BOK Financial - 10-Q quarterly report FY2017 Q2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2017



¨		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: 65,416,403 shares of common stock ($.00006 par value) as of June 30, 2017.

BOK Financial Corporation

Form 10-Q

Quarter Ended June 30, 2017

Index



Part I. Financial Information
Management’s Discussion and Analysis (Item 2)	1
Market Risk (Item 3)	42
Controls and Procedures (Item 4)	45
Consolidated Financial Statements – Unaudited (Item 1)	46
Quarterly Financial Summary – Unaudited (Item 2)	124
Quarterly Earnings Trend – Unaudited	127

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

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

Performance Summary

BOK Financial Corporation (“the Company”) reported net income of $88.1 million or $1.35 per diluted share for the second quarter of 2017, compared to $65.8 million or $1.00 per diluted share for the second quarter of 2016 and $88.4 million or $1.35 per diluted share for the first quarter of 2017.

Highlights of the second quarter of 2017 included:

•

Net interest revenue totaled $205.2 million for the second quarter of 2017, up from $182.6 million in the second quarter of 2016 and $201.2 million in the first quarter of 2017. The increase in net interest revenue over the prior year was driven by both improving yields and growth in average earning assets. Net interest margin was 2.89 percent for the second quarter of 2017. Net interest margin was 2.63 percent for the second quarter of 2016 and 2.81 percent for the first quarter of 2017. Average earning assets were $29.2 billion for the second quarter of 2017 and $28.8 billion for the second quarter of 2016.

•

Fees and commissions revenue totaled $177.5 million for the second quarter of 2017, a $2.7 million decrease compared to the second quarter of 2016. Growth in fiduciary and asset management revenue was offset by lower brokerage and trading revenue and mortgage banking revenue. Fees and commissions revenue increased $13.1 million over the first quarter of 2017. Growth in mortgage banking revenue, fiduciary and asset management revenue and transaction card revenue were partially offset by a decrease in brokerage and trading revenue.

•

Other operating expense for the second quarter of 2017 totaled $250.9 million, largely unchanged compared to the second quarter of 2016. Personnel expense increased $4.5 million, primarily due to an increase in the probability that certain performance-based equity awards will vest. Non-personnel expense decreased $5.0 million. Deposit insurance expense decreased primarily due to $5.1 million in credits received during the second quarter of 2017 related to revision of certain inputs to the assessment calculation filed in previous periods. Operating expenses increased $6.2 million over the previous quarter. Personnel expense was up $7.3 million and non-personnel expense decreased $1.1 million.

•

Income tax expense was $47.7 million or 34.9 percent of net income before taxes for the second quarter of 2017, compared to $30.5 million or 31.5 percent in the second quarter of 2016 and $38.1 million or 30.1 percent in the first quarter of 2017. Excluding the effect of a new accounting standard that requires the tax effect of vested equity compensation to be recorded in income tax expense, the effective tax rate would be 33.7 percent of net income before taxes for the second quarter of 2017 and 33.2 percent for the first quarter of 2017.

•

No provision for credit losses was recorded in the second quarter of 2017 or the first quarter of 2017. A $20.0 million provision for credit losses was recorded in the second quarter of 2016. Gross charge-offs were $2.9 million in the second quarter of 2017, $8.8 million in the second quarter of 2016 and $2.2 million in the first quarter of 2017. Recoveries were $1.2 million in the second quarter of 2017, compared to $1.4 million in the second quarter of 2016 and $2.9 million in the first quarter of 2017.


•	The combined allowance for credit losses totaled $256 million or 1.49 percent of outstanding loans at June 30, 2017, compared to $258 million or 1.52 percent of outstanding loans at March 31, 2017.


•	Nonperforming assets that are not guaranteed by U.S. government agencies totaled $276 million or 1.62 percent of outstanding loans and repossessed assets at June 30, 2017 and $240 million or 1.43 percent of outstanding loans and repossessed assets at March 31, 2017. The increase in nonperforming assets was primarily due to an increase in nonaccruing healthcare and energy loans.


•	Average loans were largely unchanged compared to the previous quarter. Period-end outstanding loan balances were $17.2 billion at June 30, 2017, an increase of $192 million over March 31, 2017.


•	Average deposits decreased $277 million compared to the previous quarter. Growth in demand deposit balances was offset by a decrease in interest-bearing transaction account balances and time deposits. Period-end deposits were $22.3 billion at June 30, 2017, a $259 million decrease compared to March 31, 2017.

- 1 -

•

The Company's common equity Tier 1 ratio was 11.76% at June 30, 2017. In addition, the Company's Tier 1 capital ratio was 11.76%, total capital ratio was 13.36% and leverage ratio was 9.27% at June 30, 2017. The Company's common equity Tier 1 ratio was 11.59% at March 31, 2017. In addition, the Company's Tier 1 capital ratio was 11.59%, total capital ratio was 13.25% and leverage ratio was 8.89% at March 31, 2017.


•	The Company paid a regular quarterly cash dividend of $29 million or $0.44 per common share during the second quarter of 2017. On July 25, 2017, the board of directors approved a regular quarterly cash dividend of $0.44 per common share payable on or about August 25, 2017 to shareholders of record as of August 11, 2017.

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 $205.2 million for the second quarter of 2017, up from $182.6 million in the second quarter of 2016 and $201.2 million in the first quarter of 2017. Net interest margin was 2.89 percent for the second quarter of 2017, 2.63 percent for the second quarter of 2016 and 2.81 percent for the first quarter of 2017.

Tax-equivalent net interest revenue increased $22.6 million over the second quarter of 2016. 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 $13.1 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 $9.4 million primarily due to the growth in average balances of loans and trading securities.

The tax-equivalent yield on earning assets was 3.30 percent for the second quarter of 2017, up 39 basis points over the second quarter of 2016, primarily due to increases in short-term interest rates resulting from three 25 basis point increases in the federal funds rate by the Federal Reserve since the second quarter of 2016. Loan yields increased 45 basis points to 4.03 percent. The yield on interest-bearing cash and cash equivalents increased 53 basis points. The available for sale securities portfolio yield was up 7 basis points to 2.11 percent. Funding costs were up 22 basis points over the second quarter of 2016. Growth in the cost of interest-bearing deposits was limited to 7 basis points by a lack of market pricing pressure. The cost of other borrowed funds increased 50 basis points. The cost of the subordinated debt was up 403 basis points as lower variable rate debt was replaced in the second quarter of 2016 by higher fixed rate debt. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 22 basis points for the second quarter of 2017, up 9 basis points over the second quarter of 2016. Average non-interest bearing deposits comprised 29% of total liabilities and equity for the second quarter of 2017, up from 26% for the second quarter of 2016.

Average earning assets for the second quarter of 2017 increased $424 million or 1 percent over the second quarter of 2016, including $495 million related to the Mobank acquisition. Average loans, net of allowance for loan losses, increased $860 million due primarily to growth in commercial, consumer and commercial real estate loans and included $495 million related to the Mobank acquisition. The average balance of trading securities increased $218 million primarily due to the addition of a new group in the third quarter of 2016 that trades in U.S. agency residential mortgage-backed securities. The average balance of fair value option securities held as an economic hedge of our mortgage servicing rights increased $108 million. The average balance of available for sale securities decreased $506 million. The average balance of residential mortgage loans held for sale decreased $156 million and the investment securities portfolio balance decreased $63 million.

Average deposits increased $1.6 billion over the second quarter of 2016, including $547 million from the Mobank acquisition in the fourth quarter of 2016. Demand deposit balances grew by $1.2 billion, including $265 million from Mobank. Interest-bearing transaction account balances increased $497 million, including $282 million from Mobank. This growth was partially offset by a $93 million decrease in average time deposits. Savings account balances also grew over the prior year. Average borrowed funds decreased $695 million compared to the second quarter of 2016, primarily due to decreased borrowings from the Federal Home Loan Banks and lower average repurchase agreement balances. The average balance of subordinated debentures decreased $88 million.

- 2 -

Net interest margin increased 8 basis points over the first quarter of 2017. The yield on average earning assets increased 15 basis points. The loan portfolio yield increased by 15 basis points primarily due to increases in the 30 day and 90 day LIBOR. The yield on the available for sale securities portfolio increased 6 basis points. The yield on interest-bearing cash and cash equivalents increased 22 basis points. Funding costs were 0.63 percent, up 11 basis points over the prior quarter. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities increased 4 basis points over the prior quarter.

Average earning assets decreased $359 million compared to the first quarter of 2017. The average balance of the available for sale securities portfolio decreased $183 million. The average balance of fair value option securities held as an economic hedge of our mortgage servicing rights increased $60 million. Average trading securities portfolio balances decreased $124 million and interest-bearing cash and cash equivalents balances decreased $80 million.

Average deposits decreased $277 million compared to the previous quarter. Interest-bearing transaction account balances decreased $480 million and time deposit balances decreased $55 million, partially offset by a $237 million increase in demand deposit balances. The average balance of borrowed funds decreased $254 million compared to the first quarter of 2017 primarily due to decreased borrowings from the Federal Home Loan Banks and lower average repurchase agreement balances.

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 81% 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.

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

- 3 -

Table 1 -- Volume/Rate Analysis

(In thousands)



	Three Months Ended June 30, 2017 / 2016									Six Months Ended June 30, 2017 / 2016
				Change Due To¹									Change Due To¹
	Change			Volume			Yield/Rate			Change			Volume			Yield/Rate
Tax-equivalent interest revenue:
Interest-bearing cash and cash equivalents	$	2,629		$	(31	)	$	2,660		$	4,167		$	21		$	4,146
Trading securities	2,742			3,098			(356		)	7,384			8,346			(962		)
Investment securities:
Taxable securities	(138		)	(101		)	(37		)	(300		)	(212		)	(88		)
Tax-exempt securities	(121		)	(322		)	201			(212		)	(604		)	392
Total investment securities	(259		)	(423		)	164			(512		)	(816		)	304
Available for sale securities:
Taxable securities	(425		)	(2,078		)	1,653			(2,430		)	(3,284		)	854
Tax-exempt securities	(137		)	(285		)	148			(285		)	(492		)	207
Total available for sale securities	(562		)	(2,363		)	1,801			(2,715		)	(3,776		)	1,061
Fair value option securities	1,477			689			788			1,268			562			706
Restricted equity securities	536			(424		)	960			534			(115		)	649
Residential mortgage loans held for sale	(1,122		)	(1,434		)	312			(1,986		)	(2,014		)	28
Loans	27,431			8,459			18,972			49,369			17,945			31,424
Total tax-equivalent interest revenue	32,872			7,571			25,301			57,509			20,153			37,356
Interest expense:
Transaction deposits	3,177			241			2,936			5,074			607			4,467
Savings deposits	(7		)	12			(19		)	(13		)	25			(38		)
Time deposits	(545		)	(264		)	(281		)	(1,624		)	(584		)	(1,040		)
Funds purchased	63			(7		)	70			51			(61		)	112
Repurchase agreements	(4		)	(21		)	17			(61		)	(35		)	(26		)
Other borrowings	6,513			(1,040		)	7,553			10,439			(675		)	11,114
Subordinated debentures	1,125			(774		)	1,899			2,440			(1,507		)	3,947
Total interest expense	10,322			(1,853		)	12,175			16,306			(2,230		)	18,536
Tax-equivalent net interest revenue	22,550			9,424			13,126			41,203			22,383			18,820
Change in tax-equivalent adjustment	(42		)							1
Net interest revenue	$	22,592								$	41,202


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

- 4 -

Other Operating Revenue

Other operating revenue was $182.3 million for the second quarter of 2017, a $3.3 million decrease compared to the second quarter of 2016 and a $12.0 million increase over the first quarter of 2017. Fees and commissions revenue decreased $2.7 million compared to the second quarter of 2016 and increased $13.1 million over the prior quarter. The change in the fair value of mortgage servicing rights, net of economic hedges, decreased other operating revenue by $1.7 million in the second quarter of 2017, decreased other operating revenue by $1.2 million in the second quarter of 2016 and increased other operating revenue $266 thousand in the first quarter of 2017.

Table 2 – Other Operating Revenue

(In thousands)



	Three Months Ended June 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2017			Increase (Decrease)			% Increase (Decrease)
	2017			2016			Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2017			Increase (Decrease)			% Increase (Decrease)
Brokerage and trading revenue	$	31,764		$	39,530		$	(7,766	)	(20	)%	$	33,623		$	(1,859	)	(6	)%
Transaction card revenue	35,296			34,950			346			1	%	32,127			3,169			10	%
Fiduciary and asset management revenue	41,808			34,813			6,995			20	%	38,631			3,177			8	%
Deposit service charges and fees	23,354			22,618			736			3	%	23,030			324			1	%
Mortgage banking revenue	30,276			34,884			(4,608		)	(13	)%	25,191			5,085			20	%
Other revenue	14,984			13,352			1,632			12	%	11,752			3,232			28	%
Total fees and commissions revenue	177,482			180,147			(2,665		)	(1	)%	164,354			13,128			8	%
Other gains, net	6,108			1,307			4,801			N/A		3,627			2,481			N/A
Gain (loss) on derivatives, net	3,241			10,766			(7,525		)	N/A		(450		)	3,691			N/A
Gain (loss) on fair value option securities, net	1,984			4,279			(2,295		)	N/A		(1,140		)	3,124			N/A
Change in fair value of mortgage servicing rights	(6,943		)	(16,283		)	9,340			N/A		1,856			(8,799		)	N/A
Gain on available for sale securities, net	380			5,326			(4,946		)	N/A		2,049			(1,669		)	N/A
Total other operating revenue	$	182,252		$	185,542		$	(3,290	)	(2	)%	$	170,296		$	11,956		7	%

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

Fees and commissions revenue

Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 46 percent of total revenue for the second quarter of 2017, excluding provision for credit losses and gains and losses on other assets, securities and derivatives and the change in the fair value of mortgage servicing rights. We believe that a variety of fee revenue sources provides an offset to changes in interest rates, values in the equity markets, commodity prices and consumer spending, all of which can be volatile. As an example of this strength, many of the economic factors that cause net interest revenue compression such as falling interest rates may also drive growth in our mortgage banking revenue. We expect growth in other operating revenue to come through offering new products and services and by further development of our presence in other markets. However, current and future economic conditions, regulatory constraints, increased competition and saturation in our existing markets could affect the rate of future increases.

Brokerage and trading revenue, which includes revenues from trading, customer hedging, retail brokerage and investment banking, decreased $7.8 million or 20 percent compared to the second quarter of 2016.

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Trading revenue includes net realized and unrealized gains primarily related to sales of U.S. government securities, residential mortgage-backed securities guaranteed by U.S. government agencies and municipal securities to institutional customers and related derivative instruments. Trading revenue was $10.1 million for the second quarter of 2017, a $2.2 million or 18 percent decrease compared to the second quarter of 2016. Lower volumes of U.S. agency residential mortgage-backed and municipal securities sold to our institutional customers due to anticipation of future interest increase, was offset by the addition of a new group in the third quarter of 2016 that trades in U.S. government agency residential mortgage-backed securities and related to-be-announced derivatives. The addition of this group added $1.4 million of net interest revenue and $2.1 million of trading revenue in the second quarter. This new group increased our trading securities portfolio by $359 million and receivable for unsettled trades by $111 million at June 30, 2017.

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 $11.6 million for the second quarter of 2017, a $1.9 million or 14 percent decrease compared to the second quarter of 2016 primarily attributed to energy and mortgage banking customers.

Revenue earned from retail brokerage transactions decreased $740 thousand or 11 percent compared to the second quarter of 2016 to $6.0 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. Trading volume decreased in the second quarter of 2017, primarily due to the impact of the implementation of the new Department of Labor ("DOL") fiduciary rule. New regulation issued by the DOL amended the definition of investment advice under the Employee Retirement Income Security Act ("ERISA"). The new rule is designed to provide better protection to plans, participants, beneficiaries and individual retirement account ("IRA") owners against conflicts of interest, imprudence and disloyalty.

Investment banking revenue, which includes fees earned upon completion of underwriting and financial advisory services and loan syndication fees, totaled $4.0 million for the second quarter of 2017, a $2.9 million or 42 percent decrease compared to the second quarter of 2016. Investment banking revenue is primarily related to the timing and volume of completed transactions.

Brokerage and trading revenue decreased $1.9 million compared to the first quarter of 2017, primarily due to a $1.0 million decrease in trading revenue and an $862 thousand decrease in retail brokerage fees. Customer hedging revenue was unchanged compared to the prior quarter. Increased hedging activity from our mortgage banking customers was offset by a decreased volume of energy contracts.

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. Excluding the impact of a customer early termination fee received in the second quarter of 2016, transaction card revenue for the second quarter of 2017 increased $1.5 million or 5 percent over the second quarter of 2016. Revenues from the processing of transactions on behalf of the members of our TransFund electronic funds transfer ("EFT") network totaled $18.1 million, up $1.0 million or 6% over the prior year. Merchant services fees totaled $12.1 million, a $373 thousand or 3 percent increase from increased transaction activity. Revenue from interchange fees paid by merchants for transactions processed from debit cards issued by the Company totaled $5.1 million, an increase of $133 thousand or 3 percent over the second quarter of 2016.

Transaction card revenue increased $3.2 million over the prior quarter, primarily due to a seasonal increase in transaction volumes on our TransFund EFT network and a full quarter's impact of expansion into the Arizona market. Revenue from processing transactions on behalf of merchants and check card revenue also increased over the prior quarter.

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.

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Fiduciary and asset management revenue grew by $7.0 million or 20 percent over the second quarter of 2016, primarily due to growth in assets under management, improved pricing discipline and decreased fee waivers. We earn fees as administrator to and investment adviser for the Cavanal Hill Funds, a diversified, open-ended investment company established as a business trust under the Investment Company Act of 1940. The Bank is custodian and Cavanal Hill Distributors, Inc. is distributor for the Cavanal Hill Funds. Products of the Cavanal Hill Funds are offered to customers, employee benefit plans, trusts and the general public in the ordinary course of business. Prior to the recent increases in short-term market interest rates as a result of the Federal Reserve's federal funds rate increases, we voluntarily waived $1.8 million of administration fees on the Cavanal Hill money market funds in order to maintain positive yields on these funds in the second quarter of 2016. We waived $445 thousand of fees in the first quarter of 2017. No fees were waived in the second quarter of 2017.

Fiduciary and asset management revenue increased $3.2 million over the first quarter of 2017, primarily due to an annual assessment of tax preparation fees, growth in assets under management and decreased fee waivers.

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 June 30,
	2017						2016
	Balance		Revenue¹		Margin²		Balance		Revenue¹		Margin²
Managed fiduciary assets:
Personal	$	7,581,555	$	21,698	1.14	%	$	6,696,329	$	19,561	1.17	%
Institutional	12,265,037		5,475		0.18	%	11,423,563		4,498		0.16	%
Total managed fiduciary assets	19,846,592		27,173		0.55	%	18,119,892		24,059		0.53	%

Non-managed assets:
Fiduciary	25,242,561		14,049		0.22	%	22,376,691		10,287		0.18	%
Non-fiduciary	16,579,586		586		0.01	%	16,863,508		467		0.01	%
Safekeeping and brokerage assets under administration	16,143,023		—		—	%	15,641,425		—		—	%
Total non-managed assets	57,965,170		14,635		0.10	%	54,881,624		10,754		0.08	%

Total assets under management or administration	$	77,811,762	$	41,808	0.21	%	$	73,001,516	$	34,813	0.19	%


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


²	Annualized revenue divided by period-end balance.

A summary of changes in assets under management or administration for the three months ended June 30, 2017 and 2016 follows:

Table 4 -- Changes in Assets Under Management or Administration



	Three Months Ended June 30,
	2017			2016
Beginning balance	$	77,418,956		$	71,869,013
Net inflows (outflows)	(918,076		)	377,244
Net change in fair value	1,310,882			755,259
Ending balance	$	77,811,762		$	73,001,516

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Deposit service charges and fees were $23.4 million for the second quarter of 2017, an increase of $736 thousand or 3 percent over the second quarter of 2016. Commercial account service charge revenue totaled $11.8 million, up $705 thousand or 6 percent. Overdraft fees were $9.8 million, largely unchanged compared to the second quarter of 2016. Service charges on deposit accounts with a standard monthly fee were $1.7 million, an increase of $109 thousand or 7 percent. Deposit service charges and fees increased $324 thousand over the prior quarter primarily due to an increase in commercial account service charge revenue and a seasonal increase in overdraft fee volumes.

Mortgage banking revenue decreased $4.6 million or 13 percent compared to the second quarter of 2016. Mortgage production revenue decreased $5.2 million. Mortgage loan production volumes decreased $998 million, including a $581 million decrease related to the Company's strategic decision to exit the correspondent lending channel during the third quarter of 2016. Production volumes in the Home Direct online and retail channel both decreased compared to the prior year as average primary mortgage interest rates were up 39 basis points over the second quarter of 2016. Gains on sale margins increased 56 basis points over the prior year. The margin increase was primarily due to exiting the correspondent lending channel, the lowest margin of our three sales channels, partially offset by a decrease in margins from our Home Direct online origination channel. Mortgage servicing revenue was up $638 thousand or 4 percent over the second quarter of 2016. The outstanding principal balance of mortgage loans serviced for others totaled $22.1 billion, an increase of $917 million or 4 percent.

Mortgage banking revenue increased $5.1 million over the first quarter of 2017. Mortgage production revenue increased $5.3 million. Production volume increased $109 million in response to lower average primary mortgage interest rates and normal seasonality. Gains on sale margin improved due to increased retail margins and improved hedging performance. Revenue from mortgage loan servicing decreased $212 thousand compared to the prior quarter.

Table 5 – Mortgage Banking Revenue

(In thousands)



	Three Months Ended June 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2017			Increase (Decrease)			% Increase (Decrease)
	2017			2016			Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2017			Increase (Decrease)			% Increase (Decrease)
Mortgage production revenue	$	13,840		$	19,086		$	(5,246	)	(27	)%	$	8,543		$	5,297		62	%

Mortgage loans funded for sale	$	902,978		$	1,818,844							$	711,019
Add: Current period end outstanding commitments	362,088			965,631								381,732
Less: Prior period end outstanding commitments	381,732			902,986								318,359
Total mortgage production volume	$	883,334		$	1,881,489		$	(998,155	)	(53	)%	$	774,392		$	108,942		14	%

Mortgage loan refinances to mortgage loans funded for sale	33		%	44		%	(11		) bps			44		%	(11		) bps
Gains on sale margin	1.57		%	1.01		%	56		bps			1.10		%	47		bps
Primary mortgage interest rates:
Average	3.98		%	3.59		%	39		bps			4.17		%	(19		) bps
Period end	3.88		%	3.48		%	40		bps			4.14		%	(26		) bps

Mortgage servicing revenue	$	16,436		$	15,798		$	638		4	%	$	16,648		$	(212	)	(1	)%
Average outstanding principal balance of mortgage loans serviced for others	22,055,127			20,736,525			1,318,602			6	%	22,006,295			48,832			—	%

Average mortgage servicing revenue rates	0.30		%	0.31		%	(1		) bp			0.31		%	(1		) bp


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.

- 8 -

Net gains on other assets, securities and derivatives

Other net gains totaled $6.1 million in the second quarter of 2017, due to the sale of a merchant banking investment. Other net gains totaled $3.6 million in the first quarter of 2017 related to holdings of two consolidated private equity funds and the sale of certain merchant banking investments. The sales of merchant banking investments included a consolidated entity that reduced goodwill by $2.7 million, identifiable intangible assets by $4.6 million and other assets by $5.6 million.

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.

The net economic benefit of the changes in fair value of mortgage servicing rights and related economic hedges was $247 thousand in the second quarter of 2017, including a $6.9 million decrease in the fair value of the mortgage servicing rights, a $5.2 million increase in the fair value of securities and derivative contracts held as an economic hedge and $2.0 million of related net interest revenue.

The net economic benefit of changes in the fair value of mortgage servicing rights and related economic hedges was $110 thousand for the second quarter of 2016. The fair value of mortgage servicing rights decreased $16.3 million.The fair value of securities and interest rate derivative contracts held as an economic hedge increased $15.0 million. Net interest earned on securities held as an economic hedge was $1.3 million.

The net economic benefit of changes in the fair value of mortgage servicing rights and related economic hedges was $1.5 million for the first quarter of 2017. The fair value of mortgage servicing rights increased by $1.9 million. The fair value of securities and interest rate derivative contracts held as an economic hedge decreased by $1.6 million.

Table 6 - Gain (Loss) on Mortgage Servicing Rights

(In thousands)



	Three Months Ended
	June 30, 2017			Mar. 31, 2017			June 30, 2016
Gain (loss) on mortgage hedge derivative contracts, net	$	3,241		$	(450	)	$	10,766
Gain (loss) on fair value option securities, net	1,984			(1,140		)	4,279
Gain (loss) on economic hedge of mortgage servicing rights, net	5,225			(1,590		)	15,045
Gain (loss) on change in fair value of mortgage servicing rights	(6,943		)	1,856			(16,283		)
Loss on changes in fair value of mortgage servicing rights, net of economic hedges included in other operating revenue	(1,718		)	266			(1,238		)
Net interest revenue on fair value option securities¹	1,965			1,271			1,348
Total economic benefit (cost) of changes in the fair value of mortgage servicing rights, net of economic hedges	$	247		$	1,537		$	110

- 9 -

Other Operating Expense

Other operating expense increased $6.2 million over previous quarter. Personnel expense was up $7.3 million, primarily due to changes in assumptions for the vesting of certain performance-based equity awards. Non-personnel expense decreased $1.1 million. Deposit insurance expense decreased primarily due to $5.1 million in credits received during the second quarter of 2017 related to the revision of certain inputs to the assessment calculation filed in previous periods. Data processing and communication expense increased $1.4 million and net losses and operating expenses of repossessed assets increased $1.3 million.

The discussion following excludes the impact of these items.

Table 7 – Other Operating Expense

(In thousands)



	Three Months Ended June 30,				Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2017		Increase (Decrease)			% Increase (Decrease)
	2017		2016		Increase (Decrease)			% Increase (Decrease)		Three Months Ended Mar. 31, 2017		Increase (Decrease)			% Increase (Decrease)
Regular compensation	$	83,630	$	81,730	$	1,900		2	%	$	83,228	$	402		—	%
Incentive compensation:
Cash-based	29,954		32,595		(2,641		)	(8	)%	28,836		1,118			4	%
Share-based	7,380		3,701		3,679			99	%	1,603		5,777			360	%
Deferred compensation	1,000		211		789			N/A		792		208			N/A
Total incentive compensation	38,334		36,507		1,827			5	%	31,231		7,103			23	%
Employee benefits	21,780		20,976		804			4	%	21,966		(186		)	(1	)%
Total personnel expense	143,744		139,213		4,531			3	%	136,425		7,319			5	%
Business promotion	7,738		6,703		1,035			15	%	6,717		1,021			15	%
Professional fees and services	12,419		14,158		(1,739		)	(12	)%	11,417		1,002			9	%
Net occupancy and equipment	21,125		19,677		1,448			7	%	21,624		(499		)	(2	)%
Insurance	689		7,129		(6,440		)	(90	)%	6,404		(5,715		)	(89	)%
Data processing and communications	36,330		32,802		3,528			11	%	34,902		1,428			4	%
Printing, postage and supplies	4,140		3,889		251			6	%	3,851		289			8	%
Net losses (gains) and operating expenses of repossessed assets	2,267		1,588		679			43	%	1,009		1,258			125	%
Amortization of intangible assets	1,803		2,624		(821		)	(31	)%	1,802		1			—	%
Mortgage banking costs	12,072		15,746		(3,674		)	(23	)%	13,003		(931		)	(7	)%
Other expense	8,558		7,856		702			9	%	7,557		1,001			13	%
Total other operating expense	$	250,885	$	251,385	$	(500	)	—	%	$	244,711	$	6,174		3	%

Average number of employees (full-time equivalent)	4,910		4,893		17			—	%	4,910		—			—	%

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

- 10 -

Personnel expense

Regular compensation, which consists of salaries and wages, overtime pay and temporary personnel costs, increased 1.9 million or 2 percent over the second quarter of 2016. The average number of employees was relatively unchanged compared to the prior year. Recent additions from the Mobank acquisition and in mortgage and technology were offset by the impact of staff reductions in the fourth quarter of 2016. In addition, standard annual merit increases in regular compensation were effective for the majority of our staff on March 1.

Incentive compensation increased $1.8 million or 5 percent over the second quarter of 2016, primarily due to increased share-based compensation expense, partially offset by lower cash-based incentive compensation expense.

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 decreased $2.6 million or 8 percent compared to the second quarter of 2016.

Share-based compensation expense represents expense for equity awards based on grant-date fair value. Non-vested shares generally cliff vest in 3 years and are subject to a two year holding period after vesting. The number of shares that will ultimately vest is determined by BOKF's change in earnings per share relative to a defined group of peer banks. In addition, compensation costs related to certain shares is variable based on changes in the the fair value of BOK Financial common shares. Share-based compensation expense increased $3.7 million or 99% over the prior year, primarily due to changes in the vesting assumptions for performance-based awards that were granted in January 2015 and a $21.43 per share increase in the fair value of BOK Financial common shares.

Employee benefits expense increased $804 thousand or 4 percent over the the second quarter of 2016, primarily due to an increase in employee medical costs.

Personnel expense increased $7.3 million over the first quarter of 2017. Regular compensation expense was largely unchanged compared to the prior quarter. Incentive compensation expense increased $7.1 million, primarily due to a $5.8 million increase in share-based compensation expense and a $1.1 million increase in cash-based incentive compensation expense. A $2.6 million increase in employee healthcare costs was offset by a $2.2 million seasonal decrease in payroll tax expense.

Non-personnel operating expense

Non-personnel operating expense decreased $5.0 million or 4% compared to the second quarter of 2016.

Deposit insurance expense decreased $6.4 million. The company received $5.1 million in credits during the second quarter of 2017 related to the revision of certain inputs to the assessment calculation filed for years 2013 through 2016. In conjunction with ongoing cost reduction efforts, management performed a comprehensive review of inputs into the deposit insurance assessment calculation. We were able to support eligibility for the custodial bank adjustment, which allows for the deduction of certain qualifying low-risk assets from the deposit insurance assessment base for depository institutions with greater than $50 billion in trust assets. The remaining decrease was primarily due to the benefit of decreased criticized and classified assets levels related to the stabilization of energy prices, partially offset by a new surcharge for banks with more than $10 billion in assets that became effective in the third quarter of 2016.

Mortgage banking expense decreased $3.7 million, primarily due to improvement in the estimated loss rates on servicing certain defaulted residential mortgage loans serviced for U.S. government agencies and lower prepayments as average mortgage interest rates trended upward over the prior year. Professional fees and servicing expense was $1.7 million lower, primarily due to costs incurred in the second quarter of 2016 related to the Mobank acquisition and lower legal fees. Data processing and communications expense increased $3.5 million. Occupancy and equipment expense increased $1.4 million. Increases in these expense categories were primarily due to information technology infrastructure and cybersecurity project costs and increased data processing transaction activity. Business promotion expense was up $1.0 million primarily related to the timing of advertising spending.

Non-personnel expense decreased $1.1 million compared to the first quarter of 2017. Deposit insurance expense decreased $5.7 million. Data processing and communication expense increased $1.4 million primarily due to increased transaction activity. Net losses and operating expenses of repossessed assets increased $1.3 million primarily due to increased operating expenses related to repossessed oil and gas properties. This increased expense was offset by revenue from these properties included in other revenues.

- 11 -

Income Taxes

The Company's income tax expense was $47.7 million or 34.9 percent of net income before taxes for the second quarter of 2017 compared to $30.5 million or 31.5 percent of net income before taxes for the second quarter of 2016 and $38.1 million or 30.1 percent of net income before taxes for the first quarter of 2017.

The Company implemented a new accounting standard in the first quarter of 2017 that includes the tax effect of equity compensation in income tax expense that previously was included in stockholders' equity. The accounting standard was adopted prospectively without restatement of prior periods. Excluding this change, tax expense would have been 33.7 percent of net income before taxes for the second quarter of 2017 and 33.2 percent of net income before taxes for the first quarter of 2017.

The Company's effective tax rate is affected by recurring items such as amortization related to its investments in affordable housing investments net of affordable housing tax credits and other tax benefits, bank-owned life insurance and tax-exempt income. 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 $17 million at June 30, 2017, $17 million at March 31, 2017 and $13 million at June 30, 2016.

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 support assets of the operating lines of business tends to insulate them from interest rate risk.

The value of funds provided by the operating lines of business to the Funds Management unit is also based on rates 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.

- 12 -

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.

As shown in Table 8, net income attributable to our lines of business increased $23.7 million or 35 percent over the second quarter of 2016. Net interest revenue grew by $31.4 million over the prior year. Other operating revenue decreased $1.3 million while operating expenses decreased $1.4 million and net charge-offs were down $5.9 million.

Table 8 -- Net Income by Line of Business

(In thousands)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017		2016
Commercial Banking	$	68,299		$	52,836		$	132,215	$	89,890
Consumer Banking	7,422			4,231			12,166		4,342
Wealth Management	15,824			10,780			30,108		17,758
Subtotal	91,545			67,847			174,489		111,990
Funds Management and other	(3,398		)	(2,046		)	2,014		(3,625		)
Total	$	88,147		$	65,801		$	176,503	$	108,365

- 13 -

Commercial Banking

Commercial Banking contributed $68.3 million to consolidated net income in the second quarter of 2017, an increase of $15.5 million or 29 percent over the second quarter of 2016. The increase in Commercial Banking's contribution was largely due to net interest revenue.

Table 9 -- Commercial Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)			Six Months Ended						Increase (Decrease)
	June 30,									June 30,
	2017			2016						2017			2016
Net interest revenue from external sources	$	144,164		$	118,480		$	25,684		$	278,868		$	235,116		$	43,752
Net interest expense from internal sources	(20,347		)	(14,575		)	(5,772		)	(37,140		)	(29,208		)	(7,932		)
Total net interest revenue	123,817			103,905			19,912			241,728			205,908			35,820
Net loans charged off (recovered)	1,228			6,852			(5,624		)	(234		)	28,423			(28,657		)
Net interest revenue after net loans charged off (recovered)	122,589			97,053			25,536			241,962			177,485			64,477

Fees and commissions revenue	49,792			51,028			(1,236		)	94,265			96,504			(2,239		)
Other gains, net	5,986			469			5,517			7,783			101			7,682
Other operating revenue	55,778			51,497			4,281			102,048			96,605			5,443

Personnel expense	28,005			27,520			485			55,033			54,147			886
Non-personnel expense	31,123			25,074			6,049			56,532			54,516			2,016
Other operating expense	59,128			52,594			6,534			111,565			108,663			2,902

Net direct contribution	119,239			95,956			23,283			232,445			165,427			67,018
Gain on financial instruments, net	3			—			3			41			—			41
Gain (loss) on repossessed assets, net	1,403			(598		)	2,001			1,398			(680		)	2,078
Corporate expense allocations	8,862			8,883			(21		)	17,493			17,627			(134		)
Income before taxes	111,783			86,475			25,308			216,391			147,120			69,271
Federal and state income tax	43,484			33,639			9,845			84,176			57,230			26,946
Net income	$	68,299		$	52,836		$	15,463		$	132,215		$	89,890		$	42,325

Average assets	$	17,596,273		$	16,973,663		$	622,610		$	17,517,960		$	16,971,339		$	546,621
Average loans	14,177,635			13,571,602			606,033			14,097,588			13,444,470			653,118
Average deposits	8,652,811			8,403,408			249,403			8,642,326			8,430,579			211,747
Average invested capital	1,239,492			1,167,840			71,652			1,226,041			1,160,485			65,556

Net interest revenue increased $19.9 million or 19 percent over the prior year. Growth in net interest revenue was primarily due to a $606 million or 4 percent increase in average loan balances and increased yields on commercial loans due to rising short-term interest rates. Average deposit balances increased $249 million or 3 percent. Yields on deposits sold to the funds management unit also went up due to the increase in short-term interest rates from the Federal Reserve increase in the federal funds rate.

Fees and commissions revenue decreased $1.2 million or 2 percent compared to the second quarter of 2016, primarily due to a $1.4 million decline in customer energy derivatives trading and a $1.3 million decline in loan syndication fees. This decline was partially offset by increases in deposit service fees and transaction card revenue from our TransFund electronic fund transfer network and other revenue from the operation of repossessed oil and gas properties.

- 14 -

Operating expenses increased $6.5 million or 12 percent compared to the second quarter of 2016. Personnel expense increased $485 thousand or 2 percent. Non-personnel expense increased $6.0 million or 24 percent. Net repossession expense increased $2.7 million related mainly to the repossession of oil and gas properties. Deposit insurance expense increased $1.7 million due to increased granularity in the allocation to the segments.

The average outstanding balance of loans attributed to Commercial Banking grew by $606 million or 4 percent over the second quarter of 2016 to $14.2 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 $8.7 billion for the second quarter of 2017, an increase of $249 million or 3 percent compared to the second quarter of 2016. See Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital for further discussion of change.

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 Home Direct Mortgage, an online origination channel.

Consumer Banking contributed $7.4 million to consolidated net income for the second quarter of 2017, up $3.2 million over the second quarter of 2016. Growth in net interest revenue of $4.1 million was offset by a decrease in other operating revenue of $5.3 million while non-personnel expense decreased by $6.4 million.

- 15 -

Table 10 -- Consumer Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)			Six Months Ended						Increase (Decrease)
	June 30,									June 30,
	2017			2016						2017			2016
Net interest revenue from external sources	$	23,503		$	22,349		$	1,154		$	44,632		$	43,799		$	833
Net interest revenue from internal sources	11,837			8,876			2,961			22,789			18,229			4,560
Total net interest revenue	35,340			31,225			4,115			67,421			62,028			5,393
Net loans charged off	926			1,318			(392		)	2,198			3,020			(822		)
Net interest revenue after net loans charged off	34,414			29,907			4,507			65,223			59,008			6,215

Fees and commissions revenue	52,081			57,170			(5,089		)	99,472			111,341			(11,869		)
Other gains (losses), net	21			270			(249		)	(64		)	128			(192		)
Other operating revenue	52,102			57,440			(5,338		)	99,408			111,469			(12,061		)

Personnel expense	25,545			26,228			(683		)	50,944			51,072			(128		)
Non-personnel expense	30,164			36,578			(6,414		)	58,298			67,452			(9,154		)
Total other operating expense	55,709			62,806			(7,097		)	109,242			118,524			(9,282		)

Net direct contribution	30,807			24,541			6,266			55,389			51,953			3,436
Gain on financial instruments, net	5,224			15,045			(9,821		)	3,557			31,626			(28,069		)
Change in fair value of mortgage servicing rights	(6,943		)	(16,283		)	9,340			(5,087		)	(44,271		)	39,184
Gain (loss) on repossessed assets, net	98			252			(154		)	(39		)	406			(445		)
Corporate expense allocations	17,039			16,630			409			33,908			32,608			1,300
Income before taxes	12,147			6,925			5,222			19,912			7,106			12,806
Federal and state income tax	4,725			2,694			2,031			7,746			2,764			4,982
Net income	$	7,422		$	4,231		$	3,191		$	12,166		$	4,342		$	7,824

Average assets	$	8,845,398		$	8,774,881		$	70,517		$	8,747,524		$	8,731,085		$	16,439
Average loans	1,945,981			1,888,692			57,289			1,936,916			1,886,298			50,618
Average deposits	6,662,838			6,634,362			28,476			6,622,367			6,605,127			17,240
Average invested capital	282,932			266,561			16,371			280,454			262,762			17,692

Net interest revenue from Consumer Banking activities grew by $4.1 million or 13 percent over the the second quarter of 2016 primarily due to increased rates received on deposit balances sold to the Funds Management unit. Average loan balances grew by $57 million or 3 percent and average deposits were largely unchanged from prior year.

Fees and commissions revenue decreased $5.1 million or 9 percent compared to the second quarter of 2016, primarily due to a $4.6 million decrease in mortgage banking revenue. Mortgage loan production volumes decreased $998 million. Revenue from interchange fees paid by merchants for transactions processed from debit cards issued by the Company and deposit service charges and fees were relatively unchanged compared to the prior year.

Operating expenses decreased $7.1 million or 11 percent compared to the second quarter of 2016. Personnel expenses decreased $683 thousand or 3 percent. Non-personnel expense decreased $6.4 million or 18 percent compared to the prior year. Mortgage banking costs were down $3.7 million primarily due to improvement in the estimated loss rates on outstanding claims on servicing certain defaulted residential mortgage loans guaranteed by U.S. government agencies as well as lower prepayments of loans serviced for others. Other expense decreased $1.3 million primarily due to a legal settlement in the second quarter of 2016. Professional fees and services were down $1.4 million.

- 16 -

Changes in the fair value of our mortgage servicing rights, net of economic hedge, resulted in a $1.1 million decrease in Consumer Banking net income in the second quarter of 2017 compared to a $756 thousand decrease in Consumer Banking net income in the second quarter of 2016.

Corporate expense allocations increased $409 thousand or 3% over the second quarter of 2016.

Average consumer deposits were largely unchanged compared to the second quarter of 2016. Higher-costing time deposit balances decreased $135 million or 12 percent, offset by a $95 million or 6 percent increase in demand deposit balances, a $37 million or 9 percent increase in savings account balances and a $32 million or 1 percent increase in interest-bearing transaction accounts.

Wealth Management

Wealth Management contributed $15.8 million to consolidated net income in the second quarter of 2017, up $5.0 million or 47 percent over the second quarter of 2016 largely due to growth in net interest revenue.

Table 11 -- Wealth Management

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)			Six Months Ended						Increase (Decrease)
	June 30,									June 30,
	2017			2016						2017			2016
Net interest revenue from external sources	$	10,474		$	6,271		$	4,203		$	21,960		$	12,349		$	9,611
Net interest revenue from internal sources	10,325			7,193			3,132			19,181			14,857			4,324
Total net interest revenue	20,799			13,464			7,335			41,141			27,206			13,935
Net loans charged off (recovered)	(93		)	(239		)	146			(53		)	(390		)	337
Net interest revenue after net loans charged off (recovered)	20,892			13,703			7,189			41,194			27,596			13,598

Fees and commissions revenue	75,553			75,467			86			149,474			144,187			5,287
Other gains, net	16			305			(289		)	253			331			(78		)
Other operating revenue	75,569			75,772			(203		)	149,727			144,518			5,209

Personnel expense	45,477			48,147			(2,670		)	90,264			93,266			(3,002		)
Non-personnel expense	15,138			13,267			1,871			30,761			28,832			1,929
Other operating expense	60,615			61,414			(799		)	121,025			122,098			(1,073		)

Net direct contribution	35,846			28,061			7,785			69,896			50,016			19,880
Corporate expense allocations	9,947			10,417			(470		)	20,619			20,952			(333		)
Income before taxes	25,899			17,644			8,255			49,277			29,064			20,213
Federal and state income tax	10,075			6,864			3,211			19,169			11,306			7,863
Net income	$	15,824		$	10,780		$	5,044		$	30,108		$	17,758		$	12,350

Average assets	$	6,763,093		$	5,765,390		$	997,703		$	6,960,872		$	5,665,218		$	1,295,654
Average loans	1,312,857			1,098,178			214,679			1,289,846			1,094,252			195,594
Average deposits	5,531,091			4,521,031			1,010,060			5,556,680			4,608,522			948,158
Average invested capital	268,322			240,693			27,629			258,698			236,798			21,900

- 17 -

Net interest revenue for the second quarter of 2017 increased $7.3 million or 55 percent over the second quarter of 2016, primarily due to an increase in the size of the U.S. agency mortgage-backed securities portfolio related to a new trading group that began operations during the third quarter of 2016 and growth in deposit balances sold to the Funds Management unit. Average deposit balances grew by $1.0 billion or 22 percent over the second quarter of 2016. Non-interest bearing demand deposits grew by $285 million or 26 percent, interest-bearing transaction account balances increased $677 million or 25 percent and time deposit balances grew by $44 million or 6 percent. Average loan balances increased $215 million or 20 percent over the prior year.

Fees and commissions revenue was relatively unchanged compared to the second quarter of 2016. Brokerage and trading revenue decreased by $6.0 million or 18 percent primarily due to lower volumes of U.S. agency residential mortgage-backed and municipal securities sold to our institutional customers. Fiduciary and asset management revenue increased $7.0 million or 20 percent over the prior year primarily due to growth in assets under management, improved pricing discipline and decreased fee waivers.

Fees and commissions revenue above includes fees earned from state and municipal bond and corporate debt underwritings and financial advisory services, primarily in the Oklahoma and Texas markets. In the second quarter of 2017, the Wealth Management division participated in 74 state and municipal bond underwritings that totaled $1.4 billion. As a participant, the Wealth Management division was responsible for facilitating the sale of approximately $397 million of these underwritings. The Wealth Management division also participated in 6 corporate debt underwritings that totaled $2.3 billion. Our interest in these underwritings was $47 million. In the second quarter of 2016, the Wealth Management division participated in 136 state and municipal bond underwritings that totaled approximately $4.2 billion. Our interest in these underwritings totaled approximately $803 million. The Wealth Management division also participated in two corporate debt underwritings that totaled $350 million. Our interest in these underwritings was $44 million.

Operating expense decreased $799 thousand or 1 percent compared to the second quarter of 2016. Personnel expenses decreased $2.7 million primarily due to decreased incentive compensation expense. Non-personnel expense increased $1.9 million primarily due to a $1.3 million increase in data processing and communications expense.

Corporate expense allocations decreased $470 thousand or 5 percent from the prior year.

Financial Condition

Securities

We maintain a securities portfolio to enhance profitability, manage interest rate risk, provide liquidity and comply with regulatory requirements. Securities are classified as trading, held for investment, or available for sale. See Note 2 to the consolidated financial statements for the composition of the securities portfolio as of June 30, 2017, December 31, 2016 and June 30, 2016.

At June 30, 2017, the carrying value of investment (held-to-maturity) securities was $490 million and the fair value was $516 million. Investment securities consist primarily of long-term, fixed rate Oklahoma and Texas municipal bonds, taxable Texas school construction bonds and residential mortgage-backed securities issued by U.S. government agencies. The investment security portfolio is diversified among issuers. The largest obligation of any single issuer is $30 million. Substantially all of these bonds are general obligations of the issuers. Approximately $100 million of the $199 million portfolio of Texas school construction bonds is also guaranteed by the Texas Permanent School Fund Guarantee Program supervised by the State Board of Education for the State of Texas.

Available for sale securities, which may be sold prior to maturity, are carried at fair value. Unrealized gains or losses, net of deferred taxes, are recorded as accumulated other comprehensive income in shareholders’ equity. The amortized cost of available for sale securities totaled $8.3 billion at June 30, 2017, a $118 million decrease compared to March 31, 2017. At June 30, 2017, the available for sale securities portfolio consisted primarily of U.S. government agency residential mortgage-backed securities with an amortized cost of $5.4 billion and U.S. government agency commercial mortgage-backed securities with an amortized cost of $2.8 billion. Both residential and commercial mortgage-backed securities also have credit risk from delinquency or default of the underlying loans. We mitigate this risk by primarily investing in securities issued by U.S. government agencies. Principal and interest payments on the underlying loans are fully guaranteed. Commercial mortgage-backed securities have prepayment penalties similar to commercial loans.

- 18 -

A primary risk of holding residential mortgage-backed securities comes from extension during periods of rising interest rates or prepayment during periods of falling interest rates. We evaluate this risk through extensive modeling of risk both before making an investment and throughout the life of the security. Our best estimate of the duration of the combined residential mortgage-backed securities portfolio held in investment and available for sale securities at June 30, 2017 is 3.2 years. Management estimates the duration extends to 3.9 years assuming an immediate 200 basis point upward shock. The estimated duration contracts to 2.8 years assuming a 50 basis point decline in the current low rate environment.

We also hold amortized cost of $87 million in residential mortgage-backed securities privately issued by publicly-owned financial institutions, a decrease of $6.7 million from March 31, 2017. The decrease was due to cash payments received during the quarter. The fair value of our portfolio of privately issued residential mortgage-backed securities totaled $103 million at June 30, 2017.

The aggregate gross amount of unrealized losses on available for sale securities totaled $50 million at June 30, 2017, compared to $68 million at March 31, 2017. On a quarterly basis, we perform separate evaluations on debt and equity securities to determine if the unrealized losses are temporary as more fully described in Note 2 of the Consolidated Financial Statements. No other-than-temporary impairment charges were recognized in earnings during the second quarter of 2017.

BOK Financial is required to hold stock as members of the Federal Reserve system and the Federal Home Loan Banks ("FHLB"). These restricted equity securities are carried at cost as these securities do not have a readily determined fair value because the ownership of these shares is restricted and they lack a market. Federal Reserve Bank stock totaled $37 million and holdings of FHLB stock totaled $274 million at June 30, 2017. Holdings of FHLB stock increased $27 million compared to March 31, 2017. We are required to hold stock in the FHLB in proportion to our borrowings with the FHLB.

Bank-Owned Life Insurance

We have approximately $313 million of bank-owned life insurance at June 30, 2017. This investment is expected to provide a long-term source of earnings to support existing employee benefit programs. Approximately $285 million is held in separate accounts. Our separate account holdings are invested in diversified portfolios of investment-grade fixed income securities and cash equivalents, including U.S. Treasury and Agency securities, residential mortgage-backed securities, corporate debt, asset-backed and commercial mortgage-backed securities. The portfolios are managed by unaffiliated professional managers within parameters established in the portfolio’s investment guidelines. The cash surrender value of certain life insurance policies is further supported by a stable value wrap, which protects against changes in the fair value of the investments. At June 30, 2017, the fair value of investments held in separate accounts was approximately $290 million. As the underlying fair value of the investments held in a separate account at June 30, 2017 exceeded the net book value of the investments, no cash surrender value was supported by the stable value wrap. The stable value wrap is provided by a domestic financial institution. The remaining cash surrender value of $28 million primarily represents the cash surrender value of policies held in general accounts and other amounts due from various insurance companies.

- 19 -

Loans

The aggregate loan portfolio before allowance for loan losses totaled $17 billion at June 30, 2017, an increase of $192 million over March 31, 2017. The outstanding balance of commercial loans increased by $311 million, partially offset by a $182 million decrease in commercial real estate loan balances. Residential mortgage loans decreased $7.1 million and personal loans grew by $70 million.

Table 12 -- Loans

(In thousands)



	June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30,2016		June 30, 2016
Commercial:
Energy	$	2,847,240	$	2,537,112	$	2,497,868	$	2,520,804	$	2,818,656
Services	2,958,827		3,013,375		3,108,990		2,936,599		2,830,864
Healthcare	2,221,518		2,265,604		2,201,916		2,085,046		2,051,146
Wholesale/retail	1,543,695		1,506,243		1,576,818		1,602,030		1,532,957
Manufacturing	546,137		543,430		514,975		499,486		595,403
Other commercial and industrial	520,538		461,346		490,257		476,198		527,411
Total commercial	10,637,955		10,327,110		10,390,824		10,120,163		10,356,437

Commercial real estate:
Retail	722,805		745,046		761,888		801,377		795,419
Multifamily	952,380		922,991		903,272		873,773		787,200
Office	862,973		860,889		798,888		752,705		769,112
Industrial	693,635		871,463		871,749		838,021		645,586
Residential construction and land development	141,592		135,994		135,533		159,946		157,576
Other commercial real estate	315,207		334,680		337,716		367,776		427,073
Total commercial real estate	3,688,592		3,871,063		3,809,046		3,793,598		3,581,966

Residential mortgage:
Permanent mortgage	989,040		977,743		1,006,820		969,558		969,007
Permanent mortgages guaranteed by U.S. government agencies	191,729		204,181		199,387		190,309		192,732
Home equity	758,429		764,350		743,625		712,926		719,184
Total residential mortgage	1,939,198		1,946,274		1,949,832		1,872,793		1,880,923

Personal	917,900		847,459		839,958		678,232		587,423

Total	$	17,183,645	$	16,991,906	$	16,989,660	$	16,464,786	$	16,406,749

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 $10.6 billion or 62 percent of the loan portfolio at June 30, 2017, an increase of $311 million over March 31, 2017 primarily due to growth in energy loan balances. Other commercial and industrial loans increased by $59 million and wholesale/retail sector loan balances increased by $37 million. This growth was offset by a $55 million decrease in service sector loan balances and a $44 million decrease in healthcare sector loan balances.

- 20 -

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	$	537,606	$	1,464,660	$	14,847	$	4,178	$	347,932	$	9,110	$	77,788	$	391,119	$	2,847,240
Services	650,748		873,279		195,368		5,184		306,628		209,729		332,001		385,890		2,958,827
Healthcare	277,652		383,698		138,205		96,924		119,288		127,803		272,382		805,566		2,221,518
Wholesale/retail	385,275		519,826		45,333		36,136		61,464		64,504		87,736		343,421		1,543,695
Manufacturing	102,594		186,172		1,492		13,583		39,541		31,760		106,832		64,163		546,137
Other commercial and industrial	97,919		132,119		2,438		58,396		26,947		28,780		80,232		93,707		520,538
Total commercial loans	$	2,051,794	$	3,559,754	$	397,683	$	214,401	$	901,800	$	471,686	$	956,971	$	2,083,866	$	10,637,955

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 19 percent concentrated in the Oklahoma market. At June 30, 2017, the Other category is primarily composed of California - $303 million or 3 percent of the commercial loan portfolio, Louisiana - $194 million or 2 percent of the commercial loan portfolio, Florida - $159 million or 1 percent of the commercial loan portfolio, Pennsylvania - $115 million or 1 percent of the commercial loan portfolio and Tennessee - $108 million or 1 percent of the commercial loan portfolio. All other states individually represent one percent or less 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 $2.8 billion or 17 percent of total loans at June 30, 2017. Unfunded energy loan commitments of $2.7 billion at June 30, 2017 were largely unchanged compared to March 31, 2017. Approximately $2.4 billion of energy loans were to oil and gas producers, up $362 million over March 31, 2017. The majority of this portfolio is first lien, senior secured, reserve-based lending, which we believe is the lowest risk form of energy lending. The Company has largely avoided higher-risk energy lending areas including second-lien financing, mezzanine debt and subordinated debt. In addition, the Company has no direct exposure to energy company equity or to borrowers with deep-water offshore exposure. Approximately 58 percent of the committed production loans are secured by properties primarily producing oil and 42 percent of the committed production loans are secured by properties primarily producing natural gas. Loans to midstream oil and gas companies totaled $277 million at June 30, 2017, a decrease of $39 million compared to March 31, 2017. Loans to borrowers that provide services to the energy industry totaled $178 million at June 30, 2017, largely unchanged compared to the prior quarter. Loans to other energy borrowers, including those engaged in wholesale or retail energy sales, totaled $38 million, a $15 million decrease over the prior quarter.

The services sector of the loan portfolio totaled $3.0 billion or 17 percent of total loans and consists of a large number of loans to a variety of businesses, including governmental, finance and insurance, educational services, loans to entities providing services for real estate and construction and professional services. Service sector loans decreased by $55 million compared to March 31, 2017. Loans to governmental entities totaled $562 million at June 30, 2017. 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.

- 21 -

The healthcare sector of the loan portfolio totaled $2.2 billion or 13% 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.

We participate in shared national credits when appropriate to obtain or maintain business relationships with local customers. Shared national credits are defined by banking regulators as credits of more than $20 million and with three or more non-affiliated banks as participants. At June 30, 2017, the outstanding principal balance of these loans totaled $4.0 billion. Substantially all of these loans are to borrowers with local market relationships. We serve as the agent lender in approximately 18 percent of our shared national credits, based on dollars committed. We hold shared credits to the same standard of analysis and perform the same level of review as internally originated credits. Our lending policies generally avoid loans in which we do not have the opportunity to maintain or achieve other business relationships with the customer. In addition to management’s quarterly assessment of credit risk, banking regulators annually review a sample of shared national credits for proper risk grading.

Commercial Real Estate

Commercial real estate represents loans for the construction of buildings or other improvements to real estate and property held by borrowers for investment purposes generally within our geographical footprint, with larger concentrations in Texas and Oklahoma which represent 32 percent and 12 percent of the total commercial real estate portfolio at June 30, 2017, 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 $3.7 billion or 21 percent of the loan portfolio at June 30, 2017. The outstanding balance of commercial real estate loans decreased $182 million during the second quarter of 2017. Loans secured by industrial properties decreased $178 million. Retail sector loans decreased $22 million. Multifamily residential loans increased $29 million. The commercial real estate loan balance as a percentage of our total loan portfolio has ranged from 18 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
Retail	$	73,978	$	272,460	$	107,535	$	6,526	$	30,853	$	27,747	$	25,354	$	178,352	$	722,805
Multifamily	110,567		428,929		13,801		25,191		64,959		56,347		113,529		139,057		952,380
Office	96,167		226,147		77,153		2,119		64,825		72,175		58,330		266,057		862,973
Industrial	81,871		192,427		25,791		—		16,233		11,753		48,457		317,103		693,635
Residential construction and land development	25,500		36,465		18,330		1,850		15,500		9,536		17,006		17,405		141,592
Other commercial real estate	53,010		40,603		22,784		4,282		14,721		38,051		30,168		111,588		315,207
Total commercial real estate loans	$	441,093	$	1,197,031	$	265,394	$	39,968	$	207,091	$	215,609	$	292,844	$	1,029,562	$	3,688,592

The Other category is primarily composed of California and Utah which represent $146 million or 4 percent and $120 million or 3 percent of the commercial real estate portfolio, respectively. All other states represent less than 3% 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.

- 22 -

Based on Moody's U.S. Retail Industry Classifications, approximately 60 percent of $723 million of outstanding retail commercial real estate loans have services-based tenants which are considered less susceptible to online competition. Additionally, 61 percent of the $653 million of outstanding retail loans included in our commercial wholesale/retail sector are service-based.

Residential Mortgage and Personal

Residential mortgage loans totaled $1.9 billion, largely unchanged compared to March 31, 2017. 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 96 percent 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 June 30, 2017, $192 million of permanent residential mortgage loans are guaranteed by U.S. government agencies. We have minimal credit exposure on loans guaranteed by the agencies. This amount includes residential mortgage loans previously sold into GNMA mortgage pools that the Company may repurchase when certain defined delinquency criteria are met. Because of this repurchase right, the Company is deemed to have regained effective control over these loans and must include them on the Consolidated Balance Sheet. Permanent residential mortgage loans guaranteed by U.S. government agencies decreased $12 million compared to March 31, 2017.

Home equity loans totaled $758 million at June 30, 2017, a $5.9 million decrease compared to March 31, 2017. 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 June 30, 2017 by lien position and amortizing status follows in Table 15.

Table 15 -- Home Equity Loans

(In thousands)



	Revolving		Amortizing		Total
First lien	$	70,650	$	421,861	$	492,511
Junior lien	135,771		130,147		265,918
Total home equity	$	206,421	$	552,008	$	758,429

- 23 -

Personal loans totaled $918 million, a $70 million increase over the prior quarter primarily due to growth in loans to wealth management customers for investment in businesses that will be repaid from personal income.

The distribution of residential mortgage and personal loans at June 30, 2017 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	$	181,030	$	413,293	$	40,810	$	13,864	$	162,013	$	93,997	$	49,766	$	34,267	$	989,040
Permanent mortgages guaranteed by U.S. government agencies	54,187		25,912		46,426		5,975		5,968		1,881		14,555		36,825		191,729
Home equity	394,081		136,667		97,977		5,141		38,029		8,236		75,642		2,656		758,429
Total residential mortgage	$	629,298	$	575,872	$	185,213	$	24,980	$	206,010	$	104,114	$	139,963	$	73,748	$	1,939,198

Personal	$	305,856	$	385,087	$	11,615	$	11,993	$	58,918	$	54,434	$	76,967	$	13,030	$	917,900

- 24 -

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

Table 17 -- Loans Managed by Primary Geographical Market

(In thousands)



	June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30,2016		June 30, 2016
Bank of Oklahoma:
Commercial	$	3,369,967	$	3,189,183	$	3,370,259	$	3,545,924	$	3,698,215
Commercial real estate	667,932		691,332		684,381		795,806		781,458
Residential mortgage	1,398,021		1,404,054		1,407,197		1,401,166		1,415,766
Personal	318,016		310,708		303,823		271,420		246,229
Total Bank of Oklahoma	5,753,936		5,595,277		5,765,660		6,014,316		6,141,668

Bank of Texas:
Commercial	4,339,634		4,148,316		4,022,455		3,903,218		3,901,632
Commercial real estate	1,360,164		1,452,988		1,415,011		1,400,709		1,311,408
Residential mortgage	232,074		231,647		233,981		229,345		222,548
Personal	354,222		312,092		306,748		278,167		233,304
Total Bank of Texas	6,286,094		6,145,043		5,978,195		5,811,439		5,668,892

Bank of Albuquerque:
Commercial	369,370		407,403		399,256		398,147		398,427
Commercial real estate	324,405		307,927		284,603		299,785		322,956
Residential mortgage	103,849		106,432		108,058		110,478		114,226
Personal	12,439		11,305		11,483		11,333		10,569
Total Bank of Albuquerque	810,063		833,067		803,400		819,743		846,178

Bank of Arkansas:
Commercial	85,020		88,010		86,577		83,544		81,227
Commercial real estate	73,943		74,469		73,616		72,649		69,235
Residential mortgage	6,395		6,829		7,015		6,936		6,874
Personal	11,993		6,279		6,524		6,757		7,025
Total Bank of Arkansas	177,351		175,587		173,732		169,886		164,361

Colorado State Bank & Trust:
Commercial	1,065,780		998,216		1,018,208		1,013,314		1,076,620
Commercial real estate	255,379		266,218		265,264		254,078		237,569
Residential mortgage	63,346		62,313		59,631		59,838		59,425
Personal	56,187		49,523		50,372		42,901		35,064
Total Colorado State Bank & Trust	1,440,692		1,376,270		1,393,475		1,370,131		1,408,678

Bank of Arizona:
Commercial	617,759		643,222		686,253		680,447		670,814
Commercial real estate	705,858		737,088		747,409		726,542		639,112
Residential mortgage	37,034		36,737		36,265		39,206		38,998
Personal	55,528		51,386		52,553		31,205		24,248
Total Bank of Arizona	1,416,179		1,468,433		1,522,480		1,477,400		1,373,172

Mobank:
Commercial	790,425		852,760		807,816		495,569		529,502
Commercial real estate	300,911		341,041		338,762		244,029		220,228
Residential mortgage	98,479		98,262		97,685		25,824		23,086
Personal	109,515		106,166		108,455		36,449		30,984
Total Mobank	1,299,330		1,398,229		1,352,718		801,871		803,800

Total BOK Financial loans	$	17,183,645	$	16,991,906	$	16,989,660	$	16,464,786	$	16,406,749

- 25 -

Loan Commitments

We enter into certain off-balance sheet arrangements in the normal course of business. These arrangements included unfunded loan commitments, which totaled $9.6 billion and standby letters of credit, which totaled $615 million at June 30, 2017. Loan commitments may be unconditional obligations to provide financing or conditional obligations that depend on the borrower’s financial condition, collateral value or other factors. Standby letters of credit are unconditional commitments to guarantee the performance of our customer to a third party. Since some of these commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Approximately $317 thousand of the outstanding standby letters of credit were issued on behalf of customers whose loans are nonperforming at June 30, 2017.

Table 18 – Off-Balance Sheet Credit Commitments

(In thousands)



	June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30,2016		June 30, 2016
Loan commitments	$	9,632,911	$	9,403,641	$	9,404,665	$	8,697,322	$	8,508,606
Standby letters of credit	614,852		595,746		585,472		499,990		491,002
Mortgage loans sold with recourse	133,896		134,631		139,486		139,306		145,403

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 $82 million to borrowers in Oklahoma, $14 million to borrowers in Arkansas and $13 million to borrowers in New Mexico. An accrual related to this off-balance sheet risk is included in Other liabilities in the consolidated balances sheets and totaled $3.9 million at June 30, 2017 and $4.0 million at March 31, 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 as described further in Note 6 to the Consolidated Financial Statements. For the period from 2010 through the second quarter of 2017 combined, approximately 17 percent of repurchase requests have currently resulted in actual repurchases or indemnification by the Company. The accrual for credit losses related to potential loan repurchases under representations and warranties totaled $1.6 million at June 30, 2017 and $2.6 million at March 31, 2017.

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.

- 26 -

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 June 30, 2017, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under these programs totaled $265 million compared to $304 million at March 31, 2017. At June 30, 2017, the fair value of our derivative contracts included $162 million for foreign exchange contracts, $36 million for energy contracts, $30 million for interest rate swaps and $29 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 $257 million at June 30, 2017 and $296 million at March 31, 2017.

At June 30, 2017, total derivative assets were reduced by $24 million of cash collateral received from counterparties and total derivative liabilities were reduced by $21 million of cash collateral paid to counterparties related to instruments executed with the same counterparty under a master netting agreement.

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

The fair value of derivative contracts reported as assets under these programs, net of cash margin held by the Company, by category of debtor at June 30, 2017 follows in Table 19.

Table 19 -- Fair Value of Derivative Contracts

(In thousands)



Banks and other financial institutions	$	111,723
Customers	95,002
Exchanges and clearing organizations	33,379
Fair value of customer risk management program asset derivative contracts, net	$	240,104

At June 30, 2017, our largest derivative exposure was to an exchange for energy derivative contracts which totaled $14 million.

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 $24.22 per barrel of oil would increase the fair value of derivative assets by $9.1 million. An increase in prices equivalent to $67.53 per barrel of oil would increase the fair value of derivative assets by $208 million as current prices move further away from the fixed prices embedded in our existing contracts. Liquidity requirements of this program may also be affected by our credit rating. At June 30, 2017 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 June 30, 2017, changes in interest rates would not materially impact regulatory capital or liquidity needed to support this portion of our customer derivative program.

- 27 -

Summary of Loan Loss Experience

We maintain an allowance for loan losses and an accrual for off-balance sheet credit risk. At June 30, 2017, the combined allowance for loan losses and off-balance sheet credit losses totaled $256 million or 1.49 percent of outstanding loans and 109 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $250 million and the accrual for off-balance sheet credit losses was $6.4 million. At March 31, 2017, the combined allowance for credit losses was $258 million or 1.52 percent of outstanding loans and 131 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $249 million and the accrual for off-balance sheet credit losses was $9.4 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 changes in nonaccruing and potential problem loans, overall loan growth and net charge-offs, the Company determined that no provision for credit losses was necessary in the second quarter of 2017. No provision for credit losses was necessary in the first quarter of 2017 based on continued improvements in credit metric trends largely driven by energy price stability. A $20 million provision for credit losses was recorded in the second quarter of 2016 due primarily to the effects of falling energy prices.

- 28 -

Table 20 -- Summary of Loan Loss Experience

(In thousands)



	Three Months Ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
Allowance for loan losses:
Beginning balance	$	248,710		$	246,159		$	245,103		$	243,259		$	233,156
Loans charged off:
Commercial	(1,703		)	(424		)	(81		)	(6,266		)	(7,355		)
Commercial real estate	(76		)	—			—			—			—
Residential mortgage	(40		)	(236		)	(208		)	(285		)	(345		)
Personal	(1,053		)	(1,493		)	(1,362		)	(1,550		)	(1,145		)
Total	(2,872		)	(2,153		)	(1,651		)	(8,101		)	(8,845		)
Recoveries of loans previously charged off:
Commercial	283			1,182			839			177			223
Commercial real estate	208			735			395			521			282
Residential mortgage	169			228			986			650			200
Personal	554			755			593			690			681
Total	1,214			2,900			2,813			2,038			1,386
Net loans recovered (charged off)	(1,658		)	747			1,162			(6,063		)	(7,459		)
Provision for loan losses	3,009			1,804			(106		)	7,907			17,562
Ending balance	$	250,061		$	248,710		$	246,159		$	245,103		$	243,259
Accrual for off-balance sheet credit losses:
Beginning balance	$	9,440		$	11,244		$	11,138		$	9,045		$	6,607
Provision for off-balance sheet credit losses	(3,009		)	(1,804		)	106			2,093			2,438
Ending balance	$	6,431		$	9,440		$	11,244		$	11,138		$	9,045
Total combined provision for credit losses	$	—		$	—		$	—		$	10,000		$	20,000
Allowance for loan losses to loans outstanding at period-end	1.46		%	1.46		%	1.45		%	1.49		%	1.48		%
Net charge-offs (recoveries) (annualized) to average loans	0.04		%	(0.02		)%	(0.03		)%	0.15		%	0.18		%
Total provision for credit losses (annualized) to average loans	—		%	—		%	—		%	0.24		%	0.49		%
Recoveries to gross charge-offs	42.27		%	134.70		%	170.38		%	25.16		%	15.67		%
Accrual for off-balance sheet credit losses to off-balance sheet credit commitments	0.06		%	0.09		%	0.11		%	0.12		%	0.10		%
Combined allowance for credit losses to loans outstanding at period-end	1.49		%	1.52		%	1.52		%	1.56		%	1.54		%

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.

- 29 -

Loans are considered to be impaired when it is probable that we will not collect all amounts due according to the contractual terms of the loan agreement. This includes all nonaccruing loans, all loans modified in troubled debt restructurings and all government guaranteed loans repurchased from GNMA pools. 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 June 30, 2017, impaired loans totaled $428 million, including $73 million with specific allowances of $9.7 million and $355 million with no specific allowances. At March 31, 2017, impaired loans totaled $402 million, including $52 million of impaired loans with specific allowances of $3.5 million and $350 million with no specific allowances.

Risk grading guidelines in the Office of the Comptroller of the Currency ("OCC") Oil and Gas Lending Handbook updated at the beginning of 2016, heavily weight the ability to repay total borrower debt, regardless of collateral position. This change in grading methodology has increased loans especially mentioned, potential problem loans and nonaccrual loans. Because substantially all of our energy portfolio is supported by senior lien positions that, in general, have substantially lower loss exposure, the historical relationship between loan classification and loss exposure may be more difficult to correlate. The most recently completed energy portfolio redetermination supported that $57 million of impaired energy loans required no allowance for credit losses based on the adequacy of collateral. In addition, $76 million of impaired energy loans are current on all payments due.

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 $213 million at June 30, 2017, a decrease of $4.9 million compared to March 31, 2017. The general allowance attributed to the commercial loan segment decreased $6.1 million, partially offset by an $859 thousand increase in the general allowance attributed to the personal 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 $27 million at June 30, 2017, unchanged compared to March 31, 2017. The nonspecific allowance includes consideration of the indirect impact of the prolonged low energy price environment on the broader economies within our geographical footprint that are highly dependent on the energy industry.

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 $327 million at June 30, 2017 and wereprimarily composed of $226 million or 8 percent of energy loans, $33 million or 1 percent of healthcare sector loans, $17 million or 1 percent of service sector loans, $16 million or 3 percent of manufacturing sector loans and $10 million or 1 percent of wholesale/retail sector loans. Potential problem loans totaled $413 million at March 31, 2017.

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 $199 million at June 30, 2017 and were composed primarily of $120 million or 4 percent of outstanding energy loans, $34 million or 2 percent of outstanding healthcare loans, $16 million or 1 percent of outstanding wholesale/retail sector loans and $12 million or less than 1 percent of outstanding services loans. Other loans especially mentioned totaled $233 million at March 31, 2017.

We updated our semi-annual energy loan portfolio stress test at June 30, 2017 to estimate how the energy portfolio may respond in a prolonged low-price environment. Stress test assumptions include a starting price of $2.00 per million BTUs for natural gas and $35.87 per barrel of oil, gradually escalating over twelve to fifteen years to a maximum of $3.00 and $55.00, respectively. The results of the stress test are factored into our expectation that the loan loss provision could range from $0 to $10 million for 2017. This expectation is based upon current observed conditions. The portion of the combined allowance for credit losses attributable to the energy portfolio totaled 2.84 percent of outstanding energy loans at June 30, 2017, compared to 3.37 percent of outstanding energy loans at March 31, 2017.

- 30 -

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 $1.7 million in the second quarter of 2017, compared to net recoveries of $747 thousand in the first quarter of 2017 and net loans charged off of $7.5 million in the second quarter of 2016. The ratio of net loans charged off to average loans on an annualized basis was 0.04 percent for the second quarter of 2017, compared with (0.02) percent for the first quarter of 2017 and 0.18 percent for the second quarter of 2016.

Net charge-offs of commercial loans were $1.4 million in the second quarter of 2017, primarily due to a single healthcare borrower. Commercial loans had a net recovery of $758 thousand in the first quarter of 2017. Net commercial real estate loan recoveries were $132 thousand in the second quarter of 2017, compared to net recoveries of $735 thousand in the first quarter of 2017. Net charge-offs of residential mortgage loans were $129 thousand and net charge-offs of personal loans were $499 thousand for the second quarter. Personal loan net charge-offs include deposit account overdraft losses.

- 31 -

Nonperforming Assets

Table 21 -- Nonperforming Assets

(In thousands)



	June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30,2016		June 30, 2016
Nonaccruing loans:
Commercial	$	197,157	$	156,825	$	178,953	$	176,464	$	181,989
Commercial real estate	3,775		4,475		5,521		7,350		7,780
Residential mortgage	44,235		46,081		46,220		52,452		57,061
Personal	272		235		290		686		354
Total nonaccruing loans	245,439		207,616		230,984		236,952		247,184
Accruing renegotiated loans guaranteed by U.S. government agencies	80,624		83,577		81,370		80,306		78,806
Real estate and other repossessed assets	39,436		42,726		44,287		31,941		24,054
Total nonperforming assets	$	365,499	$	333,919	$	356,641	$	349,199	$	350,044
Total nonperforming assets excluding those guaranteed by U.S. government agencies	$	275,823	$	240,234	$	263,425	$	253,461	$	251,497

Nonaccruing loans by loan portfolio segment and class:
Commercial:
Energy	$	123,992	$	110,425	$	132,499	$	142,966	$	168,145
Services	7,754		7,713		8,173		8,477		9,388
Wholesale / retail	10,620		11,090		11,407		2,453		2,772
Manufacturing	9,656		5,907		4,931		274		293
Healthcare	24,505		909		825		855		875
Other commercial and industrial	20,630		20,781		21,118		21,439		516
Total commercial	197,157		156,825		178,953		176,464		181,989

Commercial real estate:
Residential construction and land development	2,051		2,616		3,433		3,739		4,261
Retail	301		314		326		1,249		1,265
Office	396		413		426		882		606
Multifamily	10		24		38		51		65
Industrial	—		76		76		76		76
Other commercial real estate	1,017		1,032		1,222		1,353		1,507
Total commercial real estate	3,775		4,475		5,521		7,350		7,780

Residential mortgage:
Permanent mortgage	23,415		24,188		22,855		25,956		27,228
Permanent mortgage guaranteed by U.S. government agencies	9,052		10,108		11,846		15,432		19,741
Home equity	11,768		11,785		11,519		11,064		10,092
Total residential mortgage	44,235		46,081		46,220		52,452		57,061
Personal	272		235		290		686		354
Total nonaccruing loans	$	245,439	$	207,616	$	230,984	$	236,952	$	247,184

- 32 -



	June 30, 2017			Mar. 31, 2017			Dec. 31, 2016			Sept. 30,2016			June 30, 2016
Nonaccruing loans as % of outstanding balance for class:
Commercial:
Energy	4.35		%	4.35		%	5.30		%	5.67		%	5.97		%
Services	0.26		%	0.26		%	0.26		%	0.29		%	0.33		%
Wholesale / retail	0.69		%	0.74		%	0.72		%	0.15		%	0.18		%
Manufacturing	1.77		%	1.09		%	0.96		%	0.05		%	0.05		%
Healthcare	1.10		%	0.04		%	0.04		%	0.04		%	0.04		%
Other commercial and industrial	3.96		%	4.50		%	4.31		%	4.50		%	0.10		%
Total commercial	1.85		%	1.52		%	1.72		%	1.74		%	1.76		%

Commercial real estate:
Residential construction and land development	1.45		%	1.92		%	2.53		%	2.34		%	2.70		%
Retail	0.04		%	0.04		%	0.04		%	0.16		%	0.16		%
Office	0.05		%	0.05		%	0.05		%	0.12		%	0.08		%
Multifamily	—		%	—		%	—		%	0.01		%	0.01		%
Industrial	—		%	0.01		%	0.01		%	0.01		%	0.01		%
Other commercial real estate	0.32		%	0.31		%	0.36		%	0.37		%	0.35		%
Total commercial real estate	0.10		%	0.12		%	0.14		%	0.19		%	0.22		%

Residential mortgage:
Permanent mortgage	2.37		%	2.47		%	2.27		%	2.68		%	2.81		%
Permanent mortgage guaranteed by U.S. government agencies	4.72		%	4.95		%	5.94		%	8.11		%	10.24		%
Home equity	1.55		%	1.54		%	1.55		%	1.55		%	1.40		%
Total residential mortgage	2.28		%	2.37		%	2.37		%	2.80		%	3.03		%
Personal	0.03		%	0.03		%	0.03		%	0.10		%	0.06		%
Total nonaccruing loans	1.43		%	1.22		%	1.36		%	1.44		%	1.51		%

Ratios:
Allowance for loan losses to nonaccruing loans¹	105.78		%	125.92		%	112.33		%	110.65		%	106.95		%
Accruing loans 90 days or more past due¹	$	1,414		$	95		$	5		$	3,839		$	2,899


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

Nonperforming assets totaled $365 million or 2.12 percent of outstanding loans and repossessed assets at June 30, 2017. Nonaccruing loans totaled $245 million, accruing renegotiated residential mortgage loans totaled $81 million and real estate and other repossessed assets totaled $39 million. All accruing renegotiated residential mortgage loans and $9.1 million of nonaccruing loans are guaranteed by U.S. government agencies. Excluding assets guaranteed by U.S. government agencies, nonperforming assets increased $36 million over the second quarter primarily due to an increase in nonaccruing healthcare and energy loans. The Company generally retains nonperforming assets to maximize potential recovery, which may cause future nonperforming assets to decrease more slowly.

- 33 -

Loans are generally classified as nonaccruing when it becomes probable that we will not collect the full contractual principal and interest. As more fully discussed in Note 4 to the Consolidated Financial Statements, we may modify loans in troubled debt restructurings. Modifications may include extension of payment terms and rate concessions. We generally do not forgive principal or accrued but unpaid interest. All loans modified in troubled debt restructurings, except for residential mortgage loans guaranteed by U.S. government agencies, are classified as nonaccruing. We may also renew matured nonaccruing loans. All nonaccruing loans, including those renewed or modified in troubled debt restructurings, are charged off when the loan balance is no longer covered by the paying capacity of the borrower based on a quarterly evaluation of available cash resources and collateral value. All nonaccruing loans generally remain on nonaccrual status until full collection of principal and interest in accordance with the original terms, including principal previously charged off, is probable. We generally do not voluntarily 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 consist solely of accruing residential mortgage loans guaranteed by U.S. government agencies that have been modified in troubled debt restructurings. See Note 4 to the Consolidated Financial Statements for additional discussion of troubled debt restructurings. Generally, we modify residential mortgage loans primarily by reducing interest rates and extending the number of payments in accordance with U.S. government agency guidelines. Generally, no unpaid principal or interest is forgiven. Interest continues to accrue based on the modified terms of the loan. Modified loans guaranteed by U.S. government agencies under residential mortgage loan programs may be sold once they become eligible according to U.S. government agency guidelines.

A rollforward of nonperforming assets for the three and six months ended June 30, 2017 follows in Table 22.

Table 22 -- Rollforward of Nonperforming Assets

(In thousands)



	Three Months Ended
	June 30, 2017
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, March 31, 2017	$	207,616		$	83,577		$	42,726		$	333,919
Additions	58,768			15,032			—			73,800
Transfers from premises and equipment	—			—			452			452
Payments	(15,230		)	(833		)	—			(16,063		)
Charge-offs	(2,872		)	—			—			(2,872		)
Net gains, losses and write-downs	—			—			1,694			1,694
Foreclosure of nonperforming loans	(688		)	—			688			—
Foreclosure of loans guaranteed by U.S. government agencies	(1,580		)	(2,752		)	—			(4,332		)
Proceeds from sales	—			(14,662		)	(5,829		)	(20,491		)
Net transfers to nonaccruing loans	—			—			—			—
Return to accrual status	(618		)	—			—			(618		)
Other, net	43			262			(295		)	10
Balance, June 30, 2017	$	245,439		$	80,624		$	39,436		$	365,499

- 34 -



	Six Months Ended
	June 30, 2017
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, Dec. 31, 2016	$	230,984		$	81,370		$	44,287		$	356,641
Additions	81,732			26,354			—			108,086
Transfers from premises and equipment	—			—			452			452
Payments	(50,162		)	(1,786		)	—			(51,948		)
Charge-offs	(5,025		)	—			—			(5,025		)
Net gains, losses and write-downs	—			—			1,604			1,604
Foreclosure of nonperforming loans	(1,597		)	—			1,597			—
Foreclosure of loans guaranteed by U.S. government agencies	(3,980		)	(4,290		)	—			(8,270		)
Proceeds from sales	—			(21,406		)	(7,702		)	(29,108		)
Return to accrual status	(6,556		)	—			—			(6,556		)
Other, net	43			382			(802		)	(377		)
Balance, June 30, 2017	$	245,439		$	80,624		$	39,436		$	365,499

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

Commercial

Nonaccruing commercial loans totaled $197 million or 1.85 percent of total commercial loans at June 30, 2017 and $157 million or 1.52 percent of commercial loans at March 31, 2017. There were $54 million in newly identified nonaccruing commercial loans during the quarter, offset by $12 million in payments and $1.7 million of charge-offs. Newly identified nonaccruing commercial loans were primarily healthcare and energy loans.

Nonaccruing commercial loans at June 30, 2017 were primarily composed of $124 million or 4.35 percent of total energy loans, $25 million or 1.10 percent of total healthcare sector loans, $21 million or 3.96 percent of total other commercial and industrial sector loans and $11 million or 0.69 percent of wholesale/retail sector loans.

Commercial Real Estate

Nonaccruing commercial real estate loans totaled $3.8 million or 0.10 percent of outstanding commercial real estate loans at June 30, 2017, down from $4.5 million or 0.12 percent of outstanding commercial real estate loans at March 31, 2017. Newly identified nonaccruing commercial real estate loans of $195 thousand were offset by $819 thousand of cash payments received and $76 thousand in charge-offs. There were no foreclosures of nonaccruing commercial real estate loans during the second quarter.

Nonaccruing commercial real estate loans were primarily composed of $2.1 million or 1.45 percent of residential construction and land development loans.

Residential Mortgage and Personal

Nonaccruing residential mortgage loans totaled $44 million or 2.28 percent of outstanding residential mortgage loans at June 30, 2017, a $1.8 million decrease compared to March 31, 2017. Newly identified nonaccruing residential mortgage loans totaling $3.3 million were offset by $2.3 million of foreclosures, $2.2 million of payments and $40 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 2.37 percent of outstanding non-guaranteed permanent residential mortgage loans at June 30, 2017. Nonaccruing home equity loans totaled $12 million or 1.55 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 decreased $3.2 million in the second quarter to $3.6 million at June 30, 2017. Residential mortgage loans 60 to 89 days past due increased by $1.1 million. Personal loans past due 30 to 59 days increased by $57 thousand and personal loans 60 to 89 days increased $184 thousand.

Table 23 -- Residential Mortgage and Personal Loans Past Due

(In thousands)



	June 30, 2017						March 31, 2017
	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 mortgage¹	$	132	$	1,026	$	2,024	$	—	$	—	$	5,364
Home equity	—		362		1,564		9		266		1,376
Total residential mortgage	$	132	$	1,388	$	3,588	9		$	266	$	6,740

Personal	$	—	$	289	$	487	$	37	$	105	$	430


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 $39 million at June 30, 2017, a decrease of $3.3 million compared to March 31, 2017. The distribution of real estate and other repossessed assets attributed by geographical market is included in Table 24 following.

Table 24 -- Real Estate and Other Repossessed Assets by Collateral Location

(In thousands)



	Oklahoma		Texas		Colorado		Arkansas		New Mexico		Arizona		Kansas/ Missouri		Other		Total
1-4 family residential properties	$	3,065	$	305	$	—	$	493	$	1,450	$	692	$	131	$	357	$	6,493
Developed commercial real estate properties	71		—		2,147		—		446		198		1,296		—		4,158
Undeveloped land	1,152		1,215		—		—		—		135		1,197		—		3,699
Residential land development properties	67		—		210		—		—		343		2		—		622
Oil and gas properties	—		24,433										—		—		24,433
Other	8		23		—		—		—		—		—		—		31
Total real estate and other repossessed assets	$	4,363	$	25,976	$	2,357	$	493	$	1,896	$	1,368	$	2,626	$	357	$	39,436

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

- 36 -

Liquidity and Capital

Subsidiary Bank

Deposits and borrowed funds are the primary sources of liquidity for BOKF, NA, the wholly owned subsidiary bank of BOK Financial. Based on the average balances for the second quarter of 2017, approximately 68 percent of our funding was provided by deposit accounts, 19 percent from borrowed funds, less than 1 percent is 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.

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

Average deposits for the second quarter of 2017 totaled $22.1 billion, a $277 million decrease compared to the first quarter of 2017. Interest-bearing transaction account balances decreased $480 million and time deposit balances decreased $55 million. Demand deposit balances grew by $237 million during the second quarter of 2017.

Table 25 - Average Deposits by Line of Business

(In thousands)



	Three Months Ended
	June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016		June 30, 2016
Commercial Banking	$	8,652,811	$	8,631,724	$	8,543,532	$	8,317,341	$	8,403,408
Consumer Banking	6,662,838		6,581,446		6,659,380		6,660,514		6,634,362
Wealth Management	5,531,091		5,582,554		5,333,095		4,913,409		4,521,031
Subtotal	20,846,740		20,795,724		20,536,007		19,891,264		19,558,801
Funds Management and other	1,245,591		1,573,698		1,167,409		873,750		908,931
Total	$	22,092,331	$	22,369,422	$	21,703,416	$	20,765,014	$	20,467,732

Average Commercial Banking deposit balances were largely unchanged compared to the first quarter of 2017. Average demand deposit balances increased $202 million, offset by a $182 million decrease in the average balances of interest-bearing transaction accounts. Average deposit balances attributed to commercial and industrial customers grew by $113 million, offset by $53 million decrease in balances attributed to energy customers and a $36 million decrease in average balances attributed to healthcare customers. 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 once the economic outlook improves and customers deploy cash or short-term market interest rates rise and related earnings credit rates rise, reducing the amount of deposits required to offset service charges.

Average Consumer Banking deposit balances increased by $81 million. Demand deposit balances grew by $75 million, partially offset by a $35 million decrease in time deposit balances. Interest-bearing transaction and savings account balanaces also grew over the prior quarter.

Average Wealth Management deposits decreased $51 million compared to the first quarter of 2017. A $142 million decrease in interest-bearing transaction account balances was partially offset by a $90 million increase in demand deposit balances.

Average deposits attributed to Funds Management and Other decreased $328 million.

Average time deposits for the second quarter of 2017 included $590 million of brokered deposits, an increase of $12 million over the first quarter of 2017. Average interest-bearing transaction accounts for the second quarter included $1.3 billion of brokered deposits, a decrease of $14 million compared to the first quarter of 2017.

The distribution of our period end deposit account balances among principal markets follows in Table 26.

- 37 -

Table 26 -- Period End Deposits by Principal Market Area

(In thousands)



	June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016		June 30, 2016
Bank of Oklahoma:
Demand	$	4,353,421	$	4,320,666	$	3,993,170	$	4,158,273	$	4,020,181
Interest-bearing:
Transaction	5,998,787		6,114,288		6,345,536		5,701,983		5,741,302
Savings	263,664		265,014		241,696		242,959		247,984
Time	1,170,014		1,189,144		1,118,355		1,091,464		1,167,271
Total interest-bearing	7,432,465		7,568,446		7,705,587		7,036,406		7,156,557
Total Bank of Oklahoma	11,785,886		11,889,112		11,698,757		11,194,679		11,176,738

Bank of Texas:
Demand	3,121,890		3,091,258		3,137,009		2,734,981		2,677,253
Interest-bearing:
Transaction	2,272,185		2,317,576		2,388,812		2,240,040		2,035,634
Savings	91,491		89,640		83,101		84,642		83,862
Time	502,128		511,037		535,642		528,380		516,231
Total interest-bearing	2,865,804		2,918,253		3,007,555		2,853,062		2,635,727
Total Bank of Texas	5,987,694		6,009,511		6,144,564		5,588,043		5,312,980

Bank of Albuquerque:
Demand	612,117		593,117		627,979		584,681		530,853
Interest-bearing:
Transaction	558,523		623,677		590,571		555,326		573,690
Savings	54,136		53,683		49,963		54,480		49,200
Time	229,616		233,506		238,408		244,706		250,068
Total interest-bearing	842,275		910,866		878,942		854,512		872,958
Total Bank of Albuquerque	1,454,392		1,503,983		1,506,921		1,439,193		1,403,811

Bank of Arkansas:
Demand	40,511		42,622		26,389		32,203		30,607
Interest-bearing:
Transaction	129,848		106,804		105,232		313,480		278,335
Savings	2,135		2,304		2,192		2,051		1,853
Time	14,876		15,067		16,696		17,534		18,911
Total interest-bearing	146,859		124,175		124,120		333,065		299,099
Total Bank of Arkansas	187,370		166,797		150,509		365,268		329,706

Colorado State Bank & Trust:
Demand	577,617		601,778		576,000		517,063		528,124
Interest-bearing:
Transaction	626,343		610,510		616,679		623,055		625,240
Savings	35,651		37,801		32,866		31,613		31,509
Time	228,458		234,740		242,782		247,667		254,164
Total interest-bearing	890,452		883,051		892,327		902,335		910,913
Total Colorado State Bank & Trust	1,468,069		1,484,829		1,468,327		1,419,398		1,439,037

- 38 -



	June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016		June 30, 2016
Bank of Arizona:
Demand	366,866		342,854		366,755		418,718		396,837
Interest-bearing:
Transaction	154,457		180,254		305,099		303,750		302,297
Savings	3,638		3,858		2,973		2,959		3,198
Time	19,911		26,112		27,765		27,935		28,681
Total interest-bearing	178,006		210,224		335,837		334,644		334,176
Total Bank of Arizona	544,872		553,078		702,592		753,362		731,013

Mobank:
Demand	496,473		514,278		508,418		235,445		240,755
Interest-bearing:
Transaction	346,996		406,105		513,176		86,526		112,371
Savings	13,603		13,424		12,679		1,645		1,656
Time	31,119		34,242		42,152		11,945		11,735
Total interest-bearing	391,718		453,771		568,007		100,116		125,762
Total Mobank	888,191		968,049		1,076,425		335,561		366,517
Total BOK Financial deposits	$	22,316,474	$	22,575,359	$	22,748,095	$	21,095,504	$	20,759,802

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 $22 million at June 30, 2017. 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 $5.5 billion during the quarter, compared to $5.7 billion in the first quarter of 2017.

At June 30, 2017, the estimated unused credit available to BOKF, NA from collateralized sources was approximately $6.1 billion.

A summary of other borrowings for BOK Financial on a consolidated basis follows in Table 27.

- 39 -

Table 27 -- Borrowed Funds

(In thousands)



			Three Months Ended June 30, 2017								Three Months Ended March 31, 2017
	Jun 30, 2017		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter		Mar 31, 2017		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter

Parent Company and Other Non-Bank Subsidiaries:
Trust preferred debt	$	—	$	6,084	3.49	%	$	7,217	$	7,217	$	7,217	3.32	%	$	7,217
Other	878		867		11.06	%	$	881	847		913		10.83	%	871
Total other borrowings	878		6,951		5.14	%			8,064		8,130		5.64	%
Subordinated debentures	144,658		144,654		5.55	%	$	144,658	144,649		144,644		5.68	%	144,649
Total parent company and other non-bank subsidiaries	145,536		151,605		5.53	%			152,713		152,774		5.68	%

BOKF, NA:
Funds purchased	67,990		63,263		0.61	%	67,990		47,629		55,508		0.47	%	50,154
Repurchase agreements	396,333		427,353		0.06	%	489,814		508,352		523,561		0.02	%	536,094
Other borrowings:
Federal Home Loan Bank advances	5,200,000		5,532,967		1.07	%	5,600,000		5,200,000		5,691,111		0.80	%	5,700,000
GNMA repurchase liability	16,056		16,734		4.65	%	17,693		15,532		23,392		4.61	%	24,139
Other	15,409		15,379		2.40	%	15,409		15,351		15,322		2.41	%	15,351
Total other borrowings	5,231,465		5,565,080		1.09	%			5,230,883		5,729,825		0.82	%
Total BOKF, NA	5,695,788		6,055,696		1.01	%			5,786,864		6,308,894		0.75	%

Total Other Borrowed Funds	$	5,841,324	$	6,207,301	1.12	%			$	5,939,577	$	6,461,668	0.87	%

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 June 30, 2017, cash and interest-bearing cash and cash equivalents held by the parent company totaled $187 million. 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 June 30, 2017, based upon the most restrictive limitations as well as management's internal capital policy, the bank could declare up to $283 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 June 30, 2017 was $3.4 billion, an increase of $79 million over March 31, 2017. Net income less cash dividends paid increased equity $59 million during the second quarter of 2017. Accumulated other comprehensive income increased $13 million primarily related to the impact on changes in interest rates on the net unrealized gain (loss) of the available for sale securities portfolio. Capital is managed to maximize long-term value to the shareholders. Factors considered in managing capital include projections of future earnings, asset growth and acquisition strategies, and regulatory and debt covenant requirements. Capital management may include subordinated debt 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 June 30, 2017, a cumulative total of 2,879,243 shares have been repurchased under this authorization. No shares were repurchased in the second quarter of 2017.

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.

Effective January 1, 2015 for BOK Financial, 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, consistent with the treatment under previous capital rules.

A summary of minimum capital requirements, including capital conservation buffer follows in Table 28. 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 28.

Table 28 -- Capital Ratios



	Minimum Capital Requirement		Capital Conservation Buffer		Minimum Capital Requirement Including Capital Conservation Buffer		June 30, 2017		Mar. 31, 2017		June 30, 2016
Risk-based capital:
Common equity Tier 1	4.50	%	2.50	%	7.00	%	11.76	%	11.59	%	11.86	%
Tier 1 capital	6.00	%	2.50	%	8.50	%	11.76	%	11.59	%	11.86	%
Total capital	8.00	%	2.50	%	10.50	%	13.36	%	13.25	%	13.51	%
Tier 1 Leverage	4.00	%	N/A		4.00	%	9.27	%	8.89	%	9.06	%

Average total equity to average assets							10.53	%	10.10	%	10.46	%
Tangible common equity ratio							9.24	%	8.88	%	9.33	%

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

- 41 -

Table 29 -- Non-GAAP Measure

(Dollars in thousands)



	June 30, 2017			Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			June 30, 2016
Tangible common equity ratio:
Total shareholders' equity	$	3,422,469		$	3,341,744		$	3,274,854		$	3,398,311		$	3,368,833
Less: Goodwill and intangible assets, net	487,452			488,294			495,830			424,716			426,111
Tangible common equity	2,935,017			2,853,450			2,779,024			2,973,595			2,942,722
Total assets	32,263,532			32,628,932			32,772,281			32,779,231			31,970,450
Less: Goodwill and intangible assets, net	487,452			488,294			495,830			424,716			426,111
Tangible assets	$	31,776,080		$	32,140,638		$	32,276,451		$	32,354,515		$	31,544,339
Tangible common equity ratio	9.24		%	8.88		%	8.61		%	9.19		%	9.33		%

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 unpledged 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 30 -- Interest Rate Sensitivity

(Dollars in thousands)



	200 bp Increase						50 bp Decrease
	June 30,						June 30,
	2017			2016			2017			2016
Anticipated impact over the next twelve months on net interest revenue	$	(104	)	$	(483	)	$	(17,632	)	$	(24,425	)
	(0.01		)%	(0.06		)%	(2.07		)%	(3.18		)%

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 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 31 -- MSR Asset and Hedge Sensitivity Analysis

(Dollars in thousands)



	June 30,
	2017						2016
	Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp
MSR Asset	$	25,977		$	(31,851	)	$	31,043		$	(53,564	)
MSR Hedge	(31,507		)	32,312			(28,934		)	31,098
Net Exposure	(5,530		)	461			2,109			(22,466		)

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 32 -- Mortgage Pipeline Sensitivity Analysis

(Dollars in thousands)



	Three Months Ended June 30,												Six Months Ended June 30,
	2017						2016						2017						2016
	Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp
Average¹	$	(3	)	$	(1,439	)	$	(3,835	)	$	(740	)	$	117		$	(1,316	)	$	(3,916	)	$	(591	)
Low²	1,030			(679		)	(288		)	724			1,030			(398		)	(288		)	1,815
High³	(810		)	(2,377		)	(6,858		)	(2,656		)	(810		)	(2,377		)	(6,858		)	(2,953		)
Period End	(263		)	(1,025		)	(1,328		)	(1,423		)	(263		)	(1,025		)	(1,328		)	(1,423		)


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 enters into 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 33 -- BOKFS Trading Sensitivity Analysis

(Dollars in thousands)



	Three Months Ended June 30,										Six Months Ended June 30,
	2017					2016					2017					2016
	Up 50 bp			Down 50 bp		Up 50 bp			Down 50 bp		Up 50 bp			Down 50 bp		Up 50 bp			Down 50 bp
Average¹	$	(1,359	)	$	1,592	$	(3,389	)	$	3,118	$	(1,991	)	$	2,241	$	(2,984	)	$	2,721
Low²	(219		)	3,833		(2,208		)	2,009		86			5,210		146			5,274
High³	(2,916		)	91		(4,211		)	2,092		(4,386		)	2		(5,607		)	(107		)
Period End	(1,842		)	1,727		(3,055		)	3,001		(1,842		)	1,727		(3,055		)	3,001


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.

Controls and Procedures

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

Forward-Looking Statements

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

- 45 -



Consolidated Statements of Earnings (Unaudited)
(In thousands, except share and per share data)	Three Months Ended						Six Months Ended
	June 30,						June 30,
Interest revenue	2017			2016			2017			2016
Loans	$	168,952		$	141,560		$	329,847		$	280,672
Residential mortgage loans held for sale	2,386			3,508			4,222			6,208
Trading securities	3,339			616			8,522			1,140
Investment securities	4,005			4,217			8,176			8,604
Available for sale securities	43,363			43,872			86,735			89,339
Fair value option securities	3,539			2,062			5,919			4,651
Restricted equity securities	4,399			3,863			8,708			8,174
Interest-bearing cash and cash equivalents	5,198			2,569			9,442			5,275
Total interest revenue	235,181			202,267			461,571			404,063
Interest expense
Deposits	12,622			9,997			23,976			20,539
Borrowed funds	15,352			8,780			27,181			16,752
Subordinated debentures	2,003			878			4,028			1,588
Total interest expense	29,977			19,655			55,185			38,879
Net interest revenue	205,204			182,612			406,386			365,184
Provision for credit losses	—			20,000			—			55,000
Net interest revenue after provision for credit losses	205,204			162,612			406,386			310,184
Other operating revenue
Brokerage and trading revenue	31,764			39,530			65,387			71,871
Transaction card revenue	35,296			34,950			67,423			67,304
Fiduciary and asset management revenue	41,808			34,813			80,439			66,869
Deposit service charges and fees	23,354			22,618			46,384			45,160
Mortgage banking revenue	30,276			34,884			55,467			66,984
Other revenue	14,984			13,352			26,736			25,256
Total fees and commissions	177,482			180,147			341,836			343,444
Other gains, net	6,108			1,307			9,735			2,867
Gain (loss) on derivatives, net	3,241			10,766			2,791			17,904
Gain (loss) on fair value option securities, net	1,984			4,279			844			13,722
Change in fair value of mortgage servicing rights	(6,943		)	(16,283		)	(5,087		)	(44,271		)
Gain on available for sale securities, net	380			5,326			2,429			9,290
Total other operating revenue	182,252			185,542			352,548			342,956
Other operating expense
Personnel	143,744			139,213			280,169			272,775
Business promotion	7,738			6,703			14,455			12,399
Professional fees and services	12,419			14,158			23,836			25,917
Net occupancy and equipment	21,125			19,677			42,749			38,443
Insurance	689			7,129			7,093			14,394
Data processing and communications	36,330			32,802			71,232			64,819
Printing, postage and supplies	4,140			3,889			7,991			7,796
Net losses (gains) and operating expenses of repossessed assets	2,267			1,588			3,276			2,658
Amortization of intangible assets	1,803			2,624			3,605			3,783
Mortgage banking costs	12,072			15,746			25,075			28,076
Other expense	8,558			7,856			16,115			22,895
Total other operating expense	250,885			251,385			495,596			493,955
Net income before taxes	136,571			96,769			263,338			159,185
Federal and state income taxes	47,705			30,497			85,808			51,925
Net income	88,866			66,272			177,530			107,260
Net income (loss) attributable to non-controlling interests	719			471			1,027			(1,105		)
Net income attributable to BOK Financial Corporation shareholders	$	88,147		$	65,801		$	176,503		$	108,365
Earnings per share:
Basic	$	1.35		$	1.00		$	2.70		$	1.64
Diluted	$	1.35		$	1.00		$	2.69		$	1.64
Average shares used in computation:
Basic	64,729,752			65,245,887			64,722,744			65,271,214
Diluted	64,793,134			65,302,926			64,788,322			65,317,177
Dividends declared per share	$	0.44		$	0.43		$	0.88		$	0.86

See accompanying notes to consolidated financial statements.

- 46 -



Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Net income	$	88,866		$	66,272		$	177,530		$	107,260
Other comprehensive income before income taxes:
Net change in unrealized gain (loss)	21,958			45,475			33,369			166,566
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			(43		)	—			(112		)
Gain on available for sale securities, net	(380		)	(5,326		)	(2,429		)	(9,290		)
Other comprehensive income before income taxes	21,578			40,106			30,940			157,164
Federal and state income taxes	8,393			15,583			12,009			61,119
Other comprehensive income, net of income taxes	13,185			24,523			18,931			96,045
Comprehensive income	102,051			90,795			196,461			203,305
Comprehensive income (loss) attributable to non-controlling interests	719			471			1,027			(1,105		)
Comprehensive income attributable to BOK Financial Corp. shareholders	$	101,332		$	90,324		$	195,434		$	204,410

See accompanying notes to consolidated financial statements.

- 47 -

Consolidated Balance Sheets (In thousands, except share data)

	Jun 30, 2017			Dec 31, 2016			Jun 30, 2016
	(Unaudited)			(Footnote 1)			(Unaudited)
Assets
Cash and due from banks	$	561,587		$	620,846		$	498,713
Interest-bearing cash and cash equivalents	2,078,831			1,916,651			1,907,838
Trading securities	441,414			337,628			211,622
Investment securities (fair value: June 30, 2017 – $515,675; December 31, 2016 – $565,493 ; June 30, 2016 – $599,062)	490,426			546,145			560,711
Available for sale securities	8,341,041			8,676,829			8,830,689
Fair value option securities	445,169			77,046			263,265
Restricted equity securities	311,033			307,240			319,639
Residential mortgage loans held for sale	287,259			301,897			430,728
Loans	17,183,645			16,989,660			16,406,749
Allowance for loan losses	(250,061		)	(246,159		)	(243,259		)
Loans, net of allowance	16,933,584			16,743,501			16,163,490
Premises and equipment, net	321,038			325,849			315,199
Receivables	295,042			772,952			173,638
Goodwill	446,697			448,899			382,739
Intangible assets, net	40,755			46,931			43,372
Mortgage servicing rights	245,239			247,073			190,747
Real estate and other repossessed assets, net of allowance (June 30, 2017 – $8,576; December 31, 2016 – $9,562; June 30, 2016 – $9,448)	39,436			44,287			24,054
Derivative contracts, net	280,289			689,872			883,673
Cash surrender value of bank-owned life insurance	312,774			308,430			307,860
Receivable on unsettled securities sales	33,177			7,188			142,820
Other assets	358,741			353,017			319,653
Total assets	$	32,263,532		$	32,772,281		$	31,970,450

Liabilities and Equity
Liabilities:
Noninterest-bearing demand deposits	$	9,568,895		$	9,235,720		$	8,424,609
Interest-bearing deposits:
Transaction	10,087,139			10,865,105			9,668,869
Savings	464,318			425,470			419,262
Time	2,196,122			2,221,800			2,247,061
Total deposits	22,316,474			22,748,095			20,759,801
Funds purchased	67,990			57,929			56,780
Repurchase agreements	396,333			668,661			472,683
Other borrowings	5,232,343			4,846,072			5,830,736
Subordinated debentures	144,658			144,640			371,812
Accrued interest, taxes and expense	133,198			146,704			197,742
Derivative contracts, net	285,819			664,531			719,159
Due on unsettled securities purchases	32,636			6,508			11,757
Other liabilities	204,536			182,784			147,242
Total liabilities	28,813,987			29,465,924			28,567,712
Shareholders' equity:
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: June 30, 2017 – 75,089,152; December 31, 2016 – 74,993,407; June 30, 2016 – 74,817,155)	4			4			4
Capital surplus	1,017,495			1,006,535			990,106
Retained earnings	2,942,447			2,823,334			2,755,766
Treasury stock (shares at cost: June 30, 2017 – 9,672,749; December 31, 2016 – 9,655,975; June 30, 2016 – 8,950,838)	(545,441		)	(544,052		)	(494,675		)
Accumulated other comprehensive income (loss)	7,964			(10,967		)	117,632
Total shareholders’ equity	3,422,469			3,274,854			3,368,833
Non-controlling interests	27,076			31,503			33,905
Total equity	3,449,545			3,306,357			3,402,738
Total liabilities and equity	$	32,263,532		$	32,772,281		$	31,970,450

See accompanying notes to consolidated financial statements.

- 48 -

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, Dec. 31, 2015	74,530	$	4	$	982,009	$	2,704,121		8,636	$	(477,165	)	$	21,587		$	3,230,556		$	37,083		$	3,267,639
Net income (loss)	—	—		—		108,365			—	—			—			108,365			(1,105		)	107,260
Other comprehensive income	—	—		—		—			—	—			96,045			96,045			—			96,045
Repurchase of common stock	—	—		—		—			305	(17,770		)	—			(17,770		)	—			(17,770		)
Share-based compensation plans:
Stock options exercised	39	—		2,016		—			—	—			—			2,016			—			2,016
Non-vested shares awarded, net	248	—		—		—			—	—			—			—			—			—
Vesting of non-vested shares	—	—		—		—			10	260			—			260			—			260
Tax effect from equity compensation, net	—	—		351		—			—	—			—			351			—			351
Share-based compensation	—	—		5,730		—			—	—			—			5,730			—			5,730
Cash dividends on common stock	—	—		—		(56,720		)	—	—			—			(56,720		)	—			(56,720		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			(2,073		)	(2,073		)

Balance, June 30, 2016	74,817	$	4	$	990,106	$	2,755,766		8,951	$	(494,675	)	$	117,632		$	3,368,833		$	33,905		$	3,402,738

Balance, Dec. 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 (loss)	—	—		—		176,503			—	—			—			176,503			1,027			177,530
Other comprehensive income	—	—		—		—			—	—			18,931			18,931			—			18,931
Share-based compensation plans:
Stock options exercised	41	—		1,977		—			—	—			—			1,977			—			1,977
Non-vested shares awarded, net	55	—		—		—			—	—			—			—			—			—
Vesting of non-vested shares	—	—		—		—			17	(1,389		)	—			(1,389		)	—			(1,389		)
Share-based compensation	—	—		8,983		—			—	—			—			8,983			—			8,983
Cash dividends on common stock	—	—		—		(57,390		)	—	—			—			(57,390		)	—			(57,390		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			(5,454		)	(5,454		)

Balance, June 30, 2017	75,089	$	4	$	1,017,495	$	2,942,447		9,673	$	(545,441	)	$	7,964		$	3,422,469		$	27,076		$	3,449,545

See accompanying notes to consolidated financial statements.

- 49 -

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

	Six Months Ended
	June 30,
	2017			2016
Cash Flows From Operating Activities:
Net income	$	177,530		$	107,260
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	—			55,000
Change in fair value of mortgage servicing rights due to market changes	5,087			44,271
Change in the fair value of mortgage servicing rights due to loan runoff	16,261			17,942
Net unrealized gains from derivative contracts	(5,928		)	(15,459		)
Share-based compensation	8,983			5,730
Depreciation and amortization	25,864			23,532
Net amortization of securities discounts and premiums	15,377			21,814
Net realized gains on financial instruments and other net gains	(4,351		)	(9,787		)
Net gain on mortgage loans held for sale	(25,229		)	(37,151		)
Mortgage loans originated for sale	(1,613,997		)	(3,062,859		)
Proceeds from sale of mortgage loans held for sale	1,651,018			2,981,973
Capitalized mortgage servicing rights	(19,514		)	(34,355		)
Change in trading and fair value option securities	(472,682		)	90,484
Change in receivables	479,774			(9,698		)
Change in other assets	(17,548		)	(4,740		)
Change in accrued interest, taxes and expense	(19,703		)	20,299
Change in other liabilities	27,420			(8,854		)
Net cash provided by operating activities	228,362			185,402
Cash Flows From Investing Activities:
Proceeds from maturities or redemptions of investment securities	71,654			52,463
Proceeds from maturities or redemptions of available for sale securities	899,096			721,432
Purchases of investment securities	(18,802		)	(18,599		)
Purchases of available for sale securities	(1,242,070		)	(1,155,261		)
Proceeds from sales of available for sale securities	700,412			795,140
Change in amount receivable on unsettled securities transactions	(25,989		)	(102,627		)
Loans originated, net of principal collected	(159,924		)	(481,085		)
Net payments on derivative asset contracts	420,996			(204,041		)
Acquisitions, net of cash acquired	—			(7,700		)
Proceeds from disposition of assets	127,699			78,629
Purchases of assets	(106,362		)	(107,241		)
Net cash provided by investing activities	666,710			(428,890		)
Cash Flows From Financing Activities:
Net change in demand deposits, transaction deposits and savings accounts	(405,943		)	(169,354		)
Net change in time deposits	(25,678		)	(159,003		)
Net change in other borrowed funds	64,833			259,359
Issuance of subordinated debentures	—			145,390
Net proceeds on derivative liability contracts	(422,016		)	196,225
Net change in derivative margin accounts	27,327			(188,823		)
Change in amount due on unsettled security transactions	26,128			(5,140		)
Issuance of common and treasury stock, net	588			2,276
Repurchase of common stock	—			(17,770		)
Dividends paid	(57,390		)	(56,720		)
Net cash provided by (used in) financing activities	(792,151		)	6,440
Net increase (decrease) in cash and cash equivalents	102,921			(237,048		)
Cash and cash equivalents at beginning of period	2,537,497			2,643,599
Cash and cash equivalents at end of period	$	2,640,418		$	2,406,551

Supplemental Cash Flow Information:
Cash paid for interest	$	54,881		$	40,213
Cash paid for taxes	$	60,654		$	14,671
Net loans and bank premises transferred to repossessed real estate and other assets	$	2,049		$	5,372
Residential mortgage loans guaranteed by U.S. government agencies that became eligible for repurchase during the period	$	59,171		$	49,325
Conveyance of other real estate owned guaranteed by U.S. government agencies	$	22,602		$	29,512

See accompanying notes to consolidated financial statements.

- 50 -

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 2016 Form 10-K filed with the Securities and Exchange Commission, which contains audited financial statements. Amounts presented as of December 31, 2016 have been derived from the audited financial statements included in BOK Financial’s 2016 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 six-month period ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

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. ASU 2014-09 is effective for the Company for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Net interest revenue from financial assets and liabilities is explicitly excluded from the scope of ASU 2014-09. Management expects that most fees and commissions revenue will not be affected. The Company continues to evaluate the impact of ASU 2014-09 on Fiduciary and Asset Management Revenue and Transaction Card Revenue, which represents 19% of gross revenue and 43% of fees and commissions revenue for the first half of 2017. Timing of revenue recognition and gross versus net presentation may be affected. Management will adopt the standard in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings if such adjustment is significant.

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. ASU 2016-08 is effective for the Company for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is evaluating the impact the adoption of ASU 2016-08 will have on the Company's financial statements along with ASU 2014-09.

- 51 -

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. The ASU is effective for the Company for interim and annual periods beginning after December 15, 2017. Upon adoption, unrealized gains and losses from equity securities will be reclassified from other comprehensive income to retained earnings. At June 30, 2017, the Company had $3.2 million of unrealized gains included in accumulated other comprehensive income.

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 and requires transition through a modified retrospective approach for leases existing at or entered into after January 1, 2017. The Company is evaluating the impact the adoption of ASU 2016-02 will have on the Company's financial statements.

FASB Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09")

On March 30, 2016, the FASB issued ASU 2016-09 to simplify multiple aspects of accounting for employee share-based payment transactions including accounting income taxes, forfeitures, and statutory tax withholding requirements. The ASU became effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. Implementation of ASU 2016-09 decreased tax expense $2.3 million in the first six months of 2017.

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 is evaluating the impact the adoption of ASU 2016-13 will have on the Company's financial statements.

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. ASU 2016-15 is effective for the Company for interim and annual reporting periods beginning after December 15, 2017. Entities generally must apply the guidance retrospectively to all periods presented. Adoption of ASU 2016-15 is not expected to have a material impact on the Company's financial statements.

- 52 -

(2) Securities

Trading Securities

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



	June 30, 2017					December 31, 2016					June 30, 2016
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. government agency debentures	$	20,954	$	(9	)	$	6,234	$	(4	)	$	18,909	$	(8	)
U.S. government agency residential mortgage-backed securities	365,171		(1,032		)	310,067		635			122,306		363
Municipal and other tax-exempt securities	45,444		230			14,427		50			52,721		262
Other trading securities	9,845		(175		)	6,900		57			17,686		169
Total trading securities	$	441,414	$	(986	)	$	337,628	$	738		$	211,622	$	786

Investment Securities

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



	June 30, 2017
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	267,375	$	270,531	$	3,384	$	(228	)
U.S. government agency residential mortgage-backed securities – Other	18,035		18,642		668		(61		)
Other debt securities	205,016		226,502		22,040		(554		)
Total investment securities	$	490,426	$	515,675	$	26,092	$	(843	)


¹	Gross unrealized gains and losses are not recognized in Accumulated Other Comprehensive Income "AOCI" in the Consolidated Balance Sheets.



	December 31, 2016
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	320,364	$	321,225	$	2,272	$	(1,411	)
U.S. government agency residential mortgage-backed securities – Other	20,777		21,473		767		(71		)
Other debt securities	205,004		222,795		18,115		(324		)
Total investment securities	$	546,145	$	565,493	$	21,154	$	(1,806	)


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



	June 30, 2016
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	334,551	$	340,700	$	6,234	$	(85	)
U.S. government agency residential mortgage-backed securities – Other	23,750		25,233		1,483		—
Other debt securities	202,410		233,129		30,723		(4		)
Total investment securities	$	560,711	$	599,062	$	38,440	$	(89	)


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

- 53 -

The amortized cost and fair values of investment securities at June 30, 2017, 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	$	90,415		$	122,560		$	10,739		$	43,661		$	267,375		3.48
Fair value	90,436			122,914			11,220			45,961			270,531
Nominal yield¹	1.66		%	2.12		%	4.88		%	5.05		%	2.55		%
Other debt securities:
Amortized cost	14,286			45,638			130,279			14,813			205,016			6.59
Fair value	14,482			48,973			148,415			14,632			226,502
Nominal yield	3.84		%	4.95		%	5.75		%	4.46		%	5.35		%
Total fixed maturity securities:
Amortized cost	$	104,701		$	168,198		$	141,018		$	58,474		$	472,391		4.83
Fair value	104,918			171,887			159,635			60,593			497,033
Nominal yield	1.95		%	2.89		%	5.69		%	4.90		%	3.77		%
Residential mortgage-backed securities:
Amortized cost													$	18,035		³
Fair value													18,642
Nominal yield⁴													2.76		%
Total investment securities:
Amortized cost													$	490,426
Fair value													515,675
Nominal yield													3.73		%


¹	Calculated on a taxable equivalent basis using a 39 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 4.7 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.

- 54 -

Available for Sale Securities

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



	June 30, 2017
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	998	$	—	$	(2	)	$	—
Municipal and other tax-exempt	32,885		32,765		293		(413		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,005,920		3,008,531		24,213		(21,602		)	—
FHLMC	1,412,376		1,412,472		7,785		(7,689		)	—
GNMA	938,086		936,365		3,641		(5,362		)	—
Other	25,000		25,009		52		(43		)	—
Total U.S. government agencies	5,381,382		5,382,377		35,691		(34,696		)	—
Private issue:
Alt-A loans	38,334		46,903		8,569		—			—
Jumbo-A loans	48,322		56,480		8,158		—			—
Total private issue	86,656		103,383		16,727		—			—
Total residential mortgage-backed securities	5,468,038		5,485,760		52,418		(34,696		)	—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,788,543		2,782,070		7,804		(14,277		)	—
Other debt securities	4,400		4,152		—		(248		)	—
Perpetual preferred stock	12,562		16,568		4,006		—			—
Equity securities and mutual funds	17,572		18,728		1,219		(63		)	—
Total available for sale securities	$	8,325,000	$	8,341,041	$	65,740	$	(49,699	)	$	—

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

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

- 55 -



	December 31, 2016
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	999	$	—	$	(1	)	$	—
Municipal and other tax-exempt	41,050		40,993		343		(400		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,062,525		3,055,676		25,066		(31,915		)	—
FHLMC	1,534,451		1,531,116		8,475		(11,810		)	—
GNMA	878,375		873,594		2,259		(7,040		)	—
Total U.S. government agencies	5,475,351		5,460,386		35,800		(50,765		)	—
Private issue:
Alt-A loans	44,245		51,512		7,485		—			(218		)
Jumbo-A loans	56,947		64,023		7,092		(16		)	—
Total private issue	101,192		115,535		14,577		(16		)	(218		)
Total residential mortgage-backed securities	5,576,543		5,575,921		50,377		(50,781		)	(218		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	3,035,750		3,017,933		5,472		(23,289		)	—
Other debt securities	4,400		4,152		—		(248		)	—
Perpetual preferred stock	15,561		18,474		2,913		—			—
Equity securities and mutual funds	17,424		18,357		1,060		(127		)	—
Total available for sale securities	$	8,691,728	$	8,676,829	$	60,165	$	(74,846	)	$	(218	)

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

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



	June 30, 2016
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	1,004	$	4	$	—		$	—
Municipal and other tax-exempt	50,170		50,262		805		(713		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	2,908,698		2,988,974		80,549		(273		)	—
FHLMC	1,746,661		1,785,332		38,869		(198		)	—
GNMA	921,928		925,962		4,646		(612		)	—
Total U.S. government agencies	5,577,287		5,700,268		124,064		(1,083		)	—
Private issue:
Alt-A loans	49,522		54,536		5,461		—			(447		)
Jumbo-A loans	65,787		71,777		6,355		(36		)	(329		)
Total private issue	115,309		126,313		11,816		(36		)	(776		)
Total residential mortgage-backed securities	5,692,596		5,826,581		135,880		(1,119		)	(776		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,854,306		2,911,946		57,762		(122		)	—
Other debt securities	4,400		4,151		—		(249		)	—
Perpetual preferred stock	15,562		17,931		2,369		—			—
Equity securities and mutual funds	17,270		18,814		1,558		(14		)	—
Total available for sale securities	$	8,635,304	$	8,830,689	$	198,378	$	(2,217	)	$	(776	)


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


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

- 56 -

The amortized cost and fair values of available for sale securities at June 30, 2017, 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 Maturity⁵
U.S. Treasuries:
Amortized cost	$	1,000		$	—		$	—		$	—			$	1,000		0.55
Fair value	998			—			—			—				998
Nominal yield	0.87		%	—		%	—		%	—		%		0.87		%
Municipal and other tax-exempt:
Amortized cost	$	8,981		$	6,380		$	1,028		$	16,496			$	32,885		8.87
Fair value	9,021			6,497			1,081			16,166				32,765
Nominal yield¹	4.24		%	3.91		%	6.72		%	2.28		%	⁶	3.27		%
Commercial mortgage-backed securities:
Amortized cost	$	58,263		$	880,459		$	1,571,735		$	278,086			$	2,788,543		6.98
Fair value	58,147			879,286			1,568,732			275,905				2,782,070
Nominal yield	1.20		%	1.83		%	1.84		%	1.88		%		1.82		%
Other debt securities:
Amortized cost	$	—		$	—		$	—		$	4,400			$	4,400		30.16
Fair value	—			—			—			4,152				4,152
Nominal yield	—		%	—		%	—		%	1.71		%	⁶	1.71		%
Total fixed maturity securities:
Amortized cost	$	68,244		$	886,839		$	1,572,763		$	298,982			$	2,826,828		7.03
Fair value	68,166			885,783			1,569,813			296,223				2,819,985
Nominal yield	1.60		%	1.85		%	1.85		%	1.90		%		1.83		%
Residential mortgage-backed securities:
Amortized cost														$	5,468,038		²
Fair value														5,485,760
Nominal yield⁴														1.94		%
Equity securities and mutual funds:
Amortized cost														$	30,134		³
Fair value														35,296
Nominal yield														—		%
Total available-for-sale securities:
Amortized cost														$	8,325,000
Fair value														8,341,041
Nominal yield														1.90		%


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


²	The average expected lives of mortgage-backed securities were 3.9 years years based upon current prepayment assumptions.


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


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


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


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

- 57 -

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Proceeds	$	460,402		$	325,758	$	700,412		$	795,140
Gross realized gains	2,763			5,326		4,855			9,290
Gross realized losses	(2,383		)	—		(2,426		)	—
Related federal and state income tax expense	148			2,072		945			3,614

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



	June 30, 2017		Dec. 31, 2016		June 30, 2016
Investment:
Amortized cost	$	251,684	$	322,208	$	287,166
Fair value	255,097		323,808		293,625

Available for sale:
Amortized cost	6,327,666		7,353,116		7,502,361
Fair value	6,317,623		7,327,470		7,657,916

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

- 58 -

Temporarily Impaired Securities as of June 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	82	$	111,078	$	149	$	3,000	$	79	$	114,078	$	228
U.S. government agency residential mortgage-backed securities – Other	1	3,810		61		—		—		3,810		61
Other debt securities	22	8,384		554		—		—		8,384		554
Total investment securities	105	$	123,272	$	764	$	3,000	$	79	$	126,272	$	843



	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	$	997	$	2	$	—	$	—	$	997	$	2
Municipal and other tax-exempt	13	$	1,957	$	1	$	4,655	$	412	$	6,612	$	413
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	75	1,381,687		20,288		87,371		1,314		1,469,058		21,602
FHLMC	42	731,853		7,213		16,388		476		748,241		7,689
GNMA	21	291,806		3,766		76,605		1,596		368,411		5,362
Other	1	19,957		43		—		—		19,957		43
Total U.S. government agencies	139	2,425,303		31,310		180,364		3,386		2,605,667		34,696
Private issue:
Alt-A loans	—	—		—		—		—		—		—
Jumbo-A loans	—	—		—		—		—		—		—
Total private issue	—	—		—		—		—		—		—
Total residential mortgage-backed securities	139	2,425,303		31,310		180,364		3,386		2,605,667		34,696
Commercial mortgage-backed securities guaranteed by U.S. government agencies	121	1,388,406		12,690		78,828		1,587		1,467,234		14,277
Other debt securities	2	—		—		4,152		248		4,152		248
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	91	1,668		22		887		41		2,555		63
Total available for sale securities	367	$	3,818,331	$	44,025	$	268,886	$	5,674	$	4,087,217	$	49,699

- 59 -

Temporarily Impaired Securities as of December 31, 2016

(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	151	$	219,892	$	1,316	$	4,333	$	95	$	224,225	$	1,411
U.S. government agency residential mortgage-backed securities – Other	1	4,358		71		—		—		4,358		71
Other debt securities	41	11,820		322		855		2		12,675		324
Total investment securities	193	$	236,070	$	1,709	$	5,188	$	97	$	241,258	$	1,806



	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	24	$	15,666	$	22	$	4,689	$	378	$	20,355	$	400
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	91	1,787,644		30,238		72,105		1,677		1,859,749		31,915
FHLMC	58	964,017		11,210		18,307		600		982,324		11,810
GNMA	31	548,637		6,145		25,796		895		574,433		7,040
Total U.S. government agencies	180	3,300,298		47,593		116,208		3,172		3,416,506		50,765
Private issue¹:
Alt-A loans	5	7,931		174		7,410		44		15,341		218
Jumbo-A loans	1	—		—		6,098		16		6,098		16
Total private issue	6	7,931		174		13,508		60		21,439		234
Total residential mortgage-backed securities	186	3,308,229		47,767		129,716		3,232		3,437,945		50,999
Commercial mortgage-backed securities guaranteed by U.S. government agencies	171	1,904,584		22,987		38,875		302		1,943,459		23,289
Other debt securities	2	—		—		4,152		248		4,152		248
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	104	2,127		41		817		86		2,944		127
Total available for sale securities	488	$	5,231,605	$	70,818	$	178,249	$	4,246	$	5,409,854	$	75,064


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

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Temporarily Impaired Securities as of June 30, 2016

(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	19	$	11,915	$	20	$	4,378	$	65	$	16,293	$	85
U.S. government agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	1	—		—		858		4		858		4
Total investment securities	20	$	11,915	$	20	$	5,236	$	69	$	17,151	$	89



	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-exempt¹	17	$	375	$	—	$	10,289	$	713	$	10,664	$	713
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4	97,910		267		15,401		6		113,311		273
FHLMC	1	—		—		22,338		198		22,338		198
GNMA	11	349,631		612		—		—		349,631		612
Total U.S. government agencies	16	447,541		879		37,739		204		485,280		1,083
Private issue¹:
Alt-A loans	5	8,513		241		8,291		206		16,804		447
Jumbo-A loans	9	7,076		36		7,877		329		14,953		365
Total private issue	14	15,589		277		16,168		535		31,757		812
Total residential mortgage-backed securities	30	463,130		1,156		53,907		739		517,037		1,895
Commercial mortgage-backed securities guaranteed by U.S. government agencies	11	103,955		37		65,857		85		169,812		122
Other debt securities	2	—		—		4,151		249		4,151		249
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	30	—		—		889		14		889		14
Total available for sale securities	90	$	567,460	$	1,193	$	135,093	$	1,800	$	702,553	$	2,993


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

For debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be required to sell impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and securities portfolio management. Based on this evaluation as of June 30, 2017, the Company does not intend to sell any impaired available for sale securities before fair value recovers to the current amortized cost and it is more-likely-than-not that the Company will not be required to sell impaired securities before fair value recovers, which may be maturity.

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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 U.S. Treasury securities, residential mortgage-backed securities issued by U.S. government agencies and derivative contracts 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):



	June 30, 2017				Dec. 31, 2016					June 30, 2016
	Fair Value		Net Unrealized Gain (Loss)		Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. Treasury	$	—	$	—	$	—	$	—		$	25,306	$	(43	)
U.S. government agency residential mortgage-backed securities	445,169		1,247		77,046		(1,777		)	237,959		4,476
Total	$	445,169	$	1,247	$	77,046	$	(1,777	)	$	263,265	$	4,433

Restricted Equity Securities

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



	June 30, 2017		Dec. 31, 2016		June 30, 2016
Federal Reserve stock	$	36,676	$	36,498	$	36,283
Federal Home Loan Bank stock	274,113		270,541		283,155
Other	244		201		201
Total	$	311,033	$	307,240	$	319,639

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(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.

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 as an economic hedge of trading securities. As of June 30, 2017, derivative contracts under the internal risk management programs were primarily used as part of the economic hedges of the change in the fair value of the mortgage servicing rights and trading securities.

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.

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The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at June 30, 2017 (in thousands):



	Assets
	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	$	16,174,687	$	57,948	$	(29,034	)	$	28,914	$	—		$	28,914
Interest rate swaps	1,450,193		29,932		—			29,932		(2,206		)	27,726
Energy contracts	891,480		56,824		(20,546		)	36,278		(21,267		)	15,011
Agricultural contracts	45,250		3,541		(1,027		)	2,514		—			2,514
Foreign exchange contracts	169,529		162,429		—			162,429		(7		)	162,422
Equity option contracts	100,159		4,437		—			4,437		(920		)	3,517
Total customer risk management programs	18,831,298		315,111		(50,607		)	264,504		(24,400		)	240,104
Internal risk management programs	10,680,498		40,185		—			40,185		—			40,185
Total derivative contracts	$	29,511,796	$	355,296	$	(50,607	)	$	304,689	$	(24,400	)	$	280,289

	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	$	16,174,687	$	53,829	$	(29,034	)	$	24,795	$	—		$	24,795
Interest rate swaps	1,450,193		29,982		—			29,982		(15,396		)	14,586
Energy contracts	874,625		53,895		(20,546		)	33,349		—			33,349
Agricultural contracts	45,262		3,538		(1,027		)	2,511		(2,511		)	—
Foreign exchange contracts	169,553		162,276		—			162,276		(3,188		)	159,088
Equity option contracts	100,159		4,437		—			4,437		—			4,437
Total customer risk management programs	18,814,479		307,957		(50,607		)	257,350		(21,095		)	236,255
Internal risk management programs	8,310,950		49,564		—			49,564		—			49,564
Total derivative contracts	$	27,125,429	$	357,521	$	(50,607	)	$	306,914	$	(21,095	)	$	285,819


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

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The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2016 (in thousands):



	Assets
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	16,949,152	$	180,695	$	(60,555	)	$	120,140	$	—		$	120,140
Interest rate swaps	1,403,408		34,442		—			34,442		(4,567		)	29,875
Energy contracts	835,566		64,140		(28,298		)	35,842		(71		)	35,771
Agricultural contracts	53,209		1,382		(515		)	867		—			867
Foreign exchange contracts	580,886		494,349		—			494,349		(5,183		)	489,166
Equity option contracts	100,924		4,357		—			4,357		(730		)	3,627
Total customer risk management programs	19,923,145		779,365		(89,368		)	689,997		(10,551		)	679,446
Internal risk management programs	2,514,169		10,426		—			10,426		—			10,426
Total derivative contracts	$	22,437,314	$	789,791	$	(89,368	)	$	700,423	$	(10,551	)	$	689,872

	Liabilities
	Notional ¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	16,637,532	$	176,928	$	(60,555	)	$	116,373	$	—		$	116,373
Interest rate swaps	1,403,408		34,442		—			34,442		(11,977		)	22,465
Energy contracts	820,365		64,306		(28,298		)	36,008		(31,534		)	4,474
Agricultural contracts	53,216		1,365		(515		)	850		(769		)	81
Foreign exchange contracts	580,712		494,695		—			494,695		(3,630		)	491,065
Equity option contracts	100,924		4,357		—			4,357		—			4,357
Total customer risk management programs	19,596,157		776,093		(89,368		)	686,725		(47,910		)	638,815
Internal risk management programs	2,582,202		25,716		—			25,716		—			25,716
Total derivative contracts	$	22,178,359	$	801,809	$	(89,368	)	$	712,441	$	(47,910	)	$	664,531


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

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The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at June 30, 2016 (in thousands):



	Assets
	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	$	18,774,134	$	183,118	$	(67,383	)	$	115,735	$	—		$	115,735
Interest rate swaps	1,299,985		54,978		—			54,978		(1,100		)	53,878
Energy contracts	757,669		59,103		(33,996		)	25,107		(155		)	24,952
Agricultural contracts	50,848		2,488		(1,609		)	879		(37		)	842
Foreign exchange contracts	701,436		675,804		—			675,804		(5,054		)	670,750
Equity option contracts	116,901		4,236		—			4,236		(478		)	3,758
Total customer risk management programs	21,700,973		979,727		(102,988		)	876,739		(6,824		)	869,915
Internal risk management programs	1,337,000		13,758		—			13,758		—			13,758
Total derivative contracts	$	23,037,973	$	993,485	$	(102,988	)	$	890,497	$	(6,824	)	$	883,673

	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	$	18,662,334	$	179,443	$	(67,383	)	$	112,060	$	(103,724	)	$	8,336
Interest rate swaps	1,299,985		55,404		—			55,404		(32,597		)	22,807
Energy contracts	734,538		58,033		(33,996		)	24,037		(11,784		)	12,253
Agricultural contracts	50,843		2,476		(1,609		)	867		—			867
Foreign exchange contracts	701,219		675,383		—			675,383		(4,723		)	670,660
Equity option contracts	116,901		4,236		—			4,236		—			4,236
Total customer risk management programs	21,565,820		974,975		(102,988		)	871,987		(152,828		)	719,159
Internal risk management programs	—		—		—			—		—			—
Total derivative contracts	$	21,565,820	$	974,975	$	(102,988	)	$	871,987	$	(152,828	)	$	719,159


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

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



	Three Months Ended
	June 30, 2017				June 30, 2016
	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	$	9,205	$	—	$	9,862		$	—
Interest rate swaps	665		—		723			—
Energy contracts	1,666		—		2,749			—
Agricultural contracts	11		—		32			—
Foreign exchange contracts	90		—		134			—
Equity option contracts	—		—		—			—
Total customer risk management programs	11,637		—		13,500			—
Internal risk management programs	6,485		3,241		(9		)	10,766
Total derivative contracts	$	18,122	$	3,241	$	13,491		$	10,766



	Six Months Ended
	June 30, 2017				June 30, 2016
	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	$	17,232	$	—	$	17,302		$	—
Interest rate swaps	1,124		—		1,048			—
Energy contracts	4,539		—		3,445			—
Agricultural contracts	20		—		61			—
Foreign exchange contracts	360		—		512			—
Equity option contracts	—		—		—			—
Total customer risk management programs	23,275		—		22,368			—
Internal risk management programs	6,018		2,791		(9		)	17,904
Total derivative contracts	$	29,293	$	2,791	$	22,359		$	17,904

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(4) Loans and Allowances for Credit Losses

Loans

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

Interest is accrued at the applicable interest rate on the principal amount outstanding. Loans are placed on nonaccruing status when, in the opinion of management, full collection of principal or interest is uncertain. Internally risk graded loans are individually evaluated for nonaccruing status quarterly. Non-risk graded loans are generally placed on nonaccruing status when more than 90 days past due or within 60 days of being notified of the borrower's bankruptcy filing. Interest previously accrued but not collected is charged against interest income when the loan is placed on nonaccruing status. Payments on nonaccruing loans are applied to principal or recognized as interest income, according to management’s judgment as to the collectability of principal. Loans may be returned to accruing status when, in the opinion of management, full collection of principal and interest, including principal previously charged off, is probable based on improvements in the borrower’s financial condition or a sustained period of performance.

Loans to borrowers experiencing financial difficulties may be modified in troubled debt restructurings ("TDRs"). All TDRs are classified as nonaccruing, 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.

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.

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

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

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



	June 30, 2017								December 31, 2016
	Fixed Rate		Variable Rate		Non-accrual		Total		Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	2,198,066	$	8,242,732	$	197,157	$	10,637,955	$	2,327,085	$	7,884,786	$	178,953	$	10,390,824
Commercial real estate	594,542		3,090,275		3,775		3,688,592		624,187		3,179,338		5,521		3,809,046
Residential mortgage	1,597,587		297,376		44,235		1,939,198		1,647,357		256,255		46,220		1,949,832
Personal	150,728		766,900		272		917,900		154,971		684,697		290		839,958
Total	$	4,540,923	$	12,397,283	$	245,439	$	17,183,645	$	4,753,600	$	12,005,076	$	230,984	$	16,989,660
Accruing loans past due (90 days)¹							$	1,414							$	5



	June 30, 2016
	Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	1,994,415	$	8,180,033	$	181,989	$	10,356,437
Commercial real estate	612,822		2,961,364		7,780		3,581,966
Residential mortgage	1,586,116		237,746		57,061		1,880,923
Personal	109,447		477,622		354		587,423
Total	$	4,302,800	$	11,856,765	$	247,184	$	16,406,749
Accruing loans past due (90 days)¹							$	2,899


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

At June 30, 2017, $5.7 billion or 33 percent of our total loan portfolio is to businesses and individuals attributed to the Texas market and $3.4 billion or 20 percent of the total loan portfolio is to businesses and individuals attributed to the Oklahoma market. These geographic concentrations subject the loan portfolio to the general economic conditions within these areas.

Commercial

Commercial loans represent loans for working capital, facilities acquisition or expansion, purchases of equipment and other needs of commercial customers primarily located within our geographical footprint. Commercial loans are underwritten individually and represent 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 June 30, 2017, commercial loans attributed to the Texas market totaled $3.6 billion or 33 percent of the commercial loan portfolio segment and commercial loans attributed to the Oklahoma market totaled $2.1 billion or 19 percent of the commercial loan portfolio segment.

The commercial loan portfolio segment is further divided into loan classes. The energy loan class totaled $2.8 billion or 17 percent of total loans at June 30, 2017, including $2.4 billion of outstanding loans to energy producers. Approximately 58 percent of committed production loans are secured by properties primarily producing oil and 42 percent are secured by properties producing natural gas. The services loan class totaled $3.0 billion or 17 percent of total loans at June 30, 2017. 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, finance and insurance, not-for-profit, educational services and loans to entities providing services for real estate and construction. The healthcare loan class totaled $2.2 billion or 13 percent of total loans at June 30, 2017. 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.

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Commercial Real Estate

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

At June 30, 2017, 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 three to ten years, then adjust annually thereafter.

At June 30, 2017, residential mortgage loans included $192 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 $758 million at June 30, 2017. Approximately 65 percent of the home equity loan portfolio is comprised of first lien loans and 35 percent of the home equity portfolio is comprised of junior lien loans. Junior lien loans are distributed 49 percent to amortizing term loans and 51 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 5 year revolving period followed by a 15 year term of amortizing repayments. Interest-only home equity loans may not be extended for any additional revolving time. All other home equity loans may be extended at management's discretion for an additional 5 year revolving term, subject to an update of certain credit information.

Credit Commitments

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At June 30, 2017, outstanding commitments totaled $9.6 billion. Because some commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial uses the same credit policies in making commitments as it does loans.

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

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Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally, BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the underlying loan commitment. At June 30, 2017, outstanding standby letters of credit totaled $615 million. Commercial letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is consummated. At June 30, 2017, outstanding commercial letters of credit totaled $3.2 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 six months ended June 30, 2017.

Loans are considered to be impaired when it becomes probable that BOK Financial will be unable to collect all amounts due according to the contractual terms of the loan agreements. Internally risk graded loans are evaluated individually for impairment. Substantially all commercial and commercial real estate loans and certain residential mortgage and consumer loans are risk graded based on evaluation of the borrowers' ability to repay. Certain commercial loans and most residential mortgage and consumer loans are small balance, homogeneous pools of loans that are not risk graded. Non-risk graded loans are identified as impaired based on performance status. Generally, non-risk graded loans 90 days or more past due or modified in a TDR or in bankruptcy are considered to be impaired.

Specific allowances for impaired loans are measured by an evaluation of estimated future cash flows discounted at the loans’ initial effective interest rate or the fair value of collateral for certain collateral dependent loans. Collateral value of real property is generally based on third party appraisals that conform to Uniform Standards of Professional Appraisal Practice, less estimated selling costs. Appraised values are on an "as-is" basis and are generally not adjusted by the Company. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values have declined. Collateral value of mineral rights is generally determined by our internal staff of engineers based on projected cash flows under current market conditions. Collateral values and available cash resources that support impaired loans are evaluated quarterly. Historical statistics may be used as a practical way to estimate impairment in limited situations, such as when a collateral dependent loan is identified as impaired at the end of a reporting period, until an updated appraisal of collateral value is received or a full assessment of future cash flows is completed. Estimates of future cash flows and collateral values require significant judgments and may be volatile.

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

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

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

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

The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the three months ended June 30, 2017 is summarized as follows (in thousands):



	Commercial			Commercial Real Estate			Residential Mortgage			Personal			Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	137,616		$	58,343		$	18,177		$	7,247		$	27,327	$	248,710
Provision for loan losses	1,546			105			(47		)	1,358			47		3,009
Loans charged off	(1,703		)	(76		)	(40		)	(1,053		)	—		(2,872		)
Recoveries	283			208			169			554			—		1,214
Ending balance	$	137,742		$	58,580		$	18,259		$	8,106		$	27,374	$	250,061
Allowance for off-balance sheet credit losses:
Beginning balance	$	9,288		$	106		$	40		$	6		$	—	$	9,440
Provision for off-balance sheet credit losses	(2,987		)	(22		)	(2		)	2			—		(3,009		)
Ending balance	$	6,301		$	84		$	38		$	8		$	—	$	6,431

Total provision for credit losses	$	(1,441	)	$	83		$	(49	)	$	1,360		$	47	$	—

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The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the six months ended June 30, 2017 is summarized as follows (in thousands):



	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	(1,809		)	6,964			(86		)	570			(826		)	4,813
Loans charged off	(2,127		)	(76		)	(276		)	(2,546		)	—			(5,025		)
Recoveries	1,465			943			397			1,309			—			4,114
Ending balance	$	137,742		$	58,580		$	18,259		$	8,106		$	27,374		$	250,061
Allowance for off-balance sheet credit losses:
Beginning balance	$	11,063		$	123		$	50		$	8		$	—		$	11,244
Provision for off-balance sheet credit losses	(4,762		)	(39		)	(12		)	—			—			(4,813		)
Ending balance	$	6,301		$	84		$	38		$	8		$	—		$	6,431

Total provision for credit losses	$	(6,571	)	$	6,925		$	(98	)	$	570		$	(826	)	$	—



	Commercial			Commercial Real Estate			Residential Mortgage			Personal			Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	139,793		$	44,453		$	18,467		$	5,022		$	25,421	$	233,156
Provision for loan losses	12,478			2,010			368			1,443			1,263		17,562
Loans charged off	(7,355		)	—			(345		)	(1,145		)	—		(8,845		)
Recoveries	223			282			200			681			—		1,386
Ending balance	$	145,139		$	46,745		$	18,690		$	6,001		$	26,684	$	243,259
Allowance for off-balance sheet credit losses:
Beginning balance	$	6,319		$	228		$	58		$	2		$	—	$	6,607
Provision for off-balance sheet credit losses	2,433			(25		)	4			26			—		2,438
Ending balance	$	8,752		$	203		$	62		$	28		$	—	$	9,045

Total provision for credit losses	$	14,911		$	1,985		$	372		$	1,469		$	1,263	$	20,000

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	Commercial			Commercial Real Estate		Residential Mortgage			Personal			Nonspecific Allowance			Total
Allowance for loan losses:
Beginning balance	$	130,334		$	41,391	$	19,509		$	4,164		$	30,126		$	225,524
Provision for loan losses	43,575			4,987		(363		)	2,909			(3,442		)	47,666
Loans charged off	(29,481		)	—		(819		)	(2,536		)	—			(32,836		)
Recoveries	711			367		363			1,464			—			2,905
Ending balance	$	145,139		$	46,745	$	18,690		$	6,001		$	26,684		$	243,259
Allowance for off-balance sheet credit losses:
Beginning balance	$	1,506		$	153	$	30		$	22		$	—		$	1,711
Provision for off-balance sheet credit losses	7,246			50		32			6			—			7,334
Ending balance	$	8,752		$	203	$	62		$	28		$	—		$	9,045

Total provision for credit losses	$	50,821		$	5,037	$	(331	)	$	2,915		$	(3,442	)	$	55,000

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 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	$	10,440,798	$	128,049	$	197,157	$	9,693	$	10,637,955	$	137,742
Commercial real estate	3,684,817		58,580		3,775		—		3,688,592		58,580
Residential mortgage	1,894,963		18,259		44,235		—		1,939,198		18,259
Personal	917,628		8,106		272		—		917,900		8,106
Total	16,938,206		212,994		245,439		9,693		17,183,645		222,687

Nonspecific allowance	—		—		—		—		—		27,374

Total	$	16,938,206	$	212,994	$	245,439	$	9,693	$	17,183,645	$	250,061

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at December 31, 2016 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	$	10,211,871	$	139,416	$	178,953	$	797	$	10,390,824	$	140,213
Commercial real estate	3,803,525		50,749		5,521		—		3,809,046		50,749
Residential mortgage	1,903,612		18,178		46,220		46		1,949,832		18,224
Personal	839,668		8,773		290		—		839,958		8,773
Total	16,758,676		217,116		230,984		843		16,989,660		217,959

Nonspecific allowance	—		—		—		—		—		28,200

Total	$	16,758,676	$	217,116	$	230,984	$	843	$	16,989,660	$	246,159

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The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at June 30, 2016 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	$	10,174,448	$	140,911	$	181,989	$	4,228	$	10,356,437	$	145,139
Commercial real estate	3,574,186		46,727		7,780		18		3,581,966		46,745
Residential mortgage	1,823,862		18,626		57,061		64		1,880,923		18,690
Personal	587,069		6,001		354		—		587,423		6,001
Total	16,159,565		212,265		247,184		4,310		16,406,749		216,575

Nonspecific allowance	—		—		—		—		—		26,684

Total	$	16,159,565	$	212,265	$	247,184	$	4,310	$	16,406,749	$	243,259

Credit Quality Indicators

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

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at June 30, 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	$	10,612,477	$	136,819	$	25,478	$	923	$	10,637,955	$	137,742
Commercial real estate	3,688,592		58,580		—		—		3,688,592		58,580
Residential mortgage	216,007		2,976		1,723,191		15,283		1,939,198		18,259
Personal	824,318		5,742		93,582		2,364		917,900		8,106
Total	15,341,394		204,117		1,842,251		18,570		17,183,645		222,687

Nonspecific allowance	—		—		—		—		—		27,374

Total	$	15,341,394	$	204,117	$	1,842,251	$	18,570	$	17,183,645	$	250,061

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The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at December 31, 2016 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	10,360,725	$	139,293	$	30,099	$	920	$	10,390,824	$	140,213
Commercial real estate	3,809,046		50,749		—		—		3,809,046		50,749
Residential mortgage	243,703		2,893		1,706,129		15,331		1,949,832		18,224
Personal	744,602		5,035		95,356		3,738		839,958		8,773
Total	15,158,076		197,970		1,831,584		19,989		16,989,660		217,959

Nonspecific allowance	—		—		—		—		—		28,200

Total	$	15,158,076	$	197,970	$	1,831,584	$	19,989	$	16,989,660	$	246,159

The allowance for loan losses and recorded investment of the related loans by portfolio segment for risk graded and non-risk graded loans at June 30, 2016 is as follows (in thousands):



	Internally Risk Graded				Non-Graded				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	10,331,701	$	144,217	$	24,736	$	922	$	10,356,437	$	145,139
Commercial real estate	3,581,966		46,745		—		—		3,581,966		46,745
Residential mortgage	202,520		2,995		1,678,403		15,695		1,880,923		18,690
Personal	500,240		3,624		87,183		2,377		587,423		6,001
Total	14,616,427		197,581		1,790,322		18,994		16,406,749		216,575

Nonspecific allowance	—		—		—		—		—		26,684

Total	$	14,616,427	$	197,581	$	1,790,322	$	18,994	$	16,406,749	$	243,259

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.

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The following table summarizes the Company’s loan portfolio at June 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	$	2,376,368	$	120,473	$	226,407	$	123,992	$	—	$	—	$	2,847,240
Services	2,921,510		12,452		17,111		7,754		—		—		2,958,827
Wholesale/retail	1,507,063		16,224		9,788		10,620		—		—		1,543,695
Manufacturing	513,442		6,540		16,499		9,656		—		—		546,137
Healthcare	2,130,339		33,554		33,120		24,505		—		—		2,221,518
Other commercial and industrial	453,712		2,961		17,861		20,526		25,374		104		520,538
Total commercial	9,902,434		192,204		320,786		197,053		25,374		104		10,637,955

Commercial real estate:
Residential construction and land development	138,790		—		751		2,051		—		—		141,592
Retail	720,730		1,774		—		301		—		—		722,805
Office	859,722		2,855		—		396		—		—		862,973
Multifamily	947,950		—		4,420		10		—		—		952,380
Industrial	693,635		—		—		—		—		—		693,635
Other commercial real estate	314,187		—		3		1,017		—		—		315,207
Total commercial real estate	3,675,014		4,629		5,174		3,775		—		—		3,688,592

Residential mortgage:
Permanent mortgage	212,563		1,693		478		1,273		750,891		22,142		989,040
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		—		182,677		9,052		191,729
Home equity	—		—		—		—		746,661		11,768		758,429
Total residential mortgage	212,563		1,693		478		1,273		1,680,229		42,962		1,939,198

Personal	823,304		49		877		88		93,398		184		917,900

Total	$	14,613,315	$	198,575	$	327,315	$	202,189	$	1,799,001	$	43,250	$	17,183,645

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The following table summarizes the Company’s loan portfolio at December 31, 2016 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	$	1,937,790	$	119,583	$	307,996	$	132,499	$	—	$	—	$	2,497,868
Services	3,052,002		10,960		37,855		8,173		—		—		3,108,990
Wholesale/retail	1,535,463		16,886		13,062		11,407		—		—		1,576,818
Manufacturing	468,314		26,532		15,198		4,931		—		—		514,975
Healthcare	2,140,458		44,472		16,161		825		—		—		2,201,916
Other commercial and industrial	433,789		5,309		—		21,060		30,041		58		490,257
Total commercial	9,567,816		223,742		390,272		178,895		30,041		58		10,390,824

Commercial real estate:
Residential construction and land development	131,630		—		470		3,433		—		—		135,533
Retail	756,418		4,745		399		326		—		—		761,888
Office	798,462		—		—		426		—		—		798,888
Multifamily	898,800		—		4,434		38		—		—		903,272
Industrial	871,673		—		—		76		—		—		871,749
Other commercial real estate	336,488		—		6		1,222		—		—		337,716
Total commercial real estate	3,793,471		4,745		5,309		5,521		—		—		3,809,046

Residential mortgage:
Permanent mortgage	238,769		1,186		2,331		1,417		741,679		21,438		1,006,820
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		—		187,541		11,846		199,387
Home equity	—		—		—		—		732,106		11,519		743,625
Total residential mortgage	238,769		1,186		2,331		1,417		1,661,326		44,803		1,949,832

Personal	743,451		—		1,054		97		95,163		193		839,958

Total	$	14,343,507	$	229,673	$	398,966	$	185,930	$	1,786,530	$	45,054	$	16,989,660

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The following table summarizes the Company’s loan portfolio at June 30, 2016 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	$	2,031,955	$	197,531	$	421,025	$	168,145	$	—	$	—	$	2,818,656
Services	2,805,307		6,253		9,916		9,388		—		—		2,830,864
Wholesale/retail	1,478,966		24,595		26,624		2,772		—		—		1,532,957
Manufacturing	556,741		18,757		19,612		293		—		—		595,403
Healthcare	2,011,934		29,420		8,917		875		—		—		2,051,146
Other commercial and industrial	478,169		24,053		—		453		24,673		63		527,411
Total commercial	9,363,072		300,609		486,094		181,926		24,673		63		10,356,437

Commercial real estate:
Residential construction and land development	152,343		—		972		4,261		—		—		157,576
Retail	787,779		5,962		413		1,265		—		—		795,419
Office	767,296		906		304		606		—		—		769,112
Multifamily	781,058		—		6,077		65		—		—		787,200
Industrial	645,510		—		—		76		—		—		645,586
Other commercial real estate	425,558		—		8		1,507		—		—		427,073
Total commercial real estate	3,559,544		6,868		7,774		7,780		—		—		3,581,966

Residential mortgage:
Permanent mortgage	194,962		1,197		3,406		2,955		742,214		24,273		969,007
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		—		172,991		19,741		192,732
Home equity	—		—		—		—		709,092		10,092		719,184
Total residential mortgage	194,962		1,197		3,406		2,955		1,624,297		54,106		1,880,923

Personal	496,534		—		3,590		116		86,945		238		587,423

Total	$	13,614,112	$	308,674	$	500,864	$	192,777	$	1,735,915	$	54,407	$	16,406,749

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Impaired Loans

Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. This includes all nonaccruing loans, all loans modified in a TDR and all loans repurchased from GNMA pools.

A summary of impaired loans follows (in thousands):



	As of										For the				For the
	June 30, 2017										Three Months Ended				Six Months Ended
			Recorded Investment								June 30, 2017				June 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	$	141,091	$	123,992	$	56,988	$	67,004	$	8,874	$	117,209	$	—	$	128,246	$	—
Services	11,209		7,754		7,754		—		—		7,734		—		7,964		—
Wholesale/retail	17,392		10,620		10,620		—		—		10,855		—		11,013		—
Manufacturing	10,223		9,656		9,656		—		—		7,781		—		7,293		—
Healthcare	24,795		24,505		18,883		5,622		802		12,707		—		12,665		—
Other commercial and industrial	28,933		20,630		20,609		21		17		20,706		—		20,874		—
Total commercial	233,643		197,157		124,510		72,647		9,693		176,992		—		188,055		—

Commercial real estate:
Residential construction and land development	3,676		2,051		2,051		—		—		2,334		—		2,742		—
Retail	518		301		301		—		—		308		—		314		—
Office	499		396		396		—		—		404		—		411		—
Multifamily	1,000		10		10		—		—		17		—		24		—
Industrial	—		—		—		—		—		38		—		38		—
Other commercial real estate	1,212		1,017		1,017		—		—		1,024		—		1,119		—
Total commercial real estate	6,905		3,775		3,775		—		—		4,125		—		4,648		—

Residential mortgage:
Permanent mortgage	28,603		23,415		23,415		—		—		23,801		307		23,135		598
Permanent mortgage guaranteed by U.S. government agencies¹	197,659		191,729		191,729		—		—		202,946		2,021		205,159		3,925
Home equity	13,064		11,768		11,768		—		—		11,776		—		11,643		—
Total residential mortgage	239,326		226,912		226,912		—		—		238,523		2,328		239,937		4,523

Personal	307		272		272		—		—		253		—		281		—

Total	$	480,181	$	428,116	$	355,469	$	72,647	$	9,693	$	419,893	$	2,328	$	432,921	$	4,523


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At June 30, 2017, $9.1 million of these loans were nonaccruing and $183 million were accruing based on the guarantee by U.S. government agencies.

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

- 80 -

A summary of impaired loans at December 31, 2016 follows (in thousands):



			Recorded Investment
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance
Commercial:
Energy	$	146,897	$	132,499	$	121,418	$	11,081	$	762
Services	11,723		8,173		8,173		—		—
Wholesale/retail	17,669		11,407		11,407		—		—
Manufacturing	5,320		4,931		4,931		—		—
Healthcare	1,147		825		825		—		—
Other commercial and industrial	29,006		21,118		21,083		35		35
Total commercial	211,762		178,953		167,837		11,116		797

Commercial real estate:
Residential construction and land development	4,951		3,433		3,433		—		—
Retail	530		326		326		—		—
Office	521		426		426		—		—
Multifamily	1,000		38		38		—		—
Industrial	76		76		76		—		—
Other commercial real estate	7,349		1,222		1,222		—		—
Total commercial real estate	14,427		5,521		5,521		—		—

Residential mortgage:
Permanent mortgage	28,830		22,855		22,809		46		46
Permanent mortgage guaranteed by U.S. government agencies¹	205,564		199,387		199,387		—		—
Home equity	12,611		11,519		11,519		—		—
Total residential mortgage	247,005		233,761		233,715		46		46

Personal	332		290		290		—		—

Total	$	473,526	$	418,525	$	407,363	$	11,162	$	843


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, 2016, $12 million of these loans were nonaccruing and $188 million were accruing based on the guarantee by U.S. government agencies.

- 81 -

A summary of impaired loans at June 30, 2016 follows (in thousands):



											For the				For the
	As of June 30, 2016										Three Months Ended				Six Months Ended
			Recorded Investment								June 30, 2016				June 30, 2016
	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	$	202,369	$	168,145	$	136,264	$	31,881	$	4,228	$	163,849	$	—	$	97,923	$	—
Services	12,780		9,388		9,388		—		—		9,450		—		9,839		—
Wholesale/retail	8,697		2,772		2,772		—		—		3,229		—		2,846		—
Manufacturing	650		293		293		—		—		303		—		312		—
Healthcare	1,175		875		875		—		—		949		—		973		—
Other commercial and industrial	8,186		516		516		—		—		542		—		569		—
Total commercial	233,857		181,989		150,108		31,881		4,228		178,322		—		112,462		—

Commercial real estate:
Residential construction and land development	7,177		4,261		4,261		—		—		4,525		—		4,335		—
Retail	1,914		1,265		1,265		—		—		1,283		—		1,292		—
Office	907		606		606		—		—		618		—		628		—
Multifamily	1,000		65		65		—		—		157		—		169		—
Industrial	76		76		76		—		—		76		—		76		—
Other commercial real estate	7,445		1,507		1,355		152		18		1,865		—		1,890		—
Total commercial real estate	18,519		7,780		7,628		152		18		8,524		—		8,390		—

Residential mortgage:
Permanent mortgage	33,793		27,228		27,117		111		64		27,362		304		28,106		631
Permanent mortgage guaranteed by U.S. government agencies¹	198,534		192,732		192,732		—		—		191,430		2,023		195,563		3,795
Home equity	10,964		10,092		10,092		—		—		10,311		—		10,224		—
Total residential mortgage	243,291		230,052		229,941		111		64		229,103		2,327		233,893		4,426

Personal	1,174		354		354		—		—		342		—		409		—

Total	$	496,841	$	420,175	$	388,031	$	32,144	$	4,310	$	416,291	$	2,327	$	355,154	$	4,426


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At June 30, 2016, $20 million of these loans were nonaccruing and $173 million were accruing based on the guarantee by U.S. government agencies.

- 82 -

Troubled Debt Restructurings

A summary of troubled debt restructurings ("TDRs") by accruing status as of June 30, 2017 is as follows (in thousands):



	As of June 30, 2017								Amounts Charged Off During:
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended June 30, 2017		Six Months Ended June 30, 2017
Nonaccruing TDRs:

Commercial:
Energy	$	22,466	$	12,692	$	9,774	$	4,308	$	—	$	—
Services	7,208		6,561		647		—		3		3
Wholesale/retail	10,524		10,524		—		—		—		—
Manufacturing	195		195		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	20,531		35		20,496		—		—		—
Total commercial	60,924		30,007		30,917		4,308		3		3

Commercial real estate:
Residential construction and land development	381		145		236		—		—		—
Retail	301		301		—		—		—		—
Office	121		—		121		—		—		—
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other commercial real estate	365		365		—		—		—		—
Total commercial real estate	1,168		811		357		—		—		—

Residential mortgage:
Permanent mortgage	14,284		9,939		4,345		—		—		—
Permanent mortgage guaranteed by U.S. government agencies	5,962		1,176		4,786		—		—		—
Home equity	5,549		4,239		1,310		—		—		31
Total residential mortgage	25,795		15,354		10,441		—		—		31

Personal	228		228		—		—		7		8

Total nonaccruing TDRs	$	88,115	$	46,400	$	41,715	$	4,308	$	10	$	42

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	80,624		24,506		56,118		—		—		—

Total TDRs	$	168,739	$	70,906	$	97,833	$	4,308	$	10	$	42

- 83 -

A summary of troubled debt restructurings by accruing status as of December 31, 2016 is as follows (in thousands):



	As of
	December 31, 2016
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance
Nonaccruing TDRs:

Commercial:
Energy	$	16,893	$	10,867	$	6,026	$	—
Services	7,527		6,830		697		—
Wholesale/retail	11,291		11,251		40		—
Manufacturing	224		224		—		—
Healthcare	607		—		607		—
Other commercial and industrial	337		53		284		—
Total commercial	36,879		29,225		7,654		—

Commercial real estate:
Residential construction and land development	690		97		593		—
Retail	326		326		—		—
Office	143		143		—		—
Multifamily	—		—		—		—
Industrial	—		—		—		—
Other commercial real estate	548		548		—		—
Total commercial real estate	1,707		1,114		593		—

Residential mortgage:
Permanent mortgage	14,876		10,175		4,701		46
Permanent mortgage guaranteed by U.S. government agencies	6,702		2,241		4,461		—
Home equity	5,346		4,458		888		—
Total residential mortgage	26,924		16,874		10,050		46

Personal	237		236		1		—

Total nonaccuring TDRs	$	65,747	$	47,449	$	18,298	$	46

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	81,370		27,289		54,081		—

Total TDRs	$	147,117	$	74,738	$	72,379	$	46

- 84 -

A summary of troubled debt restructurings by accruing status as of June 30, 2016 is as follows (in thousands):



	As of June 30, 2016								Amounts Charged Off During:
	Recorded Investment		Performing in Accordance With Modified Terms		Not Performing in Accordance With Modified Terms		Specific Allowance		Three Months Ended June 30, 2016		Six Months Ended June 30, 2016
Nonaccruing TDRs:

Commercial:
Energy	$	2,246	$	—	$	2,246	$	—	$	500	$	500
Services	8,610		7,853		757		—		—		—
Wholesale/retail	2,467		2,427		40		—		—		—
Manufacturing	253		253		—		—		—		—
Healthcare	640		640		—		—		—		—
Other commercial and industrial	516		63		453		—		—		57
Total commercial	14,732		11,236		3,496		—		500		557

Commercial real estate:
Residential construction and land development	1,601		1,079		522		—		—		—
Retail	1,264		907		357		—		—		—
Office	152		152		—		—		—		—
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other commercial real estate	793		372		421		—		—		—
Total commercial real estate	3,810		2,510		1,300		—		—		—

Residential mortgage:
Permanent mortgage	17,367		12,462		4,905		64		37		52
Permanent mortgage guaranteed by U.S. government agencies	9,709		2,024		7,685		—		—		—
Home equity	4,763		4,139		624		—		60		126
Total residential mortgage	31,839		18,625		13,214		64		97		178

Personal	298		276		22		—		3		9

Total nonaccruing TDRs	$	50,679	$	32,647	$	18,032	$	64	$	600	$	744

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	78,806		27,999		50,807		—		—		—

Total TDRs	$	129,485	$	60,646	$	68,839	$	64	$	600	$	744

- 85 -

Troubled debt restructurings generally consist of interest rate concessions, payment stream concessions or a combination of concessions to distressed borrowers. The following tables detail the recorded balance of loans at June 30, 2017 by class that were restructured during the three months ended June 30, 2017 by primary type of concession (in thousands):



	Three Months Ended June 30, 2017
	Accruing						Nonaccrual						Total
	Payment Stream		Combination & Other		Total		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		—		—		—		—
Wholesale/retail	—		—		—		—		626		626		626
Manufacturing	—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		20,242		—		20,242		20,242
Total commercial	—		—		—		20,242		626		20,868		20,868

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

Residential mortgage:
Permanent mortgage	—		—		—		138		53		191		191
Permanent mortgage guaranteed by U.S. government agencies	10,410		1,568		11,978		223		—		223		12,201
Home equity	—		—		—		26		559		585		585
Total residential mortgage	10,410		1,568		11,978		387		612		999		12,977

Personal	—		—		—		—		47		47		47

Total	$	10,410	$	1,568	$	11,978	$	20,629	$	1,285	$	21,914	$	33,892

- 86 -



	Six Months Ended June 30, 2017
	Accruing							Nonaccrual							Total
		Payment Stream		Combination & Other		Total			Payment Stream		Combination & Other		Total
Commercial:
Energy		$	—	$	—	$	—		$	13,010	$	—	$	13,010	$	13,010
Services		—		—		—			—		—		—		—
Wholesale/retail		—		—		—			—		626		626		626
Manufacturing		—		—		—			—		—		—		—
Healthcare		—		—		—			—		—		—		—
Other commercial and industrial		—		—		—			20,242		—		20,242		20,242
Total commercial		—		—		—			33,252		626		33,878		33,878

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

Residential mortgage:
Permanent mortgage		—		—		—			153		84		237		237
Permanent mortgage guaranteed by U.S. government agencies		14,883		2,586		17,469			224		85		309		17,778
Home equity		—		—		—			149		1,053		1,202		1,202
Total residential mortgage		14,883		2,586		17,469			526		1,222		1,748		19,217

Personal		—		—		—			—		51		51		51

Total		$	14,883	$	2,586	$	17,469		$	33,778	$	1,899	$	35,677	$	53,146

- 87 -

Troubled debt restructurings generally consist of interest rate concessions, payment stream concessions or a combination of concessions to distressed borrowers. The following tables detail the recorded balance of loans by class that were restructured during three months ended June 30, 2016 by primary type of concession (in thousands):



	Three Months Ended June 30, 2016
	Accruing						Nonaccrual						Total
	Payment Stream		Combination & Other		Total		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		—		—		—		—
Wholesale/retail	—		—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—		—
Total commercial	—		—		—		—		—		—		—

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

Residential mortgage:
Permanent mortgage	—		—		—		684		1,183		1,867		1,867
Permanent mortgage guaranteed by U.S. government agencies	2,783		4,455		7,238		—		625		625		7,863
Home equity	—		—		—		48		329		377		377
Total residential mortgage	2,783		4,455		7,238		732		2,137		2,869		10,107

Personal	—		—		—		—		65		65		65

Total	$	2,783	$	4,455	$	7,238	$	732	$	2,202	$	2,934	$	10,172

- 88 -



	Six Months Ended June 30, 2016
	Accruing						Nonaccrual						Total
	Payment Stream		Combination & Other		Total		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	501	$	—	$	501	$	501
Services	—		—		—		—		—		—		—
Wholesale/retail	—		—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—		—
Total commercial	—		—		—		501		—		501		501

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

Residential mortgage:
Permanent mortgage	—		—		—		1,046		1,244		2,290		2,290
Permanent mortgage guaranteed by U.S. government agencies	6,625		7,818		14,443		—		625		625		15,068
Home equity	—		—		—		48		791		839		839
Total residential mortgage	6,625		7,818		14,443		1,094		2,660		3,754		18,197

Personal	—		—		—		—		72		72		72

Total	$	6,625	$	7,818	$	14,443	$	1,595	$	2,732	$	4,327	$	18,770

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The following table summarizes, by loan class, the recorded investment at June 30, 2017 and 2016, respectively, of loans modified as TDRs within the previous 12 months and for which there was a payment default during the three months ended June 30, 2017 and 2016, respectively (in thousands):



	Three Months Ended June 30, 2017						Six Months Ended June 30, 2017
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	9,774	$	9,774	$	—	$	9,774	$	9,774
Services	—		—		—		—		—		—
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	—		20,242		20,242		—		20,242		20,242
Total commercial	—		30,016		30,016		—		30,016		30,016

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

Residential mortgage:
Permanent mortgage	—		161		161		—		161		161
Permanent mortgage guaranteed by U.S. government agencies	22,234		918		23,152		22,590		918		23,508
Home equity	—		1,113		1,113		—		1,262		1,262
Total residential mortgage	22,234		2,192		24,426		22,590		2,341		24,931

Personal	—		—		—		—		—		—

Total	$	22,234	$	32,208	$	54,442	$	22,590	$	32,357	$	54,947

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

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	Three Months Ended June 30, 2016						Six Months Ended June 30, 2016
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	2,246	$	2,246	$	—	$	2,246	$	2,246
Services	—		—		—		—		—		—
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—
Total commercial	—		2,246		2,246		—		2,246		2,246

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

Residential mortgage:
Permanent mortgage	—		788		788		—		1,806		1,806
Permanent mortgage guaranteed by U.S. government agencies	18,893		1,006		19,899		20,621		1,006		21,627
Home equity	—		232		232		—		232		232
Total residential mortgage	18,893		2,026		20,919		20,621		3,044		23,665

Personal	—		—		—		—		—		—

Total	$	18,893	$	4,272	$	23,165	$	20,621	$	5,290	$	25,911

- 91 -

Nonaccrual & Past Due Loans

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

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 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	$	2,723,248	$	—	$	—	$	—	$	123,992	$	2,847,240
Services	2,949,562		50		180		1,281		7,754		2,958,827
Wholesale/retail	1,532,986		89		—		—		10,620		1,543,695
Manufacturing	536,481		—		—		—		9,656		546,137
Healthcare	2,196,088		925		—		—		24,505		2,221,518
Other commercial and industrial	499,743		45		119		1		20,630		520,538
Total commercial	10,438,108		1,109		299		1,282		197,157		10,637,955

Commercial real estate:
Residential construction and land development	139,070		471		—		—		2,051		141,592
Retail	722,504		—		—		—		301		722,805
Office	862,577		—		—		—		396		862,973
Multifamily	952,370		—		—		—		10		952,380
Industrial	693,635		—		—		—		—		693,635
Other commercial real estate	314,187		3		—		—		1,017		315,207
Total commercial real estate	3,684,343		474		—		—		3,775		3,688,592

Residential mortgage:
Permanent mortgage	962,443		2,024		1,026		132		23,415		989,040
Permanent mortgages guaranteed by U.S. government agencies	36,867		18,416		13,581		113,813		9,052		191,729
Home equity	744,735		1,564		362		—		11,768		758,429
Total residential mortgage	1,744,045		22,004		14,969		113,945		44,235		1,939,198

Personal	916,852		487		289		—		272		917,900

Total	$	16,783,348	$	24,074	$	15,557	$	115,227	$	245,439	$	17,183,645

- 92 -

A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of December 31, 2016 is as follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days	90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,364,890	$	479	—	$	—	$	132,499	$	2,497,868
Services	3,099,605		191		1,021	—		8,173		3,108,990
Wholesale/retail	1,561,650		3,761		—	—		11,407		1,576,818
Manufacturing	509,662		382		—	—		4,931		514,975
Healthcare	2,201,050		—		41	—		825		2,201,916
Other commercial and industrial	468,981		155		3	—		21,118		490,257
Total commercial	10,205,838		4,968		1,065	—		178,953		10,390,824

Commercial real estate:
Residential construction and land development	132,100		—		—	—		3,433		135,533
Retail	761,562		—		—	—		326		761,888
Office	798,462		—		—	—		426		798,888
Multifamily	903,234		—		—	—		38		903,272
Industrial	871,673		—		—	—		76		871,749
Other commercial real estate	336,488		6		—	—		1,222		337,716
Total commercial real estate	3,803,519		6		—	—		5,521		3,809,046

Residential mortgage:
Permanent mortgage	979,386		3,299		1,280	—		22,855		1,006,820
Permanent mortgages guaranteed by U.S. government agencies	40,594		17,465		13,803	115,679		11,846		199,387
Home equity	729,493		2,276		337	—		11,519		743,625
Total residential mortgage	1,749,473		23,040		15,420	115,679		46,220		1,949,832

Personal	838,811		589		263	5		290		839,958

Total	$	16,597,641	$	28,603	16,748	$	115,684	$	230,984	$	16,989,660

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A summary of loans currently performing, loans past due and accruing and nonaccrual loans as of June 30, 2016 is as follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days	90 Days or More		Nonaccrual		Total
Commercial:
Energy	$	2,647,678	$	—	—	$	2,833	$	168,145	$	2,818,656
Services	2,817,217		494		3,765	—		9,388		2,830,864
Wholesale/retail	1,530,110		75		—	—		2,772		1,532,957
Manufacturing	595,110		—		—	—		293		595,403
Healthcare	2,050,271		—		—	—		875		2,051,146
Other commercial and industrial	526,691		76		82	46		516		527,411
Total commercial	10,167,077		645		3,847	2,879		181,989		10,356,437

Commercial real estate:
Residential construction and land development	153,315		—		—	—		4,261		157,576
Retail	794,154		—		—	—		1,265		795,419
Office	768,506		—		—	—		606		769,112
Multifamily	784,826		2,309		—	—		65		787,200
Industrial	645,510		—		—	—		76		645,586
Other commercial real estate	425,566		—		—	—		1,507		427,073
Total commercial real estate	3,571,877		2,309		—	—		7,780		3,581,966

Residential mortgage:
Permanent mortgage	935,857		5,798		124	—		27,228		969,007
Permanent mortgages guaranteed by U.S. government agencies	42,019		15,349		11,869	103,754		19,741		192,732
Home equity	707,024		1,889		159	20		10,092		719,184
Total residential mortgage	1,684,900		23,036		12,152	103,774		57,061		1,880,923

Personal	586,611		400		58	—		354		587,423

Total	$	16,010,465	$	26,390	16,057	$	106,653	$	247,184	$	16,406,749

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(5) Acquisitions

On December 1, 2016, the Company acquired MBT Bancshares (“MBT”), parent company of Missouri Bank and Trust of Kansas City (“Mobank”) following regulatory approval of the transaction. Mobank operated four banking branches in the Kansas City, Mo. area. BOK Financial paid $102.5 million in an all-cash deal for all outstanding shares of MBT stock. MBT was merged into BOK Financial and Mobank became a wholly owned subsidiary of BOK Financial on December 1, 2016. On February 21, 2017, Mobank was merged with the Bank of Kansas City division of BOKF, NA. All branches in the Kansas City market will operate under the Mobank name. The preliminary purchase price allocation was updated in the first quarter of 2017 resulting in a $2.0 million increase in identifiable intangibles, $1.5 million decrease in premises and equipment and other repossessed assets, and a $526 thousand decrease in goodwill.

(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 sale 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):



	June 30, 2017				Dec. 31, 2016				June 30, 2016
	Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value
Residential mortgage loans held for sale	$	269,772	$	275,179	$	286,414	$	286,971	$	404,507	$	417,542
Residential mortgage loan commitments	362,088		10,993		318,359		9,733		965,631		25,499
Forward sales contracts	587,595		1,087		569,543		5,193		1,216,966		(12,313		)
			$	287,259			$	301,897			$	430,728

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of June 30, 2017, December 31, 2016 or June 30, 2016. No credit losses were recognized on residential mortgage loans held for sale for the three and six month periods ended June 30, 2017 and 2016.

- 95 -

Mortgage banking revenue was as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Production revenue:
Net realized gains on sale of mortgage loans	$	11,787		$	15,865		$	20,402		$	24,314
Net change in unrealized gain on mortgage loans held for sale	985			3,884			4,827			7,167
Net change in the fair value of mortgage loan commitments	(3,274		)	5,329			1,260			17,365
Net change in the fair value of forward sales contracts	4,342			(5,992		)	(4,106		)	(13,113		)
Total production revenue	13,840			19,086			22,383			35,733
Servicing revenue	16,436			15,798			33,084			31,251
Total mortgage banking revenue	$	30,276		$	34,884		$	55,467		$	66,984

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):



	June 30, 2017			Dec. 31, 2016			June 30, 2016
Number of residential mortgage loans serviced for others	138,335			139,340			137,210
Outstanding principal balance of residential mortgage loans serviced for others	$	22,095,232		$	21,997,568		$	21,178,387
Weighted average interest rate	3.95		%	3.97		%	4.06		%
Remaining term (in months)	299			301			301

Activity in capitalized mortgage servicing rights during the three months ended June 30, 2017 was as follows (in thousands):



	Purchased			Originated			Total
Balance, March 31, 2017	$	8,316		$	241,087		$	249,403
Additions, net	—			11,078			11,078
Change in fair value due to scheduled payments and full-balance payoffs	(464		)	(7,835		)	(8,299		)
Change in fair value due to market assumption changes	143			(7,086		)	(6,943		)
Balance, June 30, 2017	$	7,995		$	237,244		$	245,239



	Purchased			Originated			Total
Balance, Dec. 31, 2016	$	8,909		$	238,164		$	247,073
Additions, net	—			19,514			19,514
Change in fair value due to scheduled payments and full-balance payoffs	(973		)	(15,288		)	(16,261		)
Change in fair value due to market assumption changes	59			(5,146		)	(5,087		)
Balance, June 30, 2017	$	7,995		$	237,244		$	245,239

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Activity in capitalized mortgage servicing rights during the three months ended June 30, 2016 was as follows (in thousands):



	Purchased			Originated			Total
Balance, March 31, 2016	$	5,949		$	190,106		$	196,055
Additions, net	—			20,773			20,773
Change in fair value due to scheduled payments and full-balance payoffs	(730		)	(9,068		)	(9,798		)
Change in fair value due to market assumption changes	(1,152		)	(15,131		)	(16,283		)
Balance, June 30, 2016	$	4,067		$	186,680		$	190,747



	Purchased			Originated			Total
Balance, Dec. 31, 2015	$	9,911		$	208,694		$	218,605
Additions, net	—			34,355			34,355
Change in fair value due to scheduled payments and full-balance payoffs	(1,356		)	(16,586		)	(17,942		)
Change in fair value due to market assumption changes	(4,488		)	(39,783		)	(44,271		)
Balance, June 30, 2016	$	4,067		$	186,680		$	190,747

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

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



	June 30, 2017	Dec. 31, 2016	June 30, 2016
Discount rate – risk-free rate plus a market premium	9.84%	10.08%	10.09%
Prepayment rate - based upon loan interest rate, original term and loan type	8.61%-15.91%	8.98%-16.91%	9.26%-42.77%
Loan servicing costs – annually per loan based upon loan type:
Performing loans	$65-$120	$63 - $120	$63 - $120
Delinquent loans	$150-$500	$150 - $500	$150 - $500
Loans in foreclosure	$1,000-$4,250	$650 - $4,250	$650 - $4,250
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life	1.95%	1.98%	0.99%
Primary/secondary mortgage rate spread	105 bps	105 bps	115 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 June 30, 2017 follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	8,083,330	$	48,659	$	12,294	$	27,338	$	8,171,621
FNMA	6,756,211		46,918		10,679		23,981		6,837,789
GNMA	6,331,439		170,889		47,335		16,082		6,565,745
Other	514,272		3,278		932		1,595		520,077
Total	$	21,685,252	$	269,744	$	71,240	$	68,996	$	22,095,232

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The Company has obligations to repurchase or provide indemnification for residential mortgage loans sold to government sponsored entities 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.

The Company repurchased five loans from the agencies for $1.3 million during the second quarter of 2017. There were four indemnifications on loans paid during the second quarter of 2017. Losses recognized on repurchases were insignificant.

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



	June 30,
	2017		2016
Number of unresolved deficiency requests	206		211
Aggregate outstanding principal balance subject to unresolved deficiency requests	$	13,370	$	15,920
Unpaid principal balance subject to indemnification by the Company	5,074		5,519

The activity in the accruals for mortgage losses related to repurchases is summarized as follows (in thousands).



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Beginning balance	$	2,587		$	2,974		$	2,788		$	3,359
Provision for losses	(895		)	368			(1,094		)	250
Charge-offs, net	(45		)	(89		)	(47		)	(356		)
Ending balance	$	1,647		$	3,253		$	1,647		$	3,253

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(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 415,755 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 March 3, 2015, BOKF, NA and the Company were named as defendants in a class action alleging (1) that the manner in which the Bank posted charges to its consumer deposit accounts was improper from September 1, 2011 through July 8, 2014, the period after which the Bank and BOK Financial had settled a class action respecting a similar claim, and before it made changes to its posting order and (2) that the manner in which the Bank posted charges to its small business deposit accounts was improper from July 9, 2009 through July 8, 2014. Following mediation of the case in August 2016, the Class Representatives and the Bank reached a settlement of the action for $7.8 million. The Settlement was approved by the Court in a final order, the Company funded the settlement, and the settlement has been implemented.

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 (estimated to be approximately $73 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. Management has been advised by counsel that the Bank has valid defenses to the claims. The Bank expects 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 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. 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. It is the opinion of management that no loss is probable at this time.

The County of Bernalillo, New Mexico, commenced arbitration pursuant to the Arbitration Rules of FINRA seeking recovery of $5.6 million alleging that various municipal bonds purchased by the elected County Treasurer of Bernalillo County, New Mexico, from BOK Financial Securities, Inc. were unsuitable. The arbitration was conducted in July 2017. Management has been advised by counsel that a loss is not probable.

- 99 -

On March 30, 2017, two deposit customers of the Bank sued the Bank in the District Court of Harris County, Texas. A judgment creditor had served a garnishment summons on the Bank. The deposit customers allege that, because the Bank was unable to produce adequate documentation of ownership of a series of deposit accounts at the Bank owned by them, they were compelled to enter into a settlement agreement with the judgment creditor pursuant to which the Bank paid $4.2 million from the accounts to the judgment creditor. The two deposit customers seek $7 million. Management has been advised by counsel that a loss is not probable and that the amount of the liability, if any, cannot be quantified at this time.

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 BOKF, NA is interest and exceeds permitted rates. BOKF, NA was previously sued in a class action in the United States District Court for the Northern District of Oklahoma making the same allegations. Pursuant to a motion to dismiss, the Northern District of Oklahoma Court action was dismissed. Other courts considering the question whether extended overdraft fees are interest have likewise determined such fees are not interest. BOKF, NA has moved to dismiss the action. 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 $4.0 million at June 30, 2017. 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.

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.

- 100 -

A summary of consolidated and unconsolidated alternative investments as of June 30, 2017, December 31, 2016 and June 30, 2016 is as follows (in thousands):



	June 30, 2017
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	16,905	$	—	$	—	$	14,199
Tax credit entities	10,000		11,274		—		10,964		10,000
Other	—		15,894		1,621		878		2,877
Total consolidated	$	10,000	$	44,073	$	1,621	$	11,842	$	27,076

Unconsolidated:
Tax credit entities	$	59,744	$	148,525	$	63,822	$	—	$	—
Other	—		33,155		13,680		—		—
Total unconsolidated	$	59,744	$	181,680	$	77,502	$	—	$	—



	Dec. 31, 2016
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	17,357	$	—	$	—	$	13,237
Tax credit entities	10,000		11,585		—		10,964		10,000
Other	—		29,783		3,189		1,092		8,266
Total consolidated	$	10,000	$	58,725	$	3,189	$	12,056	$	31,503

Unconsolidated:
Tax credit entities	$	44,488	$	143,715	$	63,329	$	—	$	—
Other	—		31,675		15,028		—		—
Total unconsolidated	$	44,488	$	175,390	$	78,357	$	—	$	—



	June 30, 2016
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	20,469	$	—	$	—	$	16,316
Tax credit entities	10,000		11,895		—		10,964		10,000
Other	—		35,387		2,004		2,272		7,589
Total consolidated	$	10,000	$	67,751	$	2,004	$	13,236	$	33,905

Unconsolidated:
Tax credit entities	$	32,679	$	102,138	$	30,953	$	—	$	—
Other	—		23,439		13,767		—		—
Total unconsolidated	$	32,679	$	125,577	$	44,720	$	—	$	—

- 101 -

Other Commitments and Contingencies

At June 30, 2017, Cavanal Hill Funds’ assets included U.S. Treasury, cash management and tax-free money market funds. Assets of these funds consist of highly-rated, short-term obligations of the U.S. Treasury, corporate issuers and U.S. states and municipalities. The net asset value of units in these funds was $1.00 at June 30, 2017. An investment in these funds is not insured by the Federal Deposit Insurance Corporation or guaranteed by BOK Financial or any of its subsidiaries. BOK Financial may, but is not obligated to purchase assets from these funds to maintain the net asset value at $1.00. No assets were purchased from the funds in 2017 or 2016.

(8) Shareholders' Equity

On July 25, 2017, the Company declared a quarterly cash dividend of $0.44 per common share on or about August 25, 2017 to shareholders of record as of August 11, 2017.

Dividends declared were $0.44 per share and $0.88 per share during the three and six months ended June 30, 2017 and $0.43 per share and $0.86 per share during the three and six months ended June 30, 2016.

Accumulated Other Comprehensive Income (Loss)

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

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



	Unrealized Gain (Loss) on
	Available for Sale Securities			Investment Securities Transferred from AFS			Employee Benefit Plans			Total
Balance, Dec. 31, 2015	$	23,284		$	68		$	(1,765	)	$	21,587
Net change in unrealized gain (loss)	166,566			—			—			166,566
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			(112		)	—			(112		)
Gain on available for sale securities, net	(9,290		)	—			—			(9,290		)
Other comprehensive income (loss), before income taxes	157,276			(112		)	—			157,164
Federal and state income taxes¹	61,163			(44		)	—			61,119
Other comprehensive income (loss), net of income taxes	96,113			(68		)	—			96,045
Balance, June 30, 2016	$	119,397		$	—		$	(1,765	)	$	117,632

Balance, Dec. 31, 2016	$	(9,087	)	$	—		$	(1,880	)	$	(10,967	)
Net change in unrealized gain (loss)	33,369			—			—			33,369
Reclassification adjustments included in earnings:
Gain on available for sale securities, net	(2,429		)	—			—			(2,429		)
Other comprehensive income, before income taxes	30,940			—			—			30,940
Federal and state income taxes¹	12,009						—			12,009
Other comprehensive income, net of income taxes	18,931			—			—			18,931
Balance, June 30, 2017	$	9,844		$	—		$	(1,880	)	$	7,964


¹	Calculated using a 39 percent effective tax rate.

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(9) Earnings Per Share



(In thousands, except share and per share amounts)	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator:
Net income attributable to BOK Financial Corp. shareholders	$	88,147	$	65,801	$	176,503	$	108,365
Less: Earnings allocated to participating securities	926		821		1,929		1,359
Numerator for basic earnings per share – income available to common shareholders	87,221		64,980		174,574		107,006
Effect of reallocating undistributed earnings of participating securities	1		—		1		—
Numerator for diluted earnings per share – income available to common shareholders	$	87,222	$	64,980	$	174,575	$	107,006

Denominator:
Weighted average shares outstanding	65,416,274		66,069,392		65,436,909		66,100,279
Less: Participating securities included in weighted average shares outstanding	686,522		823,505		714,165		829,065
Denominator for basic earnings per common share	64,729,752		65,245,887		64,722,744		65,271,214
Dilutive effect of employee stock compensation plans¹	63,382		57,039		65,578		45,963
Denominator for diluted earnings per common share	64,793,134		65,302,926		64,788,322		65,317,177

Basic earnings per share	$	1.35	$	1.00	$	2.70	$	1.64
Diluted earnings per share	$	1.35	$	1.00	$	2.69	$	1.64
¹ Excludes employee stock options with exercise prices greater than current market price.	—		—		—		145,247

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(10) Reportable Segments

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	144,164		$	23,503		$	10,474		$	27,063		$	205,204
Net interest revenue (expense) from internal sources	(20,347		)	11,837			10,325			(1,815		)	—
Net interest revenue	123,817			35,340			20,799			25,248			205,204
Provision for credit losses	1,228			926			(93		)	(2,061		)	—
Net interest revenue after provision for credit losses	122,589			34,414			20,892			27,309			205,204
Other operating revenue	55,778			52,102			75,569			(1,197		)	182,252
Other operating expense	59,128			55,709			60,615			75,433			250,885
Net direct contribution	119,239			30,807			35,846			(49,321		)	136,571
Gain on financial instruments, net	3			5,224			—			(5,227		)	—
Change in fair value of mortgage servicing rights	—			(6,943		)	—			6,943			—
Gain on repossessed assets, net	1,403			98			—			(1,501		)	—
Corporate expense allocations	8,862			17,039			9,947			(35,848		)	—
Net income before taxes	111,783			12,147			25,899			(13,258		)	136,571
Federal and state income taxes	43,484			4,725			10,075			(10,579		)	47,705
Net income	68,299			7,422			15,824			(2,679		)	88,866
Net income attributable to non-controlling interests	—			—			—			719			719
Net income attributable to BOK Financial Corp. shareholders	$	68,299		$	7,422		$	15,824		$	(3,398	)	$	88,147

Average assets	$	17,596,273		$	8,845,398		$	6,763,093		$	(836,193	)	$	32,368,571

- 104 -

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	278,868		$	44,632		$	21,960		$	60,926		$	406,386
Net interest revenue (expense) from internal sources	(37,140		)	22,789			19,181			(4,830		)	—
Net interest revenue	241,728			67,421			41,141			56,096			406,386
Provision for credit losses	(234		)	2,198			(53		)	(1,911		)	—
Net interest revenue after provision for credit losses	241,962			65,223			41,194			58,007			406,386
Other operating revenue	102,048			99,408			149,727			1,365			352,548
Other operating expense	111,565			109,242			121,025			153,764			495,596
Net direct contribution	232,445			55,389			69,896			(94,392		)	263,338
Gain on financial instruments, net	41			3,557			—			(3,598		)	—
Change in fair value of mortgage servicing rights	—			(5,087		)	—			5,087			—
Gain (loss) on repossessed assets, net	1,398			(39		)	—			(1,359		)	—
Corporate expense allocations	17,493			33,908			20,619			(72,020		)	—
Net income before taxes	216,391			19,912			49,277			(22,242		)	263,338
Federal and state income taxes	84,176			7,746			19,169			(25,283		)	85,808
Net income	132,215			12,166			30,108			3,041			177,530
Net income attributable to non-controlling interests	—			—			—			1,027			1,027
Net income attributable to BOK Financial Corp. shareholders	$	132,215		$	12,166		$	30,108		$	2,014		$	176,503

Average assets	$	17,517,960		$	8,747,524		$	6,960,872		$	(566,196	)	$	32,660,160

Reportable segments reconciliation to the Consolidated Financial Statements for the three months ended June 30, 2016 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	118,480		$	22,349		$	6,271		$	35,512		$	182,612
Net interest revenue (expense) from internal sources	(14,575		)	8,876			$	7,193		(1,494		)	—
Net interest revenue	103,905			31,225			13,464			34,018			182,612
Provision for credit losses	6,852			1,318			(239		)	12,069			20,000
Net interest revenue after provision for credit losses	97,053			29,907			13,703			21,949			162,612
Other operating revenue	51,497			57,440			75,772			833			185,542
Other operating expense	52,594			62,806			61,414			74,571			251,385
Net direct contribution	95,956			24,541			28,061			(51,789		)	96,769
Gain on financial instruments, net	—			15,045			—			(15,045		)	—
Change in fair value of mortgage servicing rights	—			(16,283		)	—			16,283			—
Gain (loss) on repossessed assets, net	(598		)	252			—			346			—
Corporate expense allocations	8,883			16,630			10,417			(35,930		)	—
Net income before taxes	86,475			6,925			17,644			(14,275		)	96,769
Federal and state income taxes	33,639			2,694			6,864			(12,700		)	30,497
Net income	52,836			4,231			10,780			(1,575		)	66,272
Net gain attributable to non-controlling interests	—			—			—			471			471
Net income attributable to BOK Financial Corp. shareholders	$	52,836		$	4,231		$	10,780		$	(2,046	)	$	65,801

Average assets	$	16,973,663		$	8,774,881		$	5,765,390		$	472,108		$	31,986,042

- 105 -

Reportable segments reconciliation to the Consolidated Financial Statements for the six months ended June 30, 2016 is as follows (in thousands):



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	235,116		$	43,799		$	12,349		$	73,920		$	365,184
Net interest revenue (expense) from internal sources	(29,208		)	18,229			$	14,857		(3,878		)	—
Net interest revenue	205,908			62,028			27,206			70,042			365,184
Provision for credit losses	28,423			3,020			(390		)	23,947			55,000
Net interest revenue after provision for credit losses	177,485			59,008			27,596			46,095			310,184
Other operating revenue	96,605			111,469			144,518			(9,636		)	342,956
Other operating expense	108,663			118,524			122,098			144,670			493,955
Net direct contribution	165,427			51,953			50,016			(108,211		)	159,185
Gain on financial instruments, net	—			31,626			—			(31,626		)	—
Change in fair value of mortgage servicing rights	—			(44,271		)	—			44,271			—
Gain (loss) on repossessed assets, net	(680		)	406			—			274			—
Corporate expense allocations	17,627			32,608			20,952			(71,187		)	—
Net income before taxes	147,120			7,106			29,064			(24,105		)	159,185
Federal and state income taxes	57,230			2,764			11,306			(19,375		)	51,925
Net income	89,890			4,342			17,758			(4,730		)	107,260
Net loss attributable to non-controlling interests	—			—			—			(1,105		)	(1,105		)
Net income attributable to BOK Financial Corp. shareholders	$	89,890		$	4,342		$	17,758		$	(3,625	)	$	108,365

Average assets	$	16,971,339		$	8,731,085		$	5,665,218		$	379,615		$	31,747,257

- 106 -

(11) Fair Value Measurements

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

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

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

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


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


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


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


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

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

Transfers between levels are recognized as of the end of the reporting period. There were no transfers in or out of quoted prices in active markets for identical instruments to significant other observable inputs or significant unobservable inputs during the three and six months ended June 30, 2017 and 2016, respectively. Transfers between significant other observable inputs and significant unobservable inputs during the three and six months ended June 30, 2017 and 2016 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 June 30, 2017, December 31, 2016 or June 30, 2016.

- 107 -

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 June 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	$	20,954	$	—	$	20,954	$	—
U.S. government agency residential mortgage-backed securities	365,171		—		365,171		—
Municipal and other tax-exempt securities	45,444		—		45,444		—
Other trading securities	9,845		—		9,845		—
Total trading securities	441,414		—		441,414		—
Available for sale securities:
U.S. Treasury	998		998		—		—
Municipal and other tax-exempt securities	32,765		—		28,110		4,655
U.S. government agency residential mortgage-backed securities	5,382,377		—		5,382,377		—
Privately issued residential mortgage-backed securities	103,383		—		103,383		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,782,070		—		2,782,070		—
Other debt securities	4,152		—		—		4,152
Perpetual preferred stock	16,568		—		16,568		—
Equity securities and mutual funds	18,728		3,516		15,212		—
Total available for sale securities	8,341,041		4,514		8,327,720		8,807
Fair value option securities – U.S. government agency residential mortgage-backed securities	445,169		—		445,169		—
Residential mortgage loans held for sale	287,259		—		274,524		12,735
Mortgage servicing rights¹	245,239		—		—		245,239
Derivative contracts, net of cash collateral²	280,289		20,213		260,076		—
Liabilities:
Derivative contracts, net of cash collateral²	285,819		5,919		279,900		—


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

- 108 -

The fair value of financial assets and liabilities measured on a recurring basis was as follows as of December 31, 2016 (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	$	6,234	$	—	$	6,234	$	—
U.S. government agency residential mortgage-backed securities	310,067		—		310,067		—
Municipal and other tax-exempt securities	14,427		—		14,427		—
Other trading securities	6,900		—		6,900		—
Total trading securities	337,628		—		337,628		—
Available for sale securities:
U.S. Treasury	999		999		—		—
Municipal and other tax-exempt securities	40,993		—		35,204		5,789
U.S. government agency residential mortgage-backed securities	5,460,386		—		5,460,386		—
Privately issued residential mortgage-backed securities	115,535		—		115,535		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	3,017,933		—		3,017,933		—
Other debt securities	4,152		—		—		4,152
Perpetual preferred stock	18,474		—		18,474		—
Equity securities and mutual funds	18,357		3,495		14,862		—
Total available for sale securities	8,676,829		4,494		8,662,394		9,941
Fair value option securities – U.S. government agency residential mortgage-backed securities	77,046		—		77,046		—
Residential mortgage loans held for sale	301,897		—		290,280		11,617
Mortgage servicing rights¹	247,073		—		—		247,073
Derivative contracts, net of cash collateral²	689,872		7,541		682,331		—
Liabilities:
Derivative contracts, net of cash collateral²	664,531		6,972		657,559		—


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

- 109 -

The fair value of financial assets and liabilities measured on a recurring basis was as follows as of June 30, 2016 (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	$	18,909	$	—	$	18,909	$	—
U.S. government agency residential mortgage-backed securities	122,306		—		122,306		—
Municipal and other tax-exempt securities	52,721		—		52,721		—
Other trading securities	17,686		—		17,686		—
Total trading securities	211,622		—		211,622		—
Available for sale securities:
U.S. Treasury	1,004		1,004		—		—
Municipal and other tax-exempt securities	50,262		—		40,662		9,600
U.S. government agency residential mortgage-backed securities	5,700,268		—		5,700,268		—
Privately issued residential mortgage-backed securities	126,313		—		126,313		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,911,946		—		2,911,946		—
Other debt securities	4,151		—		—		4,151
Perpetual preferred stock	17,931		—		17,931		—
Equity securities and mutual funds	18,814		3,785		15,029		—
Total available for sale securities	8,830,689		4,789		8,812,149		13,751
Fair value option securities:
U.S. Treasury	25,306		25,306		—		—
U.S. government agency residential mortgage-backed securities	237,959		—		237,959		—
Total fair value option securities	263,265		25,306		237,959		—
Residential mortgage loans held for sale	430,728		—		420,979		9,749
Mortgage servicing rights¹	190,747		—		—		190,747
Derivative contracts, net of cash collateral²	883,673		7,246		876,427		—
Liabilities:
Derivative contracts, net of cash collateral²	719,159		4,808		714,351		—


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 energy and agricultural derivative contacts, net of cash margin. 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, net cash margin.

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

Securities

The fair values of trading, available for sale and fair value 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 counterparty credit rating or equivalent loan grading, derivative contract notional size, price volatility of the underlying commodity, duration of the derivative contracts and expected loss severity. Expected loss severity is based on historical losses for similarly risk graded commercial loan customers. Decreases in counterparty credit rating or grading and increases in price volatility and expected loss severity all tend to increase the credit quality adjustment which reduces the fair value of asset contracts. The reduction in fair value is recognized in earnings during the current period.

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

Residential Mortgage Loans Held for Sale

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

Other Assets - Private Equity Funds

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

See Note 7 for disclosure of the fair value of the private equity funds using the net asset value per share of the underlying investments, as a practical expedient, included in Other assets in the Consolidated Balance Sheets of the Company.

- 111 -

The following represents the changes for the three and six months ended June 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, March 31, 2017	$	5,722		$	4,153		$	12,679
Transfer to Level 3 from Level 2¹	—			—			853
Purchases	—			—			—
Proceeds from sales	—			—			(1,030		)
Redemptions and distributions	(1,100		)	—			—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—			—			233
Other comprehensive income (loss):
Net change in unrealized gain (loss)	33			(1		)	—
Balance, June 30, 2017	$	4,655		$	4,152		$	12,735


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, Dec. 31, 2016	$	5,789		$	4,152	$	11,617
Transfer to Level 3 from Level 2¹	—			—		2,740
Purchases	—			—		—
Proceeds from sales	—			—		(1,702		)
Redemptions and distributions	(1,100		)	—		—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—			—		80
Other comprehensive income (loss):
Net change in unrealized gain (loss)	(34		)	—		—
Balance, June 30, 2017	$	4,655		$	4,152	$	12,735


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.

- 112 -

The following represents the changes for the three and six months ended June 30, 2016 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, March 31, 2016	$	9,614		$	4,151	$	8,099
Transfer to Level 3 from Level 2¹	—			—		3,080
Purchases	—			—		—
Proceeds from sales	—			—		(1,249		)
Redemptions and distributions	—			—		—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—			—		(181		)
Other comprehensive income (loss):
Net change in unrealized gain (loss)	(14		)	—		—
Balance, June 30, 2016	$	9,600		$	4,151	$	9,749


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, Dec. 31, 2015	$	9,610		$	4,151	$	7,874
Transfer to Level 3 from Level 2¹	—			—		3,540
Purchases	—			—		—
Proceeds from sales	—			—		(1,362		)
Redemptions and distributions	—			—		—
Gain (loss) recognized in earnings
Mortgage banking revenue	—			—		(303		)
Other comprehensive income (loss):
Net change in unrealized gain (loss)	(10		)	—		—
Balance, June 30, 2016	$	9,600		$	4,151	$	9,749


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.

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



	Par Value		Amortized Cost/Unpaid Principal Balance		Fair Value		Valuation Technique(s)		Unobservable Input	Range (Weighted Average)

Available for sale securities
Municipal and other tax-exempt securities	$	5,095	$	5,067	$	4,655	Discounted cash flows	¹	Interest rate spread	5.98%-5.98% (5.98%)	²
										90.00%-94.90% (92.93%)	³
Other debt securities	4,400		4,400		4,152		Discounted cash flows	¹	Interest rate spread	5.41%-6.72% (6.57%)	⁴
										94.31% - 94.38 (94.37%)	³

Residential mortgage loans held for sale	N/A		13,274		12,563		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.	94.64%


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 360 to 446 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.

A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of December 31, 2016 follows (in thousands):



	Par Value		Amortized Cost/Unpaid Principal Balance		Fair Value		Valuation Technique(s)		Unobservable Input	Range (Weighted Average)

Available for sale securities
Municipal and other tax-exempt securities	$	6,195	$	6,163	$	5,789	Discounted cash flows	¹	Interest rate spread	5.91%-6.21% (6.16%)	²
										90.00%-93.40% (92.20%)	³
Other debt securities	4,400		4,400		4,152		Discounted cash flows	¹	Interest rate spread	6.01%-6.26% (6.23%)	⁴
										94.34% - 94.36 (94.36%)	³
Residential mortgage loans held for sale	N/A		12,431		11,617		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.	93.45%


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


²	Interest rate yields used to value investment grade tax-exempt securities represent a spread of 467 to 525 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value.


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

- 114 -

A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of June 30, 2016 follows (in thousands):



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

Available for sale securities
Municipal and other tax-exempt securities	$	10,370	$	10,312	$	9,600	Discounted cash flows	¹	Interest rate spread	5.34%-5.64% (5.60%)	²
										90.00%-93.28% (92.58%)	³
Other debt securities	4,400		4,400		4,151		Discounted cash flows	¹	Interest rate spread	5.51%-5.96% (5.91%)	⁴
										94.32% - 94.34 (94.34%)	³

Residential mortgage loans held for sale	N/A		10,518		9,749		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.	92.69%


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 474 to 513 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value.


⁴	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 1 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 June 30, 2017 for which the fair value was adjusted during the six months ended June 30, 2017:



							Fair Value Adjustments for the
	Carrying Value at June 30, 2017						Three Months Ended June 30, 2017 Recognized in:				Six Months Ended June 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	$	—	$	464	$	3,570	$	232	$	—	$	676	$	—
Real estate and other repossessed assets	—		3,488		530		—		772		—		906

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The following represents the carrying value of assets measured at fair value on a non-recurring basis (and related losses) during the period. The carrying value represents only those assets with a balance at June 30, 2016 for which the fair value was adjusted during the six months ended June 30, 2016:



	Carrying Value at June 30, 2016						Fair Value Adjustments for the Three Months Ended June 30, 2016 Recognized in:				Six Months Ended June 30, 2016 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	$	—	$	634	$	42,342	$	7,041	$	—	$	29,186	$	—
Real estate and other repossessed assets	—		5,709		1,693		—		751		—		1,068

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 June 30, 2017 follows (in thousands):



	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Impaired loans	$	3,570	Discounted cash flows	Recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs	75% - 90% (83%)¹
Real estate and other repossessed assets	530		Appraised value, as adjusted	Marketability adjustment off appraised value²	65% - 88% (80%)


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


²	Marketability adjustments include consideration of estimated costs to sell which is approximately 10% of the fair value.

A summary of quantitative information about Non-recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of June 30, 2016 follows (in thousands):



	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Impaired loans	$	42,342	Discounted cash flows	Recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs	25% - 71% (58%)¹
Real estate and other repossessed assets	1,693		Appraised value, as adjusted	Marketability adjustments off appraised value2	68% - 80% (71%)


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


²	Marketability adjustments include consideration of estimated costs to sell which is approximately 10% of the fair value.

- 116 -

Fair Value of Financial Instruments

The following table presents the carrying values and estimated fair values of all financial instruments, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis as of June 30, 2017 (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	$	561,587		$	561,587	$	561,587	$	—	$	—
Interest-bearing cash and cash equivalents	2,078,831			2,078,831		2,078,831		—		—
Trading securities:								—
U.S. government agency debentures	20,954			20,954		—		20,954		—
U.S. government agency residential mortgage-backed securities	365,171			365,171		—		365,171		—
Municipal and other tax-exempt securities	45,444			45,444		—		45,444		—
Other trading securities	9,845			9,845		—		9,845		—
Total trading securities	441,414			441,414		—		441,414		—
Investment securities:
Municipal and other tax-exempt securities	267,375			270,531		—		270,531		—
U.S. government agency residential mortgage-backed securities	18,035			18,642		—		18,642		—
Other debt securities	205,016			226,502		—		226,502		—
Total investment securities	490,426			515,675		—		515,675		—
Available for sale securities:
U.S. Treasury	998			998		998		—		—
Municipal and other tax-exempt securities	32,765			32,765		—		28,110		4,655
U.S. government agency residential mortgage-backed securities	5,382,377			5,382,377		—		5,382,377		—
Privately issued residential mortgage-backed securities	103,383			103,383		—		103,383		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,782,070			2,782,070		—		2,782,070		—
Other debt securities	4,152			4,152		—		—		4,152
Perpetual preferred stock	16,568			16,568		—		16,568		—
Equity securities and mutual funds	18,728			18,728		3,516		15,212		—
Total available for sale securities	8,341,041			8,341,041		4,514		8,327,720		8,807
Fair value option securities – U.S. government agency residential mortgage-backed securities	445,169			445,169		—		445,169		—
Residential mortgage loans held for sale	287,259			287,259		—		274,524		12,735
Loans:
Commercial	10,637,955			10,413,704		—		—		10,413,704
Commercial real estate	3,688,592			3,636,365		—		—		3,636,365
Residential mortgage	1,939,198			1,950,577		—		—		1,950,577
Personal	917,900			909,055		—		—		909,055
Total loans	17,183,645			16,909,701		—		—		16,909,701
Allowance for loan losses	(250,061		)	—		—		—		—
Loans, net of allowance	16,933,584			16,909,701		—		—		16,909,701
Mortgage servicing rights	245,239			245,239		—		—		245,239
Derivative instruments with positive fair value, net of cash collateral	280,289			280,289		46,366		233,923		—
Deposits with no stated maturity	20,120,352			20,120,352		—		—		20,120,352
Time deposits	2,196,122			2,164,115		—		—		2,164,115
Other borrowed funds	5,696,666			5,664,273		—		—		5,664,273
Subordinated debentures	144,658			147,204		—		147,204		—
Derivative instruments with negative fair value, net of cash collateral	285,819			285,819		20,915		264,904		—

- 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	$	620,846		$	620,846	$	620,846	$	—	$	—
Interest-bearing cash and cash equivalents	1,916,651			1,916,651		1,916,651		—		—
Trading securities:								—
U.S. government agency debentures	6,234			6,234		—		6,234		—
U.S. government agency residential mortgage-backed securities	310,067			310,067		—		310,067		—
Municipal and other tax-exempt securities	14,427			14,427		—		14,427		—
Other trading securities	6,900			6,900		—		6,900		—
Total trading securities	337,628			337,628		—		337,628		—
Investment securities:
Municipal and other tax-exempt securities	320,364			321,225		—		321,225		—
U.S. government agency residential mortgage-backed securities	20,777			21,473		—		21,473		—
Other debt securities	205,004			222,795		—		222,795		—
Total investment securities	546,145			565,493		—		565,493		—
Available for sale securities:
U.S. Treasury	999			999		999		—		—
Municipal and other tax-exempt securities	40,993			40,993		—		35,204		5,789
U.S. government agency residential mortgage-backed securities	5,460,386			5,460,386		—		5,460,386		—
Privately issued residential mortgage-backed securities	115,535			115,535		—		115,535		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	3,017,933			3,017,933		—		3,017,933		—
Other debt securities	4,152			4,152		—		—		4,152
Perpetual preferred stock	18,474			18,474		—		18,474		—
Equity securities and mutual funds	18,357			18,357		3,495		14,862		—
Total available for sale securities	8,676,829			8,676,829		4,494		8,662,394		9,941
Fair value option securities – U.S. government agency residential mortgage-backed securities	77,046			77,046		—		77,046		—
Residential mortgage loans held for sale	301,897			301,897		—		290,280		11,617
Loans:
Commercial	10,390,824			10,437,016		—		—		10,437,016
Commercial real estate	3,809,046			3,850,981		—		—		3,850,981
Residential mortgage	1,949,832			2,025,159		—		—		2,025,159
Personal	839,958			864,904		—		—		864,904
Total loans	16,989,660			17,178,060		—		—		17,178,060
Allowance for loan losses	(246,159		)	—		—		—		—
Loans, net of allowance	16,743,501			17,178,060		—		—		17,178,060
Mortgage servicing rights	247,073			247,073		—		—		247,073
Derivative instruments with positive fair value, net of cash collateral	689,872			689,872		7,541		682,331		—
Deposits with no stated maturity	20,526,295			20,526,295		—		—		20,526,295
Time deposits	2,221,800			2,218,303		—		—		2,218,303
Other borrowed funds	5,572,662			5,556,327		—		—		5,556,327
Subordinated debentures	144,640			128,903		—		128,903		—
Derivative instruments with negative fair value, net of cash collateral	664,531			664,531		6,972		657,559		—

- 118 -



	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	$	498,713		$	498,713	$	498,713	$	—	$	—
Interest-bearing cash and cash equivalents	1,907,838			1,907,838		1,907,838		—		—
Trading securities:								—
U.S. government agency debentures	18,909			18,909		—		18,909		—
U.S. government agency residential mortgage-backed securities	122,306			122,306		—		122,306		—
Municipal and other tax-exempt securities	52,721			52,721		—		52,721		—
Other trading securities	17,686			17,686		—		17,686		—
Total trading securities	211,622			211,622		—		211,622		—
Investment securities:
Municipal and other tax-exempt securities	334,551			340,700		—		340,700		—
U.S. government agency residential mortgage-backed securities	23,750			25,233		—		25,233		—
Other debt securities	202,410			233,129		—		233,129		—
Total investment securities	560,711			599,062		—		599,062		—
Available for sale securities:
U.S. Treasury	1,004			1,004		1,004		—		—
Municipal and other tax-exempt securities	50,262			50,262		—		40,662		9,600
U.S. government agency residential mortgage-backed securities	5,700,268			5,700,268		—		5,700,268		—
Privately issued residential mortgage-backed securities	126,313			126,313		—		126,313		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,911,946			2,911,946		—		2,911,946		—
Other debt securities	4,151			4,151		—		—		4,151
Perpetual preferred stock	17,931			17,931		—		17,931		—
Equity securities and mutual funds	18,814			18,814		3,785		15,029		—
Total available for sale securities	8,830,689			8,830,689		4,789		8,812,149		13,751
Fair value option securities:
U.S. Treasury	25,306			25,306		25,306		—		—
U.S. government agency residential mortgage-backed securities	237,959			237,959		—		237,959		—
Total fair value option securities	263,265			263,265		25,306		237,959		—
Residential mortgage loans held for sale	430,728			430,728		—		420,979		9,749
Loans:
Commercial	10,356,437			10,172,701		—		—		10,172,701
Commercial real estate	3,581,966			3,563,378		—		—		3,563,378
Residential mortgage	1,880,923			1,913,208		—		—		1,913,208
Personal	587,423			582,353		—		—		582,353
Total loans	16,406,749			16,231,640		—		—		16,231,640
Allowance for loan losses	(243,259		)	—		—		—		—
Loans, net of allowance	16,163,490			16,231,640		—		—		16,231,640
Mortgage servicing rights	190,747			190,747		—		—		190,747
Derivative instruments with positive fair value, net of cash collateral	883,673			883,673		7,246		876,427		—
Deposits with no stated maturity	18,512,740			18,512,740		—		—		18,512,740
Time deposits	2,247,061			2,252,212		—		—		2,252,212
Other borrowed funds	6,360,199			6,342,885		—		—		6,342,885
Subordinated debentures	371,812			371,808		—		150,234		221,574
Derivative instruments with negative fair value, net of cash collateral	719,159			719,159		4,808		714,351		—

- 119 -

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

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

Cash and Cash Equivalents

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

Securities

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

Loans

The fair value of loans, excluding loans held for sale, are based on discounted cash flow analyses using interest rates and credit and liquidity spreads currently being offered for loans with similar remaining terms to maturity and risk, adjusted for the impact of interest rate floors and ceilings, which are classified as Significant Unobservable Inputs. The fair values of loans were estimated to approximate their discounted cash flows less loan loss allowances allocated to these loans of $223 million at June 30, 2017, $218 million at December 31, 2016 and $217 million at June 30, 2016. A summary of assumptions used in determining the fair value of loans follows:



	Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate
June 30, 2017:
Commercial	0.38% - 30.00%	0.64	0.71% - 4.56%
Commercial real estate	0.38% - 18.00%	0.77	1.03% - 4.31%
Residential mortgage	1.74% - 18.00%	2.18	1.75% - 4.19%
Personal	0.25% - 21.00%	0.28	0.70% - 4.68%

December 31, 2016:
Commercial	0.38% - 30.00%	0.70	0.64% - 4.60%
Commercial real estate	0.38% - 18.00%	0.71	0.94% - 4.27%
Residential mortgage	1.74% - 18.00%	2.27	1.71% - 4.26%
Personal	0.25% - 21.00%	0.40	1.03% - 4.59%

June 30, 2016:
Commercial	0.38% - 30.00%	0.69	0.55% - 3.68%
Commercial real estate	0.38% - 18.00%	0.73	0.80% - 3.65%
Residential mortgage	1.70% - 18.00%	1.97	1.25% - 3.75%
Personal	0.25% - 21.00%	0.35	0.71% - 3.91%

Deposits

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

- 120 -

A summary of assumptions used in determining the fair value of time deposits follows:



	Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate
June 30, 2017	0.03% - 10.00%	1.91	1.81% - 2.12%
December 31, 2016	0.02% - 9.65%	1.96	1.57% - 2.00%
June 30, 2016	0.03% - 9.64%	2.15	1.16% - 1.43%

Other Borrowings and Subordinated Debentures

The fair values of these instruments are based upon discounted cash flow analyses using interest rates currently being offered on similar instruments, which are considered Significant Unobservable Inputs. A summary of assumptions used in determining the fair value of other borrowings and subordinated debentures follows:



	Range of Contractual Yields	Average Re-pricing (in years)	Discount Rate
June 30, 2017:
Other borrowed funds	0.25% - 3.58%	0.02	1.06% - 3.69%
Subordinated debentures	5.38%	16.90	4.89%

December 31, 2016:
Other borrowed funds	0.25% - 3.50%	0.00	0.55% - 3.22%
Subordinated debentures	5.38%	16.86	6.11%

June 30, 2016:
Other borrowed funds	0.25% - 3.28%	0.02	0.30% - 2.92%
Subordinated debentures	1.32% - 5.38%	8.35	2.16% - 5.38%

Off-Balance Sheet Instruments

The fair values of commercial loan commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements. The fair values of these off-balance sheet instruments were not significant at June 30, 2017, December 31, 2016 or June 30, 2016.

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 and U.S. Treasury securities 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.

- 121 -

(12) Federal and State Income Taxes

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



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Amount:
Federal statutory tax	$	47,800		$	33,869		$	92,168		$	55,715
Tax exempt revenue	(3,224		)	(2,568		)	(6,335		)	(5,100		)
Effect of state income taxes, net of federal benefit	2,944			1,557			5,389			3,858
Utilization of tax credits:
Low-income housing tax credit, net of amortization	(526		)	(572		)	(2,249		)	(1,882		)
Other tax credits	(363		)	(521		)	(727		)	(1,042		)
Bank-owned life insurance	(775		)	(810		)	(1,547		)	(1,601		)
Share-based compensation	1,636			—			(2,301		)	—
Other, net	213			(458		)	1,410			1,977
Total income tax expense	$	47,705		$	30,497		$	85,808		$	51,925



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Percent of pretax income:
Federal statutory tax	35.0	%	35.0	%	35.0	%	35.0	%
Tax exempt revenue	(2.4	)	(2.7	)	(2.4	)	(3.2	)
Effect of state income taxes, net of federal benefit	2.2		1.6		2.0		2.4
Utilization of tax credits:
Low-income housing tax credit, net of amortization	(0.4	)	(0.6	)	(0.8	)	(1.2	)
Other tax credits	(0.3	)	(0.5	)	(0.3	)	(0.6	)
Bank-owned life insurance	(0.6	)	(0.8	)	(0.6	)	(1.0	)
Share-based compensation	1.2		—		(0.9	)	—
Other, net	0.2		(0.5	)	0.6		1.2
Total	34.9	%	31.5	%	32.6	%	32.6	%

(13) Subsequent Events

The Company evaluated events from the date of the consolidated financial statements on June 30, 2017 through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q. No events were identified requiring recognition in and/or disclosure in the consolidated financial statements.

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

(In Thousands, Except Per Share Data)	Six Months Ended
	June 30, 2017							June 30, 2016
	Average Balance			Revenue/ Expense		Yield/ Rate		Average Balance			Revenue/ Expense			Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	2,047,633		$	9,442	0.93	%	$	2,037,433		$	5,275		0.52	%
Trading securities	517,447			8,886		3.59	%	212,954			1,502			2.13	%
Investment securities
Taxable	220,528			5,944		5.39	%	228,460			6,244			5.47	%
Tax-exempt	294,539			3,650		2.48	%	346,468			3,862			2.23	%
Total investment securities	515,067			9,594		3.73	%	574,928			10,106			3.52	%
Available for sale securities
Taxable	8,420,578			85,847		2.06	%	8,848,806			88,277			2.04	%
Tax-exempt	54,470			1,453		5.71	%	71,967			1,738			5.01	%
Total available for sale securities	8,475,048			87,300		2.08	%	8,920,773			90,015			2.06	%
Fair value option securities	446,478			5,919		2.62	%	409,456			4,651			2.29	%
Restricted equity securities	304,074			8,708		5.73	%	306,833			8,174			5.33	%
Residential mortgage loans held for sale	232,932			4,222		3.65	%	345,429			6,208			3.62	%
Loans	17,132,662			336,258		3.96	%	16,127,563			286,889			3.58	%
Allowance for loan losses	(250,512		)					(239,782		)
Loans, net of allowance	16,882,150			336,258		4.01	%	15,887,781			286,889			3.63	%
Total earning assets	29,420,829			470,329		3.23	%	28,695,587			412,820			2.91	%
Receivable on unsettled securities sales	70,990							82,335
Cash and other assets	3,168,341							2,969,335
Total assets	$	32,660,160						$	31,747,257
Liabilities and equity
Interest-bearing deposits:
Transaction	$	10,326,232		$	11,651	0.23	%	$	9,673,849		$	6,577		0.14	%
Savings	451,476			182		0.08	%	407,300			195			0.10	%
Time	2,231,526			12,143		1.10	%	2,332,082			13,767			1.19	%
Total interest-bearing deposits	13,009,234			23,976		0.37	%	12,413,231			20,539			0.33	%
Funds purchased	59,407			160		0.54	%	91,446			109			0.24	%
Repurchase agreements	475,191			100		0.04	%	636,952			161			0.05	%
Other borrowings	5,654,534			26,921		0.96	%	5,829,974			16,482			0.57	%
Subordinated debentures	144,649			4,028		5.62	%	229,581			1,588			1.39	%
Total interest-bearing liabilities	19,343,015			55,185		0.58	%	19,201,184			38,879			0.41	%
Non-interest bearing demand deposits	9,220,877							8,133,945
Due on unsettled securities purchases	124,666							125,931
Other liabilities	602,964							951,455
Total equity	3,368,638							3,334,742
Total liabilities and equity	$	32,660,160						$	31,747,257
Tax-equivalent Net Interest Revenue				$	415,144	2.65	%				$	373,941		2.50	%
Tax-equivalent Net Interest Revenue to Earning Assets						2.85	%							2.64	%
Less tax-equivalent adjustment				8,758							8,757
Net Interest Revenue				406,386							365,184
Provision for credit losses				—							55,000
Other operating revenue				352,548							342,956
Other operating expense				495,596							493,955
Income before taxes				263,338							159,185
Federal and state income taxes				85,808							51,925
Net income				177,530							107,260
Net income (loss) attributable to non-controlling interests				1,027							(1,105		)
Net income attributable to BOK Financial Corp. shareholders				$	176,503						$	108,365
Earnings Per Average Common Share Equivalent:
Net income:
Basic				$	2.70						$	1.64
Diluted				$	2.69						$	1.64

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.

- 123 -

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

(In Thousands, Except Per Share Data)	Three Months Ended
	June 30, 2017							March 31, 2017
	Average Balance			Revenue/ Expense		Yield/ Rate		Average Balance			Revenue/ Expense		Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	2,007,746		$	5,198	1.04	%	$	2,087,964		$	4,244	0.82	%
Trading securities	456,028			3,517		3.23	%	579,549			5,369		3.87	%
Investment securities
Taxable	219,385			2,931		5.34	%	221,684			3,013		5.44	%
Tax-exempt	279,987			1,757		2.51	%	309,252			1,893		2.45	%
Total investment securities	499,372			4,688		3.76	%	530,936			4,906		3.70	%
Available for sale securities
Taxable	8,332,709			42,920		2.09	%	8,509,423			42,927		2.02	%
Tax-exempt	51,348			725		6.09	%	57,626			728		5.37	%
Total available for sale securities	8,384,057			43,645		2.11	%	8,567,049			43,655		2.05	%
Fair value option securities	476,102			3,539		2.92	%	416,524			2,380		2.27	%
Restricted equity securities	295,743			4,399		5.95	%	312,498			4,309		5.52	%
Residential mortgage loans held for sale	245,401			2,386		3.92	%	220,325			1,836		3.35	%
Loans	17,129,533			172,139		4.03	%	17,135,825			164,119		3.88	%
Allowance for loan losses	(251,632		)					(249,379		)
Loans, net of allowance	16,877,901			172,139		4.09	%	16,886,446			164,119		3.94	%
Total earning assets	29,242,350			239,511		3.30	%	29,601,291			230,818		3.15	%
Receivable on unsettled securities sales	79,248							62,641
Cash and other assets	3,046,973							3,291,057
Total assets	$	32,368,571						$	32,954,989
Liabilities and equity
Interest-bearing deposits:
Transaction	$	10,087,640		$	6,437	0.26	%	$	10,567,475		$	5,214	0.20	%
Savings	461,586			95		0.08	%	441,254			87		0.08	%
Time	2,204,422			6,090		1.11	%	2,258,930			6,053		1.09	%
Total interest-bearing deposits	12,753,648			12,622		0.40	%	13,267,659			11,354		0.35	%
Funds purchased	63,263			96		0.61	%	55,508			64		0.47	%
Repurchase agreements	427,353			68		0.06	%	523,561			32		0.02	%
Other borrowings	5,572,031			15,188		1.09	%	5,737,955			11,733		0.83	%
Subordinated debentures	144,654			2,003		5.55	%	144,644			2,025		5.68	%
Total interest-bearing liabilities	18,960,949			29,977		0.63	%	19,729,327			25,208		0.52	%
Non-interest bearing demand deposits	9,338,683							9,101,763
Due on unsettled securities purchases	157,438							91,529
Other liabilities	502,068							704,978
Total equity	3,409,433							3,327,392
Total liabilities and equity	$	32,368,571						$	32,954,989
Tax-equivalent Net Interest Revenue				$	209,534	2.67	%				$	205,610	2.63	%
Tax-equivalent Net Interest Revenue to Earning Assets						2.89	%						2.81	%
Less tax-equivalent adjustment				4,330							4,428
Net Interest Revenue				205,204							201,182
Provision for credit losses				—							—
Other operating revenue				182,252							170,296
Other operating expense				250,885							244,711
Income before taxes				136,571							126,767
Federal and state income taxes				47,705							38,103
Net income				88,866							88,664
Net income (loss) attributable to non-controlling interests				719							308
Net income attributable to BOK Financial Corp. shareholders				$	88,147						$	88,356
Earnings Per Average Common Share Equivalent:
Basic				$	1.35						$	1.35
Diluted				$	1.35						$	1.35

- 124 -



Three Months Ended
December 31, 2016								September 30, 2016							June 30, 2016
Average Balance			Revenue /Expense			Yield / Rate		Average Balance			Revenue / Expense		Yield / Rate		Average Balance			Revenue / Expense		Yield / Rate

$	2,032,785		$	2,800		0.55	%	$	2,047,991		$	2,651	0.51	%	$	2,022,028		$	2,569	0.51	%
476,498			4,554			3.91	%	366,545			3,157		2.71	%	237,808			775		1.89	%

224,376			3,024			5.39	%	224,518			3,000		5.34	%	227,103			3,069		5.41	%
318,493			1,854			2.33	%	328,074			1,851		2.26	%	335,288			1,878		2.25	%
542,869			4,878			3.60	%	552,592			4,851		3.51	%	562,391			4,947		3.52	%

8,706,449			42,482			1.98	%	8,795,869			42,513		1.99	%	8,819,135			43,345		2.01	%
60,106			748			5.27	%	66,721			867		5.47	%	70,977			862		5.06	%
8,766,555			43,230			2.00	%	8,862,590			43,380		2.01	%	8,890,112			44,207		2.04	%
210,733			541			0.99	%	266,998			1,531		1.70	%	368,434			2,062		2.19	%
334,114			4,554			5.45	%	335,812			4,510		5.37	%	319,136			3,863		4.84	%
345,066			2,835			3.31	%	445,930			3,615		3.28	%	401,114			3,508		3.53	%
16,723,588			156,734			3.67	%	16,447,750			150,077		3.63	%	16,263,132			144,708		3.58	%
(246,977		)						(247,901		)					(245,448		)
16,476,611			156,734			3.72	%	16,199,849			150,077		3.69	%	16,017,684			144,708		3.63	%
29,185,231			220,126			2.98	%	29,078,307			213,772		2.93	%	28,818,707			206,639		2.91	%
33,813								259,906							49,568
3,742,032								3,308,260							3,117,767
$	32,961,076							$	32,646,473						$	31,986,042


$	9,980,132		$	3,912		0.16	%	$	9,650,618		$	3,417	0.14	%	$	9,590,855		$	3,260	0.14	%
421,654			91			0.09	%	420,009			100		0.09	%	417,122			102		0.10	%
2,177,035			6,140			1.12	%	2,197,350			6,295		1.14	%	2,297,621			6,635		1.16	%
12,578,821			10,143			0.32	%	12,267,977			9,812		0.32	%	12,305,598			9,997		0.33	%
62,004			44			0.28	%	68,280			33		0.19	%	70,682			33		0.19	%
560,891			34			0.02	%	522,822			53		0.04	%	611,264			72		0.05	%
6,072,150			9,315			0.61	%	6,342,369			9,105		0.57	%	6,076,028			8,675		0.57	%
144,635			2,003			5.51	%	255,890			2,468		3.84	%	232,795			878		1.52	%
19,418,501			21,539			0.44	%	19,457,338			21,471		0.44	%	19,296,367			19,655		0.41	%
9,124,595								8,497,037							8,162,134
77,575								200,574							93,812
1,004,212								1,099,858							1,089,483
3,336,193								3,391,666							3,344,246
$	32,961,076							$	32,646,473						$	31,986,042
			$	198,587		2.54	%				$	192,301	2.49	%				$	186,984	2.50	%
						2.69	%						2.64	%						2.63	%
			4,389								4,455							4,372
			194,198								187,846							182,612
			—								10,000							20,000
			143,754								187,310							185,542
			265,547								258,088							251,385
			72,405								107,068							96,769
			22,496								31,956							30,497
			49,909								75,112							66,272
			(117		)						835							471
			$	50,026							$	74,277						$	65,801

			$	0.76							$	1.13						$	1.00
			$	0.76							$	1.13						$	1.00

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Quarterly Earnings Trends – Unaudited

(In thousands, except share and per share data)



	Three Months Ended
	June 30, 2017			Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			June 30, 2016

Interest revenue	$	235,181		$	226,390		$	215,737		$	209,317		$	202,267
Interest expense	29,977			25,208			21,539			21,471			19,655
Net interest revenue	205,204			201,182			194,198			187,846			182,612
Provision for credit losses	—			—			—			10,000			20,000
Net interest revenue after provision for credit losses	205,204			201,182			194,198			177,846			162,612
Other operating revenue
Brokerage and trading revenue	31,764			33,623			28,500			38,006			39,530
Transaction card revenue	35,296			32,127			34,521			33,933			34,950
Fiduciary and asset management revenue	41,808			38,631			34,535			34,073			34,813
Deposit service charges and fees	23,354			23,030			23,365			23,668			22,618
Mortgage banking revenue	30,276			25,191			28,414			38,516			34,884
Other revenue	14,984			11,752			12,693			13,080			13,352
Total fees and commissions	177,482			164,354			162,028			181,276			180,147
Other gains, net	6,108			3,627			(1,279		)	2,442			1,307
Gain (loss) on derivatives, net	3,241			(450		)	(35,815		)	2,226			10,766
Gain (loss) on fair value option securities, net	1,984			(1,140		)	(20,922		)	(3,355		)	4,279
Change in fair value of mortgage servicing rights	(6,943		)	1,856			39,751			2,327			(16,283		)
Gain (loss) on available for sale securities, net	380			2,049			(9		)	2,394			5,326
Total other operating revenue	182,252			170,296			143,754			187,310			185,542
Other operating expense
Personnel	143,744			136,425			141,132			139,212			139,213
Business promotion	7,738			6,717			7,344			6,839			6,703
Charitable contributions to BOKF Foundation	—			—			2,000			—			—
Professional fees and services	12,419			11,417			16,828			14,038			14,158
Net occupancy and equipment	21,125			21,624			21,470			20,111			19,677
Insurance	689			6,404			8,705			9,390			7,129
Data processing and communications	36,330			34,902			33,691			33,331			32,802
Printing, postage and supplies	4,140			3,851			3,998			3,790			3,889
Net losses (gains) and operating expenses of repossessed assets	2,267			1,009			1,627			(926		)	1,588
Amortization of intangible assets	1,803			1,802			1,558			1,521			2,624
Mortgage banking costs	12,072			13,003			17,348			15,963			15,746
Other expense	8,558			7,557			9,846			14,819			7,856
Total other operating expense	250,885			244,711			265,547			258,088			251,385
Net income before taxes	136,571			126,767			72,405			107,068			96,769
Federal and state income taxes	47,705			38,103			22,496			31,956			30,497
Net income	88,866			88,664			49,909			75,112			66,272
Net income (loss) attributable to non-controlling interests	719			308			(117		)	835			471
Net income attributable to BOK Financial Corporation shareholders	$	88,147		$	88,356		$	50,026		$	74,277		$	65,801

Earnings per share:
Basic	$1.35			$1.35			$0.76			$1.13			$1.00
Diluted	$1.35			$1.35			$0.76			$1.13			$1.00
Average shares used in computation:
Basic	64,729,752			64,715,964			64,719,018			65,085,392			65,245,887
Diluted	64,793,134			64,783,737			64,787,728			65,157,841			65,302,926

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PART II. Other Information

Item 1. Legal Proceedings

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

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

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended June 30, 2017.



Period	Total Number of Shares Purchased²	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs¹	Maximum Number of Shares that May Yet Be Purchased Under the Plans
April 1 to April 30, 2017	—	$	—	—	2,120,757
May 1 to May 31, 2017	—	$	—	—	2,120,757
June 1 to June 30, 2017	—	$	—	—	2,120,757
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 June 30, 2017, the Company had repurchased 2,879,243 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


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.

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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: July 28, 2017

/s/ Steven E. Nell

Steven E. Nell

Executive Vice President and

Chief Financial Officer

/s/ John C. Morrow

John C. Morrow

Senior Vice President and

Chief Accounting Officer

- 128 -

BOK Financial - 10-Q quarterly report FY2017 Q2

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