×

Southwest Bancorp, Inc. Reports Second Quarter 2014 Results and Announces Quarterly Dividend

Southwest Bancorp, Inc. Logo

STILLWATER, Okla., July 22, 2014 (GLOBE NEWSWIRE) -- Southwest Bancorp, Inc. (Nasdaq:OKSB), ("Southwest"), today reported net income for the second quarter of 2014 of $6.2 million, or $0.31 per diluted share, compared to $3.7 million, or $0.19 per diluted share, for the first quarter of 2014. Included in the second quarter of 2014 results is a pre-tax net gain of $4.4 million from the sale of three community bank branches in Anthony, Harper, and Overland Park, Kansas. Net income for the six months ended June 30, 2014 totaled $9.8 million, or $0.50 per diluted share, compared to $6.8 million, or $0.34 per diluted share, for the six months ended June 30, 2013.

Southwest announced that its board of directors has approved a quarterly cash dividend of $0.04 per share payable August 15, 2014 to shareholders of record as of August 1, 2014.

Mark Funke, President and CEO, stated, "The positive results of the second quarter reflect our focus on the strategic objective to grow loans, complete the sale of branches in non-strategic markets, and to continue to improve asset quality. Our efforts produced several highlights for the quarter.

  • The previously announced sales of three of our Kansas branches were successfully completed in the second quarter and resulted in a $4.4 million pre-tax net gain. These sales included the sale of $27.9 million in loans and $130.6 million in deposits.
  • Loan growth in the second quarter was $59.5 million, adjusted for loans sold with the branch sales.
  • The quarterly net interest margin improved to 3.34% (normalized) at June 30, 2014 compared to 3.21% (normalized) at March 31, 2014 and 3.07% at June 30, 2013.
  • Asset quality improved as nonperforming loans stabilized and potential problem loans decreased $7.6 million, or 8%, during the second quarter. The improved asset quality resulted in a negative provision of $0.4 million."

"These positive results and actions reflect the good work of our associates at Bank SNB and a growing customer base. We will continue to focus our company on future growth through the expansion of our revenue base while prudently managing our expenses. We are encouraged by the momentum we have throughout our company."

Financial Overview

Condition: During the quarter ended June 30, 2014, total assets of $1.9 billion decreased $126.9 million from March 31, 2014 primarily as a result of the branch sales. Total loans of $1.4 billion increased $31.6 million from March 31, 2014 and total investment securities of $385.9 million remained flat compared to March 31, 2014. Cash and cash equivalents at June 30, 2014 were $115.2 million, down $151.4 million from March 31, 2014, primarily due to the branch sales that occurred during the quarter.

At June 30, 2014, the allowance for loan losses was $33.1 million, a decrease of $7.3 million when compared to a year ago, and a decrease of $1.8 million when compared to March 31, 2014. The allowance for loan losses to portfolio loans was 2.46% as of June 30, 2014, compared to 3.08% as of June 30, 2013 and 2.66% as of March 31, 2014. The allowance for loan losses to nonperforming loans was 200.77% as of June 30, 2014, compared to 123.87% as of June 30, 2013 and 217.13% as of March 31, 2014. Subsequent to the end of the second quarter, Southwest collected a $1.3 million recovery of a prior period loan loss and a $6.8 million payoff of a related restructured potential problem loan.

Nonperforming loans decreased by $16.1 million in a year over year comparison, and remained stable during the quarter with only an increase of $0.4 million. Other real estate at June 30, 2014 was $4.3 million, an increase of $2.5 million from June 30, 2013, but a decrease of $0.4 million when compared to March 31, 2014. Nonperforming assets were $20.8 million, or 1.54% of portfolio loans and other real estate, as of June 30, 2014, compared to $34.4 million, or 2.62% of portfolio loans and other real estate, as of June 30, 2013, and $20.7 million, or 1.57% of portfolio loans and other real estate, as of March 31, 2014.

Total core funding, which includes all non-brokered deposits and sweep repurchase agreements, comprised 95% and 98% of total funding as of June 30, 2014 and March 31, 2014, respectively. Wholesale funding, including FHLB borrowings, federal funds purchased, and brokered deposits, accounted for 5% and 2% of total funding at June 30, 2014 and March 31, 2014, respectively. See Table 7 for details on core funding and non-brokered deposits, which are non-GAAP financial measures.

The capital ratios of Southwest and Bank SNB, National Association, ("Bank SNB"), Southwest's banking subsidiary, as of June 30, 2014, exceeded the criteria for regulatory classification as "well-capitalized". Southwest's total regulatory capital was $329.6 million, for a total risk-based capital ratio of 21.43%, and Tier 1 capital was $309.6 million, for a Tier 1 risk-based capital ratio of 20.13%. Southwest's capital exceeded the minimum to be classified as "well-capitalized" by $175.8 million. Bank SNB had total regulatory capital of $282.9 million, for a total risk-based capital ratio of 18.48%, and Tier 1 capital of $263.5 million, for a Tier 1 risk-based capital ratio of 17.21%. Bank SNB exceeded the minimum to be classified as "well-capitalized" by $129.8 million. Designation as a well-capitalized institution under regulations does not constitute a recommendation or endorsement by Federal bank regulators.

Second Quarter Results:

Summary: For the second quarter of 2014, net income was $6.2 million, compared to $4.4 million for the second quarter of 2013 and $3.7 million for the first quarter of 2014.

The $1.7 million increase in our net income compared to the second quarter of 2013 was primarily the result of a $1.4 million increase in net interest income, primarily driven by lower interest expense on deposits and a reduction in interest costs due to the redemption of the 10.5% Trust Preferred Securities in third quarter of 2013, and the $4.8 million increase in noninterest income, primarily driven by the pre-tax net gain on the sale of the community bank branches, offset in part by a $0.5 million decline in the negative provision for loan losses and a $2.5 million increase in noninterest expense.

The $2.5 million increase in net income compared to the first quarter of 2014 was primarily due to the $0.6 million increase in net interest income resulting from loan growth combined with the recognition of accelerated discount accretion attributable to the sale of loans covered by the loss share agreement and the $5.2 million increase in noninterest income, which included the $4.4 million pre-tax net gain recognized on the branch sales and $0.6 million recognized on the sale of a stock that was acquired in a prior year repossession. Partially offsetting these increases were a $0.6 million decrease in the negative provision for loan losses and a $1.2 million increase in noninterest expense.

Net Interest Income: Net interest income totaled $16.6 million for the second quarter of 2014, compared to $15.1 million for the second quarter of 2013, an increase of $1.4 million, or 10%, and to $16.0 million for the first quarter of 2014, an increase of $0.6 million, or 4%. Net interest margin was 3.50% for the second quarter of 2014, compared to 3.07% for the second quarter of 2013 and 3.33% for the first quarter of 2014. Included in interest income for the second quarter of 2014 was $0.8 million due to accelerated discount accretion attributable to the sale of loans covered by the loss share agreement, and included in interest income for the first quarter of 2014 was $0.6 million due to the interest recognition resulting from loans returning to accrual status. The net effects of these adjustments on the net interest margin were a 16 basis point increase in the second quarter of 2014 and a 12 basis point increase in the first quarter of 2014. Loans (including loans held for sale) increased $33.6 million, or 3%, when compared to June 30, 2013, and $31.6 million, or 2%, when compared to March 31, 2014.

Provision for Loan Losses and Net Charge-offs: The provision for loan losses is the amount that is required to maintain the allowance for losses at an appropriate level based upon the inherent risks in the loan portfolio after the effects of net charge-offs or net recoveries for the period. The provision for loan losses was a negative provision (or credit) of $0.4 million for the second quarter of 2014, compared to a negative provision of $0.9 million for the second quarter of 2013, and a negative provision of $1.0 million for the first quarter of 2014. During the second quarter of 2014, charge-offs totaled $2.0 million and recoveries totaled $0.5 million. Therefore, the second quarter of 2014 net charge-offs totaled $1.5 million, or 0.45% (annualized) of average portfolio loans, compared to net charge-offs of $1.6 million, or 0.50% (annualized) of average portfolio loans for the second quarter of 2013 and net charge-offs of $0.8 million, or 0.24% (annualized) of average portfolio loans for the first quarter of 2014.

Noninterest Income: Noninterest income totaled $8.2 million for the second quarter of 2014, compared to $3.5 million for the second quarter of 2013 and to $3.0 million for the first quarter of 2014. The $4.8 million increase from second quarter 2013 included the $4.4 million recognized as the gain on sales of the community bank branches and $0.6 million gain on the sale of a stock investment that was acquired in a prior year repossession, offset in part by $0.4 million decrease in gain on sales of mortgage loans. Excluding the gain on sale of branches, the $0.8 million increase from first quarter of 2014 included a $0.2 million increase in gain on sale of mortgage loans and a $0.5 million increase in the gain on the sale of investment securities.

Noninterest Expense: Noninterest expense totaled $15.3 million for the second quarter of 2014, compared to $12.8 million for the second quarter of 2013 and to $14.1 million for the first quarter of 2014. The $2.5 million increase in noninterest expense from second quarter of 2013 consisted of a $1.9 million increase in other real estate expense due to net gains on sales of other real estate properties recognized in the prior year, a $0.4 million increase in employee benefit expense, and a $0.4 million increase in other general and administrative expense, primarily increased legal fees and contingencies on several legal matters, offset in part by a $0.2 million decrease in the provision for unfunded loan commitments.

The $1.2 million increase in noninterest expense from first quarter of 2014 was due to a $0.6 million increase in other general and administrative expense, primarily legal fees and contingencies and marketing expenses, a $0.4 million increase in other real estate expense due to write-downs that occurred during the second quarter, and a $0.3 million increase employee benefit expense.

Income Tax: Income tax expense totaled $3.7 million for the second quarter of 2014, compared to $2.2 million for the second quarter of 2013 and for the first quarter of 2014 each respectively. The income tax expense fluctuates in relation to pre-tax income levels. The second quarter of 2014 effective tax rate was 37.50%.

Year-to-date Results:

Summary: Net income was $9.8 million as of June 30, 2014, compared to $6.8 million as of June 30, 2013. The $3.0 million increase in net income from 2013 is the result of a $1.8 million increase in net interest income, primarily driven by lower interest expense on deposits and a reduction in interest expense due to the redemption of the 10.5% Trust Preferred Securities in third quarter of 2013, a $1.0 million increase in the negative provision for loan losses, resulting from improved asset quality, a $4.2 million increase in noninterest income, primarily the pre-tax net gain on sale of community bank branches, offset in part by a $2.2 million increase in noninterest expense due to decreased gains recognized on sale of other real estate properties and increased employee benefit expenses.

Net Interest Income: Net interest income totaled $32.6 million for the first six months of 2014, compared to $30.7 million for the first six months of 2013, an increase of $1.8 million, or 6%, primarily driven by lower interest expense on deposits and a reduction in interest expense due to the redemption the 10.5% Trust Preferred Securities in third quarter of 2013. Year-to-date net interest margin was 3.42%, compared to 3.12% for 2013. Included in interest income for the first six months of 2014 was $0.8 million due to accelerated discount accretion attributable to the sale of loans covered by the loss share agreement and $0.6 million due to the interest recognition resulting from loans returning to accrual status. The net effect of these adjustments on the net interest margin was an 14 basis point increase for the first six months of 2014. With the rate environment remaining low, earning assets are repricing at lower rates.

Provision for Loan Losses and Net Charge-offs: The provision for loan losses is the amount of expense that is required to maintain the allowance for losses at an appropriate level based upon the inherent risks in the loan portfolio after the effects of net charge-offs for the period. The provision for loan losses was a credit (or negative) of $1.3 million for the first six months of 2014, compared to a credit of $0.4 million for the first six months of 2013. Net charge-offs totaled $2.2 million, or 0.35% (annualized) of average portfolio loans year-to-date as of June 30, 2014, compared to $6.0 million, or 0.91% (annualized) of average portfolio loans for the same period 2013.

Noninterest Income: Noninterest income totaled $11.3 million for the first six months of 2014, compared to $7.0 million for the first six months of 2013. The increase consists of the $4.4 million recognized as the pre-tax net gain on sales of the community bank branches and the $0.8 million in gain on sale of investment securities, offset in part by the $1.0 million decline in gains on sales of mortgage loans.

Noninterest Expense: Noninterest expense totaled $29.4 million for the first six months of 2014, compared to $27.2 million for the first six months of 2013. The increase consists of a $1.6 million increase in other real estate expense, which is primarily due to net gains recognized during the prior year on the sale of other real estate properties, a $0.4 million increase in employee benefit expenses, a $0.3 million increase in occupancy expense, and a $0.3 million increase in other general and administrative expense, primarily the result of increased legal fees and contingencies on several matters, offset in part by a decrease in the provision for unfunded loan commitments.

Income Tax: Income tax expense totaled $5.9 million for the first six months of 2014, compared to $4.1 million for the first six months of 2013. The income tax expense fluctuates in relation to pre-tax income levels. The year-to-date effective tax rate was 37.50% as of June 30, 2014.

Conference Call

Southwest will host a conference call to review these results on Wednesday, July 23, 2014 at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). Investors, news media, and others may pre-register for the call using the following link to receive a special dial-in number and PIN: http://dpregister.com/10048892. Telephone participants who are unable to pre-register may access the call by telephone at 866-218-2402 (toll-free) or 412-902-4190 (international). Participants are encouraged to dial into the call approximately 10 minutes prior to the start time. The call and corresponding presentation slides will be webcast live on Southwest's website at www.oksb.com or http://services.choruscall.com/links/oksb140723.html. An audio replay will be available one hour after the call at 877-344-7529 (toll-free) or 412-317-0088 (international), conference number 10048892. Telephone replay access will be available until 9:00 a.m. Eastern Time on August 20, 2014.

Southwest Bancorp and Subsidiaries

Southwest is the holding company for Bank SNB, National Association ("Bank SNB"). Bank SNB offers commercial and consumer lending, deposit and investment services, specialized cash management, and other financial services from offices in Oklahoma, Texas, and Kansas. Bank SNB was chartered in 1894 and Southwest was organized in 1981 as the holding company. At June 30, 2014, Southwest had total assets of $1.9 billion, deposits of $1.5 billion, and shareholders' equity of $271.4 million.

Southwest's area of expertise focuses on the special financial needs of healthcare and health professionals, businesses and their managers and owners, commercial lending, energy banking, and commercial real estate borrowers. The strategic focus on healthcare lending was established in 1974. Southwest and its banking subsidiary provide credit and other services, such as deposits, cash management, and document imaging for physicians and other healthcare practitioners to start or develop their practices and finance the development and purchase of medical offices, clinics, surgical care centers, hospitals, and similar facilities. As of June 30, 2014, approximately $398.7 million, or 29%, of loans were loans to individuals and businesses in the healthcare industry. Regular market reviews are conducted of (i) current and potential healthcare lending business, and (ii) the appropriate concentrations within healthcare based upon economic and regulatory conditions.

Southwest's common stock is traded on the NASDAQ Global Select Market under the symbol OKSB.

Caution About Forward-Looking Statements

Southwest makes forward-looking statements in this news release that are subject to risks and uncertainties. These statements are intended to be covered by the safe harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include:

  • Statements of Southwest's goals, intentions, and expectations;
  • Estimates of risks and of future costs and benefits;
  • Expectations regarding Southwest's future financial performance and the financial performance of its operating segments;
  • Expectations regarding regulatory actions;
  • Expectations regarding Southwest's ability to utilize tax loss benefits;
  • Assessments of loan quality, probable loan losses, and the amount and timing of loan payoffs;
  • Estimates of the value of assets held for sale or available for sale; 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: the amount and timing of future changes in interest rates, market behavior, and other economic conditions; future laws, regulations, and accounting principles; changes in regulatory standards and examination policies, and a variety of other matters. These other matters include, among other things, the direct and indirect effects of economic conditions on interest rates, credit quality, loan demand, liquidity, and monetary and supervisory policies of banking regulators. 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 future results. For other factors, risks, and uncertainties that could cause actual results to differ materially from estimates and projections contained in forward-looking statements, please read Southwest's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2013. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading "Risk Factors".

The cautionary statements in this release also identify important factors and possible events that involve risk and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These forward-looking statements speak only as of the date on which the statements were made. Southwest does not intend, and undertakes no obligation, to update or revise any forward-looking statements contained in this release, whether as a result of differences in actual results, changes in assumptions, or changes in other factors affecting such statements, except as required by law.

Southwest is required under generally accepted accounting principles to evaluate subsequent events and their impact, if any, on its financial statements as of June 30, 2014 through the date its financial statements are filed with the Securities and Exchange Commission. The June 30, 2014 financial statements included in this release will be adjusted if necessary to properly reflect the impact of subsequent events on estimates used to prepare those statements.

The Southwest Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8074

The Bank SNB logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=23106

Financial Tables
Unaudited Financial Highlights Table 1
Unaudited Consolidated Statements of Financial Condition Table 2
Unaudited Consolidated Statements of Operations Table 3
Unaudited Average Balances, Yields, and Rates-Quarterly Table 4
Unaudited Average Balances, Yields, and Rates-Year-to-date Table 5
Unaudited Quarterly Summary Loan Data Table 6
Unaudited Quarterly Summary Financial Data Table 7
Unaudited Quarterly Supplemental Analytical Data Table 8
SOUTHWEST BANCORP, INC. Table 1
UNAUDITED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share)
Second Quarter First Quarter
QUARTERLY HIGHLIGHTS 2014 2013 % Change 2014 % Change
Operations
Net interest income $ 16,574 $ 15,134 10% $ 16,001 4%
Provision for loan losses (355) (876) (59) (986) (64)
Noninterest income 8,246 3,491 136 3,025 173
Noninterest expense 15,332 12,839 19 14,107 9
Income before taxes 9,843 6,662 48 5,905 67
Taxes on income 3,691 2,248 64 2,214 67
Net income 6,152 4,414 39 3,691 67
Diluted earnings per share 0.31 0.22 41 0.19 63
Balance Sheet
Total assets 1,885,158 2,031,962 (7) 2,012,053 (6)
Loans held for sale 6,803 7,217 (6) 5,741 18
Portfolio loans 1,344,897 1,310,872 3 1,314,381 2
Total deposits 1,463,855 1,615,961 (9) 1,605,906 (9)
Total shareholders' equity 271,351 249,420 9 264,586 3
Book value per common share 13.71 12.67 8 13.37 3
Key Ratios
Net interest margin 3.50% 3.07% 3.33%
Efficiency ratio 61.77 68.93 74.15
Total capital to risk-weighted assets 21.43 23.78 21.29
Nonperforming loans to portfolio loans 1.23 2.49 1.22
Shareholders' equity to total assets 14.39 12.27 13.15
Tangible common equity to tangible assets* 14.34 12.22 13.10
Return on average assets (annualized) 1.27 0.87 0.75
Return on average common equity (annualized) 9.19 7.00 5.68
Return on average tangible common equity (annualized)** 9.24 7.03 5.71
Six Months
YEAR-TO-DATE HIGHLIGHTS 2014 2013 % Change
Operations
Net interest income $ 32,575 $ 30,740 6%
Provision for loan losses (1,341) (378) 255
Noninterest income 11,271 7,028 60
Noninterest expense 29,439 27,227 8
Income before taxes 15,748 10,919 44
Taxes on income 5,905 4,116 43
Net income 9,843 6,803 45
Diluted earnings per share 0.50 0.34 47
Balance Sheet
Total assets 1,885,158 2,031,962 (7)
Loans held for sale 6,803 7,217 (6)
Portfolio loans 1,344,897 1,310,872 3
Total deposits 1,463,855 1,615,961 (9)
Total shareholders' equity 271,351 249,420 9
Book value per common share 13.71 12.67 8
Key Ratios
Net interest margin 3.42% 3.12%
Efficiency ratio 67.14 72.09
Total capital to risk-weighted assets 21.43 23.78
Nonperforming loans to portfolio loans 1.23 2.49
Shareholders' equity to total assets 14.39 12.27
Tangible common equity to tangible assets* 14.34 12.22
Return on average assets (annualized) 1.01 0.66
Return on average common equity (annualized) 7.47 5.46
Return on average tangible common equity (annualized)** 7.50 5.49
Balance sheet amounts and ratios are as of period end unless otherwise noted.
* This is a Non-GAAP financial measure. Please see Table 8 for a reconciliation to the most directly comparable GAAP based measure.
** This is a Non-GAAP financial measure.
Please see accompanying tables for additional financial information.
SOUTHWEST BANCORP, INC. Table 2
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
June 30, December 31, June 30,
2014 2013 2013
Assets
Cash and due from banks $ 28,369 $ 28,062 $ 32,137
Interest-bearing deposits 86,785 251,777 266,835
Cash and cash equivalents 115,154 279,839 298,972
Securities held to maturity (fair values of $11,286, $12,115, and $12,188, respectively) 10,682 11,720 11,758
Securities available for sale (amortized cost of $373,609, $385,423, and $361,397, respectively) 375,191 382,479 360,645
Loans held for sale 6,803 3,060 7,217
Loans receivable (includes loss share of $606, $1,812, and $5,062, respectively) 1,344,897 1,267,843 1,310,872
Less: Allowance for loan losses (33,083) (36,663) (40,352)
Net loans receivable 1,311,814 1,231,180 1,270,520
Accrued interest receivable 4,636 5,335 6,067
Derivative asset 121 -- --
Premises and equipment, net 19,096 20,833 21,063
Other real estate 4,285 2,654 1,811
Goodwill 1,214 1,214 1,214
Other intangible assets, net 3,849 4,980 4,981
Other assets 32,313 38,129 47,714
Total assets $ 1,885,158 $ 1,981,423 $ 2,031,962
Liabilities
Deposits:
Noninterest-bearing demand $ 427,431 $ 444,796 $ 412,176
Interest-bearing demand 124,712 120,156 138,502
Money market accounts 430,296 439,981 408,145
Savings accounts 31,187 41,727 38,611
Time deposits of $100,000 or more 209,059 251,185 295,179
Other time deposits 241,170 286,241 323,348
Total deposits 1,463,855 1,584,086 1,615,961
Accrued interest payable 772 832 1,020
Derivative liability 121 -- --
Other liabilities 11,906 10,293 9,264
Other borrowings 90,760 80,632 74,334
Subordinated debentures 46,393 46,393 81,963
Total liabilities 1,613,807 1,722,236 1,782,542
Shareholders' equity
Common stock -- $1 par value; 40,000,000 shares authorized;
19,793,123, 19,732,926, and 19,692,606 shares issued and outstanding, respectively 19,793 19,733 19,693
Additional paid-in capital 100,962 99,937 99,342
Retained earnings 150,789 142,528 131,896
Accumulated other comprehensive loss (193) (3,011) (1,511)
Total shareholders' equity 271,351 259,187 249,420
Total liabilities and shareholders' equity $ 1,885,158 $ 1,981,423 $ 2,031,962
SOUTHWEST BANCORP, INC. Table 3
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share)
For the three months ended For the six months
June 30, March 31, June 30, ended June 30,
2014 2014 2013 2014 2013
Interest income
Loans $ 16,343 $ 15,775 $16,415 $32,118 $33,421
Investment securities 1,628 1,650 1,594 3,278 3,285
Other interest-earning assets 314 375 255 689 495
Total interest income 18,285 17,800 18,264 36,085 37,201
Interest expense
Interest-bearing deposits 931 1,025 1,442 1,956 3,094
Other borrowings 223 225 222 448 442
Subordinated debentures 557 549 1,466 1,106 2,925
Total interest expense 1,711 1,799 3,130 3,510 6,461
Net interest income 16,574 16,001 15,134 32,575 30,740
Provision for loan losses (355) (986) (876) (1,341) (378)
Net interest income after provision for loan losses 16,929 16,987 16,010 33,916 31,118
Noninterest income
Service charges and fees 2,608 2,596 2,607 5,204 5,267
Gain on sale of branches, net 4,378 -- -- 4,378 --
Gain on sales of mortgage loans 463 224 831 687 1,645
Gain on sale/call of investment securities, net 629 135 -- 764 --
Other noninterest income 168 70 53 238 116
Total noninterest income 8,246 3,025 3,491 11,271 7,028
Noninterest expense
Salaries and employee benefits 8,472 8,126 8,039 16,598 16,175
Occupancy 2,783 2,769 2,679 5,552 5,253
FDIC and other insurance 314 397 400 711 891
Other real estate, net 511 68 (1,394) 579 (1,041)
General and administrative 3,252 2,747 3,115 5,999 5,949
Total noninterest expense 15,332 14,107 12,839 29,439 27,227
Income before taxes 9,843 5,905 6,662 15,748 10,919
Taxes on income 3,691 2,214 2,248 5,905 4,116
Net income $ 6,152 $ 3,691 $ 4,414 $ 9,843 $ 6,803
Basic earnings per common share $ 0.31 $ 0.19 $ 0.22 $ 0.50 $ 0.34
Diluted earnings per common share 0.31 0.19 0.22 0.50 0.34
Common dividends declared per share 0.04 0.04 -- 0.08 --
SOUTHWEST BANCORP, INC. Table 4
UNAUDITED AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY
(Dollars in thousands)
For the three months ended
June 30, 2014 March 31, 2014 June 30, 2013
Average Average Average Average Average Average
Balance Yield/Rate Balance Yield/Rate Balance Yield/Rate
Assets
Loans $ 1,331,126 4.92% $ 1,278,332 5.00% $ 1,318,950 4.99%
Investment securities 384,395 1.70 388,639 1.72 374,353 1.71
Other interest-earning assets 183,378 0.69 280,327 0.54 282,067 0.36
Total interest-earning assets 1,898,899 3.86 1,947,298 3.71 1,975,370 3.71
Other assets 49,829 50,247 63,390
Total assets $ 1,948,728 $ 1,997,545 $ 2,038,760
Liabilities and Shareholders' Equity
Interest-bearing demand deposits $ 130,232 0.12% $ 134,760 0.12% $ 126,250 0.12%
Money market accounts 421,001 0.13 436,763 0.14 420,477 0.18
Savings accounts 43,124 0.10 44,764 0.10 38,833 0.12
Time deposits 493,805 0.60 531,071 0.63 633,647 0.76
Total interest-bearing deposits 1,088,162 0.34 1,147,358 0.36 1,219,207 0.47
Other borrowings 85,682 1.04 80,806 1.13 71,857 1.24
Subordinated debentures 46,393 4.80 46,393 4.73 81,963 7.15
Total interest-bearing liabilities 1,220,237 0.56 1,274,557 0.57 1,373,027 0.91
Noninterest-bearing demand deposits 449,364 449,128 402,224
Other liabilities 10,751 10,489 10,561
Shareholders' equity 268,376 263,371 252,948
Total liabilities and shareholders' equity $ 1,948,728 $ 1,997,545 $ 2,038,760
Net interest income and spread 3.30% 3.14% 2.80%
Net interest margin (1) 3.50% 3.33% 3.07%
Average interest-earning assets to average interest-bearing liabilities 155.62% 152.78% 143.87%
(1) Net interest margin = annualized net interest income / average interest-earning assets
SOUTHWEST BANCORP, INC. Table 5
UNAUDITED AVERAGE BALANCES, YIELDS, AND RATES - YEAR-TO-DATE
(Dollars in thousands)
For the six months ended June 30,
2014 2013
Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
Assets
Loans $ 1,304,876 4.96% $ 1,337,111 5.04%
Investment securities 386,506 1.71 377,422 1.76
Other interest-earning assets 231,584 0.60 275,269 0.36
Total interest-earning assets 1,922,966 3.78 1,989,802 3.77
Other assets 50,036 75,423
Total assets $ 1,973,002 $ 2,065,225
Liabilities and Shareholders' Equity
Interest-bearing demand deposits $ 132,483 0.12% $ 129,905 0.13%
Money market accounts 428,839 0.13 420,058 0.20
Savings accounts 43,939 0.10 38,777 0.12
Time deposits 512,335 0.62 658,266 0.78
Total interest-bearing deposits 1,117,596 0.35 1,247,006 0.50
Other borrowings 83,258 1.09 70,798 1.26
Subordinated debentures 46,393 4.77 81,963 7.14
Total interest-bearing liabilities 1,247,247 0.57 1,399,767 0.93
Noninterest-bearing demand deposits 449,247 402,882
Other liabilities 10,621 11,418
Shareholders' equity 265,887 251,158
Total liabilities and shareholders' equity $ 1,973,002 $ 2,065,225
Net interest income and spread 3.21% 2.84%
Net interest margin (1) 3.42% 3.12%
Average interest-earning assets to average interest-bearing liabilities 154.18% 142.15%
(1) Net interest margin = annualized net interest income / average interest-earning assets
SOUTHWEST BANCORP, INC. Table 6
UNAUDITED QUARTERLY SUMMARY LOAN DATA
(Dollars in thousands)
2014 2013
Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
LOAN COMPOSITION
Real estate mortgage:
Commercial $ 769,021 $ 766,178 $ 752,279 $ 757,435 $ 802,138 $ 836,843
One-to-four family residential 79,542 84,619 83,988 84,645 81,698 78,369
Real estate construction:
Commercial 166,981 166,007 143,848 163,307 159,227 139,829
One-to-four family residential 8,359 6,629 4,646 4,464 5,241 5,015
Commercial 300,163 266,311 255,058 264,565 237,221 233,939
Installment and consumer:
Guaranteed student loans 4,282 4,318 4,394 4,471 4,520 4,576
Other 23,352 26,060 26,690 27,738 28,044 28,644
Total loans, including held for sale 1,351,700 1,320,122 1,270,903 1,306,625 1,318,089 1,327,215
Less allowance for loan losses (33,083) (34,925) (36,663) (40,081) (40,352) (42,853)
Total loans, net $ 1,318,617 $ 1,285,197 $ 1,234,240 $ 1,266,544 $ 1,277,737 $ 1,284,362
LOANS BY SEGMENT
Oklahoma banking $ 773,665 $ 754,698 $ 681,999 $ 681,749 $ 656,356 $ 628,747
Texas banking 408,385 372,018 366,697 414,433 444,327 495,815
Kansas banking 145,248 170,720 198,992 206,802 210,189 195,355
Subtotal 1,327,298 1,297,436 1,247,688 1,302,984 1,310,872 1,319,917
Mortgage banking 24,402 22,686 23,215 3,641 7,217 7,298
Total loans $ 1,351,700 $ 1,320,122 $ 1,270,903 $ 1,306,625 $ 1,318,089 $ 1,327,215
NONPERFORMING LOANS BY TYPE
Construction & development $ 82 $ 80 $ 2,721 $ 5,789 $ 6,119 $ 6,539
Commercial real estate 7,613 7,541 7,766 15,378 15,112 15,975
Commercial 7,484 7,992 8,819 10,991 10,790 11,940
One-to-four family residential 1,180 470 513 467 492 701
Consumer 119 2 53 55 64 74
Total nonperforming loans $ 16,478 $ 16,085 $ 19,872 $ 32,680 $ 32,577 $ 35,229
NONPERFORMING LOANS BY SEGMENT
Oklahoma banking $ 7,149 $ 7,056 $ 5,547 $ 3,279 $ 1,678 $ 2,000
Texas banking 5,636 5,793 11,902 24,963 26,294 28,817
Kansas banking 3,693 3,236 2,423 4,438 4,605 4,412
Total nonperforming loans $ 16,478 $ 16,085 $ 19,872 $ 32,680 $ 32,577 $ 35,229
OTHER REAL ESTATE BY TYPE
Construction & development $ 2,130 $ 2,130 $ 130 $ 1,333 $ 972 $ 1,389
Commercial real estate 2,155 2,524 2,524 360 839 10,276
Total other real estate $ 4,285 $ 4,654 $ 2,654 $ 1,693 $ 1,811 $ 11,665
OTHER REAL ESTATE BY SEGMENT
Oklahoma banking $ -- $ -- $ -- $ -- $ -- $ 1,980
Texas banking 2,000 2,000 -- -- -- 7,227
Kansas banking 2,285 2,654 2,654 1,693 1,811 2,458
Total other real estate $ 4,285 $ 4,654 $ 2,654 $ 1,693 $ 1,811 $ 11,665
Continued
SOUTHWEST BANCORP, INC. Table 6
UNAUDITED QUARTERLY SUMMARY LOAN DATA Continued
(Dollars in thousands)
2014 2013
Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
POTENTIAL PROBLEM LOANS BY TYPE
Construction & development $ 18,842 $ 22,220 $ 21,501 $ 22,222 $ 20,745 $ 19,968
Commercial real estate 60,559 64,257 70,654 64,505 65,518 64,287
Commercial 4,299 4,807 7,107 10,028 10,136 8,220
One-to-four family residential 475 481 488 414 1,071 1,157
Total potential problem loans $ 84,175 $ 91,765 $ 99,750 $ 97,169 $ 97,470 $ 93,632
POTENTIAL PROBLEM LOANS BY SEGMENT
Oklahoma banking $ 23,887 $ 29,208 $ 29,005 $ 31,345 $ 31,495 $ 32,246
Texas banking 57,044 58,361 65,079 59,561 58,710 51,978
Kansas banking 3,244 4,196 5,666 6,263 7,265 9,408
Total potential problem loans $ 84,175 $ 91,765 $ 99,750 $ 97,169 $ 97,470 $ 93,632
LOANS OUT OF MARKET
Net balance of loans out of market:
Arizona $ 14,984 $ 15,348 $ 19,458 $ 30,516 $ 31,564 $ 33,017
Kentucky 14,273 13,415 12,404 10,088 11,860 10,144
North Carolina 13,323 13,494 13,070 10,161 300 407
Colorado 13,269 13,705 12,553 12,358 8,586 3,067
Iowa 11,501 22,178 22,316 22,438 22,537 22,659
California 9,527 8,869 9,154 9,472 9,632 10,866
Mississippi 8,582 8,712 8,823 8,929 9,233 9,170
Montana 6,722 471 514 519 566 570
Tennessee 6,555 6,684 6,048 6,136 6,171 6,246
Ohio 4,142 3,862 3,549 3,294 4,759 4,132
Other 10,011 9,452 14,766 27,342 30,100 27,759
Total loans out of market $ 112,889 $ 116,190 $ 122,655 $ 141,253 $ 135,308 $ 128,037
Nonperforming loans out of market:
Arizona $ 5,381 $ 5,441 $ 9,302 $ 11,205 $ 12,167 $ 13,419
New Jersey 594 1,094 -- -- -- --
New York -- -- -- 1,033 1,048 --
Florida 240 246 252 258 264 270
Colorado -- -- -- -- -- 131
Other -- -- -- -- 1 --
Total nonperforming out of market $ 6,215 $ 6,781 $ 9,554 $ 12,496 $ 13,480 $ 13,820
Potential problem loans out of market:
Iowa $ 11,414 $ 11,490 $ 11,568 $ 11,645 $ 11,719 $ 11,792
Arizona 1,152 1,167 -- -- -- --
California 461 474 482 499 512 524
Florida 58 62 66 71 75 80
New Jersey -- -- 1,094 1,170 1,244 --
Total potential problem loans out of market $ 13,085 $ 13,193 $ 13,210 $ 13,385 $ 13,550 $ 12,396
Continued
SOUTHWEST BANCORP, INC. Table 6
UNAUDITED QUARTERLY SUMMARY FINANCIAL DATA Continued
(Dollars in thousands)
2014 2013
Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
ALLOWANCE ACTIVITY
Balance, beginning of period $ 34,925 $ 36,663 $ 40,081 $ 40,352 $ 42,853 $ 46,718
Charge offs 1,991 3,392 2,681 600 2,072 4,651
Recoveries 504 2,640 5,765 658 447 288
Net charge offs (recoveries) 1,487 752 (3,084) (58) 1,625 4,363
Provision for loan losses (355) (986) (6,502) (329) (876) 498
Balance, end of period $ 33,083 $ 34,925 $ 36,663 $ 40,081 $ 40,352 $ 42,853
NET CHARGE OFFS BY TYPE
Construction & development $ -- $ 655 $ (4,845) (20) $ 111 $ (19)
Commercial real estate 583 (2,243) (62) 274 7 416
Commercial 652 2,267 1,883 (169) 1,085 3,751
One-to-four family residential (2) (18) (40) (165) 363 167
Consumer 254 91 (20) 22 59 48
Total net charge offs (recoveries) by type $ 1,487 $ 752 $ (3,084) $ (58) $ 1,625 $ 4,363
NET CHARGE OFFS BY SEGMENT
Oklahoma banking $ 763 $ 229 $ (1,294) $ (203) $ 200 $ 589
Texas banking 244 (1,586) (2,314) (80) 1,356 3,241
Kansas banking 480 2,109 524 225 69 533
Total net charge offs (recoveries) by segment $ 1,487 $ 752 $ (3,084) $ (58) $ 1,625 $ 4,363
SOUTHWEST BANCORP, INC. Table 7
UNAUDITED QUARTERLY SUMMARY FINANCIAL DATA
(Dollars in thousands, except per share)
2014 2013
Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PER SHARE DATA
Basic earnings per common share $ 0.31 $ 0.19 $ 0.35 $ 0.19 $ 0.22 $ 0.12
Diluted earnings per common share 0.31 0.19 0.35 0.19 0.22 0.12
Common dividends declared per share 0.04 0.04 -- -- -- --
Book value per common share 13.71 13.37 13.13 12.83 12.67 12.72
Tangible book value per share* 13.65 13.31 13.07 12.77 12.60 12.66
COMMON STOCK
Shares issued and outstanding 19,793,123 19,786,206 19,732,926 19,703,313 19,692,606 19,692,038
OTHER FINANCIAL DATA
Investment securities $ 385,873 $ 386,987 $ 394,199 $ 382,001 $ 372,403 $ 365,605
Loans held for sale 6,803 5,741 3,060 3,641 7,217 7,297
Portfolio loans 1,344,897 1,314,381 1,267,843 1,302,984 1,310,872 1,319,918
Total loans 1,351,700 1,320,122 1,270,903 1,306,625 1,318,089 1,327,215
Total assets 1,885,158 2,012,053 1,981,423 1,972,367 2,031,962 2,091,694
Total deposits 1,463,855 1,605,906 1,584,086 1,583,791 1,615,961 1,677,668
Other borrowings 90,760 85,692 80,632 78,663 74,334 70,872
Subordinated debentures 46,393 46,393 46,393 46,393 81,963 81,963
Total shareholders' equity 271,351 264,586 259,187 252,802 249,420 250,509
Mortgage servicing portfolio 397,339 391,303 390,732 383,400 368,825 356,032
INTANGIBLE ASSET DATA
Goodwill $ 1,214 $ 1,214 $ 1,214 $ 1,214 $ 1,214 $ 1,214
Core deposit intangible 667 1,925 2,058 2,185 2,306 2,424
Mortgage servicing rights 3,182 3,006 2,922 2,837 2,675 2,445
Total intangible assets $ 5,063 $ 6,145 $ 6,194 $ 6,236 $ 6,195 $ 6,083
Intangible amortization expense $ 210 $ 183 $ 278 $ 314 $ 313 $ 410
DEPOSIT COMPOSITION
Non-interest bearing demand $ 427,431 $ 471,568 $ 444,796 $ 436,904 $ 412,176 $ 416,979
Interest-bearing demand 124,712 132,622 120,156 106,176 138,502 125,914
Money market accounts 430,296 440,875 439,981 423,720 408,145 437,629
Savings accounts 31,187 47,532 41,727 39,727 38,611 39,733
Time deposits of $100,000 or more 209,059 236,035 251,185 270,916 295,179 317,270
Other time deposits 241,170 277,274 286,241 306,348 323,348 340,143
Total deposits** $1,463,855 $1,605,906 $1,584,086 $1,583,791 $1,615,961 $1,677,668
OFFICES AND EMPLOYEES
FTE Employees 364 397 402 407 408 412
Branches 21 24 23 23 22 22
Assets per employee $ 5,179 $ 5,068 $ 4,929 $ 4,846 $ 4,980 $ 5,077
*This is a Non-GAAP based financial measure.
**Calculation of Non-brokered Deposits and Core Funding (Non-GAAP Financial Measures)
Total deposits $1,463,855 $1,605,906 $1,584,086 $1,583,791 $1,615,961 $1,677,668
Less:
Brokered time deposits 1,348 1,347 1,347 1,343 4,904 5,760
Other brokered deposits 48,424 3,424 3,423 3,423 3,422 3,422
Non-brokered deposits $1,414,083 $1,601,135 $1,579,316 $1,579,025 $1,607,635 $1,668,486
Plus:
Sweep repurchase agreements 65,760 60,692 55,631 53,663 49,334 45,872
Core funding $1,479,843 $1,661,827 $1,634,947 $1,632,688 $1,656,969 $1,714,358
Balance sheet amounts are as of period end unless otherwise noted.
SOUTHWEST BANCORP, INC. Table 8
UNAUDITED QUARTERLY SUPPLEMENTAL ANALYTICAL DATA
(Dollars in thousands)
2014 2013
Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PERFORMANCE RATIOS
Return on average assets (annualized) 1.27% 0.75% 1.37% 0.75% 0.87% 0.46%
Return on average common equity (annualized) 9.19 5.68 10.59 5.99 7.00 3.89
Return on average tangible common equity
(annualized)* 9.24 5.71 10.64 6.02 7.03 3.90
Net interest margin (annualized) 3.50 3.33 3.42 3.11 3.07 3.16
Total dividends declared to net income 12.86 21.40 -- -- -- --
Effective tax rate 37.50 37.49 38.68 38.01 33.74 43.88
Efficiency ratio 61.77 74.15 76.45 69.18 68.93 75.16
NONPERFORMING ASSETS
Nonaccrual loans $ 16,478 $ 16,085 $ 19,819 $ 32,678 $ 32,575 $ 35,229
90 days past due and accruing -- -- 53 2 2 --
Total nonperforming loans 16,478 16,085 19,872 32,680 32,577 35,229
Other real estate 4,285 4,654 2,654 1,693 1,811 11,665
Total nonperforming assets $ 20,763 $ 20,739 $ 22,526 $ 34,373 $ 34,388 $ 46,894
Potential problem loans $ 84,175 $ 91,765 $ 99,750 $ 97,169 $ 97,470 $ 93,632
ASSET QUALITY RATIOS
Nonperforming assets to portfolio loans and other real estate 1.54% 1.57% 1.77% 2.63% 2.62% 3.52%
Nonperforming loans to portfolio loans 1.23 1.22 1.57 2.51 2.49 2.67
Allowance for loan losses to portfolio loans 2.46 2.66 2.89 3.08 3.08 3.24
Allowance for loan losses to nonperforming loans 200.77 217.13 184.50 122.65 123.87 121.64
Net loan charge-offs to average portfolio loans (annualized) 0.45 0.24 (0.96) (0.02) 0.50 1.32
CAPITAL RATIOS
Average total shareholders' equity to average assets 13.77% 13.18% 12.93% 12.53% 12.41% 11.92%
Leverage ratio 15.95 15.09 14.86 14.78 16.10 15.59
Tier 1 capital to risk-weighted assets 20.13 19.98 20.28 20.21 22.48 22.25
Total capital to risk-weighted assets 21.43 21.29 21.59 21.52 23.78 23.54
Tangible common equity to tangible assets*** 14.34 13.10 13.03 12.76 12.22 11.93
REGULATORY CAPITAL DATA
Tier I capital $ 309,600 $ 299,938 $ 292,051 $ 296,488 $ 326,831 $ 324,659
Total capital 329,586 319,516 310,867 315,570 345,717 343,562
Total risk adjusted assets 1,537,903 1,500,957 1,439,934 1,466,672 1,453,878 1,459,465
Average total assets 1,941,064 1,987,231 1,964,920 2,006,525 2,030,064 2,082,789
*This is a Non-GAAP based financial measure.
***Calculation of Tangible Common Equity to Tangible Assets (Non-GAAP Financial Measure)
Total shareholders' equity $ 271,351 $ 264,586 $ 259,187 $ 252,802 $ 249,420 $ 250,509
Less goodwill 1,214 1,214 1,214 1,214 1,214 1,214
Tangible common equity $ 270,137 $ 263,372 $ 257,973 $ 251,588 $ 248,206 $ 249,295
Total assets $1,885,158 $2,012,053 $1,981,423 $1,972,367 $2,031,962 $2,091,694
Less goodwill 1,214 1,214 1,214 1,214 1,214 1,214
Tangible assets $1,883,944 $2,010,839 $1,980,209 $1,971,153 $2,030,748 $2,090,480
Total shareholders' equity to total assets 14.39% 13.15% 13.08% 12.82% 12.27% 11.98%
Tangible common equity to tangible assets 14.34% 13.10% 13.03% 12.76% 12.22% 11.93%
Balance sheet amounts and ratios are as of period end unless otherwise noted.

CONTACT: Mark W. Funke President & CEO Joe T. Shockley, Jr. EVP & CFO (405) 372-2230

Source:Southwest Bancorp, Inc.