SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
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ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
------------------------
SOUTHWEST BANCORPORATION OF TEXAS, INC.
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
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FINANCIAL STATEMENTS
WITH INDEPENDENT ACCOUNTANTS' REPORT
FOR THE PERIODS ENDED JUNE 11, 1999, DECEMBER 31, 1998 AND 1997
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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PAGE(S)
Independent Accountants' Report 1
Financial Statements:
Statement of Net Assets Available for
Benefits as of June 11, 1999 and
December 31, 1998 2
Statement of Changes in Net Assets Available for Benefits,
for the period ended June 11, 1999 and for the years
ended December 31, 1998 and 1997 3-5
Notes to Financial Statements 6-11
Supplemental Schedule:
Item 27d - Schedule of Reportable Transactions
for the period ended June 21, 1999 12
<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 June
11, 1999 and December 31, 1998, and the related statement of changes in net
assets available for benefits for the period ended June 11, 1999 and the years
ended December 31, 1998 and 1997. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
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.
As further discussed in Note 9, the Plan was merged into the Southwest Bank of
Texas 401(k) Savings Plan effective April 1, 1999.
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 June 11, 1999 and
December 31, 1998, and the changes in net assets available for benefits for the
period ended June 11, 1999 and the years ended December 31, 1998 and 1997 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 complying with the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974 and is not a required part of the basic financial statements. 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.
/S/ Ham, Langston & Brezina, L.L.P.
Houston, Texas
May 26, 2000
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 11, 1999 AND DECEMBER 31, 1998
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ASSETS: JUNE 11, 1999
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ALLOCATED UNALLOCATED TOTAL
---------- ----------- ----------
Investments in Fort Bend Holding
Corp. common stock, at fair
value $ - $ - $ -
Cash and cash equivalents - - -
---------- ----------- ----------
Total assets - - -
LIABILITIES:
Loan payable - - -
Other payable - - -
---------- ----------- ----------
Total liabilities - - -
---------- ----------- ----------
Net assets available for benefits $ - $ - $ -
========== ========== ==========
ASSETS: DECEMBER 31, 1998
--------------------------------------
ALLOCATED UNALLOCATED TOTAL
---------- ----------- ----------
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
========== ========== ==========
* Represents five percent of net assets.
The accompanying notes are an integral part of these
financial statements.
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE PERIOD ENDED JUNE 11, 1999 AND
THE YEARS ENDED DECEMBER 31, 1998 AND 1997
---------------
<TABLE>
<CAPTION>
1999
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ALLOCATED UNALLOCATED TOTAL
---------- ---------- ----------
<S> <C> <C> <C>
Investment income:
Interest $ 1,516 $ - $ 1,516
Dividends 11,827 - 11,827
---------- ---------- ----------
Total additions 13,343 - 13,343
---------- ---------- ----------
Realized loss in market value of
investments 3,726 - 3,726
Interest expense 96 107 203
Other fees 1,500 - 1,500
Transfer of cash to Southwest Bank
of Texas 401(k) Plan 84,418 - 84,418
Transfer of 171,012 shares of common
stock of Southwest Bancorporation
of Texas, Inc., at market value 2,885,828 - 2,885,828
---------- ---------- ----------
Total deductions 2,975,568 107 2,975,675
---------- ---------- ----------
Net change in assets available
for benefits (2,962,225) (107) (2,962,332)
Net assets available for benefits,
beginning of year 2,962,225 107 2,962,332
---------- ---------- ----------
Net assets available for benefits,
end of year $ - $ - $ -
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
Continued
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, CONTINUED
FOR THE PERIOD ENDED JUNE 11, 1999 AND
THE YEARS ENDED DECEMBER 31, 1998 AND 1997
-------------
<TABLE>
<CAPTION>
1998
---------------------------------------
ALLOCATE UNALLOCATED TOTAL
---------- ---------- ----------
<S> <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
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, CONTINUED
FOR THE PERIOD ENDED JUNE 11, 1999 AND
THE YEARS ENDED DECEMBER 31, 1998 AND 1997
-------------
<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.
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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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
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 holds 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.
Effective April 1, 1999 the Company merged with Southwest Bancorporation of
Texas, Inc. Accordingly, on April 1, 1999 the Plan was merged into the
Southwest Bank of Texas 401(k) Savings Plan (the "Southwest Plan") (See
Note 9).
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.
Continued
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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1. PLAN DESCRIPTION AND BASIS OF PRESENTATION, CONTINUED
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.
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 $46,185 of forfeitures during the period ended
June 11, 1999 and 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 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.
Continued
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------
1. PLAN DESCRIPTION AND BASIS OF PRESENTATION, CONTINUED
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.
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 (See Note 9).
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
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<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. 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.
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
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<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 June 11, 1999 and December 31, 1998 are presented
as follows:
1999 1998
----------------------- -----------------------
ALLOCATED UNALLOCATED ALLOCATED UNALLOCATED
--------- ----------- ---------- -----------
Fort Bend Holding Corp.
common shares:
Number of shares - - 117,941 -
Cost $ - $ - $ 589,705 $ -
Market $ - $ - $2,889,554 $ -
Continued
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<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
------------
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. Prior to the merger of this Plan into the Southwest Plan
this loan was paid in full.
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. PLAN TERMINATION
On April 1, 1999 the Plan was merged into the Southwest Plan and, in
accordance with the agreement, the Plan's investment in Fort Bend Holding
Corp. common stock was exchanged for 1.45 times the common stock of
Southwest Bancorporation of Texas, Inc. Upon termination of the Plan, all
of the participants were immediately fully vested in the benefits provided
pursuant to the Plan, and the trustee of the Plan was directed to transfer
the net assets of the Plan to the trustee of the Southwest Plan as soon as
practicable. The transferred net assets have been recognized in the
accounts of the Southwest Plan at their balances as previously carried in
the accounts of the Plan. The total amount of net assets available for
benefits transferred on June 11, 1999 was $2,970,246.
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<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
FORT BEND HOLDING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE PERIOD ENDED JUNE 11, 1999
----------
NUMBER OF PURCHASE SELLING CURRENT
IDENTITY OF PARTY INVOLVED TRANSACTIONS PRICE PRICE VALUE
-------------------------- ------------ ---------- ---------- ----------
Fort Bend Holding Corp.
common stock 2 $ 589,705 $2,063,967*
Southwest Bancorporation of
Texas, Inc. common stock 2 2,063,967 $2,063,967
* Effective April 1, 1999 the Plan was merged into the Southwest Plan and the
Fort Bend Holding Corp. common stock was exchanged for 1.45 times Southwest
Bancorporation common stock. On June 11, 1999 the Southwest Bancorporation
common stock was transferred from this Plan to the Southwest Plan at the
current market value of $2,885,827.
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