Southwest Bancorp, Inc. Reports Net Income Of $5.9 Million For The Third Quarter Of 2012

STILLWATER, Okl., Oct. 18, 2012 (GLOBE NEWSWIRE) -- Southwest Bancorp, Inc. (Nasdaq:OKSB) (Nasdaq:OKSBP), ("Southwest"), today reported earnings for the third quarter of 2012 of $5.9 million, compared to a loss of ($9.5) million for the third quarter of 2011. Net income available to common shareholders was $4.3 million, or $0.22 per diluted share for the third quarter of 2012, compared to a net loss available to common shareholders of ($10.6) million, or ($0.54) per diluted share for the third quarter of 2011.

Southwest reported earnings for the nine months ended September 30, 2012 of $15.2 million, compared to a loss of ($10.0) million for the nine months ended September 30, 2011. Net income available to common shareholders for the nine months ended September 30, 2012 totaled $11.5 million or $0.59 per diluted share compared to a net loss available to common shareholders of ($13.2) million or ($0.68) per diluted share for the nine months ended September 30, 2011.

Rick Green, President Emeritus, stated, "During the third quarter, Southwest took actions to achieve its strategic goals. In July, we resumed payment of dividends on the three trust preferred securities and our Series B Preferred securities and brought current all dividends that had been previously deferred. The Series B Preferred securities were issued by Southwest to the U.S. Treasury Department under the Treasury's Capital Purchase Program in December 2008."

"In August 2012, Southwest completed the repurchase of all $70.0 million of the Series B Preferred securities sold to the Treasury. Southwest incurred a one-time non-cash equity charge of $1.2 million to reflect accelerated accretion of the remaining discount on the securities. The funds for the repurchase were internally generated, and Southwest and each of its banking subsidiaries remain well capitalized after the repurchase."

"We were able to accomplish these goals while at the same time improving year-to-date profitability, stabilizing asset quality, and maintaining strong capital levels."

Mr. Green went on to say, "As previously announced, on October 1, 2012 Mark W. Funke became Southwest's President and Chief Executive Officer. Mr. Funke previously served as market president for Bank of Oklahoma – Oklahoma City."

"These actions are designed to allow Southwest to continue to pursue our strategy of independent operation for the benefit of all of our shareholders."

Mark Funke, new President and Chief Executive Officer, stated, "I am excited to join this organization and expect to lead Southwest on a path of conservative growth. We will continue to have an emphasis on solid underwriting and taking advantage of opportunities for growth and increasing shareholder value."

Key items for the quarter were as follows:

Unless otherwise indicated, the following discussion excludes "covered" assets, which are subject to loss sharing agreements with the FDIC. For information on covered versus noncovered assets, please see the accompanying unaudited financial statement and tables.
  • Nonperforming assets were $41.6 million, or 2.88% of portfolio loans and other real estate, as of September 30, 2012, an increase of $3.6 million (9%) from $38.0 million, or 2.51% of portfolio loans and other real estate, as of June 30, 2012. The increase in nonperforming assets during the third quarter of 2012 is attributable to placing $18.7 million in loans on nonaccrual, offset in part by the receipt of $9.9 million in resolutions and payments on nonperforming loans, net charge-offs of $2.6 million in nonperforming loans, the receipt of $2.4 million from sales of other real estate, and the recognition of impairments in other real estate assets of $0.2 million.  
  • Nonperforming loans, a component of nonperforming assets, were $26.9 million, or 1.88% of portfolio loans, as of September 30, 2012, an increase of $6.2 million (30%) from $20.7 million, or 1.38% of portfolio loans, as of June 30, 2012. This increase is primarily the result of two commercial real estate relationships offset in part by the resolution of a commercial healthcare related loan, all in our Texas market segment.  
  • Potential problem loans were $86.8 million as of September 30, 2012, a decrease of $24.3 million (22%) from $111.1 million as of June 30, 2012. The decrease in potential problem loans resulted from $18.0 million in movement to nonaccrual, $7.4 million in resolutions and paydowns, and $0.8 million in upgrades, offset in part by the identification of $1.9 million in additional potential problem loans.  
  • The allowance for loan losses was $43.6 million at September 30, 2012, a decrease of $0.2 million (less than 1%) from June 30, 2012. The allowance for loan losses to portfolio loans was 3.05% as of September 30, 2012 compared to 2.92% as of June 30, 2012. The allowance for loan losses to nonperforming loans was 162.21% as of September 30, 2012 compared to 211.43% as of June 30, 2012.  
  • A negative provision of $1.7 million was recorded for the third quarter of 2012, reflecting the appropriate allowance required under Southwest's established methodology.  
  • Portfolio loans decreased $69.6 million (5%) from June 30, 2012. The decline was anticipated due in part to the change in our lending focus away from larger average size loans.  
  • Noninterest expense decreased $2.2 million (13%) from June 30, 2012.  
  • The capital ratios of Southwest and each of its banking subsidiaries, as of September 30, 2012, met the criteria for regulatory classification as "well-capitalized". Southwest's total regulatory capital was $338.7 million, for a total risk-based capital ratio of 20.64%, and Tier 1 capital was $317.7 million, for a Tier 1 risk-based capital ratio of 19.36%. Southwest's capital exceeded the minimum to be classified as "well-capitalized" by $174.6 million. Stillwater National Bank, Southwest's principal banking subsidiary, had total regulatory capital of $267.6 million, for a total risk-based capital ratio of 18.46%, and Tier 1 capital of $234.1 million, for a Tier 1 risk-based capital ratio of 16.15%. Stillwater National Bank exceeded the minimum to be classified as "well-capitalized" by $122.6 million. Designation as a well-capitalized institution under regulations does not constitute a recommendation or endorsement by Federal bank regulators.

Financial Overview

Condition: At September 30, 2012 total assets were $2.2 billion, down $226.1 million, or 9%, from December 31, 2011, and total loans were $1.5 billion, down $271.4 million, or 15%, from December 31, 2011.

At September 30, 2012 the noncovered allowance for loan losses was $43.6 million, a decrease of 1% from December 31, 2011. The noncovered allowance for loan losses to noncovered portfolio loans was 3.05% as of September 30, 2012 compared to 2.62% as of December 31, 2011.

Investment securities increased $106.1 million, or 39%, to $381.5 million as of September 30, 2012, from $275.4 million as of December 31, 2011. The increase is primarily the result of a $53.7 million, or 82%, increase in U.S. government and agency securities, a $29.4 million, or 16%, increase in government agency guaranteed residential mortgage-backed securities, a $21.3 million, or 81%, increase in municipal securities, and a $1.2 million increase in other mortgage-backed securities. The investment portfolio is managed to provide safety, liquidity, and collateral for public funds and borrowings. Southwest plans to continue to invest in treasury, U.S. agency, and high grade municipal securities. The investment portfolio continues to be managed in compliance with the current investment policy, including interest rate and liquidity risk stress testing, and the average duration of the portfolio not exceeding four years.

Total core funding, which includes all non-brokered deposits and sweep repurchase agreements, comprised 98% of total funding as of September 30, 2012, compared to 94% at December 31, 2011. Core funding by segment is as follows as of September 30, 2012 and December 31, 2011, respectively: $1,335.2 million and $1,426.2 million in Oklahoma banking, $162.8 million and $156.2 million in Texas banking, $263.9 million and $273.6 million in Kansas banking, and $8.9 million and $3.9 million in the secondary market and other operations segments. Wholesale funding, including FHLB borrowings, federal funds purchased, and brokered deposits, accounted for 2% of total funding at September 30, 2012, compared to 6% at December 31, 2011. Please see Table 7 for details on these non-GAAP financial measures.

Third Quarter Results:

Summary: For the third quarter of 2012, net income available to common shareholders was $4.3 million, compared to a net loss available to common shareholders of ($10.6) million for the third quarter of 2011. The $14.9 million increase in our net income available to common shareholders from third quarter 2011 is the result of a $26.4 million decrease in the provision for loan losses, a $3.1 million decrease in noninterest expense, and a $0.4 million increase in noninterest income, offset in part by a $5.3 million decrease in net interest income and a $9.1 million increase in income tax expense.

The third quarter 2012 effective tax rate was 39.73%.

Net Interest Income: Net interest income totaled $18.7 million for the third quarter of 2012, compared to $24.0 million for the third quarter of 2011, a decrease of $5.3 million, or 22%, and to $19.7 million for the second quarter of 2012, a decrease of $1.1 million, or 5%. Lower average loan volume was the primary cause of each of these decreases. Net interest margin was 3.59% for the third quarter of 2012, compared to 3.77% for the third quarter of 2011 and 3.71% for the second quarter of 2012.

Provision for Loan Losses and Net Charge-offs: A negative provision for loan losses of $1.7 million was recorded for the third quarter of 2012, compared to a provision for loan losses of $24.6 million for third quarter of 2011 and $32,000 for the second quarter of 2012. For the third quarter of 2012, net recoveries totaled $1.6 million, or (0.42%) (annualized) of average portfolio loans, compared to net charge-offs of $14.5 million, or 2.70% (annualized) of average portfolio loans for the third quarter of 2011 and $1.2 million, or 0.31% (annualized) of average portfolio loans for the second quarter of 2012. The provision for loan losses is the amount that is required to maintain the allowance for losses at an appropriate level based upon the inherent risks in the loan portfolio after the effects of net charge-offs or net recoveries for the period.

Noninterest Income: Noninterest income totaled $4.0 million for the third quarter of 2012, compared to $3.6 million for the third quarter of 2011 and $3.6 million for the second quarter of 2012. The increase in noninterest income is the result of increased gains on sale of mortgage loans.

Noninterest Expense: Noninterest expense totaled $14.6 million for the third quarter of 2012, compared to $17.7 million for the third quarter of 2011 and $16.8 million for the second quarter of 2012.

The $3.1 million decrease from third quarter of 2011 consists of a $1.9 million decrease in general and administrative expense, which is primarily the result of decreased loan collection costs and legal fees, a $0.4 million decrease in personnel expense, a $0.4 million decrease in the provision for unfunded loan commitments, a $0.3 million decrease in FDIC and other insurance expense, and a $0.2 million decrease in other real estate expense.

The $2.2 million decrease from second quarter of 2012 consists of a $0.8 million decrease in other real estate expense due to the second quarter fair value write-down of properties, a $0.8 million decrease in general and administrative expense, which is primarily the result of decreased legal fees, decreased loan review costs and the second quarter write-down of an investment carried at cost, and a $0.5 million decrease in the provision for unfunded loan commitments.

Year-to-date Results:

Summary: Net income available to common shareholders was $11.5 million as of September 30, 2012, compared to a net loss available to common shareholders of ($13.2) million as of September 30, 2011. The $24.7 million increase in our net income available to common shareholders from 2011 is the result of a $53.8 million decrease in the provision for loan losses, a $2.6 million decrease in noninterest expense, and a $0.6 million increase in noninterest income, offset in part by a $15.2 million decrease in net interest income and a $16.6 million increase in income tax expense.

The year-to-date effective tax rate was 38.28% as of September 30, 2012.    

Net Interest Income: Net interest income totaled $59.3 million for the first nine months of 2012, compared to $74.4 million for the first nine months of 2011, a decrease of $15.2 million, or 20%. Lower loan volume was the primary cause of this decrease. Year-to-date net interest margin was 3.71%, compared to 3.78% for 2011.    

Provision for Loan Losses and Net Charge-offs: The provision for loan losses totaled $22,000 for the first nine months of 2012, compared to $53.8 million for the first nine months of 2011. Net charge-offs totaled $1.0 million, or 0.08% (annualized) of average portfolio loans year-to-date as of September 30, 2012, compared to $54.3 million, or 3.24% (annualized) of average portfolio loans for the same period 2011. The provision for loan losses is the amount that is required to maintain the allowance for losses at an appropriate level based upon the inherent risks in the loan portfolio after the effects of net charge-offs for the period.

Noninterest Income: Noninterest income totaled $11.1 million for the first nine months of 2012, compared to $10.4 million for the first nine months of 2011. The increase in noninterest income was primarily the result of a $1.2 million increase in gain on sale of loans, offset in part by a $0.6 million decline in service charges and fees.

Noninterest Expense: Noninterest expense totaled $45.7 million for the first nine months of 2012, compared to $48.3 million for the first nine months of 2011. The decrease consists of a $1.0 million decrease in FDIC and other insurance expense, a $0.8 million decrease in other real estate expense, a $0.3 million decrease in personnel expense, a $0.3 million decrease in general and administrative expense, and a $0.3 million decrease in occupancy expense.

Southwest Bancorp and Subsidiaries

Southwest is the bank holding company for Stillwater National Bank and Trust Company ("Stillwater National") and Bank of Kansas. Through its subsidiaries, Southwest offers commercial and consumer lending, deposit and investment services, specialized cash management, and other financial services from offices in Oklahoma, Texas, and Kansas, and on the Internet, through SNB DirectBanker®. We were organized in 1981 as the holding company for Stillwater National, which was chartered in 1894. At September 30, 2012 we had total assets of $2.2 billion, deposits of $1.7 billion, and shareholders' equity of $250.4 million.

Our area of expertise focuses on the special financial needs of healthcare and health professionals, businesses and their managers and owners, and commercial and commercial real estate borrowers. We established a strategic focus on healthcare lending in 1974. We provide credit and other services, such as deposits, cash management, and document imaging for physicians and other healthcare practitioners to start or develop their practices and finance the development and purchase of medical offices, clinics, surgical care centers, hospitals, and similar facilities. As of September 30, 2012, approximately $521.0 million, or 36%, of our noncovered loans were loans to individuals and businesses in the healthcare industry. We conduct regular market reviews of our current and potential healthcare lending and the appropriate concentrations within healthcare based upon economic and regulatory conditions.

We also focus on commercial real estate mortgage and construction credits. We do not focus on one-to-four family residential development loans or "spec" residential property credits. Additionally, subprime residential lending has never been a part of our business strategy, and our exposure to subprime mortgage loans and subprime lenders is minimal. One-to-four family mortgages account for 5% of total noncovered loans. As of September 30, 2012 approximately $1.1 billion, or 75%, of our noncovered loans were commercial real estate mortgage and construction loans, including $353.4 million of loans to individuals and businesses in the healthcare industry. 

Southwest's common stock is traded on the NASDAQ Global Select Market under the symbol OKSB. Southwest's public trust preferred securities are traded on the NASDAQ Global Select Market under the symbol OKSBP.

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

Caution About Forward-Looking Statements

We make forward-looking statements in this news release that are subject to risks and uncertainties. We intend these statements 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 our future financial performance and the financial performance of our operating segments;
  • Expectations regarding regulatory actions;
  • Expectations regarding our ability to utilize tax loss benefits;
  • Assessments of loan quality, probable loan losses, and the amount and timing of loan payoffs;
  • Estimates of the value of assets held for sale or available for sale; and
  • Statements of our 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 our 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 the "Risk Factors" contained in Southwest's reports to the Securities and Exchange Commission.

The cautionary statements in this release also identify important factors and possible events that involve risk and uncertainties that could cause our 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. We do not intend, and undertake no obligation, to update or revise any forward-looking statements contained in this release, whether as a result of differences in actual results, changes in assumptions, or changes in other factors affecting such statements, except as required by law.

Southwest is required under generally accepted accounting principles to evaluate subsequent events and their impact, if any, on its financial statements as of September 30, 2012 through the date its financial statements are filed with the Securities and Exchange Commission. The September 30, 2012 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.
Financial Tables    
     
Unaudited Financial Highlights   Table 1
     
Unaudited Consolidated Statements of Financial Condition   Table 2
     
Unaudited Consolidated Statements of Operations   Table 3
     
Unaudited Average Balances, Yields, and Rates-Quarterly   Table 4
     
Unaudited Average Balances, Yields, and Rates-Year-to-Date   Table 5
     
Unaudited Quarterly Summary Loan Data    Table 6
     
Unaudited Quarterly Summary Financial Data    Table 7
     
Unaudited Quarterly Supplemental Analytical Data    Table 8
           
           
SOUTHWEST BANCORP, INC.          Table 1
UNAUDITED FINANCIAL HIGHLIGHTS           
(Dollars in thousands, except per share)           
   Third Quarter   Second Quarter 
QUARTERLY HIGHLIGHTS       %     % 
  2012 2011  Change  2012  Change 
Operations           
Net interest income  $ 18,682 $ 24,025  (22)% $ 19,747  (5)%
Provision for loan losses   (1,726)  24,626  (107)  32  (5,494)
Noninterest income   3,950  3,589  10  3,601  10
Noninterest expense   14,591  17,693  (18)  16,769  (13)
Income (loss) before taxes   9,767  (14,705)  (166)  6,547  49
Taxes on income   3,880  (5,180)  (175)  2,430  60
Net income (loss)   5,887  (9,525)  (162)  4,117  43
Net income (loss) available to common shareholders   4,344  (10,589)  (141)  3,011  44
Diluted earnings per share   0.22  (0.54)  (141)  0.15  47
Balance Sheet           
Total assets   2,156,750  2,572,492  (16)  2,269,720  (5)
Loans held for sale   34,749  39,902  (13)  23,996  45
Noncovered portfolio loans   1,429,165  1,933,694  (26)  1,498,708  (5)
Covered portfolio loans   28,197  41,209  (32)  30,712  (8)
Total deposits   1,743,673  2,022,253  (14)  1,788,379  (2)
Total shareholders' equity   250,418  367,024  (32)  314,600  (20)
Book value per common share   12.88  15.37  (16)  12.64  2
Key Ratios           
Net interest margin  3.59% 3.77%   3.71%  
Efficiency ratio   64.47  64.07    71.82  
Total capital to risk-weighted assets   20.64  20.81    23.52  
Nonperforming loans to portfolio loans - noncovered   1.88  6.66    1.38  
Shareholders' equity to total assets   11.61  14.27    13.86  
Tangible common equity to tangible assets*   11.33  11.38    10.56  
Return on average assets (annualized)   1.07  (1.43)    0.72  
Return on average common equity (annualized)   7.03  (13.42)    4.92  
Return on average tangible common equity (annualized)**   7.23  (13.72)    5.06  
           
 YEAR-TO-DATE HIGHLIGHTS   Nine Months     
       %     
  2012 2011  Change     
 Operations           
Net interest income  $ 59,278 $ 74,431  (20)%    
Provision for loan losses   22  53,816  (100)    
Noninterest income   11,065  10,442  6    
Noninterest expense   45,669  48,298  (5)    
Income (loss) before taxes   24,652  (17,241)  (243)    
Taxes on income   9,437  (7,207)  (231)    
Net income (loss)   15,215  (10,034)  (252)    
Net income (loss) available to common shareholders   11,474  (13,208)  (187)    
Diluted earnings per share   0.59  (0.68)  (187)    
Balance Sheet           
Total assets   2,156,750  2,572,492  (16)    
Loans held for sale   34,749  39,902  (13)    
Noncovered portfolio loans   1,429,165  1,933,694  (26)    
Covered portfolio loans   28,197  41,209  (32)    
Total deposits   1,743,673  2,022,253  (14)    
Total shareholders' equity   250,418  367,024  (32)    
Book value per common share   12.88  15.37  (16)    
Key Ratios           
Net interest margin   3.71%  3.78%      
Efficiency ratio (GAAP-based)   64.92  56.91      
Total capital to risk-weighted assets   20.64  20.81      
Nonperforming loans to portfolio loans - noncovered   1.88  6.66      
Shareholders' equity to total assets   11.61  14.27      
Tangible common equity to tangible assets*   11.33  11.38      
Return on average assets   0.89  (0.49)      
Return on average common equity   6.24  (5.61)      
Return on average tangible common equity**   6.41  (5.74)      
           
Balance sheet amounts and ratios are as of period end unless otherwise noted.         
* This is a Non-GAAP financial measure. Please see Table 8 for a reconciliation to the most directly comparable GAAP based measure.   
** This is a Non-GAAP financial measure.           
           
Please see accompanying tables for additional financial information.           
       
       
SOUTHWEST BANCORP, INC.       Table 2
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION     
(Dollars in thousands, except per share)       
       
   September 30,   December 31,   September 30, 
  2012 2011 2011
Assets       
Cash and due from banks  $ 25,524 $ 30,247 $ 27,501
Interest-bearing deposits   164,712  199,642  89,099
Cash and cash equivalents   190,236  229,889  116,600
Securities held to maturity (fair values of $13,854, $15,885, $15,805, respectively)   12,942  15,252  15,398
Securities available for sale (amortized cost of $361,379, $253,869, $247,094, respectively)   368,557  260,100  254,201
Loans held for sale   34,749  38,695  39,902
Noncovered loans receivable   1,429,165  1,687,178  1,993,694
Less: Allowance for loan losses   (43,607)  (44,233)  (64,698)
Net noncovered loans receivable   1,385,558  1,642,945  1,928,996
Covered loans receivable (includes loss share: $7,333, $10,073, $10,976, respectively)   28,197  37,615  41,209
Less: Allowance for loan losses   (138)  (451)  --
Net covered loans receivable   28,059  37,164  41,209
Net loans receivable   1,413,617  1,680,109  1,970,205
Accrued interest receivable   7,347  7,176  8,035
Income tax receivable   24,549  28,666  12,509
Premises and equipment, net   22,197  22,700  22,706
Noncovered other real estate   14,683  19,844  70,785
Covered other real estate   4,142  4,529  5,350
Goodwill   6,811  6,811  6,811
Other intangible assets, net   4,786  4,857  4,966
Other assets   52,134  64,245  45,024
Total assets  $ 2,156,750 $ 2,382,873 $ 2,572,492
       
Liabilities       
Deposits:       
Noninterest-bearing demand  $ 429,407 $ 400,985 $ 388,365
Interest-bearing demand   113,677  105,905  98,270
Money market accounts   385,296  423,181  461,546
Savings accounts   36,461  33,406  31,319
Time deposits of $100,000 or more   389,969  487,907  551,914
Other time deposits   388,863  469,998  490,839
Total deposits   1,743,673  1,921,382  2,022,253
Accrued interest payable   944  3,689  2,507
Other liabilities   13,058  12,174  12,162
Other borrowings   66,694  56,479  86,583
Subordinated debentures   81,963  81,963  81,963
Total liabilities   1,906,332  2,075,687  2,205,468
       
Shareholders' equity       
Serial preferred stock; 2,000,000 shares authorized;       
0, 70,000, 70,000 shares issued and outstanding, respectively   --  68,455  68,268
Common stock -- $1 par value; 40,000,000 shares authorized;       
19,448,312, 19,444,213, 19,441,577 shares issued and outstanding, respectively   19,448  19,444  19,442
Additional paid-in capital   98,903  98,932  98,981
Retained earnings   129,720  118,244  177,584
Accumulated other comprehensive income   2,347  2,111  2,749
Total shareholders' equity   250,418  307,186  367,024
Total liabilities and shareholders' equity  $ 2,156,750 $ 2,382,873 $ 2,572,492
         
         
SOUTHWEST BANCORP, INC.         Table 3
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS     
(Dollars in thousands, except per share)         
         
   For the three months   For the nine months 
   ended September 30,   ended September 30, 
  2012 2011 2012 2011
Interest income         
Loans  $ 20,496 $ 27,873 $ 65,581 $ 87,890
Investment securities   1,934  1,779  6,019  5,389
Other interest-earning assets   186  131  563  401
Total interest income   22,616  29,783  72,163  93,680
         
Interest expense         
Interest-bearing deposits   2,251  3,811  7,689  13,475
Other borrowings   225  469  671  1,460
Subordinated debentures   1,458  1,478  4,525  4,314
Total interest expense   3,934  5,758  12,885  19,249
         
Net interest income   18,682  24,025  59,278  74,431
         
Provision for loan losses   (1,726)  24,626  22  53,816
         
Net interest income (loss) after provision for loan losses   20,408  (601)  59,256  20,615
         
Noninterest income         
Service charges and fees   2,730  3,117  8,588  9,226
Gain on sales of loans   1,106  426  2,223  1,021
Gain on investment securities   --  --  35  --
Other noninterest income   114  46  219  195
Total noninterest income  3,950  3,589  11,065  10,442
         
Noninterest expense         
Salaries and employee benefits   7,362  7,734  21,963  22,223
Occupancy   2,729  2,694  7,909  8,201
FDIC and other insurance   539  824  2,021  3,004
Other real estate, net   1,267  1,445  3,698  4,483
General and administrative   2,694  4,996  10,078  10,387
Total noninterest expense   14,591  17,693  45,669  48,298
Income (loss) before taxes   9,767  (14,705)  24,652  (17,241)
Taxes on income   3,880  (5,180)  9,437  (7,207)
Net income (loss)  $ 5,887 $ (9,525) $ 15,215 $ (10,034)
Net income (loss) available to common shareholders  $ 4,344 $ (10,589) $ 11,474 $ (13,208)
         
Basic earnings per common share  $ 0.22 $ (0.54) $ 0.59 $ (0.68)
Diluted earnings per common share   0.22  (0.54)  0.59  (0.68)
Common dividends declared per share   --  --  --  --
             
             
SOUTHWEST BANCORP, INC.            Table 4
UNAUDITED AVERAGE BALANCES, YIELDS, AND RATES - QUARTERLY     
(Dollars in thousands)            
             
   For the three months ended September 30,
  2012 2011
  Average   Average Average   Average
  Balance Interest Yield/Rate Balance Interest Yield/Rate
Assets            
Noncovered loans  $ 1,493,215 $ 20,013 5.33% $ 2,127,291 $ 27,160 5.07%
Covered loans  29,600  483  6.49  44,018  713  6.43
Investment securities  364,695  1,934  2.11  269,143  1,779  2.62
Other interest-earning assets  181,192  186  0.41  87,649  131  0.59
Total interest-earning assets  2,068,702  22,616  4.35  2,528,101  29,783  4.67
Other assets  140,928      121,115    
Total assets $ 2,209,630     $ 2,649,216    
             
Liabilities and Shareholders' Equity            
Interest-bearing demand deposits $ 112,912 $ 49 0.17% $ 111,805 $ 102 0.36%
Money market accounts  376,316  230  0.24  480,817  507  0.42
Savings accounts  36,479  13  0.14  30,467  11  0.14
Time deposits  813,906  1,959  0.96  1,065,019  3,191  1.19
Total interest-bearing deposits  1,339,613  2,251  0.67  1,688,108  3,811  0.93
Other borrowings  64,880  225  1.38  89,964  469  2.07
Subordinated debentures  81,963  1,458  7.12  81,963  1,478  7.21
Total interest-bearing liabilities  1,486,456  3,934  1.05  1,860,035  5,758  1.23
             
Noninterest-bearing demand deposits  398,979      375,465    
Other liabilities  47,188      32,447    
Shareholders' equity  277,007      381,269    
Total liabilities and shareholders' equity $ 2,209,630     $ 2,649,216    
             
Net interest income and spread   $ 18,682 3.30%   $ 24,025 3.44%
Net interest margin (1)     3.59%     3.77%
Average interest-earning assets to average interest-bearing liabilities 139.17%     135.92%    
             
 (1) Net interest margin = annualized net interest income / average interest-earning assets       
             
             
SOUTHWEST BANCORP, INC.            Table 5
UNAUDITED AVERAGE BALANCES, YIELDS, AND RATES - YEAR-TO-DATE     
(Dollars in thousands)            
             
  For the nine months ended September 30,
  2012 2011
  Average   Average Average   Average
  Balance Interest Yield/Rate Balance Interest Yield/Rate
Assets            
Noncovered loans  $ 1,574,095 $ 63,861 5.42% $ 2,234,219 $ 85,366 5.11%
Covered loans  32,490  1,720  7.07  47,619  2,524  7.09
Investment securities  339,776  6,019  2.37  264,004  5,389  2.73
Other interest-earning assets  188,264  563  0.40  87,729  401  0.61
Total interest-earning assets  2,134,625  72,163  4.52  2,633,571  93,680  4.76
Other assets  149,193      102,042    
Total assets $ 2,283,818     $ 2,735,613    
             
Liabilities and Shareholders' Equity            
Interest-bearing demand deposits $ 118,036 $ 178 0.20% $ 112,394 $ 329 0.39%
Money market accounts  375,634  750  0.27  487,522  1,766  0.48
Savings accounts  35,237  39  0.15  29,131  37  0.17
Time deposits  875,012  6,722  1.03  1,158,922  11,343  1.31
Total interest-bearing deposits  1,403,919  7,689  0.73  1,787,969  13,475  1.05
Other borrowings  59,846  671  1.50  89,384  1,460  2.18
Subordinated debentures  81,963  4,525  7.36  81,963  4,314  7.02
Total interest-bearing liabilities  1,545,728  12,885  1.11  1,959,316  19,249  1.31
             
Noninterest-bearing demand deposits  388,370      370,145    
Other liabilities  48,851      23,510    
Shareholders' equity  300,869      382,642    
Total liabilities and shareholders' equity $ 2,283,818     $ 2,735,613    
             
Net interest income and spread   $ 59,278 3.41%   $ 74,431 3.45%
Net interest margin (1)     3.71%     3.78%
Average interest-earning assets to average interest-bearing liabilities 138.10%     134.41%    
             
 (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, except per share)               
   2012 2011
   Sep. 30   Jun. 30   Mar. 31   Dec. 31   Sep. 30   Jun. 30   Mar. 31 
LOAN COMPOSITION               
Noncovered:              
Real estate mortgage:               
Commercial  $ 898,453 $ 931,239 $ 996,486 $ 1,028,561 $ 1,169,010 $ 1,262,753 $ 1,302,164
One-to-four family residential   74,081  74,390  76,287  80,375  85,272  87,407  87,286
Real estate construction               
Commercial   206,342  211,098  222,678  227,098  348,053  372,576  403,635
One-to-four family residential   3,438  4,184  3,814  4,987  25,527  26,400  26,758
Commercial   244,018  263,085  273,324  346,266  367,241  404,229  416,392
Installment and consumer:               
Guaranteed student loans   4,872  5,153  5,276  5,396  5,547  5,600  5,700
Other   32,710  33,555  31,766  33,190  32,946  34,335  36,493
Total noncovered loans, including held for sale   1,463,914  1,522,704  1,609,631  1,725,873  2,033,596  2,193,300  2,278,428
Less allowance for loan losses   (43,607)  (43,807)  (45,023)  (44,233)  (64,698)  (54,575)  (61,285)
Total noncovered loans, net  $ 1,420,307 $ 1,478,897 $ 1,564,608 $ 1,681,640 $ 1,968,898 $ 2,138,725 $ 2,217,143
Covered:              
Real estate mortgage:               
Commercial  $ 20,664 $ 21,472 $ 22,607 $ 23,686 $ 23,201 $ 26,976 $ 28,929
One-to-four family residential   5,059  5,432  5,766  7,072  7,378  8,113  8,192
Real estate construction               
Commercial   419  1,627  2,344  3,746  5,987  6,001  6,144
One-to-four family residential   --  --  --  --  --  172  281
Commercial   1,937  2,033  2,401  2,841  4,286  4,461  5,021
Installment and consumer:   118  148  196  270  357  430  550
Total covered loans  $ 28,197  30,712  33,314  37,615  41,209  46,153  49,117
Less allowance for loan losses   (138)  (91)  (60)  (451)  --  --  --
Total covered loans, net  $ 28,059 $ 30,621 $ 33,254 $ 37,164 $ 41,209 $ 46,153 $ 49,117
LOANS BY SEGMENT               
Oklahoma banking  $ 564,734 $ 597,506 $ 642,700 $ 688,592 $ 770,306 $ 834,189 $ 838,006
Texas banking   554,367  596,262  636,540  665,010  845,485  911,134  953,123
Kansas banking   202,262  198,404  202,050  238,468  252,302  260,431  272,685
Out of market   135,999  137,248  122,890  132,723  166,810  196,495  226,383
Subtotal   1,457,362  1,529,420  1,604,180  1,724,793  2,034,903  2,202,249  2,290,197
Secondary market   34,749  23,996  38,765  38,695  39,902  37,204  37,348
Total loans  $ 1,492,111 $ 1,553,416 $ 1,642,945 $ 1,763,488 $ 2,074,805 $ 2,239,453 $ 2,327,545
NONPERFORMING LOANS BY TYPE               
Construction & development  $ 3,436 $ 3,608 $ 3,768 $ 3,877 $ 68,554 $ 73,487 $ 68,183
Commercial real estate   20,576  4,932  6,821  4,667  56,234  60,857  47,986
Commercial   1,791  10,878  2,209  3,374  6,080  15,224  16,633
One-to-four family residential   949  1,125  1,508  1,491  1,706  1,457  2,634
Consumer   131  176  118  140  152  153  27
Total nonperforming loans - noncovered  $ 26,883 $ 20,719 $ 14,424 $ 13,549 $ 132,726 $ 151,178 $ 135,463
NONPERFORMING LOANS BY SEGMENT               
Oklahoma banking  $ 5,198 $ 2,305 $ 2,864 $ 3,699 $ 14,932 $ 18,870 $ 13,443
Texas banking   15,342  11,526  2,258  83  95,191  91,449  87,122
Kansas banking   5,681  6,214  8,617  9,070  7,976  9,725  7,924
Out of market   662  674  685  697  14,627  31,134  26,974
Total nonperforming loans - noncovered  $ 26,883 $ 20,719 $ 14,424 $ 13,549 $ 132,726 $ 151,178 $ 135,463
OTHER REAL ESTATE BY TYPE               
Construction & development  $ 445 $ 2,585 $ 3,542 $ 3,542 $ 38,927 $ 12,588 $ 6,304
Commercial real estate   14,130  14,129  14,854  15,464  24,364  16,300  23,890
One-to-four family residential   108  549  933  838  7,494  10,068  10,873
Total other real estate - noncovered  $ 14,683 $ 17,263 $ 19,329 $ 19,844 $ 70,785 $ 38,956 $ 41,067
OTHER REAL ESTATE BY SEGMENT               
Oklahoma banking  $ 6,178 $ 6,178 $ 6,273 $ 6,178 $ 8,709 $ 2,613 $ 4,616
Texas banking   7,227  9,162  9,846  9,846  35,270  17,398  18,652
Kansas banking   1,278  1,923  3,210  3,210  12,390  14,539  12,848
Out of market   --  --  --  610  14,416  4,406  4,951
Total other real estate - noncovered  $ 14,683 $ 17,263 $ 19,329 $ 19,844 $ 70,785 $ 38,956 $ 41,067
POTENTIAL PROBLEM LOANS BY TYPE               
Construction & development  $ 22,565 $ 25,563 $ 33,907 $ 43,607 $ 75,867 $ 111,032 $ 111,204
Commercial real estate   53,725  71,537  67,654  55,873  162,692  140,079  85,833
Commercial   9,305  12,753  23,506  32,477  37,027  38,850  19,940
One-to-four family residential   1,157  1,230  1,253  1,082  1,108  1,210  429
Total potential problem loans - noncovered  $ 86,752 $ 111,083 $ 126,320 $ 133,039 $ 276,694 $ 291,171 $ 217,406
POTENTIAL PROBLEM LOANS BY SEGMENT               
Oklahoma banking  $ 27,415 $ 37,320 $ 32,761 $ 27,481 $ 54,310 $ 42,565 $ 30,678
Texas banking   43,472  58,021  78,961  83,035  163,973  183,486  114,506
Kansas banking   3,286  3,118  1,893  836  14,530  11,289  19,472
Out of market   12,579  12,624  12,705  21,687  43,881  53,831  52,750
Total potential problem loans - noncovered  $ 86,752 $ 111,083 $ 126,320 $ 133,039 $ 276,694 $ 291,171 $ 217,406
Continued               
               
SOUTHWEST BANCORP, INC.     Table 6 
UNAUDITED QUARTERLY SUMMARY LOAN DATA             Continued 
(Dollars in thousands, except per share)               
   2012 2011
   Sep. 30   Jun. 30   Mar. 31   Dec. 31   Sep. 30   Jun. 30   Mar. 31 
OUT OF MARKET LOANS               
Net balance out of market loans:              
Arizona  $ 41,255 $ 39,449 $ 34,749 $ 26,372 $ 35,978 $ 49,977 $ 57,657
Iowa   22,958  23,022  23,130  26,494  26,626  26,695  26,759
Ohio   11,182  11,502  12,650  12,741  9,367  9,568  9,963
California   9,684  9,922  10,252  10,530  10,737  9,814  9,984
Kentucky   7,517  9,455  517  488  490  492  494
South Carolina   7,283  7,320  --  --  --  --  --
Tennessee   6,232  6,310  6,368  6,427  6,484  6,550  6,606
Florida   6,204  6,240  6,269  6,421  6,374  10,582  7,600
Louisiana   4,968  4,974  4,931  5,336  5,644  5,963  8,018
New Mexico   3,696  3,714  3,715  15,215  21,019  21,092  28,226
Other   15,020  15,340  20,309  22,699  44,091  55,762  71,076
Total out of market loans  $ 135,999 $ 137,248 $ 122,890 $ 132,723 $ 166,810 $ 196,495 $ 226,383
Nonperforming out of market loans:              
Florida  $ 281 $ 287 $ 293 $ 299 $ 305 $ 1,479 $ 1,479
Arizona   250  256  261  267  8,441  16,745  10,316
Colorado   131  131  131  131  746  4,909  880
New Mexico   --  --  --  --  5,135  5,135  11,827
Alabama   --  --  --  --  --  157  172
Other   --  --  --  --  --  2,709  2,300
Total nonperforming out of market loans  $ 662 $ 674 $ 685 $ 697 $ 14,627 $ 31,134 $ 26,974
Potential problem out of market loans:              
Iowa  $ 11,941 $ 11,970 $ 12,035 $ -- $ -- $ -- $ --
New Mexico   --  --  --  11,542  11,589  11,635  --
Arizona   --  --  --  9,463  10,287  14,865  25,242
California   548  559  570  578  593  9,423  9,575
Florida   90  95  100  104  108  116  --
Colorado   --  --  --  --  17,034  13,500  17,933
Alabama   --  --  --  --  4,270  4,292  --
Total potential problem out of market loans  $ 12,579 $ 12,624 $ 12,705 $ 21,687 $ 43,881 $ 53,831 $ 52,750
ALLOWANCE ACTIVITY               
Balance, beginning of period  $ 43,898 $ 45,083 $ 44,684 $ 64,698 $ 54,575 $ 61,285 $ 65,229
Charge offs   2,653  2,229  1,936  99,604  16,067  27,562  13,392
Recoveries   4,226  1,012  619  1,305  1,564  712  398
Net charge offs (recoveries)   (1,573)  1,217  1,317  98,299  14,503  26,850  12,994
Provision for loan losses   (1,726)  32  1,716  78,285  24,626  20,140  9,050
Balance, end of period  $ 43,745 $ 43,898 $ 45,083 $ 44,684 $ 64,698 $ 54,575 $ 61,285
NET CHARGE OFFS BY TYPE               
Construction & development  $ (1,823) $ (85) $ (42) $ 41,513 $ 7,177 $ 10,847 $ 1,012
Commercial real estate   2,022  91  14  50,070  5,702  7,593  7,290
Commercial   (1,894)  1,228  1,211  6,434  1,469  7,999  4,337
One-to-four family residential   20  (105)  123  1  55  165  58
Consumer   102  88  11  281  100  246  297
Total net charge offs (recoveries) by type  $ (1,573) $ 1,217 $ 1,317 $ 98,299 $ 14,503 $ 26,850 $ 12,994
NET CHARGE OFFS BY SEGMENT               
Oklahoma banking  $ 7 $ (204) $ 1,070 $ 13,210 $ 1,058 $ 1,442 $ 1,593
Texas banking   857  1,139  229  64,370  7,386  9,163  4,502
Kansas banking   (2,435)  324  166  8,872  361  1,791  372
Out of market   (2)  (42)  (148)  11,847  5,698  14,454  6,527
Total net charge offs (recoveries) by segment  $ (1,573) $ 1,217 $ 1,317 $ 98,299 $ 14,503 $ 26,850 $ 12,994
               
     
SOUTHWEST BANCORP, INC.     Table 7 
UNAUDITED QUARTERLY SUMMARY FINANCIAL DATA             
(Dollars in thousands, except per share)               
   2012 2011
   Sep. 30   Jun. 30   Mar. 31   Dec. 31   Sep. 30   Jun. 30   Mar. 31 
NET INCOME (LOSS) BY SEGMENT               
Oklahoma banking  $ 2,873 $ 4,497 $ 3,158 $ (5,586) $ 7 $ 5,290 $ 3,435
Texas banking   2,622  1,435  3,161  (35,435)  (6,455)  1,575  1,079
Kansas banking   1,550  (424)  1,239  (7,533)  (612)  971  131
Out of market   (169)  693  (570)  (7,857)  (1,947)  (9,039)  (924)
Subtotal   6,876  6,201  6,988  (56,411)  (9,007)  (1,203)  3,721
Secondary market   330  124  286  144  90  127  (13)
Other operations   (1,319)  (2,208)  (2,063)  (1,994)  (608)  (1,894)  (1,247)
Net income (loss)  $ 5,887 $ 4,117 $ 5,211 $ (58,261) $ (9,525) $ (2,970) $ 2,461
PER SHARE DATA               
Basic earnings per common share  $ 0.22 $ 0.15 $ 0.21 $ (3.05) $ (0.54) $ (0.21) $ 0.07
Diluted earnings per common share   0.22  0.15  0.21  (3.05)  (0.54)  (0.21)  0.07
Book value per common share   12.88  12.64  12.50  12.28  15.37  15.89  16.02
Tangible book value per share*   12.53  12.29  12.15  11.93  15.02  15.54  15.67
COMMON STOCK               
Shares issued and outstanding   19,448,312  19,447,202  19,445,913  19,444,213  19,441,577  19,439,167  19,438,290
OTHER FINANCIAL DATA               
Investment securities  $ 381,499 $ 340,378 $ 333,860 $ 275,352 $ 269,599 $ 268,153 $ 258,436
Loans held for sale   34,749  23,996  38,765  38,695  39,902  37,204  37,348
Noncovered portfolio loans   1,429,165  1,498,708  1,570,866  1,687,178  1,993,694  2,156,096  2,241,080
Total noncovered loans   1,463,914  1,522,704  1,609,631  1,725,873  2,033,596  2,193,300  2,278,428
Covered portfolio loans   28,197  30,712  33,314  37,615  41,209  46,153  49,117
Total assets   2,156,750  2,269,720  2,273,861  2,382,873  2,572,492  2,660,495  2,779,028
Total deposits   1,743,673  1,788,379  1,806,780  1,921,382  2,022,253  2,094,236  2,218,571
Other borrowings   66,694  68,477  55,139  56,479  86,583  96,682  85,332
Subordinated debentures   81,963  81,963  81,963  81,963  81,963  81,963  81,963
Total shareholders' equity   250,418  314,600  311,643  307,186  367,024  376,930  379,350
Mortgage servicing portfolio   329,184  305,465  301,378  295,492  285,886  283,083  281,271
INTANGIBLE ASSET DATA               
Goodwill  $ 6,811 $ 6,811 $ 6,811 $ 6,811 $ 6,811 $ 6,811 $ 6,811
Core deposit intangible   2,664  2,785  2,906  3,030  3,155  3,285  3,420
Mortgage servicing rights   2,122  1,975  1,952  1,825  1,808  1,781  1,718
Nonmortgage servicing rights   --  --  --  2  3  3  3
Total intangible assets  $ 11,597 $ 11,571 $ 11,669 $ 11,668 $ 11,777 $ 11,880 $ 11,952
Intangible amortization expense  $ 283 $ 282 $ 296 $ 252 $ 226 $ 222 $ 361
DEPOSIT COMPOSITION               
Non-interest bearing demand  $ 429,407 $ 421,083 $ 395,141 $ 400,985 $ 388,365 $ 389,027 $ 369,013
Interest-bearing demand   113,677  119,929  119,759  105,905  98,270  124,346  112,731
Money market accounts   385,296  361,839  349,419  423,181  461,546  465,269  486,770
Savings accounts   36,461  35,610  34,679  33,406  31,319  29,586  28,440
Time deposits of $100,000 or more   389,969  431,317  464,876  487,907  551,914  570,116  669,817
Other time deposits   388,863  418,601  442,906  469,998  490,839  515,892  551,800
Total deposits**  $ 1,743,673 $ 1,788,379 $ 1,806,780 $ 1,921,382 $ 2,022,253 $ 2,094,236 $ 2,218,571
OFFICES AND EMPLOYEES               
FTE Employees   429  430  435  435  437  437  424
Branches   23  23  23  23  23  23  23
Loan production offices   2  2  2  2  2  2  2
Assets per employee  $ 5,027 $ 5,278 $ 5,227 $ 5,478 $ 5,887 $ 6,088 $ 6,554
____________________               
*This is a Non-GAAP based financial measure.               
**Calculation of Non-brokered Deposits and Core Funding (Non-GAAP Financial Measures)           
Total deposits  $ 1,743,673 $ 1,788,379 $ 1,806,780 $ 1,921,382 $ 2,022,253 $ 2,094,236 $ 2,218,571
Less:               
Brokered time deposits   10,197  12,238  13,307  14,974  46,838  52,407  122,124
Other brokered deposits   4,421  4,420  6,529  78,236  105,483  105,392  112,033
Non-brokered deposits  $ 1,729,055 $ 1,771,721 $ 1,786,944 $ 1,828,172 $ 1,869,932 $ 1,936,437 $ 1,984,414
Plus:               
Sweep repurchase agreements   41,694  43,477  30,139  31,482  40,305  30,636  27,214
Core funding  $ 1,770,749 $ 1,815,198 $ 1,817,083 $ 1,859,654 $ 1,910,237 $ 1,967,073 $ 2,011,628
               
Balance sheet amounts are as of period end unless otherwise noted.             
     
     
SOUTHWEST BANCORP, INC.     Table 8
UNAUDITED QUARTERLY SUPPLEMENTAL ANALYTICAL DATA           
(Dollars in thousands, except per share)               
   2012 2011
   Sep. 30   Jun. 30   Mar. 31   Dec. 31   Sep. 30   Jun. 30   Mar. 31 
PERFORMANCE RATIOS               
Return on average assets (annualized)  1.07% 0.72% 0.89%  (8.96)%  (1.43)%  (0.43)% 0.35%
Return on average common equity (annualized)   7.03  4.92  6.84  (79.48)  (13.42)  (5.11)  1.81
Return on average tangible common equity (annualized)*   7.23  5.06  7.03  (81.35)  (13.72)  (5.22)  1.85
Net interest margin (annualized)   3.59  3.71  3.82  3.62  3.77  3.79  3.78
Effective tax rate   39.73  37.12  37.50  38.49  35.23  54.53  38.40
Efficiency ratio   64.47  71.82  58.73  164.47  64.07  52.40  54.50
NONPERFORMING ASSETS               
Noncovered:              
Nonaccrual loans  $ 26,493 $ 20,474 $ 14,324 $ 13,506 $ 132,268 $ 151,135 $ 134,934
90 days past due and accruing   390  245  100  43  458  43  529
Total nonperforming loans   26,883  20,719  14,424  13,549  132,726  151,178  135,463
Other real estate   14,683  17,263  19,329  19,844  70,785  38,956  41,067
Total nonperforming assets  $ 41,566 $ 37,982 $ 33,753 $ 33,393 $ 203,511 $ 190,134 $ 176,530
Performing restructured  $ 281 $ 328 $ 1,700 $ 1,017 $ 1,026 $ 3,191 $ 2,166
Potential problem loans  $ 86,752 $ 111,083 $ 126,320 $ 133,039 $ 276,694 $ 291,171 $ 217,406
Covered:              
Nonaccrual loans  $ 4,809 $ 6,067 $ 7,015 $ 7,128 $ 7,065 $ 9,800 $ 9,809
90 days past due and accruing   353  --  --  --  610  --  --
Total nonperforming loans   5,162  6,067  7,015  7,128  7,675  9,800  9,809
Other real estate   4,142  3,825  4,694  4,529  5,350  3,806  4,016
Total nonperforming assets  $ 9,304 $ 9,892 $ 11,709 $ 11,657 $ 13,025 $ 13,606 $ 13,825
Performing restructured  $ 2,548 $ 1,701 $ -- $ -- $ -- $ -- $ --
Potential problem loans  $ 1,621 $ 1,573 $ 553 $ 912 $ 2,015 $ 2,731 $ 3,444
ASSET QUALITY RATIOS               
Net loan charge-offs to average portfolio loans (annualized)   (0.42)% 0.31% 0.32% 19.78% 2.70% 4.76% 2.25%
Noncovered:              
Nonperforming assets to portfolio loans and  other real estate  2.88% 2.51% 2.12% 1.96% 9.86% 8.66% 7.74%
Nonperforming loans to portfolio loans   1.88  1.38  0.92  0.80  6.66  7.01  6.04
Allowance for loan losses to portfolio loans   3.05  2.92  2.87  2.62  3.25  2.53  2.73
Allowance for loan losses to  nonperforming loans   162.21  211.43  312.14  326.47  48.75  36.10  45.24
Covered:              
Nonperforming assets to portfolio loans and other real estate  28.77% 28.64% 30.81% 27.66% 27.98% 27.23% 26.02%
Nonperforming loans to portfolio loans   18.31  19.75  21.06  18.95  18.62  21.23  19.97
Allowance for loan losses to portfolio loans   0.49  0.30  0.18  1.20  --  --  --
Allowance for loan losses to nonperforming loans   2.67  1.50  0.86  6.33  --  --  --
CAPITAL RATIOS               
Average total shareholders' equity to average assets  12.54% 13.78% 13.19% 14.14% 14.39% 13.98% 13.57%
Leverage ratio   14.49  16.84  16.20  14.50  16.47  16.25  15.95
Tier 1 capital to risk-weighted assets   19.36  22.24  21.21  19.51  19.54  18.93  18.49
Total capital to risk-weighted assets   20.64  23.52  22.49  20.78  20.81  20.20  19.77
Tangible common equity to tangible assets***   11.33  10.56  10.42  9.76  11.38  11.38  10.99
REGULATORY CAPITAL DATA               
Tier I capital  $ 317,664 $ 382,262 $ 378,949 $ 374,552 $ 433,628 $ 444,106 $ 447,803
Total capital   338,738  404,251  401,808  398,945  461,929  473,950  478,713
Total risk adjusted assets   1,641,123  1,719,057  1,786,282  1,920,075  2,219,271  2,346,596  2,421,752
Average total assets   2,192,579  2,269,639  2,339,784  2,562,094  2,633,000  2,733,561  2,807,518
 ____________________               
*This is a Non-GAAP based financial measure.               
***Calculation of Tangible Capital to Tangible Assets (Non-GAAP Financial Measure)           
Total shareholders' equity  $ 250,418 $ 314,600 $ 311,643 $ 307,186 $ 367,024 $ 376,930 $ 379,350
Less:               
Goodwill   6,811  6,811  6,811  6,811  6,811  6,811  6,811
Preferred stock   --  68,837  68,644  68,455  68,268  68,084  67,902
Tangible common equity  $ 243,607 $ 238,952 $ 236,188 $ 231,920 $ 291,945 $ 302,035 $ 304,637
Total assets  $ 2,156,750 $ 2,269,720 $ 2,273,861 $ 2,382,873 $ 2,572,492 $ 2,660,495 $ 2,779,028
Less goodwill   6,811  6,811  6,811  6,811  6,811  6,811  6,811
Tangible assets  $ 2,149,939 $ 2,262,909 $ 2,267,050 $ 2,376,062 $ 2,565,681 $ 2,653,684 $ 2,772,217
Tangible common equity to tangible assets  11.33% 10.56% 10.42% 9.76% 11.38% 11.38% 10.99%
               
Balance sheet amounts and ratios are as of period end unless otherwise noted.           
CONTACT: Mark W. Funke         President & CEO         Priscilla J. Barnes         Senior EVP & COO         (405) 372-2230

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