-----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, ISDMTdXAaiiCRSgVyhfwJ9vcq31M/vzTtGO60TamsNS0F3sZ2iGAL7Vg6ceobzwn AviKKZZnV+AopdwsSV5+Ow== 0000875357-96-000006.txt : 19960814 0000875357-96-000006.hdr.sgml : 19960814 ACCESSION NUMBER: 0000875357-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOK FINANCIAL CORP ET AL CENTRAL INDEX KEY: 0000875357 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 731373454 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19341 FILM NUMBER: 96611213 BUSINESS ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: PO BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 BUSINESS PHONE: 9185886000 MAIL ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: P O BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 10-Q 1 As filed with the Securities and Exchange Commission on August 13, 1996 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30,1996 Commission File No. 0-19341 BOK FINANCIAL CORPORATION Incorporated in the State of Oklahoma I.R.S. Employer Identification No. 73-1373454 Bank of Oklahoma Tower P.O. Box 2300 Tulsa, Oklahoma 74192 Registrant's Telephone Number, Including Area Code (918) 588-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: (NONE) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK ($.00006 Par Value) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 20,462,446 shares of common stock ($.00006 par value) as of July 31, 1996. ================================================================================ BOK Financial Corporation Form 10-Q Quarter Ended June 30, 1996 Index Part I. Financial Information Management's Discussion and Analysis of Financial Condition and Results of Operations 2 Report of Management on Consolidated Financial Statements 12 Consolidated Statements of Earnings 13 Consolidated Balance Sheets 14 Consolidated Statements of Changes in Shareholders' Equity 15 Consolidated Statements of Cash Flows 16 Notes to Consolidated Financial Statements 17 Financial Summaries - Unaudited 19 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 22 Signature 22 MANAGEMENT'S DISCUSSION AND ANALYSIS HIGHLIGHTS BOK Financial Corporation ("BOK Financial")recorded net income of $13.6 million or $0.58 per fully diluted common share for the second quarter of 1996 compared to $12.1 million or $0.52 per fully diluted common share for the second quarter of 1995. Returns on average assets and equity were 1.29% and 17.51%, respectively, for the second quarter of 1996. This is compared to returns on average assets and equity of 1.20% and 18.35%, respectively, for the same period in 1995. Year to date net income and earnings per fully diluted common share were $26.6 million or $1.14, respectively for 1996 compared to $24.0 million or $1.03, respectively for 1995. RESULTS OF OPERATIONS Net interest revenue on a tax-equivalent basis was $34.4 million for the second quarter of 1996 compared to $30.1 million for the second quarter of 1995, an increase of $4.3 million or 14.3%. Average earning assets increased by $188 million while interest bearing liabilities increased $109 million. Total interest-bearing liabilities as a percent of earning assets decreased to 86.0% from 87.4% due to increases in both average demand deposits and equity. Concurrently, average loans increased by $275 million or 14.1%.Total loans, net of allowance, now comprise 57.6% of average earning assets, an increase from 53.1% in the second quarter of 1995. The increase in average earning assets and the improvement in asset mix increased interest income by $4.9 million. This 2 increase was partially offset by lower aggregate yields on earning assets of $1.7 million. Since the second quarter of 1995, management has taken steps to reduce BOK Financial's reliance on borrowed funds and to increase deposits as a source of funding. Average interest-bearing deposits increased $468 million or 22.6% compared to the second quarter of 1995 while borrowed funds decreased $359 million or 32.9%. This improvement in the mix of interest-bearing liabilities also contributed to the increase in net interest revenue. Additionally, interest rate swaps which hedge against interest rate risk on certain long-term certificates of deposit, reduced interest expense for the second quarter and year to date, 1996 by $446 thousand and $672 thousand, respectively. - -------------------------------------------------------------------------------- TABLE 1 - VOLUME/RATE ANALYSIS (In thousands) Three months ended Six months ended June 30, 1996/1995 June 30, 1996/1995 ------------------------------------------------------- -----Due to----- -----Due to---- Yield Yield Change Volume /Rate Change Volume /Rate ------------------------------------------------------- Tax-equivalent interest revenue: Securities $ (2,251) $(1,708) $ (543)$ (4,407) $(2,759)$(1,649) Trading securities 28 29 (1) 76 76 0 Loans 5,086 6,127 (1,041) 11,952 13,427 (1,474) Funds sold 361 426 (65) 417 486 (69) - ------------------------------------------------------------------------------- Total 3,224 4,874 (1,650) 8,038 11,230 (3,192) - ------------------------------------------------------------------------------- Interest expense: Transaction deposits (1,993) (2,785) 792 (2,657) (2,998) 341 Money market deposits 2,599 3,518 (919) 3,748 4,761 (1,013) Savings deposits (114) (121) 7 (340) (280) (60) Time deposits 5,125 5,740 (615) 11,291 10,703 588 Other borrowings (6,701) (5,279) (1,422) (10,517) (8,041) (2,476) Subordinated debenture (12) (12) 0 (352) (352) 0 - ------------------------------------------------------------------------------- Total (1,096) 1,061 (2,157) 1,173 3,793 (2,620) - ------------------------------------------------------------------------------- Tax-equivalent net interest revenue $ 4,320 $ 3,813 $ 507 $ 6,865 $ 7,437 (572) Change in tax-equivalent adjustment 232 378 - ------------------------------------------------------------------------------- Net interest revenue $ 4,088 $ 6,487 =============================================================================== (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 3.64% for the second quarter of 1996. This is compared to 3.34% in the same quarter of 1995 and 3.53% for the first quarter of 1996. The improvement 3 in net interest margin continues to be due primarily to the change in mix of interest-bearing liabilities. While the yield on average earning assets decreased slightly compared to the second quarter of 1995, the cost of interest bearing liabilities decreased 29 basis points. This decrease in the cost of funds contributed $2.2 million to the increase in net interest revenue. Year to date tax equivalent net interest revenue was $67.1 million, a $6.9 million or 11.4% increase from the first half of 1995. Growth in average earning assets and improvement in the mix of earning assets contributed $11.2 million, partially offset by lower yield. Increases in average interest-bearing liabilities between the two periods were substantially reduced by lower rates. - ------------------------------------------------------------------------------ TABLE 2 - OTHER OPERATING REVENUE (In thousands) Three Months Ended ----------------------------------------------------- JUNE 30, March 31, Dec. 30, Sept. 30, June 30, 1996 1996 1995 1995 1995 ----------------------------------------------------- Brokerage and trading revenue $ 1,823 $ 2,078 $ 1,518 $ 1,808 $ 1,431 TransFund network revenue 2,153 2,096 1,880 1,867 1,729 Securities gains (losses), net (1,967) (18) 0 948 226 Trust fees and commissions 5,528 5,469 5,014 4,731 4,616 Service charges and fees on deposit accounts 5,732 5,839 5,697 5,205 5,150 Mortgage banking revenue 6,056 5,869 5,905 4,850 5,297 Other revenue 4,641 5,251 3,937 3,776 3,408 - ------------------------------------------------------------------------------- Total $ 23,966 $ 26,584 $ 23,951 $ 23,185 $ 21,857 =============================================================================== Other operating revenue (excluding securities gains and losses) increased $4.3 million or 19.9% compared to the same quarter of 1995. All significant revenue producing activities contributed to this increase. The increased revenue from brokerage and trading activities, TransFund network,trust fees and deposit fees was due primarily to volume gains in each area. Mortgage banking revenue increased $759 thousand or 14.3% due primarily to servicing fees on loans originated or purchased. The growth in other revenue was due primarily to volume increases in customer use of debit and credit cards and to growth in equipment leasing activities. During the second quarter of 1996, management elected to sell securities totaling $185 million at a loss of $2.0 million. The proceeds of this sale were reinvested in securities which will return a higher yield without extending the duration of the securities portfolio. Year to date, other operating revenue (excluding securities gains and losses) increased $8.8 million or 20.0%. The same volume-related factors which caused the second quarter's increases also contributed to the year to date increases. 4 - -------------------------------------------------------------------------------- TABLE 3 - OTHER OPERATING EXPENSE (In thousands) Three Months Ended ------------------------------------------------------ JUNE 30, March 31, Dec. 31, Sept. 30, June 30, 1996 1996 1995 1995 1995 ------------------------------------------------------ Personnel $ 18,059 $ 17,747 $ 17,097 $ 16,729 $ 16,103 Business promotion 1,801 1,494 1,315 1,658 1,468 Professional fees/services 1,420 1,242 1,307 1,973 1,208 Net occupancy, equipment and data processing 7,845 7,158 7,318 7,106 6,649 FDIC and other insurance 555 539 660 519 1,600 Printing, postage and supplies 1,763 1,577 1,771 1,582 1,402 Net gains and operating expenses on repossessed assets (946) (197) (164) (858) (1,039) Amortization of intangible assets 5,288 1,465 1,527 1,495 1,477 Mortgage banking costs 3,646 3,745 3,222 3,184 3,231 Other expense 3,343 2,872 2,799 2,294 2,468 - -------------------------------------------------------------------------------- Total $ 42,774 $ 37,642 $ 36,852 $ 35,682 $ 34,567 =============================================================================== Operating expenses for the second quarter of 1996 increased $8.2 million or 23.7% compared to the second quarter of 1996. The most significant increase in operating expenses was due to the write-off of certain intangible assets totaling $3.8 million. Since 1991, BOK Financial acquired deposits insured by the FDIC's Savings Association Insurance Fund ("SAIF") totaling approximately $843 million. In conjunction with these acquisitions, core deposit intangible assets which represent the future net earnings potential of these funds, were recorded. In determining the value of these core deposit intangible assets, assumptions were made regarding the returns which were expected to be earned over the costs incurred, which included interest expense, processing costs and deposit insurance premiums. The failure of Congress to resolve the differential between deposit insurance rates paid on SAIF insured deposits compared to Bank Insurance Fund ("BIF") deposits, which was expected to occur early in 1996, in addition to heightened competitive pressures have caused the spreads between the actual returns and costs to decrease significantly. These conditions have caused the value of these core deposit intangible assets to be impaired. Personnel costs have increased $2.0 million or 12.1% compared to the second quarter of 1995. Approximately $490 thousand of this increase is due to incentive compensation plans which vary directly with increases in revenue. Other expenses, including business promotion, data processing and mortgage banking costs have increased 17.0% due to expanded volume. The increases in operating expenses were partially offset by a decrease in premiums due on BIF insured deposits. As previously noted, the ultimate resolution of the insurance rate differential between BIF insured deposits and SAIF insured deposits remains uncertain. Previous proposals would require banks and savings associations to pay a one-time assessment on all SAIF-insured deposits. The ultimate amount and timing of this assessment, if any, is subject to the Federal budget reconciliation process. Management will accrue for any resulting assessment once it becomes reasonably estimable. 5 In addition to the write-down of impaired intangible assets, BOK Financial incurred expenses of $750 thousand on its deposit operations primarily related to the conversion to item processing equipment which will enhance future operating efficiency. The relative growth in operating expenses exceeded growth in tax-equivalent revenue when compared to the first quarter of 1996. The result is an efficiency ratio of 66.09% compared to efficiency ratios of 63.83% and 68.80% for the first quarter of 1996 and the second quarter of 1995, respectively. Management believes that the actions taken during the quarter to enhance future operations will cause the efficiency ratio to decrease over the remainder of 1996. - ------------------------------------------------------------------------------- TABLE 4 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS (In thousands) Three Months Ended ------------------------------------------------------ JUNE 30, March 31, Dec. 31, Sept. 30, June 30, 1996 1996 1995 1995 1995 ------------------------------------------------------ Total Other Operating Expense $ 42,774 $ 37,642 $ 36,852 $ 35,682 $ 34,567 FDIC Insurance premium reduction, net of costs 0 0 0 0 (1,085) Organizational costs for new subsidiary 0 0 0 (500) 0 Net gains and operating costs from repossessed assets 946 197 164 858 1,039 Asset valuation charges (4,071) (500) (500) (350) (605) Item processing conversion and related costs (750) - - - - Employee benefits and other related charges 0 0 0 0 550 - ------------------------------------------------------------------------------- Total $ 38,889 $ 37,339 $ 36,516 $ 35,690 $ 34,466 =============================================================================== Year to date, operating expenses (excluding gains on repossessed assets and the previously discussed write-off of core deposit intangible assets)increased $6.0 million or 8.3%. The more significant increases were personnel expenses which increased $2.3 million (including $1.2 million of increased incentive compensation which varies directly with increased revenue), data processing costs which increased $1.4 million due to increased processing volume, and mortgage banking costs which increased $1.3 million due to additional loan servicing. BOK Financial recorded a provision for loan losses of $2.9million in the second quarter of 1996 compared to $40 thousand in the second quarter of 1995. The factors considered by management in determining that a provision for loan losses was appropriate are discussed subsequently under the Risk Elements heading. 6 BOK Financial reversed $6.2 million of valuation allowance related to certain deferred tax assets during the second quarter of 1996, resulting in a net tax benefit for the quarter of $2.9 million. The valuation allowance was related to certain built-in losses and net operating loss carryforwards which existed from the time BOK Financial acquired Bank of Oklahoma. BOK Financial's ability to realize the benefits of these losses was limited during a five year period after the acquisition. This period expired on June 6, 1996, and accordingly the valuation allowance was no longer considered necessary. Excluding the reversal of this allowance, income tax expense was 31% of income before taxes. RISK ELEMENTS The aggregate loan portfolio at June 30, 1996 increased $50 million or 2.3% since December 31, 1995 with substantially all of the increase occurring in the second quarter. Commercial and commercial real estate loans increased $64 million or 4.4%. Residential mortgage loans retained by BOK Financial decreased by $12 million as production of adjustable rate mortgages failed to maintain pace with normal loan payments. Consumer loans increased by $22 million after adjusting for the sale of $25 million of student loans in the first quarter. - -------------------------------------------------------------------------------- TABLE 5 - LOANS (In thousands) JUNE 30, March 31, Dec. 31, Sept. 30, June 30, 1996 1996 1995 1995 1995 ------------------------------------------------------ Commercial: Energy $ 176,685 $ 156,230 $ 159,887 $ 159,430 $ 160,223 Manufacturing 139,509 148,068 136,701 131,465 122,781 Wholesale/retail 179,458 156,261 143,941 139,426 145,141 Agricultural 88,036 89,080 86,733 74,342 75,917 Loans for purchasing or carrying securities 8,587 7,613 7,963 7,491 8,748 Other commercial and industrial 287,339 288,518 325,839 284,590 300,783 Commercial real estate: Construction and land development 151,032 143,476 148,217 126,219 119,794 Other real estate loans 493,107 473,110 450,385 436,929 406,819 Residential mortgage: Secured by 1-4 family residential property 424,766 419,135 436,816 432,565 429,750 Residential mortgages held for resale 73,335 102,836 72,412 79,914 63,165 Consumer 222,844 214,834 225,474 239,184 221,890 - -------------------------------------------------------------------------------- Total $2,244,698 $2,199,161 $2,194,368 $2,111,555 $2,055,011 =============================================================================== Substantially all commercial and consumer loans and a large portion of residential mortgage loans (excluding loans held for sale) are to businesses and individuals within Oklahoma or Northwest Arkansas. This geographic concentration subjects the loan portfolio to the general economic conditions within BOK Financial's primary market area. Major segments of the commercial loan portfolio are presented in Table 5. Commercial real estate loans are 7 secured primarily by properties located in the Tulsa or Oklahoma City metropolitan areas. - -------------------------------------------------------------------------------- TABLE 6 - NONPERFORMING ASSETS (In thousands) JUNE 30, March 31, Dec. 31, Sept. 30, June 30 1996 1996 1995 1995 1995 ----------------------------------------------- Nonperforming assets: Nonperforming loans: Nonaccrual loans: Commercial $ 11,418 $ 12,399 $ 14,646 $ 15,095 $ 16,221 Commercial real estate 8,528 10,138 10,621 6,412 5,057 Residential mortgage 3,001 3,136 2,794 3,269 3,441 Consumer 1,037 1,178 1,227 1,175 1,020 - ------------------------------------------------------------------------------- Total nonaccrual loans 23,984 26,851 29,288 25,951 25,739 Loans past due (90 days)(1) 17,424 15,023 9,379 7,888 7,721 - ------------------------------------------------------------------------------- Total nonperforming loans(1) 41,408 41,874 38,667 33,839 33,460 - ------------------------------------------------------------------------------- Other nonperforming assets: Commercial real estate 3,342 2,949 3,023 3,429 3,550 Other 481 526 376 344 382 - ------------------------------------------------------------------------------- Total other nonperforming assets 3,823 3,475 3,399 3,773 3,932 - ------------------------------------------------------------------------------- Total nonperforming assets $ 45,231 $ 45,349 $ 42,066 $ 37,612 $ 37,392 - ------------------------------------------------------------------------------- Ratios: Reserve for loan losses to nonperforming loans 103.38% 94.48% 99.02% 112.98% 114.00% Nonperforming loans(1) to period-end loans(2) 1.91 2.00 1.82 1.67 1.68 - ------------------------------------------------------------------------------- (1) Includes 1-4 family loans guaranteed by agencies of the U.S. government $ 12,456 $ 12,165 $ 6,754 $ 5,931 $ 7,084 (2) Excludes residential mortgage loans held for sale =============================================================================== BOK Financial monitors loan performance on a portfolio and individual loan basis. Nonperforming loans are reviewed at least quarterly. The loan review process involves evaluating the credit worthiness of customers and their ability, based upon current and anticipated economic conditions, to meet future principal and interest payments. Loans may be identified which possess more than the normal amount of risk due to deterioration in the financial condition of the borrower or the value of the collateral. Because the borrowers are performing in accordance with the original terms of the loan agreements and no loss of principal or interest is anticipated,such loans are not included in the nonperforming assets totals. These loans are assigned to various risk categories in order to focus management's attention on the loans with higher 8 risk of loss. At June 30, 1996, loans totaling $32 million were assigned to the substandard risk category, and loans totaling $72 million were assigned to the special mention category. These are compared to $42 million and $40 million, respectively, at December 31, 1995. The allowance for loan losses, which is available to absorb losses inherent in the loan portfolio,totaled $43 million at June 30, 1996 compared to $38 million at December 31 1995 or 1.97% and 1.80%, respectively, of total loans, excluding loans held for sale. Losses on loans held for sale, principally residential mortgage loans accumulated for placement in securitized pools, are charged to earnings through adjustments in carrying value to the lower of cost or market value in accordance with accounting standards applicable to mortgage banking. Table 7 presents statistical information regarding the reserve for loan losses. - ------------------------------------------------------------------------------- TABLE 7 - SUMMARY OF LOAN LOSS EXPERIENCE (In thousands) Three months ended -------------------------------------------------- JUNE 30, March 31, Dec. 31, Sept. 30, June 30, 1996 1996 1995 1995 1995 -------------------------------------------------- Beginning balance $ 39,561 $ 38,287 $ 38,232 $ 38,143 $ 38,020 Loans charged-off: Commercial 222 397 135 96 180 Commercial real estate 106 82 155 0 0 Residential mortgage 80 14 153 2 24 Consumer 820 735 696 647 641 - ------------------------------------------------------------------------------- Total 1,228 1,228 1,139 745 845 - ------------------------------------------------------------------------------- Recoveries of loans previously charged-off: Commercial 449 807 428 318 410 Commercial real estate 741 463 119 259 269 Residential mortgage 44 130 302 19 27 Consumer 303 191 169 223 222 - ------------------------------------------------------------------------------- Total 1,537 1,591 1,018 819 928 - ------------------------------------------------------------------------------- Net loans charged-off (recoveries) (309) (363) 121 (74) (83) Provision for loan losses 2,937 911 176 15 40 Addition due to acquisition 0 0 0 0 0 - ------------------------------------------------------------------------------- Ending balance $ 42,807 $ 39,561 $ 38,287 $ 38,232 $ 38,143 - ------------------------------------------------------------------------------- Reserve to loans outstanding at period-end(1) 1.97 1.89 1.80 1.88 1.91 Net loan losses (recoveries) (annualized) to average loans(1) (0.06) (.07) .02 (.01) (.02) - ------------------------------------------------------------------------------- (1) Excludes residential mortgage loans held for sale =============================================================================== 9 The adequacy of the allowance for loan losses is assessed by management based upon an evaluation of the current risk characteristics of the loan portfolio including current economic conditions, historical experience, collateral valuation, changes in the composition of the portfolio and other relevant factors. A provision for loan losses is charged against earnings in amounts necessary to maintain the adequacy of the allowance for loan losses. These provisions totaled $2.9 million for the second quarter of 1996 compared to $911 thousand in the first quarter of 1996 and $40 thousand for the second quarter of 1995. The provision for loan losses recorded in the second quarter of 1996 reflects management's assessment of the increased risk of loss due primarily to continued growth in the loan portfolio, moderation of economic activity in BOK Financial's primary market areas and drought conditions which prevailed over much of Oklahoma during the first half of 1996. Management believes that the allowance for loan losses is adequate for each period presented based upon the evaluation criteria and information available at that time. INTEREST RATE SENSITIVITY AND LIQUIDITY BOK Financial's asset/liability management policy addresses several complementary goals: assuring adequate liquidity, maintaining an appropriate balance between interest sensitive assets and liabilities, and maximizing net interest revenue. The responsibility for attaining these goals rests with the Asset/Liability Committee. Interest rate sensitivity, the risk associated with changes in interest rates, is of primary importance within the banking industry. Management has established strategies and procedures to protect net interest revenue against significant changes in interest rates. Generally, these strategies are designed to achieve an acceptable level of net interest revenue based upon management's projections of future changes in interest rates. Management simulates the potential effect of changes in interest rates through computer modeling which incorporates both the current gap position and the expected magnitude of the repricing of specific types of assets and liabilities. This modeling is performed assuming expected interest rates over the next twelve months based on both a "most likely" rate scenario and a "shock test" rate scenario assuming a 200 basis point increase over the next twelve months. An independent source is used to determine the most likely interest rates for the next year. At June 30, 1996, this modeling indicated that under both the most likely interest rate forecast and the shock test, net interest revenue for the next twelve months could increase by approximately 15% compared to 1995. While these results are consistent with the increase in net interest revenue for the first six months of 1996 compared to the same period in 1995, these simulations are based on numerous assumptions regarding the timing and extent of repricing characteristics. Actual results may differ significantly. BOK Financial uses interest rate swaps, a form of off-balance sheet derivative product, in managing its interest rate sensitivity. These swaps are used to more closely match the interest paid on certain long-term, fixed rate certificates of deposit with earning assets. Swaps allow BOK Financial to offer these deposits to its customers without altering the desired repricing characteristics. BOK Financial accrues and periodically receives a fixed amount from the counter parties to these swaps and accrues and periodically makes a variable payment to the counter parties.Credit risk from these swaps is closely monitored and counter parties to these contracts are selected on the basis of their credit worthiness among other factors. Derivative products are not used for speculative purposes. 10 - ------------------------------------------------------------------------------- TABLE 8 - INTEREST RATE SWAPS (In thousands) Notional Pay Receive Amount Rate Rate ---------------------------------------------------- Expiration: 1998 $70,000 5.25 - 7.03% (1) 5.8125 - 7.96% 1999 15,000 5.2578 (1) 7.68 - ------------------------------------------------------------------------------- (1) Rates are variable based on LIBOR and reset quarterly or semiannually. =============================================================================== The best measure of liquidity is the ability to obtain funds to meet cash requirements. Liquidity is achieved through maturities of earning assets, securities available for sale and loans held for sale. On the liability side, liquidity depends on the availability of deposits and short-term borrowings in both the local and national markets. Cash provided by operating activities in the first half of 1996 totaled $33 million. This compares to cash provided by operating activities of $5 million, or $29 million excluding the decrease in mortgage loans held for sale, in the first half of 1995. Investing activities used $177 million in the first half of 1996, primarily for the net purchase of securities totaling $116 million and net loan fundings of $74 million. This is compared to $227 million in net loan fundings and limited net securities purchases in the first half of 1995. Financing activities provided $139 million during the first half of 1996. Demand deposits provided $107 million of the $164 million increase in total demand, transaction, money market and savings deposits. Certificates of deposit provided $110 million. These funds were used to reduce other borrowings by $134 million as well as for investing activities. - ------------------------------------------------------------------------------ TABLE 9 - CAPITAL RATIOS June 30, March 31, Dec. 31, Sept. 30, June 30, 1996 1996 1995 1995 1995 ------------------------------------------------ Average shareholders' equity to average assets Risk-based capital Tier 1 capital 10.43 10.08 9.91 9.75 9.44 Total capital 11.69 11.33 11.17 11.01 10.70 Leverage 7.09 6.80 6.55 6.27 5.92 =============================================================================== 11 REPORT OF MANAGEMENT ON CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the consolidated financial statements which have been prepared in accordance with generally accepted accounting principles. In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial condition, results of operations and cash flows of BOK Financial and its subsidiaries at the dates and for the periods presented. The financial information included in this interim report has been prepared by management without audit by independent public accountants and should be read in conjunction with BOK Financial's 1995 Form 10-K to the Securities and Exchange Commission which contains audited financial statements. 12 - ------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF EARNINGS (In Thousands Except Share Data) Three Months Ended Six Months Ended June 30, June 30, --------------------------------------------- 1996 1995 1996 1995 --------------------------------------------- INTEREST REVENUE Loans $ 49,024 $ 43,999 $ 96,890 $ 84,998 Taxable securities 19,215 21,905 38,310 43,496 Tax-exempt securities 3,307 3,039 6,465 6,004 - ------------------------------------------------------------------------------- Total securities 22,522 24,944 44,775 49,500 - ------------------------------------------------------------------------------- Trading securities 100 72 195 119 Funds sold 574 213 976 559 - ------------------------------------------------------------------------------- Total interest revenue 72,220 69,228 142,836 135,176 - ------------------------------------------------------------------------------- INTEREST EXPENSE Deposits 29,606 23,989 58,427 46,385 Other borrowings 10,167 16,868 21,160 31,677 Subordinated debenture -- 12 -- 352 - ------------------------------------------------------------------------------- Total interest expense 39,773 40,869 79,587 78,414 - ------------------------------------------------------------------------------- NET INTEREST REVENUE 32,447 28,359 63,249 56,762 PROVISION FOR LOAN LOSSES 2,937 40 3,848 40 - ------------------------------------------------------------------------------- NET INTEREST REVENUE AFTER PROVISION FOR LOAN LOSSES 29,510 28,319 59,401 56,722 - ------------------------------------------------------------------------------- OTHER OPERATING REVENUE Brokerage and trading revenue 1,823 1,431 3,901 2,720 TransFund network revenue 2,153 1,729 4,249 3,278 Securities gains (losses), net (1,967) 226 (1,985) 226 Trust fees and commissions 5,528 4,616 10,997 9,618 Service charges and fees on deposit accounts 5,732 5,150 11,571 10,250 Mortgage banking revenue, net 6,056 5,297 11,925 9,581 Other revenue 4,641 3,408 9,892 8,337 - ------------------------------------------------------------------------------- Total other operating revenue 23,966 21,857 50,550 44,010 - ------------------------------------------------------------------------------- OTHER OPERATING EXPENSE Personnel 18,059 16,103 35,806 33,472 Business promotion 1,801 1,468 3,295 3,066 Professional fees and services 1,420 1,208 2,662 2,618 Net occupancy, equipment and data processing 7,845 6,649 15,003 12,900 FDIC and other insurance 555 1,600 1,094 3,227 Printing postage and supplies 1,763 1,402 3,340 2,987 Net gains and operating expenses on repossessed assets (946) (1,039) (1,143) (2,076) Amortization of intangible assets 5,288 1,477 6,753 2,969 Mortgage banking costs 3,646 3,231 7,391 6,123 Other expense 3,343 2,468 6,215 4,386 - ------------------------------------------------------------------------------- Total other operating expense 42,774 34,567 80,416 69,672 - ------------------------------------------------------------------------------- INCOME BEFORE TAXES 10,702 15,609 29,535 31,060 Federal and state income tax (2,889) 3,527 2,949 7,011 - ------------------------------------------------------------------------------- NET INCOME $ 13,591 $ 12,082 $ 26,586 $ 24,049 =============================================================================== EARNINGS PER SHARE: Net income Primary $ 0.64 $ 0.57 $ 1.26 $ 1.13 - ------------------------------------------------------------------------------- Fully diluted $ 0.58 $ 0.52 $ 1.14 $ 1.03 - ------------------------------------------------------------------------------- AVERAGE SHARES USED IN COMPUTATION: Primary 20,535,122 20,523,233 20,526,580 20,529,053 - ------------------------------------------------------------------------------- Fully diluted 23,369,980 23,261,447 23,367,499 23,267,369 =============================================================================== See accompanying notes to consolidated financial statements 13 CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Data) June 30, December 31, June 30, 1996 1995 1995 ------------------------------------------- ASSETS Cash and due from banks $ 290,139 $ 303,499 $ 277,450 Funds sold 16,755 8,440 1,120 Trading securities 6,055 7,777 1,825 Securities: Available for sale 1,440,331 1,366,661 676,037 Investment (fair value: June 30, 1996 - $191,420; December 31, 1995 - $181,786; June 30, 1995 - $926,850) 194,386 179,121 945,138 - ------------------------------------------------------------------------------- Total securities 1,634,717 1,545,782 1,621,175 - ------------------------------------------------------------------------------- Loans 2,244,698 2,194,368 2,055,011 Less reserve for loan losses 42,807 38,287 38,143 - ------------------------------------------------------------------------------- Net loans 2,201,891 2,156,081 2,016,868 - ------------------------------------------------------------------------------- Premises and equipment, net 48,659 47,673 45,555 Accrued revenue receivable 43,807 41,121 37,428 Excess cost over fair value of net assets acquired and core deposit premiums (net of accumulated amortization: June 30, 1996 - $28,279; December 31, 1995 - $21,526; June 30, 1995 - $18,493) 30,755 37,134 40,106 Mortgage servicing rights 61,815 50,634 43,605 Real estate and other repossessed assets 3,823 3,399 3,932 Other assets 41,985 20,378 21,445 - ------------------------------------------------------------------------------- Total assets $ 4,380,401 $ 4,221,918 $ 4,110,509 =============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing demand deposits $ 758,173 $ 651,134 $ 621,698 Interest-bearing deposits: Transaction 107,878 411,861 394,616 Money market 731,052 369,344 370,882 Savings 103,486 104,726 120,228 Time 1,510,704 1,400,644 1,184,499 - ------------------------------------------------------------------------------- Total deposits 3,211,293 2,937,709 2,691,923 - ------------------------------------------------------------------------------- Funds purchased and repurchase agreements 522,031 697,497 944,099 Other borrowings 291,320 250,309 162,966 Accrued interest, taxes and expense 25,778 25,107 26,406 Other liabilities 14,904 9,731 9,011 - ------------------------------------------------------------------------------- Total liabilities 4,065,326 3,920,353 3,834,405 - ------------------------------------------------------------------------------- Stockholders' equity: Preferred stock 23 23 13 Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding: June 30, 1995 -20,458,215; December 31, 1995 - 20,415,504; June 30, 1995 -19,779,712) 1 1 1 Capital surplus 158,297 157,395 143,668 Retained earnings 172,563 146,727 135,177 Unrealized loss on securities available for sale (15,676) (2,427) (2,515) Less notes receivable from exercise of stock options (133) (154) (240) - ------------------------------------------------------------------------------- Total shareholders' equity 315,075 301,565 276,104 - ------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 4,380,401 $ 4,221,918 $ 4,110,509 =============================================================================== See accompanying notes to consolidated financial statements. 14 - ------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (in thousands) Preferred Stock Common Stock Capital Retained Unrealized Notes Shares Amount Shares Amount Surplus Earnings Gain(Loss) Receivable Total -------------------------------------------------------------------------------------- Balances at December 31, 1994 250,000 $ 13 19,735 $1 $142,718 $111,878 $(17,423) $(285) $236,902 Net income - - - - - 24,049 - - 24,049 Issuance of common stock to Thrift Plan - - 3 - 70 - - - 70 Exercise of stock options - - 2 - 52 - - - 52 Payments on stock option notes receivable - - - - - - - 45 45 Preferred dividends paid in shares of common stock - - 36 - 750 (750) - - - Director retainer shares - - 4 - 78 - - - 78 Change in unrealized net gain(loss) on securities available for sale - - - - - - 14,908 - 14,908 - ------------------------------------------------------------------------------------------------------------------ Balances at June 30, 1995 250,000 $ 13 19,780 $1 $143,668 $135,177 $ (2,515) $(240) $276,104 ================================================================================================================== Balances at December 31, 1995 250,102 $ 23 20,416 $1 $157,395 $146,727 $ (2,427) $(154) $301,565 Net income - - - - - 26,586 - - 26,586 Issuance of common stock to Thrift Plan - - - - - - - - - Exercise of stock options - - 5 - 69 - - - 69 Payments on stock option notes receivable - - - - - - - 21 21 Issuance of preferred stock 3 - - - - - - - - Preferred dividends paid in shares of common stock - - 33 - 750 (750) - - - Director retainer shares - - 4 - 83 - - - 83 Change in unrealized net gain(loss) on securities available for sale - - - - - - (13,249) - (13,249) - ------------------------------------------------------------------------------------------------------------------ Balances at June 30, 1996 250,105 $ 23 20,458 $1 $158,297 $172,563 $(15,676) $(133) $315,075 ================================================================================================================== See accompanying notes to consolidated financial statements.
15 CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands Except Share Data) Six Months Ended June 30, --------------------- 1996 1995 --------------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income $ 26,586 $ 24,049 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan and repossessed real estate losses 3,848 40 Depreciation and amortization 11,202 9,466 Valuation adjustment of intangible assets 3,821 -- Net amortization of investment security discounts and premiums 1,240 925 Net gain on sale of assets (885) (2,393) Mortgage loans originated for resale (377,699) (185,788) Proceeds from sale of mortgage loans held for resale 377,035 162,409 Decrease in trading securities 1,722 710 (Increase) decrease in accrued revenue receivable (2,686) 3,970 Increase in other assets (21,635) (7,166) Increase (decrease)in accrued interest, taxes and expense 11,050 (480) Decrease in other liabilities (517) (350) - ------------------------------------------------------------------------------- Net cash provided (used) by operating activities 33,082 5,392 - ------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of investment securities 17,092 29,172 Proceeds from maturities of available for sale securities 154,199 61,293 Purchases of investment securities (32,528) (17,918) Purchases of available for sale securities (474,321) (193,643) Proceeds from sales of available for sale securities 219,771 111,394 Loans originated or acquired net of principal collected (74,202) (227,142) Proceeds from sales of assets 27,995 40,244 Purchases of assets (15,235) (14,282) Cash and cash equivalents of branches & subsidiaries acquired and sold, net (200) (19,371) - ------------------------------------------------------------------------------- Net cash used by investing activities (177,429) (230,253) - ------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand deposits, transaction deposits, money market deposits, and savings accounts 163,524 (17,599) Net increase in certificates of deposit 110,060 101,955 Net increase (decrease) in other borrowings (134,455) 132,731 Repayment of capital note -- (23,000) Issuance of preferred, common and treasury stock, net 152 200 Payments on stock option notes receivable 21 45 - ------------------------------------------------------------------------------- Net cash provided by financing activities 139,302 194,332 - ------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (5,045) (30,529) Cash and cash equivalents at beginning of period 311,939 309,099 - ------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 306,894 $ 278,570 =============================================================================== CASH PAID FOR INTEREST $ 78,157 $ 76,457 =============================================================================== CASH PAID FOR TAXES $ 5,065 $ 8,496 =============================================================================== NET LOANS TRANSFERRED TO REPOSSESSED REAL ESTATE AND OTHER ASSETS $ 778 $ 960 =============================================================================== PAYMENT OF PREFERRED STOCK DIVIDENDS IN COMMON STOCK $ 750 $ 750 =============================================================================== See accompanying notes to consolidated financial statements. 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION The accounting and reporting policies of BOK Financial Corporation conform to generally accepted accounting principles and to generally accepted practices within the banking industry. The Consolidated Financial Statements of BOK Financial include the accounts of BOK Financial and its banking subsidiaries, Bank of Oklahoma, N.A. and Citizens Bank of Northwest Arkansas, N.A. Certain prior period balances have been reclassified to conform with the current period presentation. (2) MORTGAGE BANKING ACTIVITIES BOK Financial engages in mortgage-banking activities through its subsidiary, BancOklahoma Mortgage Corp. ("BOMC"). At June 30, 1996, BOMC owned the rights to service 78,639 mortgage loans with outstanding principal balances of $5.6 billion, including $239 million serviced for BOK. The weighted average interest rate and remaining term was 7.69% and 285 months, respectively. Activity in capitalized mortgage servicing rights and related valuation allowance during the current period is as follows: Capitalized Mortgage Servicing Rights ----------------------------------Valuation Purchased Originated Total Allowance Net - ------------------------------------------------------------------------------ Balance at December 31, 1995 $ 49,532 $ 1,641 $ 51,173 $ (539) $50,634 Additions 14,189 2,072 16,261 16,261 Amortization expense (4,177) (542) (4,719) (4,719) Provision for impairment - - - (361) (361) - ------------------------------------------------------------------------------ Balance at June 30, 1996 $ 59,544 $ 3,171 $ 62,715 $ (900) $61,815 =============================================================================== Estimated fair value of mortgage servicing rights (*) $ 74,830 $ 5,752 $ 80,582 $ - $80,582 =============================================================================== (*) Excludes approximately $18.0 million of loan servicing rights on mortgage loans originated prior to the adoption of FAS 122. 17 (3) DISPOSAL OF AVAILABLE FOR SALE SECURITIES Sales of available for sale securities for the period ending June 30, 1996 resulted in gains and losses as follows (in thousands): Proceeds 219,771 Gross realized gains 144 Gross realized losses 2,129 Related federal and state income tax expense (benefit) (615) (4) FEDERAL AND STATE INCOME TAXES BOK Financial reduced its valuation allowance for deferred tax assets by $6.2 million during the second quarter of 1996. The valuation allowance is related to built-in and net operating loss carry forwards which existed from the time BOK Financial acquired Bank of Oklahoma. BOK Financial's ability to realize the benefits of these losses expired on June 6, 1996, and accordingly the valuation allowance was no longer considered necessary. (5) 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. 18 - ------------------------------------------------------------------------------- QUARTERLY FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Three months ended --------------------------------------------------- June 30, 1996 March 31, 1996 --------------------------------------------------- Average Revenue/ Yield Average Revenue/Yield Balance Expense /Rate Balance Expense /Rate --------------------------------------------------- ASSETS Taxable securities $1,280,094 19,215 6.04 $1,274,853 $19,095 6.02 Tax-exempt securities(1) 282,738 5,238 7.45 269,115 5,032 7.52 - ------------------------------------------------------------------------------- Total securities 1,562,832 24,453 6.29 1,543,968 24,127 6.28 - ------------------------------------------------------------------------------- Trading securities 6,416 100 6.27 6,005 95 6.36 Funds sold 43,274 574 5.33 27,409 402 5.90 Loans(2) 2,233,711 49,085 8.84 2,189,423 47,866 8.79 Less reserve for loan losses 40,311 38,966 - ------------------------------------------------------------------------------- Loans, net of reserve 2,193,400 49,085 9.00 2,150,457 47,866 8.95 - ------------------------------------------------------------------------------- Total earning assets 3,805,922 74,212 7.84 3,727,839 72,490 7.82 - -------------------------------------------------------------------------------- Cash and other assets 446,659 432,081 - ------------------------------------------------------------------------------- Total assets $4,252,581 $4,159,920 =============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Transaction deposits $ 72,085 746 4.16 $ 298,442 2,051 2.76 Money market deposits 760,042 6,114 3.24 506,281 4,336 3.44 Savings deposits 103,274 624 2.43 103,931 629 2.43 Other time deposits 1,605,179 22,122 5.54 1,533,143 21,805 5.72 - ------------------------------------------------------------------------------- Total interest-bearing deposits 2,540,580 29,606 4.69 2,441,797 28,821 4.75 - ------------------------------------------------------------------------------- Other borrowings 732,122 10,167 5.59 778,343 10,993 5.68 Subordinated debenture 0 0 0 0 0 0 - ------------------------------------------------------------------------------- Total interest-bearing liabilities 3,272,702 39,773 4.89 3,220,140 39,814 4.97 - ------------------------------------------------------------------------------- Demand deposits 629,973 588,624 Other liabilities 37,637 40,865 Shareholders' equity 312,269 310,291 - ------------------------------------------------------------------------------- Total liabilities and shareholders' equity $4,252,581 $4,159,920 =============================================================================== TAX-EQUIVALENT NET INTEREST REVENUE(1) 34,439 2.95 32,676 2.85 TAX-EQUIVALENT NET INTEREST REVENUE(1) TO EARNING ASSETS 3.64 3.53 Less tax-equivalent adjustment(1) 1,992 1,874 - ------------------------------------------------------------------------------- NET INTEREST REVENUE 32,447 30,802 Provision for loan losses 2,937 911 Other operating revenue 23,966 26,584 Other operating expense 42,774 37,642 - ------------------------------------------------------------------------------- INCOME BEFORE TAXES 10,702 18,833 Federal and state income tax (2,889) 5,838 - ------------------------------------------------------------------------------- NET INCOME $13,591 $12,995 =============================================================================== EARNINGS PER SHARE: NET INCOME Primary $ .64 $ .62 - ------------------------------------------------------------------------------- Fully Diluted $ .58 $ .56 =============================================================================== (1) Tax-equivalent at the statutory federal and state rates for all periods presented. The taxable equivalent adjustments shown above are for comparative purposes. (2) The loan averages include loans on which the accrual of interest has been discounted and are stated net of unearned income. 19 For Three months ended - ------------------------------------------------------------------------------- December 31, 1995 September 30, 1995 June 30, 1995 - ------------------------------------------------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Average Revenue/Yield Balance Expense /Rate Balance Expense /Rate Balance Expense /Rate - ------------------------------------------------------------------------------- $1,285,158 $19,337 5.97% $1,336,474 $20,243 6.01% $1,425,922 $21,905 6.16% 256,599 4,824 7.46 255,688 4,798 7.44 253,770 4,799 7.59 - ------------------------------------------------------------------------------- 1,541,757 24,161 6.22 1,592,162 25,041 6.24 1,679,692 26,704 6.38 - ------------------------------------------------------------------------------- 3,787 72 7.54 3,323 51 6.09 4,565 72 6.33 19,197 288 5.95 9,826 149 6.02 13,670 213 6.25 2,145,558 47,838 8.85 2,073,088 46,216 8.84 1,958,467 43,999 9.01 38,378 38,372 38,218 - ------------------------------------------------------------------------------- 2,107,180 47,838 9.01 2,034,716 46,216 9.01 1,920,249 43,999 9.19 - ------------------------------------------------------------------------------- 3,671,921 72,359 7.82 3,640,027 71,457 7.79 3,618,176 70,988 7.87 - ------------------------------------------------------------------------------- 431,982 418,656 424,687 - ------------------------------------------------------------------------------- $4,103,903 $ 4,058,683 $4,042,863 =============================================================================== $ 385,302 2,714 2.79 $ 387,039 2,713 2.78 $ 393,141 2,739 2.79 374,618 3,891 4.12 378,298 3,802 3.99 362,817 3,515 3.89 106,633 654 2.43 115,312 710 2.44 123,169 738 2.40 1,338,106 19,416 5.76 1,208,924 17,454 5.73 1,193,816 16,997 5.71 - ------------------------------------------------------------------------------- 2,204,659 26,675 4.80 2,089,573 24,679 4.69 2,072,943 23,989 4.64 - ------------------------------------------------------------------------------- 973,914 14,457 5.89 1,060,864 15,952 5.97 1,090,359 16,868 6.21 0 0 0 0 0 0 506 12 9.00 - ------------------------------------------------------------------------------- 3,178,573 41,132 5.13 3,150,437 40,631 5.12 3,163,808 40,869 5.18 - ------------------------------------------------------------------------------- 584,748 586,340 576,761 43,465 39,746 38,268 297,117 282,160 264,025 - ------------------------------------------------------------------------------- $4,103,903 $4,058,683 $4,042,862 =============================================================================== 31,227 2.69 30,826 2.67 30,119 2.69 3.37 3.36 3.34 1,780 1,771 1,760 - ------------------------------------------------------------------------------- 29,447 29,055 28,359 176 15 40 23,951 23,185 21,857 36,852 35,682 34,567 - ------------------------------------------------------------------------------- 16,370 16,543 15,609 3,707 4,050 3,527 - ------------------------------------------------------------------------------- $12,663 $12,493 $12,082 =============================================================================== $ .60 $ .59 $ .57 - ------------------------------------------------------------------------------- $ .54 $ .54 $ .52 =============================================================================== 20 THREE MONTH FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Six months ended ---------------------------------------------------- JUNE 30, 1996 JUNE 30, 1995 ---------------------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Balance Expense /Rate Balance Expense /Rate ---------------------------------------------------- ASSETS Taxable securities $1,277,475 $ 38,310 6.03% $1,399,811 $ 43,496 6.27% Tax-exempt securities(1) 275,926 10,270 7.48 251,759 9,491 7.60 - ------------------------------------------------------------------------------ Total securities 1,553,401 48,580 6.29 1,651,570 52,987 6.47 - ------------------------------------------------------------------------------- Trading securities 6,210 195 6.31 3,792 119 6.33 Funds sold 35,341 976 5.55 18,539 559 6.08 Loans(2) 2,211,567 96,950 8.82 1,914,222 84,998 8.95 Less reserve for loan losses 39,638 38,260 - ------------------------------------------------------------------------------- Loans, net of reserve 2,171,929 96,951 8.98 1,875,962 84,998 9.14 - ------------------------------------------------------------------------------- Total earning assets 3,766,881 146,701 7.83 3,549,863 138,663 7.88 - ------------------------------------------------------------------------------- Cash and other assets 437,390 415,871 - ------------------------------------------------------------------------------- Total assets $4,204,271 $3,965,734 =============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Transaction deposits $ 185,264 2,797 3.04 $ 392,706 5,454 2.80 Money market deposits 633,162 10,450 3.32 361,787 6,702 3.74 Savings deposits 103,602 1,253 2.43 126,483 1,593 2.54 Other time deposits 1,569,160 43,927 5.63 1,185,298 32,636 5.55 - ------------------------------------------------------------------------------- Total interest-bearing deposits 2,491,188 58,427 4.72 2,066,274 46,385 4.53 - -------------------------------------------------------------------------------- Other borrowings 755,233 21,160 5.63 1,030,277 31,677 6.20 Subordinated debenture 0 0 0.00 11,691 352 6.10 - ------------------------------------------------------------------------------- Total interest-bearing liabilities 3,246,421 79,587 4.93 3,108,242 78,414 5.09 - ------------------------------------------------------------------------------- Demand deposits 609,299 564,008 Other liabilities 37,272 38,692 Shareholders' equity 311,280 254,792 - ------------------------------------------------------------------------------- Total liabilities and shareholders' equity $4,204,271 $3,965,734 =============================================================================== TAX-EQUIVALENT NET INTEREST REVENUE(1) 67,114 2.90 60,249 2.79 TAX-EQUIVALENT NET INTEREST REVENUE(1) TO EARNING ASSETS 3.58 3.42 Less tax-equivalent adjustment(1) 3,865 3,487 - ------------------------------------------------------------------------------- NET INTEREST REVENUE 63,249 56,762 Provision for loan losses 3,848 40 Other operating revenue 50,550 44,010 Other operating expense 80,416 69,672 - ------------------------------------------------------------------------------- INCOME BEFORE TAXES 29,535 31,060 Federal and state income tax 2,949 7,011 - ------------------------------------------------------------------------------- NET INCOME $ 26,586 $ 24,049 =============================================================================== EARNINGS PER SHARE: NET INCOME Primary $ 1.26 $ 1.13 - ------------------------------------------------------------------------------- Fully Diluted $ 1.14 $ 1.03 =============================================================================== (1) Tax-equivalent at the statutory federal and state rates for all periods presented. The taxable equivalent adjustments shown above are for comparative purposes. (2) The loan averages include loans on which the accrual of interest has been discounted and are stated net of unearned income. 21 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: No. 27 Financial Data Schedule filed herewith electronically. (B) Reports on Form 8-K: No reports on Form 8-K were filed during the three months ended June 30, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BOK FINANCIAL CORPORATION ------------------------- (Registrant) Date August 13, 1996 /s/ James A. White ----------------- ------------------- James A. White Executive Vice President and Chief Financial Officer 22 EX-27 2
9 This schedule contains summary financial information extracted from the BOK Financial Corporation's 10-Q for the period ended June 30,1996 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1996 JUN-30-1996 230,039 100 16,755 6,055 1,440,331 194,386 191,420 2,244,698 42,807 4,380,401 3,211,293 77,205 40,682 736,146 0 23 1 315,051 4,380,401 96,890 44,775 1,171 142,836 58,427 79,587 63,249 3,848 (1,985) 80,416 29,535 26,586 0 0 26,586 1.26 1.14 3.58 23,984 17,424 0 32,490 38,287 2,456 3,128 42,807 42,807 0 0
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