FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number -00-22007
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Southwest Bank of Texas 401(k) Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Southwest Bancorporation of Texas, Inc.
4400 Post Oak Parkway
Houston, Texas 77027
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
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FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
TABLE OF CONTENTS
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PAGE(s)
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Report of Independent Accountants 1
Financial Statements:
Statement of Net Assets Available for
Benefits as of December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available
for Benefits for the years ended December 31,
2002, 2001 and 2000 3
Notes to Financial Statements 4-8
Supplementary Schedule*:
Schedule H, Item 4i - Assets Held for Investment
Purposes as of December 31, 2002 9
* Other schedules required by Section 2520.103.10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable. Schedule H, Item
4j-Reportable Transactions for the year ended December 31, 2002 has been
omitted because all investment transactions in the Plan were participant
directed and, therefore, not reportable.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrative Committee
Southwest Bank of Texas 401(k)
Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Southwest Bank of Texas 401(k) Savings Plan as of December 31, 2002 and
2001, and the related statements of changes in net assets available for benefits
for the three years ended December 31, 2002, 2001 and 2000. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Southwest Bank
of Texas 401(k) Savings Plan as of December 31, 2002 and 2001, and the changes
in its net assets available for benefits for the years ended December 31, 2002,
2001 and 2000 in conformity with accounting principles generally accepted in the
United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 2002 is presented for purposes of
complying with the Department of Labor Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974 and is not
a required part of the basic financial statements. The supplemental schedule has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated, in all materials
respects, in relation to the basic financial statements taken as a whole.
/s/ Ham, Langston & Brezina, L.L.P.
Houston, Texas
June 24, 2003
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
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2002 2001
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Cash $ 84,665 $ 369,815
Investments:
Money market funds 55,063 2,512
Common stock 11,053,129* 11,516,676*
Investment in Fairmont Park JV 295,606 348,197
Shares of registered investment companies, reported
at fair value:
Hand Benefits and Trust Short Term Income Fund 8,348,966* 6,718,565*
Fidelity Spartan US Equity Index Fund 3,191,665* 3,453,717*
Fidelity Spartan Government Income Fund 1,302,879 245,211
Hand Benefits and Trust SMART Aggressive Fund 551,120 752,282
Hand Benefits and Trust SMART Moderate Fund 1,505,190 1,601,553
Hand Benefits and Trust SMART Conservative Fund 896,868 1,149,091
American Funds Fundamental Fund A 1,539,821 1,473,564
AIM Aggressive Growth Fund 2,104,284 2,324,675*
AIM Balanced Fund A 1,575,310 1,882,370
AIM Charter Fund 1,862,602 2,185,462*
AIM Global Science & Technology Fund 166,230 279,738
AIM Value Fund Class A -- 3,339,519*
AIM Premier Equity Fund A 2,420,468* --
Janus Worldwide Fund 2,572,891* 2,780,580*
Janus Enterprise Fund 732,222 746,549
Loomis Sayles Bond Fund 781,972 527,990
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Total investments 40,956,286 41,328,251
Accounts receivable 15,239 21,223
Loans to participants 1,555,886 1,038,400
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Net assets 42,612,076 $42,757,689
Accounts payable - purchase of securities 6,296 --
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Net assets available for benefits $42,605,780 $42,757,689
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* Represents five percent or more of net assets.
The accompanying notes are an integral
part of these financial statements.
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
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2002 2001 2000
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Additions to net assets attributable to:
Investment income:
Interest and/or dividends $ 89,483 $ 70,097 $ 70,269
Net (depreciation)/appreciation in fair
value of investments (5,113,654) (8,211,290) 7,535,128
Decrease in value of investment in Fairmont
Park JV (52,591) -- --
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Total investment income (loss) (5,076,762) (8,141,193) 7,605,397
------------ ------------ ------------
Contributions:
Transfer in from other plan -- 8,995,939 --
Employer 2,480,482 2,173,022 1,691,577
Employee 5,002,962 4,336,616 3,524,181
Other 21,273 16,326 2,161
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Total contributions 7,504,717 15,521,903 5,217,919
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Total additions 2,427,955 7,380,710 12,823,316
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Deductions from net assets attributable to:
Benefits to participants 2,537,102 3,138,668 3,737,572
Administrative expenses 42,762 12,652 57,870
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Total deductions 2,579,864 3,151,320 3,795,442
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Increase (decrease) in net assets available
for benefits (151,909) 4,229,390 9,027,874
Net assets available for benefits at beginning
of year 42,757,689 38,528,299 29,500,425
------------ ------------ ------------
Net assets available for benefits at end
of year $ 42,605,780 $ 42,757,689 $ 38,528,299
============ ============ ============
The accompanying notes are an integral
part of these financial statements.
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF PLAN
The following description of the Southwest Bank of Texas (the
"Company") 401(k) Savings Plan (the "Plan") (formerly Southwest Bank of
Texas National Association Savings Plan) provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provision.
GENERAL
The Plan, adopted by the Company's board of directors and effective
December 30, 1985 is a defined contribution plan covering all employees
who have attained the age of eighteen years (18) and have completed one
full year of service as defined in the Plan. The Plan is subject to the
Employee Retirement Income Security Act of 1974 ("ERISA").
On April 1, 2001 the Profit Sharing Plan for Employees of Citizens Bank
and Trust Company of Baytown, Texas (the "Citizen Plan") was merged
into the Plan. Upon termination of the Citizen Plan, the trustee of the
Citizen Plan was directed to transfer the net assets of the Citizen
Plan to the trustee of the Plan. The transferred net assets have been
recognized in the accounts of the Plan at their balances as previously
carried in the accounts of the Citizen Plan. The total amount of net
assets available for benefits transferred was $8,995,939.
In addition, the Plan was amended to provide service credit for
eligibility and vesting for individuals employed by Citizens Bank and
Trust Company of Baytown, Texas as of the date of merger and who
subsequently became employees of the Company.
Effective January 1, 2002, the Plan was amended to reflect certain
provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001.
CONTRIBUTIONS
Each year participants may elect to defer from 1% to 18% of pretax
annual compensation to the Plan, subject to the limitations specified
in the Internal Revenue Code. The Company is required to make matching
contributions equal to 100% of the participant's eligible deferred
contributions not to exceed 6% of the participant's annual compensation
for the Plan Year. The Plan also allows the Company to make
discretionary contributions as determined by the board of directors.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, earnings on the investments selected by the participant
and Company matching and discretionary contributions. Company
contributions and earnings on investments are allocated to each
participant's account according to compensation based allocation
formulas contained in the Plan agreement. Forfeitures can be used to
pay expenses under the Plan. Forfeitures not used to pay expenses are
allocated to each participant's account according to compensation based
allocation formulas contained in the Plan agreement. The Company pays
substantially all expenses of plan administration.
VESTING
Participants are immediately vested in their contributions and earnings
thereon, and are vested in the employer contributions as follows:
Years of Service Vesting
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Less than 2 0%
2 40%
3 60%
4 80%
5 or more 100%
Continued
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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1. DESCRIPTION OF PLAN, CONTINUED
PARTICIPANT LOANS
The Custodian may make loans to participants from the Plan, subject to
the provisions of the trust instrument.
PAYMENT OF BENEFITS
The account of a withdrawing participant is equal to the current market
value of his or her vested balance in the account. The normal retirement
age under the Plan is 65 but early retirement is allowed at or after age
55. Hardship and in-service withdrawals are allowed under the Plan before
age 55 but such withdrawals may have income tax consequences to the
participant. Benefits are generally paid by lump-sum distribution.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100 percent vested in their
accounts.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct all of his or her
contributions into one or more of the investment options offered by the
Custodian as follows:
SOUTHWEST BANCORPORATION OF TEXAS, INC. STOCK FUND
Funds are invested in common stock of Southwest Bancorporation of
Texas, Inc. and Subsidiaries.
HAND BENEFITS AND TRUST SHORT TERM INCOME FUND
Funds are invested in shares of a registered investment company that
invests in short-term obligations (money market accounts, certificates of
deposit, or commercial paper) and U.S. governmental obligations (treasury
bills or agency notes).
FIDELITY SPARTAN U.S. EQUITY INDEX FUND
Funds are invested in shares of a registered investment company that
invests in selected common stock of the five hundred companies that make
up the Standard & Poor's 500 Index ("S&P 500") and in other securities
that are based on the S&P 500.
FIDELITY SPARTAN GOVERNMENT INCOME FUND
Funds are invested mainly in securities of any maturity issued or
guaranteed by the U.S. government and its agencies to provide the
opportunity for high current income.
HAND BENEFITS AND TRUST SMART AGGRESSIVE FUND
Funds are invested in shares of a registered investment company that
invests primarily in common stock of domestic and foreign companies with
the potential for high growth.
Continued
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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1. DESCRIPTION OF PLAN, CONTINUED
INVESTMENT OPTIONS, CONTINUED
HAND BENEFITS AND TRUST SMART MODERATE FUND
Funds are invested in shares of a registered investment company that
invests in intermediate-term bonds and common stock of domestic and
foreign companies with the potential for long-term capital growth.
HAND BENEFITS AND TRUST SMART CONSERVATIVE FUND
Funds are invested in shares of a registered investment company that
invests in U.S. government securities, intermediate-term bonds and common
stock of domestic and foreign companies that provide an opportunity for
capital growth that exceeds inflation.
AMERICAN FUNDS FUNDAMENTAL FUND A
Funds are invested primarily in common stocks or securities convertible
into common stocks to provide long-term growth or capital and income. The
funds may also be invested in bonds and debt securities of issuers
outside the U.S.
AIM AGGRESSIVE GROWTH FUND
Funds are invested in shares of a registered investment company that
invests in common stocks of companies with the potential for long-term
capital growth.
AIM BALANCED FUND A
Funds are invested in shares of a registered investment company that
invests in a broadly diversified portfolio of high-yielding securities
including common stocks, preferred stocks, convertible securities and
bonds for a high total return consistent with capital preservation.
AIM CHARTER FUND
Funds are invested in shares of a registered investment company that
invests in income-producing securities, including dividend-paying common
stocks and convertible securities, in order to achieve a high total
return through a combination of current income and capital appreciation.
AIM GLOBAL SCIENCE & TECHNOLOGY FUND
Funds are invested in shares of a registered investment company that
invests in equity securities of domestic and foreign telecommunications
and technology companies for long-term capital growth.
AIM VALUE FUND CLASS A
Funds are invested in shares of a registered investment company that
invests in common stocks of large domestic companies which have the
potential for long-term capital appreciation. This fund is no longer
offered as an investment option as of December 31, 2002.
AIM PREMIER EQUITY FUND A
Funds are invested in shares of a registered investment company that
invests in equity securities with the potential for long-term capital
growth.
Continued
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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1. DESCRIPTION OF PLAN, CONTINUED
INVESTMENT OPTIONS, CONTINUED
JANUS WORLDWIDE FUND
Funds are invested in shares of a registered investment company that
invests in common stocks of domestic and foreign companies with the
potential for long-term capital appreciation in a manner consistent with
capital preservation.
JANUS ENTERPRISE FUND
Funds are invested in shares of a registered investment company that
invests in common stocks of medium-sized companies with the potential for
long-term capital growth.
LOOMIS SAYLES BOND FUND
Funds are invested in shares of a registered investment company that
invests in preferred stocks and long-term bonds in order to achieve a
high total return through a combination of current income and capital
appreciation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
method of accounting.
INVESTMENT VALUATION
Funds deposited in short-term income accounts are valued at contract
value as reported to the Plan by the Custodian. Investments in various
pooled separate accounts offered by the Custodian are valued at estimated
fair value as determined by the Custodian. Investments in registered
investment companies (mutual funds) are valued based on quoted market
prices in an active market. Investments in employer common stock are
valued at the closing market price on the last business day of the Plan's
fiscal year. Investment in the Fairmont Park JV is valued based on an
independent appraisal as of December 31, 2002 and 2001.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses on sale of
investments and unrealized appreciation (depreciation) on those
investments.
Continued
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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3. CREDIT RISK
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Investment securities, in general, are exposed to various
risks, such as interest rate, credit and overall market volatility risk.
Due to the level of risk associated with certain investment securities,
it is reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could
materially affect the amounts reported in the statements of net assets
available for plan benefits and the amounts reported in participant
accounts.
4. INVESTMENT IN FAIRMONT PARK JV
The investment in Fairmont Park Joint Venture ("FP Investment")
represents a 5.81% ownership interest in a real estate joint venture in
Houston, Texas. The FP Investment was transferred into the Plan in
connection with its merger with the Citizen Plan in 2001. As per the
merger agreement, all Citizen Plan participants as of September 30, 2000
who had an employer profit sharing account under the Citizen Plan shall
maintain an interest in the FP Investment. However, this investment
became a "frozen" investment fund in which no contributions, loans or
in-service withdrawals can be made. All distributions to a terminated
participant with an interest in the FP Investment shall be made in cash
based upon the valuation of the investment on or preceding such
participant's distribution date.
5. PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Hand
Benefits and Trust. Hand Benefits and Trust is the Trustee as defined by
the Plan and, therefore, these transactions qualify as party-in-interest.
Trustee fees paid by the Company, on behalf of the Plan, were $2,961,
$104,781 and $40,088 for the years ended December 31, 2002, 2001 and
2000, respectively.
6. TAX STATUS
The Plan is designed to constitute a qualified plan under section 401(k)
of the Internal Revenue Code ("IRC"). The Plan obtained its latest
determination letter dated April 24, 2001 in which the Internal Revenue
Service stated that the Plan, as amended, is in compliance with the
applicable requirements of the IRC.
7. NON-CASH TRANSACTIONS
Included in benefits to participants for the years ended December 31,
2002, 2001 and 2000 are non-cash distributions of Southwest
Bancorporation of Texas, Inc. common stock with a value of $7,467,
$49,762 and $194,638, respectively.
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SUPPLEMENTAL SCHEDULE
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
SCHEDULE H, ITEM 4i - ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2002
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EIN: 76-0028668
PIN: 001
(b) IDENTIFY OF ISSUE (c) DESCRIPTION OF INVESTMENT, INCLUDING
BORROWER, LESSOR OR MATURITY DATE, RATE OF INTEREST, COLLATERAL, NUMBER MARKET
(a) SIMILAR PARTY PAR OR MATURITY VALUE OF SHARES VALUE***
--- --------------------- -------------------------------------------- -------------- ------------
Investment in Fairmont Park JV $ 295,606
* Southwest Bancorpora- Common stock-Southwest Bancorporation
tion of Texas, Inc. of Texas, Inc. 383,656.0000 11,053,129**
* Hand Benefits & Trust Money market funds 55,062.6100 55,063
* Hand Benefits & Trust Shares of registered investment companies:
Hand Benefits and Trust Short Term 8,348,966.1400 8,348,966**
Fidelity Spartan Income Fund 102,461.1640 3,191,665**
Fidelity Spartan Fidelity Spartan US Equity Index Fund 115,605.9670 1,302,879
* Hand Benefits & Trust Fidelity Spartan Government Income Fund
Hand Benefits and Trust SMART 56,641.7980 551,120
* Hand Benefits & Trust Aggressive Fund 140,261.7926 1,505,190
* Hand Benefits & Trust Hand Benefits and Trust SMART Moderate Fund
Hand Benefits and Trust SMART 80,257.4694 896,868
American Fundamental Conservative Fund
Investors 69,267.6950 1,539,821
AIM American Funds Fundamental Fund A 287,863.7670 2,104,284
AIM AIM Aggressive Growth Fund 75,699.6660 1,575,310
AIM AIM Balanced Fund A 193,819.1490 1,862,602
AIM AIM Charter Fund 35,595.1620 166,230
AIM AIM Global Science & Technology Fund 322,299.3840 2,420,468**
Janus AIM Premier Equity Fund A 80,077.5160 2,572,891**
Janus Janus Worldwide Fund 31,905.1130 732,222
Loomis Janus Enterprise Fund 71,153.0240 781,972
Loomis Sayles Bond Fund ------------
Total investment in shares of registered 29,552,488
investment companies ------------
$ 40,956,286
Total assets held for investment purposes ============
Loans to participants bearing interest at $ 1,555,886
rates ranging from 6% to 10% ============
* Represents a party-in-interest transaction.
** Represents investments comprising at least 5% of net assets available for
benefits.
*** Cost information is not presented because all investments are participant
directed.
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