-----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, NwTPxbYKZyOodnreer6YisEf+xO7Ir6RwXW2FS7CcGu2YmvI6DvQASFj8l54klYV xgazObmv9kETjDzNWX7pzQ== 0000875357-99-000009.txt : 19991117 0000875357-99-000009.hdr.sgml : 19991117 ACCESSION NUMBER: 0000875357-99-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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: 99754238 BUSINESS ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: PO BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 BUSINESS PHONE: 9185886416 MAIL ADDRESS: STREET 1: BANK OF OKLAHOMA TOWER STREET 2: P O BOX 2300 CITY: TULSA STATE: OK ZIP: 74192 10-Q 1 9/30/99 QUARTERLY FINANCIAL STATEMENTS As filed with the Securities and Exchange Commission on November 15, 1999 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended September 30, 1999 Commission File No. 0-19341 BOK FINANCIAL CORPORATION Incorporated in the State of Oklahoma I.R.S. Employer Identification No. 73-1373454 Bank of Oklahoma Tower P.O. Box 2300 Tulsa, Oklahoma 74192 Registrant's Telephone Number, Including Area Code (918) 588-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: (NONE) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK ($.00006 Par Value) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 49,013,555 shares of common stock ($.00006 par value) as of October 31, 1999. - -------------------------------------------------------------------------------- BOK Financial Corporation Form 10-Q Quarter Ended September 30, 1999 Index Part I. Financial Information Management's Discussion and Analysis 2 Report of Management on Consolidated Financial Statements 16 Consolidated Statements of Earnings - Unaudited 17 Consolidated Balance Sheets - Unaudited 18 Consolidated Statements of Changes in Shareholders' Equity - Uunaudited 19 Consolidated Statements of Cash Flows - Uunaudited 20 Notes to Consolidated Financial Statements - Unaudited 21 Financial Summaries - Unaudited 25 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 28 Signature 28 MANAGEMENT'S ASSESSMENT OF OPERATIONS AND FINANCIAL CONDITION Assessment of Operations Summary of Performance BOK Financial Corporation ("BOK Financial") recorded net income of $22.7 million or $0.41 per diluted common share for the third quarter of 1999 compared to $20.0 million or $0.36 per diluted common share for the third quarter of 1998. Returns on average assets were 1.15% for the third quarter of 1999 compared to 1.34% for the third quarter of 1998. The decrease in return on average assets is due to the growth in average assets over the past twelve months, including $926 million due to acquisitions. Returns on average equity, including $53 million decrease in unrealized gain on securities available for sale, were 16.81% and 16.21%, for the third quarter of 1999 and 1998, respectively. Net interest revenue for the third quarter of 1999 increased by $13.5 million or 28% while fees and commissions revenue grew by $2.4 million or 6%. This revenue growth was largely offset by a $12.6 million or 22% increase in operating expenses, which included a $2.2 million increase in amortization of intangible assets. Operating results for the third quarter of 1999 include Bank of Albuquerque, which was acquired in the fourth quarter of 1998 and Mid-Cities National Bank, Canyon Creek National Bank and Swiss Avenue State Bank which were acquired in the second quarter of 1999. Year to date net income and earnings per diluted common share were $66.0 million or $1.18, respectively for 1999 compared to $59.2 million or $1.06, respectively, for the same period in 1998. Returns on average assets and equity were 1.19% and 16.40%, respectively, for 1999 compared to returns on average assets and equity of 1.37% and 16.73%, respectively, for 1998. All per share data have been restated for a 3 percent stock dividend that was announced on September 28, 1999 and paid in October, 1999. Tangible Operating Results Since inception, BOK Financial has completed several acquisitions that were accounted for under the purchase method of accounting. The purchase method results in the recording of goodwill and other identifiable intangible assets that are amortized as non-cash charges in future years into operating expense. Operating results excluding the impact of the amortization of these intangible assets are summarized below: - --------------------------------------------------------------------------------- ------------------- TABLE 1 - TANGIBLE OPERATING RESULTS ------------------------------- ------------------- (Dollars in Thousands Except Share Three months ended Nine months ended Data) --------------------------------------------------- Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1999 1998 1999 1998 --------------------------------------------------- Net income $ 22,736 $ 19,995 $ 66,029 $ 59,244 After-tax impact of amortization of intangible 4,084 2,094 10,283 6,281 assets - ----------------------------------------------------------------------------------------------------- Tangible net income $ 26,820 $ 22,089 $ 76,312 $ 65,525 - ----------------------------------------------------------------------------------------------------- Tangible net income per diluted share $ 0.48 $ 0.40 $ 1.37 $ 1.17 - ----------------------------------------------------------------------------------------------------- Tangible return on average shareholders' equity 19.83% 17.91% 18.95% 18.50% - ----------------------------------------------------------------------------------------------------- Tangible return on average assets 1.35% 1.48% 1.37% 1.51% - -----------------------------------------------------------------------------------------------------
Net Interest Revenue Net interest revenue on a tax-equivalent basis was $64.4 million for the third quarter of 1999 compared to $51.2 million for the third quarter of 1998, an increase of $13.2 million or 26% compared to the same quarter from last year. Average earning assets increased by $1.7 billion, including increases in average loans of $1.2 billion and average securities of $536 million. Interest bearing liabilities increased $1.9 billion, primarily due to increases in borrowed funds of $914 million. Interest bearing deposits increased $949 million. The growth in average earning assets and interest bearing liabilities included $811 million and $759 million, respectively, due to acquisitions in the fourth quarter of 1998 and the second quarter of 1999. - ---------------------------------------------------------------------------------------------------------------------- TABLE 2 - VOLUME/RATE ANALYSIS (In thousands) Three months ended Nine months ended September 30, 1999/1998 September 30, 1999/1998 --------------------------------------------------------------------------- Change Due To (1) Change Due To (1) ------------------------ ------------------------ Yield Yield Change Volume /Rate Change Volume /Rate --------------------------------------------------------------------------- Tax-equivalent interest revenue: Securities $ 7,524 $ 8,098 $ (574) $ 19,781 $ 22,235 $ (2,454) Trading securities 4 3 1 1,088 994 94 Loans 22,961 25,375 (2,414) 46,532 58,882 (12,350) Funds sold 86 115 (29) (625) (290) (335) - ---------------------------------------------------------------------------------------------------------------------- Total 30,575 33,591 (3,016) 66,776 81,821 (15,045) - ---------------------------------------------------------------------------------------------------------------------- Interest expense: Interest bearing transaction deposits 2,835 4,640 (1,805) 5,849 10,072 (4,223) Savings deposits (152) 96 (248) (637) 194 (831) Time deposits 2,268 3,782 (1,514) (2,213) 3,866 (6,079) Other borrowings 10,832 12,783 (1,951) 29,824 36,189 (6,365) Subordinated debenture (156) 4 (160) (413) (22) (391) - ---------------------------------------------------------------------------------------------------------------------- Total 15,627 21,305 (5,678) 32,410 50,299 (17,889) - ---------------------------------------------------------------------------------------------------------------------- Tax-equivalent net interest revenue 14,948 $ 12,268 $ 2,662 34,366 $ 31,522 $ 2,844 before nonrecurring foregone interest Change in non-recurring foregone (1,794) (3,262) interest Change in tax-equivalent adjustment (372) (549) - ---------------------------------------------------------------------------------------------------------------------- Net interest revenue $ 13,526 $ 31,653 - ---------------------------------------------------------------------------------------------------------------------- (1) Changes attributable to both volume and yield are allocated to both volume and yield/rate on an equal basis.
Year to date, net interest revenue increased by $31.7 million compared to 1998. Excluding the non-recurring collection of foregone interest in 1998, this represented a 23% increase in net interest revenue due to growth in earning assets. Net interest margin, the ratio of net interest revenue to average earning assets, was 3.66% for the third quarter of 1999 compared to 3.72% for the third quarter of 1998 and 3.60% for the second quarter of 1999. Since inception, BOK Financial has followed a strategy of fully utilizing its capital resources by borrowing funds in the capital markets to supplement deposit growth in order to fund increased investments in securities. Although this strategy typically results in a net interest margin that falls below those normally seen in the commercial banking industry, it provides positive net interest revenue. Management estimates that for the third quarter of 1999, this strategy resulted in a 71 basis point decrease in net interest margin. However, this strategy contributed $3.7 million to net interest revenue. As more fully discussed in the Market Risk section, management employs various techniques to control, within established parameters, the interest rate and liquidity risk inherent in this strategy. Other Operating Revenue Other operating revenue for the third quarter of 1999 increased $1.4 million compared to the same quarter of 1998. Total fees and commissions, which are included in other operating revenue, increased $2.4 million or 6%. Transaction card revenue increased $1.8 million or 27% over the third quarter of 1998 due to a greater volume of transactions processed. Service charges on deposits increased $2.4 million or 29%, including $1.5 million due to acquisitions. Leasing revenue decreased $1.2 million due to the sale of BOK Financial's interests in four leasing partnerships during the second quarter of 1999. Brokerage and trading revenue decreased $872 thousand due primarily to a revaluation of the residual interest in a pool of automobile loans that was sold in the first quarter of 1999. Actual repayments of the loans have exceeded the initial estimates. The accelerated repayments has reduced the value of the residual interest. - -------------------------------------------------------------------------------- TABLE 3 - OTHER OPERATING REVENUE (In thousands) Three Months Ended ------------------------------------------------ Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1999 1999 1999 1998 1998 ------------------------------------------------ Brokerage and trading revenue $ 3,237 $ 3,779 $ 4,436 $ 4,010 $ 4,109 Transaction card revenue 8,298 7,986 7,597 6,360 6,516 Trust fees and commissions 9,045 8,874 7,769 7,655 7,755 Service charges and fees on deposit accounts 10,857 10,073 9,453 9,553 8,439 Mortgage banking revenue 9,189 9,877 9,292 10,543 10,929 Leasing revenue 526 817 1,868 1,897 1,749 Other revenue 4,129 4,659 5,085 2,399 3,367 - -------------------------------------------------------------------------------- Total fees and commissions 45,281 46,065 45,500 42,417 42,864 - -------------------------------------------------------------------------------- Gain on student loan sales 39 16 529 - 13 Gain on loan securitization - - 270 - - Gain on sale of other assets - 3,638 892 - - Gain (loss) on securities (485) (288) 274 2,967 538 - -------------------------------------------------------------------------------- Total other operating revenue $44,835 $49,431 $ 47,465 $ 45,384 $43,415 - -------------------------------------------------------------------------------- Year to date, other operating revenue increased $12.1 million or 9% compared to 1998. Total fees and commissions increased $15.1 million or 12% due primarily to increases in transaction card revenue and service charges on deposit accounts. Additionally, other revenue for the nine months ended September 30, 1999 included $4.3 million for underwriting and private placement fees compared to $348 thousand for the same period of 1998. Other Operating Expenses Operating expenses for the third quarter of 1999 increased $12.6 million or 22% compared to the third quarter of 1998. The third quarter of 1999 included operating expenses of $9.3 million for acquired banks that were not included in the third quarter of 1998. The discussion following Table 4 of other operating expenses excludes these charges from 1999 to improve comparability. - -------------------------------------------------------------------------------- TABLE 4 - OTHER OPERATING EXPENSE (In thousands) Three Months Ended ------------------------------------------------ Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1999 1999 1999 1998 1998 ------------------------------------------------ Personnel $ 34,262 $ 34,047 $ 31,900 $ 30,346 $ 26,914 Business promotion 1,925 2,410 2,498 2,663 1,900 Professional fees/services 2,452 2,780 1,901 3,165 2,652 Net occupancy, equipment and data processing 15,198 13,657 13,108 12,640 10,762 FDIC and other insurance 323 369 326 362 297 Printing, postage and supplies 2,729 3,019 2,816 2,748 2,349 Net gains and operating Expenses on repossessed assets (1,501) (132) (1,296) (89) (18 Amortization of intangible Assets 4,519 3,667 3,248 2,565 2,304 Mortgage banking costs 6,183 6,787 5,304 7,262 6,374 Provision for impairment of Mortgage servicing rights - - - (4,290) - Other expense 4,665 4,074 5,021 4,927 4,637 - -------------------------------------------------------------------------------- Total $ 70,755 $ 70,678 $ 64,826 $ 62,299 $ 58,171 - -------------------------------------------------------------------------------- Personnel costs increased $3.8 million due to increased staffing, normal compensation increases and increased incentive compensation. Staffing on a full-time equivalent ("FTE") basis increased by 198 employees while average compensation per FTE increased by 2%. Incentive compensation, which varies directly with revenue increased $950 thousand to $3.5 million for the quarter. The increase in incentive compensation was due to growth in revenue over pre-determined targets and growth in the number of business units covered by incentive plans. Occupancy, equipment and data processing costs increased $2.5 million or 23%, due primarily to an increase in data processing costs. A significant portion of BOK Financial's data processing is outsourced to third parties. Therefore, data processing costs are directly related to the volume of transactions processed. - ---------------------------------------------------------------------------------------- TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS (In thousands) Three Months Ended ---------------------------------------------------- Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1999 1999 1999 1998 1998 ---------------------------------------------------- Total other operating expense $70,755 $ 70,678 $ 64,826 $ 62,299 $ 58,171 Acquisition expenses - (1,266) - (1,508) - Provision for impairment of mortgage Servicing rights - - - 4,290 - Net gains and operating costs from repossessed assets 1,501 132 1,296 89 18 - ---------------------------------------------------------------------------------------- Total $72,256 $ 69,544 $ 66,122 $ 65,170 $ 58,189 - ----------------------------------------------------------------------------------------
Operating expenses through September 30, 1999 were $35 million or 20% higher than operating expenses for the first nine months of 1998. Excluding significant or non-recurring items and the effect of acquisitions, operating expenses increased $16.4 million or 10% due primarily to higher personnel costs and data processing expenses. LINES OF BUSINESS BOK Financial operates four principal lines of business, corporate banking, consumer banking, mortgage banking and trust services. Other lines of business include the TransFund ATM system, BOSC, Inc., Bank of Arkansas, Bank of Texas and Bank of Albuquerque. Corporate Banking Corporate banking contributed $14.1 million or 62% of consolidated net income for the third quarter of 1999 compared to $11.6 million or 58% of consolidated net income for the third quarter of 1998. Revenue increased 12% due to increased loan volumes while operating expenses were unchanged. Table 6 Corporate Banking (In Thousands) Three months ended Sept. 30, Nine months ended Sept. 30, ----------------------------- --------------------------- 1999 1998 1999 1998 ------------- --------------- --------------------------- Total revenue $ 37,905 $ 33,730 $ 95,249 $ 81,776 Operating expense 14,591 14,639 35,685 35,686 Net income 14,124 11,571 36,201 27,975 Average assets $ 3,489,657 $ 2,762,803 $ 3,164,627 $ 2,491,836 Average equity 339,918 277,830 320,862 263,229 Return on assets 1.61% 1.66% 1.53% 1.50% Return on equity 16.48 16.52 15.08 14.21 Efficiency ratio 38.49 43.40 37.46 43.64 Consumer Banking Consumer banking contributed $3.2 million or 14% of consolidated net income for the third quarter of 1999 compared to $2.4 million or 24% of consolidated net income for the third quarter of 1998. Total revenue, which consists primarily of intercompany credit for funds provided to other divisions of BOK Financial and fees generated by various services, were unchanged compared to the third quarter of 1998. Operating expenses decreased $977 thousand for the same period. Table 7 Consumer Banking (In Thousands) Three months ended Sept. 30, Nine months ended Sept. 30, ----------------------------- --------------------------- 1999 1998 1999 1998 ------------- --------------- --------------------------- Total revenue $ 16,886 $ 16,584 $ 51,317 $ 49,031 Operating expense 11,715 12,692 35,508 37,634 Net income 3,159 2,364 9,658 6,911 Average assets $ 1,861,710 $ 1,938,165 $ 1,872,041 $ 1,943,724 Average equity 43,149 45,778 42,628 45,187 Return on assets 0.67% 0.48% 0.69% 0.48% Return on equity 29.05 20.49 30.29 20.45 Efficiency ratio 69.38 76.53 69.19 76.76 Mortgage Banking Mortgage banking contributed $466 thousand or 2% of consolidated net income for the third quarter of 1999 compared to $1.7 million or 8% for the third quarter of 1998. Total revenue decreased $2.4 million. Mortgage loan origination activity has decreased since last year due to higher interest rates, resulting in lower gains on secondary marketing activity. Revenue from mortgage banking activities was also reduced by internal funding costs associated with the deferred hedging losses. Capitalized mortgage servicing rights totaled $106.5 million at September 30, 1999 compared to $107.0 million at June 30, 1999 and $69.2 million at December 31, 1998. The increase in capitalized servicing rights was due primarily to $28.5 million in hedging losses realized since December 31, 1998. At September 30, 1999, realized hedging losses totaled $7.4 million, net of accumulated amortization, while unrealized losses on open hedging positions totaled $347 thousand. Table 8 Mortgage Banking (In Thousands) Three months ended Sept. 30, Nine months ended Sept. 30, ----------------------- ------------------------- 1999 1998 1999 1998 ---------- ----------- ------------------------- Total revenue $ 10,767 $ 13,128 $ 33,171 $ 37,549 Operating expense 10,003 10,392 30,244 30,282 Provision for impairment of mortgage servicing assets - - - 2,000 Net income 466 1,672 1,788 3,218 Average assets $ 380,940 $ 366,956 $ 357,549 $ 378,952 Average equity 25,586 30,761 26,157 30,259 Return on assets 0.49% 1.81% 0.67% 1.14% Return on equity 7.23 21.56 9.14 14.22 Efficiency ratio 92.90 79.16 91.18 80.65 Trust Services Trust services contributed $2.3 million or 10% of consolidated net income for the third quarter of 1999 compared to $1.8 million or 9% of consolidated net income for the third quarter of 1998. Revenue from trust services increased $2.2 million or 18% for the quarter while operating expenses increased $1.3 million or 15%. Table 9 Trust Services (In Thousands) Three months ended Sept. 30, Nine months ended Sept. 30, --------------------------- ----------------------------- 1999 1998 1999 1998 ------------ -------------- --------------- ------------- Total revenue $ 13,914 $ 11,763 $ 40,306 $ 34,745 Operating expense 10,071 8,753 29,778 26,492 Net income 2,349 1,840 6,433 5,043 Average assets $ 336,884 $ 296,623 $ 335,573 $ 300,024 Average equity 35,757 29,654 35,067 29,380 Return on assets 2.77% 2.46% 2.56% 2.25% Return on equity 26.06 24.62 24.53 22.95 Efficiency ratio 72.38 74.41 73.88 76.25 YEAR 2000 CONSIDERATIONS The Year 2000 issue, in general, is the result of computer programs being written using two digits rather than four to define the applicable year. Any computer programs that have date sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including among other things, a temporary inability to process transactions or to engage in similar normal business activities. BOK Financial's Year 2000 efforts are under the direction of the Year 2000 Oversight Committee, comprised of various members of executive management, as well as a Year 2000 Project Team, which includes representatives from BOK Financial's major business units. Both groups meet on a regular basis to monitor and discuss continuing Year 2000 developments. The Board of Directors recognizes the importance of and supports these Year 2000 initiatives. The Federal Financial Institution Examination Council ("FFIEC") provides regulatory guidance on BOK Financial's and other financial institutions' Year 2000 compliance. These guidelines covered system testing, business resumption planning, cash reserve considerations, as well as guidance for monitoring systems during the weekend of December 31st. BOK Financial has successfully completed all requirements. FFIEC guidelines also required financial institutions to substantially complete the four phases of the Year 2000 business resumption contingency planning process no later than June 30, 1999. BOK Financial's Year 2000 Project Team is focused on preparation for the Year 2000 event. Plans have been finalized to address certain situations that may arise as a result of internal or external disruptions. These plans have been simulated or otherwise validated during the third quarter of 1999. System change control policies require that new enhancements or initiatives within the company or at our outsourced providers be tested for Year 2000 compliance prior to introduction to our processing environment. This policy includes severe limitations on all changes from October 1, 1999 through February 29, 2000. Finally, plans have been developed to have key resources available throughout all high risk processing periods during December, 1999 and January and February, 2000. Additional costs to prepare for Year 2000 are not expected to be significant. BOK Financial has also communicated with large customers to determine what steps they have undertaken to ensure they are prepared for Year 2000. This effort has enabled BOK Financial to adopt contingency plans related to the possible effects of the Year 2000 issue on the credit risk of its borrowers, cash flow disruptions of its funds providers, and its overall liquidity needs. BOK Financial has included the potential effect of Year 2000 on the credit risk of its borrowers in determining the adequacy of its loan loss reserve. The foregoing forward-looking statements, including the costs of addressing the Year 2000 issue, reflect management's current assessment and estimates with respect to BOK Financial's Year 2000 compliance effort. Various factors could cause actual plans and results to differ materially from those contemplated by such assessments, estimates and forward-looking statements, many of which are beyond the control of BOK Financial. Some of these factors include, but are not limited to, third party modification plans, availability of technological and monetary resources, representations by vendors and counter parties, technological advances, economic considerations and consumer perceptions. BOK Financial's Year 2000 compliance program is an ongoing process involving continual evaluation and may be subject to change in response to new developments. Assessment of Financial Condition The aggregate loan portfolio at September 30, 1999 increased $283 million to $4.4 billion during the third quarter of 1999. Commercial loans increased $205 million and commercial real estate loans increased $58 million, respectively. - --------------------------------------------------------------------------------------------------------------------- TABLE 10 - LOANS (In thousands) Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1999 1999 1999 1998 1998 --------------------------------------------------------------------------------- Commercial: Energy $ 593,944 $ 558,975 $ 484,810 $ 468,700 $ 361,359 Manufacturing 327,195 289,879 280,155 245,268 233,913 Wholesale/retail 400,730 371,867 319,545 279,265 302,832 Agricultural 162,531 151,010 212,314 160,241 147,959 Services 833,671 757,012 647,963 635,585 552,902 Other commercial and industrial 206,045 190,668 189,752 200,214 128,760 Commercial real estate: Construction and land development 258,947 246,948 203,968 174,059 151,396 Multifamily 259,276 240,906 191,173 181,525 153,304 Other real estate loans 523,324 495,304 412,798 404,985 350,188 Residential mortgage: Secured by 1-4 family residential properties 526,622 520,061 482,990 500,690 460,945 Residential mortgages held for 58,466 79,994 81,277 100,269 82,886 sale Consumer 259,414 224,493 175,217 296,298 240,761 - --------------------------------------------------------------------------------------------------------------------- Total $ 4,410,165 $ 4,127,117 $ 3,681,962 $ 3,647,099 $ 3,167,205 - ---------------------------------------------------------------------------------------------------------------------
While BOK Financial continues to increase geographic diversification through expansion in the Dallas, Texas and Albuquerque, New Mexico areas, geographic concentration subjects the loan portfolio to the general economic conditions in Oklahoma. Notable loan concentrations by the primary industry of the borrowers are presented in Table 10. Agriculture includes loans totaling $141 million to the cattle industry. Services include loans totaling $160 million to nursing and medical facilities and $113 million to the hotel industry. Commercial real estate loans are secured primarily by properties in the Tulsa or Oklahoma City metropolitan areas. The major components of other real estate loans are office buildings, $174 million and retail facilities, $158 million. SUMMARY OF LOAN LOSS EXPERIENCE The reserve for loans losses, which is available to absorb losses inherent in the loan portfolio, totaled $75 million at September 30, 1999, $73 million at June 30, 1999 and $66 million at December 31, 1998. This represents 1.73%, 1.80% and 1.86% of total loans, excluding loans held for sale, at September 30, 1999, June 30, 1999, and December 31, 1998, respectively. Losses on loans held for sale, principally mortgage loans accumulated for placement in securitized pools, are charged to earnings through adjustments in carrying value to the lower of cost or market value in accordance with accounting standards applicable to mortgage banking. Table 11 presents statistical information regarding the reserve for loan losses for the past five quarters. - ------------------------------------------------------------------------------------------------------------------- TABLE 11 - SUMMARY OF LOAN LOSS EXPERIENCE (In thousands) Three Months Ended -------------------------------------------------------------------------------- Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1999 1999 1999 1998 1998 -------------------------------------------------------------------------------- Beginning balance $ 72,732 $ 68,994 $ 65,922 $ 63,056 $ 58,676 Loans charged-off: Commercial 71 1,420 4 1,132 533 Commercial real estate - - 35 33 50 Residential mortgage 20 37 14 54 53 Consumer 1,237 1,339 1,164 940 896 - ------------------------------------------------------------------------------------------------------------------- Total 1,328 2,796 1,217 2,159 1,532 - ------------------------------------------------------------------------------------------------------------------- Recoveries of loans previously charged-off: Commercial 830 1,839 133 34 796 Commercial real estate 208 4 236 516 551 Residential mortgage 2 1 - - - Consumer 600 627 490 388 504 - ------------------------------------------------------------------------------------------------------------------- Total 1,640 2,471 859 938 1,851 - ------------------------------------------------------------------------------------------------------------------- Net loans charged-off (recoveries) (312) 325 358 1,221 (319) Provision for loan losses 2,142 2,538 3,430 4,087 4,061 Additions due to acquisitions - 1,525 - - - - ------------------------------------------------------------------------------------------------------------------- Ending balance $ 75,186 $ 72,732 $ 68,994 $ 65,922 $ 63,056 - ------------------------------------------------------------------------------------------------------------------- Reserve to loans outstanding at period-end(1) 1.73% 1.80% 1.92% 1.86% 2.04% Net loan losses (annualized) to average loans (1) (0.03) 0.03 0.04 0.15 (0.04) - ------------------------------------------------------------------------------------------------------------------- (1) Excludes residential mortgage loans held for sale which are carried at the lower of aggregate cost or market value.
The adequacy of the reserve for loan losses is assessed by management based upon an ongoing quarterly evaluation of the probable estimated losses inherent in the portfolio. A consistent methodology has been developed that includes reserves assigned to specific criticized loans, general reserves that are based upon a statistical migration analysis for each category of loans, and unallocated reserves that are based upon an analysis of current economic conditions, loan concentrations, portfolio growth, and other relevant factors. An independent Credit Administration department is responsible for performing this evaluation for all of BOK Financial's subsidiaries to ensure that the methodology is applied consistently. All significant criticized loans are reviewed quarterly with written documentation. Specific reserves for impairment are determined in accordance with generally accepted accounting principles and appropriate regulatory standards. At September 30, 1999, specific impairment reserves totaled $1.9 million. The adequacy of general loan loss reserves is determined primarily through an internally developed migration analysis model. Management uses an eight-quarter aggregate accumulation of net loan losses as the basis for this model. Greater emphasis is placed on net loan losses in the more recent periods. This model is used to assign general loan loss reserves to commercial loans and leases, residential mortgage loans and consumer loans. All loans, leases and letters of credit are allocated a migration factor by this model. Management can override the general allocation only by utilizing a specific allocation that is greater than the general allocation. A nonspecific allowance for loan losses is maintained for risks beyond those factors specific to a particular loan or those identified by the migration analysis. These factors include trends in general economic conditions in BOK Financial's primary lending areas, duration of the business cycle, specific conditions in industries where BOK Financial has a concentration of loans, overall growth in the loan portfolio, bank regulatory examination results, error potential in either the migration analysis model or in the underlying data, and other relevant factors. A range of potential losses is then determined for each factor identified. At September 30, 1999, the loss potential ranges for the more significant factors are: Concentration of large loans - $1.1 million to $2.2 million Loan portfolio growth and expansion into new markets - $1.2 million to $2.3 million A provision for loan losses is charged against earnings in amounts necessary to maintain an adequate allowance for loan losses. These provisions were $2.1 million for the third quarter of 1999 compared to $2.5 million for the second quarter of 1999 and $4.1 million for the third quarter of 1998. NON-PERFORMING ASSETS Information regarding non-performing assets, which were $22 million at September 30, 1999, $25 million at June 30, 1999 and $19 million at December 31, 1998 is presented in Table 12. Non-performing loans include non-accrual loans and renegotiated loans, and exclude loans 90 days past due. The loan review process also identifies loans that possess more than the normal amount of risk due to deterioration in the financial condition of the borrower or the value of the collateral. Because the borrowers are performing in accordance with the original terms of the loan agreements and no loss of principal or interest is anticipated, such loans are not included in the Non-performing Assets totals. These loans are assigned to various risk categories in order to focus management's attention on the loans with higher risk of loss. At September 30, 1999, loans totaling $95 million were assigned by management to the substandard risk category and loans totaling $77 million were assigned to the special mention risk category, compared to $79 million and $54 million, respectively, at June 30, 1999. Management expects that the level of loans assigned to these risk categories will moderate over the next nine to twelve months as improvements in the energy and cattle sectors begin to show in the operating results of BOK Financial's borrowers. This expectation depends upon continued stability in the overall economy. - --------------------------------------------------------------------------------------------------------------------- TABLE 12 - NONPERFORMING ASSETS (In thousands) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 1999 1999 1999 1998 1998 ---------------------------------------------------------------------- Nonperforming assets: Nonperforming loans: Nonaccrual loans: Commercial $ 12,088 $ 13,754 $ 9,712 $ 8,394 $ 8,439 Commercial real estate 1,796 2,824 2,726 1,950 2,379 Residential mortgage 44 699 2,097 2,583 3,097 Consumer 3,938 3,198 1,410 1,168 1,127 - --------------------------------------------------------------------------------------------------------------------- Total nonaccrual loans 17,866 20,475 15,945 14,095 15,042 Renegotiated loans - - - - - - --------------------------------------------------------------------------------------------------------------------- Total nonperforming loans 17,866 20,475 15,945 14,095 15,042 Other nonperforming assets 4,447 4,450 4,927 4,667 4,400 - --------------------------------------------------------------------------------------------------------------------- Total nonperforming assets $ 22,313 $ 24,925 $ 20,872 $ 18,762 $ 19,442 - --------------------------------------------------------------------------------------------------------------------- Ratios: Reserve for loan losses to Nonperforming loans 420.83% 355.22% 432.70% 467.70% 419.20% Nonperforming loans to Period-end loans (2) 0.41 0.51 0.44 0.40 0.49 - --------------------------------------------------------------------------------------------------------------------- Loans past due 90 days (1) $ 12,757 $ 11,082 $ 13,037 $ 9,553 $ 15,714 - --------------------------------------------------------------------------------------------------------------------- (1) Includes residential mortgages guaranteed by agencies of the U.S. Government $ 7,712 $ 7,958 $ 7,674 $ 8,122 $ 8,449 Excludes residential mortgages guaranteed by agencies of the U.S. Government in foreclosure 8,159 7,487 7,099 6,953 9,742 (2) Excludes residential mortgage loans held for sale - ---------------------------------------------------------------------------------------------------------------------
MARKET RISK Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices, or equity prices. Additionally, the financial instruments subject to market risk can be classified either as held for trading or held for purposes other than trading. BOK Financial is subject to market risk primarily through the effect of changes in interest rates on both its portfolio of assets held for purposes other than trading and trading assets. The effect of other changes, such as foreign exchange rates, commodity prices or equity prices, do not pose a material market risk to BOK Financial. The responsibility for managing market risk rests with the Asset/Liability Committee which operates under policy guidelines established by the Board of Directors. The negative acceptable variation in net interest revenue and economic value of equity due to a 200 basis point increase or decrease in interest rates is generally limited by these guidelines to +/- 10%. These guidelines also establish maximum levels for short-term borrowings, short-term assets, and public and brokered deposits, and establish minimum levels for unpledged assets, among other things. Compliance with these guidelines is reviewed monthly. Interest Rate Risk Management (Other than Trading) BOK Financial performs a sensitivity analysis to identify more dynamic interest rate risk exposures, including embedded option positions, on net interest revenue, net income and economic value of equity. A simulation model is used to estimate the effect of changes in interest rates over the next twelve months based on three interest rate scenarios. These are a "most likely" rate scenario and two "shock test" scenarios, the first assuming a sustained parallel 200 basis point increase and the third a sustained parallel 200 basis point decrease in interest rates. An independent source is used to determine the most likely interest rates for the next year. BOK Financial's primary interest rate exposures include the Federal Reserve Bank's discount rate which affects short-term borrowings, the prime lending rate and the London InterBank Offering Rate ("LIBOR") which are the basis for much of the variable-rate loan pricing, the 30-year mortgage rate which directly affects the prepayment speeds for mortgage-backed securities and mortgage servicing rights, and the 10-year U.S. Treasury rate which affects the value of the mortgage servicing hedges. Derivative financial instruments and other financial instruments used for purposes other than trading are included in this simulation. In addition, sensitivity of fee income to market interest rate levels, such as those related to cash management services and mortgage servicing, is included. The model incorporates management's assumptions regarding the level of interest rate or balance changes on indeterminable maturity deposits (demand deposits, interest-bearing transaction accounts and savings accounts) for a given level of market rate changes. The assumptions have been developed through a combination of historical analysis and future expected pricing behavior. Interest rate swaps on all products are included to the extent that they are effective in the 12-month simulation period. Additionally, changes in prepayment behavior of mortgage-backed securities, residential mortgage loans and mortgage servicing in each rate environment are captured using industry estimates of prepayment speeds for various coupon segments of the portfolio. Finally, the impact of planned growth and new business activities is factored into the simulation model. At September 30, 1999 and 1998, this modeling indicated interest rate sensitivity as follows: Table 13 - Interest Rate Sensitivity (Dollars in Thousands) 200 bp Increase 200 bp Decrease Most Likely ---------------------- --------------------- ------------------- 1999 1998 1999 1998 1999 1998 ------------- -------- ------------ -------- ------------ ------ Anticipated impact over the next twelve months: Net interest revenue $ (1,741) $ 1,849 $ 1,163 $ (2,818) $ (2,215) $ (1,706) (0.6)% 0.9% 0.4% (1.4)% (0.8)% (0.8)% - ------------------------------------------ ----------------------- ------------ ----------- ---------- Net income $(1.079) $ 3,701 $ 721 $ (12,717) $ (1,373) $ (1,151) (1.1)% 4.2% 0.7% (14.3)% (1.4)% (1.3)% - ------------------------------------------ ----------------------- ------------ ----------- ---------- Economic value of equity $(43,667) $(26,981) $(2,515) $ (12,139) $ (539) $ 8,151 (3.9)% (3.5)% (0.2)% (1.6)% 0.0% 1.1% - ------------------------------------------ ----------------------- ------------ ------------ ---------
The estimated changes in interest rates on net interest revenue or net income is not projected to be significant within the +/- 200 basis point range of assumptions. However, this modeling indicated that under the 200 basis point increase scenario, BOK Financial's economic value of equity would decrease by $43.7 million due primarily to the effect of rising interest rates on the value of the securities portfolio. BOK Financial hedges its loss exposure from the prepayment of mortgage loans that it services through the use of futures contracts, call options and put options. These derivatives are based upon 10-year U.S. Treasury securities. The changes in value of these derivatives have a highly correlated, inverse relation to changes in value of the mortgage servicing rights. The interest rate sensitivity of the mortgage servicing portfolio and the related hedge is modeled over a range of + or - 50 basis points. At September 30, 1999, the pre-tax results of this modeling are as follows: 50 bp increase 50 bp decrease ----------------- ------------------ Anticipated change in: Mortgage servicing rights $ 4,272 $(6,884) Hedging instruments (2,918) 3,169 ================= ================== Net $ 1,354 $(3,715) ================= ================== The simulations used to manage market risk are based on numerous assumptions regarding the effect of changes in interest rates on the timing and extent of repricing characteristics, future cash flows and customer behavior. These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest revenue, net income or economic value of equity or precisely predict the impact of higher or lower interest rates on net interest revenue, net income or economic value of equity. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors. BOK Financial uses interest rate swaps, a form of off-balance sheet derivative product, in managing its interest rate sensitivity. These products are generally used to more closely match interest paid on certain long-term certificates of deposit and subordinated debt with earning assets. BOK Financial agrees with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed-upon notional amount. For the third quarter of 1999, income from these swaps exceeded the cost of the swaps by $362 thousand. Credit risk from these swaps is closely monitored and counterparties to these contracts are selected on the basis of their credit worthiness, among other factors. Derivative products are not used for speculative purposes. - -------------------------------------------------------------------------------- TABLE 14 - INTEREST RATE SWAPS (In thousands) Notional Pay Receive Fair Amount Rate Rate Value ------------------------------------------------------------- Expiration: 2001 $ 4,324 5.03 % 5.40(1) % $ 62 2002 120,660 5.4 - 6.08 (1) 6.21 - 6.92 295 2003 42,081 4.82 - 5.99 5.40 (1) 1,265 2004 23,604 5.65 - 5.92 5.40 (1) 452 2005 8,383 5.08 - 5.21 5.40 (1) 472 2006 16,500 7.26 6.08 (1) (554) 2007 164,384 5.23 - 7.48 5.40 - 6.08 (1) 619 2008 28,706 5.15 - 5.67 5.40 (1) 1,998 2009 68,851 5.22 - 6.8 5.40 (1) 2,850 - -------------------------------------------------------------------------------- (1) Rates are variable based on LIBOR and reset monthly, quarterly or semiannually. Trading Activities BOK Financial enters into trading account activities both as an intermediary for customers and for its own account. As an intermediary, BOK Financial will take positions in securities, generally mortgage-backed securities, government agency securities, and municipal bonds. These securities are purchased for resale to customers, which include individuals, corporations, foundations, and other financial institutions. BOK Financial will also take trading positions in U.S. Treasury securities, mortgage-backed securities, municipal bonds and financial futures for its own account through Bank of Oklahoma, N.A. and BOSC, Inc. These positions are taken with the objective of generating trading profits. Both of these activities involve interest rate risk. A variety of methods are used to manage the interest rate risk of trading activities. These methods include daily marking of all positions to market value, independent verification of inventory pricing, and position limits for each trading activity. Hedges in either the futures or cash markets may be used to reduce the risk associated with some trading positions. The Risk Management Department monitors trading activity daily and reports to senior management and the Risk Overssight and Audit Committee of the Board of Directors on any exceptions to trading position limits and risk management policy. BOK Financial uses a Value at Risk ("VAR") methodology to measure the market risk inherent in its trading activities. VAR is calculated based upon historical simulations over the past five years. It represents an amount of market loss that is likely to be exceeded only one out of every 100 two-week periods. Trading positions are managed within guidelines approved by the Board of Directors. These guidelines limit the nominal aggregate trading positions to $360 million and the VAR to $6.5 million. At September 30, 1999, the nominal aggregate trading positions was $15 million, the VAR was $539 thousand. - -------------------------------------------------------------------------------- TABLE 15 - CAPITAL RATIOS Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 1999 1999 1999 1998 1998 --------------------------------------------------- Average shareholders' equity to average assets 6.72% 7.36% 7.62% 8.07% 8.25% Risk-based capital: Tier 1 capital 7.09 7.09 8.19 7.93 9.51 Total capital 10.67 10.89 12.23 12.02 14.08 Leverage 5.64 5.47(1) 6.32 6.60 7.25 - -------------------------------------------------------------------------------- (1) Originally reported as 5.86% but has been restated to reflect second quarter acquisitions average assets as if outstanding entire quarter in accordance with regulatory guidance. Financial institutions are considered to be "well capitalized" pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 if their Leverage, Tier 1 and Total Capital ratios are at least 5%, 6%, and 10%, respectively. BOK Financial and its subsidiary banks continue to exceed the regulatory definition of well capitalized. However, BOK Financial's capital ratios have declined compared to the third quarter of 1998 due to its acquisition program and continued asset growth. While management projects capital to grow and the capital ratios to increase over time, future asset growth and acquisitions may be constrained by capital limitations. BOK Financial had borrowing lines from other commercial banks totaling $105 million which have been renegotiated into a $125 million syndicated senior facility with a three year maturity, interest based on LIBOR + 75 basis points. The debt facility includes covenants on capital adequacy, asset quality and indebtedness that are generally consistent with regulatory guidelines. REPORT OF MANAGEMENT ON CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the consolidated financial statements which have been prepared in accordance with generally accepted accounting principles. In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial condition, results of operations and cash flows of BOK Financial and its subsidiaries at the dates and for the periods presented. The financial information included in this interim report has been prepared by management without audit by independent public accountants and should be read in conjunction with BOK Financial's 1998 Form 10-K filed with the Securities and Exchange Commission which contains audited financial statements. - ----------------------------------------------------------------------------- --------------------------------------- Consolidated Statement of Earnings - UNAUDITED (In Thousands Except Share Data) Three Months Ended Nine Months Ended September 30, September 30, ------------------------------- ------------------------------- 1999 1998 1999 1998 ------------- --- ------------- ------------- --- ------------- Interest Revenue Loans $ 89,655 $ 68,592 $ 239,302 $ 196,240 Taxable securities 37,735 29,111 106,520 84,924 Tax-exempt securities 3,456 4,080 11,170 12,228 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Total securities 41,191 33,191 117,690 97,152 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Trading securities 393 389 1,901 813 Funds sold 503 417 1,276 1,901 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Total interest revenue 131,742 102,589 360,169 296,106 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Interest Expense Deposits 39,293 34,342 108,152 105,153 Other borrowings 27,690 16,857 74,089 44,265 Subordinated debenture 2,372 2,529 6,947 7,360 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Total interest expense 69,355 53,728 189,188 156,778 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Net Interest Revenue 62,387 48,861 170,981 139,328 Provision for Loan Losses 2,142 4,061 8,110 10,504 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Net Interest Revenue After Provision for Loan Losses 60,245 44,800 162,871 128,824 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Other Operating Revenue Brokerage and trading revenue 3,237 4,109 11,452 11,291 Transaction card revenue 8,298 6,516 23,881 18,066 Trust fees and commissions 9,045 7,755 25,688 22,301 Service charges and fees on deposit accounts 10,857 8,439 30,383 24,366 Mortgage banking revenue, net 9,189 10,929 28,358 31,190 Leasing revenue 526 1,749 3,211 5,214 Other revenue 4,129 3,367 13,873 9,290 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Total fees and commissions revenue 45,281 42,864 136,846 121,718 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Gain on sale of student loans 39 13 584 1,548 Gain on loan securitization - - 270 - Gain on sale of other assets - - 4,530 - Securities gains (losses), net (485) 538 (499) 6,370 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Total other operating revenue 44,835 43,415 141,731 129,636 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Other Operating Expense Personnel 34,262 26,914 100,209 79,092 Business promotion 1,925 1,900 6,833 5,556 Contribution of stock to BOk Charitable Foundation - - - 2,257 Professional fees and services 2,452 2,652 7,133 6,616 Net occupancy, equipment & data processing 15,198 10,762 41,963 30,878 FDIC and other insurance 323 297 1,018 1,006 Printing, postage and supplies 2,729 2,349 8,564 6,775 Net(gains) losses, and operating expenses of repossessed assets (1,501) (18) (2,929) (386) Amortization of intangible assets 4,519 2,304 11,434 6,950 Mortgage banking costs 6,183 6,374 18,274 18,687 Provision for impairment of mortgage servicing rights - - - 2,000 Other expense 4,665 4,637 13,760 12,265 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Total Other Operating Expense 70,755 58,171 206,259 171,696 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Income Before Taxes 34,325 30,044 98,343 86,764 Federal and state income tax 11,589 10,049 32,314 27,520 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Net Income $ 22,736 $ 19,995 $ 66,029 $ 59,244 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Earnings Per Share: Net Income Basic $ 0.46 $ 0.40 $ 1.33 $ 1.19 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Diluted $ 0.41 $ 0.36 $ 1.18 $ 1.06 - ---------------------------------------------- --- ------------- --- ------------- -- ------------- --- ------------- Average Shares Used in Computation: Basic 48,993,564 48,824,281 48,927,113 48,899,911 - ---------------------------------------------- ----------------- ----------------- ---------------- ----------------- Diluted 55,769,698 55,709,650 55,767,967 55,836,384 - ---------------------------------------------- ----------------- ----------------- ---------------- ----------------- See accompanying notes to consolidated financial statements.
- -------------------------------------------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS - UNAUDITED (In Thousands Except Share Data) September 30, December 31, September 30, 1999 1998 1998 -------------------------------------------------- ASSETS Cash and due from banks $ 409,014 $ 431,874 $ 352,892 Funds sold 180,170 39,551 36,826 Trading securities 15,945 41,138 22,730 Securities: Available for sale 2,454,018 2,329,375 2,100,329 Investment (fair value: September 30, 1999 - $204,623; December 31, 1998 -$227,754; September 30, 1998 - $220,161) 213,125 227,777 221,329 - -------------------------------------------------------------------------------------------------------------------- Total securities 2,667,143 2,557,152 2,321,658 - -------------------------------------------------------------------------------------------------------------------- Loans 4,410,165 3,647,099 3,167,205 Less reserve for loan losses 75,186 65,922 63,057 - -------------------------------------------------------------------------------------------------------------------- Net loans 4,334,979 3,581,177 3,104,148 - -------------------------------------------------------------------------------------------------------------------- Premises and equipment, net 116,614 87,721 69,270 Accrued revenue receivable 64,403 64,409 62,512 Excess cost over fair value of net assets acquired and core deposit premiums (net of accumulated amortization: September 30, 1999 - $57,903; December 31, 1998 - $49,469; September 30, 1998 - $46,532) 131,332 97,578 66,123 Mortgage servicing rights 106,532 69,224 52,233 Real estate and other repossessed assets 4,447 4,667 4,400 Other assets 143,748 85,016 76,992 - -------------------------------------------------------------------------------------------------------------------- Total assets $ 8,174,327 $ 7,059,507 $ 6,169,784 - -------------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing demand deposits $ 961,009 $ 1,165,283 $ 942,783 Interest-bearing deposits: Transaction 1,806,433 1,453,236 1,189,534 Savings 162,395 185,971 148,650 Time 2,217,401 1,803,237 1,722,244 - -------------------------------------------------------------------------------------------------------------------- Total deposits 5,147,238 4,607,727 4,003,211 - -------------------------------------------------------------------------------------------------------------------- Funds purchased and repurchase Agreements 1,306,792 1,040,683 817,840 Other borrowings 888,239 660,347 609,579 Subordinated debenture 148,597 146,921 148,415 Accrued interest, taxes and expense 57,545 58,034 52,667 Other liabilities 80,693 21,002 23,944 - -------------------------------------------------------------------------------------------------------------------- Total liabilities 7,629,104 6,534,714 5,655,656 - -------------------------------------------------------------------------------------------------------------------- Stockholders' equity: Preferred stock 25 25 23 Common stock ($.00006 par value; 2,500,000,000 shares authorized; shares issued and outstanding September 30, 1999 - 49,164,957; December 31, 1998 - 48,111,647; September 30, 1998 -47,193,815) 3 3 3 Capital surplus 269,423 236,726 215,109 Retained earnings 309,928 278,365 288,393 Notes receivable from exercise of stock options - - - Treasury stock (shares at cost: September 30, 1999 -152,691; December 31, 1998 - 748,576; September 30, 1998 - 1,191,076) (3,553) (2,623) (11,798) Accumulated other comprehensive income (loss) (30,603) 12,297 22,398 - -------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 545,223 524,793 514,128 - -------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 8,174,327 $ 7,059,507 $ 6,169,784 - -------------------------------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
- ------------------------------------------------------------------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED (In Thousands) Accumulated Other Preferred Stock Common Stock Comprehensive Capital Retained Treasury Stock Notes Shares Amount Shares Amount Income(loss) Surplus Earnings Shares Amount Receivable Total ------------------------------------------------------------------------------------------------------------- Balances at December 31, 1997 250,000 $ 23 47,002 $ 3 $11,669 $211,883 $232,620 881 $ (4,314) $ (4) $ 451,880 Comprehensive income: Net income - - - - - - 59,244 - - - 59,244 Other Comprehensive income, net of tax: Unrealized gains(loss) on securities available for sale (1) - - - - 10,729 - - - - - 10,729 ----------- Comprehensive income 69,973 ----------- Exercise of stock options - - 128 - - 1,797 - 16 (346) - 1,451 Issuance of common stock to Thrift Plan - - - - - 84 - (46) 998 - 1,082 Common stock dividend - - - - - - (2,346) - - - (2,346) Preferred dividend paid in shares of common stock - - 52 - - 1,125 (1,125) - - - - Payment on stock options notes receivable - - - - - - - - - 4 4 Director retainer shares - - 12 - - 220 - - - - 220 Treasury stock purchase - - - - - - - 341 (8,136) - (8,136) - ------------------------------------------------------------------------------------------------------------------------------------ Balance at September 30, 1998 250,000 $ 23 47,194 $ 3 $22,398 $215,109 $288,393 1,192 $ (11,798) $ - $ 514,128 - ------------------------------------------------------------------------------------------------------------------------------------ Balances at December 31, 1998 250,000 $ 25 48,112 $ 3 $12,297 $236,726 $278,365 749 $ (2,623) $ - $524,793 Comprehensive income: Net income - - - - - - 66,029 - - - 66,029 Other Comprehensive income, net of tax: Unrealized gains(loss) on securitiesavailable for sale (1) - - - - (42,900) - - - - (42,900) ----------- Comprehensive income 23,129 ----------- Exercise of stock options - - 280 - - 2,312 - 101 (2,352) - (40) Issuance of common stock to Thrift Plan - - 17 - - 405 - (1) 36 - 441 Dividends paid in shares of common stock: Preferred stock - - 40 - - 1,125 (1,125) - - - - Common stock - - 1,432 - - 30,702 (30,606) 4 (96) - - Common stock dividend - - - - - - (2,735) - - - (2,735) Director retainer shares - - 9 - - 215 - - - - 215 Cancel treasury stock - - (725) - - (2,062) - (725) 2,062 - - Treasury stock purchase - - - - - - - 25 (580) - (580) - ------------------------------------------------------------------------------------------------------------------------------------ Balances at September 30, 1999 250,000 $ 25 49,165 $ 3 $(30,603) $269,423 $309,928 153 $ (3,553) $ - $545,223 - ------------------------------------------------------------------------------------------------------------------------------------
(1) September 30, 1999 September 30, 1998 ------------------ ------------------ Reclassification adjustments: Unrealized losses on available for sale securities $ (43,235) $ 14,991 Less:reclassification adjustment for gains realized included in net income, net of tax (335) 4,262 ---------------------------------- Net unrealized losses on securities $ (42,900) $ 10,729 ---------------------------------- See accompanying notes to consolidated financial statements. - --------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (In Thousands) Nine Months Ended September 30, ---------------------------------- 1999 1998 ---------------------------------- Cash Flow From Operating Activities: Net income $ 66,029 $ 59,244 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan and repossessed real estate losses 8,110 10,504 Depreciation and amortization 31,071 29,199 Provision for impairment of mortgage servicing rights - 2,000 Net amortization of security discounts and premiums 1,226 396 Contribution of stock to Bank of Oklahoma Foundation - 2,257 Net gain on sale of assets (14,879) (16,863) Mortgage loans originated for resale (558,043) (680,919) Proceeds from sale of mortgage loans held for resale 604,863 685,938 (Increase) decrease in trading securities 33,241 (17,731) (Increase) decrease in accrued revenue receivable 3,258 (10,110) Increase in other assets (85,940) (4,724) Increase in accrued interest, taxes and expense 25,989 5,915 Increase in other liabilities 57,184 6,073 - ----------------------------------------------------------------------------------------------- Net cash provided by operating activities 172,109 71,179 - ----------------------------------------------------------------------------------------------- Cash Flow From Investing Activities: Proceeds from maturities of investment securities 53,962 27,816 Proceeds from maturities of available for sale securities 527,181 391,552 Purchases of investment securities (39,496) (36,941) Purchases of available for sale securities (1,929,299) (1,853,847) Proceeds from sales of available for sale securities 1,352,130 1,235,152 Proceeds from hedging mortgage servicing rights 874 21,974 Loans originated or acquired net or principal collected (809,352) (364,085) Proceeds from disposition of assets 187,545 61,821 Purchases of assets (72,386) (43,071) Cash and cash equivalents of branches & subsidiaries acquired and sold, net 25,584 35,793 - ----------------------------------------------------------------------------------------------- Net cash used by investing activities (703,257) (523,836) - ----------------------------------------------------------------------------------------------- Cash Flows From Financing Activities: Net increase (decrease) in demand deposits, transaction deposits, money market deposits, and savings accounts (134,032) 60,740 Net increase (decrease) in certificates of deposit 319,253 (12,263) Net increase in other borrowings 465,763 401,517 Purchase of treasury stock (580) (8,482) Common stock dividend (2,735) (2,343) Preferred stock dividend - (1) Issuance of preferred, common and treasury stock, net 1,238 3,098 Payments on stock option notes receivable - 4 - ----------------------------------------------------------------------------------------------- Net cash provided by financing activities 648,907 442,270 - ----------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 117,759 (10,387) Cash and cash equivalents at beginning of period 471,425 400,105 - ----------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 589,184 $ 389,718 - --------------------------------------------------------------------------------------------- Cash paid for interest $ 191,416 $ 128,762 - --------------------------------------------------------------------------------------------- Cash paid for taxes $ 19,468 $ 13,825 - --------------------------------------------------------------------------------------------- Net loans transferred to repossessed real estate And other assets $ 2,041 $ 2,165 - --------------------------------------------------------------------------------------------- Payment of preferred stock dividends in common stock $ 1,125 $ 1,125 - --------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED (1) ACCOUNTING POLICIES Basis of Presentation The accounting and reporting policies of BOK Financial Corporation conform to generally accepted accounting principles and to generally accepted practices within the banking industry. The Consolidated Financial Statements of BOK Financial include the accounts of BOK Financial and its subsidiaries, primarily Bank of Oklahoma, N.A. ("BOk"), Bank of Arkansas N.A., Bank of Texas, N.A., Swiss Avenue State Bank, Mid-Cities National Bank, Canyon Creek National Bank and First National Bank and Trust Company of Muskogee. Certain prior period balances have been reclassified to conform with the current period presentation. (2) ACQUISITIONS On June 30, 1999, BOK Financial issued 2,371,809 common shares to acquire First Muskogee Bancshares, Inc. and its subsidiary, First National Bank and Trust Company of Muskogee (collectively "First Muskogee") in a pooling of interests. Financial statements of BOK Financial for the three months and nine months of 1998 have been restated to reflect this acquisition. Information regarding this acquisition follows (in thousands except per share data): Nine Months Ended Three Months Ended September 30, September 30, 1998 1998 1998 ---------------- --- ------------------- Net interest revenue: BOK Financial $ 133,278 $ 46,777 First Muskogee 6,050 2,084 ---------------- --- ------------------- Combined $ 139,328 $ 48,861 ---------------- --- ------------------- Net income: BOK Financial $ 55,501 $ 18,750 First Muskogee 3,743 1,245 ---------------- --- ------------------- Combined $ 59,244 $ 19,995 ---------------- --- ------------------- Earnings per share: Basic BOK Financial $ 1.17 $ 0.40 First Muskogee 0.02 - ---------------- --- ------------------- Combined $ 1.19 $ 0.40 ---------------- --- ------------------- Diluted BOK Financial $ 1.04 $ 0.35 First Muskogee 0.02 0.01 ---------------- --- ------------------- Combined $ 1.06 $ 0.36 ---------------- --- ------------------- (3) MORTGAGE BANKING ACTIVITIES At September 30, 1999, BOk owned the rights to service 95,575 mortgage loans with outstanding principal balances of $6.9 billion, including $83.4 million serviced for BOk. The weighted average interest rate and remaining term was 7.46% and 273 months, respectively. Activity in capitalized mortgage servicing rights and related valuation allowance during the nine months ending September 30, 1999 is as follows: Capitalized Mortgage Servicing Rights ----------------------------------------------------------------------- Valuation Hedging Purchased Originated Total Allowance (Gain)/Loss Net ------------ ------------ ----------------------- --------------------- Balance at December 31, 1998 $ 70,509 $ 21,199 $ 91,708 $ - $ (22,484) $ 69,224 Additions 10,385 8,813 19,198 - 19,198 Amortization expense (9,435) (2,655) (12,090) 880 (11,210) Realized hedge losses - - 28,454 28,454 Unrealized hedge losses - - 866 866 - ------------------------------- ---------- -- ---------- ---------- ------------- ----------- --------- Balance at September 30, 1999 $ 71,459 $ 27,357 $ 98,816 $ - $ 7,716 $106,532 - ------------------------------- ---------- -- ---------- ---------- ------------- ----------- --------- Estimated fair value of mortgage servicing rights (1) $ 79,502 $ 35,518 $115,020 $115,020 - ------------------------------- --- ---------- -- ---------- -- ---------- -- -------------- -- ------- (1) Excludes approximately $8.8 million of loan servicing rights on mortgage loans originated prior to the adoption of FAS 122.
Stratification of the mortgage loan servicing portfolio, outstanding principal of loans serviced, and related hedging information by interest rate at September 30, 1999 follows (in thousands): < 6.50% 6.50% - 7.49% 7.50% - 8.49% => 8.50% Total ----------- ----------- ----------------- ------------- ---------- Cost less accumulated amortization $ 8,138 $ 59,394 $ 28,470 $ 2,814 $ 98,816 Deferred hedge losses - 7,301 415 - 7,716 - --------------------------------------------- ------------------------- ------------- ------------- Adjusted cost 8,138 66,695 28,885 2,814 106,532 Fair value 9,444 68,339 32,118 5,119 115,020 - --------------------------------------------- ------------------------- ------------- ------------- Impairment $ - $ - $ - $ - $ - - --------------------------------------------- ------------------------- ------------- ------------- Outstanding principal of loans serviced (in millions) (1) $ 562 $ 3,688 $ 1,776 $ 309 $ 6,335 - ---------------------------------------------------------- -------------- ------------- ----------- (1) Excludes outstanding principal of $508.0 million for loans serviced for which there is no capitalized mortgage servicing rights.
(4) DISPOSAL OF AVAILABLE FOR SALE SECURITIES Sales of available for sale securities resulted in gains and losses as follows (in thousands): Nine Months Ended September 30, ------------------------------------- 1999 1998 -------------- ----------------- Proceeds $ 1,352,130 $ 1,235,152 Gross realized gains 3,966 7,350 Gross realized losses 4,465 980 Related federal and state income tax expense (164) 2,108 (5) EARNINGS PER SHARE The following table presents the computation of basic and diluted earnings per share (dollars in thousands except share data): Three Months Ended Nine Months Ended ---------------------------------------------------------- September 30, September 30, September 30, September 1999 1998 1999 30, 1998 ---------------------------------------------------------- Numerator: Net income $ 22,736 $ 19,995 $ 66,029 $ 59,244 Preferred stock dividends 375 375 1,125 1,125 - ---------------------------------------------------------------------------------------------------------------- Numerator for basic earnings per share - income available to common stockholders 22,361 19,620 64,904 58,119 - ---------------------------------------------------------------------------------------------------------------- Effect of dilutive securities: Preferred stock dividends 375 375 1,125 1,125 - ---------------------------------------------------------------------------------------------------------------- Numerator for diluted earnings per share - income available to common stockholders after assumed conversion $ 22,736 $ 19,995 $ 66,029 $ 59,244 - ---------------------------------------------------------------------------------------------------------------- Denominator: Denominator for basic earnings per share -weighted average shares 48,993,564 48,824,281 48,927,113 48,899,911 Effect of dilutive securities: Employee stock options 626,769 736,004 691,489 787,108 Convertible preferred stock 6,149,365 6,149,365 6,149,365 6,149,365 - ---------------------------------------------------------------------------------------------------------------- Dilutive potential common shares 6,776,134 6,885,369 6,840,854 6,936,473 - ---------------------------------------------------------------------------------------------------------------- Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 55,769,698 55,709,650 55,767,967 55,836,384 - ---------------------------------------------------------------------------------------------------------------- Basic earnings per share $ 0.46 $ 0.40 $ 1.33 $ 1.19 - ---------------------------------------------------------------------------------------------------------------- Diluted earnings per share 0.41 0.36 1.18 1.06 - ----------------------------------------------------------------------------------------------------------------
(6) REPORTABLE SEGMENTS Reportable segments reconciliation to the Consolidated Financial Statements for the nine months ended September 30, 1999 is as follows: Other Other Net Interest Operating Operating Average Revenue Revenue Expense Assets -------------- -- ------------- --- -------------- -- -------------- Total reportable lines of business $ 115,618 $ 104,425 $ 131,215 $ 5,729,790 Total non-reportable lines of business 42,221 35,495 60,284 1,743,904 Unallocated items: Tax-equivalent adjustment (6,552) - - - Funds management 20,715 253 11,313 107,935 Eliminations and all others, net (1,021) 1,558 3,447 (155,359) ============== == ============= === ============== == ============== BOK Financial consolidated $ 170,981 $ 141,731 $ 206,259 $ 7,426,270 ============== == ============= === ============== == ==============
Reportable segments reconciliation to the Consolidated Financial Statements for the nine months ended September 30, 1998 is as follows: Other Other Net Interest Operating Operating Average Revenue Revenue Expense Assets -------------- -- ------------- --- -------------- -- -------------- Total reportable lines of business $ 103,701 $ 99,400 $ 132,094 $ 5,114,536 Total non-reportable lines of business 19,922 23,261 30,669 625,122 Unallocated items: Tax-equivalent adjustment (7,101) - - - Funds management 22,607 6,671 4,756 72,886 Contribution to BOk Foundation - - 2,257 - Eliminations and all others, net 199 304 1,920 (17,381) ============== == ============= === ============== == ============== BOK Financial consolidated $ 139,328 $ 129,636 $ 171,696 $ 5,795,163 ============== == ============= === ============== == ==============
(7) CONTINGENT LIABILITIES In the ordinary course of business, BOK Financial and its subsidiaries are subject to legal actions and complaints. Management believes, based upon the opinion of counsel, that the actions and liability or loss, if any, resulting from the final outcomes of the proceedings, will not be material in the aggregate. - ------------------------------------------------------------------------------------------------------------------------------------ NINE MONTH FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Nine months ended ----------------------------------------------------------------------------------------- September 30, 1999 September 30, 1998 -------------------------------------------- ---------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate ----------------------------------------------------------------------------------------- Assets Taxable securities $ 2,359,405 $ 106,520 6.04 $ 1,832,065 $ 84,925 6.20% Tax-exempt securities(1) 297,776 17,130 7.69% 330,730 18,944 7.66 - ----------------------------------------------------------------------------------------------------------------------------------- Total securities 2,657,181 123,650 6.22 2,162,795 103,869 6.42 - ----------------------------------------------------------------------------------------------------------------------------------- Trading securities 44,134 1,901 5.76 20,248 813 5.37 Funds sold 36,787 1,276 4.64 44,249 1,901 5.74 Loans(2)(3) 3,900,878 239,894 8.22 2,970,593 196,624 8.78 Less reserve for loan losses 71,004 57,728 - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net of reserve(3) 3,829,874 239,894 8.37 2,912,865 196,624 8.88 - ----------------------------------------------------------------------------------------------------------------------------------- Total earning assets(1)(2)(3) 6,567,976 366,721 7.47 5,140,157 303,207 7.80 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and other assets 858,294 655,006 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $ 7,426,270 $ 5,795,163 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities And Shareholders' Equity Transaction deposits $ 1,660,558 $ 33,872 2.73% $ 1,200,102 28,023 3.12% Savings deposits 162,172 2,249 1.85 150,442 2,886 2.56 Other time deposits 1,908,636 72,031 5.05 1,810,460 74,244 5.48 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 3,731,366 108,152 3.88 3,161,004 105,153 4.45 - ----------------------------------------------------------------------------------------------------------------------------------- Other borrowings 1,913,032 74,089 5.18 1,028,039 44,265 5.76 Subordinated debenture 147,937 6,947 6.28 148,392 7,360 6.63 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing 5,792,335 189,188 4.37 4,337,435 156,778 4.83 liabilities(1)(2) - ----------------------------------------------------------------------------------------------------------------------------------- Demand deposits 1,006,552 919,055 Other liabilities 89,044 65,219 Shareholders' equity 538,339 473,454 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' $ 7,426,270 $ 5,795,163 equity - ----------------------------------------------------------------------------------------------------------------------------------- Tax-Equivalent Net Interest Revenue(1)(3) 177,533 3.10% 146,429 2.97% Tax-Equivalent Net Interest Revenue (1)(3) To Earning Assets 3.61 3.72 Less tax-equivalent adjustment(1) 6,552 7,101 - ----------------------------------------------------------------------------------------------------------------------------------- Net Interest Revenue 170,981 139,328 Provision for loan losses 8,110 10,504 Other operating revenue 141,731 129,636 Other operating expense 206,259 171,696 - ----------------------------------------------------------------------------------------------------------------------------------- Income Before Taxes 98,343 86,764 Federal and state income tax 32,314 27,520 - ----------------------------------------------------------------------------------------------------------------------------------- Net Income $ 66,029 $ 59,244 - ----------------------------------------------------------------------------------------------------------------------------------- Earnings Per Share: Net Income Basic $ 1.33 $ 1.19 - ----------------------------------------------------------------------------------------------------------------------------------- Diluted $ 1.18 $ 1.06 - ----------------------------------------------------------------------------------------------------------------------------------- (1) Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments shown are for comparative purposes. (2) The loan averages included loans on which the accrual of interest has been discontinued and are stated net of unearned income. (3) Yield/Rate excludes $3,262 million of non-recurring collection of foregone interest in the second and third quarters of 1998.
- ------------------------------------------------------------------------------------------------------------------------------ QUARTERLY FINANCIAL SUMMARY - UNAUDITED Consolidated Daily Average Balances, Average Yields and Rates (In Thousands Except Share Data) For Three months ended ------------------------------------------------------------------------------------- September 30, 1999 June 30, 1999 ------------------------------------------ ------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate ------------------------------------------------------------------------------------- Assets Taxable securities $ 2,456,120 37,735 6.10% $ 2,418,685 $ 35,841 5.94% Tax-exempt securities(1) 275,749 5,219 7.51 295,095 5,742 7.80 - ------------------------------------------------------------------------------------------------------------------------------ Total securities 2,731,869 42,954 6.24 2,713,780 41,583 6.15 - ------------------------------------------------------------------------------------------------------------------------------ Trading securities 27,606 393 5.65 50,190 812 6.49 Funds sold 40,295 503 4.95 40,587 520 5.14 Loans(2)(3) 4,256,430 89,882 8.38 3,822,018 77,330 8.12 Less reserve for loan losses 74,539 70,968 - ------------------------------------------------------------------------------------------------------------------------------ Loans, net of reserve(3) 4,181,891 89,882 8.53 3,751,050 77,330 8.27 - ------------------------------------------------------------------------------------------------------------------------------ Total earning assets(3) 6,981,661 133,732 7.60 6,555,607 120,245 7.36 - ------------------------------------------------------------------------------------------------------------------------------ Cash and other assets 890,977 831,059 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $ 7,872,638 $ 7,386,666 - ------------------------------------------------------------------------------------------------------------------------------ Liabilities And Shareholders' Equity Transaction deposits $ 1,858,386 12,278 2.62% $ 1,655,457 11,035 2.67% Savings deposits 167,875 779 1.84 162,874 742 1.83 Other time deposits 2,046,295 26,236 5.09 1,822,915 22,643 4.98 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 4,072,556 39,293 3.83 3,641,246 34,420 3.79 - ------------------------------------------------------------------------------------------------------------------------------ Other borrowings 2,067,944 27,689 5.31 1,955,583 24,761 5.08 Subordinated debenture 148,576 2,373 6.34 148,275 2,253 6.09 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 6,289,076 69,355 4.38 5,745,104 61,434 4.29 - ------------------------------------------------------------------------------------------------------------------------------ Demand deposits 969,289 1,008,502 Other liabilities 77,574 89,319 Shareholders' equity 536,699 543,741 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' $ 7,872,638 $ 7,386,666 Equity - ------------------------------------------------------------------------------------------------------------------------------ Tax-Equivalent Net Interest Revenue (1)(3) 64,377 3.22% 58,811 3.07% Tax-Equivalent Net Interest Revenue (1)(3) To Earning Assets 3.66 3.60 Less tax-equivalent adjustment (1) 1,990 2,228 - ------------------------------------------------------------------------------------------------------------------------------ Net Interest Revenue 62,387 56,583 Provision for loan losses 2,142 2,538 Other operating revenue 44,835 49,431 Other operating expense 70,755 70,678 - ------------------------------------------------------------------------------------------------------------------------------ Income Before Taxes 34,325 32,798 Federal and state income tax 11,589 10,742 - ------------------------------------------------------------------------------------------------------------------------------ Net Income $ 22,736 $ 22,056 - ------------------------------------------------------------------------------------------------------------------------------ Earnings Per Share: Net Income Basic $ 0.46 $ 0.44 - ------------------------------------------------------------------------------------------------------------------------------ Diluted $ 0.41 $ 0.40 - ------------------------------------------------------------------------------------------------------------------------------ (1) Tax equivalent at the statutory federal and state rates for the periods presented. The taxable equivalent adjustments shown are for comparative purposes. (2) The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned income. (3) Excludes $1,794 of nonrecurring foregone interest in the third quarter 1998 and $1,468 in the second quarter 1998.
- ------------------------------------------------------------------------------------------------------------------------- For Three months ended - ------------------------------------------------------------------------------------------------------------------------- March 31, 1999 December 31, 1998 September 30, 1998 - ------------------------------------------------------------------------------------------------------------------------- Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield Balance Expense(1) /Rate Balance Expense(1) /Rate Balance Expense(1) /Rate - ------------------------------------------------------------------------------------------------------------------------- $ 2,198,972 $ 32,944 6.08% $ 2,011,692 $ 30,808 6.08% $ 1,864,907 $ 29,113 6.19% 324,297 6,168 7.71 328,998 6,269 7.56 331,444 6,317 7.56 - ------------------------------------------------------------------------------------------------------------------------- 2,523,269 39,112 6.29 2,340,690 37,077 6.28 2,196,351 35,430 6.40 - ------------------------------------------------------------------------------------------------------------------------- 54,907 696 5.14 19,415 232 4.74 27,389 389 5.63 34,962 413 4.79 31,779 420 5.24 31,378 417 5.27 3,617,162 72,683 8.15 3,365,960 71,331 8.41 3,073,221 68,715 8.64 67,428 64,682 60,720 - ------------------------------------------------------------------------------------------------------------------------- 3,549,734 72,683 8.30 3,301,278 71,331 8.57 3,012,501 68,715 8.81 - ------------------------------------------------------------------------------------------------------------------------- 6,162,872 112,904 7.43 5,693,162 109,060 7.60 5,267,619 104,951 7.77 - ------------------------------------------------------------------------------------------------------------------------- 833,945 689,808 664,646 - ------------------------------------------------------------------------------------------------------------------------- $ 6,996,817 $ 6,382,970 $ 5,932,265 - ------------------------------------------------------------------------------------------------------------------------- $ 1,463,556 10,558 2.93% $ 1,264,080 9,126 2.86 $ 1,213,449 9,443 3.09 155,634 729 1.90 159,914 950 2.36 150,198 931 2.46 1,854,590 23,152 5.06 1,720,035 22,775 5.25 1,760,223 23,968 5.40 - ------------------------------------------------------------------------------------------------------------------------- 3,473,780 34,439 4.02 3,144,029 32,851 4.15 3,123,870 34,342 4.36 - ------------------------------------------------------------------------------------------------------------------------- 1,715,715 21,772 5.15 1,504,257 20,444 5.39 1,154,520 16,857 5.79 148,482 2,348 6.41 147,418 2,333 6.28 148,392 2,529 6.76 - ------------------------------------------------------------------------------------------------------------------------- 5,337,977 58,559 4.45 4,795,704 55,628 4.60 4,426,782 53,728 4.82 - ------------------------------------------------------------------------------------------------------------------------- 1,042,679 984,589 936,690 83,315 87,304 79,433 532,846 515,373 489,360 - ------------------------------------------------------------------------------------------------------------------------- $ 6,996,817 $ 6,382,970 $ 5,932,265 - ------------------------------------------------------------------------------------------------------------------------- 54,345 2.98% 53,432 3.00% 51,223 2.95% 3.05 3.58 3.72 3.72 2,334 2,334 2,362 - ------------------------------------------------------------------------------------------------------------------------- 52,011 51,098 48,861 3,430 4,087 4,061 47,465 45,384 43,415 64,826 62,299 58,171 - ------------------------------------------------------------------------------------------------------------------------- 31,220 30,096 30,044 9,983 9,729 10,049 - ------------------------------------------------------------------------------------------------------------------------- $ 21,237 $ 20,367 $ 19,995 - ------------------------------------------------------------------------------------------------------------------------- $ 0.43 $ 0.41 $ 0.40 - ------------------------------------------------------------------------------------------------------------------------- $ 0.38 $ 0.37 $ 0.36 - -------------------------------------------------------------------------------------------------------------------------
PART II. Other Information Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: No. 27.0 Financial Data Schedule filed herewith electronically. No. 27.1 Restated Financial Data Schedule filed herewith electronically. (B) Reports on Form 8-K: No reports on Form 8-K were filed during the three months ended September 30, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BOK FINANCIAL CORPORATION (Registrant) Date: November 15, 1999 /s/ James A. White ----------------- ------------------------------ James A. White Executive Vice President and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from BOK Financial Corporations 10-Q for the period ended September 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000875357 BOK Financial Corporation 1,000 9-mos DEC-31-1999 SEP-30-1999 409,014 0 180,170 15,945 2,454,018 213,125 204,623 4,410,165 75,186 8,174,327 5,147,238 2,163,924 138,238 179,704 0 25 3 545,195 8,174,327 239,302 117,690 3,177 360,169 108,152 189,188 170,981 8,110 (499) 206,259 98,343 66,029 0 0 66,029 1.33 1.18 3.61 17,866 12,757 0 76,730 65,922 5,341 4,970 75,186 75,186 0 0
EX-27.1 3 RESTATED FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from BOK Financial Corporations 10-Q for the period ended September 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000875357 BOK Financial Corporation 1,000 9-mos DEC-31-1998 SEP-30-1998 352,892 0 36,826 22,730 2,100,329 221,329 220,161 3,167,205 63,057 6,169,784 4,003,211 1,332,206 76,611 243,628 0 23 3 214,102 6,169,784 196,240 97,152 2,714 296,106 105,153 156,778 139,328 10,504 6,370 171,696 86,764 59,244 0 0 59,244 1.19 1.06 3.72 15,042 15,714 0 37,087 54,044 5,437 3,945 63,056 63,056 0 0
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