As filed with the Securities and Exchange Commission on March 15, 2006
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2005
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File No. 0-19341
BOK FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Oklahoma 73-1373454
(State or other jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
(Address of Principal Executive Offices) (Zip Code)
(918) 588-6000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common stock, $0.00006 par value
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes |X| No |_|
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15 (d) of the Act. Yes |_| No |X|
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 12 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer |X| Accelerated filer |_| Non-accelerated filer |_|
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|
The aggregate market value of the registrant's common stock ("Common
Stock") held by non-affiliates is approximately $948,181,172 (based on the June
30, 2005 closing price of Common Stock of $46.12 per share). As of March 1,
2006, there were 66,955,508 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document of the Registrant Reference Locations
Portions of the 2005 Annual Report to Shareholders Parts I, II, III and IV
Portions of the 2006 Proxy Statement Part III
===============================================================================
BOK FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10-K
INDEX
ITEM PAGE
PART I
1. Business 3
1A. Risk Factors 8
1B. Unresolved Staff Comments 12
2. Properties 12
3. Legal Proceedings 12
4. Submission of Matters to a Vote of Security Holders 12
PART II
5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 13
6. Selected Financial Data 14
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
7A. Quantitative and Qualitative Disclosures About Market Risk 14
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 15
9A. Controls and Procedures 15
9B. Other Information 15
PART III
10. Directors and Executive Officers of the Registrant 16
11. Executive Compensation 16
12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 16
13. Certain Relationships and Related Transactions 16
14. Principal Accountant Fees and Services 16
PART IV
15. Exhibits, Financial Statement Schedules 17
Signatures 26
Chief Executive Officer Section 302 Certification Exhibit 31.1
Chief Financial Officer Section 302 Certification Exhibit 31.2
Section 906 Certifications Exhibit 32
3
PART I
ITEM 1. BUSINESS
General
Developments relating to individual aspects of the business of BOK
Financial Corporation ("BOK Financial" or "the Company") are described below.
Additional discussion of the Company's activities during the current year is
incorporated by reference to the "Management's Assessment of Operations and
Financial Condition" section of BOK Financial's 2005 Annual Report to
Shareholders (the "2005 Annual Report"). Information regarding BOK Financial's
acquisitions is incorporated by reference to Note 2 of "Notes to Consolidated
Financial Statements" within the 2005 Annual Report.
Description of Business
BOK Financial is a financial holding company whose activities are limited
by the Bank Holding Company Act of 1956 ("BHCA"), as amended by the Financial
Services Modernization Act or Gramm-Leach-Bliley Act. BOK Financial offers full
service banking in Oklahoma, Dallas and Houston, Texas, Albuquerque, New Mexico,
Northwest Arkansas, Denver, Colorado, and Phoenix, Arizona. The Company also has
commercial loan production, mortgage banking and institutional sales offices in
the Kansas City market. Principal subsidiaries are Bank of Oklahoma, N.A.
("BOk"), Bank of Texas, N.A., Bank of Albuquerque, N.A., Bank of Arkansas, N.A.,
Colorado State Bank and Trust, N.A. and Bank of Arizona, N.A. (collectively, the
"Banks"). Other subsidiaries include BOSC, Inc., a broker/dealer that engages in
retail and institutional securities sales and municipal bond underwriting. Other
non-bank subsidiary operations are not significant.
Our overall strategic objective is to emphasize growth in long-term value
by building on our leadership position in Oklahoma and expanding into
high-growth markets. We have a solid position in Oklahoma and are the state's
largest financial institution as measured by deposit market share. Since 1997,
we have expanded into Dallas and Houston, Texas, Albuquerque, New Mexico,
Denver, Colorado, and Phoenix, Arizona. We are currently exploring opportunities
for further growth in our regional markets and expansion into the Kansas City
market through acquisition or de novo banking operations.
Our primary focus is to provide a broad range of financial products and
services, including loans and deposits, cash management services, fiduciary
services, mortgage banking and brokerage and trading services to middle-market
businesses, financial institutions and consumers. Our revenue sources are
diversified. Approximately 43% of our revenue comes from commissions and fees.
Commercial banking is a significant part of our business. Our credit
culture emphasizes building relationships by making high quality loans and
providing a full range of financial products and services to our customers.
Our acquisition strategy targets quality organizations that have
demonstrated solid growth in their business lines. We provide additional growth
opportunities by hiring talent to enhance competitiveness, adding locations, and
broadening product offerings. Our operating philosophy embraces local
decision-making through the boards of directors for each of our bank
subsidiaries.
BOK Financial's corporate headquarters is located at Bank of Oklahoma
Tower, P.O. Box 2300, Tulsa, Oklahoma 74192.
The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and amendments to those reports are available on the
Company's website at www.bokf.com as soon as reasonably practicable after the
Company electronically files such material with or furnishes it to the
Securities and Exchange Commission.
4
Operating Segments
BOK Financial operates five principal lines of business: Oklahoma corporate
banking, Oklahoma consumer banking, mortgage banking, wealth management, and
regional banking. Mortgage banking activities include loan origination and
servicing across all markets served by the Company. Wealth management provides
brokerage and trading, private financial services and investment advisory
services in all markets. Wealth management also provides fiduciary services in
all markets except Colorado. Fiduciary services in Colorado are included in
regional banking. Regional banking consists primarily of corporate and consumer
banking activities in the respective local markets. Discussion of these
principal lines of business is incorporated by reference to the Lines of
Business section of Management's Discussion and Analysis within the 2005 Annual
Report and to Note 18 of Notes to Consolidated Financial Statements within the
2005 Annual Report.
Competition
BOK Financial and its operating segments face competition from other banks,
thrifts, credit unions and other non-bank financial institutions, such as
investment banking firms, investment advisory firms, brokerage firms, investment
companies, government agencies, mortgage brokers and insurance companies. The
Company competes largely on the basis of customer services, interest rates on
loans and deposits, lending limits and customer convenience. Some operating
segments face competition from institutions that are not as closely regulated as
banks, and therefore are not limited by the same capital requirements and other
restrictions. All market share information presented below is based upon share
of deposits in specified areas according to SNL DataSource as of December 31,
2005.
BOk is the largest banking subsidiary of BOK Financial and has the largest
market share in Oklahoma with 12% of the state's total deposits. In the Tulsa
and Oklahoma City areas, BOk has 27% and 10% of the market share, respectively.
BOk competes with two banks that have operations nationwide and have greater
access to funds at lower costs, higher lending limits, and greater access to
technology resources. BOk also competes with regional and locally owned banks in
both the Tulsa and Oklahoma City areas, as well as in every other community in
which we do business throughout the state.
Through other subsidiary banks, BOK Financial competes in Dallas-Fort Worth
and Houston, Texas, Albuquerque, New Mexico, Denver, Colorado, Phoenix, Arizona,
and Northwest Arkansas. Bank of Texas competes against numerous financial
institutions, including some of the largest in the United States, and has a
market share of approximately 1% in each of the Dallas-Fort Worth and Houston
areas. Bank of Albuquerque has a number four market share position with 11% of
deposits in the Albuquerque area and competes with two large national banks,
some regional banks and several locally-owned smaller community banks. Colorado
State Bank and Trust has a market share of approximately 1% in the Denver area.
Bank of Arizona operates as a community bank with locations in Phoenix and
Scottsdale. Bank of Arkansas serves Benton and Washington counties in Arkansas.
The Company's ability to expand into additional states remains subject to
various federal and state laws.
Employees
As of December 31, 2005, BOK Financial and its subsidiaries employed 3,825
full-time equivalent employees. None of the Company's employees are represented
by collective bargaining agreements. Management considers its employee relations
to be good.
Supervision and Regulation
BOK Financial and its subsidiaries are subject to extensive regulations
under federal and state laws. These regulations are designed to protect
depositors, the Bank Insurance Fund and the banking system as a whole and not
necessarily to protect shareholders and creditors. As detailed below, these
regulations may restrict the Company's ability to diversify, to acquire other
institutions and to pay dividends on its capital
5
stock. They also may require the Company to provide financial support to its
subsidiaries, maintain certain capital balances and pay higher deposit insurance
premiums.
Proposals to change laws and regulations governing the banking industry are
frequently introduced in Congress, in the state legislatures and before bank
regulatory agencies. The likelihood and timing of any new proposals or
legislation and the impact they might have on the Company and its subsidiaries
cannot be predicted at this time.
The following information summarizes certain laws and regulations that
affect the Company's operations. It does not discuss all provisions of these
laws and regulations and it does not summarize all laws and regulations that
affect the Company.
General
As a financial holding company, BOK Financial is regulated under the BHCA
and is subject to regular inspection, examination and supervision by the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"). Under
the BHCA, BOK Financial files quarterly reports and other information with the
Federal Reserve Board.
The Banks are organized as national banking associations under the National
Banking Act, and are subject to regulation, supervision and examination by the
Office of the Comptroller of the Currency (the "OCC"), the Federal Deposit
Insurance Corporation (the "FDIC"), the Federal Reserve Board and other federal
and state regulatory agencies. The OCC has primary supervisory responsibility
for national banks and must approve certain corporate or structural changes,
including changes in capitalization, payment of dividends, change of place of
business, and establishment of a branch or operating subsidiary. The OCC
performs its functions through national bank examiners who provide the OCC with
information concerning the soundness of a national bank, the quality of
management and directors, and compliance with applicable regulations. The
National Banking Act authorizes the OCC to examine every national bank as often
as necessary.
A financial holding company, and the companies under its control, are
permitted to engage in activities considered "financial in nature" as defined by
the Gramm-Leach-Bliley Act and Federal Reserve Board interpretations, and
therefore may engage in a broader range of activities than permitted for bank
holding companies and their subsidiaries. Activities that are "financial in
nature" include securities underwriting and dealing, insurance underwriting,
operating a mortgage company, credit card company or factoring company,
performing certain data processing operations, servicing loans and other
extensions of credit, providing investment and financial advice, owning and
operating savings and loan associations, and leasing personal property on a full
pay-out, non-operating basis. In order for a financial holding company to
commence any new activity permitted by the BHCA, each insured depository
institution subsidiary of the financial holding company must have received a
rating of at least satisfactory in its most recent examination under the
Community Reinvestment Act. A financial holding company is required to notify
the Federal Reserve Board within thirty days of engaging in new activities
determined to be "financial in nature." BOK Financial is engaged in some of
these activities and has notified the Federal Reserve Board.
The BHCA requires the Federal Reserve Board's prior approval for the direct
or indirect acquisition of more than five percent of any class of voting stock
of any non-affiliated bank. Under the Federal Bank Merger Act, the prior
approval of the OCC is required for a national bank to merge with another bank
or purchase the assets or assume the deposits of another bank. In reviewing
applications seeking approval of merger and acquisition transactions, the bank
regulatory authorities consider, among other things, the competitive effect and
public benefits of the transactions, the capital position of the combined
organization, the applicant's performance record under the Community
Reinvestment Act and fair housing laws and the effectiveness of the subject
organizations in combating money laundering activities.
A financial holding company and its subsidiaries are prohibited under the
BHCA from engaging in certain tie-in arrangements in connection with the
provision of any credit, property or services. Thus, a subsidiary of a financial
holding company may not extend credit, lease or sell property, furnish any
6
services or fix or vary the consideration for these activities on the condition
that (1) the customer obtain or provide additional credit, property or services
from or to the financial holding company or any subsidiary thereof, or (2) the
customer may not obtain some other credit, property or services from a
competitor, except to the extent reasonable conditions are imposed to insure the
soundness of credit extended.
The Banks and other non-bank subsidiaries are also subject to other federal
and state laws and regulations. For example, BOSC, Inc., the Company's
broker/dealer subsidiary that engages in retail and institutional securities
sales and municipal bond underwriting, is regulated by the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., the
Federal Reserve Board, the National Futures Association and state securities
regulators. As another example, Bank of Arkansas is subject to certain
consumer-protection laws incorporated in the Arkansas Constitution, which, among
other restrictions, limit the maximum interest rate on general loans to five
percent above the Federal Reserve Discount Rate and limit the rate on consumer
loans to the lower of five percent above the discount rate or seventeen percent.
Capital Adequacy and Prompt Corrective Action
The Federal Reserve Board, the OCC and the FDIC have issued substantially
similar risk-based and leverage capital guidelines applicable to United States
banking organizations to ensure capital adequacy based upon the risk levels of
assets and off-balance sheet financial instruments. In addition, these
regulatory agencies may from time to time require that a banking organization
maintain capital above the minimum levels, whether because of its financial
condition or actual or anticipated growth. Capital adequacy guidelines and
prompt corrective action regulations involve quantitative measures of assets,
liabilities, and certain off-balance sheet items calculated under regulatory
accounting practices. Capital amounts and classifications are also subject to
qualitative judgments by regulators regarding components, risk weighting and
other factors.
The Federal Reserve Board risk-based guidelines define a three-tier capital
framework. Core capital (Tier 1) includes common shareholders' equity and
qualifying preferred stock, less goodwill, most intangible assets and other
adjustments. Supplementary capital (Tier 2) consists of preferred stock not
qualifying as Tier 1 capital, qualifying mandatory convertible debt securities,
limited amounts of subordinated debt, other qualifying term debt and allowances
for credit losses, subject to limitations. Market risk capital (Tier 3) includes
qualifying unsecured subordinated debt. Assets and off-balance sheet exposures
are assigned to one of four categories of risk-weights, based primarily upon
relative credit risk. Risk-based capital ratios are calculated by dividing Tier
1 and total capital by risk-weighted assets. For a depository institution to be
considered well capitalized under the regulatory framework for prompt corrective
action, the institution's Tier 1 and total capital ratios must be at least 6%
and 10% on a risk-adjusted basis, respectively. As of December 31, 2005, BOK
Financial's Tier 1 and total capital ratios under these guidelines were 9.84%
and 12.10%, respectively.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Banking organizations are required to maintain a ratio of
at least 5% to be classified as well capitalized. BOK Financial's leverage ratio
at December 31, 2005 was 8.30%.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDICIA"), among other things, identifies five capital categories for insured
depository institutions from well capitalized to critically undercapitalized and
requires the respective federal regulatory agencies to implement systems for
prompt corrective action for institutions failing to meet minimum capital
requirements within such categories. FDICIA imposes progressively more
restrictive covenants on operations, management and capital distributions,
depending upon the category in which an institution is classified.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of
7
corrective action to be taken when an institution is considered
undercapitalized. Under these guidelines, each of the Banks was considered well
capitalized as of December 31, 2005.
The federal regulatory authorities' risk-based capital guidelines are based
upon the 1988 capital accord of the Basel Committee on Banking Supervision (the
"BCBS"). The BCBS is a committee of central banks and bank regulators from the
major industrialized countries that develops broad policy guidelines for use by
each country's supervisors in determining the supervisory policies they apply.
In January 2001, the BCBS released a proposal to replace the 1988 capital
accord with a new capital accord that would set capital requirements for
operational risk and refine the existing capital requirements for credit risk
and market risk exposures. Operational risk refers to the risk of direct or
indirect losses resulting from failed internal processes, people, and systems.
The 1988 capital accord does not include separate capital requirements for
operational risk.
In June 2004, the BCBS published the framework for a new set of risk-based
capital standards. Release of proposed rules to implement the new capital accord
is expected in the first half of 2006. The ultimate timing and final form of a
new accord are uncertain. However, it is possible that a new capital accord will
eventually be adopted by the BCBS and implemented by the United States federal
bank regulatory authorities. The new capital requirements that may arise from a
new capital accord could increase minimum capital requirements applicable to BOK
Financial and its subsidiaries.
Further discussion of regulatory capital, including regulatory capital
amounts and ratios, is incorporated by reference to information set forth under
the heading "Borrowings and Capital" within Management's Discussion and Analysis
and Note 16 of the 2005 Annual Report.
Dividends
The primary source of liquidity for BOK Financial is dividends from the
Banks, which are limited by various banking regulations to net profits, as
defined, for the year plus retained profits for the preceding two years and
further restricted by minimum capital requirements. Based on the most
restrictive limitations, the Banks had excess regulatory capital and could
declare up to $158 million of dividends without regulatory approval as of
December 31, 2005. BOK Financial management has developed and the Board of
Directors has approved an internal capital policy that is more restrictive than
the regulatory standards. Under this policy, the Banks could declare dividends
of up to $86 million as of December 31, 2005. These amounts are not necessarily
indicative of amounts that may be available to be paid in future periods.
Source of Strength Doctrine
According to Federal Reserve Board policy, bank holding companies are
expected to act as a source of financial strength to each subsidiary bank and to
commit resources to support each such subsidiary. This support may be required
at times when a bank holding company may not be able to provide such support.
Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance
Act, in the event of a loss suffered by the FDIC as a result of default of a
banking subsidiary or related to FDIC assistance provided to a subsidiary in
danger of default, the other Banks may be assessed for the FDIC's loss, subject
to certain exceptions.
Governmental Policies and Economic Factors
The operations of BOK Financial and its subsidiaries are affected by
legislative changes and by the policies of various regulatory authorities and,
in particular, the credit policies of the Federal Reserve Board. An important
function of the Federal Reserve Board is to regulate the national supply of bank
credit to moderate recessions and curb inflation. Among the instruments of
monetary policy used by the Federal Reserve Board to implement its objectives
are: open-market operations in U.S. Government securities, changes in the
discount rate and federal funds rate on bank borrowings, and changes in reserve
8
requirements on bank deposits. The effect of future changes in such policies on
the business and earnings of BOK Financial and its subsidiaries is uncertain.
The Sarbanes-Oxley Act (the "Act") addresses many aspects of financial
reporting, corporate governance and public company disclosure. Among other
things, the Act establishes a comprehensive framework for the oversight of
public company auditing and for strengthening the independence of auditors and
audit committees. Under the Act, audit committees are responsible for the
appointment, compensation and oversight of the work of the auditors. The
non-audit services that can be provided to a company by its auditor are limited.
Audit committee members are subject to specific rules addressing their
independence. The Act also requires enhanced and accelerated financial
disclosures, and it establishes various responsibility measures, such as
requiring the chief executive officer and chief financial officer to certify to
the quality of the company's financial reporting. The Act imposes restrictions
on and accelerated reporting requirements for certain insider trading
activities. It imposes a variety of penalties for fraud and other violations and
creates a federal felony for securities fraud. Various sections of the Act are
applicable to BOK Financial.
Foreign Operations
BOK Financial does not engage in operations in foreign countries, nor does
it lend to foreign governments.
ITEM 1A. RISK FACTORS
ADVERSE REGIONAL ECONOMIC DEVELOPMENTS COULD NEGATIVELY AFFECT BOK
FINANCIAL'S BUSINESS.
A substantial majority of BOK Financial loans are generated in Oklahoma and
other markets in the southwest region. As a result, poor economic conditions in
Oklahoma or other markets in the southwest region may cause BOK Financial to
incur losses associated with higher default rates and decreased collateral
values in BOK Financial's loan portfolio. A regional economic downturn could
also adversely affect revenue from brokerage and trading activities, mortgage
loan originations and other sources of fee-based revenue.
ADVERSE ECONOMIC FACTORS AFFECTING PARTICULAR INDUSTRIES COULD HAVE A
NEGATIVE EFFECT ON BOK FINANCIAL CUSTOMERS AND THEIR ABILITY TO MAKE PAYMENTS TO
BOK FINANCIAL.
Certain industry-specific economic factors also affect BOK Financial. For
example, a portion of BOK Financial's total loan portfolio is comprised of loans
to borrowers in the energy and agricultural industries, both of which are
historically cyclical industries. Low commodity prices may adversely affect
those industries and, consequently, may affect BOK Financial's business
negatively. In addition, BOK Financial's loan portfolio includes commercial real
estate loans. A downturn in the real estate industry in Oklahoma and the
Southwest region could also have an adverse effect on BOK Financial's
operations.
FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT BOK FINANCIAL'S
BUSINESS.
BOK Financial's business is highly sensitive to:
o the monetary policies implemented by the Federal Reserve Board,
including the discount rate on bank borrowings and changes in reserve
requirements, which affect BOK Financial's ability to make loans and
the interest rates we may charge;
9
o changes in prevailing interest rates, due to the dependency of BOK
Financial's banks on interest income;
o open market operations in U.S. Government securities.
Significant increase in market interest rates, or the perception that an
increase may occur, could adversely affect both BOK Financial's ability to
originate new loans and BOK Financial's ability to grow. Conversely, a decrease
in interest rates could result in acceleration in the payment of loans,
including loans underlying BOK Financial's holdings of mortgage-backed
securities and termination of BOK Financial's mortgage servicing rights. In
addition, changes in market interest rates, changes in the relationships between
short-term and long-term market interest rates or changes in the relationships
between different interest rate indices, could affect the interest rates charged
on interest-earning assets differently than the interest rates paid on
interest-bearing liabilities. This difference could result in an increase in
interest expense relative to interest income. An increase in market interest
rates also could adversely affect the ability of BOK Financial's floating-rate
borrowers to meet their higher payment obligations. If this occurred, it could
cause an increase in nonperforming assets and net charge-offs, which could
adversely affect BOK Financial's business.
BOK FINANCIAL'S SUBSTANTIAL HOLDINGS OF MORTGAGE-BACKED SECURITIES AND
MORTGAGE SERVICING RIGHTS COULD ADVERSELY AFFECT BOK FINANCIAL'S BUSINESS.
BOK Financial has invested a substantial amount of its holdings in
mortgage-backed securities, which are investment interests in pools of
mortgages. Mortgage-backed securities are highly sensitive to changes in
interest rates. BOK Financial mitigates this risk somewhat by investing
principally in shorter duration mortgage products, which are less sensitive to
changes in interest rates. A significant decrease in interest rates could lead
mortgage holders to refinance the mortgages constituting the pool backing the
securities, subjecting BOK Financial to a risk of prepayment and decreased
return on investment due to subsequent reinvestment at lower interest rates.
Conversely, a significant increase in interest rates could cause mortgage
holders to extend the term over which they repay their loans, which delays the
Company's opportunity to reinvest funds at higher rates.
In addition, as part of BOK Financial's mortgage banking business, BOK
Financial has substantial holdings of mortgage servicing rights. The value of
these rights is also very sensitive to changes in interest rates. Falling
interest rates tend to increase loan prepayments, which may lead to cancellation
of the related servicing rights. BOK Financial's investments and dealings in
mortgage-related products increase the risk that falling interest rates could
adversely affect BOK Financial's business. BOK Financial attempts to manage this
risk by maintaining an active hedging program for its mortgage servicing rights.
BOK Financial's hedging program has only been partially successful in recent
years.
SUBSTANTIAL COMPETITION COULD ADVERSELY AFFECT BOK FINANCIAL.
Banking is a competitive business. BOK Financial competes actively for
loan, deposit and other financial services business in Oklahoma, as well as in
BOK Financial's other markets. BOK Financial's competitors include a large
number of small and large local and national banks, savings and loan
associations, credit unions, trust companies, broker-dealers and underwriters,
as well as many financial and nonfinancial firms that offer services similar to
BOK Financial's. Large national financial institutions have entered the Oklahoma
market. These institutions have substantial capital, technology and marketing
resources. Such large financial institutions may have greater access to capital
at a lower cost than BOK Financial does, which may adversely affect BOK
Financial's ability to compete effectively.
10
BOK Financial has expanded into markets outside of Oklahoma, where it
competes with a large number of financial institutions that have an established
customer base and greater market share than BOK Financial. BOK Financial may not
be able to continue to compete successfully in these markets outside of
Oklahoma. With respect to some of its services, BOK Financial competes with
non-bank companies that are not subject to regulation. The absence of regulatory
requirements may give non-banks a competitive advantage.
ADVERSE FACTORS COULD IMPACT BOK FINANCIAL'S ABILITY TO IMPLEMENT ITS
OPERATING STRATEGY.
Although BOK Financial has developed an operating strategy which it expects
to result in continuing improved financial performance, BOK Financial cannot
assure you that it will be successful in fulfilling this strategy or that this
operating strategy will be successful. Achieving success is dependent upon a
number of factors, many of which are beyond BOK Financial's direct control.
Factors that may adversely affect BOK Financial's ability to implement its
operating strategy include:
o deterioration of BOK Financial's asset quality;
o inability to control BOK Financial's noninterest expenses;
o inability to increase noninterest income;
o deterioration in general economic conditions, especially in BOK
Financial's core markets;
o decreases in net interest margins;
o increases in competition;
o adverse regulatory developments.
BANKING REGULATIONS COULD ADVERSELY AFFECT BOK FINANCIAL.
BOK Financial and its subsidiaries are extensively regulated under both
federal and state law. In particular, BOK Financial is subject to the Bank
Holding Company Act of 1956 and the National Bank Act. These regulations are
primarily for the benefit and protection of BOK Financial's customers and not
for the benefit of BOK Financial's investors. In the past, BOK Financial's
business has been materially affected by these regulations. For example,
regulations limit BOK Financial's business to banking and related businesses,
and they limit the location of BOK Financial's branches and offices, as well as
the amount of deposits that it can hold in a particular state. These regulations
may limit BOK Financial's ability to grow and expand into new markets and
businesses.
Additionally, under the Community Reinvestment Act, BOK Financial is
required to provide services in traditionally underserved areas. BOK Financial's
ability to make acquisitions and engage in new business may be limited by these
requirements.
The Federal Deposit Insurance Corporation Improvement Act of 1991 and the
Bank Holding Company Act of 1956, and various regulations of regulatory
authorities, require us to maintain specified capital ratios. Any failure to
maintain required capital ratios would limit the growth potential of BOK
Financial's business.
11
Under a long-standing policy of the Board of Governors of the Federal
Reserve System, a bank holding company is expected to act as a source of
financial strength for its subsidiary banks. As a result of that policy, BOK
Financial may be required to commit financial and other resources to its
subsidiary banks in circumstances where we might not otherwise do so.
The trend toward extensive regulation is likely to continue in the future.
Laws, regulations or policies currently affecting us and BOK Financial's
subsidiaries may change at any time. Regulatory authorities may also change
their interpretation of these statutes and regulations. Therefore, BOK
Financial's business may be adversely affected by any future changes in laws,
regulations, policies or interpretations.
STATUTORY RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND OTHER DISTRIBUTIONS AND
DEBTS OF BOK FINANCIAL'S SUBSIDIARIES COULD LIMIT AMOUNTS BOK FINANCIAL'S
SUBSIDIARIES MAY PAY TO BOK FINANCIAL.
BOK Financial is a bank holding company, and a substantial portion of BOK
Financial's cash flow typically comes from dividends that BOK Financial's bank
and nonbank subsidiaries pay to BOK Financial. Various statutory provisions
restrict the amount of dividends BOK Financial's subsidiaries can pay to BOK
Financial without regulatory approval. Management also developed, and the BOK
Financial board of directors approved, an internal capital policy that is more
restrictive than the regulatory capital standards. In addition, if any of BOK
Financial's subsidiaries liquidates, that subsidiary's creditors will be
entitled to receive distributions from the assets of that subsidiary to satisfy
their claims against it before BOK Financial, as a holder of an equity interest
in the subsidiary, will be entitled to receive any of the assets of the
subsidiary. If, however, BOK Financial is a creditor of the subsidiary with
recognized claims against it, BOK Financial will be in the same position as
other creditors.
ALTHOUGH PUBLICLY TRADED, BOK FINANCIAL'S COMMON STOCK HAS SUBSTANTIALLY
LESS LIQUIDITY THAN THE AVERAGE TRADING MARKET FOR A STOCK QUOTED ON THE NASDAQ
NATIONAL MARKET SYSTEM.
A relatively small fraction of BOK Financial's outstanding common stock is
actively traded. The risks of low liquidity include increased volatility of the
price of BOK Financial's common stock. Low liquidity may also limit holders of
BOK Financial's common stock in their ability to sell or transfer BOK
Financial's shares at the price, time and quantity desired.
BOK FINANCIAL'S PRINCIPAL SHAREHOLDER CONTROLS A MAJORITY OF BOK
FINANCIAL'S COMMON STOCK.
Mr. George B. Kaiser owns a majority of the outstanding shares of BOK
Financial's common stock. Mr. Kaiser is able to elect all of BOK Financial's
directors and effectively control the vote on all matters submitted to a vote of
BOK Financial's common shareholders. Mr. Kaiser's ability to prevent an
unsolicited bid for BOK Financial or any other change in control could have an
adverse effect on the market price for BOK Financial's common stock. A
substantial majority of BOK Financial's directors are not officers or employees
of BOK Financial or any of its affiliates. However, because of Mr. Kaiser's
control over the election of BOK Financial's directors, he could change the
composition of BOK Financial's Board of Directors so that it would not have a
majority of outside directors.
POSSIBLE FUTURE SALES OF SHARES BY BOK FINANCIAL'S PRINCIPAL SHAREHOLDER
COULD ADVERSELY AFFECT THE MARKET PRICE OF BOK FINANCIAL'S COMMON STOCK.
Mr. Kaiser has the right to sell shares of BOK Financial's common stock in
compliance with the federal securities laws at any time, or from time to time.
The federal securities laws will be the only
12
restrictions on Mr. Kaiser's ability to sell. Because of his current control of
BOK Financial, Mr. Kaiser could sell large amounts of his shares of BOK
Financial's common stock by causing BOK Financial to file a registration
statement that would allow him to sell shares more easily. In addition, Mr.
Kaiser could sell his shares of BOK Financial's common stock without
registration under Rule 144 of the Securities Act. Although BOK Financial can
make no predictions as to the effect, if any, that such sales would have on the
market price of BOK Financial's common stock, sales of substantial amounts of
BOK Financial's common stock, or the perception that such sales could occur,
would adversely affect market prices. If Mr. Kaiser sells or transfers his
shares of BOK Financial's common stock as a block, another person or entity
could become BOK Financial's controlling shareholder.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2 - PROPERTIES
BOK Financial and its subsidiaries own and lease improved real estate that
is carried at $123 million, net of depreciation and amortization. The Company's
principal offices are located in leased premises in the Bank of Oklahoma Tower,
Tulsa, Oklahoma. Banking offices are primarily located in Tulsa and Oklahoma
City, Oklahoma, Dallas-Forth Worth and Houston, Texas, Albuquerque, New Mexico,
Denver, Colorado, and Phoenix, Arizona. Operations facilities are located in
Tulsa, Oklahoma, Dallas, Texas, and Albuquerque, New Mexico. The Company's
facilities are suitable for their respective uses and present needs.
The information set forth in Notes 6 and 15 of the 2005 Annual Report
provides further discussion related to properties and is incorporated herein by
reference.
ITEM 3 - LEGAL PROCEEDINGS
The information set forth in Note 15 of the 2005 Annual Report is
incorporated herein by reference.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the three months ended December 31,
2005.
13
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
BOK Financial's $.00006 par value common stock is traded on the Nasdaq
Stock Market under the symbol BOKF. As of March 1, 2006, common shareholders of
record numbered 1,143 with 66,955,508 shares outstanding.
The highest and lowest closing bid price for shares of BOK Financial common
stock follows:
First Second Third Fourth
--------------- -------------- -------------- ---------------
2005:
Low $39.79 $40.09 $45.26 $43.54
High 48.97 46.02 49.30 48.53
2004:
Low $37.48 $37.29 $38.95 $44.33
High 39.91 41.20 45.45 49.18
The Company had a stock repurchase plan that was initially authorized by
the Company's board of directors on February 24, 1998 and amended on May 25,
1999. Under the terms of that plan, the Company could repurchase up to 800,000
shares of its common stock. As of March 31, 2005, the Company had repurchased
638,642 shares under that plan. On April 26, 2005, the Company's board of
directors terminated this authorization and replaced it with a new stock
repurchase plan authorizing the Company to repurchase up to two million shares
of the Company's common stock. The specific timing and amount of shares
repurchased will vary based upon market conditions, securities law limitations
and other factors. Repurchases may be made over time in open market or privately
negotiated transactions. The repurchase program may be suspended or discontinued
at any time without prior notice. As of December 31, 2005, the Company had
repurchased 30,000 shares under the new plan for $1.3 million.
During the second quarter of 2005, the board of directors approved the
Company's first quarterly cash dividend of $0.10 per common share. The quarterly
cash dividend replaced the annual dividend historically paid in shares of common
stock. Concurrent with the first quarterly cash dividend, holders of the
Company's convertible preferred stock exercised their conversion rights. All of
the Series A Preferred Stock was converted into 6,920,666 common shares. For the
year ended December 31, 2005, the Company's payout ratio of common dividends to
earnings was 9.91%.
14
The following table provides information with respect to purchases made by
or on behalf of the Company or any "affiliated purchaser" (as defined in Rule
10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company's common
stock during the three months ended December 31, 2005.
- ---------------------------------------- ------------------- ----------------- ------------------------ ---------------------
Total Number of Shares Maximum Number of
Purchased as Part of Shares that May Yet
Total Number of Average Price Publicly Announced Be Purchased Under
Period Shares Purchased (1) Paid per Share Plans or Programs the Plans
- ---------------------------------------- ------------------- ----------------- ------------------------ ---------------------
October 1, 2005 to October 31, 2005 13,552 $45.63 - 1,970,000
- ---------------------------------------- ------------------- ----------------- ------------------------ ---------------------
November 1, 2005 to November 30, 2005 16,989 $47.14 - 1,970,000
- ---------------------------------------- ------------------- ----------------- ------------------------ ---------------------
December 1, 2005 to December 31, 2005 43,960 $46.64 - 1,970,000
- ---------------------------------------- ------------------- ----------------- ------------------------ ---------------------
Total 74,501 -
- ---------------------------------------- ------------------- ----------------- ------------------------ ---------------------
(1) The Company routinely repurchases mature shares from employees to cover the
exercise price and taxes in connection with employee stock option
exercises.
BOK Financial entered into a limited price guarantee on a portion of the
shares issued in the Bank of Tanglewood acquisition on October 25, 2002.
Additional discussion of this price guarantee is incorporated by reference to
information set forth under the "Off-Balance Sheet Arrangements" heading within
the Management's Discussion and Analysis section and in Note 16 of the 2005
Annual Report.
The information set forth under the headings "Table 1 - Consolidated
Selected Financial Data," "Table 5 - Selected Quarterly Financial Data,"
"Borrowings and Capital," and Note 16 of the 2005 Annual Report is incorporated
herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information set forth under the heading "Table 1 - Consolidated
Selected Financial Data" of the 2005 Annual Report is incorporated herein by
reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information set forth under the headings "Management's Discussion and
Analysis," "Annual Financial Summary - Unaudited" and "Quarterly Financial
Summary - Unaudited" of the 2005 Annual Report is incorporated herein by
reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
BOK Financial is subject to market risk primarily through the effect of
changes in interest rates on both its assets held for purposes other than
trading and trading assets. The effects of other changes, such as foreign
exchange rates, commodity prices or equity prices do not pose significant market
risk to BOK Financial. BOK Financial has no material investments in assets that
are affected by changes in foreign exchange rates or equity prices. Energy
derivative contracts, which are affected by changes in commodity prices, are
matched against offsetting contracts. Additional discussion of this type of
market risk is set forth under the heading "Market Risk" within the Management's
Discussion and Analysis section of the 2005 Annual Report and is incorporated
herein by reference.
BOK Financial is also exposed to market risk related to a stock price
guarantee agreement made in connection with the Bank of Tanglewood acquisition.
Additional information regarding this risk is set
15
forth under the "Off-Balance Sheet Arrangements" heading within the Management's
Discussion and Analysis section and in Note 16 of the 2005 Annual Report.
Additional information regarding market risk is set forth under the "Loans"
heading within the Management's Discussion and Analysis section of the 2005
Annual Report and is incorporated herein by reference, including disclosures of
loan concentrations by primary industry of the borrower and geographic
concentrations of the loan portfolio. The information set forth under the
"Deposits" heading within the Management's Discussion and Analysis section of
the 2005 Annual Report is also incorporated herein by reference, including
geographic distribution of deposit accounts.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information set forth in the 2005 Annual Report is
incorporated herein by reference: the Consolidated Financial Statements and
Notes to Consolidated Financial Statements of BOK Financial Corporation,
together with the report thereon of Ernst & Young LLP dated March 10, 2006,
which appears on page 37 of the 2005 Annual Report, and the Selected Quarterly
Financial Data in Table 5.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A - CONTROLS AND PROCEDURES
As of the end of the period covered by this report and pursuant to Rule
13a-15 of the Securities Exchange Act of 1934 (the "Exchange Act"), the
Company's management, including the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness and design of the
Company's disclosure controls and procedures (as that term is defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer concluded, as of
the end of the period covered by this report, that the Company's disclosure
controls and procedures were effective in recording, processing, summarizing and
reporting information required to be disclosed by the Company, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
In addition and as of the end of the period covered by this report, there
have been no changes in internal control over financial reporting (as defined in
Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the Company's fourth
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the internal control over financial reporting.
The Report of Management on Financial Statements and Management's Report on
Internal Control over Financial Reporting appear on Page 36 of the 2005 Annual
Report and are incorporated herein by reference. The independent registered
public accounting firm, Ernst & Young, LLP, has audited the financial statements
included in the 2005 Annual Report and has issued an audit report on
management's assessment of the internal control over financial reporting, which
appears on Page 38 of the 2005 Annual Report and is incorporated herein by
reference.
ITEM 9B - OTHER INFORMATION
None.
16
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the headings "Election of Directors,"
"Executive Compensation" and "Risk Oversight and Audit Committee" in BOK
Financial's 2006 Annual Proxy Statement is incorporated herein by reference.
The Company has a Code of Ethics which is applicable to all Directors,
officers and employees of the Company, including the Chief Executive Officer and
the Chief Financial Officer, the principal executive officer and principal
financial and accounting officer, respectively. A copy of the Code of Ethics
will be provided without charge to any person who requests it by writing to the
Company's headquarters at Bank of Oklahoma Tower, P.O. Box 2300, Tulsa, Oklahoma
74192 or telephoning the Chief Auditor at (918) 588-6000. The Company will also
make available amendments to or waivers from its Code of Ethics applicable to
Directors or executive officers, including the Chief Executive Officer and the
Chief Financial Officer, in accordance with all applicable laws and regulations.
ITEM 11 - EXECUTIVE COMPENSATION
The information set forth under the heading "Executive Compensation" in BOK
Financial's 2006 Annual Proxy Statement is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information set forth under the headings "Security Ownership of Certain
Beneficial Owners and Management" and "Election of Directors" in BOK Financial's
2006 Annual Proxy Statement is incorporated herein by reference.
The information set forth under the heading "Equity Compensation Plan
Information" in BOK Financial's 2006 Annual Proxy Statement is incorporated
herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the heading "Certain Transactions" in BOK
Financial's 2006 Annual Proxy Statement is incorporated herein by reference.
The information set forth under Note 14 of the 2005 Annual Report is
incorporated herein by reference.
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information set forth under the heading "Principal Accountant Fees and
Services" in BOK Financial's 2006 Annual Proxy Statement is incorporated herein
by reference.
17
PART IV
ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements
The following financial statements and reports are incorporated by
reference from the 2005 Annual Report:
Exhibit 13
2005 Annual Report
Description Page Number
Consolidated Selected Financial Data 1
Selected Quarterly Financial Data 13
Report of Management on Financial Statements and
Management's Report on Internal Control over Financial Reporting 36
Reports of Independent Registered Public Accounting Firm 37 - 38
Consolidated Statements of Earnings for the years ended
December 31, 2005, 2004 and 2003 39
Consolidated Balance Sheets as of December 31, 2005 and 2004 40
Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003 41
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 2005, 2004 and 2003 42 - 43
Notes to Consolidated Financial Statements 44 - 75
Annual Financial Summary - Unaudited 76 - 77
Quarterly Financial Summary - Unaudited 78 - 79
(a) (2) Financial Statement Schedules
The schedules to the consolidated financial statements required by
Regulation S-X are not required under the related instructions or are
inapplicable and are therefore omitted.
18
(a) (3) Exhibits
Exhibit Number Description of Exhibit
3.0 The Articles of Incorporation of BOK Financial, incorporated by
reference to (i) Amended and Restated Certificate of
Incorporation of BOK Financial filed with the Oklahoma Secretary
of State on May 28, 1991, filed as Exhibit 3.0 to S-1
Registration Statement No. 33-90450, and (ii) Amendment attached
as Exhibit A to Information Statement and Prospectus Supplement
filed November 20, 1991.
3.1 Bylaws of BOK Financial, incorporated by reference to Exhibit 3.1
of S-1 Registration Statement No. 33-90450.
4.0 The rights of the holders of the Common Stock and Preferred Stock
of BOK Financial are set forth in its Certificate of
Incorporation.
10.0 Purchase and Sale Agreement dated October 25, 1990, among BOK
Financial, Kaiser, and the FDIC, incorporated by reference to
Exhibit 2.0 of S-1 Registration Statement No. 33-90450.
10.1 Amendment to Purchase and Sale Agreement effective March 29,
1991, among BOK Financial, Kaiser, and the FDIC, incorporated by
reference to Exhibit 2.2 of S-1 Registration Statement No.
33-90450
10.2 Letter agreement dated April 12, 1991, among BOK Financial,
Kaiser, and the FDIC, incorporated by reference to Exhibit 2.3 of
S-1 Registration Statement No. 33-90450.
10.3 Second Amendment to Purchase and Sale Agreement effective April
15, 1991, among BOK Financial, Kaiser, and the FDIC, incorporated
by reference to Exhibit 2.4 of S-1 Registration Statement No.
33-90450.
10.4 Employment and Compensation Agreements.
10.4(a) Employment Agreement between BOK Financial and Stanley A.
Lybarger, incorporated by reference to Exhibit 10.4(a) of Form
10-K for the fiscal year ended December 31, 1991.
10.4(b) Amendment to 1991 Employment Agreement between BOK Financial
and Stanley A. Lybarger, incorporated by reference to Exhibit
10.4(b) of Form 10-K for the fiscal year ended December 31, 2001.
10.4(c) Amended and Restated Deferred Compensation Agreement (Amended
as of September 1, 2003) between Stanley A. Lybarger and BOK
Financial Corporation, incorporated by reference to Exhibit 10.4
(c) of Form 10-Q for the quarter ended September 30, 2003.
10.4 (d) 409A Deferred Compensation Agreement between Stanley A.
Lybarger and BOK Financial Corporation dated December 31, 2004,
incorporated by reference to Exhibit 10.4 (d) of Form 8-K filed
on January 5, 2005.
10.4 (e) Guaranty by George B. Kaiser in favor of Stanley A. Lybarger
dated March 7, 2005, incorporated by reference to Exhibit 10.4
(e) of Form 10-K for the fiscal year ended December 31, 2004.
19
10.4.1(a) Employee Agreement between BOK Financial and V. Burns
Hargis, incorporated by reference to Exhibit 10.4.1(a) of Form
10-K for the fiscal year ended December 31, 2002.
10.4.1(b) Amendment to Employee Agreement between BOK Financial and V.
Burns Hargis, incorporated by reference to Exhibit 10.4.1(b) of
Form 10-K for the fiscal year ended December 31, 2002.
10.4.2 Amended and Restated Deferred Compensation Agreement (Amended
as of December 1, 2003) between Steven G. Bradshaw and BOK
Financial Corporation, incorporated by reference to Exhibit
10.4.2 of Form 10-K for the fiscal year ended December 31, 2003.
10.4.2 (a) 409A Deferred Compensation Agreement between Steven G.
Bradshaw and BOK Financial Corporation dated December 31, 2004,
incorporated by reference to Exhibit 10.4.2 (a) of Form 8-K filed
on January 5, 2005.
10.4.2 (b) Employment Agreement between BOK Financial and Steven G.
Bradshaw dated September 29, 2003, incorporated by reference to
Exhibit 10.4.2 (b) of Form 10-K for the fiscal year ended
December 31, 2004.
10.4.3 Amended and Restated Deferred Compensation Agreement (Amended
as of December 1, 2003) between William Jeffrey Pickryl and BOK
Financial Corporation, incorporated by reference to Exhibit
10.4.3 of Form 10-K for the fiscal year ended December 31, 2003.
10.4.3 (a) 409A Deferred Compensation Agreement between William
Jeffrey Pickryl and BOK Financial Corporation dated December 31,
2004, incorporated by reference to Exhibit 10.4.3 (a) of Form 8-K
filed on January 5, 2005.
10.4.3 (b) Employment Agreement between BOK Financial and W. Jeffrey
Pickryl dated September 29, 2003, incorporated by reference to
Exhibit 10.4.3 (b) of Form 10-K for the fiscal year ended
December 31, 2004.
10.4.3 (c) Amendment to Employment Agreement between BOK Financial and
W. Jeffrey Pickryl dated August 30, 2004, incorporated by
reference to Exhibit 10.4.3 (c) of Form 10-K for the fiscal year
ended December 31, 2004.
10.4.3 (d) Supplemental Executive Income Agreement dated December 20,
2005 between W. Jeffrey Pickryl and BOK Financial Corporation,
incorporated by reference to Exhibit 99 (a) of Form 8-K filed on
December 22, 2005.
10.4.4 Amended and Restated Employment Agreement (Amended as of June
14, 2002) among First National Bank of Park Cities, BOK Financial
Corporation and C. Fred Ball, Jr., incorporated by reference to
Exhibit 10.4.4 of Form 10-K for the fiscal year ended December
31, 2003.
10.4.5 409A Deferred Compensation Agreement between Daniel H. Ellinor
and BOK Financial Corporation dated December 31, 2004,
incorporated by reference to Exhibit 10.4.5 of Form 8-K filed on
January 5, 2005.
10.4.5 (a) Employment Agreement between BOK Financial and Dan H.
Ellinor dated August 29, 2003, incorporated by reference to
Exhibit 10.4.5 (a) of Form 10-K for the fiscal year ended
December 31, 2004.
20
10.4.5 (b) Deferred Compensation Agreement dated November 28, 2003
between Daniel H. Ellinor and BOK Financial Corporation,
incorporated by reference to Exhibit 10.4.5 (b) of Form 10-K for
the fiscal year ended December 31, 2004.
10.4.6 409A Deferred Compensation Agreement between Mark W. Funke and
BOK Financial Corporation dated December 31, 2004, incorporated
by reference to Exhibit 10.4.6 of Form 8-K filed on January 5,
2005.
10.4.6 (a) Amended and Restated Deferred Compensation Agreement
(Amended as of December 1, 2003) between Mark W. Funke and BOK
Financial Corporation, incorporated by reference to Exhibit
10.4.6 (a) of Form 10-K for the fiscal year ended December 31,
2004.
10.4.7 409A Deferred Compensation Agreement between Steven E. Nell and
BOK Financial Corporation dated December 31, 2004, incorporated
by reference to Exhibit 10.4.7 of Form 8-K filed on January 5,
2005.
10.4.7 (a) Amended and Restated Deferred Compensation Agreement
(Amended as of December 1, 2003) between Steven E. Nell and BOK
Financial Corporation, incorporated by reference to Exhibit
10.4.7 (a) of Form 10-K for the fiscal year ended December 31,
2004.
10.4.8 Employment Agreement dated August 1, 2005 between BOK Financial
Corporation and Donald T. Parker, incorporated by reference to
Exhibit 99 (a) of Form 8-K filed on February 1, 2006.
10.5 Director indemnification agreement dated June 30, 1987, between
BOk and Kaiser, incorporated by reference to Exhibit 10.5 of S-1
Registration Statement No. 33-90450. Substantially similar
director indemnification agreements were executed between BOk and
the following:
Date of Agreement
James E. Barnes June 30, 1987
William H. Bell June 30, 1987
James S. Boese June 30, 1987
Dennis L. Brand June 30, 1987
Chester E. Cadieux June 30, 1987
William B. Cleary June 30, 1987
Glenn A. Cox June 30, 1987
William E. Durrett June 30, 1987
Leonard J. Eaton, Jr. June 30, 1987
William B. Fader December 5, 1990
Gregory J. Flanagan June 30, 1987
Jerry L. Goodman June 30, 1987
David A. Hentschel July 7, 1987
Philip N. Hughes July 8, 1987
Thomas J. Hughes, III June 30, 1987
William G. Kerr June 30, 1987
Philip C. Lauinger, Jr. June 30, 1987
Stanley A. Lybarger December 5, 1990
Patricia McGee Maino June 30, 1987
Robert L. Parker, Sr. June 30, 1987
James A. Robinson June 30, 1987
William P. Sweich June 30, 1987
21
10.6 Capitalization and Stock Purchase Agreement dated May 20, 1991,
between BOK Financial and Kaiser, incorporated by reference to
Exhibit 10.6 of S-1 Registration Statement No. 33-90450.
10.7.3 BOK Financial Corporation 1994 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
33-79834.
10.7.4 BOK Financial Corporation 1994 Stock Option Plan (Typographical
Error Corrected January 16, 1995), incorporated by reference to
Exhibit 10.7.4 of Form 10-K for the fiscal year ended December
31, 1994.
10.7.5 BOK Financial Corporation 1997 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
333-32649.
10.7.6 BOK Financial Corporation 2000 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
333-93957.
10.7.7 BOK Financial Corporation 2001 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
333-62578.
10.7.8 BOK Financial Corporation Directors' Stock Compensation Plan,
incorporated by reference to Exhibit 4.0 of S-8 Registration
Statement No. 33-79836.
10.7.9 Bank of Oklahoma Thrift Plan (Amended and Restated Effective as
of January 1, 1995), incorporated by reference to Exhibit 10.7.6
of Form 10-K for the year ended December 31, 1994.
10.7.10 Trust Agreement for the Bank of Oklahoma Thrift Plan (December
30, 1994), incorporated by reference to Exhibit 10.7.7 of Form
10-K for the year ended December 31, 1994.
10.7.11 BOK Financial Corporation 2003 Stock Option Plan, incorporated
by reference to Exhibit 4.0 of S-8 Registration Statement No.
333-106531.
10.7.12 BOK Financial Corporation 2003 Executive Incentive Plan,
incorporated by reference to Exhibit 4.0 of S-8 Registration
Statement No. 333-106530.
10.8 Lease Agreement between One Williams Center Co. and National Bank
of Tulsa (predecessor to BOk) dated June 18, 1974, incorporated
by reference to Exhibit 10.9 of S-1 Registration Statement No.
33-90450.
10.9 Lease Agreement between Security Capital Real Estate Fund and BOk
dated January 1, 1988, incorporated by reference to Exhibit 10.10
of S-1 Registration Statement No. 33-90450.
10.10Asset Purchase Agreement (OREO and other assets) between BOk and
Phi-Lea-Em Corporation dated April 30, 1991, incorporated by
reference to Exhibit 10.11 of S-1 Registration Statement No.
33-90450.
10.11Asset Purchase Agreement (Tanker Assets) between BOk and Green
River Exploration Company dated April 30, 1991, incorporated by
reference to Exhibit 10.12 of S-1 Registration Statement No.
33-90450.
22
10.12Asset Purchase Agreement (Recovery Rights) between BOk and
Kaiser dated April 30, 1991, incorporated by reference to Exhibit
10.13 of S-1 Registration Statement No. 33-90450.
10.13Purchase and Assumption Agreement dated August 7, 1992 among
First Gibraltar Bank, FSB, Fourth Financial Corporation and BOk,
as amended, incorporated by reference to Exhibit 10.14 of Form
10-K for the fiscal year ended December 31, 1992.
10.13.1 Allocation Agreement dated August 7, 1992 between BOk and
Fourth Financial Corporation, incorporated by reference to
Exhibit 10.14.1 of Form 10-K for the fiscal year ended December
31, 1992.
10.14Merger Agreement among BOK Financial, BOKF Merger Corporation
Number Two, Brookside Bancshares, Inc., The Shareholders of
Brookside Bancshares, Inc. and Brookside State Bank dated
December 22, 1992, as amended, incorporated by reference to
Exhibit 10.15 of Form 10-K for the fiscal year ended December 31,
1992.
10.14.1 Agreement to Merge between BOk and Brookside State Bank dated
January 27, 1993, incorporated by reference to Exhibit 10.15.1 of
Form 10-K for the fiscal year ended December 31, 1992.
10.15Merger Agreement among BOK Financial, BOKF Merger Corporation
Number Three, Sand Springs Bancshares, Inc., The Shareholders of
Sand Springs Bancshares, Inc. and Sand Springs State Bank dated
December 22, 1992, as amended, incorporated by reference to
Exhibit 10.16 of Form 10-K for the fiscal year ended December 31,
1992.
10.15.1 Agreement to Merge between BOk and Sand Springs State Bank
dated January 27, 1993, incorporated by reference to Exhibit
10.16.1 of Form 10-K for the fiscal year ended December 31, 1992.
10.16Partnership Agreement between Kaiser-Francis Oil Company and BOK
Financial dated December 1, 1992, incorporated by reference to
Exhibit 10.16 of Form 10-K for the fiscal year ended December 31,
1993.
10.16.1 Amendment to Partnership Agreement between Kaiser-Francis Oil
Company and BOK Financial dated May 17, 1993, incorporated by
reference to Exhibit 10.16.1 of Form 10-K for the fiscal year
ended December 31, 1993.
10.17Purchase and Assumption Agreement between BOk and FDIC, Receiver
of Heartland Federal Savings and Loan Association dated October
9, 1993, incorporated by reference to Exhibit 10.17 of Form 10-K
for the fiscal year ended December 31, 1993.
10.18Merger Agreement among BOk, Plaza National Bank and The
Shareholders of Plaza National Bank dated December 20, 1993,
incorporated by reference to Exhibit 10.18 of Form 10-K for the
fiscal year ended December 31, 1993.
10.18.1 Amendment to Merger Agreement among BOk, Plaza National Bank
and The Shareholders of Plaza National Bank dated January 14,
1994, incorporated by reference to Exhibit 10.18.1 of Form 10-K
for the fiscal year ended December 31, 1993.
23
10.19Stock Purchase Agreement between Texas Commerce Bank, National
Association and BOk dated March 11, 1994, incorporated by
reference to Exhibit 10.19 of Form 10-K for the fiscal year ended
December 31, 1993.
10.20Merger Agreement among BOK Financial Corporation, BOKF Merger
Corporation Number Four, Citizens Holding Company and others
dated May 11, 1994, incorporated by reference to Exhibit 10.20 of
Form 10-K for the fiscal year ended December 31, 1994.
10.21Stock Purchase and Merger Agreement among Northwest Bank of
Enid, BOk and The Shareholders of Northwest Bank of Enid
effective as of May 16, 1994, incorporated by reference to
Exhibit 10.21 of Form 10-K for the fiscal year ended December 31,
1994.
10.22Agreement and Plan of Merger among BOK Financial Corporation,
BOKF Merger Corporation Number Five and Park Cities Bancshares,
Inc. dated October 3, 1996, incorporated by reference to Exhibit
C of S-4 Registration Statement No. 333-16337.
10.23Agreement and Plan of Merger among BOK Financial Corporation and
First TexCorp., Inc. dated December 18, 1996, incorporated by
reference to Exhibit 10.24 of S-4 Registration Statement No.
333-16337.
10.24Purchase and Assumption Agreement between Bank of America
National Trust and Savings Association and BOK Financial
Corporation dated July 27, 1998.
10.25Merger Agreement among BOK Financial Corporation, BOKF Merger
Corporation No. Seven, First Bancshares of Muskogee, Inc., First
National Bank and Trust Company of Muskogee, and Certain
Shareholders of First Bancshares of Muskogee, Inc. dated December
30, 1998.
10.26Merger Agreement among BOK Financial Corporation, BOKF Merger
Corporation Number Nine, and Chaparral Bancshares, Inc. dated
February 19, 1999.
10.27Merger Agreement among BOK Financial Corporation, Park Cities
Bancshares, Inc., Mid-Cities Bancshares, Inc. and Mid-Cities
National Bank dated February 24, 1999.
10.28Merger Agreement among BOK Financial Corporation, Park Cities
Bancshares, Inc., PC Interim State Bank, Swiss Avenue State Bank
and Certain Shareholders of Swiss Avenue State Bank dated March
4, 1999.
10.29Merger Agreement among BOK Financial Corporation, Park Cities
Bancshares, Inc. and CNBT Bancshares, Inc. dated August 18, 2000,
incorporated by reference to Exhibit 10.29 of Form 10-K for the
fiscal year ended December 31, 2000.
10.30Merger Agreement among BOK Financial Corporation, Bank of
Tanglewood, N.A. and TW Interim Bank dated October 25, 2002,
incorporated by reference to Exhibit 2.0 of S-4 Registration
Statement No. 333-98685.
24
10.31Remote Outsourcing Services Agreement between Bank of Oklahoma,
N.A. and Alltel Information Services, Inc., dated September 1,
2002, incorporated by reference to Exhibit 10.30 of the September
30, 2002 10-Q filed on November 13, 2002.
10.32Merger Agreement among BOK Financial Corporation, BOKF Merger
Corporation Number Eleven, Colorado Funding Company, Colorado
State Bank and Trust and Certain Shareholders of Colorado Funding
Company dated July 8, 2003, incorporated by reference to Exhibit
10.32 of Form 10-K for the fiscal year ended December 31, 2003.
10.33Merger Agreement between BOK Financial Corporation, BOKF Merger
Corporation Number Eight, Valley Commerce Bank, and Valley
Commerce Bancorp, Ltd. dated December 20, 2004, incorporated by
reference to Exhibit 10.1 of the Form 8-K filed on December 22,
2004.
13.0 Annual Report to Shareholders for the fiscal year ended December
31, 2005. Such report, except for those portions thereof which
are expressly incorporated by reference in this filing, is
furnished for the information of the Commission and is not deemed
to be "filed" as part of this Annual Report on Form 10-K.
21.0 Subsidiaries of BOK Financial, filed herewith.
23.0 Consent of independent registered public accounting firm - Ernst
& Young LLP, filed herewith.
31.1 Certification of Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2 Certification of Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002, filed herewith.
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
99.0 Additional Exhibits.
99 (a) Credit Agreement dated December 2, 2005 between BOK Financial
Corporation and participating lenders, incorporated by reference
to Exhibit 99 (a) of Form 8-K filed December 6, 2005.
99.1 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-44121 for Bank of Oklahoma Master Thrift Plan
and Trust, incorporated by reference to Exhibit 99.1 of Form 10-K
for the fiscal year ended December 31, 1993.
99.5 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-79834 for BOK Financial Corporation 1994 Stock
Option Plan, incorporated by reference to Exhibit 99.5 of Form
10-K for the fiscal year ended December 31, 1994.
25
99.6 Undertakings incorporated by reference into S-8 Registration
Statement No. 33-79836 for BOK Financial Corporation Directors'
Stock Compensation Plan, incorporated by reference to Exhibit
99.6 of Form 10-K for the fiscal year ended December 31, 1994.
99.7 Undertakings incorporated by reference into S-8 Registration
Statement No. 333-32649 for BOK Financial Corporation 1997 Stock
Option Plan, Incorporated by reference to Exhibit 99.7 of Form
10-K for the fiscal year ended December 31, 1997.
99.8 Undertakings incorporated by reference into S-8 Registration
Statement No. 333-93957 for BOK Financial Corporation 2000 Stock
Option Plan, Incorporated by reference to Exhibit 99.8 of Form
10-K for the fiscal year ended December 31, 1999.
99.9 Undertakings incorporated by reference into S-8 Registration
Statement No. 333-40280 for BOK Financial Corporation Thrift Plan
for Hourly Employees, Incorporated by reference to Exhibit 99.9
of Form 10-K for the fiscal year ended December 31, 2000.
(b) Exhibits
See Item 15 (a) (3) above.
(c) Financial Statement Schedules
See Item 15 (a) (2) above.
26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
DATE: March 15, 2006 BY: /s/ George B. Kaiser
------------------------------ -------------------------------------
George B. Kaiser
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 15, 2006, by the following persons on behalf of
the registrant and in the capacities indicated.
OFFICERS
/s/ George B. Kaiser /s/ Stanley A. Lybarger
- ------------------------------------- -------------------------------------
George B. Kaiser Stanley A. Lybarger
Chairman of the Board of Directors Director, President and Chief
Executive Officer
/s/ Steven E. Nell /s/ John C. Morrow
- ------------------------------------- -------------------------------------
Steven E. Nell John C. Morrow
Executive Vice President and Senior Vice President and Director of
Chief Financial Officer Financial Accounting and Reporting
DIRECTORS
/s/ Gregory S. Allen /s/ V. Burns Hargis
- ------------------------------------- -------------------------------------
Gregory S. Allen V. Burns Hargis
/s/ C. F. Ball, Jr. /s/ E. Carey Joullian, IV
- ------------------------------------- -------------------------------------
C. Fred Ball, Jr. E. Carey Joullian, IV
/s/ Sharon J. Bell /s/ Judith Z. Kishner
- ------------------------------------- -------------------------------------
Sharon J. Bell Judith Z. Kishner
/s/ David L. Kyle
- ------------------------------------- -------------------------------------
Peter C. Boylan, III David L. Kyle
/s/ Chester Cadieux, III /s/ Robert J. LaFortune
- ------------------------------------- -------------------------------------
Chester Cadieux, III Robert J. LaFortune
/s/ Joseph E. Cappy /s/ Steven J. Malcolm
- ------------------------------------- -------------------------------------
Joseph E. Cappy Steven J. Malcolm
/s/ Paula Marshall-Chapman
- ------------------------------------- -------------------------------------
William E. Durrett Paula Marshall-Chapman
/s/ Robert G. Greer /s/ James A. Robinson
- ------------------------------------- -------------------------------------
Robert G. Greer James A. Robinson
/s/ David F. Griffin
- -------------------------------------
David F. Griffin