UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT OF EMPLOYEE STOCK PURCHASE,
SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _____________________ TO _______________________
COMMISSION FILE NO. 000-22007
A. Full title of the plan and 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 offices:
SOUTHWEST BANCORPORATION OF TEXAS, INC.
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
SOUTHWEST BANK OF TEXAS 401(k) SAVINGS PLAN
----------
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
TABLE OF CONTENTS
PAGE(s)
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Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statement of Net Assets Available for Benefits as of
December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available for Benefits
for the years ended December 31, 2003, 2002 and 2001 3
Notes to Financial Statements 4-7
Supplementary Schedule*:
Schedule H, Item 4i - Assets Held for Investment Purposes
as of December 31, 2003 8
* 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, 2003 has been omitted because
all investment transactions in the Plan were participant directed and,
therefore, not reportable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2003 and
2002, and the related statements of changes in net assets available for benefits
for the three years ended December 31, 2003, 2002 and 2001. 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2003 and 2002, and the changes
in its net assets available for benefits for the years ended December 31, 2003,
2002 and 2001 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, 2003 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, 2004
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
----------
2003 2002
----------- -----------
Cash $ 55,981 $ 84,665
Investments:
Money market funds 356,993 55,063
Common stock 14,158,416 11,053,129*
Investment in Fairmont Park JV -- 295,606
Shares of registered investment companies, reported at fair value:
Dreyfus S&P 500 Index Fund 5,182,157* --
Fidelity Advisor Freedom 2010 Fund 1,238,031 --
Fidelity Advisor Freedom 2020 Fund 1,669,872 --
Fidelity Advisor Freedom 2030 Fund 648,770 --
Fidelity Advisor Freedom 2040 Fund 13,856 --
Federated Mid Cap Fund 144,576 --
Dreyfus Premier Worldwide Growth Fund 2,917,246* --
Loomis Sayles Bond Admin Fund 1,548,082 --
Evergreen Special Values Fund 189,117 --
Fidelity Treasury Fund 397,292 --
Fidelity Advisor Equity Income Fund 2,398,874* --
Fidelity Advisor Equity Growth Fund 419,068 --
Fidelity Advisor Growth & Income Fund 2,709,702* --
Fidelity Advisor Small Cap Fund 775,881 --
Fidelity Advisor High Income Fund 41,695 --
Fidelity Advisor Mid Cap Fund 5,889,632* --
Fidelity Advisor Balanced Fund 2,071,032 --
Fidelity Advisor Short Fixed Income Fund 65,069 --
Fidelity Advisor Strategic Income Fund 380,175 --
Fidelity Advisor Government Investment Fund 1,733,618 --
Fidelity Advisor Stable Value Fund 9,970,031* --
Fidelity Advisor Dividend Growth Fund 2,997,968* --
Fidelity Advisor Diversified International Fund 411,440 --
Hand Benefits and Trust Short Term Income Fund -- 8,348,966*
Fidelity Spartan US Equity Index Fund -- 3,191,665*
Fidelity Spartan Government Income Fund -- 1,302,879
Hand Benefits and Trust SMART Aggressive Fund -- 551,120
Hand Benefits and Trust SMART Moderate Fund -- 1,505,190
Hand Benefits and Trust SMART Conservative Fund -- 896,868
American Funds Fundamental Fund A -- 1,539,821
AIM Aggressive Growth Fund -- 2,104,284
AIM Balanced Fund A -- 1,575,310
AIM Charter Fund -- 1,862,602
AIM Global Science & Technology Fund -- 166,230
AIM Value Fund Class A -- --
AIM Premier Equity Fund A -- 2,420,468*
Janus Worldwide Fund -- 2,572,891*
Janus Enterprise Fund -- 732,222
Loomis Sayles Bond Fund -- 781,972
----------- -----------
Total investments 58,328,593 40,956,286
Accounts receivable -- 15,239
Loans to participants 1,924,860 1,555,886
----------- -----------
Net assets 60,309,434 42,612,076
Accounts payable - purchase of securities -- 6,296
----------- -----------
Net assets available for benefits $60,309,434 $42,605,780
=========== ===========
* 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, 2003, 2002 AND 2001
----------
2003 2002 2001
------------ ------------ ------------
Additions to net assets attributable to:
Investment income:
Interest and/or dividends $ 717,320 $ 89,483 $ 70,097
Net (depreciation)/appreciation in fair
value of investments 9,244,716 (5,113,654) (8,211,290)
Decrease in value of investment in Fairmont
Park JV -- (52,591) --
------------ ------------ ------------
Total investment income (loss) 9,962,036 (5,076,762) (8,141,193)
------------ ------------ ------------
Contributions:
Employer 2,977,314 2,480,482 2,173,022
Employee 5,668,275 5,002,962 4,336,616
Transfer in from merged plan 3,959,299 -- 8,995,939
Other 375 21,273 16,326
------------ ------------ ------------
Total contributions 12,605,263 7,504,717 15,521,903
------------ ------------ ------------
Total additions 22,567,299 2,427,955 7,380,710
------------ ------------ ------------
Deductions from net assets attributable to:
Benefits to participants 4,514,924 2,537,102 3,138,668
Transfer to other plan 295,606 -- --
Administrative expenses 53,115 42,762 12,652
------------ ------------ ------------
Total deductions 4,863,645 2,579,864 3,151,320
------------ ------------ ------------
Increase (decrease) in net assets available
for benefits 17,703,654 (151,909) 4,229,390
Net assets available for benefits at beginning
of year 42,605,780 42,757,689 38,528,299
------------ ------------ ------------
Net assets available for benefits at end
of year $ 60,309,434 $ 42,605,780 $ 42,757,689
============ ============ ============
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
month 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.
On July 1, 2003, the MaximBank 401(k) Retirement Savings Plan (the "Maxim
Plan") was merged into the Plan. Upon termination of the Maxim Plan, the
trustee of the Maxim Plan was directed to transfer the net assets of the
Maxim 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 Maxim Plan. The total amount of
net assets available for benefits transferred was $3,959,299.
In addition, the Plan was amended to provide service credit for
eligibility and vesting for individuals employed by Citizens Bank and
Trust Company and Maxim Bank 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. Effective June 1, 2003, the Plan changed its trustee from Hand
Benefits and Trust Company to Fidelity Management Trust Company and
amended the Plan by adopting a Fidelity prototype plan that contained
provisions similar to its original plan.
CONTRIBUTIONS
Each year participants may elect to defer from 1% to 80% of pretax annual
compensation to the Plan, subject to the limitations specified in the
Internal Revenue Code ($12,000 in 2003). The Plan also allows the Company
to make discretionary contributions as determined by the board of
directors. During the years ended December 31, 2003, 2002 and 2001, the
Company made matching contributions equal to 100% of the participant's
eligible deferred contributions not to exceed 5% of the participant's
annual compensation for the Plan year.
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 are first used to pay
administrative expenses under the Plan. Forfeitures not used to pay
expenses are used to reduce future employer contributions.
Continued
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. DESCRIPTION OF PLAN, CONTINUED
VESTING
Participants who are active on or after June 1, 2003 are immediately
vested in their contributions and earnings thereon, and are vested in the
employer contributions as follows:
YEARS OF SERVICE VESTING
---------------- -------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
Participants who terminated service prior to June 1, 2003 and still have
assets in the Plan are immediately vested in their contributions and
earnings thereon, and are vested in the employer contributions as
follows:
YEARS OF SERVICE VESTING
---------------- -------
Less than 2 0%
2 40%
3 60%
4 80%
5 or more 100%
PARTICIPANT LOANS
Participants may borrow from their fund accounts up to a maximum equal to
the lesser of $50,000 or 50 percent of the participant's vested account
balance. Loans are calculated on a fully amortized basis. A loan is
collateralized by the vested balance in the participant's account and
bears interest at a rate commensurate with market rates for similar
loans, as defined.
PAYMENT OF BENEFITS
Upon termination of employment due to death or retirement, a participant
(or his or her designated beneficiary in the event of death) may elect to
receive either a lump-sum amount equal to the value of the participant's
vested interest in his or her account, or to have the account balance
distributed in annual installments. For termination of employment due to
other reasons, the vested interest in his or her account will be
distributed as a 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.
Continued
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
method of accounting in accordance with accounting principles generally
accepted in the United States of America. These principles may require
management to make estimates and assumptions that affect the reported
amount of assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities; accordingly, actual results could
differ from any such estimates.
FINANCIAL STATEMENT PRESENTATION
Effective June 1, 2003, when the Plan changed its trustee to Fidelity
Management Trust Company, all assets included in the Plan were
transferred to a newly created plan ("Plan 002") except for its
investment in the Fairmont Park JV (See Note 4) which remained in the
original plan ("Plan 001"). Accordingly, the Plan's financial statements
are presented to include the plan assets and activity of Plan 001 prior
to June 1, 2003 and Plan 002 subsequent to June 1, 2003.
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.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
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.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
3. RISKS AND UNCERTAINTIES
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.
Continued
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SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
----------
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. As of June 2, 2003 the FP Investment was
transferred to another qualified plan.
5. PARTY-IN-INTEREST TRANSACTIONS
Until liquidated on June 1, 2003, certain Plan investments were shares of
mutual funds managed by Hand Benefits and Trust. Hand Benefits and Trust
was the Trustee of the Plan until June 1, 2003 and, therefore, these
transactions qualify as party-in-interest. Fees paid to the Trustee by
the Company, on behalf of the Plan, were $31,666, $2,961 and $104,781 for
the years ended December 31, 2003, 2002 and 2001, 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.
Effective June 1, 2003 a standardized prototype plan was adopted. The
prototype plan received an opinion letter from the IRS and the Plan
trustee and administrator believe that the Plan is designed and is
currently being operated in compliance with the applicable requirements
of the IRC, as amended, and accordingly, that the trust maintained in
connection with the Plan is tax-exempt.
7. NON-CASH TRANSACTIONS
Included in benefits to participants for the years ended December 31,
2003, 2002 and 2001 are non-cash distributions of Southwest
Bancorporation of Texas, Inc. common stock with a value of $27,839,
$7,467 and $49,762, respectively.
8. SUBSEQUENT EVENT
Effective February 1, 2004 the Lone Star Bank Profit Sharing and Salary
Deferral Plan was merged into the Plan.
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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, 2003
----------
EIN: 76-0028668
PIN: 002
(b) IDENTIFY OF ISSUE (c) DESCRIPTION OF INVESTMENT, INCLUDING
BORROWER, LESSOR OR MATURITY DATE, RATE OF INTEREST, COLLATERAL, MARKET
(a) SIMILAR PARTY PAR OR MATURITY VALUE VALUE***
--- --------------------- -------------------------------------------- ------------
* Southwest Bancorpora- Common stock-Southwest Bancorporation
tion of Texas, Inc. of Texas, Inc. $14,158,416*
* Money market funds 356,993
Dreyfus Dreyfus S&P 500 Index Fund 5,182,157*
* Fidelity Fidelity Advisor Freedom 2010 Fund 1,238,031
* Fidelity Fidelity Advisor Freedom 2020 Fund 1,669,872
* Fidelity Fidelity Advisor Freedom 2030 Fund 648,770
* Fidelity Fidelity Advisor Freedom 2040 Fund 13,856
* Fidelity Federated Mid Cap Fund 144,576
Dreyfus Dreyfus Premier Worldwide Growth Fund 2,917,246*
Loomis Loomis Sayles Bond Admin Fund 1,548,082
Evergreen Evergreen Special Values Fund 189,117
* Fidelity Fidelity Treasury Fund 397,292
* Fidelity Fidelity Advisor Equity Income Fund 2,398,874*
* Fidelity Fidelity Advisor Equity Growth Fund 419,068
* Fidelity Fidelity Advisor Growth & Income Fund 2,709,702*
* Fidelity Fidelity Advisor Small Cap Fund 775,881
* Fidelity Fidelity Advisor High Income Fund 41,695
* Fidelity Fidelity Advisor Mid Cap Fund 5,889,632*
* Fidelity Fidelity Advisor Balanced Fund 2,071,032
* Fidelity Fidelity Advisor Short Fixed Income Fund 65,069
* Fidelity Fidelity Advisor Strategic Income Fund 380,175
* Fidelity Fidelity Advisor Government Investment Fund 1,733,618
* Fidelity Fidelity Advisor Stable Value Fund 9,970,031*
* Fidelity Fidelity Advisor Dividend Growth Fund 2,997,968*
* Fidelity Fidelity Advisor Diversified International Fund 411,440
-----------
$58,328,593
===========
Loans to participants bearing interest at
rates ranging from 6% to 10% $ 1,924,860
===========
* 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.
-8-
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
401(k) SAVINGS PLAN
Date: June 28, 2004 \s\ ROBYN BREND
---------------------------------------
Robyn Brend
Vice President
Benefits/Payroll Manager
-9-
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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23.1 - Consent of Ham, Langston & Brezina, L.L.P, independent auditors
(filed herewith).