FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
BOK Financial Thrift Plan for Hourly Employees
As of December 31, 2005 and 2004, and for the Year Ended December 31, 2005
BOK Financial Thrift Plan for Hourly 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 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, 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 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, 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 Hourly Employees
Statements of Net Assets Available for Benefits
December 31
2005 2004
------------------------------------
Assets
Investments:
BOK Financial Corporation Common Stock $ 95,002 $ 102,964
American Performance Funds:
Growth Equity Fund - 19,498
Cash Management Fund 142,085 89,500
Intermediate Bond Fund 34,857 29,203
SEI Stable Asset Fund 128,099 21,022
American Advantage International Equity Fund - 17,851
American Balanced Fund 21,532 17,866
Neuberger and Berman Genesis Trust Fund 89,126 59,506
Dodge and Cox Stock Fund 125,884 99,180
Vanguard Institutional Index 84,259 49,495
American Growth Fund of America 24,424 56
Goldman Sachs Growth Opportunity Fund 455 126
Hochkis and Wiley Midcap Valuation Fund 1,512 570
T. Rowe Price New Horizons 6,243 298
American Beacon International Fund 27,934 -
Bank of Oklahoma, N.A. Managed Allocation Portfolios (MAP):
MAP Conservative Fund 655 -
MAP Balanced Fund 174,720 -
MAP Moderate Growth Fund 9,397 -
MAP Growth Fund 4,116 -
MAP Aggressive Growth Fund 8,517 -
Participant Loans 7,993 13,123
------------------------------------
Total investments 986,810 520,258
Cash 15,078 9,024
Accrued interest receivable 556 620
------------------------------------
Total assets 1,002,444 529,902
Liabilities
Due to broker 9,032 5,697
------------------------------------
Net assets available for benefits $ 993,412 $ 524,205
====================================
See accompanying notes.
3
BOK Financial Thrift Plan for Hourly Employees
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2005
Additions
Investment income:
Interest and dividends $ 14,776
Net appreciation in fair value of investments 29,077
------------------
43,853
Contributions:
Participant 209,318
Employer 45,411
Rollover 188,010
Transfers into the Plan 103,710
------------------
Total additions 590,302
Deductions
Benefit payments 121,095
Net increase 469,207
Net assets available for benefits, at beginning of year 524,205
------------------
Net assets available for benefits, at end of year $ 993,412
==================
See accompanying notes.
4
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements
December 31, 2005
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 have attained age 21 and one year of service
(equivalent to 1,000 hours) and who are compensated on an hourly basis, except
those covered under a collective bargaining agreement and those treated as
independent contractors. 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 or registered investment companies, and BOKF Common Stock. During 2005,
the Employer authorized the following modification 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 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 2005, the
entire matching contribution of $45,411 was made in cash.
For 2005, the Employer matching contribution ranges from $.40 to $1.00 for each
dollar of the participant's contribution, 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 in its sole discretion, make an additional discretionary
contribution to the Plan. There was no discretionary contribution in 2005.
During 2005, rollovers and transfers into the Plan were $188,010 and $103,710,
respectively. The rollovers relate primarily to one participant that rolled over
the participant's balance in a previous employer's plan and the transfers relate
primarily to one employee that transferred from salaried to hourly status.
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.
6
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
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 7.00 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,
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.
Forfeitures
Forfeited balances of terminated participants' nonvested accounts are utilized
to pay administrative costs or to reduce future Employer contributions. During
2005, forfeitures of $1,729 were used to reduce Employer matching contributions.
Additionally, at
7
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
1. Description of Plan (continued)
December 31, 2005 and 2004 forfeitures outstanding that will be used to reduce
future Employer matching contributions were $5,990 and $5,822, 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 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 Hourly Employees
Notes to Financial Statements (continued)
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 published market prices for registered investment
companies as follows:
Net Appreciation
(Depreciation) in Fair
Value of Investments
--------------------------
BOK Financial Corporation Common Stock $ (4,330)
Registered investment companies 28,126
Collective Investment trusts 5,281
--------------------------
$ 29,077
==========================
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 sponsor has
indicated that it will take the necessary steps, if any, to bring the Plan's
operations into compliance with the Code.
9
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
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
2005 2004
----------------- ----------------
Net assets available for benefits
per the financial statements $ 993,412 $ 524,205
Less: Benefits payable - (17,955)
----------------- ----------------
Net assets available for benefits per the Form 5500 $ 993,412 $ 506,250
================= ================
The following is a reconciliation of benefit payments per the financial
statements to the Form 5500:
Year ended
December 31, 2005
-------------------
Benefit payments per financial statements $ 121,095
Add: Benefits payable at end of year -
Less: Benefits payable at beginning of year (17,955)
-------------------
Benefit payments to participants per the Form 5500 $ 103,140
===================
Benefits payable are recorded on the Form 5500 for payments to participants who
requested payment prior to December 31, but had not been paid as of that date.
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.
10
BOK Financial Thrift Plan for Hourly Employees
Notes to Financial Statements (continued)
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 services as
investment advisor to the MAP Funds.
8. Subsequent Events
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 Hourly Employees
EIN: 73-0780382 Plan #: 004
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 $ 95,002
* American Performance Funds Cash Management Fund 142,085
Intermediate Bond Fund 34,857
SEI Funds Stable Asset Fund 128,099
American Balanced Fund 21,532
Neuberger and Berman Genesis Trust Fund 89,126
Dodge and Cox Stock Fund 125,884
Vanguard Institutional Index 84,259
American Growth Fund of America 24,424
American Beacon International Fund 27,934
Goldman Sachs Growth Opportunity Fund 455
Hochkis and Wiley Midcap Valuation Fund 1,512
T. Rowe Price New Horizons 6,243
* Bank of Oklahoma N.A.,
Managed Allocation Portfolios MAP Conservative Fund 655
MAP Balanced Fund 174,720
MAP Moderate Growth Fund 9,397
MAP Growth Fund 4,116
MAP Aggressive Growth Fund 8,517
* Participant Loans Interest rates ranging from 4.00
percent to 7.00 percent 7,993
-------------------
$ 986,810
===================
*Indicates Party-in-interest to the Plan
Column (d) is not applicable as all investments are participant directed.