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ViewPoint Financial Group, Inc. Reports Fourth Quarter and Full Year 2013 Earnings

Merger With LegacyTexas Group Announced During the Quarter

PLANO, Texas, Feb. 4, 2014 /PRNewswire/ -- ViewPoint Financial Group, Inc. (NASDAQ: VPFG) (the "Company"), the holding company for ViewPoint Bank, N.A. (the "Bank"), today announced net income of $7.2 million for the quarter ended December 31, 2013, a decrease of $968,000, or 11.8%, from the quarter ended September 30, 2013.  Compared to the fourth quarter of 2012, net income decreased by $3.1 million, or 30.1%. Net income for the year ended December 31, 2013, was $31.7 million, a $3.6 million decrease, or 10.1%, from net income of $35.2 million for the year ended December 31, 2012.  Basic and diluted earnings per share for the quarter ended December 31, 2013, was $0.19.  Basic earnings per share was down $0.03 from the linked quarter and down $0.09 from the quarter ended December 31, 2012, reflecting merger costs of $663,000 and severance costs of $210,000, which accounted for a $0.02 per share decline in earnings per share.

In November 2013, the Company announced that it had entered into a definitive agreement under which LegacyTexas Group, Inc. will merge into ViewPoint and, immediately thereafter, ViewPoint's bank subsidiary, ViewPoint Bank, N.A., will merge into LegacyTexas Group's subsidiary bank, LegacyTexas Bank. The merger will result in one of the largest independent banks in the state of Texas, with 51 branches and pro forma assets of over $5 billion. President and CEO Kevin Hanigan, said, "This combination allows ViewPoint to accomplish many of our strategic objectives, including: gaining greater scale in the Dallas-Fort Worth Metroplex; accelerating ViewPoint's transition to a full-service, commercial-oriented community bank; leveraging our excess capital in a financially attractive transaction, and deepening our management and board depth and experience."

Full Year 2013 Performance Highlights

  • Merger with LegacyTexas Group announced November 2013; the merger will result in one of the largest independent banks in the state of Texas, with 51 branches and pro forma assets of over $5 billion
  • Continued execution of commercial banking strategy with commercial loan portfolio growing 39.3% to a total of $1.6 billion
  • The Company formed a new energy lending group in May 2013 with total loans outstanding of $166.5 million at December 31, 2013
  • Net interest margin expanded to 3.71% for the year compared to 3.61% for 2012
  • Non-performing assets of $22.6 million, or 0.64% of total assets, at December 31, 2013, represents lowest level in nine quarters
  • The Company announced today its second consecutive quarterly cash dividend of $0.12 per share, up 20% from the $0.10 per share declared for the four prior quarterly dividend periods

Fourth Quarter 2013 Performance Highlights

  • Linked quarter commercial loan growth of $119.1 million or 8.3%; loans held for investment, excluding Warehouse Purchase Program loans, up $116.2 million, or 6.0%
  • Net interest margin increased 20 basis points for the linked quarter to 3.83%
  • Net charge-offs declined to $127,000—the lowest level since becoming a publicly traded company in 2006

"I'm very pleased with what we accomplished last year—and last quarter," said President and CEO Kevin Hanigan. "We recorded tremendous loan growth, including strong results from our new Energy Finance group. Our non-interest bearing deposits continue to grow, our asset quality is the best it's been in more than two years, and it would be an understatement to say we're thrilled about our upcoming merger with LegacyTexas Bank. I'm looking forward to an exciting 2014."

Financial Highlights


At or For the Quarters Ended


December


September


December

(unaudited)

2013


2013


2012


(Dollars in thousands, except per share amounts)

Net interest income

$

30,069



$

29,188



$

31,528


Provision (benefit) for loan losses

616



(158)



(17)


Non-interest income

5,005



5,226



6,494


Non-interest expense

24,128



22,173



21,705


Income tax expense

3,086



4,187



5,973


Net income

$

7,244



$

8,212



$

10,361








Basic earnings per common share

$

0.19



$

0.22



$

0.28


Weighted average common shares outstanding - basic

37,686,866



37,594,701



37,460,539


Estimated Tier 1 risk-based capital ratio1

18.17

%


19.17

%


21.67

%

Tangible common equity to tangible assets - Non-GAAP 2

14.70

%


15.18

%


13.48

%



1

Calculated at the ViewPoint Financial Group, Inc. level, which is subject to the capital adequacy requirements of the Federal Reserve.  The decline in our December 2013 and September 2013 ratio is primarily the result of a risk-weighting change from 50% to 100% on our Warehouse Purchase Program loans.

2

See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.

 

Net Interest Income and Net Interest Margin


For the Quarters Ended


December


September


December

(unaudited)

2013


2013


2012


(Dollars in thousands)

Interest income:






  Loans held for investment, excluding Warehouse Purchase Program loans 1

$

26,050



$

24,188



$

24,045


  Warehouse Purchase Program loans

5,138



6,617



9,202


  Securities

3,273



3,038



3,203


  Interest-earning deposit accounts

38



32



31


Total interest income

$

34,499



$

33,875



$

36,481








Net interest income

$

30,069



$

29,188



$

31,528


Net interest margin

3.83

%


3.63

%


3.77

%

Selected average balances:






  Total earning assets

$

3,139,253



$

3,212,156



$

3,341,960


  Total loans

$

2,482,274



$

2,517,255



$

2,556,806


  Total securities

$

592,769



$

640,041



$

734,598


  Total deposits

$

2,240,333



$

2,204,371



$

2,180,354


  Total borrowings

$

468,855



$

587,651



$

770,627


  Total non-interest-bearing demand deposits

$

404,087



$

405,344



$

358,707


  Total interest-bearing liabilities

$

2,305,101



$

2,386,678



$

2,592,274




1

Warehouse Purchase Program loans are now reported as loans held for investment rather than as loans held for sale. Please see the Financial Condition section for further information. Prior periods have been reclassified to conform to the current presentation.

Net interest income for the quarter ended December 31, 2013, was $30.1 million, a $1.5 million decrease from the fourth quarter of 2012 and an $881,000 increase from the third quarter of 2013. The year-over-year decrease was primarily due to a $2.1 million decrease in interest income on loans, partially offset by a $523,000 decrease in interest expense and a $70,000 increase in interest income on securities. The increase in net interest income for the current period compared to the third quarter of 2013 was primarily due to a $383,000 and a $235,000 increase in interest income earned on loans and securities, respectively, and a $257,000 decrease in interest expense.

The decrease in interest income on loans from the quarter ended December 31, 2012, was primarily due to a $4.1 million decrease in interest income from Warehouse Purchase Program loans, as well as a decline in yields earned on most loan portfolios.  The average balance of Warehouse Purchase Program loans decreased by $366.2 million, or 40.3%, compared to the fourth quarter of 2012. This decline was more than offset by a $386.1 million, or 35.7%, increase in the average balance of commercial loans.  The average yield earned on the Warehouse Purchase Program loan portfolio was 3.79% for the fourth quarter of 2013, compared to an average yield of 5.37% earned on the commercial loan portfolio. Growth in commercial loan volume was partially offset by lower yields, as the average yield on commercial real estate and commercial and industrial loans declined by 61 and 23 basis points, respectively, from the fourth quarter of 2012. The average yield on loans decreased 17 basis points to 5.03% for the fourth quarter of 2013, compared to 5.20% for the fourth quarter of 2012.

The increase in interest income on loans from the linked quarter was primarily due to an increase in average yields for the comparable periods. Average balances on loans declined $35.0 million, while average yields on loans increased 13 basis points to 5.03% for the fourth quarter of 2013, compared to 4.90% for the third quarter 2013. A $124.0 million increase in the average balance of commercial loans compared to the third quarter of 2013, was more than offset by a $143.5 million decline in the average balance of Warehouse Purchase Program loans. The yield earned on loans was positively impacted in the fourth quarter by a $532,000 recovery of interest on a non-performing loan while the third quarter was negatively impacted by a $377,000 reversal of interest income on three non-performing commercial real estate loans that were sold at par in September 2013.

The average balance of securities declined $141.8 million or 19.3%, during the fourth quarter of 2013 compared to the same period in 2012, while the average yield on securities increased by 47 basis points for the comparable periods. The decline in average balances in our securities portfolio over the past year was primarily due to normal paydowns and the sale of securities that were not consistent with our portfolio strategy. The proceeds from the securities paydowns and sales were re-deployed to support commercial loan growth and to build liquidity in preparation for the merger with LegacyTexas Group expected to close in the second quarter of 2014. Average security balances for the linked quarters declined $47.3 million to $592.8 million, while the average yield on securities increased 31 basis points to 2.21%, compared to 1.90% for the immediately preceding quarter.

Fourth quarter 2013 interest expense decreased $523,000 from the 2012 fourth quarter, primarily due to a $454,000, or 17.2%, decrease in the interest paid on FHLB advances and other borrowings, as a result of lower average balances, partially offset by a 49 basis point increase in interest rate and a $69,000, or 3.0%, decrease in interest paid on deposits. The average balances of FHLB advances and other borrowings declined by $301.8 million, or 39.2%, from the comparable prior year period, primarily due to lower average Warehouse Purchase Program balances during the 2013 period, of which a portion was strategically funded with short-term advances. The average rate paid on interest-bearing deposits declined by two basis points to 0.49% for the quarter ended December 31, 2013, from 0.51% for the quarter ended December 31, 2012.  Average interest-bearing liabilities decreased by $287.2 million to $2.3 billion for the quarter ended December 31, 2013, compared to $2.6 billion for the same period in 2012, while the average cost of interest-bearing liabilities increased by one basis point to 0.77% for the quarter ended December 31, 2013. The decline in interest expense for the linked quarters was driven primarily by lower average FHLB advances and other borrowings, as well as lower average rates on interest-bearing deposits.

The net interest margin for the fourth quarter of 2013 was 3.83%, a six basis point increase from the fourth quarter of 2012 and a 20 basis point increase from the third quarter of 2013. Accretion of interest related to the Highlands acquisition contributed 10 basis points to the net interest margin for the quarter ended December 31, 2013, compared to seven basis points for the quarter ended September 30, 2013, and 12 basis points for the fourth quarter of 2012. The average yield on earning assets for the 2013 fourth quarter was 4.40%, a three basis point increase from the fourth quarter of 2012 and an 18 basis point increase from the third quarter of 2013. 

Non-interest Income

Non-interest income for the quarter ended December 31, 2013, was $5.0 million, a $1.5 million decrease from the fourth quarter of 2012 and a $221,000 decrease from the third quarter of 2013. The decrease from the fourth quarter of 2012 was primarily attributable to a $1.3 million decrease in service charges and fees and a $621,000 decrease in other non-interest income for the comparable periods. Service charges and fees decreased from the fourth quarter of 2012, driven by $722,000 in commercial loan prepayment penalty fees collected in the fourth quarter of 2012 that were not repeated in the fourth quarter of 2013; a $424,000 decline in Warehouse Purchase Program fees primarily due to fewer total loans funded during the comparable periods; and a $226,000 decline in debit card income. The decrease in other non-interest income for the comparable fourth quarter periods was primarily due to $267,000 in higher gains on investments in community development-oriented private equity funds used for Community Reinvestment Act purposes experienced in the fourth quarter of 2012.

The decrease in non-interest income from third quarter 2013 was primarily due to a $201,000 decrease in service charges and fees, primarily due to a decline in Warehouse Purchase Program fees.

Non-interest Expenses

Non-interest expense for the quarter ended December 31, 2013, was $24.1 million, a $2.4 million increase from the fourth quarter of 2012 and a $2.0 million increase from the third quarter of 2013. The year-over-year increase in non-interest expense was primarily due to a $1.1 million increase in salaries and employee benefits expense and $663,000 in merger-related costs.  The increase in salaries and employee benefits expense primarily reflected increased salaries and incentives, partially offset by lower health care costs for the comparable periods. The Company continued its growth strategy by adding high-level revenue producers in lending and treasury management which led to increased loan production and higher incentive-based bonuses.

The $2.0 million increase in non-interest expense from the third quarter of 2013 was primarily due to a $793,000 increase in salaries and employee benefits expense, $663,000 in merger-related costs and a $287,000 increase in occupancy and equipment expense. The increase in salaries and employee benefits expense primarily reflected increased salaries and incentives, offset by a decrease in stock-based compensation and lower health care costs for the comparable periods. Occupancy and equipment expense increased primarily due to increased property taxes and building and landscape maintenance costs.

Financial Condition

As previously disclosed in our 2013 third quarter Form 10-Q, the Federal Financial Institutions Examination Council ("FFIEC") issued Supplemental Instructions for the September 30, 2013 Call Report, stating that certain residential mortgage loan purchase programs (like the Company's Warehouse Purchase Program) should be reported as loans held for investment. The Company has historically reported these loans as loans held for sale in our Call Reports and US GAAP basis financial statements. Based on more interpretation of regulatory guidance, we determined during the fourth quarter of 2013 that these loans should have been reported as loans held for investment on our consolidated balance sheets. We will report these loans as held for investment in our regularly filed financial reports commencing with our Annual Report on Form 10-K for the year ended December 31, 2013, for all periods presented. The financial data included in this release for prior periods reflect these loans as held for investment. This change in classification of Warehouse Purchase Program loans from loans held for sale to loans held for investment had no impact to net income, total assets, or total shareholders' equity.

Gross loans held for investment at December 31, 2013, excluding Warehouse Purchase Program loans, increased by $116.2 million, or 6.0%, from September 30, 2013, and by $359.1 million, or 21.2%, from December 31, 2012. Warehouse Purchase Program loans at December 31, 2013, increased by $33.4 million, or 5.2%, from September 30, 2013, but decreased by $387.3 million, or 36.5%, from December 31, 2012.  Commercial real estate loan balances at December 31, 2013, increased by $55.8 million, or 5.4%, from September 30, 2013, and by $265.9 million or 32.2%, from December 31, 2012. Commercial and industrial loans at December 31, 2013, increased by $48.7 million, or 12.5%, from September 30, 2013, and $160.9 million, or 57.8%, from December 31, 2012.  Commercial construction and land loans totaled $27.6 million, an increase of $14.6 million, or 111.7%, from September 30, 2013, and $13.1 million, or 89.6%, from December 31, 2012.

Energy loans, which are included in our commercial and industrial loans, totaled $166.5 million at December 31, 2013, up from $114.2 million at September 30, 2013. In May 2013, the Company formed its Energy Finance group, which focuses on providing loans to private and public oil and gas companies throughout the United States. The group's offerings also include the Bank's full array of commercial services, including Treasury Management and Letters of Credit.

Total deposits increased by $16.7 million, or 0.7%, to $2.3 billion from September 30, 2013. The total reflects increases in all deposit categories except for time deposits. Compared to December 31, 2012, deposits increased by $86.8 million, or 4.0%, which included a $53.1 million increase in non-interest-bearing demand deposits. Non-interest-bearing demand deposits totaled $410.9 million, or 18.1%, of total deposits at December 31, 2013, reaching a new high for the category.

Total shareholders' equity increased by $4.4 million to $544.5 million at December 31, 2013, from $540.1 million at September 30, 2013.  The Company's tangible common equity ratio was 14.7% at December 31, 2013, a decrease of 48 basis points from September 30, 2013, and an increase of 122 basis points from December 31, 2012. 

Credit Quality


At or For the Quarters Ended


December


September


December

(unaudited)

2013


2013


2012


(Dollars in thousands)

Net charge-offs

$

127



$

250



$

1,767


Net charge-offs/Average loans held for investment, excluding Warehouse Purchase Program loans 1

0.03

%


0.05

%


0.43

%

Net charge-offs/Average loans held for investment 1

0.02



0.04



0.28


Provision for loan losses

$

616



$

(158)



$

(17)


Non-performing loans ("NPLs")

22,124



22,307



27,203


NPLs/Total loans held for investment, excluding Warehouse Purchase Program loans 1

1.08

%


1.15

%


1.61

%

NPLs/Total loans held for investment 1

0.81



0.87



0.99


Non-performing assets ("NPAs")

$

22,604



$

22,735



$

29,104


NPAs to total assets

0.64

%


0.67

%


0.79

%

NPAs/Loans held for investment and foreclosed assets, excluding Warehouse Purchase Program loans 1

1.10



1.18



1.72


NPAs/Loans held for investment and foreclosed assets 1

0.83



0.88



1.06


Allowance for loan losses

$

19,358



$

18,869



$

18,051


Allowance for loan losses/Total loans held for investment, excluding Warehouse Purchase Program loans 1

0.94

%


0.98

%


1.07

%

Allowance for loan losses/Total loans held for investment 1

0.71



0.73



0.66


ALL/Total Loans held for investment, excluding acquired loans & Warehouse Purchase Program loans 1, 2

1.00



1.05



1.23


Allowance for loan losses/NPLs

87.50



84.59



66.36




1

Warehouse Purchase Program loans are now reported as loans held for investment rather than as loans held for sale. Please see the Financial Condition section for further information. Prior periods have been reclassified to conform to the current presentation.

2

Excludes loans acquired from Highlands, which were initially recorded at fair value.

The Company recorded a provision expense of $616,000 for the quarter ended December 31, 2013, compared to provision benefits of $158,000 for the 2013 third quarter and $17,000 for the quarter ended December 31, 2012. Non-performing loans to total loans held for investment, excluding Warehouse Purchase Program loans, at December 31, 2013, was 1.08%, compared to 1.15% at September 30, 2013, and 1.61% at December 31, 2012. Non-performing loans decreased by $183,000 to $22.1 million at December 31, 2013, from $22.3 million at September 30, 2013, and decreased $5.1 million from $27.2 million at December 31, 2012. At December 31, 2013, non-performing loans were at their lowest level in nine quarters.  In the third quarter of 2013, three commercial real estate loans that were placed in nonaccrual status in September were sold at par in the same month, which avoided an increase in non-performing loans, as well as any potential losses on those three loans. 

Net charge-offs totaled $127,000 for the fourth quarter of 2013, compared to $250,000 for the third quarter and $1.8 million for the fourth quarter of 2012. Fourth quarter 2013 charge-offs declined to the lowest level since the Company became publicly traded in 2006. Provision expense for the quarter ended December 31, 2013, totaled $616,000, up $774,000 from the quarter ended September 30, 2013, and up $633,000 from the quarter ended December 31, 2012, primarily due to increased commercial loan production.

Subsequent Events

The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing of its consolidated financial statements for the year ended December 31, 2013, on Form 10-K.  As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2013, and will adjust amounts preliminarily reported, if necessary.

Conference Call

The Company will also host an investor conference call to review these results on Wednesday, February 5, 2014, at 8 a.m. Central Time. Participants are asked to call (toll-free) 1-888-317-6016 at least five minutes prior to the call.  International participants are asked to call 1-412-317-6016 and participants in Canada are asked to call (toll-free) 1-855-669-9657.  The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.viewpointfinancialgroup.com. An audio replay will be available one hour after the conclusion of the call at 1-877-344-7529, Conference #10039602. This replay, as well as the webcast, will be available until the Company's next quarterly webcast/conference call.

About ViewPoint Financial Group, Inc.

ViewPoint Financial Group, Inc. is the holding company for ViewPoint Bank, N.A. ViewPoint Bank, N.A. operates 31 banking offices in the Dallas/Fort Worth metropolitan area, including two First National Bank of Jacksboro locations in Jack and Wise Counties. 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; the industry-wide decline in mortgage production; competition; changes in management's business strategies; our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we have acquired or may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; and other factors set forth under Risk Factors in the Company's Form 10-K that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The 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 that may be made to any forward-looking statements to reflect events or circumstances occurring after the date of such statements.


 

VIEWPOINT FINANCIAL GROUP, INC.

Consolidated Balance Sheets



December 31, 2013


September 30, 2013


June 30, 2013


March 31, 2013


December 31, 2012


(Dollars in thousands)

ASSETS

(unaudited)


(unaudited)


(unaudited)


(unaudited)



Cash and due from financial institutions

$

30,012



$

33,803



$

30,504



$

25,724



$

34,227


Short-term interest-bearing deposits in other financial institutions

57,962



40,223



27,280



26,783



34,469


  Total cash and cash equivalents

87,974



74,026



57,784



52,507



68,696


Securities available for sale, at fair value

248,012



264,657



287,834



315,438



287,034


Securities held to maturity

294,583



307,822



330,969



329,993



360,554


  Total securities

542,595



572,479



618,803



645,431



647,588


Loans held for investment - Warehouse Purchase Program 1

673,470



640,028



904,228



757,472



1,060,720


Loans held for investment

2,049,902



1,933,669



1,835,187



1,745,737



1,690,769


Less: allowance for loan losses and deferred fees on loans held for investment

(20,625)



(19,513)



(19,162)



(18,282)



(17,565)


  Net loans

2,702,747



2,554,184



2,720,253



2,484,927



2,733,924


FHLB and Federal Reserve Bank stock, at cost

34,883



29,632



41,475



31,607



45,025


Bank-owned life insurance

35,565



35,379



35,231



35,078



34,916


Premises and equipment, net

53,272



52,729



52,865



53,050



53,160


Goodwill

29,650



29,650



29,650



29,650



29,650


Other assets

38,546



35,528



38,423



41,386



50,099


    Total assets

$

3,525,232



$

3,383,607



$

3,594,484



$

3,373,636



$

3,663,058


LIABILITIES AND SHAREHOLDERS' EQUITY










Non-interest-bearing demand

$

410,933



$

401,136



$

384,836



$

392,759



$

357,800


Interest-bearing demand

474,515



451,248



464,262



481,966



488,748


Savings and money market

904,576



896,330



887,082



888,874



880,924


Time

474,615



499,228



453,000



449,491



450,334


  Total deposits

2,264,639



2,247,942



2,189,180



2,213,090



2,177,806


FHLB advances

639,096



511,166



800,208



564,221



892,208


Repurchase agreement and other borrowings

25,000



25,000



25,000



25,000



25,000


Accrued expenses and other liabilities

52,037



59,410



46,662



40,358



47,173


Total liabilities

2,980,772



2,843,518



3,061,050



2,842,669



3,142,187












Shareholders' equity










Common stock

399



400



399



399



396


Additional paid-in capital

377,657



375,563



373,378



373,492



372,168


Retained earnings

183,236



180,787



176,569



172,386



164,328


Accumulated other comprehensive income (loss), net

(383)



155



271



2,239



1,895


Unearned Employee Stock Ownership Plan (ESOP) shares

(16,449)



(16,816)



(17,183)



(17,549)



(17,916)


Total shareholders' equity

544,460



540,089



533,434



530,967



520,871


Total liabilities and shareholders' equity

$

3,525,232



$

3,383,607



$

3,594,484



$

3,373,636



$

3,663,058


1

Warehouse Purchase Program loans are now reported as loans held for investment rather than as loans held for sale. Please see the Financial Condition section for further information. Prior periods have been reclassified to conform to the current presentation.

 

 

 

VIEWPOINT FINANCIAL GROUP, INC.

Consolidated Statements of Income



2013


2012


2011

Interest and dividend income

(unaudited)





  Loans, including fees

$

124,522



$

120,596



$

88,238


  Taxable securities

9,780



14,850



25,830


  Nontaxable securities

2,133



1,891



1,892


  Interest-bearing deposits in other financial institutions

126



117



170


  FHLB and Federal Reserve Bank stock

528



538



94



137,089



137,992



116,224


Interest expense






  Deposits

9,545



11,453



22,474


  FHLB advances

8,503



9,807



9,882


  Repurchase agreement

816



876



816


  Other borrowings

5



33



474



18,869



22,169



33,646


Net interest income

118,220



115,823



82,578


Provision for loan losses

3,199



3,139



3,970


Net interest income after provision for loan losses

115,021



112,684



78,608


Non-interest income






  Service charges and fees

17,778



19,512



18,556


  Other charges and fees

937



579



723


  Net gain on sale of mortgage loans



5,436



7,639


  Bank-owned life insurance income

649



699



506


  Gain (loss) on sale of available for sale securities

(177)



1,014



6,268


  Gain (loss) on sale and disposition of assets

835



(191)



(798)


  Impairment of goodwill



(818)



(271)


  Other

1,811



3,325



1,925



21,833



29,556



34,548


Non-interest expense






  Salaries and employee benefits

53,328



51,719



47,360


  Merger/Acquisition costs

663



4,127




  Advertising

2,690



1,753



1,519


  Occupancy and equipment

7,675



7,365



5,966


  Outside professional services

2,760



2,320



2,644


  Regulatory assessments

2,477



2,534



2,401


  Data processing

6,727



6,109



4,648


  Office operations

6,783



7,144



5,972


  Other

5,774



4,619



4,730



88,877



87,690



75,240


Income before income tax expense

47,977



54,550



37,916


Income tax expense

16,289



19,309



11,588


Net income

$

31,688



$

35,241



$

26,328


Earnings per share:






  Basic

$

0.83



$

0.98



$

0.81


  Diluted

$

0.83



$

0.98



$

0.81









 

 

VIEWPOINT FINANCIAL GROUP, INC.

Consolidated Quarterly Statements of Income (unaudited)



For the Quarters Ended


Fourth Quarter 2013 Compared to:


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Mar 31, 2013


Dec 31, 2012


Third Quarter 2013

Fourth Quarter 2012

Interest and dividend income

(Dollars in thousands)

  Loans, including fees

$

31,188



$

30,805



$

32,151



$

30,378



$

33,247



$

383


1.2

%

$

(2,059)


(6.2)%


  Taxable securities

2,583



2,337



2,457



2,403



2,591



246


10.5


(8)


(0.3)


  Nontaxable securities

562



568



529



474



472



(6)


(1.1)


90


19.1


  Interest-bearing deposits in other financial institutions

38



32



25



31



31



6


18.8


7


22.6


  FHLB and Federal Reserve Bank stock

128



133



134



133



140



(5)


(3.8)


(12)


(8.6)



34,499



33,875



35,296



33,419



36,481



624


1.8


(1,982)


(5.4)


Interest expense















  Deposits

2,252



2,411



2,450



2,432



2,321



(159)


(6.6)


(69)


(3.0)


  FHLB advances

1,971



2,066



2,205



2,261



2,423



(95)


(4.6)


(452)


(18.7)


  Repurchase agreement

206



206



203



201



205





1


0.5


  Other borrowings

1



4







4



(3)


(75.0)

(3)


(75.0)



4,430



4,687



4,858



4,894



4,953



(257)


(5.5)


(523)


(10.6)


Net interest income

30,069



29,188



30,438



28,525



31,528



881


3.0


(1,459)


(4.6)


Provision (benefit) for loan losses

616



(158)



1,858



883



(17)



774


N/M 1

633


N/M 1

Net interest income after provision (benefit) for loan losses

29,453



29,346



28,580



27,642



31,545



107


0.4


(2,092)


(6.6)


Non-interest income















  Service charges and fees

4,259



4,460



4,768



4,291



5,562



(201)


(4.5)


(1,303)


(23.4)


  Other charges and fees

246



300



179



212



142



(54)


(18.0)


104


73.2


  Bank-owned life insurance income

186



148



153



162



216



38


25.7


(30)


(13.9)


  Loss on sale of available for sale securities







(177)






N/M 1


N/M 1

  Gain (loss) on sale and disposition of assets

120



41



444



230



(241)



79


192.7


361


(149.8)


  Other

194



277



199



1,141



815



(83)


(30.0)


(621)


(76.2)



5,005



5,226



5,743



5,859



6,494



(221)


(4.2)


(1,489)


(22.9)


Non-interest expense















  Salaries and employee benefits

14,339



13,546



12,528



12,915



13,200



793


5.9


1,139


8.6


  Merger/Acquisition costs

663











663


N/M 1

663


N/M 1

  Advertising

760



666



751



513



599



94


14.1


161


26.9


  Occupancy and equipment

2,117



1,830



1,938



1,790



1,934



287


15.7


183


9.5


  Outside professional services

824



682



570



684



568



142


20.8


256


45.1


  Regulatory assessments

619



629



650



579



661



(10)


(1.6)


(42)


(6.4)


  Data processing

1,747



1,733



1,729



1,518



1,717



14


0.8


30


1.7


  Office operations

1,781



1,603



1,751



1,648



1,831



178


11.1


(50)


(2.7)


  Other

1,278



1,484



1,786



1,226



1,195



(206)


(13.9)


83


6.9



24,128



22,173



21,703



20,873



21,705



1,955


8.8


2,423


11.2


Income before income tax expense

10,330



12,399



12,620



12,628



16,334



(2,069)


(16.7)


(6,004)


(36.8)


Income tax expense

3,086



4,187



4,446



4,570



5,973



(1,101)


(26.3)


(2,887)


(48.3)


Net income

$

7,244



$

8,212



$

8,174



$

8,058



$

10,361



$

(968)


(11.8)%


$

(3,117)


(30.1)%


1

N/M - not meaningful

 

                                                                                     

VIEWPOINT FINANCIAL GROUP, INC.

Selected Financial Highlights (unaudited)



At or For the Quarters Ended


At or for the Years Ended


December


September


December


December


December


2013


2013


2012


2013


2012


(Dollars in thousands, except share and per share amounts)

SHARE DATA:










Weighted average common shares outstanding- basic

37,686,866



37,594,701



37,460,539



37,589,548



35,879,704


Weighted average common shares outstanding- diluted

37,911,775



37,774,400



37,592,618



37,744,786



35,998,345


Shares outstanding at end of period

39,938,816



39,951,884



39,612,911



39,938,816



39,612,911


Income available to common shareholders1

$

7,147



$

8,096



$

10,310



$

31,294



$

35,135


Basic earnings per common share

0.19



0.22



0.28



0.83



0.98


Diluted earnings per common share

0.19



0.21



0.27



0.83



0.98


Dividends declared per share 5

0.12



0.10



0.20



0.32



0.40


Total shareholders' equity

544,460



540,089



520,871



544,460



520,871


Common shareholders' equity per share (book value per share)

13.63



13.52



13.15



13.63



13.15


Tangible book value per share- Non-GAAP2

12.86



12.74



12.36



12.86



12.36


Market value per share for the quarter:










High

27.66



22.34



21.80



27.66



21.80


Low

20.19



19.62



19.30



17.97



13.19


Close

$

27.45



$

20.67



$

20.94



$

27.45



$

20.94


KEY RATIOS:










Return on average common shareholders' equity

5.34

%


6.11

%


7.96

%


5.92

%


7.23

%

Return on average assets

0.87



0.97



1.17



0.94



1.04


Efficiency ratio3

67.07



64.28



56.99



63.41



58.12


Estimated Tier 1 risk-based capital ratio4

18.17



19.17



21.67



18.17



21.67


Estimated total risk-based capital ratio4

18.85



19.88



22.47



18.85



22.47


Estimated Tier 1 leverage ratio4

15.67



15.17



13.97



15.67



13.97


Tangible equity to tangible assets- Non-GAAP2

14.70

%


15.18

%


13.48

%


14.70

%


13.48

%

Number of employees- full-time equivalent

561



561



557



561



557


1

Net of distributed and undistributed earnings to participating securities.

2 

See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.

3 

Calculated by dividing total non-interest expense by net interest income plus non-interest income, excluding gain (loss) on assets, impairment of goodwill, amortization of intangible assets, gains (losses) from securities transactions and other non-recurring items.

4 

Calculated at the ViewPoint Financial Group, Inc. level, which is subject to the capital adequacy requirements of the Federal Reserve.  Beginning March 2013, capital ratios reflect a risk weighting change from 50% to 100% on our Warehouse Purchase Program loans.

5 

The December 31, 2012, quarter included two dividend payments of $0.10 each.

 


VIEWPOINT FINANCIAL GROUP, INC.

Selected Loan Data (unaudited)



Ending Balances at


December 31, 2013


September 30, 2013


June 30, 2013


March 31, 2013


December 31, 2012

Loans:

(Dollars in thousands)

Commercial real estate

$

1,091,200



$

1,035,383



$

990,227



$

882,492



$

825,340


Warehouse Purchase Program loans

673,470



640,028



904,228



757,472



1,060,720


Commercial and industrial loans:










  Commercial

425,030



373,390



288,054



271,605



245,799


  Warehouse lines of credit

14,400



17,356



24,977



30,861



32,726


Total commercial and industrial loans

439,430



390,746



313,031



302,466



278,525


Construction and land loans










  Commercial construction and land

27,619



13,045



14,491



15,042



14,568


  Consumer construction and land

2,628



2,307



5,980



6,531



6,614


Total Construction and land loans

30,247



15,352



20,471



21,573



21,182


Consumer:










  Consumer real estate

441,226



442,073



459,076



484,068



506,642


  Other consumer loans

47,799



50,115



52,382



55,138



59,080


Total consumer

489,025



492,188



511,458



539,206



565,722


    Gross loans held for investment

$

2,723,372



$

2,573,697



$

2,739,415



$

2,503,209



$

2,751,489


Non-performing assets:










Commercial real estate

$

7,604



$

7,770



$

8,625



$

12,696



$

13,609


Commercial and industrial

5,141



5,788



6,849



6,807



5,401


Consumer real estate

8,812



8,237



7,913



7,840



7,931


Other consumer loans

567



512



412



378



262


    Total non-performing loans

22,124



22,307



23,799



27,721



27,203


Foreclosed assets

480



428



557



1,505



1,901


    Total non-performing assets

$

22,604



$

22,735



$

24,356



$

29,226



$

29,104


Total non-performing assets to total assets

0.64

%


0.67

%


0.68

%


0.87

%


0.79

%

Total non-performing loans to total loans held for investment, excluding Warehouse Purchase Program loans 1

1.08

%


1.15

%


1.30

%


1.59

%


1.61

%

Total non-performing loans to total loans held for investment 1

0.81

%


0.87

%


0.87

%


1.11

%


0.99

%

Allowance for loan losses to non-performing loans

87.50

%


84.59

%


81.00

%


67.25

%


66.36

%

Allowance for loan losses to total loans held for investment, excluding Warehouse Purchase Program loans 1

0.94

%


0.98

%


1.05

%


1.07

%


1.07

%

Allowance for loan losses to total loans held for investment 1

0.71

%


0.73

%


0.70

%


0.74

%


0.66

%

Allowance for loan losses to total loans held for investment excluding acquired loans and Warehouse Purchase Program loans 1, 2

1.00

%


1.05

%


1.15

%


1.19

%


1.23

%

Troubled debt restructured loans ("TDRs"):










  Performing TDRs:










  Commercial real estate

$



$



$



$

3,372



$

3,384


  Commercial and industrial

185



190



196



202



207


  Construction and land

2



3



4



4



5


  Consumer real estate

737



741



744



959



553


  Other consumer loans

47



51



54



62



67


    Total performing TDRs

$

971



$

985



$

998



$

4,599



$

4,216


Non-performing TDRs:3










  Commercial real estate

$

7,446



$

7,559



$

8,344



$

11,786



$

11,218


  Commercial and industrial

349



277



75



71



102


  Consumer real estate

3,070



2,690



2,215



2,018



2,235


  Other consumer loans

503



470



317



261



205


    Total non-performing TDRs

$

11,368



$

10,996



$

10,951



$

14,136



$

13,760


Allowance for loan losses:










Balance at beginning of period

18,869



19,277



18,642



18,051



19,835


  Provision expense (benefit)

616



(158)



1,858



883



(17)


 Charge-offs

(255)



(356)



(1,394)



(476)



(1,936)


  Recoveries

128



106



171



184



169


    Balance at end of period

$

19,358



$

18,869



$

19,277



$

18,642



$

18,051


Net charge-offs (recoveries)










  Commercial real estate

$



$

34



$

716



$

56



$

185


  Commercial and industrial

43



204



64



172



893


  Construction and land







31




  Consumer real estate

14



(18)



320



23



437


  Other consumer loans

70



30



123



10



252


    Total net charge-offs

$

127



$

250



$

1,223



$

292



$

1,767












1

Warehouse Purchase Program loans are now reported as loans held for investment rather than as loans held for sale. Please see the Financial Condition section for further information. Prior periods have been reclassified to conform to the current presentation.

2

Excludes loans acquired from Highlands, which were initially recorded at fair value.

3

Non-performing TDRs are included in the non-performing assets above.

 

 

VIEWPOINT FINANCIAL GROUP, INC.

Average Balances and Yields/Rates (unaudited)



For the Quarters Ended


December 31, 2013


September 30, 2013


June 30, 2013


March 31, 2013


December 31, 2012

Loans:

(Dollars in thousands)

  Commercial real estate

$

1,077,112



$

1,007,449



$

961,631



$

839,155



$

805,362


  Warehouse Purchase Program loans

542,367



685,852



755,577



738,234



908,603


  Commercial and industrial loans:










    Commercial

376,557



316,506



288,481



257,510



251,447


    Warehouse lines of credit

15,316



21,077



27,670



26,037



26,072


  Consumer real estate

441,722



453,939



476,226



504,965



524,213


  Other consumer loans

49,202



51,414



53,759



57,164



60,435


 Less: deferred fees and allowance for loan loss

(20,002)



(18,982)



(18,649)



(17,240)



(19,326)


Loans receivable

2,482,274



2,517,255



2,544,695



2,405,825



2,556,806


Securities

592,769



640,041



680,931



674,109



734,598


Overnight deposits

64,210



54,860



45,810



54,096



50,556


    Total interest-earning assets

$

3,139,253



$

3,212,156



$

3,271,436



$

3,134,030



$

3,341,960


Deposits:










  Interest-bearing demand

$

455,983



$

448,241



$

459,433



$

465,385



$

463,465


  Savings and money market

902,019



892,355



883,507



877,690



888,410


  Time

478,244



458,431



451,110



450,071



469,772


FHLB advances and other borrowings

468,855



587,651



679,693



590,238



770,627


    Total interest-bearing liabilities

$

2,305,101



$

2,386,678



$

2,473,743



$

2,383,384



$

2,592,274












Total assets

$

3,318,500



$

3,390,837



$

3,453,699



$

3,322,899



$

3,529,665


Non-interest-bearing demand deposits

$

404,087



$

405,344



$

393,815



$

367,217



$

358,707


Total deposits

$

2,240,333



$

2,204,371



$

2,187,865



$

2,160,363



$

2,180,354


Total shareholders' equity

$

542,360



$

537,901



$

532,897



$

527,958



$

520,684












Yields/Rates:










  Commercial real estate

5.56

%


5.50

%


5.85

%


5.88

%


6.17

%

  Warehouse Purchase Program loans

3.79

%


3.86

%


3.87

%


3.92

%


4.05

%

   Commercial and industrial loans:










    Commercial

4.92

%


4.45

%


4.97

%


4.72

%


5.24

%

    Warehouse lines of credit

3.51

%


3.56

%


3.57

%


3.63

%


3.71

%

  Consumer real estate

5.05

%


5.15

%


5.16

%


5.30

%


5.48

%

  Other consumer loans

6.07

%


6.19

%


5.94

%


5.84

%


6.00

%

Loans receivable

5.03

%


4.90

%


5.05

%


5.05

%


5.20

%

Securities

2.21

%


1.90

%


1.83

%


1.79

%


1.74

%

Overnight deposits

0.24

%


0.23

%


0.22

%


0.23

%


0.25

%

    Total interest-earning assets

4.40

%


4.22

%


4.32

%


4.27

%


4.37

%

Deposits:










Interest-bearing demand

0.38

%


0.39

%


0.41

%


0.40

%


0.43

%

Savings and money market

0.28

%


0.28

%


0.27

%


0.27

%


0.27

%

Time

0.99

%


1.18

%


1.23

%


1.22

%


1.03

%

FHLB advances and other borrowings

1.86

%


1.55

%


1.42

%


1.67

%


1.37

%

    Total interest-bearing liabilities

0.77

%


0.79

%


0.79

%


0.82

%


0.76

%

Net interest spread

3.63

%


3.43

%


3.53

%


3.45

%


3.61

%

Net interest margin

3.83

%


3.63

%


3.72

%


3.64

%


3.77

%

Cost of deposits (including non-interest-bearing demand)

0.40

%


0.44

%


0.45

%


0.45

%


0.43

%

 

 

VIEWPOINT FINANCIAL GROUP, INC.

Supplemental Information- Non-GAAP Financial Measures (unaudited)



Ending Balances At


December 31, 2013


September 30, 2013


June 30, 2013


March 31, 2013


December 31, 2012

Calculation of Tangible Book Value per Share:

(Dollars in thousands, except per share amounts)

Total shareholders' equity

$

544,460



$

540,089



$

533,434



$

530,967



$

520,871


Less:  Goodwill

(29,650)



(29,650)



(29,650)



(29,650)



(29,650)


Identifiable intangible assets, net

(1,239)



(1,365)



(1,446)



(1,541)



(1,653)


Total tangible shareholders' equity

$

513,571



$

509,074



$

502,338



$

499,776



$

489,568












Shares outstanding at end of period

39,938,816


39,951,884


39,926,716



39,948,031



39,612,911












Book value per share- GAAP

$

13.63



$

13.52



$

13.36



$

13.29



$

13.15


Tangible book value per share- Non-GAAP

12.86



12.74



12.58



12.51



12.36












Calculation of Tangible Equity to Tangible Assets:










Total assets

$

3,525,232



$

3,383,607



$

3,594,484



$

3,373,636



$

3,663,058


Less:  Goodwill

(29,650)



(29,650)



(29,650)



(29,650)



(29,650)


Identifiable intangible assets, net

(1,239)



(1,365)



(1,446)



(1,541)



(1,653)


Total tangible assets

$

3,494,343



$

3,352,592



$

3,563,388



$

3,342,445



$

3,631,755












Equity to assets- GAAP

15.44

%


15.96

%


14.84

%


15.74

%


14.22

%

Tangible common equity to tangible assets- Non-GAAP

14.70



15.18



14.10



14.95



13.48


 

SOURCE ViewPoint Financial Group, Inc.

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