As filed with the Securities and Exchange Commission on November 15, 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 September 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 ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: 49,013,555 shares of
common stock ($.00006 par value) as of October 31, 1999.
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BOK Financial Corporation
Form 10-Q
Quarter Ended September 30, 1999
Index
Part I. Financial Information
Management's Discussion and Analysis 2
Report of Management on Consolidated
Financial Statements 16
Consolidated Statements of Earnings - Unaudited 17
Consolidated Balance Sheets - Unaudited 18
Consolidated Statements of Changes
in Shareholders' Equity - Uunaudited 19
Consolidated Statements of Cash Flows - Uunaudited 20
Notes to Consolidated Financial Statements - Unaudited 21
Financial Summaries - Unaudited 25
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 28
Signature 28
MANAGEMENT'S ASSESSMENT OF OPERATIONS AND FINANCIAL CONDITION
Assessment of Operations
Summary of Performance
BOK Financial Corporation ("BOK Financial") recorded net income of $22.7 million
or $0.41 per diluted common share for the third quarter of 1999 compared to
$20.0 million or $0.36 per diluted common share for the third quarter of 1998.
Returns on average assets were 1.15% for the third quarter of 1999 compared to
1.34% for the third quarter of 1998. The decrease in return on average assets is
due to the growth in average assets over the past twelve months, including $926
million due to acquisitions. Returns on average equity, including $53 million
decrease in unrealized gain on securities available for sale, were 16.81% and
16.21%, for the third quarter of 1999 and 1998, respectively.
Net interest revenue for the third quarter of 1999 increased by $13.5 million or
28% while fees and commissions revenue grew by $2.4 million or 6%. This revenue
growth was largely offset by a $12.6 million or 22% increase in operating
expenses, which included a $2.2 million increase in amortization of intangible
assets.
Operating results for the third quarter of 1999 include Bank of Albuquerque,
which was acquired in the fourth quarter of 1998 and Mid-Cities National Bank,
Canyon Creek National Bank and Swiss Avenue State Bank which were acquired in
the second quarter of 1999.
Year to date net income and earnings per diluted common share were $66.0 million
or $1.18, respectively for 1999 compared to $59.2 million or $1.06,
respectively, for the same period in 1998. Returns on average assets and equity
were 1.19% and 16.40%, respectively, for 1999 compared to returns on average
assets and equity of 1.37% and 16.73%, respectively, for 1998.
All per share data have been restated for a 3 percent stock dividend that was
announced on September 28, 1999 and paid in October, 1999.
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:
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TABLE 1 - TANGIBLE OPERATING RESULTS
------------------------------- -------------------
(Dollars in Thousands Except Share Three months ended Nine months ended
Data)
---------------------------------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
---------------------------------------------------
Net income $ 22,736 $ 19,995 $ 66,029 $ 59,244
After-tax impact of amortization of intangible 4,084 2,094 10,283 6,281
assets
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Tangible net income $ 26,820 $ 22,089 $ 76,312 $ 65,525
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Tangible net income per diluted share $ 0.48 $ 0.40 $ 1.37 $ 1.17
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Tangible return on average shareholders' equity 19.83% 17.91% 18.95% 18.50%
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Tangible return on average assets 1.35% 1.48% 1.37% 1.51%
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Net Interest Revenue
Net interest revenue on a tax-equivalent basis was $64.4 million for the third
quarter of 1999 compared to $51.2 million for the third quarter of 1998, an
increase of $13.2 million or 26% compared to the same quarter from last year.
Average earning assets increased by $1.7 billion, including increases in average
loans of $1.2 billion and average securities of $536 million. Interest bearing
liabilities increased $1.9 billion, primarily due to increases in borrowed funds
of $914 million. Interest bearing deposits increased $949 million. The growth in
average earning assets and interest bearing liabilities included $811 million
and $759 million, respectively, due to acquisitions in the fourth quarter of
1998 and the second quarter of 1999.
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TABLE 2 - VOLUME/RATE ANALYSIS
(In thousands)
Three months ended Nine months ended
September 30, 1999/1998 September 30, 1999/1998
---------------------------------------------------------------------------
Change Due To (1) Change Due To (1)
------------------------ ------------------------
Yield Yield
Change Volume /Rate Change Volume /Rate
---------------------------------------------------------------------------
Tax-equivalent interest revenue:
Securities $ 7,524 $ 8,098 $ (574) $ 19,781 $ 22,235 $
(2,454)
Trading securities 4 3 1 1,088 994 94
Loans 22,961 25,375 (2,414) 46,532 58,882 (12,350)
Funds sold 86 115 (29) (625) (290) (335)
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Total 30,575 33,591 (3,016) 66,776 81,821 (15,045)
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Interest expense:
Interest bearing transaction deposits 2,835 4,640 (1,805) 5,849 10,072 (4,223)
Savings deposits (152) 96 (248) (637) 194 (831)
Time deposits 2,268 3,782 (1,514) (2,213) 3,866 (6,079)
Other borrowings 10,832 12,783 (1,951) 29,824 36,189 (6,365)
Subordinated debenture (156) 4 (160) (413) (22) (391)
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Total 15,627 21,305 (5,678) 32,410 50,299 (17,889)
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Tax-equivalent net interest revenue 14,948 $ 12,268 $ 2,662 34,366 $ 31,522 $ 2,844
before nonrecurring foregone interest
Change in non-recurring foregone (1,794) (3,262)
interest
Change in tax-equivalent adjustment (372) (549)
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Net interest revenue $ 13,526 $ 31,653
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(1) Changes attributable to both volume and yield are allocated to both volume
and yield/rate on an equal basis.
Year to date, net interest revenue increased by $31.7 million compared to 1998.
Excluding the non-recurring collection of foregone interest in 1998, this
represented a 23% increase in net interest revenue due to growth in earning
assets.
Net interest margin, the ratio of net interest revenue to average earning
assets, was 3.66% for the third quarter of 1999 compared to 3.72% for the third
quarter of 1998 and 3.60% for the second quarter of 1999.
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 typically results in a net interest margin that falls below those
normally seen in the commercial banking industry, it provides positive net
interest revenue. Management estimates that for the third quarter of 1999, this
strategy resulted in a 71 basis point decrease in net interest margin. However,
this strategy contributed $3.7 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 for the third quarter of 1999 increased $1.4 million
compared to the same quarter of 1998. Total fees and commissions, which are
included in other operating revenue, increased $2.4 million or 6%. Transaction
card revenue increased $1.8 million or 27% over the third quarter of 1998 due to
a greater volume of transactions processed. Service charges on deposits
increased $2.4 million or 29%, including $1.5 million due to acquisitions.
Leasing revenue decreased $1.2 million due to the sale of BOK Financial's
interests in four leasing partnerships during the second quarter of 1999.
Brokerage and trading revenue decreased $872 thousand due primarily to a
revaluation of the residual interest in a pool of automobile loans that was sold
in the first quarter of 1999. Actual repayments of the loans have exceeded the
initial estimates. The accelerated repayments has reduced the value of the
residual interest.
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TABLE 3 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
------------------------------------------------
Brokerage and trading revenue $ 3,237 $ 3,779 $ 4,436 $ 4,010 $ 4,109
Transaction card revenue 8,298 7,986 7,597 6,360 6,516
Trust fees and commissions 9,045 8,874 7,769 7,655 7,755
Service charges and fees
on deposit accounts 10,857 10,073 9,453 9,553 8,439
Mortgage banking revenue 9,189 9,877 9,292 10,543 10,929
Leasing revenue 526 817 1,868 1,897 1,749
Other revenue 4,129 4,659 5,085 2,399 3,367
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Total fees and commissions 45,281 46,065 45,500 42,417 42,864
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Gain on student loan sales 39 16 529 - 13
Gain on loan securitization - - 270 - -
Gain on sale of other assets - 3,638 892 - -
Gain (loss) on securities (485) (288) 274 2,967 538
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Total other operating revenue $44,835 $49,431 $ 47,465 $ 45,384 $43,415
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Year to date, other operating revenue increased $12.1 million or 9% compared to
1998. Total fees and commissions increased $15.1 million or 12% due primarily to
increases in transaction card revenue and service charges on deposit accounts.
Additionally, other revenue for the nine months ended September 30, 1999
included $4.3 million for underwriting and private placement fees compared to
$348 thousand for the same period of 1998.
Other Operating Expenses
Operating expenses for the third quarter of 1999 increased $12.6 million or 22%
compared to the third quarter of 1998. The third quarter of 1999 included
operating expenses of $9.3 million for acquired banks that were not included in
the third quarter of 1998. The discussion following Table 4 of other operating
expenses excludes these charges from 1999 to improve comparability.
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TABLE 4 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
------------------------------------------------
Personnel $ 34,262 $ 34,047 $ 31,900 $ 30,346 $ 26,914
Business promotion 1,925 2,410 2,498 2,663 1,900
Professional fees/services 2,452 2,780 1,901 3,165 2,652
Net occupancy, equipment
and data processing 15,198 13,657 13,108 12,640 10,762
FDIC and other insurance 323 369 326 362 297
Printing, postage and supplies 2,729 3,019 2,816 2,748 2,349
Net gains and operating
Expenses on repossessed assets (1,501) (132) (1,296) (89) (18
Amortization of intangible
Assets 4,519 3,667 3,248 2,565 2,304
Mortgage banking costs 6,183 6,787 5,304 7,262 6,374
Provision for impairment of
Mortgage servicing rights - - - (4,290) -
Other expense 4,665 4,074 5,021 4,927 4,637
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Total $ 70,755 $ 70,678 $ 64,826 $ 62,299 $ 58,171
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Personnel costs increased $3.8 million due to increased staffing, normal
compensation increases and increased incentive compensation. Staffing on a
full-time equivalent ("FTE") basis increased by 198 employees while average
compensation per FTE increased by 2%. Incentive compensation, which varies
directly with revenue increased $950 thousand to $3.5 million for the quarter.
The increase in incentive compensation was due to growth in revenue over
pre-determined targets and growth in the number of business units covered by
incentive plans. Occupancy, equipment and data processing costs increased $2.5
million or 23%, 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
----------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
----------------------------------------------------
Total other operating expense $70,755 $ 70,678 $ 64,826 $ 62,299 $ 58,171
Acquisition expenses - (1,266) - (1,508) -
Provision for impairment of mortgage
Servicing rights - - - 4,290 -
Net gains and operating costs from
repossessed assets 1,501 132 1,296 89 18
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Total $72,256 $ 69,544 $ 66,122 $ 65,170 $ 58,189
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Operating expenses through September 30, 1999 were $35 million or 20% higher
than operating expenses for the first nine months of 1998. Excluding significant
or non-recurring items and the effect of acquisitions, operating expenses
increased $16.4 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., Bank of Arkansas, Bank of Texas
and Bank of Albuquerque.
Corporate Banking
Corporate banking contributed $14.1 million or 62% of consolidated net income
for the third quarter of 1999 compared to $11.6 million or 58% of consolidated
net income for the third quarter of 1998. Revenue increased 12% due to increased
loan volumes while operating expenses were unchanged.
Table 6 Corporate Banking
(In Thousands)
Three months ended Sept. 30, Nine months ended Sept. 30,
----------------------------- ---------------------------
1999 1998 1999 1998
------------- --------------- ---------------------------
Total revenue $ 37,905 $ 33,730 $ 95,249 $ 81,776
Operating expense 14,591 14,639 35,685 35,686
Net income 14,124 11,571 36,201 27,975
Average assets $ 3,489,657 $ 2,762,803 $ 3,164,627 $ 2,491,836
Average equity 339,918 277,830 320,862 263,229
Return on assets 1.61% 1.66% 1.53% 1.50%
Return on equity 16.48 16.52 15.08 14.21
Efficiency ratio 38.49 43.40 37.46 43.64
Consumer Banking
Consumer banking contributed $3.2 million or 14% of consolidated net income for
the third quarter of 1999 compared to $2.4 million or 24% of consolidated net
income for the third 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, were unchanged compared to the third quarter
of 1998. Operating expenses decreased $977 thousand for the same period.
Table 7 Consumer Banking
(In Thousands)
Three months ended Sept. 30, Nine months ended Sept. 30,
----------------------------- ---------------------------
1999 1998 1999 1998
------------- --------------- ---------------------------
Total revenue $ 16,886 $ 16,584 $ 51,317 $ 49,031
Operating expense 11,715 12,692 35,508 37,634
Net income 3,159 2,364 9,658 6,911
Average assets $ 1,861,710 $ 1,938,165 $ 1,872,041 $ 1,943,724
Average equity 43,149 45,778 42,628 45,187
Return on assets 0.67% 0.48% 0.69% 0.48%
Return on equity 29.05 20.49 30.29 20.45
Efficiency ratio 69.38 76.53 69.19 76.76
Mortgage Banking
Mortgage banking contributed $466 thousand or 2% of consolidated net income for
the third quarter of 1999 compared to $1.7 million or 8% for the third quarter
of 1998. Total revenue decreased $2.4 million. Mortgage loan origination
activity has decreased since last year due to higher interest rates, resulting
in lower gains on secondary marketing activity. Revenue from mortgage banking
activities was also reduced by internal funding costs associated with the
deferred hedging losses.
Capitalized mortgage servicing rights totaled $106.5 million at September 30,
1999 compared to $107.0 million at June 30, 1999 and $69.2 million at December
31, 1998. The increase in capitalized servicing rights was due primarily to
$28.5 million in hedging losses realized since December 31, 1998. At September
30, 1999, realized hedging losses totaled $7.4 million, net of accumulated
amortization, while unrealized losses on open hedging positions totaled $347
thousand.
Table 8 Mortgage Banking
(In Thousands)
Three months ended Sept. 30, Nine months ended Sept. 30,
----------------------- -------------------------
1999 1998 1999 1998
---------- ----------- -------------------------
Total revenue $ 10,767 $ 13,128 $ 33,171 $ 37,549
Operating expense 10,003 10,392 30,244 30,282
Provision for impairment
of mortgage servicing assets - - - 2,000
Net income 466 1,672 1,788 3,218
Average assets $ 380,940 $ 366,956 $ 357,549 $ 378,952
Average equity 25,586 30,761 26,157 30,259
Return on assets 0.49% 1.81% 0.67% 1.14%
Return on equity 7.23 21.56 9.14 14.22
Efficiency ratio 92.90 79.16 91.18 80.65
Trust Services
Trust services contributed $2.3 million or 10% of consolidated net income for
the third quarter of 1999 compared to $1.8 million or 9% of consolidated net
income for the third quarter of 1998. Revenue from trust services increased $2.2
million or 18% for the quarter while operating expenses increased $1.3 million
or 15%.
Table 9 Trust Services
(In Thousands)
Three months ended Sept. 30, Nine months ended Sept. 30,
--------------------------- -----------------------------
1999 1998 1999 1998
------------ -------------- --------------- -------------
Total revenue $ 13,914 $ 11,763 $ 40,306 $ 34,745
Operating expense 10,071 8,753 29,778 26,492
Net income 2,349 1,840 6,433 5,043
Average assets $ 336,884 $ 296,623 $ 335,573 $ 300,024
Average equity 35,757 29,654 35,067 29,380
Return on assets 2.77% 2.46% 2.56% 2.25%
Return on equity 26.06 24.62 24.53 22.95
Efficiency ratio 72.38 74.41 73.88 76.25
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. These guidelines covered system testing, business resumption
planning, cash reserve considerations, as well as guidance for monitoring
systems during the weekend of December 31st. BOK Financial has successfully
completed all requirements.
FFIEC guidelines also required 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 have been 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.
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, 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 at September 30, 1999 increased $283 million to
$4.4 billion during the third quarter of 1999. Commercial loans increased $205
million and commercial real estate loans increased $58 million, respectively.
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TABLE 10 - LOANS
(In thousands)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
---------------------------------------------------------------------------------
Commercial:
Energy $ 593,944 $ 558,975 $ 484,810 $ 468,700 $ 361,359
Manufacturing 327,195 289,879 280,155 245,268 233,913
Wholesale/retail 400,730 371,867 319,545 279,265 302,832
Agricultural 162,531 151,010 212,314 160,241 147,959
Services 833,671 757,012 647,963 635,585 552,902
Other commercial and industrial 206,045 190,668 189,752 200,214 128,760
Commercial real estate:
Construction and land development 258,947 246,948 203,968 174,059 151,396
Multifamily 259,276 240,906 191,173 181,525 153,304
Other real estate loans 523,324 495,304 412,798 404,985 350,188
Residential mortgage:
Secured by 1-4 family
residential properties 526,622 520,061 482,990 500,690 460,945
Residential mortgages held for 58,466 79,994 81,277 100,269 82,886
sale
Consumer 259,414 224,493 175,217 296,298 240,761
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Total $ 4,410,165 $ 4,127,117 $ 3,681,962 $ 3,647,099 $ 3,167,205
- ---------------------------------------------------------------------------------------------------------------------
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 $141 million to
the cattle industry. Services include loans totaling $160 million to nursing and
medical facilities and $113 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, $158 million.
SUMMARY OF LOAN LOSS EXPERIENCE
The reserve for loans losses, which is available to absorb losses inherent in
the loan portfolio, totaled $75 million at September 30, 1999, $73 million at
June 30, 1999 and $66 million at December 31, 1998. This represents 1.73%, 1.80%
and 1.86% of total loans, excluding loans held for sale, at September 30, 1999,
June 30, 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.
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TABLE 11 - SUMMARY OF LOAN LOSS EXPERIENCE
(In thousands)
Three Months Ended
--------------------------------------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
--------------------------------------------------------------------------------
Beginning balance $ 72,732 $ 68,994 $ 65,922 $ 63,056 $ 58,676
Loans charged-off:
Commercial 71 1,420 4 1,132 533
Commercial real estate - - 35 33 50
Residential mortgage 20 37 14 54 53
Consumer 1,237 1,339 1,164 940 896
- -------------------------------------------------------------------------------------------------------------------
Total 1,328 2,796 1,217 2,159 1,532
- -------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial 830 1,839 133 34 796
Commercial real estate 208 4 236 516 551
Residential mortgage 2 1 - - -
Consumer 600 627 490 388 504
- -------------------------------------------------------------------------------------------------------------------
Total 1,640 2,471 859 938 1,851
- -------------------------------------------------------------------------------------------------------------------
Net loans charged-off (recoveries) (312) 325 358 1,221 (319)
Provision for loan losses 2,142 2,538 3,430 4,087 4,061
Additions due to acquisitions - 1,525 - - -
- -------------------------------------------------------------------------------------------------------------------
Ending balance $ 75,186 $ 72,732 $ 68,994 $ 65,922 $ 63,056
- -------------------------------------------------------------------------------------------------------------------
Reserve to loans outstanding
at period-end(1) 1.73% 1.80% 1.92% 1.86% 2.04%
Net loan losses (annualized)
to average loans (1) (0.03) 0.03 0.04 0.15 (0.04)
- -------------------------------------------------------------------------------------------------------------------
(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. A consistent methodology has been developed that includes reserves
assigned to specific criticized loans, general reserves that are based upon a
statistical migration analysis for each category of loans, and unallocated
reserves that are based upon an analysis of current economic conditions, loan
concentrations, portfolio growth, and other relevant factors. An independent
Credit Administration department is responsible for performing this evaluation
for all of BOK Financial's subsidiaries to ensure that the methodology is
applied consistently.
All significant criticized loans are reviewed quarterly with written
documentation. Specific reserves for impairment are determined in accordance
with generally accepted accounting principles and appropriate regulatory
standards. At September 30, 1999, specific impairment reserves totaled $1.9
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 September 30, 1999, the loss potential ranges for the more
significant factors are:
Concentration of large loans - $1.1 million to $2.2 million
Loan portfolio growth and expansion into new markets - $1.2 million to $2.3
million
A provision for loan losses is charged against earnings in amounts necessary to
maintain an adequate allowance for loan losses. These provisions were $2.1
million for the third quarter of 1999 compared to $2.5 million for the second
quarter of 1999 and $4.1 million for the third quarter of 1998.
NON-PERFORMING ASSETS
Information regarding non-performing assets, which were $22 million at September
30, 1999, $25 million at June 30, 1999 and $19 million at December 31, 1998 is
presented in Table 12. Non-performing loans include non-accrual loans and
renegotiated loans, and exclude loans 90 days past due.
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 September 30, 1999, loans totaling $95 million were assigned by
management to the substandard risk category and loans totaling $77 million were
assigned to the special mention risk category, compared to $79 million and $54
million, respectively, at June 30, 1999. Management expects that the level of
loans assigned to these risk categories will moderate over the next nine to
twelve months as improvements in the energy and cattle sectors begin to show in
the operating results of BOK Financial's borrowers.
This expectation depends upon continued stability in the overall economy.
- ---------------------------------------------------------------------------------------------------------------------
TABLE 12 - NONPERFORMING ASSETS
(In thousands)
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
----------------------------------------------------------------------
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
Commercial $ 12,088 $ 13,754 $ 9,712 $ 8,394 $ 8,439
Commercial real estate 1,796 2,824 2,726 1,950 2,379
Residential mortgage 44 699 2,097 2,583 3,097
Consumer 3,938 3,198 1,410 1,168 1,127
- ---------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 17,866 20,475 15,945 14,095 15,042
Renegotiated loans - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 17,866 20,475 15,945 14,095 15,042
Other nonperforming assets 4,447 4,450 4,927 4,667 4,400
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 22,313 $ 24,925 $ 20,872 $ 18,762 $ 19,442
- ---------------------------------------------------------------------------------------------------------------------
Ratios:
Reserve for loan losses to
Nonperforming loans 420.83% 355.22% 432.70% 467.70% 419.20%
Nonperforming loans to
Period-end loans (2) 0.41 0.51 0.44 0.40 0.49
- ---------------------------------------------------------------------------------------------------------------------
Loans past due 90 days (1) $ 12,757 $ 11,082 $ 13,037 $ 9,553 $ 15,714
- ---------------------------------------------------------------------------------------------------------------------
(1) Includes residential mortgages guaranteed
by agencies of the U.S. Government $ 7,712 $ 7,958 $ 7,674 $ 8,122 $ 8,449
Excludes residential mortgages guaranteed
by agencies of the U.S. Government in
foreclosure 8,159 7,487 7,099 6,953 9,742
(2) Excludes residential mortgage loans held for sale
- ---------------------------------------------------------------------------------------------------------------------
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 third 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
September 30, 1999 and 1998, this modeling indicated interest rate sensitivity
as follows:
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 $ (1,741) $ 1,849 $ 1,163 $ (2,818) $ (2,215) $ (1,706)
(0.6)% 0.9% 0.4% (1.4)% (0.8)% (0.8)%
- ------------------------------------------ ----------------------- ------------ ----------- ----------
Net income $(1.079) $ 3,701 $ 721 $ (12,717) $ (1,373) $ (1,151)
(1.1)% 4.2% 0.7% (14.3)% (1.4)% (1.3)%
- ------------------------------------------ ----------------------- ------------ ----------- ----------
Economic value of equity $(43,667) $(26,981) $(2,515) $ (12,139) $ (539) $ 8,151
(3.9)% (3.5)% (0.2)% (1.6)% 0.0% 1.1%
- ------------------------------------------ ----------------------- ------------ ------------ ---------
The estimated changes in interest rates on net interest revenue or net income is
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
$43.7 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 + or - 50 basis points. At September 30, 1999, the pre-tax
results of this modeling are as follows:
50 bp increase 50 bp decrease
----------------- ------------------
Anticipated change in:
Mortgage servicing rights $ 4,272 $(6,884)
Hedging instruments (2,918) 3,169
================= ==================
Net $ 1,354 $(3,715)
================= ==================
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 agrees with
other parties to exchange, at specified intervals, the difference between
fixed-rate and floating-rate interest amounts calculated by reference to an
agreed-upon notional amount. For the third quarter of 1999, income from these
swaps exceeded the cost of the swaps by $362 thousand. Credit risk from these
swaps is closely monitored and counterparties to these contracts are selected on
the basis of their credit worthiness, among other factors. Derivative products
are not used for speculative purposes.
- --------------------------------------------------------------------------------
TABLE 14 - INTEREST
RATE SWAPS
(In thousands)
Notional Pay Receive Fair
Amount Rate Rate Value
-------------------------------------------------------------
Expiration:
2001 $ 4,324 5.03 % 5.40(1) % $ 62
2002 120,660 5.4 - 6.08 (1) 6.21 - 6.92 295
2003 42,081 4.82 - 5.99 5.40 (1) 1,265
2004 23,604 5.65 - 5.92 5.40 (1) 452
2005 8,383 5.08 - 5.21 5.40 (1) 472
2006 16,500 7.26 6.08 (1) (554)
2007 164,384 5.23 - 7.48 5.40 - 6.08 (1) 619
2008 28,706 5.15 - 5.67 5.40 (1) 1,998
2009 68,851 5.22 - 6.8 5.40 (1) 2,850
- --------------------------------------------------------------------------------
(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 Bank of Oklahoma, N.A. and BOSC, Inc. These
positions are taken with the objective of generating trading profits. Both of
these activities involve interest rate risk.
A variety of methods are used to manage the interest rate risk of trading
activities. These methods include daily marking of all positions to market
value, independent verification of inventory pricing, and position limits for
each trading activity. Hedges in either the futures or cash markets may be used
to reduce the risk associated with some trading positions. The Risk Management
Department monitors trading activity daily and reports to senior management and
the Risk 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 September 30, 1999, the nominal
aggregate trading positions was $15 million, the VAR was $539 thousand.
- --------------------------------------------------------------------------------
TABLE 15 - CAPITAL RATIOS
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
1999 1999 1999 1998 1998
---------------------------------------------------
Average shareholders' equity
to average assets 6.72% 7.36% 7.62% 8.07% 8.25%
Risk-based capital:
Tier 1 capital 7.09 7.09 8.19 7.93 9.51
Total capital 10.67 10.89 12.23 12.02 14.08
Leverage 5.64 5.47(1) 6.32 6.60 7.25
- --------------------------------------------------------------------------------
(1) Originally reported as 5.86% but has been restated to reflect second quarter
acquisitions average assets as if outstanding entire quarter in accordance with
regulatory guidance.
Financial institutions are considered to be "well capitalized" pursuant to the
Federal Deposit Insurance Corporation Improvement Act of 1991 if their Leverage,
Tier 1 and Total Capital ratios are at least 5%, 6%, and 10%, respectively. BOK
Financial and its subsidiary banks continue to exceed the regulatory definition
of well capitalized. However, BOK Financial's capital ratios have declined
compared to the third quarter of 1998 due to its acquisition program and
continued asset growth. While management projects capital to grow and the
capital ratios to increase over time, future asset growth and acquisitions may
be constrained by capital limitations.
BOK Financial had borrowing lines from other commercial banks totaling $105
million which have been renegotiated into a $125 million syndicated senior
facility with a three year maturity, interest based on LIBOR + 75 basis points.
The debt facility includes covenants on capital adequacy, asset quality and
indebtedness that are generally consistent with regulatory guidelines.
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 filed with the Securities and
Exchange Commission which contains audited financial statements.
- ----------------------------------------------------------------------------- ---------------------------------------
Consolidated Statement of Earnings - UNAUDITED
(In Thousands Except Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
1999 1998 1999 1998
------------- --- ------------- ------------- --- -------------
Interest Revenue
Loans $ 89,655 $ 68,592 $ 239,302 $ 196,240
Taxable securities 37,735 29,111 106,520 84,924
Tax-exempt securities 3,456 4,080 11,170 12,228
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total securities 41,191 33,191 117,690 97,152
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Trading securities 393 389 1,901 813
Funds sold 503 417 1,276 1,901
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total interest revenue 131,742 102,589 360,169 296,106
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Interest Expense
Deposits 39,293 34,342 108,152 105,153
Other borrowings 27,690 16,857 74,089 44,265
Subordinated debenture 2,372 2,529 6,947 7,360
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total interest expense 69,355 53,728 189,188 156,778
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Net Interest Revenue 62,387 48,861 170,981 139,328
Provision for Loan Losses 2,142 4,061 8,110 10,504
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Net Interest Revenue After
Provision for Loan Losses 60,245 44,800 162,871 128,824
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Other Operating Revenue
Brokerage and trading revenue 3,237 4,109 11,452 11,291
Transaction card revenue 8,298 6,516 23,881 18,066
Trust fees and commissions 9,045 7,755 25,688 22,301
Service charges and fees on deposit accounts 10,857 8,439 30,383 24,366
Mortgage banking revenue, net 9,189 10,929 28,358 31,190
Leasing revenue 526 1,749 3,211 5,214
Other revenue 4,129 3,367 13,873 9,290
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total fees and commissions revenue 45,281 42,864 136,846 121,718
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Gain on sale of student loans 39 13 584 1,548
Gain on loan securitization - - 270 -
Gain on sale of other assets - - 4,530 -
Securities gains (losses), net (485) 538 (499) 6,370
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total other operating revenue 44,835 43,415 141,731 129,636
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Other Operating Expense
Personnel 34,262 26,914 100,209 79,092
Business promotion 1,925 1,900 6,833 5,556
Contribution of stock to BOk Charitable
Foundation - - - 2,257
Professional fees and services 2,452 2,652 7,133 6,616
Net occupancy, equipment & data processing 15,198 10,762 41,963 30,878
FDIC and other insurance 323 297 1,018 1,006
Printing, postage and supplies 2,729 2,349 8,564 6,775
Net(gains) losses, and operating expenses
of repossessed assets (1,501) (18) (2,929) (386)
Amortization of intangible assets 4,519 2,304 11,434 6,950
Mortgage banking costs 6,183 6,374 18,274 18,687
Provision for impairment of mortgage
servicing rights - - - 2,000
Other expense 4,665 4,637 13,760 12,265
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Total Other Operating Expense 70,755 58,171 206,259 171,696
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Income Before Taxes 34,325 30,044 98,343 86,764
Federal and state income tax 11,589 10,049 32,314 27,520
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Net Income $ 22,736 $ 19,995 $ 66,029 $ 59,244
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Earnings Per Share:
Net Income
Basic $ 0.46 $ 0.40 $ 1.33 $ 1.19
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Diluted $ 0.41 $ 0.36 $ 1.18 $ 1.06
- ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- -------------
Average Shares Used in Computation:
Basic 48,993,564 48,824,281 48,927,113 48,899,911
- ---------------------------------------------- ----------------- ----------------- ---------------- -----------------
Diluted 55,769,698 55,709,650 55,767,967 55,836,384
- ---------------------------------------------- ----------------- ----------------- ---------------- -----------------
See accompanying notes to consolidated financial statements.
- --------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In Thousands Except Share Data)
September 30, December 31, September 30,
1999 1998 1998
--------------------------------------------------
ASSETS
Cash and due from banks $ 409,014 $ 431,874 $ 352,892
Funds sold 180,170 39,551 36,826
Trading securities 15,945 41,138 22,730
Securities:
Available for sale 2,454,018 2,329,375 2,100,329
Investment (fair value: September 30, 1999 - $204,623;
December 31, 1998 -$227,754;
September 30, 1998 - $220,161) 213,125 227,777 221,329
- --------------------------------------------------------------------------------------------------------------------
Total securities 2,667,143 2,557,152 2,321,658
- --------------------------------------------------------------------------------------------------------------------
Loans 4,410,165 3,647,099 3,167,205
Less reserve for loan losses 75,186 65,922 63,057
- --------------------------------------------------------------------------------------------------------------------
Net loans 4,334,979 3,581,177 3,104,148
- --------------------------------------------------------------------------------------------------------------------
Premises and equipment, net 116,614 87,721 69,270
Accrued revenue receivable 64,403 64,409 62,512
Excess cost over fair value of net assets acquired
and core deposit premiums (net of accumulated
amortization: September 30, 1999 - $57,903;
December 31, 1998 - $49,469;
September 30, 1998 - $46,532) 131,332 97,578 66,123
Mortgage servicing rights 106,532 69,224 52,233
Real estate and other repossessed assets 4,447 4,667 4,400
Other assets 143,748 85,016 76,992
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 8,174,327 $ 7,059,507 $ 6,169,784
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 961,009 $ 1,165,283 $ 942,783
Interest-bearing deposits:
Transaction 1,806,433 1,453,236 1,189,534
Savings 162,395 185,971 148,650
Time 2,217,401 1,803,237 1,722,244
- --------------------------------------------------------------------------------------------------------------------
Total deposits 5,147,238 4,607,727 4,003,211
- --------------------------------------------------------------------------------------------------------------------
Funds purchased and repurchase
Agreements 1,306,792 1,040,683 817,840
Other borrowings 888,239 660,347 609,579
Subordinated debenture 148,597 146,921 148,415
Accrued interest, taxes and expense 57,545 58,034 52,667
Other liabilities 80,693 21,002 23,944
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 7,629,104 6,534,714 5,655,656
- --------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 25 25 23
Common stock ($.00006 par value; 2,500,000,000
shares authorized; shares issued and outstanding
September 30, 1999 - 49,164,957; December 31, 1998
- 48,111,647; September 30, 1998 -47,193,815) 3 3 3
Capital surplus 269,423 236,726 215,109
Retained earnings 309,928 278,365 288,393
Notes receivable from exercise of stock options - - -
Treasury stock (shares at cost: September 30, 1999 -152,691; December 31, 1998 -
748,576; September 30, 1998 -
1,191,076) (3,553) (2,623) (11,798)
Accumulated other comprehensive income (loss) (30,603) 12,297 22,398
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 545,223 524,793 514,128
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 8,174,327 $ 7,059,507 $ 6,169,784
- --------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED
(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 47,002 $ 3 $11,669 $211,883 $232,620 881 $ (4,314) $ (4) $ 451,880
Comprehensive income:
Net income - - - - - - 59,244 - - - 59,244
Other
Comprehensive income, net of tax:
Unrealized gains(loss)
on securities available
for sale (1) - - - - 10,729 - - - - - 10,729
-----------
Comprehensive income 69,973
-----------
Exercise of stock options - - 128 - - 1,797 - 16 (346) - 1,451
Issuance of common
stock to Thrift Plan - - - - - 84 - (46) 998 - 1,082
Common stock dividend - - - - - - (2,346) - - - (2,346)
Preferred dividend paid
in shares of
common stock - - 52 - - 1,125 (1,125) - - - -
Payment on stock options
notes receivable - - - - - - - - - 4 4
Director retainer shares - - 12 - - 220 - - - - 220
Treasury stock purchase - - - - - - - 341 (8,136) - (8,136)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at
September 30, 1998 250,000 $ 23 47,194 $ 3 $22,398 $215,109 $288,393 1,192 $ (11,798) $ - $ 514,128
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1998 250,000 $ 25 48,112 $ 3 $12,297 $236,726 $278,365 749 $ (2,623) $ - $524,793
Comprehensive income:
Net income - - - - - - 66,029 - - - 66,029
Other
Comprehensive
income, net of tax:
Unrealized gains(loss)
on securitiesavailable
for sale (1) - - - - (42,900) - - - - (42,900)
-----------
Comprehensive income 23,129
-----------
Exercise of stock options - - 280 - - 2,312 - 101 (2,352) - (40)
Issuance of common
stock to Thrift Plan - - 17 - - 405 - (1) 36 - 441
Dividends paid in
shares of common
stock:
Preferred stock - - 40 - - 1,125 (1,125) - - - -
Common stock - - 1,432 - - 30,702 (30,606) 4 (96) - -
Common stock dividend - - - - - - (2,735) - - - (2,735)
Director retainer shares - - 9 - - 215 - - - - 215
Cancel treasury stock - - (725) - - (2,062) - (725) 2,062 - -
Treasury stock purchase - - - - - - - 25 (580) - (580)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at
September 30, 1999 250,000 $ 25 49,165 $ 3 $(30,603) $269,423 $309,928 153 $ (3,553) $ - $545,223
- ------------------------------------------------------------------------------------------------------------------------------------
(1) September 30, 1999 September 30, 1998
------------------ ------------------
Reclassification adjustments:
Unrealized losses on available
for sale securities $ (43,235) $ 14,991
Less:reclassification adjustment for
gains realized included in net
income, net of tax (335) 4,262
----------------------------------
Net unrealized losses on securities $ (42,900) $ 10,729
----------------------------------
See accompanying notes to consolidated financial statements.
- ---------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In Thousands)
Nine Months Ended
September 30,
----------------------------------
1999 1998
----------------------------------
Cash Flow From Operating Activities:
Net income $ 66,029 $ 59,244
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan and repossessed real estate losses 8,110 10,504
Depreciation and amortization 31,071 29,199
Provision for impairment of mortgage servicing rights - 2,000
Net amortization of security discounts and premiums 1,226 396
Contribution of stock to Bank of Oklahoma Foundation - 2,257
Net gain on sale of assets (14,879) (16,863)
Mortgage loans originated for resale (558,043) (680,919)
Proceeds from sale of mortgage loans held for resale 604,863 685,938
(Increase) decrease in trading securities 33,241 (17,731)
(Increase) decrease in accrued revenue receivable 3,258 (10,110)
Increase in other assets (85,940) (4,724)
Increase in accrued interest, taxes and expense 25,989 5,915
Increase in other liabilities 57,184 6,073
- -----------------------------------------------------------------------------------------------
Net cash provided by operating activities 172,109 71,179
- -----------------------------------------------------------------------------------------------
Cash Flow From Investing Activities:
Proceeds from maturities of investment securities 53,962 27,816
Proceeds from maturities of available for sale securities 527,181 391,552
Purchases of investment securities (39,496) (36,941)
Purchases of available for sale securities (1,929,299) (1,853,847)
Proceeds from sales of available for sale securities 1,352,130 1,235,152
Proceeds from hedging mortgage servicing rights 874 21,974
Loans originated or acquired net or principal collected (809,352) (364,085)
Proceeds from disposition of assets 187,545 61,821
Purchases of assets (72,386) (43,071)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net 25,584 35,793
- -----------------------------------------------------------------------------------------------
Net cash used by investing activities (703,257) (523,836)
- -----------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase (decrease) in demand deposits, transaction
deposits, money market deposits, and savings accounts (134,032) 60,740
Net increase (decrease) in certificates of deposit 319,253 (12,263)
Net increase in other borrowings 465,763 401,517
Purchase of treasury stock (580) (8,482)
Common stock dividend (2,735) (2,343)
Preferred stock dividend - (1)
Issuance of preferred, common and treasury stock, net 1,238 3,098
Payments on stock option notes receivable - 4
- -----------------------------------------------------------------------------------------------
Net cash provided by financing activities 648,907 442,270
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 117,759 (10,387)
Cash and cash equivalents at beginning of period 471,425 400,105
- -----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 589,184 $ 389,718
- ---------------------------------------------------------------------------------------------
Cash paid for interest $ 191,416 $ 128,762
- ---------------------------------------------------------------------------------------------
Cash paid for taxes $ 19,468 $ 13,825
- ---------------------------------------------------------------------------------------------
Net loans transferred to repossessed real estate
And other assets $ 2,041 $ 2,165
- ---------------------------------------------------------------------------------------------
Payment of preferred stock dividends in common stock $ 1,125 $ 1,125
- ---------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(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 nine months of
1998 have been restated to reflect this acquisition. Information regarding this
acquisition follows (in thousands except per share data):
Nine Months Ended Three Months Ended
September 30, September 30, 1998
1998 1998
---------------- --- -------------------
Net interest revenue:
BOK Financial $ 133,278 $ 46,777
First Muskogee 6,050 2,084
---------------- --- -------------------
Combined $ 139,328 $ 48,861
---------------- --- -------------------
Net income:
BOK Financial $ 55,501 $ 18,750
First Muskogee 3,743 1,245
---------------- --- -------------------
Combined $ 59,244 $ 19,995
---------------- --- -------------------
Earnings per share:
Basic
BOK Financial $ 1.17 $ 0.40
First Muskogee 0.02 -
---------------- --- -------------------
Combined $ 1.19 $ 0.40
---------------- --- -------------------
Diluted
BOK Financial $ 1.04 $ 0.35
First Muskogee 0.02 0.01
---------------- --- -------------------
Combined $ 1.06 $ 0.36
---------------- --- -------------------
(3) MORTGAGE BANKING ACTIVITIES
At September 30, 1999, BOk owned the rights to service 95,575 mortgage loans
with outstanding principal balances of $6.9 billion, including $83.4 million
serviced for BOk. The weighted average interest rate and remaining term was
7.46% and 273 months, respectively.
Activity in capitalized mortgage servicing rights and related valuation
allowance during the nine months ending September 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 10,385 8,813 19,198 - 19,198
Amortization expense (9,435) (2,655) (12,090) 880 (11,210)
Realized hedge losses - - 28,454 28,454
Unrealized hedge losses - - 866 866
- ------------------------------- ---------- -- ---------- ---------- ------------- ----------- ---------
Balance at September 30, 1999
$ 71,459 $ 27,357 $ 98,816 $ - $ 7,716 $106,532
- ------------------------------- ---------- -- ---------- ---------- ------------- ----------- ---------
Estimated fair value of
mortgage servicing
rights (1) $ 79,502 $ 35,518 $115,020 $115,020
- ------------------------------- --- ---------- -- ---------- -- ---------- -- -------------- -- -------
(1) Excludes approximately $8.8 million of loan servicing rights on mortgage
loans originated prior to the adoption of FAS 122.
Stratification of the mortgage loan servicing portfolio, outstanding principal
of loans serviced, and related hedging information by interest rate at September
30, 1999 follows (in thousands):
< 6.50% 6.50% - 7.49% 7.50% - 8.49% => 8.50% Total
----------- ----------- ----------------- ------------- ----------
Cost less accumulated
amortization $ 8,138 $ 59,394 $ 28,470 $ 2,814 $ 98,816
Deferred hedge losses - 7,301 415 - 7,716
- --------------------------------------------- ------------------------- ------------- -------------
Adjusted cost 8,138 66,695 28,885 2,814 106,532
Fair value 9,444 68,339 32,118 5,119 115,020
- --------------------------------------------- ------------------------- ------------- -------------
Impairment $ - $ - $ - $ - $ -
- --------------------------------------------- ------------------------- ------------- -------------
Outstanding principal of loans
serviced (in millions) (1) $ 562 $ 3,688 $ 1,776 $ 309 $ 6,335
- ---------------------------------------------------------- -------------- ------------- -----------
(1) Excludes outstanding principal of $508.0 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):
Nine Months Ended September 30,
-------------------------------------
1999 1998
-------------- -----------------
Proceeds $ 1,352,130 $ 1,235,152
Gross realized gains 3,966 7,350
Gross realized losses 4,465 980
Related federal and state income
tax expense (164) 2,108
(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 Nine Months Ended
----------------------------------------------------------
September 30, September 30, September 30, September
1999 1998 1999 30,
1998
----------------------------------------------------------
Numerator:
Net income $ 22,736 $ 19,995 $ 66,029 $ 59,244
Preferred stock dividends 375 375 1,125 1,125
- ----------------------------------------------------------------------------------------------------------------
Numerator for basic earnings per share - income
available to common stockholders 22,361 19,620 64,904 58,119
- ----------------------------------------------------------------------------------------------------------------
Effect of dilutive securities:
Preferred stock dividends 375 375 1,125 1,125
- ----------------------------------------------------------------------------------------------------------------
Numerator for diluted earnings per share - income
available
to common stockholders after assumed conversion $ 22,736 $ 19,995 $ 66,029 $ 59,244
- ----------------------------------------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per share
-weighted average shares 48,993,564 48,824,281 48,927,113 48,899,911
Effect of dilutive securities:
Employee stock options 626,769 736,004 691,489 787,108
Convertible preferred stock 6,149,365 6,149,365 6,149,365 6,149,365
- ----------------------------------------------------------------------------------------------------------------
Dilutive potential common shares 6,776,134 6,885,369 6,840,854 6,936,473
- ----------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 55,769,698 55,709,650 55,767,967 55,836,384
- ----------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.46 $ 0.40 $ 1.33 $ 1.19
- ----------------------------------------------------------------------------------------------------------------
Diluted earnings per share 0.41 0.36 1.18 1.06
- ----------------------------------------------------------------------------------------------------------------
(6) REPORTABLE SEGMENTS
Reportable segments reconciliation to the Consolidated Financial Statements for
the nine months ended September 30, 1999 is as follows:
Other Other
Net Interest Operating Operating Average
Revenue Revenue Expense Assets
-------------- -- ------------- --- -------------- -- --------------
Total reportable lines of business $ 115,618 $ 104,425 $ 131,215 $ 5,729,790
Total non-reportable lines of business 42,221 35,495 60,284 1,743,904
Unallocated items:
Tax-equivalent adjustment (6,552) - - -
Funds management 20,715 253 11,313 107,935
Eliminations and all others, net (1,021) 1,558 3,447 (155,359)
============== == ============= === ============== == ==============
BOK Financial consolidated $ 170,981 $ 141,731 $ 206,259 $ 7,426,270
============== == ============= === ============== == ==============
Reportable segments reconciliation to the Consolidated Financial Statements for
the nine months ended September 30, 1998 is as follows:
Other Other
Net Interest Operating Operating Average
Revenue Revenue Expense Assets
-------------- -- ------------- --- -------------- -- --------------
Total reportable lines of business $ 103,701 $ 99,400 $ 132,094 $ 5,114,536
Total non-reportable lines of business 19,922 23,261 30,669 625,122
Unallocated items:
Tax-equivalent adjustment (7,101) - - -
Funds management 22,607 6,671 4,756 72,886
Contribution to BOk Foundation - - 2,257 -
Eliminations and all others, net 199 304 1,920 (17,381)
============== == ============= === ============== == ==============
BOK Financial consolidated $ 139,328 $ 129,636 $ 171,696 $ 5,795,163
============== == ============= === ============== == ==============
(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.
- ------------------------------------------------------------------------------------------------------------------------------------
NINE MONTH FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Nine months ended
-----------------------------------------------------------------------------------------
September 30, 1999 September 30, 1998
-------------------------------------------- ----------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
-----------------------------------------------------------------------------------------
Assets
Taxable securities $ 2,359,405 $ 106,520 6.04 $ 1,832,065 $ 84,925 6.20%
Tax-exempt securities(1) 297,776 17,130 7.69% 330,730 18,944 7.66
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities 2,657,181 123,650 6.22 2,162,795 103,869 6.42
- -----------------------------------------------------------------------------------------------------------------------------------
Trading securities 44,134 1,901 5.76 20,248 813 5.37
Funds sold 36,787 1,276 4.64 44,249 1,901 5.74
Loans(2)(3) 3,900,878 239,894 8.22 2,970,593 196,624 8.78
Less reserve for loan losses 71,004 57,728
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve(3) 3,829,874 239,894 8.37 2,912,865 196,624 8.88
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets(1)(2)(3) 6,567,976 366,721 7.47 5,140,157 303,207 7.80
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 858,294 655,006
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 7,426,270 $ 5,795,163
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,660,558 $ 33,872 2.73% $ 1,200,102 28,023 3.12%
Savings deposits 162,172 2,249 1.85 150,442 2,886 2.56
Other time deposits 1,908,636 72,031 5.05 1,810,460 74,244 5.48
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 3,731,366 108,152 3.88 3,161,004 105,153 4.45
- -----------------------------------------------------------------------------------------------------------------------------------
Other borrowings 1,913,032 74,089 5.18 1,028,039 44,265 5.76
Subordinated debenture 147,937 6,947 6.28 148,392 7,360 6.63
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing 5,792,335 189,188 4.37 4,337,435 156,778 4.83
liabilities(1)(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Demand deposits 1,006,552 919,055
Other liabilities 89,044 65,219
Shareholders' equity 538,339 473,454
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' $ 7,426,270 $ 5,795,163
equity
- -----------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue(1)(3) 177,533 3.10% 146,429 2.97%
Tax-Equivalent Net Interest Revenue (1)(3)
To Earning Assets 3.61 3.72
Less tax-equivalent adjustment(1) 6,552 7,101
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 170,981 139,328
Provision for loan losses 8,110 10,504
Other operating revenue 141,731 129,636
Other operating expense 206,259 171,696
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 98,343 86,764
Federal and state income tax 32,314 27,520
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 66,029 $ 59,244
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 1.33 $ 1.19
- -----------------------------------------------------------------------------------------------------------------------------------
Diluted $ 1.18 $ 1.06
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown are for comparative purposes.
(2) The loan averages included loans on which the accrual of interest has been
discontinued and are stated net of unearned income. (3) Yield/Rate excludes
$3,262 million of non-recurring collection of foregone interest in the second
and third quarters of 1998.
- ------------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
-------------------------------------------------------------------------------------
September 30, 1999 June 30, 1999
------------------------------------------ -------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate
-------------------------------------------------------------------------------------
Assets
Taxable securities $ 2,456,120 37,735 6.10% $ 2,418,685 $ 35,841 5.94%
Tax-exempt securities(1) 275,749 5,219 7.51 295,095 5,742 7.80
- ------------------------------------------------------------------------------------------------------------------------------
Total securities 2,731,869 42,954 6.24 2,713,780 41,583 6.15
- ------------------------------------------------------------------------------------------------------------------------------
Trading securities 27,606 393 5.65 50,190 812 6.49
Funds sold 40,295 503 4.95 40,587 520 5.14
Loans(2)(3) 4,256,430 89,882 8.38 3,822,018 77,330 8.12
Less reserve for loan losses 74,539 70,968
- ------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve(3) 4,181,891 89,882 8.53 3,751,050 77,330 8.27
- ------------------------------------------------------------------------------------------------------------------------------
Total earning assets(3) 6,981,661 133,732 7.60 6,555,607 120,245 7.36
- ------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 890,977 831,059
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $ 7,872,638 $ 7,386,666
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,858,386 12,278 2.62% $ 1,655,457 11,035 2.67%
Savings deposits 167,875 779 1.84 162,874 742 1.83
Other time deposits 2,046,295 26,236 5.09 1,822,915 22,643 4.98
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4,072,556 39,293 3.83 3,641,246 34,420 3.79
- ------------------------------------------------------------------------------------------------------------------------------
Other borrowings 2,067,944 27,689 5.31 1,955,583 24,761 5.08
Subordinated debenture 148,576 2,373 6.34 148,275 2,253 6.09
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 6,289,076 69,355 4.38 5,745,104 61,434 4.29
- ------------------------------------------------------------------------------------------------------------------------------
Demand deposits 969,289 1,008,502
Other liabilities 77,574 89,319
Shareholders' equity 536,699 543,741
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' $ 7,872,638 $ 7,386,666
Equity
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue (1)(3) 64,377 3.22% 58,811 3.07%
Tax-Equivalent Net Interest Revenue (1)(3)
To Earning Assets 3.66 3.60
Less tax-equivalent adjustment (1) 1,990 2,228
- ------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 62,387 56,583
Provision for loan losses 2,142 2,538
Other operating revenue 44,835 49,431
Other operating expense 70,755 70,678
- ------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 34,325 32,798
Federal and state income tax 11,589 10,742
- ------------------------------------------------------------------------------------------------------------------------------
Net Income $ 22,736 $ 22,056
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.46 $ 0.44
- ------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.41 $ 0.40
- ------------------------------------------------------------------------------------------------------------------------------
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown are for comparative purposes.
(2) The loan averages include loans on which the accrual of interest has been
discontinued and are stated net of unearned income. (3) Excludes $1,794 of
nonrecurring foregone interest in the third quarter 1998 and $1,468 in the
second quarter 1998.
- -------------------------------------------------------------------------------------------------------------------------
For Three months ended
- -------------------------------------------------------------------------------------------------------------------------
March 31, 1999 December 31, 1998 September 30, 1998
- -------------------------------------------------------------------------------------------------------------------------
Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield
Balance Expense(1) /Rate Balance Expense(1) /Rate Balance Expense(1) /Rate
- -------------------------------------------------------------------------------------------------------------------------
$ 2,198,972 $ 32,944 6.08% $ 2,011,692 $ 30,808 6.08% $ 1,864,907 $ 29,113 6.19%
324,297 6,168 7.71 328,998 6,269 7.56 331,444 6,317 7.56
- -------------------------------------------------------------------------------------------------------------------------
2,523,269 39,112 6.29 2,340,690 37,077 6.28 2,196,351 35,430 6.40
- -------------------------------------------------------------------------------------------------------------------------
54,907 696 5.14 19,415 232 4.74 27,389 389 5.63
34,962 413 4.79 31,779 420 5.24 31,378 417 5.27
3,617,162 72,683 8.15 3,365,960 71,331 8.41 3,073,221 68,715 8.64
67,428 64,682 60,720
- -------------------------------------------------------------------------------------------------------------------------
3,549,734 72,683 8.30 3,301,278 71,331 8.57 3,012,501 68,715 8.81
- -------------------------------------------------------------------------------------------------------------------------
6,162,872 112,904 7.43 5,693,162 109,060 7.60 5,267,619 104,951 7.77
- -------------------------------------------------------------------------------------------------------------------------
833,945 689,808 664,646
- -------------------------------------------------------------------------------------------------------------------------
$ 6,996,817 $ 6,382,970 $ 5,932,265
- -------------------------------------------------------------------------------------------------------------------------
$ 1,463,556 10,558 2.93% $ 1,264,080 9,126 2.86 $ 1,213,449 9,443 3.09
155,634 729 1.90 159,914 950 2.36 150,198 931 2.46
1,854,590 23,152 5.06 1,720,035 22,775 5.25 1,760,223 23,968 5.40
- -------------------------------------------------------------------------------------------------------------------------
3,473,780 34,439 4.02 3,144,029 32,851 4.15 3,123,870 34,342 4.36
- -------------------------------------------------------------------------------------------------------------------------
1,715,715 21,772 5.15 1,504,257 20,444 5.39 1,154,520 16,857 5.79
148,482 2,348 6.41 147,418 2,333 6.28 148,392 2,529 6.76
- -------------------------------------------------------------------------------------------------------------------------
5,337,977 58,559 4.45 4,795,704 55,628 4.60 4,426,782 53,728 4.82
- -------------------------------------------------------------------------------------------------------------------------
1,042,679 984,589 936,690
83,315 87,304 79,433
532,846 515,373 489,360
- -------------------------------------------------------------------------------------------------------------------------
$ 6,996,817 $ 6,382,970 $ 5,932,265
- -------------------------------------------------------------------------------------------------------------------------
54,345 2.98% 53,432 3.00% 51,223 2.95%
3.05
3.58 3.72 3.72
2,334 2,334 2,362
- -------------------------------------------------------------------------------------------------------------------------
52,011 51,098 48,861
3,430 4,087 4,061
47,465 45,384 43,415
64,826 62,299 58,171
- -------------------------------------------------------------------------------------------------------------------------
31,220 30,096 30,044
9,983 9,729 10,049
- -------------------------------------------------------------------------------------------------------------------------
$ 21,237 $ 20,367 $ 19,995
- -------------------------------------------------------------------------------------------------------------------------
$ 0.43 $ 0.41 $ 0.40
- -------------------------------------------------------------------------------------------------------------------------
$ 0.38 $ 0.37 $ 0.36
- -------------------------------------------------------------------------------------------------------------------------
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
September 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: November 15, 1999 /s/ James A. White
----------------- ------------------------------
James A. White
Executive Vice President and
Chief Financial Officer