<PAGE>
FOR IMMEDIATE RELEASE CONTACT: Jane Powell
(713) 974-9300
SOUTHWEST BANCORPORATION OF TEXAS
REPORTS QUARTERLY OPERATING EPS UP 29%
HOUSTON (January 18, 2001) -- Southwest Bancorporation of Texas, Inc.
(NASDAQ: SWBT), the largest independent bank-holding company in Houston, with
$3.97 billion in assets, reported continued strong operating earnings for the
fourth quarter, according to Paul B. Murphy, Jr., chief executive officer and
president. "We are hitting on all cylinders at Southwest Bank. Our
extraordinary growth tells you not simply how we're doing, but also where we
are going," said Murphy.
On December 29, 2000, Southwest Bancorporation of Texas, Inc.
("Southwest") and Citizens Bankers, Inc. ("Citizens") completed their
previously announced merger. The merger resulted in the issuance of
approximately four million shares of Southwest common stock on a fully
diluted basis. In connection with this transaction, Southwest incurred
approximately $4.1 million in pretax merger-related expenses and other
charges ("merger expenses"). Citizens is a three-bank holding company in
east Harris County and is the largest Harris County bank holding company that
does not operate in Houston. The operational merger is on track to be
completed during the second quarter of 2001. Cross-sales initiatives are
already active between the two organizations. The following historical
financial data has been restated to include the accounts and operations of
Citizens for all periods presented.
RESULTS OF OPERATIONS EXCLUDING MERGER-RELATED EXPENSES AND
NET LOSSES ON SALES OF SECURITIES
Excluding merger expenses and net losses on sales of securities
("security losses"), net income for the years ended December 31, 2000, and
1999 was $46.9 million compared to $35.7 million, an increase of 31 percent.
For the three months ended December 31, 2000, net income excluding merger
expenses and security losses was $13.1 million, or $0.39 per diluted common
share compared to $9.9 million, or $0.30 per diluted common share for the
same period in 1999, an increase of 32 percent and 29 percent, respectively.
Return on average assets and return on average common shareholders' equity
for the three months ended December 31, 2000 would have been 1.39 percent and
18.52 percent, respectively. The company's efficiency ratio would have been
58.95 percent for
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the three months ended December 31, 2000 compared with 62.13 percent for the
same period last year.
RESULTS OF OPERATIONS AS REPORTED
For the year ended December 31, 2000, net income was $43.5 million
compared to $32.0 million for the same period in 1999, an increase of 36
percent. For the three months ended December 31, 2000, net income was $9.7
million compared to $9.9 million for the same period in 1999, a decrease of
three percent. Net income per diluted common share was $0.28 for the three
months ended December 31, 2000 compared with $0.30 for the three months ended
December 31, 1999. This decrease in net income, and net income per diluted
common share, for the three-month period, resulted primarily from $4.1
million in pretax merger related expenses and other charges related to the
Citizens transaction and net pretax security losses of $462,000. Return on
average assets and return on average common shareholders' equity for the
three months ended December 31, 2000 was 1.02 percent and 13.65 percent,
respectively. The company's efficiency ratio was 66.81 percent for the three
months ended December 31, 2000 compared with 62.13 percent for the same
period last year.
ASSET QUALITY
Non-performing assets totaled $9.9 million or 0.41 percent of loans and
other real estate at December 31, 2000, compared to $6.2 million or 0.31
percent for the period ending December 31, 1999. Non-performing assets
increased primarily due to the addition of two loans - a $5.1 million secured
relationship which is expected to be a long term workout and a $1.1 million
loan secured by three houses which are expected to be sold near term. "I am
pleased with our asset quality," said Murphy, "with annual net charge-offs of
6 basis points and non-performing assets of 0.41 percent of loans and other
real estate, our asset quality remains among the best in the industry. Our
credit culture is conservative and consistent." Net charge-offs for the
twelve-month period ended December 31, 2000 were $1.3 million, compared to
$1.6 million for the same period in 1999. The allowance for loan losses was
1.16 percent of total loans and 297.82 percent of non-performing loans at
December 31, 2000.
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FINANCIAL HIGHLIGHTS
Net interest income for the quarter increased $7.0 million or 21 percent,
to $40.6 million, from the same period last year. This increase is
attributable primarily to a 20 percent growth in average earning assets and,
to a lesser extent, a 5 basis point increase in the net interest margin to
4.67 percent. Net interest income for the year ended December 31, 2000
increased $27.5 million or 22 percent, to $150.5 million, from the same
period last year. This increase is also attributable primarily to a 17
percent growth in average earning assets over the period combined with the 20
basis point rise in the net interest margin to 4.64 percent.
Non interest income increased 14 percent (19 percent excluding security
losses) for the quarter due to: significant growth in service charges on
deposit accounts - up $823,000 or 18 percent; investment services fee income
- up $439,000 or 40 percent; and factoring fee income - up $242,000 or 26
percent. Trust department income was $155,000 for the quarter, down 5
percent, compared to the same period last year.
Non interest expenses increased $8.0 million to $35.0 million for the
quarter, an increase of 29 percent (14 percent excluding merger expenses).
The majority of this increase was due to $4.1 million in merger expenses.
The remainder of the increase is attributable to costs associated with
maintaining the company's growth, such as: additional salaries and benefits
expense - up $3.1 million or 21 percent; maintenance contract expense - up
$239,000 or 61 percent; and rent expense - up $175,000 or 16 percent.
Total assets were $3.97 billion on December 31, 2000 - an increase of
$699.1 million or 21 percent, from $3.27 billion on December 31, 1999.
Deposits increased to $3.09 billion on December 31, 2000, up from $2.53
billion on December 31, 1999 - an increase of $559.4 million or 22 percent.
Loans were $2.51 billion on December 31, 2000 - an increase of $476.1 million
or 23 percent, from $2.04 billion on December 31, 1999.
NEW OFFSHORE BRANCH
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Southwest Bank has established an offshore branch on the Cayman Islands.
It received approval for the "Grand Cayman" branch in November 2000. The
establishment of the branch allows customers to sweep short-term funds into
Eurodollar time deposits with competitive rates, giving customers an
alternative to traditional brokerage products. "We believe this product has
significant potential to re-integrate deposits into our bank," stated Murphy.
RESULTS OF PREVIOUSLY SEPARATE COMPANIES
On December 29, 2000, Southwest and Citizens completed their previously
announced merger. Separate interest income and net income amounts of the
merged entities are presented as follows: Southwest's interest income for
the quarter ended December 31, 2000 was $67.0 million, an increase of $16.4
million or 32 percent over the same period last year. Net income, for the
quarter, excluding merger expenses and security losses, was $11.7 million -
an increase of $3.2 million or 38 percent. Citizens' interest income for the
quarter ended December 31, 2000 was $7.4 million - an increase of $826,000 or
12 percent over the same period last year. Net income, for the quarter, was
$1.4 million - an increase of $108,000 or 8 percent.
"The fourth quarter of 2000 was a strong finish to an outstanding year
for both Southwest and Citizens," said Murphy. "Southwest (stand alone)
posted loan growth of 24 percent, deposit growth of 25 percent and
noninterest income growth of 29 percent while asset quality measures remained
better than industry peers. Teaming up with Citizens will enhance our
opportunity to continue posting above average results for 2001."
Southwest Bancorporation of Texas, with $3.97 billion in assets, is the
largest independent bank-holding company headquartered in Houston, Texas.
The Company focuses on commercial, treasury management, private, retail and
mortgage banking services to small and middle-market businesses and
individuals. The bank has 32 full-service branches located throughout the
Houston metropolitan area. The bank opened a new operations center in
downtown Houston during the fourth quarter of 2000.
# # #
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This press release includes forward-looking statements that are subject
to risks and uncertainties. Actual results might differ materially from
those projected in the forward-looking statements. Additional information
concerning factors that could cause actual results to materially differ from
those in the forward-looking statements is contained in Southwest
Bancorporation's Securities and Exchange Commission filings.
# # #
Media Contact Investor Contact
------------- ----------------
Jane Powell John McWhorter SVP/Controller
Powell Public Relations Southwest Bank of Texas
713.974.9300 713.235.8808
[email protected] [email protected]
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SOUTHWEST BANCORPORATION OF TEXAS, INC.
CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
4Q-00 4Q-99 % CHANGE YTD 00 YTD 99
------------ ------------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET AVERAGES ($ in 000's except per share data)
Total loans $ 2,455,734 $ 1,924,791 27.6% $ 2,281,340 $ 1,762,826
Investment securities 877,143 905,224 -3.1% 881,379 946,391
Securities purchased under resale agreements 38,293 - 100.0% 9,626 959
Fed funds sold and other earning assets 67,349 37,663 78.8% 51,668 52,941
------------ ------------ ------------ ------------
TOTAL EARNING ASSETS 3,438,519 2,867,678 19.9% 3,224,013 2,763,117
------------ ------------ ------------ ------------
Allowance for loan losses (27,717) (22,039) 25.8% (25,326) (20,161)
Cash and due from banks 161,211 164,121 -1.8% 161,180 112,048
Other assets 190,208 136,075 39.8% 174,266 153,761
------------ ------------ ------------ ------------
TOTAL ASSETS $ 3,762,221 $ 3,145,835 19.6% $ 3,534,133 $ 3,008,765
============ ============ ============ ============
Noninterest-bearing deposits $ 835,149 $ 707,481 18.0% $ 774,111 $ 656,428
Interest-bearing demand deposits 60,197 55,807 7.9% 58,093 69,859
Savings deposits 1,244,638 1,034,791 20.3% 1,159,773 939,121
Time deposits 921,335 713,187 29.2% 829,047 718,037
------------ ------------ ------------ ------------
Total deposits 3,061,319 2,511,266 21.9% 2,821,024 2,383,445
Fed funds purchased and other
interest-bearing liabilities 381,047 382,754 -0.4% 423,160 381,052
Other liabilities 36,945 25,421 45.3% 33,037 26,840
Minority interest in consolidated subsidiary 1,319 1,097 20.2% 1,319 -
Shareholders' equity 281,591 225,297 25.0% 255,593 217,428
------------ ------------ ------------ ------------
TOTAL LIABILITIES AND EQUITY $ 3,762,221 $ 3,145,835 19.6% $ 3,534,133 $ 3,008,765
============ ============ ============ ============
INCOME STATEMENT DATA
Interest and fees on loans $ 58,257 $ 42,548 36.9% $ 210,990 $ 150,576
Interest on securities 14,436 14,200 1.7% 57,755 58,007
Interest on fed funds sold and other
earning assets 1,747 511 241.9% 3,943 2,649
------------ ------------ ------------ ------------
TOTAL INTEREST INCOME 74,440 57,259 30.0% 272,688 211,232
------------ ------------ ------------ ------------
Interest on deposits 28,476 18,979 50.0% 98,688 70,149
Interest on fed funds purchased and
other borrowings 5,410 4,701 15.1% 23,496 18,070
------------ ------------ ------------ ------------
TOTAL INTEREST EXPENSE 33,886 23,680 43.1% 122,184 88,219
------------ ------------ ------------ ------------
NET INTEREST INCOME 40,554 33,579 20.8% 150,504 123,013
Provision for loan losses 1,805 1,538 17.4% 7,053 6,474
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER PROVISION 38,749 32,041 20.9% 143,451 116,539
------------ ------------ ------------ ------------
Service charges on deposit accounts 5,450 4,627 17.8% 20,765 17,017
Investment services 1,689 1,259 34.2% 6,017 4,868
Other fee income 2,876 1,671 72.1% 9,719 8,740
Other operating income 1,877 2,443 -23.2% 7,570 7,748
Gains/(losses) on sales of securities (462) 4 -11650.0% (467) (134)
------------ ------------ ------------ ------------
TOTAL NONINTEREST INCOME 11,430 10,004 14.3% 43,604 38,239
------------ ------------ ------------ ------------
Salaries and benefits 17,920 14,821 20.9% 67,060 57,516
Net occupancy expenses 5,067 4,545 11.5% 18,732 16,887
Merger-related expenses and other charges 4,122 - 100.0% 4,122 4,474
Other expenses 7,931 7,711 2.9% 30,954 26,409
------------ ------------ ------------ ------------
TOTAL NONINTEREST EXPENSES 35,040 27,077 29.4% 120,868 105,286
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 15,139 14,968 1.1% 66,187 49,492
Provision for income taxes 5,459 5,044 8.2% 22,607 17,500
Minority interest 16 17 -5.9% 119 29
------------ ------------ ------------ ------------
NET INCOME AVAILABLE FOR COMMON
SHAREHOLDERS $ 9,664 (1) $ 9,907 -2.5% $ 43,461 (2) $ 31,963 (3)
============ ============ ============ ============
BASIC EARNINGS PER COMMON SHARE $ 0.30 $ 0.31 -4.5% $ 1.34 $ 1.01
============ ============ ============ ============
DILUTED EARNINGS PER COMMON SHARE $ 0.28 $ 0.30 -5.2% $ 1.29 $ 0.97
============ ============ ============ ============
PERIOD END # OF SHARES OUTSTANDING 32,705 32,018 2.1% 32,705 32,018
WEIGHTED AVG # OF SHARES OUTSTANDING
(INCL CSE'S) 34,042 33,081 2.9% 33,629 32,973
(1) Excluding merger-related expenses and net losses on the sales of
securities, net income available to common shareholders would have been
$13,108 or $0.39 per diluted common share for the quarter ended
December 31, 2000.
(2) Excluding merger-related expenses and net losses on the sales of securities,
net income available to common shareholders would have been $46,888 or
$1.39 per diluted common share for the year ended December 31, 2000.
(3) Excluding merger-related expenses and net losses on the sales of securities,
net income available to common shareholders would have been $35,675 or
$1.08 per diluted common share for the year ended December 31, 1999.
<PAGE>
NONPERFORMING ASSETS ($ in 000's except per share data)
Nonaccrual loans $ 8,345 $ 2,471 237.7%
Accruing loans 90 or more days past due 1,107 1,847 -40.1%
Restructured loans - - 0.0%
ORE and OLRA 454 1,840 -75.3%
------------ ------------
Total nonperforming assets $ 9,906 $ 6,158 60.9%
============ ============
CHANGES IN ALLOWANCE FOR LOAN LOSSES
Allowance for loan losses - beginning
of period $ 26,771 $ 21,278 25.8% $ 22,436 $ 17,532
Provision for loan losses 1,805 1,538 17.4% 7,053 6,474
Charge-offs (774) (562) 37.7% (2,093) (2,211)
Recoveries 348 182 91.2% 754 641
------------ ------------ ------------ ------------
Adjustment to conform reporting periods - - - -
------------ ------------ ------------ ------------
Allowance for loan losses - end of period $ 28,150 $ 22,436 25.5% $ 28,150 $ 22,436
============ ============ ============ ============
RATIOS
Return on average assets 1.02% (4) 1.25% 1.23% (5) 1.06%
Return on average common equity 13.65% (4) 17.45% 17.00% (5) 14.70%
Leverage ratio 7.94% 7.81%
Yield on earning assets 8.58% 7.88% 8.40% 7.63%
Cost of funds with demand accounts 3.92% 3.25% 3.77% 3.19%
Net interest margin 4.67% 4.62% 4.64% 4.44%
Efficiency ratio 66.81% (4) 62.13% 62.12% (5) 65.24%
Noninterest expense to average
earning assets 4.05% (4) 3.75% 3.75% (5) 3.81%
Nonperforming assets to loans and other
real estate 0.41% 0.31%
Net charge-offs(recoveries) to average
loans 0.07% 0.08% 0.06% 0.09%
Allowance for loan losses to total loans 1.16% 1.15%
Allowance for loan losses to nonperforming
loans 297.82% 519.59%
COMMON STOCK PERFORMANCE
Market value of stock - Close $ 42.938 $ 19.813 $ 42.938 $ 19.813
Market value of stock - High $ 45.625 $ 20.000 $ 45.625 $ 20.000
Market value of stock - Low $ 29.938 $ 16.125 $ 14.875 $ 11.875
Book value of stock $ 9.11 $ 7.28 $ 9.11 $ 7.28
Market/book value of stock 471% 272% 471% 272%
Price/12 month trailing earnings ratio 33 20 33 20
OTHER DATA
EOP Employees - full time equivalent 1,313 1,168 12.4%
PERIOD END BALANCES ($ in 000's)
-------------------
Total loans $ 2,511,450 $ 2,035,340 23.4%
Investment securities 847,896 890,369 -4.8%
Securities purchased under resale agreements 55,000 - 100.0%
Fed funds sold and other earning assets 56,677 25,644 121.0%
------------ ------------
TOTAL EARNING ASSETS 3,471,023 2,951,353 17.6%
------------ ------------
Allowance for loan losses (28,150) (22,436) 25.5%
Cash and due from banks 329,350 188,381 74.8%
Other assets 198,105 153,890 28.7%
------------ ------------
TOTAL ASSETS $ 3,970,328 $ 3,271,188 21.4%
============ ============
Noninterest-bearing demand deposits $ 891,918 $ 716,785 24.4%
Interest-bearing demand deposits 60,953 70,935 -14.1%
Savings deposits 1,231,514 1,042,673 18.1%
Time deposits 906,623 701,240 29.3%
------------ ------------
Total deposits 3,091,008 2,531,633 22.1%
Fed funds purchased and other
interest-bearing liabilities 549,508 483,978 13.5%
Other liabilities 30,541 21,523 41.9%
Minority interest in consolidated
subsidiary 1,319 1,097 20.2%
Shareholders' equity 297,952 232,957 27.9%
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 3,970,328 $ 3,271,188 21.4%
============ ============
</TABLE>
(4) Excluding merger-related expenses and net losses on sales of securities
ROA, ROE, Efficiency ratio and NIE to average earning assets would have
been 1.39%, 18.52%, 58.95% and 3.58%, respectively, for the quarter ended
December 31, 2000.
(5) Excluding merger-related expenses and net losses on sales of securities
ROA, ROE, Efficiency ratio and NIE to average earning assets would have
been 1.33%, 18.34%, 60.00% and 3.62%, respectively, for the year to date
period ended December 31, 2000.
