FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
BOK Financial Thrift Plan for Salaried Employees
As of December 31, 2006 and 2005, and for the Year Ended December 31, 2006
BOK Financial Thrift Plan for Salaried Employees
Financial Statements
and Supplemental Schedule
As of December 31, 2006 and 2005,
and for the Year Ended December 31, 2006
Contents
Report of Independent Registered Public Accounting Firm.....................1
Audited Financial Statements
Statements of Net Assets Available for Benefits.............................2
Statement of Changes in Net Assets Available for Benefits...................3
Notes to Financial Statements...............................................4
Supplemental Schedule
Schedule H; Line 4i--Schedule of Assets (Held at End of Year)...............12
1
Report of Independent Registered Public Accounting Firm
The Plan Administrative Committee
BOK Financial Thrift Plan for Salaried Employees
We have audited the accompanying statements of net assets available for benefits
of the BOK Financial Thrift Plan for Salaried Employees as of December 31, 2006
and 2005, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2006. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2006 and 2005, and the changes in its net assets available for
benefits for the year ended December 31, 2006, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2006, is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Tulsa, Oklahoma
June 27, 2007
2
BOK Financial Thrift Plan for Salaried Employees
Statements of Net Assets Available for Benefits
December 31
2006 2005
-----------------------------------------
Assets
Investments:
BOKF Common Stock $ 24,683,494 $ 22,551,206
American Performance Funds:
Cash Management Fund 7,530,587 5,547,193
Intermediate Bond Fund 7,647,629 6,999,242
SEI Stable Asset Fund 9,827,325 10,601,453
International Strategic Allocation Fund 9,535,140 -
American Balanced Fund 4,624,876 3,975,819
Neuberger and Berman Genesis Trust Fund 23,080,679 22,626,711
Dodge and Cox Stock Fund 29,640,539 22,013,241
Vanguard Institutional Index 20,663,716 18,770,373
Vanguard Mid-Cap Index 958,959 -
Goldman Sachs Growth Fund - 322,749
American Growth Fund 7,294,052 5,608,011
Hotchkis and Wiley Midcap Value Fund 4,320,540 2,748,496
T Rowe Price New Horizons 2,049,374 769,431
American Beacon International Fund - 5,956,149
Self-directed common stocks 740,582 602,999
Self-directed registered investment companies 878,643 710,954
Self-directed bonds 32,812 15,118
Bank of Oklahoma, N.A. Managed Allocation Portfolios (MAP):
MAP Conservative Fund 508,826 309,197
MAP Balanced Fund 3,034,736 1,213,603
MAP Moderate Growth Fund 3,993,813 1,935,984
MAP Growth Fund 3,010,532 2,522,252
MAP Aggressive Growth Fund 3,211,645 1,035,640
Participant loans 4,825,194 4,410,900
-----------------------------------------
Total investments 172,093,693 141,246,721
Cash 962,144 656,022
Accrued interest receivable 123,864 93,898
Due from broker 28,149 5,307
Employer contribution receivable 868,500 -
-----------------------------------------
Total assets 174,076,350 142,001,948
Liabilities
Due to broker 925,312 628,042
Excess contributions payable - 3,731
-----------------------------------------
Total liabilities 925,312 631,773
-----------------------------------------
Net assets available for benefits $ 173,151,038 $ 141,370,175
=========================================
See accompanying notes.
3
BOK Financial Thrift Plan for Salaried Employees
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2006
Additions
Investment income:
Interest and dividends $ 2,838,873
Net appreciation in fair value of investments 17,057,418
----------------------
19,896,291
Contributions:
Participants 13,428,171
Employer 8,186,947
Rollovers 1,286,079
----------------------
22,901,197
----------------------
Total additions 42,797,488
Deductions
Benefit payments 10,954,806
Administrative expenses 11,696
Net transfers out of the Plan 50,123
----------------------
11,016,625
----------------------
Net increase 31,780,863
Net assets available for benefits, at beginning of year 141,370,175
----------------------
Net assets available for benefits, at end of year $ 173,151,038
======================
See accompanying notes.
4
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements
December 31, 2006
1. Description of Plan
The following description of the BOK Financial Thrift Plan for Salaried
Employees (the Plan) provides only general information. Participants should
refer to the Summary Plan Description or the Plan document for a more complete
description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all salaried employees of BOK
Financial Corporation (BOKF) and its subsidiaries and affiliates (collectively,
the Employer or Company). An eligible employee may enter the Plan on the first
day of the month following the date the employee is credited with one full month
of service. All new eligible employees are automatically enrolled in the Plan at
a three percent contribution rate unless the employee designates on the
enrollment form not to participate or to participate at another allowable
contribution rate. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
Contributions
Participants may elect to contribute a percentage of their compensation up to
the maximum allowable by federal regulation (as defined by the Plan) on a
pre-tax basis pursuant to a salary reduction agreement filed with the Plan
administrator. In addition, participants may make after-tax contributions which
shall not exceed 5% of each participant's compensation; however, the combination
of pre-tax and after-tax contributions cannot be more than the annual legal
limit on the total amount that may be contributed to this type of plan (as
defined by the Plan). Effective April 1, 2006, participants may make after-tax
contributions not to exceed 6% of each participant's compensation not to exceed
the annual legal limit. For participants who attained age 50 on or before
December 31, 2006, such participants were allowed to make a pre-tax catch-up
contribution of an additional $5,000 for the year ended December 31, 2006 above
the maximum allowable by federal regulation. Also effective April 1, 2006,
participants may make Roth 401(k) contributions to the Plan not to exceed the
annual legal limit.
Participants may elect to invest in any of 12 registered investment companies,
the Bank of Oklahoma, N.A. Managed Allocation Portfolios (MAP), which are
collective investment trusts, self-directed common stocks, bonds, or registered
investment companies, and BOKF Common Stock. During 2006, the Employer
authorized the following modifications to the investment selections available to
participants: (a) removal of the Goldman Sachs Growth and American Beacon
International Funds and (b) addition of the International Strategic Allocation
and Vanguard Mid-Cap Index Funds.
5
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
The Employer contributes a matching contribution to the Plan. The matching
contribution may be made in cash or in shares of BOKF Common Stock. In 2006, the
entire matching contribution of $7,318,447 was made in cash.
Through March 31, 2006, the Employer matching contribution ranged from $.40 to
$1.00 for each dollar of the participant's contributions, up to five percent of
compensation, based on each participant's years of service as follows:
Years of Service Matching Percentage
------------------------------------------ ---------------------------
Less than four years 40%
At least four, but less than ten years 60%
At least ten, but less than fifteen years 80%
Fifteen or more years 100%
Effective April 1, 2006, the Plan document was amended and the Employer matching
contribution ranged from $.50 to $2.00 for each dollar of the participant's
contributions, up to six percent of compensation, based on each participant's
years of service as follows:
Years of Service Matching Percentage
------------------------------------------ ---------------------------
Less than four years 50%
At least four, but less than ten years 100%
At least ten, but less than fifteen years 150%
Fifteen or more years 200%
The Company will also make a special contribution for participants making less
than $40,000. This special contribution is $750 for participants making less
than $30,000 and phases out for participants making $30,000 to $40,000. The
special contribution for the 2006 plan year was $868,500.
The Employer may, at its sole discretion, make an additional discretionary
contribution to the Plan. There was no discretionary contribution in 2006.
6
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocations of (a) the Employer's contribution and (b) Plan earnings and charged
with administrative expenses, if applicable. Allocations are based on
participant earnings or account balances, as defined by the Plan. The benefit to
which a participant is entitled is the benefit that can be provided from the
participant's vested account.
Vesting
Participants vest in Employer matching contributions based upon years of
service, as defined by the Plan. Participants are 100 percent vested upon
completion of five years of service and are immediately vested in their deferred
(pre-tax) contributions, after-tax contributions, and the actual earnings
thereon.
Loans
Participants may borrow against their accounts in amounts of not less than
$1,000 and not to exceed the lesser of $50,000 or 50 percent of the
participant's vested account balance. Loans will bear interest based on the
current banking prime rate when the loan is requested and may not exceed a
five-year term, unless the proceeds are used to acquire the primary residence of
the participant, in which case the maximum term may be 25 years. The loans are
secured by the balances in the participant's account. Interest rates are based
on the Chase Prime Rate and range from 4.00 percent to 13.00 percent at December
31, 2006. Repayment is made by payroll withholdings.
Payment of Benefits
A participant who terminated employment with a vested account balance less than
$1,000, excluding rollover contributions, will receive a lump-sum payment. If
the participant has a vested balance which exceeds $1,000, excluding rollover
contributions, and has not elected payment to another eligible retirement plan
in a direct rollover or to receive payment directly, the Plan will pay the
distribution in a direct rollover to an individual retirement account designated
by the Plan Administrator. In lieu of lump-sum payment, a participant who
terminates
7
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
employment after his or her 65th birthday or attaining age 50 and completing ten
years of service, shall be entitled to elect monthly, quarterly, semiannual, or
annual installment payments to be paid over a period not to exceed 10 years from
the benefit commencement date. The installments may be accelerated at the
direction of the participant.
Forfeitures
Forfeited balances of terminated participants' nonvested accounts are utilized
to pay administrative costs or to reduce future Employer contributions. During
2006, forfeitures of $76,000 were used to reduce Employer matching
contributions. Additionally, at December 31, 2006 and 2005, forfeitures
outstanding that will be used to reduce future Employer matching contributions
were $22,617 and $24,085, respectively.
Plan Termination
The Employer expects to continue the Plan indefinitely. However, the Employer
reserves the right to discontinue the Plan or to amend the Plan, in whole or in
part, from time-to-time. In the event of Plan termination, participants will
become 100 percent vested in their accounts.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of
accounting. Benefit payments are recorded when paid.
Administrative Expenses
The Employer pays all administrative expenses except for loan origination fees
and fees related to self-directed common stocks, registered investment
companies, and bonds, which are paid by the participants.
Investment Valuation and Income Recognition
Shares of registered investment companies are valued at fair value based on
published market prices, which represent the net asset value of shares held by
the Plan at year-end. The BOKF Common Stock, other common stocks and bonds are
valued at the quoted market price. The
8
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
MAP funds are collective trust funds and are valued at fair value based on the
underlying investments of such funds as determined by BOKF. Participant loans
receivable are valued at their outstanding balances, which approximates fair
value.
Purchases and sales of securities are recorded on a trade-date basis. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
In December 2005, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive
Investment Contracts Held by Certain Investment Companies Subject to the AICPA
Investment Company Guide and Defined-Contribution Health and Welfare and Pension
Plans (the FSP). The FSP defines the circumstances in which an investment
contract is considered fully benefit-responsive and provides certain reporting
and disclosure requirements for funds that invest in such assets. The Plan's
investments include the SEI Stable Asset Fund (SEI), a collective trust that
invests in a variety of fully benefit-responsive investment contracts. The Plan
adopted the FSP as of December 31, 2006. However, the adoption did not have a
material effect on the Plan's financial statements as the Plan's investments in
SEI are stated at contract value, which approximates fair value, as of December
31, 2006 and 2005. Contract value represents contributions made, plus earnings,
less withdrawals and administrative expenses.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Effect of Recently Issued Statements of Financial Accounting Standards
In September 2006, the FASB issued Statement No. 157, Fair Value Measurements
(FAS 157). This statement defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. FAS
157 is effective for the Plan in 2007. The Plan is currently evaluating the
impact on FAS 157 on its financial statements.
Excess Contributions Payable
In order to be in compliance with the nondiscrimination rules under the Internal
Revenue Code (the Code), the Plan is required to return excess contributions to
certain highly compensated employees. As of December 31, 2005, the Plan recorded
a liability in the amount of $3,731. The amounts payable to participants as of
December 31, 2005 were refunded by December 31, 2006, as required by the Code.
9
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
There were no excess contributions as of December 31, 2006.
3. Investments
The Plan's investments are held by a bank-administered trust fund at Bank of
Oklahoma, N.A. Trust Division (the Trustee). During 2006, the Plan's investments
(including investments purchased and sold, as well as held during the year)
appreciated (depreciated) in fair value as determined by quoted market prices
for BOKF Common Stock, bonds and common stocks; published market prices for
registered investment companies; and the MAP funds annual audited financial
statements for collective investment trusts as follows:
Net Appreciation
(Depreciation)
in Fair Value
of Investments
-----------------------
BOKF Common Stock $ 4,532,022
Registered investment companies 11,267,949
Self-directed common stocks (73,480)
Self-directed registered investment companies 97,482
Self-directed bonds 4,914
Collective investment trusts 1,228,531
-----------------------
$ 17,057,418
=======================
The fair values of all individual investments, including those that represent
five percent or more of the Plan's net assets, are separately identified in the
statements of net assets available for benefits.
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated April 1, 2002, stating that the Plan is qualified under Section
401(a) of the Code and, therefore, the related trust is exempt from taxation.
Subsequent to this determination by the IRS, the Plan was amended. Once
qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Plan administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan, as amended, is qualified and the related
trust is tax-exempt.
10
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
5. Reconciliation of Financial Statements to the Form 5500
The following reconciles net assets available for benefits per the financial
statements to the Form 5500:
December 31
2006 2005
--------------------- ---------------------
Net assets available for benefits per the financial
statements $173,151,038 $141,370,175
Less: Benefits payable (335) (120,416)
--------------------- ---------------------
Net assets available for benefits per the Form 5500
$173,150,703 $141,249,759
===================== =====================
Year Ended
December 31,
2006
----------------------
Benefit payments per the financial statements $ 10,954,806
Add: Benefits payable at end of year 335
Less: Benefits payable at beginning of year (120,416)
----------------------
Benefit payments to participants per the Form 5500 $ 10,834,725
======================
Benefits payable are recorded on the Form 5500 for payments to participants that
have been processed and approved for payment prior to December 31, but not yet
paid.
6. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are
exposed to various risks such as interest rate, market and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statements of net
assets available for benefits.
11
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
7. Related Parties
AXIA Investment Management, Inc. (AXIA), formerly BOK Investment Advisors, Inc.,
a wholly owned subsidiary of Bank of Oklahoma, N.A. (BOk), serves as investment
advisor and administrator to American Performance Funds (AP Funds). AP Funds is
a diversified, open-ended, investment company established in 1987 as a business
trust under the Investment Act of 1940. BOk serves as custodian for AP Funds.
BOK Financial offers the AP Funds products to customers and employees, in the
ordinary course of business, through its brokerage and trading, employee benefit
plan and trust services, as well as to the public. Additionally, a portion of
the Plan's assets are invested in Company Stock. Since the Company is the Plan
Sponsor, investments involving Company Common Stock qualify as party-in-interest
transactions. All of these transactions are exempt from prohibited transaction
rules.
Effective January 1, 2005, the Plan was authorized to include Bank of Oklahoma,
N.A. MAP funds as investment options. The MAP funds include five different
managed funds designed to meet different risk tolerances and years to
retirement. The MAP funds are comprised of different asset classes,
capitalizations and investment styles. AXIA also serves as investment advisor to
the MAP funds.
8. Subsequent Event
Effective May 1, 2007, participants are eligible to make after-tax contributions
on the first day of the month following one month of service. Additionally, the
24-month restriction for after-tax in-service withdrawals was eliminated.
Supplemental Schedule
12
BOK Financial Thrift Plan for Salaried Employees
EIN: 73-0780382 Plan #: 002
Schedule H; Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2006
(c)
(b) Description of Investments, (e)
Identity of Issue, Including Maturity Date, Rate Current
(a) Borrower, Lessor, or Similar Party of Interest, or Maturity Value Value
--------------------------------------------------------------------------------------------------------------------
* BOK Financial Corporation BOKF Common Stock $ 24,683,494
* American Performance Funds Cash Management Fund 7,530,587
Intermediate Bond Fund 7,647,629
SEI Funds Stable Asset Fund 9,827,325
International Strategic Allocation Fund 9,535,140
American Balanced Fund 4,624,876
Neuberger and Berman Genesis Trust Fund 23,080,679
Dodge and Cox Stock Fund 29,640,539
Vanguard Institutional Index 20,663,716
Vanguard Mid-Cap Index 958,959
American Growth Fund of America 7,294,052
Hotchkis and Wiley Midcap Valuation Fund 4,320,540
T Rowe Price New Horizons 2,049,374
* Bank of Oklahoma, N.A. Managed Allocation PortfolioMAP Conservative Fund 508,826
MAP Balanced Fund 3,034,736
MAP Moderate Growth Fund 3,993,813
MAP Growth Fund 3,010,532
MAP Aggressive Growth Fund 3,211,645
Self-directed common stocks, bonds and registered Common stocks, bonds and registered
investment companies investment companies 1,652,037
* Participant loans Interest rates ranging from 4.00
percent to 13.00 percent 4,825,194
----------------------
$ 172,093,693
======================
*Indicates Party-in-interest to the Plan.
Column (d) is not applicable as all investments are participant directed.