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

STILLWATER, Okla., Jan. 19, 2016 (GLOBE NEWSWIRE) -- Southwest Bancorp, Inc. (NASDAQ:OKSB), (“Southwest”), today reported net income for the fourth quarter of 2015 of $4.6 million, or $0.23 per diluted share, compared to $5.9 million, or $0.30 per diluted share, for the fourth quarter of 2014. Included in the prior year’s fourth quarter results was a negative (credit) provision for loan losses of $2.4 million versus a negative (credit) provision of $0.6 million for the quarter ended December 31, 2015. Net income for the year ended December 31, 2015 totaled $17.4 million, or $0.90 per diluted share, compared to $21.0 million, or $1.07 per diluted share, for the year ended December 31, 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 $6.6 million, versus a negative (credit) provision for loan losses of $3.6 million for the year ended December 31, 2015.

Southwest announced that its board of directors has approved an increase in the quarterly cash dividend from $0.06 per share to $0.08 per share payable February 12, 2016 to shareholders of record as of January 29, 2016.

Mark Funke, President and CEO, stated, “The fourth quarter was a positive growth and expansion quarter for Bank SNB. We successfully completed the acquisition and integration of First Commercial Bancshares, Inc. We hired a market president and two commercial bankers to lead our newly established Denver banking efforts. The acquisition 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 fourth quarter reflect solid earnings and strong loan growth. Our efforts produced several highlights:

  • Closed the acquisition of Edmond-based First Commercial Bancshares, Inc. (“FCBI”) October 9, 2015.
  • Total loan growth was $231.3 million, including $194.0 million of FCBI acquired loans, or 15%, for the fourth quarter and $379.4 million, or 27%, for the year. We have had eight consecutive quarters of loan growth.
  • Core loan growth (excluding the FCBI acquisition) for the year was $185.4 million, or 13%.
  • The quarterly net interest margin improved to 3.48% at December 31, 2015 compared to 3.34% at September 30, 2015.

“Our financial results and the solid loan growth for the fourth quarter and the full year 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 risk and expenses.”

On February 24, 2015, Southwest’s board of directors authorized its second consecutive share repurchase program of up to 5.0% of its outstanding common stock, or approximately 950,000 shares, which became effective on August 14, 2015. The first share repurchase program, in August 2014, authorized up to 990,000 shares. Since August 2014, Southwest has repurchased 1,121,558 shares for a total of $18.8 million. During the fourth quarter of 2015, 254,248 shares for a total of $4.4 million were repurchased.

Financial Overview

Condition: As of December 31, 2015, total assets were $2.4 billion, an increase of $297.1 million, including FCBI acquired assets, when compared to September 30, 2015. At the date of acquisition, FCBI assets were $291.9 million. As of December 31, 2015, total loans were $1.8 billion, an increase of $231.3 million from the prior quarter end, including $194.0 million in acquired loans. As of December 31, 2015, investment securities were $412.1 million, an increase of $23.6 million from the prior quarter end, including $34.8 million in acquired investments. Cash and cash equivalents at December 31, 2015 were $78.1 million, up $9.5 million from September 30, 2015.

At December 31, 2015, the allowance for loan losses was $26.1 million, a decrease of $0.5 million when compared to September 30, 2015 and a decrease of $2.3 million when compared to December 31, 2014. The allowance for loan losses to portfolio loans was 1.47% as of December 31, 2015, compared to 1.73% as of September 30, 2015 and 2.03% as of December 31, 2014. The allowance for loan losses to nonperforming loans was 128.49% as of December 31, 2015, compared to 176.38% as of September 30, 2015 and 302.26% as of December 31, 2014. The total allowance for loan losses combined with the purchase discount on acquired loans represents 1.96% of gross loans.

Nonperforming loans were $20.3 million at December 31, 2015, an increase of $5.2 million from September 30, 2015, including $4.1 million of acquired nonperforming loans, and an increase of $10.9 million from December 31, 2014. Other real estate at December 31, 2015 was $2.3 million, which is flat from September 30, 2015, and a decrease of $0.8 million when compared to December 31, 2014. Nonperforming assets were $22.6 million, or 1.27% of portfolio loans and other real estate, as of December 31, 2015, compared to $17.4 million, or 1.12% of portfolio loans and other real estate, as of September 30, 2015, and $12.5 million, or 0.89% of portfolio loans and other real estate, as of December 31, 2014.

As of December 31, 2015, total deposits were $1.9 billion, an increase of $257.9 million, including $227.9 million of acquired deposits, when compared to September 30, 2015. Total core funding, which includes all non-brokered deposits and sweep repurchase agreements, comprised 88% and 89% of total funding as of December 31, 2015 and September 30, 2015, respectively. Wholesale funding, including Federal Home Loan Bank borrowings, federal funds purchased, and brokered deposits, accounted for 12% and 11% of total funding at December 31, 2015 and September 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 December 31, 2015 exceeded the criteria for regulatory classification as “well-capitalized”. Southwest’s total regulatory capital was $354.3 million, for a total risk-based capital ratio of 16.55%, Common Equity Tier 1 capital was $282.7 million, for a Common Equity Tier 1 ratio of 13.21%, and Tier 1 capital was $327.5 million, for a Tier 1 risk-based capital ratio of 15.30%. Bank SNB had total regulatory capital of $317.9 million, for a total risk-based capital ratio of 14.90% and Common Equity Tier 1 and Tier 1 capital of $291.1 million, for a Common Equity Tier 1 and Tier 1 ratio of 13.65%. Designation as a well-capitalized institution under regulations does not constitute a recommendation or endorsement by bank regulators.

Fourth Quarter Results:

Summary: For the fourth quarter of 2015, net income was $4.6 million, compared to $4.1 million for the third quarter of 2015 and $5.9 million for the fourth quarter of 2014. For the quarter, FCBI contributed $1.1 million of net income, which was substantially offset by deal costs, net of tax, of $1.0 million.

The $0.5 million increase in net income compared to the third quarter of 2015 was primarily due to $3.0 million increase in net interest income, a negative provision for loan losses of $0.6 million versus a small loan provision for loan losses in the previous quarter, and a $0.2 million increase in noninterest income, offset in part by a $3.0 million increase in noninterest expense including FCBI acquisition expenses, and an increase in taxes of $0.3 million.

The $1.3 million decrease in our net income compared to the fourth quarter of 2014 was primarily the result of a decrease in the negative provision for loan losses of $1.8 million, a $0.4 million decrease in noninterest income, a $3.0 million increase in noninterest expense, offset in part by a $2.9 million increase in net interest income and a $1.0 million decrease in taxes.

Net Interest Income: Net interest income totaled $19.5 million for the fourth quarter of 2015, compared to $16.5 million for the third quarter of 2015 and $16.6 million for the fourth quarter of 2014. Net interest margin was 3.48% for the fourth quarter of 2015, compared to 3.34% for the third quarter of 2015 and 3.52% for the fourth quarter of 2014. Included in interest income for the fourth quarter of 2015 was $0.3 million due to accelerated discount accretion attributable to the acquisition of FCBI. The net effect of these adjustments on the net interest margin was a 5 basis point increase for the quarter ended 2015. The FCBI acquisition contributed $2.7 million in net interest income including $0.3 million in accelerated discount accretion. Loans (including loans held for sale) for the fourth quarter of 2015 increased $231.3 million, or 15%, including $194.0 million of acquired loans, when compared to September 30, 2015, and $379.4 million, or 27%, when compared to December 31, 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 loan 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 of $0.6 million for the fourth quarter of 2015, compared to a provision of $0.02 million for the third quarter of 2015, and a negative provision of $2.4 million for the fourth quarter of 2014. During the fourth quarter of 2015, net recoveries totaled $0.1 million, or (0.02%) (annualized) of average portfolio loans, compared to net recoveries of $0.4 million, or (0.09%) (annualized) of average portfolio loans for the third quarter of 2015 and net charge-offs of $0.1 million, or 0.02% (annualized) of average portfolio loans for the fourth quarter of 2014.

Noninterest Income: Noninterest income totaled $4.2 million for the fourth quarter of 2015, compared to $4.0 million for the third quarter of 2015 and $4.6 million for the fourth quarter of 2014.

The $0.2 million increase from the third quarter of 2015 is primarily the result of a $0.2 million increase in service charges and fees and a $0.1 million increase in the gain on sale of mortgage loans, offset in part by a $0.1 million decrease in other noninterest income, primarily from customer risk management interest rate swap income.

The $0.4 million decrease from the fourth quarter of 2014 is primarily the result of a $1.1 million decrease in gain on investment securities related to the gain on sale of a private equity investment during the fourth quarter of 2014, offset in part by a $0.1 million increase in service charges and fees, a $0.2 million increase in the gain on sale of mortgage loans, and a $0.4 million increase in other noninterest income, primarily from customer risk management interest rate swap income and income on bank owned life insurance.

Noninterest Expense: Noninterest expense totaled $17.1 million for the fourth quarter of 2015, compared to $14.1 million for the third quarter of 2015 and the fourth quarter of 2014.

The $3.0 million increase in noninterest expense from the third quarter of 2015 was primarily due to a $1.9 million increase in personnel expense, a $0.3 million increase in occupancy, a $0.4 million increase in data processing, and a $0.4 million increase in general and administrative expense. Noninterest expense included $2.6 million of expenses related to the acquisition of FCBI and the associated deal costs.

The $3.0 million increase in noninterest expense from the fourth quarter of 2014 consisted of a $2.8 million increase in personnel expense, a $0.2 million increase in occupancy, a $0.4 million increase in data processing, and a $0.1 million increase in FDIC and other insurance, offset in part by a $0.2 million decrease in other real estate and a $0.4 million decrease in general and administrative expense, which includes primarily legal, accounting, and marketing expenses. Noninterest expense included $2.6 million of expenses related to the acquisition of FCBI and the associated deal costs.

Income Tax: Income tax expense totaled $2.6 million for the fourth quarter of 2015, compared to $2.3 million for the third quarter of 2015 and $3.5 million for the fourth quarter of 2014. The income tax expense fluctuates in relation to pre-tax income levels. The fourth quarter of 2015 effective tax rate was 35.96%, compared to 35.84% for the third quarter of 2015 and 37.50% for the fourth 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 $17.4 million for the year ended December 31, 2015, compared to $21.0 million for the year ended December 31, 2014. The $3.6 million decrease in net income from 2014 is the result of a $3.1 million decrease in the negative provision for loan losses, a $4.5 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, and a $1.3 million increase in noninterest expense, offset in part by a $2.4 million increase in net interest income and a $2.8 million decrease in income tax. For the year, FCBI contributed $1.1 million of net income, which was offset by, net of tax, deal costs of $1.2 million.

Net Interest Income: Net interest income totaled $67.4 million for 2015, compared to $65.0 million for 2014, an increase of $2.4 million. Year-to-date net interest margin was 3.35%, compared to 3.45% for 2014. Included in interest income for 2015 was $0.3 million due to accelerated discount accretion attributable to the acquisition of FCBI. The net effect of these adjustments on the net interest margin was a 2 basis point increase for the year ended 2015. Included in interest income for 2014 was $0.8 million due to accelerated discount accretion attributable to the sale of loans covered by a loss share agreement and $0.8 million due to the interest recovery on nonaccrual loans. The net effect of these adjustments on the net interest margin was a 8 basis point increase for the year ended 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 loan 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 $3.6 million for 2015, compared to a negative provision of $6.6 million for 2014. Net recoveries totaled $1.2 million, or (0.08%) (annualized) of average portfolio loans year-to-date as of 2015, compared to net charge-offs of $1.6 million, or 0.12% (annualized) of average portfolio loans for 2014.

Noninterest Income: Noninterest income totaled $14.5 million for 2015, compared to $18.9 million for 2014. The decrease consists of a $0.2 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 $1.7 million decrease in the gain on sale of investment securities, due to the gain on sale of a private equity investment and the gain on the sale of a stock investment that was acquired in a prior year repossession in 2014, offset in part by a $0.6 million increase in gain on sales of mortgage loans and a $1.2 million increase in other noninterest income, which includes customer risk management interest rate swap income and income on bank owned life insurance.

Noninterest Expense: Noninterest expense totaled $58.2 million for 2015, compared to $56.9 million for 2014. The increase consists of a $3.0 million increase in salaries and employee benefits, a $0.2 million increase in occupancy expense, and a $0.4 million increase in data processing. These increases are offset in part by a $0.4 million decrease in other real estate expense and a $1.9 million decrease in general and administrative expenses, which primarily includes legal, marketing, and consulting. Noninterest expense included $3.1 million of expenses related to the acquisition of FCBI and the associated deal costs.

Income Tax: Income tax expense totaled $9.8 million for 2015, compared to $12.6 million for 2014. The income tax expense fluctuates in relation to pre-tax income levels. The year-to-date effective tax rate was 36.00% as of December 31, 2015, compared to 37.50% as of December 31, 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, January 20, 2016 at 11:00 a.m. Eastern Time (10:00 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/10077971. 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/oksb160120.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 10077971. Telephone replay access will be available until 9:00 a.m. Eastern Time on February 20, 2016.

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 December 31, 2015, Southwest had total assets of approximately $2.4 billion, deposits of $1.9 billion, and shareholders’ equity of $296.1 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 December 31, 2015, approximately $425.7 million, or 24%, 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 December 31, 2015 through the date its financial statements are filed with the Securities and Exchange Commission. The December 31, 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)
Fourth QuarterThird Quarter Fourth Quarter
QUARTERLY HIGHLIGHTS 2015 % Change 2014 % Change
Operations
Net interest income $ 19,520 $ 16,496 18% $ 16,592 18%
Provision (credit) for loan losses (566) 23 (2,561) (2,386) (76)
Noninterest income 4,179 4,029 4 4,576 (9)
Noninterest expense 17,099 14,077 21 14,115 21
Income before taxes 7,166 6,425 12 9,439 (24)
Taxes on income 2,577 2,303 12 3,540 (27)
Net income 4,589 4,122 11 5,899 (22)
Diluted earnings per share 0.23 0.22 5 0.30 (23)
Balance Sheet
Total assets 2,357,022 2,059,899 14 1,942,034 21
Loans held for sale 7,453 7,024 6 1,485 402
Portfolio loans 1,771,976 1,541,070 15 1,398,506 27
Total deposits 1,884,105 1,626,250 16 1,533,999 23
Total shareholders' equity 296,098 277,344 7 270,786 9
Book value per common share 14.80 14.57 2 14.11 5
Key Ratios
Net interest margin 3.48% 3.34% 3.52%
Efficiency ratio 71.49 68.25 66.68
Total capital to risk-weighted assets 16.55 18.21 20.96
Nonperforming loans to portfolio loans 1.15 0.98 0.67
Shareholders' equity to total assets 12.56 13.46 13.94
Tangible common equity to tangible assets* 11.95 13.40 13.89
Return on average assets (annualized) 0.78 0.81 1.22
Return on average common equity (annualized) 6.14 5.94 8.62
Return on average tangible common equity (annualized)** 6.46 5.97 8.66
Year
YEAR-TO-DATE HIGHLIGHTS 2015 2014 % Change
Operations
Net interest income $ 67,417 $ 65,004 4%
Provision (credit) for loan losses (3,566) (6,624) (46)
Noninterest income 14,457 18,931 (24)
Noninterest expense 58,240 56,912 2
Income before taxes 27,200 33,647 (19)
Taxes on income 9,793 12,617 (22)
Net income 17,407 21,030 (17)
Net income available to common shareholders 17,407 21,030 (17)
Diluted earnings per share 0.90 1.07 (16)
Balance Sheet
Total assets 2,357,022 1,942,034 21
Loans held for sale 7,453 1,485 402
Portfolio loans 1,771,976 1,398,506 27
Total deposits 1,884,105 1,533,999 23
Total shareholders' equity 296,098 270,786 9
Book value per common share 14.80 14.11 5
Key Ratios
Net interest margin 3.35% 3.45%
Efficiency ratio 70.67 67.80
Total capital to risk-weighted assets 16.55 20.96
Nonperforming loans to portfolio loans 1.15 0.67
Shareholders' equity to total assets 12.56 13.94
Tangible common equity to tangible assets* 11.95 13.89
Return on average assets (annualized) 0.84 1.09
Return on average common equity (annualized) 6.23 7.82
Return on average tangible common equity (annualized)** 6.35 7.85
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)
December 31, December 31,
2015 2014
Assets
Cash and due from banks$ 24,971 $ 19,705
Interest-bearing deposits 53,158 121,231
Cash and cash equivalents 78,129 140,936
Securities held to maturity (fair values of $12,282 and $12,880, respectively) 11,797 12,362
Securities available for sale (amortized cost of $401,136 and $352,275, respectively) 400,331 353,231
Loans held for sale 7,453 1,485
Loans receivable 1,771,976 1,398,506
Less: Allowance for loan losses (26,106) (28,452)
Net loans receivable 1,745,870 1,370,054
Accrued interest receivable 5,767 4,723
Non-hedge derivative asset 1,793 787
Premises and equipment, net 23,819 18,588
Other real estate 2,274 3,097
Goodwill 13,467 1,214
Other intangible assets, net 6,615 3,927
Other assets 59,707 31,630
Total assets$ 2,357,022 $ 1,942,034
Liabilities
Deposits:
Noninterest-bearing demand$ 596,494 $ 496,128
Interest-bearing demand 151,015 122,342
Money market accounts 534,357 461,679
Savings accounts 56,333 32,795
Time deposits of $100,000 or more 311,538 198,952
Other time deposits 234,368 222,103
Total deposits 1,884,105 1,533,999
Accrued interest payable 867 769
Non-hedge derivative liability 1,793 787
Other liabilities 11,684 9,920
Other borrowings 110,927 79,380
Subordinated debentures 51,548 46,393
Total liabilities 2,060,924 1,671,248
Shareholders' equity
Common stock - $1 par value; 40,000,000 shares authorized;
21,138,028 and 19,810,877 shares issued, respectively 21,138 19,811
Additional paid-in capital 121,966 101,245
Retained earnings 173,210 160,427
Accumulated other comprehensive income (loss) (1,290) (395)
Treasury stock, at cost, 1,131,226 and 617,818 shares, respectively (18,926) (10,302)
Total shareholders' equity 296,098 270,786
Total liabilities and shareholders' equity$ 2,357,022 $ 1,942,034


SOUTHWEST BANCORP, INC.
Table 3
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
For the three months ended For the year
December 31, September 30, December 31, ended December 31,
2015 2015 2014 2015 2014
Interest income
Loans$ 19,725 $16,510 $ 16,423 $ 67,644 $ 64,224
Investment securities 1,813 1,644 1,737 6,559 7,146
Other interest-earning assets 46 66 56 280 422
Total interest income 21,584 18,220 18,216 74,483 71,792
Interest expense
Interest-bearing deposits 1,196 905 835 3,798 3,655
Other borrowings 261 255 225 984 900
Subordinated debentures 607 564 564 2,284 2,233
Total interest expense 2,064 1,724 1,624 7,066 6,788
Net interest income 19,520 16,496 16,592 67,417 65,004
Provision (credit) for loan losses (566) 23 (2,386) (3,566) (6,624)
Net interest income after provision for loan losses 20,086 16,473 18,978 70,983 71,628
Noninterest income
Service charges and fees 2,676 2,441 2,526 9,995 10,222
Gain on sale of branches, net - - - - 4,378
Gain on sales of mortgage loans 645 565 480 2,179 1,549
Gain on sale/call of investment securities, net - 19 1,120 162 1,884
Other noninterest income 858 1,004 450 2,121 898
Total noninterest income 4,179 4,029 4,576 14,457 18,931
Noninterest expense
Salaries and employee benefits 10,273 8,374 7,428 34,850 31,830
Occupancy 2,586 2,288 2,388 9,359 9,193
Data processing 847 475 417 2,178 1,776
FDIC and other insurance 384 341 295 1,353 1,305
Other real estate, net 8 20 235 161 594
General and administrative 3,001 2,579 3,352 10,339 12,214
Total noninterest expense 17,099 14,077 14,115 58,240 56,912
Income before taxes 7,166 6,425 9,439 27,200 33,647
Taxes on income 2,577 2,303 3,540 9,793 12,617
Net income$ 4,589 $4,122 $ 5,899 $ 17,407 $ 21,030
Basic earnings per common share$ 0.23 $0.22 $ 0.30 $ 0.90 $ 1.07
Diluted earnings per common share 0.23 0.22 0.30 0.90 1.07
Common dividends declared per share 0.06 0.06 0.04 0.24 0.16


SOUTHWEST BANCORP, INC.
Table 4
UNAUDITED AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
(Dollars in thousands)
For the three months ended
December 31, 2015 September 30, 2015 December 31, 2014
Average Average Average Average Average Average
Balance Yield/Rate Balance Yield/Rate Balance Yield/Rate
Assets
Loans$ 1,744,374 4.49% $ 1,473,297 4.45% $ 1,369,852 4.76%
Investment securities 413,701 1.74 387,194 1.68 367,978 1.87
Other interest-earning assets 64,562 0.28 100,011 0.26 132,418 0.17
Total interest-earning assets 2,222,637 3.85 1,960,502 3.69 1,870,248 3.86
Other assets 101,003 65,459 44,268
Total assets$ 2,323,640 $ 2,025,961 $ 1,914,516
Liabilities and Shareholders' Equity
Interest-bearing demand deposits$ 137,154 0.15% $ 123,829 0.12% $ 114,035 0.11%
Money market accounts 541,976 0.18 497,935 0.17 466,937 0.15
Savings accounts 53,603 0.13 35,982 0.10 32,824 0.10
Time deposits 548,145 0.63 446,464 0.57 427,582 0.57
Total interest-bearing deposits 1,280,878 0.37 1,104,210 0.33 1,041,378 0.32
Other borrowings 80,343 1.29 76,799 1.32 79,932 1.12
Subordinated debentures 51,044 4.76 46,393 4.86 46,393 4.86
Total interest-bearing liabilities 1,412,265 0.58 1,227,402 0.56 1,167,703 0.55
Noninterest-bearing demand deposits 594,537 511,442 465,466
Other liabilities 20,149 11,708 9,765
Shareholders' equity 296,689 275,409 271,582
Total liabilities and shareholders' equity$ 2,323,640 $ 2,025,961 $ 1,914,516
Net interest income and spread 3.27% 3.13% 3.31%
Net interest margin (1) 3.48% 3.34% 3.52%
Average interest-earning assets
to average interest-bearing liabilities 157.38% 159.73% 160.16%
(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 year ended December 31,
2015 2014
Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
Assets
Loans$ 1,519,730 4.45% $ 1,334,323 4.81%
Investment securities 384,745 1.70 379,924 1.88
Other interest-earning assets 106,587 0.26 170,563 0.25
Total interest-earning assets 2,011,062 3.70 1,884,810 3.81
Other assets 68,680 46,894
Total assets$ 2,079,742 $ 1,931,704
Liabilities and Shareholders' Equity
Interest-bearing demand deposits$ 134,381 0.11% $ 121,976 0.12%
Money market accounts 499,788 0.17 440,658 0.14
Savings accounts 39,456 0.11 38,147 0.10
Time deposits 469,547 0.59 472,820 0.60
Total interest-bearing deposits 1,143,172 0.33 1,073,601 0.34
Other borrowings 72,538 1.36 82,965 1.08
Subordinated debentures 47,565 4.80 46,393 4.81
Total interest-bearing liabilities 1,263,275 0.56 1,202,959 0.56
Noninterest-bearing demand deposits 524,025 449,052
Other liabilities 13,217 10,612
Shareholders' equity 279,225 269,081
Total liabilities and shareholders' equity$ 2,079,742 $ 1,931,704
Net interest income and spread 3.14% 3.25%
Net interest margin (1) 3.35% 3.45%
Average interest-earning assets
to average interest-bearing liabilities 159.19% 156.68%
(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
Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
LOAN COMPOSITION
Real estate mortgage:
Commercial$ 938,462 $ 869,250 $ 759,406 $ 759,676 $ 752,971 $ 757,878 $ 769,021 $ 766,178
One-to-four family residential 161,958 95,906 85,338 86,343 77,531 78,985 79,542 84,619
Real estate construction:
Commercial 129,070 126,407 186,140 192,052 186,659 166,379 166,981 166,007
One-to-four family residential 21,337 12,866 13,107 12,586 10,464 11,030 8,359 6,629
Commercial 507,173 423,480 384,788 366,282 350,410 330,738 300,163 266,311
Installment and consumer:
Guaranteed student loans - - - - 37 127 4,282 4,318
Other 21,429 20,185 20,651 21,306 21,919 22,251 23,352 26,060
Total loans, including held for sale 1,779,429 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 (26,106) (26,593) (26,219) (27,250) (28,452) (30,917) (33,083) (34,925)
Total loans, net$ 1,753,323 $ 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****$ 1,048,473 $ 832,282 $ 810,367 $ 814,949 $ 793,268 $ 800,201 $ 798,067 $ 777,384
Texas banking 580,476 563,010 493,047 478,005 460,680 424,640 408,385 372,018
Kansas banking 150,480 152,802 146,016 145,291 146,043 142,547 145,248 170,720
Total loans$ 1,779,429 $ 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$ 1,010 $ 391 $ 416 $ 392 $ 73 $ 77 $ 82 $ 80
Commercial real estate 3,992 1,795 2,141 2,247 2,195 7,504 7,613 7,541
Commercial 13,491 11,727 5,114 5,447 6,044 6,149 7,484 7,992
One-to-four family residential 1,777 1,016 1,216 1,065 1,100 1,274 1,180 470
Consumer 88 148 - - 1 55 119 2
Total nonperforming loans$ 20,358 $ 15,077 $ 8,887 $ 9,151 $ 9,413 $ 15,059 $ 16,478 $ 16,085
NONPERFORMING LOANS BY SEGMENT
Oklahoma banking****$ 6,948 $ 2,846 $ 1,670 $ 2,244 $ 1,867 $ 6,410 $ 7,149 $ 7,056
Texas banking 12,450 11,025 5,353 5,264 5,699 5,777 5,636 5,793
Kansas banking 960 1,206 1,864 1,643 1,847 2,872 3,693 3,236
Total nonperforming loans$ 20,358 $ 15,077 $ 8,887 $ 9,151 $ 9,413 $ 15,059 $ 16,478 $ 16,085
OTHER REAL ESTATE BY TYPE
Construction & development$ 2,060 $ 2,025 $ 2,035 $ 2,035 $ 2,035 $ 2,130 $ 2,130 $ 2,130
Commercial real estate 214 249 358 220 1,062 1,318 2,155 2,524
Total other real estate$ 2,274 $ 2,274 $ 2,393 $ 2,255 $ 3,097 $ 3,448 $ 4,285 $ 4,654
OTHER REAL ESTATE BY SEGMENT
Oklahoma banking****$ 274 $ 200 $ 200 $ - $ - $ - $ - $ -
Texas banking 2,000 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 $ 2,274 $ 2,393 $ 2,255 $ 3,097 $ 3,448 $ 4,285 $ 4,654
****Due to immateriality, Colorado banking is included within Oklahoma banking.


SOUTHWEST BANCORP, INC.
Table 6
UNAUDITED QUARTERLY SUMMARY LOAN DATA Continued
(Dollars in thousands)
2015 2014
Dec. 31 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 26,981 22,362 20,375 24,672 26,108 40,623 60,559 64,257
Commercial 9,879 7,366 14,519 14,016 5,842 4,090 4,299 4,807
One-to-four family residential 2,285 79 80 81 83 355 475 481
Consumer 10 - - - - - - -
Total potential problem loans$ 39,155 $ 29,807 $ 34,974 $ 38,970 $ 34,037 $ 64,375 $ 84,175 $ 91,765
POTENTIAL PROBLEM LOANS BY SEGMENT
Oklahoma banking****$ 32,970 $ 23,597 $ 23,231 $ 26,713 $ 24,950 $ 23,895 $ 23,887 $ 29,208
Texas banking 4,165 4,086 9,180 9,541 6,283 38,586 57,044 58,361
Kansas banking 2,020 2,124 2,563 2,716 2,804 1,894 3,244 4,196
Total potential problem loans$ 39,155 $ 29,807 $ 34,974 $ 38,970 $ 34,037 $ 64,375 $ 84,175 $ 91,765
ALLOWANCE ACTIVITY
Balance, beginning of period$ 26,593 $ 26,219 $ 27,250 $ 28,452 $ 30,917 $ 33,083 $ 34,925 $ 36,663
Charge offs 569 226 325 230 377 1,156 1,991 3,392
Recoveries 648 577 430 915 298 1,887 504 2,640
Net charge offs (recoveries) (79) (351) (105) (685) 79 (731) 1,487 752
Provision (credit) for loan losses (566) 23 (1,136) (1,887) (2,386) (2,897) (355) (986)
Balance, end of period$ 26,106 $ 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 219 24 82 (118) (34) (640) 583 (2,243)
Commercial (286) (325) (52) (188) (45) 22 652 2,267
One-to-four family residential (48) (68) (91) (331) 84 11 (2) (18)
Consumer 36 34 (29) (53) 74 (124) 254 91
Total net charge offs (recoveries) by type$ (79) $ (351) $ (105) $ (685) $ 79 $ (731) $ 1,487 $ 752
NET CHARGE OFFS BY SEGMENT
Oklahoma banking****$ 288 $ (86) $ 25 $ (309) $ 248 $ 67 $ 763 $ 229
Texas banking (415) (103) (72) (114) (36) (611) 244 (1,586)
Kansas banking 48 (162) (58) (262) (133) (187) 480 2,109
Total net charge offs (recoveries) by segment$ (79) $ (351) $ (105) $ (685) $ 79 $ (731) $ 1,487 $ 752
****Due to immateriality, Colorado banking is included within Oklahoma banking.


SOUTHWEST BANCORP, INC.
Table 7
UNAUDITED QUARTERLY SUMMARY FINANCIAL DATA
(Dollars in thousands, except per share)
2015 2014
Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PER SHARE DATA
Basic earnings per common share$0.23 $0.22 $0.22 $0.24 $0.30 $0.27 $0.31 $0.19
Diluted earnings per common share 0.23 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 0.06 0.04 0.04 0.04 0.04
Book value per common share 14.80 14.57 14.38 14.26 14.11 13.90 13.71 13.37
Tangible book value per share* 13.98 14.49 14.29 14.17 14.02 13.80 13.61 13.21
COMMON STOCK
Shares issued 21,138,028 19,901,336 19,900,855 19,900,350 19,810,877 19,793,623 19,793,123 19,786,206
Less treasury shares 1,131,226 868,617 867,310 867,310 617,818 223,005 - -
Outstanding shares 20,006,802 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$412,128 $388,543 $373,260 $377,545 $365,593 $370,607 $385,873 $386,987
Loans held for sale 7,453 7,024 6,687 9,106 1,485 4,368 6,803 5,741
Portfolio loans 1,771,976 1,541,070 1,442,743 1,429,139 1,398,506 1,363,020 1,344,897 1,314,381
Total loans 1,779,429 1,548,094 1,449,430 1,438,245 1,399,991 1,367,388 1,351,700 1,320,122
Total assets 2,357,022 2,059,899 2,031,581 2,003,079 1,942,034 1,900,948 1,885,158 2,012,053
Total deposits 1,884,105 1,626,250 1,624,446 1,616,454 1,533,999 1,494,946 1,463,855 1,605,906
Other borrowings 110,927 96,801 75,839 58,578 79,380 75,884 90,760 85,692
Subordinated debentures 51,548 46,393 46,393 46,393 46,393 46,393 46,393 46,393
Total shareholders' equity 296,098 277,344 273,681 271,444 270,786 271,966 271,351 264,586
Mortgage servicing portfolio 432,318 422,845 415,961 407,903 410,315 401,756 397,339 391,303
INTANGIBLE ASSET DATA
Goodwill$13,467 $1,214 $1,214 $1,214 $1,214 $1,214 $1,214 $1,214
Core deposit intangible 2,894 342 405 467 530 597 667 1,925
Mortgage servicing rights 3,721 3,631 3,518 3,399 3,397 3,269 3,182 3,006
Total intangible assets$20,082 $5,187 $5,137 $5,080 $5,141 $5,080 $5,063 $6,145
Intangible amortization expense$330 $243 $243 $168 $193 $195 $210 $183
DEPOSIT COMPOSITION
Non-interest bearing demand$596,494 $526,159 $515,156 $506,952 $496,128 $445,148 $427,431 $471,568
Interest-bearing demand 151,015 114,877 131,547 140,659 122,342 104,807 124,712 132,622
Money market accounts 534,357 502,028 496,178 488,569 461,679 477,614 430,296 440,875
Savings accounts 56,333 36,163 35,647 34,413 32,795 33,398 31,187 47,532
Time deposits of $100,000 or more 311,538 238,318 233,105 227,426 198,952 203,090 209,059 236,035
Other time deposits 234,368 208,705 212,813 218,435 222,103 230,889 241,170 277,274
Total deposits**$1,884,105 $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 412 358 361 360 359 351 364 397
Branches 32 23 23 22 21 21 21 24
Assets per employee$5,721 $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$1,884,105 $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 39,797 10,086 7,683 7,694 3,373 2,952 1,348 1,347
Other brokered deposits 135,880 133,025 103,025 83,025 73,425 98,425 48,424 3,424
Non-brokered deposits$1,708,428 $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 37,273 50,801 50,839 33,578 54,380 50,884 65,760 60,692
Core funding$1,745,701 $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
Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PERFORMANCE RATIOS
Return on average assets (annualized) 0.78% 0.81% 0.85% 0.92% 1.22% 1.12% 1.27% 0.75%
Return on average common equity (annualized) 6.14 5.94 6.11 6.78 8.62 7.69 9.19 5.68
Return on average tangible common equity
(annualized)* 6.46 5.97 6.14 6.82 8.67 7.74 9.30 5.75
Net interest margin (annualized) 3.48 3.34 3.31 3.25 3.52 3.44 3.50 3.33
Total dividends declared to net income 26.22 27.53 27.45 25.19 12.93 14.88 12.86 21.40
Effective tax rate 35.96 35.84 34.51 37.49 37.50 37.49 37.50 37.49
Efficiency ratio 71.49 68.25 72.43 70.47 68.90 71.39 74.25 73.61
NONPERFORMING ASSETS
Nonaccrual loans$ 19,858 $ 15,076 $ 8,887 $ 9,151 $ 9,276 $ 15,059 $ 16,478 $ 16,085
90 days past due and accruing 500 1 - - 137 - - -
Total nonperforming loans 20,358 15,077 8,887 9,151 9,413 15,059 16,478 16,085
Other real estate 2,274 2,274 2,393 2,255 3,097 3,448 4,285 4,654
Total nonperforming assets$ 22,632 $ 17,351 $ 11,280 $ 11,406 $ 12,510 $ 18,507 $ 20,763 $ 20,739
Potential problem loans$ 39,155 $ 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 1.28% 1.12% 0.78% 0.80% 0.89% 1.36% 1.54% 1.57%
Nonperforming loans to portfolio loans 1.15 0.98 0.62 0.64 0.67 1.10 1.23 1.22
Allowance for loan losses to portfolio loans 1.47 1.73 1.82 1.91 2.03 2.27 2.46 2.66
Allowance for loan losses to
nonperforming loans 128.49 176.38 295.03 297.78 302.26 205.29 200.77 217.13
Net loan charge-offs to average portfolio
loans (annualized) (0.02) (0.09) (0.03) (0.20) 0.02 (0.21) 0.45 0.24
CAPITAL RATIOS
Average total shareholders' equity to
average assets 12.77% 13.59% 13.87% 13.59% 14.19% 14.61% 13.77% 13.18%
Leverage ratio 14.19 15.84 16.12 15.75 16.45 16.86 15.95 15.09
Common equity tier 1 capital 13.21 14.57 15.30 15.51 n/a n/a n/a n/a
Tier 1 capital to risk-weighted assets 15.30 16.95 17.84 18.10 19.70 20.05 20.13 19.98
Total capital to risk-weighted assets 16.55 18.21 19.09 19.36 20.96 21.34 21.43 21.29
Tangible common equity to tangible assets*** 11.95 13.40 13.40 13.48 13.87 14.23 14.31 13.01
REGULATORY CAPITAL DATA
Common equity tier 1 capital$ 282,737 $ 275,350 $ 272,048 $ 269,007 $ n/a $ n/a $ n/a $ n/a
Tier I capital 327,468 320,350 317,048 314,007 314,216 314,120 309,600 299,938
Total capital 354,300 344,095 339,412 335,734 334,348 334,456 329,586 319,516
Total risk adjusted assets 2,140,344 1,889,892 1,777,618 1,734,401 1,595,032 1,566,996 1,537,903 1,500,957
Average total assets 2,307,421 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$ 296,098 $ 277,344 $ 273,681 $ 271,444 $ 270,786 $ 271,966 $ 271,351 $ 264,586
Less goodwill and core deposit intangible 16,361 1,556 1,619 1,681 1,744 1,811 1,881 3,139
Tangible common equity$ 279,737 $ 275,788 $ 272,062 $ 269,763 $ 269,042 $ 270,155 $ 269,470 $ 261,447
Total assets$ 2,357,022 $ 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 16,361 1,556 1,619 1,681 1,744 1,811 1,881 3,139
Tangible assets$ 2,340,661 $ 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 12.56% 13.46% 13.47% 13.55% 13.94% 14.31% 14.39% 13.15%
Tangible common equity to tangible assets 11.95% 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.