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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - December 29, 2000
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SOUTHWEST BANCORPORATION OF TEXAS, INC.
(Name of Registrant as specified in its charter)
TEXAS 000-22007 76-0519693
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
(713) 235-8800
(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)
N/A
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On December 29, 2000, (i) Citizens Bankers, Inc., a Texas
corporation ("Citizens") was merged with and into Southwest Bancorporation of
Texas, Inc. (the "Registrant" and the "Company") pursuant to an Agreement and
Plan of Merger dated October 16, 2000 (the "Merger Agreement"), between the
Company and Citizens, and (ii) Southwest Bank of Texas National Association,
the Company's subsidiary bank ("SW Bank") acquired all of the assets and
liabilities of Citizens Bankers Limited Partnership, a Texas limited
partnership ("CBLP") pursuant to a Purchase Agreement dated as of November 9,
2000 (the "Purchase Agreement") among the Company, SW Bank, CBLP and Baytown
Land I, Ltd. (The office building that houses Citizens and its principal
subsidiary bank and certain unrelated tenants was the only significant asset
of CBLP.) In addition, on that date (i) the three wholly-owned subsidiary
banks of Citizens (Citizens Bank and Trust Company of Baytown, Texas, Baytown
State Bank and Pasadena State Bank) were merged into SW Bank and their six
banking locations became branches of SW Bank, and (ii) the 57.834% owned
subsidiary bank of Citizens, First National Bank of Bay City, became a
57.834% owned subsidiary bank of the Company as a result of the merger.
A total of approximately 4,000,000 shares of Company Common Stock
were issued to the shareholders of Citizens and the partners of CBLP in the
combined transaction, which will be accounted for as a pooling-of-interests.
In determining the number of such shares, the Company valued the entire
transaction at $130,000,000. The Company considered the following factors in
arriving at that price: (i) prices paid by peer group banks in similar
transactions, (ii) the importance of the acquisition being accretive to the
Company's earnings per share, (iii) Citizens' low loan to deposit ratio, (iv)
Citizens' capital levels compared to peer banks, (v) an appraisal of the
office building owned by CBLP, and (vi) advice of the Company's financial
advisor, Legg Mason Wood Walker, Incorporated. The documentation provided
that a total of 4,000,000 to 4,300,000 shares would be issued in the combined
transaction, based on the average of the closing prices for the Company's
Common Stock for the 15 trading days ending five business days prior to
closing. An average market price equal to or less than $30.2326 would have
resulted in 4,300,000 shares being issued. Since the average market price was
greater than $32.50 for the defined period, the minimum number of shares
(4,000,000) were issued.
As of September 30, 2000, Citizens had total assets of $423.8
million, net loans of $128.4 million, total deposits of $374.4 million and
total shareholders' equity of $44.9 million. Through its bank subsidiaries,
Citizens provided a full range of commercial and consumer banking services.
For businesses, Citizens offered checking facilities, certificates of
deposit, short-term loans for working capital purposes, construction
financing, mortgage loans, loans for fixed assets and expansion needs and a
variety of non-credit services. The services provided for individuals include
checking accounts, savings accounts, certificates of deposit, individual
retirement accounts, consumer loan programs, mortgage loans, travelers
checks, money orders and safe deposit facilities.
Prior to the merger there were no material relationships between
Citizens and the Company or any affiliate, director or officer of the Company
or any associate of such director or officer. In connection with the Merger
Agreement, the Company agreed that at the first Board of Directors meeting of
the Company following the closing, the Board of Directors would create two
new positions on the Board and elect two directors of Citizens, John H.
Echols (who is also the President and Chief Executive Officer of Citizens)
and Duncan W. Stewart, to fill those new positions. As a result of the
combined transaction, John H. Echols beneficially owns 1,741,500 (5.3% of the
outstanding) shares of Company Common Stock, and Duncan W. Stewart owns
beneficially 1,342,015 (4.1% of the outstanding) shares of Company Common
Stock. As a condition to the Merger Agreement, the Company entered into a
three-year Employment Agreement with John H. Echols providing for an annual
salary of $222,000, with an annual discretionary bonus of up to $110,000 and
a grant of an option to purchase 10,000 shares of the Company's Common Stock.
In addition, for up to 120 days following the closing, his base annual salary
will be $293,800 ($24,483.33 per month). Mr. Echols' title under his
Employment Agreement is Chief Executive Officer, Baytown Region of SW Bank.
The shares of Company Common Stock issued pursuant to the Merger
Agreement and the Purchase Agreement were issued in a transaction exempt from
registration under the Securities Act of 1933 pursuant to Regulation D
thereunder. Citizens and CBLP were closely held entities with over 77% of the
equity interests being owned beneficially by members of the Echols and
Stewart families. Such shares may not be offered or sold by the holders
thereof in the United States absent registration or an applicable exemption
from registration.
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(b) The Company intends to continue operating the business of
Citizens and its three wholly-owned subsidiary banks by integrating their
operations with those of SW Bank and operating their existing locations as
branches of SW Bank. The operations of First National Bank of Bay City will
continue as a separate entity under its current management.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
No financial statements are required to be included herein in
accordance with Section 210.3.05(b)(2)(i), because none of the
conditions specified in Section 210.1-02(w) exceeds 20%.
(b) Pro Forma Financial Information
No pro forma financial statements are required to be included
herein in accordance with Section 210.11-01(b)(1).
(c) Exhibits
10.1 - Employment Agreement, effective as of December 29, 2000,
between the Company and John H. Echols.
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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 hereunto duly authorized.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
Date: January 2, 2001 By: /s/ R. John McWhorter
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R. John McWhorter
Senior Vice President and Controller
