As filed with the Securities and Exchange Commission on November 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 September 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 ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 49,142,400 shares of
common stock ($.00006 par value) as of October 31, 2000.
--------------------------------------------------------------------------------
<PAGE>
BOK Financial Corporation
Form 10-Q
Quarter Ended September 30, 2000
Index
Part I. Financial Information
Management's Discussion and Analysis 2
Report of Management on Consolidated
Financial Statements 16
Consolidated Statements of Earnings 17
Consolidated Balance Sheets 18
Consolidated Statements of Changes
in Shareholders' Equity 19
Consolidated Statements of Cash Flows 20
Notes to Consolidated Financial Statements 21
Financial Summaries - Unaudited 24
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 27
Signature 27
MANAGEMENT'S ASSESSMENT OF OPERATIONS AND FINANCIAL CONDITION
Assessment of Operations
Summary of Performance
BOK Financial Corporation ("BOK Financial") recorded net income of $25.6 million
or $0.46 per diluted common share for the third quarter of 2000 compared to
$22.7 million or $0.41 per diluted common share for the third quarter of 1999.
The return on average assets was 1.17% for the quarter ended September 30, 2000
compared to 1.15% for the same period of 1999. Returns on average equity were
16.42% and 16.81% for the third quarters of 2000 and 1999, respectively.
Net interest revenue grew $5.8 million due primarily to a $820 million increase
in average earning assets. Fees and commissions increased $5.1 million. All
categories of fee income increased in the third quarter of 2000 when compared to
the same quarter of 1999. Operating expenses increased $3.2 million or 5%
compared to the third quarter of 1999. The provision for loan loss increased
$2.9 million to $5.0 million.
Year to date net income and earnings per diluted common share were $74.6 million
and $1.34, respectively, for 2000 compared to $66.0 million and $1.18,
respectively for 1999. Returns on average assets and equity were 1.17% and
16.92%, respectively, for 2000 compared to 1.19% and 16.40%, respectively, for
1999.
During the third quarter of 2000, BOK Financial announced an agreement to
acquire CNBT Bancshares, Inc. ("CNBT") for $91 million. CNBT has total assets of
$424 million and operates six banking locations in the Houston, Texas area. The
acquisition is expected to close during the first quarter of 2001.
<PAGE>
Tangible Operating Results
Since inception, BOK Financial has completed several acquisitions that were
accounted for by 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 subsequent years into operating expense. The
intangible assets that result from the purchase method of accounting are
deducted from shareholders' equity when determining regulatory capital. Tangible
net income, net income excluding the after-tax effect of intangible
amortization, represents regulatory capital generated during the year. We
believe that tangible net income is an appropriate measure of the growth in
regulatory capital, which affects the amounts available for future growth.
Operating results excluding the impact of these intangible assets are summarized
below:
<TABLE>
---------------------------------------------------- -----------------------------------------------------
TABLE 1 - TANGIBLE OPERATING RESULTS
(Dollars in thousands)
------------------------------ ---------------------------
Three months ended Nine months ended
---------------------------------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 25,637 $ 22,736 $ 74,644 $ 66,029
After-tax impact of amortization of
intangible assets 3,302 3,769 10,120 9,349
----------------------------------------------------------------------------------------------------------
Tangible net income $ 28,939 $ 26,505 $ 84,764 $ 75,378
----------------------------------------------------------------------------------------------------------
Tangible net income per diluted share $ 0.52 $ 0.47 $ 1.56 $ 1.35
----------------------------------------------------------------------------------------------------------
Tangible return on average shareholders' equity 18.74% 19.81% 19.27% 18.72%
----------------------------------------------------------------------------------------------------------
Tangible return on average assets 1.34% 1.35% 1.32% 1.36%
----------------------------------------------------------------------------------------------------------
</TABLE>
Net Interest Revenue
Net interest revenue on a tax-equivalent basis was $70.1 million for the third
quarter of 2000 compared to $64.4 million for the third quarter of 1999. Average
earning assets increased by $820 million. Average loans increased $765 million
and now comprise 64% of average earning assets. Average loans were 61% of
average earning assets for the third quarter of 1999. Loans generally have
higher yields than other types of earning assets therefore, the increase in
loans significantly increased net interest revenue. Average interest-bearing
liabilities increased $740 million and now comprise 81% of all funding sources.
Average interest-bearing liabilities were 80% of all funding sources for the
third 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 Nine months ended
September 30, 2000/1999 September 30, 2000/1999
-------------------------------------------------------------------------
Change Due To (1) Change Due To (1)
------------------------ ---------------------
Yield Yield
Change Volume /Rate Change Volume /Rate
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax-equivalent interest revenue:
Securities $ 2,873 $ 941 $ 1,932 $ 14,904 $ 7,962 $ 6,942
Trading securities (23) (195) 172 (856) (1,681) 825
Loans 28,641 16,959 11,682 89,353 59,973 29,380
Funds sold 296 142 154 506 52 454
-----------------------------------------------------------------------------------------------------------------
Total 31,787 17,847 13,940 103,907 66,306 37,601
-----------------------------------------------------------------------------------------------------------------
Interest expense:
Interest bearing transaction deposits 1,406 383 1,023 5,501 4,610 891
Savings deposits (79) (77) (2) (219) (102) (117)
Time deposits 13,239 6,583 6,656 35,259 21,598 13,661
Other borrowings 11,186 3,497 7,689 34,597 15,486 19,111
Subordinated debenture 331 (1) 332 823 42 781
-----------------------------------------------------------------------------------------------------------------
Total 26,083 10,385 15,698 75,961 41,634 34,327
-----------------------------------------------------------------------------------------------------------------
Tax-equivalent net interest revenue 5,704 $ 7,462 $ (1,758) 27,946 $ 24,672 $ 3,274
Change in tax-equivalent adjustment (56) (768)
-----------------------------------------------------------------------------------------------------------------
Net interest revenue $ 5,760 $ 28,714
-----------------------------------------------------------------------------------------------------------------
(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 3.57% for the third quarter of 2000 compared to 3.66% for the third
quarter of 1999 and 3.66% for the second quarter of 2000. BOK Financial's
interest bearing liabilities react more quickly to changes in interest rates
than its earning assets. This causes the net interest margin to decrease during
periods of rising interest rates. While market interest rate increases and
growth in loans caused the yield on average earning assets for the third quarter
of 2000 to increase 84 basis points, the cost of interest-bearing liabilities
increased 102 basis points for this same period.
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 third quarter of 2000, this
strategy resulted in a 90 basis point decrease in net interest margin. However,
this strategy contributed $151 thousand to net interest revenue. Net interest
revenue contributed by this strategy has decreased over the past several
quarters due to rising interest rates that have increased the costs of funds
borrowed to purchase the securities. 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 increased $5.0 million compared to the same quarter of
1999. Total fees and commissions, which are included in other operating revenue,
increased $5.1 million. Transaction card revenue increased $2.4 million compared
to the same quarter of last year. This increase included $1.0 million from the
early buyout of several ATM servicing contracts and the favorable resolution of
a revenue dispute during the quarter. Transaction card revenue increased 17%
excluding these non-recurring revenue items due to a greater volume of
transactions processed.
<TABLE>
---------------------------------------------------------------------------------------------
TABLE 3 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
-----------------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brokerage and trading revenue $ 3,451 $ 4,219 $ 4,426 $ 4,781 $ 3,237
Transaction card revenue 10,739 9,331 8,620 8,767 8,298
Trust fees and commissions 10,072 9,743 9,523 9,439 9,045
Service charges and fees
on deposit accounts 11,012 10,736 10,255 10,684 10,857
Mortgage banking revenue 9,774 9,427 7,834 8,628 9,189
Leasing revenue 931 1,192 744 514 526
Other revenue 4,371 3,344 4,973 3,716 4,129
---------------------------------------------------------------------------------------------
Total fees and commissions 50,350 47,992 46,375 46,529 45,281
---------------------------------------------------------------------------------------------
Gain on student loan sales 28 38 433 16 39
Gain on sale of other assets - - - 96 -
Gain (loss) on securities (538) (682) (17) 80 (485)
---------------------------------------------------------------------------------------------
Total other operating revenue $ 49,840 $ 47,348 $ 46,791 $ 46,721 $ 44,835
---------------------------------------------------------------------------------------------
</TABLE>
Year to date fees and commissions for 2000 increased 6% compared to 1999.
Transaction card revenue and trust fee increases of 20% and 14%, respectively,
were partially offset by decreased mortgage banking revenue.
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 for certain fees, but would tend to decrease
mortgage loan prepayments. Similarly, a decrease in economic activity would
decrease transaction card revenue.
<PAGE>
Other Operating Expense
Operating expenses for the third quarter of 2000 increased $3.2 million or 5%
compared to the third quarter of 1999. Excluding significant or nonrecurring
items as shown in Table 5, operating expenses increased $2.3 million or 3%.
Personnel costs increased $1.7 million or 5%. Compensation and benefits
increased by 3% due to normal compensation increases. Incentive compensation,
which varies directly with revenue growth, increased by $757 thousand to $4.5
million for the third quarter of 2000. Occupancy, equipment and data processing
increased $1.3 million or 8%. Most notably, equipment expense increased $475
thousand or 14% due primarily to a $238 thousand increase in depreciation
expense at Bank of Texas. This reflects a $2.9 million investment in new
equipment made since the third quarter of 1999. Additionally, other expenses for
the third quarter of 2000 included $723 thousand of depreciation expense on
equipment leased under operating leases compared to $292 thousand for the third
quarter of 1999.
<TABLE>
---------------------------------------------------------------------------------------------
TABLE 4 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
------------------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personnel $ 35,937 $ 35,789 $ 37,289 $ 35,801 $ 34,262
Business promotion 1,941 2,148 2,335 2,244 1,925
Professional fees/services 2,145 2,161 2,318 2,451 2,452
Net occupancy, equipment
and data processing 16,480 16,244 15,897 16,061 15,198
FDIC and other insurance 403 387 380 338 323
Printing, postage and supplies 2,546 3,095 2,811 3,035 2,729
Net gains and operating
expenses on repossessed assets (574) (118) (583) (544) (1,501)
Amortization of intangible assets 3,940 4,016 4,078 4,389 4,519
Mortgage banking costs 5,600 5,540 5,437 5,658 6,183
Other expense 5,546 5,655 4,654 4,824 4,665
---------------------------------------------------------------------------------------------
Total $ 73,964 $ 74,917 $ 74,616 $ 74,257 $ 70,755
---------------------------------------------------------------------------------------------
</TABLE>
Operating expenses through September 30, 2000 were $17 million or 8% higher than
operating expenses for the first nine months of 1999. Excluding significant or
nonrecurring entries and the effects of 1999's acquisitions, operating expenses
increased $10 million or 5%.
<TABLE>
-------------------------------------------------------------------------------------------------
TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS
(In thousands)
Three Months Ended
-----------------------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total other operating expense $ 73,964 $ 74,917 $ 74,616 $ 74,257 $ 70,755
Reorganization costs - (638) - -
Net gains and operating expenses
from repossessed assets 574 118 583 544 1,501
-------------------------------------------------------------------------------------------------
Total $ 74,538 $ 75,035 $ 74,561 $ 74,801 $ 72,256
-------------------------------------------------------------------------------------------------
</TABLE>
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.
<PAGE>
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 $13.3 million or 52% to consolidated net
income for the third quarter of 2000. This is compared to $13.4 million or 59%
of consolidated net income for the third quarter of 1999. The decreased
contribution from the Corporate Banking Division was primarily due to an
increase in net charge-offs and lower gains on repossessed asset sales.
<TABLE>
Table 6 Corporate Banking
(In thousands)
Three months ended Nine months ended
September 30, September 30,
--------------------------------------------------------
2000 1999 2000 1999
----------- -- ----------- -----------------------------
<S> <C> <C> <C> <C>
Revenue(expense) from external sources $ 68,394 $ 57,330 $ 193,195 $ 160,188
Revenue(expense) from internal sources (32,093) (23,887) (89,115) (61,779)
Total revenue 36,301 33,443 104,080 98,409
Operating expense 13,390 12,216 41,170 37,574
Net income 13,302 13,372 37,455 37,877
Average assets $ 3,770,896 $ 3,394,134 $ 3,763,070 $ 3,317,819
Average equity 411,836 344,999 405,368 335,470
Return on assets 1.40% 1.56% 1.33% 1.53%
Return on equity 12.85 15.38 12.34 15.10
Efficiency ratio 36.89 36.53 39.56 38.18
</TABLE>
Consumer Banking
The Consumer Banking Division, which provides a full line of deposit, loan and
fee-based services to customers throughout Oklahoma, contributed $4.2 million or
16% to consolidated net income for the third quarter of 2000. This is compared
to $2.9 million or 13% of consolidated net income for the third quarter of 1999.
The increase in contribution to net income from the Consumer Banking Division
was due primarily to an increase in the internal interest rate paid for funds
provided by this Division.
<TABLE>
Table 7 Consumer Banking
(In thousands)
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
2000 1999 2000 1999
---------- -- ----------- -------------- ------------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ (1,649) $ (2,037) $ (4,972) $ (4,537)
Revenue (expense) from internal sources 22,214 17,815 62,179 52,694
Total revenue 20,565 15,778 57,207 48,157
Operating expense 12,926 11,086 37,686 33,721
Net income 4,165 2,945 10,580 7,967
Average assets $1,805,429 $ 1,709,411 $ 1,809,275 $ 1,718,907
Average equity 55,672 45,549 54,403 45,080
Return on assets 0.92% 0.68% 0.78% 0.62%
Return on equity 29.77 25.65 25.98 23.63
Efficiency ratio 62.85 70.26 65.88 70.02
</TABLE>
Mortgage Banking
The Mortgage Banking Division contributed $969 thousand or 4% to consolidated
net income for the third quarter of 2000. This is compared to $473 thousand or
2% of consolidated net income for the third quarter of 1999. Loan servicing fees
were $8.2 million for the third quarter of 2000 compared to $8.4 million in
1999. However, gains on loans sold increased $830 thousand for the same periods.
<PAGE>
Capitalized mortgage servicing rights totaled $114.1 million compared to $106.5
million at September 30, 1999 and $114.1 million at December 31, 1999. At
September 30, 2000, capitalized mortgage servicing rights included $10.4 million
of deferred hedging losses.
<TABLE>
Table 8 Mortgage Banking
(In thousands)
Three months ended Nine months ended
September 30, September 30,
--------------------------- ------------------------
2000 1999 2000 1999
------------- -------------- ------------------------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ 14,936 $ 12,730 $ 39,606 $ 39,327
Revenue (expense) from internal sources (3,942) (1,929) (9,527) (6,156)
Total revenue 10,994 10,801 30,079 33,171
Operating expense 9,388 10,010 28,231 30,266
Net income 969 473 1,105 1,740
Average assets 410,344 $ 361,957 $ 382,730 $ 357,549
Average equity 31,791 32,543 30,710 33,104
Return on assets 0.94% 0.52% 0.39% 0.65%
Return on equity 12.13 5.77 4.81 7.03
Efficiency ratio 85.63 92.68 93.95 91.24
</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 $2.6 million or 10% of consolidated net
income for the third quarter of 2000. This is compared to $2.1 million or 9% of
consolidated net income for the same quarter of 1999. At September 30, 2000,
trust assets with an aggregate market value of $18.4 billion were subject to
various fiduciary arrangements, compared to trust assets of $15.6 billion at
September 30, 1999.
<TABLE>
Table 9 Trust Services
(In thousands)
Three months ended Nine months ended
September 30, September 30,
------------------------------------------------
2000 1999 2000 1999
----------- ------------------------------------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ 10,794 $ 10,277 $ 33,051 $ 29,275
Revenue (expense) from internal sources 2,395 1,798 6,147 5,668
Total revenue 13,189 12,075 39,198 34,943
Operating expense 8,995 8,755 27,460 25,983
Net income 2,562 2,050 7,054 5,475
Average assets $ 354,376 $336,286 $ 343,823 $ 334,975
Average equity 38,772 34,404 38,316 33,868
Return on assets 2.88% 2.42% 2.74% 2.19%
Return on equity 26.29 23.64 24.59 21.61
Efficiency ratio 68.20 72.51 70.05 74.36
</TABLE>
<PAGE>
Regional Banks
Regional banks provide 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 $3.0 million or 12% to consolidated
net income for the third quarter of 2000. This is compared to $2.7 million or
12% of consolidated net income for the third quarter of 1999. Growth in the
regional banks' contribution to net income was partially offset by a $1.0
million increase in loan loss provision. The increase in loan loss provision
reflected the additional credit risk at Bank of Texas.
Average equity assigned to regional banks included both an amount based on
management's assessment of risk and an additional amount based on 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 Nine months ended
September 30, September 30,
----------------------------------------------------
2000 1999 2000 1999
----------- -------------- -------------------------
<S> <C> <C> <C> <C>
Revenue (expense) from external sources $ 27,878 $ 22,409 $ 79,896 $ 54,469
Revenue (expense) from internal sources (4,931) (2,152) (12,630) (4,496)
Total revenue 22,947 20,257 67,266 49,973
Operating expense 15,506 14,932 50,168 39,330
Net income 2,954 2,698 7,044 5,448
Tangible net income 5,948 6,066 16,164 13,469
Average assets $2,368,557 $ 1,902,056 $2,323,961 $1,677,338
Average equity 268,551 211,499 260,431 196,943
Tangible return on assets 1.00% 1.27% 0.93% 1.07%
Tangible return on equity 8.81 11.38 8.29 9.14
Efficiency ratio 67.55 73.65 74.52 78.66
</TABLE>
INCOME TAXES
The Internal Revenue Service closed its examination of 1996 and management
completed a review of the 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 September 30, 2000 was $37.3 million
or 34% of pre-tax book income excluding the reduction in this reserve.
Assessment of Financial Condition
The aggregate loan portfolio at September 30, 2000 totaled $5.2 billion, an
increase of $257 million since June 30, 2000 and $555 million since December 31,
1999. Energy loans increased $109 million during the third quarter and comprised
15% of total loans. The energy category included loans to oil and gas producers
which totaled $517 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 services industry increased $84 million during the third quarter
and comprised 17% of total loans at September 30, 2000. Services included loans
totaling $229 million to medical and nursing facilities and $76 million to the
hotel industry. Agriculture loans, which included loans totaling $133 million to
the cattle industry, decreased $26 million. This decrease was due in part to
seasonal factors and to improved feedlot operations.
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------
TABLE 11 - LOANS
(In thousands)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial:
Energy $ 774,284 $ 665,550 $ 601,991 $ 606,561 $ 593,944
Manufacturing 418,986 389,823 368,337 378,341 360,361
Wholesale/retail 450,337 450,681 435,026 407,785 400,730
Agricultural 159,099 185,473 184,299 173,653 162,531
Services 901,749 817,871 782,825 773,018 800,505
Other commercial and industrial 289,787 323,162 310,224 325,343 206,045
Commercial real estate:
Construction and land development 303,965 291,871 278,551 249,160 258,947
Multifamily 268,595 258,658 269,667 257,187 259,276
Other real estate loans 676,176 635,089 624,309 588,195 523,324
Residential mortgage:
Secured by 1-4 family
residential properties 597,464 573,346 551,639 531,058 526,622
Residential mortgages held for 58,888 55,332 42,967 57,057 58,466
sale
Consumer 299,199 294,466 269,964 296,131 259,414
---------------------------------------------------------------------------------------------------------
Total $5,198,529 $ 4,941,322 $ 4,719,799 $4,643,489 $4,410,165
---------------------------------------------------------------------------------------------------------
</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 71% of the loan portfolio is attributed to Oklahoma and
approximately 19% of the loan portfolio is attributed to Texas. Approximately
61% of commercial real estate loans was 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, $233
million and retail facilities, $197 million.
SUMMARY OF LOAN LOSS EXPERIENCE
The loan loss reserve, which is available to absorb losses inherent in the loan
portfolio, totaled $81 million at September 30, 2000, $79 million at June 30,
2000, and $75 million at September 30, 1999. This represented 1.58%, 1.63% and
1.73% of total loans, excluding loans held for sale, at September 30, 2000, June
30, 2000, and September 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
-------------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $ 79,405 $ 77,828 $ 76,234 $ 75,186 $ 72,732
Loans charged-off:
Commercial 1,747 1,165 845 641 71
Commercial real estate 615 311 250 - -
Residential mortgage 63 62 21 546 20
Consumer 1,511 1,329 1,148 820 1,237
------------------------------------------------------------------------------------------
Total 3,936 2,867 2,264 2,007 1,328
------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial 121 348 261 308 830
Commercial real estate 100 39 265 39 208
Residential mortgage 17 3 134 14 2
Consumer 707 520 559 439 600
------------------------------------------------------------------------------------------
Total 945 910 1,219 800 1,640
------------------------------------------------------------------------------------------
Net loans charged-off (recoveries) 2,991 1,957 1,045 1,207 (312)
Provision for loan losses 5,031 3,534 2,639 2,255 2,142
------------------------------------------------------------------------------------------
Ending balance $ 81,445 $ 79,405 $ 77,828 $ 76,234 $ 75,186
------------------------------------------------------------------------------------------
Reserve to loans outstanding
at period-end(1) 1.58% 1.63% 1.66% 1.66% 1.73%
Net loan charge-offs/(recoveries)
(annualized)to average loans (1) 0.24% 0.16 0.09 0.11 (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
financing commitments. 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. Written documentation
of these reviews is maintained. Specific reserves for impairment are determined
in accordance with generally accepted accounting principles and appropriate
regulatory standards. At September 30, 2000, specific impairment reserves
totaled $8.7 million on loans that totaled $26 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 September 30, 2000, the loss potential for the more
significant factors was:
<PAGE>
Concentration of large loans - $1.1 million to $2.1 million
Loan portfolio growth and expansion into new markets -
$1.3 million to $2.6 million
A provision for loan losses is charged against earnings in amounts necessary to
maintain an adequate reserve for loan losses. These provisions were $5.0 million
for the third quarter of 2000, compared to $2.1 million for the third quarter of
1999.
NONPERFORMING ASSETS
Information regarding nonperforming assets, which totaled $41 million at
September 30, 2000, $29 million at June 30, 2000, and $22 million at September
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 nonaccruing loans since March 31, 2000 has
generally been due to circumstances unique to two borrowers. One borrower filed
for bankruptcy protection after their previously issued audited financial
statements had to be restated due to improper accounting. The second borrower
has experienced operating problems due to a change in demand from its major
customer. The specific impairment loan loss reserve reflects losses that may be
incurred on these loans.
<TABLE>
---------------------------------------------------------------------------------------------------------------------
TABLE 13 - NONPERFORMING ASSETS
(In thousands)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
Commercial $ 34,421 $ 21,445 $ 13,448 $ 12,686 $ 12,088
Commercial real estate 169 823 1,629 2,046 1,796
Residential mortgage 2,115 2,410 2,555 3,383 44
Consumer 474 709 970 1,350 3,938
---------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 37,179 25,387 18,602 19,465 17,866
Renegotiated loans 88 89 - - -
---------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 37,267 25,476 18,602 19,465 17,866
Other nonperforming assets 3,790 3,805 3,972 3,478 4,447
---------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 41,057 $ 29,281 $ 22,574 $ 22,943 $ 22,313
---------------------------------------------------------------------------------------------------------------------
Ratios:
Reserve for loan losses to
nonperforming loans 219.06% 311.69% 418.39% 391.65% 420.83%
Nonperforming loans to
period-end loans (2) 0.73 0.52 0.40 0.42 0.41
---------------------------------------------------------------------------------------------------------------------
Loans past due (90 days) (1) $ 10,931 $ 9,828 $ 9,704 $ 11,336 $ 12,757
---------------------------------------------------------------------------------------------------------------------
(1) Includes residential mortgages guaranteed
by agencies of the U.S. Government $ 7,369 $ 7,363 $ 7,623 $ 8,538 $ 7,712
Excludes residential mortgages guaranteed
by agencies of the U.S. Government in
foreclosure. 5,202 6,817 8,102 8,310 8,159
(2) Excludes residential mortgage loans held for sale
---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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
September 30, 2000, loans totaling $117 million were assigned to the substandard
risk category and loans totaling $106 million were assigned to the special
mention risk category. This is compared to $86 million of loans classified as
substandard and $42 million of loans classified as special mention at June 30,
2000, and loans that totaled $95 million and $77 million classified as
substandard and special mentions, respectively, at September 30, 1999. The
increase in special mention and substandard loans generally reflects loans for
business acquisitions that were ineffectively managed by our borrowers. Further
deterioration of the borrowers' performance may occur and a more severe
classification may be required before improvement is demonstrated.
LEASING
BOK Financial expanded its equipment leasing activities during 2000. Other
assets included $24 million of equipment held for various operating leases at
September 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 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 September
30, 2000 and 1999, this modeling indicated interest rate sensitivity as follows:
<TABLE>
Table 14 - Interest Rate Sensitivity
(Dollars in Thousands)
200 bp Increase 200 bp Decrease Most Likely
------------------------- --------------------------- -----------------------
2000 1999 2000 1999 2000 1999
------------ ------------ ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Anticipated impact over the next twelve months:
Net interest revenue $ 2,752 $(1,741) $(2,641) $1,163 $ (554) $ (2,215)
1.0% (0.6)% (0.9)% 0.4% (0.2)% (0.8)%
------------------------------------------- ------------- ----------- -------------- ----------- -----------
Net income $ 1,720 $(1,079) $(1,651) $ 721 $ (346) $ (1,373)
1.7% (1.1)% (1.6)% 0.7% (0.3)% (1.4)%
------------------------------------------- ------------- ----------- -------------- ----------- -----------
Economic value of equity $ (5,412) $(43,667) $(52,266) $(2,515) $ (3,427) $ (539)
(0.4)% (3.9)% (4.3)% 0.2% (0.3)% (0.0)%
------------------------------------------- ------------- ----------- -------------- ------------ ----------
</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.
Subsequent to September 30, 2000, management restructured a portion of the
securities portfolio by selling $250 million of securities at a loss of
approximately $1.5 million and terminated interest rate swaps with a notional
amount of $270 million at a gain of approximately $3.0 million. The proceeds of
the securities sales were reinvested in securities with a higher yield and
longer duration. These actions are not expected to significantly affect BOK
Financial's interest rate risk.
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 and to recognize gains when necessary to offset losses on the
mortgage servicing rights. At September 30, 2000, securities with a fair value
of $63 million and aggregate unrealized gains of $1.1 million were held for this
program. The interest rate sensitivity of the mortgage servicing portfolio and
the securities held as hedges is modeled over a range of +/- 50 basis points. At
September 30, 2000, the pre-tax results of this modeling are:
50 bp increase 50 bp decrease
----------------- ------------------
Anticipated change in:
Mortgage servicing rights $ 5,013 $ (8,571)
Hedging instruments (3,529) 4,065
----------------- ------------------
Net $ 1,484 $ (4,506)
================= ==================
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.
<PAGE>
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 third quarter of 2000 income
from these swaps exceeded the cost of the swaps by $540 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.
--------------------------------------------------------------------------------
TABLE 15 - INTEREST
RATE SWAPS
(In thousands)
Notional Pay Receive Fair
Amount Rate Rate Value
------------------------------------------------------------
Expiration:
2001 $ 4,324 5.03% 6.618% (1) $ 42
2002 211,660 6.21 - 6.81 (1) 6.62 - 6.94 (1) (317)
2003 94,481 4.82 - 6.81 (1) 6.62 - 7.91 (1) 1,411
2004 83,604 5.65 - 6.81 (1) 6.62 - 7.36 (1) 1,512
2005 8,383 5.08 - 5.21 6.618 (1) 413
2006 16,500 7.26 6.81 (1) (142)
2007 210,884 5.23 - 7.48 (1) 6.62 - 6.82 (1) (895)
2008 51,285 5.15 - 6.68 6.62 (1) 1,432
2009 82,732 5.22 - 6.85 6.62 (1) 1,722
2010 22,749 7.01 - 7.41 6.62 (1) (497)
--------------------------------------------------------------------------------
(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 September 30, 2000, the nominal
aggregate trading positions was $4.8 million, the VAR was $157 thousand.
<PAGE>
--------------------------------------------------------------------------------
TABLE 16 - CAPITAL RATIOS
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2000 2000 2000 1999 1999
----------------------------------------------------
Average shareholders' equity
to average assets 6.89% 6.79% 6.71% 6.80% 6.72%
Risk-based capital:
Tier 1 capital 8.14 7.80 7.45 7.27 7.09
Total capital 11.49 11.15 10.80 10.72 10.67
Leverage 6.48 6.23 6.06 5.92 5.64
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 as been deferred until fiscal years beginning after
June 15, 2000. BOK Financial will 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. At this time, management expects that few of the
derivatives used to hedge the various financial risks will qualify for special
hedge accounting and that changes in the fair value of derivatives will
generally be included in income.
The fair value of BOK Financial's off balance sheet derivatives increased by
$1.1 million during the third quarter of 2000. This amount would have increased
pre-tax income for the quarter, excluding the non-recurring effects of initial
transition adjustments. The increase in income may not be indicative of future
earnings from derivatives since their fair value of these instruments can be
volatile and because changes in fair value of the hedged assets or liabilities
are not included in income under current accounting principles.
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.
<PAGE>
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 Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2000 1999 2000 1999
------------- --- ------------- ------------- --- -------------
<S> <C> <C> <C> <C>
Interest Revenue
Loans $ 118,250 $ 89,655 $ 328,486 $ 239,302
Taxable securities 41,135 37,735 124,150 106,520
Tax-exempt securities 3,031 3,456 9,381 11,170
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total securities 44,166 41,191 133,531 117,690
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Trading securities 370 393 1,045 1,901
Funds sold 791 503 2,173 1,276
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total interest revenue 163,577 131,742 465,235 360,169
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Interest Expense
Deposits 53,859 39,293 148,693 108,152
Other borrowings 38,867 27,690 109,077 74,089
Subordinated debenture 2,704 2,372 7,770 6,947
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total interest expense 95,430 69,355 265,540 189,188
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Net Interest Revenue 68,147 62,387 199,695 170,981
Provision for Loan Losses 5,031 2,142 11,204 8,110
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Net Interest Revenue After
Provision for Loan Losses 63,116 60,245 188,491 162,871
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Other Operating Revenue
Brokerage and trading revenue 3,451 3,237 12,096 11,452
Transaction card revenue 10,739 8,298 28,690 23,881
Trust fees and commissions 10,072 9,045 29,338 25,688
Service charges and fees on deposit accounts 11,012 10,857 32,003 30,383
Mortgage banking revenue, net 9,774 9,189 27,035 28,358
Leasing revenue 931 526 2,867 3,211
Other revenue 4,371 4,129 12,688 13,873
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total fees and commissions revenue 50,350 45,281 144,717 136,846
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Gain on sale of student loans 28 39 499 584
Gain on loan securitization - - - 270
Gain on sale of other assets - - - 4,530
Securities gains (losses), net (538) (485) (1,237) (499)
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total other operating revenue 49,840 44,835 143,979 141,731
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Other Operating Expense
Personnel 35,937 34,262 109,015 100,209
Business promotion 1,941 1,925 6,424 6,833
Professional fees and services 2,145 2,452 6,624 7,133
Net occupancy, equipment & data processing 16,480 15,198 48,621 41,963
FDIC and other insurance 403 323 1,170 1,018
Printing, postage and supplies 2,546 2,729 8,452 8,564
Net gains and operating expenses of
repossessed assets (574) (1,501) (1,275) (2,929)
Amortization of intangible assets 3,940 4,519 12,034 11,434
Mortgage banking costs 5,600 6,183 16,577 18,274
Other expense 5,546 4,665 15,855 13,760
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total Other Operating Expense 73,964 70,755 223,497 206,259
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Income Before Taxes 38,992 34,325 108,973 98,343
Federal and state income tax 13,355 11,589 34,329 32,314
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Net Income $ 25,637 $ 22,736 $ 74,644 $ 66,029
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Earnings Per Share:
Net Income
Basic $ 0.51 $ 0.46 $ 1.50 $ 1.32
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Diluted $ 0.46 $ 0.41 $ 1.34 $ 1.18
---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Average Shares Used in Computation:
Basic 49,058,328 49,068,809 49,106,905 49,002,358
---------------------------------------------- ----------------- ----------------- ---------------- -----------------
Diluted 55,530,973 55,844,944 55,575,413 55,843,212
---------------------------------------------- ----------------- ----------------- ---------------- -----------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
September 30, December 31, September 30,
2000 1999 1999
--------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 503,583 $ 397,895 $ 409,014
Funds sold 38,690 28,960 180,170
Trading securities 18,218 14,452 15,945
Securities:
Available for sale 2,569,722 2,588,704 2,454,018
Investment (fair value: September 30, 2000 - $230,081;
December 31, 1999 -$211,624; September 30, 1999 - $204,623 230,453 213,180 213,125
--------------------------------------------------------------------------------------------------------------------
Total securities 2,800,175 2,801,884 2,667,143
--------------------------------------------------------------------------------------------------------------------
Loans 5,198,529 4,643,489 4,410,165
Less reserve for loan losses 81,445 76,234 75,186
--------------------------------------------------------------------------------------------------------------------
Net loans 5,117,084 4,567,255 4,334,979
--------------------------------------------------------------------------------------------------------------------
Premises and equipment, net 128,449 119,239 116,614
Accrued revenue receivable 68,596 67,640 64,403
Excess cost over fair value of net assets acquired
and core deposit premiums (net of accumulated
amortization: September 30, 2000 - $77,326;
December 31, 1999 - $65,292;
September 30, 1999 - $57,903 112,489 125,011 131,332
Mortgage servicing rights 114,076 114,134 106,532
Real estate and other repossessed assets 3,790 3,478 4,447
Bankers' acceptances 9,104 6,801 16,470
Other assets 101,746 103,888 81,885
--------------------------------------------------------------------------------------------------------------------
Total assets $ 9,016,000 $ 8,350,637 $ 8,128,934
--------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 1,100,178 $ 1,020,996 $ 961,009
Interest-bearing deposits:
Transaction 1,883,749 1,866,499 1,806,433
Savings 146,954 155,839 162,395
Time 2,615,454 2,219,850 2,217,401
--------------------------------------------------------------------------------------------------------------------
Total deposits 5,746,335 5,263,184 5,147,238
--------------------------------------------------------------------------------------------------------------------
Funds purchased and repurchase
agreements 1,501,221 1,345,683 1,306,792
Other borrowings 882,954 938,020 888,239
Subordinated debenture 148,771 148,642 148,597
Accrued interest, taxes and expense 59,595 62,431 57,545
Bankers' acceptances 9,104 6,801 16,470
Other liabilities 21,141 28,712 18,830
--------------------------------------------------------------------------------------------------------------------
Total liabilities 8,369,121 7,793,473 7,583,711
--------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 25 25 25
Common stock ($.00006 par value; 2,500,000,000
shares authorized; shares issued and outstanding
September 30, 2000 - 49,535,381; December 31, 1999
- 49,382,262; September 30, 1999 - 49,164,957 3 3 3
Capital surplus 276,445 274,980 269,423
Retained earnings 406,269 332,751 309,928
Treasury stock (shares at cost: September 30, 2000 -
453,501; December 31, 1999 - 316,325;
September 30, 1999 - 152,691 (9,391) (7,018) (3,553)
Accumulated other comprehensive loss (26,472) (43,577) (30,603)
--------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 646,879 557,164 545,223
--------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 9,016,000 $ 8,350,637 $ 8,128,934
--------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(In Thousands)
Accumulated
Preferred Stock Common Stock Other Treasury Stock
------------------ ----------------Comprehensive Capital Retained -------------------
Shares Amount Shares Amount Income(loss) Surplus Earnings Shares Amount Total
----------------------------------------------------------------------------------------------------
<S> <C> <C> <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 - - - - - - 66,029 - - 66,029
Other Comprehensive
income, net of tax:
Unrealized gains(loss)
on securities available
for sale (1) - - - - (42,900) - - - - (42,900)
-----------
Comprehensive income 23,129
-----------
Exercise of stock option - - 280 - - 2,312 - 101 (2,352) (40)
Issuance of common
stock to Thrift Plan - - 17 - - 405 - (1) 36 441
Common stock dividend - - - - - - (2,735) - - (2,735)
Dividends paid in
shares of common
stock:
Preferred stock - - 40 - - 1,125 (1,125) - - -
Common stock - - 1,432 - - 30,702 (30,606) 4 (96) -
Director retainer shares - - 9 - - 215 - - - 215
Cancel treasury stock - - (725) - - (2,062) - (725) 2,062 -
Treasury stock purchase - - - - - - - 25 (580) (580)
--------------------------------------------------------------------------------------------------------------------------
Balance at
September 30, 1999 250,000 $ 25 49,165 $ 3 $(30,603) $269,423 $309,928 153 $ (3,553) $ 545,223
---------------------------------------------------------------------------------------------------------------------------
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 - - - - - - 74,644 - - 74,644
Other Comprehensive
income, net of tax:
Unrealized gains(loss)
on securities
available for sale(1) - - - - 17,105 - - - - 17,105
-----------
Comprehensive income 91,749
-----------
Exercise of stock options - - 123 - - 1,088 - 36 (724) 364
Preferred dividends paid
in shares of common stock - - 26 - - 328 (1,125) (40) 797 -
Preferred stock dividend - - - - - - (1) - - (1)
Director retainer shares - - 4 - - 49 - (9) 187 236
Treasury stock purchase - - - - - - - 151 (2,633) (2,633)
---------------------------------------------------------------------------------------------------------------------------
Balances at
September 30, 2000 250,000 $ 25 49,535 $ 3 $(26,472) $276,445 $406,269 454 $ (9,391) $646,879
---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) September 30, 2000 September 30, 1999
------------------ ------------------
Reclassification adjustments:
Unrealized losses on available for
sale securities $ 16,258 $ (43,235)
Less: reclassification adjustment for
gains/(losses) realized included in
net income, net of tax (847) (335)
----------------------------------
Net unrealized losses on securities $ 17,105 $ (42,900)
----------------------------------
</FN>
</TABLE>
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
September 30,
---------------------------------
2000 1999
---------------------------------
<S> <C> <C>
Cash Flow From Operating Activities:
Net income $ 74,644 $ 66,029
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan losses 11,204 8,110
Depreciation and amortization 38,251 31,071
Tax reserve reversal 3,000 -
Net amortization of security discounts and premiums (3,145) 1,226
Net gain on sale of assets (5,768) (14,879)
Mortgage loans originated for resale (389,980) (558,043)
Proceeds from sale of mortgage loans held for resale 394,440 604,863
Change in trading securities (3,485) 33,241
Change in accrued revenue receivable (956) 3,258
Change in other assets 42,770 (85,940)
Change in accrued interest, taxes and expense (17,376) 25,989
Change in other liabilities (24,577) 57,184
---------------------------------------------------------------------------------------------
Net cash provided by operating activities 119,022 172,109
---------------------------------------------------------------------------------------------
Cash Flow From Investing Activities:
Proceeds from maturities of investment securities 38,017 53,962
Proceeds from maturities of available for sale securities 307,490 527,181
Purchases of investment securities (55,607) (39,496)
Purchases of available for sale securities (1,008,079) (1,929,299)
Proceeds from sales of available for sale securities 734,978 1,352,130
Proceeds from sales of investment securities 175 -
Loans originated or acquired net or principal collected (603,816) (809,352)
Proceeds from disposition of assets 45,200 187,545
Purchases of assets (43,551) (71,512)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net - 25,584
---------------------------------------------------------------------------------------------
Net cash used by investing activities (585,193) (703,257)
---------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net change in demand deposits, transaction
deposits, money market deposits, and savings accounts 87,547 (134,032)
Net change in certificates of deposit 395,604 319,253
Net change in other borrowings 100,472 465,763
Purchase of treasury stock (2,633) (580)
Common stock dividend - (2,735)
Preferred stock dividend (1) -
Issuance of preferred, common and treasury stock, net 600 1,238
---------------------------------------------------------------------------------------------
Net cash provided by financing activities 581,589 648,907
---------------------------------------------------------------------------------------------
Net change in cash and cash equivalents 115,418 117,759
Cash and cash equivalents at beginning of period 426,855 471,425
---------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 542,273 $ 589,184
---------------------------------------------------------------------------------------------
Cash paid for interest $ 236,628 $ 191,416
---------------------------------------------------------------------------------------------
Cash paid for taxes $ 38,591 $ 19,468
---------------------------------------------------------------------------------------------
Net loans transferred to repossessed real estate
and other assets $ 1,481 $ 2,041
---------------------------------------------------------------------------------------------
Payment of preferred stock dividends in common stock $ 1,125 $ 1,125
---------------------------------------------------------------------------------------------
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 Albuquerque,
N.A., 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 September 30, 2000, BOk owned the rights to service 92,635 mortgage loans
with outstanding principal balances of $6.9 billion, including $143.9 million
serviced for BOk. The weighted average interest rate and remaining term was
7.48% and 271 months, respectively.
Activity in capitalized mortgage servicing rights and related valuation
allowance during the nine months ending September 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 3,640 6,484 10,124 - - 10,124
Amortization expense (7,579) (2,558) (10,137) - (1,088) (11,225)
Realized hedge losses - 4,389 4,389
Unrealized hedge gains - (3,346) (3,346)
----------------------------- -- --------- - ---------- -- ---------- ------------ -- ---------- -- ---------
Balance at September 30, 2000 $ 70,973 $ 32,741 $ 103,714 $ - $ 10,362 $ 114,076
----------------------------- -- --------- - ---------- -- ---------- ------------ -- ---------- -- ---------
Estimated fair value of
mortgage servicing
rights (1) $ 83,119 $ 44,570 $ 127,689 $ 127,689
----------------------------- -- --------- - ---------- -- ---------- -- --------- - ---------- -- ----------
(1) Excludes approximately $8.2 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 September
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 $ 9,528 $ 59,114 $ 32,252 $ 2,820 $ 103,714
Deferred hedge losses - 8,345 2,017 - 10,362
--------------------------------------------------- ------------- -------------------------- ------------
Adjusted cost 9,528 67,459 34,269 2,820 114,076
Fair value 11,405 72,962 38,255 5,067 127,689
--------------------------------------------------- ------------- -------------------------- ------------
Impairment $ - $ - $ - $ - $ -
--------------------------------------------------- ------------- -------------------------- ------------
Outstanding principal of loans
serviced(1) $ 611,600 $ 3,632,400 $ 1,925,400 $ 273,900 $ 6,443,300
--------------------------------------------------- ------------- -------------------------- ------------
(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):
Nine Months Ended September 30,
-------------------------------
2000 1999
-------------- ------------
Proceeds $ 734,978 $ 1,352,130
Gross realized gains 624 3,966
Gross realized losses 1,861 4,465
Related federal and state income
tax benefit (390) (164)
(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 Nine Months Ended
----------------------------------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
----------------------------------------------------------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 25,637 $ 22,736 $ 74,644 $ 66,029
Preferred stock dividends 375 375 1,125 1,125
----------------------------------------------------------------------------------------------------------------
Numerator for basic earnings per share - income
available to common stockholders 25,262 22,361 73,519 64,904
----------------------------------------------------------------------------------------------------------------
Effect of dilutive securities:
Preferred stock dividends 375 375 1,125 1,125
----------------------------------------------------------------------------------------------------------------
Numerator for diluted earnings per share - income available
to common stockholders after assumed conversion $ 25,637 $ 22,736 $ 74,644 $ 66,026
----------------------------------------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per share
-weighted average shares 49,058,328 49,068,809 49,106,905 49,002,358
Effect of dilutive securities:
Employee stock options (1) 323,280 626,770 319,143 691,489
Convertible preferred stock 6,149,365 6,149,365 6,149,365 6,149,365
----------------------------------------------------------------------------------------------------------------
Dilutive potential common shares 6,472,645 6,776,135 6,468,508 6,840,854
----------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 55,530,973 55,844,944 55,575,413 55,843,212
----------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.51 $ 0.46 $ 1.50 $ 1.32
----------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 0.46 $ 0.41 $ 1.34 $ 1.18
----------------------------------------------------------------------------------------------------------------
(1) Employee stock options to purchase 1,640,647 shares of common stock at a
range from $18.18 to $20.52 per share were outstanding at September 30,
2000 but were not included in the computation of diluted earnings per share
since the options' exercise price was greater than the average market price
of the common. At September 30, 1999, the average market price of common
shares exceeded the exercise price for all outstanding employee stock
options.
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(5) REPORTABLE SEGMENTS
Reportable segments reconciliation to the Consolidated Financial Statements for
the Nine months ended September 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 $ 190,743 $ 107,109 $ 184,715 $ 8,622,859
Total non-reportable lines of business 471 36,751 27,439 28,841
Unallocated items:
Tax-equivalent adjustment 5,784 - - -
Funds management 19,787 927 9,261 159,354
Eliminations and all others, net (17,090) 429 2,082 (263,026)
-------------- -- ------------- --- -------------- -- --------------
BOK Financial consolidated $ 199,695 $ 145,216 $ 223,497 $ 8,548,028
============== == ============= === ============== == ==============
(1) Excludes securities gains/losses.
</TABLE>
Reportable segments reconciliation to the Consolidated Financial Statements for
the Nine months ended September 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 $ 157,249 $ 107,434 $ 166,874 $ 7,406,588
Total non-reportable lines of business 1,056 32,516 25,499 67,136
Unallocated items:
Tax-equivalent adjustment 6,552 - - -
Funds management 20,712 722 10,444 107,940
Eliminations and all others, net (14,588) 1,558 3,442 (145,368)
-------------- -- ------------- --- -------------- -- --------------
BOK Financial consolidated $ 170,981 $ 142,230 $ 206,259 $ 7,436,296
============== == ============= === ============== == ==============
(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>
------------------------------------------------------------------------------------------------------------------------------
NINE MONTH FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Nine months ended
------------------------------------------------------------------------------------
September 30, 2000 September 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 $ 2,564,415 $ 124,150 6.47% $ 2,359,405 $ 106,520 6.04%
Tax-exempt securities 267,465 14,404 7.19 297,776 17,130 7.69
------------------------------------------------------------------------------------------------------------------------------
Total securities 2,831,880 138,554 6.54 2,657,181 123,650 6.22
------------------------------------------------------------------------------------------------------------------------------
Trading securities 14,684 1,045 9.51 44,134 1,901 5.76
Funds sold 46,524 2,173 6.24 45,291 1,667 4.92
Loans(2) 4,823,378 329,247 9.12 3,900,878 239,894 8.22
Less reserve for loan losses 79,508 71,004
------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve 4,743,870 329,247 9.27 3,829,874 239,894 8.37
------------------------------------------------------------------------------------------------------------------------------
Total earning assets(2) 7,636,958 471,019 8.24 6,576,480 367,112 7.46
------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 911,070 859,816
------------------------------------------------------------------------------------------------------------------------------
Total assets $ 8,548,028 $ 7,436,296
------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,882,969 39,373 2.79% $ 1,660,558 33,872 2.73%
Savings deposits 154,523 2,030 1.75 162,172 2,249 1.85
Other time deposits 2,435,860 107,290 5.88 1,908,636 72,031 5.05
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,473,352 148,693 4.44 3,731,366 108,152 3.88
------------------------------------------------------------------------------------------------------------------------------
Other borrowings 2,278,019 109,077 6.40 1,921,536 74,480 5.18
Subordinated debenture 148,706 7,770 6.98 147,937 6,947 6.28
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 6,900,077 265,540 5.14 5,800,839 189,579 4.37
------------------------------------------------------------------------------------------------------------------------------
Demand deposits 972,824 1,006,552
Other liabilities 85,951 90,566
Shareholders' equity 589,176 538,339
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 8,548,028 $ 7,436,296
------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue 205,479 3.10% 177,533 3.09%
Tax-Equivalent Net Interest Revenue
To Earning Assets 3.59 3.61
Less tax-equivalent adjustment 5,784 6,552
------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 199,695 170,981
Provision for loan losses 11,204 8,110
Other operating revenue 143,979 141,731
Other operating expense 223,497 206,259
------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 108,973 98,343
Federal and state income tax 34,329 32,314
------------------------------------------------------------------------------------------------------------------------------
Net Income $ 74,644 $ 66,029
------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 1.50 $ 1.32
------------------------------------------------------------------------------------------------------------------------------
Diluted $ 1.34 $ 1.18
------------------------------------------------------------------------------------------------------------------------------
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown are for comparative
purposes.
(2) The loan averages included loans on which the accrual of interest has been
discontinued and are stated net of unearned income.
(3) Yield/Rate excludes $1,468 million of non-recurring collection of foregone
interest in June 30, 1998.
</TABLE>
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
-------------------------------------------------------------------------------------
September 30, 2000 June 30, 2000
------------------------------------------ -------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Taxable securities $ 2,520,917 $ 41,135 6.49% $ 2,625,306 $ 42,738 6.55%
Tax-exempt securities 274,402 4,692 6.80 267,320 5,111 7.69
------------------------------------------------------------------------------------------------------------------------------
Total securities 2,795,319 45,827 6.52 2,892,626 47,849 6.65
------------------------------------------------------------------------------------------------------------------------------
Trading securities 16,873 370 8.72 12,562 315 10.09
Funds sold 47,053 791 6.69 44,731 680 6.11
Loans (2) 5,020,994 118,523 9.39 4,796,948 109,453 9.18
Less reserve for loan losses 81,194 79,503
------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve 4,939,800 118,523 9.55 4,717,445 109,453 9.33
------------------------------------------------------------------------------------------------------------------------------
Total earning assets (2) 7,799,045 165,511 8.44 7,667,364 158,297 8.30
------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 910,737 920,169
------------------------------------------------------------------------------------------------------------------------------
Total assets $ 8,709,782 $ 8,587,533
------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,916,712 13,684 2.84% $ 1,875,180 12,888 2.76%
Savings deposits 151,385 700 1.84 156,369 658 1.69
Other time deposits 2,510,655 39,475 6.26 2,431,978 35,252 5.83
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,578,752 53,859 4.68 4,463,527 48,798 4.40
------------------------------------------------------------------------------------------------------------------------------
Other borrowings 2,299,155 38,867 6.73 2,318,426 37,094 6.44
Subordinated debenture 148,750 2,704 7.23 148,705 2,552 6.90
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 7,026,657 95,430 5.40 6,930,658 88,444 5.13
------------------------------------------------------------------------------------------------------------------------------
Demand deposits 974,478 989,716
Other liabilities 87,439 82,438
Shareholders' equity 621,208 584,721
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders'equity $ 8,709,782 $ 8,587,533
-----------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue 70,081 3.04% 69,853 3.17%
Tax-Equivalent Net Interest Revenue
To Earning Assets 3.57 3.66
Less tax-equivalent adjustment 1,934 1,983
------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 68,147 67,870
Provision for loan losses 5,031 3,534
Other operating revenue 49,840 47,348
Other operating expense 73,964 74,917
------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 38,992 36,767
Federal and state income tax 13,355 12,573
------------------------------------------------------------------------------------------------------------------------------
Net Income $ 25,637 $ 24,194
------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.51 $ 0.48
------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.46 $ 0.44
------------------------------------------------------------------------------------------------------------------------------
(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
-------------------------------------------------------------------------------------------------------------------------
March 31, 2000 December 31, 1999 September 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>
$ 2,547,499 $ 40,275 6.36% $ 2,453,800 $ 38,381 6.21% $ 2,456,120 $ 37,735 6.10%
260,593 4,602 7.10 259,760 4,656 7.11 275,749 5,219 7.51
-------------------------------------------------------------------------------------------------------------------------
2,808,092 44,877 6.43 2,713,560 43,037 6.29 2,731,869 42,954 6.24
-------------------------------------------------------------------------------------------------------------------------
14,593 360 9.92 17,845 390 8.67 27,606 393 5.65
47,782 703 5.92 37,650 552 5.82 37,558 495 5.23
4,650,020 101,271 8.76 4,480,283 97,563 8.64 4,256,430 89,882 8.38
77,808 76,166 74,539
-------------------------------------------------------------------------------------------------------------------------
4,572,212 101,271 8.91 4,404,117 97,563 8.79 4,181,891 89,882 8.53
-------------------------------------------------------------------------------------------------------------------------
7,442,679 147,211 7.96 7,173,172 141,542 7.83 6,978,924 133,724 7.60
-------------------------------------------------------------------------------------------------------------------------
909,666 922,100 890,218
-------------------------------------------------------------------------------------------------------------------------
$ 8,352,345 $ 8,095,272 $ 7,869,142
-------------------------------------------------------------------------------------------------------------------------
$ 1,856,644 12,801 2.77% $ 1,885,730 12,639 2.66% $ 1,858,386 12,278 2.62%
155,848 672 1.73 159,442 721 1.79 167,875 779 1.84
2,364,126 32,563 5.54 2,206,956 29,109 5.23 2,046,295 26,236 5.09
-------------------------------------------------------------------------------------------------------------------------
4,376,618 46,036 4.23 4,252,128 42,469 3.96 4,072,556 39,293 3.83
-------------------------------------------------------------------------------------------------------------------------
2,216,244 33,116 6.01 2,071,787 29,715 5.69 2,065,207 27,681 5.32
148,663 2,514 6.80 148,620 2,387 6.37 148,576 2,373 6.34
-------------------------------------------------------------------------------------------------------------------------
6,741,525 81,666 4.87 6,472,535 74,571 4.57 6,286,339 69,347 4.38
-------------------------------------------------------------------------------------------------------------------------
954,307 977,825 969,289
95,268 91,489 76,815
561,245 553,423 536,699
-------------------------------------------------------------------------------------------------------------------------
$ 8,352,345 $ 8,095,272 $ 7,869,142
-------------------------------------------------------------------------------------------------------------------------
65,545 3.08% 66,971 3.26% 64,377 3.22%
3.05
3.54 3.70 3.66
1,867 1,828 1,990
-------------------------------------------------------------------------------------------------------------------------
63,678 65,143 62,387
2,639 2,255 2,142
46,791 46,721 44,835
74,616 74,257 70,755
-------------------------------------------------------------------------------------------------------------------------
33,214 35,352 34,325
8,401 12,155 11,589
-------------------------------------------------------------------------------------------------------------------------
$ 24,813 $ 23,197 $ 22,736
-------------------------------------------------------------------------------------------------------------------------
$ 0.50 $ 0.46 $ 0.46
-------------------------------------------------------------------------------------------------------------------------
$ 0.45 $ 0.42 $ 0.41
-------------------------------------------------------------------------------------------------------------------------
</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
September 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: November 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
