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Southwest Bancorp, Inc. Reports Results for Second Quarter 2016 and Announces Quarterly Dividend

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STILLWATER, Okla., July 19, 2016 (GLOBE NEWSWIRE) -- Southwest Bancorp, Inc. (NASDAQ: OKSB), ("Southwest"), today reported net income for the second quarter of 2016 of $5.4 million, or $0.28 per diluted share, compared to $4.2 million, or $0.22 per diluted share, for the second quarter of 2015. Net income for the six months ended June 30, 2016 totaled $7.3 million, or $0.38 per diluted share, compared to $8.7 million, or $0.46 per diluted share, for the six months ended June 30, 2015. Included in the first six months of 2016 results is a first quarter $4.4 million loan loss provision primarily driven by the impact of low energy prices combined with deterioration in a few general business credits.

Southwest announced that its board of directors has approved a quarterly cash dividend of $0.08 per share payable August 12, 2016 to shareholders of record as of July 29, 2016.

Mark Funke, President and CEO, stated, "We are pleased with the improvement in earnings and efficiency.  Loan growth was good in the second quarter and asset quality improved. Here are several highlights to take from this quarter.

  • Total loans grew $39.5 million to $1.82 billion from first quarter of 2016 and $371.9 million, or 26%, compared to the second quarter of 2015. We funded $51.4 million in new loans during the second quarter of 2016 making this our tenth consecutive quarter of loan growth.
  • The quarterly net interest margin was 3.48% at June 30, 2016, compared to 3.54% at March 31, 2016 and 3.31% at June 30, 2015.
  • Pre-tax, pre-provision income was $8.0 million in the second quarter, an increase of 8% from $7.5 million in the first quarter of 2016 and an increase of 51% from $5.3 million in the second quarter of 2015.
  • The efficiency ratio for the second quarter of 2016 improved to 65.70%, compared to 67.48% for the first quarter of 2016 and 71.83% for the second quarter of 2015.
  • On May 25, 2016 our board of directors authorized a fourth consecutive share repurchase program of up to another 5.0%, or approximately 921,000 shares of Southwest's outstanding common stock, which becomes effective as of the earlier of:  (a) the date Southwest completes its repurchase of all the shares of Southwest's common stock that it is authorized to purchase under its current stock repurchase program that became effective as of February 23, 2016; or (b) February 23, 2017, which is the original expiration date of the current program. During the first six months of 2016, Southwest repurchased 1,336,387 shares for a total of $21.0 million, and since August 2014, Southwest has repurchased 2,457,945 shares under the share repurchase programs for a total of $39.8 million.

"Diluted earnings per share of $0.28 was up 27% from the same quarter a year ago. 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."

Financial Overview

Condition:  As of June 30, 2016, total assets were $2.4 billion, an increase of $41.4 million, when compared to March 31, 2016. As of June 30, 2016, total loans were $1.8 billion, an increase of $39.5 million from the prior quarter end. As of June 30, 2016, investment securities were $422.3 million, a decrease of $0.7 million from the prior quarter end. Cash and cash equivalents at June 30, 2016 were $68.1 million, an increase of $0.7 million from March 31, 2016. 

At June 30, 2016, the allowance for loan losses was $26.9 million, a decrease of $0.3 million when compared to March 31, 2016 and an increase of $0.7 million when compared to June 30, 2015. The allowance for loan losses to portfolio loans was 1.48% as of June 30, 2016, down from 1.53% as of March 31, 2016, and from 1.82% as of June 30, 2015. The allowance for loan losses to nonperforming loans was 121.80% as of June 30, 2016, compared to 122.01% as of March 31, 2016 and 295.03% as of June 30, 2015. The total allowance for loan losses combined with the purchase discount on acquired loans represents 1.87% of gross loans as of June 30, 2016, compared to 1.96% as of March 31, 2016.

Nonperforming loans were $22.3 million at June 30, 2016, an increase of $0.1 million from March 31, 2016, and an increase of $13.4 million from June 30, 2015. Other real estate at June 30, 2016 was $2.1 million, which is down from $2.3 million at March 31, 2016 and $2.4 million at June 30, 2015. Nonperforming assets were $24.4 million, or 1.35% of portfolio loans and other real estate, as of June 30, 2016, compared to $24.5 million, or 1.38% of portfolio loans and other real estate, as of March 31, 2016, and $11.3 million, or 0.78% of portfolio loans and other real estate, as of June 30, 2015.

As of June 30, 2016, total deposits were $1.9 billion, an increase of $7.6 million, when compared to March 31, 2016. Total core funding, which includes all non-brokered deposits and sweep repurchase agreements, comprised 83% and 87% of total funding as of June 30, 2016 and March 31, 2016, respectively. Wholesale funding, including Federal Home Loan Bank borrowings, federal funds purchased, and brokered deposits, accounted for 17% and 13% of total funding at June 30, 2016 and March 31, 2016, 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 June 30, 2016 exceeded the criteria for regulatory classification as "well-capitalized". Southwest's total regulatory capital was $339.6 million, for a total risk-based capital ratio of 15.56%, Common Equity Tier 1 capital was $266.9 million, for a Common Equity Tier 1 ratio of 12.23%, and Tier 1 capital was $312.2 million, for a Tier 1 risk-based capital ratio of 14.31%. Bank SNB had total regulatory capital of $321.7 million, for a total risk-based capital ratio of 14.78% and Common Equity Tier 1 and Tier 1 capital of $294.4 million, for a Common Equity Tier 1 and Tier 1 risk-based capital ratio of 13.53%. Designation as a well-capitalized institution under regulations does not constitute a recommendation or endorsement by bank regulators.

Second Quarter Results:

Summary:  For the second quarter of 2016, net income was $5.4 million, compared to $1.9 million for the first quarter of 2016 and $4.2 million for the second quarter of 2015. Pre-tax, pre-provision income for the second quarter of 2016 was $8.0 million, compared to $7.5 million for the first quarter of 2016 and $5.3 million for the second quarter of 2015.

The $3.5 million increase in net income compared to the first quarter of 2016 was primarily due to the $4.4 million provision for loan losses recorded in the prior quarter. The increase in net income also includes a $0.5 million increase in noninterest income and a $0.7 million decrease in noninterest expense, offset in part by a $0.1 million decrease in net interest income, and a $1.9 million increase in income taxes.

The $1.3 million increase in net income compared to the second quarter of 2015 was due to a $3.9 million increase in net interest income and a $0.5 million increase in noninterest income, offset in part by a $1.1 million increase in the provision for loan losses, a $1.3 million increase in noninterest expense, and a $0.7 million increase in income taxes. The increases in net interest income, noninterest income, and noninterest expense are due in part to the First Commercial Bancshares, Inc. acquisition that occurred in the fourth quarter of 2015.

Net Interest Income:  Net interest income totaled $19.7 million for the second quarter of 2016, compared to $19.8 million for the first quarter of 2016 and $15.8 million for the second quarter of 2015. Net interest margin was 3.48% for the second quarter of 2016, compared to 3.54% for the first quarter of 2016 and 3.31% for the second quarter of 2015. Included in interest income for the second quarter of 2016, the first quarter of 2016, and the second quarter of 2015 was $0.2 million, $0.3 million, and $0.2 million of accelerated discount accretion, respectively. The net effects of these adjustments on the net interest margins were a 3 basis point, a 5 basis point, and a 5 basis point increase, respectively for each quarter. Average loans (including loans held for sale) for the second quarter of 2016 increased $10.6 million when compared to March 31, 2016, and $360.5 million when compared to June 30, 2015. Loans acquired in the fourth quarter of 2015 were $202.4 million.

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 provision of $10,000 for the second quarter of 2016, compared to a provision of $4.4 million for the first quarter of 2016, and a negative provision of $1.1 million for the second quarter of 2015. The first quarter 2016 provision was driven primarily by the impact of low energy prices combined with deterioration in a few general business credits. During the second quarter of 2016, net charge-offs totaled $0.3 million, or 0.07% (annualized) of average portfolio loans, compared to net charge-offs of $3.3 million, or 0.75% (annualized) of average portfolio loans for the first quarter of 2016 and net recoveries of $0.1 million, or (0.03%) (annualized) of average portfolio loans for the second quarter of 2015. 

Noninterest Income:  Noninterest income totaled $3.9 million for the second quarter of 2016, compared to $3.4 million for the first quarter of 2016 and the second quarter of 2015. 

The $0.5 million increase from the first quarter of 2016 is primarily the result of a $0.3 million increase in the gain on sales of mortgage loans and a $0.1 million increase in other noninterest income, which is primarily from customer risk management interest rate swap income. Included in service charges and fees was a $0.2 million and a $0.3 million impairment on mortgage servicing rights for the second quarter of 2016 and the first quarter of 2016, respectively.

The $0.5 million increase from the second quarter of 2015 is the result of a $0.1 million increase in service charges and fees, a $0.1 million increase in the gain on sales of mortgage loans and a $0.2 million increase in other noninterest income, which includes income on bank owned life insurance and customer risk management interest rate swap income.

Noninterest Expense:  Noninterest expense totaled $15.3 million for the second quarter of 2016, compared to $16.0 million for the first quarter of 2016 and $14.0 million for the second quarter of 2015. 

The $0.7 million decrease in noninterest expense from the first quarter of 2016 was primarily due to a $0.5 million decrease in the provision for unfunded loan commitments and a $0.5 million decrease in general and administrative expense, which includes a $0.2 million decrease in business development expenses and a $0.2 million decrease in professional fees, offset in part by a $0.2 million increase in personnel expense.

The $1.3 million increase in noninterest expense from the second quarter of 2015 consisted of a $1.3 million increase in personnel expense, a $0.5 million increase in occupancy, and a $0.1 million increase in FDIC and other insurance, offset in part by a $0.1 million decrease in other real estate expense, a $0.4 million decrease in the provision for unfunded loan commitments, and a $0.1 million decrease in general and administrative expense, which includes a $0.1 million decrease in business development expenses, a $0.1 million decrease in professional fees, and a $0.1 million increase in intangible amortization expense.

Income Tax:  Income tax expense totaled $2.9 million for the second quarter of 2016, compared to $1.0 million for the first quarter of 2016 and $2.2 million for the second quarter of 2015.  The income tax expense fluctuates in relation to pre-tax income levels. The second quarter of 2016 effective tax rate was 34.70%, compared to 35.19% for the first quarter of 2016 and 34.51% for the second quarter of 2015. 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 $7.3 million for the six months ended June 30, 2016, compared to $8.7 million for the six months ended June 30, 2015. The $1.4 million decrease in net income from 2015 is the result of a $7.4 million increase in the provision for loan losses and a $4.2 million increase in noninterest expense due to increased personnel, occupancy, and general and administrative expenses, offset in part by an $8.1 million increase in net interest income, a $1.0 million increase in noninterest income, and a $1.0 million decrease in income taxes. The increases in noninterest expense, net interest income, and noninterest income are due in part to the First Commercial Bancshares, Inc. acquisition that occurred in the fourth quarter of 2015.

Net Interest Income:  Net interest income totaled $39.5 million for the first six months of 2016, compared to $31.4 million for the first six months of 2015, an increase of $8.1 million. Year-to-date net interest margin was 3.51%, compared to 3.28% for 2015. Included in interest income for the first six months of 2016 and the first six months of 2015 was $0.5 million and $0.3 million of accelerated discount accretion, respectively. The net effect on the net interest margin was a 4 basis point and a 3 basis point increase, respectively for each six-month period. Average loans (including loans held for sale) as of June 30, 2016 increased $365.1 million when compared to June 30, 2015. Loans acquired in the fourth quarter of 2015 were $202.4 million.

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 $4.4 million for the first six months of 2016, compared to a negative provision of $3.0 million for the first six months of 2015. The provision for loans losses for the first six months of 2016 was driven primarily by the impact of low energy prices combined with deterioration in a few general business credits that occurred in the first quarter of 2016. Net charge-offs totaled $3.6 million, or 0.41% (annualized) of average portfolio loans year-to-date as of June 30, 2016, compared to net recoveries of $0.8 million, or (0.11%) (annualized) of average portfolio loans for the same period in 2015.  

Noninterest Income:  Noninterest income totaled $7.3 million for the first six months of 2016, compared to $6.2 million for the first six months of 2015. The increase consists of a $0.2 million increase in service charges and fees, which for the first six months of 2016 includes a $0.5 million impairment of mortgage servicing rights, a $0.2 million increase in gains on sales of mortgage loans, a $0.1 million increase in the gain on sale of investment securities and, a $0.5 million increase in other noninterest income, which includes income on bank owned life insurance and customer risk management interest rate swap income.

Noninterest Expense:  Noninterest expense totaled $31.3 million for the first six months of 2016, compared to $27.1 million for the first six months of 2015. The increase consists of a $2.7 million increase in personnel expense, a $0.9 million increase in occupancy, a $0.2 million increase in FDIC and other insurance, a $0.1 million increase in the provision for unfunded loan commitments, and a $0.5 million increase in general and administrative expense, which includes a $0.1 million increase in business development expense, a $0.1 million increase in telephone expense, and a $0.2 million increase in intangible amortization expense, offset in part by a $0.1 million decrease in other real estate expense.

Income Tax:  Income tax expense totaled $3.9 million for the first six months of 2016, compared to $4.9 million for the first six months of 2015. The income tax expense fluctuates in relation to pre-tax income levels. The year-to-date effective tax rate was 34.83% as of June 30, 2016, compared to 36.10% as of June 30, 2015. 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, July 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/10088802. 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/oksb160720. An audio replay will be available one hour after the call at 877-344-7529 (toll-free) or 412-317-0088 (international), conference number 10088802. Telephone replay access will be available until August 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 June 30, 2016, Southwest had total assets of approximately $2.4 billion, deposits of $1.9 billion, and shareholders' equity of $282.4 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 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 June 30, 2016, approximately $435.2 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 or negative provisions, 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, 2015. 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, 2016 through the date its financial statements are filed with the Securities and Exchange Commission. The June 30, 2016 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-YTDTable 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)
 
  Second Quarter First Quarter 
QUARTERLY HIGHLIGHTS 2016 2015 % Change 2016 % Change 
Operations              
Net interest income $  19,695  $  15,791   25% $  19,840   (1)% 
Provision (credit) for loan losses    10     (1,136)    (101)    4,375     (100) 
Noninterest income    3,871     3,409     14     3,415   13  
Noninterest expense    15,268     13,982     9     15,996     (5) 
Income before taxes    8,288     6,354     30     2,884     187  
Taxes on income    2,876     2,193     31     1,015   183  
Net income    5,412     4,161     30     1,869     190  
Diluted earnings per share    0.28     0.22     27     0.10     193  
Balance Sheet              
Total assets    2,402,262     2,031,581     18     2,360,819     2  
Loans held for sale    7,090     6,687     6     1,803     293  
Portfolio loans    1,814,287     1,442,743     26     1,780,081   2  
Total deposits    1,902,865     1,624,446     17     1,895,248     0  
Total shareholders' equity    282,360     273,681     3     285,661     (1) 
Book value per common share    15.06     14.38     5     14.81     2  
Key Ratios              
Net interest margin   3.48%   3.31%     3.54%   
Efficiency ratio     65.70      71.83        67.48    
Total capital to risk-weighted assets     15.48      19.09        15.39    
Nonperforming loans to portfolio loans     1.23      0.62        1.25    
Shareholders' equity to total assets     11.75      13.47        12.10    
Tangible common equity to tangible assets*     11.16      13.40        11.49    
Return on average assets (annualized)     0.91      0.85        0.32    
Return on average common equity (annualized)     7.67      6.11        2.56    
Return on average tangible common equity (annualized)**     8.13      6.14        2.71    
               
  Six Months      
YEAR-TO-DATE  HIGHLIGHTS 2016 2015 % Change      
Operations              
Net interest income $  39,535  $  31,401   26%      
Provision (credit) for loan losses    4,385     (3,023)    (245)      
Noninterest income    7,286     6,249     17       
Noninterest expense    31,264     27,064     16       
Income before taxes    11,172     13,609     (18)      
Taxes on income    3,891    4,913     (21)      
Net income    7,281     8,696     (16)      
Diluted earnings per share    0.38    0.46     (17)      
Balance Sheet              
Total assets    2,402,262     2,031,581     18       
Loans held for sale    7,090     6,687     6       
Portfolio loans    1,814,287     1,442,743     26       
Total deposits    1,902,865     1,624,446     17       
Total shareholders' equity    282,360     273,681     3       
Book value per common share    15.06     14.38     5       
Key Ratios              
Net interest margin   3.51%   3.28%        
Efficiency ratio     66.58      71.76         
Total capital to risk-weighted assets     15.48      19.09         
Nonperforming loans to portfolio loans     1.23      0.62         
Shareholders' equity to total assets     11.75      13.47         
Tangible common equity to tangible assets*     11.16      13.40         
Return on average assets (annualized)     0.62      0.88         
Return on average common equity (annualized)     5.07      6.44         
Return on average tangible common equity (annualized)**     5.38      6.48         
                   

Balance sheet amounts and ratios are as of period end unless otherwise noted.
* This is a Non-GAAP financial measure.  Please see Table 7 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,
 2016 2015 2015
Assets        
Cash and due from banks$ 35,822  $ 24,971  $ 22,923 
Interest-bearing deposits  32,266    53,158    133,765 
Cash and cash equivalents  68,088    78,129    156,688 
Securities held to maturity (fair values of $12,660, $12,282, and $11,818 respectively)  12,161    11,797    11,364 
Securities available for sale (amortized cost of $406,427, $401,136 and $360,609, respectively)  410,135    400,331    361,896 
Loans held for sale  7,090    7,453    6,687 
Loans receivable  1,814,287    1,771,975    1,442,743 
Less: Allowance for loan losses  (26,876)   (26,106)   (26,219)
Net loans receivable  1,787,411    1,745,869    1,416,524 
Accrued interest receivable  5,730    5,767    4,281 
Non-hedge derivative asset  5,163     1,793     701 
Premises and equipment, net  22,971    23,819    18,251 
Other real estate  2,122    2,274    2,393 
Goodwill  13,467    13,467    1,214 
Other intangible assets, net  5,934    6,615    3,923 
Other assets  61,990    59,708    47,659 
Total assets$ 2,402,262  $ 2,357,022  $ 2,031,581 
         
Liabilities        
Deposits:        
Noninterest-bearing demand$  545,421  $  596,494  $  515,156 
Interest-bearing demand   160,886     151,015     131,547 
Money market accounts   547,415     534,357     496,178 
Savings accounts   55,209     56,333     35,647 
Time deposits of $100,000 or more   323,137     311,538     233,105 
Other time deposits   270,797     234,368     212,813 
Total deposits   1,902,865     1,884,105     1,624,446 
Accrued interest payable   931     867     774 
Non-hedge derivative liability   5,163     1,793     701 
Other liabilities   10,982     11,684     9,747 
Other borrowings   153,568     110,927     75,839 
Subordinated debentures   46,393     51,548     46,393 
Total liabilities    2,119,902     2,060,924     1,757,900 
         
Shareholders' equity        
Common stock - $1 par value; 40,000,000 shares authorized;        
21,223,613, 21,138,028 and 19,900,855 shares issued, respectively   21,224     21,138     19,901 
Additional paid-in capital   122,293     121,966     101,518 
Retained earnings   177,373     173,210     166,837 
Accumulated other comprehensive income (loss)   1,503     (1,290)    (233)
Treasury stock, at cost, 2,472,830, 1,131,226 and 867,310 shares, respectively   (40,033)    (18,926)    (14,342)
Total shareholders' equity   282,360     296,098     273,681 
Total liabilities and shareholders' equity$  2,402,262  $  2,357,022  $  2,031,581 


SOUTHWEST BANCORP, INC.Table 3
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS 
(Dollars in thousands) 
  
 For the three months ended For the six months
 June 30,  March 31, June 30,  ended June 30,
 2016 2016 2015 2016 2015
Interest income              
Loans$  20,031  $ 20,030 $  15,839  $  40,061  $  31,409 
Investment securities   1,962    1,965    1,549     3,927     3,102 
Other interest-earning assets   51    53    67     104     168 
Total interest income   22,044    22,048    17,455     44,092     34,679 
               
Interest expense              
Interest-bearing deposits   1,428    1,307    862     2,735     1,697 
Other borrowings   342    309    241     651     468 
Subordinated debentures   579    592    561     1,171     1,113 
Total interest expense   2,349    2,208    1,664     4,557     3,278 
               
Net interest income   19,695    19,840    15,791     39,535     31,401 
               
Provision (credit) for loan losses   10    4,375    (1,136)    4,385     (3,023)
               
Net interest income after provision for loan losses   19,685    15,465    16,927     35,150     34,424 
               
Noninterest income              
Service charges and fees   2,556    2,549    2,450     5,105     4,878 
Gain on sales of mortgage loans   722    401    621     1,123     969 
Gain on sale/call of investment securities, net   165    126    138     291     143 
Other noninterest income   428    339    200     767     259 
Total noninterest income   3,871    3,415    3,409     7,286     6,249 
               
Noninterest expense              
Salaries and employee benefits   9,587    9,342    8,289     18,929     16,203 
Occupancy   2,669    2,671    2,201     5,340     4,485 
Data processing   430    470    410     900     856 
FDIC and other insurance   432    368    316     800     628 
Other real estate, net   8    13    112     21     133 
Provision for unfunded loan commitments   (263)   215    115     (48)    (110)
General and administrative   2,405    2,917    2,539     5,322     4,869 
Total noninterest expense   15,268    15,996    13,982     31,264     27,064 
Income before taxes   8,288    2,884    6,354     11,172     13,609 
Taxes on income   2,876    1,015    2,193     3,891     4,913 
Net income$  5,412  $ 1,869 $  4,161  $  7,281  $  8,696 
               
Pre-tax, pre-provision income*$  8,035  $ 7,474 $  5,333  $  15,509  $  10,476 
               
Basic earnings per common share$  0.29  $ 0.10 $  0.22  $  0.38  $  0.46 
Diluted earnings per common share   0.28    0.10    0.22     0.38     0.46 
Common dividends declared per share   0.08    0.08    0.06     0.16     0.12 
               
*This is a Non-GAAP based financial measure.  Pre-tax, pre-provision income is calculated as follows:         
Net Income + Taxes on income + Provision (credit) for loan losses + Provision for unfunded loan commitments      


SOUTHWEST BANCORP, INC.Table 4
UNAUDITED AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY 
(Dollars in thousands) 
  
  For the three months ended
 June 30, 2016 March 31, 2016 June 30, 2015
 Average Average Average Average Average Average
 Balance Yield/Rate Balance Yield/Rate Balance Yield/Rate
Assets              
Loans$  1,799,591   4.48% $  1,788,992   4.50% $  1,439,050   4.41%
Investment securities   428,275     1.84     412,307     1.92     369,677     1.68 
Other interest-earning assets   48,569     0.42     51,031     0.42     103,943     0.26 
Total interest-earning assets   2,276,435     3.89     2,252,330     3.94     1,912,670     3.66 
Other assets   103,566       107,874       58,267   
Total assets$  2,380,001    $  2,360,204    $  1,970,937   
               
Liabilities and Shareholders' Equity              
Interest-bearing demand deposits$  165,011   0.16% $  160,638   0.16% $  137,781   0.09%
Money market accounts   537,734     0.25     542,800     0.24     473,993     0.15 
Savings accounts   54,808     0.13     55,834     0.14     34,702     0.10 
Time deposits   589,029     0.69     564,213     0.65     448,175     0.57 
Total interest-bearing deposits   1,346,582     0.43     1,323,485     0.40     1,094,651     0.32 
Other borrowings   141,623     0.97     117,171     1.06     60,568     1.60 
Subordinated debentures   46,393     4.99     48,546     4.88     46,393     4.84 
Total interest-bearing liabilities   1,534,598     0.62     1,489,202     0.60     1,201,612     0.56 
               
Noninterest-bearing demand deposits   547,963       563,022       485,984   
Other liabilities   13,598       14,769       10,005   
Shareholders' equity   283,842       293,211       273,336   
Total liabilities and shareholders' equity$  2,380,001    $  2,360,204    $  1,970,937   
               
Net interest income and spread    3.27%     3.34%     3.10%
Net interest margin (1)    3.48%     3.54%     3.31%
Average interest-earning assets              
   to average interest-bearing liabilities  148.34%     151.24%     159.18%  
               
(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,
 2016 2015
 Average Average Average Average
 Balance Yield/Rate Balance Yield/Rate
Assets         
Loans$  1,794,291   4.49% $  1,429,148   4.43%
Investment securities   420,291     1.88     368,782     1.70 
Other interest-earning assets   49,800     0.42     131,290     0.26 
Total interest-earning assets   2,264,382     3.92     1,929,220     3.62 
Other assets   105,720       53,888   
Total assets$  2,370,102    $  1,983,108   
          
Liabilities and Shareholders' Equity         
Interest-bearing demand deposits$  162,825   0.16% $  138,335   0.09%
Money market accounts   540,267     0.24     479,287     0.15 
Savings accounts   55,321     0.13     34,030     0.10 
Time deposits   576,621     0.67     441,330     0.57 
Total interest-bearing deposits   1,335,034     0.41     1,092,982     0.31 
Other borrowings   129,397     1.01     66,405     1.42 
Subordinated debentures   47,469     4.93     46,393     4.80 
Total interest-bearing liabilities   1,511,900     0.61     1,205,780     0.55 
          
Noninterest-bearing demand deposits   555,493       494,582   
Other liabilities   14,184       10,458   
Shareholders' equity   288,525       272,288   
Total liabilities and shareholders' equity$  2,370,102    $  1,983,108   
          
Net interest income and spread    3.31%     3.07%
Net interest margin (1)    3.51%     3.28%
Average interest-earning assets         
   to average interest-bearing liabilities  149.77%     160.00%  
          
(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)  
   
 2016 2015
 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
LOAN COMPOSITION                 
Real estate mortgage:                 
Commercial$  862,287  $  878,822  $  938,462  $  869,250  $  759,406  $  759,676 
One-to-four family residential   183,693     158,078     161,958     95,906     85,338     86,343 
Real estate construction:                 
Commercial   175,805     156,454     129,070     126,407     186,140     192,052 
One-to-four family residential   20,347     24,202     21,337     12,866     13,107     12,586 
Commercial   558,472     543,822     507,173     423,480     384,788     366,282 
Installment and consumer   20,773     20,506     21,429     20,185     20,651     21,306 
Total loans, including held for sale   1,821,377     1,781,884     1,779,429     1,548,094     1,449,430     1,438,245 
Less allowance for loan losses   (26,876)    (27,168)    (26,106)    (26,593)    (26,219)    (27,250)
Total loans, net$  1,794,501  $  1,754,716  $  1,753,323  $  1,521,501  $  1,423,211  $  1,410,995 
LOANS BY SEGMENT                 
Oklahoma banking****$  1,085,986  $  1,060,482  $  1,048,473  $  832,282  $  810,367  $  814,949 
Texas banking   577,333     560,421     580,476     563,010     493,047     478,005 
Kansas banking   158,058     160,981     150,480     152,802     146,016     145,291 
Total loans$  1,821,377  $  1,781,884  $  1,779,429  $  1,548,094  $  1,449,430  $  1,438,245 
NONPERFORMING LOANS BY TYPE                 
Construction & development$  1,436  $  1,444  $  1,010  $  391  $  416  $  392 
Commercial real estate   3,894     3,830     3,992     1,795     2,141     2,247 
Commercial   13,800     13,461     13,491     11,727     5,114     5,447 
One-to-four family residential   3,120     3,448     1,777     1,016     1,216     1,065 
Consumer   75     84     88     148     -     - 
Total nonperforming loans$  22,325  $  22,267  $  20,358  $  15,077  $  8,887  $  9,151 
NONPERFORMING LOANS BY SEGMENT                 
Oklahoma banking****$  9,268  $  7,978  $  6,948  $  2,846  $  1,670  $  2,244 
Texas banking   12,586     13,521     12,450     11,025     5,353     5,264 
Kansas banking   471     768     960     1,206     1,864     1,643 
Total nonperforming loans$  22,325  $  22,267  $  20,358  $  15,077  $  8,887  $  9,151 
OTHER REAL ESTATE BY TYPE                 
Construction & development$  1,962  $  2,060  $  2,060  $  2,025  $  2,035  $  2,035 
Commercial real estate   160     214     214     249     358     220 
Total other real estate$  2,122  $  2,274  $  2,274  $  2,274  $  2,393  $  2,255 
OTHER REAL ESTATE BY SEGMENT                 
Oklahoma banking****$  220  $  274  $  274  $  200  $  200  $  - 
Texas banking   1,902     2,000     2,000     2,025     2,000     2,000 
Kansas banking   -     -     -     49     193     255 
Total other real estate$  2,122  $  2,274  $  2,274  $  2,274  $  2,393  $  2,255 
                  
****Due to immateriality, Colorado banking is included within Oklahoma banking.
Continued                 


SOUTHWEST BANCORP, INC. Table 6
UNAUDITED QUARTERLY SUMMARY LOAN DATA Continued
(Dollars in thousands)  
   
 2016 2015
 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
POTENTIAL PROBLEM LOANS BY TYPE                 
Construction & development$  -  $  -  $  -  $  -  $  -  $  201 
Commercial real estate   33,472     36,216     26,981     22,362     20,375     24,672 
Commercial   29,537     29,931     9,879     7,366     14,519     14,016 
One-to-four family residential   1,353     2,275     2,285     79     80     81 
Consumer   2     38     10     -     -     - 
Total potential problem loans$  64,364  $  68,460  $  39,155  $  29,807  $  34,974  $  38,970 
POTENTIAL PROBLEM LOANS BY SEGMENT                 
Oklahoma banking****$  43,895  $  46,102  $  32,970  $  23,597  $  23,231  $  26,713 
Texas banking   17,726     18,801     4,165     4,086     9,180     9,541 
Kansas banking   2,743     3,557     2,020     2,124     2,563     2,716 
Total potential problem loans$  64,364  $  68,460  $  39,155  $  29,807  $  34,974  $  38,970 
ALLOWANCE ACTIVITY                 
Balance, beginning of period$  27,168  $  26,106  $  26,593  $  26,219  $  27,250  $  28,452 
Charge-offs   538     3,725     569     226     325     230 
Recoveries   236     412     648     577     430     915 
Net charge-offs (recoveries)   302     3,313     (79)    (351)    (105)    (685)
Provision (credit) for loan losses   10     4,375     (566)    23     (1,136)    (1,887)
Balance, end of period$  26,876  $  27,168  $  26,106  $  26,593  $  26,219  $  27,250 
NET CHARGE-OFFS BY TYPE                 
Construction & development$  -  $  -  $  -  $  (16) $  (15) $  5 
Commercial real estate   (44)    (187)    219     24     82     (118)
Commercial   82     3,408     (286)    (325)    (52)    (188)
One-to-four family residential   (12)    41     (48)    (68)    (91)    (331)
Consumer   276     51     36     34     (29)    (53)
Total net charge-offs (recoveries) by type$  302  $  3,313  $  (79) $  (351) $  (105) $  (685)
NET CHARGE-OFFS BY SEGMENT                 
Oklahoma banking****$  127  $  458  $  288  $  (86) $  25  $  (309)
Texas banking   211     952     (415)    (103)    (72)    (114)
Kansas banking   (36)    1,903     48     (162)    (58)    (262)
Total net charge-offs (recoveries) by segment$  302  $  3,313  $  (79) $  (351) $  (105) $  (685)
                  
****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)  
   
 2016 2015
 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PER SHARE DATA                 
Basic earnings per common share$  0.29   $  0.10   $  0.23   $  0.22   $  0.22   $  0.24  
Diluted earnings per common share   0.28      0.10      0.23      0.22      0.22      0.24  
Common dividends declared per share   0.08      0.08      0.06      0.06      0.06      0.06  
Book value per common share   15.06      14.81      14.80      14.57      14.38      14.26  
Tangible book value per share*   14.20      13.97      13.98      14.49      14.29      14.17  
COMMON STOCK                 
Shares issued  21,223,613     21,225,034     21,138,028     19,901,336     19,900,855     19,900,350  
Less treasury shares  2,472,830     1,939,989     1,131,226     868,617     867,310     867,310  
Outstanding shares  18,750,783     19,285,045     20,006,802     19,032,719     19,033,545     19,033,040  
OTHER FINANCIAL DATA                 
Investment securities$ 422,296   $ 423,030   $ 412,128   $ 388,543   $ 373,260   $ 377,545  
Loans held for sale  7,090     1,803     7,453     7,024     6,687     9,106  
Portfolio loans  1,814,287     1,780,081     1,771,975     1,541,070     1,442,743     1,429,139  
Total loans  1,821,377     1,781,884     1,779,428     1,548,094     1,449,430     1,438,245  
Total assets  2,402,262     2,360,819     2,357,022     2,059,899     2,031,581     2,003,079  
Total deposits  1,902,865     1,895,248     1,884,105     1,626,250     1,624,446     1,616,454  
Other borrowings  153,568     117,763     110,927     96,801     75,839     58,578  
Subordinated debentures  46,393     46,393     51,548     46,393     46,393     46,393  
Total shareholders' equity  282,360     285,661     296,098     277,344     273,681     271,444  
Mortgage servicing portfolio  443,568     434,340     432,318     422,845     415,961     407,903  
INTANGIBLE ASSET DATA                 
Goodwill$ 13,467   $ 13,467   $ 13,467   $ 1,214   $ 1,214   $ 1,214  
Core deposit intangible  2,584     2,734     2,894     342     405     467  
Mortgage servicing rights  3,350     3,411     3,721     3,631     3,518     3,399  
Total intangible assets$ 19,401   $ 19,612   $ 20,082   $ 5,187   $ 5,137   $ 5,080  
Intangible amortization expense$ 350   $ 341   $ 330   $ 243   $ 243   $ 168  
DEPOSIT COMPOSITION                 
Non-interest bearing demand$ 545,421   $ 552,499   $ 596,494   $ 526,159   $ 515,156   $ 506,952  
Interest-bearing demand  160,886     168,210     151,015     114,877     131,547     140,659  
Money market accounts  547,415     540,323     534,357     502,028     496,178     488,569  
Savings accounts  55,209     56,235     56,333     36,163     35,647     34,413  
Time deposits of $100,000 or more  323,137     314,496     311,538     238,318     233,105     227,426  
Other time deposits  270,797     263,485     234,368     208,705     212,813     218,435  
Total deposits**$ 1,902,865   $ 1,895,248   $ 1,884,105   $ 1,626,250   $ 1,624,446   $ 1,616,454  
OFFICES AND EMPLOYEES                 
FTE Employees 410    411    412    358    361    360  
Branches 33    33    33    24    24    23  
Assets per employee$5,859   $5,744   $ 5,721   $ 5,754   $ 5,628   $ 5,564  
____________________                 
*This is a Non-GAAP based financial measure.
**Calculation of Non-brokered Deposits and Core Funding (Non-GAAP Financial Measures)
Total deposits$ 1,902,865   $ 1,895,248   $ 1,884,105   $ 1,626,250   $ 1,624,446   $ 1,616,454  
Less:                 
Brokered time deposits  61,709     55,901     39,797     10,086     7,683     7,694  
Other brokered deposits  175,367     140,372     135,880     133,025     103,025     83,025  
Non-brokered deposits$ 1,665,789   $ 1,698,975   $ 1,708,428   $ 1,483,139   $ 1,513,738   $ 1,525,735  
Plus:                 
Sweep repurchase agreements  42,568     42,763     37,273     50,801     50,839     33,578  
Core funding$ 1,708,357   $ 1,741,738   $ 1,745,701   $ 1,533,940   $ 1,564,577   $ 1,559,313  
                  
Balance sheet amounts are as of period end unless otherwise noted.


SOUTHWEST BANCORP, INC. Table 8
UNAUDITED QUARTERLY SUPPLEMENTAL ANALYTICAL DATA  
(Dollars in thousands)  
   
 2016 2015
  Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
PERFORMANCE RATIOS                 
Return on average assets (annualized)  0.91%   0.32%   0.78%   0.81%   0.85%   0.92%
Return on average common equity (annualized)    7.67      2.56      6.14      5.94      6.11      6.78 
Return on average tangible common equity                 
(annualized)*    8.13      2.71      6.46      5.97      6.14      6.82 
Net interest margin (annualized)    3.48      3.54      3.48      3.34      3.31      3.25 
Total dividends declared to net income    28.35      84.66      26.22      27.53      27.45      25.19 
Effective tax rate    34.70      35.19      35.96      35.84      34.51      37.49 
Efficiency ratio    65.70      67.48      72.17      68.16      71.83      71.69 
NONPERFORMING ASSETS                 
Nonaccrual loans$  22,259  $  22,161  $  19,858  $  15,076  $  8,887  $  9,151 
90 days past due and accruing   66     106     500     1     -     - 
Total nonperforming loans   22,325     22,267     20,358     15,077     8,887     9,151 
Other real estate   2,122     2,274     2,274     2,274     2,393     2,255 
Total nonperforming assets$  24,447  $  24,541  $  22,632  $  17,351  $  11,280  $  11,406 
Potential problem loans$  64,364  $  68,460  $  39,155  $  29,807  $  34,974  $  38,970 
ASSET QUALITY RATIOS                 
Nonperforming assets to portfolio loans and                 
other real estate  1.35%   1.38%   1.28%   1.12%   0.78%   0.80%
Nonperforming loans to portfolio loans    1.23      1.25      1.15      0.98      0.62      0.64 
Allowance for loan losses to portfolio loans    1.48      1.53      1.47      1.73      1.82      1.91 
Allowance for loan losses to                 
nonperforming loans    120.39      122.01      128.23      176.38      295.03      297.78 
Net loan charge-offs to average portfolio                 
loans (annualized)    0.07      0.75      (0.02)     (0.09)     (0.03)     (0.20)
CAPITAL RATIOS                 
Average total shareholders' equity to                 
average assets  11.93%   12.42%   12.77%   13.59%   13.87%   13.59%
Leverage ratio    13.16      13.45      14.41      15.84      16.12      15.75 
Common equity tier 1 capital    12.18      12.13      13.21      14.57      15.30      15.51 
Tier 1 capital to risk-weighted assets    14.22      14.14      15.53      16.95      17.84      18.10 
Total capital to risk-weighted assets    15.48      15.39      16.79      18.21      19.09      19.36 
Tangible common equity to tangible assets***    11.16      11.49      11.95      13.40      13.40      13.48 
REGULATORY CAPITAL DATA                 
Common equity tier 1 capital$ 266,366  $ 270,564  $ 282,737  $ 275,350  $ 272,048  $ 269,007 
Tier I capital  311,127    315,326    332,468    320,350    317,048    314,007 
Total capital  338,547    343,287    359,300    344,095    339,412    335,734 
Total risk adjusted assets  2,187,262    2,230,326    2,140,344    1,889,892    1,777,618    1,734,401 
Average total assets  2,363,351    2,344,259    2,307,421    2,022,972    1,966,577    1,993,446 
____________________                 
*This is a Non-GAAP based financial measure.
***Calculation of Tangible Common Equity to Tangible Assets (Non-GAAP Financial Measure)
Total shareholders' equity$  282,360  $  285,661  $  296,098  $  277,344  $  273,681  $  271,444 
Less goodwill and core deposit intangible   16,051     16,201     16,361     1,556     1,619     1,681 
Tangible common equity$  266,309  $  269,460  $  279,737  $  275,788  $  272,062  $  269,763 
Total assets$  2,402,262  $  2,360,819  $  2,357,022  $  2,059,899  $  2,031,581  $  2,003,079 
Less goodwill and core deposit intangible   16,051     16,201     16,361     1,556     1,619     1,681 
Tangible assets$  2,386,211  $  2,344,618  $  2,340,661  $  2,058,343  $  2,029,962  $  2,001,398 
Total shareholders' equity to total assets  11.75%   12.10%   12.56%   13.46%   13.47%   13.55%
Tangible common equity to tangible assets  11.16%   11.49%   11.95%   13.40%   13.40%   13.48%
                  
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

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