Parent of Vista Bank Files for 2nd Stock Swap

Southwest Bancorp has filed a common-for-preferred stock swap with the Securities and Exchange Commission for its 108,710 remaining preferred shares, company officials said Tuesday.

If Southwest’s second exchange offer in the past two years is successful, the parent company of Southwest Bank will be able to divert hundreds of thousands of dollars in unpaid preferred dividends into its capital base.

Vista-based Southwest has not yet determined how many shares of common stock will be offered in exchange for each of its 108,710 outstanding shares of preferred.

However, in an exchange offer initiated in 1984 and completed in 1985, the bank converted 91,000 preferred shares in an exchange that offered seven shares of common for each of its 200,000 then-outstanding preferred shares.

Some shareholders criticized that swap as benefiting Southwest--which would escape paying more than $1 million in unpaid preferred dividends if all shares were swapped--but not shareholders. After the offer, which attracted about half of Southwest’s preferred stock, two preferred holders were appointed to the holding company’s board.

A successful offering might allow Southwest to remove those board members, according to one industry analyst.

A successful offering also might reduce the likelihood of another lawsuit by a disgruntled shareholder who has twice sued the company. That would make the company more desirable as a merger or acquisition candidate, according to another banking industry observer.

The holding company’s previous stock-swap offering was marred by what officials later described as an “innocent” filing error that eventually forced the company to rescind its swap offering. However, few shareholders exercised their option of returning their newly issued common stock for preferred.

Southwest initiated the second swap because of interest from preferred shareholders who held their preferred during the first offering, according to Chief Financial Officer Mike Ernst.