As filed with the Securities and Exchange Commission on August 14, 2000
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2000
Commission File No. 0-19341
BOK FINANCIAL CORPORATION
Incorporated in the State of Oklahoma
I.R.S. Employer Identification No. 73-1373454
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
Registrant's Telephone Number,
Including Area Code (918) 588-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT: (NONE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
COMMON STOCK ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 49,063,912 shares of
common stock ($.00006 par value) as of July 31, 2000.
--------------------------------------------------------------------------------
<PAGE>
BOK Financial Corporation
Form 10-Q
Quarter Ended June 30, 2000
Index
Part I. Financial Information
Management's Discussion and Analysis 2
Report of Management on Consolidated
Financial Statements 15
Consolidated Statements of Earnings 16
Consolidated Balance Sheets 17
Consolidated Statements of Changes
in Shareholders' Equity 18
Consolidated Statements of Cash Flows 19
Notes to Consolidated Financial Statements 20
Financial Summaries - Unaudited 23
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 26
Signature 26
MANAGEMENT'S ASSESSMENT OF OPERATIONS AND FINANCIAL CONDITION
Assessment of Operations
Summary of Performance
BOK Financial Corporation ("BOK Financial") recorded net income of $24.2 million
or $0.44 per diluted common share for the second quarter of 2000 compared to
$22.1 million or $0.39 per diluted common share for the second quarter of 1999.
Returns on average assets were 1.13% for the quarter ended June 30, 2000
compared to 1.19% for the quarter ended June 30, 1999. Returns on average equity
were 16.64% and 16.27% for the quarter ended June 30, 2000 and 1999,
respectively.
Net interest revenue for the second quarter of 2000 increased by $11.3 million
or 20%. Fees and commission revenue was $48.0 million, a 4% increase from the
second quarter of 1999. Gains on sales of securities, loans and other assets
decreased by $4.0 million. Operating expenses increased $4.2 million or 6%
compared to the second quarter of 1999. This increase included $2.4 million of
expenses from acquisitions that were consummated late in the second quarter of
1999. These expenses affect the comparability between the two quarters.
Year to date net income and earnings per diluted common share were $49.0 million
and $0.88, respectively for 2000 compared to $43.3 million and $0.78,
respectively, for the same period in 1999. Returns on average assets and equity
were 1.16% and 17.19%, respectively, for 2000 compared to returns on average
assets and equity of 1.21% and 16.21%, respectively, for 1999.
<PAGE>
Tangible Operating Results
Since inception, BOK Financial has completed several acquisitions that were
accounted for under the purchase method of accounting. The purchase method
results in the recording of goodwill and other identifiable intangible assets
that are amortized as non-cash charges in future years into operating expense.
Operating results excluding the impact of the amortization of these intangible
assets are summarized below:
<TABLE>
------------------------------------------------- -------------------------------- ----------------------
TABLE 1 - TANGIBLE OPERATING RESULTS
(Dollars in Thousands)
-------------------------------- ----------------------
Three months ended Six months ended
----------------------------- -------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
----------------------------- -------------------------
<S> <C> <C> <C> <C>
Net income $ 24,194 $ 22,056 $ 49,007 $ 43,293
After-tax impact of amortization of
intangible assets 3,403 2,999 6,818 5,580
------------------------------------------------- ----------------------------- -------------------------
Tangible net income $ 27,597 $ 25,055 $ 55,825 $ 48,873
------------------------------------------------- ----------------------------- -------------------------
Tangible net income per diluted share $ 0.50 $ 0.45 $ 1.00 $ 0.88
------------------------------------------------- ----------------------------- -------------------------
Tangible return on average shareholders' equity 18.98% 18.48% 19.59% 18.30%
------------------------------------------------- ----------------------------- -------------------------
Tangible return on average assets 1.29% 1.36% 1.32% 1.37%
------------------------------------------------- ----------------------------- -------------------------
</TABLE>
Net Interest Revenue
Net interest revenue on a tax-equivalent basis was $69.9 million for the second
quarter of 2000 compared to $58.8 million for the second quarter of 1999.
Average earning assets increased $1.1 billion. Average loans increased $975
million and now comprise 63% of average earning assets. Average loans were 58%
of average earning assets for the second quarter of 1999. Loans generally have
higher yields than other types of earning assets therefore, the increase in
average loans had a significant impact on the growth in interest revenue.
Average interest bearing liabilities increased $1.2 billion. Interest bearing
liabilities now comprise 80% of all funding sources compared to 78% for the
second quarter of 1999. Table 2 shows how net interest revenue was affected by
changes in average balances and interest rates for various types of earning
assets and interest bearing liabilities.
<TABLE>
----------------------------------------------------------------------------------------------------------------------
TABLE 2 - VOLUME/RATE ANALYSIS
(In thousands)
Three months ended Six months ended
June 30, 2000/1999 June 30, 2000/1999
---------------------------------------------------------------------------
Change Due To (1) Change Due To (1)
------------------------ ------------------------
Yield Yield
Change Volume /Rate Change Volume /Rate
---------------------------------------------------------------------------
Tax-equivalent interest revenue:
<S> <C> <C> <C> <C> <C> <C>
Securities $ 6,266 $ 2,615 $ 3,651 $ 12,031 $ 6,966 $ 5,065
Trading securities (497) (778) 281 (833) (1,524) 691
Loans 32,123 20,866 11,257 60,711 42,839 17,872
Funds sold (79) (254) 175 211 (76) 287
------------------------------------------------------------------------------------------------------------------
Total 37,813 22,449 15,364 72,120 48,205 23,915
------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest bearing transaction deposits 1,853 1,472 381 4,096 4,252 (156)
Savings deposits (84) (29) (55) (141) (26) (115)
Time deposits 12,609 8,161 4,448 22,020 14,948 7,072
Other borrowings 12,094 4,826 7,268 23,411 11,867 11,544
Subordinated debenture 299 3 296 492 42 450
------------------------------------------------------------------------------------------------------------------
Total 26,771 14,433 12,338 49,878 31,083 18,795
------------------------------------------------------------------------------------------------------------------
Tax-equivalent net interest revenue 11,042 $ 8,016 $ 3,026 22,242 $ 17,122 $ 5,120
Change in tax-equivalent adjustment (245) (712)
------------------------------------------------------------------------------------------------------------------
Net interest revenue $ 11,287 $ 22,954
------------------------------------------------------------------------------------------------------------------
(1) Changes attributable to both volume and yield are allocated to both volume
and yield/rate on an equal basis.
</TABLE>
<PAGE>
Net interest margin, the ratio of net interest revenue to average earning
assets, was 3.66% for the second quarter of 2000 compared to 3.59% for the
second quarter of 1999 and 3.54% for the first quarter of 2000. Net interest
margin was up from the second quarter of 1999 largely due to the mix of earning
assets, most notably the increase in loans which have a higher yield than other
earning assets. Net interest margin was up from the first quarter of 2000 due to
the effect of interest rate increases in the first quarter of 2000. Most of BOK
Financial's earning assets and interest bearing liabilities have variable
interest rates, however, interest bearing liabilities generally reprice more
quickly than earning assets. This caused an increase in the cost of interest
bearing liabilities, which decreased the net interest margin in the first
quarter. The net interest margin has recovered in the second quarter through an
increase in the yield on earning assets.
Since inception, BOK Financial has followed a strategy of fully utilizing its
capital resources by borrowing funds in the capital markets to supplement
deposit growth in order to fund increased investments in securities. Although
this strategy frequently results in a net interest margin that falls below those
normally seen in the commercial banking industry, it provides positive net
interest revenue. Management estimates that for the second quarter of 2000, this
strategy resulted in an 83 basis point decrease in net interest margin. However,
this strategy contributed $1.3 million to net interest revenue. Management
employs various techniques to control, within established parameters, the
interest rate and liquidity risk inherent in this strategy, the results of which
are presented in the Market Risk section.
Other Operating Revenue
Other operating revenue decreased $2.1 million compared to the same quarter of
1999. Total fees and commissions, which are included in other operating revenue,
increased $1.9 million. Brokerage, transaction card and trust revenue increased
12%, 17% and 10%, respectively. Transaction card revenue increased $1.3 million
over the second quarter of 1999 due to a greater volume of transactions
processed. Leasing revenue increased $375 thousand over the second quarter of
1999 due to the expansion of equipment leasing activities late in the first
quarter of 2000. Management expects leasing revenue to continue to increase over
the next few quarters. These increases were substantially offset by lower
revenue from mortgage banking and a decline in other revenue. The other revenue
decline was due largely to a $1.2 million decline in underwriting and placement
fees at BOSC, Inc., BOK Financial's broker-dealer subsidiary. The recognition of
these underwriting and placement fees depends on the closing of unique
transactions and may fluctuate greatly from quarter to quarter. Gains on sales
of assets decreased $4.0 million primarily due to a $3.6 million gain on sale of
leasing partnerships in the second quarter of 1999.
<TABLE>
-----------------------------------------------------------------------------------------------------------
TABLE 3 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
--------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2000 2000 1999 1999 1999
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brokerage and trading revenue $ 4,219 $ 4,426 $ 4,781 $ 3,237 $ 3,779
Transaction card revenue 9,331 8,620 8,767 8,298 7,986
Trust fees and commissions 9,743 9,523 9,439 9,045 8,874
Service charges and fees
on deposit accounts 10,736 10,255 10,684 10,857 10,073
Mortgage banking revenue 9,427 7,834 8,628 9,189 9,877
Leasing revenue 1,192 744 514 526 817
Other revenue 3,344 4,973 3,716 4,129 4,659
-----------------------------------------------------------------------------------------------------------
Total fees and commissions 47,992 46,375 46,529 45,281 46,065
-----------------------------------------------------------------------------------------------------------
Gain on student loan sales 38 433 16 39 16
Gain on sale of other assets - - 96 - 3,638
Gain (loss) on securities (682) (17) 80 (485) (288)
-----------------------------------------------------------------------------------------------------------
Total other operating revenue $ 47,348 $ 46,791 $ 46,721 $ 44,835 $ 49,431
-----------------------------------------------------------------------------------------------------------
</TABLE>
Year to date, fees and commissions revenue increased $2.8 million or 3% compared
to 1999 for the same factors affecting the second quarter discussed above. Total
other operating revenue decreased $2.8 million or 3% due primarily to the $3.6
million decrease in gains on sales of leasing partnerships as discussed above.
<PAGE>
While management expects continued growth in other operating revenue, the future
rate of increase could be affected by increased competition from national and
regional financial institutions and from market saturation. Continued growth may
require BOK Financial to introduce new products or to enter new markets. This
growth introduces additional demands on capital and managerial resources.
Many of BOK Financial's fee generating activities, such as brokerage and trading
activities, trust fees, and mortgage banking revenue are indirectly affected by
changes in interest rates. Significant increases in interest rates may tend to
decrease the volume of trading activities and may lower the value of trust
assets managed, which is the basis of certain fees, but would tend to decrease
the incidence of mortgage loans prepayments. Similarly, a decrease in economic
activity would decrease ATM, bankcard, and related revenue.
Other Operating Expenses
Operating expenses for the second quarter of 2000 increased $4.2 million or 6%
compared to the second quarter of 1999. The second quarter of 2000 included
operating expenses of $2.4 million for banks that were acquired late in the
second quarter of 1999. These operating expenses consisted primarily of $1.0
million of personnel costs, $1.1 million of intangible asset amortization, $178
thousand of occupancy, equipment and data processing costs and $102 thousand of
printing, postage and supplies expenses. The discussion following Table 4 of
other operating expenses excludes these charges for 2000 to improve
comparability.
<TABLE>
----------------------------------------------------------------------------------------------------------------------
TABLE 4 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
--------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2000 2000 1999 1999 1999
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personnel $ 35,789 $ 37,289 $ 35,801 $ 34,262 $ 34,047
Business promotion 2,148 2,335 2,244 1,925 2,410
Professional fees/services 2,161 2,318 2,451 2,452 2,780
Net occupancy, equipment
and data processing 16,244 15,897 16,061 15,198 13,657
FDIC and other insurance 387 380 338 323 369
Printing, postage and supplies 3,095 2,811 3,035 2,729 3,019
Net gains and operating
expenses on repossessed assets (118) (583) (544) (1,501) (132)
Amortization of intangible
assets 4,016 4,078 4,389 4,519 3,667
Mortgage banking costs 5,540 5,437 5,658 6,183 6,787
Other expense 5,655 4,654 4,824 4,665 4,074
-------------------------------------------------------------------------------------------------------
Total $ 74,917 $ 74,616 $ 74,257 $ 70,755 $ 70,678
-------------------------------------------------------------------------------------------------------
</TABLE>
Personnel costs increased $733 million or 2%. Occupancy, equipment and data
processing costs increased $2.4 million or 18% due primarily to an increase in
data processing costs. A significant portion of BOK Financial's data processing
is outsourced to third parties. Therefore, data processing costs are directly
related to the volume of transactions processed. Included in the $1.0 million
increase in other expense over first quarter 2000 was $400 thousand impairment
of a software development project, as well as $400 thousand increase in costs of
operating the equipment leasing program.
<TABLE>
-------------------------------------------------------------------------------------------------------------
TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS
(In thousands)
Three Months Ended
--------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2000 2000 1999 1999 1999
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total other operating expense $ 74,917 $ 74,616 $ 74,257 $ 70,755 $ 70,678
Acquisition expenses - - - - (1,266)
Reorganization costs - (638) - - -
Net gains and operating costs from
repossessed assets 118 583 544 1,501 132
-------------------------------------------------------------------------------------------------------------
Total $ 75,035 $ 74,561 $ 74,801 $ 72,256 $ 69,544
-------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Operating expenses through June 30, 2000 were $7.7 million or 6% higher than
operating expenses for the first six months of 1999 excluding expenses of $6.3
million for banks that were acquired late in the second quarter of 1999.
LINES OF BUSINESS
BOK Financial operates four principal lines of business under its Bank of
Oklahoma franchise: corporate banking, consumer banking, mortgage banking and
trust services. It also operates a fifth line of business, regional banks, which
includes all functions for Bank of Arkansas, N.A., Bank of Texas, N.A., and Bank
of Albuquerque, N.A. Other lines of business include the TransFund ATM system
and BOSC, Inc., a securities broker-dealer.
Corporate Banking
The Corporate Banking Division, which provides loan and lease financing and
treasury and cash management services to businesses throughout Oklahoma and
seven surrounding states, contributed $11.8 million or 49% of consolidated net
income for the second quarter of 2000. This is compared to $12.9 million or 58%
of consolidated net income for the first quarter of 1999. Returns on average
assets and equity both declined from the second quarter of 1999 due to a
narrowing of the difference between loan yields and BOK Financial's cost of
funds.
<TABLE>
Table 6 Corporate Banking
(In thousands)
Three months ended June 30, Six months ended June 30,
--------------------------------- ---------------------------
2000 1999 2000 1999
------------- -- -------------- ----------------- -----------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ 64,882 $ 54,543 $ 124,801 $ 102,858
Revenue (expense) from internal sources (30,515) (19,740) (57,022) (37,892)
Total revenue 34,367 34,803 67,779 64,966
Operating expense 14,763 13,858 27,780 25,358
Net income 11,844 12,896 24,153 24,505
Average assets $ 3,779,324 $ 3,310,249 $ 3,755,244 $ 3,241,504
Average equity 402,968 336,710 398,900 325,941
Return on assets 1.26% 1.56% 1.29% 1.52%
Return on equity 11.82 15.36 12.18 15.16
Efficiency ratio 42.96 39.82 40.99 39.03
</TABLE>
Consumer Banking
The Consumer Banking Division, which provides a full line of deposit, loan and
fee-based services to customers throughout Oklahoma, contributed $3.0 million or
13% of consolidated net income for the second quarter of 2000 compared to $2.5
million or 11% of consolidated net income for the same quarter of 1999. Total
revenue increased $2.4 million or 15% to $18.9 million. Operating expenses
increased $1.9 million or 17% for the same period.
<TABLE>
Table 7 Consumer Banking
(In thousands)
Three months ended June 30, Six months ended June 30,
--------------------------------- ----------------------------
2000 1999 2000 1999
------------- -- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Revenue(expense) from external sources $ (2,157) $ (1,680) $ (3,323) $ (2,500)
Revenue (expense) from internal sources 21,053 18,162 39,965 34,879
Total revenue 18,896 16,482 36,642 32,397
Operating expense 13,143 11,266 24,760 22,635
Net income 3,046 2,491 6,415 5,022
Average assets $ 1,805,687 $ 1,679,251 $ 1,813,121 $ 1,728,403
Average equity 53,537 43,612 53,134 44,611
Return on assets 0.68% 0.59% 0.71% 0.59%
Return on equity 22.88 22.91 24.28 22.70
Efficiency ratio 69.55 68.35 67.57 66.91
</TABLE>
<PAGE>
Mortgage Banking
Mortgage banking operations resulted in net income of $639 thousand for the
second quarter of 2000 compared to net income of $265 thousand for the same
quarter of 1999. Total revenue decreased $938 thousand due to gains on mortgage
loans sold of $2.0 in the second quarter of 2000 compared to gains of $2.5
million in the second quarter of 1999, coupled with a $436 thousand decrease in
servicing revenue. The performance shift in secondary marketing was due to
higher interest rates that reduced loan origination activity.
Capitalize mortgage servicing rights totaled $112.1 million at June 30, 2000
compared to $107.0 million at June 30, 1999 and $114.1 million at December 31,
1999. At June 30, 2000, capitalized mortgage servicing rights included $10.7
million of deferred hedge losses.
<TABLE>
Table 8 Mortgage Banking
(In thousands)
Three months ended June 30, Six months ended June 30,
-------------------------------- ---------------------------------
2000 1999 2000 1999
------------- -- -------------- ---------------------------------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ 13,707 $ 13,570 $ 24,670 $ 26,597
Revenue (expense) from internal sources (3,176) (2,101) (5,585) (4,227)
Total revenue 10,531 11,469 19,085 22,370
Operating expense 9,465 10,988 18,843 20,256
Net income 639 269 136 1,267
Average assets $ 385,207 $ 364,391 $ 355,116 $ 353,141
Average equity 31,529 34,747 29,629 33,665
Return on assets 0.67% 0.30% 0.08% 0.72%
Return on equity 8.15 3.10 0.92 7.59
Efficiency ratio 89.88 95.81 98.73 90.55
</TABLE>
Trust Services
Trust Services, which includes institutional, investment, and retirement
products and services to affluent individuals, businesses, not-for-profit
organizations, and governmental agencies, contributed $2.5 million or 10% of
consolidated net income for the second quarter of 2000. This is compared to $2.2
million or 10% of consolidated net income for the same quarter of 1999. Revenue
from trust services increased $1.2 million or 10% for the quarter while
operating expenses increased $624 thousand or 7%. At June 30, 2000, trust assets
with an aggregate market value of $17.7 billion were subject to various
fiduciary arrangements, compared to trust assets of $15.5 billion at June 30,
1999.
<TABLE>
Table 9 Trust Services
(In thousands)
Three months ended June 30, Six months ended June 30,
------------------------------- ----------------------------
2000 1999 2000 1999
----------- -- -------------- ------------------- ----------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ 11,102 $ 10,090 $ 22,257 $ 18,998
Revenue (expense) from internal sources 2,236 2,021 3,752 3,870
Total revenue 13,338 12,111 26,009 22,868
Operating expense 9,128 8,504 18,465 17,228
Net income 2,456 2,183 4,491 3,425
Average assets $ 357,184 $ 346,797 $ 333,270 $ 333,664
Average equity 38,303 35,086 37,860 33,332
Return on assets 2.77% 2.52% 2.71% 2.07%
Return on equity 25.79 25.69 23.86 20.72
Efficiency ratio 68.44 70.22 70.99 75.34
</TABLE>
<PAGE>
Regional Banks
Regional Banks include Bank of Texas, Bank of Arkansas, and Bank of Albuquerque.
Each of these banks provides a full range of corporate and consumer banking,
trust services, treasury services and retail investments in their respective
markets. Small businesses and middle market corporations are the regional banks'
primary customer focus.
Regional Banks contributed $2.0 million or 8% of consolidated net income for the
second quarter of 2000, compared to $1.9 million or 9% in 1999. Total revenue
increased by $6.6 million to $22.9 million. Operating expenses increased by $5.1
million to $17.9 million. The growth in total revenue and operating expenses
included $1.8 million and $2.4 million, respectively, from acquisitions that
were completed late in the second quarter of 1999. Average equity assigned to
the regional banks included both an amount based on management's assessment of
risk and an additional amount based upon BOK Financial's investment in these
entities. Management measures performance for regional banks based on tangible
net income, return on assets and return on equity as reflected below.
<TABLE>
Table 10 Regional Banks
(In thousands)
Three months ended June 30, Six months ended June 30,
---------------------------------- --------------------------------
2000 1999 2000 1999
-------------- -- -------------- -------------------- -------------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ 27,094 $ 17,558 $ 52,064 $ 32,072
Revenue (expense) from internal sources (4,226) (1,319) (7,699) (2,344)
Total revenue 27,045 16,289 44,365 29,728
Operating expense 18,302 12,825 34,130 24,398
Net income 2,799 1,942 4,668 2,474
Tangible net income 4,851 4,412 10,794 7,403
Average assets $ 2,315,195 $ 1,647,123 $ 2,279,365 $ 1,452,620
Average equity 262,833 194,338 252,311 182,387
Tangible return on assets 0.84% 1.07% 0.95% 1.03%
Tangible return on equity 7.42 9.11 8.60 8.19
Efficiency ratio 80.04 78.98 76.83 82.07
</TABLE>
INCOME TAXES
The Internal Revenue Service closed its examination of 1996 and management
completed a review of various tax issues during the first quarter of 2000. As a
result of these events, BOK Financial reduced its tax reserve by $3.0 million.
Year to date income tax expense at June 30, 2000 was $24.0 million or 34% of
pre-tax income excluding the reduction in this allowance.
<PAGE>
Assessment of Financial Condition
The aggregate loan portfolio at June 30, 2000 totaled $4.9 billion, an increase
of $222 million since March 31, 2000 and $298 million since December 31, 1999.
All loan types, except multifamily real estate increased during the quarter.
Most notably, energy loans increased $64 million during the quarter and
comprised 13% of total loans. The energy category includes loans to oil and gas
producers which totaled $461 million, loans to borrowers involved in the
transportation and sale of oil and gas, and loans to borrowers that manufacture
equipment and provide other services to the energy industry.
Loans to the service industry increased $35 million during the quarter and
comprised 17% of total loans at June 30, 2000. Services included loans totaling
$219 million to nursing and medical facilities and $76 million to the hotel
industry. Agriculture included loans totaling $154 million to the cattle
industry.
<TABLE>
--------------------------------------------------------------------------------------------------------------
TABLE 11 - LOANS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2000 2000 1999 1999 1999
--------------------------------------------------------------------------
Commercial:
<S> <C> <C> <C> <C> <C>
Energy $ 665,550 $ 601,991 $ 606,561 $ 593,944 $ 558,975
Manufacturing 389,823 368,337 378,341 360,361 323,045
Wholesale/retail 450,681 435,026 407,785 400,730 371,867
Agricultural 185,473 184,299 173,653 162,531 151,010
Services 817,871 782,825 773,018 800,505 723,846
Other commercial and industrial 323,162 310,224 325,343 206,045 190,668
Commercial real estate:
Construction and land development 291,871 278,551 249,160 258,947 246,948
Multifamily 258,658 269,667 257,187 259,276 240,906
Other real estate loans 635,089 624,309 588,195 523,324 495,304
Residential mortgage:
Secured by 1-4 family
residential properties 573,346 551,639 531,058 526,622 520,061
Residential mortgages held for sale 55,332 42,967 57,057 58,466 79,994
Consumer 294,466 269,964 296,131 259,414 224,493
--------------------------------------------------------------------------------------------------------------
Total $ 4,941,322 $ 4,719,799 $ 4,643,489 $ 4,410,165 $ 4,127,117
--------------------------------------------------------------------------------------------------------------
</TABLE>
While BOK Financial continues to increase geographic diversification through
expansion into the Dallas, Texas and Albuquerque, New Mexico areas, geographic
concentration subjects the loan portfolio to the general economic conditions in
Oklahoma. Approximately 73% of the loan portfolio is attributed to Oklahoma and
approximately 18% of the loan portfolio is attributed to Texas. Approximately
61% of commercial real estate loans were secured by property in Oklahoma,
primarily in the Tulsa and Oklahoma City metropolitan areas. An additional 22%
of commercial real estate loans was secured by property in Texas. The major
components of other commercial real estate loans were office buildings, $210
million and retail facilities, $198 million.
SUMMARY OF LOAN LOSS EXPERIENCE
The reserve for loan losses, which is available to absorb losses inherent in the
loan portfolio, totaled $79 million at June 30, 2000, $78 million at March 31,
2000, and $73 million at June 30, 1999. This represents 1.63%, 1.66% and 1.80%
of total loans, excluding loans held for sale, at June 30, 2000, March 31, 2000,
and June 30, 1999, respectively. Losses on loans held for sale, principally
mortgage loans accumulated for placement in securitized pools, are charged to
earnings through adjustments in carrying value to the lower of cost or market
value in accordance with accounting standards applicable to mortgage banking.
Table 12 presents statistical information regarding the reserve for loan losses
for the past five quarters.
<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------------
TABLE 12 - SUMMARY OF LOAN LOSS EXPERIENCE
(In thousands)
Three Months Ended
---------------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2000 2000 1999 1999 1999
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $ 77,828 $ 76,234 $ 75,186 $ 72,732 $ 68,994
Loans charged-off:
Commercial 1,165 845 641 71 1,420
Commercial real estate 311 250 - - -
Residential mortgage 62 21 546 20 37
Consumer 1,329 1,148 820 1,237 1,339
--------------------------------------------------------------------------------------------------------------
Total 2,867 2,264 2,007 1,328 2,796
--------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial 348 261 308 830 1,839
Commercial real estate 39 265 39 208 4
Residential mortgage 3 134 14 2 1
Consumer 520 559 439 600 627
--------------------------------------------------------------------------------------------------------------
Total 910 1,219 800 1,640 2,471
--------------------------------------------------------------------------------------------------------------
Net loans charged-off (recoveries) 1,957 1,045 1,207 (312) 325
Provision for loan losses 3,534 2,639 2,255 2,142 2,538
Additions due to acquisitions - - - - 1,525
--------------------------------------------------------------------------------------------------------------
Ending balance $ 79,405 $ 77,828 $ 76,234 $ 75,186 $ 72,732
--------------------------------------------------------------------------------------------------------------
Reserve to loans outstanding
at period-end(1) 1.63% 1.66% 1.66% 1.73% 1.80%
Net loan losses (annualized)
to average loans (1) 0.16 0.09 0.11 (0.03) 0.03
--------------------------------------------------------------------------------------------------------------
(1) Excludes residential mortgage loans held for sale which are carried at the
lower of aggregate cost or market value.
</TABLE>
The adequacy of the reserve for loan losses is assessed by management based upon
an ongoing quarterly evaluation of the probable estimated losses inherent in the
portfolio, including probable losses on both outstanding loans and unused
commitments to provide financing. A consistent methodology has been developed
that includes reserves assigned to specific criticized loans, general reserves
that are based upon a statistical migration analysis for each category of loans,
and unallocated reserves that are based upon an analysis of current economic
conditions, loan concentrations, portfolio growth, and other relevant factors.
An independent Credit Administration department is responsible for performing
this evaluation for all of BOK Financial's subsidiaries to ensure that the
methodology is applied consistently.
All significant criticized loans are reviewed quarterly with written
documentation. Specific reserves for impairment are determined in accordance
with accounting principles generally accepted in the United States and
appropriate regulatory standards. At June 30, 2000, specific impairment reserves
totaled $2.8 million on loans that totaled $15 million.
The adequacy of the general loan loss reserve is determined primarily through an
internally developed migration analysis model. Management uses an eight-quarter
aggregate accumulation of net loan losses as the basis for this model. Greater
emphasis is placed on net losses in the more recent periods. This model is used
to assign general loan loss reserves to commercial loans and capital leases,
residential loans, and consumer loans. All loans, capital leases, and letters of
credit are allocated a migration factor by this model. Management can override
the general allocation only by utilizing a specific allocation that is greater
than the general allocation.
A nonspecific reserve for loan losses is maintained for risks beyond those
factors specified to a particular loan or those identified by the migration
analysis. These factors include trends in general economic conditions in BOK
Financial's primary lending areas, duration of the business cycle, specific
conditions in industries where BOK Financial has a concentration of loans,
overall growth in the loan portfolio, bank regulatory examination results, error
potential in either the migration analysis model or in the underlying data, and
other relevant factors. A range of potential losses is then determined for each
factor identified. At June 30, 2000, the loss potential for the more significant
factors was:
<PAGE>
Concentration of large loans - $2.1 million to $4.1 million Loan portfolio
growth and expansion into
new markets - $2.3 million to $4.6 million
A provision for loan losses is charged against earnings in amounts necessary to
maintain an adequate reserve for loan losses. These provisions were $3.5 million
for the second quarter of 2000, compared to $2.5 million for the second quarter
of 1999.
NONPERFORMING ASSETS
Information regarding nonperforming assets, which totaled $29 million at June
30, 2000, $23 million at March 31, 2000 and $25 million at June 30,1999, is
presented in Table 13. Nonperforming loans included nonaccrual loans and
renegotiated loans and excluded loans 90 days or more past due but still
accruing. The increase in nonaccrual commercial loans during the second quarter
is primarily due to the bankruptcy of one borrower.
<TABLE>
---------------------------------------------------------------------------------------------------------------
TABLE 13 - NONPERFORMING ASSETS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2000 2000 1999 1999 1999
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
Commercial $ 21,445 $ 13,448 $ 12,686 $ 12,088 $ 13,754
Commercial real estate 823 1,629 2,046 1,796 2,824
Residential mortgage 2,410 2,555 3,383 44 699
Consumer 709 970 1,350 3,938 3,198
---------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 25,387 18,602 19,465 17,866 20,475
Renegotiated loans 89 - - - -
---------------------------------------------------------------------------------------------------------------
Total nonperforming loans 25,476 18,602 19,465 17,866 20,475
Other nonperforming assets 3,805 3,972 3,478 4,447 4,450
---------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 29,281 $ 22,574 $ 22,943 $ 22,313 $ 24,925
---------------------------------------------------------------------------------------------------------------
Ratios:
Reserve for loan losses to
nonperforming loans 311.69% 418.39% 391.65% 420.83% 355.22%
Nonperforming loans to
period-end loans (2) 0.52 0.40 0.42 0.41 0.51
---------------------------------------------------------------------------------------------------------------
Loans past due (90 days) (1) $ 9,828 $ 9,704 $ 11,336 $ 12,757 $ 11,082
---------------------------------------------------------------------------------------------------------------
(1) Includes residential mortgages guaranteed $ 7,363 $ 7,623 $ 8,538 $ 7,712 $ 7,958
by agencies of the U.S. Government
Excludes residential mortgages guaranteed
by agencies of the U.S. Government in 6,817 8,102 8,310 8,159 7,487
foreclosure.
(2) Excludes residential mortgage loans held for sale
---------------------------------------------------------------------------------------------------------------
</TABLE>
The loan review process also identifies loans that possess more than the normal
amount of risk due to deterioration in the financial condition of the borrower
or the value of the collateral. Because the borrowers are performing in
accordance with the original terms of the loan agreements and no loss of
principal or interest is anticipated, such loans are not included in the
Nonperforming Assets totals. These loans are assigned to risk categories in
order to focus management's attention on the loans with higher risk of loss. At
June 30, 2000, loans totaling $86 million were assigned to the substandard risk
category and loans totaling $42 million were assigned to the special mention
risk category. This is compared to $71 million of loans classified as
substandard and $51 million of loans classified as special mention at March 31,
2000, and loans that totaled $79 million and $54 million classified as
substandard and special mention, respectively, at June 30, 1999.
<PAGE>
LEASING
BOK Financial expanded its equipment leasing activities during the first quarter
of 2000. Other assets included $24 million of equipment held for various
operating leases at June 30, 2000, compared to $14 million at December 31, 1999.
These activities include a much greater range of equipment financing than the
natural gas compressors that were the focus of BOK Financial's previous leasing
activities and introduce unique credit, collateral valuation, and transaction
structure risk to the company.
MARKET RISK
Market risk is a broad term for the risk of economic loss due to adverse changes
in the fair value of a financial instrument. These changes may be the result of
various factors, including interest rates, foreign exchange rates, commodity
prices, or equity prices. Additionally, the financial instruments subject to
market risk can be classified either as held for trading or held for purposes
other than trading.
BOK Financial is subject to market risk primarily through the effect of changes
in interest rates on its portfolio of assets held for purposes other than
trading and trading assets. The effect of other changes, such as foreign
exchange rates, commodity prices or equity prices, is not material to BOK
Financial. The responsibility for managing market risk rests with the
Asset/Liability Committee which operates under policy guidelines which have been
established by the Board of Directors. The negative acceptable variation in net
interest revenue and economic value of equity due to a 200 basis point increase
or decrease in interest rates is limited by these guidelines to +/- 10%. These
guidelines also establish maximum levels for short-term borrowings, short-term
assets, and public and brokered deposits, and establish minimum levels for
unpledged assets, among other things. Compliance with these guidelines is
reviewed monthly.
Interest Rate Risk Management (Other than Trading)
BOK Financial performs a sensitivity analysis to identify more dynamic interest
rate risk exposures, including embedded option positions, on net interest
revenue, net income and economic value of equity. A simulation model is used to
estimate the effect of changes in interest rates over the next twelve months
based on three interest rate scenarios. These are a "most likely" rate scenario
and on two "shock test" scenarios, the first assuming a sustained parallel 200
basis point increase and the second a sustained parallel 200 basis point
decrease in interest rates. An independent source is used to determine the most
likely interest rates for the next year. BOK Financial's primary interest rate
exposures include the Federal Reserve Bank's discount rate which affects
short-term borrowings, the prime lending rate and the London InterBank Offering
Rate ("LIBOR") which are the basis for much of the variable-rate loan pricing
and the 30-year mortgage rate which directly affects the prepayment speeds for
mortgage-backed securities and mortgage servicing rights. Derivative financial
instruments and other financial instruments used for purposes other than trading
are included in this simulation. In addition, sensitivity of fee income to
market interest rate levels, such as those related to cash management services
and mortgage servicing, are included. The model incorporates management's
assumptions regarding the level of interest rate or balance changes on
indeterminable maturity deposits (demand deposits, interest-bearing transaction
accounts and savings accounts) for a given level of market rate changes. The
assumptions have been developed through a combination of historical analysis and
future expected pricing behavior. Interest rate swaps on all products are
included to the extent that they are effective in the 12-month simulation
period. Additionally, changes in prepayment behavior of mortgage-backed
securities, residential mortgage loans and mortgage servicing in each rate
environment are captured using industry estimates of prepayment speeds for
various coupon segments of the portfolio. Finally, the impact of planned growth
and new business activities is factored into the simulation model. At December
31, 2000 and 1999, this modeling indicated interest rate sensitivity as follows:
<PAGE>
<TABLE>
Table 14 - Interest Rate Sensitivity
(Dollars in Thousands)
200 bp Increase 200 bp Decrease Most Likely
--------------------------------------------------- -------------------
2000 1999 2000 1999 2000 1999
------------- ---------- ---------- -------------- ----------- ---------
Anticipated impact over the next twelve months:
<S> <C> <C> <C> <C> <C> <C>
Net interest revenue $ 1,245 $ (2,061) $ (609) $ 1,647 $ 486 $(1,136)
0.4% (0.8)% (0.2)% 0.6% 0.2% (0.4)%
--------------------------------------------- ----------------------- ----------- ----------- -----------
Net income $ 778 $ (1,278) $ (380) $ 1,021 $ 304 $( 704)
0.8% (1.4)% (0.4)% 1.1% 0.3% (0.7)%
--------------------------------------------- ----------------------- ----------- ----------- -----------
Economic value of equity $(25,019) $(68,450) $(43,938) $ 38,587 $ 5,926 $1,869
(2.1)% (7.2)% (3.7)% 4.0% 0.5% 0.2%
--------------------------------------------- ----------------------- ----------- ------------ ----------
</TABLE>
The estimated changes in interest rates on net interest revenue, net income, and
economic value of equity is not projected to be significant within the +/- 200
basis point range of assumptions.
BOK Financial hedges its portfolio of mortgage servicing rights by acquiring
mortgage-backed and principal only securities whenever the prepayment risk
exceeds certain levels. The fair value of these securities is expected to vary
inversely to the value of the mortgage servicing rights. Management may sell
these securities to recognize gains when necessary to offset losses on the
mortgage servicing rights. At June 30, 2000, securities with a fair value of $61
million and an aggregate unrealized gain of $73 thousand were held for this
program. The interest rate sensitivity of the mortgage servicing portfolio and
securities held as hedges is modeled over a range of +/- 50 basis points. At
June 30, 2000, the pre-tax results of this modeling are:
50 bp increase 50 bp decrease
----------------- ------------------
Anticipated change in:
Mortgage servicing rights $ 3,898 $ (5,727)
Hedging instruments (1,887) 2,066
----------------- ------------------
Net $ 2,011 $ (3,661)
================= ==================
The simulations used to manage market risk are based on numerous assumptions
regarding the effect of changes in interest rates on the timing and extent of
repricing characteristics, future cash flows and customer behavior. These
assumptions are inherently uncertain and, as a result, the model cannot
precisely estimate net interest revenue, net income or economic value of equity
or precisely predict the impact of higher or lower interest rates on net
interest revenue, net income or economic value of equity. Actual results will
differ from simulated results due to timing, magnitude and frequency of interest
rate changes and changes in market conditions and management strategies, among
other factors.
BOK Financial uses interest rate swaps, a form of off-balance sheet derivative
product, in managing its interest rate sensitivity. These products are generally
used to match interest received or paid on certain long-term, fixed rate loans,
certificates of deposit and subordinated debt with other variable rate assets
and liabilities. BOK Financial accrues and periodically receives a fixed amount
from the counterparties to these swaps and accrues and periodically makes a
variable payment to the counterparties. During the second quarter of 2000 income
from these swaps exceeded the cost of the swaps by $497 thousand. Credit risk
from these swaps is closely monitored and counterparties to these contracts are
selected on the basis of their credit worthiness, among other factors.
Derivative products are not used for speculative purposes.
<PAGE>
--------------------------------------------------------------------------------
TABLE 15 - INTEREST
RATE SWAPS
(In thousands)
Notional Pay Receive Fair
Amount Rate Rate Value
-------------------------------------------------------------
Expiration:
2001 4,324 5.03 6.64 (1) 69
2002 211,660 6.21 - 7.0 (1) 6.64 - 6.94 (1) (1,845)
2003 87,081 4.82 - 6.77 (1) 6.64 - 7.91 (1) 1,120
2004 83,604 5.65 - 6.77 (1) 6.64 - 7.36 (1) 976
2005 8,383 5.08 - 5.21 6.64 (1) 1,213
2006 16,500 7.26 6.77 (1) 345
2007 194,675 5.23 - 7.48 6.64 - 6.80 (1) (654)
2008 51,285 5.15 - 6.63 6.64 (1) 2,132
2009 82,732 5.22 - 6.47 6.12 - 6.85 3,202
2010 22,750 7.01 - 7.41 6.64 (1) (90)
--------------------------------------------------------------------------------
(1) Rates are variable based on LIBOR and reset monthly, quarterly or
semiannually.
Trading Activities
BOK Financial enters into trading account activities both as an intermediary for
customers and for its own account. As an intermediary, BOK Financial will take
positions in securities, generally mortgage-backed securities, government agency
securities, and municipal bonds. These securities are purchased for resale to
customers, which include individuals, corporations, foundations, and other
financial institutions. BOK Financial may also take trading positions in U.S.
Treasury securities, mortgage-backed securities, municipal bonds, and financial
futures for its own account through BOk and BOSC, Inc.. These positions are
taken with the objective of generating trading profits. Both of these activities
involve interest rate risk.
A variety of methods are used to manage the interest rate risk of trading
activities. These methods include daily marking of all positions to market
value, independent verification of inventory pricing, and position limits for
each trading activity. Hedges in either the futures or cash markets may be used
to reduce the risk associated with some trading positions. The Risk Management
Department monitors trading activity daily and reports to senior management and
the Risk Oversight and Audit Committee of the Board of Directors on any
exceptions to trading position limits and risk management policy.
BOK Financial uses a Value at Risk ("VAR") methodology to measure the market
risk inherent in its trading activities. VAR is calculated based upon historical
simulations over the past five years. It represents an amount of market loss
that is likely to be exceeded only one out of every 100 two-week periods.
Trading positions are managed within guidelines approved by the Board of
Directors. These guidelines limit the nominal aggregate trading positions to
$360 million, the VAR to $6.5 million. At June 30, 2000, the nominal aggregate
trading positions was $6.2 million, the VAR was $129 thousand.
--------------------------------------------------------------------------------
TABLE 16 - CAPITAL RATIOS
June 30, March 31, Dec. 31, Sept. 30, June 30,
2000 2000 1999 1999 1999
---------------------------------------------------
Average shareholders' equity
to average assets 6.79% 6.71% 6.80% 6.72% 7.36%
Risk-based capital:
Tier 1 capital 7.80 7.45 7.27 7.09 7.09
Total capital 11.15 10.80 10.72 10.67 10.89
Leverage 6.23 6.06 5.92 5.64 5.47
<PAGE>
NEW ACCOUNTING STANDARDS
During 1998, the Financial Accounting Standards Board adopted Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). The
effective date for FAS 133 has been deferred until fiscal years beginning after
June 15, 2000. BOK Financial expects to adopt FAS 133 effective January 1, 2001.
FAS 133 will require the recognition of all derivatives on the balance sheet at
fair value. Derivatives that do not qualify for special hedge accounting must be
adjusted to fair value through income. Accounting for changes in fair value of
derivatives that qualify for special hedge accounting depends on the nature of
the hedge. Changes in the fair value of derivatives that qualify for hedge
accounting will either be offset against changes in fair value of the hedged
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings.
BOK Financial is currently analyzing the effect of FAS 133 on derivatives used
as part of its asset / liability management programs. Although the full effect
of FAS 133 on earnings and financial position has not yet been determined, it
appears that its adoption may result in an increase in earnings volatility.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are based on management's
beliefs, assumptions, current expectations, estimates, and projections about BOK
Financial, the financial services industry, and the economy in general. Words
such as "anticipates", "believes", "estimates", "expects", "forecasts", "plans",
"projects", variations of such words, and similar expressions are intended to
identify such forward-looking statements. Management judgments relating to, and
discussion of the provision and reserve for loan losses involve judgments as to
future events and are inherently forward-looking statements. Assessments that
BOK Financial's acquisitions and other growth endeavors will be profitable are
necessary statements of belief as to the outcome of future events, based in part
on information provided by others which BOK Financial has not independently
verified. These statements are not guarantees of future performance and involve
risks, uncertainties, and assumptions that are difficult to predict with regard
to timing, extent, likelihood, and degree of occurrence. Therefore, actual
results and outcomes may materially differ from what is expressed, implied, or
forecasted in such forward-looking statements. Internal and external factors
that might cause such a difference include, but are not limited to, (1) the
ability to fully realize expected cost savings from mergers with the expected
time frames, (2) the ability of other companies on which BOK Financial relies to
provide goods and services in a timely and accurate manner, (3) changes in
interest rates and interest rate relationships, (4) demand for products and
services, (5) the degree of competition by traditional and nontraditional
competitors, (6) changes in banking regulations, tax laws, prices, levies, and
assessments, (7) the impact of technological advances, and (8) trends in
customer behavior as well as their ability to repay loans. BOK Financial and its
affiliates undertake no obligation to update, amend, or clarify forward-looking
statements, whether as a result of new information, future events, or otherwise.
REPORT OF MANAGEMENT ON CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the consolidated financial statements which have
been prepared in accordance with accounting principles generally accepted in the
United States. In management's opinion, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of normal recurring
accruals) necessary to present fairly the financial condition, results of
operations and cash flows of BOK Financial and its subsidiaries at the dates and
for the periods presented.
The financial information included in this interim report has been prepared by
management without audit by independent public accountants and should be read in
conjunction with BOK Financial's 1999 Form 10-K filed with the Securities and
Exchange Commission which contains audited financial statements.
<PAGE>
<TABLE>
------------------------------------------------ ------------- --- ---------- -- ------------- --- ------
Consolidated Statement of Earnings
(In Thousands Except Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
2000 1999 2000 1999
-------------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
Interest Revenue
Loans $ 109,198 $ 77,116 $ 210,236 $ 149,648
Taxable securities 42,737 35,841 83,013 68,784
Tax-exempt securities 3,384 3,728 6,351 7,714
------------------------------------------------ -------------- ------------- -------------- ------------
Total securities 46,121 39,569 89,364 76,498
------------------------------------------------ -------------- ------------- -------------- ------------
Trading securities 315 812 675 1,508
Funds sold 680 759 1,383 1,172
------------------------------------------------ -------------- ------------- -------------- ------------
Total interest revenue 156,314 118,256 301,658 228,826
------------------------------------------------ -------------- ------------- -------------- ------------
Interest Expense
Deposits 48,798 34,420 94,834 68,859
Other borrowings 37,094 25,000 70,210 46,799
Subordinated debenture 2,552 2,253 5,066 4,574
------------------------------------------------ -------------- ------------- -------------- ------------
Total interest expense 88,444 61,673 170,110 120,232
------------------------------------------------ -------------- ------------- -------------- ------------
Net Interest Revenue 67,870 56,583 131,548 108,594
Provision for Loan Losses 3,534 2,538 6,173 5,968
------------------------------------------------ -------------- ------------- -------------- ------------
Net Interest Revenue After
Provision for Loan Losses 64,336 54,045 125,375 102,626
------------------------------------------------ -------------- ------------- -------------- ------------
Other Operating Revenue
Brokerage and trading revenue 4,219 3,779 8,645 8,215
Transaction card revenue 9,331 7,986 17,951 15,583
Trust fees and commissions 9,743 8,874 19,266 16,643
Service charges and fees on deposit accounts 10,736 10,073 20,991 19,526
Mortgage banking revenue, net 9,427 9,877 17,261 19,169
Leasing revenue 1,192 817 1,936 2,685
Other revenue 3,344 4,659 8,317 9,744
------------------------------------------------ -------------- ------------- -------------- ------------
Total fees and commissions revenue 47,992 46,065 94,367 91,565
------------------------------------------------ -------------- ------------- -------------- ------------
Gain on sale of student loans 38 16 471 545
Gain on loan securitization - - - 270
Gain on sale of other assets - 3,638 - 4,530
Securities gains (losses), net (682) (288) (699) (14)
------------------------------------------------ -------------- ------------- -------------- ------------
Total other operating revenue 47,348 49,431 94,139 96,896
------------------------------------------------ -------------- ------------- -------------- ------------
Other Operating Expense
Personnel 35,789 34,047 73,078 65,947
Business promotion 2,148 2,410 4,483 4,908
Professional fees and services 2,161 2,780 4,479 4,681
Net occupancy, equipment & data processing 16,244 13,657 32,141 26,765
FDIC and other insurance 387 369 767 695
Printing, postage and supplies 3,095 3,019 5,906 5,835
Net gains and operating expenses of
repossessed assets (118) (132) (701) (1,428)
Amortization of intangible assets 4,016 3,667 8,094 6,915
Mortgage banking costs 5,540 6,787 10,977 12,091
Other expense 5,655 4,074 10,309 9,095
------------------------------------------------ -------------- ------------- -------------- ------------
Total Other Operating Expense 74,917 70,678 149,533 135,504
------------------------------------------------ -------------- ------------- -------------- ------------
Income Before Taxes 36,767 32,798 69,981 64,018
Federal and state income tax 12,573 10,742 20,974 20,725
------------------------------------------------ -------------- ------------- -------------- ------------
Net Income $ 24,194 $ 22,056 $ 49,007 $ 43,293
------------------------------------------------ -------------- ------------- -------------- ------------
Earnings Per Share:
Net Income
Basic $ 0.48 $ 0.44 $ 0.98 $ 0.87
------------------------------------------------ -------------- ------------- -------------- ------------
Diluted $ 0.44 $ 0.39 $ 0.88 $ 0.78
------------------------------------------------ -------------- ------------- -------------- ------------
Average Shares Used in Computation:
Basic 49,125,252 48,973,613 49,129,149 48,946,008
---------------------------------------------------------------------------------------------------------
Diluted 55,584,091 55,869,573 55,595,589 55,819,223
---------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
June 30, December 31, June 30,
2000 1999 1999
------------------------------------------
ASSETS
<S> <C> <C> <C>
Cash and due from banks $ 438,921 $ 397,895 $ 457,142
Funds sold 112,636 28,960 45,440
Trading securities 20,051 14,452 52,450
Securities:
Available for sale 2,547,066 2,588,704 2,634,253
Investment (fair value: June 30, 2000 - $226,248;
December 31, 1999 -$211,624;
June 30, 1999 - $221,649) 227,449 213,180 222,895
------------------------------------------------------------------------------------------------------
Total securities 2,774,515 2,801,884 2,857,148
------------------------------------------------------------------------------------------------------
Loans 4,941,322 4,643,489 4,127,117
Less reserve for loan losses 79,405 76,234 72,732
------------------------------------------------------------------------------------------------------
Net loans 4,861,917 4,567,255 4,054,385
------------------------------------------------------------------------------------------------------
Premises and equipment, net 125,492 119,239 110,707
Accrued revenue receivable 68,258 67,640 65,921
Excess cost over fair value of net assets acquired
and core deposit premiums (net of accumulated
amortization: June 30, 2000 - $73,386;
December 31, 1999 - $65,292;
June 30, 1999 - $56,384) 116,918 125,011 135,005
Mortgage servicing rights 112,091 114,134 107,011
Real estate and other repossessed assets 3,805 3,478 4,450
Bankers' acceptances 58,617 30,161 1,136
Other assets 126,002 103,888 101,625
------------------------------------------------------------------------------------------------------
Total assets $ 8,819,223 $ 8,373,997 $ 7,992,420
------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 1,119,690 $ 1,020,996 $ 1,144,211
Interest-bearing deposits:
Transaction 1,840,828 1,866,499 1,803,225
Savings 155,263 155,839 173,853
Time 2,485,127 2,219,850 1,896,578
------------------------------------------------------------------------------------------------------
Total deposits 5,600,908 5,263,184 5,017,867
------------------------------------------------------------------------------------------------------
Funds purchased and repurchase
agreements 1,448,879 1,345,683 1,304,896
Other borrowings 877,512 938,020 894,017
Subordinated debenture 148,727 148,642 148,551
Accrued interest, taxes and expense 59,363 62,431 53,146
Bankers' acceptances 58,617 30,161 1,136
Other liabilities 19,352 28,712 42,901
------------------------------------------------------------------------------------------------------
Total liabilities 8,213,358 7,816,833 7,462,514
------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 25 25 25
Common stock ($.00006 par value; 2,500,000,000
shares authorized; shares issued and outstanding
June 30, 2000 - 49,479,553; December 31, 1999
- 49,382,262; June 30, 1999 - 47,655,870) 3 3 3
Capital surplus 276,005 274,980 237,740
Retained earnings 381,007 332,751 318,174
Notes receivable from exercise of stock options -
Treasury stock (shares at cost: June 30, 2000 - 378,579;
December 31, 1999 - 316,325; June 30, 1999 - 110,441) (8,109) (7,018) (2,580)
Accumulated other comprehensive loss (43,066) (43,577) (23,456)
------------------------------------------------------------------------------------------------------
Total shareholders' equity 605,865 557,164 529,906
------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 8,819,223 $ 8,373,997 $ 7,992,420
------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In Thousands)
Accumulated
Other
Preferred Stock Common Stock Comprehensive Capital Retained Treasury Stock
Shares Amount Shares Amount Income(loss) Surplus Earnings Shares Amount Total
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1998 250,000 $ 25 48,112 $ 3 $12,297 $236,726 $278,365 749 $ (2,623) $524,793
Comprehensive income:
Net income - - - - - - 43,293 - - 43,293
Other
Comprehensive
income, net of
tax:
Unrealized gains(loss)
on securities available
for sale (1) - - - - (35,753) - - - - (35,753)
-----------
Comprehensive income 7,540
-----------
Exercise of stock options - - 221 - - 1,778 - 81 (1,909) (131)
Issuance of common
stock to Thrift Plan - - 17 - - 405 - (1) 33 438
Common stock dividend - - - - - - (2,734) - - (2,734)
Preferred dividend
paid in shares of
common stock - - 25 - - 750 (750) - - -
Director retainer shares - - 6 - - 143 - - - 143
Cancel treasury stock (725) (2,062) (725) 2,062 -
Treasury stock purchase - - - - - - - 6 (143) (143)
---------------------------------------------------------------------------------------------------------------------------
Balance at
June 30, 1999 250,000 $ 25 47,656 $ 3 $(23,456) $237,740 $318,174 110 $(2,580) $ 529,906
---------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1999 250,000 $ 25 49,382 $ 3 $(43,577)$274,980 $332,751 316 $ (7,018) $557,164
Comprehensive income:
Net income - - - - - - 49,007 - - 49,007
Other Comprehensive
income, net of tax:
Unrealized gains(loss)
on securities available
for sale(1) - - - - 511 - - - 511
-----------
Comprehensive income 49,518
-----------
Exercise of stock options - - 68 - - 594 - 27 (546) 48
Preferred dividends paid in
shares of common stock - - 17 - - 371 (750) (18) 379 -
Common stock dividend - - 9 - - - (1) - - (1)
Director retainer - - 4 - - 60 - (5) 98 158
shares
Treasury stock purchase - - - - - - - 58 (1,022) (1,022)
---------------------------------------------------------------------------------------------------------------------------
Balances at
June 30, 2000 250,000 $ 25 49,480 $ 3 $(43,066)$276,005 $381,007 378 $(8,109) $605,865
---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) June 30, 1999 June 30, 1998
------------- -------------
Reclassification adjustments:
Unrealized losses on available for
sale securities $ (13) $ (35,763)
Less: reclassification adjustment for
gains realized included in net income,
net of tax (524) (10)
-----------------------------
Net unrealized losses on securities $ 511 $ (35,753)
-----------------------------
</FN>
</TABLE>
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended June 30,
-------------------------------
2000 1999
-------------------------------
<S> <C> <C>
Cash Flow From Operating Activities:
Net income $ 49,007 $ 43,293
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan losses 6,173 5,968
Depreciation and amortization 25,456 21,094
Tax reserve reversal (3,000) -
Net amortization of security discounts and premiums (1,649) 856
Net gain on sale of assets (3,231) (11,569)
Mortgage loans originated for resale (242,956) (399,019)
Proceeds from sale of mortgage loans held for resale 303,862 423,840
Change in trading securities (5,318) (3,264)
Change in accrued revenue receivable 40,870 1,740
Change in other assets (30,358) (44,438)
Change in accrued interest, taxes and expense (967) 16,797
Change in other liabilities 24,937 20,497
--------------------------------------------------------------------------------------------
Net cash provided by operating activities 162,826 75,795
--------------------------------------------------------------------------------------------
Cash Flow From Investing Activities:
Proceeds from maturities of investment securities 27,419 38,395
Proceeds from maturities of available for sale securities 177,467 416,173
Purchases of investment securities (41,945) (33,633)
Purchases of available for sale securities (542,081) (1,686,823)
Proceeds from sales of available for sale securities 393,405 1,052,992
Proceeds from sales of investment securities 175 -
Loans originated or acquired net or principal collected (443,726) (505,498)
Proceeds from disposition of assets 44,201 184,199
Purchases of assets (32,634) (60,152)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net - 26,019
--------------------------------------------------------------------------------------------
Net cash used by investing activities (417,719) (568,328)
--------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net change in demand deposits, transaction
deposits, money market deposits, and savings accounts 72,447 57,420
Net change in certificates of deposit 265,277 (1,570)
Net change in other borrowings 42,688 469,643
Purchase of treasury stock (1,022) (143)
Common stock dividend - (2,733)
Preferred stock dividend (1) (1)
Issuance of preferred, common and treasury stock, net 206 1,074
--------------------------------------------------------------------------------------------
Net cash provided by financing activities 379,595 523,690
--------------------------------------------------------------------------------------------
Net change in cash and cash equivalents 124,702 31,157
Cash and cash equivalents at beginning of period 426,855 471,425
--------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 551,557 $ 502,582
--------------------------------------------------------------------------------------------
Cash paid for interest $ 168,170 $ 118,235
--------------------------------------------------------------------------------------------
Cash paid for taxes $ 28,353 $ 17,100
--------------------------------------------------------------------------------------------
Net loans transferred to repossessed real estate
and other assets $ 1,214 $ 797
--------------------------------------------------------------------------------------------
Payment of preferred stock dividends in common stock $ 750 $ 750
--------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of BOK Financial Corporation conform to
accounting principles generally accepted in the United States and generally
accepted practices within the banking industry. The Consolidated Financial
Statements of BOK Financial include the accounts of BOK Financial and its
subsidiaries, primarily Bank of Oklahoma, N.A. ("BOk"), Bank of Arkansas N.A.,
Bank of Texas, N.A. and BOSC, Inc. Certain prior period balances have been
reclassified to conform with the current period presentation.
(2) MORTGAGE BANKING ACTIVITIES
At June 30, 2000, BOk owned the rights to service 93,861 mortgage loans with
outstanding principal balances of $6.9 billion, including $129.7 million
serviced for BOk. The weighted average interest rate and remaining term was
7.46% and 271 months, respectively.
Activity in capitalized mortgage servicing rights and related valuation
allowance during the six months ending June 30, 2000 is as follows:
<TABLE>
Capitalized Mortgage Servicing Rights
------------------------------------------------------------------------------
Valuation Hedging
Purchased Originated Total Allowance (Gain)/Loss Net
--------------------------- ---------------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1999 $ 74,912 $ 28,815 $ 103,727 $ - $ 10,407 $ 114,134
Additions 560 3,784 4,344 - - 4,344
Amortization expense (5,062) (1,636) (6,698) - (732) (7,430)
Realized hedge losses - 4,389 4,389
Unrealized hedge losses - (3,346) (3,346)
----------------------------- ---------- - ---------- ----------- --------------- ---------- -- ---------
Balance at June 30, 2000 $ 70,410 $ 30,963 $ 101,373 $ - $ 10,718 $ 112,091
----------------------------- ---------- - ---------- ----------- --------------- ---------- -- ---------
Estimated fair value of
mortgage servicing
rights (1) $ 83,340 $ 43,604 $ 126,944 $ 126,944
----------------------------- ---------- - ---------- ----------- --------------- ---------- -- ---------
(1) Excludes approximately $8.5 million of loan servicing rights on mortgage
loans originated prior to the adoption of FAS 122.
</TABLE>
Stratification of the mortgage loan servicing portfolio, outstanding principal
of loans serviced, and related hedging information by interest rate at June 30,
2000 follows (in thousands):
<TABLE>
< 6.50% 6.50% - 7.49% 7.50% - 8.49% => 8.50% Total
--------------------------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Cost less accumulated amortization $ 8,883 $ 58,876 $ 30,651 $ 2,963 $ 101,373
Deferred hedge losses - 8,497 2,221 - 10,718
------------------------------------------ --------------------------- -------------- ----------- ----------
Adjusted cost 8,883 67,373 32,872 2,963 112,091
Fair value 10,789 71,820 38,558 5,777 126,944
------------------------------------------ --------------------------- -------------- ----------- ----------
Impairment $ - $ - $ - $ - $ -
------------------------------------------ --------------------------- -------------- ----------- ----------
Outstanding principal of loans serviced(1) $ 596,000 $ 3,617,200 $ 1,863,500 $ 279,500 $6,356,200
------------------------------------------ --------------------------- -------------- ----------- ----------
(1) Excludes outstanding principal of $457.4 million for loans serviced for
which there is no capitalized mortgage servicing rights.
</TABLE>
<PAGE>
(3) DISPOSAL OF AVAILABLE FOR SALE SECURITIES
Sales of available for sale securities resulted in gains and losses as follows
(in thousands):
Six Months Ended June 30,
-------------------------------
2000 1999
-------------- ------------
Proceeds $ 357,105 $ 1,052,992
Gross realized gains 187 3,134
Gross realized losses 886 3,148
Related federal and state income
tax benefit (175) (4)
(4) EARNINGS PER SHARE
The following table presents the computation of basic and diluted earnings per
share (dollars in thousands except share data):
<TABLE>
Three Months Ended Six Months Ended
--------------------------- --------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------------------------- --------------------------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 24,194 $ 22,056 $ 49,007 $ 43,293
Preferred stock dividends 375 375 750 750
----------------------------------------------------------------------------------------------------------------
Numerator for basic earnings per share - income
available to common stockholders 23,819 21,681 48,257 42,543
----------------------------------------------------------------------------------------------------------------
Effect of dilutive securities:
Preferred stock dividends 375 375 750 750
----------------------------------------------------------------------------------------------------------------
Numerator for diluted earnings per share - income
available to common stockholders after assumed conversion $ 24,194 $ 22,056 $ 49,007 $ 43,293
----------------------------------------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per share -weighted
average shares 49,125,252 48,973,613 49,129,149 48,946,008
Effect of dilutive securities:
Employee stock options (1) 309,474 746,595 317,075 723,850
Convertible preferred stock 6,149,365 6,149,365 6,149,365 6,149,365
----------------------------------------------------------------------------------------------------------------
Dilutive potential common shares 6,458,839 6,895,960 6,466,440 6,873,215
----------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 55,584,091 55,869,573 55,595,589 55,819,223
----------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.48 $ 0.44 $ 0.98 $ 0.87
----------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 0.44 $ 0.39 $ 0.88 $ 0.78
----------------------------------------------------------------------------------------------------------------
(1)Excludes employee stock options with exercise
price greater than current market price 215,520 - 198,638 -
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(5) REPORTABLE SEGMENTS
Reportable segments reconciliation to the Consolidated Financial Statements for
the six months ended June 30, 2000 is as follows:
<TABLE>
Other Other
Net Interest Operating Operating Average
Revenue Revenue(1) Expense Assets
-------------- -- ------------- --- -------------- -- -------------
<S> <C> <C> <C> <C>
Total reportable lines of business $ 123,874 $ 70,006 $ 123,932 $ 8,536,116
Total non-reportable lines of business 247 23,902 18,619 28,227
Unallocated items:
Tax-equivalent adjustment 3,850 - - -
Funds management 13,761 603 6,099 187,778
Eliminations and all others, net (10,184) 327 883 (264,117)
-------------- -- ------------- --- -------------- -- -------------
BOK Financial consolidated $ 131,548 $ 94,838 $ 149,533 $ 8,488,004
============== == ============= === ============== == ============+
(1) Excludes securities gains/losses.
</TABLE>
Reportable segments reconciliation to the Consolidated Financial Statements for
the six months ended June 30, 1999 is as follows:
<TABLE>
Other Other
Net Interest Operating Operating Average
Revenue Revenue(1) Expense Assets
-------------- -- ------------- --- -------------- -- --------------
<S> <C> <C> <C> <C>
Total reportable lines of business $ 98,906 $ 73,405 $ 109,875 $ 7,109,332
Total non-reportable lines of business 832 21,880 16,874 67,074
Unallocated items:
Tax-equivalent adjustment 4,562 - - -
Funds management 14,579 469 6,560 108,967
Eliminations and all others, net (10,285) 1,156 2,195 (75,646)
-------------- -- ------------- --- -------------- -- --------------
BOK Financial consolidated $ 108,594 $ 96,910 $ 135,504 $ 7,209,727
============== == ============= === ============== == ==============
(1) Excludes securities gains/losses.
</TABLE>
(6) CONTINGENT LIABILITIES
In the ordinary course of business, BOK Financial and its subsidiaries are
subject to legal actions and complaints. Management believes, based upon the
opinion of counsel, that the actions and liability or loss, if any, resulting
from the final outcomes of the proceedings, will not be material in the
aggregate.
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
SIX MONTH FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Six months ended
------------------------------------------------------------------------------------
June 30, 2000 June 30, 1999
----------------------------------------- -----------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Taxable securities $ 2,586,403 $ 83,013 6.45% $ 2,309,820 $ 68,785 6.01%
Tax-exempt securities 264,114 9,713 7.40 309,554 11,910 7.76
------------------------------------------------------------------------------------------------------------------------------
Total securities 2,850,517 92,726 6.54 2,619,374 80,695 6.21
------------------------------------------------------------------------------------------------------------------------------
Trading securities 13,577 675 10.00 52,536 1,508 5.79
Funds sold 46,257 1,383 6.01 49,158 1,172 4.81
Loans(2) 4,723,484 210,724 8.97 3,720,156 150,013 8.13
Less reserve for loan losses 78,655 69,208
------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve 4,644,829 210,724 9.12 3,650,948 150,013 8.29
------------------------------------------------------------------------------------------------------------------------------
Total earning assets(2) 7,555,180 305,508 8.13 6,372,016 233,388 7.39
------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 932,824 837,711
------------------------------------------------------------------------------------------------------------------------------
Total assets $ 8,488,004 $ 7,209,727
------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,865,912 25,689 2.77% $ 1,560,037 21,593 2.79%
Savings deposits 156,109 1,330 1.71 159,274 1,471 1.86
Other time deposits 2,398,052 67,815 5.69 1,838,665 45,795 5.02
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,420,073 94,834 4.31 3,557,976 68,859 3.90
------------------------------------------------------------------------------------------------------------------------------
Other borrowings 2,267,335 70,210 6.23 1,848,445 46,799 5.11
Subordinated debenture 148,684 5,066 6.85 147,613 4,574 6.25
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities(2) 6,836,092 170,110 5.00 5,554,034 120,232 4.37
------------------------------------------------------------------------------------------------------------------------------
Demand deposits 971,988 1,025,496
Other liabilities 106,845 91,531
Shareholders' equity 573,079 538,666
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
equity $ 8,488,004 $ 7,209,727
------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest 135,398 3.13% 113,156 3.02%
Revenue(1)(3)
Tax-Equivalent Net Interest Revenue
To Earning Assets 3.60 3.58
Less tax-equivalent adjustment 3,850 4,562
------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 131,548 108,594
Provision for loan losses 6,173 5,968
Other operating revenue 94,139 96,896
Other operating expense 149,533 135,504
------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 69,981 64,018
Federal and state income tax 20,974 20,725
------------------------------------------------------------------------------------------------------------------------------
Net Income $ 49,007 $ 43,293
------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.98 $ 0.87
------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.88 $ 0.78
------------------------------------------------------------------------------------------------------------------------------
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown are for comparative
purposes.
(2) The loan averages included loans on which the accrual of interest has been
discontinued and are stated net of unearned income.
</TABLE>
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
-------------------------------------------------------------------------------------
June 30, 2000 March 31, 2000
------------------------------------------ -------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
-------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C> <C> <C>
Taxable securities $ 2,625,306 $ 42,738 6.55% $ 2,547,499 $ 40,275 6.36%
Tax-exempt securities 267,320 5,111 7.69 260,593 4,602 7.10
------------------------------------------------------------------------------------------------------------------------------
Total securities 2,892,626 47,849 6.65 2,808,092 44,877 6.43
------------------------------------------------------------------------------------------------------------------------------
Trading securities 12,562 315 10.09 14,593 360 9.92
Funds sold 44,731 680 6.11 47,782 703 5.92
Loans(2) 4,796,948 109,453 9.18 4,650,020 101,271 8.76
Less reserve for loan losses 79,503 77,808
------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve 4,717,445 109,453 9.33 4,572,212 101,271 8.91
------------------------------------------------------------------------------------------------------------------------------
Total earning assets 7,667,364 158,297 8.30 7,442,679 147,211 7.96
------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 942,817 925,477
------------------------------------------------------------------------------------------------------------------------------
Total assets $ 8,610,181 $ 8,368,156
------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,875,180 12,888 2.76% $ 1,856,644 12,801 2.77%
Savings deposits 156,369 658 1.69 155,848 672 1.73
Other time deposits 2,431,978 35,252 5.83 2,364,126 32,563 5.54
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,463,527 48,798 4.40 4,376,618 46,036 4.23
------------------------------------------------------------------------------------------------------------------------------
Other borrowings 2,318,426 37,094 6.44 2,216,244 33,116 6.01
Subordinated debenture 148,705 2,552 6.90 148,663 2,514 6.80
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 6,930,658 88,444 5.13 6,741,525 81,666 4.87
------------------------------------------------------------------------------------------------------------------------------
Demand deposits 989,716 954,307
Other liabilities 105,086 111,079
Shareholders' equity 584,721 561,245
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
Equity $ 8,610,181 $ 8,368,156
-----------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue 69,853 3.17% 65,545 3.08%
Tax-Equivalent Net Interest Revenue
To Earning Assets 3.66 3.54
Less tax-equivalent adjustment 1,983 1,867
------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 67,870 63,678
Provision for loan losses 3,534 2,639
Other operating revenue 47,348 46,791
Other operating expense 74,917 74,616
------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 36,767 33,214
Federal and state income tax 12,573 8,401
------------------------------------------------------------------------------------------------------------------------------
Net Income $ 24,194 $ 24,813
------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.48 $ 0.50
------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.44 $ 0.45
------------------------------------------------------------------------------------------------------------------------------
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown are for comparative
purposes.
(2) The loan averages include loans on which the accrual of interest has been
discontinued and are stated net of unearned income.
</TABLE>
<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------------------------
For Three months ended
-------------------------------------------------------------------------------------------------------------------------
December 31, 1999 September 30, 1999 June 30, 1999
-------------------------------------------------------------------------------------------------------------------------
Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate Balance Expense(1) /Rate
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 2,453,800 $ 38,381 6.21% $ 2,456,120 $ 37,735 6.10% $ 2,418,685 $ 35,841 5.94%
259,760 4,656 7.11 275,749 5,219 7.51 295,095 5,742 7.80
-------------------------------------------------------------------------------------------------------------------------
2,713,560 43,037 6.29 2,731,869 42,954 6.24 2,713,780 41,583 6.15
-------------------------------------------------------------------------------------------------------------------------
17,845 390 8.67 27,606 393 5.65 50,190 812 6.49
37,650 552 5.82 37,558 495 5.23 63,353 759 4.81
4,480,283 97,563 8.64 4,256,430 89,882 8.38 3,822,018 77,330 8.12
76,166 74,539 70,968
-------------------------------------------------------------------------------------------------------------------------
4,404,117 97,563 8.79 4,181,891 89,882 8.53 3,751,050 77,330 8.27
-------------------------------------------------------------------------------------------------------------------------
7,173,172 141,542 7.83 6,978,924 133,724 7.60 6,578,373 120,484 7.35
-------------------------------------------------------------------------------------------------------------------------
963,257 890,977 831,059
-------------------------------------------------------------------------------------------------------------------------
$ 8,136,429 $ 7,869,901 $ 7,409,432
-------------------------------------------------------------------------------------------------------------------------
$ 1,885,730 12,639 2.66% $ 1,858,386 12,278 2.62% $ 1,655,457 11,035 2.67%
159,442 721 1.79 167,875 779 1.84 162,874 742 1.83
2,206,956 29,109 5.23 2,046,295 26,236 5.09 1,822,915 22,643 4.98
-------------------------------------------------------------------------------------------------------------------------
4,252,128 42,469 3.96 4,072,556 39,293 3.83 3,641,246 34,420 3.79
-------------------------------------------------------------------------------------------------------------------------
2,071,787 29,715 5.69 2,065,207 27,681 5.32 1,978,349 25,000 5.07
148,620 2,387 6.37 148,576 2,373 6.34 148,275 2,253 6.09
-------------------------------------------------------------------------------------------------------------------------
6,472,535 74,571 4.57 6,286,339 69,347 4.38 5,767,870 61,673 4.29
-------------------------------------------------------------------------------------------------------------------------
977,825 969,289 1,008,502
132,646 77,574 89,319
553,423 536,699 543,741
-------------------------------------------------------------------------------------------------------------------------
$ 8,136,429 $ 7,869,901 $ 7,409,432
-------------------------------------------------------------------------------------------------------------------------
66,971 3.26% 64,377 3.22% 58,811 3.06%
3.05
3.70 3.66 3.59
1,828 1,990 2,228
-------------------------------------------------------------------------------------------------------------------------
65,143 62,387 56,583
2,255 2,142 2,538
46,721 44,835 49,431
74,257 70,755 70,678
-------------------------------------------------------------------------------------------------------------------------
35,352 34,325 32,798
12,155 11,589 10,742
-------------------------------------------------------------------------------------------------------------------------
$ 23,197 $ 22,736 $ 22,056
-------------------------------------------------------------------------------------------------------------------------
$ 0.46 $ 0.46 $ 0.44
-------------------------------------------------------------------------------------------------------------------------
$ 0.42 $ 0.41 $ 0.39
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K (A) Exhibits:
No. 27.0 Financial Data Schedule filed herewith electronically.
(B) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
June 30, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOK FINANCIAL CORPORATION
(Registrant)
Date: August 14, 2000 /s/ Steven E. Nell
------------------- ------------------
Steven E. Nell
Senior Vice President and
Corporate Controller
/s/ John C. Morrow
-------------------
John C. Morrow
Senior Vice President and Director
of Financial Accounting & Reporting
