ViewPoint Financial Group, Inc. Reports Second Quarter 2010 Earnings

PLANO, Texas, July 23 /PRNewswire-FirstCall/ -- ViewPoint Financial Group, Inc. (Nasdaq: VPFG, VPFGD), the holding company for ViewPoint Bank, announced financial results today for its predecessor entity, ViewPoint Financial Group (the "Company"), for the three and six month periods ended June 30, 2010.  Detailed results of the quarter will be available in ViewPoint Financial Group, Inc.'s Quarterly Report on Form 10-Q, which we expect to be filed on July 26, 2010, and posted on our websites, http://viewpointbank.com and http://viewpointfinancialgroup.com.  References to the Company in this document refer to ViewPoint Financial Group, ViewPoint Financial Group, Inc., and ViewPoint Bank, as the context requires.  

Performance Highlights

• Shareholders and depositors approved plan of conversion and reorganization:  In June 2010, the Company's shareholders and ViewPoint Bank's depositors approved the plan of conversion and reorganization, and the conversion and offering was completed on July 6, 2010.
• EPS of $0.13 the highest since becoming public company: Basic and diluted quarterly earnings per share of $0.13, up $0.02 from last quarter and up $0.29 from the same period last year, is our highest quarterly EPS since becoming a public company in 2006.
• NPA ratio below 1.00%: Our non-performing assets to total assets ratio was 0.85% at June 30, 2010, outperforming the SNL Bank and Thrift industry index of 2.72%.
• Net charge-offs declined by 50%:  Net charge-offs for the three months ended June 30, 2010, decreased $494,000, or 49.6%, from the same period last year.
• Continued loan growth: Warehouse Purchase Program and commercial non-mortgage loans helped gross loans (including loans held for sale) increase by $161.1 million, or 11.0%, from December 31, 2009.
• Deposit growth of $152.4 million: Deposits increased by $152.4 million, or 8.5%, from December 31, 2009, primarily due to growth of $123.1 million in interest bearing demand accounts.

"We are pleased to report continued earnings improvement and our new status as a full-stock company," said Gary Base, President and Chief Executive Officer.  "Many thanks to the shareholders, depositors and employees who made our reorganization possible. We look forward to taking advantage of new opportunities for growth in the months and years ahead."

Results of Operations for the Three and Six Months Ended June 30, 2010

Net income for the three months ended June 30, 2010, was $3.2 million, an increase of $7.0 million from a net loss of $3.8 million for the three months ended June 30, 2009.  The net loss for the three months ended June 30, 2009, resulted from a $7.8 million (net of tax, using a tax rate of 34%) impairment charge on the Company's collateralized debt obligations.  These collateralized debt obligations were sold in June 2009, eliminating this type of investment from the Company's books.  Net income excluding this impairment charge for the three months ended June 30, 2009, was $3.9 million.  The $748,000 decrease in net income in the June 30, 2010, period compared to June 30, 2009, results, excluding the 2009 impairment charge, was driven by lower non-interest income and higher provision for loan losses for the three months ended June 30, 2010, and was partially offset by higher net interest income and lower non-interest expense.  Our basic and diluted earnings per share for the three months ended June 30, 2010, increased $0.29 from the three months ended June 20, 2009, to $0.13, which is the highest quarterly earnings per share the Company has recorded since becoming public in 2006.

Net income for the six months ended June 30, 2010, was $5.9 million, an increase of $8.5 million from a net loss of $2.6 million for the six months ended June 30, 2009.  Net income excluding an $8.1 million (net of tax) impairment charge for the six months ended June 30, 2009, was $5.5 million.  The $406,000 increase in net income in the June 30, 2010, period compared to June 30, 2009, results, excluding the 2009 impairment charge on collateralized debt obligations, was driven by higher net interest income and lower non-interest expense and was partially offset by higher provision for loan losses and lower non-interest income.  The decrease in non-interest income was primarily due to lower net gains on sale of loans during the six months ended June 30, 2010, compared to the same period last year and a $2.4 million gain on the sale of available for sale securities during the six months ended June 30, 2009, with no similar transaction in the 2010 period.  Our basic and diluted earnings per share for the six months ended June 30, 2010, increased to $0.24 from a loss per share of $.11 for the six months ended June 30, 2009.  

Net Interest Rate Spread and Margin

The net interest rate spread increased one basis point to 2.46% for the three months ended June 30, 2010, from 2.45% for the same period last year.  The net interest margin decreased seven basis points to 2.73% for the three months ended June 30, 2010, from 2.80% for the three months ended June 30, 2009.  

The net interest rate spread increased six basis points to 2.43% for the six months ended June 30, 2010, from 2.37% for the same period last year.  The net interest margin decreased four basis points to 2.71% for the six months ended June 30, 2010, from 2.75% for the six months ended June 30, 2009.

Financial Condition as of June 30, 2010

Total assets increased by $385.0 million, or 16.2%, to $2.76 billion at June 30, 2010, from $2.38 billion at December 31, 2009.  The rise in total assets was primarily due to a $163.4 million increase in loans held for sale, a $117.8 million increase in securities available for sale and a $79.0 million increase in interest bearing deposits in other financial institutions.  Asset growth was funded by a $152.4 million increase in deposits and a $132.3 million increase in FHLB advances.

Loan Portfolio and Asset Quality

The Company's mortgage subsidiary, VPBM, originated $126.6 million in one-to four-family mortgage loans during the three months ended June 30, 2010, and sold $92.4 million to investors, generating a net gain on sale of loans of $3.2 million. Also, $9.8 million in VPBM-originated loans were retained in our portfolio.  Commercial real estate loans increased by $26.9 million, or 5.9%, from December 31, 2009.  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 has not experienced the same economic pressures currently being experienced in other geographic areas.

The percentage of non-performing loans to total loans at June 30, 2010, was 1.71%, compared to 1.13% at December 31, 2009.  Non-performing loans increased by $6.4 million, from $12.7 million at December 31, 2009, to $19.1 million at June 30, 2010.  The increase in non-performing loans was primarily due to the addition of three commercial real estate loans totaling $8.1 million that were placed on nonaccrual.  The non-performing asset ratio for June 30, 2010 was 0.85%, which remains well below the SNL Bank and Thrift industry index of 2.72%.

The provision for loan losses was $1.9 million for the three months ended June 30, 2010, an increase of $394,000, or 26.4%, from $1.5 million for the same time last year.  This increase was primarily due to a higher level of non-performing loans.  This increase in the provision was partially offset by a decrease in net charge-offs of $493,000 over the same period last year and minimal loan growth.  The provision for loan losses was $3.0 million for the six months ended June 30, 2010, an increase of $98,000, or 3.3%, from $2.9 million for the same time last year.  Our resulting allowance for loan losses increased from $12.3 million, or 1.10% of gross loans, at December 31, 2009, to $14.3 million, or 1.28%, of gross loans, at June 30, 2010.

Conversion, Reorganization and Related Stock Offering

On July 6, 2010, we completed our conversion from the mutual holding company structure and related public stock offering.  As a result of that conversion, ViewPoint Bank has a new stock form holding company, ViewPoint Financial Group, Inc., that is wholly owned by public shareholders.  All outstanding shares of ViewPoint Financial Group common stock (other than those owned by ViewPoint MHC) were converted into the right to receive 1.40 shares of ViewPoint Financial Group, Inc. common stock.  ViewPoint Financial Group, Inc. sold a total of 19,857,337 shares of common stock at a purchase price of $10.00 per share in the offering, including 1,588,587 shares purchased by the ViewPoint Bank Employee Stock Ownership Plan.  The offering resulted in proceeds of $198.6 million, which includes ESOP proceeds of $15.9 million.  Following the conversion, ViewPoint Financial Group, Inc. had 34,864,800 shares of common stock outstanding.  The below table shows earnings per share on a pro-forma basis assuming that the conversion had taken place at the beginning of the periods set forth below and that we maintained the same number of shares outstanding throughout each period.

About ViewPoint Financial Group, Inc.

ViewPoint Financial Group, Inc. is the holding company for ViewPoint Bank.  ViewPoint Bank operates 23 community bank offices and 16 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 our 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.  

SOURCE ViewPoint Financial Group, Inc.