Table 1 -- Consolidated Selected Financial Data

(Dollars in thousands, except
per share data)

                                                                     December 31,
                                       2012              2011             2010             2009            2008
Selected Financial Data
For the year:
Interest revenue                  $    791,648      $    811,595     $    851,082     $    914,569     $ 1,061,645
Interest expense                        87,322           120,101          142,030          204,205         414,783
Net interest revenue                   704,326           691,494          709,052          710,364         646,862
Provision for for credit losses        (22,000 )          (6,050 )        105,139          195,900         202,593
Fees and commissions revenue           632,103           528,643          516,394          480,512         415,194
Net income                             351,191           285,875          246,754          200,578         153,232
Period-end:
Loans                               12,311,456        11,269,743       10,643,036       11,279,698      12,876,006
Assets                              28,148,631        25,493,946       23,941,603       23,516,831      22,734,648
Deposits                            21,179,060        18,762,580       17,179,061       15,518,228      14,982,607
Subordinated debentures                347,633           398,881          398,701          398,539         398,407
Shareholders' equity                 2,957,860         2,750,468        2,521,726        2,205,813       1,846,257
Nonperforming assets2                  276,716           356,932          394,469          484,295         342,291

Profitability Statistics
Earnings per share (based on
average equivalent shares):
Basic                             $       5.15      $       4.18     $       3.63     $       2.96     $      2.27
Diluted                                   5.13              4.17             3.61             2.96            2.27
Percentages (based on daily
averages):
Return on average assets                  1.34 %            1.17 %           1.04 %           0.87 %          0.71 %
Return on average shareholders'
equity                                   12.09             10.66            10.18             9.66            7.87
Average shareholders' equity to
average assets                           11.05             10.95            10.19             8.98            9.01

Common Stock Performance
Per Share:
Book value per common share       $      43.29      $      40.36     $      36.97     $      32.53     $     27.36
Market price: December 31 close          54.46             54.93            53.40            47.52           40.40
Market range - High close                59.77             56.30            55.68            48.13           60.84
Market range - Low close                 52.56             44.00            42.89            22.98           38.48
Cash dividends declared                   2.47              1.13             0.99            0.945           0.875
Dividend payout ratio                    48.01 % 5         27.01 %          27.16 %          31.93 %         38.55 %

Selected Balance Sheet
Statistics
Period-end:
Tier 1 capital ratio                     12.78 %           13.27 %          12.69 %          10.86 %          9.40 %
Total capital ratio                      15.13             16.49            16.20            14.43           12.81
Leverage ratio                            9.01              9.15             8.74             8.05            7.89
Tangible common equity ratio1             9.25              9.56             9.21             7.99            6.64
Allowance for loan losses to
nonaccruing loans                       160.34            125.93           126.93            86.07           77.73
Allowance for loan losses to
loans                                     1.75              2.25             2.75             2.59            1.81
Combined allowances for credit
losses to loans 4                         1.77              2.33             2.89             2.72            1.93

Table 1 -- Consolidated Selected Financial Data

(Dollars in thousands, except
per share data)

                                                                                    December 31,
                                          2012                   2011                   2010                   2009                   2008
Miscellaneous (at December 31)
Number of employees (full-time
equivalent)                                    4,704                  4,511                  4,432                  4,355                  4,300
Number of banking locations                      217                    212                    207                    202                    202
Number of TransFund locations                  1,970                  1,912                  1,943                  1,896                  1,933
Fiduciary assets                          25,829,038             22,821,813             22,914,737             20,642,512             18,987,025
Mortgage loan servicing
portfolio3                                13,091,482             12,356,917             12,059,241              7,366,780              5,983,824

1 Shareholders' equity as defined by generally accepted accounting principles in the United State of America less goodwill, intangible assets and equity which does not benefit common shareholders divided by total assets less goodwill and intangible assets.

2 Includes nonaccrual loans, renegotiated loans and assets acquired in satisfaction of loans. Excludes loans past due 90 days or more and still accruing.

3 Includes outstanding principal for loans serviced for affiliates.

4 Includes allowance for loan losses and accrual for off-balance sheet credit risk.

5 Includes $1.00 per share special dividend.

Management's Assessment of Operations and Financial Condition

Overview

The following discussion is management's analysis to assist in the understanding and evaluation of the financial condition and results of operations of BOK Financial Corporation ("BOK Financial" or "the Company"). This discussion should be read in conjunction with the consolidated financial statements and footnotes and selected financial data presented elsewhere in this report.

Following the severe recession from 2007 to 2009, economic growth in the United State has been modest and gradual. National unemployment rates have improved from 8.5% in December of 2011 to 7.8% in December of 2012. With subdued indications of inflation, the U.S. government has provided accommodative economic policy to support growth in the economy and further reduction in the unemployment rate. Long-term and short-term interest rates remained at historic lows throughout the year. Low national mortgage rates during much of the year sustained a record level of mortgage lending activity. This low interest rate environment has presented challenges for all financial institutions as cash flows from loan and securities portfolios are reinvested at current rates. The Federal Reserve has continued to affirm its intention to keep interest rates low for the foreseeable future. Both personal and corporate balance sheets have improved during the year. Corporations have amassed a significant amount of cash, placing the U.S. in a strong position to fund growth opportunities and reinvest. However, this has been hindered by the uncertainty in tax and regulatory policy as we address the high level of national debt and deficit issues.
Performance Summary

Net income for the year ended December 31, 2012 totaled $351.2 million or $5.13 per diluted share compared with net income of $285.9 million or $4.17 per diluted share for the year ended December 31, 2011. Net income was up 23% over last year primarily due to a record level of mortgage banking revenue and sustained improvement in credit quality.

Highlights of 2012 included:
• Net interest revenue totaled $704.3 million for 2012 compared to $691.5 million for 2011. Net interest earned from the increase in average loan and securities balances was largely offset by the reinvestment of cash flows from the securities portfolio at lower current market rates and decreased loan yield. Net interest margin was 3.14% for 2012 compared to 3.34% for 2011.

• Fees and commissions revenue increased $103.5 million or 20% over 2011. Mortgage banking revenue increased $77.7 million or 85% over the prior year. BOK Financial originated a record number of residential mortgage loans during the year and benefited from improved pricing of loans sold in the secondary market. Brokerage fees and commission revenue increased $22.7 million or 22% primarily due to increased mortgage-related securities trading and customer hedging

revenue. Transaction card revenue was down $8.8 million compared to the prior year. Increased transaction volume was offset by the impact of debit card interchange fee regulations which were effective in the fourth quarter of 2011.
• Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $840.4 million, up $61.1 million or 8% over 2011. Personnel costs increased $61.0 million due largely to incentive compensation. Non-personnel expenses were largely unchanged compared to the prior year.

• The Company recorded a $22.0 million negative provision for credit losses in 2012 and a $6.1 million negative provision for credit losses in 2011. Net loans charged off totaled $23.3 million or 0.20% of average loans for 2012 compared to $38.5 million or 0.35% of average loans for 2011. Gross charge-offs decreased to $42.1 million in 2012 from $56.8 million in 2011.

• The combined allowance for credit losses totaled $217 million or 1.77% of outstanding loans at December 31, 2012 compared to $263 million or 2.33% of outstanding loans at December 31, 2011. Nonperforming assets totaled $277 million or 2.23% of outstanding loans and repossessed assets at December 31, 2012, down from $357 million or 3.13% of outstanding loans and repossessed assets at December 31, 2011. During 2012, nonaccruing loans decreased $67 million and repossessed assets decreased $19 million.

• Outstanding loan balances were $12.3 billion at December 31, 2012, up $1.0 billion over the prior year. Commercial loan balances grew by $1.1 billion or 17%. Commercial real estate loans decreased $62 million, residential mortgage loans increased $71 million and consumer loans decreased $53 million.

• The available for sale securities portfolio increased by $1.1 billion during 2012 to $11.3 billion at December 31, 2012. The Company increased its holdings of low duration residential mortgage-backed securities guaranteed by U.S. government agencies.

• Period-end deposits totaled $21.2 billion at December 31, 2012 compared to $18.8 billion at December 31, 2011. Demand deposit accounts grew by $2.2 billion. Interest-bearing transaction accounts increased $534 million and time deposits decreased $414 million.

• The tangible common equity ratio was 9.25% at December 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 decrease in tangible common equity was primarily due to payment of a special dividend during the year partially offset by retained earnings.

• The Company and its subsidiary bank exceeded the regulatory definition of well capitalized. The Company's Tier 1 capital ratios, as defined by banking regulations, were 12.78% at December 31, 2012 and 13.27% at December 31, 2011.

• Regular cash dividends paid on common shares were $1.47 per common share in 2012. In addition, the Company paid a special dividend of $1.00 per common share in the fourth quarter of 2012. Cash dividends paid on common shares in 2011 totaled $1.13.

Net income for the fourth quarter of 2012 totaled $82.6 million or $1.21 per diluted share compared to $67.0 million or $0.98 per diluted share for the fourth quarter of 2011.

Highlights of the fourth quarter of 2012 included:
• Net interest revenue totaled $173.4 million for the fourth quarter of 2012 compared to $171.5 million for the fourth quarter of 2011. Net interest margin was 2.95% for the fourth quarter of 2012 compared to 3.20% for the fourth quarter of 2011. Net interest earned from the increase in average loan and securities balances was largely offset by the reinvestment of cash flows from the securities portfolio at lower current market rates.

• Fees and commissions revenue increased $34.0 million over the prior year to $165.8 million for the fourth quarter of 2012. Mortgage banking revenue increased $21.0 million due primarily to an increase in loan production volume and improved pricing of loans sold. Nearly all other fee-based revenue sources increased over the prior year and quarter.

• Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $226.8 million, up $13.1 million over the prior year. Personnel costs increased $10.1 million and non-personnel expenses increased $3.0 million.

• A $14.0 million negative provision for credit losses was recorded in the fourth quarter of 2012 compared to a $15.0 million negative provision for credit losses in the fourth quarter of 2011. Net loans charged off totaled $4.3 million in

the fourth quarter of 2012 compared to $9.5 million in the fourth quarter of 2011. Gross charge-offs were $8.0 million compared to $14.8 million in the prior year.
Critical Accounting Policies & Estimates

The Consolidated Financial Statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). The Company's accounting policies are more fully described in Note 1 of the Consolidated Financial Statements. Management makes significant assumptions and estimates in the preparation of the Consolidated Financial Statements and accompanying notes in conformity with GAAP that may be highly subjective, complex and subject to variability. Actual results could differ significantly from these assumptions and estimates. The following discussion addresses the most critical areas where these assumptions and estimates could affect the financial condition, results of operations and cash flows of the Company. These critical accounting policies and estimates have been discussed with the appropriate committees of the Board of Directors.

Allowance for Loan Losses and Accrual for Off-Balance Sheet Credit Risk

The allowance for loan losses and accrual for off-balance sheet credit risk are assessed by management based on an ongoing quarterly evaluation of the probable estimated losses inherent in the loan portfolio and probable estimated losses on unused commitments to provide financing. A consistent, well-documented methodology has been developed and is applied by an independent Credit Administration department to assure consistency across the Company. The allowance for loan losses consists of specific allowances attributed to certain impaired loans that have not yet been charged down to amounts we expect to recover, general allowances for unimpaired loans that are based on estimated loss rates by loan class and nonspecific allowances for risks beyond factors specific to a particular portfolio segment or loan class. There have been no material changes in the approach or techniques utilized in developing the allowance for loan losses and accrual for off-balance sheet credit risk during 2012.

Loans are considered impaired when it is probable that we will not collect all amounts due according to the contractual terms of the loan agreements, including loans modified in troubled debt restructurings. 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 through a quarterly evaluation of the borrower's ability to repay. Certain commercial loans and most residential mortgage and consumer loans which represent small balance, homogeneous pools are not risk graded. Non-risk graded loans are identified as impaired based on performance status. Generally, non-risk graded loans are considered impaired when 90 or more days past due, in bankruptcy or modified in a troubled debt restructuring.

Specific allowances for impaired loans that have not yet been charged down to amounts we expect to recover are measured by an evaluation of estimated future cash flows discounted at the loan's 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 generally are not adjusted by the Company. Updated appraisals are obtained at least annually or more frequently if market conditions indicate collateral values may have declined. Collateral value of mineral rights is determined by our internal staff of engineers based on projected cash flows under current market conditions. The value of other collateral is generally determined by our special assets staff based on liquidation 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 near 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.

General allowances for unimpaired loans are based on estimated loss rates by loan class. The appropriate historical gross loss rate for each loan class is determined by the greater of the current loss rate based on the most recent twelve months or a ten-year average gross loss rate. Recoveries are not directly considered in the estimation of historical 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 proceedings. For risk graded loans, historical loss rates are adjusted for changes in risk rating. For each loan class, the weighted average current risk grade is compared to the weighted average long-term risk grade. This comparison determines whether the risk in each loan class is increasing or decreasing. Historical loss rates are adjusted upward or downward in proportion to changes in weighted average risk grading. General allowances for unimpaired loans also consider inherent risks identified for a given loan class. Inherent risks include consideration of the loss rates that most appropriately represent the current credit cycle and other factors attributable to a specific loan class which have not yet been represented in the historical gross loss rates or risk grading. Examples of 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 product types.

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.

Fair Value Measurement

Certain assets and liabilities are recorded at fair value in the Consolidated Financial Statements. 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 markets for the given asset or liability at the measurement date based on markets conditions at that date. An orderly transaction assumes exposure to the market for a customary period for marketing activities prior to the measurement date and not a forced liquidation or distressed sale.

A hierarchy for fair value has been established that prioritizes the inputs of valuation techniques used to measure fair value into three broad categories:
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), other observable inputs that can be observed either directly or indirectly (Level 2) and unobservable inputs for assets or liabilities (Level
3). Fair value may be recorded for certain assets and liabilities every reporting period on a recurring basis or under certain circumstances on a non-recurring basis.

The following represents significant fair value measurements included in the Consolidated Financial Statements based on estimates. See Note 18 of the Consolidated Financial Statements for additional discussion of fair value measurement and disclosure included in the Consolidated Financial Statements.

Mortgage Servicing Rights

We have a significant investment in mortgage servicing rights. Mortgage servicing rights may be recognized when mortgage loans are originated pursuant to an existing plan for sale or, if no such plan exists, when the mortgage loans are sold. Our mortgage servicing rights are primarily retained from sales in the secondary market of residential mortgage loans we have originated. Occasionally mortgage servicing rights may be purchased from other lenders. 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 fair value are recognized in earnings as they occur.

There is no active market for mortgage servicing rights after origination. The fair value of the mortgage servicing rights are determined by discounting the projected cash flows. Certain significant assumptions and estimates used in valuing mortgage servicing rights are based on current market sources including projected prepayment speeds, assumed servicing costs, earnings on escrow deposits, ancillary income and discount rates. Assumptions used to value our mortgage servicing rights are considered significant unobservable inputs and represent our best estimate of assumptions that market participants would use to value this asset. A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults and other relevant factors. The prepayment model is updated daily for changes in market conditions and adjusted to better correlate with actual performance of our servicing portfolio. The discount rate is based on benchmark rates for mortgage loans plus a market spread expected by investors in servicing rights. Significant assumptions used to determine the fair value of our mortgage servicing rights are presented in Note 7 to the Consolidated Financial Statements. At least annually, we request estimates of fair value from outside sources to corroborate the results of the valuation model.

The assumptions used in this model are primarily based on mortgage interest rates. Evaluation of the effect of a change in one assumption without considering the effect of that change on other assumptions is not meaningful. Considering all related assumptions, we would expect a 50 basis point increase in mortgage interest rates to increase the fair value of our servicing rights by $11 million. We would expect a $13 million decrease in the fair value of our mortgage servicing rights from a 50 basis point decrease in mortgage interest rates.

Valuation of Derivative Instruments

We use interest rate derivative instruments to manage our interest rate risk. We also offer interest rate, commodity, foreign exchange and equity derivative contracts to our customers. All derivative instruments are carried on the

balance sheet at fair value. Fair values for exchange-traded contracts are based on quoted prices in an active market for identical instruments. Fair values for over-the-counter interest rate contracts used to manage our interest rate risk are provided either by third-party dealers in the contracts or by quotes provided by independent pricing services. Information used by these third-party dealers or independent pricing services to determine fair values are considered significant other observable inputs. Fair values for interest rate, commodity, foreign exchange and equity contracts used in our customer hedging programs are based on valuations generated internally by third-party provided pricing models. These models use significant other observable market inputs to estimate fair values. Changes in assumptions used in these pricing models could significantly affect the reported fair values of derivative assets and liabilities, though the net effect of these changes should not significantly affect earnings.

Credit risk is considered in determining the fair value of derivative instruments. Deterioration in the credit rating of customers or dealers reduces the fair value of asset contracts. The reduction in fair value is recognized in earnings during the current period. Fair value adjustments are 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. Deterioration in our credit rating below investment grade would affect the fair value of our derivative liabilities. In the event of a credit down-grade, the fair value of our derivative liabilities would decrease. The reduction in fair value would be recognized in earnings in the current period.

Valuation of Securities

The fair value of our securities portfolio is generally based on a single price
for each financial instrument provided to us by a third-party pricing service
determined by 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.

The underlying methods used by the third-party pricing services are considered in determining the primary inputs used to determine fair values. We evaluate 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. . . .