-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dl1Xrgy/rcIvwlmr4aRSTMCEEO1hns6MxEhg6ug5HQZHl8nGCeU7NRhNC8rgOt7v v81fFRJ1XZnObFi2YBl6XA== 0000875357-96-000012.txt : 19961113 0000875357-96-000012.hdr.sgml : 19961113 ACCESSION NUMBER: 0000875357-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOK FINANCIAL CORP ET AL CENTRAL INDEX KEY: 0000875357 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 731373454 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19341 FILM NUMBER: 96659648 BUSINESS ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: PO BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 BUSINESS PHONE: 9185886000 MAIL ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: P O BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 10-Q 1 As filed with the Securities and Exchange Commission on November 12, 1996 ================================================================================ 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 30,1996 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 ($.00006 Par Value) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:20,508,171 shares of common stock ($.00006 par value) as of October 31, 1996. ================================================================================ BOK Financial Corporation Form 10-Q Quarter Ended September 30, 1996 Index Part I. Financial Information Management's Discussion and Analysis of Financial Condition and Results of Operations 2 Report of Management on Consolidated Financial Statements 13 Consolidated Statements of Earnings 14 Consolidated Balance Sheets 16 Consolidated Statements of Changes in Shareholders' Equity 18 Consolidated Statements of Cash Flows 19 Notes to Consolidated Financial Statements 21 Financial Summaries - Unaudited 23 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 29 Signature 29 MANAGEMENT'S DISCUSSION AND ANALYSIS HIGHLIGHTS BOK Financial Corporation("BOK Financial") recorded net income of $13.0 million or $0.56 per fully diluted common share for the third quarter of 1996 compared to $12.5 million or $0.54 per fully diluted common for the third quarter of 1995. Returns on average assets and equity were 1.20% and 15.99%, respectively, for the third quarter of 1996. This is compared to returns on average assets and equity of 1.22% and 17.57%, respectively, for the same period of 1995. The third quarter of 1996 included a charge of $3.8 million related to the recapitalization of the Savings Association Insurance Fund ("SAIF"), partially offset by a gain of $2.0 million on the sale of non-accruing notes. Excluding these items, net income and fully diluted earnings per common share would have been $14.2 million and $0.61, respectively. Both of these items are more fully discussed in subsequent sections of this report. Year to date, net income and earnings per fully diluted common share were $39.6 million or $1.69, respectively, for 1996 compared to $36.5 million or $1.57, respectively, for 1995. BOK Financial has reached a definitive agreement for the acquisition of First National Bank of Park Cities ("Park Cities") in Dallas, Texas. This acquisition, which will be accounted for as a purchase, will provide BOK Financial with a strong entry into the rapidly growing North Texas market. Park Cities has total assets of approximately $206 million and total deposits of approximately $187 million. The purchase price of approximately $52 million will be paid in a combination of cash and notes. The acquisition, which is 2 subject to shareholder and regulatory approval, is expected to be completed during the first quarter of 1997. RESULTS OF OPERATIONS Net interest income on a tax-equivalent basis was $34.0 million for the third quarter of 1996 compared to $30.8 million for the third quarter of 1995, an increase of $3.2 million or 10.4%. Average earning assets increased by $194 million while interest bearing liabilities increased by $145 million. The growth in average earning assets in excess of the growth in interest bearing liabilities was funded by increases in both average demand deposits and equity. The growth in average earning assets was substantially due to loans which increased by $182 million or 8.8% compared to the third quarter of 1995. The growth in average earning assets and the improvement in asset mix increased interest income by $4.3 million. This increase was partially offset by a $781 thousand (1 basis point) decrease in the yield on average earning assets. TABLE 1 - VOLUME/RATE ANALYSIS (In thousands) Three months ended Nine months ended September 30, 1996/1995 September 30, 1996/1995 -------------------------------------------------------- -----Due to----- -----Due to----- Yield Yield Change Volume /Rate Change Volume /Rate -------------------------------------------------------- Tax-equivalent interest revenue: Securities $ 381 $ 167 $ 214 $ (4,027) $ (2,579)$ (1,448) Trading securities 22 13 9 98 90 8 Loans 2,957 3,946 (989) 14,910 17,187 (2,277) Funds sold 149 164 (15) 566 652 (86) - ------------------------------------------------------------------------------- Total 3,509 4,290 (781) 11,547 15,350 (3,803) - ------------------------------------------------------------------------------- Interest expense: Interest bearing transaction deposits 896 1,326 (430) 1,986 3,164 (1,178) Savings (94) (87) (7) (435) (367) (68) Time 4,303 4,818 (515) 15,596 15,556 40 Other borrowings (4,792) (4,141) (651) (15,309) (12,199) (3,110) Subordinated debenture - - - (352) (352) - - ------------------------------------------------------------------------------- Total 313 1,916 (1,603) 1,486 5,802 (4,316) - ------------------------------------------------------------------------------- Tax-equivalent net interest revenue $ 3,196 $ 2,374 $ 822 $ 10,061 $ 9,548 $ 513 Less change in tax- equivalent adjustment 305 683 - ------------------------------------------------------------------------------- Net interest revenue $ 2,891 $ 9,378 =============================================================================== (1) Changes attributable to both volume and yield are allocated to both volume and yield/rate on an equal basis. 3 Since the second quarter of 1995, management has taken steps to reduce BOK Financial's reliance on borrowed funds and to increase deposits as a source of funding. Average interest bearing deposits increased $425 million or 20.4% compared to the third quarter of 1995 while borrowed funds decreased $281 million or 26.5%. This improvement in the mix of interest bearing liabilities decreased interest expense by $1.6 million. Additionally, interest rate swaps, which hedge against interest rate risk on certain long-term certificates of deposit, reduced interest expense for the third quarter and year to date, 1996 by $404 thousand and $1.1 million, respectively. Since inception in 1990, BOK Financial has followed a strategy of fully utilizing its capital resources by borrowing funds in the capital markets to supplement deposit growth and investing in securities. This strategy frequently results in a net interest margin which falls below those normally seen in the commercial banking industry even though it provides positive net interest revenue because of a relatively larger proportion of securities in earning assets. As more fully discussed in the subsequent Interest Rate Sensitivity and Liquidity section, management employs various techniques to control, within established parameters, the interest rate and liquidity risk which results from this strategy. Net interest margin,the ratio of net interest revenue to average earning assets was 3.53% for the third quarter of 1996 compared to 3.36% in the third quarter of 1995 and 3.64% in the second quarter of 1996. The increase in net interest margin compared to the same quarter of 1995 is due to the previously discussed changes in the mix of interest bearing liabilities. The decrease in net interest margin compared to the preceding quarter is due primarily to a 16basis point decrease in the yield on loans and a 2basis point increase in the cost of deposits. Both of these changes reflect competitive pricing in BOK Financial's primary market areas. This competitive pricing is expected to continue as national and regional competitors continue to enter the Oklahoma market. Year to date tax equivalent net interest revenue was $101.1 million, a $10.1 million or 11.0% increase over the same period of 1995. Growth in average earning assets and improvement in the mix of earning assets contributed $15.4 million to this increase, partially offset by a 4 basis point decrease in the yield on earning assets. Interest expense increased $1.5 million as the effect of growth in interest bearing liabilities was substantially offset by improvement in the mix between deposits and borrowed funds. 4 TABLE 2 - OTHER OPERATING REVENUE (In thousands) Three Months Ended ---------------------------------------------------- Sept. 30, June 30, March 31, Dec. 30, Sept. 30, 1996 1996 1996 1995 1995 ---------------------------------------------------- Brokerage and trading revenue $ 2,031 $ 1,823 $ 2,078 $ 1,518 $ 1,808 TransFund network revenue 2,236 2,153 2,096 1,880 1,867 Securities gains (losses), net - (1,967) (18) - 948 Trust fees and commissions 5,317 5,528 5,469 5,014 4,731 Service charges and fees on deposit accounts 6,027 5,732 5,839 5,697 5,205 Mortgage banking revenue 7,103 6,056 5,869 5,905 4,850 Other revenue 4,514 4,641 5,251 3,937 3,776 - ------------------------------------------------------------------------------ Total $ 27,228 $ 23,966 $ 26,584 $ 23,951 $ 23,185 ============================================================================== Other operating revenue, excluding securities gains and losses, increased $5.0 million or 22.4% compared to the third quarter of 1995. All significant revenue producing activities contributed to this increase. The increased revenue from brokerage and trading activities,transFund network, trust fees and deposit fees was due primarily to volume gains in each area. Mortgage banking revenue increased $2.3 million or 46.5% attributable to a $1.5 million increase in servicing revenue and a $777 thousand improvement in secondary marketing activities. Mortgage loans serviced totaled $5.9 billion at September 30, 1996 compared to $5.1 billion at September 30, 1995. Certain of BOK Financial's fee generating activities, such as brokerage and trading activities, trust fees, and mortgage servicing revenue, are affected by changes in interest rates. Significant increases in interest rates may tend to decrease the volume of trading activities, may lower the value of trust assets managed, which is the basis for certain fees, but would tend to decrease the incidence of mortgage loan prepayment. Similarly, a decrease in economic activity would decrease ATM, bankcard and other related revenue. Year to date other operating revenue, excluding securities gains and losses, increased $13.7 million or 20.8%. The same volume-related factors which caused the third quarter's increase also contributed to the year to date increases. While management expects continued growth in other operating revenue, the rate of increase may not be sustainable due to increased competition from national and regional banks which have entered the Oklahoma market and from market saturation. Continued growth may require BOK Financial to introduce new products or to enter new markets which introduces additional demands on capital and managerial resources. 5 TABLE 3 - OTHER OPERATING EXPENSE (In thousands) Three Months Ended ------------------------------------------------------ Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1996 1996 1996 1995 1995 ------------------------------------------------------ Personnel $ 17,759 $ 18,059 $ 17,747 $ 17,097 $ 16,729 Business promotion 1,618 1,801 1,494 1,315 1,658 Professional fees/services 1,458 1,420 1,242 1,307 1,973 Net occupancy, equipment and data processing 7,799 7,845 7,158 7,318 7,106 FDIC and other insurance 4,377 555 539 660 519 Printing, postage and supplies 1,683 1,763 1,577 1,771 1,582 Net gains and operating expenses on repossessed assets (2,706) (946) (197) (164) (858) Amortization of intangible assets 1,238 5,288 1,465 1,527 1,495 Mortgage banking costs 4,089 3,646 3,745 3,222 3,184 Other expense 2,982 3,343 2,872 2,799 2,294 - ------------------------------------------------------------------------------ Total $ 40,297 $ 42,774 $ 37,642 $ 36,852 $ 35,682 ============================================================================== Operating expenses for the third quarter of 1996 increased $4.6 million or 12.9% compared to the third quarter of 1995. The most significant increase in operating expenses was due to a special deposit insurance assessment of $3.8 million. On September 30, 1996, legislation was enacted which was designed to recapitalize the SAIF and to subsequently equalize SAIF and Bank Insurance Fund premium rates. This legislation included a one-time assessment against all SAIF insured deposits, including approximately $740 million of such deposits held by BOK Financial as a result of acquisition activities over the past five years. Following this assessment, management expects future deposit insurance premiums to decrease by approximately $300 thousand per quarter. Excluding the effect of this special assessment and other significant or non- recurring items as shown in Table 4, operating expenses increased $3.5 million or 9.8% compared to the third quarter of 1995. Personnel costs increased $1.0 million or 6.2% due primarily to staffing increases and incentive compensation which are directly related to increases in revenue. Other expenses, including data processing and mortgage banking costs, increased $2.4 million or 13.07% due to increased volumes. 6 TABLE 4 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS (In thousands) Three Months Ended ----------------------------------------------------- Sept. 30 June 30, March 31, Dec. 31, Sept. 30, 1996 1996 1996 1995 1995 ----------------------------------------------------- Total Other Operating Expense $ 40,297 $ 42,774 $ 37,642 $ 36,852 $ 35,682 FDIC Insurance premium reduction, net of costs (3,820) - - - - Organizational costs for new subsidiary - - - - (500) Net gains and operating costs from repossessed assets 2,706 946 197 164 858 Asset valuation charges - (4,071) (500) (500) (350) Item processing conversion and other related charges - (750) - - - - ------------------------------------------------------------------------------- Total $ 39,183 $ 38,899 $ 37,339 $ 36,516 $ 35,690 =============================================================================== The efficiency ratio, recurring operating expenses divided by total tax- equivalent revenue, was 64.0% for the third quarter compared to 66.1% in the second quarter of 1996 and 68.9% in the third quarter of 1995. This improvement is due to growth in revenue in excess of growth in related operating expenses. Year to date operating expenses, excluding net gains on sales of repossessed assets and charges for the SAIF assessment in the third quarter and for SAIF- related core deposit intangible assets in the second quarter, increased $8.6 million or 8.0%. The more significant increases were personnel expenses which increased $3.4 million or 6.7% (including $1.3 million of increased incentive compensation which varies directly with revenue increases), mortgage banking costs which increased $2.2 million due primarily to additional loan servicing, and data processing expenses which increased $2.0 million due to increased processing volume. During the third quarter of 1996, BOK Financial sold two non-accruing loans for cash, notes and other consideration. This sale resulted in a recovery of amounts previously charged off of approximately $2.7 million, a gain of approximately $2.0 million, and a reduction of nonaccrual commercial real estate loans of $3.7 million. This recovery, along with other significant recoveries during the quarter, increased the allowance for loan losses by $4.7 million. As a result, the provision for loan losses for the third quarter of 1996 was $62 thousand, compared to $2.9 million in the second quarter of 1996 and $15 thousand in the third quarter of 1995. 7 RISK ELEMENTS The aggregate loan portfolio increased $125 million or 5.7% since December 31, 1995 and $75 million since June 30, 1996. Commercial loans contributed $81 million and $62 million, respectively, to this growth. Consumer loans also increased $18 million during the third quarter of 1996 and $40 million since December 31, 1995 (after adjusting for $25 million of student loans sold during the first quarter of 1996). TABLE 5 - LOANS (In thousands) Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1996 1996 1996 1995 1995 ------------------------------------------------------- Commercial: Energy $ 185,972 $ 176,685 $ 156,230 $ 159,887 $ 159,430 Manufacturing 126,356 139,509 148,068 136,701 131,465 Wholesale/retail 177,351 179,458 156,261 143,941 139,426 Agricultural 95,973 88,036 89,080 86,733 74,342 Loans for purchasing or carrying securities 14,728 8,587 7,613 7,963 7,491 Other commercial and industrial 341,352 287,339 288,518 325,839 284,590 Commercial real estate: Construction and land development 140,189 151,032 143,476 148,217 126,219 Other real estate loans 496,356 493,107 473,110 450,385 436,929 Residential mortgage: Secured by 1-4 family residential property 434,789 424,766 419,135 436,816 432,565 Residential mortgages held for resale 66,310 73,335 102,836 72,412 79,914 Consumer 240,468 222,844 214,834 225,474 239,184 - -------------------------------------------------------------------------------- Total $2,319,844 $2,244,698 $2,199,161 $2,194,368 $2,111,555 ================================================================================ Substantially all commercial and consumer loans and a large portion of residential mortgage loans (excluding loans held for sale) are to businesses and individuals within Oklahoma or Northwest Arkansas. This geographic concentration subjects the loan portfolio to the general economic conditions within BOK Financial's primary market area. Major segments of the commercial loan portfolio are presented in Table 5. Commercial real estate loans are secured primarily by properties located in the Tulsa or Oklahoma City metropolitan areas. BOK Financial monitors loan performance on a portfolio and individual loan basis. Nonperforming loans, which include all loans identified as doubtful or loss, are reviewed at least quarterly. The loan review process involves evaluating the credit worthiness of customers and their ability, based upon current and anticipated economic conditions, to meet future principal and interest payments. Loans may be identified which 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 8 accordance with the original terms of the loan agreements and no loss of principal or interest is anticipated, such loans are not included in the nonperforming assets totals. These loans are assigned to various risk categories in order to focus management's attention on the loans with higher risk of loss.At September 30, 1996, loans totaling $44 million were assigned to the substandard risk category, and loans totaling $71 million were assigned to the special mention category. These are compared to $42 million and $40 million, respectively, at December 31, 1995. In addition, various regulatory agencies, as part of their examination process, periodically review management's evaluation of loan performance and the adequacy of the reserve for loan losses.BOK Financial has experienced no significant differences of opinion between management's and the regulatory agencies' evaluations of the collectibility of the loan portfolio. TABLE 6 - NONPERFORMING ASSETS (In thousands) Sept. 30, June 30, March 31 Dec. 31, Sept. 30, 1996 1996 1996 1995 1995 ------------------------------------------------ Nonperforming assets: Nonperforming loans: Nonaccrual loans: Commercial $ 10,844 $ 11,418 $ 12,399 $ 14,646 $ 15,095 Commercial real estate 4,323 8,528 10,138 10,621 6,412 Residential mortgage 3,333 3,001 3,136 2,794 3,269 Consumer 1,114 1,037 1,178 1,227 1,175 - ------------------------------------------------------------------------------- Total nonaccrual loans 19,614 23,984 26,851 29,288 25,951 Loans past due (90 days)(1) 17,379 17,424 15,023 9,379 7,888 - ------------------------------------------------------------------------------- Total nonperforming loans(1) 36,993 41,408 41,874 38,667 33,839 - ------------------------------------------------------------------------------- Other nonperforming assets: Commercial real estate 4,158 3,342 2,949 3,023 3,429 Other 926 481 526 376 344 - ------------------------------------------------------------------------------- Total other nonperforming assets 5,084 3,823 3,475 3,399 3,773 - ------------------------------------------------------------------------------- Total nonperforming assets $ 42,077 $ 45,231 $ 45,349 $ 42,066 $ 37,612 - ------------------------------------------------------------------------------- Ratios: Reserve for loan losses to nonperforming loans 121.53% 103.38% 94.48% 99.02% 112.98% Nonperforming loans(1) to period-end loans(2) 1.64 1.91 2.00 1.82 1.67 - ------------------------------------------------------------------------------- (1) Includes 1-4 family loans guaranteed by agencies of the U.S. government $ 13,741 $ 12,456 $ 12,165 $ 6,754 $ 5,931 (2) Excludes residential mortgage loans held for sale =============================================================================== The allowance for loan losses, which is available to absorb losses inherent in the loan portfolio, totaled $45 million at September 30, 1996 compared to $38 9 million at December 31 1995 or 2.00% and 1.80%, respectively, of total loans, excluding loans held for sale. Losses on loans held for sale, principally residential 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 7 presents statistical information regarding the reserve for loan losses. TABLE 7 - SUMMARY OF LOAN LOSS EXPERIENCE (In thousands) Three months ended -------------------------------------------------- Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1996 1996 1996 1995 1995 -------------------------------------------------- Beginning balance $ 42,807 $ 39,561 $ 38,287 $ 38,232 $ 38,143 Loans charged-off: Commercial 1,475 222 397 135 96 Commercial real estate 335 106 82 155 - Residential mortgage 97 80 14 153 2 Consumer 663 820 735 696 647 - ------------------------------------------------------------------------------- Total 2,570 1,228 1,228 1,139 745 - ------------------------------------------------------------------------------- Recoveries of loans previously charged-off: Commercial 1,670 449 807 428 318 Commercial real estate 2,747 741 463 119 259 Residential mortgage 21 44 130 302 19 Consumer 222 303 191 169 223 - ------------------------------------------------------------------------------- Total 4,660 1,537 1,591 1,018 819 - ------------------------------------------------------------------------------- Net loans charged-off (recoveries) (2,090) (309) (363) 121 (74) Provision for loan losses 62 2,937 911 176 15 Addition due to acquisition - - - - ------------------------------------------------------------------------------- Ending balance $ 44,959 $ 42,807 $ 39,561 $ 38,287 $ 38,232 - ------------------------------------------------------------------------------- Reserve to loans outstanding at period-end(1) 2.00 1.97 1.89 1.80 1.88 Net loan losses (recoveries) (annualized) to average loans(1) (0.39) (0.06) (.07) .02 (.01) - ------------------------------------------------------------------------------- (1) Excludes residential mortgage loans held for sale =============================================================================== The adequacy of the allowance for loan losses is assessed by management based upon an evaluation of the current risk characteristics of the loan portfolio including current economic conditions, historical experience, collateral 10 valuation, changes in the composition of the portfolio and other relevant factors. A provision for loan losses is charged against earnings in amounts necessary to maintain the adequacy of the allowance for loan losses. As prev- iously discussed, BOK Financial realized $4.7 million of recoveries on loans previously charged-off compared to charge-offs for the third quarter of $2.6 million. The resulting increase in the allowance for loan losses reduced the need for a provision for loan losses. Management believes that the allowance for loan losses is adequate for each period presented based upon the evaluation criteria and information available at that time. INTEREST RATE SENSITIVITY AND LIQUIDITY BOK Financial's asset/liability management policy addresses several complementary goals: assuring adequate liquidity, maintaining an appropriate balance between interest sensitive assets and liabilities, and maximizing net interest revenue. The responsibility for attaining these goals rests with the Asset/Liability Committee which operates under policy guidelines which have been established by the Board of Directors. These guidelines limit the negative acceptable variation in net interest revenue and economic value of equity due to a 200 basis point rate increase or decrease to +/-10%, 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 are reviewed monthly. At September 30, 1996, BOK Financial is within all guidelines established under these policies. Interest rate sensitivity, the risk associated with changes in interest rates, is of primary importance within the banking industry. Management has established strategies and procedures to protect net interest revenue against significant changes in interest rates. Generally, these strategies are designed to achieve an acceptable level of net interest revenue based upon management's projections of future changes in interest rates. Management simulates the potential effect of changes in interest rates through computer modeling which incorporates both the current gap position and the expected magnitude of the repricing of specific types of assets and liabil- ities. This modeling is performed assuming expected interest rates over the next twelve months based on a "most likely" rate scenario and on two "shock test" rate scenarios, the first assumes a 200 basis point increase and the second assuming a 200 basis point decrease over the next twelve months. An independent source is used to determine the most likely interest rates for the next year. At September 30, 1996, this modeling indicated that under both the most likely interest rate forecast and the 200 basis point increase scenario, net interest revenue would increase by less than 2% and under the 200 basis point decrease scenario, net interest revenue would decrease by less than 3%. In addition to the decrease in net interest revenue, which would result from a 200 basis point decrease in interest rates, this modeling indicates that the pre-tax value of BOK Financial's capitalized mortgage servicing rights would decrease by approximately $17.8 million. While this decrease in value would largely be offset by an increase in the value of the securities portfolio, current accounting principles require the decreased value of mortgage loan servicing rights to be charged to earnings while the increased value of available for sale securities would be credited to shareholders' equity. These simulations are based on numerous assumptions regarding the timing and extent of repricing characteristics, prepayments and other factors. Actual results may differ significantly. 11 BOK Financial uses interest rate swaps, a form of off-balance sheet derivative product, in managing its interest rate sensitivity. These swaps are used to more closely match the interest paid on certain long-term, fixed rate certificates of deposit with earning assets. Swaps allow BOK Financial to offer these deposits to its customers without altering the desired repricing characteristics. BOK Financial accrues and periodically receives a fixed amount from the counter parties to these swaps and accrues and periodically makes a variable payment to the counter parties.Credit risk from these swaps is closely monitored and counter parties to these contracts are selected on the basis of their credit worthiness among other factors. These products are not used for speculative purposes. - ------------------------------------------------------------------------------- TABLE 8 - INTEREST RATE SWAPS (In thousands) Notional Pay Receive Amount Rate Rate ---------------------------------------------------- Expiration: 1998 $70,000 5.25 - 7.03% (1) 5.8125 - 7.96% 1999 15,000 5.2578 (1) 7.68 - ------------------------------------------------------------------------------- (1) Rates are variable based on LIBOR and reset quarterly or semiannually. =============================================================================== The best measure of liquidity is the ability to obtain funds to meet cash requirements. Liquidity is achieved through maturities of earning assets, securities available for sale and loans held for sale. On the liability side, liquidity depends on the availability of deposits and short-term borrowings in both the local and national markets. Cash provided by operating activities in the first nine months of 1996 totaled $73 million. This compares to cash provided by operating activities of $3 million, or $44 million excluding the decrease in mortgage loans held for sale, in the first nine months of 1995. Investing activities used $251 million in the first nine months of 1996, primarily for the net purchase of securities totaling $98 million and net loan fundings of $156 million. This is compared to $51 million of net securities purchases and $231 million in net loan fundings in the first nine months of 1995. Financing activities provided $211 million during the first nine months of 1996 Demand deposits provided $101 million of the $153 million increase in total demand, transaction, money market and savings deposits. Certificates of deposit provided $145 million. These funds were used to reduce other borrowings by $87 million as well as for investing activities. 12 TABLE 9 - CAPITAL RATIOS Sept. 30, June 30, March 31, Dec. 31,Sept. 30, 1996 1996 1996 1995 1995 ----------------------------------------------- Average shareholders' equity to average assets Risk-based capital Tier 1 capital 10.26% 10.43% 10.08% 9.91% 9.75% Total capital 11.52 11.69 11.33 11.17 11.01 Leverage 7.34 7.09 6.80 6.55 6.27 ============================================================================== 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 1995 Form 10-K to the Securities and Exchange Commission which contains audited financial statements. 13 CONSOLIDATED STATEMENTS OF EARNINGS (In Thousands Except Share Data) Three Months Ended Nine Months Ended September 30, September 30, - ------------------------------------------------------------------------------ 1996 1995 1996 1995 - ------------------------------------------------------------------------------ INTEREST REVENUE Loans $ 49,094 $ 46,216 $ 145,984 $ 131,214 Taxable securities 20,013 20,243 58,323 63,739 Tax-exempt securities 3,412 3,027 9,878 9,031 - ------------------------------------------------------------------------------ Total securities 23,425 23,270 68,201 72,770 - ------------------------------------------------------------------------------ Trading securities 73 51 267 170 Funds sold 298 149 1,274 708 - ------------------------------------------------------------------------------ Total interest revenue 72,890 69,686 215,726 204,862 - ------------------------------------------------------------------------------ INTEREST EXPENSE Deposits 29,784 24,679 88,211 71,064 Other borrowings 11,160 15,952 32,320 47,629 Subordinated debenture -- -- 352 - ------------------------------------------------------------------------------ Total interest expense 40,944 40,631 120,531 119,045 - ------------------------------------------------------------------------------ NET INTEREST REVENUE 31,946 29,055 95,195 85,817 PROVISION FOR LOAN LOSSES 62 15 3,910 55 - ------------------------------------------------------------------------------ NET INTEREST REVENUE AFTER PROVISION FOR LOAN LOSSES 31,884 29,040 91,285 85,762 - ------------------------------------------------------------------------------ OTHER OPERATING REVENUE Brokerage and trading revenue 2,031 1,808 5,932 4,528 TransFund network revenue 2,236 1,867 6,485 5,145 Securities gains (losses), net -- 948 (1,985) 1,174 Trust fees and commissions 5,317 4,731 16,314 14,349 Service charges and fees on deposit accounts 6,027 5,205 17,598 15,455 Mortgage banking revenue, net 7,103 4,850 19,028 14,430 Other revenue 4,514 3,776 14,406 12,114 - ------------------------------------------------------------------------------ Total other operating revenue 27,228 23,185 77,778 67,195 - ------------------------------------------------------------------------------ OTHER OPERATING EXPENSE Personnel 17,759 16,729 53,565 50,201 Business promotion 1,618 1,658 4,913 4,724 Professional fees and services 1,458 1,973 4,120 4,591 Net occupancy, equipment and data processing 7,799 7,106 22,802 20,006 FDIC and other insurance 557 519 1,651 3,746 Special deposit insurance Assessment 3,820 -- 3,820 -- Printing postage and supplies 1,683 1,582 5,023 4,569 Net gains and operating expenses on repossessed assets (2,706) (858) (3,849) (2,934) Amortization of intangible assets 1,238 1,495 7,991 4,464 Mortgage banking costs 4,089 3,184 11,480 9,307 Other expense 2,982 2,294 9,197 6,680 - ------------------------------------------------------------------------------ Total other operating expense 40,297 35,682 120,713 105,354 - ------------------------------------------------------------------------------ INCOME BEFORE TAXES 18,815 16,543 48,350 47,603 Federal and state income tax 5,840 4,050 8,789 11,061 - ------------------------------------------------------------------------------ NET INCOME $ 12,975 $ 12,493 $ 39,561 $ 36,542 ============================================================================== EARNINGS PER SHARE: Net income Primary $ 0.61 $ 0.59 $ 1.87 $ 1.72 - ------------------------------------------------------------------------------ Fully diluted $ 0.56 $ 0.54 $ 1.69 $ 1.57 - ------------------------------------------------------------------------------ AVERAGE SHARES USED IN COMPUTATION: Primary 20,581,581 20,575,203 20,557,098 20,547,572 - ------------------------------------------------------------------------------ Fully diluted 23,367,851 23,307,020 23,362,881 23,302,722 ============================================================================== See accompanying notes to consolidated financial statements 15 CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Data) September 30, December 31, September 30, 1996 1995 1995 ---------------------------------------------- ASSETS Cash and due from banks $ 313,541 303,499 248,826 Funds sold 31,225 8,440 9,560 Trading securities 4,015 7,777 7,605 Securities: Available for sale 1,425,362 1,366,661 634,587 Investment (fair value: September 30, 1996 - $199,221; December 31, 1995 - $181,786; September 30, 1995 - $916,047) 200,961 179,121 927,375 - ------------------------------------------------------------------------------ Total securities 1,626,323 1,545,782 1,561,962 - ------------------------------------------------------------------------------ Loans 2,319,844 2,194,368 2,111,555 Less reserve for loan losses 44,959 38,287 38,232 - ------------------------------------------------------------------------------ Net loans 2,274,885 2,156,081 2,073,323 - ------------------------------------------------------------------------------ Premises and equipment, net 48,141 47,673 47,172 Accrued revenue receivable 39,384 41,121 39,589 Excess cost over fair value of net assets acquired and core deposit premiums (net of accumulated amortization: September 30, 1996 - $22,764; December 31, 1995 - $21,526; September 30, 1995 - $19,998) 29,517 37,134 38,610 Mortgage servicing rights 61,377 50,634 50,899 Real estate and other repossessed assets 5,084 3,399 3,773 Other assets 39,201 20,378 19,442 - ------------------------------------------------------------------------------ Total assets $ 4,472,693 4,221,918 4,100,761 ============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing demand deposit $ 724,094 651,134 607,606 Interest-bearing deposits: Interest bearing transaction 867,171 781,205 769,885 Savings 98,589 104,726 112,328 Time 1,546,092 1,400,644 1,236,294 - ------------------------------------------------------------------------------ Total deposits 3,235,946 2,937,709 2,726,113 - ------------------------------------------------------------------------------ Funds purchased and repurchase agreements 573,004 697,497 946,124 Other borrowings 287,604 250,309 94,807 Accrued interest, taxes and expense 26,968 25,107 29,598 Other liabilities 15,994 9,731 14,218 - ------------------------------------------------------------------------------ Total liabilities 4,139,516 3,920,353 3,810,860 - ------------------------------------------------------------------------------ Stockholders' equity: Preferred stock 23 23 13 Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued: September 30, 1996 - 20,488,254; December 31, 1995 - 20,415,504; September 30, 1995 - 19,799,415) 1 1 1 Capital surplus 158,851 157,395 144,087 Retained earnings 185,156 146,727 147,295 Treasury stock (shares at cost: September 30, 1996 - 4,733) (106) - - Unrealized loss on securities available for sale (10,628) (2,427) (1,279) Less notes receivable from exercise of stock options (120) (154) (216) - ------------------------------------------------------------------------------ Total shareholders' equity 333,177 301,565 289,901 - ------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 4,472,693 4,221,918 4,100,761 ============================================================================== See accompanying notes to consolidated financial statements. 17 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (in thousands) Preferred Stock Common Stock Capital Retained Treasury Stock Unrealized Notes Shares Amount Shares Amount Surplus Earnings Shares Amount Gain(Loss) Receivable Total ------------------------------------------------------------------------------------------ Balances at December 31, 1994 250,000 $ 13 19,735 $1 $142,718 $111,878 - $ - $ (17,423) $ (285) $ 236,902 Net income - - - - - 36,542 - - - - 36,542 Issuance of common stock to Thrift Plan - - 3 - 70 - - - - - 70 Exercise of stock options - - 2 - 59 - - - - - 59 Payments on stock option notes receivable - - - - - - - - - 69 69 Preferred dividends paid in shares of common stock - - 53 - 1,125 (1,125) - - - - - Director retainer shares - - 6 - 115 - - - - - 115 Change in unrealized net gain(loss) on securities available for sale - - - - - - - - 16,144 - 16,144 - --------------------------------------------------------------------------------------------------------------------- Balances at September 30, 1995 250,000 $ 13 19,799 $1 $144,087 $147,295 - $ - $ (1,279) $ (216) $ 289,901 ===================================================================================================================== Balances at December 31, 1995 250,102 $ 23 20,416 $1 $157,395 $146,727 - (2,427) $ (154) $ 301,565 Net income - - - - - 39,561 - - - - 39,561 Exercise of stock options - - 15 - 203 - - - - - 203 Payments on stock option notes receivable - - - - - - - - - 34 34 Purchase of treasury stock - - - - - - 5 (106) - - (106) Preferred dividends paid in shares of common stock - - 51 - 1,125 (1,125) - - - - - Director retainer shares - - 6 - 128 - - - - - 128 Partnership distributions - - - - - (7) - - - - (7) Change in unrealized net gain(loss) on securities available for sale - - - - - - - - (8,201) - (8,201) - --------------------------------------------------------------------------------------------------------------------- Balances at September 30, 1996 250,102 $ 23 20,488 $1 $158,851 $185,156 5 $ (106) $ (10,628) $ (120) $ 333,177 ===================================================================================================================== See accompanying notes to consolidated financial statements.
18 CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands Except Share Data) Nine Months Ended September 30, --------------------- 1996 1995 --------------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income $ 39,561 $ 36,542 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan and repossessed real estate losses 3,910 55 Depreciation and amortization 16,914 14,558 Valuation adjustment of intangible assets 3,821 - Net amortization of investment security discounts and premiums 1,992 1,465 Net gain on sale of assets (3,948) (3,546) Mortgage loans originated for resale (535,934) (358,427) Proceeds from sale of mortgage loans held for resale 542,552 317,672 (Increase) decrease in trading securities 3,762 (5,070) Decrease in accrued revenue receivable 1,737 1,809 Increase in other assets (13,986) (5,163) Increase in accrued interest, taxes and expense 7,167 1,968 Increase in other liabilities 5,347 1,035 - ------------------------------------------------------------------------------- Net cash provided by operating activities 72,895 2,898 - ------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of investment securities 20,953 49,316 Proceeds from maturities of available for sale securities 190,850 107,407 Purchases of investment securities (43,040) (20,887) Purchases of available for sale securities (571,179 (205,047) Proceeds from sales of available for sale securities 304,391 121,109 Loans originated or acquired net or principal collected (155,597) (230,629) Proceeds from sales of assets 31,795 5,042 Purchases of assets (29,331) (23,007) Cash and cash equivalents of branches & subsidiaries acquired and sold, net (200) (19,371) - ------------------------------------------------------------------------------- Net cash used by investing activities (251,358) (216,067) - ------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand deposits, transaction deposits, money market deposits, and savings accounts 152,789 (35,204) Net increase in certificates of deposit 145,447 153,750 Net increase (decrease) in other borrowings (87,198) 66,597 Purchases of treasury stock (106) - Partnership distributions (7) - Repayment of capital note - (23,000) Issuance of preferred, common and treasury stock, net 331 244 Payments on stock option notes receivable 34 69 - ------------------------------------------------------------------------------- Net cash provided by financing activities 211,290 162,456 - ------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 32,827 (50,713) Cash and cash equivalents at beginning of period 311,939 309,099 - ------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 344,766 $ 258,386 =============================================================================== CASH PAID FOR INTEREST $ 121,873 $ 116,026 =============================================================================== CASH PAID FOR TAXES $ 5,394 $ 5,050 =============================================================================== NET LOANS TRANSFERRED TO REPOSSESSED REAL ESTATE AND OTHER ASSETS $ 3,206 $ 1,488 =============================================================================== PAYMENT OF PREFERRED STOCK DIVIDENDS IN COMMON STOCK $ 1,125 $ 1,125 =============================================================================== See accompanying notes to consolidated financial statements. 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) 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 banking subsidiaries, Bank of Oklahoma, N.A. ("BOk") and Citizens Bank of Northwest Arkansas, N.A.. Certain prior period balances have been reclassified to conform with the current period presentation. (2) MORTGAGE BANKING ACTIVITIES BOK Financial engages in mortgage-banking activities through its subsidiary, BancOklahoma Mortgage Corp. ("BOMC"). At September 30, 1996, BOMC owned the rights to service 83,494 mortgage loans with outstanding principal balances of $5.9 billion, including $248 million serviced for BOk. The weighted average interest rate and remaining term was 7.69% and 282 months, respectively. Activity in capitalized mortgage servicing rights and related valuation allowance during the current period is as follows: Capitalized Mortgage Servicing Rights ----------------------------------Valuation Purchased Originated Total Allowance Net ----------------------------------------------------- Balance at December 31, 1995 $ 49,532 $ 1,641 $ 51,173 $ (539) $50,634 Additions 15,135 3,181 18,316 - 18,316 Amortization expense (6,551) (661) (7,212) - (7,212) Provision for impairment - - - (361) (361) ----------------------------------------------------- Balance at September 30, 1996 $ 58,116 $ 4,161 $ 62,277 $ (900) $61,377 ===================================================== Estimated fair value of mortgage servicing rights (1) $ 80,801 $ 8,031 $ 88,832 $ - $88,832 ===================================================== (1) Excludes approximately $18.0 million of loan servicing rights on mortgage loans originated prior to the adoption of FAS 122. 21 (3) DISPOSAL OF AVAILABLE FOR SALE SECURITIES Sales of available for sale securities for the nine months ending September 30, 1996 resulted in gains and losses as follows (in thousands): Proceeds 304,391 Gross realized gains 151 Gross realized losses 2,136 Related federal and state income tax expense (benefit) (615) (4) SHAREHOLDERS' EQUITY On October 29, 1996, the Board of Directors of BOK Financial declared a 3% stock dividend payable in shares of BOK Financial common stock. The dividend is payable on November 27, 1996 to shareholders of record on November 18, 1996. Generally accepted accounting principles require earnings per share information to be retroactively restated to reflect the new capital structure upon consummation of a stock dividend. Accordingly, for all financial statements issued after November 27, 1996, earnings per share will be restated as follows: Fully Diluted Earnings Per Share: As Reported Restated ----------- -------- 1995: 1st Quarter $ .52 $ .50 2nd Quarter .52 .50 3rd Quarter .54 .52 4th Quarter .54 .53 Year Ended December 31 2.12 2.05 1996: 1st Quarter $ .56 .54 2nd Quarter .58 .57 3rd Quarter .56 .54 Nine Months Ended September 30 1.69 1.64 (5) PARK CITIES ACQUISITION On October 3, 1996, BOK Financial announced it had reached an agreement to acquire Park Cities Bancshares, Inc. ("Park Cities"). Park Cities has total assets of $206 million with two banking locations in Dallas, Texas. The acquisition, which is subject to regulatory and approval, is expected to be completed during the first quarter of 1997. (6) CONTINGENT LIABILITIES In the ordinary course of business, BOK Financial and its subsidiaries are subject to legal actions and complaints. Management believes, based upon the opinion of counsel, that the actions and liability or loss, if any, resulting from the final outcomes of the proceedings, will not be material in the aggregate. 22 QUARTERLY FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Three months ended --------------------------------------------------- September 30, 1996 June 30, 1996 --------------------------------------------------- Average Revenue/ Yield Revenue/ Yield Balance Expense /Rate Expense /Rate ---------------------------------------------------- ASSETS Taxable securities $1,306,584 20,014 6.09 $1,280,094 19,215 6.04 Tax-exempt securities(1) 290,848 5,408 7.40 282,738 5,238 7.45 - ------------------------------------------------------------------------------- Total securities 1,597,432 25,422 6.33 1,562,832 24,453 6.29 - ------------------------------------------------------------------------------- Trading securities 4,116 73 7.06 6,416 100 6.27 Funds sold 21,040 298 5.63 43,274 574 5.33 Loans(2) 2,254,863 49,173 8.68 2,233,711 49,085 8.84 Less reserve for loan losses 43,510 40,311 - ------------------------------------------------------------------------------- Loans, net of reserve 2,211,353 49,173 8.85 2,193,400 49,085 9.00 - ------------------------------------------------------------------------------- Total earning assets 3,833,941 74,966 7.78 3,805,922 74,212 7.84 - ------------------------------------------------------------------------------- Cash and other assets 457,049 446,659 - ------------------------------------------------------------------------------- Total assets $4,290,990 $4,252,581 =============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Transaction deposits $ 864,904 7,411 3.41 $ 832,127 6,860 3.32 Savings deposits 101,328 616 2.42 103,274 624 2.43 Other time deposits 1,548,832 21,757 5.59 1,605,179 22,122 5.54 - ------------------------------------------------------------------------------- Total interest-bearing deposits 2,515,064 29,784 4.71 2,540,580 29,606 4.69 - ------------------------------------------------------------------------------- Other borrowings 780,037 11,160 5.69 732,122 10,167 5.59 - ------------------------------------------------------------------------------- Total interest-bearing liabilities 3,295,101 40,944 4.94 3,272,702 39,773 4.89 - ------------------------------------------------------------------------------- Demand deposits 631,981 629,973 Other liabilities 41,083 37,637 Shareholders' equity 322,825 312,269 - ------------------------------------------------------------------------------- Total liabilities and shareholders' equity $4,290,990 $4,252,581 =============================================================================== TAX-EQUIVALENT NET INTEREST REVENUE(1) 34,022 2.84 34,439 2.95 TAX-EQUIVALENT NET INTEREST REVENUE(1) TO EARNING ASSETS 3.53 3.64 Less tax-equivalent adjustment(1) 2,076 1,992 - ------------------------------------------------------------------------------- NET INTEREST REVENUE 31,946 32,447 Provision for loan losses 62 2,937 Other operating revenue 27,228 23,966 Other operating expense 40,297 42,774 - ------------------------------------------------------------------------------- INCOME BEFORE TAXES 18,815 10,702 Federal and state income tax 5,840 (2,889) - ------------------------------------------------------------------------------- NET INCOME $12,975 $13,591 =============================================================================== EARNINGS PER SHARE: NET INCOME Primary $ 0.61 $ 0.64 - ------------------------------------------------------------------------------- Fully Diluted $ 0.56 $ 0.58 =============================================================================== (1) Tax-equivalent at the statutory federal and state rates for all periods presented. The taxable equivalent adjustments shown above are for comparative purposes. (2) The loan averages include loans on which the accrual of interest has been discounted and are stated net of unearned income. 24 For Three months ended - ------------------------------------------------------------------------------- March 31, 1996 December 31, 1995 September 30, 1995 - ------------------------------------------------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield Balance Expense /Rate Balance Expense /Rate Balance Expense /Rate - ------------------------------------------------------------------------------- $1,274,853 $19,095 6.02% $ 1,285,158 $19,337 5.97% $1,336,474 $20,243 6.01% 269,115 5,032 7.52 256,599 4,824 7.46 255,688 4,798 7.44 - ------------------------------------------------------------------------------- 1,543,968 24,127 6.28 1,541,757 24,161 6.22 1,592,162 25,041 6.24 - ------------------------------------------------------------------------------- 6,005 95 6.36 3,787 72 7.54 3,323 51 6.09 27,409 402 5.90 19,197 288 5.95 9,826 149 6.02 2,189,423 47,866 8.79 2,145,558 47,838 8.85 2,073,088 46,216 8.84 38,966 38,378 38,372 - ------------------------------------------------------------------------------- 2,150,457 47,866 8.95 2,107,180 47,838 9.01 2,034,716 46,216 9.01 - ------------------------------------------------------------------------------- 3,727,839 72,490 7.82 3,671,921 72,359 7.82 3,640,027 71,457 7.79 - ------------------------------------------------------------------------------- 432,081 431,982 418,656 - ------------------------------------------------------------------------------- $4,159,920 $ 4,103,903 $ 4,058,683 =============================================================================== $ 804,723 6,387 3.19 $ 759,920 6,605 3.45 $ 765,337 6,515 3.38 103,931 629 2.43 106,633 654 2.43 115,312 710 2.44 1,533,143 21,805 5.72 1,338,106 19,416 5.76 1,208,924 17,454 5.73 - ------------------------------------------------------------------------------- 2,441,797 28,821 4.75 2,204,659 26,675 4.80 2,089,573 24,679 4.69 - ------------------------------------------------------------------------------- 778,343 10,993 5.68 973,914 14,457 5.89 1,060,864 15,952 5.97 - ------------------------------------------------------------------------------- 3,220,140 39,814 4.97 3,178,573 41,132 5.13 3,150,437 40,631 5.12 - ------------------------------------------------------------------------------- 588,624 584,748 586,340 40,865 43,465 39,746 310,291 297,117 282,160 - ------------------------------------------------------------------------------- $4,159,920 $ 4,103,903 $4,058,683 =============================================================================== 32,676 2.85 31,227 2.69 30,826 2.67 3.53 3.37 3.36 1,874 1,780 1,771 - ------------------------------------------------------------------------------- 30,802 29,447 29,055 911 176 15 26,584 23,951 23,185 37,642 36,852 35,682 - ------------------------------------------------------------------------------- 18,833 16,370 16,543 5,838 3,707 4,050 - ------------------------------------------------------------------------------- $12,995 $12,663 $12,493 =============================================================================== $ 0.62 $ .60 $ 0.59 - ------------------------------------------------------------------------------- $ 0.56 $ .54 $ 0.54 =============================================================================== 26 NINE MONTH FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Nine months ended ---------------------------------------------------- SEPTEMBER 30, 1996 SEPTEMBER 30, 1995 ---------------------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Balance Expense /Rate Balance Expense /Rate ---------------------------------------------------- ASSETS Taxable securities $1,287,248 $ 58,323 6.05% $1,378,467 $ 63,739 6.18% Tax-exempt securities(1) 280,937 15,677 7.45 253,083 14,289 7.55 - ------------------------------------------------------------------------------- Total securities 1,568,185 74,002 6.30 1,631,550 78,028 6.39 - ------------------------------------------------------------------------------- Trading securities 5,507 267 6.50 3,634 170 6.25 Funds sold 30,540 1,274 5.57 15,603 708 6.07 Loans(2) 2,226,103 146,124 8.77 1,967,759 131,214 8.92 Less reserve for loan losses 40,938 38,298 - ------------------------------------------------------------------------------- Loans, net of reserve 2,185,165 146,124 8.93 1,929,461 131,214 9.09 - ------------------------------------------------------------------------------- Total earning assets 3,789,397 221,667 7.81 3,580,248 210,120 7.85 - ------------------------------------------------------------------------------- Cash and other assets 444,093 416,810 - ------------------------------------------------------------------------------- Total assets $4,233,490 $3,997,058 =============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Transaction deposits $ 834,032 20,657 3.31 $ 758,147 18,671 3.29 Savings deposits 102,838 1,868 2.43 122,718 2,303 2.51 Other time deposits 1,562,335 65,686 5.62 1,193,261 50,090 5.61 - ------------------------------------------------------------------------------- Total interest-bearing deposits 2,499,205 88,211 4.71 2,074,126 71,064 4.58 - ------------------------------------------------------------------------------- Other borrowings 763,561 32,320 5.65 1,040,585 47,629 6.12 Subordinated debenture 0 0 0.00 7,751 352 6.07 - ------------------------------------------------------------------------------- Total interest-bearing liabilities 3,262,766 120,531 4.93 3,122,462 119,045 5.10 - ------------------------------------------------------------------------------- Demand deposits 616,914 571,534 Other liabilities 38,650 39,047 Shareholders' equity 315,157 264,015 - ------------------------------------------------------------------------------- Total liabilities and shareholders' equity $4,233,487 $3,997,058 =============================================================================== TAX-EQUIVALENT NET INTEREST REVENUE(1) 101,136 2.88 91,075 2.75 TAX-EQUIVALENT NET INTEREST REVENUE(1) TO EARNING ASSETS 3.57 3.40 Less tax-equivalent adjustment(1) 5,941 5,258 - ------------------------------------------------------------------------------- NET INTEREST REVENUE 95,195 85,817 Provision for loan losses 3,910 55 Other operating revenue 77,778 67,195 Other operating expense 120,713 105,354 - ------------------------------------------------------------------------------- INCOME BEFORE TAXES 48,350 47,603 Federal and state income tax 8,789 11,061 - ------------------------------------------------------------------------------- NET INCOME $ 39,561 $ 36,542 =============================================================================== EARNINGS PER SHARE: NET INCOME Primary $ 1.87 $ 1.72 - ------------------------------------------------------------------------------- Fully Diluted $ 1.69 $ 1.57 =============================================================================== (1) Tax-equivalent at the statutory federal and state rates for all periods presented. The taxable equivalent adjustments shown above are for comparative purposes. (2) The loan averages include loans on which the accrual of interest has been discounted and are stated net of unearned income. 28 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: No. 27 Financial Data Schedule filed herewith electronically. (B) Reports on Form 8-K: No reports on Form 8-K were filed during the nine months ended September 30, 1996. 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 12, 1996 /s/ James A. White ----------------- -------------------- James A. White Executive Vice President and Chief Financial Officer 29 EX-27 2
9 This schedule contains summary financial information extracted from the BOK Financial Corporation's 10_Q for the period ended September 30, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1996 SEP-30-1996 313,441 100 31,225 4,015 1,425,362 200,961 199,221 2,319,844 44,959 4,472,693 3,235,946 760,843 42,962 99,765 0 23 1 333,177 4,472,693 145,984 68,201 1,541 215,726 88,211 120,531 95,195 3,910 (1,985) 120,713 48,350 39,561 0 0 39,561 1.87 1.69 3.57 19,614 17,379 0 44,222 38,287 5,026 7,788 44,959 44,959 0 0
-----END PRIVACY-ENHANCED MESSAGE-----