SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from __________
to __________
Commission File Number 0-23064
SOUTHWEST BANCORP, INC.
(Exact name of registrant as specified in its charter)
Oklahoma #73-1136584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
608 South Main Street 74074
Stillwater, Oklahoma (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code: (405) 372-2230
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
[ x ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date.
3,761,202
---------
1
SOUTHWEST BANCORP, INC.
INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Consolidated Statements of Financial Condition at
June 30, 1996 and December 31, 1995 3
Unaudited Consolidated Statements of Operations for the
three and six months ended June 30, 1996 and 1995 4
Unaudited Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 5
Notes to Unaudited Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION 12
SIGNATURES 13
2
SOUTHWEST BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share date)
June 30, December 31,
1996 1995
----------- -----------
Assets
Cash and due from banks $ 28,691 $ 20,789
Federal funds sold 10,600 --
----------- -----------
Cash and cash equivalents 39,291 20,789
Investment securities:
Held to maturity, approximate fair value of
$81,157 (1996) and $75,202 (1995) 81,583 74,644
Available for sale, approximate fair value 60,666 73,044
Loans receivable, net of allowance for loan
losses of $6,513 (1996) and $5,813 (1995) 572,289 526,175
Accrued interest receivable 7,404 7,117
Premises and equipment, net 7,818 6,224
Other real estate 118 195
Other assets 3,500 2,190
Intangibles, net 693 757
----------- -----------
Total assets $773,362 $711,135
=========== ===========
Liabilities & shareholders' equity
Deposits:
Noninterest-bearing demand $ 81,935 $ 78,308
Interest-bearing demand 39,714 33,762
Time, money market and savings 582,045 522,317
----------- -----------
Total deposits 703,694 634,387
Income taxes payable 103 271
Accrued interest payable 4,216 4,266
Other liabilities 3,187 11,854
----------- -----------
Total liabilities 711,200 650,778
Commitments and contingencies
Shareholders' equity:
Serial preferred stock -
Series A, 9.20% Redeemable, Cumulative Preferred Stock;
$1 par value; 1,000,000 shares authorized; liquidation
value $17,250,000; 690,000 shares issued and outstanding 690 690
Series B, $1 par value; 1,000,000 shares authorized; none issued -- --
Common stock - $1 par value; 10,000,000 shares
authorized; issued and outstanding 3,759,492 (1996)
and 3,755,228 (1995) 3,759 3,755
Capital surplus 24,245 24,171
Retained earnings 33,718 31,129
Unrealized gain/(loss) on investment securities
available for sale, net of tax (250) 612
----------- -----------
Total shareholders' equity 62,162 60,357
----------- -----------
Total liabilities & shareholders' equity $773,362 $711,135
=========== ===========
SOUTHWEST BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
For the three months For the six months
ended June 30, ended June 30,
1996 1995 1996 1995
-------- -------- -------- --------
Interest income:
Interest and fees on loans $13,271 $11,155 $26,103 $21,120
Investment securities:
U.S. Government and Agency obligations 1,651 1,569 3,291 3,188
State and political subdivisions 146 117 286 224
Mortgage-backed securities 391 378 781 757
Other securities 19 12 32 26
Federal funds sold 144 317 218 413
-------- -------- -------- --------
Total interest income 15,622 13,548 30,711 25,728
Interest expense:
Interest-bearing demand 206 181 409 377
Time, money market and savings 7,550 7,180 14,875 13,033
Other borrowed money 13 13 71 207
-------- -------- -------- --------
Total interest expense 7,769 7,374 15,355 13,617
-------- -------- -------- --------
Net interest income 7,853 6,174 15,356 12,111
Provision for loan losses 775 375 1,650 750
-------- -------- -------- --------
Net interest income after provision for loan losses 7,078 5,799 13,706 11,361
Other income:
Service charges and fees 720 658 1,428 1,254
Credit cards 233 199 440 414
Other noninterest income 101 78 218 192
Gain/(loss) on sales of loans receivable 375 144 823 333
Gain/(loss) on sale of investment securities 49 - 171 (8)
-------- -------- -------- --------
Total other income 1,478 1,079 3,080 2,185
Other expenses:
Salaries and employee benefits 3,006 2,434 5,834 4,708
Occupancy 866 757 1,625 1,459
FDIC and other insurance 153 330 285 655
Credit cards 60 144 164 273
Other real estate owned, net 1 4 1 (16)
General and administrative 1,379 1,258 2,775 2,480
-------- -------- -------- --------
Total other expenses 5,465 4,927 10,684 9,559
-------- -------- -------- --------
Income before taxes 3,091 1,951 6,102 3,987
Taxes on income 1,115 687 2,194 1,388
-------- -------- -------- --------
Net income $ 1,976 $ 1,264 $ 3,908 $ 2,599
======== ======== ======== ========
Net income available to common shareholders $ 1,579 $ 1,264 $ 3,114 $ 2,599
======== ======== ======== ========
Earnings per common share $0.42 $0.34 $0.83 $0.70
======== ======== ======== ========
Weighted average common shares outstanding 3,759,198 3,755,228 3,758,029 3,755,228
========= ========= ========= =========
SOUTHWEST BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the six months
ended June 30,
1996 1995
----------- -----------
Operating activities:
Net income $ 3,908 $ 2,599
Adjustments to reconcile net income to net cash provided
from/(used in) operating activities:
Provision for loan losses 1,650 750
Depreciation and amortization expense 584 482
Amortization of premiums and accretion of discount
on securities, net 122 146
Amortization of intangibles 64 87
(Gain)/loss on sales of securities (171) 8
(Gain)/loss on sales of loans receivable (823) (333)
(Gain)/loss on sales of premises and equipment (10) 3
(Gain)/loss on other real estate owned, net (2) (26)
Proceeds from sales of residential mortgage loans 26,837 9,871
Residential mortgage loans originated for resale (36,045) (14,555)
Changes in assets and liabilities:
Accrued interest receivable (287) (304)
Income taxes payable (168) (193)
Accrued interest payable (50) 1,552
Other (9,439) (14,145)
----------- -----------
Net cash provided from/(used in) operating activities (13,830) (14,058)
----------- -----------
Investing activities:
Proceeds from sales of held to maturity securities -- 5,993
Proceeds from sales of available for sale securities -- --
Proceeds from principal repayments, redemptions and maturities of:
Held to maturity securities 14,824 8,012
Available for sale securities 17,377 1,331
Purchases of held to maturity securities (21,848) (3,939)
Purchases of available for sale securities (6,303) (1,006)
Loans originated and principal repayments, net (54,968) (77,665)
Proceeds from sales of guaranteed student loans 17,235 16,164
Purchases of premises and equipment (2,191) (1,271)
Proceeds from sales of premises and equipment 24 16
Proceeds from sales of other real estate 79 94
----------- -----------
Net cash provided from/(used in) investing activities (35,771) (52,271)
----------- -----------
Financing activities:
Net increase in deposits 69,307 94,186
Net proceeds from issuance of common stock 78 --
Net proceeds from issuance of preferred stock -- --
Common stock dividends paid (488) (638)
Preferred stock dividends paid (794) --
----------- -----------
Net cash provided from/(used in) financing activities 68,103 93,548
----------- -----------
Net increase/(decrease) in cash and cash equivalents 18,502 27,219
Cash and cash equivalents,
Beginning of period 20,789 16,394
----------- -----------
End of period $39,291 $43,613
=========== ===========
5
SOUTHWEST BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements
NOTE 1: GENERAL
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, changes in shareholders' equity, and cash flows
in conformity with generally accepted accounting principles. However, the
financial statements include all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair presentation. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Southwest
Bancorp, Inc. Annual Report on Form 10-K for the year ended December 31, 1995.
NOTE 2: PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements include the
accounts of Southwest Bancorp, Inc. (the Company) and its wholly owned
subsidiary, The Stillwater National Bank and Trust Company (the Bank). All
significant intercompany transactions and balances have been eliminated in
consolidation.
NOTE 3: RECENTLY ADOPTED ACCOUNTING STANDARDS
The Company adopted Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which establishes
accounting standards for such assets, on January 1, 1996. Also on that date,
the Company adopted SFAS No. 122, Accounting for Mortgage Servicing Rights,
which amends the accounting for the rights to service mortgage loans, however
acquired, and requires the Company to recognize as separate assets those rights
to service mortgage loans for others. SFAS No. 122 also requires the Company to
evaluate whether amounts capitalized as mortgage servicing rights are impaired.
Adoption of SFAS Nos. 121 and 122 did not have a material impact on the
Company's consolidated financial position or results of operations.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 establishes a fair value method and disclosure
standards for stock-based employee compensation arrangements, such as stock
purchase plans and stock options. SFAS No. 123 became effective January 1, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages, but does not require, compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply Accounting Principles
Board Opinion (APB) No. 25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue to
apply APB No. 25 to its stock-based compensation awards to employees and will
disclose the required pro forma effect on net income and earnings per share in
the 1996 year-end financial statements.
6
SOUTHWEST BANCORP, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
FINANCIAL CONDITION
The Company's total assets increased by $62.3 million, or 9%, from $711.1
million at December 31, 1995 to $773.4 million at June 30, 1996.
Loans were $578.8 million at June 30, 1996, an increase of $46.8 million, or 9%,
compared to December 31, 1995. The Company experienced its most significant
increases in the categories of commercial loans, which increased by $21.9
million, or 12%, real estate construction loans, which increased by $14.0
million, or 42%, residential mortgages, which increased by $10.0 million, or
23%, and commercial mortgages, which increased by $5.2 million, or 3%. These
increases were offset by a $5.5 million, or 8% reduction in government-
guaranteed student loans. At June 30, 1996, the allowance for loan losses was
$6.5 million, or 1.13% of total loans, compared to $5.8 million, or 1.09% of
total loans, at December 31, 1995.
Investment securities were $142.2 at June 30, 1996, a reduction of $5.4 million,
or 4%, compared to December 31, 1995.
The Company's deposits increased by $69.3 million, or 11%, from $634.4 million
at December 31, 1995 to $703.7 million at June 30, 1996. This increase occurred
primarily in time deposits.
Shareholders' equity increased by $1.8 million, or 3%, due primarily to first
and second quarter earnings, net of dividends declared on common and preferred
stock.
RESULTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
Net Income
Net income for the first six months of 1996 was $3.9 million, a $1.3 million, or
50%, increase from the $2.6 million earned during the same period in 1995.
Earnings per common share for the first six months of 1996 were $0.83, after the
deduction of preferred stock dividends, compared to $0.70 for the first six
months of 1995. Average common shares outstanding were 3,758,029 and 3,755,228,
respectively. The Company issued 690,000 shares of Series A, 9.20% Cumulative
Preferred Stock in the third quarter of 1995. Net interest income increased
$3.2 million, or 27%, for the first six months of 1996 compared to the same
period in 1995. This increase in net interest income, as well as an $895,000,
or 41%, increase in other income, offset a $1.1 million, or 12%, increase in
other expenses, a $900,000, or 120%, increase in provision for loan loss and an
$806,000, or 58%, increase in taxes. For the first six months of 1996, the
return on average total equity was 12.85% and the return on average common
equity was 14.27% compared to the 13.33% return on average equity for the first
six months of 1995.
Net Interest Income
Net interest income increased to $15.3 million for the first six months of 1996
from $12.1 million for the same period in 1995 as continued growth in the loan
portfolio enabled the Company to post a $5.0 million increase in interest income
that exceeded the $1.7 million increase in interest expense during the period.
Yields on the Company's interest-earning assets increased by 13 basis points,
and the rates paid on the Company's interest-bearing liabilities declined by 8
basis points, resulting in an increase in the interest rate
7
spread to 3.57% for the six months ended June 30, 1996 from 3.36% for the six
months ended June 30, 1995. The ratio of average interest-earning assets to
average interest-bearing liabilities increased to 119.07% for the first six
months of 1996 from 115.84% for the first six months of 1995. This percentage
increase was, in part, the result of the use of proceeds from the Company's July
1995 Preferred stock issuance to fund interest-earning assets.
Total interest income for the first six months of 1996 was $30.7 million, up 19%
from $25.7 million during the same period in 1995. The principal factors
providing greater interest income were the $99.0 million, or 22%, increase in
the volume of average loans outstanding and the increase in yields earned on
loans and investment securities. The Company's loan yields increased to 9.59%
for the first six months of 1996 from 9.50% in 1995. During the same period,
the Company's yield on investment securities declined to 6.11% from 6.25% as a
result of calls of relatively high-yielding Agency securities.
Total interest expense for the first six months of 1996 was $15.4 million, an
increase of 13% from $13.6 million for the same period in 1995. The increase in
total interest expense can be attributed to an increase in average interest-
bearing liabilities of $72.3 million, or 14%. During the same period, the rates
paid on average interest-bearing liabilities declined to 5.25% from 5.33%.
Other Income
Other income increased by $895,000 for the first six months of 1996 compared to
the first six months of 1995 primarily due to increased gains on sales of loans
receivable and investment securities. The increase in gains on sales of loans
receivable reflected higher sales of student loans and mortgage loans. Sales of
student loans during the first six months of 1996 were $17.2 million compared to
$16.2 million for the same period in 1995. Sales of mortgage loans increased to
$26.8 million for the first six months of 1996 compared to $9.9 million for the
same period in 1995. The gain on sales of investment securities occurred when
$4.6 million in Agency securities classified as "held to maturity" and $11.2
million in Agency securities classified as "available for sale", originally
purchased at a discount, were called prior to their stated maturity date.
Other Expenses
The Company's other expenses increased $1.1 million for the first six months of
1996 compared to the first six months of 1995. This increase was primarily the
result of an increase in salaries and employee benefits, which increased $1.1
million as a result of a 15% increase in staffing. The increase in staffing is
related to the expansion of the Company's asset and deposit bases. In addition,
occupancy expense increased $166,000 and general and administrative expense
increased $295,000 compared to 1995. These increases were offset by a $370,000
reduction in FDIC and other insurance expense. The increase in occupancy
expense was due primarily to the leasing of additional office space and the
depreciation on furniture and equipment purchased to furnish those new offices.
The reduction in FDIC and other insurance for the six month periods ended June
30, 1996 and 1995 was due to a reduction in premiums, beginning July 1, 1995, as
the Bank Insurance Fund (BIF), of which the Bank is a member, achieved its
statutory reserve ratio. If certain legislation currently being considered by
Congress is enacted, the Bank will be required to pay a special assessment to
the FDIC with respect to deposits it acquired from a savings association in
1991. It is not known whether this legislation will be enacted or what the
amount of the special assessment will be if it is enacted.
Provision for Loan Losses
The Company makes provisions for loan losses in amounts deemed necessary to
maintain the allowance for loan losses at an appropriate level. The adequacy of
the allowance for loan losses is determined by management based upon a number of
factors including, among others, analytical reviews of loan loss experience in
relationship to outstanding loans and commitments; unfunded loan commitments;
problem
8
and nonperforming loans and other loans presenting credit concerns; trends in
loan growth, portfolio composition and quality; use of appraisals to estimate
the value of collateral; and management's judgment with respect to current and
expected economic conditions and their impact on the existing loan portfolio.
Changes in the allowance may occur because of changing economic conditions, and
economic prospects or the financial position of borrowers. Based upon this
review, management established an allowance of $6.5 million, or 1.13% of total
loans, at June 30, 1996 compared to an allowance of $5.8 million, or 1.09% of
total loans at December 31, 1995. During the first six months of 1996 and 1995,
the provisions for loan losses were $1.7 million and $750,000, respectively. The
larger provision for loan losses during the first six months of 1996 was due to
the need for greater general reserves in light of the increase in the size of
the loan portfolio and higher historical charge-off ratios.
Taxes on Income
The Company's income tax expense for the first six months of 1996 and 1995 was
$2.2 million and $1.4 million, respectively. The Company's income tax expense
for the second quarters of 1996 and 1995 was $1.1 million and $687,000,
respectively. The Company's effective tax rates have been lower than the 34%
Federal and 6% State statutory rates primarily because of tax-exempt income on
municipal obligations and loans.
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
Net Income
Net income for the second quarter of 1996 was $2.0 million, a $712,000, or 56%,
increase from the $1.3 million earned during the same period in 1995. Earnings
per common share for the second quarter of 1996 were $0.42, after the deduction
of preferred stock dividends, compared to $0.34 for the second quarter of 1995.
Average common shares outstanding were 3,759,198 and 3,755,228, respectively.
The Company issued 690,000 shares of Series A, 9.20% Cumulative Preferred Stock
in the third quarter of 1995. Net interest income increased $1.7 million, or
27%, for the second quarter of 1996 compared to the same period in 1995. This
increase in net interest income, as well as a $399,000, or 37%, increase in
other income, offset a $538,000, or 11%, increase in other expenses, a $400,000,
or 107%, increase in provision for loan loss and a $428,000, or 62%, increase in
taxes. For the second quarter of 1996, the return on average total equity was
12.92% and the return on average common equity was 14.16% compared to the 12.63%
return on average equity for the second quarter of 1995.
Net Interest Income
Net interest income increased to $7.9 million for the second quarter of 1996
from $6.2 million for the same period in 1995 as continued growth in the loan
portfolio enabled the Company to post a $2.1 million increase in interest income
that exceeded the $395,000 increase in interest expense during the period.
Yields on the Company's interest-earning assets increased by 2 basis points, and
the rates paid on the Company's interest-bearing liabilities declined by 34
basis points, resulting in an increase in the interest rate spread to 3.63% for
the second quarter of 1996 from 3.27% for the second quarter of 1995. The ratio
of average interest-earning assets to average interest-bearing liabilities
increased to 118.39% for the second quarter of 1996 from 115.50% for the second
quarter of 1995. This percentage increase was, in part, the result of the use
of proceeds from the Company's July 1995 Preferred stock issuance to fund
interest-earning assets.
Total interest income for the second quarter of 1996 was $15.6 million, up 15%
from $13.5 million during the same period in 1995. The principal factor
providing greater interest income was the $92.3 million, or 20%, increase in the
volume of average loans outstanding. The Company's loan yields declined to
9.64% for the second quarter of 1996 from 9.70% in 1995. During the same
period, the Company's yield on
9
investment securities declined to 6.09% from 6.22% as a result of calls of
relatively high-yielding Agency securities.
Total interest expense for the second quarter of 1996 was $7.8 million, an
increase of 5% from $7.4 million for the same period in 1995. The increase in
total interest expense can be attributed to an increase in average interest-
bearing liabilities of $66.7 million, or 13%. During the same period, the rates
paid on average interest-bearing liabilities declined to 5.21% from 5.55%.
Other Income
Other income increased by $399,000 for the second quarter of 1996 compared to
the second quarter of 1995 primarily due to increased gains on sales of loans
receivable. The increase in gains on sales of loans receivable reflected higher
sales of student loans and mortgage loans. Sales of student loans during the
second quarter of 1996 were $4.8 million compared to $4.6 million for the same
period in 1995. Sales of mortgage loans increased to $18.4 million for the
second quarter of 1996 compared to $6.4 million for the same period in 1995.
Other Expenses
The Company's other expenses increased $538,000 for the second quarter of 1996
compared to the second quarter of 1995. This increase was primarily the result
of an increase in salaries and employee benefits, which increased $572,000 as a
result of a 15% increase in staffing. The increase in staffing is related to
the expansion of the Company's asset and deposit bases. In addition, occupancy
expense increased $109,000 and general and administrative expense increased
$121,000 compared to 1995. These increases were offset by a $177,000 reduction
in FDIC and other insurance expense. The increase in occupancy expense was due
primarily to the leasing of additional office space and the depreciation on
furniture and equipment purchased to furnish those new offices.
The reduction in FDIC and other insurance for the three month periods ended June
30, 1996 and 1995 was due to a reduction in premiums, beginning July 1, 1995, as
the Bank Insurance Fund (BIF), of which the Bank is a member, achieved its
statutory reserve ratio. If certain legislation currently being considered by
Congress is enacted, the Bank will be required to pay a special assessment to
the FDIC with respect to deposits it acquired from a savings association in
1991. It is not known whether this legislation will be enacted.
LIQUIDITY
Liquidity is measured by a financial institution's ability to raise funds
through deposits, borrowed funds, capital, or the sale of highly marketable
assets such as residential mortgage loans. The Company's portfolio of
government-guaranteed student loans and SBA loans are also readily salable.
Additional sources of liquidity, including cash flow from the repayment of
loans, are also considered in determining whether liquidity is satisfactory.
Liquidity is also achieved through growth of core deposits and liquid assets,
and accessibility to the capital and money markets. These funds are used to
meet deposit withdrawals, maintain reserve requirements, fund loans and operate
the organization. Core deposits, defined as demand deposits, interest-bearing
transaction accounts, savings deposits and certificates of deposit less than
$100,000 were 84% and 87% of total deposits at June 30, 1996 and 1995,
respectively.
The Company uses various forms of short-term borrowings for cash management and
liquidity purposes on a limited basis. These forms of borrowings include
federal funds purchases and borrowings from the Federal Reserve Bank. The Bank
has approved federal funds purchase lines with three other banks. The Bank also
carries interest-bearing demand notes issued by the Bank to the U.S. Treasury as
a participant in the Treasury Tax and Loan note program. In addition, the Bank
has available a $20.0 million line of credit from the Student Loan Marketing
Association (SLMA). Borrowings under the SLMA line would be
10
secured by student loans. During the first quarters of 1996 and 1995, no
category of borrowings averaged more than 30% of ending shareholders' equity.
During the first six months of 1996, cash and cash equivalents increased by
$18.5 million. The increase was the result of cash generated from financing
activities (primarily increased deposits) of $68.1 million offset by $13.8
million in cash used in operating activities and $35.8 million in cash used in
investing activities.
Cash and cash equivalents, during the first six months of 1995, increased by
$27.2 million. The increase was the result of cash generated from financing
activities (primarily increased deposits) of $93.5 million offset by $14.0
million in cash used in operating activities and $52.3 million in cash used in
investing activities.
CAPITAL RESOURCES
Bank holding companies are required to maintain capital ratios in accordance
with guidelines adopted by the Federal Reserve Board (FRB). The guidelines are
commonly known as Risk-Based Capital Guidelines.
On June 30, 1996, the Company exceeded all applicable capital requirements,
having a total risk-based capital ratio of 12.17%, a Tier I risk-based capital
ratio of 10.80%, and a leverage ratio of 8.12%. As of June 30, 1996, the Bank
also met the criteria for classification as a "well-capitalized" institution
under the prompt corrective action rules promulgated under the Federal Deposit
Insurance Corporation Improvement Act of 1991 (FDICIA). Designation as a well-
capitalized institution under these regulations does not constitute a
recommendation or endorsement of the Company or the Bank by Federal bank
regulators.
The Company declared a dividend of $.07 per common share payable on July 1, 1996
to shareholders of record as of June 19, 1996. In July 1996, the Company
declared a dividend of $.575 per preferred share payable on September 3, 1996
to shareholders of record as of August 19, 1996.
EFFECTS OF INFLATION
The consolidated financial statements and related consolidated financial data
presented herein have been prepared in accordance with generally accepted
accounting principles and practices within the banking industry which require
the measurement of financial position and operating results in terms of
historical dollars without considering the changes in the relative purchasing
power of money over time due to inflation. Unlike most industrial companies,
virtually all the assets and liabilities of a financial institution are monetary
in nature. As a result, interest rates have a more significant impact on a
financial institution's performance than the effects of general levels of
inflation.
11
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security holders
At the Company's annual shareholders' meeting, held on April 25,
1996, the shareholders of the Company elected Robert L. McCormick,
Jr., J. Berry Harrison, Erd M. Johnson, and James B. Wise, M.D. as
Directors with terms expiring at the 1999 annual shareholders'
meeting. The shareholder vote in the election of each director was
3,081,404 for and 23,823 withheld. Other Directors continuing in
office are George M. Berry, Paul C. Wise, Joyce P. Berry, Joe Berry
Cannon, Robert B. Rodgers, Thomas D. Berry, W. Haskell Cudd, David
P. Lambert, Linford R. Pitts, and Lee Wise.
Also at the annual shareholders' meeting, the shareholders of the
Company approved an amendment to the Company's Certificate of
Incorporation to increase the authorized shares of capital stock
from 7,000,000 to 12,000,000, consisting of 10,000,000 shares of
common stock, par value $1.00 per share ("Common Stock"), and an
aggregate of 2,000,000 shares of serial preferred stock, par value
$1.00 per share. The shareholder vote in this matter was 2,742,797
for, 28,189 against, 19,454 abstaining, and 314,787 broker non-
votes.
Item 5. Other information
None
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits. The following is a list of Exhibits filed as part
--------
of this Quarterly Report on Form 10-Q:
No. Exhibit
--- -------
3.1 Amended and Restated Certificate of Incorporation of
Southwest Bancorp, Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
-------------------
during for the quarter which this Quarterly Report on
Form 10-Q is filed.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHWEST BANCORP, INC.
(Registrant)
By:/s/ Robert L. McCormick, Jr. July 31, 1996
------------------------------------- --------------------------
Robert L. McCormick, Jr. Date
President
(Principal Executive Officer)
By:/s/ Kerby E. Crowell July 31, 1996
---------------------------------- --------------------------
Kerby E. Crowell Date
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
13
INDEX TO EXHIBITS
Number Description
3.1 Amended and Restated Certificate of Incorporation of Southwest
Bancorp., Inc.
27 Financial Data Schedule.