As filed with the Securities and Exchange Commission on August 11, 1997
- -------------------------------------------------------------------------------
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 June 30, 1997
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 ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 21,219,668 shares of
common stock ($.00006 par value) as of July 31, 1997.
- -------------------------------------------------------------------------------
<PAGE>2
BOK Financial Corporation
Form 10-Q
Quarter Ended June 30, 1997
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 10
Consolidated Statements of Earnings 11
Consolidated Balance Sheets 12
Consolidated Statements of Changes
in Shareholders' Equity 13
Consolidated Statements of Cash Flows 14
Notes to Consolidated Financial Statements 15
Financial Summaries - Unaudited 17
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 20
Signature 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
HIGHLIGHTS
BOK Financial Corporation ("BOK Financial") recorded net income of $16.1 or
$0.66 per fully diluted common share for the second quarter of 1997 compared to
$13.6 million or $0.57 per fully diluted common share for the second quarter of
1996. Returns on average assets and equity were 1.26% and 17.23%, respectively,
for the second quarter of 1997. This is compared to returns on average assets
and equity of 1.28% and 17.51%, respectively, for the same period of 1996.
Year to date net income and earnings per fully diluted common share were $31.4
million or $1.28, respectively, for 1997 compared to $26.6 million or $1.11,
respectively, for the same period of 1996. Returns on average assets and equity
were 1.28% and 17.08%, respectively, for 1997 compared to returns on average
assets and equity of 1.26% and 17.18%, respectively, for 1996.
RESULTS OF OPERATIONS
Net interest revenue on a tax-equivalent basis was $41.5 million for the second
quarter of 1997 compared to $34.5 million for the second quarter of 1996, an
increase of $7.0 million or 20.2%. Average earning assets increased by $722
million, including $344 million from the acquisitions of First National Bank of
Park Cities ("Park Cities") and First Texas Bank ("First Texas") in the first
quarter of 1997, while average interest bearing liabilities increased $617
million, including $220 million from acquisitions. Demand deposit accounts and
equity funded the growth in earning assets in excess of interest bearing
liabilities. This improvement in the volume of total earning assets as compared
to interest bearing liabilities contributed $5.9 million to the increase in net
interest revenue. The effect of an increase in the yield on earning assets in
excess of an increase in the cost of interest bearing liabilities contributed
$1.1 million .
<PAGE>3
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
TABLE 1 - VOLUME/RATE ANALYSIS
(In thousands)
Three months ended Six months ended
June 30, 1997/1996 June 30, 1997/1996
---------------------------------------------------------------------------
Change Due To (1) Change Due To (1)
------------------------ ------------------------
Yield Yield
Change Volume /Rate Change Volume /Rate
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax-equivalent interest revenue:
Securities $ 7,804 $ 6,582 $ 1,222 $ 12,782 $ 11,010 $ 1,772
Trading securities (17) (13) (4) (54) (47) (7)
Loans 6,765 6,711 54 10,346 11,337 (991)
Funds sold 243 191 52 552 520 32
- ---------------------------------------------------------------------------------------------------------------------
Total 14,795 13,471 1,324 23,626 22,820 806
- ---------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest bearing transaction deposits 1,488 1,649 (161) 3,088 3,084 4
Savings deposits (20) 36 (56) (85) 31 (116)
Time deposits (497) (369) (128) (869) (18) (851)
Other borrowings 6,533 5,980 553 9,211 8,874 337
Subordinated debenture 326 326 - 420 420 -
- ---------------------------------------------------------------------------------------------------------------------
Total 7,830 7,622 208 11,765 12,391 (626)
- ---------------------------------------------------------------------------------------------------------------------
Tax-equivalent net interest revenue $ 6,965 $ 5,849 $ 1,116 $ 11,861 $ 10,429 $ 1,432
Change in tax-equivalent adjustment (244) (880)
- ---------------------------------------------------------------------------------------------------------------------
Net interest revenue $ 6,721 $ 10,981
=====================================================================================================================
(1) Changes attributable to both volume and yield are allocated to both volume and yield/rate on an equal basis.
</TABLE>
Net interest margin, the ratio of net interest revenue to average earning assets
was 3.68% for the second quarter of 1997. This is compared to 3.65% for the same
quarter of 1996 and 3.58% for the first quarter of 1997. Yields on average
earning assets for the second quarter of 1997 were 7.89%, an increase of 4 basis
points over the second quarter of 1996 and 13 basis points over the first
quarter of 1997. The increase is due primarily to the repricing of variable rate
loans in response to a 25 basis point increase in the national prime rate late
in the first quarter of 1997. At the same time, the cost of interest bearing
liabilities for the second quarter of 1997 was 4.91%, an increase of 2 basis
points over the second quarter of 1996 and 5 basis points over the first quarter
of 1997. BOK Financial has been working to reduce its overall cost of funds by
lowering the rates paid on certain certificates of deposit. These efforts have
been successful as shown by the reduction in the rates paid on deposits and by
the limited increase in the total cost of interest bearing liabilities. However,
this strategy has limited the growth in deposits and has required BOK Financial
to increase borrowings to fund asset growth.
Since its inception, BOK Financial has followed a strategy of utilizing its
capital resources by borrowing funds in the capital markets to supplement
deposit growth and invest in securities. This strategy frequently results in a
net interest margin which falls below those normally seen in the commercial
banking industry even though it provides positive net interest revenue. As more
fully discussed in the subsequent Interest Rate Sensitivity and Liquidity
section, management employs various techniques to control, within established
parameters, the interest rate and liquidity risk which results from this
strategy.
Year to date tax equivalent net interest revenue was $79.0 million, an $11.9
million or 17.7% increase over the first six months of 1996. Average earning
assets increased $621 million while average interest bearing liabilities
increased $526 million. While the yield on earning assets remained unchanged at
7.83%, the cost of interest bearing liabilities decreased 5 basis points to
4.88% due to the previously discussed deposit pricing policy. The result is an
increase in the year to date net interest margin to 3.63% in 1997 from 3.58% in
1996.
<PAGE>4
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
TABLE 2 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
-----------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1997 1997 1996 1996 1996
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brokerage and trading revenue $ 2,229 $ 2,240 $ 1,964 $ 2,031 $ 1,823
TransFund network revenue 2,939 2,543 2,310 2,236 2,153
Securities gains (losses), net (200) 262 (622) (1,967)
Trust fees and commissions 5,851 5,278 5,324 5,317 5,528
Service charges and fees
on deposit accounts 7,112 6,714 6,506 6,027 5,732
Mortgage banking revenue 7,460 6,948 7,206 7,103 6,056
Other revenue 6,020 6,467 4,846 4,514 4,641
- -------------------------------------------------------------------------------------------------------------------
Total $ 31,411 $ 30,452 $ 27,534 $ 27,228 $ 23,966
===================================================================================================================
</TABLE>
Other operating revenue increased $7.4 million or 31.1% compared to the same
quarter of 1996. Excluding the effect of securities gains and losses and
acquisitions, other operating revenue increased $5.0 million or 19.2%. TransFund
revenue increased $786 thousand or 36.5% due to an increased number of
transactions and repricing of services. Service charges and deposit fees
increased $882 thousand or 15.4%, excluding the effect of acquisitions, due
primarily to an increased number of transactions processed for commercial
accounts. Mortgage banking revenue increased $1.4 million or 23.2% due to a $1.0
million increase in loan servicing revenue along with a $361 thousand
improvement in secondary marketing activities. BOk Mortgage, a division of BOk,
has entered into an agreement to purchase $1.0 billion of loan servicing rights
during the remainder of 1997, subject to certain conditions. The obligation to
purchase these servicing rights and the servicing rights asset is included in
the Consolidated Balance Sheet at June 30, 1997. The related servicing revenue
and expenses will begin to be recognized over the remainder of 1997 as the loans
are originated and servicing is transferred to BOk Mortgage. Leasing revenue,
which is reported in other revenue, increased to $1.5 million in the second
quarter of 1997 compared to $333 thousand in 1996.
Year to date, other operating revenue increased $11.3 million or 22.4%.
Excluding the effect of securities gains and losses and acquisitions, other
operating revenue increased $8.3 million or 15.8%. The same volume-related
factors which caused the second quarter's increased also contributed to the year
to date increases.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
TABLE 3 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
------------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1997 1997 1996 1996 1996
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personnel $ 21,148 $ 19,294 $ 18,380 $ 17,759 $ 18,059
Business promotion 2,190 1,950 1,459 1,618 1,801
Professional fees/services 1,571 1,496 1,286 1,458 1,420
Net occupancy, equipment
and data processing 8,250 8,320 8,029 7,799 7,845
FDIC and other insurance 328 333 89 4,377 555
Printing, postage and supplies 1,921 1,825 1,769 1,683 1,763
Net gains and operating
expenses on repossessed assets (222) (412) (703) (2,706) (946)
Amortization of intangible
assets 2,398 1,728 1,241 1,238 1,467
Write-off of core deposit intangible
assets related to SAIF-insured
deposits - - - - 3,821
Mortgage banking costs 4,412 4,217 4,354 4,089 3,646
Other expense 3,447 2,975 2,411 2,982 3,343
- --------------------------------------------------------------------------------------------------------------------
Total $ 45,443 $ 41,726 $ 38,315 $ 40,297 $ 42,774
====================================================================================================================
</TABLE>
<PAGE>5
Operating expenses for the second quarter of 1997 increased $2.7 million or 6.2%
compared to the second quarter of 1996. Excluding the effects of acquisitions
and significant or non-recurring items as shown in Table 4, operating expenses
increased $3.3 million or 8.4%. Personnel costs increased $3.1 million ($1.8
million or 9.9% excluding acquisitions) due to both increased staffing and to
normal compensation increases. Staffing on a full-time equivalent ("FTE") basis
increased by 151 employees or 7.6% while average compensation per FTE increased
by 3.0%. Mortgage banking expenses increased $766 thousand or 21.0% due to
increased amortization of capitalized servicing rights. Net occupancy, equipment
and data processing expenses increased $91 thousand or 1.2%, excluding
acquisitions. This increase included a $756 thousand increase in data processing
costs due primarily to the higher volume of transactions processed partially
offset by a $655 thousand increase in rental income at BOK Financial's main
offices in Oklahoma City. Additionally, business promotion expenses increased
$389 thousand or 21.6% as BOK Financial continued its efforts to capitalize on
disruptions in banking relationships due to mergers involving its two largest
competitors in Oklahoma.
The growth in operating expenses was consistent with the growth in
tax-equivalent interest revenue and other operating revenue. The resulting
efficiency ratio for the second quarter of 1997 was 62.4% compared to 66.0% for
the second quarter of 1996 and 62.3% for the first quarter of 1997.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
TABLE 4 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS
(In thousands)
Three Months Ended
--------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1997 1997 1996 1996 1996
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total other operating expense $ 45,443 $ 41,726 $ 38,315 $ 40,297 $ 42,774
FDIC Insurance premium
reduction, net of costs - - - (3,820) -
Net gains and operating costs from
repossessed assets 222 412 703 2,706 946
Asset valuation charges - - - - (4,071)
Item processing conversion
and other related charges - - - - (750)
- -----------------------------------------------------------------------------------------------------------------
Total $ 45,665 $ 42,138 $ 39,018 $ 39,183 $ 38,899
=================================================================================================================
</TABLE>
Year to date, operating expenses increased $6.8 million or 8.4%. Excluding the
effects of acquisitions and significant or non-recurring items, operating
expenses increased $6.6 million or 8.7% due to the same factors which
contributed to the quarterly increases.
BOK Financial recorded a provision for loan losses of $1.5 million in the second
quarter of 1997 compared to $2.9 million in the second quarter of 1996. The
factors considered by management in determining the provision for loan losses
are discussed subsequently under "Risk Element."
BOK Financial recorded income tax expense of $7.6 million or 32.0% of income
before taxes for the second quarter of 1997 compared to a normalized income tax
expense of $3.3 million or 30.9% for the second quarter of 1996. Tax benefit for
the second quarter of 1996 included the reversal of a $6.2 million valuation
allowance on certain deferred tax assets which was no longer considered
necessary.
RISK ELEMENT
The aggregate loan portfolio at June 30, 1997 increased $235 million to $2.6
billion since December 31, 1996. This included increases of $79 million and $59
million, respectively, from the acquisitions of Park Cities and First Texas in
the first quarter. Loans increased by $130 million during the second quarter of
1997. This increase during the second quarter include all major loan groups with
commercial loans up $79 million, commercial real estate loans up $29 million,
residential mortgage loans up $16 million and consumer loans up $5 million.
These increases are the result of continued growth in the Oklahoma economy and
BOK Financial's efforts to capitalize on the disruption of banking relationships
which have resulted from the acquisition of its two largest competitors. The
growth of the loan portfolio and strategies employed by BOK Financial has added
additional risk as discussed below.
<PAGE>6
Although the acquisitions of Park Cities and First Texas enhance the geographic
diversity of the loan portfolio, a substantial portion of the commercial and
consumer loans continues to be concentrated in Oklahoma and Northwest Arkansas.
This concentration subjects the 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. Approximately $66 million of construction loans were
transferred from construction and land development loans to other real estate
loans due to completion of the underlying projects. During the second quarter of
1997, BOK Financial opened a loan production office in Albuquerque, New Mexico.
This office, which will focus primarily on residential construction lending, is
expected to add diversity to the loan portfolio.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
TABLE 5 - LOANS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
1997 1997 1996 1996 1996
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial:
Energy $ 247,821 $ 230,447 $ 217,056 $ 185,972 $ 176,685
Manufacturing 169,871 163,312 137,529 126,356 139,509
Wholesale/retail 200,358 184,488 166,075 177,351 179,458
Agricultural 125,704 119,055 109,324 95,973 88,036
Loans for purchasing or
carrying securities 18,627 15,437 13,604 14,728 8,587
Other commercial and industrial 376,277 346,785 340,602 341,352 287,339
Commercial real estate:
Construction and land development 130,381 186,982 165,784 140,189 151,032
Other real estate loans 591,080 505,371 509,874 496,356 493,107
Residential mortgage:
Secured by 1-4 family
residential property 469,681 465,432 429,405 434,789 424,766
Residential mortgages held for sale 79,438 67,192 95,332 66,310 73,335
Consumer 220,005 215,112 209,995 240,468 222,844
- --------------------------------------------------------------------------------------------------------------------
Total $ 2,629,243 $ 2,499,613 $ 2,394,580 $ 2,319,844 $ 2,244,698
====================================================================================================================
</TABLE>
Nonperforming assets totaled $47.2 million at June 30, 1997 compared to $44.2
million at March 31, 1997 and $42.2 million at December 31, 1996. The increase
in the second quarter of 1997 was due primarily to a $2.9 million increase in
nonperforming commercial real estate loans.
BOK Financial monitors loan performance on a portfolio and individual loan
basis. Nonperforming loans, which include all loans classified as doubtful or
loss, are reviewed at least quarterly, and more frequently in the case of larger
credits. 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 June 30, 1997,
loans totaling $106 million were assigned to the special mention category and
loans totaling $62 million were assigned to the substandard risk category. These
are compared to special mention loans of $105 million and substandard loans of
$46 million at March 31, 1997, and to special mention loans of $62 million and
substandard loans of $40 million at December 31, 1996.
The increase in substandard loans during the second quarter was due to continued
deterioration in the operating results from several large borrowers in the
energy and manufacturing industries which had been reported as special mention
at March 31, 1997. Concurrently, a $15 million loan was downgraded from pass to
special mention based upon the borrower's decision not to pursue additional
equity financing and BOK Financial's assessment that the collateral value did
not provide a sufficient margin over the loan balance. Although this loan
continues to perform in accordance with its contractual terms and no loss of
principal or interest is expected, management will continue to closely monitor
the loan in the future.
<PAGE>7
BOK Financial previously reported that on a limited and strategically selective
basis, certain new loans were being made that would be classified as special
mention at inception. These loans were to borrowers with stable, long-term
operating histories which were experiencing credit difficulties whci managment
expects to be temporary. Loans totaling approximately $15.4 million were
originated under this strategy with $9.5 million funded in the second quarter.
Management does not anticipate approving any additional significant credits
under this strategy.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
TABLE 6 - NONPERFORMING ASSETS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
1997 1997 1996 1996 1996
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
Commercial $ 9,591 $ 9,332 $ 9,589 $ 10,844 $ 11,418
Commercial real estate 8,356 5,418 5,306 4,323 8,528
Residential mortgage 3,917 4,138 2,580 3,333 3,001
Consumer 1,830 1,366 1,360 1,114 1,037
- ------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 23,694 20,254 18,835 19,614 23,984
Loans past due (90 days) (1) 17,976 17,838 18,816 17,379 17,424
- ------------------------------------------------------------------------------------------------------------------
Total nonperforming loans (1) 41,670 38,092 37,651 36,993 41,408
- ------------------------------------------------------------------------------------------------------------------
Other nonperforming assets:
Commercial real estate 2,594 2,710 2,586 4,158 3,342
Other 2,970 3,381 1,990 926 481
- ------------------------------------------------------------------------------------------------------------------
Total other nonperforming assets 5,564 6,091 4,576 5,084 3,823
- ------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 47,234 $ 44,183 $ 42,227 $ 42,077 $ 45,231
==================================================================================================================
Ratios:
Reserve for loan losses to
nonperforming loans 119.68% 127.37% 119.91% 121.53% 103.38%
Nonperforming loans (1) to
period-end loans (2) 1.63 1.57 1.64 1.64 1.91
==================================================================================================================
(1) Includes 1-4 family loans
guaranteed by agencies of
the U.S. government $ 15,538 $ 15,083 $ 13,932 $ 13,741 $ 12,456
(2) Excludes residential mortgage loans held for sale
==================================================================================================================
</TABLE>
The allowance for loan losses, which is available to absorb losses inherent in
the loan portfolio, totaled $50 million at June 30, 1997 compared to $49 million
at March 31, 1997 and $45 million at December 31, 1996 or 1.96% of total loans,
excluding loans held for sale. Losses on loans held for sale, principally
fixed-rate 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.
<PAGE>8
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
TABLE 7 - SUMMARY OF LOAN LOSS EXPERIENCE
(In thousands)
Three Months Ended
---------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1997 1997 1996 1996 1996
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $ 48,517 $ 45,148 $ 44,959 $ 42,807 $ 39,561
Loans charged-off:
Commercial 444 199 224 1,475 222
Commercial real estate 18 1 0 335 106
Residential mortgage 64 89 46 97 80
Consumer 896 951 1,214 663 820
- -----------------------------------------------------------------------------------------------------------------
Total 1,422 1,240 1,484 2,570 1,228
- -----------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial 547 367 821 1,670 449
Commercial real estate 341 148 162 2,747 741
Residential mortgage 53 64 67 21 44
Consumer 335 479 266 222 303
- -----------------------------------------------------------------------------------------------------------------
Total 1,276 1,058 1,316 4,660 1,537
- -----------------------------------------------------------------------------------------------------------------
Net loans charged-off (recoveries) 146 182 168 (2,090) (309)
Provision for loan losses 1,500 1,026 357 62 2,937
Addition due to acquisition - 2,525 - - -
- -----------------------------------------------------------------------------------------------------------------
Ending balance $ 49,871 $ 48,517 $ 45,148 $ 44,959 $ 42,807
=================================================================================================================
Reserve to loans outstanding
at period-end(1) 1.96% 1.99% 1.96% 2.00% 1.97%
Net loan losses (recoveries)
(annualized) to average loans (1) 0.02 0.03 (0.06) 0.39 (0.06)
=================================================================================================================
(1) Excludes residential mortgage loans held for sale which are carried at the
lower of aggregate cost or market value.
</TABLE>
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 and anticipated economic conditions, historical experience,
collateral valuation, changes in the composition of the portfolio and other
relevant factors. A provision for loan losses is charged against earnings in
amounts necessary to maintain the adequacy of the allowance for loan losses. The
provision for loan losses totaled $1.5 million for the second quarter of 1997
compared to $2.9 million for the second quarter of 1996. 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.
At June 30, 1997 other assets included $25.1 million of natural gas compression
and other equipment which is being leased to various customers. These leases are
generally designed to be operating leases where both legal and economic
ownership remains with BOK Financial. Lease payments are recorded as income when
earned. The equipment is being depreciated over estimated useful lives. The
lease terms are generally much shorter than the estimated useful lives of the
related equipment. As each lease expires, the remaining net book value of the
equipment is evaluated for impairment based upon current market values,
re-leasing opportunities and other relevant factors.
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 which operates under policy guidelines which have
been established by the Board of Directors. These guidelines limit the negative
acceptable variation in net interest revenue and economic value of equity due to
a 200 basis point rate increase or decrease to + / - 10%, establish maximum
levels for short-term assets and funding, and public and brokered deposits, and
establish minimum levels for unpledged assets, among other things. Compliance
with these guidelines is reviewed monthly. At June 30, 1997, BOK Financial is
within all guidelines established under these policies. However, BOk is close to
the guidelines which limit short-term borrowings in relation to total assets and
which limit loans in relation to non-public deposits. Management is reviewing
various strategies to allow continued loan growth within these guidelines,
including a reduction of the securities portfolio and increases in non-public
deposits.
<PAGE>9
BOk expects to issue $150 million of subordinated notes during the third quarter
of 1997. These notes will be unsecured obligations of BOk and will not be
insured by the FDIC or any other government agency and will not be guaranteed by
BOK Financial. Standard & Poors Rating Service has rated the notes as BBB;
Moody's Investors Service, Baa3; and Thomson Bank Watch, A-. Up to $50 million
of the proceeds will be paid as dividends to BOK Financial which will in turn be
used to repay existing debt, including a $20 million subordinated debenture due
to an affiliate of George B. Kaiser, BOK Financial's principal shareholder. The
remaining proceeds will be retained by BOk to fund future growth.
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 on two "shock test" rate
scenarios, the first assuming a 200 basis point increase and the second assuming
a 200 basis point decrease over the next twelve months. An independent source is
used to determine the most likely interest rates for the next year.
The estimated impact of changes in interest rates on net interest revenue is not
projected to be significant within the + / - 200 basis point range of
assumptions. However, this modeling indicates that under the 200 basis point
decrease scenario the after-tax value of BOK Financial's capitalized mortgage
servicing rights, net of mortgage loan refinancing income, would decrease by
approximately $12.4 million. While this decrease in value would largely be
offset by an increase in the value of the securities portfolio, current
accounting principles require that the net decreased value of mortgage loan
servicing rights would be charged to earnings while the increased value of
available for sale securities would be credited to shareholders' equity. The
result is an estimated decrease in net income of 19.0%. Additionally, a 200
basis point increase in interest rates would decrease the economic value of
equity by 7.5% due primarily to the decrease in value of the securities
portfolio. This decrease is compared against the applicable policy which limits
the negative impact of a 200 basis point change in interest rates on the
economic value of equity to 10%. These simulations are based on numerous
assumptions regarding the timing and extent of repricing characteristics. Actual
results in such situations would differ significantly.
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
TABLE 8 - INTEREST RATE SWAPS
(In thousands)
Notional Pay Receive
Amount Rate Rate
------------------------------------------------------------------------
<S> <C> <C> <C>
Expiration:
1998 63,000 5.78 - 5.94% (1) 6.64 - 7.96%
1999 22,000 5.81 - 5.94 (1) 6.80 - 7.68
2006 16,500 7.26 (1) 5.86 (1)
2007 10,000 7.48 5.75 (1)
- -------------------------------------------------------------------------------------------------------------------
(1) Rates are variable based on LIBOR and reset quarterly or semiannually.
</TABLE>
<PAGE>10
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. During the second quarter of 1997, income from these swaps
exceeded costs of the swaps by $283 thousand and at June 30, 1997, the net
market value appreciation of all swaps was $716 thousand. 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.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
TABLE 9 - CAPITAL RATIOS
June 30, March 31, Dec. 31, Sept. 30, June 30,
1997 1997 1996 1996 1996
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average shareholders' equity
to average assets 7.33% 7.70% 7.72% 7.50% 7.31%
Risk-based capital:
Tier 1 capital 9.00 8.96 10.49 10.26 10.43
Total capital 10.75 10.81 11.74 11.52 11.69
Leverage 6.26 6.34 7.46 7.34 7.09
</TABLE>
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 1996 Form 10-K to the Securities and Exchange
Commission which contains audited financial statements.
<PAGE>11
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
Consolidated Statement of Earnings
(In Thousands Except Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
-------------- --- ------------- ------------- -- --------------
<S> <C> <C> <C> <C>
Interest Revenue
Loans $ 55,843 $ 49,024 $ 107,199 $ 96,890
Taxable securities 25,793 19,215 48,361 38,310
Tax-exempt securities 4,235 3,307 8,353 6,465
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Total securities 30,028 22,522 56,714 44,775
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Trading securities 83 100 141 195
Funds sold 817 574 1,528 976
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Total interest revenue 86,771 72,220 165,582 142,836
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Interest Expense
Deposits 30,577 29,606 60,561 58,427
Other borrowings 16,700 10,167 30,369 21,160
Subordinated debenture 326 - 422 -
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Total interest expense 47,603 39,773 91,352 79,587
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Net Interest Revenue 39,168 32,447 74,230 63,249
Provision for Loan Losses 1,500 2,937 2,526 3,848
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Net Interest Revenue After
Provision for Loan Losses 37,668 29,510 71,704 59,401
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Other Operating Revenue
Brokerage and trading revenue 2,229 1,823 4,469 3,901
Transfund network revenue 2,939 2,153 5,482 4,249
Securities gains (losses), net (200) (1,967) 62 (1,985)
Trust fees and commissions 5,851 5,528 11,129 10,997
Service charges and fees on deposit
accounts 7,112 5,732 13,826 11,571
Mortgage banking revenue, net 7,460 6,056 14,408 11,925
Other revenue 6,020 4,641 12,487 9,892
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Total Other Operating Revenue 31,411 23,966 61,863 50,550
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Other Operating Expense
Personnel 21,148 18,059 40,442 35,806
Business promotion 2,190 1,801 4,140 3,295
Professional fees and services 1,571 1,420 3,067 2,662
Net occupancy, equipment & data
processing 8,250 7,845 16,570 15,003
FDIC and other insurance 328 555 661 1,094
Printing, postage and supplies 1,921 1,763 3,746 3,340
Net(gains) losses, and operating
expenses of repossessed assets (222) (946) (634) (1,143)
Amortization of intangible assets 2,398 1,467 4,126 2,932
Write-off of core deposit intangible
assets related to SAIF-insured - 3,821 - 3,821
deposits
Mortgage banking costs 4,412 3,646 8,629 7,391
Other expense 3,447 3,343 6,422 6,215
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Total Other Operating Expense 45,443 42,774 87,169 80,416
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Income Before Taxes 23,636 10,702 46,398 29,535
Federal and state income tax 7,572 (2,889) 14,987 2,949
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Net Income $ 16,064 $ 13,591 $ 31,411 $ 26,586
====================================================================================================================
Earnings Per Share:
Net Income
Primary $ .73 $ .62 $ 1.42 $ 1.22
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Fully Diluted $ .66 $ .57 $ 1.28 $ 1.11
- -------------------------------------------- --- -------------- --- ------------- -- ------------- -- --------------
Average Shares Used in Computation:
Primary 21,580,415 21,219,013 21,540,955 21,212,762
- -------------------------------------------- ------------------ ----------------- ---------------- -----------------
Fully Diluted 24,442,369 24,054,503 24,469,382 24,033,228
====================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>12
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
June 30, December 31, June 30,
1997 1996 1996
------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 373,533 $ 322,791 $ 290,139
Funds sold 78,432 44,760 16,755
Trading securities 5,974 6,454 6,055
Securities:
Available for sale 1,713,075 1,459,122 1,440,331
Investment (fair value: June 30, 1997 - $202,272;
December 31, 1996 -$199,549;
June 30, 1996 - $191,420) 202,716 198,408 194,386
- --------------------------------------------------------------------------------------------------------------------
Total securities 1,915,791 1,657,530 1,634,717
- --------------------------------------------------------------------------------------------------------------------
Loans 2,629,243 2,394,580 2,244,698
Less reserve for loan losses 49,871 45,148 42,807
- --------------------------------------------------------------------------------------------------------------------
Net loans 2,579,372 2,349,432 2,201,891
- --------------------------------------------------------------------------------------------------------------------
Premises and equipment, net 61,173 47,479 48,659
Accrued revenue receivable 50,635 46,020 43,807
Excess cost over fair value of net assets acquired
and core deposit premiums (net of accumulated
amortization: June 30, 1997 - $34,884;
December 31, 1996 - $30,758;
June 30, 1996 - $28,279) 72,501 28,276 30,755
Mortgage servicing rights 74,583 61,544 61,815
Real estate and other repossessed assets 5,564 4,576 3,823
Other assets 74,612 51,838 67,285
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 5,292,170 $ 4,620,700 $ 4,405,701
====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 881,829 $ 696,853 $ 758,173
Interest-bearing deposits:
Transaction 1,017,113 954,546 838,930
Savings 108,502 97,019 103,486
Time 1,538,865 1,508,337 1,510,704
- --------------------------------------------------------------------------------------------------------------------
Total deposits 3,546,309 3,256,755 3,211,293
- --------------------------------------------------------------------------------------------------------------------
Funds purchased and repurchase
agreements 786,314 669,176 522,031
Other borrowings 480,981 277,128 291,320
Accrued interest, taxes and expense 47,017 46,047 51,078
Other liabilities 22,089 11,628 14,904
Subordinated debenture 20,000 - -
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 4,902,710 4,260,734 4,090,626
- --------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 23 23 23
Common stock ($.00006 par value; 2,500,000,000
shares authorized; shares issued and outstanding
June 30, 1997 - 21,234,185; December 31, 1996
- 21,148,729; June 30, 1996 - 20,458,215) 1 1 1
Capital surplus 177,951 176,093 158,297
Retained earnings 213,553 182,892 172,563
Treasury stock (shares at cost: June 30, 1997 -
40,451; December 31, 1996 - 16,834) (1,181) (428) -
Unrealized gain/(loss) on securities available for sale (882) 1,472 (15,676)
Less notes receivable from exercise of stock options (5) (87) (133)
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 389,460 359,966 315,075
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 5,292,170 $ 4,620,700 $ 4,405,701
====================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>13
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY
(In Thousands)
Preferred Stock Common Stock Capital Retained Treasury Stock Unrealized Notes
-------------------------------------- --------------------
Shares Amount Shares Amount Surplus Earnings Shares Amount Gain(Loss) Receivable Total
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December
31, 1995 250,102 $ 23 20,416 $ 1 $157,395 $ 146,727 - $ - $ (2,427) $ (154) $ 301,565
Net income - - - - - 26,586 - - - - 26,586
Issuanceof common
stock to Thrift
Plan - - - - - - - - - - -
Exercise of stock
options - - 5 - 69 - - - - - 69
Payments on stock
option notes receivable - - - - - - - - - 21 21
Preferred dividends
paid in shares of
stock common - - 33 - 750 (750) - - - - -
Director retainer
shares - - 4 - 83 - - - - - 83
Change in unrealized
net gain(loss)on securities
available for sale - - - - - - - - (13,249) - (13,249)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at
June 30, 1996 250,102 $ 23 20,458 $ 1 $158,297 $172,563 - $ - $ (15,676) $ (133) $ 315,075
====================================================================================================================================
Balances at December
31, 1996 250,102 $ 23 21,149 $ 1 $176,093 $182,892 17 $ (428) $ 1,472 $ (87) $359,966
Net income - - - - - 31,411 - - - - 31,411
Issuance of common
stock to Thrift Plan - - 5 - 169 - - - - - 169
Exercise of stock options - - 44 - 833 - 24 (753) - - 80
Payments on stock option
notes receivable - - - - - - - - - 82 82
Preferred dividends paid
in shares of common
stock - - 32 - 750 (750) - - - - -
Director retainer shares - 4 - 106 - - - - - 106
Change in unrealized net
gain(loss) on securities
available for sale - - - - - - - - (2,354) - (2,354)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at
June 30, 1997 205,102 $ 23 21,234 $ 1 $177,951 $213,553 41 $(1,181) $ (882) $ (5) $389,460
====================================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>14
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands Except Share Data)
Six Months Ended
June 30,
------------------------------------------------
1997 1996
------------------------------------------------
<S> <C> <C>
Cash Flow From Operating Activities:
Net income $ 31,411 $ 26,586
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan and repossessed real estate losses 2,526 3,848
Depreciation and amortization 14,277 11,202
Valuation adjustment of intangible assets - 3,821
Net amortization of security discounts and premiums 1,567 1,240
Net gain on sale of assets (2,949) (885)
Mortgage loans originated for resale (371,012) (377,699)
Proceeds from sale of mortgage loans held for resale 391,279 377,035
Decrease in trading securities 480 1,722
(Increase) decrease in accrued revenue receivable 1,002 (2,686)
Increase in other assets (9,764) (21,635)
Increase in accrued interest, taxes and expense 1,486 11,050
Increase (decrease) in other liabilities 3,235 (517)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 63,538 33,082
- --------------------------------------------------------------------------------------------------------------------
Cash Flow From Investing Activities:
Proceeds from maturities of investment securities 11,878 17,092
Proceeds from maturities of available for sale securities 125,631 154,199
Purchases of investment securities (16,257) (32,528)
Purchases of available for sale securities (647,655) (474,321)
Proceeds from sales of available for sale securities 415,956 219,771
Loans originated or acquired net or principal collected (118,266) (74,202)
Proceeds from sales of assets 4,125 27,995
Purchases of assets (38,398) (15,235)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net (1,240) (200)
- --------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (264,226) (177,429)
- --------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase in demand deposits, transaction
deposits, money market deposits, and savings accounts 21,553 163,524
Net increase (decrease) in certificates of deposit (77,589) 110,060
Net increase (decrease) in other borrowings 320,701 (134,455)
Issuance of subordinated debenture 20,000 -
Issuance of preferred, common and treasury stock, net 355 152
Payments on stock option notes receivable 82 21
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 285,102 139,302
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 84,414 (5,045)
Cash and cash equivalents at beginning of period 367,551 311,939
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 451,965 $ 306,894
====================================================================================================================
Cash paid for interest $ 91,170 $ 78,157
- --------------------------------------------------------------------------------------------------------------------
Cash paid for taxes $ 12,412 $ 5,065
- --------------------------------------------------------------------------------------------------------------------
Net loans transferred to repossessed real estate
and other assets $ 1,140 $ 778
- --------------------------------------------------------------------------------------------------------------------
Payment of preferred stock dividends in common stock $ 750 $ 750
- --------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>15
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 subsidiaries, primarily
Bank of Oklahoma, N.A. ("BOk"), Bank of Arkansas N.A. (formerly Citizens Bank of
Northwest Arkansas, N.A.), First National Bank of Park Cities, and First Texas
Bank. Certain prior period balances have been reclassified to conform with the
current period presentation.
(2) MORTGAGE BANKING ACTIVITIES
At June 30, 1997, BOk owned the rights to service 86,206 mortgage loans with
outstanding principal balances of $6.2 billion, including $217 million serviced
for BOk. The weighted average interest rate and remaining term was 7.70% and 279
months, respectively.
Activity in capitalized mortgage servicing rights and related valuation
allowance during the six months ending June 30, 1997 is as follows:
<TABLE>
Capitalized Mortgage Servicing Rights
------------------------------------------------------------------------------------
Valuation
Purchased Originated Total Allowance Net
------------------ ------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1996 $ 57,256 $ 5,188 $ 62,444 $ (900) $ 61,544
Additions 16,190 2,101 18,291 - 18,291
Amortization expense (4,652) (600) (5,252) - (5,252)
- ------------------------------ -- ------------ --- ------------ -- ------------ --- ------------ -- ---------------
Balance at
June 30, 1997 $ 68,794 $ 6,689 $ 75,483 $ (900) $ 74,583
===================================================================================================================
Estimated fair value of
mortgage servicing
rights (1) $ 80,730 $ 12,065 $ 92,795 $ - $ 92,795
===================================================================================================================
(1) Excludes approximately $16.0 million of loan servicing rights on mortgage
loans originated prior to the adoption of FAS 122.
</TABLE>
(3) DISPOSAL OF AVAILABLE FOR SALE SECURITIES
Sales of available for sale securities for the six months ending June 30, 1997
resulted in gains and losses as follows (in thousands):
Proceeds $ 415,956
Gross realized gains 565
Gross realized losses 503
Related federal and state
income tax expense (benefit) 20
<PAGE>16
(4) EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share, which is required to be adopted on December 31, 1997.
At that time, BOKF will be required to change the method currently used to
compute earnings per share and to restate for all periods presented. This new
standard requires the disclosure of basic earnings per share and diluted
earnings per share in place of primary and fully diluted earnings per share. The
pro forma results of applying FAS 128 to the second quarter of 1997 are basic
earnings per share of $0.74 and diluted earnings per share of $0.66, and for the
six month period ending June 30, 1997 are basic earnings per share of $1.45 and
diluted earnings per share of $1.30.
(5) 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.
BOk has been sued in the United States District Court for the Northern District
of Oklahoma by the holder of a mortgage serviced by BOk Mortgage. The plaintiff
alleges that Bok required the mortgagor to maintain an escrow balance in excess
of the amount permitted by the mortgage. The plaintiff seeks to have the action
certified as a class action and the action has conditionally been transferred to
the Multi-District Litigation docket. The plaintiff alleges breach of contract,
breach of fiduciary duty, and violation of the Racketeer Influenced and Corrupt
Organizations Act and seeks treble damages. No discovery has been conducted in
the action and amount in controversy is unknown. Management has been advised by
counsel that, based upon the limited investigation done to date, BOk has valid
defenses to the plaintiffs' claims.
<PAGE>17
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
THREE MONTH FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Six months ended
------------------------------------------------------------------------------------------
June 30, 1997 June 30, 1996
-------------------------------------------- -----------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Taxable securities $ 1,559,622 $ 48,361 6.25% $ 1,277,475 $ 38,310 6.03%
Tax-exempt securities(1) 342,064 13,001 7.66 275,926 10,270 7.48
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities 1,901,686 61,362 6.51 1,553,401 48,580 6.29
- -----------------------------------------------------------------------------------------------------------------------------------
Trading securities 4,676 141 6.08 6,210 195 6.31
Funds sold 54,037 1,528 5.70 35,341 976 5.55
Loans(2) 2,475,083 107,296 8.74 2,211,567 96,950 8.82
Less reserve for loan losses 47,974 39,638 - -
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve 2,427,109 107,296 8.91 2,171,929 96,950 8.98
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 4,387,508 170,327 7.83 3,766,881 146,701 7.83
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 554,592 462,542
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 4,942,100 $ 4,229,423
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,010,489 16,335 3.26 $ 818,426 13,247 3.25
Savings deposits 106,461 1,168 2.21 103,602 1,253 2.43
Other time deposits 1,570,712 43,058 5.53 1,569,160 43,927 5.63
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 2,687,662 60,561 4.54 2,491,188 58,427 4.72
- -----------------------------------------------------------------------------------------------------------------------------------
Other borrowings 1,071,902 30,369 5.71 755,233 21,160 5.63
Subordinated debenture 13,039 422 6.44 0 - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 3,772,603 91,352 4.88 3,246,421 79,587 4.93
- -----------------------------------------------------------------------------------------------------------------------------------
Demand deposits 732,666 609,299
Other liabilities 65,895 62,423
Shareholders' equity 370,936 311,280
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and $ 4,942,100 $ 4,229,423
shareholders' equity
- -----------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue(1) 78,975 2.95 67,114 2.90
Tax-Equivalent Net Interest Revenue (1)
To Earning Assets 3.63 3.58
Less tax-equivalent adjustment(1) 4,745 3,865
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 74,230 63,249
Provision for loan losses 2,526 3,848
Other operating revenue 61,863 50,550
Other operating expense 87,169 80,416
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 46,398 29,535
Federal and state income tax 14,987 2,949
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 31,411 $ 26,586
===================================================================================================================================
Earnings Per Share:
Net Income
Primary $ 1.42 $ 1.22
- -----------------------------------------------------------------------------------------------------------------------------------
Fully Diluted $ 1.28 $ 1.11
===================================================================================================================================
(1) Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments shown
are for
comparative purposes.
(2) The loan averages included loans on which the accrual of interest has been
discontinued and are stated net of unearned income.
</TABLE>
<PAGE>18
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
------------------------------------------------------------------------------------------
June 30, 1997 March 31, 1997
--------------------------------------------- ------------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Taxable securities $ 1,634,264 $ 25,793 6.33% $ 1,484,137 $ 22,861 6.25%
Tax-exempt securities(1) 344,558 6,572 7.65 339,542 6,135 7.33
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities 1,978,822 32,365 6.56 1,823,679 28,996 6.45
- -----------------------------------------------------------------------------------------------------------------------------------
Trading securities 5,552 83 6.00 3,790 58 6.21
Funds sold 57,072 817 5.74 50,967 711 5.66
Loans(2) 2,535,264 55,850 8.84 2,414,234 51,446 8.64
Less reserve for loan losses 49,164 - - 46,771 - -
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve 2,486,100 55,850 9.01 2,367,463 51,446 8.81
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 4,527,546 89,115 7.89 4,245,899 81,211 7.76
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 576,578 532,386
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 5,104,124 $ 4,778,285
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,032,622 8,348 3.24 $ 988,110 7,987 3.28
Savings deposits 109,349 604 2.22 103,542 564 2.21
Other time deposits 1,576,211 21,625 5.50 1,565,153 21,433 5.55
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 2,718,182 30,577 4.51 2,656,805 29,984 4.58
- -----------------------------------------------------------------------------------------------------------------------------------
Other borrowings 1,151,971 16,700 5.81 990,944 13,668 5.59
Subordinated debenture 20,000 326 6.45 6,000 96 6.40
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 3,890,153 47,603 4.91 3,653,749 43,748 4.86
- -----------------------------------------------------------------------------------------------------------------------------------
Demand deposits 776,405 688,440
Other liabilities 63,664 68,159
Shareholders' equity 373,902 367,937
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and $ 5,104,124 $ 4,778,285
shareholders' equity
- -----------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue (1) 41,512 2.98 37,463 2.90
Tax-Equivalent Net Interest Revenue (1)
To Earning Assets 3.68 3.58
Less tax-equivalent adjustment (1) 2,344 2,401
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 39,168 35,062
Provision for loan losses 1,500 1,026
Other operating revenue 31,411 30,452
Other operating expense 45,443 41,726
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 23,636 22,762
Federal and state income tax 7,572 7,415
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 16,064 $ 15,347
===================================================================================================================================
Earnings Per Share:
Net Income
Primary $ 0.73 $ 0.70
- -----------------------------------------------------------------------------------------------------------------------------------
Fully Diluted $ 0.66 $ 0.63
===================================================================================================================================
(1) Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments
shown are for comparative purposes.
(2) The loan averages include loans on which the accrual of interest has been
discontinued and are stated net of unearned income.
</TABLE>
<PAGE>19
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
For Three months ended
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1996 September 30, 1996 June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate Balance Expense(1) /Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,326,104 $ 20,042 6.01% $ 1,281,588 $ 19,610 6.09% $ 1,258,382 $ 18,841 6.02%
330,195 6,129 7.38 315,844 5,920 7.46 304,450 5,720 7.56
- -----------------------------------------------------------------------------------------------------------------------------------
1,656,299 26,171 6.29 1,597,432 25,530 6.36 1,562,832 24,561 6.32
- -----------------------------------------------------------------------------------------------------------------------------------
3,870 72 7.40 4,116 73 7.06 6,416 100 6.27
24,949 356 5.68 21,040 298 5.63 43,274 574 5.33
2,329,981 50,414 8.61 2,254,863 49,173 8.68 2,233,711 49,085 8.84
45,455 - - 43,510 - -- 40,311 - -
- -----------------------------------------------------------------------------------------------------------------------------------
2,284,526 50,414 8.78 2,211,353 49,173 8.85 2,193,400 49,085 9.00
- -----------------------------------------------------------------------------------------------------------------------------------
3,969,644 77,013 7.72 3,833,941 75,074 7.79 3,805,922 74,320 7.85
- -----------------------------------------------------------------------------------------------------------------------------------
475,824 469,575 468,001
- -----------------------------------------------------------------------------------------------------------------------------------
$ 4,445,468 $ 4,303,516 $ 4,273,923
- -----------------------------------------------------------------------------------------------------------------------------------
$ 891,053 7,678 3.43 $ 864,904 7,411 3.41 $ 832,127 6,860 3.32
96,609 595 2.45 101,328 616 2.42 103,274 624 2.43
1,533,447 21,582 5.60 1,548,832 21,757 5.59 1,605,179 22,122 5.54
- -----------------------------------------------------------------------------------------------------------------------------------
2,521,109 29,855 4.71 2,515,064 29,784 4.71 2,540,580 29,606 4.69
- -----------------------------------------------------------------------------------------------------------------------------------
887,502 12,707 5.70 780,037 11,160 5.69 732,122 10,167 5.59
- - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
3,408,611 42,562 4.97 3,295,101 40,944 4.94 3,272,702 39,773 4.89
- -----------------------------------------------------------------------------------------------------------------------------------
633,441 631,981 629,973
60,023 53,609 58,979
343,393 322,825 312,269
- -----------------------------------------------------------------------------------------------------------------------------------
$ 4,445,468 $ 4,303,516 $ 4,273,923
- -----------------------------------------------------------------------------------------------------------------------------------
34,451 2.75 34,130 2.85 34,547 2.96
3.45 3.54 3.65
2,207 2,184 2,100
- -----------------------------------------------------------------------------------------------------------------------------------
32,244 31,946 32,447
357 62 2,937
27,534 27,228 23,966
38,315 40,297 42,774
- -----------------------------------------------------------------------------------------------------------------------------------
21,106 18,815 10,702
6,540 5,840 (2,889)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 14,566 $ 12,975 $ 13,591
===================================================================================================================================
$ 0.66 $ 0.59 $ 0.62
- -----------------------------------------------------------------------------------------------------------------------------------
$ 0.60 $ 0.54 $ 0.57
===================================================================================================================================
</TABLE>
<PAGE>20
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, 1997.
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: August 11, 1997 /s/ James A. White
---------------- -------------------
James A. White
Executive Vice President and
Chief Financial Officer
<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 June 30, 1997 and is
qualified in its entiriety by reference to such financial statements.
</LEGEND>
<CIK> 0000875357
<NAME> BOK Financial Corporation
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 373,433
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 78,432
<TRADING-ASSETS> 5,974
<INVESTMENTS-HELD-FOR-SALE> 1,713,075
<INVESTMENTS-CARRYING> 202,716
<INVESTMENTS-MARKET> 202,272
<LOANS> 2,629,243
<ALLOWANCE> 49,871
<TOTAL-ASSETS> 5,292,170
<DEPOSITS> 3,546,309
<SHORT-TERM> 467,748
<LIABILITIES-OTHER> 69,106
<LONG-TERM> 799,547
0
23
<COMMON> 1
<OTHER-SE> 389,436
<TOTAL-LIABILITIES-AND-EQUITY> 5,292,170
<INTEREST-LOAN> 107,199
<INTEREST-INVEST> 56,714
<INTEREST-OTHER> 1,528
<INTEREST-TOTAL> 165,582
<INTEREST-DEPOSIT> 60,561
<INTEREST-EXPENSE> 91,352
<INTEREST-INCOME-NET> 74,230
<LOAN-LOSSES> 2,526
<SECURITIES-GAINS> 62
<EXPENSE-OTHER> 87,169
<INCOME-PRETAX> 46,398
<INCOME-PRE-EXTRAORDINARY> 46,398
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,411
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.28
<YIELD-ACTUAL> 3.63
<LOANS-NON> 23,694
<LOANS-PAST> 17,976
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 62,220
<ALLOWANCE-OPEN> 48,517
<CHARGE-OFFS> 1,422
<RECOVERIES> 1,276
<ALLOWANCE-CLOSE> 49,871
<ALLOWANCE-DOMESTIC> 49,871
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
