OmniAmerican Bancorp (OABC) 10-Q 2011 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number001-34605

OMNIAMERICAN BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland	27-0983595
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

1320 S. University Drive, Fort Worth, Texas	76107
(Address of Principal Executive Offices)	(Zip Code)

(817) 367-4640

(Telephone Number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero	Accelerated filerþ	Non-accelerated filero	Smaller reporting companyo
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

There were 11,839,475 shares of Common Stock, par value $0.01 per share, issued and outstanding as of May 10, 2011.

	Page
	Number
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets at March 31, 2011 and December 31, 2010		1
Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 2011 and 2010		2
Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2011 and 2010		3
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010		4
Condensed Notes to Unaudited Consolidated Interim Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures about Market Risk		34
Item 4. Controls and Procedures		38
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		39
Item 1A. Risk Factors		39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 3. Defaults Upon Senior Securities		39
Item 4. Removed and Reserved		39
Item 5. Other Information		40
Item 6. Exhibits		40
SIGNATURE PAGE		41
EXHIBIT INDEX		42
Exhibit 31.1
Exhibit 31.2
Exhibit 32

i

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OmniAmerican Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share data)

	March 31,			December 31,
	2011			2010
ASSETS
Cash and due from financial institutions	$	13,946		$	12,842
Short-term interest-earning deposits in other financial institutions		7,384			11,755
Total cash and cash equivalents		21,330			24,597
Investments:
Securities available for sale (Amortized cost of $540,776 at March 31, 2011 and $316,056 at December 31, 2010)		542,717			317,806
Other		13,322			3,060
Loans held for sale		730			861
Loans, net of deferred fees and discounts		666,047			669,357
Less allowance for loan losses		(8,830	)		(8,932	)
Loans, net		657,217			660,425
Premises and equipment, net		46,797			47,665
Bank-owned life insurance		20,314			20,078
Other real estate owned		13,664			14,793
Mortgage servicing rights		1,241			1,242
Deferred tax asset, net		6,711			6,935
Accrued interest receivable		4,046			3,469
Other assets		6,935			7,488
Total assets	$	1,335,024		$	1,108,419
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	77,577		$	74,583
Interest-bearing		729,566			726,575
Total deposits		807,143			801,158
Federal Home Loan Bank advances		262,000			41,000
Other secured borrowings		58,000			58,000
Accrued expenses and other liabilities		9,453			9,634
Total liabilities		1,136,596			909,792
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01 per share; 100,000,000 shares authorized; 11,839,475 shares issued and outstanding at March 31, 2011 and 11,902,500 shares issued and outstanding at December 31, 2010		118			119
Additional paid-in capital		114,532			115,470
Unallocated Employee Stock Ownership Plan (“ESOP”) shares; 904,590 shares at March 31, 2011 and 914,112 shares at December 31, 2010		(9,046	)		(9,141	)
Retained earnings		92,731			92,212
Accumulated other comprehensive income (loss):
Unrealized gain on securities available for sale, net of income taxes		1,281			1,155
Unrealized loss on pension plan, net of income taxes		(1,188	)		(1,188	)
Total accumulated other comprehensive income (loss)		93			(33	)
Total stockholders’ equity		198,428			198,627
Total liabilities and stockholders’ equity	$	1,335,024		$	1,108,419

See Condensed Notes to Unaudited Consolidated Interim Financial Statements.

1

OmniAmerican Bancorp, Inc. and Subsidiary

Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)

	Three Months Ended
	March 31,
	2011		2010
Interest income:
Loans, including fees	$	10,105	$	10,642
Securities — taxable		2,686		2,505
Securities — nontaxable		—		13
Total interest income		12,791		13,160
Interest expense:
Deposits		1,986		2,413
Borrowed funds		1,195		1,056
Total interest expense		3,181		3,469
Net interest income		9,610		9,691
Provision for loan losses		400		800
Net interest income after provision for loan losses		9,210		8,891
Noninterest income:
Service charges and other fees		2,282		2,502
Net gains on sales of loans		173		297
Net gains on sales of securities available for sale		11		91
Net gains on sales of repossessed assets		22		17
Commissions		179		135
Increase in cash surrender value of bank-owned life insurance		236		—
Other income		246		182
Total noninterest income		3,149		3,224
Noninterest expense:
Salaries and benefits		5,979		5,673
Software and equipment maintenance		686		787
Depreciation of furniture, software and equipment		761		798
FDIC insurance		275		506
Real estate owned expense		511		165
Service fees		123		216
Communications costs		214		272
Other operations expense		890		810
Occupancy		902		960
Professional and outside services		981		842
Loan servicing		135		60
Marketing		205		254
Total noninterest expense		11,662		11,343
Income before income tax expense		697		772
Income tax expense		178		239
Net income	$	519	$	533
Earnings per share:
Basic	$	0.05	$	0.05	(1)
Diluted	$	0.05	$	0.05	(1)

(1) The Company completed its mutual to stock conversion on January 20, 2010. The earnings per share for the quarter ended March 31, 2010 is calculated as if the conversion had been completed prior to January 1, 2010.

See Condensed Notes to Unaudited Consolidated Interim Financial Statements.

2

OmniAmerican Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(Dollars in thousands, except share data)

												Accumulated
				Additional			Unallocated					Other			Total
	Common			Paid-in			ESOP			Retained		Comprehensive			Stockholders’
	Stock			Capital			Shares			Earnings		Income (Loss)			Equity
Balances at January 1, 2010	$	—		$	—		$	—		$	90,555	$	601		$	91,156
Issuance of 11,902,500 shares of common stock, net of offering costs		119			115,407			(9,522	)							106,004
Comprehensive income:
Net income											533		—			533
Change in fair value of securities available for sale, net of reclassification to earnings of $(91) and income tax effect of $(34)											—		(65	)		(65	)
Total comprehensive income																468
Balances at March 31, 2010	$	119		$	115,407		$	(9,522	)	$	91,088	$	536		$	197,628
Balances at January 1, 2011	$	119		$	115,470		$	(9,141	)	$	92,212	$	(33	)	$	198,627
ESOP shares allocated, 9,522 shares					52			95								147
Stock purchased at cost, 63,025 shares		(1	)		(990	)										(991	)
Comprehensive income:
Net income											519		—			519
Change in fair value of securities available for sale, net of reclassification to earnings of $(11) and income tax effect of $65											—		126			126
Total comprehensive income																645
Balances at March 31, 2011	$	118		$	114,532		$	(9,046	)	$	92,731	$	93		$	198,428

See Condensed Notes to Unaudited Consolidated Interim Financial Statements.

3

OmniAmerican Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flow (Unaudited)
(In thousands)

	Three Months Ended
	March 31,
	2011			2010
Cash flows from operating activities:
Net income	$	519		$	533
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,161			1,215
Provision for loan losses		400			800
Amortization of net premium on investments		866			370
Amortization of mortgage servicing rights		82			62
Net gain on sale of securities available for sale		(11	)		(91	)
Net gain on sales of loans		(173	)		(297	)
Proceeds from sales of loans held for sale		2,646			3,902
Loans originated for sale		(2,515	)		(4,748	)
Net loss on write-down of other real estate owned		403			—
Net gain on sale of repossessed assets		(22	)		(17	)
Increase in cash surrender value of bank-owned life insurance		(236	)		—
Federal Home Loan Bank stock dividends		(3	)		(5	)
ESOP compensation expense		147			—
Changes in operating assets and liabilities:
Accrued interest receivable		(577	)		(206	)
Other assets		642			3,157
Accrued interest payable and other liabilities		(181	)		220
Net cash provided by operating activities		3,148			4,895
Cash flows from investing activities:
Securities available for sale:
Purchases		(322,941	)		(113,376	)
Proceeds from sales		71,782			1,734
Proceeds from maturities, calls and principal repayments		25,584			17,398
Purchases of other investments		(10,865	)		—
Redemptions of other investments		606			—
Purchases of loans held for investment		—			(130	)
Net (increase) decrease in loans held for investment		(6,146	)		2,846
Proceeds from sales of loans held for investment		8,557			10,931
Purchases of premises and equipment		(299	)		(420	)
Proceeds from sales of premises and equipment		6			—
Proceeds from sales of other real estate owned		1,307			524
Net cash used in investing activities		(232,409	)		(80,493	)
Cash flows from financing activities:
Net increase (decrease) in deposits		5,985			(134,744	)
Net increase (decrease) in Federal Home Loan Bank advances		221,000			(10,400	)
Proceeds from issuance of common stock		—			106,004
Purchase of stock		(991	)		—
Net cash provided by (used in) financing activities		225,994			(39,140	)
Net decrease in cash and cash equivalents		(3,267	)		(114,738	)
Cash and cash equivalents, beginning of period		24,597			140,144
Cash and cash equivalents, end of period	$	21,330		$	25,406
Supplemental cash flow information:
Interest paid	$	3,085		$	3,445
Non-cash transactions:
Loans transferred to other real estate owned	$	571		$	478
Loans transferred to foreclosed assets	$	811		$	760

See Condensed Notes to Unaudited Consolidated Interim Financial Statements.

4

OmniAmerican Bancorp, Inc. and Subsidiary

Condensed Notes to Unaudited Consolidated Interim Financial Statements

NOTE 1 — Basis of Financial Statement Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of OmniAmerican Bancorp, Inc. (referred to herein as “the Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. These interim consolidated financial statements and notes should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, for the year ended December 31, 2010, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2011. In management’s opinion, the interim data as of March 31, 2011 and for the three months ended March 31, 2011 and 2010 includes all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results of the interim periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. References to the Company include, where appropriate, OmniAmerican Bank.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses and the fair values of financial instruments are particularly subject to change.

NOTE 2 — Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, which was codified as ASC Topic 820, “Fair Value Measurements and Disclosures.” The guidance requires companies to disclose transfers in and out of levels 1 and 2, and to expand the reconciliation of level 3 fair value measurements by presenting separately information about purchases, sales, issuances and settlements. The updated guidance also clarifies existing disclosure requirements on the level of disaggregation (provide fair value measurement disclosures for each class of assets and liabilities) and inputs and valuation techniques (disclose for fair value measurements that fall in either level 2 or level 3). This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances and settlements in the reconciliation of level 3 fair value measurements. Those disclosures are effective for periods beginning after December 15, 2010. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-18, “Effect of a Loan Modification When the Loan is Part of a Pool That is Accounted for as a Single Asset.” As a result of the amendments in this update, modifications of loans that are accounted for within a pool under Subtopic 310-30 do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered to be a troubled debt restructuring. An entity will continue to be required to consider whether the pool of assets in which the loan is included is impaired if expected cash flows for the pool change. The guidance in this ASU is effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

5

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

In July 2010, the FASB issued ASU No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” ASU No. 2010-20 requires that additional information be disclosed about the credit quality of a company’s loans and the allowance for loan losses held against those loans. A company will need to disaggregate new and existing disclosure based on how it develops its allowance for loan losses and how it manages credit exposures. Existing disclosures to be presented on a disaggregated basis include a rollforward of the allowance for loan losses, the related recorded investment in such loans, the non-accrual status of loans, and impaired loans. Additional disclosure is also required about the credit quality indicators of loans by class at the end of the reporting period, the aging of past due loans, information about troubled debt restructurings, and significant purchases and sales of loans during the reporting period by class. For public companies, ASU No. 2010-20 requires certain disclosures as of the end of a reporting period effective for periods ending on or after December 15, 2010. Other required disclosures about activity that occurs during a reporting period are effective for periods beginning on or after December 15, 2010. The additional disclosures required under this ASU have been included in Note 4 — Loans and Allowance for Loan Losses.

In January 2011, the FASB issued ASU No. 2011-01, “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20,” which became effective upon issuance. This guidance delays the effective date of the disclosures about troubled debt restructurings required in ASU No. 2010-20 for public entities. The adoption of this guidance did not have a material impact on the Company’s financial statements.

In April 2011, the FASB issued ASU No. 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” ASU 2011-02 clarifies when a loan modification or restructuring is considered a troubled debt restructuring. In determining whether a loan modification represents a troubled debt restructuring, an entity should consider whether the debtor is experiencing financial difficulty and the lender has granted a concession to the borrower. ASU 2011-02 is effective for periods ending on or after December 15, 2011, for loan modifications that occur on or after September 1, 2011. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 3 — Investment Securities

The amortized cost and estimated fair values of investment securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) as of March 31, 2011 and December 31, 2010 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
March 31, 2011
U. S. government sponsored mortgage-backed securities	$	277,977	$	1,996	$	(1,291	)	$	278,682
U. S. government sponsored collateralized mortgage obligations		257,799		1,782		(611	)		258,970
Other equity securities		5,000		65		—			5,065
Total investment securities available for sale	$	540,776	$	3,843	$	(1,902	)	$	542,717

6

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
December 31, 2010
U. S. government sponsored mortgage-backed securities	$	150,678	$	4,614	$	(678	)	$	154,614
U. S. government sponsored collateralized mortgage obligations		149,336		1,914		(458	)		150,792
Private-label collateralized mortgage obligations (residential)		3,349		47		—			3,396
Trust preferred securities		7,693		—		(3,773	)		3,920
Other equity securities		5,000		84		—			5,084
Total investment securities available for sale	$	316,056	$	6,659	$	(4,909	)	$	317,806

Investment securities available for sale with gross unrealized losses at March 31, 2011 and December 31, 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position, were as follows:

	Continuous Unrealized Losses Existing for
	Less Than 12 Months					Greater Than 12 Months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(In thousands)
March 31, 2011
U. S. government sponsored mortgage-backed securities	$	167,268	$	(1,291	)	$	—	$	—		$	167,268	$	(1,291	)
U. S. government sponsored collateralized mortgage obligations		63,345		(611	)		—		—			63,345		(611	)
	$	230,613	$	(1,902	)	$	—	$	—		$	230,613	$	(1,902	)
December 31, 2010
U. S. government sponsored mortgage-backed securities	$	40,582	$	(678	)	$	—	$	—		$	40,582	$	(678	)
U. S. government sponsored collateralized mortgage obligations		36,704		(458	)		—		—			36,704		(458	)
Trust preferred securities		—		—			3,920		(3,773	)		3,920		(3,773	)
	$	77,286	$	(1,136	)	$	3,920	$	(3,773	)	$	81,206	$	(4,909	)

At March 31, 2011, the Company owned 202 investments of which 72 had unrealized losses. At December 31, 2010, the Company owned 238 investments of which 39 had unrealized losses. Unrealized losses generally result from interest rate levels differing from those existing at the time of purchase of the securities and, as to mortgage-backed securities, estimated prepayment speeds. These unrealized losses are considered to be temporary as they reflect fair values on March 31, 2011 and December 31, 2010, and are subject to change daily as interest rates fluctuate. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell prior to recovery. Management evaluates investment securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent of the Company to sell or whether it would be more likely than not required to sell its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

7

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

The amortized cost and fair value of securities available for sale by contractual maturity at March 31, 2011 are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or earlier redemptions that may occur.

	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	—	$	—
Due from one to five years		815		840
Due from five to ten years		17,309		18,135
Due after ten years		517,652		518,677
Equity securities		5,000		5,065
Total	$	540,776	$	542,717

Investment securities with an amortized cost of $468.3 million and $242.5 million at March 31, 2011 and December 31, 2010, respectively, were pledged to secure Federal Home Loan Bank advances. In addition, investment securities with a fair value of $66.1 million and $66.2 million at March 31, 2011 and December 31, 2010, respectively, were pledged to secure other borrowings.

Sales activity of securities available for sale for the three months ended March 31, 2011 and 2010 was as follows:

	Three Months Ended
	March 31,
	2011			2010
	(In thousands)
Proceeds from sales of investment securities	$	71,782		$	1,734
Gross gains from sales of investment securities		2,922			91
Gross losses from sales of investment securities		(2,911	)		—

Gains or losses on the sales of securities are recognized at the trade date utilizing the specific identification method.

8

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

NOTE 4 — Loans and Allowance for Loan Losses

The composition of the loan portfolio was as follows at the dates indicated:

	March 31,			December 31,
	2011			2010
	(In thousands)
Residential Real Estate Loans:
One- to four-family	$	264,921		$	271,792
Home equity		25,778			26,670
Total residential real estate loans		290,699			298,462
Commercial Loans
Commercial real estate		85,667			87,887
Real estate construction		39,062			34,502
Commercial business		48,616			48,733
Total commercial loans		173,345			171,122
Consumer Loans:
Automobile, indirect		159,784			156,708
Automobile, direct		23,886			24,523
Unsecured		12,700			13,416
Other		5,253			5,287
Total consumer loans		201,623			199,934
Total loans		665,667			669,518
Plus (less):
Deferred fees and discounts		380			(161	)
Allowance for loan losses		(8,830	)		(8,932	)
Total loans receivable, net	$	657,217		$	660,425

The Company originates real estate mortgage loans which are sold in the secondary market. The Company retains the servicing for residential mortgage loans that are sold to the Federal National Mortgage Association (“FNMA”). Mortgage loans serviced for FNMA are not included as assets on the consolidated balance sheets. The principal balances of the loans sold at March 31, 2011 and December 31, 2010 were $125.2 million and $122.5 million, respectively. Mortgage servicing rights associated with the mortgage loans serviced for FNMA totaled $1.2 million at March 31, 2011 and December 31, 2010.

9

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

The following table presents loans identified as impaired by class of loans as of March 31, 2011 and December 31, 2010:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
	(In thousands)
March 31, 2011
With no related allowance recorded:
One- to four-family	$	5,049	$	5,049	$	—	$	5,057	$	60
Home equity		263		263		—		262		—
Commercial real estate		13,300		13,300		—		11,963		61
Real estate construction		797		797		—		659		4
Commercial business		997		997		—		981		16
Automobile, indirect		541		541		—		450		8
Automobile, direct		109		109		—		113		2
Unsecured		6		6		—		6		—
Other consumer		—		—		—		—		—
Impaired loans with no related allowance recorded		21,062		21,062		—		19,491		151
With an allowance recorded:
One- to four-family	$	3,262	$	3,262	$	131	$	3,267	$	55
Home equity		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Real estate construction		10,062		10,062		701		10,670		87
Commercial business		2,126		2,126		1,500		2,249		29
Automobile, indirect		—		—		—		—		—
Automobile, direct		—		—		—		—		—
Unsecured		—		—		—		—		—
Other consumer		—		—		—		—		—
Impaired loans with an allowance recorded		15,450		15,450		2,332		16,186		171
Total	$	36,512	$	36,512	$	2,332	$	35,677	$	322
December 31, 2010
With no related allowance recorded:
One- to four-family	$	5,045	$	5,045	$	—	$	4,732	$	276
Home equity		210		210		—		222		13
Commercial real estate		9,241		9,241		—		10,441		141
Real estate construction		1,126		1,126		—		590		36
Commercial business		1,296		1,296		—		1,372		77
Automobile, indirect		628		628		—		748		46
Automobile, direct		123		123		—		180		18
Unsecured		6		6		—		6		1
Other consumer		1		1		—		1		—
Impaired loans with no related allowance recorded		17,676		17,676		—		18,292		608
With an allowance recorded:
One- to four-family	$	3,272	$	3,272	$	131	$	3,306	$	85
Home equity		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Real estate construction		10,352		10,352		701		1,546		24
Commercial business		2,025		2,025		1,477		978		46
Automobile, indirect		—		—		—		—		—
Automobile, direct		—		—		—		—		—
Unsecured		—		—		—		—		—
Other consumer		—		—		—		—		—
Impaired loans with an allowance recorded		15,649		15,649		2,309		5,830		155
Total	$	33,325	$	33,325	$	2,309	$	24,122	$	763

As of March 31, 2011 and December 31, 2010, no additional funds were committed to be advanced in connection with impaired loans.

10

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

Included in impaired loans as of March 31, 2011 and December 31, 2010 were troubled debt restructured loans of $32.5 million and $19.5 million, respectively.

The following table presents the recorded investment in non-accrual loans by class of loans as of March 31, 2011 and December 31, 2010:

	March 31,		December 31,
	2011		2010
	(In thousands)
Residential Real Estate Loans:
One- to four-family	$	546	$	2,294
Home equity		230		230
Commercial Loans
Commercial real estate		6,018		5,587
Real estate construction		498		—
Commercial business		1,869		1,051
Consumer Loans:
Automobile, indirect		204		78
Automobile, direct		—		11
Unsecured		—		—
Other		—		—
Total	$	9,365	$	9,251

There were no loans greater than 90 days past due that continued to accrue interest at March 31, 2011 or December 31, 2010.

The following table presents the aging of the recorded investment in past due loans as of March 31, 2011 and December 31, 2010 by class of loans:

					Greater
	30-59		60-89		than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
	(In thousands)
At March 31, 2011
Residential real estate loans:
One- to four-family	$	2,766	$	623	$	545	$	3,934	$	260,987	$	264,921
Home equity		352		—		230		582		25,196		25,778
Commercial loans:
Commercial real estate		114		259		1,894		2,267		83,400		85,667
Real estate construction		102		1,059		241		1,402		37,660		39,062
Commercial business		—		—		—		—		48,616		48,616
Consumer loans:
Automobile, indirect		1,143		174		204		1,521		158,263		159,784
Automobile, direct		70		8		—		78		23,808		23,886
Unsecured		46		24		—		70		12,630		12,700
Other		—		—		—		—		5,253		5,253
Total loans	$	4,593	$	2,147	$	3,114	$	9,854	$	655,813	$	665,667

11

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

					Greater
	30-59		60-89		than
	Days		Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
	(In thousands)
At December 31, 2010
Residential real estate loans:
One- to four-family	$	2,499	$	—	$	2,294	$	4,793	$	266,999	$	271,792
Home equity		46		—		230		276		26,394		26,670
Commercial loans:
Commercial real estate		4,105		149		1,568		5,822		82,065		87,887
Real estate construction		—		—		—		—		34,502		34,502
Commercial business		—		359		—		359		48,374		48,733
Consumer loans:
Automobile, indirect		1,434		204		78		1,716		154,992		156,708
Automobile, direct		45		9		11		65		24,458		24,523
Unsecured		96		40		—		136		13,280		13,416
Other		78		—		—		78		5,209		5,287
Total loans	$	8,303	$	761	$	4,181	$	13,245	$	656,273	$	669,518

Our methodology for evaluating the adequacy of the allowance for loan losses consists of:

• a specific loss component which is the allowance for impaired loans as required by ASC 310-10, “Receivables,” and

• a general loss component for all other loans not individually evaluated for impairment but that, on a portfolio basis, are believed to have some inherent but unidentified loss in accordance with ASC 450-10, “Contingencies.”

The specific component of the allowance for loan losses relates to loans that are considered impaired, which are generally classified as doubtful or substandard. For such loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for non-homogenous loans, including one- to four-family residential real estate loans with balances in excess of $1 million, commercial real estate, real estate construction, and commercial business loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, consumer and one- to four-family residential real estate loans with balances less than $1 million are not separately identified for impairment disclosures, unless such loans are the subject of a restructuring agreement.

12

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

The general component of the allowance for loan losses covers unimpaired loans and is based on the historical loss experience adjusted for other qualitative factors. The loan portfolio is stratified into homogeneous groups of loans that possess similar loss potential characteristics and an appropriate loss ratio adjusted for other qualitative factors is applied to the homogeneous pools of loans to estimate the incurred losses in the loan portfolio. The other qualitative factors considered by management include, but are not limited to, the following:

• changes in lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices;

• changes in national and local economic and business conditions and developments, including the condition of various market segments;

• changes in the nature and volume of the loan portfolio;

• changes in the experience, ability, and depth of knowledge of the management of the lending staff;

• changes in the trend of the volume and severity of past due and classified loans; and trends in the volume of non-accrual loans, troubled debt restructurings, and other loan modifications;

• changes in the quality of our loan review system and the degree of oversight by the board of directors;

• the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

• the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our current portfolio.

Consumer loans generally have greater risk of loss or default than one- to four-family residential real estate loans, particularly in the case of loans that are secured by rapidly depreciable assets, such as automobiles, or loans that are unsecured. In these cases, a risk exists that the collateral, if any, for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the ability to recover on consumer loans.

Commercial real estate loans generally have greater credit risks compared to one- to four-family residential real estate loans, as they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by income-producing properties typically depends on the successful operation of the related real estate project and thus may be subject to a greater extent to adverse conditions in the real estate market and in the general economy.

Commercial business loans involve a greater risk of default than residential real estate loans of like duration since their repayment generally depends on the successful operation of the borrower’s business and the sufficiency of collateral, if any. Loans secured by multi-family residential real estate generally involve a greater degree of credit risk than one- to four-family residential real estate loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family mortgages typically depends upon the successful operation of the related real estate property. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

Real estate construction loans generally have greater credit risk than traditional one- to four-family residential real estate loans. The repayment of these loans depends upon the sale of the property to third parties or the availability of permanent financing upon completion of all improvements. In the event a loan is made on property that is not yet approved for the planned development, there is the risk that approvals will not be granted or will be delayed. These events may adversely affect the borrower and the collateral value of the property. Real estate construction loans also expose us to the risk that improvements will not be completed on time in accordance with specifications and projected costs. In addition, the ultimate sale or rental of the property may not occur as anticipated.

13

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

When establishing the allowance for loan losses, management categorizes loans into risk categories based on the class of loans: residential real estate, commercial, or consumer, and relevant information about the ability of the borrowers to repay the loans such as: the current economic conditions, historical payment experience, the nature and volume of the loan portfolio, the financial strength of the borrower and the estimated value of any underlying collateral, among other factors. Management classifies the loans individually analyzed for impairment as to credit risk. This analysis includes residential real estate loans with an outstanding balance in excess of $1 million and non-homogeneous loans, such as commercial real estate, real estate construction, and commercial business loans. The following definitions for the credit risk ratings are used for such loans:

Special mention.Special mention loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification.

Substandard.Substandard loans have well defined weaknesses where a payment default and/or a loss is possible, but not yet probable. Loans so classified are inadequately protected by the current net worth and repayment capacity of the obligor or of the collateral pledged, if any. If deficiencies are not corrected quickly, there is a possibility of loss.

Doubtful.Doubtful loans have the weaknesses and characteristics of Substandard loans, but the available information suggests that collection or liquidation in its entirety, on the basis of currently existing facts, conditions and values, is highly improbable. The possibility of a loss is exceptionally high, but certain identifiable contingencies could possibly arise (proposed merger, acquisition, capital injection, refinancing plans, and pledging of additional collateral) that may strengthen the loan, such that it is reasonable to defer its classification as a loss until a more exact status is determined.

Loans not meeting the criteria described above are considered to be pass-rated loans. The following table presents the risk category of loans by class for loans individually analyzed for impairment as of March 31, 2011 and December 31, 2010:

	Commercial		Real Estate		Commercial		One-to
	Real Estate		Construction		Business		Four-Family		Total
	(In thousands)
March 31, 2011:
Pass	$	64,998	$	27,855	$	36,106	$	23,170	$	152,129
Special Mention		3,855		—		3,431		—		7,286
Substandard		16,814		11,207		9,079		3,262		40,362
Doubtful		—		—		—		—		—
	$	85,667	$	39,062	$	48,616	$	26,432	$	199,777
December 31, 2010:
Pass	$	67,237	$	23,024	$	35,848	$	24,282	$	150,391
Special Mention		4,940		—		4,377		—		9,317
Substandard		15,710		11,478		8,508		3,272		38,968
Doubtful		—		—		—		—		—
	$	87,887	$	34,502	$	48,733	$	27,554	$	198,676

14

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

The Company classifies residential real estate loans that are not analyzed individually for impairment (less than $1 million) as prime or subprime. The Company defines a subprime residential real estate loan as any loan to a borrower who has no credit score or a credit score of less than 661 along with at least one of the following at the time of funding:

• Two or more 30 day delinquencies in the past 12 months;

• 1 or more 60 day delinquencies in the past 24 months;

• Bankruptcy filing within the past 60 months;

• Judgment or unpaid charge-off of $500,000 or more in the last 24 months; and

• Foreclosure or repossession in the past 24 months.

All other residential real estate loans not individually analyzed for impairment are classified as prime.

The following table presents the prime and subprime residential real estate loans collectively evaluated for impairment as of March 31, 2011 and December 31, 2010:

	One-to
	Four-		Home
	Family		Equity		Total
	(In thousands)
March 31, 2011:
Prime	$	199,081	$	25,022	$	224,103
Subprime		39,408		756		40,164
	$	238,489	$	25,778	$	264,267
December 31, 2010:
Prime	$	206,277	$	25,879	$	232,156
Subprime		37,961		791		38,752
	$	244,238	$	26,670	$	270,908

The Company evaluates consumer loans based on the credit score for each borrower when the loan is originated. The Company defines a sub-prime consumer loan as any loan to a borrower who has a credit score of less than 660 at the time of funding. The following table presents the credit score for each of the classes of consumer loans as of March 31, 2011 and December 31, 2010:

		Automobile,		Automobile,
Risk Tier	Credit Score	indirect		direct		Unsecured		Other		Total
		(In thousands)
At March 31, 2011:
A	720+	$	77,125	$	18,225	$	9,784	$	4,446	$	109,580
B	690-719		41,325		2,627		1,567		360		45,879
C	660-689		27,644		1,646		1,013		283		30,586
D	659 and under		13,690		1,388		336		164		15,578
		$	159,784	$	23,886	$	12,700	$	5,253	$	201,623
At December 31, 2010:
A	720+	$	81,868	$	18,853	$	10,233	$	4,510	$	115,464
B	690-719		39,006		2,557		1,638		363		43,564
C	660-689		23,762		1,646		1,103		272		26,783
D	659 and under		12,072		1,467		442		142		14,123
		$	156,708	$	24,523	$	13,416	$	5,287	$	199,934

15

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

The following table presents the activity in the allowance for loan losses by portfolio segment based on impairment method for the quarters ended March 31, 2011 and 2010:

	Residential
	Real Estate			Commercial			Consumer			Total
	(In thousands)
March 31, 2011:
Allowance for loan losses:
Beginning balance	$	1,365		$	4,901		$	2,666		$	8,932
Charge-offs		(22	)		—			(624	)		(646	)
Recoveries of loans previously charged -off		—			39			105			144
Provision for loan losses		(38	)		(127	)		565			400
Ending balance	$	1,305		$	4,813		$	2,712		$	8,830
Ending balance attributable to loans:
Individually evaluated for impairment	$	131		$	2,201		$	—		$	2,332
Collectively evaluated for impairment		1,174			2,612			2,712			6,498
Total ending balance	$	1,305		$	4,813		$	2,712		$	8,830
March 31, 2010:
Allowance for loan losses:
Beginning balance	$	1,477		$	4,000		$	2,851		$	8,328
Charge-offs		(19	)		—			(512	)		(531	)
Recoveries of loans previously charged -off		—			4			94			98
Provision for loan losses		141			559			100			800
Ending balance	$	1,599		$	4,563		$	2,533		$	8,695
Ending balance attributable to loans:
Individually evaluated for impairment	$	131		$	1,379		$	—		$	1,510
Collectively evaluated for impairment		1,468			3,184			2,533			7,185
Total ending balance	$	1,599		$	4,563		$	2,533		$	8,695

The Company’s recorded investment in loans as of March 31, 2011, December 31, 2010 and March 31, 2010 related to each balance in the allowance for possible loan losses by portfolio segment and disaggregated on the basis of the Company’s impairment methodology was as follows:

	Residential
	Real Estate		Commercial		Consumer		Total
	(In thousands)
March 31, 2011:
Loans individually evaluated for impairment	$	8,574	$	27,282	$	656	$	36,512
Loans collectively evaluated for impairment		282,125		146,063		200,967		629,155
Total ending balance	$	290,699	$	173,345	$	201,623	$	665,667
December 31, 2010:
Loans individually evaluated for impairment	$	8,527	$	24,040	$	758	$	33,325
Loans collectively evaluated for impairment		289,935		147,082		199,176		636,193
Total ending balance	$	298,462	$	171,122	$	199,934	$	669,518
March 31, 2010:
Individually evaluated for impairment	$	9,170	$	11,954	$	321	$	21,445
Collectively evaluated for impairment		277,812		182,061		212,054		671,927
Total ending balance	$	286,982	$	194,015	$	212,375	$	693,372

NOTE 5 — Repurchase Agreements

On July 24, 2007, the Company entered into a sale of securities under agreement to repurchase (“Repurchase Agreement”) with PNC Bank, N.A. (“PNC”). The Repurchase Agreement is structured as the sale of a specified amount of identified securities to PNC which the Company has agreed to repurchase five years after the initial sale. The Repurchase Agreement is treated as financing and the obligation to repurchase securities sold is included in other secured borrowings in the consolidated balance sheets. The underlying securities continue to be carried as assets of the Company and the Company is entitled to receive interest and principal payments on the underlying securities. The Company had $58.0 million in repurchase agreements outstanding at March 31, 2011 and December 31, 2010. These repurchase agreements were secured by investment securities with a fair value of $66.1 million and $66.2 million at March 31, 2011 and December 31, 2010, respectively.

16

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

NOTE 6 — Employee Benefit Plans

Employee Stock Ownership Plan

OmniAmerican Bank adopted an Employee Stock Ownership Plan (“ESOP”) effective January 1, 2010. The ESOP enables all eligible employees of the Bank to share in the growth of the Company through the acquisition of Company common stock. Employees are generally eligible to participate in the ESOP after completion of one year of service and attaining age 21.

The ESOP purchased eight percent of the shares sold in the initial public offering of the Company (952,200 shares). This purchase was facilitated by a note payable to the Company from the ESOP in the amount of $9,522,000. The note is secured by a pledge of the ESOP shares. The shares pledged as collateral are reported as unallocated ESOP shares in the accompanying consolidated balance sheets. The corresponding note is to be paid back in 25 approximately equal annual payments of $561,000 on the last day of each fiscal year, beginning December 31, 2010, including interest at an adjustable rate equal to the Wall Street Journal prime rate (3.25% as of March 31, 2011 and December 31, 2010). The note payable and the corresponding note receivable have been eliminated for consolidation purposes.

The Company may make discretionary contributions to the ESOP in the form of debt service. If dividends are received on the unallocated ESOP shares they would be utilized to service the debt. Shares are released for allocation to plan participants based on principal and interest payments of the note. Compensation expense is recognized based on the number of shares allocated to plan participants each year and the average market price of the stock for the current year. Released ESOP shares become outstanding for earnings per share computations.

As compensation expense is incurred, the unallocated ESOP shares account is reduced based on the original cost of the stock. The difference between the cost and average market price of shares released for allocation is applied to additional paid-in capital. Compensation expense recognized from the release of shares from the ESOP was $147,000 and $0 for the three months ended March 31, 2011 and 2010, respectively.

The ESOP shares as of March 31, 2011 were as follows:

Allocated shares		47,610
Unearned shares		904,590
Total ESOP shares		952,200
Fair value of unearned shares	$	14,329

Pension Plan

The Company has a noncontributory defined benefit pension plan (the “Pension Plan”) that provides for benefits to be paid to eligible employees at retirement based primarily upon years of service with the Company and compensation levels at retirement. Effective December 31, 2006, the Company froze benefits under the Pension Plan, so that no further benefits would be earned by employees after that date. In addition, no new participants may be added to the Pension Plan after December 31, 2006.

17

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

The net periodic pension cost for the three months ended March 31, 2011 and 2010 includes the following components:

	2011			2010
	(In thousands)
Interest cost on projected benefit obligation	$	62		$	60
Expected return on assets		(62	)		(48	)
Amortization of net loss		16			19
Net periodic pension cost	$	16		$	31

NOTE 7 — Earnings Per Share

Basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. The Company had no dilutive potential common shares for the three-month periods ended March 31, 2011 and 2010.

	Three Months Ended March 31,
	2011			2010(1)
	(Dollars in thousands, except per share data)
Basic and diluted
Earnings:
Net income	$	519		$	533
Shares
Weighted average common shares outstanding		11,884,456			11,902,500
Less: Average unallocated ESOP shares		(907,764	)		(952,200	)
Average shares		10,976,692			10,950,300
Net income per common share, basic and diluted	$	0.05		$	0.05

(1) The Company completed its mutual to stock conversion on January 20, 2010. The earnings per share for the quarter ended March 31, 2010 is calculated as if the conversion had been completed prior to January 1, 2010.

NOTE 8 — Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures,” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

• Level 1 Inputs- Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

• Level 2 Inputs- Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

18

OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

• Level 3 Inputs— Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the fair value hierarchy, is set forth below.

Securities available for sale are valued at fair value on a recurring basis. The fair values of securities available for sale is determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Level 3 investments consisted of trust preferred securities which are issued by financial institutions and insurance companies. The decline in the level of observable inputs and market activity in this class of investments by the measurement date has been significant and resulted in unreliable external pricing. Broker pricing and bid/ask spreads, when available, vary widely. There are currently very few market participants who are willing and/or able to transact for these securities.

In accordance with ASC Topic 820, certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets or liabilities required to be measured at fair value on a nonrecurring basis include impaired loans and mortgage servicing rights. Nonfinancial assets or liabilities required to be measured at fair value on a nonrecurring basis include other real estate owned.

Impaired loans (loans which are not expected to repay all principal and interest amounts due in accordance with the original contractual terms) are measured at an observable market price (if available) or at the fair value of the loan’s collateral (if collateral dependent). Fair value of the loan’s collateral is determined by appraisals or independent valuation which is then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. A significant portion of the Company’s impaired loans are measured using the estimated fair market value of the collateral less the estimated costs to sell. Therefore, the Company has categorized its impaired loans as Level 3.

Mortgage servicing rights are carried at the lower of cost or estimated fair value. The estimated fair values of mortgage servicing rights are obtained through independent third-party valuations through an analysis of cash flows, incorporating estimates of assumptions market participants would use in determining fair value, including market discount rates, prepayment speeds, servicing income, servicing costs, default rates and other market-driven data, including the market’s perception of future interest rate movements and, as such, are classified as Level 3.

Other real estate owned is carried at fair value less estimated selling costs. Fair value is estimated through current appraisals, real estate brokers or listing prices. As these properties are actively marketed, estimated fair values may be adjusted by management to reflect current economic and market conditions and, as such, are classified as Level 3.

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OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

Assets and liabilities measured at fair value on a recurring and nonrecurring basis are summarized below:

	Fair Value Measurements at March 31, 2011, Using						Total Fair Value at
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		March 31, 2011
	(In thousands)
Measured on a recurring basis:
Assets:
U. S. government sponsored mortgage-backed securities	$	—	$	278,682	$	—	$	278,682
U. S. government sponsored collateralized mortgage obligations		—		258,970		—		258,970
Other equity securities		—		5,065		—		5,065
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	—	$	—	$	456	$	456
Mortgage servicing rights		—		—		1,241		1,241
Other real estate owned		—		—		1,207		1,207

	Fair Value Measurements at December 31, 2010, Using						Total Fair Value at
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		December 31, 2010
	(In thousands)
Measured on a recurring basis:
Assets:
U.S. government sponsored mortgage-back securities	$	—	$	154,614	$	—	$	154,614
U.S. government sponsored collateralized mortgage obligations		—		150,792		—		150,792
Private-label collateralized mortgage obligations (residential)		—		3,396		—		3,396
Trust preferred securities		—		—		3,920		3,920
Other equity securities		—		5,084		—		5,084
Measured on a nonrecurring basis:
Assets:
Impaired loans	$	—	$	—	$	13,340	$	13,340
Mortgage servicing rights		—		—		1,242		1,242
Other real estate owned		—		—		14,793		14,793

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OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

The table below presents a reconciliation and income statement classification of gains and losses for trust preferred securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2011:

	Securities
	available for sale
	(In thousands)
Beginning balance, January 1, 2011	$	3,920
Sale of trust preferred securities		(7,673	)
Total gains or losses (realized / unrealized):
Included in earnings:
Loss on sales of securities available for sale		2,911
Included in other comprehensive income
Change in unrealized gain on securities available for sale		862
Interest income on securities		2
Settlements		(22	)
Ending balance, March 31, 2011	$	—

The table below presents a reconciliation and income statement classification of gains and losses for trust preferred securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2010:

	Securities
	available for sale
	(In thousands)
Beginning balance, January 1, 2010	$	5,604
Total gains or losses (realized / unrealized):
Included in other comprehensive income
Change in unrealized gain on securities available for sale		(87	)
Interest income on securities		12
Settlements		(18	)
Ending balance, March 31, 2010	$	5,511

No changes in unrealized gains or losses were recorded through earnings for the three months ended March 31, 2010 for the assets measured using significant unobservable inputs (Level 3 Inputs).

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies for the other financial assets and financial liabilities are discussed below:

Cash and cash equivalents:The carrying amounts for cash and cash equivalents approximate fair values.

Accrued interest receivable and payable:The carrying amounts for accrued interest receivable and payable approximate fair values.

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OmniAmerican Bancorp, Inc. and Subsidiary
Condensed Notes to Unaudited Consolidated Interim Financial Statements — (Continued)

Other investments:The carrying amount for other investments, which consist primarily of Federal Home Loan Bank stock, approximates fair values.

Loans:The estimated fair value for all fixed rate loans is determined by discounting the estimated cash flows using the current rate at which similar loans would be made to borrowers with similar credit ratings and maturities. The estimated fair value for variable rate loans is the carrying amount. The impact of delinquent loans on the estimation of the fair values described above is not considered to have a material effect and, accordingly, delinquent loans have been disregarded in the valuation methodologies employed.

Deposits:The estimated fair value of demand deposit accounts is the carrying amount. The fair value of fixed-maturity certificates is estimated by discounting the estimated cash flows using the current rate at which similar certificates would be issued.

Borrowed Funds:The estimated fair value for borrowed funds is determined by discounting the estimated cash flows using the current rate at which similar borrowings would be made with similar ratings and maturities.

Off-balance sheet financial instruments:The fair values for the Company’s off-balance sheet commitments are estimated based on fees charged to others to enter into similar agreements taking into account the remaining terms of the agreements and credit standing of the members. The estimated fair value of these commitments is not significant.

The carrying amount and estimated fair value of the Company’s financial instruments at March 31, 2011 and December 31, 2010 are summarized as follows:

	March 31, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(In thousands)
Financial assets:
Cash and cash equivalents	$	21,330	$	21,330	$	24,597	$	24,597
Securities available for sale		542,717		542,717		317,806		317,806
Other investments		13,322		13,322		3,060		3,060
Loans held for sale		730		730		861		861
Loans, net		657,217		664,200		660,425		675,641
Mortgage servicing rights		1,241		1,241		1,242		1,242
Accrued interest receivable		4,046		4,046		3,469		3,469
Financial liabilities:
Deposits	$	807,143	$	810,385	$	801,158	$	804,998
Federal Home Loan Bank advances		262,000		263,269		41,000		42,244
Other secured borrowings		58,000		60,651		58,000		61,125
Accrued interest payable		1,026		1,026		930		930
Off-balance sheet financial instruments:
Loan commitments	$	—	$	—	$	—	$	—
Letters of credit		—		—		—		—

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may,” and words of similar meaning. These forward-looking statements include, but are not limited to:

• statements of our goals, intentions, and expectations;

• statements regarding our business plans, prospects, growth, and operating strategies;

• statements regarding the asset quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and, unless required under the federal securities laws, we do not take any obligation to update any forward-looking statements after the date of this Quarterly Report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

• general economic conditions, either nationally or in our market areas, that are worse than expected;

• competition among depository and other financial institutions;

• inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

• adverse changes in the securities markets;

• changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

• our ability to enter new markets successfully and capitalize on growth opportunities;

• our ability to successfully integrate acquired entities, if any;

• changes in consumer spending, borrowing, and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission, and the Public Company Accounting Oversight Board;

• changes in our organization, compensation, and benefit plans;

• changes in our financial condition or results of operations that reduce capital available to pay dividends; and

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• changes in the financial condition or future prospects of issuers of securities that we own; and

• changes resulting from intense compliance and regulatory costs associated with the Dodd-Frank Wall Street Reform and Consumer Protection Act and the pending elimination of the Office of Thrift Supervision as our primary regulator.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

General

OmniAmerican Bancorp, Inc. is the Maryland corporation that owns all of the outstanding shares of common stock of OmniAmerican Bank following the January 20, 2010 completion of the mutual-to-stock conversion of OmniAmerican Bank and initial public stock offering of OmniAmerican Bancorp, Inc. OmniAmerican Bancorp, Inc. has no significant assets other than all of the outstanding shares of common stock of OmniAmerican Bank and the net proceeds that it retained in connection with the offering.

OmniAmerican Bank was originally chartered in 1956 as a federal credit union serving the active and retired military personnel of Carswell Air Force Base. The Bank converted from a Texas credit union charter to a federal mutual savings bank charter on January 1, 2006. The objective of the charter conversion was to convert to a savings bank charter in order to carry out our business strategy of broadening our banking services into residential real estate and commercial lending and selling loans and servicing loans for others. Broadening the services offered has allowed the Bank to better serve the needs of its customers and the local community.

Our principal business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in mortgage loans secured by residential real estate, consumer loans, consisting primarily of indirect automobile loans (automobile loans referred to us by automobile dealerships), and to a lesser extent, commercial real estate, real estate construction, commercial business loans and direct automobile loans. Since we completed our conversion from a credit union to a savings bank, we have increased our residential real estate, real estate construction, commercial real estate and commercial business lending while deemphasizing our consumer lending activities. Loans are originated from our main office in Fort Worth, Texas, and from our branch network in the Dallas-Fort Worth Metroplex and surrounding communities in North Texas. We retain in our portfolio all adjustable-rate loans that we originate, as well as fixed-rate one- to four-family residential mortgage loans with terms of 15 years or less. We generally sell the long-term, fixed-rate one- to four-family residential mortgage loans (terms greater than 15 years) that we originate either to Fannie Mae on a servicing-retained basis or into the secondary mortgage market on a servicing-released basis, in order to generate fee income and for interest rate risk management purposes.

In addition to loans, we invest in a variety of investments, primarily government sponsored mortgage-backed securities and government sponsored collateralized mortgage obligations, and to a lesser extent, municipal obligations, agency bonds and equity securities. We have in the past invested in trust preferred securities issued by third parties and private-label collateralized mortgage obligations. On March 18, 2011, as part of our new investment strategy, we made the decision to sell our trust preferred securities and private-label collateralized mortgage obligations and the securities were sold on March 22, 2011. We do not intend to invest in these types of securities in the future. At March 31, 2011, our investment securities portfolio had an amortized cost of $540.8 million.

We attract retail deposits from the general public in the areas surrounding our main office and our branch offices. We offer a variety of deposit accounts, including noninterest-bearing and interest-bearing demand accounts, savings accounts, money market accounts and certificates of deposit.

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Our revenues are derived primarily from interest on loans, mortgage-backed securities and other investment securities. We also generate revenues from fees and service charges. Our primary sources of funds are deposits, principal and interest payments on securities and loans, and borrowings.

Critical Accounting Policies

There are no material changes to the critical accounting policies disclosed in OmniAmerican Bancorp, Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2011.

Comparison of Financial Condition at March 31, 2011 and December 31, 2010

Assets.Total assets increased $226.6 million, or 20.4%, to $1.34 billion at March 31, 2011 from $1.11 billion at December 31, 2010. The increase was primarily the result of increases in securities classified as available for sale of $224.9 million and other investments of $10.2 million, partially offset by decreases in total cash and cash equivalents of $3.3 million and loans, net of the allowance for loan losses and deferred fees and discounts of $3.2 million.

Cash and Cash Equivalents.Total cash and cash equivalents decreased $3.3 million, or 13.4%, to $21.3 million at March 31, 2011 from $24.6 million at December 31, 2010. The decrease in total cash and cash equivalents was primarily due to $322.9 million in cash used to purchase securities classified as available for sale, $63.5 million in cash used to originate loans, and $10.9 million in cash used to purchase other investments. These decreases were partially offset by increases of $221.0 million in cash received from Federal Home Loan Bank advances, $97.4 million of proceeds from sales, principal repayments, and maturities of securities, $55.8 million in cash received from loan principal repayments, and $11.2 million of proceeds from the sales of loans. The sales of loans consisted of longer term (greater than 15 years) one- to four-family residential real estate loans and a real estate construction loan, during the three months ended March 31, 2011.

Securities.Securities classified as available for sale increased $224.9 million, or 70.8%, to $542.7 million at March 31, 2011 from $317.8 million at December 31, 2010. The increase in securities classified as available for sale reflected purchases of $322.9 million during the three months ended March 31, 2011, of which $205.4 million was related to the implementation of an investment strategy which allowed us to leverage our excess capital. Due to the steepening of the yield curve, we were able to achieve a favorable interest rate margin between mortgage-backed securities investments and laddered maturity advances from the Federal Home Loan Bank, which is intended to provide increased earnings. In addition, $71.8 million in proceeds was generated from sales of securities, including the entire portfolio of trust preferred securities and private-label collateralized mortgage obligations. The proceeds from these sales were utilized to purchase $71.9 million in U. S. government sponsored mortgage-backed securities and collateralized mortgage obligations. Principal repayments and maturities totaled $25.6 million. At March 31, 2011, securities classified as available for sale consisted primarily of government-sponsored mortgage-backed securities, government-sponsored collateralized mortgage obligations, and other equity securities.

Other Investments.Other investments increased $10.2 million, or 329.0%, to $13.3 million at March 31, 2011 from $3.1 million at December 31, 2010. The increase in other investments during the three months ended March 31, 2011 reflected purchases of $9.1 million in Federal Home Loan Bank stock as a required investment associated with the additional $200.0 million in Federal Home Loan Bank advances incurred during the same time period. As part of our Community Reinvestment Act program, we purchased $1.8 million in qualified investments. The increase in other investments due to purchases was partially offset by principal repayments and maturities of $606,000.

Loans.Loans, net of the allowance for loan losses and deferred fees and discounts, decreased $3.2 million, or 0.5%, to $657.2 million at March 31, 2011 from $660.4 million at December 31, 2010. One- to four-family residential real estate loans decreased $6.9 million, or 2.5%, to $264.9 million at March 31, 2011 from $271.8 million at December 31, 2010, as loan repayments of $13.5 million, sales of $8.8 million, and the reclassification of two single-family residential real estate loans with balances totaling $571,000 to other real estate owned were partially offset by $16.0 million in originations of one- to four-family residential real estate loans. The decrease in one- to four-family residential real estate loans was primarily due to continued weakness in the housing market in our market area and mortgage interest rates resulting in a decline in refinancing demand. Real estate construction loans increased $4.6 million, or 13.3%, to $39.1 million at March 31, 2011 from $34.5 million at December 31, 2010, as new construction demonstrated slight signs of recovery in certain segments of the economy. Automobile loans (consisting of direct and indirect loans) increased $2.5 million, or 1.4%, to $183.7 million at March 31, 2011 from $181.2 million at December 31, 2010, related primarily to our refocused sales initiatives and competitive rate structure.

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Allowance for Loan Losses.The allowance for loan losses decreased $100,000, or 1.1%, to $8.8 million at March 31, 2011 from $8.9 million at December 31, 2010, primarily as a result of total loans decreasing $3.8 million, or 0.6%, to $665.7 million at March 31, 2011 from $669.5 million at December 31, 2010. The decrease in the allowance for loan losses attributable to commercial real estate loans was partially offset by an increase in the allowance for loan losses related to indirect automobile loans. The allowance for loan losses represented 1.33% of total loans at March 31, 2011 and at December 31, 2010. Included in the allowance for loan losses at March 31, 2011 were specific allowances for loan losses of $2.3 million related to ten impaired loans with balances totaling $15.5 million. Impaired loans with balances totaling $21.0 million did not require specific allowances for loan losses at March 31, 2011. The allowance for loan losses at December 31, 2010 included specific allowances for loan losses of $2.3 million related to eight impaired loans with balances totaling $15.6 million. Impaired loans with balances totaling $17.7 million did not require specific allowances for loan losses at December 31, 2010. The balance of unimpaired loans decreased $7.0 million, or 1.1%, to $629.2 million at March 31, 2011 from $636.2 million at December 31, 2010. The allowance for loan losses related to unimpaired loans decreased $100,000, or 1.5%, to $6.5 million at March 31, 2011 from $6.6 million at December 31, 2010.

The significant changes in the amount of the allowance for loan losses during the three months ended March 31, 2011 related to: (i) a $106,000 decrease in the general allowance for loan losses on unimpaired commercial real estate loans reflecting a decrease of $6.2 million, or 7.9%, in the total outstanding balance of unimpaired commercial real estate loans to $72.4 million at March 31, 2011 from $78.6 million at December 31, 2010; and (ii) a $57,000 increase in the general allowance for loan losses on unimpaired indirect automobile loans primarily due to an increase of $3.1 million, or 2.0%, in the total outstanding balance of unimpaired indirect automobile loans to $159.2 million at March 31, 2011 from $156.1 million at December 31, 2010. Management also considered local economic factors and unemployment as well as the higher risk profile of commercial real estate loans when evaluating the adequacy of the allowance for loan losses as it pertains to these types of loans.

Bank-Owned Life Insurance.During 2010, we purchased $20.0 million of life insurance policies on certain key employees to help offset costs associated with the Company’s compensation and benefit programs and to generate competitive investment yields. The policy premiums were invested in an insurance carrier which had a rating of A+ by Standard & Poor’s. As of March 31, 2011, the cash surrender value increased to $20.3 million from $20.1 million at December 31, 2010.

Deposits.Deposits increased $5.9 million, or 0.7%, to $807.1 million at March 31, 2011 from $801.2 million at December 31, 2010. Our core deposits (consisting of interest-bearing and non-interest-bearing demand accounts, money market accounts and savings accounts) increased $15.1 million, or 3.3%, to $473.3 million at March 31, 2011 from $458.2 million at December 31, 2010. This increase was partially offset by a decrease in certificates of deposit of $9.2 million, or 2.7%, to $333.8 million at March 31, 2011 from $343.0 million at December 31, 2010. The change in deposit composition reflects consumer tendencies to shift their savings into liquid deposit accounts in anticipation of rising rates.

Borrowings.Federal Home Loan Bank borrowings increased $221.0 million, or 539.0%, to $262.0 million at March 31, 2011 from $41.0 million at December 31, 2010. Additional borrowings were utilized in an investment strategy which allowed us to leverage our excess capital and benefit from the steepening of the yield curve which provided a favorable interest rate margin between investment securities yields and rates on laddered maturity Federal Home Loan Bank advances. The additional borrowings were partially offset by decreases due to scheduled maturities of Federal Home Loan Bank advances during the three months ended March 31, 2011. Securities sold under agreements to repurchase were unchanged at $58.0 million at March 31, 2011 and at December 31, 2010.

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Stockholders’ Equity.At March 31, 2011, our stockholders’ equity was $198.4 million, a decrease of $200,000, or 0.1%, from $198.6 million at December 31, 2010. This decrease primarily reflected the repurchase of the Company’s common stock. Repurchased shares at March 31, 2011 totaled $991,000 representing the repurchases during the quarter of 63,025 shares at an average cost of $15.73 per share, as part of the Company’s stock repurchase plan announced on January 26, 2011. Partially offsetting this decrease in stockholders’ equity was net income of $519,000 for the three months ended March 31, 2011, and an increase of $126,000 in accumulated other comprehensive income (loss) to a gain of $93,000 at March 31, 2011 compared to a loss of $33,000 at December 31, 2010.

Comparison of Operating Results for the Three Months Ended March 31, 2011 and 2010

General. Net income decreased $14,000, or 2.6%, to $519,000 for the three months ended March 31, 2011 from $533,000 for the three months ended March 31, 2010. The decrease in net income for the three months ended March 31, 2011 reflected an increase in noninterest expense of $319,000, and decreases in net interest income of $81,000 and noninterest income of $75,000, partially offset by a decrease in the provision for loan losses of $400,000, and a decrease in income tax expense of $61,000.

Interest Income. Interest income decreased $369,000, or 2.8%, to $12.8 million for the three months ended March 31, 2011 from $13.2 million for the three months ended March 31, 2010. The decrease resulted from a decrease of 34 basis points in our average yield on interest-earning assets to 4.88% for the three months ended March 31, 2011 from 5.22% for the three months ended March 31, 2010. The decrease in our average yield on interest-earning assets during the three months ended March 31, 2011 as compared to the prior year period was due to a higher percentage of lower yielding investment securities relative to total interest-earning assets due to a lower demand for loans. Partially offsetting the decrease in the average yield on interest-earning assets was a $39.7 million, or 3.9%, increase in the average balance of interest-earning assets to $1.05 billion for the three months ended March 31, 2011 from $1.01 billion for the three months ended March 31, 2010.

Interest income on loans decreased $537,000, or 5.1%, to $10.1 million for the three months ended March 31, 2011 from $10.6 million for the three months ended March 31, 2010. The decrease resulted primarily from a decrease in the average balance of loans of $29.3 million, or 4.2%, to $665.7 million for the three months ended March 31, 2011 from $695.0 million for the three months ended March 31, 2010. In addition, the average yield on our loan portfolio decreased by six basis points to 6.07% for the three months ended March 31, 2011 from 6.13% for the three months ended March 31, 2010.

Interest income on investment securities increased $168,000, or 6.7%, to $2.7 million for the three months ended March 31, 2011 from $2.5 million for the three months ended March 31, 2010. The increase resulted primarily from a $86.7 million, or 32.8%, increase in the average balance of our securities portfolio to $351.1 million for the three months ended March 31, 2011 from $264.4 million for the three months ended March 31, 2010, due to purchases of securities, primarily U.S. government sponsored mortgage-backed securities and collateralized mortgage obligations. The purchases were a part of an investment leveraging strategy described above. Partially offsetting the increase in the average balance on our securities portfolio was a decrease in the average yield on our securities portfolio (excluding nontaxable investment securities) of 74 basis points to 3.05% for the three months ended March 31, 2011 from 3.79% for the three months ended March 31, 2010.

Interest Expense.Interest expense decreased by $288,000, or 8.2%, to $3.2 million for the three months ended March 31, 2011 from $3.5 million for the three months ended March 31, 2010. The decrease resulted primarily from a $427,000 decrease in interest expense on deposits, partially offset by a $139,000 increase in interest expense on borrowed funds. The average rate we paid on deposits decreased 29 basis points to 1.10% for the three months ended March 31, 2011 from 1.39% for the three months ended March 31, 2010, as we were able to reprice our deposits lower as market interest rates declined. Partially offsetting the decrease in expense due to the decrease in the rates we paid on deposits was a $31.3 million, or 4.5%, increase in the average balance of interest-bearing deposits to $725.4 million for the three months ended March 31, 2011 from $694.1 million for the three months ended March 31, 2010. The increase in the average balance of our interest-bearing deposits was due to an increase in the average balance of our interest-bearing core deposits (consisting of demand accounts, money market accounts and savings accounts) and in our certificates of deposit. The increase in our core deposits reflected our marketing efforts of these account products which included greater efforts to cross-sell these products to our borrowing customers. The increase in certificates of deposit resulted from increases in personal savings rates and many consumers continuing to invest in FDIC-insured deposits as the economy continues to recover from the recession.

27

The interest expense on our core deposits decreased $258,000, or 42.9%, to $344,000 for the three months ended March 31, 2011 from $602,000 for the three months ended March 31, 2010. The average rate paid on core deposits decreased 30 basis points to 0.36% for the three months ended March 31, 2011 from 0.66% for the three months ended March 31, 2010, reflecting lower market interest rates. Partially offsetting the decrease in interest expense was a $23.2 million, or 6.4%, increase in the average balance of core deposits to $387.0 million for the three months ended March 31, 2011 from $363.8 million for the three months ended March 31, 2010. Interest expense on certificates of deposit decreased $169,000, or 9.4%, to $1.6 million for the three months ended March 31, 2011 from $1.8 million for the three months ended March 31, 2010. The average rate paid on certificates of deposit decreased 25 basis points to 1.94% for the three months ended March 31, 2011 from 2.19% for the three months ended March 31, 2010. Partially offsetting the decrease in interest expense was an $8.1 million, or 2.5%, increase in the average balance of certificates of deposit, to $338.4 million for the three months ended March 31, 2011 from $330.3 million for the three months ended March 31, 2010.

Interest expense on borrowed funds increased by $139,000, or 12.6%, to $1.2 million for the three months ended March 31, 2011 from $1.1 million for the three months ended March 31, 2010, primarily due to a $29.1 million increase in the average balance of Federal Home Loan Bank borrowings to $87.7 million for the three months ended March 31, 2011 from $58.6 million for the three months ended March 31, 2010, due to advances taken to purchase securities as a part of our previously described leveraging strategy. Partially offsetting the increase in the average balances of borrowed funds was a decrease in the average rate paid for borrowed funds of 34 basis points to 3.28% for the three months ended March 31, 2011 from 3.62% for the three months ended March 31, 2010.

Net Interest Income. Net interest income decreased by $81,000, or 0.8%, to $9.6 million for the three months ended March 31, 2011 from $9.7 million for the three months ended March 31, 2010. The decrease in net interest income resulted from a 9 basis point decrease in our interest rate spread to 3.42% for the three months ended March 31, 2011 from 3.51% for the three months ended March 31, 2010. Our net interest margin decreased 18 basis points to 3.66% for the three months ended March 31, 2011 from 3.84% for the three months ended March 31, 2010. The decrease in our interest rate spread and net interest margin reflected the sloping yield curve as short-term market interest rates used to price our deposits have continued to decline in 2011, while we had significant growth in the average balance of our interest-earning assets, such as investment securities, which generally are priced based on medium and longer-term interest rates, and steady growth in our deposits.

Provision for Loan Losses.We recorded a provision for loan losses of $400,000 for the three months ended March 31, 2011 compared to a provision for loan losses of $800,000 for the three months ended March 31, 2010. The provision for loan losses is charged to operations to bring the allowance for loan losses to a level that reflects management’s best estimate of the losses inherent in the portfolio. An evaluation of the loan portfolio, current economic conditions and other factors is performed at each balance sheet date. The decrease in the provision for loan losses is deemed to be appropriate as credit quality trends have begun to stabilize and the loan portfolio has decreased. Total loans decreased $27.7 million, or 4.0%, to $665.7 million at March 31, 2011 from $693.4 million at March 31, 2010. Net charge-offs increased $69,000 to $502,000 for the three months ended March 31, 2011 from $433,000 for the three months ended March 31, 2010 and decreased from $2.1 million for the three months ended December 31, 2010. Net charge-offs as a percentage of average loans outstanding was 0.30% for the three months ended March 31, 2011 compared to 0.25% for the three months ended March 31, 2010 and 1.23% for the three months ended December 31, 2010. The allowance for loan losses to total loans receivable increased to 1.33% at March 31, 2011 from 1.25% at March 31, 2010.

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Non-performing loans include loans on non-accrual status or loans delinquent 90 days or greater and still accruing interest. None of our loans were delinquent 90 days or greater and still accruing interest at either March 31, 2011 or March 31, 2010. At March 31, 2011, non-performing loans totaled $9.4 million, or 1.41% of total loans, compared to $9.0 million, or 1.31% of total loans, at March 31, 2010. The allowance for loan losses as a percentage of non-performing loans decreased to 94.29% at March 31, 2011 from 96.09% at March 31, 2010. To the best of our knowledge, we have provided for all losses that are both probable and reasonable to estimate at March 31, 2011 and 2010.

Noninterest Income. Noninterest income decreased $75,000, or 2.3%, to $3.1 million for the three months ended March 31, 2011 from $3.2 million for the three months ended March 31, 2010. The decrease was primarily attributable to a $220,000 decrease in service charges and other fees due primarily to a decrease in insufficient funds and overdraft fees, and a $124,000 decrease in net gains on the sale of loans, primarily one- to four-family residential real estate loans, partially offset by a $236,000 increase in the cash surrender value of bank-owned life insurance interest income from the purchase of life insurance policies on certain key employees in November 2010.

Noninterest Expense. Noninterest expense increased $319,000, or 2.8%, to $11.7 million for the three months ended March 31, 2011 from $11.3 million for the three months ended March 31, 2010. The increase was primarily attributable to increases in real estate owned expense of $346,000, salaries and benefits expense of $306,000, and professional and outside services expense of $139,000, partially offset by decreases in the FDIC insurance premium expense of $231,000, software and equipment maintenance expense of $101,000, and service fees expense of $93,000. The increase in real estate owned expense was due primarily to the write down of two properties to their current fair values less costs to sell. The increase in salaries and benefits expense was due primarily to compensation costs related to the employee stock ownership plan, and increases in incentives and commissions expenses. The increase in professional and outside services expense can be primarily attributed to higher legal expenses and costs associated with the implementation of a new sales training program. The decrease in the FDIC insurance premium expense was primarily attributable to a decrease in the general assessment rate applied to our insured deposits. The decrease in software and equipment maintenance expense related primarily to savings from a new annual contract negotiated with our ATM servicing contractor, and expenditures incurred to enhance the performance and security of our information systems in the prior year. The decrease in service fees expense was primarily due to our conversion to in-house item processing from outsourcing item processing in the prior year.

Income Tax Expense. Income tax expense decreased $61,000 to $178,000 for the three months ended March 31, 2011 from $239,000 for the three months ended March 31, 2010, reflecting a decrease in income before income tax expense. Our effective tax rate, including provisions for the Texas state margin tax was 25.5% for the three months ended March 31, 2011 compared to 31.0% for the three months ended March 31, 2010. The decrease in the effective tax rate was primarily attributable to a $236,000 increase in nontaxable income from the increase in the cash surrender value of bank-owned life insurance for the three months ended March 31, 2011 compared to the prior year period.

Analysis of Net Interest Income — Three Months Ended March 31, 2011 and 2010

Net interest income, the primary contributor to earnings, represents the difference between income on interest-earning assets and expenses on interest-bearing liabilities. Net interest income depends upon the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.

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Average Balances and Yields

The following table sets forth average balance sheets, average yields and costs, and certain other information at or for the periods indicated. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

	For the Three Months Ended March 31,
	2011								2010
	Average								Average
	Outstanding					Yield/			Outstanding					Yield/
	Balance			Interest		Rate(1)			Balance			Interest		Rate(1)
	(Dollars in thousands)
Interest-earning assets:
Loans	$	665,652		$	10,105		6.07	%	$	694,974		$	10,642		6.13	%
Taxable investment securities available for sale		351,119			2,673		3.05			259,844			2,461		3.79
Nontaxable investment securities available for sale		—			—		—			4,542			13		1.14	(5)
Cash and cash equivalents		27,402			10		0.15			46,039			32		0.28
Other		4,735			3		0.25			3,850			12		1.25
Total interest-earning assets		1,048,908			12,791		4.88			1,009,249			13,160		5.22
Noninterest-earning assets		105,944								87,929
Total assets	$	1,154,852							$	1,097,178
Interest-bearing liabilities:
Interest-bearing demand	$	75,769		$	50		0.26	%	$	70,868		$	87		0.49	%
Savings accounts		210,217			166		0.32			201,897			294		0.58
Money market accounts		101,059			128		0.51			91,048			221		0.97
Certificates of deposit		338,358			1,642		1.94			330,288			1,811		2.19
Total interest-bearing deposits		725,403			1,986		1.10			694,101			2,413		1.39
Federal Home Loan Bank advances		87,733			470		2.14			58,618			538		3.67
Other secured borrowings		58,094			725		4.99			58,000			518		3.57
Total interest-bearing liabilities		871,230			3,181		1.46			810,719			3,469		1.71
Noninterest-bearing liabilities(6)		84,451								123,319
Total liabilities		955,681								934,038
Equity		199,171								163,140
Total liabilities and equity	$	1,154,852							$	1,097,178
Net interest income				$	9,610							$	9,691
Interest rate spread(2)							3.42	%							3.51	%
Net interest-earning assets(3)	$	177,678							$	198,530
Net interest margin(4)							3.66	%							3.84	%
Average interest-earning assets to interest-bearing liabilities		120.39	%							124.49	%

(1)	Annualized.
(2)	Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(3)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4)	Net interest margin represents net interest income divided by average total interest-earning assets.
(5)	The tax equivalent yield of nontaxable investment securities was 1.73% for the three months ended March 31, 2010 assuming a marginal tax rate of 34%.
(6)	Includes noninterest-bearing deposits.

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Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the years indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by later volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume.

	Three Months Ended March 31,
	2011 vs. 2010
	Increase (Decrease)						Total
	Due to						Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	(449	)	$	(88	)	$	(537	)
Taxable investment securities available for sale		864			(652	)		212
Nontaxable investment securities available for sale		(13	)		—			(13	)
Cash and cash equivalents		(13	)		(9	)		(22	)
Other		3			(12	)		(9	)
Total interest-earning assets	$	392		$	(761	)	$	(369	)
Interest-bearing liabilities:
Interest-bearing demand	$	6		$	(43	)	$	(37	)
Savings accounts		12			(140	)		(128	)
Money market accounts		24			(117	)		(93	)
Certificates of deposit		44			(213	)		(169	)
Total interest-bearing deposits		86			(513	)		(427	)
Federal Home Loan Bank advances		267			(335	)		(68	)
Other secured borrowings		1			206			207
Total interest-bearing liabilities	$	354		$	(642	)	$	(288	)
Change in net interest income	$	38		$	(119	)	$	(81	)

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, advances from the Federal Home Loan Bank of Dallas, and maturities and sales of available-for-sale securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. We monitor our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies.

We regularly monitor and adjust our investments in liquid assets based upon our assessment of:

(i) expected loan demand;

(ii) expected deposit flows and borrowing maturities;

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(iii) yields available on interest-earning deposits and securities; and

(iv) the objectives of our asset/liability management program.

Excess liquid assets are invested generally in interest-earning deposits and short- and intermediate-term securities.

Our most liquid assets are cash and cash equivalents. The levels of these assets are affected by our operating, financing, lending and investing activities during any given period. At March 31, 2011, cash and cash equivalents totaled $21.3 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $542.7 million at March 31, 2011. On that date, we had $262.0 million in Federal Home Loan Bank advances outstanding, with the ability to borrow an additional $359.6 million.

Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Consolidated Statements of Cash Flows included in our consolidated financial statements.

At March 31, 2011, we had $33.4 million in commitments to extend credit, which were comprised of $4.4 million of commitments to originate loans and $29.0 million in unused lines of credit to borrowers. Certificates of deposit due within one year of March 31, 2011 totaled $186.1 million, or 23.1% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales and Federal Home Loan Bank advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2012. However, we believe that, based on past experience, a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Generally, our primary investing activity is originating loans. During the three months ended March 31, 2011, we originated $63.5 million of loans. We purchased $322.9 million of securities during the three months ended March 31, 2011.

Financing activities consist primarily of activity in deposit accounts and Federal Home Loan Bank advances. Total deposits increased $5.9 million for the three months ended March 31, 2011. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors.

Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of Dallas, which provides an additional source of funds. Federal Home Loan Bank advances increased by $221.0 million for the three months ended March 31, 2011. Federal Home Loan Bank advances have primarily been used to fund loan demand and to purchase investment securities. At March 31, 2011, we had the ability to borrow up to $621.6 million from the Federal Home Loan Bank of Dallas. In addition, we maintained $27.5 million in federal funds lines with other financial institutions at March 31, 2011. We also have a line of credit with the Federal Reserve Bank of Dallas which allows us to borrow on a collateralized basis at a fixed term with pledged assignments. At March 31, 2011, the borrowing limit for this line of credit was $168.2 million.

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OmniAmerican Bank is subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At March 31, 2011, OmniAmerican Bank exceeded all regulatory capital requirements. OmniAmerican Bank is considered “well capitalized” under regulatory guidelines. The table below presents the capital required as a percentage of total and risk-weighted assets and the percentage and the total amount of capital maintained at March 31, 2011 and December 31, 2010.

						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Consolidated as of March 31, 2011
Total risk-based capital to risk-weighted assets	$	198,074		26.56	%	$	59,657		8.00	%	$	74,571		10.00	%
Tier I risk-based capital to risk-weighted assets		191,576		25.69	%		29,828		4.00	%		44,743		6.00	%
Tier I (Core) capital to adjusted total assets		191,576		14.42	%		53,127		4.00	%		66,409		5.00	%
OmniAmerican Bank as of March 31, 2011
Total risk-based capital to risk-weighted assets	$	171,525		23.01	%	$	59,630		8.00	%	$	74,538		10.00	%
Tier I risk-based capital to risk-weighted assets		165,027		22.14	%		29,815		4.00	%		44,723		6.00	%
Tier I (Core) capital to adjusted total assets		165,027		12.42	%		53,132		4.00	%		66,415		5.00	%
Consolidated as of December 31, 2010
Total risk-based capital to risk-weighted assets	$	198,366		27.86	%	$	56,958		8.00	%	$	71,197		10.00	%
Tier I risk-based capital to risk-weighted assets		191,743		26.93	%		28,479		4.00	%		42,718		6.00	%
Tier I (Core) capital to adjusted total assets		191,743		17.40	%		44,078		4.00	%		55,097		5.00	%
OmniAmerican Bank as of December 31, 2010
Total risk-based capital to risk-weighted assets	$	170,526		23.95	%	$	56,965		8.00	%	$	71,207		10.00	%
Tier I risk-based capital to risk-weighted assets		163,903		23.02	%		28,483		4.00	%		42,724		6.00	%
Tier I (Core) capital to adjusted total assets		163,903		14.88	%		44,065		4.00	%		55,082		5.00	%

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make.

Contractual Obligations.In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include operating leases for premises and equipment, and agreements with respect to borrowed funds and deposit liabilities.

The following table summarizes our significant fixed and determinable contractual obligations and other funding needs by payment date at March 31, 2011. The payment amounts represent those amounts due to the recipient and do not include any unamortized premiums or discounts or other similar carrying amount adjustments.

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	Payments Due by Period
			More than		More than
	One year or		one year to		three years to		More than
	less		three years		five years		five years		Total
	(In thousands)
Contractual obligations:
Long-term debt(1)	$	140,000	$	161,000	$	19,000	$	—	$	320,000
Operating leases		471		951		774		1,425		3,621
Certificates of deposit		186,115		122,684		25,027		—		333,826
Total contractual obligations	$	326,586	$	284,635	$	44,801	$	1,425	$	657,447
Off-balance sheet loan commitments:
Undisbursed portion of loans closed	$	4,372	$	—	$	—	$	—	$	4,372
Unused lines of credit(2)		—		—		—		—		29,018
Total loan commitments	$	4,372	$	—	$	—	$	—	$	33,390
Total contractual obligations and loan commitments	$	330,958	$	284,635	$	44,801	$	1,425	$	690,837

(1)	Includes Federal Home Loan Bank advances and securities sold under agreements to repurchase.
(2)	Since lines of credit may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General.Because the majority of our assets and liabilities are sensitive to changes in interest rates, our most significant form of market risk is interest rate risk. We are vulnerable to an increase in interest rates to the extent that our interest-bearing liabilities mature or reprice more quickly than our interest-earning assets. As a result, a principal part of our business strategy is to manage interest rate risk and limit the exposure of our net interest income to changes in market interest rates. Accordingly, our board of directors has established an Asset/Liability Management Committee, which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

We have sought to manage our interest rate risk in order to control the exposure of our earnings and capital to changes in interest rates. As part of our ongoing asset-liability management, we currently use the following strategies to manage our interest rate risk:

(i) sell the long-term, fixed-rate one- to four-family residential mortgage loans (terms greater than 15 years) that we originate into the secondary mortgage market;

(ii) lengthen the weighted average maturity of our liabilities through retail deposit pricing strategies and through longer-term wholesale funding sources such as fixed-rate advances from the Federal Home Loan Bank of Dallas;

(iii) invest in shorter- to medium-term securities;

(iv) originate commercial business and consumer loans, which tend to have shorter terms and higher interest rates than residential mortgage loans, and which generate customer relationships that can result in larger noninterest-bearing demand deposit accounts; and

(v) maintain adequate levels of capital.

We have not engaged in hedging through the use of derivatives.

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Net Portfolio Value.The Office of Thrift Supervision requires the computation of amounts by which the net present value of an institution’s cash flow from assets, liabilities and off-balance sheet items (the institution’s net portfolio value or “NPV”) would change in the event of a range of assumed changes in market interest rates. The Office of Thrift Supervision provides all institutions that file a Consolidated Maturity/Rate Schedule as a part of their quarterly Thrift Financial Report with an interest rate sensitivity report of net portfolio value. The Office of Thrift Supervision simulation model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. Historically, the Office of Thrift Supervision model estimated the economic value of each type of asset, liability and off-balance sheet contract under the assumption that the United States Treasury yield curve increases or decreases instantaneously by 100 to 300 basis points in 100 basis point increments. However, given the current relatively low level of market interest rates, an NPV calculation for an interest rate decrease of greater than 100 basis points has not been prepared. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below. The Office of Thrift Supervision provides us the results of the interest rate sensitivity model, which is based on information we provide to the Office of Thrift Supervision to estimate the sensitivity of our net portfolio value.

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The table below sets forth, as of December 31, 2010 (the most recent date available), the Office of Thrift Supervision’s calculation of the estimated changes in our net portfolio value that would result from the designated immediate changes in the United States Treasury yield curve.

At December 31, 2010
									NPV as a Percentage of
Change in									Present Value of Assets(3)
Interest Rates			Estimated Increase									Increase
(basis points)	Estimated		(Decrease) in NPV									(Decrease)
(1)	NPV(2)		Amount			Percent			NPV Ratio(4)			(basis points)
(Dollars in thousands)
+300	$	166,054	$	(38,469	)		(18.81	)%		15.15	%		(254	)
+200		181,629		(22,894	)		(11.19	)%		16.24	%		(145	)
+100		194,780		(9,743	)		(4.76	)%		17.11	%		(58	)
0		204,523		—			—			17.69	%		—
-100		213,176		8,653			4.23	%		18.20	%		51

(1)	Assumes an instantaneous uniform change in interest rates at all maturities.
(2)	NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4)	NPV Ratio represents NPV divided by the present value of assets.

Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results. The Office of Thrift Supervision model illustrates the change in the economic value of our assets and liabilities at December 31, 2010 assuming an immediate change in interest rates. The table above indicates that at December 31, 2010, under the Office of Thrift Supervision model, in the event of a 200 basis point increase in interest rates, we would experience an 11.19% decrease in net portfolio value. In the event of a 100 basis point decrease in interest rates, we would experience a 4.23% increase in net portfolio value.

In addition to the Office of Thrift Supervision’s calculations with respect to the effects of changes in interest rates on net portfolio value, we prepare our own internal calculations of the estimated changes in our net portfolio value that would result from the designated immediate changes in the United States Treasury yield curve. We also analyze our sensitivity to changes in interest rates through our net interest income model. The model assumes loan prepayment rates, reinvestment rates and deposit decay rates based on historical experience and current economic conditions.

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The following table presents our internal calculations of the estimated changes in our net portfolio value and net interest income that would result from the designated instantaneous changes in the interest rate yield curve as of March 31, 2011:

At March 31, 2011
									NPV as a Percentage of						Net Interest Income
Change in									Present Value of Assets(3)								Increase (Decrease) in
Interest Rates			Estimated Increase									Increase			Estimated		Estimated Net Interest
(basis points)	Estimated		(Decrease) in NPV									(Decrease)			Net Interest		Income
(1)	NPV(2)		Amount			Percent			NPV Ratio(4)			(basis points)			Income		Amount			Percent
(Dollars in thousands)
+300	$	176,781	$	(60,368	)		(25.46	)%		13.38	%		(348	)	$	38,893	$	(5,390	)		(12.17	)%
+200		198,963		(38,186	)		(16.10	)%		14.73	%		(213	)		41,124		(3,159	)		(7.13	)%
+100		219,148		(18,001	)		(7.59	)%		15.88	%		(98	)		42,844		(1,439	)		(3.25	)%
0		237,149		—			—			16.86	%		—			44,283		—			—
-100		244,735		7,586			3.20	%		17.20	%		34			43,388		(895	)		(2.02	)%

(1)	Assumes an instantaneous uniform change in interest rates at all maturities.
(2)	NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4)	NPV Ratio represents NPV divided by the present value of assets.

The table above indicates that at March 31, 2011, in the event of a 200 basis point increase in interest rates, we would experience a 16.10% decrease in net portfolio value. In the event of a 100 basis point decrease in interest rates, we would experience a 3.20% increase in net portfolio value.

Net Interest Income.As of March 31, 2011, using our internal interest rate risk model, we estimated that our net interest income for the three months ended March 31, 2011 would decrease by 7.13% in the event of an instantaneous 200 basis point increase in market interest rates, and would decrease by 2.02% in the event of an instantaneous 100 basis point decrease in market interest rates. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. In our model, we estimate what our net interest income would be for a rolling forward twelve-month period using historical data for assumptions such as loan prepayment rates and deposit decay rates, the current term structure for interest rates, and current deposit and loan offering rates. We then calculate what the net interest income would be for the same period in the event of an instantaneous 200 basis point increase or a 100 basis point decrease in market interest rates.

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Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in net portfolio value and net interest income. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net portfolio value and net interest income information presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although interest rate risk calculations provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the Senior Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2011. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and the Senior Executive Vice President and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended March 31, 2011, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiary are subject to various legal actions that are considered ordinary routine litigation incidental to the business of the Company, and no claim for money damages exceeds ten percent of the Company’s consolidated assets. In the opinion of management, based on currently available information, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s results of operations.

ITEM 1A. RISK FACTORS

There are no material changes to the risk factors as previously disclosed in the Company’s Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on March 10, 2011.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

(c) The following table provides information with respect to purchases made by or on behalf of the Corporation or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Corporation’s common stock during the three months ended March 31, 2011.

					(c)		(d)
					Total Number of		Maximum Number
	(a)				Shares Purchased		of Shares That May
	Total Number		(b)		as Part of Publicly		Yet Be Purchased
	of Shares		Average Price		Announced Plans		Under the Plans or
Period	Purchased		Paid Per Share		or Programs (1)		Program(1)
January 1, 2011 through January 31, 2011		—	$	—		—		595,125
February 1, 2011 through February 28, 2011		2,000		15.03		2,000		593,125
March 1, 2011 through March 31, 2011		61,025		15.75		61,025		532,100
Total		63,025	$	15.73		63,025		532,100

(1) On January 25, 2011, the Company’s Board of Directors approved a stock repurchase program under which the Company may repurchase up to 595,125 shares of the Company’s common stock, from time to time, subject to market conditions. The repurchase program will continue until completed or terminated by the Board of Directors.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

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ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits required by Item 601 of Regulation S-K are included with this Form 10-Q and are listed on the “Index to Exhibits” immediately following the Signatures.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OMNIAMERICAN BANCORP, INC.
	(Registrant)
Date: May 10, 2011	/s/ Tim Carter
	Tim Carter
	President and Chief Executive Officer
Date: May 10, 2011	/s/ Deborah B. Wilkinson
	Deborah B. Wilkinson
	Senior Executive Vice President and Chief Financial Officer

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INDEX TO EXHIBITS

Exhibit
Number		Description
	31.1	Certification of Tim Carter, President and Chief Executive Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
	31.2	Certification of Deborah B. Wilkinson, Senior Executive Vice President and Chief Financial Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
	32	Certification of Tim Carter, President and Chief Executive Officer, and Deborah B. Wilkinson, Senior Executive Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section��1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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