10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

__________________

[ x ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

OR

[   ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-34110

SOUTHWEST BANCORP, INC.

(Exact name of registrant as specified in its charter)

Oklahoma	73-1136584
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
608 South Main Street, Stillwater, Oklahoma	74074
(Address of principal executive office)	(Zip Code)

Registrant’s telephone number, including area code: (405) 742-1800

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 12 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 90 days.

[ x ] YES[    ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

[  x ] YES[    ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” or an “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large Accelerated Filer [  ]   Accelerated Filer [ x ]   Non-Accelerated Filer [  ]   Smaller Reporting Company [  ]   Emerging Growth Company [  ] 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.[  ] 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[    ] YES[ x ] NO

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 7, 2017, the issuer has 18,685,050shares of its Common Stock, par value $1.00, outstanding.

1

SOUTHWEST BANCORP, INC.

INDEX TO FORM 10-Q

9
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition	4
Unaudited Consolidated Statements of Operations	5
Unaudited Consolidated Statements of Comprehensive Income	6
Unaudited Consolidated Statements of Cash Flows	7
Unaudited Consolidated Statements of Shareholders’ Equity	8
Notes to Unaudited Consolidated Financial Statements	9
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS	30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	46
ITEM 4. CONTROLS AND PROCEDURES	47
PART II. OTHER INFORMATION	48
ITEM 1. LEGAL PROCEEDINGS	48
ITEM 1A. RISK FACTORS	48
ITEM 6. EXHIBITS	48
SIGNATURES	49

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Southwest Bancorp, Inc. (“we”, “our”, “us”, “Southwest”) makes forward-looking statements in this Form 10-Q and documents incorporated by reference into it that are subject to risks and uncertainties.  Forward-looking statements often use words such as “anticipate”, “target”, “outlook”, “forecast”, “will”, “should”, “expect”, “estimate”, “intend”, “plan”, “goal”,
“believe”, or other words with similar meanings.  Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time, many of which are beyond our control.  We intend these statements to be covered by the safe harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 

These forward-looking statements include: 

· Statements of our goals, intentions, and expectations; 

· Estimates of risks and of future costs and benefits; 

· Expectations regarding our future financial performance and the financial performance of our operating segments; 

· Expectations regarding regulatory actions; 

· Expectations regarding our ability to utilize tax loss benefits; 

· Expectations regarding our stock repurchase program;

· Expectations regarding dividends;

· Expectations regarding our planned merger with Simmons First National Corporation;

· Expectations regarding integration of acquired banks;

· Assessments of loan quality, probable loan losses or negative provisions, and the amount and timing of loan payoffs; 

· Estimates of the value of assets held for sale or available for sale; and 

· Statements of our ability to achieve financial and other goals. 

These forward-looking statements are subject to significant uncertainties because they are based upon: the amount and timing of future changes in interest rates, market behavior, and other economic conditions, future laws,  regulations and accounting principles; changes in effective tax rates or the expiration of favorable tax provisions; changes in regulatory standards and examination policies; and a variety of other matters. These other matters include, among other things, the direct and indirect effects of economic conditions on interest rates, credit quality, loan demand, liquidity, and monetary and supervisory policies of banking regulators. Because of these uncertainties, the actual future results may be materially different from the results indicated by these forward-looking statements.  In addition, our past growth and performance do not necessarily indicate our future results.  For other factors, risks, and uncertainties that could cause actual results to differ materially from estimates and projections contained in forward-looking statements, please read the “Risk Factors” contained in our Annual Report on  Form 10-K for the year ended December 31, 2016. 

The cautionary statements in this Form 10-Q and any documents incorporated by reference herein also identify important factors and possible events that involve risk and uncertainties that could cause our actual results to differ materially from those contained in the forward-looking statements.  These forward-looking statements speak only as of the date on which the statements were made. We do not intend, and undertake no obligation, to update or revise any forward-looking statements contained in this Form 10-Q, whether as a result of differences in actual results, changes in assumptions, or changes in other factors affecting such statements, except as required by law. 

Management’s discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes. 

3

SOUTHWEST BANCORP, INC.

Consolidated Statementsof Financial Condition

	June 30,		December 31,
	2017		2016
(Dollars in thousands)	(unaudited)
Assets:
Cash and due from banks	$	37,898	$	36,831
Interest-bearing deposits		41,941		38,819
Cash and cash equivalents		79,839		75,650
Securities held to maturity (fair values of $10,632 and $10,677, respectively)		10,382		10,443
Securities available for sale (amortized cost of $424,172 and $427,113, respectively)		424,031		426,218
Loans held for sale		6,036		4,386
Loans receivable		1,965,598		1,872,746
Less:  Allowance for loan losses		(27,318)		(27,546)
Net loans receivable		1,938,280		1,845,200
Accrued interest receivable		6,328		6,194
Non-hedge derivative asset		2,698		1,235
Premises and equipment, net		21,901		22,808
Other real estate		-		350
Goodwill		13,545		13,545
Other intangible assets, net		5,727		5,790
Bank owned life insurance		28,450		28,575
Other assets		35,718		34,998
Total assets	$	2,572,935	$	2,475,392
Liabilities:
Deposits:
Noninterest-bearing demand	$	557,159	$	551,709
Interest-bearing demand		176,724		152,656
Money market accounts		599,122		567,058
Savings accounts		57,905		56,410
Time deposits of $100,000 or more		403,918		360,307
Other time deposits		219,006		257,878
Total deposits		2,013,834		1,946,018
Accrued interest payable		1,259		1,132
Non-hedge derivative liability		2,698		1,235
Other liabilities		9,500		10,171
Other borrowings		203,705		183,814
Subordinated debentures		46,393		46,393
Total liabilities		2,277,389		2,188,763
Shareholders' equity:
Common stock - $1 par value; 40,000,000 shares authorized;
21,260,352 and 21,230,714 shares issued, respectively		21,260		21,231
Additional paid in capital		123,772		123,112
Retained earnings		192,961		184,840
Accumulated other comprehensive loss		(292)		(907)
Treasury stock, at cost; 2,574,079 and 2,555,987 shares, respectively		(42,155)		(41,647)
Total shareholders' equity		295,546		286,629
Total liabilities & shareholders' equity	$	2,572,935	$	2,475,392
The accompanying notes are an integral part of these statements.

4

SOUTHWEST BANCORP, INC.

Unaudited Consolidated Statements of Operations

	For the three months				For the six months
	ended June 30,				ended June 30,
(Dollars in thousands, except earnings per share data)	2017		2016		2017		2016
Interest income:
Interest and fees on loans	$	22,562	$	20,031	$	43,506	$	40,061
Investment securities:
U.S. government and agency obligations		270		302		539		598
Mortgage-backed securities		1,084		1,038		2,207		2,115
State and political subdivisions		339		350		678		698
Other securities		342		272		663		516
Other interest-earning assets		111		51		186		104
Total interest income		24,708		22,044		47,779		44,092
Interest expense:
Interest-bearing demand		90		65		180		127
Money market accounts		815		329		1,287		650
Savings accounts		19		18		38		37
Time deposits of $100,000 or more		514		448		1,324		815
Other time deposits		686		568		1,135		1,106
Other borrowings		610		342		1,088		651
Subordinated debentures		604		579		1,194		1,171
Total interest expense		3,338		2,349		6,246		4,557
Net interest income		21,370		19,695		41,533		39,535
Provision for loan losses		1,729		10		3,505		4,385
Net interest income after provision for loan losses		19,641		19,685		38,028		35,150
Noninterest income:
Service charges and fees		2,800		2,556		5,481		5,105
Gain on sales of  mortgage loans, net		695		722		1,247		1,123
Gain on sales/calls of investment securities, net		-		165		451		291
Other noninterest income		1,026		428		2,222		767
Total noninterest income		4,521		3,871		9,401		7,286
Noninterest expense:
Salaries and employee benefits		9,675		9,587		19,575		18,929
Occupancy		2,318		2,669		4,691		5,340
Data processing		459		430		868		900
FDIC and other insurance		273		432		546		800
Other real estate, net		50		8		53		21
Provision (credit) for unfunded loan commitments		30		(263)		(358)		(48)
General and administrative		2,350		2,405		5,083		5,322
Total noninterest expense		15,155		15,268		30,458		31,264
Income before taxes		9,007		8,288		16,971		11,172
Taxes on income		3,189		2,876		5,874		3,891
Net income	$	5,818	$	5,412	$	11,097	$	7,281
Basic earnings per common share	$	0.31	$	0.29	$	0.59	$	0.38
Diluted earnings per common share		0.31		0.28		0.59		0.38
Common dividends declared per share		0.08		0.08		0.16		0.16
The accompanying notes are an integral part of these statements.

5

SOUTHWEST BANCORP, INC.

Unaudited Consolidated Statements of Comprehensive Income

	For the three months				For the six months
	ended June 30,				ended June 30,
(Dollars in thousands)	2017		2016		2017		2016
Net income	$	5,818	$	5,412	$	11,097	$	7,281
Other comprehensive income:
Unrealized holding gain (loss) on available for sale securities		(109)		1,693		754		4,804
Reclassification adjustment for net gains arising during the period		-		(165)		-		(291)
Change in fair value of derivative used for cash flow hedge		128		95		285		211
Other comprehensive income, before tax		19		1,623		1,039		4,724
Tax expense related to items of other comprehensive
income		(9)		(666)		(424)		(1,931)
Other comprehensive income, net of tax		10		957		615		2,793
Comprehensive income	$	5,828	$	6,369	$	11,712	$	10,074
The accompanying notes are an integral part of these statements.

6

SOUTHWEST BANCORP, INC.

Unaudited Consolidated Statements of Cash Flows

	For the six months
	ended June 30,
(Dollars in thousands)	2017		2016
Operating activities:
Net income	$	11,097	$	7,281
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		3,505		4,385
Deferred tax expense		824		39
Asset depreciation		1,210		1,436
Securities premium amortization, net of discount accretion		1,895		1,539
Amortization of intangibles		425		1,193
Restricted stock amortization expense		353		448
Net gain on sales/calls of investment securities		(451)		(291)
Net gain on sales of mortgage loans		(1,247)		(1,123)
Net loss on sales of premises/equipment		7		7
Net loss on sales of other real estate		23		5
Proceeds from sales of held for sale loans		56,690		56,253
Held for sale loans originated for resale		(57,335)		(54,682)
Net changes in assets and liabilities:
Accrued interest receivable		(134)		37
Bank owned life insurance		125		(455)
Other assets		(1,143)		(5,396)
Accrued interest payable		127		64
Other liabilities		1,427		2,924
Net cash provided by operating activities		17,398		13,664
Investing activities:
Proceeds from sales of available for sale securities		-		41,530
Proceeds from principal repayments, calls, and maturities:
Available for sale securities		43,476		33,828
Purchases of held to maturity securities		-		(444)
Purchases of available for sale securities		(42,370)		(81,817)
Net purchases of FHLB stock		(2,551)		(2,733)
Loans originated, net of principal repayments		(96,711)		(46,059)
Purchases of premises and equipment		(334)		(639)
Proceeds from sales of premises and equipment		24		44
Proceeds from sales of other real estate		337		147
Net cash used in investing activities		(98,129)		(56,143)
Financing activities:
Net increase in deposits		67,816		18,760
Net increase in other borrowings		19,891		42,641
Net proceeds from issuance of common stock		689		413
Purchases of treasury stock		(508)		(21,107)
Redemption of trust preferred securities		-		(5,155)
Common stock dividends paid		(2,967)		(3,113)
Preferred stock dividends paid		(1)		(1)
Net cash provided by financing activities		84,920		32,438
Net increase (decrease) in cash and cash equivalents		4,189		(10,041)
Cash and cash equivalents:
Beginning of period		75,650		78,129
End of period	$	79,839	$	68,088
The accompanying notes are an integral part of these statements.

7

SOUTHWEST BANCORP, INC.

Unaudited Consolidated Statements of Shareholders’ Equity

								Accumulated
				Additional				Other				Total
	Common Stock			Paid-in		Retained		Comprehensive			Treasury	Shareholders'
(Dollars in thousands)	Shares	Amount		Capital		Earnings		Income Gain/(Loss)			Stock	Equity
Balance, December 31, 2015	20,006,802	$	21,138	$	121,966	$	173,210	$	(1,290)	$	(18,926)	$	296,098
Dividends declared:
Preferred	-		-		-		(1)		-		-		(1)
Common, $0.16 per share	-		-		-		(3,117)		-		-		(3,117)
Net common stock issued under
employee plans and related tax expense	85,585		86		327		-		-		-		413
Other comprehensive income, net of tax	-		-		-		-		2,793		-		2,793
Treasury shares purchased	(1,341,604)		-		-		-		-		(21,107)		(21,107)
Net income	-		-		-		7,281		-		-		7,281
Balance, June 30, 2016	18,750,783	$	21,224	$	122,293	$	177,373	$	1,503	$	(40,033)	$	282,360
Balance, December 31, 2016	18,674,727	$	21,231	$	123,112	$	184,840	$	(907)	$	(41,647)	$	286,629
Dividends declared:
Preferred	-		-		-		(1)		-		-		(1)
Common, $0.16 per share	-		-		-		(2,975)		-		-		(2,975)
Net common stock issued under
employee plans and related tax expense	29,638		29		660		-		-		-		689
Other comprehensive income, net of tax	-		-		-		-		615		-		615
Treasury shares purchased	(18,092)		-		-		-		-		(508)		(508)
Net income	-		-		-		11,097		-		-		11,097
Balance, June 30, 2017	18,686,273	$	21,260	$	123,772	$	192,961	$	(292)	$	(42,155)	$	295,546
The accompanying notes are an integral part of these statements.

8

SOUTHWEST BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

NOTE1:  SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, shareholders’ equity, cash flows, and comprehensive income in conformity with accounting principles generally accepted in the United States. However, the unaudited consolidated financial statements include all adjustments which, in the opinion of management, are necessary for a fair presentation. Those adjustments consist of normal recurring adjustments. The results of operations for the three and six months ended June 30, 2017, and the cash flows for the six months ended June 30, 2017, should not be considered indicative of the results to be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Southwest Bancorp, Inc. Annual Report on Form 10-K for the year ended December 31, 2016.

The accompanying unaudited consolidated financial statements include the accounts of Southwest Bancorp, Inc. (“we”, “our”, “us”, “Southwest”), and our consolidated subsidiaries, including Bank SNB, an Oklahoma state banking corporation (“Bank SNB”), our banking subsidiary, and the consolidated subsidiaries of Bank SNB. All significant intercompany transactions and balances have been eliminated in consolidation.

In accordance with Accounting Standards Codification (“ASC”) 855, Subsequent Events, we have evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements included in this Quarterly Report on Form 10-Q were issued.

NOTE 2:  INVESTMENT SECURITIES

A summary of the amortized cost and fair values of investment securities at June 30, 2017 and December 31, 2016 follows:

	Amortized		Gross Unrealized				Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
At June 30, 2017
Held to Maturity:
Obligations of state and political subdivisions	$	10,382	$	252	$	(2)	$	10,632
Total	$	10,382	$	252	$	(2)	$	10,632
Available for Sale:
Federal agency securities	$	64,502	$	353	$	(63)	$	64,792
Obligations of state and political subdivisions		45,306		624		(74)		45,856
Residential mortgage-backed securities		285,835		411		(1,771)		284,475
Asset-backed securities		8,511		18		(32)		8,497
Corporate debt		20,018		450		(57)		20,411
Total	$	424,172	$	1,856	$	(1,997)	$	424,031
At December 31, 2016
Held to Maturity:
Obligations of state and political subdivisions	$	10,443	$	242	$	(8)	$	10,677
Total	$	10,443	$	242	$	(8)	$	10,677
Available for Sale:
Federal agency securities	$	69,691	$	201	$	(198)	$	69,694
Obligations of state and political subdivisions		46,105		461		(191)		46,375
Residential mortgage-backed securities		282,035		573		(1,966)		280,642
Asset-backed securities		9,265		-		(88)		9,177
Corporate debt		20,017		385		(72)		20,330
Total	$	427,113	$	1,620	$	(2,515)	$	426,218

Residential mortgage-backed securities consist of agency securities underwritten and guaranteed by Government National Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. Other securities consist of corporate stock.

9

Securities with limited marketability, such as Federal Reserve Bank stock, Federal Home Loan Bank (“FHLB”) stock, and certain other investments, are carried at cost and included in other assets on the consolidated statements of financial condition. Total investments carried at cost were $17.1 million at June 30, 2017 and $14.6 million at December 31, 2016. There are no identified events or changes in circumstances that may have a significant adverse effect on the investments carried at cost.  

A comparison of the amortized cost and approximate fair value of our investment securities by maturity date at June 30, 2017 follows:

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
One year or less	$	26,829	$	26,854	$	371	$	370
More than one year through five years		265,468		265,416		8,878		9,105
More than five years through ten years		103,256		102,849		1,133		1,157
More than ten years		28,619		28,912		-		-
Total	$	424,172	$	424,031	$	10,382	$	10,632

The foregoing analysis assumes that our residential mortgage-backed securities mature during the period in which they are estimated to be prepaid and are based on expected maturities. Expected maturities differ from contractual maturities because borrowers of the underlying mortgages may have the right to call or prepay obligations with or without prepayment penalties.No other prepayment or repricing assumptions have been applied to our investment securities for this analysis. 

Gain or loss on sale of investments is based upon the specific identification method. The table below shows the proceeds, gross realized gains and gross realized losses recognized on the investment portfolio for the three and six months ended June 30, 2017 and June 30, 2016. Proceeds from sales recognized during the six months ended June 30, 2017resulted from the sale of a private equity investment carried at cost and recorded in other assets. Proceeds from the sales during the threeand six months ended June 30, 2016resulted from a slight restructuring of our investment portfolio.

		For the three months				For the six months
		ended June 30,				ended June 30,
(Dollars in thousands)		2017		2016		2017		2016
Proceeds from sales	$	-	$	18,726	$	601	$	41,530
Gross realized gains		-		173		451		345
Gross realized losses		-		(8)		-		(54)

10

The following table shows securities with gross unrealized losses and their fair values by the length of time that the individual securities had been in a continuous unrealized loss position at June 30, 2017 and December 31, 2016. Securities whose market values exceed cost are excluded from this table. 

				Continuous Unrealized
		Amortized Cost of		Loss Existing for:				Fair Value of
	Number of	Securities with		Less than		More than		Securities with
(Dollars in thousands)	Securities	Unrealized Losses		12 Months		12 Months		Unrealized Losses
At June 30, 2017
Held to Maturity:
Obligations of state and political subdivisions	5	$	442	$	(1)	$	(1)	$	440
	5	$	442	$	(1)	$	(1)	$	440
Available for Sale:
Federal agency securities	11	$	27,667	$	(42)	$	(21)	$	27,604
Obligations of state and political subdivisions	11		8,343		(22)		(52)		8,269
Residential mortgage-backed securities	101		236,213		(1,356)		(415)		234,442
Asset-backed securities	1		3,958		-		(32)		3,926
Corporate debt	2		5,007		-		(57)		4,950
Total	126	$	281,188	$	(1,420)	$	(577)	$	279,191
At December 31, 2016
Held to Maturity:
Obligations of state and political subdivisions	7	$	1,987	$	(8)	$	-	$	1,979
	7	$	1,987	$	(8)	$	-	$	1,979
Available for Sale:
Federal agency securities	13	$	34,734	$	(111)	$	(87)	$	34,536
Obligations of state and political subdivisions	36		18,283		(145)		(46)		18,092
Residential mortgage-backed securities	89		225,986		(1,618)		(348)		224,020
Asset-backed securities	3		9,265		-		(88)		9,177
Corporate debt	2		5,005		-		(72)		4,933
Total	143	$	293,273	$	(1,874)	$	(641)	$	290,758

We evaluate all securities on an individual basis for other-than-temporary impairment on at least a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for an anticipated recovery in fair value. 

We have the ability and intent to hold the securities classified as held to maturity until they mature, at which time we expect to receive full value for the securities. Furthermore, as of June 30, 2017, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is not likely that we will have to sell any such securities before a recovery of cost. The declines in fair value were attributable to recent increases in market interest rates over the yields available at the time the underlying securities were purchased or increases in spreads over market interest rates. Management does not believe any of the securities are impaired due to credit quality. Accordingly, as of June 30, 2017, management believes the impairment of these investments is not deemed to be other-than-temporary. 

As required by law, available for sale investment securities are pledged to secure public and trust deposits, sweep agreements, and borrowings from the FHLB. Securities with an amortized cost of $215.3 million and $199.0 million were pledged to meet such requirements at June 30, 2017 and December 31, 2016, respectively. Any amount over-pledged can be released at any time.

11

NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES

We extend commercial and consumer credit primarily to customers in the states of Oklahoma, Texas, Kansas, and Colorado.  Our commercial lending operations are concentrated in Oklahoma City, Tulsa, Dallas, San Antonio, Wichita,and other metropolitan markets in Oklahoma, Texas, Kansas, and Colorado. As a result, the collectability of our loan portfolio can be affected by changes in the economic conditions in those states and markets.  Please see “Note 9:  Operating Segments” in the Notes to Unaudited Consolidated Financial Statements for more detail regarding loans by market. At June 30, 2017 and December 31, 2016, substantially all of ourloans were collateralized with real estate, inventory, accounts receivable, and/or other assets or were guaranteed by agencies of the United States government.

Our loan classifications were as follows: 

(Dollars in thousands)	At June 30, 2017		At December 31, 2016
Real estate mortgage:
Commercial	$	961,085	$	882,071
One-to-four family residential		241,140		199,123
Real estate construction:
Commercial		182,620		199,113
One-to-four family residential		14,523		20,946
Commercial		554,094		556,248
Installment and consumer		18,172		19,631
		1,971,634		1,877,132
Less: Allowance for loan losses		(27,318)		(27,546)
Total loans, net		1,944,316		1,849,586
Less: Loans held for sale (included above)		(6,036)		(4,386)
Net loans receivable	$	1,938,280	$	1,845,200

Concentrations of Credit.  At June 30, 2017,  $662.6 million, or 34%, and $429.5 million, or 22%,  of ourloans consisted of loans to individuals and businesses in the real estate and healthcare industries, respectively.  We do not have any other concentrations of loans to individuals or businesses involved in a single industry totaling 10% or more of total loans. 

Loans Held for Sale.  We had loans held for sale of $6.0 million and $4.4 million at June 30, 2017 and December 31, 2016, respectively. The loans currently classified as held for sale, primarily residential mortgage loans, are carried at the lower of cost or market value. A substantial portion of our one-to-four family residential loans and loan servicing rights are sold to one buyer. These mortgage loans are generally sold within a one-month period from loan closing at amounts determined by the investor commitment based upon the pricing of the loan. These loans are available for sale in the secondary market.  

Loan Servicing.  We earn fees for servicing real estate mortgages and other loans owned by others. The fees are generally calculated on the outstanding principal balance of the loans serviced and are recorded as noninterest income when earned. The unpaid principal balance of real estate mortgage loans serviced for others totaled $463.8 million and $460.6 million at June 30, 2017 and December 31, 2016, respectively. Loan servicing rights are capitalized based on estimated fair value at the point of origination. The servicing rights are amortized over the period of estimated net servicing income.   

Acquired Loans.On October 9, 2015, we completed the acquisition of First Commercial Bancshares (“Bancshares”) by merging Bancshares with and into us (the “Merger”). In connection with the Merger, First Commercial Bank was merged with and into Bank SNB, with Bank SNB being the surviving bank. We evaluated $200.0 million of the loans purchased in conjunction with the merger in accordance with the provisions of FASB ASC Topic 310-20, Nonrefundable Fees and Other Costs, and those loans were recorded with a $4.5 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the weighted average life of the loans using a constant yield method. The remaining $7.8 million of loans evaluated were considered purchased credit impaired loans within the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and were recorded with a $3.3 million discount. These purchased credit impaired loans will recognize interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows.

12

Changes in the carrying amounts and accretable yields for the ACS 310-30 loans that were acquired were as follows for the three and six months ended June 30, 2017 and June 30, 2016:

	For the three months ended June 30,
	2017					2016
			Carrying				Carrying
	Accretable		amount		Accretable		amount
(Dollars in thousands)	Yield		of loans		Yield		of loans
Balance at beginning of period	$	487	$	3,817	$	742	$	7,288
Payments received		-		(572)		-		(286)
Net charge-offs		(2)		(623)		(11)		(196)
Accretion		(9)		896		(48)		-
Balance at end of period	$	476	$	3,518	$	683	$	6,806

	For the six months ended June 30,
	2017				2016
			Carrying				Carrying
	Accretable		amount		Accretable		amount
(Dollars in thousands)	Yield		of loans		Yield		of loans
Balance at beginning of period	$	630	$	4,632	$	807	$	7,914
Payments received		-		(1,387)		-		(790)
Net charge-offs		(2)		(623)		(11)		(318)
Accretion		(152)		896		(113)		-
Balance at end of period	$	476	$	3,518	$	683	$	6,806

Nonperforming / Past Due Loans.  We identify past due loans based on contractual terms on a loan-by-loan basis and generally place loans, except for consumer loans, on nonaccrual when any portion of the principal or interest is ninety  days past due and collateral is insufficient to discharge the debt in full. Interest accrual may also be discontinued earlier if, in management’s opinion, collection is unlikely. Generally, past due consumer installment loans are not placed on nonaccrual but are charged-off when they are four months past due. Accrued interest is written off when a loan is placed on nonaccrual status. Subsequent interest income is recorded when cash receipts are received from the borrower and collectability of the principal amount is reasonably assured.   

Under generally accepted accounting principles and instructions to reports of condition and income of banking regulators, a nonaccrual loan may be returned to accrual status:  (i) when none of its principal and interest is due and unpaid, repayment is expected, and there has been a sustained period (at least six months) of repayment performance; (ii) when the loan is well-secured, there is a sustained period of performance and repayment within a reasonable period is reasonably assured; or (iii) when the loan otherwise becomes well-secured and in the process of collection. Loans that have been restructured because of weakened financial positions of the borrowers also may be returned to accrual status if repayment is reasonably assured under the revised terms and there has been a sustained period of repayment performance.

Management strives to carefully monitor credit quality and to identify loans that may become nonperforming. At any time, however, there are loans included in the portfolio that will result in losses to usthat have not been identified as nonperforming or potential problem loans. Because the loan portfolio contains a significant number of commercial (including energy banking credits) and commercial real estate loans with relatively large balances, the unexpected deterioration of one or a few such loans may cause a significant increase in nonperforming assets and may lead to a material increase in charge-offs and the provision for loan losses in future periods.

13

The following table shows the recorded investment in loans on nonaccrual status:

(Dollars in thousands)	At June 30, 2017		At December 31, 2016
Real estate mortgage:
Commercial	$	6,694	$	6,471
One-to-four family residential		2,752		2,766
Real estate construction:
Commercial		132		522
One-to-four family residential		447		448
Commercial		12,883		5,949
Other consumer		21		111
Total nonaccrual loans	$	22,929	$	16,267

During the first six months of 2017,  $0.2 million of interest income was received on nonaccruing loans. If interest on all nonaccrual loans had been accrued for the six months ended June 30, 2017, additional interest income of $0.5 million would have been recorded.

The following table shows an age analysis of past due loans at June 30, 2017 and December 31, 2016:

December 31, 2016

			90 days +								Recorded loans
	30-89 days		past due and		Total past				Total		> 90 days and
(Dollars in thousands)	past due		nonaccrual		due		Current		loans		accruing
At June 30, 2017
Real estate mortgage:
Commercial	$	285	$	6,694	$	6,979	$	954,106	$	961,085	$	-
One-to-four family residential		1,192		2,797		3,989		237,151		241,140		45
Real estate construction:
Commercial		-		132		132		182,488		182,620		-
One-to-four family residential		-		447		447		14,076		14,523		-
Commercial		498		12,884		13,382		540,712		554,094		1
Other		134		106		240		17,932		18,172		85
Total	$	2,109	$	23,060	$	25,169	$	1,946,465	$	1,971,634	$	131
At December 31, 2016
Real estate mortgage:
Commercial	$	24	$	6,472	$	6,496	$	875,575	$	882,071	$	-
One-to-four family residential		631		2,903		3,534		195,589		199,123		138
Real estate construction:
Commercial		-		522		522		198,591		199,113		-
One-to-four family residential		-		448		448		20,498		20,946		-
Commercial		2,530		6,142		8,672		547,576		556,248		193
Other		359		123		482		19,149		19,631		12
Total	$	3,544	$	16,610	$	20,154	$	1,856,978	$	1,877,132	$	343

Impaired Loans.  A loan is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Each loan deemed to be impaired (loans on nonaccrual status and greater than $100,000, and all troubled debt restructurings) is evaluated on an individual basis using the discounted present value of expected cash flows based on the loan’s initial effective interest rate, the fair value of collateral, or the market value of the loan. Smaller balance and homogeneous loans, including mortgage and consumer loans, are collectively evaluated for impairment.     

Interest payments on impaired loans are applied to principal until collectability of the principal amount is reasonably assured, and, at that time, interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged-off when deemed uncollectible. 

14

Impaired loans as of June 30, 2017 and December 31, 2016 are shown in the following table: 

	With No Specific Allowance				With A Specific Allowance
			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Investment		Balance		Allowance
At June 30, 2017
Commercial real estate	$	7,789	$	8,473	$	-	$	-	$	-
One-to-four family residential		2,769		3,162		-		-		-
Real estate construction		579		781		-		-		-
Commercial		477		1,450		12,408		16,034		2,461
Other		21		26		-		-		-
Total	$	11,635	$	13,892	$	12,408	$	16,034	$	2,461
At December 31, 2016
Commercial real estate	$	1,536	$	3,057	$	6,053	$	6,529	$	2,219
One-to-four family residential		1,188		1,535		1,593		1,698		63
Real estate construction		762		926		207		245		40
Commercial		1,032		2,861		4,963		7,480		1,346
Other		111		115		-		-		-
Total	$	4,629	$	8,494	$	12,816	$	15,952	$	3,668

The average recorded investment of loans classified as impaired and the interest income recognized on those loans for the six months ended June 30, 2017 and June 30, 2016 are shown in the following table:  

	As of and for the six months ended June 30,
	2017				2016
	Average				Average
	Recorded		Interest		Recorded		Interest
(Dollars in thousands)	Investment		Income		Investment		Income
Commercial real estate	$	3,430	$	97	$	17,365	$	871
One-to-four family residential		3,183		34		3,627		12
Real estate construction		651		-		1,408		-
Commercial		9,342		94		13,274		32
Other		26		-		77		-
Total	$	16,632	$	225	$	35,751	$	915

Troubled Debt Restructurings.  Our loan portfolio also includes certain loans that have been modified in troubled debt restructurings, where economic concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from loss mitigation activities and can include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Troubled debt restructurings are classified as impaired at the time of restructuring and are then further classified as nonperforming, potential problem, or performing restructured, as applicable. Loans modified in troubled debt restructurings may be returned to performing status after considering the borrowers’ sustained repayment for a reasonable period of at least six months. 

When we modify loans in a troubled debt restructuring, an evaluation of any possible impairment is performed similar to the evaluation done with respect to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, or use of the current fair value of the collateral, less selling costs for collateral dependent loans. If it is determined that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs, and unamortized premium or discount), an impairment is recognized through an allowance estimate or a charge-off to the allowance. 

15

Troubled debt restructured loans outstanding as of June 30, 2017 and December 31, 2016 were as follows: 

	At June 30, 2017				At December 31, 2016
(Dollars in thousands)	Accruing		Nonaccrual		Accruing		Nonaccrual
Commercial real estate	$	1,095	$	107	$	1,118	$	475
One-to-four family residential		17		-		15		46
Commercial		2		7,335		45		3,323
Total	$	1,114	$	7,442	$	1,178	$	3,844

At June 30, 2017 and December 31, 2016, we had no significant commitments to lend additional funds to debtors whose loan terms had been modified in a troubled debt restructuring. 

There were three commercial loans modified as troubled debt restructurings that occurred during the three months ended June 30, 2017 and none for the three months ended June 30, 2016. There were three commercial loans modified as troubled debt restructurings that occurred during the six months ended June 30, 2017 and one commercial loan modified as a troubled debt restructuring for the six months ended June 30, 2016. Loans modified as troubled debt restructurings that occurred during the three and six months endedJune 30, 2017and June 30, 2016 are shown in the following table:   

	For the three months ended June 30,
	2017				2016
	Number of		Recorded		Number of		Recorded
(Dollars in thousands)	Modifications		Investment		Modifications		Investment
Commercial		3	$	4,174		-	$	-
Total		3	$	4,174		-	$	-
	For the six months ended June 30,
	2017				2016
	Number of		Recorded		Number of		Recorded
(Dollars in thousands)	Modifications		Investment		Modifications		Investment
Commercial		3	$	4,174		1	$	26
Total		3	$	4,174		1	$	26

The modifications of loans identified as troubled debt restructurings primarily related to payment reductions, payment extensions, and/or reductions in the interest rate. The financial impact of troubled debt restructurings is not significant.

There were no loans modified as a troubled debt restructuring that subsequently defaulted during the three or six months ended June 30, 2017 or June 30, 2016. Default, for this purpose, is deemed to occur when a loan is 90 days or more past due or transferred to nonaccrual and is within twelve months of restructuring.

Credit Quality Indicators.  To assess the credit quality of loans, we categorize loans into risk categories based on relevant information about the ability of the borrowers to service their debts such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. This analysis is performed on a quarterly basis. We use the following definitions for risk ratings:   

Special mention – Loans classified as special mention have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for these loans or of the institution’s credit position at some future date. 

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligors or of the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. These loans are considered potential problem or nonperforming loans depending on the accrual status of the loans.    

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These loans are considered nonperforming. 

16

Loans not meeting the criteria above that are analyzed as part of the above described process are considered to be pass rated loans. As of June 30, 2017 and December 31, 2016, based on the most recent analysis performed as of those dates, the risk category of loans by class was as follows: 

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2017
Grade:
Pass	$	919,620	$	235,040	$	185,916	$	502,838	$	18,151	$	1,861,565
Special Mention		25,711		2,154		10,059		20,522		-		58,446
Substandard		15,754		3,946		1,168		29,730		21		50,619
Doubtful		-		-		-		1,004		-		1,004
Total	$	961,085	$	241,140	$	197,143	$	554,094	$	18,172	$	1,971,634
At December 31, 2016
Grade:
Pass	$	857,290	$	192,395	$	210,780	$	498,039	$	19,518	$	1,778,022
Special Mention		4,479		1,983		7,720		24,639		-		38,821
Substandard		20,302		4,745		1,559		33,175		113		59,894
Doubtful		-		-		-		395		-		395
Total	$	882,071	$	199,123	$	220,059	$	556,248	$	19,631	$	1,877,132

Allowance for Loan Losses.  The allowance for loan losses is a reserve established through the provision for loan losses charged to operations. Loan amounts which are determined to be uncollectible are charged against this allowance, and recoveries, if any, are added to the allowance. The appropriate amount of the allowance is based on periodic review and evaluation of the loan portfolio and quarterly assessments of the probable losses inherent in the loan portfolio. The amount of the loan loss provision for a period is based solely upon the amount needed to cause the allowance to reach the level deemed appropriate after the effects of net charge-offs for the period. 

Management believes the level of the allowance is appropriate to absorb probable losses inherent in the loan portfolio. The allowance for loan losses is determined in accordance with regulatory guidelines and generally accepted accounting principles and is comprised of two primary components, specific and general. There is no one factor, or group of factors, that produces the amount of an appropriate allowance for loan losses, as the methodology for assessing the allowance for loan losses makes use of evaluations of individual impaired loans along with other factors and analysis of loan categories. This assessment is highly qualitative and relies upon judgments and estimates by management.

The specific allowance is recorded based on the result of an evaluation consistent with ASC 310.10.35, Receivables: Subsequent Measurement, for each impaired loan.  Collateral dependent loans are evaluated for impairment based upon the fair value of the collateral. The amount and level of the impairment allowance is ultimately determined by management’s estimate of the amount of expected future cash flows or, if the loan is collateral dependent, on the value of collateral, which may vary from period to period depending on changes in the financial condition of the borrower or changes in the estimated value of the collateral. Charge-offs against the allowance for impaired loans are made when and to the extent loans are deemed uncollectible. Any portion of a collateral dependent impaired loan in excess of the fair value of the collateral that is determined to be uncollectible is charged off.  

The general component of the allowance is calculated based on ASC 450, Contingencies. Loans not evaluated for specific allowance are segmented into loan pools by type of loan.  Commercial real estate pools are further segmented by market type for non-owner occupied and owner occupied collateral. Our primary markets are Oklahoma, Texas, Kansas, and Colorado. Estimated allowances are based on historical loss trends with adjustments factored in based on qualitative risk factors both internal and external to us.  The historical loss trend is determined by loan pool and segmentation and is based on the actual loss history experienced by us over the most recent three years. The qualitative risk factors include, but are not limited to, economic and business conditions, changes in lending staff, lending policies and procedures, quality of loan review, changes in the nature and volume of the portfolios, loss and recovery trends, asset quality trends, and legal and regulatory considerations.

Independent appraisals on real estate collateral securing loans are obtained at origination. New appraisals are obtained periodically and following discovery of factors that may significantly affect the value of the collateral. Appraisals typically are received within 30 days of request. Results of appraisals on nonperforming and potential problem loans are reviewed promptly upon receipt and considered in the determination of the allowance for loan losses. We are not aware of any significant time

17

lapses in the process that have resulted, or would result in, a significant delay in determination of a credit weakness, the identification of a loan as nonperforming, or the measurement of an impairment.

The following tables show the balance in the allowance for loan losses and the recorded investment in loans for the dates indicated by portfolio classification disaggregated on the basis of impairment evaluation method.   

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2017
Balance at beginning of fiscal year	$	12,507	$	1,163	$	3,502	$	10,058	$	316	$	27,546
Loans charged-off		(2,029)		(3)		-		(2,165)		(201)		(4,398)
Recoveries		216		75		5		317		52		665
Provision for loan losses		1,632		136		(566)		2,193		110		3,505
Balance at end of period	$	12,326	$	1,371	$	2,941	$	10,403	$	277	$	27,318
Allowance for loan losses ending balance:
Individually evaluated for impairment	$	-	$	-	$	-	$	2,461	$	-	$	2,461
Collectively evaluated for impairment		12,326		1,371		2,941		7,942		277		24,857
Acquired with deteriorated credit quality		-		-		-		-		-		-
Total ending allowance balance	$	12,326	$	1,371	$	2,941	$	10,403	$	277	$	27,318
Loans receivable ending balance:
Individually evaluated for impairment	$	7,011	$	1,871	$	-	$	12,408	$	-	$	21,290
Collectively evaluated for impairment		952,524		238,120		196,514		541,496		18,172		1,946,826
Acquired with deteriorated credit quality		1,550		1,149		629		190		-		3,518
Total ending loans balance	$	961,085	$	241,140	$	197,143	$	554,094	$	18,172	$	1,971,634

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2016
Balance at beginning of fiscal year	$	12,716	$	700	$	2,533	$	9,965	$	192	$	26,106
Loans charged-off		(3)		(83)		-		(3,801)		(376)		(4,263)
Recoveries		234		54		-		311		49		648
Provision for loan losses		(2,234)		362		647		5,194		416		4,385
Balance at end of period	$	10,713	$	1,033	$	3,180	$	11,669	$	281	$	26,876
Allowance for loan losses ending balances:
Individually evaluated for impairment	$	281	$	116	$	-	$	2,915	$	-	$	3,312
Collectively evaluated for impairment		9,961		917		3,140		8,754		281		23,053
Acquired with deteriorated credit quality		471		-		40		-		-		511
Total ending allowance balance	$	10,713	$	1,033	$	3,180	$	11,669	$	281	$	26,876
Loans receivable ending balance:
Individually evaluated for impairment	$	13,192	$	2,187	$	754	$	13,880	$	38	$	30,051
Collectively evaluated for impairment		844,739		180,213		194,646		544,221		20,702		1,784,521
Acquired with deteriorated credit quality		4,356		1,293		752		371		33		6,805
Total ending loans balance	$	862,287	$	183,693	$	196,152	$	558,472	$	20,773	$	1,821,377

18

NOTE 4:  FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In estimating fair value, we utilize valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability.

ASC 820, Fair Value Measurements and Disclosure,  establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1Quoted prices in active markets for identical instruments.

Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 

Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 

The estimated fair value amounts have been determined by us using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amount we could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a material effect on our estimated fair value amounts. There were no significant changes in valuation methods used to estimate fair value during the six months ended June 30, 2017. 

A description of the valuation methodologies used for instruments measured at fair value on a recurring basis is as follows: 

Available for sale securities – The fair value of U.S. Government and federal agency securities, equity securities, and residential mortgage-backed securities is estimated based on quoted market prices or dealer quotes. The fair value of other investments such as obligations of state and political subdivisions is estimated based on quoted market prices.  We obtain fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and bond’s terms and conditions, among other things. We review the prices supplied by our independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. 

Derivative instruments – We utilize an interest rate swap agreement to convert one of our variable-rate subordinated debentures to a fixed rate. This has been designated as a cash flow hedge. We also offer an interest rate swap program that permits qualified customers to manage interest rate risk on variable rate loans with Bank SNB. Derivative contracts are executed between our customers and Bank SNB. Offsetting contracts are executed by Bank SNB and approved counterparties. The counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to us and collateral requirements. The fair value of the interest rate swap agreements are obtained from dealer quotes.

19

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016: 

			Fair Value Measurement at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
At June 30, 2017
Available for sale securities:
Federal agency securities	$	64,792	$	-	$	64,792	$	-
Obligations of state and political subdivisions		45,856		-		45,856		-
Residential mortgage-backed securities		284,475		-		284,475		-
Asset-backed securities		8,497		-		8,497		-
Corporate debt		20,411		231		20,180		-
Derivative asset		2,698		-		2,698		-
Derivative liability		(3,068)		-		(3,068)		-
Total	$	423,661	$	231	$	423,430	$	-
At December 31, 2016
Available for sale securities:
Federal agency securities	$	69,694	$	-	$	69,694	$	-
Obligations of state and political subdivisions		46,375		-		46,375		-
Residential mortgage-backed securities		280,642		-		280,642		-
Asset-backed securities		9,177		-		9,177		-
Corporate debt		20,330		213		20,117		-
Derivative asset		1,235		-		1,235		-
Derivative liability		(1,890)		-		(1,890)		-
Total	$	425,563	$	213	$	425,350	$	-

Certain financial assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These assets are recorded at the lower of cost or fair value. Valuation methodologies for assets measured on a nonrecurring basis are as follows: 

Impaired loans – Certain impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from collateral.  Collateral values are estimated using inputs based on third-party appraisals. Certain other impaired loans are analyzed and reported through a specific valuation allowance based upon the net present value of cash flows.   

Loans held for sale  –Real estate mortgage loans held for sale are carried at the lower of cost or market, which is determined on an individual loan basis. The fair value of loans held for sale is based on existing investor commitments.

Other real estate – Other real estate fair value is based on third-party appraisals for significant properties less the estimated costs to sell the asset.   

Mortgage loan servicing rights – There is no active trading market for loan servicing rights. The fair value of loan servicing rights is estimated by calculating the present value of net servicing revenue over the anticipated life of each loan. A cash flow model is used to determine fair value. Key assumptions and estimates, including projected prepayment speeds and assumed servicing costs, earnings on escrow deposits, ancillary income, and discount rates, used by this model are based on current market sources.  A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults, and other relevant factors. The prepayment model is updated for changes in market conditions.

Core deposit premiums – The fair value of core deposit premiums are based on third-party appraisals.

Goodwill – Fair value of goodwill is based on the fair value of each of our reporting units to which goodwill is allocated compared with their respective carrying value.

20

Assets that were measured at fair value on a nonrecurring basis as of June 30, 2017 and December 31, 2016 are summarized below.   

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
At June 30, 2017
Impaired loans at fair value :
Commercial		12,408		-		-		12,408
Loans held for sale:
One-to-four family residential		6,036		-		6,036		-
Total	$	18,444	$	-	$	6,036	$	12,408
At December 31, 2016
Impaired loans at fair value :
Commercial real estate	$	6,053	$	-	$	-	$	6,053
One-to-four family residential		1,593		-		-		1,593
Real estate construction		207		-		-		207
Commercial		5,357		-		-		5,357
Loans held for sale:
One-to-four family residential		4,386		-		4,386		-
Total	$	17,596	$	-	$	4,386	$	13,210

For the six months ended June 30, 2017, impaired loans measured at fair value with a carrying amount of $15.9 million were written down to a fair value of $12.4 million, resulting in a life-to-date impairment of $3.5  million. For the year ended December 31, 2016, impaired loans measured at fair value with a carrying amount of $19.7 million were written down to a fair value of $13.2 million at December 31, 2016, resulting in a life-to-date impairment charge of $6.5 million.

No impairment was recognized for other real estate during the six months ended June 30, 2017 or the year ended December 31, 2016. 

As of June 30, 2017, mortgage servicing rights had a fair value of $4.4 million, which exceeded the book value of $3.7 million. Because the fair value exceeded the book value, there was no impairment charge at June 30, 2017. As of December 31, 2016, the mortgage servicing rights had a fair value of $4.2 million, which exceeded the book value of $3.5 million. Because the fair value exceeded the book value, there was no impairment charge at December 31, 2016.

No impairment of core deposit premiums or goodwill was recognized during the six months ended June 30, 2017 or the year ended December 31, 2016.

ASC 825, Financial Instruments,  requires an entity to provide disclosures about fair value of financial instruments, including those that are not measured and reported at fair value on a recurring or nonrecurring basis. The methodologies used in estimating the fair value of financial instruments that are measured on a recurring or nonrecurring basis are discussed above. The methodologies for the other financial instruments are discussed below: 

Cash and cash equivalents – For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value. 

Securities held to maturity – The investment securities held to maturity are carried at cost. The fair value of the held to maturity securities is estimated based on quoted market prices or dealer quotes. 

Loans, net of allowance – Fair values are estimated for certain homogenous categories of loans adjusted for differences in loan characteristics. Our loans have been aggregated by categories consisting of commercial, real estate, and other consumer. The fair value of loans is estimated by discounting the cash flows using risks inherent in the loan category and interest rates currently offered for loans with similar terms and credit risks. 

Accrued interest receivable – The carrying amount is a reasonable estimate of fair value for accrued interest receivable. 

Investments included in other assets – The estimated fair value of investments included in other assets, which primarily consists of investments carried at cost, approximates their carrying values. 

21

Deposits – The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the statement of financial condition date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. 

Accrued interest payable and other liabilities – The estimated fair value of accrued interest payable and other liabilities, which primarily includes trade accounts payable, approximates their carrying values. 

Other borrowings – Included in other borrowings are FHLB advances and securities sold under agreements to repurchase. The fair value for fixed rate FHLB advances is based upon discounted cash flow analysis using interest rates currently being offered for similar instruments. The fair values of other borrowings are the amounts payable at the statement of financial condition date, as the carrying amount is a reasonable estimate of fair value due to the short-term maturity rates.   

Subordinated debentures – Our two subordinated debentures have floating rates that reset quarterly. The fair value of the floating rate subordinated debentures approximates carrying value at June 30, 2017.   

The carrying values and estimated fair values of our financial instruments segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value were as follows:

	At June 30, 2017				At December 31, 2016
	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Values		Values		Values		Values
Financial assets:
Level 2 inputs:
Cash and cash equivalents	$	79,839	$	79,839	$	75,650	$	75,650
Securities held to maturity		10,382		10,632		10,443		10,677
Accrued interest receivable		6,328		6,328		6,194		6,194
Mortgage loan servicing rights		3,666		4,404		3,491		4,159
Bank-owned life insurance		28,450		28,450		28,575		28,575
Investments included in other assets		17,079		17,079		14,627		14,627
Level 3 inputs:
Total loans, net of allowance		1,944,316		1,934,986		1,849,586		1,839,960
Financial liabilities:
Level 2 inputs:
Deposits		2,013,834		1,967,298		1,946,018		1,897,927
Accrued interest payable		1,259		1,259		1,132		1,132
Other liabilities		9,130		9,130		9,516		9,516
Other borrowings		203,705		203,793		183,814		183,926
Subordinated debentures		46,393		46,393		46,393		46,393

22

NOTE 5:  DERIVATIVE INSTRUMENTS

We utilize derivatives instruments to manage exposure to various types of interest rate risk for us and our customers within our policy guidelines. All derivative instruments are carried at fair value and credit risk is considered in determining fair value.

Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Institutional counterparties must have an investment grade credit rating and be approved by our asset/liability management committee. Our credit exposure on interest rate swaps is limited to the net favorable value and interest payments of all swaps with each counterparty.Access to collateral in the event of default is reasonably assured. Therefore, credit exposure may be reduced by the amount of collateral pledged by the counterparty.

Customer Risk Management Interest Rate Swaps

Our qualified customers have the opportunity to participate in our interest rate swap program for the purpose of managing interest rate risk on their variable rate loans with us. If we enter into such agreements with customers, then offsetting agreements are executed between us and approved dealer counterparties to minimize our market risk from changes in interest rates. The counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to us by the dealer counterparty and the collateral requirements. These interest rate swaps carry varying degrees of credit, interest rate and market or liquidity risks. The fair value of derivative instruments is recognized as either assets or liabilities in the consolidated statements of financial condition. 

We have entered into seventeencustomer interest rate swap agreements that effectively convert the loan interest rate from floating rate based on LIBOR or prime rate to a fixed rate for the customer. As of June 30, 2017, these loans had an outstanding balance of $180.6 million. We have entered into offsetting agreements with dealer counterparties.  The following table summarizes the fair values of derivative contracts recorded as “non-hedge derivative assets” and “non-hedge derivative liabilities” in the consolidated statements of financial condition:

	As of June 30, 2017				At December 31, 2016
(Dollars in thousands)	Notional		Fair Value		Notional		Fair Value
Non-hedge derivative assets	$	180,631	$	2,698	$	123,953	$	1,235
Non-hedge derivative liabilities		180,631		2,698		123,953		1,235

The margin rates to us in connection with these instruments are a contractual percentage over the one-month LIBOR or a minimal percentage under the prime rate. From time to time, it may be necessary to post collateral with our dealer counterparties to secure the market values of these contracts. As of June 30, 2017, we had posted $1.5 million in collateral with our dealer counterparties. These interest rate swaps are not designated as hedging instruments.

Interest Rate Swap

We have an interest rate swap agreement with a total notional amount of $25.0 million. The interest rate swap agreement was designated as a hedging instrument in cash flow hedges with the objective of protecting the overall cash flow from our quarterly interest payments on the SBI Capital Trust II preferred securities throughout the seven-year period beginning February 11, 2011 and ending April 7, 2018 from the risk of variability of those payments resulting from changes in the three-month London Interbank Offered Rate (“LIBOR”). Under the swap agreement, we pay a fixed interest rate of 6.15% and receive a variable interest rate of three-month LIBOR plus a margin of 2.85% on a total notional amount of $25.0 million, with quarterly settlements. The rate received by us as of June 30, 2017 was 4.01%. 

The estimated fair value of the interest rate swap contract outstanding as of June 30, 2017 and December 31, 2016 resulted in a pre-tax loss of $0.4 million and $0.7 million, respectively, and was included in other liabilities in the consolidated statements of financial condition. We obtained the counterparty valuation to validate the interest rate derivative contract as of June 30, 2017 and December 31, 2016.   

The effective portion of our gain or loss due to changes in the fair value of the interest rate swap contract, a $0.2 million loss and a $0.1 million loss for the six months ended June 30, 2017 and June 30, 2016, respectively, is included in other comprehensive income, net of tax, while the ineffective portion (indicated by the excess of the cumulative change in the fair value of the derivative over that which is necessary to offset the cumulative change in expected future cash flows on the hedge transaction) is included in other noninterest income or other noninterest expense. No ineffectiveness related to the interest rate derivative was recognized during either reporting period.   

23

Net cash outflows as a result of the interest rate swap contract were $0.3 million for both the six months ended June 30, 2017 and June 30, 2016and were included in interest expense on subordinated debentures.

We posted cash collateral with our counterparty related to the interest rate swap contract in excess of the required $0.5 million and $0.7 million at June 30, 2017 and December 31, 2016, respectively.

There are no credit-risk-related contingent features associated with our derivative contract. 

NOTE 6:  TAXES ON INCOME

Net deferred tax assets totaled $11.9 million at June 30, 2017 and $13.2 million at December 31, 2016. Net deferred tax assets are included in other assets and no valuation allowance is considered necessary.

We or one of our subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are no longer subject to U.S. federal or state tax examinations for years before 2013.

NOTE 7:  SHAREHOLDERS’ EQUITY

Stock Repurchase Program

On May 25, 2016, the Board authorized our fourth stock repurchase program since August 2014. The program authorizes the repurchase of up to another 5.0%, or approximately 921,000 shares, of our outstanding common stock and became effective February 23, 2017, which was the original expiration date of the third program. During the first six months of 2017, we have made no repurchases. During 2016, we repurchased 1,398,026 shares for a total of $22.1million, and since August 2014, we have repurchased a total of 2,519,584 shares for a total of $40.8 million. Repurchases under the program are available at the discretion of management based upon market, business, legal, and other factors. Our ability to repurchase our common stock is limited during the time that our planned merger with Simmons First National Corporation is pending.

NOTE 8:  EARNINGS PER SHARE

Earnings per common share is computed using the two-class method prescribed by ASC 260, Earnings Per Share. Using the two-class method, basic earnings per common share is computed based upon net income divided by the weighted average number of common shares outstanding during each period, which excludes outstanding unvested restricted stock. Diluted earnings per share is computed using the weighted average number of common shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. 

The following table shows the computation of basic and diluted earnings per common share: 

	For the three months				For the six months
	ended June 30,				ended June 30,
(Dollars in thousands, except earnings per share data)	2017		2016		2017		2016
Numerator:
Net income	$	5,818	$	5,412	$	11,097	$	7,281
Earnings allocated to participating securities		(104)		(110)		(193)		(131)
Numerator for earnings per common share	$	5,714	$	5,302	$	10,904	$	7,150
Denominator:
Denominator for basic earnings per common share		18,354,631		18,574,300		18,362,549		18,916,686
Dilutive effect of stock compensation		138,108		102,261		136,485		18,918
Denominator for diluted earnings per common share		18,492,739		18,676,561		18,499,034		18,935,604
Earnings per common share:
Basic	$	0.31	$	0.29	$	0.59	$	0.38
Diluted	$	0.31	$	0.28	$	0.59	$	0.38

24

NOTE 9: OPERATING SEGMENTS  

We operate four principal segments:  Oklahoma Banking, Texas Banking, Kansas Banking, and Other Operations. The Oklahoma Banking segment provides deposit and lending services, including residential mortgage lending services to customers. Due to its size and our management structure, our Colorado banking operations are included within the Oklahoma Banking segment. The Texas Banking segment and the Kansas Banking segment provide deposit and lending services. Other Operations includes our funds management unit and corporate investments.

The primary purpose of the funds management unit is to manage our overall internal liquidity needs and interest rate risk. Each segment borrows funds from or provides funds to the funds management unit as needed to support its operations. The value of funds provided to and the cost of funds borrowed from the funds management unit by each segment are internally priced at rates that approximate market rates for funds with similar duration. The yield used in the funds transfer pricing curve is a blend of rates based on the volume usage of retail and brokered certificates of deposit and FHLB advances.    

The accounting policies of each reportable segment are the same as ours. Expenses for consolidated back-office operations are allocated to operating segments based on estimated uses of those services. General overhead expenses such as executive administration, accounting, and audit are allocated based on the direct expense and/or deposit and loan volumes of the operating segment. Income tax expense for the operating segments is calculated at statutory rates. The Other Operations segment records the tax expense or benefit necessary to reconcile to the consolidated financial statements. The following table summarizes financial results by operating segment:

For the three months ended June 30, 2017
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations		Company
Net interest income	$	13,349	$	6,197	$	1,614	$	210	$	21,370
Provision (credit) for loan losses		1,424		354		(52)		3		1,729
Noninterest income		3,146		466		290		619		4,521
Noninterest expenses		9,735		3,219		1,314		887		15,155
Income (loss) before taxes		5,336		3,090		642		(61)		9,007
Taxes on income (loss)		1,892		1,095		227		(25)		3,189
Net income (loss)	$	3,444	$	1,995	$	415	$	(36)	$	5,818

For the six months ended June 30, 2017
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations*		Company
Net interest income (loss)	$	26,143	$	12,285	$	3,172	$	(67)	$	41,533
Provision (credit) for loan losses		2,846		845		(186)		-		3,505
Noninterest income		6,406		922		592		1,481		9,401
Noninterest expenses		19,432		6,416		2,721		1,889		30,458
Income (loss) before taxes		10,271		5,946		1,229		(475)		16,971
Taxes on income (loss)		3,555		2,058		425		(164)		5,874
Net income (loss)	$	6,716	$	3,888	$	804	$	(311)	$	11,097
* Includes externally generated revenue of $2.3 million, primarily from investing services, and an internally generated loss of $0.9 million from the funds management unit.
Total loans at period end	$	1,193,108	$	636,709	$	141,817	$	-	$	1,971,634
Total assets at period end		1,228,506		632,773		140,702		570,954		2,572,935
Total deposits at period end		1,369,810		196,390		156,383		291,251		2,013,834

25

For the three months ended June 30, 2016
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations		Company
Net interest income	$	12,339	$	5,640	$	1,638	$	78	$	19,695
Provision (credit) for loan losses		(210)		330		(113)		3		10
Noninterest income		2,657		290		300		624		3,871
Noninterest expenses		9,879		3,256		1,347		786		15,268
Income (loss) before taxes		5,327		2,344		704		(87)		8,288
Taxes on income (loss)		1,837		816		250		(27)		2,876
Net income (loss)	$	3,490	$	1,528	$	454	$	(60)	$	5,412

For the six months ended June 30, 2016
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations*		Company
Net interest income (loss)	$	25,277	$	11,206	$	3,466	$	(414)	$	39,535
Provision for loan losses		50		2,245		2,086		4		4,385
Noninterest income		4,852		592		618		1,224		7,286
Noninterest expenses		19,839		6,987		2,764		1,674		31,264
Income (loss) before taxes		10,240		2,566		(766)		(868)		11,172
Taxes on income (loss)		3,566		894		(267)		(302)		3,891
Net income (loss)	$	6,674	$	1,672	$	(499)	$	(566)	$	7,281
* Includes externally generated revenue of $1.9 million, primarily from investing services, and an internally generated loss of $1.0 million from the funds management unit.
Total loans at period end	$	1,085,986	$	577,333	$	158,058	$	-	$	1,821,377
Total assets at period end		1,130,161		573,199		157,054		541,848		2,402,262
Total deposits at period end		1,322,430		190,475		135,585		254,375		1,902,865

NOTE 10:  COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk

In the normal course of business, we make use of a number of different financial instruments to help meet the financial needs of our customers. In accordance with U.S. generally accepted accounting principles, these transactions are not presented in the accompanying consolidated financial statements and are referred to as off-balance sheet instruments. These transactions and activities include commitments to extend lines of commercial and real estate mortgage credit and standby and commercial letters of credit.

A loan commitment is a binding contract to lend up to a maximum amount for a specified period of time provided there is no violation of any financial, economic, or other terms of the contract. A standby letter of credit obligates us to honor a financial commitment to a third party should our customer fail to perform. Many loan commitments and most standby letters of credit expire unfunded, and, therefore, total commitments do not represent our future funding obligations. Loan commitments and letters of credit are made under normal credit terms, including interest rates and collateral prevailing at the time, and usually require the payment of a fee by the customer. Commercial letters of credit are commitments generally issued to finance the movement of goods between buyers and sellers. Our exposure to credit loss, assuming commitments are funded, in the event of nonperformance by the other party to the financial instrument is represented by the contractual amount of those instruments. We do not anticipate any material losses as a result of the commitments.

As of June 30, 2017 and December 31, 2016, our loan commitments were $429.3 million and $429.4 million, respectively. As of June 30, 2017 and December 31, 2016, our standby letters of credit obligations were $6.1 million and $7.2 million, respectively.

26

Customer Risk Management Interest Rate Swap

On September 9, 2014, we entered into an agreement to provide one of our commercial borrowers a customer interest rate swap that effectively converts the loan interest rate from a floating rate based on LIBOR to a fixed rate for the customer. As of June 30, 2017, the floating rate loan had an outstanding balance of $14.2 million.  The option to execute the swap is conditional on the borrower’s compliance with the loan and swap agreements, and will be subject to the terms of the International Swaps and Derivatives Association Master Agreement.  The fixed pay amount will be based on the market rates at the time of execution, and it is our intention to simultaneously execute an offsetting trade with an approved swap dealer counterparty with identical terms. 

As of June 30, 2017 and December 31, 2016, we had eight risk participation agreements and  seven risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. As of June 30, 2017 and December 31, 2016, the current notional amount for these transactions were $51.6 million and $34.7 million, respectively.

Legal Action

On March 18, 2011, an action entitled Ubaldi, et al. v SLM Corporation (“Sallie Mae”), et al., Case No. 3:11-cv-01320 EDL (the “Ubaldi Case”) was filed in the U.S. District Court for the Northern District of California as a putative class action with respect to certain loans that the plaintiffs claim were made by Sallie Mae. The loans in question were made by various banks, including Bank SNB, and sold to Sallie Mae. Plaintiffs claim that Sallie Mae entered into arrangements with chartered banks in order to evade California law and that Sallie Mae is the de facto lender on the loans in question and, as the lender on such loan, Sallie Mae charged interest and late fees that violates California usury law and the California Business and Professions Code. Sallie Mae has denied all claims asserted against it and has stated that it intends to vigorously defend the action.  On March 26, 2014, the Court denied the plaintiffs’ request to certify the class; however, the Court permitted the plaintiffs to amend the filing to redefine the class. Plaintiffs filed a renewed motion on June 23, 2014. On December 19, 2014, the Court issued a decision on the renewed motion, certifying a class with respect to claims of improper late fees, but denying class certification with respect to plaintiffs’ usury claims. Plaintiffs thereafter filed a motion seeking leave to amend their complaint to add additional parties, which Sallie Mae opposed, and, on March 24, 2015, the Court denied the plaintiffs’ motion. On June 5, 2015, the law firm Cohen Milstein Sellers & Toll based in Washington, D.C. entered its appearance as co-counsel on behalf of plaintiffs.

Bank SNB is not specifically named in the action.  However, in the first quarter of 2014, Sallie Mae provided Bank SNB with a notice of claims that have been asserted against Sallie Mae in the Ubaldi Case (the “Notice”). Sallie Mae asserts in the Notice that Bank SNB may have indemnification and/or repurchase obligations pursuant to the ExportSS Agreement dated July 1, 2002 between Sallie Mae and Bank SNB, pursuant to which the loans in question were made by Bank SNB. Bank SNB has substantial defenses with respect to any claim for indemnification or repurchase ultimately made by Sallie Mae, if any, and intends to vigorously defend against any such claims.

Due to the uncertainty regarding (i) the size and scope of the class, (ii) whether a class will ultimately be certified, (iii) the particular class members, (iv) the interest rate on loans made by Bank SNB charged to particular class members, (v) the late fees charged to particular class members, (vi) the time period that will ultimately be at issue if a class is certified in the Ubaldi Case, (vii) the theories, if any, under which the plaintiffs might prevail, (viii) whether Sallie Mae will make a claim against us for indemnification or repurchase, and (ix) the likelihood that Sallie Mae would prevail if it makes such a claim, we cannot estimate the amount or the range of losses that may arise as a result of the Ubaldi Case.

In the normal course of business, we are at all times subject to various pending and threatened legal actions. The relief or damages sought in some of these actions may be substantial. After reviewing pending and threatened actions with counsel, management currently does not expect that the outcome of such actions will have a material adverse effect on our financial position; however, we are not able to predict whether the outcome of such actions may or may not have a material adverse effect on results of operations in a particular future period as the timing and amount of any resolution of such actions and relationship to the future results of operations are not known.

Pending Merger Update

We previously announced a definitive agreement and plan of merger with and into Simmons First National Corporation (NASDAQ-GS: SFNC). The merger application for this transaction was filed on July 14, 2017. Conversion and integration plans are in process. Subject to regulatory approval and the satisfaction of other closing conditions, we anticipate a closing date as early as October 2017 or as late as January 2018.

27

NOTE 11:  NEW AUTHORITATIVE ACCOUNTING GUIDANCE

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current accounting treatment. This ASU changes the guidance on sale-leaseback transactions, initial direct costs and lease execution costs, and, for lessors, modifies the classification criteria and the accounting for sales-type and direct financing leases. The guidance becomes effective for us on January 1, 2019. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. We are evaluating the impact of this ASU on our financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):  Measurement of Credit Losses on Financial Instruments. This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that estimates credit losses on most financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity securities, using the current expected credit loss (CECL) model. Under this model, entities will estimate credit losses over the financial instrument’s entire contractual term from the date of initial recognition of that instrument. The ASU also requires incremental disclosures on how the entity developed its estimates. This guidance becomes effective for us on January 1, 2020. We are evaluating the impact of this ASU on our financial statements and disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance specifically addresses eight classification issues:  debt prepayment or debt extinguishment costs; settlement of zero-coupon bonds; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance (COLI) policies, including bank-owned life insurance (BOLI) policies; distributions received from equity method investments; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance becomes effective for us on January 1, 2018. We are evaluating the impact of the ASU on our financial statements and disclosures.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory. The ASU requires companies to recognize the income tax consequences of an intercompany asset transfer when the transfer occurs. The amendments in this ASU do not change accounting for the pre-tax effects of intra-entity asset transfers under Topic 810, Consolidation, and do not apply to intra-entity inventory transfers. The economic consequences of intra-entity asset sales—other than inventory—will be recognized in the period in which the transaction occurs and no longer deferred. A reporting entity’s effective tax rate likely will be affected due to the immediate recognition of the seller’s taxes and buyer’s deferred taxes, particularly when the transaction has no effect on consolidated pre-tax income. This guidance becomes effective for us on January 1, 2018. We are evaluating the impact of this ASU on our financial statement disclosures.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805):  Clarifying the Definition of a Business. The main objective of this new standard is to help financial statement preparers evaluate whether a set of transferred assets and activities (either acquired or disposed of) is a business. Accounting for a business combination differs significantly from that of an asset acquisition. Because the definition of a business affects acquisitions, disposals, goodwill, and consolidation, the revised definition of a business is generally expected to reduce the number of transactions that qualify as a business combination. This guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The set is not a business if this screen is met. If this screen is not met, however, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. This guidance becomes effective for us on January 1, 2018, and we are evaluating the impact of this ASU on our financial statements and disclosures. 

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350):  Simplifying the Test for Goodwill Impairment. The new guidance will simplify financial reporting because it eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure the goodwill impairment. This ASU simplifies how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Entities will still perform their annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the fair value exceeds the carrying amount, no impairment should be recorded. If a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charged based on that difference. Impairment losses on goodwill cannot be reversed once recognized. This guidance becomes effective for us on January 1, 2020, and we are evaluating the impact of this ASU on our financial statements and disclosures.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):  Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of

28

Nonfinancial Assets. This ASU primarily defines in-substance nonfinancial assets and provides guidance for partial sales of nonfinancial assets. It also eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. This guidance becomes effective for us on January 1, 2019, and we are evaluating the impact of this ASU on our financial statements and disclosures.

In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20):  Premium Amortization on Purchased Callable Debt Securities, which is intended to enhance the accounting for the amortization of premiums for purchased callable debt securities. This ASU amends the amortization period for certain callable debt securities held at a premium by more closely aligning the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities.  Previously, the premiums on callable debt securities generally were required to be amortized based on the maturity date. Under this update, the premiums on certain callable debt securities held at a premium are to be amortized based on the earliest call date. This update is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company has elected to early adopt this update effective January 1, 2017, which did not have a material impact on our financial statements and disclosures.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718):  Scope of Modification Accounting. This ASU provides relief to entities that make non-substantive changes to their share-based payment awards. It provides guidance that will allow companies to make certain changes to awards without applying modification accounting.  Under the new guidance, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions, and classification as an equity or liability instrument are the same immediately before and after the change. This guidance becomes effective for us on January 1, 2018, and we are evaluating the impact of this ASU on our financial statements and disclosures.

29

SOUTHWEST BANCORP, INC.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

Southwest Bancorp, Inc. (“we”, “our”, “us”, or “Southwest”) is a financial holding company for Bank SNB, which has been providing banking services since 1894. Through Bank SNB, we have thirty full-service banking centers located primarily along the heavily populated areas on the I-35 corridor through Texas, Oklahoma, Kansas, and Colorado.In addition, we have a fully dedicated loan production office in Denver, Colorado. We focus on providing customers with exceptional service and meeting all of their banking needs by offering a wide variety of commercial and consumer banking services, including commercial and consumer lending, deposit services, specialized cash management, and other financial services and products. At June 30, 2017 we had total assets of $2.6 billion, deposits of $2.0 billion, and shareholders’ equity of $295.5 million.

On December 14, 2016, we entered into a Merger Agreement with Simmons First National Corporation (“Simmons”), an Arkansas corporation, pursuant to which, and subject to its terms and conditions, Simmons will acquire all of our outstanding capital stock for $95.0 million in cash and 7,250,000 shares of Simmons’s common stock, subject to potential adjustments. The merger application for this transaction was filed on July 14, 2017. Conversion and integration plans are in process. Subject to regulatory approval and the satisfaction of other closing conditions, we anticipate a closing date as early as October 2017 or as late as January 2018.

On May 25, 2016, the Board authorized our fourth stock repurchase program since August 2014. The program authorizes the repurchase of up to another 5.0%, or approximately 921,000 shares, of our outstanding common stock and became effective February 23, 2017, which was the original expiration date of the third program. During the first six months of 2017, we have made no repurchases. During 2016, we repurchased 1,398,026 shares for a total of $22.1 million, and since August 2014, we have repurchased a total of 2,519,584 shares for a total of $40.8 million. Repurchases under the program are available at the discretion of management based upon market, business, legal, and other factors. Our ability to repurchase our common stock is limited during the time that our planned merger with Simmons is pending.  

Our business operations are conducted through four operating segments that include Oklahoma Banking, Texas Banking, Kansas Banking, and Other Operations. Due to its size and our management structure, Colorado banking operations are included within our Oklahoma Banking segment. At June 30, 2017, the Oklahoma Banking segment accounted for $1.2billion in loans, the Texas Banking segment accounted for $636.7 million in loans, and the Kansas Banking segment accounted for $141.8 million in loans. For additional information on the composition of our loans, see “Loans” in the “Financial Condition” section on page31.  For additional information on our operating segments, see “Note 9:  Operating Segments” in the Notes to Unaudited Consolidated Financial Statements. 

Our common stock is traded on the NASDAQ Global Select Market under the symbol OKSB. We focus on converting our strategic vision into long-term shareholder value. 

INDUSTRY FOCUS

Our area of expertise focuses on the special financial needs of: (i) healthcare and health professionals; (ii) commercial real estate borrowers, businesses and their managers and owners; (iii) commercial lending; (iv) and energy banking.The healthcare and real estate industries make up the majority of our loan and deposit portfolios.We conduct regular reviews of our current and potential healthcare and real estate lending and the appropriate concentrations within those industries based upon economic and regulatory conditions. 

As of June 30, 2017, $1.1 billion, or 58%, of our loans were commercial real estate loans. Economic factors that affect commercial real estate values include job growth, corporate profits, and business expansion. The unemployment rate, uncertainty over government regulation and fiscal policy, the rising cost of debt capital, and depressed oil and gas prices are all industry risk factors.

Our tactical focus on healthcare lending was established in 1974.We provide credit and other remittance services, such as deposits, cash management, and document imaging for physicians and other healthcare practitioners to start or develop their practices and finance the development and purchase of medical offices, clinics, surgical care centers, hospitals, and similar facilities.As of June 30, 2017,  $429.5 million, or 22%, of our loans were to individuals and businesses in the healthcare industry.

30

As of June 30, 2017,approximately 4% of our loan portfolio was concentrated in the oil and gas industry. Our exposure continues to be focused on production based companies and servicing companies, representing 78% and 22%, respectively, of our energy portfolio.  If oil prices return to lower levels for an extended period, we could experience weaker energy loan demand and increased losses within our energy portfolio. Furthermore, a prolonged period of low or stagnant oil prices could have a negative impact on the economies of energy-dominant states such as Oklahoma and Texas.  As a result, low oil prices could have an adverse effect on our business, financial condition and results of operation. We have the ability to adjust the borrowing base on outstanding commitments based on market price and condition.

FINANCIAL CONDITION

Investment Securities

The following table shows the composition of the investment portfolio at the dates indicated:

	June 30,		December 31,
(Dollars in thousands)	2017		2016		$ Change		% Change
Federal agency securities	$	64,792	$	69,694	$	(4,902)	(7.03)	%
Obligations of state and political subdivisions		56,238		56,818		(580)	(1.02)
Residential mortgage-backed securities		284,475		280,642		3,833	1.37
Asset-backed securities		8,497		9,177		(680)	(7.41)
Corporate debt		20,411		20,330		81	0.40
Total	$	434,413	$	436,661	$	(2,248)	(0.51)	%

Loans

Total loans, including loans held for sale, were $2.0 billion at June 30, 2017. The following table shows the composition of the loan portfolio at the dates indicated:

(Dollars in thousands)	June 30, 2017		December 31, 2016		$ Change		% Change
Real estate mortgage
Commercial	$	961,085	$	882,071	$	79,014	8.96	%
One-to-four family residential		241,140		199,123		42,017	21.10
Real estate construction
Commercial		182,620		199,113		(16,493)	(8.28)
One-to-four family residential		14,523		20,946		(6,423)	(30.66)
Commercial		554,094		556,248		(2,154)	(0.39)
Installment and consumer
Other		18,172		19,631		(1,459)	(7.43)
Total loans	$	1,971,634	$	1,877,132	$	94,502	5.03	%

The composition of loans held for sale and a  reconciliation to total loans is shown in the following table: 

	June 30,		December 31,
(Dollars in thousands)	2017		2016		$ Change		% Change
Loans held for sale:
One-to-four family residential	$	6,036	$	4,386	$	1,650	37.62	%
Total loans held for sale		6,036		4,386		1,650	37.62
Portfolio loans		1,965,598		1,872,746		92,852	4.96
Total  loans	$	1,971,634	$	1,877,132	$	94,502	5.03	%

Allowance for Loan Losses

Management determines the appropriate level of the allowance for loan losses using an established methodology. Management believes the amount of the allowance is appropriate, based on our analysis. For additional information, see “Note 3:  Loans and Allowance for Loan Losses” in the Notes to Unaudited Consolidated Financial Statements.

The allowance for loan losses is comprised of two components. We consider all non-accrual loans and troubled debt restructuring loans to be impaired loans. However, all troubled debt restructuring loans and non-accrual loans greater than or equal to $100,000

31

are evaluated on an individual basis using the discounted present value of expected cash flows, the fair value of collateral, or the market value of the loan, and a specific allowance is recorded based upon the result. Collateral dependent loans are evaluated for impairment based upon the fair value of the collateral. Any portion of a collateral dependent impaired loan in excess of the fair value of the collateral that is determined to be uncollectible is charged off. 

The allowance on all other loans (including non-accrual loans less than $100,000) is determined by use of historical loss ratios adjusted for qualitative internal and external risk factors, segmented into loan pools by type of loan and market area. 

The composition of the allowance for loan losses, at the dates indicated, is shown in the following table: 

	As of June 30, 2017						As of December 31, 2016
(Dollars in thousands)	Loan Balance		Allowance		Allowance %		Loan Balance		Allowance		Allowance %
Nonaccrual	$	22,929	$	2,461	10.7	%	$	16,267	$	3,668	22.5	%
Performing TDR		1,114		-	0.0			1,178		-	0.0
All other excluding loans held for sale		1,941,555		24,857	1.3			1,855,301		23,878	1.3
Total	$	1,965,598	$	27,318	1.4	%	$	1,872,746	$	27,546	1.5	%

The decrease in the allowance for nonaccrual loans was primarily the result of $4.2 million in charge-offs in the first six months of 2017, of which $2.0 million had been previously reserved as of December 31, 2016. The increase in the nonaccrual loan balance was due to one non-owner occupied retail real estate loan of $6.5 million, of which minimal loss is expected. The allowance relating to the other loans reflects the consideration of improving portfolio loss trends and qualitative factors including management’s assessment of economic risk, asset quality trends, levels of potential problem loans, and loan concentrations in commercial real estate mortgage and construction loans.

The amount of the loan loss provision, or negative provision, for a period is based solely upon the amount needed to cause the allowance to reach the level deemed appropriate, after the effects of net charge-offs (recoveries) for the period.  The provision for loan losses for the first six months of 2017 was $3.5 million, representing a decrease of $0.9 million from the provision of $4.4 million recorded for the first six months of 2016. The provision for loan losses for the first six months of 2017 was driven primarily by loan growth and an increase in reserves on a few classified loans. Net charge-offs totaled  $3.7 million, or 0.39% (annualized) of average portfolio loans year-to-date as of June 30, 2017, compared to net charge-offs of $3.6 million, or 0.41% (annualized) of average portfolio loans for the same period in 2016.

Nonperforming Loans / Nonperforming Assets 

At June 30, 2017, the allowance for loan losses was 118.46% of nonperforming loans, compared to 165.84% of nonperforming loans at December 31, 2016. Nonaccrual loans, which comprise the majority of nonperforming loans, were $22.9 million as of June 30, 2017,  an increase of $6.7 million, or 41%, from December 31, 2016. We have taken cumulative net charge-offs related to these nonaccrual loans of $3.2 million as of June 30, 2017.  Nonaccrual loans at June 30, 2017 were comprised of 37 relationships and were primarily concentrated in commercial and industrial (56.18%) and commercial real estate (29.20%). All nonaccrual loans are considered impaired and are carried at their estimated collectible amounts. These loans are believed to have sufficient collateral and are in the process of being collected.

32

(Dollars in thousands)	June 30, 2017			December 31, 2016
Nonaccrual loans:
Commercial real estate	$	6,694		$	6,471
One-to-four family residential		2,752			2,766
Real estate construction		579			970
Commercial		12,883			5,949
Other consumer		21			111
Total nonaccrual loans		22,929			16,267
Past due 90 days or more:
Commercial		1			193
One-to-four family residential		45			138
Other consumer		85			12
Total past due 90 days or more		131			343
Total nonperforming loans		23,060			16,610
Other real estate		-			350
Total nonperforming assets	$	23,060		$	16,960
Nonperforming assets to portfolio loans receivable and
other real estate		1.17	%		0.91	%
Nonperforming loans to portfolio loans receivable		1.17			0.89
Allowance for loan losses to nonperforming loans		118.46			165.84

At June 30, 2017, six credit relationships represented 83% of nonperforming loans and nonperforming assets. At December 31, 2016, six credit relationships represented 77% of nonperforming loans and 74% of nonperforming assets. 

Performing loans considered potential problem loans (loans which are not included in the past due or nonaccrual categories but for which known information about possible credit problems causes management to be uncertain as to the ability of the borrowers to comply with the present loan repayment terms) amounted to approximately $28.7 million at June 30, 2017, compared to $44.0 million at December 31, 2016. Substantially all of these loans were performing in accordance with their present terms at June 30, 2017. Loans may be monitored by management and reported as potential problem loans for an extended period of time during which management continues to be uncertain as to the ability of certain borrowers to comply with the present loan repayment terms. 

There was no other real estate at June 30, 2017, compared to other real estate of $0.4 million at December 31, 2016.

At June 30, 2017, the reserve for unfunded loan commitments was $2.1 million, a $0.4 million, or 16%, decrease from the reserve amount at December 31, 2016. Management believes the amount of the reserve is appropriate and is included in other liabilities on the consolidated statements of financial condition. The decrease is primarily related to a reduction in the outstanding unfunded loan commitments.

Deposits and Other Borrowings

Our deposits were $2.0 billion at June 30, 2017 and $1.9 billion at December 31, 2016. The following table shows the composition of deposits at the dates indicated:

	June 30,		December 31,
(Dollars in thousands)	2017		2016		$ Change		% Change
Noninterest-bearing demand	$	557,159	$	551,709	$	5,450	0.99	%
Interest-bearing demand		176,724		152,656		24,068	15.77
Money market accounts		599,122		567,058		32,064	5.65
Savings accounts		57,905		56,410		1,495	2.65
Time deposits of $100,000 or more		403,918		360,307		43,611	12.10
Other time deposits		219,006		257,878		(38,872)	(15.07)
Total deposits	$	2,013,834	$	1,946,018	$	67,816	3.48	%

33

Some of our interest-bearing deposits were obtained through brokered transactions and we participate in the Certificate of Deposit Account Registry Services (“CDARS”). CDARS deposits totaled $32.5 million at June 30, 2017 and $29.0 million at December 31, 2016.

Other borrowings, which includes short-term federal funds purchased, FHLB borrowings, and repurchase agreements, increased $19.9 million, or 11%, to $203.7 million during the first six months of 2017.  The increase primarily reflects the change in short-term FHLB advances for the period.   

Wholesale funding, including FHLB borrowings, federal funds purchased, and brokered deposits, accounted for 22% and 19% of total funding at June 30, 2017 and December 31, 2016, respectively. See further discussion under the “Liquidity” section below on page 43.

Shareholders’ Equity

Shareholders’ equity increased  $8.9 million during the six months ended June 30, 2017 primarily due to $11.1 million in net income and an increase of $0.6 million in other comprehensive income, offset in part by $3.0 million in common stock dividends declared.  At June 30, 2017, the accumulated other comprehensive loss on available for sale investment securities and derivative instruments (net of tax) was $0.3 million, an improvement from a comprehensive loss of $0.9 million at December 31, 2016.

At June 30, 2017, we and Bank SNB continued to exceed all applicable regulatory capital requirements. See “Capital Requirements” on page 43.

34

RESULTS OF OPERATIONS

FOR THE THREE MONTH PERIODS ENDED JUNE 30, 2017 and 2016

Net incomeof $5.8million for the second quarter of 2017represented an increase of $0.4 million from the $5.4 million net income recorded for the second quarter of 2016. Diluted earnings per share were $0.31 for the second quarter of 2017, compared to $0.28 for the second quarter of 2016. The $0.4 million increase in net income compared to the second quarter of 2016 was due to a $1.7 million increase in net interest income, a $0.7 million increase in noninterest income, and a $0.1 million decrease in noninterest expense, offset in part by a $1.7 million increase in the provision for loan losses and a $0.3 million increase in income taxes.

Provisions for loan losses are booked in the amounts necessary to maintain the allowance for loan losses at an appropriate level at period end after net charge-offs for the period. For additional information, see “Note 3:  Loans and Allowance for Loan Losses” in the Notes to Unaudited Consolidated Financial Statements and “Provision for Loan Losses” on page 42.

Net Interest Income

	For the three months
	ended June 30,
(Dollars in thousands)	2017		2016		$ Change		% Change
Interest income:
Loans	$	22,562	$	20,031	$	2,531	12.64	%
Investment securities:
U.S. government and agency obligations		270		302		(32)	(10.60)
Mortgage-backed securities		1,084		1,038		46	4.43
State and political subdivisions		339		350		(11)	(3.14)
Other securities		342		272		70	25.74
Other interest-earning assets		111		51		60	117.65
Total interest income		24,708		22,044		2,664	12.08
Interest expense:
Interest-bearing demand deposits		90		65		25	38.46
Money market accounts		815		329		486	147.72
Savings accounts		19		18		1	5.56
Time deposits of $100,000 or more		514		448		66	14.73
Other time deposits		686		568		118	20.77
Other borrowings		610		342		268	78.36
Subordinated debentures		604		579		25	4.32
Total interest expense		3,338		2,349		989	42.10
Net interest income	$	21,370	$	19,695	$	1,675	8.50	%

Net interest income is the difference between the interest income we earn on our loans, investments, and other interest-earning assets and the interest paid on interest-bearing liabilities, such as deposits and borrowings. Net interest income is affected by changes in market interest rates because rates on different types of assets and liabilities may react differently and at different times to changes in market interest rates. When interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce net interest income.  Similarly, when interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, an increase of market rates of interest could reduce net interest income. On the other hand, when interest-earning assets mature or reprice more quickly than interest-bearingliabilities, rising interest rates could increase net interest income and when interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, a decrease of market rates of interest could increase net interest income.

35

AVERAGE BALANCES, YIELDS AND RATES

The following table shows average interest-earning assets and interest-bearing liabilities and the average yields and rates on them for the periods indicated:

	For the three months ended June 30,
	2017						2016
	Average				Average		Average				Average
(Dollars in thousands)	Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate
Assets
Loans (1) (2)	$	1,940,684	$	22,562	4.66	%	$	1,799,591	$	20,031	4.48	%
Investment securities (2)		435,091		2,035	1.88			428,275		1,962	1.84
Other interest-earning assets		54,634		111	0.81			48,569		51	0.42
Total interest-earning assets		2,430,409		24,708	4.08			2,276,435		22,044	3.89
Other assets		101,033						103,566
Total assets	$	2,531,442					$	2,380,001
Liabilities and shareholders' equity
Interest-bearing demand deposits	$	178,206	$	90	0.20	%	$	165,011	$	65	0.16	%
Money market accounts		598,346		815	0.55			537,734		329	0.25
Savings accounts		57,749		19	0.13			54,808		18	0.13
Time deposits		616,870		1,200	0.78			589,029		1,016	0.69
Total interest-bearing deposits		1,451,171		2,124	0.59			1,346,582		1,428	0.43
Other borrowings		180,920		610	1.35			141,623		342	0.97
Subordinated debentures		46,393		604	5.21			46,393		579	4.99
Total interest-bearing liabilities		1,678,484		3,338	0.80			1,534,598		2,349	0.62
Noninterest-bearing demand deposits		545,896						547,963
Other liabilities		12,630						13,598
Shareholders' equity		294,432						283,842
Total liabilities and shareholders' equity	$	2,531,442					$	2,380,001
Net interest income and interest rate spread			$	21,370	3.28	%			$	19,695	3.27	%
Net interest margin (3)					3.53	%					3.48	%
Ratio of average interest-earning assets
to average interest-bearing liabilities		144.80%						148.34%
(1) Average balances include nonaccrual loans.  Fees included in interest income on loans receivable are not considered material.
(2) Interest on tax-exempt loans and securities is not shown on a tax-equivalent basis because it is not considered material.
(3) Net interest margin = annualized net interest income / average interest-earning assets

Compared to the second quarter of 2016, the second quarter 2017 yields on our interest-earning assets increased 19 basis points, while the rates paid on our interest-bearing liabilities increased 18 basis points, resulting in an increase in the interest rate spread from 3.27% to 3.28%. During the quarterly periods ended June 30, 2017 and June 30, 2016, annualized net interest margin was 3.53% and 3.48%, respectively, and for the same periods, the ratio of average interest-earning assets to average interest-bearing liabilities was 144.80% and 148.34%, respectively. Average loans (including loans held for sale) for the second quarter of 2017 increased $141.1 million when compared to June 30, 2016. Loan growth combined with the March 2017 Federal Reserve interest rate increase provided growth in interest income during the second quarter of 2017.

36

RATE VOLUME TABLE

The following table analyzes changes in our interest income and interest expense for the periods indicated. For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to:  (i) changes in volume (changes in volume multiplied by the prior period’s rate); and (ii) changes in rates (changes in rate multiplied by the prior period’s volume). Changes in rate-volume (changes in rate multiplied by the changes in volume) are allocated between changes in rate and changes in volume in proportion to the relative contribution of each.

The increase in net interest income is primarily the result of higher interest income from loans, driven by loan volume combined with the March 2017 Federal Reserve interest rate increase, offset in part by higher interest expense primarily on money market accounts, time deposits, and other borrowings.

	For the three months ended June 30,
	2017 vs. 2016
	Increase		Due to Change
	Or		In Average:
(Dollars in thousands)	(Decrease)		Volume		Rate
Interest earned on:
Loans receivable (1)	$	2,531	$	1,615	$	916
Investment securities (1)		73		32		41
Other interest-earning assets		60		7		53
Total interest income		2,664		1,654		1,010
Interest paid on:
Interest-bearing demand		25		6		19
Money market accounts		486		41		445
Savings accounts		1		1		-
Time deposits		184		65		119
Other borrowings		268		110		158
Subordinated debentures		25		-		25
Total interest expense		989		223		766
Net interest income	$	1,675	$	1,431	$	244
(1) Interest on tax-exempt loans and securities is not shown on a tax-equivalent basis because it is not considered material.

Noninterest Income

	For the three months
	ended June 30,
(Dollars in thousands)	2017		2016		$ Change		% Change
Noninterest income:
Other service charges and fees	$	2,800	$	2,556	$	244	9.55	%
Other noninterest income		1,026		428		598	139.72
Gain on sale/call of investment securities		-		165		(165)	(100.00)
Gain on sales of mortgage loans, net		695		722		(27)	(3.74)
Total noninterest income	$	4,521	$	3,871	$	650	16.79	%

Other service charges and fees for the three months ended June 30, 2017 increased $0.2 million compared to the three months ended June 30, 2016.

Other noninterest income for the three months ended June 30, 2017increased $0.6 million compared to the three months ended June 30, 2016, primarily due to an increase in income on bank owned life insurance and customer risk management interest rate swap income.

There was no gain on sale/call of investment securities for the three months ended June 30, 2017 compared to a gain of $0.2 million for the three months ended June 30, 2016.

37

Gain on sales of mortgage loans for the three months ended June 30, 2017 did not significantly change compared to the three months ended June 30, 2016.

Noninterest Expense

	For the three months
	ended June 30,
(Dollars in thousands)	2017		2016		$ Change		% Change
Noninterest expense:
Salaries and employee benefits	$	9,675	$	9,587	$	88	0.92	%
Occupancy		2,318		2,669		(351)	(13.15)
Data processing		459		430		29	6.74
FDIC and other insurance		273		432		(159)	(36.81)
Other real estate (net)		50		8		42	525.00
Provision (credit) for unfunded loan commitments		30		(263)		293	111.41
Other general and administrative		2,350		2,405		(55)	(2.29)
Total noninterest expense	$	15,155	$	15,268	$	(113)	(0.74)	%

The number of full-time equivalent employees decreased from 410 as of June 30, 2016 to 388 as of June 30, 2017.The increase in personnel expense from the prior year was primarily due to increased incentives, severance costs, payroll taxes, and benefits.

The decrease in occupancy for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016 was due primarily to decreased rental expense and depreciation expense. The increase in data processing for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016 was primarily due to higher interchange volumes and normal billing fluctuations.

Our financial institution subsidiary pays deposit insurance premiums to the FDIC based on assessment rates. There was a decrease in FDIC and other insurance expense for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016.

The increase in other real estate net expenses for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016 was primarily the result of expenses incurred on properties sold during the second quarter of 2017.

The provision (credit) for unfunded loan commitments for the three months ended June 30, 2017 increased compared to the three months ended June 30, 2016, primarily as a result of a quarterly increase in the level of unfunded commitments related to loans outstanding at June 30, 2017.

The decrease in other general and administrative for the three months ended June 30, 2017 as compared to the three months ended June 30, 2016 was primarily the result of decreased employee travel expenses, intangible amortization, and administrative expenses.

38

RESULTS OF OPERATIONS

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2017 and 2016

Net income of $11.1 million for the six months ended June 30, 2017 represented an increase of $3.8 million from the $7.3 million net income recorded for the six months ended June 30, 2016. Diluted earnings per share were $0.59 for the six months ended June 30, 2017, compared to $0.38 for the six months ended June 30, 2016. The $3.8 million increase in net income from 2016 was the result of a $2.0 million increase in net interest income, a $2.1 million increase in noninterest income, a $0.9 million decrease in the provision for loan losses, and a $0.8 million decrease in noninterest expense, offset in part by a $2.0 million increase in income taxes.

Provisions for loan losses are booked in the amounts necessary to maintain the allowance for loan losses at an appropriate level at period end after net charge-offs for the period.  See “Note 3:  Loans and Allowance for Loan Losses” in the Notes to Unaudited Consolidated Financial Statements and “Provision for Loan Losses” on page 42.  

	For the six months
	ended June 30,
(Dollars in thousands)	2017		2016		$ Change		% Change
Interest income:
Loans	$	43,506	$	40,061	$	3,445	8.60	%
Investment securities:
U.S. government and agency obligations		539		598		(59)	(9.87)
Mortgage-backed securities		2,207		2,115		92	4.35
State and political subdivisions		678		698		(20)	(2.87)
Other securities		663		516		147	28.49
Other interest-earning assets		186		104		82	78.85
Total interest income		47,779		44,092		3,687	8.36
Interest expense:
Interest-bearing demand deposits		180		127		53	41.73
Money market accounts		1,287		650		637	98.00
Savings accounts		38		37		1	2.70
Time deposits of $100,000 or more		1,324		815		509	62.45
Other time deposits		1,135		1,106		29	2.62
Other borrowings		1,088		651		437	67.13
Subordinated debentures		1,194		1,171		23	1.96
Total interest expense		6,246		4,557		1,689	37.06
Net interest income	$	41,533	$	39,535	$	1,998	5.05	%

Net interest income is the difference between the interest income we earn on our loans, investments, and other interest-earning assets and the interest paid on interest-bearing liabilities, such as deposits and borrowings. Net interest income is affected by changes in market interest rates because rates on different types of assets and liabilities may react differently and at different times to changes in market interest rates. When interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce net interest income.  Similarly, when interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, an increase of market rates of interest could reduce net interest income. On the other hand, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, rising interest rates could increase net interest income and when interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, a decrease of market rates of interest could increase net interest income.

39

AVERAGE BALANCES, YIELDS AND RATES 

The following table shows average interest-earning assets and interest-bearing liabilities and the average yields and rates on them for the periods indicated.

	For the six months ended June 30,
(Dollars in thousands)	2017						2016
	Average				Average		Average				Average
	Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate
Assets
Loans (1) (2)	$	1,919,981	$	43,506	4.57	%	$	1,794,291	$	40,061	4.49	%
Investment securities (2)		433,326		4,087	1.90			420,291		3,927	1.88
Other interest-earning assets		55,358		186	0.68			49,800		104	0.42
Total interest-earning assets		2,408,665		47,779	4.00			2,264,382		44,092	3.92
Other assets		101,679						105,720
Total assets	$	2,510,344					$	2,370,102
Liabilities and shareholders' equity
Interest-bearing demand deposits	$	182,712	$	180	0.20	%	$	162,825	$	127	0.16	%
Money market accounts		585,924		1,287	0.44			540,267		650	0.24
Savings accounts		57,884		38	0.13			55,321		37	0.13
Time deposits		614,037		2,459	0.81			576,621		1,921	0.67
Total interest-bearing deposits		1,440,557		3,964	0.55			1,335,034		2,735	0.41
Other borrowings		177,659		1,088	1.23			129,397		651	1.01
Subordinated debentures		46,393		1,194	5.15			47,469		1,171	4.93
Total interest-bearing liabilities		1,664,609		6,246	0.76			1,511,900		4,557	0.61
Noninterest-bearing demand deposits		541,025						555,493
Other liabilities		12,850						14,184
Shareholders' equity		291,860						288,525
Total liabilities and shareholders' equity	$	2,510,344					$	2,370,102
Net interest income and interest rate spread			$	41,533	3.24	%			$	39,535	3.31	%
Net interest margin (3)					3.48	%					3.51	%
Ratio of average interest-earning assets
to average interest-bearing liabilities		144.70%						149.77%
(1) Average balances include nonaccrual loans.  Fees included in interest income on loans receivable are not considered material.
(2) Interest on tax-exempt loans and securities is not shown on a tax-equivalent basis because it is not considered material.
(3) Net interest margin = annualized net interest income / average interest-earning assets

Compared to the six months ended June 30, 2016, the six months ended June 30, 2017 yields on our interest-earning assets increased 8 basis points, while the rates paid on our interest-bearing liabilities increased 15 basis points, resulting in adecrease in the interest rate spread from 3.31% to 3.24%. During the same periods, annualized net interest margin was 3.48% and 3.51%, respectively, and for the same periods, the ratio of average interest-earning assets to average interest-bearing liabilities was 144.70% and 149.77%, respectively. Included in interest income for the first six months of 2017 and the first six months of 2016 was $0.7 million and $0.5 million of accelerated discount accretion, respectively. The net effect on the net interest margin was a 6 basis point and a 4 basis point increase, respectively for each six-month period. For the first six months of 2017, net interest margin was also reduced by an increase in the cost of deposits and other borrowings. Average loans (including loans held for sale) as of June 30, 2017 increased $125.7 million when compared to June 30, 2016.  Loan growth combined with the recent Federal Reserve interest rate increases provided growth in our loan interest income.

40

RATE VOLUME TABLE 

The following table analyzes changes in our interest income and interest expense for the periods indicated.  For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to:  (i) changes in volume (changes in volume multiplied by the prior period’s rate); and (ii) changes in rates (changes in rate multiplied by the prior period’s volume).  Changes in rate-volume (changes in rate multiplied by the changes in volume) are allocated between changes in rate and changes in volume in proportion to the relative contribution of each. 

The increase in net interest income is primarily the result of higher interest income from loans, driven by loan volume combined with the recent Federal Reserve interest rate increases, offset in part by higher interest expense primarily on money market accounts, time deposits, and other borrowings.

	For the six months ended June 30,
	2017 vs. 2016
	Increase		Due to Change
	Or		In Average:
(Dollars in thousands)	(Decrease)		Volume		Rate
Interest earned on:
Loans receivable (1)	$	3,445	$	2,841	$	604
Investment securities (1)		160		123		37
Other interest-earning assets		82		13		69
Total interest income		3,687		2,977		710
Interest paid on:
Interest-bearing demand		53		17		36
Money market accounts		637		59		578
Savings accounts		1		2		(1)
Time deposits		538		137		401
Other borrowings		437		276		161
Subordinated debentures		23		(27)		50
Total interest expense		1,689		464		1,225
Net interest income	$	1,998	$	2,513	$	(515)
(1) Interest on tax-exempt loans and securities is not shown on a tax-equivalent basis, because it is not considered material.

Noninterest Income

	For the six months
	ended June 30,
(Dollars in thousands)	2017		2016		$ Change		% Change
Noninterest income:
Other service charges and fees	$	5,481	$	5,105	$	376	7.37	%
Other noninterest income		2,222		767		1,455	189.70
Gain on sale/call of investment securities		451		291		160	54.98
Gain on sales of mortgage loans, net		1,247		1,123		124	11.04
Total noninterest income	$	9,401	$	7,286	$	2,115	29.03	%

Other service charges and fees for the six months ended June 30, 2017 increased $0.4 million compared to the six months ended June 30, 2016.  

Other noninterest income for the six months ended June 30, 2017increased $1.5 million compared to the six months ended June 30, 2016, which includes income on bank owned life insurance and customer risk management interest rate swap income.

The gain on sale/call of investment securities for the six months ended June 30, 2017 increased $0.2 million compared to the six months ended June 30, 2016and was driven by a first quarter of 2017 sale of a private equity investment.

41

Gain on sales of mortgage loans for the six months ended June 30, 2017 increased $0.1 million compared to the six months ended June 30, 2016, primarily as a reflection of increased activity in residential mortgage lending. 

Noninterest Expense

	For the six months
	ended June 30,
(Dollars in thousands)	2017		2016		$ Change		% Change
Noninterest expense:
Salaries and employee benefits	$	19,575	$	18,929	$	646	3.41	%
Occupancy		4,691		5,340		(649)	(12.15)
Data processing		868		900		(32)	(3.56)
FDIC and other insurance		546		800		(254)	(31.75)
Other real estate (net)		53		21		32	152.38
Provision (credit) for unfunded loan commitments		(358)		(48)		(310)	(645.83)
Other general and administrative		5,083		5,322		(239)	(4.49)
Total noninterest expense	$	30,458	$	31,264	$	(806)	(2.58)	%

The number of full-time equivalent employees decreased from 410 at June 30, 2016 to 388 as of June 30, 2017. The increase in personnel expense from the prior year was primarily due to increased incentives, severance costs, payroll taxes, and benefits.

The decrease in occupancy and data processing for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016was primarily due to decreased rental expense, depreciation expense, maintenance contract amortization expense, and data processing expense related to software expense.

Our financial institution subsidiary pays deposit insurance premiums to the FDIC based on assessment rates. There was a decrease in FDIC and other insurance expense for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016.

The increase in other real estate net expenses for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016was primarily the result of expenses incurred on properties sold during the second quarter of 2017.

The provision (credit) for unfunded loan commitments for the six months ended June 30, 2017 decreased compared to the six months ended June 30, 2016, primarily as a result of a year-to-date decrease in the level of unfunded commitments related to loans outstanding at June 30, 2017.

The decrease in other general and administrative for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016 was primarily the result of decreased employee travel expenses, intangible amortization, and administrative expenses.

Provision for Loan Losses

The provision for loan losses is the amount that is required to maintain the allowance for loan losses at an appropriate level based upon the inherent risks in the loan portfolio after the net effects of charge-offs and recoveries for the period. The provision for loan losses was $3.5 million for the first six months of 2017, representing a decrease of $0.9 million from the provision of $4.4 million recorded for the first six months of 2016. The provision for loan losses for the first six months of 2017 was driven primarily by loan growth and an increase in reserves on a few classified loans. For additional information, see “Note 3:  Loans and Allowance for Loan Losses” in the Notes to Unaudited Consolidated Financial Statements. 

42

Taxes on Income

Our income tax expense was $5.9 million for the first six months of 2017 compared to $3.9 million for the first six months of 2016, an increase of $2.0 million, or 51%. The increase in the income tax expense was the result of increased pretax income and fluctuations in permanent book/tax differences. The effective tax rate for the first six months ended June 30, 2017 was 34.61%, compared to 34.83% for the first six months ended June 30, 2016. The decline in the effective tax rate includes a $0.2 million tax benefit due to the adoption of an accounting principle related to the tax benefit on vested stock incentive awards that became effective January 1, 2017.

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 available for sale investments. Additional sources of liquidity, including cash flow from the repayment of loans and the sale of participations in outstanding loans, are also considered in determining whether liquidity is satisfactory. Liquidity is also achieved through growth of deposits, reductions in liquid assets, and accessibility to capital and money markets. These funds are used to meet deposit withdrawals, maintain reserve requirements, fund loans, and operate the organization.

Southwest and Bank SNB have available various forms of short-term borrowings for cash management and liquidity purposes. These forms of borrowings include federal funds purchased, securities sold under agreements to repurchase, and borrowings from the Federal Reserve Bank (“FRB”) and the Federal Home Loan Bank of Topeka (“FHLB”).

Bank SNB has approved federal funds purchased lines totaling $70.0 million with three financial entities. There wasnooutstanding balance on these lines at June 30, 2017. Bank SNB is qualified to borrow funds from the FRB through their Borrower-In-Custody (“BIC”) program. Collateral under this program consists of pledged selected commercial and industrial loans.  Currently the collateral allows Bank SNB to borrow up to $109.8 million. As of June 30, 2017, no borrowings were made through the BIC program.In addition, Bank SNB has available a $365.9 million line of credit from the FHLB.  Borrowings under the FHLB lines are secured by investment securities and loans. At June 30, 2017, Bank SNB’s FHLB line of credit had an outstanding balance of $192.0 million. See also “Deposits and Other Borrowings” on page 33for funds available and “Note 9:Operating Segments” in the Notes to Unaudited Consolidated Financial Statements for a discussion of our funds management unit.

Bank SNB sells securities under agreements to repurchase with Bank SNB retaining custody of the collateral. Collateral consists of U.S. government agency obligations, which are designated as pledged with Bank SNB’s safekeeping agent. These transactions are for one to four day periods. Outstanding balances under this program were $11.7 million and $45.8 million as of June 30, 2017 and December 31, 2016, respectively. 

At June 30, 2017, $215.3 million of the total carrying value of investment securities of $434.4 million were pledged as collateral to secure public and trust deposits, sweep agreements, and borrowings from the FHLB.  Any amount over pledged can be released at any time. 

During the first six months of 2017, cash and cash equivalents increased by $4.2 million, or 6%, to $79.8 million compared to December 31, 2016. This increase was the net result of cash provided by financing activities of $84.9 million (primarily from net increases in deposits and other borrowings) and cash provided by operating activities of $17.4 million, partially offset by cash used in investing activities of $98.1 million (primarily from the increase in net loans originated).

CAPITAL REQUIREMENTS

Basel III – United States banking regulators are members of the Basel Committee on Banking Supervision. This committee issues accords, which include capital guidelines for use by regulators in individual countries, generally referred to as Basel I (1988), Basel II (2004), and Basel III (2011).  U.S. banking agencies published the final proposed rules to implement Basel III in the United States (the “Basel III Capital Rules”), which were effective for us January 1, 2015 (subject to a phase-in period for certain provisions). The Basel III Capital Rules introduce a comprehensive new regulatory framework for U.S. banking organizations, which is consistent with international standards.  The implementation of Basel III is intended to help ensure that banks of all sizes maintain strong capital positions to keep them viable during times of financial stress and severe economic downturns.

The Basel III Capital Rules, among other things, introduce a new capital measure called “Common Equity Tier 1” (“CET1”), specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and expand the scope of the deductions/adjustments as compared to existing regulations.

43

Under the Basel III Capital Rules, the initial minimum capital ratios that became effective on January 1, 2015 are as follows:

· 4.5% CET1 to risk weighted assets

· 6.0% Tier 1 capital to risk weighted assets

· 8.0% Total capital to risk weighted assets

· 4.0% Tier 1 capital to average quarterly assets

When fully phased in on January 1, 2019, the Basel III Capital Rules will require us to maintain (i) a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a “capital conservation buffer” equal to 2.5% of total risk-weighted assets (the “Capital Buffer”), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the Capital Buffer, (iii) a minimum ratio of Total capital to risk-weighted assets of at least 8.0%, plus the Capital Buffer and (iv) a minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average quarterly assets. The Capital Buffer will be tested on a quarterly basis. Our ability to pay dividends, discretionary bonuses, or repurchase stock will be restricted unless we maintain the Capital Buffer.As of June 30, 2017, we are well-capitalized even if we apply the capital buffer on a fully phased-in basis.

The Basel III Capital Rules also prescribe a standardized approach for risk weightings that expand the risk-weighting categories from the four Basel I-derived categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets and resulting in higher risk weights for a variety of asset categories. Specific changes to the rules impacting our determination of risk-weighted assets include, a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans, and a 150% risk weight to exposures that are 90 days past due.

Banks with under $250 billion in assets are given a one-time, opt-out election under the Basel III Capital Rules to filter from regulatory capital certain accumulated other comprehensive income (“AOCI”) components. Without this election, a bank must reflect unrealized gains and losses on “available for sale” securities in regulatory capital. This AOCI opt-out election must be made on a bank’s first regulatory report filed after January 1, 2015. 

In connection with the adoption of the Basel III Capital Rules, we elected to opt-out of the requirement to include most components of accumulated other comprehensive income in regulatory capital. Accordingly, amounts reported as accumulated other comprehensive income/loss related to securities available for sale and effective cash flow hedges do not increase or reduce regulatory capital and are not included in the calculation of risk-based capital and leverage ratios. Regulatory agencies for banks and bank holding companies utilize capital guidelines designed to measure capital and take into consideration the risk inherent in both on-balance sheet and off-balance sheet items.

Capital Ratios – Financial holding companies are required to maintain capital ratios set by the FRB in its Risk-Based Capital Guidelines.  At June 30, 2017, we exceeded all applicable capital requirements, having a total risk-based capital ratio of 15.48%, a Tier Irisk-based capital ratio of 14.23%, a Tier 1 leverage ratio of 12.95%, and a CET1 ratio of 12.26%.  As of June 30, 2017, Bank SNB met the criteria for classification as “well-capitalized” institutions under the prompt corrective action rules of the Federal Deposit Insurance Act. Designation as a well-capitalized institution under these regulations does not constitute a recommendation or endorsement of Southwest or Bank SNB by bank regulators.

EFFECTS OF INFLATION

The unaudited consolidated financial statements and related unaudited consolidated financial data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America and practices within the banking industry which require the measurement of financial position and operating results in terms of historical dollars without considering fluctuations 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 do the effects of general levels of inflation.

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

The accounting and reporting policies followed by Southwest Bancorp, Inc. conform, in all material respects, to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the financial services industry. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base our estimates on historical experience, current information, and other factors deemed to be relevant, actual results could differ from those estimates. 

We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to

44

occur from period to period, could have a material impact on our financial statements. Accounting policies related to the allowance for loan losses, the valuation of securities, income taxes, goodwill and other intangible assets are considered to be critical, as these policies involve considerable subjective judgment and estimation by management. 

There have been no significant changes in our application of critical accounting policies since December 31, 2016.  

*   *   *   *   *   *   *

45

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

Our income is largely dependent on our net interest income. We seek to maximize our net interest margin within an acceptable level of interest rate risk while maintaining adequate levels of liquidity and capital. Interest rate risk can be defined as the amount of forecasted net interest income that may be gained or lost due to favorable or unfavorable movements in interest rates. Interest rate risk or sensitivity arises when the maturity or repricing characteristics of assets differ significantly from the maturity or repricing characteristics of liabilities. Net interest income is also affected by changes in the portion of interest-earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and shareholders’ equity.

The Asset/Liability Committee is responsible for managing interest rate risk in accordance with policy guidelines established by the Board of Directors. The Committee monitors projected variation in net interest income and economic value of equity due to specified changes in interest rates over time, local and national market conditions, and market interest rates. The committee also reviews the liquidity, capital, deposit mix, loan mix, and investment strategy. A principal objective of the asset and liability management effort is to balance the various factors that generate interest rate risk, thereby maintaining the interest rate sensitivity within acceptable risk levels. To measure interest rate sensitivity, we utilize a simulation model that facilitates the forecasting of net interest income under a variety of interest rate scenarios.   

The earnings simulation model uses numerous assumptions regarding the effect of changes in interest rates on the timing and extent of repricing characteristics, future cash flows, and customer behavior. These assumptions are inherently uncertain and, as a result, the model cannot precisely project net income. Actual results will differ from simulated results due to timing, cash flows, magnitude, and frequency of interest rate changes and changes in market conditions and management strategies, among other factors.

To measure the level of interest rate risk, the balance sheet is modeled under alternative interest rate scenarios that include immediate rates shocks of +/- 100, 200, and 300 basis points (“bps”), although we may not use particular scenarios that are determined to be impractical in the current rate environment. It is management’s goal to structure the balance sheet so that forecasted net interest income and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels.

Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments. They do not necessarily indicate the long-term prospects or economic value of the institution.

Estimated Changes in Net Interest Income

Changes in Interest Rates:	+300 bps	+200 bps	+100 bps	-100 bps
June 30, 2017	13.98%	8.56%	3.16%	-11.35%
December 31, 2016	17.41%	10.98%	4.32%	-11.66%

When compared to December 31, 2016, net interest income marginally increased in the down 100 bps scenario and declined in each of the three rising interest rate scenarios. The measured changes in net interest income for all scenarios are in compliance with the established policy limits. 

The measures of equity value at risk indicate the ongoing economic value of equity considering the effects of interest rate changes on cash flows, and discounting the cash flows to estimate the present value of assets and liabilities. The difference between these discounted values of the assets and liabilities is the economic value of equity, which, in theory, approximates the fair value of our net assets.

Estimated Changes in Economic Value of Equity (EVE)

Changes in Interest Rates:	+300 bps	+200 bps	+100 bps	-100 bps
June 30, 2017	2.34%	1.74%	1.07%	-0.13%
December 31, 2016	4.07%	2.80%	1.43%	-0.31%

As of June 30, 2017, the economic value of equity measure declined in each of the three rising interest rate scenarios and marginally increased in the down 100 bps scenario when compared to December 31, 2016. The measured changes in economic value of equity for all scenarios are in compliance with the established policy limits.

*   *   *   *   *   *   *

46

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by SEC rules, our management evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2017.  Our Chief Executive Officer and Chief Financial Officer participated in the evaluation. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2017.

Changes in Internal Control over Financial Reporting

No changes occurred during the six months ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

47

PART II:  OTHER INFORMATION

Item 1:  Legal proceedings

On March 18, 2011, an action entitled Ubaldi, et al. v SLM Corporation (“Sallie Mae”), et al., Case No. 3:11-cv-01320 EDL (the “Ubaldi Case”) was filed in the U.S. District Court for the Northern District of California as a putative class action with respect to certain loans that the plaintiffs claim were made by Sallie Mae. The loans in question were made by various banks, including Bank SNB, and sold to Sallie Mae. Plaintiffs claim that Sallie Mae entered into arrangements with chartered banks in order to evade California law and that Sallie Mae is the de facto lender on the loans in question and, as the lender on such loan, Sallie Mae charged interest and late fees that violates California usury law and the California Business and Professions Code. Sallie Mae has denied all claims asserted against it and has stated that it intends to vigorously defend the action.  On March 26, 2014, the Court denied the plaintiffs’ request to certify the class; however, the Court permitted the plaintiffs to amend the filing to redefine the class. Plaintiffs filed a renewed motion on June 23, 2014. On December 19, 2014, the Court issued a decision on the renewed motion, certifying a class with respect to claims of improper late fees, but denying class certification with respect to plaintiffs’ usury claims. Plaintiffs thereafter filed a motion seeking leave to amend their complaint to add additional parties, which Sallie Mae opposed, and, on March 24, 2015, the Court denied the plaintiffs’ motion.  On June 5, 2015, the law firm Cohen Milstein Sellers & Toll based in Washington, D.C. entered its appearance as co-counsel on behalf of plaintiffs.

Bank SNB is not specifically named in the action.  However, in the first quarter of 2014, Sallie Mae provided Bank SNB with a notice of claims that have been asserted against Sallie Mae in the Ubaldi Case (the “Notice”). Sallie Mae asserts in the Notice that Bank SNB may have indemnification and/or repurchase obligations pursuant to the ExportSS Agreement dated July 1, 2002 between Sallie Mae and Bank SNB, pursuant to which the loans in question were made by Bank SNB. Bank SNB has substantial defenses with respect to any claim for indemnification or repurchase ultimately made by Sallie Mae, if any, and intends to vigorously defend against any such claims.

In the normal course of business, we are at all times subject to various pending and threatened legal actions. The relief or damages sought in some of these actions may be substantial.  After reviewing pending and threatened actions with counsel, management currently does not expect that the outcome of such actions will have a material adverse effect on our financial position; however, we are not able to predict whether the outcome of such actions may or may not have a material adverse effect on results of operations in a particular future period as the timing and amount of any resolution of such actions and relationship to the future results of operations are not known.

Item 1A:  Risk Factors 

There were no material changes in risk factors during the first six months of 2017 from those disclosed in our Form 10-K for the year ended December 31, 2016.

Item 2:  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3:  Defaults upon Senior Securities

None 

Item 4:  Mine Safety Disclosures 

Not Applicable 

Item 5:  Other Information

None  

Item 6:  Exhibits 

Exhibit 31(a), (b)   Rule 13a-14(a)/15d-14(a) Certifications

Exhibit 32(a), (b)   18 U.S.C. Section 1350 Certifications

Exhibit 101   Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements

48

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/ Mark W. Funke	August 7, 2017
Mark W. Funke President and Chief Executive Officer (Principal Executive Officer)	Date
By:  /s/ Joe T. Shockley, Jr.	August 7, 2017
Joe T. Shockley, Jr. Executive Vice President and Chief Financial Officer (Principal Financial Officer)	Date

49

EX-31.1

Exhibit 31(a)

Rule 13a-14(a)/15d-14(a) Certifications

I, Mark W. Funke, certify that:

1.   I have reviewed this report on Form 10-Q of Southwest Bancorp, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2017	/s/ Mark W. Funke
	Mark W. Funke
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31(b)

Rule 13a-14(a)/15d-14(a) Certifications

I, Joe T. Shockley, Jr., certify that:

1.   I have reviewed this report on Form 10-Q of Southwest Bancorp, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 7, 2017	/s/ Joe T. Shockley, Jr.
	Joe T. Shockley, Jr.
	Executive Vice President, Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32(a)

18 U.S.C. Section 1350 Certifications

I hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that the accompanying Form 10-Q of Southwest Bancorp, Inc. (“Southwest”) for the six months ended June 30, 2017, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and that the information contained in this Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Southwest.

By:  /s/ Mark W. Funke	August 7, 2017
Mark W. Funke	Date
President and Chief Executive Officer
(Principal Executive Officer)

EX-32.2

Exhibit 32(b)

18 U.S.C. Section 1350 Certifications

I hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that the accompanying Form 10-Q of Southwest Bancorp, Inc. (“Southwest”) for the six months ended June  30, 2017, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and that the information contained in this Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Southwest.

By: /s/ Joe T. Shockley, Jr.	August 7, 2017
Joe T. Shockley, Jr.	Date
Executive Vice President, Chief Financial
Officer
(Principal Financial Officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 07, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	SOUTHWEST BANCORP INC
Entity Central Index Key	0000914374
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Trading Symbol	oksb
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,685,050

XML

Consolidated Statements Of Financial Condition - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets:
Cash and due from banks	$ 37,898	$ 36,831
Interest-bearing deposits	41,941	38,819
Cash and cash equivalents	79,839	75,650
Securities held to maturity (fair values of $10,632 and $10,677, respectively)	10,382	10,443
Securities available for sale (amortized cost of $424,172 and $427,113, respectively)	424,031	426,218
Loans held for sale	6,036	4,386
Loans receivable	1,965,598	1,872,746
Less: Allowance for loan losses	(27,318)	(27,546)
Net loans receivable	1,938,280	1,845,200
Accrued interest receivable	6,328	6,194
Non-hedge derivative asset	2,698	1,235
Premises and equipment, net	21,901	22,808
Other real estate		350
Goodwill	13,545	13,545
Other intangible assets, net	5,727	5,790
Bank owned life insurance	28,450	28,575
Other assets	35,718	34,998
Total assets	2,572,935	2,475,392
Deposits:
Noninterest-bearing demand	557,159	551,709
Interest-bearing demand	176,724	152,656
Money market accounts	599,122	567,058
Savings accounts	57,905	56,410
Time deposits of $100,000 or more	403,918	360,307
Other time deposits	219,006	257,878
Total deposits	2,013,834	1,946,018
Accrued interest payable	1,259	1,132
Non-hedge derivative liability	2,698	1,235
Other liabilities	9,500	10,171
Other borrowings	203,705	183,814
Subordinated debentures	46,393	46,393
Total liabilities	2,277,389	2,188,763
Shareholders' equity:
Common stock - $1 par value; 40,000,000 shares authorized; 21,260,352 and 21,230,714 shares issued, respectively	21,260	21,231
Additional paid in capital	123,772	123,112
Retained earnings	192,961	184,840
Accumulated other comprehensive loss	(292)	(907)
Treasury stock, at cost; 2,574,079 and 2,555,987 shares, respectively	(42,155)	(41,647)
Total shareholders' equity	295,546	286,629
Total liabilities & shareholders' equity	$ 2,572,935	$ 2,475,392

XML

Consolidated Statements Of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Consolidated Statements Of Financial Condition [Abstract]
Held to maturity securities, fair value	$ 10,632	$ 10,677
Available for sale securities, amortized cost	$ 424,172	$ 427,113
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	21,260,352	21,230,714
Treasury Stock, Shares	2,574,079	2,555,987

XML

Consolidated Statements Of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest income:
Interest and fees on loans	$ 22,562	$ 20,031	$ 43,506	$ 40,061
Investment securities:
U.S. government and agency obligations	270	302	539	598
Mortgage-backed securities	1,084	1,038	2,207	2,115
State and political subdivisions	339	350	678	698
Other securities	342	272	663	516
Other interest-earning assets	111	51	186	104
Total interest income	24,708	22,044	47,779	44,092
Interest expense:
Interest-bearing demand	90	65	180	127
Money market accounts	815	329	1,287	650
Savings accounts	19	18	38	37
Time deposits of $100,000 or more	514	448	1,324	815
Other time deposits	686	568	1,135	1,106
Other borrowings	610	342	1,088	651
Subordinated debentures	604	579	1,194	1,171
Total interest expense	3,338	2,349	6,246	4,557
Net interest income	21,370	19,695	41,533	39,535
Provision for loan losses	1,729	10	3,505	4,385
Net interest income after provision for loan losses	19,641	19,685	38,028	35,150
Noninterest income:
Service charges and fees	2,800	2,556	5,481	5,105
Gain on sales of mortgage loans, net	695	722	1,247	1,123
Gain on sales/calls of investment securities, net		165	451	291
Other noninterest income	1,026	428	2,222	767
Total noninterest income	4,521	3,871	9,401	7,286
Noninterest expense:
Salaries and employee benefits	9,675	9,587	19,575	18,929
Occupancy	2,318	2,669	4,691	5,340
Data processing	459	430	868	900
FDIC and other insurance	273	432	546	800
Other real estate, net	50	8	53	21
Provision (credit) for unfunded loan commitments	30	(263)	(358)	(48)
General and administrative	2,350	2,405	5,083	5,322
Total noninterest expense	15,155	15,268	30,458	31,264
Income before taxes	9,007	8,288	16,971	11,172
Taxes on income	3,189	2,876	5,874	3,891
Net income	$ 5,818	$ 5,412	$ 11,097	$ 7,281
Basic earnings per common share	$ 0.31	$ 0.29	$ 0.59	$ 0.38
Diluted earnings per common share	0.31	0.28	0.59	0.38
Common dividends declared per share	$ 0.08	$ 0.08	$ 0.16	$ 0.16

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements Of Comprehensive Income [Abstract]
Net income	$ 5,818	$ 5,412	$ 11,097	$ 7,281
Other comprehensive income:
Unrealized holding gain (loss) on available for sale securities	(109)	1,693	754	4,804
Reclassification adjustment for net gains arising during the period		(165)		(291)
Change in fair value of derivative used for cash flow hedge	128	95	285	211
Other comprehensive income, before tax	19	1,623	1,039	4,724
Tax expense related to items of other comprehensive income	(9)	(666)	(424)	(1,931)
Other comprehensive income, net of tax	10	957	615	2,793
Comprehensive income	$ 5,828	$ 6,369	$ 11,712	$ 10,074

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities:
Net income	$ 11,097	$ 7,281
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	3,505	4,385
Deferred tax expense	824	39
Asset depreciation	1,210	1,436
Securities premium amortization, net of discount accretion	1,895	1,539
Amortization of intangibles	425	1,193
Restricted stock amortization expense	353	448
Net gain on sales/calls of investment securities	(451)	(291)
Net gain on sales of mortgage loans	(1,247)	(1,123)
Net loss on sales of premises/equipment	7	7
Net loss on sales of other real estate	23	5
Proceeds from sales of held for sale loans	56,690	56,253
Held for sale loans originated for resale	(57,335)	(54,682)
Net changes in assets and liabilities:
Accrued interest receivable	(134)	37
Bank owned life insurance	125	(455)
Other assets	(1,143)	(5,396)
Accrued interest payable	127	64
Other liabilities	1,427	2,924
Net cash provided by operating activities	17,398	13,664
Investing activities:
Proceeds from sales of available for sale securities		41,530
Available for sale securities	43,476	33,828
Purchases of held to maturity securities		(444)
Purchases of available for sale securities	(42,370)	(81,817)
Net purchases of FHLB stock	(2,551)	(2,733)
Loans originated, net of principal repayments	(96,711)	(46,059)
Purchases of premises and equipment	(334)	(639)
Proceeds from sales of premises and equipment	24	44
Proceeds from sales of other real estate	337	147
Net cash used in investing activities	(98,129)	(56,143)
Financing activities:
Net increase in deposits	67,816	18,760
Net increase in other borrowings	19,891	42,641
Net proceeds from issuance of common stock	689	413
Purchases of treasury stock	(508)	(21,107)
Redemption of trust preferred securities		(5,155)
Common stock dividends paid	(2,967)	(3,113)
Preferred stock dividends paid	(1)	(1)
Net cash provided by financing activities	84,920	32,438
Net increase (decrease) in cash and cash equivalents	4,189	(10,041)
Cash and cash equivalents:
Beginning of period	75,650	78,129
End of period	$ 79,839	$ 68,088

XML

Consolidated Statement Of Shareholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income Gain/(Loss) [Member]	Treasury Stock [Member]	Total
Beginning balance, Shares at Dec. 31, 2015	20,006,802
Beginning balance at Dec. 31, 2015	$ 21,138	$ 121,966	$ 173,210	$ (1,290)	$ (18,926)	$ 296,098
Dividends declared:
Preferred			(1)			(1)
Common			(3,117)			(3,117)
Net common stock issued under employee plans and related tax expense	$ 86	327				413
Net common stock issued under employee plans and related tax expense, shares	85,585
Other comprehensive income, net of tax				2,793		2,793
Treasury shares purchased					(21,107)	(21,107)
Treasury shares purchased, shares	(1,341,604)
Net income			7,281			7,281
Ending balance, Shares at Jun. 30, 2016	18,750,783
Ending balance at Jun. 30, 2016	$ 21,224	122,293	177,373	1,503	(40,033)	282,360
Beginning balance, Shares at Dec. 31, 2016	18,674,727
Beginning balance at Dec. 31, 2016	$ 21,231	123,112	184,840	(907)	(41,647)	286,629
Dividends declared:
Preferred			(1)			(1)
Common			(2,975)			(2,975)
Net common stock issued under employee plans and related tax expense	$ 29	660				689
Net common stock issued under employee plans and related tax expense, shares	29,638
Other comprehensive income, net of tax				615		615
Treasury shares purchased					(508)	(508)
Treasury shares purchased, shares	(18,092)
Net income			11,097			11,097
Ending balance, Shares at Jun. 30, 2017	18,686,273
Ending balance at Jun. 30, 2017	$ 21,260	$ 123,772	$ 192,961	$ (292)	$ (42,155)	$ 295,546

XML

Consolidated Statement of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statement Of Shareholders' Equity [Abstract]
Common Stock, Dividends, Per Share, Declared	$ 0.08	$ 0.08	$ 0.16	$ 0.16

XML

Summary of Significant Accounting And Reporting Policies

6 Months Ended

Jun. 30, 2017

Significant Accounting And Reporting Policies [Abstract]

Significant Accounting And Reporting Policies

NOTE1:   SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, shareholders’ equity, cash flows, and comprehensive income in conformity with accounting principles generally accepted in the United States. However, the unaudited consolidated financial statements include all adjustments which, in the opinion of management, are necessary for a fair presentation. Those adjustments consist of normal recurring adjustments. The results of operations for the three and six months endedJune 30, 2017, and the cash flows for the six months ended June 30, 2017, should not be considered indicative of the results to be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Southwest Bancorp, Inc. Annual Report on Form 10-K for the year ended December 31, 2016.

The accompanying unaudited consolidated financial statements include the accounts of Southwest Bancorp, Inc. (“we”, “our”, “us”, “Southwest”), and our consolidated subsidiaries, including Bank SNB, an Oklahoma state banking corporation (“Bank SNB”), our banking subsidiary, and the consolidated subsidiaries of Bank SNB. All significant intercompany transactions and balances have been eliminated in consolidation.

In accordance with Accounting Standards Codification (“ASC”) 855, Subsequent Events, we have evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements included in this Quarterly Report on Form 10-Q were issued.

XML

Investment Securities

6 Months Ended

Jun. 30, 2017

Investment Securities [Abstract]

Investment Securities

NOTE 2:  INVESTMENT SECURITIES

A summary of the amortized cost and fair values of investment securities at June 30, 2017 and December 31, 2016 follows:

	Amortized		Gross Unrealized				Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
At June 30, 2017
Held to Maturity:
Obligations of state and political subdivisions	$	10,382	$	252	$	(2)	$	10,632
Total	$	10,382	$	252	$	(2)	$	10,632
Available for Sale:
Federal agency securities	$	64,502	$	353	$	(63)	$	64,792
Obligations of state and political subdivisions		45,306		624		(74)		45,856
Residential mortgage-backed securities		285,835		411		(1,771)		284,475
Asset-backed securities		8,511		18		(32)		8,497
Corporate debt		20,018		450		(57)		20,411
Total	$	424,172	$	1,856	$	(1,997)	$	424,031
At December 31, 2016
Held to Maturity:
Obligations of state and political subdivisions	$	10,443	$	242	$	(8)	$	10,677
Total	$	10,443	$	242	$	(8)	$	10,677
Available for Sale:
Federal agency securities	$	69,691	$	201	$	(198)	$	69,694
Obligations of state and political subdivisions		46,105		461		(191)		46,375
Residential mortgage-backed securities		282,035		573		(1,966)		280,642
Asset-backed securities		9,265		-		(88)		9,177
Corporate debt		20,017		385		(72)		20,330
Total	$	427,113	$	1,620	$	(2,515)	$	426,218

Residential mortgage-backed securities consist of agency securities underwritten and guaranteed by Government National Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. Other securities consist of corporate stock.

Securities with limited marketability, such as Federal Reserve Bank stock, Federal Home Loan Bank (“FHLB”) stock, and certain other investments, are carried at cost and included in other assets on the consolidated statements of financial condition. Total investments carried at cost were $17.1 million at June 30, 2017 and $14.6 million at December 31, 2016. There are no identified events or changes in circumstances that may have a significant adverse effect on the investments carried at cost.  

A comparison of the amortized cost and approximate fair value of our investment securities by maturity date at June 30, 2017 follows:

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
One year or less	$	26,829	$	26,854	$	371	$	370
More than one year through five years		265,468		265,416		8,878		9,105
More than five years through ten years		103,256		102,849		1,133		1,157
More than ten years		28,619		28,912		-		-
Total	$	424,172	$	424,031	$	10,382	$	10,632

The foregoing analysis assumes that our residential mortgage-backed securities mature during the period in which they are estimated to be prepaid and are based on expected maturities. Expected maturities differ from contractual maturities because borrowers of the underlying mortgages may have the right to call or prepay obligations with or without prepayment penalties.No other prepayment or repricing assumptions have been applied to our investment securities for this analysis. 

Gain or loss on sale of investments is based upon the specific identification method. The table below shows the proceeds, gross realized gains and gross realized losses recognized on the investment portfolio for the three and six months ended June 30, 2017 and June 30, 2016. Proceeds from sales recognized during the six months ended June 30, 2017resulted from the sale of a private equity investment carried at cost and recorded in other assets. Proceeds from the sales during the threeand six months ended June 30, 2016resulted from a slight restructuring of our investment portfolio.

		For the three months				For the six months
		ended June 30,				ended June 30,
(Dollars in thousands)		2017		2016		2017		2016
Proceeds from sales	$	-	$	18,726	$	601	$	41,530
Gross realized gains		-		173		451		345
Gross realized losses		-		(8)		-		(54)

The following table shows securities with gross unrealized losses and their fair values by the length of time that the individual securities had been in a continuous unrealized loss position at June 30, 2017 and December 31, 2016. Securities whose market values exceed cost are excluded from this table. 

				Continuous Unrealized
		Amortized Cost of		Loss Existing for:				Fair Value of
	Number of	Securities with		Less than		More than		Securities with
(Dollars in thousands)	Securities	Unrealized Losses		12 Months		12 Months		Unrealized Losses
At June 30, 2017
Held to Maturity:
Obligations of state and political subdivisions	5	$	442	$	(1)	$	(1)	$	440
	5	$	442	$	(1)	$	(1)	$	440
Available for Sale:
Federal agency securities	11	$	27,667	$	(42)	$	(21)	$	27,604
Obligations of state and political subdivisions	11		8,343		(22)		(52)		8,269
Residential mortgage-backed securities	101		236,213		(1,356)		(415)		234,442
Asset-backed securities	1		3,958		-		(32)		3,926
Corporate debt	2		5,007		-		(57)		4,950
Total	126	$	281,188	$	(1,420)	$	(577)	$	279,191
At December 31, 2016
Held to Maturity:
Obligations of state and political subdivisions	7	$	1,987	$	(8)	$	-	$	1,979
	7	$	1,987	$	(8)	$	-	$	1,979
Available for Sale:
Federal agency securities	13	$	34,734	$	(111)	$	(87)	$	34,536
Obligations of state and political subdivisions	36		18,283		(145)		(46)		18,092
Residential mortgage-backed securities	89		225,986		(1,618)		(348)		224,020
Asset-backed securities	3		9,265		-		(88)		9,177
Corporate debt	2		5,005		-		(72)		4,933
Total	143	$	293,273	$	(1,874)	$	(641)	$	290,758

We evaluate all securities on an individual basis for other-than-temporary impairment on at least a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for an anticipated recovery in fair value. 

We have the ability and intent to hold the securities classified as held to maturity until they mature, at which time we expect to receive full value for the securities. Furthermore, as of June 30, 2017, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is not likely that we will have to sell any such securities before a recovery of cost. The declines in fair value were attributable to recent increases in market interest rates over the yields available at the time the underlying securities were purchased or increases in spreads over market interest rates. Management does not believe any of the securities are impaired due to credit quality. Accordingly, as of June 30, 2017, management believes the impairment of these investments is not deemed to be other-than-temporary. 

As required by law, available for sale investment securities are pledged to secure public and trust deposits, sweep agreements, and borrowings from the FHLB. Securities with an amortized cost of $215.3 million and $199.0 million were pledged to meet such requirements at June 30, 2017 and December 31, 2016, respectively. Any amount over-pledged can be released at any time.

XML

Loans And Allowance For Loan Losses

6 Months Ended

Jun. 30, 2017

Loans And Allowance For Loan Losses [Abstract]

Loans And Allowance For Loan Losses

NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES

We extend commercial and consumer credit primarily to customers in the states of Oklahoma, Texas, Kansas, and Colorado.  Our commercial lending operations are concentrated in Oklahoma City, Tulsa, Dallas, San Antonio, Wichita,and other metropolitan markets in Oklahoma, Texas, Kansas, and Colorado. As a result, the collectability of our loan portfolio can be affected by changes in the economic conditions in those states and markets.  Please see “Note 9:  Operating Segments” in the Notes to Unaudited Consolidated Financial Statements for more detail regarding loans by market. At June 30, 2017 and December 31, 2016, substantially all of ourloans were collateralized with real estate, inventory, accounts receivable, and/or other assets or were guaranteed by agencies of the United States government.

Our loan classifications were as follows: 

(Dollars in thousands)	At June 30, 2017		At December 31, 2016
Real estate mortgage:
Commercial	$	961,085	$	882,071
One-to-four family residential		241,140		199,123
Real estate construction:
Commercial		182,620		199,113
One-to-four family residential		14,523		20,946
Commercial		554,094		556,248
Installment and consumer		18,172		19,631
		1,971,634		1,877,132
Less: Allowance for loan losses		(27,318)		(27,546)
Total loans, net		1,944,316		1,849,586
Less: Loans held for sale (included above)		(6,036)		(4,386)
Net loans receivable	$	1,938,280	$	1,845,200

Concentrations of Credit.  At June 30, 2017,  $662.6 million, or 34%, and $429.5 million, or 22%,  of ourloans consisted of loans to individuals and businesses in the real estate and healthcare industries, respectively.  We do not have any other concentrations of loans to individuals or businesses involved in a single industry totaling 10% or more of total loans. 

Loans Held for Sale.  We had loans held for sale of $6.0 million and $4.4 million at June 30, 2017 and December 31, 2016, respectively. The loans currently classified as held for sale, primarily residential mortgage loans, are carried at the lower of cost or market value. A substantial portion of our one-to-four family residential loans and loan servicing rights are sold to one buyer. These mortgage loans are generally sold within a one-month period from loan closing at amounts determined by the investor commitment based upon the pricing of the loan. These loans are available for sale in the secondary market.  

Loan Servicing.  We earn fees for servicing real estate mortgages and other loans owned by others. The fees are generally calculated on the outstanding principal balance of the loans serviced and are recorded as noninterest income when earned. The unpaid principal balance of real estate mortgage loans serviced for others totaled $463.8 million and $460.6 million at June 30, 2017 and December 31, 2016, respectively. Loan servicing rights are capitalized based on estimated fair value at the point of origination. The servicing rights are amortized over the period of estimated net servicing income.   

Acquired Loans.On October 9, 2015, we completed the acquisition of First Commercial Bancshares (“Bancshares”) by merging Bancshares with and into us (the “Merger”). In connection with the Merger, First Commercial Bank was merged with and into Bank SNB, with Bank SNB being the surviving bank. We evaluated $200.0 million of the loans purchased in conjunction with the merger in accordance with the provisions of FASB ASC Topic 310-20, Nonrefundable Fees and Other Costs, and those loans were recorded with a $4.5 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the weighted average life of the loans using a constant yield method. The remaining $7.8 million of loans evaluated were considered purchased credit impaired loans within the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and were recorded with a $3.3 million discount. These purchased credit impaired loans will recognize interest income through accretion of the difference between the carrying amount of the loans and the expected cash flows.

Changes in the carrying amounts and accretable yields for the ACS 310-30 loans that were acquired were as follows for the three and six months ended June 30, 2017 and June 30, 2016:

	For the three months ended June 30,
	2017					2016
			Carrying				Carrying
	Accretable		amount		Accretable		amount
(Dollars in thousands)	Yield		of loans		Yield		of loans
Balance at beginning of period	$	487	$	3,817	$	742	$	7,288
Payments received		-		(572)		-		(286)
Net charge-offs		(2)		(623)		(11)		(196)
Accretion		(9)		896		(48)		-
Balance at end of period	$	476	$	3,518	$	683	$	6,806

	For the six months ended June 30,
	2017				2016
			Carrying				Carrying
	Accretable		amount		Accretable		amount
(Dollars in thousands)	Yield		of loans		Yield		of loans
Balance at beginning of period	$	630	$	4,632	$	807	$	7,914
Payments received		-		(1,387)		-		(790)
Net charge-offs		(2)		(623)		(11)		(318)
Accretion		(152)		896		(113)		-
Balance at end of period	$	476	$	3,518	$	683	$	6,806

Nonperforming / Past Due Loans.  We identify past due loans based on contractual terms on a loan-by-loan basis and generally place loans, except for consumer loans, on nonaccrual when any portion of the principal or interest is ninety  days past due and collateral is insufficient to discharge the debt in full. Interest accrual may also be discontinued earlier if, in management’s opinion, collection is unlikely. Generally, past due consumer installment loans are not placed on nonaccrual but are charged-off when they are four months past due. Accrued interest is written off when a loan is placed on nonaccrual status. Subsequent interest income is recorded when cash receipts are received from the borrower and collectability of the principal amount is reasonably assured.   

Under generally accepted accounting principles and instructions to reports of condition and income of banking regulators, a nonaccrual loan may be returned to accrual status:  (i) when none of its principal and interest is due and unpaid, repayment is expected, and there has been a sustained period (at least six months) of repayment performance; (ii) when the loan is well-secured, there is a sustained period of performance and repayment within a reasonable period is reasonably assured; or (iii) when the loan otherwise becomes well-secured and in the process of collection. Loans that have been restructured because of weakened financial positions of the borrowers also may be returned to accrual status if repayment is reasonably assured under the revised terms and there has been a sustained period of repayment performance.

Management strives to carefully monitor credit quality and to identify loans that may become nonperforming. At any time, however, there are loans included in the portfolio that will result in losses to usthat have not been identified as nonperforming or potential problem loans. Because the loan portfolio contains a significant number of commercial (including energy banking credits) and commercial real estate loans with relatively large balances, the unexpected deterioration of one or a few such loans may cause a significant increase in nonperforming assets and may lead to a material increase in charge-offs and the provision for loan losses in future periods.

The following table shows the recorded investment in loans on nonaccrual status:

(Dollars in thousands)	At June 30, 2017		At December 31, 2016
Real estate mortgage:
Commercial	$	6,694	$	6,471
One-to-four family residential		2,752		2,766
Real estate construction:
Commercial		132		522
One-to-four family residential		447		448
Commercial		12,883		5,949
Other consumer		21		111
Total nonaccrual loans	$	22,929	$	16,267

During the first six months of 2017,  $0.2 million of interest income was received on nonaccruing loans. If interest on all nonaccrual loans had been accrued for the six months ended June 30, 2017, additional interest income of $0.5 million would have been recorded.

The following table shows an age analysis of past due loans at June 30, 2017 and December 31, 2016:

December 31, 2016

			90 days +								Recorded loans
	30-89 days		past due and		Total past				Total		> 90 days and
(Dollars in thousands)	past due		nonaccrual		due		Current		loans		accruing
At June 30, 2017
Real estate mortgage:
Commercial	$	285	$	6,694	$	6,979	$	954,106	$	961,085	$	-
One-to-four family residential		1,192		2,797		3,989		237,151		241,140		45
Real estate construction:
Commercial		-		132		132		182,488		182,620		-
One-to-four family residential		-		447		447		14,076		14,523		-
Commercial		498		12,884		13,382		540,712		554,094		1
Other		134		106		240		17,932		18,172		85
Total	$	2,109	$	23,060	$	25,169	$	1,946,465	$	1,971,634	$	131
At December 31, 2016
Real estate mortgage:
Commercial	$	24	$	6,472	$	6,496	$	875,575	$	882,071	$	-
One-to-four family residential		631		2,903		3,534		195,589		199,123		138
Real estate construction:
Commercial		-		522		522		198,591		199,113		-
One-to-four family residential		-		448		448		20,498		20,946		-
Commercial		2,530		6,142		8,672		547,576		556,248		193
Other		359		123		482		19,149		19,631		12
Total	$	3,544	$	16,610	$	20,154	$	1,856,978	$	1,877,132	$	343

Impaired Loans.  A loan is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Each loan deemed to be impaired (loans on nonaccrual status and greater than $100,000, and all troubled debt restructurings) is evaluated on an individual basis using the discounted present value of expected cash flows based on the loan’s initial effective interest rate, the fair value of collateral, or the market value of the loan. Smaller balance and homogeneous loans, including mortgage and consumer loans, are collectively evaluated for impairment.     

Interest payments on impaired loans are applied to principal until collectability of the principal amount is reasonably assured, and, at that time, interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged-off when deemed uncollectible. 

Impaired loans as of June 30, 2017 and December 31, 2016 are shown in the following table: 

	With No Specific Allowance				With A Specific Allowance
			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Investment		Balance		Allowance
At June 30, 2017
Commercial real estate	$	7,789	$	8,473	$	-	$	-	$	-
One-to-four family residential		2,769		3,162		-		-		-
Real estate construction		579		781		-		-		-
Commercial		477		1,450		12,408		16,034		2,461
Other		21		26		-		-		-
Total	$	11,635	$	13,892	$	12,408	$	16,034	$	2,461
At December 31, 2016
Commercial real estate	$	1,536	$	3,057	$	6,053	$	6,529	$	2,219
One-to-four family residential		1,188		1,535		1,593		1,698		63
Real estate construction		762		926		207		245		40
Commercial		1,032		2,861		4,963		7,480		1,346
Other		111		115		-		-		-
Total	$	4,629	$	8,494	$	12,816	$	15,952	$	3,668

The average recorded investment of loans classified as impaired and the interest income recognized on those loans for the six months ended June 30, 2017 and June 30, 2016 are shown in the following table:  

	As of and for the six months ended June 30,
	2017				2016
	Average				Average
	Recorded		Interest		Recorded		Interest
(Dollars in thousands)	Investment		Income		Investment		Income
Commercial real estate	$	3,430	$	97	$	17,365	$	871
One-to-four family residential		3,183		34		3,627		12
Real estate construction		651		-		1,408		-
Commercial		9,342		94		13,274		32
Other		26		-		77		-
Total	$	16,632	$	225	$	35,751	$	915

Troubled Debt Restructurings.  Our loan portfolio also includes certain loans that have been modified in troubled debt restructurings, where economic concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from loss mitigation activities and can include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Troubled debt restructurings are classified as impaired at the time of restructuring and are then further classified as nonperforming, potential problem, or performing restructured, as applicable. Loans modified in troubled debt restructurings may be returned to performing status after considering the borrowers’ sustained repayment for a reasonable period of at least six months. 

When we modify loans in a troubled debt restructuring, an evaluation of any possible impairment is performed similar to the evaluation done with respect to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, or use of the current fair value of the collateral, less selling costs for collateral dependent loans. If it is determined that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs, and unamortized premium or discount), an impairment is recognized through an allowance estimate or a charge-off to the allowance. 

Troubled debt restructured loans outstanding as of June 30, 2017 and December 31, 2016 were as follows: 

	At June 30, 2017				At December 31, 2016
(Dollars in thousands)	Accruing		Nonaccrual		Accruing		Nonaccrual
Commercial real estate	$	1,095	$	107	$	1,118	$	475
One-to-four family residential		17		-		15		46
Commercial		2		7,335		45		3,323
Total	$	1,114	$	7,442	$	1,178	$	3,844

At June 30, 2017 and December 31, 2016, we had no significant commitments to lend additional funds to debtors whose loan terms had been modified in a troubled debt restructuring. 

There were three commercial loans modified as troubled debt restructurings that occurred during the three months ended June 30, 2017 and none for the three months ended June 30, 2016. There were three commercial loans modified as troubled debt restructurings that occurred during the six months ended June 30, 2017 and one commercial loan modified as a troubled debt restructuring for the six months ended June 30, 2016. Loans modified as troubled debt restructurings that occurred during the three and six months endedJune 30, 2017and June 30, 2016 are shown in the following table:   

	For the three months ended June 30,
	2017				2016
	Number of		Recorded		Number of		Recorded
(Dollars in thousands)	Modifications		Investment		Modifications		Investment
Commercial		3	$	4,174		-	$	-
Total		3	$	4,174		-	$	-
	For the six months ended June 30,
	2017				2016
	Number of		Recorded		Number of		Recorded
(Dollars in thousands)	Modifications		Investment		Modifications		Investment
Commercial		3	$	4,174		1	$	26
Total		3	$	4,174		1	$	26

The modifications of loans identified as troubled debt restructurings primarily related to payment reductions, payment extensions, and/or reductions in the interest rate. The financial impact of troubled debt restructurings is not significant.

There were no loans modified as a troubled debt restructuring that subsequently defaulted during the three or six months ended June 30, 2017 or June 30, 2016. Default, for this purpose, is deemed to occur when a loan is 90 days or more past due or transferred to nonaccrual and is within twelve months of restructuring.

Credit Quality Indicators.  To assess the credit quality of loans, we categorize loans into risk categories based on relevant information about the ability of the borrowers to service their debts such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. This analysis is performed on a quarterly basis. We use the following definitions for risk ratings:   

Special mention – Loans classified as special mention have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for these loans or of the institution’s credit position at some future date. 

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligors or of the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. These loans are considered potential problem or nonperforming loans depending on the accrual status of the loans.    

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These loans are considered nonperforming. 

Loans not meeting the criteria above that are analyzed as part of the above described process are considered to be pass rated loans. As of June 30, 2017 and December 31, 2016, based on the most recent analysis performed as of those dates, the risk category of loans by class was as follows: 

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2017
Grade:
Pass	$	919,620	$	235,040	$	185,916	$	502,838	$	18,151	$	1,861,565
Special Mention		25,711		2,154		10,059		20,522		-		58,446
Substandard		15,754		3,946		1,168		29,730		21		50,619
Doubtful		-		-		-		1,004		-		1,004
Total	$	961,085	$	241,140	$	197,143	$	554,094	$	18,172	$	1,971,634
At December 31, 2016
Grade:
Pass	$	857,290	$	192,395	$	210,780	$	498,039	$	19,518	$	1,778,022
Special Mention		4,479		1,983		7,720		24,639		-		38,821
Substandard		20,302		4,745		1,559		33,175		113		59,894
Doubtful		-		-		-		395		-		395
Total	$	882,071	$	199,123	$	220,059	$	556,248	$	19,631	$	1,877,132

Allowance for Loan Losses.  The allowance for loan losses is a reserve established through the provision for loan losses charged to operations. Loan amounts which are determined to be uncollectible are charged against this allowance, and recoveries, if any, are added to the allowance. The appropriate amount of the allowance is based on periodic review and evaluation of the loan portfolio and quarterly assessments of the probable losses inherent in the loan portfolio. The amount of the loan loss provision for a period is based solely upon the amount needed to cause the allowance to reach the level deemed appropriate after the effects of net charge-offs for the period. 

Management believes the level of the allowance is appropriate to absorb probable losses inherent in the loan portfolio. The allowance for loan losses is determined in accordance with regulatory guidelines and generally accepted accounting principles and is comprised of two primary components, specific and general. There is no one factor, or group of factors, that produces the amount of an appropriate allowance for loan losses, as the methodology for assessing the allowance for loan losses makes use of evaluations of individual impaired loans along with other factors and analysis of loan categories. This assessment is highly qualitative and relies upon judgments and estimates by management.

The specific allowance is recorded based on the result of an evaluation consistent with ASC 310.10.35, Receivables: Subsequent Measurement, for each impaired loan.  Collateral dependent loans are evaluated for impairment based upon the fair value of the collateral. The amount and level of the impairment allowance is ultimately determined by management’s estimate of the amount of expected future cash flows or, if the loan is collateral dependent, on the value of collateral, which may vary from period to period depending on changes in the financial condition of the borrower or changes in the estimated value of the collateral. Charge-offs against the allowance for impaired loans are made when and to the extent loans are deemed uncollectible. Any portion of a collateral dependent impaired loan in excess of the fair value of the collateral that is determined to be uncollectible is charged off.  

The general component of the allowance is calculated based on ASC 450, Contingencies. Loans not evaluated for specific allowance are segmented into loan pools by type of loan.  Commercial real estate pools are further segmented by market type for non-owner occupied and owner occupied collateral. Our primary markets are Oklahoma, Texas, Kansas, and Colorado. Estimated allowances are based on historical loss trends with adjustments factored in based on qualitative risk factors both internal and external to us.  The historical loss trend is determined by loan pool and segmentation and is based on the actual loss history experienced by us over the most recent three years. The qualitative risk factors include, but are not limited to, economic and business conditions, changes in lending staff, lending policies and procedures, quality of loan review, changes in the nature and volume of the portfolios, loss and recovery trends, asset quality trends, and legal and regulatory considerations.

Independent appraisals on real estate collateral securing loans are obtained at origination. New appraisals are obtained periodically and following discovery of factors that may significantly affect the value of the collateral. Appraisals typically are received within 30 days of request. Results of appraisals on nonperforming and potential problem loans are reviewed promptly upon receipt and considered in the determination of the allowance for loan losses. We are not aware of any significant time lapses in the process that have resulted, or would result in, a significant delay in determination of a credit weakness, the identification of a loan as nonperforming, or the measurement of an impairment.

The following tables show the balance in the allowance for loan losses and the recorded investment in loans for the dates indicated by portfolio classification disaggregated on the basis of impairment evaluation method.   

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2017
Balance at beginning of fiscal year	$	12,507	$	1,163	$	3,502	$	10,058	$	316	$	27,546
Loans charged-off		(2,029)		(3)		-		(2,165)		(201)		(4,398)
Recoveries		216		75		5		317		52		665
Provision for loan losses		1,632		136		(566)		2,193		110		3,505
Balance at end of period	$	12,326	$	1,371	$	2,941	$	10,403	$	277	$	27,318
Allowance for loan losses ending balance:
Individually evaluated for impairment	$	-	$	-	$	-	$	2,461	$	-	$	2,461
Collectively evaluated for impairment		12,326		1,371		2,941		7,942		277		24,857
Acquired with deteriorated credit quality		-		-		-		-		-		-
Total ending allowance balance	$	12,326	$	1,371	$	2,941	$	10,403	$	277	$	27,318
Loans receivable ending balance:
Individually evaluated for impairment	$	7,011	$	1,871	$	-	$	12,408	$	-	$	21,290
Collectively evaluated for impairment		952,524		238,120		196,514		541,496		18,172		1,946,826
Acquired with deteriorated credit quality		1,550		1,149		629		190		-		3,518
Total ending loans balance	$	961,085	$	241,140	$	197,143	$	554,094	$	18,172	$	1,971,634

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2016
Balance at beginning of fiscal year	$	12,716	$	700	$	2,533	$	9,965	$	192	$	26,106
Loans charged-off		(3)		(83)		-		(3,801)		(376)		(4,263)
Recoveries		234		54		-		311		49		648
Provision for loan losses		(2,234)		362		647		5,194		416		4,385
Balance at end of period	$	10,713	$	1,033	$	3,180	$	11,669	$	281	$	26,876
Allowance for loan losses ending balances:
Individually evaluated for impairment	$	281	$	116	$	-	$	2,915	$	-	$	3,312
Collectively evaluated for impairment		9,961		917		3,140		8,754		281		23,053
Acquired with deteriorated credit quality		471		-		40		-		-		511
Total ending allowance balance	$	10,713	$	1,033	$	3,180	$	11,669	$	281	$	26,876
Loans receivable ending balance:
Individually evaluated for impairment	$	13,192	$	2,187	$	754	$	13,880	$	38	$	30,051
Collectively evaluated for impairment		844,739		180,213		194,646		544,221		20,702		1,784,521
Acquired with deteriorated credit quality		4,356		1,293		752		371		33		6,805
Total ending loans balance	$	862,287	$	183,693	$	196,152	$	558,472	$	20,773	$	1,821,377

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Measurements [Abstract]

Fair Value Measurements

NOTE 4:  FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In estimating fair value, we utilize valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability.

ASC 820, Fair Value Measurements and Disclosure,  establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1Quoted prices in active markets for identical instruments.

Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 

Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 

The estimated fair value amounts have been determined by us using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amount we could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a material effect on our estimated fair value amounts. There were no significant changes in valuation methods used to estimate fair value during the six months ended June 30, 2017. 

A description of the valuation methodologies used for instruments measured at fair value on a recurring basis is as follows: 

Available for sale securities – The fair value of U.S. Government and federal agency securities, equity securities, and residential mortgage-backed securities is estimated based on quoted market prices or dealer quotes. The fair value of other investments such as obligations of state and political subdivisions is estimated based on quoted market prices.  We obtain fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and bond’s terms and conditions, among other things. We review the prices supplied by our independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. 

Derivative instruments – We utilize an interest rate swap agreement to convert one of our variable-rate subordinated debentures to a fixed rate. This has been designated as a cash flow hedge. We also offer an interest rate swap program that permits qualified customers to manage interest rate risk on variable rate loans with Bank SNB. Derivative contracts are executed between our customers and Bank SNB. Offsetting contracts are executed by Bank SNB and approved counterparties. The counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to us and collateral requirements. The fair value of the interest rate swap agreements are obtained from dealer quotes.

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016: 

			Fair Value Measurement at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
At June 30, 2017
Available for sale securities:
Federal agency securities	$	64,792	$	-	$	64,792	$	-
Obligations of state and political subdivisions		45,856		-		45,856		-
Residential mortgage-backed securities		284,475		-		284,475		-
Asset-backed securities		8,497		-		8,497		-
Corporate debt		20,411		231		20,180		-
Derivative asset		2,698		-		2,698		-
Derivative liability		(3,068)		-		(3,068)		-
Total	$	423,661	$	231	$	423,430	$	-
At December 31, 2016
Available for sale securities:
Federal agency securities	$	69,694	$	-	$	69,694	$	-
Obligations of state and political subdivisions		46,375		-		46,375		-
Residential mortgage-backed securities		280,642		-		280,642		-
Asset-backed securities		9,177		-		9,177		-
Corporate debt		20,330		213		20,117		-
Derivative asset		1,235		-		1,235		-
Derivative liability		(1,890)		-		(1,890)		-
Total	$	425,563	$	213	$	425,350	$	-

Certain financial assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These assets are recorded at the lower of cost or fair value. Valuation methodologies for assets measured on a nonrecurring basis are as follows: 

Impaired loans – Certain impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from collateral.  Collateral values are estimated using inputs based on third-party appraisals. Certain other impaired loans are analyzed and reported through a specific valuation allowance based upon the net present value of cash flows.   

Loans held for sale  –Real estate mortgage loans held for sale are carried at the lower of cost or market, which is determined on an individual loan basis. The fair value of loans held for sale is based on existing investor commitments.

Other real estate – Other real estate fair value is based on third-party appraisals for significant properties less the estimated costs to sell the asset.   

Mortgage loan servicing rights – There is no active trading market for loan servicing rights. The fair value of loan servicing rights is estimated by calculating the present value of net servicing revenue over the anticipated life of each loan. A cash flow model is used to determine fair value. Key assumptions and estimates, including projected prepayment speeds and assumed servicing costs, earnings on escrow deposits, ancillary income, and discount rates, used by this model are based on current market sources.  A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults, and other relevant factors. The prepayment model is updated for changes in market conditions.

Core deposit premiums – The fair value of core deposit premiums are based on third-party appraisals.

Goodwill – Fair value of goodwill is based on the fair value of each of our reporting units to which goodwill is allocated compared with their respective carrying value.

Assets that were measured at fair value on a nonrecurring basis as of June 30, 2017 and December 31, 2016 are summarized below.   

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
At June 30, 2017
Impaired loans at fair value :
Commercial		12,408		-		-		12,408
Loans held for sale:
One-to-four family residential		6,036		-		6,036		-
Total	$	18,444	$	-	$	6,036	$	12,408
At December 31, 2016
Impaired loans at fair value :
Commercial real estate	$	6,053	$	-	$	-	$	6,053
One-to-four family residential		1,593		-		-		1,593
Real estate construction		207		-		-		207
Commercial		5,357		-		-		5,357
Loans held for sale:
One-to-four family residential		4,386		-		4,386		-
Total	$	17,596	$	-	$	4,386	$	13,210

For the six months ended June 30, 2017, impaired loans measured at fair value with a carrying amount of $15.9 million were written down to a fair value of $12.4 million, resulting in a life-to-date impairment of $3.5  million. For the year ended December 31, 2016, impaired loans measured at fair value with a carrying amount of $19.7 million were written down to a fair value of $13.2 million at December 31, 2016, resulting in a life-to-date impairment charge of $6.5 million.

Noimpairment was recognized for other real estate during the six months ended June 30, 2017 or the year ended December 31, 2016. 

As of June 30, 2017, mortgage servicing rights had a fair value of $4.4 million, which exceeded the book value of $3.7 million. Because the fair value exceeded the book value, there was noimpairment charge at June 30, 2017. As of December 31, 2016, the mortgage servicing rights had a fair value of $4.2 million, which exceeded the book value of $3.5 million. Because the fair value exceeded the book value, there was no impairment charge at December 31, 2016.

Noimpairment of core deposit premiums or goodwill was recognized during the six months ended June 30, 2017 or the year ended December 31, 2016.

ASC 825, Financial Instruments,  requires an entity to provide disclosures about fair value of financial instruments, including those that are not measured and reported at fair value on a recurring or nonrecurring basis. The methodologies used in estimating the fair value of financial instruments that are measured on a recurring or nonrecurring basis are discussed above. The methodologies for the other financial instruments are discussed below: 

Cash and cash equivalents – For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value. 

Securities held to maturity – The investment securities held to maturity are carried at cost. The fair value of the held to maturity securities is estimated based on quoted market prices or dealer quotes. 

Loans, net of allowance – Fair values are estimated for certain homogenous categories of loans adjusted for differences in loan characteristics. Our loans have been aggregated by categories consisting of commercial, real estate, and other consumer. The fair value of loans is estimated by discounting the cash flows using risks inherent in the loan category and interest rates currently offered for loans with similar terms and credit risks. 

Accrued interest receivable – The carrying amount is a reasonable estimate of fair value for accrued interest receivable. 

Investments included in other assets – The estimated fair value of investments included in other assets, which primarily consists of investments carried at cost, approximates their carrying values. 

Deposits – The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the statement of financial condition date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. 

Accrued interest payable and other liabilities – The estimated fair value of accrued interest payable and other liabilities, which primarily includes trade accounts payable, approximates their carrying values. 

Other borrowings – Included in other borrowings are FHLB advances and securities sold under agreements to repurchase. The fair value for fixed rate FHLB advances is based upon discounted cash flow analysis using interest rates currently being offered for similar instruments. The fair values of other borrowings are the amounts payable at the statement of financial condition date, as the carrying amount is a reasonable estimate of fair value due to the short-term maturity rates.   

Subordinated debentures – Our two subordinated debentures have floating rates that reset quarterly. The fair value of the floating rate subordinated debentures approximates carrying value at June 30, 2017.   

The carrying values and estimated fair values of our financial instruments segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value were as follows:

	At June 30, 2017				At December 31, 2016
	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Values		Values		Values		Values
Financial assets:
Level 2 inputs:
Cash and cash equivalents	$	79,839	$	79,839	$	75,650	$	75,650
Securities held to maturity		10,382		10,632		10,443		10,677
Accrued interest receivable		6,328		6,328		6,194		6,194
Mortgage loan servicing rights		3,666		4,404		3,491		4,159
Bank-owned life insurance		28,450		28,450		28,575		28,575
Investments included in other assets		17,079		17,079		14,627		14,627
Level 3 inputs:
Total loans, net of allowance		1,944,316		1,934,986		1,849,586		1,839,960
Financial liabilities:
Level 2 inputs:
Deposits		2,013,834		1,967,298		1,946,018		1,897,927
Accrued interest payable		1,259		1,259		1,132		1,132
Other liabilities		9,130		9,130		9,516		9,516
Other borrowings		203,705		203,793		183,814		183,926
Subordinated debentures		46,393		46,393		46,393		46,393

XML

Derivative Instruments

6 Months Ended

Jun. 30, 2017

Derivative Instruments [Abstract]

Derivative Instruments

NOTE 5:  DERIVATIVE INSTRUMENTS

We utilize derivatives instruments to manage exposure to various types of interest rate risk for us and our customers within our policy guidelines. All derivative instruments are carried at fair value and credit risk is considered in determining fair value.

Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Institutional counterparties must have an investment grade credit rating and be approved by our asset/liability management committee. Our credit exposure on interest rate swaps is limited to the net favorable value and interest payments of all swaps with each counterparty.Access to collateral in the event of default is reasonably assured. Therefore, credit exposure may be reduced by the amount of collateral pledged by the counterparty.

Customer Risk Management Interest Rate Swaps

Our qualified customers have the opportunity to participate in our interest rate swap program for the purpose of managing interest rate risk on their variable rate loans with us. If we enter into such agreements with customers, then offsetting agreements are executed between us and approved dealer counterparties to minimize our market risk from changes in interest rates. The counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to us by the dealer counterparty and the collateral requirements. These interest rate swaps carry varying degrees of credit, interest rate and market or liquidity risks. The fair value of derivative instruments is recognized as either assets or liabilities in the consolidated statements of financial condition. 

We have entered into seventeencustomer interest rate swap agreements that effectively convert the loan interest rate from floating rate based on LIBOR or prime rate to a fixed rate for the customer. As of June 30, 2017, these loans had an outstanding balance of $180.6 million. We have entered into offsetting agreements with dealer counterparties.  The following table summarizes the fair values of derivative contracts recorded as “non-hedge derivative assets” and “non-hedge derivative liabilities” in the consolidated statements of financial condition:

	As of June 30, 2017				At December 31, 2016
(Dollars in thousands)	Notional		Fair Value		Notional		Fair Value
Non-hedge derivative assets	$	180,631	$	2,698	$	123,953	$	1,235
Non-hedge derivative liabilities		180,631		2,698		123,953		1,235

The margin rates to us in connection with these instruments are a contractual percentage over the one-month LIBOR or a minimal percentage under the prime rate. From time to time, it may be necessary to post collateral with our dealer counterparties to secure the market values of these contracts. As of June 30, 2017, we had posted $1.5 million in collateral with our dealer counterparties. These interest rate swaps are not designated as hedging instruments.

Interest Rate Swap

We have an interest rate swap agreement with a total notional amount of $25.0 million. The interest rate swap agreement was designated as a hedging instrument in cash flow hedges with the objective of protecting the overall cash flow from our quarterly interest payments on the SBI Capital Trust II preferred securities throughout the seven-year period beginning February 11, 2011 and ending April 7, 2018 from the risk of variability of those payments resulting from changes in the three-month London Interbank Offered Rate (“LIBOR”). Under the swap agreement, we pay a fixed interest rate of 6.15% and receive a variable interest rate of three-month LIBOR plus a margin of 2.85% on a total notional amount of $25.0 million, with quarterly settlements. The rate received by us as of June 30, 2017 was 4.01%. 

The estimated fair value of the interest rate swap contract outstanding as of June 30, 2017 and December 31, 2016 resulted in a pre-tax loss of $0.4 million and $0.7 million, respectively, and was included in other liabilities in the consolidated statements of financial condition. We obtained the counterparty valuation to validate the interest rate derivative contract as of June 30, 2017 and December 31, 2016.   

The effective portion of our gain or loss due to changes in the fair value of the interest rate swap contract, a $0.2 million loss and a $0.1 million loss for the six months ended June 30, 2017 and June 30, 2016, respectively, is included in other comprehensive income, net of tax, while the ineffective portion (indicated by the excess of the cumulative change in the fair value of the derivative over that which is necessary to offset the cumulative change in expected future cash flows on the hedge transaction) is included in other noninterest income or other noninterest expense. No ineffectiveness related to the interest rate derivative was recognized during either reporting period.   

Net cash outflows as a result of the interest rate swap contract were $0.3 million for both the six months ended June 30, 2017 and June 30, 2016and were included in interest expense on subordinated debentures.

We posted cash collateral with our counterparty related to the interest rate swap contract in excess of the required $0.5 million and $0.7 million at June 30, 2017 and December 31, 2016, respectively.

There are no credit-risk-related contingent features associated with our derivative contract. 

XML

Taxes On Income

6 Months Ended

Jun. 30, 2017

Taxes On Income [Abstract]

Taxes On Income

NOTE 6:  TAXES ON INCOME

Net deferred tax assets totaled $11.9 million at June 30, 2017 and $13.2 million at December 31, 2016. Net deferred tax assets are included in other assets and no valuation allowance is considered necessary.

We or one of our subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are no longer subject to U.S. federal or state tax examinations for years before 2013. 

XML

Shareholders' Equity

6 Months Ended

Jun. 30, 2017

Shareholders' Equity [Abstract]

Shareholders' Equity

NOTE 7:  SHAREHOLDERS’ EQUITY

Stock Repurchase Program

On May 25, 2016, the Board authorized our fourth stock repurchase program since August 2014. The program authorizes the repurchase of up to another 5.0%, or approximately 921,000 shares, of our outstanding common stock and became effective February 23, 2017, which was the original expiration date of the third program. During the first six months of 2017, we have made no repurchases. During 2016, we repurchased 1,398,026 shares for a total of $22.1million, and since August 2014, we have repurchased a total of 2,519,584 shares for a total of $40.8 million. Repurchases under the program are available at the discretion of management based upon market, business, legal, and other factors. Our ability to repurchase our common stock is limited during the time that our planned merger with Simmons First National Corporation is pending.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 8:  EARNINGS PER SHARE

Earnings per common share is computed using the two-class method prescribed by ASC 260, Earnings Per Share. Using the two-class method, basic earnings per common share is computed based upon net income divided by the weighted average number of common shares outstanding during each period, which excludes outstanding unvested restricted stock. Diluted earnings per share is computed using the weighted average number of common shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. 

The following table shows the computation of basic and diluted earnings per common share: 

	For the three months				For the six months
	ended June 30,				ended June 30,
(Dollars in thousands, except earnings per share data)	2017		2016		2017		2016
Numerator:
Net income	$	5,818	$	5,412	$	11,097	$	7,281
Earnings allocated to participating securities		(104)		(110)		(193)		(131)
Numerator for earnings per common share	$	5,714	$	5,302	$	10,904	$	7,150
Denominator:
Denominator for basic earnings per common share		18,354,631		18,574,300		18,362,549		18,916,686
Dilutive effect of stock compensation		138,108		102,261		136,485		18,918
Denominator for diluted earnings per common share		18,492,739		18,676,561		18,499,034		18,935,604
Earnings per common share:
Basic	$	0.31	$	0.29	$	0.59	$	0.38
Diluted	$	0.31	$	0.28	$	0.59	$	0.38

XML

Operating Segments

6 Months Ended

Jun. 30, 2017

Operating Segments [Abstract]

Operating Segments

NOTE 9: OPERATING SEGMENTS  

We operate four principal segments:  Oklahoma Banking, Texas Banking, Kansas Banking, and Other Operations. The Oklahoma Banking segment provides deposit and lending services, including residential mortgage lending services to customers. Due to its size and our management structure, our Colorado banking operations are included within the Oklahoma Banking segment. The Texas Banking segment and the Kansas Banking segment provide deposit and lending services. Other Operations includes our funds management unit and corporate investments.

The primary purpose of the funds management unit is to manage our overall internal liquidity needs and interest rate risk. Each segment borrows funds from or provides funds to the funds management unit as needed to support its operations. The value of funds provided to and the cost of funds borrowed from the funds management unit by each segment are internally priced at rates that approximate market rates for funds with similar duration. The yield used in the funds transfer pricing curve is a blend of rates based on the volume usage of retail and brokered certificates of deposit and FHLB advances.    

The accounting policies of each reportable segment are the same as ours. Expenses for consolidated back-office operations are allocated to operating segments based on estimated uses of those services. General overhead expenses such as executive administration, accounting, and audit are allocated based on the direct expense and/or deposit and loan volumes of the operating segment. Income tax expense for the operating segments is calculated at statutory rates. The Other Operations segment records the tax expense or benefit necessary to reconcile to the consolidated financial statements. The following table summarizes financial results by operating segment:

For the three months ended June 30, 2017
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations		Company
Net interest income	$	13,349	$	6,197	$	1,614	$	210	$	21,370
Provision (credit) for loan losses		1,424		354		(52)		3		1,729
Noninterest income		3,146		466		290		619		4,521
Noninterest expenses		9,735		3,219		1,314		887		15,155
Income (loss) before taxes		5,336		3,090		642		(61)		9,007
Taxes on income (loss)		1,892		1,095		227		(25)		3,189
Net income (loss)	$	3,444	$	1,995	$	415	$	(36)	$	5,818

For the six months ended June 30, 2017
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations*		Company
Net interest income (loss)	$	26,143	$	12,285	$	3,172	$	(67)	$	41,533
Provision (credit) for loan losses		2,846		845		(186)		-		3,505
Noninterest income		6,406		922		592		1,481		9,401
Noninterest expenses		19,432		6,416		2,721		1,889		30,458
Income (loss) before taxes		10,271		5,946		1,229		(475)		16,971
Taxes on income (loss)		3,555		2,058		425		(164)		5,874
Net income (loss)	$	6,716	$	3,888	$	804	$	(311)	$	11,097
* Includes externally generated revenue of $2.3 million, primarily from investing services, and an internally generated loss of $0.9 million from the funds management unit.
Total loans at period end	$	1,193,108	$	636,709	$	141,817	$	-	$	1,971,634
Total assets at period end		1,228,506		632,773		140,702		570,954		2,572,935
Total deposits at period end		1,369,810		196,390		156,383		291,251		2,013,834

For the three months ended June 30, 2016
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations		Company
Net interest income	$	12,339	$	5,640	$	1,638	$	78	$	19,695
Provision (credit) for loan losses		(210)		330		(113)		3		10
Noninterest income		2,657		290		300		624		3,871
Noninterest expenses		9,879		3,256		1,347		786		15,268
Income (loss) before taxes		5,327		2,344		704		(87)		8,288
Taxes on income (loss)		1,837		816		250		(27)		2,876
Net income (loss)	$	3,490	$	1,528	$	454	$	(60)	$	5,412

For the six months ended June 30, 2016
	Oklahoma		Texas		Kansas		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Operations*		Company
Net interest income (loss)	$	25,277	$	11,206	$	3,466	$	(414)	$	39,535
Provision for loan losses		50		2,245		2,086		4		4,385
Noninterest income		4,852		592		618		1,224		7,286
Noninterest expenses		19,839		6,987		2,764		1,674		31,264
Income (loss) before taxes		10,240		2,566		(766)		(868)		11,172
Taxes on income (loss)		3,566		894		(267)		(302)		3,891
Net income (loss)	$	6,674	$	1,672	$	(499)	$	(566)	$	7,281
* Includes externally generated revenue of $1.9 million, primarily from investing services, and an internally generated loss of $1.0 million from the funds management unit.
Total loans at period end	$	1,085,986	$	577,333	$	158,058	$	-	$	1,821,377
Total assets at period end		1,130,161		573,199		157,054		541,848		2,402,262
Total deposits at period end		1,322,430		190,475		135,585		254,375		1,902,865

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies [Abstract]

Commitments and contingencies

NOTE 10:  COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk

In the normal course of business, we make use of a number of different financial instruments to help meet the financial needs of our customers. In accordance with U.S. generally accepted accounting principles, these transactions are not presented in the accompanying consolidated financial statements and are referred to as off-balance sheet instruments. These transactions and activities include commitments to extend lines of commercial and real estate mortgage credit and standby and commercial letters of credit.

A loan commitment is a binding contract to lend up to a maximum amount for a specified period of time provided there is no violation of any financial, economic, or other terms of the contract. A standby letter of credit obligates us to honor a financial commitment to a third party should our customer fail to perform. Many loan commitments and most standby letters of credit expire unfunded, and, therefore, total commitments do not represent our future funding obligations. Loan commitments and letters of credit are made under normal credit terms, including interest rates and collateral prevailing at the time, and usually require the payment of a fee by the customer. Commercial letters of credit are commitments generally issued to finance the movement of goods between buyers and sellers. Our exposure to credit loss, assuming commitments are funded, in the event of nonperformance by the other party to the financial instrument is represented by the contractual amount of those instruments. We do not anticipate any material losses as a result of the commitments.

As of June 30, 2017 and December 31, 2016, our loan commitments were $429.3 million and $429.4 million, respectively. As of June 30, 2017 and December 31, 2016, our standby letters of credit obligations were $6.1 million and $7.2 million, respectively.

Customer Risk Management Interest Rate Swap

On September 9, 2014, we entered into an agreement to provide one of our commercial borrowers a customer interest rate swap that effectively converts the loan interest rate from a floating rate based on LIBOR to a fixed rate for the customer. As of June 30, 2017, the floating rate loan had an outstanding balance of $14.2 million.  The option to execute the swap is conditional on the borrower’s compliance with the loan and swap agreements, and will be subject to the terms of the International Swaps and Derivatives Association Master Agreement.  The fixed pay amount will be based on the market rates at the time of execution, and it is our intention to simultaneously execute an offsetting trade with an approved swap dealer counterparty with identical terms. 

As of June 30, 2017 and December 31, 2016, we had eight risk participation agreements and  seven risk participation agreements, respectively, with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. As of June 30, 2017 and December 31, 2016, the current notional amount for these transactions were $51.6 million and $34.7 million, respectively.

Legal Action

On March 18, 2011, an action entitled Ubaldi, et al. v SLM Corporation (“Sallie Mae”), et al., Case No. 3:11-cv-01320 EDL (the “Ubaldi Case”) was filed in the U.S. District Court for the Northern District of California as a putative class action with respect to certain loans that the plaintiffs claim were made by Sallie Mae. The loans in question were made by various banks, including Bank SNB, and sold to Sallie Mae. Plaintiffs claim that Sallie Mae entered into arrangements with chartered banks in order to evade California law and that Sallie Mae is the de facto lender on the loans in question and, as the lender on such loan, Sallie Mae charged interest and late fees that violates California usury law and the California Business and Professions Code. Sallie Mae has denied all claims asserted against it and has stated that it intends to vigorously defend the action.  On March 26, 2014, the Court denied the plaintiffs’ request to certify the class; however, the Court permitted the plaintiffs to amend the filing to redefine the class. Plaintiffs filed a renewed motion on June 23, 2014. On December 19, 2014, the Court issued a decision on the renewed motion, certifying a class with respect to claims of improper late fees, but denying class certification with respect to plaintiffs’ usury claims. Plaintiffs thereafter filed a motion seeking leave to amend their complaint to add additional parties, which Sallie Mae opposed, and, on March 24, 2015, the Court denied the plaintiffs’ motion. On June 5, 2015, the law firm Cohen Milstein Sellers & Toll based in Washington, D.C. entered its appearance as co-counsel on behalf of plaintiffs.

Bank SNB is not specifically named in the action.  However, in the first quarter of 2014, Sallie Mae provided Bank SNB with a notice of claims that have been asserted against Sallie Mae in the Ubaldi Case (the “Notice”). Sallie Mae asserts in the Notice that Bank SNB may have indemnification and/or repurchase obligations pursuant to the ExportSS Agreement dated July 1, 2002 between Sallie Mae and Bank SNB, pursuant to which the loans in question were made by Bank SNB. Bank SNB has substantial defenses with respect to any claim for indemnification or repurchase ultimately made by Sallie Mae, if any, and intends to vigorously defend against any such claims.

Due to the uncertainty regarding (i) the size and scope of the class, (ii) whether a class will ultimately be certified, (iii) the particular class members, (iv) the interest rate on loans made by Bank SNB charged to particular class members, (v) the late fees charged to particular class members, (vi) the time period that will ultimately be at issue if a class is certified in the Ubaldi Case, (vii) the theories, if any, under which the plaintiffs might prevail, (viii) whether Sallie Mae will make a claim against us for indemnification or repurchase, and (ix) the likelihood that Sallie Mae would prevail if it makes such a claim, we cannot estimate the amount or the range of losses that may arise as a result of the Ubaldi Case.

In the normal course of business, we are at all times subject to various pending and threatened legal actions. The relief or damages sought in some of these actions may be substantial. After reviewing pending and threatened actions with counsel, management currently does not expect that the outcome of such actions will have a material adverse effect on our financial position; however, we are not able to predict whether the outcome of such actions may or may not have a material adverse effect on results of operations in a particular future period as the timing and amount of any resolution of such actions and relationship to the future results of operations are not known.

Pending Merger Update

We previously announced a definitive agreement and plan of merger with and into Simmons First National Corporation (NASDAQ-GS: SFNC). The merger application for this transaction was filed on July 14, 2017. Conversion and integration plans are in process. Subject to regulatory approval and the satisfaction of other closing conditions, we anticipate a closing date as early as October 2017 or as late as January 2018.

XML

New Authoritative Accounting Guidance

6 Months Ended

Jun. 30, 2017

New Authoritative Accounting Guidance [Abstract]

New Authoritative Accounting Guidance

NOTE 11:  NEW AUTHORITATIVE ACCOUNTING GUIDANCE

In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current accounting treatment. This ASU changes the guidance on sale-leaseback transactions, initial direct costs and lease execution costs, and, for lessors, modifies the classification criteria and the accounting for sales-type and direct financing leases. The guidance becomes effective for us on January 1, 2019. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. We are evaluating the impact of this ASU on our financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):  Measurement of Credit Losses on Financial Instruments. This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that estimates credit losses on most financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity securities, using the current expected credit loss (CECL) model. Under this model, entities will estimate credit losses over the financial instrument’s entire contractual term from the date of initial recognition of that instrument. The ASU also requires incremental disclosures on how the entity developed its estimates. This guidance becomes effective for us on January 1, 2020. We are evaluating the impact of this ASU on our financial statements and disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance specifically addresses eight classification issues:  debt prepayment or debt extinguishment costs; settlement of zero-coupon bonds; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance (COLI) policies, including bank-owned life insurance (BOLI) policies; distributions received from equity method investments; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance becomes effective for us on January 1, 2018. We are evaluating the impact of the ASU on our financial statements and disclosures.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory. The ASU requires companies to recognize the income tax consequences of an intercompany asset transfer when the transfer occurs. The amendments in this ASU do not change accounting for the pre-tax effects of intra-entity asset transfers under Topic 810, Consolidation, and do not apply to intra-entity inventory transfers. The economic consequences of intra-entity asset sales—other than inventory—will be recognized in the period in which the transaction occurs and no longer deferred. A reporting entity’s effective tax rate likely will be affected due to the immediate recognition of the seller’s taxes and buyer’s deferred taxes, particularly when the transaction has no effect on consolidated pre-tax income. This guidance becomes effective for us on January 1, 2018. We are evaluating the impact of this ASU on our financial statement disclosures.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805):  Clarifying the Definition of a Business. The main objective of this new standard is to help financial statement preparers evaluate whether a set of transferred assets and activities (either acquired or disposed of) is a business. Accounting for a business combination differs significantly from that of an asset acquisition. Because the definition of a business affects acquisitions, disposals, goodwill, and consolidation, the revised definition of a business is generally expected to reduce the number of transactions that qualify as a business combination. This guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The set is not a business if this screen is met. If this screen is not met, however, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. This guidance becomes effective for us on January 1, 2018, and we are evaluating the impact of this ASU on our financial statements and disclosures. 

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350):  Simplifying the Test for Goodwill Impairment. The new guidance will simplify financial reporting because it eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure the goodwill impairment. This ASU simplifies how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Entities will still perform their annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the fair value exceeds the carrying amount, no impairment should be recorded. If a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charged based on that difference. Impairment losses on goodwill cannot be reversed once recognized. This guidance becomes effective for us on January 1, 2020, and we are evaluating the impact of this ASU on our financial statements and disclosures.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):  Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This ASU primarily defines in-substance nonfinancial assets and provides guidance for partial sales of nonfinancial assets. It also eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. This guidance becomes effective for us on January 1, 2019, and we are evaluating the impact of this ASU on our financial statements and disclosures.

In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20):  Premium Amortization on Purchased Callable Debt Securities, which is intended to enhance the accounting for the amortization of premiums for purchased callable debt securities. This ASU amends the amortization period for certain callable debt securities held at a premium by more closely aligning the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. Previously, the premiums on callable debt securities generally were required to be amortized based on the maturity date. Under this update, the premiums on certain callable debt securities held at a premium are to be amortized based on the earliest call date. This update is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company has elected to early adopt this update effective January 1, 2017, which did not have a material impact on our financial statements and disclosures.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718):  Scope of Modification Accounting. This ASU provides relief to entities that make non-substantive changes to their share-based payment awards. It provides guidance that will allow companies to make certain changes to awards without applying modification accounting.  Under the new guidance, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions, and classification as an equity or liability instrument are the same immediately before and after the change. This guidance becomes effective for us on January 1, 2018, and we are evaluating the impact of this ASU on our financial statements and disclosures.

XML

Investment Securities (Tables)

6 Months Ended

Jun. 30, 2017

Investment Securities [Abstract]

Summary Of Amortized Cost And Fair Values Of Investment Securities

	Amortized		Gross Unrealized				Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
At June 30, 2017
Held to Maturity:
Obligations of state and political subdivisions	$	10,382	$	252	$	(2)	$	10,632
Total	$	10,382	$	252	$	(2)	$	10,632
Available for Sale:
Federal agency securities	$	64,502	$	353	$	(63)	$	64,792
Obligations of state and political subdivisions		45,306		624		(74)		45,856
Residential mortgage-backed securities		285,835		411		(1,771)		284,475
Asset-backed securities		8,511		18		(32)		8,497
Corporate debt		20,018		450		(57)		20,411
Total	$	424,172	$	1,856	$	(1,997)	$	424,031
At December 31, 2016
Held to Maturity:
Obligations of state and political subdivisions	$	10,443	$	242	$	(8)	$	10,677
Total	$	10,443	$	242	$	(8)	$	10,677
Available for Sale:
Federal agency securities	$	69,691	$	201	$	(198)	$	69,694
Obligations of state and political subdivisions		46,105		461		(191)		46,375
Residential mortgage-backed securities		282,035		573		(1,966)		280,642
Asset-backed securities		9,265		-		(88)		9,177
Corporate debt		20,017		385		(72)		20,330
Total	$	427,113	$	1,620	$	(2,515)	$	426,218

Amortized Cost And Approximate Fair Value Of Investment Securities By Maturity Date

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
One year or less	$	26,829	$	26,854	$	371	$	370
More than one year through five years		265,468		265,416		8,878		9,105
More than five years through ten years		103,256		102,849		1,133		1,157
More than ten years		28,619		28,912		-		-
Total	$	424,172	$	424,031	$	10,382	$	10,632

Summary Of Sales Of Available For Sale Securities

		For the three months				For the six months
		ended June 30,				ended June 30,
(Dollars in thousands)		2017		2016		2017		2016
Proceeds from sales	$	-	$	18,726	$	601	$	41,530
Gross realized gains		-		173		451		345
Gross realized losses		-		(8)		-		(54)

Summary Of Securities With Gross Unrealized Losses And Their Fair Values

				Continuous Unrealized
		Amortized Cost of		Loss Existing for:				Fair Value of
	Number of	Securities with		Less than		More than		Securities with
(Dollars in thousands)	Securities	Unrealized Losses		12 Months		12 Months		Unrealized Losses
At June 30, 2017
Held to Maturity:
Obligations of state and political subdivisions	5	$	442	$	(1)	$	(1)	$	440
	5	$	442	$	(1)	$	(1)	$	440
Available for Sale:
Federal agency securities	11	$	27,667	$	(42)	$	(21)	$	27,604
Obligations of state and political subdivisions	11		8,343		(22)		(52)		8,269
Residential mortgage-backed securities	101		236,213		(1,356)		(415)		234,442
Asset-backed securities	1		3,958		-		(32)		3,926
Corporate debt	2		5,007		-		(57)		4,950
Total	126	$	281,188	$	(1,420)	$	(577)	$	279,191
At December 31, 2016
Held to Maturity:
Obligations of state and political subdivisions	7	$	1,987	$	(8)	$	-	$	1,979
	7	$	1,987	$	(8)	$	-	$	1,979
Available for Sale:
Federal agency securities	13	$	34,734	$	(111)	$	(87)	$	34,536
Obligations of state and political subdivisions	36		18,283		(145)		(46)		18,092
Residential mortgage-backed securities	89		225,986		(1,618)		(348)		224,020
Asset-backed securities	3		9,265		-		(88)		9,177
Corporate debt	2		5,005		-		(72)		4,933
Total	143	$	293,273	$	(1,874)	$	(641)	$	290,758

XML

Loans And Allowance For Loan Losses (Tables)

6 Months Ended

Jun. 30, 2017

Loans And Allowance For Loan Losses [Abstract]

Southwest's Loan Classifications

(Dollars in thousands)	At June 30, 2017		At December 31, 2016
Real estate mortgage:
Commercial	$	961,085	$	882,071
One-to-four family residential		241,140		199,123
Real estate construction:
Commercial		182,620		199,113
One-to-four family residential		14,523		20,946
Commercial		554,094		556,248
Installment and consumer		18,172		19,631
		1,971,634		1,877,132
Less: Allowance for loan losses		(27,318)		(27,546)
Total loans, net		1,944,316		1,849,586
Less: Loans held for sale (included above)		(6,036)		(4,386)
Net loans receivable	$	1,938,280	$	1,845,200

Changes In The Carrying Amounts And Accretable Yields For ASC 310.30 Loans

	For the three months ended June 30,
	2017					2016
			Carrying				Carrying
	Accretable		amount		Accretable		amount
(Dollars in thousands)	Yield		of loans		Yield		of loans
Balance at beginning of period	$	487	$	3,817	$	742	$	7,288
Payments received		-		(572)		-		(286)
Net charge-offs		(2)		(623)		(11)		(196)
Accretion		(9)		896		(48)		-
Balance at end of period	$	476	$	3,518	$	683	$	6,806

	For the six months ended June 30,
	2017				2016
			Carrying				Carrying
	Accretable		amount		Accretable		amount
(Dollars in thousands)	Yield		of loans		Yield		of loans
Balance at beginning of period	$	630	$	4,632	$	807	$	7,914
Payments received		-		(1,387)		-		(790)
Net charge-offs		(2)		(623)		(11)		(318)
Accretion		(152)		896		(113)		-
Balance at end of period	$	476	$	3,518	$	683	$	6,806

Recorded Investment In Loans On Nonaccrual Status

(Dollars in thousands)	At June 30, 2017		At December 31, 2016
Real estate mortgage:
Commercial	$	6,694	$	6,471
One-to-four family residential		2,752		2,766
Real estate construction:
Commercial		132		522
One-to-four family residential		447		448
Commercial		12,883		5,949
Other consumer		21		111
Total nonaccrual loans	$	22,929	$	16,267

Age Analysis Of Past Due Loans

			90 days +								Recorded loans
	30-89 days		past due and		Total past				Total		> 90 days and
(Dollars in thousands)	past due		nonaccrual		due		Current		loans		accruing
At June 30, 2017
Real estate mortgage:
Commercial	$	285	$	6,694	$	6,979	$	954,106	$	961,085	$	-
One-to-four family residential		1,192		2,797		3,989		237,151		241,140		45
Real estate construction:
Commercial		-		132		132		182,488		182,620		-
One-to-four family residential		-		447		447		14,076		14,523		-
Commercial		498		12,884		13,382		540,712		554,094		1
Other		134		106		240		17,932		18,172		85
Total	$	2,109	$	23,060	$	25,169	$	1,946,465	$	1,971,634	$	131
At December 31, 2016
Real estate mortgage:
Commercial	$	24	$	6,472	$	6,496	$	875,575	$	882,071	$	-
One-to-four family residential		631		2,903		3,534		195,589		199,123		138
Real estate construction:
Commercial		-		522		522		198,591		199,113		-
One-to-four family residential		-		448		448		20,498		20,946		-
Commercial		2,530		6,142		8,672		547,576		556,248		193
Other		359		123		482		19,149		19,631		12
Total	$	3,544	$	16,610	$	20,154	$	1,856,978	$	1,877,132	$	343

Impaired Loans

	With No Specific Allowance				With A Specific Allowance
			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Investment		Balance		Allowance
At June 30, 2017
Commercial real estate	$	7,789	$	8,473	$	-	$	-	$	-
One-to-four family residential		2,769		3,162		-		-		-
Real estate construction		579		781		-		-		-
Commercial		477		1,450		12,408		16,034		2,461
Other		21		26		-		-		-
Total	$	11,635	$	13,892	$	12,408	$	16,034	$	2,461
At December 31, 2016
Commercial real estate	$	1,536	$	3,057	$	6,053	$	6,529	$	2,219
One-to-four family residential		1,188		1,535		1,593		1,698		63
Real estate construction		762		926		207		245		40
Commercial		1,032		2,861		4,963		7,480		1,346
Other		111		115		-		-		-
Total	$	4,629	$	8,494	$	12,816	$	15,952	$	3,668

Average Recorded Investment And Interest Income Recognized On Impaired Loans

	As of and for the six months ended June 30,
	2017				2016
	Average				Average
	Recorded		Interest		Recorded		Interest
(Dollars in thousands)	Investment		Income		Investment		Income
Commercial real estate	$	3,430	$	97	$	17,365	$	871
One-to-four family residential		3,183		34		3,627		12
Real estate construction		651		-		1,408		-
Commercial		9,342		94		13,274		32
Other		26		-		77		-
Total	$	16,632	$	225	$	35,751	$	915

Troubled Debt Restructured Loans Outstanding

	At June 30, 2017				At December 31, 2016
(Dollars in thousands)	Accruing		Nonaccrual		Accruing		Nonaccrual
Commercial real estate	$	1,095	$	107	$	1,118	$	475
One-to-four family residential		17		-		15		46
Commercial		2		7,335		45		3,323
Total	$	1,114	$	7,442	$	1,178	$	3,844

Loans Modified As Troubled Debt Restructurings

	For the three months ended June 30,
	2017				2016
	Number of		Recorded		Number of		Recorded
(Dollars in thousands)	Modifications		Investment		Modifications		Investment
Commercial		3	$	4,174		-	$	-
Total		3	$	4,174		-	$	-
	For the six months ended June 30,
	2017				2016
	Number of		Recorded		Number of		Recorded
(Dollars in thousands)	Modifications		Investment		Modifications		Investment
Commercial		3	$	4,174		1	$	26
Total		3	$	4,174		1	$	26

Classification Of Risk Category Of Loans, By Classes

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2017
Grade:
Pass	$	919,620	$	235,040	$	185,916	$	502,838	$	18,151	$	1,861,565
Special Mention		25,711		2,154		10,059		20,522		-		58,446
Substandard		15,754		3,946		1,168		29,730		21		50,619
Doubtful		-		-		-		1,004		-		1,004
Total	$	961,085	$	241,140	$	197,143	$	554,094	$	18,172	$	1,971,634
At December 31, 2016
Grade:
Pass	$	857,290	$	192,395	$	210,780	$	498,039	$	19,518	$	1,778,022
Special Mention		4,479		1,983		7,720		24,639		-		38,821
Substandard		20,302		4,745		1,559		33,175		113		59,894
Doubtful		-		-		-		395		-		395
Total	$	882,071	$	199,123	$	220,059	$	556,248	$	19,631	$	1,877,132

By Balance In The Allowance For Loan Losses And The Recorded Investment In Loans Portfolio Classification Disaggregated On The Basis Of Impairment Evaluation Method

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2017
Balance at beginning of fiscal year	$	12,507	$	1,163	$	3,502	$	10,058	$	316	$	27,546
Loans charged-off		(2,029)		(3)		-		(2,165)		(201)		(4,398)
Recoveries		216		75		5		317		52		665
Provision for loan losses		1,632		136		(566)		2,193		110		3,505
Balance at end of period	$	12,326	$	1,371	$	2,941	$	10,403	$	277	$	27,318
Allowance for loan losses ending balance:
Individually evaluated for impairment	$	-	$	-	$	-	$	2,461	$	-	$	2,461
Collectively evaluated for impairment		12,326		1,371		2,941		7,942		277		24,857
Acquired with deteriorated credit quality		-		-		-		-		-		-
Total ending allowance balance	$	12,326	$	1,371	$	2,941	$	10,403	$	277	$	27,318
Loans receivable ending balance:
Individually evaluated for impairment	$	7,011	$	1,871	$	-	$	12,408	$	-	$	21,290
Collectively evaluated for impairment		952,524		238,120		196,514		541,496		18,172		1,946,826
Acquired with deteriorated credit quality		1,550		1,149		629		190		-		3,518
Total ending loans balance	$	961,085	$	241,140	$	197,143	$	554,094	$	18,172	$	1,971,634

	Commercial		1-4 Family		Real Estate
(Dollars in thousands)	Real Estate		Residential		Construction		Commercial		Other		Total
At June 30, 2016
Balance at beginning of fiscal year	$	12,716	$	700	$	2,533	$	9,965	$	192	$	26,106
Loans charged-off		(3)		(83)		-		(3,801)		(376)		(4,263)
Recoveries		234		54		-		311		49		648
Provision for loan losses		(2,234)		362		647		5,194		416		4,385
Balance at end of period	$	10,713	$	1,033	$	3,180	$	11,669	$	281	$	26,876
Allowance for loan losses ending balances:
Individually evaluated for impairment	$	281	$	116	$	-	$	2,915	$	-	$	3,312
Collectively evaluated for impairment		9,961		917		3,140		8,754		281		23,053
Acquired with deteriorated credit quality		471		-		40		-		-		511
Total ending allowance balance	$	10,713	$	1,033	$	3,180	$	11,669	$	281	$	26,876
Loans receivable ending balance:
Individually evaluated for impairment	$	13,192	$	2,187	$	754	$	13,880	$	38	$	30,051
Collectively evaluated for impairment		844,739		180,213		194,646		544,221		20,702		1,784,521
Acquired with deteriorated credit quality		4,356		1,293		752		371		33		6,805
Total ending loans balance	$	862,287	$	183,693	$	196,152	$	558,472	$	20,773	$	1,821,377

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Measurements [Abstract]

Summary Of Financial Assets Measured At Fair Value On A Recurring Basis

			Fair Value Measurement at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
At June 30, 2017
Available for sale securities:
Federal agency securities	$	64,792	$	-	$	64,792	$	-
Obligations of state and political subdivisions		45,856		-		45,856		-
Residential mortgage-backed securities		284,475		-		284,475		-
Asset-backed securities		8,497		-		8,497		-
Corporate debt		20,411		231		20,180		-
Derivative asset		2,698		-		2,698		-
Derivative liability		(3,068)		-		(3,068)		-
Total	$	423,661	$	231	$	423,430	$	-
At December 31, 2016
Available for sale securities:
Federal agency securities	$	69,694	$	-	$	69,694	$	-
Obligations of state and political subdivisions		46,375		-		46,375		-
Residential mortgage-backed securities		280,642		-		280,642		-
Asset-backed securities		9,177		-		9,177		-
Corporate debt		20,330		213		20,117		-
Derivative asset		1,235		-		1,235		-
Derivative liability		(1,890)		-		(1,890)		-
Total	$	425,563	$	213	$	425,350	$	-

Asset Measured At Fair Value On A Nonrecurring Basis

			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
At June 30, 2017
Impaired loans at fair value :
Commercial		12,408		-		-		12,408
Loans held for sale:
One-to-four family residential		6,036		-		6,036		-
Total	$	18,444	$	-	$	6,036	$	12,408
At December 31, 2016
Impaired loans at fair value :
Commercial real estate	$	6,053	$	-	$	-	$	6,053
One-to-four family residential		1,593		-		-		1,593
Real estate construction		207		-		-		207
Commercial		5,357		-		-		5,357
Loans held for sale:
One-to-four family residential		4,386		-		4,386		-
Total	$	17,596	$	-	$	4,386	$	13,210

Carrying Values And Estimated Fair Values Of Financial Instruments Segregated By The Level Of The Valuation Inputs

	At June 30, 2017				At December 31, 2016
	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Values		Values		Values		Values
Financial assets:
Level 2 inputs:
Cash and cash equivalents	$	79,839	$	79,839	$	75,650	$	75,650
Securities held to maturity		10,382		10,632		10,443		10,677
Accrued interest receivable		6,328		6,328		6,194		6,194
Mortgage loan servicing rights		3,666		4,404		3,491		4,159
Bank-owned life insurance		28,450		28,450		28,575		28,575
Investments included in other assets		17,079		17,079		14,627		14,627
Level 3 inputs:
Total loans, net of allowance		1,944,316		1,934,986		1,849,586		1,839,960
Financial liabilities:
Level 2 inputs:
Deposits		2,013,834		1,967,298		1,946,018		1,897,927
Accrued interest payable		1,259		1,259		1,132		1,132
Other liabilities		9,130		9,130		9,516		9,516
Other borrowings		203,705		203,793		183,814		183,926
Subordinated debentures		46,393		46,393		46,393		46,393

XML

Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Derivative Instruments [Abstract]

Non-Hedge Derivative Assets and Liabilities

	As of June 30, 2017				At December 31, 2016
(Dollars in thousands)	Notional		Fair Value		Notional		Fair Value
Non-hedge derivative assets	$	180,631	$	2,698	$	123,953	$	1,235
Non-hedge derivative liabilities		180,631		2,698		123,953		1,235

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Computation Of Basic And Diluted Earnings Per Common Share

	For the three months				For the six months
	ended June 30,				ended June 30,
(Dollars in thousands, except earnings per share data)	2017		2016		2017		2016
Numerator:
Net income	$	5,818	$	5,412	$	11,097	$	7,281
Earnings allocated to participating securities		(104)		(110)		(193)		(131)
Numerator for earnings per common share	$	5,714	$	5,302	$	10,904	$	7,150
Denominator:
Denominator for basic earnings per common share		18,354,631		18,574,300		18,362,549		18,916,686
Dilutive effect of stock compensation		138,108		102,261		136,485		18,918
Denominator for diluted earnings per common share		18,492,739		18,676,561		18,499,034		18,935,604
Earnings per common share:
Basic	$	0.31	$	0.29	$	0.59	$	0.38
Diluted	$	0.31	$	0.28	$	0.59	$	0.38

XML

Investment Securities (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Investment Securities [Abstract]
Total investments carried at cost	$ 17.1	$ 14.6
Available for sale debt securities amortized cost pledged as collateral	$ 215.3	$ 199.0

XML

Investment Securities (Summary Of Amortized Cost And Fair Values Of Investment Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Held To Maturity Securities And Available For Sale Securities [Line Items]
Amortized Cost, Held to Maturity	$ 10,382	$ 10,443
Gross Unrealized Gains, Held-to-maturity	252	242
Gross Unrealized Losses, Held to Maturity	(2)	(8)
Fair Value, Held to Maturity	10,632	10,677
Amortized Cost, Available for Sale	424,172	427,113
Gross Unrealized Gains, Available for Sale	1,856	1,620
Gross Unrealized Losses, Available for Sale	(1,997)	(2,515)
Available-for-sale Securities	424,031	426,218
Federal Agency Securities [Member]
Held To Maturity Securities And Available For Sale Securities [Line Items]
Amortized Cost, Available for Sale	64,502	69,691
Gross Unrealized Gains, Available for Sale	353	201
Gross Unrealized Losses, Available for Sale	(63)	(198)
Available-for-sale Securities	64,792	69,694
Obligations Of State And Political Subdivisions [Member]
Held To Maturity Securities And Available For Sale Securities [Line Items]
Amortized Cost, Held to Maturity	10,382	10,443
Gross Unrealized Gains, Held-to-maturity	252	242
Gross Unrealized Losses, Held to Maturity	(2)	(8)
Fair Value, Held to Maturity	10,632	10,677
Amortized Cost, Available for Sale	45,306	46,105
Gross Unrealized Gains, Available for Sale	624	461
Gross Unrealized Losses, Available for Sale	(74)	(191)
Available-for-sale Securities	45,856	46,375
Residential Mortgage-Backed Securities [Member]
Held To Maturity Securities And Available For Sale Securities [Line Items]
Amortized Cost, Available for Sale	285,835	282,035
Gross Unrealized Gains, Available for Sale	411	573
Gross Unrealized Losses, Available for Sale	(1,771)	(1,966)
Available-for-sale Securities	284,475	280,642
Asset-Backed Securities [Member]
Held To Maturity Securities And Available For Sale Securities [Line Items]
Amortized Cost, Available for Sale	8,511	9,265
Gross Unrealized Gains, Available for Sale	18
Gross Unrealized Losses, Available for Sale	(32)	(88)
Available-for-sale Securities	8,497	9,177
Corporate Debt [Member]
Held To Maturity Securities And Available For Sale Securities [Line Items]
Amortized Cost, Available for Sale	20,018	20,017
Gross Unrealized Gains, Available for Sale	450	385
Gross Unrealized Losses, Available for Sale	(57)	(72)
Available-for-sale Securities	$ 20,411	$ 20,330

XML

Investment Securities (Amortized Cost And Approximate Fair Value Of Investment Securities By Maturity Date) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Amortized cost and approximate fair value [Abstract]
One year or less, Amortized cost, Available for Sale	$ 26,829
One year or less, Fair Value, Available for Sale	26,854
One year or less, Amortized Cost, Held to Maturity	371
One year or less, Fair Value, Held to Maturity	370
More than one year through five years, Amortized Cost, Available for Sale	265,468
More than one year through five years, Fair Value, Available for Sale	265,416
More than one year through five years, Amortized Cost, Held to Maturity	8,878
More than one year through five years, Fair Value, Held to Maturity	9,105
More than five years through ten years, Amortized Cost, Available for Sale	103,256
More than five years through ten years, Fair Value, Available for Sale	102,849
More than five years through ten years, Amortized Cost, Held to Maturity	1,133
More than five years through ten years, Fair Value, Held to Maturity	1,157
More than ten years, Amortized Cost, Available for Sale	28,619
More than ten years, Fair Value, Available for Sale	28,912
Total, Amortized Cost, Available for Sale	424,172
Total, Fair Value, Available for Sale	424,031
Held-to-maturity Securities, Total	10,382	$ 10,443
Fair Value, Held to Maturity	$ 10,632	$ 10,677

XML

Investment Securities (Summary Of Sales Of Available For Sale Securities) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Investment Securities [Abstract]
Proceeds from sales	$ 18,726	$ 601	$ 41,530
Gross realized gains	173	$ 451	345
Gross realized losses	$ (8)		$ (54)

XML

Investment Securities (Summary Of Securities With Gross Unrealized Losses And Their Fair Values) (Details) $ in Thousands	Jun. 30, 2017 USD ($) security	Dec. 31, 2016 USD ($) security
Available-for-sale Securities and Held-to-maturity Securities
Number of Securities, Available for Sale | security	126	143
Number of Securities, Held to Maturity | security	5	7
Amortized cost of securities with unrealized losses, Available for Sale	$ 281,188	$ 293,273
Amortized cost of securities with unrealized losses, Held to Maturity	442	1,987
Continuous Unrealized Loss Existing for Less Than 12 Months, Available for Sale	(1,420)	(1,874)
Continuous Unrealized Loss Existing for Less Than 12 Months, Held to Maturity	(1)	(8)
Continuous Unrealized Loss Existing for More Than 12 Months, Available for Sale	(577)	(641)
Continuous Unrealized Loss Existing for More Than 12 Months, Held to Maturity	(1)
Fair value of securities with unrealized losses, Available for Sale	279,191	290,758
Fair value of securities with unrealized losses, Held to Maturity	$ 440	$ 1,979
Federal Agency Securities [Member]
Available-for-sale Securities and Held-to-maturity Securities
Number of Securities, Available for Sale | security	11	13
Amortized cost of securities with unrealized losses, Available for Sale	$ 27,667	$ 34,734
Continuous Unrealized Loss Existing for Less Than 12 Months, Available for Sale	(42)	(111)
Continuous Unrealized Loss Existing for More Than 12 Months, Available for Sale	(21)	(87)
Fair value of securities with unrealized losses, Available for Sale	$ 27,604	$ 34,536
Obligations Of State And Political Subdivisions [Member]
Available-for-sale Securities and Held-to-maturity Securities
Number of Securities, Available for Sale | security	11	36
Number of Securities, Held to Maturity | security	5	7
Amortized cost of securities with unrealized losses, Available for Sale	$ 8,343	$ 18,283
Amortized cost of securities with unrealized losses, Held to Maturity	442	1,987
Continuous Unrealized Loss Existing for Less Than 12 Months, Available for Sale	(22)	(145)
Continuous Unrealized Loss Existing for Less Than 12 Months, Held to Maturity	(1)	(8)
Continuous Unrealized Loss Existing for More Than 12 Months, Available for Sale	(52)	(46)
Continuous Unrealized Loss Existing for More Than 12 Months, Held to Maturity	(1)
Fair value of securities with unrealized losses, Available for Sale	8,269	18,092
Fair value of securities with unrealized losses, Held to Maturity	$ 440	$ 1,979
Residential Mortgage-Backed Securities [Member]
Available-for-sale Securities and Held-to-maturity Securities
Number of Securities, Available for Sale | security	101	89
Amortized cost of securities with unrealized losses, Available for Sale	$ 236,213	$ 225,986
Continuous Unrealized Loss Existing for Less Than 12 Months, Available for Sale	(1,356)	(1,618)
Continuous Unrealized Loss Existing for More Than 12 Months, Available for Sale	(415)	(348)
Fair value of securities with unrealized losses, Available for Sale	$ 234,442	$ 224,020
Asset-Backed Securities [Member]
Available-for-sale Securities and Held-to-maturity Securities
Number of Securities, Available for Sale | security	1	3
Amortized cost of securities with unrealized losses, Available for Sale	$ 3,958	$ 9,265
Continuous Unrealized Loss Existing for More Than 12 Months, Available for Sale	(32)	(88)
Fair value of securities with unrealized losses, Available for Sale	$ 3,926	$ 9,177
Corporate Debt [Member]
Available-for-sale Securities and Held-to-maturity Securities
Number of Securities, Available for Sale | security	2	2
Amortized cost of securities with unrealized losses, Available for Sale	$ 5,007	$ 5,005
Continuous Unrealized Loss Existing for More Than 12 Months, Available for Sale	(57)	(72)
Fair value of securities with unrealized losses, Available for Sale	$ 4,950	$ 4,933

XML

Loans And Allowance For Loan Losses (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Oct. 09, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	$ 6.0	$ 6.0	$ 4.4
Actual loss period		3 years
Period to sell loans from the date of closing		1 month
Loans Purchased Evaluated in Conjunction With The Acquisition				$ 200.0
Loans Purchased Evaluated in Conjunction With The Acquisition, Discount				4.5
Loans, purchase credit impaired				7.8
Loans and debt securities acquired with deteriorated credit quality, discount				$ 3.3
Accrued additional interest income		$ 0.5
Interest And Fee Income Nonaccruing Loans		$ 0.2
Troubled debt restructuring default period		90 days
Troubled debt restructuring Period		12 months
Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to individuals and businesses	$ 662.6
Percentage of loans to individuals and businesses	34.00%	34.00%
Real Estate Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid principal of mortgage loans serviced for others	$ 463.8	$ 463.8	$ 460.6
Healthcare [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans to individuals and businesses	$ 429.5
Percentage of loans to individuals and businesses	22.00%	22.00%
Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of days for independent appraisals on real estate collateral		30 days

XML

Loans And Allowance For Loan Losses (Southwest's Loan Classifications) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 1,971,634	$ 1,877,132
Less: Allowance for loan losses	(27,318)	(27,546)
Total loans, net	1,944,316	1,849,586
Less: Loans held for sale (included above)	(6,036)	(4,386)
Net loans receivable	1,938,280	1,845,200
Real Estate Mortgage [Member] | Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	961,085	882,071
Real Estate Mortgage [Member] | Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	241,140	199,123
Commercial Real Estate [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	554,094	556,248
Construction Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	182,620	199,113
Construction Loans [Member] | Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	14,523	20,946
Installment And Consumer [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 18,172	$ 19,631

XML

Loans And Allowance For Loan Losses (Changes In Carryng Amounts And Accretable Yields) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Loan And Allowance For Loans Losses [Abstract]
Balance at beginning of period, Accretable Yield	$ 487	$ 742	$ 630	$ 807
Net charge-offs, Accretable Yield	(2)	(11)	(2)	(11)
Accretion, Accretable yield	(9)	(48)	(152)	(113)
Balance at end of period, Accretable Yield	476	683	476	683
Balance at beginning of period, Carrying amount of loans	3,817	7,288	4,632	7,914
Payments received, Carrying amount of loans	(572)	(286)	(1,387)	(790)
Net charged-offs, Carrying amount of loans	(623)	(196)	(623)	(318)
Accretion, Carrying amount of loans	896		896
Balance at end of period, Carrying amount of loans	$ 3,518	$ 6,806	$ 3,518	$ 6,806

XML

Loans And Allowance For Loan Losses (Recorded Investment In Loans On Nonaccrual Status) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual loans	$ 22,929	$ 16,267
Commercial Real Estate Portfolio Segment [Member] | Real Estate Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual loans	6,694	6,471
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual loans	132	522
Residential Portfolio Segment [Member] | Real Estate Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual loans	2,752	2,766
Real Estate Construction [Member] | One-To-Four Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual loans	447	448
Commercial Portfolio Segment [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual loans	12,883	5,949
Consumer Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual loans	$ 21	$ 111

XML

Loans And Allowance For Loan Losses (Age Analysis Of Past Due Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	$ 25,169	$ 20,154
Current	1,946,465	1,856,978
Loans receivable	1,971,634	1,877,132	$ 1,821,377
Recorded loans > 90 days and accruing	131	343
30 Days To 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	2,109	3,544
90 Days And Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	23,060	16,610
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable	961,085	882,071
One-To-Four Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable	241,140	199,123
Real Estate Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable	197,143	220,059
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable	554,094	556,248
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable	961,085		862,287
Commercial Real Estate Portfolio Segment [Member] | Real Estate Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	6,979	6,496
Current	954,106	875,575
Loans receivable	961,085	882,071
Commercial Real Estate Portfolio Segment [Member] | Real Estate Mortgage [Member] | 30 Days To 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	285	24
Commercial Real Estate Portfolio Segment [Member] | Real Estate Mortgage [Member] | 90 Days And Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	6,694	6,472
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	132	522
Current	182,488	198,591
Loans receivable	182,620	199,113
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | 90 Days And Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	132	522
Residential Portfolio Segment [Member] | One-To-Four Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	3,989	3,534
Current	237,151	195,589
Loans receivable	241,140	199,123	183,693
Recorded loans > 90 days and accruing	45	138
Residential Portfolio Segment [Member] | One-To-Four Family Residential [Member] | 30 Days To 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	1,192	631
Residential Portfolio Segment [Member] | One-To-Four Family Residential [Member] | 90 Days And Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	2,797	2,903
Residential Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	447	448
Current	14,076	20,498
Loans receivable	14,523	20,946
Residential Portfolio Segment [Member] | Construction Loans [Member] | 90 Days And Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	447	448
Real Estate Construction [Member] | Real Estate Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable	197,143		196,152
Commercial Portfolio Segment [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	13,382	8,672
Current	540,712	547,576
Loans receivable	554,094	556,248	$ 558,472
Recorded loans > 90 days and accruing	1	193
Commercial Portfolio Segment [Member] | Commercial [Member] | 30 Days To 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	498	2,530
Commercial Portfolio Segment [Member] | Commercial [Member] | 90 Days And Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	12,884	6,142
Consumer Portfolio Segment [Member] | Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	240	482
Current	17,932	19,149
Loans receivable	18,172	19,631
Recorded loans > 90 days and accruing	85	12
Consumer Portfolio Segment [Member] | Other [Member] | 30 Days To 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	134	359
Consumer Portfolio Segment [Member] | Other [Member] | 90 Days And Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	$ 106	$ 123

XML

Loans And Allowance For Loan Losses (Impaired Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
With No Specific Allowance Recorded Investment	$ 11,635	$ 4,629
With No Specific Allowance Unpaid Principal Balance	13,892	8,494
With A Specific Allowance Recorded Investment	12,408	12,816
With A Specific Allowance Unpaid Principal Balance	16,034	15,952
With A Specific Allowance Related Allowance	2,461	3,668
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With No Specific Allowance Recorded Investment	7,789	1,536
With No Specific Allowance Unpaid Principal Balance	8,473	3,057
With A Specific Allowance Recorded Investment		6,053
With A Specific Allowance Unpaid Principal Balance		6,529
With A Specific Allowance Related Allowance		2,219
Residential Portfolio Segment [Member] | One-To-Four Family Residential [Member]
Financing Receivable, Impaired [Line Items]
With No Specific Allowance Recorded Investment	2,769	1,188
With No Specific Allowance Unpaid Principal Balance	3,162	1,535
With A Specific Allowance Recorded Investment		1,593
With A Specific Allowance Unpaid Principal Balance		1,698
With A Specific Allowance Related Allowance		63
Real Estate Construction [Member]
Financing Receivable, Impaired [Line Items]
With No Specific Allowance Recorded Investment	579	762
With No Specific Allowance Unpaid Principal Balance	781	926
With A Specific Allowance Recorded Investment		207
With A Specific Allowance Unpaid Principal Balance		245
With A Specific Allowance Related Allowance		40
Commercial Portfolio Segment [Member] | Commercial [Member]
Financing Receivable, Impaired [Line Items]
With No Specific Allowance Recorded Investment	477	1,032
With No Specific Allowance Unpaid Principal Balance	1,450	2,861
With A Specific Allowance Recorded Investment	12,408	4,963
With A Specific Allowance Unpaid Principal Balance	16,034	7,480
With A Specific Allowance Related Allowance	2,461	1,346
Consumer Portfolio Segment [Member] | Other [Member]
Financing Receivable, Impaired [Line Items]
With No Specific Allowance Recorded Investment	21	111
With No Specific Allowance Unpaid Principal Balance	$ 26	$ 115

XML

Loans And Allowance For Loan Losses (Average Recorded Investment And Interest Income Recognized On Impaired Loans) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	$ 16,632	$ 35,751
Interest Income	225	915
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	3,430	17,365
Interest Income	97	871
Residential Portfolio Segment [Member] | One-To-Four Family Residential [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	3,183	3,627
Interest Income	34	12
Real Estate Construction [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	651	1,408
Commercial Portfolio Segment [Member] | Commercial [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	9,342	13,274
Interest Income	94	32
Consumer Portfolio Segment [Member] | Other [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	$ 26	$ 77

XML

Loans And Allowance For Loan Losses (Troubled Debt Restructured Loans Outstanding) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Modifications [Line Items]
Accruing	$ 1,114	$ 1,178
Nonaccrual	7,442	3,844
Commercial Real Estate [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Accruing	1,095	1,118
Nonaccrual	107	475
One-To-Four Family Residential [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Accruing	17	15
Nonaccrual		46
Commercial [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Accruing	2	45
Nonaccrual	$ 7,335	$ 3,323

XML

Loans And Allowance For Loan Losses (Loans Modified As Troubled Debt Restructurings) (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017 USD ($) loan	Jun. 30, 2017 USD ($) loan	Jun. 30, 2016 USD ($) loan
Financing Receivable, Modifications [Line Items]
Number of Modifications | loan	3	3	1
Recorded Investment | $	$ 4,174	$ 4,174	$ 26
Commercial Portfolio Segment [Member] | Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications | loan	3	3	1
Recorded Investment | $	$ 4,174	$ 4,174	$ 26

XML

Loans And Allowance For Loan Losses (Classification Of Risk Category Of Loans, By Classes) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	$ 1,971,634	$ 1,877,132	$ 1,821,377
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	1,861,565	1,778,022
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	58,446	38,821
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	50,619	59,894
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	1,004	395
Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	18,172	19,631	20,773
Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	18,151	19,518
Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	21	113
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	961,085	882,071
Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	919,620	857,290
Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	25,711	4,479
Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	15,754	20,302
Commercial Real Estate [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	961,085		862,287
One-To-Four Family Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	241,140	199,123
One-To-Four Family Residential [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	235,040	192,395
One-To-Four Family Residential [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	2,154	1,983
One-To-Four Family Residential [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	3,946	4,745
One-To-Four Family Residential [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	241,140	199,123	183,693
Real Estate Mortgage [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	961,085	882,071
Real Estate Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	197,143	220,059
Real Estate Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	185,916	210,780
Real Estate Construction [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	10,059	7,720
Real Estate Construction [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	1,168	1,559
Real Estate Construction [Member] | Real Estate Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	197,143		196,152
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	554,094	556,248
Commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	502,838	498,039
Commercial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	20,522	24,639
Commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	29,730	33,175
Commercial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	1,004	395
Commercial [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	554,094	556,248	$ 558,472
Construction Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	182,620	199,113
Construction Loans [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivable	$ 14,523	$ 20,946

XML

Loans And Allowance For Loan Losses (By Balance In The Allowance For Loan Losses And The Recorded Investment In Loans Portfolio Classification Disaggregated On The Basis Of Impairment Evaluation Method) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Financing Receivable, Recorded Investment [Line Items]
Balance at beginning of period			$ 27,546	$ 26,106
Loans charged-off			(4,398)	(4,263)
Recoveries			665	648
Provision for loan losses	$ 1,729	$ 10	3,505	4,385
Balance at end of period	27,318	26,876	27,318	26,876
Individually evaluated for impairment					$ 2,461		$ 3,312
Collectively evaluated for impairment					24,857		23,053
Acquired with deteriorated credit quality				511
Total ending allowance balance	27,318	26,876	27,546	26,106	27,318	$ 27,546	26,876
Individually evaluated for impairment					21,290		30,051
Collectively evaluated for impairment					1,946,826		1,784,521
Acquired With Deteriorated Credit Quality							6,805
Total ending loans balance					1,971,634	1,877,132	1,821,377
Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Recorded Investment [Line Items]
Acquired With Deteriorated Credit Quality					3,518
Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance at beginning of period			316	192
Loans charged-off			(201)	(376)
Recoveries			52	49
Provision for loan losses			110	416
Balance at end of period	277	281	277	281
Collectively evaluated for impairment					277		281
Total ending allowance balance	277	281	316	192	277	316	281
Individually evaluated for impairment							38
Collectively evaluated for impairment					18,172		20,702
Acquired With Deteriorated Credit Quality							33
Total ending loans balance					18,172	19,631	20,773
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance					961,085	882,071
Commercial Real Estate [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance at beginning of period			12,507	12,716
Loans charged-off			(2,029)	(3)
Recoveries			216	234
Provision for loan losses			1,632	(2,234)
Balance at end of period	12,326	10,713	12,326	10,713
Individually evaluated for impairment							281
Collectively evaluated for impairment					12,326		9,961
Acquired with deteriorated credit quality				471
Total ending allowance balance	12,326	10,713	12,507	12,716	12,326	12,507	10,713
Individually evaluated for impairment					7,011		13,192
Collectively evaluated for impairment					952,524		844,739
Acquired With Deteriorated Credit Quality							4,356
Total ending loans balance					961,085		862,287
Commercial Real Estate [Member] | Commercial Real Estate Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Recorded Investment [Line Items]
Acquired With Deteriorated Credit Quality					1,550
One-To-Four Family Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance					241,140	199,123
One-To-Four Family Residential [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance at beginning of period			1,163	700
Loans charged-off			(3)	(83)
Recoveries			75	54
Provision for loan losses			136	362
Balance at end of period	1,371	1,033	1,371	1,033
Individually evaluated for impairment							116
Collectively evaluated for impairment					1,371		917
Total ending allowance balance	1,371	1,033	1,163	700	1,371	1,163	1,033
Individually evaluated for impairment					1,871		2,187
Collectively evaluated for impairment					238,120		180,213
Acquired With Deteriorated Credit Quality							1,293
Total ending loans balance					241,140	199,123	183,693
One-To-Four Family Residential [Member] | Residential Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Recorded Investment [Line Items]
Acquired With Deteriorated Credit Quality					1,149
Real Estate Mortgage [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance					961,085	882,071
Construction Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance					182,620	199,113
Construction Loans [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance					14,523	20,946
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance					554,094	556,248
Commercial [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance at beginning of period			10,058	9,965
Loans charged-off			(2,165)	(3,801)
Recoveries			317	311
Provision for loan losses			2,193	5,194
Balance at end of period	10,403	11,669	10,403	11,669
Individually evaluated for impairment					2,461		2,915
Collectively evaluated for impairment					7,942		8,754
Total ending allowance balance	10,403	11,669	10,058	9,965	10,403	10,058	11,669
Individually evaluated for impairment					12,408		13,880
Collectively evaluated for impairment					541,496		544,221
Acquired With Deteriorated Credit Quality							371
Total ending loans balance					554,094	556,248	558,472
Commercial [Member] | Commercial Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Recorded Investment [Line Items]
Acquired With Deteriorated Credit Quality					190
Real Estate Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance					197,143	220,059
Real Estate Construction [Member] | Real Estate Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Balance at beginning of period			3,502	2,533
Recoveries			5
Provision for loan losses			(566)	647
Balance at end of period	2,941	3,180	2,941	3,180
Collectively evaluated for impairment					2,941		3,140
Acquired with deteriorated credit quality				40
Total ending allowance balance	$ 2,941	$ 3,180	$ 3,502	$ 2,533	2,941	$ 3,502	3,180
Individually evaluated for impairment							754
Collectively evaluated for impairment					196,514		194,646
Acquired With Deteriorated Credit Quality							752
Total ending loans balance					197,143		$ 196,152
Real Estate Construction [Member] | Real Estate Construction [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Recorded Investment [Line Items]
Acquired With Deteriorated Credit Quality					$ 629

XML

Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Fair Value Measurements [Abstract]
Impaired loans carrying amount	$ 15.9	$ 19.7
Impaired loans measured at fair value	12.4	13.2
Impaired loans life to date impairment	3.5	6.5
Servicing Asset at Fair Value, Amount	4.4	4.2
Servicing Asset at Amortized Cost	$ 3.7	$ 3.5

XML

Fair Value Measurements (Summary Of Financial Assets Measured At Fair Value On A Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 424,031	$ 426,218
Derivative asset	2,698	1,235
Derivative liability	(2,698)	(1,235)
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	2,698	1,235
Total Assets at Fair Value on a recurring basis	423,661	425,563
Fair Value, Measurements, Recurring [Member] | Federal Agency Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	64,792	69,694
Fair Value, Measurements, Recurring [Member] | Obligations Of State And Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	45,856	46,375
Fair Value, Measurements, Recurring [Member] | Residential Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	284,475	280,642
Fair Value, Measurements, Recurring [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	8,497	9,177
Fair Value, Measurements, Recurring [Member] | Corporate Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	20,411	20,330
Fair Value, Measurements, Recurring [Member] | Derivative Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	(3,068)	(1,890)
Fair Value, Measurements, Recurring [Member] | Level 1 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets at Fair Value on a recurring basis	231	213
Fair Value, Measurements, Recurring [Member] | Level 1 Inputs [Member] | Corporate Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	231	213
Fair Value, Measurements, Recurring [Member] | Level 2 Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	2,698	1,235
Total Assets at Fair Value on a recurring basis	423,430	425,350
Fair Value, Measurements, Recurring [Member] | Level 2 Inputs [Member] | Federal Agency Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	64,792	69,694
Fair Value, Measurements, Recurring [Member] | Level 2 Inputs [Member] | Obligations Of State And Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	45,856	46,375
Fair Value, Measurements, Recurring [Member] | Level 2 Inputs [Member] | Residential Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	284,475	280,642
Fair Value, Measurements, Recurring [Member] | Level 2 Inputs [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	8,497	9,177
Fair Value, Measurements, Recurring [Member] | Level 2 Inputs [Member] | Corporate Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	20,180	20,117
Fair Value, Measurements, Recurring [Member] | Level 2 Inputs [Member] | Derivative Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ (3,068)	$ (1,890)

XML

Fair Value Measurements (Asset Measured At Fair Value On A Nonrecurring Basis) (Details) - Fair Value Measurements Nonrecurring [Member] - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Noncovered impaired loans at fair value:
Assets fair value, Total	$ 18,444	$ 17,596
Commercial Real Estate [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total		6,053
One-To-Four Family Residential [Member]
Noncovered impaired loans at fair value:
Loans held for sale	6,036	4,386
Assets fair value, Total		1,593
Real Estate Construction [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total		207
Commercial [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total	12,408	5,357
Level 2 Inputs [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total	6,036	4,386
Level 2 Inputs [Member] | One-To-Four Family Residential [Member]
Noncovered impaired loans at fair value:
Loans held for sale	6,036	4,386
Level 3 Inputs [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total	12,408	13,210
Level 3 Inputs [Member] | Commercial Real Estate [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total		6,053
Level 3 Inputs [Member] | One-To-Four Family Residential [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total		1,593
Level 3 Inputs [Member] | Real Estate Construction [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total		207
Level 3 Inputs [Member] | Commercial [Member]
Noncovered impaired loans at fair value:
Assets fair value, Total	$ 12,408	$ 5,357

XML

Fair Value Measurements (Carrying Values And Estimated Fair Values Of Financial Instruments Segregated By The Level Of The Valuation Inputs) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financial Assets:
Held to maturity securities, fair value	$ 10,632	$ 10,677
Accrued interest receivable	6,328	6,194
Servicing Asset at Amortized Cost	3,700	3,500
Mortgage loan servicing rights	4,400	4,200
Bank owned life insurance	28,450	28,575
Derivative Assets	2,698	1,235
Financial Liabilities:
Accrued interest payable	1,259	1,132
Derivative instrument	2,698	1,235
Other borrowings	203,705	183,814
Carrying Values [Member] | Level 2 Inputs [Member]
Financial Assets:
Cash and cash equivalents	79,839	75,650
Held to maturity securities, fair value	10,382	10,443
Accrued interest receivable	6,328	6,194
Mortgage loan servicing rights	3,666	3,491
Bank owned life insurance	28,450	28,575
Investments included in other assets	17,079	14,627
Financial Liabilities:
Deposits	2,013,834	1,946,018
Accrued interest payable	1,259	1,132
Other liabilities	9,130	9,516
Other borrowings	203,705	183,814
Subordinated debentures	46,393	46,393
Carrying Values [Member] | Level 3 Inputs [Member]
Financial Assets:
Total loans, net of allowance	1,944,316	1,849,586
Fair Values [Member] | Level 2 Inputs [Member]
Financial Assets:
Cash and cash equivalents	79,839	75,650
Held to maturity securities, fair value	10,632	10,677
Accrued interest receivable	6,328	6,194
Mortgage loan servicing rights	4,404	4,159
Bank owned life insurance	28,450	28,575
Investments included in other assets	17,079	14,627
Financial Liabilities:
Deposits	1,967,298	1,897,927
Accrued interest payable	1,259	1,132
Other liabilities	9,130	9,516
Other borrowings	203,793	183,926
Subordinated debentures	46,393	46,393
Fair Values [Member] | Level 3 Inputs [Member]
Financial Assets:
Total loans, net of allowance	$ 1,934,986	$ 1,839,960

XML

Derivative Instruments (Details) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2017 USD ($) item	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Derivative [Line Items]
Interest rate swap agreement Notional amount	$ 51,600		$ 34,700
Interest payment period	7 years
Fixed interest rate	6.15%
Rate received by Southwest	4.01%
Pretax loss related to derivative contracts	$ 400		700
Gain or loss due to changes in the fair value of the derivative hedging instrument	(200)	$ (100)
Net cash flows as a result of the interest rate swap agreement	300	$ 300
The fair value of cash and securities posted as collateral	500		700
Fair Value Net of Cash Collateral	1,500
Interest Rate Swap on Trust Preferred Securities [Member]
Derivative [Line Items]
Interest rate swap agreement Notional amount	$ 25,000
Variable interest rate	2.85%
Customer Risk Management Swaps [Member]
Derivative [Line Items]
Number of customer interest rate swap agreements | item	17
Interest rate swap agreement Notional amount	$ 180,600
Non-Hedge Derivative Asset [Member]
Derivative [Line Items]
Derivative Asset, Notional Amount	180,631		123,953
Non-hedge derivative asset, fair value	2,698		1,235
Non-Hedge Derivative Liability [Member]
Derivative [Line Items]
Derivative Liability, Notional Amount	180,631		123,953
Non-hedge derivative liability, fair value	$ 2,698		$ 1,235

XML

Taxes On Income (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Taxes On Income [Abstract]
Net deferred tax assets	$ 11.9	$ 13.2

XML

Shareholders' Equity (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended	29 Months Ended
	Jun. 30, 2017	Dec. 31, 2016	Dec. 31, 2016	Feb. 23, 2017
Shareholders' Equity [Abstract]
Stock Repurchase Program Authorized Percent Of Common Stock				5.00%
Stock Repurchase Program, Number of Shares Authorized to be Repurchased				921,000
Treasury Stock, Shares, Acquired	0	1,398,026	2,519,584
Treasury Stock, Amount, Acquired		$ 22.1	$ 40.8

XML

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator:
Net income	$ 5,818	$ 5,412	$ 11,097	$ 7,281
Earnings allocated to participating securities	(104)	(110)	(193)	(131)
Numerator for earnings per common share	$ 5,714	$ 5,302	$ 10,904	$ 7,150
Denominator:
Denominator for basic earnings per common share	18,354,631	18,574,300	18,362,549	18,916,686
Effect of dilutive securities:
Stock compensation	138,108	102,261	136,485	18,918
Denominator for diluted earnings per common share	18,492,739	18,676,561	18,499,034	18,935,604
Earnings per common share:
Basic	$ 0.31	$ 0.29	$ 0.59	$ 0.38
Diluted	$ 0.31	$ 0.28	$ 0.59	$ 0.38

XML

Operating Segments (Narrative) (Details)	6 Months Ended
	Jun. 30, 2017 segment
Operating Segments [Abstract]
Number of principal segments	4

XML

Operating Segments (Financial Results By Operating Segment) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Financial results by operating segment
Net interest income (loss)	$ 21,370	$ 19,695	$ 41,533	$ 39,535
Provision for loan losses	1,729	10	3,505	4,385
Noninterest income	4,521	3,871	9,401	7,286
Noninterest expenses	15,155	15,268	30,458	31,264
Income before taxes	9,007	8,288	16,971	11,172
Taxes on income (loss)	3,189	2,876	5,874	3,891
Net income	5,818	5,412	11,097	7,281
Externally generated revenue from investing activities			2,300	1,900
Internally generated loss from fund management			900	1,000
Total loans at period end	1,971,634	1,821,377	1,971,634	1,821,377
Total assets at period end	2,572,935	2,402,262	2,572,935	2,402,262
Total deposits at period end	2,013,834	1,902,865	2,013,834	1,902,865
Oklahoma Banking [Member]
Financial results by operating segment
Net interest income (loss)	13,349	12,339	26,143	25,277
Provision for loan losses	1,424	(210)	2,846	50
Noninterest income	3,146	2,657	6,406	4,852
Noninterest expenses	9,735	9,879	19,432	19,839
Income before taxes	5,336	5,327	10,271	10,240
Taxes on income (loss)	1,892	1,837	3,555	3,566
Net income	3,444	3,490	6,716	6,674
Total loans at period end	1,193,108	1,085,986	1,193,108	1,085,986
Total assets at period end	1,228,506	1,130,161	1,228,506	1,130,161
Total deposits at period end	1,369,810	1,322,430	1,369,810	1,322,430
Texas Banking [Member]
Financial results by operating segment
Net interest income (loss)	6,197	5,640	12,285	11,206
Provision for loan losses	354	330	845	2,245
Noninterest income	466	290	922	592
Noninterest expenses	3,219	3,256	6,416	6,987
Income before taxes	3,090	2,344	5,946	2,566
Taxes on income (loss)	1,095	816	2,058	894
Net income	1,995	1,528	3,888	1,672
Total loans at period end	636,709	577,333	636,709	577,333
Total assets at period end	632,773	573,199	632,773	573,199
Total deposits at period end	196,390	190,475	196,390	190,475
Kansas Banking [Member]
Financial results by operating segment
Net interest income (loss)	1,614	1,638	3,172	3,466
Provision for loan losses	(52)	(113)	(186)	2,086
Noninterest income	290	300	592	618
Noninterest expenses	1,314	1,347	2,721	2,764
Income before taxes	642	704	1,229	(766)
Taxes on income (loss)	227	250	425	(267)
Net income	415	454	804	(499)
Total loans at period end	141,817	158,058	141,817	158,058
Total assets at period end	140,702	157,054	140,702	157,054
Total deposits at period end	156,383	135,585	156,383	135,585
Other Operations [Member]
Financial results by operating segment
Net interest income (loss)	210	78	(67)	(414)
Provision for loan losses	3	3		4
Noninterest income	619	624	1,481	1,224
Noninterest expenses	887	786	1,889	1,674
Income before taxes	(61)	(87)	(475)	(868)
Taxes on income (loss)	(25)	(27)	(164)	(302)
Net income	(36)	(60)	(311)	(566)
Total assets at period end	570,954	541,848	570,954	541,848
Total deposits at period end	$ 291,251	$ 254,375	$ 291,251	$ 254,375

XML

Commitments And Contingencies (Narrative) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2017 USD ($) agreement	Dec. 31, 2016 USD ($) agreement
Loss Contingency, Information about Litigation Matters [Abstract]
Loan Balance of Swap Commitment	$ 14.2
Loss Contingency, Lawsuit Filing Date	March 18, 2011
Derivative Asset, Number of Instruments Held | agreement	8	7
Interest rate swap agreement Notional amount	$ 51.6	$ 34.7
Loan commitments	429.3	429.4
Letters of credit	$ 6.1	$ 7.2