PLANO, Texas, July 27 /PRNewswire-FirstCall/ -- ViewPoint Financial Group (Nasdaq: VPFG) (the "Company"), the holding company for ViewPoint Bank, announced unaudited financial results today for the three and six month periods ended June 30, 2009. Detailed results of the quarter will be available in the Company's Quarterly Report on Form 10-Q, which will be filed in August and posted on our website, http://viewpointbank.com. Highlights for the quarter include:
- Company assets approaching $2.3 billion: Assets totaled $2.29 billion, an increase of $74.6 million, or 3.4%, from December 31, 2008.
- Strong loan growth: Gross loans (including loans held for sale) totaled $1.52 billion, an increase of $111.6 million, or 7.9%, from December 31, 2008.
- Total deposits surpassed $1.6 billion: Deposits totaled $1.69 billion, an increase of $137.8 million, or 8.9%, from December 31, 2008.
- Continued capital strength: At June 30, 2009, the Company's equity to total assets was 8.65% and the Bank's tier one capital ratio was 7.71%, exceeding the regulatory minimum of 5% for a well-capitalized institution.
- Increase of 98.8% in non-GAAP net income: Non-GAAP net income for the six months ended June 30, 2009, totaled $5.3 million, an increase of $2.7 million, or 98.8%, from the same period last year.
"In the first six months of 2009, we have seen strong growth and customer satisfaction," said Gary Base, President and Chief Executive Officer. "In addition to our continued growth in deposits, loans and assets, we've expanded our network of full-service community banking offices, opening locations in Grapevine and Frisco. Despite the impairment charge taken on the collateralized debt obligations in our investment portfolio, core operations remain strong as evidenced by the fact that our year-to-date non-GAAP earnings per share doubled from the same time period last year. We no longer have any collateralized debt obligations on our books. Plus, looking beyond the balance sheet, we were honored to have been voted 'Best Community Bank' in five of the communities we serve by readers of the Dallas Morning News' NeighborsGo sections. We take our customer feedback seriously, and it's nice to see that they are pleased with our community-focused banking."
During the six months ended June 30, 2009, the Company continued to grow organically, with key drivers including solid loan growth, especially in our real estate and commercial non-mortgage sectors, and substantial deposit growth in all products offered.
Financial Condition as of June 30, 2009
Total assets increased by $74.6 million, or 3.4%, to $2.29 billion at June 30, 2009, from $2.21 billion at December 31, 2008. The rise in total assets was primarily due to a $111.6 million, or 7.9%, increase in gross loans (including $337.2 million in mortgage loans held for sale) and a $25.2 million, or 216.5%, increase in short-term interest-bearing deposits in other financial institutions. This increase was partially offset by a $58.4 million, or 8.9%, reduction in our securities portfolio.
June 30, December 31, Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
(Dollars in Thousands)
Mortgage loans:
One-to four-family $470,258 $498,961 $(28,703) -5.8%
Commercial 437,630 436,483 1,147 0.3%
One-to four-family
construction 3,621 503 3,118 619.9%
Mortgage loans held for
sale 337,228 159,884 177,344 110.9%
Home equity 99,408 101,021 (1,613) -1.6%
------ ------- ------
Total mortgage loans 1,348,145 1,196,852 151,293 12.6%
Automobile loans 86,365 111,870 (25,505) -22.8%
Other consumer loans 29,649 29,299 350 1.2%
Commercial non-mortgage
loans 22,494 18,574 3,920 21.1%
Warehouse lines of credit 34,769 53,271 (18,502) -34.7%
------ ------ -------
Total non-mortgage
loans 173,277 213,014 (39,737) -18.7%
Gross loans $1,521,422 $1,409,866 $111,556 7.9%
========== ========== ========
At June 30, 2009, mortgage loans held for sale consisted of $46.0 million of loans originated for sale by our mortgage banking subsidiary, ViewPoint Bankers Mortgage ("VPBM"), and $291.2 million of Purchase Program loans purchased for sale under our standard loan participation agreement, which enables our mortgage banking company clients to close 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. The $177.3 million, or 110.9%, increase in mortgage loans held for sale was attributable to VPBM's increased real estate production and a $153.7 million increase in the volume of Purchase Program loans purchased under our standard loan participation agreement.
Commercial non-mortgage loans, which primarily consist of secured and unsecured lines of credit and loans to finance commercial vehicles and equipment, increased by $3.9 million, or 21.1%, from December 31, 2008, while warehouse lines of credit, which are participations in warehouse lines extended by other financial institutions or multi-bank warehouse lending syndications originated with other banks, decreased by $18.5 million, or 34.7%. Consumer loans, including direct and indirect automobile and other secured installment loans and unsecured lines of credit, decreased by $25.2 million, or 17.8%, from December 31, 2008. We have reduced our emphasis on consumer lending and are focused on originating high-quality residential and commercial loans; however, 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 June 30, 2009, was 0.62% compared to 0.38% at December 31, 2008. Nonaccrual loans increased by $4.3 million, from $2.2 million at December 31, 2008, to $6.5 million at June 30, 2009, while troubled debt restructurings decreased by $1.7 million, from $2.5 million at December 31, 2008, to $873,000 at June 30, 2009. The increase in nonaccrual loans was due to a $2.7 million increase in commercial real estate loans on nonaccrual status; this consists of three commercial real estate loans, two of which are delinquent greater than 90 days and one that is not delinquent. Of these three loans, one is a single-tenant retail building which is currently being marketed for sale. Another is a loan in which the Company is a participant that is collateralized by a two office building complex currently in the process of foreclosure. The third is a loan in which the Company is a participant that is collateralized by a hotel property experiencing financial difficulties. An analysis performed on the loans secured by the single-tenant retail building and the hotel property indicated that no specific valuation allowances were necessary, while an $84,000 specific valuation allowance was set aside for the loan secured by the two office building complex. Also, one-to four-family real estate loans on nonaccrual status increased by $1.3 million from December 31, 2008: $1.2 million of this increase was attributable to loans purchased from other financial institutions, while only $100,000 of this increase was attributable to loans originated directly by the Company.
Our securities portfolio decreased by $58.4 million, or 8.9%, to $597.0 million at June 30, 2009, from $655.4 million at December 31, 2008. The decline in our securities portfolio was primarily caused by $93.8 million of maturities and principal paydowns and $73.8 million in sales of available for sale securities. This was partially offset by purchases of securities totaling $109.3 million. The sale of 22 agency residential collateralized mortgage obligations and two agency residential mortgage-backed securities, with a cost basis of $71.2 million, resulted in a $1.6 million after-tax increase to earnings. The sale of the collateralized debt obligation securities generated proceeds of $224,000. We no longer have any collateralized debt obligations in our securities portfolio.
Total deposits increased by $137.8 million, or 8.9%, to $1.69 billion at June 30, 2009, from $1.55 billion at December 31, 2008.
June 30, December 31, Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
(Dollars in Thousands)
Non-interest-bearing
demand $180,225 $172,395 $7,830 4.5%
Interest-bearing demand 158,585 98,884 59,701 60.4%
Savings 150,251 144,530 5,721 4.0%
Money Market 508,168 482,525 25,643 5.3%
IRA savings 8,521 8,188 333 4.1%
Time 680,097 641,568 38,529 6.0%
------- ------- ------
Total deposits $1,685,847 $1,548,090 $137,757 8.9%
========== ========== ========
We saw increases in all deposit categories, with the largest being a $59.7 million, or 60.4%, increase in interest-bearing demand accounts, which was primarily attributable to our Absolute Checking product, which currently provides a 4.0% annual percentage yield on account balances up to $50,000 when certain stipulations are met. Core deposits, which include non-interest-bearing and interest-bearing demand, savings, money market and IRA accounts, increased by $99.2 million, or 10.9%, from December 31, 2008. This includes $18.8 million of growth in our Purchase Program checking account, which is a non-interest-bearing demand account opened by our mortgage banking company clients who participate in our Purchase Program lending program, and a $33.7 million increase in consumer money market accounts. Additionally, time accounts increased by $38.5 million, or 6.0%, primarily due to our participation in the CDARS(R) network. We have an opportunity to further improve our costs on deposits due to lowered certificate of deposit costs, which were 3.12% for the six months ended June 30, 2009, compared to 4.21% for the six months ended June 30, 2008, with 50% of these balances maturing in the next six months.
Federal Home Loan Bank advances decreased by $73.9 million, or 18.0%, from $410.8 million at December 31, 2008, to $336.9 million at June 30, 2009. The outstanding balance of borrowings has decreased due to monthly principal paydowns. During the six months ended June 30, 2009, the Company used deposit growth to fund loans more often than utilizing borrowings as a funding source.
Total shareholders' equity increased by $3.9 million, or 2.0%, from $194.1 million at December 31, 2008, to $198.0 million at June 30, 2009.
June 30, December 31, Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
(Dollars in Thousands)
Common stock $262 $262 $- 0.0%
Additional paid-in
capital 116,934 115,963 971 0.8%
Retained Earnings 107,191 108,332 (1,141) -1.1%
Accumulated other
comprehensive income
(loss) 1,940 (1,613) 3,553 220.3%
Unearned ESOP shares (6,628) (7,097) 469 6.6%
Treasury stock (21,708) (21,708) - 0.0%
------- ------- -
Total shareholders'
equity $197,991 $194,139 $3,852 2.0%
======== ======== ======
This increase was primarily caused by a $3.6 million, or 220.3%, change in unrealized gains and losses on securities available for sale. This change was primarily attributable to the sales of available for sale securities during the six months ended June 30, 2009, which consisted of agency residential mortgage-backed securities, agency residential collateralized mortgage obligations, and collateralized debt obligations. A $12.2 million pre-tax impairment of collateralized debt obligations was the primary reason for a net loss of $2.6 million for the six months ended June 30, 2009, which partially offset the change in unrealized gains and losses on securities available for sale and contributed to the reduction in retained earnings. Also, the payment of dividends totaling $0.13 per share resulted in a $1.4 million reduction to shareholders' equity.
Results of Operations for the Three Months Ended June 30, 2009
Non-GAAP net income for the three months ended June 30, 2009, was $3.0 million, an increase of $1.4 million, or 89.0%, from $1.6 million for the three months ended June 30, 2008. However, the Company reported a net loss of $3.8 million for the three months ended June 30, 2009, a decrease of $5.2 million, or 373.6%, from the three months ended June 30, 2008, as a result of an $11.8 million impairment charge. Additionally, the Company had $486,000 of loss relating to the closure of in-store banking centers, and share-based compensation expense of $475,000. A gain of $2.4 million on the sale of available for sale securities was also included in net income for the three months ended June 30, 2009. Comparatively, net income for the three months ended June 30, 2008, included share-based compensation expense of $387,000 and a $96,000 benefit related to the Visa initial public offering, with no similar benefit recognized during the same period in 2009. A reconciliation of these non-GAAP income items to GAAP net income can be found in the tables accompanying this press release.
Interest income increased by $4.5 million, or 19.4%, from $23.2 million for the three months ended June 30, 2008, to $27.7 million for the three months ended June 30, 2009.
Three Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Interest and dividend income (Dollars in Thousands)
Loans, including fees $21,224 $15,281 $5,943 38.9%
Securities 6,304 7,394 (1,090) -14.7%
Interest-bearing deposits in other
financial institutions 169 413 (244) -59.1%
Federal Home Loan Bank stock 3 117 (114) -97.4%
- --- ----
$27,700 $23,205 $4,495 19.4%
======= ======= ======
This increase was primarily due to a $5.9 million, or 38.9%, increase in interest income on loans as the average balance of loans increased by $397.8 million, or 38.5%, from the three months ended June 30, 2008. This increase was driven by higher average balances in residential and commercial real estate, and our Purchase Program, which was introduced in July 2008. This increase in interest income earned on loans was partially offset by lower interest income on securities, which declined by $1.1 million, or 14.7%, from the three months ended June 30, 2008. Overall, the yield on interest-earning assets for the three months ended June 30, 2009, decreased by 11 basis points, from 5.33% for the three months ended June 30, 2008, to 5.22%; this decrease was due to lower yields earned on assets and was partially offset by a $380.0 million, or 21.8%, increase in interest-earning assets.
Interest expense increased by $1.7 million, or 15.9%, from $10.8 million for the three months ended June 30, 2008, to $12.5 million for the three months ended June 30, 2009.
Three Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Interest expense (Dollars in Thousands)
Deposits $8,714 $8,888 $(174) -2.0%
Federal Home Loan Bank advances 3,585 1,796 1,789 99.6%
Repurchase agreement 195 92 103 112.0%
--- -- ---
$12,494 $10,776 $1,718 15.9%
======= ======= ======
This increase was primarily caused by a $1.8 million, or 99.6%, increase in interest expense on Federal Home Loan Bank advances and a $103,000, or 112.0%, increase in interest expense on our $25 million repurchase agreement with Credit Suisse after the agreement repriced during the period to 3.22% from 1.62%. The average balance of borrowings increased by $172.3 million, or 89.0%, from the three months ended June 30, 2008, while the rate paid on borrowings increased by 23 basis points as a result of the repurchase agreement repricing. We utilize Federal Home Loan Bank advances and the $25.0 million repurchase agreement to leverage our balance sheet and to more closely match the duration of our assets to our liabilities. A $174,000, or 2.0%, decrease in interest expense on deposits partially offset the increase in borrowing interest expense. 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. Overall, the yield on interest-bearing liabilities decreased 38 basis points, from 3.09% for the three months ended June 30, 2008, to 2.71%.
Noninterest income decreased by $7.4 million, or 90.0%, from $8.2 million for the three months ended June 30, 2008, to $817,000 for the three months ended June 30, 2009.
Three Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Noninterest income (Dollars in Thousands)
Service charges and fees $4,829 $5,134 $(305) -5.9%
Brokerage fees 64 104 (40) -38.5%
Net gain on sales of loans 5,331 2,314 3,017 130.4%
Loan servicing fees 48 69 (21) -30.4%
Bank-owned life insurance
income 178 269 (91) -33.8%
Impairment of collateralized
debt obligations (all
credit) (11,781) - (11,781) -100.0%
Gain on sale of available for
sale securities 2,377 - 2,377 100.0%
Loss on sale of foreclosed
assets (111) (23) (88) -382.6%
Gain (loss) on disposition of
assets (526) 4 (530) -13250.0%
Other 408 327 81 24.8%
--- --- --
$817 $8,198 $(7,381) -90.0%
==== ====== =======
Net gain on sales of loans increased by $3.0 million, or 130.4%, as VPBM sold $216.0 million in loans to outside investors during the three months ended June 30, 2009, compared to $66.0 million for the same period in 2008. The increase in sales can be attributed to more loan production offices as well as the current rate environment. Non-interest income for the three months ended June 30, 2009, included losses such as an $11.8 million impairment on the remaining collateralized debt obligations, which were impaired to their fair value and sold in June 2009, and $486,000 in lease termination fees for in-store banking centers closed in 2009, which are reported as losses on disposition of assets. During the three months ended June 30, 2009, we recognized $2.4 million in gain on the sale of 22 agency residential collateralized mortgage obligations and two agency residential mortgage-backed securities, with a cost basis of $71.2 million. Fees of $439,000 generated by our Purchase Program partially offset the decrease in service charges and fees, which was primarily attributable to a $438,000 decrease in non-sufficient funds fees and a $130,000 decline in debit card income. The decrease in non-sufficient funds fees and debit card income is primarily due to a trend of lower volume of these types of transactions. Excluding the impairment related to collateralized debt obligations and the gain on sale of securities, non-interest income would have been $10.2 million, a 24.7% increase over the same time period in 2008.
Noninterest expense increased by $3.1 million, or 18.0%, from $16.9 million for the three months ended June 30, 2008, to $20.0 million for the three months ended June 30, 2009.
Three Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Noninterest expense (Dollars in Thousands)
Salaries and employee benefits $12,109 $10,433 $1,676 16.1%
Advertising 434 806 (372) -46.2%
Occupancy and equipment 1,462 1,309 153 11.7%
Outside professional services 502 470 32 6.8%
Regulatory assessments 1,793 355 1,438 405.1%
Data processing 1,038 1,012 26 2.6%
Office operations 1,462 1,464 (2) -0.1%
Deposit processing charges 228 251 (23) -9.2%
Lending and collection 387 356 31 8.7%
Other 536 453 83 18.3%
--- --- --
$19,951 $16,909 $3,042 18.0%
======= ======= ======
This increase in noninterest expense was primarily due to organic growth as we have opened multiple new locations over the past year and paid additional mortgage loan production incentives due to higher mortgage originations. Commissions and other bonuses paid to VPBM employees increased by $576,000 from the three months ended June 30, 2008, compared to the same period this year due to an $83.5 million increase in mortgage loans closed by VPBM. The increase in salary expense due to these commissions is more than offset by a $3.0 million increase in the net gain on sales of loans, which is reported in noninterest income.
Over the past year, the Company opened four new community bank offices in Northeast Tarrant County, Oak Cliff, Grapevine and West Frisco and added a new Purchase Program division in July 2008, resulting in additional salary expense of $463,000, which was partially offset by salary expense savings of $369,000 due to the closure of eight in-store banking centers during the first quarter of 2009. VPBM has opened four additional loan production offices from June 30, 2008, to June 30, 2009, resulting in increased salary expense of $370,000.
Advertising expense decreased by $372,000, or 46.2%, as we are focusing more on community marketing efforts rather than mass branding campaigns. Regulatory assessments expense increased by $1.4 million, or 405.1%, due to increased FDIC and OTS regulatory assessments, including a $1.1 million FDIC special assessment booked as expense in the second quarter of 2009. This special assessment, adopted in May 2009, assessed FDIC-insured banks five basis points on a base of total assets less Tier One capital.
Results of Operations for the Six Months Ended June 30, 2009
Non-GAAP net income for the six months ended June 30, 2009, was $5.3 million, an increase of $2.7 million, or 98.8%, from $2.6 million for the six months ended June 30, 2008. However, the Company reported a net loss of $2.6 million for the six months ended June 30, 2009, a decrease of $5.5 million, or 189.2%, from the six months ended June 30, 2008, as a result of a $12.2 million impairment charge. Additionally, the Company had $903,000 of loss relating to the closure of in-store banking centers, a $211,000 charge to adjust our mortgage servicing rights to fair value, and share-based compensation expense of $909,000. A gain of $2.4 million on the sale of available for sale securities was also included in net income for the six months ended June 30, 2009. Comparatively, net income for the six months ended June 30, 2008, included share-based compensation expense of $827,000 and a $1.2 million benefit related to the Visa initial public offering, with no similar benefit recognized during the same period in 2009. A reconciliation of these non-GAAP income items to GAAP net income can be found in the tables accompanying this press release.
Interest income increased by $9.9 million, or 21.8%, from $45.3 million for the six months ended June 30, 2008, to $55.2 million for the six months ended June 30, 2009.
Six Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Interest and dividend income (Dollars in Thousands)
Loans, including fees $41,962 $29,606 $12,356 41.7%
Securities 13,027 14,759 (1,732) -11.7%
Interest-bearing deposits in other
financial institutions 228 791 (563) -71.2%
Federal Home Loan Bank stock 3 181 (178) -98.3%
-- --- ----
$55,220 $45,337 $9,883 21.8%
======= ======= ======
This increase was primarily due to a $12.4 million, or 41.7%, increase in interest income on loans as the average balance of loans increased by $451.0 million, or 45.4%, from the six months ended June 30, 2008. This increase was driven by higher average balances in residential and commercial real estate, and our Purchase Program, which was introduced in July 2008. This increase in interest income earned on loans was partially offset by lower interest income on securities, which declined by $1.7 million, or 11.7%, from the six months ended June 30, 2008. Overall, the yield on interest-earning assets for the six months ended June 30, 2009, decreased by 26 basis points, from 5.44% for the six months ended June 30, 2008, to 5.18%; this decrease was due to lower yields earned on assets and was partially offset by a $467.7 million, or 28.1%, increase in interest-earning assets.
Interest expense increased by $4.0 million, or 18.7%, from $21.5 million for the six months ended June 30, 2008, to $25.5 million for the six months ended June 30, 2009.
Six Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Interest expense (Dollars in Thousands)
Deposits $17,859 $17,990 $(131) -0.73%
Federal Home Loan Bank advances 7,361 3,441 3,920 113.9%
Federal Reserve Bank borrowings 29 - 29 100.0%
Repurchase agreement 296 92 204 221.7%
--- -- ---
$25,545 $21,523 $4,022 18.7%
======= ======= ======
This increase was primarily caused by a $3.9 million, or 113.9%, increase in interest expense on Federal Home Loan Bank advances and a $204,000, or 221.7%, increase in interest expense on our repurchase agreement with Credit Suisse after the agreement repriced during the period to 3.22% from 1.62%. The repurchase agreement was entered into in April 2008; therefore, only three months of interest expense is reflected in the six months ended June 30, 2008, compared to six months of interest expense reflected in the six months ended June 30, 2009. The average balance of borrowings increased by $225.6 million, or 135.5%, from the six months ended June 30, 2008, which was partially offset by a 32 basis point decrease in the average rate paid for borrowings for the year-to-date time period. We utilize Federal Home Loan Bank advances and our $25.0 million repurchase agreement to leverage our balance sheet and to more closely match the duration of our assets to our liabilities. A $131,000, or 0.73%, decrease in interest expense on deposits partially offset the increase in borrowing interest expense. 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. Overall, the yield on interest-bearing liabilities decreased 45 basis points, from 3.23% for the six months ended June 30, 2008, to 2.78%.
Noninterest income decreased by $8.0 million, or 49.3%, from $16.2 million for the six months ended June 30, 2008, to $8.2 million for the six months ended June 30, 2009.
Six Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Noninterest income (Dollars in Thousands)
Service charges and fees $9,265 $9,884 $(619) -6.3%
Brokerage fees 139 220 (81) -36.8%
Net gain on sales of loans 9,037 4,168 4,869 116.8%
Loan servicing fees 101 127 (26) -20.5%
Bank-owned life insurance income 342 548 (206) -37.6%
Gain on redemption of Visa, Inc.
shares - 771 (771) -100.0%
Valuation adjustment on mortgage
servicing rights (211) - (211) -100.0%
Impairment of collateralized debt
obligation (all credit) (12,246) - (12,246) -100.0%
Gain on sale of available for sale
securities 2,377 - 2,377 100.0%
Loss on sale of foreclosed assets (276) (25) (251) -1004.0%
Gain (loss) on disposition of
assets (942) 12 (954) -7950.0%
Other 651 532 119 22.4%
--- --- ---
$8,237 $16,237 $(8,000) -49.3%
====== ======= =======
Net gain on sale of loans increased by $4.9 million, or 116.8%, as VPBM sold $356.2 million in loans to outside investors during the six months ended June 30, 2009, compared to $125.4 million for the same period in 2008. The increase in sales can be attributed to more loan production offices as well as the current rate environment. Non-interest income for the six months ended June 30, 2009, included losses such as a $12.2 million impairment on the remaining collateralized debt obligations, which were impaired to their fair value and sold in June 2009, and $903,000 in lease termination fees and leasehold improvement write-offs for in-store banking centers closed in the first six months of 2009, which are reported as losses on disposition of assets. Other items that impacted noninterest income for the six months ended June 30, 2009, included a valuation adjustment of $211,000 to write down our mortgage servicing rights, which had a carrying value of $983,000 at June 30, 2009. Comparatively, 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, with no similar transactions in 2009.
During the six months ended June 30, 2009, we recognized $2.4 million in gain on the sale of 22 agency residential collateralized mortgage obligations and two agency residential mortgage-backed securities, with a cost basis of $71.2 million. Fees of $687,000 generated by our Purchase Program partially offset the decrease in service charges and fees, which was primarily attributable to an $823,000 decrease in non-sufficient funds fees and a $187,000 decline in debit card income. The decrease in non-sufficient funds fees and debit card income is primarily due to a trend of lower volume of these types of transactions. Excluding the impairment related to collateralized debt obligations and the gain on sale of securities, non-interest income would have been $18.1 million, an 11.5% increase over the same time period in 2008.
Noninterest expense increased by $5.8 million, or 17.5%, from $32.8 million for the six months ended June 30, 2008, to $38.6 million for the six months ended June 30, 2009.
Six Months Ended
June 30,
-------- Dollar Percent
2009 2008 Change Change
---- ---- ------ ------
Noninterest expense (Dollars in Thousands)
Salaries and employee benefits $24,204 $20,359 $3,845 18.9%
Advertising 689 1,370 (681) -49.7%
Occupancy and equipment 3,064 2,622 442 16.9%
Outside professional services 910 681 229 33.6%
Regulatory assessments 2,461 674 1,787 265.1%
Data processing 2,042 2,070 (28) -1.4%
Office operations 2,968 3,009 (41) -1.4%
Deposit processing charges 463 510 (47) -9.2%
Lending and collection 675 597 78 13.1%
Other 1,094 945 149 15.8%
----- --- ---
$38,570 $32,837 $5,733 17.5%
======= ======= ======
This increase in noninterest expense was primarily due to organic growth as we have opened multiple new locations over the past year and paid additional mortgage loan production incentives due to higher mortgage originations. Commissions and other bonuses paid to VPBM employees increased by $1.3 million from the six months ended June 30, 2008, compared to the same period this year due to a $168.1 million increase in mortgage loans closed by VPBM. The increase in salary expense due to these commissions is more than offset by a $4.9 million increase in the net gain on sales of loans, which is reported in noninterest income.
Over the past year, the Company opened four new community bank offices in Northeast Tarrant County, Oak Cliff, Grapevine and West Frisco and added a new Purchase Program division in July 2008, resulting in additional salary expense of $771,000, which was partially offset by salary expense savings of $395,000 due to the closure of eight in-store banking centers during the first quarter of 2009. VPBM opened four additional loan production offices from June 30, 2008, to June 30, 2009, resulting in increased salary expense of $791,000.
Advertising expense decreased by $681,000, or 49.7%, as we are focusing more on community marketing efforts rather than mass branding campaigns. Regulatory assessments expense increased by $1.8 million, or 265.1%, due to increased FDIC and OTS regulatory assessments which include a $1.1 million FDIC special assessment booked as expense in the second quarter of 2009. This special assessment, adopted in May 2009, assessed FDIC-insured banks five basis points on a base of total assets less Tier One capital. Occupancy and equipment expense increased by $442,000, or 16.9%, primarily due to increased rental expense of $378,000 attributable to the four additional loan production offices and three community bank offices opened over the past year.
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)
June 30, December 31,
2009 2008
---- ----
ASSETS (Unaudited)
Total cash and cash equivalents $54,410 $32,513
Securities available for sale, at fair value 428,288 483,016
Securities held to maturity 168,666 172,343
Mortgage loans held for sale 337,228 159,884
Loans, net of allowance of $9,996-
June 30, 2009, $9,068-December 31,
2008 1,172,932 1,239,708
Federal Home Loan Bank stock 15,147 18,069
Bank-owned life insurance 27,920 27,578
Premises and equipment, net 50,041 45,937
Accrued interest receivable and other assets 33,408 34,367
------ ------
Total assets $2,288,040 $2,213,415
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing demand 180,225 172,395
Interest-bearing demand 158,585 98,884
Savings and money market 666,940 635,243
Time 680,097 641,568
------- -------
Total deposits 1,685,847 1,548,090
Federal Home Loan Bank advances 336,866 410,841
Repurchase agreement 25,000 25,000
Accrued interest payable and other
liabilities 42,336 35,345
------ ------
Total liabilities 2,090,049 2,019,276
--------- ---------
Total shareholders' equity 197,991 194,139
------- -------
Total liabilities and
shareholders' equity $2,288,040 $2,213,415
========== ==========
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Condensed Consolidated Statements of Income (Loss)
(In thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
Interest and dividend income (unaudited)
Loans, including fees $21,224 $15,281 $41,962 $29,606
Securities 6,304 7,394 13,027 14,759
Interest-bearing deposits in
other financial institutions 169 413 228 791
Federal Home Loan Bank stock 3 117 3 181
-- --- -- ---
27,700 23,205 55,220 45,337
Interest expense
Deposits 8,714 8,888 17,859 17,990
Federal Home Loan Bank advances 3,585 1,796 7,361 3,441
Other borrowings 195 92 325 92
--- -- --- --
12,494 10,776 25,545 21,523
Net interest income 15,206 12,429 29,675 23,814
Provision for loan losses 1,494 1,506 2,936 2,638
----- ----- ----- -----
Net interest income after provision
for loan losses 13,712 10,923 26,739 21,176
Noninterest income 817 8,198 8,237 16,237
Noninterest expense 19,951 16,909 38,570 32,837
------ ------ ------ ------
Income (loss) before income tax
expense (5,422) 2,212 (3,594) 4,576
Income tax expense (benefit) (1,591) 812 (1,007) 1,677
------ --- ------ -----
Net income (loss) $(3,831) $1,400 $(2,587) $2,899
======= ====== ======= ======
Basic and diluted earnings (loss) per
share $(0.16) $0.06 $(0.11) $0.12
====== ===== ====== =====
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Reconciliation of Non-GAAP to GAAP Net Income
(In thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
(unaudited)
Net income (loss) $(3,831) $1,400 $(2,587) $2,899
Share-based compensation expense, net
of tax 313 255 600 546
Impairment of collateralized debt
obligations (all credit), net of tax 7,775 - 8,082 -
Gain on sale of available for sale
securities, net of tax (1,569) - (1,569) -
Valuation adjustment on mortgage
servicing rights, net of tax - - 139 -
Loss relating to closure of in-store
banking centers, net of tax 321 - 596 -
Reversal of Visa litigation
liability, net of tax - (63) - (294)
Gain on redemption of Class B
Visa, Inc. shares, net of tax - - - (504)
-- -- -- ----
Non-GAAP net income $3,009 $1,592 $5,261 $2,647
====== ====== ====== ======
Basic and diluted non-GAAP earnings
per share $0.13 $0.07 $0.22 $0.11
===== ===== ===== =====
VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Selected Financial Data
(Dollar amounts in thousands except share data)
(unaudited)
Three Months Ended
----------------------------------------------------
June Mar Dec Sept June
2009 2009 2008 2008 2008
---- ---- ---- ---- ----
Share Data for
Earnings per
Share
Calculation:
Weighted
average
common
shares
outstanding 24,929,157 24,929,157 24,929,157 24,958,368 25,211,327
Less:
average
unallocated
ESOP shares (672,886) (696,319) (722,090) (749,177) (776,064)
Less: average
unvested
restricted
shares (307,219) (344,161) (346,161) (346,161) (393,264)
-------- -------- -------- -------- --------
Average
shares 23,949,052 23,888,677 23,860,906 23,863,030 24,041,999
Diluted
average
shares 23,949,052 23,888,677 23,860,906 23,863,030 24,041,999
Net income
(loss) $(3,831) $1,244 $(7,403) $1,189 $1,400
EPS $(0.16) $0.05 $(0.31) $0.05 $0.06
Non-GAAP
EPS $0.13 $0.09 $(0.30) $0.06 $0.07
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) (1,080,257)
---------- ---------- ---------- ---------- ----------
Total shares
outstanding 24,929,157 24,929,157 24,929,157 24,929,157 25,128,701
Location
Data:
Number of
full-service
community
bank offices 20 18 18 17 16
Number of
in-store
banking
centers 3 4 12 12 12
-- -- -- -- --
Total
community
bank
offices 23 22 30 29 28
Number of loan
production
offices 15 14 15 20 11
Performance
Ratios (1):
Return on
assets -0.68% 0.22% -1.41% 0.24% 0.30%
Return on
equity -7.86% 2.55% -15.34% 2.41% 2.74%
Noninterest
income to
operating
revenues 2.86% 21.29% -26.12% 23.89% 26.11%
Operating
expenses to
average total
assets 3.54% 3.33% 3.49% 3.74% 3.65%
Efficiency
ratio 124.51% 85.08% 225.18% 83.69% 81.98%
Efficiency
ratio-excluding
impairment
charges (2) 71.76% 83.31% 83.47% 83.69% 81.98%
Capital
Ratios:
Equity to
total
assets 8.65% 8.76% 8.77% 10.03% 10.82%
Risk-based
capital
to risk-
weighted
assets (3) 13.83% 10.97% 11.17% 13.68% 15.16%
Tier 1
capital to
risk-
weighted
assets (3) 13.14% 10.40% 10.58% 13.05% 14.55%
Six Months Ended
----------------
June June
2009 2008
---- ----
Share Data for
Earnings per Share
Calculation:
Weighted average
common shares
outstanding 24,929,157 25,214,915
Less: average
unallocated ESOP
shares (684,538) (789,559)
Less: average
unvested
restricted shares (325,588) (411,736)
-------- --------
Average shares 23,919,031 24,013,620
Diluted average
shares 23,919,031 24,013,620
Net income (loss) $(2,587) $2,899
EPS $(0.11) $0.12
Non-GAAP EPS $0.22 $0.11
Share data at
period-end:
Total shares
issued 26,208,958 26,208,958
Less: Treasury
stock (1,279,801) (1,080,257)
---------- ----------
Total shares
outstanding 24,929,157 25,128,701
Location Data:
Number of full-
service community
bank offices 20 16
Number of in-
store banking
centers 3 12
--- ---
Total community
bank offices 23 28
Number of loan
production
offices 15 11
Performance Ratios (1):
Return on assets -0.23% 0.33%
Return on equity -2.65% 2.83%
Noninterest
income to
operating
revenues 12.98% 26.37%
Operating
expenses to
average total
assets 3.43% 3.69%
Efficiency ratio 101.74% 81.99%
Efficiency
ratio-excluding
impairment
charges (2) 76.90% 81.99%
Capital Ratios:
Equity to total
assets 8.65% 10.82%
Risk-based
capital to risk-
weighted assets (3) 13.83% 15.16%
Tier 1 capital to
risk-weighted
assets (3) 13.14% 14.55%
(1) With the exception of end of period ratios, all ratios are based on
average monthly balances and are annualized where appropriate.
(2) Calculated using noninterest income as reported with the impairment
of collateralized debt obligations added back.
(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
(Dollar amounts in thousands except share data)
(unaudited) Six Months
Three Months Ended Ended
------------------------------------ ------------
June Mar Dec Sept June June June
2009 2009 2008 2008 2008 2009 2008
---- ---- ---- ---- ---- ---- ----
Asset Quality
Data and Ratios:
Non-performing
loans $7,337 $6,029 $4,745 $4,706 $3,457 $7,337 $3,457
Non-performing
assets to total
assets 0.40% 0.34% 0.29% 0.27% 0.25% 0.40% 0.25%
Non-performing
loans to total
loans (4) 0.62% 0.49% 0.38% 0.39% 0.33% 0.62% 0.33%
Allowance for
loan losses to
non-performing
loans 136.24% 157.54% 191.11% 180.92% 210.53% 136.24% 210.53%
Allowance for
loan losses to
total loans (4) 0.84% 0.76% 0.73% 0.70% 0.70% 0.84% 0.70%
Yields:
Loans 5.94% 5.68% 5.93% 5.98% 5.92% 5.81% 5.96%
Securities 4.09% 4.08% 4.59% 4.74% 4.70% 4.08% 4.85%
Overnight deposits 0.91% 0.84% 1.67% 2.00% 2.38% 0.89% 2.83%
Total interest-
earning assets 5.22% 5.13% 5.39% 5.47% 5.33% 5.18% 5.44%
Deposits:
Interest-bearing
demand 1.86% 1.56% 1.37% 1.23% 0.89% 1.73% 0.82%
Savings and money
market 1.81% 2.10% 2.43% 2.44% 2.31% 1.95% 2.37%
Time 3.01% 3.24% 3.38% 3.68% 3.95% 3.12% 4.21%
FHLB advances and
other borrowings 4.13% 3.74% 4.04% 3.79% 3.90% 3.92% 4.24%
Total interest-
bearing
liabilities 2.71% 2.85% 3.08% 3.06% 3.09% 2.78% 3.23%
Net interest
spread 2.51% 2.28% 2.31% 2.41% 2.24% 2.40% 2.21%
Net interest
margin 2.87% 2.70% 2.76% 2.97% 2.86% 2.78% 2.86%
(4) Total loans does not include loans held for sale.
SOURCE ViewPoint Financial Group
