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As filed with the Securities and Exchange Commission on July 2, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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BOK FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
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OKLAHOMA 6021 73-1373454
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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BANK OF OKLAHOMA TOWER
BOSTON AVENUE AT SECOND STREET
TULSA, OKLAHOMA 74172
(918) 588-6000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
JAMES A. WHITE
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
BOK FINANCIAL CORPORATION
BANK OF OKLAHOMA TOWER
BOSTON AVENUE AT SECOND STREET
TULSA, OKLAHOMA 74172
(918) 588-6416
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
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FREDERIC DORWART, LAWYERS
TAMARA R. WAGMAN
OLD CITY HALL
124 EAST FOURTH STREET
TULSA, OKLAHOMA 74103
(918) 583-9922
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE(1)
- ----------------------------- ------------- --------- -------------- -------------------
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COMMON STOCK................. 2,371,809 $ 25.25 $59,888,178.00 $ 16,649.00
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(1) CALCULATED PURSUANT TO RULE 457(c) OF THE RULES AND REGULATIONS UNDER THE
SECURITIES ACT OF 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a)
OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
2,371,809 SHARES
BOK FINANCIAL CORPORATION
COMMON STOCK
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The shareholders named in this prospectus may offer from time to time shares of
common stock of BOK Financial Corporation. The common stock will be offered in
accordance with the Plan of Distribution as described on page 41.
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Our common stock is listed on the Nasdaq National Market under the symbol
"BOKF". On July 1, 1999, the last reported sale price of our common stock was
$24.938 per share.
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Investing in the common stock involves risks. See "Risk Factors" beginning on
page 8.
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The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
July 2, 1999
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TABLE OF CONTENTS
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Page
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ABOUT THIS PROSPECTUS........................... i
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS.................................... i
PROSPECTUS SUMMARY.............................. 1
RECENT DEVELOPMENTS............................. 5
THE OFFERING.................................... 6
SUMMARY CONSOLIDATED FINANCIAL DATA............. 7
RISK FACTORS.................................... 8
USE OF PROCEEDS................................. 13
PRICE RANGE OF COMMON STOCK AND DIVIDEND
POLICY.......................................... 13
SELECTED CONSOLIDATED FINANCIAL DATA............ 14
BUSINESS........................................ 16
MANAGEMENT...................................... 33
PRINCIPAL AND SELLING SHAREHOLDERS.............. 37
DESCRIPTION OF CAPITAL STOCK.................... 39
PLAN OF DISTRIBUTION............................ 41
LEGAL MATTERS................................... 42
EXPERTS......................................... 42
WHERE YOU CAN FIND MORE INFORMATION............. 42
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, the
selling shareholders may sell the securities described in this prospectus in
one or more offerings from time to time in accordance with the Plan of
Distribution found on page 41. This prospectus provides you with a description
of the securities the selling shareholders may offer.
You should rely only on the information contained in, or incorporated by
reference into, this prospectus and any accompanying prospectus supplement. We
have not authorized anyone to provide you with information different from that
contained in this prospectus supplement and any accompanying prospectus
supplement. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or any sale of the common stock. In this prospectus, "we," "us" or
"our" refer to BOK Financial Corporation.
This prospectus contains certain references to and information for banks
that are comparable to us. As used in this prospectus, references to comparable
banks refer to the banks (other than BOK Financial) constituting the Morgan
Stanley Mid-Cap Bank Index. The Morgan Stanley Mid-Cap Bank Index comprises 20
mid-size commercial banks (including BOK Financial) with market capitalizations
ranging in size from approximately $1.1 billion to $8.6 billion as of June 25,
1999.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference includes
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Some of the
forward-looking statements can be identified by the use of forward-looking
words such as "believes," "contemplates," "expects," "may," "will," "should,"
"seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or
the negative of those words or other comparable terminology. Forward-looking
statements involve inherent risks and uncertainties. A number of important
factors could cause actual results to differ materially from those in the
forward-looking statements. These factors include fluctuations in interest
rates, inflation, government regulations, and economic conditions and
competition in the geographic and business areas in which we conduct our
operations. For a discussion of factors that could cause actual results to
differ, please see the discussion under "Risk Factors" contained in this
prospectus and in other information contained in our publicly available SEC
filings.
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PROSPECTUS SUMMARY
You should read the following summary with the more detailed information
about us and our financial statements, including the notes to those financial
statements, included in this prospectus and in the documents incorporated by
reference in this prospectus.
BOK Financial Corporation is the largest bank holding company headquartered
in the State of Oklahoma. We conduct business primarily in Oklahoma and
selected markets in neighboring states. We provide a broad array of financial
products and services to major corporations, middle-market companies, small
businesses, retail customers and other entities, including:
o corporate, small business and consumer lending;
o deposit taking;
o corporate treasury services and cash management;
o mortgage lending and servicing;
o trust and asset management services;
o automated teller machine network services; and
o capital markets services.
We have the number one deposit market share in Oklahoma and a leading
market position in nine of the 11 Oklahoma counties in which we operate. As of
March 31, 1999, approximately 76% of our assets were managed in Tulsa and in
Oklahoma City and 8% in the Dallas/Fort Worth area, with additional assets
managed in other Oklahoma markets, Fayetteville, Arkansas and Albuquerque, New
Mexico. We are the largest originator of mortgage loans in Oklahoma, serve as
the state's leading fiduciary and own the state's largest ATM/EFT network and
supermarket banking network.
As of March 31, 1999, we had:
o assets of $7.0 billion;
o loans of $3.6 billion;
o deposits of $4.3 billion; and
o shareholders' equity of $519.2 million.
For 1998, we had net income of $74.7 million, and for the three months ended
March 31, 1999, we had net income of $19.8 million.
BUSINESS SEGMENTS
Our operations are divided into four primary segments and Other Financial
Services. As a percentage of our total revenue for the first quarter of 1999,
Corporate Banking represents 27%, Consumer Banking represents 18%, Mortgage
Banking represents 11%, Trust Services represents 13%, Other Financial Services
represents 24% and other revenue, primarily from asset and liability
management, represents the remaining 7%.
CORPORATE BANKING DIVISION:
o offers commercial and industrial loans, real estate financing,
commercial mortgage loans, specialized industry loans, trade finance and
letters of credit, lease financing, selected capital markets products
and highly specialized treasury and cash management products;
o is the market leader in Oklahoma and has a significant presence in its
largest counties; and
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o had average loans of $2.3 billion and average deposits of $621 million
in the first quarter of 1999.
CONSUMER BANKING DIVISION:
o provides a full line of deposit, loan and fee-based banking products to
retail and small-business customers;
o is the deposit market share leader in Oklahoma and, through our subsidiaries,
has the fourth largest deposit market share in Albuquerque and fifth largest in
the State of New Mexico; and
o had average loans of $300 million and average deposits of $1.7 billion
in the first quarter of 1999.
MORTGAGE BANKING DIVISION:
o originates, purchases, sells and services individual residential
mortgage loans;
o is the largest mortgage originator in Oklahoma;
o services a $7.1 billion mortgage portfolio; and
o had mortgage loan originations of $850 million in 1998 and $198 million
in the first quarter of 1999.
TRUST SERVICES DIVISION:
o provides institutional, investment and retirement products, including
401(k) plans, mutual fund products, cash management and trust services
to affluent individuals, businesses, non-profit organizations and
government entities; and
o is currently responsible for approximately $15 billion in assets.
OTHER FINANCIAL SERVICES:
Other Financial Services comprises:
o TRANSFUND. This division provides merchants and financial institutions
with a full line of ATM, debit/credit card and merchant payment
processing products.
o BOSC, INC. This subsidiary specializes in the execution of securities
transactions as well as public and municipal finance activities and is
responsible for retail sales and brokerage activity.
o BANK OF TEXAS. This subsidiary provides corporate and consumer banking
and other financial services in the Dallas/Fort Worth metropolitan area,
focusing on middle-market banking.
o BANK OF ALBUQUERQUE. This subsidiary serves as the hub for expanding our
consumer and commercial banking and fiduciary service operations in New
Mexico.
o BANK OF ARKANSAS. This subsidiary provides corporate and consumer
banking, public finance, capital markets services and other financial
services in northwest Arkansas.
As a percentage of our first quarter of 1999 revenue, TransFund represents
6%, BOSC, Inc. represents 4%, Bank of Texas represents 7%, Bank of Albuquerque
represents 6%, and Bank of Arkansas represents 1%.
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PRIMARY MARKETS
Our primary markets have recently experienced impressive growth and
diversification:
o OKLAHOMA. Oklahoma's gross state product has grown from $37 billion in
1980 to $79 billion in 1998. Its economy has become significantly more
diversified, with the percentage of its gross state product derived from
the energy industry decreasing from 17.8% in 1980 to 5.3% in 1997.
o TEXAS. Our Texas operations are concentrated in the Dallas/Fort Worth
metropolitan area, the ninth largest Consolidated Metropolitan
Statistical Area in the United States. This market has experienced over
17% population growth and over 31% household income growth from 1990
through 1998.
o NEW MEXICO. Our New Mexico operations are concentrated in the
Albuquerque metropolitan area, which has experienced over 15% population
growth and over 38% household income growth from 1990 through 1998.
o ARKANSAS. Our Arkansas operations are focused in two counties in the
northwest region. From 1990 through 1998, these counties have
experienced over 29% population growth and over 36% household income
growth.
These growth rates significantly surpass U.S. historical growth levels,
which have been 8.3% in population growth and 27.3% in household income growth
from 1990 through 1998.
COMPETITIVE ADVANTAGES
Our primary competitive advantages include:
o STRONG FINANCIAL PERFORMANCE AND CAPITAL POSITION. We have consistently
achieved financial performance and growth superior to that of comparable
banks. Highlights of our recent financial performance include:
-- 19.8% compounded annual revenue growth from 1995 through 1998;
-- 22.5% compounded annual fee-based revenue growth from 1995 through
1998;
-- 14.5% compounded annual diluted earnings per share growth from 1995
through 1998; and
-- 1998 tangible ROA of 1.46% and tangible ROE of 17.8%, compared to
medians of 1.42% and 16.8%, respectively, for comparable banks.
We have achieved this growth and profitability while maintaining solid
reserve and capital levels.
o STRONG PRESENCE IN ATTRACTIVE AND GROWING MARKETS. We are the largest
locally-owned and managed bank in Oklahoma and have the number one
deposit market share in the state. Recent acquisitions have also
provided us with significant market share in new regional markets,
including Dallas/Fort Worth and Albuquerque. We rank among the top five
banks in deposit market share in nine of the 11 Oklahoma counties in
which we operate.
o EXCEPTIONAL LOCAL MARKET KNOWLEDGE AND CUSTOMER SERVICE. We have grown
our market share by emphasizing our reputation for in-depth local market
knowledge and strong customer service. In addition to having significant
expertise in many specialized industries, our commercial lending
officers have an average of seven years of service at BOK Financial and
approximately 13 years of overall industry experience. In each of our
markets, we identify our operations using a local name and provide local
management with the necessary decision-making authority to provide a
quick response to customer requests. We believe that our local market
knowledge and commitment, specialized industry expertise and strong
customer service were important factors leading to the growth of our
deposit market share in Oklahoma from 8.3% in 1995 to 10.4% in 1998.
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o DIVERSIFIED, FEE-BASED PRODUCT OFFERING. In the first quarter of 1999,
our fee-based revenue represented over 46% of total revenue, which
compares favorably to the median of 29% for comparable banks. We offer
our customers a full line of products and services comparable to those
provided by many larger, super-regional or national banks. These
products include: treasury and cash management, selected capital markets
services, mortgage loan related services, brokerage, trust services,
asset management and certain trade finance products. Many of these
products and services provide us with fee-based revenue as opposed to
interest income. As a result, we enjoy this above average proportion of
diverse, predictable fee-based revenue.
o EXPERIENCED AND HIGHLY INCENTIVIZED MANAGEMENT TEAM. Our senior
management team has an average of 26 years of experience in financial
services. Our chairman, Mr. George B. Kaiser, has been Chairman of the
Board and majority owner since 1991. Our CEO, Mr. Stanley A. Lybarger,
has been with BOK Financial for 25 years. In addition, our management
compensation system is highly oriented toward employee retention and
generation of long-term appreciation in equity ownership. Mr. Kaiser
owns 74.1% of our diluted shares. In 1998, approximately 11% of our
full-time employees participated in at least one of our stock option
programs, and depending upon their tenure, members of our senior
management team can expect to have almost 40% of their compensation
derived from stock options.
o CONSISTENT UNDERWRITING APPROACH AND SUPERIOR CREDIT QUALITY. Our
conservative credit culture and consistent and prudent underwriting
approach have produced excellent credit quality. Our conservative
underwriting approach emphasizes local market knowledge and experience,
standardized credit evaluation criteria and an efficient and timely loan
approval process without sacrificing credit quality. As of March 31,
1999, our nonperforming assets to total loans and foreclosed assets
ratio was 0.55%, compared to a median of 0.57% for comparable banks.
BUSINESS STRATEGY
Our business strategy is to:
o FURTHER ENHANCE OUR LEADERSHIP POSITION IN THE OKLAHOMA MARKET. We have
the number one deposit market share in the state and are among the five
largest banks in terms of deposits in nine of the 11 Oklahoma counties
in which we operate. We intend to strengthen this leadership position by
pursuing several initiatives that leverage our Oklahoma market strengths.
These initiatives include acquiring customers through targeted sales to
desirable customer segments, developing new product and technological
innovations and continuing our high levels of customer service.
o CAPITALIZE ON THE VOID CREATED BY MERGERS OF LEADING LOCAL BANKS INTO
LARGE NATIONAL BANKS. We intend to continue our expansion by developing
business with middle market companies that are no longer being served
adequately by local banks due to consolidation in the banking industry.
We believe that we offer middle market companies a full range of
services typically provided by large banks, coupled with the customer
service typically offered by smaller local banks. In addition to an
increased emphasis on developing relationships with these customers, we
are employing a carefully designed acquisition strategy which targets
small to medium-size banks located in growing communities with large
numbers of mid-sized businesses and upper-income customer bases. We
believe that these banks afford us the platform from which to develop a
middle market lending presence that capitalizes on the void resulting
from a reduction in the number of banking firms which primarily target
those customers. Our recent acquisitions in the Dallas and Albuquerque
markets are examples of this strategy.
o CONTINUE TO GROW OUR FEE-BASED REVENUE. We believe that our ratio of
approximately 46% of fee-based revenue to total revenue in the first
quarter of 1999 represents one of the highest percentages of fee-based
revenue of any bank in the country. However, we intend to continue
growing our fee-based revenue contribution by executing a series of
ongoing initiatives in our nationally competitive, niche fee-generating
businesses, including Trust Services, Mortgage Banking, TransFund and
BOSC, Inc., our securities brokerage subsidiary.
o IMPROVE OUR OPERATING EXPENSE MANAGEMENT AND EFFICIENCY RATIO. Our focus
in prior years has been to build share in our home markets by taking
advantage of disruptions from ongoing bank consolidations, while
continuing to expand and develop our Texas franchise. While continued
opportunities exist, we also have identified opportunities to improve
our operating efficiency. To capitalize on these opportunities, we have
developed and are pursuing a number of expense-reduction strategies
including:
-- personnel expense reduction;
-- continued evaluation of outsourcing opportunities;
-- consolidation of operational facilities; and
-- revenue enhancement through differential pricing and improved float
management.
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RECENT DEVELOPMENTS
We recently acquired three banks located in the Dallas/Fort Worth area for
approximately $76 million in cash and an additional bank in Oklahoma for
approximately 2.4 million shares of our common stock (approximately $60
million).
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AS OF MARCH 31, 1999
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CLOSING TOTAL TOTAL TOTAL
DATE NAME PLACE OF OPERATION ASSETS LOANS DEPOSITS
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(in millions)
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6/30/99 First National Bank & Trust Muskogee, Oklahoma $ 245.4 $90.6 $ 227.3
Company of Muskogee
5/14/99 Canyon Creek National Bank Richardson and McKinney, 104.8 56.8 97.2
Texas
6/4/99 Mid-Cities National Bank Tarrant County, Texas 78.6 42.8 72.1
6/16/99 Swiss Avenue State Bank Dallas, Texas 227.2 49.0 182.6
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The three acquisitions in the Dallas/Fort Worth metropolitan area increased our
total assets in this area to approximately $977 million from $566 million at
March 31, 1999. They also have increased our deposits in the area from $404
million to $756 million, giving us an approximate 1.2% share in this $53.9
billion deposit market.
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Our principal executive offices are located at Bank of Oklahoma Tower,
Boston Avenue at Second Street, Tulsa, Oklahoma, 74172, and our telephone
number is (918) 588-6000.
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THE OFFERING
The following summarizes the offering of our common stock by the selling
shareholders.
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Common stock offered hereby.................. 2,371,809
Common stock to be outstanding after
this offering............................... 47,553,759 shares based on shares
outstanding as of June 30, 1999. This does
not include 2,736,445 shares of common stock
issuable upon the exercise of stock options
granted under our stock incentive plans, of
which options to purchase 2,054,043 shares
are currently outstanding but not
exercisable and options to purchase 682,402
shares are currently outstanding and
exercisable, and 5,970,264 shares of common
stock immediately issuable upon conversion
of preferred stock.
Use of proceeds.............................. We will not receive any of the proceeds
from the sale of the shares by the selling
shareholders.
Dividend policy.............................. Our present policy is to retain earnings
for capital and future growth, and management
has no current plans to recommend payment of
cash dividends on our common stock. Since 1996,
we have declared an annual dividend on our common
stock, payable in shares of our common stock, at
a rate of 3%.
Nasdaq National Market symbol................ BOKF
Risk Factors................................. You should carefully consider all of the
information in this prospectus and the
accompanying prospectus supplement including the
discussion of risks beginning on page 8 of this
prospectus.
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SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial and other data as of or for the periods
ended December 31, 1996, 1997 and 1998 are calculated from our audited
consolidated financial statements incorporated by reference into this
prospectus. The summary consolidated financial and other data as of and for the
periods ended March 31, 1998 and March 31, 1999 are calculated from our
unaudited consolidated financial statements incorporated by reference in to this
prospectus.
You should read the following data with the more detailed information
contained in "Selected Consolidated Financial and Operating Data" included in
this prospectus and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our Annual Report on Form 10-K for the
Year Ended December 31, 1998, and Quarterly Report on Form 10-Q for the Three
Months Ended March 31, 1999, each of which is incorporated by reference into
this prospectus and with our consolidated financial statements and notes to the
consolidated financial statements incorporated by reference into this
prospectus.
See "Selected Consolidated Financial Data" for information regarding
assumptions and definitions used in the presentation of our financial data.
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THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------- ---------------------------
1996 1997 1998 1998 1999
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(unaudited)
(dollars in thousands, except per share and ratio data)
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RESULTS OF OPERATIONS:
Taxable-equivalent net interest revenue ........ $ 135,804 $ 165,167 $ 191,545 $ 44,366 $ 52,231
Provision for loan loss ........................ 4,267 9,026 14,451 2,470 3,370
Other operating revenue ........................ 105,312 129,699 172,819 40,787 46,865
Other operating expense ........................ 159,028 195,166 228,655 57,193 63,593
----------- ----------- ----------- ----------- -----------
Income before taxes ............................ 77,821 90,674 121,258 25,490 32,133
Income tax ..................................... 23,694 26,049 46,542 9,177 12,316
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Net income ..................................... $ 54,127 $ 64,625 $ 74,716 $ 16,313 $ 19,817
=========== =========== =========== =========== ===========
PER COMMON SHARE:
Net income--basic .............................. $ 1.17 $ 1.40 $ 1.62 $ 0.35 $ 0.43
Net income--diluted ............................ 1.06 1.25 1.44 0.31 0.38
Book value--diluted (end of period) ............ 7.98 9.68 11.09 9.73 11.34
BALANCE SHEET DATA (END OF PERIOD):
Assets ......................................... $ 4,620,700 $ 5,399,642 $ 6,809,348 $ 5,632,667 $ 7,044,000
Loans .......................................... 2,394,580 2,765,093 3,551,941 2,836,296 3,591,398
Deposits ....................................... 3,256,755 3,728,079 4,379,230 4,019,374 4,342,935
Shareholders' equity ........................... 359,966 435,477 505,114 448,635 519,207
OTHER DATA:
Return on average assets ....................... 1.26% 1.27% 1.31% 1.19% 1.19%
Tangible return on average assets .............. 1.43 1.42 1.46 1.34 1.36
Return on average shareholders' equity ......... 16.80 16.41 15.99 14.89 15.75
Tangible return on average shareholders'
equity ....................................... 19.03 18.42 17.79 16.78 18.05
Net interest margin ............................ 3.54 3.66 3.72 3.65 3.57
Efficiency ratio ............................... 67.84 67.49 62.89 67.23 65.48
Tangible efficiency ratio ...................... 64.01 64.50 60.31 64.53 62.21
Tier 1 capital ratio ........................... 10.49 9.39 7.80 9.47 8.06
Total capital ratio ............................ 11.74 14.54 11.96 14.47 12.15
Leverage ratio ................................. 7.46 6.81 6.57 6.81 6.31
Tangible shareholders' equity ratio ............ 7.22 6.90 6.09 6.88 6.12
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RISK FACTORS
You should carefully consider the following risks as well as the other
information included or incorporated by reference in this prospectus before
purchasing the common stock.
ADVERSE REGIONAL ECONOMIC DEVELOPMENTS COULD NEGATIVELY AFFECT OUR BUSINESS
A substantial majority of our loans are generated in Oklahoma and other
markets in the southwest region, with approximately 95% of 1998 earnings
derived from Bank of Oklahoma. As a result, poor economic conditions in
Oklahoma or other markets in the southwest region may cause us to incur losses
associated with higher default rates and decreased collateral values in our
loan portfolio. In the mid-to-late 1980s, Oklahoma and other parts of the
region underwent an economic downturn that resulted in increases in the level
of delinquencies and losses for us and many of the other financial institutions
operating in the state. If another economic downturn were to occur, we would
expect our level of problem assets to increase accordingly. A regional economic
downturn could also adversely affect revenue from brokerage and trading
activities, mortgage loan originations and other sources of fee-based revenue.
ADVERSE ECONOMIC FACTORS AFFECTING PARTICULAR INDUSTRIES COULD HAVE A NEGATIVE
EFFECT ON OUR CUSTOMERS AND THEIR ABILITY TO MAKE PAYMENTS TO US
Certain industry-specific economic factors also affect us. For example, as
of year-end 1998, 4.4% of our total loan portfolio was to borrowers in the
agricultural industry and 13.2% of our total loan portfolio was to borrowers in
the energy industry, both of which industries are historically cyclical. Low
commodity prices may adversely affect those industries and, consequently, may
affect our business negatively; prices for certain commodities are currently
low. In addition, as of year-end, 1998, 20.9% of our total loan portfolio is
from commercial real estate loans, and a portion of our recent growth has been
fueled by the general real estate recovery in Oklahoma. Accordingly, a
commensurate downturn in the real estate industry in Oklahoma could also have
an adverse effect on our operations.
FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR BUSINESS
Our business is highly sensitive to:
o the monetary policies implemented by the Federal Reserve Board, including
the discount rate on bank borrowings and changes in reserve requirements,
which affect our ability to make loans and the interest rates we may
charge;
o changes in prevailing interest rates, due to the dependency of our banks
on interest income; and
o open market operations in U.S. Government securities.
Significant increases in market interest rates, or the perception that an
increase may occur, could adversely affect both our ability to originate new
loans and our ability to grow. Conversely, a decrease in interest rates could
result in an acceleration in the prepayment of loans, including loans underlying
our holdings of mortgage-backed securities and termination of our mortgage
servicing rights. In recognition of the significant risk of loss on our
capitalized mortgage servicing rights in a declining interest rate environment,
we have undertaken a program to hedge this exposure through use of futures
contracts, call options and put options. In addition, changes in market interest
rates, changes in the relationships between short-term and long-term market
interest rates or changes in the relationships between different interest rate
indices, could affect the interest rates charged on interest-earning assets
differently than the interest rates paid on interest-bearing liabilities. This
difference could result in an increase in interest expense relative to interest
income. Our strategy of borrowing funds in the capital markets to supplement
deposit growth subjects us to additional interest rate and liquidity risk. An
increase in market interest rates also could adversely affect the ability of our
floating-rate borrowers to meet their higher payment obligations. If this
occurred, it could cause an increase in nonperforming assets and net
charge-offs, which could adversely affect our business. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation--Market
Risk, Quarterly Report on Form 10-Q for the Three Months Ended March 31, 1999"
for a discussion of our management of interest rate risk.
OUR SUBSTANTIAL HOLDINGS OF MORTGAGE-BACKED SECURITIES AND MORTGAGE SERVICING
RIGHTS COULD ADVERSELY AFFECT OUR BUSINESS
We have invested a substantial amount of our holdings in mortgage-backed
securities, which are investment interests in pools of mortgages.
Mortgage-backed securities are highly sensitive to changes in interest rates.
We mitigate this risk
- 8 -
<PAGE> 12
somewhat by investing principally in shorter duration, adjustable rate mortgage
products which are less sensitive to changes in interest rates. Nonetheless, a
significant decrease in interest rates could lead mortgage holders to refinance
the mortgages constituting the pool backing the securities, subjecting us to a
risk of prepayment and decreased return on investment due to subsequent
reinvestment at lower interest rates.
In addition, as part of our mortgage banking business, we have acquired
substantial holdings of mortgage servicing rights. The value of these rights is
also very sensitive to changes in interest rates. Falling interest rates tend to
increase loan prepayments, which may lead to cancellation of the related
servicing rights. Our investments and dealings in mortgage-related products
increases the risk that a decrease in interest rates could adversely affect our
business. We attempt to manage this risk by maintaining an active hedging
program for our mortgage servicing rights. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Market Risk,
Quarterly Report on Form 10-Q, for the Three Months Ended March 31, 1999."
SUBSTANTIAL COMPETITION COULD ADVERSELY AFFECT US
Banking is a competitive business. We compete actively for loan, deposit and
other financial services business in Oklahoma, as well as in our other markets.
Our competitors include a large number of small and large local and national
banks, savings and loan associations, credit unions, trust companies,
broker-dealers and underwriters, as well as many financial and nonfinancial
firms that offer services similar to ours. Recently, large national financial
institutions, such as Bank One and BankAmerica, have entered the Oklahoma
market. These institutions have substantial capital, technology and marketing
resources. Such large financial institutions may have greater access to capital
at a lower cost than we do, which may adversely affect our ability to compete
effectively. In addition, there have been a number of recent mergers involving
financial institutions located in Oklahoma and our other markets. There have
historically been significant limitations in Oklahoma on the ability of existing
banks to establish branches. On June 30, 1999, legislation restricting the
ability of state thrifts to branch expired. As a consequence, after June 30,
1999, banks will have an unlimited ability to establish branches in Oklahoma.
Accordingly, we may face increased competition from both merged banks and new
entrants to our markets.
We have recently expanded into markets outside of Oklahoma, where we
compete with a large number of financial institutions that have an established
customer base and greater market share than we do. We may not be able to
compete successfully in these markets outside of Oklahoma.
With respect to some of our services, we compete with non-bank companies
that are not subject to regulation. The absence of regulatory requirements may
give non-banks a competitive advantage.
POSSIBLE DISRUPTION OF BUSINESS DUE TO THE YEAR 2000 PROBLEM
The Year 2000 problem results from an inability of computer systems to
accurately recognize dates on and after the year 2000. The Year 2000 problem is
a broad business issue that extends beyond computer failures to possible
failures of entire infrastructures, such as telecommunications and data
networks, building facilities and security systems and systems of other
institutions, including governmental agencies, to settle transactions.
We and our service providers are having to modify or replace significant
portions of computer software and hardware to ensure that our systems will
function correctly in the year 2000 and thereafter. As part of our
comprehensive Year 2000 compliance program, we have identified all of the major
application and processing systems and have sought external and internal
resources to replace and test the systems. We are testing purchased software,
internally developed systems and systems supported by external parties as part
of the program. We are evaluating customers and vendors that have significant
relationships with us to determine whether they are adequately preparing for
the year 2000. In addition, we are developing contingency plans to reduce the
impact of some potential events that may occur. These plans will include a
definition of and a plan to address the most reasonably likely, worst case
scenario. We cannot guarantee, however, that the systems of vendors or
customers with whom we do business will be Year 2000 compliant on a timely
basis or that contingency plans will shield operations from failures that may
occur.
The Year 2000 problem poses the following principal risks to our business:
o disruption of our business due to our failure to achieve Year 2000
readiness;
o disruption of our business due to failure of third parties to achieve
Year 2000 readiness; and
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<PAGE> 13
o disruption in our funding and repayment operations due to failure of fund
providers and obligors to achieve Year 2000 readiness.
We are funding the cost of the Year 2000 project by normal operating cash
flow. Our estimated total cost could change further as analysis continues.
Because of the range of possible issues and the large number of variables
involved, however, we cannot definitively quantify the potential costs. For
example, our remediation efforts or the efforts of third parties may be
unsuccessful. Any failure of such remediation efforts could result in a loss of
business, damage to our reputation or legal liability. Consequently, such
failures could have a material adverse effect on our business. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Year
2000 Considerations", Quarterly Report on Form 10-Q for the Three Months Ended
March 31, 1999 for a discussion of our Year 2000 compliance strategy.
YEAR 2000 LIQUIDITY NEEDS
We may experience additional liquidity needs in connection with increased
deposit withdrawals due to customer concerns over the Year 2000 issue. Although
we have developed a contingency funding plan to prepare for this potential
liquidity need, there can be no assurance that such steps will be adequate. As
a result, significant customer withdrawals in advance or immediately following
January 1, 2000 could have a material adverse effect on our results of
operations or financial condition.
RISKS ASSOCIATED WITH ACQUISITIONS
In order to grow our business, we have recently acquired, and expect to
acquire, other bank and nonbank businesses and assets from time to time.
Accordingly, we expect to face risks commonly encountered in making
acquisitions, including:
o possible loss of key personnel of our acquired businesses;
o difficulties assimilating the personnel and operations of our acquired
businesses;
o possible disruption of our ongoing business and additional burdens on our
management team;
o difficulties in maintaining uniform standards, controls, procedures and
policies;
o possible regulatory and other impediments associated with making
acquisitions; and
o possible unexpected increased costs related to acquisitions.
We cannot be certain that we will realize the anticipated benefits from our
acquisitions or that we will be able to integrate the acquired businesses
successfully. If we fail to integrate acquired businesses successfully, this
could have a material adverse effect on our business.
ADVERSE FACTORS COULD IMPACT OUR ABILITY TO IMPLEMENT OUR OPERATING STRATEGY
Although we have developed an operating strategy which we expect to result
in continuing improved financial performance, we cannot assure you that we will
be successful in fulfilling this strategy or that this operating strategy will
be successful. Achieving success is dependent upon a number of factors, many of
which are beyond our direct control. Factors that may adversely affect our
ability to implement our operating strategy include:
o deterioration of our asset quality;
o inability to reduce our noninterest expenses;
o inability to increase noninterest income;
o deterioration in general economic conditions, especially in our core
markets;
o decreases in net interest margins;
o increases in competition; and
o adverse regulatory developments.
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<PAGE> 14
In particular, we cannot assure you that we will be able to achieve our
plan to reduce expenses and improve our efficiency ratio. This plan is based
on estimates of cost savings and revenue enhancements attributable to various
planned initiatives, and actual results may vary from our estimates. In
particular, our plan is based on current conditions and does not take into
effect future cost increases that may result from acquisitions, internal
growth, wage and price increases or other factors.
ADVERSE EFFECTS OF BANKING REGULATIONS OR CHANGES IN BANKING REGULATIONS COULD
ADVERSELY AFFECT US
We and our subsidiaries are extensively regulated under both federal and
state law. In particular, we are subject to the Bank Holding Company Act of
1956 and the National Bank Act. These regulations are primarily for the benefit
and protection of our customers and not for the benefit of our investors. In
the past, our business has been materially affected by these regulations. For
example, regulations limit our business to banking and related businesses, and
they limit the location of our branches and offices, as well as the amount of
deposits that we can own in a particular state. These regulations may limit our
ability to grow and expand into new markets and businesses.
Additionally, under the Community Reinvestment Act, we are required to
provide services in traditionally underserved areas. Our ability to make
acquisitions and engage in new business may be limited by these requirements.
In addition, the Federal Deposit Insurance Act of 1991 requires us to
maintain specified capital ratios. Any failure to maintain required capital
ratios would limit the growth potential of our business.
Under a long-standing policy of the Board of Governors of the Federal
Reserve System, a bank holding company is expected to act as a source of
financial strength for its subsidiary banks. As a result of that policy, we may
be required to commit financial and other resources to our subsidiary banks in
circumstances where we might not otherwise do so.
The trend toward extensive regulation is likely to continue in the future.
Laws, regulations or policies currently affecting us and our subsidiaries may
change at any time. Regulatory authorities may also change their interpretation
of these statutes and regulations. Therefore, our business may be adversely
affected by any future changes in laws, regulations, policies or
interpretations.
STATUTORY RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND OTHER DISTRIBUTIONS AND DEBTS
OF OUR SUBSIDIARIES COULD LIMIT AMOUNTS OUR SUBSIDIARIES MAY PAY TO US
We are a bank holding company, and a substantial portion of our cash flow
typically comes from dividends that our bank and nonbank subsidiaries pay to
us. Various statutory provisions restrict the amount of dividends our
subsidiaries can pay to us without regulatory approval. In addition, if any of
our subsidiaries liquidates, that subsidiary's creditors will be entitled to
receive distributions from the assets of that subsidiary to satisfy their
claims against it before we, as a holder of an equity interest in the
subsidiary, will be entitled to receive any of the assets of the subsidiary.
If, however, we are a creditor of the subsidiary with recognized claims against
it, we will be in the same position as other creditors.
RISKS ASSOCIATED WITH LOW LIQUIDITY
A relatively small fraction of our outstanding common stock is actively
traded. Although this registration may increase the liquidity of our common
stock, we cannot be sure it will eliminate risks associated with low liquidity.
The risks of low liquidity include increased volatility of the price of our
shares. Low liquidity may also limit holders of our common stock in their
ability to sell or transfer our shares at the price, time and quantity desired.
OUR PRINCIPAL SHAREHOLDER CONTROLS A MAJORITY OF OUR SHARES
Mr. George B. Kaiser owns a majority of the outstanding shares of our common
stock. Mr. Kaiser will continue to be able to elect all of our directors and
effectively to control the vote on all matters submitted to a vote of our common
shareholders.
Mr. Kaiser's ability to prevent an unsolicited bid for BOK Financial or any
other change in control could have an adverse effect on the market price for our
common stock. A substantial majority of our directors are not officers or
employees of BOK Financial or any of its affiliates. However, because of Mr.
Kaiser's control over the election of our directors, he could change the
composition of our Board of Directors so that it would not have a majority of
outside directors.
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<PAGE> 15
POSSIBLE FUTURE SALES OF SHARES BY OUR PRINCIPAL SHAREHOLDER COULD ADVERSELY
AFFECT THE MARKET PRICE OF OUR COMMON STOCK
Although Mr. Kaiser intends to maintain at least a majority ownership in
BOK Financial, he may sell shares of our common stock in compliance with the
federal securities laws at any time, or from time to time. The federal
securities laws will be the only restrictions on Mr. Kaiser's ability to sell.
Because of his current control of us, Mr. Kaiser could sell large amounts of
his shares of our common stock by causing us to file a registration statement
that would allow him to sell shares more easily. In addition, Mr. Kaiser could
sell his shares of our common stock without registration under Rule 144 of the
Securities Act. Although we can make no predictions as to the effect, if any,
that such sales would have on the market price of our common stock, sales of
substantial amounts of our common stock, or the perception that such sales
could occur, would adversely affect market prices. If Mr. Kaiser sells or
transfers his shares of our common stock as a block, another person or entity
could become our controlling shareholder.
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<PAGE> 16
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling shareholders.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is quoted on the Nasdaq National Market under the symbol
"BOKF." The following table sets forth the high and low closing sale prices for
our common stock for the periods indicated, as reported by the Nasdaq National
Market. The share prices have been adjusted to reflect a two-for-one stock
split in the form of a 100% stock dividend paid on February 22, 1999, but not
for the annual 3% stock dividends paid in 1996, 1997 and 1998.
<TABLE>
<CAPTION>
COMMON STOCK
PRICE
-------------------------
HIGH LOW
---------- -----------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997
First quarter.......................... $ 15 3/16 $ 12 23/32
Second quarter......................... 17 1/32 13 9/16
Third quarter.......................... 19 5/16 15 7/16
Fourth quarter......................... 22 3/8 17 7/16
YEAR ENDED DECEMBER 31, 1998
First quarter.......................... 24 7/8 18 3/32
Second quarter......................... 24 15/16 22 1/32
Third quarter.......................... 23 29/32 19 19/32
Fourth quarter......................... 24 1/16 20 3/4
YEAR ENDED DECEMBER 31, 1999
First quarter.......................... 25 15/16 22 1/16
Second quarter......................... 25 7/8 23 3/4
</TABLE>
A recent reported last sale price for our common stock as reported on the
Nasdaq National Market is set forth on the cover page of this prospectus. As of
June 30, 1999, there were 1,225 holders of record of our common stock based on
number of accounts.
Our present policy is to retain earnings for capital and future growth, and
management has no current plans to recommend payment of cash dividends on our
common stock. Our policy is also to pay an annual dividend on our common stock
payable in shares of our common stock at a rate of 3%.
In each of 1996, 1997 and 1998, a 3% dividend payable in shares of our
common stock was declared and paid to holders of our common stock. In addition,
in 1996, 1997 and 1998, 139,344 shares, 107,230 shares and 68,765 shares,
respectively, of our common stock were issued in payment of dividends on our
Series A Preferred Stock in lieu of cash by mutual agreement of BOK Financial
and the holders of our Series A Preferred Stock.
- 13 -
<PAGE> 17
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected consolidated financial and other data as of and for the years
ended December 31, 1994, 1995, 1996, 1997 and 1998 are derived from our audited
consolidated financial statements that are incorporated in this prospectus by
reference. The selected consolidated financial and other data as of and for the
quarter ended March 31, 1998 and 1999 are derived from our unaudited
consolidated financial statements that are incorporated in this prospectus by
reference. You should read the following data with the more detailed information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report for the year ended December 31,
1998, and Quarterly Report on Form 10-Q, for the Three Months Ended March 31,
1999, each of which is incorporated in this prospectus by reference, and with
our consolidated financial statements and the notes to the consolidated
financial statements incorporated in this prospectus by reference.
You should read the following information with the data in the table on the
next page:
o Per share data has been restated to reflect the two-for-one stock split
in the form of a 100% stock dividend paid on February 22, 1999 and a 3%
stock dividend paid on November 25, 1998.
o We have presented net interest income and income before income taxes on a
taxable-equivalent basis using a combined federal and state statutory tax
rate of 38.9%.
o Other operating expense includes merger and integration expense, which
was $98,000 for 1996, $112,000 for 1997 and $2.0 million for 1998.
o Tangible return on average shareholders' equity is net income plus
intangible amortization net of income taxes divided by average
shareholders' equity.
o The efficiency ratio is noninterest expense not including foreclosed
asset expense or income, as a percentage of the sum of net interest
income (on a taxable-equivalent basis) and noninterest income.
o The tangible efficiency ratio is noninterest expense not including
foreclosed asset expense or income and expenses from intangible
assets, as a percentage of the sum of net interest income (on a
taxable-equivalent basis) and noninterest income.
o The Tier 1 leverage ratio is computed by dividing Tier 1 capital, which
is total shareholders' equity less net unrealized gains and losses on
securities available for sale and intangible assets, by average tangible
assets.
o The Tier 1 capital ratio is computed by dividing Tier 1 capital by risk
weighted period-end assets. Risk weighted period-end assets equal the
balance of the assets at risk less the portion of the allowance for
credit losses which exceeds 1.25% of the balance of the assets at risk.
The balance of the assets at risk is calculated by applying risk-weighted
percentages per regulatory guidelines to total assets and off-balance
sheet items.
o The tangible shareholders' equity ratio is tangible shareholders' equity
divided by tangible assets.
o The total capital ratio is total risk-based capital divided by total
risk-adjusted assets.
o The reserve for loan losses to loans is computed by dividing the reserve
for loan losses by total loans, excluding residential mortgage loans held
for sale which are carried at the lower of aggregate cost or market
value.
o The provision for loan losses to average total loans is computed by
dividing the annualized provision for loan losses by total average loans,
excluding average residential mortgage loans held for sale.
- 14 -
<PAGE> 18
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ----------- ---------- ----------
(dollars in thousands, except per share and ratio data)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Taxable-equivalent interest revenue .............. $ 229,175 $ 282,479 $ 298,897 $ 354,115 $ 395,880
Interest expense ................................. 104,055 160,177 163,093 188,948 204,335
---------- ---------- ----------- ---------- ----------
Taxable-equivalent net interest revenue .......... 125,120 122,302 135,804 165,167 191,545
Provision for loan losses ........................ 195 231 4,267 9,026 14,451
Other operating revenue .......................... 74,364 91,146 105,312 129,699 172,819
Other operating expense .......................... 133,475 142,206 159,028 195,166 228,665
---------- ---------- ----------- ---------- ----------
Income before income taxes ....................... 65,814 71,011 77,821 90,674 121,258
Income tax expense ............................... 20,749 21,806 23,694 26,049 46,542
---------- ---------- ----------- ---------- ----------
Net income ....................................... $ 45,065 $ 49,205 $ 54,127 $ 64,625 $ 74,716
========== ========== =========== ========== ==========
PER COMMON SHARE:
Net income-basic ................................. $ 0.96 $ 1.06 $ 1.17 $ 1.40 $ 1.62
Net income-diluted ............................... 0.88 0.96 1.06 1.25 1.44
Book value-diluted (end of period) ............... 5.22 6.67 7.98 9.68 11.09
Common shares outstanding (end of period) ........ 39,470 40,832 42,264 43,818 45,037
Weighted average common shares
outstanding-basic ................................ 45,032 44,971 45,014 45,120 45,118
Weighted average common shares
outstanding-diluted .............................. 51,110 51,058 51,161 51,634 51,790
BALANCE SHEET DATA (END OF PERIOD):
Assets ........................................... $3,927,276 $4,244,118 $ 4,620,700 $5,399,642 $6,809,348
Loans ............................................ 1,844,053 2,194,368 2,394,580 2,765,093 3,551,941
Intangible assets ................................ 43,846 37,134 28,276 67,796 95,935
Nonperforming assets ............................. 24,214 32,687 23,411 24,232 17,716
Deposits ......................................... 2,629,574 2,937,709 3,256,755 3,728,079 4,379,230
Subordinated debenture ........................... 23,000 -- -- 148,356 146,921
Shareholders' equity ............................. 236,902 301,565 359,966 435,477 505,114
BALANCE SHEET DATA (PERIOD AVERAGE):
Assets ........................................... $3,580,373 $4,046,189 $ 4,302,427 $5,090,545 $5,712,791
Loans ............................................ 1,718,508 2,012,574 2,252,216 2,598,718 2,978,438
Earning assets ................................... 3,177,134 3,603,355 3,834,705 4,510,970 5,064,001
Deposits ......................................... 2,554,185 2,681,892 3,125,780 3,471,875 3,878,801
Shareholder's equity ............................. 226,201 272,359 322,254 393,704 467,300
PROFITABILITY RATIOS:
Return on average assets ......................... 1.26 % 1.22 % 1.26 % 1.27 % 1.31 %
Tangible return on average assets ................ 1.38 1.34 1.43 1.42 1.46
Return on average shareholders' equity ........... 19.92 18.07 16.80 16.41 15.99
Tangible return on average
shareholders' equity ............................. 21.90 19.85 19.03 18.42 17.79
Net interest margin .............................. 3.94 3.39 3.54 3.66 3.72
Efficiency ratio ................................. 69.20 68.07 67.84 67.49 62.89
Tangible efficiency ratio ........................ 66.40 65.27 64.01 64.50 60.31
RISK-BASED CAPITAL RATIOS:
Tier 1 capital ratio ............................. 9.14 % 9.91 % 10.49 % 9.39 % 7.80 %
Total capital ratio .............................. 11.19 11.17 11.74 14.54 11.96
Leverage ratio ................................... 5.64 6.55 7.46 6.81 6.57
Return on average shareholders' equity ........... 19.92 18.07 16.80 16.41 15.99
CREDIT QUALITY RATIOS:
Reserve for loan losses to
nonperforming loans .............................. 190.27 % 130.73 % 239.70 % 279.86 % 495.05 %
Reserve for loan losses to loans ................. 2.12 1.80 1.96 1.98 1.88
Provision for loan losses to average
total loans ...................................... 0.01 0.01 0.19 0.35 0.50
Net loans charged off to average total loans ..... 0.01 0.01 (0.12) 0.14 0.09
Nonperforming assets to total loans and
foreclosed assets ................................ 1.31 1.49 0.98 0.87 0.50
Nonperforming assets to total assets ............. 0.62 0.77 0.51 0.45 0.26
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
--------------------------
1998 1999
---------- ----------
(unaudited)
(dollars in thousands,
except per share and ratio data)
<S> <C> <C>
RESULTS OF OPERATIONS:
Taxable-equivalent interest revenue .............. $ 95,074 $ 108,841
Interest expense ................................. 50,708 56,610
---------- ----------
Taxable-equivalent net interest revenue .......... 44,366 52,231
Provision for loan losses ........................ 2,470 3,370
Other operating revenue .......................... 40,787 46,865
Other operating expense .......................... 57,193 63,593
---------- ----------
Income before income taxes ....................... 25,490 32,133
Income tax expense ............................... 9,177 12,316
---------- ----------
Net income ....................................... $ 16,313 $ 19,817
========== ==========
PER COMMON SHARE:
Net income-basic ................................. $ 0.35 $ 0.43
Net income-diluted ............................... 0.31 0.38
Book value-diluted (end of period) ............... 9.73 11.34
Common shares outstanding (end of period) ........ 43,797 45,125
Weighted average common shares
outstanding-basic ................................ 45,229 45,096
Weighted average common shares
outstanding-diluted .............................. 51,934 51,747
BALANCE SHEET DATA (END OF PERIOD):
Assets ........................................... $5,632,667 $7,044,000
Loans ............................................ 2,836,296 3,591,398
Intangible assets ................................ 65,494 93,933
Nonperforming assets ............................. 24,181 19,827
Deposits ......................................... 4,019,374 4,342,935
Subordinated debenture ........................... 148,388 148,504
Shareholders' equity ............................. 448,635 519,207
BALANCE SHEET DATA (PERIOD AVERAGE):
Assets ........................................... $5,554,376 $6,750,179
Loans ............................................ 2,822,147 3,523,454
Earning assets ................................... 4,928,513 5,933,983
Deposits ......................................... 3,852,937 4,291,586
Shareholder's equity ............................. 444,246 510,279
PROFITABILITY RATIOS:
Return on average assets ......................... 1.19 % 1.19 %
Tangible return on average assets ................ 1.34 1.36
Return on average shareholders' equity ........... 14.89 15.75
Tangible return on average
shareholders' equity ............................. 16.78 18.05
Net interest margin .............................. 3.65 3.57
Efficiency ratio ................................. 67.23 65.48
Tangible efficiency ratio ........................ 64.53 62.21
RISK-BASED CAPITAL RATIOS:
Tier 1 capital ratio ............................. 9.47% 8.06 %
Total capital ratio .............................. 14.47 12.15
Leverage ratio ................................... 6.81 6.31
Return on average shareholders' equity ........... 14.89 15.75
CREDIT QUALITY RATIOS:
Reserve for loan losses to
nonperforming loans .............................. 291.46 % 452.85 %
Reserve for loan losses to loans ................. 2.02 1.94
Provision for loan losses to average
total loans ...................................... 0.36 0.39
Net loans charged off to average total loans ..... 0.10 0.04
Nonperforming assets to total loans and
foreclosed assets ................................ 0.85 0.55
Nonperforming assets to total assets ............. 0.43 0.28
</TABLE>
- 15 -
<PAGE> 19
BUSINESS
BOK Financial Corporation is the largest bank holding company headquartered
in the State of Oklahoma. We conduct business primarily in Oklahoma and
selected markets in neighboring states. We provide a broad array of financial
products and services to major corporations, middle-market companies, small
businesses, retail customers and other entities, including:
o corporate, small business and consumer lending;
o deposit taking;
o corporate treasury services and cash management;
o mortgage lending and servicing;
o trust and asset management services;
o automated teller machine network services; and
o capital markets services.
We have the number one deposit market share in Oklahoma and a leading
market position in nine of the 11 Oklahoma counties in which we operate. At
March 31, 1999, approximately 76% of our assets were managed in Tulsa and in
Oklahoma City and 8% in the Dallas/Fort Worth area, with additional assets
managed in other Oklahoma markets, Fayetteville, Arkansas and Albuquerque, New
Mexico. We are the largest originator of mortgage loans in Oklahoma, serve as
the state's leading fiduciary and own the state's largest ATM/EFT network and
supermarket banking network.
As of March 31, 1999, we had:
o assets of $7.0 billion;
o loans of $3.6 billion;
o deposits of $4.3 billion; and
o shareholders' equity of $519.2 million.
For 1998, we had net income of $74.7 million, and for the three months ended
March 31, 1999, we had net income of $19.8 million.
COMPETITIVE ADVANTAGES
We are a leading provider of financial services in Oklahoma and selected
markets in neighboring states. Our ability to maintain and further enhance our
competitive position is based on a number of significant competitive advantages
which include:
o STRONG FINANCIAL GROWTH AND CAPITAL POSITION. We have consistently
achieved financial performance and growth superior to that of comparable
banks:
-- 19.8% compounded annual revenue growth from 1995 through 1998 and
24.5% revenue growth in 1998;
-- 22.5% compounded annual fee-based revenue growth from 1995 through
1998 and 24.8% fee-based revenue growth in 1998, compared to the
median 20.0% compounded annual fee-based revenue growth for comparable
banks;
-- 14.9% compounded annual net income growth from 1995 through 1998 and
15.6% net income growth in 1998;
-- 14.5% compounded annual diluted earnings per share growth from 1995
through 1998 and 15.2% diluted earnings per share growth in 1998;
-- 1998 ROA and ROE of 1.31% and 16.0%, compared to medians of 1.35% and
15.4% for comparable banks; and
- 16 -
<PAGE> 20
-- 1998 tangible ROA and tangible ROE of 1.46% and 17.8%, compared to
medians of 1.42% and 16.8%, respectively, for comparable banks.
We have achieved this growth and profitability while maintaining solid
reserve levels and capital ratios, as reflected below:
-- provision for loan losses has exceeded net charge-offs in each of the
last four years;
-- reserves to loans at year-end were at 1.98% in 1997 and 1.88% in 1998;
-- our Tier 1 capital ratio was 9.39% in 1997 and 7.80% in 1998, compared
to medians of 10.69% and 10.25% for comparable banks;
-- our total capital ratio was 14.5% in 1997 and 12.0% in 1998, compared
to medians of 12.9% and 12.0% for comparable banks; and
-- our leverage ratio was 6.81% in 1997 and 6.57% in 1998, compared to
medians of 8.53% and 7.84% for comparable banks.
A bank with better than 6% for the Tier 1 capital ratio, 10% for the total
capital ratio and 5% for the leverage ratio is considered well-capitalized
by regulatory agencies.
We believe that our consistently strong financial performance and capital
adequacy have provided us with the momentum and characteristics that are
critical for continued business success.
o STRONG PRESENCE IN ATTRACTIVE AND GROWING MARKETS. We are the largest
locally-owned and managed bank in Oklahoma with the number one deposit
market share in the state and a leading position in nine of the 11
Oklahoma counties in which we operate. Our deposit market share in
Oklahoma grew from 8.3% in 1995 to 10.4% in 1998, without in-state
acquisitions. We have also established a significant presence in the
majority of the counties in which we operate outside of Oklahoma,
including selected counties in Texas, New Mexico and Arkansas. We rank
among the top five banks in terms of deposit market share in 12 of the
17 counties in which we operate.
While our presence in Oklahoma has been historically strong, recent
acquisitions have provided us with a significant increase in market
share in some of our newer markets. We recently achieved the number four
deposit market share position in Albuquerque through our acquisition of
17 branches in New Mexico from Bank of America. Recent acquisitions in
the Dallas/Fort Worth metropolitan area have increased our deposits in
the area from $404 million to $756 million, giving us an approximate
1.2% share in this $53.9 billion deposit market. With the completion of
these acquisitions, we believe that we have reached the necessary
critical mass to be a significant competitive force in each of these
markets.
We have chosen to enter and expand our share in markets that we believe
possess attractive demographics and future growth characteristics. The
population growth rate of the Valencia County, New Mexico market is
expected to be approximately 3.89% per annum over the next five years,
and the Dallas/Fort Worth market area is expected to grow in excess of
1.1% in population per annum over the same period. Our primary markets
together are estimated to have a population growth rate of over 10% from
1997 to 2002, compared to 4.5% for the United States over the same
period. We believe that our strong presence in these growing markets will
provide a platform for significant expansion of our business into the
future.
o EXCEPTIONAL LOCAL MARKET KNOWLEDGE AND CUSTOMER SERVICE. We have grown
our share in all of the markets in which we compete by emphasizing our
reputation for in-depth local market knowledge and strong customer
service. This reputation has been particularly valuable in allowing us to
capitalize on the deterioration of competitors' customer service levels
caused by ongoing merger and acquisition activity. Our senior management
team in each of our major markets has extensive local experience. Our
commercial lending officers have an average of seven years of service
at BOK Financial and approximately 13 years of overall industry
experience. This experience extends into a number of more specialized
industries, including energy, real estate and agriculture. In each of our
principal markets, we identify our operations using a local name and
provide local management with the necessary decision-making authority to
provide a quick response to customer requests.
We believe that it is, in part, our combination of local market
knowledge, commitment and specialized industry expertise that allows us
to deliver superior customer service and build significant market share.
o DIVERSIFIED, FEE-BASED PRODUCT OFFERING. In the first quarter of 1999,
our fee-based revenue represented over 46% of our total revenue, which
compares favorably to the median of 29% for comparable banks. We offer
our commercial and retail customers a full line of banking services and
products comparable to those provided by many larger, super-regional or
national banks. This product offering has enabled us to grow our customer
base and market share while competing against larger institutions. Many
of these products and services provide us with predominantly fee-based
revenue as opposed to interest income. In Corporate Banking, our
fee-based products include: treasury and cash management, asset
management, selected capital markets services and certain trade finance
products. In our other divisions, our fee-based products include:
mortgage loan related services, ATM services, brokerage, trust services
and asset management. In striving to serve all of
- 17 -
<PAGE> 21
our customers' banking needs, we have developed a significant presence
in many of these businesses. As a result, we enjoy an above-average
proportion of predictable, fee-based revenue. This relative diversity
and predictability of revenue increases the stability of our earnings
stream and financial performance.
o EXPERIENCED AND HIGHLY INCENTIVIZED MANAGEMENT TEAM. Our senior
management team has an average of 26 years of experience in financial
services. Most of our senior management team has had significant
experience at other leading national banking organizations including Banc
One, Bankers Trust, Comerica and NationsBank. Our Chairman, Mr. George B.
Kaiser, has served as Chairman of BOK Financial and Bank of Oklahoma
since 1991, when he acquired his current ownership interest. In addition
to his banking investment, Mr. Kaiser is actively involved in the oil and
gas exploration and production business, with interests in 22 states and
two Canadian provinces. Our CEO, Mr. Stanley A. Lybarger, has been with
BOK Financial for the past 25 years, gaining substantial experience
across our organization in a variety of positions. We believe that our
management team has industry and regional knowledge superior to that of
our primary competitors in the Oklahoma market.
We have historically encouraged a high level of employee ownership. Mr.
Kaiser owns 74.1% of our diluted outstanding shares.
Our management compensation system is highly oriented toward employee
retention and generation of long-term appreciation in equity ownership by
the management group. The primary non-cash compensation is a stock option
plan which vests over a seven-year period. This program is intended to
align the interests of management with those of our shareholders, while
encouraging the retention of senior management. Depending upon their
tenure, members of our senior management team can expect to have almost
40% of their compensation derived from options. Participation in stock
option plans is also used as an incentive for other bank officers.
Approximately 302 employees participated in at least one of our stock
option plans in 1998, representing approximately 11% of our total
full-time employee base.
o CONSISTENT UNDERWRITING APPROACH AND SUPERIOR CREDIT QUALITY. The local
market knowledge of our commercial relationship officers, as well as our
extensive experience as a lender in the middle-market commercial, energy,
agriculture and real estate markets, helps us to identify quality lending
opportunities. In order to prudently capitalize on these opportunities,
we employ a conservative underwriting approach that emphasizes local
market and industry knowledge and experience as well as standardized
credit evaluation criteria tailored by industry and asset class. By
providing our commercial relationship officers with a standardized set of
criteria, we provide both a more efficient and timely approval process,
as well as a high degree of predictability and consistency, in our
treatment of customers.
Central to this approach is the "Credit Concurrence Officer" ("CCO"). The
CCO is a senior level, highly experienced banker whose primary
responsibility is to work closely with relationship managers in
evaluating all new credit decisions over $2.5 million. Importantly, the
CCO has no direct lending duties or business development responsibilities
and is compensated solely upon the quality of his or her credit
decisions.
This consistent and prudent underwriting approach has allowed us to
maintain and grow our market share without sacrificing credit quality. As
of March 31, 1999, our nonperforming assets to loans and foreclosed
assets ratio was 0.55%, compared to a median of 0.57% for comparable
banks. In addition, our net charge-offs to average loans ratio was 0.04%,
compared to a median of 0.27% for comparable banks.
We believe that the maintenance of our strong credit culture and
consistent underwriting approach is essential for sustaining and growing
our market share in favorable economic climates, while avoiding
deteriorated asset quality in adverse environments.
BUSINESS STRATEGY
o FURTHER ENHANCE OUR LEADERSHIP POSITION IN THE OKLAHOMA MARKET. One of
our primary strengths is our number one deposit market share in the
State of Oklahoma, particularly in the metropolitan markets of Tulsa
and Oklahoma City. We rank among the five largest banks in terms of
deposits in nine of the 11 Oklahoma counties in which we operate. At
the end of 1998, our Corporate Banking Division had the leading market
share in Tulsa and a significant market share in Oklahoma City. At the
end of 1998, approximately 34% of commercial customers in Tulsa and 19%
of commercial customers in Oklahoma City had their primary lending
relationships with us. We currently have banking relationships with 16
of the 20 largest public companies headquartered in the state and
provide fiduciary services for 11 of these businesses. In addition, we
are the largest originator of mortgage loans in Oklahoma, we serve as
the state's leading fiduciary, responsible for over $15 billion of
assets, and we own the state's largest ATM/EFT network and supermarket
banking network.
- 18 -
<PAGE> 22
We believe that we will further enhance our leadership position in
Oklahoma by focusing on our Oklahoma market strengths, which include:
-- an historically strong presence and recognized brand name in Oklahoma;
-- a broader product and service offering than our community bank
competitors;
-- an in-depth knowledge of local markets and high level of customer
service;
-- a reputation for consistently and prudently providing credit services
to our customers throughout economic and market cycles;
-- a loyal local customer base which continues to grow due to disruptions
at other banks caused by ongoing merger and acquisition activity; and
-- a record of service leadership in the middle-market business
community.
Additionally, the breadth and variety of our distribution channels makes
us one of the most convenient banks in Oklahoma based upon number of
branches and geographic coverage. As an example, we have built the
largest supermarket banking network in the state through our strong and
established relationship with Albertsons, one of the premier supermarket
chains in the U.S. The favorable business climate and diversified economy
in Oklahoma provide us with opportunities to increase revenue along all
of our primary business lines. We believe our established strengths,
together with our ability to think and act more entrepreneurially than
our competitors, will allow us to grow our leadership position in
Oklahoma in the future.
o CAPITALIZE ON THE VOID CREATED BY MERGERS OF LENDING LOCAL BANKS INTO
LARGE NATIONAL BANKS. We believe that there is significant potential to
build upon our competitive advantages in high growth markets outside of
Oklahoma, and that we can capitalize on the market disruptions caused by
consolidation within the banking system. In addition to an increased
focus on middle market companies no longer being adequately served by
their traditional bank, we are employing a carefully designed bank
acquisition strategy which targets small to medium-size banks located in
growing communities with large numbers of mid-sized businesses and
upper-income customer bases. The institutions that we target typically do
not have the financial capacity and scale to provide their customers with
the range of products and services required to meet all of their
financial needs, but have an excellent reputation for customer
responsiveness. Post acquisition, we improve our partners' overall level
of customer service by combining our full range of products and services
with our partners' local presence, experience and relationships.
After entering a new market, we use our partner as a hub to develop
additional business opportunities, primarily in the small and medium-size
local business market. We retain and hire experienced bankers from local
markets who have expertise in specific industries and market segments,
such as energy, real estate, agriculture and middle-market commercial
lending. Post integration, the subsidiary operates as an affiliate bank,
making localized lending decisions in accordance with our comprehensive
credit policy. Our philosophy is to offer the best of large bank services
with the look and feel of a service-oriented community bank.
Examples of the effective employment of this strategy include our recent
acquisitions in the Dallas and Albuquerque markets.
-- Dallas Acquisitions. In 1997, we acquired First National Bank of Park
Cities in Dallas, which served the affluent markets of Highland Park
and University Park in Dallas. Park Cities offered traditional upscale
retail products and services, but lacked other services, including
trust, significant commercial lending and investment services.
Subsequent to this acquisition, we acquired a strong small business
bank in the Dallas market, the First Texas Bank, which we combined
with Park Cities to create Bank of Texas. We hired local bankers
experienced in middle-market lending and retained both management
teams who now serve as the senior management at Bank of Texas. Lending
decisions for Bank of Texas are made locally, but in accordance with
our credit guidelines to ensure overall credit quality. Bank of Texas,
now a broad-based bank with a middle-market/small-business niche, is
expected to experience significant internal and acquisition-related
growth. In 1999, we have further expanded our presence in the Dallas/
Fort Worth Metropolitan area through our acquisition of Swiss Avenue
State Bank, Mid-Cities National Bank and Canyon Creek National Bank.
We anticipate combining these newly acquired entities with Bank of
Texas in the second quarter of 2000.
-- New Mexico Acquisition. Through our acquisition of 17 Bank of America
branches in New Mexico, we obtained entry into Bernalillo, Valencia
and Sandoval Counties, among the fastest growing counties in New
Mexico, and created the Bank of Albuquerque. This newly established
bank, with $420 million in deposits and a loan portfolio of
approximately $147 million, as of March 31, 1999, is the fourth
largest bank in the City of Albuquerque and the fifth largest in the
State of New Mexico in terms of deposits. We plan to develop our
management team and introduce our products and services in a manner
consistent with that utilized in Dallas.
Focusing on high quality acquisition opportunities, we intend to apply
this acquisition strategy throughout selected major midwest and southwest
metropolitan business centers, such as Dallas, Fort Worth, Houston, the
greater Kansas City area and other attractive regional markets.
o CONTINUE TO GROW OUR FEE-BASED REVENUE. Growing our fee-based revenue
continues to be a major operating objective. While we believe that we
have one of the highest percentages of fee-based revenue of any bank in
the country, we see significant opportunities to grow further through the
expansion and implementation of fee-generating businesses and products.
- 19 -
<PAGE> 23
The table below illustrates the percentage of total pre-tax income
contributed by our primary fee-generating businesses.
Fee-based Operating Revenue
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
---------------------------------------------------------------------
INVESTMENT
TRUST MORTGAGE TRANSFUND SERVICES
SERVICES(1) BANKING (ATM NETWORK) (BOSC, INC.)(1) TOTAL(1)
----------- ------- ------------- --------------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Fee-based operating revenue ....... $ 37,928 $ 44,379 $ 19,138 $ 14,941 $ 109,511
Fee-based operating expense ....... 35,419 39,573 12,440 14,310 95,885
Pretax contribution ............... 12,463 10,940 6,954 1,557 30,893
Percentage contribution to
consolidated net income ......... 11.13% 9.78% 6.21% 1.39% 27.59%
</TABLE>
- ----------
(1) Approximately $6.9 million of investment revenue and $5.9 million in related
expenses are reported in both Trust Services and BOSC, Inc. but excluded
from Total.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999
---------------------------------------------------------------------
INVESTMENT
TRUST MORTGAGE TRANSFUND SERVICES
SERVICES BANKING (ATM NETWORK) (BOSC, INC.)(1) TOTAL(1)
----------- ------- ------------- --------------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Fee-based operating revenue ....... $ 9,961 $ 9,926 $ 5,711 $ 5,454 $ 29,246
Fee-based operating expense ....... 9,880 9,261 3,380 4,925 25,930
Pretax contribution ............... 2,592 1,659 2,434 957 7,352
Percentage contribution to
consolidated net income ......... 8.70% 5.57% 8.17% 3.21% 24.67%
</TABLE>
- ----------
(1) Approximately $1.8 million of investment revenue and $1.5 million in related
expenses are reported in both Trust Services and BOSC, Inc. but excluded
from Total.
We also have several businesses, including Commercial Deposits/Treasury and
Retail Deposits, which provide us with a revenue stream that is more stable
than that of traditional lending services. In the aggregate, these
businesses and our other fee-generating businesses accounted for
approximately 46% of our 1998 total revenue and 46% of our revenue for the
three months ended March 31, 1999.
We are expanding our fee-generating businesses through a number of ongoing
initiatives:
-- The Trust Services Division's recent growth initiatives include:
workplace delivery of voluntary insurance products, a new, partially
proprietary mutual fund asset allocation product, Trust Internet
access and Employee Benefit Record-keeping System Internet access.
Internet delivery of retail brokerage and research service is pending
implementation.
-- We have recently grown the Mortgage Banking Division through two
acquisitions in the affluent metropolitan Kansas City market and one
acquisition in Little Rock. Other recent Mortgage Banking initiatives
include the creation of a Portfolio Retention Department designed to
focus on providing mortgage services to our existing customer base.
-- TransFund has recently introduced several new and innovative products
and services, including off-line debit cards, business debit cards,
direct debit point of sale and Internet payment processing.
-- BOSC, Inc. is the result of the August 1998 merger of our securities
units with Leo Oppenheim & Co., Inc., Oklahoma's leading public
finance firm. In 1998, we were the largest underwriter of general
obligation municipal securities in the State of Arkansas, serving as
the lead underwriter on 22 new competitive issues. We were also a
leading underwriter in Oklahoma, serving as lead underwriter on 24
issues in 1998. Our acquisition of Leo Oppenheim has enabled us to
also enter the revenue bond underwriting market, resulting in an
additional nine lead- managed revenue bond transactions completed
between August 15 and December 31, 1998. The new BOSC, Inc.
strengthens the breadth of our fee-based products and services by
providing specialized expertise in public and municipal finance,
asset-backed securities and private placement activities.
o IMPROVE OUR OPERATING EXPENSE MANAGEMENT AND EFFICIENCY RATIO. We have
identified expense management and productivity improvement as major
corporate objectives for 1999 and 2000. In prior years, the unprecedented
opportunity to gain market share resulting from merger- related
disruptions required that we place more emphasis on business development
than on expense management. While continued opportunities exist to gain
customers and market share, we see a clear opportunity to enhance
profitability through productivity improvement and expense management. In
1998, our efficiency ratio was 62.9% and for the three months ended March
31, 1999, it was 65.5%. Adjusted to exclude intangible amortization, the
ratio was 60.3% for 1998 and 62.2% for the three months ended
March 31, 1999.
In 1998, we engaged the strategic consulting firm of Carreker-Antinori,
Inc. to formulate a number of initiatives to increase income and to reduce
expenses. In addition, a working group of senior executives chaired by our
Chief Executive Officer meets monthly to identify specific areas and
opportunities to reduce expenses.
- 20 -
<PAGE> 24
Initiatives generated by the consultants and our management working group
include:
--personnel expense reduction;
--reduction of inefficient outsourcing operations;
--consolidation of operational facilities; and
--revenue enhancement through differential pricing and improved float
management.
We believe these initiatives together will yield over $5 million in
ongoing pre-tax income improvement beginning in 1999. $2.2 million of this
improvement relates to personnel reductions already implemented for fiscal year
1999.
Our estimates regarding expense reduction and improved efficiency are
forward-looking statements based on estimates of cost savings and revenue
enhancements attributable to various planned initiatives. Actual results may
vary from our estimates. In particular, the estimates are based on current
conditions and do not take into effect future cost increases that may result
from acquisitions, internal growth, wage and price increases or other factors
that may increase our expenses. See "Risk Factors--Adverse factors could impact
our ability to implement our operating strategy."
PRIMARY MARKETS
As of March 31, 1999, approximately 76% of our assets were managed in Tulsa
and in Oklahoma City and 8% in the Dallas/Fort Worth area, with additional
assets managed in other Oklahoma markets, Fayetteville, Arkansas and
Albuquerque, New Mexico. However, after giving effect to the acquisitions of
Canyon Creek National Bank, Mid-Cities National Bank and Swiss Avenue State
Bank, we have increased our assets in the Dallas/Fort Worth area from $566
million to approximately $977 million, representing approximately 13% of our
total asset base (including assets resulting from the recent Muskogee
acquisition).
OKLAHOMA
Historically, Oklahoma's economy has been largely dependent on the energy
industry and, to a lesser extent, the agricultural industry. However, following
the deterioration of energy prices in the mid-to-late 1980s and a subsequent
regional economic downturn, Oklahoma's economy became more diversified. While
energy continues to be an important business sector, Oklahoma has experienced
significant growth in many other sectors, including health care, aviation and
telecommunications. Consequently, Oklahoma's gross state product has grown
significantly, from approximately $48 billion in 1980 to approximately $79
billion in 1998. Oklahoma's gross state product has also become more
diversified, as shown in the table below.
Oklahoma Gross State Product
<TABLE>
<CAPTION>
CONTRACT WHOLESALE, FINANCIAL
AGRICULTURE ENERGY CONSTRUCTION MANUFACTURING RETAIL SERVICES OTHER TOTAL
----------- ------ ------------ ------------- ------ -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1980.......... 3.15% 17.83% 4.85% 14.61% 6.64% 11.33% 41.79% 100.00%
1997.......... 2.72 5.33 3.10 16.98 6.13 12.51 53.23 100.00
---- ---- ---- ----- ---- ----- ----- ------
change in %... (0.43) (12.50) (1.75) 2.37 (0.51) 1.18 11.44 --
</TABLE>
Oklahoma's two largest metropolitan areas, Tulsa and Oklahoma City, have
led the state's economic growth. These two business centers serve as corporate
or regional headquarters for a number of major domestic and international
companies, including CITGO Petroleum Corporation, Dollar Thrifty Automotive
Group Inc., Fleming Companies, Inc., Phillips Petroleum, Kerr-McGee and
Williams, Inc. Additionally, due in part to the state's highly skilled
workforce, companies such as American Airlines, General Motors Corporation, MCI
Worldcom, Lucent Technologies, Seagate Technologies and Whirlpool have
established major servicing and manufacturing operations in Oklahoma. A variety
of small businesses, in a number of different industries, continue to choose
both cities as major business locations.
Median household income in Oklahoma has shown consistent growth. From 1990
to 1998, household income grew 29.6% in the Tulsa MSA and 27.0% in the Oklahoma
City MSA, compared to the U.S. median of 27.3%. During 1998, employment growth
was 3.5% in the Tulsa MSA and 2.1% in the Oklahoma City MSA, compared to the
national growth level of 2.5%.
- 21 -
<PAGE> 25
Oklahoma State Government Revenue
As Oklahoma's economic base has become increasingly diversified, the
state's reliance on oil-related businesses has decreased commensurately. For
example, in 1984, oil and gas severance taxes accounted for 26.7% of the total
tax revenue for Oklahoma. By 1998, the percentage of tax revenue attributable
to oil and gas severance taxes had dropped to 3.8%. This decrease occurred
while Oklahoma tax revenue increased from $2.6 billion in 1984 to almost $3.9
billion in 1998.
TEXAS
Texas is the second most populous state in the country, with a population
of over 19.4 million in 1997. The state also has the country's third largest
state economy, according to the Texas Chamber of Commerce. In addition to the
energy industry, Texas has become a leader in technology, research and other
emerging industries in recent years.
Our Texas operations are concentrated in the Dallas/Fort Worth area. Dallas
has more than 140,000 businesses and more than 5,000 corporate headquarters in
its metropolitan area. In recent history, the Dallas/ Fort Worth area has
experienced population and business growth superior to that of the majority of
other U.S. markets. In 1998, Fortune magazine reported that Dallas ranked sixth
in the number of Fortune 500 companies headquartered in its metropolitan area.
Sixteen Fortune 500 companies are located in the Dallas/ Fort Worth Metroplex.
In addition, the Dallas/Fort Worth area was rated one of the best places in
America to start and grow a company, ranking 13th out of 50 U.S. metropolitan
areas, according to data provided by the Dallas Chamber of Commerce. Dallas is
also among the largest high technology employment centers in the U.S. and is
expected to lead the nation in employment growth from 1997 through 2005,
according to data provided by the Dallas Chamber of Commerce.
Also, according to data provided by the Dallas Chamber of Commerce, the
Dallas/Fort Worth Consolidated Metropolitan Statistical Area ("CMSA") is larger
in population than the majority of U.S. states and is the nation's ninth most
populous CMSA. By 2010, the Dallas/Fort Worth area is expected to be the fourth
largest CMSA in the nation. Household income in the area is expected to rise at
a faster rate than the national average.
The following tables illustrate population and income growth in the Dallas/Fort
Worth area.
Population Growth
<TABLE>
<CAPTION>
1990-1998 1998-2003
AREA 1990 1998 % CHANGE 2003 ESTIMATE % CHANGE
---- ---- ---- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Dallas MSA................. 2,676,248 3,154,195 17.9% 3,399,780 7.8%
Fort Worth-Arlington MSA... 1,361,034 1,570,657 15.4 1,682,415 7.1
U.S........................ 248,709,873 269,412,836 8.3 280,885,064 4.3
</TABLE>
Median Household Income Growth
<TABLE>
<CAPTION>
AREA 1990 1998 % CHANGE
---- ---- ---- --------
<S> <C> <C> <C>
Dallas MSA.................. $ 32,739 $ 45,117 37.8%
Fort Worth-Arlington MSA.... 32,161 41,972 30.5
U.S......................... 30,097 38,302 27.3
</TABLE>
NEW MEXICO
In 1998, the State of New Mexico had a population of approximately 1.7
million. New Mexico has experienced rapid compounded annual population growth in
recent years. In 1997, its compounded annual population growth rate was the
ninth fastest among all the states in the U.S. From 1990 to 1998, New Mexico's
gross state product grew at a compounded annual rate of 5.6%. An area with
especially strong growth in New Mexico has been high technology. Major
corporations with production facilities located in New Mexico include Intel,
Motorola, General Electric, General Mills, Philips, Levi, Strauss and Sumitomo
Sitix Silicon. Our operations in New Mexico are concentrated in the Albuquerque
MSA. The following tables illustrate population and household income growth in
those markets.
Population Growth
<TABLE>
<CAPTION>
1990-1998 1998-2003
AREA 1990 1998 % Change 2003 Estimate % Change
---- ---- ---- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Albuquerque MSA..... 589,131 681,530 15.7% 741,341 8.8%
U.S................. 248,709,873 269,412,836 8.3 280,885,064 4.3
</TABLE>
Median Household Income Growth
<TABLE>
<CAPTION>
AREA 1990 1998 % CHANGE
---- ---- ---- --------
<S> <C> <C> <C>
Albuquerque MSA..... $ 27,347 $ 37,895 38.6%
U.S................. 30,097 38,302 27.3
</TABLE>
- 22 -
<PAGE> 26
ARKANSAS
In 1998, Arkansas had a population of approximately 2.5 million. Principal
industries in Arkansas include manufacturing, agriculture, forestry and tourism.
Arkansas has experienced strong economic growth in recent years. From 1990 to
1998, the state's gross state product grew from $40.1 billion to $54.9 billion.
Sixty-eight Fortune 500 firms operate in Arkansas. Five of those firms, Wal-Mart
Stores, Tyson Foods, ALLTEL, Beverly Enterprises and Dillard's, are
headquartered in Arkansas.
Our Arkansas operations are concentrated in Benton County and Washington
County, which include the towns of Fayetteville, Springdale, Rogers and
Bentonville. These two counties ranked first and sixth out of 74 Arkansas
counties in population growth from 1990 to 1998. The following tables
illustrate population and household income growth in these markets.
Population Growth
<TABLE>
<CAPTION>
1990-1998 1998-2003
AREA 1990 1998 % CHANGE 2003 ESTIMATE % CHANGE
---- ---- ---- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Benton County........ 97,499 133,534 37.0% 151,180 13.2%
Washington County.... 113,409 140,233 23.7 151,661 8.2
U.S.................. 248,709,873 269,412,836 8.3 280,885,064 4.3
</TABLE>
Median Household Income Growth
<TABLE>
<CAPTION>
AREA 1990 1998 % CHANGE
---- ---- ---- --------
<S> <C> <C> <C>
Benton County........ $ 26,039 $ 35,350 35.8%
Washington County.... 23,177 32,038 38.2
U.S.................. 30,097 38,302 27.3
</TABLE>
BUSINESS SEGMENTS
CORPORATE BANKING DIVISION
The following table provides summary historical financial data on the
Corporate Banking Division:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------- --------------------------
1996 1997 1998 1998 1999
----------- ----------- ---------- ---------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net interest income .......... $ 56,449 $ 65,888 $ 77,493 $ 17,123 $ 19,801
Noninterest income ........... 14,278 20,757 24,862 5,921 6,674
----------- ----------- ---------- ---------- -----------
Total ........................ 70,727 86,645 102,355 23,044 26,475
Noninterest expense .......... 23,126 30,328 42,077 10,412 9,772
Provision for loan loss ...... (96) (133) 63 46 (337)
----------- ----------- ---------- ---------- -----------
Income before income taxes ... $ 47,697 $ 56,450 $ 60,215 $ 12,586 $ 17,040
=========== =========== ========== ========== ===========
Average assets ............... $ 1,449,637 $ 1,819,834 $2,171,023 $2,044,630 $ 2,598,249
Average equity ............... 164,214 210,407 255,108 247,068 293,600
</TABLE>
Our Corporate Banking Division has historically been one of our strengths.
Through this Division, we offer a broad spectrum of commercial banking services
to primarily middle-market companies and some of the nation's largest
corporations. These services include commercial and industrial loans, real
estate financing, commercial mortgage lending, energy industry loans,
agricultural loans, trade finance and letters of credit, lease financing and
selected capital markets products. Additionally, the Division also offers
highly specialized treasury and cash management products.
The Corporate Banking Division and our banking subsidiaries are active
lenders in all of our primary geographic markets, including Oklahoma, Texas,
New Mexico, Arkansas, Kansas, Missouri and Colorado. The Division is organized
on both a geographical and customer basis. The Division is organized into three
distinct, geographically-oriented units, each of which is headed by an
experienced senior manager with strong local market knowledge. In addition, the
Division manages certain activities in accordance with the specific customer
segments and industries it serves:
o the Commercial and Industrial Group serves middle-market and larger
companies;
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<PAGE> 27
o the Real Estate Group serves residential and commercial real estate
developers, operators and builders;
o the Business Banking Group serves smaller family-owned businesses;
o the various Specialized Lending Groups serve companies operating in
selected industries, including energy, agriculture, healthcare and
banking/finance; and
o the Treasury Services/Cash Management Group provides a wide range of
treasury and cash management services to companies of all sizes.
The Division's primary objective is to develop relationships in which we
can serve as the customer's lead or primary bank. The Division attempts to meet
the full breadth of customer needs by offering a nationally competitive array
of depository, trust, investment, cash management and credit services which are
superior to those offered by our community bank competitors.
At the end of 1998, our Corporate Banking Division had the leading market
share in Tulsa and a significant and growing market share in Oklahoma City.
Approximately 34% of commercial customers in Tulsa and 19% of commercial
customers in Oklahoma City have their primary lending relationships with us. We
believe that we oversee all but one of the retail lockbox accounts managed in
the State of Oklahoma. Following the acquisition of our two main Oklahoma
competitors by nationally-operating bank holding companies, we were successful
in winning all of their Oklahoma-based retail lockbox business.
Our Corporate Banking Division competes with a variety of financial service
companies. These competitors include a number of community, regional, national
and international banks. In addition, we compete with commercial finance
companies, investment banks, leasing companies and insurance companies.
This Division's recent initiatives include:
o Regional expansion. Consistent with our strategy of focusing our growth
in areas with higher growth rates than our home markets, we have
established business development calling efforts in the Denver/Colorado
Springs, Kansas City and Wichita markets. Our initial effort is directed
toward identifying middle-market companies to which we can offer our
array of services, in some situations using our expertise in specialized
industries as a means to establish initial contact and credibility. As
these efforts mature, we will assess the possibility of establishing loan
production offices and potentially acquiring a bank or establishing a de
novo bank in some of these markets. At December 31, 1998, approximately
$50 million in loans were outstanding in these three markets, and we are
focused on achieving loan growth in these markets in the future.
o Commercial leasing function. For several years, we have engaged in
commercial leasing. The initial focus of our leasing activity was the
financing of large scale equipment, such as gas compressors. We have
developed a strategy to actively expand our leasing activity during 1999
in order to broaden the financing alternatives we offer our existing
customers, and to a lesser extent, to develop relationships with new
customers. The total amount of leases outstanding at December 31, 1998
was $38.8 million. Of this amount, $20.5 million represented leases
originated in 1998. In May 1999, $29 million of gas compressor leases
were liquidated at a gain, before taxes, of $3.6 million.
o Establishment of a Merchant Banking Unit. We are establishing a unit to
provide non-traditional bank financing services to our existing
customers. This unit will execute private placement of mezzanine
financing and structured finance transactions and will utilize a
syndications desk for larger, multi-bank credits. The principal focus of
this unit will initially be on existing customers to reduce the
competitive threat posed by larger banks that provide similar services.
o Enhanced technology. We continue to improve our information technology in
an effort to enhance the efficiency of our operations, increase the
productivity of our bankers and support staff and continue providing
excellent customer service. Significant system improvements that are
either ongoing or will begin this year include:
-- enhanced loan operations;
-- improved loan automation technology;
-- improved software to measure customer profitability; and
-- enhanced information and contact management systems for our
relationship officers.
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<PAGE> 28
CONSUMER BANKING DIVISION
The following table provides summary historical financial data on the
Consumer Banking Division:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -------------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net interest income .......... $ 44,647 $ 43,283 $ 46,290 $ 10,195 $ 9,889
Noninterest income ........... 19,853 21,800 23,156 6,430 7,804
---------- ---------- ---------- ---------- ----------
Total ........................ 64,500 65,083 69,446 16,625 17,693
Noninterest expense .......... 49,911 50,879 52,395 12,258 11,975
Provision for loan loss ...... 1,817 2,520 2,116 527 383
---------- ---------- ---------- ---------- ----------
Income before income taxes ... $ 12,772 $ 11,684 $ 14,935 $ 3,840 $ 5,335
========== ========== ========== ========== ==========
Average assets ............... $1,963,068 $1,894,535 $1,904,409 $1,932,739 $1,886,641
Average equity ............... 55,332 44,600 46,767 44,813 43,432
</TABLE>
Through the Consumer Banking Division, we provide our retail and
small-business customers with a full line of deposit, loan and fee-based banking
products. The Division serves approximately 200,000 households and over 7,500
business customers with 64 branches in Oklahoma. Additionally, the Division
serves as a significant referral source for BOSC's Retail Brokerage Division,
Mortgage Banking and the Business Banking Department of the Corporate Banking
Division. We also offer consumer banking services in Texas, New Mexico and
Arkansas through the Bank of Texas, Bank of Albuquerque, Bank of Arkansas,
Swiss Avenue State Bank, Mid-Cities National Bank and Canyon Creek National
Bank. The Division owns and operates approximately 284 ATMs located throughout
our major markets.
The Division is organized into two business units responsible for marketing
and operations, and three geographic units responsible for eastern Oklahoma,
western Oklahoma and New Mexico. In the Dallas market, through our Bank of Texas
subsidiary, we have four offices which offer a variety of consumer and
commercial banking services and operate under the direct management of Bank of
Texas. The recent acquisitions of Mid-Cities National Bank, Canyon Creek
National Bank and Swiss Avenue State Bank have added six offices in the Dallas
market.
The Consumer Banking Division's primary strategic objective is to be the
most convenient consumer bank in our markets. The Division conducts business
through four major distribution channels: traditional branches, supermarket
branches, the 24-hour ExpressBank call center and, more recently, the Internet.
We offer service seven days a week, 24 hours a day in numerous, accessible
locations throughout our major markets. The Division leads Community
Reinvestment Act ("CRA") compliance efforts for all of our banks and ensures
that appropriate CRA initiatives are implemented as we enter into new markets.
Through our strong and established relationship with Albertsons, one of the
premier supermarket chains in the U.S., we have built the largest supermarket
banking network in Oklahoma. Of our 26 supermarket branches, 23 are located in
Albertsons. The average deposits of these supermarket locations are
significantly higher than comparable average deposits for branches of most other
major banks throughout the United States. In 1998, our supermarket banking
network generated $40 million of consumer loan applications, or 23% of the total
Oklahoma application volume in the Consumer Banking Division.
Consumer Banking targets two classes of customers: consumer households and
businesses with sales under $1 million. The Division's deposit base is stable,
with customers over 55 years of age accounting for more than 70% of deposits.
The borrower base is also attractive, with customers between 35 and 55 years of
age accounting for over 62% of the Division's total loan portfolio. The small
business customers we serve are a broad and diverse customer class, generally
with annual revenues under $1 million. The Division typically handles credit
relationships for small businesses with borrowing needs of up to $150,000.
In Tulsa and Oklahoma City, the Consumer Banking Division has long been an
established market leader. In New Mexico, Bank of Albuquerque is the fourth
largest bank in the city and fifth largest in the state in terms of deposits.
Our Consumer Banking Division competitors include:
o large, multi-state bank holding companies and their divisions operating
in Oklahoma;
o credit unions;
o smaller community banks that compete for small business customers; and
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<PAGE> 29
o national brokerage firms and home equity lenders.
This Division's recent initiatives include:
o Strategic Selling Initiative. In 1998, the Consumer Division retained
Action Systems, Inc., a major strategy consulting firm, to develop a
system to better measure and manage profitability. The new system enables
our branches to create weekly performance targets and tactics to identify
customers for cross-selling and retention efforts. This initiative has
aided in the repricing of a number of lower-profitability accounts, while
insulating high-value customers from the effects of these price changes.
o New branch/call center automation. In 1998, we began replacing our branch
and call center automated systems with Unisys systems. By September 1999,
these new platform and teller systems will be in place throughout the
Division. The new systems will provide improved sales presentations,
simplify the account opening process for multiple products and provide a
link into a new consumer loan processing system that will improve loan
turnaround time and efficiency.
o Remote Teller System. Since September 1998, the Division has been pilot
testing Remote Teller technology. This technology allows us to replace
some or all of our traditional teller windows with a two-way video
connection and a pneumatic tube-delivery system (similar to drive-ins)
that connects to teller workstations.
o 24-Hour ExpressBank. In 1995, we developed the 24-hour ExpressBank that
serves the Oklahoma, New Mexico and Arkansas markets with full sales and
service seven days a week, 24 hours a day. In 1998, the 24-hour
ExpressBank generated $39 million of consumer loan application volume, or
23% of total Oklahoma application volume in the Consumer Banking
Division. We expect that our 24-hour ExpressBank will begin providing
services to our Dallas area customers in the second quarter of 1999.
o On-line banking services. In 1998, we introduced two web sites which
enable customers to apply for consumer loans, On-line Banking and On-line
BillPay, check mortgage rates and download account information. The web
sites, www.bankofoklahoma.com and www.bankofalbuquerque.com, also support
our branding strategy at the local level. We also plan to launch web
sites for Bank of Texas and Bank of Arkansas in mid-year 1999 and to
initiate an on-line brokerage service in the early part of the third
quarter of 1999, which will be available to active BOSC, Inc. retail
customers. We do not incorporate the contents of the websites into this
prospectus.
MORTGAGE BANKING DIVISION
The following table provides summary historical financial data on the
Mortgage Banking Division:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------- ------------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net interest income ............................ $ 4,247 $ 5,099 $ 6,264 $ 1,212 $ 994
Noninterest income ............................. 28,189 34,208 44,379 9,868 9,926
--------- --------- --------- --------- ---------
Total .......................................... 32,436 39,307 50,643 11,080 10,920
Noninterest expense ............................ 27,750 33,204 41,863 9,501 9,261
Provision for loan losses ...................... 119 165 130 33 --
Provision for impairment of mortgage servicing
rights ...................................... 361 4,100 (2,290) 3,000 --
--------- --------- --------- --------- ---------
Income before income taxes ..................... $ 4,206 $ 1,838 $ 10,940 $ (1,454) $ 1,659
========= ========= ========= ========= =========
Average assets ................................. $ 520,559 $ 386,985 $ 350,362 $ 378,799 $ 305,660
Average equity ................................ 26,396 28,723 30,556 29,505 25,705
</TABLE>
The Mortgage Banking Division is a full-service, prime mortgage banking
company which reports to the Consumer Banking Division. Through Mortgage
Banking, we originate, purchase and service individual residential mortgage
loans and acquire bulk mortgage servicing portfolios.
Mortgage Banking is organized along three functional lines, each of which
is managed by an experienced veteran of the mortgage industry:
o Retail Production;
o Servicing; and
o Financial.
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<PAGE> 30
The Division's primary strategic focus is to use technology to improve
customer service and operating efficiency by constantly evaluating and updating
our mortgage servicing systems, as well as exploring new ways to improve
production and reduce servicing costs. While we are the market leader in
mortgage servicing in Oklahoma, we are focused on expanding our business
outside of our home state. We service a $6.7 billion mortgage portfolio, with
pending acquisitions expected to add an additional $577 million to the
portfolio. We are currently positioning ourselves to offer our full range of
mortgage products in the State of Texas.
Mortgage Banking's primary markets for originating new mortgages are
Oklahoma, Arkansas, Kansas and New Mexico. In 1998, we originated $850 million
in direct retail mortgage loans. In Oklahoma, we have lending outlets in
Oklahoma City, Tulsa, Owasso, Enid, Ponca City and Lawton. In Arkansas, through
our Bank of Arkansas subsidiary, we have offices in Fayetteville, Little Rock
and Bentonville. We also have operations in the greater Kansas City
metropolitan area and, through our Bank of Albuquerque subsidiary, in
Albuquerque.
The Division's customers consist of individuals who are financing home
purchases and homeowners who are refinancing their existing mortgages. We
actively market our services directly to these consumers and through referrals
from our extensive local home builder and realtor network.
Mortgage Banking has the largest share of mortgage originations in
Oklahoma. Our significant retail origination market share in Oklahoma has also
opened up opportunities to expand outside the state.
We compete with local and national banks, mortgage brokers and credit
unions.
This Division's recent initiatives include:
o Creation of a Portfolio Retention Department. Mortgage Banking is a
regional "originator" of home loans, and a national "servicer" of such
loans, with approximately 88,000 loans serviced in 49 states and the
District of Columbia. To take advantage of this potential customer base
for new and refinancing mortgage lending, a "Portfolio Retention"
department was formed in 1998 with the purpose of serving this customer
base by offering refinance lending and the origination of new mortgages.
This operation is conducted through in-bound telemarketing
representatives, with additional contacts generated through Internet
channels. In 1998, the Portfolio Retention Department generated
approximately 684 loans with a total principal amount of over $70
million.
o Broader automated underwriting. In all of its lending locations, Mortgage
Banking continues to expand its automated underwriting capabilities
through the use of proprietary credit-scoring based systems of Fannie Mae
and Freddie Mac. These systems, which are integrated with Mortgage
Banking's own automated origination systems, allow for increased
productivity in processing and underwriting, thereby leading to more
timely loan approvals for mortgage customers.
o Expansion into Little Rock and Kansas City. As a result of our 1998
retail expansion program, Mortgage Banking expanded the coverage area of
its mortgage origination businesses to both the Little Rock and the
Kansas City metropolitan areas. Our expansion efforts in these markets
were primarily through three acquisitions:
-- In March 1998, we acquired Suburban Mortgage Co. in the Kansas City
area, which became part of the Mortgage Banking Division.
-- In August 1998, we acquired Arkansas Fidelity Mortgage in Little Rock,
which now operates as Bank of Arkansas Mortgage Group in concert with
our offices in Fayetteville and Bentonville, Arkansas.
-- In March 1999, we acquired First Mortgage Investors, Inc., which
expands our presence in the greater Kansas City metropolitan area.
o Hedging of interest rate exposure in the servicing portfolio. In 1998,
the Mortgage Banking Division implemented a program that uses futures
contracts and call and put options to hedge against the effect of falling
interest rates on the fair value of its mortgage servicing rights
portfolio. At March 31, 1999, realized hedging gains totaled $9.6
million, net of accumulated amortization, while unrealized losses on open
hedging positions totaled $3.1 million
- 27 -
<PAGE> 31
TRUST SERVICES DIVISION
The following table provides summary historical financial data on the Trust
Services Division:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- ---------------------
1996 1997 1998 1998 1999
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net interest income ........... $ 6,618 $ 8,324 $ 10,079 $ 2,074 $ 2,511
Noninterest income ............ 26,902 30,084 37,928 8,809 9,961
-------- -------- -------- -------- --------
Total ......................... 33,520 38,408 48,007 10,883 12,472
Noninterest expense ........... 25,779 28,532 35,419 8,573 9,880
Provision for loan losses ..... 130 180 125 31 --
-------- -------- -------- -------- --------
Income before income taxes .... $ 7,611 $ 9,696 $ 12,463 $ 2,279 $ 2,592
======== ======== ======== ======== ========
Average assets ................ $219,851 $242,886 $295,660 $274,766 $306,223
Average equity ................ 20,898 24,233 30,188 27,657 33,542
</TABLE>
Our Trust Services Division provides institutional, investment and
retirement products and services to affluent individuals and businesses,
non-profit organizations and governmental entities. We are now responsible for
more than $15 billion in assets.
Our Trust Services Division consists of four units:
o PRIVATE FINANCIAL SERVICES ("PFS"). PFS targets individuals with a net
worth of more than $1 million or an annual income of $200,000 or greater.
We serve our market with a number of products and services, such as:
-- deposit and cash management accounts;
-- customized loans;
-- full service brokerage;
-- mutual fund asset allocation;
-- private portfolio management; and
-- personal trust and estate planning.
PFS serves 7,000 Oklahoma households. Collectively, the PFS business units
have grown revenue at an average rate of 18% per year since 1995.
The primary focus of PFS is to provide customized products and services to the
most affluent individuals within its chosen markets. This group's strategy
relies on building and maintaining highly-trained sales groups that focus on
client development and are compensated based upon attaining specific performance
measures. We also cross-sell other services to our PFS customers. Currently,
approximately 31% of our PFS customers use one or more of our other banking
services.
o INSTITUTIONAL AND EMPLOYEE BENEFITS. Institutional and Employee Benefits
targets clients who require a full line of retirement plan products and
services, as well as trustee, custody and investment management services
for foundations and endowments. Our target market for 401(k) plan
services includes firms with at least 50 employees in the local market
and at least 500 employees in the national market. Our trust/custody area
focuses on local non-profit organizations, pension plans and public
entities that seek a local provider. We are the largest provider of
institutional and employee benefits in Oklahoma.
This group's primary strategy is to build market share by cross-selling its full
line of retirement plan products and services to our broad customer base, as
well as to new customer groups gained through acquisitions.
o TRUST INVESTMENTS. Trust Investments is responsible for individual money
management and for management of our American Performance Funds. It
primarily targets retail customers, 401(k) plans and other pension plans.
Our American Performance Fund mutual fund family consists of ten funds which are
designed for retail investors. These funds have nearly $1.6 billion in assets
and grew approximately 18% in 1998. The Short-Term Income Fund ranked number one
in the U.S. for 1998, and the Growth Equity Fund ranked in the seventh, sixth
and fourth percentiles nationally for the last one, two and three-year periods,
respectively.
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<PAGE> 32
At year-end 1998, the group managed $5.6 billion in discretionary assets,
ranking us as the largest discretionary asset manager in Oklahoma. Our 356
customers for our 401(k) service rank us among the 40 largest providers in the
United States with in-house trust services.
o CORPORATE TRUST. Corporate Trust targets governmental bodies and
companies requiring bond trustees, registrars, paying agents and escrow
agents. Corporate Trust is a leader in the Oklahoma market in serving the
fiduciary needs of governmental bodies and companies. Given our
established strength in the Oklahoma market, our primary strategy is to
expand these services into Texas, New Mexico and Arkansas.
The Trust Services Division's primary markets are Oklahoma, Texas, New
Mexico and Arkansas. We have regional offices in Tulsa, Oklahoma City, Dallas
and Sherman, Texas and plan to open additional offices this year in
Fayetteville, Arkansas and Albuquerque.
The Division's primary competitors are other banks and other financial
service providers, such as brokerage houses, national mutual fund companies,
private money management firms and insurance companies.
This Division's recent initiatives include:
o Workplace availability of insurance products. In November 1997, we
introduced workplace availability for insurance products, which
facilitates mass-market delivery of life, health and disability
insurance products to customers. This initiative complements traditional
pension/401(k) plan delivery and takes advantage of existing commercial
banking relationships. In 1998, 34% of our total insurance revenue
attributable to insurance was derived through workplace delivery.
o Foundations Mutual Fund asset allocation account. The full launch of our
Foundations Mutual Fund asset allocation product began in March 1998.
This product features ten distinct model portfolios of proprietary and
nonproprietary mutual funds and is marketed by both trust and brokerage
sales professionals to emerging affluent customers. This product tailors
investment portfolios to the risk tolerance, time horizon and specific
objectives of the investor.
o 401(k)/Self Directed Option product. In 1996, we introduced a 401(k)/Self
Directed Option product in response to plan participants' desire to
exercise more control over their account balances. Our program offers
core mutual fund options and a self-directed brokerage account option
integrated with daily valuation, voice response and consolidated
reporting. The target market for this product includes primarily
corporate retirement pools with over $25 million in assets. We market
this product nationally and have established customer relationships in
several markets including Chicago, New York, Los Angeles and Dallas.
Target customers include professional firms in the legal, medical,
engineering, technology, architecture, accounting and financial fields.
We presently have nine customers in our 401(k)/SDO program throughout six
different states.
OTHER FINANCIAL SERVICES
Other Financial Services includes our TransFund and BOSC, Inc. businesses
and Bank of Texas, Bank of Albuquerque and Bank of Arkansas.
TRANSFUND
TransFund, our electronic card processing unit, provides merchants and
financial institutions with a full line of ATM, debit/credit cards and merchant
payment processing products.
TransFund consists of four units:
o Operations and Technology;
o Sales and Marketing;
o Customer Service; and
o Financial Administration.
TransFund's primary strategic goal is to increase market share both within
Oklahoma and in contiguous states by introducing new products and services to
current and potential customers. In addition, we continue to employ new
technology in an effort to improve customer responsiveness, increase
information and communication flow and maintain our position as a low cost
service provider.
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<PAGE> 33
In our ATM/debit card business, we processed 58 million debit card
transactions in 1998, representing transactions conducted by more than one
million cardholders. In 1998, we served 238 financial institution customers in
Oklahoma, Kansas, Missouri, Arkansas, Texas, Colorado, New Mexico and Nevada. We
process transactions at approximately 995 ATMs located in these eight states.
In addition, through alliances with other processors, we offer our customers
access to more than 432,000 ATMs worldwide and debit card purchase capability at
more than 15 million merchant locations worldwide.
TransFund markets products to a variety of merchants and financial
institutions. We focus on smaller financial institutions, a segment not heavily
targeted by our larger competitors. Additionally, we focus on the small to
mid-sized merchant market segment. In the merchant payment business, we
processed approximately 3.9 million merchant sales in 1998 with a value of $390
million at more than 5,900 merchant locations.
TransFund's superior customer service and responsiveness has enabled us to
increase our market share significantly over the past few years. For the period
1995 through 1998, the number of debit transactions processed in the United
States grew 26.9% compounded annually, while the number of cardholders in the
United States increased at a compounded annual rate of 28.2%. Over the same
time period, we experienced compounded annual growth rates of 34.4% and 37.5%,
respectively, in the number of merchant locations and the dollar volume of
merchant payments processed. During 1998, TransFund's transaction volume grew
11.3% while total ATM transactions grew 2.2% nationally. While we have the
number one market share in Oklahoma, much of our growth in the past few years
has been in contiguous states.
Our primary competitors are ATM/debit card processors and regional
electronic funds transfer networks. Our competitors have similar capabilities
to ours in terms of cost, product features and functionality. In the merchant
payment processing business, our major competitors are large national
commercial banks.
TransFund's recent initiatives include:
o Business debit cards. In 1998, we began offering the TransFund Business
Check Card. This product was developed to target the purchasing and cash
management needs of businesses with annual revenue of less than $10
million and fewer than 100 employees. The business check card simplifies
cash management and tracking of smaller business expenses, separates
business and personal expenses and is widely accepted at merchant
locations. It also helps our financial institution clients strengthen and
expand their commercial relationships with small businesses.
o Direct debit point-of-sale. TransFund began offering direct debit
point-of-sale purchase capability in 1998 for our financial institution
clients that require a PIN-based debit card for purchases at merchant
locations. We currently have relationships with the Interlink and PULSE
networks to facilitate this PIN-based debit card product.
o Off-line debit cards. The TransFund Check Card is a signature-based card,
which is linked to a cardholder's checking account and routed through the
VISA payment system. This card can be used to make purchases at more than
15 million merchant locations worldwide. During the last two years,
TransFund has focused on introducing this product to most of our
financial institution clients. At year-end 1998, 229 of our client
financial institutions, or 96% of our total clients, used this product.
BOSC, INC.
BOSC, Inc., a subsidiary of BOK Financial Corporation, is a full-service
securities firm with specialized expertise in public and municipal finance,
asset backed securities and private placements. BOSC is authorized to deal in
and underwrite a broader range of securities than traditional banks.
BOSC is comprised of three divisions:
o the Retail Brokerage Division is responsible for retail customer sales
and brokerage activity;
o the Institutional Investments Division executes securities transactions
with other banks, corporations, foundations and public sector entities;
and
o the Leo Oppenheim Division specializes in public and municipal finance
activity, including financial advisory and underwriting services.
In 1998, we consolidated Leo Oppenheim and two of our existing securities
companies into one full-service securities firm. BOSC's strategy is to be the
leading underwriter and dealer in Oklahoma public and municipal securities, to
play a leading role in asset-backed transactions in Oklahoma and to provide
medium-size corporate clients access to the capital markets. We intend to grow
selectively into surrounding markets, particularly with our Retail Brokerage
and Public Finance units.
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<PAGE> 34
The 35 retail financial consultants of BOSC, Inc. serve more than 22,000
households, primarily in Oklahoma, as well as in Texas, Arkansas and
Albuquerque. Institutional sales, trading and underwriting activity is based out
of four primary locations: Oklahoma City, Tulsa, Little Rock and Fayetteville,
Arkansas. Our 32 institutional sales representatives and eight fixed-income
traders focus on Oklahoma and contiguous states. The Leo Oppenheim Division has
eight investment bankers in Oklahoma, three in Arkansas and two in Texas.
The three BOSC divisions are further organized according to their primary
customer segments:
o the Retail Brokerage Division operates as a full-service broker/dealer.
The principal products the Division offers are mutual funds, annuities,
fixed-income securities and equities;
o the Institutional Investment Division focuses on Oklahoma and its
contiguous states. In 1998, the mix of revenue from securities sales
included approximately 25% from financial institutions, 16% from
foundations and trusts, 15% from governmental entities and 11% from
corporations. In 1998, approximately 64% of the revenue earned by the
Institutional Investments Division was generated from Oklahoma-based
institutional customers, but we have recently seen strong growth from
outside of Oklahoma; and
o the Leo Oppenheim Division specializes in municipal finance, asset-backed
securities and private placement activities. Among its clients are many
of the largest issuers of municipal debt in Oklahoma. Although the
Division is growing into adjacent states, the majority of its 1999
revenue is expected to be derived from Oklahoma-based customers.
The Leo Oppenheim Division is the market leader in the underwriting of
Oklahoma and Arkansas school bonds and Oklahoma housing bonds. With BOSC's
appointment as the sole underwriter of the Oklahoma Water Resource Board, we
hope to expand our market share in other public finance areas. We have one of
the largest networks of sales representatives in Oklahoma specializing in
public and municipal securities, and we have been particularly successful in
placing double-tax-exempt bonds with our customer base.
Primary competitors for BOSC include:
o other full-service broker/dealers, financial planning firms and
electronic brokerage firms, which compete with BOSC's Retail Brokerage
Division;
o regional and national securities dealers, which compete with BOSC's
Institutional Investment Division; and
o regional and national firms engaged in public finance underwriting in
Oklahoma and its contiguous states and several small municipal financial
advisory firms based in Oklahoma, which compete with BOSC's Oppenheim
Division.
BOSC's recent initiatives include:
o Section 20, Tier II Authorization. We recently secured Tier II approval
from the Federal Reserve Board, allowing us to expand BOSC's underwriting
activity into the corporate debt market. This additional capability
significantly enhances our position as a niche investment banking firm
which focuses on public finance and asset-backed transactions in the
region. As the only remaining provider of such services based in
Oklahoma, we believe we have significant competitive advantages relative
to out-of-state firms.
o Internet access to brokerage accounts. BOSC plans to offer our retail
clients access to their brokerage accounts through Pershing's "Net
Exchange Client" system. This service provides Internet access for
account review, equity research, stock trade order entry, stock quote,
market news and other information. Our clients will be able to access
this system through a link from our current Web Page. We anticipate
offering this service early in the third quarter of 1999.
BANKING SUBSIDIARIES
We operate six out-of-state banking subsidiaries:
o Bank of Texas, which operates primarily in the Dallas/Forth Worth
metropolitan area;
o Bank of Albuquerque, which serves as our hub in the largest and
fastest-growing market in New Mexico; and
o Bank of Arkansas, which operates primarily in northwest Arkansas.
o Mid-Cities National Bank, Canyon Creek National Bank and Swiss Avenue
State Bank, all recently acquired, which are based in the Dallas/Fort
Worth metropolitan area.
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<PAGE> 35
These subsidiaries have similar lines of business and focus on similar
market segments as Bank of Oklahoma. While tailored for the unique
characteristics of these markets and operating environments, our strategy in
these markets closely resembles the strategy we have pursued successfully in
Oklahoma. We plan to build these subsidiaries into banks with significant
expertise in selected niche products and industries, while offering a community
bank level of service quality.
The primary products and services offered by Bank of Texas, Bank of
Albuquerque and Bank of Arkansas include middle-market and small- business
banking, consumer banking, trust services, treasury services and retail
investments through BOSC. Our primary customer focus is on small businesses and
middle-market corporations that have been affected by disruptions in their
banking services due to consolidations in the banking industry. We also offer
our products and services to retail customers, large corporations and public
and nonprofit entities.
Primary competitors of our banking subsidiaries consist of various
community, regional, national and international banks operating in their
respective geographic areas, as well as other financial services companies.
Market position and recent initiatives for each of our primary banking
subsidiaries are:
o Bank of Texas
-- Bank of Texas currently has $404 million in deposits and a loan
portfolio of approximately $318 million. Our three recent
acquisitions in the Dallas/Fort Worth area, which we anticipate
merging with Bank of Texas in the second quarter of 2000, increased
our total assets in this area to approximately $977 million from $566
million at March 31, 1999. They also have increased our deposits in
the area from $404 million to $756 million, giving us an approximate
1.2% share in this $53.9 billion deposit market.
-- Recent initiatives include expansion in the Dallas/Fort Worth
metropolitan area, as well as the establishment of a merchant banking
unit. This unit will be located in our Dallas office. Initial business
development for this unit will focus upon customers and prospects of
Bank of Texas.
o Bank of Albuquerque
-- Bank of Albuquerque currently has $420 million in deposits and a loan
portfolio of approximately $147 million. It is the fourth largest bank
in the City of Albuquerque and the fifth largest in the State of New
Mexico in terms of deposits.
-- Recent initiatives include expanding middle-market commercial banking
to more fully service the middle-market customer segment, introducing
on-line debit cards and launching an Internet site, which will enable
customers to use various banking services via the Internet.
o Bank of Arkansas
-- Bank of Arkansas currently has $87 million in deposits and a loan
portfolio of approximately $76 million. It grew its total deposits by
17.7% and net loans by 48.2% in 1998. Furthermore, Bank of Arkansas
has become a significant employee benefit plan administrator in
northwest Arkansas.
-- Recent initiatives include expansion in the Ft. Smith, Arkansas
market, establishment of a loan production office in Little Rock,
addition of a local trust administrator for our northwest Arkansas
employee benefit plans and ongoing efforts to enhance the sale of our
treasury service products.
- 32 -
<PAGE> 36
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN KEY EMPLOYEES
The following table presents certain information with respect to the
executive officers, directors and certain key employees of BOK Financial as of
the date of this prospectus.
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
George B. Kaiser......... 56 Chairman of the Board
Stanley A. Lybarger...... 49 President, Chief Executive Officer, and
Director
James A. White........... 55 Executive Vice President and Chief
Financial Officer
W. Wayne Allen........... 63 Director
C. Fred Ball, Jr......... 55 Director, President and Chief Executive Officer,
Bank of Texas
James E. Barnes.......... 65 Director
Sharon J. Bell*.......... 49 Director
Luke R. Corbett.......... 52 Director
Robert H. Donaldson...... 56 Director
William E. Durrett....... 68 Director
James O. Goodwin......... 59 Director
V. Burns Hargis.......... 53 Director, Vice Chairman
Howard E. Janzen......... 45 Director
E. Carey Joullian, IV 39 Director
Robert J. LaFortune*..... 72 Director
Philip C. Lauinger, Jr.* 63 Director
Frank A. McPherson*...... 66 Director
Steve E. Moore*.......... 53 Director
J. Larry Nichols......... 56 Director
Ronald J. Norick......... 57 Director
Robert L. Parker, Sr..... 75 Director
James W. Pielsticker..... 61 Director
E.C. Richards............ 49 Director
James A. Robinson........ 70 Director
L. Francis Rooney, III... 45 Director
David J. Tippeconnic*.... 59 Director
Tom E. Turner............ 60 Director, Chairman, Bank of Texas
Robert L. Zemanek........ 49 Director
Jeffrey R. Dunn.......... 36 Chairman, President, Bank of Arkansas
Paul M. Elvir............ 59 Executive Vice President, Bank of Oklahoma
Mark W. Funke............ 43 President, Bank of Oklahoma, Oklahoma City
Eugene A. Harris......... 57 Executive Vice President, Chief Credit
Officer
H. James Holloman........ 48 Executive Vice President, Bank of Oklahoma
David L. Laughlin........ 46 Senior Vice President and President,
Mortgage Banking
John C. Morrow........... 43 Senior Vice President, Financial Accounting
& Reporting
Steven E. Nell........... 37 Senior Vice President, Corporate Controller
W. Jeffrey Pickryl....... 47 Executive Vice President, Bank of Oklahoma
Norman W. Smith.......... 52 Executive Vice President, Bank of Oklahoma
Gregory K. Symons........ 46 President, Bank of Albuquerque
Charles D. Williamson.... 52 Executive Vice President, Bank of Oklahoma
</TABLE>
- ----------
* Member, Risk Oversight and Audit Committee
- 33 -
<PAGE> 37
George B. Kaiser. Mr. Kaiser has served as a Director of BOK Financial
since 1991 and serves as Chairman of the Board of BOK Financial and Bank of
Oklahoma. He also serves as President and principal owner of Kaiser-Francis Oil
Company, an independent oil and gas exploration and production company with
interests in 22 states and two provinces. Kaiser-Francis also owns Fountains
Continuum of Care, Inc., which holds interests in senior housing communities in
fifteen states.
Stanley A. Lybarger. Mr. Lybarger has served as a Director of BOK Financial
since 1991. He also serves as President and Chief Executive Officer of BOK
Financial and Bank of Oklahoma. He has been with Bank of Oklahoma for 25 years.
Previously, he was President of Bank of Oklahoma's Oklahoma City Regional Office
and Executive Vice President of Bank of Oklahoma with responsibility for
corporate banking.
James A. White. Mr. White is a Director of Bank of Oklahoma and Executive
Vice President, Chief Financial Officer and Treasurer of BOK Financial and Bank
of Oklahoma. He became Chief Financial Officer of BOK Financial and Bank of
Oklahoma in 1992. He formerly served as President and Chief Executive Officer of
First National Bank & Trust Co. of Tulsa, and currently is Chairman of the Board
of Hillcrest Healthcare System.
W. Wayne Allen. Mr. Allen has served as a Director of BOK Financial since
1992. He also serves as Chairman and Director of Phillips Petroleum Company.
From 1993 until 1995, he served as a member of the Board of Directors of the
Federal Reserve Bank of Kansas City.
C. Fred Ball, Jr. Mr. Ball has served as a Director of BOK Financial since
April, 1999. Mr. Ball is President and CEO of the Bank of Texas and is
responsible for Commercial Banking in the Dallas area. Before joining Bank of
Oklahoma in 1997, he was Executive Vice President of Comerica Bank-Texas and
later President of Comerica Securities Inc.
James E. Barnes. Mr. Barnes has served as a Director of BOK Financial since
1991. He is retired Chairman of the Board, President, and Chief Executive
Officer of MAPCO Inc., which has subsequently merged with Williams, Inc. In
addition, he is a Director of Parker Drilling Co., Kansas City Southern
Industries, Inc. and SBC Communications, Inc.
Sharon J. Bell. Ms. Bell has served as a Director of BOK Financial since
1993. She is also an Attorney and Managing Partner at Rogers and Bell in Tulsa,
Oklahoma. She serves as a Trustee and General Counsel to Chapman-McFarlin
Interests. Previously, she was a Director and President of Red River Oil
Company.
Luke R. Corbett. Mr. Corbett has served as a Director of BOK Financial since
April, 1999. He serves as Chairman and Chief Executive Officer of Kerr-McGee
Corporation.
Robert H. Donaldson. Mr. Donaldson has served as a Director of BOK Financial
since 1995. He is a Professor and former President of the University of Tulsa in
Tulsa, Oklahoma.
William E. Durrett. Mr. Durrett has served as a Director of BOK Financial
since 1991. He also serves as Senior Chairman of the Board of American Fidelity
Corporation and American Fidelity Assurance Company. He is also a Director of
Oklahoma Gas & Electric Company and Chairman of the Board of Integris Health.
James O. Goodwin. Mr. Goodwin has served as a Director of BOK Financial
since 1995. He serves as Chief Executive Officer of Oklahoma Eagle Publishing
Co. He is also the Sole Proprietor of Goodwin & Goodwin Law Firm in Tulsa,
Oklahoma.
V. Burns Hargis. Mr. Hargis has served as a Director of BOK Financial since
1993. He also serves as Vice Chairman of BOK Financial and Bank of Oklahoma and
Director of BOSC. Formerly, he was an Attorney and Of Counsel to the law firm of
McAfee & Taft in Oklahoma City, Oklahoma.
Howard E. Janzen. Mr. Janzen has served as a Director of BOK Financial since
1998. He is also President and Chief Executive Officer of Williams
Communications, a subsidiary of Williams, Inc.
E. Carey Joullian, IV. Mr. Joullian has served as a Director of BOK
Financial since 1995. He also serves as President of Mustang Fuel Corporation
and Subsidiaries. In addition, he serves as President and Manager of Joullian &
Co., Inc.
Robert J. LaFortune. Mr. LaFortune has served as a Director of BOK Financial
since 1993. He is self-employed in the investment and management of personal
financial holdings. He is also a Director of Williams, Inc.
Philip C. Lauinger, Jr. Mr. Lauinger has served as a Director of BOK
Financial since 1991. He also serves as Chairman and Chief Executive Officer of
Lauinger Publishing Company. Previously, he was Chairman of the Board and Chief
Executive Officer of PennWell Publishing Co.
Frank A. McPherson. Mr. McPherson has served as a Director of BOK Financial
since 1996. He also served as Chairman of the Board and Chief Executive Officer
of Kerr-McGee Corporation from 1983 to 1997. He is a member of the Board of
Directors of Kimberly-Clark Corp., Conoco Inc.,
- 34 -
<PAGE> 38
Tri-Continental Corporation, Seligman Quality Fund, Inc., Seligman Select
Municipal Fund, Inc. and Seligman Group of Mutual Funds and is a former Director
of the Federal Reserve Bank of Kansas City.
Steven E. Moore. Mr. Moore has served as a Director of BOK Financial since
1998. He also serves as Chairman, President and Chief Executive Officer of OGE
Energy Corp. In addition, he is Director of the Oklahoma City Chamber of
Commerce, Oklahoma State Chamber of Commerce and Edison Electric Institute.
J. Larry Nichols. Mr. Nichols has served as a Director of BOK Financial
since 1997. He is the President and Chief Executive Officer of Devon Energy. He
also serves as Director of Independent Petroleum Association of America and the
Domestic Petroleum Counsel. He is on the Board of Governors for the American
Stock Exchange. In addition, he serves as Director of Smedvig ASA, CMI
Corporation and Caribou Communications Company.
Ronald J. Norick. Mr. Norick has served as a Director of BOK Financial since
April, 1999. He is Controlling Manager, Norick Investments Company, L.L.C. He
previously served as Mayor of Oklahoma City from 1987 until 1998 and was
President of Norick Brothers, Inc. from 1981 to 1992. In addition, he is a
Director of Sport Haley, Inc., Oklahoma Medical Holdings, Ltd., and the Oklahoma
City Chamber of Commerce.
Robert L. Parker, Sr. Mr. Parker has served as a Director of BOK Financial
since 1991. He is the Chairman and Director of Parker Drilling Co. In addition,
he serves as a Director of Weatherford-Enterra Corp., Clayton Williams Energy,
Inc. and Norwest Bank of Texas-Kerrville.
James W. Pielsticker. Mr. Pielsticker has served as a Director of BOK
Financial since 1996. He is the President of Arrow Trucking Co.
E.C. Richards. Mr. Richards has served as a Director of BOK Financial since
1997. He is also Executive Vice President and Chief Operating Officer for Sooner
Pipe and Supply Corporation.
James A. Robinson. Mr. Robinson has served as a Director of BOK Financial
since 1993. He is self-employed in the investment and management of personal
financial holdings and in the ranching business.
L. Francis Rooney, III. Mr. Rooney has served as a Director of BOK Financial
since 1995. He is Chairman of the Board and Chief Executive Officer of Manhattan
Construction Company.
David J. Tippeconnic. Mr. Tippeconnic has served as a Director of BOK
Financial since 1998. He is the President, Chief Executive Officer and Director
of CITGO Petroleum Corporation. In addition, he is the Director of the American
Petroleum Institute, St. Francis Health Systems, the Boy Scouts of America and
Southdown, Inc.
Tom E. Turner. Mr. Turner has served as a Director of BOK Financial since
1998. He is the Chairman of Bank of Texas, NA. Prior to the Bank of Texas, he
served as Chairman and Chief Executive Officer of the First National Bank of
Park Cities in Dallas, Texas, which was acquired by BOK Financial on February
12, 1997. He had been the Chief Executive Officer of FNB Park Cities since 1984.
Robert L. Zemanek. Mr. Zemanek has served as a Director of BOK Financial
since 1994. He is the President of Energy Delivery, at Central & South West
Services. Previously, he served as the President, Chief Executive Officer and
Director of Public Service Company of Oklahoma and as Director of Central and
Southwest Service, Inc., Ash Creek Mining Company and the University of Tulsa.
Jeffrey R. Dunn. Mr. Dunn is Chairman and President of Bank of Arkansas.
Prior to becoming President of Bank of Arkansas, he served as Senior Vice
President of Commercial Lending. He has been with Bank of Oklahoma for ten
years.
Paul M. Elvir. Mr. Elvir is the Executive Vice President and Manager of the
Bank of Oklahoma Operations and Technology Division. Before joining Bank of
Oklahoma in 1997, he was the President of Liberty Payments Services, Inc., a
subsidiary of Banc One Services Corporation. He had previously served as an
Executive Vice President of Banc One Services Corporation.
Mark W. Funke. Mr. Funke is President of the Bank of Oklahoma, Oklahoma City
and heads our Commercial Banking Division in Oklahoma City. He also heads our
Business Banking Group, which manages our statewide small-business banking
efforts and all of our Community Banking Offices. He joined BOK Financial in
1984 as Vice President in the financial institutions department and was named to
his current position in 1997. Before joining BOK Financial, he was a commercial
lender with Republic Bank in Houston for seven years.
- 35 -
<PAGE> 39
Eugene A. Harris. Mr. Harris has served as a Director of Bank of Oklahoma
since 1991. He is also the Director and Executive Vice President of Bank of
Oklahoma, Chief Credit Officer and Manager of the Credit Administration
Division. He has been with Bank of Oklahoma for 17 years.
H. James Holloman. Mr. Holloman is the Executive President of Bank of
Oklahoma and Manager of Trust Services. Before joining Bank of Oklahoma, he
spent 12 years at First Union National Bank in Charlotte, NC. He has been with
Bank of Oklahoma since 1985.
David L. Laughlin. Mr. Laughlin is the Senior Vice President and President
of the Mortgage Banking Division. He joined BOK Financial in 1986 as the
Secondary Marketing Manager in charge of retail production and secondary
marketing, and he became President of Mortgage Banking in 1993. He has served
two terms on the Fannie Mae Advisory Board and is a past President of the
Oklahoma Mortgage Bankers' Association and the Tulsa Mortgage Bankers
Association.
John C. Morrow. Mr. Morrow is Senior Vice President and serves as Director
of Financial Accounting and Reporting. He joined Bank of Oklahoma in 1993. He
was previously with Ernst & Young for 10 years.
Steven E. Nell. Mr. Nell is Senior Vice President and serves as Corporate
Controller. He joined Bank of Oklahoma in 1992. He was previously with Ernst &
Young for eight years.
W. Jeffrey Pickryl. Mr. Pickryl is the Executive Vice President responsible
for Corporate Banking in Tulsa, as well as statewide energy and real estate
lending. Before joining Bank of Oklahoma in 1997, he was President and Chief
Credit Officer for Liberty Bancorp, Inc. in Tulsa, where he worked for 14 years.
He was previously with Arizona Bank in Phoenix.
Norman W. Smith. Mr. Smith is the Executive Vice President of Bank of
Oklahoma and manages the Consumer Banking Division. In addition to BOKF's branch
network, he is responsible for mortgage operations, corporate marketing and
corporate Community Reinvestment Act activities. Before joining Bank of Oklahoma
in 1991, he was Senior Vice President and Manager, Branch Sales and Services
Division, at Ameritrust Bank in Cleveland, Ohio.
Gregory K. Symons. Mr. Symons is the President of the Bank of Albuquerque
and is responsible for Corporate Banking in New Mexico. He previously served as
Bank of Oklahoma's Senior Vice President of Regional Banking and Commercial
Lending/Sales. He has been with Bank of Oklahoma since 1976 and was named to his
current position in 1998.
Charles D. Williamson. Mr. Williamson is the Executive Vice President of
Capital Markets of Bank of Oklahoma and Chairman and Chief Executive Officer of
BOSC. Before joining Bank of Oklahoma six years ago, he was the Manager of the
Investment Division at First Interstate Bank of Arizona and the Manager of the
Investment Division at First Interstate Bank of Oklahoma.
- 36 -
<PAGE> 40
PRINCIPAL AND SELLING SHAREHOLDERS
OUR PRINCIPAL SHAREHOLDER
As of the date of this prospectus, our principal shareholder, Mr. George B.
Kaiser, beneficially owns 74.1% of our common stock after giving effect to
conversion of 249,490,880 shares of our Series A Preferred Stock owned by him.
Mr. Kaiser has been our Chairman since 1991. He is also the owner and CEO of
Kaiser-Francis Oil Co., an oil and gas exploration and production company that
he has managed for more than 25 years. Kaiser-Francis also owns Fountains
Continuum of Care, Inc., which holds interests in senior housing communities in
15 states.
SELLING SHAREHOLDERS
The following table identifies shareholders that will be offering their
common stock and the number of shares to be sold by each shareholder, as well as
the number of shares beneficially owned before and after the offering. The
selling shareholders are former shareholders of First Bancshares of Muskogee,
Inc. which we acquired on June 30, 1999. All selling shareholders will own less
than one percent of our common stock before and after completion of the
offering.
<TABLE>
<CAPTION>
SHARES OWNED SHARES SHARES OWNED
PRIOR TO OFFERING BEING OFFERED AFTER OFFERING
----------------- ------------- --------------
NAME NUMBER NUMBER NUMBER
---- ------ ------ ------
<S> <C> <C> <C>
Jill Krumme Burns ................................ 0 37,261 0
Chris L. Condley(1)............................... 0 35,058 0
Diane Krumme Cox ................................. 0 37,261 0
Marilyn Dougall .................................. 0 16,170 0
Pam L. Ford (2)................................... 0 3,343 0
Edwin L. or Elaine Gage(3)........................ 0 65,621 0
Paul Glover ...................................... 0 20,777 0
Christopher R. Guthery ........................... 0 2,204 0
David Barclay Guthery ............................ 0 2,204 0
David or Jeannie Guthery ......................... 0 83,851 0
Carolyn A. Krumme ................................ 0 16,341 0
Catherine Krumme ................................. 0 21,922 0
Cynthia A. Krumme ................................ 0 8,443 0
David W. Krumme .................................. 0 39,922 0
George W. Krumme ................................. 1,068 34,971 1,068
J.B. Krumme Family Trust ......................... 0 48,479 0
Matthew Krumme ................................... 0 21,922 0
Molly Krumme ..................................... 0 2,662 0
R. H. Krumme ..................................... 0 112,383 0
Robert B. Krumme ................................. 0 88,115 0
Robert B., as Custodian for John P.A. ............
Krumme ......................................... 0 16,341 0
Virginia F. Krumme ............................... 0 28,618 0
Courtney Lamont .................................. 0 35,172 0
Courtney Lamont Irrevocable Trust ................ 0 21,464 0
Abbie Leonard .................................... 0 1,431 0
Amy Leonard ...................................... 0 35,172 0
Amy Leonard Irrevocable Trust .................... 0 21,464 0
Austin Leonard Irrevocable Trust ................. 0 1,431 0
Carlene C. Leonard Trust ......................... 0 25,070 0
Cecil Elleen Leonard Revocable Trust ............. 0 48,651 0
Eric Leonard ..................................... 0 1,431 0
Kevin Leonard Irrevocable Trust .................. 0 1,431 0
Harry E. Leonard Trust ........................... 0 25,070 0
Harry E. Leonard, Jr(4)........................... 2 68,912 2
Michael Stephens Leonard Revocable Trust(5)....... 0 166,354 0
Robert E. List ................................... 0 68,397 0
Victor R. McMillen ............................... 0 16,141 0
V. David Miller .................................. 0 80,560 0
C.R. Morris ...................................... 0 28,618 0
David W. Morris .................................. 0 5,724 0
Gil L. Morris .................................... 0 5,724 0
Grant J. Morris .................................. 0 5,724 0
Jennie D. Morris for the Benefit of Alexis R
Morris ........................................... 0 8,242 0
Jennie D. Morris for the Benefit of Zachary R
Morris ........................................... 0 8,242 0
W.L. Morris(6).................................... 0 123,086 0
Margaret Pickett ................................ 0 48,479 0
Sally D. Prince .................................. 0 16,170 0
John A. Schilt(7)................................. 0 430 0
Glen S. Scott .................................... 0 430 0
Bob Smith ........................................ 0 336,889 0
Michael G. Smith ................................. 0 28,618 0
J. Steve Thompson(7).............................. 0 430 0
J. Walker Trust, QTIP ............................ 0 14,309 0
J. Walker Trust .................................. 0 37,204 0
Mike Webb ........................................ 0 76,324 0
Vicky Wilcoxen ................................... 0 430 0
David W. Wood .................................... 0 7,155 0
Robert N. Yaffe(8)................................ 4,428 257,561 4,428
</TABLE>
- 37 -
<PAGE> 41
(1) Senior Executive Vice President and Director of our subsidiary, First
National Bank and Trust Company of Muskogee.
(2) Executive Vice President, Chief Financial Officer and Advisory Director of
our subsidiary, First National Bank and Trust Company of Muskogee.
(3) Edwin L. Gage serves as a Director of our subsidiary, First National Bank
and Trust Company of Muskogee.
(4) President and Director of our subsidiary, First Muskogee Insurance Corp.;
Chairman of the Board of our subsidiary, First National Bank and Trust
Company of Muskogee.
(5) Vice-President and Director of our subsidiary, First Muskogee Insurance
Corp.; President and Chief Executive Officer of our subsidiary, First
National Bank and Trust Company of Muskogee.
(6) Vice President of our subsidiary, Bank of Oklahoma, National Association.
(7) Director of our subsidiaries, First National Bank and Trust Company of
Muskogee and First Muskogee Insurance Corp.
(8) Director of our subsidiary, First National Bank and Trust Company of
Muskogee.
- 38 -
<PAGE> 42
DESCRIPTION OF CAPITAL STOCK
The following descriptions of our capital stock are not complete. You should
also read our Amended and Restated Certificate of Incorporation, our Bylaws and
the General Corporation Act of the State of Oklahoma. We have filed copies of
our Certificate of Incorporation and Bylaws with the SEC. These documents are
incorporated by reference into the registration statement of which this
prospectus is a part.
We have 3,500,000,000 shares of capital stock authorized, of which
2,500,000,000 shares are common stock, $0.00006 par value, and 1,000,000,000
shares are preferred stock, $0.00005 par value. As of June 25, 1999, we had
47,553,759 shares of common stock issued and outstanding and 250,000,000
shares of preferred stock issued and outstanding as a single series of Series A
Preferred Stock.
COMMON STOCK
Each holder of shares of our common stock is entitled to one vote for each
share held on all matters to be voted upon by our shareholders. The holders of
outstanding shares of our common stock are entitled to receive ratably such
dividends out of assets legally available therefor as our Board of Directors may
determine. Upon our liquidation or dissolution, the holders of our common stock
will be entitled to share ratably in our assets that are legally available for
distribution to shareholders after payment of liabilities. Holders of
outstanding Series A Preferred Stock are entitled to dividend and/or liquidation
preferences. Holders of other series of preferred stock may likewise be entitled
to dividend and liquidation preferences. In either such case, we must pay the
applicable distribution to the holders of our preferred stock before we may pay
them to the holders of our common stock. Holders of our common stock have no
conversion, sinking fund, redemption, preemptive or subscription rights. In
addition, holders of our common stock do not have cumulative voting rights. We
cannot further call or assess shares of our common stock.
SERIES A PREFERRED STOCK
The Series A Preferred Stock has no voting rights under the Certificate of
Incorporation and under Oklahoma corporate law would only have the right to vote
in the event of a proposed amendment to the Certificate of Incorporation
altering or changing the special rights and preferences of the Series A
Preferred Stock, changing the par value or increasing or decreasing the number
of authorized shares.
The holders of outstanding shares of our Series A Preferred Stock are
entitled to receive cumulative cash dividends at the annual rate of ten percent
of the $0.06 liquidation preference value per share, when and as declared by our
Board of Directors. Any shares of Series A Preferred Stock may be redeemed by us
at any time, provided that all regulatory requirements are met and all accrued
dividends are paid. Holders of our Series A Preferred Stock may convert their
shares to our common stock at any time at a ratio of 2.39 shares of common stock
for each 100 shares of Series A Preferred Stock. This ratio has been adjusted to
account for the two for one stock split which was issued February 22, 1999 and
also gives effect to the 1 for 100 reverse stock split of common stock effected
December 17, 1991 and the November 18, 1993, November 17, 1994, November 27,
1995, November 27, 1996, November 19, 1997 and November 25, 1998 BOKF 3% common
stock dividends payable by the issuance of our common stock. Holders of our
preferred stock have no sinking fund or preemptive rights.
PREFERRED STOCK
Our Board of Directors has the authority to determine and alter the rights,
preferences, privileges and restrictions granted to or imposed upon any unissued
series of our preferred stock and to fix the number of shares, dividend rights,
conversion or exchange rights, voting rights, redemption rights, liquidation
preferences and sinking funds of any series of our preferred stock. The
authorized shares of our preferred stock will be available for issuance without
further action by our shareholders, unless shareholder action is required by
applicable law or by the rules of a stock exchange on which any series of our
stock may be listed. The holders of our preferred stock will have the right to
vote separately as a class on any proposal involving fundamental changes in the
rights of those holders as provided by the General Business Corporation Act of
the State of Oklahoma.
This authority of our Board of Directors gives it the power to approve the
issuance of a series of preferred stock that could, depending on its terms,
either impede or facilitate the completion of a merger, tender offer or other
takeover attempt. For example, the issuance of new shares might impede a
business combination if the terms of those shares include voting rights that
would enable a holder to block business combinations. Conversely, the issuance
of new shares might facilitate a business combination if those shares have
general voting rights sufficient to satisfy an applicable percentage vote
requirement.
If applicable, the terms on which our preferred stock may be convertible
into or exchangeable for our common stock or our other securities will be
described in the applicable Certificate of Determination. The terms will include
provisions as to whether conversion or exchange is
- 39 -
<PAGE> 43
mandatory, at the option of the holder, or at our option, and may include
provisions that adjust the number of shares of our common stock or other
securities of ours that the holders of our preferred stock may receive.
DIRECTORS' LIABILITY
Article VI of our Bylaws provide for indemnification of directors to the
fullest extent authorized by Oklahoma Law. Section 1031 of the Oklahoma General
Business Corporation Act Authorizes a corporation to indemnify its officers,
employees and agents against expenses, including attorneys' fees, judgments,
fines, and amounts paid in settlement actually and reasonably incurred, whether
in civil, criminal, administrative, or investigative proceedings, by him or her
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Pursuant to statutory and bylaw provisions, we have purchased insurance against
certain costs of indemnification of its officers and directors.
TRANSFER AGENT AND REGISTRAR
The Bank of New York acts as transfer agent and registrar for our common
stock and our Series A Preferred Stock.
- 40 -
<PAGE> 44
PLAN OF DISTRIBUTION
The selling shareholders or their respective pledgees, donees, transferees
or other successors in interest may, from time to time, sell all or a portion of
the shares on the Nasdaq National Market, in privately negotiated transactions
or otherwise. Shares may be sold at fixed prices that may be changed, at market
prices prevailing at the time of sale, at prices related to such market prices
or negotiated prices. The shares may be sold by the selling shareholders by one
or more of the following methods:
o block trades in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o privately negotiated transactions;
o short sales;
o through the writing of options on the shares; and
o a combination of any such methods of sale.
In effecting sales, brokers and dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate. Broker-dealers may
agree with the selling shareholders to sell a specified number of such shares at
a stipulated price per share. To the extent that such broker-dealer is unable to
do so in acting as agent for a selling shareholder, it may agree to purchase as
principal any unsold shares at the stipulated price. Broker-dealers who acquire
shares as principals may thereafter resell such shares from time to time in
transactions in the Nasdaq National market at prices and on terms then
prevailing at time of sale, at prices related to the then-current market price
or in negotiated transactions. Broker-dealers may use block transactions and
sales to and through broker-dealers, including transactions of the nature
described above.
From time to time, one or more of the selling shareholders may pledge,
hypothecate or grant a security interest in some of all of the shares owned by
them. The pledges, secured parties or persons to whom such securities have been
hypothecated will, upon foreclosure in the event of default, be deemed to be
selling shareholders. The number of selling shareholder's shares offered under
this prospectus will decrease as and when it takes such actions. The plan of
distribution for such selling shareholder's shares will otherwise remain
unchanged. In addition, a selling shareholder may, from time to time, sell short
our common stock and in such instances, this prospectus may be delivered in
connection with such short sales and the shares offered under this prospectus
may be used to cover such short sales.
To the extent required under the Securities Act the aggregate amount of
selling shareholders' shares of our common stock being offered and the terms of
the offering, the names of any such agents, brokers, dealers or underwriters and
any applicable commission with respect to a particular offer will be set forth
in a accompanying prospectus supplement. Any underwriters, dealers, brokers or
agents participating in the distribution of our common stock may receive
compensation in the form of underwriting discounts, concessions, commissions or
fees from a selling shareholder and/or purchasers of selling shareholders'
shares of common stock, for whom they may act (which compensation to a
particular broker-dealer might be in excess of customary commissions).
The selling shareholders and any broker-dealers or agents that participate
with the selling shareholders in the sales of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In such event, any commission received by such broker-dealers or agents
and any profit on the resale of the shares purchased by them may be deemed to be
an underwriting commission or discount under the Securities Act.
A selling shareholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the common
stock in the course of hedging the positions they assume with such selling
shareholder, including any connection with distributions of the common stock by
such broker-dealers. A selling shareholder may enter into option or other
transactions with broker-dealers that involve the delivery of the shares offered
hereby to the broker-dealers, who may then resell or otherwise transfer such
shares. A selling shareholder may also loan or pledge the shares offered hereby
to the broker-dealer and the broker-dealer may sell the shares hereby so loaned
or upon a default may sell or otherwise transfer the pledged shares offered
hereby.
- 41 -
<PAGE> 45
The selling shareholders and any other persons participating in the sale or
distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act and the rules and the regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the sales by
selling shareholders or any other such person. The foregoing may affect the
marketability of the shares.
In order to comply with securities laws of certain states, if applicable,
the shares offered by this prospectus may be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the shares may not be sold unless they have been registered or qualified
for sale or an exemption from the registration or qualification requirements is
available and is complied with.
We will make copies of this prospectus available to the selling shareholders
and have informed the selling shareholders that they must deliver a copy of this
prospectus to each purchaser of the shares prior to or at the time of any sale.
We have agreed with the selling shareholders to keep this prospectus effective
until the earlier of (i) the sale of all of the shares or (ii)
June 30, 2001.
LEGAL MATTERS
The validity of the shares of common stock in respect of which this
prospectus is being delivered will be passed on for us by Frederic Dorwart,
Lawyers, Tulsa, Oklahoma.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the years
ended December 31, 1998, 1997, and 1996, as set forth in their report, which is
incorporated by reference. Our financial statements are incorporated by
reference, as well as included, in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other information with the SEC. You
may read and copy these reports, proxy statements, and other information
concerning us at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800- SEC-0330 for further
information on the Public Reference Room. The SEC maintains an internet site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC,
including ourselves. Our common stock is quoted on the Nasdaq National Market.
These reports, proxy statements and other information are also available for
inspection at the offices of the National Association of Securities Dealers,
Inc., Report Section, 1735 K Street N.W., Washington, D.C. 20006.
This prospectus is part of a registration statement that we filed with the
SEC. You can obtain the full registration statement from the SEC as indicated
above, or from us.
The SEC allows us to "incorporate by reference" the information we file with
the SEC. This permits us to disclose important information to you by referring
to these filed documents. Any information referred to in this way is considered
part of this prospectus, and any information that we file with the SEC after the
date of this prospectus will automatically be deemed to update and supersede
this information. We incorporate by reference the following documents that have
been filed with the SEC:
o Annual Report on Form 10-K for the year ended December 31, 1998.
o Quarterly Report on Form 10-Q for the three months ended March 31, 1999.
We also incorporate by reference any future filings made with the SEC
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until we file
a post-effective amendment that indicates the termination of the offering of the
securities made by this prospectus.
We will provide without charge upon written or oral request, a copy of any
or all of the documents that are incorporated by reference into this prospectus.
Requests should be directed to Chief Financial Officer, BOK Financial
Corporation, Bank of Oklahoma Tower, Boston Avenue at Second Street, Tulsa,
Oklahoma 74172, (telephone number 918-588-6717) ([email protected]).
- 42 -
<PAGE> 46
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses to be incurred by BOK Financial
Corporation in connection with the Offer described in this Registration
Statement:
<TABLE>
<S> <C>
SEC registration fee.................... $ 16,649
Printing and engraving expense.......... 6,500
Fees and expenses of transfer agent..... 1,000
Accounting fees and expenses............ 10,000
Legal fees and expenses................. 35,000
Miscellaneous........................... 5,000
--------
Total ........................ $ 74,149
========
</TABLE>
BOK Financial Corporation will bear all costs relating to the registration
of the shares as related to the selling shareholders. The selling shareholders
shall pay all legal fees and underwriting discounts related to subsequent
offerings.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Oklahoma Business Corporation Act and Article VI of the Bylaws of BOK
Financial Corporation provide BOK Financial Corporation with broad powers and
authority to indemnify its directors and officers and to purchase and maintain
insurance for such purposes. Pursuant to such statutory and Bylaw provisions,
BOK Financial Corporation has purchased insurance against certain costs of
indemnification of its officers and directors.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
- -------------- -----------------------
<S> <C>
3 -- The Certificate of Incorporation of BOK Financial
Corporation, incorporated by reference to (i) Amended and
Restated Certificate of Incorporation of BOK Financial
Corporation filed with the Oklahoma Secretary of State on
May 28, 1991, filed as Exhibit 3.0 to S-1 Registration
Statement No. 33-90450, and (ii) Amendment attached as
Exhibit A to Information Statement and prospectus supplement
filed November 20, 1991.
3.1 -- Bylaws of BOK Financial Corporation, incorporated by
reference to Exhibit 3.1 of S-1 Registration Statement No.
33-90450.
4 -- The rights of the holders of the Common Stock and Preferred
Stock of BOK Financial Corporation are set forth in its
Certificate of Incorporation.
5* -- Opinion of Frederic Dorwart, Lawyers
23* -- Consent of Independent Auditors--Ernst & Young LLP.
24 -- Power of Attorney (contained on page II-7)
27 -- Financial Data Schedule for ended December 31, 1998,
incorporated by reference to Exhibit 27.0 of Form 10-K for
the fiscal year ended December 31, 1998.
27.1 -- Restated Financial Data Schedule, incorporated by
reference to Exhibit 27.1 of Form 10-Q for the fiscal
quarter ended March 31, 1999.
</TABLE>
<PAGE> 47
<TABLE>
<S> <C>
99 -- Additional Exhibits.
99.1 -- Undertakings incorporated by reference into S-8
Registration Statement No. 33-44121 for Bank of Oklahoma
Master Thrift Plan and Trust, incorporated by reference to
Exhibit 99.1 of Form 10-K for the fiscal year ended
December 31, 1993.
99.2 -- Undertakings incorporated by reference into S-8
Registration Statement No. 33-44122 for BOK Financial
Corporation 1991 Special Stock Option Plan, incorporated by
reference to Exhibit 99.2 of Form 10-K for the fiscal year
ended December 31, 1993.
99.3 -- Undertakings incorporated by reference into S-8
Registration Statement No. 33-55312 for BOK Financial
Corporation 1992 Stock Option Plan, incorporated by
reference to Exhibit 99.3 of Form 10-K for the fiscal year
ended December 31, 1993.
99.4 -- Undertakings incorporated by reference into S-8
Registration Statement No. 33-70102 for BOK Financial
Corporation 1993 Stock Option Plan, incorporated by
reference to Exhibit 99.4 of Form 10-K for the fiscal year
ended December 31, 1993.
99.5 -- Undertakings incorporated by reference into S-8
Registration Statement No. 33-79834 for BOK Financial
Corporation 1994 Stock Option Plan, incorporated by
reference to Exhibit 99.5 of Form 10-K for the fiscal year
ended December 31, 1994.
99.6 -- Undertakings incorporated by reference into S-8
Registration Statement No. 33-79836 for BOK Financial
Corporation Directors' Stock Compensation Plan,
incorporated by reference to Exhibit 99.6 of Form 10-K for
the fiscal year ended December 31, 1994.
99.7 -- Undertakings incorporated by reference into S-8
Registration Statement No. 33-32642 for BOK Financial
Corporation 1997 Stock Option Plan, Incorporated by
reference to Exhibit 99.7 of Form 10-K for the fiscal year
ended December 31, 1997.
</TABLE>
- ----------
* Filed herewith.
(b) Financial Statement Schedules.
All schedules either are not applicable or the information required thereby
is included in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range
II-2
<PAGE> 48
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(I) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tulsa,
State of Oklahoma, on June 29, 1999.
BOK FINANCIAL CORPORATION
By: /s/ STANLEY A. LYBARGER
--------------------------------------------
Stanley A. Lybarger
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE Title Date
--------- ----- ----
<S> <C> <C>
/s/ GEORGE B. KAISER Chairman of the Board of BOK 6/29/99
- ------------------------------- Financial Corporation
George B. Kaiser
/s/ STANLEY A. LYBARGER President, Chief Executive 6/29/99
- ------------------------------- Officer,-and Director of
Stanley A. Lybarger BOK Financial Corporation
/s/ JAMES A. WHITE Executive Vice President and 6/29/99
- ------------------------------- Chief-Financial Officer of
James A. White BOK Financial Corporation
/s/ JOHN C. MORROW Senior Vice President and 6/29/99
- ------------------------------- Director-of Financial
John C. Morrow Accounting and Reporting
of BOK Financial
Corporation
/s/ STEVEN E. NELL Senior Vice President and 6/29/99
- ------------------------------- Corporate Controller of
Steven E. Nell BOK Financial Corporation
/s/ W. WAYNE ALLEN Director of BOK Financial 6/29/99
- ------------------------------- Corporation
W. Wayne Allen
Director of BOK Financial
- ------------------------------- Corporation
James E. Barnes
/s/ SHARON J. BELL Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Sharon J. Bell
/s/ C. FRED BALL, JR. Director of BOK Financial 6/29/99
- ------------------------------- Corporation
C. Fred Ball, Jr.
Director of BOK Financial
- ------------------------------- Corporation
Luke R. Corbett
</TABLE>
II-4
<PAGE> 50
<TABLE>
<S> <C>
/s/ ROBERT H. DONALDSON Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Robert H. Donaldson
Director of BOK Financial 6/29/99
- ------------------------------- Corporation
William E. Durrett
/s/ JAMES O. GOODWIN Director of BOK Financial 6/29/99
- ------------------------------- Corporation
James O. Goodwin
/s/ V. BURNS HARGIS Vice Chairman and Director 6/29/99
- ------------------------------- of-BOK-Financial
V. Burns Hargis Corporation
/s/ HOWARD E. JANZEN Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Howard E. Janzen
Director of BOK Financial
- ------------------------------- Corporation
E. Carey Joullian, IV
/s/ ROBERT J. LAFORTUNE Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Robert J. LaFortune
/s/ PHILIP C. LAUINGER, JR. Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Philip C. Lauinger, Jr.
/s/ FRANK A. MCPHERSON Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Frank A. McPherson
Director of BOK Financial
- ------------------------------- Corporation
Steven E. Moore
Director of BOK Financial
- ------------------------------- Corporation
J. Larry Nichols
/s/ RONALD J. NORICK Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Ronald J. Norick
Director of BOK Financial
- ------------------------------- Corporation
Robert L. Parker, Sr.
Director of BOK Financial
- ------------------------------- Corporation
James W. Pielsticker
</TABLE>
II-5
<PAGE> 51
<TABLE>
<S> <C>
/s/ E. C. RICHARDS Director of BOK Financial 6/29/99
- ------------------------------- Corporation
E.C. Richards
Director of BOK Financial
- ------------------------------- Corporation
James A. Robinson
Director of BOK Financial
- ------------------------------- Corporation
L. Francis Rooney, III
Director of BOK Financial
- ------------------------------- Corporation
David J. Tippeconnic
/s/ TOM E. TURNER Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Tom E. Turner
Director of BOK Financial
- ------------------------------- Corporation
Robert L. Zemanek
</TABLE>
II-6
<PAGE> 52
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes George B.
Kaiser and James A. White, or either of them, to file one or more amendments
(including post-effective amendments which may be held pursuant to Rule 462(b)
under the Securities Act of 1933) to Registration Statement number , which
amendments may make such changes in the Registration Statement as Mr. Kaiser or
Mr. White deems appropriate, and each such person hereby appoints George B.
Kaiser and James A. White, or either of them, as attorney-in-fact to execute in
the name and on behalf of each person individually, and in each capacity stated
below, any such amendment to the Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GEORGE B. KAISER Chairman of the Board of BOK 6/29/99
- ------------------------------- Financial Corporation
George B. Kaiser
/S/ STANLEY A. LYBARGER President, Chief Executive 6/29/99
- ------------------------------- Officer,-and Director of
Stanley A. Lybarger BOK Financial Corporation
/s/ JAMES A. WHITE Executive Vice President and 6/29/99
- ------------------------------- Chief-Financial Officer of
James A. White BOK Financial Corporation
/S/ JOHN C. MORROW Senior Vice President and 6/29/99
- ------------------------------- Director-of Financial
John C. Morrow Accounting and Reporting
of BOK Financial
Corporation
/S/ STEVEN E. NELL Senior Vice President and 6/29/99
- ------------------------------- Corporate Controller of
Steven E. Nell BOK Financial Corporation
/s/ W. WAYNE ALLEN Director of BOK Financial 6/29/99
- ------------------------------- Corporation
W. Wayne Allen
Director of BOK Financial
- ------------------------------- Corporation
James E. Barnes
/s/ SHARON J. BELL Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Sharon J. Bell
/s/ C. FRED BALL, JR. Director of BOK Financial 6/29/99
- ------------------------------- Corporation, President and
C. Fred Ball, Jr. Chief Executive Officer,
Bank of Texas
Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Luke R. Corbett
/s/ ROBERT H. DONALDSON Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Robert H. Donaldson
</TABLE>
II-7
<PAGE> 53
<TABLE>
<S> <C>
Director of BOK Financial
- ------------------------------- Corporation
William E. Durrett
/s/ JAMES O. GOODWIN Director of BOK Financial 6/29/99
- ------------------------------- Corporation
James O. Goodwin
/s/ V. BURNS HARGIS Vice Chairman and Director 6/29/99
- ------------------------------- of-BOK-Financial
V. Burns Hargis Corporation
/s/ HOWARD E. JANZEN Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Howard E. Janzen
Director of BOK Financial
- ------------------------------- Corporation
E. Carey Joullian, IV
/s/ ROBERT J. LAFORTUNE Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Robert J. LaFortune
/s/ PHILLIP C. LAUINGER, JR. Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Philip C. Lauinger, Jr
/s/ FRANK A. MCPHERSON Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Frank A. McPherson
Director of BOK Financial
- ------------------------------- Corporation
Steven E. Moore
Director of BOK Financial
- ------------------------------- Corporation
J. Larry Nichols
/s/ RONALD J. NORICK Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Ronald J. Norick
Director of BOK Financial
- ------------------------------- Corporation
Robert L. Parker, Sr.
Director of BOK Financial
- ------------------------------- Corporation
James W. Pielsticker
/s/ E. C. RICHARDS Director of BOK Financial 6/29/99
- ------------------------------- Corporation
E.C. Richards
Director of BOK Financial
- ------------------------------- Corporation
James A. Robinson
</TABLE>
II-8
<PAGE> 54
<TABLE>
<S> <C>
Director of BOK Financial
- ------------------------------- Corporation
L. Francis Rooney, III
Director of BOK Financial
- ------------------------------- Corporation
David J. Tippeconnic
/s/ TOM E. TURNER Director of BOK Financial 6/29/99
- ------------------------------- Corporation
Tom E. Turner
Director of BOK Financial
- ------------------------------- Corporation
Robert L. Zemanek
</TABLE>
II-9
<PAGE> 55
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- --------- -----------------------
<S> <C>
5 -- Opinion of Frederic Dorwart, Lawyers
23 -- Consent of Independent Auditors--Ernst & Young LLP
</TABLE>
<PAGE> 1
EXHIBIT 5
Opinion of Frederic Dorwart, Lawyers
July 2, 1999
BOK Financial Corporation
Bank of Oklahoma Tower
Boston Avenue at Second Street
Tulsa, Oklahoma 74172
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of 2,371,809 shares
of your common stock to be offered for the sale for the benefit of certain
selling shareholders. The shares are to be sold from time to time by the selling
shareholders as described in the Registration Statement. As your counsel in
connection with these transactions, we have examined the proceedings taken and
proposed to be taken in connection with the issue in sale of the shares.
It is our opinion that the shares, when issued as described in the
Registration Statement, will be legally and validly issued, fully paid, and
non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, including the prospectus constituting a part thereof
and any amendment thereto.
Sincerely,
/s/ FREDERIC DORWART
Frederic Dorwart
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-3 No. 333-________ and related Prospectus of BOK
Financial Corporation for the registration of 2,371,809 shares of its common
stock and to the incorporation by reference therein of our report dated
January 26, 1999, with respect to the consolidated financial statements of BOK
Financial Corporation included in its Annual Report (Form 10-K) for the year
ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Tulsa, Oklahoma
July 2, 1999
