<PAGE>
As filed with the Securities and Exchange Commission on May 13, 1996
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1996
Commission File No. 0-19341
BOK FINANCIAL CORPORATION
Incorporated in the State of Oklahoma
I.R.S. Employer Identification No. 73-1373454
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
Registrant's Telephone Number,
Including Area Code (918) 588-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT: (NONE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
COMMON STOCK ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 20,440,678 shares of
common stock ($.00006 par value) as of April 30, 1996.
<PAGE>
================================================================================
BOK Financial Corporation
Form 10-Q
Quarter Ended March 31, 1996
Index
Part I. Financial Information
Management's Discussion and Analysis
of Financial Condition and
Results of Operations 2
Report of Management on Consolidated
Financial Statements 12
Consolidated Statements of Earnings 13
Consolidated Balance Sheets 15
Consolidated Statements of Changes
in Shareholders' Equity 17
Consolidated Statements of Cash Flows 18
Notes to Consolidated Financial Statements 20
Financial Summaries - Unaudited 21
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 23
Signature 23
MANAGEMENT'S DISCUSSION AND ANALYSIS
HIGHLIGHTS
BOK Financial Corporation ("BOK Financial") recorded net income of $13.0
million or $0.56 per fully diluted common share for the first quarter of 1996
compared to $12.0 million or $0.52 per fully diluted common share for the first
quarter of 1995. Returns on average assets and equity were 1.26% and 16.84%,
respectively, for the first quarter of 1996. This is compared to returns on
average assets and equity of 1.25% and 19.77%, respectively, for the same
period in 1995.
RESULTS OF OPERATIONS
Net interest revenue on a tax-equivalent basis was $32.7 million for the first
quarter of 1996 compared to $30.1 million for the first quarter of 1995, an
increase of $2.6 million or 8.5%. Average earning assets increased by $247
million while interest bearing liabilities increased $168 million. Equity and
demand deposits funded the growth in average earning assets in excess of
interest-bearing liabilities. Concurrently, average loans increased by $320
million or 17.1%. The increase in average earning assets and the improvement
in asset mix increased interest income by $5.9 million. This increase was
2
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partially offset by $1.1 million due to lower aggregate yields on earning
assets. Since the second quarter of 1995, management has taken steps to reduce
BOK Financial's reliance on borrowed funds and to increase deposits as a source
of funding. Average interest-bearing deposits increased $382 million or 18.6%
compared to the first quarter of 1995 while borrowed funds decreased $214
million or 21.6%. This improvement in the mix of interest-bearing liabilities
also contributed to the increase in net interest revenue. Additionally,
interest rate swaps which hedge against interest rate risk on certain long-term
certificates of deposit, reduced interest expense by $226 thousand in the first
quarter of 1996 compared to $154 thousand in the first quarter of 1995.
- - --------------------------------------------------------------------------------
TABLE 1 - VOLUME/RATE ANALYSIS
(In thousands)
Three months ended
March 31, 1996/1995
-----------------------------
-----Due to-----
Yield
Change Volume /Rate
----------------------------
Tax-equivalent interest
revenue:
Securities $(2,156) $(1,265) $ (891)
Trading securities 48 47 1
Loans 6,867 7,032 (165)
Funds sold 56 58 (2)
- - -------------------------------------------------------------------------------
Total 4,815 5,872 (1,057)
- - -------------------------------------------------------------------------------
Interest expense:
Transaction deposits (664) (650) (14)
Money market deposits 1,149 1,270 (121)
Savings deposits (226) (16) (62)
Time deposits 6,166 4,93 1,243
Other borrowings (3,815) (2,821) (994)
Subordinated debenture (341) (341) 0
- - -------------------------------------------------------------------------------
Total 2,269 2,217 52
- - -------------------------------------------------------------------------------
Tax-equivalent net
interest revenue 2,546 $ 3,655 $(1,109)
Change in tax-equivalent
adjustment 147
- - -------------------------------------------------------------------------------
Net interest revenue $ 2,399
===============================================================================
(1) Changes attributable to both volume and yield are allocated to both
volume and yield/rate on an equal basis.
- - -------------------------------------------------------------------------------
Net interest margin,the ratio of net interest revenue to average earning assets
was 3.53% for the first quarter of 1996. This is compared to 3.51% in the same
quarter of 1995 and 3.37% for the fourth quarter of 1995. The improvement in
net interest margin, particularly when compared to the previous quarter, is due
3
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primarily to the change in mix of interest-bearing liabilities. A decrease in
market interest rates during the first quarter of 1996 also contributed to the
increase in net interest revenue.
- - ------------------------------------------------------------------------------
TABLE 2 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
-----------------------------------------------------
MARCH 31, Dec. 31, Sept. 30, June 30, March 31,
1996 1995 1995 1995 1995
-----------------------------------------------------
Brokerage and trading
revenue $ 2,078 $ 1,518 $ 1,808 $ 1,431 $ 1,289
TransFund network revenue 2,096 1,880 1,867 1,729 1,549
Securities gains (losses),
net (18) -- 948 226 --
Trust fees and commissions 5,469 5,014 4,731 4,616 5,002
Service charges and fees
on deposit accounts 5,839 5,697 5,205 5,150 5,100
Mortgage banking revenue 5,869 5,905 4,850 5,297 4,284
Other revenue 5,251 3,937 3,776 3,408 4,929
- - -------------------------------------------------------------------------------
Total $ 26,584 $ 23,951 $ 23,185 $ 21,857 $ 22,153
===============================================================================
Other operating revenue increased $4.4 million or 20.0% compared to the same
quarter of 1995. Excluding a $1.2 million gain on the sale of branch deposits
from the first quarter of 1995 and $758 thousand due to a change in accounting
for originated mortgage loan servicing rights from the first quarter of 1996 to
improve comparability,other operating revenue from ongoing activities increased
$4.8 million or 23.1%. All significant revenue producing activities contributed
to this increase. The increased revenue from brokerage and trading activities,
TransFund network,trust fees and deposit fees was due primarily to volume gains
in each area. Mortgage banking revenue, excluding the change in accounting for
originated servicing rights, increased $827 thousand or 19.3% due primarily to
servicing fees on loans originated or purchased during 1995. Other revenue for
the first quarter of 1996 included a $992 thousand gain on the sale of student
loans compared to a gain of $740 thousand on a similar sale in the first
quarter of 1995.
4
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- - -------------------------------------------------------------------------------
TABLE 3 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
-----------------------------------------------------
MARCH 31, Dec. 31, Sept. 30, June 30, March 31,
1996 1995 1995 1995 1995
-----------------------------------------------------
Personnel $ 17,747 $ 17,097 $ 16,729 $ 16,103 $ 17,369
Business promotion 1,494 1,315 1,658 1,468 1,598
Professional fees/services 1,242 1,307 1,973 1,208 1,410
Net occupancy, equipment
and data processing 7,158 7,318 7,106 6,649 6,251
FDIC and other insurance 539 660 519 1,600 1,627
Printing, postage and
supplies 1,577 1,771 1,582 1,402 1,585
Net gains and operating
expenses on repossessed
assets (197) (164) (858) (1,039) (1,037)
Amortization of intangible
assets 1,465 1,527 1,495 1,477 1,493
Mortgage banking costs 3,745 3,222 3,184 3,231 2,892
Other expense 2,872 2,799 2,294 2,468 1,917
- - -------------------------------------------------------------------------------
Total $ 37,642 $ 36,852 $ 35,682 $ 34,567 $ 35,105
===============================================================================
Operating expenses for the first quarter of 1996 increased $2.5 million or 7.2%
compared to the first quarter of 1995. The more significant increases were
occupancy, equipment and data processing expenses which increased $907 thousand
due primarily to volume-related transaction processing costs and mortgage
banking costs which increased $853 thousand due to an increase in amortization
expense associated with capitalized loan servicing rights. These increases were
partially offset by a $1.1 million decrease in deposit insurance expense. BOK
Financial continues to incur deposit insurance expenses on deposits totaling
$739 million which are insured by the FDIC's Savings and Loan Insurance Fund
("SAIF"). Legislation is being considered which, if proposed and approved,
would require banks and savings associations to pay a one-time assessment on
all SAIF-insured deposits. The ultimate amount and timing of this assessment,
if any, is subject to the Federal budget reconciliation process. Management
will accrue for any resulting assessment once it becomes reasonably estimable.
Excluding net repossessed asset gains and other significant or nonrecurring
items shown in Table 4, operating expenses increased $3.0 million or 8.8%.
Personnel costs increased $1.1 million excluding related significant or
non-recurring charges of $738 thousand from the first quarter of 1995.
Approximately $678 thousand of this increase is related to incentive
compensation plans which vary directly with the increases in revenue.
Control over the growth in operating expenses combined with increased
tax-equivalent revenue resulted in an efficiency ratio of 63.9%. This
represents a significant improvement from the first quarter of 1995's ratio of
69.1%.
5
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- - --------------------------------------------------------------------------------
TABLE 4 - OTHER OPERATING EXPENSE, EXCLUDING
SIGNIFICANT OR NONRECURRING ITEMS
(In thousands)
Three Months Ended
-----------------------------------------------------
MARCH 31, Dec. 31, Sept. 30, June 30, March 31,
1996 1995 1995 1995 1995
-----------------------------------------------------
Total Other Operating
Expense $ 37,642 $ 36,852 $ 35,682 $ 34,567 $ 35,105
FDIC Insurance premium
reduction, -- -- -- (1,085) (1,097)
Organizational costs for
new subsidiary -- -- (500) -- --
Net gains and operating
costs from repossessed
assets 197 164 858 1,039 1,037
Asset valuation charges
and other accruals (500) (500) (350) (605) --
Employee benefits and
other related charges -- -- -- 550 (738)
- - -------------------------------------------------------------------------------
Total $ 37,339 $ 36,516 $ 35,690 $ 34,466 $ 34,307
===============================================================================
BOK Financial recorded a provision for loan losses of $911 thousand in the
first quarter of 1996 compared to no provision in the first quarter of 1995.
The factors considered by management in determining that a provision for loan
losses was appropriate are discussed subsequently under the Risk Element
heading.
Income tax expense increased to $5.8 million or 31% of pre-tax income for the
first quarter of 1996 compared to $3.5 million or 23% for the same period of
1995. The expiration of certain tax benefits associated with the acquisition of
Bank of Oklahoma, NA ("BOk") and BOk's former parent company by BOK Financial
during 1996 resulted in an effective tax rate which is more consistent with
statutory tax rates.
RISK ELEMENTS
The aggregate loan portfolio at March 31, 1996 remained unchanged at $2.2
billion compared to December 31, 1995. Commercial real estate increased $18
million. Residential mortgage loans retained by BOK Financial decreased by $18
million as production of adjustable rate mortgages failed to maintain pace with
normal loan payments. However, production of fixed rate mortgage loans caused
loans held for sale to increase by $30 million. The decrease in consumer loans
was caused by the sale of $25 million of student loans.
6
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- - -------------------------------------------------------------------------------
TABLE 5 - LOANS
(In thousands)
MARCH 31, Dec. 31, Sept. 30, June 30, March 31,
1996 1995 1995 1995 1995
------------------------------------------------------
Commercial:
Energy $ 156,230 $ 159,887 $ 159,430 $ 160,223 $ 143,139
Manufacturing 148,068 136,701 131,465 122,781 113,688
Wholesale/retail 156,261 143,941 139,426 145,141 124,700
Agricultural 89,080 86,733 74,342 75,917 80,861
Loans for purchasing or
carrying securities 7,613 7,963 7,491 8,748 7,504
Other commercial and
industrial 288,518 325,839 284,590 300,783 321,388
Commercial real estate:
Construction and land
development 143,476 148,217 126,219 119,794 107,110
Other real estate loans 473,110 450,385 436,929 406,819 369,202
Residential mortgage:
Secured by 1-4 family
residential property 419,135 436,816 432,565 429,750 414,257
Residential mortgages
held for resale 102,836 72,412 79,914 63,165 27,061
Consumer 214,834 225,474 239,184 221,890 214,793
- - -------------------------------------------------------------------------------
Total $2,199,161 $2,194,368 $2,111,555 $2,055,011 $1,923,703
===============================================================================
Substantially all commercial and consumer loans and a large portion of
residential mortgage loans (excluding loans held for sale) are to businesses
and individuals within Oklahoma or Northwest Arkansas. This geographic
concentration subjects the loan portfolio to the general economic conditions
within BOK Financial's primary market area. Major segments of the commercial
loan portfolio are presented in Table 5. Commercial real estate loans are
secured primarily by properties located in the Tulsa or Oklahoma City
metropolitan areas.
Nonperforming assets totaled $45.3 million at March 31, 1996 compared to $42.1
million at December 31, 1995. The increase in nonperforming assets included
$5.4 million of loans which are guaranteed by agencies of the U.S. government.
BOK Financial periodically purchases such loans to minimize operating costs of
its mortgage banking subsidiary.
7
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- - -------------------------------------------------------------------------------
TABLE 6 - NONPERFORMING ASSETS
(In thousands)
MARCH 31, Dec. 31, Sept. 30, June 30 March 31,
1996 1995 1995 1995 1995
------------------------------------------------
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
Commercial $ 12,399 $ 14,646 $ 15,095 $ 16,221 $ 11,903
Commercial real estate 10,138 10,621 6,412 5,057 7,854
Residential mortgage 3,136 2,794 3,269 3,441 1,998
Consumer 1,178 1,227 1,175 1,020 871
- - -------------------------------------------------------------------------------
Total nonaccrual loans 26,851 29,288 25,951 25,739 22,626
Loans past due (90 days)(1) 15,023 9,379 7,888 7,721 10,257
- - -------------------------------------------------------------------------------
Total nonperforming loans(1) 41,874 38,667 33,839 33,460 32,883
- - -------------------------------------------------------------------------------
Other nonperforming assets:
Commercial real estate 2,949 3,023 3,429 3,550 4,239
Other 526 376 344 382 162
- - -------------------------------------------------------------------------------
Total other nonperforming
assets 3,475 3,399 3,773 3,932 4,401
- - -------------------------------------------------------------------------------
Total nonperforming assets $ 45,349 $ 42,066 $ 37,612 $ 37,392 $ 37,284
- - -------------------------------------------------------------------------------
Ratios:
Reserve for loan losses to
nonperforming loans 94.48% 99.02% 112.98% 114.00% 115.62%
Nonperforming loans(1) to
period-end loans(2) 2.00 1.82 1.67 1.68 1.73
- - -------------------------------------------------------------------------------
(1) Includes 1-4 family loans
guaranteed by agencies of
the U.S. government $ 12,165 $ 6,754 $ 5,931 $ 7,156 $ 9,272
(2) Excludes residential
mortgage loans held for sale
===============================================================================
BOK Financial monitors loan performance on a portfolio and individual loan
basis. Nonperforming loans are reviewed at least quarterly. The loan review
process involves evaluating the credit worthiness of customers and their
ability, based upon current and anticipated economic conditions, to meet future
principal and interest payments. Loans may be identified which 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
performing in accordance with the original terms of the loan agreements and no
loss of principal or interest is anticipated, such loans are not included in
the nonperforming assets totals. These loans are assigned to various risk
categories in order to focus management's attention on the loans with higher
risk of loss. At March 31, 1996, loans totaling $37 million were assigned to
the substandard risk category, and loans totaling $49 million were assigned to
8
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the special mention category. These are compared to $42 million and $40
million, respectively, at December 31, 1995.
The allowance for loan losses, which is available to absorb losses inherent in
the loan portfolio, totaled $40 million at March 31, 1996 compared to $38
million at December 31 1995 or 1.89% and 1.80%, respectively, of total loans,
excluding loans held for sale. Losses on loans held for sale, principally
residential mortgage loans accumulated for placement in securitized pools, are
charged to earnings through adjustments in carrying value to the lower of cost
or market value in accordance with accounting standards applicable to mortgage
banking. Table 7 presents statistical information regarding the reserve for
loan losses.
- - -------------------------------------------------------------------------------
TABLE 7 - SUMMARY OF LOAN LOSS EXPERIENCE
(In thousands)
Three months ended
--------------------------------------------------
MARCH 31, Dec. 31, Sept. 30, June 30, March 31,
1996 1995 1995 1995 1995
--------------------------------------------------
Beginning balance $ 38,287 $ 38,232 $ 38,143 $ 38,020 $ 38,271
Loans charged-off:
Commercial 397 135 96 180 342
Commercial real estate 82 155 -- -- 16
Residential mortgage 14 153 2 24 11
Consumer 735 696 647 641 890
- - -------------------------------------------------------------------------------
Total 1,228 1,139 745 845 1,259
- - -------------------------------------------------------------------------------
Recoveries of loans
previously charged-off:
Commercial 807 428 318 410 423
Commercial real estate 463 119 259 269 340
Residential mortgage 130 302 19 27 25
Consumer 191 169 223 222 220
- - -------------------------------------------------------------------------------
Total 1,591 1,018 819 928 1,008
- - -------------------------------------------------------------------------------
Net loans charged-off
(recoveries) (363) 121 (74) (83) 251
Provision for loan losses 911 176 15 40 --
- - -------------------------------------------------------------------------------
Ending balance $ 39,561 $ 38,287 $ 38,232 $ 38,143 $ 38,020
- - -------------------------------------------------------------------------------
Reserve to loans outstanding
at period-end(1) 1.89 1.80 1.88 1.91 2.00
Net loan losses
(recoveries) (annualized)
to average loans(1) (.07) .02 (.01) (.02) .05
- - -------------------------------------------------------------------------------
(1) Excludes residential mortgage loans held for sale
===============================================================================
9
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The adequacy of the allowance for loan losses is assessed by management based
upon an evaluation of the current risk characteristics of the loan portfolio
including current economic conditions, historical experience, collateral
valuation, changes in the composition of the portfolio and other relevant
factors. A provision for loan losses is charges against earnings in amounts
necessary to maintain the adequacy of the allowance for loan losses. These
provisions totaled $911 thousand for the first quarter of 1996 compared to no
provision for the first quarter of 1995. Management believes that the allowance
for loan losses is adequate for each period presented based upon the evaluation
criteria and information available at that time.
INTEREST RATE SENSITIVITY AND LIQUIDITY
BOK Financial's asset/liability management policy addresses several
complementary goals: assuring adequate liquidity, maintaining an appropriate
balance between interest sensitive assets and liabilities, and maximizing net
interest revenue. The responsibility for attaining these goals rests with the
Asset/Liability Committee.
Interest rate sensitivity, the risk associated with changes in interest rates,
is of primary importance within the banking industry. Management has
established strategies and procedures to protect net interest revenue against
significant changes in interest rates. Generally, these strategies are designed
to achieve an acceptable level of net interest revenue based upon management's
projections of future changes in interest rates.
Management simulates the potential effect of changes in interest rates through
computer modeling which incorporates both the current gap position and the
expected magnitude of the repricing of specific types of assets and
liabilities. This modeling is performed assuming expected interest rates over
the next twelve months based on both a "most likely" rate scenario and a "shock
test" rate scenario assuming a 200 basis point increase over the next twelve
months. An independent source is used to determine the most likely interest
rates for the next year. At March 31, 1996, this modeling indicated that under
both the most likely interest rate forecast and the shock test, net interest
revenue for 1996 could increase by approximately 7% to 8% compared to 1995.
These simulations are based on numerous assumptions regarding the timing and
extent of repricing characteristics. Actual results may differ significantly.
BOK Financial uses interest rate swaps, a form of off-balance sheet derivative
product, in managing its interest rate sensitivity. These swaps are used to
more closely match the interest paid on certain long-term, fixed rate
certificates of deposit with earning assets. Swaps allow BOK Financial to offer
these deposits to its customers without altering the desired repricing
characteristics. BOK Financial accrues and periodically receives a fixed amount
from the counter parties to these swaps and accrues and periodically makes a
variable payment to the counter parties.Credit risk from these swaps is closely
monitored and counter parties to these contracts are selected on the basis of
their credit worthiness among other factors. Derivative products are not used
for speculative purposes.
10
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- - -------------------------------------------------------------------------------
TABLE 8 - INTEREST RATE SWAPS
(In thousands)
Notional Pay Receive
Amount Rate Rate
----------------------------------------------------
Expiration:
1998 $70,000 5.25 - 7.03% (1) 5.8125 - 7.96%
1999 15,000 5.2578 (1) 7.68
- - -------------------------------------------------------------------------------
(1) Rates are variable based on LIBOR and reset quarterly or semiannually.
===============================================================================
The best measure of liquidity is the ability to obtain funds to meet cash
requirements. Liquidity is achieved through maturities of earning assets,
securities available for sale and loans held for sale. On the liability side,
liquidity depends on the availability of deposits and short-term borrowings in
both the local and national markets. BOK Financial obtains 73% of its funding
through deposits and 7% through equity.
Cash used by operating activities in the first quarter of 1996 totaled $11
million. Excluding an increase in mortgage loans held for sale, operating
activities provided $19 million. This compares to cash provided by operating
activities of $32 million, or $19 million excluding the decrease in mortgage
loans held for sale, in the first quarter of 1995.
Investing activities used $7 million in the first quarter of 1996, primarily
for the net purchase of securities totaling $30 million, partially offset by
the proceeds of the student loan sale. This is compared to $169 million used by
investing activities in the first quarter of 1995 for both securities and loan
growth.
Financing activities provided $13 million during the first quarter of 1996.
Certificates of deposit provided $229 million and other deposit accounts
provided $27 million, which offset $243 million which was used to reduce
borrowed funds.
- - -------------------------------------------------------------------------------
TABLE 9 - CAPITAL RATIOS
MARCH 31, Dec. 31, Sept. 30, June 30, March 31,
1996 1995 1995 1995 1995
------------------------------------------------
Risk-based capital
Tier 1 capital 10.08% 9.91% 9.75% 9.44% 9.34%
Total capital 11.33 11.17 11.01 10.70 11.36
Leverage 6.80 6.55 6.27 5.92 5.79
===============================================================================
11
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REPORT OF MANAGEMENT ON CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the consolidated financial statements which
have been prepared in accordance with generally accepted accounting principles.
In management's opinion, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial condition, results of operations and
cash flows of BOK Financial and its subsidiaries at the dates and for the
periods presented.
The financial information included in this interim report has been prepared
by management without audit by independent public accountants and should be
read in conjunction with BOK Financial's 1995 Form 10-K to the Securities
and Exchange Commission which contains audited financial statements.
12
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- - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands Except Share Data)
Three months ended
March 31,
-----------------------
1996 1995
-----------------------
INTEREST REVENUE
Loans $ 47,866 $ 40,999
Taxable securities 20,251 19,864
Tax-exempt securities 2,002 4,692
- - -------------------------------------------------------------------------------
Total securities 22,253 24,556
- - -------------------------------------------------------------------------------
Trading securities 95 47
Funds sold 402 346
- - -------------------------------------------------------------------------------
Total interest revenue 70,616 65,948
- - -------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 28,821 22,396
Other borrowings 10,993 14,808
Subordinated debenture -- 341
- - -------------------------------------------------------------------------------
Total interest expense 39,814 37,545
- - -------------------------------------------------------------------------------
NET INTEREST REVENUE 30,802 28,403
PROVISION FOR LOAN LOSSES 911 --
- - -------------------------------------------------------------------------------
NET INTEREST REVENUE AFTER
PROVISION FOR LOAN LOSSES 29,891 28,403
- - -------------------------------------------------------------------------------
OTHER OPERATING REVENUE
Brokerage and trading revenue 2,078 1,289
TransFund network revenue 2,096 1,549
Securities gains (losses), net (18) --
Trust fees and commissions 5,469 5,002
Service charges and fees on
deposit accounts 5,839 5,100
Mortgage banking revenue, net 5,869 4,284
Other revenue 5,251 4,929
- - -------------------------------------------------------------------------------
Total other operating revenue 26,584 22,153
- - -------------------------------------------------------------------------------
13
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CONSOLIDATED STATEMENT OF EARNINGS, (CONTINUED)
(In Thousands Except Share Data)
Three months ended
March 31,
-----------------------
1996 1995
-----------------------
OTHER OPERATING EXPENSE
Personnel $ 17,747 17,369
Business promotion 1,494 1,598
Professional fees and services 1,242 1,410
Net occupancy, equipment and
data processing 7,158 6,251
FDIC and other insurance 539 1,627
Printing postage and supplies 1,577 1,585
Net gains and operating expenses
on repossessed assets (197) (1,037)
Amortization of intangible assets 1,465 1,493
Mortgage banking costs 3,745 2,892
Other expense 2,872 1,917
- - -------------------------------------------------------------------------------
Total other operating expense 37,642 35,105
- - -------------------------------------------------------------------------------
INCOME BEFORE TAXES 18,833 15,451
Federal and state income tax 5,838 3,484
- - -------------------------------------------------------------------------------
NET INCOME $ 12,995 $ 11,967
===============================================================================
EARNINGS PER SHARE:
Net income
Primary $ .62 $ .57
- - -------------------------------------------------------------------------------
Fully diluted $ .56 $ .52
- - -------------------------------------------------------------------------------
AVERAGE SHARES USED IN COMPUTATION:
Primary 20,500,669 20,487,814
- - -------------------------------------------------------------------------------
Fully diluted 23,248,818 23,221,119
===============================================================================
See accompanying notes to consolidated financial statements
14
<PAGE>
- - -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
MARCH 31, December 31, March 31,
1996 1995 1995
-------------------------------------------
ASSETS
Cash and due from banks $ 270,364 $ 303,499 $ 217,553
Funds sold 36,000 8,440 17,465
Trading securities 6,753 7,777 3,531
Securities:
Available for sale 1,367,894 1,366,661 690,960
Investment (fair value:
March 31, 1996 - $192,572;
December 31, 1995 - $181,786;
March 31, 1995 - $912,562) 192,481 179,121 955,439
- - -------------------------------------------------------------------------------
Total securities 1,560,375 1,545,782 1,646,399
- - -------------------------------------------------------------------------------
Loans 2,199,161 2,194,368 1,923,703
Less reserve for loan losses 39,561 38,287 38,020
- - -------------------------------------------------------------------------------
Net loans 2,159,600 2,156,081 1,885,683
- - -------------------------------------------------------------------------------
Premises and equipment, net 48,032 47,673 43,837
Accrued revenue receivable 45,324 41,121 38,425
Excess cost over fair value of net
assets acquired and core deposit
premiums (net of accumulated
amortization:
March 31, 1996 - $22,991;
December 31, 1995 - $21,526;
March 31, 1995 - $17,026) 36,043 37,134 41,603
Mortgage servicing rights 50,895 50,634 44,958
Real estate and other repossessed
assets 3,475 3,399 4,401
Other assets 22,854 20,378 17,133
- - -------------------------------------------------------------------------------
Total assets $ 4,239,715 $ 4,221,918 $3,960,988
===============================================================================
15
<PAGE>
CONSOLIDATED BALANCE SHEETS, (CONTINUED)
(In Thousands Except Share Data)
MARCH 31, December 31, March 31,
1996 1995 1995
-------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 632,720 $ 651,134 $ 593,825
Interest-bearing deposits:
Transaction 98,740 411,861 391,689
Money market 728,125 369,344 353,655
Savings 104,176 104,726 129,098
Time 1,629,254 1,400,644 1,200,633
- - -------------------------------------------------------------------------------
Total deposits 3,193,015 2,937,709 2,668,900
- - -------------------------------------------------------------------------------
Funds purchased and repurchase
agreements 522,108 697,497 920,704
Other borrowings 182,831 250,309 54,888
Accrued interest, taxes and expense 24,467 25,107 25,681
Other liabilities 11,325 9,731 11,423
Subordinated debenture -- -- 23,000
- - -------------------------------------------------------------------------------
Total liabilities 3,933,746 3,920,353 3,704,596
- - -------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 23 23 13
Common stock ($.00006 par value;
2,500,000,000 shares authorized;
shares issued and outstanding:
March 31, 1996 - 20,436,431;
December 31, 1995 - 20,415,504;
March 31, 1995 - 19,758,145) 1 1 1
Capital surplus 157,844 157,395 143,223
Retained earnings 159,347 146,727 123,470
Unrealized loss on securities
available for sale (11,102) (2,427) (10,071)
Less notes receivable from
exercise of stock options (144) (154) (244)
- - -------------------------------------------------------------------------------
Total shareholders' equity 305,969 301,565 256,392
- - -------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 4,239,715 $ 4,221,918 $ 3,960,988
===============================================================================
See accompanying notes to consolidated financial statements
16
<PAGE>
- - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS EQUITY
(in thousands)
<TABLE>
Preferred Stock Common Stock Capital Retained Unrealized Notes
Shares Amount Shares Amount Surplus Earnings Gain(Loss) Receivable Total
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1994 250,000 $ 13 19,735 $1 $142,718 $111,878 $(17,423) $(285) $236,902
Net income -- -- -- -- -- 11,967 -- -- 11,967
Issuance of common stock
to Thrift Plan -- -- 3 -- 70 -- -- -- 70
Exercise of stock options -- -- -- -- 21 -- -- -- 21
Payments on stock option
notes receivable -- -- -- -- -- -- -- 41 41
Preferred dividends paid
in shares of common stock -- -- 18 -- 375 (375) -- -- --
Director retainer shares -- -- 2 -- 39 -- -- -- 39
Change in unrealized net
gain(loss) on securities
available for sale -- -- -- -- -- -- 7,352 -- 7,352
- - ------------------------------------------------------------------------------------------------------------------
Balances at
March 31, 1995 250,000 $ 13 19,758 $1 $143,223 $123,470 $(10,071) $(244) $256,392
==================================================================================================================
Balances at
December 31, 1995 250,102 $ 23 20,416 $1 $157,395 $146,727 $ (2,427) $(154) $301,565
Net income -- -- -- -- -- 12,995 -- -- 12,995
Issuance of common stock
to Thrift Plan -- -- -- -- -- -- -- -- --
Exercise of stock options -- -- 2 -- 34 -- -- -- 34
Payments on stock option
notes receivable -- -- -- -- -- -- -- 10 10
Preferred dividends paid
in shares of common stock -- -- 16 -- 375 (375) -- -- --
Director retainer shares -- -- 2 -- 40 -- -- -- 40
Change in unrealized net
gain(loss) on securities
available for sale -- -- -- -- -- -- (8,675) -- (8,675)
- - -------------------------------------------------------------------------------------------------------------------
Balances at
March 31, 1996 250,102 $ 23 20,436 $1 $157,844 $159,347 $(11,102) $(144) $305,969
===================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
17
<PAGE>
- - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands Except Share Data)
Three Months Ended
March 31,
--------------------
1996 1995
--------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 12,995 $ 11,967
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan and repossessed
real estate losses 912 --
Depreciation and amortization 5,583 4,395
Net amortization of investment security
discounts and premiums 697 405
Net gain on sale of assets (1,862) (1,302)
Mortgage loans originated for resale (194,294) (70,065)
Proceeds from sale of mortgage loans
held for resale 164,483 82,944
(Increase) decrease in trading securities 1,024 (996)
(Increase) decrease in accrued revenue receivable (4,203) 2,973
Increase in other assets (2,476) (2,854)
Increase in accrued interest, taxes and expense 4,922 3,571
Increase in other liabilities 1,370 1,226
- - -------------------------------------------------------------------------------
Net cash provided (used) by operating activities (10,849) 32,264
- - -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities 6,959 15,329
Proceeds from maturities of available for sale securities 107,179 27,908
Purchases of investment securities (20,404) (13,895)
Purchases of available for sale securities (159,472) (76,306)
Proceeds from sales of available for sale securities 36,193 --
Loans originated or acquired net or principal collected 975 (94,950)
Proceeds from sales of assets 26,334 1,452
Purchases of assets (4,813) (9,274)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net (200) (19,371)
- - -------------------------------------------------------------------------------
Net cash used by investing activities (7,249) (169,107)
- - -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits,
transaction deposits, money market deposits,
and savings accounts 26,696 (56,756)
Net increase in certificates of deposit 228,610 118,089
Net increase (decrease) in other borrowings (242,867) 1,258
Issuance of preferred, common and treasury stock, net 74 130
Payments on stock option notes receivable 10 41
- - -------------------------------------------------------------------------------
Net cash provided by financing activities 12,523 62,762
- - -------------------------------------------------------------------------------
18
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS, (CONTINUED)
(In Thousands Except Share Data)
Three Months Ended
March 31,
--------------------
1996 1995
--------------------
Net decrease in cash and cash equivalents $ (5,575)$ (74,081)
Cash and cash equivalents at beginning of period 311,939 309,099
- - -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 306,364 $ 235,018
===============================================================================
CASH PAID FOR INTEREST $ 38,876 $ 33,281
===============================================================================
CASH PAID FOR TAXES $ 253 $ 2,645
===============================================================================
NET LOANS TRANSFERRED TO
REPOSSESSED REAL ESTATE AND OTHER ASSETS $ 223 $ 651
===============================================================================
PAYMENT OF PREFERRED STOCK DIVIDENDS IN COMMON STOCK $ 375 $ 375
===============================================================================
See accompanying notes to consolidated financial statements.
19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accounting and reporting policies of BOK Financial Corporation conform to
generally accepted accounting principles and to generally accepted practices
within the banking industry. The Consolidated Financial Statements of BOK
Financial include the accounts of BOK Financial and its banking subsidiaries,
Bank of Oklahoma, N.A. and Citizens Bank of Northwest Arkansas. Certain prior
period balances have been reclassified to conform with the current period
presentation.
(2) CONTINGENT LIABILITIES
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 be material in the
aggregate.
20
<PAGE>
- - --------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances,
Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
---------------------------------------------------
MARCH 31, 1996 December 31, 1995
---------------------------------------------------
Average Revenue/ Yield Average Revenue/Yield
Balance Expense /Rate Balance Expense /Rate
---------------------------------------------------
ASSETS
Taxable securities $1,274,853 $19,095 6.02% $1,285,158 $19,337 5.97%
Tax-exempt securities(1) 269,115 5,032 7.52 256,599 4,824 7.46
- - -------------------------------------------------------------------------------
Total securities 1,543,968 24,127 6.28 1,541,757 24,161 6.22
- - -------------------------------------------------------------------------------
Trading securities 6,005 95 6.36 3,787 72 7.54
Funds sold 27,409 402 5.90 19,197 288 5.95
Loans(2) 2,189,423 47,866 8.79 2,145,558 47,838 8.85
Less reserve for
loan losses 38,966 38,378
- - -------------------------------------------------------------------------------
Loans, net of reserve 2,150,457 47,866 8.95 2,107,180 47,838 9.01
- - -------------------------------------------------------------------------------
Total earning assets 3,727,839 72,490 7.82 3,671,921 72,359 7.82
- - -------------------------------------------------------------------------------
Cash and other assets 432,081 431,982
- - -------------------------------------------------------------------------------
Total assets $4,159,920 $4,103,903
===============================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Transaction deposits $ 298,442 2,051 2.76 $ 385,302 2,714 2.79
Money market deposits 506,281 4,336 3.44 374,618 3,891 4.12
Savings deposits 103,931 629 2.43 106,633 654 2.43
Other time deposits 1,533,143 21,805 5.72 1,338,106 19,416 5.76
- - -------------------------------------------------------------------------------
Total interest-bearing
deposits 2,441,797 28,821 4.75 2,204,659 26,675 4.80
- - -------------------------------------------------------------------------------
Other borrowings 778,343 10,993 5.68 973,914 14,457 5.89
Subordinated debenture -- -- -- -- -- --
- - -------------------------------------------------------------------------------
Total interest-bearing
liabilities 3,220,140 39,814 4.97 3,178,573 41,132 5.13
- - -------------------------------------------------------------------------------
Demand deposits 588,624 584,748
Other liabilities 40,865 43,465
Shareholders' equity 310,291 297,117
- - -------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $4,159,920 $4,103,903
===============================================================================
TAX-EQUIVALENT NET
INTEREST REVENUE(1) 32,676 2.85 31,227 2.69
TAX-EQUIVALENT NET
INTEREST REVENUE(1) TO
EARNING ASSETS 3.53 3.37
Less tax-equivalent
adjustment(1) 1,874 1,780
- - -------------------------------------------------------------------------------
NET INTEREST REVENUE 30,802 29,447
Provision for loan losses 911 176
Other operating revenue 26,584 23,951
Other operating expense 37,642 36,852
- - -------------------------------------------------------------------------------
INCOME BEFORE TAXES 18,833 16,370
Federal and state income tax 5,838 3,707
- - -------------------------------------------------------------------------------
NET INCOME $12,995 $12,663
===============================================================================
EARNINGS PER SHARE:
NET INCOME
Primary $ .62 $ .60
- - -------------------------------------------------------------------------------
Fully Diluted $ .56 $ .54
===============================================================================
(1) Tax-equivalent at the statutory federal and state rates for all periods
presented. The taxable equivalent adjustments shown above are for
comparative purposes.
(2) The loan averages include loans on which the accrual of interest has been
discounted and are stated net of unearned income.
- - -------------------------------------------------------------------------------
21
<PAGE>
For Three months ended
- - -------------------------------------------------------------------------------
September 30, 1995 June 30, 1995 March 31, 1995
- - -------------------------------------------------------------------------------
Average Revenue/ Yield Average Revenue/ Yield Average Revenue/Yield
Balance Expense /Rate Balance Expense /Rate Balance Expense /Rate
- - -------------------------------------------------------------------------------
$1,336,474 $20,243 6.01% $1,425,922 $21,905 6.16% $1,373,411 $21,591 6.38%
255,688 4,798 7.44 253,770 4,799 7.59 249,725 4,692 7.62
- - -------------------------------------------------------------------------------
1,592,162 25,041 6.24 1,679,692 26,704 6.38 1,623,136 26,283 6.57
- - -------------------------------------------------------------------------------
3,323 51 6.09 4,565 72 6.33 3,010 47 6.33
9,826 149 6.02 13,670 213 6.25 23,463 346 5.98
2,073,088 46,216 8.84 1,958,467 43,999 9.01 1,869,484 40,999 8.89
38,372 38,218 38,302
- - -------------------------------------------------------------------------------
2,034,716 46,216 9.01 1,920,249 43,999 9.19 1,831,182 40,999 9.08
- - -------------------------------------------------------------------------------
3,640,027 71,457 7.79 3,618,176 70,988 7.87 3,480,791 67,675 7.88
- - -------------------------------------------------------------------------------
418,656 424,687 406,957
- - -------------------------------------------------------------------------------
$4,058,683 $ 4,042,863 $3,887,748
===============================================================================
$ 387,039 2,713 2.78 $ 393,141 2,739 2.79 $ 392,266 2,715 2.81
378,298 3,802 3.99 362,817 3,515 3.89 360,745 3,187 3.58
115,312 710 2.44 123,169 738 2.40 129,834 855 2.67
1,208,924 17,454 5.73 1,193,816 16,997 5.71 1,176,686 15,639 5.39
- - -------------------------------------------------------------------------------
2,089,573 24,679 4.69 2,072,943 23,989 4.64 2,059,531 22,396 4.41
- - -------------------------------------------------------------------------------
1,060,864 15,952 5.97 1,090,359 16,868 6.21 969,528 14,808 6.19
-- -- -- 506 12 9.00 23,000 341 6.00
- - -------------------------------------------------------------------------------
3,150,437 40,631 5.12 3,163,808 40,869 5.18 3,052,059 37,545 4.99
- - -------------------------------------------------------------------------------
586,340 576,761 551,114
39,746 38,268 39,118
282,160 264,025 245,457
- - -------------------------------------------------------------------------------
$4,058,683 $4,042,862 $3,887,748
===============================================================================
30,826 2.67 30,119 2.69 30,130 2.89
3.36 3.34 3.51
1,771 1,760 1,727
- - -------------------------------------------------------------------------------
29,055 28,359 28,403
15 40 --
23,185 21,857 22,153
35,682 34,567 35,105
- - -------------------------------------------------------------------------------
16,543 15,609 15,451
4,050 3,527 3,484
- - -------------------------------------------------------------------------------
$12,493 $12,082 $11,967
===============================================================================
$ .59 $ .57 $ .57
- - -------------------------------------------------------------------------------
$ .54 $ .52 $ .52
===============================================================================
22
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
No. 27 Financial Data Schedule filed herewith electronically.
(B) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months
ended March 31, 1996.
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 May 13, 1996 /s/ James A. White
----------------- -------------------
James A. White
Executive Vice President and
Chief Financial Officer
23
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the BOK
Financial Corporation's 10-Q for the period ended March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 46,238
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 36,000
<TRADING-ASSETS> 6,753
<INVESTMENTS-HELD-FOR-SALE> 1,367,894
<INVESTMENTS-CARRYING> 192,481
<INVESTMENTS-MARKET> 192,572
<LOANS> 2,199,161
<ALLOWANCE> 39,561
<TOTAL-ASSETS> 4,239,715
<DEPOSITS> 3,193,015
<SHORT-TERM> 658,560
<LIABILITIES-OTHER> 35,792
<LONG-TERM> 46,379
0
23
<COMMON> 1
<OTHER-SE> 305,945
<TOTAL-LIABILITIES-AND-EQUITY> 4,239,715
<INTEREST-LOAN> 47,866
<INTEREST-INVEST> 22,253
<INTEREST-OTHER> 497
<INTEREST-TOTAL> 70,616
<INTEREST-DEPOSIT> 28,821
<INTEREST-EXPENSE> 39,814
<INTEREST-INCOME-NET> 30,802
<LOAN-LOSSES> 911
<SECURITIES-GAINS> (18)
<EXPENSE-OTHER> 37,642
<INCOME-PRETAX> 18,833
<INCOME-PRE-EXTRAORDINARY> 18,833
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,995
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.56
<YIELD-ACTUAL> 3.53
<LOANS-NON> 26,851
<LOANS-PAST> 15,023
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 36,653
<ALLOWANCE-OPEN> 38,287
<CHARGE-OFFS> 1,228
<RECOVERIES> 1,591
<ALLOWANCE-CLOSE> 39,561
<ALLOWANCE-DOMESTIC> 39,561
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
