ViewPoint Financial Group, Inc. Reports Record Earnings for Fourth Quarter and Full Year 2010

Mar 03, 2011, 16:30 ET from ViewPoint Financial Group, Inc.

PLANO, Texas, March 3, 2011 /PRNewswire/ -- ViewPoint Financial Group, Inc. (Nasdaq: VPFG) (the "Company"), the holding company for ViewPoint Bank, announced financial results today for the quarter and year ended December 31, 2010.  Detailed results of the year will be available in the Company's Annual Report on Form 10-K, which will be filed today and posted on our websites, http://www.viewpointbank.com and http://www.viewpointfinancialgroup.com.  

Performance Highlights

  • Record Earnings:  The Company recorded net income of $6.5 million during the fourth quarter of 2010 and $17.8 million for the year ended December 31, 2010, both of which are the highest in the Company's 58-year history.
  • Improved margin:  Due to improvements in our cost of funds, the Company's net interest margin improved to 2.98% for the quarter ended December 31, 2010, an increase of 17 basis points from the quarter ended September 30, 2010, and an increase of 21 basis points from the quarter ended December 31, 2009.
  • Continued organic growth:  In 2010, deposits increased by $220.9 million, or 12.3%, to $2.02 billion at December 31, 2010, while gross loans (including $492.0 million in mortgage loans held for sale) increased by $136.0 million, or 9.3%, to $1.60 billion at December 31, 2010.
  • Strong capitalization:  The Company raised gross proceeds of $198.6 million through its "second-step" conversion and stock offering, which concluded in July 2010.
  • Asset quality outperforms peers: Non-performing assets to total assets remained low at 0.69% at December 31, 2010, compared to the SNL U.S. Bank and Thrift industry index of 2.48%.  Net charge-offs declined by $513,000, or 32.3%, for the quarter ended December 31, 2010, compared to the same time last year, while net charge-offs for the year ended December 31, 2010, declined by $1.8 million, or 41.5%, compared to the year ended December 31, 2009.

"2010 was the best year in the Bank's history, with record earnings and a second step capital raise of $198.6 million," said President and Chief Executive Officer Gary Base.  "Strong organic growth also occurred in both deposits and loans."

Results of Operations for the Quarter and Year Ended December 31, 2010

Net income for the quarter ended December 31, 2010, was $6.5 million, an increase of $4.1 million, or 174.5%, from net income of $2.4 million for the quarter ended December 31, 2009.  The increase in net income was primarily driven by higher interest income, lower interest expense and a lower provision for loan losses.  Our basic and diluted earnings per share for the quarter ended December 31, 2010, was $0.20 compared to $0.08 for the quarter ended December 31, 2009.  

Net income for the year ended December 31, 2010, was $17.8 million, an increase of $15.1 million from net income of $2.7 million for the year ended December 31, 2009.  The $15.1 million increase was partially due to an $8.1 million (net of tax, using a tax rate of 34%) impairment charge for the year ended December 31, 2009.  The remaining $7.0 million increase in net income during 2010 compared to 2009 results, excluding the 2009 impairment charge, was driven by higher net interest and noninterest income, a lower provision for loan losses and lower non-interest expense.  Our basic and diluted earnings per share for the year ended December 31, 2010, was $0.59 compared to $0.10 for the year ended December 31, 2009.

Net Interest Margin and Spread

The net interest margin was 2.98% for the quarter ended December 31, 2010, a 17 basis point increase from 2.81% for the quarter ended September 30, 2010, and a 21 basis point increase from 2.77% for the quarter ended December 31, 2009.  The net interest spread was 2.67% for the quarter ended December 31, 2010, a 25 basis point increase from 2.42% for the quarter ended September 30, 2010, and a 22 basis point increase from 2.45% for the quarter ended December 31, 2009.  During the fourth quarter of 2010, we improved our cost of deposits by adjusting the terms of certain deposit products.  Effective November 1, 2010, the maximum balance that could qualify for the 4.0% annual percentage yield (APY) paid on our Absolute Checking product was reduced from $50,000 to $25,000, and the rate paid on certain money market accounts was decreased from APYs ranging from 4.50% to 5.50% to APYs ranging from 1.05% to 1.25%.  

Additionally, in November 2010, we modified $91.6 million in fixed-rate FHLB advances, which reduced our cost of borrowings.  These advances had a weighted average rate of 4.15% and an average term to maturity of approximately 2.6 years.  They were prepaid and restructured with $91.6 million of new, lower-cost FHLB advances with a weighted average rate of 1.79% and an average term to maturity of approximately 5.0 years.  The early repayment of the debt resulted in a prepayment penalty of $5.4 million, which will be amortized to interest expense in future periods as an adjustment to the cost of the new FHLB advances.  The effective rate of the new advances, after accounting for the prepayment penalty, is 2.98%.  

The net interest margin increased eight basis points to 2.80% for the year ended December 31, 2010, from 2.72% for the year ended December 31, 2009.  The net interest rate spread increased 12 basis points to 2.49% for the year ended December 31, 2010, from 2.37% for last year.  The increase in the net interest margin from the year ended December 31, 2009, to 2010 was primarily attributable to lower deposit and borrowing rates.

Financial Condition as of December 31, 2010

Total assets increased by $562.5 million, or 23.6%, to $2.94 billion at December 31, 2010, from $2.38 billion at December 31, 2009.  The increase in total assets was primarily due to a $411.2 million increase in investment securities and a $150.6 million increase in mortgage loans held for sale.  Asset growth was funded by a $220.9 million increase in deposits, a $174.9 million increase in shareholders' equity as a result of our stock offering and a $148.7 million increase in FHLB advances.

Loan Portfolio and Asset Quality

Gross loans (including $492.0 million in mortgage loans held for sale) increased by $136.0 million, or 9.3%, from $1.46 billion at December 31, 2009, to $1.60 billion at December 31, 2010.  Mortgage loans held for sale increased by $150.6 million, or 44.1%, from December 31, 2009, and consisted of $460.9 million of Warehouse Purchase Program loans purchased for sale under our standard loan participation agreement and $31.1 million of loans originated for sale by our mortgage banking subsidiary, ViewPoint Bankers Mortgage, Inc. (doing business as ViewPoint Mortgage) ("VPM").  VPM originated $487.7 million in one-to four-family mortgage loans during the year ended December 31, 2010, and sold $402.0 million to investors, generating a net gain on sale of loans of $13.0 million. Also, $74.3 million in VPM-originated loans were retained in our portfolio.  One- to four- family mortgage loans held in our portfolio declined by $28.0 million, or 6.6%, from December 31, 2009, since paydowns and maturities exceeded new loans added to the portfolio.  

Commercial real estate loans increased by $25.5 million, or 5.6%, in 2010 from December 31, 2009.  For the year ended December 31, 2010, commercial real estate loans generated $32.0 million in interest income.  Our commercial real estate portfolio consists almost exclusively of loans secured by existing, multi-tenanted commercial buildings.  89% of our commercial real estate loan balances are secured by properties located in Texas, a market that we do not believe has experienced the same level of economic pressure experienced in certain other geographic areas in the United States.

Our commercial non-mortgage portfolio at December 31, 2010 increased by $11.3 million, or 40.4%, compared to December 31, 2009, while consumer loans, including direct and indirect automobile loans, other secured installment loans, and unsecured lines of credit, decreased by $27.5 million, or 29.0%, in 2010 from December 31, 2009.    

Our non-performing loans to total loans ratio at December 31, 2010, was 1.59%, compared to 1.04% at December 31, 2009.   Non-performing loans increased by $5.9 million, from $11.7 million at December 31, 2009, to $17.6 million at December 31, 2010.  The increase in non-performing loans from December 2009 to December 2010 was primarily due to the addition of four commercial real estate loans totaling $8.2 million that were placed on nonaccrual status during the year ended December 31, 2010.  These four loans, two of which are troubled debt restructurings, were current at December 31, 2010.  

The provision for loan losses was $5.1 million for the year ended December 31, 2010, a decrease of $2.6 million, or 33.1%, from $7.7 million for last year.  This decrease was primarily due to an improvement in net charge-offs, which declined by $1.8 million during the year ended December 31, 2010, compared to last year.  The average balance of our portfolio loans for the year ended December 31, 2010,(not including loans held for sale, which are not included in the allowance for loan loss calculation)  decreased by $68.5 million from the year ended December 31, 2009, which may be a factor contributing to our lower charge-offs.

Our allowance for loan losses at December 31, 2010, was $14.8 million, or 1.34% of gross loans, compared to $12.3 million, or 1.10% of gross loans, at December 31, 2009.  The $2.5 million, or 20.6%, increase in our allowance for loan losses was primarily due to a higher level of non-performing loans.   Our allowance for loan losses to non-performing loans was 84.22% at December 31, 2010, compared to 105.44% as of December 31, 2009.

Conversion, Reorganization and Related Stock Offering

The Company was organized by ViewPoint MHC, ViewPoint Financial Group and ViewPoint Bank to facilitate the "second-step" conversion of ViewPoint Bank from the mutual holding company structure to the stock holding company structure (the "Conversion").  Upon consummation of the Conversion, which occurred on July 6, 2010, the Company became the holding company for ViewPoint Bank and now owns all of the issued and outstanding shares of ViewPoint Bank's common stock.  As part of the Conversion, shares of the Company's common stock were issued and sold in an offering to certain depositors of ViewPoint Bank and others.  Concurrent with the offering, each share of ViewPoint Financial Group's common stock owned by public shareholders was exchanged for 1.4 shares of the Company's common stock, with cash paid in lieu of issuing fractional shares.

The Company sold a total of 19,857,337 shares of common stock at $10.00 per share in the offering.  Proceeds from the offering, net of $7.8 million in expenses, totaled $190.8 million.  All share and per share information in this news release for periods prior to the Conversion has been revised to reflect the 1.4:1 conversion ratio on publicly traded shares, which resulted in a 4,287,752 increase in outstanding shares.

Conference Call

The Company will host an investor conference call to review these results on Friday, March 4, 2011, 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 #447523. This replay will be available until March 21, 2011, at 8 a.m., Central Time. The webcast will be archived on the Company's website until September 4, 2011.

About ViewPoint Financial Group, Inc.

ViewPoint Financial Group, Inc. is the holding company for ViewPoint Bank.  ViewPoint Bank operates 23 community bank offices and 14 loan production offices.  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, competition, changes in management's business strategies 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 Company wishes to advise readers that 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 which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.  

VIEWPOINT FINANCIAL GROUP, INC.

Condensed Consolidated Statements of Condition

(In thousands)

December 31,

December 31,

2010

2009

ASSETS

Total cash and cash equivalents

$          68,650

$         55,470

Securities available for sale, at fair value

717,497

484,058

Securities held to maturity

432,519

254,724

Mortgage loans held for sale

491,985

341,431

Loans, includes allowance for loan losses of $14,847 at December 31, 2010 and $12,310 at December 31, 2009

1,092,114

1,108,159

Federal Home Loan Bank stock

20,569

14,147

Bank-owned life insurance

28,501

28,117

Premises and equipment, net

48,731

50,440

Accrued interest receivable and other assets

41,429

42,958

      Total assets

$     2,941,995

$    2,379,504

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits

  Non-interest-bearing demand

201,998

193,581

  Interest-bearing demand

438,719

268,063

  Savings and money market

711,911

701,835

  Time

664,922

633,186

    Total deposits

2,017,550

1,796,665

Net Federal Home Loan Bank advances

461,219

312,504

Repurchase agreement and other borrowings

35,000

35,000

Accrued interest payable and other liabilities

31,637

29,653

      Total liabilities

2,545,406

2,173,822

Total shareholders’ equity

396,589

205,682

      Total liabilities and shareholders’ equity

$     2,941,995

$    2,379,504

VIEWPOINT FINANCIAL GROUP, INC.

Condensed Consolidated Statements of Income

(In thousands except per share data)

Three Months Ended

Year Ended

December 31,

December 31,

2010

2009

2010

2009

Interest and dividend income

(unaudited)

  Loans, including fees

$   23,629

$   21,138

$   88,550

$   83,802

  Securities

7,649

5,773

26,365

23,436

  Interest-bearing deposits in other financial institutions

58

109

402

652

  Federal Home Loan Bank stock

21

6

68

16

31,357

27,026

115,385

107,906

Interest expense

  Deposits

7,181

7,962

31,015

34,366

  Federal Home Loan Bank advances

2,651

3,274

11,723

14,056

  Other borrowings

357

333

1,415

864

10,189

11,569

44,153

49,286

Net interest income

21,168

15,457

71,232

58,620

Provision for loan losses

1,329

2,941

5,119

7,652

Net interest income after provision for loan losses

19,839

12,516

66,113

50,968

Net gain on sales of loans

3,524

3,757

13,041

16,591

Other non-interest income

5,162

5,071

20,423

10,608

Non-interest expense

18,927

18,226

73,146

74,537

Income before income tax expense

9,598

3,118

26,431

3,630

Income tax expense

3,108

754

8,632

960

Net income

$     6,490

$     2,364

$   17,799

$     2,670

Basic and diluted earnings per share (1)

$       0.20

$       0.08

$       0.59

$       0.10

(1) 2009 per share data has been revised to reflect the 1.4:1 conversion ratio on publicly traded shares related

   to the Conversion, which resulted in a 4,287,752 increase in outstanding shares.

VIEWPOINT FINANCIAL GROUP, INC.

Selected Financial Data

(unaudited)

Three Months Ended

Year Ended

Dec

Sept

June

Mar

Dec

Dec

Dec

2010

2010

2010

2010

2009

2010

2009

Share Data for Earnings per Share Calculation:(1)

Weighted average common shares outstanding

34,839,491

34,555,356

29,206,205

29,216,909

29,216,909

31,977,020

29,216,909

Less: average unallocated ESOP shares

(2,316,413)

(2,275,964)

(810,799)

(843,605)

(876,423)

(1,567,687)

(925,351)

Less: average unvested restricted shares

(218,393)

(234,074)

(309,643)

(361,362)

(364,165)

(280,348)

(409,617)

Average shares

32,304,685

32,045,318

28,085,763

28,011,942

27,976,321

30,128,985

27,881,941

Diluted average shares

32,312,993

32,045,318

28,116,397

28,033,713

27,976,833

30,131,960

27,881,941

Net income (in thousands)

$        6,490

$        5,408

$        3,196

$        2,705

$        2,364

$      17,799

$        2,670

Earnings per share

$          0.20

$          0.17

$          0.11

$          0.10

$          0.08

$          0.59

$          0.10

Location Data:

Number of full-service community bank offices

21

21

21

21

21

21

21

Number of in-store banking centers

2

2

2

2

2

2

2

Total community bank offices

23

23

23

23

23

23

23

Number of loan production offices

14

15

16

15

15

14

15

Performance Ratios: (2)

Return on assets

0.87%

0.76%

0.50%

0.45%

0.40%

0.66%

0.12%

Return on equity

6.37%

5.22%

5.89%

5.26%

4.64%

5.69%

1.34%

Non-interest income to operating revenues

21.69%

23.12%

22.77%

22.38%

24.62%

22.48%

20.13%

Operating expenses to average total assets

2.53%

2.63%

2.82%

2.92%

3.08%

2.71%

3.26%

Efficiency ratio (3)

63.40%

67.82%

73.14%

77.32%

75.05%

69.87%

76.01%

Capital Ratios:

Equity to total assets

13.48%

13.19%

7.70%

8.42%

8.64%

13.48%

8.64%

Risk-based capital to risk-weighted assets (4)

18.42%

19.79%

14.55%

15.28%

15.27%

18.42%

15.27%

Tier 1 capital to risk-weighted assets (4)

17.61%

18.92%

13.64%

14.37%

14.39%

17.61%

14.39%

(1) Per share data for periods prior to the Conversion (July 2010) has been revised to reflect the 1.4:1 conversion ratio on publicly

  traded shares, which resulted in a 4,287,752 increase in outstanding shares.

(2) With the exception of end of period ratios, all ratios are based on average daily balances and are annualized where appropriate.

(3) Calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding impairment on securities.

(4) Calculated at the ViewPoint Bank level, which is subject to capital adequacy requirements by the Office of Thrift Supervision.

VIEWPOINT FINANCIAL GROUP, INC.

Selected Financial Data, continued

(unaudited)

As of or For the Three Months Ended

Year Ended

Dec

Sept

June

Mar

Dec

Dec

Dec

2010

2010

2010

2010

2009

2010

2009

Asset Quality Data and Ratios:

Non-performing loans

$      17,628

$      17,549

$      15,817

$        8,186

$      11,675

$      17,628

$      11,675

Non-performing assets to total assets

0.69%

0.68%

0.73%

0.45%

0.66%

0.69%

0.66%

Non-performing loans to total loans (1)

1.59%

1.57%

1.41%

0.73%

1.04%

1.59%

1.04%

Allowance for loan losses to non-performing loans

84.22%

83.14%

90.50%

157.94%

105.44%

84.22%

105.44%

Allowance for loan losses to total loans (1)

1.34%

1.31%

1.28%

1.15%

1.10%

1.34%

1.10%

Average Balances:

Loans (2)

$ 1,614,910

$ 1,571,432

$ 1,461,993

$ 1,365,166

$ 1,416,429

$ 1,504,246

$ 1,418,331

Securities

1,148,875

981,498

865,680

782,756

758,052

945,807

660,178

Overnight deposits

79,934

87,549

81,941

113,434

57,728

90,614

74,356

Total interest-earning assets

2,843,719

2,640,479

2,409,614

2,261,356

2,232,209

2,540,667

2,152,865

Deposits:

Interest-bearing demand

$    434,147

$    419,770

$    356,062

$    284,202

$    231,829

$    374,083

$    163,996

Savings and money market

724,075

724,333

723,955

700,207

695,101

718,224

670,518

Time

675,830

641,021

662,117

656,973

650,009

658,988

661,231

FHLB advances and other borrowings

509,597

379,422

366,509

342,378

359,390

399,880

374,029

Total interest-bearing liabilities

$ 2,343,649

$ 2,164,546

$ 2,108,643

$ 1,983,760

$ 1,936,329

$ 2,151,175

$ 1,869,774

Yields:

Loans

5.85%

5.84%

5.92%

5.96%

5.97%

5.89%

5.91%

Securities

2.67%

2.89%

2.75%

2.93%

3.05%

2.79%

3.55%

Overnight deposits

0.29%

0.31%

0.63%

0.52%

0.76%

0.44%

0.88%

Total interest-earning assets

4.41%

4.56%

4.60%

4.64%

4.84%

4.54%

5.01%

Deposits:

Interest-bearing demand

2.20%

2.65%

2.47%

2.27%

2.28%

2.40%

2.04%

Savings and money market

0.90%

1.33%

1.36%

1.48%

1.56%

1.27%

1.79%

Time

1.87%

1.95%

1.95%

2.08%

2.42%

1.96%

2.87%

FHLB advances and other borrowings

2.36%

3.44%

3.68%

4.08%

4.01%

3.29%

3.99%

Total interest-bearing liabilities

1.74%

2.14%

2.14%

2.24%

2.39%

2.05%

2.64%

Net interest spread

2.67%

2.42%

2.46%

2.39%

2.45%

2.49%

2.37%

Net interest margin

2.98%

2.81%

2.73%

2.67%

2.77%

2.80%

2.72%

(1) Total loans does not include loans held for sale.

(2) Includes loans held for sale

SOURCE ViewPoint Financial Group, Inc.



RELATED LINKS

http://www.viewpointbank.com


http://www.viewpointfinancialgroup.com