BOK Financial Corporation's goal is to be the financial institution of first choice in our chosen markets. By delivering our best to our customers, employees. and communities, we d l 1 maximize long term value for our shareholders. WE VALUE OUR P E O P L E WE VALUE OUR CUSTOMERS WE ARE COMMITTED TO THE COMMUNITIES WE SERVE < O l < l ~ O I i i s1 ' R A T E G I E S. l < i l I O * < R I G H T RESULTS. C. Fred Ball, Jr, Chdimim R CEO Hank olTexq hA Sharon J. Bell \$anaging Partner Rnger; & Pel1 Peter C. Boylan, Ill Pmident CEO R Director Likrty Rroadband heractive 'IT Joseph E. Cappy Clrainnzi, President 8. CEO Dollar Tlirifw .4utomoliw Group Luke R. Corbea Chammi & CEO Kerr-McGe Corpomion William E. Durren Senior Chairman American Fidelity Carp. James 0. Goodvcin Chef Executive Officer The Oklahoma Eagle Publishing Cumpaiiy, Inc. 1J.C Right Leadership BOK Financial Board of Directors Robert ti. Greer Vice Chainnan Hank dTexa5, N.A. David E GrifGn President & General Manager Griffin Telnlsion, 112 k'. Bums Hugis Vice Chailllldn HOti Financial Corporation and Baik of Oklahoma, N ti. Eugene A. Harris Executive Vice Pmident BOK Finaicial Coqioratioii and Uaik of Okidionia. U i i Howard E. Janaen Poniier President & CEO T'illimc Communicathins E. Carey Joullian, lV President & CEO Yustang Fuel Cnq~oration tieoqe B. Kaiser Chainimi BOK Financial Corporatiorr and Rank of Oklahoma. '4 A. David L. Kyle Chairman, I'resllent & CEO ONEOK. Inc Robert J. LaFortune Personal Ini~itinents Philip C. Lauinger, Jr. Chaimiaii &CEO Lauinger Publishing Co. John C. Lopez Chairman R CEO Inpope/ Foods. Inc. Stanley A. Iybarger President & CEO K0)K Financial Corporation aid h l k Of Oklahoma, K.A Steven J. Malcolm Chaininn, P w i h t & CEO Villiams Paula Marshall-Chapman im Eama Companies F r d A. McPhenon R a i d Chairn~dn & CEO tiemMcGe Corporation Stsen E. Moore Chairman. President R CEO OGE b e r m Cnrp. J. L a r ~ Nichols Chairman. President R CEO Devon Energy Coqoratioii Robert L. Parker, Sr, Chairman of the Bud Parker Drilling Company James A. Robinson Personal 1iivestnient.s L. Francis Rooney, III Chairman and CEO Manhami ~OIlStNCtiOIl COmpan) scan E z m o w Pmldent Foreman IllvesLllient filnitdl LLC Right values. Right strategies, Right results. The theme of this year's annual report to shareholders seems fitting as we look back at our past achievements and ahead to anticipated successes on behalf of our stockholders: customers and employees. Since the compan)T's inception 12 years agol our aim at BOK Financial Corporation has been to produce consistently superior returns for investors, To do this we have utilized strategies that promote growth at home, expansion into high-gro%Th markets, superior service to middle market commercial clients and a dive% revenue base to help us succeed through economic cycles. At no time in the company's histoy has the prudence of our approach been more evident than in 2002, when we reported record net income of $150 million, an increase of 29 percent over the previous year. Yet, behind all of our strategies and accomplishments are core beliefs that govern what we do and how we think, year in and year out. Simply put. our values dictate that we do things right. We take a discreet, forthright approach in applying accounting rules and standards to ensure our financial reports accurately and fairly represent the financial condition of the company. We manage our resources and base our decisions on sound ethical and legal principles. Our outlook is evident in the caliber of our hoard of directors, the experience and expertise of our management team and the talent and dedication of front-line employees who are ultimately responsible for our achievements. The BOK Financial board of directors consists of veteran business professionals aud corporate and conimuniv leaden whose integrig expertise and business acumen set the tone for our success. Our managers demonstrate seasoned, insightful judgment to devise and execute progressive strategies. Our employees' dedication to quality and innovation is second to none. Our values will can' us fornard as we continue to implement far-sighted strategies that produce solid perforinance across-the- board--even during economic slowdowns. Despite the soft economy, our diluted earnings per share in 2002 rose 27 percent, to $2.48. Total loans grew 10 percent and deposits 18 percent, contributing to gronth in net jnterest revenue of 12 percent Altogether, total revenue rose 18 percent. Non-interest revenue from fees and commissions comprised 41 percent of revenue when excluding gains from sales of securities and derivatives. That puts our diversification of revenue well ahead of comparable banking companies. Total assets increased 10 percent to $12.2 billion, and loans rose to $6.9 billion, with the company experiencing growth in commercial loans, commercial real estate loans and residential mortgage loans. Our loan grouqh was aided by the acquisition of Bank of Tanglewood in Houston and the opening of a Denver loan production office, which enhanced the portfolio by $132 million and $65 million. respectively. Deposits were $8.1 billion at year-end, and deposit growth enabled us to fund asset growth and reduce borrowed funds by $198 million. In the securities portfolio. our strategy of investing for total return served us well in 2002. Gains from the sales of securities and derivatives generated revenue of $65 million, up $38 million from 2001. Total gains included $26 million from a hedge program designed to offset the volatility in the market value of our mortgage servicing rights (MSR). The MSR impairment and associated amortization cosb have increased because of the high volume of mortgage refinancing during times of record low interest rates. BOK Financial adopted a new accounting standard in 2002 that discontinued amortization of goodwill, but even if the standard had been effective during 2001, income growth in 2002 would haire been 22 percent over the previous year. When the MSR accounting charge and the sales of securities and derivatives from both 2001 and 2002 are excluded. the company produced 18 percent growth in net income. Asset quality continued to be evident in 2002 as key measures remained lhrell ahead of peer banks with assets from $7 billion to $20 billion. Nonperforining assets to period-end loans remained relatively steady at 0.84 percent while loan loss reserves were 1.72 percent of period-end loans? compared with 1.59 percent for our peers. Net charge-offs to average loans declined to 0.33 percent for the year from 0.35 percent while the a\'erage for our peers was 0. j7 percent. This pear, we are committed to achieving more success with the expansion in Houston, where we also opened new locations over the past year. The success of our loan production office in Denver is providing us with a solid pla~orm for exploring a full- senice banking presence in that fast-growing metropolitan area. ui'e remain confident that our sound strategies backed by the right values will continue to produce solid results Through it all, we will continue to value our people, our customers and the communities we serve as we cary out our mission of generating optimal long-term returns for our shareholders, y j L l l d < e e o e B. Kaiser Chairinan Stanley A!Lybarg& President and Chief Executive Officer it!<.: 1 1 ' 1 ' ~ ' l ' l < . \ ' i ' l ' ~ ~ l ~ i - l ENHANCE OKLAHOMA LEADERSHIP Over the past five years, south klsa and the adjacent suburb of Jenks 1nv-e experienced a surge of residential construction and commercial development. To serve the bustling area, Branch Manager Cathy Wilson and her staff opened the doors in October on a new Bank of Oklahoma location that brings service even closer to our customers. In just over two months, new deposits and loans there exceeded targets by 96 percent and 162 percent, respectively. A new branch in a growing area is but one example of our resolve to remain the dominant bank in our original market. During the past decade, we emerged as the clear financial services leader in Oklahomawhile our chief rivals sold to large out-of-state banks with distant, impersonal customer sentice. wie offered tiationally competitive products with the personal touch of a community bank, an approach that continues to appeal to businesses and consumers. As a result of our commitment, Bank of Oklahoma has 12 percent of the state's total deposits and an estimated 27 percent of commercial loans, according to SNL DataSourw. That compares with 6 percent of deposits and 7 percent of commercial loans fur our nearest competitors. In Tulsa County alone, we have an estimated 50 percent of the commercial lending market. In Oklahoma Couny, which includes Oklahoma City, our coinmercial lending market share has grown to almost 24 percent. 1ve have 68 full-service locations statewide, including community banks serving Bartlesville, Enid, Eufaula. Grove, Mcillester. Muskogee, Newkirk, Ponca City and Sand Springs. But we refuse to take our Oklahoma lead for granted. Growth in middle market commercial and small business lending remained major priorities in 2002) and we were able to grow total loans 7 percent, despite a slowdown in the overall market. \Ve introduced check cards with logos of the Llniversiv of Oklahoma and Oklahoma State University, which remain popular with customers. Our customers also enjoyed our new Overdraft Privilege"" service on checking accounts. In 200& record low interest rates accelerated loan grow$h at BOk Mortgage. which does business in sir states. The company remains the leading provider of residential mortgages in Oklahoma, accounting for a major portion of statewide originations. In Tulsa County, the mortgage company enjoyed an estimated 22 percent share of all loan fundin9 among the Top 20 lenders, according to public filings. And in 2002 we continued to make strides in Oklahoma Civ, where Vice President Shecyl Eastwood heads up a team of lenders dedicated to expanding market share already estimated at 20 percent. Bank of Oklahoma udl continue to offer convenience, a broader array of products and services and small business and commercial lending initiatives to fuel our growth and enhance our leadership. In 2002, CEO Rich Jochetz and his shareholders at Bank of 'Tanglewood were at a crossroads after six years of rapid growth into a $236 million institution catering to affluent Houstonians and their businesses. The bank could invest millions to introduce additional services and open new locations to keep pace-or successful group of bankers to take the latter course, and the acquisition of Bank of Tanglewood and its merger with Bank of Texas marked the latest milestone in our strategic espansion into high-growth metropolitan areas in neighboring states. find the right merger partner. BOK Financial persuaded this We formed Bank of Texas in 1997 from acquisitions in the Dallas-Fort Worth Metroplex and launched Bank of Tesas-Houston with the purchase of CNBT Bancshares in 2001. Our efforts have allowed us to compete in hvo of the country's most vibrant markets Both Dallas-Fort Worth and Greater Houston had more than 25 percent population growth during the 1990s and now have more than 11 million residents combined. Median incomes are well above the national average. We have acquired established, well-managed institutions, then formed a solid foundation for new growth by combining community banking expertise with a desirable local brand name and our strengths in middle market lending, trust and private financial services. To run our operations, we recruited and retained talented, experienced bankers with strong local roots. Jochetz is now president of Bank of Texas-Houston and; Ralph Williams, formerly of CNBT, is the Houston chairman. Both work in concert with Barry Kelly, executive vice president over corporate banking in the Houston market. Growth didn't stop with acquisitions. Wile we have acquired assets of $1.5 billion in Texas, we have added another $900 inillion in new business as we successfully marketed our products and services. We added locations in 2002, including one in the Dallas suburb of Plano and two in Greater Houston. Bank of Texas has 28 locations; including 12 in the Houston area. We continue to look for new opportunities in other markets, We formed Bank of Albuquerque in 1998 and continue to experience healthy growth in a metro area that accounts for almost half of New Mexico's economic output. In 2002, Bank of Oklahoma opened a loan production office in Denver headed by Senior Vice President Tom Foncannon. At year-end, we had $65 million in loans outstanding, and by January 31, that had grown to more than $100 million. Greater success is expected as we forge ahead with plans to establish a full banking presence in the Denver area, the economic and business hub of Colorado and home to more than 2 million residents. Bank of Texas-Dallas President Toni Swiley keeps his eye on a potentially huge prize in the Dah-Fort Worth Mekopk-more than 3,000 companies v&h revenue from $10 million to $750 million, according to Dun & Bradstreet. 'The bank focuses on about 400 of those, but Swiley and Bank of Texas Chairman and CEO Fred Ball know there's plenly of new business to be won as more middle market companies feel alienated frum merging mega banks Bank of Texas specializes in exceptional customer senice that gives business executives easy access to xcount officers and the banks senior management. Big bank consolidation over the past decade created a void in the crucial middle market, where entrepreneurial companies are in need of responsive bankers. Utilizing the skills we honed financing emerging companies in Oklahoma and Arkansas, BOK Financial implemented a strategy of catering to the commercial middle market as we formed new banks and expanded into high-growth markets in neighboring states. In Dallas-Fort Worth and Greater Houston, the commercial lending outlook is especially promising. Thousands of companies in the Dallas-Fort Worth Metroplex contribute to a gross domestic product of more than $250 billion, 19th largest compared with the worlds nations. Grater Houston's GDP is approaching $245 billion and its middle market compmies seek penonal balking relationships. Despite an economic slowdown in 2002, commercial loan growth attributable to uur Texas operations rose more than 11 percent. In 2002, we made big strides in New Mexico, where there are considerable opportunities in small business and middle market lending. Bank of Albuquerque is competing successfully against the comhy's largest banks by attracting top bank_ng talent and new customer relationships. Commercial loans grew 31 percent in 2002, with commercial real estate loans up 10 percent and total loans rising 17percent, tu $524 million. Bank of Albuquerquewas formedin 1998 when wepptlrchased 17 branch locations from Bank of America with combined loans valued at $172 million. In addition to establishing a fullservice location in Santa Fe, the bank since its founding has recruited the top commercial bankers in the market fmm larger competitors, forming a premier lending group under the direction of Chairman and CEO Greg Symons and President Paul Sowards. We continue to establish new relationships in Northwest Arkansas and in Oklahoma, where we are already the dominant force in the commercial middle market. We are also attracting additional customen by cross-selling loans, treasuq senfces and international banking. Especially appealing are innovative products such as Treasuy Semices' new Netconnect Internet senrice that allows customers to instantly initiate transactions. All these efforts continue to demonstrate our superior semice to :he middle market wherever we do business. For Senior Vice President Pave Sharpe and his staff at 'ItansFund, rapid grow^ has become more the rule than the exception. TransFund started as a sniall, proprietay ATM nehvork in Tulsa in 1976, but i6 growth ha? been especially vibrant since we embarked on a strategy six yeas ago to expand into neighboring states. In 2002: TransFund emerged as the 12th largest electronic funds transfer (EFT) network in the country with transaction volumes in a nine-state area surpassing 100 million for the first time and the number of cardholders exceeding 1.6 million. Visa check card transactions rose 27 percent for the year, and overall transactions were up 18 percent. That capped transaction volume growth of 146 percent over five years with merchant card processing climbing 192 percent. TransFund is an important part of BOK Financial's strategy of dereloping fee-generating business lines that enable the company to expand earnings through economic cycles. In 2002> revenue from fees and commissions grew 12 percent over 2001 and accounted for 41 percent of revenue when excluding gains on sales of securities and derivatives. That compares with a 30 percent average for banks in our peer group. TransFuiid also outperformed the industry according to Thomson's 2003 EFT survey comparing March 2002 to hlarch 2001. Our volumes were up 19 percent versus an industry average of 15 percent. Sharpe and his staff served 325 financial institutions, gaining ground in spite of the financial industry's ongoing consolidation Our Trust Division dates from the founding in 1918 of Oklahoma's first trust company and continues to pioneer revenue- generating products Senior Vice President J o h n Schaub, manager of Institutional and Employee Benefits Trust in Rlsa, sees first-hand the role that innovative products play in meeting our customers' needs. I&EH initiated a self-directed 401(k) plan that allows participants to allocate their assets among mutual funds and individual stocks and bonds. This flexibility has special appeal to law firms, medical clinics and other professional businesses where a high percentage of participants are motivated to manage their own investments. In 2002, additional self-directed plans contributed to an overall increase in 401(k) plans of almost 10 percent. New self-directed plans brought in $165 million in assets and more than $460,000 in additional revenue in 2002. Our diverse non-interest revenue base also includes fees and commissions from other trust seivices, deposit services, mortgage and international banking, cash management, and brokerage and trading. In fact, revenue grew 32 percent in 2002 from service charges and fees on deposit accounts and increased 24 percent at our BOX: Inc. broker/dealer subsidiay. International fee revenue wa up 21 percent with strong growth along all product lines and new business from our Exporters' Plussm document preparation service. BOK Financial remains committed to introducing innovative products and services that enhance and diversify our revenue bas and support our growth. ________ \ , . ~, ~. $6.9 1 I S8 I Loans in billions Deposits in billions Our values and strategies would be of little consequence if they didn't produce right results for our stakeholders. We again demonstrated in 2002 that right results emanate from consistently applied strategies based on values that promote progress and growth on a solid foundation of business ethics and financial integrity. Net income of $150 million for the year ~ highest in the company's history ~ resulted from accomplishments by many individuals, all working under the umbrella of our corporate goals. Despite margin pressure and a generally sluggish environment during 2002. we achieved growth by most measures: assets, loans, deposits, net interest revenue, fees and commissions and earnings per share. Our vision for 2003 looks remarkably similar to our past. In spite of the challenges of an economic slowdown and international uncertainty, we look for new growth in 2003 and beyond. We will continue to follow the four prirnar?, strategies outlined in this report, and we uill pursue excellence in all that we do. For our shareholders, customers and employees, the combination of these right strategies supported by right values will continue to produce results that are right on the money. S692 $2.48 Revenue in millions Earnings per share I I