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Southwest Bancorp, Inc. Reports Another Quarter of Solid Results for Third Quarter 2015 and Announces Quarterly Dividend

STILLWATER, Okla., Oct. 20, 2015 (GLOBE NEWSWIRE) -- Southwest Bancorp, Inc. (NASDAQ:OKSB), (“Southwest”), today reported net income for the third quarter of 2015 of $4.1 million, or $0.22 per diluted share, compared to $5.3 million, or $0.27 per diluted share, for the third quarter of 2014, which included a negative (credit) provision for loan losses of $2.9 million. Net income for the nine months ended September 30, 2015 totaled $12.8 million, or $0.68 per diluted share, compared to $15.1 million, or $0.77 per diluted share, for the nine months ended September 30, 2014. Included in the prior year’s results was a pre-tax net gain on sale of bank branches of $4.4 million and a negative (credit) provision for loan losses of $4.2 million, versus a negative (credit) provision for loan losses of $3.0 million for the first nine months of 2015.



Southwest also announced that its board of directors has approved a quarterly cash dividend of $0.06 per share payable November 13, 2015 to shareholders of record as of October 30, 2015.

Mark Funke, President and CEO, stated, “The third quarter was a busy and successful quarter for Bank SNB. We received regulatory approval to acquire First Commercial Bancshares, Inc. and completed the acquisition in early October. This expands our presence in the Oklahoma City metro area with five additional branches, increasing our total to ten. It also adds Colorado to our geographic footprint with three branches in Denver and one in Colorado Springs.

“The financial results for the third quarter reflect solid earnings, improved efficiency, and strong loan growth. Our efforts produced several highlights:

  • Received regulatory approval to acquire Edmond-based First Commercial Bancshares, Inc. (“FCBI”) and closed the merger on October 9, 2015.
  • Loan growth was $98.7 million, or 7%, for the third quarter and $148.1 million, or 11%, for the first nine months of 2015. We have had seven consecutive quarters of loan growth.
  • The quarterly net interest margin improved to 3.34% at September 30, 2015 compared to 3.31% at June 30, 2015.
  • The quarterly efficiency ratio improved to 68.25% for the third quarter, reflecting management’s commitment to improved operating performance.

“Our financial results and the strong loan growth for the third quarter reflect the excellent work of our banking associates. We will continue to focus our company on producing consistent, conservative, and sustainable earnings through the expansion of our revenue base while prudently managing our expenses.”

Southwest’s share repurchase program, approved in August of 2014, authorized the repurchase of up to 5.0% or 990,000 shares of its outstanding common stock, par value $1.00 per share. As of September 30, 2015, Southwest had repurchased 867,310 shares for a total of $14.3 million. During the third quarter of 2015, no shares were repurchased due to trade restrictions pursuant to the pending acquisition of FCBI. On August 14, 2015, this share repurchase plan expired. On February 24, 2015, Southwest’s board of directors authorized a second share repurchase program of up to another 5.0% of its outstanding common stock, or approximately 950,000 shares, which became effective on August 14, 2015, immediately following the expiration of the 2014 program.

Financial Overview

Condition: As of September 30, 2015, total assets were $2.1 billion, an increase of $28.3 million from June 30, 2015. As of September 30, 2015, total loans were $1.5 billion and investment securities were $388.5 million, an increase of $98.7 million and an increase of $15.3 million from the prior quarter end, respectively. Consequently, cash and cash equivalents at September 30, 2015 were $68.6 million, down $88.0 million from June 30, 2015.

At September 30, 2015, the allowance for loan losses was $26.6 million, an increase of $0.4 million when compared to June 30, 2015 and a decrease of $4.3 million when compared to September 30, 2014. The allowance for loan losses to portfolio loans was 1.73% as of September 30, 2015, compared to 1.82% as of June 30, 2015 and 2.27% as of September 30, 2014. The allowance for loan losses to nonperforming loans was 176.38% as of September 30, 2015, compared to 295.03% as of June 30, 2015 and 205.29% as of September 30, 2014.

Nonperforming loans were $15.1 million at September 30, 2015, an increase of $6.2 million from June 30, 2015, and remained relatively flat from September 30, 2014. Other real estate at September 30, 2015 was $2.3 million, a decrease of $0.1 million from June 30, 2015, and a decrease of $1.2 million when compared to September 30, 2014. Nonperforming assets were $17.4 million, or 1.12% of portfolio loans and other real estate, as of September 30, 2015, compared to $11.3 million, or 0.78% of portfolio loans and other real estate, as of June 30, 2015, and $18.5 million, or 1.36% of portfolio loans and other real estate, as of September 30, 2014.

Total core funding, which includes all non-brokered deposits and sweep repurchase agreements, comprised 89% and 92% of total funding as of September 30, 2015 and June 30, 2015, respectively. Wholesale funding, including Federal Home Loan Bank borrowings, federal funds purchased, and brokered deposits, accounted for 11% and 8% of total funding at September 30, 2015 and June 30, 2015, 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 as of September 30, 2015 exceeded the criteria for regulatory classification as “well-capitalized”. Southwest’s total regulatory capital was $344.1 million, for a total risk-based capital ratio of 18.21%, Common Equity Tier 1 capital was $275.4 million, for a Common Equity Tier 1 ratio of 14.57%, and Tier 1 capital was $320.4 million, for a Tier 1 risk-based capital ratio of 16.95%. Bank SNB had total regulatory capital of $296.9 million, for a total risk-based capital ratio of 15.77% and Common Equity Tier 1 and Tier 1 capital of $273.2 million, for a Common Equity Tier 1 and Tier 1 ratio of 14.51%. Designation as a well-capitalized institution under regulations does not constitute a recommendation or endorsement by bank regulators.

Third Quarter Results:

Summary: For the third quarter of 2015, net income was $4.1 million, compared to $4.2 million for the second quarter of 2015 and $5.3 million for the third quarter of 2014.

The $0.04 million decrease in net income compared to the second quarter of 2015 was primarily due to a small loan provision for loan losses versus a negative provision for loan losses in the previous quarter of $1.1 million, a $0.1 million increase in noninterest expense, and an increase in taxes of $0.1 million, offset in part by a $0.7 million increase in net interest income and a $0.6 million increase of noninterest income.

The $1.2 million decrease in our net income compared to the third quarter of 2014 was primarily the result of a small loan provision for loan losses versus a negative provision for loan losses in the previous quarter of $2.9 million and a $0.7 million increase in noninterest expense, offset in part by a $0.7 million increase in net interest income, a $0.9 million increase in noninterest income, and a $0.9 million decrease in taxes.

Net Interest Income: Net interest income totaled $16.5 million for the third quarter of 2015, compared to $15.8 million for the second quarter of 2015 and the third quarter of 2014. Net interest margin was 3.34% for the third quarter of 2015, compared to 3.31% for the second quarter of 2015 and 3.44% for the third quarter of 2014. Loans (including loans held for sale) for the third quarter of 2015 increased $98.7 million, or 7%, when compared to June 30, 2015, and $180.7 million, or 13%, when compared to September 30, 2014.

Provision (Credit) 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 provision of $0.02 million for the third quarter of 2015, compared to a negative provision of $1.1 million for the second quarter of 2015, and a negative provision of $2.9 million for the third quarter of 2014. The $98.7 million loan growth in the third quarter of 2015 accounts for $1.3 million of the excess provision for loan losses. During the third quarter of 2015, net recoveries totaled $0.4 million, or (0.09%) (annualized) of average portfolio loans, compared to net recoveries of $0.1 million, or (0.03%) (annualized) of average portfolio loans for the second quarter of 2015 and net recoveries of $0.7 million, or (0.21%) (annualized) of average portfolio loans for the third quarter of 2014.

Noninterest Income: Noninterest income totaled $4.0 million for the third quarter of 2015, compared to $3.4 million for the second quarter of 2015 and $3.1 million for the third quarter of 2014.

The $0.6 million increase from the second quarter of 2015 is primarily the result of a $0.8 million increase in other noninterest income, primarily from customer risk management interest rate swap income, offset in part by a $0.1 million decrease in gain on sale of mortgage loans, and a $0.1 million decrease in gain on sale of securities.

The $0.9 million increase from the third quarter of 2014 is primarily the result of a $0.2 million increase in the gain on sale of mortgage loans and a $0.8 million increase in other noninterest income, primarily from customer risk management interest rate swap income and interest income on bank owned life insurance, offset in part by a $0.1 million decrease in service charges and fees.

Noninterest Expense: Noninterest expense totaled $14.1 million for the third quarter of 2015, compared to $14.0 million for the second quarter of 2015 and $13.4 million for the third quarter of 2014.

The $0.1 million increase in noninterest expense from the second quarter of 2015 was primarily due to a $0.1 million increase in each personnel expense, occupancy expense, and data processing, offset in part by a $0.1 million decrease in other real estate, and a $0.1 million decrease in general and administrative expense primarily related to the decrease in provision for unfunded loan commitments, and also included $0.3 million in FCBI acquisition expenses and $0.1 million in swap fee consulting expense, offset in part by the reversal of a prior accrual of a contingent liability.

The $0.7 million increase in noninterest expense from the third quarter of 2014 consisted of a $0.6 million increase in personnel expense, a $0.1 million increase in data processing, a $0.2 million increase in other real estate, and a $0.3 million increase in the provision for unfunded loan commitments, offset in part by a $0.6 million decrease in general and administrative expense, which includes primarily legal, accounting, and marketing expenses.

Income Tax: Income tax expense totaled $2.3 million for the third quarter of 2015, compared to $2.2 million for the second quarter of 2015 and $3.2 million for the third quarter of 2014. The income tax expense fluctuates in relation to pre-tax income levels. The third quarter of 2015 effective tax rate was 35.84%, compared to 34.51% for the second quarter of 2015 and 37.49% for the third quarter of 2014. The decline in the effective tax rate includes the impact of an increase in tax exempt income, as a percentage of pre-tax income.

Year-to-date Results:

Summary: Net income was $12.8 million for the nine months ended September 30, 2015, compared to $15.1 million for the nine months ended September 30, 2014. The $2.3 million decrease in net income from 2014 is the result of a $0.5 million decrease in net interest income, a $1.2 million decrease in the negative provision for loan losses, and a $4.1 million decrease in noninterest income, which is primarily the pre-tax net gain of $4.4 million on the sales of community bank branches in the second quarter of 2014, offset in part by a $1.7 million decrease in noninterest expense, primarily due to decreased general and administrative expense and other real estate expenses, and a $1.8 million decrease in income tax.

Net Interest Income: Net interest income totaled $47.9 million for the first nine months of 2015, compared to $48.4 million for the first nine months of 2014, a decrease of $0.5 million. Year-to-date net interest margin was 3.30%, compared to 3.43% for 2014. Included in interest income for the first nine months of 2014 was $0.8 million due to accelerated discount accretion attributable to the sale of loans covered by a 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 a 9 basis point increase for the first nine months of 2014. With the rate environment remaining low, earning assets are repricing at lower rates.

Provision (Credit) 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 or net recoveries for the period. The provision for loan losses was a credit (or negative) of $3.0 million for the first nine months of 2015, compared to a negative provision of $4.2 million for the first nine months of 2014. Net recoveries totaled $1.1 million, or (0.11%) (annualized) of average portfolio loans year-to-date as of September 30, 2015, compared to net charge-offs of $1.5 million, or 0.15% (annualized) of average portfolio loans for the same period in 2014.

Noninterest Income: Noninterest income totaled $10.3 million for the first nine months of 2015, compared to $14.4 million for the first nine months of 2014. The decrease consists of a $0.4 million decrease in service charges and fees, the $4.4 million recognized as the pre-tax net gain on the sales of the community bank branches in the second quarter of 2014, and a $0.6 million decrease in the gain on sale of investment securities, due to the gain on the sale of a stock investment that was acquired in a prior year repossession in 2014, offset in part by a $0.5 million increase in gains on sales of mortgage loans and a $0.8 million increase in other noninterest income, which includes customer risk management interest rate swap income and interest income on bank owned life insurance.

Noninterest Expense: Noninterest expense totaled $41.1 million for the first nine months of 2015, compared to $42.8 million for the first nine months of 2014. The decrease consists of a $0.2 million decrease in other real estate expense and a $1.7 million decrease in other general and administrative expenses, which primarily includes legal, marketing, travel, consulting, and is offset by $0.5 million in FCBI acquisition expenses. These decreases are offset in part by a $0.2 million increase in employee benefit expenses and a $0.1 million increase in the provision for unfunded loan commitments.

Income Tax: Income tax expense totaled $7.2 million for the first nine months of 2015, compared to $9.1 million for the first nine months of 2014. The income tax expense fluctuates in relation to pre-tax income levels. The year-to-date effective tax rate was 36.02% as of September 30, 2015, compared to 37.50% as of September 30, 2014. The decline in the effective tax rate includes the impact of an increase in tax exempt income, as a percentage of pre-tax income.

Conference Call

Southwest will host a conference call to review these results on Wednesday, October 21, 2015 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/10073037. 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/oksb151021.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 10073037. Telephone replay access will be available until 9:00 a.m. Eastern Time on November 21, 2015.

Southwest Bancorp and Subsidiaries

Southwest is the holding company for Bank SNB, an Oklahoma state banking corporation (“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, Kansas, and Colorado. Bank SNB was chartered in 1894 and Southwest was organized in 1981 as the holding company. At September 30, 2015, Southwest had total assets of approximately $2.1 billion, deposits of $1.6 billion, and shareholders’ equity of $277.3 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 remittance 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 September 30, 2015, approximately $429.5 million, or 28%, 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;
  • Expectations regarding Southwest’s stock repurchase program;
  • Expectations regarding dividends;
  • Expectations regarding acquisitions and divestitures;
  • 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, 2014. 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 September 30, 2015 through the date its financial statements are filed with the Securities and Exchange Commission. The September 30, 2015 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 HighlightsTable 1
Unaudited Consolidated Statements of Financial ConditionTable 2
Unaudited Consolidated Statements of OperationsTable 3
Unaudited Average Balances, Yields, and Rates-Quarterly Table 4
Unaudited Average Balances, Yields, and Rates-Year-to-dateTable 5
Unaudited Quarterly Summary Loan DataTable 6
Unaudited Quarterly Summary Financial DataTable 7
Unaudited Quarterly Supplemental Analytical DataTable 8


SOUTHWEST BANCORP, INC. Table 1
UNAUDITED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share)
Third QuarterSecond Quarter Third Quarter
QUARTERLY HIGHLIGHTS 2015 % Change 2014 % Change
Operations
Net interest income $ 16,496 $ 15,791 4% $ 15,837 4%
Provision (credit) for loan losses 23 (1,136) (102) (2,897) (101)
Noninterest income 4,029 3,409 18 3,084 31
Noninterest expense 14,077 13,982 1 13,358 5
Income before taxes 6,425 6,354 1 8,460 (24)
Taxes on income 2,303 2,193 5 3,172 (27)
Net income 4,122 4,161 (1) 5,288 (22)
Diluted earnings per share 0.22 0.22 - 0.27 (19)
Balance Sheet
Total assets 2,059,899 2,031,581 1 1,900,948 8
Loans held for sale 7,024 6,687 5 4,368 61
Portfolio loans 1,541,070 1,442,743 7 1,363,020 13
Total deposits 1,626,250 1,624,446 0 1,494,946 9
Total shareholders' equity 277,344 273,681 1 271,966 2
Book value per common share 14.57 14.38 1 13.90 5
Key Ratios
Net interest margin 3.34% 3.31% 3.44%
Efficiency ratio 68.25 72.43 70.60
Total capital to risk-weighted assets 18.21 19.09 21.34
Nonperforming loans to portfolio loans 0.98 0.62 1.10
Shareholders' equity to total assets 13.46 13.47 14.31
Tangible common equity to tangible assets* 13.40 13.40 14.23
Return on average assets (annualized) 0.81 0.85 1.12
Return on average common equity (annualized) 5.94 6.11 7.69
Return on average tangible common equity (annualized)** 5.97 6.14 7.72
Nine Months
YEAR-TO-DATE HIGHLIGHTS 2015 2014 % Change
Operations
Net interest income $ 47,897 $ 48,412 (1)%
Provision (credit) for loan losses (3,000) (4,238) (29)
Noninterest income 10,278 14,355 (28)
Noninterest expense 41,141 42,797 (4)
Income before taxes 20,034 24,208 (17)
Taxes on income 7,216 9,077 (21)
Net income 12,818 15,131 (15)
Net income available to common shareholders 12,818 15,131 (15)
Diluted earnings per share 0.68 0.77 (12)
Balance Sheet
Total assets 2,059,899 1,900,948 8
Loans held for sale 7,024 4,368 61
Portfolio loans 1,541,070 1,363,020 13
Total deposits 1,626,250 1,494,946 9
Total shareholders' equity 277,344 271,966 2
Book value per common share 14.57 13.90 5
Key Ratios
Net interest margin 3.30% 3.43%
Efficiency ratio 70.33 68.18
Total capital to risk-weighted assets 18.21 21.34
Nonperforming loans to portfolio loans 0.98 1.10
Shareholders' equity to total assets 13.46 14.31
Tangible common equity to tangible assets* 13.40 14.23
Return on average assets (annualized) 0.86 1.04
Return on average common equity (annualized) 6.27 7.54
Return on average tangible common equity (annualized)** 6.31 7.62
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)
September 30, December 31, September 30,
2015 2014 2014
Assets
Cash and due from banks$ 25,198 $ 19,705 $ 18,498
Interest-bearing deposits 43,447 121,231 111,605
Cash and cash equivalents 68,645 140,936 130,103
Securities held to maturity (fair values of $13,462, $12,880 and $11,265, respectively) 12,954 12,362 10,663
Securities available for sale (amortized cost of $373,219, $352,275 and $359,042, respectively) 375,589 353,231 359,944
Loans held for sale 7,024 1,485 4,368
Loans receivable (includes loss share of $0 in all periods) 1,541,070 1,398,506 1,363,020
Less: Allowance for loan losses (26,593) (28,452) (30,917)
Net loans receivable 1,514,477 1,370,054 1,332,103
Accrued interest receivable 4,872 4,723 4,952
Non-hedge derivative asset 2,344 787 166
Premises and equipment, net 18,180 18,588 18,986
Other real estate 2,274 3,097 3,448
Goodwill 1,214 1,214 1,214
Other intangible assets, net 3,973 3,927 3,866
Other assets 48,353 31,630 31,135
Total assets$ 2,059,899 $ 1,942,034 $ 1,900,948
Liabilities
Deposits:
Noninterest-bearing demand$ 526,159 $ 496,128 $ 445,148
Interest-bearing demand 114,877 122,342 104,807
Money market accounts 502,028 461,679 477,614
Savings accounts 36,163 32,795 33,398
Time deposits of $100,000 or more 238,318 198,952 203,090
Other time deposits 208,705 222,103 230,889
Total deposits 1,626,250 1,533,999 1,494,946
Accrued interest payable 778 769 771
Non-hedge derivative liability 2,344 787 166
Other liabilities 9,989 9,920 10,822
Other borrowings 96,801 79,380 75,884
Subordinated debentures 46,393 46,393 46,393
Total liabilities 1,782,555 1,671,248 1,628,982
Shareholders' equity
Common stock - $1 par value; 40,000,000 shares authorized;
19,901,336, 19,810,877, and 19,793,623 shares issued, respectively 19,901 19,811 19,794
Additional paid-in capital 101,611 101,245 100,971
Retained earnings 169,825 160,427 155,290
Accumulated other comprehensive income (loss) 372 (395) (411)
Treasury stock, at cost, 868,617, 617,818 and 223,005 shares, respectively (14,365) (10,302) (3,678)
Total shareholders' equity 277,344 270,786 271,966
Total liabilities and shareholders' equity$ 2,059,899 $ 1,942,034 $ 1,900,948


SOUTHWEST BANCORP, INC. Table 3
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
For the three months ended For the nine months
September 30, June 30, September 30, ended September 30,
2015 2015 2014 2015 2014
Interest income
Loans$16,510 $ 15,839 $ 15,683 $ 47,919 $ 47,801
Investment securities 1,443 1,328 1,534 4,120 4,812
Other interest-earning assets 267 288 274 860 963
Total interest income 18,220 17,455 17,491 52,899 53,576
Interest expense
Interest-bearing deposits 905 862 864 2,602 2,820
Other borrowings 255 241 227 723 675
Subordinated debentures 564 561 563 1,677 1,669
Total interest expense 1,724 1,664 1,654 5,002 5,164
Net interest income 16,496 15,791 15,837 47,897 48,412
Provision (credit) for loan losses 23 (1,136) (2,897) (3,000) (4,238)
Net interest income after provision for loan losses 16,473 16,927 18,734 50,897 52,650
Noninterest income
Service charges and fees 2,441 2,450 2,492 7,319 7,696
Gain on sale of branches, net - - - - 4,378
Gain on sales of mortgage loans 565 621 382 1,534 1,069
Gain on sale/call of investment securities, net 19 138 - 162 764
Other noninterest income 1,004 200 210 1,263 448
Total noninterest income 4,029 3,409 3,084 10,278 14,355
Noninterest expense
Salaries and employee benefits 8,374 8,289 7,804 24,577 24,402
Occupancy 2,288 2,201 2,269 6,773 6,805
Data processing 475 410 343 1,331 1,359
FDIC and other insurance 341 316 299 969 1,010
Other real estate, net 20 112 (220) 153 359
General and administrative 2,579 2,654 2,863 7,338 8,862
Total noninterest expense 14,077 13,982 13,358 41,141 42,797
Income before taxes 6,425 6,354 8,460 20,034 24,208
Taxes on income 2,303 2,193 3,172 7,216 9,077
Net income$4,122 $ 4,161 $ 5,288 $ 12,818 $ 15,131
Basic earnings per common share$0.22 $ 0.22 $ 0.27 $ 0.67 $ 0.77
Diluted earnings per common share 0.22 0.22 0.27 0.68 0.77
Common dividends declared per share 0.06 0.06 0.04 0.18 0.12


SOUTHWEST BANCORP, INC. Table 4
UNAUDITED AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
(Dollars in thousands)
For the three months ended
September 30, 2015 June 30, 2015 September 30, 2014
Average Average Average Average Average Average
Balance Yield/Rate Balance Yield/Rate Balance Yield/Rate
Assets
Loans$ 1,473,297 4.45% $ 1,439,050 4.41% $ 1,356,729 4.59%
Investment securities 387,194 1.48 369,677 1.44 378,924 1.61
Other interest-earning assets 100,011 1.06 103,943 1.11 88,653 1.23
Total interest-earning assets 1,960,502 3.69 1,912,670 3.66 1,824,306 3.80
Other assets 65,459 58,267 43,339
Total assets$ 2,025,961 $ 1,970,937 $ 1,867,645
Liabilities and Shareholders' Equity
Interest-bearing demand deposits$ 123,829 0.12% $ 137,781 0.09% $ 109,245 0.12%
Money market accounts 497,935 0.17 473,993 0.15 437,632 0.14
Savings accounts 35,982 0.10 34,702 0.10 32,076 0.10
Time deposits 446,464 0.57 448,175 0.57 440,317 0.60
Total interest-bearing deposits 1,104,210 0.33 1,094,651 0.32 1,019,270 0.34
Other borrowings 76,799 1.32 60,568 1.60 85,423 1.05
Subordinated debentures 46,393 4.86 46,393 4.84 46,393 4.85
Total interest-bearing liabilities 1,227,402 0.56 1,201,612 0.56 1,151,086 0.57
Noninterest-bearing demand deposits 511,442 485,984 432,255
Other liabilities 11,708 10,005 11,442
Shareholders' equity 275,409 273,336 272,862
Total liabilities and shareholders' equity$ 2,025,961 $ 1,970,937 $ 1,867,645
Net interest income and spread 3.13% 3.10% 3.23%
Net interest margin (1) 3.34% 3.31% 3.44%
Average interest-earning assets
to average interest-bearing liabilities 159.73% 159.18% 158.49%
(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 nine months ended September 30,
2015 2014
Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
Assets
Loans$ 1,444,026 4.44% $ 1,322,351 4.83%
Investment securities 374,987 1.47 383,950 1.68
Other interest-earning assets 120,749 0.95 183,416 0.70
Total interest-earning assets 1,939,762 3.65 1,889,717 3.79
Other assets 57,787 47,780
Total assets$ 1,997,549 $ 1,937,497
Liabilities and Shareholders' Equity
Interest-bearing demand deposits$ 133,447 0.10% $ 124,652 0.12%
Money market accounts 485,571 0.16 431,802 0.14
Savings accounts 34,688 0.10 39,941 0.10
Time deposits 443,060 0.57 488,066 0.61
Total interest-bearing deposits 1,096,766 0.32 1,084,461 0.35
Other borrowings 69,908 1.38 83,987 1.07
Subordinated debentures 46,393 4.82 46,393 4.80
Total interest-bearing liabilities 1,213,067 0.55 1,214,841 0.57
Noninterest-bearing demand deposits 500,263 443,520
Other liabilities 10,879 10,898
Shareholders' equity 273,340 268,238
Total liabilities and shareholders' equity$ 1,997,549 $ 1,937,497
Net interest income and spread 3.10% 3.22%
Net interest margin (1) 3.30% 3.43%
Average interest-earning assets
to average interest-bearing liabilities 159.91% 155.55%
(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)
2015 2014
Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
LOAN COMPOSITION
Real estate mortgage:
Commercial$ 869,250 $ 759,406 $ 759,676 $ 752,971 $ 757,878 $ 769,021 $ 766,178
One-to-four family residential 95,906 85,338 86,343 77,531 78,985 79,542 84,619
Real estate construction:
Commercial 126,407 186,140 192,052 186,659 166,379 166,981 166,007
One-to-four family residential 12,866 13,107 12,586 10,464 11,030 8,359 6,629
Commercial 423,480 384,788 366,282 350,410 330,738 300,163 266,311
Installment and consumer:
Guaranteed student loans - - - 37 127 4,282 4,318
Other 20,185 20,651 21,306 21,919 22,251 23,352 26,060
Total loans, including held for sale 1,548,094 1,449,430 1,438,245 1,399,991 1,367,388 1,351,700 1,320,122
Less allowance for loan losses (26,593) (26,219) (27,250) (28,452) (30,917) (33,083) (34,925)
Total loans, net$ 1,521,501 $ 1,423,211 $ 1,410,995 $ 1,371,539 $ 1,336,471 $ 1,318,617 $ 1,285,197
LOANS BY SEGMENT
Oklahoma banking$ 832,282 $ 810,367 $ 814,949 $ 793,268 $ 800,201 $ 798,067 $ 777,384
Texas banking 563,010 493,047 478,005 460,680 424,640 408,385 372,018
Kansas banking 152,802 146,016 145,291 146,043 142,547 145,248 170,720
Total loans$ 1,548,094 $ 1,449,430 $ 1,438,245 $ 1,399,991 $ 1,367,388 $ 1,351,700 $ 1,320,122
NONPERFORMING LOANS BY TYPE
Construction & development$ 391 $ 416 $ 392 $ 73 $ 77 $ 82 $ 80
Commercial real estate 1,795 2,141 2,247 2,195 7,504 7,613 7,541
Commercial 11,727 5,114 5,447 6,044 6,149 7,484 7,992
One-to-four family residential 1,016 1,216 1,065 1,100 1,274 1,180 470
Consumer 148 - - 1 55 119 2
Total nonperforming loans$ 15,077 $ 8,887 $ 9,151 $ 9,413 $ 15,059 $ 16,478 $ 16,085
NONPERFORMING LOANS BY SEGMENT
Oklahoma banking$ 2,846 $ 1,670 $ 2,244 $ 1,867 $ 6,410 $ 7,149 $ 7,056
Texas banking 11,025 5,353 5,264 5,699 5,777 5,636 5,793
Kansas banking 1,206 1,864 1,643 1,847 2,872 3,693 3,236
Total nonperforming loans$ 15,077 $ 8,887 $ 9,151 $ 9,413 $ 15,059 $ 16,478 $ 16,085
OTHER REAL ESTATE BY TYPE
Construction & development$ 2,025 $ 2,035 $ 2,035 $ 2,035 $ 2,130 $ 2,130 $ 2,130
Commercial real estate 249 358 220 1,062 1,318 2,155 2,524
Total other real estate$ 2,274 $ 2,393 $ 2,255 $ 3,097 $ 3,448 $ 4,285 $ 4,654
OTHER REAL ESTATE BY SEGMENT
Oklahoma banking$ 200 $ 200 $ - $ - $ - $ - $ -
Texas banking 2,025 2,000 2,000 2,000 2,000 2,000 2,000
Kansas banking 49 193 255 1,097 1,448 2,285 2,654
Total other real estate$ 2,274 $ 2,393 $ 2,255 $ 3,097 $ 3,448 $ 4,285 $ 4,654
Continued


SOUTHWEST BANCORP, INC. Table 6
UNAUDITED QUARTERLY SUMMARY LOAN DATA Continued
(Dollars in thousands)
2015 2014
Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
POTENTIAL PROBLEM LOANS BY TYPE
Construction & development$ - $ - $ 201 $ 2,004 $ 19,307 $ 18,842 $ 22,220
Commercial real estate 22,362 20,375 24,672 26,108 40,623 60,559 64,257
Commercial 7,366 14,519 14,016 5,842 4,090 4,299 4,807
One-to-four family residential 79 80 81 83 355 475 481
Total potential problem loans$ 29,807 $ 34,974 $ 38,970 $ 34,037 $ 64,375 $ 84,175 $ 91,765
POTENTIAL PROBLEM LOANS BY SEGMENT
Oklahoma banking$ 23,597 $ 23,231 $ 26,713 $ 24,950 $ 23,895 $ 23,887 $ 29,208
Texas banking 4,086 9,180 9,541 6,283 38,586 57,044 58,361
Kansas banking 2,124 2,563 2,716 2,804 1,894 3,244 4,196
Total potential problem loans$ 29,807 $ 34,974 $ 38,970 $ 34,037 $ 64,375 $ 84,175 $ 91,765
ALLOWANCE ACTIVITY
Balance, beginning of period$ 26,219 $ 27,250 $ 28,452 $ 30,917 $ 33,083 $ 34,925 $ 36,663
Charge offs 226 325 230 377 1,156 1,991 3,392
Recoveries 577 430 915 298 1,887 504 2,640
Net charge offs (recoveries) (351) (105) (685) 79 (731) 1,487 752
Provision (credit) for loan losses 23 (1,136) (1,887) (2,386) (2,897) (355) (986)
Balance, end of period$ 26,593 $ 26,219 $ 27,250 $ 28,452 $ 30,917 $ 33,083 $ 34,925
NET CHARGE OFFS BY TYPE
Construction & development$ (16) $ (15) $ 5 $ - $ - $ - $ 655
Commercial real estate 24 82 (118) (34) (640) 583 (2,243)
Commercial (325) (52) (188) (45) 22 652 2,267
One-to-four family residential (68) (91) (331) 84 11 (2) (18)
Consumer 34 (29) (53) 74 (124) 254 91
Total net charge offs (recoveries) by type$ (351) $ (105) $ (685) $ 79 $ (731) $ 1,487 $ 752
NET CHARGE OFFS BY SEGMENT
Oklahoma banking$ (86) $ 25 $ (309) $ 248 $ 67 $ 763 $ 229
Texas banking (103) (72) (114) (36) (611) 244 (1,586)
Kansas banking (162) (58) (262) (133) (187) 480 2,109
Total net charge offs (recoveries) by segment$ (351) $ (105) $ (685) $ 79 $ (731) $ 1,487 $ 752


SOUTHWEST BANCORP, INC. Table 7
UNAUDITED QUARTERLY SUMMARY FINANCIAL DATA
(Dollars in thousands, except per share)
2015 2014
Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PER SHARE DATA
Basic earnings per common share$0.22 $0.22 $0.24 $0.30 $0.27 $0.31 $0.19
Diluted earnings per common share 0.22 0.22 0.24 0.30 0.27 0.31 0.19
Common dividends declared per share 0.06 0.06 0.06 0.04 0.04 0.04 0.04
Book value per common share 14.57 14.38 14.26 14.11 13.90 13.71 13.37
Tangible book value per share* 14.49 14.29 14.17 14.02 13.80 13.61 13.21
COMMON STOCK
Shares issued 19,901,336 19,900,855 19,900,350 19,810,877 19,793,623 19,793,123 19,786,206
Less treasury shares 868,617 867,310 867,310 617,818 223,005 - -
Outstanding shares 19,032,719 19,033,545 19,033,040 19,193,059 19,570,618 19,793,123 19,786,206
OTHER FINANCIAL DATA
Investment securities$388,543 $373,260 $377,545 $365,593 $370,607 $385,873 $386,987
Loans held for sale 7,024 6,687 9,106 1,485 4,368 6,803 5,741
Portfolio loans 1,541,070 1,442,743 1,429,139 1,398,506 1,363,020 1,344,897 1,314,381
Total loans 1,548,094 1,449,430 1,438,245 1,399,991 1,367,388 1,351,700 1,320,122
Total assets 2,059,899 2,031,581 2,003,079 1,942,034 1,900,948 1,885,158 2,012,053
Total deposits 1,626,250 1,624,446 1,616,454 1,533,999 1,494,946 1,463,855 1,605,906
Other borrowings 96,801 75,839 58,578 79,380 75,884 90,760 85,692
Subordinated debentures 46,393 46,393 46,393 46,393 46,393 46,393 46,393
Total shareholders' equity 277,344 273,681 271,444 270,786 271,966 271,351 264,586
Mortgage servicing portfolio 422,845 415,961 407,903 410,315 401,756 397,339 391,303
INTANGIBLE ASSET DATA
Goodwill$1,214 $1,214 $1,214 $1,214 $1,214 $1,214 $1,214
Core deposit intangible 342 405 467 530 597 667 1,925
Mortgage servicing rights 3,631 3,518 3,399 3,397 3,269 3,182 3,006
Total intangible assets$5,187 $5,137 $5,080 $5,141 $5,080 $5,063 $6,145
Intangible amortization expense$243 $243 $168 $193 $195 $210 $183
DEPOSIT COMPOSITION
Non-interest bearing demand$526,159 $515,156 $506,952 $496,128 $445,148 $427,431 $471,568
Interest-bearing demand 114,877 131,547 140,659 122,342 104,807 124,712 132,622
Money market accounts 502,028 496,178 488,569 461,679 477,614 430,296 440,875
Savings accounts 36,163 35,647 34,413 32,795 33,398 31,187 47,532
Time deposits of $100,000 or more 238,318 233,105 227,426 198,952 203,090 209,059 236,035
Other time deposits 208,705 212,813 218,435 222,103 230,889 241,170 277,274
Total deposits**$1,626,250 $1,624,446 $1,616,454 $1,533,999 $1,494,946 $1,463,855 $1,605,906
OFFICES AND EMPLOYEES
FTE Employees 358 361 360 359 351 364 397
Branches 23 23 22 21 21 21 24
Assets per employee$5,754 $5,628 $5,564 $5,410 $5,416 $5,179 $5,068
*This is a Non-GAAP based financial measure.
**Calculation of Non-brokered Deposits and Core Funding (Non-GAAP Financial Measures)
Total deposits$1,626,250 $1,624,446 $1,616,454 $1,533,999 $1,494,946 $1,463,855 $1,605,906
Less:
Brokered time deposits 10,086 7,683 7,694 3,373 2,952 1,348 1,347
Other brokered deposits 133,025 103,025 83,025 73,425 98,425 48,424 3,424
Non-brokered deposits$1,483,139 $1,513,738 $1,525,735 $1,457,201 $1,393,569 $1,414,083 $1,601,135
Plus:
Sweep repurchase agreements 50,801 50,839 33,578 54,380 50,884 65,760 60,692
Core funding$1,533,940 $1,564,577 $1,559,313 $1,511,581 $1,444,453 $1,479,843 $1,661,827
Balance sheet amounts are as of period end unless otherwise noted.


SOUTHWEST BANCORP, INC. Table 8
UNAUDITED QUARTERLY SUPPLEMENTAL ANALYTICAL DATA
(Dollars in thousands)
2015 2014
Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PERFORMANCE RATIOS
Return on average assets (annualized) 0.81% 0.85% 0.92% 1.22% 1.12% 1.27% 0.75%
Return on average common equity (annualized) 5.94 6.11 6.78 8.62 7.69 9.19 5.68
Return on average tangible common equity
(annualized)* 5.97 6.14 6.82 8.67 7.74 9.30 5.75
Net interest margin (annualized) 3.34 3.31 3.25 3.52 3.44 3.50 3.33
Total dividends declared to net income 27.53 27.45 25.19 12.93 14.88 12.86 21.40
Effective tax rate 35.84 34.51 37.49 37.50 37.49 37.50 37.49
Efficiency ratio 68.25 72.43 70.47 68.90 71.39 74.25 73.61
NONPERFORMING ASSETS
Nonaccrual loans$ 15,076 $ 8,887 $ 9,151 $ 9,276 $ 15,059 $ 16,478 $ 16,085
90 days past due and accruing 1 - - 137 - - -
Total nonperforming loans 15,077 8,887 9,151 9,413 15,059 16,478 16,085
Other real estate 2,274 2,393 2,255 3,097 3,448 4,285 4,654
Total nonperforming assets$ 17,351 $ 11,280 $ 11,406 $ 12,510 $ 18,507 $ 20,763 $ 20,739
Potential problem loans$ 29,807 $ 34,974 $ 38,970 $ 34,037 $ 64,375 $ 84,175 $ 91,765
ASSET QUALITY RATIOS
Nonperforming assets to portfolio loans and
other real estate 1.12% 0.78% 0.80% 0.89% 1.36% 1.54% 1.57%
Nonperforming loans to portfolio loans 0.98 0.62 0.64 0.67 1.10 1.23 1.22
Allowance for loan losses to portfolio loans 1.73 1.82 1.91 2.03 2.27 2.46 2.66
Allowance for loan losses to
nonperforming loans 176.38 295.03 297.78 302.26 205.29 200.77 217.13
Net loan charge-offs to average portfolio
loans (annualized) (0.09) (0.03) (0.20) 0.02 (0.21) 0.45 0.24
CAPITAL RATIOS
Average total shareholders' equity to
average assets 13.59% 13.87% 13.59% 14.19% 14.61% 13.77% 13.18%
Leverage ratio 15.84 16.12 15.75 16.45 16.86 15.95 15.09
Common equity tier 1 capital 14.57 15.30 15.51 n/a n/a n/a n/a
Tier 1 capital to risk-weighted assets 16.95 17.84 18.10 19.70 20.05 20.13 19.98
Total capital to risk-weighted assets 18.21 19.09 19.36 20.96 21.34 21.43 21.29
Tangible common equity to tangible assets*** 13.40 13.40 13.48 13.87 14.23 14.31 13.01
REGULATORY CAPITAL DATA
Common equity tier 1 capital$ 275,350 $ 272,048 $ 269,007 $ n/a $ n/a $ n/a $ n/a
Tier I capital 320,350 317,048 314,007 314,216 314,120 309,600 299,938
Total capital 344,095 339,412 335,734 334,348 334,456 329,586 319,516
Total risk adjusted assets 1,889,892 1,777,618 1,734,401 1,595,032 1,566,996 1,537,903 1,500,957
Average total assets 2,022,972 1,966,577 1,993,446 1,910,688 1,863,127 1,941,064 1,987,231
*This is a Non-GAAP based financial measure.
***Calculation of Tangible Common Equity to Tangible Assets (Non-GAAP Financial Measure)
Total shareholders' equity$ 277,344 $ 273,681 $ 271,444 $ 270,786 $ 271,966 $ 271,351 $ 264,586
Less goodwill and core deposit intangible 1,556 1,619 1,681 1,744 1,811 1,881 3,139
Tangible common equity$ 275,788 $ 272,062 $ 269,763 $ 269,042 $ 270,155 $ 269,470 $ 261,447
Total assets$ 2,059,899 $ 2,031,581 $ 2,003,079 $ 1,942,034 $ 1,900,948 $ 1,885,158 $ 2,012,053
Less goodwill and core deposit intangible 1,556 1,619 1,681 1,744 1,811 1,881 3,139
Tangible assets$ 2,058,343 $ 2,029,962 $ 2,001,398 $ 1,940,290 $ 1,899,137 $ 1,883,277 $ 2,008,914
Total shareholders' equity to total assets 13.46% 13.47% 13.55% 13.94% 14.31% 14.39% 13.15%
Tangible common equity to tangible assets 13.40% 13.40% 13.48% 13.87% 14.23% 14.31% 13.01%
Balance sheet amounts and ratios are as of period end unless otherwise noted.


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

Source:Southwest Bancorp, Inc.