-----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, CuJBsgIyf8EToKgLnl6ZN0xAQxQ53pY8L8cnoSqxtEVo3kQ0TO2dEPRvWNDJwy1r TyBpqZ/4RErKzBFATKjraA== 0000875357-98-000008.txt : 19980518 0000875357-98-000008.hdr.sgml : 19980518 ACCESSION NUMBER: 0000875357-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOK FINANCIAL CORP ET AL CENTRAL INDEX KEY: 0000875357 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 731373454 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19341 FILM NUMBER: 98623894 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 3/31/98 QUARTERLY FINANCIAL STATEMENTS As filed with the Securities and Exchange Commission on May 15, 1998 - -------------------------------------------------------------------------------- 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 March 31, 1998 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 ($.00006 Par Value) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 21,886,347 shares of common stock ($.00006 par value) as of April 30, 1998. - -------------------------------------------------------------------------------- 2 BOK Financial Corporation Form 10-Q Quarter Ended March 31, 1998 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 10 Consolidated Statements of Earnings 11 Consolidated Balance Sheets 12 Consolidated Statements of Changes in Shareholders' Equity 13 Consolidated Statements of Cash Flows 14 Notes to Consolidated Financial Statements 15 Financial Summaries - Unaudited 17 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 19 Signature 19 MANAGEMENT'S DISCUSSION AND ANALYSIS HIGHLIGHTS BOK Financial Corporation ("BOK Financial") recorded net income of $16.3 million or $0.65 per diluted common share for the first quarter of 1998 compared to $15.3 million or $0.61 per diluted common share for the first quarter of 1997. Returns on average assets and equity were 1.19% and 14.89%, respectively, compared to returns on average assets and equity of 1.30% and 16.92%, respectively, for the first quarter of 1997. The increase in net income for the first quarter of 1998 was due to increases of $7.0 million or 19.9% in net interest revenue and $10.3 million or 33.9% in other operating revenue. These increases were partially offset by increases of $15.5 million or 37.1% in operating expenses and $1.4 million in provision for loan losses. Operating expenses for the first quarter of 1998 included a $3.0 million provision for impairment of BOK Financial's mortgage servicing rights and $2.3 million for the cost of securities contributed to the Bank of Oklahoma Foundation. RESULTS OF OPERATIONS Net interest revenue on a tax-equivalent basis was $44.4 million for the first quarter of 1998 compared to $37.5 million for the first quarter of 1997, an increase of $6.9 million or 18.4%. Average earning assets increased by $683 million, including increases in average loans of $408 million and average securities of $278 million. Interest bearing liabilities increased $541 million, primarily due to increases in time deposits of $175 million and interest bearing transaction accounts of $157 million. Demand deposits and shareholders' equity, which are additional sources of funding asset growth, increased $170 million and $76 million, respectively. The growth in average earning assets in excess of the growth in interest bearing liabilities contributed $6.3 million to the increase in net interest revenue. 3 ================================================================================ TABLE 1 - VOLUME/RATE ANALYSIS (In thousands) Three months ended March 31, 1998/1997 ------------------------------------- Change Due To (1) ------------------------ Yield Change Volume /Rate ------------------------------------- Tax-equivalent interest revenue: Securities $ 4,487 $ 4,243 $ 244 Trading securities 105 116 (11) Loans 9,291 8,736 555 Funds sold (20) (56) 36 - -------------------------------------------------------------------------- Total 13,863 13,039 824 - -------------------------------------------------------------------------- Interest expense: Interest bearing transaction 930 1,247 (317) deposits Savings deposits 38 33 5 Time deposits 2,431 2,394 37 Other borrowings 1,290 851 439 Subordinated debenture 2,271 2,258 13 - -------------------------------------------------------------------------- Total 6,960 6,783 177 - -------------------------------------------------------------------------- Tax-equivalent net interest 6,903 $ 6,256 $ 647 revenue Change in tax-equivalent adjustment 71 - -------------------------------------------------------------------------- Net interest revenue $ 6,974 - -------------------------------------------------------------------------- (1) Changes attributable to both volume and yield are allocated to both volume and yield/rate on an equal basis. Since inception, BOK Financial has completed acquisitions which were accounted for under the purchase method of accounting. The purchase method results in recording goodwill and other identifiable intangible assets which are amortized as noncash charges into operating expense in future years. This is in contrast to the pooling of interest method of accounting, which is only applicable in certain limited circumstances. The pooling of interests method does not result in the recording of goodwill or other intangible assets. Since the amortization of goodwill and other intangible assets does not result in a current period cash expense, the economic value to shareholders under either accounting method is essentially the same. Operating results excluding the impact of these intangible assets are summarized below: ================================================================================ TABLE 2 - TANGIBLE OPERATING RESULTS (Dollars in Thousands Except Share Data) ------------------------------- Three months ended ------------------------------- March 31, March 31, 1998 1997 --------------- --------------- Net income $ 16,313 $ 15,347 After-tax impact of amortization of intangible assets 2,072 1,524 - --------------------------------------------------------------- --------------- Tangible net income $ 18,385 $ 16,871 - --------------------------------------------------------------- --------------- Tangible net income per diluted share $ 0.73 $ 0.68 - --------------------------------------------------------------- --------------- Average tangible shareholders' equity $ 377,114 $ 318,422 Return on tangible shareholders' equity 19.77% 21.49% - --------------------------------------------------------------- --------------- Average tangible assets $5,487,243 $4,728,769 Return on tangible assets 1.36% 1.45% - --------------------------------------------------------------- --------------- Net interest margin, the ratio of net interest revenue to average earning assets, was 3.65% for the first quarter of 1998 compared to 3.58% for the first quarter of 1997. This increase was due primarily to a 12 basis point yield improvement on loans. Commercial and commercial real estate loans increased to 72% of the total loan portfolio for the first quarter of 1998 compared to 69% for the first quarter of 1997 while residential mortgage loans decreased to 10% of total loans from 12% for the same periods. This change in the composition of the loan portfolio caused the overall yield to increase since commercial and commercial real estate loans generally have a higher yield than residential mortgage loans. The increase in yield on average earning assets was partially offset by a 5 basis point increase in the cost of average interest bearing liabilities. The composition of interest bearing 4 liabilities shifted toward a greater percentage of borrowed funds in the first quarter of 1998 compared to the first quarter of 1997. Most notably, subordinated debt, which had a 6.36% cost of funds represented 3.5% of interest bearing liabilities for the first quarter of 1998 compared to 0.2% for the same period of 1997. Since inception, BOK Financial has generally followed a strategy of fully utilizing its capital resources by borrowing funds in the capital markets to supplement deposit growth and to invest in securities. Although this strategy frequently results in a net interest margin which falls below those normally seen in the commercial banking industry, it provides positive net interest revenue. Management estimates that for the first quarter of 1998, this strategy resulted in a 41 basis point decrease in net interest margin. However, this strategy contributed $2.9 million to net interest revenue. As more fully discussed in the Market Risk section, management employs various techniques designed to control, within established parameters, the interest rate and liquidity risk inherent in this strategy. Other operating revenue increased $10.3 million or 33.9% compared to the same quarter of 1997. Total fees and commissions, which are included in other operating revenue, increased $7.8 million or 26.7%. All categories of fee income showed increases over the first quarter of 1997. Most notably, mortgage banking revenue increased $2.4 million due to a $1.5 million increase in mortgage servicing fees and an $845 thousand increase in secondary marketing income. Loans serviced by BOK Mortgage, a division of BOk, totaled $7.0 billion at March 31, 1998. Additionally, trust fees and transaction card revenue increased $1.6 million and $1.5 million, respectively. Other operating revenue also included gains on student loans of $1.4 million for the first quarter of 1998 compared to $1.1 million for the first quarter of 1997, and a $2.5 million gain on securities sales in the first quarter of 1998. ========================================================================================================================= TABLE 3 - OTHER OPERATING REVENUE (In thousands) Three Months Ended ------------------------------------------------------------------------------- March 31, Dec. 31, Sept. 30, June 30, March 31, 1998 1997 1997 1997 1997 ------------------------------------------------------------------------------- Brokerage and trading revenue $ 3,131 $ 2,565 $ 2,522 $ 2,229 $ 2,240 Transaction card revenue 5,540 4,828 5,770 4,742 3,999 Trust fees and commissions 6,884 6,528 6,405 5,851 5,278 Service charges and fees on deposit accounts 7,638 7,570 7,255 7,112 6,714 Mortgage banking revenue 9,321 9,411 8,416 7,460 6,948 Leasing revenue 1,661 1,522 1,566 1,512 1,261 Other revenue 2,685 3,198 1,546 2,614 2,655 - ------------------------------------------------------------------------------------------------------------------------- Total fees and commissions 36,860 35,622 33,480 31,520 29,095 - ------------------------------------------------------------------------------------------------------------------------- Gain on student loan sales 1,415 99 26 91 1,095 Gain (loss) on securities 2,512 (2,200) 809 (200) 262 - ------------------------------------------------------------------------------------------------------------------------- Total other operating revenue $ 40,787 $ 33,521 $ 34,315 $ 31,411 $ 30,452 ==========================================================================================================================
Other operating expenses for the first quarter of 1998 increased $15.5 million or 37.1% compared to the first quarter of 1997. Notable large or non-recurring expenses affected the first quarter of 1998, including business promotion expenses for the contribution of stock with a cost of $2.3 million (market value at the time of donation was $5.0 million) to the Bank of Oklahoma Foundation and a provision of $3.0 million for impairment of mortgage servicing rights due to falling interest rates. Excluding these items and excluding net OREO gains, operating expenses increased $9.9 million or 23.4%. Personnel costs increased $5.5 million due to increased staffing, normal compensation increases and increased incentive compensation. Staffing on a full-time equivalent ("FTE") basis increased by 243 employees while average compensation per FTE increased by 9.8%. These changes reflect the addition of several senior level positions in both the lending and operations areas as well as related support staff in the second half of 1997. Incentive compensation, which varies directly with revenue increased $1.2 million to $2.6 million for the quarter. Net occupancy, equipment and data processing expenses increased $894 thousand or 10.7% due primarily to a $796 thousand increase in data processing costs. A significant portion of BOK Financial's data processing is outsourced to third party providers. The cost of these services are directly related to the volume of transactions 5 processed. Mortgage banking costs increased $1.8 million or 42.8% due to increased amortization of capitalized servicing rights and a greater volume of loan originations. ===================================================================================================================== TABLE 4 - OTHER OPERATING EXPENSE (In thousands) Three Months Ended ----------------------------------------------------------------------------------- March 31, Dec. 31, Sept. 30, June 30, March 31, 1998 1997 1997 1997 1997 ----------------------------------------------------------------------------------- Personnel $ 24,829 $ 24,811 $ 22,475 $ 21,148 $ 19,294 Business promotion 1,897 2,450 2,067 2,190 1,950 Contribution of stock to BOK Charitable Foundation 2,257 3,638 - - - Professional fees/services 1,596 2,123 1,579 1,571 1,496 Net occupancy, equipment and data processing 9,214 10,426 8,618 8,250 8,320 FDIC and other insurance 310 258 374 328 333 Printing, postage and supplies 2,047 2,220 1,817 1,921 1,825 Net gains and operating expenses on repossessed assets (55) (1,553) (1,662) (222) (412) Amortization of intangible assets 2,302 2,336 2,362 2,398 1,728 Mortgage banking costs 6,023 6,137 5,202 4,412 4,217 Provision for impairment of mortgage servicing rights 3,000 4,100 - - - Other expense 3,773 4,331 3,888 3,447 2,975 - --------------------------------------------------------------------------------------------------------------------- Total $ 57,193 $ 61,277 $ 46,720 $ 45,443 $ 41,726 =====================================================================================================================
The efficiency ratio, the ratio of other operating expenses, excluding net gains on real estate sales and the previously discussed large or non-recurring transactions, to tax-equivalent net interest revenue and other operating revenue, excluding securities gains and losses was 62.9% for the first quarter of 1998 compared to 62.3% for the first quarter of 1997. ===================================================================================================================== TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS (In thousands) Three Months Ended ------------------------------------------------------------------------------- March 31, Dec. 31, Sept. 30, June 30, March 31, 1998 1997 1997 1997 1997 ------------------------------------------------------------------------------- Total other operating expense $ 57,193 $ 61,277 $ 46,720 $ 45,443 $ 41,726 Contribution of stock to BOk Charitable Foundation (2,257) (3,638) - - - Provision for impairment of mortgage servicing rights (3,000) (4,100) - - - Net gains and operating costs from repossessed assets 55 1,553 1,662 222 412 - --------------------------------------------------------------------------------------------------------------------- Total $ 51,991 $ 55,092 $ 48,382 $ 45,665 $ 42,138 =====================================================================================================================
RISK ELEMENTS The aggregate loan portfolio at March 31, 1998 increased $71 million to $2.8 billion during the first quarter of 1998. Commercial and commercial real estate loans increased $70 million and $24 million, respectively. These included increases for Bank of Texas, NA of $18 million for commercial loans and $15 million for commercial real estate loans. Consumer loans decreased $49 million due to the sale of student loans during the quarter. BOK Financial has achieved some geographic diversification through acquisitions and expansion into Northwest Arkansas, North Texas and New Mexico. However, the majority of commercial and consumer loans are to 6 businesses and individuals in Oklahoma. This geographic concentration subjects the loans portfolio to the general economic conditions in Oklahoma. Notable loan concentrations by the primary industry of the borrowers are presented in Table 6. ===================================================================================================================== TABLE 6 - LOANS (In thousands) March 31, Dec. 31, Sept. 30, June 30, March 31, 1998 1997 1997 1997 1997 --------------------------------------------------------------------------------- Commercial: Energy $ 324,052 $ 332,770 $ 333,347 $ 281,801 $ 255,975 Manufacturing 222,385 201,918 185,795 170,052 160,160 Wholesale/retail 250,702 242,156 255,768 265,547 256,154 Agricultural 159,324 151,525 155,052 142,908 129,619 Services 473,684 465,317 416,871 381,452 352,996 Other commercial and industrial 139,516 105,714 168,028 186,065 171,178 Commercial real estate: Construction and land development 123,412 102,800 79,275 74,595 67,143 Multifamily 95,335 100,422 110,340 115,188 123,118 Other real estate loans 283,329 274,579 258,280 244,944 227,881 Residential mortgage: Secured by 1-4 family residential properties 404,481 419,139 414,050 423,123 426,956 Residential mortgages held for 118,777 78,669 103,300 79,438 67,192 sale Consumer 241,299 290,084 289,892 264,130 261,241 - --------------------------------------------------------------------------------------------------------------------- Total $ 2,836,296 $ 2,765,093 $ 2,769,998 $ 2,629,243 $ 2,499,613 =====================================================================================================================
7 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 risk of loss. At March 31, 1998, loans totaling $52 million were assigned to the substandard risk category and loans totaling $84 million were assigned to the special mention risk category, compared to $57 million and $68 million, respectively, at December 31, 1997. The increase in special mention loans is due primarily to one borrower incurring losses on activities outside of the normal scope of their operations. Management does not expect to incur any losses on this loan based upon information currently available. ===================================================================================================================== TABLE 7 - NONPERFORMING ASSETS (In thousands) March 31, Dec. 31, Sept. 30, June 30, March 31, 1998 1997 1997 1997 1997 ------------------------------------------------------------------------ Nonperforming assets: Nonperforming loans: Nonaccrual loans: Commercial $ 12,556 $ 12,717 $ 16,103 $ 16,556 $ 13,624 Commercial real estate 2,824 2,960 3,854 3,721 2,910 Residential mortgage 2,243 2,441 2,512 2,641 2,969 Consumer 1,192 649 713 776 751 - --------------------------------------------------------------------------------------------------------------------- Total nonaccrual loans 18,815 18,767 23,182 23,694 20,254 Loans past due (90 days) (1) 18,330 18,178 20,551 17,976 17,838 - --------------------------------------------------------------------------------------------------------------------- Total nonperforming loans (1) 37,145 36,945 43,733 41,670 38,092 - --------------------------------------------------------------------------------------------------------------------- Other nonperforming assets: Commercial real estate 2,297 2,395 2,503 2,594 2,710 Other 3,069 2,863 2,684 2,970 3,381 - --------------------------------------------------------------------------------------------------------------------- Total other nonperforming assets 5,366 5,258 5,187 5,564 6,091 - --------------------------------------------------------------------------------------------------------------------- Total nonperforming assets $ 42,511 $ 42,203 $ 48,920 $ 47,234 $ 44,183 ===================================================================================================================== Ratios: Reserve for loan losses to nonperforming loans 147.63% 143.73% 119.80% 119.68% 127.37% Nonperforming loans (1) to period-end loans (2) 1.37 1.38 1.64 1.63 1.57 - --------------------------------------------------------------------------------------------------------------------- (1) Includes 1-4 family loans guaranteed by agencies of the U.S. government $ 16,006 $ 14,468 $ 16,010 $ 15,538 $ 15,083 (2) Excludes residential mortgage loans held for sale - ---------------------------------------------------------------------------------------------------------------------
The reserve for loans losses, which is available to absorb losses inherent in the loan portfolio, totaled $55 million at March 31, 1998, compared to $53 million at December 31, 1997. This represents 2.02% and 1.98% of total loans, excluding loans held for sale, at March 31, 1998 and December 31, 1997, 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 8 presents statistical information regarding the reserve for loan losses. 8 =================================================================================================================== TABLE 8 - SUMMARY OF LOAN LOSS EXPERIENCE (In thousands) Three Months Ended --------------------------------------------------------------------------------- March 31, Dec. 31, Sept. 30, June 30, March 31, 1998 1997 1997 1997 1997 --------------------------------------------------------------------------------- Beginning balance $ 53,101 $ 52,393 $ 49,871 $ 48,517 $ 45,148 Loans charged-off: Commercial 172 1,852 1,179 288 24 Commercial real estate - 441 194 5 58 Residential mortgage 50 269 91 34 15 Consumer 1,305 1,464 1,051 1,095 1,143 - ------------------------------------------------------------------------------------------------------------------- Total 1,527 4,026 2,515 1,422 1,240 - ------------------------------------------------------------------------------------------------------------------- Recoveries of loans previously charged-off: Commercial 120 611 1,004 547 367 Commercial real estate 161 69 393 341 148 Residential mortgage 82 119 325 53 64 Consumer 432 435 315 335 479 - ------------------------------------------------------------------------------------------------------------------- Total 795 1,234 2,037 1,276 1,058 - ------------------------------------------------------------------------------------------------------------------- Net loans charged-off 732 2,792 478 146 182 (recoveries) Provision for loan losses 2,470 3,500 3,000 1,500 1,026 Addition due to acquisition - - - - 2,525 - ------------------------------------------------------------------------------------------------------------------- Ending balance $ 54,839 $ 53,101 $ 52,393 $ 49,871 $ 48,517 =================================================================================================================== Reserve to loans outstanding at period-end(1) 2.02 1.98 1.96 1.96 1.99 Net loan losses (recoveries) (annualized) to average loans (1) 0.10 0.14 0.07 0.02 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 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 reserve for loan losses. These provisions totaled $2.5 million for the first quarter of 1998 and $1.0 million for the first quarter of 1997. The increased provision reflected management's assessment of increased risk of loan losses due primarily to continued growth in the loan portfolio and in criticized assets, geographic expansion of BOK Financial's market area to include North Texas and New Mexico, and an expectation that economic activities will moderate in BOK Financial's primary market areas. At March 31, 1998, other assets included $22.8 million of natural gas compression and other equipment which is being leased to various customers by entities in which BOK Capital Services Corporation, as subsidiary of BOK Financial, is a general partner. The terms of these leases are generally shorter than the estimated useful lives of the equipment. Therefore, as each lease expires, there is a risk that the remaining net book value of the equipment may not be recovered based upon market conditions and re-leasing opportunities at that time. Market Risk Market risk is a broad term related to 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. The effect of other changes, such as foreign exchange rates, commodity prices or equity prices, is not material to BOK Financial nor is the effect of market risk on financial 9 instruments held for trading purposes. 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. These guidelines limit 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 to +/- 10%, establish maximum levels for short-term borrowings, short-term assets, and public and brokered deposits, and establish minimum levels for unpledged assets, among other things. Compliance with these guidelines is reviewed monthly. At March 31, 1998, BOK Financial is within all guidelines established under these policies. 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 assuming expected interest rates over the next twelve months based upon both 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 March 31, 1998, this modeling indicated interest rate sensitivity as follows (dollars in thousands): 200 bp 200 bp Most increase decrease Likely Anticipated impact over the next twelve months compared to a constant interest rate scenario Net interest revenue $ 2,491 $ ( 3,130) $ ( 736) 1.3% (1.6%) (0.4%) Net income $ 5,075 $ (26,987) $ (410) 6.7% (35.6%) (0.5%) Economic value of equity $ ( 9,092) $ ( 7,780) $ 4,717 (1.3%) (1.0%) 0.7% The estimated changes in interest rates on net interest revenue or economic value of equity is not projected to be significant within the +/- 200 basis point range of assumptions. However, this modeling indicated that under the 200 basis point decrease scenario, the after-tax value of BOK Financial's capitalized mortgage loan servicing rights would decrease by $25.1 million. While this decrease in value would largely be offset by an increase in the value of the securities portfolio, current accounting principles require that the decreased value of mortgage loan servicing rights be charged to earnings while the increased value of available for sale securities be credited to shareholders' equity. The result is a projected decrease in net income of $27.0 million or 35.6% compared to projected net income assuming no changes in interest rates. The simulation is 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 10 timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors. Subsequent to March 31, 1998, BOK Financial implemented a program which uses futures contracts and call and put options (collectively "derivative instruments") to hedge against the risk of loss on capitalized mortgage servicing rights. The intent of this program is to reduce, through market value increases on the derivative instruments, the estimated pre-tax risk of loss assuming a 50 basis point decrease in interest rates from approximately $15 million to approximately $5 million. While this program is expected to reduce the risk of loss on capitalized mortgage servicing rights in a falling interest rate environment, it limits the increase in market value of the capitalized mortgage servicing rights in a rising rate environment. Management estimates that a 50 basis point increase in interest rates would result a $9.4 million decrease in the market value of the derivative instruments compared to a $7.9 million increase in the fair value of the capitalized mortgage servicing rights. ================================================================================ TABLE 9 - INTEREST RATE SWAPS (In thousands) Notional Pay Receive Amount Rate Rate ---------------------------------------------------------- Expiration: 1998 63,000 5.63 - 5.94% (1) 6.64 - 7.96% 1999 22,000 5.63 - 5.94 (1) 6.80 - 7.68 2006 16,500 7.26 5.65 (1) 2007 100,000 5.69 (1) 6.75 - 6.80 2007 10,000 7.47 5.69 (1) - -------------------------------------------------------------------------------- (1) Rates are variable based on LIBOR and reset monthly, quarterly or semiannually. BOK Financial uses interest rate swaps, an of off-balance sheet derivative product, in managing its interest rate sensitivity. These products are generally used to more closely match interest paid on certain long-term certificates of deposit and subordinated debt with earning assets. BOK Financial accrues and periodically receives a fixed amount from the counterparties to these swaps and accrues and periodically makes a variable payment to the counterparties. During the first quarter of 1998, income from these swaps exceeded the cost of the swaps by $533 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 10 - CAPITAL RATIOS March 31, Dec. 31, Sept. 30, June 30, March 31, 1998 1997 1997 1997 1997 -------------------------------------------------- Average shareholders' equity to average assets 8.00% 8.13% 7.76% 7.33% 7.70% Risk-based capital: Tier 1 capital 9.47 9.49 8.93 9.00 8.96 Total capital 14.47 14.69 14.08 10.75 10.81 Leverage 6.81 6.81 6.53 6.26 6.34 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 1997 Form 10-K to the Securities and Exchange Commission which contains audited financial statements. 11 ================================================================================ Consolidated Statement of Earnings (In Thousands Except Share Data) Three Months Ended March 31, ----------------------- 1998 1997 ------------ ---------- Interest Revenue Loans $ 60,737 $ 51,355 Taxable securities 27,235 22,567 Tax-exempt securities 3,918 4,119 - -------------------------------------------------------- ------------ ---------- Total securities 31,153 26,686 - -------------------------------------------------------- ------------ ---------- Trading securities 163 58 Funds sold 691 711 - -------------------------------------------------------- ------------ ---------- Total interest revenue 92,744 78,810 - -------------------------------------------------------- ------------ ---------- Interest Expense Deposits 33,383 29,984 Other borrowings 14,958 13,668 Subordinated debenture 2,367 96 - -------------------------------------------------------- ------------ ---------- Total interest expense 50,708 43,748 - -------------------------------------------------------- ------------ ---------- Net Interest Revenue 42,036 35,062 Provision for Loan Losses 2,470 1,026 - -------------------------------------------------------- ------------ ---------- Net Interest Revenue After Provision for Loan Losses 39,566 34,036 - -------------------------------------------------------- ------------ ---------- Other Operating Revenue Brokerage and trading revenue 3,131 2,240 Transaction card revenue 5,540 3,999 Trust fees and commissions 6,884 5,278 Service charges and fees on deposit accounts 7,638 6,714 Mortgage banking revenue, net 9,321 6,948 Leasing revenue 1,661 1,261 Other revenue 2,685 2,655 - -------------------------------------------------------- ------------ ---------- Total Fees and Commissions 36,860 29,095 - -------------------------------------------------------- ------------ ---------- Gain on sale of student loans 1,415 1,095 Gain on securities 2,512 262 - -------------------------------------------------------- ------------ ---------- Total Other Operating Revenue 40,787 30,452 - -------------------------------------------------------- ------------ ---------- Other Operating Expense Personnel 24,829 19,294 Business promotion 1,897 1,950 Contribution of stock to Bank of Oklahoma Foundation 2,257 - Professional fees and services 1,596 1,496 Net occupancy, equipment & data processing 9,214 8,320 FDIC and other insurance 310 333 Printing, postage and supplies 2,047 1,825 Net gains and operating expenses of repossessed assets (55) (412) Amortization of intangible assets 2,302 1,728 Mortgage banking costs 6,023 4,217 Provision for impairment of mortgage servicing rights 3,000 - Other expense 3,773 2,975 - -------------------------------------------------------- ------------ ---------- Total Other Operating Expense 57,193 41,726 - -------------------------------------------------------- ------------ ---------- Income Before Taxes 23,160 22,762 Federal and state income tax 6,847 7,415 - -------------------------------------------------------- ------------ ---------- Net Income $ 16,313 $ 15,347 - -------------------------------------------------------- ------------ ---------- Earnings Per Share: Net Income Basic $ .73 $ .69 - -------------------------------------------------------- ------------ ---------- Diluted $ .65 $ .61 - -------------------------------------------------------- ------------ ---------- Average Shares Used in Computation: Basic 21,922,372 21,850,055 - -------------------------------------------------------------------------------- Diluted 25,177,435 24,958,334 - -------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. 12 ==================================================================================================================== CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Data) March 31, December 31, March 31, 1998 1997 1997 --------------------------------------------------- ASSETS Cash and due from banks $ 410,369 $ 371,321 $ 342,913 Funds sold 5,450 18,005 76,387 Trading securities 19,027 4,999 3,887 Securities: Available for sale 1,873,390 1,749,411 1,787,637 Investment (fair value: March 31, 1998 - $222,545; December 31, 1997 -$214,125; March 31, 1997 - $202,325 ) 221,825 213,111 202,750 - -------------------------------------------------------------------------------------------------------- Total securities 2,095,215 1,962,522 1,990,387 - -------------------------------------------------------------------------------------------------------- Loans 2,836,296 2,765,093 2,499,613 Less reserve for loan losses 54,839 53,101 48,517 - -------------------------------------------------------------------------------------------------------- Net loans 2,781,457 2,711,992 2,451,096 - -------------------------------------------------------------------------------------------------------- Premises and equipment, net 58,109 65,478 62,039 Accrued revenue receivable 53,019 50,754 49,566 Excess cost over fair value of net assets acquired and core deposit premiums (net of accumulated amortization: March 31, 1998 - $41,884; December 31, 1997 - $39,582; March 31, 1997 - $22,991) 65,494 67,796 74,926 Mortgage servicing rights 80,274 83,890 67,005 Real estate and other repossessed assets 5,366 5,258 6,091 Other assets 58,887 57,627 60,215 - -------------------------------------------------------------------------------------------------------- Total assets $ 5,632,667 $ 5,399,642 $ 5,184,512 - -------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing demand deposits $ 978,490 $ 881,029 $ 822,984 Interest-bearing deposits: Transaction 1,159,160 1,124,288 1,046,562 Savings 113,172 106,900 112,292 Time 1,768,552 1,615,862 1,616,860 - -------------------------------------------------------------------------------------------------------- Total deposits 4,019,374 3,728,079 3,598,698 - -------------------------------------------------------------------------------------------------------- Funds purchased and repurchase agreements 614,534 631,815 802,990 Other borrowings 345,602 394,087 325,530 Subordinated debenture 148,388 148,356 20,000 Accrued interest, taxes and expense 41,217 39,998 50,332 Other liabilities 14,917 21,830 15,786 - -------------------------------------------------------------------------------------------------------- Total liabilities 5,184,032 4,964,165 4,813,336 - -------------------------------------------------------------------------------------------------------- Stockholders' equity: Preferred stock 23 23 23 Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding March 31, 1998 - 22,010,110; December 31, 1997 - 21,975,747; March 31, 1997 - 21,193,453) 1 1 1 Capital surplus 209,750 208,327 176,982 Retained earnings 234,567 218,629 197,864 Treasury stock (shares at cost: March 31,1998 - 111,409; December 31, 1997 - 66,377; March 31, 1997- (4,410) (2,190) (844) 30,512) Unrealized gain (loss) on securities available for sale 8,708 10,691 (2,845) Less notes receivable from exercise of stock options (4) (4) (5) - -------------------------------------------------------------------------------------------------------- Total shareholders' equity 448,635 435,477 371,176 - -------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 5,632,667 $ 5,399,642 $ 5,184,512 - -------------------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
13 - ------------------------------------------------------------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (In Thousands) Accumulated Preferred Stock Common Stock Other Capital Retained Treasury Stock Notes --------------------------------------Comprehensive -------------------- Shares Amount Shares Amount Income Surplus Earnings Shares Amount Receivable Total ------------------------------------------------------------------------------------------------------------------- Balances at December 31, 1996 250,000 $ 23 21,149 $ 1 $ 1,472 $176,093 $ 182,892 17 $ (428) $ (87) $ 359,966 Comprehensive Income: Net income - - - - - - 15,347 - - - 15,347 Other comprehensive income, net of tax: Unrealized gains(losses) on securities available for sale (1) - - - - (4,317) - - - - - (4,317) ------- Comprehensive income 11,030 ------- Exercise of stock options - - 25 - - 469 - 14 (416) - 53 Payments on stock option notes receivable - - - - - - - - - 82 82 Preferred dividends paid in shares of common stock - - 17 - - 375 (375) - - - - Director retainer shares - - 2 - - 45 - - - - 45 - -------------------------------------------------------------------------------------------------------------------------------- Balance at March 31, 1997 250,000 $ 23 21,193 $ 1 $ (2,845) $176,982 $197,864 31 $ (844) $ (5) $ 371,176 ================================================================================================================================ Balances at December 31, 1997 250,000 $ 23 21,976 $ 1 $ 10,691 $208,327 $218,629 66 $(2,190) $ (4) $ 435,477 Comprehensive Income: Net income - - - - - 16,313 - - - 16,313 Other comprehensive income, net of tax: Unrealized gains(losses) on securities available for sale (1) - - - - (1,983) - - - - - (1,983) ------- Comprehensive income 14,330 ------- Plan Exercise of stock options - - 23 - - 973 - 8 (346) - 627 Payments on stock option notes receivable - - - - - - - - - - - Preferred dividends paid in shares of common stock - - 9 - - 375 (375) - - - - Director retainer shares - - 2 - - 75 - - - - 75 Treasury stock purchase - - - - - - - 37 (1,874) - (1,874) - -------------------------------------------------------------------------------------------------------------------------------- Balances at March 31, 1998 250,000 $ 23 22,010 $ 1 $ 8,708 $209,750 $234,567 111 $(4,410) $ (4) $ 448,635 ================================================================================================================================ March 31, 1998 March 31, 1997 ----------------------------------- (1) Reclassification adjustments: Unrealized gain(loss) on available for sale securities $ (214) $ (4,140) Less: reclassification adjustment for gains realized included in net income, net of tax 1,769 177 ---------------------------------- Net unrealized losses on securities $ (1,983) $ (4,317) =================================== See accompanying notes to consolidated financial statements.
14 ================================================================================ CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands Except Share Data) Three Months Ended March 31, --------------------- 1998 1997 --------------------- Cash Flow From Operating Activities: Net income $ 16,313 $ 15,347 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan and repossessed real estate losses 2,470 1,026 Depreciation and amortization 9,193 6,577 Valuation adjustment of intangible assets 3,000 - Net amortization of security discounts and premiums 364 790 Contribution of stock to Bank of Oklahoma Foundation 2,257 - Net gain on sale of assets (5,590) (2,339) Mortgage loans originated for resale (221,621) (180,488) Proceeds from sale of mortgage loans held for resale 183,078 209,336 (Increase) decrease in trading securities (14,028) 2,567 (Increase) decrease in accrued revenue receivable (2,264) 2,071 Increase in other assets (1,142) (4,312) Increase in accrued interest, taxes and expense 1,401 5,568 Decrease in other liabilities (2,302) (304) - -------------------------------------------------------------------------------- Net cash provided (used) by operating activities (28,871) 55,839 - -------------------------------------------------------------------------------- Cash Flow From Investing Activities: Proceeds from maturities of investment securities 7,364 4,822 Proceeds from maturities of available for sale securities 97,875 59,084 Purchases of investment securities (16,894) (9,187) Purchases of available for sale securities (690,995) (317,023) Proceeds from sales of available for sale securities 466,935 75,508 Loans originated or acquired net or principal collected (85,115) 2,748 Proceeds from disposition of assets 63,737 2,978 Purchases of assets (11,900) 20,239) Cash and cash equivalents of branches & subsidiaries acquired and sold, net - (1,240) - -------------------------------------------------------------------------------- Net cash used by investing activities (168,993) (202,549) - -------------------------------------------------------------------------------- Cash Flows From Financing Activities: Net increase (decrease) in demand deposits, transaction deposits, money market deposits, and savings accounts 138,605 (4,053) Net increase in certificates of deposit 152,690 406 Net increase (decrease) in other borrowings (65,766) 181,926 Issuance of subordinated debenture - 20,000 Purchase of treasury stock (1,874) - Issuance of preferred, common and treasury stock, net 702 98 Payments on stock option notes receivable - 82 - -------------------------------------------------------------------------------- Net cash provided by financing activities 224,357 198,459 - -------------------------------------------------------------------------------- Net increase in cash and cash equivalents 26,493 51,749 Cash and cash equivalents at beginning of period 389,326 367,551 - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 415,819 $419,300 - -------------------------------------------------------------------------------- Cash paid for interest $ 49,503 $ 42,118 - -------------------------------------------------------------------------------- Cash paid for taxes $ 353 $ 385 - -------------------------------------------------------------------------------- Net loans transferred to repossessed real estate and other assets $ 701 $ 694 - -------------------------------------------------------------------------------- Payment of preferred stock dividends in common stock $ 375 $ 375 - -------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) ACCOUNTING POLICIES Basis of Presentation The accounting and reporting policies of BOK Financial Corporation conform to generally accepted accounting principles and to generally accepted practices within the banking industry. The Consolidated Financial Statements of BOK Financial include the accounts of BOK Financial and its subsidiaries, primarily Bank of Oklahoma, N.A. ("BOk"), Bank of Arkansas N.A., and Bank of Texas, N.A.. Certain prior period balances have been reclassified to conform with the current period presentation. Hedging of Mortgage Servicing Rights BOK Financial enters into futures contracts and call and put options on futures contracts to hedge against the risk of loss on mortgage servicing rights due to accelerated loan prepayments during periods of falling interest rates. Contracts on underlying securities which are expected to have a duration similar to that of the mortgage servicing portfolio, such as 10-year U.S. Treasury notes, are used for these hedges. The combination of contracts selected is based upon an analysis of the expected range of market value changes over a probable range of interest rates to achieve a high degree of correlation between changes in the fair value of the mortgage servicing rights and changes in the market value of the contracts. These contracts are designated as hedges on the trade date. Transaction fees are charged to expense as mortgage banking costs when incurred. Premiums paid or received on option contracts are deferred and amortized against mortgage banking costs over the life of the options. Both unrealized and realized gains and losses on futures contracts and option contracts are deferred as part of the capitalized mortgage servicing rights. These deferred gains and losses are amortized over the life of the loan servicing portfolio. These unamortized deferred gains and losses are included with the cost of the servicing rights when determining whether an allowance for impairment of the servicing rights is required. Changes in the fair value of the contracts and changes in the market value of the mortgage servicing rights are reviewed at least monthly to determine whether a high degree of correlation exists on a statistically valid basis. If correlation criteria are not met, the contracts are no longer accounted for as a hedge. In such circumstances, any remaining unamortized deferred gains or losses are recognized in current income. (2) MORTGAGE BANKING ACTIVITIES At March 31, 1998, BOk owned the rights to service 92,319 mortgage loans with outstanding principal balances of $7.0 billion, including $189 million serviced for BOk. The weighted average interest rate and remaining term was 7.67% and 284 months, respectively. Activity in capitalized mortgage servicing rights and related valuation allowance during the three months ending March 31, 1998 is as follows: Capitalized Mortgage Servicing Rights ------------------------------------------------------------------- Valuation Purchased Originated Total Allowance Net ---------------- ----------- ------------- ------------------------ Balance at December 31, 1997 $ 78,961 $ 9,929 $ 88,890 $ (5,000) $ 83,890 Additions 622 2,734 3,356 - 3,356 Amortization expense (3,495) (477) (3,972) - (3,972) Provision for impairment - - - (3,000) (3,000) Impairment charge-off (2,296) - (2,296) 2,296 - - --------------------------------------------------------------------------------------------------- Balance at March 31, 1998 $ 73,792 $ 12,186 $ 85,978 $ (5,704) $ 80,274 =================================================================================================== Estimated fair value of Mortgage servicing rights (1) $ 74,515 $ 14,905 $ 89,420 $ 89,420 =================================================================================================== (1) Excludes approximately $15.2 million of loan servicing rights on mortgage loans originated prior to the adoption of FAS 122.
16 (3) DISPOSAL OF AVAILABLE FOR SALE SECURITIES Sales of available for sale securities for the three months ending March 31, 1998 resulted in gains and losses as follows (in thousands): Proceeds $ 466,935 Gross realized gains 3,157 Gross realized losses 645 Related federal and state income tax expense 743 (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 -------------------------------------- March 31, 1998 March 31, 1997 -------------------------------------- Numerator: Net income $ 16,313 $ 15,347 Preferred stock dividends (375) (375) - ---------------------------------------------------------------------------------------------------------- Numerator for basic earnings per share - income available to common stockholders 15,938 14,972 - ---------------------------------------------------------------------------------------------------------- Effect of dilutive securities: Preferred stock dividends 375 375 - ---------------------------------------------------------------------------------------------------------- Numerator for diluted earnings per share - income available to common stockholders after assumed conversion $ 16,313 $ 15,347 ========================================================================================================== Denominator: Denominator for basic earnings per share -weighted average shares 21,922,372 21,850,055 Effect of dilutive securities: Employee stock options 356,877 210,093 Convertible preferred stock 2,898,186 2,898,186 - ---------------------------------------------------------------------------------------------------------- Dilutive potential common shares 3,255,063 3,108,279 - ---------------------------------------------------------------------------------------------------------- Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 25,177,435 24,958,334 ========================================================================================================== Basic earnings per share $0.73 $0.69 ========================================================================================================== Diluted earnings per share $0.65 $0.61 ==========================================================================================================
(5) COMPREHENSIVE INCOME As of January 1, 1998, BOK Financial adopted Statement 130, Reporting Comprehensive Income. Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or shareholders' equity. Statement 130 requires unrealized gains or losses on available for sale securities be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of Statement 130. The components of comprehensive income are disclosed in the Consolidated Statement of Changes in Shareholders' Equity. (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. 16 ============================================================================================================================== QUARTERLY FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Three months ended -------------------------------------------------------------------------------------- March 31, 1998 December 31, 1997 ------------------------------------------- -------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate -------------------------------------------------------------------------------------- Assets Taxable securities $ 1,772,971 $ 27,235 6.19% $ 1,562,455 $ 24,408 6.20% Tax-exempt securities(1) 328,735 6,248 7.44 331,793 6,666 7.97 - ------------------------------------------------------------------------------------------------------------------------------ Total securities 2,101,706 33,483 6.43 1,894,238 31,074 6.51 - ------------------------------------------------------------------------------------------------------------------------------ Trading securities 11,774 163 5.87 6,203 93 5.95 Funds sold 47,050 691 5.91 53,964 724 5.32 Loans(2) 2,822,147 60,737 8.76 2,764,436 60,924 8.74 Less reserve for loan losses 54,164 - - 53,180 - - - ------------------------------------------------------------------------------------------------------------------------------ Loans, net of reserve 2,767,983 60,737 8.93 2,711,256 60,924 8.92 - ------------------------------------------------------------------------------------------------------------------------------ Total earning assets 4,928,513 95,074 7.85 4,665,661 92,815 7.89 - ------------------------------------------------------------------------------------------------------------------------------ Cash and other assets 625,863 618,039 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $ 5,554,376 $ 5,283,700 - ------------------------------------------------------------------------------------------------------------------------------ Liabilities And Shareholders' Equity Transaction deposits $ 1,145,221 8,917 3.08 $ 1,102,144 8,466 3.05 Savings deposits 109,560 602 2.21 106,207 596 2.23 Other time deposits 1,739,816 23,864 5.56 1,582,538 22,037 5.52 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 2,994,597 33,383 4.45 2,790,889 31,099 4.42 - ------------------------------------------------------------------------------------------------------------------------------ Other borrowings 1,051,724 14,958 5.89 1,050,545 15,169 5.73 Subordinated debenture 148,374 2,367 6.36 148,334 2,439 6.52 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 4,194,695 50,708 4.91 3,989,768 48,707 4.84 - ------------------------------------------------------------------------------------------------------------------------------ Demand deposits 858,340 783,508 Other liabilities 57,095 80,763 Shareholders' equity 444,246 429,661 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' Equity $ 5,554,376 $ 5,283,700 - ------------------------------------------------------------------------------------------------------------------------------ Tax-Equivalent Net Interest Revenue (1) 44,366 2.94 44,108 3.05 Tax-Equivalent Net Interest Revenue (1) To Earning Assets 3.65 3.75 Less tax-equivalent adjustment (1) 2,330 2,396 - ------------------------------------------------------------------------------------------------------------------------------ Net Interest Revenue 42,036 41,712 Provision for loan losses 2,470 3,500 Other operating revenue 40,787 33,521 Other operating expense 57,193 61,277 - ------------------------------------------------------------------------------------------------------------------------------ Income Before Taxes 23,160 10,456 Federal and state income tax 6,847 (6,362) - ------------------------------------------------------------------------------------------------------------------------------ Net Income $ 16,313 $ 16,818 - ------------------------------------------------------------------------------------------------------------------------------ Earnings Per Share: Net Income Primary $ 0.73 $ 0.75 - ------------------------------------------------------------------------------------------------------------------------------ Fully Diluted $ 0.65 $ 0.67 - ------------------------------------------------------------------------------------------------------------------------------ (1) Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments shown are forcomparative purposes. (2) The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income.
18 ====================================================================================================================== For Three months ended - ---------------------------------------------------------------------------------------------------------------------- September 30, 1997 June 30, 1997 March 31, 1997 - ---------------------------------------------------------------------------------------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate Balance Expense(1) /Rate - ---------------------------------------------------------------------------------------------------------------------- $ 1,560,418 $ 24,354 6.19% $ 1,634,264 $ 25,793 6.33% $ 1,484,137 $ 22,861 6.25% 360,461 6,764 7.44 344,558 6,572 7.65 339,542 6,135 7.33 - ---------------------------------------------------------------------------------------------------------------------- 1,920,879 31,118 6.43 1,978,822 32,365 6.56 1,823,679 28,996 6.45 - ---------------------------------------------------------------------------------------------------------------------- 3,583 53 5.87 5,552 83 6.00 3,790 58 6.21 49,645 740 5.91 57,072 817 5.74 50,967 711 5.66 2,676,237 59,063 8.76 2,535,264 55,850 8.84 2,414,234 51,446 8.64 51,165 - 49,164 - 46,771 - - - - - ---------------------------------------------------------------------------------------------------------------------- 2,625,072 59,063 8.93 2,486,100 55,850 9.01 2,367,463 51,446 8.81 - ---------------------------------------------------------------------------------------------------------------------- 4,599,179 90,974 7.85 4,527,546 89,115 7.89 4,245,899 81,211 7.76 - ---------------------------------------------------------------------------------------------------------------------- 590,260 576,578 532,386 - ---------------------------------------------------------------------------------------------------------------------- $ 5,189,439 $ 5,104,124 $ 4,778,285 - ---------------------------------------------------------------------------------------------------------------------- $ 1,067,895 8,290 3.08 $ 1,032,622 8,348 3.24 $ 988,110 7,987 3.28 108,104 603 2.21 109,349 604 2.22 103,542 564 2.21 1,533,191 21,489 5.56 1,576,211 21,625 5.50 1,565,153 21,433 5.55 - ---------------------------------------------------------------------------------------------------------------------- 2,709,190 30,382 4.45 2,718,182 30,577 4.51 2,656,805 29,984 4.58 - ---------------------------------------------------------------------------------------------------------------------- 1,159,005 17,203 5.89 1,151,971 16,700 5.81 990,944 13,668 5.59 81,395 1,305 6.36 20,000 326 6.45 6,000 96 6.40 - ---------------------------------------------------------------------------------------------------------------------- 3,949,590 48,890 4.91 3,890,153 47,603 4.91 3,653,749 43,748 4.86 - ---------------------------------------------------------------------------------------------------------------------- 761,578 776,405 688,440 75,732 63,664 68,159 402,539 373,902 367,937 - ---------------------------------------------------------------------------------------------------------------------- $ 5,189,439 $ 5,104,124 $ 4,778,285 - ---------------------------------------------------------------------------------------------------------------------- 42,084 2.94 41,512 2.98 37,463 2.90 3.63 3.68 3.58 2,426 2,344 2,401 - ---------------------------------------------------------------------------------------------------------------------- 39,658 39,168 35,062 3,000 1,500 1,026 34,315 31,411 30,452 46,720 45,443 41,726 - ---------------------------------------------------------------------------------------------------------------------- 24,253 23,636 22,762 7,857 7,572 7,415 - ---------------------------------------------------------------------------------------------------------------------- $ 16,396 $ 16,064 $ 15,347 - ---------------------------------------------------------------------------------------------------------------------- $ 0.73 $ 0.72 $ 0.69 - ---------------------------------------------------------------------------------------------------------------------- $ 0.65 $ 0.64 $ 0.61 - ----------------------------------------------------------------------------------------------------------------------
19 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 March 31, 1998. 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: May 14, 1998 /s/ James A. White ---------------------- ---------------------------- James A. White Executive Vice President and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from BOK Finanacial Corporation's 10-Q for the period ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 MAR-31-1998 410,369 0 5,450 19,027 1,873,390 221,825 222,545 2,836,296 54,839 5,632,667 4,019,374 959,320 56,134 149,204 0 23 1 448,611 5,632,667 60,737 31,153 854 92,744 33,383 50,708 42,036 2,470 2,512 57,193 23,160 16,313 0 0 16,313 .73 .65 3.65 18,815 18,330 0 51,647 53,101 1,527 795 54,839 54,839 0 0
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