FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
BOK Financial Thrift Plan for Hourly Employees
As of December 31, 2006 and 2005, and for the Year Ended December 31, 2006
BOK Financial Thrift Plan for Hourly 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 Hourly Employees
We have audited the accompanying statements of net assets available for benefits
of the BOK Financial Thrift Plan for Hourly 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 Hourly Employees
Statements of Net Assets Available for Benefits
December 31
2006 2005
-------------------------------------
Assets
Investments:
BOK Financial Corporation Common Stock $ 92,379 $ 95,002
American Performance Funds:
Cash Management Fund 175,866 142,085
Intermediate Bond Fund 37,031 34,857
SEI Stable Asset Fund 127,523 128,099
International Strategic Allocation Fund 46,930 -
American Balanced Fund 30,266 21,532
Neuberger and Berman Genesis Trust Fund 93,957 89,126
Dodge and Cox Stock Fund 114,699 125,884
Vanguard Institutional Index 75,438 84,259
Vanguard Mid-Cap Index 2,936 -
American Growth Fund of America 27,022 24,424
Goldman Sachs Growth Opportunity Fund - 455
Hochkis and Wiley Midcap Valuation Fund 10,634 1,512
T. Rowe Price New Horizons 25,550 6,243
American Beacon International Fund - 27,934
Bank of Oklahoma, N.A. Managed Allocation Portfolios (MAP):
MAP Conservative Fund 1,381 655
MAP Balanced Fund 4,726 174,720
MAP Moderate Growth Fund 243,050 9,397
MAP Growth Fund 13,175 4,116
MAP Aggressive Growth Fund 12,945 8,517
Participant Loans 26,198 7,993
-------------------------------------
Total investments 1,161,706 986,810
Cash 13,054 15,078
Due from brokers 1,859 -
Accrued interest receivable 1,475 556
Employee contribution receivable 45 -
Employer contribution receivable 130,450 -
-------------------------------------
Total assets 1,308,589 1,002,444
Liabilities
Due to broker 7,823 9,032
-------------------------------------
Net assets available for benefits $ 1,300,766 $ 993,412
=====================================
See accompanying notes.
3
BOK Financial Thrift Plan for Hourly Employees
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2006
Additions
Investment income:
Interest and dividends $ 22,550
Net appreciation in fair value of investments 91,409
------------------
113,959
Contributions:
Participant 215,231
Employer 213,831
Rollover 773
Net transfers into the Plan 8,143
------------------
Total additions 551,937
Deductions
Benefit payments 244,583
------------------
Net increase 307,354
Net assets available for benefits, at beginning of year 993,412
------------------
Net assets available for benefits, at end of year $ 1,300,766
==================
See accompanying notes.
4
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements
December 31, 2006
1. Description of Plan
The following description of the BOK Financial Thrift Plan for Hourly 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 employees of BOK Financial
Corporation (BOKF) and its subsidiaries and affiliates (collectively, the
Employer or Company) who are compensated on an hourly basis, except those
covered under a collective bargaining agreement and those treated as independent
contractors. 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 and $4,000 for the years ended December 31,
2006 and 2005, respectively, 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 investment in any of 12 registered investment companies,
the Bank of Oklahoma, N.A. Managed Allocation Portfolios (MAP), which are
collective investment funds, self-directed common stocks, bonds, or registered
investment companies, and BOKF common stock. During 2006, the Employer
authorized the following modification 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 Hourly 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 $83,381 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
year 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%
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. The special contribution for the 2006 Plan year was $130,450.
The Employer may in its sole discretion, make an additional discretionary
contribution to the Plan. There was no discretionary contribution in 2006.
6
BOK Financial Thrift Plan for Hourly 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.
Participant Loans
Participants may borrow against their accounts in amounts 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 balance in the participant's account. Interest rates are based on
the Chase Prime Rate and range from 4.00 percent to 8.25 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 employment after his or her 65th birthday or attaining age 50 and
completing ten years of service, shall be entitled to elect monthly, quarterly,
semi-annual 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.
7
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Forfeitures
Forfeited balances of terminated participants' nonvested accounts are utilized
to pay administrative costs or to reduce future Employer contributions. During
2006, forfeitures of $3,000 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 $10,520 and
$5,990, 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 of the Plan, except for loan
origination fees, which are paid by the participants.
Investment Valuation and Income Recognition
Shares of registered investment companies are valued at published market prices,
which represent the net asset value of shares held by the Plan at year-end. The
BOKF Common Stock is valued at the quoted market price. The MAP funds are
collective trust funds and are valued at fair value based on the fair values of
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.
8
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
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.
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, published market prices for
9
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
3. Investments (continued)
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 $ 17,081
Registered investment companies 50,767
Collective investment trusts 23,561
---------------------------
$ 91,409
===========================
The fair value 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
dated April 1, 2002, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the Code) and, therefore, the related trust is exempt
from taxation. Subsequent to this determination by the Internal Revenue Service,
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 is a reconciliation of 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 $ 1,300,766 $ 993,412
Less: Benefits payable (13,008) -
------------------ -----------------
Net assets available for benefits per the Form 5500 $ 1,287,758 $ 993,412
================== =================
10
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
5. Reconciliation of Financial Statements to the Form 5500 (continued)
The following is a reconciliation of benefit payments per the financial
statements to the Form 5500:
Year Ended
December 31, 2006
------------------
Benefit payments per financial statements $ 244,583
Add: Benefits payable at end of year 13,008
------------------
Benefit payments to participants per the Form 5500 $ 257,591
==================
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.
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.
11
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
7. Related Parties (continued)
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 Events
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 Hourly Employees
EIN: 73-0780382 Plan #: 004
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 $ 92,379
* American Performance Funds Cash Management Fund 175,866
Intermediate Bond Fund 37,031
SEI Funds Stable Asset Fund 127,523
International Strategic Allocation Fund 46,930
American Balanced Fund 30,266
Neuberger and Berman Genesis Trust Fund 93,957
Dodge and Cox Stock Fund 114,699
Vanguard Institutional Index 75,438
Vanguard Mid-Cap Index 2,936
American Growth Fund of America 27,022
Hochkis and Wiley Midcap Valuation Fund 10,634
T. Rowe Price New Horizons 25,550
* Bank of Oklahoma N.A.,
Managed Allocation Portfolios MAP Conservative Fund 1,381
MAP Balanced Fund 4,726
MAP Moderate Growth Fund 243,050
MAP Growth Fund 13,175
MAP Aggressive Growth Fund 12,945
* Participant Loans Interest rates ranging from 4.00
percent to 8.25 percent 26,198
-------------------
$ 1,161,706
===================
*Indicates Party-in-interest to the Plan
Column (d) is not applicable as all investments are participant directed.