FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
BOK Financial Thrift Plan for Salaried Employees
As of December 31, 2005 and 2004, and for the Year Ended December 31, 2005
BOK Financial Thrift Plan for Salaried Employees
Financial Statements
and Supplemental Schedule
As of December 31, 2005 and 2004,
and for the Year Ended December 31, 2005
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)........11
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, 2005
and 2004, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2005. 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 audit
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, 2005 and 2004, and the changes in its net assets available for
benefits for the year ended December 31, 2005, 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, 2005, 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 29, 2006
2
BOK Financial Thrift Plan for Salaried Employees
Statements of Net Assets Available for Benefits
December 31
2005 2004
-----------------------------------------
Assets
Investments:
BOKF Common Stock $ 22,551,206 $ 22,556,065
American Performance Funds:
Growth Equity Fund - 3,073,008
Cash Management Fund 5,547,193 5,667,853
Intermediate Bond Fund 6,999,242 7,581,527
SEI Stable Asset Fund 10,601,453 10,292,400
American Advantage International Equity Fund - 5,085,328
American Balanced Fund 3,975,819 3,575,620
Neuberger and Berman Genesis Trust Fund 22,626,711 19,232,148
Dodge and Cox Stock Fund 22,013,241 20,247,815
Vanguard Institutional Index 18,770,373 20,492,655
Goldman Sachs Growth Fund 322,749 116,173
American Growth Fund 5,608,011 623,682
Hotchkis and Wiley Midcap Value Fund 2,748,496 1,159,735
T Rowe Price New Horizons 769,431 189,464
American Beacon International Fund 5,956,149 -
Self-directed common stocks 602,999 495,208
Self-directed registered investment companies 710,954 546,489
Self-directed bonds 15,118 -
Bank of Oklahoma, N.A. Managed Allocation Portfolios (MAP):
MAP Conservative Fund 309,197 -
MAP Balanced Fund 1,213,603 -
MAP Moderate Growth Fund 1,935,984 -
MAP Growth Fund 2,522,252 -
MAP Aggressive Growth Fund 1,035,640 -
Participant loans 4,410,900 3,732,706
-----------------------------------------
Total investments 141,246,721 124,667,876
Cash 656,022 599,194
Accrued interest receivable 93,898 240,902
Due from broker 5,307 211,229
-----------------------------------------
Total assets 142,001,948 125,719,201
Liabilities
Due to broker 628,042 728,626
Excess contributions payable 3,731 -
-----------------------------------------
Total liabilities 631,773 728,626
-----------------------------------------
Net assets available for benefits $ 141,370,175 $ 124,990,575
=========================================
See accompanying notes.
3
BOK Financial Thrift Plan for Salaried Employees
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2005
Additions
Investment income:
Interest and dividends $ 2,156,379
Net appreciation in fair value of investments 5,194,309
----------------------
7,350,688
Contributions:
Participants 11,038,246
Employer 3,728,204
Rollovers 2,357,011
----------------------
17,123,461
----------------------
Total additions 24,474,149
Deductions
Benefit payments 7,951,665
Administrative expenses 7,086
Net transfers out of the Plan 135,798
----------------------
8,094,549
----------------------
Net increase 16,379,600
Net assets available for benefits, at beginning of year 124,990,575
----------------------
Net assets available for benefits, at end of year $ 141,370,175
======================
See accompanying notes.
4
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements
December 31, 2005
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) who have attained age 21 and who have completed at
least one year of service (equivalent to 1,000 hours). Effective April 1, 2003,
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. Additionally,
as of April 1, 2003, 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 percent 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). For participants who attained age 50 on or before
December 31, 2005, such participants were allowed to make a pre-tax catch-up
contribution of an additional $4,000 above the maximum allowable by federal
regulation. Participants may elect investment in any of 12 mutual funds, the
Bank of Oklahoma, N.A. Managed Allocation Portfolios (MAP), self-directed common
stocks, bonds, or registered investment companies, and BOKF Common Stock. During
2005, the Employer authorized the following modifications to the investment
selections available to participants: (a) removal of the American Performance
Growth Equity Fund and (b) addition of the American Beacon International and MAP
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 2005, the
entire matching contribution of $3,728,204 was made in cash.
For 2005, 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%
The Employer may, at its sole discretion, make an additional discretionary
contribution to the Plan. There was no discretionary contribution in 2005.
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.
6
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
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, 2005. Repayment is made by payroll withholdings.
Payment of Benefits
A participant who terminated employment with a vested account balance less than
$1,000 ($5,000 prior to March 28, 2005), excluding rollover contributions, will
receive a lump-sum payment. If the participant has a vested balance which
exceeds $1,000 ($5,000 prior to March 28, 2005), 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 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
2005, forfeitures of $61,000 were used to reduce Employer matching
contributions. Additionally, at December 31, 2005 and 2004 forfeitures
outstanding that will be used to reduce future Employer matching contributions
were $24,085 and $39,153, respectively.
7
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
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 and registered investment
companies, 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 MAP fund values are obtained from the MAP
annual audited financial statements. The MAP funds are reported at market value.
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.
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.
8
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
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 will be refunded by December 31, 2006, as required by the
Code.
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 2005, 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 and common stocks and published market prices for
registered investment companies as follows:
Net Appreciation
(Depreciation)
in Fair Value
of Investments
-----------------------
BOKF Common Stock $ (1,256,845)
Registered investment companies 6,088,804
Self-directed common stocks (103,056)
Self-directed registered investment companies 49,099
Self-directed bonds (5,082)
Collective investment trusts 421,389
-----------------------
$ 5,194,309
=======================
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.
9
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
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 the Code and, therefore, the related trust is exempt from
taxation. Subsequent to 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.
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
2005 2004
--------------------- --------------------
Net assets available for benefits per the
financial statements $ 141,370,175 $ 124,990,575
Less: Benefits payable (120,416) (497,611)
--------------------- --------------------
Net assets available for benefits per the Form
5500 $ 141,249,759 $ 124,492,964
===================== ====================
Year ended
December 31,
2005
-------------------
Benefit payments per the financial statements $ 7,951,665
Add: benefits payable at end of year 120,416
Less: benefits payable at beginning of year (497,611)
-------------------
Benefit payments to participants per the Form 5500 $ 7,574,470
===================
Amounts allocated to withdrawn participants are recorded on the Form 5500 for
benefit payments that have been processed and approved for payment prior to
year-end, but not yet paid.
10
BOK Financial Thrift Plan for Salaried Employees
Notes to Financial Statements (continued)
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.
7. Related Parties
BOK Investment Advisors, Inc. (BOKIA), a wholly owned subsidiary of Bank of
Oklahoma, N.A. (BOk), serves as investment advisor 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. Effective July 1, 2004, BOKIA began serving as
the AP Funds administrator. 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
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. Managed Allocation Portfolio (MAP) Funds as investment options. The MAP
Funds include five different managed funds designed to meet different risk
tolerances and years to retirement. The portfolios are comprised of different
asset classes, capitalizations and investment styles. BOKIA also serves as
investment advisor to the MAP Funds.
8. Subsequent Event
Effective April 1, 2006, the Company matching contribution changed as a result
of modifications to both the Plan and the BOK Financial Pension Plan. The
Company will begin matching participant contributions up to 6% of the employee's
compensation. Additionally, the Employer match will range from $.50 to $2.00 for
each dollar of the participant's contribution based on the participant's years
of service. Matching contributions for the 2006 plan year are limited to a
certain dollar amount (ranging from $6,050 to $22,550) based on the
participant's year of service. 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. In addition to the contribution changes, the limit on
after-tax contributions will change to 6% of the participant's compensation.
Supplemental Schedule
11
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, 2005
(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 $ 22,551,206
* American Performance Funds Cash Management Fund 5,547,193
Intermediate Bond Fund 6,999,242
SEI Funds Stable Asset Fund 10,601,453
American Balanced Fund 3,975,819
Neuberger and Berman Genesis Trust Fund 22,626,711
Dodge and Cox Stock Fund 22,013,241
Vanguard Institutional Index 18,770,373
Goldman Sachs Growth Fund Stock Fund 322,749
American Growth Fund Stock Fund 5,608,011
Hotchkis and Wiley Midcap Value Fund Stock Fund 2,748,496
T Rowe Price New Horizons Stock Fund 769,431
American Beacon International Fund 5,956,149
* Bank of Oklahoma, N.A. Managed Allocation
Portfolio (MAP) MAP Conservative Fund 309,197
MAP Balanced Fund 1,213,603
MAP Moderate Growth Fund 1,935,984
MAP Growth Fund 2,522,252
MAP Aggressive Growth Fund 1,035,640
Self-directed common stocks, bonds and Common stocks and registered
registered investment companies investment companies 1,329,071
* Participant loans Interest rates ranging from 4.00
percent to 13.00 percent 4,410,900
----------------------
$ 141,246,721
======================
*Indicates Party-in-interest to the Plan.
Column (d) is not applicable as all investments are participant directed.