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NasdaqGS : VPFG Financial Sector: Regional Banks Current Price: 12.89 DCF Value:15.83 % Upside:22.8%. Danforth Holley Jacob McDonough Elizabeth Kim. Background. Founded in 1952. Headquarters: Plano, Texas Full stock holding company for its wholly owned subsidiary, ViewPoint Bank

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nasdaqgs vpfg financial sector regional banks current price 12 89 dcf value 15 83 upside 22 8

NasdaqGS: VPFGFinancial Sector: Regional BanksCurrent Price: 12.89DCF Value:15.83% Upside:22.8%

Danforth HolleyJacob McDonough

Elizabeth Kim

background
Background
  • Founded in 1952. Headquarters: Plano, Texas
  • Full stock holding company for its wholly owned subsidiary, ViewPoint Bank
  • 23 community bank offices in Dallas/Fort Worth (DFW) Metroplex
  • 14 loan production offices in DFW: Houston, San Antonio, Austin, other Texas cities and Oklahoma
  • Warehouse Purchase Program- mortgage banking loans and real estate loans
  • Attract retail deposits, funds, and consumer loans
background continued
Background (continued)
  • Market Cap: 420.77 M
  • P/E Ratio: 17.9
  • P/B Ratio: 0.98
  • EPS: 0.72
  • Div & Yield: .20 (1.50%)
  • 52 wk Range: 9.45-14.05
slide4
News
  • History of beating Earnings
    • In Sep 2010: Reported EPS at 0.17 vs. estimate at 0.09 (surprise of 88.9%)
    • In Dec 2010: Reported EPS at 0.2 vs. estimate at 0.16 (surprise of 25%)
    • In Mar 2011: Reported EPS at 0.2 vs. estimate at 0.19 (surprise of 5.3%)
    • In Jun 2011: Reported 0.15 vs. estimate at 0.13 (surprise of 15.4%).
    • Average beat of 33.3% to the upside
  • 8/26/11- Stock Repurchase Program
    • Plans to repurchase up to 5% of total common shares outstanding ( approximately 1,741,975 shares)
2010 reorganization
2010 Reorganization
  • Viewpoint Financial Group sold off its stake in the Viewpoint Mutual Holding Company on July 6, 2010
    • This made viewpoint 100% public
    • This type of transition was popular among small financial holding companies such as Viewpoint
    • Caused by changes in the way mutual holding companies’ were regulated
  • Existing stockholders received 1.4 shares for each existing share
  • The company sold 19.8 million shares at $10 each to become a 100% public holding company.
key 3 rd quarter facts
Key 3rd Quarter Facts
  • Loan Balances Increased $290.0 million (18.5%), primarily due to Warehouse Purchase Program and Commercial Real Estate
  • Net Interest Margin up 6 basis points YOY
    • Even with record low interest rates, NIM increased due to lower rates paid on deposits
    • Rising net interest margin is a key driver of profits
  • Q3 Net Income of $5.1 Million, or $0.16 per share, up 5.9% linked quarter
corporate geographic overview
Corporate & Geographic Overview
  • Total Assets = $3.24 billion
  • Total Net Loans = $1.84 billion
  • Total Deposits = $2.07 billion
  • 59 years in Texas market
  • Operations focused in Dallas/Fort Worth Metro Area
  • 81% of VPFG’s commercial real estate loans are in 4 of the top 5 best cities for jobs in the U.S.
texas economy
Texas Economy
  • Job growth of 3.2% projected this year
    • Highest of any state
  • Dallas area home prices only down 6.2% since December 2005
    • National average is 30.3%
    • VPFG maintains high quality loan portfolio
  • Long-term rise in oil prices driving economic growth
    • 10% increase in oil prices leads to 0.3% rise in Texas employment according to Dallas Fed Research.
  • Strong economy to drive further loan and deposit growth
new locations
New Locations
  • Two new bank branches opened in Q3 2011 in Flower Mound and in Carrollton
  • Will convert grocery store branch to new full service banking center in Lake Highlands, Texas.
    • 2010 Estimated Average Household Income of Customers: $69,683
business strategy
Business Strategy
  • Continue to grow organically in the economically stable and growing Texas market
  • Continue to develop existing lines of business, diversify the loan portfolio and develop Commercial and Industrial lending
  • Transitioned in recent years to fully diversified consumer and business bank
    • More diversified revenue stream
  • Future growth focused on increasing Commercial Real Estate loans
business strategy12
Business Strategy
  • 3 key business segments
    • Warehouse purchase program
      • Fund third party mortgage brokers
      • Increase of 200 million in 2011
    • Residential Mortgage Lending
    • Commercial Real Estate Lending
      • Growing portion of portfolio, represents almost 50% of total loans
      • Earning higher interest income on Commercial Real Estate loans than other residential loans
  • Overall strong loan growth
    • Up 16% in first 3 quarters this year
competitors
Competitors
  • Bank of America introduced a $5 per month fee for debit card purchases.
    • Fees have been scaled but damage to their brand names has been done
    • Bank of America has almost 1 trillion in deposits that could be at risk of moving to smaller more cost-efficient banks such as Viewpoint.
  • Viewpoint not as susceptible to volatility in the international financial markets
    • Smaller banks are effected more by the local economy.
viewpoint outperforming p eers
Viewpoint Outperforming Peers

Blue-Viewpoint

Red-Cullen Frost

Green-First Financial

Orange-Vanguard Financials ETF

conclusion
Conclusion
  • Viewpoint is in the strongest market in the United States
  • Loan portfolio consists of high quality assets
    • Bank is well-capitalized and has high underwriting standards
  • Growing Texas economy and commercial real estate business to drive continued earnings growth.
  • Risks: Major financial markets disruption, substantial deterioration of assets, and bank runs