11-K 1 h07090e11vk.txt SOUTHWEST BANCORPORATION OF TEXAS, INC.- 401(K) 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 ----------- 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 -----------
PAGE(s) ------- 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 -1- SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 2002 AND 2001 ----------
2002 2001 ----------- ----------- 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 ----------- ----------- Total investments 40,956,286 41,328,251 Accounts receivable 15,239 21,223 Loans to participants 1,555,886 1,038,400 ----------- ----------- Net assets 42,612,076 $42,757,689 Accounts payable - purchase of securities 6,296 -- ----------- ----------- Net assets available for benefits $42,605,780 $42,757,689 =========== ===========
* Represents five percent or more of net assets. The accompanying notes are an integral part of these financial statements. -2- 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 ----------
2002 2001 2000 ------------ ------------ ------------ 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) -- -- ------------ ------------ ------------ 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 ------------ ------------ ------------ Total contributions 7,504,717 15,521,903 5,217,919 ------------ ------------ ------------ Total additions 2,427,955 7,380,710 12,823,316 ------------ ------------ ------------ 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 ------------ ------------ ------------ Total deductions 2,579,864 3,151,320 3,795,442 ------------ ------------ ------------ 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. -3- SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS ----------- 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 ---------------- ------- Less than 2 0% 2 40% 3 60% 4 80% 5 or more 100%
Continued -4- SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED ----------- 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 -5- SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED ----------- 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 -6- SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED ----------- 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 -7- SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED ----------- 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. -8- SUPPLEMENTAL SCHEDULE SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN SCHEDULE H, ITEM 4i - ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 2002 ---------- 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. -9-