375		)
Tax-exempt securities	196			433			(237		)	543			812			(269		)
Total investment securities	(213		)	164			(377		)	(382		)	262			(644		)
Available for sale securities:
Taxable securities	(4,902		)	(4,877		)	(25		)	(12,654		)	(6,976		)	(5,678		)
Tax-exempt securities	(6		)	(221		)	215			(178		)	(201		)	23
Total available for sale securities	(4,908		)	(5,098		)	190			(12,832		)	(7,177		)	(5,655		)
Fair value option securities	(230		)	(238		)	8			(556		)	(402		)	(154		)
Restricted equity securities	(187		)	(724		)	537			(55		)	(388		)	333
Residential mortgage loans held for sale	229			(421		)	650			27			(329		)	356
Loans	1,516			9,959			(8,443		)	(894		)	8,420			(9,314		)
Total tax-equivalent interest revenue	(3,990		)	3,484			(7,474		)	(14,984		)	91			(15,075		)
Interest expense:
Transaction deposits	(273		)	152			(425		)	(860		)	(158		)	(702		)
Savings deposits	(14		)	12			(26		)	(36		)	5			(41		)
Time deposits	(845		)	(709		)	(136		)	(2,131		)	(1,329		)	(802		)
Funds purchased	(98		)	(46		)	(52		)	(301		)	(116		)	(185		)
Repurchase agreements	53			13			40			58			18			40
Other borrowings	(163		)	(729		)	566			(185		)	(371		)	186
Subordinated debentures	(11		)	4			(15		)	(12		)	(1		)	(11		)
Total interest expense	(1,351		)	(1,303		)	(48		)	(3,467		)	(1,952		)	(1,515		)
Tax-equivalent net interest revenue	(2,639		)	4,787			(7,426		)	(11,517		)	2,043			(13,560		)
Change in tax-equivalent adjustment	156									88
Net interest revenue	$	(2,795	)							$	(11,605	)

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

- 4 -

Other Operating Revenue

Other operating revenue was $162.6 million for the second quarter of 2014 , a $771 thousand decrease compared to the second quarter of 2013 and a $25.6 million increase over the first quarter of 2014 . Fees and commissions revenue increase d $4.9 million over the second quarter of 2013 and $23.2 million over the prior quarter. The change in the fair value of mortgage servicing rights, net of the change in the fair value of securities and derivative contracts held as an economic hedge, decreased other operating revenue by $1.5 million in the second quarter of 2014 , decreased other operating revenue $908 thousand in the first quarter of 2014 and increased operating revenue $2.7 million in the second quarter of 2013 . Net gains on available for sale securities decrease d $3.7 million compared to the prior year and decrease d $1.2 million compared to the previous quarter. The loss on other assets in the first quarter of 2014 was primarily due to changes in the fair value of assets held as an economic hedge of a deferred compensation liability and charges related to certain merchant banking equity investments.

Table 2 – Other Operating Revenue

(In thousands)



	Three Months Ended June 30,											Three Months Ended Mar. 31, 2014
	2014			2013			Increase(Decrease)			% Increase(Decrease)		Three Months Ended Mar. 31, 2014			Increase(Decrease)			% Increase(Decrease)
Brokerage and trading revenue	$	39,056		$	32,874		$	6,182		19	%	$	29,516		$	9,540		32	%
Transaction card revenue	31,510			29,942			1,568			5	%	29,134			2,376			8	%
Fiduciary and asset management revenue	29,543			24,803			4,740			19	%	25,722			3,821			15	%
Deposit service charges and fees	23,133			23,962			(829		)	(4	)%	22,689			444			2	%
Mortgage banking revenue	29,330			36,596			(7,266		)	(20	)%	22,844			6,486			28	%
Bank-owned life insurance	2,274			2,236			38			2	%	2,106			168			8	%
Other revenue	9,208			8,760			448			5	%	8,852			356			4	%
Total fees and commissions revenue	164,054			159,173			4,881			3	%	140,863			23,191			16	%
Loss on other assets, net	(52		)	(1,666		)	1,614			N/A		(4,264		)	4,212			N/A
Gain (loss) on derivatives, net	831			(2,527		)	3,358			N/A		968			(137		)	N/A
Gain (loss) on fair value option securities, net	4,176			(9,156		)	13,332			N/A		2,660			1,516			N/A
Change in fair value of mortgage servicing rights	(6,444		)	14,315			(20,759		)	N/A		(4,461		)	(1,983		)	N/A
Gain on available for sale securities, net	4			3,753			(3,749		)	N/A		1,240			(1,236		)	N/A
Total other-than-temporary impairment	—			(1,138		)	1,138			N/A		—			—			N/A
Portion of loss recognized in (reclassified from) other comprehensive income	—			586			(586		)	N/A		—			—			N/A
Net impairment losses recognized in earnings	—			(552		)	552			N/A		—			—			N/A
Total other operating revenue	$	162,569		$	163,340		$	(771	)	—	%	$	137,006		$	25,563		19	%

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 50% of total revenue for the second quarter of 2014 , excluding provision for credit losses and gains and losses on other assets, securities and derivatives and the change in the fair value of mortgage servicing rights. We believe that a variety of fee revenue sources provides 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 such as falling interest rates may also drive growth in our mortgage banking revenue. We expect growth in other operating revenue to come through offering new products and services and by further development of our presence in other markets. However, current and future economic conditions, regulatory constraints, increased competition and saturation in our existing markets could affect the rate of future increases.

- 5 -

Brokerage and trading revenue, which includes revenues from securities trading, retail brokerage, customer hedging and investment banking, increase d $6.2 million over the second quarter of 2013 .

Securities trading revenue totaled $18.6 million for the second quarter of 2014 , a $4.4 million increase over the second quarter of 2013 . 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. The second quarter of 2013 included a negative mark-to-market of municipal and U.S. government agency securities due to an increase in interest rates.

Customer hedging revenue is based primarily on realized and unrealized changes in the fair value of derivative contracts held for customer risk management programs. As more fully discussed under Customer Derivative Programs in Note 3 of the Consolidated Financial Statements, we offer commodity, interest rate, foreign exchange and equity derivatives to our customers. Customer hedging revenue totaled $3.7 million for the second quarter of 2014 . Combined recoveries from the Lehman Brothers and MF Global bankruptcies totaled $1.6 million and $662 thousand in the second quarter of 2014 and 2013, respectively. Excluding the impact of these recoveries, customer hedging revenue decreased $2.4 million compared to the second quarter of 2013 , primarily due to a lower volume of derivative contracts executed by our energy and mortgage banking customers.

Revenue earned from retail brokerage transactions grew by $1.2 million or 13% over the second quarter of 2013 to $10.3 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 $6.5 million for the second quarter of 2014 , a $2.0 million or 47% increase over the second quarter of 2013 related to the timing and volume of completed transactions.

Brokerage and trading revenue increase d $9.5 million over the first quarter of 2014 . Securities trading revenue increase d $3.5 million . Excluding the impact of recoveries from the Lehman Brothers and MF Global bankruptcies, customer hedging revenue increase d $590 thousand over the prior quarter. Retail brokerage fees were up $863 thousand and investment banking fees grew by $3.0 million .

Transaction card revenue depends largely on the volume and amount of transactions processed, the number of TransFund automated teller machine (“ATM”) locations and the number of merchants served. Transaction card revenue for the second quarter of 2014 increase d $1.6 million or 5% over the second quarter of 2013 . Revenues from the processing of transactions on behalf of the members of our TransFund electronic funds transfer ("EFT") network totaled $16.0 million , a $796 thousand or 5% increase over the prior year, due to increased transaction volumes and increased dollar amounts per transaction. Merchant services fees totaled $10.7 million , an increase of $695 thousand or 7% 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 , an increase of $77 thousand or 2% over the second quarter of 2013 .

Transaction card revenue increase d $2.4 million over the the first quarter of 2014 . Revenue increased from processing transactions on behalf of members of our TransFund EFT network and from merchant services fees primarily due to growth in transaction volumes. Interchange fees paid on debit cards issued by the Company also increased over the prior quarter on increased transaction volumes.

Fiduciary and asset management revenue grew by $4.7 million or 19% over the second quarter of 2013 . The acquisition of Topeka, Kansas-based GTRUST Financial Corporation in the first quarter of 2014 added $371 thousand of revenue and $631 million of fiduciary assets as of June 30, 2014 . 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 $32.7 billion at June 30, 2014 , $28.3 billion at June 30, 2013 and $31.3 billion at March 31, 2014 .

Fiduciary and asset management revenue increase d $3.8 million over the first quarter of 2014 . The acquisition of MBM Advisors in the second quarter of 2014 and a full quarter of revenue from the acquisition of GTRUST Financial Corporation in the first quarter of 2014 added approximately $1.5 million in fiduciary and asset management revenue over the first quarter of 2014 . The remainder of the increase was primarily due to the seasonal timing of tax service fees and an increase in the fair value of assets managed.

- 6 -

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 $2.4 million for the second quarter of 2014 compared to $1.9 million for the second quarter of 2013 and $2.2 million for the first quarter of 2014 .

Deposit service charges and fees were $23.1 million for the second quarter of 2014 compared to $24.0 million for the second quarter of 2013 . Overdraft fees totaled $12.0 million for the second quarter of 2014 , a decrease of $468 thousand or 4% compared to the second quarter of 2013 . Consumers are generally maintaining higher average balances and better managing their accounts to reduce overdraft fees. Commercial account service charge revenue totaled $9.3 million , a decrease of $147 thousand or 2% compared to the prior year. Service charges on deposit accounts with a standard monthly fee were $1.8 million , a decrease of $216 thousand or 11% compared to the second quarter of 2013 . Deposit service charges and fees increase d $444 thousand over the prior quarter primarily due to increased overdraft fee volumes, partially offset by decreased commercial account service charges.

Mortgage banking revenue decrease d $7.3 million compared to the second quarter of 2013 . Mortgage production revenue totaled $17.7 million , a decrease of $8.6 million . Average primary mortgage interest rates were 4.23% for the first quarter of 2014, up 56 basis points over the second quarter of 2013 . This increase in interest rates reduced loan production volume compared to the prior year. Mortgage loans funded for sale totaled $1.1 billion in the second quarter of 2014 , a decrease of $105 million compared to the second quarter of 2013 . Outstanding commitments to originate mortgage loans were largely unchanged compared to June 30, 2013 . In addition to the effect of lower production volume, mortgage banking revenue decreased due to an overall narrowing of gain on sale margins and a shift in product mix toward loans with narrower margins. Approximately 41% of loans originated in the second quarter of 2014 were through correspondent channels, up from 26% for the second quarter of 2013 . Mortgage loans funded through Home Direct Mortgage, our recently launched online loan channel, were 7% of total originations in the second quarter of 2014 . Refinanced mortgage loans decreased to 25% of loans originated in the second quarter of 2014 compared to 48% of loans originated in the second quarter of 2013 .

Mortgage servicing revenue grew by $1.4 million or 13% over the second quarter of 2013 . The outstanding principal balance of mortgage loans serviced for others totaled $14.6 billion , an increase of $1.9 billion or 15% over June 30, 2013 .

Mortgage banking revenue increase d $6.5 million over the first quarter of 2014 . Mortgage production revenue was up $6.3 million . Outstanding commitments to originate residential mortgage loans were up $159 million or 41% and residential mortgage loans funded for sale increased $363 million over the prior quarter. In addition to the typical seasonal increase in mortgage loan funding and commitment volumes, interest rates also decreased compared to the prior quarter and we continue to expand our correspondent channel.

Mortgage servicing revenue increase d $211 thousand over the prior quarter. The outstanding balance of mortgage loans serviced for others increase d $581 million over March 31, 2014 .

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Table 3 – Mortgage Banking Revenue

(In thousands)



	Three Months Ended June 30,						Increase (Decrease)				% Increase (Decrease)		Three Months Ended Mar. 31, 2014			Increase (Decrease)				% Increase (Decrease)
	2014			2013			Increase (Decrease)				% Increase (Decrease)		Three Months Ended Mar. 31, 2014			Increase (Decrease)				% Increase (Decrease)
Mortgage production revenue	$	17,727		$	26,356		$	(8,629	)		(33	)%	$	11,452		$	6,275			55	%
Servicing revenue	11,603			10,240			1,363				13	%	11,392			211				2	%
Total mortgage revenue	$	29,330		$	36,596		$	(7,266	)		(20	)%	$	22,844		$	6,486			28	%

Period end outstanding mortgage commitments	$	546,864		$	547,508		$	(644	)		—	%	$	387,755		$	159,109			41	%
Mortgage loans funded for sale	1,090,629			1,196,038			(105,409		)		(9	)%	727,516			363,113				50	%
Average primary residential mortgage interest rate	4.23		%	3.67		%	56			bp			4.36		%	(13		)	bp
Mortgage loan refinances to total funded	25		%	48		%							32		%
Outstanding principal balance of mortgage loans serviced for others	$	14,626,291		$	12,741,651		$	1,884,640			15	%	$	14,045,642		$	580,649			4	%

Net gains on securities, derivatives and other assets

In the second quarter of 2014 , we recognized a $4 thousand net gain from sales of $800 million of available for sale securities. Securities were sold either because they had reached their expected maximum potential return or to move into securities that will perform better in a rising rate environment. In the second quarter of 2013 , we recognized a $3.8 million net gain from sales of $1.1 billion of available for sale securities and in the first quarter of 2014 , we recognized a $1.2 million net gain on sales of $531 million of available for sale securities.

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 6 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
	June 30, 2014			March 31, 2014			June 30, 2013
Gain (loss) on mortgage hedge derivative contracts, net	$	831		$	968		$	(2,526	)
Gain (loss) on fair value option securities, net	4,074			2,585			(9,102		)
Gain (loss) on economic hedge of mortgage servicing rights	4,905			3,553			(11,628		)
Gain (loss) on change in fair value of mortgage servicing rights	(6,444		)	(4,461		)	14,315
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges	$	(1,539	)	$	(908	)	$	2,687

Net interest revenue on fair value option securities	$	721		$	790		$	910

Primary residential mortgage interest rate at period end	4.14		%	4.40		%	4.46		%
Secondary residential mortgage interest rate at period end	3.17		%	3.42		%	3.31		%

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.

Gain (loss) on other assets included changes in the fair value of certain equity investments the Company holds as an economic hedge of a deferred compensation liability. During the first quarter of 2014, the fair value of certain of these investments was adjusted downward by $1.7 million. Gain (loss) on other assets for the first quarter of 2014 also included a $1.5 million charge against a merchant-banking investment that is accounted for by the equity method.

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Other Operating Expense

Other operating expense for the second quarter of 2014 totaled $214.7 million , a $3.8 million or 2% increase over the second quarter of 2013 . Personnel expenses decrease d $4.4 million or 3% . Non-personnel expenses increase d $8.2 million or 10% over the prior year.

Operating expenses increase d $29.6 million over the previous quarter. Personnel expense increase d $19.3 million . During the first quarter of 2014, the Company reversed $17.2 million primarily related to amounts payable to certain executive officers that had been accrued during 2011 through 2013 under the 2011 True-Up Plan. Non-personnel expense increase d $10.3 million .

Table 5 -- Other Operating Expense

(In thousands)



	Three Months Ended June 30,				Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2014			Increase (Decrease)			% Increase (Decrease)
	2014		2013		Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2014			Increase (Decrease)			% Increase (Decrease)
Regular compensation	$	73,064	$	69,289	$	3,775		5	%	$	72,367		$	697		1	%
Incentive compensation:
Cash-based	29,042		30,111		(1,069		)	(4	)%	24,727			4,315			17	%
Stock-based	3,527		9,500		(5,973		)	(63	)%	(13,193		)	16,720			(127	)%
Total incentive compensation	32,569		39,611		(7,042		)	(18	)%	11,534			21,035			182	%
Employee benefits	18,081		19,210		(1,129		)	(6	)%	20,532			(2,451		)	(12	)%
Total personnel expense	123,714		128,110		(4,396		)	(3	)%	104,433			19,281			18	%
Business promotion	7,150		5,770		1,380			24	%	5,841			1,309			22	%
Charitable contributions to BOKF Foundation	—		—		—			N/A		2,420			(2,420		)	N/A
Professional fees and services	11,054		8,381		2,673			32	%	7,565			3,489			46	%
Net occupancy and equipment	18,789		16,909		1,880			11	%	16,896			1,893			11	%
Insurance	4,467		4,044		423			10	%	4,541			(74		)	(2	)%
Data processing and communications	29,071		26,734		2,337			9	%	27,135			1,936			7	%
Printing, postage and supplies	3,429		3,580		(151		)	(4	)%	3,541			(112		)	(3	)%
Net losses and operating expenses of repossessed assets	1,118		282		836			296	%	1,432			(314		)	(22	)%
Amortization of intangible assets	949		875		74			8	%	816			133			16	%
Mortgage banking costs	7,960		7,910		50			1	%	3,634			4,326			119	%
Other expense	7,006		8,326		(1,320		)	(16	)%	6,850			156			2	%
Total other operating expense	$	214,707	$	210,921	$	3,786		2	%	$	185,104		$	29,603		16	%

Average number of employees (full-time equivalent)	4,657		4,731		(74		)	(2	)%	4,640			17			—	%

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

Personnel expense

Regular compensation, which consists of salaries and wages, overtime pay and temporary personnel costs, increase d $3.8 million or 5% over the second quarter of 2013 . Although the average number of employees decreased 2% compared to the prior year, we continue to invest in higher-costing wealth management, compliance and risk management positions. Growth in these positions was partially offset by a decrease in the average number of employees in consumer banking. In addition, standard annual merit increases in regular compensation were effective for the majority of our staff March 1.

- 10 -

Incentive compensation decrease d $7.0 million compared to the second quarter of 2013 . 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 decrease d $1.1 million or 4% compared to the second quarter of 2013 .

The Company also provides stock-based incentive compensation plans. Stock-based compensation plans include both equity and liability awards. Compensation expense for equity awards increase d $1.3 million and compensation expense for liability awards decreased $7.3 million compared to the second quarter of 2013 .

Stock-based compensation expense included accruals for amounts payable to certain executive officers of the Company under the 2011 True-Up Plan. Approved by shareholders on April 26, 2011, the True-Up Plan was 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 peer group of banks was determined based on asset size and included an equal number of publicly-traded SEC registered bank holding companies with the Company being the median bank. Amounts accrued related to the 2011 True-Up Plan were paid in May 2014. Stock-based compensation expense for the second quarter of 2013 included $7.0 million expense related to accruals for the 2011 True-Up Plan.

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. Expenses based on changes in the fair value of BOK Financial common stock and other investments decreased $264 thousand compared to the second quarter of 2013 .

Employee benefit expense decrease d $1.1 million or 6% compared to the second quarter of 2013 primarily due to decreased employee medical costs. The Company self-insures a portion of its employee health care coverage and these costs may be volatile.

Personnel costs increase d $19.3 million over the first quarter of 2014 primarily due to the adjustment to the 2011 True-Up Plan accrual during the first quarter. Regular compensation expense increase d $697 thousand over prior quarter. Incentive compensation expense increase d $21.0 million . 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, increase d $4.3 million . Stock-based compensation expense increase d $16.7 million . The first quarter included a $17.2 million reversal of amounts payable to certain executive officers of the Company primarily related to the 2011 True-Up Plan. Based on the annual Form 10-K and proxy statements filed by our peer banks in the first quarter of 2014, the composition of the peer group and the compensation levels of comparable senior executives used in determining the amounts payable both changed. The first quarter of 2014 also included a $1.7 million decrease in the deferred compensation expense related to the decrease in the fair value of assets held for deferred compensation purposes. This decrease in fair value was included in the gain (loss) on other assets, net. Employee benefits expense decrease d $2.5 million primarily due to a decrease in employee medical costs.

Non-personnel operating expenses

Non-personnel operating expenses increase d $8.2 million or 10% over the second quarter of 2013 . Professional fees and services expense increase d $2.7 million due to increased increased risk management and regulatory compliance costs. Data processing and communication expense was up $2.3 million primarily due to increased transaction activity.

Non-personnel expense increase d $10.3 million over the first quarter of 2014 . Mortgage banking costs increase d $4.3 million over the prior quarter. The Company finalized hold-back claims related to purchased mortgage loan servicing rights which reduced expenses by $1.3 million in the first quarter. The remaining increase was due to increased accruals for loan servicing costs. Professional fees and services expense increase d $3.5 million largely due to increased risk management and regulatory compliance costs. Data processing, net occupancy expense and business promotion expense all increased over the prior quarter. In addition, BOK Financial made a $2.4 million discretionary contribution of appreciated stock to the BOKF Foundation during the first quarter of 2014. This contribution also resulted in a $1.2 million reduction in income tax expense.

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Income Taxes

Income tax expense was $37.2 million or 33% of book taxable income for the second quarter of 2014 compared to $41.4 million or 34% of book taxable income for the second quarter of 2013 and $37.5 million or 33% of book taxable income for the first quarter of 2014 . The Company made a charitable contribution of appreciated securities to the BOKF Foundation in the first quarter of 2014, which reduced income tax expense by $1.2 million.

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 $12 million at both June 30, 2014 and March 31, 2014 , and $13 million at June 30, 2013 .

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, private banking services and investment advisory services in all markets. Wealth Management also underwrites state and municipal securities and engages in brokerage and trading activities.

In conjunction with the previously announced change in our chief executive officer and other changes to the executive leadership team, we re-evaluated the reporting units within our principal lines of business. We defined reporting units to align with the various products and services offered by our lines of business rather than geographic region. This definition change better represents how the current executive team evaluates the Company's performance and growth beyond our traditional markets.

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 using the net direct contribution which includes the allocation of funds, actual net credit losses and capital costs. In addition, we measure the performance of our business lines after allocation of certain indirect expenses and taxes based on statutory rates. Corporate expense allocations were updated in the first quarter of 2014. The allocations for 2013 have been revised on a comparable basis.

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 other 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.

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As shown in Table 6 , net income attributable to our lines of business decrease d $1.7 million or 3% compared to the second quarter of 2013 . The decrease was primarily due to increased operating expenses and lower mortgage banking revenue, partially offset by growth in other fee-based revenue, increased net interest revenue and lower credit losses.

Table 6 -- Net Income by Line of Business

(In thousands)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Commercial Banking	$	40,033	$	36,039	$	76,331	$	71,177
Consumer Banking	7,790		17,757		16,174		35,641
Wealth Management	5,162		926		7,703		2,812
Subtotal	52,985		54,722		100,208		109,630
Funds Management and other	22,910		25,209		52,277		58,265
Total	$	75,895	$	79,931	$	152,485	$	167,895

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Commercial Banking

Commercial Banking contributed $40.0 million to consolidated net income in the second quarter of 2014 , up $4.0 million or 11% over the second quarter of 2013 . Increased net interest revenue, decreased net loans charged off and growth in transaction card revenue was partially offset by increased operating expenses.

Table 7 -- Commercial Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Six Months Ended						Increase (Decrease)
	June 30,										June 30,
	2014			2013							2014			2013
Net interest revenue from external sources	$	95,018		$	90,551		$	4,467			$	186,037		$	181,433		$	4,604
Net interest expense from internal sources	(7,857		)	(9,389		)	1,532				(16,714		)	(18,534		)	1,820
Total net interest revenue	87,161			81,162			5,999				169,323			162,899			6,424
Net loans charged off (recovered)	(2,812		)	86			(2,898		)		(6,043		)	1,107			(7,150		)
Net interest revenue after net loans charged off (recovered)	89,973			81,076			8,897				175,366			161,792			13,574

Fees and commissions revenue	44,849			43,330			1,519				87,014			84,762			2,252
Gain (loss) on financial instruments and other assets, net	(13		)	—			(13		)		(1,489		)	19			(1,508		)
Other operating revenue	44,836			43,330			1,506				85,525			84,781			744

Personnel expense	27,544			26,699			845				54,496			52,168			2,328
Net losses (gains) and operating expenses of repossessed assets	1,162			(217		)	1,379				3,354			953			2,401
Other non-personnel expense	22,216			20,860			1,356				42,460			40,881			1,579
Other operating expense	50,922			47,342			3,580				100,310			94,002			6,308

Net direct contribution	83,887			77,064			6,823				160,581			152,571			8,010
Corporate expense allocations	18,367			18,080			287				35,653			36,079			(426		)
Income before taxes	65,520			58,984			6,536				124,928			116,492			8,436
Federal and state income tax	25,487			22,945			2,542				48,597			45,315			3,282
Net income	$	40,033		$	36,039		$	3,994			$	76,331		$	71,177		$	5,154

Average assets	$	11,243,678		$	10,363,144		$	880,534			$	11,100,687		$	10,486,544		$	614,143
Average loans	10,577,582			9,626,933			950,649				10,429,821			9,603,323			826,498
Average deposits	9,875,644			9,027,912			847,732				9,738,496			9,136,188			602,308
Average invested capital	937,085			899,087			37,998				934,768			895,748			39,020
Return on average assets	1.43		%	1.39		%	4			bp	1.39		%	1.37		%	2			bp
Return on invested capital	17.14		%	16.08		%	106			bp	16.47		%	16.02		%	45			bp
Efficiency ratio	38.52		%	37.96		%	56			bp	39.07		%	37.89		%	118			bp
Net charge-offs (annualized) to average loans	(0.11		)%	—		%	(11		)	bp	(0.12		)%	0.02		%	(14		)	bp

Net interest revenue increase d $6.0 million or 7% over the prior year. Growth in net interest revenue was primarily due to a $951 million increase in average loan balances and a $848 million increase in average deposits over the second quarter of 2013 , partially offset by reduced yields on loans and deposits sold to our Funds Management unit. The Commercial Banking unit experienced a net recovery of $2.8 million in the second quarter of 2014 compared to net loans charged off of $86 thousand in the second quarter of 2013 .

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Fees and commissions revenue increased $1.5 million or 4% over the second quarter of 2013 primarily due to a $1.6 million increase in transaction card revenues from our TransFund electronic funds transfer network. Brokerage and trading revenue decrease d $138 thousand primarily due to lower customer hedging revenue. Commercial deposit service charge revenue was largely unchanged compared to the prior year.

Operating expenses increase d $3.6 million or 8% over the second quarter of 2013 . Personnel costs increased $845 thousand or 3% primarily due to standard annual merit increases and increased incentive compensation. Net losses and operating expenses on repossessed assets increased $1.4 million . Net gains on repossessed assets in the the second quarter of 2013 were $1.1 million. A minimal net loss was experienced in the second quarter of 2014 and operating expenses of repossessed assets increased. Other non-personnel expenses increase d $1.4 million or 7% , primarily related to increased data processing expenses related to growth in the transaction activity. Corporate expense allocations also increase d $287 thousand over the prior year.

The average outstanding balance of loans attributed to Commercial Banking grew by $951 million during the second quarter of 2014 to $10.6 billion . 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 $9.9 billion for the second quarter of 2014 , up $848 million or 9% over the second quarter of 2013 . Average balances attributed to our commercial & industrial loan customers increase d $718 million or 24% . Balances related to small business customers were up $139 million or 7% and balances from treasury services customers increased $123 million or 7% . Balances related to healthcare customers grew by $37 million or 8% and commercial real estate balances increase d $15 million or 4% . This growth was partially offset by a $164 million or 11% decrease in balances attributed to energy customers. 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 provides retail banking services 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, through correspondent loan originators and through Home Direct Mortgage, an on-line origination channel.

Consumer Banking contributed $7.8 million to consolidated net income for the second quarter of 2014 , down $10.0 million compared to the second quarter of 2013 primarily due to a decrease in mortgage banking revenue and higher non-personnel expense and corporate expense allocations.

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Table 8 -- Consumer Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Six Months Ended						Increase (Decrease)
	June 30,										June 30,
	2014			2013							2014			2013
Net interest revenue from external sources	$	24,170		$	24,830		$	(660	)		$	48,826		$	48,925		$	(99	)
Net interest revenue from internal sources	4,666			5,167			(501		)		8,860			10,650			(1,790		)
Total net interest revenue	28,836			29,997			(1,161		)		57,686			59,575			(1,889		)
Net loans charged off	1,345			1,402			(57		)		2,201			2,332			(131		)
Net interest revenue after net loans charged off	27,491			28,595			(1,104		)		55,485			57,243			(1,758		)

Fees and commissions revenue	54,443			61,338			(6,895		)		100,585			124,541			(23,956		)
Gain (loss) on financial instruments and other assets, net	3,257			(13,344		)	16,601				4,988			(19,406		)	24,394
Change in fair value of mortgage servicing rights	(6,444		)	14,315			(20,759		)		(10,905		)	16,973			(27,878		)
Other operating revenue	51,256			62,309			(11,053		)		94,668			122,108			(27,440		)

Personnel expense	23,328			23,498			(170		)		46,766			45,954			812
Net losses (gains) and operating expenses of repossessed assets	86			206			(120		)		(482		)	(44		)	(438		)
Other non-personnel expense	25,673			23,447			2,226				44,648			46,249			(1,601		)
Total other operating expense	49,087			47,151			1,936				90,932			92,159			(1,227		)

Net direct contribution	29,660			43,753			(14,093		)		59,221			87,192			(27,971		)
Corporate expense allocations	16,911			14,690			2,221				32,750			28,859			3,891
Income before taxes	12,749			29,063			(16,314		)		26,471			58,333			(31,862		)
Federal and state income tax	4,959			11,306			(6,347		)		10,297			22,692			(12,395		)
Net income	$	7,790		$	17,757		$	(9,967	)		$	16,174		$	35,641		$	(19,467	)

Average assets	$	5,668,256		$	5,695,096		$	(26,840	)		$	5,642,181		$	5,709,446		$	(67,265	)
Average loans	2,341,053			2,363,129			(22,076		)		2,373,607			2,358,828			14,779
Average deposits	5,635,528			5,645,595			(10,067		)		5,610,465			5,644,103			(33,638		)
Average invested capital	276,294			297,674			(21,380		)		279,897			297,375			(17,478		)
Return on average assets	0.55		%	1.25		%	(70		)	bp	0.58		%	1.26		%	(68		)	bp
Return on invested capital	11.31		%	23.93		%	(1,262		)	bp	11.65		%	24.17		%	(1,252		)	bp
Efficiency ratio	55.11		%	49.26		%	585			bp	53.74		%	47.91		%	583			bp
Net charge-offs (annualized) to average loans	0.23		%	0.24		%	(1		)	bp	0.19		%	0.20		%	(1		)	bp
Residential mortgage loans funded for sale	$	1,090,629		$	1,196,038		$	(105,409	)		$	1,818,145		$	2,152,353		$	(334,208	)



	June 30, 2014		June 30, 2013		Increase (Decrease)
Banking locations	188		195		(7		)
Residential mortgage loan servicing portfolio ¹	$	15,748,719	$	13,846,184	$	1,902,535


¹	Includes outstanding principal for loans serviced for affiliates

- 16 -

Net interest revenue from Consumer Banking activities decrease d $1.2 million or 4% compared to the second quarter of 2013 . Average loan balances were $22 million or 1% lower than the prior year. Net interest revenue decreased $589 thousand compared to the prior year due to the phase-out of the deposit advance product during the second quarter of 2014.

Fees and commissions revenue decreased $6.9 million or 11% compared to the second quarter of 2013 primarily due to a $7.4 million decrease in mortgage banking revenue. Residential mortgage fundings were lower compared to the second quarter of 2013 when funding reached all-time highs. Funding levels have since contracted as average mortgage interest rates trended higher compared to the prior year. Gains on sale margin also narrowed as the mix of mortgage loan production shifted toward loans with lower margins. Deposit service charges and fees decrease d $650 thousand compared to the prior year primarily due to lower overdraft fees.

Operating expenses increase d $1.9 million or 4% over the second quarter of 2013 . Personnel expenses were down $170 thousand or 1% due to staffing reductions, net of standard annual merit increases. Non-personnel expense increase d $2.2 million or 9% . Professional fees were up $808 thousand and data processing and communications expense increased $562 thousand primarily related to increased transaction activity and higher compliance costs to comply with mortgage servicing regulations. Corporate expense allocations were up $2.2 million over the second quarter of 2013 .

Average consumer deposits were largely unchanged compared to the second quarter of 2013 . Average demand deposit balances increase d $23 million or 3% and average interest-bearing transaction accounts increased $107 million or 4% . Average time deposit balances were down $171 million or 10% compared to the prior year.

Mortgage banking activities include the origination, marketing and servicing of conventional and government-sponsored residential mortgage loans. We funded $1.1 billion of residential mortgage loans in the second quarter of 2014 and $1.3 billion in the second quarter of 2013 . Mortgage loan fundings included $1.1 billion of mortgage loans funded for sale in the secondary market and $30 million funded for retention within the consolidated group. Approximately 16% of our mortgage loans funded were in the Oklahoma market and 15% in the Texas market. In addition, 40% of our mortgage loan fundings came from correspondent lenders compared to 24% in the second quarter of 2013 and 6% was originated from our recently added Home Direct Mortgage on-line sales channel launched in the fourth quarter of 2013.

At June 30, 2014 , we serviced $14.6 billion of mortgage loans for others and $1.1 billion of loans retained within the consolidated group. Approximately 91% of the mortgage loans serviced were to borrowers in our primary geographical market areas. Loans past due 90 days or more totaled $71 million or 0.49% of loans serviced for others at June 30, 2014 compared to $71 million or 0.51% of loans serviced for others at March 31, 2014 . Mortgage servicing revenue, including revenue on loans serviced for the consolidated group, totaled $12.0 million, up $1.0 million or 9% over the second quarter of 2013 . Changes in the fair value of our mortgage servicing rights, net of economic hedge, resulted in a $940 thousand decrease in Consumer Banking net income in the second quarter of 2014 , compared to a $1.6 million increase in Consumer Banking net income in the second quarter of 2013 .

- 17 -

Wealth Management

Wealth Management contributed $5.2 million to consolidated net income in second quarter of 2014 compared to $926 thousand in the second quarter of 2013 . Growth in fiduciary and asset management revenue and brokerage and trading revenue was partially offset by increased operating expenses.

Table 9 -- Wealth Management

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)				Six Months Ended						Increase (Decrease)
	June 30,										June 30,
	2014			2013							2014			2013
Net interest revenue from external sources	$	5,765		$	6,512		$	(747	)		$	11,604		$	12,991		$	(1,387	)
Net interest revenue from internal sources	4,719			5,107			(388		)		9,403			10,403			(1,000		)
Total net interest revenue	10,484			11,619			(1,135		)		21,007			23,394			(2,387		)
Net loans charged off	19			931			(912		)		(26		)	1,449			(1,475		)
Net interest revenue after net loans charged off	10,465			10,688			(223		)		21,033			21,945			(912		)

Fees and commissions revenue	65,698			55,095			10,603				120,368			107,190			13,178
Loss on financial instruments and other assets, net	(171		)	192			(363		)		(581		)	(412		)	(169		)
Other operating revenue	65,527			55,287			10,240				119,787			106,778			13,009

Personnel expense	43,871			42,000			1,871				83,459			80,349			3,110
Net losses and expenses of repossessed assets	2			17			(15		)		329			49			280
Other non-personnel expense	11,283			9,423			1,860				20,615			18,164			2,451
Other operating expense	55,156			51,440			3,716				104,403			98,562			5,841

Net direct contribution	20,836			14,535			6,301				36,417			30,161			6,256
Corporate expense allocations	12,388			13,019			(631		)		23,810			25,559			(1,749		)
Income before taxes	8,448			1,516			6,932				12,607			4,602			8,005
Federal and state income tax	3,286			590			2,696				4,904			1,790			3,114
Net income	$	5,162		$	926		$	4,236			$	7,703		$	2,812		$	4,891

Average assets	$	4,556,825		$	4,544,061		$	12,764			$	4,589,141		$	4,615,169		$	(26,028	)
Average loans	975,982			935,856			40,126				956,431			931,786			24,645
Average deposits	4,427,350			4,336,034			91,316				4,463,109			4,473,779			(10,670		)
Average invested capital	214,936			206,219			8,717				208,909			204,161			4,748
Return on average assets	0.45		%	0.08		%	37			bp	0.34		%	0.12		%	22			bp
Return on invested capital	9.63		%	1.80		%	783			bp	7.44		%	2.78		%	466			bp
Efficiency ratio	72.29		%	76.87		%	(458		)	bp	73.72		%	75.24		%	(152		)	bp
Net charge-offs (annualized) to average loans	0.01		%	0.40		%	(39		)	bp	(0.01		)%	0.31		%	(32		)	bp

- 18 -



	June 30, 2014		June 30, 2013		Increase (Decrease)
Fiduciary assets in custody for which BOKF has sole or joint discretionary authority	$	14,124,496	$	11,580,842	$	2,543,654
Fiduciary assets not in custody for which BOKF has sole or joint discretionary authority	3,103,877		1,947,821		1,156,056
Non-managed trust assets in custody	15,488,275		14,751,551		736,724
Total fiduciary assets	32,716,648		28,280,214		4,436,434
Assets held in safekeeping	23,233,467		21,824,166		1,409,301
Brokerage accounts under BOKF administration	5,273,814		4,586,789		687,025
Assets under management or in custody	$	61,223,929	$	54,691,169	$	6,532,760

Net interest revenue for the second quarter of 2014 was down $1.1 million or 10% compared to the second quarter of 2013 . Average deposit balances were up $91 million or 2% over the second quarter of 2013 . However, yields on funds sold to the Funds Management unit were down compared to the prior year. Non-interest bearing demand deposits increase d $80 million and interest-bearing transaction account balances increase d $53 million . Higher-costing time deposit balances decrease d $47 million . Average loan balances were up $40 million or 4% over the prior year. The benefit of this growth was partially offset by lower yields. Net loans charged off decreased $912 thousand compared to the second quarter of 2013 to $19 thousand or 0.01% of average loans on an annualized basis.

Fees and commissions revenue was up $10.6 million or 19% over the second quarter of 2013 . Brokerage and trading revenue increase d $5.9 million or 20% . Securities trading revenue increased $4.4 million or 31% over the prior year. The second quarter of 2013 included a negative mark-to-market of municipal and U.S. government agency securities due to an increase in interest rates. Retail brokerage grew by $1.2 million or 13% and investment banking revenue was up $1.2 million or 28%. This growth was partially offset by a $817 thousand decrease in customer hedging revenue primarily related to a decrease in hedging activity by mortgage banking customers. Mortgage pipelines being hedged by these customers were at historic highs in the second quarter of 2013. Fiduciary and asset management revenue grew by $4.8 million or 19% . The acquisition of MBM Advisors in the second quarter of 2014 and GTRUST Financial Corporation in the first quarter of 2014 added approximately $1.8 million in revenue over the prior year. The remaining increase was primarily due to the increase in the fair value of assets managed.

Other operating revenue includes fees earned from state and municipal bond and corporate debt underwriting and financial advisory services, primarily in the Oklahoma and Texas markets. In the second quarter of 2014 , the Wealth Management division participated in 108 state and municipal bond underwritings that totaled $1.9 billion. As a participant, the Wealth Management division was responsible for facilitating the sale of approximately $604 million of these underwritings. The Wealth Management division also participated in seven corporate debt underwritings that totaled $6.4 billion. In the second quarter of 2013 , the Wealth Management division participated in 159 state and municipal bond underwritings that totaled approximately $2.2 billion. Our interest in these underwritings totaled approximately $1.1 billion. The Wealth Management division also participated in six corporate debt underwritings that totaled $1.7 billion.

Operating expenses increased $3.7 million or 7% over the second quarter of 2013 . Personnel expenses increased $1.9 million , including a $1.5 million increase in regular compensation and a $363 thousand increase in employee benefits primarily related to investments in Wealth Management talent, including the GTRUST and MBM acquisitions. Incentive compensation expense was largely unchanged compared to the second quarter of 2013 . Non-personnel expense increase d $1.9 million , primarily related to increased professional fees and services, data processing and communications fees, net occupancy and equipment and amortization of identifiable intangible assets from the acquisitions of MBM Advisors and GTRUST Financial Corporation. Corporate expense allocations decrease d $631 thousand compared to the prior year.

- 19 -

Financial Condition

Securities

We maintain a securities portfolio to enhance profitability, manage interest rate risk, provide liquidity and comply with regulatory requirements. Securities are classified as trading, held for investment, or available for sale. See Note 2 to the consolidated financial statements for the composition of the securities portfolio as of June 30, 2014 , December 31, 2013 and June 30, 2013 .

At June 30, 2014 , the carrying value of investment (held-to-maturity) securities was $650 million and the fair value was $671 million . Investment securities consist primarily of long-term, fixed rate Oklahoma and Texas 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 $80 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 $9.6 billion at June 30, 2014 , a decrease of $305 million from March 31, 2014 . The decrease was primarily in U.S. government agency residential mortgage-backed securities and U.S. government agency commercial mortgage-backed securities. Commercial mortgage-backed securities have prepayment penalties similar to commercial loans. At June 30, 2014 , residential mortgage-backed securities represented 77% 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 combined residential mortgage-backed securities portfolio held in investment and available for sale securities at June 30, 2014 is 3.1 years. Management estimates the duration extends to 3.4 years assuming an immediate 200 basis point upward shock. The estimated duration contracts to 3.0 years assuming a 50 basis point decline in the current rate environment.

Residential mortgage-backed securities also have credit risk from delinquency or default of the underlying loans. We mitigate this risk by primarily investing in securities issued by U.S. government agencies. Principal and interest payments on the underlying loans are fully guaranteed. At June 30, 2014 , approximately $7.2 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 $7.3 billion at June 30, 2014 .

We also hold amortized cost of $169 million in residential mortgage-backed securities privately issued by publicly-owned financial institutions, a decrease of $11 million from March 31, 2014 . The decrease was due to the sale of $3.6 million in amortized cost during the second quarter and cash payments received. The fair value of our portfolio of privately issued residential mortgage-backed securities totaled $179 million at June 30, 2014 .

The amortized cost of our portfolio of privately issued residential mortgage-backed securities included $98 million of Jumbo-A residential mortgage loans and $71 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 9.5% and has been fully absorbed as of June 30, 2014 . The Jumbo-A residential mortgage-backed securities had original credit enhancement of 9.7% and the current level is 3.3%. Approximately 91% 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 30% 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.

- 20 -

The aggregate gross amount of unrealized losses on available for sale securities totaled $55 million at June 30, 2014 , compared to $102 million at March 31, 2014 . 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. No other-than-temporary impairment charges were recognized in earnings in the second quarter of 2014 .

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.

BOK Financial is required to hold stock as members of the Federal Reserve system and the Federal Home Loan Banks ("FHLB"). These restricted equity securities are carried at cost as these securities do not have a readily determined fair value because the ownership of these shares are restricted and they lack a market. Federal Reserve Bank stock totaled $34 million and holdings of FHLB stock totaled $57 million at June 30, 2014 .

Bank-Owned Life Insurance

We have approximately $289 million of bank-owned life insurance at June 30, 2014 . This investment is expected to provide a long-term source of earnings to support existing employee benefit programs. Approximately $257 million is held in separate accounts. Our separate account holdings are invested in diversified portfolios of investment-grade fixed income securities and cash equivalents, including U.S. Treasury and Agency securities, residential mortgage-backed securities, corporate debt, asset-backed and commercial mortgage-backed securities. The portfolios are managed by unaffiliated professional managers within parameters established in the portfolio’s investment guidelines. The cash surrender value of certain life insurance policies is further supported by a stable value wrap, which protects against changes in the fair value of the investments. At June 30, 2014 , the cash surrender value represented by the underlying fair value of investments held in separate accounts was approximately $273 million. As the underlying fair value of the investments held in a separate account at June 30, 2014 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 $32 million primarily represents the cash surrender value of policies held in general accounts and other amounts due from various insurance companies.

- 21 -

Loans

The aggregate loan portfolio before allowance for loan losses totaled $13.4 billion at June 30, 2014 , an increase of $349 million over March 31, 2014 . Outstanding commercial loans grew by $316 million over March 31, 2014 , largely due to growth in services, wholesale/retail and energy sector loans. Commercial real estate loan balances were up $24 million primarily related to growth in loans secured by industrial facilities, multifamily residential properties and other commercial real estate loans, partially offset by a decrease in loans secured by office buildings. Residential mortgage loans decrease d $10 million and consumer loans increase d $20 million compared to March 31, 2014 .

Table 10 -- Loans

(In thousands)



	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
Commercial:
Energy	$	2,419,788	$	2,344,072	$	2,351,760	$	2,311,991	$	2,384,746
Services	2,377,065		2,232,471		2,282,210		2,148,551		2,204,253
Wholesale/retail	1,318,151		1,225,990		1,201,364		1,181,806		1,175,543
Manufacturing	452,866		444,215		391,751		382,460		386,133
Healthcare	1,394,156		1,396,562		1,274,246		1,160,212		1,118,810
Other commercial and industrial	405,635		408,396		441,890		386,055		438,635
Total commercial	8,367,661		8,051,706		7,943,221		7,571,075		7,708,120

Commercial real estate:
Residential construction and land development	184,779		184,820		206,258		216,456		225,654
Retail	642,110		640,506		586,047		556,918		553,412
Office	394,217		436,264		411,499		422,043		459,558
Multifamily	677,403		662,674		576,502		520,454		500,452
Industrial	342,080		305,207		243,877		245,022		253,990
Other commercial real estate	414,389		401,936		391,170		388,336		324,030
Total commercial real estate	2,654,978		2,631,407		2,415,353		2,349,229		2,317,096

Residential mortgage:
Permanent mortgage	1,020,928		1,033,572		1,062,744		1,078,661		1,095,871
Permanent mortgages guaranteed by U.S. government agencies	188,087		184,822		181,598		163,919		156,887
Home equity	799,200		800,281		807,684		792,185		787,027
Total residential mortgage	2,008,215		2,018,675		2,052,026		2,034,765		2,039,785

Consumer	396,004		376,066		381,664		395,031		375,781

Total	$	13,426,858	$	13,077,854	$	12,792,264	$	12,350,100	$	12,440,782

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.

- 22 -

Commercial loans totaled $8.4 billion or 62% of the loan portfolio at June 30, 2014 , an increase of $316 million over March 31, 2014 . Service sector grew by $145 million over the prior quarter. Wholesale/retail sector loans were up $92 million and energy loans grew by $76 million .

Table 11 presents the commercial sector of our loan portfolio distributed primarily by collateral location. Loans for which collateral location is less relevant, such as unsecured loans and reserve-based energy loans, are distributed by the borrower's primary operating location. The majority of the collateral securing our commercial loan portfolio is located within our geographical footprint with 34% concentrated in the Texas market and 24% concentrated in the Oklahoma market. The Other category is primarily composed of two states, California and Louisiana, which represent $163 million or 2% of the commercial loan portfolio and $141 million or 2% of the commercial loan portfolio, respectively, at June 30, 2014 . All other states individually represent one percent or less of total commercial loans.

Table 11 -- Commercial Loans by Collateral Location

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/Missouri		Other		Total
Energy	$	569,010	$	1,117,291	$	29,416	$	7,581	$	338,893	$	16,768	$	61,928	$	278,901	$	2,419,788
Services	576,973		796,295		211,429		17,300		201,965		169,285		121,494		282,324		2,377,065
Wholesale/retail	426,677		487,684		34,625		58,329		59,321		45,114		56,512		149,889		1,318,151
Manufacturing	123,986		117,281		6,827		7,057		12,110		44,568		59,813		81,224		452,866
Healthcare	265,848		225,568		112,183		81,478		110,058		85,247		202,936		310,838		1,394,156
Other commercial and industrial	78,882		84,001		12,507		17,292		32,227		3,272		61,774		115,680		405,635
Total commercial loans	$	2,041,376	$	2,828,120	$	406,987	$	189,037	$	754,574	$	364,254	$	564,457	$	1,218,856	$	8,367,661

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 $2.4 billion or 18% of total loans at June 30, 2014 . Unfunded energy loan commitments increase d by $171 million to $2.8 billion at June 30, 2014 . Approximately $2.1 billion of energy loans were to oil and gas producers, up $35 million over March 31, 2014 . 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 that provide services to the energy industry increased $50 million to $128 million at June 30, 2014 . Loans to borrowers engaged in wholesale or retail energy sales decrease d $22 million from March 31, 2014 to $73 million . Loans to midstream oil and gas companies totaled $67 million at June 30, 2014 , a decrease of $13 million from March 31, 2014 . Loans to borrowers that manufacture equipment primarily for the energy industry totaled $19 million , down $2.6 million compared to the prior quarter.

The services sector of the loan portfolio totaled $2.4 billion or 18% of total loans and consists of a large number of loans to a variety of businesses, including gaming, governmental, utilities, not-for-profit entities and insurance. Service sector loans grew by $145 million over March 31, 2014 . Approximately $1.2 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 June 30, 2014 , the outstanding principal balance of these loans totaled $2.7

- 23 -

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, with larger concentrations in Texas and Oklahoma which represent 33% and 17% of the total commercial real estate portfolio at June 30, 2014 , respectively. 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 $2.7 billion or 20% of the loan portfolio at June 30, 2014 . The outstanding balance of commercial real estate loans increase d $24 million during the second quarter of 2014 . Loans secured by industrial facilities increase d $37 million . Loans secured by multifamily residential properties grew by $15 million and other commercial real estate loans increase d $12 million over March 31, 2014 . These increases were partially offset by a $42 million decrease in loans secured by office buildings. Residential construction and land development and loans secured by retail facilities were largely unchanged compared to March 31, 2014 . 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 distributed by collateral location follows in Table 12 .

Table 12 -- Commercial Real Estate Loans by Collateral Location

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/Missouri		Other		Total
Residential construction and land development	$	53,980	$	37,029	$	32,938	$	11,522	$	40,654	$	4,935	$	3,023	$	698	$	184,779
Retail	103,017		209,212		66,734		10,177		26,800		57,534		26,637		141,999		642,110
Office	74,059		181,749		33,354		5,152		33,398		35,980		12,392		18,133		394,217
Multifamily	95,395		253,359		44,791		23,684		68,013		41,229		71,060		79,872		677,403
Industrial	49,955		101,195		33,898		634		6,817		8,820		42,110		98,651		342,080
Other real estate	76,707		103,271		48,489		15,438		33,320		48,227		24,138		64,799		414,389
Total commercial real estate loans	$	453,113	$	885,815	$	260,204	$	66,607	$	209,002	$	196,725	$	179,360	$	404,152	$	2,654,978

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Residential Mortgage and Consumer

Residential mortgage loans totaled $2.0 billion , a $10 million decrease compared to March 31, 2014 . 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. Collateral for 98% of our residential mortgage loan portfolio is located within our geographical footprint.

The majority of our permanent mortgage loan portfolio is 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 $900 million. 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.

At June 30, 2014 , $188 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 increase d $3.3 million over March 31, 2014 .

Home equity loans totaled $799 million at June 30, 2014 , a decrease of $1.1 million compared to March 31, 2014 . 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 a 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 June 30, 2014 by lien position and amortizing status follows in Table 13 .

Table 13 -- Home Equity Loans

(In thousands)



	Revolving		Amortizing		Total
First lien	$	38,511	$	516,657	$	555,168
Junior lien	65,804		178,228		244,032
Total home equity	$	104,315	$	694,885	$	799,200

The distribution of residential mortgage and consumer loans at June 30, 2014 is as follows in Table 14 . Residential mortgage loans are distributed by collateral location. Consumer loans are generally distributed by borrower location.

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Table 14 -- Residential Mortgage and Consumer Loans by Collateral Location

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/Missouri		Other		Total
Residential mortgage:
Permanent mortgage	$	222,329	$	385,863	$	42,455	$	19,847	$	167,388	$	98,852	$	58,469	$	25,725	$	1,020,928
Permanent mortgages guaranteed by U.S. government agencies	61,077		21,091		65,722		6,929		9,866		2,876		14,244		6,282		188,087
Home equity	477,277		139,177		126,688		4,579		32,750		9,948		8,158		623		799,200
Total residential mortgage	$	760,683	$	546,131	$	234,865	$	31,355	$	210,004	$	111,676	$	80,871	$	32,630	$	2,008,215

Consumer	$	191,127	$	145,878	$	12,442	$	1,789	$	23,321	$	8,676	$	10,759	$	2,012	$	396,004

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The Company secondarily evaluates loan portfolio performance based on the primary geographical market managing the loan. Loans attributed to a geographical market may not represent the location of the borrower or the collateral. All permanent mortgage loans serviced by our mortgage banking unit and held for investment by the Bank are centrally managed by the Bank of Oklahoma.

Table 15 -- Loans Managed by Primary Geographical Market

(In thousands)



	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
Bank of Oklahoma:
Commercial	$	3,101,513	$	2,782,997	$	2,902,140	$	2,801,979	$	2,993,247
Commercial real estate	598,790		593,282		602,010		564,141		569,780
Residential mortgage	1,490,171		1,505,702		1,524,212		1,497,027		1,503,457
Consumer	187,914		179,733		192,283		207,360		211,744
Total Bank of Oklahoma	5,378,388		5,061,714		5,220,645		5,070,507		5,278,228

Bank of Texas:
Commercial	3,107,808		3,161,203		3,052,274		2,858,970		2,849,888
Commercial real estate	995,182		969,804		816,574		853,857		813,659
Residential mortgage	251,290		256,332		260,544		263,945		263,916
Consumer	147,322		136,782		131,297		129,144		105,390
Total Bank of Texas	4,501,602		4,524,121		4,260,689		4,105,916		4,032,853

Bank of Albuquerque:
Commercial	381,843		351,454		342,336		325,542		296,036
Commercial real estate	309,421		305,080		308,829		306,914		314,871
Residential mortgage	137,110		131,932		133,900		131,756		133,058
Consumer	12,346		12,972		13,842		14,583		14,364
Total Bank of Albuquerque	840,720		801,438		798,907		778,795		758,329

Bank of Arkansas:
Commercial	71,859		73,804		81,556		73,063		61,414
Commercial real estate	85,633		81,181		78,264		84,364		85,546
Residential mortgage	8,334		7,898		7,922		10,466		10,691
Consumer	6,323		6,881		8,023		9,426		11,819
Total Bank of Arkansas	172,149		169,764		175,765		177,319		169,470

Colorado State Bank & Trust:
Commercial	856,323		825,315		735,626		748,331		786,262
Commercial real estate	200,995		213,850		190,355		158,320		146,137
Residential mortgage	60,360		57,345		62,821		66,475		62,490
Consumer	23,330		22,095		22,686		22,592		23,148
Total Colorado State Bank & Trust	1,141,008		1,118,605		1,011,488		995,718		1,018,037

Bank of Arizona:
Commercial	446,814		453,799		417,702		379,817		355,698
Commercial real estate	292,799		301,266		257,477		250,129		258,938
Residential mortgage	41,059		42,899		47,111		49,109		51,774
Consumer	7,821		7,145		7,887		7,059		4,947
Total Bank of Arizona	788,493		805,109		730,177		686,114		671,357

Bank of Kansas City:
Commercial	401,501		403,134		411,587		383,373		365,575
Commercial real estate	172,158		166,944		161,844		131,504		128,165
Residential mortgage	19,891		16,567		15,516		15,987		14,399
Consumer	10,948		10,458		5,646		4,867		4,369
Total Bank of Kansas City	604,498		597,103		594,593		535,731		512,508

Total BOK Financial loans	$	13,426,858	$	13,077,854	$	12,792,264	$	12,350,100	$	12,440,782

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Loan Commitments

We enter into certain off-balance sheet arrangements in the normal course of business. These arrangements included unfunded loan commitments which totaled $7.5 billion and standby letters of credit which totaled $469 million at June 30, 2014 . 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 $624 thousand of the outstanding standby letters of credit were issued on behalf of customers whose loans are nonperforming at June 30, 2014 .

As more fully described in Note 6 to the Consolidated Financial Statements, we have off-balance sheet commitments related to certain residential mortgage loans originated under community development loan programs that were sold to a U.S. government agency with full recourse. These mortgage loans were underwritten to standards approved by the agencies, including full documentation and originated under programs available only for owner-occupied properties. The Company no longer sells residential mortgage loans with recourse other than obligations under standard representations and warranties. We are obligated to repurchase these loans for the life of these loans in the event of foreclosure for the unpaid principal and interest at the time of foreclosure. At June 30, 2014 , the principal balance of residential mortgage loans sold subject to recourse obligations totaled $181 million , down from $187 million at March 31, 2014 . Substantially all of these loans are to borrowers in our primary markets including $125 million to borrowers in Oklahoma, $20 million to borrowers in Arkansas, $13 million to borrowers in New Mexico and $10 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 6 to the Consolidated Financial Statements. For the period from 2010 through the second quarter of 2014 combined, approximately 14% 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 $6 million at June 30, 2014 and $8 million at March 31, 2014 .

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Customer Derivative Programs

We offer programs that permit our customers to hedge various risks, including fluctuations in energy, cattle and other agricultural product prices, interest rates and foreign exchange rates. 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 June 30, 2014 , the net fair values of derivative contracts, before consideration of cash margin, reported as assets under these programs totaled $359 million compared to $222 million at March 31, 2014 . Derivative contracts carried as assets included to-be-announced residential mortgage-backed securities sold to our mortgage banking customers considered interest rate derivative contracts. At June 30, 2014 , the fair value of our derivative contracts included $81 million related to these to-be-announced residential mortgage-backed securities, $40 million for interest rate swaps, $45 million for energy contracts, and $175 million for foreign exchange contracts. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $355 million at June 30, 2014 and $217 million at March 31, 2014 .

At June 30, 2014 , total derivative assets were reduced by $1.7 million of cash collateral received from counterparties and total derivative liabilities were reduced by $59 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.

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The fair value of derivative contracts reported as assets under these programs, net of cash margin held by the Company, by category of debtor at June 30, 2014 follows in Table 16 .

Table 16 -- Fair Value of Derivative Contracts

(In thousands)



Customers	$	183,267
Banks and other financial institutions	174,413
Fair value of customer risk management program asset derivative contracts, net	$	357,680

At June 30, 2014 , our largest derivative exposure was to an internationally active domestic financial institution for equity option contracts which totaled $13 million. At June 30, 2014 , our aggregate gross exposure to internationally active domestic financial institutions was approximately $234 million comprised of $220 million of cash and securities positions and $14 million of gross derivative positions. We have no direct exposure to European sovereign debt and our aggregate gross exposure to European financial institutions totaled $6.2 million at June 30, 2014 .

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 $48.57 per barrel of oil would decrease the fair value of derivative assets by $33 million. An increase in prices equivalent to $156.82 per barrel of oil would increase the fair value of derivative assets by $295 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 $21 million . The fair value of our to-be-announced residential mortgage-backed securities and interest rate swap derivative contracts is affected by changes in interest rates. Based on our assessment as of June 30, 2014 , changes in interest rates 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 $192 million or 1.43% of outstanding loans and 199% of nonaccruing loans at June 30, 2014 . The allowance for loans losses was $191 million and the accrual for off-balance sheet credit losses was $1.3 million . At March 31, 2014 , the combined allowance for credit losses was $190 million or 1.45% of outstanding loans and 181% of nonaccruing loans. The allowance for loan losses was $188 million and the accrual for off-balance sheet credit losses was $1.7 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 no provision for credit losses was necessary during the second quarter of 2014 . No provision for credit losses was recorded in the first quarter of 2014 or in the second quarter of 2013 .

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Table 17 -- Summary of Loan Loss Experience

(In thousands)



	Three Months Ended
	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
Allowance for loan losses:
Beginning balance	$	188,318		$	185,396		$	194,325		$	203,124		$	205,965
Loans charged off:
Commercial	(29		)	(144		)	(145		)	(1,354		)	(4,538		)
Commercial real estate	—			(220		)	(176		)	(419		)	(450		)
Residential mortgage	(1,842		)	(996		)	(956		)	(961		)	(2,057		)
Consumer	(1,651		)	(1,488		)	(1,836		)	(1,974		)	(1,507		)
Total	(3,522		)	(2,848		)	(3,113		)	(4,708		)	(8,552		)
Recoveries of loans previously charged off:
Commercial	1,196			1,985			1,291			864			1,940
Commercial real estate	2,621			1,827			3,496			2,073			2,727
Residential mortgage	722			354			354			188			444
Consumer	985			1,194			927			1,284			1,099
Total	5,524			5,360			6,068			4,409			6,210
Net loans recovered (charged off)	2,002			2,512			2,955			(299		)	(2,342		)
Provision for loan losses	370			410			(11,884		)	(8,500		)	(499		)
Ending balance	$	190,690		$	188,318		$	185,396		$	194,325		$	203,124
Accrual for off-balance sheet credit losses:
Beginning balance	$	1,678		$	2,088		$	1,604		$	1,604		$	1,105
Provision for off-balance sheet credit losses	(370		)	(410		)	484			—			499
Ending balance	$	1,308		$	1,678		$	2,088		$	1,604		$	1,604
Total combined provision for credit losses	$	—		$	—		$	(11,400	)	$	(8,500	)	$	—
Allowance for loan losses to loans outstanding at period-end	1.42		%	1.44		%	1.45		%	1.57		%	1.63		%
Net charge-offs (annualized) to average loans	(0.06		)%	(0.08		)%	(0.09		)%	0.01		%	0.08		%
Total provision for credit losses (annualized) to average loans	—		%	—		%	(0.37		)%	(0.27		)%	—		%
Recoveries to gross charge-offs	156.84		%	188.20		%	194.92		%	93.65		%	72.61		%
Accrual for off-balance sheet credit losses to off-balance sheet credit commitments	0.02		%	0.02		%	0.03		%	0.02		%	0.02		%
Combined allowance for credit losses to loans outstanding at period-end	1.43		%	1.45		%	1.47		%	1.59		%	1.65		%

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 June 30, 2014 , impaired loans totaled $283 million , including $4.7 million with specific allowances of $3.4 million and $278 million with no specific allowances because the loan balances represent the amounts we expect to recover. At March 31, 2014 , impaired loans totaled $288 million , including $5.5 million of impaired loans with specific allowances of $4.2 million and $282 million with no specific allowances.

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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 $160 million at June 30, 2014 , compared to $157 million at March 31, 2014 . The increase in the general allowance was primarily related to growth in commercial loans during the quarter.

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 $27 million at June 30, 2014 , largely unchanged compared to March 31, 2014 . 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 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 $105 million at June 30, 2014 , primarily composed of $22 million of energy loans, $21 million of service sector loans, $17 million of residential construction and land development loans and $14 million of loans secured by multifamily residential properties. Potential problem loans totaled $74 million at March 31, 2014 .

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.

BOK Financial had a net recovery of $2.0 million in the second quarter of 2014 compared to a net recovery of $2.5 million in the first quarter of 2014 and net charge-offs of $2.3 million in the second quarter of 2013 . The ratio of net loans charged off to average loans on an annualized basis was (0.06)% for the second quarter of 2014 compared with (0.08)% for the first quarter of 2014 and 0.08% for the second quarter of 2013 . The net recovery in the second quarter of 2014 was $510 thousand less than the previous quarter.

Net commercial loans recoveries totaled $1.2 million in the second quarter of 2014 compared to $1.8 million in the first quarter of 2014 . Net commercial real estate loan recoveries were $2.6 million in the second quarter and $1.6 million in the first quarter. Residential mortgage net charge-offs were $1.1 million and consumer net charge-offs were $666 thousand for the second quarter. Consumer loan net charge-offs include indirect auto loan and deposit account overdraft losses.

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Nonperforming Assets

Table 18 -- Nonperforming Assets

(In thousands)



	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
Nonaccruing loans:
Commercial	$	17,103	$	19,047	$	16,760	$	19,522	$	20,869
Commercial real estate	34,472		39,305		40,850		52,502		58,693
Residential mortgage	44,340		45,380		42,320		39,256		40,534
Consumer	765		974		1,219		1,624		2,037
Total nonaccruing loans	96,680		104,706		101,149		112,904		122,133
Accruing renegotiated loans guaranteed by U.S. government agencies	57,818		55,507		54,322		50,099		48,733
Total nonperforming loans	154,498		160,213		155,471		163,003		170,866
Real estate and other repossessed assets:
Guaranteed by U.S. government agencies	49,720		45,638		37,431		37,906		32,155
Other	50,391		49,877		54,841		70,216		77,957
Real estate and other repossessed assets	100,111		95,515		92,272		108,122		110,112
Total nonperforming assets	$	254,609	$	255,728	$	247,743	$	271,125	$	280,978
Total nonperforming assets excluding those guaranteed by U.S. government agencies	$	145,124	$	153,011	$	155,213	$	182,543	$	200,007

Nonaccruing loans by loan portfolio segment and class:
Commercial:
Energy	$	1,619	$	1,759	$	1,860	$	1,953	$	2,277
Services	3,669		4,581		4,922		6,927		7,448
Wholesale / retail	5,885		6,854		6,969		7,223		6,700
Manufacturing	3,507		3,565		592		843		876
Healthcare	1,422		1,443		1,586		1,733		2,670
Other commercial and industrial	1,001		845		831		843		898
Total commercial	17,103		19,047		16,760		19,522		20,869

Commercial real estate:
Residential construction and land development	15,146		16,547		17,377		20,784		21,135
Retail	4,199		4,626		4,857		7,914		8,406
Office	3,591		6,301		6,391		6,838		7,828
Multifamily	—		—		7		4,350		6,447
Industrial	631		886		252		—		—
Other commercial real estate	10,905		10,945		11,966		12,616		14,877
Total commercial real estate	34,472		39,305		40,850		52,502		58,693

Residential mortgage:
Permanent mortgage	32,952		36,342		34,279		31,797		32,747
Permanent mortgage guaranteed by U.S. government agencies	1,947		1,572		777		577		83
Home equity	9,441		7,466		7,264		6,882		7,704
Total residential mortgage	44,340		45,380		42,320		39,256		40,534
Consumer	765		974		1,219		1,624		2,037
Total nonaccruing loans	$	96,680	$	104,706	$	101,149	$	112,904	$	122,133

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	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
Nonaccruing loans as % of outstanding balance for class:
Commercial:
Energy	0.07		%	0.08		%	0.08		%	0.08		%	0.10		%
Services	0.15		%	0.21		%	0.22		%	0.32		%	0.34		%
Wholesale / retail	0.45		%	0.56		%	0.58		%	0.61		%	0.57		%
Manufacturing	0.77		%	0.80		%	0.15		%	0.22		%	0.23		%
Healthcare	0.10		%	0.10		%	0.12		%	0.15		%	0.24		%
Other commercial and industrial	0.25		%	0.21		%	0.19		%	0.22		%	0.20		%
Total commercial	0.20		%	0.24		%	0.21		%	0.26		%	0.27		%

Commercial real estate:
Residential construction and land development	8.20		%	8.95		%	8.42		%	9.60		%	9.37		%
Retail	0.65		%	0.72		%	0.83		%	1.42		%	1.52		%
Office	0.91		%	1.44		%	1.55		%	1.62		%	1.70		%
Multifamily	—		%	—		%	—		%	0.84		%	1.29		%
Industrial	0.18		%	0.29		%	0.10		%	—		%	—		%
Other commercial real estate	2.63		%	2.72		%	3.06		%	3.25		%	4.59		%
Total commercial real estate	1.30		%	1.49		%	1.69		%	2.23		%	2.53		%

Residential mortgage:
Permanent mortgage	3.23		%	3.52		%	3.23		%	2.95		%	2.99		%
Permanent mortgage guaranteed by U.S. government agencies	1.04		%	0.85		%	0.43		%	0.35		%	0.05		%
Home equity	1.18		%	0.93		%	0.90		%	0.87		%	0.98		%
Total residential mortgage	2.21		%	2.25		%	2.06		%	1.93		%	1.99		%
Consumer	0.19		%	0.26		%	0.32		%	0.41		%	0.54		%
Total nonaccruing loans	0.72		%	0.80		%	0.79		%	0.91		%	0.98		%

Ratios:
Allowance for loan losses to nonaccruing loans	197.24		%	179.86		%	183.29		%	172.12		%	166.31		%
Nonaccruing loans to period-end loans	0.72		%	0.80		%	0.79		%	0.91		%	0.98		%
Accruing loans 90 days or more past due ¹	$	67		$	1,991		$	1,415		$	188		$	2,460


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

Nonperforming assets totaled $255 million or 1.88% of outstanding loans and repossessed assets at June 30, 2014 . Nonaccruing loans totaled $97 million , accruing renegotiated residential mortgage loans totaled $58 million and real estate and other repossessed assets totaled $100 million . All accruing renegotiated residential mortgage loans, $1.9 million of nonaccruing loans and $50 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 $7.9 million during the second 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 generally 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 nonaccruing 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

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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 June 30, 2014 , 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. Generally, 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 three and six ended June 30, 2014 follows in Table 19 .

Table 19 -- Rollforward of Nonperforming Assets

(In thousands)



	Three Months Ended
	June 30, 2014
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, March 31, 2014	$	104,706		$	55,507		$	95,515		$	255,728
Additions	14,225			14,264			—			28,489
Payments	(12,802		)	(727		)	—			(13,529		)
Charge-offs	(3,522		)	—			—			(3,522		)
Net gains and write-downs	—			—			617			617
Foreclosure of nonperforming loans	(5,926		)	—			5,926			—
Foreclosure of loans guaranteed by U.S. government agencies	—			(1,581		)	13,294			11,713
Proceeds from sales	—			(9,593		)	(5,919		)	(15,512		)
Conveyance to U.S. government agencies	—			—			(9,212		)	(9,212		)
Net transfers to nonaccruing loans	—			—			—			—
Return to accrual status	—			—			—			—
Other, net	(1		)	(52		)	(110		)	(163		)
Balance, June 30, 2014	$	96,680		$	57,818		$	100,111		$	254,609

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	Six Months Ended
	June 30, 2014
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, December 31, 2013	$	101,149		$	54,322		$	92,272		$	247,743
Additions	30,445			27,083			—			57,528
Payments	(20,350		)	(1,056		)	—			(21,406		)
Charge-offs	(6,370		)	—			—			(6,370		)
Net gains and write-downs	—			—			532			532
Foreclosure of nonperforming loans	(8,196		)	—			8,196			—
Foreclosure of loans guaranteed by U.S. government agencies	—			(4,770		)	30,601			25,831
Proceeds from sales	—			(17,486		)	(13,029		)	(30,515		)
Conveyance to U.S. government agencies	—			—			(18,312		)	(18,312		)
Net transfers to nonaccruing loans	—			—			—			—
Return to accrual status	—			—			—			—
Other, net	2			(275		)	(149		)	(422		)
Balance, June 30, 2014	$	96,680		$	57,818		$	100,111		$	254,609

We foreclose on loans guaranteed by U.S. government agencies in accordance with agency guidelines. Generally these loans are not eligible for modification programs or have failed to comply with modified loan terms. Principal is guaranteed by agencies of the U.S. government, subject to limitations and credit risk is minimal. These properties will be conveyed to the agencies once applicable criteria have been met. During the second quarter of 2014 , $13 million of properties guaranteed by U.S. government agencies were foreclosed on and $9.2 million of properties were conveyed to the applicable U.S. government agencies.

Nonaccruing loans totaled $97 million or 0.72% of outstanding loans at June 30, 2014 and $105 million or 0.80% of outstanding loans at March 31, 2014 . Nonaccruing loans decrease d $8.0 million compared to March 31, 2014 . Newly identified nonaccruing loans totaled $14 million for the second quarter of 2014 , were offset by $13 million of payments, $5.9 million of foreclosures and $3.5 million of charge-offs.

Commercial

Nonaccruing commercial loans totaled $17 million or 0.20% of total commercial loans at June 30, 2014 , compared to $19 million or 0.24% of total commercial loans at March 31, 2014 . Nonaccruing commercial loans decrease d $1.9 million in the second quarter of 2014 . Newly identified nonaccruing commercial loans of $907 thousand were offset by $1.9 million in payments, $913 thousand of foreclosures and $29 thousand of charge-offs during the second quarter.

Nonaccruing commercial loans at June 30, 2014 were primarily composed of $5.9 million or 0.45% of total wholesale/retail sector loans, $3.7 million or 0.15% of total services sector loans and $3.5 million or 0.77% of total manufacturing sector loans. Over half of the balance of nonaccruing wholesale/retail sector loans was comprised of a single customer in the New Mexico market.

Commercial Real Estate

Nonaccruing commercial real estate loans totaled $34 million or 1.30% of outstanding commercial real estate loans at June 30, 2014 compared to $39 million or 1.49% of outstanding commercial real estate loans at March 31, 2014 . Newly identified nonaccruing commercial real estate loans totaled $2.4 million were offset by $5.7 million of cash payments received and $1.5 million of foreclosures.

Nonaccruing commercial real estate loans continue to be largely concentrated in residential construction and land development loans, totaling $15 million or 8.20% of residential construction and land development loans. Other commercial real estate loans totaled $11 million or 2.63% of other commercial real estate loans.

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Residential Mortgage and Consumer

Nonaccruing residential mortgage loans totaled $44 million or 2.21% of outstanding residential mortgage loans at June 30, 2014 , compared to $45 million or 2.25% of outstanding residential mortgage loans at March 31, 2014 . Newly identified nonaccruing residential mortgage loans totaled $9.0 million , offset by $5.0 million of payments, $3.3 million of foreclosures and $1.8 million of loans charged off during the quarter.

Nonaccruing residential mortgage loans primarily consist of non-guaranteed permanent residential mortgage loans which totaled $33 million or 3.23% of outstanding non-guaranteed permanent residential mortgage loans at June 30, 2014 . Nonaccruing home equity loans totaled $9.4 million or 1.18% of total home equity loans.

Payments of accruing residential mortgage loans and consumer loans may be delinquent. The composition of residential mortgage loans and consumer loans past due but still accruing is included in the following Table 20 . Substantially all non-guaranteed residential loans past due 90 days or more are nonaccruing. Residential mortgage loans 30 to 89 days past due increased $2.6 million in the second quarter to $11.9 million at June 30, 2014 . Consumer loans past due 30 to 89 days increased $419 thousand over March 31, 2014 .

Table 20 -- Residential Mortgage and Consumer Loans Past Due

(In thousands)



	June 30, 2014				March 31, 2014
	90 Days or More		30 to 89 Days		90 Days or More		30 to 89 Days
Residential mortgage:
Permanent mortgage ¹	$	—	$	10,079	$	12	$	5,732
Home equity	41		1,855		25		3,556
Total residential mortgage	$	41	$	11,934	37		$	9,288

Consumer	$	1	$	992	$	1	$	573


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 $100 million at June 30, 2014 , an increase of $4.6 million over March 31, 2014 . The distribution of real estate and other repossessed assets attributed by geographical market is included in Table 21 following.

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Table 21 -- Real Estate and Other Repossessed Assets by Collateral Location

(In thousands)



	Oklahoma		Texas		Colorado		Arkansas		New Mexico		Arizona		Kansas/ Missouri		Other		Total
1-4 family residential properties guaranteed by U.S. government agencies	$	15,307	$	2,252	$	1,549	$	1,511	$	24,492	$	458	$	3,655	$	496	$	49,720
Developed commercial real estate properties	2,287		242		2,657		796		4,076		1,438		—		5,073		16,569
1-4 family residential properties	4,674		2,359		161		965		1,804		4,782		551		288		15,584
Undeveloped land	272		2,524		2,635		57		—		5,186		1,114		—		11,788
Residential land development properties	164		30		1,483		1,275		—		3,161		4		—		6,117
Multifamily residential properties	—		—		—		—		—		—		—		—		—
Other	—		9		—		—		—		324		—		—		333
Total real estate and other repossessed assets	$	22,704	$	7,416	$	8,485	$	4,604	$	30,372	$	15,349	$	5,324	$	5,857	$	100,111

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

- 38 -

Liquidity and Capital

Subsidiary Bank

Deposits and borrowed funds are the primary sources of liquidity for the subsidiary bank. Based on the average balances for the second quarter of 2014 , approximately 75% of our funding was provided by deposit accounts, 10% from borrowed funds, 1% from long-term subordinated debt and 12% from equity. Our funding sources, which primarily include deposits and borrowings from the Federal Home Loan Banks and other banks, provide adequate liquidity to meet our operating needs.

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

Average deposits for the second quarter of 2014 totaled $20.5 billion and represented approximately 75% of total liabilities and capital compared with $20.2 billion and 74% of total liabilities and capital for the first quarter of 2014 . Average deposits increase d $262 million over the first quarter of 2014 . Average demand deposit balances increased $342 million over the first quarter. Average interest-bearing transaction deposit accounts decrease d $50 million and and average time deposits decreased $50 million .

Average Commercial Banking deposit balances increase d $276 million over the first quarter of 2014 . Balances related to commercial & industrial customers increase d $194 million , balances related to our treasury services customers increase d $93 million . Balances related to energy customers decrease d $87 million compared to the first quarter of 2014 . Healthcare customer balances increase d $30 million , commercial real estate customer balances increase d $24 million and small business customer balances increase d $24 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. These deposit account balances may decline due to future changes in economic conditions.

Average Consumer Banking deposit balances increase d $50 million . Demand deposit balances grew by $49 million , interest-bearing transaction deposits were up $21 million and savings account balances were up $17 million . This growth was partially offset by a $36 million decrease in time deposits. Average Wealth Management deposits decrease d $72 million compared to the first quarter of 2014 primarily due to a $165 million decrease in interest-bearing transaction deposit account balances, partially offset by a $96 million increase in demand deposit balances.

Brokered deposits included in time deposits averaged $201 million for the second quarter of 2014 , an increase of $6.6 million over the first quarter of 2014 . Average interest-bearing transaction accounts for the second quarter include $259 million of brokered deposits, an increase of $44 million over the first quarter of 2014 .

- 39 -

The distribution of our period end deposit account balances among principal markets follows in Table 22 .

Table 22 -- Period End Deposits by Principal Market Area

(In thousands)



	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
Bank of Oklahoma:
Demand	$	3,785,922	$	3,476,876	$	3,432,940	$	3,442,831	$	3,552,328
Interest-bearing:
Transaction	5,997,474		6,148,712		6,318,045		5,565,462		5,644,959
Savings	210,330		211,770		191,880		189,186		185,345
Time	1,195,586		1,209,002		1,214,507		1,197,617		1,179,869
Total interest-bearing	7,403,390		7,569,484		7,724,432		6,952,265		7,010,173
Total Bank of Oklahoma	11,189,312		11,046,360		11,157,372		10,395,096		10,562,501

Bank of Texas:
Demand	2,617,194		2,513,729		2,481,603		2,498,668		2,299,632
Interest-bearing:
Transaction	1,957,236		1,967,107		1,966,580		1,853,586		1,931,758
Savings	67,012		70,890		64,632		63,368		63,745
Time	606,248		621,925		638,465		667,873		692,888
Total interest-bearing	2,630,496		2,659,922		2,669,677		2,584,827		2,688,391
Total Bank of Texas	5,247,690		5,173,651		5,151,280		5,083,495		4,988,023

Bank of Albuquerque:
Demand	515,554		524,191		502,395		491,894		455,580
Interest-bearing:
Transaction	489,378		516,734		529,140		541,565		525,481
Savings	36,442		37,481		33,944		34,003		34,096
Time	309,540		320,352		327,281		334,946		346,506
Total interest-bearing	835,360		874,567		890,365		910,514		906,083
Total Bank of Albuquerque	1,350,914		1,398,758		1,392,760		1,402,408		1,361,663

Bank of Arkansas:
Demand	44,471		40,026		38,566		33,378		31,778
Interest-bearing:
Transaction	205,216		212,144		144,018		205,891		187,223
Savings	2,287		2,264		1,986		1,919		1,974
Time	41,155		32,312		32,949		35,184		37,272
Total interest-bearing	248,658		246,720		178,953		242,994		226,469
Total Bank of Arkansas	293,129		286,746		217,519		276,372		258,247

Colorado State Bank & Trust:
Demand	396,185		399,820		409,942		375,060		367,407
Interest-bearing:
Transaction	566,320		536,438		541,675		536,734		519,584
Savings	29,234		28,973		26,880		27,782		27,948
Time	385,252		399,948		407,088		424,225		451,168
Total interest-bearing	980,806		965,359		975,643		988,741		998,700
Total Colorado State Bank & Trust	1,376,991		1,365,179		1,385,585		1,363,801		1,366,107

- 40 -



	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
Bank of Arizona:
Demand	293,836		265,149		204,092		188,365		186,382
Interest-bearing:
Transaction	379,170		409,200		364,736		339,158		376,305
Savings	2,813		2,711		2,432		2,511		2,238
Time	37,666		37,989		34,391		36,285		35,490
Total interest-bearing	419,649		449,900		401,559		377,954		414,033
Total Bank of Arizona	713,485		715,049		605,651		566,319		600,415

Bank of Kansas City:
Demand	254,843		252,496		246,739		301,780		252,216
Interest-bearing:
Transaction	103,610		109,321		69,857		77,414		81,250
Savings	1,511		1,507		1,252		1,080		1,029
Time	40,379		40,646		41,312		23,890		24,779
Total interest-bearing	145,500		151,474		112,421		102,384		107,058
Total Bank of Kansas City	400,343		403,970		359,160		404,164		359,274
Total BOK Financial deposits	$	20,571,864	$	20,389,713	$	20,269,327	$	19,491,655	$	19,496,230

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 $337 million at June 30, 2014 . 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 $1.3 billion during the quarter, up from $1.0 billion during the first quarter of 2014 .

At June 30, 2014 , the estimated unused credit available to the subsidiary bank from collateralized sources was approximately $8.1 billion.

A summary of other borrowings by the subsidiary bank follows in Table 23 .

- 41 -

Table 23 -- Borrowed Funds

(In thousands)



			Three Months Ended								Three Months Ended
			June 30, 2014								March 31, 2014
	June 30, 2014		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter		March 31, 2014		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter
Subsidiary Bank:
Funds purchased	$	705,573	$	574,926	0.07	%	$	709,072	$	1,166,178	$	1,021,755	0.06	%	$	1,548,676
Repurchase agreements	1,072,375		914,892		0.08	%	1,072,375		777,108		773,127		0.08	%	800,802
Other borrowings:
Federal Home Loan Bank advances	1,200,000		1,264,533		0.23	%	1,400,000		1,002,500		1,005,370		0.20	%	1,005,650
GNMA repurchase liability	15,193		13,991		5.24	%	16,515		12,834		17,082		5.37	%	17,721
Other	16,469		16,408		5.02	%	16,227		16,359		16,295		3.29	%	16,159
Total other borrowings	1,231,662		1,294,932		0.40	%			1,031,693		1,038,747		0.40	%
Subordinated debentures	347,890		347,868		2.52	%	347,890		347,846		347,824		2.52	%	347,846
Total Subsidiary Bank	3,357,500		3,132,618		0.48	%			3,322,825		3,181,453		0.45	%

Total Borrowed Funds	$	3,357,500	$	3,132,618	0.48	%			$	3,322,825	$	3,181,453	0.45	%

In 2007, the Company issued $250 million of subordinated debt due May 15, 2017 to fund the Worth National Bank and First United Bank acquisitions and fund continued asset growth. Interest on this debt was based on a fixed rate of 5.75% through May 14, 2012 which then converted to a floating rate of three-month LIBOR plus 0.69%. At June 30, 2014 , $227 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 June 30, 2014 , $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 June 30, 2014 , based on the most restrictive limitations as well as management’s internal capital policy, the subsidiary bank could declare up to $238 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.

- 42 -

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, 2015. The Credit Agreement contains customary representations and warranties, as well as affirmative and negative covenants including limits on the Company’s ability to borrow additional funds, make investments and sell assets. These covenants also require BOKF to maintain minimum capital levels. No amounts were outstanding under the Credit Facility at June 30, 2014 and the Company met all of the covenants.

Our equity capital at June 30, 2014 was $3.2 billion , an increase of $103 million over March 31, 2014 . Net income less cash dividends paid increase d equity $48 million during the second quarter of 2014 and accumulated other comprehensive income increased $43 million 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 June 30, 2014 , the Company has repurchased 39,496 shares for $2.1 million under this program. No shares were repurchased in the second quarter of 2014 .

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 24 .

Table 24 -- Capital Ratios



	Well Capitalized Minimums		June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013
Average total equity to average assets	—		11.56	%	11.40	%	11.27	%	10.88	%	10.95	%
Tangible common equity ratio	—		10.20	%	10.06	%	9.90	%	9.73	%	9.38	%
Tier 1 common equity ratio	—		13.46	%	13.59	%	13.59	%	13.33	%	13.19	%
Risk-based capital:
Tier 1 capital	6.00	%	13.63	%	13.77	%	13.77	%	13.51	%	13.37	%
Total capital	10.00	%	15.38	%	15.55	%	15.56	%	15.35	%	15.28	%
Leverage	5.00	%	10.26	%	10.17	%	10.05	%	9.80	%	9.43	%

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 13.46% as of June 30, 2014 . Based on our interpretation of the new capital rule, our estimated Tier 1 common equity ratio on a fully phased-in basis would be 12.35% , nearly 535 basis points above the 7% regulatory threshold.

- 43 -

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 requirement under the rule is 4%. 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. This non-GAAP measure is a valuable indicator 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 became effective for the Company in the fourth quarter of 2013. Existing regulations indicate that results will be made public 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 25 provides a reconciliation of the non-GAAP measures with financial measures defined by GAAP.

Table 25 -- Non-GAAP Measure

(Dollars in thousands)



	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013
Tangible common equity ratio:
Total shareholders' equity	$	3,212,517		$	3,109,925		$	3,020,049		$	2,991,244		$	2,957,637
Less: Goodwill and intangible assets, net	414,356			396,131			384,323			385,166			386,001
Tangible common equity	2,798,161			2,713,794			2,635,726			2,606,078			2,571,636
Total assets	27,843,770			27,364,714			27,015,432			27,166,367			27,808,200
Less: Goodwill and intangible assets, net	414,356			396,131			384,323			385,166			386,001
Tangible assets	$	27,429,414		$	26,968,583		$	26,631,109		$	26,781,201		$	27,422,199
Tangible common equity ratio	10.20		%	10.06		%	9.90		%	9.73		%	9.38		%

Off-Balance Sheet Arrangements

See Note 8 to the Consolidated Financial Statements for a discussion of the Company’s significant off-balance sheet commitments.

- 44 -

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 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 on the Company's performance across multiple interest rate scenarios. While the current internal policy limit for net interest revenue variation is a maximum decline of 5% or 200 basis points change over twelve months, the results of a 200 basis point decrease in interest rates in the current low-rate environment are not meaningful. We report the effect of a 50 basis point decrease in the interim.

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. In addition, the impact on the level and composition of DDA and other core deposit balances resulting from a significant increase in short-term market interest rates and the overall interest rate environment is likely to be material. The simulation incorporates assumptions regarding the effects of such changes 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 26 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 6 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.

- 45 -

Table 26 -- Interest Rate Sensitivity

(Dollars in thousands)



	200 bp Increase						50 bp Decrease
	2014			2013			2014			2013
Anticipated impact over the next twelve months on net interest revenue	$	(8,161	)	$	(16,219	)	$	(15,479	)	$	(13,330	)
	(1.18		)%	(2.27		)%	(2.23		)%	(1.87		)%

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 limits for each trading activity. Hedges in either the futures or cash markets may be used to reduce the risk associated with some trading programs.

Management uses a Value at Risk ("VaR") methodology to measure market risk due to changes in interest rates inherent in its trading activities. VaR is calculated based upon historical simulations over the past five years using a variance/covariance matrix of interest rate changes, 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 positions 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 June 30, 2014 and 2013 . At June 30, 2014 , there were no trading positions for the purposes of enhancing returns on the Company's securities portfolio.

The average, high and low VaR amounts for three months ended June 30, 2014 and June 30, 2013 are as follows in Table 27 .

Table 27 -- Value at Risk (VaR)

(In thousands)



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Average	$	2,099	$	3,378	$	1,817	$	3,471
High	3,433		5,826		3,731		5,826
Low	1,231		1,893		984		1,893

- 46 -

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.

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.

- 47 -



Consolidated Statements of Earnings (Unaudited)
(In thousands, except share and per share data)	Three Months Ended						Six Months Ended
	June 30,						June 30,
Interest revenue	2014			2013			2014			2013
Loans	$	125,493		$	124,297		$	247,964		$	249,410
Residential mortgage loans held for sale	2,523			2,294			4,113			4,086
Trading securities	408			621			819			1,099
Taxable securities	3,195			3,604			6,477			7,402
Tax-exempt securities	1,471			1,150			2,975			2,178
Total investment securities	4,666			4,754			9,452			9,580
Taxable securities	46,458			51,360			93,713			106,367
Tax-exempt securities	631			687			1,125			1,291
Total available for sale securities	47,089			52,047			94,838			107,658
Fair value option securities	794			1,024			1,645			2,201
Restricted equity securities	1,275			1,462			2,272			2,327
Interest-bearing cash and cash equivalents	383			278			648			462
Total interest revenue	182,631			186,777			361,751			376,823
Interest expense
Deposits	12,777			13,909			25,763			28,790
Borrowed funds	1,568			1,776			2,902			3,330
Subordinated debentures	2,189			2,200			4,347			4,359
Total interest expense	16,534			17,885			33,012			36,479
Net interest revenue	166,097			168,892			328,739			340,344
Provision for credit losses	—			—			—			(8,000		)
Net interest revenue after provision for credit losses	166,097			168,892			328,739			348,344
Other operating revenue
Brokerage and trading revenue	39,056			32,874			68,572			64,625
Transaction card revenue	31,510			29,942			60,644			57,633
Fiduciary and asset management revenue	29,543			24,803			55,265			47,116
Deposit service charges and fees	23,133			23,962			45,822			46,928
Mortgage banking revenue	29,330			36,596			52,174			76,572
Bank-owned life insurance	2,274			2,236			4,380			5,462
Other revenue	9,208			8,760			18,060			17,902
Total fees and commissions	164,054			159,173			304,917			316,238
Gain (loss) on assets, net	(52		)	(1,666		)	(4,316		)	(1,199		)
Gain (loss) on derivatives, net	831			(2,527		)	1,799			(3,468		)
Gain (loss) on fair value option securities, net	4,176			(9,156		)	6,836			(12,327		)
Change in fair value of mortgage servicing rights	(6,444		)	14,315			(10,905		)	16,973
Gain on available for sale securities, net	4			3,753			1,244			8,608
Total other-than-temporary impairment losses	—			(1,138		)	—			(1,138		)
Portion of loss recognized in (reclassified from) other comprehensive income	—			586			—			339
Net impairment losses recognized in earnings	—			(552		)	—			(799		)
Total other operating revenue	162,569			163,340			299,575			324,026
Other operating expense
Personnel	123,714			128,110			228,147			253,765
Business promotion	7,150			5,770			12,991			11,223
Charitable contributions to BOKF Foundation	—			—			2,420			—
Professional fees and services	11,054			8,381			18,619			15,366
Net occupancy and equipment	18,789			16,909			35,685			33,390
Insurance	4,467			4,044			9,008			7,789
Data processing and communications	29,071			26,734			56,206			52,184
Printing, postage and supplies	3,429			3,580			6,970			7,254
Net losses and operating expenses of repossessed assets	1,118			282			2,550			1,528
Amortization of intangible assets	949			875			1,765			1,751
Mortgage banking costs	7,960			7,910			11,594			15,264
Other expense	7,006			8,326			13,856			15,390
Total other operating expense	214,707			210,921			399,811			414,904
Net income before taxes	113,959			121,311			228,503			257,466
Federal and state income taxes	37,230			41,423			74,731			88,519
Net income	76,729			79,888			153,772			168,947
Net income attributable to non-controlling interest	834			(43		)	1,287			1,052
Net income attributable to BOK Financial Corporation shareholders	$	75,895		$	79,931		$	152,485		$	167,895
Earnings per share:
Basic	$	1.10		$	1.16		$	2.21		$	2.45
Diluted	$	1.10		$	1.16		$	2.20		$	2.44
Average shares used in computation:
Basic	68,359,945			67,993,822			68,318,689			67,904,599
Diluted	68,511,378			68,212,497			68,475,802			68,126,751
Dividends declared per share	$	0.40		$	0.38		$	0.80		$	0.76

See accompanying notes to consolidated financial statements.

- 48 -



Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income	$	76,729		$	79,888		$	153,772		$	168,947
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)	70,038			(183,186		)	124,651			(204,545		)
Reclassification adjustments included in earnings:
Interest revenue, Investments securities, Taxable securities	(333		)	(873		)	(736		)	(2,021		)
Interest expense, Subordinated debentures	71			72			154			124
Net impairment losses recognized in earnings	—			552			—			799
Gain on available for sale securities, net	(4		)	(3,753		)	(1,244		)	(8,608		)
Other comprehensive income (loss) before income taxes	69,772			(187,188		)	122,825			(214,251		)
Federal and state income taxes	(27,151		)	72,819			(47,786		)	83,345
Other comprehensive income (loss), net of income taxes	42,621			(114,369		)	75,039			(130,906		)
Comprehensive income (loss)	119,350			(34,481		)	228,811			38,041
Comprehensive income (loss) attributable to non-controlling interests	834			(43		)	1,287			1,052
Comprehensive income (loss) attributable to BOK Financial Corp. shareholders	$	118,516		$	(34,438	)	$	227,524		$	36,989

See accompanying notes to consolidated financial statements.

- 49 -

Consolidated Balance Sheets (In thousands, except share data)

	June 30, 2014			Dec 31, 2013			June 30, 2013
	(Unaudited)			(Footnote 1)			(Unaudited)
Assets
Cash and due from banks	$	615,479		$	512,931		$	507,551
Interest-bearing cash and cash equivalents	732,395			574,282			570,836
Trading securities	101,097			91,616			190,591
Investment securities (fair value : June 30, 2014 – $670,811; December 31, 2013 – $687,127 ; June 30, 2013 – $625,705)	649,937			677,878			615,790
Available for sale securities	9,699,146			10,147,162			10,698,074
Fair value option securities	185,674			167,125			205,756
Restricted equity securities	91,213			85,240			157,847
Residential mortgage loans held for sale	325,875			200,546			301,057
Loans	13,426,858			12,792,264			12,440,782
Allowance for loan losses	(190,690		)	(185,396		)	(203,124		)
Loans, net of allowance	13,236,168			12,606,868			12,237,658
Premises and equipment, net	280,286			277,849			271,191
Receivables	115,991			117,126			136,605
Goodwill	377,780			359,759			359,759
Intangible assets, net	36,576			24,564			26,242
Mortgage servicing rights	155,740			153,333			132,889
Real estate and other repossessed assets, net of allowance ( June 30, 2014 – $22,530 ; December 31, 2013 – $24,195; June 30, 2013 – $26,857)	100,111			92,272			110,112
Derivative contracts	357,680			265,012			546,206
Cash surrender value of bank-owned life insurance	289,231			284,801			280,047
Receivable on unsettled securities sales	14,025			17,174			182,147
Other assets	479,366			359,894			277,842
Total assets	$	27,843,770		$	27,015,432		$	27,808,200

Liabilities and Equity
Liabilities:
Noninterest-bearing demand deposits	$	7,908,005		$	7,316,277		$	7,145,323
Interest-bearing deposits:
Transaction	9,698,404			9,934,051			9,266,560
Savings	349,629			323,006			316,375
Time	2,615,826			2,695,993			2,767,972
Total deposits	20,571,864			20,269,327			19,496,230
Funds purchased	705,573			868,081			747,165
Repurchase agreements	1,072,375			813,454			845,106
Other borrowings	1,231,662			1,040,353			2,481,644
Subordinated debentures	347,890			347,802			347,716
Accrued interest, taxes and expense	100,227			194,870			175,677
Derivative contracts	297,851			247,185			521,991
Due on unsettled securities purchases	124,537			45,740			49,369
Other liabilities	144,145			133,647			150,420
Total liabilities	24,596,124			23,960,459			24,815,318
Shareholders' equity:
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: June 30, 2014 – 73,896,899 ; December 31, 2013 – 73,163,275; June 30, 2013 – 73,029,101)	4			4			4
Capital surplus	938,665			898,586			884,238
Retained earnings	2,447,118			2,349,428			2,253,810
Treasury stock (shares at cost: June 30, 2014 – 4,610,898 ; December 31, 2013 – 4,304,782; June 30, 2013 – 4,289,893)	(222,686		)	(202,346		)	(199,429		)
Accumulated other comprehensive income (loss)	49,416			(25,623		)	19,014
Total shareholders’ equity	3,212,517			3,020,049			2,957,637
Non-controlling interests	35,129			34,924			35,245
Total equity	3,247,646			3,054,973			2,992,882
Total liabilities and equity	$	27,843,770		$	27,015,432		$	27,808,200

See accompanying notes to consolidated financial statements.

- 50 -

Consolidated Statements of Changes in Equity (Unaudited) (In thousands)

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

Balance, December 31, 2012	72,415	$	4	$	859,278	$	2,137,541		4,088	$	(188,883	)	$	149,920		$	2,957,860		$	35,821		$	2,993,681
Net income	—	—		—		167,895			—	—			—			167,895			1,052			168,947
Other comprehensive loss	—	—		—		—			—	—			(130,906		)	(130,906		)	—			(130,906		)
Issuance of shares for equity compensation	614	—		23,425		—			202	(10,546		)	—			12,879			—			12,879
Tax effect from equity compensation, net	—	—		178		—			—	—			—			178			—			178
Stock-based compensation	—	—		1,357		—			—	—			—			1,357			—			1,357
Cash dividends on common stock	—	—		—		(51,626		)	—	—			—			(51,626		)	—			(51,626		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			(1,628		)	(1,628		)

Balance, June 30, 2013	73,029	$	4	$	884,238	$	2,253,810		4,290	$	(199,429	)	$	19,014		$	2,957,637		$	35,245		$	2,992,882

Balances at December 31, 2013	73,163	$	4	$	898,586	$	2,349,428		4,305	$	(202,346	)	$	(25,623	)	$	3,020,049		$	34,924		$	3,054,973
Net income	—	—		—		152,485			—	—			—			152,485			1,287			153,772
Other comprehensive income	—	—		—		—			—	—			75,039			75,039			—			75,039
Issuance of shares for equity compensation	734	—		10,964		—			306	(20,340		)	—			(9,376		)	—			(9,376		)
Tax effect from equity compensation, net	—	—		7,333		—			—	—			—			7,333			—			7,333
Stock-based compensation	—	—		21,782		—			—	—			—			21,782			—			21,782
Cash dividends on common stock	—	—		—		(54,795		)	—	—			—			(54,795		)	—			(54,795		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			(1,082		)	(1,082		)

Balance, June 30, 2014	73,897	$	4	$	938,665	$	2,447,118		4,611	$	(222,686	)	$	49,416		$	3,212,517		$	35,129		$	3,247,646

See accompanying notes to consolidated financial statements.

- 51 -

Consolidated Statements of Cash Flows (Unaudited) (in thousands)

	Six Months Ended
	June 30,
	2014			2013
Cash Flows From Operating Activities:
Net income	$	153,772		$	168,947
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	—			(8,000		)
Change in fair value of mortgage servicing rights	10,905			(16,973		)
Unrealized losses (gains) from derivative contracts	(1,371		)	6,137
Tax effect from equity compensation, net	(7,333		)	(178		)
Change in bank-owned life insurance	(4,380		)	(5,462		)
Stock-based compensation	6,710			1,357
Depreciation and amortization	26,090			27,634
Net amortization of securities discounts and premiums	28,279			32,867
Net realized gains on financial instruments and other assets	(2,021		)	(9,784		)
Net gain on mortgage loans held for sale	(29,733		)	(47,998		)
Mortgage loans originated for sale	(1,818,145		)	(2,152,353		)
Proceeds from sale of mortgage loans held for sale	1,721,995			2,201,324
Capitalized mortgage servicing rights	(21,816		)	(25,932		)
Change in trading and fair value option securities	(28,867		)	100,889
Change in receivables	4,608			(23,890		)
Change in other assets	45,929			38,648
Change in accrued interest, taxes and expense	(124,579		)	(1,001		)
Change in other liabilities	23,629			(13,407		)
Net cash provided by (used in) operating activities	(16,328		)	272,825
Cash Flows From Investing Activities:
Proceeds from maturities or redemptions of investment securities	34,074			99,020
Proceeds from maturities or redemptions of available for sale securities	805,216			1,689,165
Purchases of investment securities	(9,593		)	(217,160		)
Purchases of available for sale securities	(1,597,081		)	(3,173,504		)
Proceeds from sales of available for sale securities	1,340,190			1,837,970
Change in amount receivable on unsettled securities transactions	3,149			28,905
Loans originated, net of principal collected	(604,979		)	(130,381		)
Net payments on derivative asset contracts	(117,280		)	(229,888		)
Acquisitions, net of cash acquired	(21,898		)	—
Proceeds from disposition of assets	52,871			53,191
Purchases of assets	(56,778		)	(115,250		)
Net cash used in investing activities	(172,109		)	(157,932		)
Cash Flows From Financing Activities:
Net change in demand deposits, transaction deposits and savings accounts	382,704			(1,482,810		)
Net change in time deposits	(80,167		)	(200,020		)
Net change in other borrowed funds	223,824			1,311,756
Net proceeds on derivative liability contracts	119,269			220,024
Net change in derivative margin accounts	(218,491		)	114,958
Change in amount due on unsettled security transactions	78,797			(248,084		)
Issuance of common and treasury stock, net	(9,376		)	12,879
Tax effect from equity compensation, net	7,333			178
Dividends paid	(54,795		)	(51,626		)
Net cash provided by (used in) financing activities	449,098			(322,745		)
Net increase (decrease) in cash and cash equivalents	260,661			(207,852		)
Cash and cash equivalents at beginning of period	1,087,213			1,286,239
Cash and cash equivalents at end of period	$	1,347,874		$	1,078,387

Cash paid for interest	$	32,535		$	36,615
Cash paid for taxes	$	50,187		$	73,527
Net loans and bank premises transferred to repossessed real estate and other assets	$	38,797		$	52,967
Residential mortgage loans guaranteed by U.S. government agencies that became eligible for repurchase during the period	$	63,898		$	55,938
Conveyance of other real estate owned guaranteed by U.S. government agencies	$	18,312		$	22,527
Issuance of shares in settlement of accrued executive compensation	$	15,072		$	—

See accompanying notes to consolidated financial statements.

- 52 -

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 2013 Form 10-K filed with the Securities and Exchange Commission, which contains audited financial statements. Amounts presented as of December 31, 2013 have been derived from the audited financial statements included in BOK Financial’s 2013 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 six -month period ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 .

Newly Adopted and Pending Accounting Policies

Financial Accounting Standards Board (“FASB”)

FASB Accounting Standards Update No. 2013-08, Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements (ASU 2013-08)

On June 7, 2013, the FASB issued ASU 2013-08 which amends the criteria an entity would need to meet to qualify as an investment company under ASC 946, Financial Services - Investment Companies. ASU 2013-08 also provides additional implementation guidance for the assessment and requires additional disclosures. ASU 2013-08 was effective prospectively during interim and annual periods beginning after December 15, 2013, with early adoption prohibited. The adoption of ASU 2013-08 did not have a material impact on the Company's consolidated financial statements.

FASB Accounting Standards Update No. 2014-01, Accounting for Investments in Qualified Affordable Housing Projects (ASU 2014-01)

On January 15, 2014, the FASB issued ASU 2014-01 to simplify the amortization method an entity uses and modify the criteria to elect a measurement and presentation alternative, including the simplified amortization method, for certain investments in qualified affordable housing projects. This alternative permits the entity to present the investment's performance net of the related tax benefits as part of income tax expense. ASU 2014-01 is effective for the Company for interim and annual periods beginning after December 15, 2014. Early adoption is permitted. Adoption of ASU 2014-01 may affect income statement presentation, but otherwise is not expected to have a material impact on the Company's consolidated financial statements.

- 53 -

FASB Accounting Standards Update No. 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure

On January 17, 2014, the FASB issued ASU 2014-04 to clarify when an entity is considered to have obtained physical possession (from an in-substance possession or foreclosure) of a residential real estate property collateralizing a mortgage loan. Upon physical possession of such real property, an entity is required to reclassify the nonperforming mortgage loan to other real estate owned. ASU 2014-04 is effective for the Company for interim and annual periods beginning after December 15, 2014. Early adoption is permitted. Adoption of ASU 2014-04 is not expected to have a material impact on the Company's consolidated financial statements.

( 2 ) Securities

Trading Securities

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



	June 30, 2014				December 31, 2013					June 30, 2013
	Fair Value		Net Unrealized Gain (Loss)		Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. Government agency debentures	$	19,027	$	6	$	34,120	$	77		$	60,713	$	(552	)
U.S. agency residential mortgage-backed securities	13,540		3		21,011		123			43,858		38
Municipal and other tax-exempt securities	32,950		28		27,350		(182		)	53,819		(1,271		)
Other trading securities	35,580		20		9,135		(7		)	32,201		(717		)
Total	$	101,097	$	57	$	91,616	$	11		$	190,591	$	(2,502	)

Investment Securities

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



	June 30, 2014
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value ¹		Value		Gain		Loss
Municipal and other tax-exempt	$	425,221	$	425,221	$	429,051	$	4,442	$	(612	)
U.S. agency residential mortgage-backed securities – Other	40,879		41,973		44,176		2,203		—
Other debt securities	182,743		182,743		197,584		14,914		(73		)
Total	$	648,843	$	649,937	$	670,811	$	21,559	$	(685	)


¹	Carrying value includes $1.1 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.

- 54 -



	December 31, 2013
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value ¹		Value		Gain		Loss
Municipal and other tax-exempt	$	440,187	$	440,187	$	439,870	$	2,452	$	(2,769	)
U.S. agency residential mortgage-backed securities – Other	48,351		50,182		51,864		1,738		(56		)
Other debt securities	187,509		187,509		195,393		8,497		(613		)
Total	$	676,047	$	677,878	$	687,127	$	12,687	$	(3,438	)


¹	Carrying value includes $1.8 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.



	June 30, 2013
	Amortized		Carrying		Fair		Gross Unrealized ²
	Cost		Value ¹		Value		Gain		Loss
Municipal and other tax-exempt	$	375,317	$	375,317	$	371,690	$	2,189	$	(5,816	)
U.S. agency residential mortgage-backed securities – Other	61,152		64,172		66,796		2,624		—
Other debt securities	176,301		176,301		187,219		10,978		(60		)
Total	$	612,770	$	615,790	$	625,705	$	15,791	$	(5,876	)


¹	Carrying value includes $3.0 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.

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 .

- 55 -

The amortized cost and fair values of investment securities at June 30, 2014 , by contractual maturity, are as shown in the following table (dollars in thousands):



	Less than One Year			One to Five Years			Six to Ten Years			Over Ten Years			Total			Weighted Average Maturity²
Municipal and other tax-exempt:
Carrying value	$	36,962		$	296,908		$	52,328		$	39,023		$	425,221		4.14
Fair value	37,136			298,655			52,567			40,693			429,051
Nominal yield¹	1.99		%	1.70		%	2.64		%	5.35		%	2.18		%
Other debt securities:
Carrying value	12,853			32,853			47,576			89,461			182,743			8.32
Fair value	12,909			33,627			50,213			100,835			197,584
Nominal yield	3.54		%	4.78		%	5.37		%	6.32		%	5.60		%
Total fixed maturity securities:
Carrying value	$	49,815		$	329,761		$	99,904		$	128,484		$	607,964		5.39
Fair value	50,045			332,282			102,780			141,528			626,635
Nominal yield	2.39		%	2.01		%	3.94		%	6.02		%	3.20		%
Residential mortgage-backed securities:
Carrying value													$	41,973		³
Fair value													44,176
Nominal yield ⁴													2.74		%
Total investment securities:
Carrying value													$	649,937
Fair value													670,811
Nominal yield													3.17		%


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 2.9 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.

- 56 -

Available for Sale Securities

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



	June 30, 2014
	Amortized		Fair		Gross Unrealized ¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,023	$	1,024	$	1	$	—		$	—
Municipal and other tax-exempt	63,931		64,970		1,624		(585		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,297,579		4,364,168		82,436		(15,847		)	—
FHLMC	2,055,924		2,068,940		27,019		(14,003		)	—
GNMA	815,201		820,454		8,850		(3,597		)	—
Other	5,489		5,942		453		—			—
Total U.S. government agencies	7,174,193		7,259,504		118,758		(33,447		)	—
Private issue:
Alt-A loans	70,880		75,700		4,820		—			—
Jumbo-A loans	97,939		103,342		5,889		—			(486		)
Total private issue	168,819		179,042		10,709		—			(486		)
Total residential mortgage-backed securities	7,343,012		7,438,546		129,467		(33,447		)	(486		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,129,521		2,115,295		5,539		(19,765		)	—
Other debt securities	34,501		34,528		195		(168		)	—
Perpetual preferred stock	22,171		24,730		2,559		—			—
Equity securities and mutual funds	19,507		20,053		780		(234		)	—
Total	$	9,613,666	$	9,699,146	$	140,165	$	(54,199	)	$	(486	)

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.

- 57 -



	December 31, 2013
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,042	$	1,042	$	—	$	—		$	—
Municipal and other tax-exempt	73,232		73,775		1,606		(1,063		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,224,327		4,232,332		68,154		(60,149		)	—
FHLMC	2,308,341		2,293,943		25,813		(40,211		)	—
GNMA	1,151,225		1,152,128		9,435		(8,532		)	—
Other	36,296		37,607		1,311		—			—
Total U.S. government agencies	7,720,189		7,716,010		104,713		(108,892		)	—
Private issue:
Alt-A loans	104,559		107,212		4,386		—			(1,733		)
Jumbo-A loans	109,622		113,887		4,974		—			(709		)
Total private issue	214,181		221,099		9,360		—			(2,442		)
Total residential mortgage-backed securities	7,934,370		7,937,109		114,073		(108,892		)	(2,442		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,100,146		2,055,804		1,042		(45,384		)	—
Other debt securities	35,061		35,241		368		(188		)	—
Perpetual preferred stock	22,171		22,863		705		(13		)	—
Equity securities and mutual funds	19,069		21,328		2,326		(67		)	—
Total	$	10,185,091	$	10,147,162	$	120,120	$	(155,607	)	$	(2,442	)

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.



	June 30, 2013
	Amortized		Fair		Gross Unrealized ¹
	Cost		Value		Gain		Loss			OTTI ²
U.S. Treasury	$	1,061	$	1,060	$	—	$	(1	)	$	—
Municipal and other tax-exempt	95,974		95,103		1,653		(1,870		)	(654		)
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,648,337		4,687,141		78,285		(39,481		)	—
FHLMC	2,695,506		2,715,896		32,994		(12,604		)	—
GNMA	916,646		925,081		11,163		(2,728		)	—
Other	42,563		44,677		2,114		—			—
Total U.S. government agencies	8,303,052		8,372,795		124,556		(54,813		)	—
Private issue:
Alt-A loans	113,804		115,036		2,905		—			(1,673		)
Jumbo-A loans	178,581		182,139		4,129		(274		)	(297		)
Total private issue	292,385		297,175		7,034		(274		)	(1,970		)
Total residential mortgage-backed securities	8,595,437		8,669,970		131,590		(55,087		)	(1,970		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,885,585		1,846,943		343		(38,985		)	—
Other debt securities	35,622		35,894		479		(207		)	—
Perpetual preferred stock	22,172		25,583		3,439		(28		)	—
Equity securities and mutual funds	19,990		23,521		3,736		(205		)	—
Total	$	10,655,841	$	10,698,074	$	141,240	$	(96,383	)	$	(2,624	)


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.

- 58 -

The amortized cost and fair values of available for sale securities at June 30, 2014 , 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	$	1,023		$	—		$	—		$	—			$	1,023		0.63
Fair value	1,024			—			—			—				1,024
Nominal yield	0.24		%	—		%	—		%	—		%		0.24		%
Municipal and other tax-exempt:
Amortized cost	$	3,404		$	33,797		$	2,778		$	23,952			$	63,931		8.67
Fair value	3,432			35,004			3,032			23,502				64,970
Nominal yield¹	3.96		%	4.00		%	6.25		%	1.92		%	⁶	3.32		%
Commercial mortgage-backed securities:
Amortized cost	$	—		$	626,496		$	1,156,265		$	346,760			$	2,129,521		8.84
Fair value	—			624,969			1,146,932			343,394				2,115,295
Nominal yield	—		%	1.30		%	1.63		%	1.27		%		1.47		%
Other debt securities:
Amortized cost	$	30,101		$	—		$	—		$	4,400			$	34,501		4.64
Fair value	30,297			—			—			4,231				34,528
Nominal yield	1.80		%	—		%	—		%	1.71		%	⁶	1.79		%
Total fixed maturity securities:
Amortized cost	$	34,528		$	660,293		$	1,159,043		$	375,112			$	2,228,976		8.77
Fair value	34,753			659,973			1,149,964			371,127				2,215,817
Nominal yield	1.97		%	1.44		%	1.64		%	1.32		%		1.53		%
Residential mortgage-backed securities:
Amortized cost														$	7,343,012		²
Fair value														7,438,546
Nominal yield ⁴														1.87		%
Equity securities and mutual funds:
Amortized cost														$	41,678		³
Fair value														44,783
Nominal yield														1.26		%
Total available-for-sale securities:
Amortized cost														$	9,613,666
Fair value														9,699,146
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 years based upon current prepayment assumptions.


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


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


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


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

- 59 -

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



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Proceeds	$	800,405		$	1,083,001		$	1,331,190		$	1,784,881
Gross realized gains	9,894			9,992			16,327			15,784
Gross realized losses	(9,890		)	(6,239		)	(15,083		)	(7,176		)
Related federal and state income tax expense	2			1,460			484			3,349

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):



	June 30, 2014		December 31, 2013		June 30, 2013
Investment:
Carrying value	$	77,835	$	89,087	$	97,286
Fair value	81,248		91,804		100,644

Available for sale:
Amortized cost	5,556,130		5,171,782		5,078,098
Fair value	5,583,008		5,133,530		5,103,507

The secured parties do not have the right to sell or re-pledge these securities. In addition, securities may be 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 June 30, 2014 , March 31, 2014 or June 30, 2013 .

- 60 -

Temporarily Impaired Securities as of June 30, 2014

(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	42	$	—	$	—	$	104,959	$	612	$	104,959	$	612
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	30	3,593		40		808		33		4,401		73
Total investment	72	$	3,593	$	40	$	105,767	$	645	$	109,360	$	685



	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	23	$	571	$	—	$	22,270	$	585	$	22,841	$	585
Residential mortgage-backed securities:
U. S. agencies:
FNMA	33	—		—		890,711		15,847		890,711		15,847
FHLMC	37	255,401		951		712,951		13,052		968,352		14,003
GNMA	7	77,869		6		153,596		3,591		231,465		3,597
Total U.S. agencies	77	333,270		957		1,757,258		32,490		2,090,528		33,447
Private issue ¹ :
Alt-A loans	—	—		—		—		—		—		—
Jumbo-A loans	11	19,976		486		—		—		19,976		486
Total private issue	11	19,976		486		—		—		19,976		486
Total residential mortgage-backed securities	88	353,246		1,443		1,757,258		32,490		2,110,504		33,933
Commercial mortgage-backed securities guaranteed by U.S. government agencies	96	114,048		488		1,242,462		19,277		1,356,510		19,765
Other debt securities	2	—		—		4,231		168		4,231		168
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	80	5,298		195		1,306		39		6,604		234
Total available for sale	289	$	473,163	$	2,126	$	3,027,527	$	52,559	$	3,500,690	$	54,685

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



Alt-A loans	—	—	—	—	—	—	—
Jumbo-A loans	11	19,976	486	—	—	19,976	486

- 61 -

Temporarily Impaired Securities as of December 31, 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	107	$	166,382	$	1,921	$	53,073	$	848	$	219,455	$	2,769
U.S. Agency residential mortgage-backed securities – Other	2	15,224		56		—		—		15,224		56
Other debt securities	30	10,932		549		777		64		11,709		613
Total investment	139	$	192,538	$	2,526	$	53,850	$	912	$	246,388	$	3,438



	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	27	$	13,286	$	245	$	17,805	$	818	$	31,091	$	1,063
Residential mortgage-backed securities:
U. S. agencies:
FNMA	81	2,281,491		60,149		—		—		2,281,491		60,149
FHLMC	50	1,450,588		40,211		—		—		1,450,588		40,211
GNMA	27	647,058		8,532		—		—		647,058		8,532
Total U.S. agencies	158	4,379,137		108,892		—		—		4,379,137		108,892
Private issue ¹ :
Alt-A loans	7	11,043		756		30,774		977		41,817		1,733
Jumbo-A loans	9	14,642		709		—		—		14,642		709
Total private issue	16	25,685		1,465		30,774		977		56,459		2,442
Total residential mortgage-backed securities	174	4,404,822		110,357		30,774		977		4,435,596		111,334
Commercial mortgage-backed securities guaranteed by U.S. government agencies	123	1,800,717		45,302		2,286		82		1,803,003		45,384
Other debt securities	3	4,712		188		—		—		4,712		188
Perpetual preferred stocks	1	4,988		13		—		—		4,988		13
Equity securities and mutual funds	118	2,070		67		—		—		2,070		67
Total available for sale	446	$	6,230,595	$	156,172	$	50,865	$	1,877	$	6,281,460	$	158,049


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



Alt-A loans	7	$	11,043	$	756	$	30,774	$	977	$	41,817	$	1,733
Jumbo-A loans	9	14,642		709		—		—		14,642		709

- 62 -

Temporarily Impaired Securities as of June 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	149	$	271,897	$	5,816	$	—	$	—	$	271,897	$	5,816
U.S. Agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	14	841		60		—		—		841		60
Total investment	163	$	272,738	$	5,876	$	—	$	—	$	272,738	$	5,876



	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	1	$	1,060	$	1	$	—	$	—	$	1,060	$	1
Municipal and other tax-exempt ¹	86	$	66,168	$	2,524	$	—	$	—	$	66,168	$	2,524
Residential mortgage-backed securities:
U. S. agencies:
FNMA	72	2,196,603		39,481		—		—		2,196,603		39,481
FHLMC	38	1,202,545		12,604		—		—		1,202,545		12,604
GNMA	13	197,149		2,728		—		—		197,149		2,728
Total U.S. agencies	123	3,596,297		54,813		—		—		3,596,297		54,813
Private issue ¹ :
Alt-A loans	10	51,681		1,236		3,379		437		55,060		1,673
Jumbo-A loans	2	17,615		296		12,298		275		29,913		571
Total private issue	12	69,296		1,532		15,677		712		84,973		2,244
Total residential mortgage-backed securities	135	3,665,593		56,345		15,677		712		3,681,270		57,057
Commercial mortgage-backed securities guaranteed by U.S. government agencies	113	1,730,306		38,985		—		—		1,730,306		38,985
Other debt securities	4	5,193		207		—		—		5,193		207
Perpetual preferred stocks	1	4,973		28		—		—		4,973		28
Equity securities and mutual funds	7	3,558		205		—		—		3,558		205
Total available for sale	347	$	5,476,851	$	98,295	$	15,677	$	712	$	5,492,528	$	99,007


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	$	11,731	$	654	$	—	$	—	$	11,731	$	654
Alt-A loans	10	51,681		1,236		3,379		437		55,060		1,673
Jumbo-A loans	2	17,615		296		—		—		17,615		296

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.

- 63 -

For debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be required to sell impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and securities portfolio management. Based on this evaluation as of June 30, 2014 , the Company does not intend to sell any impaired available for sale securities before fair value recovers to the current amortized cost and it is more-likely-than-not that the Company 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 is considered temporary unless specific contrary information is identified. None of the debt securities rated investment grade were considered to be other-than-temporarily impaired at June 30, 2014 .

- 64 -

At June 30, 2014 , 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	$	—	$	—	$	271,498	$	272,244	$	16,497	$	16,721	$	—	$	—	$	137,226	$	140,086	$	425,221	$	429,051
Mortgage-backed securities -- other	41,973		44,176		—		—		—		—		—		—		—		—		41,973		44,176
Other debt securities	—		—		160,353		175,071		—		—		—		—		22,390		22,513		182,743		197,584
Total investment securities	$	41,973	$	44,176	$	431,851	$	447,315	$	16,497	$	16,721	$	—	$	—	$	159,616	$	162,599	$	649,937	$	670,811



	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	$	1,023	$	1,024	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,023	$	1,024
Municipal and other tax-exempt	—		—		40,967		42,360		11,505		11,225		—		—		11,459		11,385		63,931		64,970
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4,297,579		4,364,168		—		—		—		—		—		—		—		—		4,297,579		4,364,168
FHLMC	2,055,924		2,068,940		—		—		—		—		—		—		—		—		2,055,924		2,068,940
GNMA	815,201		820,454		—		—		—		—		—		—		—		—		815,201		820,454
Other	5,489		5,942		—		—		—		—		—		—		—		—		5,489		5,942
Total U.S. government agencies	7,174,193		7,259,504		—		—		—		—		—		—		—		—		7,174,193		7,259,504
Private issue:
Alt-A loans	—		—		—		—		—		—		70,880		75,700		—		—		70,880		75,700
Jumbo-A loans	—		—		—		—		—		—		97,939		103,342		—		—		97,939		103,342
Total private issue	—		—		—		—		—		—		168,819		179,042		—		—		168,819		179,042
Total residential mortgage-backed securities	7,174,193		7,259,504		—		—		—		—		168,819		179,042		—		—		7,343,012		7,438,546
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,129,521		2,115,295		—		—		—		—		—		—		—		—		2,129,521		2,115,295
Other debt securities	—		—		4,400		4,231		30,101		30,297		—		—		—		—		34,501		34,528
Perpetual preferred stock	—		—		—		—		11,406		12,588		10,765		12,142		—		—		22,171		24,730
Equity securities and mutual funds	—		—		4		505		—		—		—		—		19,503		19,548		19,507		20,053
Total available for sale securities	$	9,304,737	$	9,375,823	$	45,371	$	47,096	$	53,012	$	54,110	$	179,584	$	191,184	$	30,962	$	30,933	$	9,613,666	$	9,699,146


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.

- 65 -

At June 30, 2014 , the entire portfolio of privately issued residential mortgage-backed securities was rated below investment grade. The gross unrealized loss on these securities totaled $486 thousand . 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:



	June 30, 2014	December 31, 2013	June 30, 2013

Unemployment rate	Held constant at 6.7% over the next 12 months and remains at 6.7% thereafter.	Increasing to 7.3% over the next 12 months and remain at 7.3% thereafter.	Increasing to 8% over the next 12 months and remain at 8% thereafter.
Housing price appreciation/depreciation	Starting with current depreciated housing prices based on information derived from the FHFA ¹ , appreciating 4% 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 , appreciating 4% 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 , appreciating 5% over the next 12 months, then flat for he following 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. The 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 increases 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. No credit loss impairments were recognized in earnings on privately issued residential mortgage-backed securities during the three months ended June 30, 2014 .

- 66 -

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



						Credit Losses Recognized
						Three months ended
						June 30, 2014			Life-to-date
	Number of Securities	Amortized Cost		Fair Value		Number of Securities	Amount		Number of Securities	Amount
Alt-A	14	$	70,880	$	75,700	—	$	—	14	$	36,127
Jumbo-A	30	97,939		103,342		—	—		29	18,220
Total	44	$	168,819	$	179,042	—	$	—	43	$	54,347

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 June 30, 2014 .

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



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014			2013
Balance of credit-related OTTI recognized on available for sale debt, beginning of period	$	54,347	$	75,475	$	67,346		$	75,228
Additions for credit-related OTTI not previously recognized	—		552		—			552
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	—		—		—			247
Reductions for change in intent to hold before recovery	—		—		—			—
Sales	—		—		(12,999		)	—
Balance of credit-related OTTI recognized on available for sale debt securities, end of period	$	54,347	$	76,027	$	54,347		$	76,027

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

- 67 -

Fair Value Option Securities

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

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



	June 30, 2014					December 31, 2013					June 30, 2013
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. agency residential mortgage-backed securities	$	181,205	$	(1,720	)	$	157,431	$	(8,378	)	$	203,816	$	(8,048	)
Other securities	4,469		387			9,694		209			1,940		(8		)
Total	$	185,674	$	(1,333	)	$	167,125	$	(8,169	)	$	205,756	$	(8,056	)

Restricted Equity Securities

Restricted equity securities include stock we are required to hold as members of the Federal Reserve system and the Federal Home Loan Banks ("FHLB"). Restricted equity securities are carried at cost as these securities do not have a readily determined fair value because ownership of these shares are restricted and lacks a market. A summary of restricted equity securities follows (in thousands):



	June 30, 2014		December 31, 2013		June 30, 2013
Federal Reserve stock	$	33,971	$	33,742	$	33,695
Federal Home Loan Bank stock	57,242		51,498		124,152
Total	$	91,213	$	85,240	$	157,847

- 68 -

( 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 June 30, 2014 , 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 $21 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 the 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 June 30, 2014 , 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 6 , 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 6 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.

- 69 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at June 30, 2014 (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	$	14,576,481	$	134,411	$	(53,746	)	$	80,665	$	—		$	80,665
Interest rate swaps	1,266,228		39,974		—			39,974		—			39,974
Energy contracts	1,063,840		67,831		(23,169		)	44,662		—			44,662
Agricultural contracts	36,050		2,528		(223		)	2,305		—			2,305
Foreign exchange contracts	242,866		174,802		—			174,802		—			174,802
Equity option contracts	205,904		16,962		—			16,962		(1,690		)	15,272
Total customer risk management programs	17,391,369		436,508		(77,138		)	359,370		(1,690		)	357,680
Interest rate risk management programs	—		—		—			—		—			—
Total derivative contracts	$	17,391,369	$	436,508	$	(77,138	)	$	359,370	$	(1,690	)	$	357,680

	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	$	14,734,106	$	131,256	$	(53,746	)	$	77,510	$	—		$	77,510
Interest rate swaps	1,266,228		40,218		—			40,218		(19,700		)	20,518
Energy contracts	1,049,835		66,742		(23,169		)	43,573		(36,355		)	7,218
Agricultural contracts	36,036		2,538		(223		)	2,315		(2,298		)	17
Foreign exchange contracts	242,791		174,477		—			174,477		(680		)	173,797
Equity option contracts	205,904		16,962		—			16,962		—			16,962
Total customer risk management programs	17,534,900		432,193		(77,138		)	355,055		(59,033		)	296,022
Interest rate risk management programs	47,000		1,829		—			1,829		—			1,829
Total derivative contracts	$	17,581,900	$	434,022	$	(77,138	)	$	356,884	$	(59,033	)	$	297,851


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

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The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2013 (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	$	10,817,159	$	102,921	$	(46,623	)	$	56,298	$	—		$	56,298
Interest rate swaps	1,283,379		44,124		—			44,124		(731		)	43,393
Energy contracts	1,263,266		48,078		(29,957		)	18,121		(2,575		)	15,546
Agricultural contracts	100,886		2,060		(1,166		)	894		—			894
Foreign exchange contracts	136,543		136,543		—			136,543		(2,147		)	134,396
Equity option contracts	210,816		17,957		—			17,957		(3,472		)	14,485
Total customer risk management programs	13,812,049		351,683		(77,746		)	273,937		(8,925		)	265,012
Interest rate risk management programs	—		—		—			—		—			—
Total derivative contracts	$	13,812,049	$	351,683	$	(77,746	)	$	273,937	$	(8,925	)	$	265,012

	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	$	10,982,049	$	99,830	$	(46,623	)	$	53,207	$	—		$	53,207
Interest rate swaps	1,283,379		44,377		—			44,377		(17,853		)	26,524
Energy contracts	1,216,426		46,095		(29,957		)	16,138		(6,055		)	10,083
Agricultural contracts	99,191		2,009		(1,166		)	843		—			843
Foreign exchange contracts	135,237		135,237		—			135,237		(294		)	134,943
Equity option contracts	210,816		17,957		—			17,957		—			17,957
Total customer risk management programs	13,927,098		345,505		(77,746		)	267,759		(24,202		)	243,557
Interest rate risk management programs	47,000		3,628		—			3,628		—			3,628
Total derivative contracts	$	13,974,098	$	349,133	$	(77,746	)	$	271,387	$	(24,202	)	$	247,185


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

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The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at June 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	$	16,351,395	$	545,290	$	(268,087	)	$	277,203	$	—		$	277,203
Interest rate swaps	1,381,836		51,745		—			51,745		—			51,745
Energy contracts	1,501,959		65,414		(35,376		)	30,038		(2,537		)	27,501
Agricultural contracts	207,439		5,871		(4,658		)	1,213		—			1,213
Foreign exchange contracts	177,643		177,643		—			177,643		—			177,643
Equity option contracts	211,595		13,469		—			13,469		(2,568		)	10,901
Total customer risk management programs	19,831,867		859,432		(308,121		)	551,311		(5,105		)	546,206
Interest rate risk management programs	—		—		—			—		—			—
Total derivative contracts	$	19,831,867	$	859,432	$	(308,121	)	$	551,311	$	(5,105	)	$	546,206

	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	$	16,439,531	$	540,540	$	(268,087	)	$	272,453	$	—		$	272,453
Interest rate swaps	1,381,836		52,095		—			52,095		(19,381		)	32,714
Energy contracts	1,441,957		63,515		(35,376		)	28,139		(5,865		)	22,274
Agricultural contracts	207,329		5,824		(4,658		)	1,166		—			1,166
Foreign exchange contracts	177,187		177,187		—			177,187		—			177,187
Equity option contracts	211,595		13,469		—			13,469		—			13,469
Total customer risk management programs	19,859,435		852,630		(308,121		)	544,509		(25,246		)	519,263
Interest rate risk management programs	47,000		2,728		—			2,728		—			2,728
Total derivative contracts	$	19,906,435	$	855,358	$	(308,121	)	$	547,237	$	(25,246	)	$	521,991


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

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



	Three Months Ended
	June 30, 2014				June 30, 2013
	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	$	224	$	—	$	1,716	$	—
Interest rate swaps	524		—		768		—
Energy contracts	2,613		—		2,436		—
Agricultural contracts	38		—		77		—
Foreign exchange contracts	333		—		172		—
Equity option contracts	—		—		—		—
Total customer risk management programs	3,732		—		5,169		—
Interest Rate Risk Management Programs	—		831		—		(2,527		)
Total Derivative Contracts	$	3,732	$	831	$	5,169	$	(2,527	)



	Six Months Ended
	June 30, 2014				June 30, 2013
	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	$	64	$	—	$	1,701	$	—
Interest rate swaps	1,031		—		1,535		—
Energy contracts	3,484		—		4,219		—
Agricultural contracts	101		—		185		—
Foreign exchange contracts	552		—		360		—
Equity option contracts	—		—		—		—
Total customer risk management programs	5,232		—		8,000		—
Interest Rate Risk Management Programs	—		1,799		—		(3,468		)
Total Derivative Contracts	$	5,232	$	1,799	$	8,000	$	(3,468	)

Net interest revenue was not significantly impacted by the settlement of amounts receivable or payable on interest rate swaps for the three and six months ended June 30, 2014 and 2013 , respectively.

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( 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's 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 Sheets. 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):



	June 30, 2014								December 31, 2013
	Fixed Rate		Variable Rate		Non-accrual		Total		Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	1,681,348	$	6,669,210	$	17,103	$	8,367,661	$	1,637,620	$	6,288,841	$	16,760	$	7,943,221
Commercial real estate	744,101		1,876,405		34,472		2,654,978		770,908		1,603,595		40,850		2,415,353
Residential mortgage	1,753,186		210,689		44,340		2,008,215		1,783,615		226,092		42,319		2,052,026
Consumer	115,185		280,054		765		396,004		135,494		244,950		1,220		381,664
Total	$	4,293,820	$	9,036,358	$	96,680	$	13,426,858	$	4,327,637	$	8,363,478	$	101,149	$	12,792,264
Accruing loans past due (90 days) ¹							$	67							$	1,415



	June 30, 2013
	Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	1,447,823	$	6,239,428	$	20,869	$	7,708,120
Commercial real estate	698,242		1,560,161		58,693		2,317,096
Residential mortgage	1,768,607		230,644		40,534		2,039,785
Consumer	142,737		231,007		2,037		375,781
Total	$	4,057,409	$	8,261,240	$	122,133	$	12,440,782
Accruing loans past due (90 days) ¹							$	2,460


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

At June 30, 2014 , $4.4 billion or 33% of our total loan portfolio is to businesses and individuals attributed to the Texas market and $3.4 billion or 26% of the total loan portfolio is to businesses and individuals attributed to the Oklahoma 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 June 30, 2014 , commercial loans attributed to the Texas market totaled $2.8 billion or 34% of the commercial loan portfolio segment and commercial loans attributed to the Oklahoma market totaled $2.0 billion or 24% of the commercial loan portfolio segment.

The commercial loan portfolio segment is further divided into loan classes. The energy loan class totaled $2.4 billion or 18% of total loans at June 30, 2014 , including $2.1 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 $2.4 billion at June 30, 2014 . Approximately $1.2 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 June 30, 2014 , 33% of commercial real estate loans are secured by properties primarily located in the Dallas and Houston areas of Texas. An additional 17% of commercial real estate loans are secured by properties located primarily in the Tulsa and Oklahoma City metropolitan areas of Oklahoma.

Residential Mortgage and Consumer

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

At June 30, 2014 , residential mortgage loans included $188 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 $799 million at June 30, 2014 . Approximately, 69% of the home equity loan portfolio is comprised of first lien loans and 31% of the home equity portfolio is comprised of junior lien loans. Junior lien loans are distributed 73% to amortizing term loans and 27% 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 June 30, 2014 , outstanding commitments totaled $7.5 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 June 30, 2014 , outstanding standby letters of credit totaled $469 million . Commercial letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is consummated. At June 30, 2014 , outstanding commercial letters of credit totaled $11 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 6 , 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 six months ended June 30, 2014 .

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 June 30, 2014 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	85,246		$	41,589		$	28,307		$	6,211		$	26,965		$	188,318
Provision for loan losses	1,393			(2,958		)	467			1,484			(16		)	370
Loans charged off	(29		)	—			(1,842		)	(1,651		)	—			(3,522		)
Recoveries	1,196			2,621			722			985			—			5,524
Ending balance	$	87,806		$	41,252		$	27,654		$	7,029		$	26,949		$	190,690
Allowance for off-balance sheet credit losses:
Beginning balance	$	576		$	1,040		$	62		$	—		$	—		$	1,678
Provision for off-balance sheet credit losses	(231		)	(138		)	(19		)	18			—			(370		)
Ending balance	$	345		$	902		$	43		$	18		$	—		$	1,308

Total provision for credit losses	$	1,162		$	(3,096	)	$	448		$	1,502		$	(16	)	$	—

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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 six months ended June 30, 2014 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	79,180		$	41,573		$	29,465		$	6,965		$	28,213		$	185,396
Provision for loan losses	5,618			(4,549		)	(49		)	1,024			(1,264		)	780
Loans charged off	(173		)	(220		)	(2,838		)	(3,139		)	—			(6,370		)
Recoveries	3,181			4,448			1,076			2,179			—			10,884
Ending balance	$	87,806		$	41,252		$	27,654		$	7,029		$	26,949		$	190,690
Allowance for off-balance sheet credit losses:
Beginning balance	$	119		$	1,876		$	90		$	3		$	—		$	2,088
Provision for off-balance sheet credit losses	226			(974		)	(47		)	15			—			(780		)
Ending balance	$	345		$	902		$	43		$	18		$	—		$	1,308

Total provision for credit losses	$	5,844		$	(5,523	)	$	(96	)	$	1,039		$	(1,264	)	$	—



	Commercial			Commercial Real Estate			Residential Mortgage			Consumer			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	66,419		$	48,528		$	40,222		$	7,984		$	42,812		$	205,965
Provision for loan losses	223			(1,118		)	597			162			(363		)	(499		)
Loans charged off	(4,538		)	(450		)	(2,057		)	(1,507		)	—			(8,552		)
Recoveries	1,940			2,727			444			1,099			—			6,210
Ending balance	$	64,044		$	49,687		$	39,206		$	7,738		$	42,449		$	203,124
Allowance for off-balance sheet credit losses:
Beginning balance	$	405		$	618		$	72		$	10		$	—		$	1,105
Provision for off-balance sheet credit losses	(3		)	560			(66		)	8			—			499
Ending balance	$	402		$	1,178		$	6		$	18		$	—		$	1,604

Total provision for credit losses	$	220		$	(558	)	$	531		$	170		$	(363	)	$	—

- 79 -



	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	(1,733		)	(3,798		)	323			(743		)	(1,738		)	(7,689		)
Loans charged off	(4,836		)	(5,250		)	(3,836		)	(3,539		)	—			(17,461		)
Recoveries	5,333			3,851			1,016			2,567			—			12,767
Ending balance	$	64,044		$	49,687		$	39,206		$	7,738		$	42,449		$	203,124
Allowance for off-balance sheet credit losses:
Beginning balance	$	475		$	1,353		$	78		$	9		$	—		$	1,915
Provision for off-balance sheet credit losses	(73		)	(175		)	(72		)	9			—			(311		)
Ending balance	$	402		$	1,178		$	6		$	18		$	—		$	1,604

Total provision for credit losses	$	(1,806	)	$	(3,973	)	$	251		$	(734	)	$	(1,738	)	$	(8,000	)

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 30, 2014 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	$	8,350,558	$	84,639	$	17,103	$	3,167	$	8,367,661	$	87,806
Commercial real estate	2,620,506		41,069		34,472		183		2,654,978		41,252
Residential mortgage	1,963,875		27,571		44,340		83		2,008,215		27,654
Consumer	395,239		7,029		765		—		396,004		7,029
Total	13,330,178		160,308		96,680		3,433		13,426,858		163,741

Nonspecific allowance	—		—		—		—		—		26,949

Total	$	13,330,178	$	160,308	$	96,680	$	3,433	$	13,426,858	$	190,690

- 80 -

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 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	$	7,926,461	$	78,607	$	16,760	$	573	$	7,943,221	$	79,180
Commercial real estate	2,374,503		41,440		40,850		133		2,415,353		41,573
Residential mortgage	2,010,483		29,217		41,543		248		2,052,026		29,465
Consumer	380,445		6,965		1,219		—		381,664		6,965
Total	12,691,892		156,229		100,372		954		12,792,264		157,183

Nonspecific allowance	—		—		—		—		—		28,213

Total	$	12,691,892	$	156,229	$	100,372	$	954	$	12,792,264	$	185,396

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 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	$	7,687,251	$	63,492	$	20,869	$	552	$	7,708,120	$	64,044
Commercial real estate	2,258,403		48,493		58,693		1,194		2,317,096		49,687
Residential mortgage	1,999,334		39,028		40,451		178		2,039,785		39,206
Consumer	373,744		7,618		2,037		120		375,781		7,738
Total	12,318,732		158,631		122,050		2,044		12,440,782		160,675

Nonspecific allowance	—		—		—		—		—		42,449

Total	$	12,318,732	$	158,631	$	122,050	$	2,044	$	12,440,782	$	203,124

- 81 -

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 June 30, 2014 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	8,341,114	$	86,893	$	26,547	$	913	$	8,367,661	$	87,806
Commercial real estate	2,654,978		41,252		—		—		2,654,978		41,252
Residential mortgage	203,097		4,169		1,805,118		23,485		2,008,215		27,654
Consumer	295,762		2,980		100,242		4,049		396,004		7,029
Total	11,494,951		135,294		1,931,907		28,447		13,426,858		163,741

Nonspecific allowance	—		—		—		—		—		26,949

Total	$	11,494,951	$	135,294	$	1,931,907	$	28,447	$	13,426,858	$	190,690

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, 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	$	7,888,219	$	78,250	$	55,002	$	930	$	7,943,221	$	79,180
Commercial real estate	2,415,353		41,573		—		—		2,415,353		41,573
Residential mortgage	220,635		5,481		1,831,391		23,984		2,052,026		29,465
Consumer	265,533		2,657		116,131		4,308		381,664		6,965
Total	10,789,740		127,961		2,002,524		29,222		12,792,264		157,183

Nonspecific allowance	—		—		—		—		—		28,213

Total	$	10,789,740	$	127,961	$	2,002,524	$	29,222	$	12,792,264	$	185,396

- 82 -

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at June 30, 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	$	7,689,954	$	62,830	$	18,166	$	1,214	$	7,708,120	$	64,044
Commercial real estate	2,317,096		49,687		—		—		2,317,096		49,687
Residential mortgage	230,359		3,753		1,809,426		35,453		2,039,785		39,206
Consumer	243,384		2,316		132,397		5,422		375,781		7,738
Total	10,480,793		118,586		1,959,989		42,089		12,440,782		160,675

Nonspecific allowance	—		—		—		—		—		42,449

Total	$	10,480,793	$	118,586	$	1,959,989	$	42,089	$	12,440,782	$	203,124

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.

- 83 -

The following table summarizes the Company’s loan portfolio at June 30, 2014 by the risk grade categories (in thousands):



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,395,942	$	22,227	$	1,619	$	—	$	—	$	2,419,788
Services	2,352,450		20,946		3,669		—		—		2,377,065
Wholesale/retail	1,307,426		4,840		5,885		—		—		1,318,151
Manufacturing	442,493		6,866		3,507		—		—		452,866
Healthcare	1,385,395		7,339		1,422		—		—		1,394,156
Other commercial and industrial	374,556		3,593		939		26,485		62		405,635
Total commercial	8,258,262		65,811		17,041		26,485		62		8,367,661

Commercial real estate:
Residential construction and land development	152,228		17,405		15,146		—		—		184,779
Retail	636,332		1,579		4,199		—		—		642,110
Office	389,487		1,139		3,591		—		—		394,217
Multifamily	663,349		14,054		—		—		—		677,403
Industrial	341,449		—		631		—		—		342,080
Other commercial real estate	400,709		2,775		10,905		—		—		414,389
Total commercial real estate	2,583,554		36,952		34,472		—		—		2,654,978

Residential mortgage:
Permanent mortgage	197,005		2,187		3,905		788,784		29,047		1,020,928
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		186,140		1,947		188,087
Home equity	—		—		—		789,759		9,441		799,200
Total residential mortgage	197,005		2,187		3,905		1,764,683		40,435		2,008,215

Consumer	295,552		25		185		99,662		580		396,004

Total	$	11,334,373	$	104,975	$	55,603	$	1,890,830	$	41,077	$	13,426,858

- 84 -

The following table summarizes the Company’s loan portfolio at December 31, 2013 by the risk grade categories (in thousands):



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,347,519	$	2,381	$	1,860	$	—	$	—	$	2,351,760
Services	2,265,984		11,304		4,922		—		—		2,282,210
Wholesale/retail	1,191,791		2,604		6,969		—		—		1,201,364
Manufacturing	381,794		9,365		592		—		—		391,751
Healthcare	1,272,626		34		1,586		—		—		1,274,246
Other commercial and industrial	381,394		4,736		758		54,929		73		441,890
Total commercial	7,841,108		30,424		16,687		54,929		73		7,943,221

Commercial real estate:
Residential construction and land development	173,488		15,393		17,377		—		—		206,258
Retail	579,506		1,684		4,857		—		—		586,047
Office	403,951		1,157		6,391		—		—		411,499
Multifamily	562,800		13,695		7		—		—		576,502
Industrial	243,625		—		252		—		—		243,877
Other commercial real estate	371,628		7,576		11,966		—		—		391,170
Total commercial real estate	2,334,998		39,505		40,850		—		—		2,415,353

Residential mortgage:
Permanent mortgage	210,142		3,283		7,210		815,040		27,069		1,062,744
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		180,821		777		181,598
Home equity	—		—		—		800,420		7,264		807,684
Total residential mortgage	210,142		3,283		7,210		1,796,281		35,110		2,052,026

Consumer	264,536		795		202		115,114		1,017		381,664

Total	$	10,650,784	$	74,007	$	64,949	$	1,966,324	$	36,200	$	12,792,264

- 85 -

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



	Internally Risk Graded						Non-Graded
	Performing		Potential Problem		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,378,187	$	4,282	$	2,277	$	—	$	—	$	2,384,746
Services	2,170,695		26,110		7,448		—		—		2,204,253
Wholesale/retail	1,167,215		1,628		6,700		—		—		1,175,543
Manufacturing	381,729		3,528		876		—		—		386,133
Healthcare	1,116,089		51		2,670		—		—		1,118,810
Other commercial and industrial	410,237		9,395		837		18,105		61		438,635
Total commercial	7,624,152		44,994		20,808		18,105		61		7,708,120

Commercial real estate:
Residential construction and land development	184,216		20,303		21,135		—		—		225,654
Retail	540,872		4,134		8,406		—		—		553,412
Office	450,790		940		7,828		—		—		459,558
Multifamily	491,864		2,141		6,447		—		—		500,452
Industrial	253,732		258		—		—		—		253,990
Other commercial real estate	296,864		12,289		14,877		—		—		324,030
Total commercial real estate	2,218,338		40,065		58,693		—		—		2,317,096

Residential mortgage:
Permanent mortgage	219,222		4,789		6,348		839,113		26,399		1,095,871
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		156,804		83		156,887
Home equity	—		—		—		779,323		7,704		787,027
Total residential mortgage	219,222		4,789		6,348		1,775,240		34,186		2,039,785

Consumer	242,059		930		395		130,755		1,642		375,781

Total	$	10,303,771	$	90,778	$	86,244	$	1,924,100	$	35,889	$	12,440,782

- 86 -

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
	June 30, 2014										Three Months Ended				Six Months Ended
			Recorded Investment								June 30, 2014				June 30, 2014
	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	$	1,646	$	1,619	$	1,619	$	—	$	—	$	1,689	$	—	$	1,739	$	—
Services	6,530		3,669		2,917		752		158		4,125		—		4,295		—
Wholesale/retail	10,966		5,885		5,853		32		9		6,369		—		6,427		—
Manufacturing	3,764		3,507		507		3,000		3,000		3,536		—		2,050		—
Healthcare	2,438		1,422		1,422		—		—		1,433		—		1,504		—
Other commercial and industrial	8,668		1,001		1,001		—		—		923		—		916		—
Total commercial	34,012		17,103		13,319		3,784		3,167		18,075		—		16,931		—

Commercial real estate:
Residential construction and land development	19,441		15,146		14,504		642		162		15,846		—		16,261		—
Retail	5,679		4,199		4,199		—		—		4,413		—		4,529		—
Office	6,039		3,591		3,588		3		3		4,946		—		4,991		—
Multifamily	—		—		—		—		—		—		—		3		—
Industrial	790		631		631		—		—		758		—		441		—
Other real estate loans	17,617		10,905		10,725		180		18		10,925		—		11,436		—
Total commercial real estate	49,566		34,472		33,647		825		183		36,888		—		37,661		—

Residential mortgage:
Permanent mortgage	41,646		32,952		32,817		135		83		34,647		293		33,615		638
Permanent mortgage guaranteed by U.S. government agencies ¹	194,178		188,087		188,087		—		—		187,505		2,054		187,247		4,190
Home equity	9,482		9,441		9,441		—		—		8,453		—		8,353		—
Total residential mortgage	245,306		230,480		230,345		135		83		230,605		2,347		229,215		4,828

Consumer	781		765		765		—		—		870		—		992		—

Total	$	329,665	$	282,820	$	278,076	$	4,744	$	3,433	$	286,438	$	2,347	$	284,799	$	4,828


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 June 30, 2014 , $1.9 million of these loans were nonaccruing and $186 million were accruing based on the guarantee by U.S. government agencies.

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

- 87 -

A summary of impaired loans at December 31, 2013 follows (in thousands):



			Recorded Investment
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance
Commercial:
Energy	$	1,860	$	1,860	$	1,860	$	—	$	—
Services	6,486		4,922		3,791		1,131		516
Wholesale/retail	11,009		6,969		6,937		32		9
Manufacturing	746		592		592		—		—
Healthcare	2,193		1,586		1,538		48		48
Other commercial and industrial	8,532		831		831		—		—
Total commercial	30,826		16,760		15,549		1,211		573

Commercial real estate:
Residential construction and land development	20,804		17,377		17,050		327		107
Retail	6,133		4,857		4,857		—		—
Office	7,848		6,391		6,383		8		8
Multifamily	7		7		7		—		—
Industrial	252		252		252		—		—
Other real estate loans	14,593		11,966		11,779		187		18
Total commercial real estate	49,637		40,850		40,328		522		133

Residential mortgage:
Permanent mortgage	41,870		34,279		33,869		410		248
Permanent mortgage guaranteed by U.S. government agencies ¹	188,436		181,598		181,598		—		—
Home equity	7,537		7,264		7,264		—		—
Total residential mortgage	237,843		223,141		222,731		410		248

Total consumer	1,228		1,219		1,219		—		—

Total	$	319,534	$	281,970	$	279,827	$	2,143	$	954


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, 2013 , $777 thousand of these loans were nonaccruing and $181 million were accruing based on the guarantee by U.S. government agencies.

- 88 -

A summary of impaired loans at June 30, 2013 follows (in thousands):



	As of										For the				For the
	As of June 30, 2013										Three Months Ended				Six Months Ended
			Recorded Investment								June 30, 2013				June 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	$	2,277	$	2,277	$	2,277	$	—	$	—	$	2,327	$	—	$	2,369	$	—
Services	9,631		7,448		6,283		1,165		493		8,461		—		9,769		—
Wholesale/retail	10,916		6,700		6,656		44		11		4,470		—		4,889		—
Manufacturing	1,168		876		876		—		—		1,362		—		1,442		—
Healthcare	3,357		2,670		2,622		48		48		2,816		—		2,918		—
Other commercial and industrial	8,398		898		898		—		—		930		—		1,283		—
Total commercial	35,747		20,869		19,612		1,257		552		20,366		—		22,670		—

Commercial real estate:
Residential construction and land development	24,752		21,135		20,841		294		102		22,299		—		23,633		—
Retail	9,827		8,406		8,406		—		—		8,664		—		8,262		—
Office	9,245		7,828		7,820		8		8		10,340		—		7,329		—
Multifamily	6,447		6,447		4,415		2,032		196		5,474		—		4,577		—
Industrial	—		—		—		—		—		1,099		—		1,984		—
Other real estate loans	17,196		14,877		13,113		1,764		888		14,060		—		13,876		—
Total commercial real estate	67,467		58,693		54,595		4,098		1,194		61,936		—		59,661		—

Residential mortgage:
Permanent mortgage	42,983		32,747		32,495		252		178		35,450		285		36,304		603
Permanent mortgage guaranteed by U.S. government agencies ¹	165,431		156,887		156,887		—		—		158,038		1,628		162,256		3,408
Home equity	7,704		7,704		7,704		—		—		7,382		—		6,980		—
Total residential mortgage	216,118		197,338		197,086		252		178		200,870		1,913		205,540		4,011

Total consumer	2,103		2,037		1,917		120		120		2,105		—		2,373		—

Total	$	321,435	$	278,937	$	273,210	$	5,727	$	2,044	$	285,277	$	1,913	$	290,244	$	4,011


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 June 30, 2013 , $83 thousand of these loans were nonaccruing and $157 million were accruing based on the guarantee by U.S. government agencies.

- 89 -

Troubled Debt Restructurings

A summary of troubled debt restructurings ("TDRs") by accruing status as of June 30, 2014 is as follows (in thousands):



	As of June 30, 2014								Amounts Charged Off During
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
Nonaccruing TDRs:

Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	1,762		742		1,020		148		—		—
Wholesale/retail	3,719		3,598		121		9		—		—
Manufacturing	3,369		369		3,000		3,000		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	726		54		672		—		—		—
Total commercial	9,576		4,763		4,813		3,157		—		—

Commercial real estate:
Residential construction and land development	9,482		1,622		7,860		162		—		—
Retail	3,727		2,535		1,192		—		—		—
Office	2,378		1,416		962		—		—		—
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other real estate loans	3,151		3,151		—		—		—		—
Total commercial real estate	18,738		8,724		10,014		162		—		—

Residential mortgage:
Permanent mortgage	17,182		11,605		5,577		83		107		108
Permanent mortgage guaranteed by U.S. government agencies	855		180		675		—		—		—
Home equity	5,076		3,923		1,153		—		52		65
Total residential mortgage	23,113		15,708		7,405		83		159		173

Consumer	610		440		170		—		1		1

Total nonaccruing TDRs	$	52,037	$	29,635	$	22,402	$	3,402	$	160	$	174

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	57,818		17,269		40,549		—		—		—

Total TDRs	$	109,855	$	46,904	$	62,951	$	3,402	$	160	$	174

- 90 -

A summary of troubled debt restructurings by accruing status as of December 31, 2013 is as follows (in thousands):



	As of
	December 31, 2013
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance
Nonaccruing TDRs:

Commercial:
Energy	$	—	$	—	$	—	$	—
Services	2,235		852		1,383		237
Wholesale/retail	235		89		146		9
Manufacturing	391		—		391		—
Healthcare	—		—		—		—
Other commercial and industrial	771		173		598		—
Total commercial	3,632		1,114		2,518		246

Commercial real estate:
Residential construction and land development	10,148		1,444		8,704		107
Retail	4,359		3,141		1,218		—
Office	5,059		3,872		1,187		—
Multifamily	—		—		—		—
Industrial	—		—		—		—
Other real estate loans	5,011		2,885		2,126		—
Total commercial real estate	24,577		11,342		13,235		107

Residential mortgage:
Permanent mortgage	18,697		12,214		6,483		88
Home equity	4,045		3,531		514		—
Total residential mortgage	22,742		15,745		6,997		88

Consumer	1,008		758		250		—

Total nonaccuring TDRs	$	51,959	$	28,959	$	23,000	$	441

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	54,322		13,384		40,938		—
Total TDRs	$	106,281	$	42,343	$	63,938	$	441

- 91 -

A summary of troubled debt restructurings by accruing status as of June 30, 2013 is as follows (in thousands):



	As of June 30, 2013								Amount Charged Off During
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Nonaccruing TDRs:

Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	3,065		710		2,355		228		—		—
Wholesale/retail	1,107		968		139		12		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	821		189		632		—		—		—
Total commercial	4,993		1,867		3,126		240		—		—

Commercial real estate:
Residential construction and land development	11,734		1,934		9,800		23		54		54
Retail	5,681		1,604		4,077		—		—		627
Office	5,488		1,313		4,175		—		77		77
Multifamily	990		208		782		—		—		—
Industrial	—		—		—		—		—		—
Other real estate loans	8,746		3,739		5,007		—		—		—
Total commercial real estate	32,639		8,798		23,841		23		131		758

Residential mortgage:
Permanent mortgage	17,639		10,917		6,722		54		8		348
Home equity	3,504		3,264		240		—		69		69
Total residential mortgage	21,143		14,181		6,962		54		77		417

Consumer	1,542		1,324		218		78		—		1

Total nonaccruing TDRs	$	60,317	$	26,170	$	34,147	$	395	$	208	$	1,176

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	48,733		12,598		36,135		—		—		—
Total TDRs	$	109,050	$	38,768	$	70,282	$	395	$	208	$	1,176

- 92 -

Troubled debt restructurings generally consist of interest rate concessions, payment stream concessions or a combination of concessions to distressed borrowers. The following tables detail the recorded balance of loans at June 30, 2014 by class that were restructured during the three and six months ended June 30, 2014 by primary type of concession (in thousands):



	Three Months Ended June 30, 2014
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		—		—		—		—		—
Wholesale/retail	—		—		—		—		3,542		—		3,542		3,542
Manufacturing	—		—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—		—		—
Total commercial	—		—		—		—		3,542		—		3,542		3,542

Commercial real estate:
Residential construction and land development	—		—		—		—		—		307		307		307
Retail	—		—		—		—		—		—		—		—
Office	—		—		—		—		—		—		—		—
Multifamily	—		—		—		—		—		—		—		—
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		—		—		—		—
Total commercial real estate	—		—		—		—		—		307		307		307

Residential mortgage:
Permanent mortgage	—		—		—		—		218		1,821		2,039		2,039
Permanent mortgage guaranteed by U.S. government agencies	4,260		6,694		10,954		—		—		230		230		11,184
Home equity	—		—		—		—		—		1,276		1,276		1,276
Total residential mortgage	4,260		6,694		10,954		—		218		3,327		3,545		14,499

Consumer	—		—		—		—		—		33		33		33

Total	$	4,260	$	6,694	$	10,954	$	—	$	3,760	$	3,667	$	7,427	$	18,381

- 93 -



	Six Months Ended June 30, 2014
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		—		—		—		—		—
Wholesale/retail	—		—		—		—		3,542		—		3,542		3,542
Manufacturing	—		—		—		—		3,000		—		3,000		3,000
Healthcare	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		26		26		26
Total commercial	—		—		—		—		6,542		26		6,568		6,568

Commercial real estate:
Residential construction and land development	—		—		—		—		422		307		729		729
Retail	—		—		—		—		—		—		—		—
Office	—		—		—		—		—		—		—		—
Multifamily	—		—		—		—		—		—		—		—
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		—		—		—		—
Total commercial real estate	—		—		—		—		422		307		729		729

Residential mortgage:
Permanent mortgage	—		—		—		—		348		2,062		2,410		2,410
Permanent mortgage guaranteed by U.S. government agencies	5,773		10,300		16,073		—		—		411		411		16,484
Home equity	—		—		—		—		—		1,564		1,564		1,564
Total residential mortgage	5,773		10,300		16,073		—		348		4,037		4,385		20,458

Consumer	—		—		—		—		—		46		46		46

Total	$	5,773	$	10,300	$	16,073	$	—	$	7,312	$	4,416	$	11,728	$	27,801

- 94 -

Troubled debt restructurings generally consist of interest rate 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 six months ended June 30, 2013 by primary type of concession (in thousands):



	Three Months Ended June 30, 2013
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		—		1,140		—		1,140		1,140
Wholesale/retail	—		—		—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—		—		—
Total commercial	—		—		—		—		1,140		—		1,140		1,140

Commercial real estate:
Residential construction and land development	—		—		—		—		—		—		—		—
Retail	—		—		—		—		612		—		612		612
Office	—		—		—		—		3,181		—		3,181		3,181
Multifamily	—		—		—		—		990		—		990		990
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		3,931		—		3,931		3,931
Total commercial real estate	—		—		—		—		8,714		—		8,714		8,714

Residential mortgage:
Permanent mortgage	—		—		—		—		—		1,132		1,132		1,132
Permanent mortgage guaranteed by U.S. government agencies	3,087		5,809		8,896		—		—		—		—		8,896
Home equity	—		—		—		—		—		1,798		1,798		1,798
Total residential mortgage	3,087		5,809		8,896		—		—		2,930		2,930		11,826

Consumer	—		—		—		—		—		777		777		777

Total	$	3,087	$	5,809	$	8,896	$	—	$	9,854	$	3,707	$	13,561	$	22,457

- 95 -



	Six Months Ended June 30, 2013
	Accruing						Nonaccrual								Total
	Payment Stream		Combination & Other		Total		Interest Rate		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		—		1,173		—		1,173		1,173
Wholesale/retail	—		—		—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		147		—		—		147		147
Total commercial	—		—		—		147		1,173		—		1,320		1,320

Commercial real estate:
Residential construction and land development	—		—		—		—		—		—		—		—
Retail	—		—		—		—		612		—		612		612
Office	—		—		—		—		3,181		—		3,181		3,181
Multifamily	—		—		—		—		990		—		990		990
Industrial	—		—		—		—		—		—		—		—
Other real estate loans	—		—		—		—		3,931		—		3,931		3,931
Total commercial real estate	—		—		—		—		8,714		—		8,714		8,714

Residential mortgage:
Permanent mortgage	—		—		—		—		27		1,377		1,404		1,404
Permanent mortgage guaranteed by U.S. government agencies	8,694		8,949		17,643		—		—		—		—		17,643
Home equity	—		—		—		—		—		2,108		2,108		2,108
Total residential mortgage	8,694		8,949		17,643		—		27		3,485		3,512		21,155

Consumer	—		—		—		87		—		823		910		910

Total	$	8,694	$	8,949	$	17,643	$	234	$	9,914	$	4,308	$	14,456	$	32,099

- 96 -

The following table summarizes, by loan class, the recorded investment at June 30, 2014 of loans modified as TDRs within the previous 12 months and for which there was a payment default during the three months ended June 30, 2014 (in thousands):



	Three Months Ended June 30, 2014						Six Months Ended June 30, 2014
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		1,020		1,020		—		1,020		1,020
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		3,000		3,000		—		3,369		3,369
Healthcare	—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—
Total commercial	—		4,020		4,020		—		4,389		4,389

Commercial real estate:
Residential construction and land development	—		422		422		—		422		422
Retail	—		459		459		—		459		459
Office	—		—		—		—		199		199
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other real estate loans	—		—		—		—		—		—
Total commercial real estate	—		881		881		—		1,080		1,080

Residential mortgage:
Permanent mortgage	—		2,324		2,324		—		2,769		2,769
Permanent mortgage guaranteed by U.S. government agencies	20,492		383		20,875		20,912		383		21,295
Home equity	—		1,002		1,002		—		1,021		1,021
Total residential mortgage	20,492		3,709		24,201		20,912		4,173		25,085

Consumer	—		14		14		—		14		14

Total	$	20,492	$	8,624	$	29,116	$	20,912	$	9,656	$	30,568

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.

- 97 -

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



	Three Months Ended June 30, 2013						Six Months Ended June 30, 2013
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		2,007		2,007		—		2,007		2,007
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		33		33
Total commercial	—		2,007		2,007		—		2,040		2,040

Commercial real estate:
Residential construction and land development	—		6,889		6,889		—		6,889		6,889
Retail	—		612		612		—		612		612
Office	—		3,181		3,181		—		3,181		3,181
Multifamily	—		782		782		—		990		990
Industrial	—		—		—		—		—		—
Other real estate loans	—		3,398		3,398		—		3,931		3,931
Total commercial real estate	—		14,862		14,862		—		15,603		15,603

Residential mortgage:
Permanent mortgage	—		1,949		1,949		—		1,969		1,969
Permanent mortgage guaranteed by U.S. government agencies	22,784		—		22,784		26,767		—		26,767
Home equity	—		240		240		—		371		371
Total residential mortgage	22,784		2,189		24,973		26,767		2,340		29,107

Consumer	—		85		85		—		122		122

Total	$	22,784	$	19,143	$	41,927	$	26,767	$	20,105	$	46,872

- 98 -

Nonaccrual & Past Due Loans

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

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2014 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,416,139	$	2,005	$	25	$	1,619	$	2,419,788
Services	2,373,081		315		—		3,669		2,377,065
Wholesale/retail	1,312,255		11		—		5,885		1,318,151
Manufacturing	448,656		703		—		3,507		452,866
Healthcare	1,392,718		16		—		1,422		1,394,156
Other commercial and industrial	404,248		386		—		1,001		405,635
Total commercial	8,347,097		3,436		25		17,103		8,367,661

Commercial real estate:
Residential construction and land development	169,627		6		—		15,146		184,779
Retail	637,609		302		—		4,199		642,110
Office	390,626		—		—		3,591		394,217
Multifamily	677,403		—		—		—		677,403
Industrial	341,449		—		—		631		342,080
Other real estate loans	403,484		—		—		10,905		414,389
Total commercial real estate	2,620,198		308		—		34,472		2,654,978

Residential mortgage:
Permanent mortgage	977,897		10,079		—		32,952		1,020,928
Permanent mortgages guaranteed by U.S. government agencies	27,855		19,231		139,054		1,947		188,087
Home equity	787,863		1,855		41		9,441		799,200
Total residential mortgage	1,793,615		31,165		139,095		44,340		2,008,215

Consumer	394,246		992		1		765		396,004

Total	$	13,155,156	$	35,901	$	139,121	$	96,680	$	13,426,858

- 99 -

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2013 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,347,267	$	2,483	$	150	$	1,860	$	2,351,760
Services	2,276,036		1,210		42		4,922		2,282,210
Wholesale/retail	1,193,905		338		152		6,969		1,201,364
Manufacturing	391,159		—		—		592		391,751
Healthcare	1,272,660		—		—		1,586		1,274,246
Other commercial and industrial	440,973		81		5		831		441,890
Total commercial	7,922,000		4,112		349		16,760		7,943,221

Commercial real estate:
Residential construction and land development	188,434		428		19		17,377		206,258
Retail	580,926		264		—		4,857		586,047
Office	404,505		603		—		6,391		411,499
Multifamily	576,495		—		—		7		576,502
Industrial	243,625		—		—		252		243,877
Other real estate loans	376,699		1,493		1,012		11,966		391,170
Total commercial real estate	2,370,684		2,788		1,031		40,850		2,415,353

Residential mortgage:
Permanent mortgage	1,018,670		9,795		—		34,279		1,062,744
Permanent mortgages guaranteed by U.S. government agencies	21,916		17,290		141,615		777		181,598
Home equity	797,299		3,087		34		7,264		807,684
Total residential mortgage	1,837,885		30,172		141,649		42,320		2,052,026

Consumer	379,417		1,027		1		1,219		381,664

Total	$	12,509,986	$	38,099	$	143,030	$	101,149	$	12,792,264

- 100 -

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2013 is as follows (in thousands):



			Past Due
	Current		30 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,382,377	$	92	$	—	$	2,277	$	2,384,746
Services	2,192,771		1,769		2,265		7,448		2,204,253
Wholesale/retail	1,168,686		—		157		6,700		1,175,543
Manufacturing	385,257		—		—		876		386,133
Healthcare	1,115,187		953		—		2,670		1,118,810
Other commercial and industrial	437,558		160		19		898		438,635
Total commercial	7,681,836		2,974		2,441		20,869		7,708,120

Commercial real estate:
Residential construction and land development	204,519		—		—		21,135		225,654
Retail	542,946		2,060		—		8,406		553,412
Office	451,730		—		—		7,828		459,558
Multifamily	492,306		1,699		—		6,447		500,452
Industrial	253,990		—		—		—		253,990
Other real estate loans	308,373		780		—		14,877		324,030
Total commercial real estate	2,253,864		4,539		—		58,693		2,317,096

Residential mortgage:
Permanent mortgage	1,054,435		8,689		—		32,747		1,095,871
Permanent mortgages guaranteed by U.S. government agencies	22,328		17,670		116,806		83		156,887
Home equity	776,872		2,451		—		7,704		787,027
Total residential mortgage	1,853,635		28,810		116,806		40,534		2,039,785

Consumer	371,243		2,482		19		2,037		375,781

Total	$	12,160,578	$	38,805	$	119,266	$	122,133	$	12,440,782

( 5 ) Acquisitions

On February 28, 2014, the Company acquired GTRUST Financial Corporation ("GTRUST"), a Topeka-based independent trust and asset management company with approximately $631 million of assets under management or custody at the date of acquisition.

On April 30, 2014, the Company acquired MBM Advisors, a Houston-based independent, full service retirement and pension plan investment firm and an SEC registered investment adviser with approximately $1.3 billion of assets under management at the date of acquisition.

The purchase price for these acquisitions totaled approximately $27 million including $23 million paid in cash and $4 million of contingent consideration. The purchase price allocation included $14 million of identifiable intangible assets and $18 million of goodwill. The pro-forma impact of these transactions was not material to the Company's consolidated financial statements.

- 101 -

( 6 ) 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):



	June 30, 2014					December 31, 2013				June 30, 2013
	Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value
Residential mortgage loans held for sale	$	310,341	$	319,508		$	192,266	$	193,584	$	284,454	$	280,962
Residential mortgage loan commitments	546,864		13,616			258,873		2,656		547,508		(1,709		)
Forward sales contracts	828,739		(7,249		)	435,867		4,306		740,752		21,804
			$	325,875				$	200,546			$	301,057

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of June 30, 2014 , December 31, 2013 or June 30, 2013 . No credit losses were recognized on residential mortgage loans held for sale for the six month periods ended June 30, 2014 and 2013 .

Mortgage banking revenue was as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Production revenue:
Residential mortgages loan held for sale	$	17,764		$	17,763		$	29,732		$	47,998
Residential mortgage loan commitments	7,614			(15,052		)	11,001			(14,442		)
Forward sales contracts	(7,651		)	23,645			(11,554		)	22,710
Total production revenue	17,727			26,356			29,179			56,266
Servicing revenue	11,603			10,240			22,995			20,306
Total mortgage banking revenue	$	29,330		$	36,596		$	52,174		$	76,572

Production 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.

- 102 -

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 and purchased mortgage servicing rights are initially recognized at fair value. The Company has elected to carry all mortgage servicing rights at fair value. Changes in the fair value are recognized in earnings as they occur. The unpaid principal balance of loans serviced for others is the primary driver of servicing revenue.

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



	June 30, 2014			December 31, 2013			June 30, 2013
Number of residential mortgage loans serviced for others	110,404			106,137			101,498
Outstanding principal balance of residential mortgage loans serviced for others	$	14,626,291		$	13,718,942		$	12,741,651
Weighted average interest rate	4.36		%	4.40		%	4.47		%
Remaining term (in months)	293			292			291

Activity in capitalized mortgage servicing rights during the three months ended June 30, 2014 was as follows (in thousands):



	Purchased			Originated			Total
Balance, March 31, 2014	$	14,790		$	138,984		$	153,774
Additions, net	—			13,172			13,172
Change in fair value due to loan runoff	(599		)	(4,163		)	(4,762		)
Change in fair value due to market changes	(1,109		)	(5,335		)	(6,444		)
Balance, June 30, 2014	$	13,082		$	142,658		$	155,740

Activity in capitalized mortgage servicing rights during the six months ended June 30, 2014 was as follows (in thousands):



	Purchased			Originated			Total
Balance, December 31, 2013	$	15,935		$	137,398		$	153,333
Additions, net	—			21,816			21,816
Change in fair value due to loan runoff	(1,114		)	(7,390		)	(8,504		)
Change in fair value due to market changes	(1,739		)	(9,166		)	(10,905		)
Balance, June 30, 2014	$	13,082		$	142,658		$	155,740

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



	Purchased			Originated			Total
Balance, March 31, 2013	$	13,203		$	96,637		$	109,840
Additions, net	—			14,499			14,499
Change in fair value due to loan runoff	(940		)	(4,825		)	(5,765		)
Change in fair value due to market changes	3,319			10,996			14,315
Balance, June 30, 2013	$	15,582		$	117,307		$	132,889

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



	Purchased			Originated			Total
Balance, December 31, 2012	$	12,976		$	87,836		$	100,812
Additions, net	—			25,932			25,932
Change in fair value due to loan runoff	(1,811		)	(9,017		)	(10,828		)
Change in fair value due to market changes	4,417			12,556			16,973
Balance, June 30, 2013	$	15,582		$	117,307		$	132,889

- 103 -

Changes in the fair value of mortgage servicing rights are included in Other operating revenue 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:



	June 30, 2014	December 31, 2013	June 30, 2013
Discount rate – risk-free rate plus a market premium	10.20%	10.21%	10.25%
Loan servicing costs – annually per loan based upon loan type:
Performing loans	$60-$105	$60 - $105	$58 - $105
Delinquent loans	$150 - $500	$150 - $500	$135 - $500
Loans in foreclosure	$1,000-$4,250	$1,000 - $4,250	$875 - $4,250
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life	1.69%	1.80%	1.56%

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

Stratification of the residential mortgage loan servicing portfolio and outstanding principal of loans serviced for others by interest rate at June 30, 2014 follows (in thousands):



	< 4.00%			4.00% - 4.99%			5.00% - 5.99%			> 5.99%			Total
Fair value	$	61,918		$	65,639		$	22,702		$	5,481		$	155,740
Outstanding principal of loans serviced for others	$	5,682,055		$	5,687,478		$	2,187,993		$	1,068,765		$	14,626,291
Weighted average prepayment rate ¹	7.33		%	8.26		%	12.60		%	28.53		%	10.03		%


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 June 30, 2014 , 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 $4.0 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 $4.5 million . In the model, changes in the value of servicing rights due to changes in interest rates assume stable relationships between residential mortgage rates and prepayment speeds. Changes in market conditions can cause variations from these assumptions. These factors and others may cause changes in the value of our mortgage servicing rights to differ from our expectations.

The aging status of our mortgage loans serviced for others by investor at June 30, 2014 follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	4,681,165	$	36,913	$	9,828	$	31,543	$	4,759,449
FNMA	4,628,707		25,380		7,206		20,149		4,681,442
GNMA	4,538,079		125,530		35,461		14,487		4,713,557
Other	458,621		6,382		1,922		4,918		471,843
Total	$	14,306,572	$	194,205	$	54,417	$	71,097	$	14,626,291

- 104 -

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 $181 million at June 30, 2014 , $191 million at December 31, 2013 and $212 million at June 30, 2013 . A separate accrual for these off-balance sheet commitments is included in Other liabilities in the Consolidated Balance Sheets totaling $9 million at June 30, 2014 , $10 million at December 31, 2013 and $11 million at June 30, 2013 . At June 30, 2014 , approximately 4% of the loans sold with recourse with an outstanding principal balance of $6.6 million were either delinquent more than 90 days, in bankruptcy or in foreclosure and 5% with an outstanding balance of $10 million were past due 30 to 89 days. The provision for credit losses on loans sold with recourse is included in Mortgage banking costs in the Consolidated Statements of Earnings.

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



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Beginning balance	$	9,066		$	11,420		$	9,562		$	13,158
Provision for recourse losses	183			416			167			(348		)
Loans charged off, net	(559		)	(916		)	(1,039		)	(1,890		)
Ending balance	$	8,690		$	10,920		$	8,690		$	10,920

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 nine loans from the agencies for $ 1.3 million during the second quarter of 2014 . There were two indemnifications on loans paid during the second quarter of 2014 . Losses recognized on indemnifications and repurchases were insignificant.

A summary of unresolved deficiency requests from the agencies follows (in thousands, except for number of unresolved deficiency requests):



	June 30, 2014		June 30, 2013
Number of unresolved deficiency requests	188		464
Aggregate outstanding principal balance subject to unresolved deficiency requests	$	16,497	$	55,517
Unpaid principal balance subject to indemnification by the Company	2,248		1,774

The activity in the accrual for credit losses related to potential loan repurchases and indemnifications under representations and warranties is summarized as follows (in thousands).



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Beginning balance	$	7,877		$	5,877		$	8,845		$	5,291
Provision for repurchase losses	(2,229		)	453			(3,071		)	1,429
Losses on repurchases and indemnifications, net	(75		)	(149		)	(201		)	(539		)
Ending balance	$	5,573		$	6,181		$	5,573		$	6,181

- 105 -

( 7 ) 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 $149 thousand and $500 thousand for the three months ended June 30, 2014 and 2013 , respectively and $297 thousand and $1.0 million for the six months ended June 30, 2014 and 2013 , respectively. The Company made no Pension Plan contributions during the three and six months ended June 30, 2014 and 2013 .

No minimum contribution is required for 2014.

( 8 ) 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 105,992 shares of 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 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 $6.0 million at June 30, 2014 . 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 will limit both the amount and structure of these types of investments.

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.

- 106 -

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 June 30, 2014 , December 31, 2013 and June 30, 2013 is as follows (in thousands):



	June 30, 2014
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	27,834	$	—	$	—	$	23,112
Tax credit entities	10,000		13,137		—		10,964		10,000
Other	—		7,112		—		—		2,017
Total consolidated	$	10,000	$	48,083	$	—	$	10,964	$	35,129

Unconsolidated:
Tax credit entities	$	19,855	$	95,251	$	30,782	$	—	$	—
Other	—		6,321		1,657		—		—
Total unconsolidated	$	19,855	$	101,572	$	32,439	$	—	$	—



	December 31, 2013
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	27,341	$	—	$	—	$	23,036
Tax credit entities	10,000		13,448		—		10,964		9,869
Other	—		9,178		—		—		2,019
Total consolidated	$	10,000	$	49,967	$	—	$	10,964	$	34,924

Unconsolidated:
Tax credit entities	$	27,319	$	90,260	$	35,776	$	—	$	—
Other	—		9,257		1,681		—		—
Total unconsolidated	$	27,319	$	99,517	$	37,457	$	—	$	—

- 107 -



	June 30, 2013
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	28,379	$	—	$	—	$	23,418
Tax credit entities	10,000		13,706		—		10,964		10,000
Other	—		8,483		—		—		1,827
Total consolidated	$	10,000	$	50,568	$	—	$	10,964	$	35,245

Unconsolidated:
Tax credit entities	$	26,851	$	86,327	$	37,864	$	—	$	—
Other	—		9,371		1,775		—		—
Total unconsolidated	$	26,851	$	95,698	$	39,639	$	—	$	—

Other Commitments and Contingencies

At June 30, 2014 , Cavanal Hill Funds’ assets included $991 million of U.S. Treasury, $1.1 billion of cash management and $241 million of tax-free money market funds. Assets of these funds consist of highly-rated, short-term obligations of the U.S. Treasury, corporate issuers and U.S. states and municipalities. The net asset value of units in these funds was $1.00 at June 30, 2014 . 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 2014 or 2013 .

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 $29 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 $10 million at June 30, 2014 . 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 .

- 108 -

( 9 ) Shareholders' Equity

On July 29, 2014 , the Company declared a a quarterly cash dividend of $0.40 per common share on or about August 29, 2014 to shareholders of record as of August 15, 2014 .

Dividends declared were $0.40 and $0.80 per share during the three and six months ended June 30, 2014 , respectively. Dividends declared were $0.38 and $0.76 per share during the three and six months ended June 30, 2013 , 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, 2012	$	155,553		$	3,078		$	(8,296	)	$	(415	)	$	149,920
Net change in unrealized gain (loss)	(204,545		)	—			—			—			(204,545		)
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			(2,021		)	—			—			(2,021		)
Interest expense, Subordinated debentures	—			—			—			124			124
Net impairment losses recognized in earnings	799			—			—			—			799
Gain on available for sale securities, net	(8,608		)	—			—			—			(8,608		)
Other comprehensive income (loss), before income taxes	(212,354		)	(2,021		)	—			124			(214,251		)
Federal and state income taxes ¹	82,605			788			—			(48		)	83,345
Other comprehensive income (loss), net of income taxes	(129,749		)	(1,233		)	—			76			(130,906		)
Balance, June 30, 2013	$	25,804		$	1,845		$	(8,296	)	$	(339	)	$	19,014

Balance, December 31, 2013	$	(23,175	)	$	1,118		$	(3,311	)	$	(255	)	$	(25,623	)
Net change in unrealized gains (losses)	124,653			—			(2		)	—			124,651
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			(736		)	—			—			(736		)
Interest expense, Subordinated debentures	—			—			—			154			154
Gain on available for sale securities, net	(1,244		)	—			—			—			(1,244		)
Other comprehensive income (loss), before income taxes	123,409			(736		)	(2		)	154			122,825
Federal and state income taxes ¹	(48,013		)	286			1			(60		)	(47,786		)
Other comprehensive income (loss), net of income taxes	75,396			(450		)	(1		)	94			75,039
Balance, June 30, 2014	$	52,221		$	668		$	(3,312	)	$	(161	)	$	49,416


¹	Calculated using a 39% effective tax rate.

- 109 -

( 10 ) Earnings Per Share



(In thousands, except share and per share amounts)	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Numerator:
Net income attributable to BOK Financial Corp. shareholders	$	75,895	$	79,931	$	152,485	$	167,895
Less: Earnings allocated to participating securities	884		854		1,579		1,825
Numerator for basic earnings per share – income available to common shareholders	75,011		79,077		150,906		166,070
Effect of reallocating undistributed earnings of participating securities	1		2		2		4
Numerator for diluted earnings per share – income available to common shareholders	$	75,012	$	79,079	$	150,908	$	166,074

Denominator:
Weighted average shares outstanding	69,162,724		68,719,694		69,031,961		68,645,247
Less: Participating securities included in weighted average shares outstanding	802,779		725,872		713,272		740,648
Denominator for basic earnings per common share	68,359,945		67,993,822		68,318,689		67,904,599
Dilutive effect of employee stock compensation plans ¹	151,433		218,675		157,113		222,152
Denominator for diluted earnings per common share	68,511,378		68,212,497		68,475,802		68,126,751

Basic earnings per share	$	1.10	$	1.16	$	2.21	$	2.45
Diluted earnings per share	$	1.10	$	1.16	$	2.20	$	2.44
¹ Excludes employee stock options with exercise prices greater than current market price.	—		—		—		—

- 110 -

( 11 ) Reportable Segments

Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended June 30, 2014 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	95,018		$	24,170		$	5,765		$	41,144		$	166,097
Net interest revenue (expense) from internal sources	(7,857		)	4,666			$	4,719		(1,528		)	—
Net interest revenue	87,161			28,836			10,484			39,616			166,097
Provision for credit losses	(2,812		)	1,345			19			1,448			—
Net interest revenue after provision for credit losses	89,973			27,491			10,465			38,168			166,097
Other operating revenue	44,836			51,256			65,527			950			162,569
Other operating expense	50,922			49,087			55,156			59,542			214,707
Net direct contribution	83,887			29,660			20,836			(20,424		)	113,959
Corporate expense allocations	18,367			16,911			12,388			(47,666		)	—
Net income before taxes	65,520			12,749			8,448			27,242			113,959
Federal and state income taxes	25,487			4,959			3,286			3,498			37,230
Net income	40,033			7,790			5,162			23,744			76,729
Net income attributable to non-controlling interests	—			—			—			834			834
Net income attributable to BOK Financial Corp. shareholders	$	40,033		$	7,790		$	5,162		$	22,910		$	75,895

Average assets	$	11,243,678		$	5,668,256		$	4,556,825		$	6,018,062		$	27,486,821
Average invested capital	937,085			276,294			214,936			1,748,409			3,176,724

Performance measurements:
Return on average assets	1.43		%	0.55		%	0.45		%				1.11		%
Return on average invested capital	17.14		%	11.31		%	9.63		%				9.58		%
Efficiency ratio	38.52		%	55.11		%	72.29		%				63.62		%

- 111 -

Reportable segments reconciliation to the Consolidated Financial Statements for the six months ended June 30, 2014 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	186,037		$	48,826		$	11,604		$	82,272		$	328,739
Net interest revenue (expense) from internal sources	(16,714		)	8,860			$	9,403		(1,549		)	—
Net interest revenue	169,323			57,686			21,007			80,723			328,739
Provision for credit losses	(6,043		)	2,201			(26		)	3,868			—
Net interest revenue after provision for credit losses	175,366			55,485			21,033			76,855			328,739
Other operating revenue	85,525			94,668			119,787			(405		)	299,575
Other operating expense	100,310			90,932			104,403			104,166			399,811
Net direct contribution	160,581			59,221			36,417			(27,716		)	228,503
Corporate expense allocations	35,653			32,750			23,810			(92,213		)	—
Net income before taxes	124,928			26,471			12,607			64,497			228,503
Federal and state income taxes	48,597			10,297			4,904			10,933			74,731
Net income	76,331			16,174			7,703			53,564			153,772
Net income attributable to non-controlling interests	—			—			—			1,287			1,287
Net income attributable to BOK Financial Corp. shareholders	$	76,331		$	16,174		$	7,703		$	52,277		$	152,485

Average assets	$	11,100,687		$	5,642,181		$	4,589,141		$	6,031,471		$	27,363,480
Average invested capital	934,768			279,897			208,909			1,717,523			3,141,097

Performance measurements:
Return on average assets	1.39		%	0.58		%	0.34		%				1.12		%
Return on average invested capital	16.47		%	11.65		%	7.44		%				9.79		%
Efficiency ratio	39.07		%	53.74		%	73.72		%				61.74		%

- 112 -

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	90,551		$	24,830		$	6,512		$	46,999		$	168,892
Net interest revenue (expense) from internal sources	(9,389		)	5,167			5,107			(885		)	—
Net interest revenue	81,162			29,997			11,619			46,114			168,892
Provision for credit losses	86			1,402			931			(2,419		)	—
Net interest revenue after provision for credit losses	81,076			28,595			10,688			48,533			168,892
Other operating revenue	43,330			62,309			55,287			2,414			163,340
Other operating expense	47,342			47,151			51,440			64,988			210,921
Net direct contribution	77,064			43,753			14,535			(14,041		)	121,311
Corporate expense allocations	18,080			14,690			13,019			(45,789		)	—
Net income before taxes	58,984			29,063			1,516			31,748			121,311
Federal and state income taxes	22,945			11,306			590			6,582			41,423
Net income	36,039			17,757			926			25,166			79,888
Net loss attributable to non-controlling interests	—			—			—			(43		)	(43		)
Net income attributable to BOK Financial Corp. shareholders	$	36,039		$	17,757		$	926		$	25,209		$	79,931

Average assets	$	10,363,144		$	5,695,096		$	4,544,061		$	7,057,023		$	27,659,324
Average invested capital	899,087			297,674			206,219			1,624,674			3,027,654

Performance measurements:
Return on average assets	1.39		%	1.25		%	0.08		%				1.16		%
Return on average invested capital	16.08		%	23.93		%	1.80		%				10.59		%
Efficiency ratio	37.96		%	49.26		%	76.87		%				63.11		%

- 113 -

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	181,433		$	48,925		$	12,991		$	96,995		$	340,344
Net interest revenue (expense) from internal sources	(18,534		)	10,650			10,403			(2,519		)	—
Net interest revenue	162,899			59,575			23,394			94,476			340,344
Provision for credit losses	1,107			2,332			1,449			(12,888		)	(8,000		)
Net interest revenue after provision for credit losses	161,792			57,243			21,945			107,364			348,344
Other operating revenue	84,781			122,108			106,778			10,359			324,026
Other operating expense	94,002			92,159			98,562			130,181			414,904
Net direct contribution	152,571			87,192			30,161			(12,458		)	257,466
Corporate expense allocations	36,079			28,859			25,559			(90,497		)	—
Net income before taxes	116,492			58,333			4,602			78,039			257,466
Federal and state income taxes	45,315			22,692			1,790			18,722			88,519
Net income	71,177			35,641			2,812			59,317			168,947
Net income attributable to non-controlling interests	—			—			—			1,052			1,052
Net income attributable to BOK Financial Corp. shareholders	$	71,177		$	35,641		$	2,812		$	58,265		$	167,895

Average assets	$	10,486,544		$	5,709,446		$	4,615,169		$	6,775,621		$	27,586,780
Average invested capital	895,748			297,375			204,161			1,615,544			3,012,828

Performance measurements:
Return on average assets	1.37		%	1.26		%	0.12		%				1.23		%
Return on average invested capital	16.02		%	24.17		%	2.78		%				11.24		%
Efficiency ratio	37.89		%	47.91		%	75.24		%				62.07		%

- 114 -

( 12 ) 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 six months ended June 30, 2014 and 2013 , 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 June 30, 2014 , December 31, 2013 or June 30, 2013 .

- 115 -

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 is as follows as of June 30, 2014 (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	$	19,027	$	—	$	19,027	$	—
U.S. agency residential mortgage-backed securities	13,540		—		13,540		—
Municipal and other tax-exempt securities	32,950		—		32,950		—
Other trading securities	35,580		—		35,580		—
Total trading securities	101,097		—		101,097		—
Available for sale securities:
U.S. Treasury	1,024		1,024		—		—
Municipal and other tax-exempt	64,970		—		54,525		10,445
U.S. agency residential mortgage-backed securities	7,259,504		—		7,259,504		—
Privately issued residential mortgage-backed securities	179,042		—		179,042		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,115,295		—		2,115,295		—
Other debt securities	34,528		—		30,297		4,231
Perpetual preferred stock	24,730		—		24,730		—
Equity securities and mutual funds	20,053		5,106		14,947		—
Total available for sale securities	9,699,146		6,130		9,678,340		14,676
Fair value option securities:
U.S. agency residential mortgage-backed securities	181,205		—		181,205		—
Other securities	4,469		—		4,469		—
Total fair value option securities	185,674		—		185,674		—
Residential mortgage loans held for sale	325,875		—		325,875		—
Mortgage servicing rights ¹	155,740		—		—		155,740
Derivative contracts, net of cash collateral ²	357,680		800		356,880		—
Other assets – private equity funds	27,834		—		—		27,834
Liabilities:
Derivative contracts, net of cash collateral ²	297,851		—		297,851		—


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 6 , Mortgage Banking Activities.

See Note 3 for detail of fair value of derivative contracts by contract type. Derivative contracts in asset positions that were valued based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded energy derivative contacts, net of cash margin. Derivative contacts in liability positions that were valued using quoted prices in active market for identical instruments are exchange-traded energy, agricultural and interest rate derivative contracts that were fully offset by cash margin.

- 116 -

The fair value of financial assets and liabilities that are measured on a recurring basis is as follows as of December 31, 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	$	34,120	$	—	$	34,120	$	—
U.S. agency residential mortgage-backed securities	21,011		—		21,011		—
Municipal and other tax-exempt securities	27,350		—		27,350		—
Other trading securities	9,135		—		9,135		—
Total trading securities	91,616		—		91,616		—
Available for sale securities:
U.S. Treasury	1,042		1,042		—		—
Municipal and other tax-exempt	73,775		—		55,970		17,805
U.S. agency residential mortgage-backed securities	7,716,010		—		7,716,010		—
Privately issued residential mortgage-backed securities	221,099		—		221,099		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,055,804		—		2,055,804		—
Other debt securities	35,241		—		30,529		4,712
Perpetual preferred stock	22,863		—		22,863		—
Equity securities and mutual funds	21,328		—		17,121		4,207
Total available for sale securities	10,147,162		1,042		10,119,396		26,724
Fair value option securities:
U.S. agency residential mortgage-backed securities	157,431		—		157,431		—
Other securities	9,694		—		9,694		—
Total fair value option securities	167,125		—		167,125		—
Residential mortgage loans held for sale	200,546		—		200,546		—
Mortgage servicing rights ¹	153,333		—		—		153,333
Derivative contracts, net of cash collateral ²	265,012		2,712		262,300		—
Other assets – private equity funds	27,341		—		—		27,341
Liabilities:
Derivative contracts, net of cash collateral ²	247,185		—		247,185		—


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 6 , 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 derivative contacts, net of cash margin.

- 117 -

The fair value of financial assets and liabilities that are measured on a recurring basis is as follows as of June 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	$	60,713	$	—	$	60,713	$	—
U.S. agency residential mortgage-backed securities	43,858		—		43,858		—
Municipal and other tax-exempt securities	53,819		—		53,819		—
Other trading securities	32,201		—		32,201		—
Total trading securities	190,591		—		190,591		—
Available for sale securities:
U.S. Treasury	1,060		1,060		—		—
Municipal and other tax-exempt	95,103		—		56,256		38,847
U.S. agency residential mortgage-backed securities	8,372,795		—		8,372,795		—
Privately issued residential mortgage-backed securities	297,175		—		297,175		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,846,943		—		1,846,943		—
Other debt securities	35,894		—		30,701		5,193
Perpetual preferred stock	25,583		—		25,583		—
Equity securities and mutual funds	23,521		5,119		16,155		2,247
Total available for sale securities	10,698,074		6,179		10,645,608		46,287
Fair value option securities:
U.S. agency residential mortgage-backed securities	203,816		—		203,816		—
Other securities	1,940		—		1,940		—
Total fair value option securities	205,756		—		205,756		—
Residential mortgage loans held for sale	301,057		—		301,057		—
Mortgage servicing rights ¹	132,889		—		—		132,889
Derivative contracts, net of cash collateral ²	546,206		17,588		528,618		—
Other assets – private equity funds	28,379		—		—		28,379
Liabilities:
Derivative contracts, net of cash collateral ²	521,991		—		521,991		—


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 6 , 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.

- 118 -

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 option 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 uses 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.

- 119 -

The following represents the changes for the three months ended June 30, 2014 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, March 31, 2014	$	15,523		$	4,712		$	—	$	27,466
Transfer to Level 3 from Level 2	—			—			—		—
Purchases and capital calls	—			—			—		220
Redemptions and distributions	(5,165		)	(500		)	—		(2,076		)
Gain (loss) recognized in earnings:
Gain on other assets, net	—			—			—		2,223
Loss on available for sale securities, net	(157		)	—			—		—
Charitable contributions to BOKF Foundation	—			—			—		—
Other comprehensive gain (loss):
Net change in unrealized gain (loss)	244			19			—		—
Balance, June 30, 2014	$	10,445		$	4,231		$	—	$	27,833

The following represents the changes for the six months ended June 30, 2014 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, December 31, 2013	$	17,805		$	4,712		$	4,207		$	27,341
Transfer to Level 3 from Level 2	—			—			—			—
Purchases and capital calls	—			—			—			425
Redemptions and distributions	(7,487		)	(500		)	—			(3,181		)
Gain (loss) recognized in earnings:
Gain on other assets, net	—			—			—			3,248
Loss on available for sale securities, net	(235		)	—			—			—
Charitable contributions to BOKF Foundation	—			—			(2,420		)	—
Other comprehensive gain (loss):
Net change in unrealized gain (loss)	362			19			(1,787		)	—
Balance, June 30, 2014	$	10,445		$	4,231		$	—		$	27,833

- 120 -

The following represents the changes for the six months ended June 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, March 31, 2013	$	39,007		$	5,193	$	2,472		$	29,216
Transfer to Level 3 from Level 2	—			—		—			—
Purchases, and capital calls	—			—		—			148
Redemptions and distributions	—			—		—			(1,005		)
Gain (loss) recognized in earnings
Gain on other assets, net	—			—		—			20
Other comprehensive gain (loss):
Net change in unrealized gain (loss)	(160		)	—		(225		)	—
Balance, June 30, 2013	$	38,847		$	5,193	$	2,247		$	28,379

The following represents the changes for the three months ended June 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, December 31, 2012	$	40,702		$	5,399		$	2,161	$	28,169
Transfer to Level 3 from Level 2	—			—			—		—
Purchases, and capital calls	—			—			—		640
Redemptions and distributions	(98		)	—			—		(1,835		)
Gain (loss) recognized in earnings
Gain on other assets, net	—			—			—		1,405
Other comprehensive gain (loss):
Net change in unrealized gain (loss)	(1,757		)	(206		)	86		—
Balance, June 30, 2013	$	38,847		$	5,193		$	2,247	$	28,379

- 121 -

A summary of quantitative information about assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of June 30, 2014 follows (in thousands):

Quantitative Information about Level 3 Recurring Fair Value Measurements

Par

Value

Amortized

Cost

Fair

Value

Valuation Technique(s)

Unobservable Input

Range

(Weighted Average)

Available for sale securities

Municipal and other tax-exempt securities

10,970

10,903

10,445

Discounted cash flows

Interest rate spread

4.91%-5.21% (5.17%)

95.11%-96.13% (95.38%)

Other debt securities

4,400

4,231

Discounted cash flows

Interest rate spread

4.38%-5.65% (5.51%)

⁴

95.11% - 95.28 (95.17%)

Other assets - private equity funds

N/A

27,834

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 480 to 508 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value


⁴	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 1% .

The fair value of these securities measured at fair value using significant unobservable inputs are sensitive primarily to changes in interest rate spreads. At June 30, 2014 , 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 $101 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 $41 thousand .

A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of December 31, 2013 follows (in thousands):

Quantitative Information about Level 3 Recurring Fair Value Measurements

Par

Value

Amortized

Cost

Fair

Value

Valuation Technique(s)

Unobservable Input

Range

(Weighted Average)

Available for sale securities

Municipal and other tax-exempt securities

18,695

18,624

17,805

Discounted cash flows

Interest rate spread

4.97%-5.27% (5.16%)

95.02%-95.50% (95.24%)

Other debt securities

4,900

4,712

Discounted cash flows

Interest rate spread

5.67% (5.67%)

⁴

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

⁵

Other assets - private equity funds

N/A

27,341

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 467 to 518 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value


⁴	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 1% .


⁵	Fair value of shares of a smaller privately-held financial institution were valued using preliminary announced purchase information by a publicly-traded acquirer.

- 122 -

A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of June 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

28,470

28,375

27,116

Discounted cash flows

Interest rate spread

4.99%-5.49% (5.24%)

95.01%-95.60% (95.25%)

Below investment grade

17,000

12,384

11,731

Discounted cash flows

Interest rate spread

9.15%-11.19% (9.87%)

⁴

68.91%-69.09% (69.01%)

Total municipal and other tax-exempt securities

45,470

40,759

38,847

Other debt securities

5,400

5,193

Discounted cash flows

Interest rate spread

4.41%-5.69% (5.48%)

⁵

96.13% - 96.16 (96.16%)

Equity securities and mutual funds

N/A

2,420

2,247

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

28,379

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 457 to 520 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.

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 June 30, 2014 for which the fair value was adjusted during the six months ended June 30, 2014 :



							Fair Value Adjustments for the
	Carrying Value at June 30, 2014						Three Months Ended June 30, 2014 Recognized in:					Six Months Ended June 30, 2014 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	$	—	$	5,182	$	65	$	949	$	—		$	1,627	$	—
Real estate and other repossessed assets	—		8,303		27		—		(21		)	—		1,308

- 123 -

The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets with a balance at June 30, 2013 for which the fair value was adjusted during the six months ended June 30, 2013 :



							Fair Value Adjustments for the
	Carrying Value at June 30, 2013						Three Months Ended June 30, 2013 Recognized in:				Six Months Ended June 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	$	—	$	10,245	$	4,930	$	5,060	$	—	$	6,601	$	—
Real estate and other repossessed assets	—		7,949		271		—		863		—		1,014

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 estimates 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 professionals 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 June 30, 2014 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	$	65	Appraised value, as adjusted	Broker quotes and management's knowledge of industry and collateral.	N/A
Real estate and other repossessed assets	$	27	Listing value, less cost to sell	Marketability adjustment off appraised value	77% ¹


¹	Marketability adjustments include consideration of estimated costs to sell, which is approximately 10% of fair value.

A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of June 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	$	4,930	Appraised value, as adjusted	Broker quotes and management's knowledge of industry and collateral.	N/A
Real estate and other repossessed assets	271		Listing value, less cost to sell	Marketability adjustments off appraised value	71%-81% (76%) ¹


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

- 124 -

Fair Value of Financial Instruments

The following table presents the carrying values and estimated fair values of all financial instruments, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis as of June 30, 2014 (dollars in thousands):



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and due from banks	$	615,479						$	615,479
Interest-bearing cash and cash equivalents	732,395							732,395
Trading securities:
U.S. Government agency debentures	19,027							19,027
U.S. agency residential mortgage-backed securities	13,540							13,540
Municipal and other tax-exempt securities	32,950							32,950
Other trading securities	35,580							35,580
Total trading securities	101,097							101,097
Investment securities:
Municipal and other tax-exempt	425,221							429,051
U.S. agency residential mortgage-backed securities	41,973							44,176
Other debt securities	182,743							197,584
Total investment securities	649,937							670,811
Available for sale securities:
U.S. Treasury	1,024							1,024
Municipal and other tax-exempt	64,970							64,970
U.S. agency residential mortgage-backed securities	7,259,504							7,259,504
Privately issued residential mortgage-backed securities	179,042							179,042
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,115,295							2,115,295
Other debt securities	34,528							34,528
Perpetual preferred stock	24,730							24,730
Equity securities and mutual funds	20,053							20,053
Total available for sale securities	9,699,146							9,699,146
Fair value option securities:
U.S. agency residential mortgage-backed securities	181,205							181,205
Other securities	4,469							4,469
Total fair value option securities	185,674							185,674
Residential mortgage loans held for sale	325,875							325,875
Loans:
Commercial	8,367,661			0.16% - 30.00%	0.67	0.55% - 4.28%		8,244,031
Commercial real estate	2,654,978			0.38% - 18.00%	0.83	1.14% - 3.59%		2,635,903
Residential mortgage	2,008,215			1.20% - 18.00%	2.49	0.55% - 4.18%		2,043,551
Consumer	396,004			0.38% - 21.00%	0.49	1.07% - 3.79%		39,038
Total loans	13,426,858							12,962,523
Allowance for loan losses	(190,690		)					—
Loans, net of allowance	13,236,168							12,962,523
Mortgage servicing rights	155,740							155,740
Derivative instruments with positive fair value, net of cash margin	357,680							357,680
Other assets – private equity funds	27,834							27,834
Deposits with no stated maturity	17,956,038							17,956,038
Time deposits	2,615,826			0.03% - 9.64%	2.07	0.74% - 1.29%		2,623,086
Other borrowed funds	3,009,610			0.25% - 6.80%	—	0.09% - 2.62%		2,984,331
Subordinated debentures	347,890			0.91% - 5.00%	2.16	2.20	%	344,717
Derivative instruments with negative fair value, net of cash margin	297,851							297,851

- 125 -



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and due from banks	$	512,931						$	512,931
Interest-bearing cash and cash equivalents	574,282							574,282
Trading securities:
U.S. Government agency debentures	34,120							34,120
U.S. agency residential mortgage-backed securities	21,011							21,011
Municipal and other tax-exempt securities	27,350							27,350
Other trading securities	9,135							9,135
Total trading securities	91,616							91,616
Investment securities:
Municipal and other tax-exempt	440,187							439,870
U.S. agency residential mortgage-backed securities	50,182							51,864
Other debt securities	187,509							195,393
Total investment securities	677,878							687,127
Available for sale securities:
U.S. Treasury	1,042							1,042
Municipal and other tax-exempt	73,775							73,775
U.S. agency residential mortgage-backed securities	7,716,010							7,716,010
Privately issued residential mortgage-backed securities	221,099							221,099
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,055,804							2,055,804
Other debt securities	35,241							35,241
Perpetual preferred stock	22,863							22,863
Equity securities and mutual funds	21,328							21,328
Total available for sale securities	10,147,162							10,147,162
Fair value option securities:
U.S. agency residential mortgage-backed securities	157,431							157,431
Other securities	9,694							9,694
Total fair value option securities	167,125							167,125
Residential mortgage loans held for sale	200,546							200,546
Loans:
Commercial	7,943,221			0.04% - 30.00%	0.49	0.48% - 4.33%		7,835,325
Commercial real estate	2,415,353			0.38% - 18.00%	0.78	1.21% - 3.49%		2,394,443
Residential mortgage	2,052,026			0.38% - 18.00%	2.63	0.59% - 4.73%		2,068,690
Consumer	381,664			0.38% - 21.00%	0.55	1.22% - 3.75%		375,962
Total loans	12,792,264							12,674,420
Allowance for loan losses	(185,396		)					—
Loans, net of allowance	12,606,868							12,674,420
Mortgage servicing rights	153,333							153,333
Derivative instruments with positive fair value, net of cash margin	265,012							265,012
Other assets – private equity funds	27,341							27,341
Deposits with no stated maturity	17,573,334							17,573,334
Time deposits	2,695,993			0.01% - 9.64%	2.12	0.75% - 1.33%		2,697,290
Other borrowed funds	2,721,888			0.25% - 4.78%	0.03	0.08% - 2.64%		2,693,788
Subordinated debentures	347,802			0.95% - 5.00%	2.63	2.22	%	344,783
Derivative instruments with negative fair value, net of cash margin	247,185							247,185

- 126 -



	Carrying Value			Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate		Estimated Fair Value
Cash and due from banks	$	507,551						$	507,551
Interest-bearing cash and cash equivalents	570,836							570,836
Trading securities:
U.S. Government agency debentures	60,713							60,713
U.S. agency residential mortgage-backed securities	43,858							43,858
Municipal and other tax-exempt securities	53,819							53,819
Other trading securities	32,201							32,201
Total trading securities	190,591							190,591
Investment securities:
Municipal and other tax-exempt	375,317							371,690
U.S. agency residential mortgage-backed securities	64,172							66,796
Other debt securities	176,301							187,219
Total investment securities	615,790							625,705
Available for sale securities:
U.S. Treasury	1,060							1,060
Municipal and other tax-exempt	95,103							95,103
U.S. agency residential mortgage-backed securities	8,372,795							8,372,795
Privately issued residential mortgage-backed securities	297,175							297,175
Commercial mortgage-backed securities guaranteed by U.S. government agencies	1,846,943							1,846,943
Other debt securities	35,894							35,894
Perpetual preferred stock	25,583							25,583
Equity securities and mutual funds	23,521							23,521
Total available for sale securities	10,698,074							10,698,074
Fair value option securities:
U.S. agency residential mortgage-backed securities	203,816							203,816
Other securities	1,940							1,940
Total fair value option securities	205,756							205,756
Residential mortgage loans held for sale	301,057							301,057
Loans:
Commercial	7,708,120			0.25% - 30.00%	0.63	0.59% - 4.19%		7,638,327
Commercial real estate	2,317,096			0.38% - 18.00%	0.83	1.23% - 3.47%		2,288,188
Residential mortgage	2,039,785			0.38% - 18.00%	3.64	0.70% - 4.46%		2,038,375
Consumer	375,781			0.38% - 21.00%	0.35	1.26% - 3.74%		369,375
Total loans	12,440,782							12,334,265
Allowance for loan losses	(203,124		)					—
Loans, net of allowance	12,237,658							12,334,265
Mortgage servicing rights	132,889							132,889
Derivative instruments with positive fair value, net of cash margin	546,206							546,206
Other assets – private equity funds	28,379							28,379
Deposits with no stated maturity	16,728,258							16,728,258
Time deposits	2,767,972			0.03% - 9.64%	2.02	0.76% - 1.30%		2,781,202
Other borrowed funds	4,073,915			0.25% - 5.25%	—	0.07% - 2.66%		4,034,685
Subordinated debentures	347,716			0.97% - 5.00%	3.10	2.24	%	345,201
Derivative instruments with negative fair value, net of cash margin	521,991							521,991

- 127 -

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.

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 sheets 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 $164 million at June 30, 2014 , $157 million at December 31, 2013 and $161 million at June 30, 2013 .

Deposits

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

Other Borrowings and Subordinated Debentures

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

Off-Balance Sheet Instruments

The fair values of commercial loan commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements. The fair values of these off-balance sheet instruments were not significant at June 30, 2014 , December 31, 2013 or June 30, 2013 .

Fair Value Election

As more fully disclosed in Note 2 and Note 6 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.

- 128 -

( 13 ) Federal and State Income Taxes

The reconciliations of income (loss) attributable to continuing operations at the U.S. federal statutory tax rate to income tax expense are as follows (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Amount:
Federal statutory tax	$	39,886		$	42,459		$	79,976		$	90,113
Tax exempt revenue	(2,099		)	(1,803		)	(4,090		)	(3,545		)
Effect of state income taxes, net of federal benefit	2,457			3,122			5,327			6,500
Utilization of tax credits	(2,836		)	(1,826		)	(5,466		)	(3,548		)
Bank-owned life insurance	(784		)	(993		)	(1,552		)	(1,878		)
Charitable contributions to BOKF Foundation	—			—			(427		)	—
Other, net	606			464			963			877
Total	$	37,230		$	41,423		$	74,731		$	88,519



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Percent of pretax income:
Federal statutory tax	35	%	35	%	35	%	35	%
Tax exempt revenue	(2	)	(1	)	(2	)	(1	)
Effect of state income taxes, net of federal benefit	3		3		3		2
Utilization of tax credits	(2	)	(2	)	(2	)	(1	)
Bank-owned life insurance	(1	)	(1	)	(1	)	(1	)
Charitable contributions to BOKF Foundation	—		—		—		—
Other, net	—		—		—		—
Total	33	%	34	%	33	%	34	%

( 14 ) Subsequent Events

The Company evaluated events from the date of the consolidated financial statements on June 30, 2014 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.

- 129 -

Six-Month Financial Summary – Unaudited Consolidated Daily Average Balances, Average Yields and Rates

(In Thousands, Except Per Share Data)	Six Months Ended
	June 30, 2014							June 30, 2013
	Average Balance			Revenue/ Expense		Yield/ Rate		Average Balance			Revenue/ Expense			Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	592,543		$	648	0.22	%	$	398,233		$	462		0.23	%
Trading securities	104,363			1,058		2.60	%	172,163			1,536			2.27	%
Investment securities
Taxable	229,569			6,477		5.64	%	251,717			7,402			5.88	%
Tax-exempt	435,669			3,594		1.65	%	321,349			3,051			2.10	%
Total investment securities	665,238			10,071		3.03	%	573,066			10,453			3.85	%
Available for sale securities
Taxable	9,842,763			93,713		1.92	%	11,059,419			106,367			2.02	%
Tax-exempt	95,413			1,742		3.76	%	116,382			1,920			3.49	%
Total available for sale securities	9,938,176			95,455		1.94	%	11,175,801			108,287			2.03	%
Fair value option securities	165,097			1,645		1.96	%	233,921			2,201			1.99	%
Restricted equity securities	91,158			2,272		4.98	%	112,559			2,327			4.13	%
Residential mortgage loans held for sale	202,346			4,113		4.10	%	239,521			4,086			3.46	%
Loans ²	13,107,068			251,843		3.87	%	12,251,347			252,737			4.16	%
Allowance for loan losses	(188,160		)					(210,392		)
Loans, net of allowance	12,918,908			251,843		3.93	%	12,040,955			252,737			4.23	%
Total earning assets	24,677,829			367,105		3.00	%	24,946,219			382,089			3.15	%
Receivable on unsettled securities sales	111,750							157,145
Cash and other assets	2,573,901							2,483,416
Total assets	$	27,363,480						$	27,586,780
Liabilities and equity
Interest-bearing deposits:
Transaction	$	9,875,769		$	5,048	0.10	%	$	9,669,248		$	5,908		0.12	%
Savings	346,070			204		0.12	%	305,923			240			0.16	%
Time	2,661,106			20,511		1.55	%	2,866,003			22,642			1.59	%
Total interest-bearing deposits	12,882,945			25,763		0.40	%	12,841,174			28,790			0.45	%
Funds purchased	797,107			268		0.07	%	971,630			569			0.12	%
Repurchase agreements	844,401			333		0.08	%	848,862			275			0.07	%
Other borrowings	1,167,547			2,301		0.40	%	1,521,505			2,486			0.33	%
Subordinated debentures	347,846			4,347		2.52	%	347,675			4,359			2.53	%
Total interest-bearing liabilities	16,039,846			33,012		0.42	%	16,530,846			36,479			0.45	%
Non-interest bearing demand deposits	7,484,096							6,945,202
Due on unsettled securities	141,547							497,127
Other liabilities	556,894							600,778
Total equity	3,141,097							3,012,828
Total liabilities and equity	$	27,363,480						$	27,586,781
Tax-equivalent Net Interest Revenue				$	334,093	2.58	%				$	345,610		2.70	%
Tax-equivalent Net Interest Revenue to Earning Assets						2.73	%							2.85	%
Less tax-equivalent adjustment				5,354							5,266
Net Interest Revenue				328,739							340,344
Reduction of allowance for credit losses				—							(8,000		)
Other operating revenue				299,575							324,024
Other operating expense				399,811							414,902
Income before taxes				228,503							257,466
Federal and state income tax				74,731							88,519
Net income before non-controlling interest				153,772							168,947
Net income (loss) attributable to non-controlling interest				1,287							1,052
Net income attributable to BOK Financial Corp. shareholders				$	152,485						$	167,895
Earnings Per Average Common Share Equivalent:
Net income:
Basic				$	2.21						$	2.45
Diluted				$	2.20						$	2.44

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Quarterly Financial Summary – Unaudited Consolidated Daily Average Balances, Average Yields and Rates

(In Thousands, Except Per Share Data)	Three Months Ended
	June 30, 2014							March 31, 2014
	Average Balance			Revenue/ Expense		Yield/ Rate		Average Balance			Revenue/ Expense		Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	635,140		$	383	0.24	%	$	549,473		$	265	0.20	%
Trading securities	116,186			527		2.40	%	92,409			531		2.85	%
Investment securities
Taxable	226,528			3,195		5.64	%	232,646			3,282		5.64	%
Tax-exempt	432,265			1,764		1.63	%	439,110			1,830		1.67	%
Total investment securities	658,793			4,959		3.01	%	671,756			5,112		3.04	%
Available for sale securities
Taxable	9,706,965			46,458		1.94	%	9,980,069			47,255		1.90	%
Tax-exempt	93,969			1,007		4.44	%	96,873			735		3.11	%
Total available for sale securities	9,800,934			47,465		1.96	%	10,076,942			47,990		1.91	%
Fair value option securities	164,684			794		1.94	%	165,515			851		1.99	%
Restricted equity securities	97,016			1,275		5.26	%	85,234			997		4.68	%
Residential mortgage loans held for sale	219,308			2,523		4.63	%	185,196			1,590		3.46	%
Loans ²	13,264,461			127,508		3.85	%	12,947,926			124,335		3.89	%
Allowance for loan losses	(189,329		)					(186,979		)
Loans, net of allowance	13,075,132			127,508		3.91	%	12,760,947			124,335		3.95	%
Total earning assets	24,767,193			185,434		3.02	%	24,587,472			181,671		2.99	%
Receivable on unsettled securities sales	108,825							114,708
Cash and other assets	2,610,803							2,536,588
Total assets	$	27,486,821						$	27,238,768
Liabilities and equity
Interest-bearing deposits:
Transaction	$	9,850,991		$	2,489	0.10	%	$	9,900,823		$	2,559	0.10	%
Savings	355,459			106		0.12	%	336,576			98		0.12	%
Time	2,636,444			10,182		1.55	%	2,686,041			10,329		1.56	%
Total interest-bearing deposits	12,842,894			12,777		0.40	%	12,923,440			12,986		0.41	%
Funds purchased	574,926			107		0.07	%	1,021,755			161		0.06	%
Repurchase agreements	914,892			182		0.08	%	773,127			151		0.08	%
Other borrowings	1,294,932			1,279		0.40	%	1,038,747			1,022		0.40	%
Subordinated debentures	347,868			2,189		2.52	%	347,824			2,158		2.52	%
Total interest-bearing liabilities	15,975,512			16,534		0.42	%	16,104,893			16,478		0.41	%
Non-interest bearing demand deposits	7,654,225							7,312,076
Due on unsettled securities	166,521							116,295
Other liabilities	513,839							600,430
Total equity	3,176,724							3,105,074
Total liabilities and equity	$	27,486,821						$	27,238,768
Tax-equivalent Net Interest Revenue				$	168,900	2.60	%				$	165,193	2.58	%
Tax-equivalent Net Interest Revenue to Earning Assets						2.75	%						2.71	%
Less tax-equivalent adjustment				2,803							2,551
Net Interest Revenue				166,097							162,642
Reduction of allowance for credit losses				—							—
Other operating revenue				162,569							137,006
Other operating expense				214,707							185,104
Income before taxes				113,959							114,544
Federal and state income tax				37,230							37,501
Net income before non-controlling interest				76,729							77,043
Net income (loss) attributable to non-controlling interest				834							453
Net income attributable to BOK Financial Corp. shareholders				$	75,895						$	76,590
Earnings Per Average Common Share Equivalent:
Net income:
Basic				$	1.10						$	1.11
Diluted				$	1.10						$	1.11

Yield calculations are shown on a tax equivalent at the statutory federal and state rates for the periods presented. The yield calculations exclude security trades that have been recorded on trade date with no corresponding interest income and the unrealized gains and losses. The yield calculation also includes average loan balances for which the accrual of interest has been discontinued and are net of unearned income. Yield / rate calculations are generally based on the conventions that determine how interest income and expense is accrued.

- 131 -



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

$	559,918		$	258		0.18	%	$	654,591		$	355		0.22	%	$	408,224		$	278		0.27	%
127,011			472			1.73	%	124,689			688			2.25	%	181,866			829			2.40	%

238,306			3,424			5.75	%	237,487			3,434			5.78	%	245,311			3,604			5.88	%
434,416			1,772			1.66	%	383,617			1,501			1.60	%	365,629			1,568			1.88	%
672,722			5,196			3.12	%	621,104			4,935			3.22	%	610,940			5,172			3.58	%

10,322,624			48,295			1.89	%	10,439,353			50,167			1.92	%	10,940,486			51,360			1.94	%
112,186			751			2.74	%	119,324			828			2.81	%	120,214			1,013			3.59	%
10,434,810			49,046			1.89	%	10,558,677			50,995			1.93	%	11,060,700			52,373			1.96	%
167,490			892			2.06	%	169,299			814			1.80	%	216,312			1,024			1.92	%
123,009			1,555			5.06	%	155,938			1,189			3.05	%	144,332			1,462			4.05	%
217,811			2,251			4.16	%	225,789			2,168			3.87	%	261,977			2,294			3.54	%
12,461,576			125,917			4.01	%	12,402,096			126,849			4.06	%	12,277,444			125,992			4.12	%
(193,309		)						(201,616		)						(206,807		)
12,268,267			125,917			4.07	%	12,200,480			126,849			4.13	%	12,070,637			125,992			4.19	%
24,571,038			185,587			3.02	%	24,710,567			187,993			3.03	%	24,954,988			189,424			3.10	%
83,016								90,014								135,964
2,448,734								2,454,151								2,568,372
$	27,102,788							$	27,254,732							$	27,659,324


$	9,486,136		$	2,566		0.11	%	$	9,276,136		$	2,681		0.11	%	$	9,504,128		$	2,762		0.12	%
323,123			95			0.12	%	317,912			107			0.13	%	315,421			120			0.15	%
2,710,019			10,587			1.55	%	2,742,970			10,738			1.55	%	2,818,533			11,027			1.57	%
12,519,278			13,248			0.42	%	12,337,018			13,526			0.43	%	12,638,082			13,909			0.44	%
748,074			145			0.08	%	776,356			134			0.07	%	789,302			205			0.10	%
752,286			105			0.06	%	799,175			123			0.06	%	819,373			129			0.06	%
1,551,591			1,205			0.31	%	2,175,747			1,547			0.28	%	2,172,417			1,442			0.27	%
347,781			2,173			2.48	%	347,737			2,209			2.52	%	347,695			2,200			2.54	%
15,919,010			16,876			0.42	%	16,436,033			17,539			0.42	%	16,766,869			17,885			0.43	%
7,356,063								7,110,079								6,888,983
152,078								111,998								330,926
621,834								631,699								644,892
3,053,803								2,964,923								3,027,654
$	27,102,788							$	27,254,732							$	27,659,324
			$	168,711		2.60	%				$	170,454		2.61	%				$	171,539		2.67	%
						2.74	%							2.75	%							2.80	%
			2,467								2,565								2,647
			166,244								167,889								168,892
			(11,400		)						(8,500		)						—
			147,015								143,432								163,340
			215,419								210,298								210,921
			109,240								109,523								121,311
			35,318								33,461								41,423
			73,922								76,062								79,888
			946								324								(43		)
			$	72,976							$	75,738							$	79,931


			$	1.06							$	1.10							$	1.16
			$	1.06							$	1.10							$	1.16

- 132 -

Quarterly Earnings Trends – Unaudited

(In thousands, except share and per share data)



	Three Months Ended
	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013

Interest revenue	$	182,631		$	179,120		$	183,120		$	185,428		$	186,777
Interest expense	16,534			16,478			16,876			17,539			17,885
Net interest revenue	166,097			162,642			166,244			167,889			168,892
Provision for credit losses	—			—			(11,400		)	(8,500		)	—
Net interest revenue after provision for credit losses	166,097			162,642			177,644			176,389			168,892
Other operating revenue
Brokerage and trading revenue	39,056			29,516			28,515			32,338			32,874
Transaction card revenue	31,510			29,134			29,134			30,055			29,942
Fiduciary and asset management revenue	29,543			25,722			25,074			23,892			24,803
Deposit service charges and fees	23,133			22,689			23,440			24,742			23,962
Mortgage banking revenue	29,330			22,844			21,876			23,486			36,596
Bank-owned life insurance	2,274			2,106			2,285			2,408			2,236
Other revenue	9,208			8,852			12,048			8,314			8,760
Total fees and commissions	164,054			140,863			142,372			145,235			159,173
Gain (loss) on other assets, net	(52		)	(4,264		)	651			(377		)	(1,666		)
Gain (loss) on derivatives, net	831			968			(930		)	31			(2,527		)
Gain (loss) on fair value option securities, net	4,176			2,660			(2,805		)	(80		)	(9,156		)
Change in fair value of mortgage servicing rights	(6,444		)	(4,461		)	6,093			(346		)	14,315
Gain on available for sale securities, net	4			1,240			1,634			478			3,753
Total other-than-temporary impairment losses	—			—			—			(1,436		)	(1,138		)
Portion of loss recognized in (reclassified from) other comprehensive income	—			—			—			(73		)	586
Net impairment losses recognized in earnings	—			—			—			(1,509		)	(552		)
Total other operating revenue	162,569			137,006			147,015			143,432			163,340
Other operating expense
Personnel	123,714			104,433			125,662			125,799			128,110
Business promotion	7,150			5,841			6,020			5,355			5,770
Charitable contributions to BOKF Foundation	—			2,420			—			2,062			—
Professional fees and services	11,054			7,565			10,003			7,183			8,381
Net occupancy and equipment	18,789			16,896			19,103			17,280			16,909
Insurance	4,467			4,541			4,394			3,939			4,044
Data processing and communications	29,071			27,135			28,196			25,695			26,734
Printing, postage and supplies	3,429			3,541			3,126			3,505			3,580
Net losses and operating expenses of repossessed assets	1,118			1,432			1,618			2,014			282
Amortization of intangible assets	949			816			842			835			875
Mortgage banking costs	7,960			3,634			7,071			8,753			7,910
Other expense	7,006			6,850			9,384			7,878			8,326
Total other operating expense	214,707			185,104			215,419			210,298			210,921
Net income before taxes	113,959			114,544			109,240			109,523			121,311
Federal and state income taxes	37,230			37,501			35,318			33,461			41,423
Net income before non-controlling interest	76,729			77,043			73,922			76,062			79,888
Net income (loss) attributable to non-controlling interest	834			453			946			324			(43		)
Net income attributable to BOK Financial Corporation	$	75,895		$	76,590		$	72,976		$	75,738		$	79,931

Earnings per share:
Basic	$1.10			$1.11			$1.06			$1.10			$1.16
Diluted	$1.10			$1.11			$1.06			$1.10			$1.16
Average shares used in computation:
Basic	68,359,945			68,273,685			68,095,254			68,049,179			67,993,822
Diluted	68,511,378			68,436,478			68,293,758			68,272,861			68,212,497

- 133 -

PART II. Other Information

Item 1. Legal Proceedings

See discussion of legal proceedings at Note 8 to the Consolidated Financial Statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended June 30, 2014 .



Period	Total Number of Shares Purchased ²	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ¹	Maximum Number of Shares that May Yet Be Purchased Under the Plans
April 1 to April 30, 2014	979	$	70.72	—	1,960,504
May 1 to May 31, 2014	202,328	$	66.55	—	1,960,504
June 1 to June 30, 2014	—	$	—	—	1,960,504
Total	203,307			—


¹	On April 24, 2012, the Company’s board of directors authorizing the Company to repurchase up to two million shares of the Company’s common stock. As of June 30, 2014 , 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.

- 134 -

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BOK FINANCIAL CORPORATION

(Registrant)

Date: August 1, 2014

/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

- 135 -

TABLE OF CONTENTS

Part II. Other Information Item 1. Legal Proceedings Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 6. Exhibits

BOKF 10-Q Quarter ended June 30, 2014