ViewPoint Financial Group, Inc. Reports Record Quarterly Earnings and Strong Loan Growth For Third Quarter 2012

25 Oct, 2012, 16:31 ET from ViewPoint Financial Group, Inc.

PLANO, Texas, Oct. 25, 2012 /PRNewswire/ -- ViewPoint Financial Group, Inc. (NASDAQ: VPFG) (the "Company"), the holding company for ViewPoint Bank, N.A. (the "Bank"), today announced third quarter 2012 net income of $11.3 million, an increase of $4.8 million, or 74.3%, from $6.5 million for the second quarter of 2012.  Earnings per share of $0.30 increased $0.13, or 76.5%, from $0.17 for the second quarter of 2012.

Third Quarter 2012 Highlights Compared to Second Quarter 2012

  • Earnings per share: Quarterly earnings per share were $0.30 per share, up $0.13 per share, or 76.5%, from June 30, 2012.   
  • Record net income of $11.3 million for the quarter, up 74% from prior quarter and up 120% from same time last year:  Net income for the three months ended September 30, 2012, was $11.3 million, up $4.8 million, or 74.3%, from the second quarter of 2012.  The increase primarily reflected lower non-interest expense, higher net interest income, and a decrease in the provision expense, partially offset by a decrease in non-interest income.
  • $140 million in loan growth during the third quarter of 2012, including $80 million of commercial loan growth: Gross loans increased $139.9 million, or 5.5%, to $2.67 billion at September 30, 2012, from $2.53 billion at June 30, 2012, primarily reflecting growth of $88.8 million in mortgage loans held for sale (due to Warehouse Purchase Program) and $79.7 million in commercial loans (commercial real estate and commercial and industrial). Commercial and industrial ("C&I") loans (excluding warehouse lines of credit) grew $45.7 million, or 25.3%, during the quarter and totaled $226.4 million at September 30, 2012.
  • Net interest margin increased by eight basis points for the three months ended September 30, 2012: Due to changes in the earning asset mix and lower deposit and borrowing rates, the net interest margin increased by eight basis points on a linked quarter basis to 3.70% for the three months ended September 30, 2012, from 3.62% for the three months ended June 30, 2012.
  • Announced quarterly cash dividend of $0.10 per share, up 25% from prior quarter: The Company today declared a quarterly cash dividend of $0.10 per share, up $0.02, or 25%, from $0.08 per share in the prior quarter.

"We are very pleased with our quarterly performance and with the continued execution of our plans," said President and CEO Kevin Hanigan. "Not only did the Company post record quarterly earnings, our net interest margin is also at a record high, and our C&I, commercial real estate and warehouse lending programs showed solid growth. In addition, our employees were able to accomplish these results in concert with the successful system conversion and integration of the former Highlands Bank to ViewPoint Bank."

At Or For The Quarters Ended

September

June

September

(Dollars in thousands, except share and per share amounts)

2012

2012

2011

Net interest income

$      31,619

$      29,186

$      20,479

Provision for loan losses

814

1,447

581

Non-interest income

7,819

8,513

6,207

Non-interest expense

21,210

26,323

18,567

Income tax expense

6,098

3,437

2,395

Net income

11,316

6,492

5,143

Diluted earnings per common share

0.30

0.17

0.16

Weighted average common shares outstanding - diluted

37,466,031

37,236,213

32,497,283

Tier 1 risk-based capital ratio1

22.16

%

22.55

%

21.20

%

Tangible common equity to tangible assets - Non-GAAP2

13.45

12.96

12.54

Net interest margin

3.70

3.62

2.87

 

1

Calculated at the ViewPoint Financial Group, Inc. level, which is subject to the capital adequacy requirements of the Federal Reserve. On December 19, 2011, the Bank converted its charter from a federal thrift charter to a national banking charter, with regulatory oversight by the OCC.

2

See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document.

 

Net Interest Income and Net Interest Margin

At Or For The Quarters Ended

September

June

September

(Dollars in thousands)

2012

2012

2011

Net interest income

$      31,619

$      29,186

$      20,479

Net interest margin

3.70

%

3.62

%

2.87

%

Selected average balances

   Total earning assets

$ 3,414,701

$ 3,221,482

$ 2,854,251

   Total securities

914,818

976,611

1,237,853

   Total loans

2,450,143

2,211,630

1,543,162

   Total deposits

2,183,998

2,244,578

2,066,657

   Total borrowings

863,949

626,055

458,620

   Total noninterest-bearing deposits

338,074

316,237

193,725

Third quarter net interest income increased by $2.4 million, or 8.3%, to $31.6 million, compared to the second quarter of 2012, primarily due to a $2.4 million increase in interest income earned on loans.  The increase in interest income on loans was driven by a $205.6 million increase in the average balance of mortgage loans held for sale (due to Warehouse Purchase Program), a $37.7 million increase in the average balance of commercial real estate loans and a $20.9 million increase in average C&I loans. The increase in interest income on loans was partially offset by a $559,000 decrease in interest income earned on securities, as the average balance of the securities portfolio (including FHLB and FRB stock) declined by $61.8 million, or 6.3%, during the third quarter of 2012 compared to the second quarter of 2012.

Interest expense on deposits decreased by $591,000 during the third quarter of 2012 compared to the second quarter of 2012, primarily due to interest-bearing demand and time deposits. The average balances of interest-bearing demand and time deposits decreased by $31.2 million and $53.3 million, respectively, while the average rate paid on interest-bearing demand and time deposits declined by 23 basis points and six basis points, respectively. A $21.8 million increase in non-interest-bearing checking average balances helped to offset these balance declines. 

The net interest margin for the third quarter of 2012 was 3.70%, an eight basis point increase from the second quarter of 2012, and an 83 basis point increase from the third quarter of 2011. The increase in the net interest margin was primarily attributable to changes in the earning asset mix, lower deposit and borrowing rates paid, and the accretion of the Highlands purchase accounting discount.

Non-interest Income

Third quarter non-interest income declined $694,000, or 8.2%, to $7.8 million compared to the second quarter of 2012, primarily reflecting a $1.8 million gain in the value of an investment in a community development-oriented private equity fund used for Community Reinvestment Act purposes recorded in the second quarter of 2012, with no corresponding gain in the third quarter.  Also, due to the third quarter 2012 sale of ViewPoint Mortgage (VPM), net gain on the sale of mortgage loans decreased by $1.1 million in the third quarter when compared to the quarter ended June 30, 2012.  The decreases in non-interest income for the third quarter were partially offset by the $818,000 second quarter goodwill impairment charge due to the sale of ViewPoint Mortgage, with no corresponding charge in the third quarter of 2012, and a $782,000 increase in gain on the sale of available-for-sale securities in the third quarter.

Non-interest Expenses

Non-interest expense totaled $21.2 million for the third quarter of 2012, a decrease of $5.1 million, or 19.4%, from $26.3 million for the second quarter of 2012.  The decrease in non-interest expenses was primarily due to a $3.5 million decrease in acquisition costs and a $1.4 million decrease in salaries and employee benefits.  The decrease in salaries and employee benefits primarily resulted from the sale of VPM, as well as $308,000 in unrestricted stock awarded to the Company's newly appointed CEO in the second quarter, with no corresponding charge in the third quarter of 2012.

Non-interest expense for the third quarter of 2012 included Highlands-related acquisition costs of $242,000 and severance and benefits costs of $273,000 paid for the departure of our Chief Operating Officer in August 2012, while non-interest expense for the second quarter of 2012 included Highlands-related acquisition costs of $3.7 million and severance costs of $493,000 related to the Highlands acquisition, the sale of VPM, and the departure of our General Counsel.

Financial Condition

Total assets decreased by $56.8 million to $3.64 billion at September 30, 2012, from $3.69 billion at June 30, 2012, primarily due to a $184.7 million decrease in securities, partially offset by a $139.9 million increase in gross loans.  The decrease in securities reflects a shift in the average earning asset mix as we transition from lower yielding securities to higher yielding commercial loans. 

Gross loans (including $1.01 billion in mortgage loans held for sale at September 30, 2012) increased by $139.9 million, or 5.5%, to $2.67 billion at September 30, 2012, from $2.53 billion at June 30, 2012.  Mortgage loans held for sale (Warehouse Purchase Program loans) increased $88.8 million from the prior quarter, while commercial loans grew $79.7 million.  C&I loans grew $45.7 million, or 25.3%, during the quarter and totaled $226.4 million at September 30, 2012.  These increases were partially offset by a $34.5 million decline in one- to four-family loan balances.

Total deposits decreased by $36.5 million, or 1.6%, to $2.19 billion at September 30, 2012, compared to $2.23 billion at June 30, 2012.  Decreases in interest-bearing demand and time deposits of $38.0 million and $18.1 million, respectively, primarily drove the decline, offset by increases of $12.0 million in savings and money market funds and $7.6 million in non-interest-bearing demand deposits.  

Shareholders' equity was $516.4 million at September 30, 2012, compared to $505.6 million at June 30, 2012. There were approximately 39.6 million common shares outstanding at September 30, 2012.  On October 25, 2012, the Company declared a quarterly cash dividend of $0.10 per share, up $0.02, or 25%, from $0.08 per share in the prior quarter.

On August 22, 2012, the Company issued a press release announcing its intention to repurchase up to 5% of its total common shares outstanding, or approximately 1,978,871 shares.  The stock repurchase program, which is open-ended, commenced on August 27, 2012, and allows the Company to repurchase its shares from time to time in the open market and in negotiated transactions, depending upon market conditions.  The Board of Directors of the Company also authorized management to enter into a trading plan with Sandler O'Neill & Partners, LP in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, to facilitate repurchases of its common stock pursuant to the above- mentioned stock repurchase program.  There were no repurchases of common stock in the third or second quarters of 2012.

The Company's tangible common equity ratio was 13.45% at September 30, 2012, an increase of 49 basis points from June 30, 2012. The Tier 1 risk-based capital ratio decreased 39 basis points, to 22.16% at September 30, 2012, from June 30, 2012.

Credit Quality

At Or For The Quarters Ended

September

June

September

(Dollars in thousands)

2012

2012

2011

Net charge-offs

$         208

$      241

$         205

Net charge-offs/Average total loans held for investment

0.01

%

0.02

%

0.02

%

Provision for loan losses

$         814

$   1,447

$         581

Nonperforming loans

28,081

22,557

17,439

Nonperforming assets

31,931

25,880

19,537

NPAs/Total loans held for investment and foreclosed property

1.93

%

1.61

%

1.67

%

Allowance for loan losses

$    19,835

$ 19,229

$    16,535

Allowance for loan losses/Total loans (a)

1.20

%

1.20

%

1.42

%

Allowance for loan losses/Nonperforming loans

70.63

85.25

94.82

(a)

Reflects the impact of acquired loans, which were initially recorded at fair value, with no related allowance for loan losses

The provision for loan losses was $814,000 for the three months ended September 30, 2012, a decrease of $633,000, or 43.7%, from the three months ended June 30, 2012.  In the third quarter of 2012, the decrease in provision expense was primarily driven by management's assessment, and subsequent decrease, of qualitative factors on certain portfolios where trends have indicated decreased loss exposure.  The balance of the allowance for loan losses at September 30, 2012, was $19.8 million, an increase of $606,000 from $19.2 million at June 30, 2012, which was primarily due to loan growth.  The allowance for loan losses to total loans ratio was 1.20% for both the quarters ended September 30, 2012 and June 30, 2012.

Our non-performing loans to total loans ratio at September 30, 2012, was 1.70%, compared to 1.41% at June 30, 2012.  Non-performing loans increased by $5.5 million to $28.1 million at September 30, 2012, from $22.6 million at June 30, 2012.  This increase was primarily due to three substandard line of credit C&I loans acquired from Highlands totaling $2.9 million that were placed on nonaccrual in the third quarter of 2012.  The $1.6 million in purchase accounting discounts applied to these loans cover any estimated losses.  At September 30, 2012, no purchased credit impaired loans from the Highlands transaction were included in non-performing loans.  Our allowance for loan losses to non-performing loans ratio was 70.63% at September 30, 2012, compared to 85.25% as of June 30, 2012.

ViewPoint Mortgage Sale

On June 5, 2012, the Bank and its wholly owned subsidiary, ViewPoint Bankers Mortgage, Inc., doing business as ViewPoint Mortgage ("VPM"), entered into a definitive agreement (the "Agreement") with Highlands Residential Mortgage, Ltd. ("HRM") to sell substantially all of the assets of VPM to HRM, subject to certain closing conditions. The terms of the Agreement provided for HRM to, subject to certain conditions contained in the Agreement, (i) purchase VPM's loan pipeline and all of VPM's existing construction loan portfolio, together with certain furniture, fixtures and equipment, (ii) assume substantially all of VPM's loan production office leases and its equipment leases, (iii) hire no less than 95% of the current VPM employees and satisfactorily release VPM from certain employment contracts, and (iv) make additional earn out payments to VPM. The sale closed during the third quarter of 2012, and the Agreement provides an opportunity for the Bank to partner with HRM to continue providing the Bank's customers with residential mortgage services. 

Conference Call

The Company will host an investor conference call to review these results on Friday, October 26, 2012, at 10 a.m., Central Time. Participants are asked to call (toll-free) 1-877-317-6789 at least five minutes prior to the call.  International participants are asked to call 1-412-317-6789 and participants in Canada are asked to call (toll-free) 1-866-605-3852.

The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.viewpointfinancialgroup.com. An audio replay will be available one hour after the conclusion of the call at 1-877-344-7529, Conference #10017636. This audio replay, as well as the webcast, will be available until the Company's next quarterly webcast/conference call.  

About ViewPoint Financial Group, Inc.

ViewPoint Financial Group, Inc. is the holding company for ViewPoint Bank, National Association. ViewPoint Bank, N.A. operates 31 community bank offices, including two First National Bank of Jacksboro locations in Jack and Wise Counties. For more information, please visit www.viewpointbank.com or www.viewpointfinancialgroup.com.

When used in filings by the Company with the Securities and Exchange Commission (the "SEC") in the Company's press releases or other public or shareholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "intends" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including, among other things: changes in economic conditions; legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; the industry-wide decline in mortgage production; competition; changes in management's business strategies; our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we have acquired or may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; and other factors set forth under Risk Factors in the Company's Form 10-K that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The factors listed above could materially affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances occurring after the date of such statements. 

 

VIEWPOINT FINANCIAL GROUP, INC.

Consolidated Balance Sheets

September 30,

June 30,

December 31,

September 30,

2012

2012

2011

2011

(Dollar amounts in thousands, except share data)

(unaudited)

(unaudited)

(unaudited)

ASSETS

Cash and due from financial institutions

$          24,429

$      30,407

$         16,661

$          16,374

Short-term interest-bearing deposits in other financial institutions

36,301

39,571

29,687

37,786

     Total cash and cash equivalents

60,730

69,978

46,348

54,160

Securities available for sale, at fair value

316,780

467,515

433,745

655,925

Securities held to maturity

396,437

430,368

500,488

539,257

     Total securities

713,217

897,883

934,233

1,195,182

Loans held for sale

1,014,445

925,637

834,352

691,204

Loans held for investment

1,651,755

1,600,963

1,228,544

1,166,161

     Total loans

2,666,200

2,526,600

2,062,896

1,857,365

Less: allowance for loan losses

(19,835)

(19,229)

(17,487)

(16,535)

     Net loans

2,646,365

2,507,371

2,045,409

1,840,830

FHLB and Federal Reserve Bank stock, at cost

43,383

45,241

37,590

29,210

Bank-owned life insurance

34,701

34,491

29,007

28,904

Premises and equipment, net

53,348

53,725

50,261

48,595

Goodwill

29,650

29,203

818

818

Accrued income and other assets

54,639

54,964

36,912

37,579

       Total assets

$     3,636,033

$ 3,692,856

$    3,180,578

$     3,235,278

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

   Non-interest-bearing demand

$        349,880

$    342,228

$       211,670

$        207,940

   Interest-bearing demand

471,672

509,650

498,253

496,269

   Savings and money market

897,515

885,550

759,576

762,238

   Time

473,834

491,978

493,992

607,180

     Total deposits

2,192,901

2,229,406

1,963,491

2,073,627

FHLB advances - net of prepayment penalty

852,168

875,102

746,398

671,761

Repurchase agreement and other borrowings

25,000

38,682

25,000

35,000

Accrued expenses and other liabilities

49,611

44,091

39,380

48,204

       Total liabilities

3,119,680

3,187,281

2,774,269

2,828,592

Commitments and contingent liabilities

-

-

-

-

Shareholders' equity

   Common stock, $.01 par value; 90,000,000 shares authorized;

          Issued and Outstanding - 39,579,667 shares at 9/30/12, 39,344,167 shares at 6/30/12, 33,700,399 shares at 12/31/11, and 34,262,491 shares at 9/30/11 

396

393

337

342

   Additional paid-in capital

369,904

367,938

279,473

284,974

   Retained earnings

161,887

153,722

144,535

136,454

   Accumulated other comprehensive income, net 

2,449

2,171

1,347

4,665

   Unearned Employee Stock Ownership Plan (ESOP)

(18,283)

(18,649)

(19,383)

(19,749)

     Total shareholders' equity

516,353

505,575

406,309

406,686

       Total liabilities and shareholders' equity

$     3,636,033

$ 3,692,856

$    3,180,578

$     3,235,278

 

 

 

VIEWPOINT FINANCIAL GROUP, INC.

Consolidated Statements of Income

Three Months Ended September 30,

Nine Months Ended September 30,

2012

2011

2012

2011

(Dollars in thousands, except share and per share amounts)

(unaudited)

(unaudited)

Interest and dividend income

   Loans, including fees

$      32,739

$      21,838

$      87,349

$      63,132

   Taxable securities

3,616

6,633

12,259

20,140

   Nontaxable securities

473

473

1,419

1,419

   Interest-bearing deposits in other financial institutions

29

44

86

144

   FHLB and Federal Reserve Bank stock

151

18

398

52

37,008

29,006

101,511

84,887

Interest expense

   Deposits

2,656

5,702

9,132

18,045

   FHLB advances

2,515

2,467

7,384

7,360

   Repurchase agreement

217

206

671

611

   Other borrowings

1

152

29

450

5,389

8,527

17,216

26,466

Net interest income

31,619

20,479

84,295

58,421

Provision for loan losses

814

581

3,156

2,741

Net interest income after provision for loan losses

30,805

19,898

81,139

55,680

Non-interest income

   Service charges and fees

4,885

4,659

13,950

14,027

   Other charges and fees

144

144

437

544

   Net gain on sale of mortgage loans

1,030

1,710

5,436

5,538

   Bank-owned life insurance income

210

118

484

403

   Gain on sale of available for sale securities

898

-

1,014

3,415

   Gain (loss) on sale and disposition of assets

187

(533)

50

(749)

   Impairment of goodwill

-

-

(818)

(271)

   Other

465

109

2,509

1,403

7,819

6,207

23,062

24,310

Non-interest expense

   Salaries and employee benefits

12,685

11,751

38,519

35,147

   Acquisition costs

242

-

4,127

-

   Advertising

379

351

1,154

1,217

   Occupancy and equipment

2,009

1,511

5,431

4,333

   Outside professional services

578

769

1,752

2,126

   Regulatory assessments

668

409

1,873

1,866

   Data processing

1,530

1,168

4,392

3,366

   Office operations

1,834

1,521

5,313

4,452

   Other

1,285

1,087

3,424

3,189

21,210

18,567

65,985

55,696

Income before income tax expense

17,414

7,538

38,216

24,294

Income tax expense

6,098

2,395

13,336

7,740

Net income

$      11,316

$        5,143

$      24,880

$      16,554

Weighted  average common shares outstanding - basic

37,362,535

32,468,640

35,348,911

32,422,921

Weighted average common shares outstanding - diluted

37,466,031

32,497,283

35,475,596

32,479,092

Per share information

Basic

$          0.30

$          0.16

$          0.70

$          0.51

Diluted

0.30

0.16

0.70

0.51

Cash dividends declared per share

0.08

0.05

0.20

0.15

VIEWPOINT FINANCIAL GROUP, INC.

Consolidated Quarterly Statements of Income

For The Quarters Ended

September

June

March

December

September

Third Quarter 2012 Compared To:

(Dollars in thousands)

2012

2012

2012

2011

2011

Second Quarter 2012

Third quarter 2011

Interest and dividend income

   Loans, including fees

$    32,739

$ 30,290

$ 24,320

$   25,106

$    21,838

$ 2,449

8.09

%

$ 10,901

49.92

%

   Taxable securities

3,616

4,185

4,458

5,690

6,633

(569)

(13.60)

(3,017)

(45.48)

   Nontaxable securities

473

473

473

473

473

-

0.00

-

0.00

   Interest-bearing deposits in other financial institutions

29

38

19

26

44

(9)

(23.68)

(15)

(34.09)

   FHLB and Federal Reserve Bank stock

151

141

106

42

18

10

7.09

133

N/M

37,008

35,127

29,376

31,337

29,006

1,881

5.35

8,002

27.59

Interest expense

   Deposits

2,656

3,247

3,229

4,429

5,702

(591)

(18.20)

(3,046)

(53.42)

   FHLB advances

2,515

2,415

2,454

2,522

2,467

100

4.14

48

1.95

   Repurchase agreement

217

251

203

205

206

(34)

(13.55)

11

5.34

   Other borrowings

1

28

-

24

152

(27)

(96.43)

(151)

(99.34)

5,389

5,941

5,886

7,180

8,527

(552)

(9.29)

(3,138)

(36.80)

Net interest income

31,619

29,186

23,490

24,157

20,479

2,433

8.34

11,140

54.40

Provision for loan losses

814

1,447

895

1,229

581

(633)

(43.75)

233

40.10

Net interest income after provision for loan losses

30,805

27,739

22,595

22,928

19,898

3,066

11.05

10,907

54.81

Non-interest income

   Service charges and fees

4,885

4,827

4,238

4,529

4,659

58

1.20

226

4.85

   Other charges and fees

144

165

128

179

144

(21)

(12.73)

-

0.00

   Net gain on sale of mortgage loans

1,030

2,174

2,232

2,101

1,710

(1,144)

(52.62)

(680)

(39.77)

   Bank-owned life insurance income

210

165

109

103

118

45

27.27

92

77.97

   Gain on sale of available for sale securities

898

116

-

2,853

-

782

N/M

898

N/M

   Gain (loss) on sale and disposition of assets

187

(56)

(81)

(49)

(533)

243

N/M

720

N/M

   Impairment of goodwill

-

(818)

-

-

-

818

(100.00)

-

N/M

   Other

465

1,940

104

522

109

(1,475)

(76.03)

356

N/M

7,819

8,513

6,730

10,238

6,207

(694)

(8.15)

1,612

25.97

Non-interest expense

   Salaries and employee benefits

12,685

14,110

11,724

12,213

11,751

(1,425)

(10.10)

934

7.95

   Acquisition costs

242

3,741

144

-

-

(3,499)

(93.53)

242

N/M

   Advertising

379

490

285

302

351

(111)

(22.65)

28

7.98

   Occupancy and equipment

2,009

1,952

1,470

1,633

1,511

57

2.92

498

32.96

   Outside professional services

578

691

483

518

769

(113)

(16.35)

(191)

(24.84)

   Regulatory assessments

668

624

581

535

409

44

7.05

259

63.33

   Data processing

1,530

1,617

1,245

1,282

1,168

(87)

(5.38)

362

30.99

   Office operations

1,834

1,934

1,545

1,520

1,521

(100)

(5.17)

313

20.58

   Other

1,285

1,164

975

1,541

1,087

121

10.40

198

18.22

21,210

26,323

18,452

19,544

18,567

(5,113)

(19.42)

2,643

14.23

Income before income tax expense

17,414

9,929

10,873

13,622

7,538

7,485

75.39

9,876

131.02

Income tax expense

6,098

3,437

3,801

3,848

2,395

2,661

77.42

3,703

154.61

Net income

$    11,316

$   6,492

$   7,072

$     9,774

$      5,143

$ 4,824

74.31

%

$   6,173

120.03

%

VIEWPOINT FINANCIAL GROUP, INC.

Selected Financial Highlights (unaudited)

At Or For The Quarters Ended

At Or For The Nine Months Ended

September

June

September

September

September

2012

2012

2011

2012

2011

(Dollars in thousands, except share and per share amounts)

SHARE DATA:

Basic earnings per common share

$            0.30

$            0.17

$            0.16

$            0.70

$            0.51

Diluted earnings per common share

0.30

0.17

0.16

0.70

0.51

Dividends declared per share

0.08

0.06

0.05

0.20

0.15

Total shareholders' equity

516,353

505,575

406,686

Common shareholders' equity per share of common stock (Book value per share)

13.05

12.85

11.87

Tangible book value per share - Non-GAAP 1

12.25

12.06

11.83

Market value per share for the quarter:

   High

19.50

16.72

14.00

19.50

14.00

   Low

15.88

14.79

10.81

13.19

10.81

   Close

19.17

15.64

11.45

19.17

11.45

Shares outstanding at end of period

39,579,667

39,344,167

34,262,491

39,579,667

34,262,491

Weighted average common shares outstanding - basic

37,362,535

37,116,322

32,468,640

35,348,911

32,422,921

Weighted average common shares outstanding - diluted

37,466,031

37,236,213

32,497,283

35,475,596

32,479,092

KEY RATIOS:

Return on average common shareholders' equity

8.82

%

5.15

%

5.02

%

6.96

%

5.40

%

Return on average assets

1.25

0.76

0.69

0.99

0.77

Efficiency ratio2

55.37

72.03

68.29

62.76

69.99

Tier 1 risk-based capital ratio3

22.16

22.55

21.20

Total risk-based capital ratio3

23.08

23.47

21.93

Tier 1 leverage ratio3

13.54

13.95

12.31

Tangible equity to tangible assets - Non-GAAP 1

13.45

12.96

12.54

Number of employees - full time equivalent

555

620

579

1

See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document.

2

Calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding gain (loss) on sale of foreclosed assets, impairment of goodwill, gains from securities transactions and other nonrecurring items.

3

Calculated at the ViewPoint Financial Group, Inc. level, which is subject to the capital adequacy requirements of the Federal Reserve. On December 19, 2011, the Bank converted its charter from a federal thrift charter to a national banking charter, with regulatory oversight by the OCC.

VIEWPOINT FINANCIAL GROUP, INC.

Selected Financial Highlights (unaudited)

Ending Balances At

September

June

March

December

September

(Dollars in thousands)

2012

2012

2012

2011

2011

Loans:

Real Estate:

One- to four- family

$    400,951

$    435,486

$    372,070

$    379,944

$    382,819

Commercial

794,619

760,609

624,057

585,328

546,914

Home equity/home improvement

141,152

144,147

139,339

140,966

140,945

Total real estate loans

1,336,722

1,340,242

1,135,466

1,106,238

1,070,678

Automobile

39,271

37,376

32,867

33,027

32,525

Other consumer

23,319

25,267

17,464

18,143

18,394

Total consumer loans

62,590

62,643

50,331

51,170

50,919

Commercial and industrial:

Warehouse lines of credit

25,936

16,965

19,072

16,141

-

Commercial

226,391

180,706

51,244

54,479

44,014

Gross loans held for investment

1,651,639

1,600,556

1,256,113

1,228,028

1,165,611

Mortgage loans held for sale

1,014,445

925,637

734,408

834,352

691,204

Gross loans

$ 2,666,084

$ 2,526,193

$ 1,990,521

$ 2,062,380

$ 1,856,815

Nonaccruing loans: 1

One- to four- family real estate

$        5,142

$        4,158

$        4,987

$        5,340

$        4,896

Commercial real estate

16,572

16,378

15,774

16,076

10,768

Home equity/home improvement

1,519

1,112

1,170

1,226

1,330

Consumer

251

36

29

26

-

Commercial and industrial

4,597

873

467

430

445

Total non-performing loans

28,081

22,557

22,427

23,098

17,439

Foreclosed assets

3,850

3,323

2,021

2,293

2,098

Total non-performing assets

$      31,931

$      25,880

$      24,448

$      25,391

$      19,537

Total non-performing assets to total assets

0.88

%

0.70

%

0.80

%

0.80

%

0.60

%

Total non-performing loans to total loans 2

1.70

1.41

1.79

1.88

1.50

Allowance for loan losses to non-performing loans

70.63

85.25

80.36

75.71

94.82

Allowance for loan losses to total loans 2

1.20

1.20

1.43

1.42

1.42

Troubled Debt Restructured Loans:

Performing troubled debt restructurings:

One- to four- family real estate

$           682

$           498

$           374

$           136

$           280

Commercial real estate

3,087

3,087

3,087

2,860

2,860

Home equity/home improvement

106

45

106

107

-

Consumer

88

107

121

142

48

Commercial and industrial

213

20

21

26

-

Total

$        4,176

$        3,757

$        3,709

$        3,271

$        3,188

Nonaccruing troubled debt restructurings:

One- to four- family real estate

$        1,709

$        1,103

$        1,093

$           843

$           855

Commercial real estate

8,849

8,952

9,063

9,266

9,264

Home equity/home improvement

234

75

77

81

-

Consumer

88

-

13

18

-

Commercial and industrial

105

281

287

212

214

Total

$      10,985

$      10,411

$      10,533

$      10,420

$      10,333

Allowance for loan losses:

Balance at beginning of period

$      19,229

$      18,023

$      17,487

$      16,535

$      16,159

Provision expense

814

1,447

895

1,229

581

Charge-offs

(412)

(358)

(496)

(408)

(314)

Recoveries

204

117

137

131

109

Balance at end of period

$      19,835

$      19,229

$      18,023

$      17,487

$      16,535

Net Charge-Offs (Recoveries)

One- to four- family real estate

$             15

$             57

$             77

$           161

$             (4)

Commercial real estate

2

-

-

-

(2)

Home equity/home improvement

79

63

-

72

9

Consumer

143

111

90

62

77

Commercial and industrial

(31)

10

192

(18)

125

Total

$           208

$           241

$           359

$           277

$           205

 

1

Includes nonaccruing troubled debt restructurings.

2

Total loans does not include loans held for sale.

VIEWPOINT FINANCIAL GROUP, INC.

Average Balances and Yields/Rates

For The Quarters Ended

September

June

March

December

September

2012

2012

2012

2011

2011

Loans:

(Dollars in thousands)

One- to four- family real estate

$    407,216

$    430,696

$    371,257

$    377,106

$    381,322

Loans held for sale

886,743

681,095

661,688

736,745

416,924

Commercial real estate

762,521

724,775

582,710

556,909

524,516

Home equity/home improvement

143,125

145,095

140,754

140,000

141,483

Consumer

63,142

62,192

50,635

51,225

51,246

Commercial and industrial:

   Warehouse lines of credit

22,639

16,013

15,865

5,796

-

   Commercial

183,870

169,567

53,654

46,130

43,806

Less: deferred fees and allowance for loan loss

(19,113)

(17,803)

(16,812)

(16,155)

(16,135)

Loans receivable

2,450,143

2,211,630

1,859,751

1,897,756

1,543,162

Securities

914,818

976,611

950,906

1,147,794

1,237,853

Overnight deposits

49,740

33,241

33,809

43,787

73,236

Total interest-earning assets

$ 3,414,701

$ 3,221,482

$ 2,844,466

$ 3,089,337

$ 2,854,251

Deposits:

Interest-bearing demand

$    474,342

$    505,569

$    473,687

$    485,897

$    484,926

Savings and money market

894,916

892,844

759,590

758,191

753,252

Time

476,666

529,928

472,097

559,169

634,754

FHLB advances and other borrowings

863,949

626,055

610,255

750,202

458,620

Total interest-bearing liabilities

$ 2,709,873

$ 2,554,396

$ 2,315,629

$ 2,553,459

$ 2,331,552

Total assets

$ 3,607,101

$ 3,427,807

$ 2,975,818

$ 3,216,502

$ 2,982,615

Non-interest-bearing demand deposits

338,074

316,237

213,220

204,458