Exhibit 99
| | | | | | | | | |
| Contact: | | Mark Hord | | FOR IMMEDIATE RELEASE |
| | | ViewPoint Financial Group | | October 24, 2007 |
| | | 972-578-5000, Ext. 7440 | | | | |
ViewPoint Financial Group
Reports Third Quarter and Year-to-Date 2007 Earnings
PLANO, Texas,October 24, 2007 — ViewPoint Financial Group (NasdaqGS:VPFG) (the “Company”), the holding company for ViewPoint Bank, today announced quarterly and year-to-date financial results as of September 30, 2007. Detailed results will be available in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, which will be filed in November.
“This month marks our first full year as a public company, and I am very happy with our results,” said Gary Base, President and Chief Executive Officer of ViewPoint Financial Group. “Our earnings have been solid, our deposits and assets continue to increase, and we’re looking forward to continued growth.”
Highlights for the quarter include:
| | • | | Total assets increased by $98.5 million from December 31, 2006, to September 30, 2007. |
| | • | | Total deposits increased by $49.7 million from December 31, 2006, to September 30, 2007. |
| | • | | Our acquisition of the assets of Bankers Financial Mortgage Group, Ltd. resulted in $19.0 million in real estate production for September 2007, of which $5.5 million was added to our loan portfolio. |
| | • | | Basic and diluted earnings per share for the three and nine months ended September 30, 2007, were $0.07 per share and $0.16 per share, respectively. |
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Result of Operations for the Three Months ended September 30, 2007
The Company recognized net income of $1.6 million for the three months ended September 30, 2007, compared to net income of $1.5 million for the three months ended September 30, 2006. The increase in net income resulted from higher interest income of $2.8 million, an increase of 15.0%, higher noninterest income of $284,000, an increase of 4.8%, and a decrease in the provision for loan losses of $70,000, or 10.4%. These amounts were partially offset by higher interest expense of $2.4 million, an increase of 28.2%, and higher noninterest expense of $819,000, an increase of 6.1%.
Interest income increased by $2.8 million, or 15.0%, to $21.8 million for the three months ended September 30, 2007, from $19.0 million for the three months ended September 30, 2006. As consumer loans with lower rates matured, the proceeds were reinvested in real estate loans, commercial loans and investments with higher yields, leading to the increase in interest income. We anticipate this trend to continue as we emphasize one- to four-family real estate, commercial real estate and business lending.
Interest expense increased $2.4 million, or 28.2%, to $10.7million for the three months ended September 30, 2007, from $8.3 million for the three months ended September 30, 2006. The increase in interest expense was primarily due to an increase in the volume of our time accounts and the higher rates paid on these products. The average balance of time deposits increased by $151.6 million compared to the third quarter of 2006, as market demand for time products has grown due to the interest rate environment. An increase in the volume of Federal Home Loan Bank advances also contributed to the increase in interest expense. We increased the average balance of our Federal Home Loan Bank borrowings by $33.8 million for the three months ended September 30, 2007, compared to the same time period in 2006, to extend the duration on our liabilities to more closely match our assets. Additionally, we experienced increased interest expense due to a 77 basis point rise in the cost of average interest-bearing liabilities, with the largest rate increases being in time and money market accounts.
Noninterest income increased $284,000, or 4.8%, to $6.2 million for the three months ended September 30, 2007, from $6.0 million for the three months ended September 30, 2006. The increase primarily resulted from increased net gain on sales of mortgage loans resulting from the September 2007 acquisition by our subsidiary, Community Financial Services, Inc., of the assets of Bankers Financial Mortgage Group, Ltd. (the “BFMG Acquisition”).
Noninterest expense increased $819,000, or 6.1%, to $14.2 million for the three months ended September 30, 2007, compared to $13.3 million for the three months ended September 30, 2006. The increase in noninterest expense was primarily due to an increase in salaries and employee benefits associated with the BFMG Acquisition, as well as increased stock compensation expense from the shareholder approved equity incentive plan and employee stock ownership plan expense. Higher outside professional services expense due to increases in regulatory and internal audit fees also contributed to the increase in noninterest expense.
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Result of Operations for the Nine Months ended September 30, 2007
Income before income tax expense (benefit) for the nine months ended September 30, 2007, was $6.4 million, an increase of $2.9 million from $3.5 million for the nine months ended September 30, 2006. The increase in income before income tax expense (benefit) resulted from higher interest income of $9.3 million, an increase of 17.6%, higher noninterest income of $1.3 million, an increase of 7.5%, and lower noninterest expense of $445,000, a decrease of 1.0%. These amounts were partially offset by higher interest expense of $7.4 million, an increase of 32.7%.
The Company recognized net income of $4.0 million for the nine months ended September 30, 2007, compared to net income of $7.7 million for the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2006, included a $6.1 million tax benefit due to the Company’s change in tax status at the beginning of 2006.
Interest income increased by $9.3 million, or 17.6%, to $62.4 million for the nine months ended September 30, 2007, from $53.1 million for the nine months ended September 30, 2006. As consumer loans with lower rates matured, the proceeds were reinvested in real estate loans, commercial loans and investments with higher yields, leading to the increase in interest income. We anticipate this trend to continue as we emphasize one- to four-family real estate, commercial real estate and business lending.
Interest expense increased $7.4 million, or 32.7%, to $30.1 million for the nine months ended September 30, 2007, from $22.7 million for the nine months ended September 30, 2006. Increased volume and rates in our time accounts contributed to the increase in interest expense, as the average balance in time deposits increased by $147.3 million compared to the nine months ended September 30, 2006. The average balance of FHLB advances increased by $21.5 million for the nine months ended September 30, 2007, compared to the same time period in 2006, which also led to the increase in interest expense.
Noninterest income increased $1.3 million, or 7.5%, to $18.5 million for the nine months ended September 30, 2007, from $17.2 million for the nine months ended September 30, 2006. Service charges and fees increased due to higher non-sufficient funds fees, deposit service charges, and miscellaneous lending fees.
Noninterest expense decreased $445,000, or 1.0%, to $42.2 million for the nine months ended September 30, 2007, compared to $42.6 million for the nine months ended September 30, 2006. The decrease in noninterest expense was primarily due to decreases in salaries and employee benefits caused by staffing adjustments in 2006 to improve overall efficiency and advertising expense.
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Financial Condition at September 30, 2007
Total assets increased by $98.5 million, or 6.4%, to $1.63 billion at September 30, 2007, from $1.53 billion at December 31, 2006. The increase resulted from growth in investment securities available for sale, which were purchased primarily with funds received from the increased deposit base and maturing loans. The increase was partially offset by a decrease in net loans.
Our net loan portfolio, including loans held for sale, decreased by $65.1 million, or 6.7%, from $968.7 million at December 31, 2006, to $903.6 million at September 30, 2007. This decline has been an ongoing element of our previously announced strategy to transition our loan portfolio away from consumer loans, in particular indirect automobile loans, into one- to four-family and commercial real estate loans and business loans. The decline in loans has slowed from the nine months ended September 30, 2006, during which our net loan portfolio declined by $104.1 million, or 9.7%. We expect the rate of this decline to continue to slow, and ultimately be reversed, as our consumer loan portfolio is paid down and the rate of increase in our one- to four-family and commercial real estate loan portfolio begins to outpace these paydowns. As consumer loan balances decline, available funds are invested into securities until these funds can be redeployed into one- to four- family and commercial real estate loans.
Our non-performing loans have remained relatively constant during the period despite concerns regarding the credit market, with our nonperforming loans to total loans ratio ending at 0.39% for September 30, 2007. We will continue to focus on maintaining quality assets and do not retain any subprime lending products.
Our real estate loan portfolio (not including loans held for sale) has increased $66.5 million, or 12.0%, from $551.6 million at December 31, 2006, to $618.1 million at September 30, 2007. We are currently seeing the most growth in our commercial real estate loans and one-to four-family residential loans. Due to the BFMG Acquisition, we added $5.5 million of our mortgage subsidiary’s $19.0 million September production to our real estate loan portfolio. We will continue to closely review this production, and intend to increase our one-to four-family real estate loan portfolio by retaining more loans originated by this subsidiary. Loans that are purchased from outside parties or added to our portfolio from our subsidiary meet our underwriting guidelines.
Total deposits increased by $49.7 million, or 4.0%, to $1.28 billion at September 30, 2007, as compared to $1.23 billion at December 31, 2006. Time deposits increased by $115.5 million as market demand for time products has grown due to the interest rate environment. We are currently focusing on building our business account products and offering consumer accounts that offer a wide range of services to best meet our customers’ banking needs.
Total equity declined by $3.2 million, or 1.5%, to $211.6 million at September 30, 2007, from $214.8 million at December 31, 2006. The Company purchased 420,208 shares of common stock and placed them into treasury during the nine months ended September 30, 2007, reducing equity by $7.2 million. This decrease in equity was partially offset by undistributed net income of $4.0 million. The Company paid $1.7 million in dividends during the nine months ended September 30, 2007, which also reduced equity. On October 3, 2007, the Company marked the completion of its first year as a publicly traded company; therefore, the Board of Directors is currently reviewing the potential and appropriateness of additional stock buyback plans.
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About ViewPoint Financial Group
ViewPoint Financial Group is the holding company for Plano-based ViewPoint Bank. ViewPoint Bank is the largest bank based in Collin County and operates 33 locations, 14 of which are in-store branches and 3 of which are loan production offices.
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 report and factors set forth under Risk Factors in our Annual Report onForm 10-K.
The forward-looking statements are made as of the date of this report, 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.
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VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In thousands)
| | | | | | | | | |
| | | September 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
| | | (Unaudited) | | | | |
| ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 136,460 | | | $ | 155,855 | |
| Securities available for sale, at fair value | | | 482,232 | | | | 324,523 | |
| Securities held to maturity | | | 6,771 | | | | 11,271 | |
| Loans held for sale | | | 9,140 | | | | 3,212 | |
| Loans, net of allowance of $6,030-September 30, 2007, $6,507-December 31, 2006 | | | 894,457 | | | | 965,452 | |
| Federal Home Loan Bank stock, at cost | | | 5,153 | | | | 3,724 | |
| Bank-owned life insurance | | | 26,137 | | | | — | |
| Premises and equipment, net | | | 41,356 | | | | 42,262 | |
| Accrued interest receivable and other assets | | | 26,517 | | | | 23,461 | |
| | | | | | | |
| | | | | | | | | |
| Total Assets | | $ | 1,628,223 | | | $ | 1,529,760 | |
| | | | | | | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest-bearing demand | | $ | 184,044 | | | $ | 211,301 | |
| Interest-bearing demand | | | 74,954 | | | | 69,711 | |
| Savings and money market | | | 604,003 | | | | 647,706 | |
| Time | | | 421,626 | | | | 306,163 | |
| | | | | | | |
| Total deposits | | | 1,284,627 | | | | 1,234,881 | |
| Federal Home Loan Bank advances | | | 101,986 | | | | 55,762 | |
| Other liabilities | | | 30,018 | | | | 24,339 | |
| Total shareholders’ equity | | | 211,592 | | | | 214,778 | |
| | | | | | | |
| | | | | | | | | |
| Total Liabilities and Shareholders’ Equity | | $ | 1,628,223 | | | $ | 1,529,760 | |
| | | | | | | |
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VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
Condensed Consolidated Statements of Income (unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Interest and dividend income | | | 21,792 | | | | 18,954 | | | | 62,474 | | | | 53,142 | |
| Interest expense | | | 10,678 | | | | 8,328 | | | | 30,158 | | | | 22,727 | |
| | | | | | | | | | | | | |
| Net interest income | | | 11,114 | | | | 10,626 | | | | 32,316 | | | | 30,415 | |
| Provision for loan losses | | | 601 | | | | 671 | | | | 2,183 | | | | 1,479 | |
| | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 10,513 | | | | 9,955 | | | | 30,133 | | | | 28,936 | |
| | | | | | | | | | | | | | | | | |
| Noninterest income | | | 6,236 | | | | 5,952 | | | | 18,453 | | | | 17,160 | |
| Noninterest expense | | | 14,157 | | | | 13,338 | | | | 42,193 | | | | 42,638 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Income before income tax expense (benefit) | | | 2,592 | | | | 2,569 | | | | 6,393 | | | | 3,458 | |
| Income tax expense (benefit) | | | 991 | | | | 1,043 | | | | 2,378 | | | | (4,281 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 1,601 | | | $ | 1,526 | | | $ | 4,015 | | | $ | 7,739 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Financial Summary (unaudited)
(Dollar amounts in thousands)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | | | | | |
| Basic EPS | | $ | 0.07 | | | $ | n/a | 1 | | $ | 0.16 | | | $ | n/a | 1 |
| Diluted EPS | | $ | 0.07 | | | $ | n/a | | | $ | 0.16 | | | $ | n/a | |
| Weighted average common shares outstanding | | | 25,855,920 | | | | n/a | | | | 25,851,852 | | | | n/a | |
| Less: average unallocated ESOP shares | | | (850,861 | ) | | | n/a | | | | (873,842 | ) | | | n/a | |
| Less: average unallocated restricted shares | | | (420,208 | ) | | | n/a | | | | (203,177 | ) | | | n/a | |
| | | | | | | | | | | | | |
| Average shares | | | 24,584,851 | | | | n/a | | | | 24,774,833 | | | | n/a | |
| Diluted average shares | | | 24,584,851 | | | | n/a | | | | 24,774,833 | | | | n/a | |
| 1 | | The Company completed its minority stock offering on September 29, 2006; therefore, earnings per share data are not available for the three and nine months ended September 30, 2006. |
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