Attached files

file filename
8-K - 8-K - LegacyTexas Financial Group, Inc.a8k4q2014covererslides.htm
EX-99.4 - EXHIBIT 99.4 - LegacyTexas Financial Group, Inc.ex994sharerepurchaseannoun.htm
EX-99.3 - EXHIBIT 99.3 - LegacyTexas Financial Group, Inc.ex993q42014investorprese.htm
EX-99.2 - EXHIBIT 99.2 - LegacyTexas Financial Group, Inc.ex992q42014dividendannounc.htm
EXHIBIT 99.1

FOR IMMEDIATE RELEASE
January 27, 2015
Contact: Investor Inquiries:
Casey Farrell, LegacyTexas Financial Group, Inc.
972-801-5871/shareholderrelations@legacytexasfinancialgroup.com
Media Inquiries:
Mary Rische
972-509-2020 Ex. 7331/mary.rische@legacytexas.com

LegacyTexas Financial Group, Inc. Reports Fourth Quarter and Full Year 2014 Earnings
Strong Loan Growth of $696.7 million, or 26%, over 2013;
Merger with LegacyTexas Group, Inc. Completed on January 1, 2015

PLANO, Texas, January 27, 2015 -- LegacyTexas Financial Group, Inc. (formerly known as ViewPoint Financial Group, Inc.) (NASDAQ: LTXB) (the “Company”), the holding company for LegacyTexas Bank (the “Bank”), today announced net income of $5.5 million and core net income (which is net income adjusted for the impact of merger and acquisition costs and certain other items) of $11.2 million for the quarter ended December 31, 2014. Basic earnings per share for the quarter ended December 31, 2014, was $0.14, while core basic earnings per share for the same period was $0.29. Net income for the year ended December 31, 2014 totaled $31.3 million, or $0.82 basic earnings per share, and core net income for the same period totaled $38.9 million, or $1.03 basic earnings per share. The reconciliation of non-GAAP measures, which the Company believes facilitates the assessment of its banking operations and peer comparability, is included in tabular form at the end of this release.
 
For the Quarters Ended
 
Linked Quarter
 
Year-over-Year
 
For the Years Ended December 31,
 
Q4 2014
 
Q3 2014
 
Q4 2013
 
$ change
 
% change
 
$ change
 
% change
 
2014
 
2013
 
$ change
 
% change
(Dollars in thousands, except per share amounts; all periods unaudited except for net income and earnings per share for full year 2013)
Net income
$
5,466

 
$
9,312

 
$
7,244

 
$
(3,846
)
 
(41.3
)%
 
$
(1,778
)
 
(24.5
)%
 
$
31,278

 
$
31,688

 
$
(410
)
 
(1.3
)%
Core net income
11,186

 
10,026

 
7,776

 
1,160

 
11.6

 
3,410

 
43.9

 
38,902

 
32,096

 
6,806

 
21.2

Basic EPS
0.14

 
0.24

 
0.19

 
(0.10
)
 
(41.7
)
 
(0.05
)
 
(26.3
)
 
0.82

 
0.83

 
(0.01
)
 
(1.2
)
Core basic EPS
0.29

 
0.26

 
0.21

 
0.03

 
11.5

 
0.08

 
38.1

 
1.03

 
0.85

 
0.18

 
21.2


Fourth Quarter 2014 Performance Highlights

Loans held for investment at December 31, 2014, excluding Warehouse Purchase Program loans, grew $144.6 million, or 5.8%, from September 30, 2014, with commercial loans ending the year at $2.06 billion, an increase of $133.9 million, or 6.9%, from the linked quarter. Since December 31, 2013, loans held for investment, excluding Warehouse Purchase Program loans, grew by $583.8 million, or 28.5%, including a $503.8 million, or 32.3%, increase in commercial loans.

Warehouse Purchase Program loans at December 31, 2014, grew on both a linked-quarter and year-over-year basis, increasing by $49.8 million, or 6.8%, from September 30, 2014, and by $112.9 million, or 16.8%, from December 31, 2013.



1


Net interest income for the fourth quarter of 2014 increased by $1.2 million, or 3.3%, from the linked quarter and $5.8 million, or 19.2%, from the fourth quarter of 2013. Non-interest income grew on both a linked-quarter and year-over-year basis. Excluding the impact of merger and acquisition costs, non-interest expense declined by $89,000 from the third quarter of 2014 and by $2.0 million from the fourth quarter of 2013.

Deposits increased by $161.3 million, or 6.5%, from September 30, 2014, with growth in all deposit categories. Compared to December 31, 2013, deposits increased by $393.2 million, or 17.4%.

Net interest margin for the quarter ended December 31, 2014 was 3.84%, a four basis point increase from the linked quarter and a one basis point increase compared to the fourth quarter of 2013.

“2014 was a great year for the Company,” said President and CEO Kevin Hanigan.  "Core earnings were up for both the year and the fourth quarter, loans and deposits continued to show impressive growth, our net interest margin improved and we controlled our operating costs. Closing the merger with LegacyTexas on January 1 was a great way to start 2015. With most of the one-time costs related to the merger now behind us, we look forward to executing our plans for 2015."

On January 1, 2015, the Company completed its merger with LegacyTexas Group, Inc. and changed its name from ViewPoint Financial Group, Inc. to LegacyTexas Financial Group, Inc. On January 2, the Company’s common stock began trading on the NASDAQ Global Select Market under the ticker symbol LTXB. The Company’s bank subsidiary, ViewPoint Bank, N.A., was merged into LegacyTexas Bank, the banking subsidiary of LegacyTexas Group, Inc. ViewPoint Bank will publicly adopt the LegacyTexas name when the bank's branch and branding integration is complete on February 17.  At that time, customers of both institutions will be able to conduct business at any LegacyTexas Bank location. 

At completion of the merger, Mays Davenport (Executive Vice President of LegacyTexas Bank) joined the Company as Executive Vice President and Chief Financial Officer, and George Fisk (Chief Executive Officer and Vice Chairman of LegacyTexas Group, Inc.) and Greg Wilkinson (director of LegacyTexas Group, Inc.) began serving on the Boards of Directors of the Company and the merged LegacyTexas Bank. Kevin Hanigan continues to serve the Company and the merged LegacyTexas Bank as President and Chief Executive Officer. Additionally, Arcilia Acosta, who has served on the Board of Directors of ViewPoint Bank since 2013, was appointed to the Board of Directors of the Company, effective January 1, 2015.

Financial Highlights
 
At or For the Quarters Ended
 
December
 
September
 
December
(unaudited)
2014
 
2014
 
2013
 
(Dollars in thousands, except per share amounts)
Net interest income
$
35,830

 
$
34,670

 
$
30,069

Provision for loan losses
2,637

 
2,511

 
616

Non-interest income
5,294

 
5,058

 
5,005

Non-interest expense
29,796

 
22,791

 
24,128

Income tax expense
3,225

 
5,114

 
3,086

Net income
$
5,466

 
$
9,312

 
$
7,244

 
 
 
 
 
 
Basic earnings per common share
$
0.14

 
$
0.24

 
$
0.19

Basic core (non-GAAP) earnings per common share2
$
0.29

 
$
0.26

 
$
0.21

Weighted average common shares outstanding - basic
38,051,511

 
37,971,790

 
37,686,866

Estimated Tier 1 risk-based capital ratio1
15.14
%
 
16.04
%
 
18.17
%
Total equity to total assets
13.65
%
 
14.28
%
 
15.44
%
Tangible common equity to tangible assets - Non-GAAP 2
13.01
%
 
13.61
%
 
14.70
%
1 Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve.
2 See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.




2


Net Interest Income and Net Interest Margin
 
For the Quarters Ended
 
December
 
September
 
December
(unaudited)
2014
 
2014
 
2013
 
(Dollars in thousands)
Interest income:
 
 
 
 
 
Loans held for investment, excluding Warehouse Purchase Program loans 
$
31,667

 
$
30,134

 
$
26,050

Warehouse Purchase Program loans
5,440

 
5,738

 
5,138

Securities
2,808

 
2,926

 
3,273

Interest-earning deposit accounts
64

 
57

 
38

Total interest income
$
39,979

 
$
38,855

 
$
34,499

Net interest income
$
35,830

 
34,670

 
$
30,069

Net interest margin
3.84
%
 
3.80
%
 
3.83
%
Selected average balances:
 
 
 
 
 
Total earning assets
$
3,732,058

 
$
3,652,243

 
$
3,139,253

Total loans
$
3,120,214

 
$
3,029,047

 
$
2,482,274

Total securities
$
505,692

 
$
532,950

 
$
592,769

Total deposits
$
2,612,125

 
$
2,469,482

 
$
2,240,333

Total borrowings
$
654,396

 
$
733,615

 
$
468,855

Total non-interest-bearing demand deposits
$
473,996

 
$
456,115

 
$
404,087

Total interest-bearing liabilities
$
2,792,525

 
$
2,746,982

 
$
2,305,101


Net interest income for the quarter ended December 31, 2014, was $35.8 million, a $1.2 million increase from the third quarter of 2014 and a $5.8 million increase from the fourth quarter of 2013. The $1.2 million increase from the linked quarter was due to an increase in interest income on loans, which was driven by increased volume in commercial real estate and commercial and industrial loans. The average balance of commercial and industrial loans increased by $68.1 million, or 10.3%, to $730.6 million from the third quarter of 2014, resulting in a $1.1 million increase in interest income. Additionally, the average balance of commercial real estate loans increased by $42.0 million, or 3.5%, from the linked quarter, contributing $439,000 of the increase in interest income. The increases in interest income driven by commercial loan volume was partially offset by a $298,000 decline in interest income on Warehouse Purchase Program loans, as the average balance of the portfolio declined by $25.4 million on a linked-quarter basis.

Interest expense for the quarter ended December 31, 2014, slightly decreased compared to the linked quarter, declining by $36,000, or 0.86%. A $133,000 linked-quarter increase in interest expense related to savings and money market accounts was offset by an $180,000 decrease in interest expense related to borrowings. The average balance of borrowings declined by $79.2 million, or 10.8%, from the linked quarter, which was primarily related to the decline in the Warehouse Purchase Program average balance for the same period, as these loans are partially funded by short-term advances.

The $5.8 million increase in net interest income compared to the fourth quarter of 2013 was due to a $5.9 million, or 19.0%, increase in interest income on loans, which was driven by higher commercial loan volume. For the quarter ended December 31, 2014, the average balance of commercial and industrial loans increased by $338.8 million, or 86.4%, compared to the quarter ended December 31, 2013, which resulted in a $3.2 million increase in interest income. Additionally, the average balance of commercial real estate loans increased by $152.9 million, or 14.2%, for the quarter ended December 31, 2014, compared to the same period in 2013, contributing $1.7 million of the increase in interest income. Increased volume in consumer real estate and Warehouse Purchase Program loans also added to the growth in interest income on a year-over-year basis, which was partially offset by reductions in yields earned on most loan portfolios.







3


Compared to the fourth quarter of 2013, interest expense for the quarter ended December 31, 2014, decreased by $281,000, or 6.3%, which was primarily due to a 35 basis point reduction in the average rate paid on time deposits, as well as a 65 basis point decrease in the average rate paid on borrowings. Average balances of savings, money market and time deposits, as well as the average balance of borrowings, increased compared to the fourth quarter of 2013, which partially offset the decline in interest expense related to lower rates.

The net interest margin for the fourth quarter of 2014 was 3.84%, a four basis point increase from the third quarter of 2014 and a one basis point increase from the fourth quarter of 2013. Accretion of interest related to the 2012 Highlands acquisition contributed three basis points to the net interest margin for the quarter ended December 31, 2014, compared to three basis points for the quarter ended September 30, 2014, and ten basis points for the quarter ended December 31, 2013. The average yield on earning assets for the fourth quarter of 2014 was 4.28%, a two basis point increase from the third quarter of 2014 and a 12 basis point decrease from the fourth quarter of 2013. The cost of deposits for the fourth quarter of 2014 was 0.33%, unchanged from the third quarter of 2014 and a seven basis point decrease from the fourth quarter of 2013.

Non-interest Income

Non-interest income for the fourth quarter of 2014 was $5.3 million, a $236,000, or 4.7%, increase from the third quarter of 2014 and a $289,000, or 5.8%, increase from the fourth quarter of 2013. The increase from the linked quarter was primarily due to a $153,000, or 3.3%, increase in service charges and fees, which was driven by an increase in commercial loan pre-prepayment and other one-time commercial loan fees. Additionally, the increase in non-interest income from the linked quarter included a $100,000 increase in the gain (loss) on sale and disposition of assets, attributable to a net gain of $11,000 on other real estate owned recognized in the fourth quarter of 2014, compared to a net loss of $85,000 on other real estate owned recognized in the third quarter of 2014.

The $289,000 increase in non-interest income for the fourth quarter of 2014 was primarily due to a $465,000, or 10.9%, increase in service charges and fees compared to the fourth quarter of 2013. This growth in service charges and fees was driven by increased commercial loan pre-payment and debit card fee income, and was partially offset by a $105,000 decline in the gain (loss) on sale and disposition of assets, primarily related to a gain recognized on a purchased credit impaired loan obtained in the Highlands acquisition that was paid in full during the fourth quarter of 2013, with no comparable gain recognized in the 2014 period.

Non-interest Expenses

Non-interest expense for the quarter ended December 31, 2014 was $29.8 million, a $7.0 million, or 30.7%, increase from the third quarter of 2014, and a $5.7 million, or 23.5%, increase from the fourth quarter of 2013. The linked-quarter increase includes a $7.1 million increase in merger and acquisition costs related to the merger with LegacyTexas Group, Inc., which was completed on January 1, 2015. Excluding the impact of these merger costs, non-interest expense declined by $89,000, which was driven by a $524,000, or 3.8%, decrease in salaries and employee benefits expense, primarily due to reductions in salary and incentive accruals compared to the linked quarter. In the latter half of 2014, several high-level employees left the Company in advance of the merger with LegacyTexas Group, Inc. This decline was partially offset by a $163,000 increase in advertising expense and a $142,000 increase in outside professional services expense.

The increase in non-interest expense from the fourth quarter of 2013 includes a $7.6 million increase in merger and acquisition costs related to the merger with LegacyTexas Group, Inc., which was completed on January 1, 2015. Excluding the impact of these merger costs, non-interest expense declined by $2.0 million, which was driven by a $1.2 million, or 8.4%, decrease in salaries and employee benefits expense, primarily due to reductions in salary and incentive accruals compared to the fourth quarter of 2013 related to a decrease in the number of employees. This was partially offset by a $622,000 increase in restricted stock expense, caused by $666,000 of expense that was reversed in the 2013 period due to the cancellation of certain stock awards that did not meet performance-based vesting conditions, with no comparable expense reversals recognized in the current period. Compared to the fourth quarter of 2013, advertising expense decreased by $335,000, while occupancy and equipment and office operations expense declined by $261,000 and $160,000, respectively.









4



Financial Condition

Gross loans held for investment at December 31, 2014, excluding Warehouse Purchase Program loans, increased by $144.6 million, or 5.8%, from September 30, 2014, and by $583.8 million, or 28.5%, from December 31, 2013, with increased commercial lending driving the loan growth. Commercial real estate loan balances at December 31, 2014 increased by $46.4 million, or 3.8%, from September 30, 2014, and by $174.7 million, or 16.0%, from December 31, 2013. Commercial and industrial loans at December 31, 2014 increased by $86.3 million, or 12.4%, from September 30, 2014, and by $342.4 million, or 77.9%, from December 31, 2013. Warehouse Purchase Program loans at December 31, 2014 increased by $49.8 million, or 6.8%, from September 30, 2014, and by $112.9 million, or 16.8%, from December 31, 2013. Consumer loans at December 31, 2014 increased by $7.5 million, or 1.3%, from September 30, 2014, and by $75.7 million, or 15.5%, from December 31, 2013.

Energy loans, which are reported as commercial and industrial loans, totaled $359.6 million at December 31, 2014, up $76.0 million from $283.6 million at September 30, 2014, and up $193.1 million from December 31, 2013. In May 2013, the Company formed its Energy Finance group, which is comprised of a group of seasoned lenders, executives, and credit risk professionals with more than 100 years of combined Texas energy experience, to focus on providing loans to private and public oil and gas companies throughout the United States. The group also offers the Bank's full array of commercial services, including Treasury Management and letters of credit, to its customers. The vast majority of the loans in the Energy portfolio are reserve based loans, secured by deeds of trust on properties containing both oil and natural gas reserves. Four loans managed by the Energy Finance group are not secured by oil and gas reserves. These loans, with a combined commitment of $39.5 million and a total outstanding balance of $16.5 million at December 31, 2014, are categorized as “Midstream and Other” loans. Loans in this category are typically related to the transmission of oil and natural gas and would have only an indirect impact from declining commodity prices.
   
Total deposits at December 31, 2014 increased by $161.3 million, or 6.5%, from September 30, 2014, and by $393.2 million, or 17.4%, from December 31, 2013. Savings and money market deposits increased by $118.8 million, or 11.2%, from September 30, 2014, and by $272.2 million, or 30.1%, from December 31, 2013. Over the past year, non-interest-bearing demand deposits have grown by $83.4 million, or 20.3%, and totaled $494.4 million at December 31, 2014, or 18.6% of total deposits. This increase was driven by higher balances in commercial checking products. Time deposits increased by $13.6 million, or 2.7%, from September 30, 2014, and by $39.4 million, or 8.3%, from December 31, 2013.
 
Total shareholders' equity increased by $4.1 million to $568.2 million at December 31, 2014, from $564.1 million at September 30, 2014. The Company's tangible common equity ratio was 13.01% at December 31, 2014, a decrease of 60 basis points from September 30, 2014, and 169 basis points from December 31, 2013.


5


Credit Quality
 
At or For the Quarters Ended
 
December
 
September
 
December
(unaudited)
2014
 
2014
 
2013
 
(Dollars in thousands)
Net charge-offs (recoveries)
$
(327
)
 
$
366

 
$
127

Net charge-offs (recoveries)/Average loans held for investment, excluding Warehouse Purchase Program loans
(0.05
)%
 
0.06
%
 
0.03
%
Net charge-offs (recoveries)/Average loans held for investment
(0.04
)
 
0.05

 
0.02

Provision for loan losses
$
2,637

 
$
2,511

 
$
616

Non-performing loans ("NPLs")
23,507

 
24,382

 
22,124

NPLs/Total loans held for investment, excluding Warehouse Purchase Program loans
0.89
 %
 
0.98
%
 
1.08
%
NPLs/Total loans held for investment
0.69

 
0.76

 
0.81

Non-performing assets ("NPAs")
$
24,058

 
$
24,488

 
$
22,604

NPAs to total assets
0.58
 %
 
0.62
%
 
0.64
%
NPAs/Loans held for investment and foreclosed assets, excluding Warehouse Purchase Program loans
0.91

 
0.98

 
1.10

NPAs/Loans held for investment and foreclosed assets
0.70

 
0.76

 
0.83

Allowance for loan losses
$
25,549

 
$
22,585

 
$
19,358

Allowance for loan losses/Total loans held for investment, excluding Warehouse Purchase Program loans
0.97
 %
 
0.91
%
 
0.94
%
Allowance for loan losses/Total loans held for investment
0.75

 
0.70

 
0.71

Allowance for loan losses/Total Loans held for investment, excluding acquired loans & Warehouse Purchase Program loans 1
1.00

 
0.94

 
1.00

Allowance for loan losses/NPLs
108.69

 
92.63

 
87.50

1 Excludes loans acquired in 2012 from Highlands, which were initially recorded at fair value.

The Company recorded a provision for loan losses of $2.6 million for the quarter ended December 31, 2014, compared to $2.5 million for the quarter ended September 30, 2014, and $616,000 for the quarter ended December 31, 2013. The increase in the provision for loan losses on a linked-quarter basis, as well as compared to the fourth quarter of 2013, was primarily related to increased commercial loan production, as commercial balances increased by $133.9 million compared to September 30, 2014, and by $503.8 million from December 31, 2013. Additionally, in the fourth quarter of 2014, the Company increased its qualitative reserve factors to set aside additional allowance for loan losses due to the economic uncertainty in Texas related to the recent decline in the price of oil. To date, the Company has not recognized a loss from loans in the Energy portfolio, which we believe is a reflection of prudent risk mitigation techniques.  These techniques include sound underwriting (reasonable advance rates based on number and diversification of wells), sound policy (requiring hedges on production sales), and conservative collateral valuations (frequent borrowing base determinations at prices below NYMEX posted rates).  All borrowing base valuations are performed by highly qualified and nationally recognized third party firms intimately familiar with the properties and their production history. At December 31, 2014, less than 1% of the Company's loan portfolio (excluding Warehouse Purchase Program loans) consisted of criticized energy loans, and all energy loans were performing.



 








6



Subsequent Events

The Company is required under generally accepted accounting principles to evaluate subsequent events through the filing of its consolidated financial statements for the year ended December 31, 2014, on Form 10-K. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2014, and will adjust amounts preliminarily reported, if necessary.

Conference Call

The Company will host an investor conference call to review these results on Wednesday, January 28, 2015, at 8 a.m. Central Time. Participants may pre-register for the call by visiting http://dpregister.com/10057578 and will receive a unique pin number, which can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call (toll-free) 1-877-513-4119 at least five minutes prior to the call to be placed into the call by an operator. International participants are asked to call 1-412-902-4148 and participants in Canada are asked to call (toll-free) 1-855-669-9657.

The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.legacytexasfinancialgroup.com. An audio replay will be available one hour after the conclusion of the call at 1-877-344-7529, Conference #10057578. This replay, as well as the webcast, will be available until February 18, 2015.

About LegacyTexas Financial Group, Inc.

LegacyTexas Financial Group, Inc. is a bank holding company based in Plano, Texas. The Company’s holdings include LegacyTexas Bank, which also operates as ViewPoint Bank and First National Bank of Jacksboro. Beginning February 17, 2015, the Bank will operate under the LegacyTexas brand in each of its markets, with 48 banking offices in 19 North Texas cities, including 45 branches in the Dallas-Fort Worth Metroplex. For more information, please visit www.legacytexasfinancialgroup.com.
When used in filings by LegacyTexas Financial Group, Inc. (the "Company”) with the Securities and Exchange Commission (the “SEC”), in the Company's press releases or other public or stockholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “intends” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected, including, among other things: the expected cost savings, synergies and other financial benefits from the Company-LegacyTexas Group, Inc. merger (the “Merger”) might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters might be greater than expected; changes in economic conditions; legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; fluctuations in the price of oil, natural gas and other commodities; competition; changes in management’s business strategies and other factors set forth in the Company's filings with the SEC.

The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

7


LegacyTexas Financial Group, Inc. (formerly known as ViewPoint Financial Group, Inc.)
Consolidated Balance Sheets
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
 
March 31, 2014
 
December 31, 2013
 
(Dollars in thousands)
ASSETS
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
Cash and due from financial institutions
$
28,416

 
$
27,669

 
$
35,276

 
$
33,627

 
$
30,012

Short-term interest-bearing deposits in other financial institutions
103,605

 
62,616

 
130,632

 
88,238

 
57,962

Total cash and cash equivalents
132,021

 
90,285

 
165,908

 
121,865


87,974

Securities available for sale, at fair value
199,699

 
211,364

 
224,184

 
236,062

 
248,012

Securities held to maturity
241,920

 
254,665

 
267,614

 
280,490

 
294,583

Total securities
441,619

 
466,029

 
491,798

 
516,552

 
542,595

Loans held for investment:
 
 
 
 
 
 
 
 
 
Loans held for investment - Warehouse Purchase Program
786,416

 
736,624

 
769,566

 
590,904

 
673,470

Loans held for investment
2,633,680

 
2,489,063

 
2,349,509

 
2,207,580

 
2,049,902

Gross loans
3,420,096

 
3,225,687

 
3,119,075

 
2,798,484

 
2,723,372

Less: allowance for loan losses and deferred fees on loans held for investment
(28,476
)
 
(24,773
)
 
(22,139
)
 
(21,291
)
 
(20,625
)
Net loans
3,391,620

 
3,200,914

 
3,096,936

 
2,777,193

 
2,702,747

FHLB and Federal Reserve Bank stock, at cost
44,084

 
41,473

 
44,532

 
33,632

 
34,883

Bank-owned life insurance
36,193

 
36,010

 
35,863

 
35,718

 
35,565

Premises and equipment, net
48,743

 
51,118

 
51,955

 
52,736

 
53,272

Goodwill
29,650

 
29,650

 
29,650

 
29,650

 
29,650

Other assets
40,184

 
35,045

 
34,602

 
36,242

 
38,546

Total assets
$
4,164,114

 
$
3,950,524

 
$
3,951,244

 
$
3,603,588

 
$
3,525,232

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Non-interest-bearing demand
$
494,376

 
$
483,784

 
$
433,194

 
$
434,463

 
$
410,933

Interest-bearing demand
472,703

 
454,416

 
476,203

 
479,432

 
474,515

Savings and money market
1,176,749

 
1,057,912

 
1,032,496

 
945,046

 
904,576

Time
513,981

 
500,356

 
493,833

 
510,305

 
474,615

Total deposits
2,657,809

 
2,496,468

 
2,435,726

 
2,369,246

 
2,264,639

FHLB advances
862,907

 
799,704

 
874,866

 
607,996

 
639,096

Repurchase agreement and other borrowings
25,000

 
25,000

 
25,000

 
25,000

 
25,000

Accrued expenses and other liabilities
50,175

 
65,225

 
58,240

 
51,247

 
52,037

Total liabilities
3,595,891

 
3,386,397

 
3,393,832

 
3,053,489

 
2,980,772

Shareholders’ equity
 

 
 
 
 

 
 

 
 

Common stock
400

 
400

 
400

 
399

 
399

Additional paid-in capital
386,549

 
383,779

 
381,808

 
379,578

 
377,657

Retained earnings
195,327

 
194,663

 
190,150

 
186,126

 
183,236

Accumulated other comprehensive income (loss), net
930

 
635

 
770

 
78

 
(383
)
Unearned Employee Stock Ownership Plan (ESOP) shares
(14,983
)
 
(15,350
)
 
(15,716
)
 
(16,082
)
 
(16,449
)
Total shareholders’ equity
568,223

 
564,127

 
557,412

 
550,099

 
544,460

Total liabilities and shareholders’ equity
$
4,164,114

 
$
3,950,524

 
$
3,951,244

 
$
3,603,588

 
$
3,525,232

 

8



LegacyTexas Financial Group, Inc. (formerly known as ViewPoint Financial Group, Inc.)
Consolidated Quarterly Statements of Income (unaudited)
 
For the Quarters Ended
 
Fourth Quarter 2014 Compared to:
 
Dec 31, 2014
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Third Quarter 2014
 
Fourth Quarter 2013
Interest and dividend income
(Dollars in thousands)
Loans, including fees
$
37,107

 
$
35,872

 
$
33,888

 
$
30,388

 
$
31,188

 
$
1,235

3.4
 %
 
$
5,919

19.0
 %
Taxable securities
2,109

 
2,225

 
2,453

 
2,565

 
2,583

 
(116
)
(5.2
)
 
(474
)
(18.4
)
Nontaxable securities
561

 
562

 
561

 
564

 
562

 
(1
)
(0.2
)
 
(1
)
(0.2
)
Interest-bearing deposits in other financial institutions
64

 
57

 
71

 
57

 
38

 
7

12.3

 
26

68.4

FHLB and Federal Reserve Bank stock
138

 
139

 
136

 
130

 
128

 
(1
)
(0.7
)
 
10

7.8

 
39,979

 
38,855

 
37,109

 
33,704

 
34,499

 
1,124

2.9

 
5,480

15.9

Interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
2,165

 
2,021

 
2,035

 
1,991

 
2,252

 
144

7.1

 
(87
)
(3.9
)
FHLB advances
1,778

 
1,957

 
1,948

 
1,927

 
1,971

 
(179
)
(9.1
)
 
(193
)
(9.8
)
Repurchase agreement
206

 
205

 
204

 
201

 
206

 
1

0.5

 


Other borrowings

 
2

 

 

 
1

 
(2
)
N/M 1

 
(1
)
N/M 1

 
4,149

 
4,185

 
4,187

 
4,119

 
4,430

 
(36
)
(0.9
)
 
(281
)
(6.3
)
Net interest income
35,830

 
34,670

 
32,922

 
29,585

 
30,069

 
1,160

3.3

 
5,761

19.2

Provision for loan losses
2,637

 
2,511

 
1,197

 
376

 
616

 
126

5.0

 
2,021

328.1

Net interest income after provision for loan losses
33,193

 
32,159

 
31,725

 
29,209

 
29,453

 
1,034

3.2

 
3,740

12.7

Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges and fees
4,724

 
4,571

 
4,874

 
4,298

 
4,259

 
153

3.3

 
465

10.9

Other charges and fees
239

 
227

 
239

 
210

 
246

 
12

5.3

 
(7
)
(2.8
)
Bank-owned life insurance income
183

 
147

 
145

 
153

 
186

 
36

24.5

 
(3
)
(1.6
)
Gain (loss) on sale and disposition of assets
15

 
(85
)
 
727

 
1

 
120

 
100

N/M 1

 
(105
)
(87.5
)
Other
133

 
198

 
(556
)
 
300

 
194

 
(65
)
(32.8
)
 
(61
)
(31.4
)
 
5,294

 
5,058

 
5,429

 
4,962

 
5,005

 
236

4.7

 
289

5.8


9


 
For the Quarters Ended
 
Fourth Quarter 2014 Compared to:
 
Dec 31, 2014
 
Sep 30, 2014
 
Jun 30, 2014
 
Mar 31, 2014
 
Dec 31, 2013
 
Third Quarter 2014
 
Fourth Quarter 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
13,137

 
13,661

 
14,127

 
14,132

 
14,339

 
(524
)
(3.8
)
 
(1,202
)
(8.4
)
Merger and acquisition costs
8,282

 
1,188

 
652

 
169

 
663

 
7,094

597.1

 
7,619

1,149.2

Advertising
425

 
262

 
493

 
355

 
760

 
163

62.2

 
(335
)
(44.1
)
Occupancy and equipment
1,856

 
1,807

 
1,819

 
1,892

 
2,117

 
49

2.7

 
(261
)
(12.3
)
Outside professional services
711

 
569

 
486

 
525

 
824

 
142

25.0

 
(113
)
(13.7
)
Regulatory assessments
700

 
698

 
687

 
628

 
619

 
2

0.3

 
81

13.1

Data processing
1,753

 
1,739

 
1,708

 
1,662

 
1,747

 
14

0.8

 
6

0.3

Office operations
1,621

 
1,566

 
1,717

 
1,680

 
1,781

 
55

3.5

 
(160
)
(9.0
)
Other
1,311

 
1,301

 
1,661

 
1,112

 
1,278

 
10

0.8

 
33

2.6

 
29,796

 
22,791

 
23,350

 
22,155

 
24,128

 
7,005

30.7

 
5,668

23.5

Income before income tax expense
8,691

 
14,426

 
13,804

 
12,016

 
10,330

 
(5,735
)
(39.8
)
 
(1,639
)
(15.9
)
Income tax expense
3,225

 
5,114

 
4,986

 
4,334

 
3,086

 
(1,889
)
(36.9
)
 
139

4.5

Net income
$
5,466

 
$
9,312

 
$
8,818

 
$
7,682

 
$
7,244

 
$
(3,846
)
(41.3
)%
 
$
(1,778
)
(24.5
)%
1N/M - not meaningful


































10




LegacyTexas Financial Group, Inc. (formerly known as ViewPoint Financial Group, Inc.)
Consolidated Statements of Income for the Years Ended December 31,
(Dollars in thousands)
2014
 
2013
 
2012
Interest and dividend income
(unaudited)
 
 
 
 
Loans, including fees
$
137,255

 
$
124,522

 
$
120,596

Taxable securities
9,352

 
9,780

 
14,850

Nontaxable securities
2,248

 
2,133

 
1,891

Interest-bearing deposits in other financial institutions
249

 
126

 
117

FHLB and Federal Reserve Bank stock
543

 
528

 
538

 
149,647

 
137,089

 
137,992

Interest expense
 
 
 
 
 
Deposits
8,212

 
9,545

 
11,453

FHLB advances
7,610

 
8,503

 
9,807

Repurchase agreement
816

 
816

 
876

Other borrowings
2

 
5

 
33

 
16,640

 
18,869

 
22,169

Net interest income
133,007

 
118,220

 
115,823

Provision for loan losses
6,721

 
3,199

 
3,139

Net interest income after provision for loan losses
126,286

 
115,021

 
112,684

Non-interest income
 
 
 
 
 
Service charges and fees
18,467

 
17,778

 
19,512

Other charges and fees
915

 
937

 
579

Net gain on sale of mortgage loans

 

 
5,436

Bank-owned life insurance income
628

 
649

 
699

Gain (loss) on sale of available-for-sale securities

 
(177
)
 
1,014

Gain (loss) on sale and disposition of assets
658

 
835

 
(191
)
Impairment of goodwill

 

 
(818
)
Other
75

 
1,811

 
3,325

 
20,743

 
21,833

 
29,556

Non-interest expense
 
 
 
 
 
Salaries and employee benefits
55,057

 
53,328

 
51,719

Merger and acquisition costs
10,291

 
663

 
4,127

Advertising
1,535

 
2,690

 
1,753

Occupancy and equipment
7,374

 
7,675

 
7,365

Outside professional services
2,291

 
2,760

 
2,320

Regulatory assessments
2,713

 
2,477

 
2,534

Data processing
6,862

 
6,727

 
6,109

Office operations
6,584

 
6,783

 
7,144

Other
5,385

 
5,774

 
4,619

 
98,092

 
88,877

 
87,690

Income before income tax expense
48,937

 
47,977

 
54,550

Income tax expense
17,659

 
16,289

 
19,309

Net income
$
31,278

 
$
31,688

 
$
35,241

Earnings per share:
 
 
 
 
 
Basic
$
0.82

 
$
0.83

 
$
0.98

Diluted
$
0.81

 
$
0.83

 
$
0.98

Dividends declared per share
$
0.48

 
$
0.32

 
$
0.40


11



LegacyTexas Financial Group, Inc. (formerly known as ViewPoint Financial Group, Inc.)
Selected Financial Highlights (unaudited)
 
At or For the Quarters Ended
 
December 31,
 
September 30,
 
December 31,
 
2014
 
2014
 
2013
 
(Dollars in thousands, except per share amounts)
SHARE DATA:
 
 
 
 
 
Weighted average common shares outstanding- basic
38,051,511

 
37,971,790

 
37,686,866

Weighted average common shares outstanding- diluted
38,275,814

 
38,203,508

 
37,911,775

Shares outstanding at end of period
40,014,851

 
40,006,941

 
39,938,816

Income available to common shareholders1
$
5,412

 
$
9,215

 
$
7,147

Basic earnings per common share
0.14

 
0.24

 
0.19

Basic core (non-GAAP) earnings per common share2
0.29

 
0.26

 
0.21

Diluted earnings per common share
0.14

 
0.24

 
0.19

Dividends declared per share
0.12

 
0.12

 
0.12

Total shareholders' equity
568,223

 
564,127

 
544,460

Common shareholders' equity per share (book value per share)
14.20

 
14.10

 
13.63

Tangible book value per share- Non-GAAP2
13.44

 
13.34

 
12.86

Market value per share for the quarter:
 
 
 
 
 
High
27.61

 
27.52

 
27.66

Low
21.33

 
23.94

 
20.19

Close
23.85

 
23.94

 
27.45

KEY RATIOS:
 
 
 
 
 
Return on average common shareholders' equity
3.83
%
 
6.63
%
 
5.34
%
Core return on average common shareholders' equity2
7.85

 
7.14

 
5.73

Return on average assets
0.56

 
0.97

 
0.87

Core return on average assets2
1.14

 
1.05

 
0.94

Efficiency ratio3
52.22

 
54.17

 
67.07

Estimated Tier 1 risk-based capital ratio4
15.14

 
16.04

 
18.17

Estimated total risk-based capital ratio4
15.87

 
16.72

 
18.85

Estimated Tier 1 leverage ratio4
13.86

 
14.03

 
15.67

Total equity to total assets
13.65

 
14.28

 
15.44

Tangible equity to tangible assets- Non-GAAP2
13.01

 
13.61

 
14.70

Number of employees- full-time equivalent
517

 
512

 
561

1 Net of distributed and undistributed earnings to participating securities
2 See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.
3 Calculated by dividing total non-interest expense by net interest income plus non-interest income, excluding gain (loss) on foreclosed assets, amortization of intangible assets, gains (losses) from securities transactions, merger and acquisition costs and other non-recurring items.
4 Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve.
  

12


LegacyTexas Financial Group, Inc. (formerly known as ViewPoint Financial Group, Inc.)
Selected Loan Data (unaudited)
 
At the Quarter Ended
 
December 31,
 2014
 
September 30,
 2014
 
June 30,
 2014
 
March 31,
 2014
 
December 31,
 2013
Loans:
(Dollars in thousands)
Commercial real estate
$
1,265,868

 
$
1,219,436

 
$
1,162,035

 
$
1,118,059

 
$
1,091,200

Warehouse Purchase Program loans
786,416

 
736,624

 
769,566

 
590,904

 
673,470

Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
Commercial
741,678

 
668,421

 
579,561

 
517,247

 
425,030

Warehouse lines of credit
40,146

 
27,122

 
31,426

 
26,333

 
14,400

Total commercial and industrial loans
781,824

 
695,543

 
610,987

 
543,580

 
439,430

Construction and land loans:
 
 
 
 
 
 
 
 
 
Commercial construction and land
14,396

 
13,206

 
28,496

 
34,465

 
27,619

Consumer construction and land
6,902

 
3,694

 
3,445

 
2,604

 
2,628

Total construction and land loans
21,298

 
16,900

 
31,941

 
37,069

 
30,247

Consumer:
 
 
 
 
 
 
 
 
 
Consumer real estate
524,199

 
515,706

 
501,328

 
463,857

 
441,226

Other consumer loans
40,491

 
41,478

 
43,218

 
45,015

 
47,799

Total consumer
564,690

 
557,184

 
544,546

 
508,872

 
489,025

Gross loans held for investment
$
3,420,096

 
$
3,225,687

 
$
3,119,075

 
$
2,798,484

 
$
2,723,372

Non-performing assets:
 
 
 
 
 
 
 
 
 
Commercial real estate
$
6,703

 
$
7,452

 
$
7,386

 
$
8,110

 
$
7,604

Commercial and industrial
5,778

 
6,328

 
6,245

 
5,990

 
5,141

Construction and land
149

 
150

 
213

 

 

Consumer real estate
10,591

 
10,106

 
9,304

 
8,203

 
8,812

Other consumer loans
286

 
346

 
457

 
526

 
567

Total non-performing loans
23,507

 
24,382

 
23,605

 
22,829

 
22,124

Foreclosed assets
551

 
106

 
240

 
387

 
480

Total non-performing assets
$
24,058

 
$
24,488

 
$
23,845

 
$
23,216

 
$
22,604

Total non-performing assets to total assets
0.58
%
 
0.62
%
 
0.60
%
 
0.64
%
 
0.64
%
Total non-performing loans to total loans held for investment, excluding Warehouse Purchase Program loans
0.89
%
 
0.98
%
 
1.00
%
 
1.03
%
 
1.08
%
Total non-performing loans to total loans held for investment
0.69
%
 
0.76
%
 
0.76
%
 
0.82
%
 
0.81
%
Allowance for loan losses to non-performing loans
108.69
%
 
92.63
%
 
86.59
%
 
84.99
%
 
87.50
%
Allowance for loan losses to total loans held for investment, excluding Warehouse Purchase Program loans
0.97
%
 
0.91
%
 
0.87
%
 
0.88
%
 
0.94
%
Allowance for loan losses to total loans held for investment
0.75
%
 
0.70
%
 
0.66
%
 
0.69
%
 
0.71
%
Allowance for loan losses to total loans held for investment, excluding acquired loans and Warehouse Purchase Program loans 1
1.00
%
 
0.94
%
 
0.90
%
 
0.92
%
 
1.00
%

13


 
At the Quarter Ended
 
December 31,
 2014
 
September 30,
 2014
 
June 30,
 2014
 
March 31,
 2014
 
December 31,
 2013
Troubled debt restructured loans ("TDRs"):
 
 
 
 
 
 
 
 
Performing TDRs:
 
 
 
 
 
 
 
 
 
Commercial real estate
$
702

 
$
706

 
$
666

 
$

 
$

Commercial and industrial
153

 
158

 
162

 
167

 
185

Construction and land

 

 

 
2

 
2

Consumer real estate
204

 
407

 
729

 
732

 
737

Other consumer loans
39

 
41

 
43

 
44

 
47

Total performing TDRs
$
1,098

 
$
1,312

 
$
1,600

 
$
945

 
$
971

Non-performing TDRs:2
 
 
 
 
 
 
 
 
 
Commercial real estate
$
6,569

 
$
6,646

 
$
6,694

 
$
7,401

 
$
7,446

Commercial and industrial
2,031

 
2,125

 
2,194

 
2,333

 
349

Construction and land
103

 
104

 

 

 

Consumer real estate
4,034

 
3,606

 
3,199

 
3,024

 
3,070

Other consumer loans
245

 
300

 
411

 
471

 
503

Total non-performing TDRs
$
12,982

 
$
12,781

 
$
12,498

 
$
13,229

 
$
11,368

Allowance for loan losses:
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
22,585

 
$
20,440

 
$
19,402

 
$
19,358

 
$
18,869

Provision expense
2,637

 
2,511

 
1,197

 
376

 
616

Charge-offs
(203
)
 
(493
)
 
(294
)
 
(471
)
 
(255
)
Recoveries
530

 
127

 
135

 
139

 
128

Balance at end of period
$
25,549

 
$
22,585

 
$
20,440

 
$
19,402

 
$
19,358

Net charge-offs (recoveries):
 
 
 
 
 
 
 
 
 
Commercial real estate
$
(435
)
 
$

 
$

 
$

 
$

Commercial and industrial
77

 
152

 
53

 
192

 
43

Construction and land

 
50

 

 

 

Consumer real estate
(1
)
 
69

 
54

 
77

 
14

Other consumer loans
32

 
95

 
52

 
63

 
70

Total net charge-offs
$
(327
)
 
$
366

 
$
159

 
$
332

 
$
127

 
 
 
 
 
 
 
 
 
 
1 Excludes loans acquired from Highlands, which were initially recorded at fair value.
2 Non-performing TDRs are included in the non-performing assets reported above.

14



LegacyTexas Financial Group, Inc. (formerly known as ViewPoint Financial Group, Inc.)
Average Balances and Yields/Rates (unaudited)
 
For the Quarters Ended
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
 
March 31, 2014
 
December 31, 2013
Loans:
(Dollars in thousands)
Commercial real estate
$
1,229,962

 
$
1,187,982

 
$
1,169,484

 
$
1,130,304

 
$
1,077,112

Warehouse Purchase Program loans
619,736

 
645,148

 
571,922

 
446,935

 
542,367

Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
Commercial
703,326

 
633,208

 
561,026

 
449,867

 
376,557

Warehouse lines of credit
27,303

 
29,296

 
29,327

 
17,988

 
15,316

Consumer real estate
523,998

 
513,768

 
480,512

 
440,662

 
441,722

Other consumer loans
41,169

 
42,308

 
44,162

 
46,453

 
49,202

Less: deferred fees and allowance for loan loss
(25,280
)
 
(22,663
)
 
(21,683
)
 
(20,767
)
 
(20,002
)
Loans receivable
3,120,214

 
3,029,047

 
2,834,750

 
2,511,442

 
2,482,274

Securities
505,692

 
532,950

 
545,944

 
562,607

 
592,769

Overnight deposits
106,152

 
90,246

 
118,529

 
96,292

 
64,210

Total interest-earning assets
$
3,732,058

 
$
3,652,243

 
$
3,499,223

 
$
3,170,341

 
$
3,139,253

Deposits:
 
 
 
 
 
 
 
 
 
Interest-bearing demand
$
455,210

 
$
460,192

 
$
468,283

 
$
460,745

 
$
455,983

Savings and money market
1,169,133

 
1,060,311

 
1,000,243

 
918,636

 
902,019

Time
513,786

 
492,864

 
503,035

 
493,196

 
478,244

FHLB advances and other borrowings
654,396

 
733,615

 
678,817

 
464,723

 
468,855

Total interest-bearing liabilities
$
2,792,525

 
$
2,746,982

 
$
2,650,378

 
$
2,337,300

 
$
2,305,101

 
 
 
 
 
 
 
 
 
 
Total assets
$
3,910,111

 
$
3,837,424

 
$
3,683,042

 
$
3,354,668

 
$
3,318,500

Non-interest-bearing demand deposits
$
473,996

 
$
456,115