ViewPoint Financial Group Announces Third Quarter and Year-to-Date 2008 Earnings
VPFG Reports Significant Loan Growth and Higher Year-to-Date Net Income
PLANO, Texas, Oct. 27 /PRNewswire-FirstCall/ -- ViewPoint Financial Group
(Nasdaq: VPFG) (the 'Company'), the holding company for ViewPoint Bank (the
'Bank'), announced unaudited financial results today for the three and nine
month periods ended September 30, 2008. Detailed results of the quarter will
be available in the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2008, which will be filed in November and posted on our
website, http://viewpointbank.com. Highlights for the quarter include:
-- Total assets of $1.99 billion, an increase of $331.1 million, or 20.0%,
from December 31, 2007
-- Total net loans (including loans held for sale) of $1.22 billion, an
increase of $299.9 million, or 32.5%, from December 31, 2007
-- Total deposits of $1.36 billion, an increase of $58.4 million, or 4.5%,
from December 31, 2007
-- Net income of $4.3 million for the nine months ended
September 30, 2008, an increase of 6.7% from the nine months ended
September 30, 2007
-- $0.06 basic and diluted earnings per share for the quarter ended
September 30, 2008
-- $0.18 basic and diluted earnings per share for the nine months ended
September 30, 2008
-- Over the quarter, we opened a full-service community bank office in
Northeast Tarrant County and added nine mortgage loan production
offices throughout Texas
'Given the turmoil in the economy these days, we're very pleased to report
that ViewPoint Financial Group remains a solid, stable financial institution
that provides a safe haven for our depositors,' said Gary Base, President and
Chief Executive Officer. 'Our capital position and asset quality remain
strong and we've grown our assets by 20%.'
As we continue to expand our loan portfolio, we are focused on maintaining
our solid asset quality by applying stringent underwriting guidelines to all
loans that we originate. The vast majority of our residential real estate
loans are full-documentation, standard 'A' type products and we do not offer
any subprime loan origination products. Our mortgage lending subsidiary,
ViewPoint Bankers Mortgage ('VPBM') (formerly known as Bankers Financial
Mortgage Group), has been providing quality mortgage loans since 1988, while
performing in-house underwriting and closing for all loans originated. The
loans originated by VPBM and retained in the Bank's portfolio for the nine
months ended September 30, 2008, had an average loan-to-value ratio of 74.90%
and an average credit score of 745.
Our asset quality data is a direct reflection of our conservative approach
to loan origination: during this turbulent time in the credit market, net
charge-offs for the nine months ended September 30, 2008, have declined
$505,000, from $2.7 million for the nine months ended September 30, 2007, to
$2.2 million for the same period this year. Our non-performing loans to total
loans ratio has remained steady at 0.38%, compared to 0.38% at December 31,
2007. Similarly, at September 30, 2008, our non-performing assets made up
0.27% of total assets, compared to 0.26% of total assets at December 31, 2007.
Results of Operations for the Quarter Ended September 30, 2008
Net income for the quarter ended September 30, 2008, was $1.3 million, a
decrease of $293,000, or 18.3%, from $1.6 million for the quarter ended
September 30, 2007. The decline in net income was primarily attributable to a
$3.8 million, or 27.3%, increase in noninterest expense and a $1.3 million, or
210.6%, increase in provision for loan losses. These increased expenses were
partially offset by a $2.7 million, or 23.9%, increase in net interest income
and a $1.8 million, or 28.0%, increase in noninterest income. The increase in
the provision for loan losses was due to the significant growth in our loan
portfolio rather than negative trends in our credit quality.
Net interest income increased by $2.7 million, or 23.9%, to $13.8 million
for the quarter ended September 30, 2008, from $11.1 million for the quarter
ended September 30, 2007. The net interest rate spread increased 26 basis
points to 2.41% for the quarter ended September 30, 2008, from 2.15% for the
same period last year. The net interest margin remained steady for the
quarter ended September 30, 2008, at 2.97%, compared to 2.97% for the quarter
ended September 30, 2007.
Interest income increased by $3.6 million, or 16.7%, to $25.4 million for
the quarter ended September 30, 2008, from $21.8 million for the quarter ended
September 30, 2007. This growth was primarily due to a $3.9 million, or
28.2%, increase in loan interest income, as the average balance of our loan
portfolio increased by $265.7 million, or 29.2%, from $911.2 million for the
three months ended September 30, 2007, to $1.18 billion for the three months
ended September 30, 2008. Also, interest income on securities increased by
$707,000, or 10.3%, from $6.9 million for the three months ended September 30,
2007, to $7.6 million for the three months ended September 30, 2008. While
the average yields earned on mortgage-backed securities and collateralized
mortgage obligations for the quarter ended September 30, 2008, decreased by 51
basis points and 105 basis points, respectively, from the quarter ended
September 30, 2007, the average balances in these categories increased by
$103.5 million and $17.0 million, respectively, for the same periods.
Both the average yield and average balance of other investment securities,
which include agency and municipal bonds, Small Business Administration pools,
and collateralized debt obligations, increased by 28 basis points and
$13.6 million, respectively, from the quarter ended September 30, 2007, to the
same period in 2008. Overall, the average yield on interest-earning assets
decreased by 34 basis points, from 5.81% for the three months ended September
30, 2007, to 5.47% for the three months ended September 30, 2008, primarily
due to the reduction in market interest rates during the period.
The increase in interest income due to the higher balances of loans and
securities was partially offset by lower interest income from interest-bearing
deposits in other financial institutions, which decreased by $941,000, or
84.2%, from $1.1 million for the three months ended September 30, 2007, to
$176,000 for the three months ended September 30, 2008. This decline was
attributable to a decrease of $50.4 million, or 58.9%, in the average balance
retained in these accounts, from $85.5 million for the three months ended
September 30, 2007, to $35.1 million for the three months ended September 30,
2008. The funds moved from interest-earning deposit accounts in other
financial institutions have been reinvested in loans and securities. A 322
basis point decline in the average yield earned on these deposits for the
quarter ended September 30, 2008, also contributed to the decline in interest
income they generated as the Federal Open Market Committee reduced its target
for the federal funds rate from September 30, 2007, to September 30, 2008.
Interest expense increased by $973,000, or 9.1%, to $11.7 million for the
quarter ended September 30, 2008, from $10.7 million for the quarter ended
September 30, 2007. This increase was caused by higher interest expense on
Federal Home Loan Bank advances of $1.9 million, or 177.0%, as the average
balance of advances and other borrowings increased by $238.5 million, or
302.9%, from $78.8 million for the three months ended September 30, 2007, to
$317.3 million for the three months ended September 30, 2008. Also, the
Company paid $104,000 in interest expense on the $25.0 million repurchase
agreement entered into in April 2008. We utilize Federal Home Loan Bank
advances and the repurchase agreement to leverage our balance sheet and to
extend the duration of our liabilities to more closely match our assets. The
increase in interest expense on advances was partially offset by a 153 basis
point decline in the rate paid for borrowings, as the average rate for the
three months ended September 30, 2008, dropped to 3.79% from 5.32% for the
same period last year.
A decline of $984,000, or 10.2%, in interest expense on deposits also
helped to offset the increase in interest expense. This decrease was due to
lower rates paid on our savings, money market and time deposits as a result of
the falling interest rate environment. The average rates paid on savings and
money market accounts and on time deposits decreased from 2.94% and 4.94%,
respectively, for the three months ended September 30, 2007, to 2.44% and
3.68%, respectively, for the three months ended September 30, 2008. While the
average balance of savings and money market accounts declined by $1.2 million
for the three months ended September 30, 2008, the average balance of time
deposits increased by $101.7 million. Overall, the average rate paid on
interest-bearing liabilities decreased 60 basis points, from 3.66% for the
three months ended September 30, 2007, to 3.06% for the three months ended
September 30, 2008.
Based on management's evaluation, provisions for loan losses of
$1.9 million and $601,000 were made during the three months ended September
30, 2008, and September 30, 2007, respectively. The $1.3 million, or 210.6%,
increase in provisions for loan losses was caused by the growth of our loan
portfolio: compared to the three months ended September 30, 2007, our average
loans have increased by $265.7 million, or 29.2%, with the growth being driven
by residential and commercial real estate loans and our new warehouse lending
program. While provision expense has increased, net charge-offs have
decreased by $106,000, or 14.4%, from $737,000 for the three months ended
September 30, 2007, to $631,000 for the three months ended September 30, 2008.
At September 30, 2008, our allowance for loan losses to total loans was 0.69%,
compared to 0.66% at December 31, 2007, and 0.66% at September 30, 2007.
Noninterest income increased by $1.8 million, or 28.0%, to $8.0 million
for the quarter ended September 30, 2008, from $6.2 million for the quarter
ended September 30, 2007. This growth in noninterest income was caused by a
$2.0 million, or 591.8%, increase in the net gain on sales of loans. For the
three months ended September 30, 2008, the Company sold $67.6 million of loans
originated by VPBM to outside investors. The Company completed its
acquisition of the assets of Bankers Financial Mortgage Group, Ltd. ('BFMG')
(now known as VPBM) on September 1, 2007; therefore, the Company did not
recognize similar gains on loan sales for the three months ended September 30,
2007. All loans originated by VPBM are carefully evaluated to determine
whether the loans will be marked for sale or retained in the Company's
portfolio, and the Company uses the sale of loans to investors as both a
source of income and as an asset/liability management tool.
Bank-owned life insurance income from a policy purchased in September 2007
totaled $301,000 for the three months ended September 30, 2008, compared to
$100,000 for the three months ended September 30, 2007, which also contributed
to the increase in noninterest income. This increase was partially offset by
a $329,000 decline in service charges and fees primarily due to lower account
service charges and non-sufficient fund fees.
Noninterest expense increased by $3.8 million, or 27.3%, to $18.0 million
for the quarter ended September 30, 2008, from $14.2 million for the quarter
ended September 30, 2007. The rise in noninterest expense was primarily
attributable to higher salary expense of $3.5 million, or 44.6%, as our full-
time employee equivalent count increased from 541.5 at September 30, 2007, to
650.5 at September 30, 2008. Over the past year, we have added employees due
to the September 2007 BFMG acquisition and the expansion of our community bank
office network, as well as hired experienced retail banking and warehouse
lending personnel who will help us to fully serve our customers by providing a
wide range of banking services. Community bank office staff hired since
September 2007 includes staff for our Plano Central community bank office,
which opened in October 2007, our Northeast Tarrant County community bank
office, which opened in August 2008, and our Oak Cliff community bank office,
which opened in late October 2008.
Included in salary expense for the quarter ended September 30, 2008, are
nonrecurring earnout payments totaling $186,000 to former partners of BFMG
pursuant to the acquisition agreement, with no similar payments during the
quarter ended September 30, 2007. We also had higher outside professional
services expenses of $253,000, or 32.9%, during the quarter ended September
30, 2008, due to increased management and consultation fees, which included
one-time professional placement fees for the addition of nine new mortgage
loan production offices. This increase was partially offset by lower
advertising expense of $110,000, or 17.2%.
Results of Operations for the Nine Months Ended September 30, 2008
Net income for the nine months ended September 30, 2008, was $4.3 million,
an increase of $270,000, or 6.7%, from $4.0 million for the nine months ended
September 30, 2007. Earnings for the nine months ended September 30, 2008,
included a $1.2 million benefit related to the Visa initial public offering
and share-based compensation expense of $1.3 million from the Equity Incentive
Plan adopted in May 2007. The Company recognized share-based compensation
expense of $646,000 and had no similar Visa-related benefit in the nine months
ended September 30, 2007. A reconciliation of these non-GAAP income items to
GAAP net income can be found in the tables attached to this press release.
Net interest income increased by $5.3 million, or 16.3%, to $37.6 million
for the nine months ended September 30, 2008, from $32.3 million for the nine
months ended September 30, 2007. The net interest rate spread increased 15
basis points to 2.26% for the nine months ended September 30, 2008, from 2.11%
for the same period last year. The net interest margin decreased four basis
points to 2.88% for the nine months ended September 30, 2008, from 2.92% for
the nine months ended September 30, 2007.
Interest income increased by $8.3 million, or 13.3%, to $70.8 million for
the nine months ended September 30, 2008, from $62.5 million for the nine
months ended September 30, 2007. This growth was primarily due to a
$6.2 million, or 15.2%, increase in loan interest income, as the average
balance of our loan portfolio increased by $124.5 million, or 13.3%, from
$934.6 million for the nine months ended September 30, 2007, to $1.06 billion
for the nine months ended September 30, 2008. Also, interest income on
securities increased by $4.1 million, or 22.6%, from $18.2 million for the
nine months ended September 30, 2007, to $22.3 million for the nine months
ended September 30, 2008. While the average yields earned on mortgage-backed
securities and collateralized mortgage obligations for the nine months ended
September 30, 2008, decreased by 26 basis points and 79 basis points,
respectively, from the nine months ended September 30, 2007, the average
balances in these categories increased by $102.9 million and $37.1 million,
respectively, for the same periods. Both the average yield and average
balance of other investment securities, which includes agency and municipal
bonds, Small Business Administration pools, and collateralized debt
obligations, increased by 107 basis points and $17.5 million, respectively,
from the nine months ended September 30, 2007, to the same period in 2008.
Overall, the average yield on interest-earning assets decreased by 21 basis
points, from 5.64% for the nine months ended September 30, 2007, to 5.43% for
the nine months ended September 30, 2008, primarily due to the reduction in
market interest rates during the period.
The increase in interest income due to the higher balances of loans and
securities was partially offset by lower interest income from interest-bearing
deposits in other financial institutions, which decreased by $2.1 million, or
68.8%, from $3.1 million for the nine months ended September 30, 2007, to
$967,000 for the nine months ended September 30, 2008. This decline in
interest income was attributable to a decrease of $26.7 million, or 34.1%, in
the average balance retained in these accounts, from $78.5 million for the
nine months ended September 30, 2007, to $51.8 million for the nine months
ended September 30, 2008. The funds moved from interest-earning deposit
accounts in other financial institutions have been reinvested in loans and
securities.
A 278 basis point decline in the average yield earned on these deposits
for the nine months ended September 30, 2008, also contributed to the decline
in interest income they generated as the Federal Open Market Committee reduced
its target for the federal funds rate from September 30, 2007, to September
30, 2008.
Interest expense increased by $3.0 million, or 10.0%, to $33.2 million for
the nine months ended September 30, 2008, from $30.2 million for the nine
months ended September 30, 2007. This increase was caused by higher interest
expense on Federal Home Loan Bank advances of $3.8 million, or 146.7%, as the
average balance of advances and other borrowings increased by $149.3 million,
or 221.2%, from $67.5 million for the nine months ended September 30, 2007, to
$216.8 million for the nine months ended September 30, 2008. Also, the
Company paid $196,000 in interest expense on the $25.0 million repurchase
agreement entered into in April 2008. We utilize Federal Home Loan Bank
advances and the repurchase agreement to leverage our balance sheet and to
extend the duration of our liabilities to more closely match our assets. The
increase in interest expense on advances was partially offset by a 106 basis
point decline in the rate paid for borrowings, as the average rate for the
nine months ended September 30, 2008, dropped to 4.02% from 5.08% for the same
period last year.
A decline of $951,000, or 3.4%, in interest expense on deposits also
helped to offset the increase in interest expense. This decrease was due to
lower rates paid on savings, money market and time deposits as a result of the
recent falling interest rate environment. The average rates paid on savings
and money market accounts and on time deposits decreased from 2.88% and 4.87%,
respectively, for the nine months ended September 30, 2007, to 2.39% and
4.03%, respectively, for the nine months ended September 30, 2008. While the
average balance of savings and money market accounts declined by $36.4 million
for the nine months ended September 30, 2008, the average balance of time
deposits increased by $134.5 million. Overall, the average rate paid on
interest-bearing liabilities decreased 36 basis points, from 3.53% for the
nine months ended September 30, 2007, to 3.17% for the nine months ended
September 30, 2008.
Based on management's evaluation, provisions for loan losses of $4.5
million and $2.2 million were made during the nine months ended September 30,
2008, and September 30, 2007, respectively. The $2.3 million, or 106.3%,
increase in provisions for loan losses was caused by the growth of our loan
portfolio: compared to the nine months ended September 30, 2007, our average
loans have increased by $124.5 million, or 13.3%, with the growth being driven
by residential and commercial real estate loans and our new warehouse lending
program. While provision expense has increased, net charge-offs have
decreased by $505,000, or 19.0%, from $2.7 million for the nine months ended
September 30, 2007, to $2.2 million for the nine months ended September 30,
2008. At September 30, 2008, our allowance for loan losses to total loans was
0.69%, compared to 0.66% at December 31, 2007, and 0.66% at September 30,
2007.
Noninterest income increased by $5.7 million, or 31.2%, to $24.2 million
for the nine months ended September 30, 2008, from $18.5 million for the nine
months ended September 30, 2007. This growth in noninterest income was caused
by a $6.1 million, or 1,478.5%, increase in the net gain on sales of loans.
For the nine months ended September 30, 2008, the Company sold $193.0 million
of loans originated by VPBM to outside investors.
The Company completed its acquisition of the assets of Bankers Financial
Mortgage Group, Ltd. ('BFMG') (now known as VPBM) on September 1, 2007;
therefore, the Company did not recognize similar gains on loan sales for the
nine months ended September 30, 2007. All loans originated by VPBM are
carefully evaluated to determine whether the loans will be marked for sale or
retained in the Company's portfolio, and the Company uses the sale of loans to
investors as both a source of income and as an asset/liability management
tool.
Bank-owned life insurance income from a policy purchased in September 2007
totaled $849,000 for the nine months ended September 30, 2008, compared to
$100,000 for the nine months ended September 30, 2007, which also contributed
to the increase in noninterest income. Additionally, in March 2008, we
recognized a gain of $771,000 resulting from the redemption of 18,029 shares
of Visa Class B stock in association with Visa's initial public offering.
This increase was partially offset by a $1.4 million decline in service
charges and fees primarily due to lower account service charges and
non-sufficient fund fees.
Noninterest expense increased by $8.5 million, or 20.2%, to $50.7 million
for the nine months ended September 30, 2008, from $42.2 million for the nine
months ended September 30, 2007. The rise in noninterest expense was
primarily attributable to higher salary expense of $8.7 million, or 38.3%, as
our full-time employee equivalent count increased from 541.5 at September 30,
2007, to 650.5 at September 30, 2008. Over the past year, we have added
employees due to the September 2007 BFMG acquisition and the expansion of our
community bank office network, as well as hired experienced retail banking and
warehouse lending personnel who will help us to fully serve our customers by
providing a wide range of banking services. Community bank office staff hired
since September 2007 includes staff for our Plano Central community bank
office, which opened in October 2007, our Northeast Tarrant County community
bank office, which opened in August 2008, and our Oak Cliff community bank
office, which opened in late October 2008.
Included in salary expense for the nine months ended September 30, 2008,
are nonrecurring earnout payments totaling $186,000 to former partners of BFMG
pursuant to the acquisition agreement, with no similar payments during the
nine months ended September 30, 2007. Also, the Company recognized higher
share compensation expense of $645,000 from the Equity Incentive Plan approved
in May 2007, which is caused by the Company having nine months of expense in
2008, compared to approximately four months of expense in 2007.
The increase in noninterest expense was partially offset by lower outside
professional services expense of $415,000 during the nine months ended
September 30, 2008, due to the reversal of $446,000 of the VISA litigation
liability originally recorded in the fourth quarter of 2007. In October, we
received notice from Visa that they have reached a settlement in principle
with Discover Financial Services, which is covered litigation under Visa's
retrospective responsibility plan. Results of this settlement will not be
announced by Visa until October 29; therefore, the effects of this settlement,
if any, have not been reflected in this earnings release.
Financial Condition as of September 30, 2008
Total assets increased by $331.1 million, or 20.0%, to $1.99 billion at
September 30, 2008, from $1.66 billion at December 31, 2007. The rise in
total assets was primarily caused by a $299.9 million, or 32.5%, increase in
net loans (including loans held for sale) and a $54.0 million, or 9.6%,
increase in securities. This increase was partially offset by a reduction in
cash and cash equivalents of $38.8 million, or 52.8%.
Our net loan portfolio, including loans held for sale, increased $299.9
million, or 32.5%, from $921.8 million at December 31, 2007, to $1.22 billion
at September 30, 2008. The table below shows our mix of loans, including
loans held for sale, at September 30, 2008, and December 31, 2007:
September 30, December 31,
2008 2007
Mortgage loans:
One-to four-family $502,241 40.78% $345,952 37.30%
Commercial and business 400,464 32.52 252,140 27.19
Home Equity 96,626 7.85 85,064 9.17
Total mortgage loans 999,331 81.15 683,156 73.66
Automobile loans 126,300 10.25 202,973 21.89
Other consumer loans 28,655 2.33 28,977 3.13
Business non-mortgage loans 18,649 1.51 12,278 1.32
Warehouse lines of credit 58,588 4.76 - -
Total non-mortgage
loans 232,192 18.85 244,228 26.34
Gross loans $1,231,523 100.00% $927,384 100.00%
We are experiencing significant growth in both our residential and
commercial mortgage loan categories: one-to four-family mortgage loans have
increased by $156.2 million, or 45.2%, from $346.0 million at December 31,
2007, to $502.2 million at September 30, 2008. Since December 31, 2007, the
Company has opened 13 new mortgage loan production offices to expand VPBM's
footprint in the Texas market. Four of these offices are in residential real
estate markets new to the Company, consisting of Austin, Clear Lake, Corpus
Christi and Houston. At September 30, 2008, VPBM had originated
$378.7 million in one-to four-family mortgage loans in 2008, of which
$203.5 million had been sold or committed for sale to outside investors and
$175.2 million had been retained in our loan portfolio.
Our commercial real estate loan portfolio has also increased by
$148.4 million, or 58.8%, from $252.1 million at December 31, 2007, to
$400.5 million at September 30, 2008, while business non-mortgage loans grew
by $6.4 million, or 51.9%, for the same period. Additionally, in July 2008,
we initiated our warehouse lending program. Through this program, the Company
extends lines of credit to mortgage loan originators that the originators use
to fund the one-to four-family real estate loans they originate. The lines of
credit are secured by the underlying one- to four-family real estate loans.
We have hired experienced warehouse lenders to operate this new line of
business. Jerry Davis, who heads the Warehouse Lending Division, has over 33
years of experience in the mortgage industry and a proven record of success in
developing warehouse lending programs.
At September 30, 2008, warehouse lines of credit totaled $58.6 million, or
4.8%, of our loan portfolio. The growth in our loan portfolio was partially
offset by a $76.7 million, or 37.8%, decline in automobile loans. We
discontinued our indirect automobile lending program in 2007, so as our
indirect automobile portfolio pays down, the proceeds are being reinvested in
real estate and business loans.
Our securities portfolio increased by $54.0 million, or 9.6%, to
$617.0 million at September 30, 2008, from $563.0 million at December 31,
2008, due to the purchase of $163.7 million of securities during the nine
months ended September 30, 2008. These purchases consisted of $116.5 million
(71.1%) in agency mortgage-backed securities, $15.0 million (9.2%) in agency
bonds, $16.0 million (9.8%) in agency collateralized mortgage obligations,
$7.1 million (4.3%) in municipal bonds and $9.1 million (5.6%) in Small
Business Association pools. These purchases had a weighted average yield of
4.70% and a weighted average life of 4.5 years. This increase in securities
was partially offset by maturities and paydowns totaling $103.8 million.
Total deposits increased by $58.4 million, or 4.5%, from $1.30 billion at
December 31, 2007, to $1.36 billion at September 30, 2008. Deposit growth is
primarily attributed to an increase of $36.5 million, or 6.3%, in savings and
money market accounts, as these account balances increased from $578.7 million
at December 31, 2007, to $615.2 million at September 30, 2008. Also, time
accounts increased by $22.8 million, or 5.0%, from $456.8 million at December
31, 2007, to $479.6 million at September 30, 2008, while interest-bearing
demand accounts increased by $19.3 million, or 26.8%. This growth in deposits
was partially offset by a $20.3 million, or 10.7%, decline in
non-interest-bearing demand accounts.
In May 2008, we introduced our Absolute Checking product, which
contributed $25.4 million of growth to our interest-bearing demand accounts,
while in October 2008, we launched our participation in the Certificate of
Deposit Account Registry Service(R) (CDARS(R)). Through CDARS(R), the Company
can provide a depositor the ability to place up to $50.0 million on deposit
with the Company while receiving FDIC insurance on the entire deposit by
placing customer funds in excess of the FDIC deposit limits with other
financial institutions in the CDARS(R) network. In return, these financial
institutions place customer funds with the Company on a reciprocal basis.
Federal Home Loan Bank advances increased by $241.6 million, or 188.1%,
from $128.5 million at December 31, 2007, to $370.1 million at September 30,
2008. Also, the Company entered into a $25.0 million repurchase agreement in
April 2008. As its loan portfolio increases, the Company utilizes Federal
Home Loan Bank advances and other borrowings to leverage its balance sheet and
to extend the duration of liabilities to more closely match assets.
Total shareholders' equity decreased by $4.2 million, or 2.1%, to $199.6
million at September 30, 2008, from $203.8 million at December 31, 2007. The
decrease in shareholders' equity was primarily due to a decrease in
accumulated other comprehensive income of $4.2 million, which was offset by
net income of $4.3 million. During the nine months ended September 30, 2008,
we repurchased 289,346 shares of our common stock, resulting in a $4.3 million
increase in treasury stock. The decrease in accumulated other comprehensive
income was primarily caused by an unrealized market value loss in
collateralized debt obligations held in our securities portfolio. Depository
institutions comprise at least 75% of the underlying issuers in each of these
securities, with the remainder being insurance companies.
The unrealized losses in these collateralized debt obligations are related
to recent events in the mortgage market more so than to current levels of
interest rates. Recent market events have lowered investor demand for these
securities, which has resulted in lower prices, causing these securities to
have unrealized losses. As a result of the new FASB Staff Position No. 157-3,
issued October 10, 2008, the Company has moved to a Level Three fair value
calculation that includes risk adjustments that market participants would
make, including adjustments for credit and liquidity risks. We have not
recognized any impairment charges related to our securities portfolio.
Shareholders' equity was further reduced by dividend payments of $0.21 per
share (over the nine months ended September 30, 2008) to minority shareholders
totaling $2.3 million.
About ViewPoint Financial Group
ViewPoint Financial Group is the holding company for ViewPoint Bank, the
largest bank based in fast-growing Collin County, Texas. ViewPoint Bank
operates 30 community bank offices and 20 loan production offices. For more
information, please visit http://www.viewpointbank.com.
This report may contain statements relating to the future results of the
Company (including certain projections and business trends) that are
considered 'forward-looking statements' as defined in the Private Securities
Litigation Reform Act of 1995 (the 'PSLRA'). Such forward-looking statements,
in addition to historical information, which involve risk and uncertainties,
are based on the beliefs, assumptions and expectations of management of the
Company. Words such as 'expects,' 'believes,' 'should,' 'plans,'
'anticipates,' 'will,' 'potential,' 'could,' 'intend,' 'may,' 'outlook,'
'predict,' 'project,' 'would,' 'estimates,' 'assumes,' 'likely,' and
variations of such similar expressions are intended to identify such
forward-looking statements. Examples of forward-looking statements include,
but are not limited to, possible or assumed estimates with respect to the
financial condition, expected or anticipated revenue, and results of
operations and business of the Company, including earnings growth; revenue
growth in retail banking, lending and other areas; origination volume in the
Company's consumer, commercial and other lending businesses; current and
future capital management programs; non-interest income levels, including fees
from banking services as well as product sales; tangible capital generation;
market share; expense levels; and other business operations and strategies.
For this presentation, the Company claims the protection of the safe harbor
for forward-looking statements contained in the PSLRA.
Factors that could cause future results to vary from current management
expectations include, but are not limited to, changing economic conditions;
legislative and regulatory changes; monetary and fiscal policies of the
federal government; changes in tax policies; rates and regulations of federal,
state and local tax authorities; changes in interest rates; deposit flows; the
cost of funds; demand for loan products; demand for financial services;
competition; changes in the quality and composition of the Company's loan and
investment portfolios; changes in management's business strategies; changes in
accounting principles, policies or guidelines; changes in real estate values
and other factors discussed elsewhere in this release and factors set forth
under Risk Factors in our Form 10-K. The forward-looking statements are made
as of the date of this release, and the Company assumes no obligation to
update the forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking statements.
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2008 2007
(unaudited)
ASSETS
Cash and cash equivalents $34,698 $73,478
Securities available for sale, at fair value 463,031 542,875
Securities held to maturity 153,997 20,091
Loans, net of allowance of $8,514 -
September 30, 2008, $6,165 -
December 31, 2007 1,221,711 921,822
Federal Home Loan Bank stock 17,441 6,241
Bank-owned life insurance 27,346 26,497
Premises and equipment, net 43,694 40,862
Accrued interest receivable and other assets 27,385 26,338
Total Assets $1,989,303 $1,658,204
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing demand $169,868 $190,163
Interest-bearing demand 91,242 71,934
Savings and money market 615,240 578,728
Time 479,645 456,768
Total deposits 1,355,995 1,297,593
Federal Home Loan Bank advances 370,095 128,451
Repurchase agreement 25,000 -
Accrued interest payable and other liabilities 38,605 28,366
Total liabilities 1,789,695 1,454,410
Total shareholders' equity 199,608 203,794
Total Liabilities and
Shareholders' Equity $1,989,303 $1,658,204
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Condensed Consolidated Statements of Income (unaudited)
(In thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Interest and dividend income
Loans, including fees $17,602 $13,727 $47,208 $40,983
Securities 7,601 6,894 22,360 18,235
Interest-bearing deposits in
other financial institutions 176 1,117 967 3,104
Federal Home Loan Bank stock 44 54 225 152
25,423 21,792 70,760 62,474
Interest expense
Deposits 8,647 9,631 26,637 27,588
Federal Home Loan Bank
advances and other borrowings 3,004 1,047 6,537 2,570
11,651 10,678 33,174 30,158
Net interest income 13,772 11,114 37,586 32,316
Provision for loan losses 1,867 601 4,504 2,183
Net interest income after
provision for loan losses 11,905 10,513 33,082 30,133
Noninterest income 7,981 6,236 24,218 18,453
Noninterest expense 18,018 14,157 50,736 42,193
Income before income tax expense 1,868 2,592 6,564 6,393
Income tax expense 560 991 2,279 2,378
Net income $1,308 $1,601 $4,285 $4,015
Basic and diluted earnings
per share $0.06 $0.07 $0.18 $0.16
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Reconciliation of Non-GAAP to GAAP Net Income (unaudited)
(In thousands except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
2008 2007 2008 2007
GAAP net income $1,308 $1,601 $4,285 $4,015
Share-based compensation expense,
net of tax 307 294 852 426
Reversal of Visa litigation
liability due to Visa IPO
proceeds, net of tax - - (294) -
Gain on redemption of Visa Class B
shares due to Visa IPO proceeds,
net of tax - - (504) -
Non-GAAP net income $1,615 $1,895 $4,339 $4,441
Basic and diluted non-GAAP
earnings per share $0.07 $0.08 $0.18 $0.18
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Selected Financial Data (unaudited)
(Dollar amounts in thousands except share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Share Data for
Earnings
per Share
Calculation:
Weighted average
common shares
outstanding 24,958,368 25,855,920 25,128,775 25,851,852
Less: Average
unallocated (758,021) (850,861) (781,089) (873,842)
ESOP shares
Average unvested
restricted shares (346,161) (420,208) (389,718) (203,177)
Average shares 23,854,186 24,584,851 23,957,968 24,774,833
Diluted average
shares 23,854,186 24,584,851 23,957,968 24,774,833
Share data at
period-end:
Total shares issued 26,208,958 26,208,958 26,208,958 26,208,958
Less: Treasury
stock (1,279,801) (420,208) (1,279,801) (420,208)
Total shares
outstanding 24,929,157 25,788,750 24,929,157 25,788,750
Location Data:
Number of community
bank offices 29 30 29 30
Number of loan
production offices 20 13 20 13
Performance Ratios:
Return on assets
(ratio of net
income to average
total assets) 0.27% 0.40% 0.31% 0.34%
Return on equity
(ratio of net
income to average
equity) 2.65% 3.06% 2.82% 2.51%
Net interest rate
spread 2.41% 2.15% 2.26% 2.11%
Net interest margin 2.97% 2.97% 2.88% 2.92%
September 30, 2008 December 31, 2007
Asset Quality Data and Ratios:
Non-performing loans 4,706 $3,513
Non-performing assets to
total assets 0.27% 0.26%
Non-performing loans to total loans 0.38% 0.38%
Allowance for loan losses to
non-performing loans 180.92% 175.49%
Allowance for loan losses to
total loans 0.69% 0.66%
SOURCE ViewPoint Financial Group
