BOK Financial - 10-Q quarterly report FY2017 Q3

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended September 30, 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: 65,456,786 shares of common stock ($.00006 par value) as of September 30, 2017.

BOK Financial Corporation

Form 10-Q

Quarter Ended September 30, 2017

Index



Part I. Financial Information
Management’s Discussion and Analysis (Item 2)	1
Market Risk (Item 3)	43
Controls and Procedures (Item 4)	46
Consolidated Financial Statements – Unaudited (Item 1)	47
Quarterly Financial Summary – Unaudited (Item 2)	125
Quarterly Earnings Trend – Unaudited	129

Part II. Other Information
Item 1. Legal Proceedings	129
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	129
Item 6. Exhibits	129
Signatures	130

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

Performance Summary

BOK Financial Corporation (“the Company”) reported net income of $85.6 million or $1.31 per diluted share for the third quarter of 2017, compared to $74.3 million or $1.13 per diluted share for the third quarter of 2016 and $88.1 million or $1.35 per diluted share for the second quarter of 2017.

Highlights of the third quarter of 2017 included:

•

Net interest revenue totaled $218.5 million, up from $187.8 million in the third quarter of 2016 and $205.2 million in the second 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 3.01 percent for the third quarter of 2017. Recoveries of foregone interest primarily related to nonaccruing energy loans added 6 basis points to the net interest margin for the third quarter. Net interest margin was 2.64 percent for the third quarter of 2016 and 2.89 percent for the second quarter of 2017. Average earning assets were $29.6 billion for the third quarter of 2017 compared to $29.1 billion for the third quarter of 2016.

•

Fees and commissions revenue totaled $173.5 million, a $7.8 million decrease compared to the third quarter of 2016, primarily due to a $13.6 million decrease in mortgage banking revenue. This decrease was partially offset by growth in fiduciary and asset management revenue. Fees and commissions revenue decreased $4.0 million compared to the second quarter of 2017, primarily due to mortgage banking revenue. Increased transaction card revenue and brokerage and trading revenue was partially offset by lower fiduciary and asset management revenue and other revenue.

•

Other operating expense totaled $265.9 million, up $7.8 million over the third quarter of 2016. Personnel expense increased $8.7 million, primarily due to $5.9 million of equity compensation charges caused by changes in the probability that certain performance-based equity awards will vest and growth in BOKF's stock price. Other operating expense increased $15.0 million over the previous quarter. Personnel expense was up $4.2 million. Non-personnel expense increased $10.9 million. Deposit insurance expense for the second quarter of 2017 included $5.1 million in credits related to the revision of certain inputs to the assessment calculation filed in previous periods. Net losses and operating expenses of repossessed assets was up $3.8 million over the prior quarter primarily due to a $4.7 million write-down of one set of repossessed oil and gas properties.

•

No provision for credit losses was recorded in the third quarter of 2017 or the second quarter of 2017. A $10.0 million provision for credit losses was recorded in the third quarter of 2016. Gross charge-offs were $5.8 million in the third quarter of 2017, $8.1 million in the third quarter of 2016 and $2.9 million in the second quarter of 2017. Recoveries were $2.4 million in the third quarter of 2017, compared to $2.0 million in the third quarter of 2016 and $1.2 million in the second quarter of 2017.


•	The combined allowance for credit losses totaled $253 million or 1.47 percent of outstanding loans at September 30, 2017, compared to $256 million or 1.49 percent of outstanding loans at June 30, 2017.


•	Nonperforming assets that are not guaranteed by U.S. government agencies totaled $249 million or 1.46 percent of outstanding loans and repossessed assets at September 30, 2017 and $276 million or 1.62 percent of outstanding loans and repossessed assets at June 30, 2017. The decrease in nonperforming assets was primarily due to nonaccruing energy loans.


•	Average loans were largely unchanged compared to the previous quarter. Period-end outstanding loan balances were $17.2 billion at September 30, 2017, an increase of $23 million over June 30, 2017.


•	Average deposits were largely unchanged compared to the previous quarter. Growth in demand deposit balances was offset by decreased time deposit balances. Period-end deposits were $21.8 billion at September 30, 2017, a $468 million decrease compared to June 30, 2017.

•

The Company's common equity Tier 1 ratio was 11.90% at September 30, 2017. In addition, the Company's Tier 1 capital ratio was 11.90%, total capital ratio was 13.47% and leverage ratio was 9.30% at September 30, 2017. 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.

- 1 -


•	The Company paid a regular quarterly cash dividend of $29 million or $0.44 per common share during the third quarter of 2017. On October 31, 2017, the board of directors approved an increase in the regular quarterly cash dividend to $0.45 per common share payable on or about November 27, 2017 to shareholders of record as of November 13, 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 $218.5 million for the third quarter of 2017, up from $187.8 million in the third quarter of 2016 and $205.2 million in the second quarter of 2017. Net interest margin was 3.01 percent for the third quarter of 2017, 2.64 percent for the third quarter of 2016 and 2.89 percent for the second quarter of 2017. Approximately $4.7 million of foregone interest recoveries primarily related to nonaccruing energy loans added 6 basis points to the net interest margin for the third quarter of 2017. Interest recoveries from nonaccruing loans were not significant for the third quarter of 2016 and second quarter of 2017. This impact is excluded from the discussion following.

Tax-equivalent net interest revenue increased $30.5 million over the third 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 $19.1 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 $11.3 million. Growth in the average balances of loans, fair value option securities and trading securities was partially offset by decreases in available for sale securities and residential mortgage loans held for sale.

Excluding the impact of net interest recoveries in the third quarter of 2017, the tax-equivalent yield on earning assets was 3.44 percent, up 51 basis points over the third 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. Loan yields increased 57 basis points to 4.20 percent. The yield on interest-bearing cash and cash equivalents increased 78 basis points. The available for sale securities portfolio yield was up 16 basis points to 2.17 percent. The yield on the fair value option securities portfolio increased 127 basis points primarily related to a change in the mix of securities and an increase in average rates. Funding costs were up 31 basis points over the third quarter of 2016. Growth in the cost of interest-bearing deposits was limited to 13 basis points by a lack of market pricing pressure. The cost of other borrowed funds increased 70 basis points. The cost of the subordinated debt was up 184 basis points as higher fixed rate debt issued in the second quarter of 2016 replaced lower variable rate debt paid off in third quarter of 2016. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 26 basis points for the third quarter of 2017, up 11 basis points over the third quarter of 2016. Average non-interest bearing deposits comprised 28% of total liabilities and equity for the third quarter of 2017, up from 26% for the third quarter of 2016.

Average earning assets for the third quarter of 2017 increased $559 million or 2 percent over the third quarter of 2016, including $482 million related to the Mobank acquisition in the fourth quarter of 2016. Average loans, net of allowance for loan losses, increased $806 million due primarily to growth in commercial and personal loans, partially offset by lower commercial real estate loan balances. Loan growth included $482 million related to the Mobank acquisition. Fair value option securities held as an economic hedge of our mortgage servicing rights increased $418 million. The average balance of trading securities increased $125 million primarily due to expansion of U.S. agency residential mortgage-backed securities trading activities. Available for sale securities decreased $434 million. The average balance of residential mortgage loans held for sale decreased $190 million. Interest-bearing cash and cash equivalents decreased $82 million and investment securities decreased $77 million.

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Average deposits increased $1.4 billion over the third quarter of 2016, including $514 million from the Mobank acquisition. Demand deposit balances grew by $893 million, including $248 million from Mobank. Interest-bearing transaction account balances increased $438 million, including $233 million from Mobank. Savings account balances also grew over the prior year and time deposit balances were largely unchanged. Average borrowed funds decreased $360 million compared to the third 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 $111 million.

Excluding the impact of net interest recoveries in the third quarter of 2017, net interest margin increased 6 basis points over the second quarter of 2017. The yield on average earning assets increased 14 basis points. The loan portfolio yield increased by 17 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 25 basis points. Funding costs were 0.75 percent, up 12 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 increased $395 million compared to the second quarter of 2017. Fair value option securities held as an economic hedge of our mortgage servicing rights increased $208 million. Average loan balances grew by $127 million. Available for sale securities increased $44 million, trading securities increased $36 million and restricted equity securities were up $33 million over the prior quarter. These increases were partially offset by a $42 million decrease in average interest-bearing cash and cash equivalents balances.

Average deposits increased $27 million over the previous quarter. Demand deposit balances increased $51 million, partially offset by a $28 million decrease in time deposit balances. Interest-bearing transaction account balances were largely unchanged compared to the prior quarter. The average balance of borrowed funds increased $511 million over the second quarter of 2017 primarily due to increased borrowings from the Federal Home Loan Banks, partially offset by 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.

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Table 1 -- Volume/Rate Analysis

(In thousands)



	Three Months Ended September 30, 2017 / 2016									Nine Months Ended September 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	$	3,724		$	(204	)	$	3,928		$	7,891		$	(172	)	$	8,063
Trading securities	965			3,813			(2,848		)	8,349			12,645			(4,296		)
Investment securities:
Taxable securities	(58		)	(40		)	(18		)	(358		)	(246		)	(112		)
Tax-exempt securities	(201		)	(452		)	251			(413		)	(1,058		)	645
Total investment securities	(259		)	(492		)	233			(771		)	(1,304		)	533
Available for sale securities:
Taxable securities	2,066			(1,536		)	3,602			(364		)	(4,819		)	4,455
Tax-exempt securities	(301		)	(275		)	(26		)	(586		)	(771		)	185
Total available for sale securities	1,765			(1,811		)	3,576			(950		)	(5,590		)	4,640
Fair value option securities	3,535			1,881			1,654			4,803			2,532			2,271
Restricted equity securities	316			(168		)	484			850			(294		)	1,144
Residential mortgage loans held for sale	(1,520		)	(1,597		)	77			(3,506		)	(3,641		)	135
Loans	37,429			8,320			29,109			86,798			24,936			61,862
Total tax-equivalent interest revenue	45,955			9,742			36,213			103,464			29,112			74,352
Interest expense:
Transaction deposits	4,645			211			4,434			9,719			816			8,903
Savings deposits	(10		)	5			(15		)	(23		)	36			(59		)
Time deposits	83			(43		)	126			(1,541		)	(659		)	(882		)
Funds purchased	83			(26		)	109			134			(92		)	226
Repurchase agreements	87			(37		)	124			26			(62		)	88
Other borrowings	11,000			(384		)	11,384			21,439			(1,190		)	22,629
Subordinated debentures	(398		)	(1,331		)	933			2,042			(2,823		)	4,865
Total interest expense	15,490			(1,605		)	17,095			31,796			(3,974		)	35,770
Tax-equivalent net interest revenue	30,465			11,347			19,118			71,668			33,086			38,582
Change in tax-equivalent adjustment	(141		)							(140		)
Net interest revenue	$	30,606								$	71,808


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

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Other Operating Revenue

Other operating revenue was $175.7 million for the third quarter of 2017, an $11.6 million decrease compared to the third quarter of 2016 and a $6.5 million decrease compared to the second quarter of 2017. Fees and commissions revenue decreased $7.8 million compared to the third quarter of 2016 and decreased $4.0 million compared to the prior quarter. The change in the fair value of mortgage servicing rights, net of economic hedges, increased other operating revenue by $1.0 million in the third quarter of 2017, increased other operating revenue by $1.2 million in the third quarter of 2016 and decreased other operating revenue $1.7 million in the second quarter of 2017.

Table 2 – Other Operating Revenue

(In thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2017			Increase (Decrease)			% Increase (Decrease)
	2017			2016			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2017			Increase (Decrease)			% Increase (Decrease)
Brokerage and trading revenue	$	33,169		$	38,006		$	(4,837	)	(13	)%	$	31,764		$	1,405		4	%
Transaction card revenue	37,826			33,933			3,893			11	%	35,296			2,530			7	%
Fiduciary and asset management revenue	40,687			34,073			6,614			19	%	41,808			(1,121		)	(3	)%
Deposit service charges and fees	23,209			23,668			(459		)	(2	)%	23,354			(145		)	(1	)%
Mortgage banking revenue	24,890			38,516			(13,626		)	(35	)%	30,276			(5,386		)	(18	)%
Other revenue	13,670			13,080			590			5	%	14,984			(1,314		)	(9	)%
Total fees and commissions revenue	173,451			181,276			(7,825		)	(4	)%	177,482			(4,031		)	(2	)%
Other gains (losses), net	(1,283		)	2,442			(3,725		)	N/A		6,108			(7,391		)	N/A
Gain on derivatives, net	1,033			2,226			(1,193		)	N/A		3,241			(2,208		)	N/A
Gain (loss) on fair value option securities, net	661			(3,355		)	4,016			N/A		1,984			(1,323		)	N/A
Change in fair value of mortgage servicing rights	(639		)	2,327			(2,966		)	N/A		(6,943		)	6,304			N/A
Gain on available for sale securities, net	2,487			2,394			93			N/A		380			2,107			N/A
Total other operating revenue	$	175,710		$	187,310		$	(11,600	)	(6	)%	$	182,252		$	(6,542	)	(4	)%

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

Fees and commissions revenue

Diversified sources of fees and commissions revenue are a significant part of our business strategy and represented 44 percent of total revenue for the third 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 $4.8 million or 13 percent compared to the third quarter of 2016.

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 $11.9 million for the third quarter of 2017, a $98 thousand or 1 percent decrease compared to the third quarter of 2016.

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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 $10.5 million for the third quarter of 2017, a $3.2 million or 23 percent decrease compared to the third quarter of 2016 primarily attributed to decreased activity related to our mortgage banking customers.

Revenue earned from retail brokerage transactions decreased $1.7 million or 25 percent compared to the third quarter of 2016 to $5.2 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. The implementation of the new Department of Labor ("DOL") fiduciary rule in the second quarter of 2017 has negatively impacted retail brokerage revenue. 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 $5.5 million for the third quarter of 2017, a $214 thousand or 4 percent increase over the third quarter of 2016. Investment banking revenue is primarily related to the timing and volume of completed transactions.

Brokerage and trading revenue increased $1.4 million over the second quarter of 2017, primarily due to increases of $1.8 million in trading revenue and $1.5 million in investment banking revenue, partially offset by a decrease of $1.1 million in customer hedging revenue.

Transaction card revenue depends largely on the volume and amount of transactions processed, the number of TransFund automated teller machine (“ATM”) locations and the number of merchants served. Transaction card revenue for the third quarter of 2017 increased $3.9 million or 11.5 percent, including a $2.1 million early termination penalty, over the third quarter of 2016. Excluding the penalty, TransFund revenue was up $1.0 million or 5.3 percent. TransFund electronic funds transfer ("EFT") network revenue totaled $20.8 million, up $3.1 million or 17.3 percent over the prior year. Merchant services fees totaled $12.0 million, a $712 thousand or 6 percent increase. Revenue from interchange fees paid by merchants for transactions processed from debit cards issued by the Company totaled $5.0 million, an increase of $114 thousand or 2 percent.

Transaction card revenue increased $2.5 million over the prior quarter, primarily due to a customer early termination fee in the third quarter of 2017.

Fiduciary and asset management revenue is earned through managing or holding of assets for customers and executing transactions or providing related services. Approximately 80 percent of fiduciary and asset management revenue is primarily based on the fair value of assets. Rates applied to asset values vary based on the nature of the relationship. Fiduciary relationships and managed asset relationships generally have higher fee rates than non-fiduciary and/or managed relationships.

Fiduciary and asset management revenue grew by $6.6 million or 19 percent over the third quarter of 2016, primarily due to growth in assets under management, improved pricing discipline and decreased fee waivers.

Fiduciary and asset management revenue decreased $1.1 million compared to the second quarter of 2017. The annual assessment of tax preparation fees added $1.0 million in the second quarter of 2017.

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

Table 3 -- Assets Under Management or Administration



	Three Months Ended September 30,
	2017						2016
	Balance		Revenue¹		Margin²		Balance		Revenue¹		Margin²
Managed fiduciary assets:
Personal	$	7,611,265	$	21,299	1.12	%	$	7,502,577	$	19,521	1.04	%
Institutional	12,747,679		5,585		0.18	%	11,732,295		4,366		0.15	%
Total managed fiduciary assets	20,358,944		26,884		0.53	%	19,234,872		23,887		0.50	%

Non-managed assets:
Fiduciary	24,818,241		13,214		0.21	%	23,164,851		9,692		0.17	%
Non-fiduciary	16,458,382		589		0.01	%	17,289,854		494		0.01	%
Safekeeping and brokerage assets under administration	16,015,342		—		—	%	15,584,153		—		—	%
Total non-managed assets	57,291,965		13,803		0.10	%	56,038,858		10,186		0.07	%

Total assets under management or administration	$	77,650,909	$	40,687	0.21	%	$	75,273,730	$	34,073	0.18	%


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 September 30, 2017 and 2016 follows:

Table 4 -- Changes in Assets Under Management or Administration



	Three Months Ended September 30,
	2017			2016
Beginning balance	$	77,811,762		$	73,001,516
Net inflows (outflows)	(1,781,037		)	870,819
Net change in fair value	1,620,184			1,401,395
Ending balance	$	77,650,909		$	75,273,730

Deposit service charges and fees were $23.2 million for the third quarter of 2017, a decrease of $459 thousand or 2 percent compared to the third quarter of 2016. Commercial account service charge revenue totaled $11.8 million, up $400 thousand or 4 percent. Overdraft fees were $9.7 million, an $895 thousand or 8.5 percent decrease compared to the third quarter of 2016. Service charges on deposit accounts with a standard monthly fee were $1.7 million, an increase of $33 thousand or 2 percent. Deposit service charges and fees decreased $145 thousand compared to the prior quarter.

Mortgage banking revenue decreased $13.6 million or 35 percent compared to the third quarter of 2016. Mortgage production revenue decreased $13.6 million. Mortgage loan production volumes decreased $725 million, including a $539 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 retail channel decreased compared to the prior year as average primary mortgage interest rates were up 43 basis points over the third quarter of 2016. Gain on sale margin decreased 41 basis points compared to the prior year. The margin decrease was primarily due to market pricing pressure. Mortgage servicing revenue was relatively consistent compared to the third quarter of 2016. The outstanding principal balance of mortgage loans serviced for others totaled $22.1 billion, an increase of $212 million or 1 percent.

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Mortgage banking revenue decreased $5.4 million compared to the second quarter of 2017. Mortgage production revenue decreased $5.5 million. Production volume decreased $78 million primarily due to increased competition. Gain on sale margin decreased due to increased market pricing pressure. Revenue from mortgage loan servicing increased $125 thousand over the prior quarter.

Table 5 – Mortgage Banking Revenue

(In thousands)



	Three Months Ended September 30,						Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2017			Increase (Decrease)			% Increase (Decrease)
	2017			2016			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2017			Increase (Decrease)			% Increase (Decrease)
Mortgage production revenue	$	8,329		$	21,958		$	(13,629	)	(62	)%	$	13,840		$	(5,511	)	(40	)%

Mortgage loans funded for sale	$	832,796		$	1,864,583							$	902,978
Add: Current period end outstanding commitments	334,337			630,804								362,088
Less: Prior period end outstanding commitments	362,088			965,631								381,732
Total mortgage production volume	$	805,045		$	1,529,756		$	(724,711	)	(47	)%	$	883,334		$	(78,289	)	(9	)%

Mortgage loan refinances to mortgage loans funded for sale	38		%	51		%	(1,300		) bps			33		%	500		bps
Gains on sale margin	1.03		%	1.44		%	(41		) bps			1.57		%	(54		) bps
Primary mortgage interest rates:
Average	3.88		%	3.45		%	43		bps			3.98		%	(10		) bps
Period end	3.83		%	3.42		%	41		bps			3.88		%	(5		) bps

Mortgage servicing revenue	$	16,561		$	16,558		$	3		—	%	$	16,436		$	125		1	%
Average outstanding principal balance of mortgage loans serviced for others	22,079,177			21,514,962			564,215			3	%	22,055,127			24,050			—	%

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


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

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

Net gains on other assets, securities and derivatives

Other net losses totaled $1.3 million in the third quarter of 2017, which includes a $1.1 million write-down related to recent tornado damage. Other net gains totaled $6.1 million in the second quarter of 2017 due to the sale of a merchant banking investment.

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 $3.6 million in the third quarter of 2017, including a $639 thousand decrease in the fair value of mortgage servicing rights, offset by a $1.7 million increase in the fair value of securities and derivative contracts held as an economic hedge and $2.5 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 $2.1 million for the third quarter of 2016. The fair value of mortgage servicing rights increased $2.3 million.The fair value of securities and interest rate derivative contracts held as an economic hedge decreased $1.1 million. Net interest earned on securities held as an economic hedge was $861 thousand.

- 8 -

The net economic benefit of changes in the fair value of mortgage servicing rights and related economic hedges was $247 thousand for the second quarter of 2017. The fair value of mortgage servicing rights decreased by $6.9 million. The fair value of securities and interest rate derivative contracts held as an economic hedge increased by $5.2 million.

Table 6 - Gain (Loss) on Mortgage Servicing Rights

(In thousands)



	Three Months Ended
	Sept. 30, 2017			June 30, 2017			Sept. 30, 2016
Gain on mortgage hedge derivative contracts, net	$	1,025		$	3,241		$	2,268
Gain (loss) on fair value option securities, net	661			1,984			(3,355		)
Gain (loss) on economic hedge of mortgage servicing rights, net	1,686			5,225			(1,087		)
Gain (loss) on change in fair value of mortgage servicing rights	(639		)	(6,943		)	2,327
Gain (loss) on changes in fair value of mortgage servicing rights, net of economic hedges included in other operating revenue	1,047			(1,718		)	1,240
Net interest revenue on fair value option securities¹	2,543			1,965			861
Total economic benefit of changes in the fair value of mortgage servicing rights, net of economic hedges	$	3,590		$	247		$	2,101

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

- 9 -

Other Operating Expense

Other operating expense for the third quarter of 2017 totaled $265.9 million, an increase of $7.8 million or 3 percent over the third quarter of 2016. Personnel expense increased $8.7 million or 6 percent. Non-personnel expense decreased $852 thousand or 1 percent compared to the prior year.

Other operating expense increased $15.0 million over the previous quarter. Personnel expense was up $4.2 million and non-personnel expense increased $10.9 million.

In addition to $1.1 million of losses included in other gain (losses), net, operating expense for the third quarter of 2017 included $1.3 million of additional expense related to tornado damage sustained on our Tulsa operations center and the impact of the hurricane in the Houston market.

Table 7 – Other Operating Expense

(In thousands)



	Three Months Ended September 30,					Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2017		Increase (Decrease)			% Increase (Decrease)
	2017		2016			Increase (Decrease)			% Increase (Decrease)		Three Months Ended June 30, 2017		Increase (Decrease)			% Increase (Decrease)
Regular compensation	$	83,583	$	83,123		$	460		1	%	$	83,630	$	(47	)	—	%
Incentive compensation:
Cash-based	33,643		33,240			403			1	%	29,954		3,689			12	%
Share-based	8,407		1,839			6,568			357	%	7,380		1,027			14	%
Deferred compensation	975		1,059			(84		)	N/A		1,000		(25		)	N/A
Total incentive compensation	43,025		36,138			6,887			19	%	38,334		4,691			12	%
Employee benefits	21,302		19,951			1,351			7	%	21,780		(478		)	(2	)%
Total personnel expense	147,910		139,212			8,698			6	%	143,744		4,166			3	%
Business promotion	7,105		6,839			266			4	%	7,738		(633		)	(8	)%
Professional fees and services	11,887		14,038			(2,151		)	(15	)%	12,419		(532		)	(4	)%
Net occupancy and equipment	21,325		20,111			1,214			6	%	21,125		200			1	%
Insurance	6,005		9,390			(3,385		)	(36	)%	689		5,316			772	%
Data processing and communications	37,327		33,331			3,996			12	%	36,330		997			3	%
Printing, postage and supplies	3,917		3,790			127			3	%	4,140		(223		)	(5	)%
Net losses (gains) and operating expenses of repossessed assets	6,071		(926		)	6,997			(756	)%	2,267		3,804			168	%
Amortization of intangible assets	1,744		1,521			223			15	%	1,803		(59		)	(3	)%
Mortgage banking costs	13,450		15,963			(2,513		)	(16	)%	12,072		1,378			11	%
Other expense	9,193		14,819			(5,626		)	(38	)%	8,558		635			7	%
Total other operating expense	$	265,934	$	258,088		$	7,846		3	%	$	250,885	$	15,049		6	%

Average number of employees (full-time equivalent)	4,887		4,928			(41		)	(1	)%	4,910		(23		)	—	%

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

Personnel expense

Regular compensation, which consists of salaries and wages, overtime pay and temporary personnel costs, increased $460 thousand or 1 percent over the third quarter of 2016. The average number of employees was relatively unchanged compared to the prior year. Standard annual merit increases in regular compensation were effective for the majority of our staff on March 1.

- 10 -

Incentive compensation increased $6.9 million or 19 percent over the third quarter of 2016, primarily due to increased share-based compensation expense. 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. Third quarter 2017 equity compensation expense included charges of $4.0 million from changes in the vesting assumptions for performance-based awards and $1.9 million from an increase in the fair value of BOK Financial common shares.

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 increased $403 thousand or 1 percent over the third quarter of 2016.

Employee benefits expense increased $1.4 million or 7 percent over the the third quarter of 2016, primarily due to an increase in employee medical costs.

Personnel expense increased $4.2 million over the second quarter of 2017. Cash-based incentive compensation increased $3.7 million due to continued improvement of performance metrics against internal targets. Regular compensation expense was largely unchanged compared to the prior quarter. A $1.5 million seasonal decrease in payroll tax expense was partially offset by a $740 thousand increase in employee healthcare costs.

Non-personnel operating expense

Non-personnel operating expense decreased $852 thousand or 1% compared to the third quarter of 2016.

Deposit insurance expense decreased $3.4 million due to improvement in risk factors including the benefit of decreased criticized and classified asset levels. Mortgage banking expense decreased $2.5 million primarily due to lower prepayments as average mortgage interest rates trended upward. Professional fees and servicing expense decreased $2.2 million.

Data processing and communications expense increased $4.0 million. Occupancy and equipment expense increased $1.2 million. Increases in these expense categories were primarily due to information technology infrastructure and cybersecurity project costs and increased data processing transaction activity.

Other expense decreased $5.6 million compared to the third quarter of 2016, primarily due to a $5.0 million legal settlement accrual concerning the manner in which the Company posted charges to certain consumer and small business deposit accounts in the third quarter of 2016.

Non-personnel expense increased $10.9 million over the second quarter of 2017. Deposit insurance expense increased $5.3 million, 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. Net losses and operating expenses of repossessed assets increased $3.8 million mainly due to a $4.7 million write-down of a set of oil and gas properties. Mortgage banking expense increased $1.4 million and data processing and communication expense increased $1.0 million.

- 11 -

Income Taxes

The Company's income tax expense was $42.4 million or 33.1 percent of net income before taxes for the third quarter of 2017 compared to $32.0 million or 29.8 percent of net income before taxes for the third quarter of 2016 and $47.7 million or 34.9 percent of net income before taxes for the second quarter of 2017.

The statute of limitations expired on uncertain income tax positions and the Company adjusted its current income tax liability amounts on filed tax returns for 2016 during the third quarter of 2017. These adjustments reduced income tax expense by $3.1 million in the third quarter of 2017. Adjustments reduced income tax expense by $4.1 million in the third quarter of 2016 related to filed tax returns for 2015. Excluding these adjustments, income tax expense would have been 35.5 percent of net income before taxes for the third quarter of 2017 and 33.7 percent of net income before taxes for the third quarter of 2016.

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 $18 million at September 30, 2017, $17 million at June 30, 2017 and $14 million at September 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 supports assets of the operating lines of business tends to insulate them from interest rate risk.

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

- 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 $18.1 million or 25 percent over the third quarter of 2016. Net interest revenue grew by $34.9 million over the prior year. Other operating revenue decreased $6.9 million while operating expenses decreased $3.2 million. Net charge-offs were down $2.8 million compared to the prior year.

Table 8 -- Net Income by Line of Business

(In thousands)



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016
Commercial Banking	$	69,689		$	55,995	$	201,603		$	145,885
Consumer Banking	6,734			8,761		18,900			13,103
Wealth Management	15,576			9,108		45,684			26,865
Subtotal	91,999			73,864		266,187			185,853
Funds Management and other	(6,350		)	413		(4,035		)	(3,211		)
Total	$	85,649		$	74,277	$	262,152		$	182,642

- 13 -

Commercial Banking

Commercial Banking contributed $69.7 million to consolidated net income in the third quarter of 2017, an increase of $13.7 million or 25 percent over the third quarter of 2016. The increase in Commercial Banking's contribution was largely due to an increase in net interest revenue.

Table 9 -- Commercial Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)			Nine Months Ended						Increase (Decrease)
	September 30,									September 30,
	2017			2016						2017			2016
Net interest revenue from external sources	$	157,080		$	123,599		$	33,481		$	435,946		$	358,713		$	77,233
Net interest expense from internal sources	(24,173		)	(15,052		)	(9,121		)	(61,803		)	(44,259		)	(17,544		)
Total net interest revenue	132,907			108,547			24,360			374,143			314,454			59,689
Net loans charged off	3,217			5,601			(2,384		)	2,983			34,024			(31,041		)
Net interest revenue after net loans charged off	129,690			102,946			26,744			371,160			280,430			90,730

Fees and commissions revenue	53,928			47,710			6,218			148,193			144,215			3,978
Other gains, net	163			1,932			(1,769		)	7,946			2,033			5,913
Other operating revenue	54,091			49,642			4,449			156,139			146,248			9,891

Personnel expense	28,902			28,365			537			83,935			82,513			1,422
Non-personnel expense	28,050			25,010			3,040			84,582			79,526			5,056
Other operating expense	56,952			53,375			3,577			168,517			162,039			6,478

Net direct contribution	126,829			99,213			27,616			358,782			264,639			94,143
Gain on financial instruments, net	4			—			4			46			—			46
Gain (loss) on repossessed assets, net	(4,126		)	1,486			(5,612		)	(2,728		)	806			(3,534		)
Corporate expense allocations	8,650			9,054			(404		)	26,144			26,681			(537		)
Income before taxes	114,057			91,645			22,412			329,956			238,764			91,192
Federal and state income tax	44,368			35,650			8,718			128,353			92,879			35,474
Net income	$	69,689		$	55,995		$	13,694		$	201,603		$	145,885		$	55,718

Average assets	$	17,558,390		$	16,934,587		$	623,803		$	17,525,658		$	16,958,999		$	566,659
Average loans	14,274,896			13,737,081			537,815			14,157,340			13,542,719			614,621
Average deposits	8,683,331			8,317,341			365,990			8,656,144			8,392,558			263,586
Average invested capital	1,353,525			1,285,627			67,898			1,334,056			1,234,962			99,094

Net interest revenue increased $24.4 million or 22 percent over the prior year. Growth in net interest revenue was primarily due to increased yields on commercial loans due to rising short-term interest rates and a $538 million or 4 percent increase in average loan balances. Average deposit balances increased $366 million or 4 percent. The Mobank acquisition increased loans by $390 million and deposits by $396 million. 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 increased $6.2 million or 13 percent compared to the third quarter of 2016 primarily due to a $3.9 million increase in transaction card revenue and a $1.5 million increase in brokerage and trading revenue. The increase in transaction card revenue included a $2.1 million early customer termination fee received in the third quarter of 2017. The increase in brokerage and trading revenue was largely due a $1.2 million increase in loan syndication fees.

- 14 -

Operating expenses increased $3.6 million or 7 percent compared to the third quarter of 2016. Personnel expense increased $537 thousand or 2 percent. Non-personnel expense increased $3.0 million or 12 percent. Net repossession expense increased $1.3 million related mainly to the repossession of certain oil and gas properties. Deposit insurance expense increased $1.4 million due to increased granularity in the allocation to the segments.

The average outstanding balance of loans attributed to Commercial Banking grew by $538 million or 4 percent over the third quarter of 2016 to $14.3 billion. See the Loans section of Management’s Discussion and Analysis of Financial Condition following for additional discussion of changes in commercial and commercial real estate loans, which are primarily attributed to the Commercial Banking segment.

Average deposits attributed to Commercial Banking were $8.7 billion for the third quarter of 2017, an increase of $366 million or 4 percent compared to the third 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 $6.7 million to consolidated net income for the third quarter of 2017, down $2.0 million compared to the third quarter of 2016. Growth in net interest revenue of $6.4 million was offset by a decrease in other operating revenue of $13.6 million while operating expense decreased by $4.2 million.

- 15 -

Table 10 -- Consumer Banking

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)			Nine Months Ended						Increase (Decrease)
	September 30,									September 30,
	2017			2016						2017			2016
Net interest revenue from external sources	$	25,576		$	22,098		$	3,478		$	70,208		$	65,897		$	4,311
Net interest revenue from internal sources	12,213			9,263			2,950			35,002			27,492			7,510
Total net interest revenue	37,789			31,361			6,428			105,210			93,389			11,821
Net loans charged off	1,315			1,157			158			3,512			4,177			(665		)
Net interest revenue after net loans charged off	36,474			30,204			6,270			101,698			89,212			12,486

Fees and commissions revenue	47,134			60,773			(13,639		)	146,605			172,114			(25,509		)
Other gains (losses), net	(101		)	(170		)	69			(165		)	(42		)	(123		)
Other operating revenue	47,033			60,603			(13,570		)	146,440			172,072			(25,632		)

Personnel expense	25,547			26,604			(1,057		)	76,490			77,675			(1,185		)
Non-personnel expense	31,238			34,360			(3,122		)	89,537			101,812			(12,275		)
Total other operating expense	56,785			60,964			(4,179		)	166,027			179,487			(13,460		)

Net direct contribution	26,722			29,843			(3,121		)	82,111			81,797			314
Gain (loss) on financial instruments, net	1,686			(1,087		)	2,773			5,242			30,539			(25,297		)
Change in fair value of mortgage servicing rights	(639		)	2,327			(2,966		)	(5,726		)	(41,944		)	36,218
Gain on repossessed assets, net	292			161			131			253			566			(313		)
Corporate expense allocations	17,039			16,905			134			50,947			49,513			1,434
Income before taxes	11,022			14,339			(3,317		)	30,933			21,445			9,488
Federal and state income tax	4,288			5,578			(1,290		)	12,033			8,342			3,691
Net income	$	6,734		$	8,761		$	(2,027	)	$	18,900		$	13,103		$	5,797

Average assets	$	9,115,319		$	8,827,816		$	287,503		$	8,871,470		$	8,763,564		$	107,906
Average loans	1,961,265			1,893,431			67,834			1,945,122			1,888,693			56,429
Average deposits	6,707,859			6,660,514			47,345			6,651,177			6,623,724			27,453
Average invested capital	327,667			356,788			(29,121		)	321,420			328,752			(7,332		)

Net interest revenue from Consumer Banking activities grew by $6.4 million or 21 percent over the the third quarter of 2016 primarily due to increased rates received on deposit balances sold to the Funds Management unit. Average loan balances grew by $68 million or 4 percent and average deposits increased $47 million or 1% over the prior year.

Fees and commissions revenue decreased $13.6 million or 22 percent compared to the third quarter of 2016 due to a $13.6 million decrease in mortgage banking revenue. Mortgage loan production volumes decreased $725 million, largely due to the exit from the correspondent lending channel. Gain on sale margin decreased 41 basis points due to market pricing pressure. 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 $4.2 million or 7 percent compared to the third quarter of 2016. Personnel expenses decreased $1.1 million or 4 percent. Non-personnel expense decreased $3.1 million or 9 percent compared to the prior year. Mortgage banking costs were down $2.5 million primarily due to lower prepayments of loans serviced for others. A $1.8 million decrease in professional fees and services expense was partially offset by an increase of $575 thousand in data processing and communications expense and $569 thousand in business promotion expense.

- 16 -

Changes in the fair value of our mortgage servicing rights, net of economic hedge, resulted in a $640 thousand increase in Consumer Banking net income in the third quarter of 2017 compared to a $758 thousand increase in Consumer Banking net income in the third quarter of 2016.

Average consumer deposits grew by $47 million over the third quarter of 2016. Higher-costing time deposit balances decreased $114 million or 10 percent, offset by an $80 million or 5 percent increase in demand deposit balances, a $42 million or 11 percent increase in savings account balances and a $39 million or 1 percent increase in interest-bearing transaction accounts.

Wealth Management

Wealth Management contributed $15.6 million to consolidated net income in the third quarter of 2017, up $6.5 million or 71 percent over the third quarter of 2016, largely due to growth in net interest revenue.

Table 11 -- Wealth Management

(Dollars in thousands)



	Three Months Ended						Increase (Decrease)			Nine Months Ended						Increase (Decrease)
	September 30,									September 30,
	2017			2016						2017			2016
Net interest revenue from external sources	$	11,169		$	9,274		$	1,895		$	33,130		$	21,620		$	11,510
Net interest revenue from internal sources	9,604			7,401			2,203			28,784			22,258			6,526
Total net interest revenue	20,773			16,675			4,098			61,914			43,878			18,036
Net loans charged off (recovered)	(623		)	(89		)	(534		)	(676		)	(479		)	(197		)
Net interest revenue after net loans charged off (recovered)	21,396			16,764			4,632			62,590			44,357			18,233

Fees and commissions revenue	75,915			73,331			2,584			225,390			217,519			7,871
Other gains (losses), net	(208		)	192			(400		)	44			523			(479		)
Other operating revenue	75,707			73,523			2,184			225,434			218,042			7,392

Personnel expense	46,494			48,969			(2,475		)	136,758			142,235			(5,477		)
Non-personnel expense	15,297			15,457			(160		)	46,058			44,289			1,769
Other operating expense	61,791			64,426			(2,635		)	182,816			186,524			(3,708		)

Net direct contribution	35,312			25,861			9,451			105,208			75,875			29,333
Loss on financial instruments, net	—			(42		)	42			—			(42		)	42
Corporate expense allocations	9,819			10,912			(1,093		)	30,438			31,864			(1,426		)
Income before taxes	25,493			14,907			10,586			74,770			43,969			30,801
Federal and state income tax	9,917			5,799			4,118			29,086			17,104			11,982
Net income	$	15,576		$	9,108		$	6,468		$	45,684		$	26,865		$	18,819

Average assets	$	6,992,021		$	6,413,735		$	578,286		$	6,971,369		$	5,916,545		$	1,054,824
Average loans	1,324,574			1,139,396			185,178			1,301,549			1,109,410			192,139
Average deposits	5,495,250			4,913,409			581,841			5,535,979			4,710,893			825,086
Average invested capital	244,976			202,168			42,808			231,608			198,167			33,441

Net interest revenue for the third quarter of 2017 increased $4.1 million or 25 percent over the third quarter of 2016, primarily due to the increase in the average loan volume of $185 million coupled with the increase in rates. Additionally, earnings on net funds invested grew by $2.2 million. Average deposit balances grew by $582 million or 12 percent over the third quarter of 2016. Non-interest bearing demand deposits grew by $240 million or 21 percent, interest-bearing transaction account balances increased $264 million or 9 percent and time deposit balances grew by $76 million or 11 percent. Average loan balances increased $185 million or 16 percent over the prior year.

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Fees and commissions revenue increased $2.2 million or 3 percent over the third quarter of 2016. Fiduciary and asset management revenue increased $6.5 million or 19 percent over the prior year primarily due to growth in assets under management, improved pricing discipline and decreased fee waivers. Brokerage and trading revenue decreased by $4.8 million or 14 percent primarily due to decreased activity related to our mortgage banking customers along with a decrease in brokerage fees due to the implementation of the DOL fiduciary rule in the second quarter of 2017.

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 third quarter of 2017, the Wealth Management division participated in 79 state and municipal bond underwritings that totaled $1.7 billion. As a participant, the Wealth Management division was responsible for facilitating the sale of approximately $454 million of these underwritings. The Wealth Management division also participated in 7 corporate debt underwritings that totaled $2.6 billion. Our interest in these underwritings was $69 million. In the third quarter of 2016, the Wealth Management division participated in 107 state and municipal bond underwritings that totaled approximately $5.2 billion. Our interest in these underwritings totaled approximately $708 million. The Wealth Management division also participated in 11 corporate debt underwritings that totaled $4 billion. Our interest in these underwritings was $93 million.

Operating expense decreased $2.6 million or 4 percent compared to the third quarter of 2016. Personnel expense decreased $2.5 million primarily due to decreased incentive compensation expense. Non-personnel expense decreased $160 thousand.

Corporate expense allocations decreased $1.1 million or 10 percent compared to 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 September 30, 2017, December 31, 2016 and September 30, 2016.

At September 30, 2017, the carrying value of investment (held-to-maturity) securities was $467 million and the fair value was $490 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 $99 million of the $198 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 $8.4 billion at September 30, 2017, a $44 million increase compared to June 30, 2017. At September 30, 2017, the available for sale securities portfolio consisted primarily of U.S. government agency residential mortgage-backed securities with an amortized cost of $5.3 billion and U.S. government agency commercial mortgage-backed securities with an amortized cost of $2.9 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.

A primary risk of holding residential mortgage-backed securities comes from extension during periods of rising interest rates or prepayment during periods of falling interest rates. We evaluate this risk through extensive modeling of risk both before making an investment and throughout the life of the security. Our best estimate of the duration of the combined residential mortgage-backed securities portfolio held in investment and available for sale securities at September 30, 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.

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We also hold amortized cost of $81 million in residential mortgage-backed securities privately issued by publicly-owned financial institutions, a decrease of $5.9 million from June 30, 2017 due to cash payments received during the quarter. The fair value of our portfolio of privately issued residential mortgage-backed securities totaled $100 million at September 30, 2017.

The aggregate gross amount of unrealized losses on available for sale securities totaled $51 million at September 30, 2017, compared to $50 million at June 30, 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 third 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 $311 million at September 30, 2017. Holdings of FHLB stock increased $37 million compared to June 30, 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 $314 million of bank-owned life insurance at September 30, 2017. This investment is expected to provide a long-term source of earnings to support existing employee benefit programs. Approximately $286 million is held in separate accounts. Our separate account holdings are invested in diversified portfolios of investment-grade fixed income securities and cash equivalents, including U.S. Treasury and Agency securities, residential mortgage-backed securities, corporate debt, asset-backed and commercial mortgage-backed securities. The portfolios are managed by unaffiliated professional managers within parameters established in the portfolio’s investment guidelines. The cash surrender value of certain life insurance policies is further supported by a stable value wrap, which protects against changes in the fair value of the investments. At September 30, 2017, the fair value of investments held in separate accounts was approximately $292 million. As the underlying fair value of the investments held in a separate accounts at September 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.

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Loans

The aggregate loan portfolio before allowance for loan losses totaled $17 billion at September 30, 2017, an increase of $23 million over June 30, 2017. The outstanding balance of commercial loans increased by $158 million, offset by a $170 million decrease in commercial real estate loan balances. Residential mortgage loans increased $6.6 million and personal loans grew by $29 million.

Table 12 -- Loans

(In thousands)



	Sept. 30, 2017		June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016
Commercial:
Energy	$	2,867,981	$	2,847,240	$	2,537,112	$	2,497,868	$	2,520,804
Services	2,967,513		2,958,827		3,013,375		3,108,990		2,936,599
Healthcare	2,239,451		2,221,518		2,265,604		2,201,916		2,085,046
Wholesale/retail	1,658,098		1,543,695		1,506,243		1,576,818		1,602,030
Manufacturing	519,446		546,137		543,430		514,975		499,486
Other commercial and industrial	543,445		520,538		461,346		490,257		476,198
Total commercial	10,795,934		10,637,955		10,327,110		10,390,824		10,120,163

Commercial real estate:
Retail	725,865		722,805		745,046		761,888		801,377
Multifamily	999,009		952,380		922,991		903,272		873,773
Office	797,089		862,973		860,889		798,888		752,705
Industrial	591,080		693,635		871,463		871,749		838,021
Residential construction and land development	112,102		141,592		135,994		135,533		159,946
Other commercial real estate	292,997		315,207		334,680		337,716		367,776
Total commercial real estate	3,518,142		3,688,592		3,871,063		3,809,046		3,793,598

Residential mortgage:
Permanent mortgage	1,013,965		989,040		977,743		1,006,820		969,558
Permanent mortgages guaranteed by U.S. government agencies	187,370		191,729		204,181		199,387		190,309
Home equity	744,415		758,429		764,350		743,625		712,926
Total residential mortgage	1,945,750		1,939,198		1,946,274		1,949,832		1,872,793

Personal	947,008		917,900		847,459		839,958		678,232

Total	$	17,206,834	$	17,183,645	$	16,991,906	$	16,989,660	$	16,464,786

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 $10.8 billion or 63 percent of the loan portfolio at September 30, 2017, an increase of $158 million over June 30, 2017. Wholesale/retail loan balances grew by $114 million. Other commercial and industrial loans increased by $23 million, energy loan balances increased by $21 million and healthcare sector loan balances increased $18 million. This growth was offset by a $27 million decrease in manufacturing sector loan balances.

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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	$	515,667	$	1,538,977	$	16,971	$	4,020	$	334,392	$	8,606	$	72,259	$	377,089	$	2,867,981
Services	661,654		856,253		187,561		5,965		316,468		231,846		314,463		393,303		2,967,513
Healthcare	265,166		394,476		131,983		96,446		122,688		127,707		263,705		837,280		2,239,451
Wholesale/retail	422,993		587,592		44,080		31,501		71,908		62,706		88,834		348,484		1,658,098
Manufacturing	109,034		150,554		410		3,121		61,398		32,885		95,558		66,486		519,446
Other commercial and industrial	107,925		160,797		2,371		71,194		26,610		19,204		58,728		96,616		543,445
Total commercial loans	$	2,082,439	$	3,688,649	$	383,376	$	212,247	$	933,464	$	482,954	$	893,547	$	2,119,258	$	10,795,934

The majority of the collateral securing our commercial loan portfolio is located within our geographical footprint with 34 percent concentrated in the Texas market and 19 percent concentrated in the Oklahoma market. At September 30, 2017, the Other category is primarily composed of California - $310 million or 2.87 percent of the commercial loan portfolio, Florida - $195 million or 1.81 percent of the commercial loan portfolio, Louisiana - $171 million or 1.58 percent of the commercial loan portfolio, Pennsylvania - $119 million or 1.10 percent of the commercial loan portfolio and Tennessee - $114 million or 1.05 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 $2.9 billion or 17 percent of total loans at September 30, 2017. Unfunded energy loan commitments of $2.7 billion at September 30, 2017 were largely unchanged compared to June 30, 2017. Approximately $2.3 billion of energy loans were to oil and gas producers, largely unchanged compared to June 30, 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 57 percent of the committed production loans are secured by properties primarily producing oil and 43 percent of the committed production loans are secured by properties primarily producing natural gas. Loans to midstream oil and gas companies totaled $314 million at September 30, 2017, an increase of $36 million over June 30, 2017. Loans to borrowers that provide services to the energy industry totaled $163 million at September 30, 2017, down $15 million compared to the prior quarter. Loans to other energy borrowers, including those engaged in wholesale or retail energy sales, totaled $52 million, a $14 million increase 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, educational services, consumer services, loans to entities providing services for real estate and construction and commercial services. Service sector loans increased by $8.7 million over June 30, 2017. Loans to governmental entities totaled $571 million at September 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.

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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 September 30, 2017, the outstanding principal balance of these loans totaled $4.1 billion. Substantially all of these loans are to borrowers with local market relationships. We serve as the agent lender in approximately 17 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 35 percent and 13 percent of the total commercial real estate portfolio at September 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 $3.5 billion or 20 percent of the loan portfolio at September 30, 2017. The outstanding balance of commercial real estate loans decreased $170 million during the third quarter of 2017 as borrowers continue to refinance loans in the permanent market. Loans secured by industrial properties decreased $103 million. Loans secured by office buildings decreased $66 million. Residential construction and land development loans and other commercial real estate loans also decreased compared to the prior quarter. These decreases were partially offset by a $47 million increase in multifamily residential loans. 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	$	68,768	$	291,284	$	103,151	$	6,419	$	31,647	$	27,583	$	19,923	$	177,090	$	725,865
Multifamily	115,182		485,063		19,464		25,930		48,855		56,321		111,260		136,934		999,009
Office	93,693		222,094		76,416		5,928		30,903		68,080		51,787		248,188		797,089
Industrial	97,399		154,007		23,161		—		10,151		10,245		47,044		249,073		591,080
Residential construction and land development	11,483		26,153		18,138		1,995		15,633		6,892		16,018		15,790		112,102
Other commercial real estate	61,464		38,617		14,645		3,301		14,397		24,480		28,311		107,782		292,997
Total commercial real estate loans	$	447,989	$	1,217,218	$	254,975	$	43,573	$	151,586	$	193,601	$	274,343	$	934,857	$	3,518,142

The Other category is primarily composed of Utah and California, which represent $120 million or 3.4 percent and $118 million or 3.3 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.

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Based on Moody's U.S. Retail Industry Classifications, approximately 60 percent of $726 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 $718 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 June 30, 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 September 30, 2017, $187 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 $4.4 million compared to June 30, 2017.

Home equity loans totaled $744 million at September 30, 2017, a $14 million decrease compared to June 30, 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 September 30, 2017 by lien position and amortizing status follows in Table 15.

Table 15 -- Home Equity Loans

(In thousands)



	Revolving		Amortizing		Total
First lien	$	71,921	$	406,132	$	478,053
Junior lien	140,791		125,571		266,362
Total home equity	$	212,712	$	531,703	$	744,415

Personal loans totaled $947 million, a $29 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.

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The distribution of residential mortgage and personal loans at September 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	$	178,762	$	420,529	$	46,567	$	12,765	$	168,312	$	93,812	$	52,951	$	40,267	$	1,013,965
Permanent mortgages guaranteed by U.S. government agencies	54,803		26,028		41,887		7,029		5,744		1,987		13,128		36,764		187,370
Home equity	387,021		134,753		95,537		5,098		38,346		9,100		71,904		2,656		744,415
Total residential mortgage	$	620,586	$	581,310	$	183,991	$	24,892	$	212,402	$	104,899	$	137,983	$	79,687	$	1,945,750

Personal	$	287,080	$	403,033	$	12,803	$	10,438	$	62,598	$	47,182	$	77,992	$	45,882	$	947,008

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

Table 17 -- Loans Managed by Primary Geographical Market

(In thousands)



	Sept. 30, 2017		June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016
Bank of Oklahoma:
Commercial	$	3,408,973	$	3,369,967	$	3,189,183	$	3,370,259	$	3,545,924
Commercial real estate	712,915		667,932		691,332		684,381		795,806
Residential mortgage	1,405,900		1,398,021		1,404,054		1,407,197		1,401,166
Personal	322,320		318,016		310,708		303,823		271,420
Total Bank of Oklahoma	5,850,108		5,753,936		5,595,277		5,765,660		6,014,316

Bank of Texas:
Commercial	4,434,595		4,339,634		4,148,316		4,022,455		3,903,218
Commercial real estate	1,236,702		1,360,164		1,452,988		1,415,011		1,400,709
Residential mortgage	229,993		232,074		231,647		233,981		229,345
Personal	375,173		354,222		312,092		306,748		278,167
Total Bank of Texas	6,276,463		6,286,094		6,145,043		5,978,195		5,811,439

Bank of Albuquerque:
Commercial	367,747		369,370		407,403		399,256		398,147
Commercial real estate	319,208		324,405		307,927		284,603		299,785
Residential mortgage	101,983		103,849		106,432		108,058		110,478
Personal	12,953		12,439		11,305		11,483		11,333
Total Bank of Albuquerque	801,891		810,063		833,067		803,400		819,743

Bank of Arkansas:
Commercial	91,051		85,020		88,010		86,577		83,544
Commercial real estate	80,917		73,943		74,469		73,616		72,649
Residential mortgage	6,318		6,395		6,829		7,015		6,936
Personal	10,388		11,993		6,279		6,524		6,757
Total Bank of Arkansas	188,674		177,351		175,587		173,732		169,886

Colorado State Bank & Trust:
Commercial	1,124,200		1,065,780		998,216		1,018,208		1,013,314
Commercial real estate	186,427		255,379		266,218		265,264		254,078
Residential mortgage	63,734		63,346		62,313		59,631		59,838
Personal	60,513		56,187		49,523		50,372		42,901
Total Colorado State Bank & Trust	1,434,874		1,440,692		1,376,270		1,393,475		1,370,131

Bank of Arizona:
Commercial	634,809		617,759		643,222		686,253		680,447
Commercial real estate	706,188		705,858		737,088		747,409		726,542
Residential mortgage	40,730		37,034		36,737		36,265		39,206
Personal	55,050		55,528		51,386		52,553		31,205
Total Bank of Arizona	1,436,777		1,416,179		1,468,433		1,522,480		1,477,400

Mobank (Kansas City):
Commercial	734,559		790,425		852,760		807,816		495,569
Commercial real estate	275,785		300,911		341,041		338,762		244,029
Residential mortgage	97,092		98,479		98,262		97,685		25,824
Personal	110,611		109,515		106,166		108,455		36,449
Total Mobank (Kansas City)	1,218,047		1,299,330		1,398,229		1,352,718		801,871

Total BOK Financial loans	$	17,206,834	$	17,183,645	$	16,991,906	$	16,989,660	$	16,464,786

- 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 $9.7 billion and standby letters of credit, which totaled $666 million at September 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 $55 thousand of the outstanding standby letters of credit were issued on behalf of customers whose loans are nonperforming at September 30, 2017.

Table 18 – Off-Balance Sheet Credit Commitments

(In thousands)



	Sept. 30, 2017		June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016
Loan commitments	$	9,693,489	$	9,632,911	$	9,403,641	$	9,404,665	$	8,697,322
Standby letters of credit	665,513		614,852		595,746		585,472		499,990
Mortgage loans sold with recourse	128,681		133,896		134,631		139,486		139,306

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 $79 million to borrowers in Oklahoma, $14 million to borrowers in Arkansas and $12 million to borrowers in New Mexico. An accrual related to this off-balance sheet risk is included in Other liabilities in the consolidated balance sheets and totaled $3.8 million at September 30, 2017 and $3.9 million at June 30, 2017.

We also have an off-balance sheet obligation to repurchase residential mortgage loans sold to government sponsored entities through our mortgage banking activities due to standard representations and warranties made under contractual agreements and to service loans in accordance with investor guidelines. The Company has established accruals for losses related to these obligations that are included in Other liabilities in the Consolidated Balance Sheets and in Mortgage banking costs in the Consolidated Statements of Earnings.

For the period from 2010 through the third quarter of 2017 combined, approximately 18 percent of repurchase requests have currently resulted in actual repurchases or indemnification by the Company. The Company repurchased five loans from the agencies for $1.2 million during the third quarter of 2017. There were four indemnifications on loans paid during the third 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):



	September 30,
	2017		2016
Number of unresolved deficiency requests	180		221
Aggregate outstanding principal balance subject to unresolved deficiency requests	$	8,899	$	15,750
Unpaid principal balance subject to indemnification by the Company	5,206		5,399

The accrual for potential loan repurchases under representations and warranties totaled $1.4 million at September 30, 2017 and $1.6 million at June 30, 2017.

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Customer Derivative Programs

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

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

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

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

Derivative contracts are carried at fair value. At September 30, 2017, the net fair values of derivative contracts, before consideration of cash margin, reported as assets under these programs totaled $322 million compared to $265 million at June 30, 2017. At September 30, 2017, the fair value of our derivative contracts included $250 million for foreign exchange contracts, $29 million of to-be-announced residential mortgage-backed securities, $27 million for interest rate swaps and $10 million for energy contracts.. The aggregate net fair value of derivative contracts, before consideration of cash margin, held under these programs reported as liabilities totaled $312 million at September 30, 2017 and $257 million at June 30, 2017.

At September 30, 2017, total derivative assets were reduced by $4.0 million of cash collateral received from counterparties and total derivative liabilities were reduced by $18 million of cash collateral paid to counterparties related to instruments executed with the same counterparty under a master netting agreement.

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

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

Table 19 -- Fair Value of Derivative Contracts

(In thousands)



Banks and other financial institutions	$	163,232
Customers	132,215
Exchanges and clearing organizations	22,478
Fair value of customer risk management program asset derivative contracts, net	$	317,925

At September 30, 2017, our largest derivative exposure was to a financial institution for equity option derivative contracts which totaled $3.8 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

- 27 -

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 $27.71 per barrel of oil would increase the fair value of derivative assets by $5.5 million. An increase in prices equivalent to $77.25 per barrel of oil would increase the fair value of derivative assets by $298 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 September 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 September 30, 2017, changes in interest rates would not materially impact regulatory capital or liquidity needed to support this portion of our customer derivative program.

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Summary of Loan Loss Experience

We maintain an allowance for loan losses and an accrual for off-balance sheet credit risk. At September 30, 2017, the combined allowance for loan losses and off-balance sheet credit losses totaled $253 million or 1.47 percent of outstanding loans and 117 percent of nonaccruing loans, excluding loans guaranteed by U.S. government agencies. The allowance for loan losses was $248 million and the accrual for off-balance sheet credit losses was $5.4 million. At June 30, 2017, the combined allowance for credit losses was $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.

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 third quarter of 2017 or the second quarter of 2017.

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Table 20 -- Summary of Loan Loss Experience

(In thousands)



	Three Months Ended
	Sept. 30, 2017			June 30, 2017			Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016
Allowance for loan losses:
Beginning balance	$	250,061		$	248,710		$	246,159		$	245,103		$	243,259
Loans charged off:
Commercial	(4,429		)	(1,703		)	(424		)	(81		)	(6,266		)
Commercial real estate	—			(76		)	—			—			—
Residential mortgage	(168		)	(40		)	(236		)	(208		)	(285		)
Personal	(1,228		)	(1,053		)	(1,493		)	(1,362		)	(1,550		)
Total	(5,825		)	(2,872		)	(2,153		)	(1,651		)	(8,101		)
Recoveries of loans previously charged off:
Commercial	1,014			283			1,182			839			177
Commercial real estate	739			208			735			395			521
Residential mortgage	134			169			228			986			650
Personal	550			554			755			593			690
Total	2,437			1,214			2,900			2,813			2,038
Net loans recovered (charged off)	(3,388		)	(1,658		)	747			1,162			(6,063		)
Provision for loan losses	1,030			3,009			1,804			(106		)	7,907
Ending balance	$	247,703		$	250,061		$	248,710		$	246,159		$	245,103
Accrual for off-balance sheet credit losses:
Beginning balance	$	6,431		$	9,440		$	11,244		$	11,138		$	9,045
Provision for off-balance sheet credit losses	(1,030		)	(3,009		)	(1,804		)	106			2,093
Ending balance	$	5,401		$	6,431		$	9,440		$	11,244		$	11,138
Total combined provision for credit losses	$	—		$	—		$	—		$	—		$	10,000
Allowance for loan losses to loans outstanding at period-end	1.44		%	1.46		%	1.46		%	1.45		%	1.49		%
Net charge-offs (recoveries) (annualized) to average loans	0.08		%	0.04		%	(0.02		)%	(0.03		)%	0.15		%
Total provision for credit losses (annualized) to average loans	—		%	—		%	—		%	—		%	0.24		%
Recoveries to gross charge-offs	41.84		%	42.27		%	134.70		%	170.38		%	25.16		%
Accrual for off-balance sheet credit losses to off-balance sheet credit commitments	0.05		%	0.06		%	0.09		%	0.11		%	0.12		%
Combined allowance for credit losses to loans outstanding at period-end	1.47		%	1.49		%	1.52		%	1.52		%	1.56		%

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.

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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 September 30, 2017, impaired loans totaled $404 million, including $90 million with specific allowances of $13 million and $315 million with no specific allowances. At June 30, 2017, impaired loans totaled $428 million, including $73 million of impaired loans with specific allowances of $9.7 million and $355 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 $45 million of impaired energy loans required no allowance for credit losses based on the adequacy of collateral and $66 million of impaired loans with a $4.9 million allowance for credit losses. In addition, $53 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 $206 million at September 30, 2017, a decrease of $6.7 million compared to June 30, 2017. The general allowance attributed to the commercial loan segment decreased $4.5 million and the general allowance attributed to the commercial real estate loan segment decreased $2.2 million.

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 $28 million at September 30, 2017, an increase of $704 thousand over June 30, 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 and the impact of the recent hurricane on borrowers in the Houston market.

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 $285 million at September 30, 2017 and were primarily composed of $207 million or 7 percent of energy loans, $33 million or 1 percent of healthcare sector loans and $17 million or 3 percent of manufacturing sector loans. Potential problem loans totaled $327 million at June 30, 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 $198 million at September 30, 2017 and were composed primarily of $114 million or 4 percent of outstanding energy loans, $32 million or 1 percent of outstanding healthcare loans and $26 million or less than 1 percent of outstanding services loans. Other loans especially mentioned totaled $199 million at June 30, 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 portion of the combined allowance for credit losses attributable to the energy portfolio totaled 2.41 percent of outstanding energy loans at September 30, 2017, compared to 2.84 percent of outstanding energy loans at June 30, 2017.

- 31 -

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 $3.4 million in the third quarter of 2017, compared to net charge-offs of $1.7 million in the second quarter of 2017 and net loans charged off of $6.1 million in the third quarter of 2016. The ratio of net loans charged off to average loans on an annualized basis was 0.08 percent for the third quarter of 2017, compared with 0.04 percent for the second quarter of 2017 and 0.15 percent for the third quarter of 2016.

Net charge-offs of commercial loans were $3.4 million in the third quarter of 2017, primarily due to $4.3 million of charge-offs related to two energy borrowers. Commercial loans had net charge-offs of $1.4 million in the second quarter of 2017 primarily due to a single healthcare borrower. Net commercial real estate loan recoveries were $739 thousand in the third quarter of 2017, compared to net recoveries of $132 thousand in the second quarter of 2017. Net charge-offs of residential mortgage loans were $34 thousand and net charge-offs of personal loans were $678 thousand for the third quarter. Personal loan net charge-offs include deposit account overdraft losses.

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Nonperforming Assets

Table 21 -- Nonperforming Assets

(In thousands)



	Sept. 30, 2017		June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016
Nonaccruing loans:
Commercial	$	176,900	$	197,157	$	156,825	$	178,953	$	176,464
Commercial real estate	2,975		3,775		4,475		5,521		7,350
Residential mortgage	45,506		44,235		46,081		46,220		52,452
Personal	255		272		235		290		686
Total nonaccruing loans	225,636		245,439		207,616		230,984		236,952
Accruing renegotiated loans guaranteed by U.S. government agencies	69,440		80,624		83,577		81,370		80,306
Real estate and other repossessed assets	32,535		39,436		42,726		44,287		31,941
Total nonperforming assets	$	327,611	$	365,499	$	333,919	$	356,641	$	349,199
Total nonperforming assets excluding those guaranteed by U.S. government agencies	$	249,280	$	275,823	$	240,234	$	263,425	$	253,461

Nonaccruing loans by loan portfolio segment and class:
Commercial:
Energy	$	110,683	$	123,992	$	110,425	$	132,499	$	142,966
Services	1,174		7,754		7,713		8,173		8,477
Wholesale / retail	1,893		10,620		11,090		11,407		2,453
Manufacturing	9,059		9,656		5,907		4,931		274
Healthcare	24,446		24,505		909		825		855
Other commercial and industrial	29,645		20,630		20,781		21,118		21,439
Total commercial	176,900		197,157		156,825		178,953		176,464

Commercial real estate:
Residential construction and land development	1,924		2,051		2,616		3,433		3,739
Retail	289		301		314		326		1,249
Office	275		396		413		426		882
Multifamily	—		10		24		38		51
Industrial	—		—		76		76		76
Other commercial real estate	487		1,017		1,032		1,222		1,353
Total commercial real estate	2,975		3,775		4,475		5,521		7,350

Residential mortgage:
Permanent mortgage	24,623		23,415		24,188		22,855		25,956
Permanent mortgage guaranteed by U.S. government agencies	8,891		9,052		10,108		11,846		15,432
Home equity	11,992		11,768		11,785		11,519		11,064
Total residential mortgage	45,506		44,235		46,081		46,220		52,452
Personal	255		272		235		290		686
Total nonaccruing loans	$	225,636	$	245,439	$	207,616	$	230,984	$	236,952

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	Sept. 30, 2017			June 30, 2017			Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016
Nonaccruing loans as % of outstanding balance for class:
Commercial:
Energy	3.86		%	4.35		%	4.35		%	5.30		%	5.67		%
Services	0.04		%	0.26		%	0.26		%	0.26		%	0.29		%
Wholesale / retail	0.11		%	0.69		%	0.74		%	0.72		%	0.15		%
Manufacturing	1.74		%	1.77		%	1.09		%	0.96		%	0.05		%
Healthcare	1.09		%	1.10		%	0.04		%	0.04		%	0.04		%
Other commercial and industrial	5.46		%	3.96		%	4.50		%	4.31		%	4.50		%
Total commercial	1.64		%	1.85		%	1.52		%	1.72		%	1.74		%

Commercial real estate:
Residential construction and land development	1.72		%	1.45		%	1.92		%	2.53		%	2.34		%
Retail	0.04		%	0.04		%	0.04		%	0.04		%	0.16		%
Office	0.03		%	0.05		%	0.05		%	0.05		%	0.12		%
Multifamily	—		%	—		%	—		%	—		%	0.01		%
Industrial	—		%	—		%	0.01		%	0.01		%	0.01		%
Other commercial real estate	0.17		%	0.32		%	0.31		%	0.36		%	0.37		%
Total commercial real estate	0.08		%	0.10		%	0.12		%	0.14		%	0.19		%

Residential mortgage:
Permanent mortgage	2.43		%	2.37		%	2.47		%	2.27		%	2.68		%
Permanent mortgage guaranteed by U.S. government agencies	4.75		%	4.72		%	4.95		%	5.94		%	8.11		%
Home equity	1.61		%	1.55		%	1.54		%	1.55		%	1.55		%
Total residential mortgage	2.34		%	2.28		%	2.37		%	2.37		%	2.80		%
Personal	0.03		%	0.03		%	0.03		%	0.03		%	0.10		%
Total nonaccruing loans	1.31		%	1.43		%	1.22		%	1.36		%	1.44		%

Ratios:
Allowance for loan losses to nonaccruing loans¹	114.28		%	105.78		%	125.92		%	112.33		%	110.65		%
Accruing loans 90 days or more past due¹	$	253		$	1,414		$	95		$	5		$	3,839


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

Nonperforming assets totaled $328 million or 1.90 percent of outstanding loans and repossessed assets at September 30, 2017. Nonaccruing loans totaled $226 million, accruing renegotiated residential mortgage loans totaled $69 million and real estate and other repossessed assets totaled $33 million. All accruing renegotiated residential mortgage loans and $8.9 million of nonaccruing loans are guaranteed by U.S. government agencies. Excluding assets guaranteed by U.S. government agencies, nonperforming assets decreased $27 million compared to the third quarter primarily due to a decrease in nonaccruing energy loans. The Company generally retains nonperforming assets to maximize potential recovery, which may cause future nonperforming assets to decrease more slowly.

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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 nine months ended September 30, 2017 follows in Table 22.

Table 22 -- Rollforward of Nonperforming Assets

(In thousands)



	Three Months Ended
	September 30, 2017
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, June 30, 2017	$	245,439		$	80,624		$	39,436		$	365,499
Additions	24,366			11,329			—			35,695
Transfers from premises and equipment	—			—			—			—
Payments	(34,686		)	(760		)	—			(35,446		)
Charge-offs	(5,825		)	—			—			(5,825		)
Net gains, losses and write-downs	—			—			(3,810		)	(3,810		)
Foreclosure of nonperforming loans	(2,600		)	—			2,600			—
Foreclosure of loans guaranteed by U.S. government agencies	(1,221		)	(930		)	—			(2,151		)
Proceeds from sales	—			(21,053		)	(5,210		)	(26,263		)
Net transfers to nonaccruing loans	136			(136		)	—			—
Return to accrual status	—			—			—			—
Other, net	27			366			(481		)	(88		)
Balance, September 30, 2017	$	225,636		$	69,440		$	32,535		$	327,611

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	Nine Months Ended
	September 30, 2017
	Nonaccruing Loans			Renegotiated Loans			Real Estate and Other Repossessed Assets			Total Nonperforming Assets
Balance, December 31, 2016	$	230,984		$	81,370		$	44,287		$	356,641
Additions	106,098			37,683			—			143,781
Transfers from premises and equipment	—			—			452			452
Payments	(84,848		)	(2,546		)	—			(87,394		)
Charge-offs	(10,850		)	—			—			(10,850		)
Net gains, losses and write-downs	—			—			(2,206		)	(2,206		)
Foreclosure of nonperforming loans	(4,197		)	—			4,197			—
Foreclosure of loans guaranteed by U.S. government agencies	(5,201		)	(5,220		)	—			(10,421		)
Proceeds from sales	—			(42,459		)	(12,912		)	(55,371		)
Net transfers to nonaccruing loans	136			(136		)	—			—
Return to accrual status	(6,556		)	—			—			(6,556		)
Other, net	70			748			(1,283		)	(465		)
Balance, September 30, 2017	$	225,636		$	69,440		$	32,535		$	327,611

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 $177 million or 1.64 percent of total commercial loans at September 30, 2017 and $197 million or 1.85 percent of commercial loans at June 30, 2017. There were $15 million in newly identified nonaccruing commercial loans during the quarter, offset by $31 million in payments and $4.4 million of charge-offs. Newly identified nonaccruing commercial loans were primarily other commercial & industrial loans and energy loans.

Nonaccruing commercial loans at September 30, 2017 were primarily composed of $111 million or 3.86 percent of total energy loans, $30 million or 5.46 percent of total other commercial and industrial sector loans and $24 million or 1.09 percent of total healthcare sector loans.

Commercial Real Estate

Nonaccruing commercial real estate loans totaled $3.0 million or 0.08 percent of outstanding commercial real estate loans at September 30, 2017, down from $3.8 million or 0.10 percent of outstanding commercial real estate loans at June 30, 2017. Newly identified nonaccruing commercial real estate loans of $2.0 million were offset by $1.7 million of cash payments received and $1.1 million foreclosures. There were no charge-offs of nonaccruing commercial real estate loans during the third quarter.

Nonaccruing commercial real estate loans were primarily composed of $1.9 million or 1.72 percent of residential construction and land development loans.

Residential Mortgage and Personal

Nonaccruing residential mortgage loans totaled $46 million or 2.34 percent of outstanding residential mortgage loans at September 30, 2017, a $1.3 million increase over June 30, 2017. Newly identified nonaccruing residential mortgage loans totaling $5.7 million were partially offset by $2.8 million of foreclosures, $1.7 million of payments and $168 thousand of loans charged off during the quarter.

Nonaccruing residential mortgage loans primarily consist of non-guaranteed permanent residential mortgage loans, which totaled $25 million or 2.43 percent of outstanding non-guaranteed permanent residential mortgage loans at September 30, 2017. Nonaccruing home equity loans totaled $12 million or 1.61 percent of total home equity loans.

- 36 -

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 increased $3.2 million in the third quarter to $6.8 million at September 30, 2017. Residential mortgage loans 60 to 89 days past due decreased by $489 thousand. Personal loans past due 30 to 59 days increased by $2.8 million and personal loans 60 to 89 days decreased $208 thousand.

Table 23 -- Residential Mortgage and Personal Loans Past Due

(In thousands)



	September 30, 2017						June 30, 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	$	—	$	454	$	3,705	$	132	$	1,026	$	2,024
Home equity	28		445		3,066		—		362		1,564
Total residential mortgage	$	28	$	899	$	6,771	132		$	1,388	$	3,588

Personal	$	8	$	81	$	3,296	$	—	$	289	$	487


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 $33 million at September 30, 2017, a decrease of $6.9 million compared to June 30, 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	$	2,735	$	882	$	—	$	418	$	1,185	$	692	$	160	$	358	$	6,430
Developed commercial real estate properties	71		—		1,116		—		—		207		—		—		1,394
Undeveloped land	1,116		1,215		—		—		1,057		135		1,197		—		4,720
Residential land development properties	101		—		—		—		—		102		1		—		204
Oil and gas properties	5,645		13,060										1,075		—		19,780
Other	7		—		—		—		—		—		—		—		7
Total real estate and other repossessed assets	$	9,675	$	15,157	$	1,116	$	418	$	2,242	$	1,136	$	2,433	$	358	$	32,535

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

- 37 -

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 third quarter of 2017, approximately 67 percent of our funding was provided by deposit accounts, 20 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 third quarter of 2017 totaled $22.1 billion, largely unchanged compared to the second quarter of 2017. Demand deposit balances grew by $51 million during the third quarter of 2017 partially offset by a decrease in time deposits of $28 million.

Table 25 - Average Deposits by Line of Business

(In thousands)



	Three Months Ended
	Sept. 30, 2017		June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016
Commercial Banking	$	8,683,331	$	8,652,811	$	8,631,724	$	8,543,532	$	8,317,341
Consumer Banking	6,707,859		6,662,838		6,581,446		6,659,380		6,660,514
Wealth Management	5,495,250		5,531,091		5,582,554		5,333,095		4,913,409
Subtotal	20,886,440		20,846,740		20,795,724		20,536,007		19,891,264
Funds Management and other	1,232,881		1,245,591		1,573,698		1,167,409		873,750
Total	$	22,119,321	$	22,092,331	$	22,369,422	$	21,703,416	$	20,765,014

Average Commercial Banking deposit balances were largely unchanged compared to the second quarter of 2017. The average balance of interest-bearing transaction accounts increased $60 million, partially offset by a $26 million decrease in demand deposits. Average deposit balances attributed to commercial and industrial customers decreased by $145 million, offset by a $114 million increase in balances attributed to energy customers and a $45 million increase in average balances attributed to commercial real estate 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 $45 million. Demand deposit balances grew by $51 million, partially offset by a $17 million decrease in time deposit balances. Interest-bearing transaction and savings account balances were also up slightly over the prior quarter.

Average Wealth Management deposits decreased $36 million compared to the second quarter of 2017. A $68 million decrease in interest-bearing transaction account balances was partially offset by a $39 million increase in demand deposit balances.

Average deposits attributed to Funds Management and Other decreased $13 million.

Average time deposits for the third quarter of 2017 included $602 million of brokered deposits, an increase of $12 million over the second quarter of 2017. Average interest-bearing transaction accounts for the third quarter included $1.4 billion of brokered deposits, an increase of $26 million over the second quarter of 2017.

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

- 38 -

Table 26 -- Period End Deposits by Principal Market Area

(In thousands)



	Sept. 30, 2017		June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016
Bank of Oklahoma:
Demand	$	4,061,612	$	4,353,421	$	4,320,666	$	3,993,170	$	4,158,273
Interest-bearing:
Transaction	5,909,259		5,998,787		6,114,288		6,345,536		5,701,983
Savings	265,023		263,664		265,014		241,696		242,959
Time	1,131,547		1,170,014		1,189,144		1,118,355		1,091,464
Total interest-bearing	7,305,829		7,432,465		7,568,446		7,705,587		7,036,406
Total Bank of Oklahoma	11,367,441		11,785,886		11,889,112		11,698,757		11,194,679

Bank of Texas:
Demand	3,094,184		3,121,890		3,091,258		3,137,009		2,734,981
Interest-bearing:
Transaction	2,272,987		2,272,185		2,317,576		2,388,812		2,240,040
Savings	93,400		91,491		89,640		83,101		84,642
Time	521,072		502,128		511,037		535,642		528,380
Total interest-bearing	2,887,459		2,865,804		2,918,253		3,007,555		2,853,062
Total Bank of Texas	5,981,643		5,987,694		6,009,511		6,144,564		5,588,043

Bank of Albuquerque:
Demand	659,793		612,117		593,117		627,979		584,681
Interest-bearing:
Transaction	551,884		558,523		623,677		590,571		555,326
Savings	53,532		54,136		53,683		49,963		54,480
Time	224,773		229,616		233,506		238,408		244,706
Total interest-bearing	830,189		842,275		910,866		878,942		854,512
Total Bank of Albuquerque	1,489,982		1,454,392		1,503,983		1,506,921		1,439,193

Bank of Arkansas:
Demand	31,442		40,511		42,622		26,389		32,203
Interest-bearing:
Transaction	126,746		129,848		106,804		105,232		313,480
Savings	1,876		2,135		2,304		2,192		2,051
Time	14,434		14,876		15,067		16,696		17,534
Total interest-bearing	143,056		146,859		124,175		124,120		333,065
Total Bank of Arkansas	174,498		187,370		166,797		150,509		365,268

Colorado State Bank & Trust:
Demand	540,300		577,617		601,778		576,000		517,063
Interest-bearing:
Transaction	628,807		626,343		610,510		616,679		623,055
Savings	34,776		35,651		37,801		32,866		31,613
Time	231,927		228,458		234,740		242,782		247,667
Total interest-bearing	895,510		890,452		883,051		892,327		902,335
Total Colorado State Bank & Trust	1,435,810		1,468,069		1,484,829		1,468,327		1,419,398

- 39 -



	Sept. 30, 2017		June 30, 2017		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016
Bank of Arizona:
Demand	335,740		366,866		342,854		366,755		418,718
Interest-bearing:
Transaction	174,010		154,457		180,254		305,099		303,750
Savings	4,105		3,638		3,858		2,973		2,959
Time	20,831		19,911		26,112		27,765		27,935
Total interest-bearing	198,946		178,006		210,224		335,837		334,644
Total Bank of Arizona	534,686		544,872		553,078		702,592		753,362

Mobank (Kansas City):
Demand	462,410		496,473		514,278		508,418		235,445
Interest-bearing:
Transaction	361,391		346,996		406,105		513,176		86,526
Savings	12,513		13,603		13,424		12,679		1,645
Time	27,705		31,119		34,242		42,152		11,945
Total interest-bearing	401,609		391,718		453,771		568,007		100,116
Total Mobank (Kansas City)	864,019		888,191		968,049		1,076,425		335,561
Total BOK Financial deposits	$	21,848,079	$	22,316,474	$	22,575,359	$	22,748,095	$	21,095,504

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 $13 million at September 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 $6.1 billion during the quarter, up from $5.5 billion in the second quarter of 2017.

At September 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.

- 40 -

Table 27 -- Borrowed Funds

(In thousands)



			Three Months Ended September 30, 2017								Three Months Ended June 30, 2017
	Sept. 30, 2017		Average Balance During the Quarter		Rate		Maximum Outstanding At Any Month End During the Quarter		June 30, 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
Other	3,103		947		11.23	%	$	3,104	878		867		11.06	%	881
Total other borrowings	3,103		947		11.23	%			878		6,951		5.14	%
Subordinated debentures	144,668		144,663		5.68	%	$	144,668	144,658		144,654		5.55	%	144,658
Total parent company and other non-bank subsidiaries	147,771		145,610		5.83	%			145,536		151,605		5.53	%

BOKF, NA:
Funds purchased	62,356		49,774		0.92	%	62,356		67,990		63,263		0.61	%	67,990
Repurchase agreements	328,189		361,512		0.15	%	381,340		396,333		427,353		0.06	%	489,814
Other borrowings:
Federal Home Loan Bank advances	6,200,000		6,127,174		1.27	%	6,200,000		5,200,000		5,532,967		1.07	%	5,600,000
GNMA repurchase liability	22,705		19,083		4.55	%	22,908		16,056		16,734		4.65	%	17,693
Other	15,467		15,437		2.38	%	15,467		15,409		15,379		2.40	%	15,409
Total other borrowings	6,238,172		6,161,694		1.29	%			5,231,465		5,565,080		1.09	%
Total BOKF, NA	6,628,717		6,572,980		1.22	%			5,695,788		6,055,696		1.01	%

Total other borrowed funds and subordinated debentures	$	6,776,488	$	6,718,590	1.32	%			$	5,841,324	$	6,207,301	1.12	%

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

Parent Company

At September 30, 2017, cash and interest-bearing cash and cash equivalents held by the parent company totaled $162 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 September 30, 2017, based upon the most restrictive limitations as well as management's internal capital policy, the bank could declare up to $343 million of dividends without regulatory approval. Dividend constraints may be alleviated through increases in retained earnings, capital issuances or changes in risk weighted assets. Future losses or increases in required regulatory capital at the bank could affect its ability to pay dividends to the parent company.

Our equity capital at September 30, 2017 was $3.5 billion, an increase of $66 million over June 30, 2017. Net income less cash dividends paid increased equity $57 million during the third quarter of 2017. 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.

- 41 -

On October 27, 2015, the board of directors authorized the Company to purchase up to five million common shares, subject to market conditions, securities law and other regulatory compliance limitations. As of September 30, 2017, a cumulative total of 2,879,243 shares have been repurchased under this authorization. No shares were repurchased in the third 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		Sept. 30, 2017		June 30, 2017		Sept. 30, 2016
Risk-based capital:
Common equity Tier 1	4.50	%	2.50	%	7.00	%	11.90	%	11.76	%	11.99	%
Tier 1 capital	6.00	%	2.50	%	8.50	%	11.90	%	11.76	%	11.99	%
Total capital	8.00	%	2.50	%	10.50	%	13.47	%	13.36	%	13.65	%
Tier 1 Leverage	4.00	%	N/A		4.00	%	9.30	%	9.27	%	9.06	%

Average total equity to average assets							10.56	%	10.53	%	10.39	%
Tangible common equity ratio							9.23	%	9.24	%	9.19	%

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.

- 42 -

Table 29 -- Non-GAAP Measure

(Dollars in thousands)



	Sept. 30, 2017			June 30, 2017			Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016
Tangible common equity ratio:
Total shareholders' equity	$	3,488,814		$	3,422,469		$	3,341,744		$	3,274,854		$	3,398,311
Less: Goodwill and intangible assets, net	485,710			487,452			488,294			495,830			424,716
Tangible common equity	3,003,104			2,935,017			2,853,450			2,779,024			2,973,595
Total assets	33,005,515			32,263,532			32,628,932			32,772,281			32,779,231
Less: Goodwill and intangible assets, net	485,710			487,452			488,294			495,830			424,716
Tangible assets	$	32,519,805		$	31,776,080		$	32,140,638		$	32,276,451		$	32,354,515
Tangible common equity ratio	9.23		%	9.24		%	8.88		%	8.61		%	9.19		%

Off-Balance Sheet Arrangements

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

Market Risk

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

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

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

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

- 43 -

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
	September 30,						September 30,
	2017			2016			2017			2016
Anticipated impact over the next twelve months on net interest revenue	$	652		$	551		$	(18,117	)	$	(25,147	)
	0.08		%	0.07		%	(2.10		)%	(3.22		)%

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

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

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

- 44 -

Table 31 -- MSR Asset and Hedge Sensitivity Analysis

(Dollars in thousands)



	September 30,
	2017						2016
	Up 50 bp			Down 50 bp			Up 50 bp			Down 50 bp
MSR Asset	$	26,449		$	(33,561	)	$	30,597		$	(52,609	)
MSR Hedge	(32,790		)	29,132			(37,529		)	34,948
Net Exposure	(6,341		)	(4,429		)	(6,932		)	(17,661		)

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 September 30,												Nine Months Ended September 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	$	(167	)	$	(881	)	$	(590	)	$	(449	)	$	21		$	(1,172	)	$	(2,778	)	$	(542	)
Low²	1,314			187			930			1,055			1,314			187			930			1,815
High³	(1,533		)	(1,993		)	(2,563		)	(2,030		)	(1,553		)	(2,377		)	(6,858		)	(2,953		)
Period End	(744		)	(374		)	(76		)	360			(744		)	(374		)	(76		)	360


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.

- 45 -

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 -- Trading Sensitivity Analysis

(Dollars in thousands)



	Three Months Ended September 30,											Nine Months Ended September 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	$	(1,152	)	$	1,171		$	(3,541	)	$	3,756	$	(1,711	)	$	1,884		$	(3,172	)	$	3,070
Low²	328			3,509			(954		)	7,013		328			5,210			146			7,013
High³	(3,404		)	(486		)	(6,130		)	430		(4,386		)	(486		)	(6,130		)	(107		)
Period End	(1,395		)	945			(1,718		)	2,469		(1,395		)	945			(1,718		)	2,469


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.

- 46 -



Consolidated Statements of Earnings (Unaudited)
(In thousands, except share and per share data)	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Interest revenue	2017			2016			2017			2016
Loans	$	184,200		$	146,840		$	514,047		$	427,512
Residential mortgage loans held for sale	2,095			3,615			6,317			9,823
Trading securities	3,975			2,996			12,497			4,136
Investment securities	3,951			4,132			12,127			12,736
Available for sale securities	44,925			43,042			131,660			132,381
Fair value option securities	5,066			1,531			10,985			6,182
Restricted equity securities	4,826			4,510			13,534			12,684
Interest-bearing cash and cash equivalents	6,375			2,651			15,817			7,926
Total interest revenue	255,413			209,317			716,984			613,380
Interest expense
Deposits	14,530			9,812			38,506			30,351
Borrowed funds	20,361			9,191			47,542			25,943
Subordinated debentures	2,070			2,468			6,098			4,056
Total interest expense	36,961			21,471			92,146			60,350
Net interest revenue	218,452			187,846			624,838			553,030
Provision for credit losses	—			10,000			—			65,000
Net interest revenue after provision for credit losses	218,452			177,846			624,838			488,030
Other operating revenue
Brokerage and trading revenue	33,169			38,006			98,556			109,877
Transaction card revenue	37,826			33,933			105,249			101,237
Fiduciary and asset management revenue	40,687			34,073			121,126			100,942
Deposit service charges and fees	23,209			23,668			69,593			68,828
Mortgage banking revenue	24,890			38,516			80,357			105,500
Other revenue	13,670			13,080			40,406			38,336
Total fees and commissions	173,451			181,276			515,287			524,720
Other gains, net	(1,283		)	2,442			8,452			5,309
Gain on derivatives, net	1,033			2,226			3,824			20,130
Gain (loss) on fair value option securities, net	661			(3,355		)	1,505			10,367
Change in fair value of mortgage servicing rights	(639		)	2,327			(5,726		)	(41,944		)
Gain on available for sale securities, net	2,487			2,394			4,916			11,684
Total other operating revenue	175,710			187,310			528,258			530,266
Other operating expense
Personnel	147,910			139,212			428,079			411,987
Business promotion	7,105			6,839			21,560			19,238
Professional fees and services	11,887			14,038			35,723			39,955
Net occupancy and equipment	21,325			20,111			64,074			58,554
Insurance	6,005			9,390			13,098			23,784
Data processing and communications	37,327			33,331			108,559			98,150
Printing, postage and supplies	3,917			3,790			11,908			11,586
Net losses (gains) and operating expenses of repossessed assets	6,071			(926		)	9,347			1,732
Amortization of intangible assets	1,744			1,521			5,349			5,304
Mortgage banking costs	13,450			15,963			38,525			44,039
Other expense	9,193			14,819			25,308			37,714
Total other operating expense	265,934			258,088			761,530			752,043
Net income before taxes	128,228			107,068			391,566			266,253
Federal and state income taxes	42,438			31,956			128,246			83,881
Net income	85,790			75,112			263,320			182,372
Net income (loss) attributable to non-controlling interests	141			835			1,168			(270		)
Net income attributable to BOK Financial Corporation shareholders	$	85,649		$	74,277		$	262,152		$	182,642
Earnings per share:
Basic	$	1.31		$	1.13		$	4.01		$	2.77
Diluted	$	1.31		$	1.13		$	4.00		$	2.76
Average shares used in computation:
Basic	64,742,822			65,085,392			64,729,391			65,208,774
Diluted	64,805,172			65,157,841			64,793,893			65,263,566
Dividends declared per share	$	0.44		$	0.43		$	1.32		$	1.29

See accompanying notes to consolidated financial statements.

- 47 -



Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands, except share and per share data)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net income	$	85,790		$	75,112		$	263,320		$	182,372
Other comprehensive income (loss) before income taxes:
Net change in unrealized gain (loss)	512			(33,458		)	33,881			133,108
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			—			—			(112		)
Gain on available for sale securities, net	(2,487		)	(2,394		)	(4,916		)	(11,684		)
Other comprehensive income (loss) before income taxes	(1,975		)	(35,852		)	28,965			121,312
Federal and state income taxes	(768		)	(13,947		)	11,241			47,172
Other comprehensive income (loss), net of income taxes	(1,207		)	(21,905		)	17,724			74,140
Comprehensive income	84,583			53,207			281,044			256,512
Comprehensive income (loss) attributable to non-controlling interests	141			835			1,168			(270		)
Comprehensive income attributable to BOK Financial Corp. shareholders	$	84,442		$	52,372		$	279,876		$	256,782

See accompanying notes to consolidated financial statements.

- 48 -

Consolidated Balance Sheets (In thousands, except share data)

	Sept. 30, 2017			Dec. 31, 2016			Sept. 30, 2016
	(Unaudited)			(Footnote 1)			(Unaudited)
Assets
Cash and due from banks	$	547,203		$	620,846		$	535,916
Interest-bearing cash and cash equivalents	1,926,779			1,916,651			2,080,978
Trading securities	614,117			337,628			546,615
Investment securities (fair value: September 30, 2017 – $489,895; December 31, 2016 – $565,493 ; September 30, 2016 – $580,310)	466,562			546,145			546,457
Available for sale securities	8,383,199			8,676,829			8,862,283
Fair value option securities	819,531			77,046			222,409
Restricted equity securities	347,542			307,240			333,391
Residential mortgage loans held for sale	275,643			301,897			447,592
Loans	17,206,834			16,989,660			16,464,786
Allowance for loan losses	(247,703		)	(246,159		)	(245,103		)
Loans, net of allowance	16,959,131			16,743,501			16,219,683
Premises and equipment, net	320,060			325,849			318,196
Receivables	314,251			772,952			650,368
Goodwill	446,697			448,899			382,739
Intangible assets, net	39,013			46,931			41,977
Mortgage servicing rights	245,858			247,073			203,621
Real estate and other repossessed assets, net of allowance (September 30, 2017 – $11,738; December 31, 2016 – $9,562; September 30, 2016 – $9,524)	32,535			44,287			31,941
Derivative contracts, net	352,559			689,872			655,078
Cash surrender value of bank-owned life insurance	314,201			308,430			310,211
Receivable on unsettled securities sales	230,225			7,188			19,642
Other assets	370,409			353,017			370,134
Total assets	$	33,005,515		$	32,772,281		$	32,779,231

Liabilities and Equity
Liabilities:
Noninterest-bearing demand deposits	$	9,185,481		$	9,235,720		$	8,681,364
Interest-bearing deposits:
Transaction	10,025,084			10,865,105			9,824,160
Savings	465,225			425,470			420,349
Time	2,172,289			2,221,800			2,169,631
Total deposits	21,848,079			22,748,095			21,095,504
Funds purchased	62,356			57,929			109,031
Repurchase agreements	328,189			668,661			504,573
Other borrowings	6,241,275			4,846,072			6,533,443
Subordinated debentures	144,668			144,640			144,631
Accrued interest, taxes and expense	152,029			146,704			191,276
Derivative contracts, net	336,327			664,531			573,987
Due on unsettled securities purchases	160,781			6,508			677
Other liabilities	217,372			182,784			193,698
Total liabilities	29,491,076			29,465,924			29,346,820
Shareholders' equity:
Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: September 30, 2017 – 75,129,535; December 31, 2016 – 74,993,407; September 30, 2016 – 74,866,429)	4			4			4
Capital surplus	1,028,489			1,006,535			995,680
Retained earnings	2,999,005			2,823,334			2,801,931
Treasury stock (shares at cost: September 30, 2017 – 9,672,749; December 31, 2016 – 9,655,975; September 30, 2016 – 8,955,975)	(545,441		)	(544,052		)	(495,031		)
Accumulated other comprehensive income (loss)	6,757			(10,967		)	95,727
Total shareholders’ equity	3,488,814			3,274,854			3,398,311
Non-controlling interests	25,625			31,503			34,100
Total equity	3,514,439			3,306,357			3,432,411
Total liabilities and equity	$	33,005,515		$	32,772,281		$	32,779,231

See accompanying notes to consolidated financial statements.

- 49 -

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

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

Balance, December 31, 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)	—	—		—		182,642			—	—			—			182,642			(270		)	182,372
Other comprehensive income	—	—		—		—			—	—			74,140			74,140			—			74,140
Repurchase of common stock	—	—		—		—			305	(17,771		)	—			(17,771		)	—			(17,771		)
Share-based compensation plans:
Stock options exercised	108	—		5,513		—			—	—			—			5,513			—			5,513
Non-vested shares awarded, net	228	—		—		—			—	—			—			—			—			—
Vesting of non-vested shares	—	—		—		—			15	(95		)	—			(95		)	—			(95		)
Tax effect from equity compensation, net	—	—		589		—			—	—			—			589			—			589
Share-based compensation	—	—		7,569		—			—	—			—			7,569			—			7,569
Cash dividends on common stock	—	—		—		(84,832		)	—	—			—			(84,832		)	—			(84,832		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			(2,713		)	(2,713		)

Balance, September 30, 2016	74,866	$	4	$	995,680	$	2,801,931		8,956	$	(495,031	)	$	95,727		$	3,398,311		$	34,100		$	3,432,411

Balance, December 31, 2016	74,993	$	4	$	1,006,535	$	2,823,334		9,656	$	(544,052	)	$	(10,967	)	$	3,274,854		$	31,503		$	3,306,357
Net income (loss)	—	—		—		262,152			—	—			—			262,152			1,168			263,320
Other comprehensive income	—	—		—		—			—	—			17,724			17,724			—			17,724
Share-based compensation plans:
Stock options exercised	80	—		4,564		—			—	—			—			4,564			—			4,564
Non-vested shares awarded, net	57	—		—		—			—	—			—			—			—			—
Vesting of non-vested shares	—	—		—		—			17	(1,389		)	—			(1,389		)	—			(1,389		)
Share-based compensation	—	—		17,390		—			—	—			—			17,390			—			17,390
Cash dividends on common stock	—	—		—		(86,481		)	—	—			—			(86,481		)	—			(86,481		)
Capital calls and distributions, net	—	—		—		—			—	—			—			—			(7,046		)	(7,046		)

Balance, September 30, 2017	75,130	$	4	$	1,028,489	$	2,999,005		9,673	$	(545,441	)	$	6,757		$	3,488,814		$	25,625		$	3,514,439

See accompanying notes to consolidated financial statements.

- 50 -

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

	Nine Months Ended
	September 30,
	2017			2016
Cash Flows From Operating Activities:
Net income	$	263,320		$	182,372
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	—			65,000
Change in fair value of mortgage servicing rights due to market changes	5,726			41,944
Change in the fair value of mortgage servicing rights due to loan runoff	24,928			29,385
Net unrealized gains from derivative contracts	(3,937		)	(9,755		)
Share-based compensation	17,390			7,569
Depreciation and amortization	39,154			35,158
Net amortization of securities discounts and premiums	22,149			31,373
Net realized gains on financial instruments and other net gains	(1,930		)	(13,663		)
Net gain on mortgage loans held for sale	(35,778		)	(61,775		)
Mortgage loans originated for sale	(2,446,793		)	(4,927,442		)
Proceeds from sale of mortgage loans held for sale	2,503,759			4,855,682
Capitalized mortgage servicing rights	(29,439		)	(56,345		)
Change in trading and fair value option securities	(1,019,906		)	(204,030		)
Change in receivables	459,480			(483,836		)
Change in other assets	(18,991		)	(17,931		)
Change in accrued interest, taxes and expense	(99		)	27,780
Change in other liabilities	43,767			7,262
Net cash provided by (used in) operating activities	(177,200		)	(491,252		)
Cash Flows From Investing Activities:
Proceeds from maturities or redemptions of investment securities	94,243			65,104
Proceeds from maturities or redemptions of available for sale securities	1,345,575			1,120,917
Purchases of investment securities	(18,802		)	(18,599		)
Purchases of available for sale securities	(2,001,160		)	(1,860,287		)
Proceeds from sales of available for sale securities	966,044			1,027,379
Change in amount receivable on unsettled securities transactions	(223,037		)	20,551
Loans originated, net of principal collected	(156,404		)	(551,351		)
Net payments on derivative asset contracts	334,709			(79,512		)
Acquisitions, net of cash acquired	—			(7,700		)
Proceeds from disposition of assets	162,793			131,761
Purchases of assets	(170,937		)	(159,263		)
Net cash provided by (used in) investing activities	333,024			(311,000		)
Cash Flows From Financing Activities:
Net change in demand deposits, transaction deposits and savings accounts	(850,505		)	243,779
Net change in time deposits	(49,511		)	(236,433		)
Net change in other borrowed funds	957,859			1,015,822
Repayment of subordinated debentures	—			(226,550		)
Issuance of subordinated debentures	—			145,331
Net proceeds on derivative liability contracts	(339,566		)	76,144
Net change in derivative margin accounts	(8,583		)	(129,141		)
Change in amount due on unsettled security transactions	154,273			(16,220		)
Issuance of common and treasury stock, net	3,175			5,418
Repurchase of common stock	—			(17,771		)
Dividends paid	(86,481		)	(84,832		)
Net cash provided by (used in) financing activities	(219,339		)	775,547
Net increase (decrease) in cash and cash equivalents	(63,515		)	(26,705		)
Cash and cash equivalents at beginning of period	2,537,497			2,643,599
Cash and cash equivalents at end of period	$	2,473,982		$	2,616,894

Supplemental Cash Flow Information:
Cash paid for interest	$	89,901		$	61,522
Cash paid for taxes	$	95,967		$	43,096
Net loans and bank premises transferred to repossessed real estate and other assets	$	4,649		$	20,580
Residential mortgage loans guaranteed by U.S. government agencies that became eligible for repurchase during the period	$	101,299		$	79,710
Conveyance of other real estate owned guaranteed by U.S. government agencies	$	32,033		$	50,855

See accompanying notes to consolidated financial statements.

- 51 -

Notes to Consolidated Financial Statements (Unaudited)

(1) Significant Accounting Policies

Basis of Presentation

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

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

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

The financial information should be read in conjunction with BOK Financial’s 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 nine-month period ended September 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 there will be no material impact on the timing of revenue recognized as our current revenue recognition policies generally conform with the principals in the standard. 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. Currently, we do not anticipate any significant adjustments.

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. Management expects that interchange fees paid to issuing banks for card transactions processed related to its merchant processing services currently included in data processing and communication expense, will be netted against the amounts charged to the merchant in transaction card processing revenue. For 2016, interchange fees related to merchant processing services were approximately $27 million.

- 52 -

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

On January 5, 2016, the FASB issued ASU 2016-01 over the recognition and measurement of financial assets and liabilities. The update requires equity investments, in general, to be measured at fair value with changes in fair value recognized in earnings. It also eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost, requires entities to use the exit price notion when measuring fair value, requires an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the fair value option has been elected, requires separate presentation of financial assets and liabilities by measurement category and form on the balance sheet or accompanying notes, clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets, and simplifies the impairment assessment of equity investments without readily determinable fair values. 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 September 30, 2017, the Company had $2.2 million of net 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 for 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 $2.5 million in the first nine 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.

- 53 -

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

On August 28, 2017, the FASB issued ASU 2017-12, which amends the hedge accounting recognition and presentation requirements in ASC815 in order to improve transparency and understandability of information and reduce the complexity. The update expands the types of transactions eligible for hedge accounting, eliminates the requirement to separately measure and present hedge ineffectiveness, simplifies hedge effectiveness assessments and updates documentation and presentation requirements. ASU 2017-12 is effective for the Company for fiscal years beginning after December 15, 2018, and interim periods therein; however, early adoption is permitted. The Company is evaluating the impact the adoption of ASU 2017-12 will have on the Company's financial statements.

- 54 -

(2) Securities

Trading Securities

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



	September 30, 2017					December 31, 2016					September 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	$	30,162	$	(101	)	$	6,234	$	(4	)	$	15,705	$	(7	)
U.S. government agency residential mortgage-backed securities	516,760		723			310,067		635			464,749		876
Municipal and other tax-exempt securities	56,148		153			14,427		50			54,856		(100		)
Other trading securities	11,047		23			6,900		57			11,305		14
Total trading securities	$	614,117	$	798		$	337,628	$	738		$	546,615	$	783

Investment Securities

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



	September 30, 2017
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	246,000	$	249,250	$	3,415	$	(165	)
U.S. government agency residential mortgage-backed securities – Other	16,926		17,458		594		(62		)
Other debt securities	203,636		223,187		20,141		(590		)
Total investment securities	$	466,562	$	489,895	$	24,150	$	(817	)


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.



	September 30, 2016
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss
Municipal and other tax-exempt	$	323,225	$	327,788	$	4,745	$	(182	)
U.S. government agency residential mortgage-backed securities – Other	22,166		23,452		1,286		—
Other debt securities	201,066		229,070		28,014		(10		)
Total investment securities	$	546,457	$	580,310	$	34,045	$	(192	)


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

- 55 -

The amortized cost and fair values of investment securities at September 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	$	84,786		$	107,938		$	16,132		$	37,144		$	246,000		3.51
Fair value	84,835			108,352			16,776			39,287			249,250
Nominal yield¹	1.75		%	2.15		%	4.68		%	5.21		%	2.64		%
Other debt securities:
Amortized cost	13,546			47,077			130,494			12,519			203,636			6.40
Fair value	13,688			50,230			147,066			12,203			223,187
Nominal yield	4.10		%	4.86		%	5.75		%	4.47		%	5.35		%
Total fixed maturity securities:
Amortized cost	$	98,332		$	155,015		$	146,626		$	49,663		$	449,636		4.82
Fair value	98,523			158,582			163,842			51,490			472,437
Nominal yield	2.08		%	2.97		%	5.63		%	5.02		%	3.87		%
Residential mortgage-backed securities:
Amortized cost													$	16,926		³
Fair value													17,458
Nominal yield⁴													2.76		%
Total investment securities:
Amortized cost													$	466,562
Fair value													489,895
Nominal yield													3.83		%


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.

- 56 -

Available for Sale Securities

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



	September 30, 2017
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	999	$	—	$	(1	)	$	—
Municipal and other tax-exempt	28,411		28,368		240		(283		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,103,869		3,108,822		25,510		(20,557		)	—
FHLMC	1,331,212		1,330,159		6,630		(7,683		)	—
GNMA	864,256		862,394		3,254		(5,116		)	—
Other	25,000		25,009		51		(42		)	—
Total U.S. government agencies	5,324,337		5,326,384		35,445		(33,398		)	—
Private issue:
Alt-A loans	35,853		46,695		10,842		—			—
Jumbo-A loans	44,944		53,299		8,355		—			—
Total private issue	80,797		99,994		19,197		—			—
Total residential mortgage-backed securities	5,405,134		5,426,378		54,642		(33,398		)	—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,899,828		2,889,346		5,577		(16,059		)	—
Other debt securities	4,400		4,153		—		(247		)	—
Perpetual preferred stock	12,562		16,245		3,683		—			—
Equity securities and mutual funds	17,803		17,710		655		(748		)	—
Total available for sale securities	$	8,369,138	$	8,383,199	$	64,797	$	(50,736	)	$	—

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

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

- 57 -



	December 31, 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.



	September 30, 2016
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	1,002	$	2	$	—		$	—
Municipal and other tax-exempt	41,943		42,092		602		(453		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,035,041		3,101,136		67,859		(1,764		)	—
FHLMC	1,611,887		1,641,178		29,640		(349		)	—
GNMA	924,176		926,358		3,530		(1,348		)	—
Total U.S. government agencies	5,571,104		5,668,672		101,029		(3,461		)	—
Private issue:
Alt-A loans	47,039		54,065		7,230		—			(204		)
Jumbo-A loans	61,377		67,538		6,187		(26		)	—
Total private issue	108,416		121,603		13,417		(26		)	(204		)
Total residential mortgage-backed securities	5,679,520		5,790,275		114,446		(3,487		)	(204		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,942,988		2,986,495		45,329		(1,822		)	—
Other debt securities	4,400		4,151		—		(249		)	—
Perpetual preferred stock	15,562		19,578		4,016		—			—
Equity securities and mutual funds	17,337		18,690		1,370		(17		)	—
Total available for sale securities	$	8,702,750	$	8,862,283	$	165,765	$	(6,028	)	$	(204	)


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


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

- 58 -

The amortized cost and fair values of available for sale securities at September 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		0.29
Fair value	999			—			—			—				999
Nominal yield	0.87		%	—		%	—		%	—		%		0.87		%
Municipal and other tax-exempt:
Amortized cost	$	8,754		$	4,163		$	—		$	15,494			$	28,411		9.00
Fair value	8,780			4,313			—			15,275				28,368
Nominal yield¹	3.25		%	5.13		%	—		%	2.26		%	⁶	2.99		%
Commercial mortgage-backed securities:
Amortized cost	$	59,483		$	978,565		$	1,616,383		$	245,397			$	2,899,828		6.90
Fair value	59,402			976,466			1,610,642			242,836				2,889,346
Nominal yield	1.25		%	1.85		%	1.92		%	1.92		%		1.88		%
Other debt securities:
Amortized cost	$	—		$	—		$	—		$	4,400			$	4,400		29.91
Fair value	—			—			—			4,153				4,153
Nominal yield	—		%	—		%	—		%	1.71		%	⁶	1.71		%
Total fixed maturity securities:
Amortized cost	$	69,237		$	982,728		$	1,616,383		$	265,291			$	2,933,639		6.96
Fair value	69,181			980,779			1,610,642			262,264				2,922,866
Nominal yield	1.50		%	1.86		%	1.92		%	1.93		%		1.88		%
Residential mortgage-backed securities:
Amortized cost														$	5,405,134		²
Fair value														5,426,378
Nominal yield⁴														1.99		%
Equity securities and mutual funds:
Amortized cost														$	30,365		³
Fair value														33,955
Nominal yield														—		%
Total available-for-sale securities:
Amortized cost														$	8,369,138
Fair value														8,383,199
Nominal yield														1.95		%


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


²	The average expected lives of mortgage-backed securities were 4.0 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.

- 59 -

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Proceeds	$	265,632		$	232,239		$	966,044		$	1,027,379
Gross realized gains	2,768			2,415			7,623			11,705
Gross realized losses	(281		)	(21		)	(2,707		)	(21		)
Related federal and state income tax expense	967			931			1,912			4,545

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):



	Sept. 30, 2017		Dec. 31, 2016		Sept. 30, 2016
Investment:
Amortized cost	$	237,525	$	322,208	$	301,754
Fair value	241,208		323,808		307,264

Available for sale:
Amortized cost	6,559,615		7,353,116		7,098,721
Fair value	6,551,240		7,327,470		7,213,520

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

At September 30, 2017, trading securities and receivables collateralized by securities with a fair value of $224 million were pledged as collateral at the Federal Home Loan Bank (FHLB) for the trading activities of BOK Financial Securities, Inc. No trading securities were pledged as collateral as of December 31, 2016 and no trading securities were pledged as collateral at September 30, 2016.

- 60 -

Temporarily Impaired Securities as of September 30, 2017

(in thousands):



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	63	$	80,235	$	70	$	9,795	$	95	$	90,030	$	165
U.S. government agency residential mortgage-backed securities – Other	1	3,578		62		—		—		3,578		62
Other debt securities	28	10,022		566		427		24		10,449		590
Total investment securities	92	$	93,835	$	698	$	10,222	$	119	$	104,057	$	817



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
U.S. Treasury	1	$	999	$	1	$	—	$	—	$	999	$	1
Municipal and other tax-exempt	11	576		1		4,785		282		5,361		283
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	81	1,054,171		10,288		480,994		10,269		1,535,165		20,557
FHLMC	42	477,823		3,546		198,478		4,137		676,301		7,683
GNMA	17	166,565		1,718		124,037		3,398		290,602		5,116
Other	1	19,958		42		—		—		19,958		42
Total U.S. government agencies	141	1,718,517		15,594		803,509		17,804		2,522,026		33,398
Private issue:
Alt-A loans	—	—		—		—		—		—		—
Jumbo-A loans	—	—		—		—		—		—		—
Total private issue	—	—		—		—		—		—		—
Total residential mortgage-backed securities	141	1,718,517		15,594		803,509		17,804		2,522,026		33,398
Commercial mortgage-backed securities guaranteed by U.S. government agencies	137	1,154,911		7,194		559,984		8,865		1,714,895		16,059
Other debt securities	2	—		—		4,153		247		4,153		247
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	91	3,672		696		1,428		52		5,100		748
Total available for sale securities	383	$	2,878,675	$	23,486	$	1,373,859	$	27,250	$	4,252,534	$	50,736

- 61 -

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 September 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	75	$	100,624	$	106	$	4,359	$	76	$	104,983	$	182
U.S. government agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	3	444		6		856		4		1,300		10
Total investment securities	78	$	101,068	$	112	$	5,215	$	80	$	106,283	$	192



	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	20	2,210		3		6,396		450		8,606		453
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	14	365,201		1,712		14,229		52		379,430		1,764
FHLMC	6	122,713		91		20,306		258		143,019		349
GNMA	16	230,043		1,157		212,705		191		442,748		1,348
Total U.S. government agencies	36	717,957		2,960		247,240		501		965,197		3,461
Private issue¹:
Alt-A loans	5	8,231		141		7,773		63		16,004		204
Jumbo-A loans	1	6,583		26		—		—		6,583		26
Total private issue	6	14,814		167		7,773		63		22,587		230
Total residential mortgage-backed securities	42	732,771		3,127		255,013		564		987,784		3,691
Commercial mortgage-backed securities guaranteed by U.S. government agencies	33	372,805		1,656		60,851		166		433,656		1,822
Other debt securities	2	—		—		4,151		249		4,151		249
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	33	86		—		886		17		972		17
Total available for sale securities	130	$	1,107,872	$	4,786	$	327,297	$	1,446	$	1,435,169	$	6,232


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. Impaired equity securities, including perpetual preferred stocks, are evaluated based on the near-term prospects of the investment in relation to the severity and duration of the impairment and management's ability and intent to hold the securities until fair value recovers. Based on this evaluation as of September 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):



	September 30, 2017				December 31, 2016					September 30, 2016
	Fair Value		Net Unrealized Gain (Loss)		Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. Treasury	$	—	$	—	$	—	$	—		$	222,409	$	(2,397	)
U.S. government agency residential mortgage-backed securities	819,531		1,671		77,046		(1,777		)	—		—
Total	$	819,531	$	1,671	$	77,046	$	(1,777	)	$	222,409	$	(2,397	)

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):



	Sept. 30, 2017		Dec. 31, 2016		Sept. 30, 2016
Federal Reserve stock	$	36,676	$	36,498	$	36,283
Federal Home Loan Bank stock	310,622		270,541		296,907
Other	244		201		201
Total	$	347,542	$	307,240	$	333,391

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

	Liabilities
	Notional¹		Gross Fair Value		Netting Adjustments			Net Fair Value Before Cash Collateral		Cash Collateral			Fair Value Net of Cash Collateral
Customer risk management programs:
Interest rate contracts
To-be-announced residential mortgage-backed securities	$	14,244,442	$	34,948	$	(9,547	)	$	25,401	$	(374	)	$	25,027
Interest rate swaps	1,368,230		27,056		—			27,056		(16,599		)	10,457
Energy contracts	939,350		42,744		(35,166		)	7,578		—			7,578
Agricultural contracts	60,746		1,846		(1,172		)	674		—			674
Foreign exchange contracts	249,269		245,925		—			245,925		(1,395		)	244,530
Equity option contracts	101,841		4,871		—			4,871		—			4,871
Total customer risk management programs	16,963,878		357,390		(45,885		)	311,505		(18,368		)	293,137
Internal risk management programs	9,180,531		43,190		—			43,190		—			43,190
Total derivative contracts	$	26,144,409	$	400,580	$	(45,885	)	$	354,695	$	(18,368	)	$	336,327


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

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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 September 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	$	20,078,974	$	90,999	$	(38,678	)	$	52,321	$	—		$	52,321
Interest rate swaps	1,323,045		49,279		—			49,279		(794		)	48,485
Energy contracts	729,202		41,775		(28,464		)	13,311		(288		)	13,023
Agricultural contracts	53,002		3,950		(1,571		)	2,379		(1,076		)	1,303
Foreign exchange contracts	550,828		536,264		—			536,264		(7,577		)	528,687
Equity option contracts	103,464		4,654		—			4,654		(730		)	3,924
Total customer risk management programs	22,838,515		726,921		(68,713		)	658,208		(10,465		)	647,743
Internal risk management programs	2,298,038		7,335		—			7,335		—			7,335
Total derivative contracts	$	25,136,553	$	734,256	$	(68,713	)	$	665,543	$	(10,465	)	$	655,078

	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	$	19,776,883	$	86,812	$	(38,678	)	$	48,134	$	(39,042	)	$	9,092
Interest rate swaps	1,323,045		49,518		—			49,518		(34,457		)	15,061
Energy contracts	695,835		40,888		(28,464		)	12,424		(3,857		)	8,567
Agricultural contracts	52,997		3,943		(1,571		)	2,372		—			2,372
Foreign exchange contracts	550,943		536,660		—			536,660		(5,396		)	531,264
Equity option contracts	103,464		4,654		—			4,654		—			4,654
Total customer risk management programs	22,503,167		722,475		(68,713		)	653,762		(82,752		)	571,010
Internal risk management programs	1,485,691		2,977		—			2,977		—			2,977
Total derivative contracts	$	23,988,858	$	725,452	$	(68,713	)	$	656,739	$	(82,752	)	$	573,987


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
	September 30, 2017					September 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	$	9,181		$	—	$	11,584		$	—
Interest rate swaps	767			—		710			—
Energy contracts	378			—		1,222			—
Agricultural contracts	38			—		25			—
Foreign exchange contracts	164			—		218			—
Equity option contracts	—			—		—			—
Total customer risk management programs	10,528			—		13,759			—
Internal risk management programs	(711		)	1,033		(1,608		)	2,226
Total derivative contracts	$	9,817		$	1,033	$	12,151		$	2,226



	Nine Months Ended
	September 30, 2017				September 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	$	26,413	$	—	$	28,886		$	—
Interest rate swaps	1,891		—		1,758			—
Energy contracts	4,917		—		4,667			—
Agricultural contracts	58		—		86			—
Foreign exchange contracts	524		—		730			—
Equity option contracts	—		—		—			—
Total customer risk management programs	33,803		—		36,127			—
Internal risk management programs	5,307		3,824		(1,617		)	20,130
Total derivative contracts	$	39,110	$	3,824	$	34,510		$	20,130

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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):



	September 30, 2017								December 31, 2016
	Fixed Rate		Variable Rate		Non-accrual		Total		Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	2,225,470	$	8,393,564	$	176,900	$	10,795,934	$	2,327,085	$	7,884,786	$	178,953	$	10,390,824
Commercial real estate	564,681		2,950,486		2,975		3,518,142		624,187		3,179,338		5,521		3,809,046
Residential mortgage	1,589,013		311,231		45,506		1,945,750		1,647,357		256,255		46,220		1,949,832
Personal	153,750		793,003		255		947,008		154,971		684,697		290		839,958
Total	$	4,532,914	$	12,448,284	$	225,636	$	17,206,834	$	4,753,600	$	12,005,076	$	230,984	$	16,989,660
Accruing loans past due (90 days)¹							$	253							$	5



	September 30, 2016
	Fixed Rate		Variable Rate		Non-accrual		Total
Commercial	$	1,991,423	$	7,952,276	$	176,464	$	10,120,163
Commercial real estate	565,429		3,220,819		7,350		3,793,598
Residential mortgage	1,572,288		248,053		52,452		1,872,793
Personal	104,408		573,138		686		678,232
Total	$	4,233,548	$	11,994,286	$	236,952	$	16,464,786
Accruing loans past due (90 days)¹							$	3,839


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

At September 30, 2017, $5.9 billion or 34 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 September 30, 2017, commercial loans attributed to the Texas market totaled $3.7 billion or 34 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 $2.9 billion or 17 percent of total loans at September 30, 2017, including $2.3 billion of outstanding loans to energy producers. Approximately 57 percent of committed production loans are secured by properties primarily producing oil and 43 percent are secured by properties producing natural gas. The services loan class totaled $3.0 billion or 17 percent of total loans at September 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, educational services, consumer services, loans to entities providing services for real estate and construction and commercial services. The healthcare loan class totaled $2.2 billion or 13 percent of total loans at September 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 September 30, 2017, 35 percent of commercial real estate loans are secured by properties primarily located in the Dallas and Houston areas of Texas. An additional 13 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 September 30, 2017, residential mortgage loans included $187 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 $744 million at September 30, 2017. Approximately 64 percent of the home equity loan portfolio is comprised of first lien loans and 36 percent of the home equity portfolio is comprised of junior lien loans. Junior lien loans are distributed 47 percent to amortizing term loans and 53 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 September 30, 2017, outstanding commitments totaled $9.7 billion. Because some commitments are expected to expire before being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. BOK Financial uses the same credit policies in making commitments as it does loans.

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

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Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Because the credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan commitments, BOK Financial uses the same credit policies in evaluating the creditworthiness of the customer. Additionally, BOK Financial uses the same evaluation process in obtaining collateral on standby letters of credit as it does for loan commitments. The term of these standby letters of credit is defined in each commitment and typically corresponds with the underlying loan commitment. At September 30, 2017, outstanding standby letters of credit totaled $666 million. Commercial letters of credit are used to facilitate customer trade transactions with the drafts being drawn when the underlying transaction is consummated. At September 30, 2017, outstanding commercial letters of credit totaled $2.3 million.

Allowances for Credit Losses

BOK Financial maintains an allowance for loan losses and an accrual for off-balance sheet credit risk. The accrual for off-balance sheet credit risk is maintained at a level that is appropriate to cover estimated losses associated with credit instruments that are not currently recognized as assets such as loan commitments, standby letters of credit or guarantees. As discussed in greater detail in Note 6, the Company also has separate accruals for off-balance sheet credit risk related to residential mortgage loans previously sold with full or partial recourse and for residential mortgage loans sold to government sponsored agencies under standard representations and warranties.

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

The allowance for loan losses consists of specific allowances attributed to impaired loans that have not yet been charged down to amounts we expect to recover, general allowances for unimpaired loans based on estimated loss rates by loan class and nonspecific allowances based on general economic conditions, risk concentration and related factors. There have been no material changes in the approach or techniques utilized in developing the allowance for loan losses and the accrual for off-balance sheet credit losses for the three and nine months ended September 30, 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 September 30, 2017 is summarized as follows (in thousands):



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

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

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The activity in the allowance for loan losses and the allowance for off-balance sheet credit losses related to loan commitments and standby letters of credit for the nine months ended September 30, 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	665			4,050			82			1,168			(122		)	5,843
Loans charged off	(6,556		)	(76		)	(444		)	(3,774		)	—			(10,850		)
Recoveries	2,479			1,682			531			1,859			—			6,551
Ending balance	$	136,801		$	56,405		$	18,393		$	8,026		$	28,078		$	247,703
Allowance for off-balance sheet credit losses:
Beginning balance	$	11,063		$	123		$	50		$	8		$	—		$	11,244
Provision for off-balance sheet credit losses	(5,738		)	(88		)	(11		)	(6		)	—			(5,843		)
Ending balance	$	5,325		$	35		$	39		$	2		$	—		$	5,401

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



	Commercial			Commercial Real Estate			Residential Mortgage			Personal			Nonspecific Allowance		Total
Allowance for loan losses:
Beginning balance	$	145,139		$	46,745		$	18,690		$	6,001		$	26,684	$	243,259
Provision for loan losses	2,420			2,551			(466		)	1,900			1,502		7,907
Loans charged off	(6,266		)	—			(285		)	(1,550		)	—		(8,101		)
Recoveries	177			521			650			690			—		2,038
Ending balance	$	141,470		$	49,817		$	18,589		$	7,041		$	28,186	$	245,103
Allowance for off-balance sheet credit losses:
Beginning balance	$	8,752		$	203		$	62		$	28		$	—	$	9,045
Provision for off-balance sheet credit losses	2,170			(53		)	(7		)	(17		)	—		2,093
Ending balance	$	10,922		$	150		$	55		$	11		$	—	$	11,138

Total provision for credit losses	$	4,590		$	2,498		$	(473	)	$	1,883		$	1,502	$	10,000

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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	45,995			7,538			(829		)	4,809			(1,940		)	55,573
Loans charged off	(35,747		)	—			(1,104		)	(4,086		)	—			(40,937		)
Recoveries	888			888			1,013			2,154			—			4,943
Ending balance	$	141,470		$	49,817		$	18,589		$	7,041		$	28,186		$	245,103
Allowance for off-balance sheet credit losses:
Beginning balance	$	1,506		$	153		$	30		$	22		$	—		$	1,711
Provision for off-balance sheet credit losses	9,416			(3		)	25			(11		)	—			9,427
Ending balance	$	10,922		$	150		$	55		$	11		$	—		$	11,138

Total provision for credit losses	$	55,411		$	7,535		$	(804	)	$	4,798		$	(1,940	)	$	65,000

The allowance for loan losses and recorded investment of the related loans by portfolio segment for each impairment measurement method at September 30, 2017 is as follows (in thousands):



	Collectively Measured for Impairment				Individually Measured for Impairment				Total
	Recorded Investment		Related Allowance		Recorded Investment		Related Allowance		Recorded Investment		Related Allowance
Commercial	$	10,619,034	$	123,517	$	176,900	$	13,284	$	10,795,934	$	136,801
Commercial real estate	3,515,167		56,405		2,975		—		3,518,142		56,405
Residential mortgage	1,900,244		18,393		45,506		—		1,945,750		18,393
Personal	946,753		8,026		255		—		947,008		8,026
Total	16,981,198		206,341		225,636		13,284		17,206,834		219,625

Nonspecific allowance	—		—		—		—		—		28,078

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

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 September 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	$	9,943,699	$	134,968	$	176,464	$	6,502	$	10,120,163	$	141,470
Commercial real estate	3,786,248		49,817		7,350		—		3,793,598		49,817
Residential mortgage	1,820,341		18,527		52,452		62		1,872,793		18,589
Personal	677,546		7,041		686		—		678,232		7,041
Total	16,227,834		210,353		236,952		6,564		16,464,786		216,917

Nonspecific allowance	—		—		—		—		—		28,186

Total	$	16,227,834	$	210,353	$	236,952	$	6,564	$	16,464,786	$	245,103

Credit Quality Indicators

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

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



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

Nonspecific allowance	—		—		—		—		—		28,078

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

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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 September 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	$	10,093,884	$	140,552	$	26,279	$	918	$	10,120,163	$	141,470
Commercial real estate	3,793,598		49,817		—		—		3,793,598		49,817
Residential mortgage	206,430		3,028		1,666,363		15,561		1,872,793		18,589
Personal	586,869		4,182		91,363		2,859		678,232		7,041
Total	14,680,781		197,579		1,784,005		19,338		16,464,786		216,917

Nonspecific allowance	—		—		—		—		—		28,186

Total	$	14,680,781	$	197,579	$	1,784,005	$	19,338	$	16,464,786	$	245,103

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 September 30, 2017 by the risk grade categories (in thousands):



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

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

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

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

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

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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 September 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	$	1,869,598	$	147,153	$	361,087	$	142,966	$	—	$	—	$	2,520,804
Services	2,882,065		14,861		31,196		8,477		—		—		2,936,599
Wholesale/retail	1,557,067		15,337		27,173		2,453		—		—		1,602,030
Manufacturing	470,702		8,774		19,736		274		—		—		499,486
Healthcare	2,022,757		42,224		19,210		855		—		—		2,085,046
Other commercial and industrial	415,769		2,478		10,302		21,370		26,210		69		476,198
Total commercial	9,217,958		230,827		468,704		176,395		26,210		69		10,120,163

Commercial real estate:
Residential construction and land development	155,737		—		470		3,739		—		—		159,946
Retail	794,920		4,802		406		1,249		—		—		801,377
Office	750,924		899		—		882		—		—		752,705
Multifamily	868,501		—		5,221		51		—		—		873,773
Industrial	837,945		—		—		76		—		—		838,021
Other commercial real estate	366,416		—		7		1,353		—		—		367,776
Total commercial real estate	3,774,443		5,701		6,104		7,350		—		—		3,793,598

Residential mortgage:
Permanent mortgage	200,590		1,192		2,134		2,514		739,686		23,442		969,558
Permanent mortgages guaranteed by U.S. government agencies	—		—		—		—		174,877		15,432		190,309
Home equity	—		—		—		—		701,862		11,064		712,926
Total residential mortgage	200,590		1,192		2,134		2,514		1,616,425		49,938		1,872,793

Personal	585,287		228		923		431		91,108		255		678,232

Total	$	13,778,278	$	237,948	$	477,865	$	186,690	$	1,733,743	$	50,262	$	16,464,786

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Impaired Loans

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

A summary of impaired loans follows (in thousands):



	As of										For the				For the
	September 30, 2017										Three Months Ended				Nine Months Ended
			Recorded Investment								September 30, 2017				September 30, 2017
	Unpaid Principal Balance		Total		With No Allowance		With Allowance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial:
Energy	$	133,643	$	110,683	$	45,169	$	65,514	$	4,944	$	117,338	$	—	$	121,591	$	—
Services	3,838		1,174		1,174		—		—		4,464		—		4,674		—
Wholesale/retail	8,418		1,893		1,893		—		—		6,256		—		6,650		—
Manufacturing	9,674		9,059		9,059		—		—		9,357		—		6,995		—
Healthcare	24,591		24,446		474		23,972		8,323		24,476		—		12,635		—
Other commercial and industrial	38,222		29,645		29,626		19		17		25,138		—		25,382		—
Total commercial	218,386		176,900		87,395		89,505		13,284		187,029		—		177,927		—

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

Residential mortgage:
Permanent mortgage	29,861		24,623		24,623		—		—		24,019		315		23,739		912
Permanent mortgage guaranteed by U.S. government agencies¹	193,594		187,370		187,370		—		—		188,461		1,884		199,532		5,809
Home equity	13,332		11,992		11,992		—		—		11,880		—		11,755		—
Total residential mortgage	236,787		223,985		223,985		—		—		224,360		2,199		235,026		6,721

Personal	290		255		255		—		—		263		—		273		—

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


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

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

- 82 -

A summary of impaired loans at December 31, 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.

- 83 -

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



											For the				For the
	As of September 30, 2016										Three Months Ended				Nine Months Ended
			Recorded Investment								September 30, 2016				September 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	$	179,578	$	142,966	$	100,300	$	42,666	$	6,502	$	155,555	$	—	$	85,333	$	—
Services	11,858		8,477		8,477		—		—		8,932		—		9,384		—
Wholesale/retail	8,528		2,453		2,453		—		—		2,613		—		2,686		—
Manufacturing	642		274		274		—		—		284		—		303		—
Healthcare	1,168		855		855		—		—		865		—		964		—
Other commercial and industrial	29,176		21,439		21,439		—		—		10,978		—		11,031		—
Total commercial	230,950		176,464		133,798		42,666		6,502		179,227		—		109,701		—

Commercial real estate:
Residential construction and land development	6,090		3,739		3,739		—		—		4,000		—		4,074		—
Retail	1,914		1,249		1,249		—		—		1,257		—		1,284		—
Office	1,187		882		882		—		—		744		—		766		—
Multifamily	1,000		51		51		—		—		58		—		163		—
Industrial	76		76		76		—		—		76		—		76		—
Other commercial real estate	7,375		1,353		1,353		—		—		1,430		—		1,813		—
Total commercial real estate	17,642		7,350		7,350		—		—		7,565		—		8,176		—

Residential mortgage:
Permanent mortgage	32,372		25,956		25,847		109		62		26,592		292		27,470		923
Permanent mortgage guaranteed by U.S. government agencies¹	196,162		190,309		190,309		—		—		190,547		2,098		193,879		5,893
Home equity	12,099		11,064		11,064		—		—		10,578		—		10,710		—
Total residential mortgage	240,633		227,329		227,220		109		62		227,717		2,390		232,059		6,816

Personal	724		686		686		—		—		520		—		575		—

Total	$	489,949	$	411,829	$	369,054	$	42,775	$	6,564	$	415,029	$	2,390	$	350,511	$	6,816


¹	All permanent mortgage loans guaranteed by U.S. government agencies are considered impaired as we do not expect full collection of contractual principal and interest. At September 30, 2016, $15 million of these loans were nonaccruing and $175 million were accruing based on the guarantee by U.S. government agencies.

- 84 -

Troubled Debt Restructurings

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



	As of September 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 Sept. 30, 2017		Nine Months Ended Sept. 30, 2017
Nonaccruing TDRs:

Commercial:
Energy	$	9,582	$	9,506	$	76	$	—	$	4,322	$	4,322
Services	720		103		617		—		7		10
Wholesale/retail	1,802		—		1,802		—		—		—
Manufacturing	180		180		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	20,097		19,890		207		—		—		—
Total commercial	32,381		29,679		2,702		—		4,329		4,332

Commercial real estate:
Residential construction and land development	327		91		236		—		—		—
Retail	289		289		—		—		—		—
Office	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other commercial real estate	353		353		—		—		—		—
Total commercial real estate	969		733		236		—		—		—

Residential mortgage:
Permanent mortgage	14,765		10,188		4,577		—		—		—
Permanent mortgage guaranteed by U.S. government agencies	5,601		523		5,078		—		—		—
Home equity	5,625		4,213		1,412		—		39		70
Total residential mortgage	25,991		14,924		11,067		—		39		70

Personal	205		195		10		—		2		10

Total nonaccruing TDRs	$	59,546	$	45,531	$	14,015	$	—	$	4,370	$	4,412

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	69,440		14,948		54,492		—		—		—

Total TDRs	$	128,986	$	60,479	$	68,507	$	—	$	4,370	$	4,412

- 85 -

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

- 86 -

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



	As of September 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 Sept. 30, 2016		Nine Months Ended Sept. 30, 2016
Nonaccruing TDRs:

Commercial:
Energy	$	1,746	$	—	$	1,746	$	—	$	500	$	1,000
Services	7,761		7,034		727		—		—		—
Wholesale/retail	2,327		2,287		40		—		—		—
Manufacturing	238		238		—		—		—		—
Healthcare	623		—		623		—		—		—
Other commercial and industrial	497		61		436		—		—		57
Total commercial	13,192		9,620		3,572		—		500		1,057

Commercial real estate:
Residential construction and land development	794		359		435		—		—		—
Retail	1,249		892		357		—		—		—
Office	149		149		—		—		—		—
Multifamily	—		—		—		—		—		—
Industrial	—		—		—		—		—		—
Other commercial real estate	666		666		—		—		—		—
Total commercial real estate	2,858		2,066		792		—		—		—

Residential mortgage:
Permanent mortgage	16,109		11,944		4,165		62		—		2
Permanent mortgage guaranteed by U.S. government agencies	8,220		2,331		5,889		—		—		—
Home equity	5,168		4,667		501		—		34		153
Total residential mortgage	29,497		18,942		10,555		62		34		155

Personal	273		271		2		—		9		18

Total nonaccruing TDRs	$	45,820	$	30,899	$	14,921	$	62	$	543	$	1,230

Accruing TDRs:
Permanent mortgages guaranteed by U.S. government agencies	80,306		29,020		51,286		—		—		—

Total TDRs	$	126,126	$	59,919	$	66,207	$	62	$	543	$	1,230

- 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 at September 30, 2017 by class that were restructured during the three months ended September 30, 2017 by primary type of concession (in thousands):



	Three Months Ended Sept. 30, 2017
	Accruing						Nonaccrual						Total
	Payment Stream		Combination & Other		Total		Payment Stream		Combination & Other		Total
Commercial:
Energy	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Services	—		—		—		—		—		—		—
Wholesale/retail	—		—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—		—
Healthcare	—		—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		60		60		60
Total commercial	—		—		—		—		60		60		60

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

Residential mortgage:
Permanent mortgage	—		—		—		969		506		1,475		1,475
Permanent mortgage guaranteed by U.S. government agencies	8,205		620		8,825		315		—		315		9,140
Home equity	—		—		—		—		469		469		469
Total residential mortgage	8,205		620		8,825		1,284		975		2,259		11,084

Personal	—		—		—		—		4		4		4

Total	$	8,205	$	620	$	8,825	$	1,284	$	1,039	$	2,323	$	11,148

- 88 -



	Nine Months Ended Sept. 30, 2017
	Accruing							Nonaccrual							Total
		Payment Stream		Combination & Other		Total			Payment Stream		Combination & Other		Total
Commercial:
Energy		$	—	$	—	$	—		$	7,781	$	—	$	7,781	$	7,781
Services		—		—		—			—		—		—		—
Wholesale/retail		—		—		—			—		—		—		—
Manufacturing		—		—		—			—		—		—		—
Healthcare		—		—		—			—		—		—		—
Other commercial and industrial		—		—		—			19,825		60		19,885		19,885
Total commercial		—		—		—			27,606		60		27,666		27,666

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		1,559		1,712		1,712
Permanent mortgage guaranteed by U.S. government agencies		18,678		2,649		21,327			443		85		528		21,855
Home equity		—		—		—			104		1,468		1,572		1,572
Total residential mortgage		18,678		2,649		21,327			700		3,112		3,812		25,139

Personal		—		—		—			—		48		48		48

Total		$	18,678	$	2,649	$	21,327		$	28,306	$	3,220	$	31,526	$	52,853

- 89 -

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 September 30, 2016 by primary type of concession (in thousands):



	Three Months Ended Sept. 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	—		—		—		—		151		151		151
Permanent mortgage guaranteed by U.S. government agencies	3,527		4,211		7,738		—		287		287		8,025
Home equity	—		—		—		—		920		920		920
Total residential mortgage	3,527		4,211		7,738		—		1,358		1,358		9,096

Personal	—		—		—		—		19		19		19

Total	$	3,527	$	4,211	$	7,738	$	—	$	1,377	$	1,377	$	9,115

- 90 -



	Nine Months Ended Sept. 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	—		—		—		1,037		1,051		2,088		2,088
Permanent mortgage guaranteed by U.S. government agencies	9,687		9,350		19,037		—		982		982		20,019
Home equity	—		—		—		48		1,630		1,678		1,678
Total residential mortgage	9,687		9,350		19,037		1,085		3,663		4,748		23,785

Personal	—		—		—		—		82		82		82

Total	$	9,687	$	9,350	$	19,037	$	1,586	$	3,745	$	5,331	$	24,368

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The following table summarizes, by loan class, the recorded investment at September 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 September 30, 2017 and 2016, respectively (in thousands):



	Three Months Ended Sept. 30, 2017						Nine Months Ended Sept. 30, 2017
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	7,857	$	7,857	$	—	$	9,582	$	9,582
Services	—		—		—		—		—		—
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		19,825		19,825
Total commercial	—		7,857		7,857		—		29,407		29,407

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

Residential mortgage:
Permanent mortgage	—		1,511		1,511		—		1,511		1,511
Permanent mortgage guaranteed by U.S. government agencies	23,620		878		24,498		24,349		878		25,227
Home equity	—		1,030		1,030		—		1,139		1,139
Total residential mortgage	23,620		3,419		27,039		24,349		3,528		27,877

Personal	—		10		10		—		10		10

Total	$	23,620	$	11,286	$	34,906	$	24,349	$	32,945	$	57,294

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 Sept. 30, 2016						Nine Months Ended Sept. 30, 2016
	Accruing		Nonaccrual		Total		Accruing		Nonaccrual		Total
Commercial:
Energy	$	—	$	1,746	$	1,746	$	—	$	1,746	$	1,746
Services	—		—		—		—		—		—
Wholesale/retail	—		—		—		—		—		—
Manufacturing	—		—		—		—		—		—
Healthcare	—		—		—		—		—		—
Other commercial and industrial	—		—		—		—		—		—
Total commercial	—		1,746		1,746		—		1,746		1,746

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

Residential mortgage:
Permanent mortgage	—		298		298		—		542		542
Permanent mortgage guaranteed by U.S. government agencies	17,491		1,095		18,586		19,352		1,121		20,473
Home equity	—		258		258		—		258		258
Total residential mortgage	17,491		1,651		19,142		19,352		1,921		21,273

Personal	—		11		11		—		11		11

Total	$	17,491	$	3,408	$	20,899	$	19,352	$	3,678	$	23,030

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Nonaccrual & Past Due Loans

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

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



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

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

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

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

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

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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 September 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	$	2,365,850	$	11,988	—	$	—	$	142,966	$	2,520,804
Services	2,923,874		502		39	3,707		8,477		2,936,599
Wholesale/retail	1,599,356		221		—	—		2,453		1,602,030
Manufacturing	499,212		—		—	—		274		499,486
Healthcare	2,083,556		635		—	—		855		2,085,046
Other commercial and industrial	454,538		34		68	119		21,439		476,198
Total commercial	9,926,386		13,380		107	3,826		176,464		10,120,163

Commercial real estate:
Residential construction and land development	156,207		—		—	—		3,739		159,946
Retail	796,362		3,766		—	—		1,249		801,377
Office	751,823		—		—	—		882		752,705
Multifamily	868,591		—		5,131	—		51		873,773
Industrial	837,945		—		—	—		76		838,021
Other commercial real estate	366,416		7		—	—		1,353		367,776
Total commercial real estate	3,777,344		3,773		5,131	—		7,350		3,793,598

Residential mortgage:
Permanent mortgage	939,853		3,547		202	—		25,956		969,558
Permanent mortgages guaranteed by U.S. government agencies	41,150		17,364		12,963	103,400		15,432		190,309
Home equity	700,031		1,526		305	—		11,064		712,926
Total residential mortgage	1,681,034		22,437		13,470	103,400		52,452		1,872,793

Personal	677,194		191		148	13		686		678,232

Total	$	16,061,958	$	39,781	18,856	$	107,239	$	236,952	$	16,464,786

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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):



	September 30, 2017				December 31, 2016				September 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	$	261,868	$	265,783	$	286,414	$	286,971	$	422,523	$	433,040
Residential mortgage loan commitments	334,337		9,066		318,359		9,733		630,804		18,598
Forward sales contracts	524,878		794		569,543		5,193		929,907		(4,046		)
			$	275,643			$	301,897			$	447,592

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

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Mortgage banking revenue was as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Production revenue:
Net realized gains on sale of mortgage loans	$	12,041		$	23,110		$	32,443		$	47,424
Net change in unrealized gain on mortgage loans held for sale	(1,492		)	(2,518		)	3,335			4,649
Net change in the fair value of mortgage loan commitments	(1,927		)	(6,901		)	(667		)	10,464
Net change in the fair value of forward sales contracts	(293		)	8,267			(4,399		)	(4,846		)
Total production revenue	8,329			21,958			30,712			57,691
Servicing revenue	16,561			16,558			49,645			47,809
Total mortgage banking revenue	$	24,890		$	38,516		$	80,357		$	105,500

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

Residential Mortgage Servicing

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

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



	September 30, 2017			December 31, 2016			September 30, 2016
Number of residential mortgage loans serviced for others	137,359			139,340			139,587
Outstanding principal balance of residential mortgage loans serviced for others	$	22,063,121		$	21,997,568		$	21,851,536
Weighted average interest rate	3.95		%	3.97		%	4.01		%
Remaining term (in months)	298			301			302

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



	Purchased			Originated			Total
Balance, June 30, 2017	$	7,995		$	237,244		$	245,239
Additions, net	—			9,925			9,925
Change in fair value due to principal payments	(470		)	(8,197		)	(8,667		)
Change in fair value due to market assumption changes	303			(942		)	(639		)
Balance, September 30, 2017	$	7,828		$	238,030		$	245,858



	Purchased			Originated			Total
Balance, December 31, 2016	$	8,909		$	238,164		$	247,073
Additions, net	—			29,439			29,439
Change in fair value due to principal payments	(1,443		)	(23,485		)	(24,928		)
Change in fair value due to market assumption changes	362			(6,088		)	(5,726		)
Balance, September 30, 2017	$	7,828		$	238,030		$	245,858

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



	Purchased			Originated			Total
Balance, June 30, 2016	$	4,067		$	186,680		$	190,747
Additions, net	—			21,990			21,990
Change in fair value due to scheduled payments and full-balance payoffs	(753		)	(10,690		)	(11,443		)
Change in fair value due to market assumption changes	251			2,076			2,327
Balance, September 30, 2016	$	3,565		$	200,056		$	203,621



	Purchased			Originated			Total
Balance, December 31, 2015	$	9,911		$	208,694		$	218,605
Additions, net	—			56,345			56,345
Change in fair value due to scheduled payments and full-balance payoffs	(2,109		)	(27,276		)	(29,385		)
Change in fair value due to market assumption changes	(4,237		)	(37,707		)	(41,944		)
Balance, September 30, 2016	$	3,565		$	200,056		$	203,621

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:



	September 30, 2017	December 31, 2016	September 30, 2016
Discount rate – risk-free rate plus a market premium	9.84%	10.08%	10.08%
Prepayment rate - based upon loan interest rate, original term and loan type	8.71%-15.43%	8.98%-16.91%	9.16%-47.15%
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	2.00%	1.98%	1.18%
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 September 30, 2017 follows (in thousands):



			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	8,021,016	$	78,542	$	13,100	$	26,171	$	8,138,829
FNMA	6,635,428		76,065		10,398		20,596		6,742,487
GNMA	6,376,127		215,506		59,659		20,925		6,672,217
Other	502,768		3,492		1,167		2,161		509,588
Total	$	21,535,339	$	373,605	$	84,324	$	69,853	$	22,063,121

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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 June 24, 2015, the Bank received a complaint alleging that an employee had colluded with a bond issuer and an individual in misusing revenues pledged to municipal bonds for which the Bank served as trustee under the bond indenture. The Company conducted an investigation and concluded that employees in one of its Corporate Trust offices had, with respect to a single group of affiliated bond issuances, violated Company policies and procedures by waiving financial covenants, granting forbearances and accepting without disclosure to the bondholders, debt service payments from sources other than pledged revenues. The relationship manager was terminated. The Company reported the circumstances to, and cooperated with an investigation by, the Securities and Exchange Commission ("SEC"). On December 28, 2015, in an action brought by the SEC, the United States District Court for the District of New Jersey entered a judgment against the principals involved in issuing the bonds, precluding the principals from denying the alleged violations of the federal securities laws and requiring the principals to pay all outstanding principal, accrued interest, and other amounts required under the bond documents (now estimated to be approximately $48 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.

On September 15, 2017, the principal filed for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Georgia. The obligation of the principal to pay all principal and interest on the bonds is non-dischargeable in bankruptcy. 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 representing a different set of municipal securities. The bondholders in this second action allege two individuals purchased facilities from the principals who are the subject of the SEC New Jersey proceedings by means of the fraudulent sale of $60 million of municipal securities for which the Bank also served as indenture trustee. The bondholders allege the Bank failed to disclose that the seller of the purchased facilities had engaged in the conduct complained of in the New Jersey action. The Bank properly performed all duties as indenture trustee of this second set of municipal securities, timely commenced proceedings against the issuer of the securities when default occurred, is cooperating with the SEC in actions against the two principals, is not a target of the SEC proceedings, and has been advised by counsel that the Bank has valid defenses to the claims of these bondholders. 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. The arbitration panel found the County of Bernalillo’s complaint frivolous and awarded BOK Financial Securities, Inc. attorney fees and costs. The County has sued in the United States District Court for New Mexico to set aside the award of fees and costs to BOK Financial Securities but not the finding that the County's complaint was frivolous.

- 100 -

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 $3.4 million at September 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.

- 101 -

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



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

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



	December 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	$	—	$	—



	September 30, 2016
	Loans		Other assets		Other liabilities		Other borrowings		Non-controlling interests
Consolidated:
Private equity funds	$	—	$	18,420	$	—	$	—	$	15,946
Tax credit entities	10,000		11,740		—		10,964		10,000
Other	—		30,978		2,346		1,063		8,154
Total consolidated	$	10,000	$	61,138	$	2,346	$	12,027	$	34,100

Unconsolidated:
Tax credit entities	$	39,849	$	129,715	$	57,026	$	—	$	—
Other	—		30,272		13,653		—		—
Total unconsolidated	$	39,849	$	159,987	$	70,679	$	—	$	—

- 102 -

Other Commitments and Contingencies

At September 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 September 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 October 31, 2017, the Company declared a quarterly cash dividend of $0.45 per common share on or about November 27, 2017 to shareholders of record as of November 13, 2017.

Dividends declared were $0.44 per share and $1.32 per share during the three and nine months ended September 30, 2017 and $0.43 per share and $1.29 per share during the three and nine months ended September 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, December 31, 2015	$	23,284		$	68		$	(1,765	)	$	21,587
Net change in unrealized gain (loss)	133,108			—			—			133,108
Reclassification adjustments included in earnings:
Interest revenue, Investment securities, Taxable securities	—			(112		)	—			(112		)
Gain on available for sale securities, net	(11,684		)	—			—			(11,684		)
Other comprehensive income (loss), before income taxes	121,424			(112		)	—			121,312
Federal and state income taxes¹	47,216			(44		)	—			47,172
Other comprehensive income (loss), net of income taxes	74,208			(68		)	—			74,140
Balance, September 30, 2016	$	97,492		$	—		$	(1,765	)	$	95,727

Balance, December 31, 2016	$	(9,087	)	$	—		$	(1,880	)	$	(10,967	)
Net change in unrealized gain (loss)	33,876			—			5			33,881
Reclassification adjustments included in earnings:
Gain on available for sale securities, net	(4,916		)	—			—			(4,916		)
Other comprehensive income, before income taxes	28,960			—			5			28,965
Federal and state income taxes¹	11,239						2			11,241
Other comprehensive income, net of income taxes	17,721			—			3			17,724
Balance, September 30, 2017	$	8,634		$	—		$	(1,877	)	$	6,757


¹	Calculated using a 39 percent effective tax rate.

- 103 -

(9) Earnings Per Share



(In thousands, except share and per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Numerator:
Net income attributable to BOK Financial Corp. shareholders	$	85,649	$	74,277	$	262,152	$	182,642
Less: Earnings allocated to participating securities	888		916		2,817		2,275
Numerator for basic earnings per share – income available to common shareholders	84,761		73,361		259,335		180,367
Effect of reallocating undistributed earnings of participating securities	1		1		2		1
Numerator for diluted earnings per share – income available to common shareholders	$	84,762	$	73,362	$	259,337	$	180,368

Denominator:
Weighted average shares outstanding	65,423,258		65,895,430		65,432,313		66,031,497
Less: Participating securities included in weighted average shares outstanding	680,436		810,038		702,922		822,723
Denominator for basic earnings per common share	64,742,822		65,085,392		64,729,391		65,208,774
Dilutive effect of employee stock compensation plans¹	62,350		72,449		64,502		54,792
Denominator for diluted earnings per common share	64,805,172		65,157,841		64,793,893		65,263,566

Basic earnings per share	$	1.31	$	1.13	$	4.01	$	2.77
Diluted earnings per share	$	1.31	$	1.13	$	4.00	$	2.76
¹ Excludes employee stock options with exercise prices greater than current market price.	—		—		—		—

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(10) Reportable Segments

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	157,080		$	25,576		$	11,169		$	24,627		$	218,452
Net interest revenue (expense) from internal sources	(24,173		)	12,213			9,604			2,356			—
Net interest revenue	132,907			37,789			20,773			26,983			218,452
Provision for credit losses	3,217			1,315			(623		)	(3,909		)	—
Net interest revenue after provision for credit losses	129,690			36,474			21,396			30,892			218,452
Other operating revenue	54,091			47,033			75,707			(1,121		)	175,710
Other operating expense	56,952			56,785			61,791			90,406			265,934
Net direct contribution	126,829			26,722			35,312			(60,635		)	128,228
Gain on financial instruments, net	4			1,686			—			(1,690		)	—
Change in fair value of mortgage servicing rights	—			(639		)	—			639			—
Gain (loss) on repossessed assets, net	(4,126		)	292			—			3,834			—
Corporate expense allocations	8,650			17,039			9,819			(35,508		)	—
Net income before taxes	114,057			11,022			25,493			(22,344		)	128,228
Federal and state income taxes	44,368			4,288			9,917			(16,135		)	42,438
Net income	69,689			6,734			15,576			(6,209		)	85,790
Net income attributable to non-controlling interests	—			—			—			141			141
Net income attributable to BOK Financial Corp. shareholders	$	69,689		$	6,734		$	15,576		$	(6,350	)	$	85,649

Average assets	$	17,558,390		$	9,115,319		$	6,992,021		$	(657,560	)	$	33,008,170

- 105 -

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	435,946		$	70,208		$	33,130		$	85,554		$	624,838
Net interest revenue (expense) from internal sources	(61,803		)	35,002			28,784			(1,983		)	—
Net interest revenue	374,143			105,210			61,914			83,571			624,838
Provision for credit losses	2,983			3,512			(676		)	(5,819		)	—
Net interest revenue after provision for credit losses	371,160			101,698			62,590			89,390			624,838
Other operating revenue	156,139			146,440			225,434			245			528,258
Other operating expense	168,517			166,027			182,816			244,170			761,530
Net direct contribution	358,782			82,111			105,208			(154,535		)	391,566
Gain on financial instruments, net	46			5,242			—			(5,288		)	—
Change in fair value of mortgage servicing rights	—			(5,726		)	—			5,726			—
Gain (loss) on repossessed assets, net	(2,728		)	253			—			2,475			—
Corporate expense allocations	26,144			50,947			30,438			(107,529		)	—
Net income before taxes	329,956			30,933			74,770			(44,093		)	391,566
Federal and state income taxes	128,353			12,033			29,086			(41,226		)	128,246
Net income	201,603			18,900			45,684			(2,867		)	263,320
Net income attributable to non-controlling interests	—			—			—			1,168			1,168
Net income attributable to BOK Financial Corp. shareholders	$	201,603		$	18,900		$	45,684		$	(4,035	)	$	262,152

Average assets	$	17,525,658		$	8,871,470		$	6,971,369		$	(591,059	)	$	32,777,438

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	123,599		$	22,098		$	9,274		$	32,875		$	187,846
Net interest revenue (expense) from internal sources	(15,052		)	9,263			$	7,401		(1,612		)	—
Net interest revenue	108,547			31,361			16,675			31,263			187,846
Provision for credit losses	5,601			1,157			(89		)	3,331			10,000
Net interest revenue after provision for credit losses	102,946			30,204			16,764			27,932			177,846
Other operating revenue	49,642			60,603			73,523			3,542			187,310
Other operating expense	53,375			60,964			64,426			79,323			258,088
Net direct contribution	99,213			29,843			25,861			(47,849		)	107,068
Gain (loss) on financial instruments, net	—			(1,087		)	(42		)	1,129			—
Change in fair value of mortgage servicing rights	—			2,327			—			(2,327		)	—
Gain on repossessed assets, net	1,486			161			—			(1,647		)	—
Corporate expense allocations	9,054			16,905			10,912			(36,871		)	—
Net income before taxes	91,645			14,339			14,907			(13,823		)	107,068
Federal and state income taxes	35,650			5,578			5,799			(15,071		)	31,956
Net income	55,995			8,761			9,108			1,248			75,112
Net income attributable to non-controlling interests	—			—			—			835			835
Net income attributable to BOK Financial Corp. shareholders	$	55,995		$	8,761		$	9,108		$	413		$	74,277

Average assets	$	16,934,587		$	8,827,816		$	6,413,735		$	470,335		$	32,646,473

- 106 -

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



	Commercial			Consumer			Wealth Management			Funds Management and Other			BOK Financial Consolidated
Net interest revenue from external sources	$	358,713		$	65,897		$	21,620		$	106,800		$	553,030
Net interest revenue (expense) from internal sources	(44,259		)	27,492			$	22,258		(5,491		)	—
Net interest revenue	314,454			93,389			43,878			101,309			553,030
Provision for credit losses	34,024			4,177			(479		)	27,278			65,000
Net interest revenue after provision for credit losses	280,430			89,212			44,357			74,031			488,030
Other operating revenue	146,248			172,072			218,042			(6,096		)	530,266
Other operating expense	162,039			179,487			186,524			223,993			752,043
Net direct contribution	264,639			81,797			75,875			(156,058		)	266,253
Gain (loss) on financial instruments, net	—			30,539			(42		)	(30,497		)	—
Change in fair value of mortgage servicing rights	—			(41,944		)	—			41,944			—
Gain on repossessed assets, net	806			566			—			(1,372		)	—
Corporate expense allocations	26,681			49,513			31,864			(108,058		)	—
Net income before taxes	238,764			21,445			43,969			(37,925		)	266,253
Federal and state income taxes	92,879			8,342			17,104			(34,444		)	83,881
Net income	145,885			13,103			26,865			(3,481		)	182,372
Net loss attributable to non-controlling interests	—			—			—			(270		)	(270		)
Net income attributable to BOK Financial Corp. shareholders	$	145,885		$	13,103		$	26,865		$	(3,211	)	$	182,642

Average assets	$	16,958,999		$	8,763,564		$	5,916,545		$	410,075		$	32,049,183

- 107 -

(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 nine months ended September 30, 2017 and 2016, respectively. Transfers between significant other observable inputs and significant unobservable inputs during the three and nine months ended September 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 September 30, 2017, December 31, 2016 or September 30, 2016.

- 108 -

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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



	Total		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading securities:
U.S. government agency debentures	$	30,162	$	—	$	30,162	$	—
U.S. government agency residential mortgage-backed securities	516,760		—		516,760		—
Municipal and other tax-exempt securities	56,148		—		56,148		—
Other trading securities	11,047		—		11,047		—
Total trading securities	614,117		—		614,117		—
Available for sale securities:
U.S. Treasury	999		999		—		—
Municipal and other tax-exempt securities	28,368		—		23,583		4,785
U.S. government agency residential mortgage-backed securities	5,326,384		—		5,326,384		—
Privately issued residential mortgage-backed securities	99,994		—		99,994		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,889,346		—		2,889,346		—
Other debt securities	4,153		—		—		4,153
Perpetual preferred stock	16,245		—		16,245		—
Equity securities and mutual funds	17,710		2,578		15,132		—
Total available for sale securities	8,383,199		3,577		8,370,684		8,938
Fair value option securities – U.S. government agency residential mortgage-backed securities	819,531		—		819,531		—
Residential mortgage loans held for sale	275,643		—		263,543		12,100
Mortgage servicing rights¹	245,858		—		—		245,858
Derivative contracts, net of cash collateral²	352,559		8,498		344,061		—
Liabilities:
Derivative contracts, net of cash collateral²	336,327		6,903		329,424		—


¹	A reconciliation of the beginning and ending fair value of mortgage servicing rights and disclosures of significant assumptions used to determine fair value are presented in Note 6, Mortgage Banking Activities.

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

- 110 -

The fair value of financial assets and liabilities measured on a recurring basis was as follows as of September 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	$	15,705	$	—	$	15,705	$	—
U.S. government agency residential mortgage-backed securities	464,749		—		464,749		—
Municipal and other tax-exempt securities	54,856		—		54,856		—
Other trading securities	11,305		—		11,305		—
Total trading securities	546,615		—		546,615		—
Available for sale securities:
U.S. Treasury	1,002		1,002		—		—
Municipal and other tax-exempt securities	42,092		—		36,379		5,713
U.S. government agency residential mortgage-backed securities	5,668,672		—		5,668,672		—
Privately issued residential mortgage-backed securities	121,603		—		121,603		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,986,495		—		2,986,495		—
Other debt securities	4,151		—		—		4,151
Perpetual preferred stock	19,578		—		19,578		—
Equity securities and mutual funds	18,690		3,544		15,146		—
Total available for sale securities	8,862,283		4,546		8,847,873		9,864
Fair value option securities:
U.S. Treasury	222,409		222,409		—		—
U.S. government agency residential mortgage-backed securities	—		—		—		—
Total fair value option securities	222,409		222,409		—		—
Residential mortgage loans held for sale	447,592		—		438,291		9,301
Mortgage servicing rights¹	203,621		—		—		203,621
Derivative contracts, net of cash collateral²	655,078		5,575		649,503		—
Liabilities:
Derivative contracts, net of cash collateral²	573,987		1,308		572,679		—


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.

- 111 -

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.

- 112 -

The following represents the changes for the three and nine months ended September 30, 2017 related to assets measured at fair value on a recurring basis using significant unobservable inputs (in thousands):



	Available for Sale Securities
	Municipal and other tax-exempt securities		Other debt securities		Residential mortgage loans held for sale
Balance, June 30, 2017	$	4,655	$	4,152	$	12,735
Transfer to Level 3 from Level 2¹	—		—		176
Purchases	—		—		—
Proceeds from sales	—		—		(847		)
Redemptions and distributions	—		—		—
Gain recognized in earnings:
Mortgage banking revenue	—		—		36
Other comprehensive income:
Net change in unrealized gain	130		1		—
Balance, September 30, 2017	$	4,785	$	4,153	$	12,100


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



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities		Residential mortgage loans held for sale
Balance, December 31, 2016	$	5,789		$	4,152	$	11,617
Transfer to Level 3 from Level 2¹	—			—		2,916
Purchases	—			—		—
Proceeds from sales	—			—		(2,549		)
Redemptions and distributions	(1,100		)	—		—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—			—		116
Other comprehensive income (loss):
Net change in unrealized gain (loss)	96			1		—
Balance, September 30, 2017	$	4,785		$	4,153	$	12,100


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

- 113 -

The following represents the changes for the three and six months ended September 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, June 30, 2016	$	9,600		$	4,151	$	9,749
Transfer to Level 3 from Level 2¹	—			—		442
Purchases	—			—		—
Proceeds from sales	—			—		(1,003		)
Redemptions and distributions	(3,975		)	—		—
Gain (loss) recognized in earnings:
Mortgage banking revenue	—			—		113
Other comprehensive income (loss):
Net change in unrealized gain (loss)	88			—		—
Balance, September 30, 2016	$	5,713		$	4,151	$	9,301


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



	Available for Sale Securities
	Municipal and other tax-exempt			Other debt securities		Residential mortgage loans held for sale
Balance, December 31, 2015	$	9,610		$	4,151	$	7,874
Transfer to Level 3 from Level 2¹	—			—		3,982
Purchases	—			—		—
Proceeds from sales	—			—		(2,365		)
Redemptions and distributions	(3,975		)	—		—
Gain (loss) recognized in earnings
Mortgage banking revenue	—			—		(190		)
Other comprehensive income (loss):
Net change in unrealized gain (loss)	78			—		—
Balance, September 30, 2016	$	5,713		$	4,151	$	9,301


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.

- 114 -

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



	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	$	4,785	Discounted cash flows	¹	Interest rate spread	6.05%-6.05% (6.05%)	²
										92.25%-95.02% (93.91%)	³
Other debt securities	4,400		4,400		4,153		Discounted cash flows	¹	Interest rate spread	6.65%-6.73% (6.72%)	⁴
										94.38% - 94.38 (94.38%)	³

Residential mortgage loans held for sale	N/A		12,612		12,100		Quoted prices of loans sold in securitization transactions, with a liquidity discount applied		Liquidity discount applied to the market value of a mortgage loans qualifying for sale to U.S. government agencies.	95.94%


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


²	Interest rate yields used to value investment grade tax-exempt securities represent a spread of 352 to 467 basis points over average yields for comparable tax-exempt securities.


³	Represents fair value as a percentage of par value.


⁴	Interest rate yields used to value investment grade taxable securities based on comparable short-term taxable securities which are generally yielding less than 3 percent.

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.

- 115 -

A summary of quantitative information about Recurring Fair Value Measurements based on Significant Unobservable Inputs (Level 3) as of September 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	$	6,195	$	6,162	$	5,713	Discounted cash flows	¹	Interest rate spread	5.60%-5.90% (5.85%)	²
										90.00%-93.79% (92.22%)	³
Other debt securities	4,400		4,400		4,151		Discounted cash flows	¹	Interest rate spread	5.98%-6.03% (6.02%)	⁴
										94.34% - 94.34 (94.34%)	³

Residential mortgage loans held for sale	N/A		9,957		9,301		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.	93.41%


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 437 to 484 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 September 30, 2017 for which the fair value was adjusted during the nine months ended September 30, 2017:



							Fair Value Adjustments for the
	Carrying Value at September 30, 2017						Three Months Ended September 30, 2017 Recognized in:				Nine Months Ended September 30, 2017 Recognized in:
	Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Gross charge-offs against allowance for loan losses		Net losses and expenses of repossessed assets, net		Gross charge-offs against allowance for loan losses		Net losses and expenses of repossessed assets, net
Impaired loans	$	—	$	423	$	10,960	$	4,397	$	—	$	5,058	$	—
Real estate and other repossessed assets	—		4,392		6,845		—		4,683		—		4,915

- 116 -

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



	Carrying Value at September 30, 2016						Fair Value Adjustments for the Three Months Ended September 30, 2016 Recognized in:				Nine Months Ended September 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	$	—	$	436	$	23,089	$	6,334	$	—	$	30,200	$	—
Real estate and other repossessed assets	—		6,048		1,927		—		480		—		1,260

The fair value of collateral-dependent impaired loans secured by real estate and real estate and other repossessed assets and the related fair value adjustments are generally based on unadjusted third-party appraisals. Our appraisal review policies require appraised values to be supported by observed inputs derived principally from or corroborated by observable market data. Appraisals that are not based on observable inputs or that require significant adjustments or fair value measurements that are not based on third-party appraisals are considered to be based on significant unobservable inputs. Non-recurring fair value measurements of collateral-dependent impaired loans and real estate and other repossessed assets based on significant unobservable inputs are generally due to estimates of current fair values between appraisal dates. Significant unobservable inputs include listing prices for the same or comparable assets, uncorroborated expert opinions or management's knowledge of the collateral or industry. Non-recurring fair value measurements of collateral dependent loans secured by mineral rights are generally determined by our internal staff of engineers on projected cash flows under current market conditions and are based on significant unobservable inputs. Projected cash flows are discounted according to risk characteristics of the underlying oil and gas properties. Assets are evaluated to demonstrate with reasonable certainty that crude oil, natural gas and natural gas liquids can be recovered from known oil and gas reservoirs under existing economic and operating conditions at current prices with existing conventional equipment, operating methods and costs. Significant unobservable inputs are developed by asset management and workout professionals and approved by senior Credit Administration executives.

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



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


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

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



	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Impaired loans	$	23,089	Discounted cash flows	Recoverable oil and gas reserves, forward-looking commodity prices, estimated operating costs	23% - 59% (43%)¹
Real estate and other repossessed assets	1,927		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.

- 117 -

Fair Value of Financial Instruments

The following table presents the carrying values and estimated fair values of all financial instruments, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis as of September 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	$	547,203		$	547,203	$	547,203	$	—	$	—
Interest-bearing cash and cash equivalents	1,926,779			1,926,779		1,926,779		—		—
Trading securities:								—
U.S. government agency debentures	30,162			30,162		—		30,162		—
U.S. government agency residential mortgage-backed securities	516,760			516,760		—		516,760		—
Municipal and other tax-exempt securities	56,148			56,148		—		56,148		—
Other trading securities	11,047			11,047		—		11,047		—
Total trading securities	614,117			614,117		—		614,117		—
Investment securities:
Municipal and other tax-exempt securities	246,000			249,250		—		249,250		—
U.S. government agency residential mortgage-backed securities	16,926			17,458		—		17,458		—
Other debt securities	203,636			223,187		—		223,187		—
Total investment securities	466,562			489,895		—		489,895		—
Available for sale securities:
U.S. Treasury	999			999		999		—		—
Municipal and other tax-exempt securities	28,368			28,368		—		23,583		4,785
U.S. government agency residential mortgage-backed securities	5,326,384			5,326,384		—		5,326,384		—
Privately issued residential mortgage-backed securities	99,994			99,994		—		99,994		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,889,346			2,889,346		—		2,889,346		—
Other debt securities	4,153			4,153		—		—		4,153
Perpetual preferred stock	16,245			16,245		—		16,245		—
Equity securities and mutual funds	17,710			17,710		2,578		15,132		—
Total available for sale securities	8,383,199			8,383,199		3,577		8,370,684		8,938
Fair value option securities – U.S. government agency residential mortgage-backed securities	819,531			819,531		—		819,531		—
Residential mortgage loans held for sale	275,643			275,643		—		263,543		12,100
Loans:
Commercial	10,795,934			10,574,720		—		—		10,574,720
Commercial real estate	3,518,142			3,467,009		—		—		3,467,009
Residential mortgage	1,945,750			1,958,632		—		—		1,958,632
Personal	947,008			938,819		—		—		938,819
Total loans	17,206,834			16,939,180		—		—		16,939,180
Allowance for loan losses	(247,703		)	—		—		—		—
Loans, net of allowance	16,959,131			16,939,180		—		—		16,939,180
Mortgage servicing rights	245,858			245,858		—		—		245,858
Derivative instruments with positive fair value, net of cash collateral	352,559			352,559		8,498		344,061		—
Deposits with no stated maturity	19,675,790			19,675,790		—		—		19,675,790
Time deposits	2,172,289			2,138,367		—		—		2,138,367
Other borrowed funds	6,631,820			6,609,642		—		—		6,609,642
Subordinated debentures	144,668			146,693		—		146,693		—
Derivative instruments with negative fair value, net of cash collateral	336,327			336,327		6,903		329,424		—

- 118 -



	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		—

- 119 -



	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	$	535,916		$	535,916	$	535,916	$	—	$	—
Interest-bearing cash and cash equivalents	2,080,978			2,080,978		2,080,978		—		—
Trading securities:								—
U.S. government agency debentures	15,705			15,705		—		15,705		—
U.S. government agency residential mortgage-backed securities	464,749			464,749		—		464,749		—
Municipal and other tax-exempt securities	54,856			54,856		—		54,856		—
Other trading securities	11,305			11,305		—		11,305		—
Total trading securities	546,615			546,615		—		546,615		—
Investment securities:
Municipal and other tax-exempt securities	323,225			327,788		—		327,788		—
U.S. government agency residential mortgage-backed securities	22,166			23,452		—		23,452		—
Other debt securities	201,066			229,070		—		229,070		—
Total investment securities	546,457			580,310		—		580,310		—
Available for sale securities:
U.S. Treasury	1,002			1,002		1,002		—		—
Municipal and other tax-exempt securities	42,092			42,092		—		36,379		5,713
U.S. government agency residential mortgage-backed securities	5,668,672			5,668,672		—		5,668,672		—
Privately issued residential mortgage-backed securities	121,603			121,603		—		121,603		—
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,986,495			2,986,495		—		2,986,495		—
Other debt securities	4,151			4,151		—		—		4,151
Perpetual preferred stock	19,578			19,578		—		19,578		—
Equity securities and mutual funds	18,690			18,690		3,544		15,146		—
Total available for sale securities	8,862,283			8,862,283		4,546		8,847,873		9,864
Fair value option securities:
U.S. Treasury	222,409			222,409		222,409		—		—
U.S. government agency residential mortgage-backed securities	—			—		—		—		—
Total fair value option securities	222,409			222,409		222,409		—		—
Residential mortgage loans held for sale	447,592			447,592		—		438,291		9,301
Loans:
Commercial	10,120,163			9,926,548		—		—		9,926,548
Commercial real estate	3,793,598			3,769,427		—		—		3,769,427
Residential mortgage	1,872,793			1,905,786		—		—		1,905,786
Personal	678,232			671,421		—		—		671,421
Total loans	16,464,786			16,273,182		—		—		16,273,182
Allowance for loan losses	(245,103		)	—		—		—		—
Loans, net of allowance	16,219,683			16,273,182		—		—		16,273,182
Mortgage servicing rights	203,621			203,621		—		—		203,621
Derivative instruments with positive fair value, net of cash collateral	655,078			655,078		5,575		649,503		—
Deposits with no stated maturity	18,925,873			18,925,873		—		—		18,925,873
Time deposits	2,169,631			2,163,947		—		—		2,163,947
Other borrowed funds	7,147,047			7,079,737		—		—		7,079,737
Subordinated debentures	144,631			148,360		—		148,360		—
Derivative instruments with negative fair value, net of cash collateral	573,987			573,987		1,308		572,679		—

- 120 -

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 $220 million at September 30, 2017, $218 million at December 31, 2016 and $217 million at September 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
September 30, 2017:
Commercial	0.38% - 30.00%	0.62	0.78% - 4.59%
Commercial real estate	0.38% - 18.00%	0.77	1.04% - 4.38%
Residential mortgage	1.74% - 18.00%	2.12	1.79% - 4.09%
Personal	0.25% - 21.00%	0.24	0.55% - 4.78%

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%

September 30, 2016:
Commercial	0.38% - 30.00%	0.69	0.54% - 3.93%
Commercial real estate	0.38% - 18.00%	0.72	0.80% - 3.90%
Residential mortgage	1.74% - 18.00%	1.95	1.57% - 3.55%
Personal	0.25% - 21.00%	0.35	0.75% - 4.15%

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.

- 121 -

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
September 30, 2017	0.03% - 9.64%	1.95	1.86% - 2.18%
December 31, 2016	0.02% - 9.65%	1.96	1.57% - 2.00%
September 30, 2016	0.03% - 9.65%	2.10	1.37% - 1.66%

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
September 30, 2017:
Other borrowed funds	0.25% - 6.25%	0.02	1.06% - 3.70%
Subordinated debentures	5.38%	16.85	4.96%

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

September 30, 2016:
Other borrowed funds	0.25% - 3.81%	0.02	0.29% - 2.99%
Subordinated debentures	5.38%	18.37	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 September 30, 2017, December 31, 2016 or September 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.

- 122 -

(12) Federal and State Income Taxes

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Amount:
Federal statutory tax	$	44,880		$	37,474		$	137,048		$	93,189
Tax exempt revenue	(3,001		)	(2,391		)	(9,336		)	(7,491		)
Effect of state income taxes, net of federal benefit	2,486			1,364			7,875			5,222
Utilization of tax credits:
Low-income housing tax credit, net of amortization	(23		)	(623		)	(2,272		)	(2,505		)
Other tax credits	(364		)	(522		)	(1,091		)	(1,564		)
Bank-owned life insurance	(705		)	(813		)	(2,252		)	(2,414		)
Share-based compensation	(169		)	—			(2,470		)	—
Other, net	(666		)	(2,533		)	744			(556		)
Total income tax expense	$	42,438		$	31,956		$	128,246		$	83,881



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Percent of pretax income:
Federal statutory tax	35.0	%	35.0	%	35.0	%	35.0	%
Tax exempt revenue	(2.3	)	(2.2	)	(2.4	)	(2.8	)
Effect of state income taxes, net of federal benefit	1.9		1.3		2.0		2.0
Utilization of tax credits:
Low-income housing tax credit, net of amortization	—		(0.6	)	(0.6	)	(0.9	)
Other tax credits	(0.3	)	(0.5	)	(0.3	)	(0.6	)
Bank-owned life insurance	(0.5	)	(0.8	)	(0.6	)	(0.9	)
Share-based compensation	(0.1	)	—		(0.6	)	—
Other, net	(0.6	)	(2.4	)	0.3		(0.3	)
Total	33.1	%	29.8	%	32.8	%	31.5	%

(13) Subsequent Events

The Company evaluated events from the date of the consolidated financial statements on September 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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Nine-Month Financial Summary – Unaudited Consolidated Daily Average Balances, Average Yields and Rates

(In Thousands, Except Per Share Data)	Nine Months Ended
	September 30, 2017							September 30, 2016
	Average Balance			Revenue/ Expense		Yield/ Rate		Average Balance			Revenue/ Expense			Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	2,020,003		$	15,817	1.05	%	$	2,040,978		$	7,926		0.52	%
Trading securities	508,741			13,008		3.55	%	264,525			4,659			2.48	%
Investment securities
Taxable	220,892			8,886		5.36	%	227,136			9,244			5.43	%
Tax-exempt	280,910			5,300		2.52	%	340,292			5,713			2.24	%
Total investment securities	501,802			14,186		3.77	%	567,428			14,957			3.52	%
Available for sale securities
Taxable	8,407,421			130,426		2.09	%	8,831,032			130,790			2.02	%
Tax-exempt	51,891			2,019		5.58	%	70,205			2,605			5.15	%
Total available for sale securities	8,459,312			132,445		2.11	%	8,901,237			133,395			2.04	%
Fair value option securities	526,714			10,985		2.77	%	361,623			6,182			2.11	%
Restricted equity securities	312,365			13,534		5.78	%	316,563			12,684			5.34	%
Residential mortgage loans held for sale	240,822			6,317		3.55	%	379,174			9,823			3.49	%
Loans	17,174,450			523,764		4.08	%	16,235,071			436,966			3.59	%
Allowance for loan losses	(250,538		)					(242,508		)
Loans, net of allowance	16,923,912			523,764		4.14	%	15,992,563			436,966			3.65	%
Total earning assets	29,493,671			730,056		3.32	%	28,824,091			626,592			2.92	%
Receivable on unsettled securities sales	72,888							141,957
Cash and other assets	3,210,879							3,083,135
Total assets	$	32,777,438						$	32,049,183
Liabilities and equity
Interest-bearing deposits:
Transaction	$	10,246,125		$	19,713	0.26	%	$	9,666,048		$	9,994		0.14	%
Savings	455,740			272		0.08	%	411,568			295			0.10	%
Time	2,213,090			18,521		1.12	%	2,286,844			20,062			1.17	%
Total interest-bearing deposits	12,914,955			38,506		0.40	%	12,364,460			30,351			0.33	%
Funds purchased	56,161			276		0.66	%	83,668			142			0.23	%
Repurchase agreements	436,882			240		0.07	%	598,631			214			0.05	%
Other borrowings	5,825,764			47,026		1.08	%	6,002,018			25,587			0.57	%
Subordinated debentures	144,653			6,098		5.64	%	238,415			4,056			2.27	%
Total interest-bearing liabilities	19,378,415			92,146		0.64	%	19,287,192			60,350			0.42	%
Non-interest bearing demand deposits	9,277,820							8,255,859
Due on unsettled securities purchases	131,571							150,994
Other liabilities	581,901							1,001,282
Total equity	3,407,731							3,353,856
Total liabilities and equity	$	32,777,438						$	32,049,183
Tax-equivalent Net Interest Revenue				$	637,910	2.68	%				$	566,242		2.50	%
Tax-equivalent Net Interest Revenue to Earning Assets						2.90	%							2.64	%
Less tax-equivalent adjustment				13,072							13,212
Net Interest Revenue				624,838							553,030
Provision for credit losses				—							65,000
Other operating revenue				528,258							530,266
Other operating expense				761,530							752,043
Income before taxes				391,566							266,253
Federal and state income taxes				128,246							83,881
Net income				263,320							182,372
Net income (loss) attributable to non-controlling interests				1,168							(270		)
Net income attributable to BOK Financial Corp. shareholders				$	262,152						$	182,642
Earnings Per Average Common Share Equivalent:
Net income:
Basic				$	4.01						$	2.77
Diluted				$	4.00						$	2.76

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.

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- 125 -

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

(In Thousands, Except Per Share Data)	Three Months Ended
	September 30, 2017							June 30, 2017
	Average Balance			Revenue/ Expense		Yield/ Rate		Average Balance			Revenue/ Expense		Yield/ Rate
Assets
Interest-bearing cash and cash equivalents	$	1,965,645		$	6,375	1.29	%	$	2,007,746		$	5,198	1.04	%
Trading securities	491,613			4,122		3.47	%	456,028			3,517		3.23	%
Investment securities
Taxable	221,609			2,942		5.31	%	219,385			2,931		5.34	%
Tax-exempt	254,096			1,650		2.60	%	279,987			1,757		2.51	%
Total investment securities	475,705			4,592		3.86	%	499,372			4,688		3.76	%
Available for sale securities
Taxable	8,381,536			44,579		2.16	%	8,332,709			42,920		2.09	%
Tax-exempt	46,817			566		5.27	%	51,348			725		6.09	%
Total available for sale securities	8,428,353			45,145		2.17	%	8,384,057			43,645		2.11	%
Fair value option securities	684,571			5,066		2.97	%	476,102			3,539		2.92	%
Restricted equity securities	328,677			4,826		5.87	%	295,743			4,399		5.95	%
Residential mortgage loans held for sale	256,343			2,095		3.36	%	245,401			2,386		3.92	%
Loans	17,256,663			187,506		4.31	%	17,129,533			172,139		4.03	%
Allowance for loan losses	(250,590		)					(251,632		)
Loans, net of allowance	17,006,073			187,506		4.38	%	16,877,901			172,139		4.09	%
Total earning assets	29,636,980			259,727		3.50	%	29,242,350			239,511		3.30	%
Receivable on unsettled securities sales	76,622							79,248
Cash and other assets	3,294,568							3,046,973
Total assets	$	33,008,170						$	32,368,571
Liabilities and equity
Interest-bearing deposits:
Transaction	$	10,088,522		$	8,062	0.32	%	$	10,087,640		$	6,437	0.26	%
Savings	464,130			90		0.08	%	461,586			95		0.08	%
Time	2,176,820			6,378		1.16	%	2,204,422			6,090		1.11	%
Total interest-bearing deposits	12,729,472			14,530		0.45	%	12,753,648			12,622		0.40	%
Funds purchased	49,774			116		0.92	%	63,263			96		0.61	%
Repurchase agreements	361,512			140		0.15	%	427,353			68		0.06	%
Other borrowings	6,162,641			20,105		1.29	%	5,572,031			15,188		1.09	%
Subordinated debentures	144,663			2,070		5.68	%	144,654			2,003		5.55	%
Total interest-bearing liabilities	19,448,062			36,961		0.75	%	18,960,949			29,977		0.63	%
Non-interest bearing demand deposits	9,389,849							9,338,683
Due on unsettled securities purchases	145,155							157,438
Other liabilities	540,463							502,068
Total equity	3,484,641							3,409,433
Total liabilities and equity	$	33,008,170						$	32,368,571
Tax-equivalent Net Interest Revenue				$	222,766	2.75	%				$	209,534	2.67	%
Tax-equivalent Net Interest Revenue to Earning Assets						3.01	%						2.89	%
Less tax-equivalent adjustment				4,314							4,330
Net Interest Revenue				218,452							205,204
Provision for credit losses				—							—
Other operating revenue				175,710							182,252
Other operating expense				265,934							250,885
Income before taxes				128,228							136,571
Federal and state income taxes				42,438							47,705
Net income				85,790							88,866
Net income (loss) attributable to non-controlling interests				141							719
Net income attributable to BOK Financial Corp. shareholders				$	85,649						$	88,147
Earnings Per Average Common Share Equivalent:
Basic				$	1.31						$	1.35
Diluted				$	1.31						$	1.35

- 126 -



Three Months Ended
March 31, 2017							December 31, 2016								September 30, 2016
Average Balance			Revenue /Expense		Yield / Rate		Average Balance			Revenue / Expense			Yield / Rate		Average Balance			Revenue / Expense		Yield / Rate

$	2,087,964		$	4,244	0.82	%	$	2,032,785		$	2,800		0.55	%	$	2,047,991		$	2,651	0.51	%
579,549			5,369		3.87	%	476,498			4,554			3.91	%	366,545			3,157		2.71	%

221,684			3,013		5.44	%	224,376			3,024			5.39	%	224,518			3,000		5.34	%
309,252			1,893		2.45	%	318,493			1,854			2.33	%	328,074			1,851		2.26	%
530,936			4,906		3.70	%	542,869			4,878			3.60	%	552,592			4,851		3.51	%

8,509,423			42,927		2.02	%	8,706,449			42,482			1.98	%	8,795,869			42,513		1.99	%
57,626			728		5.37	%	60,106			748			5.27	%	66,721			867		5.47	%
8,567,049			43,655		2.05	%	8,766,555			43,230			2.00	%	8,862,590			43,380		2.01	%
416,524			2,380		2.27	%	210,733			541			0.99	%	266,998			1,531		1.70	%
312,498			4,309		5.52	%	334,114			4,554			5.45	%	335,812			4,510		5.37	%
220,325			1,836		3.35	%	345,066			2,835			3.31	%	445,930			3,615		3.28	%
17,135,825			164,119		3.88	%	16,723,588			156,734			3.67	%	16,447,750			150,077		3.63	%
(249,379		)					(246,977		)						(247,901		)
16,886,446			164,119		3.94	%	16,476,611			156,734			3.72	%	16,199,849			150,077		3.69	%
29,601,291			230,818		3.15	%	29,185,231			220,126			2.98	%	29,078,307			213,772		2.93	%
62,641							33,813								259,906
3,291,057							3,742,032								3,308,260
$	32,954,989						$	32,961,076							$	32,646,473


$	10,567,475		$	5,214	0.20	%	$	9,980,132		$	3,912		0.16	%	$	9,650,618		$	3,417	0.14	%
441,254			87		0.08	%	421,654			91			0.09	%	420,009			100		0.09	%
2,258,930			6,053		1.09	%	2,177,035			6,140			1.12	%	2,197,350			6,295		1.14	%
13,267,659			11,354		0.35	%	12,578,821			10,143			0.32	%	12,267,977			9,812		0.32	%
55,508			64		0.47	%	62,004			44			0.28	%	68,280			33		0.19	%
523,561			32		0.02	%	560,891			34			0.02	%	522,822			53		0.04	%
5,737,955			11,733		0.83	%	6,072,150			9,315			0.61	%	6,342,369			9,105		0.57	%
144,644			2,025		5.68	%	144,635			2,003			5.51	%	255,890			2,468		3.84	%
19,729,327			25,208		0.52	%	19,418,501			21,539			0.44	%	19,457,338			21,471		0.44	%
9,101,763							9,124,595								8,497,037
91,529							77,575								200,574
704,978							1,004,212								1,099,858
3,327,392							3,336,193								3,391,666
$	32,954,989						$	32,961,076							$	32,646,473
			$	205,610	2.63	%				$	198,587		2.54	%				$	192,301	2.49	%
					2.81	%							2.69	%						2.64	%
			4,428							4,389								4,455
			201,182							194,198								187,846
			—							—								10,000
			170,296							143,754								187,310
			244,711							265,547								258,088
			126,767							72,405								107,068
			38,103							22,496								31,956
			88,664							49,909								75,112
			308							(117		)						835
			$	88,356						$	50,026							$	74,277

			$	1.35						$	0.76							$	1.13
			$	1.35						$	0.76							$	1.13

- 127 -

Quarterly Earnings Trends – Unaudited

(In thousands, except share and per share data)



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

Interest revenue	$	255,413		$	235,181		$	226,390		$	215,737		$	209,317
Interest expense	36,961			29,977			25,208			21,539			21,471
Net interest revenue	218,452			205,204			201,182			194,198			187,846
Provision for credit losses	—			—			—			—			10,000
Net interest revenue after provision for credit losses	218,452			205,204			201,182			194,198			177,846
Other operating revenue
Brokerage and trading revenue	33,169			31,764			33,623			28,500			38,006
Transaction card revenue	37,826			35,296			32,127			34,521			33,933
Fiduciary and asset management revenue	40,687			41,808			38,631			34,535			34,073
Deposit service charges and fees	23,209			23,354			23,030			23,365			23,668
Mortgage banking revenue	24,890			30,276			25,191			28,414			38,516
Other revenue	13,670			14,984			11,752			12,693			13,080
Total fees and commissions	173,451			177,482			164,354			162,028			181,276
Other gains, net	(1,283		)	6,108			3,627			(1,279		)	2,442
Gain (loss) on derivatives, net	1,033			3,241			(450		)	(35,815		)	2,226
Gain (loss) on fair value option securities, net	661			1,984			(1,140		)	(20,922		)	(3,355		)
Change in fair value of mortgage servicing rights	(639		)	(6,943		)	1,856			39,751			2,327
Gain (loss) on available for sale securities, net	2,487			380			2,049			(9		)	2,394
Total other operating revenue	175,710			182,252			170,296			143,754			187,310
Other operating expense
Personnel	147,910			143,744			136,425			141,132			139,212
Business promotion	7,105			7,738			6,717			7,344			6,839
Charitable contributions to BOKF Foundation	—			—			—			2,000			—
Professional fees and services	11,887			12,419			11,417			16,828			14,038
Net occupancy and equipment	21,325			21,125			21,624			21,470			20,111
Insurance	6,005			689			6,404			8,705			9,390
Data processing and communications	37,327			36,330			34,902			33,691			33,331
Printing, postage and supplies	3,917			4,140			3,851			3,998			3,790
Net losses (gains) and operating expenses of repossessed assets	6,071			2,267			1,009			1,627			(926		)
Amortization of intangible assets	1,744			1,803			1,802			1,558			1,521
Mortgage banking costs	13,450			12,072			13,003			17,348			15,963
Other expense	9,193			8,558			7,557			9,846			14,819
Total other operating expense	265,934			250,885			244,711			265,547			258,088
Net income before taxes	128,228			136,571			126,767			72,405			107,068
Federal and state income taxes	42,438			47,705			38,103			22,496			31,956
Net income	85,790			88,866			88,664			49,909			75,112
Net income (loss) attributable to non-controlling interests	141			719			308			(117		)	835
Net income attributable to BOK Financial Corporation shareholders	$	85,649		$	88,147		$	88,356		$	50,026		$	74,277

Earnings per share:
Basic	$1.31			$1.35			$1.35			$0.76			$1.13
Diluted	$1.31			$1.35			$1.35			$0.76			$1.13
Average shares used in computation:
Basic	64,742,822			64,729,752			64,715,964			64,719,018			65,085,392
Diluted	64,805,172			64,793,134			64,783,737			64,787,728			65,157,841

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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 September 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
July 1 to July 31, 2017	—	$	—	—	2,120,757
August 1 to August 31, 2017	—	$	—	—	2,120,757
September 1 to September 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 September 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.

- 129 -

Signatures

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

BOK FINANCIAL CORPORATION

(Registrant)

Date: October 31, 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

- 130 -

BOK Financial - 10-Q quarterly report FY2017 Q3

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