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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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
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SOUTHWEST BANCORPORATION OF TEXAS, INC.
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
TABLE OF CONTENTS
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PAGE(S)
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Report of Independent Accountants 1
Financial Statements:
Statement of Net Assets Available for
Benefits as of December 31, 1999 and 1998 2
Statement of Changes in Net Assets Available
for Benefits for the years ended December 31,
1999, 1998 and 1997 3
Notes to Financial Statements 4-10
Supplementary Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1999 11
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1999 12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrative Committee
Southwest Bank of Texas 401(k)
Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Southwest Bank of Texas 401(k) Savings Plan as of December 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
for the three years ended December 31, 1999, 1998 and 1997. These financial
statements are the responsibility of the Plan's 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 audit 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 Southwest Bank
of Texas 401(k) Savings Plan as of December 31, 1999 and 1998, and the changes
in its net assets available for benefits for the years ended December 31, 1999,
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 schedules of assets held
for investment purposes and reportable transactions are presented for purposes
of complying with the Department of Labor Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974 and are
not a required part of the basic financial statements. Such schedules have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated, in all materials respects, in
relation to the basic financial statements taken as a whole.
Houston, Texas
May 26, 2000
/s/ Ham, Langston & Brezina, L.L.P.
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash .............................................. $ 156,293 $ 139,341
Investments:
Money market funds .............................. 4,670 44,057
Common stock .................................... 10,792,463* 3,722,371*
Shares of registered investment companies,
reported at fair value:
American Industries Trust Short Term Income
Fund ........................................ 1,992,387* 681,658*
Fidelity Spartan US Equity Index Fund ......... 2,106,676* 818,341*
Fidelity Puritan Fund ......................... 1,766,803* 1,185,668*
PBHG Growth Fund .............................. -- 759,225*
Fidelity Growth and Income Fund ............... 2,878,803* 2,093,741*
American Industries Trust SMART Aggressive Fund 207,047 118,883
American Industries Trust SMART Moderate Fund . 417,780 292,425
American Industries Trust SMART Conservative
Fund ........................................ 668,585 388,670
AIM Value Fund Class A ........................ 2,478,231* 1,029,965*
Baron Asset Fund .............................. 1,998,752* 499,442
Janus Worldwide Fund .......................... 2,452,522* 897,148*
Loomis Sayles Bond Fund ....................... 407,228 234,112
Yacktman Fund ................................. -- 202,046
Weitz Partners Value Fund ..................... 454,163 --
----------- -----------
Total investments ........................... 28,626,110 12,967,752
Accounts receivable ............................... 8,500 64,080
Loans to participants ............................. 744,439 479,211
----------- -----------
Net assets ................................ 29,535,342 13,650,384
Accounts payable - purchase of securities ......... 34,917 42,521
Accounts payable - taxes withheld ................. -- 999
----------- -----------
Net assets available for benefits ....... $29,500,425 $13,606,864
=========== ===========
</TABLE>
* Represents five percent or more of net assets.
The accompanying notes are an integral
part of these financial statements.
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Interest and/or dividends ............. $ 50,509 $ 79,149 $ 25,648
Net appreciation in fair
value of investments ................ 5,221,286 1,508,069 1,552,289
----------- ----------- -----------
Total investment
income ............................ 5,271,795 1,587,218 1,577,937
----------- ----------- -----------
Contributions:
Transfer in from other plan ........... 7,741,257 1,949,649 --
Employer .............................. 1,379,582 972,277 212,818
Employee .............................. 2,533,874 3,456,964 716,187
----------- ----------- -----------
Total contributions ................. 11,654,713 6,378,890 929,005
----------- ----------- -----------
Total additions ................... 16,926,508 7,966,108 2,506,942
----------- ----------- -----------
Deductions from net assets attributable to:
Benefits to participants ................ 1,032,947 391,578 215,579
Administrative expenses ................. -- -- 233
----------- ----------- -----------
Total deductions .................. 1,032,947 391,578 215,812
----------- ----------- -----------
Increase in net assets available
for benefits ............................ 15,893,561 7,574,530 2,291,130
Net assets available for benefits
at beginning of year .................... 13,606,864 6,032,334 3,741,204
----------- ----------- -----------
Net assets available for benefits
at end of year .......................... $29,500,425 $13,606,864 $ 6,032,334
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the Southwest Bank of Texas (the "Company")
401(k) Savings Plan (the "Plan") (formerly Southwest Bank of Texas National
Association Savings Plan) provides only general information. Participants
should refer to the Plan agreement for a more complete description of the
Plan's provision.
GENERAL
The Plan, adopted by the Company's board of directors and effective
December 30, 1985 is a defined contribution plan covering all employees who
have attained the age of eighteen years (18) and have completed one full
year of service as defined in the Plan. Effective January 1, 1994, the Plan
was amended and restated to conform to a prototype plan offered by American
Industries Trust Company (the "Custodian"). The Plan is subject to the
Employee Retirement Income Security Act of 1974 ("ERISA").
On April 1, 1999 the Fort Bend Federal Savings and Loan Association of
Rosenberg Profit Sharing Plan and Trust and Fort Bend Holding Corporation
Employee Stock Ownership Plan (the "Fort Bend Plans") were merged into the
Plan. Upon termination of the Fort Bend Plans, all of its participants were
immediately fully vested in the benefits provided pursuant to the Fort Bend
Plans, and the trustee of the Fort Bend Plans was directed to transfer the
net assets of the Fort Bend Plans to the trustee of the Plan. The
transferred net assets have been recognized in the accounts of the Plan at
their balances as previously carried in the accounts of the Fort Bend
Plans. The total amount of net assets available for benefits transferred
was $7,741,257.
In addition, the Plan was amended to provide service credit for eligibility
and vesting for individuals employed by Fort Bend Federal Savings and Loan
Association of Rosenberg as of the date of merger and who subsequently
became employees of the Company.
CONTRIBUTIONS
Each year participants may elect to defer from 1% to 15% of pretax annual
compensation to the Plan, subject to the limitations specified in the
Internal Revenue Code. The Company is required to make matching
contributions equal to 100% of the participant's eligible deferred
contributions not to exceed 5% of the participant's annual compensation for
the Plan Year. The Plan also allows the Company to make discretionary
contributions as determined by the board of directors.
Continued
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. DESCRIPTION OF PLAN, CONTINUED
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, earnings on the investments selected by the participant and
Company matching and discretionary contributions. Company contributions and
earnings on investments are allocated to each participant's account
according to compensation based allocation formulas contained in the Plan
agreement. Forfeitures can be used to pay expenses under the Plan.
Forfeitures not used to pay expenses are allocated to each participant's
account according to compensation based allocation formulas contained in
the Plan agreement. The Company pays substantially all expenses of plan
administration.
VESTING
Participants are immediately vested in their contributions and earnings
thereon, as follows:
YEARS OF SERVICE VESTING
---------------- -------
Less than 2 0%
2 40%
3 60%
4 80%
5 or more 100%
PARTICIPANT LOANS
The Custodian may make loans to participants from the Plan, subject to the
provisions of the trust instrument.
PAYMENT OF BENEFITS
The account of a withdrawing participant is equal to the current market
value of his or her vested balance in the account. The normal retirement
age under the Plan is 65 but early retirement is allowed at or after age
55. Hardship withdrawals are allowed under the Plan before age 55 but such
withdrawals may have income tax consequences to the participant. Benefits
are generally paid by lump-sum distribution.
Continued
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. DESCRIPTION OF PLAN, CONTINUED
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct all of his or her
contributions into one or more of the investment options offered by the
Custodian as follows:
AMERICAN INDUSTRIES TRUST SHORT TERM INCOME FUND
Funds are invested in shares of a registered investment company that
invests in short-term obligations (money market accounts, certificates of
deposit, or commercial paper) and U.S. governmental obligations (treasury
bills or agency notes).
FIDELITY SPARTAN U.S. EQUITY INDEX FUND
Funds are invested in shares of a registered investment company that
invests in selected common stock of the five hundred companies that make up
the Standard & Poor's 500 Index ("S&P 500") and in other securities that
are based on the S&P 500.
SOUTHWEST BANCORPORATION OF TEXAS, INC. STOCK FUND
Funds are invested in common stock of Southwest Bancorporation of
Texas, Inc. and Subsidiaries.
FIDELITY PURITAN FUND
Funds are invested in shares of a registered investment company that
invests in equity securities, bonds and money market instruments.
PBHG GROWTH FUND
Funds are invested in shares of a registered investment company that
invests in equity securities of companies which management believes have
the potential for strong earnings growth and capital appreciation.
Continued
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. DESCRIPTION OF PLAN, CONTINUED
INVESTMENT OPTIONS, CONTINUED
FIDELITY GROWTH AND INCOME FUND
Funds are invested in shares of a registered investment company that
invests in equity securities that seek long-term growth of capital and
income.
AMERICAN INDUSTRIES TRUST SMART AGGRESSIVE FUND
Funds are invested in shares of a registered investment company that
invests primarily in common stock of domestic and foreign companies with
the potential for high growth.
AMERICAN INDUSTRIES TRUST SMART MODERATE FUND
Funds are invested in shares of a registered investment company that
invests in intermediate-term bonds and common stock of domestic and foreign
companies with the potential for long-term capital growth.
AMERICAN INDUSTRIES TRUST SMART CONSERVATIVE FUND
Funds are invested in shares of a registered investment company that
invests in U.S. government securities, intermediate-term bonds and common
stock of domestic and foreign companies that provide an opportunity for
capital growth that exceeds inflation.
AIM VALUE FUND A
Funds are invested in shares of a registered investment company that
invests in common stocks of large domestic companies which have the
potential for long-term capital appreciation.
BARON ASSET FUND
Funds are invested in shares of a registered investment company that
invests in common stocks of small to medium-sized companies with
undervalued assets and the potential for high capital growth.
JANUS WORLDWIDE FUND
Funds are invested in shares of a registered investment company that
invests in common stocks of domestic and foreign companies with the
potential for long-term capital appreciation in a manner consistent with
capital preservation.
Continued
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. DESCRIPTION OF PLAN, CONTINUED
INVESTMENT OPTIONS, CONTINUED
LOOMIS SAYLES BOND FUND
Funds are invested in shares of a registered investment company that
invests in preferred stocks and long-term bonds in order to achieve a high
total return through a combination of current income and capital
appreciation.
YACKTMAN FUND
Funds are invested in shares of a registered investment company that
invests in common stocks of medium-sized domestic companies with the
potential for long-term capital appreciation.
WEITZ PARTNERS VALUE FUND
Funds are invested in shares of a registered investment company that
invests in common stocks and a variety of securities convertible into
equity, such as rights, warrants, preferred stocks and convertible bonds in
order to achieve a high return through capital appreciation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method
of accounting.
INVESTMENT VALUATION
Funds deposited in short-term income accounts are valued at contract value
as reported to the Plan by the Custodian. Investments in various pooled
separate accounts offered by the Custodian are valued at estimated fair
value as determined by the Custodian. Investments in registered investment
companies (mutual funds) are valued based on quoted market prices in an
active market. Investments in employer common stock are valued at the
closing market price on the last business day of the Plan's fiscal year.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
Continued
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses on sale of
investments and unrealized appreciation (depreciation) on those
investments.
3. RISKS AND UNCERTAINTIES
CREDIT RISK
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities, in general, are exposed to various
risks, such as interest rate, credit and overall market volatility risk.
Due to the level of risk associated with certain investment securities, it
is reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect
the amounts reported in the statements of net assets available for plan
benefits and the amounts reported in participant accounts.
4. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by American
Industries. American Industries is the Trustee as defined by the Plan and,
therefore, these transactions qualify as party-in- interest. Trustee fees
paid by the Company, on behalf of the Plan, were $81,540, $53,585 and
$37,835 for the years ended December 31, 1999, 1998 and 1997, respectively.
Continued
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. TAX STATUS
The Plan is designed to constitute a qualified plan under section 401(k) of
the Internal Revenue Code ("IRC"). The Plan obtained its latest
determination letter dated January 5, 1996 in which the Internal Revenue
Service stated that the Plan, as amended, is in compliance with the
applicable requirements of the IRC. 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 IRC.
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<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER MARKET
DESCRIPTION OF SHARES COST VALUE
----------- ---------------- ----------- -----------
<S> <C> <C> <C>
Common stocks ............................ 544,730.0000 $ 6,911,234 $10,792,463
Money market funds ....................... 4,670.0000 4,670 4,670
Shares of registered investment companies:
American Industries Trust Short
Term Income Fund ....................... 1,992,386.5900 1,992,387 1,992,387
Fidelity Spartan US Equity Index Fund .... 40,443.0040 1,767,480 2,106,676
Fidelity Puritan Fund .................... 92,843.0420 1,780,129 1,766,803
Fidelity Growth and Income Fund .......... 61,043.3150 2,478,255 2,878,803
American Industries Trust SMART
Aggressive Fund ......................... 16,520.5076 182,255 207,047
American Industries Trust SMART
Moderate Fund ........................... 33,467.0748 362,270 417,780
American Industries Trust SMART
Conservative Fund ....................... 56,758.0258 598,976 668,585
AIM Value Fund Class A ................... 50,752.2280 2,085,316 2,478,231
Baron Asset Fund ......................... 34,009.7310 1,790,573 1,998,752
Janus Worldwide Fund ..................... 32,088.4730 1,541,357 2,452,522
Loomis Sayles Bond Fund .................. 35,349.6870 431,164 407,228
Weitz Partners Value Fund ................ 22,685.4870 430,037 454,163
----------- -----------
Total investment in shares of
registered investment companies ......... 15,440,199 17,828,977
----------- -----------
Total assets held for investment
purposes ................................ $22,356,103 $28,626,110
=========== ===========
Loans to participants bearing
interest at rates ranging
from 7.0% to 10.0% ...................... $ - $ 744,439
=========== ===========
</TABLE>
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<PAGE>
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF PURCHASE SELLING CURRENT NET GAIN
IDENTITY OF PARTY INVOLVED TRANSACTIONS PRICE PRICE VALUE (LOSS)
-------------------------- ------------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Single transactions in
excess of 5%:
PBHG Growth Fund ......... $ 590,391 $ 735,902 $ 145,511
Mutual Fund Cash Clearing
Account ................ 1,393,992 $1,393,992
Mutual Fund Cash Clearing
Account ................ 970,315 970,315
Short Term Income Fund ... 1,013,379 1,013,379
Baron Asset Fund ......... 742,609 742,609
Mutual Fund Cash Clearing
Account ................ 1,393,157 1,393,157
Mutual Fund Cash Clearing
Account ................ 916,313 916,313
Series of transactions:
Short Term Income Fund ... 295 722,103 722,103
Short Term Income Fund ... 234 1,471,933 1,471,933
Fidelity Money Market Fund 185 2,945,498 2,945,498
PBHG Growth Fund ......... 513 899,246 1,074,239 174,993
Mutual Fund Cash Clearing
Account ................ 2,012 9,134,941 9,134,941
Southwest Bank of Texas .. 137 1,128,127 1,586,334 458,207
Short Term Income Fund ... 449 2,053,006 2,053,006
Short Term Income Fund ... 223 1,432,524 1,432,524
Fidelity Money Market Fund 201 2,945,321 2,945,321
Fidelity Growth & Income
Portfolio .............. 178 1,050,261 1,050,261
Fidelity Puritan Fund .... 205 948,277 948,277
AIM Value Fund Class A ... 319 1,462,282 1,462,282
Fidelity Spartan US Equity
Index .................. 162 1,235,490 1,235,490
Janus Worldwide Fund ..... 174 968,670 968,670
Baron Asset Fund ......... 141 1,600,863 1,600,863
Mutual Fund Cash Clearing
Account ................ 1,401 9,114,766 9,114,766
Southwest Bank of Texas .. 147 1,518,391 1,518,391
</TABLE>
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