Assessment of Financial Condition Securities Portfolio During 2001, the amortized cost of available for sale securities increased by $682 million. Mortgage-backed securities increased by $779 million to $3.3 billion. Approximately $619 million of the increase in mortgage- backed securities reflected BOK Financial’s strategy of fully utilizing available capital resources by borrowing funds in the capital markets as previously discussed in the Net Interest Revenue section of this report. Additionally, mortgage-backed securities designated as an economic hedge of the mortgage servicing rights increased $159 Securities aré identified as either investment or available for sale based upon asset/liability management strategies, liquidity and profitability objectives and regulatory requirements. Investment securities, which consist primarily of Oklahoma municipal bonds and other short-term instruments, are carried at cost, adjusted for amortization of premiums or accretion of discounts. Available for sale securities, which may be sold prior to maturity based upon asset/liability management decisions, are carried at fair value. Unrealized gains or losses on available for sale securities, less deferred taxes, are recorded as accumulated other comprehensive income in stockholders’ equity. million to $362 million. At December 31, 2001, available for sale securities with an amortized cost of $1.3 billion were pledged as collateral for repurchase agreement borrowings. BOK Financial realized net gains from securities sales of $30.6 million in 2001 and $2.1 million in 2000. These amounts included net gains from securities designated as hedges of the mortgage servicing portfolio of $12.8 million in 2001 and $5.3 million in 2000. The increase in net realized gains reflected the active management of the securities portfolio as interest rates declined in 2001. Net unrealized gains in the securities portfolio increased from $5.4 million at December 31, 5000 to $9.6 million at December 31, 2001. The expected duration of the mortgage-backed securities portfolio extended to approximately 3.0 years during 2001: Management currently intends to reduce the expected duration of the mortgage-backed securities portfolio to approximately 2.8 years. Additional information about the securities portfolio is presented in Note 3 to the Consolidated Financial Statements. Table 11 Securities (In Thousands) December 31, 2001 2000 1999 Amortized Fair Amortized Fair Amortized Fair Cost Value Cost Value Cost Value Investment: U.S. Treasury $ 7982 $:. 7,981. $ - = $ 196. $ 198 Municipal and other tax-exempt 222,195 223,487 207,177 207,641 186,177 184,748 Mortgage-backed U.S. agency securities 7,381 7,620 11,541 11,567 18,051 17,926 Other debt securities 3,555 3,540 14,653 14.659 8,756 8,752 Total 8 241,113. $ 242,628 _$ 233,37] 5 233,867. $ 213,180 $211,624 Available for sale: U.S. Treasury $ 34,538 $ 35,197 $ 85,656 . $ 85,564. $112,902 $411,860 Municipal and other tax-exempt 4,262 4,299 14,492 14,552 13,086 13,094 Mortgage-backed securities: U.S. agencies 2,637,636 2,638,425 2.050.100 2,046,318 2,174,916 2,106,094 Other 669,057 673,737 478,065 486,170 202,229 200,558 Total mortgage-backed securities 3,306,693 3,312,162 2.528.165 2,532,488 2.377 145 2,306,052 Other debt securities 536 538 242 245 353 353 Equity securities and mutual funds 93,918 97,353 129,823 130,971 156.476 156,745 $3,439,947 $3,449,549 $2.758.378 $2,763,820 $2,659,962 $2,588,704