Performance Summary

BOK Financial Corporation ("the Company") reported net income of $83.6 million or $1.22 per diluted share for the first quarter of 2012, compared to $64.8 million or $0.94 per diluted share for the first quarter of 2011 and $67.0 million or $0.98 per diluted share for the fourth quarter of 2011.

Highlights of the first quarter of 2012 included:

· Net interest revenue totaled $173.6 million for the first quarter of 2012, compared to $170.6 million for the first quarter of 2011 and $171.5 million for the fourth quarter of 2011. Net interest margin was 3.19% for the first quarter of 2012, 3.47% for the first quarter of 2011 and 3.20% for the fourth quarter of 2011. The decrease in net interest margin compared with the first quarter of 2011 was largely due to lower yield on available for sale securities, partially offset by growth in average earning assets.

· Fees and commissions revenue totaled $144.3 million for the first quarter of 2012 compared to $123.3 million for the first quarter of 2011 and $131.8 million for the fourth quarter of 2011. The increase in fees and commissions revenue was primarily due to higher mortgage-banking revenue, partially offset by lower interchange fees.

· Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $192.4 million, up $10.8 million over the first quarter of 2011 and down $21.6 million compared to the fourth quarter of 2011. Personnel costs were up $14.8 million and non-personnel expenses were down $4.0 million compared to the first quarter of 2011.

· No provision for credit losses was recorded in the first quarter of 2012 compared to a $6.3 million provision for credit losses in the first quarter of 2011 and a $15.0 million negative provision in the fourth quarter of 2011. Net loans charged off totaled $8.5 million or 0.30% of average loans on an annualized basis for the first quarter of 2012 compared to $10.3 million or 0.39% of average loans on an annualized basis in the first quarter of 2011 and $9.5 million or 0.34% on an annualized basis in the fourth quarter of 2011.

· The combined allowance for credit losses totaled $254 million or 2.20% of outstanding loans at March 31, 2012, down from $263 million or 2.33% of outstanding loans at December 31, 2011. Nonperforming assets totaled $336 million or 2.87% of outstanding loans and repossessed assets at March 31, 2012 compared to $357 million or 3.13% of outstanding loans and repossessed assets at December 31, 2011.

· Outstanding loan balances were $11.6 billion at March 31, 2012, up $308 million over December 31, 2011. Commercial loan balances increased $371 million over December 31, 2011. Consumer loans decreased $38 million, commercial real estate loans decreased $16 million and residential mortgage loans decreased $9.6 million.

· Period-end deposits totaled $18.5 billion at March 31, 2012 compared to $18.8 billion at December 31, 2011. Demand deposit accounts increased $389 million offset by a $446 million decrease in interest-bearing transaction accounts and a $216 million decrease in time deposits.

· The tangible common equity ratio was 9.75% at March 31, 2012 and 9.56% at December 31, 2011. The tangible common equity ratio is a non-GAAP measure of capital strength used by the Company and investors based on shareholders' equity as defined by generally accepted accounting principles in the United States of America ("GAAP") minus intangible assets and equity that does not benefit common shareholders.

· The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company's Tier 1 capital ratios as defined by banking regulations were 13.03% at March 31, 2012 and 13.27% at December 31, 2011.

· The Company paid a cash dividend of $23 million or $0.33 per common share during the first quarter of 2012. On April 24, 2012, the board of directors declared a cash dividend of $0.38 per common share payable on or about May 29, 2012 to shareholders of record as of May 15, 2012.

Results of Operations

Net Interest Revenue and Net Interest Margin

Net interest revenue is the interest earned on debt securities, loans and other interest-earning assets less interest paid for interest-bearing deposits and other borrowings. The net interest margin is calculated by dividing net interest revenue by average interest-earning assets. Net interest spread is the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. Net interest margin is typically greater than net interest spread due to interest income earned on assets funded by non-interest bearing liabilities such as demand deposits and equity.

Net interest revenue totaled $173.6 million for the first quarter of 2012 compared to $170.6 million for the first quarter 2011 and $171.5 million for the fourth quarter of 2011. Net interest margin was 3.19% for the first quarter of 2012, 3.47% for the first quarter of 2011 and 3.20% for the fourth quarter of 2011.

The tax-equivalent yield on earning assets was 3.64% for the first quarter of 2012, down 46 basis points from the first quarter of 2011. The available for sale securities portfolio yield decreased 67 basis points to 2.50%. Cash flows from these securities were then reinvested at current lower rates. In addition, loan yields decreased 25 basis points to 4.50% due to a combination of narrowing credit spreads and changes in market interest rates. Funding costs were down 17 basis points compared to the first quarter of 2011. Interest-bearing deposits decreased 17 basis points and the cost of other borrowed funds decreased 12 basis points. The benefit to net interest margin from earning assets funded by non-interest bearing liabilities was 18 basis points in the first quarter of 2012 compared to 17 basis points in the first quarter of 2011.

Average earning assets for the first quarter of 2012 increased $1.7 billion or 8% over first quarter of 2011. Average loans, net of allowance for loan losses, increased $826 million primarily due to growth in average commercial and residential mortgage loans. The average balance of available for sale securities, which consist largely of U.S. government agency issued residential mortgage-backed securities, increased $571 million. We purchased these securities to supplement earnings, especially in a period of declining loan demand, and to manage interest rate risk.

Average deposits increased $937 million over the first quarter of 2011, including a $1.6 billion increase in average demand deposit balances, partially offset by a $371 million decrease in average time deposits and a $313 million decrease in average interest-bearing transaction accounts. Average borrowed funds increased $565 million compared over the first quarter of 2011.

Net interest margin decreased 1 basis point from the fourth quarter of 2011. Yield on average earning assets decreased 5 basis points to 3.64%. Yield on the available for sale securities portfolio increased 12 basis points due to slower prepayment speeds on residential mortgage-backed securities which reduced premium amortization. Yield on the loan portfolio decreased 15 basis points. The cost of interest-bearing liabilities decreased 3 basis points compared to the previous quarter.

Average earning assets were up $192 million over the fourth quarter of 2011. Average outstanding loans, net of allowance for loan losses, increased $298 million due largely to growth in average commercial loan balances. Average fair value option securities decreased $105 million and available for sale securities were essentially flat compared to the prior quarter. Average deposits increased by $85 million during the first quarter of 2012, including a $259 million increase in demand deposits and a $43 million increase in interest-bearing transaction accounts, partially offset by a $239 million decrease in time deposits. The average balances of borrowed funds increased $119 million.

Our overall objective is to manage the Company's balance sheet to be relatively neutral to changes in interest rates as is further described in the Market Risk section of this report. Approximately two-thirds of our commercial and commercial real estate loan portfolios are either variable rate or fixed rate that will re-price within one year. These loans are funded primarily by deposit accounts that are either non-interest bearing, or that re-price more slowly than the loans. The result is a balance sheet that would be asset sensitive, which means that assets generally re-price more quickly than liabilities. Among the strategies that we use to manage toward a relatively rate-neutral position, we purchase fixed rate residential mortgage-backed securities issued primarily by U.S. government agencies and fund them with market rate sensitive liabilities. The liability-sensitive nature of this strategy provides an offset to the asset-sensitive characteristics of our loan portfolio. We also may use derivative instruments to manage our interest rate risk.

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

Table 1 - Volume / Rate Analysis
(In thousands)
                                                    Three Months Ended
                                                   March 31, 2012 / 2011
                                                             Change Due To1
                                                                       Yield /
                                             Change       Volume        Rate
Tax-equivalent interest revenue:
 Funds sold and resell agreements           $     (2 )   $     (2 )   $       -
 Trading securities                             (130 )        246          (376 )
 Investment securities:
Taxable securities                             2,089        2,220          (131 )
Tax-exempt securities                           (665 )       (670 )           5
Total investment securities                    1,424        1,550          (126 )
 Available for sale securities:
Taxable securities                            (9,358 )      5,652       (15,010 )
Tax-exempt securities                            (13 )         68           (81 )
Total available for sale securities           (9,371 )      5,720       (15,091 )
 Fair value option securities                    257        1,243          (986 )
 Residential mortgage loans held for sale        429          584          (155 )
 Loans                                         3,285        9,464        (6,179 )
Total tax-equivalent interest revenue         (4,108 )     18,805       (22,913 )
Interest expense:
 Transaction deposits                         (3,758 )       (171 )      (3,587 )
 Savings deposits                                (45 )         29           (74 )
 Time deposits                                (2,741 )     (1,544 )      (1,197 )
 Funds purchased                                  (8 )        162          (170 )
 Repurchase agreements                          (776 )         74          (850 )
 Other borrowings                                542         (609 )       1,151
 Subordinated debentures                         (25 )          5           (30 )
Total interest expense                        (6,811 )     (2,054 )      (4,757 )
 Tax-equivalent net interest revenue           2,703     $ 20,859     $ (18,156 )
Change in tax-equivalent adjustment              227
Net interest revenue                        $  2,930

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

Other Operating Revenue

Other operating revenue was $140.4 million for the first quarter of 2012 compared to $117.6 million for the first quarter of 2011 and $138.0 million for the fourth quarter of 2011. Fees and commissions revenue increased $21.1 million over the first quarter of 2011. Net gains on securities, derivatives and other assets increased $1.7 million. Other-than-temporary impairment charges recognized in earnings in the first quarter of 2012 were $877 thousand less than charges recognized in the first quarter of 2011.

Other operating revenue increased $2.4 million over the fourth quarter of 2011. Fees and commissions revenue increased $12.5 million. Net gains on securities, derivatives and other assets decreased $10.2 million. Other-than-temporary impairment charges recognized in earnings were $938 thousand more than charges recognized in the fourth quarter of 2011.

Table 2 - Other Operating Revenue
(In thousands)
                           Three Months Ended                                              Three Months
                                March 31,                Increase         % Increase           Ended           Increase         % Increase
                          2012            2011          (Decrease)        (Decrease)       Dec. 31, 2011      (Decrease)        (Decrease)

 Brokerage and
trading revenue        $    31,111     $    25,376     $       5,735                23 %   $      25,629     $       5,482                21 %
 Transaction card
revenue                     25,430          28,445            (3,015 )             (11 )          25,960              (530 )              (2 )
 Trust fees and
commissions                 18,438          18,422                16                 -            17,865               573                 3
 Deposit service
charges and fees            24,379          22,480             1,899                 8            24,921              (542 )              (2 )
 Mortgage banking
revenue                     33,078          17,356            15,722                91            25,438             7,640                30
 Bank-owned life
insurance                    2,871           2,863                 8                 -             2,784                87                 3
 Other revenue               9,027           8,332               695                 8             9,189              (162 )              (2 )
 Total fees and
commissions revenue        144,334         123,274            21,060                17           131,786            12,548                10
Gain (loss) on other
assets, net                   (356 )           (68 )            (288 )             424             1,897            (2,253 )            (119 )
Loss on derivatives,
net                         (2,473 )        (2,413 )             (60 )               2              (174 )          (2,299 )           1,321
Gain (loss) on fair
value option
securities, net             (1,733 )        (3,518 )           1,785               (51 )             222            (1,955 )            (881 )
Gain on available
for sale securities          4,331           4,902              (571 )             (12 )           7,080            (2,749 )             (39 )
Total
other-than-temporary
impairment                    (505 )             -              (505 )             N/A            (1,037 )             532               (51 )
Portion of loss
recognized in
(reclassified from)
other comprehensive
income                      (3,217 )        (4,599 )           1,382               (30 )          (1,747 )          (1,470 )              84
Net impairment
losses recognized in
earnings                    (3,722 )        (4,599 )             877               (19 )          (2,784 )            (938 )              34
Total other
operating revenue      $   140,381     $   117,578     $      22,803                19 %   $     138,027     $       2,354                 2 %

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 45% of total revenue for the first quarter of 2012, excluding provision for credit losses and gains and losses on other assets, securities and derivatives. We believe that a variety of fee revenue sources provide an offset to changes in interest rates, values in the equity markets, commodity prices and consumer spending, all of which can be volatile. We expect continued growth in other operating revenue through offering new products and services and by expanding into markets outside of Oklahoma. However, current and future economic conditions, regulatory constraints, increased competition and saturation in our existing markets could affect the rate of future increases.

Brokerage and trading revenue includes revenues from securities trading, retail brokerage, customer derivatives and investment banking. Brokerage and trading revenue increased $5.7 million or 23% over the first quarter of 2011. Securities trading revenue totaled $15.9 million for the first quarter of 2012, up $1.3 million over the first quarter of 2011. Securities trading revenue represents net realized and unrealized gains primarily related to sales of U.S. government securities, residential mortgage-backed securities guaranteed by U.S. government agencies and municipal securities to institutional customers, activities which we believe will be permitted under the Volcker Rule of the Dodd-Frank Act.

Revenue earned from retail brokerage transactions increased $446 thousand or 6% over the first quarter of 2011 to $7.6 million. Retail brokerage revenue is primarily based on fees and commissions earned on sales of fixed income securities, annuities and mutual funds to retail customers. Revenue growth was primarily due to increased market volatility which increased customer demand.

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 $4.6 million for the first quarter of 2012, up $3.5 million over the first quarter of 2011. Customer hedging revenue in the first quarter of 2011 was reduced by a $2.6 million credit loss on certain interest rate derivative contracts. Revenue from to be announced ("TBA") residential mortgage backed securities which are classified as interest rate derivative contracts sold to our mortgage banking customers increased $1.6 million over the first quarter of 2011, excluding last year's credit loss. Revenue from energy derivative contracts decreased $1.2 million compared to the first quarter of 2011.

Investment banking includes fees earned upon completion of underwriting and financial advisory service which totaled $3.0 million for the first quarter of 2012, a $486 thousand increase over the first quarter of 2011 related to the timing and volume of completed transactions.

Brokerage and trading revenue increased $5.5 million over the fourth quarter of 2011. Customer derivative revenues increased $4.9 million including the effect of a $1.7 million credit loss on unsettled contracts with MF Global recognized in the fourth quarter. Revenues from TBA securities sold to our mortgage banking customers were up $2.4 million. Retail brokerage fees were up $1.3 million over the fourth quarter of 2011, partially offset by a $598 thousand decrease in investment banking revenues. Securities trading revenue was largely unchanged compared to the fourth quarter of 2011.

We continue to monitor the on-going development of rules to implement the Volcker Rule in Title VI of the Dodd-Frank Act which prohibits banking entities from engaging in proprietary trading as defined by the Dodd-Frank Act and which restricts sponsorship of, or investment in, private equity funds and hedge funds, subject to limited exceptions. On October 11, 2011, regulators of financial institutions released a proposal for implementation of the Volcker Rule scheduled to take effect by July 21, 2012. On April 19, 2012 the Federal Reserve Board issued a statement clarifying that banking entities have until July 21, 2014 (two years from the July 21, 2012 effective date of the Volcker Rule) to conform all of their activities and investments to the requirements of the Volcker Rule. During this two year conformance period, banking entities are required to engage in good faith planning efforts, to enable them to conform their activities and investments to Volcker Rule requirements. Based on the proposed rules, we expect the Company's trading activity to be largely unaffected, as our trading activities are all done for the benefit of customers and securities traded are mostly exempted under the proposed rules. The Company's private equity investment activity may be curtailed, but is not expected to result in a material impact to the Company's financial statements. Final regulations will likely impose additional operating and compliance costs as presently proposed.

Title VII of the Dodd-Frank Act subjects nearly all derivative transactions to Commodity Futures Trading Commission ("CFTC") or Securities and Exchange Commission ("SEC") regulations. Title VII, among other things, imposes registration, recordkeeping, reporting, capital and margin, as well as business conduction requirements on swap dealers and major swap participants. The CFTC and SEC delayed the effective dates of a large portion of the proposed regulations under Title VII until December 31, 2012. On April 18, 2012, the CFTC and SEC both approved interim final rules on the definition of swaps dealers. The interim final rule has not yet been made publicly available by the CFTC and the SEC. Based on summaries of the interim final rule issued by the Commissions, however, we currently understand that the interim final rule provides that entities transacting less than $8 billion in swaps over a 12 month period, or a de minimis volume, will be exempt from the definition of swaps dealer, that swaps entered into for hedging purposes or in connection with originating a loan will not be considered dealing activity, and that the rule allows for "limited purpose" swap dealers, subject to registration and regulation as swap dealers only for specified categories of swaps. If these descriptions of the interim final rule are accurate, if the interim final rule does not contain other provisions that would negate or limit the foregoing elements of the rule, and if the interim final rule goes into effect as approved by the Commissions, then the Company anticipates that one or more of its subsidiaries may be required to register as a "limited purpose swap dealer" by December 31, 2012 with the CFTC, and that, though the ultimate impact of Title VII remains uncertain, its full implementation is likely not to impose significantly higher compliance costs on the Company.

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 first quarter of 2012 decreased $3.0 million or 11% compared to the first quarter of 2011. Revenues from the processing of

transactions on behalf of the members of our TransFund electronic funds transfer ("EFT") network totaled $13.3 million, up $1.3 million or 11% over the first quarter of 2011, due primarily to increased transaction volumes. Merchant services fees paid by customers for account management and electronic processing of transactions totaled $7.9 million, largely unchanged compared to the prior year.

Revenue from interchange fees paid by merchant banks for transactions processed from debit cards issued by the Company totaled $4.2 million for the first quarter of 2012 compared to $8.6 million for the first quarter of 2011. This decrease was primarily due to the impact of interchange fee regulations, commonly referred to as the Durbin Amendment, which became effective on October 1, 2011, partially offset by increased transaction volumes. Our experience in the first quarter of 2012 was consistent with our previously disclosed expectation of a decline of $20 million to $25 million annually in our transaction card revenue based on the final rule.

Transaction card revenue decreased $530 thousand compared to the fourth quarter of 2011. Revenues from processing transactions on behalf of members of our TransFund EFT network decreased $468 thousand, merchant services fees decreased $121 thousand and revenue from interchange fees paid by merchant banks for transactions processed from debit cards issued by the Company increased $59 thousand.

Trust fees and commissions totaled $18.4 million, consistent with the first quarter of 2011. We continue to voluntarily waive administration fees on the Cavanal Hill money market funds in order to maintain positive yields on these funds in the current low short-term interest rate environment. Waived fees totaled $2.6 million for the first quarter of 2012, $1.2 million for the first quarter of 2011 and $2.4 million for the fourth quarter of 2011. The fair value of trust assets administered by the Company totaled $35.1 billion at March 31, 2012, $32.0 billion at March 31, 2011 and $34.4 billion at December 31, 2011. Trust fees and commissions increased $573 thousand over the fourth quarter of 2011 primarily due to an increase in the fair value of trust assets and the timing of fees.

Deposit service charges and fees increased $1.9 million or 8% over the first quarter of 2011. Commercial account service charge revenue totaled $8.5 million, up $1.3 million or 17% over the prior year. The average earnings credit, a non-cash method for commercial customers to avoid incurring charges for deposit services based on account balances, decreased 25 basis points compared to the prior year consistent with the movement in market interest rates. Overdraft fees totaled $13.5 million for the first quarter of 2012, up $478 thousand or 4% over the first quarter of 2011. Service charges on deposit accounts with a standard monthly fee increased $187 thousand or 13% to $1.6 million.

Deposit service charges and fees were down $542 thousand compared to the previous quarter. Overdraft fees were down $1.9 million, partially offset by a $1.3 million increase in commercial account service charges. Service charges on deposit accounts with a standard monthly fee were flat compared to the fourth quarter of 2011.

Mortgage banking revenue grew by $15.7 million over the first quarter of 2011. Revenue from originating and marketing residential mortgage loans totaled $23.1 million, up $15.6 million or 207% over the first quarter of 2011. The unpaid principal balance of residential mortgage loans held for sale increased $109 million or 90% and unfunded mortgage loan commitments increased $143 million or 90%. Mortgage loans funded for sale totaled $746 million in the first quarter of 2012 compared to $420 million in the first quarter of 2011. A 93 basis point decrease in mortgage loan interest rates and expanded government programs such as Home Affordable Refinance Program ("HARP II") have stimulated mortgage loan production. In addition, the Company has increased the number of mortgage loan officers by approximately 18% during the first quarter of 2011, focusing on growth in Texas, Colorado and Kansas/Missouri markets. We have expanded our mortgage banking operations to include correspondent lending. All mortgages originated by correspondent lenders are evaluated for compliance with our underwriting standards. Mortgage loans funded for sale of $746 million includes $48 million originated by correspondent lenders. Mortgage servicing revenue . . .