Exhibit 99.1
[OKLAHOMA'S
SOUTHWEST
BANCORP, INC. LOGO]
SOUTHWEST BANCORP, INC. REPORTS RECORD EARNINGS
CONTACT: RICK GREEN, PRESIDENT & C.E.O.
KERBY E. CROWELL, EXECUTIVE VICE PRESIDENT & C.F.O.
TELEPHONE: (405) 372-2230
RELEASE DATE: JANUARY 25, 2005
January 25, 2005, 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") and SNB Bank
of Wichita ("SNB Wichita"), today reported record net income for the fourth
quarter of 2004 of $5.0 million, a 27% increase from the fourth quarter of 2003.
Diluted earnings per share were $0.39 compared to $0.32 per share for the 2003
period, up 22%. Net income for the year 2004 was a record $18.6 million, a 25%
increase from the same period in 2003. Diluted earnings per share were $1.48
compared to $1.22 per share for the 2003 period, up 21%.
2004 RESULTS AND FOCUS
o Total assets of $1.9 billion; a 21% increase from year-end 2003.
o Portfolio loans of $1.3 billion; a 16% increase from year-end 2003.
o Net Income: $5.0 million; a 27% increase from fourth quarter 2003.
$18.6 million; a 25% increase from the year 2003.
o Diluted earnings per share: $0.39; a 22% increase from fourth quarter 2003.
$1.48; a 21% increase from the year 2003.
o Dividends per share: $0.07; a 12% increase from fourth quarter 2003.
$0.28; a 12% increase from the year 2003.
o Return on average equity: 15.98% for the fourth quarter 2004.
15.80% for the year 2004.
o GAAP-based efficiency ratio: 49.05% for the fourth quarter 2004.
51.31% for the year 2004.
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STRATEGIC PERSPECTIVE
"At Southwest, we focus on converting our strategic vision into
long-term shareholder value. This includes increasing our earnings and banking
asset growth from carefully selected, higher growth markets to capitalize on our
strengths in serving medical, professional, and business customers," said Rick
Green, President and Chief Executive Officer. "Southwest's record earnings
growth for 2004 is primarily the result of significant loan growth and an
increase in net interest income due to improved interest spread and margin. We
are continuing to focus on increasing net interest income by prudent loan growth
in our Oklahoma, Texas and Kansas markets and in guaranteed student lending
coupled with careful management of interest margins and funding. Other
initiatives also contributed, including continued emphasis on appropriately
pricing loan renewals, commercial loan participation sales, and service charge
increases."
At the end of 2004, Southwest had total assets of $1.9 billion, loans
of $1.6 billion, and deposits of $1.5 billion. At that date, regulatory capital
ratios for Southwest, Stillwater National, and SNB Wichita continued to exceed
regulatory requirements for a well-capitalized institution.
ADDITIONAL FINANCIAL INFORMATION
Net income for the year 2004 was $18.6 million, up $3.7 million, or
25%, from the same period in 2003. Basic earnings per share for 2004 were $1.54,
up 22% from $1.26 in 2003. Diluted earnings per share of $1.48 increased 21%
over 2003.
Net interest income increased 31% from 2003. Noninterest income for
2004 declined $415,000 from 2003 due primarily to a $1.1 million reduction in
gain on sales of mortgage loans which occurred due to the lower refinancing
demand created by higher mortgage interest rates in 2004.
The provision for loan losses of $13.0 million increased $4.5 million,
or 52%, from 2003. Noninterest expense of $44.4 million increased $6.0 million,
or 16%, primarily as a result of increases in compensation, general and
administrative, and occupancy expenses. Southwest recorded a charge relating to
executive retirement in the first quarter of 2004 of approximately $294,000
after related tax benefits.
FINANCIAL CONDITION
At December 31, 2004, total assets were $1.9 billion, a $335.4 million
increase from the end of 2003. Total portfolio loans (loans other than those
held for sale) at the end of 2004 were $1.3 billion, up $178.9 million, or 16%,
from year-end 2003, primarily as a result of growth in total commercial and
commercial real estate loans. Loans held for sale, which are primarily
guaranteed student loans, grew by $136.1 million during 2004, and contributed
significantly to our 2004 net interest income and net income. (See "Forward
Looking Statements" below.)
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ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING LOANS
Nonaccrual loans totaled $22.1 million at December 31, 2004, compared
to $28.5 million at September 30, 2004 and $14.5 million at December 31, 2003.
Total nonperforming loans of $23.0 million increased $7.1 million, or 44%, from
year-end 2003, and represented 1.42% of total loans, compared to 1.22% of total
loans at year-end 2003. At September 30, 2004, total nonperforming loans were
$30.8 million, or 1.91% of total loans. At December 31, 2004, $1.5 million, or
6%, 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. We reduced our total
nonperforming loans by $7.8 million in the fourth quarter of 2004 through
resolution, foreclosure, or charge-off. Total nonperforming assets declined by
$5.3 million, or 16%, during the fourth quarter of 2004. At December 31, 2004,
three credit relationships accounted for approximately $16.3 million, or 71%, of
total nonperforming loans and 58% of nonperforming assets. All of these credits
were identified as problem or potential problem credits in previous quarters.
Management continues to actively manage these relationships, and anticipates
they will be significantly reduced within the next six months."
The allowance for loan losses of $19.9 million increased $4.1 million,
or 26%, from year-end 2003. At year-end 2004, the allowance for loan losses was
1.23% of total loans, compared to 1.21% of total loans at year-end 2003.
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
those on nonperforming loans.
SECURITIES
Southwest's common stock is traded on the Nasdaq National Market under
the symbol OKSB. Market makers for Southwest's common stock include Stifel
Nicolaus & Co., Goldman Sachs & Co., Keefe Bruyette & Woods Inc., Merrill Lynch,
RBC Capital Markets Corp., UBS Capital Markets, Morgan Stanley & Co., Inc.,
Sandler O'Neill & Partners, FTN Midwest Research Secs., and Citigroup Global
Markets, Inc.
Trust preferred securities of Southwest's subsidiary, SBI Capital
Trust, trade on the Nasdaq National Market under the symbol OKSBO. Southwest
intends to redeem these $25.0 million, 9.30%, cumulative trust preferred
securities during 2005.
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SOUTHWEST BANCORP AND SUBSIDIARIES
Southwest is the financial holding company for Stillwater National Bank
and Trust Company, SNB Bank of Wichita, Healthcare Strategic Support, Inc., and
Business Consulting Group, Inc. Southwest is an independent company, not
controlled by other organizations or individuals and pursues an established
strategy of independent operation for the benefit of all of its shareholders.
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 services
company for its selected markets. Information regarding Southwest can be
retrieved via the Internet, at www.oksb.com. Southwest, Stillwater National, and
SNB Wichita 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, Wichita, Kansas and metropolitan Dallas, Texas; loan production
offices in Kansas City, Kansas and Austin, Texas, 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. Stillwater National has applied to
open an additional branch office in Austin, Texas. Southwest intends to focus
its efforts on markets with characteristics that will allow it to capitalize on
its strengths, and to continue establishing new offices in those markets.
Southwest considers acquisitions of other financial institutions and other
companies, from time to time, although it does not have any specific agreements
or understandings for any such acquisition at present. Southwest also extends
loans to borrowers in Oklahoma and neighboring states through participations
with correspondent banks. Information regarding products and services of
Stillwater National and SNB Wichita, including SNB DirectBanker(R), Southwest's
online banking product, can be retrieved via the Internet, at www.oksb.com. The
Stillwater National and SNB Wichita web sites and online banking technology are
frequently updated in response to the changing needs of the 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; off-balance sheet risk and market risk;
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, market behavior, 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 previously announced that the
yields on new guaranteed private student loans will be substantially less than
those made during 2004. This yield reduction is expected to reduce the future
profitability of student lending and Southwest's secondary market segment, but
had no effect on 2004 earnings and will not affect the profitability of
Southwest's other operating segments. Southwest anticipates continued growth in
guaranteed student lending in 2005.
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SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
DECEMBER 31, DECEMBER 31,
2004 2003
----------------- -----------------
ASSETS:
Cash and cash equivalents $ 24,097 $ 33,981
Investment securities:
Held to maturity, fair value $2,509 (2004) and $16,144 (2003) 2,495 15,916
Available for sale, amortized cost $205,393 (2004) and $176,470 (2003) 204,092 177,074
Federal Reserve Bank and Federal Home Loan Bank Stock, at cost 13,464 11,276
Loans held for sale 354,557 218,422
Loans receivable, net of allowance for loan losses
of $19,944 (2004) and $15,848 (2003) 1,249,374 1,074,566
Accrued interest receivable 15,091 11,321
Premises and equipment, net 19,860 19,818
Other assets 33,067 18,351
----------- -----------
Total assets $ 1,916,097 $ 1,580,725
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Noninterest-bearing demand $ 183,738 $ 167,332
Interest-bearing demand 57,359 53,955
Money market accounts 379,818 376,016
Savings accounts 8,108 6,903
Time deposits of $100,000 or more 741,039 358,130
Other time deposits 129,996 241,789
----------- -----------
Total deposits 1,500,058 1,204,125
Other borrowings 200,065 183,850
Accrued interest payable 4,911 3,375
Income tax payable 5,529 2,850
Other liabilities 7,370 4,410
Subordinated debentures 72,180 72,180
----------- -----------
Total liabilities 1,790,113 1,470,790
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 7,993 6,997
Retained earnings 107,905 92,657
Accumulated other comprehensive income/(loss) (797) 360
Treasury stock, at cost; 138,189 (2004) and 287,410 (2003) shares (1,360) (2,322)
----------- -----------
Total shareholders' equity 125,984 109,935
----------- -----------
Total liabilities & shareholders' equity $ 1,916,097 $ 1,580,725
=========== ===========
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SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
For the three months For the twelve months
ended December 31, ended December 31,
2004 2003 2004 2003
----------- ------------ ------------- -------------
Interest income:
Interest and fees on loans $ 28,364 $ 19,844 $ 96,832 $ 76,115
Investment securities 1,966 1,944 7,881 7,954
Other interest-bearing assets 3 3 10 10
----------- ----------- ----------- -----------
30,333 21,791 104,723 84,079
Total interest income
Interest expense:
Interest-bearing deposits 6,520 4,893 21,778 20,645
Other borrowings 1,796 1,165 5,979 4,887
Subordinated debentures 1,193 1,049 4,489 3,079
----------- ----------- ----------- -----------
Total interest expense 9,509 7,107 32,246 28,611
----------- ----------- ----------- -----------
Net interest income 20,824 14,684 72,477 55,468
Provision for loan losses 4,882 2,074 12,982 8,522
Other income:
Service charges and fees 2,584 2,375 9,898 9,293
Gain on sales of loans receivable 861 954 3,247 4,111
Gain (loss) on sales of investment securities 47 0 (62) 28
Other noninterest income 271 300 1,002 1,068
----------- ----------- ----------- -----------
Total other income 3,763 3,629 14,085 14,500
Other expenses:
Salaries and employee benefits 6,706 5,359 22,599 19,792
Occupancy 2,227 2,169 9,223 8,107
FDIC and other insurance 119 94 420 340
Other real estate 135 47 242 215
General and administrative 2,874 2,691 11,928 9,994
----------- ----------- ----------- -----------
Total other expenses 12,061 10,360 44,412 38,448
----------- ----------- ----------- -----------
Income before taxes 7,644 5,879 29,168 22,998
Taxes on income 2,676 1,956 10,539 8,106
----------- ----------- ----------- -----------
Net income $ 4,968 $ 3,923 $ 18,629 $ 14,892
=========== =========== =========== ===========
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SOUTHWEST BANCORP, INC.
UNAUDITED AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands)
For the three months ended
December 31, 2004
---------------------------------------------
Interest
Average Income/ Average
Balance Expense Yield/Rate
---------------------------------------------
ASSETS:
Loans receivable $1,675,336 $28,364 6.74%
Investment securities 217,263 1,966 3.60
Other interest-earning assets 922 3 1.29
---------------- ------------ -----------
Total interest-earning assets 1,893,521 30,333 6.37
Noninterest-earning assets 69,106
----------------
Total assets $1,962,627
================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing demand $ 56,041 $ 51 0.36%
Money market accounts 387,448 1,693 1.74
Savings accounts 8,109 5 0.25
Time deposits 838,776 4,771 2.26
---------------- ------------ -----------
Total interest-bearing deposits 1,290,374 6,520 2.01
Other borrowings 270,988 1,796 2.64
Subordinated debentures 72,180 1,193 6.47
---------------- ------------ -----------
Total interest-bearing liabilities 1,633,542 9,509 2.32
------------ -----------
Noninterest-bearing demand deposits 188,396
Other noninterest-bearing liabilities 17,005
Shareholders' equity 123,684
----------------
Total liabilities and shareholders' equity $1,962,627
================
Net interest income $20,824
============
Interest rate spread 4.05%
===========
Net interest margin (1) 4.38%
===========
Ratio of average interest-earning assets
to average interest-bearing liabilities 115.92%
================
Net interest income and margin
(tax-equivalent basis) (2) $20,875 4.39%
============ ===========
(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 on taxable investments 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%.
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SOUTHWEST BANCORP, INC.
UNAUDITED AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands)
For the twelve months ended
December 31, 2004
---------------------------------------------
Interest
Average Income/ Average
Balance Expense Yield/Rate
---------------------------------------------
ASSETS:
Loans receivable $1,527,935 $ 96,832 6.34%
Investment securities 214,988 7,881 3.67
Other interest-earning assets 1,063 10 0.94
------------- ---------- ---------
Total interest-earning assets 1,743,986 104,723 6.00
Noninterest-earning assets 65,938
-------------
Total assets $1,809,924
=============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing demand $ 58,375 $ 291 0.50%
Money market accounts 405,116 6,118 1.51
Savings accounts 7,819 19 0.24
Time deposits 709,660 15,350 2.16
------------- ---------- ---------
Total interest-bearing deposits 1,180,970 21,778 1.84
Other borrowings 252,131 5,979 2.37
Subordinated debentures 72,180 4,489 6.22
------------- ---------- ---------
Total interest-bearing liabilities 1,505,281 32,246 2.14
---------- ---------
Noninterest-bearing demand deposits 174,366
Other noninterest-bearing liabilities 12,365
Shareholders' equity 117,912
-------------
Total liabilities and shareholders' equity $1,809,924
=============
Net interest income $ 72,477
==========
Interest rate spread 3.86%
=========
Net interest margin (1) 4.16%
=========
Ratio of average interest-earning assets
to average interest-bearing liabilities 115.86%
=============
Net interest income and margin
(tax-equivalent basis) (2) $ 72,761 4.17%
========== =========
(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 on taxable investments 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%.
Page 8 of 10
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
For the three months For the twelve months
ended December 31, ended December 31,
2004 2003 2004 2003
- ----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
Basic Earnings $ 0.41 $ 0.33 $ 1.54 $ 1.26
Diluted Earnings 0.39 0.32 1.48 1.22
Dividends declared 0.07 0.06 0.28 0.25
Book value (at period end) 10.41 9.20
- ----------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
- ----------------------------------------------------------------------------------------------------------------------------------
Basic 12,091,688 11,905,084 12,060,842 11,798,810
Diluted 12,650,554 12,329,963 12,547,986 12,159,620
- ----------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS:
- ----------------------------------------------------------------------------------------------------------------------------------
Return on average assets 1.01% 0.99% 1.03% 0.99%
Return on average total shareholders' equity 15.98% 14.69% 15.80% 14.59%
Efficiency ratio 49.05% 56.57% 51.31% 54.95%
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL RATIOS AS OF PERIOD END:
- ----------------------------------------------------------------------------------------------------------------------------------
Leverage ratio 8.61% 9.32%
Tier I capital ratio 10.88% 11.13%
Total capital ratio 13.92% 14.90%
Tier I capital $ 168,847 $ 145,906
Total capital 216,038 195,254
Total risk adjusted assets 1,552,326 1,310,355
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LOAN COMPOSITION AS OF PERIOD END:
- ----------------------------------------------------------------------------------------------------------------------------------
Real estate mortgage:
Commercial $ 523,358 $ 402,596
One-to-four family residential 87,858 83,250
Real estate construction 248,278 230,292
Commercial 390,272 355,965
Installment and consumer:
Guaranteed student loans 348,970 211,546
Other 25,139 25,187
------------- --------------
Total loans, including loans held for sale $1,623,875 $1,308,836
Less: Allowance for loan losses (19,944) (15,848)
------------- --------------
Total loans, net $1,603,931 $1,292,988
============= ==============
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SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS (CONTINUED)
(Dollars in thousands, except per share data)
For the twelve months
ended December 31,
2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
ASSET QUALITY AS OF PERIOD END:
- ------------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans (1) $ 22,058 $ 14,530
Restructured loans - -
90 day past due and accruing (2) 929 1,384
------------- --------------
Total nonperforming loans (3) $ 22,987 $ 15,914
============= ==============
Other real estate owned $ 4,937 $ 1,699
Allowance for loan losses as a percentage of total loans 1.23% 1.21%
Allowance for loan losses as a percentage of nonperforming loans 86.76% 99.59%
Nonperforming loans as a percentage of total loans 1.42% 1.22%
Nonperforming assets as a percentage of total loans and other real estate 1.71% 1.34%
Total charge-offs $ 10,034 $ 5,077
Total recoveries 1,148 515
------------- --------------
Net charge-offs $ 8,886 $ 4,562
============= ==============
Net charge-offs as a percentage of average loans 0.58% 0.36%
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OTHER MISCELLANEOUS INFORMATION AS OF PERIOD END:
- ----------------------------------------------------------------------------------------------------------------------------------
Goodwill $ 194 $ 194
Mortgage Servicing Rights 1,213 1,128
Non-mortgage Servicing Rights 76 90
------------- --------------
Total Intangible Assets $ 1,483 $ 1,412
============= ==============
1-4 family mortgage loans serviced for others $125,353 $124,366
Intangible amortization expense 327 398
FTE employees (at period end) 355 335
Number of ATMs 289 294
Number of branches 10 9
(1) The government-guaranteed portion of loans included in these totals were
$1.4 million (2004) and $2.5 million (2003).
(2) The government-guaranteed portion of loans included in these totals were
$38,000 (2004) and $146,000 (2003).
(3) The government-guaranteed portion of loans included in these totals were
$1.5 million (2004) and $2.7 million (2003).
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