EXHIBIT 99
[LOGO]
SOUTHWEST BANCORP, INC. REPORTS EARNINGS
CONTACT: RICK GREEN, PRESIDENT & C.E.O.
KERBY E. CROWELL, EXECUTIVE VICE PRESIDENT & C.F.O.
TELEPHONE: (405) 372-2230
RELEASE DATE: OCTOBER 16, 2003
October 16, 2003, Stillwater, Oklahoma . . . . Southwest Bancorp, Inc.
(Nasdaq National Market--OKSB, OKSBO), the Oklahoma-based parent company of the
Stillwater National Bank and Trust Company ("Stillwater National"), today
reported net income for the first nine months of 2003, of $11.0 million, a 10%
increase. Diluted net income per share through September 30, 2003, was $0.90
compared to $0.82 per share for the 2002 period, up 10%. Net income for the
third quarter of 2003 was $3.4 million, or $0.28 per common share, which is
approximately the same as for the third quarter of 2002, but is lower than the
record net incomes established in the first and second quarters of 2003. The
decrease in quarter-to-quarter net income resulted from the additional provision
for loan losses necessary to restore the allowance for loan losses following a
$1.0 million charge-off relating to a single commercial credit. (See "Additional
Financial Information-Allowance for Loan Losses and Nonperforming Loans.")
2003 RESULTS AND FOCUS
o Total assets of $1.5 billion; a 19% increase from September 30, 2002,
and a 14% increase from year-end 2002.
o Portfolio loans of $1.3 billion; a 23% increase from September 30,
2002, and a 17% increase from year-end 2002.
o Book value per share of $8.93; a 10% increase from September 30, 2002,
and a 7% increase from year-end 2002.
YEAR-TO-DATE THIRD QUARTER
------------ -------------
o Net Income: $11.0 million; a 10% increase $3.4 million; a 1%
decrease
o Diluted earnings per share: $0.90; a 10% increase $0.28; the same as for
2002
o Dividends per share: $0.19; a 14% increase $0.06; the same as for
2002
o Return on average equity: 14.56% 13.10%
o GAAP-based efficiency ratio: 54.38% 55.03%
STRATEGIC PERSPECTIVE
"Southwest Bancorp, Inc. ("Southwest") maintains an intense focus on
specific performance goals designed to increase shareholder value. These goals
include annual growth in diluted EPS and assets of 10% and geographic market
share growth and expansion," said Rick Green, President and Chief Executive
Officer. "Southwest's year-to-date earnings growth is primarily the result of
substantial loan growth, increases in net interest and noninterest income, and
improved efficiency. We are continuing to focus on increasing net interest
income by prudent loan growth coupled with careful management of interest
margins and funding."
"In the first nine months of 2003, Southwest achieved net income of
$11.0 million and increased earnings per share by 10% over the same period of
last year, despite a disappointing third quarter. The third quarter ended a
streak of five consecutive quarters of record earnings, and brought an increase
in nonperforming assets. We are acting aggressively to resolve those problem
credits."
"During 2002, Southwest made strategic moves into two important markets
- - Dallas, Texas and Wichita, Kansas. These offices are capitalizing on our
strengths in serving medical, professional and small business customers. We are
pleased with our continuing significant loan growth in Dallas and Wichita. Our
experience there demonstrates our ability to select new markets and to
successfully implement our business plan in them."
"We continue to market and find acceptance for our "Business Mail
Processing" and "Document Imaging" services, especially in our metropolitan
markets. These products are contributing to our success in gaining
noninterest-bearing demand deposits and should continue to help differentiate
Southwest from other financial services companies."
"We have received approvals of our application to create a federal
savings bank in Wichita, Kansas. We plan to open SNB Bank of Wichita on the site
of our loan production office during the fourth quarter of 2003."
"In the second quarter of 2003, Southwest issued $20.0 million in trust
preferred securities through a newly formed subsidiary trust, OKSB Statutory
Trust I, in a private placement of pooled trust preferred securities. The trust
preferred securities are disclosed on the Statement of Financial Condition as
"Long-term Debt" and bear a variable rate of interest, which will be adjusted
quarterly and is tied to three-month Libor. The majority of the proceeds of the
private placement were contributed to Stillwater National; $6.0 million of the
remaining proceeds will be contributed to SNB Bank of Wichita upon organization.
On October 14, 2003, Southwest issued an additional $25.0 million of 30-year
variable rate trust preferred securities in a private placement. Proceeds from
the October issuance are expected to be used to retire the $25.0 million in
9.30% fixed rate trust preferred securities issued in 1997, which became subject
to redemption in the third quarter of 2002. Although such a refinancing would
result in a charge to expense of approximately $650,000, net of tax
benefit, during the fourth quarter, management estimates that the refinancing
would have a net positive effect on net income within twelve months from
issuance and thereafter. Whether or not Southwest redeems the 1997 trust
preferred securities during 2003 depends upon a number of factors, including the
currently unsettled accounting and regulatory capital rules relating to trust
preferred securities."
"At September 30, 2003, Southwest had total assets of $1.5 billion,
loans of $1.3 billion, and deposits of $1.2 billion. At that date, the allowance
for loan losses was $14.6 million, or 1.14% of total loans, compared to $13.9
million, or 1.10% of total loans, at June 30, 2003. At September 30, 2003,
regulatory capital ratios for Southwest and Stillwater National exceeded
regulatory requirements for a well-capitalized institution."
ADDITIONAL FINANCIAL INFORMATION
Net income for the first nine months of 2003 was $11.0 million, up $1.0
million, or 10%, from the first nine months of 2002. Diluted earnings per share
for the first nine months of 2003 was $0.90, up 10% from the first nine months
of 2002.
Net interest income increased 19% from the first nine months of 2002.
Non-interest income for the first nine months of 2003 represented 21% of total
revenues.
The provision for loan losses of $6.4 million increased $2.4 million,
or 57%, over the first nine months of 2002. Noninterest expense of $28.1 million
increased $3.7 million, or 15%, primarily as a result of increases in
compensation, general and administrative, and occupancy expenses.
Net income for the third quarter of 2003 was $3.4 million (a $26,000,
or 1%, decrease from the third quarter of 2002). Diluted earnings per share of
$0.28 for the third quarter of 2003 were the same as for the third quarter of
2002.
Net interest income increased 24% from the third quarter of last year.
Non-interest income for the quarter represented 21% of total revenues.
The provision for loan losses of $2.7 million increased $1.2 million,
or 74%, over the 2002 third quarter. (See "Additional Financial Information -
Allowance for Loan Losses and Nonperforming Loans.") Noninterest expense of $9.9
million increased $1.5 million, or 18%, primarily as a result of increases in
compensation, general and administrative, and occupancy expenses. The efficiency
ratio of 55.03% represented an improvement of 101 basis points from the third
quarter of 2002. Southwest's efficiency ratio is based directly on financial
statement amounts.
FINANCIAL CONDITION
At September 30, 2003, total assets were $1.5 billion, a $190.0 million
increase from the end of 2002 and a $241.2 million increase from September 30,
2002. Total portfolio loans (loans other than those held for sale) at September
30, 2003 were $1.3 billion, up $187.6 million, or 17%, from year-end 2002 and up
$239.6 million, or 23%, from September 30,
2002, primarily as a result of growth in commercial and construction lending, as
well as government-guaranteed student loans.
ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING LOANS
During the third quarter, Stillwater National discovered that certain
financial and collateral information for a single commercial credit appeared to
have been falsified, and promptly took action to mitigate its losses. The
decrease in quarter-to-quarter net income resulted from the additional provision
for loan losses necessary to restore the allowance for loan losses following a
$1.0 million charge-off relating to this credit. The outstanding balance of this
credit was $2.3 million, after charge-off, and is classified as nonaccrual.
Approximately $1.6 million of this balance is guaranteed by an agency of the
United States Government. Management anticipates complete resolution of the
credit during the next several months.
Rick Green, President and Chief Executive Officer of Stillwater
National and Southwest said, "Although we are extremely disappointed by this
turn of events, we have taken control of the good collateral, and are working
diligently with legal counsel and interested parties to resolve this credit. We
are glad that our detection of the problem and prompt action appears to have
prevented additional losses not only to us, but also to the government and to
other banks that were in the process of lending additional funds to this
borrower. We also are pleased that our earnings performance for the first nine
months of 2003 has been strong enough to produce a 10% increase in net income
over the first nine months of 2002."
Nonaccrual loans totaled $17.0 million at September 30, 2003, compared
to $10.3 million at June 30, 2003. This $6.7 million increase is primarily the
result of the credit described above and the third quarter classification of a
$5.0 million commercial credit as nonaccrual. This other credit, which has been
closely monitored since late 2002, is expected to be resolved during the next
several months. In addition, management anticipates that several other large
problem credits that were classified as nonaccrual at June 30, 2003 and
September 30, 2003, will be resolved during the fourth quarter of 2003 or in
early 2004. Total nonperforming loans of $19.2 million increased $6.3 million,
or 49%, from year-end 2002, and represented 1.50% of loans, compared to 1.17% of
loans at year-end 2002. At September 30, 2003, $2.6 million, or 14%, of loans
classified as nonperforming were guaranteed by United States agencies or U.S.
government sponsored entities.
Mr. Green said, "Much of our business is commercial lending. As a
result, weakness in one or a few large credits can have a significant impact on
our nonperforming loan totals. Through the years, however, we have demonstrated
the ability to resolve problem commercial loans."
The allowance for loan losses of $14.6 million increased $2.7 million,
or 23%, from year-end 2002. Management believes the amount of the allowance is
appropriate, given its systematic methodology for calculating the allowance.
That methodology is designed to estimate inherent losses on total loans in the
portfolio, including inherent losses on nonperforming loans.
SECURITIES
Southwest's common stock is traded on the Nasdaq National Market under
the symbol OKSB. Trust preferred securities of Southwest's subsidiary, SBI
Capital Trust, trade on the Nasdaq National market under the symbol OKSBO.
Market makers for Southwest's common stock include Stifel Nicolaus & Co.,
Goldman Sachs & Co., Keefe Bruyette & Woods Inc., Merrill Lynch, RBC Dain
Rauscher, Inc., Schwab Capital Markets, Morgan Stanley & Company, Sandler
O'Neill & Partners and FTN Financial Securities Corp.
SOUTHWEST BANCORP AND SUBSIDIARIES
Southwest Bancorp, Inc. and the Stillwater National Bank and Trust
Company are independent, Oklahoma institutions, and are not controlled by out of
state organizations or individuals. Southwest has established and pursued a
strategy of independent operation for the benefit of all of its shareholders,
and has capitalized on its position as an Oklahoma operated banking organization
to increase its banking business.
Southwest is the financial holding company for Stillwater National Bank
and Trust Company, Business Consulting Group, Inc., and Healthcare Strategic
Support, Inc. Southwest expects to open its new subsidiary, SNB Bank of Wichita,
in November 2003.
A substantial portion of Southwest's current business and focus for the
future are services for local businesses, their primary employees, and other
managers and professionals. Southwest seeks to be the premier financial company
for its selected markets. Information regarding Southwest can be retrieved via
the Internet, at www.oksb.com. Southwest and Stillwater National offer
commercial and consumer lending, deposit, and investment services, and
specialized cash management, consulting and other financial services from
offices in Stillwater, Tulsa, Oklahoma City, and Chickasha, Oklahoma, and
Frisco, Texas; loan production offices in Wichita, Kansas and on the campuses of
the University of Oklahoma Health Sciences Center and Oklahoma State
University-Tulsa; a marketing presence in the Student Union at Oklahoma State
University-Stillwater; and on the Internet. Information regarding products and
services of Stillwater National, including SNB DirectBanker(R), its online
banking product, can be retrieved via the Internet, at www.oksb.com. Stillwater
National's web site and online banking technology are frequently updated in
response to the changing needs of Stillwater National's large base of Internet
banking customers.
FORWARD-LOOKING STATEMENTS
This Press Release includes forward-looking statements, such as:
statements of Southwest's goals, intentions, and expectations; estimates of
risks and of future costs and benefits; assessments of the amount and timing of
problem loan payoffs and loan losses; and statements of Southwest's ability to
achieve financial and other goals. These forward-looking statements are subject
to significant uncertainties because they are based upon: future interest rates
and other economic conditions; future laws and regulations; and a variety of
other matters. Because of these uncertainties, the actual future results may be
materially different from the results indicated by these forward-looking
statements. In addition, Southwest's past growth and performance do not
necessarily indicate its future results.
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
September 30, December 31,
2003 2002
--------------- ----------
ASSETS:
Cash and cash equivalents $ 29,441 $ 34,847
Investment securities:
Held to maturity, fair value $16,829 (2003) and $32,000 (2002) 16,456 31,154
Available for sale, amortized cost $170,444 (2003) and $145,141 (2002) 171,196 148,476
Federal Reserve Bank and Federal Home Loan Bank Stock, at cost 11,191 9,059
Loans held for sale 6,061 10,638
Loans receivable, net of allowance for loan losses
of $14,625 (2003) and $11,888 (2002) 1,263,482 1,078,586
Accrued interest receivable 9,953 9,283
Premises and equipment, net 20,179 20,202
Other assets 11,771 7,523
----------- -----------
Total assets $ 1,539,730 $ 1,349,768
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Noninterest-bearing demand $ 160,795 $ 135,945
Interest-bearing demand 53,771 50,162
Money market accounts 363,643 258,712
Savings accounts 7,067 5,700
Time deposits of $100,000 or more 375,541 309,205
Other time deposits 243,560 262,033
----------- -----------
Total deposits 1,204,377 1,021,757
Accrued interest payable 3,085 4,486
Other liabilities 5,459 2,858
Other borrowings 176,102 199,282
Long-term debt 45,013 25,013
----------- -----------
Total liabilities 1,434,036 1,253,396
Shareholders' equity:
Common stock - $1 par value; 20,000,000 shares authorized; 12,243,042
shares issued and outstanding 12,243 12,243
Capital surplus 6,460 6,196
Retained earnings 89,481 80,724
Accumulated other comprehensive income (loss) 451 2,201
Treasury stock, at cost; 401,354 (2003) and 696,284 (2002) shares (2,941) (4,992)
----------- -----------
Total shareholders' equity 105,694 96,372
----------- -----------
Total liabilities & shareholders' equity $ 1,539,730 $ 1,349,768
=========== ===========
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
For the three months For the nine months
ended September 30, ended September 30,
2003 2002 2003 2002
---- ---- ---- ----
Interest income:
Interest and fees on loans $ 19,250 $ 16,310 $ 56,271 $ 48,733
Investment securities 1,925 2,799 6,010 8,699
Other interest-bearing assets 1 29 7 40
-------- -------- -------- --------
Total interest income 21,176 19,138 62,288 57,472
Interest expense:
Interest-bearing deposits 4,983 5,962 15,752 17,866
Other borrowings 1,174 1,133 3,722 3,636
Long-term debt 792 582 1,969 1,745
-------- -------- -------- --------
Total interest expense 6,949 7,677 21,443 23,247
-------- -------- -------- --------
Net interest income 14,227 11,461 40,845 34,225
Provision for loan losses 2,726 1,570 6,448 4,095
Other income:
Service charges and fees 2,442 2,104 6,918 5,881
Other noninterest income 165 249 707 724
Gain on sales of loans receivable 1,158 927 3,157 2,126
Gain on sales of investment securities 1 228 28 231
-------- -------- -------- --------
Total other income 3,766 3,508 10,810 8,962
Other expenses:
Salaries and employee benefits 5,200 4,493 14,433 12,591
Occupancy 2,078 1,779 5,938 5,229
FDIC and other insurance 90 74 246 212
Other real estate (2) 2 168 (19)
General and administrative 2,535 2,041 7,303 6,333
-------- -------- -------- --------
Total other expenses 9,901 8,389 28,088 24,346
-------- -------- -------- --------
Income before taxes 5,366 5,010 17,119 14,746
Taxes on income 1,943 1,561 6,150 4,816
-------- -------- -------- --------
Net income $ 3,423 $ 3,449 $ 10,969 $ 9,930
======== ======== ======== ========
SOUTHWEST BANCORP, INC.
AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands)
For the three months ended
September 30, 2003
------------------------------------------------
Interest
Average Income/ Average
Balance Expense Yield/Rate
-------------------------------------------------
ASSETS:
Loans receivable $1,296,519 $19,250 5.89%
Investment securities 195,266 1,925 3.91
Other interest-earning assets 671 1 0.59
---------------- ------------ -----------
Total interest-earning assets 1,492,456 21,176 5.63
Noninterest-earning assets 49,063
----------------
Total assets $1,541,519
================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing demand $ 56,698 $ 86 0.60%
Money market accounts 363,918 1,323 1.44
Savings accounts 6,783 5 0.29
Time deposits 615,945 3,569 2.30
---------------- ------------ -----------
Total interest-bearing deposits 1,043,344 4,983 1.89
Other borrowings 189,150 1,174 2.46
Long-term debt 45,013 792 7.04
---------------- ------------ -----------
Total interest-bearing liabilities 1,277,507 6,949 2.16
------------ -----------
Noninterest-bearing demand 146,526
Other noninterest-bearing liabilities 13,780
Shareholders' equity 103,706
----------------
Total liabilities and shareholders' equity $1,541,519
================
Net interest income $14,227
============
Interest rate spread 3.47%
===========
Net interest margin (1) 3.78%
===========
Ratio of average interest-earning assets
to average interest-bearing liabilities 116.83%
================
Net interest income and margin
(tax-equivalent basis) (2) $14,331 3.81%
============ ===========
For the nine months ended
September 30, 2003
-------------------------------------------
Interest
Average Income/ Average
Balance Expense Yield
-------------------------------------------
ASSETS:
Loans receivable $1,252,591 $56,271 6.01%
Investment securities 188,423 6,010 4.26
Other interest-earning assets 1,022 7 0.92
----------------- ------------- -----------
Total interest-earning assets 1,442,036 62,288 5.78
Noninterest-earning assets 49,770
-----------------
Total assets $1,491,806
=================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing demand $ 56,537 $ 282 0.67%
Money market accounts 315,199 3,870 1.64
Savings accounts 6,427 12 0.25
Time deposits 625,985 11,588 2.47
----------------- ------------- -----------
Total interest-bearing deposits 1,004,148 15,752 2.10
Short-term borrowings 205,307 3,722 2.42
Long-term debt 32,119 1,969 8.17
----------------- ------------- -----------
Total interest-bearing liabilities 1,241,574 21,443 2.31
------------- -----------
Noninterest-bearing demand 134,335
Other noninterest-bearing liabilities 15,156
Shareholders' equity 100,741
-----------------
Total liabilities and shareholders' equity $1,491,806
=================
Net interest income $40,845
=============
Interest rate spread 3.47%
===========
Net interest margin (1) 3.79%
===========
Ratio of average interest-earning assets
to average interest-bearing liabilities 116.15%
=================
Net interest income and margin
(tax-equivalent basis) (2) $41,260 3.83%
============= ============
(1) The net interest margin is equal to annualized net interest income divided
by average interest-earning assets.
(2) In order to make pretax income and resultant yields on tax-exempt
investments and loans comparable to those on taxable investments and loans,
a tax-equivalent and loans, a tax equivalent adjustment is made equally to
interest income and income tax expense with no effect on after tax income.
The tax equivalent adjustment has been computed using a federal income tax
rate of 35%.
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
For the three months For the nine months
ended September 30, ended September 30,
2003 2002 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA:
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Earnings $ 0.30 $ 0.30 $ 0.93 $ 0.87
Diluted Earnings 0.28 0.28 0.90 0.82
Dividends declared 0.06 0.06 0.19 0.17
Book value (at period end) 8.93 8.10 8.93 8.10
- ------------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
- ------------------------------------------------------------------------------------------------------------------------------------
Basic 11,839,891 11,548,214 11,762,996 11,473,274
Diluted 12,398,000 12,157,716 12,247,042 12,037,608
- ------------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS:
- ------------------------------------------------------------------------------------------------------------------------------------
Return on average assets 0.88% 1.06% 0.98% 1.05%
Return on average total shareholders' equity 13.10% 14.90% 14.56% 15.02%
Efficiency ratio 55.03% 56.04% 54.38% 56.37%
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL RATIOS AS OF PERIOD END:
- ------------------------------------------------------------------------------------------------------------------------------------
Leverage ratio 9.27% 8.95%
Tier I capital ratio 11.07% 10.71%
Total capital ratio 13.01% 11.82%
Tier I capital $ 140,130 $ 115,851
Total capital 164,699 127,907
Total risk adjusted assets 1,265,517 1,082,131
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN COMPOSITION AS OF PERIOD END:
- ------------------------------------------------------------------------------------------------------------------------------------
Real estate mortgage:
Commercial $ 400,859 $ 359,834
One-to-four family residential 83,280 100,185
Real estate construction 212,872 127,385
Commercial 375,807 321,521
Installment and consumer:
Government-guaranteed student loans 186,735 109,613
Other 24,615 27,305
-------------- -----------------
Total loans, including loans held for sale $1,284,168 $1,045,843
Less: Allowance for loan losses (14,625) (12,056)
-------------- -----------------
Total loans, net $1,269,543 $1,033,787
============== =================
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS (CONTINUED)
(Dollars in thousands, except per share data)
For the nine months
ended September 30,
2003 2002
- -------------------------------------------------------------------------------------------------------------------------
ASSET QUALITY AS OF PERIOD END:
- -------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans (1) $ 16,950 $ 6,642
Restructured loans - -
90 day past due and accruing (2) 2,293 2,451
------------ -----------------
Total nonperforming loans (3) $ 19,243 $ 9,093
============ =================
Other real estate owned $ 482 $ 757
Allowance for loan losses as a percentage of total loans 1.14% 1.15%
Allowance for loan losses as a percentage of nonperforming loans 76.00% 132.59%
Nonperforming loans as a percentage of total loans 1.50% 0.87%
Nonperforming assets as a percentage of total loans and other real estate 1.54% 0.94%
Total charge-offs $ 4,089 $ 3,782
Total recoveries 378 251
------------ -----------------
Net charge-offs $ 3,711 $ 3,531
============ =================
Net charge-offs (annualized) as a percentage of average loans 0.40% 0.48%
- -------------------------------------------------------------------------------------------------------------------------
OTHER MISCELLANEOUS INFORMATION AS OF PERIOD END:
- -------------------------------------------------------------------------------------------------------------------------
Goodwill $ 194 $ 194
Mortgage Servicing Rights 1,112 820
Non-mortgage Servicing Rights 92 77
------------ -----------------
Total Intangible Assets $ 1,398 $ 1,091
============ =================
1-4 family mortgage loans serviced for others $124,310 $106,394
Intangible amortization expense 322 139
FTE employees (at period end) 340 322
Number of ATMs 334 296
Number of branches 8 6
(1) The government-guaranteed portion of loans included in these totals were
$2.6 million (2003) and $970,000 (2002).
(2) The government-guaranteed portion of loans included in these totals were $0
(2003) and $119,000 (2002).
(3) The government-guaranteed portion of loans included in these totals were
$2.6 million (2003) and $1.1 million (2002).