<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from __________
to __________
Commission File Number 0-23064
SOUTHWEST BANCORP, INC.
(Exact name of registrant as specified in its charter)
Oklahoma #73-1136584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
608 South Main Street 74074
Stillwater, Oklahoma (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code: (405) 372-2230
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
[ x ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date.
3,761,202
---------
1
<PAGE>
SOUTHWEST BANCORP, INC.
INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Consolidated Statements of Financial Condition at
June 30, 1996 and December 31, 1995 3
Unaudited Consolidated Statements of Operations for the
three and six months ended June 30, 1996 and 1995 4
Unaudited Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 5
Notes to Unaudited Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION 12
SIGNATURES 13
2
<PAGE>
SOUTHWEST BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share date)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
<S> <C> <C>
Assets
Cash and due from banks $ 28,691 $ 20,789
Federal funds sold 10,600 --
----------- -----------
Cash and cash equivalents 39,291 20,789
Investment securities:
Held to maturity, approximate fair value of
$81,157 (1996) and $75,202 (1995) 81,583 74,644
Available for sale, approximate fair value 60,666 73,044
Loans receivable, net of allowance for loan
losses of $6,513 (1996) and $5,813 (1995) 572,289 526,175
Accrued interest receivable 7,404 7,117
Premises and equipment, net 7,818 6,224
Other real estate 118 195
Other assets 3,500 2,190
Intangibles, net 693 757
----------- -----------
Total assets $773,362 $711,135
=========== ===========
Liabilities & shareholders' equity
Deposits:
Noninterest-bearing demand $ 81,935 $ 78,308
Interest-bearing demand 39,714 33,762
Time, money market and savings 582,045 522,317
----------- -----------
Total deposits 703,694 634,387
Income taxes payable 103 271
Accrued interest payable 4,216 4,266
Other liabilities 3,187 11,854
----------- -----------
Total liabilities 711,200 650,778
Commitments and contingencies
Shareholders' equity:
Serial preferred stock -
Series A, 9.20% Redeemable, Cumulative Preferred Stock;
$1 par value; 1,000,000 shares authorized; liquidation
value $17,250,000; 690,000 shares issued and outstanding 690 690
Series B, $1 par value; 1,000,000 shares authorized; none issued -- --
Common stock - $1 par value; 10,000,000 shares
authorized; issued and outstanding 3,759,492 (1996)
and 3,755,228 (1995) 3,759 3,755
Capital surplus 24,245 24,171
Retained earnings 33,718 31,129
Unrealized gain/(loss) on investment securities
available for sale, net of tax (250) 612
----------- -----------
Total shareholders' equity 62,162 60,357
----------- -----------
Total liabilities & shareholders' equity $773,362 $711,135
=========== ===========
</TABLE>
<PAGE>
SOUTHWEST BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
<TABLE> <CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $13,271 $11,155 $26,103 $21,120
Investment securities:
U.S. Government and Agency obligations 1,651 1,569 3,291 3,188
State and political subdivisions 146 117 286 224
Mortgage-backed securities 391 378 781 757
Other securities 19 12 32 26
Federal funds sold 144 317 218 413
-------- -------- -------- --------
Total interest income 15,622 13,548 30,711 25,728
Interest expense:
Interest-bearing demand 206 181 409 377
Time, money market and savings 7,550 7,180 14,875 13,033
Other borrowed money 13 13 71 207
-------- -------- -------- --------
Total interest expense 7,769 7,374 15,355 13,617
-------- -------- -------- --------
Net interest income 7,853 6,174 15,356 12,111
Provision for loan losses 775 375 1,650 750
-------- -------- -------- --------
Net interest income after provision for loan losses 7,078 5,799 13,706 11,361
Other income:
Service charges and fees 720 658 1,428 1,254
Credit cards 233 199 440 414
Other noninterest income 101 78 218 192
Gain/(loss) on sales of loans receivable 375 144 823 333
Gain/(loss) on sale of investment securities 49 - 171 (8)
-------- -------- -------- --------
Total other income 1,478 1,079 3,080 2,185
Other expenses:
Salaries and employee benefits 3,006 2,434 5,834 4,708
Occupancy 866 757 1,625 1,459
FDIC and other insurance 153 330 285 655
Credit cards 60 144 164 273
Other real estate owned, net 1 4 1 (16)
General and administrative 1,379 1,258 2,775 2,480
-------- -------- -------- --------
Total other expenses 5,465 4,927 10,684 9,559
-------- -------- -------- --------
Income before taxes 3,091 1,951 6,102 3,987
Taxes on income 1,115 687 2,194 1,388
-------- -------- -------- --------
Net income $ 1,976 $ 1,264 $ 3,908 $ 2,599
======== ======== ======== ========
Net income available to common shareholders $ 1,579 $ 1,264 $ 3,114 $ 2,599
======== ======== ======== ========
Earnings per common share $0.42 $0.34 $0.83 $0.70
======== ======== ======== ========
Weighted average common shares outstanding 3,759,198 3,755,228 3,758,029 3,755,228
========= ========= ========= =========
</TABLE>
<PAGE>
SOUTHWEST BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the six months
ended June 30,
1996 1995
----------- -----------
<S> <C> <C>
Operating activities:
Net income $ 3,908 $ 2,599
Adjustments to reconcile net income to net cash provided
from/(used in) operating activities:
Provision for loan losses 1,650 750
Depreciation and amortization expense 584 482
Amortization of premiums and accretion of discount
on securities, net 122 146
Amortization of intangibles 64 87
(Gain)/loss on sales of securities (171) 8
(Gain)/loss on sales of loans receivable (823) (333)
(Gain)/loss on sales of premises and equipment (10) 3
(Gain)/loss on other real estate owned, net (2) (26)
Proceeds from sales of residential mortgage loans 26,837 9,871
Residential mortgage loans originated for resale (36,045) (14,555)
Changes in assets and liabilities:
Accrued interest receivable (287) (304)
Income taxes payable (168) (193)
Accrued interest payable (50) 1,552
Other (9,439) (14,145)
----------- -----------
Net cash provided from/(used in) operating activities (13,830) (14,058)
----------- -----------
Investing activities:
Proceeds from sales of held to maturity securities -- 5,993
Proceeds from sales of available for sale securities -- --
Proceeds from principal repayments, redemptions and maturities of:
Held to maturity securities 14,824 8,012
Available for sale securities 17,377 1,331
Purchases of held to maturity securities (21,848) (3,939)
Purchases of available for sale securities (6,303) (1,006)
Loans originated and principal repayments, net (54,968) (77,665)
Proceeds from sales of guaranteed student loans 17,235 16,164
Purchases of premises and equipment (2,191) (1,271)
Proceeds from sales of premises and equipment 24 16
Proceeds from sales of other real estate 79 94
----------- -----------
Net cash provided from/(used in) investing activities (35,771) (52,271)
----------- -----------
Financing activities:
Net increase in deposits 69,307 94,186
Net proceeds from issuance of common stock 78 --
Net proceeds from issuance of preferred stock -- --
Common stock dividends paid (488) (638)
Preferred stock dividends paid (794) --
----------- -----------
Net cash provided from/(used in) financing activities 68,103 93,548
----------- -----------
Net increase/(decrease) in cash and cash equivalents 18,502 27,219
Cash and cash equivalents,
Beginning of period 20,789 16,394
----------- -----------
End of period $39,291 $43,613
=========== ===========
</TABLE>
5
<PAGE>
SOUTHWEST BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements
NOTE 1: GENERAL
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, changes in shareholders' equity, and cash flows
in conformity with generally accepted accounting principles. However, the
financial statements include all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair presentation. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Southwest
Bancorp, Inc. Annual Report on Form 10-K for the year ended December 31, 1995.
NOTE 2: PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements include the
accounts of Southwest Bancorp, Inc. (the Company) and its wholly owned
subsidiary, The Stillwater National Bank and Trust Company (the Bank). All
significant intercompany transactions and balances have been eliminated in
consolidation.
NOTE 3: RECENTLY ADOPTED ACCOUNTING STANDARDS
The Company adopted Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which establishes
accounting standards for such assets, on January 1, 1996. Also on that date,
the Company adopted SFAS No. 122, Accounting for Mortgage Servicing Rights,
which amends the accounting for the rights to service mortgage loans, however
acquired, and requires the Company to recognize as separate assets those rights
to service mortgage loans for others. SFAS No. 122 also requires the Company to
evaluate whether amounts capitalized as mortgage servicing rights are impaired.
Adoption of SFAS Nos. 121 and 122 did not have a material impact on the
Company's consolidated financial position or results of operations.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 establishes a fair value method and disclosure
standards for stock-based employee compensation arrangements, such as stock
purchase plans and stock options. SFAS No. 123 became effective January 1, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages, but does not require, compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply Accounting Principles
Board Opinion (APB) No. 25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue to
apply APB No. 25 to its stock-based compensation awards to employees and will
disclose the required pro forma effect on net income and earnings per share in
the 1996 year-end financial statements.
6
<PAGE>
SOUTHWEST BANCORP, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
FINANCIAL CONDITION
The Company's total assets increased by $62.3 million, or 9%, from $711.1
million at December 31, 1995 to $773.4 million at June 30, 1996.
Loans were $578.8 million at June 30, 1996, an increase of $46.8 million, or 9%,
compared to December 31, 1995. The Company experienced its most significant
increases in the categories of commercial loans, which increased by $21.9
million, or 12%, real estate construction loans, which increased by $14.0
million, or 42%, residential mortgages, which increased by $10.0 million, or
23%, and commercial mortgages, which increased by $5.2 million, or 3%. These
increases were offset by a $5.5 million, or 8% reduction in government-
guaranteed student loans. At June 30, 1996, the allowance for loan losses was
$6.5 million, or 1.13% of total loans, compared to $5.8 million, or 1.09% of
total loans, at December 31, 1995.
Investment securities were $142.2 at June 30, 1996, a reduction of $5.4 million,
or 4%, compared to December 31, 1995.
The Company's deposits increased by $69.3 million, or 11%, from $634.4 million
at December 31, 1995 to $703.7 million at June 30, 1996. This increase occurred
primarily in time deposits.
Shareholders' equity increased by $1.8 million, or 3%, due primarily to first
and second quarter earnings, net of dividends declared on common and preferred
stock.
RESULTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
Net Income
Net income for the first six months of 1996 was $3.9 million, a $1.3 million, or
50%, increase from the $2.6 million earned during the same period in 1995.
Earnings per common share for the first six months of 1996 were $0.83, after the
deduction of preferred stock dividends, compared to $0.70 for the first six
months of 1995. Average common shares outstanding were 3,758,029 and 3,755,228,
respectively. The Company issued 690,000 shares of Series A, 9.20% Cumulative
Preferred Stock in the third quarter of 1995. Net interest income increased
$3.2 million, or 27%, for the first six months of 1996 compared to the same
period in 1995. This increase in net interest income, as well as an $895,000,
or 41%, increase in other income, offset a $1.1 million, or 12%, increase in
other expenses, a $900,000, or 120%, increase in provision for loan loss and an
$806,000, or 58%, increase in taxes. For the first six months of 1996, the
return on average total equity was 12.85% and the return on average common
equity was 14.27% compared to the 13.33% return on average equity for the first
six months of 1995.
Net Interest Income
Net interest income increased to $15.3 million for the first six months of 1996
from $12.1 million for the same period in 1995 as continued growth in the loan
portfolio enabled the Company to post a $5.0 million increase in interest income
that exceeded the $1.7 million increase in interest expense during the period.
Yields on the Company's interest-earning assets increased by 13 basis points,
and the rates paid on the Company's interest-bearing liabilities declined by 8
basis points, resulting in an increase in the interest rate
7
<PAGE>
spread to 3.57% for the six months ended June 30, 1996 from 3.36% for the six
months ended June 30, 1995. The ratio of average interest-earning assets to
average interest-bearing liabilities increased to 119.07% for the first six
months of 1996 from 115.84% for the first six months of 1995. This percentage
increase was, in part, the result of the use of proceeds from the Company's July
1995 Preferred stock issuance to fund interest-earning assets.
Total interest income for the first six months of 1996 was $30.7 million, up 19%
from $25.7 million during the same period in 1995. The principal factors
providing greater interest income were the $99.0 million, or 22%, increase in
the volume of average loans outstanding and the increase in yields earned on
loans and investment securities. The Company's loan yields increased to 9.59%
for the first six months of 1996 from 9.50% in 1995. During the same period,
the Company's yield on investment securities declined to 6.11% from 6.25% as a
result of calls of relatively high-yielding Agency securities.
Total interest expense for the first six months of 1996 was $15.4 million, an
increase of 13% from $13.6 million for the same period in 1995. The increase in
total interest expense can be attributed to an increase in average interest-
bearing liabilities of $72.3 million, or 14%. During the same period, the rates
paid on average interest-bearing liabilities declined to 5.25% from 5.33%.
Other Income
Other income increased by $895,000 for the first six months of 1996 compared to
the first six months of 1995 primarily due to increased gains on sales of loans
receivable and investment securities. The increase in gains on sales of loans
receivable reflected higher sales of student loans and mortgage loans. Sales of
student loans during the first six months of 1996 were $17.2 million compared to
$16.2 million for the same period in 1995. Sales of mortgage loans increased to
$26.8 million for the first six months of 1996 compared to $9.9 million for the
same period in 1995. The gain on sales of investment securities occurred when
$4.6 million in Agency securities classified as "held to maturity" and $11.2
million in Agency securities classified as "available for sale", originally
purchased at a discount, were called prior to their stated maturity date.
Other Expenses
The Company's other expenses increased $1.1 million for the first six months of
1996 compared to the first six months of 1995. This increase was primarily the
result of an increase in salaries and employee benefits, which increased $1.1
million as a result of a 15% increase in staffing. The increase in staffing is
related to the expansion of the Company's asset and deposit bases. In addition,
occupancy expense increased $166,000 and general and administrative expense
increased $295,000 compared to 1995. These increases were offset by a $370,000
reduction in FDIC and other insurance expense. The increase in occupancy
expense was due primarily to the leasing of additional office space and the
depreciation on furniture and equipment purchased to furnish those new offices.
The reduction in FDIC and other insurance for the six month periods ended June
30, 1996 and 1995 was due to a reduction in premiums, beginning July 1, 1995, as
the Bank Insurance Fund (BIF), of which the Bank is a member, achieved its
statutory reserve ratio. If certain legislation currently being considered by
Congress is enacted, the Bank will be required to pay a special assessment to
the FDIC with respect to deposits it acquired from a savings association in
1991. It is not known whether this legislation will be enacted or what the
amount of the special assessment will be if it is enacted.
Provision for Loan Losses
The Company makes provisions for loan losses in amounts deemed necessary to
maintain the allowance for loan losses at an appropriate level. The adequacy of
the allowance for loan losses is determined by management based upon a number of
factors including, among others, analytical reviews of loan loss experience in
relationship to outstanding loans and commitments; unfunded loan commitments;
problem
8
<PAGE>
and nonperforming loans and other loans presenting credit concerns; trends in
loan growth, portfolio composition and quality; use of appraisals to estimate
the value of collateral; and management's judgment with respect to current and
expected economic conditions and their impact on the existing loan portfolio.
Changes in the allowance may occur because of changing economic conditions, and
economic prospects or the financial position of borrowers. Based upon this
review, management established an allowance of $6.5 million, or 1.13% of total
loans, at June 30, 1996 compared to an allowance of $5.8 million, or 1.09% of
total loans at December 31, 1995. During the first six months of 1996 and 1995,
the provisions for loan losses were $1.7 million and $750,000, respectively. The
larger provision for loan losses during the first six months of 1996 was due to
the need for greater general reserves in light of the increase in the size of
the loan portfolio and higher historical charge-off ratios.
Taxes on Income
The Company's income tax expense for the first six months of 1996 and 1995 was
$2.2 million and $1.4 million, respectively. The Company's income tax expense
for the second quarters of 1996 and 1995 was $1.1 million and $687,000,
respectively. The Company's effective tax rates have been lower than the 34%
Federal and 6% State statutory rates primarily because of tax-exempt income on
municipal obligations and loans.
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
Net Income
Net income for the second quarter of 1996 was $2.0 million, a $712,000, or 56%,
increase from the $1.3 million earned during the same period in 1995. Earnings
per common share for the second quarter of 1996 were $0.42, after the deduction
of preferred stock dividends, compared to $0.34 for the second quarter of 1995.
Average common shares outstanding were 3,759,198 and 3,755,228, respectively.
The Company issued 690,000 shares of Series A, 9.20% Cumulative Preferred Stock
in the third quarter of 1995. Net interest income increased $1.7 million, or
27%, for the second quarter of 1996 compared to the same period in 1995. This
increase in net interest income, as well as a $399,000, or 37%, increase in
other income, offset a $538,000, or 11%, increase in other expenses, a $400,000,
or 107%, increase in provision for loan loss and a $428,000, or 62%, increase in
taxes. For the second quarter of 1996, the return on average total equity was
12.92% and the return on average common equity was 14.16% compared to the 12.63%
return on average equity for the second quarter of 1995.
Net Interest Income
Net interest income increased to $7.9 million for the second quarter of 1996
from $6.2 million for the same period in 1995 as continued growth in the loan
portfolio enabled the Company to post a $2.1 million increase in interest income
that exceeded the $395,000 increase in interest expense during the period.
Yields on the Company's interest-earning assets increased by 2 basis points, and
the rates paid on the Company's interest-bearing liabilities declined by 34
basis points, resulting in an increase in the interest rate spread to 3.63% for
the second quarter of 1996 from 3.27% for the second quarter of 1995. The ratio
of average interest-earning assets to average interest-bearing liabilities
increased to 118.39% for the second quarter of 1996 from 115.50% for the second
quarter of 1995. This percentage increase was, in part, the result of the use
of proceeds from the Company's July 1995 Preferred stock issuance to fund
interest-earning assets.
Total interest income for the second quarter of 1996 was $15.6 million, up 15%
from $13.5 million during the same period in 1995. The principal factor
providing greater interest income was the $92.3 million, or 20%, increase in the
volume of average loans outstanding. The Company's loan yields declined to
9.64% for the second quarter of 1996 from 9.70% in 1995. During the same
period, the Company's yield on
9
<PAGE>
investment securities declined to 6.09% from 6.22% as a result of calls of
relatively high-yielding Agency securities.
Total interest expense for the second quarter of 1996 was $7.8 million, an
increase of 5% from $7.4 million for the same period in 1995. The increase in
total interest expense can be attributed to an increase in average interest-
bearing liabilities of $66.7 million, or 13%. During the same period, the rates
paid on average interest-bearing liabilities declined to 5.21% from 5.55%.
Other Income
Other income increased by $399,000 for the second quarter of 1996 compared to
the second quarter of 1995 primarily due to increased gains on sales of loans
receivable. The increase in gains on sales of loans receivable reflected higher
sales of student loans and mortgage loans. Sales of student loans during the
second quarter of 1996 were $4.8 million compared to $4.6 million for the same
period in 1995. Sales of mortgage loans increased to $18.4 million for the
second quarter of 1996 compared to $6.4 million for the same period in 1995.
Other Expenses
The Company's other expenses increased $538,000 for the second quarter of 1996
compared to the second quarter of 1995. This increase was primarily the result
of an increase in salaries and employee benefits, which increased $572,000 as a
result of a 15% increase in staffing. The increase in staffing is related to
the expansion of the Company's asset and deposit bases. In addition, occupancy
expense increased $109,000 and general and administrative expense increased
$121,000 compared to 1995. These increases were offset by a $177,000 reduction
in FDIC and other insurance expense. The increase in occupancy expense was due
primarily to the leasing of additional office space and the depreciation on
furniture and equipment purchased to furnish those new offices.
The reduction in FDIC and other insurance for the three month periods ended June
30, 1996 and 1995 was due to a reduction in premiums, beginning July 1, 1995, as
the Bank Insurance Fund (BIF), of which the Bank is a member, achieved its
statutory reserve ratio. If certain legislation currently being considered by
Congress is enacted, the Bank will be required to pay a special assessment to
the FDIC with respect to deposits it acquired from a savings association in
1991. It is not known whether this legislation will be enacted.
LIQUIDITY
Liquidity is measured by a financial institution's ability to raise funds
through deposits, borrowed funds, capital, or the sale of highly marketable
assets such as residential mortgage loans. The Company's portfolio of
government-guaranteed student loans and SBA loans are also readily salable.
Additional sources of liquidity, including cash flow from the repayment of
loans, are also considered in determining whether liquidity is satisfactory.
Liquidity is also achieved through growth of core deposits and liquid assets,
and accessibility to the capital and money markets. These funds are used to
meet deposit withdrawals, maintain reserve requirements, fund loans and operate
the organization. Core deposits, defined as demand deposits, interest-bearing
transaction accounts, savings deposits and certificates of deposit less than
$100,000 were 84% and 87% of total deposits at June 30, 1996 and 1995,
respectively.
The Company uses various forms of short-term borrowings for cash management and
liquidity purposes on a limited basis. These forms of borrowings include
federal funds purchases and borrowings from the Federal Reserve Bank. The Bank
has approved federal funds purchase lines with three other banks. The Bank also
carries interest-bearing demand notes issued by the Bank to the U.S. Treasury as
a participant in the Treasury Tax and Loan note program. In addition, the Bank
has available a $20.0 million line of credit from the Student Loan Marketing
Association (SLMA). Borrowings under the SLMA line would be
10
<PAGE>
secured by student loans. During the first quarters of 1996 and 1995, no
category of borrowings averaged more than 30% of ending shareholders' equity.
During the first six months of 1996, cash and cash equivalents increased by
$18.5 million. The increase was the result of cash generated from financing
activities (primarily increased deposits) of $68.1 million offset by $13.8
million in cash used in operating activities and $35.8 million in cash used in
investing activities.
Cash and cash equivalents, during the first six months of 1995, increased by
$27.2 million. The increase was the result of cash generated from financing
activities (primarily increased deposits) of $93.5 million offset by $14.0
million in cash used in operating activities and $52.3 million in cash used in
investing activities.
CAPITAL RESOURCES
Bank holding companies are required to maintain capital ratios in accordance
with guidelines adopted by the Federal Reserve Board (FRB). The guidelines are
commonly known as Risk-Based Capital Guidelines.
On June 30, 1996, the Company exceeded all applicable capital requirements,
having a total risk-based capital ratio of 12.17%, a Tier I risk-based capital
ratio of 10.80%, and a leverage ratio of 8.12%. As of June 30, 1996, the Bank
also met the criteria for classification as a "well-capitalized" institution
under the prompt corrective action rules promulgated under the Federal Deposit
Insurance Corporation Improvement Act of 1991 (FDICIA). Designation as a well-
capitalized institution under these regulations does not constitute a
recommendation or endorsement of the Company or the Bank by Federal bank
regulators.
The Company declared a dividend of $.07 per common share payable on July 1, 1996
to shareholders of record as of June 19, 1996. In July 1996, the Company
declared a dividend of $.575 per preferred share payable on September 3, 1996
to shareholders of record as of August 19, 1996.
EFFECTS OF INFLATION
The consolidated financial statements and related consolidated financial data
presented herein have been prepared in accordance with generally accepted
accounting principles and practices within the banking industry which require
the measurement of financial position and operating results in terms of
historical dollars without considering the changes in the relative purchasing
power of money over time due to inflation. Unlike most industrial companies,
virtually all the assets and liabilities of a financial institution are monetary
in nature. As a result, interest rates have a more significant impact on a
financial institution's performance than the effects of general levels of
inflation.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security holders
At the Company's annual shareholders' meeting, held on April 25,
1996, the shareholders of the Company elected Robert L. McCormick,
Jr., J. Berry Harrison, Erd M. Johnson, and James B. Wise, M.D. as
Directors with terms expiring at the 1999 annual shareholders'
meeting. The shareholder vote in the election of each director was
3,081,404 for and 23,823 withheld. Other Directors continuing in
office are George M. Berry, Paul C. Wise, Joyce P. Berry, Joe Berry
Cannon, Robert B. Rodgers, Thomas D. Berry, W. Haskell Cudd, David
P. Lambert, Linford R. Pitts, and Lee Wise.
Also at the annual shareholders' meeting, the shareholders of the
Company approved an amendment to the Company's Certificate of
Incorporation to increase the authorized shares of capital stock
from 7,000,000 to 12,000,000, consisting of 10,000,000 shares of
common stock, par value $1.00 per share ("Common Stock"), and an
aggregate of 2,000,000 shares of serial preferred stock, par value
$1.00 per share. The shareholder vote in this matter was 2,742,797
for, 28,189 against, 19,454 abstaining, and 314,787 broker non-
votes.
Item 5. Other information
None
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits. The following is a list of Exhibits filed as part
--------
of this Quarterly Report on Form 10-Q:
No. Exhibit
--- -------
3.1 Amended and Restated Certificate of Incorporation of
Southwest Bancorp, Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
-------------------
during for the quarter which this Quarterly Report on
Form 10-Q is filed.
12
<PAGE>
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 thereunto duly authorized.
SOUTHWEST BANCORP, INC.
(Registrant)
By:/s/ Robert L. McCormick, Jr. July 31, 1996
------------------------------------- --------------------------
Robert L. McCormick, Jr. Date
President
(Principal Executive Officer)
By:/s/ Kerby E. Crowell July 31, 1996
---------------------------------- --------------------------
Kerby E. Crowell Date
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
13
<PAGE>
INDEX TO EXHIBITS
Number Description
3.1 Amended and Restated Certificate of Incorporation of Southwest
Bancorp., Inc.
27 Financial Data Schedule.
<PAGE>
EX-3.1
Exhibit 3.1
Amended and Restated Certificate of Incorporation of Southwest Bancorp.,
Inc.
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SOUTHWEST BANCORP, INC.
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA: The original certificate of
incorporation of Southwest Bancorp, Inc. was filed with the Secretary of State
on March 19, 1981.
ARTICLE I
Name
The name of the corporation is Southwest Bancorp, Inc. (herein,
the "Corporation").
ARTICLE II
Registered Office
The address of the Corporation's registered office in the State of Oklahoma
is 608 South Main Street, in the City of Stillwater, Payne County, Oklahoma.
The name of the Corporation's registered agent at such address is Robert L.
McCormick, Jr.
ARTICLE III
Powers
The purposes for which the Corporation is organized are to exercise all
powers of a bank holding company registered with the Board of Governors of the
Federal Reserve System under the Bank Holding Company Act of 1956, as amended,
and to engage in any and all activities allowed for such a bank holding company
under federal law and the Laws of the State of Oklahoma. The Corporation shall
have all the powers of a corporation organized under the Oklahoma General
Corporation Act.
ARTICLE IV
Term
The Corporation is to have perpetual existence.
ARTICLE V
Capital Stock
The aggregate number of shares of all classes of capital stock which the
Corporation has authority to issue is 12,000,000 of which 10,000,000 are to be
shares of common stock, $1.00 par value per share, of which 1,000,000 are to be
shares of serial preferred stock, $1.00 par value per share, and of which
1,000,000 shall be Class B serial preferred stock, $1.00 par value per share.
1
<PAGE>
The shares may be issued by the Corporation from time to time as approved
by the board of directors of the Corporation without the approval of the
shareholders except as otherwise provided in this Article V or the rules of a
national securities exchange or association, if applicable. The consideration
for the issuance of the shares shall be paid to or received by the Corporation
in full before their issuance and shall not be less than the par value per
share. The consideration for the issuance of the shares shall be cash, services
rendered, personal property (tangible or intangible), real property, leases of
real property or any combination of the foregoing. In the absence of actual
fraud in the transaction, the judgment of the board of directors as to the value
of such consideration shall be conclusive. Upon payment of such consideration
such shares shall be deemed to be fully paid and nonassessable. In the case of
a stock dividend, the part of the surplus of the Corporation which is
transferred to stated capital upon the issuance of shares as a stock dividend
shall be deemed to be the consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
A. Common Stock. Except as provided in this Certificate of Incorporation,
------------
the holders of the common stock shall exclusively possess all voting power.
Each holder of shares of common stock shall be entitled to one vote for each
share held by such holders.
Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class of stock having preference
over the common stock as to the payment of dividends, the full amount of
dividends and sinking fund or retirement fund or other retirement payments, if
any, to which such holders are respectively entitled in preference to the common
stock, then dividends may be paid on the common stock, and on any class or
series of stock entitled to participate therewith as to dividends, out of any
assets legally available for the payment of dividends, but only when and as
declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the common stock in any such event, the full preferential amounts to which
they are respectively entitled, the holders of the common stock and of any class
or series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.
Each share of common stock shall have the same relative powers, preferences
and rights as, and shall be identical in all respects with, all the other shares
of common stock of the Corporation.
B. Serial Preferred Stock. Except as provided in this Certificate of
----------------------
Incorporation, the board of directors of the Corporation is authorized, by
resolution or resolutions from time to time adopted, to provide for the issuance
of serial preferred stock in series and to fix and state the powers,
designations, preferences and relative, participating, optional or other special
rights of the shares of each such series, and the qualifications, limitations or
restrictions thereof, including, but not limited to, determination of any of the
following:
(1) the distinctive serial designation and the number of shares
constituting such series;
(2) the dividend rates or the amount of dividends to be paid on the shares
of such series, whether dividends shall be cumulative and, if so, from
which date or dates, the payment date or dates for dividends, and the
participating or other special rights, if any, with respect to
dividends;
(3) the voting powers, full or limited, if any, of the shares of such
series;
(4) whether the shares of such series shall be redeemable and, if so, the
price or prices at which, and the terms and conditions upon which such
shares may be redeemed;
2
<PAGE>
(5) the amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
(6) whether the shares of such series shall be entitled to the benefits of
a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and, if so entitled, the amount of such
fund and the manner of its application, including the price or prices
at which such shares may be redeemed or purchased through the
application of such funds;
(7) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other
series of the same or any other class of classes of stock of the
Corporation and, if so convertible or exchangeable, the conversion
price or prices, or the rate or rates of exchange, and the adjustments
thereof, if any, at which such conversion or exchange may be made, and
any other terms and conditions of such conversion or exchange;
(8) the subscription or purchase price and form of consideration for which
the shares of such series shall be issued; and
(9) whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of
the same or any other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series.
C. Class B Serial Preferred Stock. Except as provided in this Certificate
------------------------------
of Incorporation, the board of directors of the Corporation is authorized, by
resolution or resolutions from time to time adopted, to provide for the issuance
of Class B serial preferred stock in one or more series, and to fix and state
the powers, designations, preferences and relative, participating, optional or
other special rights of the shares of each series, and the qualifications,
limitations and restrictions thereof, including , but not limited to,
determination of any of the following:
(1) the distinctive serial designation and the number of shares
constituting each series;
(2) the dividend rates or the amounts of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if
so, from which date or dates, the payment date or dates for dividends,
and the participating or other special rights, if any, with respect to
dividends;
(3) the voting powers, full or limited, if any, of the shares of such
series;
(4) whether the shares of such series shall be redeemable and, if so, the
price or prices at which, and the terms and conditions upon which such
shares may be redeemed;
(5) the amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
(6) whether the shares of such series shall be entitled to the benefits of
a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and, if so entitled, the amount of such
fund and the manner of its application, including the price or prices
at which such shares may be redeemed or purchased through the
application of such funds;
(7) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or into any
other series of the same or any other class or classes of stock of the
3
<PAGE>
Corporation and, if so convertible or exchangeable, the conversion
price or prices, or the rate or rates of exchange, and the adjustments
thereof, if any, at which such conversion or exchange may be made, and
any other terms and conditions of such conversion or exchange;
(8) the subscription or purchase price and the form of consideration for
which the shares of such series shall be issued; and
(9) whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of Class B
serial preferred stock and whether such shares may be reissued as
shares of the same or any other series of Class B serial preferred
stock.
Each share of each series of Class B serial preferred stock shall have the
same relative powers, preferences and rights as, and shall be identical in all
respects with, all of the other shares of the Corporation of the same series.
Notwithstanding anything to the contrary contained herein or in any
resolution of the board of directors providing for the issuance of any series of
Class B serial preferred stock, all shares of Class B serial preferred stock, of
any series, shall rank junior in respect of the payment of dividends and
payments to be received upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation to all shares of the Corporation's
9.20% Redeemable Cumulative Preferred Stock, Series A, or any class or series of
capital stock ranking prior to or on a parity with such 9.20% Redeemable
Cumulative Preferred Stock, Series A.
Except as may be expressly provided in the resolution of the board of
directors providing for the issuance of any series of Class B serial preferred
stock, the number of shares of Class B serial preferred stock authorized hereby
may be increased or decreased, but not below the number of shares of all series
of Class B serial preferred stock outstanding as of the date of such decrease,
upon the vote of a majority of the shares of common stock and any other class
entitled to vote with the common stock generally in respect of amendments
hereof, and without the separate vote or approval of the Class B serial
preferred stock, or of any series of Class B serial preferred stock, voting
separately as a class.
ARTICLE VI
Preemptive Rights
Holders of the capital stock of the Corporation shall not be entitled to
preemptive rights with respect to any shares or other securities of the
Corporation which may be issued or any securities convertible into any such
shares, including, without limitation, warrants, subscription rights and options
to acquire shares.
ARTICLE VII
Repurchase of Shares
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the shareholders,
purchase or otherwise acquire shares of any class, bonds, debentures, notes,
scrip, warrants, obligations, evidences of indebtedness, or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
board of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
ARTICLE VIII
Meetings of Shareholders; Cumulative Voting
4
<PAGE>
A. Notwithstanding any other provision of this Certificate of
Incorporation or the bylaws of the Corporation, no action required to be taken
or which may be taken at any annual or special meeting of shareholders of the
Corporation may be taken without a meeting, and the power of shareholders to
consent in writing, without a meeting, to the taking of any action is
specifically denied.
B. Special meetings of the shareholders of the Corporation for any purpose
or purposes may be called at any time by the board of directors of the
Corporation, or by a committee of the board of directors which has been duly
designated by the board of directors and whose powers and authorities, as
provided in a resolution of the board of directors or in the bylaws of the
Corporation, include the power and authority to call such meetings, but such
special meetings may not be called by any other person or persons.
C. There shall be cumulative voting by shareholders of any class or series
in the election of directors of the Corporation. At all times each holder of
common stock of the Corporation shall be entitle to one(1) vote for each share
of such stock standing in his name on the books of the Corporation. At all
elections of Directors of the Corporation, the number of votes which (except for
this provision) he would then be entitled to cast for the election of Directors
with respect to his shares, multiplied by the number of Directors upon whose
election he is then entitled to vote, and he may cast all or such votes for a
single candidate or may distribute them among some or all of the candidates as
he may see fit.
D. Meetings of shareholders may be held within or without the State of
Oklahoma, as the bylaws may provide.
ARTICLE IX
Notice for Nominations and Proposals
A. Nominations for the election of directors and proposals for any new
business to be taken up at any annual or special meeting of shareholders may be
made by the board of directors of the Corporation or by any shareholder of the
Corporation entitled to vote generally in the election of directors. In order
for a shareholder of the Corporation to make any such nominations and/or
proposals, he or she shall give notice thereof in writing, delivered or mailed
by first class United States mail, postage prepaid, to the Secretary of the
Corporation not less than 30 days nor more than 60 days prior to any such
meeting; provided, however, that if less than 40 days' notice of the meeting is
given to shareholders, such written notice shall be delivered or mailed, as
prescribed, to the Secretary of the Corporation not later than the close of the
tenth day following the day on which notice of the meeting was mailed to
shareholders. Each such notice given by a shareholder with respect to
nominations for the election of directors shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee. In addition, the shareholder making
such nomination shall promptly provide any other information reasonably
requested by the Corporation.
B. Each such notice given by a shareholder to the Secretary with respect
to business proposals to bring before a meeting shall set forth in writing as to
each matter: (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting;
(ii) the name and address, as they appear on the Corporation's books, of the
shareholder proposing such business; (iii) the class and number of shares of
the Corporation which are beneficially owned by the shareholder; and (iv) any
material interest of the shareholder in such business. Notwithstanding anything
in this Certificate of Incorporation to the contrary, no business shall be
conducted at the meeting except in accordance with the procedures set forth in
this Article IX.
C. The Chairman of the annual or special meeting of shareholders may, if
the facts warrant, determine and declare to such meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if he
should so determine, he shall so declare to the meeting, and the defective
nomination or proposal shall be
5
<PAGE>
disregarded and laid over for action at the next succeeding adjourned, special
or annual meeting of the shareholders taking place thirty days or more
thereafter. This provision shall not require the holding of any adjourned or
special meeting of shareholders for the purpose of considering such defective
nomination or proposal.
ARTICLE X
Directors
A. Number; Vacancies. The number of directors of the Corporation
-----------------
shall be such number, not less than three nor more than twenty-one (exclusive of
directors, if any, to be elected by holders of preferred stock of the
Corporation, voting separately as a class), as shall be provided from time to
time in or in accordance with the bylaws, provided that no decrease in the
number of directors shall have the effect of shortening the term of any
incumbent director, and provided further that no action shall be taken to
decrease or increase the number of directors from time to time unless at least
two-thirds of the directors then in office shall concur in said action.
Vacancies in the board of directors of the Corporation, however caused, and
newly created directorships shall be filled by a vote of two-thirds of the
directors then in office, whether or not a quorum, and any director so chosen
shall hold office for a term expiring at the annual meeting of shareholders at
which the term of the class to which the director has been chosen expires and
when the director's successor is elected and qualified.
B. Classified Board. The board of directors of the Corporation
----------------
elected at the 1994 annual meeting of stockholders and thereafter shall be
divided into three classes of directors which shall be designated Class I, Class
II and Class III. The members of each class shall be elected for a term of
three years and until their successors are elected and qualified. Such classes
shall be as nearly equal in number as the then total number of directors
constituting the entire board of directors shall permit, with the terms of
office of all members of one class expiring each year. When the number of
directors is changed, the board of directors shall determine the class or
classes to which the increased or decreased number of directors shall be
apportioned; provided that the directors in each class shall be as nearly equal
in number as possible; provided, further, that no decrease in the number of
directors shall affect the term of any director then in office. At the 1994
annual meeting of shareholders, directors of Class I shall be elected to hold
office for a term expiring at the third succeeding annual meeting thereafter.
At the 1995 annual meeting of shareholders, directors of Class II shall be
elected to hold office for a term expiring at the third succeeding annual
meeting thereafter. At the 1996 annual meeting of shareholders, directors of
Class III shall be elected to hold office for a term expiring at the third
succeeding annual meeting thereafter. Thereafter, at each succeeding annual
meeting, directors of each class shall be elected for three year terms.
Notwithstanding the foregoing, the director whose term shall expire at any
annual meeting shall continue to serve until such time as his successor shall
have been duly elected and shall have qualified unless his position on the board
of directors shall have been abolished by action taken to reduce the size of the
board of directors prior to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the immediately
preceding paragraph. The board of directors shall designate, by the name of the
incumbent(s), the position(s) to be abolished. Notwithstanding the foregoing,
no decrease in the number of directors shall have the effect of shortening the
term of any incumbent director. Should the number of directors of the
Corporation be increased, the additional directorships shall be allocated among
classes as appropriate so that the number of directors in each class is as
specified in the immediately preceding paragraph.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the board of directors shall consist of
said directors so elected in addition to the number of directors fixed as
provided in this Article X. Notwithstanding the foregoing, and except as
otherwise may be required by law, whenever the holders of any one or more series
of preferred stock of the Corporation shall have the right, voting separately as
a class, to elect one or more directors of the Corporation, the terms of the
director or directors elected by such holders shall expire at the next
succeeding annual meeting of shareholders.
6
<PAGE>
ARTICLE XI
Removal of Directors
Notwithstanding any other provision of this Certificate of Incorporation
or the bylaws of the Corporation, any director or the entire board of directors
of the Corporation may be removed at any time, but only for cause and only by
the affirmative vote of the holders of at least 80% of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting of the
shareholders called for that purpose. Notwithstanding the foregoing, whenever
the holders of any one or more series of preferred stock of the Corporation
shall have the right, voting separately as a class, to elect one or more
directors of the Corporation, the preceding provisions of this Article XI shall
not apply with respect to the director or directors elected by such holders of
preferred stock.
ARTICLE XII
Approval of Certain Transactions
The affirmative vote of the holders of not less than eighty percent (80%)
of the outstanding shares of voting stock of the Corporation is required to
authorize (a) a merger or consolidation of the Corporation with, or (b) a sale,
exchange or lease of all or substantially all of the assets of the Corporation
to, any person or entity unless approval of any transaction enumerated in
clauses (a) or (b) above is recommended by at least a majority of the entire
Board of Directors. For purposes of this Article XII, "substantially all of the
assets" shall mean assets having a fair market value or book value, whichever is
greater, of twenty-five percent (25%) or more of the total assets of the
Corporation as reflected on a balance sheet of the Corporation as of a date no
earlier than forty-five (45) days prior to any acquisition of such assets.
ARTICLE XIII
Approval of Business Combinations with Certain Parties
The shareholder vote required to approve Business Combinations (as
hereinafter defined) shall be as set forth in this section.
A. (1) Except as otherwise expressly provided in this Article XIII, the
affirmative vote of the holders of (i) at least 80% of the outstanding
shares entitled to vote thereon (and, if any class or series of shares is
entitled to vote thereon separately, the affirmative vote of the holders
of at least 80% of the outstanding shares of each such class or series),
and (ii) at least a majority of the outstanding shares entitled to vote
thereon, not including shares deemed beneficially owned by a Related
Person (as hereinafter defined), shall be required in order to authorize
any of the following:
(a) any merger or consolidation of the Corporation with or into a
Related Person (as hereinafter defined);
(b) any sale, lease, exchange, transfer or other disposition,
including without limitation, a mortgage, or any other capital device,
of all or any Substantial Part (as hereinafter defined) of the assets
of the Corporation (including without limitation any voting securities
of a subsidiary) or of a subsidiary, to a Related Person;
(c) any merger or consolidation of a Related Person with or into
the Corporation or a subsidiary of the Corporation;
7
<PAGE>
(d) any sale, lease, exchange, transfer or other disposition of
all or any Substantial Part of the assets of a Related Person to the
Corporation or a subsidiary of the Corporation;
(e) the issuance of any securities of the Corporation or a
subsidiary of the Corporation to a Related Person;
(f) the acquisition by the Corporation or a subsidiary of the
Corporation of any securities of a Related Person;
(g) any reclassification of the common stock of the Corporation,
or any recapitalization involving the common stock of the Corporation;
and
(h) any agreement, contract or other arrangement providing for
any of the transactions described in this Article XIII.
(2) Such affirmative vote shall be required notwithstanding any other
provision of this Certificate of Incorporation, any provision of law, or
any agreement with any regulatory agency or national securities exchange
which might otherwise permit a lesser vote or no vote.
(3) The term "Business Combination" as used in this Article XIII
shall mean any transaction which is referred to in any one or more of
subparagraphs A(1)(a) through (h) above.
B. The provisions of paragraph A shall not be applicable to any
particular Business Combination, and such Business Combination shall require
only such affirmative vote as is required by any other provision of this
Certificate of Incorporation, any provision of law, or any agreement with any
regulatory agency or national securities exchange, if the Business Combination
shall have been approved by two-thirds of the Continuing Directors (as
hereinafter defined); provided, however, that such approval shall only be
effective if obtained at a meeting at which a Continuing Director Quorum (as
hereinafter defined) is present.
C. For the purposes of this Article XIII the following definitions apply:
(1) The term "Related Person" shall mean and include (a) any
individual, corporation, partnership or other person or entity which
together with its "affiliates" (as that term is defined in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of
1934), "beneficially owns" (as that term is defined in Rule 13d-3 of the
General Rules and Regulations under the Securities Exchange Act of 1934) in
the aggregate 10% or more of the outstanding shares of the common stock of
the Corporation; and (b) any "affiliate" (as that term is defined in Rule
12b-2 under the Securities Exchange Act of 1934) of any such individual,
corporation, partnership or other person or entity. Without limitation,
any shares of the common stock of the Corporation which any Related Person
has the right to acquire pursuant to any agreement, or upon exercise or
conversion rights, warrants or options, or otherwise, shall be deemed
"beneficially owned" by such Related Person.
(2) The term "Substantial Part" shall mean more than 25 percent of
the total assets of the Corporation, as of the end of its most recent
fiscal year ending prior to the time the determination is made.
(3) The term "Continuing Director" shall mean any member of the board
of directors of the Corporation who is unaffiliated with the Related Person
and was a member of the board prior to the time that the Related Person
became a Related Person, and any successor of a Continuing Director who is
unaffiliated with the Related Person and is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the
board.
8
<PAGE>
(4) The term "Continuing Director Quorum" shall mean two-thirds of
the Continuing Directors capable of exercising the powers conferred on
them.
D. In addition to Sections A, B, and C of this Article XIII, the
provisions of Section 1090.3 of the Oklahoma General Corporation Act, as in
effect on the date of this Certificate of Incorporation or as hereafter amended,
shall apply to any Business Combination in which the Corporation may engage.
ARTICLE XIV
Evaluation of Business Combinations
In connection with the exercise of its judgment in determining what is in
the best interests of the Corporation and of the shareholders, when evaluating a
Business Combination (as defined in Article XIII) or a tender or exchange offer,
the board of directors of the Corporation may, in addition to considering the
adequacy of the amount to be paid in connection with any such transaction,
consider all of the following factors and any other factors which it deems
relevant; (i) the social and economic effects of the transaction on the
Corporation and its subsidiaries, employees, depositors, loan and other
customers, creditors and other elements of the communities in which the
Corporation and its subsidiaries operate or are located; (ii) the business and
financial condition and earnings prospects of the acquiring person or entity,
including, but not limited to, debt service and other existing financial
obligations, financial obligations to be incurred in connection with the
acquisition and other likely financial obligations of the acquiring person or
entity and the possible effect of such conditions upon the Corporation and its
subsidiaries and the other elements of the communities in which the Corporation
and its subsidiaries operate or are located; and (iii) the competence,
experience, and integrity of the acquiring person or entity and its or their
management.
ARTICLE XV
Indemnification
A. Persons. The Corporation shall indemnify, to the extent provided in
-------
paragraphs B, D or F:
(1) any person who is or was a director, officer, employee, or agent
of the Corporation; and
(2) any person who serves or served at the Corporation's request as a
director, officer, employee, agent, partner or trustee of another
corporation, partnership, joint venture, trust or other enterprise.
B. Extent -- Derivative Suits. In case of a threatened, pending or
--------------------------
completed action or suit by or in the right of the Corporation against a person
named in paragraph A by reason of his holding a position named in paragraph A,
the Corporation shall indemnify him if he satisfies the standard in paragraph C,
for expenses (including attorneys' fees) actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit.
C. Standard -- Derivative Suits. In case of a threatened, pending or
----------------------------
completed action or suit by or in the right of the Corporation, a person named
in paragraph A shall be indemnified only if:
(1) he is successful on the merits or otherwise; or
(2) he acted in good faith in the transaction which is the subject of
the action or suit, and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, including, but not
limited to, the taking of any and all actions in connection with the
Corporation's response to any tender offer or any offer or proposal of
another party to engage in a Business Combination (as defined in Article
XIII) not approved by the board of directors. However, he shall not be
indemnified in respect of any claim, issue or matter as to which he has
been adjudged liable to the Corporation unless (and only to
9
<PAGE>
the extent that) the court in which the action or suit was brought shall
determine, upon application, that despite the adjudication but in view of
all the circumstances, he is fairly and reasonably entitled to indemnity
for such expenses as the court shall deem proper.
D. Extent -- Nonderivative Suits. In case of a threatened, pending or
-----------------------------
completed suit, action or proceeding (whether civil, criminal, administrative or
investigative), other than a suit by or in the right of the Corporation,
together hereafter referred to as a nonderivative suit, against a person named
in paragraph A by reason of his holding a position named in paragraph A, the
Corporation shall indemnify him if he satisfies the standard in paragraph E, for
amounts actually and reasonably incurred by him in connection with the defense
or settlement of the nonderivative suit, including, but not limited to (i)
expenses (including attorneys' fees), (ii) amounts paid in settlement, (iii)
judgments, and (iv) fines.
E. Standard -- Nonderivative Suits. In case of a nonderivative suit, a
-------------------------------
person named in paragraph A shall be indemnified if:
(1) he is successful on the merits or otherwise; or
(2) he acted in good faith in the transaction which is the subject of
the nonderivative suit and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Corporation, including, but not
limited to, the taking of any and all actions in connection with the
Corporation's response to any tender offer or any offer or proposal of
another party to engage in a Business Combination (as defined in Article
XIII) not approved by the board of directors, and, with respect to any
criminal action or proceeding, he had no reasonable cause to believe his
conduct was unlawful. The termination of a nonderivative suit by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
---- ----------
equivalent shall not, of itself, create a presumption that the person
failed to satisfy the standard of this subparagraph E(2).
F. Determination That Standard Has Been Met. A determination that the
----------------------------------------
standard of paragraph C or E has been satisfied may be made by a court. Or,
except as stated in subparagraph C(2) (second sentence), the determination may
be made by:
(1) the board of directors by a majority vote of a quorum consisting
of directors of the Corporation who were not parties to the action, suit or
proceeding; or
(2) independent legal counsel (appointed by a majority of the
disinterested directors of the Corporation, whether or not a quorum) in a
written opinion; or
(3) the shareholders of the Corporation.
G. Proration. Anyone making a determination under paragraph F may
---------
determine that a person has met the standard as to some matters but not as to
others, and may reasonably prorate amounts to be indemnified.
H. Advance Payment. The Corporation shall pay in advance any expenses
---------------
(including attorneys' fees) which may become subject to indemnification under
paragraphs A through G if:
(1) the board of directors authorizes the specific payment; and
(2) the person receiving the payment undertakes in writing to repay
the same if it is ultimately determined that he is not entitled to
indemnification by the Corporation under paragraphs A through G.
I. Nonexclusive. The indemnification and advance payment of expenses
------------
provided by paragraphs A through H shall not be exclusive of any other rights to
which a person may be entitled by law, bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise.
10
<PAGE>
J. Continuation. The indemnification provided by this Article XV shall be
------------
deemed to be a contract between the Corporation and the persons entitled to
indemnification thereunder, and any repeal or modification of this Article XV
shall not affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought based in whole or in part upon any such state
of facts. The indemnification and advance payment provided by paragraphs A
through H shall continue as to a person who has ceased to hold a position named
in paragraph A and shall inure to his heirs, executors and administrators.
K. Insurance. The Corporation may purchase and maintain insurance on
---------
behalf of any person who holds or who has held any position named in paragraph
A, against any liability incurred by him in any such position, or arising out of
his status as such, whether or not the Corporation would have power to indemnify
him against such liability under paragraphs A through H.
L. Savings Clause. If this Article XV or any portion hereof shall be
--------------
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, officer, employee, and
agent of the Corporation or person who serves or served at the Corporation's
request as a director, officer, employee, agent, partner or trustee of another
corporation, partnership, joint venture, trust or other enterprise as to costs,
charges, and expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement with respect to any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, including an action by or in
the right of the Corporation to the full extent permitted by any applicable
portion of this Article XV that shall not have been invalidated and to the full
extent permitted by applicable law.
ARTICLE XVI
Limitations on Directors' Liability
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except: (i) for any breach of the director's duty of loyalty
to the Corporation or its shareholders, (ii) for acts or omissions that are not
in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) under Section 1053 or of the Oklahoma General Corporation Act; or
(iv) for any transaction from which the director derived an improper personal
benefit. If the Oklahoma General Corporation Act is amended after the date of
filing of this Certificate of Incorporation to further eliminate or limit the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Oklahoma General Corporation Act, as so amended.
Any repeal or modification of the foregoing paragraph by the shareholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE XVII
Applicability of Sections 1145 through 1155 of Oklahoma General Corporation
Act.
The provisions of Sections 1145 through 1155 of the Oklahoma General
Corporation Act, as in effect on the date of this Certificate of Incorporation
or as hereafter amended, shall not apply to the Corporation as of December 31,
1993 and thereafter.
11
<PAGE>
ARTICLE XVIII
Amendment of Bylaws
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the Corporation is expressly authorized to adopt,
repeal, alter, amend and rescind the bylaws of the Corporation by a vote of a
majority of the board of directors. Notwithstanding any other provision of this
Certificate of Incorporation or the bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law),
the bylaws shall not be adopted, repealed, altered, amended or rescinded by the
shareholders of the Corporation except by the affirmative vote of the holders of
not less than 80% of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the shareholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or rescission is included in the notice of such meeting), or, as set
forth above, by the board of directors.
ARTICLE XIX
Amendment of Certificate of Incorporation
The Corporation reserves the right to repeal, alter, amend or rescind any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by law, and all rights conferred on shareholders herein are
granted subject to this reservation. Notwithstanding the foregoing, the
provisions set forth in Articles X, XI, XII, XIII, XV, XVI, XVII, XVIII, and
this Article XIX may not be repealed, altered, amended or rescinded in any
respect unless the same is approved by the affirmative vote of the holders of
not less than 80% of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for this
purpose as a single class) cast at a meeting of the shareholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or rescission is included in the notice of such meeting), except, with
the prior approval of a majority of the Continuing Directors, as defined in
Article XIII, the provisions set forth in Article XIII may be repealed, altered,
amended or rescinded with the approval of the affirmative vote of the holders of
a majority of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors cast at a meeting of the
shareholders called for that purpose.
ARTICLE XX
This Amended and Restated Certificate of Incorporation has been duly
adopted in accordance with the provisions of OKLA. STAT. tit. 18, (S) 1080
(1986) by the Board of Directors without a vote of the shareholders, and only
restates and integrates, and does not further amend, the provisions of the
Amended and Restated Certificate of Incorporation of Southwest Bancorp., Inc. as
up to the time of adoption amended or supplemented. There is no discrepancy
between those provisions and the provisions of this Amended and Restated
Certificate of Incorporation.
Dated this 27th day of June, 1996_/
[SEAL APPEARS HERE]
ATTEST: SOUTHWEST BANCORP, INC.
/s/ Deborah Labig /s/ Robert L. McCormick, Jr.
___________________ By___________________________________
SECRETARY Robert L. McCormick, Jr., President
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SOUTHWEST
BANCORP'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 28,691
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 60,666
<INVESTMENTS-CARRYING> 81,583
<INVESTMENTS-MARKET> 81,157
<LOANS> 578,902
<ALLOWANCE> 6,513
<TOTAL-ASSETS> 773,362
<DEPOSITS> 703,694
<SHORT-TERM> 1,500
<LIABILITIES-OTHER> 6,006
<LONG-TERM> 0
0
690
<COMMON> 3,759
<OTHER-SE> 57,713
<TOTAL-LIABILITIES-AND-EQUITY> 773,362
<INTEREST-LOAN> 26,103
<INTEREST-INVEST> 4,390
<INTEREST-OTHER> 218
<INTEREST-TOTAL> 30,711
<INTEREST-DEPOSIT> 15,284
<INTEREST-EXPENSE> 15,355
<INTEREST-INCOME-NET> 15,356
<LOAN-LOSSES> 1,650
<SECURITIES-GAINS> 171
<EXPENSE-OTHER> 10,684
<INCOME-PRETAX> 6,102
<INCOME-PRE-EXTRAORDINARY> 6,102
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,908
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
<YIELD-ACTUAL> 8.82
<LOANS-NON> 3,180
<LOANS-PAST> 895
<LOANS-TROUBLED> 3,467
<LOANS-PROBLEM> 11,203
<ALLOWANCE-OPEN> 5,813
<CHARGE-OFFS> 1,257
<RECOVERIES> 307
<ALLOWANCE-CLOSE> 6,513
<ALLOWANCE-DOMESTIC> 6,373
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 140
</TABLE>
