As filed with the Securities and Exchange Commission on August 16, 1999
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1999
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 ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 47,564,201 shares of
common stock ($.00006 par value) as of July 31, 1999.
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2
BOK Financial Corporation
Form 10-Q
Quarter Ended June 30, 1999
Index
Part I. Financial Information
Management's Discussion and Analysis 2
Report of Management on Consolidated
Financial Statements 15
Consolidated Statements of Earnings 16
Consolidated Balance Sheets 17
Consolidated Statements of Changes
in Shareholders' Equity 18
Consolidated Statements of Cash Flows 19
Notes to Consolidated Financial Statements 20
Financial Summaries - Unaudited 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 $22.1 million
or $0.41 per diluted common share for the second quarter of 1999 compared to
$21.6 million or $0.40 per diluted common share for the second quarter of 1998.
Returns on average assets were 1.20% for the second quarter of 1999 compared to
1.53% for the second quarter of 1998. Returns on average equity were 16.27% and
18.40% for the second quarter of 1999 and 1998, respectively.
Net interest revenue for the second quarter of 1999 increased by $10.1 million
or 22% while fees and commissions revenue grew by $4.6 million or 11%. This
revenue growth was largely offset by a $15.5 million or 28% increase in
operating expenses, which included non-recurring charges of $1.3 million related
to acquisitions and a $1.4 million increase in amortization of intangible
assets.
Year to date net income and earnings per diluted common share were $43.3 million
or $0.80, respectively for 1999 compared to $39.2 million or $0.72,
respectively, for the same period in 1998. Returns on average assets and equity
were 1.21% and 16.21%, respectively, for 1999 compared to returns on average
assets and equity of 1.38% and 16.97%, respectively, for 1998.
BOK Financial completed the previously announced merger with First Muskogee
Bancshares, Inc. and its wholly-owned subsidiary, First National Bank and Trust
Company of Muskogee, during the second quarter of 1999 in a transaction that was
accounted for as a pooling of interests. Financial data for all prior periods
have been restated to reflect this merger. Additionally, BOK Financial completed
the previously announced acquisitions of Chaparral Bancshares, Inc. and its
wholly owned subsidiary, Canyon Creek National Bank; Mid-Cities Bancshares, Inc.
and its wholly-owned subsidiary, Mid-Cities National Bank; and Swiss Avenue
State Bank. These three acquisitions were accounted for by the purchase method
of accounting. These transactions increased BOK Financial's total assets by $713
million.
3
Tangible Operating Results
Since inception, BOK Financial has completed several acquisitions that were
accounted for under the purchase method of accounting. The purchase method
results in the recording of goodwill and other identifiable intangible assets
that are amortized as non-cash charges in future years into operating expense.
Operating results excluding the impact of the amortization of these intangible
assets are summarized below:
------------------------------------------------- -------------------------------- --------------------
TABLE 1 - TANGIBLE OPERATING RESULTS
(Dollars in Thousands Except Share Data) -------------------------------- --------------------
Three months ended Six months ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
------------- ------------ ------------ -------------
Net income $ 22,056 $ 21,649 $ 43,293 $ 39,249
After-tax impact of amortization of
intangible assets 3,310 2,079 6,199 4,187
------------------------------------------------- ------------- ------------ ------------ -------------
Tangible net income $ 25,366 $ 23,728 $ 49,492 $ 43,436
------------------------------------------------- ------------- ------------ ------------ -------------
Tangible net income per diluted share $ 0.47 $ 0.44 $ 0.91 $ 0.80
------------------------------------------------- ------------- ------------ ------------ -------------
Tangible return on average shareholders' equity 18.71% 20.17% 18.53% 18.78%
------------------------------------------------- ------------- ------------ ------------ -------------
Tangible return on average assets 1.38% 1.67% 1.39% 1.53%
------------------------------------------------- ------------- ------------ ------------ -------------
Net Interest Revenue
Net interest revenue on a tax-equivalent basis was $58.8 million for the second
quarter of 1999 compared to $48.9 million for the second quarter of 1998. Net
interest revenue for the second quarter of 1998 included $1.5 million from the
recovery of foregone interest. Excluding this recovery, net interest revenue
increased $11.4 million or 24% compared to the same quarter from last year.
Average earning assets increased by $1.5 billion, including increases in average
loans of $892 million and average securities of $632 million. Interest bearing
liabilities increased $1.5 billion, primarily due to increases in borrowed funds
of $1.1 billion. Interest bearing deposits increased $443 million. As shown in
Table 2, the increase in net interest revenue was due to the growth in earning
assets, partially offset by a reduction in the yield on average earning assets.
Year to date, net interest revenue on a tax-equivalent basis increased by $18.0
million compared to 1998. Excluding the non-recurring collection of foregone
interest in 1998, this represented a 21% increase in net interest revenue due to
growth in earning assets.
4
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TABLE 2 - VOLUME/RATE ANALYSIS
(In thousands)
Three months ended Six months ended
June 30, 1999/1998 June 30, 1999/1998
---------------------------------------------------------------------------
Change Due To (1) Change Due To (1)
------------------------ ------------------------
Yield Yield
Change Volume /Rate Change Volume /Rate
---------------------------------------------------------------------------
Tax-equivalent interest revenue:
Securities $ 8,421 $ 9,395 $ (974) $ 12,257 $ 14,162 $ (1,905)
Trading securities 550 409 141 1,083 975 108
Loans 13,591 18,735 (5,144) 23,572 33,532 (9,960)
Funds sold (195) (110) (85) (551) (351) (200)
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Total 22,367 28,429 (6,062) 36,361 48,318 (11,957)
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Interest expense:
Interest bearing transaction deposits 1,563 3,193 (1,630) 3,014 5,393 (2,379)
Savings deposits (267) 54 (321) (485) 97 (582)
Time deposits (2,459) (105) (2,354) (4,482) 70 (4,552)
Other borrowings 12,348 14,519 (2,171) 19,152 23,484 (4,332)
Subordinated debenture (211) (2) (209) (256) (25) (231)
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Total 10,974 17,659 (6,685) 16,943 29,019 (12,076)
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Tax-equivalent net interest revenue
before nonrecurring foregone interest 11,393 10,770 623 19,418 19,299 119
Non-recurring foregone interest (1,468) (1,468)
Change in tax-equivalent adjustment (145) (177)
- ----------------------------------------------------------------------------------------------------------------------
Net interest revenue $ 10,070 $ 18,127
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(1) Changes attributable to both volume and yield are allocated to both volume
and yield/rate on an equal basis.
Net interest margin, the ratio of net interest revenue to average earning
assets, was 3.60% for the second quarter of 1999 compared to 3.79% for the
second quarter of 1998 and 3.58% for the first quarter of 1999. The decrease in
net interest margin compared to the second quarter of 1998 is due to a 63 basis
point decrease in loan yields.
Since inception, BOK Financial has followed a strategy of fully utilizing its
capital resources by borrowing funds in the capital markets to supplement
deposit growth in order to fund increased investments in securities. Although
this strategy frequently results in a net interest margin that falls below those
normally seen in the commercial banking industry, it provides positive net
interest revenue. Management estimates that for the second quarter of 1999, this
strategy resulted in a 65 basis point decrease in net interest margin. However,
this strategy contributed $3.8 million to net interest revenue. As more fully
discussed in the Market Risk section, management employs various techniques to
control, within established parameters, the interest rate and liquidity risk
inherent in this strategy.
Other Operating Revenue
Other operating revenue increased $4.5 million or 10% compared to the same
quarter of 1998. Total fees and commissions, which are included in other
operating revenue, increased $4.6 million or 11%. Transaction card revenue
increased $2.0 million or 33% over the same quarter of 1998 due to a greater
volume of transactions processed. Service charges on deposits increased $2.2
million or 28%, including $880 thousand due to acquisitions. Leasing revenue
decreased $1.0 million due to the sale of BOK Financial's interests in four
leasing partnerships during the second quarter. The decreased revenue from the
sale of these partnerships is substantially offset by a reduction in
depreciation expense of the leased equipment and the opportunity to reinvest the
$29 million sales proceeds. These sales resulted in a $3.6 million gain during
the quarter. Brokerage and trading revenue decreased due to a loss of
approximately $519 thousand on a municipal bond trading position.
5
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TABLE 3 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
-------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
-------------------------------------------------------------------
Brokerage and trading revenue $ 3,779 $ 4,436 $ 4,010 $ 4,109 $ 4,051
Transaction card revenue 7,986 7,597 6,360 6,516 6,010
Trust fees and commissions 8,874 7,769 7,655 7,755 7,658
Service charges and fees
on deposit accounts 10,073 9,453 9,553 8,439 7,889
Mortgage banking revenue 9,877 9,292 10,543 10,929 10,940
Leasing revenue 817 1,868 1,897 1,749 1,804
Other revenue 4,659 5,085 2,399 3,366 3,128
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Total fees and commissions 46,065 45,500 42,417 42,863 41,480
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Gain on student loan sales 16 529 - 14 119
Gain on loan securitization - 270 - - -
Gain on sale of other assets 3,638 892 - - -
Gain (loss) on securities (288) 274 2,967 538 3,320
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Total other operating revenue $ 49,431 $ 47,465 $ 45,384 $ 43,415 $ 44,919
- ---------------------------------------------------------------------------------------------------
Year to date, other operating revenue increased $10.7 million or 12% compared to
1998. Total fees and commissions increased $12.7 million or 16% due primarily to
increases in transaction card revenue and service charges on deposit accounts.
Other Operating Expenses
Operating expenses for the second quarter of 1999 increased $15.5 million or 28%
compared to the same quarter of 1998. The second quarter of 1999 included
operating expenses of $9.3 million for acquisitions after the second quarter of
1998. The discussion following Table 4 of other operating expenses excludes
these charges for 1999 to improve comparability.
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TABLE 4 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
----------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
----------------------------------------------------------
Personnel $ 34,047 $ 31,902 $ 30,346 $ 26,914 $ 26,634
Business promotion 2,410 2,498 2,663 1,900 1,716
Professional fees/services 2,780 1,901 3,165 2,652 2,338
Net occupancy, equipment
and data processing 13,657 13,108 12,640 10,763 10,759
FDIC and other insurance 369 326 362 297 375
Printing, postage and supplies 3,019 2,816 2,748 2,349 2,299
Net gains and operating
expenses on repossessed assets (132) (1,296) (89) (18) (314)
Amortization of intangible
assets 3,667 3,248 2,565 2,304 2,308
Mortgage banking costs 6,787 5,304 7,262 6,374 6,290
Provision for impairment of
mortgage servicing rights - - (4,290) - (1,000)
Other expense 4,074 5,021 4,927 4,636 3,781
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Total $ 70,678 $ 64,828 $ 62,299 $ 58,171 $ 55,186
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6
Total personnel costs increased $7.4 million, including $4.4 million due to
acquisitions. The remaining increase of $3.0 million was due to increased
staffing and normal compensation increases. Staffing on a full-time equivalent
("FTE") basis increased by 468 employees including 255 due to acquisitions.
Average compensation per FTE increased by 5%. Incentive compensation which
varies directly with revenue increased $1.6 million in total, including $1.7
million due to acquisitions. Occupancy, equipment and data processing costs
increased $1.6 million or 15%, due primarily to an increase in data processing
costs. A significant portion of BOK Financial's data processing is outsourced to
third parties. Therefore, data processing costs are directly related to the
volume of transactions processed.
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TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS
(In thousands)
Three Months Ended
--------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
-------------------------------------------------------
Total other operating expense $ 70,678 $ 64,828 $ 62,299 $ 58,171 $ 55,186
Acquisition expenses (1,266) - (1,508) - -
Provision for impairment of mortgage
Servicing rights - - 4,290 - 1,000
Net gains and operating costs from
repossessed assets 132 1,296 89 18 314
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Total $ 69,544 $ 66,124 $ 65,170 $ 58,189 $ 56,500
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Operating expenses through June 30, 1999 were $22 million or 19% higher than
operating expenses for the first six months of 1998. Excluding significant or
non-recurring items and the effect of acquisitions, operating expenses increased
$11.0 million or 10% due primarily to higher personnel costs and data processing
expenses.
LINES OF BUSINESS
BOK Financial operates four principal lines of business, corporate banking,
consumer banking, mortgage banking and trust services. Other lines of business
include the TransFund ATM system, BOSC, Inc. and banks located outside of
Oklahoma.
Corporate Banking
Corporate banking contributed $11.9 million or 54% of consolidated net income
for the second quarter of 1999 compared to $8.7 million or 40% of consolidated
net income for the second quarter of 1998. Revenue increased 23% due to
increased loan volumes while operating expenses increased by $687 thousand.
Table 6 Corporate Banking
(In Thousands)
Three months ended June 30, Six months ended June 30,
------------------------------ ---------------------------
1999 1998 1999 1998
------------- -- ------------- ---------------------------
Total revenue $ 30,869 $ 25,002 $ 57,344 $ 48,046
Operating expense 11,322 10,635 21,094 21,047
Net income 11,917 8,730 22,077 16,404
Average assets $ 2,903,180 $ 2,238,663 $ 2,839,597 $ 2,220,869
Average equity 310,012 250,188 301,806 248,628
Return on assets 1.65% 1.56% 1.57% 1.49%
Return on equity 15.42 14.00 14.75 13.30
Efficiency ratio 36.68 42.54 36.79 43.81
7
Consumer Banking
Consumer banking contributed $3.0 million or 14% of consolidated net income for
the second quarter of 1999 compared to $1.9 million or 9% of consolidated net
income for the second quarter of 1998. Total revenue, which consists primarily
of intercompany credit for funds provided to other divisions of BOK Financial
and fees generated by various services, increased $916 thousand or 6% compared
to the second quarter of 1998. Operating expenses decreased $866 thousand and
for the same period.
Table 7 Consumer Banking
(In Thousands)
Three months ended June 30, Six months ended June 30,
----------------------------- ---------------------------
1999 1998 1999 1998
------------- --------------- ---------------- ----------
Total revenue $ 16,738 $ 15,822 $ 34,431 $ 32,447
Operating expense 11,818 12,684 23,793 24,942
Net income 3,006 1,877 6,499 4,547
Average assets $ 1,836,560 $ 1,929,787 $ 1,882,372 $ 1,949,283
Average equity 40,782 44,379 42,107 44,596
Return on assets 0.66% 0.39% 0.70% 0.47%
Return on equity 29.56 16.96 31.12 20.56
Efficiency ratio 70.61 80.17 69.10 76.87
Mortgage Banking
Mortgage banking contributed $309 thousand or 1% of consolidated net income for
the second quarter of 1999 compared to $2.4 million or 11% for the second
quarter of 1998. Total revenue decreased $1.9 million due primarily to a
decrease in secondary marketing gains. The decrease in marketing gains was
partially offset by an increase in servicing revenue.
Capitalized mortgage servicing rights totaled $107.0 million at June 30, 1999
compared to $92.3 million at March 31, 1999 and $69.2 million at December 31,
1998. The increase in capitalized servicing rights was due primarily to $28.9
million in hedging losses incurred since December 31, 1998. At June 30, 1999,
realized hedging losses totaled $25.3 million, net of accumulated amortization,
while unrealized losses on open hedging positions totaled $3.6 million. Both
realized and unrealized hedge losses are reflected in an increase in the
carrying value of the servicing rights.
Table 8 Mortgage Banking
(In Thousands)
Three months ended June 30, Six months ended June 30,
----------------------- ------------------------
1999 1998 1999 1998
----------- ----------- ------------------------
Total revenue $ 11,484 $ 13,341 $ 22,404 $ 24,421
Operating expense 10,980 10,389 20,241 19,890
Provision for impairment
of mortgage servicing assets - (1,000) - 2,000
Net income 309 2,414 1,322 1,546
Average assets $ 344,904 $ 387,512 $ 334,158 $ 390,948
Average equity 27,751 30,009 26,728 29,757
Return on assets 0.36% 2.50% 0.80% 0.80%
Return on equity 4.47 32.27 9.97 10.48
Efficiency ratio 95.61 77.87 90.35 81.45
8
Trust Services
Trust services contributed $2.5 million or 11% of consolidated net income for
the second quarter of 1999 compared to $1.8 million or 8% of consolidated net
income for the second quarter of 1998. Revenue from trust services increased
$1.8 million or 15% for the quarter while operating expenses increased $661
thousand or 7%.
Table 9 Trust Services
(In Thousands)
Three months ended June 30, Six months ended June 30,
--------------------------- --------------------------
1999 1998 1999 1998
------------ -------------- -------------- -----------
Total revenue $ 13,920 $ 12,099 $ 26,392 $ 22,982
Operating expense 9,827 9,166 19,707 17,739
Net income 2,500 1,792 4,084 3,203
Average assets $ 347,320 $ 318,998 $ 334,262 $ 303,425
Average equity 35,212 30,555 34,377 29,106
Return on assets 2.89% 2.25% 2.46% 2.13%
Return on equity 28.48 23.52 23.96 22.19
Efficiency ratio 70.60 75.76 74.67 77.19
YEAR 2000 CONSIDERATIONS
The Year 2000 issue, in general, is the result of computer programs being
written using two digits rather than four to define the applicable year. Any
computer programs that have date sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including among
other things, a temporary inability to process transactions or to engage in
similar normal business activities.
BOK Financial's Year 2000 efforts are under the direction of the Year 2000
Oversight Committee, comprised of various members of executive management, as
well as a Year 2000 Project Team, which includes representatives from BOK
Financial's major business units. Both groups meet on a regular basis to monitor
and discuss continuing Year 2000 developments. The Board of Directors recognizes
the importance of and supports these Year 2000 initiatives.
The Federal Financial Institution Examination Council ("FFIEC") provides
regulatory guidance on BOK Financial's and other financial institutions' Year
2000 compliance. In addition to other requirements, the FFIEC requires that
testing of mission-critical systems be substantially complete by June 30, 1999.
BOK Financial has met the FFIEC guidelines. Testing has been successfully
completed on all mission-critical information technology systems. For all
mission-critical, non-information technology systems, we have either
satisfactorily completed testing or have received written representations from
vendors as to Year 2000 compliance.
FFIEC guidelines also require financial institutions to substantially complete
the four phases of the Year 2000 business resumption contingency planning
process no later than June 30, 1999. BOK Financial's Year 2000 Project Team is
focused on preparation for the Year 2000 event. Plans have been finalized to
address certain situations that may arise as a result of internal or external
disruptions. These plans will be simulated or otherwise validated during the
third quarter of 1999. System change control policies require that new
enhancements or initiatives within the company or at our outsourced providers be
tested for Year 2000 compliance prior to introduction to our processing
environment. This policy includes severe limitations on all changes from October
1, 1999 through February 29, 2000. Finally, plans have been developed to have
key resources available throughout all high risk processing periods during
December, 1999 and January and February, 2000. Additional costs to prepare for
Year 2000 are not expected to be significant.
9
BOK Financial has also communicated with large customers to determine what
steps they have undertaken to ensure they are prepared for Year 2000. This
effort has enabled BOK Financial to adopt contingency plans related to the
possible effects of the Year 2000 issue on the credit risk of its borrowers,
cash flow disruptions of its funds providers, and its overall liquidity needs.
BOK Financial has included the potential effect of Year 2000 on the credit risk
of its borrowers in determining the adequacy of its loan loss reserve.
The foregoing forward-looking statements, including the costs of addressing the
Year 2000 issue and the dates upon which compliance will be attained, reflect
management's current assessment and estimates with respect to BOK Financial's
Year 2000 compliance effort. Various factors could cause actual plans and
results to differ materially from those contemplated by such assessments,
estimates and forward-looking statements, many of which are beyond the control
of BOK Financial. Some of these factors include, but are not limited to, third
party modification plans, availability of technological and monetary resources,
representations by vendors and counter parties, technological advances, economic
considerations and consumer perceptions. BOK Financial's Year 2000 compliance
program is an ongoing process involving continual evaluation and may be subject
to change in response to new developments.
Assessment of Financial Condition
The aggregate loan portfolio increased $445 million during the second quarter to
$4.1 billion at June 30, 1999. This increase included $148 million due to
acquisitions. Commercial loans increased $185 million or 9% and commercial real
estate loans increased $175 million or 22%, respectively. Commercial loans
increased $57 million and commercial real estate loans increased $51 million due
to acquisitions.
While BOK Financial continues to increase geographic diversification through
expansion in the Dallas, Texas and Albuquerque, New Mexico areas, geographic
concentration subjects the loan portfolio to the general economic conditions in
Oklahoma. Notable loan concentrations by the primary industry of the borrowers
are presented in Table 10. Agriculture includes loans totaling $129 million to
the cattle industry and services includes loans totaling $152 million to nursing
and medical facilities and $111 million to the hotel industry. Commercial real
estate loans are secured primarily by properties in the Tulsa or Oklahoma City
metropolitan areas. The major components of other real estate loans are office
buildings, $174 million and retail facilities, $133 million.
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TABLE 10 - LOANS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
--------------------------------------------------------------------
Commercial:
Energy $ 558,975 $ 484,810 $ 468,700 $ 361,359 $ 316,452
Manufacturing 289,879 280,155 245,268 233,913 228,042
Wholesale/retail 371,867 319,545 279,265 302,832 291,156
Agricultural 151,010 212,314 160,241 147,959 138,139
Services 757,012 647,963 635,585 552,902 516,066
Other commercial and industrial 190,668 189,752 200,214 128,760 140,054
Commercial real estate:
Construction and land development 246,948 203,968 174,059 151,396 141,072
Multifamily 240,906 191,173 181,525 153,304 119,035
Other real estate loans 495,304 412,798 404,985 350,188 321,497
Residential mortgage:
Secured by 1-4 family
residential properties 520,061 482,990 500,690 460,945 408,328
Residential mortgages held for 79,994 81,277 100,269 82,886 99,935
sale
Consumer 224,493 175,217 296,298 240,761 255,309
- ---------------------------------------------------------------------------------------------------------
Total $4,127,117 $ 3,681,962 $3,647,099 $3,167,205 $2,975,085
- ---------------------------------------------------------------------------------------------------------
10
SUMMARY OF LOAN LOSS EXPERIENCE
The reserve for loans losses, which is available to absorb losses inherent in
the loan portfolio, totaled $73 million at June 30, 1999, $69 million at March
31, 1999 and $66 million at December 31, 1998. This represents 1.80%, 1.92% and
1.86% of total loans, excluding loans held for sale, at June 30, 1999, March 31,
1999 and December 31, 1998, 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 11 presents statistical information regarding the reserve for
loan losses for the past five quarters.
- ------------------------------------------------------------------------------------------
TABLE 11 - SUMMARY OF LOAN LOSS EXPERIENCE
(In thousands)
Three Months Ended
--------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
--------------------------------------------------------------
Beginning balance $ 68,994 $ 65,922 $ 63,056 $ 58,676 $ 55,734
Loans charged-off:
Commercial 1,420 4 1,132 533 1,339
Commercial real estate - 35 33 50 92
Residential mortgage 37 14 54 53 31
Consumer 1,339 1,164 940 896 859
- -------------------------------------------------------------------------------------------
Total 2,796 1,217 2,159 1,532 2,321
- -------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial 1,839 133 34 796 535
Commercial real estate 4 236 516 551 170
Residential mortgage 1 - - - 80
Consumer 627 490 388 504 505
- -------------------------------------------------------------------------------------------
Total 2,471 859 938 1,851 1,290
- -------------------------------------------------------------------------------------------
Net loans charged-off (recoveries) 325 358 1,221 (319) 1,031
Provision for loan losses 2,538 3,430 4,087 4,061 3,973
Additions due to acquisitions 1,525 - - - -
- -------------------------------------------------------------------------------------------
Ending balance $ 72,732 $ 68,994 $ 65,922 $ 63,056 $ 58,676
- -------------------------------------------------------------------------------------------
Reserve to loans outstanding
at period-end(1) 1.80% 1.92% 1.86% 2.04% 2.04%
Net loan losses (annualized)
to average loans (1) 0.03 0.04 0.15 (0.04) 0.15
- -------------------------------------------------------------------------------------------
(1) Excludes residential mortgage loans held for sale which are carried at the
lower of aggregate cost or market value.
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, and includes probable losses on both outstanding loans and unused
commitments to provide financing. A consistent methodology has been developed
that includes reserves assigned to specific criticized loans, general reserves
that are based upon a statistical migration analysis for each category of loans,
and unallocated reserves that are based upon an analysis of current economic
conditions, loan concentrations, portfolio growth, and other relevant factors.
An independent Credit Administration department is responsible for performing
this evaluation for all of BOK Financial's subsidiaries to ensure that the
methodology is applied consistently.
11
All significant criticized loans are reviewed quarterly with written
documentation. Specific reserves for impairment are determined in accordance
with generally accepted accounting principles and appropriate regulatory
standards. At June 30, 1999, specific impairment reserves totaled $2.8 million.
The adequacy of general loan loss reserves 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 loan losses in the more recent periods. This model is
used to assign general loan loss reserves to commercial loans and leases,
residential mortgage loans and consumer loans. All loans, 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 allowance for loan losses is maintained for risks beyond those
factors specific to a particular loan or those identified by the migration
analysis. These factors include trends in general economic conditions in BOK
Financial's primary lending areas, duration of the business cycle, specific
conditions in industries where BOK Financial has a concentration of loans,
overall growth in the loan portfolio, bank regulatory examination results, error
potential in either the migration analysis model or in the underlying data, and
other relevant factors. A range of potential losses is then determined for each
factor identified. At June 30, 1999, the loss potential ranges for the more
significant factors are:
Concentration of large loans - $2.1 million to $4.2 million
Loan portfolio growth and expansion into new markets - $1.7 million to $3.4
million
A provision for loan losses is charged against earnings in amounts necessary to
maintain an adequate allowance for loan losses. These provisions were $2.5
million for the second quarter of 1999 compared to $3.4 million for the first
quarter of 1999 and $4.0 million for the second quarter of 1998.
NON-PERFORMING ASSETS
Information regarding non-performing assets, which were $25 million at June 30,
1999, $21 million at March 31, 1999 and $19 million at December 31, 1998 is
presented in Table 12. Non-performing loans include non-accrual loans and
renegotiated loans.
- ---------------------------------------------------------------------------------------------------------------------
TABLE 12 - NONPERFORMING ASSETS
(In thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
----------------------------------------------------------------------
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
Commercial $ 13,754 $ 9,712 $ 8,394 $ 8,439 $ 9,054
Commercial real estate 2,824 2,726 1,950 2,379 2,787
Residential mortgage 699 2,097 2,583 3,097 2,674
Consumer 3,198 1,410 1,168 1,127 1,196
- ---------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 20,475 15,945 14,095 15,042 15,711
Renegotiated loans - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 20,475 15,945 14,095 15,042 15,711
Other nonperforming assets 4,450 4,927 4,667 4,400 5,664
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 24,925 $ 20,872 $ 18,762 $ 19,442 $ 21,375
- ---------------------------------------------------------------------------------------------------------------------
Ratios:
Reserve for loan losses to
Nonperforming loans 355.22% 432.70% 467.70% 419.20% 373.47%
Nonperforming loans to
Period-end loans (2) 0.51 0.44 0.40 0.49 0.55
- ---------------------------------------------------------------------------------------------------------------------
Loans past due (90 days) (1) $ 11,082 $ 13,037 $ 9,553 $ 15,714 $ 21,684
- ---------------------------------------------------------------------------------------------------------------------
(1) Includes residential mortgages guaranteed
by agencies of the U.S. Government $ 7,958 $ 7,674 $ 8,122 $ 8,449 $ 7,569
Excludes residential mortgages guaranteed
by agencies of the U.S. Government in
foreclosure. 7,487 7,099 6,953 9,742 9,818
(2) Excludes residential mortgage loans held for sale
- ---------------------------------------------------------------------------------------------------------------------
12
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
Non-performing Assets totals. These loans are assigned to various risk
categories in order to focus management's attention on the loans with higher
risk of loss. At June 30, 1999, loans totaling $79 million were assigned by
management to the substandard risk category and loans totaling $54 million were
assigned to the special mention risk category, compared to $71 million and $25
million, respectively, at March 31, 1999. The increase in loans classified as
special mention included $15 million from one energy lending relationship and $7
million from the banks acquired during the quarter.
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 both 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, do not pose a material market
risk to BOK Financial. The responsibility for managing market risk rests with
the Asset/Liability Committee which operates under policy guidelines 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 generally limited by these guidelines to +/- 10%.
These guidelines also establish maximum levels for short-term borrowings,
short-term assets, and public and brokered deposits, and establish minimum
levels for unpledged assets, among other things.
Compliance with these guidelines is reviewed monthly.
Interest Rate Risk Management (Other than Trading)
BOK Financial performs a sensitivity analysis to identify more dynamic interest
rate risk exposures, including embedded option positions, on net interest
revenue, net income and economic value of equity. A simulation model is used to
estimate the effect of changes in interest rates over the next twelve months
based on three interest rate scenarios. These are a "most likely" rate scenario
and 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,
the 30-year mortgage rate which directly affects the prepayment speeds for
mortgage-backed securities and mortgage servicing rights, and the 10-year U.S.
Treasury rate which affects the value of the mortgage servicing hedges.
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, is included. The model
incorporates management's assumptions regarding the level of interest rate or
balance changes on indeterminable maturity deposits (demand deposits,
interest-bearing transaction accounts and savings accounts) for a given level of
market rate changes. The assumptions have been developed through a combination
of historical analysis and future expected pricing behavior. Interest rate swaps
on all products are included to the extent that they are effective in the
12-month simulation period. Additionally, changes in prepayment behavior of
mortgage-backed securities, residential mortgage loans and mortgage servicing in
each rate environment are captured using industry estimates of prepayment speeds
for various coupon segments of the portfolio. Finally, the impact of planned
growth and new business activities is factored into the simulation model. At
June 30, 1999 and 1998, this modeling indicated interest rate sensitivity as
follows:
13
Table 13 - Interest Rate Sensitivity
(Dollars in Thousands)
200 bp Increase 200 bp Decrease Most Likely
------------------------- --------------------------- ---------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ -------------- ------------ --------
Anticipated impact over the next twelve months:
Net interest revenue $ (2,061) $ 3,869 $ 1,647 $ (4,932) $(1,136) $ 782
(0.8)% 1.9% 0.6% (2.5)% (0.4)% (0.4)%
- ------------------------------------------ ------------ --- ----------- -------------- -- ----------- ---------
Net income $(1,278) $ 5,174 $ 1,021 $(24,704) $ (704) $ 514
(1.4)% 6.3% 1.1% (30.2)% (0.7)% (0.6)%
- ------------------------------------------ ------------ --- ----------- -------------- -- ----------- ---------
Economic value of equity $(68,450) $(3,663) $ 38,587 $ 2,704 $ 1,869 $ 2,970
(7.2)% (0.5)% 4.0% 0.4% 0.2% 0.4%
- ------------------------------------------ ------------ --- ----------- -------------- -- ------------ --------
The estimated changes in interest rates on net interest revenue or net income
are not projected to be significant within the +/- 200 basis point range of
assumptions. However, this modeling indicated that under the 200 basis point
increase scenario, BOK Financial's economic value of equity would decrease by
$68.5 million due primarily to the effect of rising interest rates on the value
of the securities portfolio.
BOK Financial hedges its loss exposure from the prepayment of mortgage loans
that it services through the use of futures contracts, call options and put
options. These derivatives are based upon 10-year U.S. Treasury securities. The
changes in value of these derivatives have a highly correlated, inverse relation
to changes in value of the mortgage servicing rights. The interest rate
sensitivity of the mortgage servicing portfolio and the related hedge is modeled
over a range of +/- 50 basis points. At June 30, 1999, the pre-tax results of
this modeling are as follows:
50 bp increase 50 bp decrease
----------------- ------------------
Anticipated change in:
Mortgage servicing rights $ 4,718 $(8,357)
Hedging instruments (6,275) 6,830
================= ==================
Net $(1,557) $(1,527)
================= ==================
The simulations used to manage market risk are based on numerous assumptions
regarding the effect of changes in interest rates on the timing and extent of
repricing characteristics, future cash flows and customer behavior. These
assumptions are inherently uncertain and, as a result, the model cannot
precisely estimate net interest revenue, net income or economic value of equity
or precisely predict the impact of higher or lower interest rates on net
interest revenue, net income or economic value of equity. Actual results will
differ from simulated results due to timing, magnitude and frequency of interest
rate changes and changes in market conditions and management strategies, among
other factors.
BOK Financial uses interest rate swaps, a form of off-balance sheet derivative
product, in managing its interest rate sensitivity. These products are generally
used to more closely match interest paid on certain long-term certificates of
deposit and subordinated debt with earning assets. BOK Financial accrues and
periodically receives a fixed amount from the counterparties to these swaps and
accrues and periodically makes a variable payment to the counterparties. For the
second quarter of 1999, income from these swaps exceeded the cost of the swaps
by $222 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.
14
- --------------------------------------------------------------------------------
TABLE 14 - INTEREST
RATE SWAPS
(In thousands)
Notional Pay Receive Fair
Amount Rate Rate Value
-------------------------------------------------------------
Expiration:
2001 4,324 5.03 5.24 (1) 57
2002 7,660 6.21 5.24 (1) (22)
2003 42,081 5.14 - 5.99 5.24 (1) 1,106
2004 23,604 5.65 - 5.92 5.24 (1) 327
2005 8,289 5.08 - 5.21 4.94 (1) 416
2006 16,500 7.26 5.37 (1) (351)
2007 100,000 5.24 (1) 6.75 - 6.80 3,667
2007 14,384 5.23 - 7.47 5.24 - 5.37 (1) (141)
2008 28,706 5.20 - 5.66 5.24 (1) 1,706
2009 47,980 5.22 - 6.10 5.24 (1) 2,305
- --------------------------------------------------------------------------------
(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 will 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. 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 Overssight 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 and the VAR to $6.5 million. At June 30, 1999, the nominal
aggregate trading positions was $81 million, the VAR was $2.1 million.
15
- --------------------------------------------------------------------------------
TABLE 15 - CAPITAL RATIOS
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
---------------------------------------------------
Average shareholders' equity
to average assets 7.36% 7.62% 8.07% 8.25% 8.30%
Risk-based capital:
Tier 1 capital 7.08 8.19 7.93 9.51 9.76
Total capital 10.86 12.23 12.02 14.08 14.61
Leverage 5.86 6.32 6.60 7.25 7.17
REPORT OF MANAGEMENT ON CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the consolidated financial statements which have
been prepared in accordance with generally accepted accounting principles. In
management's opinion, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial condition, results of operations and
cash flows of BOK Financial and its subsidiaries at the dates and for the
periods presented.
The financial information included in this interim report has been prepared by
management without audit by independent public accountants and should be read in
conjunction with BOK Financial's 1998 Form 10-K to the Securities and Exchange
Commission which contains audited financial statements.
16
- ---------------------------------------------- --- ------------- --- ------------- -- ---------
Consolidated Statement of Earnings
(In Thousands Except Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ------------------------
1999 1998 1999 1998
-------- ------------ --------- --------------
Interest Revenue
Loans $ 77,116 $ 65,070 $ 149,648 $ 127,648
Taxable securities 35,841 26,888 68,784 55,811
Tax-exempt securities 3,728 4,039 7,714 8,149
- ---------------------------------------------- ---------- ---------------------- --------------
Total securities 39,569 30,927 76,498 63,960
- ---------------------------------------------- ---------- ---------------------- --------------
Trading securities 812 262 1,508 425
Funds sold 520 715 933 1,484
- ---------------------------------------------- ---------- ---------------------- --------------
Total interest revenue 118,017 96,974 228,587 193,517
- ---------------------------------------------- ---------- ---------------------- --------------
Interest Expense
Deposits 34,420 35,584 68,859 70,812
Other borrowings 24,761 12,413 46,559 27,407
Subordinated debenture 2,253 2,464 4,575 4,831
- ---------------------------------------------- ---------- ---------------------- --------------
Total interest expense 61,434 50,461 119,993 103,050
- ---------------------------------------------- ---------- ---------------------- --------------
Net Interest Revenue 56,583 46,513 108,594 90,467
Provision for Loan Losses 2,538 3,973 5,968 6,443
- ---------------------------------------------- ---------- ---------------------- --------------
Net Interest Revenue After
Provision for Loan Losses 54,045 42,540 102,626 84,024
- ---------------------------------------------- ---------- ---------------------- --------------
Other Operating Revenue
Brokerage and trading revenue 3,779 4,051 8,215 7,182
Transaction card revenue 7,986 6,010 15,583 11,550
Trust fees and commissions 8,874 7,658 16,643 14,546
Service charges and fees on deposit accounts 10,073 7,889 19,526 15,927
Mortgage banking revenue, net 9,877 10,940 19,169 20,261
Leasing revenue 817 1,804 2,685 3,465
Other revenue 4,659 3,128 9,744 5,924
- ---------------------------------------------- ---------- ---------------------- --------------
Total fees and commissions revenue 46,065 41,480 91,565 78,855
- ---------------------------------------------- ---------- ---------------------- --------------
Gain on sale of student loans 16 119 545 1,534
Gain on loan securitization - - 270 -
Gain on sale of other assets 3,638 - 4,530 -
Securities gains (losses), net (288) 3,320 (14) 5,832
- ---------------------------------------------- ---------- ---------------------- --------------
Total other operating revenue 49,431 44,919 96,896 86,221
- ---------------------------------------------- ---------- ---------------------- --------------
Other Operating Expense
Personnel 34,047 26,634 65,947 52,178
Business promotion 2,410 1,716 4,908 3,656
Contribution of stock to BOk Charitable
Foundation - - - 2,257
Professional fees and services 2,780 2,338 4,681 3,964
Net occupancy, equipment & data processing 13,657 10,759 26,765 20,116
FDIC and other insurance 369 375 695 709
Printing, postage and supplies 3,019 2,299 5,835 4,426
Net(gains) losses, and operating expenses
of repossessed assets (132) (314) (1,428) (368)
Amortization of intangible assets 3,667 2,308 6,915 4,646
Mortgage banking costs 6,787 6,290 12,091 12,313
Provision for impairment of mortgage
servicing rights - (1,000) - 2,000
Other expense 4,074 3,781 9,095 7,628
- ---------------------------------------------- ---------- ---------------------- --------------
Total Other Operating Expense 70,678 55,186 135,504 113,525
- ---------------------------------------------- ---------- ---------------------- --------------
Income Before Taxes 32,798 32,273 64,018 56,720
Federal and state income tax 10,742 10,624 20,725 17,471
- ---------------------------------------------- ---------- ---------------------- --------------
Net Income $ 22,056 $ 21,649 $ 43,293 $ 39,249
- ---------------------------------------------- ---------- ---------------------- --------------
Earnings Per Share:
Net Income
Basic $ 0.46 $ 0.45 $ 0.90 $ 0.81
- ---------------------------------------------- ---------- ---------------------- --------------
Diluted $ 0.41 $ 0.40 $ 0.80 $ 0.72
- ---------------------------------------------- ---------- ---------------------- --------------
Average Shares Used in Computation:
Basic 47,481,156 47,449,845 47,454,355 47,498,063
- --------------------------------------------------------- ----------------- -------------- ----
Diluted 54,176,263 54,231,392 54,127,379 54,257,311
- --------------------------------------------------------- ----------------- -------------- ----
See accompanying notes to consolidated financial statements.
17
- -----------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
June 30, December 31, June 30,
1999 1998 1998
------------------------------------------
ASSETS
Cash and due from banks $ 457,142 $ 431,874 $ 450,700
Funds sold 45,440 39,551 37,865
Trading securities 52,450 41,138 29,240
Securities:
Available for sale 2,634,253 2,329,375 1,919,488
Investment (fair value: June 30, 1999 - $221,649;
December 31, 1998 -$227,754;
June 30, 1998 - $222,159) 222,895 227,777 222,038
- -------------------------------------------------------------------------------------------------------
Total securities 2,857,148 2,557,152 2,141,526
- -------------------------------------------------------------------------------------------------------
Loans 4,127,117 3,647,099 2,975,085
Less reserve for loan losses 72,732 65,922 58,676
- -------------------------------------------------------------------------------------------------------
Net loans 4,054,385 3,581,177 2,916,409
- -------------------------------------------------------------------------------------------------------
Premises and equipment, net 110,707 87,721 65,634
Accrued revenue receivable 65,921 64,409 57,107
Excess cost over fair value of net assets acquired
and core deposit premiums (net of accumulated
amortization: June 30, 1999 - $56,384;
December 31, 1998 - $49,469;
June 30, 1998 - $44,600) 135,005 97,578 68,668
Mortgage servicing rights 107,011 69,224 79,545
Real estate and other repossessed assets 4,450 4,667 5,738
Other assets 102,761 85,016 87,021
- -------------------------------------------------------------------------------------------------------
Total assets $ 7,992,420 $ 7,059,507 $ 5,939,453
- -------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 1,144,211 $ 1,165,283 $ 969,927
Interest-bearing deposits:
Transaction 1,803,225 1,453,236 1,197,612
Savings 173,853 185,971 152,461
Time 1,896,578 1,803,237 1,811,013
- -------------------------------------------------------------------------------------------------------
Total deposits 5,017,867 4,607,727 4,131,013
- -------------------------------------------------------------------------------------------------------
Funds purchased and repurchase
Agreements 1,304,896 1,040,683 758,345
Other borrowings 894,017 660,347 339,417
Subordinated debenture 148,551 146,921 148,371
Accrued interest, taxes and expense 53,146 58,034 47,580
Other liabilities 44,037 21,002 32,538
- -------------------------------------------------------------------------------------------------------
Total liabilities 7,462,514 6,534,714 5,457,264
- -------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 25 25 23
Common stock ($.00006 par value; 2,500,000,000
shares authorized; shares issued and outstanding
June 30, 1999 - 47,655,870; December 31, 1998
- 48,111,647; June 30, 1998 - 47,122,329) 3 3 3
Capital surplus 237,740 236,726 214,114
Retained earnings 318,174 278,365 269,153
Notes receivable from exercise of stock options - - (4)
Treasury stock (shares at cost: June 30, 1999 - 110,441;
December 31, 1998 - 748,576; June 30, 1998 - 1,105,466) (2,580) (2,623) (9,950)
Accumulated other comprehensive income (loss) (23,456) 12,297 8,850
- -------------------------------------------------------------------------------------------------------
Total shareholders' equity 529,906 524,793 482,189
- -------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 7,992,420 $ 7,059,507 $ 5,939,453
- -------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
18
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(In Thousands)
Accumulated
Other
Preferred Stock Common Stock Comprehensive Capital Retained Treasury Stock Notes
Shares Amount Shares Amount Income(loss) Surplus Earnings Shares Amount Receivable Total
-------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1997 250,000 $ 23 47,001 $ 3 $11,669 $211,883 $232,620 881 $(4,314) $ (4) $451,880
Comprehensive income:
Net income - - - - - - 39,249 - - - 39,249
Other Comprehensive
income, net of tax:
Unrealized gains(loss)
on securities
available for sale (1) - - - - (2,819) - - - - - (2,819)
-----------
Comprehensive income 36,430
-----------
Exercise of stock options - - 76 - - 1,264 - 16 (346) - 918
Issuance of common
stock to Thrift Plan - - - - - 69 - (17) 337 - 406
Common stock dividend - - - - - - (1,966) - - - (1,966)
Preferred dividend paid
in shares of common stock - - 37 - - 750 (750) - - - -
Director retainer shares - - 8 - - 148 - - - - 148
Treasury stock purchase - - - - - - - 225 (5,627) - (5,627)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at
June 30, 1998 250,000 $ 23 47,122 $ 3 $8,850 $214,114 $269,153 1,105 $(9,950) $ (4) $482,189
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1998 250,000 $ 25 48,112 $ 3 $12,297 $236,726 $278,365 749 $(2,623) $ - $524,793
Comprehensive income:
Net income - - - - - - 43,293 - - - 43,293
Other Comprehensive
income, net of tax:
Unrealized gains(loss)
on securities available
for sale(1) - - - - (35,753) - - - - - (35,753)
-----------
Comprehensive income 7,540
-----------
Exercise of stock options - - 221 - - 1,778 - 81 (1,909) - (131)
Issuance of common
stock to Thrift Plan - - 17 - - 405 - (1) 33 - 438
Preferred dividends paid
in shares of common stock - - 25 - - 750 (750) - - - -
Common stock dividend - - - - - - (2,734) - - - (2,734)
Director retainer shares - - 6 - - 143 - - - - 143
Cancel treasury stock - - (725) - - (2,062) - (725) 2,062 - -
Treasury stock purchase - - - - - - - 6 (143) - (143)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at
June 30, 1999 250,000 $ 25 47,656 $ 3 $(23,456) $237,740 $318,174 110 $(2,580) $ - $529,906
- ------------------------------------------------------------------------------------------------------------------------------------
(1) June 30, 1999 June 30, 1998
------------- -------------
Reclassification adjustments:
Unrealized losses on available for
sale securities $ (35,763) $ 1,134
Less: reclassification adjustment
for gains realized included in net
income, net of tax (10) 3,953
--------------------------------
Net unrealized losses on securities $ (35,753) $ (2,819)
--------------------------------
See accompanying notes to consolidated financial statements.
19
- ----------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended
June 30,
----------------------------------
1999 1998
----------------------------------
Cash Flow From Operating Activities:
Net income $ 43,293 $ 39,249
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan and repossessed real estate losses 5,908 6,443
Depreciation and amortization 21,094 18,885
Provision for impairment of mortgage servicing rights - 2,000
Net amortization of security discounts and premiums 856 362
Contribution of stock to Bank of Oklahoma Foundation - 2,257
Net gain on sale of assets (11,569) (12,723)
Mortgage loans originated for resale (399,019) (467,213)
Proceeds from sale of mortgage loans held for resale 423,840 451,796
Increase in trading securities (3,264) (24,241)
(Increase) decrease in accrued revenue receivable 1,740 (4,705)
Increase in other assets (44,438) (22,923)
Increase in accrued interest, taxes and expense 16,797 7,647
Increase in other liabilities 20,497 13,976
- ------------------------------------------------------------------------------------------------
Net cash provided by operating activities 75,735 10,810
- ------------------------------------------------------------------------------------------------
Cash Flow From Investing Activities:
Proceeds from maturities of investment securities 38,395 21,146
Proceeds from maturities of available for sale securities 416,173 283,340
Purchases of investment securities (33,633) (30,922)
Purchases of available for sale securities (1,686,823) (1,261,489)
Proceeds from sales of available for sale securities 1,052,992 910,939
Loans originated or acquired net or principal collected (505,438) (154,960)
Proceeds from disposition of assets 184,199 56,589
Purchases of assets (64,183) (24,803)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net 26,019 35,793
- ------------------------------------------------------------------------------------------------
Net cash used by investing activities (568,268) (164,367)
- ------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase in demand deposits, transaction
deposits, money market deposits, and savings accounts 57,420 99,773
Net increase (decrease) in certificates of deposit (1,570) 76,506
Net increase in other borrowings 469,643 71,860
Purchase of treasury stock (143) (5,627)
Common stock dividend (2,734) (1,966)
Preferred stock dividend - (1)
Issuance of preferred, common and treasury stock, net 1,074 1,472
- ------------------------------------------------------------------------------------------------
Net cash provided by financing activities 523,690 242,017
- ------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 31,157 88,460
Cash and cash equivalents at beginning of period 471,425 400,105
- ------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 502,582 $ 488,565
- ------------------------------------------------------------------------------------------------
Cash paid for interest $ 118,235 $ 76,409
- ------------------------------------------------------------------------------------------------
Cash paid for taxes $ 17,100 $ 7,403
- ------------------------------------------------------------------------------------------------
Net loans transferred to repossessed real estate
And other assets $ 797 $ 1,843
- ------------------------------------------------------------------------------------------------
Payment of preferred stock dividends in common stock $ 750 $ 750
- ------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of BOK Financial Corporation conform to
generally accepted accounting principles and to generally accepted practices
within the banking industry. The Consolidated Financial Statements of BOK
Financial include the accounts of BOK Financial and its subsidiaries, primarily
Bank of Oklahoma, N.A. ("BOk"), Bank of Arkansas N.A., Bank of Texas, N.A.,
Swiss Avenue State Bank, Mid-Cities National Bank, Canyon Creek National Bank
and First National Bank and Trust Company of Muskogee. Certain prior period
balances have been reclassified to conform with the current period presentation.
(2) ACQUISITIONS
On June 30, 1999, BOK Financial issued 2,371,809 common shares to acquire First
Muskogee Bancshares, Inc. and its subsidiary, First National Bank and Trust
Company of Muskogee (collectively "First Muskogee") in a pooling of interests.
Financial statements of BOK Financial for the three months and six months of
1998 have been restated to reflect this acquisition. Information regarding this
acquisition follows (in thousands except per share data):
Six Months Ended Three Months Ended
June 30, 1998 June 30, 1998
---------------- --- -------------------
Net interest revenue:
BOK Financial $ 86,500 $ 44,464
First Muskogee 3,967 2,049
---------------- --- -------------------
Combined $ 90,467 $ 46,513
---------------- --- -------------------
Net income:
BOK Financial $ 36,751 $ 20,438
First Muskogee 2,498 1,211
---------------- --- -------------------
Combined $ 39,249 $ 21,649
---------------- --- -------------------
Earnings per share:
Basic
BOK Financial $ 0.76 $ 0.42
First Muskogee 0.05 0.03
---------------- --- -------------------
Combined $ 0.81 $ 0.45
---------------- --- -------------------
Diluted
BOK Financial $ 0.68 $ 0.38
First Muskogee 0.04 0.02
---------------- --- -------------------
Combined $ 0.72 $ 0.40
---------------- --- -------------------
On May 14, 1999, BOK Financial paid $26.8 million to acquire all outstanding
common shares of Chaparral Bancshares, Inc. and its subsidiaries, (collectively
"Chaparral"). On June 2, 1999, BOK Financial paid $17.0 million to acquire all
outstanding stock of Mid-Cities Bancshares, Inc. and its subsidiaries
(collectively "Mid-Cities"). On June 16, 1999, BOK Financial paid $32.0 million
to acquire all outstanding stock of Swiss Avenue State Bank ("Swiss"). All three
of these acquisitions were accounted for by the purchase method of accounting.
Allocation of the purchase price to the net assets acquired were as follows (in
thousands):
21
Chaparral Mid-Cities Swiss
----------------------------------------
Cash and cash equivalents $ 34,858 $ 17,405 $ 50,952
Securities 13,347 19,037 114,354
Loans 54,074 43,195 50,440
Less reserve for loan losses 356 583 586
----------------------------------------
Loans, net 53,717 42,612 49,854
Premises and equipment 6,672 452 8,942
Core deposit premium 3,943 2,240 6,338
Other assets 2,665 849 2,060
----------------------------------------
Total assets acquired 115,203 82,595 232,500
Deposits
Noninterest bearing 31,164 12,993 7,678
Interest bearing 67,946 59,557 174,954
----------------------------------------
Total deposits 99,110 72,550 182,632
Borrowed funds 21 165 28,240
Other liabilies 423 122 1,155
----------------------------------------
Net assets acquired 15,649 9,758 20,473
Less purchase price 26,751 17,000 32,005
----------------------------------------
Goodwill $ 11,102 $ 7,242 $ 11,532
----------------------------------------
(3) MORTGAGE BANKING ACTIVITIES
At June 30, 1999, BOk owned the rights to service 97,561 mortgage loans with
outstanding principal balances of $7.1 billion, including $89.5 million serviced
for BOk. The weighted average interest rate and remaining term was 7.47% and 264
months, respectively.
Activity in capitalized mortgage servicing rights and related valuation
allowance during the six months ending June 30, 1999 is as follows:
Capitalized Mortgage Servicing Rights
---------------------------------------------------------------------------
Valuation Hedging
Purchased Originated Total Allowance (Gain)/Loss Net
-------------- ------------ -----------------------------------------------
Balance at
December 31, 1998 $ 70,509 $ 21,199 $ 91,708 $ - $ (22,484) $ 69,224
Additions 10,272 6,187 16,459 - - 16,459
Amortization expense (6,688) (1,834) (8,522) - 996 (7,526)
Realized hedge losses - - - - 25,298 25,298
Unrealized hedge losses - - - - 3,556 3,556
- -------------------------- - ---------- -- ---------- -- ---------- ----------------------- ----------
Balance at June 30, 1999 $ 74,093 $ 25,552 $ 99,645 $ - $ 7,366 $107,011
- -------------------------- - ---------- -- ---------- -- ---------- ----------------------- ----------
Estimated fair value of
mortgage servicing
rights (1) $ 84,844 $ 34,187 $ 119,031 $119,031
- -------------------------- - ---------- -- ---------- -- ---------- ----------------------- ----------
(1) Excludes approximately $9.5 million of loan servicing rights on mortgage
loans originated prior to the adoption of FAS 122.
22
Stratification of the mortgage loan servicing portfolio, outstanding principal
of loans serviced, and related hedging information by interest rate at June 30,
1999 follows (in thousands):
< 6.50% 6.50% - 7.49% 7.50% - 8.49% => 8.50% Total
----------- ----------------------------------------- -----------
Cost less accumulated
amortization $ 8,410 $ 59,707 $ 28,339 $ 3,189 $ 99,645
Deferred hedge losses - 6,656 710 - 7,366
- -------------------------- ----------- ----------------------------------------- -----------
Adjusted cost 8,410 66,363 29,049 3,189 107,011
Fair value 10,219 70,716 32,558 5,538 119,031
- -------------------------- ----------- ----------------------------------------- -----------
Impairment $ - $ - $ - $ - $ -
- -------------------------- ----------- ----------------------------------------- -----------
Outstanding principal of
loans serviced $ 585 $ 3,730 $ 1,806 $ 330 $ 6,451
- -------------------------- ----------- ----------------------------------------- -----------
(1) Excludes outstanding principal of $632.1 million for loans serviced for
which there is no capitalized mortgage servicing rights.
(4) DISPOSAL OF AVAILABLE FOR SALE SECURITIES
Sales of available for sale securities resulted in gains and losses as follows
(in thousands):
Six Months Ended June 30,
-------------------------------
1999 1998
-------------- ------------
Proceeds $ 1,052,992 $ 910,939
Gross realized gains 3,134 6,741
Gross realized losses 3,148 909
Related federal and state income
tax expense (4) 1,879
(5) EARNINGS PER SHARE
The following table presents the computation of basic and diluted earnings per
share (dollars in thousands except share data):
Three Months Ended Six Months Ended
--------------------------- --------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------------------------- --------------------------
Numerator:
Net income $ 22,056 $21,649 $43,293 $39,249
Preferred stock dividends 375 375 750 750
- -----------------------------------------------------------------------------------------------------------
Numerator for basic earnings per share-income
available to common stockholders 21,681 21,274 42,543 38,499
- -----------------------------------------------------------------------------------------------------------
Effect of dilutive securities:
Preferred stock dividends 375 375 750 750
- -----------------------------------------------------------------------------------------------------------
Numerator for diluted earnings per share-income
available to common stockholders after
assumed conversion $ 22,056 $21,649 $43,293 $39,249
- -----------------------------------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per share-weighted
average shares 47,481,156 47,449,845 47,454,355 47,498,063
Effect of dilutive securities:
Employee stock options 724,850 811,290 702,767 788,991
Convertible preferred stock 5,970,257 5,970,257 5,970,257 5,970,257
- -----------------------------------------------------------------------------------------------------------
Dilutive potential common shares 6,695,107 6,781,547 6,673,024 6,759,248
- -----------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 54,176,263 54,231,392 54,127,379 54,257,311
- -----------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.46 $0.45 $0.90 $0.81
- -----------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 0.41 $0.40 $0.80 $0.72
- -----------------------------------------------------------------------------------------------------------
23
(6) REPORTABLE SEGMENTS
Reportable segments reconciliation to the Consolidated Financial Statements at
June 30, 1999 is as follows:
Other Other
Net Interest Operating Operating Average
Revenue Revenue Expense Assets
-------------- ------------ ------------- ------------
Total reportable lines of business $ 70,094 $ 70,477 $ 84,835 $ 5,390,389
Total non-reportable lines of business 29,649 24,806 42,119 1,800,380
Unallocated items:
Tax-equivalent adjustment (4,561) - - -
Funds management 14,553 489 6,927 128,073
Eliminations and all others, net (1,141) 1,124 1,623 (120,484)
============== ============ ============= ============
BOK Financial consolidated $ 108,594 $ 96,896 $ 135,504 $ 7,198,358
============== ============ ============= ============
Reportable segments reconciliation to the Consolidated Financial Statements at
June 30, 1998 is as follows:
Other Other
Net Interest Operating Operating Average
Revenue Revenue Expense Assets
----------- ----------- ----------- -----------
Total reportable lines of business $ 63,812 $ 64,084 $ 85,618 $4,864,525
Total non-reportable lines of business 16,951 15,482 21,262 835,211
Unallocated items:
Tax-equivalent adjustment (4,738) - - -
Funds management 14,370 2,293 2,305 36,483
Contribution to BOk Foundation - - 2,257 -
Eliminations and all others, net 72 4,362 2,083 (6,184)
=========== =========== =========== ===========
BOK Financial consolidated $ 90,467 $ 86,221 $ 113,525 $5,730,035
=========== =========== =========== ===========
(7) 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.
24
- -----------------------------------------------------------------------------------------------------------------------------------
SIX MONTH FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Six months ended
-----------------------------------------------------------------------------------------
June 30, 1999 June 30, 1998
-------------------------------------------- ----------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
-----------------------------------------------------------------------------------------
Assets
Taxable securities $ 2,309,820 $ 68,784 6.01% $ 1,815,368 $ 55,812 6.20%
Tax-exempt securities(1) 309,554 11,911 7.76 331,257 12,626 7.69
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities 2,619,374 80,695 6.21 2,146,625 68,438 6.43
- -----------------------------------------------------------------------------------------------------------------------------------
Trading securities 52,536 1,508 5.79 16,618 425 5.16
Funds sold 37,790 933 4.98 50,799 1,484 5.89
Loans(2)(3) 3,720,156 150,012 8.13 2,918,426 127,908 8.74
Less reserve for loan losses 69,208 56,208
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve(3) 3,650,948 150,012 8.29 2,862,218 127,908 8.91
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets(1)(2)(3) 6,360,648 233,148 7.39 5,076,260 198,255 7.82
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 837,710 653,775
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 7,198,358 $ 5,730,035
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,560,037 $ 21,593 2.79% $ 1,193,313 18,579 3.14%
Savings deposits 159,274 1,471 1.86 150,563 1,956 2.62
Other time deposits 1,838,665 45,795 5.02 1,836,001 50,277 5.52
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 3,557,976 68,859 3.90 3,179,877 70,812 4.49
- -----------------------------------------------------------------------------------------------------------------------------------
Other borrowings 1,837,076 46,559 5.11 963,751 27,407 5.73
Subordinated debenture 147,613 4,575 6.25 148,392 4,831 6.57
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing 5,542,665 119,993 4.37 4,292,020 103,050 4.84
liabilities(1)(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Demand deposits 1,025,496 909,776
Other liabilities 91,532 61,945
Shareholders' equity 538,665 466,294
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' $ 7,198,358 $ 5,730,035
equity
- -----------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue(1)(3) 113,155 3.03% 95,205 2.98%
Tax-Equivalent Net Interest Revenue (1)(3)
To Earning Assets 3.59 3.72
Less tax-equivalent adjustment(1) 4,561 4,738
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 108,594 90,467
Provision for loan losses 5,968 6,443
Other operating revenue 96,896 86,221
Other operating expense 135,504 113,525
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 64,018 56,720
Federal and state income tax 20,725 17,471
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 43,293 $ 39,249
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.90 $ 0.81
- -----------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.80 $ 0.72
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown are forcomparative 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.
</FN>
25
- ------------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
-------------------------------------------------------------------------------------
June 30, 1999 March 31, 1999
------------------------------------------ -------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
-------------------------------------------------------------------------------------
Assets
Taxable securities $ 2,418,685 $ 35,841 5.94% $ 2,198,972 $ 32,944 6.08%
Tax-exempt securities(1) 295,095 5,742 7.80 324,297 6,168 7.71
- ------------------------------------------------------------------------------------------------------------------------------
Total securities 2,713,780 41,583 6.15 2,523,269 39,112 6.29
- ------------------------------------------------------------------------------------------------------------------------------
Trading securities 50,190 812 6.49 54,907 696 5.14
Funds sold 40,587 520 5.14 34,962 413 4.79
Loans(2)(3) 3,822,018 77,330 8.12 3,617,162 72,683 8.15
Less reserve for loan losses 70,968 67,428
- ------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve(3) 3,751,050 77,330 8.27 3,549,734 72,683 8.30
- ------------------------------------------------------------------------------------------------------------------------------
Total earning assets(3) 6,555,607 120,245 7.36 6,162,872 112,904 7.43
- ------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 831,059 833,945
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $ 7,386,666 $ 6,996,817
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,655,457 11,035 2.67% $ 1,463,556 10,558 2.93%
Savings deposits 162,874 742 1.83 155,634 729 1.90
Other time deposits 1,822,915 22,643 4.98 1,854,590 23,152 5.06
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 3,641,246 34,420 3.79 3,473,780 34,439 4.02
- ------------------------------------------------------------------------------------------------------------------------------
Other borrowings 1,955,583 24,761 5.08 1,715,715 21,772 5.15
Subordinated debenture 148,275 2,253 6.09 148,482 2,348 6.41
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 5,745,104 61,434 4.29 5,337,977 58,559 4.45
- ------------------------------------------------------------------------------------------------------------------------------
Demand deposits 1,008,502 1,042,679
Other liabilities 89,319 83,315
Shareholders' equity 543,741 532,846
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' $ 7,386,666 $ 6,996,817
Equity
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue (1)(3) 58,811 3.07% 54,345 2.98%
Tax-Equivalent Net Interest Revenue (1)(3)
To Earning Assets 3.60 3.58
Less tax-equivalent adjustment (1) 2,228 2,333
- ------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 56,583 52,012
Provision for loan losses 2,538 3,430
Other operating revenue 49,431 47,464
Other operating expense 70,678 64,827
- ------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 32,798 31,219
Federal and state income tax 10,742 9,983
- ------------------------------------------------------------------------------------------------------------------------------
Net Income $ 22,056 $ 21,236
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.46 $ 0.44
- ------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.41 $ 0.39
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown are forcomparative purposes.
(2) The loan averages include loans on which the accrual of interest has been
discontinued and are stated net of unearned income. (3) Excludes $1,794 of
nonrecurring foregone interest in the third quarter 1998 and $1,468 in the
second quarter 1998.
</FN>
26
- -------------------------------------------------------------------------------------------------------------------------
For Three months ended
- -------------------------------------------------------------------------------------------------------------------------
December 31, 1998 September 30, 1998 June 30, 1998
- -------------------------------------------------------------------------------------------------------------------------
Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate Balance Expense(1) /Rate
- -------------------------------------------------------------------------------------------------------------------------
$ 2,011,692 $ 30,808 6.08% $ 1,864,907 $ 29,113 6.19% $ 1,753,735 $ 26,888 6.15%
328,998 6,269 7.56 331,444 6,317 7.56 327,657 6,275 7.68
- -------------------------------------------------------------------------------------------------------------------------
2,340,690 37,077 6.28 2,196,351 35,430 6.40 2,081,392 33,163 6.39
- -------------------------------------------------------------------------------------------------------------------------
19,415 232 4.74 27,389 389 5.63 21,408 262 4.91
31,779 420 5.24 31,378 417 5.27 48,596 715 5.90
3,365,960 71,331 8.41 3,073,221 68,715 8.64 2,929,642 65,207 8.73
64,682 60,720 57,311
- -------------------------------------------------------------------------------------------------------------------------
3,301,278 71,331 8.57 3,012,501 68,715 8.81 2,872,331 65,207 8.90
- -------------------------------------------------------------------------------------------------------------------------
5,693,162 109,060 7.60 5,267,619 104,951 7.77 5,023,727 99,347 7.81
- -------------------------------------------------------------------------------------------------------------------------
689,808 664,646 661,653
- -------------------------------------------------------------------------------------------------------------------------
$ 6,382,970 $ 5,932,265 $ 5,685,380
- -------------------------------------------------------------------------------------------------------------------------
$ 1,264,080 9,126 2.86 $ 1,213,449 9,443 3.09 $ 1,214,007 9,472 3.13
159,914 950 2.36 150,198 931 2.46 153,173 1,009 2.64
1,720,035 22,775 5.25 1,760,223 23,968 5.40 1,830,952 25,103 5.50
- -------------------------------------------------------------------------------------------------------------------------
3,144,029 32,851 4.15 3,123,870 34,342 4.36 3,198,132 35,584 4.46
- -------------------------------------------------------------------------------------------------------------------------
1,504,257 20,444 5.39 1,154,520 16,857 5.79 874,380 12,413 5.69
147,418 2,333 6.28 148,392 2,529 6.76 148,410 2,464 6.66
- -------------------------------------------------------------------------------------------------------------------------
4,795,704 55,628 4.60 4,426,782 53,728 4.82 4,220,922 50,461 4.80
- -------------------------------------------------------------------------------------------------------------------------
984,589 936,690 929,848
87,304 79,433 62,753
515,373 489,360 471,857
- -------------------------------------------------------------------------------------------------------------------------
$ 6,382,970 $ 5,932,265 $ 5,685,380
- -------------------------------------------------------------------------------------------------------------------------
53,432 3.00% 51,223 2.95% 48,886 3.02%
3.05
3.72 3.72 3.79
2,334 2,362 2,373
- -------------------------------------------------------------------------------------------------------------------------
51,098 48,861 46,513
4,087 4,061 3,973
45,384 43,415 44,919
62,299 58,171 55,186
- -------------------------------------------------------------------------------------------------------------------------
30,096 30,044 32,273
9,729 10,049 10,624
- -------------------------------------------------------------------------------------------------------------------------
$ 20,367 $ 19,995 $ 21,649
- -------------------------------------------------------------------------------------------------------------------------
$ 0.42 $ 0.41 $ 0.45
- -------------------------------------------------------------------------------------------------------------------------
$ 0.38 $ 0.37 $ 0.40
- -------------------------------------------------------------------------------------------------------------------------
27
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K (A) Exhibits:
No. 27.0 Financial Data Schedule filed herewith electronically.
No. 27.1 Restated Financial Data Schedule filed herewith
electronically.
(B) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
June 30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOK FINANCIAL CORPORATION
(Registrant)
Date: August 16, 1999 /s/ James A. White
------------------- ---------------------------
James A. White
Executive Vice President and
Chief Financial Officer