ViewPoint Financial Group Reports Fourth Quarter and Full Year 2009 Earnings
Annual Earnings before Provision Expense Up Sharply from 2008
PLANO, Texas, March 4 /PRNewswire-FirstCall/ -- ViewPoint Financial Group (Nasdaq: VPFG) (the "Company"), the holding company for ViewPoint Bank, announced financial results today for the three and twelve month periods ended December 31, 2009. 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://viewpointbank.com and http://viewpointfinancialgroup.com. Highlights for the year include:
- $0.25 increase in earnings per share: Basic and diluted earnings per share of $0.11, up $0.25 from 2008.
- Earnings before provision expense increased by 918.5%: Earnings before the provision for loan losses for the year ended December 31, 2009, was $7.7 million, an increase of $7.0 million, or 918.5%, from the year ended December 31, 2008.
- Asset quality remains solid with NPA percentage of 0.70% and charge-off percentage of 0.31%: Our non-performing assets as a percentage of total assets was 0.70% at December 31, 2009, while the ratio of net charge-offs to average loans at December 31, 2009, was 0.31%, compared to 0.30% at December 31, 2008.
- Purchase Program lending boosted income, deposits and loans: Our Purchase Program earned $1.9 million in fee income, generated $10.3 million in interest income and contributed $22.3 million in non-interest bearing checking accounts in 2009.
- Deposits grew by $248.6 million: Deposits increased by $248.6 million, or 16.1%, from December 31, 2008, which was driven by a $169.2 million, or 171.1%, increase in interest bearing checking deposits.
- Maintained strong capital position: ViewPoint Bank's tier one capital ratio was 7.99% and risk-based capital ratio was 15.27%, exceeding the regulatory minimums of 5% and 10%, respectively, for a well-capitalized institution.
"ViewPoint Financial Group's solid financial performance and strong growth in 2009 –– in an economy that was challenging, to say the least –– positions us for an even more dynamic 2010," said Gary Base, President and Chief Executive Officer. "Last year we expanded our footprint, opening three new community banks; we substantially grew both our loans and our deposits and continued to exceed capital requirements. We recently announced our intent to become a full-stock company this year which, if approved, will allow us additional opportunities for growth. Through a second-step offering, we intend to offer and sell shares representing ViewPoint MHC's 57% ownership in ViewPoint Financial Group."
2009 Community Banking Success Stories
The Company is strongly committed to community banking, which means actively putting a "face on banking" in the communities that we serve. In 2009, we opened three new community bank offices in Frisco, Grapevine and Wylie and our employees contributed over 2,400 volunteer hours partnering with local non-profit organizations. Gary Base, the Company's President and CEO, was named the Plano Chamber of Commerce's Business Executive of the Year. In the Dallas Business Journal's Book of Lists 2010, ViewPoint Bank was ranked fourth in the list of the Largest Metroplex-Headquartered Banks. Also, ViewPoint Bank was voted 2009 Best Community Bank in five of the communities that we serve by readers of the Dallas Morning News' NeighborsGo sections.
Results of Operations for the Year Ended December 31, 2009
Non-GAAP net income for the year ended December 31, 2009, was $11.3 million, an increase of $5.2 million, or 83.7%, from $6.1 million for the year ended December 31, 2008. The increase was primarily due to higher net interest income, increased net gain on sale of loans and a lower effective tax rate, and was partially offset by a higher provision for loan losses and noninterest expense. Our non-GAAP basic and diluted earnings per share for the year ended December 31, 2009, increased by $0.21 to $0.47. A reconciliation of these non-GAAP income items to GAAP net income can be found in the tables accompanying this press release. The Company reported net income of $2.7 million for the year ended December 31, 2009, an increase of $6.0 million from a net loss of $3.3 million for the year ended December 31, 2008. The net loss for 2008 was caused by a $13.8 million pre-tax impairment charge on the Company's collateralized debt obligations. These collateralized debt obligations were sold in June 2009, and the Company no longer owns any collateralized debt obligations. Prior to the sale, in 2009 the Company recognized a $12.2 million pre-tax charge for the other-than-temporary decline in the fair value of the collateralized debt obligations.
Interest income increased by $11.1 million, or 11.4%, from $97.2 million for the year ended December 31, 2008, to $108.3 million for the year ended December 31, 2009.
Year Ended
December 31,
------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Interest and dividend income (Dollars in Thousands)
Loans, including fees $84,197 $66,386 $17,811 26.8%
Securities 23,436 29,391 (5,955) (20.3)
Interest bearing deposits in
other financial
institutions 652 1,195 (543) (45.4)
Federal Home Loan Bank
stock 16 271 (255) (94.1)
-------- ------- -------
$108,301 $97,243 $11,058 11.4%
======== ======= =======
The increase in interest income was primarily due to a $17.8 million, or 26.8%, increase in interest income earned on loans compared to the prior year. This was driven by a $264.4 million, or 58.0%, increase in the average balance of one- to four- family real estate loans, which was primarily attributable to $202.5 million of growth in the average balance of Purchase Program loans and the addition of adjustable rate loans which will better position us for a rising rate environment. Our Purchase Program enables our mortgage banking company customers to close conforming one- to four-family real estate loans in their own name and temporarily finance their inventory of these closed loans until the loans are sold to investors approved by the Company. Additionally, the average balance of commercial real estate loans increased by $91.4 million, or 25.7%, while the yield earned on these loans increased by 21 basis points to 6.45% from 6.24%. This increase in interest income was partially offset by a $6.0 million, or 20.3%, decrease in interest income earned on securities: although the average balance of our securities portfolio increased, lower yields led to the decline in interest income.
Interest expense increased by $3.1 million, or 6.8%, from $46.2 million for the year ended December 31, 2008, to $49.3 million for the year ended December 31, 2009.
Year Ended
December 31,
------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Interest expense (Dollars in Thousands)
Deposits $34,366 $35,529 $(1,163) (3.3%)
Federal Home Loan Bank
advances 14,056 10,340 3,716 35.9
Federal Reserve Bank
advances 29 - 29 N/M
Repurchase agreement 707 300 407 135.7
Other borrowings 128 - 128 N/M
------- ------- ------
$49,286 $46,169 $3,117 6.8%
======= ======= ======
The increase in interest expense was primarily due to a $3.7 million increase in interest expense paid on Federal Home Loan Bank advances, as the average balance of these advances increased by $103.9 million. From July 2008 to December 2008, the Company increased the average balance of Federal Home Loan Bank advances by $163.6 million; therefore, in 2009, the Company recognized a full year's worth of interest expense on the higher average balance of borrowings compared to only six months of increased interest expense in 2008. The increase in interest expense related to borrowings was partially offset by a $1.2 million, or 3.3%, decrease in interest expense paid on deposits; although the average balance of deposits increased by $299.3 million, or 25.0%, lower rates paid on savings, money market and time accounts led to this decrease.
Non-interest income increased by $8.3 million, or 44.2%, from $18.9 million for the year ended December 31, 2008, to $27.2 million for the year ended December 31, 2009.
Year Ended
December 31,
------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Non-interest income (Dollars in Thousands)
Service charges and fees $18,866 $19,779 $(913) (4.6%)
Brokerage fees 347 434 (87) (20.0)
Net gain on sale of loans 16,591 9,390 7,201 76.7
Loan servicing fees 239 252 (13) (5.2)
Bank-owned life insurance
income 539 1,081 (542) (50.1)
Gain on redemption of Visa,
Inc. shares - 771 (771) (100.0)
Valuation adjustment on
mortgage servicing rights (191) - (191) N/M
Impairment of collateralized
debt obligation (all
credit) (12,246) (13,809) 1,563 11.3
Gain on sale of available for
sale securities 2,377 - 2,377 N/M
Gain (loss) on sale of
foreclosed assets 179 (43) 222 N/M
Gain (loss) on disposition of
assets (1,220) 16 (1,236) N/M
Other 1,718 993 725 73.0
------- ------- ------
$27,199 $18,864 $8,335 44.2%
======= ======= ======
Net gain on sale of loans increased by $7.2 million, or 76.7%, as the Company sold $629.9 million in loans originated by VPBM to outside investors during the year ended December 31, 2009, compared to $285.4 million for the year ended December 31, 2008. Non-interest income for the years ended December 31, 2009, and 2008 included pre-tax impairment charges of $12.2 million and $13.8 million, respectively, on collateralized debt obligations, which were impaired to their fair value and sold in June 2009. Also, non-interest income for the year ended December 31, 2009, included $1.2 million in lease termination fees and leasehold improvement write-offs for ten in-store banking centers closed during the year, which are reported as losses on disposition of assets. Fee income of $1.9 million generated by our Purchase Program partially offset the decrease in service charges and fees, which was primarily attributable to a $1.8 million decrease in non-sufficient funds fees and a $326,000 decline in debit card income. The decrease in non-sufficient funds fees and debit card income was primarily due to a trend of lower volume in these types of transactions.
Non-interest expense increased by $5.5 million, or 8.0%, from $69.4 million for the year ended December 31, 2008, to $74.9 million for the year ended December 31, 2009.
Year Ended
December 31,
------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Non-interest expense (Dollars in Thousands)
Salaries and employee
benefits $46,777 $43,560 $3,217 7.4%
Advertising 1,284 2,296 (1,012) (44.1)
Occupancy and equipment 5,999 5,772 227 3.9
Outside professional
services 1,882 2,004 (122) (6.1)
Regulatory assessments 4,018 1,225 2,793 228.0
Data processing 4,209 4,001 208 5.2
Office operations 5,984 6,111 (127) (2.1)
Deposit processing charges 862 990 (128) (12.9)
Lending and collection 1,278 1,276 2 0.2
Other 2,639 2,124 515 24.2
------- ------- ------
$74,932 $69,359 $5,573 8.0%
======= ======= ======
The increase in non-interest expense was primarily due to a $3.2 million, or 7.4%, increase in salaries and employee benefits expense and a $2.8 million, or 228.0%, increase in regulatory assessments. The increase in salaries and employee benefits expense was chiefly attributable to $2.2 million of increased salary and commission expense for VPBM. $1.2 million of the increase was due to increased commissions due to higher mortgage loan originations, while $989,000 was due to an increase in the salaried employee headcount, primarily attributable to new loan production offices opened and a change in salary structure. This increase in VPBM expense is more than offset by a $7.2 million increase in the net gain on sale of loans, which is reported in non-interest income. Advertising expense decreased by $1.0 million, or 44.1%, as we shifted our focus to emphasize community marketing efforts rather than mass branding campaigns. Regulatory assessments expense included a $1.1 million FDIC special assessment booked as expense in the second quarter of 2009. Additionally, regulatory assessments were higher in 2009 due to a higher assessment rate and an increased deposit base.
The provision for loan losses was $7.7 million for the year ended December 31, 2009, an increase of $1.5 million, or 24.0%, from $6.2 million for the year ended December 31, 2008. This increase was primarily due to an increase in our qualitative factors due to the downturn in the U.S. economy and a trend of increasing non-performing and classified loans in our loan portfolio. This was not based on any specific loan losses on our classified assets. Also, net charge-offs increased by $1.1 million, while specific valuation allowances on impaired loans increased by $410,000. Provision for loan losses for the year ended December 31, 2008, reflected overall loan growth during 2008 that was absent in 2009. In 2009, the net increase in loans was $50.0 million, compared to a net increase of $477.8 million for 2008. This change was primarily caused by an increase in one- to four-family loans that were sold rather than added to our loan portfolio. In 2009, the Company sold $629.9 million in loans originated by VPBM to outside investors, compared to $285.4 million for 2008.
Results of Operations for the Quarter Ended December 31, 2009
Non-GAAP net income for the quarter ended December 31, 2009, was $2.8 million, an increase of $881,000, or 46.1%, from $1.9 million for the quarter ended December 31, 2008. Our non-GAAP basic and diluted earnings per share for the quarter ended December 31, 2009 increased by $0.04 to $0.12. A reconciliation of these non-GAAP income items to GAAP net income can be found in the tables accompanying this press release. Net income for the quarter ended December 31, 2009, was $2.4 million, an increase of $9.8 million from a net loss of $7.4 million for the quarter ended December 31, 2008. The net loss for 2008 was attributable to a $13.8 million pre-tax impairment charge recognized during the fourth quarter of 2008 on the Company's collateralized debt obligations.
Interest income increased by $518,000, or 1.9%, from $26.6 million for the quarter ended December 31, 2008, to $27.1 million for the quarter ended December 31, 2009.
Three Months Ended
December 31,
------------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Interest and dividend income (Dollars in Thousands)
Loans, including fees $21,204 $19,178 $2,026 10.6%
Securities 5,773 7,122 (1,349) (18.9)
Interest bearing deposits in
other financial institutions 109 228 (119) (52.2)
Federal Home Loan Bank stock 6 46 (40) (87.0)
------- ------- ----
$27,092 $26,574 $518 1.9%
======= ======= ====
This increase was primarily due to an increase in interest income on loans as the average balance of loans (including loans held for sale) increased by $156.1 million, or 12.3%, from the quarter ended December 31, 2008. This increase was driven by higher average balances in residential real estate (primarily a result of our Purchase Program that was introduced in July 2008) and commercial real estate loans.
Interest expense decreased by $1.4 million, or 11.0%, from $13.0 million for the quarter ended December 31, 2008, to $11.6 million for the quarter ended December 31, 2009.
Three Months Ended
December 31,
------------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Interest expense (Dollars in Thousands)
Deposits $7,962 $8,892 $(930) (10.5%)
Federal Home Loan Bank
advances 3,274 3,999 (725) (18.1)
Repurchase agreement 205 104 101 97.1
Other borrowings 128 - 128 N/M
------- ------- -------
$11,569 $12,995 $(1,426) (11.0%)
======= ======= =======
This decrease was primarily caused by decreased interest expense paid on deposits: while volume increased in all of our deposit categories, lower rates paid on our savings, money market, and time accounts contributed to lower interest expense on deposit accounts. Also, interest expense paid on Federal Home Loan Bank advances decreased due to a $56.6 million decline in the average balance of these advances from the quarter ended December 31, 2008, compared to the same time period in 2009.
Non-interest income increased by $14.2 million, from a loss of $5.4 million for the quarter ended December 31, 2008, to income of $8.8 million for the quarter ended December 31, 2009.
Three Months Ended
December 31,
------------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Non-interest income (Dollars in Thousands)
Service charges and fees $4,803 $4,861 $(58) (1.2%)
Brokerage fees 118 70 48 68.6
Net gain on sale of loans 3,757 2,870 887 30.9
Loan servicing fees 56 56 - -
Bank-owned life insurance
income 94 232 (138) (59.5)
Valuation adjustment on
mortgage servicing rights (89) - (89) N/M
Impairment of collateralized
debt obligations (all
credit) - (13,809) 13,809 N/M
Gain (loss) on sale of
foreclosed assets (40) (10) (30) (300.0)
Gain (loss) on disposition of
assets (182) 5 (187) N/M
Other 311 280 31 11.1
------ ------- -------
$8,828 $(5,445) $14,273 N/M
====== ======= =======
The increase in non-interest income was primarily due to a $13.8 million pre-tax impairment charge recognized during the fourth quarter of 2008 on the Company's collateralized debt obligations. Excluding the effect of this impairment charge, non-interest income for the quarter ended December 31, 2008, would have been $8.4 million, representing an increase of $464,000, or 5.5%, from the quarter ended December 31, 2008, to the same time period in 2009. This increase was primarily attributable to an $887,000 increase in the net gain on sale of loans, as VPBM increased one- to four- family loan sales to outside investors by $23.4 million during the quarter ended December 31, 2009, compared to the same time period in 2008. Non-interest income for the quarter ended December 31, 2009 included $181,000 in lease termination fees and leasehold improvement write-offs for one in-store banking center closed during the quarter, which are reported as losses on disposition of assets.
Non-interest expense decreased by $24,000, or 0.1%, from the quarter ended December 31, 2008, to the same time period in 2009.
Three Months Ended
December 31,
------------------ Dollar Percent
2009 2008 Change Change
---- ---- ------ -------
Non-interest expense (Dollars in Thousands)
Salaries and employee
benefits $11,122 $11,774 $(652) (5.5%)
Advertising 309 397 (88) (22.2)
Occupancy and equipment 1,461 1,659 (198) (11.9)
Outside professional services 457 416 41 9.9
Regulatory assessments 768 309 459 148.5
Data processing 1,082 891 191 21.4
Office operations 1,560 1,614 (54) (3.3)
Deposit processing charges 196 235 (39) (16.6)
Lending and collection 277 335 (58) (17.3)
Other 1,060 686 374 54.5
------- ------- ----
$18,292 $18,316 $(24) (0.1%)
======= ======= ====
The decrease in non-interest expense was primarily attributable to a decline in salaries and employee benefits expense. Increased salary expense due to three new community bank offices opened in 2009 was more than offset by salary expense savings of $512,000 due to the closure of ten in-store banking centers in 2009 and the streamlining of operations. The decrease in salaries and employee benefits expense was partially offset by higher regulatory assessments due to a higher assessment rate and increased deposit base and higher other non-interest expense due to an increase in regulatory compliance expense associated with VPBM.
Financial Condition as of December 31, 2009
Total assets increased by $166.1 million, or 7.5%, to $2.38 billion at December 31, 2009, from $2.21 billion at December 31, 2008. The rise in total assets was primarily due to an $82.4 million, or 47.8%, increase in securities held to maturity and a $53.2 million, or 3.8%, increase in gross loans (including loans held for sale.) Asset growth was funded by an increase in deposits of $248.6 million, or 16.1%. Excess funds were used to reduce Federal Home Loan Bank advances, which decreased by $98.3 million, or 23.9%.
December 31, December 31, Dollar Percent
2009 2008 Change Change
------------ ------------ ------ -------
(Dollars in thousands)
Mortgage loans:
One- to four-family $440,847 $498,961 $(58,114) (11.6%)
Commercial real
estate 453,604 436,483 17,121 3.9
One- to four-family
construction 6,195 503 5,692 1,131.6
Commercial
construction 879 - 879 N/M
Mortgage loans held for
sale 341,431 159,884 181,547 113.5
Home equity 97,226 101,021 (3,795) (3.8)
---------- ---------- -------
Total mortgage
loans 1,340,182 1,196,852 143,330 12.0
Automobile loans 67,897 111,870 (43,973) (39.3)
Other consumer loans 26,998 29,299 (2,301) (7.9)
Commercial non-mortgage
loans 27,983 18,574 9,409 50.7
Warehouse lines of
credit - 53,271 (53,271) (100.0)
---------- ---------- -------
Total non-mortgage
loans 122,878 213,014 (90,136) (42.3)
---------- ---------- -------
Gross loans $1,463,060 $1,409,866 $53,194 3.8%
========== ========== =======
Mortgage loans held for sale consisted of $311.4 million of Purchase Program loans purchased for sale under our standard loan participation agreement and $30.0 million of loans originated for sale by our mortgage banking subsidiary, VPBM. At December 31, 2009, the Purchase Program had 22 clients, compared to eight clients at December 31, 2008. The approved maximum borrowing amounts for our existing Purchase Program clients ranged from $10.0 million to $30.0 million at December 31, 2009. During 2009, the average outstanding balance per client was $11.7 million. The Purchase Program generated $1.9 million of fee income for the year ended December 31, 2009, and also produced interest income of $10.3 million, which was an increase of $10.0 million from the year ended December 31, 2008. Our one- to four- family mortgage loan originations, which included a limited amount of home improvement and construction loans, totaled $695.7 million for the year ended December 31, 2009, an increase of $190.1 million, or 37.6%, from the year ended December 31, 2008. Of these loans, $629.9 million were sold to investors, generating a net gain on sale of loans of $16.6 million for the year ended December 31, 2009. One- to four- family mortgage loans held in portfolio declined by $58.1 million, or 11.6%, from December 31, 2008 because we sold more loans to outside investors in 2009 compared to 2008. Since we added fewer loans to our portfolio, paydowns exceeded new loans added to the portfolio in 2009. For asset/liability and interest rate risk management, the Company follows guidelines set forth by the Company's Asset/Liability Management Committee to determine whether to keep loans in portfolio or sell with a servicing release premium. The Company evaluates price, yield and duration when determining the amount of loans sold or retained.
Our commercial real estate portfolio, which increased by $17.1 million, or 3.9%, from December 31, 2008, consists almost exclusively of loans secured by existing, multi-tenanted commercial buildings with positive cash flows. 89% of our commercial real estate properties are located in Texas, a market that has not experienced the same economic pressures currently being experienced in other geographic areas. Our commercial non-mortgage portfolio increased by $9.4 million, or 50.7%, compared to the prior year, while warehouse lines of credit decreased by $53.3 million. From July 2008 to August 2009, we originated warehouse lines of credit to mortgage banking companies in the form of participations in warehouse lines extended by other financial institutions or multi-bank warehouse lending syndications originated in conjunction with other banks. The income generated by this program assisted in funding our new Purchase Program. As the Purchase Program began to season, we decided to discontinue participating in warehouse lines of credit originated by others and instead focus on serving mortgage banking companies directly though our Purchase Program, due to the added benefits these direct relationships bring.
Consumer loans, including direct and indirect automobile, other secured installment loans, and unsecured lines of credit, decreased by $46.3 million, or 32.8%, from December 31, 2008. We have continued to reduce our emphasis on consumer lending and are focused on originating residential and commercial loans. Nevertheless, we remain committed to meeting all of the banking needs of our customers, which includes offering them competitive consumer lending products.
Our non-performing loans to total loans ratio at December 31, 2009, was 1.13%, compared to 0.38% at December 31, 2008. Non-performing loans increased by $7.9 million, from $4.7 million at December 31, 2008, to $12.6 million at December 31, 2009. The increase in non-performing loans was primarily due to a $4.7 million increase in commercial real estate nonaccrual loans that have been restructured, which consists of three loans. Also, non-performing loans increased due to a $4.7 million increase in one- to four-family real estate loans on nonaccrual status, with $1.5 million of this increase being attributable to one loan.
Our allowance for loan losses at December 31, 2009, was $12.3 million, or 1.10% of gross loans, compared to $9.1 million, or 0.73% of gross loans, at December 31, 2008. The $3.2 million, or 35.8%, increase in our allowance for loan losses was primarily due to changed qualitative factors. Our qualitative factors were increased due to the downturn in the U.S. economy, as unemployment remains elevated and real estate values have declined in both our market area and in the U.S. as a whole. Also, qualitative factors were increased due to a trend of increasing non-performing and classified loans in our loan portfolio. The increase in qualitative factors was not based on any specific loan losses on our classified assets.
Our securities portfolio increased by $83.4 million, or 12.7%, to $738.8 million at December 31, 2009, from $655.4 million at December 31, 2008. The increase in our securities portfolio was primarily caused by $714.5 million of securities purchased and was partially offset by maturities and paydowns totaling $559.0 million and sales proceeds totaling $73.8 million. The purchases consisted of $582.0 million of securities deemed available for sale and $132.5 million of securities that were recorded as held to maturity. The sale of 22 agency residential collateralized mortgage obligations and two agency residential mortgage-backed securities, with a combined cost basis of $71.2 million, resulted in a $1.6 million after-tax increase to earnings. This gain was more than offset by a pre-tax impairment charge of $12.2 million on collateralized debt obligations, which were impaired to their fair value and sold in June 2009. We no longer have any collateralized debt obligations in our securities portfolio.
Total deposits increased by $248.6 million, or 16.1%, to $1.80 billion at December 31, 2009, from $1.55 billion at December 31, 2008.
December 31, December 31, Dollar Percent
2009 2008 Change Change
------------ ------------ ------ -------
(Dollars in thousands)
Non-interest bearing
demand $193,581 $172,395 $21,186 12.3%
Interest bearing demand 268,063 98,884 169,179 171.1
Savings 143,506 144,530 (1,024) (0.7)
Money Market 549,619 482,525 67,094 13.9
IRA savings 8,710 8,188 522 6.4
Time 633,186 641,568 (8,382) (1.3)
---------- ---------- --------
Total deposits $1,796,665 $1,548,090 $248,575 16.1%
========== ========== ========
The increase in deposits was primarily caused by a $169.2 million, or 171.1%, increase in interest bearing demand deposits, which was principally attributable to our Absolute Checking product, which currently provides a 4.0% annual percentage yield on account balances up to $50,000 if certain conditions are met. These conditions include using direct deposit or online bill pay, receiving statements online and having at least 15 Visa Check Card transactions per month for purchases. Absolute Checking encourages relationship accounts with required electronic transactions that are intended to reduce the expense of maintaining this product. If the conditions described above are not met, the rate paid decreases to 0.04%. The actual average rate paid on Absolute Checking accounts for the year ended December 31, 2009, was 2.91%. At December 31, 2009, 65% of Absolute Checking customers received online statements, compared to the average of 37% in other consumer checking accounts. Additionally, at December 31, 2009, Absolute Checking customers that represented new households generated 174 new loans totaling more than $6.1 million and 598 new deposit accounts for more than $24.5 million.
Money market deposits increased by $67.1 million, or 13.9%, due to a $68.6 million, or 15.9%, increase in consumer money market accounts, while non-interest bearing demand deposits increased by $21.2 million, or 12.3%, primarily due to $22.3 million in new non-interest bearing checking accounts opened by our mortgage banking company customers who participate in the Purchase Program. Our community bank offices actively sell our deposit products, which are priced to be competitive in the market.
Federal Home Loan Bank advances decreased by $98.3 million, or 23.9%, from $410.8 million at December 31, 2008, to $312.5 million at December 31, 2009. The outstanding balance of Federal Home Loan Bank advances decreased due to monthly principal paydowns. During the year ended December 31, 2009, the Company used deposit growth to fund loans more than utilizing borrowings as a funding source.
Total shareholders' equity increased by $11.6 million, or 5.9%, from $194.1 million at December 31, 2008, to $205.7 million at December 31, 2009.
December 31, December 31, Dollar Percent
2009 2008 Change Change
------------ ------------ ------ -------
(Dollars in Thousands)
Common stock $262 $262 $- -%
Additional paid-in
capital 118,297 115,963 2,334 2.0
Retained Earnings 111,188 108,332 2,856 2.6
Accumulated other
comprehensive
income (loss) 3,802 (1,613) 5,415 N/M
Unearned ESOP shares (6,159) (7,097) 938 13.2
Treasury stock (21,708) (21,708) - -
-------- -------- -------
Total shareholders'
equity $205,682 $194,139 $11,543 5.9%
======== ======== =======
This increase was primarily caused by a $5.4 million increase in unrealized gains and losses on securities available for sale. This increase was primarily attributable to the impairment and sale of our collateralized debt obligations in June 2009, which removed our loss position in accumulated other comprehensive income. Net income of $2.7 million was partially offset by the payment of dividends totaling $0.23 per share during 2009, which resulted in a $2.5 million reduction to shareholders' equity.
About ViewPoint Financial Group
ViewPoint Financial Group is the holding company for ViewPoint Bank. ViewPoint Bank operates 23 community bank offices and 15 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.
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Condensed Consolidated Statements of Condition
(In thousands)
December 31, December 31,
2009 2008
------------ ------------
ASSETS
Total cash and cash equivalents $55,470 $32,513
Securities available for sale, at
fair value 484,058 483,016
Securities held to maturity 254,724 172,343
Mortgage loans held for sale 341,431 159,884
Loans, net of allowance of $12,310-
December 31, 2009, $9,068-December
31, 2008 1,108,159 1,239,708
Federal Home Loan Bank stock 14,147 18,069
Bank-owned life insurance 28,117 27,578
Premises and equipment, net 50,440 45,937
Accrued interest receivable and other
assets 42,958 34,367
---------- ----------
Total assets $2,379,504 $2,213,415
========== ==========
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest bearing demand 193,581 172,395
Interest bearing demand 268,063 98,884
Savings and money market 701,835 635,243
Time 633,186 641,568
---------- ----------
Total deposits 1,796,665 1,548,090
Federal Home Loan Bank advances 312,504 410,841
Repurchase agreement and other
borrowings 35,000 25,000
Accrued interest payable and other
liabilities 29,653 35,345
---------- ----------
Total liabilities 2,173,822 2,019,276
---------- ----------
Total shareholders’ equity 205,682 194,139
---------- ----------
Total liabilities and
shareholders’ equity $2,379,504 $2,213,415
========== ==========
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Condensed Consolidated Statements of Income
(In thousands except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------ ---------------
2009 2008 2009 2008
------- ------- ------- -------
Interest and dividend income
Loans, including fees $21,204 $19,178 $84,197 $66,386
Securities 5,773 7,122 23,436 29,391
Interest bearing deposits in
other financial institutions 109 228 652 1,195
Federal Home Loan Bank stock 6 46 16 271
------- ------- ------- -------
27,092 26,574 108,301 97,243
Interest expense
Deposits 7,962 8,892 34,366 35,529
Federal Home Loan Bank
advances 3,274 3,999 14,056 10,340
Other borrowings 333 104 864 300
------- ------- ------- -------
11,569 12,995 49,286 46,169
Net interest income 15,523 13,579 59,015 51,074
Provision for loan losses 2,941 1,666 7,652 6,171
------- ------- ------- -------
Net interest income after
provision for loan losses 12,582 11,913 51,363 44,903
Non-interest income (loss) 8,828 (5,445) 27,199 18,864
Non-interest expense 18,292 18,316 74,932 69,359
------- ------- ------- -------
Income (loss) before income tax
expense (benefit) 3,118 (11,848) 3,630 (5,592)
Income tax expense (benefit) 754 (4,445) 960 (2,277)
------- ------- ------- -------
Net income (loss) $2,364 $(7,403) $2,670 $(3,315)
======= ======= ======= =======
Basic and diluted earnings
(loss) per share $0.10 $(0.31) $0.11 $(0.14)
======= ======= ======= =======
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Reconciliation of Non-GAAP to GAAP Net Income
(In thousands except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------ ----------------
2009 2008 2009 2008
------ ------ ------- ------
(unaudited)
Net income $2,364 $(7,403) $2,670 $(3,315)
Share-based compensation
expense, net of tax 248 282 1,164 1,135
Impairment of collateralized
debt obligations (all credit),
net of tax - 9,114 8,082 9,114
Gain on sale of available for
sale securities, net of tax - - (1,569) -
Valuation adjustment on mortgage
servicing rights, net of tax 59 - 126 -
Loss relating to closure of in-
store banking centers, net of
tax 119 - 800 -
Visa litigation liability, net
of tax - - - 84
Reversal of Visa litigation
liability, net of tax - (84) - (378)
Gain on redemption of Class B
Visa, Inc. shares, net of tax - - - (504)
------ ------ ------- ------
Non-GAAP net income $2,790 $1,909 $11,273 $6,136
====== ====== ======= ======
Basic and diluted non-GAAP
earnings per share $0.12 $0.08 $0.47 $0.26
====== ====== ======= ======
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Selected Financial Data
(Dollar amounts in thousands, except per share data)
(unaudited)
Three Months Ended
----------------------------------------------------------
Dec Sept June Mar Dec
2009 2009 2009 2009 2008
---------- ---------- ---------- ---------- ----------
Share Data
for Earnings
per Share
Calculation:
Weighted
average
common
shares
outstanding 24,929,157 24,929,157 24,929,157 24,929,157 24,929,157
Less: average
unallocated
ESOP
shares (626,017) (649,537) (672,886) (696,319) (722,090)
Less: average
unvested
restricted
shares (260,118) (260,118) (307,219) (344,161) (346,161)
---------- ---------- ---------- ---------- ----------
Average
shares 24,043,022 24,019,502 23,949,052 23,888,677 23,860,906
Diluted
average
shares 24,043,022 24,019,502 23,949,052 23,888,677 23,860,906
Net income
(loss) $2,364 $2,893 $(3,831) $1,244 $(7,403)
EPS $0.10 $0.12 $(0.16) $0.05 $(0.31)
Non-GAAP
EPS $0.12 $0.13 $0.13 $0.09 $0.08
Share data
at period-end:
Total
shares
issued 26,208,958 26,208,958 26,208,958 26,208,958 26,208,958
Less:
Treasury
stock (1,279,801) (1,279,801) (1,279,801) (1,279,801) (1,279,801)
---------- ---------- ---------- ---------- ----------
Total shares
outstanding 24,929,157 24,929,157 24,929,157 24,929,157 24,929,157
Location Data:
Number of
full-service
community
bank offices 21 21 20 18 18
Number of
in-store
banking
centers 2 2 3 4 12
---------- ---------- ---------- ---------- ----------
Total
community
bank offices 23 23 23 22 30
Number of
loan
production
offices 15 16 15 14 15
Performance
Ratios (1):
Return on
assets 0.40% 0.51% -0.68% 0.22% -1.43%
Return on
equity 4.65% 5.78% -7.86% 2.55% -15.10%
Non-interest
income to
operating
revenues 24.58% 26.94% 2.86% 21.29% -25.77%
Operating
expenses to
average
total assets 3.09% 3.16% 3.54% 3.33% 3.54%
Efficiency
ratio (2) 75.12% 75.45% 71.76% 83.31% 83.47%
Capital Ratios:
Equity to
total assets 8.64% 8.58% 8.65% 8.76% 8.77%
Risk-based
capital to
risk-weighted
assets (3) 15.27% 14.33% 13.83% 10.97% 11.18%
Tier 1 capital
to risk-weighted
assets (3) 14.39% 13.60% 13.14% 10.40% 10.58%
Year Ended
----------------------
Dec Dec
2009 2008
---------- ----------
Share Data for Earnings per Share
Calculation:
Weighted average common shares
outstanding 24,929,157 25,078,598
Less: average unallocated ESOP
shares (660,965) (762,449)
Less: average unvested restricted
shares (292,584) (378,769)
---------- ----------
Average shares 23,975,608 23,937,380
Diluted average shares 23,975,608 23,937,380
Net income (loss) $2,670 $(3,315)
EPS $0.11 $(0.14)
Non-GAAP EPS $0.47 $0.26
Share data at period-end:
Total shares issued 26,208,958 26,208,958
Less: Treasury stock (1,279,801) (1,279,801)
---------- ----------
Total shares outstanding 24,929,157 24,929,157
Location Data:
Number of full-service community
bank offices 21 18
Number of in-store banking centers 2 12
---------- ----------
Total community bank offices 23 30
Number of loan production offices 15 15
Performance Ratios (1):
Return on assets 0.12% -0.17%
Return on equity 1.35% -1.65%
Non-interest income to operating
revenues 20.07% 16.25%
Operating expenses to average
total assets 3.27% 3.66%
Efficiency ratio (2) 76.10% 82.82%
Capital Ratios:
Equity to total assets 8.64% 8.77%
Risk-based capital to risk-
weighted assets (3) 15.27% 11.18%
Tier 1 capital to risk-weighted
assets (3) 14.39% 10.58%
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(1) With the exception of end of period ratios, all ratios are based on
average monthly balances and are annualized where appropriate.
(2) Calculated by dividing total noninterest expense by net interest
income plus noninterest income, excluding impairment on securities.
(3) Calculated at the ViewPoint Bank level, which is subject to capital
adequacy requirements by the Office of Thrift Supervision.
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Selected Financial Data, continued
(Dollar amounts in thousands, except per share data)
(unaudited)
Three Months Ended
----------------------------------------------------------
Dec Sept June Mar Dec
2009 2009 2009 2009 2008
---------- ---------- ---------- ---------- ----------
Asset Quality
Data and
Ratios:
Non-performing
loans $12,653 $14,640 $7,337 $6,029 $4,745
Non-performing
assets to
total assets 0.70% 0.67% 0.40% 0.34% 0.29%
Non-performing
loans to total
loans (4) 1.13% 1.30% 0.62% 0.49% 0.38%
Allowance for
loan losses to
non-performing
loans 97.29% 74.83% 136.24% 157.54% 191.11%
Allowance for
loan losses
to total
loans (4) 1.10% 0.97% 0.84% 0.76% 0.73%
Average
Balances:
Loans (5) $1,420,831 $1,406,372 $1,429,924 $1,459,716 $1,264,726
Securities 758,054 619,359 616,683 659,476 618,332
Overnight
deposits 57,516 132,937 74,415 27,994 61,851
---------- ---------- ---------- ---------- ----------
Total
interest
earning
assets 2,236,401 2,158,668 2,121,022 2,147,186 1,944,909
Deposits:
Interest
bearing
demand $231,817 $180,997 $137,302 $104,381 $90,741
Savings
and money
market 695,117 674,768 667,376 644,216 614,802
Time 650,055 659,951 672,779 662,419 542,334
FHLB advances
and other
borrowings 359,436 354,095 365,950 418,152 407,732
---------- ---------- ---------- ---------- ----------
Total interest
bearing
liabilities $1,936,425 $1,869,811 $1,843,407 $1,829,168 $1,655,609
Yields:
Loans 5.97% 5.98% 5.94% 5.68% 6.07%
Securities 3.05% 3.26% 4.09% 4.08% 4.64%
Overnight
deposits 0.76% 0.95% 0.91% 0.84% 1.47%
Total
interest
earning
assets 4.85% 4.89% 5.22% 5.13% 5.47%
Deposits:
Interest-
bearing
demand 2.29% 2.16% 1.86% 1.56% 1.44%
Savings and
money market 1.56% 1.73% 1.81% 2.10% 2.45%
Time 2.42% 2.82% 3.01% 3.24% 3.54%
FHLB advances
and other
borrowings 4.01% 4.10% 4.13% 3.74% 4.02%
Total
interest
bearing
liabilities 2.39% 2.60% 2.71% 2.85% 3.14%
Net interest
spread 2.46% 2.29% 2.51% 2.28% 2.33%
Net interest
margin 2.78% 2.63% 2.87% 2.70% 2.79%
Year Ended
----------------------
Dec Dec
2009 2008
---------- ----------
Asset Quality Data and Ratios:
Non-performing loans $12,653 $4,745
Non-performing assets to total
assets 0.70% 0.29%
Non-performing loans to total
loans (4) 1.13% 0.38%
Allowance for loan losses to non-
performing loans 97.29% 191.11%
Allowance for loan losses to total
loans (4) 1.10% 0.73%
Average Balances:
Loans (5) $1,429,211 $1,105,204
Securities 660,215 621,974
Overnight deposits 73,215 50,759
---------- ----------
Total interest earning assets 2,162,641 1,777,937
Deposits:
Interest bearing demand $163,625 $78,347
Savings and money market 670,369 599,549
Time 661,301 518,069
FHLB advances and other borrowings 374,408 264,500
---------- ----------
Total interest bearing
liabilities $1,869,703 $1,460,465
Yields:
Loans 5.89% 6.01%
Securities 3.55% 4.77%
Overnight deposits 0.89% 2.35%
Total interest earning assets 5.01% 5.47%
Deposits:
Interest-bearing demand 2.05% 1.11%
Savings and money market 1.79% 2.41%
Time 2.87% 3.90%
FHLB advances and other borrowings 3.98% 4.02%
Total interest bearing
liabilities 2.64% 3.16%
Net interest spread 2.37% 2.31%
Net interest margin 2.73% 2.87%
-----------------------------------------------------------
(4) Total loans does not include loans held for sale.
(5) Includes loans held for sale
SOURCE ViewPoint Financial Group
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