BOKF 10-Q Quarterly Report Sept. 30, 2018

BOK FINANCIAL CORP ET AL

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-Q	Quarter ended March 31, 2025
10-K	Fiscal year ended Dec. 31, 2024
10-Q	Quarter ended Sept. 30, 2024
10-Q	Quarter ended June 30, 2024
10-Q	Quarter ended March 31, 2024
10-K	Fiscal year ended Dec. 31, 2023
10-Q	Quarter ended Sept. 30, 2023
10-Q	Quarter ended June 30, 2023
10-Q	Quarter ended March 31, 2023
10-K	Fiscal year ended Dec. 31, 2022
10-Q	Quarter ended Sept. 30, 2022
10-Q	Quarter ended June 30, 2022
10-Q	Quarter ended March 31, 2022
10-K	Fiscal year ended Dec. 31, 2021
10-Q	Quarter ended Sept. 30, 2021
10-Q	Quarter ended June 30, 2021
10-Q	Quarter ended March 31, 2021
10-K	Fiscal year ended Dec. 31, 2020
10-Q	Quarter ended Sept. 30, 2020
10-Q	Quarter ended June 30, 2020
10-Q	Quarter ended March 31, 2020
10-K	Fiscal year ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-Q	Quarter ended March 31, 2019
10-K	Fiscal year ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-Q	Quarter ended March 31, 2018
10-K	Fiscal year ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-Q	Quarter ended March 31, 2017
10-K	Fiscal year ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-Q	Quarter ended March 31, 2016
10-K	Fiscal year ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-Q	Quarter ended March 31, 2015
10-K	Fiscal year ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-Q	Quarter ended March 31, 2014
10-K	Fiscal year ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-Q	Quarter ended March 31, 2013
10-K	Fiscal year ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-Q	Quarter ended March 31, 2012
10-K	Fiscal year ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-Q	Quarter ended March 31, 2011
10-K	Fiscal year ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-Q	Quarter ended March 31, 2010

PROXIES

DEF 14A	Filed on March 20, 2025
DEF 14A	Filed on Dec. 31, 2024
DEF 14A	Filed on March 21, 2024
DEF 14A	Filed on Dec. 31, 2023
DEF 14A	Filed on March 23, 2023
DEF 14A	Filed on March 24, 2022
DEF 14A	Filed on Dec. 31, 2021
DEF 14A	Filed on March 25, 2021
DEF 14A	Filed on March 19, 2020
DEF 14A	Filed on March 15, 2019
DEF 14A	Filed on March 15, 2018
DEF 14A	Filed on March 15, 2017
DEF 14A	Filed on March 16, 2016
DEF 14A	Filed on March 18, 2015
DEF 14A	Filed on March 19, 2014
DEF 14A	Filed on March 20, 2013
DEF 14A	Filed on March 15, 2012
DEF 14A	Filed on March 15, 2011
DEF 14A	Filed on March 16, 2010

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended September 30, 2018



¨		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 ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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: 65,434,258 shares of common stock ($.00006 par value) as of September 30, 2018 .

BOK Financial Corporation

Form 10-Q

Quarter Ended September 30, 2018

Index



Part I. Financial Information
Management’s Discussion and Analysis (Item 2)	1
Market Risk (Item 3)	42
Controls and Procedures (Item 4)	46
Consolidated Financial Statements – Unaudited (Item 1)	47
Quarterly Financial Summary – Unaudited (Item 2)	121
Quarterly Earnings Trend – Unaudited	125

Part II. Other Information
Item 1. Legal Proceedings	125
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	125
Item 6. Exhibits	125
Signatures	126

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

Performance Summary

BOK Financial Corporation (“the Company”) reported net income of $117.3 million or $1.79 per diluted share for the third quarter of 2018 , including $11.5 million or 18 cents per share from a client asset management fee. Net income was $85.6 million or $1.31 per diluted share for the third quarter of 2017 and $114.4 million or $1.75 per diluted share for the second quarter of 2018 .

On October 1, 2018, the Company acquired CoBiz Financial, Inc. (CoBiz). CoBiz is headquartered in Denver with a presence in Colorado and Arizona. The Company paid total consideration of $944 million, which included $242 million in cash along with the issuance of 7.2 million shares of BOK Financial stock valued at $702 million, in exchange for all outstanding shares of CoBiz stock. As of September 30, 2018, CoBiz had $3.1 billion in loans, $3.9 billion in total assets, $3.3 billion in deposits and $339 million in equity. The pro forma common equity Tier 1 capital ratio at September 30, 2018 on a combined basis was 10.92 percent, Tier 1 capital ratio was 10.92 percent, total capital ratio was 12.37 percent, and leverage ratio was 9.18 percent. We expect to incur approximately $45 million of total closing and integration costs during the fourth quarter of 2018 and first quarter of 2019 with an anticipated bank consolidation in the first quarter of 2019.

Highlights of the third quarter of 2018 included:

•

Net interest revenue totaled $240.9 million , up $22.4 million over the third quarter of 2017 . The increase in net interest revenue over the prior year was driven by both growth in average earning assets and improving yields. Net interest margin was 3.21 percent for the third quarter of 2018 compared to 3.01 percent for the third quarter of 2017 . Average earning assets were $30.0 billion for the third quarter of 2018 compared to $29.6 billion for the third quarter of 2017 . Net interest revenue increase d $2.3 million over the second quarter of 2018 . Excluding the impact of interest recoveries in the second quarter, net interest margin grew by 11 basis points primarily due to the Company reducing excess cash balances held at the Federal Reserve funded by borrowings from the Federal Home Loan Banks.

•

Fees and commissions revenue totaled $167.5 million . Adoption of the new revenue recognition accounting standard in the first quarter of 2018 resulted in interchange fees we pay to issuing banks being netted against transaction card revenue. Previously these fees were included in data processing and communications expense. Excluding this impact, fees and commissions revenue increase d $4.0 million compared to the third quarter of 2017 . Trust fees and commissions increased $16.8 million largely as a result of a fee generated from the sale of client assets during the third quarter of 2018 . Brokerage and trading revenue decreased $10.1 million while mortgage banking revenue decreased $1.4 million , both affected by the impact of rising interest rates on mortgage loan origination volumes and margins. Fees and commissions revenue increased $9.7 million compared to the second quarter of 2018 . Trust fees and commissions increase d $15.8 million compared to the second quarter of 2018 . Brokerage and trading revenue decrease d $3.4 million and mortgage banking revenue decrease d $2.8 million .

•

Other operating expense totaled $252.6 million , a $3.4 million or 1 percent decrease compared to the third quarter of 2017 on a comparable basis. Personnel expense decrease d $4.4 million , primarily due to decreased incentive compensation expense. Non-personnel expense increase d $977 thousand . Operating expense increase d $6.1 million over the second quarter of 2018 . Personnel expense increase d $4.6 million , primarily due to a reduction in share-based compensation expense in the second quarter of 2018 based on a change in assumptions for performance-based awards. Non-personnel expense increase d $1.6 million . Professional fees and services expense and mortgage banking costs were higher in the second quarter.


•	Income tax expense was $34.7 million or 22.8 percent of net income before taxes for the third quarter of 2018 compared to $42.4 million or 33.1 percent for the third quarter of 2017 and $33.3 million or 22.4 percent for the second quarter of 2018 . Beginning January 1, 2018, the Tax Cuts and Jobs Act ("the Act") decreased the corporate income tax rate from 35% to 21%.

•

The Company recorded provision for credit losses of $4.0 million in the third quarter of 2018 . No provision for credit losses was recorded in the second quarter of 2018 or third quarter of 2017 . Net charge-offs totaled $9.0 million or 0.20 percent of average loans on an annualized basis in the third quarter of 2018 compared to net charge-offs of $10.5 million or 0.24 percent of average loans on an annualized basis for the second quarter of 2018 . Net charge-offs were $32.5 million or 0.18 percent of average loans over the last four quarters.

- 1 -


•	The combined allowance for credit losses totaled $213 million or 1.16 percent of outstanding loans at September 30, 2018 compared to $218 million or 1.21 percent of outstanding loans at June 30, 2018 .


•	Nonperforming assets that are not guaranteed by U.S. government agencies totaled $170 million or 0.93 percent of outstanding loans and repossessed assets at September 30, 2018 and $186 million or 1.04 percent of outstanding loans and repossessed assets at June 30, 2018 . Potential problem loans increase d $36 million to $176 million at September 30, 2018 .


•	Average loan balances grew by $453 million over the previous quarter, primarily due to growth in commercial and commercial real estate loan balances. Period-end outstanding loan balances totaled $18.3 billion at September 30, 2018 , an increase of $346 million over June 30, 2018 .


•	Average deposits were largely unchanged compared to the previous quarter. Average demand deposit balances increased $102 million , while interest-bearing transaction deposit balances decreased $179 million . Period-end deposits were $21.6 billion at September 30, 2018 , a $537 million decrease compared to June 30, 2018 .

•

The common equity Tier 1 capital ratio at September 30, 2018 was 12.05 percent. Other regulatory capital ratios were Tier 1 capital ratio, 12.05 percent, total capital ratio, 13.35 percent, and leverage ratio, 9.90 percent . At June 30, 2018 , the common equity Tier 1 capital ratio was 11.92 percent , the Tier 1 capital ratio was 11.92 percent , total capital ratio was 13.26 percent , and leverage ratio was 9.57 percent .


•	The company paid a regular cash dividend of $32.6 million or $0.50 per common share during the third quarter of 2018 . On October 30, 2018 , the board of directors approved a quarterly cash dividend of $0.50 per common share payable on or about November 26, 2018 to shareholders of record as of November 12, 2018 .

- 2 -

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 tax-equivalent 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 $240.9 million for the third quarter of 2018 , up from $218.5 million in the third quarter of 2017 . Net interest margin was 3.21 percent for the third quarter of 2018 , compared to 3.01 percent for the third quarter of 2017 . Recoveries of foregone interest on nonaccruing loans added $4.6 million or 6 basis points to the net interest margin in the third quarter of 2017. Recoveries of foregone interest were not significant in the third quarter of 2018. The discussion following excludes the impact of recoveries of foregone interest.

Tax-equivalent net interest revenue increase d $20.0 million over the third quarter of 2017 . Table 1 shows the effect on net interest revenue from changes in average balances and interest rates for various types of earning assets and interest-bearing liabilities. Changes in interest rates and yields increased net interest revenue by $5.1 million . The benefit of an increase in short-term interest rates on the floating-rate earning assets was partially offset by higher borrowing costs. Tax-equivalent net interest revenue increased $15.0 million due to growth in average assets. Growth in the average balances of trading securities and loans was partially offset by decreases in interest-bearing cash and cash equivalents.

Net interest margin increased 26 basis points due largely to changes in market interest rates and spreads, along with a change in the mix of earning assets.

The tax-equivalent yield on earning assets was 4.04 percent , up 60 basis points over the third quarter of 2017 primarily due to increases in short-term interest rates resulting from increases in the federal funds rate by the Federal Reserve. Loan yields increase d 59 basis points to 4.80 percent . The available for sale securities portfolio yield increase d 20 basis points to 2.37 percent . The yield on interest-bearing cash and cash equivalents increase d 70 basis points. Funding costs were up 50 basis points over the third quarter of 2017 . The cost of interest-bearing deposits increase d 32 basis points and the cost of other borrowed funds increase d 81 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 42 basis points for the third quarter of 2018 , up 16 basis points over the third quarter of 2017 .

Average earning assets for the third quarter of 2018 increase d $319 million or 1 percent over the third quarter of 2017 . The average balance of trading securities grew by $1.3 billion , primarily due to expansion of U.S. agency residential mortgage-backed securities trading activities. Average loans, net of allowance for loan losses, increase d $984 million , due primarily to growth in commercial loans. Interest-bearing cash and cash equivalent balances decrease d $1.3 billion . The Company reduced excess cash balances held at the Federal Reserve funded by borrowings from the Federal Home Loan Banks. Available for sale securities decrease d $299 million . Average balances of fair value option securities held as an economic hedge of mortgage servicing rights decrease d $215 million . Investment securities balances decrease d $96 million .

Average deposits decrease d $183 million compared to the third quarter of 2017 . Time deposit balances decrease d $79 million , interest-bearing transaction account balances decrease d $78 million and demand deposit balances decrease d $65 million . Savings account balances increase d $40 million . Average borrowed funds increase d $385 million over the third quarter of 2017 , primarily due to the net impact of increased borrowings from the Federal Home Loan Banks. Funds purchased and repurchase agreement balances also increased over the prior year.

Net interest revenue increase d $2.3 million over the second quarter of 2018 . Recoveries of foregone interest on nonaccruing loans added $5.3 million to net interest revenue or 7 basis points to net interest margin in the previous quarter. Excluding this impact, net interest margin was 3.21 percent for the third quarter of 2018 , up 11 basis points over the second quarter of 2018 . Net interest margin improved 10 basis points in the third quarter due to the Company reducing excess cash balances held at the Federal Reserve funded by borrowings from the Federal Home Loan Banks.

- 3 -

The yield on average earning assets was up 20 basis points over the prior quarter. The loan portfolio yield increase d 12 basis points. The yield on the available for sale securities portfolio increase d 7 basis points. The yield on the trading securities portfolio was up 35 basis. Funding costs were 1.25 percent , up 14 basis points. The cost of interest-bearing deposits increase d 11 basis points to 0.77 percent . The cost of other borrowed funds was up 20 basis points to 2.04 percent . The benefit to net interest margin from earning assets funded by non-interest bearing liabilities increase d 5 basis points over the prior quarter.

Average earning assets decrease d $345 million compared to the second quarter of 2018 . Average loan balances grew by $453 million . Trading securities balances increase d $280 million . Average interest-bearing cash and cash equivalents balances decrease d $985 million . Average available for sale securities decrease d $34 million . In addition, average balances of restricted equity securities, investment securities, fair value option securities held as an economic hedge of our mortgage servicing rights and residential mortgage loans held for sale all decreased compared to the prior quarter.

Average deposit balances decrease d $119 million compared to the second quarter of 2018 . Demand deposit balances grew by $102 million , offset by a $179 million decrease in interest-bearing transaction account balances and a $41 million decrease in time deposit balance. The average balance of borrowed funds decrease d $131 million , primarily due to decreased borrowings from the Federal Home Loan Banks.

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 82% of our commercial and commercial real estate loan portfolios are either variable rate or fixed rate that will reprice within one year. These loans are funded primarily by deposit accounts that are either non-interest bearing, or that reprice more slowly than the loans. The result is a balance sheet that would be asset sensitive, which means that assets generally reprice more quickly than liabilities. One of the strategies that we use to manage toward a relative rate-neutral position is to 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. We currently expect additional increases in the Federal Funds rate to be accretive, although at a decreasing rate as competition for deposits intensifies in the future.

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.

- 4 -

Table 1 -- Volume/Rate Analysis

(In thousands)



	Three Months Ended September 30, 2018 / 2017									Nine Months Ended September 30, 2018 / 2017
				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	$	(2,934	)	$	(5,259	)	$	2,325		$	3,346		$	(5,703	)	$	9,049
Trading securities	13,297			11,912			1,385			25,304			24,096			1,208
Investment securities:
Taxable securities	(103		)	(53		)	(50		)	(246		)	(10		)	(236		)
Tax-exempt securities	(633		)	(590		)	(43		)	(1,979		)	(1,752		)	(227		)
Total investment securities	(736		)	(643		)	(93		)	(2,225		)	(1,762		)	(463		)
Available for sale securities:
Taxable securities	4,342			(192		)	4,534			11,632			(1,309		)	12,941
Tax-exempt securities	(571		)	(223		)	(348		)	(1,690		)	(1,005		)	(685		)
Total available for sale securities	3,771			(415		)	4,186			9,942			(2,314		)	12,256
Fair value option securities	(1,185		)	(1,599		)	414			1,642			273			1,369
Restricted equity securities	406			50			356			2,223			1,439			784
Residential mortgage loans held for sale	56			(460		)	516			11			(890		)	901
Loans	32,739			10,857			21,882			98,421			18,696			79,725
Total tax-equivalent interest revenue	45,414			14,443			30,971			138,664			33,835			104,829
Interest expense:
Transaction deposits	8,967			2			8,965			22,803			(158		)	22,961
Savings deposits	18			7			11			19			22			(3		)
Time deposits	1,020			(264		)	1,284			2,389			(731		)	3,120
Funds purchased and repurchase agreements	3,512			1,484			2,028			4,556			1,080			3,476
Other borrowings	11,931			(1,748		)	13,679			41,762			4,069			37,693
Subordinated debentures	(45		)	1			(46		)	(22		)	6			(28		)
Total interest expense	25,403			(518		)	25,921			71,507			4,288			67,219
Tax-equivalent net interest revenue	20,011			14,961			5,050			67,157			29,547			37,610
Change in tax-equivalent adjustment	(2,420		)							(7,186		)
Net interest revenue	$	22,431								$	74,343


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

- 5 -

Other Operating Revenue

Other operating revenue was $167.9 million for the third quarter of 2018 , a $2.1 million increase over the third quarter of 2017 and an $11.5 million increase over the second quarter of 2018 . Fees and commissions revenue increase d $4.0 million compared to the third quarter of 2017 and $9.7 million compared to the prior quarter. Rising interest rates have slowed the origination of mortgage loans and related investment products leading to compressed margins. This has adversely affected both our brokerage and trading revenue as well as our mortgage banking revenue.

Table 2 – Other Operating Revenue

(In thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended Jun 30, 2018			Increase (Decrease)			% Increase (Decrease)
	2018			2017			Increase (Decrease)			% Increase (Decrease)		Three Months Ended Jun 30, 2018			Increase (Decrease)			% Increase (Decrease)
Brokerage and trading revenue	$	23,086		$	33,169		$	(10,083	)	(30	)%	$	26,488		$	(3,402	)	(13	)%
Transaction card revenue ¹	21,396			22,929			(1,533		)	(7	)%	20,975			421			2	%
Fiduciary and asset management revenue	57,514			40,687			16,827			41	%	41,699			15,815			38	%
Deposit service charges and fees	27,765			28,191			(426		)	(2	)%	27,827			(62		)	—	%
Mortgage banking revenue	23,536			24,890			(1,354		)	(5	)%	26,346			(2,810		)	(11	)%
Other revenue	14,213			13,670			543			4	%	14,518			(305		)	(2	)%
Total fees and commissions revenue	167,510			163,536			3,974			2	%	157,853			9,657			6	%
Other gains (losses), net	1,441			(1,283		)	2,724			N/A		3,983			(2,542		)	N/A
Loss on derivatives, net	(2,847		)	1,033			(3,880		)	N/A		(3,057		)	210			N/A
Loss on fair value option securities, net	(4,385		)	661			(5,046		)	N/A		(3,341		)	(1,044		)	N/A
Change in fair value of mortgage servicing rights	5,972			(639		)	6,611			N/A		1,723			4,249			N/A
Gain (loss) on available for sale securities, net	250			2,487			(2,237		)	N/A		(762		)	1,012			N/A
Total other operating revenue	$	167,941		$	165,795		$	2,146		1	%	$	156,399		$	11,542		7	%

Non-GAAP Reconciliation: ¹
Transaction card revenue on income statement	$	21,396		$	32,844		N/A			N/A		$	20,975		N/A			N/A
Netting adjustment	—			(9,915		)	N/A			N/A		—			N/A			N/A
Transaction card revenue after netting adjustment	$	21,396		$	22,929		(1,533		)	(7	)%	$	20,975		421			2	%


¹	Non-GAAP measure to net interchange charges from prior quarters between transaction card revenue and data processing and communications expense. This measure has no effect on net income or earnings per share.

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 41 percent of total revenue for the third quarter of 2018 , 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 such as rising interest rates resulting in growth in net interest revenue or fiduciary and asset management revenue, may also decrease mortgage production volumes. 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.

- 6 -

Brokerage and Trading Revenue

Brokerage and trading revenue, which includes revenues from trading, customer hedging, retail brokerage and investment banking, decrease d $10.1 million or 30 percent compared to the third quarter of 2017 .

Trading revenue includes net realized and unrealized gains and losses 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 and related derivative instruments. Trading revenue was $4.8 million for the third quarter of 2018 , a $7.1 million or 59 percent decrease compared to the third quarter of 2017 . Rising mortgage interest rates narrowed trading margins and slowed turnover of our trading inventory. However, the higher average balance of trading securities generated an increase in net interest revenue of $5.6 million.

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 $8.5 million for the third quarter of 2018 , a $2.0 million or 19 percent decrease compared to the third quarter of 2017 .

Revenue earned from retail brokerage transactions decrease d $748 thousand or 14 percent compared to the third quarter of 2017 to $4.5 million . Retail brokerage revenue includes fees and commissions earned on sales of fixed income securities, annuities, mutual funds and other financial instruments to retail customers. Revenue is primarily based on the volume of customer transactions and applicable commission rate for each product type.We expect retail brokerage revenue to continue to decline as more relationships are transitioned to managed accounts, which are included in fiduciary and asset management revenue.

Investment banking revenue, which includes fees earned upon completion of underwriting and financial advisory services and loan syndication fees, totaled $5.2 million for the third quarter of 2018 , a $254 thousand or 5 percent decrease compared to the third quarter of 2017 . Changes in investment banking revenue are primarily related to the timing and volume of completed transactions.

Brokerage and trading revenue decrease d $3.4 million compared to the previous quarter due largely to the continued impact of rising interest rates on mortgage-backed securities and related derivative products.

Transaction Card Revenue

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 decrease d $1.5 million or 7 percent compared to the third quarter of 2017 , primarily due to an early customer termination fee that was received in the third quarter of 2017. Transaction card revenue was largely unchanged compared to the second quarter of 2018 .

Fiduciary and Asset Management Revenue

Fiduciary and asset management revenue is earned through managing or holding of assets for customers and executing transactions or providing related services. Approximately 80 percent of fiduciary and asset management revenue is primarily based on the fair value of assets. Rates applied to asset values vary based on the nature of the relationship. Fiduciary relationships and managed asset relationships generally have higher fee rates than non-fiduciary and/or managed relationships. Fiduciary and asset management revenue increase d $16.8 million or 41 percent over the third quarter of 2017 and $15.8 million or 38 percent over the second quarter of 2018 . A fee earned through the sale of client assets added $15.4 million to third quarter 2018 revenue.

- 7 -

A distribution of assets under management or administration and related fiduciary and asset management revenue follows:

Table 3 -- Assets Under Management or Administration



	Three Months Ended
	September 30, 2018							September 30, 2017						June 30, 2018
	Balance		Revenue ¹			Margin ²		Balance		Revenue ¹		Margin ²		Balance		Revenue ¹		Margin ²
Managed fiduciary assets:
Personal	$	8,076,312	$	22,921		1.14	%	$	7,611,265	$	21,299	1.12	%	$	7,791,094	$	23,307	1.20	%
Institutional	13,568,115		5,504			0.16	%	12,747,679		5,585		0.18	%	13,448,068		5,596		0.17	%
Total managed fiduciary assets	21,644,427		28,425			0.53	%	20,358,944		26,884		0.53	%	21,239,162		28,903		0.54	%

Non-managed assets:
Fiduciary	23,915,680		28,591		³	0.48	%	24,818,241		13,214		0.21	%	25,292,738		12,426		0.20	%
Non-fiduciary	16,146,102		498			0.01	%	16,458,382		589		0.01	%	16,422,810		370		0.01	%
Safekeeping and brokerage assets under administration	15,921,806		—			—	%	16,015,342		—		—	%	15,918,736		—		—	%
Total non-managed assets	55,983,588		29,089			0.21	%	57,291,965		13,803		0.10	%	57,634,284		12,796		0.09	%

Total assets under management or administration	$	77,628,015	$	57,514		0.30	%	$	77,650,909	$	40,687	0.21	%	$	78,873,446	$	41,699	0.21	%


¹	Fiduciary and asset management revenue includes asset-based and other fees associated with the assets.


²	Annualized revenue divided by period-end balance.

³ A $15.4 million fee earned through client asset management added 8 basis points to the margin in the third quarter of 2018.

A summary of changes in assets under management or administration for the three months ended September 30, 2018 and 2017 follows:

Table 4 -- Changes in Assets Under Management or Administration



	Three Months Ended September 30,
	2018			2017
Beginning balance	$	78,873,446		$	77,811,762
Net inflows (outflows)	(2,921,653		)	(1,781,037		)
Net change in fair value	1,676,222			1,620,184
Ending balance	$	77,628,015		$	77,650,909

Mortgage Banking Revenue

Mortgage banking revenue decrease d $1.4 million or 5 percent compared to the third quarter of 2017 due to a decrease in mortgage production revenue. Mortgage loan production volumes decrease d $207 million or 26 percent . Production volumes decreased compared to the prior year as average primary mortgage interest rates were up 69 basis points over the third quarter of 2017 . Mortgage servicing revenue was relatively consistent compared to the third quarter of 2017 . The outstanding principal balance of mortgage loans serviced for others totaled $21.8 billion , relatively consistent with the third quarter of 2017 .

- 8 -

Table 5 – Mortgage Banking Revenue

(In thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
	2018			2017			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
Mortgage production revenue	$	7,250		$	8,329		$	(1,079	)	(13	)%	$	9,915		$	(2,665	)	(27	)%

Mortgage loans funded for sale	$	651,076		$	832,796							$	773,910
Add: Current period end outstanding commitments	197,752			334,337								251,231
Less: Prior period end outstanding commitments	251,231			362,088								298,318
Total mortgage production volume	$	597,597		$	805,045		$	(207,448	)	(26	)%	$	726,823		$	(129,226	)	(18	)%

Mortgage loan refinances to mortgage loans funded for sale	23		%	38		%	(1,500		) bps			22		%	100		bps
Gains on sale margin	1.21		%	1.03		%	18		bps			1.36		%	(15		) bps
Primary mortgage interest rates:
Average	4.57		%	3.88		%	69		bps			4.54		%	3		bps
Period end	4.72		%	3.83		%	89		bps			4.55		%	17		bps

Mortgage servicing revenue	$	16,286		$	16,561		$	(275	)	(2	)%	$	16,431		$	(145	)	(1	)%
Average outstanding principal balance of mortgage loans serviced for others	21,895,041			22,079,177			(184,136		)	(1	)%	21,986,065			(91,024		)	—	%

Average mortgage servicing revenue rates	0.30		%	0.30		%	—					0.30		%	—


¹	Actual interest earned on fair value option securities less internal transfer-priced cost of funds.

Primary rates disclosed in Table 5 above represent rates generally available to borrowers on 30 year conforming mortgage loans.

Net gains on other assets, securities and derivatives

Other net gains totaled $1.4 million in the third quarter of 2018 compared to net losses of $1.3 million in the third quarter of 2017 . The third quarter of 2018 includes tornado insurance proceeds whereas the third quarter of 2017 included a write down related to tornado damages. Other net gains totaled $4.0 million in the second quarter of 2018 .

As discussed in the Market Risk section following, the fair value of our mortgage servicing rights ("MSRs") changes in response to changes in primary mortgage loan rates and other assumptions. We attempt to mitigate the earnings volatility caused by changes in the fair value of MSRs by designating certain financial instruments as an economic hedge. Changes in the fair value of these instruments are generally expected to partially offset changes in the fair value of MSRs.

- 9 -

Table 6 - Gain (Loss) on Mortgage Servicing Rights

(In thousands)



	Three Months Ended
	Sept. 30, 2018			June 30, 2018			Sept. 30, 2017
Gain (loss) on mortgage hedge derivative contracts, net	$	(2,843	)	$	(3,070	)	$	1,025
Gain (loss) on fair value option securities, net	(4,385		)	(3,341		)	661
Gain (loss) on economic hedge of mortgage servicing rights, net	(7,228		)	(6,411		)	1,686
Gain (loss) on change in fair value of mortgage servicing rights	5,972			1,723			(639		)
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges included in other operating revenue	(1,256		)	(4,688		)	1,047
Net interest revenue on fair value option securities ¹	1,100			1,203			2,543
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges	$	(156	)	$	(3,485	)	$	3,590

¹ Actual interest earned on fair value option securities less internal transfer-priced cost of funds.

- 10 -

Other Operating Expense

Other operating expense for the third quarter of 2018 totaled $252.6 million , a decrease of $3.4 million or 1 percent compared to the third quarter of 2017 . Personnel expense decrease d $4.4 million or 3 percent . Non-personnel expense increase d $977 thousand or 1 percent compared to the prior year.

Other operating expense increase d $6.1 million or 2 percent over the previous quarter. Personnel expense increase d $4.6 million and non-personnel expense increase d $1.6 million .

Table 7 – Other Operating Expense

(In thousands)



	Three Months Ended September 30,					Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
	2018		2017			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
Regular compensation	$	86,262	$	83,583		$	2,679		3	%	$	86,231		$	31		—	%
Incentive compensation:
Cash-based	31,430		33,643			(2,213		)	(7	)%	31,933			(503		)	(2	)%
Share-based	3,935		8,407			(4,472		)	(53	)%	(1,361		)	5,296			389	%
Deferred compensation	2,126		975			1,151			N/A		900			1,226			N/A
Total incentive compensation	37,491		43,025			(5,534		)	(13	)%	31,472			6,019			19	%
Employee benefits	19,778		21,302			(1,524		)	(7	)%	21,244			(1,466		)	(7	)%
Total personnel expense	143,531		147,910			(4,379		)	(3	)%	138,947			4,584			3	%
Business promotion	7,620		7,105			515			7	%	7,686			(66		)	(1	)%
Professional fees and services	13,209		11,887			1,322			11	%	14,978			(1,769		)	(12	)%
Net occupancy and equipment	23,394		21,325			2,069			10	%	22,761			633			3	%
Insurance	6,232		6,005			227			4	%	6,245			(13		)	—	%
Data processing and communications ¹	31,665		27,412			4,253			16	%	27,739			3,926			14	%
Printing, postage and supplies	3,837		3,917			(80		)	(2	)%	4,011			(174		)	(4	)%
Net losses (gains) and operating expenses of repossessed assets	4,044		6,071			(2,027		)	(33	)%	2,722			1,322			49	%
Amortization of intangible assets	1,603		1,744			(141		)	(8	)%	1,386			217			16	%
Mortgage banking costs	11,741		13,450			(1,709		)	(13	)%	12,890			(1,149		)	(9	)%
Other expense	5,741		9,193			(3,452		)	(38	)%	7,111			(1,370		)	(19	)%
Total other operating expense	$	252,617	$	256,019		$	(3,402	)	(1	)%	$	246,476		$	6,141		2	%

Average number of employees (full-time equivalent)	4,870		4,887			(17		)	—	%	4,875			(5		)	—	%

Non-GAAP Reconciliation: ¹
Data processing and communications expense on income statement	31,665		37,327			N/A			N/A		27,739			N/A			N/A
Netting adjustment	—		(9,915		)	N/A			N/A		—			N/A			N/A
Data processing and communications expense after netting adjustment	31,665		27,412			N/A			N/A		27,739			N/A			N/A


¹	Non-GAAP measure to net interchange charges from prior quarters between transaction card revenue and data processing and communications expense. This measure has no effect on net income or earnings per share.

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

- 11 -

Personnel expense

Regular compensation, which consists of salaries and wages, overtime pay and temporary personnel costs, increase d $2.7 million or 3 percent over the third quarter of 2017 . The average number of employees was relatively unchanged compared to the prior year. Standard annual merit increases in regular compensation were effective for the majority of our staff on March 1.

Incentive compensation decrease d $5.5 million or 13 percent compared to the third quarter of 2017 , primarily due to decreased share-based compensation expense. The number of performance-based equity awards that will ultimately vest is determined by BOKF's change in earnings per share relative to a defined group of peer banks. Changes in assumptions used to estimate the number of performance-based equity awards that were expected to vest increased compensation expense recognized in the third quarter of 2017 . No significant changes in vesting assumptions were made in the third quarter of 2018.

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. Cash-based incentive compensation expense decrease d $2.2 million or 7 percent compared to the third quarter of 2017 .

Employee benefits expense decrease d $1.5 million or 7 percent compared to the third quarter of 2017 mainly due to lower healthcare costs in the third quarter of 2018. The Company is self-insured and these costs may be volatile.

Personnel expense increase d $4.6 million over the second quarter of 2018 . Incentive compensation expense increase d $6.0 million . Share-based compensation expense was $3.9 million in the third quarter of 2018 compared to a negative $1.4 million in the previous quarter. Changes in assumptions used to estimate the number of performance-based equity awards that are expected to vest decreased compensation expense in the second quarter of 2018. Employee benefits expense decreased $1.5 million mainly due to a seasonal decrease in payroll tax expense.

Non-personnel operating expense

Non-personnel operating expense increase d $977 thousand or 1 percent over the third quarter of 2017 .

Data processing and communications expense increase d $4.3 million or 16 percent primarily due to impairment of a software license along with increased project costs and data processing transaction activity. Occupancy and equipment expense increase d $2.1 million or 10 percent mainly due to an increase in project costs. Professional fees and services expense increase d $1.3 million or 11 percent mainly due to CoBiz acquisition costs in the third quarter of 2018 .

Other expense decreased $3.5 million or 38 percent and mortgage banking costs decreased $1.7 million or 13 percent primarily as a result of lower loss contingency accruals.

Non-personnel expense increase d $1.6 million over the second quarter of 2018 . Data processing and communications expense increased $3.9 million , primarily due to impairment of a software license. Net losses and operating expenses of repossessed assets increase d $1.3 million as a result of a write down on a healthcare property.

Professional fees and services expense decrease d $1.8 million mainly due to seasonal wealth management tax service fees in the second quarter of 2018 . Mortgage banking costs decrease d $1.1 million primarily due to reduced loss contingency accruals.

- 12 -

Income Taxes

The Company's income tax expense was $34.7 million or 23 percent of net income before taxes for the third quarter of 2018 , compared to $42.4 million or 33 percent of net income before taxes for the third quarter of 2017 and $33.3 million or 22 percent of net income before taxes for the second quarter of 2018 .

The Tax Cut and Jobs Act ("the Act") enacted on December 22, 2017 reduced the federal corporate tax rate from 35 percent to 21 percent beginning January 1, 2018. The Company continues to evaluate the impact the Act will have on its financial position and results of operations, including recognition and measurement of deferred tax assets and liabilities and the determination of effective current and deferred federal and state income tax rates. No adjustments to provisional amounts were made during the second or third quarters of 2018.

The Company's effective tax rate is affected by recurring items such as tax-exempt income, net amortization related to its investments in low-income housing tax credit investments and share-based compensation. The effective tax rate is also affected by items that may occur in any given period but are not consistent from period to period. Accordingly, the comparability of the effective tax rate from period to period may be impacted.

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 $20 million at September 30, 2018 , $20 million at June 30, 2018 and $18 million at September 30, 2017 .

- 13 -

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, lending and deposit services to small business customers served through our consumer branch network 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 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.

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 repricing and cash flow characteristics. Market rates are generally based on the applicable LIBOR or interest rate swap rates, adjusted for prepayment and liquidity risk. This method of transfer-pricing funds that supports 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 that approximate wholesale market rates for funds with similar repricing and cash flow 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 repricing 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-term 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.

- 14 -

As shown in Table 8 , net income attributable to our lines of business was up $34.6 million or 39 percent over the third quarter of 2017 . Net interest revenue grew by $22.8 million over the prior year, primarily due to loan growth. Other operating revenue increase d by $2.5 million primarily due to a fiduciary and asset management fee earned through the sale of client assets, partially offset by decreased brokerage and trading revenue. Operating expense was largely unchanged compared to the third quarter of 2017 . Income tax expense attributable to the lines of business was down $16.9 million , primarily due to lower corporate tax rates related to tax reform.

Table 8 -- Net Income by Line of Business

(In thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended Jun 30, 2018		Increase (Decrease)			% Increase (Decrease)
	2018			2017			Increase (Decrease)			% Increase (Decrease)		Three Months Ended Jun 30, 2018		Increase (Decrease)			% Increase (Decrease)
Commercial Banking	$	84,964		$	68,610		$	16,354		24	%	$	87,577	$	(2,613	)	(3	)%
Consumer Banking	9,162			4,809			4,353			91	%	6,102		3,060			50	%
Wealth Management	29,331			15,472			13,859			90	%	20,358		8,973			44	%
Subtotal	123,457			88,891			34,566			39	%	114,037		9,420			8	%
Funds Management and other	(6,201		)	(3,242		)	(2,959		)	N/A		335		(6,536		)	N/A
Total	$	117,256		$	85,649		$	31,607		37	%	$	114,372	$	2,884		3	%

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

- 15 -

Commercial Banking

Commercial Banking contributed $85.0 million to consolidated net income in the third quarter of 2018 , an increase of $16.4 million or 24 percent over the third quarter of 2017 , primarily due to the positive impact of the Tax Cut and Jobs Act.

Table 9 -- Commercial Banking

(Dollars in thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
	2018			2017			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
Net interest revenue from external sources	$	187,417		$	160,572		$	26,845		17	%	$	182,127		$	5,290		3	%
Net interest expense from internal sources	(42,270		)	(25,460		)	(16,810		)	66	%	(37,102		)	(5,168		)	14	%
Total net interest revenue	145,147			135,112			10,035			7	%	145,025			122			—	%
Net loans charged off	8,047			3,217			4,830			150	%	10,108			(2,061		)	(20	)%
Net interest revenue after net loans charged off	137,100			131,895			5,205			4	%	134,917			2,183			2	%

Fees and commissions revenue ¹	39,391			44,747			(5,356		)	(12	)%	42,874			(3,483		)	(8	)%
Other gains, net	1,131			8			1,123			N/A		173			958			N/A
Other operating revenue	40,522			44,755			(4,233		)	(9	)%	43,047			(2,525		)	(6	)%

Personnel expense	31,263			29,181			2,082			7	%	29,584			1,679			6	%
Non-personnel expense ¹	17,873			18,249			(376		)	(2	)%	17,899			(26		)	—	%
Other operating expense	49,136			47,430			1,706			4	%	47,483			1,653			3	%

Net direct contribution	128,486			129,220			(734		)	(1	)%	130,481			(1,995		)	(2	)%
Gain (loss) on financial instruments, net	(3		)	4			(7		)	N/A		9			(12		)	N/A
Loss on repossessed assets, net	(1,869		)	(4,126		)	2,257			N/A		(67		)	(1,802		)	N/A
Corporate expense allocations	11,027			8,733			2,294			26	%	11,269			(242		)	(2	)%
Income before taxes	115,587			116,365			(778		)	(1	)%	119,154			(3,567		)	(3	)%
Federal and state income tax	30,623			47,755			(17,132		)	(36	)%	31,577			(954		)	(3	)%
Net income	$	84,964		$	68,610		$	16,354		24	%	$	87,577		$	(2,613	)	(3	)%

Average assets	$	18,499,979		$	17,780,494		$	719,485		4	%	$	18,072,155		$	427,824		2	%
Average loans	15,321,600			14,511,639			809,961			6	%	14,900,918			420,682			3	%
Average deposits	8,633,204			8,727,221			(94,017		)	(1	)%	8,379,584			253,620			3	%
Average invested capital	1,361,475			1,299,821			61,654			5	%	1,345,840			15,635			1	%


¹	Fees and commission revenue for 2017 has been adjusted on a comparable basis with 2018 (Non-GAAP measure) to net $9.9 million of interchange fees paid to issuing banks on card transactions processed by our TransFund merchant processing services for the three months ended September 30, 2017 . The discussion following is based on this comparable basis.

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

Net interest revenue increase d $10.0 million or 7 percent over the prior year. Growth in net interest revenue was primarily due to an $810 million or 6 percent increase in average loan balances and yields on commercial loans rising in excess of funding costs. Yields on deposits sold to the funds management unit also went up due to the increase in short-term interest rates. Net loans charged-off increase d $4.8 million . Net charge-offs for the third quarter of 2018 were primarily related to a single energy production borrower and single wholesale/retail sector borrower, both of which had previously been identified as impaired and appropriately reserved.

- 16 -

Fees and commissions revenue decrease d $5.4 million or 12 percent compared to the third quarter of 2017 . Transaction card revenue decreased as the third quarter of 2017 included a $2.1 million customer early termination fee related to our transaction card business.

Operating expenses increase d $1.7 million or 4 percent over the third quarter of 2017 . Personnel expense increase d $2.1 million or 7 percent , primarily due to increased incentive compensation expense related to loan growth combined with an annual increase in regular compensation. Non-personnel expense decrease d $376 thousand or 2 percent .

Corporate expense allocations were up $2.3 million or 26 percent over the prior year, primarily due to enhancements of activity based costing drivers to better reflect services being utilized by the Commercial Banking line of business.

The average outstanding balance of loans attributed to Commercial Banking were up $810 million or 6 percent over the third quarter of 2017 to $15.3 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 $8.6 billion for the third quarter of 2018 , a 1 percent decrease compared to the third quarter of 2017 . See Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital for further discussion of change.

Net interest revenue was relatively consistent with the second quarter of 2018 at $145 million . Second quarter earnings included $5.3 million in interest recoveries on nonaccrual loans. Excluding the impact of interest recoveries, growth in net interest revenue was driven by strong growth in loan balances and improved loan yields. This growth was partially offset by a modest increase in our internal cost of funds allocation.

Fees and commissions revenue decreased $3.5 million or 8 percent as a result of reduced customer hedging revenue primarily from our energy customers and the timing of closing loan syndication transactions after an exceptionally strong second quarter. Expense growth outpaced revenue growth primarily due to an increase in incentive compensation as a result of continued loan growth as well as a $1.7 million write down of a repossessed property in the third quarter.

Average loan balances increase d $421 million or 3 percent , largely impacted by energy, commercial real estate, service and other commercial and industrial loans. Average customer deposits increase d $254 million or 3 percent , mostly due to energy, real estate, and general commercial and industrial deposits.

- 17 -

Consumer Banking

Consumer Banking provides retail banking services through four primary distribution channels: traditional branches, the 24-hour ExpressBank call center, Internet banking and mobile banking. Consumer Banking also conducts mortgage banking activities through offices located outside of our consumer banking markets and through HomeDirect Mortgage, an online origination channel.

Consumer Banking contributed $9.2 million to consolidated net income for the third quarter of 2018 , an increase of $4.4 million over the third quarter of 2017 . Growth in net interest revenue was partially offset by decreased mortgage banking revenue. Changes in the fair value of mortgage servicing rights, net of economic hedges, decrease d pre-tax net income for third quarter of 2018 by $1.3 million compared to a $1.0 million increase in pre-tax net income in the third quarter of 2017 .

Table 10 -- Consumer Banking

(Dollars in thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
	2018			2017			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
Net interest revenue from external sources	$	21,075		$	21,965		$	(890	)	(4	)%	$	21,746		$	(671	)	(3	)%
Net interest revenue from internal sources	19,039			13,981			5,058			36	%	17,548			1,491			8	%
Total net interest revenue	40,114			35,946			4,168			12	%	39,294			820			2	%
Net loans charged off	1,451			1,316			135			10	%	1,139			312			27	%
Net interest revenue after net loans charged off	38,663			34,630			4,033			12	%	38,155			508			1	%

Fees and commissions revenue	44,038			45,006			(968		)	(2	)%	46,332			(2,294		)	(5	)%
Other losses, net	(15		)	(38		)	23			N/A		(12		)	(3		)	N/A
Other operating revenue	44,023			44,968			(945		)	(2	)%	46,320			(2,297		)	(5	)%

Personnel expense	23,326			25,121			(1,795		)	(7	)%	24,995			(1,669		)	(7	)%
Non-personnel expense	29,861			31,026			(1,165		)	(4	)%	30,911			(1,050		)	(3	)%
Total other operating expense	53,187			56,147			(2,960		)	(5	)%	55,906			(2,719		)	(5	)%

Net direct contribution	29,499			23,451			6,048			26	%	28,569			930			3	%
Gain (loss) on financial instruments, net	(7,228		)	1,686			(8,914		)	N/A		(6,411		)	(817		)	N/A
Change in fair value of mortgage servicing rights	5,972			(639		)	6,611			N/A		1,723			4,249			N/A
Gain (loss) on repossessed assets, net	(87		)	292			(379		)	N/A		174			(261		)	N/A
Corporate expense allocations	15,863			16,920			(1,057		)	(6	)%	15,867			(4		)	—	%
Income before taxes	12,293			7,870			4,423			56	%	8,188			4,105			50	%
Federal and state income tax	3,131			3,061			70			2	%	2,086			1,045			50	%
Net income	$	9,162		$	4,809		$	4,353		91	%	$	6,102		$	3,060		50	%

Average assets	$	8,323,542		$	8,683,998		$	(360,456	)	(4	)%	$	8,353,558		$	(30,016	)	—	%
Average loans	1,719,679			1,724,523			(4,844		)	—	%	1,716,259			3,420			—	%
Average deposits	6,580,395			6,663,969			(83,574		)	(1	)%	6,579,635			760			—	%
Average invested capital	291,980			289,186			2,794			1	%	293,420			(1,440		)	—	%

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

- 18 -

Net interest revenue from Consumer Banking activities grew by $4.2 million or 12 percent over the the third quarter of 2017 , primarily due to increased rates received on deposit balances sold to the Funds Management unit.

Fees and commissions revenue decrease d $968 thousand or 2 percent compared to the third quarter of 2017 . Higher interest rates decreased mortgage loan origination volumes.

Operating expenses decrease d $3.0 million or 5 percent compared to the third quarter of 2017 . Personnel expenses decrease d $1.8 million or 7 percent as mortgage originations have slowed and efforts have been made to right size current capacity. Non-personnel expenses decrease d $1.2 million or 4 percent compared to the prior year primarily due to a decrease in mortgage banking costs.

Corporate expense allocations were $1.1 million or 6 percent lower than the prior year.

Average consumer deposits decrease d $84 million compared to the third quarter of 2017 . Demand deposit balances grew by $106 million or 6 percent and savings deposit balances were up $40 million or 9 percent . Higher-costing time deposit balances decrease d $120 million or 12 percent and interest-bearing transaction account balances decrease d $110 million or 3 percent .

Net interest revenue from Consumer Banking activities increased $820 thousand or 2 percent over the second quarter of 2018 while deposit service charges and fees increased $588 thousand . The introduction of a new time deposit product as well as interest rate increases on existing money market products have positively impacted runoff trends.

Revenues from mortgage banking activities decreased $2.8 million from the prior quarter. Continued rising interest rates and increased market competition slowed origination activity, which declined 16 percent compared to the prior quarter. Efforts to right size current capacity have resulted in personnel expense savings of $1.7 million from the previous quarter.

Average consumer loans and deposits remained relatively consistent compared to the prior quarter at $1.7 billion and $6.6 billion , respectively.

- 19 -

Wealth Management

Wealth Management contributed $29.3 million to consolidated net income in the third quarter of 2018 , up $13.9 million or 90 percent over the third quarter of 2017 . The third quarter of 2018 included an after tax benefit of $11.5 million as a result of a fee earned on the sale of client assets.

Table 11 -- Wealth Management

(Dollars in thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
	2018			2017			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2018			Increase (Decrease)			% Increase (Decrease)
Net interest revenue from external sources	$	23,131		$	11,170		$	11,961		107	%	$	19,074		$	4,057		21	%
Net interest revenue from internal sources	6,267			9,604			(3,337		)	(35	)%	10,232			(3,965		)	(39	)%
Total net interest revenue	29,398			20,774			8,624			42	%	29,306			92			—	%
Net loans charged off (recovered)	(84		)	(623		)	539			(87	)%	(105		)	21			(20	)%
Net interest revenue after net loans charged off (recovered)	29,482			21,397			8,085			38	%	29,411			71			—	%

Fees and commissions revenue	83,562			75,915			7,647			10	%	70,489			13,073			19	%
Other gains (losses), net	(205		)	(208		)	3			N/A		153			(358		)	N/A
Other operating revenue	83,357			75,707			7,650			10	%	70,642			12,715			18	%

Personnel expense	45,571			46,494			(923		)	(2	)%	45,653			(82		)	—	%
Non-personnel expense	16,684			15,298			1,386			9	%	15,838			846			5	%
Other operating expense	62,255			61,792			463			1	%	61,491			764			1	%

Net direct contribution	50,584			35,312			15,272			43	%	38,562			12,022			31	%
Gain on financial instruments, net	7			—			7			N/A		—			7			N/A
Corporate expense allocations	11,126			9,819			1,307			13	%	11,142			(16		)	—	%
Income before taxes	39,465			25,493			13,972			55	%	27,420			12,045			44	%
Federal and state income tax	10,134			10,021			113			1	%	7,062			3,072			44	%
Net income	$	29,331		$	15,472		$	13,859		90	%	$	20,358		$	8,973		44	%

Average assets	$	8,498,363		$	6,992,021		$	1,506,342		22	%	$	8,495,557		$	2,806		—	%
Average loans	1,439,774			1,324,574			115,200			9	%	1,413,170			26,604			2	%
Average deposits	5,492,048			5,495,250			(3,202		)	—	%	5,834,669			(342,621		)	(6	)%
Average invested capital	249,817			236,815			13,002			5	%	248,367			1,450			1	%

Net interest revenue increase d $8.6 million or 42 percent over the third quarter of 2017 . Average trading securities balances increased $1.3 billion and average loans attributed to the Wealth Management segment increased $115 million or 9 percent . Average deposit balances were largely unchanged compared to the third quarter of 2017 . Growth in interest-bearing transaction account balances and time deposit account balances of $177 million or 5 percent and $41 million or 5 percent , respectively, were offset by a $221 million decrease in demand deposits balances.

Fees and commissions revenue increase d $7.6 million or 10 percent over the third quarter of 2017 . Trust fees and commissions increase d $16.9 million as a result of a fee generated from the sale of client assets. This increase was offset by a decrease of $9.8 million or 33 percent in brokerage and trading revenue, which has been adversely affected by rising interest rates that have slowed the origination of mortgage loans and related investment products.

- 20 -

Operating expense increase d $463 thousand or 1 percent over the third quarter of 2017 . Personnel expense decrease d $923 thousand while non-personnel expense increase d $1.4 million or 9 percent .

Corporate expense allocations were up $1.3 million or 13 percent over the prior year.

Net interest revenue remained relatively consistent compared to the second quarter of 2018 . Trust fees and commissions increased $15.8 million as a result of a fee earned on the sale of client assets. Excluding this fee, fiduciary and asset management fees produced relatively consistent results compared to the second quarter of 2018 .

Brokerage and trading revenue decreased $1.7 million or 8 percent compared to the second quarter of 2018 due to a decreased demand in investment products related to rising interest rates and slowing mortgage production.

Average loans increased $27 million or 2 percent to $1.4 billion . Average deposits decrease d $343 million or 6 percent , primarily due to client migrations to investments. Assets under management decreased $1.2 billion or 2 percent to $77.6 billion at September 30, 2018.

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 September 30, 2018 , December 31, 2017 and September 30, 2017 .

We hold an inventory of trading securities in support of sales to a variety of customers, including banks, corporations, insurance companies, money managers and others. Trading securities decrease d $296 million to $1.6 billion during the third quarter of 2018 in response to slower mortgage origination as a result of increased interest rates. As discussed in the Market Risk section of this report, trading activities involve risk of loss from adverse price movement. We mitigate this risk within board-approved limits through the use of derivative contracts, short-sales and other techniques. These limits remain unchanged from levels set before our expanded trading activities.

At September 30, 2018 , the carrying value of investment (held-to-maturity) securities was $374 million and the fair value was $383 million . Investment securities consist primarily of residential mortgage-backed securities issued by U.S. government agencies, long-term, fixed rate Oklahoma and Texas municipal bonds, and taxable Texas school construction bonds.

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 $8.3 billion at September 30, 2018 , a $55 million decrease compared to June 30, 2018 . At September 30, 2018 , the available for sale securities portfolio consisted primarily of U.S. government agency residential mortgage-backed securities and U.S. government agency commercial mortgage-backed securities. Both residential and commercial mortgage-backed securities 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. Commercial mortgage-backed securities have prepayment penalties similar to commercial loans.

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 September 30, 2018 is 3.6 years. Management estimates the duration extends to 4.2 years assuming an immediate 200 basis point upward shock. The estimated duration contracts to 3.4 years assuming a 50 basis point decline in the current low rate environment.

The aggregate gross amount of unrealized losses on available for sale securities totaled $241 million at September 30, 2018 , compared to $205 million at June 30, 2018 due primarily to an increase in longer-term market interest rates. On a quarterly basis, we perform an evaluation on debt 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 during the third quarter of 2018 .

- 21 -

Loans

The aggregate loan portfolio before allowance for loan losses totaled $18.3 billion at September 30, 2018 , up $346 million over June 30, 2018 , primarily due to growth in commercial and commercial real estate loan balances. Residential mortgage loan balances increased slightly while personal loans were largely unchanged.

Table 12 -- Loans

(In thousands)



	Sept. 30, 2018		June 30, 2018		Mar. 31, 2018		Dec. 31, 2017		Sept. 30, 2017
Commercial:
Energy	$	3,294,867	$	3,147,219	$	2,969,618	$	2,930,156	$	2,867,981
Services	3,017,311		2,944,499		2,928,294		2,986,949		2,967,513
Healthcare	2,437,323		2,353,722		2,359,928		2,314,753		2,239,451
Wholesale/retail	1,650,729		1,699,554		1,531,576		1,471,256		1,658,098
Manufacturing	660,582		647,816		559,695		496,774		519,446
Other commercial and industrial	515,289		556,229		570,556		534,087		543,445
Total commercial	11,576,101		11,349,039		10,919,667		10,733,975		10,795,934

Commercial real estate:
Multifamily	1,120,166		1,056,984		1,008,903		980,017		999,009
Office	824,829		820,127		737,144		831,770		797,089
Retail	759,423		768,024		750,396		691,532		725,865
Industrial	696,774		653,384		613,608		573,014		591,080
Residential construction and land development	101,872		118,999		117,458		117,245		112,102
Other commercial real estate	301,611		294,702		279,273		286,409		292,997
Total commercial real estate	3,804,675		3,712,220		3,506,782		3,479,987		3,518,142

Residential mortgage:
Permanent mortgage	1,094,926		1,068,412		1,047,785		1,043,435		1,013,965
Permanent mortgages guaranteed by U.S. government agencies	180,718		169,653		177,880		197,506		187,370
Home equity	696,098		704,185		720,104		732,745		744,415
Total residential mortgage	1,971,742		1,942,250		1,945,769		1,973,686		1,945,750

Personal	996,941		1,000,187		965,632		965,776		947,008

Total	$	18,349,459	$	18,003,696	$	17,337,850	$	17,153,424	$	17,206,834

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 ongoing 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 ongoing 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.

Commercial loans totaled $11.6 billion or 63 percent of the loan portfolio at September 30, 2018 , an increase of $227 million over June 30, 2018 . Energy loan balances grew by $148 million . Healthcare sector loan balances grew by $84 million . Service sector loans increase d $73 million . This growth was partially offset by a $49 million decrease in wholesale/retail sector loans and a $41 million decrease in other commercial and industrial loans.

- 22 -

Table 13 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.

Table 13 -- Commercial Loans by Collateral Location

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/Missouri		Other		Total
Energy	$	702,213	$	1,747,899	$	39,961	$	3,026	$	333,378	$	18,092	$	86,618	$	363,680	$	3,294,867
Services	715,069		836,398		195,957		5,809		353,810		229,825		290,767		389,676		3,017,311
Healthcare	247,956		341,402		115,807		81,435		154,053		110,923		253,843		1,131,904		2,437,323
Wholesale/retail	379,152		583,575		34,116		30,267		87,732		56,742		80,141		399,004		1,650,729
Manufacturing	113,391		189,260		199		5,194		91,286		90,507		83,489		87,256		660,582
Other commercial and industrial	121,115		147,773		2,505		68,318		8,193		1,136		48,189		118,060		515,289
Total commercial loans	$	2,278,896	$	3,846,307	$	388,545	$	194,049	$	1,028,452	$	507,225	$	843,047	$	2,489,580	$	11,576,101

The majority of the collateral securing our commercial loan portfolio is located within our geographical footprint with 33 percent concentrated in the Texas market and 20 percent concentrated in the Oklahoma market. At September 30, 2018 , the Other category is primarily composed of California - $302 million or 3 percent of the commercial loan portfolio, Florida - $266 million or 2 percent of the commercial loan portfolio, Louisiana - $162 million or 1 percent of the commercial loan portfolio, Pennsylvania - $146 million or 1 percent of the commercial loan portfolio, Ohio - $141 million or 1 percent of the commercial loan portfolio and Maryland - $114 million or 1 percent of the commercial loan portfolio. All other states individually represent less than one percent of total commercial loans.

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 $3.3 billion or 18 percent of total loans at September 30, 2018 . Unfunded energy loan commitments were $3.1 billion at September 30, 2018 , up $15 million over June 30, 2018 . Approximately $2.7 billion of energy loans were to oil and gas producers, growing $96 million over June 30, 2018 . The majority of this portfolio is first lien, senior secured, reserve-based lending, which we believe is the lowest risk form of energy lending. Approximately 57 percent of the committed production loans are secured by properties primarily producing oil and 43 percent of the committed production loans are secured by properties primarily producing natural gas. Loans to midstream oil and gas companies totaled $391 million at September 30, 2018 , an increase of $21 million over June 30, 2018 . Loans to borrowers that provide services to the energy industry totaled $151 million at September 30, 2018 , up $12 million over the prior quarter. Loans to other energy borrowers, including those engaged in wholesale or retail energy sales, totaled $54 million , a $19 million increase over the prior quarter.

The services sector of the loan portfolio totaled $3.0 billion or 16 percent of total loans and consists of a large number of loans to a variety of businesses, including governmental, educational services, consumer services, financial services and commercial services. Service sector loans increase d by $73 million over June 30, 2018 . Loans to governmental entities totaled $549 million at September 30, 2018 . Approximately $1.5 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.

The healthcare sector of the loan portfolio totaled $2.4 billion or 13 percent of total loans and consists primarily of loans for the development and operation of senior housing and care facilities, including independent living, assisted living and skilled nursing. Healthcare also includes loans to hospitals and other medical service providers.

- 23 -

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 $100 million and with three or more non-affiliated banks as participants. At September 30, 2018 , the outstanding principal balance of these loans totaled $3.8 billion . Substantially all of these loans are to borrowers with local market relationships. We serve as the agent lender in approximately 16 percent of our shared national credits, based on dollars committed. We hold shared national 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 32 percent and 12 percent of the total commercial real estate portfolio at September 30, 2018 , 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 $3.8 billion or 21 percent of the loan portfolio at September 30, 2018 . The outstanding balance of commercial real estate loans increase d $92 million during the third quarter of 2018 . Loans secured by multifamily residential properties increase d $63 million . Loans secured by industrial properties grew by $43 million while loans secured by residential construction and land development decreased $17 million . The commercial real estate loan balance as a percentage of our total loan portfolio has ranged from 19 percent to 23 percent over the past five years.

The commercial real estate sector of our loan portfolio distributed by collateral location follows in Table 14 .

Table 14 -- Commercial Real Estate Loans by Collateral Location

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/Missouri		Other		Total
Multifamily	$	136,227	$	485,506	$	29,032	$	27,095	$	92,660	$	56,249	$	156,326	$	137,071	$	1,120,166
Office	107,938		250,912		91,841		13,057		31,529		51,207		35,032		243,313		824,829
Retail	58,052		269,243		122,203		5,891		45,142		31,256		14,607		213,029		759,423
Industrial	85,532		170,760		23,192		100		8,989		7,178		43,898		357,125		696,774
Residential construction and land development	7,017		19,994		14,891		1,726		25,442		2,017		13,084		17,701		101,872
Other commercial real estate	48,475		37,614		10,184		1,701		22,329		25,334		16,730		139,244		301,611
Total commercial real estate loans	$	443,241	$	1,234,029	$	291,343	$	49,570	$	226,091	$	173,241	$	279,677	$	1,107,483	$	3,804,675

The Other category is primarily composed of California - $259 million or 7 percent of the commercial real estate portfolio, Florida - $129 million or 3 percent of the commercial real estate portfolio, Utah - $82 million or 2 percent of the commercial real estate portfolio and Virginia - $79 million or 2 percent of the commercial real estate portfolio. All other states represent less than 2% individually.

While recent changes nationally in consumer purchasing trends from brick-and-mortar stores to online has created concern with regards to retail lending, our credit quality remains very good. The portfolio is highly diversified with no material exposure to a single borrower or tenant.

- 24 -

Residential Mortgage and Personal

Residential mortgage loans totaled $2.0 billion , an increase of $29 million over June 30, 2018 . 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 95% 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. Jumbo loans may be fixed or variable rate and are fully amortizing. The size of jumbo loans exceeds 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 percent. Loan-to-value ratios (“LTV”) are tiered from 60 percent to 100 percent, 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 September 30, 2018 , $181 million of permanent residential mortgage loans are guaranteed by U.S. government agencies. We have limited 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 $11 million over June 30, 2018 .

Home equity loans totaled $696 million at September 30, 2018 , an $8.1 million decrease compared to June 30, 2018 . 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 50 percent. The maximum loan amount available for our home equity loan products is generally $400 thousand. Revolving loans have a 10 year revolving period followed by a 15 year term of amortizing repayment. Interest-only home equity loans have a 5 year revolving period followed by a 15 year term of amortizing repayments and may not be extended for any additional revolving time. All other home equity loans may be extended at management's discretion for an additional 5 year revolving term subject to an update of certain credit information. A summary of our home equity loan portfolio at September 30, 2018 by lien position and amortizing status follows in Table 15 .

Table 15 -- Home Equity Loans

(In thousands)



	Revolving		Amortizing		Total
First lien	$	68,256	$	357,039	$	425,295
Junior lien	152,885		117,918		270,803
Total home equity	$	221,141	$	474,957	$	696,098

- 25 -

The distribution of residential mortgage and personal loans at September 30, 2018 is as follows in Table 16 . Residential mortgage loans are distributed by collateral location. Personal loans are generally distributed by borrower location.

Table 16 -- Residential Mortgage and Personal Loans by Collateral Location

(In thousands)



	Oklahoma		Texas		New Mexico		Arkansas		Colorado		Arizona		Kansas/Missouri		Other		Total
Residential mortgage:
Permanent mortgage	$	174,482	$	444,286	$	58,153	$	13,316	$	194,457	$	95,578	$	64,813	$	49,841	$	1,094,926
Permanent mortgages guaranteed by U.S. government agencies	45,635		31,780		33,319		8,816		3,758		1,250		13,393		42,767		180,718
Home equity	371,770		130,623		83,068		6,165		40,275		9,481		52,117		2,599		696,098
Total residential mortgage	$	591,887	$	606,689	$	174,540	$	28,297	$	238,490	$	106,309	$	130,323	$	95,207	$	1,971,742

Personal	$	326,912	$	404,543	$	12,759	$	12,275	$	60,256	$	60,901	$	61,776	$	57,519	$	996,941

- 26 -

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 Company are centrally managed by the Bank of Oklahoma.

Table 17 -- Loans Managed by Primary Geographical Market

(In thousands)



	Sept. 30, 2018		June 30, 2018		Mar. 31, 2018		Dec. 31, 2017		Sept. 30, 2017
Oklahoma:
Commercial	$	3,609,109	$	3,465,407	$	3,265,013	$	3,238,720	$	3,408,973
Commercial real estate	651,315		662,665		668,031		682,037		712,915
Residential mortgage	1,429,843		1,403,658		1,419,281		1,435,432		1,405,900
Personal	376,201		362,846		353,128		342,212		322,320
Total Oklahoma	6,066,468		5,894,576		5,705,453		5,698,401		5,850,108

Texas:
Commercial	5,115,646		4,922,451		4,715,841		4,520,401		4,434,595
Commercial real estate	1,354,679		1,336,101		1,254,421		1,261,864		1,236,702
Residential mortgage	253,265		243,400		229,761		233,675		229,993
Personal	381,452		394,021		363,608		375,084		375,173
Total Texas	7,105,042		6,895,973		6,563,631		6,391,024		6,276,463

Albuquerque:
Commercial	325,048		305,167		315,701		343,296		367,747
Commercial real estate	392,494		386,878		348,485		341,282		319,208
Residential mortgage	88,110		90,581		93,490		98,018		101,983
Personal	11,659		11,107		11,667		11,721		12,953
Total Albuquerque	817,311		793,733		769,343		794,317		801,891

Arkansas:
Commercial	102,237		93,217		94,430		95,644		91,051
Commercial real estate	106,701		90,807		88,700		87,393		80,917
Residential mortgage	7,278		6,927		7,033		6,596		6,318
Personal	12,126		12,331		9,916		9,992		10,388
Total Arkansas	228,342		203,282		200,079		199,625		188,674

Colorado:
Commercial	1,132,500		1,165,721		1,180,655		1,130,714		1,124,200
Commercial real estate	354,543		267,065		210,801		174,201		186,427
Residential mortgage	68,694		64,839		64,530		63,350		63,734
Personal	56,999		60,504		63,118		63,115		60,513
Total Colorado	1,612,736		1,558,129		1,519,104		1,431,380		1,434,874

Arizona:
Commercial	621,658		681,852		624,106		687,792		634,809
Commercial real estate	666,562		710,784		672,319		660,094		706,188
Residential mortgage	44,659		47,010		39,227		41,771		40,730
Personal	67,280		65,541		57,023		57,140		55,050
Total Arizona	1,400,159		1,505,187		1,392,675		1,446,797		1,436,777

Kansas/Missouri:
Commercial	669,903		715,224		723,921		717,408		734,559
Commercial real estate	278,381		257,920		264,025		273,116		275,785
Residential mortgage	79,893		85,835		92,447		94,844		97,092
Personal	91,224		93,837		107,172		106,512		110,611
Total Kansas/Missouri	1,119,401		1,152,816		1,187,565		1,191,880		1,218,047

Total BOK Financial loans	$	18,349,459	$	18,003,696	$	17,337,850	$	17,153,424	$	17,206,834

- 27 -

Loan Commitments

We enter into certain off-balance sheet arrangements in the normal course of business as shown in Table 18. 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.

Table 18 – Off-Balance Sheet Credit Commitments

(In thousands)



	Sept. 30, 2018		June 30, 2018		Mar. 31, 2018		Dec. 31, 2017		Sept. 30, 2017
Loan commitments	$	10,715,964	$	10,294,211	$	10,249,729	$	9,958,080	$	9,693,489
Standby letters of credit	671,844		659,867		664,342		647,653		665,513
Mortgage loans sold with recourse	101,512		116,269		121,197		125,127		128,681

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. 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. Substantially all of these loans are to borrowers in our primary markets including $63 million to borrowers in Oklahoma and, $12 million to borrowers in Arkansas. An accrual related to this off-balance sheet risk is included in Other liabilities in the Consolidated Balance Sheets and totaled $3.1 million at September 30, 2018 and $3.5 million at June 30, 2018 and $3.8 million at September 30, 2017 .

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 and to service loans in accordance with investor guidelines. The Company has established accruals for losses related to these obligations that are included in Other liabilities in the Consolidated Balance Sheets and in Mortgage banking costs in the Consolidated Statements of Earnings.

For the period from 2010 through the third quarter of 2018 combined, approximately 17 percent of repurchase requests have currently resulted in actual repurchases or indemnification by the Company. There were three loans repurchased from the agencies during the third quarter of 2018 . There was one loan with indemnification paid during the third quarter of 2018 .

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



	September 30,
	2018		2017
Number of unresolved deficiency requests	170		180
Aggregate outstanding principal balance subject to unresolved deficiency requests	$	6,066	$	8,899
Unpaid principal balance subject to indemnification by the Company	7,071		5,206

The accrual for potential loan repurchases under representations and warranties totaled $1.1 million at September 30, 2018 , $1.1 million at June 30, 2018 , and $1.4 million at September 30, 2017 .

- 28 -

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 scenarios 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 the counterparty’s ability to provide margin collateral was impaired. Credit losses on customer derivatives reduce brokerage and trading revenue in the Consolidated Statements of Earnings.

Derivative contracts are carried at fair value. At September 30, 2018 , the net fair values of derivative contracts, before consideration of cash margin, reported as assets under these programs totaled $359 million compared to $382 million at June 30, 2018 . At September 30, 2018 , the net fair value of our derivative contracts included $147 million for foreign exchange contracts, $134 million for energy contracts, $45 million for interest rate swaps and $28 million of to-be-announced residential mortgage-backed securities. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $351 million at September 30, 2018 and $364 million at June 30, 2018 .

At September 30, 2018 , total derivative assets were reduced by $17 million of cash collateral received from counterparties and total derivative liabilities were reduced by $119 million of cash collateral paid to counterparties related to instruments executed with the same counterparty under a master netting agreement.

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

The fair value of derivative contracts reported as assets under these programs, net of cash margin held by the Company, by category of debtor at September 30, 2018 follows in Table 19 .

Table 19 -- Fair Value of Derivative Contracts

(In thousands)



Customers	$	186,959
Banks and other financial institutions	102,405
Exchanges and clearing organizations	52,320
Fair value of customer risk management program asset derivative contracts, net	$	341,684

At September 30, 2018 , our largest derivative exposure was to an exchange for to-be-announced mortgage-back security contracts of $27 million.

- 29 -

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 $33.33 per barrel of oil would decrease the fair value of derivative assets by $108 million. An increase in prices equivalent to $85.69 per barrel of oil would increase the fair value of derivative assets by $129 million. Liquidity requirements of this program may also be affected by our credit rating. At September 30, 2018 , a decrease in our credit rating to below investment grade did not have a significant impact on our obligation to post cash margin on existing contracts. The fair value of our to-be-announced residential mortgage-backed securities and interest rate swap derivative contracts is affected by changes in interest rates. Based on our assessment as of September 30, 2018 , 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. At September 30, 2018 , the combined allowance for loan losses and off-balance sheet credit losses totaled $213 million or 1.16 percent of outstanding loans and 146 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $211 million and the accrual for off-balance sheet credit losses was $2.0 million . At June 30, 2018 , the combined allowance for credit losses was $218 million or 1.21 percent of outstanding loans and 138 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $215 million and the accrual for off-balance sheet credit losses was $2.4 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. Based on an evaluation of all credit factors, including overall loan growth, the trends in nonaccruing loans, potential problem loans and net charge-offs, the Company determined that $4.0 million provision for credit losses was appropriate for the third quarter of 2018 . The Company recorded no provision for credit losses in the second quarter of 2018 .

- 30 -

Table 20 -- Summary of Loan Loss Experience

(In thousands)



	Three Months Ended
	Sept. 30, 2018			June 30, 2018			Mar. 31, 2018			Dec. 31, 2017			Sept. 30, 2017
Allowance for loan losses:
Beginning balance	$	215,142		$	223,967		$	230,682		$	247,703		$	250,061
Loans charged off:
Commercial	(9,602		)	(13,775		)	(1,563		)	(13,254		)	(4,429		)
Commercial real estate	—			—			—			—			—
Residential mortgage	(91		)	(135		)	(100		)	(205		)	(168		)
Personal	(1,380		)	(1,195		)	(1,227		)	(1,290		)	(1,228		)
Total	(11,073		)	(15,105		)	(2,890		)	(14,749		)	(5,825		)
Recoveries of loans previously charged off:
Commercial	1,263			298			488			1,982			1,014
Commercial real estate	40			3,097			183			258			739
Residential mortgage	229			505			242			229			134
Personal	560			678			663			592			550
Total	2,092			4,578			1,576			3,061			2,437
Net loans recovered (charged off)	(8,981		)	(10,527		)	(1,314		)	(11,688		)	(3,388		)
Provision for loan losses	4,408			1,702			(5,401		)	(5,333		)	1,030
Ending balance	$	210,569		$	215,142		$	223,967		$	230,682		$	247,703
Accrual for off-balance sheet credit losses:
Beginning balance	$	2,433		$	4,135		$	3,734		$	5,401		$	6,431
Provision for off-balance sheet credit losses	(408		)	(1,702		)	401			(1,667		)	(1,030		)
Ending balance	$	2,025		$	2,433		$	4,135		$	3,734		$	5,401
Total combined provision for credit losses	$	4,000		$	—		$	(5,000	)	$	(7,000	)	$	—
Allowance for loan losses to loans outstanding at period-end	1.15		%	1.19		%	1.29		%	1.34		%	1.44		%
Net charge-offs (recoveries) (annualized) to average loans	0.20		%	0.24		%	0.03		%	0.27		%	0.08		%
Total provision for credit losses (annualized) to average loans	0.09		%	—		%	(0.12		)%	(0.16		)%	—		%
Recoveries to gross charge-offs	18.89		%	30.31		%	54.53		%	20.75		%	41.84		%
Accrual for off-balance sheet credit losses to off-balance sheet credit commitments	0.02		%	0.02		%	0.04		%	0.04		%	0.05		%
Combined allowance for credit losses to loans outstanding at period-end	1.16		%	1.21		%	1.32		%	1.37		%	1.47		%

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 original 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. A specific allowance is required when the outstanding principal balance of the loan is not supported by either the discounted cash flows expected to be received from the borrower or the fair value of collateral for collateral dependent loans. At September 30, 2018 , impaired loans totaled $326 million , including $38 million with specific allowances of $14 million and $287 million with no specific allowances. At June 30, 2018 , impaired loans totaled $328 million , including $60 million of impaired loans with specific allowances of $15 million and $268 million with no specific allowances.

- 31 -

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 $178 million at September 30, 2018 . The general allowance for unimpaired loans decrease d $6.6 million compared to June 30, 2018 , primarily related to the commercial loan segment.

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 $19 million at September 30, 2018 , a $3.4 million increase over June 30, 2018 . The nonspecific allowance increased primarily related to the estimated impact of interest rate increases on variable-rate borrowers and impact of tariffs on cost of goods borrowers use such as steel.

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

Our loan monitoring process also identified certain accruing substandard 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. These potential problem loans totaled $176 million at September 30, 2018 and were primarily composed of $106 million or 3 percent of energy loans, $21 million or 3 percent of commercial real estate loans secured by retail facilities, $16 million or 1 percent of healthcare sector loans, $13 million or 2 percent of manufacturing sector loans and $12 million or less than 1 percent of service sector loans. Potential problem loans totaled $140 million at June 30, 2018 .

Based on 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. Other loans especially mentioned totaled $56 million at September 30, 2018 and were composed primarily of $27 million or 1 percent of service sector loans. Other loans especially mentioned totaled $124 million at June 30, 2018 .

We updated our semi-annual energy loan portfolio stress test at June 30, 2018 to estimate how the energy portfolio may respond in a prolonged low-price environment. Stress test assumptions applied the five year forward pricing curve which decreases from a starting price of $2.29 per million BTUs for natural gas and $51.70 per barrel of oil to $2.17 per million BTUs for natural gas and $43.37 per barrel of oil in year 5 and then escalated 3 percent annually for years six through ten to a maximum of $2.50 and $49.99, respectively. Results of the stress test were considered in conjunction with the determination of the allowance for credit losses.

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 net charge-offs of $9.0 million in the third quarter of 2018 , compared to net charge-offs of $10.5 million in the second quarter of 2018 and net charge-offs of $3.4 million in the third quarter of 2017 . The ratio of net loans charged off to average loans on an annualized basis was 0.20 percent for the third quarter of 2018 , compared with 0.24 percent for the second quarter of 2018 and 0.08 percent for the third quarter of 2017 .

Net charge-offs of commercial loans were $8.3 million in the third quarter of 2018 , primarily related to a single energy production borrower and single wholesale/retail sector borrower. Net commercial real estate loan recoveries were $40 thousand in the third quarter of 2018 . Net recoveries of residential mortgage loans were $138 thousand and net charge-offs of personal loans were $820 thousand for the third quarter. Personal loan net charge-offs include deposit account overdraft losses.

- 32 -

Nonperforming Assets

Table 21 -- Nonperforming Assets

(In thousands)



	Sept. 30, 2018			June 30, 2018			Mar. 31, 2018			Dec. 31, 2017			Sept. 30, 2017
Nonaccruing loans:
Commercial	$	109,490		$	120,978		$	131,460		$	137,303		$	176,900
Commercial real estate	1,316			1,996			2,470			2,855			2,975
Residential mortgage	41,917			42,343			45,794			47,447			45,506
Personal	269			340			340			269			255
Total nonaccruing loans	152,992			165,657			180,064			187,874			225,636
Accruing renegotiated loans guaranteed by U.S. government agencies	83,347			75,374			74,418			73,994			69,440
Real estate and other repossessed assets	24,515			27,891			23,652			28,437			32,535
Total nonperforming assets	$	260,854		$	268,922		$	278,134		$	290,305		$	327,611
Total nonperforming assets excluding those guaranteed by U.S. government agencies	$	169,717		$	185,981		$	194,833		$	207,132		$	249,280

Nonaccruing loans by loan portfolio segment and class:
Commercial:
Energy	$	54,033		$	65,597		$	89,942		$	92,284		$	110,683
Healthcare	15,704			16,125			15,342			14,765			24,446
Wholesale/retail	9,249			14,095			2,564			2,574			1,893
Manufacturing	9,202			2,991			3,002			5,962			9,059
Services	4,097			4,377			2,109			2,620			1,174
Other commercial and industrial	17,205			17,793			18,501			19,098			29,645
Total commercial	109,490			120,978			131,460			137,303			176,900

Commercial real estate:
Retail	777			1,068			264			276			289
Residential construction and land development	350			350			1,613			1,832			1,924
Office	—			275			275			275			275
Multifamily	—			—			—			—			—
Industrial	—			—			—			—			—
Other commercial real estate	189			303			318			472			487
Total commercial real estate	1,316			1,996			2,470			2,855			2,975

Residential mortgage:
Permanent mortgage	22,855			23,105			24,578			25,193			24,623
Permanent mortgage guaranteed by U.S. government agencies	7,790			7,567			8,883			9,179			8,891
Home equity	11,272			11,671			12,333			13,075			11,992
Total residential mortgage	41,917			42,343			45,794			47,447			45,506
Personal	269			340			340			269			255
Total nonaccruing loans	$	152,992		$	165,657		$	180,064		$	187,874		$	225,636

Ratios:
Allowance for loan losses to nonaccruing loans ¹	145.02		%	136.09		%	130.84		%	129.09		%	114.28		%
Accruing loans 90 days or more past due ¹	$	518		$	879		$	90		$	633		$	253


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

- 33 -

Nonperforming assets totaled $261 million or 1.42 percent of outstanding loans and repossessed assets at September 30, 2018 . Nonaccruing loans totaled $153 million , accruing renegotiated residential mortgage loans totaled $83 million and real estate and other repossessed assets totaled $25 million . All accruing renegotiated residential mortgage loans and $7.8 million of nonaccruing loans are guaranteed by U.S. government agencies. Excluding assets guaranteed by U.S. government agencies, nonperforming assets decrease d $16 million compared to the second quarter, primarily due to a decrease in nonaccruing energy and wholesale/retail sector loans. 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 currently 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. Nonaccruing loans generally remain on nonaccrual status until full collection of principal and interest in accordance with the original terms, including principal previously charged off, is probable. We generally do not voluntarily modify personal loans to troubled borrowers. Personal loans modified at the direction of bankruptcy court orders are identified as troubled debt restructurings and classified as nonaccruing.

Renegotiated loans currently 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 nine months ended September 30, 2018 follows in Table 22 .

Table 22 -- Rollforward of Nonperforming Assets

(In thousands)



	Three Months Ended
	September 30, 2018
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, June 30, 2018	$	165,657		$	75,374		$	27,891		$	268,922
Additions	20,063			12,885			—			32,948
Payments	(20,162		)	(867		)	—			(21,029		)
Charge-offs	(11,073		)	—			—			(11,073		)
Net gains, losses and write-downs	—			—			(1,965		)	(1,965		)
Foreclosure of nonperforming loans	(770		)	—			770			—
Foreclosure of loans guaranteed by U.S. government agencies	(873		)	(2,144		)	—			(3,017		)
Proceeds from sales	—			(2,136		)	(2,648		)	(4,784		)
Net transfers to nonaccruing loans	150			(150		)	—			—
Return to accrual status	—			—			—			—
Other, net	—			385			467			852
Balance, September 30, 2018	$	152,992		$	83,347		$	24,515		$	260,854

- 34 -



	Nine Months Ended
	September 30, 2018
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, December 31, 2017	$	187,874		$	73,994		$	28,437		$	290,305
Additions	72,211			43,506			—			115,717
Payments	(63,700		)	(2,242		)	—			(65,942		)
Charge-offs	(29,068		)	—			—			(29,068		)
Net gains, losses and write-downs	—			—			(5,971		)	(5,971		)
Foreclosure of nonperforming loans	(9,513		)	—			9,513			—
Foreclosure of loans guaranteed by U.S. government agencies	(4,059		)	(5,935		)	—			(9,994		)
Proceeds from sales	—			(26,221		)	(8,164		)	(34,385		)
Net transfers to nonaccruing loans	1,086			(1,086		)	—			—
Return to accrual status	(1,839		)	—			—			(1,839		)
Other, net	—			1,331			700			2,031
Balance, September 30, 2018	$	152,992		$	83,347		$	24,515		$	260,854

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 limited. These properties will be conveyed to the agencies once applicable criteria have been met.

Commercial

Nonaccruing commercial loans totaled $109 million or 0.95 percent of total commercial loans at September 30, 2018 and $121 million or 1.07 percent of commercial loans at June 30, 2018 . There were $15 million in newly identified nonaccruing commercial loans during the quarter, offset by $17 million in payments and $10 million of charge-offs of nonaccruing commercial loans during the third quarter. There were no foreclosures of commercial loans during the third quarter.

Nonaccruing commercial loans at September 30, 2018 were primarily composed of $54 million or 1.64 percent of total energy loans, $17 million or 3.34 percent of total other commercial and industrial sector loans and $16 million or 0.64 percent of total healthcare sector loans.

Commercial Real Estate

Nonaccruing commercial real estate loans totaled $1.3 million or 0.03 percent of outstanding commercial real estate loans at September 30, 2018 , compared to $2.0 million or 0.05 percent of outstanding commercial real estate loans at June 30, 2018 . Newly identified nonaccruing commercial real estate loans of $22 thousand were offset by $702 thousand of cash payments received. There were no charge-offs or foreclosures of nonaccruing commercial real estate loans during the third quarter.

Nonaccruing commercial real estate loans were primarily composed of $777 thousand or 0.10 percent of loans secured by retail facilities.

Residential Mortgage and Personal

Nonaccruing residential mortgage loans totaled $42 million or 2.13 percent of outstanding residential mortgage loans at September 30, 2018 , a $426 thousand decrease compared to June 30, 2018 . Newly identified nonaccruing residential mortgage loans totaling $3.6 million were offset $2.4 million of payments, $1.6 million of foreclosures and $91 thousand of loans charged off during the quarter.

Nonaccruing residential mortgage loans primarily consist of non-guaranteed permanent residential mortgage loans, which totaled $23 million or 2.09 percent of outstanding non-guaranteed permanent residential mortgage loans at September 30, 2018 . Nonaccruing home equity loans totaled $11 million or 1.62 percent of total home equity loans.

- 35 -

Payments of accruing residential mortgage loans and personal loans may be delinquent. The composition of residential mortgage loans and personal loans past due but still accruing is included in the following Table 23 . Substantially all non-guaranteed residential loans past due 90 days or more are nonaccruing. Residential mortgage loans 30 to 59 days past due increase d $3.2 million in the third quarter to $7.3 million at September 30, 2018 . Residential mortgage loans 60 to 89 days past due increase d by $998 thousand . Personal loans past due 30 to 59 days increase d by $722 thousand and personal loans 60 to 89 days decrease d $92 thousand .

Table 23 -- Residential Mortgage and Personal Loans Past Due

(In thousands)



	September 30, 2018						June 30, 2018
	90 Days or More		60 to 89 Days		30 to 59 Days		90 Days or More		60 to 89 Days		30 to 59 Days
Residential mortgage:
Permanent mortgage ¹	$	—	$	1,732	$	5,721	$	84	$	796	$	2,568
Home equity	121		156		1,609		65		94		1,612
Total residential mortgage	$	121	$	1,888	$	7,330	149		$	890	$	4,180

Personal	$	—	$	58	$	900	$	—	$	150	$	178


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 the date of foreclosure or current fair value, less estimated selling costs.

Real estate and other repossessed assets totaled $25 million at September 30, 2018 , composed primarily of $11 million of oil and gas properties, $5.3 million of 1-4 family residential properties, $3.6 million of developed commercial real estate and $4.5 million of undeveloped land primarily zoned for commercial development. Real estate and other repossessed assets totaled $28 million at June 30, 2018 .

- 36 -

Liquidity and Capital

Based on the average balances for the third quarter of 2018 , approximately 65 percent of our funding was provided by deposit accounts, 21 percent from borrowed funds, less than 1 percent from long-term subordinated debt and 11 percent 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.

Subsidiary Bank

Deposits and borrowed funds are the primary sources of liquidity for BOKF, NA, the wholly owned subsidiary bank of BOK Financial. 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 personal and small business checking, online bill paying services, mobile banking services, an extensive network of branch locations and ATMs and our ExpressBank call center. Commercial deposit growth is supported by offering treasury management and lockbox services. We also acquire brokered deposits when the cost of funds is advantageous to other funding sources.

Average deposits for the third quarter of 2018 totaled $22 billion , a decrease of $119 million compared to the second quarter of 2018 . Interest-bearing transaction account balances decrease d $179 million and time deposits decrease d $41 million . Demand deposits increase d $102 million over second quarter of 2018 .

Table 24 - Average Deposits by Line of Business

(In thousands)



	Three Months Ended
	Sept. 30, 2018		June 30, 2018		Mar. 31, 2018		Dec. 31, 2017		Sept. 30, 2017
Commercial Banking	$	8,633,204	$	8,379,584	$	8,679,269	$	8,799,166	$	8,727,221
Consumer Banking	6,580,395		6,579,635		6,533,901		6,622,149		6,663,969
Wealth Management	5,492,048		5,834,669		5,582,554		5,457,566		5,495,250
Subtotal	20,705,647		20,793,888		20,795,724		20,878,881		20,886,440
Funds Management and other	1,230,648		1,261,344		1,331,171		1,282,179		1,232,881
Total	$	21,936,295	$	22,055,232	$	22,126,895	$	22,161,060	$	22,119,321

Average Commercial Banking deposit balances increase d $254 million over second quarter of 2018 . Demand deposit balances increase d $218 million and interest-bearing transaction account balances increase d $28 million . Despite the series of federal funds rate increases from the Federal Reserve, as well as modest increases in our earnings credit, commercial customers continue to retain large cash reserves primarily due to a combination of factors including uncertainty about the economic environment and potential for growth, lack of preferable liquid alternatives and a desire 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. Commercial deposit balances may decrease as the economic outlook continues to improve and if short-term rates continue to move higher, enhancing their investment alternatives. As short-term rates move higher, related increases to the earnings credit rate may be appropriate, which will reduce the amount of deposits required to offset service charges.

Average Consumer Banking deposit balances increase d $760 thousand over the prior quarter. Demand deposit balances grew by $30 million . This growth was offset by decreases of $22 million in interest-bearing transaction account balances $6.9 million in time deposit balances.

Average Wealth Management deposits decrease d $343 million compared to the second quarter of 2018 primarily due to customers deploying funds in other off-balance sheet investment alternatives. Interest-bearing transaction account balances were down $179 million , demand deposit balances decrease d $124 million , and time deposits balances were down $39 million .

Average time deposits for the third quarter of 2018 included $248 million of brokered deposits, a decrease of $4.2 million compared to the second quarter of 2018 . Average interest-bearing transaction accounts for the third quarter included $813 million of brokered deposits, a decrease of $14 million compared to the second quarter of 2018 .

- 37 -

The distribution of our period end deposit account balances among principal markets follows in Table 25 .

Table 25 -- Period End Deposits by Principal Market Area

(In thousands)



	Sept. 30, 2018		June 30, 2018		Mar. 31, 2018		Dec. 31, 2017		Sept. 30, 2017
Oklahoma:
Demand	$	3,564,307	$	3,867,933	$	4,201,842	$	3,885,008	$	4,061,612
Interest-bearing:
Transaction	6,010,972		5,968,460		6,051,302		5,901,293		5,909,259
Savings	288,080		289,202		289,351		265,870		265,023
Time	1,128,810		1,207,471		1,203,534		1,092,133		1,131,547
Total interest-bearing	7,427,862		7,465,133		7,544,187		7,259,296		7,305,829
Total Oklahoma	10,992,169		11,333,066		11,746,029		11,144,304		11,367,441

Texas:
Demand	3,353,248		3,317,656		3,015,869		3,239,098		3,094,184
Interest-bearing:
Transaction	2,181,382		2,168,488		2,208,480		2,397,071		2,272,987
Savings	97,909		97,809		98,852		93,620		93,400
Time	453,119		445,500		475,967		502,879		521,072
Total interest-bearing	2,732,410		2,711,797		2,783,299		2,993,570		2,887,459
Total Texas	6,085,658		6,029,453		5,799,168		6,232,668		5,981,643

Albuquerque:
Demand	722,188		770,974		695,060		663,353		659,793
Interest-bearing:
Transaction	593,760		586,593		555,414		552,393		551,884
Savings	57,794		59,415		60,596		55,647		53,532
Time	221,513		212,689		216,306		216,743		224,773
Total interest-bearing	873,067		858,697		832,316		824,783		830,189
Total Albuquerque	1,595,255		1,629,671		1,527,376		1,488,136		1,489,982

Arkansas:
Demand	36,579		39,896		35,291		30,384		31,442
Interest-bearing:
Transaction	128,001		143,298		94,206		85,095		126,746
Savings	1,826		1,885		1,960		1,881		1,876
Time	10,214		10,771		11,878		14,045		14,434
Total interest-bearing	140,041		155,954		108,044		101,021		143,056
Total Arkansas	176,620		195,850		143,335		131,405		174,498

- 38 -



	Sept. 30, 2018		June 30, 2018		Mar. 31, 2018		Dec. 31, 2017		Sept. 30, 2017
Colorado:
Demand	593,442		529,912		521,963		633,714		540,300
Interest-bearing:
Transaction	622,520		701,362		687,785		657,629		628,807
Savings	40,308		38,176		37,232		35,223		34,776
Time	217,628		208,049		215,330		224,962		231,927
Total interest-bearing	880,456		947,587		940,347		917,814		895,510
Total Colorado	1,473,898		1,477,499		1,462,310		1,551,528		1,435,810

Arizona:
Demand	370,299		387,952		330,196		334,701		335,740
Interest-bearing:
Transaction	130,837		194,353		248,337		274,846		174,010
Savings	3,559		3,935		4,116		3,343		4,105
Time	23,927		22,447		21,009		20,394		20,831
Total interest-bearing	158,323		220,735		273,462		298,583		198,946
Total Arizona	528,622		608,687		603,658		633,284		534,686

Kansas/Missouri:
Demand	423,560		459,636		505,802		457,080		462,410
Interest-bearing:
Transaction	322,747		401,545		381,447		382,066		361,391
Savings	13,125		13,052		13,845		13,574		12,513
Time	20,635		20,805		22,230		27,260		27,705
Total interest-bearing	356,507		435,402		417,522		422,900		401,609
Total Kansas/Missouri	780,067		895,038		923,324		879,980		864,019
Total BOK Financial deposits	$	21,632,289	$	22,169,264	$	22,205,200	$	22,061,305	$	21,848,079

In addition to deposits, 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 wholesale federal funds purchased totaled $250 million at September 30, 2018 . 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 agency 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 $5.7 billion during the quarter, compared to $6.5 billion in the second quarter of 2018 .

At September 30, 2018 , the estimated unused credit available to BOKF, NA from collateralized sources was approximately $6.3 billion.

A summary of other borrowings for BOK Financial on a consolidated basis follows in Table 26 .

- 39 -

Table 26 -- Borrowed Funds

(In thousands)



			Three Months Ended September 30, 2018								Three Months Ended June 30, 2018
	Sept. 30, 2018		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter		June 30, 2018		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter

Parent Company and Other Non-Bank Subsidiaries:
Other borrowings	5,278		5,300		1.57	%	$	5,335	—		—		—	%	—
Subordinated debentures	144,707		144,702		5.55	%	$	144,707	144,697		144,692		5.67	%	144,697
Total parent company and other non-bank subsidiaries	149,985		150,002		5.41	%			144,697		144,692		5.67	%

BOKF, NA:
Funds purchased	339,978		725,518		1.90	%	949,531		305,668		133,064		1.44	%	305,668
Repurchase agreements	450,763		468,065		0.25	%	563,139		574,359		460,186		0.26	%	574,359
Other borrowings:
Federal Home Loan Bank advances	6,000,000		5,731,522		2.19	%	6,000,000		5,900,000		6,470,330		1.96	%	6,500,000
GNMA repurchase liability	16,053		15,199		4.36	%	16,188		14,386		11,658		4.47	%	14,386
Other	4,152		13,419		2.25	%	15,096		15,059		15,032		2.35	%	15,059
Total other borrowings	6,020,205		5,760,140		2.20	%			5,929,445		6,497,020		1.96	%
Total BOKF, NA	6,810,946		6,953,723		2.04	%			6,809,472		7,090,270		1.84	%

Total other borrowed funds and subordinated debentures	$	6,960,931	$	7,103,725	2.11	%			$	6,954,169	$	7,234,962	1.92	%

BOKF, NA 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

At September 30, 2018 , cash and interest-bearing cash and cash equivalents held by the parent company totaled $451 million, including $242 million of cash consideration available for the closing of the acquisition of CoBiz Financial on October 1, 2018. The primary sources of liquidity for BOK Financial are cash on hand and dividends from BOKF, NA. Dividends from the bank are limited by various banking regulations to net profits, as defined, for the year plus retained profits for the two preceding years. Dividends are further restricted by minimum capital requirements. At September 30, 2018 , based upon the most restrictive limitations as well as management's internal capital policy, the bank could declare up to $79 million of dividends without regulatory approval. Dividend constraints may be alleviated through increases in retained earnings, capital issuances or changes in risk weighted assets. Future losses or increases in required regulatory capital at the bank could affect its ability to pay dividends to the parent company.

Our equity capital at September 30, 2018 was $3.6 billion , a $62 million increase over June 30, 2018 . Net income less cash dividends paid increase d equity $84 million during the third quarter of 2018 . Changes in interest rates resulted in an increase in the accumulated other comprehensive loss to $162 million at September 30, 2018 , compared to $135 million at June 30, 2018 . Capital is managed to maximize long-term value to the shareholders. Factors considered in managing capital include projections of future earnings including expected benefits from lower federal income tax rates, asset growth and acquisition strategies, and regulatory and debt covenant requirements. Capital management may include subordinated debt or perpetual preferred stock issuance, share repurchase and stock and cash dividends.

- 40 -

On October 27, 2015, the board of directors authorized the Company to purchase up to five million common shares, subject to market conditions, securities law and other regulatory compliance limitations. As of September 30, 2018 , a cumulative total of 3,050,083 shares have been repurchased under this authorization. The Company repurchased no shares in the third quarter of 2018 . The Company repurchased 8,257 shares in the second quarter of 2018 at an average price of $99.84 per share.

BOK Financial and BOKF, NA 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.

Regulatory capital rules establish a 7 percent threshold for the common equity Tier 1 ratio consisting of a minimum level plus capital conservation buffer. The Company has elected to exclude unrealized gains and losses from available for sale securities from its calculation of Tier 1 capital. Components of the capital rules effective January 1, 2015 for the Company will phase in through January 1, 2019, with certain exceptions.

A summary of minimum capital requirements, including capital conservation buffer follows in Table 27 . 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.

The capital ratios for BOK Financial on a consolidated basis are presented in Table 27 .

Table 27 -- Capital Ratios



	Minimum Capital Requirement		Capital Conservation Buffer		Minimum Capital Requirement Including Capital Conservation Buffer		Sept. 30, 2018		June 30, 2018		Sept 30, 2017
Risk-based capital:
Common equity Tier 1	4.50	%	2.50	%	7.00	%	12.05	%	11.92	%	11.90	%
Tier 1 capital	6.00	%	2.50	%	8.50	%	12.05	%	11.92	%	11.90	%
Total capital	8.00	%	2.50	%	10.50	%	13.35	%	13.26	%	13.47	%
Tier 1 Leverage	4.00	%	N/A		4.00	%	9.90	%	9.57	%	9.30	%

Average total equity to average assets							10.73	%	10.36	%	10.56	%
Tangible common equity ratio							9.55	%	9.21	%	9.23	%

At March 31, 2018, the company exceeded the $1 billion regulatory capital rules threshold for trading assets plus liabilities. This subjects the company to the market risk rule, which imposes additional modeling, systems, oversight and reporting requirements effective for the second quarter of 2018 and results in an increase in risk weighted assets associated with trading.

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.

Table 28 provides a reconciliation of the non-GAAP measures with financial measures defined by GAAP.

- 41 -

Table 28 -- Non-GAAP Measure

(Dollars in thousands)



	Sept. 30, 2018			June 30, 2018			Mar. 31, 2018			Dec. 31, 2017			Sept. 30, 2017
Tangible common equity ratio:
Total shareholders' equity	$	3,615,032		$	3,553,431		$	3,495,029		$	3,495,367		$	3,488,814
Less: Goodwill and intangible assets, net	480,800			481,366			477,088			476,088			485,710
Tangible common equity	3,134,232			3,072,065			3,017,941			3,019,279			3,003,104
Total assets	33,289,864			33,833,107			33,361,492			32,272,160			33,005,515
Less: Goodwill and intangible assets, net	480,800			481,366			477,088			476,088			485,710
Tangible assets	$	32,809,064		$	33,351,741		$	32,884,404		$	31,796,072		$	32,519,805
Tangible common equity ratio	9.55		%	9.21		%	9.18		%	9.50		%	9.23		%

Off-Balance Sheet Arrangements

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

Market Risk

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

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

The Asset/Liability Committee is responsible for managing market risk in accordance with policy limits 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. These limits also set maximum levels for short-term borrowings, short-term assets, public funds and brokered deposits and establish minimum levels for un-pledged assets, among other things. Further, the Board approved market risk limits for fixed income trading, mortgage pipeline and mortgage servicing assets inclusive of economic hedge benefits. Exposure is measured daily and compliance is reviewed monthly. Deviations from the Board approved limits, which periodically occur throughout the reporting period, may require management to develop and execute plans to reduce exposure. These plans are subject to escalation to and approval by the Board.

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 repricing characteristics, future cash flows and customer behavior. These assumptions are inherently uncertain and, as a result, models cannot precisely estimate or precisely predict the impact of higher or lower interest rates. 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.

- 42 -

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. A simulation model is used to estimate the effect of changes in interest rates on our performance across multiple interest rate scenarios. Our current internal policy limit for net interest revenue variation due to a 200 basis point parallel change in market interest rates over twelve months is a maximum decline of 5%. The results of a 200 basis point decrease in interest rates in the current low-rate environment are not meaningful. Until such time as it becomes meaningful, we will instead report the effect of a 50 basis point decrease in interest rates.

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 demand deposit accounts 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.

Table 29 -- Interest Rate Sensitivity

(Dollars in thousands)



	200 bp Increase						50 bp Decrease
	September 30,						September 30,
	2018			2017			2018			2017
Anticipated impact over the next twelve months on net interest revenue	$	979		$	652		$	(17,843	)	$	(18,117	)
	0.10		%	0.08		%	(1.79		)%	(2.10		)%

BOK Financial is also subjected to market risk through changes in the fair value of mortgage servicing rights. Changes in the fair value of mortgage servicing rights are highly dependent on changes in primary mortgage rates offered to borrowers, intermediate-term interest rates that affect the value of custodial funds, and assumptions about servicing revenues, servicing costs and discount rates. As primary mortgage rates increase, prepayment speeds slow and the value of our mortgage servicing rights increases. As primary mortgage rates fall, prepayment speeds increase and the value of our mortgage servicing rights decreases.

We maintain a portfolio of financial instruments, which may include debt securities issued by the U.S. government or its agencies and interest rate derivative contracts, held as an economic hedge of the changes in the fair value of our mortgage servicing rights. Composition of this portfolio will change based on our assessment of market risk. Changes in the fair value of residential mortgage-backed securities are highly dependent on changes in secondary mortgage rates required by investors, and interest rate derivative contracts are highly dependent on changes in other market interest rates. 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 the forward-looking spread between the primary and secondary rates can cause significant earnings volatility.

Management performs a stress test to measure market risk due to changes in interest rates inherent in its MSR portfolio and hedges. The stress test shocks applicable interest rates up and down 50 basis points and calculates an estimated change in fair value, net of economic hedging activity, that may result. The Board has approved a $20 million market risk limit for mortgage servicing rights, net of economic hedges.

- 43 -

Table 30 -- MSR Asset and Hedge Sensitivity Analysis

(Dollars in thousands)



	September 30,
	2018						2017
	Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp
MSR Asset	$	14,068		$	(23,080	)	$	26,449		$	(33,561	)
MSR Hedge	(21,712		)	19,921			(32,790		)	29,132
Net Exposure	(7,644		)	(3,159		)	(6,341		)	(4,429		)

Trading Activities

The Company bears market risk by originating residential mortgages held for sale ("RMHFS"). RMHFS are generally outstanding for 60 to 90 days, which represents the typical period from commitment to originate a loan to sale of the closed loan to an investor. Primary mortgage interest rate changes during this period affect the value of RMHFS commitments and loans. We use forward sale contracts to mitigate market risk on all closed mortgage loans held for sale and on an estimate of mortgage loan commitments that are expected to result in closed loans.

A variety of methods are used to monitor market risk of mortgage origination activities. These methods include daily marking of all positions to market value, independent verification of inventory pricing, and revenue sensitivity limits.

Management performs a stress test to measure market risk due to changes in interest rates inherent in the mortgage production pipeline. The stress test shocks applicable interest rates up and down 50 basis points and calculates an estimated change in fair value, net of economic hedging activity that may result. The Board has approved a $7 million market risk limit for the mortgage production pipeline, net of forward sale contracts.

Table 31 -- Mortgage Pipeline Sensitivity Analysis

(Dollars in thousands)



	Three Months Ended September 30,												Nine Months Ended September 30,
	2018						2017						2018						2017
	Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp
Average ¹	$	156		$	(655	)	$	(167	)	$	(881	)	$	335		$	(841	)	$	21		$	(1,172	)
Low ²	596			(347		)	1,314			187			2,077			699			1,314			187
High ³	(101		)	(1,025		)	(1,533		)	(1,993		)	(1,015		)	(2,447		)	(1,553		)	(2,377		)
Period End	139			(601		)	(744		)	(374		)	139			(601		)	(744		)	(374		)


¹	Average represents the simple average of each daily value observed during the reporting period.


²	Low represents least risk of loss in fair value measured as the smallest negative value or the largest positive value observed daily during the reporting period.


³	High represents the greatest risk of loss in fair value measured as the largest negative value or the smallest positive value observed daily during the reporting period.

BOK Financial engages in trading activities both as an intermediary for customers and for its own account. As an intermediary, we 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, we may also take trading positions in U.S. Treasury securities, residential mortgage-backed securities, and municipal bonds to enhance returns on securities portfolios. Both of these activities involve interest rate, liquidity and price 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 monitor 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. Economic hedges in either the futures or cash markets may be used to reduce the risk associated with some trading programs.

- 44 -

Management performs a stress test to measure market risk from changes in interest rates on its trading portfolio. The stress test shocks applicable interest rates up and down 50 basis points and calculates an estimated change in fair value, net of economic hedging activity that may result. The Board has approved an $8 million market risk limit for the trading portfolio, net of economic hedges.

Table 32 -- Trading Sensitivity Analysis

(Dollars in thousands)



	Three Months Ended September 30,												Nine Months Ended September 30,
	2018						2017						2018						2017
	Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp
Average ¹	$	(897	)	$	(55	)	$	(1,152	)	$	1,171		$	(1,329	)	$	714		$	(1,711	)	$	1,884
Low ²	2,041			3,447			328			3,509			2,041			4,423			328			5,210
High ³	(4,005		)	(3,463		)	(3,404		)	(486		)	(4,534		)	(3,463		)	(4,386		)	(486		)
Period End	(2,116		)	1,573			(1,395		)	945			(2,116		)	1,573			(1,395		)	945


¹	Average represents the simple average of each daily value observed during the reporting period.


²	Low represents least risk of loss in fair value measured as the smallest negative value or the largest positive value observed daily during the reporting period.


³	High represents the greatest risk of loss in fair value measured as the largest negative value or the smallest positive value observed daily during the reporting period.

- 45 -

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 within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, CoBiz Financial Inc.’s and BOK Financial Corporation’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections.

In addition to factors previously disclosed in CoBiz Financial Inc.’s and BOK Financial Corporation’s reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval by CoBiz Financial Inc.’s shareholders on the expected terms and schedule, including the risk that regulatory approvals required for the merger are not obtained or are obtained subject to conditions that are not anticipated; delay in closing the merger; difficulties and delays in integrating CoBiz Financial Inc.’s business or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of BOK Financial Corporation’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

In this report we may sometimes use non-GAAP Financial information. Please note that although non-GAAP financial measures provide useful insight to analysts, investors and regulators, they should not be considered in isolation or relied upon as a substitute for analysis using GAAP measures. If applicable, we provide GAAP reconciliations for non-GAAP financial measures.

- 46 -



Consolidated Statements of Earnings (Unaudited)
(In thousands, except share and per share data)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Interest revenue	2018			2017			2018			2017
Loans	$	218,732		$	184,200		$	617,517		$	514,047
Residential mortgage loans held for sale	2,151			2,095			6,328			6,317
Trading securities	17,295			3,975			38,021			12,497
Investment securities	3,598			3,951			11,118			12,127
Available for sale securities	48,917			44,925			142,303			131,660
Fair value option securities	3,881			5,066			12,627			10,985
Restricted equity securities	5,232			4,826			15,757			13,534
Interest-bearing cash and cash equivalents	3,441			6,375			19,163			15,817
Total interest revenue	303,247			255,413			862,834			716,984
Interest expense
Deposits	24,535			14,530			63,717			38,506
Borrowed funds	35,804			20,361			93,860			47,542
Subordinated debentures	2,025			2,070			6,076			6,098
Total interest expense	62,364			36,961			163,653			92,146
Net interest revenue	240,883			218,452			699,181			624,838
Provision for credit losses	4,000			—			( 1,000		)	—
Net interest revenue after provision for credit losses	236,883			218,452			700,181			624,838
Other operating revenue
Brokerage and trading revenue	23,086			33,169			80,222			98,556
Transaction card revenue	21,396			32,844			63,361			90,452
Fiduciary and asset management revenue	57,514			40,687			141,045			121,126
Deposit service charges and fees	27,765			28,191			82,753			84,390
Mortgage banking revenue	23,536			24,890			75,907			80,357
Other revenue	14,213			13,670			41,061			40,406
Total fees and commissions	167,510			173,451			484,349			515,287
Other gains, net	1,441			( 1,283		)	4,760			8,452
Gain (loss) on derivatives, net	( 2,847		)	1,033			( 11,589		)	3,824
Gain (loss) on fair value option securities, net	( 4,385		)	661			( 25,290		)	1,505
Change in fair value of mortgage servicing rights	5,972			( 639		)	28,901			( 5,726		)
Gain (loss) on available for sale securities, net	250			2,487			( 802		)	4,916
Total other operating revenue	167,941			175,710			480,329			528,258
Other operating expense
Personnel	143,531			147,910			422,425			428,079
Business promotion	7,620			7,105			21,316			21,560
Professional fees and services	13,209			11,887			38,387			35,723
Net occupancy and equipment	23,394			21,325			70,201			64,074
Insurance	6,232			6,005			19,070			13,098
Data processing and communications	31,665			37,327			87,221			108,559
Printing, postage and supplies	3,837			3,917			11,937			11,908
Net losses and operating expenses of repossessed assets	4,044			6,071			14,471			9,347
Amortization of intangible assets	1,603			1,744			4,289			5,349
Mortgage banking costs	11,741			13,450			34,780			38,525
Other expense	5,741			9,193			19,426			25,308
Total other operating expense	252,617			265,934			743,523			761,530
Net income before taxes	152,207			128,228			436,987			391,566
Federal and state income taxes	34,662			42,438			98,940			128,246
Net income	117,545			85,790			338,047			263,320
Net income attributable to non-controlling interests	289			141			857			1,168
Net income attributable to BOK Financial Corporation shareholders	$	117,256		$	85,649		$	337,190		$	262,152
Earnings per share:
Basic	$	1.79		$	1.31		$	5.15		$	4.01
Diluted	$	1.79		$	1.31		$	5.15		$	4.00
Average shares used in computation:
Basic	64,901,095			64,742,822			64,883,319			64,729,391
Diluted	64,934,351			64,805,172			64,919,728			64,793,893
Dividends declared per share	$	0.50		$	0.44		$	1.40		$	1.32

See accompanying notes to consolidated financial statements.

- 47 -



Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net income	$	117,545		$	85,790		$	338,047		$	263,320
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)	( 35,941		)	512			( 166,464		)	33,881
Reclassification adjustments included in earnings:
Loss (gain) on available for sale securities, net	( 250		)	( 2,487		)	802			( 4,916		)
Other comprehensive income (loss) before income taxes	( 36,191		)	( 1,975		)	( 165,662		)	28,965
Federal and state income taxes	( 9,134		)	( 768		)	( 42,183		)	11,241
Other comprehensive income (loss), net of income taxes	( 27,057		)	( 1,207		)	( 123,479		)	17,724
Comprehensive income	90,488			84,583			214,568			281,044
Comprehensive income attributable to non-controlling interests	289			141			857			1,168
Comprehensive income attributable to BOK Financial Corp. shareholders	$	90,199		$	84,442		$	213,711		$	279,876

See accompanying notes to consolidated financial statements.

- 48 -

Consolidated Balance Sheets (In thousands, except share data)

	Sept. 30, 2018			Dec. 31, 2017			Sept. 30, 2017
	(Unaudited)			(Footnote 1)			(Unaudited)
Assets
Cash and due from banks	$	815,458		$	602,510		$	547,203
Interest-bearing cash and cash equivalents	430,789			1,714,544			1,926,779
Trading securities	1,613,400			462,676			614,117
Investment securities (fair value : September 30, 2018 – $382,893; December 31, 2017 – $480,035 ; September 30, 2017 – $489,895)	374,039			461,793			466,562
Available for sale securities	8,072,014			8,321,578			8,383,199
Fair value option securities	452,150			755,054			819,531
Restricted equity securities	311,189			320,189			347,542
Residential mortgage loans held for sale	175,866			221,378			275,643
Loans	18,349,459			17,153,424			17,206,834
Allowance for loan losses	( 210,569		)	( 230,682		)	( 247,703		)
Loans, net of allowance	18,138,890			16,922,742			16,959,131
Premises and equipment, net	327,129			317,335			320,060
Receivables	277,738			178,800			173,990
Goodwill	447,430			447,430			446,697
Intangible assets, net	33,370			28,658			39,013
Mortgage servicing rights	284,673			252,867			245,858
Real estate and other repossessed assets, net of allowance ( September 30, 2018 – $19,794 ; December 31, 2017 – $12,648; September 30, 2017 – $11,738)	24,515			28,437			32,535
Derivative contracts, net	349,481			220,502			352,559
Cash surrender value of bank-owned life insurance	323,628			316,498			314,201
Receivable on unsettled securities sales	421,313			340,077			370,486
Other assets	416,792			359,092			370,409
Total assets	$	33,289,864		$	32,272,160		$	33,005,515

Liabilities and Equity
Liabilities:
Noninterest-bearing demand deposits	$	9,063,623		$	9,243,338		$	9,185,481
Interest-bearing deposits:
Transaction	9,990,219			10,250,393			10,025,084
Savings	502,601			469,158			465,225
Time	2,075,846			2,098,416			2,172,289
Total deposits	21,632,289			22,061,305			21,848,079
Funds purchased and repurchase agreements	790,741			574,964			390,545
Other borrowings	6,025,483			5,134,897			6,241,275
Subordinated debentures	144,707			144,677			144,668
Accrued interest, taxes and expense	231,592			164,895			152,029
Derivative contracts, net	252,387			171,963			336,327
Due on unsettled securities purchases	414,283			338,745			176,498
Other liabilities	172,622			162,380			201,655
Total liabilities	29,664,104			28,753,826			29,491,076
Shareholders' equity:
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: September 30, 2018 – 75,308,727; December 31, 2017 – 75,147,686; September 30, 2017 – 75,129,535)	4			4			4
Capital surplus	1,044,430			1,035,895			1,028,489
Retained earnings	3,297,083			3,048,487			2,999,005
Treasury stock (shares at cost: September 30, 2018 – 9,874,469; December 31, 2017 – 9,752,749; September 30, 2017 – 9,672,749)	( 564,123		)	( 552,845		)	( 545,441		)
Accumulated other comprehensive gain (loss)	( 162,362		)	( 36,174		)	6,757
Total shareholders’ equity	3,615,032			3,495,367			3,488,814
Non-controlling interests	10,728			22,967			25,625
Total equity	3,625,760			3,518,334			3,514,439
Total liabilities and equity	$	33,289,864		$	32,272,160		$	33,005,515

See accompanying notes to consolidated financial statements.

- 49 -

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, 2016	74,993	$	4	$	1,006,535	$	2,823,334		9,656	$	( 544,052	)	$	( 10,967	)	$	3,274,854		$	31,503		$	3,306,357
Net income	—	—		—		262,152			—	—			—			262,152			1,168			263,320
Other comprehensive income	—	—		—		—			—	—			17,724			17,724			—			17,724
Share-based compensation plans:
Stock options exercised	80	—		4,564		—			—	—			—			4,564			—			4,564
Non-vested shares awarded, net	57	—		—		—			—	—			—			—			—			—
Vesting of non-vested shares	—	—		—		—			17	( 1,389		)	—			( 1,389		)	—			( 1,389		)
Share-based compensation	—	—		17,390		—			—	—			—			17,390			—			17,390
Cash dividends on common stock	—	—		—		( 86,481		)	—	—			—			( 86,481		)	—			( 86,481		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			( 7,046		)	( 7,046		)
Balance, September 30, 2017	75,130	$	4	$	1,028,489	$	2,999,005		9,673	$	( 545,441	)	$	6,757		$	3,488,814		$	25,625		$	3,514,439

Balance, December 31, 2017	75,148	$	4	$	1,035,895	$	3,048,487		9,753	$	( 552,845	)	$	( 36,174	)	$	3,495,367		$	22,967		$	3,518,334
Transition adjustment of net unrealized gains on equity securities	—	—		—		2,709			—	—			( 2,709		)	—			—			—
Balance, December 31, 2017, Adjusted	75,148	4		1,035,895		3,051,196			9,753	( 552,845		)	( 38,883		)	3,495,367			22,967			3,518,334
Net income	—	—		—		337,190			—	—			—			337,190			857			338,047
Other comprehensive loss	—	—		—		—			—	—			( 123,479		)	( 123,479		)	—			( 123,479		)
Repurchase of common stock	—	—		—		—			90	( 8,408		)	—			( 8,408		)	—			( 8,408		)
Share-based compensation plans:
Stock options exercised	49	—		2,560		—			—	—			—			2,560			—			2,560
Non-vested shares awarded, net	112	—		—		—			—	—			—			—			—			—
Vesting of non-vested shares	—	—		—		—			31	( 2,870		)	—			( 2,870		)	—			( 2,870		)
Share-based compensation	—	—		5,975		—			—	—			—			5,975			—			5,975
Cash dividends on common stock	—	—		—		( 91,303		)	—	—			—			( 91,303		)	—			( 91,303		)
Sale of non-controlling interests	—	—		—		—			—	—			—			—			( 10,000		)	( 10,000		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			( 3,096		)	( 3,096		)
Balance, September 30, 2018	75,309	$	4	$	1,044,430	$	3,297,083		9,874	$	( 564,123	)	$	( 162,362	)	$	3,615,032		$	10,728		$	3,625,760

See accompanying notes to consolidated financial statements.

- 50 -

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

	Nine Months Ended
	September 30,
	2018			2017
Cash Flows From Operating Activities:
Net income	$	338,047		$	263,320
Adjustments to reconcile net income to net cash used in operating activities:
Provision for credit losses	( 1,000		)	—
Change in fair value of mortgage servicing rights due to market changes	( 28,901		)	5,726
Change in the fair value of mortgage servicing rights due to principal payments	25,783			24,928
Net unrealized losses (gains) from derivative contracts	3,309			( 3,937		)
Share-based compensation	5,975			17,390
Depreciation and amortization	41,999			39,154
Net amortization of securities discounts and premiums	19,001			22,149
Net losses (gains) on financial instruments and other losses (gains), net	5,581			( 1,930		)
Net gain on mortgage loans held for sale	( 26,242		)	( 35,778		)
Mortgage loans originated for sale	( 2,093,860		)	( 2,446,793		)
Proceeds from sale of mortgage loans held for sale	2,165,989			2,503,759
Capitalized mortgage servicing rights	( 28,688		)	( 29,439		)
Change in trading and fair value option securities	( 848,409		)	( 1,019,906		)
Change in receivables	( 249,347		)	459,480
Change in other assets	( 15,157		)	( 18,991		)
Change in accrued interest, taxes and expense	66,697			( 99		)
Change in other liabilities	229,815			43,767
Net cash used in operating activities	( 389,408		)	( 177,200		)
Cash Flows From Investing Activities:
Proceeds from maturities or redemptions of investment securities	89,099			94,243
Proceeds from maturities or redemptions of available for sale securities	1,208,373			1,345,575
Purchases of investment securities	( 4,218		)	( 18,802		)
Purchases of available for sale securities	( 1,404,291		)	( 2,001,160		)
Proceeds from sales of available for sale securities	232,826			966,044
Change in amount receivable on unsettled available for sale securities transactions	67,775			( 223,037		)
Loans originated, net of principal collected	( 1,187,762		)	( 156,404		)
Net payments on derivative asset contracts	( 39,485		)	334,709
Acquisitions, net of cash acquired	( 13,870		)	—
Proceeds from disposition of assets	265,786			162,793
Purchases of assets	( 250,447		)	( 170,937		)
Net cash provided by (used in) investing activities	( 1,036,214		)	333,024
Cash Flows From Financing Activities:
Net change in demand deposits, transaction deposits and savings accounts	( 406,446		)	( 850,505		)
Net change in time deposits	( 22,570		)	( 49,511		)
Net change in other borrowed funds	1,035,549			957,859
Net proceeds on derivative liability contracts	42,883			( 339,566		)
Net change in derivative margin accounts	( 46,390		)	( 8,583		)
Change in amount due on unsettled available for sale securities transactions	( 148,190		)	154,273
Issuance of common and treasury stock, net	( 310		)	3,175
Repurchase of common stock	( 8,408		)	—
Dividends paid	( 91,303		)	( 86,481		)
Net cash provided by (used in) financing activities	354,815			( 219,339		)
Net decrease in cash and cash equivalents	( 1,070,807		)	( 63,515		)
Cash and cash equivalents at beginning of period	2,317,054			2,537,497
Cash and cash equivalents at end of period	$	1,246,247		$	2,473,982

Supplemental Cash Flow Information:
Cash paid for interest	$	163,381		$	89,901
Cash paid for taxes	$	77,373		$	95,967
Net loans and bank premises transferred to repossessed real estate and other assets	$	9,513		$	4,649
Residential mortgage loans guaranteed by U.S. government agencies that became eligible for repurchase during the period	$	70,814		$	101,299
Conveyance of other real estate owned guaranteed by U.S. government agencies	$	32,206		$	32,033

See accompanying notes to consolidated financial statements.

- 51 -

Notes to Consolidated Financial Statements (Unaudited)

( 1 ) Significant Accounting Policies

Basis of Presentation

The accompanying unaudited 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”), BOK Financial Securities, 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, Mobank, 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 2017 Form 10-K filed with the Securities and Exchange Commission, which contains audited financial statements. Amounts presented as of December 31, 2017 have been derived from the audited financial statements included in BOK Financial’s 2017 Form 10-K but do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the nine -month period ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 .

Newly Adopted and Pending Accounting Policies

Financial Accounting Standards Board (“FASB”)

FASB Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09")

On May 28, 2014, the FASB issued ASU 2014-09 to clarify the principles for recognizing revenue by providing a more robust framework that will give greater consistency and comparability in revenue recognition practices. In the new framework, an entity recognizes revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for goods or services. The new model requires the identification of performance obligations included in contracts with customers, a determination of the transaction price and an allocation of the price to those performance obligations. The entity recognizes revenue when performance obligations are satisfied. Revenue from financial assets and liabilities is explicitly excluded from the scope of ASU 2014-09. Management adopted the standard in the first quarter of 2018 using the modified retrospective transition method. There were no significant cumulative effect adjustments as a result of implementation as of January 1, 2018 as our current revenue recognition policies generally conform with the principals in ASU 2014-09.

FASB Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ("ASU 2016-08")

On March 17, 2016, the FASB Issued ASU 2016-08 to amend the principal versus agent implementation guidance in ASU 2014-09. The ASU clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. Management adopted the standard in the first quarter of 2018. Interchange fees paid to issuing banks for card transactions processed related to its merchant processing services previously included in data processing and communication expense are now netted against the amounts charged to the merchant in transaction card processing revenue.

- 52 -

FASB Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01")

On January 5, 2016, the FASB issued ASU 2016-01 over the recognition and measurement of financial assets and liabilities. The update requires equity investments, in general, to be measured at fair value with changes in fair value recognized in earnings. It also eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost, requires entities to use the exit price notion when measuring fair value, requires an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the fair value option has been elected, requires separate presentation of financial assets and liabilities by measurement category and form on the balance sheet or accompanying notes, clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets, and simplifies the impairment assessment of equity investments without readily determinable fair values. Management adopted the standard in the first quarter of 2018. Upon adoption, net unrealized gains of $ 2.7 million from equity securities were reclassified from other comprehensive income to retained earnings.

FASB Accounting Standards Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02")

On February 25, 2016, the FASB issued ASU 2016-02 to increase transparency and comparability by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Lessees will be required to recognize an obligation for future lease payments measured on a discounted basis and a right-of-use asset. The ASU is effective for the Company for interim and annual periods beginning after December 15, 2018. As originally issued, ASU 2016-02 required implementation through the modified transition method applied as of the earliest period presented in the financial statements. In 2018 an additional and optional transition method that allows entities to apply the standard as of the adoption date was approved. BOKF intends to elect this optional transition method. BOKF also plans to elect all practical expedients other than the lessee’s practical expedient to combine lease and non-lease components which would further gross up the lease liability and related right of use asset. The Company currently estimates that implementation of ASU 2016-02 will increase reported right of use assets and liabilities by approximately $ 100 million to $ 150 million .

FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Assets Measured at Amortized Cost ("ASU 2016-13")

On June 16, 2016, the FASB issued ASU 2016-13 in order to provide more timely recording of credit losses on loans and other financial instruments. The ASU adds an impairment model (known as the current expected credit loss ("CECL") model) that is based on expected credit losses rather than incurred credit losses. It requires measurement of all expected credit losses for financial assets carried at amortized cost, including loans and investment securities, based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also changes the recognition of other-than-temporary impairment of available for sale securities to an allowance methodology from a direct write-down methodology. ASU 2016-13 will be effective for the Company for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for annual reporting periods beginning after December 15, 2018. ASU 2016-13 will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

The Company has established a CECL implementation team in order to evaluate the impact the adoption of ASU 2016-13 will have on the Company's financial statements. The CECL implementation team, overseen by the Chief Credit Officer, Chief Financial Officer, and Chief Risk Officer, has developed a project plan that incorporates input from various departments within the bank including Credit, Financial Reporting, Risk, and Information Technology among others. Key implementation activities for 2018 include portfolio segmentation, credit risk driver identification, model development, as well as process and information systems enhancements. The Company will adopt the standard on January 1, 2020.

FASB Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15")

On August 26, 2016, the FASB issued ASU 2016-15, which amends guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. The amendments address eight cash flow issues. Management adopted the standard in first quarter of 2018. Adoption of ASU 2016-15 did not have a material impact on the Company's financial statements.

- 53 -

FASB Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12")

On August 28, 2017, the FASB issued ASU 2017-12, which amends the hedge accounting recognition and presentation requirements in ASC 815 in order to improve transparency and understandability of information and reduce the complexity. The update expands the types of transactions eligible for hedge accounting, eliminates the requirement to separately measure and present hedge ineffectiveness, simplifies hedge effectiveness assessments and updates documentation and presentation requirements. The update allows the reclassification of certain debt securities from held to maturity to available for sale if the debt security is eligible to be hedged under the last-of-layer method. ASU 2017-12 is effective for the Company for fiscal years beginning after December 15, 2018, and interim periods therein; however, early adoption is permitted. Adoption of ASU 2017-12 is not expected to have a material impact on the Company's financial statements.

FASB Accounting Standards Update No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SAB 118).

On March 13, 2018, the FASB issued ASU 2018-05, which adds SEC guidance related to SAB 118 - Income Tax Accounting Implications of the Tax Cuts and Jobs Act . ASU 2018-05 was effective upon issuance. The adoption of ASU 2018-05 has not had a significant impact in 2018.

FASB Accounting Standards Update No. 2018-15, Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract ("ASU 2018-15")

On August 29, 2018, the FASB issued ASU 2018-15, which requires a customer in a cloud hosting arrangement that is a service contract to follow the internal use software requirements in ASC 350-40 to determine which implementation costs to capitalize or expense as incurred. Internal use software guidance requires the capitalization of costs incurred during the development phase. Capitalized costs will be amortized over the term of the hosting arrangement beginning when the arrangement is ready for its intended use. ASU 2018-15 is effective for the Company for fiscal years beginning after December 15, 2019; however, early adoption is permitted. The Company elected to early adopt the update prospectively in third quarter of 2018. The adoption of ASU 2018-15 did not have a significant impact in the third quarter.

- 54 -

( 2 ) Securities

Trading Securities

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



	September 30, 2018					December 31, 2017					September 30, 2017
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. government agency debentures	$	80,692	$	21		$	21,196	$	8		$	30,162	$	( 101	)
U.S. government agency residential mortgage-backed securities	1,378,450		( 3,498		)	392,673		( 517		)	516,760		723
Municipal and other tax-exempt securities	41,345		( 161		)	13,559		83			56,148		153
Asset-backed securities	72,309		( 100		)	23,885		( 26		)	—		—
Other trading securities	40,604		5			11,363		4			11,047		23
Total trading securities	$	1,613,400	$	( 3,733	)	$	462,676	$	( 448	)	$	614,117	$	798

Investment Securities

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



	September 30, 2018
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	157,723	$	158,230	$	1,403	$	( 896	)
U.S. government agency residential mortgage-backed securities	13,234		13,201		205		( 238		)
Other debt securities	203,082		211,462		10,721		( 2,341		)
Total investment securities	$	374,039	$	382,893	$	12,329	$	( 3,475	)



	December 31, 2017
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	228,186	$	230,349	$	2,967	$	( 804	)
U.S. government agency residential mortgage-backed securities	15,891		16,242		446		( 95		)
Other debt securities	217,716		233,444		17,095		( 1,367		)
Total investment securities	$	461,793	$	480,035	$	20,508	$	( 2,266	)



	September 30, 2017
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	246,000	$	249,250	$	3,415	$	( 165	)
U.S. government agency residential mortgage-backed securities	16,926		17,458		594		( 62		)
Other debt securities	203,636		223,187		20,141		( 590		)
Total investment securities	$	466,562	$	489,895	$	24,150	$	( 817	)

- 55 -

The amortized cost and fair values of investment securities at September 30, 2018 , 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:
Amortized cost	$	65,789		$	41,827		$	35,652		$	14,455		$	157,723		4.13
Fair value	65,633			41,432			36,677			14,488			158,230
Nominal yield¹	2.06		%	2.82		%	6.00		%	4.33		%	3.36		%
Other debt securities:
Amortized cost	14,847			60,825			115,587			11,823			203,082			7.23
Fair value	14,941			62,604			123,236			10,681			211,462
Nominal yield	4.17		%	4.70		%	5.76		%	4.34		%	5.25		%
Total fixed maturity securities:
Amortized cost	$	80,636		$	102,652		$	151,239		$	26,278		$	360,805		5.88
Fair value	80,574			104,036			159,913			25,169			369,692
Nominal yield	2.44		%	3.94		%	5.82		%	4.33		%	4.42		%
Residential mortgage-backed securities:
Amortized cost													$	13,234		³
Fair value													13,201
Nominal yield ⁴													2.77		%
Total investment securities:
Amortized cost													$	374,039
Fair value													382,893
Nominal yield													4.36		%


¹	Calculated on a taxable equivalent basis using a 25 percent 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 5.2 years based upon current prepayment assumptions.


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

- 56 -

Available for Sale Securities

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



	September 30, 2018
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss			OTTI
U.S. Treasury	$	495	$	490	$	—	$	( 5	)	$	—
Municipal and other tax-exempt	4,269		4,349		81		( 1		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,057,570		2,959,457		1,653		( 99,766		)	—
FHLMC	1,562,569		1,512,928		501		( 50,142		)	—
GNMA	677,496		659,967		450		( 17,979		)	—
Total U.S. government agencies	5,297,635		5,132,352		2,604		( 167,887		)	—
Private issue	54,932		74,685		19,753		—			—
Total residential mortgage-backed securities	5,352,567		5,207,037		22,357		( 167,887		)	—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,905,974		2,834,691		1,363		( 72,646		)	—
Other debt securities	25,502		25,447		11		( 66		)	—
Total available for sale securities	$	8,288,807	$	8,072,014	$	23,812	$	( 240,605	)	$	—



	December 31, 2017
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss			OTTI
U.S. Treasury	$	1,000	$	1,000	$	—	$	—		$	—
Municipal and other tax-exempt	27,182		27,080		181		( 283		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,021,551		2,997,563		11,549		( 35,537		)	—
FHLMC	1,545,971		1,531,009		3,148		( 18,110		)	—
GNMA	787,626		780,580		1,607		( 8,653		)	—
Total U.S. government agencies	5,355,148		5,309,152		16,304		( 62,300		)	—
Private issue	74,311		93,221		19,301		—			( 391		)
Total residential mortgage-backed securities	5,429,459		5,402,373		35,605		( 62,300		)	( 391		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,858,885		2,834,961		1,963		( 25,887		)	—
Other debt securities	25,500		25,481		50		( 69		)	—
Perpetual preferred stock	12,562		15,767		3,205		—			—
Equity securities and mutual funds	14,487		14,916		515		( 86		)	—
Total available for sale securities	$	8,369,075	$	8,321,578	$	41,519	$	( 88,625	)	$	( 391	)

- 57 -



	September 30, 2017
	Amortized		Fair		Gross Unrealized
	Cost		Value		Gain		Loss			OTTI
U.S. Treasury	$	1,000	$	999	$	—	$	( 1	)	$	—
Municipal and other tax-exempt	28,411		28,368		240		( 283		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,103,869		3,108,822		25,510		( 20,557		)	—
FHLMC	1,331,212		1,330,159		6,630		( 7,683		)	—
GNMA	864,256		862,394		3,254		( 5,116		)	—
Other	25,000		25,009		51		( 42		)	—
Total U.S. government agencies	5,324,337		5,326,384		35,445		( 33,398		)	—
Private issue	80,797		99,994		19,197		—			—
Total residential mortgage-backed securities	5,405,134		5,426,378		54,642		( 33,398		)	—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,899,828		2,889,346		5,577		( 16,059		)	—
Other debt securities	4,400		4,153		—		( 247		)	—
Perpetual preferred stock	12,562		16,245		3,683		—			—
Equity securities and mutual funds	17,803		17,710		655		( 748		)	—
Total available for sale securities	$	8,369,138	$	8,383,199	$	64,797	$	( 50,736	)	$	—

- 58 -

The amortized cost and fair values of available for sale securities at September 30, 2018 , 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 ⁴
U.S. Treasuries:
Amortized cost	$	—		$	495		$	—		$	—			$	495		1.34
Fair value	—			490			—			—				490
Nominal yield	—		%	1.99		%	—		%	—		%		1.99		%
Municipal and other tax-exempt:
Amortized cost	$	—		$	—		$	—		$	4,269			$	4,269		18.72
Fair value	—			—			—			4,349				4,349
Nominal yield¹	—		%	—		%	—		%	5.60		%	⁵	5.60		%
Commercial mortgage-backed securities:
Amortized cost	$	74,694		$	1,070,820		$	1,449,084		$	311,376			$	2,905,974		7.11
Fair value	73,929			1,043,429			1,413,692			303,641				2,834,691
Nominal yield	1.70		%	2.02		%	2.24		%	2.45		%		2.17		%
Other debt securities:
Amortized cost	$	—		$	—		$	—		$	25,502			$	25,502		13.93
Fair value	—			—			—			25,447				25,447
Nominal yield	—		%	—		%	—		%	1.59		%	⁵	1.59		%
Total fixed maturity securities:
Amortized cost	$	74,694		$	1,071,315		$	1,449,084		$	341,147			$	2,936,240		7.18
Fair value	73,929			1,043,919			1,413,692			333,437				2,864,977
Nominal yield	1.70		%	2.02		%	2.24		%	2.42		%		2.17		%
Residential mortgage-backed securities:
Amortized cost														$	5,352,567		²
Fair value														5,207,037
Nominal yield ³														2.24		%
Total available-for-sale securities:
Amortized cost														$	8,288,807
Fair value														8,072,014
Nominal yield														2.21		%


¹	Calculated on a taxable equivalent basis using a 25 percent effective tax rate.


²	The average expected lives of mortgage-backed securities were 4.4 years based upon current prepayment assumptions.


³	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.


⁴	Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.


⁵	Nominal yield on municipal and other tax-exempt securities and other debt securities with contractual maturity dates over ten years are based on variable rates which generally are reset within 35 days .

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



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018			2017
Proceeds	$	45,293	$	265,632		$	232,826		$	966,044
Gross realized gains	250		2,768			700			7,623
Gross realized losses	—		( 281		)	( 1,502		)	( 2,707		)
Related federal and state income tax expense (benefit)	64		967			( 204		)	1,912

- 59 -

The fair value of debt securities pledged as collateral for repurchase agreements, public trust funds on deposit and for other purposes, as required by law was $ 8.0 billion at September 30, 2018 , $ 7.3 billion at December 31, 2017 and $ 7.0 billion at September 30, 2017 .

The secured parties do not have the right to sell or repledge these securities.

Temporarily Impaired Securities as of September 30, 2018

(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	85	$	46,618	$	277	$	54,149	$	619	$	100,767	$	896
U.S. government agency residential mortgage-backed securities	3	6,682		96		2,625		142		9,307		238
Other debt securities	93	38,441		2,035		4,714		306		43,155		2,341
Total investment securities	181	$	91,741	$	2,408	$	61,488	$	1,067	$	153,229	$	3,475



	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	$	490	$	5	$	—	$	—	$	490	$	5
Municipal and other tax-exempt	2	1,046		1		—		—		1,046		1
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	188	1,584,010		32,919		1,277,814		66,847		2,861,824		99,766
FHLMC	99	702,707		15,450		781,589		34,692		1,484,296		50,142
GNMA	38	285,731		5,326		253,506		12,653		539,237		17,979
Total U.S. government agencies	325	2,572,448		53,695		2,312,909		114,192		4,885,357		167,887
Private issue ¹	—	—		—		—		—		—		—
Total residential mortgage-backed securities	325	2,572,448		53,695		2,312,909		114,192		4,885,357		167,887
Commercial mortgage-backed securities guaranteed by U.S. government agencies	220	1,174,544		24,982		1,238,848		47,664		2,413,392		72,646
Other debt securities	2	—		—		20,435		66		20,435		66
Total available for sale securities	550	$	3,748,528	$	78,683	$	3,572,192	$	161,922	$	7,320,720	$	240,605


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

- 60 -

Temporarily Impaired Securities as of December 31, 2017

(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	100	$	145,960	$	643	$	5,833	$	161	$	151,793	$	804
U.S. government agency residential mortgage-backed securities	1	—		—		3,356		95		3,356		95
Other debt securities	49	20,091		1,238		3,076		129		23,167		1,367
Total investment securities	150	$	166,051	$	1,881	$	12,265	$	385	$	178,316	$	2,266



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
U.S. Treasury	—	$	—	$	—	$	—	$	—	$	—	$	—
Municipal and other tax-exempt	19	12,765		18		4,802		265		17,567		283
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	113	1,203,041		9,618		824,029		25,919		2,027,070		35,537
FHLMC	69	863,778		7,297		385,816		10,813		1,249,594		18,110
GNMA	27	201,887		1,452		248,742		7,201		450,629		8,653
Total U.S. government agencies	209	2,268,706		18,367		1,458,587		43,933		3,727,293		62,300
Private issue ¹	8	5,898		391		—		—		5,898		391
Total residential mortgage-backed securities	217	2,274,604		18,758		1,458,587		43,933		3,733,191		62,691
Commercial mortgage-backed securities guaranteed by U.S. government agencies	185	1,465,703		11,824		652,296		14,063		2,117,999		25,887
Other debt securities	2	19,959		41		472		28		20,431		69
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	111	911		7		2,203		79		3,114		86
Total available for sale securities	534	$	3,773,942	$	30,648	$	2,118,360	$	58,368	$	5,892,302	$	89,016


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

- 61 -

Temporarily Impaired Securities as of September 30, 2017

(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	63	$	80,235	$	70	$	9,795	$	95	$	90,030	$	165
U.S. government agency residential mortgage-backed securities	1	3,578		62		—		—		3,578		62
Other debt securities	28	10,022		566		427		24		10,449		590
Total investment securities	92	$	93,835	$	698	$	10,222	$	119	$	104,057	$	817



	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	$	999	$	1	$	—	$	—	$	999	$	1
Municipal and other tax-exempt	11	576		1		4,785		282		5,361		283
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	81	1,054,171		10,288		480,994		10,269		1,535,165		20,557
FHLMC	42	477,823		3,546		198,478		4,137		676,301		7,683
GNMA	17	166,565		1,718		124,037		3,398		290,602		5,116
Other	1	19,958		42		—		—		19,958		42
Total U.S. government agencies	141	1,718,517		15,594		803,509		17,804		2,522,026		33,398
Private issue ¹	—	—		—		—		—		—		—
Total residential mortgage-backed securities	141	1,718,517		15,594		803,509		17,804		2,522,026		33,398
Commercial mortgage-backed securities guaranteed by U.S. government agencies	137	1,154,911		7,194		559,984		8,865		1,714,895		16,059
Other debt securities	2	—		—		4,153		247		4,153		247
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	91	3,672		696		1,428		52		5,100		748
Total available for sale securities	383	$	2,878,675	$	23,486	$	1,373,859	$	27,250	$	4,252,534	$	50,736


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

Based on evaluations of impaired securities as of September 30, 2018 , the Company does not intend to sell any impaired available for sale debt 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.

- 62 -

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 securities are held as an economic hedge of the mortgage servicing rights.

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



	September 30, 2018					December 31, 2017					September 30, 2017
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. government agency residential mortgage-backed securities	$	452,150	$	( 7,923	)	$	755,054	$	( 1,877	)	$	819,531	$	1,671

- 63 -

( 3 ) Derivatives

Derivative instruments may be used by the Company as part of its internal 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. Deterioration in the credit rating of customer or other counterparties reduced the fair value of asset contracts. Deterioration of our credit rating could decrease the fair value of our derivative liabilities.

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.

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

Customer Risk Management Programs

BOK Financial offers programs to permit its customers to manage various risks, including fluctuations in energy, cattle and other agricultural products, interest rates and foreign exchange rates with 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.

Internal Risk Management Programs

BOK Financial may use derivative contracts in managing its interest rate sensitivity, as part of its economic hedge of the change in the fair value of mortgage servicing rights and to mitigate the market risk of holding trading securities. Changes in the fair value of derivative instruments used in managing interest rate sensitivity and as part of the economic hedge of changes in the fair value of mortgage servicing rights are included in Other operating revenue – Gain (loss) on derivatives, net in the Consolidated Statements of Earnings. Changes in the fair value of derivative instruments used to mitigate the market risk of holding trading securities are included in Other operating revenue – Brokerage and trading revenue.

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.

- 64 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at September 30, 2018 (in thousands):



	Assets
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	12,423,155	$	45,983	$	( 18,338	)	$	27,645	$	—		$	27,645
Interest rate swaps	1,702,731		46,160		( 1,300		)	44,860		( 13,307		)	31,553
Energy contracts	1,509,976		202,086		( 67,611		)	134,475		( 3,020		)	131,455
Agricultural contracts	26,318		1,024		( 196		)	828		—			828
Foreign exchange contracts	148,824		146,719		—			146,719		—			146,719
Equity option contracts	89,606		4,144		—			4,144		( 660		)	3,484
Total customer risk management programs	15,900,610		446,116		( 87,445		)	358,671		( 16,987		)	341,684
Internal risk management programs	1,064,113		23,887		( 16,090		)	7,797		—			7,797
Total derivative contracts	$	16,964,723	$	470,003	$	( 103,535	)	$	366,468	$	( 16,987	)	$	349,481

	Liabilities
	Notional¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	12,160,590	$	43,074	$	( 18,338	)	$	24,736	$	—		$	24,736
Interest rate swaps	1,702,731		46,162		( 1,300		)	44,862		( 3,844		)	41,018
Energy contracts	1,485,036		200,290		( 67,611		)	132,679		( 115,191		)	17,488
Agricultural contracts	26,316		998		( 196		)	802		—			802
Foreign exchange contracts	145,943		143,817		—			143,817		( 48		)	143,769
Equity option contracts	89,606		4,144		—			4,144		—			4,144
Total customer risk management programs	15,610,222		438,485		( 87,445		)	351,040		( 119,083		)	231,957
Internal risk management programs	4,079,094		36,520		( 16,090		)	20,430		—			20,430
Total derivative contracts	$	19,689,316	$	475,005	$	( 103,535	)	$	371,470	$	( 119,083	)	$	252,387


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

- 65 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2017 (in thousands):



	Assets
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	12,347,542	$	23,606	$	( 18,096	)	$	5,510	$	—		$	5,510
Interest rate swaps	1,478,944		28,278		—			28,278		( 4,964		)	23,314
Energy contracts	1,190,067		103,044		( 47,873		)	55,171		( 196		)	54,975
Agricultural contracts	53,238		1,576		( 960		)	616		—			616
Foreign exchange contracts	132,397		129,551		—			129,551		( 448		)	129,103
Equity option contracts	99,633		5,503		—			5,503		( 920		)	4,583
Total customer risk management programs	15,301,821		291,558		( 66,929		)	224,629		( 6,528		)	218,101
Internal risk management programs	4,736,701		9,494		( 7,093		)	2,401		—			2,401
Total derivative contracts	$	20,038,522	$	301,052	$	( 74,022	)	$	227,030	$	( 6,528	)	$	220,502

	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	$	11,537,742	$	20,367	$	( 18,096	)	$	2,271	$	( 704	)	$	1,567
Interest rate swaps	1,478,944		28,298		—			28,298		( 12,896		)	15,402
Energy contracts	1,166,924		101,603		( 47,873		)	53,730		( 42,767		)	10,963
Agricultural contracts	48,552		1,551		( 960		)	591		—			591
Foreign exchange contracts	126,251		123,321		—			123,321		( 53		)	123,268
Equity option contracts	99,633		5,503		—			5,503		—			5,503
Total customer risk management programs	14,458,046		280,643		( 66,929		)	213,714		( 56,420		)	157,294
Internal risk management programs	5,728,421		21,762		( 7,093		)	14,669		—			14,669
Total derivative contracts	$	20,186,467	$	302,405	$	( 74,022	)	$	228,383	$	( 56,420	)	$	171,963


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

- 66 -

The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at September 30, 2017 (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	$	14,244,442	$	38,875	$	( 9,547	)	$	29,328	$	—		$	29,328
Interest rate swaps	1,368,210		27,016		—			27,016		( 2,820		)	24,196
Energy contracts	983,794		45,368		( 35,166		)	10,202		( 238		)	9,964
Agricultural contracts	60,745		1,870		( 1,172		)	698		—			698
Foreign exchange contracts	252,525		249,788		—			249,788		—			249,788
Equity option contracts	101,841		4,871		—			4,871		( 920		)	3,951
Total customer risk management programs	17,011,557		367,788		( 45,885		)	321,903		( 3,978		)	317,925
Internal risk management programs	11,941,260		34,634		—			34,634		—			34,634
Total derivative contracts	$	28,952,817	$	402,422	$	( 45,885	)	$	356,537	$	( 3,978	)	$	352,559

	Liabilities
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	14,244,442	$	34,948	$	( 9,547	)	$	25,401	$	( 374	)	$	25,027
Interest rate swaps	1,368,230		27,056		—			27,056		( 16,599		)	10,457
Energy contracts	939,350		42,744		( 35,166		)	7,578		—			7,578
Agricultural contracts	60,746		1,846		( 1,172		)	674		—			674
Foreign exchange contracts	249,269		245,925		—			245,925		( 1,395		)	244,530
Equity option contracts	101,841		4,871		—			4,871		—			4,871
Total customer risk management programs	16,963,878		357,390		( 45,885		)	311,505		( 18,368		)	293,137
Internal risk management programs	9,180,531		43,190		—			43,190		—			43,190
Total derivative contracts	$	26,144,409	$	400,580	$	( 45,885	)	$	354,695	$	( 18,368	)	$	336,327


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

- 67 -

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



	Three Months Ended
	September 30, 2018					September 30, 2017
	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	$	7,272	$	—		$	9,181		$	—
Interest rate swaps	618		—			767			—
Energy contracts	541		—			378			—
Agricultural contracts	6		—			38			—
Foreign exchange contracts	78		—			164			—
Equity option contracts	—		—			—			—
Total customer risk management programs	8,515		—			10,528			—
Internal risk management programs	6,124		( 2,847		)	( 711		)	1,033
Total derivative contracts	$	14,639	$	( 2,847	)	$	9,817		$	1,033




	Nine Months Ended
	September 30, 2018					September 30, 2017
	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	$	21,677	$	—		$	26,413	$	—
Interest rate swaps	2,057		—			1,891		—
Energy contracts	5,097		—			4,917		—
Agricultural contracts	36		—			58		—
Foreign exchange contracts	350		—			524		—
Equity option contracts	—		—			—		—
Total customer risk management programs	29,217		—			33,803		—
Internal risk management programs	3,260		( 11,589		)	5,307		3,824
Total derivative contracts	$	32,477	$	( 11,589	)	$	39,110	$	3,824

- 68 -

( 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, excluding loans guaranteed by U.S. government agencies. 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 the current collateral value, debt service ratio and other underwriting standards. Nonaccruing loans may be renewed and will remain classified as nonaccruing.

Occasionally, loans, other than residential mortgage loans, may be held for sale in order to manage credit concentration. These loans are carried at the lower of cost or fair value with gains or losses recognized in other gains (losses), net in the Statements of Earnings.

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 days 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. Amortization does not anticipate loan prepayments. Net unamortized fees are recognized in full at time of payoff.

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 original principal guarantee remains; 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.

- 69 -

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.

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



	September 30, 2018								December 31, 2017
	Fixed Rate		Variable Rate		Non-accrual		Total		Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	2,150,138	$	9,316,473	$	109,490	$	11,576,101	$	2,217,432	$	8,379,240	$	137,303	$	10,733,975
Commercial real estate	603,515		3,199,844		1,316		3,804,675		548,692		2,928,440		2,855		3,479,987
Residential mortgage	1,592,249		337,576		41,917		1,971,742		1,608,655		317,584		47,447		1,973,686
Personal	163,067		833,605		269		996,941		154,517		810,990		269		965,776
Total	$	4,508,969	$	13,687,498	$	152,992	$	18,349,459	$	4,529,296	$	12,436,254	$	187,874	$	17,153,424
Accruing loans past due (90 days) ¹							$	518							$	633



	September 30, 2017
	Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	2,225,470	$	8,393,564	$	176,900	$	10,795,934
Commercial real estate	564,681		2,950,486		2,975		3,518,142
Residential mortgage	1,589,013		311,231		45,506		1,945,750
Personal	153,750		793,003		255		947,008
Total	$	4,532,914	$	12,448,284	$	225,636	$	17,206,834
Accruing loans past due (90 days) ¹							$	253


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

At September 30, 2018 , loans to businesses and collateral primarily located in Texas totaled $ 6.1 billion or 33 percent of the total loan portfolio. Loans to businesses and individuals with collateral primarily located in Oklahoma totaled $ 3.6 billion or 20 percent of our total loan portfolio. Loans for which the collateral location is not relevant, such as unsecured loans and reserve-based energy loans, are distributed by the borrower's primary operating location. 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 ongoing 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 ongoing cash flow from operations of the customer’s business. Inherent lending risk is centrally monitored on a continuous basis from underwriting throughout the life of the loan for compliance with commercial lending policies.

At September 30, 2018 , commercial loans with collateral primarily located in Texas market totaled $ 3.8 billion or 33 percent of the commercial loan portfolio segment and commercial loans with collateral primarily located in Oklahoma totaled $ 2.3 billion or 20 percent of the commercial loan portfolio segment.

- 70 -

The commercial loan portfolio segment is further divided into loan classes. The energy loan class totaled $ 3.3 billion or 18 percent of total loans at September 30, 2018 , including $ 2.7 billion of outstanding loans to energy producers. Approximately 57 percent of committed production loans are secured by properties primarily producing oil and 43 percent are secured by properties producing natural gas. The services loan class totaled $ 3.0 billion or 16 percent of total loans at September 30, 2018 . Approximately $ 1.5 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 governmental, educational services, consumer services, financial services and loans to entities providing services for real estate and construction. The healthcare loan class totaled $ 2.4 billion or 13 percent of total loans at September 30, 2018 . The healthcare loan class consists primarily of loans for the development and operation of senior housing and care facilities, including independent living, assisted living and skilled nursing. Healthcare also includes loans to hospitals and other medical service providers.

Commercial Real Estate

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

At September 30, 2018 , 32 percent of commercial real estate loans are secured by properties primarily located in the Dallas and Houston areas of Texas. An additional 12 percent of commercial real estate loans are secured by properties located primarily in the Tulsa and Oklahoma City metropolitan areas of Oklahoma.

Residential Mortgage and Personal

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. Personal loans consist primarily of loans secured by the cash surrender value of insurance policies and marketable securities. It also includes direct loans secured by and for the purchase of automobiles, recreational and marine equipment as well as unsecured loans. Residential mortgage and personal loans are made in accordance with underwriting policies we believe to be conservative and are fully documented. Loans may be individually underwritten or credit scored based on size and other criteria. 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 percent . Loan-to-value (“LTV”) ratios are tiered from 60 percent to 100 percent , 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 3 years to ten years , then adjust annually thereafter.

At September 30, 2018 , residential mortgage loans included $ 181 million of loans guaranteed by U.S. government agencies previously sold into GNMA mortgage pools. These loans either have been repurchased or are eligible to be repurchased by the Company when certain defined delinquency criteria are met. Although payments on these loans generally are past due more than 90 days, interest continues to accrue based on the government guarantee.

Home equity loans totaled $ 696 million at September 30, 2018 . Approximately 61 percent of the home equity loan portfolio is comprised of first lien loans and 39 percent of the home equity portfolio is comprised of junior lien loans. Junior lien loans are distributed 44 percent to amortizing term loans and 56 percent to revolving lines of credit. Home equity loans generally require a minimum FICO score of 700 and a maximum DTI of 40 percent. The maximum loan amount available for our home equity loan products is generally $ 400 thousand . Revolving loans have a revolving period of 5 years followed by 15 years 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 revolving term of 5 years , subject to an update of certain credit information.

- 71 -

Credit Commitments

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At September 30, 2018 , outstanding commitments totaled $ 10.7 billion . Because some commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial uses the same credit policies in making commitments as it does loans.

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

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally, BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the underlying loan commitment. At September 30, 2018 , outstanding standby letters of credit totaled $ 672 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 ongoing quarterly evaluation of the probable estimated losses inherent in the portfolio, including probable losses on both outstanding loans and unused commitments.

The allowance for loan losses consists of specific allowances attributed to impaired loans that have not yet been charged down to amounts we expect to recover, general allowances for unimpaired loans based on estimated loss rates by loan class and nonspecific allowances based on general economic conditions, risk concentration and related factors. There have been no material changes in the approach or techniques utilized in developing the allowance for loan losses and the accrual for off-balance sheet credit losses for the three and nine months ended September 30, 2018 .

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.

- 72 -

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

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

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

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

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended September 30, 2018 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate		Residential Mortgage			Personal			Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	113,722		$	58,758	$	18,544		$	8,646		$	15,472	$	215,142
Provision for loan losses	( 1,285		)	1,391		1			883			3,418		4,408
Loans charged off	( 9,602		)	—		( 91		)	( 1,380		)	—		( 11,073		)
Recoveries	1,263			40		229			560			—		2,092
Ending balance	$	104,098		$	60,189	$	18,683		$	8,709		$	18,890	$	210,569
Allowance for off-balance sheet credit losses:
Beginning balance	$	2,361		$	17	$	53		$	2		$	—	$	2,433
Provision for off-balance sheet credit losses	( 424		)	19		( 3		)	—			—		( 408		)
Ending balance	$	1,937		$	36	$	50		$	2		$	—	$	2,025

Total provision for credit losses	$	( 1,709	)	$	1,410	$	( 2	)	$	883		$	3,418	$	4,000

- 73 -

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the nine months ended September 30, 2018 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Personal			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	124,269		$	56,621		$	18,451		$	9,124		$	22,217		$	230,682
Provision for loan losses	2,720			248			( 418		)	1,486			( 3,327		)	709
Loans charged off	( 24,940		)	—			( 326		)	( 3,802		)	—			( 29,068		)
Recoveries	2,049			3,320			976			1,901			—			8,246
Ending balance	$	104,098		$	60,189		$	18,683		$	8,709		$	18,890		$	210,569
Allowance for off-balance sheet credit losses:
Beginning balance	$	3,644		$	45		$	43		$	2		$	—		$	3,734
Provision for off-balance sheet credit losses	( 1,707		)	( 9		)	7			—			—			( 1,709		)
Ending balance	$	1,937		$	36		$	50		$	2		$	—		$	2,025

Total provision for credit losses	$	1,013		$	239		$	( 411	)	$	1,486		$	( 3,327	)	$	( 1,000	)



	Commercial			Commercial Real Estate			Residential Mortgage			Personal			Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	137,742		$	58,580		$	18,259		$	8,106		$	27,374	$	250,061
Provision for loan losses	2,474			( 2,914		)	168			598			704		1,030
Loans charged off	( 4,429		)	—			( 168		)	( 1,228		)	—		( 5,825		)
Recoveries	1,014			739			134			550			—		2,437
Ending balance	$	136,801		$	56,405		$	18,393		$	8,026		$	28,078	$	247,703
Allowance for off-balance sheet credit losses:
Beginning balance	$	6,301		$	84		$	38		$	8		$	—	$	6,431
Provision for off-balance sheet credit losses	( 976		)	( 49		)	1			( 6		)	—		( 1,030		)
Ending balance	$	5,325		$	35		$	39		$	2		$	—	$	5,401

Total provision for credit losses	$	1,498		$	( 2,963	)	$	169		$	592		$	704	$	—

- 74 -



	Commercial			Commercial Real Estate			Residential Mortgage			Personal			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	140,213		$	50,749		$	18,224		$	8,773		$	28,200		$	246,159
Provision for loan losses	665			4,050			82			1,168			( 122		)	5,843
Loans charged off	( 6,556		)	( 76		)	( 444		)	( 3,774		)	—			( 10,850		)
Recoveries	2,479			1,682			531			1,859			—			6,551
Ending balance	$	136,801		$	56,405		$	18,393		$	8,026		$	28,078		$	247,703
Allowance for off-balance sheet credit losses:
Beginning balance	$	11,063		$	123		$	50		$	8		$	—		$	11,244
Provision for off-balance sheet credit losses	( 5,738		)	( 88		)	( 11		)	( 6		)	—			( 5,843		)
Ending balance	$	5,325		$	35		$	39		$	2		$	—		$	5,401

Total provision for credit losses	$	( 5,073	)	$	3,962		$	71		$	1,162		$	( 122	)	$	—

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at September 30, 2018 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	$	11,466,611	$	90,301	$	109,490	$	13,797	$	11,576,101	$	104,098
Commercial real estate	3,803,359		60,189		1,316		—		3,804,675		60,189
Residential mortgage	1,929,825		18,683		41,917		—		1,971,742		18,683
Personal	996,672		8,709		269		—		996,941		8,709
Total	18,196,467		177,882		152,992		13,797		18,349,459		191,679

Nonspecific allowance	—		—		—		—		—		18,890

Total	$	18,196,467	$	177,882	$	152,992	$	13,797	$	18,349,459	$	210,569

- 75 -

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 2017 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	$	10,596,672	$	115,438	$	137,303	$	8,831	$	10,733,975	$	124,269
Commercial real estate	3,477,132		56,621		2,855		—		3,479,987		56,621
Residential mortgage	1,926,239		18,451		47,447		—		1,973,686		18,451
Personal	965,507		9,124		269		—		965,776		9,124
Total	16,965,550		199,634		187,874		8,831		17,153,424		208,465

Nonspecific allowance	—		—		—		—		—		22,217

Total	$	16,965,550	$	199,634	$	187,874	$	8,831	$	17,153,424	$	230,682

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at September 30, 2017 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	$	10,619,034	$	123,517	$	176,900	$	13,284	$	10,795,934	$	136,801
Commercial real estate	3,515,167		56,405		2,975		—		3,518,142		56,405
Residential mortgage	1,900,244		18,393		45,506		—		1,945,750		18,393
Personal	946,753		8,026		255		—		947,008		8,026
Total	16,981,198		206,341		225,636		13,284		17,206,834		219,625

Nonspecific allowance	—		—		—		—		—		28,078

Total	$	16,981,198	$	206,341	$	225,636	$	13,284	$	17,206,834	$	247,703

- 76 -

Credit Quality Indicators

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

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at September 30, 2018 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	11,549,529	$	103,185	$	26,572	$	913	$	11,576,101	$	104,098
Commercial real estate	3,804,675		60,189		—		—		3,804,675		60,189
Residential mortgage	262,612		3,099		1,709,130		15,584		1,971,742		18,683
Personal	916,587		6,509		80,354		2,200		996,941		8,709
Total	16,533,403		172,982		1,816,056		18,697		18,349,459		191,679

Nonspecific allowance	—		—		—		—		—		18,890

Total	$	16,533,403	$	172,982	$	1,816,056	$	18,697	$	18,349,459	$	210,569

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, 2017 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	10,706,035	$	123,383	$	27,940	$	886	$	10,733,975	$	124,269
Commercial real estate	3,479,987		56,621		—		—		3,479,987		56,621
Residential mortgage	234,477		2,947		1,739,209		15,504		1,973,686		18,451
Personal	877,390		6,461		88,386		2,663		965,776		9,124
Total	15,297,889		189,412		1,855,535		19,053		17,153,424		208,465

Nonspecific allowance	—		—		—		—		—		22,217

Total	$	15,297,889	$	189,412	$	1,855,535	$	19,053	$	17,153,424	$	230,682

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at September 30, 2017 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	10,750,657	$	135,846	$	45,277	$	955	$	10,795,934	$	136,801
Commercial real estate	3,518,142		56,405		—		—		3,518,142		56,405
Residential mortgage	226,306		3,068		1,719,444		15,325		1,945,750		18,393
Personal	856,030		6,043		90,978		1,983		947,008		8,026
Total	15,351,135		201,362		1,855,699		18,263		17,206,834		219,625

Nonspecific allowance	—		—		—		—		—		28,078

Total	$	15,351,135	$	201,362	$	1,855,699	$	18,263	$	17,206,834	$	247,703

- 77 -

Loans are considered to be performing if they are in compliance with the original terms of the agreement and currently exhibit no factors that cause management to have doubts about the borrowers' ability to remain in compliance with the original terms of the agreement, which is consistent with the regulatory guideline of “pass.” Performing loans also include past due residential mortgages that are guaranteed by agencies of the U.S. government that continue to accrue interest based on criteria of the guarantors' programs. Other loans especially mentioned are currently performing in compliance with the original terms of the agreement but may have a potential weakness that deserves management’s close attention, consistent with regulatory guidelines.

The risk grading process identified certain loans that 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.

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.

- 78 -

The following table summarizes the Company’s loan portfolio at September 30, 2018 by the risk grade categories (in thousands):



	Internally Risk Graded								Non-Graded
	Performing
	Pass		Other Loans Especially Mentioned		Accruing Substandard		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	3,127,227	$	7,233	$	106,374	$	54,033	$	—	$	—	$	3,294,867
Services	2,974,082		27,337		11,795		4,097		—		—		3,017,311
Wholesale/retail	1,636,405		1,508		3,567		9,249		—		—		1,650,729
Manufacturing	631,198		7,265		12,917		9,202		—		—		660,582
Healthcare	2,402,801		2,614		16,204		15,704		—		—		2,437,323
Other commercial and industrial	471,188		385		—		17,144		26,511		61		515,289
Total commercial	11,242,901		46,342		150,857		109,429		26,511		61		11,576,101

Commercial real estate:
Residential construction and land development	99,694		1,828		—		350		—		—		101,872
Retail	737,313		—		21,333		777		—		—		759,423
Office	817,854		6,975		—		—		—		—		824,829
Multifamily	1,120,145		—		21		—		—		—		1,120,166
Industrial	695,554		—		1,220		—		—		—		696,774
Other commercial real estate	300,887		535		—		189		—		—		301,611
Total commercial real estate	3,771,447		9,338		22,574		1,316		—		—		3,804,675

Residential mortgage:
Permanent mortgage	259,106		—		2,520		986		810,445		21,869		1,094,926
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		—		172,928		7,790		180,718
Home equity	—		—		—		—		684,826		11,272		696,098
Total residential mortgage	259,106		—		2,520		986		1,668,199		40,931		1,971,742

Personal	916,430		47		34		76		80,161		193		996,941

Total	$	16,189,884	$	55,727	$	175,985	$	111,807	$	1,774,871	$	41,185	$	18,349,459

- 79 -

The following table summarizes the Company’s loan portfolio at December 31, 2017 by the risk grade categories (in thousands):



	Internally Risk Graded								Non-Graded
	Performing
	Pass		Other Loans Especially Mentioned		Accruing Substandard		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,632,986	$	60,288	$	144,598	$	92,284	$	—	$	—	$	2,930,156
Services	2,943,869		13,927		26,533		2,620		—		—		2,986,949
Wholesale/retail	1,443,917		19,263		5,502		2,574		—		—		1,471,256
Manufacturing	472,869		6,653		11,290		5,962		—		—		496,774
Healthcare	2,253,497		3,186		43,305		14,765		—		—		2,314,753
Other commercial and industrial	478,951		7		8,161		19,028		27,870		70		534,087
Total commercial	10,226,089		103,324		239,389		137,233		27,870		70		10,733,975

Commercial real estate:
Residential construction and land development	113,190		1,828		395		1,832		—		—		117,245
Retail	686,915		4,243		98		276		—		—		691,532
Office	824,408		7,087		—		275		—		—		831,770
Multifamily	979,969		—		48		—		—		—		980,017
Industrial	573,014		—		—		—		—		—		573,014
Other commercial real estate	285,506		145		286		472		—		—		286,409
Total commercial real estate	3,463,002		13,303		827		2,855		—		—		3,479,987

Residential mortgage:
Permanent mortgage	232,492		—		822		1,163		784,928		24,030		1,043,435
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		—		188,327		9,179		197,506
Home equity	—		—		—		—		719,670		13,075		732,745
Total residential mortgage	232,492		—		822		1,163		1,692,925		46,284		1,973,686

Personal	875,696		1,548		63		83		88,200		186		965,776

Total	$	14,797,279	$	118,175	$	241,101	$	141,334	$	1,808,995	$	46,540	$	17,153,424

- 80 -

The following table summarizes the Company’s loan portfolio at September 30, 2017 by the risk grade categories (in thousands):



	Internally Risk Graded								Non-Graded
	Performing
	Pass		Other Loans Especially Mentioned		Accruing Substandard		Nonaccrual		Performing		Nonaccrual		Total
Commercial:
Energy	$	2,436,465	$	114,065	$	206,768	$	110,683	$	—	$	—	$	2,867,981
Services	2,932,577		26,372		7,390		1,174		—		—		2,967,513
Wholesale/retail	1,637,698		9,021		9,486		1,893		—		—		1,658,098
Manufacturing	486,383		7,181		16,823		9,059		—		—		519,446
Healthcare	2,150,099		31,855		33,051		24,446		—		—		2,239,451
Other commercial and industrial	458,796		52		9,820		29,500		45,132		145		543,445
Total commercial	10,102,018		188,546		283,338		176,755		45,132		145		10,795,934

Commercial real estate:
Residential construction and land development	110,178		—		—		1,924		—		—		112,102
Retail	724,887		689		—		289		—		—		725,865
Office	788,539		8,275		—		275		—		—		797,089
Multifamily	998,125		—		884		—		—		—		999,009
Industrial	591,080		—		—		—		—		—		591,080
Other commercial real estate	292,509		—		1		487		—		—		292,997
Total commercial real estate	3,505,318		8,964		885		2,975		—		—		3,518,142

Residential mortgage:
Permanent mortgage	224,235		393		462		1,216		764,252		23,407		1,013,965
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		—		178,479		8,891		187,370
Home equity	—		—		—		—		732,423		11,992		744,415
Total residential mortgage	224,235		393		462		1,216		1,675,154		44,290		1,945,750

Personal	855,857		49		38		86		90,809		169		947,008

Total	$	14,687,428	$	197,952	$	284,723	$	181,032	$	1,811,095	$	44,604	$	17,206,834

- 81 -

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

A summary of impaired loans follows (in thousands):



	As of										For the				For the
	September 30, 2018										Three Months Ended				Nine Months Ended
			Recorded Investment								September 30, 2018				September 30, 2018
	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	$	73,600	$	54,033	$	28,180	$	25,853	$	5,305	$	59,815	$	—	$	73,159	$	—
Services	6,959		4,097		4,021		76		76		4,237		—		3,358		—
Wholesale/retail	14,281		9,249		2,227		7,022		4,102		11,672		—		5,911		—
Manufacturing ²	9,212		9,202		6,217		2,985		2,985		6,096		—		7,582		—
Healthcare	25,923		15,704		13,162		2,542		1,329		15,915		—		15,235		—
Other commercial and industrial	26,645		17,205		17,205		—		—		17,499		—		18,151		—
Total commercial	156,620		109,490		71,012		38,478		13,797		115,234		—		123,396		—

Commercial real estate:
Residential construction and land development	1,306		350		350		—		—		350		—		1,091		—
Retail	7,951		777		777		—		—		923		—		527		—
Office	—		—		—		—		—		137		—		137		—
Multifamily	—		—		—		—		—		—		—		—		—
Industrial	—		—		—		—		—		—		—		—		—
Other commercial real estate	354		189		189		—		—		246		—		330		—
Total commercial real estate	9,611		1,316		1,316		—		—		1,656		—		2,085		—

Residential mortgage:
Permanent mortgage	27,603		22,855		22,855		—		—		22,980		318		24,024		947
Permanent mortgage guaranteed by U.S. government agencies ¹	185,788		180,718		180,718		—		—		174,653		1,557		178,643		4,979
Home equity	13,048		11,272		11,272		—		—		11,472		—		12,174		—
Total residential mortgage	226,439		214,845		214,845		—		—		209,105		1,875		214,841		5,926

Personal	320		269		269		—		—		305		—		269		—

Total	$	392,990	$	325,920	$	287,442	$	38,478	$	13,797	$	326,300	$	1,875	$	340,591	$	5,926


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At September 30, 2018 , $ 7.8 million of these loans were nonaccruing and $ 173 million were accruing based on the guarantee by U.S. government agencies.


²	Impaired manufacturing sector loans included $ 6.2 million of loans from an affiliated entity, with no allowance as the fair value of the collateral exceeded the outstanding principal balance at September 30, 2018 .

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

- 82 -

A summary of impaired loans at December 31, 2017 follows (in thousands):



			Recorded Investment
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance
Commercial:
Energy	$	111,011	$	92,284	$	40,968	$	51,316	$	8,814
Services	5,324		2,620		2,620		—		—
Wholesale/retail	9,099		2,574		2,574		—		—
Manufacturing	6,073		5,962		5,962		—		—
Healthcare	25,140		14,765		14,765		—		—
Other commercial and industrial	27,957		19,098		19,080		18		17
Total commercial	184,604		137,303		85,969		51,334		8,831

Commercial real estate:
Residential construction and land development	3,285		1,832		1,832		—		—
Retail	509		276		276		—		—
Office	287		275		275		—		—
Multifamily	—		—		—		—		—
Industrial	—		—		—		—		—
Other commercial real estate	670		472		472		—		—
Total commercial real estate	4,751		2,855		2,855		—		—

Residential mortgage:
Permanent mortgage	30,435		25,193		25,193		—		—
Permanent mortgage guaranteed by U.S. government agencies ¹	203,814		197,506		197,506		—		—
Home equity	14,548		13,075		13,075		—		—
Total residential mortgage	248,797		235,774		235,774		—		—

Personal	307		269		269		—		—

Total	$	438,459	$	376,201	$	324,867	$	51,334	$	8,831


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, 2017 , $ 9.2 million of these loans were nonaccruing and $ 188 million were accruing based on the guarantee by U.S. government agencies.

- 83 -

A summary of impaired loans at September 30, 2017 follows (in thousands):



											For the				For the
	As of September 30, 2017										Three Months Ended				Nine Months Ended
			Recorded Investment								September 30, 2017				September 30, 2017
	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	$	133,643	$	110,683	$	45,169	$	65,514	$	4,944	$	117,338	$	—	$	121,591	$	—
Services	3,838		1,174		1,174		—		—		4,464		—		4,674		—
Wholesale/retail	8,418		1,893		1,893		—		—		6,256		—		6,650		—
Manufacturing	9,674		9,059		9,059		—		—		9,357		—		6,995		—
Healthcare	24,591		24,446		474		23,972		8,323		24,476		—		12,635		—
Other commercial and industrial	38,222		29,645		29,626		19		17		25,138		—		25,382		—
Total commercial	218,386		176,900		87,395		89,505		13,284		187,029		—		177,927		—

Commercial real estate:
Residential construction and land development	3,532		1,924		1,924		—		—		1,988		—		2,679		—
Retail	513		289		289		—		—		295		—		308		—
Office	287		275		275		—		—		335		—		351		—
Multifamily	—		—		—		—		—		5		—		19		—
Industrial	—		—		—		—		—		—		—		38		—
Other commercial real estate	671		487		487		—		—		752		—		855		—
Total commercial real estate	5,003		2,975		2,975		—		—		3,375		—		4,250		—

Residential mortgage:
Permanent mortgage	29,861		24,623		24,623		—		—		24,019		315		23,739		912
Permanent mortgage guaranteed by U.S. government agencies ¹	193,594		187,370		187,370		—		—		188,461		1,884		199,532		5,809
Home equity	13,332		11,992		11,992		—		—		11,880		—		11,755		—
Total residential mortgage	236,787		223,985		223,985		—		—		224,360		2,199		235,026		6,721

Personal	290		255		255		—		—		263		—		273		—

Total	$	460,466	$	404,115	$	314,610	$	89,505	$	13,284	$	415,027	$	2,199	$	417,476	$	6,721


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At September 30, 2017 , $ 8.9 million of these loans were nonaccruing and $ 178 million were accruing based on the guarantee by U.S. government agencies.

- 84 -

Troubled Debt Restructurings

At September 30, 2018 the Company had $ 171 million in troubled debt restructurings (TDRs), of which $ 83 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $ 83 million of TDRs were performing in accordance with the modified terms.

At December 31, 2017 , the Company had $ 126 million in TDRs, of which $ 74 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $ 48 million of TDRs were performing in accordance with the modified terms.

At September 30, 2017 , TDRs totaled $ 129 million , of which $ 69 million were accruing residential mortgage loans guaranteed by U.S. government agencies. Approximately $ 60 million of TDRs were performing in accordance with the modified terms.

TDRs generally consist of interest rate concessions, payment stream concessions or a combination of concessions to distressed borrowers. During the three and nine months ended September 30, 2018 , $ 31 million and $ 76 million of loans were restructured and $ 4.5 million and $ 10.2 million of loans designated as TDRs were charged off. During the three and nine months ended September 30, 2017 , $ 11 million and $ 53 million of loans were restructured and $ 4.4 million and $ 4.4 million of loans designated as TDRs were charged off.

- 85 -

Nonaccrual & Past Due Loans

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

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of September 30, 2018 is as follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	3,240,684	$	150	$	—	$	—	$	54,033	$	3,294,867
Services	3,006,581		4,908		1,725		—		4,097		3,017,311
Wholesale/retail	1,641,447		33		—		—		9,249		1,650,729
Manufacturing	648,242		3,138		—		—		9,202		660,582
Healthcare	2,421,166		453		—		—		15,704		2,437,323
Other commercial and industrial	498,066		18		—		—		17,205		515,289
Total commercial	11,456,186		8,700		1,725		—		109,490		11,576,101

Commercial real estate:
Residential construction and land development	101,185		337		—		—		350		101,872
Retail	758,646		—		—		—		777		759,423
Office	824,829		—		—		—		—		824,829
Multifamily	1,120,166		—		—		—		—		1,120,166
Industrial	696,774		—		—		—		—		696,774
Other commercial real estate	300,450		530		45		397		189		301,611
Total commercial real estate	3,802,050		867		45		397		1,316		3,804,675

Residential mortgage:
Permanent mortgage	1,064,618		5,721		1,732		—		22,855		1,094,926
Permanent mortgages guaranteed by U.S. government agencies	39,523		23,370		13,753		96,282		7,790		180,718
Home equity	682,940		1,609		156		121		11,272		696,098
Total residential mortgage	1,787,081		30,700		15,641		96,403		41,917		1,971,742

Personal	995,714		900		58		—		269		996,941

Total	$	18,041,031	$	41,167	$	17,469	$	96,800	$	152,992	$	18,349,459

- 86 -

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2017 is as follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,833,668	$	—	$	4,204	$	—	$	92,284	$	2,930,156
Services	2,983,222		514		486		107		2,620		2,986,949
Wholesale/retail	1,468,284		398		—		—		2,574		1,471,256
Manufacturing	490,739		—		73		—		5,962		496,774
Healthcare	2,284,770		15,218		—		—		14,765		2,314,753
Other commercial and industrial	514,701		85		78		125		19,098		534,087
Total commercial	10,575,384		16,215		4,841		232		137,303		10,733,975

Commercial real estate:
Residential construction and land development	115,213		200		—		—		1,832		117,245
Retail	691,256		—		—		—		276		691,532
Office	831,118		254		—		123		275		831,770
Multifamily	979,625		22		370		—		—		980,017
Industrial	573,014		—		—		—		—		573,014
Other commercial real estate	285,937		—		—		—		472		286,409
Total commercial real estate	3,476,163		476		370		123		2,855		3,479,987

Residential mortgage:
Permanent mortgage	1,014,588		3,435		219		—		25,193		1,043,435
Permanent mortgages guaranteed by U.S. government agencies	22,692		18,978		13,468		133,189		9,179		197,506
Home equity	717,007		2,206		440		17		13,075		732,745
Total residential mortgage	1,754,287		24,619		14,127		133,206		47,447		1,973,686

Personal	964,374		681		191		261		269		965,776

Total	$	16,770,208	$	41,991	$	19,529	$	133,822	$	187,874	$	17,153,424

- 87 -

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of September 30, 2017 is as follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,752,259	$	—	$	5,039	$	—	$	110,683	$	2,867,981
Services	2,963,746		2,343		250		—		1,174		2,967,513
Wholesale/retail	1,654,018		1,748		409		30		1,893		1,658,098
Manufacturing	508,231		—		2,156		—		9,059		519,446
Healthcare	2,214,849		156		—		—		24,446		2,239,451
Other commercial and industrial	513,748		52		—		—		29,645		543,445
Total commercial	10,606,851		4,299		7,854		30		176,900		10,795,934

Commercial real estate:
Residential construction and land development	109,994		184		—		—		1,924		112,102
Retail	724,850		726		—		—		289		725,865
Office	796,687		127		—		—		275		797,089
Multifamily	999,009		—		—		—		—		999,009
Industrial	591,080		—		—		—		—		591,080
Other commercial real estate	292,322		1		—		187		487		292,997
Total commercial real estate	3,513,942		1,038		—		187		2,975		3,518,142

Residential mortgage:
Permanent mortgage	985,183		3,705		454		—		24,623		1,013,965
Permanent mortgages guaranteed by U.S. government agencies	25,169		17,346		13,343		122,621		8,891		187,370
Home equity	728,884		3,066		445		28		11,992		744,415
Total residential mortgage	1,739,236		24,117		14,242		122,649		45,506		1,945,750

Personal	943,368		3,296		81		8		255		947,008

Total	$	16,803,397	$	32,750	$	22,177	$	122,874	$	225,636	$	17,206,834

- 88 -

( 5 ) Acquisitions

On May 1, 2018 , the Company acquired a majority voting interest in Switchgrass Holdings, LLC, a restaurant franchise owner and operator, pursuant to merchant banking regulations and restrictions. The purchase price for this acquisition was $ 14 million . As of September 30, 2018, the preliminary purchase price allocation included $ 6.7 million of intangible assets.

( 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 retained for investment. 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 sales commitments, which are considered derivative contracts that have not been designated as hedging instruments for accounting purposes. The volume of mortgage loans originated for sale and secondary market prices are the primary drivers of originating and marketing revenue.

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

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



	September 30, 2018				December 31, 2017					September 30, 2017
	Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value
Residential mortgage loans held for sale	$	169,095	$	169,226	$	212,525	$	215,113		$	261,868	$	265,783
Residential mortgage loan commitments	197,752		5,027		222,919		6,523			334,337		9,066
Forward sales contracts	330,876		1,613		380,159		( 258		)	524,878		794
			$	175,866			$	221,378				$	275,643

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of September 30, 2018 , December 31, 2017 or September 30, 2017 . No credit losses were recognized on residential mortgage loans held for sale for the nine month period ended September 30, 2018 and 2017 .

- 89 -

Mortgage banking revenue was as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Production revenue:
Net realized gains on sale of mortgage loans	$	9,063		$	12,041		$	28,699		$	32,443
Net change in unrealized gain on mortgage loans held for sale	( 2,135		)	( 1,492		)	( 2,457		)	3,335
Net change in the fair value of mortgage loan commitments	( 2,446		)	( 1,927		)	( 1,496		)	( 667		)
Net change in the fair value of forward sales contracts	2,768			( 293		)	1,871			( 4,399		)
Total production revenue	7,250			8,329			26,617			30,712
Servicing revenue	16,286			16,561			49,290			49,645
Total mortgage banking revenue	$	23,536		$	24,890		$	75,907		$	80,357

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 for accounting purposes related to residential mortgage loan commitments and forward sales contracts. Servicing revenue includes servicing fee income and late charges on loans serviced for others.

Residential Mortgage Servicing

Mortgage servicing rights may be originated or 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):



	September 30, 2018			December 31, 2017			September 30, 2017
Number of residential mortgage loans serviced for others	133,538			136,528			137,359
Outstanding principal balance of residential mortgage loans serviced for others	$	21,826,773		$	22,046,632		$	22,063,121
Weighted average interest rate	3.97		%	3.94		%	3.95		%
Remaining term (in months)	295			297			298

The following represents activity in capitalized mortgage servicing rights (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Beginning Balance	$	278,719		$	245,239		$	252,867		$	247,073
Additions, net	8,968			9,925			28,688			29,439
Change in fair value due to principal payments	( 8,986		)	( 8,667		)	( 25,783		)	( 24,928		)
Change in fair value due to market assumption changes	5,972			( 639		)	28,901			( 5,726		)
Ending Balance	$	284,673		$	245,858		$	284,673		$	245,858

Changes in the fair value of mortgage servicing rights due to market assumption changes are included in Other operating revenue in the Consolidated Statements of Earnings. Changes in fair value due to principal payments are included in Mortgage banking costs.

- 90 -

Mortgage servicing rights are not traded in active markets. Fair value is determined by discounting the projected net cash flows. Significant market assumptions used to determine fair value based on significant unobservable inputs were as follows:



	September 30, 2018	December 31, 2017	September 30, 2017
Discount rate – risk-free rate plus a market premium	9.95 %	9.84 %	9.84 %
Prepayment rate - based upon loan interest rate, original term and loan type	7.85%-15.04%	8.72%-15.16%	8.71%-15.43%
Loan servicing costs – annually per loan based upon loan type:
Performing loans	$66-$92	$65-$88	$65-$120
Delinquent loans	$150-$500	$150-$500	$150-$500
Loans in foreclosure	$1,000-$4,000	$1,000-$4,000	$1,000-$4,250
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life	3.07 %	2.24 %	2.00 %
Primary/secondary mortgage rate spread	105 bps	105 bps	105 bps

Changes in primary residential mortgage interest rates directly affect the prepayment speeds used in valuing our mortgage servicing rights. 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 periodically for changes in market conditions and adjusted to better correlate with actual performance of BOK Financial’s servicing portfolio.

The aging status of our mortgage loans serviced for others by investor at September 30, 2018 follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	7,804,568	$	84,339	$	14,825	$	22,326	$	7,926,058
FNMA	6,495,003		91,699		14,698		17,281		6,618,681
GNMA	6,569,093		245,827		54,429		16,867		6,886,216
Other	388,107		5,290		529		1,892		395,818
Total	$	21,256,771	$	427,155	$	84,481	$	58,366	$	21,826,773

- 91 -

( 7 ) Commitments and Contingent Liabilities

Litigation Contingencies

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

BOK Financial currently owns 252,233 Visa Class B shares which are convertible into 411,089 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.

On June 24, 2015, the Bank received a complaint alleging that an employee had colluded with a bond issuer and an individual in misusing revenues pledged to municipal bonds for which the Bank served as trustee under the bond indenture. The Company conducted an investigation and concluded that employees in one of its Corporate Trust offices had, with respect to a single group of affiliated bond issuances, violated Company policies and procedures by waiving financial covenants, granting forbearances and accepting without disclosure to the bondholders, debt service payments from sources other than pledged revenues. The relationship manager was terminated. The Company reported the circumstances to, and cooperated with an investigation by, the Securities and Exchange Commission ("SEC"). On December 28, 2015, in an action brought by the SEC, the United States District Court for the District of New Jersey entered a judgment against the principals involved in issuing the bonds, precluding the principals from denying the alleged violations of the federal securities laws and requiring the principals to pay all outstanding principal, accrued interest, and other amounts required under the bond documents (now estimated to be approximately $ 40 million , less the value of the facilities securing repayment of the bonds), subject to oversight by a court appointed monitor. On September 7, 2016, the Bank agreed, and the SEC entered, a consent order finding that the Bank had violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act and requiring the Bank to disgorge $ 1,067,721 of fees and pay a civil penalty of $ 600,000 . The Bank has disgorged the fees and paid the penalty.

On August 26, 2016, the Bank was sued in the United States District Court for New Jersey by two bondholders in a putative class action on behalf of all holders of the bonds alleging the Bank participated in the fraudulent sale of securities by the principals. On September 14, 2016, the Bank was sued in the District Court of Tulsa County, Oklahoma by 19 bondholders alleging the Bank participated in the fraudulent sale of securities by the principals. Two separate small groups of bondholders have filed arbitration complaints with the Financial Institutions Regulatory Association respecting the bonds and other bonds for which the Bank served as indenture trustee. Management has been advised by counsel that the Bank has valid defenses to the claims.

On September 15, 2017, the principal of the bond issuances filed for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Georgia. The principal subsequently sought and obtained an order dismissing the Chapter 11 proceeding. The obligation of the principal to pay all principal and interest on the bonds is non-dischargeable in bankruptcy.

A hearing on a motion by the principal to extend the time within which to perform the Court ordered payment plan until December 31, 2019 and a motion by Court Monitor compelling the principal to perform his obligation to maintain the minimum segregated account balance before the Federal Judge in New Jersey is scheduled for October 26, 2018. We expect that the extension will be granted, but there is no assurance that it will be. The Bank continues to expect the Court ordered payment plan will result in the payment of the bonds by the principals. Accordingly, no loss is probable at this time and no provision for loss has been made. If the payment plan does not result in payment of the bonds, a loss could become probable. A reasonable estimate cannot be made at this time though the amount could be material to the Company.

On March 5, 2018, the Bank was sued in the Fulton, Georgia County District Court by the administratrix of a deceased resident who had sued for and obtained a judgment for wrongful death against one of the operators of a nursing home financed by one of the bonds which are the subject of the litigation discussed above. The judgment is alleged to total approximately $ 8 million in principal and interest at this time. Plaintiff alleges that BOKF, in its capacity as indenture trustee for the bonds, colluded with the borrower and others to defraud creditors of the nursing home by misleading the public about the solvency of the nursing home. Plaintiff alleges that this conduct has prevented her from collecting on her judgment. The Bank is advised by counsel that the Bank has valid defenses to the plaintiffs’ claims and no loss is probable.

- 92 -

On March 14, 2017, the Bank was sued in the United States District Court for the Northern District of Oklahoma by bondholders in a second putative class action representing a different set of municipal securities. The bondholders in this second action allege two individuals purchased facilities from the principals who are the subject of the SEC New Jersey proceedings by means of the fraudulent sale of $ 60 million of municipal securities for which the Bank also served as indenture trustee. The bondholders allege the Bank failed to disclose that the seller of the purchased facilities had engaged in the conduct complained of in the New Jersey action. The Bank properly performed all duties as indenture trustee of this second set of municipal securities, timely commenced proceedings against the issuer of the securities when default occurred, is cooperating with the SEC in actions against the two principals, is not a target of the SEC proceedings, and has been advised by counsel that the Bank has valid defenses to the claims of these bondholders. Management is advised by counsel that a loss is not probable and that the loss, if any, cannot be reasonably estimated.

On March 7, 2017, a plaintiff filed a putative class action in the United States District Court for the Northern District of Texas alleging an extended overdraft fee charged by the Bank is interest and exceeds permitted rates. This action makes the same allegations as a putative class action that was dismissed by the United States District Court for the Northern District of Oklahoma on October 19, 2015. On August 22, 2018, a plaintiff filed a second putative class action in the United States District Court for New Mexico making the same allegations as the Texas action. On September 18, 2018, the District Court dismissed the Texas action. Management is advised by counsel that a loss is not probable in the New Mexico action or the Texas action and that the loss, if any, cannot be reasonably estimated.

On July 6, 2018, a plaintiff served a petition in a putative class action in the Oklahoma District Court for Tulsa County Oklahoma alleging BOKF NA breached its Demand Deposit Agreements by charging overdraft and not sufficient funds fees to deposit accounts on the day of the transaction triggering the fee and by the bank's debit hold process causing overdraft fees. Management is advised by counsel that a loss is not probable and that the loss, if any, cannot be reasonably estimated.

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 $ 3.4 million at September 30, 2018 . 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.

Other consolidated alternative investments include entities held under merchant banking authority. While the Company owns a majority of the voting interest in these entities, its ability to manage daily operations is limited by applicable banking regulations. Consolidated other assets includes total tangible assets, identifiable intangible assets and goodwill held by these entities.

- 93 -

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

A summary of consolidated and unconsolidated alternative investments as of September 30, 2018 , December 31, 2017 and September 30, 2017 is as follows (in thousands):



	September 30, 2018
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	11,535	$	—	$	—	$	8,693
Tax credit entities	—		—		—		—		—
Other	—		17,145		1,358		—		2,035
Total consolidated	$	—	$	28,680	$	1,358	$	—	$	10,728

Unconsolidated:
Tax credit entities	$	62,188	$	158,429	$	54,460	$	—	$	—
Other	—		47,906		16,200		—		—
Total unconsolidated	$	62,188	$	206,335	$	70,660	$	—	$	—



	December 31, 2017
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	14,783	$	—	$	—	$	11,927
Tax credit entities	10,000		10,964		—		10,964		10,000
Other	—		1,040		—		—		1,040
Total consolidated	$	10,000	$	26,787	$	—	$	10,964	$	22,967

Unconsolidated:
Tax credit entities	$	52,852	$	153,506	$	47,859	$	—	$	—
Other	—		38,397		22,968		—		—
Total unconsolidated	$	52,852	$	191,903	$	70,827	$	—	$	—

- 94 -



	September 30, 2017
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	15,621	$	—	$	—	$	12,806
Tax credit entities	10,000		11,119		—		10,963		10,000
Other	—		15,618		1,588		3,104		2,819
Total consolidated	$	10,000	$	42,358	$	1,588	$	14,067	$	25,625

Unconsolidated:
Tax credit entities	$	65,247	$	145,479	$	61,364	$	—	$	—
Other	—		32,462		13,657		—		—
Total unconsolidated	$	65,247	$	177,941	$	75,021	$	—	$	—

- 95 -

( 8 ) Shareholders' Equity

On October 30, 2018 , the Company declared a quarterly cash dividend of $ 0.50 per common share payable on or about November 26, 2018 to shareholders of record as of November 12, 2018 .

Dividends declared were $ 0.50 and $ 1.40 per share during the three and nine months ended September 30, 2018 and $ 0.44 and $ 1.32 per share during the three and nine months ended September 30, 2017 .

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. 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. 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			Employee Benefit Plans			Total
Balance, December 31, 2016	$	( 9,087	)	$	( 1,880	)	$	( 10,967	)
Net change in unrealized gain (loss)	33,876			5			33,881
Reclassification adjustments included in earnings:
Gain on available for sale securities, net	( 4,916		)	—			( 4,916		)
Other comprehensive income (loss), before income taxes	28,960			5			28,965
Federal and state income taxes ¹	11,239			2			11,241
Other comprehensive income (loss), net of income taxes	17,721			3			17,724
Balance, September 30, 2017	$	8,634		$	( 1,877	)	$	6,757

Balance, December 31, 2017	$	( 35,385	)	$	( 789	)	$	( 36,174	)
Transition adjustment for net unrealized gains on equity securities	( 2,709		)	—			( 2,709		)
Net change in unrealized gain (loss)	( 166,464		)	—			( 166,464		)
Reclassification adjustments included in earnings:
Loss on available for sale securities, net	802			—			802
Other comprehensive income (loss), before income taxes	( 165,662		)	—			( 165,662		)
Federal and state income taxes ²	( 42,183		)	—			( 42,183		)
Other comprehensive income (loss), net of income taxes	( 123,479		)	—			( 123,479		)
Balance, September 30, 2018	$	( 161,573	)	$	( 789	)	$	( 162,362	)


¹	Calculated using a 39 percent blended federal and state statutory tax rate.


²	Calculated using a 25 percent blended federal and state statutory tax rate.

- 96 -

( 9 ) Earnings Per Share



(In thousands, except share and per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Numerator:
Net income attributable to BOK Financial Corp. shareholders	$	117,256	$	85,649	$	337,190	$	262,152
Less: Earnings allocated to participating securities	963		888		2,940		2,817
Numerator for basic earnings per share – income available to common shareholders	116,293		84,761		334,250		259,335
Effect of reallocating undistributed earnings of participating securities	1		1		1		2
Numerator for diluted earnings per share – income available to common shareholders	$	116,294	$	84,762	$	334,251	$	259,337

Denominator:
Weighted average shares outstanding	$	65,438,849	$	65,423,258	$	65,455,306	$	65,432,313
Less: Participating securities included in weighted average shares outstanding	537,754		680,436		571,987		702,922
Denominator for basic earnings per common share	64,901,095		64,742,822		64,883,319		64,729,391
Dilutive effect of employee stock compensation plans ¹	33,256		62,350		36,409		64,502
Denominator for diluted earnings per common share	$	64,934,351	$	64,805,172	$	64,919,728	$	64,793,893

Basic earnings per share	$	1.79	$	1.31	$	5.15	$	4.01
Diluted earnings per share	$	1.79	$	1.31	$	5.15	$	4.00
¹ Excludes employee stock options with exercise prices greater than current market price.	—		—		—		—

- 97 -

( 10 ) Reportable Segments

Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended September 30, 2018 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	187,417		$	21,075		$	23,131		$	9,260		$	240,883
Net interest revenue (expense) from internal sources	( 42,270		)	19,039			6,267			16,964			—
Net interest revenue	145,147			40,114			29,398			26,224			240,883
Provision for credit losses	8,047			1,451			( 84		)	( 5,414		)	4,000
Net interest revenue after provision for credit losses	137,100			38,663			29,482			31,638			236,883
Other operating revenue	40,522			44,023			83,357			39			167,941
Other operating expense	49,136			53,187			62,255			88,039			252,617
Net direct contribution	128,486			29,499			50,584			( 56,362		)	152,207
Gain (loss) on financial instruments, net	( 3		)	( 7,228		)	7			7,224			—
Change in fair value of mortgage servicing rights	—			5,972			—			( 5,972		)	—
Gain (loss) on repossessed assets, net	( 1,869		)	( 87		)	—			1,956			—
Corporate expense allocations	11,027			15,863			11,126			( 38,016		)	—
Net income before taxes	115,587			12,293			39,465			( 15,138		)	152,207
Federal and state income taxes	30,623			3,131			10,134			( 9,226		)	34,662
Net income	84,964			9,162			29,331			( 5,912		)	117,545
Net income attributable to non-controlling interests	—			—			—			289			289
Net income attributable to BOK Financial Corp. shareholders	$	84,964		$	9,162		$	29,331		$	( 6,201	)	$	117,256

Average assets	$	18,499,979		$	8,323,542		$	8,498,363		$	( 1,626,067	)	$	33,695,817

- 98 -

Reportable segments reconciliation to the Consolidated Financial Statements for the nine months ended September 30, 2018 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	529,958		$	64,574		$	57,612		$	47,037		$	699,181
Net interest revenue (expense) from internal sources	( 107,715		)	51,811			26,431			29,473			—
Net interest revenue	422,243			116,385			84,043			76,510			699,181
Provision for credit losses	18,781			3,890			( 236		)	( 23,435		)	( 1,000		)
Net interest revenue after provision for credit losses	403,462			112,495			84,279			99,945			700,181
Other operating revenue	123,244			135,292			228,766			( 6,973		)	480,329
Other operating expense	143,085			158,947			186,549			254,942			743,523
Net direct contribution	383,621			88,840			126,496			( 161,970		)	436,987
Gain on financial instruments, net	13			( 36,901		)	7			36,881			—
Change in fair value of mortgage servicing rights	—			28,901			—			( 28,901		)	—
Gain (loss) on repossessed assets, net	( 6,102		)	( 21		)	—			6,123			—
Corporate expense allocations	34,802			47,760			33,223			( 115,785		)	—
Net income before taxes	342,730			33,059			93,280			( 32,082		)	436,987
Federal and state income taxes	90,943			8,421			23,982			( 24,406		)	98,940
Net income	251,787			24,638			69,298			( 7,676		)	338,047
Net income attributable to non-controlling interests	—			—			—			857			857
Net income attributable to BOK Financial Corp. shareholders	$	251,787		$	24,638		$	69,298		$	( 8,533	)	$	337,190

Average assets	$	18,124,571		$	8,381,204		$	8,364,712		$	( 1,094,992	)	$	33,775,495

Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended September 30, 2017 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	160,572		$	21,965		$	11,170		$	24,745		$	218,452
Net interest revenue (expense) from internal sources	( 25,460		)	13,981			9,604			1,875			—
Net interest revenue	135,112			35,946			20,774			26,620			218,452
Provision for credit losses	3,217			1,316			( 623		)	( 3,910		)	—
Net interest revenue after provision for credit losses	131,895			34,630			21,397			30,530			218,452
Other operating revenue	54,670			44,968			75,707			365			175,710
Other operating expense	57,345			56,147			61,792			90,650			265,934
Net direct contribution	129,220			23,451			35,312			( 59,755		)	128,228
Gain (loss) on financial instruments, net	4			1,686			—			( 1,690		)	—
Change in fair value of mortgage servicing rights	—			( 639		)	—			639			—
Gain (loss) on repossessed assets, net	( 4,126		)	292			—			3,834			—
Corporate expense allocations	8,733			16,920			9,819			( 35,472		)	—
Net income before taxes	116,365			7,870			25,493			( 21,500		)	128,228
Federal and state income taxes	47,755			3,061			10,021			( 18,399		)	42,438
Net income	68,610			4,809			15,472			( 3,101		)	85,790
Net income attributable to non-controlling interests	—			—			—			141			141
Net income (loss) attributable to BOK Financial Corp. shareholders	$	68,610		$	4,809		$	15,472		$	( 3,242	)	$	85,649

Average assets	$	17,780,494		$	8,683,998		$	6,992,021		$	( 448,343	)	$	33,008,170

- 99 -

Reportable segments reconciliation to the Consolidated Financial Statements for the nine months ended September 30, 2017 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	462,325		$	61,313		$	33,130		$	68,070		$	624,838
Net interest revenue (expense) from internal sources	( 65,291		)	39,845			28,784			( 3,338		)	—
Net interest revenue	397,034			101,158			61,914			64,732			624,838
Provision for credit losses	2,982			3,515			( 676		)	( 5,821		)	—
Net interest revenue after provision for credit losses	394,052			97,643			62,590			70,553			624,838
Other operating revenue	157,868			140,847			225,434			4,109			528,258
Other operating expense	169,761			164,138			182,816			244,815			761,530
Net direct contribution	382,159			74,352			105,208			( 170,153		)	391,566
Gain (loss) on financial instruments, net	46			5,242			—			( 5,288		)	—
Change in fair value of mortgage servicing rights	—			( 5,726		)	—			5,726			—
Gain (loss) on repossessed assets, net	( 2,728		)	253			—			2,475			—
Corporate expense allocations	26,407			50,577			30,438			( 107,422		)	—
Net income before taxes	353,070			23,544			74,770			( 59,818		)	391,566
Federal and state income taxes	144,704			9,159			29,450			( 55,067		)	128,246
Net income	208,366			14,385			45,320			( 4,751		)	263,320
Net income attributable to non-controlling interests	—			—			—			1,168			1,168
Net income attributable to BOK Financial Corp. shareholders	$	208,366		$	14,385		$	45,320		$	( 5,919	)	$	262,152

Average assets	$	17,738,224		$	8,469,201		$	6,971,369		$	( 401,356	)	$	32,777,438

- 100 -

( 11 ) Fees and Commissions Revenue

Fees and commissions revenue is generated through the sales of products, consisting primarily of financial instruments, and the performance of services for customers under contractual obligations. Revenue from providing services for customers is recognized at the time services are provided in an amount that reflects the consideration we expect to be entitled to for those services. Revenue is recognized based on the application of five steps:


•	Identify the contract with a customer


•	Identify the performance obligations in the contract


•	Determine the transaction price


•	Allocate the transaction price to the performance obligations in the contract


•	Recognize revenue when (or as) the Company satisfies a performance obligation

For contracts with multiple performance obligations, individual performance obligations are accounted for separately if the customer can benefit from the good or service on its own or with other resources readily available to the customer and the promise to transfer goods and services to the customer is separately identifiable in the contract. The transaction price is allocated to the performance obligations based on relative standalone selling prices.

Revenue is recognized on a gross basis whenever we have primary responsibility and risk in providing the services or products to our customers and have discretion in establishing the price for the services or products. Revenue is recognized on a net basis whenever we act as an agent for products or services of others.

Brokerage and trading revenue includes revenues from trading, customer hedging, retail brokerage and investment banking. Trading revenue includes net realized and unrealized gains primarily related to sales of securities to institutional customers and related derivative contracts. Customer hedging revenue includes realized and unrealized changes in the fair value of derivative contracts held for customer risk management programs including credit valuation adjustments, as necessary. We offer commodity, interest rate, foreign exchange and equity derivatives to our customers. These customer contracts are offset with contracts with selected counterparties and exchanges to minimize changes in market risk from changes in commodity prices, interest rates or foreign exchange rates. Retail brokerage revenue represents fees and commissions earned on sales of fixed income securities, annuities, mutual funds and other financial instruments to retail customers. Investment banking revenue includes fees earned upon completion of underwriting and financial advisory services. Investment banking revenue also includes fees earned in conjunction with loan syndications.

Transaction card revenue includes merchant discount fees and electronic funds transfer network fees, net of interchange fees paid to card issuers and assessments paid to card networks. Merchant discount fees represent fees paid by customers for account management and electronic processing of card transactions. Merchant discount fees are recognized at the time the customer’s transactions are processed or other services are performed. The Company also maintains the TransFund electronic funds transfer network for the benefit of its members, which includes the Bank. Electronic funds transfer fees are recognized as electronic transactions processed on behalf of its members.

Fiduciary and asset management revenue includes fees from asset management, custody, recordkeeping, investment advisory and administration services. Revenue is recognized on an accrual basis at the time the services are performed and may be based on either the fair value of the account or the service provided.

Deposit service charges and fees include commercial account service charges, overdraft fees, check card fee revenue and automated service charge and other deposit service fees. Fees are recognized at least quarterly in accordance with published deposit account agreements and disclosure statements for retail accounts or contractual agreements for commercial accounts. Item charges for overdraft or non-sufficient funds items are recognized as items are presented for payment. Account balance charges and activity fees are accrued monthly and collected in arrears. Commercial account activity fees may be offset by an earnings credit based on account balances. Check card fees represent interchange fees paid by a merchant bank for transactions processed from cards issued by the Company. Check card fees are recognized when transactions are processed.

Mortgage banking revenue includes revenues recognized in conjunction with the origination, marketing and servicing of conventional and government-sponsored residential mortgage loans. Mortgage production revenue includes net realized gains (losses) on sales of residential mortgage loans in the secondary market and the net change in unrealized gains (losses) on residential mortgage loans held for sale. Mortgage production revenue also includes changes in the fair value of derivative contracts not designated as hedging instruments related to residential mortgage loan commitments and forward sales contracts. Mortgage servicing revenue includes servicing fee income and late charges on loans serviced for others.

- 101 -

Fees and commissions revenue by reportable segment and primary service line is as follows for the three months ended September 30, 2018 .



	Commercial		Consumer		Wealth Management			Funds Management & Other			Consolidated		Out of Scope ¹		In Scope ²
Trading revenue	$	—	$	—	$	4,830		$	—		$	4,830	$	4,830	$	—
Customer hedging revenue	1,350		—		6,935			229			8,514		8,514		—
Retail brokerage revenue	—		—		4,568			( 73		)	4,495		—		4,495
Investment banking revenue	1,765		—		3,482			—			5,247		1,411		3,836
Brokerage and trading revenue	3,115		—		19,815			156			23,086		14,755		8,331
TransFund EFT network revenue	18,397		1,009		( 21		)	2			19,387		—		19,387
Merchant services revenue	1,995		14		—			—			2,009		—		2,009
Transaction card revenue	20,392		1,023		( 21		)	2			21,396		—		21,396
Personal trust revenue	—		—		35,528			—			35,528		—		35,528
Corporate trust revenue	—		—		5,741			—			5,741		—		5,741
Institutional trust & retirement plan services revenue	—		—		11,056			—			11,056		—		11,056
Investment management services and other	—		—		5,236			( 47		)	5,189		—		5,189
Fiduciary and asset management revenue	—		—		57,561			( 47		)	57,514		—		57,514
Commercial account service charge revenue	10,294		366		587			( 3		)	11,244		—		11,244
Overdraft fee revenue	95		9,413		30			3			9,541		—		9,541
Check card revenue	—		5,254		—			—			5,254		—		5,254
Automated service charge and other deposit fee revenue	35		1,661		22			8			1,726		—		1,726
Deposit service charges and fees	10,424		16,694		639			8			27,765		—		27,765
Mortgage production revenue	—		7,250		—			—			7,250		7,250		—
Mortgage servicing revenue	—		16,748		—			( 462		)	16,286		16,286		—
Mortgage banking revenue	—		23,998		—			( 462		)	23,536		23,536		—
Other revenue	5,460		2,323		5,568			862			14,213		10,051		4,162
Total fees and commissions revenue	$	39,391	$	44,038	$	83,562		$	519		$	167,510	$	48,342	$	119,168


¹	Out of scope revenue generally relates to financial instruments or contractual rights and obligations within the scope of other applicable accounting guidance.


²	In scope revenue represents revenue subject to FASB ASC Topic 606, Revenue from Contracts with Customers.

- 102 -

Fees and commissions revenue by reportable segment and primary service line is as follows for the nine months ended September 30, 2018 .



	Commercial		Consumer		Wealth Management			Funds Management & Other			Consolidated		Out of Scope ¹		In Scope ²
Trading revenue	$	—	$	—	$	21,562		$	—		$	21,562	$	21,562	$	—
Customer hedging revenue	6,264		—		21,511			1,441			29,216		29,216		—
Retail brokerage revenue	—		—		14,306			( 246		)	14,060		—		14,060
Investment banking revenue	5,729		—		9,655			—			15,384		4,772		10,612
Brokerage and trading revenue	11,993		—		67,034			1,195			80,222		55,550		24,672
TransFund EFT network revenue	54,647		3,005		( 61		)	5			57,596		—		57,596
Merchant services revenue	5,720		45		—			—			5,765		—		5,765
Transaction card revenue	60,367		3,050		( 61		)	5			63,361		—		63,361
Personal trust revenue	—		—		75,568			—			75,568		—		75,568
Corporate trust revenue	—		—		16,317			—			16,317		—		16,317
Institutional trust & retirement plan services revenue	—		—		33,545			—			33,545		—		33,545
Investment management services and other	—		—		15,760			( 145		)	15,615		—		15,615
Fiduciary and asset management revenue	—		—		141,190			( 145		)	141,045		—		141,045
Commercial account service charge revenue	32,150		1,087		1,802			( 3		)	35,036		—		35,036
Overdraft fee revenue	283		26,665		96			13			27,057		—		27,057
Check card revenue	—		15,515		—			—			15,515		—		15,515
Automated service charge and other deposit fee revenue	110		4,953		72			10			5,145		—		5,145
Deposit service charges and fees	32,543		48,220		1,970			20			82,753		—		82,753
Mortgage production revenue	—		26,617		—			—			26,617		26,617		—
Mortgage servicing revenue	—		50,677		—			( 1,387		)	49,290		49,290		—
Mortgage banking revenue	—		77,294		—			( 1,387		)	75,907		75,907		—
Other revenue	17,379		6,770		18,725			( 1,813		)	41,061		27,778		13,283
Total fees and commissions revenue	$	122,282	$	135,334	$	228,858		$	( 2,125	)	$	484,349	$	159,235	$	325,114


¹	Out of scope revenue generally relates to financial instruments or contractual rights and obligations within the scope of other applicable accounting guidance.


²	In scope revenue represents revenue subject to FASB ASC Topic 606, Revenue from Contracts with Customers.

- 103 -

( 12 ) Federal and State Income Taxes

The Tax Cuts and Jobs Act (the "Act") enacted on December 22, 2017, reduced the federal corporate income tax rate from 35 % to 21 % beginning January 1, 2018. Provisions of the Act are broad and complex, and we continue to evaluate its effect on the Company's financial statements. Results of this evaluation did not significantly impact the Company's financial position or results of operations for the three and nine months ended September 30, 2018 .

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Amount:
Federal statutory tax	$	31,963		$	44,880		$	91,767		$	137,048
Tax exempt revenue	( 2,059		)	( 3,001		)	( 5,524		)	( 9,336		)
Effect of state income taxes, net of federal benefit	3,740			2,486			10,685			7,875
Utilization of tax credits, net of proportional amortization of low-income housing limited partnership investments	56			( 387		)	( 2,611		)	( 3,363		)
Share-based compensation	( 26		)	( 169		)	( 2,070		)	( 2,470		)
Adjustment to provisional amounts related to tax reform	—			—			1,895			—
Other, net	988			( 1,371		)	4,798			( 1,508		)
Total income tax expense	$	34,662		$	42,438		$	98,940		$	128,246



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Percent of pretax income:
Federal statutory tax	21.0	%	35.0	%	21.0	%	35.0	%
Tax exempt revenue	( 1.4	)	( 2.3	)	( 1.3	)	( 2.4	)
Effect of state income taxes, net of federal benefit	2.5		1.9		2.4		2.0
Utilization of tax credits, net of proportional amortization of low-income housing limited partnership investments	—		( 0.3	)	( 0.6	)	( 0.9	)
Share-based compensation	—		( 0.1	)	( 0.5	)	( 0.6	)
Adjustment to provisional amounts related to tax reform	—		—		0.4		—
Other, net	0.7		( 1.1	)	1.2		( 0.3	)
Total	22.8	%	33.1	%	22.6	%	32.8	%

- 104 -

( 13 ) 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. An orderly transaction assumes exposure to the market for a customary period for marketing activities prior to the measurement date and not a forced liquidation or distressed sale. 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 to significant other observable inputs or significant unobservable inputs during the nine months ended September 30, 2018 and 2017 , respectively. Transfers between significant other observable inputs and significant unobservable inputs during the nine months ended September 30, 2018 and 2017 are included in the summary of changes in recurring fair values measured using unobservable inputs.

The underlying methods used by the third-party pricing services are considered in determining the primary inputs used to determine fair values. Management has evaluated the methodologies employed by the third-party pricing services by comparing the price provided by the pricing service with other sources, including brokers' quotes, sales or purchases of similar instruments and discounted cash flows to establish a basis for reliance on the pricing service values. Significant differences between the pricing service provided value and other sources are discussed with the pricing service to understand the basis for their values. Based on all observable inputs, management may adjust prices obtained from third-party pricing services to more appropriately reflect the prices that would be received to sell assets or paid to transfer liabilities in orderly transactions in the current market. No significant adjustments were made to prices provided by third-party pricing services at September 30, 2018 , December 31, 2017 or September 30, 2017 .

- 105 -

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value of financial assets and liabilities measured on a recurring basis was as follows as of September 30, 2018 (in thousands):



	Total		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading securities:
U.S. government agency debentures	$	80,692	$	—	$	80,692	$	—
U.S. government agency residential mortgage-backed securities	1,378,450		—		1,378,450		—
Municipal and other tax-exempt securities	41,345		—		41,345		—
Asset-backed securities	72,309		—		72,309		—
Other trading securities	40,604		—		40,604		—
Total trading securities	1,613,400		—		1,613,400		—
Available for sale securities:
U.S. Treasury	490		490		—		—
Municipal and other tax-exempt securities	4,349		—		4,349
U.S. government agency residential mortgage-backed securities	5,132,352		—		5,132,352		—
Privately issued residential mortgage-backed securities	74,685		—		74,685		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,834,691		—		2,834,691		—
Other debt securities	25,447		—		24,975		472
Total available for sale securities	8,072,014		490		8,071,052		472
Fair value option securities – U.S. government agency residential mortgage-backed securities	452,150		—		452,150		—
Residential mortgage loans held for sale	175,866		—		159,028		16,838
Mortgage servicing rights ¹	284,673		—		—		284,673
Derivative contracts, net of cash collateral ²	349,481		26,196		323,285		—
Liabilities:
Derivative contracts, net of cash collateral ²	252,387		17,872		234,515		—


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 primarily exchange-traded interest rate and agricultural derivative contacts, net of cash margin. Derivative contacts in liability positions that were valued using quoted prices in active markets for identical instruments are exchange-traded energy and interest rate derivative contracts, net of cash margin.

- 106 -

The fair value of financial assets and liabilities measured on a recurring basis was as follows as of December 31, 2017 (in thousands):



	Total		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading securities:
U.S. government agency debentures	$	21,196	$	—	$	21,196	$	—
U.S. government agency residential mortgage-backed securities	392,673		—		392,673		—
Municipal and other tax-exempt securities	13,559		—		13,559		—
Asset-backed securities	23,885		—		23,885		—
Other trading securities	11,363		—		11,363		—
Total trading securities	462,676		—		462,676		—
Available for sale securities:
U.S. Treasury	1,000		1,000		—		—
Municipal and other tax-exempt securities	27,080		—		22,278		4,802
U.S. government agency residential mortgage-backed securities	5,309,152		—		5,309,152		—
Privately issued residential mortgage-backed securities	93,221		—		93,221		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,834,961		—		2,834,961		—
Other debt securities	25,481		—		25,009		472
Perpetual preferred stock	15,767		—		15,767		—
Equity securities and mutual funds	14,916		—		14,916		—
Total available for sale securities	8,321,578		1,000		8,315,304		5,274
Fair value option securities – U.S. government agency residential mortgage-backed securities	755,054		—		755,054		—
Residential mortgage loans held for sale	221,378		—		209,079		12,299
Mortgage servicing rights ¹	252,867		—		—		252,867
Derivative contracts, net of cash collateral ²	220,502		8,179		212,323		—
Liabilities:
Derivative contracts, net of cash collateral ²	171,963		—		171,963		—


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 based on quoted prices in active markets for identical instruments (Level 1) are exchange-traded interest rate, energy and agricultural derivative contacts. Derivative contracts in liability positions that were valued using quoted prices in active markets for identical instruments (Level 1) are exchange-traded interest rate and energy derivative contracts, fully offset by cash margin.

- 107 -

The fair value of financial assets and liabilities measured on a recurring basis was as follows as of September 30, 2017 (in thousands):



	Total		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading securities:
U.S. government agency debentures	$	30,162	$	—	$	30,162	$	—
U.S. government agency residential mortgage-backed securities	516,760		—		516,760		—
Municipal and other tax-exempt securities	56,148		—		56,148		—
Other trading securities	11,047		—		11,047		—
Total trading securities	614,117		—		614,117		—
Available for sale securities:
U.S. Treasury	999		999		—		—
Municipal and other tax-exempt securities	28,368		—		23,583		4,785
U.S. government agency residential mortgage-backed securities	5,326,384		—		5,326,384		—
Privately issued residential mortgage-backed securities	99,994		—		99,994		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,889,346		—		2,889,346		—
Other debt securities	4,153		—		—		4,153
Perpetual preferred stock	16,245		—		16,245		—
Equity securities and mutual funds	17,710		2,578		15,132		—
Total available for sale securities	8,383,199		3,577		8,370,684		8,938
Fair value option securities – U.S. government agency residential mortgage-backed securities	819,531		—		819,531		—
Residential mortgage loans held for sale	275,643		—		263,543		12,100
Mortgage servicing rights ¹	245,858		—		—		245,858
Derivative contracts, net of cash collateral ²	352,559		8,498		344,061		—
Liabilities:
Derivative contracts, net of cash collateral ²	336,327		6,903		329,424		—


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.

- 108 -

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 references 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 assesses the appropriateness of these inputs quarterly.

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 current fair value, probability of default and loss given default.

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.

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 and forward sales contracts. The fair value of mortgage loans that were unable to be sold to U.S. government agencies were determined using quoted prices of loans that are sold in securitization transactions with a liquidity discount applied.

- 109 -

The following represents the changes for the three and nine months ended September 30, 2018 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 securities			Other debt securities		Residential mortgage loans held for sale
Balance, June 30, 2018	$	2,030		$	471	$	14,243
Transfer to Level 3 from Level 2 ¹	—			—		2,862
Purchases	—			—		—
Proceeds from sales	—			—		( 143		)
Redemptions and distributions	( 2,050		)	—		—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—			—		( 124		)
Other comprehensive income (loss):
Net change in unrealized gain (loss)	20			1		—
Balance, September 30, 2018	$	—		$	472	$	16,838


¹	Recurring transfers to Level 3 from Level 2 consist of residential mortgage loans intended for sale to U.S. government agencies that fail to meet conforming standards.



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities		Residential mortgage loans held for sale
Balance, December 31, 2017	$	4,802		$	472	$	12,299
Transfer to Level 3 from Level 2 ¹	—			—		5,603
Purchases	—			—		—
Proceeds from sales	—			—		( 853		)
Redemptions and distributions	( 5,095		)	—		—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—			—		( 211		)
Other comprehensive income (loss):
Net change in unrealized gain (loss)	293					—
Balance, September 30, 2018	$	—		$	472	$	16,838


¹	Recurring transfers to Level 3 from Level 2 consist of residential mortgage loans intended for sale to U.S. government agencies that fail to meet conforming standards.

- 110 -

The following represents the changes for the three and nine months ended September 30, 2017 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 securities		Other debt securities		Residential mortgage loans held for sale
Balance, June 30, 2017	$	4,655	$	4,152	$	12,735
Transfer to Level 3 from Level 2 ¹	—		—		176
Purchases	—		—		—
Proceeds from sales	—		—		( 847		)
Redemptions and distributions			—		—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—		—		36
Other comprehensive income (loss):
Net change in unrealized gain (loss)	130		1		—
Balance, September 30, 2017	$	4,785	$	4,153	$	12,100


¹	Recurring transfers to Level 3 from Level 2 consist of residential mortgage loans intended for sale to U.S. government agencies that fail to meet conforming standards.



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities		Residential mortgage loans held for sale
Balance, December 31, 2016	$	5,789		$	4,152	$	11,617
Transfer to Level 3 from Level 2 ¹	—			—		2,916
Purchases	—			—		—
Proceeds from sales	—			—		( 2,549		)
Redemptions and distributions	( 1,100		)	—		—
Gain (loss) recognized in earnings
Mortgage banking revenue	—			—		116
Other comprehensive income (loss):
Net change in unrealized gain (loss)	96			1		—
Balance, September 30, 2017	$	4,785		$	4,153	$	12,100


¹	Recurring transfers to Level 3 from Level 2 consist of residential mortgage loans intended for sale to U.S. government agencies that fail to meet conforming standards.

- 111 -

A summary of quantitative information about assets measured at fair value on a recurring basis using Significant Unobservable Inputs (Level 3) as of September 30, 2018 follows (in thousands):



	Fair Value	Valuation Technique(s)		Unobservable Input	Range (Weighted Average)

Available for sale securities
Other debt securities	472	Discounted cash flows	¹	Interest rate spread	6.37%-6.37% (6.37%)	³
Other debt securities	472	Discounted cash flows	¹	Interest rate spread	94.36%-94.36% (94.36%)	²
Residential mortgage loans held for sale	16,838	Quoted prices of loans sold in securitization transactions, with a liquidity discount applied		Liquidity discount applied to the market value of mortgage loans qualifying for sale to U.S. government agencies.	94.94 %


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	Represents fair value as a percentage of par value.


³	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 3 percent .

A summary of quantitative information about assets measured at fair value on a recurring basis using Significant Unobservable Inputs (Level 3) as of December 31, 2017 follows (in thousands):



	Fair Value		Valuation Technique(s)		Unobservable Input	Range (Weighted Average)

Available for sale securities
Municipal and other tax-exempt securities	$	4,802	Discounted cash flows	¹	Interest rate spread	6.60%-6.60% (6.60%)	²
Municipal and other tax-exempt securities	$	4,802	Discounted cash flows	¹	Interest rate spread	92.25%-94.76% (93.75%)	³
Other debt securities	472		Discounted cash flows	¹	Interest rate spread	6.85%-6.85% (6.85%)	⁴
Other debt securities	472		Discounted cash flows	¹	Interest rate spread	94.39%-94.39% (94.39%)	³
Residential mortgage loans held for sale	12,299		Quoted prices of loans sold in securitization transactions, with a liquidity discount applied		Liquidity discount applied to the market value of mortgage loans qualifying for sale to U.S. government agencies.	94.75 %


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 372 to 466 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 3 percent .

- 112 -

A summary of quantitative information about assets measured at fair value on a recurring basis using Significant Unobservable Inputs (Level 3) as of September 30, 2017 follows (in thousands):



	Fair Value		Valuation Technique(s)		Unobservable Input	Range (Weighted Average)

Available for sale securities
Municipal and other tax-exempt securities	$	4,785	Discounted cash flows	¹	Interest rate spread	6.05%-6.05% (6.05%)	²
Municipal and other tax-exempt securities	$	4,785	Discounted cash flows	¹	Interest rate spread	92.25%-95.02% (93.91%)	³
Other debt securities	4,153		Discounted cash flows	¹	Interest rate spread	6.65%-6.73% (6.72%)	⁴
Other debt securities	4,153		Discounted cash flows	¹	Interest rate spread	94.38%-94.38% (94.38%)	³

Residential mortgage loans held for sale	12,100		Quoted prices of loans sold in securitization transactions, with a liquidity discount applied		Liquidity discount applied to the market value of a mortgage loans qualifying for sale to U.S. government agencies.	95.94 %


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 352 to 467 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 3 percent .

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

Assets measured at fair value on a non-recurring basis include collateral for certain impaired loans and real property and other assets acquired to satisfy loans, which are based primarily on comparisons to completed sales of similar assets.

The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets with a balance at September 30, 2018 for which the fair value was adjusted during the nine months ended September 30, 2018 :



							Fair Value Adjustments for the
	Carrying Value at September 30, 2018						Three Months Ended September 30, 2018 Recognized in:				Nine Months Ended September 30, 2018 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	$	—	$	1,065	$	24,428	$	9,086	$	—	$	16,279	$	—
Real estate and other repossessed assets	—		4,608		6,545		—		2,161		—		7,388

- 113 -

The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets with a balance at September 30, 2017 for which the fair value was adjusted during the nine months ended September 30, 2017 :



							Fair Value Adjustments for the
	Carrying Value at September 30, 2017						Three Months Ended September 30, 2017 Recognized in:				Nine Months Ended September 30, 2017 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	$	—	$	423	$	10,960	$	4,397	$	—	$	5,058	$	—
Real estate and other repossessed assets	—		4,392		6,845		—		4,683		—		4,915

The fair value of collateral-dependent impaired loans secured by real estate 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. Non-recurring fair value measurements of collateral dependent loans secured by mineral rights are generally determined by our internal staff of engineers on projected cash flows under current market conditions and are based on significant unobservable inputs. Projected cash flows are discounted according to risk characteristics of the underlying oil and gas properties. Assets 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 prices with existing conventional equipment, operating methods and costs. Significant unobservable 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 September 30, 2018 follows (in thousands):



	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Impaired loans	$	24,428	Discounted cash flows	Management knowledge of industry and non-real estate collateral including but not limited to recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs	41% - 84% (55%) ¹
Real estate and other repossessed assets	6,545		Discounted cash flows	Recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs	N/A


¹	Represents fair value as a percentage of the unpaid principal balance.

- 114 -

A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of September 30, 2017 follows (in thousands):



	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Impaired loans	$	10,960	Discounted cash flows	Recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs	64% - 88% (68%) ¹
Real estate and other repossessed assets	6,845		Discounted cash flows	Recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs	N/A


¹	Represents fair value as a percentage of the unpaid principal balance.

- 115 -

Fair Value of Financial Instruments

The following table presents the carrying values and estimated fair values of all financial instruments, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis as of September 30, 2018 (dollars in thousands):



	Carrying Value			Estimated Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and due from banks	$	815,458		$	815,458	$	815,458	$	—	$	—
Interest-bearing cash and cash equivalents	430,789			430,789		430,789		—		—
Trading securities:
U.S. government agency debentures	80,692			80,692		—		80,692		—
U.S. government agency residential mortgage-backed securities	1,378,450			1,378,450		—		1,378,450		—
Municipal and other tax-exempt securities	41,345			41,345		—		41,345		—
Asset-backed securities	72,309			72,309		—		72,309		—
Other trading securities	40,604			40,604		—		40,604		—
Total trading securities	1,613,400			1,613,400		—		1,613,400		—
Investment securities:
Municipal and other tax-exempt securities	157,723			158,230		—		158,230		—
U.S. government agency residential mortgage-backed securities	13,234			13,201		—		13,201		—
Other debt securities	203,082			211,462		—		211,462		—
Total investment securities	374,039			382,893		—		382,893		—
Available for sale securities:
U.S. Treasury	490			490		490		—		—
Municipal and other tax-exempt securities	4,349			4,349		—		4,349
U.S. government agency residential mortgage-backed securities	5,132,352			5,132,352		—		5,132,352		—
Privately issued residential mortgage-backed securities	74,685			74,685		—		74,685		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,834,691			2,834,691		—		2,834,691		—
Other debt securities	25,447			25,447		—		24,975		472
Total available for sale securities	8,072,014			8,072,014		490		8,071,052		472
Fair value option securities – U.S. government agency residential mortgage-backed securities	452,150			452,150		—		452,150		—
Residential mortgage loans held for sale	175,866			175,866		—		159,028		16,838
Loans:
Commercial	11,576,101			11,431,818		—		—		11,431,818
Commercial real estate	3,804,675			3,738,494		—		—		3,738,494
Residential mortgage	1,971,742			1,937,171		—		—		1,937,171
Personal	996,941			1,003,857		—		—		1,003,857
Total loans	18,349,459			18,111,340		—		—		18,111,340
Allowance for loan losses	( 210,569		)	—		—		—		—
Loans, net of allowance	18,138,890			18,111,340		—		—		18,111,340
Mortgage servicing rights	284,673			284,673		—		—		284,673
Derivative instruments with positive fair value, net of cash collateral	349,481			349,481		26,196		323,285		—
Deposits with no stated maturity	19,556,443			19,556,443		—		—		19,556,443
Time deposits	2,075,846			2,023,244		—		—		2,023,244
Other borrowed funds	6,816,224			6,530,396		—		—		6,530,396
Subordinated debentures	144,707			144,186		—		144,186		—
Derivative instruments with negative fair value, net of cash collateral	252,387			252,387		17,872		234,515		—

- 116 -



	Carrying Value			Estimated Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and due from banks	$	602,510		$	602,510	$	602,510	$	—	$	—
Interest-bearing cash and cash equivalents	1,714,544			1,714,544		1,714,544		—		—
Trading securities:
U.S. government agency debentures	21,196			21,196		—		21,196		—
U.S. government agency residential mortgage-backed securities	392,673			392,673		—		392,673		—
Municipal and other tax-exempt securities	13,559			13,559		—		13,559		—
Asset-backed securities	23,885			23,885		—		23,885		—
Other trading securities	11,363			11,363		—		11,363		—
Total trading securities	462,676			462,676		—		462,676		—
Investment securities:
Municipal and other tax-exempt securities	228,186			230,349		—		230,349		—
U.S. government agency residential mortgage-backed securities	15,891			16,242		—		16,242		—
Other debt securities	217,716			233,444		—		233,444		—
Total investment securities	461,793			480,035		—		480,035		—
Available for sale securities:
U.S. Treasury	1,000			1,000		1,000		—		—
Municipal and other tax-exempt securities	27,080			27,080		—		22,278		4,802
U.S. government agency residential mortgage-backed securities	5,309,152			5,309,152		—		5,309,152		—
Privately issued residential mortgage-backed securities	93,221			93,221		—		93,221		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,834,961			2,834,961		—		2,834,961		—
Other debt securities	25,481			25,481		—		25,009		472
Perpetual preferred stock	15,767			15,767		—		15,767		—
Equity securities and mutual funds	14,916			14,916		—		14,916		—
Total available for sale securities	8,321,578			8,321,578		1,000		8,315,304		5,274
Fair value option securities – U.S. government agency residential mortgage-backed securities	755,054			755,054		—		755,054		—
Residential mortgage loans held for sale	221,378			221,378		—		209,079		12,299
Loans:
Commercial	10,733,975			10,524,627		—		—		10,524,627
Commercial real estate	3,479,987			3,428,733		—		—		3,428,733
Residential mortgage	1,973,686			1,977,721		—		—		1,977,721
Personal	965,776			956,706		—		—		956,706
Total loans	17,153,424			16,887,787		—		—		16,887,787
Allowance for loan losses	( 230,682		)	—		—		—		—
Loans, net of allowance	16,922,742			16,887,787		—		—		16,887,787
Mortgage servicing rights	252,867			252,867		—		—		252,867
Derivative instruments with positive fair value, net of cash collateral	220,502			220,502		8,179		212,323		—
Deposits with no stated maturity	19,962,889			19,962,889		—		—		19,962,889
Time deposits	2,098,416			2,064,558		—		—		2,064,558
Other borrowed funds	5,709,861			5,703,121		—		—		5,703,121
Subordinated debentures	144,677			148,207		—		148,207		—
Derivative instruments with negative fair value, net of cash collateral	171,963			171,963		—		171,963		—

- 117 -



	Carrying Value			Estimated Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and due from banks	$	547,203		$	547,203	$	547,203	$	—	$	—
Interest-bearing cash and cash equivalents	1,926,779			1,926,779		1,926,779		—		—
Trading securities:
U.S. government agency debentures	30,162			30,162		—		30,162		—
U.S. government agency residential mortgage-backed securities	516,760			516,760		—		516,760		—
Municipal and other tax-exempt securities	56,148			56,148		—		56,148		—
Other trading securities	11,047			11,047		—		11,047		—
Total trading securities	614,117			614,117		—		614,117		—
Investment securities:
Municipal and other tax-exempt securities	246,000			249,250		—		249,250		—
U.S. government agency residential mortgage-backed securities	16,926			17,458		—		17,458		—
Other debt securities	203,636			223,187		—		223,187		—
Total investment securities	466,562			489,895		—		489,895		—
Available for sale securities:
U.S. Treasury	999			999		999		—		—
Municipal and other tax-exempt securities	28,368			28,368		—		23,583		4,785
U.S. government agency residential mortgage-backed securities	5,326,384			5,326,384		—		5,326,384		—
Privately issued residential mortgage-backed securities	99,994			99,994		—		99,994		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,889,346			2,889,346		—		2,889,346		—
Other debt securities	4,153			4,153		—		—		4,153
Perpetual preferred stock	16,245			16,245		—		16,245		—
Equity securities and mutual funds	17,710			17,710		2,578		15,132		—
Total available for sale securities	8,383,199			8,383,199		3,577		8,370,684		8,938
Fair value option securities – U.S. government agency residential mortgage-backed securities	819,531			819,531		—		819,531		—
Residential mortgage loans held for sale	275,643			275,643		—		263,543		12,100
Loans:
Commercial	10,795,934			10,574,720		—		—		10,574,720
Commercial real estate	3,518,142			3,467,009		—		—		3,467,009
Residential mortgage	1,945,750			1,958,632		—		—		1,958,632
Personal	947,008			938,819		—		—		938,819
Total loans	17,206,834			16,939,180		—		—		16,939,180
Allowance for loan losses	( 247,703		)	—		—		—		—
Loans, net of allowance	16,959,131			16,939,180		—		—		16,939,180
Mortgage servicing rights	245,858			245,858		—		—		245,858
Derivative instruments with positive fair value, net of cash collateral	352,559			352,559		8,498		344,061		—
Deposits with no stated maturity	19,675,790			19,675,790		—		—		19,675,790
Time deposits	2,172,289			2,138,367		—		—		2,138,367
Other borrowed funds	6,631,820			6,609,642		—		—		6,609,642
Subordinated debentures	144,668			146,693		—		146,693		—
Derivative instruments with negative fair value, net of cash collateral	336,327			336,327		6,903		329,424		—

- 118 -

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.

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 guaranteed by U.S. government agencies held as economic hedges against changes in the fair value of mortgage servicing rights and all residential mortgage loans originated for sale at fair value. Changes in the fair value of these financial instruments are recognized in earnings.

( 14 ) Subsequent Events

The Company evaluated events from the date of the consolidated financial statements on September 30, 2018 through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q. Except as discussed in Note 5, no other events were identified requiring recognition in and/or disclosure in the consolidated financial statements.

- 119 -

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

(In Thousands, Except Per Share Data)	Nine Months Ended
	September 30, 2018								September 30, 2017
	Average Balance			Revenue/ Expense			Yield/ Rate		Average Balance			Revenue/ Expense		Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	1,468,904		$	19,163		1.74	%	$	2,020,003		$	15,817	1.05	%
Trading securities	1,395,871			38,312			3.72	%	508,741			13,008		3.55	%
Investment securities	406,395			11,961			3.93	%	501,802			14,186		3.77	%
Available for sale securities	8,176,037			142,387			2.30	%	8,459,312			132,445		2.11	%
Fair value option securities	527,039			12,627			3.11	%	526,714			10,985		2.77	%
Restricted equity securities	342,297			15,757			6.14	%	312,365			13,534		5.78	%
Residential mortgage loans held for sale	208,519			6,328			4.09	%	240,822			6,317		3.55	%
Loans	17,742,288			622,185			4.69	%	17,174,450			523,764		4.08	%
Allowance for loan losses	(221,949		)						(250,538		)
Loans, net of allowance	17,520,339			622,185			4.75	%	16,923,912			523,764		4.14	%
Total earning assets	30,045,401			868,720			3.85	%	29,493,671			730,056		3.32	%
Receivable on unsettled securities sales	794,434								452,348
Cash and other assets	2,935,660								2,831,419
Total assets	$	33,775,495							$	32,777,438
Liabilities and equity
Interest-bearing deposits:
Transaction	$	10,180,060		$	42,516		0.56	%	$	10,246,125		$	19,713	0.26	%
Savings	495,954			291			0.08	%	455,740			272		0.08	%
Time	2,128,925			20,910			1.31	%	2,213,090			18,521		1.12	%
Total interest-bearing deposits	12,804,939			63,717			0.67	%	12,914,955			38,506		0.40	%
Funds purchased and repurchase agreements	775,504			5,072			0.87	%	493,043			516		0.14	%
Other borrowings	6,194,418			88,788			1.92	%	5,825,764			47,026		1.08	%
Subordinated debentures	144,692			6,076			5.61	%	144,653			6,098		5.64	%
Total interest-bearing liabilities	19,919,553			163,653			1.10	%	19,378,415			92,146		0.64	%
Non-interest bearing demand deposits	9,233,837								9,277,820
Due on unsettled securities purchases	543,601								133,942
Other liabilities	542,790								579,530
Total equity	3,535,714								3,407,731
Total liabilities and equity	$	33,775,495							$	32,777,438
Tax-equivalent Net Interest Revenue				$	705,067		2.75	%				$	637,910	2.68	%
Tax-equivalent Net Interest Revenue to Earning Assets							3.13	%						2.90	%
Less tax-equivalent adjustment				5,886								13,072
Net Interest Revenue				699,181								624,838
Provision for credit losses				(1,000		)						—
Other operating revenue				480,329								528,258
Other operating expense				743,523								761,530
Income before taxes				436,987								391,566
Federal and state income taxes				98,940								128,246
Net income				338,047								263,320
Net income (loss) attributable to non-controlling interests				857								1,168
Net income attributable to BOK Financial Corp. shareholders				$	337,190							$	262,152
Earnings Per Average Common Share Equivalent:
Net income:
Basic				$	5.15							$	4.01
Diluted				$	5.15							$	4.00

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.

- 120 -

Page intentionally left blank.

- 121 -

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

(In Thousands, Except Per Share Data)	Three Months Ended
	September 30, 2018							June 30, 2018
	Average Balance			Revenue/ Expense		Yield/ Rate		Average Balance			Revenue/ Expense		Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	688,872		$	3,441	1.98	%	$	1,673,387		$	7,740	1.86	%
Trading securities	1,762,794			17,419		3.98	%	1,482,302			13,084		3.63	%
Investment securities	379,566			3,856		4.06	%	399,088			3,941		3.95	%
Available for sale securities	8,129,214			48,916		2.37	%	8,163,142			47,463		2.30	%
Fair value option securities	469,398			3,881		3.25	%	487,192			3,927		3.16	%
Restricted equity securities	328,842			5,232		6.36	%	348,546			5,408		6.21	%
Residential mortgage loans held for sale	207,488			2,151		4.27	%	218,600			2,333		4.28	%
Loans	18,203,785			220,245		4.80	%	17,751,242			212,266		4.80	%
Allowance for loan losses	(214,160		)					(222,856		)
Loans, net of allowance	17,989,625			220,245		4.86	%	17,528,386			212,266		4.86	%
Total earning assets	29,955,799			305,141		4.04	%	30,301,191			296,162		3.91	%
Receivable on unsettled securities sales	768,785							618,240
Cash and other assets	2,971,233							2,986,604
Total assets	$	33,695,817						$	33,906,035
Liabilities and equity
Interest-bearing deposits:
Transaction	$	10,010,031		$	17,029	0.67	%	$	10,189,354		$	13,993	0.55	%
Savings	503,821			108		0.09	%	503,671			95		0.08	%
Time	2,097,441			7,398		1.40	%	2,138,880			6,875		1.29	%
Total interest-bearing deposits	12,611,293			24,535		0.77	%	12,831,905			20,963		0.66	%
Funds purchased and repurchase agreements	1,193,583			3,768		1.25	%	593,250			782		0.53	%
Other borrowings	5,765,440			32,036		2.20	%	6,497,020			31,825		1.96	%
Subordinated debentures	144,702			2,025		5.55	%	144,692			2,047		5.67	%
Total interest-bearing liabilities	19,715,018			62,364		1.25	%	20,066,867			55,617		1.11	%
Non-interest bearing demand deposits	9,325,002							9,223,327
Due on unsettled securities purchases	544,263							527,804
Other liabilities	496,634							575,865
Total equity	3,614,900							3,512,172
Total liabilities and equity	$	33,695,817						$	33,906,035
Tax-equivalent Net Interest Revenue				$	242,777	2.79	%				$	240,545	2.80	%
Tax-equivalent Net Interest Revenue to Earning Assets						3.21	%						3.17	%
Less tax-equivalent adjustment				1,894							1,983
Net Interest Revenue				240,883							238,562
Provision for credit losses				4,000							—
Other operating revenue				167,941							156,399
Other operating expense				252,617							246,476
Income before taxes				152,207							148,485
Federal and state income taxes				34,662							33,330
Net income				117,545							115,155
Net income (loss) attributable to non-controlling interests				289							783
Net income attributable to BOK Financial Corp. shareholders				$	117,256						$	114,372
Earnings Per Average Common Share Equivalent:
Basic				$	1.79						$	1.75
Diluted				$	1.79						$	1.75

- 122 -



Three Months Ended
March 31, 2018								December 31, 2017								September 30, 2017
Average Balance			Revenue /Expense			Yield / Rate		Average Balance			Revenue / Expense			Yield / Rate		Average Balance			Revenue / Expense		Yield / Rate

$	2,059,517		$	7,982		1.57	%	$	1,976,395		$	6,311		1.27	%	$	1,965,645		$	6,375	1.29	%
933,404			7,809			3.40	%	560,321			4,629			3.38	%	491,613			4,122		3.47	%
441,207			4,164			3.78	%	462,869			4,606			3.98	%	475,705			4,592		3.86	%
8,236,938			46,008			2.23	%	8,435,916			45,623			2.21	%	8,428,353			45,145		2.17	%
626,251			4,819			2.95	%	792,647			5,770			2.90	%	684,571			5,066		2.97	%
349,176			5,117			5.86	%	337,673			4,956			5.87	%	328,677			4,826		5.87	%
199,380			1,844			3.71	%	257,927			2,389			3.72	%	256,343			2,095		3.36	%
17,261,481			189,674			4.45	%	17,181,007			185,614			4.29	%	17,256,663			187,506		4.31	%
(228,996		)						(246,143		)						(250,590		)
17,032,485			189,674			4.51	%	16,934,864			185,614			4.35	%	17,006,073			187,506		4.38	%
29,878,358			267,417			3.61	%	29,758,612			259,898			3.49	%	29,636,980			259,727		3.50	%
998,803								821,275								608,412
2,847,791								2,872,228								2,762,778
$	33,724,952							$	33,452,115							$	33,008,170


$	10,344,469		$	11,494		0.45	%	$	10,142,744		$	8,914		0.35	%	$	10,088,522		$	8,062	0.32	%
480,110			88			0.07	%	466,496			87			0.07	%	464,130			90		0.08	%
2,151,044			6,637			1.25	%	2,134,469			6,296			1.17	%	2,176,820			6,378		1.16	%
12,975,623			18,219			0.57	%	12,743,709			15,297			0.48	%	12,729,472			14,530		0.45	%
532,412			522			0.40	%	488,330			340			0.28	%	411,286			256		0.25	%
6,326,967			24,927			1.60	%	6,209,903			21,242			1.36	%	6,162,641			20,105		1.29	%
144,682			2,003			5.61	%	144,673			2,025			5.55	%	144,663			2,070		5.68	%
19,979,684			45,671			0.93	%	19,586,615			38,904			0.79	%	19,448,062			36,961		0.75	%
9,151,272								9,417,351								9,389,849
558,898								332,155								145,977
556,524								600,604								539,641
3,478,574								3,515,390								3,484,641
$	33,724,952							$	33,452,115							$	33,008,170
			$	221,746		2.68	%				$	220,994		2.70	%				$	222,766	2.75	%
						2.99	%							2.97	%						3.01	%
			2,010								4,131								4,314
			219,736								216,863								218,452
			(5,000		)						(7,000		)						—
			155,989								166,836								175,710
			244,430								263,987								265,934
			136,295								126,712								128,228
			30,948								54,347								42,438
			105,347								72,365								85,790
			(215		)						(127		)						141
			$	105,562							$	72,492							$	85,649

			$	1.61							$	1.11							$	1.31
			$	1.61							$	1.11							$	1.31

- 123 -

Quarterly Earnings Trends – Unaudited

(In thousands, except share and per share data)



	Three Months Ended
	Sept. 30, 2018			June 30, 2018			Mar. 31, 2018			Dec. 31, 2017			Sept. 30, 2017

Interest revenue	$	303,247		$	294,180		$	265,407		$	255,767		$	255,413
Interest expense	62,364			55,618			45,671			38,904			36,961
Net interest revenue	240,883			238,562			219,736			216,863			218,452
Provision for credit losses	4,000			—			(5,000		)	(7,000		)	—
Net interest revenue after provision for credit losses	236,883			238,562			224,736			223,863			218,452
Other operating revenue
Brokerage and trading revenue	23,086			26,488			30,648			33,045			33,169
Transaction card revenue ¹	21,396			20,975			20,990			20,028			22,929
Fiduciary and asset management revenue	57,514			41,699			41,832			41,767			40,687
Deposit service charges and fees	27,765			27,827			27,161			27,685			28,191
Mortgage banking revenue	23,536			26,346			26,025			24,362			24,890
Other revenue	14,213			14,518			12,330			11,762			13,670
Total fees and commissions	167,510			157,853			158,986			158,649			163,536
Other gains (losses), net	1,441			3,983			(664		)	552			(1,283		)
Gain (loss) on derivatives, net	(2,847		)	(3,057		)	(5,685		)	(3,045		)	1,033
Gain (loss) on fair value option securities, net	(4,385		)	(3,341		)	(17,564		)	(4,238		)	661
Change in fair value of mortgage servicing rights	5,972			1,723			21,206			5,898			(639		)
Gain (loss) on available for sale securities, net	250			(762		)	(290		)	(488		)	2,487
Total other operating revenue	167,941			156,399			155,989			157,328			165,795
Other operating expense
Personnel	143,531			138,947			139,947			145,329			147,910
Business promotion	7,620			7,686			6,010			7,317			7,105
Charitable contributions to BOKF Foundation	—			—			—			2,000			—
Professional fees and services	13,209			14,978			10,200			15,344			11,887
Net occupancy and equipment	23,394			22,761			24,046			22,403			21,325
Insurance	6,232			6,245			6,593			6,555			6,005
Data processing and communications ¹	31,665			27,739			27,817			28,903			27,412
Printing, postage and supplies	3,837			4,011			4,089			3,781			3,917
Net losses (gains) and operating expenses of repossessed assets	4,044			2,722			7,705			340			6,071
Amortization of intangible assets	1,603			1,386			1,300			1,430			1,744
Mortgage banking costs	11,741			12,890			10,149			14,331			13,450
Other expense	5,741			7,111			6,574			6,746			9,193
Total other operating expense	252,617			246,476			244,430			254,479			256,019
Net income before taxes	152,207			148,485			136,295			126,712			128,228
Federal and state income taxes	34,662			33,330			30,948			54,347			42,438
Net income	117,545			115,155			105,347			72,365			85,790
Net income (loss) attributable to non-controlling interests	289			783			(215		)	(127		)	141
Net income attributable to BOK Financial Corporation shareholders	$	117,256		$	114,372		$	105,562		$	72,492		$	85,649

Earnings per share:
Basic	$1.79			$1.75			$1.61			$1.11			$1.31
Diluted	$1.79			$1.75			$1.61			$1.11			$1.31
Average shares used in computation:
Basic	64,901,095			64,901,975			64,847,334			64,793,005			64,742,822
Diluted	64,934,351			64,937,226			64,888,033			64,843,179			64,805,172


¹	Non-GAAP measure to net interchange charges from prior quarters between transaction card revenue and data processing and communications expense. This measure has no effect on net income or earnings per share.

- 124 -

PART II. Other Information

Item 1. Legal Proceedings

See discussion of legal proceedings at Note 7 to the Consolidated Financial Statements.

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

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended September 30, 2018 .



Period	Total Number of Shares Purchased ²	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ¹	Maximum Number of Shares that May Yet Be Purchased Under the Plans
July 1 to July 31, 2018	—	$	—	—	1,949,917
August 1 to August 31, 2018	—	$	—	—	1,949,917
September 1 to September 30, 2018	—	$	—	—	1,949,917
Total	—			—


¹	On October 1, 2015, the Company's board of directors authorized the Company to repurchase up to five million shares of the Company's common stock. As of September 30, 2018 , the Company had repurchased 3,050,083 shares under this plan. Future repurchases of the Company's common stock will vary based on market conditions, regulatory limitations and other factors.


²	The Company routinely repurchases mature shares from employees to cover the exercise price and taxes in connection with employee equity compensation.

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


99.1	Agreement and Plan of Merger by and among CoBiz Financial Inc., BOK Financial Corporation and BOKF Merger Corporation Number Sixteen, dated as of June 17, 2018


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.

- 125 -

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: October 30, 2018

/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

- 126 -

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

Exhibits

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Actof 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 99.1 Agreement and Plan of Merger by and among CoBiz Financial Inc., BOK Financial Corporation and BOKF Merger Corporation Number Sixteen, dated as of June 17, 2018

BOKF 10-Q Quarter ended Sept. 30, 2018

Exhibits