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Southwest Bancorp, Inc. Reports Results for Second Quarter 2017 and Announces Quarterly Dividend

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STILLWATER, Okla., July 25, 2017 (GLOBE NEWSWIRE) -- Southwest Bancorp, Inc. (NASDAQ:OKSB), ("Southwest"), today reported net income for the second quarter of 2017 of $5.8 million, or $0.31 per diluted share, compared to $5.4 million, or $0.28 per diluted share, for the second quarter of 2016. Net income for the six months ended June 30, 2017 totaled $11.1 million, or $0.59 per diluted share, compared to $7.3 million, or $0.38 per diluted share, for the six months ended June 30, 2016. The increase was attributable to stronger revenues and improved efficiency.

Southwest announced that its board of directors has approved a quarterly cash dividend of $0.08 per share payable August 18, 2017 to shareholders of record as of August 4, 2017.

Mark Funke, President and CEO, stated, "We are pleased with the improvement in the second quarter's earnings. Our good loan growth boosted revenues while expenses remained flat."

Highlights to take from this quarter:

  • Total loans grew $35.2 million to $1.97 billion from first quarter of 2017 and $150.3 million, or 8%, compared to the second quarter of 2016.

  • The quarterly net interest margin was 3.53% at June 30, 2017, compared to 3.43% at March 31, 2017 and 3.48% at June 30, 2016.

  • Pre-tax, pre-provision income was $10.8 million in the second quarter, an increase of 15% from $9.4 million in the first quarter of 2017 and an increase of 34% from $8.0 million in the second quarter of 2016.

  • The efficiency ratio for the second quarter of 2017 was 57.77%, compared to 63.30% for the first quarter of 2017 and 65.70% for the second quarter of 2016.

"Diluted earnings per share of $0.31 was up 11% 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."

See Table 3 for details on pre-tax, pre-provision income, which is a non-GAAP measure.

Pending Merger Update

Southwest previously announced a definitive agreement and plan of merger with and into Simmons First National Corporation (NASDAQ-GS:SFNC). The merger application for this transaction was filed on July 14, 2017.   Conversion and integration plans are in process. Subject to regulatory approval and the satisfaction of other closing conditions, Southwest anticipates a closing date as early as October 2017 or as late as January 2018.

Financial Overview

Condition:  As of June 30, 2017, total assets were $2.6 billion, an increase of $50.3 million, when compared to March 31, 2017. As of June 30, 2017, total loans were $1.97 billion, an increase of $35.2 million from the prior quarter end. As of June 30, 2017, investment securities were $434.4 million, an increase of $1.4 million from the prior quarter end. Cash and cash equivalents at June 30, 2017 were $79.8 million, an increase of $14.7 million from March 31, 2017. 

At June 30, 2017, the allowance for loan losses was $27.3 million, a decrease of $0.2 million when compared to March 31, 2017 and an increase of $0.4 million when compared to June 30, 2016. The allowance for loan losses to portfolio loans was 1.39% as of June 30, 2017, down from 1.43% as of March 31, 2017, and from 1.48% as of June 30, 2016. The allowance for loan losses to nonperforming loans was 118.46% as of June 30, 2017, compared to 166.01% as of March 31, 2017 and 120.39% as of June 30, 2016. The total allowance for loan losses combined with the purchase discount on acquired loans represents 1.53% of gross loans as of June 30, 2017, compared to 1.63% as of March 31, 2017.

Nonperforming loans were $23.1 million at June 30, 2017, an increase of $6.5 million from March 31, 2017, and an increase of $0.7 million from June 30, 2016. There was no other real estate at June 30, 2017, compared to other real estate of $0.4 million at March 31, 2017 and $2.1 million at June 30, 2016. Nonperforming assets were $23.1 million, or 1.17% of portfolio loans and other real estate, as of June 30, 2017, compared to $16.9 million, or 0.88% of portfolio loans and other real estate, as of March 31, 2017, and $24.4 million, or 1.35% of portfolio loans and other real estate, as of June 30, 2016.

As of June 30, 2017, total deposits were $2.0 billion, an increase of $36.6 million, when compared to March 31, 2017. Total core funding, which includes all non-brokered deposits and sweep repurchase agreements, comprised 78% and 79% of total funding as of June 30, 2017 and March 31, 2017, respectively. Wholesale funding, including Federal Home Loan Bank borrowings, federal funds purchased, and brokered deposits, accounted for 22% of total funding at June 30, 2017 and 21% of total funding at March 31, 2017. 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, 2017 exceeded the criteria for regulatory classification as "well-capitalized." Southwest's total regulatory capital was $354.7 million, for a total risk-based capital ratio of 15.48%, Common Equity Tier 1 capital was $280.9 million, for a Common Equity Tier 1 ratio of 12.26%, and Tier 1 capital was $325.9 million, for a Tier 1 risk-based capital ratio of 14.23%. Bank SNB had total regulatory capital of $341.0 million, for a total risk-based capital ratio of 14.91% and Common Equity Tier 1 and Tier 1 capital of $312.3 million, for a Common Equity Tier 1 and Tier 1 risk-based capital ratio of 13.66%. 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 2017, net income was $5.8 million, compared to $5.3 million for the first quarter of 2017 and $5.4 million for the second quarter of 2016. Pre-tax, pre-provision income for the second quarter of 2017 was $10.8 million, compared to $9.4 million for the first quarter of 2017 and $8.0 million for the second quarter of 2016.

The $0.5 million increase in net income compared to the first quarter of 2017 includes a $1.2 million increase in net interest income and a $0.1 million decrease in noninterest expense, offset in part by a $0.4 million decrease in noninterest income, and a $0.5 million increase in income taxes.

The $0.4 million increase in net income compared to the second quarter of 2016 was due to a $1.7 million increase in net interest income, a $0.7 million increase in noninterest income, and a $0.1 million decrease in noninterest expense, offset in part by a $1.7 million increase in the provision for loan losses and a $0.3 million increase in income taxes.

Net Interest Income:  Net interest income totaled $21.4 million for the second quarter of 2017, compared to $20.2 million for the first quarter of 2017 and $19.7 million for the second quarter of 2016. Net interest margin was 3.53% for the second quarter of 2017, compared to 3.43% for the first quarter of 2017 and 3.48% for the second quarter of 2016. Included in interest income for the second quarter of 2017, the first quarter of 2017, and the second quarter of 2016 was $0.4 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 7 basis point, a 5 basis point, and a 3 basis point increase, respectively for each quarter. Average loans (including loans held for sale) for the second quarter of 2017 increased $41.6 million when compared to March 31, 2017, and $141.1 million when compared to June 30, 2016. Loan growth combined with the March 2017 interest rate increase provided growth in interest income during the second quarter of 2017.

Provision 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 $1.7 million for the second quarter of 2017, compared to a provision of $1.8 million for the first quarter of 2017, and a provision of $10,000 for the second quarter of 2016. The second quarter 2017 provision was driven primarily by loan growth and an increase in reserves on a few classified loans. During the second quarter of 2017, net charge-offs totaled $1.9 million, or 0.40% (annualized) of average portfolio loans, compared to net charge-offs of $1.8 million, or 0.38% (annualized) of average portfolio loans, for the first quarter of 2017 and net charge-offs of $0.3 million, or 0.07% (annualized) of average portfolio loans, for the second quarter of 2016. 

Noninterest Income:  Noninterest income totaled $4.5 million for the second quarter of 2017, compared to $4.9 million for the first quarter of 2017 and $3.9 million for the second quarter of 2016. 

The $0.4 million decrease from the first quarter of 2017 is primarily the result of a $0.4 million decrease in the gain on sale/call of investment securities.

The $0.7 million increase from the second quarter of 2016 is the result of a $0.2 million increase in service charges and fees and a $0.6 million increase in other noninterest income, which includes income on bank owned life insurance and customer risk management interest rate swap income, offset in part by a $0.2 million decrease in the gain on sale/call of investment securities.

Noninterest Expense:  Noninterest expense totaled $15.2 million for the second quarter of 2017, compared to $15.3 million for both the first quarter of 2017 and the second quarter of 2016. 

The $0.1 million decrease in noninterest expense from the first quarter of 2017 was primarily due to a $0.2 million decrease in salaries and employee benefits and a $0.4 million decrease in general and administrative expenses, offset in part by a $0.4 million increase in the provision for unfunded loan commitments.

The $0.1 million decrease in noninterest expense from the second quarter of 2016 was primarily due to a $0.4 million decrease in occupancy, offset in part by a $0.3 million increase in the provision for unfunded loan commitments.

Income Tax:  Income tax expense totaled $3.2 million for the second quarter of 2017, compared to $2.7 million for the first quarter of 2017 and $2.9 million for the second quarter of 2016.  The income tax expense fluctuates in relation to pre-tax income levels. The second quarter of 2017 effective tax rate was 35.41%, compared to 33.71% for the first quarter of 2017 and 34.70% for the second quarter of 2016. The increase in the effective tax rate from the first quarter of 2017 includes a reduction in the tax benefit of vested stock awards.

Year-to-Date Results:

Summary:  Net income was $11.1 million for the six months ended June 30, 2017, compared to $7.3 million for the six months ended June 30, 2016. The $3.8 million increase in net income from 2016 is the result of a $2.0 million increase in net interest income, a $2.1 million increase in noninterest income, a $0.9 million decrease in the provision for loan losses, and a $0.8 million decrease in noninterest expense, offset in part by a $2.0 million increase in income taxes.

Net Interest Income:  Net interest income totaled $41.5 million for the first six months of 2017, compared to $39.5 million for the first six months of 2016, an increase of $2.0 million. Year-to-date net interest margin was 3.48% for the first six months of 2017 and 3.51% for the first six months of 2016. Included in interest income for the first six months of 2017 and the first six months of 2016 was $0.7 million and $0.5 million of accelerated discount accretion, respectively. The net effect on the net interest margin was a 6 basis point and a 4 basis point increase, respectively for each six-month period. For the first six months of 2017, net interest margin was also reduced by an increase in the cost of deposits and other borrowings. Average loans (including loans held for sale) as of June 30, 2017 increased $125.7 million when compared to June 30, 2016. Loan growth combined with the recent interest rate increases provided growth in our loan interest income.

Provision for Loan Losses and Net Charge-offs:  The provision for loan losses is the amount of expense that is required to maintain the allowance for 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 $3.5 million for the first six months of 2017, compared to a provision of $4.4 million for the first six months of 2016. The provision for loans losses for the first six months of 2017 was driven primarily by loan growth and an increase in reserves on a few classified loans. Net charge-offs totaled $3.7 million, or 0.39% (annualized) of average portfolio loans year-to-date as of June 30, 2017, compared to net charge-offs of $3.6 million, or 0.41% (annualized) of average portfolio loans for the same period in 2016.  

Noninterest Income:  Noninterest income totaled $9.4 million for the first six months of 2017, compared to $7.3 million for the first six months of 2016. The $2.1 million increase consists of a $0.4 million increase in service charges and fees, a $0.1 million increase in gains on sales of mortgage loans, a $0.2 million increase in the gain on sale of investment securities driven by a first quarter of 2017 sale of a private equity investment, and a $1.4 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 $30.5 million for the first six months of 2017, compared to $31.3 million for the first six months of 2016. The $0.8 million decrease consists of a $0.6 million decrease in occupancy, a $0.3 million decrease in FDIC and other insurance, a $0.3 million increase in the credit provision for unfunded loan commitments, and a $0.2 million decrease in general and administrative expense, offset in part by a $0.6 million increase in salaries and employee benefits.

Income Tax:  Income tax expense totaled $5.9 million for the first six months of 2017, compared to $3.9 million for the first six months of 2016. The income tax expense fluctuates in relation to pre-tax income levels. The year-to-date effective tax rate was 34.61% as of June 30, 2017, compared to 34.83% as of June 30, 2016.

Conference Call

Southwest will host a conference call to review these results on Wednesday, July 26, 2017 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/10109903. 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/oksb170726. An audio replay will be available one hour after the call at 877-344-7529 (toll-free) or 412-317-0088 (international), conference number 10109903. Telephone replay access will be available until August 26, 2017.

 

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 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, 2017, Southwest had total assets of approximately $2.6 billion, deposits of $2.0 billion, and shareholders' equity of $295.5 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, 2017, approximately $429.5 million, or 22%, 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 our planned merger with Simmons First National Corporation;
  • 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, 2016. 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, 2017 through the date its financial statements are filed with the Securities and Exchange Commission. The June 30, 2017 financial statements included in this release will be adjusted if necessary to properly reflect the impact of subsequent events on estimates used to prepare those statements. 

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

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


Financial Tables

   
Unaudited Financial Highlights Table 1
Unaudited Consolidated Statements of Financial Condition Table 2
Unaudited Consolidated Statements of Operations Table 3
Unaudited Average Balances, Yields, and Rates-Quarterly  Table 4
Unaudited Average Balances, Yields, and Rates-YTD Table 5
Unaudited Quarterly Summary Loan Data Table 6
Unaudited Quarterly Summary Financial Data Table 7
Unaudited Quarterly Supplemental Analytical Data Table 8


SOUTHWEST BANCORP, INC.                         Table 1
UNAUDITED FINANCIAL HIGHLIGHTS                          
(Dollars in thousands, except per share)                          
    Second Quarter   First Quarter
QUARTERLY HIGHLIGHTS   2017     2016     % Change   2017     % Change
Operations                          
Net interest income   $ 21,370     $ 19,695     9 %   $ 20,163     6 %
Provision for loan losses     1,729       10     17,190       1,776     (3 )
Noninterest income     4,521       3,871     17       4,880     (7 )
Noninterest expense     15,155       15,268     (1 )     15,303     (1 )
Income before taxes     9,007       8,288     9       7,964     13  
Taxes on income     3,189       2,876     11       2,685     19  
Net income     5,818       5,412     8       5,279     10  
Diluted earnings per share     0.31       0.28     11       0.28     11  
Balance Sheet                          
Total assets     2,572,935       2,402,262     7       2,522,594     2  
Loans held for sale     6,036       7,090     (15 )     4,980     21  
Portfolio loans     1,965,598       1,814,287     8       1,931,463     2  
Total deposits     2,013,834       1,902,865     6       1,977,265     2  
Total shareholders' equity     295,546       282,360     5       290,914     2  
Book value per common share     15.82       15.06     5       15.57     2  
Key Ratios                          
Net interest margin     3.53 %     3.48 %         3.43 %    
Efficiency ratio     57.77       65.70           63.30      
Total capital to risk-weighted assets     15.48       15.56           15.44      
Nonperforming loans to portfolio loans     1.17       1.23           0.86      
Shareholders' equity to total assets     11.49       11.75           11.53      
Tangible common equity to tangible assets*     10.95       11.16           10.98      
Return on average assets (annualized)     0.92       0.91           0.86      
Return on average common equity (annualized)     7.93       7.67           7.40      
Return on average tangible common equity (annualized)**     8.37       8.13           7.83      
                           
    Six Months          
YEAR-TO-DATE  HIGHLIGHTS   2017     2016     % Change          
Operations                          
Net interest income   $ 41,533     $ 39,535     5 %          
Provision for loan losses     3,505       4,385     (20 )          
Noninterest income     9,401       7,286     29            
Noninterest expense     30,458       31,264     (3 )          
Income before taxes     16,971       11,172     52            
Taxes on income     5,874       3,891     51            
Net income     11,097       7,281     52            
Diluted earnings per share     0.59       0.38     55            
Balance Sheet                          
Total assets     2,572,935       2,402,262     7            
Loans held for sale     6,036       7,090     (15 )          
Portfolio loans     1,965,598       1,814,287     8            
Total deposits     2,013,834       1,902,865     6            
Total shareholders' equity     295,546       282,360     5            
Book value per common share     15.82       15.06     5            
Key Ratios                          
Net interest margin     3.48 %     3.51 %              
Efficiency ratio     60.47       66.58                
Total capital to risk-weighted assets     15.48       15.56                
Nonperforming loans to portfolio loans     1.17       1.23                
Shareholders' equity to total assets     11.49       11.75                
Tangible common equity to tangible assets*     10.95       11.16                
Return on average assets (annualized)     0.89       0.62                
Return on average common equity (annualized)     7.67       5.07                
Return on average tangible common equity (annualized)**     8.10       5.38                
                               
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,
  2017     2016     2016  
Assets                
Cash and due from banks $ 37,898     $ 36,831     $ 35,822  
Interest-bearing deposits   41,941       38,819       32,266  
Cash and cash equivalents   79,839       75,650       68,088  
Securities held to maturity (fair values of $10,632, $10,677 and $12,660, respectively)   10,382       10,443       12,161  
Securities available for sale (amortized cost of $424,172, $427,113 and $406,427, respectively)   424,031       426,218       410,135  
Loans held for sale   6,036       4,386       7,090  
Loans receivable   1,965,598       1,872,746       1,814,287  
Less: Allowance for loan losses   (27,318 )     (27,546 )     (26,876 )
Net loans receivable   1,938,280       1,845,200       1,787,411  
Accrued interest receivable   6,328       6,194       5,730  
Non-hedge derivative asset   2,698       1,235       5,163  
Premises and equipment, net   21,901       22,808       22,971  
Other real estate   0       350       2,122  
Goodwill   13,545       13,545       13,467  
Other intangible assets, net   5,727       5,790       5,934  
Other assets   64,168       63,573       61,990  
Total assets $ 2,572,935     $ 2,475,392     $ 2,402,262  
                 
Liabilities                
Deposits:                
Noninterest-bearing demand $ 557,159     $ 551,709     $ 545,421  
Interest-bearing demand   176,724       152,656       160,886  
Money market accounts   599,122       567,058       547,415  
Savings accounts   57,905       56,410       55,209  
Time deposits of $100,000 or more   403,918       360,307       323,137  
Other time deposits   219,006       257,878       270,797  
Total deposits   2,013,834       1,946,018       1,902,865  
Accrued interest payable   1,259       1,132       931  
Non-hedge derivative liability   2,698       1,235       5,163  
Other liabilities   9,500       10,171       10,982  
Other borrowings   203,705       183,814       153,568  
Subordinated debentures   46,393       46,393       46,393  
Total liabilities   2,277,389       2,188,763       2,119,902  
                 
Shareholders' equity                
Common stock - $1 par value; 40,000,000 shares authorized;                
21,260,352, 21,230,714 and 21,223,613 shares issued, respectively   21,260       21,231       21,224  
Additional paid-in capital   123,772       123,112       122,293  
Retained earnings   192,961       184,840       177,373  
Accumulated other comprehensive (loss) gain   (292 )     (907 )     1,503  
Treasury stock, at cost, 2,574,079, 2,555,987 and 2,472,830 shares, respectively   (42,155 )     (41,647 )     (40,033 )
Total shareholders' equity   295,546       286,629       282,360  
Total liabilities and shareholders' equity $ 2,572,935     $ 2,475,392     $ 2,402,262  


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,
  2017   2017     2016     2017     2016  
Interest income                            
Loans $ 22,562   $ 20,944     $ 20,031     $ 43,506     $ 40,061  
Investment securities   2,035     2,052       1,962       4,087       3,927  
Other interest-earning assets   111     75       51       186       104  
Total interest income   24,708     23,071       22,044       47,779       44,092  
                             
Interest expense                            
Interest-bearing deposits   2,124     1,840       1,428       3,964       2,735  
Other borrowings   610     478       342       1,088       651  
Subordinated debentures   604     590       579       1,194       1,171  
Total interest expense   3,338     2,908       2,349       6,246       4,557  
                             
Net interest income   21,370     20,163       19,695       41,533       39,535  
                             
Provision for loan losses   1,729     1,776       10       3,505       4,385  
                             
Net interest income after provision for loan losses   19,641     18,387       19,685       38,028       35,150  
                             
Noninterest income                            
Service charges and fees   2,800     2,681       2,556       5,481       5,105  
Gain on sales of mortgage loans   695     552       722       1,247       1,123  
Gain on sale/call of investment securities, net   -     451       165       451       291  
Other noninterest income   1,026     1,196       428       2,222       767  
Total noninterest income   4,521     4,880       3,871       9,401       7,286  
                             
Noninterest expense                            
Salaries and employee benefits   9,675     9,900       9,587       19,575       18,929  
Occupancy   2,318     2,373       2,669       4,691       5,340  
Data processing   459     409       430       868       900  
FDIC and other insurance   273     273       432       546       800  
Other real estate, net   50     3       8       53       21  
Provision (credit) for unfunded loan commitments   30     (388 )     (263 )     (358 )     (48 )
General and administrative   2,350     2,733       2,405       5,083       5,322  
Total noninterest expense   15,155     15,303       15,268       30,458       31,264  
Income before taxes   9,007     7,964       8,288       16,971       11,172  
Taxes on income   3,189     2,685       2,876       5,874       3,891  
Net income $ 5,818   $ 5,279     $ 5,412     $ 11,097     $ 7,281  
                             
Pre-tax, pre-provision income* $ 10,766   $ 9,352     $ 8,035     $ 20,118     $ 15,509  
                             
Basic earnings per common share $ 0.31   $ 0.28     $ 0.29     $ 0.59     $ 0.38  
Diluted earnings per common share   0.31     0.28       0.28       0.59       0.38  
Common dividends declared per share   0.08     0.08       0.08       0.16       0.16  
                             
*This is a non-GAAP financial measure.  Pre-tax, pre-provision income is calculated as follows:               
Net income + Taxes on income + Provision (credit) for loan losses + Provision (credit) 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, 2017   March 31, 2017   June 30, 2016
  Average   Average   Average   Average   Average   Average
  Balance   Yield/Rate   Balance   Yield/Rate   Balance   Yield/Rate
Assets                            
Loans $ 1,940,684     4.66 %   $ 1,899,047     4.47 %   $ 1,799,591     4.48 %
Investment securities   435,091     1.88       431,542     1.93       428,275     1.84  
Other interest-earning assets   54,634     0.81       56,089     0.54       48,569     0.42  
Total interest-earning assets   2,430,409     4.08       2,386,678     3.92       2,276,435     3.89  
Other assets   101,033           102,331           103,566      
Total assets $ 2,531,442         $ 2,489,009         $ 2,380,001      
                             
Liabilities and Shareholders' Equity                            
Interest-bearing demand deposits $ 178,206     0.20 %   $ 187,269     0.19 %   $ 165,011     0.16 %
Money market accounts   598,346     0.55       573,364     0.33       537,734     0.25  
Savings accounts   57,749     0.13       58,021     0.13       54,808     0.13  
Time deposits   616,870     0.78       611,170     0.84       589,029     0.69  
Total interest-bearing deposits   1,451,171     0.59       1,429,824     0.52       1,346,582     0.43  
Other borrowings   180,920     1.35       174,362     1.11       141,623     0.97  
Subordinated debentures   46,393     5.21       46,393     5.09       46,393     4.99  
Total interest-bearing liabilities   1,678,484     0.80       1,650,579     0.71       1,534,598     0.62  
                             
Noninterest-bearing demand deposits   545,896           536,101           547,963      
Other liabilities   12,630           13,070           13,598      
Shareholders' equity   294,432           289,259           283,842      
Total liabilities and shareholders' equity $ 2,531,442         $ 2,489,009         $ 2,380,001      
                             
Net interest income and spread       3.28 %         3.21 %         3.27 %
Net interest margin (1)       3.53 %         3.43 %         3.48 %
Average interest-earning assets                            
to average interest-bearing liabilities   144.80 %         144.60 %         148.34 %    
                             
(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,
  2017     2016  
  Average   Average   Average   Average
  Balance   Yield/Rate   Balance   Yield/Rate
Assets                  
Loans $ 1,919,981     4.57 %   $ 1,794,291     4.49 %
Investment securities   433,326     1.90       420,291     1.88  
Other interest-earning assets   55,358     0.68       49,800     0.42  
Total interest-earning assets   2,408,665     4.00       2,264,382     3.92  
Other assets   101,679           105,720      
Total assets $ 2,510,344         $ 2,370,102      
                   
Liabilities and Shareholders' Equity                  
Interest-bearing demand deposits $ 182,712     0.20 %   $ 162,825     0.16 %
Money market accounts   585,924     0.44       540,267     0.24  
Savings accounts   57,884     0.13       55,321     0.13  
Time deposits   614,037     0.81       576,621     0.67  
Total interest-bearing deposits   1,440,557     0.55       1,335,034     0.41  
Other borrowings   177,659     1.23       129,397     1.01  
Subordinated debentures   46,393     5.15       47,469     4.93  
Total interest-bearing liabilities   1,664,609     0.76       1,511,900     0.61  
                   
Noninterest-bearing demand deposits   541,025           555,493      
Other liabilities   12,850           14,184      
Shareholders' equity   291,860           288,525      
Total liabilities and shareholders' equity $ 2,510,344         $ 2,370,102      
                   
Net interest income and spread       3.24 %         3.31 %
Net interest margin (1)       3.48 %         3.51 %
Average interest-earning assets                  
to average interest-bearing liabilities   144.70 %         149.77 %    
                   
(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)                                    
  2017   2016
  Jun. 30   Mar. 31   Dec. 31   Sep. 30   Jun. 30   Mar. 31
LOAN COMPOSITION                                    
Real estate mortgage:                                    
Commercial $  961,085    $  925,458    $  882,071    $  893,807    $  862,287    $  878,822   
One-to-four family residential   241,140      210,495       199,123       193,678       183,693       158,078   
Real estate construction:                                    
Commercial   182,620      193,937       199,113       184,211       175,805       156,454   
One-to-four family residential    14,523       18,426       20,946       22,460       20,347       24,202   
Commercial   554,094      570,001       556,248       566,403       558,472       543,822   
Installment and consumer   18,172      18,126       19,631       19,553       20,773       20,506   
Total loans, including held for sale    1,971,634       1,936,443       1,877,132       1,880,112       1,821,377       1,781,884   
Less allowance for loan losses   (27,318   (27,543 )   (27,546   (28,452   (26,876   (27,168 )
Total loans, net $  1,944,316    $  1,908,900    $  1,849,586    $  1,851,660    $  1,794,501    $  1,754,716   
LOANS BY SEGMENT                                    
Oklahoma banking**** $  1,193,108    $  1,153,417    $  1,095,930    $  1,117,716    $  1,085,986    $  1,060,482   
Texas banking    636,709       639,945       636,643       605,682       577,333       560,421   
Kansas banking    141,817       143,081       144,559       156,714       158,058       160,981   
Total loans $  1,971,634    $  1,936,443    $  1,877,132    $  1,880,112    $  1,821,377    $  1,781,884   
NONPERFORMING LOANS BY TYPE                                    
Construction & development $  579    $  970    $  970    $  1,073    $  1,436    $  1,444   
Commercial real estate   6,694      570       6,471       7,620       3,894       3,830   
Commercial   12,884      12,183       6,142       12,791       13,800       13,461   
One-to-four family residential   2,797      2,838       2,904       2,982       3,120       3,448   
Consumer    106       30       123       58       75       84   
Total nonperforming loans $ 23,060   $  16,591    $  16,610    $  24,524    $  22,325    $  22,267   
NONPERFORMING LOANS BY SEGMENT                                    
Oklahoma banking $  12,920    $  7,479    $  12,006    $  12,275    $  9,268    $  7,978   
Texas banking    10,035       8,987       4,140       11,805       12,586       13,521   
Kansas banking    105       125       464       444       471       768   
Total nonperforming loans $  23,060    $  16,591    $  16,610    $  24,524    $  22,325    $  22,267   
OTHER REAL ESTATE BY TYPE                                    
Construction & development $  -   $  -   $  -   $  1,756    $  1,962    $  2,060   
Commercial real estate    -      350       350       350       160       214   
Total other real estate $  -   $  350    $  350    $  2,106    $  2,122    $  2,274   
OTHER REAL ESTATE BY SEGMENT                                    
Oklahoma banking $  -   $  -   $  -   $  -   $  220    $  274   
Texas banking    -      350       350       2,106       1,902       2,000   
Total other real estate $  -   $  350    $  350    $  2,106    $  2,122    $  2,274   
POTENTIAL PROBLEM LOANS BY TYPE                                    
Construction & development $  591    $  588    $  589    $  588    $  -   $  -  
Commercial real estate    9,059       12,167       13,831       12,212       33,472       36,216   
Commercial    17,852       27,372       27,621       30,555       29,537       29,931   
One-to-four family residential    1,194       1,954       1,980       2,119       1,353       2,275   
Consumer    -      2       2       2       2       38   
Total potential problem loans $  28,696    $  42,083    $  44,023    $  45,476    $  64,364    $  68,460   
POTENTIAL PROBLEM LOANS BY SEGMENT                                    
Oklahoma banking**** $  15,785    $  22,001    $  20,258    $  21,780    $  43,895    $  46,102   
Texas banking    10,762       16,346       19,807       21,029       17,726       18,801   
Kansas banking    2,149       3,736       3,958       2,667       2,743       3,557   
Total potential problem loans $  28,696    $  42,083    $  44,023    $  45,476    $  64,364    $  68,460   
ALLOWANCE ACTIVITY                                    
Balance, beginning of period $  27,543    $  27,546    $  28,452    $  26,876    $  27,168    $  26,106   
Charge-offs     2,241       2,157       2,108       626       538       3,725   
Recoveries    287       378       2,531       489       236       412   
Net charge-offs (recoveries)    1,954       1,779      (423    137       302       3,313   
Provision (credit) for loan losses    1,729       1,776      (1,329 )    1,713       10       4,375   
Balance, end of period $  27,318    $  27,543    $  27,546    $  28,452    $  26,876    $  27,168   
NET CHARGE-OFFS BY TYPE                                    
Construction & development $ (5 $  -   $  -   $  -   $  -   $  -  
Commercial real estate   (34 $  1,847    $ (84 $  108    $ (44 $ (187 )
Commercial    1,953      (105   (357   (64    82       3,408   
One-to-four family residential   (17 )   (55   (16    44      (12    41   
Consumer    57       92       34       49       276       51   
Total net charge-offs (recoveries) by type $  1,954    $  1,779    $ (423 $  137    $  302    $  3,313   
NET CHARGE-OFFS BY SEGMENT                                    
Oklahoma banking $  1,095    $  1,950    $ (178 $  34    $  127    $  458   
Texas banking    899       12      (168 )    180       211       952   
Kansas banking   (40   (183   (77   (77   (36    1,903   
Total net charge-offs (recoveries) by segment $  1,954    $  1,779    $ (423 ) $  137    $  302    $  3,313   
                                     
****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)                                  
  2017   2016
  Jun. 30   Mar. 31   Dec. 31   Sep. 30   Jun. 30   Mar. 31
PER SHARE DATA                                  
Basic earnings per common share $ 0.31   $ 0.28   $ 0.33   $ 0.23   $ 0.29   $ 0.10
Diluted earnings per common share   0.31     0.28     0.33     0.23     0.28     0.10
Common dividends declared per share   0.08     0.08     0.08     0.08     0.08     0.08
Book value per common share   15.82     15.57     15.35     15.19     15.06     14.81
Tangible book value per share*   14.98     14.72     14.50     14.33     14.20     13.97
COMMON STOCK                                  
Shares issued   21,260,352     21,275,434     21,230,714     21,223,895     21,223,613     21,225,034
Less treasury shares   2,574,079     2,586,412     2,555,987     2,538,510     2,472,830     1,939,989
Outstanding shares   18,686,273     18,689,022     18,674,727     18,685,385     18,750,783     19,285,045
Diluted outstanding shares   18,492,739     18,532,499     18,551,005     18,545,614     18,677,912     19,267,473
OTHER FINANCIAL DATA                                  
Investment securities $ 434,413   $ 433,053   $ 436,661   $ 427,938   $ 422,296   $ 423,030
Loans held for sale   6,036     4,980     4,386     7,899     7,010     1,803
Portfolio loans   1,965,598     1,931,463     1,872,746     1,872,213     1,814,367     1,780,081
Total loans   1,971,634     1,936,443     1,877,132     1,880,112     1,821,377     1,781,884
Total assets   2,572,935     2,522,594     2,475,392     2,468,042     2,402,262     2,360,819
Total deposits   2,013,834     1,977,265     1,946,018     1,947,924     1,902,865     1,895,248
Other borrowings   203,705     194,645     183,814     173,971     153,568     117,763
Subordinated debentures   46,393     46,393     46,393     46,393     46,393     46,393
Total shareholders' equity   295,546     290,914     286,629     283,820     282,360     285,661
Mortgage servicing portfolio   463,849     458,961     460,646     453,988     443,568     434,340
INTANGIBLE ASSET DATA                                  
Goodwill $ 13,545   $ 13,545   $ 13,545   $ 13,545   $ 13,467   $ 13,467
Core deposit intangible   2,061     2,177     2,299     2,438     2,584     2,734
Mortgage servicing rights   3,666     3,516     3,491     3,381     3,350     3,411
Total intangible assets $ 19,272   $ 19,238   $ 19,335   $ 19,364   $ 19,401   $ 19,612
Intangible amortization expense $ 197   $ 229   $ 275   $ 344   $ 350   $ 341
DEPOSIT COMPOSITION                                  
Non-interest bearing demand $ 557,159   $ 541,021   $ 551,709   $ 550,121   $ 545,421   $ 552,499
Interest-bearing demand   176,724     177,676     152,656     146,583     160,886     168,210
Money market accounts   599,122     591,368     567,058     576,550     547,415     540,323
Savings accounts   57,905     58,387     56,410     54,849     55,209     56,235
Time deposits of $100,000 or more   403,918     353,244     360,307     347,976     323,137     314,496
Other time deposits   219,006     255,569     257,878     271,845     270,797     263,485
Total deposits** $ 2,013,834   $ 1,977,265   $ 1,946,018   $ 1,947,924   $ 1,902,865   $ 1,895,248
OFFICES AND EMPLOYEES                                  
FTE Employees   388     380     387     393     410     411
Banking Centers   30     30     30     30     32     32
Loan production offices   1     1     1     1     1     0
Assets per employee $ 6,631   $ 6,638   $ 6,396   $ 6,280   $ 5,859   $ 5,744
*This is a non-GAAP financial measure.
**Calculation of non-brokered deposits and core funding (non-GAAP financial measures)
Total deposits $ 2,013,834   $ 1,977,265   $ 1,946,018   $ 1,947,924   $ 1,902,865   $ 1,895,248
Less:                                  
Brokered time deposits   84,229     59,698     64,652     65,398     61,709     55,901
Other brokered deposits   211,866     205,004     206,590     214,175     175,367     140,372
Non-brokered deposits $ 1,717,739   $ 1,712,563   $ 1,674,776   $ 1,668,351   $ 1,665,789   $ 1,698,975
Plus:                                  
 Sweep repurchase agreements   11,705     9,645     45,814     46,971     42,568     42,763
Core funding $ 1,729,444   $ 1,722,208   $ 1,720,590   $ 1,715,322   $ 1,708,357   $ 1,741,738
                                   
Balance sheet amounts are as of period end unless otherwise noted.


SOUTHWEST BANCORP, INC.                                 Table 8
UNAUDITED QUARTERLY SUPPLEMENTAL ANALYTICAL DATA                                  
(Dollars in thousands)                                  
  2017     2016  
  Jun. 30   Mar. 31   Dec. 31   Sep. 30   Jun. 30   Mar. 31
PERFORMANCE RATIOS                                  
Return on average assets (annualized)   0.92 %     0.86 %     1.00 %     0.70 %     0.91 %     0.32 %
Return on average common equity (annualized)   7.93       7.40       8.59       5.97       7.67       2.56  
Return on average tangible common equity                                  
(annualized)*   8.37       7.83       9.10       6.33       8.13       2.71  
Net interest margin (annualized)   3.53       3.43       3.40       3.42       3.48       3.54  
Total dividends declared to net income   25.70       28.33       24.23       35.14       28.35       84.66  
Effective tax rate   35.41       33.71       37.38       34.45       34.70       35.19  
Efficiency ratio   57.77       63.30       64.34       66.09       65.70       67.48  
NONPERFORMING ASSETS                                  
Nonaccrual loans $ 22,929     $ 16,481     $ 16,267     $ 24,109     $ 22,259     $ 22,161  
90 days past due and accruing   131       110       343       415       66       106  
Total nonperforming loans   23,060       16,591       16,610       24,524       22,325       22,267  
Other real estate   -       350       350       2,106       2,122       2,274  
Total nonperforming assets $ 23,060     $ 16,941     $ 16,960     $ 26,630     $ 24,447     $ 24,541  
Potential problem loans $ 28,696     $ 42,083     $ 44,023     $ 45,476     $ 64,364     $ 68,460  
ASSET QUALITY RATIOS                                  
Nonperforming assets to portfolio loans and                                  
other real estate   1.17 %     0.88 %     0.91 %     1.42 %     1.35 %     1.38 %
Nonperforming loans to portfolio loans   1.17       0.86       0.89       1.31       1.23       1.25  
Allowance for loan losses to portfolio loans   1.39       1.43       1.47       1.52       1.48       1.53  
Allowance for loan losses to                                  
nonperforming loans   118.46       166.01       165.84       116.02       120.39       122.01  
Net loan charge-offs (recoveries) to average portfolio                                  
loans (annualized)   0.40       0.38       (0.09 )     0.03       0.07       0.75  
CAPITAL RATIOS                                  
Average total shareholders' equity to                                  
average assets   11.63 %     11.62 %     11.62 %     11.75 %     11.93 %     12.42 %
Leverage ratio   12.95       12.98       13.02       13.07       13.18       13.45  
Common equity tier 1 capital   12.26       12.20       12.36       11.95       12.22       12.13  
Tier 1 capital to risk-weighted assets   14.23       14.19       14.40       13.95       14.28       14.14  
Total capital to risk-weighted assets   15.48       15.44       15.66       15.21       15.53       15.39  
Tangible common equity to tangible assets**   10.95       10.98       11.01       10.92       11.16       11.49  
REGULATORY CAPITAL DATA                                  
Common equity tier 1 capital $ 280,927     $ 276,205     $ 272,882     $ 268,045     $ 266,612     $ 270,564  
Tier I capital   325,927       321,205       317,882       313,045       311,612       315,326  
Total capital   354,675       349,615       345,597       341,196       338,968       343,287  
Total risk adjusted assets   2,291,118       2,263,998       2,207,508       2,243,895       2,182,051       2,230,326  
Average total assets   2,516,167       2,474,481       2,440,918       2,395,991       2,363,834       2,344,259  
                                   
*This is a non-GAAP financial measure.
**Calculation of tangible common equity to tangible assets (non-GAAP financial measure)
Total shareholders' equity $ 295,546     $ 290,914     $ 286,629     $ 283,820     $ 282,360     $ 285,661  
Less goodwill and core deposit intangible   15,606       15,722       15,844       15,983       16,051       16,201  
Tangible common equity $ 279,940     $ 275,192     $ 270,785     $ 267,837     $ 266,309     $ 269,460  
Total assets $ 2,572,935     $ 2,522,594     $ 2,475,392     $ 2,468,042     $ 2,402,262     $ 2,360,819  
Less goodwill and core deposit intangible   15,606       15,722       15,844       15,983       16,051       16,201  
Tangible assets $ 2,557,329     $ 2,506,872     $ 2,459,548     $ 2,452,059     $ 2,386,211     $ 2,344,618  
Total shareholders' equity to total assets   11.49 %     11.53 %     11.58 %     11.50 %     11.75 %     12.10 %
Tangible common equity to tangible assets   10.95 %     10.98 %     11.01 %     10.92 %     11.16 %     11.49 %
                                   
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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