ViewPoint Financial Group Reports Operating Results (10-Q)
VIEWPOINT FINANCIAL GROUP is the holding company for Plano-based ViewPoint Bank. ViewPoint Bank is the largest bank based in Collin County. It operates twenty eight branches and nine loan production offices. ViewPoint Financial Group has a market cap of $313.6 million; its shares were traded at around $12.58 with a P/E ratio of 251.6 and P/S ratio of 2.4. The dividend yield of ViewPoint Financial Group stocks is 1.5%. Highlight of Business Operations:General. Total assets increased by $74.6 million, or 3.4%, to $2.29 billion at June 30, 2009, from $2.21 billion at December 31, 2008. The rise in total assets was primarily due to a $111.6 million, or 7.9%, increase in gross loans (including loans held for sale) and a $25.2 million, or 216.5%, increase in short-term interest-bearing deposits in other financial institutions. This increase was partially offset by a $58.4 million, or 8.9%, reduction in our securities portfolio.
Loans. Gross loans (including $337.2 million in mortgage loans held for sale) increased by $111.6 million, or 7.9%, from $1.41 billion at December 31, 2008 to $1.52 billion at June 30, 2009.
At June 30, 2009, mortgage loans held for sale consisted of $46.0 million of loans originated for sale by our mortgage banking subsidiary, ViewPoint Bankers Mortgage (VPBM), and $291.2 million of Purchase Program loans purchased for sale under our standard loan participation agreement, which enables our mortgage banking company clients to close one-to four-family real estate loans in their own name and temporarily finance their inventory of these closed loans until the loans are sold to investors approved by the Company. The $177.3 million, or 110.9%, increase in mortgage loans held for sale was attributable to VPBMs increased real estate production and a $153.7 million increase in the volume of Purchase Program loans purchased under our standard loan participation agreement. We have also expanded our one-to four-family construction lending, which led to a $3.1 million, or 619.9%, increase from December 31, 2008. At June 30, 2009, we had $2.6 million in unfunded commitments on these construction loans. Our one- to four-family construction loans generally provide for the payment of interest only during the construction phase, which is typically limited to 12 months. At the end of the construction phase, the construction loan generally either converts to a longer-term mortgage loan or is paid off through a permanent loan from another lender. Residential construction loans, which are only made directly to consumers, not builders, can be made with a maximum loan-to-value of 90% and are expected to comprise a small portion of our loan portfolio. These loans are underwritten to Fannie Mae/Freddie Mac guidelines.
ViewPoint Bankers Mortgage. At June 30, 2009, VPBM had total assets of $55.5 million, which primarily consisted of $46.0 million in one- to four- family mortgage loans held for sale. VPBMs net income for the three and six months ended June 30, 2009, was $683,000 and $944,000, respectively, which primarily consisted of gains on sales of mortgage loans. VPBM operates 14 loan production offices in Texas and has 138 employees.
Our non-performing loans to total loans ratio at June 30, 2009, was 0.62% compared to 0.38% at December 31, 2008. Nonaccrual loans increased by $4.3 million, from $2.2 million at December 31, 2008, to $6.5 million at June 30, 2009, while troubled debt restructurings decreased by $1.7 million, from $2.5 million at December 31, 2008, to $873,000 at June 30, 2009. The increase in nonaccrual loans was due to a $2.7 million increase in commercial real estate loans on nonaccrual status; this consists of three commercial real estate loans, two of which are delinquent greater than 90 days and one that is not delinquent. Of these three loans, one is a single-tenant retail building which is currently being marketed for sale. Another is a loan in which the Company is a participant that is collateralized by a two office building complex currently in the process of foreclosure. The third is a loan in which the Company is a participant that is collateralized by a hotel property experiencing financial difficulties. An analysis performed on the loans secured by the single-tenant retail building and the hotel property indicated that no specific valuation allowances were necessary, while an $84,000 specific valuation allowance was set aside for the loan secured by the two office building complex. Also, one-to four-family real estate loans on nonaccrual status increased by $1.3 million from December 31, 2008: $1.2 million of this increase was attributable to loans purchased from other financial institutions, while only $100,000 of this increase was attributable to loans originated directly by the Company. The portfolio of one-to four-family real estate loans that were purchased from other financial institutions totaled $49.1 million at June 30, 2009.
Our allowance for loan losses at June 30, 2009, was $10.0 million, or 0.84% of gross loans, compared to $9.1 million, or 0.73% of gross loans, at December 31, 2008. The $928,000, or 10.2%, increase in our allowance for loan losses was primarily due to an increase in the general reserve due to higher historical reserve factors and a $362,000 increase in the specific reserve as impaired loans with allocated allowance for loan losses increased by $2.8 million, from $1.6 million at December 31, 2008, to $4.4 million at June 30, 2009. This increase in impaired loans with allocated allowance for loan losses was primarily attributable to a $1.7 million increase in one-to four-family mortgages that were purchased from other financial institutions and the addition of one commercial real estate loan with an outstanding principal balance of $901,000 at June 30, 2009.
Read the The complete ReportVPFG is in the portfolios of John Keeley of Keeley Fund Management.