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SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the Year Ended December 31, 2006
 Commission
File Number 0-23064
 SOUTHWEST BANCORP, INC.
  Oklahoma
    
    73-1136584(State or other jurisdiction ofincorporation or organization)
    
    (I.R.S. Employer Identification No.)608 South Main Street, Stillwater, Oklahoma
(Address of principal executive office)
    
    74074
(Zip Code)
 : (405) 372-2230
  Title of Each Class
    
    Name of Each Exchange on which RegisteredCommon Stock, par value $1.00 per share
    
    The NASDAQ Stock Market
 None
 o þ
 o þ
 þ o
 o
  Large Accelerated filer    o
    
    Accelerated filer    þ
    
    Non-accelerated filer    o
 o þ
    Part III:
    
    Portions of the definitive proxy statement for the Annual Meeting of Shareholders to be held on April 26, 2007 (the Proxy
Statement).




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SOUTHWEST BANCORP, INC.
 Index
 Forward-Looking Statements
    
    
    iiForm 10-K Cross Reference Sheet
    
    
    iiSouthwest Bancorp, Inc.
    
    
    ivAbout This Report
    
    
    vFive Year Summary of Selected Financial Data
    
    
    1Securities Listing, Prices, and Dividends
    
    
    2Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    5Controls and Procedures
    
    
    24Reports of Independent Registered Public Accounting Firm
    
    
    25Consolidated Financial Statements
    
    
    27Notes to the Consolidated Financial Statements
    
    
    32Other Material Required by Form 10-K
    
    
    63Description of Business
    
    
    63Board of Directors
    
    
    75Executive Officers
    
    
    76Risk Factors
    
    
    81Properties
    
    
    87Exhibits, Financial Statement Schedules
    
    
    89Signatures
    
    
    91EX-10.15: AUDIT COMMITTEE FINANCIAL EXPERT AGREEMENTEX-21: SUBSIDIARIESEX-23: CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRMEX-24: POWER OF ATTORNEYEX-31.A: CERTIFICATIONSEX-31.B: CERTIFICATIONSEX-32.A: CERTIFICATIONSEX-32.B: CERTIFICATIONS
 i




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
  SOUTHWEST BANCORP, INC.
 
 Form 10-K Cross Reference Sheet of Material Incorporated by Reference
  Item of Form 10-K
    
    LocationPart I.Item 1.
    
    Business.
    
    Forward-Looking Statements: on page ii,
Southwest Bancorp, Inc. and About this Report
on page iv, and Business on pages 63 through 80.Item 1A.
    
    Risk Factors
    
    Risk Factors on pages 81 through 85Item 1B.
    
    Unresolved Staff Comments
    
    Not applicable. The registrant did not receive any
comments from the staff of the Securities and
Exchange Commission regarding its periodic or
current reports within the last 180 days of 2006.Item 2.
    
    Properties
    
    Properties on page 87.Item 3.
    
    Legal Proceedings
    
    Note 15 Commitments and Contingencies on page 55.Item 4.
    
    Submission of Matters to
a Vote of Security
Holders
    
    Not applicable. No matter was submitted to a vote
of security holders during the fourth quarter of
2006.PART IIItem. 5.
    
    Market for Registrants
Common Equity, Related
Stockholder Matters, and
Issuer Purchases of
Equity Securities
    
    Recent Stock Prices, Dividends, and Equity
Compensation Plan Information on pages 2 and 4.Item 6.
    
    Selected Financial Data
    
    Five Year Summary of Selected Financial Data on
pages 1 and 2.Item 7.
    
    Managements Discussion
and Analysis of
Financial Condition and
Results of Operations
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations on pages 5
through 24.Item 7A.
    
    Quantitative and Qualitative
    
    The section titled Asset/Liability Management Quantitative and
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Item of Form 10-K
    
    LocationDisclosures
about Market Risk
    
    Qualitative Disclosures about
Market Risk on pages 19 thru 21.Item 8.
    
    Financial Statements and
Supplementary Data
    
    Pages 25 through 62Item 9.
    
    Changes in and
Disagreements with
auditors on Accounting
and Financial
Disclosures
    
    Not applicable. During the past two years or any
subsequent period there has been no change in or
reportable disagreement with the independent
registered public accounting firm for Southwest or
any of its subsidiaries.Item 9A.
    
    Controls and Procedures
    
    Controls and Procedures on page 24.Item 9B.
    
    Other Information
    
    Not applicable. The registrant reported all items
required to be reported in a Form 8-K during the
fourth quarter of 2006.Part IIIItem 10.
    
    Directors, Executive
Officers and
Corporate Governance
    
    The material labeled Election of Directors on
pages 3 through 5, Board Meetings and Committees
on pages 5 through 7, Director Independence on
pages 8 through 9, Section 16(a) Beneficial
Ownership Reporting Compliance on page 30, Code
of Ethics on page 32, Shareholder Proposals and
Communications on page 32, and Report of the
Audit Committee on page 32 of the Proxy Statement
is incorporated by reference in this Report.Item 11.
    
    Executive Compensation
    
    The material labeled Director Compensation on
page 10, Executive Compensation on pages 13
through 18, Compensation Discussion and Analysis
on pages 19 through 23, and Compensation
Committee Report on page 23 of the Proxy
Statement is incorporated by reference in this
Report.Item 12.
    
    Security Ownership of
Certain Beneficial
Owners and Management
and Related Stockholder
Matters
    
    The material labeled Common Stock Owned by
Directors and Executive Officers on pages 11 and
12 and Ownership of More than 5% of Southwests
Common Stock on page 12 of the Proxy Statement is
incorporated by reference in this Report.
Information regarding securities authorized for
issuance under equity compensation plans is
included under Equity Compensation Plan
Information on page 15.Item 13.
    
    Certain Relationships
and Related Transactions
and Director
Independence
    
    The material labeled Director Independence on
page 8 and Certain Transactions on page 30 of
the Proxy Statement is incorporated by reference
in this Report.Item 14
    
    Principal Accountant
Fees and Services
    
    The material labeled Relationship with
Independent Public Accountants on page 31 of the
Proxy Statement incorporated by reference in this
Report.Part IVItem 15.
    
    Exhibits, Financial
Statement Schedules
 iii




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Southwest Bancorp, Inc.
 SNB
DirectBanker
        iv




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About This Report
  The SEC has not approved or disapproved this Report or passed upon its accuracy or adequacy.
 v




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FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
  For the Year Ended December 31,(Dollars in thousands, except per share data)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Operations DataInterest income
    
    $
    169,760
    
    
    $
    137,344
    
    
    $
    104,723
    
    
    $
    84,079
    
    
    $
    76,495Interest expense
    
    
    76,922
    
    
    
    52,238
    
    
    
    32,246
    
    
    
    28,611
    
    
    
    30,678Net interest income
    
    
    92,838
    
    
    
    85,106
    
    
    
    72,477
    
    
    
    55,468
    
    
    
    45,817Provision for loan losses
    
    
    11,565
    
    
    
    15,785
    
    
    
    12,868
    
    
    
    8,408
    
    
    
    5,233Gain on sales of loans and securities, net
    
    
    3,689
    
    
    
    4,915
    
    
    
    3,185
    
    
    
    4,139
    
    
    
    3,498Other income
    
    
    13,087
    
    
    
    12,491
    
    
    
    10,900
    
    
    
    10,361
    
    
    
    9,220Other expenses
    
    
    56,643
    
    
    
    51,873
    
    
    
    44,526
    
    
    
    38,562
    
    
    
    33,529Income before taxes
    
    
    41,406
    
    
    
    34,854
    
    
    
    29,168
    
    
    
    22,998
    
    
    
    19,773Taxes on income
    
    
    15,409
    
    
    
    13,840
    
    
    
    10,539
    
    
    
    8,106
    
    
    
    6,354Net income
    
    $
    25,997
    
    
    $
    21,014
    
    
    $
    18,629
    
    
    $
    14,892
    
    
    $
    13,419Dividends DeclaredCommon stock
    
    $
    4,681
    
    
    $
    4,035
    
    
    $
    3,380
    
    
    $
    2,959
    
    
    $
    2,533Ratio of total dividends declared to net income
    
    
    18.00
    %
    
    
    19.20
    %
    
    
    18.14
    %
    
    
    19.87
    %
    
    
    18.87
    %Per Share Data (1)Basic earnings per common share
    
    $
    1.84
    
    
    $
    1.60
    
    
    $
    1.54
    
    
    $
    1.26
    
    
    $
    1.17Diluted earnings per common share
    
    
    1.79
    
    
    
    1.55
    
    
    
    1.48
    
    
    
    1.22
    
    
    
    1.11Common stock cash dividends
    
    
    0.33
    
    
    
    0.30
    
    
    
    0.28
    
    
    
    0.25
    
    
    
    0.22Book value per common share (2)
    
    
    13.87
    
    
    
    12.16
    
    
    
    10.41
    
    
    
    9.20
    
    
    
    8.35Weighted average common shares outstanding:Basic
    
    
    14,166,634
    
    
    
    13,165,642
    
    
    
    12,060,842
    
    
    
    11,798,810
    
    
    
    11,490,166Diluted
    
    
    14,492,554
    
    
    
    13,563,904
    
    
    
    12,548,059
    
    
    
    12,159,620
    
    
    
    12,052,118Financial Condition Data (2)Investment securities
    
    $
    269,849
    
    
    $
    268,093
    
    
    $
    220,051
    
    
    $
    204,266
    
    
    $
    188,689Total loans (3)
    
    
    1,791,190
    
    
    
    1,735,880
    
    
    
    1,623,875
    
    
    
    1,308,836
    
    
    
    1,101,112Interest-earning assets
    
    
    2,078,710
    
    
    
    2,006,578
    
    
    
    1,845,401
    
    
    
    1,514,314
    
    
    
    1,292,232Total assets
    
    
    2,170,628
    
    
    
    2,099,639
    
    
    
    1,913,787
    
    
    
    1,581,564
    
    
    
    1,351,279Interest-bearing deposits
    
    
    1,511,196
    
    
    
    1,433,265
    
    
    
    1,316,320
    
    
    
    1,036,793
    
    
    
    885,812Total deposits
    
    
    1,765,611
    
    
    
    1,657,820
    
    
    
    1,500,058
    
    
    
    1,204,125
    
    
    
    1,021,757Other borrowings
    
    
    138,094
    
    
    
    204,508
    
    
    
    200,065
    
    
    
    183,850
    
    
    
    199,282Subordinated debentures
    
    
    46,393
    
    
    
    46,393
    
    
    
    72,180
    
    
    
    72,180
    
    
    
    25,787Total shareholders equity (4)
    
    
    197,510
    
    
    
    170,444
    
    
    
    125,984
    
    
    
    109,935
    
    
    
    96,372Mortgage servicing portfolio
    
    
    135,904
    
    
    
    133,470
    
    
    
    125,353
    
    
    
    124,366
    
    
    
    107,733Selected RatiosReturn on average assets
    
    
    1.18
    %
    
    
    1.01
    %
    
    
    1.03
    %
    
    
    0.99
    %
    
    
    1.05
    %Return on average equity
    
    
    13.99
    
    
    
    13.78
    
    
    
    15.80
    
    
    
    14.59
    
    
    
    14.94Net interest margin
    
    
    4.41
    
    
    
    4.29
    
    
    
    4.16
    
    
    
    3.80
    
    
    
    3.75Efficiency ratio (5)
    
    
    51.67
    
    
    
    50.60
    
    
    
    51.44
    
    
    
    55.11
    
    
    
    57.28Average assets per employee (6)
    
    $
    5,117
    
    
    $
    5,448
    
    
    $
    5,098
    
    
    $
    4,513
    
    
    $
    3,938
 1




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SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
 At December 31,(Dollars in thousands, except per share data)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Asset Quality RatiosAllowance for loan losses to total loans (2)
    
    
    1.52
    %
    
    
    1.37
    %
    
    
    1.17
    %
    
    
    1.15
    %
    
    
    1.01
    %Nonperforming loans to total loans (2)(7)
    
    
    1.64
    
    
    
    1.36
    
    
    
    1.43
    
    
    
    1.22
    
    
    
    1.17Allowance for loan losses to nonperforming loans (2)(7)
    
    
    92.97
    
    
    
    100.96
    
    
    
    82.00
    
    
    
    94.31
    
    
    
    86.49Nonperforming assets to total loans and other real estate owned (2)(8)
    
    
    1.74
    
    
    
    1.76
    
    
    
    1.72
    
    
    
    1.34
    
    
    
    1.24Net loan charge-offs to average total loans
    
    
    0.44
    
    
    
    0.63
    
    
    
    0.58
    
    
    
    0.36
    
    
    
    0.50Capital RatiosAverage total shareholders equity to average assets
    
    
    8.47
    
    
    
    7.34
    
    
    
    6.51
    
    
    
    6.75
    
    
    
    7.04Tier I capital to risk-weighted assets (2)
    
    
    12.25
    
    
    
    12.95
    
    
    
    10.88
    
    
    
    11.13
    
    
    
    10.38Total capital to risk-weighted assets (2)
    
    
    13.50
    
    
    
    14.21
    
    
    
    13.92
    
    
    
    14.90
    
    
    
    11.42Leverage ratio (2)
    
    
    10.91
    
    
    
    10.24
    
    
    
    8.61
    
    
    
    9.32
    
    
    
    8.99
 
 (1)
    
    Except as otherwise noted, all share and per share information in this report has
been restated to the two-for-one stock split effected in the form of a stock dividend
paid August 29, 2003.(2)
    
    At period end.(3)
    
    Net of unearned discounts but before deduction of allowance for loan losses.(4)
    
    Reflects the repurchases of common shares in 2002 and 2005. Please see Capital
Resources on page 17 and Note 9 to the Consolidated Financial Statements.(5)
    
    The efficiency ratio = other expenses/(net interest income + total other income) as
shown on the Consolidated Statements of Operations.(6)
    
    Ratio = year-to-date average assets divided by the number of full-time equivalent
employees at year-end.(7)
    
    Nonperforming loans consist of nonaccrual loans, loans contractually past due 90 days
or more and loans with restructured terms.(8)
    
    Nonperforming assets consist of nonperforming loans and foreclosed assets. RECENT STOCK PRICES, DIVIDENDS, AND EQUITY COMPENSATION PLAN INFORMATION
  Transfer Agent and Registrar
 
 2




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2006
    
    2005Dividend
    
    
    
    
    
    
    
    
    
    DividendHigh
    
    Low
    
    Declared
    
    High
    
    Low
    
    DeclaredFor the Quarter Ending:March 31
    
    $
    22.96
    
    
    $
    19.81
    
    
    $
    0.0825
    
    
    $
    25.45
    
    
    $
    17.11
    
    
    $
    0.075June 30
    
    
    25.76
    
    
    
    21.27
    
    
    
    0.0825
    
    
    
    20.82
    
    
    
    16.78
    
    
    
    0.075September 30
    
    
    27.01
    
    
    
    24.16
    
    
    
    0.0825
    
    
    
    23.80
    
    
    
    20.01
    
    
    
    0.075December 31
    
    
    28.67
    
    
    
    24.76
    
    
    
    0.0825
    
    
    
    24.25
    
    
    
    18.36
    
    
    
    0.075
 3




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12/31/01
    
    
    12/31/02
    
    
    12/31/03
    
    
    12/31/04
    
    
    12/31/05
    
    
    12/31/06Southwest
    
    
    $
    100
    
    
    
    $
    148
    
    
    
    $
    210
    
    
    
    $
    294
    
    
    
    $
    242
    
    
    
    $
    342NASDAQ Bank Index
    
    
    
    100
    
    
    
    
    102
    
    
    
    
    132
    
    
    
    
    151
    
    
    
    
    147
    
    
    
    
    165NASDAQ Stock Market Index
(U.S.).
    
    
    
    100
    
    
    
    
    69
    
    
    
    
    103
    
    
    
    
    112
    
    
    
    
    115
    
    
    
    
    126
  Equity Compensation Plan Information
 Number of securitiesremaining available forPlan category
    
    Number of securities to be
    
    Weighted average exercise
    
    future issuance underissued upon exercise of
    
    price of outstanding
    
    equity compensation plansoutstanding options,
    
    options, warrants and
    
    excluding securitieswarrants and rights
    
    rights
    
    reflected in column (a)(a)
    
    (b)
    
    (c)Equity
compensation plans approved by security holders
    
    860,010
    
    $13.50
    
    348,001Equity
compensation plans  not approved by security  holders
    
    0
    
    0
    
    0Total
    
    860,010
    
    $13.50
    
    348,001
 4




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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 Overview
  
    
    Net income for 2006 was $26.0 million, up from $21.0 million in 2005 and $18.6 million
in 2004.
    
    Diluted earnings per common share increased to $1.79 in 2006, compared to $1.55 in 2005,
and $1.48 in 2004.
    
    Total assets at year-end 2006 increased 3%, ending the year at $2.17 billion compared to
$2.10 billion at year-end 2005, and $1.91 billion at year-end 2004.
    
    Portfolio loans at year-end 2006 increased by $250 million, or 19% to $1.60 billion at
December 31, 2006, compared to $1.35 billion at December 31, 2005, and $1.27 billion at
December 31, 2004.
    
    Total loans grew to $1.79 billion at December 31, 2006, compared to $1.74 billion at
December 31, 2005, and $1.62 billion at December 31, 2004.
    
    Total shareholders equity at year-end 2006 had increased 16% to $197.5 million compared
to $170.4 million for 2005 and $126.0 million for 2004.
 Results of Operations
     5




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Summary of Annual Changes in Selected Consolidated Financial Data
  2006 Change
    
    
    
    
    
    2005 Change
    
    
    
    
    
    2004 Change(Dollars in thousands, except per share data)
    
    2006
    
    From 2005
    
    2005
    
    From 2004
    
    2004
    
    From 2003Operations DataInterest income
    
    $
    169,760
    
    
    $
    32,416
    
    
    $
    137,344
    
    
    $
    32,621
    
    
    $
    104,723
    
    
    $
    20,644Interest expense
    
    
    76,922
    
    
    
    24,684
    
    
    
    52,238
    
    
    
    19,992
    
    
    
    32,246
    
    
    
    3,635Net interest income
    
    
    92,838
    
    
    
    7,732
    
    
    
    85,106
    
    
    
    12,629
    
    
    
    72,477
    
    
    
    17,009Provision for loan losses
    
    
    11,565
    
    
    
    (4,220
    )
    
    
    15,785
    
    
    
    2,917
    
    
    
    12,868
    
    
    
    4,460Gain on sales of loans and securities
    
    
    3,689
    
    
    
    (1,226
    )
    
    
    4,915
    
    
    
    1,730
    
    
    
    3,185
    
    
    
    (954
    )Other income
    
    
    13,087
    
    
    
    596
    
    
    
    12,491
    
    
    
    1,591
    
    
    
    10,900
    
    
    
    539Other expenses
    
    
    56,643
    
    
    
    4,770
    
    
    
    51,873
    
    
    
    7,347
    
    
    
    44,526
    
    
    
    5,964Income before taxes
    
    
    41,406
    
    
    
    6,552
    
    
    
    34,854
    
    
    
    5,686
    
    
    
    29,168
    
    
    
    6,170Taxes on income
    
    
    15,409
    
    
    
    1,569
    
    
    
    13,840
    
    
    
    3,301
    
    
    
    10,539
    
    
    
    2,433Net income
    
    $
    25,997
    
    
    $
    4,983
    
    
    $
    21,014
    
    
    $
    2,385
    
    
    $
    18,629
    
    
    $
    3,737Per Share DataBasic earnings per common share
    
    $
    1.84
    
    
    $
    0.24
    
    
    $
    1.60
    
    
    $
    0.06
    
    
    $
    1.54
    
    
    $
    0.28Diluted earnings per common share
    
    
    1.79
    
    
    
    0.24
    
    
    
    1.55
    
    
    
    0.07
    
    
    
    1.48
    
    
    
    0.26Financial Condition Data  AveragesInvestment securities
    
    $
    270,352
    
    
    $
    25,266
    
    
    $
    245,086
    
    
    $
    30,098
    
    
    $
    214,988
    
    
    $
    23,712Total loans
    
    
    1,830,996
    
    
    
    96,495
    
    
    
    1,734,501
    
    
    
    206,566
    
    
    
    1,527,935
    
    
    
    258,719Interest-earning assets
    
    
    2,104,690
    
    
    
    121,353
    
    
    
    1,983,337
    
    
    
    239,351
    
    
    
    1,743,986
    
    
    
    282,402Total assets
    
    
    2,195,095
    
    
    
    119,314
    
    
    
    2,075,781
    
    
    
    265,857
    
    
    
    1,809,924
    
    
    
    298,185Interest-bearing deposits
    
    
    1,498,133
    
    
    
    65,120
    
    
    
    1,433,013
    
    
    
    252,043
    
    
    
    1,180,970
    
    
    
    159,655Total deposits
    
    
    1,727,813
    
    
    
    89,302
    
    
    
    1,638,511
    
    
    
    283,175
    
    
    
    1,355,336
    
    
    
    194,960Other borrowings
    
    
    214,677
    
    
    
    5,574
    
    
    
    209,103
    
    
    
    (43,028
    )
    
    
    252,131
    
    
    
    51,658Subordinated debentures
    
    
    46,393
    
    
    
    (12,293
    )
    
    
    58,686
    
    
    
    (13,494
    )
    
    
    72,180
    
    
    
    30,138Total shareholders equity
    
    
    185,817
    
    
    
    33,363
    
    
    
    152,454
    
    
    
    34,542
    
    
    
    117,912
    
    
    
    15,866Selected RatiosReturn on average assets
    
    
    1.18
    %
    
    
    0.17
    %
    
    
    1.01
    %
    
    
    (0.02
    )%
    
    
    1.03
    %
    
    
    0.04
    %Return on average equity
    
    
    13.99
    
    
    
    0.21
    
    
    
    13.78
    
    
    
    (2.02
    )
    
    
    15.80
    
    
    
    1.21Net interest margin
    
    
    4.41
    
    
    
    0.12
    
    
    
    4.29
    
    
    
    0.13
    
    
    
    4.16
    
    
    
    0.36Asset Quality RatiosAllowance for loan losses to total loans
    
    
    1.52
    %
    
    
    0.15
    %
    
    
    1.37
    %
    
    
    0.20
    %
    
    
    1.17
    %
    
    
    0.02
    %Nonperforming loans to total loans
    
    
    1.64
    
    
    
    0.28
    
    
    
    1.36
    
    
    
    (0.07
    )
    
    
    1.43
    
    
    
    0.21Allowance for loan losses to nonperforming loans
    
    
    92.97
    
    
    
    (7.99
    )
    
    
    100.96
    
    
    
    18.96
    
    
    
    82.00
    
    
    
    (12.31
    )Nonperforming assets to total loans and
other real estate
    
    
    1.74
    
    
    
    (0.02
    )
    
    
    1.76
    
    
    
    0.04
    
    
    
    1.72
    
    
    
    0.38Net loan charge-offs to average total loans
    
    
    0.44
    
    
    
    (0.19
    )
    
    
    0.63
    
    
    
    0.05
    
    
    
    0.58
    
    
    
    0.22
 6




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##### Table of Contents



Net Interest Income
      7




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##### Table of Contents



Average Balances, Yields & Rates
 For the Year Ended December 31,(Dollars in thousands)
    
    
    
    
    
    2006
    
    
    
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    
    
    
    2004Average
    
    
    
    
    
    Yield/
    
    Average
    
    
    
    
    
    Yield/
    
    Average
    
    
    
    
    
    Yield/Balance
    
    Interest
    
    Rate(1)
    
    Balance
    
    Interest
    
    Rate(1)
    
    Balance
    
    Interest
    
    Rate(1)AssetsTotal loans and leases
    
    $
    1,830,996
    
    
    $
    158,873
    
    
    
    8.68
    %
    
    $
    1,734,501
    
    
    $
    128,011
    
    
    
    7.38
    %
    
    $
    1,527,935
    
    
    $
    96,832
    
    
    
    6.34
    %Investment securities
    
    
    270,352
    
    
    
    10,722
    
    
    
    3.97
    
    
    
    245,086
    
    
    
    9,211
    
    
    
    3.76
    
    
    
    214,988
    
    
    
    7,881
    
    
    
    3.67Other interest-earning assets
    
    
    3,342
    
    
    
    165
    
    
    
    4.94
    
    
    
    3,750
    
    
    
    122
    
    
    
    3.25
    
    
    
    1,063
    
    
    
    10
    
    
    
    0.94Total interest-earning assets
    
    
    2,104,690
    
    
    
    169,760
    
    
    
    8.07
    
    
    
    1,983,337
    
    
    
    137,344
    
    
    
    6.92
    
    
    
    1,743,986
    
    
    
    104,723
    
    
    
    6.00Other assets
    
    
    90,405
    
    
    
    
    
    
    
    
    
    
    
    92,444
    
    
    
    
    
    
    
    
    
    
    
    65,938Total assets
    
    $
    2,195,095
    
    
    
    
    
    
    
    
    
    
    $
    2,075,781
    
    
    
    
    
    
    
    
    
    
    $
    1,809,924Liabilities and Shareholders EquityInterest-bearing demand deposits
    
    $
    56,984
    
    
    $
    282
    
    
    
    0.49
    %
    
    $
    58,243
    
    
    $
    267
    
    
    
    0.46
    %
    
    $
    58,375
    
    
    $
    291
    
    
    
    0.50
    %Money market accounts
    
    
    384,470
    
    
    
    16,020
    
    
    
    4.17
    
    
    
    392,554
    
    
    
    10,727
    
    
    
    2.73
    
    
    
    405,116
    
    
    
    6,118
    
    
    
    1.51Savings accounts
    
    
    9,734
    
    
    
    50
    
    
    
    0.51
    
    
    
    8,631
    
    
    
    21
    
    
    
    0.24
    
    
    
    7,819
    
    
    
    19
    
    
    
    0.24Time deposits
    
    
    1,046,945
    
    
    
    46,750
    
    
    
    4.47
    
    
    
    973,585
    
    
    
    29,767
    
    
    
    3.06
    
    
    
    709,660
    
    
    
    15,350
    
    
    
    2.16Total interest-bearing deposits
    
    
    1,498,133
    
    
    
    63,102
    
    
    
    4.21
    
    
    
    1,433,013
    
    
    
    40,782
    
    
    
    2.85
    
    
    
    1,180,970
    
    
    
    21,778
    
    
    
    1.84Other borrowings
    
    
    214,677
    
    
    
    10,023
    
    
    
    4.67
    
    
    
    209,103
    
    
    
    7,343
    
    
    
    3.51
    
    
    
    252,131
    
    
    
    5,979
    
    
    
    2.37Subordinated debentures
    
    
    46,393
    
    
    
    3,797
    
    
    
    8.18
    
    
    
    58,686
    
    
    
    4,113
    
    
    
    7.01
    
    
    
    72,180
    
    
    
    4,489
    
    
    
    6.22Total interest-bearing liabilities
    
    
    1,759,203
    
    
    
    76,922
    
    
    
    4.37
    
    
    
    1,700,802
    
    
    
    52,238
    
    
    
    3.07
    
    
    
    1,505,281
    
    
    
    32,246
    
    
    
    2.14Noninterest-bearing demand deposits
    
    
    229,680
    
    
    
    
    
    
    
    
    
    
    
    205,498
    
    
    
    
    
    
    
    
    
    
    
    174,366Other liabilities
    
    
    20,395
    
    
    
    
    
    
    
    
    
    
    
    17,027
    
    
    
    
    
    
    
    
    
    
    
    12,365Shareholders equity
    
    
    185,817
    
    
    
    
    
    
    
    
    
    
    
    152,454
    
    
    
    
    
    
    
    
    
    
    
    117,912Total liabilities and shareholders equity
    
    $
    2,195,095
    
    
    
    
    
    
    
    
    
    
    $
    2,075,781
    
    
    
    
    
    
    
    
    
    
    $
    1,809,924Net interest income
    
    
    
    
    
    $
    92,838
    
    
    
    
    
    
    
    
    
    
    $
    85,106
    
    
    
    
    
    
    
    
    
    
    $
    72,477Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.70
    %
    
    
    
    
    
    
    
    
    
    
    3.85
    %
    
    
    
    
    
    
    
    
    
    
    3.86
    %Net interest margin (2)
    
    
    
    
    
    
    
    
    
    
    4.41
    %
    
    
    
    
    
    
    
    
    
    
    4.29
    %
    
    
    
    
    
    
    
    
    
    
    4.16
    %Ratio of average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    119.64
    %
    
    
    
    
    
    
    
    
    
    
    116.61
    %
    
    
    
    
    
    
    
    
    
    
    115.86
    %
 
 (1)
    
    Yields, interest rate spreads, and net interest margins are calculated using income
recorded in accordance with accounting principles generally accepted in the United States
(GAAP), and are not shown on the higher, non-GAAP tax-equivalent basis.(2)
    
    Net interest margin = net interest income / total average interest-earning assets. 8




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##### Table of Contents



2006 vs. 2005
    
    
    
    
    
    
    
    
    
    
    2005 vs. 2004Increase
    
    
    Due to Change
    
    
    Increase
    
    
    Due to ChangeOr
    
    
    In Average:
    
    
    Or
    
    
    In Average:(Dollars in thousands)
    
    (Decrease)
    
    
    Volume
    
    
    Rate
    
    
    (Decrease)
    
    
    Volume
    
    
    RateInterest earned on:Loans receivable (1)
    
    $
    30,862
    
    
    $
    7,423
    
    
    $
    $23,439
    
    
    $
    31,179
    
    
    $
    14,063
    
    
    $
    17,116Investment securities
    
    
    1,511
    
    
    
    984
    
    
    
    527
    
    
    
    1,330
    
    
    
    1,127
    
    
    
    203Other interest-earning assets
    
    
    43
    
    
    
    (14
    )
    
    
    57
    
    
    
    112
    
    
    
    57
    
    
    
    55Total interest income
    
    
    32,416
    
    
    
    8,779
    
    
    
    23,637
    
    
    
    32,621
    
    
    
    15,413
    
    
    
    17,208Interest paid on:Interest-bearing demand
    
    
    15
    
    
    
    (6
    )
    
    
    21
    
    
    
    (24
    )
    
    
    (1
    )
    
    
    (23
    )Money market accounts
    
    
    5,293
    
    
    
    (225
    )
    
    
    5,518
    
    
    
    4,609
    
    
    
    (195
    )
    
    
    4,804Savings accounts
    
    
    29
    
    
    
    3
    
    
    
    26
    
    
    
    2
    
    
    
    2
    
    
    
    Time deposits
    
    
    16,983
    
    
    
    2,494
    
    
    
    14,489
    
    
    
    14,417
    
    
    
    6,810
    
    
    
    7,607Other borrowings
    
    
    2,680
    
    
    
    201
    
    
    
    2,479
    
    
    
    1,364
    
    
    
    (1,149
    )
    
    
    2,513Subordinated debentures
    
    
    (316
    )
    
    
    (942
    )
    
    
    626
    
    
    
    (376
    )
    
    
    (903
    )
    
    
    527Total interest expense
    
    
    24,684
    
    
    
    1,851
    
    
    
    22,833
    
    
    
    19,992
    
    
    
    4,607
    
    
    
    15,385Net interest income
    
    $
    7,732
    
    
    $
    6,928
    
    
    $
    804
    
    
    $
    12,629
    
    
    $
    10,806
    
    
    $
    1,823
 
 (1)
    
    Average balances include nonaccrual loans. Fees included in interest income on loans
receivable are not considered material.
Interest on tax-exempt loans and securities is not shown on a tax-equivalent basis because it
is not considered material.
Changes in rate-volume (changes in rate multiplied by changes in volume) are allocated between
changes in rate and changes
in volume in proportion to the relative contribution of each.     Provision and Allowance for Loan Losses
  9




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##### Table of Contents



10




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##### Table of Contents



At December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Real estate mortgage -Commercial
    
    $
    9,641
    
    
    
    34
    %
    
    $
    8,186
    
    
    
    32
    %
    
    $
    6,430
    
    
    
    32
    %
    
    $
    5,297
    
    
    
    31
    %
    
    $
    4,136
    
    
    
    34
    %One to four family
residential
    
    
    492
    
    
    
    5
    
    
    
    584
    
    
    
    5
    
    
    
    724
    
    
    
    5
    
    
    
    319
    
    
    
    6
    
    
    
    491
    
    
    
    9Real estate construction
    
    
    1,790
    
    
    
    25
    
    
    
    1,547
    
    
    
    17
    
    
    
    1,008
    
    
    
    15
    
    
    
    1,179
    
    
    
    18
    
    
    
    1,169
    
    
    
    12Commercial
    
    
    12,321
    
    
    
    24
    
    
    
    10,922
    
    
    
    22
    
    
    
    6,898
    
    
    
    24
    
    
    
    6,451
    
    
    
    27
    
    
    
    3,753
    
    
    
    32Installment and consumer -Guaranteed student loans
    
    
    90
    
    
    
    10
    
    
    
    189
    
    
    
    22
    
    
    
    175
    
    
    
    22
    
    
    
    105
    
    
    
    16
    
    
    
    59
    
    
    
    11Other
    
    
    536
    
    
    
    2
    
    
    
    311
    
    
    
    2
    
    
    
    648
    
    
    
    2
    
    
    
    362
    
    
    
    2
    
    
    
    212
    
    
    
    2Unallocated
    
    
    2,423
    
    
    
    
    
    
    
    2,073
    
    
    
    
    
    
    
    3,108
    
    
    
    
    
    
    
    1,296
    
    
    
    
    
    
    
    1,343
    
    
    
    Total
    
    $
    27,293
    
    
    
    100
    %
    
    $
    23,812
    
    
    
    100
    %
    
    $
    18,991
    
    
    
    100
    %
    
    $
    15,009
    
    
    
    100
    %
    
    $
    11,163
    
    
    
    100
    %
  For the Year Ended December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Balance at beginning of period
    
    $
    23,812
    
    
    $
    18,991
    
    
    $
    15,009
    
    
    $
    11,163
    
    
    $
    10,977Loans charged-off:Real estate mortgage
    
    
    708
    
    
    
    2,872
    
    
    
    812
    
    
    
    717
    
    
    
    777Real estate construction
    
    
    445
    
    
    
    155
    
    
    
    275
    
    
    
    3
    
    
    
    Commercial
    
    
    7,393
    
    
    
    8,587
    
    
    
    8,382
    
    
    
    3,915
    
    
    
    4,248Installment and consumer
    
    
    379
    
    
    
    406
    
    
    
    565
    
    
    
    442
    
    
    
    371Total charge-offs
    
    
    8,925
    
    
    
    12,020
    
    
    
    10,034
    
    
    
    5,077
    
    
    
    5,396Recoveries:Real estate mortgage
    
    
    414
    
    
    
    186
    
    
    
    151
    
    
    
    173
    
    
    
    93Real estate construction
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    403
    
    
    
    706
    
    
    
    907
    
    
    
    230
    
    
    
    107Installment and consumer
    
    
    24
    
    
    
    163
    
    
    
    90
    
    
    
    112
    
    
    
    149Total recoveries
    
    
    841
    
    
    
    1,056
    
    
    
    1,148
    
    
    
    515
    
    
    
    349Net loans charged-off
    
    
    8,084
    
    
    
    10,964
    
    
    
    8,886
    
    
    
    4,562
    
    
    
    5,047Provision for loan losses
    
    
    11,565
    
    
    
    15,785
    
    
    
    12,868
    
    
    
    8,408
    
    
    
    5,233Balance at end of period
    
    $
    27,293
    
    
    $
    23,812
    
    
    $
    18,991
    
    
    $
    15,009
    
    
    $
    11,163Ratio of allowance for loan losses to total loans:Average
    
    
    1.49
    %
    
    
    1.37
    %
    
    
    1.24
    %
    
    
    1.18
    %
    
    
    1.10
    %End of period
    
    
    1.52
    
    
    
    1.37
    
    
    
    1.17
    
    
    
    1.15
    
    
    
    1.01Ratio of net charge-offs to average total loans
during the period
    
    
    0.44
    
    
    
    0.63
    
    
    
    0.58
    
    
    
    0.36
    
    
    
    0.50
 11




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##### Table of Contents



At December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Total nonaccrual
    
    $
    26,735
    
    
    $
    22,099
    
    
    $
    22,230
    
    
    $
    14,530
    
    
    $
    11,455Total past due 90 days or more
    
    
    2,622
    
    
    
    1,486
    
    
    
    929
    
    
    
    1,384
    
    
    
    1,452Total nonperforming loans
    
    
    29,357
    
    
    
    23,585
    
    
    
    23,159
    
    
    
    15,914
    
    
    
    12,907Other real estate owned
    
    
    1,873
    
    
    
    7,130
    
    
    
    4,937
    
    
    
    1,699
    
    
    
    747Total nonperforming assets
    
    $
    31,230
    
    
    $
    30,715
    
    
    $
    28,096
    
    
    $
    17,613
    
    
    $
    13,654Nonperforming assets to loans and
other real estate owned
    
    
    1.74
    %
    
    
    1.76
    %
    
    
    1.72
    %
    
    
    1.34
    %
    
    
    1.24
    %Nonperforming loans to total loans
    
    
    1.64
    %
    
    
    1.36
    %
    
    
    1.43
    %
    
    
    1.22
    %
    
    
    1.17
    %Allowance for loan losses to
nonperforming loans
    
    
    92.97
    %
    
    
    100.96
    %
    
    
    82.00
    %
    
    
    94.31
    %
    
    
    86.49
    %Government-guaranteed portion of
nonperforming loans
    
    $
    1,629
    
    
    $
    1,602
    
    
    $
    1,458
    
    
    $
    2,694
    
    
    $
    1,017
  Other Income
  COMPARISON SUMMARY-OTHER INCOME
 2006 Change
    
    
    
    
    
    2005 Change(Dollars in thousands)
    
    2006
    
    From 2005
    
    2005
    
    From 2004
    
    2004Service charges and fees
    
    $
    11,492
    
    
    $
    547
    
    
    $
    10,945
    
    
    $
    1,047
    
    
    $
    9,898Gain on sales of loans
    
    
    3,438
    
    
    
    (1,477
    )
    
    
    4,915
    
    
    
    1,668
    
    
    
    3,247Other noninterest income
    
    
    1,595
    
    
    
    49
    
    
    
    1,546
    
    
    
    544
    
    
    
    1,002Gain (loss) on sales of
investment securities
    
    
    251
    
    
    
    251
    
    
    
    
    
    
    
    62
    
    
    
    (62
    )Total other income
    
    $
    16,776
    
    
    $
    (630
    )
    
    $
    17,406
    
    
    $
    3,321
    
    
    $
    14,085
    12




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##### Table of Contents



Other Expense
  COMPARISON SUMMARY-OTHER EXPENSE
 2006 Change
    
    
    
    
    
    2005 Change(Dollars in thousands)
    
    2006
    
    From 2005
    
    2005
    
    From 2004
    
    2004Salaries and employee benefits
    
    $
    30,897
    
    
    $
    5,612
    
    
    $
    25,285
    
    
    $
    2,686
    
    
    $
    22,599Occupancy
    
    
    10,190
    
    
    
    280
    
    
    
    9,910
    
    
    
    687
    
    
    
    9,223FDIC and other insurance
    
    
    511
    
    
    
    25
    
    
    
    486
    
    
    
    66
    
    
    
    420Other real estate, net
    
    
    286
    
    
    
    (685
    )
    
    
    971
    
    
    
    729
    
    
    
    242Provision for unfunded loan
commitments
    
    
    38
    
    
    
    (899
    )
    
    
    937
    
    
    
    823
    
    
    
    114General and administrative
    
    
    14,721
    
    
    
    437
    
    
    
    14,284
    
    
    
    2,356
    
    
    
    11,928Total other expense
    
    $
    56,643
    
    
    $
    4,770
    
    
    $
    51,873
    
    
    $
    7,347
    
    
    $
    44,526
     13




---



##### Table of Contents



Operating Segments
 CONTRIBUTION OF OPERATING SEGMENTS
    
    FOR THE YEARS ENDED DECEMBER 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Oklahoma banking
    
    $
    11,942
    
    
    $
    8,819
    
    
    $
    8,114Other states banking
    
    
    4,365
    
    
    
    2,393
    
    
    
    2,610Secondary market
    
    
    5,853
    
    
    
    9,428
    
    
    
    10,420Other operations
    
    
    3,837
    
    
    
    374
    
    
    
    (2,515
    )Consolidated net income
    
    $
    25,997
    
    
    $
    21,014
    
    
    $
    18,629Oklahoma banking
    
    $
    912,862
    
    
    $
    836,850
    
    
    $
    881,682Other states banking
    
    
    689,864
    
    
    
    518,708
    
    
    
    388,002Secondary market
    
    
    188,464
    
    
    
    380,346
    
    
    
    353,812Other operations
    
    
    
    
    
    
    (24
    )
    
    
    379Consolidated total loans
    
    $
    1,791,190
    
    
    $
    1,735,880
    
    
    $
    1,623,875Oklahoma banking
    
    $
    918,814
    
    
    $
    843,584
    
    
    $
    889,768Other states banking
    
    
    694,346
    
    
    
    516,212
    
    
    
    386,379Secondary market
    
    
    201,131
    
    
    
    397,940
    
    
    
    368,557Other operations
    
    
    356,337
    
    
    
    341,903
    
    
    
    269,083Consolidated total assets
    
    $
    2,170,628
    
    
    $
    2,099,639
    
    
    $
    1,913,787
      14




---



##### Table of Contents



Taxes on Income
  Financial Condition
    15




---



##### Table of Contents



At December 31,(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    2004U.S. Government and agency obligations
    
    $
    222,384
    
    
    $
    227,111
    
    
    $
    177,953Obligations of states and political subdivisions
    
    
    2,854
    
    
    
    3,457
    
    
    
    5,477Mortgage-backed securities
    
    
    24,453
    
    
    
    22,186
    
    
    
    17,565Other securities
    
    
    20,158
    
    
    
    15,339
    
    
    
    19,056Total investment securities
    
    $
    269,849
    
    
    $
    268,093
    
    
    $
    220,051Available for sale (fair value)
    
    $
    255,904
    
    
    $
    256,751
    
    
    $
    204,092Held to maturity (amortized cost)
    
    
    1,630
    
    
    
    1,538
    
    
    
    2,495Federal Reserve Bank and Federal Home
Loan Bank Stock
    
    
    12,315
    
    
    
    9,804
    
    
    
    13,464Total investment securities
    
    $
    269,849
    
    
    $
    268,093
    
    
    $
    220,051
   One Year
    
    Two through
    
    Five through
    
    More than
    
    Total Investmentor Less
    
    Five Years
    
    Ten Years
    
    Ten Years
    
    Securities(Dollars in thousands)
    
    Cost
    
    Yield
    
    Cost
    
    Yield
    
    Cost
    
    Yield
    
    Cost
    
    Yield
    
    Cost
    
    Market
    
    YieldHeld to Maturity:U.S. government
obligations
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    $
    
    
    
    
    
    %Federal agency securities
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    $
    
    
    
    
    
    %Obligations of states and
political subdivisions
    
    
    1,630
    
    
    
    2.51
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,630
    
    
    
    1,621
    
    
    
    2.51
    %Total
    
    
    1,630
    
    
    
    2.51
    %
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    1,630
    
    
    
    1,621
    
    
    
    2.51
    %Available for Sale:U.S. government
obligations
    
    
    1,001
    
    
    
    2.73
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,001
    
    
    
    993
    
    
    
    2.73Federal agency securities
    
    
    30,183
    
    
    
    3.70
    %
    
    
    195,118
    
    
    
    3.80
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,301
    
    
    
    221,391
    
    
    
    3.63Obligations of states and
political subdivisions
    
    
    
    
    
    
    
    
    
    
    1,250
    
    
    
    3.91
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,250
    
    
    
    1,224
    
    
    
    3.91Mortgage-backed securities
    
    
    5,182
    
    
    
    3.00
    
    
    
    19,412
    
    
    
    4.88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,594
    
    
    
    24,453
    
    
    
    4.39Other securities
    
    
    
    
    
    
    
    
    
    
    4,593
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,003
    
    
    
    5.19
    
    
    
    6,596
    
    
    
    7,843
    
    
    
    1.58Total
    
    
    36,366
    
    
    
    3.60
    
    
    
    220,373
    
    
    
    3.82
    
    
    
    
    
    
    
    
    
    
    
    2,003
    
    
    
    5.19
    
    
    
    258,742
    
    
    
    255,904
    
    
    
    3.65Total
    
    $
    37,996
    
    
    
    
    
    
    $
    220,373
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    2,003
    
    
    
    
    
    
    $
    260,372
    
    
    $
    257,525
 16




---



##### Table of Contents



At December 31,(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Real estate mortgage -
Commercial
    
    $
    609,271
    
    
    $
    563,074
    
    
    $
    523,358
    
    
    $
    402,596
    
    
    $
    374,999One to four family
residential
    
    
    91,441
    
    
    
    93,478
    
    
    
    87,858
    
    
    
    83,250
    
    
    
    102,423Real estate construction
    
    
    453,750
    
    
    
    299,344
    
    
    
    248,278
    
    
    
    230,292
    
    
    
    130,001Commercial
    
    
    424,189
    
    
    
    374,101
    
    
    
    390,272
    
    
    
    355,965
    
    
    
    348,879Installment and consumer -
Guaranteed student loans
    
    
    181,458
    
    
    
    377,110
    
    
    
    348,970
    
    
    
    211,546
    
    
    
    119,064Other
    
    
    31,081
    
    
    
    28,773
    
    
    
    25,139
    
    
    
    25,187
    
    
    
    25,7461,791,190
    
    
    
    1,735,880
    
    
    
    1,623,875
    
    
    
    1,308,836
    
    
    
    1,101,112Less: Allowance for loan
losses
    
    
    (27,293
    )
    
    
    (23,812
    )
    
    
    (18,991
    )
    
    
    (15,009
    )
    
    
    (11,163
    )Total
    
    $
    1,763,897
    
    
    $
    1,712,068
    
    
    $
    1,604,884
    
    
    $
    1,293,827
    
    
    $
    1,089,949
  Capital Resources
   17




---



##### Table of Contents



Liquidity
   (Dollars in thousands)
    
    AmountThree months or less (1)
    
    $
    252,163Over three through six months (1)
    
    
    191,018Over six through 12 months (1)
    
    
    173,757Over 12 months
    
    
    31,726Total
    
    $
    648,664
 
 (1)
    
    The amount of certificates of deposit of $100,000 and more that mature within 12 months is
$616.9 million. The Company does not
have any liquidity concerns as a result of the volume of these maturities. 18




---



##### Table of Contents



Percentage of Total Average AssetsSources and uses of funds
    
    2006
    
    2005
    
    2004Sources of Funds:Deposits:Noninterest-bearing demand
    
    
    10.46
    %
    
    
    9.90
    %
    
    
    9.63
    %Interest-bearing demand and money market accounts
    
    
    20.11
    
    
    
    21.72
    
    
    
    25.61Time and savings deposits
    
    
    48.14
    
    
    
    47.32
    
    
    
    39.65Other borrowings
    
    
    9.78
    
    
    
    10.07
    
    
    
    13.93Subordinated debentures
    
    
    2.11
    
    
    
    2.83
    
    
    
    3.99Other liabilities
    
    
    0.93
    
    
    
    0.82
    
    
    
    0.68Equity capital
    
    
    8.47
    
    
    
    7.34
    
    
    
    6.51Total
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %Uses of Funds:Loans
    
    
    83.41
    %
    
    
    83.56
    %
    
    
    84.42
    %Investment securities
    
    
    12.32
    
    
    
    11.81
    
    
    
    11.88Other interest-earning assets
    
    
    0.15
    
    
    
    0.18
    
    
    
    0.06Noninterest-earning assets
    
    
    4.12
    
    
    
    4.45
    
    
    
    3.64Total
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
   Asset/Liability Management and Quantitative and Qualitative Disclosures about Market Risk
   19




---



##### Table of Contents



0 to 3
    
    4 to 12
    
    Over 1 to
    
    Over(Dollars in thousands)
    
    Months
    
    Months
    
    5 Years
    
    5 Years
    
    TotalRate-sensitive
assets:Total loans
    
    $
    1,267,974
    
    
    $
    217,781
    
    
    $
    214,015
    
    
    $
    91,420
    
    
    $
    1,791,190Investment securities
    
    
    18,030
    
    
    
    31,258
    
    
    
    198,193
    
    
    
    22,368
    
    
    
    269,849Federal funds sold
    
    
    11,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,000Due from banks
    
    
    6,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,671Total
    
    
    1,303,675
    
    
    
    249,039
    
    
    
    412,208
    
    
    
    113,788
    
    
    
    2,078,710Rate-sensitive
liabilities:Money market deposit accounts
    
    
    371,912
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    371,912Time deposits
    
    
    407,781
    
    
    
    573,031
    
    
    
    91,798
    
    
    
    5
    
    
    
    1,072,615Savings accounts
    
    
    11,273
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,273Interest-bearing demand
    
    
    55,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,396Other borrowings
    
    
    61,594
    
    
    
    50,000
    
    
    
    26,500
    
    
    
    
    
    
    
    138,094Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,393
    
    
    
    46,393Total
    
    
    907,956
    
    
    
    623,031
    
    
    
    118,298
    
    
    
    46,398
    
    
    
    1,695,683Interest
sensitivity gap
    
    $
    395,719
    
    
    $
    (373,992
    )
    
    $
    293,910
    
    
    $
    67,390
    
    
    $
    383,027Cumulative interest sensitivity gap
    
    $
    395,719
    
    
    $
    21,727
    
    
    $
    315,637
    
    
    $
    383,027
    
    
    $
    383,027Percentage of rate-sensitive assets to
rate-sensitive liabilities
    
    
    143.58
    %
    
    
    39.97
    %
    
    
    348.45
    %
    
    
    245.24
    %
    
    
    122.59
    %Percentage of cumulative gap to total
assets
    
    
    18.23
    %
    
    
    1.00
    %
    
    
    14.54
    %
    
    
    17.65
    %
    
    
    17.65
    %
    20




---



##### Table of Contents



Estimated Changes in Net Interest Income
 Changes in Interest Rates:
    
    +300 bp
    
    +200 bp
    
    +100 bp
    
    (100) bp
    
    (200) bp
    
    (300) bpPolicy Limit
    
    
    (18.00
    )%
    
    
    (10.00
    )%
    
    
    (5.00
    )%
    
    
    (5.00
    )%
    
    
    (10.00
    )%
    
    
    (18.00
    )%December 31, 2006
    
    
    + 12.02
    %
    
    
    + 6.15
    %
    
    
    + 1.96
    %
    
    
    (2.80
    )%
    
    
    (6.56
    )%
    
    
    (11.14
    )%December 31, 2005
    
    
    + 15.47
    %
    
    
    + 7.90
    %
    
    
    + 4.08
    %
    
    
    (4.09
    )%
    
    
    (9.09
    )%
    
    
    (14.21
    )%
  Estimated Changes in Economic Value of Equity (EVE)
 Changes in Interest Rates:
    
    +300 bp
    
    +200 bp
    
    + 100 bp
    
    (100) bp
    
    (200) bp
    
    (300) bpPolicy Limit
    
    
    (35.00
    )%
    
    
    (20.00
    )%
    
    
    (10.00
    )%
    
    
    (10.00
    )%
    
    
    (20.00
    )%
    
    
    (35.00
    )%December 31, 2006
    
    
    (7.68
    )%
    
    
    (4.90
    )%
    
    
    (1.52
    )%
    
    
    + 0.97
    %
    
    
    + 1.40
    %
    
    
    + 1.10
    %December 31, 2005
    
    
    (7.33
    )%
    
    
    (3.55
    )%
    
    
    (1.79
    )%
    
    
    + 0.54
    %
    
    
    (1.17
    )%
    
    
    (3.32
    )%
   Off-Balance Sheet Arrangements
  21




---



##### Table of Contents



Consolidation of Variable Interest Entities.
 Effects of Inflation
  Contractual Obligations
  Payments due by periodLess than
    
    1-3
    
    3-5
    
    Over(Dollars in thousands)
    
    1 Year
    
    Years
    
    Years
    
    5 Years
    
    TotalDeposits without stated maturity:(1)Noninterest bearing
    
    $
    254,415
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    254,415Interest bearing
    
    
    438,581
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    438,581Time deposits(2)
    
    
    1,010,138
    
    
    
    90,262
    
    
    
    9,015
    
    
    
    7
    
    
    
    1,109,422Other borrowings(2)
    
    
    124,177
    
    
    
    7,335
    
    
    
    23,194
    
    
    
    
    
    
    
    154,706Subordinated debentures(2)
    
    
    3,375
    
    
    
    6,751
    
    
    
    6,751
    
    
    
    126,164
    
    
    
    143,041Operating leases
    
    
    2,121
    
    
    
    3,670
    
    
    
    2,351
    
    
    
    125
    
    
    
    8,267Total
    
    $
    1,832,807
    
    
    $
    108,018
    
    
    $
    41,311
    
    
    $
    126,296
    
    
    $
    2,108,432
 
 (1)
    
    Excludes interest.(2)
    
    Includes interest. Interest on variable rate obligations is shown at rates in effect at December 31, 2006. The contractual
amounts to be paid on variable rate obligations are affected by changes in market interest rates. Future changes in market
interest rates could materially affect the contractual amounts to be paid.   Critical Accounting Policies
  22




---



##### Table of Contents



Allowance for Loan Losses
   Stock Compensation
 Investment Securities
 23




---



##### Table of Contents



Derivative Instruments
 Non-GAAP Financial Measures
  
 Controls and Procedures
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
   Fourth Quarter 2006 Changes in Internal Control over Financial Reporting
  24




---



##### Table of Contents



Report on Effectiveness of Internal Control over Financial Reporting
        
 25




---



##### Table of Contents



Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm
 Report on Consolidated Financial Statements
       
 26




---



##### Table of Contents



SOUTHWEST
BANCORP, INC.
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 AT DECEMBER 31,(Dollars in thousands, except per share data)
    
    2006
    
    2005AssetsCash and due from banks
    
    $
    46,618
    
    
    $
    50,277Federal funds sold
    
    
    11,000
    
    
    
    Cash and cash equivalents
    
    $
    57,618
    
    
    $
    50,277Investment securities:Held to maturity, fair value $1,621 (2006) and $1,530 (2005)
    
    
    1,630
    
    
    
    1,538Available for sale, amortized cost $258,742 (2006) and $262,180 (2005)
    
    
    255,904
    
    
    
    256,751Federal Reserve Bank and Federal Home Loan Bank Stock, at cost
    
    
    12,315
    
    
    
    9,804Loans held for sale
    
    
    188,464
    
    
    
    383,447Loans receivable
    
    
    1,602,726
    
    
    
    1,352,433Less: Allowance for loan losses
    
    
    (27,293
    )
    
    
    (23,812
    )Net loans receivable
    
    
    1,575,433
    
    
    
    1,328,621Accrued interest receivable
    
    
    24,269
    
    
    
    14,382Premises and equipment, net
    
    
    21,818
    
    
    
    20,584Other real estate
    
    
    1,873
    
    
    
    7,130Goodwill
    
    
    1,213
    
    
    
    194Other intangible assets, net
    
    
    3,069
    
    
    
    1,407Other assets
    
    
    27,022
    
    
    
    25,504Total assets
    
    $
    2,170,628
    
    
    $
    2,099,639Liabilities and shareholders equityDeposits:Noninterest-bearing demand
    
    $
    254,415
    
    
    $
    224,555Interest-bearing demand
    
    
    55,396
    
    
    
    49,235Money market accounts
    
    
    371,912
    
    
    
    402,709Savings accounts
    
    
    11,273
    
    
    
    8,765Time deposits of $100,000 or more
    
    
    648,664
    
    
    
    608,989Other time deposits
    
    
    423,951
    
    
    
    363,567Total deposits
    
    
    1,765,611
    
    
    
    1,657,820Accrued interest payable
    
    
    13,260
    
    
    
    8,953Income tax payable
    
    
    1,136
    
    
    
    288Other liabilities
    
    
    8,624
    
    
    
    11,233Other borrowings
    
    
    138,094
    
    
    
    204,508Subordinated debentures
    
    
    46,393
    
    
    
    46,393Total liabilities
    
    
    1,973,118
    
    
    
    1,929,195Shareholders equity:Common stock  $1 par value; 20,000,000 shares authorized;
14,658,042 (2006) and 14,658,042 (2005) shares issued
and outstanding
    
    
    14,658
    
    
    
    14,658Paid in capital
    
    
    45,901
    
    
    
    45,672Retained earnings
    
    
    146,197
    
    
    
    124,882Accumulated other comprehensive loss
    
    
    (1,738
    )
    
    
    (3,325
    )Treasury stock, at cost; 417,535 (2006) and 636,125 (2005)
    
    
    (7,508
    )
    
    
    (11,443
    )Total shareholders equity
    
    
    197,510
    
    
    
    170,444Total liabilities & shareholders equity
    
    $
    2,170,628
    
    
    $
    2,099,639
  27




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##### Table of Contents



SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE YEARS ENDED DECEMBER 31,(Dollars in thousands, except per share data)
    
    2006
    
    2005
    
    2004Interest income:Interest and fees on loans
    
    $
    158,873
    
    
    $
    128,011
    
    
    $
    96,832Investment securities:U.S. Government and agency obligations
    
    
    8,709
    
    
    
    7,643
    
    
    
    6,136Mortgage-backed securities
    
    
    1,051
    
    
    
    625
    
    
    
    659State and political subdivisions
    
    
    115
    
    
    
    171
    
    
    
    407Other securities
    
    
    847
    
    
    
    772
    
    
    
    679Federal funds sold
    
    
    165
    
    
    
    122
    
    
    
    10Total interest income
    
    
    169,760
    
    
    
    137,344
    
    
    
    104,723Interest expense:Interest-bearing demand
    
    
    282
    
    
    
    267
    
    
    
    291Money market accounts
    
    
    16,020
    
    
    
    10,727
    
    
    
    6,118Savings accounts
    
    
    50
    
    
    
    21
    
    
    
    19Time deposits of $100,000 or more
    
    
    29,887
    
    
    
    19,977
    
    
    
    9,762Other time deposits
    
    
    16,863
    
    
    
    9,790
    
    
    
    5,588Other borrowings
    
    
    10,023
    
    
    
    7,343
    
    
    
    5,979Subordinated debentures
    
    
    3,797
    
    
    
    4,113
    
    
    
    4,489Total interest expense
    
    
    76,922
    
    
    
    52,238
    
    
    
    32,246Net interest income
    
    
    92,838
    
    
    
    85,106
    
    
    
    72,477Provision for loan losses
    
    
    11,565
    
    
    
    15,785
    
    
    
    12,868Other income:Service charges and fees
    
    
    11,492
    
    
    
    10,945
    
    
    
    9,898Other noninterest income
    
    
    1,595
    
    
    
    1,546
    
    
    
    1,002Gain on sales of loans
    
    
    3,438
    
    
    
    4,915
    
    
    
    3,247Gain (loss) on sales of investment securities
    
    
    251
    
    
    
    
    
    
    
    (62
    )Total other income
    
    
    16,776
    
    
    
    17,406
    
    
    
    14,085Other expense:Salaries and employee benefits
    
    
    30,897
    
    
    
    25,285
    
    
    
    22,599Occupancy
    
    
    10,190
    
    
    
    9,910
    
    
    
    9,223FDIC and other insurance
    
    
    511
    
    
    
    486
    
    
    
    420Other real estate, net
    
    
    286
    
    
    
    971
    
    
    
    242General and administrative
    
    
    14,759
    
    
    
    15,221
    
    
    
    12,042Total other expense
    
    
    56,643
    
    
    
    51,873
    
    
    
    44,526Income before taxes
    
    
    41,406
    
    
    
    34,854
    
    
    
    29,168Taxes on income
    
    
    15,409
    
    
    
    13,840
    
    
    
    10,539Net income
    
    $
    25,997
    
    
    $
    21,014
    
    
    $
    18,629Basic earnings per common share
    
    $
    1.84
    
    
    $
    1.60
    
    
    $
    1.54Diluted earnings per common share
    
    
    1.79
    
    
    
    1.55
    
    
    
    1.48Cash dividends declared per share
    
    
    0.33
    
    
    
    0.30
    
    
    
    0.28
  28




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##### Table of Contents



SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 FOR THE YEARS ENDED DECEMBER 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Net income
    
    $
    25,997
    
    
    $
    21,014
    
    
    $
    18,629Other comprehensive income (loss):Unrealized holding gain (loss) on available for
sale securities
    
    
    2,842
    
    
    
    (4,128
    )
    
    
    (1,967
    )Reclassification adjustment for (gains) losses
arising during the period
    
    $
    (251
    )
    
    $
    
    
    
    
    62Other comprehensive income (loss), before tax
    
    
    2,591
    
    
    
    (4,128
    )
    
    
    (1,905
    )Tax (expense) benefit related to items
of other comprehensive income (loss)
    
    
    (1,004
    )
    
    
    1,600
    
    
    
    748Other comprehensive income (loss), net of tax
    
    
    1,587
    
    
    
    (2,528
    )
    
    
    (1,157
    )Comprehensive income
    
    $
    27,584
    
    
    $
    18,486
    
    
    $
    17,472
  29




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##### Table of Contents



SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Accumulated
    
    
    
    
    
    TotalOther
    
    
    
    
    
    Share-Common Stock
    
    Paid in
    
    Retained
    
    Comprehensive
    
    Treasury
    
    holdersShares
    
    Amount
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    Stock
    
    Equity(Dollars in thousands, except per share data)Balance, December 31, 2003
    
    12,243,042
    
    
    $
    12,243
    
    
    $
    6,997
    
    
    $
    92,657
    
    
    $
    360
    
    
    $
    (2,322
    )
    
    $
    109,935Cash dividends:Common, $0.28 per share,
and
other dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,381
    )
    
    
    
    
    
    
    
    
    
    
    (3,381
    )Common stock issued:Employee Stock Option Plan
    
    
    
    
    
    
    
    
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    901
    
    
    
    1,281Employee
Stock Purchase Plan
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    65Dividend Reinvestment Plan
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    93Tax benefit related to exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    519
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    519Other comprehensive income
(loss), net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,157
    )
    
    
    
    
    
    
    (1,157
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,629
    
    
    
    
    
    
    
    
    
    
    
    18,629Balance, December 31, 2004
    
    
    12,243,042
    
    
    
    12,243
    
    
    
    7,993
    
    
    
    107,905
    
    
    
    (797
    )
    
    
    (1,360
    )
    
    
    125,984Cash dividends:Common, $0.30 per share,
and
other dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,037
    )
    
    
    
    
    
    
    
    
    
    
    (4,037
    )Common stock issued:Employee Stock Option Plan
    
    
    
    
    
    
    
    
    
    
    (422
    )
    
    
    
    
    
    
    
    
    
    
    2,157
    
    
    
    1,735Employee
Stock Purchase Plan
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    70Dividend Reinvestment Plan
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    92Restricted Stock
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    196Public Offering
    
    
    2,415,000
    
    
    
    2,415
    
    
    
    37,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,500Tax benefit related to exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    834
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    834Other comprehensive income
(loss), net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,528
    )
    
    
    
    
    
    
    (2,528
    )Treasury shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,416
    )
    
    
    (12,416
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,014
    
    
    
    
    
    
    
    
    
    
    
    21,014Balance, December 31, 2005
    
    
    14,658,042
    
    
    
    14,658
    
    
    
    45,672
    
    
    
    124,882
    
    
    
    (3,325
    )
    
    
    (11,443
    )
    
    
    170,444Cash dividends:Common, $0.33 per share,
and
other dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,682
    )
    
    
    
    
    
    
    
    
    
    
    (4,682
    )Common stock issued:Employee Stock Option Plan
    
    
    
    
    
    
    
    
    
    
    (1,690
    )
    
    
    
    
    
    
    
    
    
    
    3,622
    
    
    
    1,932Employee
Stock Purchase Plan
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    75Dividend Reinvestment Plan
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    102Restricted Stock
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    178
    
    
    
    215Tax benefit related to exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    1,018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,018Stock Compensation Expense
    
    
    
    
    
    
    
    
    
    
    822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    822Other comprehensive income
(loss), net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,587
    
    
    
    
    
    
    
    1,587Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,997
    
    
    
    
    
    
    
    
    
    
    
    25,997Balance, December 31, 2006
    
    
    14,658,042
    
    
    $
    14,658
    
    
    $
    45,901
    
    
    $
    146,197
    
    
    $
    (1,738
    )
    
    $
    (7,508
    )
    
    $
    197,510
  30




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##### Table of Contents



SOUTHWEST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Operating activities:Net income
    
    $
    25,997
    
    
    $
    21,014
    
    
    $
    18,629Adjustments to reconcile net income to net
cash provided from operating activities:Provision for loan losses
    
    
    11,565
    
    
    
    15,785
    
    
    
    12,868Deferred taxes
    
    
    (2,279
    )
    
    
    (1,252
    )
    
    
    (626
    )Depreciation and amortization expense
    
    
    2,940
    
    
    
    2,610
    
    
    
    2,607Amortization of premiums and accretion of
discounts on securities, net
    
    
    43
    
    
    
    135
    
    
    
    164Amortization of intangibles
    
    
    493
    
    
    
    379
    
    
    
    327Stock based compensation
    
    
    822
    
    
    
    
    
    
    
    Restricted stock expense
    
    
    151Tax benefit from exercise of stock options
    
    
    
    
    
    
    834
    
    
    
    519(Gain) Loss on sales/calls of securities
    
    
    (251
    )
    
    
    
    
    
    
    62Loss on sales of loans
    
    
    (3,438
    )
    
    
    (4,915
    )
    
    
    (3,247
    )(Gain) Loss on sales of premises/equipment
    
    
    210
    
    
    
    20
    
    
    
    (11
    )(Gain) Loss on other real estate owned, net
    
    
    (220
    )
    
    
    27
    
    
    
    63Proceeds from sales of residential mortgage loans
    
    
    74,424
    
    
    
    89,238
    
    
    
    87,512Residential mortgage loans originated for sale
    
    
    (76,079
    )
    
    
    (87,808
    )
    
    
    (86,838
    )Proceeds from sales of guaranteed student loans
    
    
    779,728
    
    
    
    778,196
    
    
    
    537,246Guaranteed student loans originated for sale
    
    
    (581,880
    )
    
    
    (817,477
    )
    
    
    (672,900
    )Changes in assets and liabilities:Accrued interest receivable
    
    
    (9,716
    )
    
    
    709
    
    
    
    (3,770
    )Other assets
    
    
    (614
    )
    
    
    233
    
    
    
    (7,167
    )Income taxes payable
    
    
    1,866
    
    
    
    (1,978
    )
    
    
    (584
    )Excess tax benefit from share-based payment arrangements
    
    
    (1,018
    )
    
    
    
    
    
    
    Accrued interest payable
    
    
    4,263
    
    
    
    4,042
    
    
    
    1,536Other liabilities
    
    
    (2,770
    )
    
    
    2,706
    
    
    
    2,974Net cash (used in) provided from operating activities
    
    
    224,237
    
    
    
    2,498
    
    
    
    (110,636
    )Investing activities:Proceeds from sales of available for sale securities
    
    
    20,216
    
    
    
    
    
    
    
    11,040Proceeds from principal repayments, calls and maturities:Held to maturity securities
    
    
    1,000
    
    
    
    1,995
    
    
    
    13,400Available for sale securities
    
    
    8,989
    
    
    
    9,009
    
    
    
    77,679Proceeds from redemptions of Federal Home Loan Bank stock
    
    
    
    
    
    
    4,629
    
    
    
    Purchases of Federal Home Loan Bank stock and Federal Reserve
Bank stock
    
    
    (2,511
    )
    
    
    (969
    )
    
    
    (2,188
    )Purchases of held to maturity securities
    
    
    (1,095
    )
    
    
    (528
    )
    
    
    Purchases of available for sale securities
    
    
    (10,490
    )
    
    
    (66,439
    )
    
    
    (117,848
    )Loans originated and principal repayments, net
    
    
    (243,716
    )
    
    
    (87,456
    )
    
    
    (189,733
    )Acquisition of McMullen Bank
    
    
    (182
    )
    
    
    
    
    
    
    Purchases of premises and equipment
    
    
    (2,915
    )
    
    
    (3,424
    )
    
    
    (2,864
    )Proceeds from sales of premises and equipment
    
    
    337
    
    
    
    90
    
    
    
    226Proceeds from sales of other real estate owned
    
    
    6,072
    
    
    
    5,013
    
    
    
    734Net cash (used in) investing activities
    
    
    (224,295
    )
    
    
    (138,080
    )
    
    
    (209,554
    )Financing activities:Net increase in deposits
    
    
    75,245
    
    
    
    157,762
    
    
    
    295,933Net increase (decrease) in other borrowings
    
    
    (66,414
    )
    
    
    4,443
    
    
    
    16,215Net proceeds from issuance of common stock
    
    
    2,109
    
    
    
    41,593
    
    
    
    1,439Redemption of subordinated debentures
    
    
    
    
    
    
    (25,787
    )
    
    
    Purchases of treasury stock
    
    
    
    
    
    
    (12,416
    )
    
    
    Excess tax benefit from share-based payment arrangements
    
    
    1,018
    
    
    
    
    
    
    
    Common stock dividends paid
    
    
    (4,559
    )
    
    
    (3,833
    )
    
    
    (3,281
    )Net cash provided from financing activities
    
    
    7,399
    
    
    
    161,762
    
    
    
    310,306Net increase (decrease) in cash and cash equivalents
    
    
    7,341
    
    
    
    26,180
    
    
    
    (9,884
    )Cash and cash equivalents,Beginning of period
    
    
    50,277
    
    
    
    24,097
    
    
    
    33,981End of period
    
    $
    57,618
    
    
    $
    50,277
    
    
    $
    24,097
 31




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##### Table of Contents



SOUTHWEST BANCORP, INC.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
 1. Summary of Significant Accounting and Reporting Policies
 Organization and Nature of Operations
 Management Estimates
 Cash and Cash Equivalents
 Investment Securities
   32




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##### Table of Contents



Loans
 Allowance for Loan Losses
 33




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##### Table of Contents



Reserve for Unfunded Loan Commitments -
 Premises and Equipment
 Other Real Estate Owned
 Intangibles
   2007
    
    
    $
    234,0002008
    
    
    
    196,0002009
    
    
    
    188,0002010
    
    
    
    185,0002011
    
    
    
    169,000
 34




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##### Table of Contents



2007
    
    
    $
    351,0002008
    
    
    
    298,0002009
    
    
    
    246,0002010
    
    
    
    195,0002011
    
    
    
    145,000
 Deposits
 Loan Servicing Income
 Taxes on Income
 Earnings per Common Share
 2006
    
    2005
    
    2004Weighted average common shares outstanding:Basic earnings per share
    
    
    14,166,634
    
    
    
    13,165,642
    
    
    
    12,060,842Effect of dilutive securities:Stock options
    
    
    325,920
    
    
    
    398,262
    
    
    
    487,217Weighted average common shares outstanding:Diluted earnings per share
    
    
    14,492,554
    
    
    
    13,563,904
    
    
    
    12,548,059
 Share-Based Compensation
 35




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##### Table of Contents



Share-Based Payment
 Accounting for
Stock-Based Compensation, Accounting for Stock-Based Compensation
 Transition and Disclosure Accounting for Stock
Issued to Employees
 Derivatives Amendment of Statement 133 on Derivative Instruments and Hedging
Activities Accounting for Derivative Instruments and Hedging Activities
  Comprehensive Income
 Trust
 Liquidity
 Reclassifications
 36




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##### Table of Contents



2. Investment Securities
  At December 31, 2006Amortized
    
    Gross Unrealized
    
    Fair(Dollars in thousands)
    
    Cost
    
    Gains
    
    Losses
    
    ValueHeld to Maturity:Obligations of state and political subdivisions
    
    
    1,630
    
    
    
    
    
    
    
    (9
    )
    
    
    1,621Total
    
    $
    1,630
    
    
    $
    
    
    
    $
    (9
    )
    
    $
    1,621Available for Sale:U.S. Government obligations
    
    $
    1,001
    
    
    $
    
    
    
    $
    (8
    )
    
    $
    993Federal Agency obligations
    
    $
    225,301
    
    
    $
    
    
    
    $
    (3,910
    )
    
    $
    221,391Obligations of state and political subdivisions
    
    
    1,250
    
    
    
    
    
    
    
    (26
    )
    
    
    1,224Mortgage-backed securities
    
    
    24,594
    
    
    
    29
    
    
    
    (170
    )
    
    
    24,453Equity securities
    
    
    6,596
    
    
    
    1,248
    
    
    
    (1
    )
    
    
    7,843Total
    
    $
    258,742
    
    
    $
    1,277
    
    
    $
    (4,115
    )
    
    $
    255,904
 At December 31, 2005Amortized
    
    Gross Unrealized
    
    Fair(Dollars in thousands)
    
    Cost
    
    Gains
    
    Losses
    
    Value(dollars in thousands)Held to Maturity:U.S. Government obligations
    
    $
    1,008
    
    
    $
    
    
    
    $
    (7
    )
    
    $
    1,001Obligations of state and political subdivisions
    
    
    530
    
    
    
    
    
    
    
    (1
    )
    
    
    529Total
    
    $
    1,538
    
    
    $
    
    
    
    $
    (8
    )
    
    $
    1,530Available for Sale:U.S. Government obligations
    
    $
    1,005
    
    
    $
    
    
    
    $
    (23
    )
    
    $
    982Federal agency securities
    
    $
    230,280
    
    
    $
    
    
    
    $
    (5,159
    )
    
    $
    225,121Obligations of state and political subdivisions
    
    
    2,950
    
    
    
    7
    
    
    
    (30
    )
    
    
    2,927Mortgage-backed securities
    
    
    22,451
    
    
    
    21
    
    
    
    (286
    )
    
    
    22,186Equity securities
    
    
    5,494
    
    
    
    69
    
    
    
    (28
    )
    
    
    5,535Total
    
    $
    262,180
    
    
    $
    97
    
    
    $
    (5,526
    )
    
    $
    256,751
 37




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##### Table of Contents



Continuous Unrealized Losses Existing for:Amortized cost of
    
    
    
    
    
    
    
    
    
    Fair value ofNumber of
    
    securities with
    
    Less Than
    
    More Than
    
    securities with(Dollars in thousands)
    
    Securities
    
    unrealized losses
    
    12 Months
    
    12 Months
    
    unrealized lossesAt December 31, 2006:Held to Maturity:Obligations of state and political subdivisions
    
    
    3
    
    
    $
    1,630
    
    
    
    (7
    )
    
    
    (3
    )
    
    $
    1,621Total
    
    
    3
    
    
    $
    1,630
    
    
    $
    (7
    )
    
    $
    (3
    )
    
    $
    1,621Available for Sale:U.S. Government obligations
    
    
    1
    
    
    $
    1,001
    
    
    $
    
    
    
    $
    (8
    )
    
    $
    993Federal agency securities
    
    
    87
    
    
    $
    225,511
    
    
    
    
    
    
    $
    (4,120
    )
    
    $
    221,391Obligations of state and political subdivisions
    
    
    1
    
    
    $
    1,250
    
    
    $
    
    
    
    $
    (26
    )
    
    $
    1,224Mortgage-backed securities
    
    
    41
    
    
    $
    20,126
    
    
    $
    (38
    )
    
    $
    (132
    )
    
    $
    19,956Equity securities
    
    
    4
    
    
    $
    252
    
    
    $
    (1
    )
    
    
    
    
    
    $
    251Total
    
    
    134
    
    
    $
    248,140
    
    
    $
    (39
    )
    
    $
    (4,286
    )
    
    $
    243,815At December 31, 2005:Held to Maturity:U.S. Government and agency obligations
    
    
    1
    
    
    $
    1,008
    
    
    $
    
    
    
    $
    (7
    )
    
    $
    1,001Obligations of state and political subdivisions
    
    
    1
    
    
    
    530
    
    
    
    (1
    )
    
    
    
    
    
    
    529Total
    
    
    2
    
    
    $
    1,538
    
    
    $
    (1
    )
    
    $
    (7
    )
    
    $
    1,530Available for Sale:U.S. Government and agency obligations
    
    
    1
    
    
    $
    1,005
    
    
    $
    
    
    
    $
    (23
    )
    
    $
    982Federal agency securities
    
    
    91
    
    
    $
    230,281
    
    
    $
    (1,555
    )
    
    $
    (3,606
    )
    
    $
    225,120Obligations of state and political subdivisions
    
    
    1
    
    
    
    1,250
    
    
    
    (30
    )
    
    
    
    
    
    
    1,220Mortgage-backed securities
    
    
    35
    
    
    
    18,813
    
    
    
    (82
    )
    
    
    (204
    )
    
    
    18,527Equity securities
    
    
    2
    
    
    
    1,000
    
    
    
    (28
    )
    
    
    
    
    
    
    972Total
    
    
    130
    
    
    $
    252,349
    
    
    $
    (1,695
    )
    
    $
    (3,833
    )
    
    $
    246,821
   38




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##### Table of Contents



Available for Sale
    
    Held to MaturityAmortized
    
    Fair
    
    Amortized
    
    Fair(Dollars in thousands)
    
    Cost
    
    Value
    
    Cost
    
    Value(dollars in thousands)One year or less
    
    $
    36,366
    
    
    $
    36,101
    
    
    $
    1,630
    
    
    $
    1,621More than one year through five years
    
    
    220,373
    
    
    
    217,793
    
    
    
    
    
    
    
    More than five years through ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    More than ten years
    
    
    2,003
    
    
    
    2,010
    
    
    
    
    
    
    
    Total
    
    $
    258,742
    
    
    $
    255,904
    
    
    $
    1,630
    
    
    $
    1,621
   3. Loans
  At December 31,(Dollars in thousands)
    
    2006
    
    2005Real estate mortgage:Commercial
    
    $
    609,271
    
    
    $
    563,074One-to-four family residential
    
    
    91,441
    
    
    
    93,478Real estate construction
    
    
    453,750
    
    
    
    299,344Commercial
    
    
    424,189
    
    
    
    374,101Installment and consumer:Guaranteed student loans
    
    
    181,458
    
    
    
    377,110Other
    
    
    31,081
    
    
    
    28,7731,791,190
    
    
    
    1,735,880Allowance for loan losses
    
    
    (27,293
    )
    
    
    (23,812
    )Total loans, net
    
    $
    1,763,897
    
    
    $
    1,712,068
   39




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##### Table of Contents



One year
    
    One to
    
    Over(Dollars in thousands)
    
    or less
    
    five years
    
    five years
    
    TotalReal estate mortgage:Commercial
    
    $
    148,845
    
    
    $
    288,547
    
    
    $
    171,879
    
    
    $
    609,271One-to-four family residential
    
    
    16,025
    
    
    
    37,546
    
    
    
    37,870
    
    
    
    91,441Real estate construction
    
    
    146,377
    
    
    
    265,238
    
    
    
    42,134
    
    
    
    453,749Commercial
    
    
    172,073
    
    
    
    182,630
    
    
    
    69,487
    
    
    
    424,190Installment and consumer:Guaranteed student loans
    
    
    181,458
    
    
    
    
    
    
    
    
    
    
    
    181,458Other
    
    
    15,347
    
    
    
    14,827
    
    
    
    907
    
    
    
    31,081Total
    
    $
    680,125
    
    
    $
    788,788
    
    
    $
    322,277
    
    
    $
    1,791,190
  (Dollars in thousands)
    
    Fixed
    
    Variable
    
    TotalReal estate mortgage:Commercial
    
    $
    82,703
    
    
    $
    377,723
    
    
    $
    460,426One-to-four family residential
    
    
    30,471
    
    
    
    44,945
    
    
    
    75,416Real estate construction
    
    
    28,029
    
    
    
    279,343
    
    
    
    307,372Commercial
    
    
    66,526
    
    
    
    185,591
    
    
    
    252,117Installment and consumer
    
    
    5,190
    
    
    
    10,544
    
    
    
    15,734Total
    
    $
    212,919
    
    
    $
    898,146
    
    
    $
    1,111,065
 40




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##### Table of Contents



For the Years Ended December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Beginning balance
    
    $
    23,812
    
    
    $
    18,991
    
    
    $
    15,009Provision for loan losses
    
    
    11,565
    
    
    
    15,785
    
    
    
    12,868Loans charged off
    
    
    (8,925
    )
    
    
    (12,020
    )
    
    
    (10,034
    )Recoveries
    
    
    841
    
    
    
    1,056
    
    
    
    1,148Total
    
    $
    27,293
    
    
    $
    23,812
    
    
    $
    18,991
   4. Derivative Instruments and Hedging Activities
  Amendment of Statement 133 on Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
   41




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##### Table of Contents



December 31, 2006Notional
    
    Gross Unrealized
    
    Estimated(Dollars in thousands)
    
    Amount
    
    Gains
    
    Losses
    
    Fair ValueFair-value hedgesInterest-rate swapsReceive fixed, pay floating
    
    $
    239,261
    
    
    $
    
    
    
    $
    (166
    )
    
    $
    (166
    )$
    239,261
    
    
    $
    
    
    
    $
    (166
    )
    
    $
    (166
    )Weighted average floating pay rate
    
    
    5.17
    %Weighted average fixed receive rate
    
    
    5.13
    %Weighted average maturity in months
    
    
    5
  42




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##### Table of Contents



5. Premises and Equipment
  At December 31,(Dollars in thousands)
    
    2006
    
    2005Land
    
    $
    4,937
    
    
    $
    4,530Buildings and improvements
    
    
    12,525
    
    
    
    11,205Furniture, fixtures, and equipment
    
    
    27,453
    
    
    
    24,908Construction/Remodeling in progress
    
    
    642
    
    
    
    2,10845,557
    
    
    
    42,751Accumulated depreciation and amortization
    
    
    (23,739
    )
    
    
    (22,167
    )Premises and equipment, net
    
    $
    21,818
    
    
    $
    20,584
 43




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##### Table of Contents



6. Other Borrowed Funds
  At December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Amounts outstanding at end of period:Treasury, tax and loan note option
    
    $
    1,197
    
    
    $
    2,216
    
    
    $
    2,359Federal funds purchased and securities sold
under repurchase agreements
    
    
    50,398
    
    
    
    65,342
    
    
    
    60,006Borrowed from the Federal Home Loan Bank
    
    
    86,500
    
    
    
    136,850
    
    
    
    137,700Other
    
    
    
    
    
    
    100
    
    
    
    Weighted average rate outstanding at end of period:Treasury, tax and loan note option
    
    
    5.04
    %
    
    
    3.95
    %
    
    
    1.87
    %Federal funds purchased and securities sold
under repurchase agreements
    
    
    4.20
    
    
    
    2.88
    
    
    
    1.59Borrowed from the Federal Home Loan Bank
    
    
    4.89
    
    
    
    4.33
    
    
    
    3.54Other
    
    
    
    
    
    
    5.25
    
    
    
    Maximum amounts of borrowings outstanding
at any month-end:Treasury, tax and loan note option
    
    $
    2,362
    
    
    $
    2,216
    
    
    $
    2,500Federal funds purchased and securities sold
under repurchase agreements
    
    
    150,954
    
    
    
    130,342
    
    
    
    111,359Borrowed from the Federal Home Loan Bank
    
    
    185,040
    
    
    
    146,500
    
    
    
    189,788Other
    
    
    
    
    
    
    100
    
    
    
    Approximate average short-term borrowings
outstanding for the year:Treasury, tax and loan note option
    
    $
    617
    
    
    $
    672
    
    
    $
    758Federal funds purchased and securities sold
under repurchase agreements
    
    
    95,090
    
    
    
    78,641
    
    
    
    85,680Borrowed from the Federal Home Loan Bank
    
    
    118,970
    
    
    
    129,763
    
    
    
    165,693Other
    
    
    
    
    
    
    1
    
    
    
    Approximate weighted average rate for the year:Treasury, tax and loan note option
    
    
    4.73
    %
    
    
    3.00
    %
    
    
    1.12
    %Federal funds purchased and securities sold
under repurchase agreements
    
    
    4.55
    
    
    
    2.86
    
    
    
    1.22Borrowed from the Federal Home Loan Bank
    
    
    4.76
    
    
    
    3.91
    
    
    
    2.97Other
    
    
    
    
    
    
    5.25
    
    
    
    
   44




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##### Table of Contents



7. Subordinated Debentures
     45




---



##### Table of Contents



Consolidation of Variable Interest Entities.
 46




---



##### Table of Contents



8. Income Taxes
  For the Years Ended December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Current tax expense:Federal
    
    $
    15,948
    
    
    $
    13,657
    
    
    $
    9,921State
    
    
    1,740
    
    
    
    1,435
    
    
    
    1,244Deferred tax expense (benefit):Federal
    
    
    (1,896
    )
    
    
    (1,127
    )
    
    
    (532
    )State
    
    
    (383
    )
    
    
    (125
    )
    
    
    (94
    )Taxes on income
    
    $
    15,409
    
    
    $
    13,840
    
    
    $
    10,539
  For the Years Ended December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Computed tax expense at statutory rates
    
    $
    14,492
    
    
    $
    12,199
    
    
    $
    10,209Increase (decrease) in income
taxes resulting from:Low income housing credit
    
    
    (500
    )
    
    
    (500
    )
    
    
    (125
    )Benefit of income not subject to U.S. Federal income tax
    
    
    (86
    )
    
    
    (111
    )
    
    
    (462
    )Expenses not deductible for U.S. Federal income tax
    
    
    417
    
    
    
    172
    
    
    
    170State income taxes, net of Federal income tax benefit
    
    
    626
    
    
    
    852
    
    
    
    747Other business credits
    
    
    (172
    )
    
    
    
    
    
    
    Expiration of capital loss carryforward
    
    
    34
    
    
    
    
    
    
    
    Other
    
    
    598
    
    
    
    1,228
    
    
    
    Taxes on income
    
    $
    15,409
    
    
    $
    13,840
    
    
    $
    10,539
  For the Years Ended December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Provision for loan losses
    
    $
    (1,368
    )
    
    $
    (2,241
    )
    
    $
    (1,593
    )Accumulated depreciation
    
    
    (157
    )
    
    
    (267
    )
    
    
    828Prepaid maintenance
    
    
    (58
    )
    
    
    39
    
    
    
    39Nonaccrual loan interest
    
    
    (823
    )
    
    
    
    
    
    
    Deferred compensation accrual
    
    
    (12
    )
    
    
    (9
    )
    
    
    65Mark-to-market adjustments
    
    
    36
    
    
    
    540
    
    
    
    66FHLB stock dividends
    
    
    205
    
    
    
    580
    
    
    
    (156
    )Write-downs on other real estate
    
    
    (68
    )
    
    
    (171
    )
    
    
    Other
    
    
    (34
    )
    
    
    277
    
    
    
    125Total
    
    $
    (2,279
    )
    
    $
    (1,252
    )
    
    $
    (626
    )
 47




---



##### Table of Contents



At December 31,(Dollars in thousands)
    
    2006
    
    2005Provision for loan losses
    
    $
    11,367
    
    
    $
    9,999Accumulated depreciation
    
    
    (2,415
    )
    
    
    (2,572
    )Prepaid maintenance
    
    
    (259
    )
    
    
    (317
    )Nonaccrual loan interest
    
    
    823
    
    
    
    Deferred compensation accrual
    
    
    180
    
    
    
    168Mark-to-market adjustments
    
    
    174
    
    
    
    210FHLB stock dividends
    
    
    (596
    )
    
    
    (391
    )Write-downs on other real estate
    
    
    239
    
    
    
    171Other
    
    
    (58
    )
    
    
    (92
    )9,455
    
    
    
    7,176Deferred taxes (payable) receivable on
investment securities available for sale
    
    
    1,101
    
    
    
    2,104Net deferred tax asset
    
    $
    10,556
    
    
    $
    9,280
 9. Shareholders Equity
    48




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##### Table of Contents



Share-Based Compensation
 10. Capital Requirements
   49




---



##### Table of Contents



To Be Well CapitalizedUnder Prompt Corrective
    
    For CapitalActual
    
    Action Provisions
    
    Adequacy Purposes(Dollars in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2006:Total Capital (to risk-weighted assets)Southwest
    
    $
    266,097
    
    
    
    13.50
    %
    
    
    N/A
    
    
    
    N/A
    
    
    $
    157,450
    
    
    
    8.00
    %Stillwater National
    
    
    232,311
    
    
    
    12.11
    
    
    $
    191,867
    
    
    
    10.00
    %
    
    
    153,494
    
    
    
    8.00SNB Wichita
    
    
    6,096
    
    
    
    15.65
    
    
    
    3,895
    
    
    
    10.00
    
    
    
    3,116
    
    
    
    8.00Tier I Capital (to risk-weighted assets)Southwest
    
    
    241,399
    
    
    
    12.25
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    78,725
    
    
    
    4.00Stillwater National
    
    
    207,756
    
    
    
    10.84
    
    
    
    115,120
    
    
    
    6.00
    
    
    
    76,747
    
    
    
    4.00SNB Wichita
    
    
    5,625
    
    
    
    14.44
    
    
    
    2,337
    
    
    
    6.00
    
    
    
    1,558
    
    
    
    4.00Tier I Leverage (to average assets)Southwest
    
    
    241,399
    
    
    
    10.91
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    88,526
    
    
    
    4.00Stillwater National
    
    
    207,756
    
    
    
    9.74
    
    
    
    106,659
    
    
    
    5.00
    
    
    
    85,327
    
    
    
    4.00SNB Wichita
    
    
    5,625
    
    
    
    10.43
    
    
    
    2,696
    
    
    
    5.00
    
    
    
    2,157
    
    
    
    4.00As of December 31, 2005:Total Capital (to risk-weighted assets)Southwest
    
    $
    239,759
    
    
    
    14.21
    %
    
    
    N/A
    
    
    
    N/A
    
    
    $
    135,002
    
    
    
    8.00
    %Stillwater National
    
    
    202,444
    
    
    
    12.26
    
    
    $
    165,087
    
    
    
    10.00
    %
    
    
    132,069
    
    
    
    8.00SNB Wichita
    
    
    5,741
    
    
    
    17.84
    
    
    
    3,218
    
    
    
    10.00
    
    
    
    2,575
    
    
    
    8.00Tier I Capital (to risk-weighted assets)Southwest
    
    
    218,587
    
    
    
    12.95
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    67,501
    
    
    
    4.00Stillwater National
    
    
    181,729
    
    
    
    11.01
    
    
    
    99,052
    
    
    
    6.00
    
    
    
    66,035
    
    
    
    4.00SNB Wichita
    
    
    5,349
    
    
    
    16.62
    
    
    
    1,931
    
    
    
    6.00
    
    
    
    1,287
    
    
    
    4.00Tier I Leverage (to average assets)Southwest
    
    
    218,587
    
    
    
    10.24
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    85,393
    
    
    
    4.00Stillwater National
    
    
    181,729
    
    
    
    8.83
    
    
    
    102,877
    
    
    
    5.00
    
    
    
    82,302
    
    
    
    4.00SNB Wichita
    
    
    5,349
    
    
    
    11.43
    
    
    
    2,339
    
    
    
    5.00
    
    
    
    1,871
    
    
    
    4.00
   11. Employee Benefits
  50




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##### Table of Contents



Stock Options
   (Dollars in thousands, except per share data)
    
    2005
    
    2004Net income, as reported
    
    $
    21,014
    
    
    $
    18,629Less: Proforma compensation expense related to options
net of tax effects
    
    
    386
    
    
    
    288Net income, proforma
    
    $
    20,628
    
    
    $
    18,341Earnings per common shareBasic, as presented
    
    $
    1.60
    
    
    $
    1.54Basic, proforma
    
    $
    1.57
    
    
    $
    1.52Diluted, as presented
    
    $
    1.55
    
    
    $
    1.48Diluted, proforma
    
    $
    1.52
    
    
    $
    1.46Weighted average fair value at grant date
    
    $
    3.04
    
    
    $
    2.62
  2006
    
    
    2005
    
    
    2004Expected dividend yield
    
    
    1.43
    %
    
    
    1.90
    %
    
    
    1.97
    %Expected volatility
    
    
    26.83
    %
    
    
    28.09
    %
    
    
    25.21
    %Risk-free interest rate
    
    
    4.81
    %
    
    
    4.94
    %
    
    
    4.74
    %Expected option term (in years)
    
    
    2.50
    
    
    
    7.93
    
    
    
    7.82
   51




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##### Table of Contents



WeightedWeighted
    
    Average AggregateAverage
    
    Remaining
    
    IntrinsicNumber of
    
    Exercise
    
    Contractual
    
    Value (dollarsOptions
    
    Price
    
    Life (Years)
    
    in thousands)Outstanding at December 31, 2003
    
    
    1,034,483
    
    
    
    8.43Granted
    
    
    123,402
    
    
    
    17.09Exercised
    
    
    (140,726
    )
    
    
    7.86Canceled/expired
    
    
    (27,447
    )
    
    
    9.44Outstanding at December 31, 2004
    
    
    989,712
    
    
    
    9.56Granted
    
    
    148,236
    
    
    
    20.22Exercised
    
    
    (174,262
    )
    
    
    9.96Canceled/expired
    
    
    (41,813
    )
    
    
    11.66Outstanding at December 31, 2005
    
    
    921,873
    
    
    $
    11.21Granted
    
    
    147,372
    
    
    
    23.26Exercised
    
    
    (201,236
    )
    
    
    9.60Canceled/expired
    
    
    (7,999
    )
    
    
    16.91Outstanding at December 31, 2006
    
    
    860,010
    
    
    $
    13.50
    
    
    
    2.86
    
    
    $
    11,609Total exercisable at December 31, 2004
    
    
    623,333
    
    
    $
    9.44Total exercisable at December 31, 2005
    
    
    636,124
    
    
    $
    10.50Total exercisable at December 31, 2006
    
    
    621,710
    
    
    $
    12.60
    
    
    
    2.56
    
    
    $
    7,834
   Shares
    
    WeightedIssuable
    
    AverageUpon Exercise
    
    Grant Dateof Options
    
    Fair ValueNonvested Balance at December 31, 2005
    
    
    285,749
    
    
    $
    3.67Granted
    
    
    147,372
    
    
    
    5.53Vested
    
    
    (186,822
    )
    
    
    4.25Forfeited
    
    
    (7,999
    )
    
    
    4.70Nonvested Balance at December 31, 2006
    
    
    238,300
    
    
    $
    4.34
  Restricted Stock
 52




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##### Table of Contents



12. Operating Leases
  2007
    
    $
    2,121,0002008
    
    
    1,925,0002009
    
    
    1,745,0002010
    
    
    1,348,0002011
    
    
    1,003,000Thereafter
    
    
    125,000
  13. Fair Value Disclosures of Financial Instruments
 Disclosures About Fair Value of Financial
Instruments
 Cash and cash equivalents
 Investment securities
 Loans
 Accrued interest receivable
 Deposits
 Other borrowings
 53




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##### Table of Contents



Subordinated debentures
 Other liabilities and accrued interest payable
 Commitments
  At December 31, 2006
    At December 31, 2005Carrying
    
    Fair
    
    Carrying
    
    Fair(Dollars in thousands)
    
    Values
    
    Values
    
    Values
    
    ValuesCash and cash equivalents
    
    $
    46,618
    
    
    $
    46,618
    
    
    $
    50,277
    
    
    $
    50,277Investment securities:Held to maturity
    
    
    1,630
    
    
    
    1,621
    
    
    
    1,538
    
    
    
    1,530Available for sale
    
    
    255,904
    
    
    
    255,904
    
    
    
    256,751
    
    
    
    256,751FRB and FHLB stock
    
    
    12,315
    
    
    
    12,315
    
    
    
    9,804
    
    
    
    9,804Total loans
    
    
    1,763,897
    
    
    
    1,769,464
    
    
    
    1,712,068
    
    
    
    1,713,849Accrued interest receivable
    
    
    24,269
    
    
    
    24,269
    
    
    
    14,382
    
    
    
    14,382Derivative instruments
    
    
    166
    
    
    
    166
    
    
    
    
    
    
    
    Deposits
    
    
    1,765,611
    
    
    
    1,711,210
    
    
    
    1,657,820
    
    
    
    1,654,440Accrued interest payable
    
    
    13,260
    
    
    
    13,260
    
    
    
    8,953
    
    
    
    8,953Other liabilities
    
    
    8,624
    
    
    
    8,624
    
    
    
    11,233
    
    
    
    11,233Other borrowings
    
    
    138,094
    
    
    
    138,094
    
    
    
    204,508
    
    
    
    204,508Subordinated debentures
    
    
    46,393
    
    
    
    46,393
    
    
    
    46,393
    
    
    
    46,393Commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 14. Financial Instruments with Off-Balance Sheet Risk
   At December 31,(Dollars in thousands
    
    2006
    
    2005Commitments to extend commercial and real estate mortgage credit
    
    $
    572,182
    
    
    $
    451,095Standby and commercial letters of credit
    
    
    12,215
    
    
    
    16,344Total
    
    $
    584,397
    
    
    $
    467,439
  54




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##### Table of Contents



15. Commitments and Contingencies
      55




---



##### Table of Contents



16. Supplemental Cash Flows Information
 For the Years Ended December 31,(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    2004Cash paid for interest
    
    $
    72,615
    
    
    $
    48,196
    
    
    $
    30,710Cash paid for taxes on income
    
    
    15,321
    
    
    
    15,544
    
    
    
    8,300Loans transferred to other real estate owned
    
    
    615
    
    
    
    7,303
    
    
    
    4,035
 17. Operating Segments
     For the Year Ended December 31, 2006Oklahoma
    
    Other States
    
    Secondary
    
    Other
    
    Total(Dollars in thousands)
    
    Banking
    
    Banking
    
    Market
    
    Operations
    
    CompanyNet interest income
    
    $
    47,838
    
    
    $
    26,993
    
    
    $
    9,204
    
    
    $
    8,803
    
    
    $
    92,838Provision for loan losses
    
    
    7,182
    
    
    
    4,383
    
    
    
    
    
    
    
    
    
    
    
    11,565Other income
    
    
    8,098
    
    
    
    857
    
    
    
    3,679
    
    
    
    4,143
    
    
    
    16,777Other expenses
    
    
    30,082
    
    
    
    15,966
    
    
    
    4,140
    
    
    
    6,456
    
    
    
    56,644Income before taxes
    
    
    18,672
    
    
    
    7,501
    
    
    
    8,743
    
    
    
    6,490
    
    
    
    41,406Taxes on income
    
    
    6,730
    
    
    
    3,136
    
    
    
    2,890
    
    
    
    2,653
    
    
    
    15,409Net income
    
    $
    11,942
    
    
    $
    4,365
    
    
    $
    5,853
    
    
    $
    3,837
    
    
    $
    25,997Fixed asset expenditures
    
    $
    455
    
    
    $
    508
    
    
    $
    
    
    
    $
    1,952
    
    
    $
    2,915Total loans at period end
    
    
    912,862
    
    
    
    689,864
    
    
    
    188,464
    
    
    
    
    
    
    
    1,791,190Total assets at period end
    
    
    918,814
    
    
    
    694,346
    
    
    
    201,131
    
    
    
    356,337
    
    
    
    2,170,628
 56




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##### Table of Contents



For the Year Ended December 31, 2005Oklahoma
    
    Other States
    
    Secondary
    
    Other
    
    Total(Dollars in thousands)
    
    Banking
    
    Banking
    
    Market
    
    Operations
    
    CompanyNet interest income
    
    $
    46,119
    
    
    $
    19,272
    
    
    $
    16,971
    
    
    $
    2,744
    
    
    $
    85,106Provision for loan losses
    
    
    11,371
    
    
    
    4,414
    
    
    
    
    
    
    
    
    
    
    
    15,785Other income
    
    
    8,284
    
    
    
    990
    
    
    
    4,221
    
    
    
    3,911
    
    
    
    17,406Other expenses
    
    
    28,262
    
    
    
    12,082
    
    
    
    5,780
    
    
    
    5,749
    
    
    
    51,873Income before taxes
    
    
    14,770
    
    
    
    3,766
    
    
    
    15,412
    
    
    
    906
    
    
    
    34,854Taxes on income
    
    
    5,951
    
    
    
    1,373
    
    
    
    5,984
    
    
    
    532
    
    
    
    13,840Net income
    
    $
    8,819
    
    
    $
    2,393
    
    
    $
    9,428
    
    
    $
    374
    
    
    $
    21,014Fixed asset expenditures
    
    $
    485
    
    
    $
    1,412
    
    
    $
    
    
    
    $
    1,527
    
    
    $
    3,424Total loans at period end
    
    
    836,850
    
    
    
    518,708
    
    
    
    380,346
    
    
    
    (24
    )
    
    
    1,735,880Total assets at period end
    
    
    843,584
    
    
    
    516,212
    
    
    
    397,940
    
    
    
    341,903
    
    
    
    2,099,639
 For the Year Ended December 31, 2004Oklahoma
    
    Other States
    
    Secondary
    
    Other
    
    Total(Dollars in thousands)
    
    Banking
    
    Banking
    
    Market
    
    Operations
    
    CompanyNet interest income
    
    $
    42,272
    
    
    $
    14,331
    
    
    $
    18,817
    
    
    $
    (2,943
    )
    
    $
    72,477Provision for loan losses
    
    
    8,941
    
    
    
    3,927
    
    
    
    
    
    
    
    
    
    
    
    12,868Other income
    
    
    7,252
    
    
    
    867
    
    
    
    3,104
    
    
    
    2,862
    
    
    
    14,085Other expenses
    
    
    27,671
    
    
    
    7,281
    
    
    
    5,483
    
    
    
    4,091
    
    
    
    44,526Income (loss) before taxes
    
    
    12,912
    
    
    
    3,990
    
    
    
    16,438
    
    
    
    (4,172
    )
    
    
    29,168Taxes on income
    
    
    4,798
    
    
    
    1,380
    
    
    
    6,018
    
    
    
    (1,657
    )
    
    
    10,539Net income (loss)
    
    $
    8,114
    
    
    $
    2,610
    
    
    $
    10,420
    
    
    $
    (2,515
    )
    
    $
    18,629Fixed asset expenditures
    
    $
    480
    
    
    $
    650
    
    
    $
    2
    
    
    $
    1,732
    
    
    $
    2,864Total loans at period end
    
    
    881,682
    
    
    
    388,002
    
    
    
    353,812
    
    
    
    379
    
    
    
    1,623,875Total assets at period end
    
    
    889,768
    
    
    
    386,379
    
    
    
    368,557
    
    
    
    269,083
    
    
    
    1,913,787
 57




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##### Table of Contents



18. Parent Company Condensed Financial Information
  At December 31,(Dollars in thousands)
    
    2006
    
    2005Statements of Financial ConditionAssets:Cash and due from banks
    
    $
    2,041
    
    
    $
    3,219Investment in subsidiary bank
    
    
    208,920
    
    
    
    178,927Investments in other subsidiaries
    
    
    7,269
    
    
    
    6,920Investment securities, available for sale
    
    
    25,840
    
    
    
    29,442Other assets
    
    
    2,561
    
    
    
    2,507Total
    
    $
    246,631
    
    
    $
    221,015Liabilities:Subordinated debentures
    
    $
    46,393
    
    
    $
    46,393Other liabilities
    
    
    2,728
    
    
    
    4,178Shareholders Equity:Common stock and related accounts
    
    
    197,510
    
    
    
    170,444Total
    
    $
    246,631
    
    
    $
    221,015
 For the Years Ended December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Statements of OperationsIncome:Cash dividends from subsidiaries
    
    $
    5,614
    
    
    $
    13,624
    
    
    $
    3,335Other income
    
    
    
    
    
    
    144
    
    
    
    Investment income
    
    
    834
    
    
    
    717
    
    
    
    346Interest and fees on loans
    
    
    
    
    
    
    9
    
    
    
    18Total income
    
    
    6,448
    
    
    
    14,494
    
    
    
    3,699Expense:Interest on subordinated debentures
    
    
    3,797
    
    
    
    4,113
    
    
    
    4,489Other expense
    
    
    1,930
    
    
    
    1,827
    
    
    
    739Total expense
    
    
    5,727
    
    
    
    5,940
    
    
    
    5,228Total income (loss) before taxes and equity in
undistributed income of subsidiaries
    
    
    721
    
    
    
    8,554
    
    
    
    (1,529
    )Taxes on income
    
    
    (1,268
    )
    
    
    (1,891
    )
    
    
    (1,847
    )Income before equity in undistributed
income of subsidiaries
    
    
    1,989
    
    
    
    10,445
    
    
    
    318Equity in undistributed income of subsidiaries
    
    
    24,008
    
    
    
    10,569
    
    
    
    18,311Net income
    
    $
    25,997
    
    
    $
    21,014
    
    
    $
    18,629
 58




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##### Table of Contents



For the Years Ended December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004Statements of Cash FlowsOperating activities:Net income
    
    $
    25,997
    
    
    $
    21,014
    
    
    $
    18,629Equity in undistributed income of subsidiaries
    
    
    (24,008
    )
    
    
    (10,569
    )
    
    
    (18,311
    )Other, net
    
    
    103
    
    
    
    1,736
    
    
    
    3,503Net cash provided by operating activities
    
    
    2,092
    
    
    
    12,181
    
    
    
    3,821Investing activities:Available for sale securities:Purchases
    
    
    (1,039
    )
    
    
    (26,998
    )
    
    
    Sales
    
    
    5,005
    
    
    
    
    
    
    
    Loans originated and principal repayments, net
    
    
    
    
    
    
    151
    
    
    
    Capital contribution to Bank
    
    
    (5,000
    )
    
    
    (12,500
    )
    
    
    Return of capital contribution to other subsidiaries
    
    
    
    
    
    
    774
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (1,034
    )
    
    
    (38,573
    )
    
    
    Financing activities:Net proceeds from issuance of common stock
    
    
    2,323
    
    
    
    41,593
    
    
    
    1,439Redemption of subordinated debentures
    
    
    
    
    
    
    (25,787
    )
    
    
    Purchases of treasury stock
    
    
    
    
    
    
    (12,416
    )
    
    
    Cash dividends paid on common stock
    
    
    (4,559
    )
    
    
    (3,831
    )
    
    
    (3,280
    )Net cash provided by (used in) financing activities
    
    
    (2,236
    )
    
    
    (441
    )
    
    
    (1,841
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,178
    )
    
    
    (26,833
    )
    
    
    1,980Cash and cash equivalents,Beginning of year
    
    
    3,219
    
    
    
    30,052
    
    
    
    28,072End of year
    
    $
    2,041
    
    
    $
    3,219
    
    
    $
    30,052
 59




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##### Table of Contents



19. Selected Quarterly Financial Data (Unaudited)
 For the Quarter Ended(Dollars in thousands, except per share data)
    
    12-31-06
    
    09-30-06
    
    06-30-06
    
    03-31-06Operations DataInterest income
    
    $
    44,723
    
    
    $
    43,817
    
    
    $
    41,812
    
    
    $
    39,408Interest expense
    
    
    20,684
    
    
    
    20,121
    
    
    
    18,951
    
    
    
    17,166Net interest income
    
    
    24,039
    
    
    
    23,696
    
    
    
    22,861
    
    
    
    22,242Provision for loan losses
    
    
    2,567
    
    
    
    3,006
    
    
    
    3,316
    
    
    
    2,676Gain on sales of securities and loans
    
    
    1,402
    
    
    
    676
    
    
    
    969
    
    
    
    642Other income
    
    
    2,942
    
    
    
    3,283
    
    
    
    3,536
    
    
    
    3,326Other expenses
    
    
    15,691
    
    
    
    13,910
    
    
    
    13,852
    
    
    
    13,190Income before taxes
    
    
    10,125
    
    
    
    10,739
    
    
    
    10,198
    
    
    
    10,344Taxes on income
    
    
    3,672
    
    
    
    4,100
    
    
    
    3,572
    
    
    
    4,065Net income
    
    $
    6,453
    
    
    $
    6,639
    
    
    $
    6,626
    
    
    $
    6,279Per Share Data(1)Basic earnings per common share
    
    $
    0.45
    
    
    $
    0.47
    
    
    $
    0.46
    
    
    $
    0.45Diluted earnings per common share
    
    
    0.44
    
    
    
    0.46
    
    
    
    0.45
    
    
    
    0.44Dividends declared per common share
    
    
    0.0825
    
    
    
    0.0825
    
    
    
    0.0825
    
    
    
    0.0825Weighted average common shares outstandingBasic
    
    
    14,230,015
    
    
    
    14,206,947
    
    
    
    14,151,442
    
    
    
    14,075,998Diluted
    
    
    14,562,343
    
    
    
    14,533,573
    
    
    
    14,470,954
    
    
    
    14,406,911
 For the Quarter Ended(Dollars in thousands, except per share data)
    
    12-31-05
    
    09-30-05
    
    06-30-05
    
    03-31-05Operations DataInterest income
    
    $
    37,205
    
    
    $
    34,948
    
    
    $
    33,245
    
    
    $
    31,946Interest expense
    
    
    15,476
    
    
    
    13,555
    
    
    
    12,353
    
    
    
    10,854Net interest income
    
    
    21,729
    
    
    
    21,393
    
    
    
    20,892
    
    
    
    21,092Provision for loan losses
    
    
    4,348
    
    
    
    4,142
    
    
    
    2,986
    
    
    
    4,309Gain on sales of securities and loans
    
    
    1,813
    
    
    
    1,333
    
    
    
    916
    
    
    
    853Other income
    
    
    3,104
    
    
    
    3,258
    
    
    
    3,262
    
    
    
    2,867Other expenses
    
    
    13,220
    
    
    
    12,725
    
    
    
    13,784
    
    
    
    12,144Income before taxes
    
    
    9,078
    
    
    
    9,117
    
    
    
    8,300
    
    
    
    8,359Taxes on income
    
    
    4,486
    
    
    
    3,310
    
    
    
    3,071
    
    
    
    2,973Net income
    
    $
    4,592
    
    
    $
    5,807
    
    
    $
    5,229
    
    
    $
    5,386Per Share Data(1)Basic earnings per common share
    
    $
    0.33
    
    
    $
    0.41
    
    
    $
    0.42
    
    
    $
    0.44Diluted earnings per common share
    
    
    0.31
    
    
    
    0.41
    
    
    
    0.40
    
    
    
    0.43Dividends declared per common share
    
    
    0.075
    
    
    
    0.075
    
    
    
    0.075
    
    
    
    0.075Weighted average common shares outstandingBasic
    
    
    14,001,209
    
    
    
    13,944,877
    
    
    
    12,533,323
    
    
    
    12,154,300Diluted
    
    
    14,387,171
    
    
    
    14,359,808
    
    
    
    12,893,800
    
    
    
    12,579,941
 60




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##### Table of Contents



20. Accounting Standard Issued But Not Yet Adopted
     21. Acquisitions
  Cash and cash equivalents
    
    $
    4,933Securities
    
    
    15,067Loans
    
    
    13,010Premises and equipment, net
    
    
    1,786Core deposit premium
    
    
    1,702Other assets
    
    
    188Total assets acquired
    
    $
    36,686Deposits
    
    
    32,546Other liabilities
    
    
    45Net assets acquired
    
    $
    4,095Less purchase price
    
    
    5,115Goodwill
    
    $
    1,020
   61




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22. Subsequent Event
  62




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OTHER MATERIAL REQUIRED BY FORM 10-K
 
 Business
 General
  Products and Services
 SNB DirectBanker®,
 Strategic Focus
 SNB DirectBanker®
 63




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Organization
  Banking Segments
 Oklahoma Banking Segment.
 Other States Banking Segment
 Secondary Market Segment
   64




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Support and Control Functions SNB DirectBanker®
  Banking Offices and Geographic Markets
  SNB DirectBanker®
 Competition
  65




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66




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Regulation, Supervision, and Governmental Policy
  Bank Holding Company Regulation
       67




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National Bank Regulation
    Federal Savings Bank Regulation
 68




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Limits on Loans to One Borrower
 69




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Transactions with Affiliates
 Real Estate Lending Guidelines
 Federal Deposit Insurance .
 Regulatory Capital Requirements
  70




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71




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Brokered Deposits
 Supervision and Regulation of Mortgage Banking Operations
 Community Reinvestment
 72




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Bank Secrecy Act
 Sarbanes-Oxley Act of 2002
 Other Laws and Regulations
 Enforcement Actions
 73




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Employees
  74




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Board of Directors of Southwest Bancorp, Inc. and Stillwater National Bank & Trust
Company
 Robert B. Rodgers, Chairman of the Board
    
    President, Bob Rodgers Motor CompanyRick Green, Vice Chairman of the Board
    
    President and Chief Executive Officer
Southwest and Stillwater NationalJames E. Berry II
    
    Owner, Shading ConceptsTom D. Berry
    
    Auctioneer, Real Estate Broker, Oil & Gas ExplorationJoe Berry Cannon
    
    Assistant Professor of Management, Oral Roberts
University School of BusinessJohn Cohlmia
    
    Real Estate Broker, Grubb & Ellis/Levy BeffortDavid S. Crockett Jr.
    
    Owner, David S. Crockett & Co., CPAsJ. Berry Harrison
    
    Oklahoma State Senator (retired) and RancherJames M. Johnson
    
    Self-employed Small Business OwnerDavid P. Lambert
    
    Chairman of the Board, Lambert Construction CompanyLinford R. Pitts
    
    President, Stillwater Transfer & Storage, Inc.Russell W. Teubner
    
    Founder and Chief Executive Officer,
HostBridge Technology
 
 Board of Directors of SNB Bank of Wichita
 Robert B. Rodgers, Chairman of the Board
    
    President, Bob Rodgers Motor CompanyRick Green, Vice Chairman of the Board
    
    President and Chief Executive Officer
Southwest and Stillwater NationalKerby E. Crowell, CPA
    
    Executive Vice President and Chief Financial Officer, Southwest,
Stillwater National, and SNB Bank of WichitaSteven N. Hadley
    
    President, SNB Bank of WichitaAnthony W. Martin
    
    Dentist/Owner, Martin & Frankenberry D.D.S.P.A.
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Executive Officers
  Name
    
    Age
    
    PositionRobert H. Beuttas
    
    
    51
    
    
    President, SNB Bank of Dallas-Preston Center Division of Stillwater NationalKerby E. Crowell
    
    
    57
    
    
    Executive Vice President, Chief Financial Officer, and Secretary of Southwest and Stillwater
National; Director, Chief Financial Officer, and Secretary of SNB WichitaJohn T. Danielson
    
    
    48
    
    
    President, SNB Bank of San Antonio Division of Stillwater NationalDavid Dietz
    
    
    50
    
    
    Executive Vice President and Chief Information Officer of Stillwater NationalHal E. Fudge
    
    
    47
    
    
    President, Healthcare Lending Division of Stillwater NationalAllen Glenn
    
    
    37
    
    
    President, Business Consulting Group, Inc. and Executive Vice President of Stillwater
NationalSteven M. Gobel
    
    
    55
    
    
    Executive Vice President and Associate Chief Financial Officer of Southwest and Stillwater
NationalSteven N. Hadley
    
    
    49
    
    
    President, SNB Wichita*Kenneth D. Holmes
    
    
    55
    
    
    Senior Vice President, Regulatory Risk Management of Stillwater NationalRex E. Horning
    
    
    55
    
    
    President, Stillwater Division of Stillwater NationalJerry L. Lanier
    
    
    58
    
    
    Executive Vice President and Chief Lending Officer of Stillwater NationalLen McLaughlin
    
    
    54
    
    
    President, SNB Bank of Dallas-Frisco Division of Stillwater NationalJ. Randall Mills
    
    
    52
    
    
    President, Healthcare Strategic Support, Inc.Jason D. Osborn
    
    
    36
    
    
    President, Oklahoma City Division of Stillwater NationalSteven M. Peterson
    
    
    42
    
    
    President, SNB Bank of Austin Division of Stillwater National*Jerry Rackley
    
    
    45
    
    
    Executive Director, Corporate Marketing of Stillwater NationalKimberly G. Sinclair
    
    
    51
    
    
    Executive Vice President and Chief Administrative Officer of Stillwater National
 76




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Name
    
    Age
    
    PositionDouglas J. Watts
    
    
    57
    
    
    President, Kansas City Division of Stillwater NationalCharles H. Westerheide
    
    
    58
    
    
    Executive Vice President and Treasurer of Stillwater NationalDavid L. York
    
    
    60
    
    
    President, Tulsa Division of Stillwater National
 
 *
    
    Advisor to the Executive Officers  Robert H. Beuttas
 Kerby E. Crowell
 John T. Danielson
 David Dietz
 Hal E. Fudge
 77




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Allen Glenn
 Steven M. Gobel
 Steven N. Hadley
 Rex E. Horning
 Jerry L. Lanier
 78




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Len McLaughlin
 J. Randall Mills
 Jason D. Osborn
 Steven M. Peterson
 Kimberly G. Sinclair
 Douglas J. Watts
 Charles H. Westerheide
 79




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David L. York
 80




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RISK FACTORS
 Investing in our common stock involves risks. You should carefully consider the following
risk factors before you decide to make an investment decision regarding our stock. The risk
factors may cause our future earnings to be lower or our financial condition to be less favorable
than we expect. In addition, other risks of which we are not aware, or which we do not believe are
material, may cause earnings to be lower, or may hurt our financial condition. You should also
consider the other information in this Annual Report on Form 10-K , as well as in the documents
incorporated by reference into it.
 We may be unable to execute our growth strategy.
    Changes in interest rates and other factors beyond our control may adversely affect our
earnings and financial condition.
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Changes in local economic conditions could adversely affect our business.
  Adverse changes in healthcare-related businesses could lead to slower loan growth and higher
levels of problem loans and charge-offs.
  Income from our secondary market activities has declined as a result of changes made by Sallie
Mae and reduced profitability of private student lending. We expect this trend to continue in
2007. Our ability to conduct student lending activities and the profitability of our student
lending operations are highly dependent on Sallie Mae and federal law. Income from other secondary
market activities varies from year to year.
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Our allowance for loan losses may not be adequate to cover our actual loan losses, which could
adversely affect our earnings.
   Unseasoned loans may increase the risk of credit defaults in the future.
  We use wholesale funding sources to supplement our core deposits, which exposes us to
liquidity risk and potential earnings volatility or other adverse effects if we are unable to
secure adequate funding.
  83




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We rely on our management and other key personnel, and the loss of any of them may adversely
affect our operations.
  The market price for our common stock may be highly volatile.
  
    
    Variations in our anticipated or actual operating results or the results of our competitors;
    
    Changes in investors or analysts perceptions of the risks and conditions of our business;
    
    The size of the public float of our common stock;
    
    Regulatory developments;
    
    The announcement of acquisitions or new branch locations by us or our competitors;
    
    Market conditions; and
    
    General economic conditions.
 Competition may decrease our growth or profits.
  Government regulation significantly affects our business.
  84




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Our ability to pay dividends is limited by law and contract.
  Restrictions on unfriendly acquisitions could prevent a takeover.
    Future sales of our common stock or other securities may dilute the value of our common stock.
   We may be unable to recover $2.5 million in cash that an armored transportation company failed to
deliver. A failure to recover this cash could result in a loss to us that is not reflected in our
2006 financial statements.
  85




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Availability of Filings
  86




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Properties
  Southwest Bancorp, Inc.Corporate Headquarters
608 S. Main Street
P.O. Box 1988
www.oksb.com
    
    Stillwater, Oklahoma 74076
    
    405-372-2234Business Consulting Group, Inc.
1624 Cimarron Plaza*
P.O. Box 1988
    
    Stillwater, Oklahoma 74076
    
    405-372-2234Healthcare Strategic Support, Inc.
2431 E. 61st, Suite 170*
P.O. Box 521500
    
    Tulsa, Oklahoma 74152
    
    918-523-3690SNB Bank of WichitaCorporate Headquarters
8415 E. 21st Street North, Suite 150*
www.snbwichita.com
    
    Wichita, Kansas 67206
    
    316-315-1660Stillwater National Bank & Trust Company LocationsCorporate Headquarters
608 S. Main Street
P.O. Box 1988
www.banksnb.com
    
    Stillwater, Oklahoma 74076
    
    405-372-2234Drive-in Facility
308 S. Main Street
P.O. Box 1988
    
    Stillwater, Oklahoma 74076
    
    405-372-2234Operations Center
1624 Cimarron Plaza*
P.O. Box 1988
    
    Stillwater, Oklahoma 74076
    
    405-372-2234Waterford Branch
6301 Waterford Blvd., Suite 101*
    
    Oklahoma City, Oklahoma 73118
    
    405-427-3100Chickasha Branch
500 W. Grand Avenue
    
    Chickasha, Oklahoma 73018
    
    405-427-3100Tulsa Utica Branch
1500 S. Utica Avenue
P.O. Box 521500
    
    Tulsa, Oklahoma 74152
    
    918-523-3750Tulsa 61st Branch
2431 E. 61st, Suite 170*
P.O. Box 521500
    
    Tulsa, Oklahoma 74152
    
    918-523-3750
 87




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SNB McMullen Bank-Tilden Branch
205 Elm Street
    
    Tilden, Texas 78072
    
    361-274-3391SNB Bank of Dallas
5300 Town and Country Blvd., Suite 100*
    
    Frisco, Texas 75034
    
    972-624-2960SNB Bank of Dallas-Preston Center
5950 Berkshire Lane, Suite 350*
    
    Dallas, Texas 75225
    
    972-624-2960SNB Bank of Austin
3600 Bee Cave Road, Suite 100*
    
    Austin, Texas 78746
    
    512-314-6741SNB Bank of San Antonio-Stone Oak Branch777 E. Sonterra Blvd, Suite 190*
    
    San Antonio, Texas 78258
    
    210-442-6141SNB Bank of San Antonio-Medical Hill Branch
9324 Huebner Road
    
    San Antonio, Texas 78240
    
    210-442-6100Stillwater National Bank Loan Production Office11350 Tomahawk Creek Parkway*
Suite 100
    
    Leawood, Kansas 66211
    

    913-906-4400Stillwater National Bank Loan Production Office9990 Richmond, Suite 140*
    
    Houston, Texas 77042
    
    713-782-3154OSU Campus Branch Bank
1102 W. Hall of Fame Avenue*
P.O. Box 1988
    
    Stillwater, Oklahoma 74076
    
    405-372-2234OUHSC Loan Office
1106 N. Stonewall*
    
    Oklahoma City, Oklahoma 73190
    
    405-427-3100OSU-Stillwater Marketing Office
Student Union, Room 150*
P.O. Box 1988
    
    Stillwater, Oklahoma 74076
    
    405-372-2234
 
 *Leased from third parties.Other properties are owned. 88




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PART IV
 
  Documents Filed as Part of this Report
 Financial Statements
        Financial Statement Schedules
 Exhibits
 No.
    
    Exhibit3.1
    
    Amended and Restated Certificate of Incorporation of Southwest Bancorp, Inc.
(incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996)3.2
    
    Bylaws of Southwest Bancorp, Inc. (incorporated by reference to Exhibit 3.2 to
Registration Statement on Form S-1 (File No. 33-71168))4.1
    
    Rights Agreement, dated as of April 22, 1999, between Southwest Bancorp, Inc. and
Harris Trust & Savings Bank, as rights agent and Form of Certificate of Designations
setting forth terms of Class B, Series 1 Preferred Stock of Southwest Bancorp, Inc.
referred to in the rights agreement (incorporated by reference to Exhibits 1 and 2 to
Current Report on Form 8-K dated April 22, 1999)* 10.1
    
    Southwest Bancorp, Inc. Employee Stock Purchase Plan
(incorporated by reference from Exhibit 4.1 to Registration
Statement on Form S-8 (File No. 33-97850))* 10.2
    
    Severance Compensation Plan (incorporated by reference from
Exhibit 10.2 to Annual Report on Form 10-K for the fiscal
year ended December 31, 2004.)* 10.3
    
    Southwest Bancorp, Inc. 1994 Stock Option Plan (incorporated
by reference from Exhibit 10.3 to Annual Report on Form 10-K
for the fiscal year ended December 31, 1993)* 10.4
    
    Southwest Bancorp, Inc. 1999 Stock Option Plan (incorporated
by reference from Exhibit 4 to Registration Statement on
Form S-8 (File No. 333-92143))* 10.5
    
    Stillwater National Bank and Trust Company 2002 and 2003
Deferred Compensation Plans (incorporated by reference from
Exhibit 10.5 to Annual Report on Form 10-K for the fiscal
year ended December 31, 2002.)* 10.6
    
    Stillwater National Bank and Trust Company Supplemental
Profit Sharing Plan for Rick Green (incorporated by
reference from Exhibit 10.6 to Annual Report on Form 10-K
for the fiscal year ended December 31, 2002.)
 89




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No.
    
    Exhibit* 10.7
    
    Stillwater National Bank and Trust Company Supplemental
Profit Sharing Plan for Kerby E. Crowell (incorporated by
reference from Exhibit 10.7 to Annual Report on Form 10-K
for the fiscal year ended December 31, 2004).* 10.8
    
    Stillwater National Bank and Trust Company Supplemental
Profit Sharing Plan for Jerry L. Lanier (incorporated by
reference from Exhibit 10.8 to Annual Report on Form 10-K
for the fiscal year ended December 31, 2004).10.9
    
    Indemnification Agreements by and between Southwest Bancorp, Inc. and James E. Berry
II, Thomas D. Berry, Joe Berry Cannon, J. Berry Harrison, Erd M. Johnson, David P.
Lambert, Linford R. Pitts, Robert B. Rodgers, Russell W. Teubner, John Cohlmia, and
Anthony W. Martin (incorporated by reference from Exhibit 10.9 to Annual Report on Form
10-K for the fiscal year ended December 31, 2005).10.10
    
    Indemnification Agreements by and between Southwest Bancorp, Inc. and Rick Green,
Kerby E. Crowell, David Dietz, Allen Glenn, Steve Gobel, Steven N. Hadley, Jerry L.
Lanier, Randy Mills, Kimberly Sinclair, Kay Smith, and Charles H. Westerheide
(incorporated by reference from Exhibit 10.10 to Annual Report on Form 10-K for the fiscal
year ended December 31, 2005).10.11
    
    Selling Shareholder Agreement dated by and among certain shareholders, Betty B.
Kerns, and Southwest Bancorp, Inc. (incorporated by reference from Exhibit 10.1 to Current
Report on Form 8-K dated May 16, 2005).10.12
    
    Indemnification Agreements by and between Southwest Bancorp, Inc. and David S.
Crockett, Jr. (incorporated by reference from Exhibit 10(a) to Quarterly Report on Form
10-Q for the quarter ended September 30, 2006).10.13
    
    Indemnification Agreements by and between Southwest Bancorp, Inc. and James M.
Johnson (incorporated by reference from Exhibit 10(b) to Quarterly Report on Form 10-Q for
the quarter ended September 30, 2006.)* 10.14
    
    Directors Deferred Compensation Plan by and between Southwest Bancorp, Inc. and James
M. Johnson (incorporated by reference to Exhibit 10 to Current Report on Form 8-K dated
December 28, 2006).10.15
    
    Audit Committee Financial Expert Agreement by and between Southwest Bancorp, Inc.
and David S. Crockett, Jr.21
    
    Subsidiaries of the Registrant23
    
    Consent of Registered Public Accounting Firm24
    
    Power of Attorney31(a),(b)
    
    Rule 13a-14(a)/15d-14(a) Certifications32(a),(b)
    
    18 U.S.C. Section 1350 Certifications
 
 *
    
    Management contract or compensatory plan or arrangement required to be filed pursuant to Item
14(c) of Form 10-K. 90




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SIGNATURES
  SOUTHWEST BANCORP, INC.March 8, 2007

    by:
    /s/ Rick GreenRick GreenChief Executive Officer  /s/ Rick Green

Rick Green
    
    March 8, 2007Director and Chief Executive Officer(Principal Executive Officer)/s/ Kerby E. Crowell

Kerby E. Crowell
    
    March 8, 2007Executive Vice President,Chief Financial Officer and Secretary(Principal Financial andAccounting Officer)
  By:
    
    Rick GreenAttorney-in-Fact for
Majority of theDirectors of Southwest
    
    
    
    /s/ Rick Green
 91