<PAGE>
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number - 000-22007
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Fort Bend Holding Corporation Employee Stock Ownership Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Southwest Bancorporation of Texas, Inc.
4400 Post Oak Parkway
Houston, Texas 77027
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
-------------
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Independent Accountants' Report 1
Financial Statements:
Statement of Net Assets Available for
Benefits as of December 31, 1998 and 1997 2
Statement of Changes in Net Assets Available
for Benefits, for the years ended
December 31, 1998, 1997 and 1996 3-5
Notes to Financial Statements 6-12
Supplemental Schedule:
Item 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1998 13
</TABLE>
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Administrator of the
Fort Bend Holding Corporation
Employee Stock Ownership Plan:
We have audited the accompanying statement of net assets available for benefits
of the Fort Bend Holding Corporation Employee Stock Ownership Plan as of
December 31, 1998, and the related statement of changes in net assets available
for benefits for the years ended December 31, 1998 and 1996. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits. The
financial statements of the Fort Bend Holding Corporation Employee Stock
Ownership Plan as of December 31, 1997 were audited by other auditors whose
report dated June 24, 1998 expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Fort Bend
Holding Corporation Employee Stock Ownership Plan as of December 31, 1998, and
the changes in net assets available for benefits for the years ended December
31, 1998 and 1996 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule is presented
for purposes of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Houston, Texas
June 25, 1999
/s/ Ham, Langston & Brezina, L.L.P.
-1-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
--------------
<TABLE>
<CAPTION>
ASSETS: 1998
---------------------------------------------------
ALLOCATED UNALLOCATED TOTAL
---------- ----------- ----------
<S> <C> <C> <C>
Investments in Fort Bend Holding
Corp. common stock, at fair
value $2,889,554 $ - $2,889,554
Cash and cash equivalents 72,671 - 72,671
Accounts receivable-employer
contributions - 39,563 39,563
---------- ---------- ----------
Total assets 2,962,225 39,563 3,001,788
LIABILITIES:
Loan payable - 39,359 39,359
Other payable - 97 97
---------- ---------- ----------
Total liabilities - 39,456 39,456
---------- ---------- ----------
Net assets available for benefits $2,962,225 $ 107 $2,962,332
========== ========== ==========
ASSETS: 1997
---------------------------------------------------
ALLOCATED UNALLOCATED TOTAL
---------- ----------- ----------
Investments in Fort Bend Holding
Corp. common stock, at fair
value $2,128,477 $ 454,792 $2,583,269
Cash and cash equivalents 31,529 23 31,552
---------- ----------- ----------
Total assets 2,160,006 454,815 2,614,821
LIABILITIES:
Loan payable - 118,078 118,078
Other payable - 97 97
---------- ----------- ----------
Total liabilities - 118,175 118,175
---------- ----------- ----------
Net assets available for benefits $2,160,006 $ 336,640 $2,496,646
========== =========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
-2-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS FOR THE YEARS ENDED DECEMBER 31,
1998, 1997 AND 1996
-------------
<TABLE>
<CAPTION>
1998
---------------------------------------------------
ALLOCATED UNALLOCATED TOTAL
---------- ----------- ----------
<S> <C> <C> <C>
Investment income:
Net unrealized appreciation in
market value of investments $ 267,037 $ 57,503 $ 324,540
Interest 2,317 359 2,676
Dividends 38,978 8,364 47,342
Employer contributions - 117,418 117,418
Allocation of 20,910 shares of
common stock of Fort Bend
Holding Corporation, at market
value 512,295 - 512,295
---------- ---------- ----------
Total additions 820,627 183,644 1,004,271
---------- ---------- ----------
Interest expense - 7,882 7,882
Distributions to participants 18,408 - 18,408
Allocation of 20,910 shares of
common stock of Fort Bend
Holding Corporation, at market
value - 512,295 512,295
---------- ---------- ----------
Total deductions 18,408 520,177 538,585
---------- ---------- ----------
Net change in assets available
for benefits 802,219 (336,533) 465,686
Net assets available for benefits,
beginning of year 2,160,006 336,640 2,496,646
---------- ---------- ----------
Net assets available for benefits,
end of year $2,962,225 $ 107 $2,962,332
========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
Continued
-3-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS, CONTINUED FOR THE YEARS ENDED
DECEMBER 31, 1998, 1997 AND 1996
-------------
<TABLE>
<CAPTION>
1997
---------------------------------------------------
ALLOCATED UNALLOCATED TOTAL
---------- ----------- ----------
<S> <C> <C> <C>
Investment income:
Net unrealized appreciation in
market value of investments $ 593,747 $ 519,730 $1,113,477
Interest 1,004 108 1,112
Dividends 16,956 9,611 26,567
Employer contributions - 195,768 195,768
Allocation of 34,528 shares of
common stock of Fort Bend
Holding Corporation, at market
value 750,944 - 750,944
---------- ---------- ----------
Total additions 1,362,651 725,217 2,087,868
---------- ---------- ----------
Interest expense - 16,514 16,514
Distributions to participants 24,939 - 24,939
Allocation of 34,528 shares of
common stock of Fort Bend
Holding Corporation, at market
value - 750,944 750,944
---------- ---------- ----------
Total deductions 24,939 767,458 792,397
---------- ---------- ----------
Net change in assets available
for benefits 1,337,712 (42,241) 1,295,471
Net assets available for benefits,
beginning of year 822,294 378,881 1,201,175
---------- ---------- ----------
Net assets available for benefits,
end of year $2,160,006 $ 336,640 $2,496,646
========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
Continued
-4-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS, CONTINUED FOR THE YEARS ENDED
DECEMBER 31, 1998, 1997 AND 1996
-------------
<TABLE>
<CAPTION>
1996
---------------------------------------------------
ALLOCATED UNALLOCATED TOTAL
---------- ----------- ----------
<S> <C> <C> <C>
Investment income:
Net unrealized appreciation in
market value of investments $ 159,509 $ 248,049 $ 407,558
Interest 493 3 496
Dividends 7,316 9,707 17,023
Employer contributions - 102,757 102,757
Allocation of 18,058 shares of
common stock of Fort Bend
Holding Corporation, at market
value 223,468 - 223,468
---------- ---------- ----------
Total additions 390,786 360,516 751,302
---------- ---------- ----------
Interest expense - 24,756 24,756
Distributions to participants 4,686 - 4,686
Allocation of 18,058 shares of
common stock of Fort Bend
Holding Corporation, at market
value - 223,468 223,468
---------- ---------- ----------
Total deductions 4,686 248,224 252,910
---------- ---------- ----------
Net change in assets available
for benefits 386,100 112,292 498,392
Net assets available for benefits,
beginning of year 436,194 266,589 702,783
---------- ---------- ----------
Net assets available for benefits,
end of year $ 822,294 $ 378,881 $1,201,175
========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
-5-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
-------------
1. PLAN DESCRIPTION AND BASIS OF PRESENTATION
The following description of the Fort Bend Holding Corporation (the
"Company") Employee Stock Ownership Plan (the "Plan") provides only
general information. Participants should refer to the Plan agreement for
a more complete description of the Plan's provisions.
GENERAL
The Company established the Plan effective as of April 1, 1993. The Plan
currently operates as a leveraged employee stock ownership plan ("ESOP")
and is designed to comply with Section 4975(e)(7) and the regulations
thereunder of the Internal Revenue Code of 1986 ("the Code"), as amended,
and is subject to the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, ("ERISA"). The Plan is
administered by a four person committee appointed by the Company's Board
of Directors. First Bankers Trust Company is the Plan's Trustee.
The Plan purchased Company common shares using the proceeds of a bank
borrowing (See Note 6) guaranteed by the Company, and hold the stock in a
trust established under the Plan. As the Plan repays the bank borrowing,
an appropriate percentage of stock is allocated to eligible employees'
accounts in accordance with applicable regulations under the Code.
ELIGIBILITY
Employees of the Company and its subsidiaries are generally eligible to
participate in the Plan as of January 1 or July 1 coincident with and
following the completion of twelve consecutive months of service
providing they worked at least 1,000 hours during such plan year.
Participants who have not completed twelve consecutive months and at
least 1,000 hours of service during such plan year or who are not
employed on the last working day of a Plan year are generally not
eligible for an allocation of Company shares for such year. Shares are
allocated in proportion to participant's compensation and vest 100% after
the participant has completed five years of service.
A former participant in the Plan will again become eligible to
participate immediately upon being rehired by the Company, provided the
employee has not incurred a break as defined in the Plan document.
Continued
-6-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------
1. PLAN DESCRIPTION AND BASIS OF PRESENTATION, CONTINUED
FORFEITURES
Forfeitures shall first be made available to reinstate previously
forfeited account balances of participants. Remaining forfeitures shall
be allocated among the participants' accounts in the same proportion that
each participant's compensation bears to total compensation of all
participants for the year. There were no forfeitures during the years
ended December 31, 1998 and 1997.
ALLOCATION
The bank loan is collateralized by the unallocated shares of stock and is
guaranteed by the Company. The lender has no rights against shares once
they are allocated under the ESOP. Accordingly, the financial statements
of the Plan as of December 31, 1998 and 1997 present separately the
assets and liabilities, and the changes therein pertaining to (a) stock
allocated to participants (allocated), and (b) stock not yet allocated to
participants (unallocated).
DISTRIBUTIONS TO PARTICIPANTS
No distributions from the Plan will be made until a participant retires,
dies (in which case, payments shall be made to his or her beneficiary or,
if none, his or her legal representatives), or otherwise terminates
employment with the Company and its subsidiaries unless a participant
attains the age of 70 1/2, at which time they may be subject to mandatory
distributions under ERISA. Distributions are made in cash or, if a
participant elects, in the form of Company common shares plus cash for
any fractional share.
Each participant is entitled to exercise voting rights attributable to
the shares allocated to his or her account and is notified by the Trustee
prior to the time that such rights are to be exercised. The Trustee is
not permitted to vote any share for which instructions have not been
given by a participant.
Continued
-7-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------
1. PLAN DESCRIPTION AND BASIS OF PRESENTATION, CONTINUED
TERMINATION
The Company reserves the right to terminate the Plan at any time, subject
to Plan provisions and ERISA. Upon such termination of the Plan, each
participant is immediately 100% vested. The trust fund will be
distributed to such participant or his or her beneficiary at the time
prescribed by the Plan terms and the Code. Upon termination of the Plan,
the Plan Administrator shall direct the Trustee to pay all liabilities
and expenses of the trust fund and to sell shares of financed stock held
in the loan suspense account to the extent it determines such sale to be
necessary in order to repay the loan. All previously unallocated shares
will be allocated as prescribed by the Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, and
changes therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
method of accounting.
DISTRIBUTIONS TO PARTICIPANTS
Distributions are recorded when made.
Continued
-8-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
INVESTMENT VALUATION AND INCOME RECOGNITION
The common shares of the Company are valued at market on December 31,
1998 and 1997. The Company's stock is publicly traded on the NASDAQ
national market under the symbol "FBHC".
Dividend income is recognized on the ex-dividend date. Purchases and
sales of securities are recorded on a trade-date basis.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation in the market value of its investments
which consist of the realized gains and the unrealized appreciation on
those investments.
3. RISKS AND UNCERTAINTIES
CREDIT RISK
The Plan invests solely in Company stock which is exposed to various
risks, especially market risks. Due to the level of risk associated with
the stock and the level of uncertainty related to changes in the value of
the stock, it is at least reasonably possible that changes in risks in
the near term would materially affect participants' accounts and the
amounts reported in the statement of net assets available for benefits
and the statement of changes in net assets available for benefits. In
addition, due to the level of activity of trades of Company stock, it is
at least reasonably possible that the market value of the stock as a
whole would be different than the quoted price of the stock.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs and hardware with
embedded date technology using two digits to define the applicable year
rather than four. Any programs or hardware that are time sensitive and
have not been determined to be Year 2000 compliant may recognize a date
using "00" as the year 1900 rather than the year 2000. Such improper date
recognition could, in turn, result in erroneous processing of data, or,
in extreme situations, system failure.
Continued
-9-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------
3. RISKS AND UNCERTAINTIES, CONTINUED
IMPACT OF THE YEAR 2000 ISSUE, CONTINUED
In anticipation of the Year 2000 issue, both the Company and the
Custodian implemented Year 2000 programs which included the performance
of inventories of information technology and non- information technology
systems, assessments of potential problem areas, testing of systems for
Year 2000 readiness, and modification of systems that are not Year 2000
compliant.
The Company and the Custodian believe all of their core systems are Year
2000 compliant.
Although the Company and the Custodian expect to be ready to continue
business activities without interruption by a Year 2000 problem, each
recognizes the general uncertainty inherent in the Year 2000 issue, in
part because of the uncertainty about the Year 2000 readiness of third
parties. Under a "worst case Year 2000 scenario", it may be necessary to
temporarily interrupt normal plan activities. The Trustees do not believe
that such circumstances would result in a material adverse impact on Plan
operations. The Company and the Custodian have begun, but not yet
completed, development of contingency plans to deal with the "most likely
worst case Year 2000 scenario". The contingency plans are expected to be
completed during the third quarter of 1999.
The cost of becoming Year 2000 compliant is not expected to be
significant and such cost will be borne by the Company and the Custodian.
4. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated March 1, 1995 that the Plan and related trust are designed
in accordance with applicable sections of the Code. The Plan has been
amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Code. Therefore, they believe that the
Plan continues to be qualified and the related trust continues to be
tax-exempt.
Continued
-10-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------
5. ADMINISTRATION OF PLAN ASSETS
The Plan's assets, which consist of Company common shares and cash and
cash equivalents, are held by the Trustee of the Plan.
Company contributions are held and managed by the Trustee which invests
cash received, interest, and dividend income and makes distributions to
participants. The Trustee also administers the payments of interest and
principal on the loans, which is reimbursed to the Trustee through
contributions as determined by the Company.
Certain administrative functions are performed by officers or employees
of the Company. Administrative expenses for the Trustee's fees are paid
directly by the Company.
6. INVESTMENTS
The Plan's investments at December 31, are presented as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------- ---------------------------
ALLOCATED UNALLOCATED ALLOCATED UNALLOCATED
<S> <C> <C> <C> <C>
Fort Bend Holding Corp.
common shares:
Number of shares 117,941 - 97,861 20,910
Cost $ 589,705 $ - $ 489,305 $ 104,550
Market $2,889,554 $ - $2,128,477 $ 454,792
</TABLE>
7. LOAN PAYABLE
In June 1993, the Plan entered into a $614,250 term loan agreement with a
bank to purchase shares of common stock of the Company. The borrowing is
guaranteed by the Company but does not represent a legally binding
contribution commitment. The loan is collateralized by the unallocated
shares held by the Plan and the lender has no rights against the
allocated shares. The loan agreement provides for the loan to be repaid
over seven years in semi-annual principal payments of $43,875 plus
interest at a variable rate based on the lender's index rate. The loan
interest rate for the year ended December 31, 1998 was 6.5%. Due to the
Company's decision to prepay a portion of their loan before December 31,
1997, the next principal payment is not due until June 1999. Interest
continues to be due semi-annually.
Continued
-11-
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------
8. EMPLOYER CONTRIBUTIONS
The Plan is a noncontributory plan funded by discretionary employer
contributions. The Company's contribution is approved by its board of
directors and is not to exceed the maximum amount deductible under
Section 404 of the Code.
9. SUBSEQUENT EVENTS
On April 1, 1999 the Plan was merged into the Southwest Bank of Texas
401(k) Savings Plan (the "Southwest Plan"). The transferred net assets
have been recognized in the accounts of the Southwest Plan as of April 1,
1999, at their balances as previously carried in the accounts of the
Plan. The total amount of net assets available for benefits transferred
on April 1, 1999 was $2,970,247.
-12-
<PAGE>
SUPPLEMENTAL SCHEDULE
<PAGE>
FORT BEND H0LDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
FOR THE YEAR ENDED DECEMBER 31, 1998
-------------
EIN: 74-0629638
PN: 002
<TABLE>
<CAPTION>
NUMBER OF MARKET
DESCRIPTION OF INVESTMENT SHARES COST (1) VALUE (2)
- ------------------------- --------- ---------- ----------
<S> <C> <C> <C>
Fort Bend Holding Corporation
common stock 117,941 $ 589,705 $2,889,554
========== ==========
</TABLE>
(1) Cost was determined based on historical cost.
(2) Market value was determined based on Fort Bend Holding Corporations's
closing stock price of $24.50 at December 31, 1998.
The accompanying notes are an integral
part of these financial statements.
-13-
<PAGE>
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
FORT BEND HOLDING CORPORATION EMPLOYEE
STOCK OWNERSHIP PLAN
Date: June 29, 1999 /s/ ANTHONY TORENTINOS
-------------------------------------------
Anthony Torentinos
Plan Administrator
-14-
<PAGE>
INDEX TO EXHIBITS
NO. EXHIBITS
- ---- --------
23.1 Consent of Ham, Langston & Brezina, L.L.P.
-15-
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Fort Bend Holding Corporation on Form S-8 of our Report dated June
25, 1999, on our audit of the financial statements of the Fort Bend Holding
Corporation Employee Stock Ownership Plan as of December 31, 1998 and 1997 and
for the years ended December 31, 1998, 1997 and 1996, which report is included
in this Annual Report on Form 11-K.
/s/ Ham, Langston & Brezina, L.L.P.
Houston, Texas
June 29, 1999
