As filed with the Securities and Exchange Commission on August 14, 1998
- --------------------------------------------------------------------------------
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, 1998
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 ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 21,863,898 shares of
common stock ($.00006 par value) as of July 31, 1998.
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<PAGE>2
BOK Financial Corporation
Form 10-Q
Quarter Ended June 30, 1998
Index
Part I. Financial Information
Management's Discussion and Analysis 2
Report of Management on Consolidated
Financial Statements 11
Consolidated Statements of Earnings 12
Consolidated Balance Sheets 13
Consolidated Statements of Changes
in Shareholders' Equity 14
Consolidated Statements of Cash Flows 15
Notes to Consolidated Financial Statements 16
Financial Summaries - Unaudited 18
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 21
Signature 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
HIGHLIGHTS
BOK Financial Corporation ("BOK Financial") recorded net income of $20.4 million
or $0.81 per diluted common share for the second quarter of 1998 compared to
$16.1 million or $0.64 per diluted common share for the second quarter of 1997.
Returns on average assets and equity were 1.50% and 17.99%, respectively,
compared to returns on average assets and equity of 1.26% and 17.23%,
respectively, for the second quarter of 1997.
Year to date net income and earnings per diluted common share were $36.8 million
or $1.46, respectively for 1998 compared to $31.4 million or $1.26,
respectively, for the same period of 1997. Returns on average assets and equity
were 1.35% and 16.47%, respectively, for 1998 compared to returns on average
assets and equity of 1.28% and 17.08%, respectively, for 1997.
The increase in net income for the second quarter of 1998 was due to increases
of $9.4 million or 29.8% in fees and commissions revenue and $5.3 million or
13.5% in net interest revenue. Additionally, securities gains totaled $3.3
million for the second quarter of 1998 compared to securities losses of $200
thousand in the second quarter of 1997. These increases were partially offset by
increases of $8.4 million or 18.4% in operating expenses and $2.5 million in
provision for loan losses.
On July 27, 1998, BOK Financial announced an agreement to purchase 17 banking
offices in New Mexico from Bank of America, N.A., including 15 offices in
Albuquerque. This acquisition, which will add approximately $500 million of
deposits and $167 million of loans, is expected to be completed during the
fourth quarter of 1998, subject to regulatory approval.
<PAGE>3
RESULTS OF OPERATIONS
Net interest revenue on a tax-equivalent basis was $46.8 million for the second
quarter of 1998 compared to $41.5 million for the second quarter of 1997, an
increase of $5.3 million or 12.7%. Net interest revenue for second quarter of
1998 included $1.5 million from the non-recurring collection of foregone
interest. This amount has been excluded from the subsequent discussion of
changes in net interest revenue and net interest margin. Average earning assets
increased by $278 million, including an increase in average loans of $303
million, partially offset by decreases in average securities and funds sold of
$14 million and $19 million, respectively. Interest bearing liabilities
increased $146 million, primarily due to increases in time deposits of $142
million and interest bearing transaction accounts of $152 million, partially
offset by a $150 million decrease in borrowed funds. Demand deposits and
shareholders' equity, which are additional sources of funding asset growth,
increased $119 million and $82 million, respectively. The growth in average
earning assets in excess of the growth in interest bearing liabilities
contributed $5.0 million to the increase in net interest revenue.
Year to date, net interest revenue increased by $12.2 million compared to 1997.
Excluding the non-recurring collection of foregone interest in 1998, this
represented a 14.6% increase in net interest revenue due primarily to the growth
of earning assets in excess of the growth in interest bearing liabilities.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 1 - VOLUME/RATE ANALYSIS
(In thousands)
Three months ended Six months ended
June 30, 1998/1997 June 30, 1998/1997
---------------------------------------------------------------------------
Change Due To (1) Change Due To (1)
------------------------ ------------------------
Yield Yield
Change Volume /Rate Change Volume /Rate
---------------------------------------------------------------------------
Tax-equivalent interest revenue:
<S> <C> <C> <C> <C> <C> <C>
Securities $(1,073) $ (305) $ (768) $ 3,413 $ 3,917 $ (504)
Trading securities 179 216 (37) 284 333 (49)
Loans 5,754 6,621 (867) 15,045 15,370 (325)
Funds sold (246) (285) 39 (266) (339) 73
- ---------------------------------------------------------------------------------------------------------------------
Total 4,614 6,247 (1,633) 18,476 19,281 (805)
- ---------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest bearing transaction deposits 920 1,211 (291) 1,850 2,457 (607)
Savings deposits 13 10 3 51 43 8
Time deposits 2,015 1,948 67 4,446 4,340 106
Other borrowings (4,294) (3,994) (300) (3,005) (3,115) 110
Subordinated debenture 2,138 2,113 25 4,409 4,394 15
- ---------------------------------------------------------------------------------------------------------------------
Total 792 1,288 (496) 7,751 8,119 (368)
- ---------------------------------------------------------------------------------------------------------------------
Tax-equivalent net interest revenue
before nonrecurring foregone interest 3,822 $ 4,959 $ (1,137) $ 10,725 $ 11,162 $ (437)
Non-recurring foregone interest 1,468 1,468
Change in tax-equivalent adjustment (6) (77)
- ---------------------------------------------------------------------------------------------------------------------
Net interest revenue $ 5,296 $ 12,270
- ---------------------------------------------------------------------------------------------------------------------
(1) Changes attributable to both volume and yield are allocated to both volume and yield/rate on an equal basis.
</TABLE>
Since inception, BOK Financial has completed acquisitions which were accounted
for under the purchase method of accounting. The purchase method results in the
recording of goodwill and other identifiable intangible assets that are
amortized as noncash charges in future years into operating expense. This is in
contrast to the "pooling of interest" method, which is only applicable in
certain limited circumstances. The pooling of interests method does not result
in the recording of goodwill or other intangible assets. Since the amortization
of goodwill and other intangible assets does not result in a current period cash
expense, the economic value to shareholders under either accounting method is
essentially the same. Operating results excluding the impact of these intangible
assets are summarized below:
<PAGE>4
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TABLE 2 - TANGIBLE OPERATING RESULTS
(Dollars in Thousands Except Share Data)----------------------------
Six months ended
-------------------------------
June 30, June 30,
1998 1997
--------------- ---------------
Net income $ 36,751 $ 31,411
After-tax impact of amortization of
intangible assets 4,114 3,748
- --------------------------------------------------------------- ---------------
Tangible net income $ 40,865 $ 35,159
- --------------------------------------------------------------- ---------------
Tangible net income per diluted share $ 1.62 $ 1.41
- --------------------------------------------------------------- ---------------
Average tangible shareholders' equity $ 383,917 $ 309,279
Return on tangible shareholders' equity 21.46% 22.92%
- --------------------------------------------------------------- ---------------
Average tangible assets $5,436,885 $4,880,443
Return on tangible assets 1.52% 1.45%
- --------------------------------------------------------------- ---------------
Net interest margin, the ratio of net interest revenue to average earning
assets, was 3.78% for the second quarter of 1998 compared to 3.68% for the
second quarter of 1997. The yield on earning assets decreased 7 basis points to
7.82% due primarily to decreases in yields on loans and securities. Average
loans, which generally are the highest yielding category of earning assets,
increased to 57.9% of total earning assets for the second quarter of 1998
compared to 54.9% in the second quarter of 1997. This change in the composition
of earning assets partially offset the decreases in yields on loans and
securities. At the same time, the cost of interest bearing liabilities decreased
10 basis points to 4.81%. The cost of interest bearing deposits and other
borrowings decreased by 5 basis points and 11 basis points, respectively while
the cost of subordinated debt increased by 21 basis points. Average deposits,
which generally are the lowest costing category of interest bearing liabilities
increased to 74.7% of total interest bearing liabilities for the second quarter
of 1998 compared to 69.9% for the second quarter of 1997. This shift in the mix
of interest bearing liabilities also contributed to the decrease in the cost of
funds. Additionally, an increase in the total non-interest bearing funding
sources, primarily demand deposits and capital, contributed 7 basis points to
the increase in net interest margin.
Since inception in 1990, BOK Financial has followed a strategy of fully
utilizing its capital resources by borrowing funds in the capital markets to
supplement deposit growth and to invest in securities. Although this strategy
frequently results in a net interest margin which falls below those normally
seen in the commercial banking industry, it provides positive net interest
revenue. Management estimates that for the second quarter of 1998, this strategy
resulted in a 37 basis point decrease in net interest margin. However, this
strategy contributed $2.3 million to net interest revenue. As more fully
discussed in the Market Risk section, management employs various techniques to
control, within established parameters, the interest rate and liquidity risk
inherent in this strategy.
Other operating revenue increased $12.9 million or 41.2% compared to the same
quarter of 1997. Total fees and commissions, which are included in other
operating revenue, increased $9.4 million or 29.8%. All categories of fee income
showed increases over the first quarter of 1997. Most notably, mortgage banking
revenue increased $3.5 million due to a $1.2 million increase in mortgage
servicing fees and a $2.3 million increase in secondary marketing income.
Declining mortgage interest rates over the first half of 1998 has significantly
increased the mortgage loan refinancing activity. This refinancing activity had
a positive effect on earnings through gains on loans sold in the secondary
market. However, the refinancing activity had a negative effect on earnings
through increased amortization expense and, potentially, increased impairment
risk on capitalized mortgage loan servicing rights. Loans serviced by BOK
Mortgage, a division of BOk, totaled $6.8 billion at June 30, 1998.
Additionally, trust fees and brokerage and trading revenue each increased $1.8
million. Other operating revenue also included gains on securities sales of $3.3
million in the second quarter of 1998 compared to net losses on securities sales
of $200 thousand for the second quarter of 1997. The security sales in the
second quarter 1998 were made principally to position the investment portfolio
to perform better in a declining rate environment.
<PAGE>5
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
TABLE 3 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
-------------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1998 1998 1997 1997 1997
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brokerage and trading revenue $ 4,051 $ 3,131 $ 2,565 $ 2,522 $ 2,229
Transaction card revenue 6,010 5,540 4,828 5,770 4,742
Trust fees and commissions 7,654 6,884 6,528 6,405 5,851
Service charges and fees
on deposit accounts 7,440 7,638 7,570 7,255 7,112
Mortgage banking revenue 10,940 9,321 9,411 8,416 7,460
Leasing revenue 1,804 1,661 1,522 1,566 1,512
Other revenue 3,017 2,685 3,198 1,546 2,614
- -------------------------------------------------------------------------------------------------------------------------
Total fees and commissions 40,916 36,860 35,622 33,480 31,520
- -------------------------------------------------------------------------------------------------------------------------
Gain on student loan sales 119 1,415 99 26 91
Gain (loss) on securities 3,320 2,512 (2,200) 809 (200)
- -------------------------------------------------------------------------------------------------------------------------
Total other operating revenue $ 44,355 $ 40,787 $ 33,521 $ 34,315 $ 31,411
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Year to date, other operating revenue increased $23.3 million or 37.6%. This
included an increase of $17.2 million or 28.3% in fee and commission revenue due
to increases in all categories of other operating revenue.
Other operating expenses for the second quarter of 1998 increased $8.4 million
or 18.4% compared to the second quarter of 1997. Excluding the effects of
significant or non-recurring items as shown in Table 5, operating expenses
increased $9.5 million or 20.7%. Personnel costs increased $4.6 million due to
increased staffing, normal compensation increases and increased incentive
compensation. Staffing on a full-time equivalent ("FTE") basis increased by 213
employees while average compensation per FTE increased by 7.2%. These changes
reflect the addition of several senior level positions in both the lending and
operations areas as well as related support staff in the second half of 1997.
Incentive compensation, which varies directly with revenue increased $1.2
million to $2.9 million for the quarter. Occupancy, equipment and data
processing costs increased $2.3 million or 28.4%, which included increases of
$1.0 million in net occupancy costs and $1.3 million in data processing costs.
The increase in occupancy costs was due primarily to the conversion of BOK
Financial's ownership in its Oklahoma City headquarters building from a
controlling interest to a limited interest. This change caused the entity which
owns the building to no longer be consolidated in the financial statements of
BOK Financial. A significant portion of BOK Financial's data processing is
outsourced to third parties, therefore, data processing costs are directly
related to the volume of transactions processed. Mortgage banking costs
increased $1.9 million or 42.6% due to increased amortization of capitalized
servicing rights and a greater volume of loans originated.
<PAGE>6
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 4 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
-----------------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1998 1998 1997 1997 1997
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personnel $ 25,715 $ 24,829 $ 24,811 $ 22,475 $ 21,148
Business promotion 1,662 1,897 2,450 2,067 2,190
Contribution of stock to BOK
Charitable Foundation - 2,257 3,638 - -
Professional fees/services 2,308 1,596 2,123 1,579 1,571
Net occupancy, equipment
and data processing 10,594 9,214 10,426 8,618 8,250
FDIC and other insurance 345 310 258 374 328
Printing, postage and supplies 2,223 2,047 2,220 1,817 1,921
Net gains and operating
expenses on repossessed assets (315) (55) (1,553) (1,662) (222)
Amortization of intangible
assets 2,272 2,302 2,336 2,362 2,398
Mortgage banking costs 6,290 6,023 6,137 5,202 4,412
Provision for impairment of
mortgage servicing rights (1,000) 3,000 4,100 - -
Other expense 3,710 3,773 4,331 3,888 3,447
- ---------------------------------------------------------------------------------------------------------------------
Total $ 53,804 $ 57,193 $ 61,277 $ 46,720 $ 45,443
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
During the second quarter of 1998, BOK Financial implemented a program which
uses futures contracts, call options and put options to hedge against the effect
of changes in interest rates on the value of the mortgage servicing portfolio.
This program resulted in net realized gains of $580 thousand and net unrealized
gains of $1.6 million, which are recorded as reductions to the carrying value of
the hedged mortgage servicing rights. As a result of these reductions in the
carrying value of mortgage servicing rights, the valuation allowance associated
with the mortgage servicing rights was reduced by $1.0 million. The effect of
the hedging program on the risk of loss on the mortgage servicing portfolio due
to changes in interest rates is discussed in the Market Risk section of this
report.
The efficiency ratio, the ratio of other operating expenses, excluding net gains
on real estate sales and the previously discussed large or non-recurring
transactions, to tax-equivalent net interest revenue and other operating
revenue, excluding securities gains and losses was 62.8% for the second quarter
of 1998 compared to 62.5% for the second quarter of 1997.
Year to date, operating expenses increased $23.8 million or 27.3%. Excluding
significant or non-recurring items, operating expenses increased $19.3 million
or 22.0% due to the same factors which contributed to the quarterly increases.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS
(In thousands)
Three Months Ended
-------------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1998 1998 1997 1997 1997
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total other operating expense $ 53,804 $ 57,193 $ 61,277 $ 46,720 $ 45,443
Contribution of stock to BOk
Charitable Foundation - (2,257) (3,638) - -
Provision for impairment of mortgage
Servicing rights 1,000 (3,000) (4,100) - -
Net gains and operating costs from
repossessed assets 315 55 1,553 1,662 222
- ---------------------------------------------------------------------------------------------------------------------
Total $ 55,119 $ 51,991 $ 55,092 $ 48,382 $ 45,665
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>7
RISK ELEMENTS
The aggregate loan portfolio at June 30, 1998 increased $47 million to $2.9
billion during the second quarter of 1998. Commercial loans increased $12
million and commercial real estate loans increased $63 million, respectively,
while residential mortgage loans decreased $34 million. The aggregate growth in
the loan portfolio during the second quarter of 1998 included increases for Bank
of Texas, N.A. of $26 million.
BOK Financial has achieved some geographic diversification through acquisitions
and expansion into Northwest Arkansas, North Texas and New Mexico. However, the
majority of commercial and consumer loans are to businesses and individuals in
Oklahoma. This geographic concentration subjects the loans portfolio to the
general economic conditions in Oklahoma. Notable loan concentrations by the
primary industry of the borrowers are presented in Table 6.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 6 - LOANS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
1998 1998 1997 1997 1997
---------------------------------------------------------------------------------
Commercial:
<S> <C> <C> <C> <C> <C>
Energy $ 315,051 $ 324,052 $ 332,770 $ 333,347 $ 281,801
Manufacturing 223,540 222,385 201,918 185,795 170,052
Wholesale/retail 275,544 250,702 242,156 255,768 265,547
Agricultural 133,148 159,324 151,525 155,052 142,908
Services 496,347 473,684 465,317 416,871 381,452
Other commercial and industrial 138,278 139,516 105,714 168,028 186,065
Commercial real estate:
Construction and land development 139,323 123,412 102,800 79,275 74,595
Multifamily 115,821 95,335 100,422 110,340 115,188
Other real estate loans 310,417 283,329 274,579 258,280 244,944
Residential mortgage:
Secured by 1-4 family
residential properties 390,765 404,481 419,139 414,050 423,123
Residential mortgages held for 98,912 118,777 78,669 103,300 79,438
sale
Consumer 245,722 241,299 290,084 289,892 264,130
- ---------------------------------------------------------------------------------------------------------------------
Total $ 2,882,868 $ 2,836,296 $ 2,765,093 $ 2,769,998 $ 2,629,243
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Nonperforming assets totaled $41.9 million at June 30, 1998, a decrease of $618
thousand from March 31, 1998. Nonaccrual loans decreased $4.1 million due
primarily to the payoff of two loans previously reported as nonaccruing
partially offset by a $3.2 million increase in loans past due over 90 days which
are still accruing interest.
<PAGE>8
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 7 - NONPERFORMING ASSETS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
1998 1998 1997 1997 1997
------------------------------------------------------------------------
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
<S> <C> <C> <C> <C> <C>
Commercial $ 9,045 $ 12,556 $ 12,717 $ 16,103 $ 16,556
Commercial real estate 2,473 2,824 2,960 3,854 3,721
Residential mortgage 2,072 2,243 2,441 2,512 2,641
Consumer 1,145 1,192 649 713 776
- ---------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 14,735 18,815 18,767 23,182 23,694
Loans past due (90 days) (1) 21,568 18,330 18,178 20,551 17,976
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming loans (1) 36,303 37,145 36,945 43,733 41,670
- ---------------------------------------------------------------------------------------------------------------------
Other nonperforming assets:
Commercial real estate 4,515 2,297 2,395 2,503 2,594
Other 1,075 3,069 2,863 2,684 2,970
- ---------------------------------------------------------------------------------------------------------------------
Total other nonperforming assets 5,590 5,366 5,258 5,187 5,564
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 41,893 $ 42,511 $ 42,203 $ 48,920 $ 47,234
- ---------------------------------------------------------------------------------------------------------------------
Ratios:
Reserve for loan losses to
nonperforming loans 159.17% 147.63% 143.73% 119.80% 119.68%
Nonperforming loans (1) to
period-end loans (2) 1.30 1.37 1.38 1.64 1.63
- ---------------------------------------------------------------------------------------------------------------------
(1) Includes 1-4 family loans
guaranteed by agencies of
the U.S. government $ 17,387 $ 16,006 $ 14,468 $ 16,010 $ 15,538
(2) Excludes residential mortgage loans held for sale
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
BOK Financial monitors loan performance on a portfolio and individual loans
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 June 30, 1998, loans totaling $76 million were assigned to the substandard
risk category and loans totaling $58 million were assigned to the special
mention risk category, compared to $52 million and $84 million, respectively, at
March 31, 1998. The increase in substandard loans was generally limited to the
agriculture and energy segments of the loan portfolio. The decrease in special
mention loans reflects one previously criticized loan which paid-off during the
second quarter and another which was reclassified to substandard.
The reserve for loans losses, which is available to absorb losses inherent in
the loan portfolio, totaled $58 million at June 30, 1998, compared to $55
million at March 31,1998 and $53 million at December 31, 1997. This represented
2.08%, 2.02% and 1.98% of total loans, excluding loans held for sale, at June
30, 1998, March 31, 1998 and December 31, 1997, respectively. Losses on loans
held for sale, principally 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 8 presents statistical information
regarding the reserve for loan losses.
<PAGE>9
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
TABLE 8 - SUMMARY OF LOAN LOSS EXPERIENCE
(In thousands)
Three Months Ended
---------------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1998 1998 1997 1997 1997
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $ 54,839 $ 53,101 $ 52,393 $ 49,871 $ 48,517
Loans charged-off:
Commercial 1,339 172 1,852 1,179 288
Commercial real estate 92 - 441 194 5
Residential mortgage 19 50 269 91 34
Consumer 845 1,305 1,464 1,051 1,095
- -------------------------------------------------------------------------------------------------------------------
Total 2,295 1,527 4,026 2,515 1,422
- -------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial 534 120 611 1,004 547
Commercial real estate 170 161 69 393 341
Residential mortgage 80 82 119 325 53
Consumer 501 432 435 315 335
- -------------------------------------------------------------------------------------------------------------------
Total 1,285 795 1,234 2,037 1,276
- -------------------------------------------------------------------------------------------------------------------
Net loans charged-off 1,010 732 2,792 478 146
Provision for loan losses 3,953 2,470 3,500 3,000 1,500
- -------------------------------------------------------------------------------------------------------------------
Ending balance $ 57,782 $ 54,839 $ 53,101 $ 52,393 $ 49,871
- -------------------------------------------------------------------------------------------------------------------
Reserve to loans outstanding
at period-end(1) 2.08 2.02 1.98 1.96 1.96
Net loan losses (annualized)
to average loans (1) .14 0.10 0.14 0.07 0.02
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1) Excludes residential mortgage loans held for sale which are carried at the
lower of aggregate cost or market value.
</FN>
</TABLE>
The adequacy of the reserve 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 charged against earnings in amounts
necessary to maintain the adequacy of the reserve for loan losses. These
provisions totaled $4.0 million for the second quarter of 1998 and $1.5 million
for the second quarter of 1997. The increased provision reflected management's
assessment of increased risk of loan losses due primarily to continued growth in
the loan portfolio and in criticized assets, concern about the effect of severe
drought conditions in southern and western Oklahoma on the state's economy,
geographic expansion of BOK Financial's market area to include North Texas and
New Mexico, and an expectation that the pace of economic activity will moderate
in BOK Financial's primary market areas.
At June 30, 1998, other assets included $28.2 million of natural gas compression
and other equipment which is being leased to various customers by entities in
which a subsidiary of BOK Financial is a general partner. The terms of these
leases are generally much shorter than the estimated useful lives of the
equipment. Therefore, as each lease expires, there is a risk that the remaining
net book value of the equipment may not be recovered based upon market
conditions and re-leasing opportunities at that time.
Market Risk
Market risk is a broad term related to the risk of economic loss due to adverse
changes in the fair value of a financial instrument. These changes may be the
result of various factors, including interest rates, foreign exchange rates,
commodity prices, or equity prices. Additionally, the financial instruments
subject to market risk can be classified either as held for trading or held for
purposes other than trading.
BOK Financial is subject to market risk primarily through the effect of changes
in interest rates on its portfolio of assets held for purposes other than
trading. The effect of other changes, such as foreign exchange rates, commodity
prices or equity prices, is not material to BOK Financial nor is the effect of
market risk on financial instruments held for trading purposes. The
responsibility for managing market risk 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 increase
or decrease in interest rates to +/- 10%, establish maximum levels for
short-term borrowings, short-term assets, 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, 1998, BOK Financial is
within all guidelines established under these policies.
<PAGE>10
BOK Financial performs a sensitivity analysis to identify more dynamic interest
rate risk exposures, including embedded option positions, on net interest
revenue, net income and economic value of equity. A simulation model is used
assuming expected interest rates over the next twelve months based upon both a
"most likely" rate scenario and on two "shock test" scenarios, the first
assuming a sustained parallel 200 basis point increase and the second a
sustained parallel 200 basis point decrease in interest rates. An independent
source is used to determine the most likely interest rates for the next year.
BOK Financial's primary interest rate exposures include the Federal Reserve
Bank's discount rate which affects short-term borrowings, the prime lending rate
and the London InterBank Offering Rate ("LIBOR") which are the basis for much of
the variable-rate loan pricing and the 30-year mortgage rate which directly
affects the prepayment speeds for mortgage-backed securities and mortgage
servicing rights. Derivative financial instruments and other financial
instruments used for purposes other than trading are included in this
simulation. In addition, sensitivity of fee income to market interest rate
levels, such as those related to cash management services and mortgage
servicing, are included. The model incorporates management's assumptions
regarding the level of interest rate or balance changes on indeterminable
maturity deposits (demand deposits, interest-bearing transaction accounts and
savings accounts) for a given level of market rate changes. The assumptions have
been developed through a combination of historical analysis and future expected
pricing behavior. Interest rate swaps on all products are included to the extent
that they are effective in the 12-month simulation period. Additionally, changes
in prepayment behavior of mortgage-backed securities, residential mortgage loans
and mortgage servicing in each rate environment are captured using industry
estimates of prepayment speeds for various coupon segments of the portfolio.
Finally, the impact of planned growth and new business activities is factored
into the simulation model. At June 30, 1998, this modeling indicated interest
rate sensitivity as follows:
200 bp 200 bp Most
increase decrease Likely
-------- -------- -------
Anticipated impact over the
next twelve months compared
to a constant interest rate
scenario
Net interest revenue $ 3,869 $ ( 4,932) $ ( 782)
1.9% (2.5%) (0.4%)
Net income $ 5,174 $ (24,704) $ (514)
6.3% (30.2%) (0.6%)
Economic value of equity $ (3,663) $ (2,704) $ 2,970
(0.5%) 0.4% 0.4%
The estimated changes in interest rates on net interest revenue or economic
value of equity is not projected to be significant within the +/- 200 basis
point range of assumptions. However, this modeling indicated that under the 200
basis point decrease scenario, the after-tax value of BOK Financial's
capitalized mortgage loan servicing rights would decrease by $21.5 million,
excluding the effect of the mortgage servicing hedge program which is discussed
subsequently. 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 decreased value of mortgage loan servicing rights be charged to
earnings while the increased value of available for sale securities be credited
to shareholders' equity. The result is a projected decrease in net income of
$24.7 million or 30.2% compared to projected net income assuming no changes in
interest rates.
The simulation is based on numerous assumptions regarding the effect of changes
in interest rates on the timing and extent of repricing characteristics, future
cash flows and customer behavior. These assumptions are inherently uncertain
and, as a result, the model cannot precisely estimate net interest revenue, net
income or economic value of equity or precisely predict the impact of higher or
lower interest rates on net interest
<PAGE>11
revenue, net income or economic value of equity. Actual results will differ from
simulated results due to timing, magnitude and frequency of interest rate
changes and changes in market conditions and management strategies, among other
factors.
During the second quarter of 1998, BOK Financial implemented a program which
uses futures contracts and call and put options (collectively "derivative
instruments") to hedge against the risk of loss on capitalized mortgage
servicing rights. The intent of this program is to reduce the pre-tax risk of
loss which would result from a 50 basis point decrease in interest rates from
approximately $18.5 million to approximately $5.3 million through market value
increases on the derivative instruments. While this program is expected to
significantly reduce the risk of loss on capitalized mortgage servicing rights
in a falling interest rate environment, it adds risk in a rising rate
environment. Management estimates that a 50 basis point increase in interest
rates would result a $12.6 million decrease in the market value of the
derivative instruments compared to a $14.0 million increase in the fair value of
the capitalized mortgage servicing rights. Management believes that an analysis
of the effect of 50 basis point changes in interest rates on the value of the
mortgage servicing portfolio and related derivative instruments is more useful
in monitoring risk due to the dynamic hedging strategy employed and the
increased probability of interest rate changes within this range.
- -------------------------------------------------------------------------------
TABLE 9 - INTEREST RATE SWAPS
(In thousands)
Notional Pay Receive
Amount Rate Rate
-----------------------------------------------------------------
Expiration:
1998 65,000 6.11 - 6.83% (1) 6.80 - 7.96%
1999 22,000 6.21 - 7.30 (1) 6.80 - 7.68
2002 7,660 6.21 5.66 (1)
2003 9,200 5.83 - 5.99 5.66 (1)
2004 9,004 5.92 5.66 (1)
2006 16,500 7.26 5.66 (1)
2007 100,000 5.66 (1) 6.75 - 6.80
2007 10,000 7.47 5.66 (1)
- --------------------------------------------------------------------------------
(1) Rates are variable based on LIBOR and reset monthly, quarterly or
semiannually.
BOK Financial uses interest rate swaps, a form of off-balance sheet derivative
product, in managing its interest rate sensitivity. These products are generally
used to more closely match interest paid on certain long-term certificates of
deposit and subordinated debt with earning assets. BOK Financial accrues and
periodically receives a fixed amount from the counterparties to these swaps and
accrues and periodically makes a variable payment to the counterparties. During
the second quarter of 1998, income from these swaps exceeded the cost of the
swaps by $360 thousand. Credit risk from these swaps is closely monitored and
counterparties to these contracts are selected on the basis of their credit
worthiness, among other factors.
- --------------------------------------------------------------------------------
TABLE 10 - CAPITAL RATIOS
June 30, March 31, Dec. 31, Sept. 30, June 30,
1998 1998 1997 1997 1997
----------------------------------------------------
Average shareholders' equity
to average assets 8.18% 8.00% 8.13% 7.76% 7.33%
Risk-based capital:
Tier 1 capital 9.35 9.47 9.49 8.93 9.00
Total capital 14.15 14.47 14.69 14.08 10.75
Leverage 7.24 6.81 6.81 6.53 6.26
YEAR 2000 CONSIDERATIONS
The Year 2000 issue, in general, is the result of computer programs being
written using two digits rather than four to define the applicable year. Any
computer programs that have date sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including among
other things, a temporary inability to process transactions or to engage in
similar normal business activities.
<PAGE>12
The Federal Financial Institution Examination Council ("FFIEC") provides
regulatory guidance on BOK Financial's and other financial institutions' Year
2000 compliance and has outlined five phases to effectively manage the Year 2000
issues. The phases are: Awareness; Assessment; Renovation; Validation; and
Implementation. The FFIEC encouraged institutions to have all critical
applications identified and priorities set by September 30, 1997 and to have
renovation work largely completed and testing well underway by December 31,
1998. BOK Financial is currently within the FFIEC guidelines. BOK Financial, at
the present time, expects to have substantially all of its critical outsourced
systems renovated by December 31, 1998, with the remaining critical outsourced
systems renovated by February 28, 1999. Additionally, BOK Financial expects to
have all critical internal systems renovated by December 31, 1998.
Assisting in BOK Financial's Year 2000 effort are the Year 2000 Oversight
Committee, comprised of various members of executive management, as well as a
Year 2000 Project Team, which includes representatives from BOK Financial's
major business units. Both groups meet on a regular basis to monitor and discuss
continuing Year 2000 developments. The Board of Directors recognizes the
importance of and supports these Year 2000 initiatives.
Substantially all critical applications are run by outsourced providers of data
processing services. These processors have been contacted and are providing
current compliance status reports for their respective hardware and software
systems. BOK Financial's core processing systems are outsourced to FiServ
Solutions, Inc. ("FiServ"), based in Milwaukee, Wisconsin. FiServ is an
international data processing company which specializes in financial institution
data processing and is subject to regulatory requirements imposed upon bank data
processors. BOK Financial currently receives monthly updates from FiServ to
ensure progress towards completion of the Year 2000 compliance process. Testing
of these systems will be conducted from August, 1998 through December, 1998 as
renovations are completed. BOK Financial personnel are members of FiServ's
customer advisory committee and will directly participate in the testing of
these applications. FiServ has stated that it will complete the renovation of
all of its systems and place the renovated systems into production by December
31, 1998.
BOK Financial's trust accounting systems are outsourced to M&I Data Services
("M&I)", based in Milwaukee, Wisconsin. Proxy testing of the M&I trust
accounting system was conducted in June, 1998 by members of M&I's staff. The
test procedures and results were subject to review by the M&I Advisory Board,
which included a BOK Financial representative. The results of this testing have
been analyzed and accepted as satisfactory by BOK Financial's management.
BOK Financial is developing remediation contingency plans to address Year 2000
issues related to BOK Financial's internal systems and the systems of its
vendors. It has also initiated communication with large customers to determine
what steps they have undertaken to ensure they are prepared for Year 2000. This
effort has enabled BOK Financial to adopt contingency plans related to the
possible effects of the Year 2000 issue on the credit risk of its borrowers,
liquidity needs and other factors.
BOK Financial expects to invest approximately $12 million in computer systems
upgrades during 1998, including $2 million directly related to the Year 2000
issue. The majority of computer systems upgrades have been planned in the normal
course of business for competitive reasons, although compliance with Year 2000
issues is a factor in determining the timing of such upgrades. Substantially all
of the planned investments will be completed during 1998. These investments are
in addition to upgrades for Year 2000 compliance by outside processors which
provide services to BOK Financial. During 1997, BOK Financial invested $5.2
million in computer systems upgrades with minimal expenditures directly related
to the Year 2000 issue. Based upon the anticipated expenditures, management
believes that the costs of the Year 2000 compliance efforts will not materially
affect BOK Financial's results of operations, liquidity or capital resources.
The foregoing forward-looking statements, including the costs of addressing the
Year 2000 issue and the dates upon which compliance will be attained, reflect
management's current assessment and estimates with respect to BOK Financial's
Year 2000 compliance effort. Various factors could cause actual plans and
results to differ materially from those contemplated by such assessments,
estimates and forward-looking statements, many of which are beyond the control
of BOK Financial. Some of these factors include, but are not limited to, third
party modification plans, availability of technological and monetary resources,
representations by vendors and counter parties, technological advances, economic
considerations and consumer perceptions. BOK Financial's Year 2000 compliance
program is an ongoing process involving continual evaluation and may be subject
to change in response to new developments.
<PAGE>13
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 1997 Form 10-K to the Securities and Exchange
Commission which contains audited financial statements.
<PAGE>14
<TABLE>
- ------------------------------------------------------------------- ------------- -- ------------- -- --------------
Consolidated Statement of Earnings
(In Thousands Except Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -----------------------------
1998 1997 1998 1997
------------- ----------- ------------- ---------------
Interest Revenue
<S> <C> <C> <C> <C>
Loans $ 62,935 $ 55,843 $ 123,549 $ 107,199
Taxable securities 25,119 25,793 52,353 48,361
Tax-exempt securities 3,972 4,235 8,014 8,353
- --------------------------------------------- ------------- ------------------------- ---------------
Total securities 29,091 30,028 60,367 56,714
- --------------------------------------------- ------------- ------------------------- ---------------
Trading securities 262 83 425 141
Funds sold 571 817 1,262 1,528
- --------------------------------------------- ------------- ------------------------- ---------------
Total interest revenue 92,859 86,771 185,603 165,582
- --------------------------------------------- ------------- ------------------------- ---------------
Interest Expense
Deposits 33,525 30,577 66,908 60,561
Other borrowings 12,406 16,700 27,364 30,369
Subordinated debenture 2,464 326 4,831 422
- --------------------------------------------- ------------- ------------------------- ---------------
Total interest expense 48,395 47,603 99,103 91,352
- --------------------------------------------- ------------- ------------------------- ---------------
Net Interest Revenue 44,464 39,168 86,500 74,230
Provision for Loan Losses 3,953 1,500 6,423 2,526
- --------------------------------------------- ------------- ------------------------- ---------------
Net Interest Revenue After
Provision for Loan Losses 40,511 37,668 80,077 71,704
- --------------------------------------------- ------------- ------------------------- ---------------
Other Operating Revenue
Brokerage and trading revenue 4,051 2,229 7,182 4,469
Transaction card revenue 6,010 4,742 11,550 8,742
Trust fees and commissions 7,654 5,851 14,538 11,129
Service charges and fees on deposit 7,440 7,112 15,078 13,826
accounts
Mortgage banking revenue, net 10,940 7,460 20,261 14,408
Leasing revenue 1,804 1,512 3,465 2,773
Other revenue 3,017 2,614 5,702 5,269
- --------------------------------------------- ------------- ------------------------- ---------------
Total fees and commissions revenue 40,916 31,520 77,776 60,616
- --------------------------------------------- ------------- ------------------------- ---------------
Gain on sale of student loans 119 91 1,534 1,185
Securities gains (losses), net 3,320 (200) 5,832 62
- --------------------------------------------- ------------- ------------------------- ---------------
Total other operating revenue 44,355 31,411 85,142 61,863
- --------------------------------------------- ------------- ------------------------- ---------------
Other Operating Expense
Personnel 25,715 21,148 50,544 40,442
Business promotion 1,662 2,190 3,559 4,140
Contribution of stock to BOk
Charitable Foundation - - 2,257 -
Professional fees and services 2,308 1,571 3,904 3,067
Net occupancy, equipment & data processing 10,594 8,250 19,808 16,570
FDIC and other insurance 345 328 655 661
Printing, postage and supplies 2,223 1,921 4,270 3,746
Net(gains) losses, and operating
expenses of repossessed assets (315) (222) (370) (634)
Amortization of intangible assets 2,272 2,398 4,574 4,126
Mortgage banking costs 6,290 4,412 12,313 8,629
Provision for impairment of mortgage
servicing rights (1,000) - 2,000 -
Other expense 3,710 3,447 7,483 6,422
- --------------------------------------------- ------------- ------------------------- ---------------
Total Other Operating Expense 53,804 45,443 110,997 87,169
- --------------------------------------------- ------------- ------------------------- ---------------
Income Before Taxes 31,062 23,636 54,222 46,398
Federal and state income tax 10,624 7,572 17,471 14,987
- --------------------------------------------- ------------- ------------------------- ---------------
Net Income $ 20,438 $ 16,064 $ 36,751 $ 31,411
- --------------------------------------------- ------------- ------------------------- ---------------
Earnings Per Share:
Net Income
Basic $ .92 $ .72 $ 1.64 $ 1.40
- --------------------------------------------- ------------- ------------------------- ---------------
Diluted $ .81 $ .64 $ 1.46 $ 1.26
- --------------------------------------------- ------------- ------------------------- ---------------
Average Shares Used in Computation:
Basic 21,884,404 21,867,658 21,907,776 21,863,437
- ------------------------------------------------------------------------------------- ---------------
Diluted 25,153,332 25,016,362 25,169,772 24,991,929
- ------------------------------------------------------------------------------------- ---------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>15
<TABLE>
- -------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
June 30, December 31, June 30,
1998 1997 1997
---------------------------------------------------
ASSETS
<S> <C> <C> <C>
Cash and due from banks $ 444,055 $ 371,321 $ 373,533
Funds sold 29,025 18,005 78,432
Trading securities 29,240 4,999 5,974
Securities:
Available for sale 1,801,601 1,749,411 1,713,075
Investment (fair value: June 30, 1998 -
$222,159; December 31, 1997 -$214,125;
June 30, 1997 - $202,272 ) 222,038 213,111 202,716
- -------------------------------------------------------------------------------------------------------------
Total securities 2,023,639 1,962,522 1,915,791
- -------------------------------------------------------------------------------------------------------------
Loans 2,882,868 2,765,093 2,629,243
Less reserve for loan losses 57,782 53,101 49,871
- -------------------------------------------------------------------------------------------------------------
Net loans 2,825,086 2,711,992 2,579,372
- -------------------------------------------------------------------------------------------------------------
Premises and equipment, net 59,830 65,478 61,173
Accrued revenue receivable 55,366 50,754 50,635
Excess cost over fair value of net assets acquired
and core deposit premiums (net of accumulated
amortization: June 30, 1998 - $44,156;
December 31, 1997 - $39,582;
June 30, 1997 - $34,884) 66,953 67,796 72,501
Mortgage servicing rights 79,545 83,890 74,583
Real estate and other repossessed assets 5,665 5,258 5,564
Other assets 86,108 57,627 74,612
- -------------------------------------------------------------------------------------------------------------
Total assets $ 5,704,512 $ 5,399,642 $ 5,292,170
- -------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 937,162 $ 881,029 $ 881,829
Interest-bearing deposits:
Transaction 1,167,944 1,124,288 1,017,113
Savings 110,820 106,900 108,502
Time 1,698,266 1,615,862 1,538,865
- -------------------------------------------------------------------------------------------------------------
Total deposits 3,914,192 3,728,079 3,546,309
- -------------------------------------------------------------------------------------------------------------
Funds purchased and repurchase
Agreements 758,055 631,815 786,314
Other borrowings 339,417 394,087 480,981
Subordinated debenture 148,371 148,356 20,000
Accrued interest, taxes and expense 46,726 39,998 47,017
Other liabilities 32,481 21,830 22,089
- -------------------------------------------------------------------------------------------------------------
Total liabilities 5,239,242 4,964,165 4,902,710
- -------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 23 23 23
Common stock ($.00006 par value; 2,500,000,000
shares authorized; shares issued and outstanding
June 30, 1998 - 22,036,016; December 31, 1997
- 21,975,747; June 30, 1997 - 21,234,185) 1 1 1
Capital surplus 210,557 208,327 177,951
Retained earnings 254,629 218,629 213,553
Treasury stock (shares at cost: June 30, 1998 - 178,751;
December 31, 1997 - 66,377; June 30, 1997 - 40,451) (7,826) (2,190) (1,181)
Unrealized gain (loss) on securities available for sale 7,890 10,691 (882)
Less notes receivable from exercise of stock options (4) (4) (5)
- -------------------------------------------------------------------------------------------------------------
Total shareholders' equity 465,270 435,477 389,460
- -------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 5,704,512 $ 5,399,642 $ 5,292,170
- -------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>16
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY
(In Thousands)
Accumulated
Preferred Stock Common Stock Other Treasury Stock
---------------- -------------- Comprehensive Capital Retained --------------- Notes
Shares Amount Shares Amount Income Surplus Earnings Shares Amount Receivable Total
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1996 250,000 $ 23 21,149 $1 $1,472 $176,093 $ 182,892 17 $ (428) $ (87) $ 359,966
Comprehensive
income:
Net income - - - - - - 31,411 - - - 31,411
Other Comprehensive
income, net of tax:
Unrealized gains(loss)
on securities available
for sale(1) - - - - (2,354) - - - - - (2,354)
-----------
Comprehensive income 29,057
-----------
Exercise of stock
options - - 44 - - 833 - 24 (753) - 80
Issuance of common stock
to Thrift Plan - - 5 - - 169 - - - - 169
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
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at
June 30, 1997 250,000 $ 23 21,234 $ 1 $(882) $177,951 $213,553 41 $ (1,181) $ (5) $ 389,460
- -----------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1997 250,000 $ 23 21,976 $ 1 $10,691 $208,327 $218,629 66 $ (2,190) $ (4) $ 435,477
Comprehensive income:
Net income - - - - - - 36,751 - - - 36,751
Other Comprehensive
income, net of tax:
Unrealized gains(loss)on
securities available for
sale(1) - - - - (2,801) - - - - - (2,801)
-----------
Comprehensive income 33,950
-----------
Exercise of stock
options - - 38 - - 1,264 - 8 (346) - 918
Issuance of common
stock to Thrift Plan - - - - - 69 - 8 337 - 406
Preferred dividends paid
in shares of common
stock - - 18 - - 750 (750) - - - -
Preferred stock
dividend - - - - - - (1) - - - (1)
Director retainer
shares - - 4 - - 147 - - - - 147
Treasury stock
purchase - - - - - - - 113 (5,627) - (5,627)
- -----------------------------------------------------------------------------------------------------------------------------------
Balances at
June 30, 1998 250,000 $ 23 22,036 $ 1 $ 7,890 $210,557 $254,629 179 $(7,826) $ (4) $ 465,270
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) June 30, 1998 June 30, 1997
------------- -------------
Reclassification adjustments:
Unrealized losses on available
for sale securities $ 1,152 $ (2,312)
Less: reclassification
adjustment for gains realized 3,953 42
included in net income, net of tax
--------------------------------------
Net unrealized losses on securities $ (2,801) $ (2,354)
--------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>17
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands Except Share Data)
Six Months Ended
June 30,
-------------------------------------
1998 1997
-------------------------------------
Cash Flow From Operating Activities:
<S> <C> <C>
Net income $ 36,751 $ 31,411
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan and repossessed real estate losses 6,423 2,526
Depreciation and amortization 18,642 14,277
Provision for impairment of mortgage servicing rights 2,000 -
Net amortization of security discounts and premiums 313 1,567
Contribution of stock to Bank of Oklahoma Foundation 2,257 -
Net gain on sale of assets (12,582) (2,949)
Mortgage loans originated for resale (453,331) (371,012)
Proceeds from sale of mortgage loans held for resale 437,686 391,279
(Increase) decrease in trading securities (24,241) 480
(Increase) decrease in accrued revenue receivable (4,611) 1,002
Increase in other assets (22,905) (9,764)
Increase in accrued interest, taxes and expense 7,516 1,486
Increase in other liabilities 14,058 3,235
- -------------------------------------------------------------------------------------------------
Net cash provided by operating activities 7,976 63,538
- -------------------------------------------------------------------------------------------------
Cash Flow From Investing Activities:
Proceeds from maturities of investment securities 21,146 11,878
Proceeds from maturities of available for sale securities 274,011 125,631
Purchases of investment securities (30,922) (16,257)
Purchases of available for sale securities (1,237,180) (647,655)
Proceeds from sales of available for sale securities 910,939 415,956
Loans originated or acquired net or principal collected (153,480) (118,266)
Proceeds from disposition of assets 56,584 4,125
Purchases of assets (24,310) (38,398)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net 35,793 (1,240)
- -------------------------------------------------------------------------------------------------
Net cash used by investing activities (147,419) (264,226)
- -------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase in demand deposits, transaction
deposits, money market deposits, and savings accounts 94,242 21,553
Net increase (decrease) in certificates of deposit 61,542 (77,589)
Net increase in other borrowings 71,570 320,701
Issuance of subordinated debenture - 20,000
Purchase of treasury stock (5,973) -
Preferred stock dividend (1) -
Issuance of preferred, common and treasury stock, net 1,817 355
Payments on stock option notes receivable - 82
- -------------------------------------------------------------------------------------------------
Net cash provided by financing activities 223,197 285,102
- -------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 83,754 84,414
Cash and cash equivalents at beginning of period 389,326 367,551
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 473,080 $ 451,965
- -------------------------------------------------------------------------------------------------
Cash paid for interest $ 72,468 $ 91,170
- -------------------------------------------------------------------------------------------------
Cash paid for taxes $ 7,403 $ 12,412
- -------------------------------------------------------------------------------------------------
Net loans transferred to repossessed real estate
And other assets $ 1,792 $ 1,140
- -------------------------------------------------------------------------------------------------
Payment of preferred stock dividends in common stock $ 750 $ 750
- -------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ACCOUNTING POLICIES
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., and Bank of Texas, N.A..
Certain prior period balances have been reclassified to conform with the current
period presentation.
Hedging of Mortgage Servicing Rights
BOK Financial enters into futures contracts and call and put options on futures
contracts to hedge against the risk of loss on mortgage servicing rights due to
accelerated loan prepayments during periods of falling interest rates. Contracts
on underlying securities which are expected to have a similar duration to the
mortgage servicing portfolio, such as 10-year U.S. Treasury notes, are used for
these hedges. The combination of contracts selected is based upon an analysis of
the expected range of market value changes over a probable range of interest
rates to achieve a high degree of correlation between changes in the fair value
of the mortgage servicing rights and changes in the market value of the
contracts. These contracts are designated as hedges on the trade date.
Transaction fees are charged to expense as mortgage banking costs when incurred.
Premiums paid or received on option contracts are deferred and amortized against
mortgage banking costs over the life of the options. Both unrealized and
realized gains and losses on futures contracts and option contracts are deferred
as part of the capitalized mortgage servicing rights. These deferred gains and
losses are amortized over the life of the loan servicing portfolio. These
unamortized deferred gains and losses are included with the cost of the
servicing rights when determining whether an allowance for impairment of the
servicing rights is required. Changes in the fair value of the contracts and
changes in the market value of the mortgage servicing rights is reviewed at
least monthly to determine whether a high degree of correlation exists on a
statistically value basis. If correlation criteria are not met, the contracts
are no longer accounted for as a hedge. In such circumstances, any remaining
unamortized deferred gains or losses are recognized in current income.
(2) MORTGAGE BANKING ACTIVITIES
At June 30, 1998, BOk owned the rights to service 89,637 mortgage loans with
outstanding principal balances of $6.8 billion, including $192 million serviced
for BOk. The weighted average interest rate and remaining term was 7.65% and 283
months, respectively.
Activity in capitalized mortgage servicing rights and related valuation
allowance during the six months ending June 30, 1998 is as follows:
<TABLE>
Capitalized Mortgage Servicing Rights
------------------------------------------------------------------------------------
Valuation
Purchased Originated Total Allowance Net
------------------ ------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1997 $ 78,961 $ 9,929 $ 88,890 $ (5,000) $ 83,890
Additions 1,445 6,670 8,115 - 8,115
Amortization expense (7,134) (1,124) (8,258) - (8,258)
Deferred gain (loss) on MSR
hedging portfolio - - (2,202) - (2,202)
Provision for impairment - - (2,000) (2,000)
Impairment charge-off - - (2,710) 2,710 -
- ------------------------------ -- ------------ --- ------------ -- ------------ --- ------------ -- ---------------
Balance at June 30, 1998 $ 73,272 $ 15,475 $ 83,835 $ (4,290) $ 79,545
- ------------------------------ -- ------------ --- ------------ -- ------------ --- ------------ -- ---------------
Estimated fair value of
mortgage servicing rights(1) $ 73,682 $ 20,556 $ 94,238 - $ 94,238
- ------------------------------ -- ------------ --- ------------ -- ------------ --- ------------ -- ---------------
<FN>
(1) Excludes approximately $10.2 million of loan servicing rights on mortgage
loans originated prior to the adoption of FAS 122.
</FN>
</TABLE>
<PAGE>19
(3) DISPOSAL OF AVAILABLE FOR SALE SECURITIES
Sales of available for sale securities for the six months ending June 30, 1998
resulted in gains and losses as follows (in thousands):
Proceeds $ 910,939
Gross realized gains 6,741
Gross realized losses 909
Related federal and state
income tax expense 1,879
(4) EARNINGS PER SHARE
The following table presents the computation of basic and diluted earnings per
share (dollars in thousands except share data):
<TABLE>
Three Months Ended Six Months Ended
--------------------------- --------------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
--------------------------- --------------------------
Numerator:
<S> <C> <C> <C> <C>
Net income $ 20,438 $ 16,064 $ 36,751 $ 31,411
Preferred stock dividends (375) (375) (750) (750)
- ----------------------------------------------------------------------------------------------------------------
Numerator for basic earnings per share - income
available to common stockholders 20,063 15,689 36,001 30,661
- ----------------------------------------------------------------------------------------------------------------
Effect of dilutive securities:
Preferred stock dividends 375 375 750 750
- ----------------------------------------------------------------------------------------------------------------
Numerator for diluted earnings per share - income
available to common stockholders after assumed conversion $ 20,438 $ 16,064 $ 36,751 $ 31,411
- ----------------------------------------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per share -weighted
average shares 21,884,404 21,867,658 21,884,404 21,863,437
Effect of dilutive securities:
Employee stock options 370,742 250,518 370,742 230,306
Convertible preferred stock 2,898,186 2,898,186 2,898,186 2,898,186
- ----------------------------------------------------------------------------------------------------------------
Dilutive potential common shares 3,268,928 3,148,704 3,268,928 3,128,492
- ----------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 25,153,332 25,016,362 25,153,332 24,991,929
- ----------------------------------------------------------------------------------------------------------------
Basic earnings per share $0.92 $0.72 $1.64 $1.40
- ----------------------------------------------------------------------------------------------------------------
Diluted earnings per share $0.81 $0.64 $1.46 $1.26
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(5) COMPREHENSIVE INCOME
As of January 1, 1998, BOK Financial adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires unrealized gains or losses on available for sale
securities be included in other comprehensive income. Prior year financial
statements have been reclassified to conform to the requirements of Statement
130. The components of comprehensive income are disclosed in the Consolidated
Statement of Changes in Shareholders' Equity.
(6) 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.
<PAGE>20
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTH FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Six months ended
-----------------------------------------------------------------------------------------
June 30, 1998 June 30, 1997
-------------------------------------------- ----------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
-----------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C> <C> <C>
Taxable securities $ 1,707,525 $ 52,354 6.18% $ 1,559,622 $ 48,361 6.25%
Tax-exempt securities(1) 325,180 12,421 7.70 342,064 13,001 7.66
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities 2,032,705 64,775 6.43 1,901,686 61,362 6.51
- ----------------------------------------------------------------------------------------------------------------------------------
Trading securities 16,618 425 5.16 4,676 141 6.08
Funds sold 42,363 1,262 6.01 54,037 1,528 5.70
Loans(2)(3) 2,830,136 123,809 8.72 2,475,083 107,296 8.74
Less reserve for loan losses 55,300 47,974
- ----------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve(3) 2,774,836 123,809 8.89% 2,427,109 107,296 8.91
- ----------------------------------------------------------------------------------------------------------------------------------
Total earning assets(3) 4,866,522 190,271 7.82% 4,387,508 170,327 7.83
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 636,383 554,592
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 5,502,905 $ 4,942,100
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,165,137 $ 18,185 3.15% $ 1,010,489 16,335 3.26
Savings deposits 110,388 1,219 2.23 106,461 1,168 2.21
Other time deposits 1,728,845 47,504 5.54 1,570,712 43,058 5.53
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 3,004,370 66,908 4.49 2,687,662 60,561 4.54
- ----------------------------------------------------------------------------------------------------------------------------------
Other borrowings 962,178 27,364 5.74 1,071,902 30,369 5.71
Subordinated debenture 148,392 4,831 6.57 13,039 422 6.44
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 4,114,940 99,103 4.86 3,772,603 91,352 4.88
- ----------------------------------------------------------------------------------------------------------------------------------
Demand deposits 876,980 732,666
Other liabilities 61,048 65,895
Shareholders' equity 449,937 370,936
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and $ 5,502,905 $ 4,942,100
shareholders' equity
- ----------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest 91,168 2.97 78,975 2.95
Revenue(1)(3)
Tax-Equivalent Net Interest Revenue (1)
To Earning Assets(3) 3.72 3.63
Less tax-equivalent adjustment(1) 4,668 4,745
- ----------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 86,500 74,230
Provision for loan losses 6,423 2,526
Other operating revenue 85,142 61,863
Other operating expense 110,997 87,169
- ----------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 54,222 46,398
Federal and state income tax 17,471 14,987
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 36,751 $ 31,411
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 1.64 $ 1.40
- ----------------------------------------------------------------------------------------------------------------------------------
Diluted $ 1.46 $ 1.26
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(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. (3) Yield/Rate excludes
$1.5 million of non-recurring collection of foregone interest in 1998.
</FN>
</TABLE>
<PAGE>21
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
--------------------------------------------------------------------------------------
June 30, 1998 March 31, 1998
------------------------------------------- --------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
--------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C> <C> <C>
Taxable securities $ 1,642,799 $ 25,119 6.13% $ 1,772,971 $ 27,235 6.19%
Tax-exempt securities(1) 321,703 6,173 7.70 328,735 6,248 7.44
- ------------------------------------------------------------------------------------------------------------------------------
Total securities 1,964,502 31,292 6.39 2,101,706 33,483 6.43
- ------------------------------------------------------------------------------------------------------------------------------
Trading securities 21,408 262 4.91 11,774 163 5.87
Funds sold 37,728 571 6.07 47,050 691 5.91
Loans(2)(3) 2,838,037 63,072 8.71 2,822,147 60,737 8.76
Less reserve for loan losses 56,423 54,164 -
-
- ------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve(3) 2,781,614 63,072 8.88 2,767,983 60,737 8.93
- ------------------------------------------------------------------------------------------------------------------------------
Total earning assets(3) 4,805,252 95,197 7.82 4,928,513 95,074 7.85
- ------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 643,626 625,863
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $ 5,448,878 $ 5,554,376
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,184,835 9,268 3.14% $ 1,145,221 8,917 3.08
Savings deposits 111,207 617 2.23 109,560 602 2.21
Other time deposits 1,717,993 23,640 5.52 1,739,816 23,864 5.56
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 3,014,035 33,525 4.46 2,994,597 33,383 4.45
- ------------------------------------------------------------------------------------------------------------------------------
Other borrowings 873,616 12,406 5.70 1,051,724 14,958 5.89
Subordinated debenture 148,410 2,464 6.66 148,374 2,367 6.36
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 4,036,061 48,395 4.81 4,194,695 50,708 4.91
- ------------------------------------------------------------------------------------------------------------------------------
Demand deposits 895,415 858,340
Other liabilities 61,814 57,095
Shareholders' equity 455,588 444,246
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' $ 5,448,878 $ 5,554,376
Equity
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue (1)(3) 46,802 3.01% 44,366 2.94
Tax-Equivalent Net Interest Revenue (1)
To Earning Assets 3.65
Less tax-equivalent adjustment 2,338 3.78 2,330
(1)(3)
- ------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 44,464 42,036
Provision for loan losses 3,953 2,470
Other operating revenue 44,355 40,787
Other operating expense 53,804 57,193
- ------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 31,062 23,160
Federal and state income tax 10,624 6,847
- ------------------------------------------------------------------------------------------------------------------------------
Net Income $ 20,438 $ 16,313
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.92 $ 0.73
- ------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.81 $ 0.65
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
(3) Yield/Rate excludes $1.5 million of non-recurring collection of foregone
interest in 1998.
</FN>
</TABLE>
<PAGE>22
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
For Three months ended
- ------------------------------------------------------------------------------------------------------------------------
December 31, 1997 September 30, 1997 June 30, 1997
- ------------------------------------------------------------------------------------------------------------------------
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>
$ 1,562,445$ 24,408 6.20% $ 1,560,418 $ 24,354 6.19% $ 1,634,264$ 25,793 6.33%
331,793 6,666 7.97 360,461 6,764 7.44 344,558 6,572 7.65
- ------------------------------------------------------------------------------------------------------------------------
1,894,238 31,074 6.51 1,920,879 31,118 6.43 1,978,822 32,365 6.56
- ------------------------------------------------------------------------------------------------------------------------
6,203 93 5.95 3,583 53 5.87 5,552 83 6.00
53,964 724 5.32 49,645 740 5.91 57,072 817 5.74
2,764,436 60,924 8.74 2,676,237 59,063 8.76 2,535,264 55,850 8.84
53,180 - 51,165 - 49,164 -
- - -
- ------------------------------------------------------------------------------------------------------------------------
2,711,256 60,924 8.92 2,625,072 59,063 8.93 2,486,100 55,850 9.01
- ------------------------------------------------------------------------------------------------------------------------
4,665,661 92,815 7.89 4,599,179 90,974 7.85 4,527,546 89,115 7.89
- ------------------------------------------------------------------------------------------------------------------------
618,039 590,260 576,578
- ------------------------------------------------------------------------------------------------------------------------
$ 5,283,700 $ 5,189,439 $ 5,104,124
- ------------------------------------------------------------------------------------------------------------------------
$ 1,102,144 8,466 3.05 $ 1,067,895 8,290 3.08 $ 1,032,622 8,348 3.24
106,207 596 2.23 108,104 603 2.21 109,349 604 2.22
1,582,538 22,037 5.52 1,533,191 21,489 5.56 1,576,211 21,625 5.50
- ------------------------------------------------------------------------------------------------------------------------
2,790,889 31,099 4.42 2,709,190 30,382 4.45 2,718,182 30,577 4.51
- ------------------------------------------------------------------------------------------------------------------------
1,050,545 15,169 5.73 1,159,005 17,203 5.89 1,151,971 16,700 5.81
148,334 2,439 6.52 81,395 1,305 6.36 20,000 326 6.45
- ------------------------------------------------------------------------------------------------------------------------
3,989,768 48,707 4.84 3,949,590 48,890 4.91 3,890,153 47,603 4.91
- ------------------------------------------------------------------------------------------------------------------------
783,508 761,578 776,405
80,763 75,732 63,664
429,661 402,539 373,902
- ------------------------------------------------------------------------------------------------------------------------
$ 5,283,700 $ 5,189,439 $ 5,104,124
- ------------------------------------------------------------------------------------------------------------------------
44,108 3.05 42,084 2.94 41,512 2.98
3.05
3.75 3.63 3.68
2,396 2,426 2,344
- ------------------------------------------------------------------------------------------------------------------------
41,712 39,658 39,168
3,500 3,000 1,500
33,521 34,315 31,411
61,277 46,720 45,443
- ------------------------------------------------------------------------------------------------------------------------
10,456 24,253 23,636
(6,362) 7,857 7,572
- ------------------------------------------------------------------------------------------------------------------------
$ 16,818 $ 16,396 $ 16,064
- ------------------------------------------------------------------------------------------------------------------------
$ 0.75 $ 0.73 $ 0.72
- ------------------------------------------------------------------------------------------------------------------------
$ 0.67 $ 0.65 $ 0.64
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>23
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
June 30, 1998.
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 14, 1998 /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 BOK
Financial Corporation's 10-Q for the period ended June 30, 1998 and is qualified
in its entirety 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-31-1998
<PERIOD-END> Jun-30-1998
<CASH> 444,055
<INT-BEARING-DEPOSITS> 2,977,030
<FED-FUNDS-SOLD> 29,025
<TRADING-ASSETS> 29,240
<INVESTMENTS-HELD-FOR-SALE> 1,801,601
<INVESTMENTS-CARRYING> 222,038
<INVESTMENTS-MARKET> 222,159
<LOANS> 2,882,868
<ALLOWANCE> 57,782
<TOTAL-ASSETS> 5,704,512
<DEPOSITS> 3,914,192
<SHORT-TERM> 949,769
<LIABILITIES-OTHER> 79,207
<LONG-TERM> 296,074
0
23
<COMMON> 1
<OTHER-SE> 465,246
<TOTAL-LIABILITIES-AND-EQUITY> 5,704,512
<INTEREST-LOAN> 123,549
<INTEREST-INVEST> 60,367
<INTEREST-OTHER> 1,687
<INTEREST-TOTAL> 185,603
<INTEREST-DEPOSIT> 66,908
<INTEREST-EXPENSE> 99,103
<INTEREST-INCOME-NET> 86,500
<LOAN-LOSSES> 6,423
<SECURITIES-GAINS> 5,832
<EXPENSE-OTHER> 110,997
<INCOME-PRETAX> 54,222
<INCOME-PRE-EXTRAORDINARY> 36,751
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,751
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.46
<YIELD-ACTUAL> 3.63
<LOANS-NON> 14,735
<LOANS-PAST> 21,568
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 76,000
<ALLOWANCE-OPEN> 53,101
<CHARGE-OFFS> 3,822
<RECOVERIES> 2,080
<ALLOWANCE-CLOSE> 57,782
<ALLOWANCE-DOMESTIC> 57,782
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
