##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal ended December 31, 2010.
 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 number: 001-34933
 SP BANCORP, INC.
  Maryland
    
    27-3347359(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)5224 West Plano Parkway, Plano Texas
    
    75093(Address of principal executive offices)
    
    (Zip Code)
 (972) 931-5311
  Common Stock, par value $0.01 per share
    
    The NASDAQ Stock Market LLC(Title of each class to be registered)
    
    (Name of each exchange on whicheach class is to be registered)
 None
 YES o NO þ
 YES o NO þ
 YES þ NO o
 YES o NO o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




---



##### 



TABLE OF CONTENTS
 ITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    41ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    41ITEM 2. PROPERTIES
    
    
    41ITEM 3. LEGAL PROCEEDINGS
    
    
    41ITEM 4. RESERVED
    
    
    41ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    42ITEM 6. SELECTED FINANCIAL DATA
    
    
    43ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    43ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    59ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    59ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    59ITEM 9A.(T) CONTROLS AND PROCEDURES
    
    
    59ITEM 9B. OTHER INFORMATION
    
    
    60ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    61ITEM 11. EXECUTIVE COMPENSATION
    
    
    61ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    61ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    62ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    62ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    63CONSOLIDATED FINANCIAL STATEMENTS
    
    
    F-1Exhibit 21Exhibit 31.1Exhibit 31.2Exhibit 32.1




---



##### Table of Contents



PART I
 
 ITEM 1. Business
  
    
    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.
   
    
    general economic conditions, either nationally or in our market areas, that are
worse than expected;
 
    
    competition among depository and other financial institutions;
 
    
    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 and business 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;




---



##### Table of Contents




    
    changes in our financial condition or results of operations that reduce capital; and
 
    
    changes in the financial condition or future prospects of issuers of securities that
we own.
  SP Bancorp, Inc.
     www.shareplus.com.
 SharePlus Federal Bank
    2




---



##### Table of Contents



www.shareplus.com.
 Market Area
 Dallas-Fort Worth Metroplex
  th
  3




---



##### Table of Contents



Irvine, California
     4




---



##### Table of Contents



Louisville, Kentucky
     Competition
   Lending Activities
   5




---



##### Table of Contents



Loan Portfolio Composition.
 At December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Mortgage loans:One- to four-family residential
    
    $
    143,929
    
    
    
    73.38
    %
    
    $
    125,418
    
    
    
    72.96
    %
    
    $
    116,813
    
    
    
    70.87
    %
    
    $
    95,852
    
    
    
    69.71
    %
    
    $
    97,175
    
    
    
    68.15
    %Home equity (1)
    
    
    10,112
    
    
    
    5.15
    %
    
    
    8,996
    
    
    
    5.23
    
    
    
    9,051
    
    
    
    5.49
    
    
    
    7,889
    
    
    
    5.74
    
    
    
    8,706
    
    
    
    6.11Commercial real estate
    
    
    29,303
    
    
    
    14.94
    %
    
    
    22,615
    
    
    
    13.16
    
    
    
    17,498
    
    
    
    10.62
    
    
    
    5,551
    
    
    
    4.04
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    7,195
    
    
    
    3.67
    %
    
    
    9,892
    
    
    
    5.75
    
    
    
    15,525
    
    
    
    9.42
    
    
    
    22,618
    
    
    
    16.45
    
    
    
    30,551
    
    
    
    21.42Signature (2)
    
    
    1,806
    
    
    
    0.92
    %
    
    
    2,072
    
    
    
    1.21
    
    
    
    2,533
    
    
    
    1.54
    
    
    
    2,559
    
    
    
    1.86
    
    
    
    3,403
    
    
    
    2.39Other (3)
    
    
    1,334
    
    
    
    0.68
    %
    
    
    1,536
    
    
    
    0.89
    
    
    
    2,176
    
    
    
    1.32
    
    
    
    2,181
    
    
    
    1.59
    
    
    
    2,755
    
    
    
    1.93Commercial business loans
    
    
    2,473
    
    
    
    1.26
    %
    
    
    1,369
    
    
    
    0.80
    
    
    
    1,225
    
    
    
    0.74
    
    
    
    848
    
    
    
    0.61
    
    
    
    
    
    
    
    Total loans
    
    $
    196,152
    
    
    
    100.00
    %
    
    $
    171,898
    
    
    
    100.00
    %
    
    $
    164,821
    
    
    
    100.00
    %
    
    $
    137,498
    
    
    
    100.00
    %
    
    $
    142,590
    
    
    
    100.00
    %Other items:Premiums on mortgage pools (4)
    
    
    106
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    76
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    140Deferred loan origination costs, net
    
    
    532
    
    
    
    
    
    
    
    458
    
    
    
    
    
    
    
    515
    
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    684Allowance for loan losses
    
    
    (2,136
    )
    
    
    
    
    
    
    (940
    )
    
    
    
    
    
    
    (480
    )
    
    
    
    
    
    
    (380
    )
    
    
    
    
    
    
    (785
    )Total loans, net
    
    $
    194,654
    
    
    
    
    
    
    $
    171,467
    
    
    
    
    
    
    $
    164,932
    
    
    
    
    
    
    $
    137,763
    
    
    
    
    
    
    $
    142,629
 
 (1)
    
    Includes home equity loans, home equity lines of credit and home improvement loans.(2)
    
    Signature loans are unsecured.(3)
    
    Includes loans on recreational vehicles, boats, certificate of deposit and other securities
and other secured loans.(4)
    
    Represents the premium over par value paid for purchased loans. The premium is amortized on a
monthly basis as an adjustment to yield.  6




---



##### Table of Contents



Loan Portfolio Maturities and Yields.
 One- to four-family residential
    
    
    Home equity
    
    
    Commercial real estate
    
    
    Automobile and other vehiclesWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAmount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate(Dollars in thousands)Due During the Years
Ending December 31,2011
    
    $
    8,435
    
    
    
    4.15
    %
    
    $
    7
    
    
    
    7.80
    %
    
    $
    5,855
    
    
    
    6.59
    %
    
    $
    502
    
    
    
    6.53
    %2012
    
    
    288
    
    
    
    6.25
    %
    
    
    58
    
    
    
    7.29
    %
    
    
    5,112
    
    
    
    7.68
    %
    
    
    1,362
    
    
    
    6.98
    %2013
    
    
    5
    
    
    
    7.82
    %
    
    
    179
    
    
    
    6.37
    %
    
    
    4,944
    
    
    
    6.54
    %
    
    
    1,588
    
    
    
    6.52
    %2014 to 2015
    
    
    1,730
    
    
    
    4.84
    %
    
    
    467
    
    
    
    6.34
    %
    
    
    6,126
    
    
    
    5.94
    %
    
    
    3,187
    
    
    
    5.66
    %2016 to 2020
    
    
    4,834
    
    
    
    6.18
    %
    
    
    1,976
    
    
    
    6.73
    %
    
    
    7,090
    
    
    
    6.07
    %
    
    
    542
    
    
    
    5.64
    %2021 to 2025
    
    
    10,239
    
    
    
    5.90
    %
    
    
    2,327
    
    
    
    7.29
    %
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    5.99
    %2026 and beyond
    
    
    118,398
    
    
    
    5.18
    %
    
    
    5,098
    
    
    
    4.56
    %
    
    
    176
    
    
    
    6.51
    %
    
    
    5
    
    
    
    7.48
    %Total
    
    $
    143,929
    
    
    
    5.20
    %
    
    $
    10,112
    
    
    
    5.74
    %
    
    $
    29,303
    
    
    
    6.51
    %
    
    $
    7,195
    
    
    
    6.16
    %Signature
    
    
    Other
    
    
    Commercial business loans
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAmount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate
    
    
    Amount
    
    
    Average Rate(Dollars in thousands)Due During the Years
Ending December 31,2011
    
    $
    82
    
    
    
    7.89
    %
    
    $
    352
    
    
    
    5.07
    %
    
    $
    1,395
    
    
    
    5.77
    %
    
    $
    16,628
    
    
    
    5.26
    %2012
    
    
    218
    
    
    
    12.34
    %
    
    
    63
    
    
    
    5.67
    %
    
    
    268
    
    
    
    6.75
    %
    
    
    7,369
    
    
    
    7.58
    %2013
    
    
    252
    
    
    
    11.66
    %
    
    
    175
    
    
    
    7.11
    %
    
    
    190
    
    
    
    6.00
    %
    
    
    7,333
    
    
    
    6.71
    %2014 to 2015
    
    
    183
    
    
    
    12.15
    %
    
    
    354
    
    
    
    6.35
    %
    
    
    620
    
    
    
    6.84
    %
    
    
    12,667
    
    
    
    5.88
    %2016 to 2020
    
    
    9
    
    
    
    8.75
    %
    
    
    177
    
    
    
    5.90
    %
    
    
    
    
    
    
    
    
    
    
    14,628
    
    
    
    6.18
    %2021 to 2025
    
    
    39
    
    
    
    9.10
    %
    
    
    13
    
    
    
    10.00
    %
    
    
    
    
    
    
    
    
    
    
    12,627
    
    
    
    6.17
    %2026 and beyond
    
    
    1,023
    
    
    
    10.92
    %
    
    
    200
    
    
    
    5.75
    %
    
    
    
    
    
    
    
    
    
    
    124,900
    
    
    
    5.20
    %Total
    
    $
    1,806
    
    
    
    11.13
    %
    
    $
    1,334
    
    
    
    5.97
    %
    
    $
    2,473
    
    
    
    6.16
    %
    
    $
    196,152
    
    
    
    5.53
    %
  7




---



##### Table of Contents



Due After December 31, 2011Fixed
    
    
    Adjustable
    
    
    Total(In thousands)Mortgage loans:One- to four-family residential
    
    $
    46,546
    
    
    $
    88,948
    
    
    $
    135,494Home equity
    
    
    4,861
    
    
    
    5,244
    
    
    
    10,105Commercial real estate
    
    
    16,197
    
    
    
    7,251
    
    
    
    23,448Consumer loans:Automobile and other vehicles
    
    
    6,693
    
    
    
    
    
    
    
    6,693Signature
    
    
    1,557
    
    
    
    167
    
    
    
    1,724Other
    
    
    982
    
    
    
    
    
    
    
    982Commercial loans
    
    
    
    
    
    
    1,078
    
    
    
    1,078Total loans
    
    $
    76,836
    
    
    $
    102,688
    
    
    $
    179,524
 One- to Four-Family Residential Mortgage Loans.
     8




---



##### Table of Contents



Home Equity Loans and Lines of Credit
  9




---



##### Table of Contents



Commercial Real Estate Loans.
 The Wall Street Journal
    10




---



##### Table of Contents



Consumer Loans .
 The Wall Street Journal
   Commercial Business Loans . The Wall Street Journal .
 Loan Originations, Purchases, Sales, Participations and Servicing.
  11




---



##### Table of Contents



Loan Approval Procedures and Authority
    12




---



##### Table of Contents



Non-performing and Problem Assets
 th th th
    13




---



##### Table of Contents



Non-Performing Assets.
 At December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands)Non-accrual loans:Mortgage loans:One- to four-family residential
    
    $
    1,704
    (2)
    
    $
    421
    
    
    $
    578
    
    
    $
    2,839
    
    
    $
    179Home equity
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    2,498
    (3)
    
    
    1,270
    (1)
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    20
    
    
    
    7
    
    
    
    27
    
    
    
    52
    
    
    
    47Signature
    
    
    
    
    
    
    13
    
    
    
    5
    
    
    
    21
    
    
    
    3Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Commercial business loans
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total non-accrual loans
    
    $
    4,448
    
    
    $
    1,711
    
    
    $
    610
    
    
    $
    2,912
    
    
    $
    240Loans delinquent 90 days or greater and still accruing:Mortgage loans:One- to four-family residential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Signature
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans delinquent 90 days or greater and still accruing
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Troubled debt restructurings, not included in non-accrual loans
    
    
    997
    
    
    
    1,717
    
    
    
    860
    
    
    
    189
    
    
    
    100Total non-performing loans
    
    $
    5,445
    
    
    $
    3,428
    
    
    $
    1,470
    
    
    $
    3,101
    
    
    $
    340Other real estate owned and repossessed assets:Mortgage loans:One- to four-family residential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    521
    
    
    
    148Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    49Signature
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total other real estate owned and repossessed assets
    
    $
    
    
    
    $
    
    
    
    $
    8
    
    
    $
    531
    
    
    $
    197Total non-performing assets
    
    $
    5,445
    
    
    $
    3,428
    
    
    $
    1,478
    
    
    $
    3,632
    
    
    $
    537Ratios:Non-performing loans to total loans
    
    
    2.78
    %
    
    
    1.99
    %
    
    
    0.89
    %
    
    
    2.26
    %
    
    
    0.24
    %Non-performing assets to total assets
    
    
    2.28
    %
    
    
    1.65
    %
    
    
    0.77
    %
    
    
    2.17
    %
    
    
    0.30
    %
 
 (1)
    
    Represents a loan in which SharePlus Federal Bank participates but is not the lead lender. At
December 31, 2009, this loan was current but was deemed non-performing because the lead lender
had categorized the loan as substandard, non-accrual.(2)
    
    Includes two loans with outstanding balances totaling $399,000 that were foreclosed during
the first quarter of 2011.(3)
    
    Includes one loan totaling $2.0 million that was foreclosed during the first quarter of 2011.  14




---



##### Table of Contents



Troubled Debt Restructurings.
  15




---



##### Table of Contents



Delinquent Loans.
 Loans Delinquent For30-89 Days
    
    
    90 Days and Over
    
    
    TotalNumber
    
    
    Amount
    
    
    Number
    
    
    Amount
    
    
    Number
    
    
    Amount(Dollars in thousands)At December 31, 2010Mortgage loans:One- to four-family residential
    
    
    16
    
    
    $
    1,984
    
    
    
    11
    
    
    $
    1,704
    
    
    
    27
    
    
    $
    3,688Home equity
    
    
    3
    
    
    
    51
    
    
    
    3
    
    
    
    101
    
    
    
    6
    
    
    
    152Commercial real estate
    
    
    2
    
    
    
    1,844
    
    
    
    2
    
    
    
    2,498
    
    
    
    4
    
    
    
    4,342Consumer loans:Automobile and other vehicles
    
    
    8
    
    
    
    46
    
    
    
    3
    
    
    
    20
    
    
    
    11
    
    
    
    66Signature
    
    
    5
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    6Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    125
    
    
    
    1
    
    
    
    125Total loans
    
    
    34
    
    
    $
    3,931
    
    
    
    20
    
    
    $
    4,448
    
    
    
    54
    
    
    $
    8,379At December 31, 2009Mortgage loans:One- to four-family residential
    
    
    12
    
    
    $
    1,616
    
    
    
    10
    
    
    $
    421
    
    
    
    22
    
    
    $
    2,037Home equity
    
    
    1
    
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    34Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    10
    
    
    
    66
    
    
    
    1
    
    
    
    7
    
    
    
    11
    
    
    
    73Signature
    
    
    3
    
    
    
    10
    
    
    
    1
    
    
    
    13
    
    
    
    4
    
    
    
    23Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans
    
    
    26
    
    
    $
    1,726
    
    
    
    12
    
    
    $
    441
    
    
    
    38
    
    
    $
    2,167At December 31, 2008Mortgage loans:One- to four-family residential
    
    
    9
    
    
    $
    3,674
    
    
    
    6
    
    
    $
    578
    
    
    
    15
    
    
    $
    4,252Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    13
    
    
    
    127
    
    
    
    5
    
    
    
    27
    
    
    
    18
    
    
    
    154Signature
    
    
    14
    
    
    
    31
    
    
    
    1
    
    
    
    5
    
    
    
    15
    
    
    
    36Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans
    
    
    36
    
    
    $
    3,832
    
    
    
    12
    
    
    $
    610
    
    
    
    48
    
    
    $
    4,442At December 31, 2007Mortgage loans:One- to four-family residential
    
    
    11
    
    
    $
    2,693
    
    
    
    8
    
    
    $
    2,839
    
    
    
    19
    
    
    $
    5,532Home equity
    
    
    2
    
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    109Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    34
    
    
    
    314
    
    
    
    4
    
    
    
    52
    
    
    
    38
    
    
    
    366Signature
    
    
    29
    
    
    
    39
    
    
    
    3
    
    
    
    21
    
    
    
    32
    
    
    
    60Other
    
    
    5
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    50Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans
    
    
    81
    
    
    $
    3,205
    
    
    
    15
    
    
    $
    2,912
    
    
    
    96
    
    
    $
    6,117
  16




---



##### Table of Contents



At December 31, 2006Mortgage loans:One- to four-family residential
    
    
    5
    
    
    $
    714
    
    
    
    1
    
    
    $
    179
    
    
    
    6
    
    
    $
    893Home equity
    
    
    2
    
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    27Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    15
    
    
    
    98
    
    
    
    3
    
    
    
    47
    
    
    
    18
    
    
    
    145Signature
    
    
    14
    
    
    
    25
    
    
    
    5
    
    
    
    3
    
    
    
    19
    
    
    
    28Other
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    11
    
    
    
    1
    
    
    
    11Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans
    
    
    36
    
    
    $
    864
    
    
    
    10
    
    
    $
    240
    
    
    
    46
    
    
    $
    1,104
  Other Real Estate Owned and Repossessed Assets
 Classification of Assets.
   17




---



##### Table of Contents



Allowance for Loan Losses
 Analysis and Determination of the Allowance for Loan Losses
  Specific Allowances for Identified Problem Loans
 General Valuation Allowance on the Remainder of the Loan Portfolio
  18




---



##### Table of Contents



19




---



##### Table of Contents



At or For the Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands)Balance at beginning of year
    
    $
    940
    
    
    $
    480
    
    
    $
    380
    
    
    $
    785
    
    
    $
    531Charge-offs:Mortgage loans:One- to four-family residential
    
    
    252
    
    
    
    57
    
    
    
    99
    
    
    
    1,005
    
    
    
    186Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    13
    
    
    
    116
    
    
    
    23
    
    
    
    27
    
    
    
    23Signature
    
    
    44
    
    
    
    38
    
    
    
    85
    
    
    
    59
    
    
    
    45Other
    
    
    15
    
    
    
    34
    
    
    
    98
    
    
    
    69
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total charge-offs
    
    $
    324
    
    
    $
    245
    
    
    $
    305
    
    
    $
    1,160
    
    
    $
    260Recoveries:Mortgage loans:One- to four-family residential
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    17
    
    
    
    6
    
    
    
    3
    
    
    
    
    
    
    
    Signature
    
    
    3
    
    
    
    12
    
    
    
    11
    
    
    
    6
    
    
    
    22Other
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total recoveries
    
    $
    63
    
    
    $
    18
    
    
    $
    14
    
    
    $
    6
    
    
    $
    22Net charge-offs
    
    
    (261
    )
    
    
    (227
    )
    
    
    (291
    )
    
    
    (1,154
    )
    
    
    (238
    )Provision for loan losses
    
    
    1,457
    
    
    
    687
    
    
    
    391
    
    
    
    749
    
    
    
    492Balance at end of year
    
    $
    2,136
    
    
    $
    940
    
    
    $
    480
    
    
    $
    380
    
    
    $
    785Ratios:Net charge-offs to average loans outstanding
    
    
    0.15
    %
    
    
    0.14
    %
    
    
    0.20
    %
    
    
    0.84
    %
    
    
    0.18
    %Allowance for loan losses to non-performing loans at end of year
    
    
    39.23
    %
    
    
    27.42
    %
    
    
    32.65
    %
    
    
    12.25
    %
    
    
    230.88
    %Allowance for loan losses to total loans at end of year
    
    
    1.09
    %
    
    
    0.55
    %
    
    
    0.29
    %
    
    
    0.28
    %
    
    
    0.55
    %
  20




---



##### Table of Contents



Allocation of Allowance for Loan Losses.
 At December 31,2010
    
    
    2009
    
    
    2008Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent ofLoans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans inAllowance
    
    
    Each
    
    
    Allowance
    
    
    Each
    
    
    Allowance
    
    
    Eachfor Loan
    
    
    Category to
    
    
    for Loan
    
    
    Category to
    
    
    for Loan
    
    
    Category toLosses
    
    
    Total Loans
    
    
    Losses
    
    
    Total Loans
    
    
    Losses
    
    
    Total Loans(Dollars in thousands)Mortgage loans:One- to four-family residential
    
    $
    736
    
    
    
    73.4
    %
    
    $
    455
    
    
    
    73.0
    %
    
    $
    220
    
    
    
    70.9
    %Home equity
    
    
    60
    
    
    
    5.1
    
    
    
    33
    
    
    
    5.2
    
    
    
    17
    
    
    
    5.5Commercial real estate
    
    
    1,081
    
    
    
    14.9
    
    
    
    293
    
    
    
    13.1
    
    
    
    61
    
    
    
    10.6Consumer loans:Automobile and other vehicles
    
    
    85
    
    
    
    3.7
    
    
    
    107
    
    
    
    5.8
    
    
    
    135
    
    
    
    9.4Signature
    
    
    27
    
    
    
    0.9
    
    
    
    23
    
    
    
    1.2
    
    
    
    24
    
    
    
    1.6Other
    
    
    16
    
    
    
    0.7
    
    
    
    17
    
    
    
    0.9
    
    
    
    19
    
    
    
    1.3Commercial business loans
    
    
    131
    
    
    
    1.3
    
    
    
    12
    
    
    
    0.8
    
    
    
    4
    
    
    
    0.7Total
    
    $
    2,136
    
    
    
    100.0
    %
    
    $
    940
    
    
    
    100.0
    %
    
    $
    480
    
    
    
    100.0
    %
 At December 31,2007
    
    
    2006Percent of
    
    
    
    
    
    
    Percent ofLoans in
    
    
    
    
    
    
    Loans inAllowance
    
    
    Each
    
    
    Allowance
    
    
    Eachfor Loan
    
    
    Category to
    
    
    for Loan
    
    
    Category toLosses
    
    
    Total Loans
    
    
    Losses
    
    
    Total Loans(Dollars in thousands)Mortgage loans:One- to four-family residential
    
    $
    147
    
    
    
    69.7
    %
    
    $
    473
    
    
    
    68.2
    %Home equity
    
    
    12
    
    
    
    5.7
    
    
    
    13
    
    
    
    6.1Commercial real estate
    
    
    20
    
    
    
    4.0
    
    
    
    
    
    
    
    Consumer loans:Automobile and other vehicles
    
    
    158
    
    
    
    16.5
    
    
    
    249
    
    
    
    21.4Signature
    
    
    27
    
    
    
    1.9
    
    
    
    28
    
    
    
    2.4Other
    
    
    15
    
    
    
    1.6
    
    
    
    22
    
    
    
    1.9Commercial business loans
    
    
    1
    
    
    
    0.6
    
    
    
    
    
    
    
    Total
    
    $
    380
    
    
    
    100.0
    %
    
    $
    785
    
    
    
    100.0
    %
    21




---



##### Table of Contents



Investments
      Mortgage-Backed Securities.
   22




---



##### Table of Contents



CMOs.
  Municipal Obligations.
 Agency Securities.
  23




---



##### Table of Contents



Investment Securities Portfolio.
 At December 31,2010
    
    
    2009
    
    
    2008Amortized
    
    
    
    
    
    
    Amortized
    
    
    
    
    
    
    AmortizedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair Value(In thousands)Securities available for sale:Agencies
    
    $
    
    
    
    $
    
    
    
    $
    2,499
    
    
    $
    2,457
    
    
    $
    
    
    
    $
    Municipal securities
    
    
    3,746
    
    
    
    3,585
    
    
    
    1,370
    
    
    
    1,362
    
    
    
    482
    
    
    
    486Collateralized mortgage obligations
    
    
    10,447
    
    
    
    10,488
    
    
    
    1,820
    
    
    
    1,851
    
    
    
    2,221
    
    
    
    2,237Mortgage-backed securities
    
    
    8,021
    
    
    
    8,003
    
    
    
    7,667
    
    
    
    7,822
    
    
    
    5,200
    
    
    
    5,325Total securities available for sale
    
    $
    22,214
    
    
    $
    22,076
    
    
    $
    13,356
    
    
    $
    13,492
    
    
    $
    7,903
    
    
    $
    8,048
  24




---



##### Table of Contents



Portfolio Maturities and Yields.
 More than One Year
    
    
    More than Five YearsOne Year or Less
    
    
    through Five Years
    
    
    through Ten Years
    
    
    More than Ten Years
    
    
    Total SecuritiesWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAmortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    
    
    
    
    AverageCost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Fair Value
    
    
    Yield(Dollars in thousands)Securities available for sale:Municipal securities
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    446
    
    
    
    3.32
    %
    
    $
    3,300
    
    
    
    3.65
    %
    
    $
    3,746
    
    
    $
    3,585
    
    
    
    3.61
    %Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,447
    
    
    
    2.98
    
    
    
    10,447
    
    
    
    10,488
    
    
    
    2.98Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,482
    
    
    
    2.81
    
    
    
    6,539
    
    
    
    3.06
    
    
    
    8,021
    
    
    
    8,003
    
    
    
    3.01Total securities available for sale
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    1,928
    
    
    
    2.93
    %
    
    $
    20,286
    
    
    
    3.11
    %
    
    $
    22,214
    
    
    $
    22,076
    
    
    
    3.10
    %
  25




---



##### Table of Contents



Sources of Funds
 General.
 Deposits.
    26




---



##### Table of Contents



For the Years Ended December 31,2010
    
    
    2009
    
    
    2008Weighted
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedBalance
    
    
    Percent
    
    
    Average Rate
    
    
    Balance
    
    
    Percent
    
    
    Average Rate
    
    
    Balance
    
    
    Percent
    
    
    Average RateDeposit type:Non-interest bearing demand
    
    $
    6,370
    
    
    
    3.37
    %
    
    
    
    %
    
    $
    4,222
    
    
    
    2.53
    %
    
    
    
    %
    
    $
    3,093
    
    
    
    2.13
    %
    
    
    
    %Interest-bearing demand deposits
    
    
    51,875
    
    
    
    27.48
    
    
    
    0.25
    
    
    
    45,944
    
    
    
    27.51
    
    
    
    0.38
    
    
    
    42,345
    
    
    
    29.14
    
    
    
    0.60Money market deposits
    
    
    36,471
    
    
    
    19.32
    
    
    
    0.71
    
    
    
    27,788
    
    
    
    16.64
    
    
    
    1.24
    
    
    
    27,290
    
    
    
    18.78
    
    
    
    2.43Savings
    
    
    33,319
    
    
    
    17.65
    
    
    
    0.26
    
    
    
    32,140
    
    
    
    19.25
    
    
    
    0.26
    
    
    
    31,658
    
    
    
    21.79
    
    
    
    0.28Certificates of deposit
    
    
    60,758
    
    
    
    32.18
    
    
    
    1.95
    
    
    
    56,906
    
    
    
    34.07
    
    
    
    2.78
    
    
    
    40,934
    
    
    
    28.16
    
    
    
    3.84Total deposits
    
    $
    188,793
    
    
    
    100.00
    %
    
    
    0.88
    %
    
    $
    167,000
    
    
    
    100.00
    %
    
    
    1.31
    %
    
    $
    145,320
    
    
    
    100.00
    %
    
    
    1.77
    %
  27




---



##### Table of Contents



AtDecember 31, 2010(In thousands)Three months or less
    
    $
    2,748Over three months through six months
    
    
    4,934Over six months through one year
    
    
    14,446Over one year to three years
    
    
    7,702Over three years
    
    
    3,130Total
    
    $
    32,960
  At December 31,2010
    
    
    2009
    
    
    2008(In thousands)INTEREST RATE:Less than 2.00%
    
    $
    44,796
    
    
    $
    24,765
    
    
    $
    2.00% -2.99%
    
    
    13,327
    
    
    
    21,251
    
    
    
    18,2753.00% -3.99%
    
    
    3,494
    
    
    
    9,724
    
    
    
    12,8214.00% -4.99%
    
    
    638
    
    
    
    2,595
    
    
    
    10,7105.00% and above
    
    
    
    
    
    
    
    
    
    
    525Total
    
    $
    62,255
    
    
    $
    58,335
    
    
    $
    42,331
  At December 31, 2010Period to MaturityLess Than
    
    
    More Than
    
    
    More Thanor Equal to
    
    
    One to
    
    
    Two to
    
    
    More Than
    
    
    
    
    
    
    Percent ofOne Year
    
    
    Two Years
    
    
    Three Years
    
    
    Three Years
    
    
    Total
    
    
    Total(Dollars in thousands)Interest Rate Range:Less than 2.00%
    
    $
    35,295
    
    
    $
    6,522
    
    
    $
    1,291
    
    
    $
    1,688
    
    
    $
    44,796
    
    
    
    71.96
    %2.00% to 2.99%
    
    
    7,221
    
    
    
    3,072
    
    
    
    1,256
    
    
    
    1,778
    
    
    
    13,327
    
    
    
    21.41
    %3.00% to 3.99%
    
    
    1,291
    
    
    
    385
    
    
    
    557
    
    
    
    1,261
    
    
    
    3,494
    
    
    
    5.61
    %4.00% to 4.99%
    
    
    526
    
    
    
    77
    
    
    
    35
    
    
    
    
    
    
    
    638
    
    
    
    1.02
    %Total
    
    $
    44,333
    
    
    $
    10,056
    
    
    $
    3,139
    
    
    $
    4,727
    
    
    $
    62,255
    
    
    
    100.00
    %
  28




---



##### Table of Contents



Borrowings.
 At or For the Years Ended December 31,2010
    
    
    2009
    
    
    2008(Dollars in thousands)Balance at end of year
    
    $
    15,987
    
    
    $
    15,995
    
    
    $
    30,534Average balance during year
    
    $
    19,877
    
    
    $
    24,279
    
    
    $
    13,791Maximum outstanding at any month end
    
    $
    15,998
    
    
    $
    34,202
    
    
    $
    30,534Weighted average interest rate at end of year
    
    
    2.27
    %
    
    
    2.34
    %
    
    
    2.56
    %Average interest rate during year
    
    
    2.30
    %
    
    
    2.34
    %
    
    
    3.53
    %
 Subsidiary Activities
  SUPERVISION AND REGULATION
 General
     29




---



##### Table of Contents



New Federal Legislation
    30




---



##### Table of Contents



Federal Banking Regulation
 Business Activities.
 Capital Requirements.
    31




---



##### Table of Contents



Loans-to-One Borrower.
 Qualified Thrift Lender Test.
   Capital Distributions.
 
    
    the total capital distributions for the applicable calendar year exceed the sum of
the savings banks net income for that year to date plus the savings banks retained
net income for the preceding two years;
 
    
    the savings bank would not be at least adequately capitalized following the
distribution;
 
    
    the distribution would violate any applicable statute, regulation, agreement or
Office of Thrift Supervision-imposed condition; or
 
    
    the savings bank is not eligible for expedited treatment of its filings.
   
    
    the savings bank would be undercapitalized following the distribution;
 
    
    the proposed capital distribution raises safety and soundness concerns; or
 
    
    the capital distribution would violate a prohibition contained in any statute,
regulation or agreement.
  32




---



##### Table of Contents



Liquidity.
 Community Reinvestment Act and Fair Lending Laws.
 Transactions with Related Parties.
  (i)
    
    be made on terms that are substantially the same as, and follow credit
underwriting procedures that are not less stringent than, those prevailing for
comparable transactions with unaffiliated persons and that do not involve more than the
normal risk of repayment or present other unfavorable features; and
 (ii)
    
    not exceed certain limitations on the amount of credit extended to such
persons, individually and in the aggregate, which limits are based, in part, on the
amount of SharePlus Federal Banks capital.
  33




---



##### Table of Contents



Enforcement.
 Standards for Safety and Soundness.
 Prompt Corrective Action Regulations .
 
    
    well-capitalized (at least 5% leverage capital, 6% Tier 1 risk-based capital and 10%
total risk-based capital);
 
    
    adequately capitalized (at least 4% leverage capital, 4% Tier 1 risk-based capital
and 8% total risk-based capital);
 
    
    undercapitalized (less than 3% leverage capital, 4% Tier 1 risk-based capital and 8%
total risk-based capital);
 
    
    significantly undercapitalized (less than 3% leverage capital, 3% Tier 1 risk-based
capital and 6% total risk-based capital); and
 
    
    critically undercapitalized (less than 2% tangible capital).
  34




---



##### Table of Contents



Insurance of Deposit Accounts.
      35




---



##### Table of Contents



Temporary Liquidity Guarantee Program.
  Prohibitions Against Tying Arrangements .
 Federal Home Loan Bank System.
  36




---



##### Table of Contents



Other Regulations
  
    
    Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
 
    
    Home Mortgage Disclosure Act, requiring financial institutions to provide
information to enable the public and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the housing needs of the
community it serves;
 
    
    Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed
or other prohibited factors in extending credit;
 
    
    Fair Credit Reporting Act, governing the use and provision of information to credit
reporting agencies;
 
    
    Fair Debt Collection Act, governing the manner in which consumer debts may be
collected by collection agencies;
 
    
    Truth in Savings Act; and
 
    
    rules and regulations of the various federal agencies charged with the
responsibility of implementing such federal laws.
  
    
    Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with administrative
subpoenas of financial records;
 
    
    Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern
automatic deposits to and withdrawals from deposit accounts and customers rights and
liabilities arising from the use of automated teller machines and other electronic
banking services;
 
    
    Check Clearing for the 21st Century Act (also known as Check 21), which
gives substitute checks, such as digital check images and copies made from that
image, the same legal standing as the original paper check;
 
    
    The USA PATRIOT Act, which requires savings banks to, among other things, establish
broadened anti-money laundering compliance programs, and due diligence policies and
controls to ensure the detection and reporting of money laundering. Such required
compliance programs are intended to supplement existing compliance requirements that
also apply to financial institutions under the Bank Secrecy Act and the Office of
Foreign Assets Control regulations; and
 
    
    The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer
financial information by financial institutions with unaffiliated third parties.
Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering
financial products or services to retail customers to provide such customers with the
financial institutions
privacy policy and provide such customers the opportunity to opt out of the
sharing of certain personal financial information with unaffiliated third parties.
  37




---



##### Table of Contents



Holding Company Regulation
 General
 Permissible Activities.
   (i)
    
    the approval of interstate supervisory acquisitions by savings and loan holding
companies; and
 (ii)
    
    the acquisition of a savings institution in another state if the laws of the
state of the target savings institution specifically permit such acquisition.
   38




---



##### Table of Contents



Federal Securities Laws
   Sarbanes-Oxley Act of 2002
  TAXATION
 Federal Taxation
 General.
  39




---



##### Table of Contents



Method of Accounting .
 Minimum Tax.
 Net Operating Loss Carryovers.
 Corporate Dividends.
 Audit of Tax Returns.
 State Taxation
  Personnel
  Availability of Annual Report on Form 10-K
   40




---



##### Table of Contents



ITEM 1A. Risk Factors
  
 ITEM 1B. Unresolved Staff Comments
  
 ITEM 2. Properties
  Year AcquiredAddress
    
    Leased or Owned
    
    
    or Leased
    
    
    ExpiresMain Office:5224 W. Plano Parkway
    
    Owned
    
    
    2002
    
    
    
    N/APlano, TX 75093Branch Offices:2501 Oak Lawn Ave
    
    Leased
    
    
    2006
    
    
    
    03/2017Dallas, Texas 752197701 Legacy Drive
    
    Leased
    
    
    2004
    
    
    
    12/2014Plano, Texas 750245600 Headquarters Drive
    
    Leased
    
    
    2004
    
    
    
    12/2014Plano, Texas 7502414841 North Dallas Parkway *
    
    Leased
    
    
    2005
    
    
    
    12/2010Dallas, Texas 752545200 Commerce Crossings
    
    Leased
    
    
    2005
    
    
    
    05/2011Louisville, Kentucky 402291900 Colonel Sanders Lane
    
    Leased
    
    
    2005
    
    
    
    05/2011Louisville, Kentucky 402131 Glen Bell Way
    
    Leased
    
    
    2005
    
    
    
    01/2015Irvine, California 92618
 
 *
    
    This branch was relocated to Plano, Texas in the first quarter of 2011. At that time,
it was converted to an administrative office including an ATM with limited on-site services
available from Bank personnel. 
 ITEM 3. Legal Proceedings
  
 ITEM 4. [Removed and Reserved].
  41




---



##### Table of Contents



PART II
 
 ITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Market, Holder and Dividend Information.
  Sales of Unregistered Securities.
 Use of Proceeds.
     42




---



##### Table of Contents



Securities Authorized for Issuance Under Equity Compensation Plans.
 Stock Repurchases.
 Stock Performance Graph.
 
 ITEM 6. Selected Financial Data
  
 ITEM 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations
 Overview
      43




---



##### Table of Contents



Business Strategy
   Continuing to diversify our loan portfolio by emphasizing the origination of one- to
four-family residential loans, commercial real estate loans and commercial loans.
  Continuing conservative underwriting guidelines and aggressively monitoring our loan portfolio
to maintain asset quality
 Emphasizing lower cost core deposits to reduce the funding costs of our loan originations.
  44




---



##### Table of Contents



Managing interest rate risk.
 Increasing our sources of noninterest income.
 Implementing a controlled growth strategy to minimize increases in our non-interest expense.
   Critical Accounting Policies
  Allowance for Loan Losses.
  45




---



##### Table of Contents




    
    loans that we evaluate individually for impairment under ASC 310-10, Receivables;
and
 
    
    groups of loans with similar risk characteristics that we evaluate collectively for
impairment under ASC 450-20, Loss Contingencies.
  Economy
   46




---



##### Table of Contents



Comparison of Financial Condition at December 31, 2010 and December 31, 2009
 Summary of Selected Balance Sheet Data.
 December 31,
    
    
    December 31,
    
    
    Increase(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    % ChangeTotal assets
    
    $
    238,817
    
    
    $
    208,132
    
    
    $
    30,685
    
    
    
    14.74
    %Total cash and cash equivalents
    
    
    11,814
    
    
    
    11,717
    
    
    
    97
    
    
    
    0.83Securities available for sale, at fair value
    
    
    22,076
    
    
    
    13,492
    
    
    
    8,584
    
    
    
    63.62Loans held for sale
    
    
    3,589
    
    
    
    932
    
    
    
    2,657
    
    
    
    285.09Loans, net
    
    
    191,065
    
    
    
    170,535
    
    
    
    20,530
    
    
    
    12.04Premises and equipment, net
    
    
    4,637
    
    
    
    4,905
    
    
    
    (268
    )
    
    
    (5.46
    )Federal Home Loan Bank of Dallas stock
and other restricted stock, at cost
    
    
    1,003
    
    
    
    1,655
    
    
    
    (652
    )
    
    
    (39.40
    )Other assets (1)
    
    
    4,633
    
    
    
    4,896
    
    
    
    (263
    )
    
    
    (5.37
    )Deposits
    
    
    188,244
    
    
    
    172,591
    
    
    
    15,653
    
    
    
    9.07Borrowings
    
    
    15,987
    
    
    
    15,995
    
    
    
    (8
    )
    
    
    (0.05
    )Stockholders equity
    
    
    32,104
    
    
    
    17,262
    
    
    
    14,842
    
    
    
    85.98
 1)
    
    Includes fixed annuity investment, accrued interest receivable, deferred tax assets and other
assets.       Comparison of Operating Results for the Year Ended December 31, 2010 and 2009
 General.
  47




---



##### Table of Contents



Summary of Net Interest Income.
 Years Ended December 31,
    
    
    Increase(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    % ChangeInterest income:Interest and fees on loans
    
    $
    9,774
    
    
    $
    10,000
    
    
    $
    (226
    )
    
    
    (2.26
    )%Securities  taxable
    
    
    321
    
    
    
    425
    
    
    
    (104
    )
    
    
    (24.47
    )Securities  nontaxable
    
    
    74
    
    
    
    40
    
    
    
    34
    
    
    
    85.00Other interest  earning assets
    
    
    175
    
    
    
    131
    
    
    
    44
    
    
    
    33.59Total interest income
    
    
    10,344
    
    
    
    10,596
    
    
    
    (252
    )
    
    
    (2.38
    )Interest expense:Savings deposits
    
    
    85
    
    
    
    82
    
    
    
    3
    
    
    
    3.66Money market
    
    
    259
    
    
    
    345
    
    
    
    (86
    )
    
    
    (24.93
    )Demand deposit account
    
    
    131
    
    
    
    175
    
    
    
    (44
    )
    
    
    (25.14
    )Certificates of deposit
    
    
    1,185
    
    
    
    1,582
    
    
    
    (397
    )
    
    
    (25.09
    )Total deposits
    
    
    1,660
    
    
    
    2,184
    
    
    
    (524
    )
    
    
    (23.99
    )Borrowings
    
    
    457
    
    
    
    567
    
    
    
    (110
    )
    
    
    (19.40
    )Total interest expense
    
    
    2,117
    
    
    
    2,751
    
    
    
    (634
    )
    
    
    (23.05
    )Net interest income
    
    $
    8,227
    
    
    $
    7,845
    
    
    $
    382
    
    
    
    4.87
    %
  48




---



##### Table of Contents



Summary of Average Yields, Average Rates and Average Balances.
 Average Yields and Rates
 IncreaseYears Ended December 31,
    
    
    (decrease)2010
    
    
    2009
    
    
    in basis pointsLoans
    
    
    5.59
    %
    
    
    5.95
    %
    
    
    (0.36
    )Securites  taxable
    
    
    2.46
    %
    
    
    3.85
    %
    
    
    (1.39
    )Securities  nontaxable
    
    
    3.72
    %
    
    
    3.91
    %
    
    
    (0.19
    )Other interest  earning assets
    
    
    0.57
    %
    
    
    0.62
    %
    
    
    (0.05
    )Total interest-earning assets
    
    
    4.69
    %
    
    
    5.27
    %
    
    
    (0.58
    )Savings deposits
    
    
    0.26
    %
    
    
    0.26
    %
    
    
    0.00Money market
    
    
    0.71
    %
    
    
    1.24
    %
    
    
    (0.53
    )Demand deposit account
    
    
    0.25
    %
    
    
    0.38
    %
    
    
    (0.13
    )Certificates of deposit
    
    
    1.95
    %
    
    
    2.78
    %
    
    
    (0.83
    )Total deposits
    
    
    0.91
    %
    
    
    1.34
    %
    
    
    (0.43
    )Borrowings
    
    
    2.30
    %
    
    
    2.34
    %
    
    
    (0.04
    )Total interest-bearing liabilities
    
    
    1.05
    %
    
    
    1.47
    %
    
    
    (0.42
    )Net interest rate spread
    
    
    3.64
    %
    
    
    3.80
    %
    
    
    (0.16
    )Net interest margin
    
    
    3.73
    %
    
    
    3.90
    %
    
    
    (0.17
    )
 Average Balances
 Years Ended December 31,
    
    
    Increase(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    % ChangeLoans
    
    $
    174,778
    
    
    $
    167,995
    
    
    $
    6,783
    
    
    
    4.04
    %Securites  taxable
    
    
    13,023
    
    
    
    11,053
    
    
    
    1,970
    
    
    
    17.82Securities  nontaxable
    
    
    1,991
    
    
    
    1,024
    
    
    
    967
    
    
    
    94.43Other interest  earning assets
    
    
    30,939
    
    
    
    21,081
    
    
    
    9,858
    
    
    
    46.76Total interest-earning assets
    
    
    220,731
    
    
    
    201,153
    
    
    
    19,578
    
    
    
    9.73Savings deposits
    
    
    33,319
    
    
    
    32,140
    
    
    
    1,179
    
    
    
    3.67Money market
    
    
    36,471
    
    
    
    27,788
    
    
    
    8,683
    
    
    
    31.25Demand deposit account
    
    
    51,875
    
    
    
    45,944
    
    
    
    5,931
    
    
    
    12.91Certificates of deposit
    
    
    60,758
    
    
    
    56,906
    
    
    
    3,852
    
    
    
    6.77Total deposits
    
    
    182,423
    
    
    
    162,778
    
    
    
    19,645
    
    
    
    12.07Borrowings
    
    
    19,877
    
    
    
    24,279
    
    
    
    (4,402
    )
    
    
    (18.13
    )Total interest-bearing liabilities
    
    
    202,300
    
    
    
    187,057
    
    
    
    15,243
    
    
    
    8.15Net interest-earning assets
    
    $
    18,431
    
    
    $
    14,096
    
    
    $
    4,335
    
    
    
    30.75
  49




---



##### Table of Contents



Interest Income.
    Interest Expense.
    Net Interest Income.
 Provision for Loan Losses.
  50




---



##### Table of Contents



Summary of Noninterest Income.
 Years Ended December 31,
    
    
    Increase(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    % ChangeNoninterest income:Service charges
    
    $
    1,522
    
    
    $
    1,674
    
    
    $
    (152
    )
    
    
    (9.08
    )%Gain on sale of securities available for sale
    
    
    248
    
    
    
    34
    
    
    
    214
    
    
    
    629.41Gain on sale of mortgage loans
    
    
    979
    
    
    
    545
    
    
    
    434
    
    
    
    79.63Other
    
    
    159
    
    
    
    118
    
    
    
    41
    
    
    
    34.75Total noninterest income
    
    $
    2,908
    
    
    $
    2,371
    
    
    $
    537
    
    
    
    22.65
    %
 Noninterest Income.
   51




---



##### Table of Contents



Summary of Noninterest Expense.
 Years Ended December 31,
    
    
    Increase(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    % ChangeNoninterest expense:Compensation and benefits
    
    $
    4,625
    
    
    $
    4,474
    
    
    $
    151
    
    
    
    3.38
    %Occupancy costs
    
    
    1,113
    
    
    
    1,174
    
    
    
    (61
    )
    
    
    (5.20
    )Equipment expense
    
    
    238
    
    
    
    217
    
    
    
    21
    
    
    
    9.68Data processing expense
    
    
    532
    
    
    
    568
    
    
    
    (36
    )
    
    
    (6.34
    )ATM expense
    
    
    374
    
    
    
    380
    
    
    
    (6
    )
    
    
    (1.58
    )Professional and outside services
    
    
    651
    
    
    
    541
    
    
    
    110
    
    
    
    20.33Stationery and supplies
    
    
    114
    
    
    
    92
    
    
    
    22
    
    
    
    23.91Marketing
    
    
    162
    
    
    
    181
    
    
    
    (19
    )
    
    
    (10.50
    )FDIC insurance assessments
    
    
    321
    
    
    
    335
    
    
    
    (14
    )
    
    
    (4.18
    )Other
    
    
    717
    
    
    
    712
    
    
    
    5
    
    
    
    0.70Total noninterest expense
    
    $
    8,847
    
    
    $
    8,674
    
    
    $
    173
    
    
    
    1.99
    %
 Noninterest Expense.
    Income Tax Expense.
  52




---



##### Table of Contents



Average Balances and Yields
  For the Years Ended December 31,2010
    
    
    2009
    
    
    2008Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    
    
    
    
    Outstanding
    
    
    
    
    
    
    
    
    
    
    OutstandingBalance
    
    
    Interest
    
    
    Yield/ Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/ Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/ Rate(Dollars in thousands)Interest-earning assets:Loans
    
    $
    174,778
    
    
    $
    9,774
    
    
    
    5.59
    %
    
    $
    167,995
    
    
    $
    10,000
    
    
    
    5.95
    %
    
    $
    145,948
    
    
    $
    8,719
    
    
    
    5.97
    %Taxable investment securities
    
    
    13,023
    
    
    
    321
    
    
    
    2.46
    
    
    
    11,053
    
    
    
    425
    
    
    
    3.85
    
    
    
    12,971
    
    
    
    635
    
    
    
    4.90Nontaxable investment securities
    
    
    1,991
    
    
    
    74
    
    
    
    3.72
    
    
    
    1,024
    
    
    
    40
    
    
    
    3.91
    
    
    
    485
    
    
    
    19
    
    
    
    3.92Total other interest-earning assets
    
    
    29,777
    
    
    
    171
    
    
    
    0.57
    
    
    
    19,735
    
    
    
    128
    
    
    
    0.65
    
    
    
    7,264
    
    
    
    177
    
    
    
    2.44FHLB of Dallas stock
    
    
    1,162
    
    
    
    4
    
    
    
    0.34
    
    
    
    1,346
    
    
    
    3
    
    
    
    0.22
    
    
    
    833
    
    
    
    21
    
    
    
    2.52Total interest-earning assets
    
    
    220,731
    
    
    
    10,344
    
    
    
    4.69
    
    
    
    201,153
    
    
    
    10,596
    
    
    
    5.27
    
    
    
    167,501
    
    
    
    9,571
    
    
    
    5.71Noninterest-earning assets
    
    
    10,208
    
    
    
    
    
    
    
    
    
    
    
    9,422
    
    
    
    
    
    
    
    
    
    
    
    9,836Total assets
    
    $
    230,939
    
    
    
    
    
    
    
    
    
    
    $
    210,575
    
    
    
    
    
    
    
    
    
    
    $
    177,337Interest-bearing liabilities:Savings deposits
    
    $
    33,319
    
    
    $
    85
    
    
    
    0.26
    
    
    $
    32,140
    
    
    $
    82
    
    
    
    0.26
    
    
    $
    31,658
    
    
    $
    89
    
    
    
    0.28Money market
    
    
    36,471
    
    
    
    259
    
    
    
    0.71
    
    
    
    27,788
    
    
    
    345
    
    
    
    1.24
    
    
    
    27,290
    
    
    
    662
    
    
    
    2.43Demand deposit accounts
    
    
    51,875
    
    
    
    131
    
    
    
    0.25
    
    
    
    45,944
    
    
    
    175
    
    
    
    0.38
    
    
    
    42,345
    
    
    
    255
    
    
    
    0.60Certificates of deposit
    
    
    60,758
    
    
    
    1,185
    
    
    
    1.95
    
    
    
    56,906
    
    
    
    1,582
    
    
    
    2.78
    
    
    
    40,934
    
    
    
    1,571
    
    
    
    3.84Total deposits
    
    
    182,423
    
    
    
    1,660
    
    
    
    0.91
    
    
    
    162,778
    
    
    
    2,184
    
    
    
    1.34
    
    
    
    142,227
    
    
    
    2,577
    
    
    
    1.81Borrowings
    
    
    19,877
    
    
    
    457
    
    
    
    2.30
    
    
    
    24,279
    
    
    
    567
    
    
    
    2.34
    
    
    
    13,791
    
    
    
    487
    
    
    
    3.53Total interest-bearing liabilities
    
    
    202,300
    
    
    
    2,117
    
    
    
    1.05
    
    
    
    187,057
    
    
    
    2,751
    
    
    
    1.47
    
    
    
    156,018
    
    
    
    3,064
    
    
    
    1.96Noninterest-bearing liabilities
    
    
    8,869
    
    
    
    
    
    
    
    
    
    
    
    6,528
    
    
    
    
    
    
    
    
    
    
    
    4,683Total liabilities
    
    
    211,169
    
    
    
    
    
    
    
    
    
    
    
    193,585
    
    
    
    
    
    
    
    
    
    
    
    160,701Equity
    
    
    19,770
    
    
    
    
    
    
    
    
    
    
    
    16,990
    
    
    
    
    
    
    
    
    
    
    
    16,636Total liabilities and equity
    
    $
    230,939
    
    
    
    
    
    
    
    
    
    
    $
    210,575
    
    
    
    
    
    
    
    
    
    
    $
    177,337Net interest income
    
    
    
    
    
    $
    8,227
    
    
    
    
    
    
    
    
    
    
    $
    7,845
    
    
    
    
    
    
    
    
    
    
    $
    6,507Net interest rate spread (1)
    
    
    
    
    
    
    
    
    
    
    3.64
    %
    
    
    
    
    
    
    
    
    
    
    3.80
    %
    
    
    
    
    
    
    
    
    
    
    3.75
    %Net interest-earning assets (2)
    
    $
    18,431
    
    
    
    
    
    
    
    
    
    
    $
    14,096
    
    
    
    
    
    
    
    
    
    
    $
    11,483Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    3.73
    %
    
    
    
    
    
    
    
    
    
    
    3.90
    %
    
    
    
    
    
    
    
    
    
    
    3.88
    %Average of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    109.11
    %
    
    
    
    
    
    
    
    
    
    
    107.54
    %
    
    
    
    
    
    
    
    
    
    
    107.36
    %
 
 (1)
    
    Net interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing liabilities.(2)
    
    Net interest-earning assets represent total interest-earning assets less total
interest-bearing liabilities.(3)
    
    Net interest margin represents net interest income divided by average total interest-earning
assets.  53




---



##### Table of Contents



Rate/Volume Analysis
  Years Ended December 31,
    
    
    Years Ended December 31,2010 vs. 2009
    
    
    2009 vs. 2008Increase (Decrease)
    
    
    Total
    
    
    Increase (Decrease)
    
    
    TotalDue to
    
    
    Increase
    
    
    Due to
    
    
    IncreaseVolume
    
    
    Rate
    
    
    (Decrease)
    
    
    Volume
    
    
    Rate
    
    
    (Decrease)(In thousands)Interest-earning assets:Loans
    
    $
    394
    
    
    $
    (620
    )
    
    $
    (226
    )
    
    $
    1,313
    
    
    $
    (29
    )
    
    $
    1,284Taxable investment securities
    
    
    67
    
    
    
    (171
    )
    
    
    (104
    )
    
    
    (86
    )
    
    
    (124
    )
    
    
    (210
    )Nontaxable investment securities
    
    
    36
    
    
    
    (2
    )
    
    
    34
    
    
    
    21
    
    
    
    
    
    
    
    21Other interest earning assets
    
    
    60
    
    
    
    (17
    )
    
    
    43
    
    
    
    148
    
    
    
    (197
    )
    
    
    (49
    )FHLB of Dallas stock
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    8
    
    
    
    (26
    )
    
    
    (18
    )Total interest-earning assets
    
    
    557
    
    
    
    (809
    )
    
    
    (252
    )
    
    
    1,404
    
    
    
    (376
    )
    
    
    1,028Interest-bearing liabilities:Savings deposits
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    1
    
    
    
    (8
    )
    
    
    (7
    )Money market
    
    
    88
    
    
    
    (174
    )
    
    
    (86
    )
    
    
    12
    
    
    
    (329
    )
    
    
    (317
    )Demand deposit accounts
    
    
    21
    
    
    
    (65
    )
    
    
    (44
    )
    
    
    20
    
    
    
    (100
    )
    
    
    (80
    )Certificates of deposit
    
    
    101
    
    
    
    (498
    )
    
    
    (397
    )
    
    
    515
    
    
    
    (504
    )
    
    
    11Total deposits
    
    
    213
    
    
    
    (737
    )
    
    
    (524
    )
    
    
    548
    
    
    
    (941
    )
    
    
    (393
    )Borrowings
    
    
    (101
    )
    
    
    (9
    )
    
    
    (110
    )
    
    
    283
    
    
    
    (203
    )
    
    
    80Other liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest-bearing liabilities
    
    
    112
    
    
    
    (746
    )
    
    
    (634
    )
    
    
    831
    
    
    
    (1,144
    )
    
    
    (313
    )Change in net interest income
    
    $
    445
    
    
    $
    (63
    )
    
    $
    382
    
    
    $
    573
    
    
    $
    768
    
    
    $
    1,341
 Management of Market Risk
 General
   54




---



##### Table of Contents



(i)
    
    sell long-term, fixed-rate one- to four-family residential mortgage loans
(terms of 15 years or more) that we originate;
 (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 real estate loans, commercial loans 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.
  Net Portfolio Value .
  55




---



##### Table of Contents



At December 31, 2010NPV as a Percentage ofPresent Value of Assets (3)
    
    
    Net Interest IncomeChange in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    IncreaseInterest
    
    
    
    
    
    Estimated (Decrease) in
    
    
    
    
    
    
    (Decrease)
    
    
    EstimatedRates (basis
    
    Estimated
    
    
    NPV
    
    
    NPV Ratio
    
    
    (basis
    
    
    Net Interestpoints) (1)
    
    NPV (2)
    
    
    Amount
    
    
    Percent
    
    
    (4)
    
    
    points)
    
    
    Income
    
    
    Amount
    
    
    Percent(Dollars in thousands)+300
    
    $
    24,934
    
    
    $
    (7,753
    )
    
    
    (23.72
    )%
    
    
    11.23
    %
    
    
    (245
    )
    
    $
    9,652
    
    
    $
    (425
    )
    
    
    (4.22
    )%+200
    
    
    28,153
    
    
    
    (4,534
    )
    
    
    (13.87
    )%
    
    
    12.34
    %
    
    
    (134
    )
    
    
    9,885
    
    
    
    (192
    )
    
    
    (1.91
    )%+100
    
    
    30,932
    
    
    
    (1,755
    )
    
    
    (5.37
    )%
    
    
    13.22
    %
    
    
    (46
    )
    
    
    10,028
    
    
    
    (49
    )
    
    
    (.49
    )%0
    
    
    32,687
    
    
    
    
    
    
    
    
    %
    
    
    13.68
    %
    
    
    
    
    
    
    10,077
    
    
    
    
    
    
    
    
    %-100
    
    
    30,749
    
    
    
    (1,938
    )
    
    
    (5.93
    )%
    
    
    12.82
    %
    
    
    (86
    )
    
    
    9,885
    
    
    
    (192
    )
    
    
    (1.91
    )%
 
 (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.   Liquidity and Capital Resources
   56




---



##### Table of Contents



57




---



##### Table of Contents



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
 Commitments.
 Contractual Obligations.
 Recent Accounting Pronouncements
     58




---



##### Table of Contents



Impact of Inflation and Changing Prices
  
 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
  
 ITEM 8. Financial Statements and Supplementary Data
  
 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 ITEM 9A.(T) Controls and Procedures
    59




---



##### Table of Contents



ITEM 9B. Other Information
   60




---



##### Table of Contents



PART III
 
 ITEM 10. Directors, Executive Officers and Corporate Governance
  Section 16(a) Beneficial Ownership Reporting Compliance
   Code of Ethics
   Procedures to be Followed by Stockholders to Submit Recommendations for Director Candidates
  
 ITEM 11. Executive Compensation
 Information concerning executive compensation is incorporated herein by reference from our
Proxy Statement, specifically the section captioned Proposal I  Election of Directors.
 
 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
   61




---



##### Table of Contents



ITEM 13. Certain Relationships and Related Transactions and Director Independence
  
 ITEM 14. Principal Accountant Fees and Services
   62




---



##### Table of Contents



PART IV
 
 ITEM 15. Exhibits and Financial Statement Schedules
 (a)(1)
    
    Financial Statements
  (A)
    
    Report of Independent Registered Public Accounting Firm;
 (B)
    
    Consolidated Balance Sheets  December 31, 2010 and 2009;
 (C)
    
    Consolidated Statements of Income  years ended December 31,
2010 and 2009;
 (D)
    
    Consolidated Statements of Stockholders Equity  years ended
December 31, 2010 and 2009;
 (E)
    
    Consolidated Statements of Cash Flows  years ended December
31, 2010 and 2009; and
 (F)
    
    Notes to Consolidated Financial Statements.
 (a)(2)
    
    Financial Statement Schedules
  (a)(3)
    
    Exhibits
 3.1
    
    
    Articles of Incorporation of SP Bancorp, Inc.*3.2
    
    
    Bylaws of SP Bancorp, Inc.*4
    
    
    Form of Common Stock Certificate of SP Bancorp, Inc.*10.1
    
    
    2010 Incentive Compensation Plan*10.2
    
    
    2008 Nonqualified Deferred Compensation Plan*10.3
    
    
    Phantom Stock Plan*21
    
    
    Subsidiaries31.1
    
    
    Certification required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference to the Registration Statement on Form
S-1 (file no. 333-167967), initially filed July 2, 2010.  63




---



##### Table of Contents



Signatures
  SP Bancorp, Inc.Date: March 29, 2011
    By:
    /s/ Jeffrey L. WeaverJeffrey L. WeaverPresident and Chief Executive Officer
(Duly Authorized Representative)  Signatures
    
    Title
    
    Date/s/ Jeffrey L. Weaver

Jeffrey L. Weaver
    
    President, Chief Executive
Officer and Director (Principal
Executive Officer)
    
    March 29, 2011/s/ Suzanne C. Salls

Suzanne C. Salls
    
    Senior Vice President and Chief
Financial Officer (Principal
Financial and Accounting
Officer)
    
    March 29, 2011/s/ Paul Zmigrosky

Paul Zmigrosky
    
    Chairman of the Board
    
    March 29, 2011/s/ Richard Holland

Richard Holland
    
    Vice Chairman of the Board
    
    March 29, 2011/s/ David Rader

David Rader
    
    Director
    
    March 29, 2011/s/ P. Stan Keith

P. Stan Keith
    
    Director
    
    March 29, 2011/s/ Christopher Cozby

Christopher Cozby
    
    Director
    
    March 29, 2011/s/ Carl Forsythe

Carl Forsythe
    
    Director
    
    March 29, 2011/s/ David Stephens

David Stephens
    
    Director
    
    March 29, 2011/s/ Jeff Williams

Jeff Williams
    
    Director
    
    March 29, 2011
  64




---



##### Table of Contents



EXHIBIT INDEX
 3.1
    
    
    Articles of Incorporation of SP Bancorp, Inc.*3.2
    
    
    Bylaws of SP Bancorp, Inc.*4
    
    
    Form of Common Stock Certificate of SP Bancorp, Inc.*10.1
    
    
    2010 Incentive Compensation Plan*10.2
    
    
    2008 Nonqualified Deferred Compensation Plan*10.3
    
    
    Phantom Stock Plan*21
    
    
    Subsidiaries31.1
    
    
    Certification required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference to the Registration Statement on Form S-1 (file no. 333-167967),
initially filed July 2, 2010.  65




---



##### Table of Contents



Table of Contents
 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF SP BANCORP, INC.
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at December 31, 2010 and 2009
    
    
    F-3Consolidated Statements of Income for the years ended December 31, 2010 and 2009
    
    
    F-4Consolidated Statements of Changes in Stockholders Equity for the years ended
December 31, 2010 and 2009
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7  F-37
   F-1




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    /s/ McGladrey & Pullen, LLP 
 
  F-2




---



##### Table of Contents



SP Bancorp, Inc.
 
 Consolidated Balance Sheets
 (Dollars in thousands, except per share amounts)
 December 31,2010
    
    
    2009ASSETSCash and due from banks
    
    $
    2,384
    
    
    $
    7,902Federal funds sold
    
    
    9,430
    
    
    
    3,815Total cash and cash equivalents
    
    
    11,814
    
    
    
    11,717Securities available for sale (amortized cost of $22,214 at
December 31, 2010 and $13,356 at December 31, 2009)
    
    
    22,076
    
    
    
    13,492Fixed annuity investment
    
    
    1,131
    
    
    
    1,088Loans held for sale
    
    
    3,589
    
    
    
    932Loans, net of allowance for losses of $2,136 at December 31, 2010
and $940 at December 31, 2009
    
    
    191,065
    
    
    
    170,535Accrued interest receivable
    
    
    833
    
    
    
    764Premises and equipment, net
    
    
    4,637
    
    
    
    4,905Federal Home Loan Bank stock and other restricted
stock, at cost
    
    
    1,003
    
    
    
    1,655Deferred tax assets
    
    
    1,131
    
    
    
    679Other assets
    
    
    1,538
    
    
    
    2,365Total assets
    
    $
    238,817
    
    
    $
    208,132LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    5,738
    
    
    $
    4,932Interest-bearing
    
    
    182,506
    
    
    
    167,659Total deposits
    
    
    188,244
    
    
    
    172,591Borrowings
    
    
    15,987
    
    
    
    15,995Accrued interest payable
    
    
    39
    
    
    
    45Other liabilities
    
    
    2,443
    
    
    
    2,239Total liabilities
    
    
    206,713
    
    
    
    190,870Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value; 50,000,000 shares authorized; none
issued or outstanding
    
    
    
    
    
    
    Common stock, par value $0.01 per share; 100,000,000 shares
authorized;
1,725,000 shares issued and outstanding at December 31, 2010
    
    
    17
    
    
    
    Additional paid-in capital
    
    
    15,290
    
    
    
    Unallocated Employee Stock Ownership Plan (ESOP) shares
    
    
    (817
    )
    
    
    Retained earnings  substantially restricted
    
    
    17,701
    
    
    
    17,177Accumulated other comprehensive (loss) income
    
    
    (87
    )
    
    
    85Total stockholders equity
    
    
    32,104
    
    
    
    17,262Total liabilities and stockholders equity
    
    $
    238,817
    
    
    $
    208,132
   F-3




---



##### Table of Contents



SP Bancorp, Inc.
 
 Consolidated Statements of Income
 (Dollars in thousands)
 Years Ended December 31,2010
    
    
    2009Interest income:Interest and fees on loans
    
    $
    9,774
    
    
    $
    10,000Securities  taxable
    
    
    321
    
    
    
    425Securities  nontaxable
    
    
    74
    
    
    
    40Other interest  earning assets
    
    
    175
    
    
    
    131Total interest income
    
    
    10,344
    
    
    
    10,596Interest expense:Deposit accounts
    
    
    1,660
    
    
    
    2,184Borrowings
    
    
    457
    
    
    
    567Total interest expense
    
    
    2,117
    
    
    
    2,751Net interest income
    
    
    8,227
    
    
    
    7,845Provision for loan losses
    
    
    1,457
    
    
    
    687Net interest income after provision
for loan losses
    
    
    6,770
    
    
    
    7,158Noninterest income:Service charges
    
    
    1,522
    
    
    
    1,674Gain on sale of securities available for sale
    
    
    248
    
    
    
    34Gain on sale of mortgage loans
    
    
    979
    
    
    
    545Other
    
    
    159
    
    
    
    118Total noninterest income
    
    
    2,908
    
    
    
    2,371Noninterest expense:Compensation and benefits
    
    
    4,625
    
    
    
    4,474Occupancy costs
    
    
    1,113
    
    
    
    1,174Equipment expense
    
    
    238
    
    
    
    217Data processing expense
    
    
    532
    
    
    
    568ATM expense
    
    
    374
    
    
    
    380Professional and outside services
    
    
    651
    
    
    
    541Stationery and supplies
    
    
    114
    
    
    
    92Marketing
    
    
    162
    
    
    
    181FDIC insurance assessments
    
    
    321
    
    
    
    335Other
    
    
    717
    
    
    
    712Total noninterest expense
    
    
    8,847
    
    
    
    8,674Income before tax expense
    
    
    831
    
    
    
    855Income tax expense
    
    
    307
    
    
    
    362Net income
    
    $
    524
    
    
    $
    493
   F-4




---



##### Table of Contents



SP Bancorp, Inc.
 
 Consolidated Statements of Changes in Stockholders Equity
 (Dollars in thousands)
 AccumulatedAdditional
    
    
    Unallocated
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Paid-In
    
    
    ESOP
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Shares
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBalance, December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    16,684
    
    
    $
    90
    
    
    $
    16,774Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493
    
    
    
    
    
    
    
    493Unrealized gain on securities available for sale, net
of tax
of $8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    17Reclassification adjustment for gain on securities
available
for sale included in net income, net of tax of $(12)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    (22
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    488Balance, December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,177
    
    
    
    85
    
    
    
    17,262Issuance of 1,725,000 shares of common stock, net of
offering costs
    
    
    17
    
    
    
    15,291
    
    
    
    (828
    )
    
    
    
    
    
    
    
    
    
    
    14,480ESOP shares allocated
    
    
    
    
    
    
    (1
    )
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    10Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    524
    
    
    
    
    
    
    
    524Unrealized loss on securities available for sale, net
of tax
of ($10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (16
    )Reclassification adjustment for gain on securities
available
for sale included in net income, net of tax of $(92)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (156
    )
    
    
    (156
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    352Balance, December 31, 2010
    
    $
    17
    
    
    $
    15,290
    
    
    $
    (817
    )
    
    $
    17,701
    
    
    $
    (87
    )
    
    $
    32,104
   F-5




---



##### Table of Contents



SP Bancorp, Inc.
 
 Consolidated Statements of Cash Flows
 (Dollars in thousands)
 Years Ended December 31,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    524
    
    
    $
    493Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    394
    
    
    
    405Amortization of premiums on investments
    
    
    252
    
    
    
    67ESOP expense
    
    
    10
    
    
    
    Provision for loan losses
    
    
    1,457
    
    
    
    687Deferred tax (benefit) expense
    
    
    (350
    )
    
    
    243Loss on sale of repossessed assets
    
    
    3
    
    
    
    9(Gain) loss on sale of other real estate owned
    
    
    (10
    )
    
    
    21Gain on sale of securities available for sale
    
    
    (248
    )
    
    
    (34
    )Gains on sales of mortgage loans
    
    
    (979
    )
    
    
    (545
    )Proceeds from sale of mortgage loans
    
    
    43,400
    
    
    
    30,549Loans originated for sale
    
    
    (45,078
    )
    
    
    (30,466
    )Increase in accrued interest receivable
    
    
    (69
    )
    
    
    (47
    )Decrease in other assets
    
    
    827
    
    
    
    414Increase in fixed annuity investment
    
    
    (43
    )
    
    
    (49
    )Increase in accrued interest payable and other liabilities
    
    
    198
    
    
    
    72Net cash provided by operating activities
    
    
    288
    
    
    
    1,819Cash flows from investing activities:Purchase of securities available for sale
    
    
    (23,682
    )
    
    
    (11,512
    )Maturities of securities available for sale
    
    
    7,621
    
    
    
    3,640Proceeds from sale of securities available for sale
    
    
    7,199
    
    
    
    2,385Redemptions (purchases) of Federal Home Loan Bank stock
    
    
    652
    
    
    
    (85
    )Loan originations, net
    
    
    (22,023
    )
    
    
    (7,168
    )Proceeds from sale of repossessed assets
    
    
    33
    
    
    
    56Proceeds from sale of other real estate owned
    
    
    10
    
    
    
    324Purchases of premises and equipment
    
    
    (126
    )
    
    
    (17
    )Net cash used in investing activities
    
    
    (30,316
    )
    
    
    (12,377
    )Cash flows from financing activities:Net increase in deposit accounts
    
    
    15,653
    
    
    
    31,083Repayments of borrowings, net
    
    
    (8
    )
    
    
    (14,539
    )Issuance of common stock, net of conversion costs
    
    
    14,480
    
    
    
    Net cash provided by financing activities
    
    
    30,125
    
    
    
    16,544Net increase in cash and cash equivalents
    
    
    97
    
    
    
    5,986Cash and cash equivalents at beginning of year
    
    
    11,717
    
    
    
    5,731Cash and cash equivalents at end of year
    
    $
    11,814
    
    
    $
    11,717Cash transactions:Income taxes paid
    
    $
    517
    
    
    $
    27Interest expense paid
    
    $
    2,090
    
    
    $
    2,795Noncash transactions  transfers of loans to other real
estate owned and repossessed assets
    
    $
    36
    
    
    $
    407
   F-6




---



##### Table of Contents



SP Bancorp, Inc.
 
 Notes to Consolidated Financial Statements
 (Dollars in thousands)
 Note 1. Summary of Significant Accounting Policies
 General
   Consolidation
  Accounting Standards Codification
  Use of Estimates
   F-7




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Cash and Cash Equivalents
    Securities
      Fixed Annuity Investment
  Loans Held for Sale
   F-8




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Loans
       Allowance for Loan Losses
    F-9




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Accrued Interest Receivable
  December 31,
    
    
    December 31,2010
    
    
    2009Securities
    
    $
    109
    
    
    $
    83Loans
    
    
    724
    
    
    
    681$
    833
    
    
    $
    764
 Restricted Stock
   Premises and Equipment
   F-10




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Other Real Estate Owned (OREO)
   Income Taxes
   ESOP
   F-11




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Earnings per Share
  Segment Reporting
  Loan Commitments and Related Financial Instruments
   Comprehensive Income
  Reclassifications
  Fair Values of Financial Instruments
   F-12




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Recent Authoritative Accounting Guidance
    Note 2. Stock Conversion
   F-13




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
   Note 3. Restrictions on Cash and Due from Banks
   F-14




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Note 4. Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available for SaleDecember 31, 2010:Municipal securities
    
    $
    3,746
    
    
    $
    4
    
    
    $
    (165
    )
    
    $
    3,585Collateralized mortgage obligations
guaranteed
by FNMA and FHLMC
    
    
    10,447
    
    
    
    70
    
    
    
    (29
    )
    
    
    10,488Mortgage-backed securities guaranteed by
SBA, FNMA, GNMA and FHLMC
    
    
    8,021
    
    
    
    29
    
    
    
    (47
    )
    
    
    8,003$
    22,214
    
    
    $
    103
    
    
    $
    (241
    )
    
    $
    22,076December 31, 2009:Agency securities
    
    $
    2,499
    
    
    $
    2
    
    
    $
    (44
    )
    
    $
    2,457Municipal securities
    
    
    1,370
    
    
    
    28
    
    
    
    (36
    )
    
    
    1,362Collateralized mortgage obligations
guaranteed
by FNMA and FHLMC
    
    
    1,820
    
    
    
    31
    
    
    
    
    
    
    
    1,851Mortgage-backed securities guaranteed by
SBA, FNMA, GNMA and FHLMC
    
    
    7,667
    
    
    
    162
    
    
    
    (7
    )
    
    
    7,822$
    13,356
    
    
    $
    223
    
    
    $
    (87
    )
    
    $
    13,492
    F-15




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Continuous Unrealized
    
    
    Continuous UnrealizedLosses Existing for
    
    
    Losses Existing forNumber of Security
    
    
    Less than 12 Months
    
    
    12 Months or Longer
    
    
    TotalPositions with
    
    
    Market
    
    
    Unrealized
    
    
    Market
    
    
    Unrealized
    
    
    Market
    
    
    UnrealizedUnrealized losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesDecember 31, 2010:Municipal securities
    
    
    9
    
    
    $
    2,690
    
    
    $
    (165
    )
    
    $
    
    
    
    $
    
    
    
    $
    2,690
    
    
    $
    (165
    )Collateralized mortgage
obligations
    
    
    2
    
    
    
    3,344
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    3,344
    
    
    
    (29
    )Mortgage-backed securities
    
    
    3
    
    
    
    6,073
    
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    6,073
    
    
    
    (47
    )14
    
    
    $
    12,107
    
    
    $
    (241
    )
    
    $
    
    
    
    $
    
    
    
    $
    12,107
    
    
    $
    (241
    )December 31, 2009:Agency securities
    
    
    3
    
    
    $
    1,955
    
    
    $
    (44
    )
    
    $
    
    
    
    $
    
    
    
    $
    1,955
    
    
    $
    (44
    )Municipal securities
    
    
    2
    
    
    
    857
    
    
    
    (36
    )
    
    
    
    
    
    
    
    
    
    
    857
    
    
    
    (36
    )Mortgage-backed securities
    
    
    1
    
    
    
    2,576
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    2,576
    
    
    
    (7
    )6
    
    
    $
    5,388
    
    
    $
    (87
    )
    
    $
    
    
    
    $
    
    
    
    $
    5,388
    
    
    $
    (87
    )
   F-16




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  December 31, 2010
    
    
    December 31, 2009Available for Sale
    
    
    Available for SaleAmortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueAfter 5 years through 10 years
    
    $
    446
    
    
    $
    447
    
    
    $
    1,924
    
    
    $
    1,939Due after 10 years
    
    
    3,300
    
    
    
    3,138
    
    
    
    1,945
    
    
    
    1,8803,746
    
    
    
    3,585
    
    
    
    3,869
    
    
    
    3,819Mortgage-backed securities and
Collateralized mortgage
obligations
    
    
    18,468
    
    
    
    18,491
    
    
    
    9,487
    
    
    
    9,673$
    22,214
    
    
    $
    22,076
    
    
    $
    13,356
    
    
    $
    13,492
 Note 5. Loans and Allowance for Loan Losses
  December 31,
    
    
    December 31,2010
    
    
    2009Commercial business
    
    $
    2,473
    
    
    $
    1,369Commercial real estate
    
    
    29,303
    
    
    
    22,615One-to-four family
    
    
    140,340
    
    
    
    124,486Home equity
    
    
    10,112
    
    
    
    8,996Consumer
    
    
    10,335
    
    
    
    13,500192,563
    
    
    
    170,966Premiums/discounts, net
    
    
    106
    
    
    
    51Deferred loan costs, net
    
    
    532
    
    
    
    458Less allowance for loan losses
    
    
    (2,136
    )
    
    
    (940
    )$
    191,065
    
    
    $
    170,535
    F-17




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
       Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalAt December 31, 2010Past Due:30-59 days
    
    $
    
    
    
    $
    1,844
    
    
    $
    1,675
    
    
    $
    38
    
    
    $
    49
    
    
    
    3,60660-89 days
    
    
    
    
    
    
    
    
    
    
    309
    
    
    
    13
    
    
    
    3
    
    
    
    32590 days or more
    
    
    125
    
    
    
    2,498
    
    
    
    1,704
    
    
    
    101
    
    
    
    20
    
    
    
    4,448Total past due
    
    
    125
    
    
    
    4,342
    
    
    
    3,688
    
    
    
    152
    
    
    
    72
    
    
    
    8,379Current
    
    $
    2,348
    
    
    $
    24,961
    
    
    $
    136,652
    
    
    $
    9,960
    
    
    $
    10,263
    
    
    $
    184,184Total loans
    
    $
    2,473
    
    
    $
    29,303
    
    
    $
    140,340
    
    
    $
    10,112
    
    
    $
    10,335
    
    
    $
    192,563At December 31, 2009Past Due:30-59 days
    
    $
    
    
    
    $
    
    
    
    $
    1,477
    
    
    $
    
    
    
    $
    76
    
    
    $
    1,55360-89 days
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    34
    
    
    
    
    
    
    
    17390 days or more
    
    
    
    
    
    
    
    
    
    
    421
    
    
    
    
    
    
    
    20
    
    
    
    441Total past due
    
    
    
    
    
    
    
    
    
    
    2,037
    
    
    
    34
    
    
    
    96
    
    
    
    2,167Current
    
    $
    1,369
    
    
    $
    22,615
    
    
    $
    122,449
    
    
    $
    8,962
    
    
    $
    13,404
    
    
    $
    168,799Total loans
    
    $
    1,369
    
    
    $
    22,615
    
    
    $
    124,486
    
    
    $
    8,996
    
    
    $
    13,500
    
    
    $
    170,966
    F-18




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
   Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalAt December 31, 2010Credit Quality Indicator:Credit Risk Profile by
Grade or Classification:Pass
    
    $
    2,088
    
    
    $
    17,760
    
    
    $
    137,601
    
    
    $
    9,969
    
    
    $
    10,175
    
    
    $
    177,593Special Mention
    
    
    
    
    
    
    1,607
    
    
    
    1,036
    
    
    
    42
    
    
    
    138
    
    
    
    2,823Substandard
    
    
    385
    
    
    
    9,936
    
    
    
    1,703
    
    
    
    101
    
    
    
    20
    
    
    
    12,145Doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    2,473
    
    
    $
    29,303
    
    
    $
    140,340
    
    
    $
    10,112
    
    
    $
    10,335
    
    
    $
    192,563At December 31, 2009Credit Quality Indicator:Credit Risk Profile by
Grade or Classification:Pass
    
    $
    495
    
    
    $
    13,645
    
    
    $
    121,175
    
    
    $
    8,749
    
    
    $
    13,284
    
    
    $
    157,348Special Mention
    
    
    
    
    
    
    3,632
    
    
    
    2,890
    
    
    
    247
    
    
    
    197
    
    
    
    6,966Substandard
    
    
    874
    
    
    
    5,338
    
    
    
    421
    
    
    
    
    
    
    
    19
    
    
    
    6,652Doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,369
    
    
    $
    22,615
    
    
    $
    124,486
    
    
    $
    8,996
    
    
    $
    13,500
    
    
    $
    170,966
  F-19




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalAt December 31, 2010Impaired loans:Impaired loans with an allowance for loan
losses
    
    $
    125
    
    
    $
    2,498
    
    
    $
    1,035
    
    
    $
    33
    
    
    $
    7
    
    
    $
    3,698Impaired loans with no allowance for loan
losses
    
    
    
    
    
    
    1,900
    
    
    
    1,634
    
    
    
    81
    
    
    
    53
    
    
    
    3,668Total impaired loans
    
    $
    125
    
    
    $
    4,398
    
    
    $
    2,669
    
    
    $
    114
    
    
    $
    60
    
    
    $
    7,366Unpaid principal balance of impaired loans
    
    $
    125
    
    
    $
    4,398
    
    
    $
    2,669
    
    
    $
    114
    
    
    $
    60
    
    
    $
    7,366Allowance for loan losses on impaired loans
    
    $
    100
    
    
    $
    626
    
    
    $
    183
    
    
    $
    17
    
    
    $
    3
    
    
    $
    929Average recorded investment in impaired loans
    
    $
    63
    
    
    $
    2,834
    
    
    $
    1,887
    
    
    $
    57
    
    
    $
    51
    
    
    $
    4,892Interest income recognized on a cash basis
during the
period that the loans were impaired
    
    $
    5
    
    
    $
    174
    
    
    $
    86
    
    
    $
    6
    
    
    $
    5
    
    
    $
    276Nonperforming loans:Nonaccrual loans
    
    $
    125
    
    
    $
    2,498
    
    
    $
    1,704
    
    
    $
    101
    
    
    $
    20
    
    
    $
    4,448Loans past due 90 days and still accruing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Troubled debt restructurings (not
included in
nonaccrual loans)
    
    
    
    
    
    
    
    
    
    
    841
    
    
    
    7
    
    
    
    149
    
    
    
    997Total nonperforming loans
    
    $
    125
    
    
    $
    2,498
    
    
    $
    2,545
    
    
    $
    108
    
    
    $
    169
    
    
    $
    5,445At December 31, 2009Impaired loans:Impaired loans with an allowance for loan
losses
    
    $
    
    
    
    $
    
    
    
    $
    543
    
    
    $
    
    
    
    $
    19
    
    
    $
    562Impaired loans with no allowance for loan
losses
    
    
    
    
    
    
    1,270
    
    
    
    562
    
    
    
    
    
    
    
    23
    
    
    
    1,855Total impaired loans
    
    $
    
    
    
    $
    1,270
    
    
    $
    1,105
    
    
    $
    
    
    
    $
    42
    
    
    $
    2,417Unpaid principal balance of impaired loans
    
    $
    
    
    
    $
    1,270
    
    
    $
    1,105
    
    
    $
    
    
    
    $
    42
    
    
    $
    2,417Allowance for loan losses on impaired loans
    
    $
    
    
    
    $
    
    
    
    $
    161
    
    
    $
    
    
    
    $
    7
    
    
    $
    168Average recorded investment in impaired loans
    
    $
    
    
    
    $
    635
    
    
    $
    886
    
    
    $
    
    
    
    $
    37
    
    
    $
    1,558Interest income recognized on a cash basis
during the
period that the loans were impaired
    
    $
    
    
    
    $
    17
    
    
    $
    49
    
    
    $
    
    
    
    $
    3
    
    
    $
    69Nonperforming loans:Nonaccrual loans
    
    $
    
    
    
    $
    1,270
    
    
    $
    421
    
    
    $
    
    
    
    $
    20
    
    
    $
    1,711Loans past due 90 days and still accruing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Troubled debt restructurings (not
included in
nonaccrual loans)
    
    
    
    
    
    
    
    
    
    
    1,280
    
    
    
    
    
    
    
    437
    
    
    
    1,717Total nonperforming loans
    
    $
    
    
    
    $
    1,270
    
    
    $
    1,701
    
    
    $
    
    
    
    $
    457
    
    
    $
    3,428
   F-20




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalYear Ended December 31, 2010:Allowance for Loan Losses:Balance, beginning of year
    
    $
    12
    
    
    $
    293
    
    
    $
    455
    
    
    $
    33
    
    
    $
    147
    
    
    $
    940Provision for loan losses
    
    
    119
    
    
    
    788
    
    
    
    492
    
    
    
    27
    
    
    
    31
    
    
    
    1,457Loans charged to the allowance
    
    
    
    
    
    
    
    
    
    
    (252
    )
    
    
    
    
    
    
    (72
    )
    
    
    (324
    )Recoveries of loans previously charged off
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    22
    
    
    
    63Balance, end of year
    
    $
    131
    
    
    $
    1,081
    
    
    $
    736
    
    
    $
    60
    
    
    $
    128
    
    
    $
    2,136Ending balance: individually evaluated
for impairment
    
    $
    100
    
    
    $
    626
    
    
    $
    183
    
    
    $
    17
    
    
    $
    3
    
    
    $
    929Ending balance: collectively evaluated
for impairment
    
    $
    31
    
    
    $
    455
    
    
    $
    553
    
    
    $
    43
    
    
    $
    125
    
    
    $
    1,207Loans:Ending balance
    
    $
    2,473
    
    
    $
    29,303
    
    
    $
    140,340
    
    
    $
    10,112
    
    
    $
    10,335
    
    
    $
    192,563Ending balance individually evaluated for
impairment
    
    $
    125
    
    
    $
    4,398
    
    
    $
    2,669
    
    
    $
    114
    
    
    $
    60
    
    
    $
    7,366Ending balance collectively evaluated for
impairment
    
    $
    2,348
    
    
    $
    24,905
    
    
    $
    137,671
    
    
    $
    9,998
    
    
    $
    10,275
    
    
    $
    185,197Year Ended December 31, 2009:Allowance for Loan Losses:Balance, beginning of year
    
    $
    4
    
    
    $
    61
    
    
    $
    220
    
    
    $
    17
    
    
    $
    178
    
    
    $
    480Provision for loan losses
    
    
    8
    
    
    
    232
    
    
    
    292
    
    
    
    16
    
    
    
    139
    
    
    
    687Loans charged to the allowance
    
    
    
    
    
    
    
    
    
    
    (57
    )
    
    
    
    
    
    
    (188
    )
    
    
    (245
    )Recoveries of loans previously charged off
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    18Balance, end of year
    
    $
    12
    
    
    $
    293
    
    
    $
    455
    
    
    $
    33
    
    
    $
    147
    
    
    $
    940Ending balance: individually evaluated
for impairment
    
    $
    
    
    
    $
    
    
    
    $
    161
    
    
    $
    
    
    
    $
    7
    
    
    $
    168Ending balance: collectively evaluated
for impairment
    
    $
    12
    
    
    $
    293
    
    
    $
    294
    
    
    $
    33
    
    
    $
    140
    
    
    $
    772Loans:Ending balance
    
    $
    1,369
    
    
    $
    22,615
    
    
    $
    124,486
    
    
    $
    8,996
    
    
    $
    13,500
    
    
    $
    170,966Ending balance individually evaluated for
impairment
    
    $
    
    
    
    $
    1,270
    
    
    $
    1,105
    
    
    $
    
    
    
    $
    42
    
    
    $
    2,417Ending balance collectively evaluated for
impairment
    
    $
    1,369
    
    
    $
    21,345
    
    
    $
    123,381
    
    
    $
    8,996
    
    
    $
    13,458
    
    
    $
    168,549
     F-21




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Note 6. Premises and Equipment
  December 31,2010
    
    
    2009Land
    
    $
    1,064
    
    
    $
    1,064Building and improvements
    
    
    3,669
    
    
    
    3,669Furniture and fixtures
    
    
    1,337
    
    
    
    1,292Computer equipment
    
    
    515
    
    
    
    549Leasehold improvements
    
    
    902
    
    
    
    9027,487
    
    
    
    7,476Less accumulated depreciation and amortization
    
    
    2,850
    
    
    
    2,571$
    4,637
    
    
    $
    4,905
    F-22




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  December 31,2010First year
    
    $
    153Second year
    
    
    157Third year
    
    
    158Fourth year
    
    
    161Fifth year
    
    
    114Thereafter
    
    
    147$
    890
 Note 7. Deposits
  December 31,2010
    
    
    2009Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageDeposit type:Noninterest-bearing demand
    
    $
    5,738
    
    
    
    3
    %
    
    $
    4,932
    
    
    
    3
    %Interest-bearing demand
    
    
    50,779
    
    
    
    27
    %
    
    
    47,129
    
    
    
    27
    %Money market
    
    
    37,982
    
    
    
    20
    %
    
    
    30,014
    
    
    
    17
    %Savings accounts
    
    
    31,490
    
    
    
    17
    %
    
    
    32,181
    
    
    
    19
    %Transaction accounts
    
    
    125,989
    
    
    
    67
    %
    
    
    114,256
    
    
    
    66
    %Certificates of deposit:Less than 2.00%
    
    $
    44,796
    
    
    
    24
    %
    
    $
    24,765
    
    
    
    14
    %2.00% - 2.99%
    
    
    13,327
    
    
    
    7
    %
    
    
    21,251
    
    
    
    12
    %3.00% - 3.99%
    
    
    3,494
    
    
    
    2
    %
    
    
    9,724
    
    
    
    6
    %4.00% - 4.99%
    
    
    638
    
    
    
    
    
    
    
    2,595
    
    
    
    2
    %Total certificates of
deposit
    
    
    62,255
    
    
    
    33
    %
    
    
    58,335
    
    
    
    34
    %Total deposits
    
    $
    188,244
    
    
    
    100
    %
    
    $
    172,591
    
    
    
    100
    %
  F-23




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  December 31,2010
    
    
    2009First year
    
    $
    44,333
    
    
    $
    47,282Second year
    
    
    10,056
    
    
    
    7,537Third year
    
    
    3,139
    
    
    
    1,195Fourth year
    
    
    3,313
    
    
    
    775Fifth year
    
    
    1,414
    
    
    
    1,546$
    62,255
    
    
    $
    58,335
     December 31,2010
    
    
    2009Interest-bearing demand
    
    $
    131
    
    
    $
    175Savings
    
    
    85
    
    
    
    82Money market
    
    
    259
    
    
    
    345Certificates of deposit
    
    
    1,185
    
    
    
    1,582Total interest on deposits
    
    $
    1,660
    
    
    $
    2,184
 Note 8. Borrowings
      F-24




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
    December 31,
    
    
    December 31,2010
    
    
    2009First year
    
    $
    6,009
    
    
    $
    86Second year
    
    
    3,932
    
    
    
    6,076Third year
    
    
    1,035
    
    
    
    3,888Fourth year
    
    
    5,011
    
    
    
    1,029Fifth year
    
    
    
    
    
    
    4,916Thereafter
    
    
    
    
    
    
    $
    15,987
    
    
    $
    15,995
 Note 9. Income Taxes
  Years EndedDecember 31,2010
    
    
    2009Current expense:Federal
    
    $
    606
    
    
    $
    72State
    
    
    51
    
    
    
    47657
    
    
    
    119Deferred tax (benefit) expense
    
    
    (350
    )
    
    
    243$
    307
    
    
    $
    362
  F-25




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Years EndedDecember 31,2010
    
    
    2009Federal income tax at expected rate of 34%
    
    $
    283
    
    
    $
    291State income taxes
    
    
    51
    
    
    
    47Other
    
    
    (27
    )
    
    
    24Total income tax expense
    
    $
    307
    
    
    $
    362Effective tax rate
    
    
    36.9
    %
    
    
    42.3
    %
  December 31,2010
    
    
    2009Deferred tax assets:Allowance for loan losses
    
    $
    650
    
    
    $
    223Nonaccrual loans
    
    
    176
    
    
    
    30Unrealized loss on available for sale securities
    
    
    51
    
    
    
    Accrued employee benefits
    
    
    230
    
    
    
    227Property and improvements
    
    
    32
    
    
    
    18Net operating loss carryforward
    
    
    
    
    
    
    229Other
    
    
    
    
    
    
    3Total deferred tax assets
    
    
    1,139
    
    
    
    730Deferred tax liabilities:Unrealized gain on available for sale securities
    
    
    
    
    
    
    51Other
    
    
    8
    
    
    
    Total deferred tax liabilities
    
    
    8
    
    
    
    51Net deferred tax asset
    
    $
    1,131
    
    
    $
    679
  F-26




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Note 10. Financial Instruments With Off-Balance Sheet Risk
   December 31,
    
    
    December 31,2010
    
    
    2009Commitments to extend credit
    
    $
    14,315
    
    
    $
    9,758
   Note 11. Contingencies
  Note 12. Concentrations of Credit Risk
   F-27




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Note 13. Related Parties
   Balance at beginning of year
    
    $
    1,618New loans
    
    
    1,109Repayments
    
    
    (538
    )Balance at end of year
    
    $
    2,189
  Note 14. Employee Benefits
       F-28




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Note 15. Regulatory Matters
     F-29




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Minimum To Be WellMinimum for Capital
    
    
    Capitalized Under PromptActual
    
    
    Adequacy Purposes
    
    
    Corrective Action ProvisionAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2010:Tangible capital to tangible assets
    
    $
    28,129
    
    
    
    11.78
    %
    
    $
    3,581
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/ATotal capital to risk weighted
assets
    
    
    29,336
    
    
    
    18.46
    %
    
    
    12,716
    
    
    
    8.00
    %
    
    $
    15,894
    
    
    
    10.00
    %Tier 1 capital to risk weighted
assets
    
    
    28,129
    
    
    
    17.70
    %
    
    
    6,358
    
    
    
    4.00
    %
    
    
    9,537
    
    
    
    6.00
    %Tier 1 capital to average assets
    
    
    28,129
    
    
    
    11.78
    %
    
    
    9,548
    
    
    
    4.00
    %
    
    
    11,936
    
    
    
    5.00
    %As of December 31, 2009:Tangible capital to tangible assets
    
    $
    17,075
    
    
    
    8.21
    %
    
    $
    3,119
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/ATotal capital to risk weighted
assets
    
    
    17,735
    
    
    
    12.45
    %
    
    
    11,392
    
    
    
    8.00
    %
    
    $
    14,240
    
    
    
    10.00
    %Tier 1 capital to risk weighted
assets
    
    
    17,075
    
    
    
    11.99
    %
    
    
    5,696
    
    
    
    4.00
    %
    
    
    8,544
    
    
    
    6.00
    %Tier 1 capital to average assets
    
    
    17,075
    
    
    
    8.21
    %
    
    
    8,317
    
    
    
    4.00
    %
    
    
    10,396
    
    
    
    5.00
    %
  December 31,
    
    
    December 31,2010
    
    
    2009Equity capital
    
    $
    28,292
    
    
    $
    17,262Disallowed deferred tax asset
    
    
    (250
    )
    
    
    (102
    )Unrealized losses (gains) on securities, net
    
    
    87
    
    
    
    (85
    )Tangible and Tier 1 capital
    
    
    28,129
    
    
    
    17,075General allowance for loan losses
    
    
    1,207
    
    
    
    660Total capital
    
    $
    29,336
    
    
    $
    17,735
 Note 16. Fair Value Measurements
   F-30




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
   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.
 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.
  F-31




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Fair Value Measurements at ReportingDate UsingQuotedPrices in
    
    
    SignificantAssets/
    
    
    Active Markets
    
    
    Other
    
    
    SignificantLiabilities
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableMeasured
    
    
    Assets
    
    
    Inputs
    
    
    InputsAt Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)December 31, 2010:Measured on a recurring basis:Assets:Municipal securities
    
    $
    3,585
    
    
    
    
    
    
    $
    3,585
    
    
    
    Collateralized mortgage obligations
    
    
    10,488
    
    
    
    
    
    
    
    10,488
    
    
    
    Mortgage-backed securities
    
    
    8,003
    
    
    
    
    
    
    
    8,003
    
    
    
    Measured on a nonrecurring basis:Assets:Impaired loans
    
    $
    2,769
    
    
    
    
    
    
    $
    2,769
    
    
    
    December 31, 2009:Measured on a recurring basis:Assets:Agency securities
    
    $
    2,457
    
    
    
    
    
    
    $
    2,457
    
    
    
    Municipal securities
    
    
    1,362
    
    
    
    
    
    
    
    1,362
    
    
    
    Collateralized mortgage obligations
    
    
    1,851
    
    
    
    
    
    
    
    1,851
    
    
    
    Mortgage-backed securities
    
    
    7,822
    
    
    
    
    
    
    
    7,822
    
    
    
    Measured on a nonrecurring basis:Assets:Impaired loans
    
    $
    394
    
    
    
    
    
    
    $
    394
    
    
    
    
     F-32




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Note 17. Disclosure About the Fair Value of Financial Instruments
  December 31,
    
    
    December 31,2010
    
    
    2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assets:Cash and cash equivalents
    
    $
    11,814
    
    
    $
    11,814
    
    
    $
    11,717
    
    
    $
    11,717Securities available for sale
    
    
    22,076
    
    
    
    22,076
    
    
    
    13,492
    
    
    
    13,492Fixed annuity investment
    
    
    1,131
    
    
    
    1,131
    
    
    
    1,088
    
    
    
    1,088Restricted stock
    
    
    1,003
    
    
    
    1,003
    
    
    
    1,655
    
    
    
    1,655Loans and loans held for sale
    
    
    194,654
    
    
    
    194,707
    
    
    
    171,467
    
    
    
    172,330Accrued interest receivable
    
    
    833
    
    
    
    833
    
    
    
    764
    
    
    
    764Financial liabilities:Deposit accounts
    
    
    188,244
    
    
    
    183,738
    
    
    
    172,591
    
    
    
    173,364Accrued interest payable
    
    
    39
    
    
    
    39
    
    
    
    45
    
    
    
    45FHLB advances
    
    
    15,987
    
    
    
    16,151
    
    
    
    15,995
    
    
    
    16,230Off-balance sheet assets (liabilities):Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Fair Values of Financial Instruments
  Cash and short-term instruments
  Securities
   F-33




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Fixed annuity investment
  Loans and loans held for sale
  Deposits
  Advances from Federal Home Loan Bank
  Accrued interest
  Off-balance sheet instruments
   F-34




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Note 18. Parent Company Only Financial Statements
  Balance Sheet
 December 31,2010ASSETSCash and cash equivalents
    
    $
    3,032Investment in Bank
    
    
    28,292ESOP note receivable
    
    
    838Total assets
    
    $
    32,162LIABILITIES AND STOCKHOLDERS EQUITYOther liabilities
    
    $
    58Common stock
    
    
    17Additional paid-in capital
    
    
    15,290Unallocated ESOP shares
    
    
    (817
    )Retained earnings-substantially restricted
    
    
    17,701Accumulated other comprehensive loss, net
    
    
    (87
    )Total stockholders equity
    
    
    32,104Total liabilities and stockholders equity
    
    $
    32,162
  F-35




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Statement of Income
 Period EndedDecember 31,2010Interest income on ESOP note receivable
    
    $
    5Noninterest expense
    
    
    (29
    )Loss before income tax benefit and equity in undistributed
income of Bank
    
    
    (24
    )Income tax benefit
    
    
    (9
    )Net loss before equity in undistributed income of Bank
    
    
    (15
    )Equity in undistributed income of Bank
    
    
    539Net income
    
    $
    524
  F-36




---



##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Statement of Cash Flows
 Period EndedDecember 31,2010Cash flows from operating activities:Net income
    
    $
    524Adjustments to reconcile net income to
net cash provided by operating activities:Equity in undistributed net income
of Bank
    
    
    (539
    )Increase in other liabilities
    
    
    58Net cash provided by operating activities
    
    
    43Cash flows from investing activities:Capital contribution to Bank
    
    
    (11,501
    )Repayment of ESOP loan
    
    
    10Net cash used for investing activities
    
    
    (11,491
    )Cash flows provided by financing activities  issuance of
common stock
    
    
    14,480Net increase in cash and cash
equivalents
    
    
    3,032Cash and cash equivalents at beginning
of period
    
    
    Cash and cash equivalents at end of period
    
    $
    3,032
  F-37