SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------- --------------
Commission File Number: 0-23064
SOUTHWEST BANCORP, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1136584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
608 South Main Street 74074
Stillwater, Oklahoma (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code: (405) 372-2230
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
[x] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date.
5,773,907
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1 of 22
SOUTHWEST BANCORP, INC.
INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Consolidated Statements of Financial Condition at
June 30, 2002 and December 31, 2001 3
Unaudited Consolidated Statements of Operations for the
three and six months ended June 30, 2002 and 2001 4
Unaudited Consolidated Statements of Cash Flows for the
six months ended June 30, 2002 and 2001 5
Unaudited Consolidated Statements of Shareholders' Equity for the
six months ended June 30, 2002 6
Unaudited Consolidated Statements of Comprehensive Income for the
three and six months ended June 30, 2002 and 2001 6
Notes to Unaudited Consolidated Financial Statements 7
Average Balances, Yields and Rates 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 18
PART II. OTHER INFORMATION 19
SIGNATURES 20
2
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
JUNE 30, DECEMBER 31,
2002 2001
----------- -----------
ASSETS:
Cash and cash equivalents $ 27,712 $ 32,406
Investment securities:
Held to maturity, fair value $39,936 (2002) and $51,030 (2001) 38,904 49,893
Available for sale, amortized cost $160,862 (2002) and $163,924 (2001) 164,671 167,545
Federal Reserve Bank and Federal Home Loan Bank Stock, at cost 8,486 9,908
Loans held for sale 8,580 12,740
Loans receivable, net of allowance for loan losses
of $12,151 (2002) and $11,492 (2001) 987,014 906,814
Accrued interest receivable 10,239 10,157
Premises and equipment, net 20,199 20,418
Other assets 7,258 6,614
----------- -----------
Total assets $ 1,273,063 $ 1,216,495
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Noninterest-bearing demand $ 128,644 $ 127,196
Interest-bearing demand 54,455 49,051
Money market accounts 211,204 157,266
Savings accounts 5,494 5,372
Time deposits of $100,000 or more 313,800 260,071
Other time deposits 285,640 305,840
----------- -----------
Total deposits 999,237 904,796
Accrued interest payable 3,072 3,470
Other liabilities 3,436 2,724
Short-term borrowings 151,542 195,367
Long-term debt:
Guaranteed preferred beneficial interests in the Company's
subordinated debentures 25,013 25,013
----------- -----------
Total liabilities 1,182,300 1,131,370
Shareholders' equity:
Common stock - $1 par value; 20,000,000 shares authorized;
6,121,521 shares issued and outstanding 6,122 6,122
Capital surplus 12,091 12,508
Retained earnings 75,058 69,838
Accumulated other comprehensive income (loss) 2,512 2,389
Treasury stock, at cost; 357,350 (2002) and 420,764 (2001) shares (5,020) (5,732)
----------- -----------
Total shareholders' equity 90,763 85,125
----------- -----------
Total liabilities & shareholders' equity $ 1,273,063 $ 1,216,495
=========== ===========
See notes to unaudited consolidated financial statements.
3
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except earnings per share data)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2002 2001 2002 2001
-------- -------- -------- --------
Interest income:
Interest and fees on loans $ 16,443 $ 20,068 $ 32,423 $ 41,196
Investment securities:
U.S. Government and agency obligations 1,616 1,539 3,129 3,216
Mortgage-backed securities 826 1,296 1,758 2,495
State and political subdivisions 343 419 731 852
Other securities 139 187 282 377
Other interest-earning assets 4 9 11 18
-------- -------- -------- --------
Total interest income 19,371 23,518 38,334 48,154
Interest expense:
Interest-bearing demand 89 221 171 508
Money market accounts 1,078 1,122 1,950 2,565
Savings accounts 8 26 14 52
Time deposits of $100,000 or more 2,313 4,168 4,687 8,938
Other time deposits 2,372 4,898 5,082 10,451
Short-term borrowings 1,228 2,126 2,503 4,252
Long-term debt 581 581 1,163 1,163
-------- -------- -------- --------
Total interest expense 7,669 13,142 15,570 27,929
-------- -------- -------- --------
Net interest income 11,702 10,376 22,764 20,225
Provision for loan losses 1,275 1,125 2,525 1,950
Other income:
Service charges and fees 2,003 1,682 3,777 3,191
Other noninterest income 247 186 475 267
Gain on sales of loans receivable 555 636 1,199 1,175
Gain on sales of investment securities 1 196 3 253
-------- -------- -------- --------
Total other income 2,806 2,700 5,454 4,886
Other expenses:
Salaries and employee benefits 4,296 4,034 8,098 7,635
Occupancy 1,733 1,591 3,450 3,210
FDIC and other insurance 66 70 138 141
Other real estate (43) (6) (21) (23)
General and administrative 2,094 2,083 4,292 4,056
-------- -------- -------- --------
Total other expenses 8,146 7,772 15,957 15,019
-------- -------- -------- --------
Income before taxes 5,087 4,179 9,736 8,142
Taxes on income 1,684 1,287 3,255 2,621
-------- -------- -------- --------
Net income $ 3,403 $ 2,892 $ 6,481 $ 5,521
======== ======== ======== ========
Basic earnings per share $ 0.59 $ 0.51 $ 1.13 $ 0.97
======== ======== ======== ========
Diluted earnings per share $ 0.56 $ 0.50 $ 1.08 $ 0.95
======== ======== ======== ========
Cash dividends declared per share $ 0.11 $ 0.08 $ 0.22 $ 0.16
======== ======== ======== ========
See notes to unaudited consolidated financial statements.
4
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
FOR THE SIX MONTHS
ENDED JUNE 30,
2002 2001
--------- ---------
Operating activities:
Net income $ 6,481 $ 5,521
Adjustments to reconcile net income to net
cash (used in) provided from operating activities:
Provision for loan losses 2,525 1,950
Depreciation and amortization expense 1,252 1,219
Amortization of premiums and accretion of
discounts on securities, net 3 (5)
Amortization of intangibles 90 80
(Gain) Loss on sales/calls of securities (3) (253)
(Gain) Loss on sales of loans receivable (1,199) (1,175)
(Gain) Loss on sales of premises/equipment 16 (1)
(Gain) Loss on other real estate owned, net (102) (26)
Proceeds from sales of residential mortgage loans 46,344 53,829
Residential mortgage loans originated for resale (43,449) (55,350)
Changes in assets and liabilities:
Accrued interest receivable (82) (336)
Other assets (1,233) 438
Income taxes payable 324 (119)
Accrued interest payable (398) (2,356)
Other liabilities 212 1,095
--------- ---------
Net cash (used in) provided from operating activities 10,781 4,511
--------- ---------
Investing activities:
Proceeds from sales of available for sale securities 10 2,025
Proceeds from principal repayments, calls and maturities:
Held to maturity securities 10,735 9,225
Available for sale securities 28,723 42,302
Proceeds from redemptions of Federal Home Loan Bank stock 1,434 111
Purchases of held to maturity securities (1,022) --
Purchases of available for sale securities (24,396) (52,620)
Purchases of Federal Home Loan Bank Stock -- --
Purchases of Federal Reserve Bank and Federal Home Loan
Bank stock (12) (2,187)
Loans originated and principal repayments, net (136,565) (84,606)
Proceeds from sales of guaranteed student loans 55,919 48,794
Purchases of premises and equipment (1,090) (633)
Proceeds from sales of premises and equipment 41 22
Proceeds from sales of other real estate owned 922 406
--------- ---------
Net cash (used in) provided from investing activities (65,301) (37,161)
--------- ---------
Financing activities:
Net increase (decrease) in deposits 94,441 (34,501)
Net increase (decrease) in short-term borrowings (43,825) 68,795
Net proceeds from issuance of common stock 1,213 155
Purchases of treasury stock (918) --
Common stock dividends paid (1,085) (873)
--------- ---------
Net cash (used in) provided from financing activities 49,826 33,576
--------- ---------
Net increase (decrease) in cash and cash equivalents (4,694) 926
Cash and cash equivalents,
Beginning of period 32,406 30,851
--------- ---------
End of period $ 27,712 $ 31,777
========= =========
See notes to consolidated financial statements.
5
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except per share data)
ACCUMULATED TOTAL
OTHER SHARE-
COMMON STOCK CAPITAL RETAINED COMPREHENSIVE TREASURY HOLDERS'
SHARES AMOUNT SURPLUS EARNINGS INCOME (LOSS) STOCK EQUITY
------------------------------------------------------------------------------------
Balance, January 1, 2002 6,121,521 $ 6,122 $ 12,508 $ 69,838 $ 2,389 $ (5,732) $ 85,125
Cash dividends declared:
Common, $0.22 per share -- -- -- (1,261) -- -- (1,261)
Common stock issued:
Employee Stock Option Plan -- -- (429) -- -- 1,593 1,164
Employee Stock Purchase Plan -- -- 5 -- -- 13 18
Dividend Reinvestment Plan -- -- 7 -- -- 24 31
Other comprehensive income
(loss), net of tax -- -- -- -- 123 -- 123
Treasury shares purchased -- -- -- -- -- (918) (918)
Net income -- -- -- 6,481 -- -- 6,481
--------------------------------------------------------------------------------------
Balance, June 30, 2002 6,121,521 $ 6,122 $ 12,091 $ 75,058 $ 2,512 $ (5,020) $ 90,763
======================================================================================
See notes to unaudited consolidated financial statements.
SOUTHWEST BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE, ENDED JUNE,
2002 2001 2002 2001
------- ------- ------- -------
Net income $ 3,403 $ 2,892 $ 6,481 $ 5,521
Other comprehensive income (loss)
Unrealized holding gain (loss) on available
for sale securities 1,525 780 191 2,473
Reclassification adjustment for (gains) losses
arising during the period (1) (196) (3) (253)
------- ------- ------- -------
Other comprehensive income (loss), before tax 1,524 584 188 2,220
Tax (expense) benefit related to items
of other comprehensive income (loss) (521) (237) (65) (888)
------- ------- ------- -------
Other comprehensive income (loss), net of tax 1,003 347 123 1,332
------- ------- ------- -------
Comprehensive income $ 4,406 $ 3,239 $ 6,604 $ 6,853
======= ======= ======= =======
See notes to unaudited consolidated financial statements.
6
SOUTHWEST BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: GENERAL
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include all
information and notes necessary for a complete presentation of financial
position, results of operations, changes in shareholders' equity, cash flows and
comprehensive income in conformity with accounting principles generally accepted
in the United States of America. However, the unaudited consolidated financial
statements include all adjustments which, in the opinion of management, are
necessary for a fair presentation. Those adjustments consist of normal,
recurring adjustments. The results of operations for the three and six months
ended June 30, 2002 and 2001 and the cash flows for the six months ended June
30, 2002 and 2001 should not be considered indicative of the results to be
expected for the full year. These unaudited consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Southwest Bancorp, Inc. Annual Report on Form 10-K
for the year ended December 31, 2001.
On August 29, 2001, Southwest effected a 3:2 stock split of its common stock in
the form of a dividend of 2,040,465 shares. Per share amounts in the report have
been retroactively restated to reflect this stock split.
NOTE 2: PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements include the
accounts of Southwest Bancorp, Inc. ("Southwest") and its wholly owned
subsidiaries, the Stillwater National Bank and Trust Company ("Stillwater
National"), SBI Capital Trust ("SBI Capital") and Business Consulting Group,
Inc. ("BCG"). All significant intercompany transactions and balances have been
eliminated in consolidation.
NOTE 3: RECENTLY ADOPTED ACCOUNTING STANDARD
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 required that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. SFAS No. 141 also includes guidance
on the initial recognition and measurement of goodwill and other intangible
assets arising from business combinations completed after June 30, 2001. SFAS
No. 142 prohibits the amortization of goodwill and intangible assets with
indefinite useful lives. SFAS No. 142 requires that these assets be reviewed for
impairment at least annually. Intangible assets with finite lives will continue
to be amortized over their estimated useful lives. Additionally, SFAS No. 142
requires that goodwill included in the carrying value of equity method
investments no longer be amortized. Southwest adopted SFAS No. 141 and SFAS No.
142 on January 1, 2002 as required. Southwest has completed the first of the
required impairment tests of goodwill and indefinite-lived intangible assets;
the tests indicated no impairment existed on either goodwill or indefinite-lived
intangible assets. Finite-lived intangible assets continue to be amortized as
allowed and consisted of mortgage and other loan servicing rights with a
carrying value of $664,000, none of which showed any impairment.
In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of;
however, it retained the fundamental provisions of the Statement related to the
recognition and measurement of the impairment of long-lived assets to be "held
and used." In addition, SFAS No. 144 provided more guidance on estimating cash
flows when performing a recoverability test, required that a long-lived asset to
be disposed of other than by sale (e.g. abandoned) be classified as "held and
used" until it is disposed of, and established more restrictive criteria to
classify an asset as "held for sale." Southwest adopted SFAS No. 144 on January
1, 2002. Adoption of SFAS No. 144 did not have a material impact on Southwest's
results of operations or financial position.
7
NOTE 4: ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is shown below for the indicated
periods.
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 2002 DECEMBER 31, 2001
------------- -----------------
(Dollars in thousands)
Balance at beginning of period $ 11,492 $ 12,125
Loans charged-off:
Real estate mortgage 410 445
Real estate construction -- 99
Commercial 1,360 4,364
Installment and consumer 272 621
----------- ---------
Total charge-offs 2,042 5,529
Recoveries:
Real estate mortgage 69 54
Real estate construction -- 22
Commercial 42 574
Installment and consumer 65 246
----------- ---------
Total recoveries 176 896
----------- ---------
Net loans charged-off 1,866 4,633
Provision for loan losses 2,525 4,000
----------- ---------
Balance at end of period $ 12,151 $ 11,492
=========== =========
Loans outstanding:
Average $ 970,120 $ 938,278
End of period 1,007,745 931,046
Net charge-offs to total average loans (annualized) 0.39% 0.49%
Allowance for loan losses to total loans 1.21% 1.23%
Nonperforming assets and other risk elements of the loan portfolio are shown
below as of the indicated dates.
AT AT
JUNE 30, 2002 DECEMBER 31, 2001
------------- -----------------
(Dollars in thousands)
Nonaccrual loans (1) $7,206 $7,291
Past due 90 days or more (2) 1,320 1,935
----------- ---------
Total nonperforming loans 8,526 9,226
Other real estate owned 205 640
----------- ---------
Total nonperforming assets $8,731 $9,866
=========== =========
Nonperforming loans to loans receivable 0.85% 0.99%
Allowance for loan losses to nonperforming loans 142.52% 124.56%
Nonperforming assets to loans receivable and
other real estate owned 0.87% 1.06%
(1) The government-guaranteed portion of loans included in these totals was
$1.5 million (2002) and $208 (2001).
(2) The government-guaranteed portion of loans included in these totals was
$13 (2002) and $232 (2001).
8
Southwest makes provisions for loan losses in amounts necessary to maintain the
allowance for loan losses at the level Southwest deems appropriate. The
allowance is based on careful, continuous review and evaluation of the credit
portfolio and ongoing, quarterly assessments of the probable losses inherent in
the loan and lease portfolio, and to a lesser extent, unused commitments to
provide financing. Southwest's systematic methodology for assessing the
appropriateness of the allowance includes determination of a formula allowance,
specific allowances and an unallocated reserve. The formula allowance is
calculated by applying loss factors to corresponding categories of outstanding
loans and leases. Loss factors generally are based on Southwest's historical
loss experience in the various portfolio categories over the prior six quarters
or four quarters, but may be adjusted for categories where six and four quarter
loss experience is historically unusual. The use of these loss factors is
intended to reduce the differences between estimated losses inherent in the
portfolio and observed losses. Formula allowances also are established for
credits that do not have specific allowances according to the application of
credit risk factors. These factors are set by management to reflect its
assessment of the relative level of risk inherent in each grade. Specific
allowances are established in cases where management has identified significant
conditions or circumstances related to a credit that management believes
indicate the probability that a loss may be incurred in an amount different from
the amount determined by application of the formula allowance. The allowance for
loan losses related to loans that are identified for evaluation of impairment is
based on discounted cash flows using the loan's initial effective interest rate
or the fair value of the collateral for certain collateral dependent loans. The
unallocated allowance is based upon management's evaluation of various factors
that are not directly measured in the determination of the formula and specific
allowances. These factors may include general economic and business conditions
affecting lending areas, credit quality trends (including trends in
delinquencies and nonperforming loans expected to result from existing
conditions), loan volumes and concentrations, specific industry conditions
within portfolio categories, recent loss experience in particular loan
categories, duration of the current business cycle, bank regulatory examination
results, findings of internal credit examiners, and management's judgment with
respect to various other conditions including credit administration and
management and the quality of risk identification systems. Management reviews
these conditions quarterly. During the first six months of 2002, there were no
changes in estimation methods or assumptions that affected Southwest's
methodology for assessing the appropriateness of the allowance.
Management strives to carefully monitor credit quality and to identify loans
that may become nonperforming. At any time, however, there are loans included in
the portfolio that will result in losses to Southwest, but that have not been
identified as nonperforming or potential problem loans. Because the loan
portfolio contains a significant number of commercial and commercial real estate
loans with relatively large balances, the unexpected deterioration of one or a
few of such loans may cause a significant increase in nonperforming assets, and
may lead to a material increase in charge-offs and the provision for loan losses
in future periods.
NOTE 5: LOANS RECEIVABLE
Southwest extends commercial and consumer credit primarily to customers in the
State of Oklahoma, but its commercial lending operations are concentrated in the
Stillwater, Tulsa, and Oklahoma City areas of the state. As a result, the
collectibility of Southwest's loan portfolio can be affected by changes in the
general economic conditions in the state and in those metropolitan areas. At
June 30, 2002 and December 31, 2001, substantially all of Southwest's loans are
collateralized with real estate, inventory, accounts receivable and/or other
assets, or are guaranteed by agencies of the United States Government.
At June 30, 2002, loans to individuals and businesses in the healthcare industry
totaled approximately $171.7 million, or 17% of total loans. Southwest does not
have any other concentrations of loans to individuals or businesses involved in
a single industry totaling 5% or more of total loans.
The principal balance of loans for which accrual of interest has been
discontinued totaled approximately $7.2 million at June 30, 2002. During the
first six months of 2002, $110,000 in interest income was received on
nonaccruing loans. If interest on those loans had been accrued, additional total
interest income of $405,000 would have been recorded.
9
NOTE 6: LONG-TERM DEBT
The guaranteed preferred beneficial interests in Southwest's subordinated
debentures represent interests in 9.30% subordinated debentures ("Subordinated
Debentures"), due July 31, 2027, issued by Southwest to its subsidiary, SBI
Capital, in connection with SBI Capital's Cumulative Trust Preferred Securities
(the "Preferred Securities"). The Subordinated Debentures and related payments
are SBI Capital's only assets. The Preferred Securities meet the regulatory
criteria for Tier I capital, subject to Federal Reserve guidelines that limit
the amount of the Preferred Securities and cumulative perpetual preferred stock
to an aggregate of 25% of Tier I capital.
NOTE 7: EARNINGS PER SHARE
Basic earnings per share is computed based upon net income divided by the
weighted average number of shares outstanding during each period. Diluted
earnings per share is computed based upon net income divided by the weighted
average number of shares outstanding during each period adjusted for the effect
of dilutive potential shares calculated using the treasury stock method. At June
30, 2002, there were no antidilutive options to purchase common shares. At June
30, 2001, there were 180,000 antidilutive options to purchase shares.
The following is a reconciliation of the shares used in the calculations of
basic and diluted earnings per share:
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Weighted average shares outstanding:
Basic earnings per share 5,732,589 5,698,049 5,717,591 5,694,174
Effect of dilutive securities:
Stock options 297,363 137,687 267,930 132,069
--------- --------- --------- ---------
Weighted average shares outstanding:
Diluted earnings per share 6,029,952 5,835,736 5,985,521 5,826,243
========= ========= ========= =========
NOTE 8: SHAREHOLDERS' EQUITY
STOCK SPLIT
On August 29, 2001, Southwest effected a 3:2 stock split of its common stock in
the form of a dividend of 2,040,465 shares. Per share amounts in the report have
been retroactively restated to reflect this stock split.
SHARE REPURCHASE PROGRAM
In March 2001, Southwest authorized the repurchase of up to 5% of its current
outstanding common stock in the period ending March 31, 2002. As of March 31,
2002, Southwest had purchased 86,870 shares under this program, at an average
price of $18.02 per share. These repurchases reduced shareholders' equity by
$1.6 million.
In March 2002, Southwest authorized the repurchase of up to an additional 5% of
its current outstanding common stock. Share repurchases under the current
program are expected to be made primarily on the open market, from time to time,
until March 31, 2003, or earlier termination of the repurchase program by the
Board. Repurchases under the program will be made at the discretion of
management based upon market, business, legal, accounting and other factors. As
of June 30, 2002, no share repurchases had been made under this program.
SHAREHOLDER RIGHTS PLAN
On April 22, 1999, Southwest adopted a Rights Plan designed to protect its
shareholders against acquisitions that the Board of Directors believes are
unfair or otherwise not in the best interests of Southwest and its shareholders.
Under the Rights Plan, each holder of record of Southwest's common stock, as of
the close of business on April 22,
10
1999, received one right per common share. The rights generally become
exercisable if an acquiring party accumulates, or announces an offer to acquire,
10% or more of Southwest's voting stock. The rights will expire on April 22,
2009. Each right will entitle the holder (other than the acquiring party) to
buy, at the right's then current exercise price, Southwest's common stock or
equivalent securities having a value of twice the right's exercise price. The
exercise price of each right was initially set at $73.34. In addition, upon the
occurrence of certain events, holders of the rights would be entitled to
purchase, at the then current exercise price, common stock or equivalent
securities of an acquiring entity worth twice the exercise price. Under the
Rights Plan, Southwest also may exchange each right, other than rights owned by
an acquiring party, for a share of its common stock or equivalent securities.
SOUTHWEST BANCORP, INC.
AVERAGE BALANCES, YIELDS AND RATES
(Dollars in thousands)
FOR THE SIX MONTHS ENDED JUNE 30,
2002 2001
----------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE YIELD/RATE BALANCE YIELD/RATE
----------------------------------------------------------
ASSETS:
Loans receivable $ 970,120 6.74% $ 937,098 8.87%
Investment securities 217,318 5.47 234,090 5.98
Other interest-earning assets 1,254 1.77 724 5.01
------------ -----------
Total interest-earning assets 1,188,692 6.50 1,171,912 8.29
Noninterest-earning assets 52,365 51,966
------------ -----------
Total assets $ 1,241,057 $ 1,223,878
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing demand $ 51,247 0.67% $ 48,264 2.12%
Money market accounts 185,085 2.12 122,054 4.24
Savings accounts 5,593 0.50 5,292 1.98
Time deposits 584,895 3.37 643,881 6.07
------------ -----------
Total interest-bearing deposits 826,820 2.90 819,491 5.54
Short-term borrowings 175,903 2.87 181,278 4.73
Long-term debt 25,013 9.30 25,013 9.30
------------ -----------
Total interest-bearing liabilities 1,027,736 3.06 1,025,782 5.49
Noninterest-bearing demand 113,510 106,486
Other noninterest-bearing liabilities 13,142 15,836
Shareholders' equity 86,669 75,774
------------ -----------
Total liabilities and shareholders' equity $ 1,241,057 $ 1,223,878
============ ===========
Interest rate spread 3.44% 2.80%
==== ====
Net interest margin (1) 3.86% 3.48%
==== ====
Ratio of average interest-earning assets
to average interest-bearing liabilities 115.66% 114.25%
============ ===========
(1) Net interest margin = net interest income / total interest-earning assets
11
SOUTHWEST BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements. This Management's Discussion and Analysis of
financial condition and results of operations and other portions of this report
include forward-looking statements such as: statements of Southwest's goals,
intentions, and expectations; estimates of risks and of future costs and
benefits; assessments of loan quality, and probable loan losses; assessments of
the effects on Southwest's performance of possible Federal Reserve actions to
change interest rates; 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 and other economic conditions; future laws and
regulations; and a variety of other matters. 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 its future results.
You should read this Management's Discussion and Analysis of Southwest's
consolidated financial condition and results of operations in conjunction with
Southwest's unaudited consolidated financial statements and the accompanying
notes.
On August 29, 2001, Southwest effected a 3:2 stock split of its common stock in
the form of a dividend of 2,040,465 shares. Per share amounts in the report have
been retroactively restated to reflect this stock split.
GENERAL
Southwest Bancorp, Inc. ("Southwest") is a financial holding company
headquartered in Stillwater, Oklahoma. Southwest and its subsidiary, the
Stillwater National Bank and Trust Company ("Stillwater National"), are
independent, Oklahoma institutions, and are not controlled by out of state
organizations or individuals.
Southwest offers a broad range of commercial and consumer banking and other
financial services through full service offices in Stillwater, Oklahoma City,
Tulsa and Chickasha, Oklahoma. Southwest devotes substantial efforts to
marketing and providing services to local businesses, their primary employees,
and to other managers and professionals living and working in Southwest's
Oklahoma market areas. Southwest has developed a marketing and delivery system
that does not rely on an extensive branch network.
Southwest has established and pursued a strategy of independent operation for
the benefit of all of its shareholders, and has capitalized on its position as
an Oklahoma owned and operated banking organization to increase its banking
business. Southwest has grown from $434 million in assets since becoming a
public company at year-end 1993, to $1.27 billion at June 30, 2002, without
acquiring other financial institutions. Southwest considers acquisitions of
other financial institutions and other companies, however, from time to time,
although it does not have any specific agreements or understandings for any such
acquisition at present. Southwest also considers, from time to time, the
establishment of new lending, banking and other offices in additional geographic
markets, and recently established lending offices in the Wichita, Kansas and
Dallas, Texas metropolitan areas. Southwest also extends loans to borrowers in
Oklahoma and neighboring states through participations with correspondent banks.
12
FINANCIAL CONDITION
TOTAL ASSETS
Southwest's total assets were $1.27 billion at June 30, 2002 and $1.22 billion
at December 31, 2001.
LOANS
Total loans, including loans held for sale, were $1.01 billion at June 30, 2002,
an 8% increase ($76.7 million) from December 31, 2001 as a result of growth in
business lending. Southwest experienced increases in the categories of
commercial real estate mortgages ($60.7 million, or 20%), real estate
construction loans ($17.5 million, or 19%) and commercial and industrial loans
($5.4 million, or 2%). These increases in business loans were offset by
reductions in residential mortgage loans ($5.0 million, or 5%), other consumer
loans ($1.0 million, or 4%) and government-guaranteed student loans ($919,000,
or 1%). Loans held for sale, consisting of certain residential mortgages and
business loans, decreased $4.2 million, or 33%, while portfolio loans increased
$80.9 million, or 9%.
Management determines the appropriate level of the allowance for loan losses
using a systematic methodology. See Note 4, Allowance for Loan Losses, in the
Notes to Unaudited Consolidated Financial Statements. The allowance for loan
losses increased by $659,000, or 6%, from December 31, 2001 to June 30, 2002. At
June 30, 2002, the allowance for loan losses was $12.2 million, or 1.21% of
total loans and 142.52% of nonperforming loans, compared to $11.5 million, or
1.23% of total loans and 124.56% of nonperforming loans, at December 31, 2001.
(See "Results of Operations-Provision for Loan Losses.")
DEPOSITS AND SHORT-TERM BORROWINGS
Southwest's deposits were $999.2 million at June 30, 2002, an increase of $94.4
million, or 10%, from $904.8 million at December 31, 2001. Increases occurred in
all categories of deposits; money market accounts increased $53.9 million, or
34%, time deposits increased $33.5 million, or 6%, interest-bearing demand
accounts increased $5.4 million, or 11%, and savings accounts increased
$122,000, or 2%. A $43.8 million, or 22%, decrease in short-term borrowings
during the first six months of 2002 partially offset the same period increase in
deposit funding.
SHAREHOLDERS' EQUITY
Shareholders' equity increased by $5.6 million, or 7%, due primarily to earnings
for the first six months of 2002, stock option exercises and an increase in
accumulated other comprehensive income (net, after tax, unrealized gains on
investment securities available for sale), offset in part by common stock
dividends and treasury share purchases. At June 30, 2002, Southwest and
Stillwater National continued to exceed all applicable regulatory capital
requirements.
RESULTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2002 and 2001
NET INCOME
For the first six months of 2002, Southwest recorded net income of $6.5 million.
This was $960,000, or 17%, more than the $5.5 million in net income recorded for
the first six months of 2001. Average shares outstanding were 5,717,591 for the
first six months of 2002 and 5,694,174 for the first six months of 2001. Basic
and diluted earnings per share increased to $1.13 and $1.08 per share for the
first six months of 2002 from $0.97 and $0.95 per share for the same period in
2001, respectively.
Net interest income increased $2.5 million, or 13%, for the first six months of
2002 compared to the same period in 2001. This increase in net interest income
as well as a $568,000, or 12%, increase in other income was partially offset by
a $938,000, or 6%, increase in other expense, a $575,000, or 29%, increase in
the provision for loan
13
losses and a $634,000, or 24%, increase in taxes on income. For the first six
months of 2002, the return on average total equity was 15.08% compared to a
14.69% return on average total equity for the first six months of 2001.
NET INTEREST INCOME
Net interest income increased to $22.8 million for the first six months of 2002
from $20.2 million for the same period in 2001 as the $9.8 million, or 20%,
decline in interest income was more than offset by a $12.4 million, or 44%,
reduction in interest expense. Yields on Southwest's interest-earning assets
declined by 179 basis points, and the rates paid on Southwest's interest-bearing
liabilities declined by 243 basis points, resulting in an increase in the
interest rate spread to 3.44% for the first six months of 2002 from 2.80% for
the first six months of 2001. Net interest margin also increased from 3.48% to
3.86%. The ratio of average interest-earning assets to average interest-bearing
liabilities increased to 115.66% for the first six months of 2002 from 114.25%
for the first six months of 2001, primarily due to increases in average loans
outstanding, noninterest-bearing demand deposits, shareholders' equity and other
sources of noninterest-bearing funds.
Total interest income for the first six months of 2002 was $38.3 million, a 20%
decline from $48.2 million during the same period in 2001. The principal factor
in the decline of interest income was the 179 basis point reduction in the yield
earned on interest-earning assets, which was partially offset by the $16.8
million increase in average interest-earning assets. Southwest's average loans
increased $33.0 million, or 4%, and the related yield was reduced to 6.74% for
the first six months of 2002 from 8.87% in 2001. During the same period, average
investment securities declined $16.8 million, or 7%, and the related yield was
reduced to 5.47% from 5.98%.
Total interest expense for the first six months of 2002 was $15.6 million, a
decline of 44% from $27.9 million for the same period in 2001. The decline in
total interest expense can be attributed to the 243 basis point reduction in the
rates paid on interest-bearing liabilities. Rates paid on deposits decreased for
all categories.
The Federal Reserve's numerous actions to decrease interest rates during 2001
negatively affected the net interest margins of many banks, as interest rates on
earning assets declined more rapidly than rates paid on interest-bearing
liabilities. The Federal Reserve has not changed the benchmark federal funds
rate since December 12, 2001, however, rates on assets and liabilities have
continued to decline slightly during 2002. The current, more stable, rate
environment has created improved bank net interest margins.
OTHER INCOME
Other income increased by $568,000, or 12%, for the first six months of 2002
compared to the same period of 2001 primarily as a result of a $586,000, or 18%,
increase in service charges, a $208,000, or 78%, increase in other noninterest
income and a $24,000, or 2%, increase in gains on sales of loans. These
increases were partially offset by a reduction in gains on sales of available
for sale investment securities of $250,000, or 99%. The increase in service
charges was primarily due to additional deposit accounts as reflected by the
significant increases in noninterest-bearing demand, interest-bearing demand and
money market account balances at June 30, 2002 as compared to December 31, 2001.
OTHER EXPENSES
Southwest's other expenses increased $938,000, or 6%, for the first six months
of 2002 compared to the same period in 2001. This increase was primarily the
result of a $463,000, or 6%, increase in salaries and employee benefits, a
$240,000, or 7%, increase in occupancy expense and a $236,000, or 6%, increase
in general and administrative expense.
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 2002 and 2001
NET INCOME
For the second quarter of 2002, Southwest recorded net income of $3.4 million.
This was $511,000, or 18%, more than the $2.9 million in net income recorded for
the second quarter of 2001. Average shares outstanding were
14
5,732,589 for the second quarter of 2002 and 5,698,049 for the same period in
2001. Basic and diluted earnings per share increased to $0.59 and $0.56 per
share for the second quarter of 2002 from $0.51 and $0.50 per share for the same
period in 2001, respectively.
Net interest income increased $1.3 million, or 13%, for the second quarter of
2002 compared to the same period in 2001. This increase in net interest income
as well as a $106,000, or 4%, increase in other income was offset by a $374,000,
or 5%, increase in other expense, a $150,000, or 13%, increase in the provision
for loan losses and a $397,000, or 31%, increase in taxes on income. For the
second quarter of 2002, the return on average total equity was 15.62% compared
to a 15.01% return on average total equity for the second quarter of 2001.
NET INTEREST INCOME
Net interest income increased to $11.7 million for the second quarter of 2002
from $10.4 million for the same period in 2001 as the $4.1 million, or 18%,
decline in interest income was more than offset by a $5.5 million, or 42%,
reduction in interest expense. Yields on Southwest's interest-earning assets
declined by 155 basis points, and the rates paid on Southwest's interest-bearing
liabilities declined by 217 basis points, resulting in an increase in the
interest rate spread to 3.50% for the second quarter of 2002 from 2.88% for the
second quarter of 2001. Net interest margin also increased from 3.53% to 3.90%.
The ratio of average interest-earning assets to average interest-bearing
liabilities increased to 115.69% for the second quarter of 2002 from 114.57% for
the second quarter of 2001.
Total interest income for the second quarter of 2002 was $19.4 million, an 18%
decline from $23.5 million during the same period in 2001. The principal factor
in the decline of interest income was the 155 basis point reduction in the yield
earned on interest-earning assets, which was partially offset by the $25.2
million increase in average interest-earning assets. Southwest's average loans
increased $45.6 million, or 5%, and the related yield was reduced to 6.68% for
the second quarter of 2002 from 8.55% in 2001. During the same period, average
investment securities declined $20.5 million, or 9%, and the related yield was
reduced to 5.44% from 5.85%.
Total interest expense for the second quarter of 2002 was $7.7 million, a
decline of 42% from $13.1 million for the same period in 2001. The decline in
total interest expense can be attributed to the 217 basis point reduction in the
rates paid on interest-bearing liabilities. Rates paid on deposits decreased for
all categories.
OTHER INCOME
Other income increased by $106,000, or 4%, for the second quarter of 2002
compared to the same period of 2001 primarily as a result of a $321,000, or 19%,
increase in service charges and a $61,000, or 33%, increase in other noninterest
income. These increases in other income were partially offset by a $195,000, or
99%, decrease in gains on sales of available for sale investment securities and
an $81,000, or 13%, decrease in gains on sales of loans.
OTHER EXPENSES
Southwest's other expenses increased $374,000, or 5%, for the second quarter of
2002 compared to the same period in 2001. This increase was primarily the result
of a $262,000, or 6%, increase in salaries and employee benefits, and a
$142,000, or 9%, increase in occupancy expense.
* * * * * * *
PROVISION FOR LOAN LOSSES
Southwest makes provisions for loan losses in amounts deemed necessary to
maintain the allowance for loan losses at an appropriate level. An appropriate
level of the allowance for loan losses is determined by management using a
systematic methodology. See Note 4, Allowance for Loan Losses, in the Notes to
Unaudited Consolidated Financial Statements for additional information.
15
The allowance for loan losses of $12.2 million increased $659,000, or 6%, from
year-end 2001, while total nonperforming loans decreased by $700,000, or 8%. The
decrease in nonperforming loans was primarily the result of net charge-offs,
offset by the classification of watch list credits as nonperforming, the
resolution of other nonperforming loans and other, typical, activity in the
portfolio. Total nonperforming assets of $8.7 million (which includes other real
estate owned) decreased by $1.1 million, or 12%, and equaled 0.87% of total
loans and other real estate, compared to 1.06% at December 31, 2001.
As shown in Note 4, total nonperforming loans at June 30, 2002 represented 0.85%
of total loans, compared to $9.2 million, or 0.99% of total loans, at December
31, 2001.
TAXES ON INCOME
Southwest's income tax expense was $3.3 million and $2.6 million for the first
six months of 2002 and 2001 and $1.7 million and $1.3 million for the second
quarters of 2002 and 2001, respectively. Southwest's effective tax rates have
been lower than federal and state statutory rates primarily because of
tax-exempt income on municipal obligations and loans and the organization in
July 2001 of a real estate investment trust.
LIQUIDITY
Liquidity is measured by a financial institution's ability to raise funds
through deposits, borrowed funds, capital, or the sale of highly marketable
assets such as residential mortgage loans and available for sale investments.
Southwest's portfolio of government-guaranteed student loans and SBA loans are
also readily salable. Additional sources of liquidity, including cash flow from
the repayment of loans, are also considered in determining whether liquidity is
satisfactory. Liquidity is also achieved through growth of deposits and liquid
assets, and accessibility to the capital and money markets. These funds are used
to meet deposit withdrawals, maintain reserve requirements, fund loans, and
operate the organization.
Southwest has available various forms of short-term borrowings for cash
management and liquidity purposes. These forms of borrowings include federal
funds purchased, securities sold under agreements to repurchase, and borrowings
from the Federal Reserve Bank ("FRB"), the Student Loan Marketing Association
("SLMA"), the F&M Bank of Tulsa ("F&M"), and the Federal Home Loan Bank of
Topeka ("FHLB"). Stillwater National also carries interest-bearing demand notes
issued by the U.S. Treasury in connection with the Treasury Tax and Loan note
program; the outstanding balance of those notes was $2.7 million at June 30,
2002. Stillwater National has approved federal funds purchase lines totaling
$20.0 million with three other banks; no amounts were outstanding on these lines
at June 30, 2002. In addition, Stillwater National has available a $35.0 million
line of credit from the SLMA and a $253.4 million line of credit from the FHLB.
Borrowings under the SLMA line would be secured by student loans. Borrowings
under the FHLB line would be secured by all unpledged securities and other
loans. The SLMA line expires April 20, 2007; no amount was outstanding on this
line at June 30, 2002. The FHLB line of credit had an outstanding balance of
$110.7 million at June 30, 2002. Stillwater National also has available
unsecured brokered certificate of deposit lines of credit in connection with its
retail certificate of deposit program from Merrill Lynch & Co., Morgan Stanley
Dean Witter, Salomon Smith Barney, Prudential Securities, Inc., PaineWebber,
Inc., RBC Dain Rauscher, Inc. and CountryWide Securities that total $675.0
million. At June 30, 2002, $172.4 million in these retail certificates of
deposit were included in total deposits.
Stillwater National sells securities under agreements to repurchase with
Stillwater National retaining custody of the collateral. Collateral consists of
direct obligations of U.S. Government Agency issues, which are designated as
pledged with Stillwater National's safekeeping agent. These transactions are for
one-to-four day periods.
During the first six months of 2002, the only categories of short-term
borrowings whose averages exceeded 30% of ending shareholders' equity were
repurchase agreements and funds borrowed from the FHLB.
16
JUNE 30, 2002 JUNE 30, 2001
----------------------------- -----------------------------
FUNDS FUNDS
REPURCHASE BORROWED REPURCHASE BORROWED
AGREEMENTS FROM THE FHLB AGREEMENTS FROM THE FHLB
----------------------------- -----------------------------
(DOLLARS IN THOUSANDS)
Amount outstanding at end of period $ 38,070 $110,745 $ 48,003 $168,590
Weighted average rate paid at end of period 1.21% 3.70% 3.83% 4.34%
Average Balance:
For the three months ended $ 47,847 $119,434 $ 58,140 $141,814
For the six months ended $ 49,819 $124,610 $ 54,687 $124,940
Average Rate Paid:
For the three months ended 1.21% 3.62% 3.83% 4.39%
For the six months ended 1.21% 3.55% 4.43% 4.85%
Maximum amount outstanding at any month end $ 57,994 $141,500 $ 58,274 $168,590
During the first six months of 2002, cash and cash equivalents declined by $4.7
million. This reduction was the net result of cash used in net loan origination
and other investing activities of $65.3 million offset in part by cash provided
from financing activities of $49.8 million (primarily from an increase in
deposits) and by cash provided from operating activities of $10.8 million.
During the first six months of 2001, cash and cash equivalents increased by
$926,000. This increase was the net result of cash used in net loan origination
and other investing activities of $37.2 million offset in part by cash provided
from financing activities of $33.6 million (primarily from an increase in
short-term borrowings) and cash provided from operating activities of $4.5
million.
CAPITAL RESOURCES
In the first six months of 2002, total shareholders' equity increased $5.6
million, or 7%. Earnings, net of cash dividends declared on common stock,
contributed $5.2 million to shareholders' equity during this six-month period.
The sale or issuance of common stock through the dividend reinvestment plan, the
employee stock purchase plan and the employee stock option plan contributed an
additional $1.2 million to shareholders' equity in the first six months of 2002.
These increases were offset in part by purchases of treasury shares totaling
$918,000. Accumulated comprehensive income, consisting of net unrealized gains
(losses) on investment securities available for sale (net of tax) increased to
$2.5 million at June 30, 2002 compared to $2.4 million at December 31, 2001.
Bank holding companies are required to maintain capital ratios in accordance
with guidelines adopted by the Federal Reserve Board ("FRB"). The guidelines are
commonly known as Risk-Based Capital Guidelines. At June 30, 2002, Southwest
exceeded all applicable capital requirements, having a total risk-based capital
ratio of 11.94%, a Tier I risk-based capital ratio of 10.78%, and a leverage
ratio of 9.00%. As of June 30, 2002, Stillwater National also met the criteria
for classification as a "well-capitalized" institution under the prompt
corrective action rules promulgated under the Federal Deposit Insurance Act.
Designation of the bank as a "well-capitalized" institution under these
regulations does not constitute a recommendation or endorsement of Stillwater
National by Federal bank regulators.
Southwest declared a dividend of $0.11 per common share payable on July 1, 2002
to shareholders of record as of June 18, 2002.
17
EFFECTS OF INFLATION
The unaudited consolidated financial statements and related unaudited
consolidated financial data presented herein have been prepared in accordance
with accounting principles generally accepted in the United States of America
and practices within the banking industry which require the measurement of
financial position and operating results in terms of historical dollars without
considering fluctuations in the relative purchasing power of money over time due
to inflation. Unlike most industrial companies, virtually all the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation.
* * * * * * *
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management has determined that no additional disclosures are necessary to assess
changes in information about market risk that have occurred since December 31,
2001.
18
PART II. OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security holders
At Southwest's annual shareholders' meeting, held on April 25,
2002, the shareholders of Southwest elected five Directors
with terms expiring at the 2004 annual shareholders' meeting.
The Directors elected and the shareholder vote in the election
of each Director was as follows:
For Withheld
--- --------
J. Berry Harrison 5,225,150 22,316
Erd M. Johnson 5,224,775 22,691
Betty B. Kerns 5,166,939 80,527
Russell W. Teubner 5,225,150 22,316
Other Directors continuing in office following the annual
shareholders' meeting were James E. Berry II, Thomas D.
Berry, Joe Berry Cannon, Rick Green, David P. Lambert,
Linford R. Pitts, Robert B. Rodgers, and Stanley R. White.
Item 5. Other information
None
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits.
Exhibit 99.1 Certification of Principal Executive Officer
pursuant to 18 U.S.C. Section 1350
Exhibit 99.2 Certification of Principal Financial Officer
pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K.
None
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHWEST BANCORP, INC.
(Registrant)
By: /s/ Rick Green August 12, 2002
---------------------------------------------- ----------------------
Rick Green Date
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Kerby E. Crowell August 12, 2002
---------------------------------------------- ----------------------
Kerby E. Crowell Date
Executive Vice President, Chief Financial
Officer and Assistant Secretary
(Principal Financial and Accounting Officer)
20