-----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, SNx1w7DNweR5QCME5LyJB9BSgY1E8v2AGotreZCCXTqfrTZA3yg7wvD2SReQayLi AJ+xEBst1EE3Qr8l/LvZQw== /in/edgar/work/20000814/0000875357-00-000016/0000875357-00-000016.txt : 20000921 0000875357-00-000016.hdr.sgml : 20000921 ACCESSION NUMBER: 0000875357-00-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOK FINANCIAL CORP ET AL CENTRAL INDEX KEY: 0000875357 STANDARD INDUSTRIAL CLASSIFICATION: [6021 ] IRS NUMBER: 731373454 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19341 FILM NUMBER: 699251 BUSINESS ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: PO BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 BUSINESS PHONE: 9185886416 MAIL ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: P O BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 10-Q 1 0001.txt JUNE 30, 2000 QUARTERLY FINANCIAL STATEMENTS As filed with the Securities and Exchange Commission on August 14, 2000 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 2000 Commission File No. 0-19341 BOK FINANCIAL CORPORATION Incorporated in the State of Oklahoma I.R.S. Employer Identification No. 73-1373454 Bank of Oklahoma Tower P.O. Box 2300 Tulsa, Oklahoma 74192 Registrant's Telephone Number, Including Area Code (918) 588-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: (NONE) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK ($.00006 Par Value) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 49,063,912 shares of common stock ($.00006 par value) as of July 31, 2000. - -------------------------------------------------------------------------------- BOK Financial Corporation Form 10-Q Quarter Ended June 30, 2000 Index Part I. Financial Information Management's Discussion and Analysis 2 Report of Management on Consolidated Financial Statements 15 Consolidated Statements of Earnings 16 Consolidated Balance Sheets 17 Consolidated Statements of Changes in Shareholders' Equity 18 Consolidated Statements of Cash Flows 19 Notes to Consolidated Financial Statements 20 Financial Summaries - Unaudited 23 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 26 Signature 26 MANAGEMENT'S ASSESSMENT OF OPERATIONS AND FINANCIAL CONDITION Assessment of Operations Summary of Performance BOK Financial Corporation ("BOK Financial") recorded net income of $24.2 million or $0.44 per diluted common share for the second quarter of 2000 compared to $22.1 million or $0.39 per diluted common share for the second quarter of 1999. Returns on average assets were 1.13% for the quarter ended June 30, 2000 compared to 1.19% for the quarter ended June 30, 1999. Returns on average equity were 16.64% and 16.27% for the quarter ended June 30, 2000 and 1999, respectively. Net interest revenue for the second quarter of 2000 increased by $11.3 million or 20%. Fees and commission revenue was $48.0 million, a 4% increase from the second quarter of 1999. Gains on sales of securities, loans and other assets decreased by $4.0 million. Operating expenses increased $4.2 million or 6% compared to the second quarter of 1999. This increase included $2.4 million of expenses from acquisitions that were consummated late in the second quarter of 1999. These expenses affect the comparability between the two quarters. Year to date net income and earnings per diluted common share were $49.0 million and $0.88, respectively for 2000 compared to $43.3 million and $0.78, respectively, for the same period in 1999. Returns on average assets and equity were 1.16% and 17.19%, respectively, for 2000 compared to returns on average assets and equity of 1.21% and 16.21%, respectively, for 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: - ------------------------------------------------- -------------------------------- ---------------------- TABLE 1 - TANGIBLE OPERATING RESULTS (Dollars in Thousands) -------------------------------- ---------------------- Three months ended Six months ended ----------------------------- ------------------------- June 30, June 30, June 30, June 30, 2000 1999 2000 1999 ----------------------------- ------------------------- Net income $ 24,194 $ 22,056 $ 49,007 $ 43,293 After-tax impact of amortization of intangible assets 3,403 2,999 6,818 5,580 - ------------------------------------------------- ----------------------------- ------------------------- Tangible net income $ 27,597 $ 25,055 $ 55,825 $ 48,873 - ------------------------------------------------- ----------------------------- ------------------------- Tangible net income per diluted share $ 0.50 $ 0.45 $ 1.00 $ 0.88 - ------------------------------------------------- ----------------------------- ------------------------- Tangible return on average shareholders' equity 18.98% 18.48% 19.59% 18.30% - ------------------------------------------------- ----------------------------- ------------------------- Tangible return on average assets 1.29% 1.36% 1.32% 1.37% - ------------------------------------------------- ----------------------------- -------------------------
Net Interest Revenue Net interest revenue on a tax-equivalent basis was $69.9 million for the second quarter of 2000 compared to $58.8 million for the second quarter of 1999. Average earning assets increased $1.1 billion. Average loans increased $975 million and now comprise 63% of average earning assets. Average loans were 58% of average earning assets for the second quarter of 1999. Loans generally have higher yields than other types of earning assets therefore, the increase in average loans had a significant impact on the growth in interest revenue. Average interest bearing liabilities increased $1.2 billion. Interest bearing liabilities now comprise 80% of all funding sources compared to 78% for the second quarter of 1999. Table 2 shows how net interest revenue was affected by changes in average balances and interest rates for various types of earning assets and interest bearing liabilities. - ---------------------------------------------------------------------------------------------------------------------- TABLE 2 - VOLUME/RATE ANALYSIS (In thousands) Three months ended Six months ended June 30, 2000/1999 June 30, 2000/1999 --------------------------------------------------------------------------- Change Due To (1) Change Due To (1) ------------------------ ------------------------ Yield Yield Change Volume /Rate Change Volume /Rate --------------------------------------------------------------------------- Tax-equivalent interest revenue: Securities $ 6,266 $ 2,615 $ 3,651 $ 12,031 $ 6,966 $ 5,065 Trading securities (497) (778) 281 (833) (1,524) 691 Loans 32,123 20,866 11,257 60,711 42,839 17,872 Funds sold (79) (254) 175 211 (76) 287 - ------------------------------------------------------------------------------------------------------------------ Total 37,813 22,449 15,364 72,120 48,205 23,915 - ------------------------------------------------------------------------------------------------------------------ Interest expense: Interest bearing transaction deposits 1,853 1,472 381 4,096 4,252 (156) Savings deposits (84) (29) (55) (141) (26) (115) Time deposits 12,609 8,161 4,448 22,020 14,948 7,072 Other borrowings 12,094 4,826 7,268 23,411 11,867 11,544 Subordinated debenture 299 3 296 492 42 450 - ------------------------------------------------------------------------------------------------------------------ Total 26,771 14,433 12,338 49,878 31,083 18,795 - ------------------------------------------------------------------------------------------------------------------ Tax-equivalent net interest revenue 11,042 $ 8,016 $ 3,026 22,242 $ 17,122 $ 5,120 Change in tax-equivalent adjustment (245) (712) - ------------------------------------------------------------------------------------------------------------------ Net interest revenue $ 11,287 $ 22,954 - ------------------------------------------------------------------------------------------------------------------ (1) Changes attributable to both volume and yield are allocated to both volume and yield/rate on an equal basis.
Net interest margin, the ratio of net interest revenue to average earning assets, was 3.66% for the second quarter of 2000 compared to 3.59% for the second quarter of 1999 and 3.54% for the first quarter of 2000. Net interest margin was up from the second quarter of 1999 largely due to the mix of earning assets, most notably the increase in loans which have a higher yield than other earning assets. Net interest margin was up from the first quarter of 2000 due to the effect of interest rate increases in the first quarter of 2000. Most of BOK Financial's earning assets and interest bearing liabilities have variable interest rates, however, interest bearing liabilities generally reprice more quickly than earning assets. This caused an increase in the cost of interest bearing liabilities, which decreased the net interest margin in the first quarter. The net interest margin has recovered in the second quarter through an increase in the yield on earning assets. Since inception, BOK Financial has followed a strategy of fully utilizing its capital resources by borrowing funds in the capital markets to supplement deposit growth in order to fund increased investments in securities. Although this strategy frequently results in a net interest margin that falls below those normally seen in the commercial banking industry, it provides positive net interest revenue. Management estimates that for the second quarter of 2000, this strategy resulted in an 83 basis point decrease in net interest margin. However, this strategy contributed $1.3 million to net interest revenue. Management employs various techniques to control, within established parameters, the interest rate and liquidity risk inherent in this strategy, the results of which are presented in the Market Risk section. Other Operating Revenue Other operating revenue decreased $2.1 million compared to the same quarter of 1999. Total fees and commissions, which are included in other operating revenue, increased $1.9 million. Brokerage, transaction card and trust revenue increased 12%, 17% and 10%, respectively. Transaction card revenue increased $1.3 million over the second quarter of 1999 due to a greater volume of transactions processed. Leasing revenue increased $375 thousand over the second quarter of 1999 due to the expansion of equipment leasing activities late in the first quarter of 2000. Management expects leasing revenue to continue to increase over the next few quarters. These increases were substantially offset by lower revenue from mortgage banking and a decline in other revenue. The other revenue decline was due largely to a $1.2 million decline in underwriting and placement fees at BOSC, Inc., BOK Financial's broker-dealer subsidiary. The recognition of these underwriting and placement fees depends on the closing of unique transactions and may fluctuate greatly from quarter to quarter. Gains on sales of assets decreased $4.0 million primarily due to a $3.6 million gain on sale of leasing partnerships in the second quarter of 1999. - ----------------------------------------------------------------------------------------------------------- TABLE 3 - OTHER OPERATING REVENUE (In thousands) Three Months Ended -------------------------------------------------------------------------- June 30, March 31, Dec. 31, Sept. 30, June 30, 2000 2000 1999 1999 1999 -------------------------------------------------------------------------- Brokerage and trading revenue $ 4,219 $ 4,426 $ 4,781 $ 3,237 $ 3,779 Transaction card revenue 9,331 8,620 8,767 8,298 7,986 Trust fees and commissions 9,743 9,523 9,439 9,045 8,874 Service charges and fees on deposit accounts 10,736 10,255 10,684 10,857 10,073 Mortgage banking revenue 9,427 7,834 8,628 9,189 9,877 Leasing revenue 1,192 744 514 526 817 Other revenue 3,344 4,973 3,716 4,129 4,659 - ----------------------------------------------------------------------------------------------------------- Total fees and commissions 47,992 46,375 46,529 45,281 46,065 - ----------------------------------------------------------------------------------------------------------- Gain on student loan sales 38 433 16 39 16 Gain on sale of other assets - - 96 - 3,638 Gain (loss) on securities (682) (17) 80 (485) (288) - ----------------------------------------------------------------------------------------------------------- Total other operating revenue $ 47,348 $ 46,791 $ 46,721 $ 44,835 $ 49,431 - -----------------------------------------------------------------------------------------------------------
Year to date, fees and commissions revenue increased $2.8 million or 3% compared to 1999 for the same factors affecting the second quarter discussed above. Total other operating revenue decreased $2.8 million or 3% due primarily to the $3.6 million decrease in gains on sales of leasing partnerships as discussed above. While management expects continued growth in other operating revenue, the future rate of increase could be affected by increased competition from national and regional financial institutions and from market saturation. Continued growth may require BOK Financial to introduce new products or to enter new markets. This growth introduces additional demands on capital and managerial resources. Many of BOK Financial's fee generating activities, such as brokerage and trading activities, trust fees, and mortgage banking revenue are indirectly affected by changes in interest rates. Significant increases in interest rates may tend to decrease the volume of trading activities and may lower the value of trust assets managed, which is the basis of certain fees, but would tend to decrease the incidence of mortgage loans prepayments. Similarly, a decrease in economic activity would decrease ATM, bankcard, and related revenue. Other Operating Expenses Operating expenses for the second quarter of 2000 increased $4.2 million or 6% compared to the second quarter of 1999. The second quarter of 2000 included operating expenses of $2.4 million for banks that were acquired late in the second quarter of 1999. These operating expenses consisted primarily of $1.0 million of personnel costs, $1.1 million of intangible asset amortization, $178 thousand of occupancy, equipment and data processing costs and $102 thousand of printing, postage and supplies expenses. The discussion following Table 4 of other operating expenses excludes these charges for 2000 to improve comparability. - ---------------------------------------------------------------------------------------------------------------------- TABLE 4 - OTHER OPERATING EXPENSE (In thousands) Three Months Ended -------------------------------------------------------------------- June 30, March 31, Dec. 31, Sept. 30, June 30, 2000 2000 1999 1999 1999 -------------------------------------------------------------------- Personnel $ 35,789 $ 37,289 $ 35,801 $ 34,262 $ 34,047 Business promotion 2,148 2,335 2,244 1,925 2,410 Professional fees/services 2,161 2,318 2,451 2,452 2,780 Net occupancy, equipment and data processing 16,244 15,897 16,061 15,198 13,657 FDIC and other insurance 387 380 338 323 369 Printing, postage and supplies 3,095 2,811 3,035 2,729 3,019 Net gains and operating expenses on repossessed assets (118) (583) (544) (1,501) (132) Amortization of intangible assets 4,016 4,078 4,389 4,519 3,667 Mortgage banking costs 5,540 5,437 5,658 6,183 6,787 Other expense 5,655 4,654 4,824 4,665 4,074 - ------------------------------------------------------------------------------------------------------- Total $ 74,917 $ 74,616 $ 74,257 $ 70,755 $ 70,678 - -------------------------------------------------------------------------------------------------------
Personnel costs increased $733 million or 2%. Occupancy, equipment and data processing costs increased $2.4 million or 18% 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. Included in the $1.0 million increase in other expense over first quarter 2000 was $400 thousand impairment of a software development project, as well as $400 thousand increase in costs of operating the equipment leasing program. - ------------------------------------------------------------------------------------------------------------- TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS (In thousands) Three Months Ended -------------------------------------------------------------------------- June 30, March 31, Dec. 31, Sept. 30, June 30, 2000 2000 1999 1999 1999 -------------------------------------------------------------------------- Total other operating expense $ 74,917 $ 74,616 $ 74,257 $ 70,755 $ 70,678 Acquisition expenses - - - - (1,266) Reorganization costs - (638) - - - Net gains and operating costs from repossessed assets 118 583 544 1,501 132 - ------------------------------------------------------------------------------------------------------------- Total $ 75,035 $ 74,561 $ 74,801 $ 72,256 $ 69,544 - -------------------------------------------------------------------------------------------------------------
Operating expenses through June 30, 2000 were $7.7 million or 6% higher than operating expenses for the first six months of 1999 excluding expenses of $6.3 million for banks that were acquired late in the second quarter of 1999. LINES OF BUSINESS BOK Financial operates four principal lines of business under its Bank of Oklahoma franchise: corporate banking, consumer banking, mortgage banking and trust services. It also operates a fifth line of business, regional banks, which includes all functions for Bank of Arkansas, N.A., Bank of Texas, N.A., and Bank of Albuquerque, N.A. Other lines of business include the TransFund ATM system and BOSC, Inc., a securities broker-dealer. Corporate Banking The Corporate Banking Division, which provides loan and lease financing and treasury and cash management services to businesses throughout Oklahoma and seven surrounding states, contributed $11.8 million or 49% of consolidated net income for the second quarter of 2000. This is compared to $12.9 million or 58% of consolidated net income for the first quarter of 1999. Returns on average assets and equity both declined from the second quarter of 1999 due to a narrowing of the difference between loan yields and BOK Financial's cost of funds. Table 6 Corporate Banking (In thousands) Three months ended June 30, Six months ended June 30, --------------------------------- --------------------------- 2000 1999 2000 1999 ------------- -- -------------- ----------------- ----------- Revenue (expense) from external sources $ 64,882 $ 54,543 $ 124,801 $ 102,858 Revenue (expense) from internal sources (30,515) (19,740) (57,022) (37,892) Total revenue 34,367 34,803 67,779 64,966 Operating expense 14,763 13,858 27,780 25,358 Net income 11,844 12,896 24,153 24,505 Average assets $ 3,779,324 $ 3,310,249 $ 3,755,244 $ 3,241,504 Average equity 402,968 336,710 398,900 325,941 Return on assets 1.26% 1.56% 1.29% 1.52% Return on equity 11.82 15.36 12.18 15.16 Efficiency ratio 42.96 39.82 40.99 39.03
Consumer Banking The Consumer Banking Division, which provides a full line of deposit, loan and fee-based services to customers throughout Oklahoma, contributed $3.0 million or 13% of consolidated net income for the second quarter of 2000 compared to $2.5 million or 11% of consolidated net income for the same quarter of 1999. Total revenue increased $2.4 million or 15% to $18.9 million. Operating expenses increased $1.9 million or 17% for the same period. Table 7 Consumer Banking (In thousands) Three months ended June 30, Six months ended June 30, --------------------------------- ---------------------------- 2000 1999 2000 1999 ------------- -- -------------- --------------- -------------- Revenue(expense) from external sources $ (2,157) $ (1,680) $ (3,323) $ (2,500) Revenue (expense) from internal sources 21,053 18,162 39,965 34,879 Total revenue 18,896 16,482 36,642 32,397 Operating expense 13,143 11,266 24,760 22,635 Net income 3,046 2,491 6,415 5,022 Average assets $ 1,805,687 $ 1,679,251 $ 1,813,121 $ 1,728,403 Average equity 53,537 43,612 53,134 44,611 Return on assets 0.68% 0.59% 0.71% 0.59% Return on equity 22.88 22.91 24.28 22.70 Efficiency ratio 69.55 68.35 67.57 66.91
Mortgage Banking Mortgage banking operations resulted in net income of $639 thousand for the second quarter of 2000 compared to net income of $265 thousand for the same quarter of 1999. Total revenue decreased $938 thousand due to gains on mortgage loans sold of $2.0 in the second quarter of 2000 compared to gains of $2.5 million in the second quarter of 1999, coupled with a $436 thousand decrease in servicing revenue. The performance shift in secondary marketing was due to higher interest rates that reduced loan origination activity. Capitalize mortgage servicing rights totaled $112.1 million at June 30, 2000 compared to $107.0 million at June 30, 1999 and $114.1 million at December 31, 1999. At June 30, 2000, capitalized mortgage servicing rights included $10.7 million of deferred hedge losses. Table 8 Mortgage Banking (In thousands) Three months ended June 30, Six months ended June 30, -------------------------------- --------------------------------- 2000 1999 2000 1999 ------------- -- -------------- --------------------------------- Revenue (expense) from external sources $ 13,707 $ 13,570 $ 24,670 $ 26,597 Revenue (expense) from internal sources (3,176) (2,101) (5,585) (4,227) Total revenue 10,531 11,469 19,085 22,370 Operating expense 9,465 10,988 18,843 20,256 Net income 639 269 136 1,267 Average assets $ 385,207 $ 364,391 $ 355,116 $ 353,141 Average equity 31,529 34,747 29,629 33,665 Return on assets 0.67% 0.30% 0.08% 0.72% Return on equity 8.15 3.10 0.92 7.59 Efficiency ratio 89.88 95.81 98.73 90.55
Trust Services Trust Services, which includes institutional, investment, and retirement products and services to affluent individuals, businesses, not-for-profit organizations, and governmental agencies, contributed $2.5 million or 10% of consolidated net income for the second quarter of 2000. This is compared to $2.2 million or 10% of consolidated net income for the same quarter of 1999. Revenue from trust services increased $1.2 million or 10% for the quarter while operating expenses increased $624 thousand or 7%. At June 30, 2000, trust assets with an aggregate market value of $17.7 billion were subject to various fiduciary arrangements, compared to trust assets of $15.5 billion at June 30, 1999. Table 9 Trust Services (In thousands) Three months ended June 30, Six months ended June 30, ------------------------------- ---------------------------- 2000 1999 2000 1999 ----------- -- -------------- ------------------- ---------- Revenue (expense) from external sources $ 11,102 $ 10,090 $ 22,257 $ 18,998 Revenue (expense) from internal sources 2,236 2,021 3,752 3,870 Total revenue 13,338 12,111 26,009 22,868 Operating expense 9,128 8,504 18,465 17,228 Net income 2,456 2,183 4,491 3,425 Average assets $ 357,184 $ 346,797 $ 333,270 $ 333,664 Average equity 38,303 35,086 37,860 33,332 Return on assets 2.77% 2.52% 2.71% 2.07% Return on equity 25.79 25.69 23.86 20.72 Efficiency ratio 68.44 70.22 70.99 75.34
Regional Banks Regional Banks include Bank of Texas, Bank of Arkansas, and Bank of Albuquerque. Each of these banks provides a full range of corporate and consumer banking, trust services, treasury services and retail investments in their respective markets. Small businesses and middle market corporations are the regional banks' primary customer focus. Regional Banks contributed $2.0 million or 8% of consolidated net income for the second quarter of 2000, compared to $1.9 million or 9% in 1999. Total revenue increased by $6.6 million to $22.9 million. Operating expenses increased by $5.1 million to $17.9 million. The growth in total revenue and operating expenses included $1.8 million and $2.4 million, respectively, from acquisitions that were completed late in the second quarter of 1999. Average equity assigned to the regional banks included both an amount based on management's assessment of risk and an additional amount based upon BOK Financial's investment in these entities. Management measures performance for regional banks based on tangible net income, return on assets and return on equity as reflected below. Table 10 Regional Banks (In thousands) Three months ended June 30, Six months ended June 30, ---------------------------------- -------------------------------- 2000 1999 2000 1999 -------------- -- -------------- -------------------- ------------- Revenue (expense) from external sources $ 27,094 $ 17,558 $ 52,064 $ 32,072 Revenue (expense) from internal sources (4,226) (1,319) (7,699) (2,344) Total revenue 27,045 16,289 44,365 29,728 Operating expense 18,302 12,825 34,130 24,398 Net income 2,799 1,942 4,668 2,474 Tangible net income 4,851 4,412 10,794 7,403 Average assets $ 2,315,195 $ 1,647,123 $ 2,279,365 $ 1,452,620 Average equity 262,833 194,338 252,311 182,387 Tangible return on assets 0.84% 1.07% 0.95% 1.03% Tangible return on equity 7.42 9.11 8.60 8.19 Efficiency ratio 80.04 78.98 76.83 82.07
INCOME TAXES The Internal Revenue Service closed its examination of 1996 and management completed a review of various tax issues during the first quarter of 2000. As a result of these events, BOK Financial reduced its tax reserve by $3.0 million. Year to date income tax expense at June 30, 2000 was $24.0 million or 34% of pre-tax income excluding the reduction in this allowance. Assessment of Financial Condition The aggregate loan portfolio at June 30, 2000 totaled $4.9 billion, an increase of $222 million since March 31, 2000 and $298 million since December 31, 1999. All loan types, except multifamily real estate increased during the quarter. Most notably, energy loans increased $64 million during the quarter and comprised 13% of total loans. The energy category includes loans to oil and gas producers which totaled $461 million, loans to borrowers involved in the transportation and sale of oil and gas, and loans to borrowers that manufacture equipment and provide other services to the energy industry. Loans to the service industry increased $35 million during the quarter and comprised 17% of total loans at June 30, 2000. Services included loans totaling $219 million to nursing and medical facilities and $76 million to the hotel industry. Agriculture included loans totaling $154 million to the cattle industry. - -------------------------------------------------------------------------------------------------------------- TABLE 11 - LOANS (In thousands) June 30, March 31, Dec. 31, Sept. 30, June 30, 2000 2000 1999 1999 1999 -------------------------------------------------------------------------- Commercial: Energy $ 665,550 $ 601,991 $ 606,561 $ 593,944 $ 558,975 Manufacturing 389,823 368,337 378,341 360,361 323,045 Wholesale/retail 450,681 435,026 407,785 400,730 371,867 Agricultural 185,473 184,299 173,653 162,531 151,010 Services 817,871 782,825 773,018 800,505 723,846 Other commercial and industrial 323,162 310,224 325,343 206,045 190,668 Commercial real estate: Construction and land development 291,871 278,551 249,160 258,947 246,948 Multifamily 258,658 269,667 257,187 259,276 240,906 Other real estate loans 635,089 624,309 588,195 523,324 495,304 Residential mortgage: Secured by 1-4 family residential properties 573,346 551,639 531,058 526,622 520,061 Residential mortgages held for sale 55,332 42,967 57,057 58,466 79,994 Consumer 294,466 269,964 296,131 259,414 224,493 - -------------------------------------------------------------------------------------------------------------- Total $ 4,941,322 $ 4,719,799 $ 4,643,489 $ 4,410,165 $ 4,127,117 - --------------------------------------------------------------------------------------------------------------
While BOK Financial continues to increase geographic diversification through expansion into the Dallas, Texas and Albuquerque, New Mexico areas, geographic concentration subjects the loan portfolio to the general economic conditions in Oklahoma. Approximately 73% of the loan portfolio is attributed to Oklahoma and approximately 18% of the loan portfolio is attributed to Texas. Approximately 61% of commercial real estate loans were secured by property in Oklahoma, primarily in the Tulsa and Oklahoma City metropolitan areas. An additional 22% of commercial real estate loans was secured by property in Texas. The major components of other commercial real estate loans were office buildings, $210 million and retail facilities, $198 million. SUMMARY OF LOAN LOSS EXPERIENCE The reserve for loan losses, which is available to absorb losses inherent in the loan portfolio, totaled $79 million at June 30, 2000, $78 million at March 31, 2000, and $73 million at June 30, 1999. This represents 1.63%, 1.66% and 1.80% of total loans, excluding loans held for sale, at June 30, 2000, March 31, 2000, and June 30, 1999, respectively. Losses on loans held for sale, principally mortgage loans accumulated for placement in securitized pools, are charged to earnings through adjustments in carrying value to the lower of cost or market value in accordance with accounting standards applicable to mortgage banking. Table 12 presents statistical information regarding the reserve for loan losses for the past five quarters. - ------------------------------------------------------------------------------------------------------------- TABLE 12 - SUMMARY OF LOAN LOSS EXPERIENCE (In thousands) Three Months Ended --------------------------------------------------------------------------- June 30, March 31, Dec. 31, Sept. 30, June 30, 2000 2000 1999 1999 1999 --------------------------------------------------------------------------- Beginning balance $ 77,828 $ 76,234 $ 75,186 $ 72,732 $ 68,994 Loans charged-off: Commercial 1,165 845 641 71 1,420 Commercial real estate 311 250 - - - Residential mortgage 62 21 546 20 37 Consumer 1,329 1,148 820 1,237 1,339 - -------------------------------------------------------------------------------------------------------------- Total 2,867 2,264 2,007 1,328 2,796 - -------------------------------------------------------------------------------------------------------------- Recoveries of loans previously charged-off: Commercial 348 261 308 830 1,839 Commercial real estate 39 265 39 208 4 Residential mortgage 3 134 14 2 1 Consumer 520 559 439 600 627 - -------------------------------------------------------------------------------------------------------------- Total 910 1,219 800 1,640 2,471 - -------------------------------------------------------------------------------------------------------------- Net loans charged-off (recoveries) 1,957 1,045 1,207 (312) 325 Provision for loan losses 3,534 2,639 2,255 2,142 2,538 Additions due to acquisitions - - - - 1,525 - -------------------------------------------------------------------------------------------------------------- Ending balance $ 79,405 $ 77,828 $ 76,234 $ 75,186 $ 72,732 - -------------------------------------------------------------------------------------------------------------- Reserve to loans outstanding at period-end(1) 1.63% 1.66% 1.66% 1.73% 1.80% Net loan losses (annualized) to average loans (1) 0.16 0.09 0.11 (0.03) 0.03 - -------------------------------------------------------------------------------------------------------------- (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, including probable losses on both outstanding loans and unused commitments to provide financing. A consistent methodology has been developed that includes reserves assigned to specific criticized loans, general reserves that are based upon a statistical migration analysis for each category of loans, and unallocated reserves that are based upon an analysis of current economic conditions, loan concentrations, portfolio growth, and other relevant factors. An independent Credit Administration department is responsible for performing this evaluation for all of BOK Financial's subsidiaries to ensure that the methodology is applied consistently. All significant criticized loans are reviewed quarterly with written documentation. Specific reserves for impairment are determined in accordance with accounting principles generally accepted in the United States and appropriate regulatory standards. At June 30, 2000, specific impairment reserves totaled $2.8 million on loans that totaled $15 million. The adequacy of the general loan loss reserve is determined primarily through an internally developed migration analysis model. Management uses an eight-quarter aggregate accumulation of net loan losses as the basis for this model. Greater emphasis is placed on net losses in the more recent periods. This model is used to assign general loan loss reserves to commercial loans and capital leases, residential loans, and consumer loans. All loans, capital leases, and letters of credit are allocated a migration factor by this model. Management can override the general allocation only by utilizing a specific allocation that is greater than the general allocation. A nonspecific reserve for loan losses is maintained for risks beyond those factors specified to a particular loan or those identified by the migration analysis. These factors include trends in general economic conditions in BOK Financial's primary lending areas, duration of the business cycle, specific conditions in industries where BOK Financial has a concentration of loans, overall growth in the loan portfolio, bank regulatory examination results, error potential in either the migration analysis model or in the underlying data, and other relevant factors. A range of potential losses is then determined for each factor identified. At June 30, 2000, the loss potential for the more significant factors was: Concentration of large loans - $2.1 million to $4.1 million Loan portfolio growth and expansion into new markets - $2.3 million to $4.6 million A provision for loan losses is charged against earnings in amounts necessary to maintain an adequate reserve for loan losses. These provisions were $3.5 million for the second quarter of 2000, compared to $2.5 million for the second quarter of 1999. NONPERFORMING ASSETS Information regarding nonperforming assets, which totaled $29 million at June 30, 2000, $23 million at March 31, 2000 and $25 million at June 30,1999, is presented in Table 13. Nonperforming loans included nonaccrual loans and renegotiated loans and excluded loans 90 days or more past due but still accruing. The increase in nonaccrual commercial loans during the second quarter is primarily due to the bankruptcy of one borrower. - --------------------------------------------------------------------------------------------------------------- TABLE 13 - NONPERFORMING ASSETS (In thousands) June 30, March 31, Dec. 31, Sept. 30, June 30, 2000 2000 1999 1999 1999 ---------------------------------------------------------------- Nonperforming assets: Nonperforming loans: Nonaccrual loans: Commercial $ 21,445 $ 13,448 $ 12,686 $ 12,088 $ 13,754 Commercial real estate 823 1,629 2,046 1,796 2,824 Residential mortgage 2,410 2,555 3,383 44 699 Consumer 709 970 1,350 3,938 3,198 - --------------------------------------------------------------------------------------------------------------- Total nonaccrual loans 25,387 18,602 19,465 17,866 20,475 Renegotiated loans 89 - - - - - --------------------------------------------------------------------------------------------------------------- Total nonperforming loans 25,476 18,602 19,465 17,866 20,475 Other nonperforming assets 3,805 3,972 3,478 4,447 4,450 - --------------------------------------------------------------------------------------------------------------- Total nonperforming assets $ 29,281 $ 22,574 $ 22,943 $ 22,313 $ 24,925 - --------------------------------------------------------------------------------------------------------------- Ratios: Reserve for loan losses to nonperforming loans 311.69% 418.39% 391.65% 420.83% 355.22% Nonperforming loans to period-end loans (2) 0.52 0.40 0.42 0.41 0.51 - --------------------------------------------------------------------------------------------------------------- Loans past due (90 days) (1) $ 9,828 $ 9,704 $ 11,336 $ 12,757 $ 11,082 - --------------------------------------------------------------------------------------------------------------- (1) Includes residential mortgages guaranteed $ 7,363 $ 7,623 $ 8,538 $ 7,712 $ 7,958 by agencies of the U.S. Government Excludes residential mortgages guaranteed by agencies of the U.S. Government in 6,817 8,102 8,310 8,159 7,487 foreclosure. (2) Excludes residential mortgage loans held for sale - ---------------------------------------------------------------------------------------------------------------
The loan review process also identifies loans that possess more than the normal amount of risk due to deterioration in the financial condition of the borrower or the value of the collateral. Because the borrowers are performing in accordance with the original terms of the loan agreements and no loss of principal or interest is anticipated, such loans are not included in the Nonperforming Assets totals. These loans are assigned to risk categories in order to focus management's attention on the loans with higher risk of loss. At June 30, 2000, loans totaling $86 million were assigned to the substandard risk category and loans totaling $42 million were assigned to the special mention risk category. This is compared to $71 million of loans classified as substandard and $51 million of loans classified as special mention at March 31, 2000, and loans that totaled $79 million and $54 million classified as substandard and special mention, respectively, at June 30, 1999. LEASING BOK Financial expanded its equipment leasing activities during the first quarter of 2000. Other assets included $24 million of equipment held for various operating leases at June 30, 2000, compared to $14 million at December 31, 1999. These activities include a much greater range of equipment financing than the natural gas compressors that were the focus of BOK Financial's previous leasing activities and introduce unique credit, collateral valuation, and transaction structure risk to the company. MARKET RISK Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices, or equity prices. Additionally, the financial instruments subject to market risk can be classified either as held for trading or held for purposes other than trading. BOK Financial is subject to market risk primarily through the effect of changes in interest rates on its portfolio of assets held for purposes other than trading and trading assets. The effect of other changes, such as foreign exchange rates, commodity prices or equity prices, is not material to BOK Financial. The responsibility for managing market risk rests with the Asset/Liability Committee which operates under policy guidelines which have been established by the Board of Directors. The negative acceptable variation in net interest revenue and economic value of equity due to a 200 basis point increase or decrease in interest rates is limited by these guidelines to +/- 10%. These guidelines also establish maximum levels for short-term borrowings, short-term assets, and public and brokered deposits, and establish minimum levels for unpledged assets, among other things. Compliance with these guidelines is reviewed monthly. Interest Rate Risk Management (Other than Trading) BOK Financial performs a sensitivity analysis to identify more dynamic interest rate risk exposures, including embedded option positions, on net interest revenue, net income and economic value of equity. A simulation model is used to estimate the effect of changes in interest rates over the next twelve months based on three interest rate scenarios. These are a "most likely" rate scenario and on two "shock test" scenarios, the first assuming a sustained parallel 200 basis point increase and the second a sustained parallel 200 basis point decrease in interest rates. An independent source is used to determine the most likely interest rates for the next year. BOK Financial's primary interest rate exposures include the Federal Reserve Bank's discount rate which affects short-term borrowings, the prime lending rate and the London InterBank Offering Rate ("LIBOR") which are the basis for much of the variable-rate loan pricing and the 30-year mortgage rate which directly affects the prepayment speeds for mortgage-backed securities and mortgage servicing rights. Derivative financial instruments and other financial instruments used for purposes other than trading are included in this simulation. In addition, sensitivity of fee income to market interest rate levels, such as those related to cash management services and mortgage servicing, are included. The model incorporates management's assumptions regarding the level of interest rate or balance changes on indeterminable maturity deposits (demand deposits, interest-bearing transaction accounts and savings accounts) for a given level of market rate changes. The assumptions have been developed through a combination of historical analysis and future expected pricing behavior. Interest rate swaps on all products are included to the extent that they are effective in the 12-month simulation period. Additionally, changes in prepayment behavior of mortgage-backed securities, residential mortgage loans and mortgage servicing in each rate environment are captured using industry estimates of prepayment speeds for various coupon segments of the portfolio. Finally, the impact of planned growth and new business activities is factored into the simulation model. At December 31, 2000 and 1999, this modeling indicated interest rate sensitivity as follows: Table 14 - Interest Rate Sensitivity (Dollars in Thousands) 200 bp Increase 200 bp Decrease Most Likely --------------------------------------------------- ------------------- 2000 1999 2000 1999 2000 1999 ------------- ---------- ---------- -------------- ----------- --------- Anticipated impact over the next twelve months: Net interest revenue $ 1,245 $ (2,061) $ (609) $ 1,647 $ 486 $(1,136) 0.4% (0.8)% (0.2)% 0.6% 0.2% (0.4)% - --------------------------------------------- ----------------------- ----------- ----------- ----------- Net income $ 778 $ (1,278) $ (380) $ 1,021 $ 304 $( 704) 0.8% (1.4)% (0.4)% 1.1% 0.3% (0.7)% - --------------------------------------------- ----------------------- ----------- ----------- ----------- Economic value of equity $(25,019) $(68,450) $(43,938) $ 38,587 $ 5,926 $1,869 (2.1)% (7.2)% (3.7)% 4.0% 0.5% 0.2% - --------------------------------------------- ----------------------- ----------- ------------ ----------
The estimated changes in interest rates on net interest revenue, net income, and economic value of equity is not projected to be significant within the +/- 200 basis point range of assumptions. BOK Financial hedges its portfolio of mortgage servicing rights by acquiring mortgage-backed and principal only securities whenever the prepayment risk exceeds certain levels. The fair value of these securities is expected to vary inversely to the value of the mortgage servicing rights. Management may sell these securities to recognize gains when necessary to offset losses on the mortgage servicing rights. At June 30, 2000, securities with a fair value of $61 million and an aggregate unrealized gain of $73 thousand were held for this program. The interest rate sensitivity of the mortgage servicing portfolio and securities held as hedges is modeled over a range of +/- 50 basis points. At June 30, 2000, the pre-tax results of this modeling are: 50 bp increase 50 bp decrease ----------------- ------------------ Anticipated change in: Mortgage servicing rights $ 3,898 $ (5,727) Hedging instruments (1,887) 2,066 ----------------- ------------------ Net $ 2,011 $ (3,661) ================= ================== 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 match interest received or paid on certain long-term, fixed rate loans, certificates of deposit and subordinated debt with other variable rate assets and liabilities. BOK Financial accrues and periodically receives a fixed amount from the counterparties to these swaps and accrues and periodically makes a variable payment to the counterparties. During the second quarter of 2000 income from these swaps exceeded the cost of the swaps by $497 thousand. Credit risk from these swaps is closely monitored and counterparties to these contracts are selected on the basis of their credit worthiness, among other factors. Derivative products are not used for speculative purposes. - -------------------------------------------------------------------------------- TABLE 15 - INTEREST RATE SWAPS (In thousands) Notional Pay Receive Fair Amount Rate Rate Value ------------------------------------------------------------- Expiration: 2001 4,324 5.03 6.64 (1) 69 2002 211,660 6.21 - 7.0 (1) 6.64 - 6.94 (1) (1,845) 2003 87,081 4.82 - 6.77 (1) 6.64 - 7.91 (1) 1,120 2004 83,604 5.65 - 6.77 (1) 6.64 - 7.36 (1) 976 2005 8,383 5.08 - 5.21 6.64 (1) 1,213 2006 16,500 7.26 6.77 (1) 345 2007 194,675 5.23 - 7.48 6.64 - 6.80 (1) (654) 2008 51,285 5.15 - 6.63 6.64 (1) 2,132 2009 82,732 5.22 - 6.47 6.12 - 6.85 3,202 2010 22,750 7.01 - 7.41 6.64 (1) (90) - -------------------------------------------------------------------------------- (1) Rates are variable based on LIBOR and reset monthly, quarterly or semiannually. Trading Activities BOK Financial enters into trading account activities both as an intermediary for customers and for its own account. As an intermediary, BOK Financial will take positions in securities, generally mortgage-backed securities, government agency securities, and municipal bonds. These securities are purchased for resale to customers, which include individuals, corporations, foundations, and other financial institutions. BOK Financial may also take trading positions in U.S. Treasury securities, mortgage-backed securities, municipal bonds, and financial futures for its own account through BOk and BOSC, Inc.. These positions are taken with the objective of generating trading profits. Both of these activities involve interest rate risk. A variety of methods are used to manage the interest rate risk of trading activities. These methods include daily marking of all positions to market value, independent verification of inventory pricing, and position limits for each trading activity. Hedges in either the futures or cash markets may be used to reduce the risk associated with some trading positions. The Risk Management Department monitors trading activity daily and reports to senior management and the Risk Oversight and Audit Committee of the Board of Directors on any exceptions to trading position limits and risk management policy. BOK Financial uses a Value at Risk ("VAR") methodology to measure the market risk inherent in its trading activities. VAR is calculated based upon historical simulations over the past five years. It represents an amount of market loss that is likely to be exceeded only one out of every 100 two-week periods. Trading positions are managed within guidelines approved by the Board of Directors. These guidelines limit the nominal aggregate trading positions to $360 million, the VAR to $6.5 million. At June 30, 2000, the nominal aggregate trading positions was $6.2 million, the VAR was $129 thousand. - -------------------------------------------------------------------------------- TABLE 16 - CAPITAL RATIOS June 30, March 31, Dec. 31, Sept. 30, June 30, 2000 2000 1999 1999 1999 --------------------------------------------------- Average shareholders' equity to average assets 6.79% 6.71% 6.80% 6.72% 7.36% Risk-based capital: Tier 1 capital 7.80 7.45 7.27 7.09 7.09 Total capital 11.15 10.80 10.72 10.67 10.89 Leverage 6.23 6.06 5.92 5.64 5.47 NEW ACCOUNTING STANDARDS During 1998, the Financial Accounting Standards Board adopted Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). The effective date for FAS 133 has been deferred until fiscal years beginning after June 15, 2000. BOK Financial expects to adopt FAS 133 effective January 1, 2001. FAS 133 will require the recognition of all derivatives on the balance sheet at fair value. Derivatives that do not qualify for special hedge accounting must be adjusted to fair value through income. Accounting for changes in fair value of derivatives that qualify for special hedge accounting depends on the nature of the hedge. Changes in the fair value of derivatives that qualify for hedge accounting will either be offset against changes in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. BOK Financial is currently analyzing the effect of FAS 133 on derivatives used as part of its asset / liability management programs. Although the full effect of FAS 133 on earnings and financial position has not yet been determined, it appears that its adoption may result in an increase in earnings volatility. FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates, and projections about BOK Financial, the financial services industry, and the economy in general. Words such as "anticipates", "believes", "estimates", "expects", "forecasts", "plans", "projects", variations of such words, and similar expressions are intended to identify such forward-looking statements. Management judgments relating to, and discussion of the provision and reserve for loan losses involve judgments as to future events and are inherently forward-looking statements. Assessments that BOK Financial's acquisitions and other growth endeavors will be profitable are necessary statements of belief as to the outcome of future events, based in part on information provided by others which BOK Financial has not independently verified. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expressed, implied, or forecasted in such forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to, (1) the ability to fully realize expected cost savings from mergers with the expected time frames, (2) the ability of other companies on which BOK Financial relies to provide goods and services in a timely and accurate manner, (3) changes in interest rates and interest rate relationships, (4) demand for products and services, (5) the degree of competition by traditional and nontraditional competitors, (6) changes in banking regulations, tax laws, prices, levies, and assessments, (7) the impact of technological advances, and (8) trends in customer behavior as well as their ability to repay loans. BOK Financial and its affiliates undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise. REPORT OF MANAGEMENT ON CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial condition, results of operations and cash flows of BOK Financial and its subsidiaries at the dates and for the periods presented. The financial information included in this interim report has been prepared by management without audit by independent public accountants and should be read in conjunction with BOK Financial's 1999 Form 10-K filed with the Securities and Exchange Commission which contains audited financial statements. - ------------------------------------------------ ------------- --- ---------- -- ------------- --- ------ Consolidated Statement of Earnings (In Thousands Except Share Data) Three Months Ended Six Months Ended June 30, June 30, -------------------------- --------------------------- 2000 1999 2000 1999 -------------- ----------- -------------- ------------ Interest Revenue Loans $ 109,198 $ 77,116 $ 210,236 $ 149,648 Taxable securities 42,737 35,841 83,013 68,784 Tax-exempt securities 3,384 3,728 6,351 7,714 - ------------------------------------------------ -------------- ------------- -------------- ------------ Total securities 46,121 39,569 89,364 76,498 - ------------------------------------------------ -------------- ------------- -------------- ------------ Trading securities 315 812 675 1,508 Funds sold 680 759 1,383 1,172 - ------------------------------------------------ -------------- ------------- -------------- ------------ Total interest revenue 156,314 118,256 301,658 228,826 - ------------------------------------------------ -------------- ------------- -------------- ------------ Interest Expense Deposits 48,798 34,420 94,834 68,859 Other borrowings 37,094 25,000 70,210 46,799 Subordinated debenture 2,552 2,253 5,066 4,574 - ------------------------------------------------ -------------- ------------- -------------- ------------ Total interest expense 88,444 61,673 170,110 120,232 - ------------------------------------------------ -------------- ------------- -------------- ------------ Net Interest Revenue 67,870 56,583 131,548 108,594 Provision for Loan Losses 3,534 2,538 6,173 5,968 - ------------------------------------------------ -------------- ------------- -------------- ------------ Net Interest Revenue After Provision for Loan Losses 64,336 54,045 125,375 102,626 - ------------------------------------------------ -------------- ------------- -------------- ------------ Other Operating Revenue Brokerage and trading revenue 4,219 3,779 8,645 8,215 Transaction card revenue 9,331 7,986 17,951 15,583 Trust fees and commissions 9,743 8,874 19,266 16,643 Service charges and fees on deposit accounts 10,736 10,073 20,991 19,526 Mortgage banking revenue, net 9,427 9,877 17,261 19,169 Leasing revenue 1,192 817 1,936 2,685 Other revenue 3,344 4,659 8,317 9,744 - ------------------------------------------------ -------------- ------------- -------------- ------------ Total fees and commissions revenue 47,992 46,065 94,367 91,565 - ------------------------------------------------ -------------- ------------- -------------- ------------ Gain on sale of student loans 38 16 471 545 Gain on loan securitization - - - 270 Gain on sale of other assets - 3,638 - 4,530 Securities gains (losses), net (682) (288) (699) (14) - ------------------------------------------------ -------------- ------------- -------------- ------------ Total other operating revenue 47,348 49,431 94,139 96,896 - ------------------------------------------------ -------------- ------------- -------------- ------------ Other Operating Expense Personnel 35,789 34,047 73,078 65,947 Business promotion 2,148 2,410 4,483 4,908 Professional fees and services 2,161 2,780 4,479 4,681 Net occupancy, equipment & data processing 16,244 13,657 32,141 26,765 FDIC and other insurance 387 369 767 695 Printing, postage and supplies 3,095 3,019 5,906 5,835 Net gains and operating expenses of repossessed assets (118) (132) (701) (1,428) Amortization of intangible assets 4,016 3,667 8,094 6,915 Mortgage banking costs 5,540 6,787 10,977 12,091 Other expense 5,655 4,074 10,309 9,095 - ------------------------------------------------ -------------- ------------- -------------- ------------ Total Other Operating Expense 74,917 70,678 149,533 135,504 - ------------------------------------------------ -------------- ------------- -------------- ------------ Income Before Taxes 36,767 32,798 69,981 64,018 Federal and state income tax 12,573 10,742 20,974 20,725 - ------------------------------------------------ -------------- ------------- -------------- ------------ Net Income $ 24,194 $ 22,056 $ 49,007 $ 43,293 - ------------------------------------------------ -------------- ------------- -------------- ------------ Earnings Per Share: Net Income Basic $ 0.48 $ 0.44 $ 0.98 $ 0.87 - ------------------------------------------------ -------------- ------------- -------------- ------------ Diluted $ 0.44 $ 0.39 $ 0.88 $ 0.78 - ------------------------------------------------ -------------- ------------- -------------- ------------ Average Shares Used in Computation: Basic 49,125,252 48,973,613 49,129,149 48,946,008 - --------------------------------------------------------------------------------------------------------- Diluted 55,584,091 55,869,573 55,595,589 55,819,223 - --------------------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
- ------------------------------------------------------------------------------------------------------ CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Data) June 30, December 31, June 30, 2000 1999 1999 ------------------------------------------ ASSETS Cash and due from banks $ 438,921 $ 397,895 $ 457,142 Funds sold 112,636 28,960 45,440 Trading securities 20,051 14,452 52,450 Securities: Available for sale 2,547,066 2,588,704 2,634,253 Investment (fair value: June 30, 2000 - $226,248; December 31, 1999 -$211,624; June 30, 1999 - $221,649) 227,449 213,180 222,895 - ------------------------------------------------------------------------------------------------------ Total securities 2,774,515 2,801,884 2,857,148 - ------------------------------------------------------------------------------------------------------ Loans 4,941,322 4,643,489 4,127,117 Less reserve for loan losses 79,405 76,234 72,732 - ------------------------------------------------------------------------------------------------------ Net loans 4,861,917 4,567,255 4,054,385 - ------------------------------------------------------------------------------------------------------ Premises and equipment, net 125,492 119,239 110,707 Accrued revenue receivable 68,258 67,640 65,921 Excess cost over fair value of net assets acquired and core deposit premiums (net of accumulated amortization: June 30, 2000 - $73,386; December 31, 1999 - $65,292; June 30, 1999 - $56,384) 116,918 125,011 135,005 Mortgage servicing rights 112,091 114,134 107,011 Real estate and other repossessed assets 3,805 3,478 4,450 Bankers' acceptances 58,617 30,161 1,136 Other assets 126,002 103,888 101,625 - ------------------------------------------------------------------------------------------------------ Total assets $ 8,819,223 $ 8,373,997 $ 7,992,420 - ------------------------------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing demand deposits $ 1,119,690 $ 1,020,996 $ 1,144,211 Interest-bearing deposits: Transaction 1,840,828 1,866,499 1,803,225 Savings 155,263 155,839 173,853 Time 2,485,127 2,219,850 1,896,578 - ------------------------------------------------------------------------------------------------------ Total deposits 5,600,908 5,263,184 5,017,867 - ------------------------------------------------------------------------------------------------------ Funds purchased and repurchase agreements 1,448,879 1,345,683 1,304,896 Other borrowings 877,512 938,020 894,017 Subordinated debenture 148,727 148,642 148,551 Accrued interest, taxes and expense 59,363 62,431 53,146 Bankers' acceptances 58,617 30,161 1,136 Other liabilities 19,352 28,712 42,901 - ------------------------------------------------------------------------------------------------------ Total liabilities 8,213,358 7,816,833 7,462,514 - ------------------------------------------------------------------------------------------------------ Stockholders' equity: Preferred stock 25 25 25 Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding June 30, 2000 - 49,479,553; December 31, 1999 - 49,382,262; June 30, 1999 - 47,655,870) 3 3 3 Capital surplus 276,005 274,980 237,740 Retained earnings 381,007 332,751 318,174 Notes receivable from exercise of stock options - Treasury stock (shares at cost: June 30, 2000 - 378,579; December 31, 1999 - 316,325; June 30, 1999 - 110,441) (8,109) (7,018) (2,580) Accumulated other comprehensive loss (43,066) (43,577) (23,456) - ------------------------------------------------------------------------------------------------------ Total shareholders' equity 605,865 557,164 529,906 - ------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 8,819,223 $ 8,373,997 $ 7,992,420 - ------------------------------------------------------------------------------------------------------ See accompanying notes to consolidated financial statements.
- -------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (In Thousands) Accumulated Other Preferred Stock Common Stock Comprehensive Capital Retained Treasury Stock Shares Amount Shares Amount Income(loss) Surplus Earnings Shares Amount Total ---------------------------------------------------------------------------------------------------- Balances at December 31, 1998 250,000 $ 25 48,112 $ 3 $12,297 $236,726 $278,365 749 $ (2,623) $524,793 Comprehensive income: Net income - - - - - - 43,293 - - 43,293 Other Comprehensive income, net of tax: Unrealized gains(loss) on securities available for sale (1) - - - - (35,753) - - - - (35,753) ----------- Comprehensive income 7,540 ----------- Exercise of stock options - - 221 - - 1,778 - 81 (1,909) (131) Issuance of common stock to Thrift Plan - - 17 - - 405 - (1) 33 438 Common stock dividend - - - - - - (2,734) - - (2,734) Preferred dividend paid in shares of common stock - - 25 - - 750 (750) - - - Director retainer shares - - 6 - - 143 - - - 143 Cancel treasury stock (725) (2,062) (725) 2,062 - Treasury stock purchase - - - - - - - 6 (143) (143) - --------------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1999 250,000 $ 25 47,656 $ 3 $(23,456) $237,740 $318,174 110 $(2,580) $ 529,906 - --------------------------------------------------------------------------------------------------------------------------- Balances at December 31, 1999 250,000 $ 25 49,382 $ 3 $(43,577)$274,980 $332,751 316 $ (7,018) $557,164 Comprehensive income: Net income - - - - - - 49,007 - - 49,007 Other Comprehensive income, net of tax: Unrealized gains(loss) on securities available for sale(1) - - - - 511 - - - 511 ----------- Comprehensive income 49,518 ----------- Exercise of stock options - - 68 - - 594 - 27 (546) 48 Preferred dividends paid in shares of common stock - - 17 - - 371 (750) (18) 379 - Common stock dividend - - 9 - - - (1) - - (1) Director retainer - - 4 - - 60 - (5) 98 158 shares Treasury stock purchase - - - - - - - 58 (1,022) (1,022) - --------------------------------------------------------------------------------------------------------------------------- Balances at June 30, 2000 250,000 $ 25 49,480 $ 3 $(43,066)$276,005 $381,007 378 $(8,109) $605,865 - --------------------------------------------------------------------------------------------------------------------------- (1) June 30, 1999 June 30, 1998 ------------- ------------- Reclassification adjustments: Unrealized losses on available for sale securities $ (13) $ (35,763) Less: reclassification adjustment for gains realized included in net income, net of tax (524) (10) ----------------------------- Net unrealized losses on securities $ 511 $ (35,753) -----------------------------
- -------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Six Months Ended June 30, ------------------------------- 2000 1999 ------------------------------- Cash Flow From Operating Activities: Net income $ 49,007 $ 43,293 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan losses 6,173 5,968 Depreciation and amortization 25,456 21,094 Tax reserve reversal (3,000) - Net amortization of security discounts and premiums (1,649) 856 Net gain on sale of assets (3,231) (11,569) Mortgage loans originated for resale (242,956) (399,019) Proceeds from sale of mortgage loans held for resale 303,862 423,840 Change in trading securities (5,318) (3,264) Change in accrued revenue receivable 40,870 1,740 Change in other assets (30,358) (44,438) Change in accrued interest, taxes and expense (967) 16,797 Change in other liabilities 24,937 20,497 - -------------------------------------------------------------------------------------------- Net cash provided by operating activities 162,826 75,795 - -------------------------------------------------------------------------------------------- Cash Flow From Investing Activities: Proceeds from maturities of investment securities 27,419 38,395 Proceeds from maturities of available for sale securities 177,467 416,173 Purchases of investment securities (41,945) (33,633) Purchases of available for sale securities (542,081) (1,686,823) Proceeds from sales of available for sale securities 393,405 1,052,992 Proceeds from sales of investment securities 175 - Loans originated or acquired net or principal collected (443,726) (505,498) Proceeds from disposition of assets 44,201 184,199 Purchases of assets (32,634) (60,152) Cash and cash equivalents of branches & subsidiaries acquired and sold, net - 26,019 - -------------------------------------------------------------------------------------------- Net cash used by investing activities (417,719) (568,328) - -------------------------------------------------------------------------------------------- Cash Flows From Financing Activities: Net change in demand deposits, transaction deposits, money market deposits, and savings accounts 72,447 57,420 Net change in certificates of deposit 265,277 (1,570) Net change in other borrowings 42,688 469,643 Purchase of treasury stock (1,022) (143) Common stock dividend - (2,733) Preferred stock dividend (1) (1) Issuance of preferred, common and treasury stock, net 206 1,074 - -------------------------------------------------------------------------------------------- Net cash provided by financing activities 379,595 523,690 - -------------------------------------------------------------------------------------------- Net change in cash and cash equivalents 124,702 31,157 Cash and cash equivalents at beginning of period 426,855 471,425 - -------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 551,557 $ 502,582 - -------------------------------------------------------------------------------------------- Cash paid for interest $ 168,170 $ 118,235 - -------------------------------------------------------------------------------------------- Cash paid for taxes $ 28,353 $ 17,100 - -------------------------------------------------------------------------------------------- Net loans transferred to repossessed real estate and other assets $ 1,214 $ 797 - -------------------------------------------------------------------------------------------- Payment of preferred stock dividends in common stock $ 750 $ 750 - -------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) ACCOUNTING POLICIES Basis of Presentation The accounting and reporting policies of BOK Financial Corporation conform to accounting principles generally accepted in the United States and generally accepted practices within the banking industry. The Consolidated Financial Statements of BOK Financial include the accounts of BOK Financial and its subsidiaries, primarily Bank of Oklahoma, N.A. ("BOk"), Bank of Arkansas N.A., Bank of Texas, N.A. and BOSC, Inc. Certain prior period balances have been reclassified to conform with the current period presentation. (2) MORTGAGE BANKING ACTIVITIES At June 30, 2000, BOk owned the rights to service 93,861 mortgage loans with outstanding principal balances of $6.9 billion, including $129.7 million serviced for BOk. The weighted average interest rate and remaining term was 7.46% and 271 months, respectively. Activity in capitalized mortgage servicing rights and related valuation allowance during the six months ending June 30, 2000 is as follows: Capitalized Mortgage Servicing Rights ------------------------------------------------------------------------------ Valuation Hedging Purchased Originated Total Allowance (Gain)/Loss Net --------------------------- ---------------------------------------- --------- Balance at December 31, 1999 $ 74,912 $ 28,815 $ 103,727 $ - $ 10,407 $ 114,134 Additions 560 3,784 4,344 - - 4,344 Amortization expense (5,062) (1,636) (6,698) - (732) (7,430) Realized hedge losses - 4,389 4,389 Unrealized hedge losses - (3,346) (3,346) - ----------------------------- ---------- - ---------- ----------- --------------- ---------- -- --------- Balance at June 30, 2000 $ 70,410 $ 30,963 $ 101,373 $ - $ 10,718 $ 112,091 - ----------------------------- ---------- - ---------- ----------- --------------- ---------- -- --------- Estimated fair value of mortgage servicing rights (1) $ 83,340 $ 43,604 $ 126,944 $ 126,944 - ----------------------------- ---------- - ---------- ----------- --------------- ---------- -- --------- (1) Excludes approximately $8.5 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 June 30, 2000 follows (in thousands): < 6.50% 6.50% - 7.49% 7.50% - 8.49% => 8.50% Total --------------------------- -------------- ----------- ---------- Cost less accumulated amortization $ 8,883 $ 58,876 $ 30,651 $ 2,963 $ 101,373 Deferred hedge losses - 8,497 2,221 - 10,718 - ------------------------------------------ --------------------------- -------------- ----------- ---------- Adjusted cost 8,883 67,373 32,872 2,963 112,091 Fair value 10,789 71,820 38,558 5,777 126,944 - ------------------------------------------ --------------------------- -------------- ----------- ---------- Impairment $ - $ - $ - $ - $ - - ------------------------------------------ --------------------------- -------------- ----------- ---------- Outstanding principal of loans serviced(1) $ 596,000 $ 3,617,200 $ 1,863,500 $ 279,500 $6,356,200 - ------------------------------------------ --------------------------- -------------- ----------- ---------- (1) Excludes outstanding principal of $457.4 million for loans serviced for which there is no capitalized mortgage servicing rights.
(3) DISPOSAL OF AVAILABLE FOR SALE SECURITIES Sales of available for sale securities resulted in gains and losses as follows (in thousands): Six Months Ended June 30, ------------------------------- 2000 1999 -------------- ------------ Proceeds $ 357,105 $ 1,052,992 Gross realized gains 187 3,134 Gross realized losses 886 3,148 Related federal and state income tax benefit (175) (4) (4) EARNINGS PER SHARE The following table presents the computation of basic and diluted earnings per share (dollars in thousands except share data): Three Months Ended Six Months Ended --------------------------- -------------------------- June 30, June 30, June 30, June 30, 2000 1999 2000 1999 --------------------------- -------------------------- Numerator: Net income $ 24,194 $ 22,056 $ 49,007 $ 43,293 Preferred stock dividends 375 375 750 750 - ---------------------------------------------------------------------------------------------------------------- Numerator for basic earnings per share - income available to common stockholders 23,819 21,681 48,257 42,543 - ---------------------------------------------------------------------------------------------------------------- Effect of dilutive securities: Preferred stock dividends 375 375 750 750 - ---------------------------------------------------------------------------------------------------------------- Numerator for diluted earnings per share - income available to common stockholders after assumed conversion $ 24,194 $ 22,056 $ 49,007 $ 43,293 - ---------------------------------------------------------------------------------------------------------------- Denominator: Denominator for basic earnings per share -weighted average shares 49,125,252 48,973,613 49,129,149 48,946,008 Effect of dilutive securities: Employee stock options (1) 309,474 746,595 317,075 723,850 Convertible preferred stock 6,149,365 6,149,365 6,149,365 6,149,365 - ---------------------------------------------------------------------------------------------------------------- Dilutive potential common shares 6,458,839 6,895,960 6,466,440 6,873,215 - ---------------------------------------------------------------------------------------------------------------- Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 55,584,091 55,869,573 55,595,589 55,819,223 - ---------------------------------------------------------------------------------------------------------------- Basic earnings per share $ 0.48 $ 0.44 $ 0.98 $ 0.87 - ---------------------------------------------------------------------------------------------------------------- Diluted earnings per share $ 0.44 $ 0.39 $ 0.88 $ 0.78 - ---------------------------------------------------------------------------------------------------------------- (1)Excludes employee stock options with exercise price greater than current market price 215,520 - 198,638 - - ----------------------------------------------------------------------------------------------------------------
(5) REPORTABLE SEGMENTS Reportable segments reconciliation to the Consolidated Financial Statements for the six months ended June 30, 2000 is as follows: Other Other Net Interest Operating Operating Average Revenue Revenue(1) Expense Assets -------------- -- ------------- --- -------------- -- ------------- Total reportable lines of business $ 123,874 $ 70,006 $ 123,932 $ 8,536,116 Total non-reportable lines of business 247 23,902 18,619 28,227 Unallocated items: Tax-equivalent adjustment 3,850 - - - Funds management 13,761 603 6,099 187,778 Eliminations and all others, net (10,184) 327 883 (264,117) -------------- -- ------------- --- -------------- -- ------------- BOK Financial consolidated $ 131,548 $ 94,838 $ 149,533 $ 8,488,004 ============== == ============= === ============== == ============+ (1) Excludes securities gains/losses.
Reportable segments reconciliation to the Consolidated Financial Statements for the six months ended June 30, 1999 is as follows: Other Other Net Interest Operating Operating Average Revenue Revenue(1) Expense Assets -------------- -- ------------- --- -------------- -- -------------- Total reportable lines of business $ 98,906 $ 73,405 $ 109,875 $ 7,109,332 Total non-reportable lines of business 832 21,880 16,874 67,074 Unallocated items: Tax-equivalent adjustment 4,562 - - - Funds management 14,579 469 6,560 108,967 Eliminations and all others, net (10,285) 1,156 2,195 (75,646) -------------- -- ------------- --- -------------- -- -------------- BOK Financial consolidated $ 108,594 $ 96,910 $ 135,504 $ 7,209,727 ============== == ============= === ============== == ============== (1) Excludes securities gains/losses.
(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. - ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTH FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Six months ended ------------------------------------------------------------------------------------ June 30, 2000 June 30, 1999 ----------------------------------------- ----------------------------------- Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate ------------------------------------------------------------------------------------ Assets Taxable securities $ 2,586,403 $ 83,013 6.45% $ 2,309,820 $ 68,785 6.01% Tax-exempt securities 264,114 9,713 7.40 309,554 11,910 7.76 - ------------------------------------------------------------------------------------------------------------------------------ Total securities 2,850,517 92,726 6.54 2,619,374 80,695 6.21 - ------------------------------------------------------------------------------------------------------------------------------ Trading securities 13,577 675 10.00 52,536 1,508 5.79 Funds sold 46,257 1,383 6.01 49,158 1,172 4.81 Loans(2) 4,723,484 210,724 8.97 3,720,156 150,013 8.13 Less reserve for loan losses 78,655 69,208 - ------------------------------------------------------------------------------------------------------------------------------ Loans, net of reserve 4,644,829 210,724 9.12 3,650,948 150,013 8.29 - ------------------------------------------------------------------------------------------------------------------------------ Total earning assets(2) 7,555,180 305,508 8.13 6,372,016 233,388 7.39 - ------------------------------------------------------------------------------------------------------------------------------ Cash and other assets 932,824 837,711 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $ 8,488,004 $ 7,209,727 - ------------------------------------------------------------------------------------------------------------------------------ Liabilities And Shareholders' Equity Transaction deposits $ 1,865,912 25,689 2.77% $ 1,560,037 21,593 2.79% Savings deposits 156,109 1,330 1.71 159,274 1,471 1.86 Other time deposits 2,398,052 67,815 5.69 1,838,665 45,795 5.02 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 4,420,073 94,834 4.31 3,557,976 68,859 3.90 - ------------------------------------------------------------------------------------------------------------------------------ Other borrowings 2,267,335 70,210 6.23 1,848,445 46,799 5.11 Subordinated debenture 148,684 5,066 6.85 147,613 4,574 6.25 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities(2) 6,836,092 170,110 5.00 5,554,034 120,232 4.37 - ------------------------------------------------------------------------------------------------------------------------------ Demand deposits 971,988 1,025,496 Other liabilities 106,845 91,531 Shareholders' equity 573,079 538,666 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 8,488,004 $ 7,209,727 - ------------------------------------------------------------------------------------------------------------------------------ Tax-Equivalent Net Interest 135,398 3.13% 113,156 3.02% Revenue(1)(3) Tax-Equivalent Net Interest Revenue To Earning Assets 3.60 3.58 Less tax-equivalent adjustment 3,850 4,562 - ------------------------------------------------------------------------------------------------------------------------------ Net Interest Revenue 131,548 108,594 Provision for loan losses 6,173 5,968 Other operating revenue 94,139 96,896 Other operating expense 149,533 135,504 - ------------------------------------------------------------------------------------------------------------------------------ Income Before Taxes 69,981 64,018 Federal and state income tax 20,974 20,725 - ------------------------------------------------------------------------------------------------------------------------------ Net Income $ 49,007 $ 43,293 - ------------------------------------------------------------------------------------------------------------------------------ Earnings Per Share: Net Income Basic $ 0.98 $ 0.87 - ------------------------------------------------------------------------------------------------------------------------------ Diluted $ 0.88 $ 0.78 - ------------------------------------------------------------------------------------------------------------------------------ (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.
- ------------------------------------------------------------------------------------------------------------------------------ QUARTERLY FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Three months ended ------------------------------------------------------------------------------------- June 30, 2000 March 31, 2000 ------------------------------------------ ------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate ------------------------------------------------------------------------------------- Assets Taxable securities $ 2,625,306 $ 42,738 6.55% $ 2,547,499 $ 40,275 6.36% Tax-exempt securities 267,320 5,111 7.69 260,593 4,602 7.10 - ------------------------------------------------------------------------------------------------------------------------------ Total securities 2,892,626 47,849 6.65 2,808,092 44,877 6.43 - ------------------------------------------------------------------------------------------------------------------------------ Trading securities 12,562 315 10.09 14,593 360 9.92 Funds sold 44,731 680 6.11 47,782 703 5.92 Loans(2) 4,796,948 109,453 9.18 4,650,020 101,271 8.76 Less reserve for loan losses 79,503 77,808 - ------------------------------------------------------------------------------------------------------------------------------ Loans, net of reserve 4,717,445 109,453 9.33 4,572,212 101,271 8.91 - ------------------------------------------------------------------------------------------------------------------------------ Total earning assets 7,667,364 158,297 8.30 7,442,679 147,211 7.96 - ------------------------------------------------------------------------------------------------------------------------------ Cash and other assets 942,817 925,477 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $ 8,610,181 $ 8,368,156 - ------------------------------------------------------------------------------------------------------------------------------ Liabilities And Shareholders' Equity Transaction deposits $ 1,875,180 12,888 2.76% $ 1,856,644 12,801 2.77% Savings deposits 156,369 658 1.69 155,848 672 1.73 Other time deposits 2,431,978 35,252 5.83 2,364,126 32,563 5.54 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 4,463,527 48,798 4.40 4,376,618 46,036 4.23 - ------------------------------------------------------------------------------------------------------------------------------ Other borrowings 2,318,426 37,094 6.44 2,216,244 33,116 6.01 Subordinated debenture 148,705 2,552 6.90 148,663 2,514 6.80 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 6,930,658 88,444 5.13 6,741,525 81,666 4.87 - ------------------------------------------------------------------------------------------------------------------------------ Demand deposits 989,716 954,307 Other liabilities 105,086 111,079 Shareholders' equity 584,721 561,245 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' Equity $ 8,610,181 $ 8,368,156 - ----------------------------------------------------------------------------------------------------------------------------- Tax-Equivalent Net Interest Revenue 69,853 3.17% 65,545 3.08% Tax-Equivalent Net Interest Revenue To Earning Assets 3.66 3.54 Less tax-equivalent adjustment 1,983 1,867 - ------------------------------------------------------------------------------------------------------------------------------ Net Interest Revenue 67,870 63,678 Provision for loan losses 3,534 2,639 Other operating revenue 47,348 46,791 Other operating expense 74,917 74,616 - ------------------------------------------------------------------------------------------------------------------------------ Income Before Taxes 36,767 33,214 Federal and state income tax 12,573 8,401 - ------------------------------------------------------------------------------------------------------------------------------ Net Income $ 24,194 $ 24,813 - ------------------------------------------------------------------------------------------------------------------------------ Earnings Per Share: Net Income Basic $ 0.48 $ 0.50 - ------------------------------------------------------------------------------------------------------------------------------ Diluted $ 0.44 $ 0.45 - ------------------------------------------------------------------------------------------------------------------------------ (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.
- ------------------------------------------------------------------------------------------------------------------------- For Three months ended - ------------------------------------------------------------------------------------------------------------------------- December 31, 1999 September 30, 1999 June 30, 1999 - ------------------------------------------------------------------------------------------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate Balance Expense(1) /Rate - ------------------------------------------------------------------------------------------------------------------------- $ 2,453,800 $ 38,381 6.21% $ 2,456,120 $ 37,735 6.10% $ 2,418,685 $ 35,841 5.94% 259,760 4,656 7.11 275,749 5,219 7.51 295,095 5,742 7.80 - ------------------------------------------------------------------------------------------------------------------------- 2,713,560 43,037 6.29 2,731,869 42,954 6.24 2,713,780 41,583 6.15 - ------------------------------------------------------------------------------------------------------------------------- 17,845 390 8.67 27,606 393 5.65 50,190 812 6.49 37,650 552 5.82 37,558 495 5.23 63,353 759 4.81 4,480,283 97,563 8.64 4,256,430 89,882 8.38 3,822,018 77,330 8.12 76,166 74,539 70,968 - ------------------------------------------------------------------------------------------------------------------------- 4,404,117 97,563 8.79 4,181,891 89,882 8.53 3,751,050 77,330 8.27 - ------------------------------------------------------------------------------------------------------------------------- 7,173,172 141,542 7.83 6,978,924 133,724 7.60 6,578,373 120,484 7.35 - ------------------------------------------------------------------------------------------------------------------------- 963,257 890,977 831,059 - ------------------------------------------------------------------------------------------------------------------------- $ 8,136,429 $ 7,869,901 $ 7,409,432 - ------------------------------------------------------------------------------------------------------------------------- $ 1,885,730 12,639 2.66% $ 1,858,386 12,278 2.62% $ 1,655,457 11,035 2.67% 159,442 721 1.79 167,875 779 1.84 162,874 742 1.83 2,206,956 29,109 5.23 2,046,295 26,236 5.09 1,822,915 22,643 4.98 - ------------------------------------------------------------------------------------------------------------------------- 4,252,128 42,469 3.96 4,072,556 39,293 3.83 3,641,246 34,420 3.79 - ------------------------------------------------------------------------------------------------------------------------- 2,071,787 29,715 5.69 2,065,207 27,681 5.32 1,978,349 25,000 5.07 148,620 2,387 6.37 148,576 2,373 6.34 148,275 2,253 6.09 - ------------------------------------------------------------------------------------------------------------------------- 6,472,535 74,571 4.57 6,286,339 69,347 4.38 5,767,870 61,673 4.29 - ------------------------------------------------------------------------------------------------------------------------- 977,825 969,289 1,008,502 132,646 77,574 89,319 553,423 536,699 543,741 - ------------------------------------------------------------------------------------------------------------------------- $ 8,136,429 $ 7,869,901 $ 7,409,432 - ------------------------------------------------------------------------------------------------------------------------- 66,971 3.26% 64,377 3.22% 58,811 3.06% 3.05 3.70 3.66 3.59 1,828 1,990 2,228 - ------------------------------------------------------------------------------------------------------------------------- 65,143 62,387 56,583 2,255 2,142 2,538 46,721 44,835 49,431 74,257 70,755 70,678 - ------------------------------------------------------------------------------------------------------------------------- 35,352 34,325 32,798 12,155 11,589 10,742 - ------------------------------------------------------------------------------------------------------------------------- $ 23,197 $ 22,736 $ 22,056 - ------------------------------------------------------------------------------------------------------------------------- $ 0.46 $ 0.46 $ 0.44 - ------------------------------------------------------------------------------------------------------------------------- $ 0.42 $ 0.41 $ 0.39 - -------------------------------------------------------------------------------------------------------------------------
PART II. Other Information Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: No. 27.0 Financial Data Schedule filed herewith electronically. (B) Reports on Form 8-K: No reports on Form 8-K were filed during the three months ended June 30, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BOK FINANCIAL CORPORATION (Registrant) Date: August 14, 2000 /s/ Steven E. Nell ------------------- ------------------ Steven E. Nell Senior Vice President and Corporate Controller /s/ John C. Morrow ------------------- John C. Morrow Senior Vice President and Director of Financial Accounting & Reporting EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from BOK Financial Corporation's 10-Q for the period ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000875357 BOK Financial Corporation 1,000 6-mos Dec-31-2000 Jun-30-2000 438,921 0 112,636 20,051 2,547,066 227,449 226,248 4,941,322 79,405 8,819,223 5,600,908 2,001,250 78,715 473,869 13 12 3 605,837 8,819,223 109,198 46,121 995 156,314 48,798 88,444 67,870 3,534 (682) 74,917 36,767 24,194 0 0 24,194 0.48 0.44 3.66 25,387 9,828 0 86,365 77,828 2,867 910 79,405 79,405 0 0
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