##### 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 year ended December 31, 2009
 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 001-34605
 OMNIAMERICAN BANCORP, INC.
  Maryland
    
    27-0983595(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)1320 S. University Drive, Fort Worth, Texas
    
    76107(Address of Principal Executive Offices)
    
    (Zip Code)
 (817) 367-4640  (Telephone Number, including Area Code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share
    
    The NASDAQ Stock Market, LLC
 Securities registered pursuant to Section 12(g) of the Act: 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 þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:
 Document
    
    Part of Form 10-KProxy Statement for the 2010 Annual Meeting of Stockholders of the Registrant
    
    Part III




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##### 



OmniAmerican Bancorp, Inc.
Annual Report on Form 10-K
For The Year Ended
December 31, 2009
 Table of Contents
 ITEM 1. Business
    
    
    3ITEM 1A. Risk Factors
    
    
    49ITEM 1B. Unresolved Staff Comments
    
    
    56ITEM 2. Properties
    
    
    56ITEM 3. Legal Proceedings
    
    
    57ITEM 4. Reserved
    
    
    57ITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    58ITEM 6. Selected Financial Data
    
    
    60ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    62ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    77ITEM 8. Financial Statements and Supplementary Data
    
    
    81ITEM 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    119ITEM 9A. (T) Controls and Procedures
    
    
    119ITEM 9B. Other Information
    
    
    119ITEM 10. Directors, Executive Officers and Corporate Governance
    
    
    119ITEM 11. Executive Compensation
    
    
    120ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    120ITEM 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    120ITEM 14. Principal Accountant Fees and Services
    
    
    120ITEM 15. Exhibits and Financial Statement Schedules
    
    
    121Signatures
    
    
    122Exhibit 14Exhibit 31.1Exhibit 31.2Exhibit 32
  EXPLANATORY NOTE




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##### Table of Contents



PART I
 
 ITEM 1. Business
 Forward Looking Statements
  
    
    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;
 
    
    inflation and changes in the interest rate environment that reduce our margins or
reduce the fair value of financial instruments;
 
    
    adverse changes in the securities markets;
 
    
    changes in laws or government regulations or policies affecting financial
institutions, including changes in regulatory fees and capital requirements;
 
    
    our ability to enter new markets successfully and capitalize on growth
opportunities;
 
    
    our ability to successfully integrate acquired entities, if any;
 
    
    changes in consumer spending, borrowing and savings habits;
 
    
    changes in accounting policies and practices, as may be adopted by the bank
regulatory agencies, the Financial Accounting Standards Board, the Securities and
Exchange Commission and the Public Company Accounting Oversight Board;
 
    
    changes in our organization, compensation and benefit plans;
  3




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##### Table of Contents




    
    changes in our financial condition or results of operations that reduce capital
available to pay dividends; and
 
    
    changes in the financial condition or future prospects of issuers of securities that
we own.
  OmniAmerican Bancorp, Inc.
   OmniAmerican Bank
     4




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www.omniamerican.com.
 Market Area
     5




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##### Table of Contents



Competition
   Lending Activities
   6




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##### Table of Contents



Loan Portfolio Composition.
 At December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Real estate loans:One- to four-family(1)
    
    $
    257,265
    
    
    
    36.35
    %
    
    $
    245,554
    
    
    
    33.96
    %
    
    $
    210,475
    
    
    
    29.60
    %
    
    $
    164,585
    
    
    
    22.52
    %
    
    $
    145,842
    
    
    
    18.31
    %Home equity(2)
    
    
    28,526
    
    
    
    4.03
    
    
    
    27,180
    
    
    
    3.76
    
    
    
    21,183
    
    
    
    2.98
    
    
    
    19,241
    
    
    
    2.63
    
    
    
    22,669
    
    
    
    2.85Commercial real estate
    
    
    100,985
    
    
    
    14.27
    
    
    
    89,023
    
    
    
    12.31
    
    
    
    81,953
    
    
    
    11.53
    
    
    
    74,216
    
    
    
    10.16
    
    
    
    54,076
    
    
    
    6.79Real estate construction
    
    
    36,843
    
    
    
    5.20
    
    
    
    45,840
    
    
    
    6.34
    
    
    
    43,003
    
    
    
    6.05
    
    
    
    28,840
    
    
    
    3.95
    
    
    
    10,576
    
    
    
    1.33Consumer loans:Automobile, indirect
    
    
    176,775
    
    
    
    24.98
    
    
    
    209,371
    
    
    
    28.95
    
    
    
    258,782
    
    
    
    36.39
    
    
    
    359,428
    
    
    
    49.19
    
    
    
    472,583
    
    
    
    59.34Automobile, direct
    
    
    28,722
    
    
    
    4.06
    
    
    
    34,824
    
    
    
    4.82
    
    
    
    37,687
    
    
    
    5.30
    
    
    
    45,252
    
    
    
    6.19
    
    
    
    50,492
    
    
    
    6.34Unsecured
    
    
    14,323
    
    
    
    2.02
    
    
    
    14,505
    
    
    
    2.00
    
    
    
    15,991
    
    
    
    2.25
    
    
    
    17,381
    
    
    
    2.38
    
    
    
    17,485
    
    
    
    2.20Other
    
    
    5,001
    
    
    
    0.71
    
    
    
    5,832
    
    
    
    0.81
    
    
    
    7,048
    
    
    
    0.99
    
    
    
    10,169
    
    
    
    1.39
    
    
    
    13,675
    
    
    
    1.72Commercial business loans
    
    
    59,325
    
    
    
    8.38
    
    
    
    50,975
    
    
    
    7.05
    
    
    
    34,884
    
    
    
    4.91
    
    
    
    11,616
    
    
    
    1.59
    
    
    
    8,953
    
    
    
    1.12Total loans
    
    
    707,765
    
    
    
    100.00
    %
    
    
    723,104
    
    
    
    100.00
    %
    
    
    711,006
    
    
    
    100.00
    %
    
    
    730,728
    
    
    
    100.00
    %
    
    
    796,351
    
    
    
    100.00
    %Other items:Unearned fees and discounts, net
    
    
    (1,310
    )
    
    
    
    
    
    
    940
    
    
    
    
    
    
    
    3,479
    
    
    
    
    
    
    
    5,168
    
    
    
    
    
    
    
    7,593Allowance for loan losses
    
    
    (8,328
    )
    
    
    
    
    
    
    (8,270
    )
    
    
    
    
    
    
    (7,386
    )
    
    
    
    
    
    
    (7,049
    )
    
    
    
    
    
    
    (4,792
    )Total loans, net
    
    $
    698,127
    
    
    
    
    
    
    $
    715,774
    
    
    
    
    
    
    $
    707,099
    
    
    
    
    
    
    $
    728,847
    
    
    
    
    
    
    $
    799,152
 
 (1)
    
    Excludes loans held for sale of $241,000, $160,000, $253,000, $919,000 and $0 at December 31,
2009, 2008, 2007, 2006 and 2005, respectively.(2)
    
    Included in home equity loans are home equity lines of credit totaling $1.1 million, $1.9
million, $993,000, $970,000 and $1.1 million at December 31, 2009, 2008, 2007, 2006 and 2005,
respectively.  7




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##### Table of Contents



Loan Portfolio Maturities and Yields.
 One- to Four-Family RealEstate
    
    
    Home Equity
    
    
    Commercial Real Estate
    
    
    Real Estate Construction
    
    
    Automobile, IndirectWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageAmount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(Dollars in thousands)Due During the Years Ending December 31,2010
    
    $
    3,582
    
    
    
    5.59
    %
    
    $
    1,176
    
    
    
    3.81
    %
    
    $
    20,293
    
    
    
    4.86
    %
    
    $
    9,538
    
    
    
    5.98
    %
    
    $
    6,808
    
    
    
    6.04
    %2011
    
    
    79
    
    
    
    6.67
    
    
    
    170
    
    
    
    7.32
    
    
    
    14,276
    
    
    
    6.32
    
    
    
    12,499
    
    
    
    5.94
    
    
    
    19,628
    
    
    
    6.872012
    
    
    246
    
    
    
    6.72
    
    
    
    440
    
    
    
    7.12
    
    
    
    7,627
    
    
    
    6.21
    
    
    
    9,165
    
    
    
    5.71
    
    
    
    26,005
    
    
    
    7.192013 to 2014
    
    
    2,632
    
    
    
    5.97
    
    
    
    1,913
    
    
    
    6.46
    
    
    
    15,316
    
    
    
    5.63
    
    
    
    
    
    
    
    
    
    
    
    83,361
    
    
    
    7.112015 to 2019
    
    
    31,479
    
    
    
    5.18
    
    
    
    6,347
    
    
    
    6.70
    
    
    
    15,168
    
    
    
    5.80
    
    
    
    4,386
    
    
    
    6.37
    
    
    
    40,973
    
    
    
    7.512020 to 2024
    
    
    35,315
    
    
    
    5.49
    
    
    
    8,994
    
    
    
    7.40
    
    
    
    12,550
    
    
    
    6.41
    
    
    
    483
    
    
    
    6.18
    
    
    
    
    
    
    
    2025 and beyond
    
    
    183,932
    
    
    
    6.33
    
    
    
    9,486
    
    
    
    7.18
    
    
    
    15,755
    
    
    
    6.37
    
    
    
    772
    
    
    
    6.00
    
    
    
    
    
    
    
    Total
    
    $
    257,265
    
    
    
    6.06
    %
    
    $
    28,526
    
    
    
    6.96
    %
    
    $
    100,985
    
    
    
    5.85
    %
    
    $
    36,843
    
    
    
    5.95
    %
    
    $
    176,775
    
    
    
    7.15
    %Automobile, Direct
    
    
    Unsecured Consumer
    
    
    Other Consumer
    
    
    Commercial Business
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageAmount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(Dollars in thousands)Due During the Years Ending December 31,2010
    
    $
    1,550
    
    
    
    6.96
    %
    
    $
    8,188
    
    
    
    6.66
    %
    
    $
    3,169
    
    
    
    3.93
    %
    
    $
    12,176
    
    
    
    6.39
    %
    
    $
    66,480
    
    
    
    5.67
    %2011
    
    
    3,044
    
    
    
    7.31
    
    
    
    1,537
    
    
    
    11.24
    
    
    
    386
    
    
    
    7.86
    
    
    
    2,534
    
    
    
    5.89
    
    
    
    54,153
    
    
    
    6.622012
    
    
    6,344
    
    
    
    6.60
    
    
    
    1,750
    
    
    
    13.07
    
    
    
    340
    
    
    
    8.55
    
    
    
    10,899
    
    
    
    3.88
    
    
    
    62,816
    
    
    
    6.392013 to 2014
    
    
    15,895
    
    
    
    6.08
    
    
    
    2,838
    
    
    
    13.61
    
    
    
    576
    
    
    
    8.90
    
    
    
    18,952
    
    
    
    3.51
    
    
    
    141,483
    
    
    
    6.462015 to 2019
    
    
    1,889
    
    
    
    6.36
    
    
    
    10
    
    
    
    12.99
    
    
    
    491
    
    
    
    8.86
    
    
    
    13,436
    
    
    
    6.96
    
    
    
    114,179
    
    
    
    6.472020 to 2024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    11.60
    
    
    
    1,328
    
    
    
    6.90
    
    
    
    58,709
    
    
    
    6.022025 and beyond
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    209,945
    
    
    
    6.37Total
    
    $
    28,722
    
    
    
    6.39
    %
    
    $
    14,323
    
    
    
    9.32
    %
    
    $
    5,001
    
    
    
    5.66
    %
    
    $
    59,325
    
    
    
    5.13
    %
    
    $
    707,765
    
    
    
    6.33
    %
  8




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##### Table of Contents



Due After December 31, 2010Fixed
    
    
    Adjustable
    
    
    Total(In thousands)Real estate loans:One- to four-family
    
    $
    212,115
    
    
    $
    41,568
    
    
    $
    253,683Home equity
    
    
    23,161
    
    
    
    4,189
    
    
    
    27,350Commercial real estate
    
    
    38,795
    
    
    
    41,897
    
    
    
    80,692Real estate construction
    
    
    3,541
    
    
    
    23,764
    
    
    
    27,305Consumer loans:Automobile, indirect
    
    
    169,967
    
    
    
    
    
    
    
    169,967Automobile, direct
    
    
    27,172
    
    
    
    
    
    
    
    27,172Unsecured
    
    
    6,135
    
    
    
    
    
    
    
    6,135Other
    
    
    1,818
    
    
    
    14
    
    
    
    1,832Commercial business loans
    
    
    14,380
    
    
    
    32,769
    
    
    
    47,149Total loans
    
    $
    497,084
    
    
    $
    144,201
    
    
    $
    641,285
 One- to Four-Family Residential Mortgage Loans.
     9




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##### Table of Contents



10




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##### Table of Contents



Home Equity Loans and Lines of Credit
   11




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##### Table of Contents



Commercial Real Estate Loans.
 The Wall
Street Journal
   Real Estate Construction Loans.
   12




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##### Table of Contents



Consumer Lending
    13




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##### Table of Contents



The Wall Street Journal
  14




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##### Table of Contents



Commercial Business Loans . The Wall Street Journal .
    15




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##### Table of Contents



Loan Originations, Purchases, Sales, Participations and Servicing.
     16




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##### Table of Contents



For the Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Originations by type:Adjustable-rate:Real estate loans:One- to four-family
    
    $
    8,881
    
    
    $
    18,761
    
    
    $
    9,212Home equity
    
    
    2,038
    
    
    
    2,207
    
    
    
    Commercial real estate
    
    
    3,246
    
    
    
    9,584
    
    
    
    19,215Real estate construction
    
    
    6,285
    
    
    
    16,819
    
    
    
    43,967Consumer loans:Automobile, indirect
    
    
    
    
    
    
    
    
    
    
    Automobile, direct
    
    
    
    
    
    
    
    
    
    
    Unsecured
    
    
    611
    
    
    
    610
    
    
    
    457Other
    
    
    2,880
    
    
    
    1,919
    
    
    
    2,027Commercial business loans
    
    
    19,581
    
    
    
    6,148
    
    
    
    336Total adjustable-rate
    
    
    43,522
    
    
    
    56,048
    
    
    
    75,214Fixed-rate:Real estate loans:One- to four-family
    
    
    137,873
    
    
    
    108,441
    
    
    
    69,767Home equity
    
    
    4,534
    
    
    
    8,422
    
    
    
    6,856Commercial real estate
    
    
    7,628
    
    
    
    8,362
    
    
    
    12,791Real estate construction
    
    
    1,207
    
    
    
    415
    
    
    
    7,310Consumer loans:Automobile, indirect
    
    
    62,285
    
    
    
    79,029
    
    
    
    70,171Automobile, direct
    
    
    10,283
    
    
    
    16,223
    
    
    
    14,067Unsecured
    
    
    3,574
    
    
    
    3,427
    
    
    
    5,348Other
    
    
    529
    
    
    
    523
    
    
    
    Commercial business loans
    
    
    11,481
    
    
    
    8,042
    
    
    
    3,948Total fixed-rate
    
    
    239,394
    
    
    
    232,884
    
    
    
    190,258Total loans originated
    
    $
    282,916
    
    
    $
    288,932
    
    
    $
    265,472Purchases:Real estate loans:One- to four-family
    
    $
    14,722
    
    
    $
    33,372
    
    
    $
    Home equity
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    4,794
    
    
    
    4,200
    
    
    
    6,750Real estate construction
    
    
    
    
    
    
    2,000
    
    
    
    Consumer loans:Automobile, indirect
    
    
    
    
    
    
    
    
    
    
    Automobile, direct
    
    
    
    
    
    
    
    
    
    
    Unsecured
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    1,944
    
    
    
    38,472
    
    
    
    30,970Total loans purchased
    
    $
    21,460
    
    
    $
    78,044
    
    
    $
    37,720Sales and repayments:Real estate loans:One- to four-family
    
    $
    79,456
    
    
    $
    71,659
    
    
    $
    11,436Home equity
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    2,000Consumer loans:Automobile, indirect
    
    
    
    
    
    
    
    
    
    
    Automobile, direct
    
    
    
    
    
    
    
    
    
    
    Unsecured and other
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    4,517
    
    
    
    
    
    
    
    Total loans sold
    
    $
    83,973
    
    
    $
    71,659
    
    
    $
    13,436Principal repayments
    
    $
    235,742
    
    
    $
    283,219
    
    
    $
    309,478Total reductions
    
    $
    319,715
    
    
    $
    354,878
    
    
    $
    322,914Increase (decrease) in
other items, net
    
    $
    (2,308
    )
    
    $
    (3,423
    )
    
    $
    (2,026
    )Net increase (decrease)
    
    $
    (17,647
    )
    
    $
    8,675
    
    
    $
    (21,748
    )
  17




---



##### Table of Contents



Loan Approval Procedures and Authority
   Non-performing Assets, Problem Assets, and Potential Problem Loans
 th th st
    18




---



##### Table of Contents



Non-Performing Assets.
 At December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Non-accrual loans:Real estate loans:One- to four-family
    
    $
    1,640
    
    
    $
    81
    
    
    $
    
    
    
    $
    
    
    
    $
    Home equity
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40Commercial real estate
    
    
    6,304
    
    
    
    5,272
    
    
    
    2,668
    
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    200
    
    
    
    240
    
    
    
    243
    
    
    
    280
    
    
    
    1,431Automobile, direct
    
    
    35
    
    
    
    1
    
    
    
    57
    
    
    
    81
    
    
    
    317Unsecured
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    14Commercial business loans
    
    
    
    
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    64Total non-accrual loans
    
    
    8,273
    
    
    
    5,701
    
    
    
    2,972
    
    
    
    361
    
    
    
    1,866Loans delinquent 90 days or greater and
still accruing:Real estate loans:One- to four-family
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,938
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Automobile, direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unsecured
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans delinquent 90 days or
greater and still accruing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,938
    
    
    
    Total non-performing loans
    
    
    8,273
    
    
    
    5,701
    
    
    
    2,972
    
    
    
    3,299
    
    
    
    1,866Other real estate owned and foreclosed
assets:Real estate loans:One- to four-family
    
    $
    671
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    6,091
    
    
    
    488
    
    
    
    488
    
    
    
    488
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    218
    
    
    
    95
    
    
    
    228
    
    
    
    125
    
    
    
    279Automobile, direct
    
    
    24
    
    
    
    3
    
    
    
    8
    
    
    
    18
    
    
    
    119Unsecured
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    25
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    30Total other real estate owned
and foreclosed assets
    
    
    7,029
    
    
    
    586
    
    
    
    736
    
    
    
    631
    
    
    
    428Total non-performing assets
    
    $
    15,302
    
    
    $
    6,287
    
    
    $
    3,708
    
    
    $
    3,930
    
    
    $
    2,294Ratios:Non-performing loans to total loans
    
    
    1.17
    %
    
    
    0.79
    %
    
    
    0.42
    %
    
    
    0.45
    %
    
    
    0.23
    %Non-performing assets to total assets
    
    
    1.35
    
    
    
    0.59
    
    
    
    0.35
    
    
    
    0.37
    
    
    
    0.21
  19




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##### Table of Contents



Potential Problem Loans.
   20




---



##### Table of Contents



Delinquent Loans
 Loans Delinquent For60-89 Days
    
    
    90 Days and Over
    
    
    TotalNumber
    
    
    Amount
    
    
    Number
    
    
    Amount
    
    
    Number
    
    
    Amount(Dollars in thousands)At December 31, 2009Real estate loans:One- to four-family
    
    
    1
    
    
    $
    53
    
    
    
    11
    
    
    $
    1,640
    
    
    
    12
    
    
    $
    1,693Home equity
    
    
    2
    
    
    
    73
    
    
    
    1
    
    
    
    94
    
    
    
    3
    
    
    
    167Commercial real estate
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    103
    
    
    
    1
    
    
    
    103Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    30
    
    
    
    245
    
    
    
    11
    
    
    
    195
    
    
    
    41
    
    
    
    440Automobile, direct
    
    
    4
    
    
    
    6
    
    
    
    3
    
    
    
    30
    
    
    
    7
    
    
    
    36Unsecured
    
    
    12
    
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    61Other
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    9
    
    
    
    2
    
    
    
    9Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans
    
    
    49
    
    
    $
    438
    
    
    
    29
    
    
    $
    2,071
    
    
    
    78
    
    
    $
    2,509At December 31, 2008Real estate loans:One- to four-family
    
    
    1
    
    
    $
    101
    
    
    
    1
    
    
    $
    81
    
    
    
    2
    
    
    $
    182Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    5,272
    
    
    
    1
    
    
    
    5,272Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    42
    
    
    
    457
    
    
    
    21
    
    
    
    240
    
    
    
    63
    
    
    
    697Automobile, direct
    
    
    4
    
    
    
    29
    
    
    
    1
    
    
    
    1
    
    
    
    5
    
    
    
    30Unsecured
    
    
    13
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    74Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    1
    
    
    
    19
    
    
    
    2
    
    
    
    91
    
    
    
    3
    
    
    
    110Total loans
    
    
    61
    
    
    $
    680
    
    
    
    26
    
    
    $
    5,685
    
    
    
    87
    
    
    $
    6,365At December 31, 2007Real estate loans:One- to four-family
    
    
    1
    
    
    $
    164
    
    
    
    
    
    
    $
    
    
    
    
    1
    
    
    $
    164Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    34
    
    
    
    347
    
    
    
    21
    
    
    
    243
    
    
    
    55
    
    
    
    590Automobile, direct
    
    
    9
    
    
    
    74
    
    
    
    6
    
    
    
    57
    
    
    
    15
    
    
    
    131Unsecured
    
    
    16
    
    
    
    20
    
    
    
    1
    
    
    
    3
    
    
    
    17
    
    
    
    23Other
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Commercial business loans
    
    
    1
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    25Total loans
    
    
    61
    
    
    $
    630
    
    
    
    29
    
    
    $
    304
    
    
    
    90
    
    
    $
    934At December 31, 2006Real estate loans:One- to four-family
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    2,938
    
    
    
    1
    
    
    
    2,938Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    30
    
    
    
    357
    
    
    
    16
    
    
    
    280
    
    
    
    46
    
    
    
    637Automobile, direct
    
    
    10
    
    
    
    102
    
    
    
    7
    
    
    
    81
    
    
    
    17
    
    
    
    183Unsecured
    
    
    24
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    37Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loans
    
    
    64
    
    
    $
    496
    
    
    
    24
    
    
    $
    3,299
    
    
    
    88
    
    
    $
    3,795
  21




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##### Table of Contents



Loans Delinquent For60-89 Days
    
    
    90 Days and Over
    
    
    TotalNumber
    
    
    Amount
    
    
    Number
    
    
    Amount
    
    
    Number
    
    
    Amount(Dollars in thousands)At December 31, 2005Real estate loans:One- to four-family
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Home equity
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    40
    
    
    
    1
    
    
    
    40Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    53
    
    
    
    897
    
    
    
    90
    
    
    
    1,385
    
    
    
    143
    
    
    
    2,282Automobile, direct
    
    
    12
    
    
    
    129
    
    
    
    33
    
    
    
    299
    
    
    
    45
    
    
    
    428Unsecured
    
    
    46
    
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    106Other
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    14
    
    
    
    1
    
    
    
    14Commercial business loans
    
    
    1
    
    
    
    8
    
    
    
    2
    
    
    
    55
    
    
    
    3
    
    
    
    63Total loans
    
    
    112
    
    
    $
    1,140
    
    
    
    127
    
    
    $
    1,793
    
    
    
    239
    
    
    $
    2,933
  Real Estate Owned and Foreclosed Assets
 Classification of Assets.
   22




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##### Table of Contents



Allowance for Loan Losses
    
    
    changes in portfolio composition, loan balances, and the maturities of various loan
types in the portfolio;
 
    
    changes in loan concentrations, borrower economic profiles, industries, location of
borrowers and loan collateral, particular loan products, loan classes and collateral
types;
 
    
    changes in the volume and trend of loan delinquencies and loans in non-accrual
status;
 
    
    the level of criticized and classified loans, as well as delinquency trends in the
loan portfolio and developments in significant individual loans identified as problem
loans;
 
    
    non-performing loans and non-performing assets, including trends in the aggregate
and developments in significant individual loan credits;
 
    
    historical trends of actual loan losses or charge-offs (net of recoveries) based on
volume and types of loans;
  23




---



##### Table of Contents




    
    specific issues brought to the attention of management citing weaknesses or
deficiencies in systems and procedures or any violations of our policies which may lead
to or create any undue risk to us; and
 
    
    significant recoveries or additions to the allowance for loan losses.
  
    
    a specific loss component which is the allowance for impaired loans as required by
Accounting Standards Codification (ASC) 310-10, Receivables, and
 
    
    a general loss component for all other loans not individually evaluated for
impairment but that, on a portfolio basis, are believed to have some inherent but
unidentified loss in accordance with ASC 450-10, Contingencies.
   
    
    changes in lending policies and procedures, including underwriting standards and
collection, charge-off, and recovery practices;
 
    
    changes in national and local economic and business conditions and developments,
including the condition of various market segments;
 
    
    changes in the nature and volume of the loan portfolio;
  24




---



##### Table of Contents




    
    changes in the experience, ability and depth of knowledge of the management of the
lending staff;
 
    
    changes in the trend of the volume and severity of past due and classified loans;
and trends in the volume of non-accrual loans, troubled debt restructurings, and other
loan modifications;
 
    
    changes in the quality of our loan review system and the degree of oversight by the
board of directors;
 
    
    the existence and effect of any concentrations of credit, and changes in the level
of such concentrations; and
 
    
    the effect of external factors such as competition and legal and regulatory
requirements on the level of estimated credit losses in our current portfolio.
      25




---



##### Table of Contents



26




---



##### Table of Contents



At or For the Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Balance at beginning of period
    
    $
    8,270
    
    
    $
    7,386
    
    
    $
    7,049
    
    
    $
    4,792
    
    
    $
    5,408Charge-offs:Real estate loans:One- to four-family
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Commercial real estate
    
    
    899
    
    
    
    
    
    
    
    51
    
    
    
    27
    
    
    
    282Real estate construction
    
    
    556
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    Consumer loans:Automobile, indirect
    
    
    2,187
    
    
    
    1,890
    
    
    
    2,026
    
    
    
    2,875
    
    
    
    2,840Automobile, direct
    
    
    137
    
    
    
    120
    
    
    
    45
    
    
    
    576
    
    
    
    612Unsecured
    
    
    975
    
    
    
    1,139
    
    
    
    1,242
    
    
    
    877
    
    
    
    2,198Other
    
    
    30
    
    
    
    26
    
    
    
    19
    
    
    
    130
    
    
    
    239Commercial business loans
    
    
    665
    
    
    
    345
    
    
    
    946
    
    
    
    53
    
    
    
    255Total charge-offs
    
    
    5,632
    
    
    
    3,520
    
    
    
    4,329
    
    
    
    4,548
    
    
    
    6,436Recoveries:Real estate loans:One- to four-family
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Automobile, indirect
    
    
    335
    
    
    
    296
    
    
    
    505
    
    
    
    466
    
    
    
    174Automobile, direct
    
    
    7
    
    
    
    8
    
    
    
    52
    
    
    
    184
    
    
    
    49Unsecured
    
    
    144
    
    
    
    256
    
    
    
    230
    
    
    
    17
    
    
    
    69Other
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    67Commercial business loans
    
    
    2
    
    
    
    18
    
    
    
    228
    
    
    
    2
    
    
    
    1Total recoveries
    
    
    490
    
    
    
    579
    
    
    
    1,016
    
    
    
    692
    
    
    
    360Net charge-offs
    
    
    5,142
    
    
    
    2,941
    
    
    
    3,313
    
    
    
    3,856
    
    
    
    6,076Portfolio sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (270
    )Provision for loan losses
    
    
    5,200
    
    
    
    3,825
    
    
    
    3,650
    
    
    
    6,113
    
    
    
    5,730Balance at end of period
    
    $
    8,328
    
    
    $
    8,270
    
    
    $
    7,386
    
    
    $
    7,049
    
    
    $
    4,792Ratios:Net charge-offs to average
loans outstanding
(annualized)
    
    
    0.71
    %
    
    
    0.40
    %
    
    
    0.46
    %
    
    
    0.52
    %
    
    
    0.76
    %Allowance for loan losses to
non-performing loans at end
of period
    
    
    100.66
    
    
    
    145.06
    
    
    
    248.52
    
    
    
    213.67
    
    
    
    256.81Allowance for loan losses to
total loans at end of period
    
    
    1.18
    
    
    
    1.14
    
    
    
    1.04
    
    
    
    0.96
    
    
    
    0.60
  27




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##### Table of Contents



Allocation of Allowance for Loan Losses.
 At December 31,2009
    
    
    2008
    
    
    2007Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent ofLoans in Each
    
    
    
    
    
    
    Loans in Each
    
    
    
    
    
    
    Loans in EachAllowance for
    
    
    Category to
    
    
    Allowance for
    
    
    Category to
    
    
    Allowance for
    
    
    Category toLoan Losses
    
    
    Total Loans
    
    
    Loan Losses
    
    
    Total Loans
    
    
    Loan Losses
    
    
    Total Loans(Dollars in thousands)Real estate loans:One- to four-family
    
    $
    1,341
    
    
    
    36.35
    %
    
    $
    936
    
    
    
    33.96
    %
    
    $
    641
    
    
    
    29.60
    %Home equity
    
    
    136
    
    
    
    4.03
    
    
    
    156
    
    
    
    3.76
    
    
    
    63
    
    
    
    2.98Commercial real estate
    
    
    2,068
    
    
    
    14.27
    
    
    
    2,660
    
    
    
    12.31
    
    
    
    3,455
    
    
    
    11.53Real estate construction
    
    
    1,077
    
    
    
    5.20
    
    
    
    1,204
    
    
    
    6.34
    
    
    
    301
    
    
    
    6.05Consumer loans:Automobile, indirect
    
    
    2,156
    
    
    
    24.98
    
    
    
    1,927
    
    
    
    28.95
    
    
    
    1,966
    
    
    
    36.39Automobile, direct
    
    
    350
    
    
    
    4.06
    
    
    
    320
    
    
    
    4.82
    
    
    
    111
    
    
    
    5.30Unsecured
    
    
    284
    
    
    
    0.71
    
    
    
    270
    
    
    
    2.00
    
    
    
    493
    
    
    
    2.25Other
    
    
    61
    
    
    
    2.02
    
    
    
    53
    
    
    
    0.81
    
    
    
    21
    
    
    
    0.99Commercial business loans
    
    
    855
    
    
    
    8.38
    
    
    
    744
    
    
    
    7.05
    
    
    
    335
    
    
    
    4.91Total
    
    
    8,328
    
    
    
    100.00
    %
    
    $
    8,270
    
    
    
    100.00
    %
    
    $
    7,386
    
    
    
    100.00
    %
 At December 31,2006
    
    
    2005Percent of
    
    
    
    
    
    
    Percent ofLoans in Each
    
    
    
    
    
    
    Loans in EachAllowance for
    
    
    Category to
    
    
    Allowance for
    
    
    Category toLoan Losses
    
    
    Total Loans
    
    
    Loan Losses
    
    
    Total Loans(Dollars in thousands)Real estate loans:One- to four-family
    
    $
    500
    
    
    
    22.52
    %
    
    $
    4
    
    
    
    18.31
    %Home equity
    
    
    58
    
    
    
    2.63
    
    
    
    9
    
    
    
    2.85Commercial real estate
    
    
    725
    
    
    
    10.16
    
    
    
    395
    
    
    
    6.79Real estate construction
    
    
    282
    
    
    
    3.95
    
    
    
    77
    
    
    
    1.33Consumer loans:Automobile, indirect
    
    
    2,867
    
    
    
    49.19
    
    
    
    2,870
    
    
    
    59.34Automobile, direct
    
    
    552
    
    
    
    6.19
    
    
    
    748
    
    
    
    6.34Unsecured
    
    
    481
    
    
    
    2.38
    
    
    
    400
    
    
    
    2.20Other
    
    
    144
    
    
    
    1.39
    
    
    
    224
    
    
    
    1.72Commercial business loans
    
    
    1,440
    
    
    
    1.59
    
    
    
    65
    
    
    
    1.12Total
    
    $
    7,049
    
    
    
    100.00
    %
    
    $
    4,792
    
    
    
    100.00
    %
   28




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Investments
      29




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##### Table of Contents



Mortgage-Backed Securities.
     30




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##### Table of Contents



Municipal Obligations.
 Trust Preferred Securities.
 Other Equity Securities.
  31




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##### Table of Contents



Investment Securities Portfolio.
 At December 31,2009
    
    
    2008
    
    
    2007Amortized
    
    
    
    
    
    
    Amortized
    
    
    
    
    
    
    AmortizedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair Value(In thousands)Mortgage-backed securities:U.S. Government
sponsored
mortgage-backed
securities:Fannie Mae
    
    $
    67,474
    
    
    $
    70,102
    
    
    $
    97,722
    
    
    $
    100,100
    
    
    $
    111,172
    
    
    $
    111,383Freddie Mac
    
    
    60,948
    
    
    
    63,134
    
    
    
    79,004
    
    
    
    81,188
    
    
    
    101,214
    
    
    
    102,047Ginnie Mae
    
    
    1,668
    
    
    
    1,731
    
    
    
    2,099
    
    
    
    2,107
    
    
    
    
    
    
    
    Collateralized
mortgage obligations
    
    
    54,378
    
    
    
    55,148
    
    
    
    24,919
    
    
    
    25,180
    
    
    
    18,773
    
    
    
    18,799Private-label
collateralized mortgage
obligations
    
    
    5,513
    
    
    
    5,075
    
    
    
    8,407
    
    
    
    7,135
    
    
    
    9,444
    
    
    
    9,324Total
mortgage-backed
securities
    
    
    189,981
    
    
    
    195,190
    
    
    
    212,151
    
    
    
    215,710
    
    
    
    240,603
    
    
    
    241,553Trust preferred securities
    
    
    7,762
    
    
    
    5,604
    
    
    
    7,808
    
    
    
    6,275
    
    
    
    
    
    
    
    Municipal obligations
    
    
    4,595
    
    
    
    4,595
    
    
    
    5,290
    
    
    
    5,290
    
    
    
    
    
    
    
    Other equity securities
    
    
    5,000
    
    
    
    5,032
    
    
    
    3,000
    
    
    
    3,029
    
    
    
    3,000
    
    
    
    3,032Total
    
    $
    207,338
    
    
    $
    210,421
    
    
    $
    228,249
    
    
    $
    230,304
    
    
    $
    243,603
    
    
    $
    244,585
  32




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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)Mortgage-backed securities:U.S. Government sponsored mortgage-backed securities:Fannie Mae
    
    $
    2,111
    
    
    
    3.51
    %
    
    $
    2,772
    
    
    
    4.47
    %
    
    $
    35,801
    
    
    
    4.86
    %
    
    $
    26,790
    
    
    
    4.10
    %
    
    $
    67,474
    
    
    $
    70,102
    
    
    
    4.50
    %Freddie Mac
    
    
    794
    
    
    
    3.84
    
    
    
    1,389
    
    
    
    4.53
    
    
    
    26,576
    
    
    
    4.43
    
    
    
    32,189
    
    
    
    4.37
    
    
    
    60,948
    
    
    
    63,134
    
    
    
    4.39Ginnie Mae
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,668
    
    
    
    4.93
    
    
    
    1,668
    
    
    
    1,731
    
    
    
    4.93Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    10,264
    
    
    
    3.98
    
    
    
    3,672
    
    
    
    5.22
    
    
    
    40,442
    
    
    
    4.03
    
    
    
    54,378
    
    
    
    55,148
    
    
    
    4.10Private-label collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,382
    
    
    
    4.62
    
    
    
    4,131
    
    
    
    5.30
    
    
    
    5,513
    
    
    
    5,075
    
    
    
    5.13Total mortgage-backed securities
    
    
    2,905
    
    
    
    3.60
    
    
    
    14,425
    
    
    
    4.13
    
    
    
    67,431
    
    
    
    4.71
    
    
    
    105,220
    
    
    
    4.22
    
    
    
    189,981
    
    
    
    195,190
    
    
    
    4.37Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    7,762
    
    
    
    1.52
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,762
    
    
    
    5,604
    
    
    
    1.52Municipal obligations(1)
    
    
    
    
    
    
    
    
    
    
    4,595
    
    
    
    1.20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,595
    
    
    
    4,595
    
    
    
    1.20Other equity securities
    
    
    5,000
    
    
    
    3.61
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5,032
    
    
    
    3.61Total
    
    $
    7,905
    
    
    
    3.61
    %
    
    $
    26,782
    
    
    
    2.87
    %
    
    $
    67,431
    
    
    
    4.71
    %
    
    $
    105,220
    
    
    
    4.22
    %
    
    $
    207,338
    
    
    $
    210,421
    
    
    
    4.18
    %
 
 (1)
    
    The tax equivalent yield of municipal obligations was 1.82% for maturities of more than one
year through five years at December 31, 2009. There were no municipal obligations with
maturities that were one year or less or greater than five years at December 31, 2009.  33




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##### Table of Contents



Sources of Funds
 General.
 Deposits.
    For the Year Ended
    
    
    For the Year Ended
    
    
    For the Year EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Weighted
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Percent
    
    
    Rate
    
    
    Balance
    
    
    Percent
    
    
    Rate
    
    
    Balance
    
    
    Percent
    
    
    Rate(Dollars in thousands)Deposit type:Noninterest-bearing demand
    
    $
    73,798
    
    
    
    9.62
    %
    
    
    
    %
    
    $
    67,591
    
    
    
    9.14
    %
    
    
    
    %
    
    $
    66,715
    
    
    
    8.80
    %
    
    
    
    %Interest-bearing demand
    
    
    66,250
    
    
    
    8.64
    
    
    
    0.41
    
    
    
    62,176
    
    
    
    8.41
    
    
    
    0.59
    
    
    
    62,211
    
    
    
    8.21
    
    
    
    0.73Savings accounts
    
    
    197,394
    
    
    
    25.73
    
    
    
    0.68
    
    
    
    189,523
    
    
    
    25.62
    
    
    
    1.12
    
    
    
    200,721
    
    
    
    26.48
    
    
    
    1.50Money market
    
    
    87,032
    
    
    
    11.35
    
    
    
    1.11
    
    
    
    77,971
    
    
    
    10.54
    
    
    
    2.06
    
    
    
    104,200
    
    
    
    13.74
    
    
    
    3.49Certificates of deposit
    
    
    342,589
    
    
    
    44.66
    
    
    
    2.97
    
    
    
    342,315
    
    
    
    46.29
    
    
    
    4.09
    
    
    
    324,292
    
    
    
    42.77
    
    
    
    4.82Total deposits
    
    $
    767,063
    
    
    
    100.00
    %
    
    
    1.84
    %
    
    $
    739,576
    
    
    
    100.00
    %
    
    
    2.69
    %
    
    $
    758,139
    
    
    
    100.00
    %
    
    
    3.29
    %
  34




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##### Table of Contents



AtDecember 31, 2009(In thousands)Three months or less
    
    $
    16,991Over three months through six months
    
    
    23,273Over six months through one year
    
    
    49,175Over one year to three years
    
    
    29,738Over three years
    
    
    3,814Total
    
    $
    122,991
 Borrowings.
 At or For the Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Balance at end of period
    
    $
    66,400
    
    
    $
    169,900
    
    
    $
    156,900Average balance during period
    
    $
    117,547
    
    
    $
    169,026
    
    
    $
    108,848Maximum outstanding at any month end
    
    $
    159,900
    
    
    $
    189,650
    
    
    $
    156,900Weighted average interest rate at end of period
    
    
    3.54
    %
    
    
    4.20
    %
    
    
    4.46
    %Average interest rate during period
    
    
    4.05
    %
    
    
    4.21
    %
    
    
    4.15
    %
  At or For the Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Balance at end of period
    
    $
    58,000
    
    
    $
    58,000
    
    
    $
    50,000Average balance during period
    
    $
    58,000
    
    
    $
    57,716
    
    
    $
    21,781Maximum outstanding at any month end
    
    $
    58,000
    
    
    $
    58,000
    
    
    $
    50,000Weighted average interest rate at end of period
    
    
    3.52
    %
    
    
    3.23
    %
    
    
    5.31
    %Average interest rate during period
    
    
    3.68
    %
    
    
    3.47
    %
    
    
    5.38
    %
  At or For the Years Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Balance at end of period
    
    $
    
    
    
    $
    664
    
    
    $
    16,156Average balance during period
    
    $
    
    
    
    $
    6,781
    
    
    $
    27,568Maximum outstanding at any month end
    
    $
    
    
    
    $
    15,225
    
    
    $
    25,105Weighted average interest rate at end of period
    
    
    
    %
    
    
    4.79
    %
    
    
    4.30
    %Average interest rate during period
    
    
    
    %
    
    
    6.58
    %
    
    
    4.64
    %
  35




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##### Table of Contents



Subsidiary Activities
  Expense and Tax Allocation
  Personnel
  SUPERVISION AND REGULATION
 General
      36




---



##### Table of Contents



Proposed Federal Legislation
  Federal Banking Regulation
 Business Activities.
 Capital Requirements.
    37




---



##### 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.
  38




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##### 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 OmniAmerican Banks capital.
  39




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##### Table of Contents



Enforcement.
 Standards for Safety and Soundness.
 Regulatory Guidance to Subprime Lending.
 Prompt Corrective Action Regulations .
 
    
    well-capitalized (at least 5% leverage capital, 6% Tier 1 risk-based capital and 10%
total risk-based capital);
  40




---



##### Table of Contents




    
    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).
   Recent Regulatory Developments.
  41




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##### Table of Contents




    
    implement enhanced corporate governance practices;
 
    
    hire qualified senior management and appoint an outside director with commercial
real estate expertise;
 
    
    prepare, adopt and implement a revised business plan;
 
    
    improve audit committee policies and practices, including hiring a qualified person
as the director of internal audit and ensuring that only independent directors serve on
the audit committee;
 
    
    restrict our ability to enter into compensation arrangements without first obtaining
the Office of Thrift Supervisions non-objection;
 
    
    prepare a compensation policy;
 
    
    adopt an asset classification policy and review our loan portfolio and classified
assets;
 
    
    conduct an internal loan review and commercial real estate and commercial business
risk analysis; and
 
    
    complete a detailed analysis of Bank Secrecy Act compliance, Bank Secrecy Act and
Office of Foreign Assets Control staffing and training, and ensure the adequacy of
OmniAmerican Banks Customer Information Security Program, including the safeguarding
of customer information and our information technology policies, practices and
personnel.
   42




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##### Table of Contents



Insurance of Deposit Accounts.
      43




---



##### Table of Contents



Temporary Liquidity Guarantee Program.
  U.S. Treasurys Troubled Asset Relief Program Capital Purchase Program.
  44




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##### Table of Contents



Prohibitions Against Tying Arrangements .
 Federal Home Loan Bank System.
 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;
  45




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##### Table of Contents




    
    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.
 Holding Company Regulation
 General
 Permissible Activities.
   46




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##### Table of Contents



(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.
  Federal Securities Laws
   Sarbanes-Oxley Act of 2002
   47




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##### Table of Contents



TAXATION
 Federal Taxation
 General.
 Method of Accounting .
 Minimum Tax.
 Net Operating Loss Carryovers.
 Corporate Dividends.
 Audit of Tax Returns.
 State Taxation
   48




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##### Table of Contents



ITEM 1A. Risk Factors
 Our loan portfolio has greater risk than those of many savings banks due to the substantial number
of automobile and other consumer loans in our portfolio.
   A portion of our loan portfolio consists of loans made to persons with impaired credit or with
reduced documentation, which presents greater risk of loss or delinquency.
    49




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Our loan portfolio has more risk due to the recent change in our lending emphasis which has
resulted in a greater percentage of new one- to four-family residential mortgage loans.
  We have increased our levels of non-residential mortgage loans and commercial business loans which
has increased our exposure to credit risk.
   50




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Protecting our business from identity theft and the theft of other customer data increases our cost
of operations. To the extent that we, or our third party providers, are unable to prevent the loss
of customer information, our operations may become disrupted and our net income may be adversely
affected.
     51




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We could record future impairment losses on our holdings of investment securities. We may not
receive full future interest payments on these securities.
  If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings will
decrease.
   Our expenses may increase as a result of increases in Federal Deposit Insurance Corporation
insurance premiums.
   52




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##### Table of Contents



Future changes in interest rates could reduce our profits.
  
    
    the interest income we earn on our interest-earning assets, such as loans and
securities; and
 
    
    the interest expense we incur on our interest-bearing liabilities, such as deposits
and borrowings.
    53




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##### Table of Contents



A legislative proposal has been introduced that would eliminate our primary federal regulator,
require OmniAmerican Bank to convert to a national bank or state bank, and require OmniAmerican
Bancorp, Inc. to become a bank holding company.
   Negative developments in the financial industry and the domestic and international credit markets
may adversely affect our operations and results.
   54




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Strong competition within our market areas may limit our growth and profitability.
   55




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##### Table of Contents



We operate in a highly regulated environment and may be adversely affected by changes in laws and
regulations.
  
 ITEM 1B. Unresolved Staff Comments
  
 ITEM 2. Properties
  Leased or
    
    Year Acquired orAddress
    
    Owned
    
    LeasedMain Office:1320 South University Dr.
Fort Worth, TX 76107
    
    Owned
    
    
    2004Full Service Branches:1320 South University Dr.
Fort Worth, TX 76107
    
    Owned
    
    
    2006NAS/JRB FW Building 1870
Fort Worth, TX 76127
    
    Leased (1)
    
    
    19687800 White Settlement Road
Fort Worth, TX 76108
    
    Owned
    
    
    19911616 W. Northwest Highway
Grapevine, TX 76051
    
    Leased (2)
    
    
    20051401 W. Walnut Hill Lane
Irving, TX 75038
    
    Owned
    
    
    1990
  56




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##### Table of Contents



Leased or
    
    Year Acquired orAddress
    
    Owned
    
    Leased2311 West Euless Boulevard
Euless, TX 76040
    
    Owned
    
    
    1992950 West Arbrook Boulevard
Arlington, TX 76015
    
    Owned
    
    
    19991000 Pennsylvania Avenue
Fort Worth, TX 76014
    
    Owned
    
    
    19956001 Bryant Irvin Road
Fort Worth, TX 76132
    
    Owned
    
    
    1996803 East Lamar
Arlington, TX 76011
    
    Leased(3)
    
    
    20012330 East Rosedale Street
Fort Worth, TX 76105
    
    Owned
    
    
    1996318 South Main
Weatherford, TX 76086
    
    Owned
    
    
    20038024 Denton Highway
Watauga, TX 76148
    
    Owned
    
    
    20021030 East Highway 377
Suite 138
Granbury, TX 76048
    
    Leased(3)
    
    
    20021204 W. Henderson Road
Cleburne, TX 76033
    
    Owned
    
    
    20032341 Justin Road
Flower Mound, TX 75248
    
    Leased(4)
    
    
    2009
 
 (1)
    
    Lease on a month-to-month basis.(2)
    
    Lease expires in 2015.(3)
    
    Lease expires in 2010.(4)
    
    Lease expires in 2019. 
 ITEM 3. Legal Proceedings
  
 ITEM 4. Reserved
  57




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PART II
 
 ITEM
5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
       58




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59




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ITEM
6. Selected Financial Data
  At December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands)Selected Consolidated
Financial Condition
Data:Total assets
    
    $
    1,133,927
    
    
    $
    1,067,914
    
    
    $
    1,051,021
    
    
    $
    1,062,874
    
    
    $
    1,118,733Cash and cash equivalents
    
    
    140,144
    
    
    
    41,242
    
    
    
    19,036
    
    
    
    98,317
    
    
    
    40,653Securities available for
sale, at fair value
    
    
    210,421
    
    
    
    230,304
    
    
    
    244,585
    
    
    
    150,904
    
    
    
    183,530Other investments
    
    
    3,850
    
    
    
    10,014
    
    
    
    10,065
    
    
    
    9,715
    
    
    
    16,875Loans receivable, net
    
    
    698,127
    
    
    
    715,774
    
    
    
    707,099
    
    
    
    728,847
    
    
    
    799,152Foreclosed assets, net
    
    
    267
    
    
    
    98
    
    
    
    248
    
    
    
    143
    
    
    
    428Other real estate owned
    
    
    6,762
    
    
    
    488
    
    
    
    488
    
    
    
    488
    
    
    
    Deposits
    
    
    909,966
    
    
    
    739,846
    
    
    
    729,895
    
    
    
    794,152
    
    
    
    689,057Federal Home Loan Bank
of Dallas advances
    
    
    66,400
    
    
    
    169,900
    
    
    
    156,900
    
    
    
    128,900
    
    
    
    253,479Other secured borrowings
    
    
    58,000
    
    
    
    58,664
    
    
    
    66,156
    
    
    
    41,168
    
    
    
    77,796Total equity capital
    
    
    91,156
    
    
    
    89,329
    
    
    
    88,722
    
    
    
    88,861
    
    
    
    87,718
 For the Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands)Selected Consolidated Operating Data:Interest income
    
    $
    53,715
    
    
    $
    57,696
    
    
    $
    54,915
    
    
    $
    52,010
    
    
    $
    53,462Interest expense
    
    
    19,674
    
    
    
    27,677
    
    
    
    29,688
    
    
    
    25,521
    
    
    
    23,385Net interest income
    
    
    34,041
    
    
    
    30,019
    
    
    
    25,227
    
    
    
    26,489
    
    
    
    30,077Provision for loan losses
    
    
    5,200
    
    
    
    3,825
    
    
    
    3,650
    
    
    
    6,113
    
    
    
    5,730Net interest income after provision for
loan losses
    
    
    28,841
    
    
    
    26,194
    
    
    
    21,577
    
    
    
    20,376
    
    
    
    24,347Noninterest income
    
    
    16,463
    
    
    
    16,269
    
    
    
    17,569
    
    
    
    17,325
    
    
    
    19,187Noninterest expense
    
    
    43,757
    
    
    
    41,077
    
    
    
    42,433
    
    
    
    45,957
    
    
    
    38,145Income (loss) before income tax expense
(benefit)
    
    
    1,547
    
    
    
    1,386
    
    
    
    (3,287
    )
    
    
    (8,256
    )
    
    
    5,389Income tax expense (benefit)(1)
    
    
    892
    
    
    
    742
    
    
    
    (1,115
    )
    
    
    (7,332
    )
    
    
    Net income (loss)
    
    $
    655
    
    
    $
    644
    
    
    $
    (2,172
    )
    
    $
    (924
    )
    
    $
    5,389
 
 (1)
    
    Until its conversion to a federally chartered mutual savings bank on January 1, 2006,
OmniAmerican Bank was a credit union, and generally exempt from federal and state income
taxes. As a result of the change in tax status on January 1, 2006, OmniAmerican Bank recorded
a deferred tax asset in the amount of $6.1 million, as well as a related tax benefit of $4.5
million. The following table provides a reconciliation to pro forma net income for the periods
presented prior to and through the year ended December 31, 2006, had OmniAmerican Bank been
subject to federal and state income taxes: December 31,2006
    
    
    2005(In thousands)Historical net (loss) income
    
    $
    (924
    )
    
    $
    5,389Less: pro forma tax expense
    
    
    
    
    
    
    1,832Less: tax benefit
    
    
    4,541
    
    
    
    Pro forma net (loss) income
    
    $
    (5,465
    )
    
    $
    3,557
  60




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At or For the Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Selected Consolidated Financial Ratios and Other Data:Performance Ratios:Return (loss) on average assets (ratio of net income
(loss) to average total assets)
    
    
    0.06
    %
    
    
    0.06
    %
    
    
    (0.21
    )%
    
    
    (0.09
    )%
    
    
    0.50
    %Return on average assets tax effected
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    0.33
    %Return (loss) on average equity (ratio of net income
(loss) to average equity)
    
    
    0.72
    %
    
    
    0.72
    %
    
    
    (2.46
    )%
    
    
    (1.00
    )%
    
    
    5.66
    %Return on average equity tax effected
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    3.74
    %Interest rate spread(1)
    
    
    3.29
    %
    
    
    2.74
    %
    
    
    2.38
    %
    
    
    2.58
    %
    
    
    2.63
    %Net interest margin (2)
    
    
    3.51
    %
    
    
    3.02
    %
    
    
    2.70
    %
    
    
    2.77
    %
    
    
    2.74
    %Efficiency ratio(3)
    
    
    86.64
    %
    
    
    88.74
    %
    
    
    99.15
    %
    
    
    104.89
    %
    
    
    77.43
    %Noninterest expense to average total assets
    
    
    4.18
    %
    
    
    3.82
    %
    
    
    4.17
    %
    
    
    4.38
    %
    
    
    3.50
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    111.49
    %
    
    
    109.88
    %
    
    
    110.08
    %
    
    
    107.33
    %
    
    
    105.45
    %Average equity to average total assets
    
    
    8.73
    %
    
    
    8.32
    %
    
    
    8.68
    %
    
    
    8.84
    %
    
    
    8.75
    %Asset Quality Ratios:Non-performing assets to total assets
    
    
    1.35
    %
    
    
    0.59
    %
    
    
    0.35
    %
    
    
    0.37
    %
    
    
    0.21
    %Non-performing loans to total loans
    
    
    1.17
    %
    
    
    0.79
    %
    
    
    0.42
    %
    
    
    0.45
    %
    
    
    0.23
    %Allowance for loan losses to non-performing loans
    
    
    100.66
    %
    
    
    145.06
    %
    
    
    248.52
    %
    
    
    213.67
    %
    
    
    256.81
    %Allowance for loan losses to total loans
    
    
    1.18
    %
    
    
    1.14
    %
    
    
    1.04
    %
    
    
    0.96
    %
    
    
    0.60
    %Net charge-offs to average loans outstanding
    
    
    0.71
    %
    
    
    0.40
    %
    
    
    0.46
    %
    
    
    0.52
    %
    
    
    0.76
    %Capital Ratios:Total capital (to risk-weighted assets)
    
    
    12.03
    %
    
    
    11.73
    %
    
    
    11.66
    %
    
    
    11.74
    %
    
    
    11.09
    %(4)Tier I capital (to risk-weighted assets)
    
    
    11.01
    %
    
    
    10.73
    %
    
    
    10.68
    %
    
    
    10.83
    %
    
    
    10.54
    %(4)Tier I capital (to total assets)
    
    
    7.35
    %
    
    
    7.71
    %
    
    
    7.76
    %
    
    
    7.95
    %
    
    
    8.22
    % (4)Other Data:Number of full service offices
    
    
    16
    
    
    
    17
    
    
    
    17
    
    
    
    17
    
    
    
    16Full-time equivalent employees
    
    
    330
    
    
    
    345
    
    
    
    338
    
    
    
    387
    
    
    
    336
 
 (1)
    
    The interest rate spread represents the difference between the weighted-average yield on
interest-earning assets and the weighted-average cost of interest-bearing liabilities for the
year.(2)
    
    The net interest margin represents net interest income as a percent of average
interest-earning assets for the year.(3)
    
    The efficiency ratio represents noninterest expense divided by the sum of net interest income
and noninterest income.(4)
    
    On January 1, 2006, OmniAmerican Bank converted its charter to a federal mutual savings bank
charter and became subject to regulation and examination by the Office of Thrift Supervision
and the Federal Deposit Insurance Corporation. Prior to January 1, 2006, OmniAmerican Bank
was a credit union and was subject to various regulatory capital requirements administered by
the National Credit Union Administration and the Texas Credit Union Department. The capital
ratios at December 31, 2005 are presented as if OmniAmerican Bank had been subject to the
regulatory capital requirements of the federal banking regulators on those dates. The National
Credit Union Administration and the Texas Credit Union Department categorized OmniAmerican
Bank as well capitalized under the regulatory framework for prompt corrective action as of
December 31, 2005. To be categorized as well capitalized, as a credit union, OmniAmerican
Bank was required to maintain a minimum net worth ratio of 7% of total assets. The actual net
worth to total assets ratios as of December 31, 2005 was 7.84%.  61




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ITEM
7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
     62




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Business Strategy
  Diversifying our loan portfolio by emphasizing the origination of one- to four-family
residential mortgage loans, commercial real estate loans and commercial business loans.
 Continuing conservative underwriting guidelines and aggressive monitoring of our loan
portfolio in order to maintain asset quality
 Emphasizing lower cost core deposits to reduce the funding costs of our loan growth.
 Managing interest rate risk.
  63




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Increasing our sources of noninterest income.
 Implementing a controlled growth strategy.
  Critical Accounting Policies
  Allowance for Loan Losses.
  
    
    loans that we evaluate individually for impairment pursuant to ASC 310-10,
Receivables, and
 
    
    groups of loans with similar risk characteristics that we evaluate collectively for
impairment pursuant to ASC 450-10, Contingencies.
   64




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Impairment of Investment Securities.
 Defined Benefit Retirement Plan.
  Income Taxes. 
  65




---



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Comparison of Financial Condition at December 31, 2009 and 2008
      66




---



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Comparison of Operating Results for the Years Ended December 31, 2009 and 2008
 General
 Interest Income
  67




---



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Interest Expense
    68




---



##### Table of Contents



Net Interest Income
 Provision for Loan Losses
  Noninterest Income
 Noninterest Expense
  69




---



##### Table of Contents



Income Tax Expense
 Comparison of Operating Results for the Years Ended December 31, 2008 and 2007
 General.
 Interest Income.
    70




---



##### Table of Contents



Interest Expense.
    Net Interest Income.
 Provision for Loan Losses.
  71




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##### Table of Contents



Noninterest Income.
 Noninterest Expense.
 Income Tax Expense (Benefit).
  72




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Average Balances and Yields
  For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    Yield/
    
    
    Outstanding
    
    
    
    
    
    
    Yield/
    
    
    Outstanding
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Interest-earning assets:Loans
    
    $
    722,143
    
    
    $
    44,702
    
    
    
    6.19
    %
    
    $
    731,999
    
    
    $
    45,111
    
    
    
    6.16
    %
    
    $
    714,412
    
    
    $
    44,016
    
    
    
    6.16
    %Taxable investment securities available for
sale
    
    
    197,331
    
    
    
    8,737
    
    
    
    4.43
    
    
    
    242,551
    
    
    
    12,061
    
    
    
    4.97
    
    
    
    192,263
    
    
    
    9,324
    
    
    
    4.85Nontaxable investment securities available
for sale
    
    
    5,112
    
    
    
    111
    
    
    
    2.17
    (4)
    
    
    520
    
    
    
    23
    
    
    
    4.42
    (4)
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    37,581
    
    
    
    66
    
    
    
    0.18
    
    
    
    9,359
    
    
    
    199
    
    
    
    2.13
    
    
    
    20,458
    
    
    
    1,105
    
    
    
    5.40Other
    
    
    6,456
    
    
    
    99
    
    
    
    1.53
    
    
    
    10,525
    
    
    
    302
    
    
    
    2.87
    
    
    
    8,117
    
    
    
    470
    
    
    
    5.79Total interest-earning assets
    
    
    968,623
    
    
    
    53,715
    
    
    
    5.55
    
    
    
    994,954
    
    
    
    57,696
    
    
    
    5.80
    
    
    
    935,250
    
    
    
    54,915
    
    
    
    5.87Noninterest-earning assets
    
    
    78,690
    
    
    
    
    
    
    
    
    
    
    
    79,384
    
    
    
    
    
    
    
    
    
    
    
    81,918Total assets
    
    $
    1,047,313
    
    
    
    
    
    
    
    
    
    
    $
    1,074,338
    
    
    
    
    
    
    
    
    
    
    $
    1,017,168Interest-bearing liabilities:Interest-bearing demand
    
    $
    66,250
    
    
    $
    269
    
    
    
    0.41
    %
    
    $
    62,176
    
    
    $
    367
    
    
    
    0.59
    %
    
    $
    62,211
    
    
    $
    457
    
    
    
    0.73
    %Savings accounts
    
    
    197,394
    
    
    
    1,344
    
    
    
    0.68
    
    
    
    189,523
    
    
    
    2,119
    
    
    
    1.12
    
    
    
    200,721
    
    
    
    3,011
    
    
    
    1.50Money market accounts
    
    
    87,032
    
    
    
    970
    
    
    
    1.11
    
    
    
    77,971
    
    
    
    1,608
    
    
    
    2.06
    
    
    
    104,200
    
    
    
    3,640
    
    
    
    3.49Certificates of deposit
    
    
    342,589
    
    
    
    10,189
    
    
    
    2.97
    
    
    
    342,315
    
    
    
    14,011
    
    
    
    4.09
    
    
    
    324,292
    
    
    
    15,616
    
    
    
    4.82Total interest-bearing deposits
    
    
    693,265
    
    
    
    12,772
    
    
    
    1.84
    
    
    
    671,985
    
    
    
    18,105
    
    
    
    2.69
    
    
    
    691,424
    
    
    
    22,724
    
    
    
    3.29Federal Home Loan Bank
advances
    
    
    117,547
    
    
    
    4,762
    
    
    
    4.05
    
    
    
    169,026
    
    
    
    7,123
    
    
    
    4.21
    
    
    
    108,848
    
    
    
    4,513
    
    
    
    4.15Other secured borrowings
    
    
    58,000
    
    
    
    2,140
    
    
    
    3.69
    
    
    
    64,497
    
    
    
    2,449
    
    
    
    3.80
    
    
    
    49,349
    
    
    
    2,451
    
    
    
    4.97Total interest-bearing liabilities
    
    
    868,812
    
    
    
    19,674
    
    
    
    2.26
    
    
    
    905,508
    
    
    
    27,677
    
    
    
    3.06
    
    
    
    849,621
    
    
    
    29,688
    
    
    
    3.49Noninterest-bearing liabilities(5)
    
    
    87,115
    
    
    
    
    
    
    
    
    
    
    
    79,449
    
    
    
    
    
    
    
    
    
    
    
    79,302Total liabilities
    
    
    955,927
    
    
    
    
    
    
    
    
    
    
    
    984,957
    
    
    
    
    
    
    
    
    
    
    
    928,923Equity
    
    
    91,386
    
    
    
    
    
    
    
    
    
    
    
    89,381
    
    
    
    
    
    
    
    
    
    
    
    88,245Total liabilities and equity
    
    $
    1,047,313
    
    
    
    
    
    
    
    
    
    
    $
    1,074,338
    
    
    
    
    
    
    
    
    
    
    $
    1,017,168Net interest income
    
    
    
    
    
    $
    34,041
    
    
    
    
    
    
    
    
    
    
    $
    30,019
    
    
    
    
    
    
    
    
    
    
    $
    25,227Interest rate spread (1)
    
    
    
    
    
    
    
    
    
    
    3.29
    %
    
    
    
    
    
    
    
    
    
    
    2.74
    %
    
    
    
    
    
    
    
    
    
    
    2.38
    %Net interest-earning assets (2)
    
    $
    99,811
    
    
    
    
    
    
    
    
    
    
    $
    89,446
    
    
    
    
    
    
    
    
    
    
    $
    85,629Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    3.51
    %
    
    
    
    
    
    
    
    
    
    
    3.02
    %
    
    
    
    
    
    
    
    
    
    
    2.70
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    111.49
    %
    
    
    
    
    
    
    
    
    
    
    109.88
    %
    
    
    
    
    
    
    
    
    
    
    110.08
    %
 
 (1)
    
    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.(4)
    
    The tax equivalent yield of nontaxable investment securities was 3.29%, and 6.70% for the
years ended December 31, 2009 and 2008, respectively, assuming a marginal tax rate of 34%.
OmniAmerican Bank did not have investments in nontaxable securities during the year ended
December 31, 2007.(5)
    
    Includes noninterest-bearing deposits.  73




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Rate/Volume Analysis
  Years Ended December 31,
    
    
    Years Ended December 31,2009 vs. 2008
    
    
    2008 vs. 2007Increase (Decrease)
    
    
    Total
    
    
    Increase (Decrease)
    
    
    TotalDue to
    
    
    Increase
    
    
    Due to
    
    
    IncreaseVolume
    
    
    Rate
    
    
    (Decrease)
    
    
    Volume
    
    
    Rate
    
    
    (Decrease)(In thousands)Interest-earning assets:Loans
    
    $
    (607
    )
    
    $
    198
    
    
    $
    (409
    )
    
    $
    1,084
    
    
    $
    11
    
    
    $
    1,095Taxable investment securities
available for sale
    
    
    (2,249
    )
    
    
    (1,075
    )
    
    
    (3,324
    )
    
    
    2,439
    
    
    
    298
    
    
    
    2,737Nontaxable investment securities
available for sale
    
    
    203
    
    
    
    (115
    )
    
    
    88
    
    
    
    
    
    
    
    23
    
    
    
    23Cash and cash equivalents
    
    
    600
    
    
    
    (733
    )
    
    
    (133
    )
    
    
    (599
    )
    
    
    (307
    )
    
    
    (906
    )Other
    
    
    (116
    )
    
    
    (87
    )
    
    
    (203
    )
    
    
    140
    
    
    
    (308
    )
    
    
    (168
    )Total interest-earning assets
    
    $
    (2,169
    )
    
    $
    (1,812
    )
    
    $
    (3,981
    )
    
    $
    3,064
    
    
    $
    (283
    )
    
    $
    2,781Interest-bearing liabilities:Interest-bearing demand
    
    $
    24
    
    
    $
    (122
    )
    
    $
    (98
    )
    
    $
    
    
    
    $
    (90
    )
    
    $
    (90
    )Savings accounts
    
    
    88
    
    
    
    (863
    )
    
    
    (775
    )
    
    
    (168
    )
    
    
    (724
    )
    
    
    (892
    )Money market accounts
    
    
    187
    
    
    
    (825
    )
    
    
    (638
    )
    
    
    (916
    )
    
    
    (1,116
    )
    
    
    (2,032
    )Certificates of deposit
    
    
    11
    
    
    
    (3,833
    )
    
    
    (3,822
    )
    
    
    868
    
    
    
    (2,473
    )
    
    
    (1,605
    )Total interest-bearing deposits
    
    
    310
    
    
    
    (5,643
    )
    
    
    (5,333
    )
    
    
    (216
    )
    
    
    (4,403
    )
    
    
    (4,619
    )Federal Home Loan Bank advances
    
    
    (2,169
    )
    
    
    (192
    )
    
    
    (2,361
    )
    
    
    2,495
    
    
    
    115
    
    
    
    2,610Other secured borrowings
    
    
    (247
    )
    
    
    (62
    )
    
    
    (309
    )
    
    
    752
    
    
    
    (754
    )
    
    
    (2
    )Total interest-bearing liabilities
    
    $
    (2,106
    )
    
    $
    (5,897
    )
    
    $
    (8,003
    )
    
    $
    3,031
    
    
    $
    (5,042
    )
    
    $
    (2,011
    )Change in net interest income
    
    $
    (63
    )
    
    $
    4,085
    
    
    $
    4,022
    
    
    $
    33
    
    
    $
    4,759
    
    
    $
    4,792
 Liquidity and Capital Resources
   74




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(i)
    
    expected loan demand;(ii)
    
    expected deposit flows;(iii)
    
    yields available on interest-earning deposits and securities; and(iv)
    
    the objectives of our asset/liability management program.
        75




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Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
 Commitments.
 Contractual Obligations.
  76




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Payments Due by PeriodMore than
    
    
    More thanOne year or
    
    
    one year to
    
    
    three years to
    
    
    More thanless
    
    
    three years
    
    
    five years
    
    
    five years
    
    
    Total(In thousands)Contractual obligations:Long-term debt (1)
    
    $
    25,400
    
    
    $
    84,000
    
    
    $
    6,000
    
    
    $
    9,000
    
    
    $
    124,400Operating leases
    
    
    488
    
    
    
    482
    
    
    
    483
    
    
    
    532
    
    
    
    1,985Certificates of deposit
    
    
    254,680
    
    
    
    43,764
    
    
    
    35,361
    
    
    
    10
    
    
    
    333,815Total contractual obligations
    
    $
    280,568
    
    
    $
    128,246
    
    
    $
    41,844
    
    
    $
    9,542
    
    
    $
    460,200Off-balance sheet loan commitments:Undisbursed portion of loans closed
    
    $
    4,127
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,127Unused lines of credit (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,492Total loan commitments
    
    $
    4,127
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    27,619Total contractual obligations and
loan commitments
    
    $
    284,695
    
    
    $
    128,246
    
    
    $
    41,844
    
    
    $
    9,542
    
    
    $
    487,819
 
 (1)
    
    Includes Federal Home Loan Bank advances and securities sold under agreements to repurchase.(2)
    
    Since lines of credit may expire without being drawn upon, the total commitment amount does
not necessarily represent future cash requirements. Recent Accounting Pronouncements
  Impact of Inflation and Changing Prices
  
 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
 Management of Market Risk
 General
  77




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(i)
    
    sell the long-term, fixed-rate one- to four-family residential mortgage loans
(terms greater than 15 years) that we originate into the secondary mortgage market;
 (ii)
    
    lengthen the weighted average maturity of our liabilities through retail
deposit pricing strategies and through longer-term wholesale funding sources such as
fixed-rate advances from the Federal Home Loan Bank of Dallas;
 (iii)
    
    invest in shorter- to medium-term securities;
 (iv)
    
    originate commercial business and consumer loans, which tend to have shorter
terms and higher interest rates than residential mortgage loans, and which generate
customer relationships that can result in larger noninterest-bearing demand deposit
accounts; and
 (v)
    
    maintain adequate levels of capital.
  Net Portfolio Value .
  78




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At December 31, 2009NPV as a Percentage of
    
    
    Net Interest IncomePresent Value of Assets (3)
    
    
    
    
    
    
    Increase (Decrease) inChange in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase
    
    
    Estimated
    
    
    Estimated Net InterestInterest Rates
    
    Estimated
    
    
    Estimated (Decrease) in NPV
    
    
    
    
    
    
    (Decrease)
    
    
    Net Interest
    
    
    Income(basis points)(1)
    
    NPV (2)
    
    
    Amount
    
    
    Percent
    
    
    NPV Ratio (4)
    
    
    (basis points)
    
    
    Income
    
    
    Amount
    
    
    Percent(Dollars in thousands)+300
    
    $
    119,525
    
    
    $
    (17,256
    )
    
    
    (12.61
    )%
    
    
    10.53
    %
    
    
    (107
    )
    
    $
    41,253
    
    
    $
    (1,342
    )
    
    
    (3.15
    )%+200
    
    
    127,930
    
    
    
    (8,851
    )
    
    
    (6.47
    )%
    
    
    11.11
    %
    
    
    (49
    )
    
    
    41,874
    
    
    
    (719
    )
    
    
    (1.69
    )%+100
    
    
    133,957
    
    
    
    (2,824
    )
    
    
    (2.06
    )%
    
    
    11.48
    %
    
    
    (12
    )
    
    
    42,315
    
    
    
    (280
    )
    
    
    (0.66
    )%0
    
    
    136,781
    
    
    
    
    
    
    
    
    
    
    
    11.60
    %
    
    
    
    
    
    
    42,595
    
    
    
    
    
    
    
    -100
    
    
    135,457
    
    
    
    (1,324
    )
    
    
    (0.97
    )%
    
    
    11.41
    %
    
    
    (19
    )
    
    
    42,427
    
    
    
    (168
    )
    
    
    (0.39
    )%
 
 (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.   79




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Net Interest Income.
   80




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##### Table of Contents



ITEM 8. Financial Statements and Supplementary Data
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF
OMNIAMERICAN BANK
 Report of Independent Registered Public Accounting Firm
    
    
    82Consolidated Balance Sheets at December 31, 2009 and 2008
    
    
    83Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    84Consolidated Statements of Changes in Equity Capital for the years ended
December 31, 2009, 2008 and 2007
    
    
    85Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    86Notes to Consolidated Financial Statements
    
    
    87
  81




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Report of Independent Registered Public Accounting Firm
 
     
 
 
  82




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OmniAmerican Bank
 
 Consolidated Balance Sheets
 (In thousands)
 December 31,2009
    
    
    2008ASSETSCash and due from financial institutions
    
    $
    14,729
    
    
    $
    17,242Short-term interest-earning deposits in other financial institutions
    
    
    125,415
    
    
    
    24,000Total cash and cash equivalents
    
    
    140,144
    
    
    
    41,242Investments:Securities available for sale (Amortized cost of $207,338 on
December 31, 2009 and $228,249 on December 31, 2008)
    
    
    210,421
    
    
    
    230,304Other
    
    
    3,850
    
    
    
    10,014Loans held for sale
    
    
    241
    
    
    
    160Loans, net of deferred fees and discounts
    
    
    706,455
    
    
    
    724,044Less allowance for loan losses
    
    
    (8,328
    )
    
    
    (8,270
    )Loans, net
    
    
    698,127
    
    
    
    715,774Premises and equipment, net
    
    
    50,951
    
    
    
    54,176Other real estate owned
    
    
    6,762
    
    
    
    488Mortgage servicing rights
    
    
    1,168
    
    
    
    765Deferred tax asset, net
    
    
    7,514
    
    
    
    8,406Accrued interest receivable
    
    
    3,523
    
    
    
    3,921Other assets
    
    
    11,226
    
    
    
    2,664Total assets
    
    $
    1,133,927
    
    
    $
    1,067,914LIABILITIES AND EQUITY CAPITALDeposits:Noninterest-bearing
    
    $
    75,628
    
    
    $
    67,483Interest-bearing
    
    
    834,338
    
    
    
    672,363Total deposits
    
    
    909,966
    
    
    
    739,846Federal Home Loan Bank advances
    
    
    66,400
    
    
    
    169,900Other secured borrowings
    
    
    58,000
    
    
    
    58,664Accrued expenses and other liabilities
    
    
    8,405
    
    
    
    10,175Total liabilities
    
    
    1,042,771
    
    
    
    978,585Commitments and contingenciesEquity capital:Retained earnings
    
    
    90,555
    
    
    
    89,900Accumulated other comprehensive income (loss):Unrealized gain on securities available for sale, net of income taxes
    
    
    2,035
    
    
    
    1,356Unrealized loss on pension plan, net of income taxes
    
    
    (1,434
    )
    
    
    (1,927
    )Total accumulated other comprehensive income (loss)
    
    
    601
    
    
    
    (571
    )Total equity capital
    
    
    91,156
    
    
    
    89,329Total liabilities and equity capital
    
    $
    1,133,927
    
    
    $
    1,067,914
   83




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##### Table of Contents



OmniAmerican Bank
 
 Consolidated Statements of Operations
 (In thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Interest income:Loans, including fees
    
    $
    44,702
    
    
    $
    45,111
    
    
    $
    44,016Securities  taxable
    
    
    8,902
    
    
    
    12,536
    
    
    
    10,899Securities  nontaxable
    
    
    111
    
    
    
    49
    
    
    
    Total interest income
    
    
    53,715
    
    
    
    57,696
    
    
    
    54,915Interest expense:Deposits
    
    
    12,771
    
    
    
    18,105
    
    
    
    22,724Borrowed funds
    
    
    6,903
    
    
    
    9,572
    
    
    
    6,964Total interest expense
    
    
    19,674
    
    
    
    27,677
    
    
    
    29,688Net interest income
    
    
    34,041
    
    
    
    30,019
    
    
    
    25,227Provision for loan losses
    
    
    5,200
    
    
    
    3,825
    
    
    
    3,650Net interest income after provision for loan losses
    
    
    28,841
    
    
    
    26,194
    
    
    
    21,577Noninterest income:Service charges and other fees
    
    
    10,735
    
    
    
    12,650
    
    
    
    15,316Net gains on sales of securities available for sale
    
    
    2,516
    
    
    
    121
    
    
    
    Net gains on sales of loans
    
    
    1,540
    
    
    
    1,175
    
    
    
    223Net gains on sales of fixed assets
    
    
    5
    
    
    
    7
    
    
    
    Commissions
    
    
    781
    
    
    
    1,166
    
    
    
    1,020Other income
    
    
    886
    
    
    
    1,150
    
    
    
    1,010Total noninterest income
    
    
    16,463
    
    
    
    16,269
    
    
    
    17,569Noninterest expense:Salaries and benefits
    
    
    21,051
    
    
    
    19,261
    
    
    
    20,977Software and equipment maintenance
    
    
    2,979
    
    
    
    2,183
    
    
    
    1,774Depreciation of furniture, software and equipment
    
    
    3,684
    
    
    
    3,515
    
    
    
    3,465FDIC insurance
    
    
    2,138
    
    
    
    822
    
    
    
    807Service fees
    
    
    902
    
    
    
    898
    
    
    
    852Communications costs
    
    
    962
    
    
    
    985
    
    
    
    996Other operations expense
    
    
    3,799
    
    
    
    4,309
    
    
    
    4,485Occupancy
    
    
    4,067
    
    
    
    4,104
    
    
    
    4,094Professional and outside services
    
    
    3,204
    
    
    
    4,281
    
    
    
    3,560Loan servicing
    
    
    429
    
    
    
    276
    
    
    
    489Marketing
    
    
    542
    
    
    
    443
    
    
    
    934Total noninterest expense
    
    
    43,757
    
    
    
    41,077
    
    
    
    42,433Income (loss) before income tax expense (benefit)
    
    
    1,547
    
    
    
    1,386
    
    
    
    (3,287
    )Income tax expense (benefit)
    
    
    892
    
    
    
    742
    
    
    
    (1,115
    )Net income (loss)
    
    $
    655
    
    
    $
    644
    
    
    $
    (2,172
    )
   84




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##### Table of Contents



OmniAmerican Bank
 
 Consolidated Statements of Changes in Equity Capital
 (In thousands)
 AccumulatedOther
    
    
    TotalRetained
    
    
    Comprehensive
    
    
    EquityEarnings
    
    
    Income (Loss)
    
    
    CapitalBalances at January 1, 2007
    
    $
    91,428
    
    
    $
    (2,567
    )
    
    $
    88,861Comprehensive loss:Net loss
    
    
    (2,172
    )
    
    
    
    
    
    
    (2,172
    )Change in fair value of securities available for sale, net of
income tax effect of $(1,370)
    
    
    
    
    
    
    2,659
    
    
    
    2,659Change in unrealized loss on pension plan, net of income
tax effect of $322
    
    
    
    
    
    
    (626
    )
    
    
    (626
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (139
    )Balances at December 31, 2007
    
    
    89,256
    
    
    
    (534
    )
    
    
    88,722Comprehensive income:Net income
    
    
    644
    
    
    
    
    
    
    
    644Change in fair value of securities available for sale, net of
reclassification to earnings of $(121) and
income tax effect of $(365)
    
    
    
    
    
    
    708
    
    
    
    708Change in unrealized loss on pension plan, net of income
tax effect of $384
    
    
    
    
    
    
    (745
    )
    
    
    (745
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    607Balances at December 31, 2008
    
    
    89,900
    
    
    
    (571
    )
    
    
    89,329Comprehensive income:Net income
    
    
    655
    
    
    
    
    
    
    
    655Change in fair value of securities available for sale, net of
reclassification to earnings of $(2,516) and
income tax effect of $(350)
    
    
    
    
    
    
    678
    
    
    
    678Change in unrealized loss on pension plan, net of income
tax effect of $(254)
    
    
    
    
    
    
    494
    
    
    
    494Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    1,827Balances at December 31, 2009
    
    $
    90,555
    
    
    $
    601
    
    
    $
    91,156
   85




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OmniAmerican Bank
 
 Consolidated Statements of Cash Flows
 (In thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    655
    
    
    $
    644
    
    
    $
    (2,172
    )Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:Depreciation and amortization
    
    
    5,313
    
    
    
    5,079
    
    
    
    4,937Provision for loan losses
    
    
    5,200
    
    
    
    3,825
    
    
    
    3,650Amortization of net premium on investments
    
    
    719
    
    
    
    448
    
    
    
    459Amortization of mortgage servicing rights
    
    
    370
    
    
    
    34
    
    
    
    4Deferred tax provision (benefit)
    
    
    288
    
    
    
    333
    
    
    
    (1,115
    )Net gain on sale of securities available for sale
    
    
    (2,516
    )
    
    
    (121
    )
    
    
    Net gain on sales of loans
    
    
    (1,540
    )
    
    
    (1,175
    )
    
    
    (223
    )Net gain on disposition of premises and equipment
    
    
    (5
    )
    
    
    (7
    )
    
    
    Proceeds from sales of loans held for sale
    
    
    13,608
    
    
    
    7,288
    
    
    
    7,941Loans originated for sale
    
    
    (13,689
    )
    
    
    (7,195
    )
    
    
    (7,275
    )Net loss on write-down of other real estate owned
    
    
    212
    
    
    
    
    
    
    
    Net loss (gain) on sale of other real estate owned
    
    
    86
    
    
    
    (3
    )
    
    
    65Federal Home Loan Bank stock dividends
    
    
    (19
    )
    
    
    (220
    )
    
    
    (320
    )Decrease in cash surrender value of life insurance
    
    
    
    
    
    
    
    
    
    
    824Changes in operating assets and liabilities:Accrued interest receivable
    
    
    398
    
    
    
    (38
    )
    
    
    (517
    )Other assets
    
    
    (9,335
    )
    
    
    (887
    )
    
    
    1,505Accrued interest payable and other liabilities
    
    
    (1,022
    )
    
    
    829
    
    
    
    (446
    )Net cash (used in) provided by operating activities
    
    
    (1,277
    )
    
    
    8,834
    
    
    
    7,317Cash flows from investing activities:Securities available for sale:Purchases
    
    
    (106,123
    )
    
    
    (73,612
    )
    
    
    (123,451
    )Proceeds from sales
    
    
    62,330
    
    
    
    40,809
    
    
    
    Proceeds from maturities, calls and principal repayments
    
    
    66,501
    
    
    
    47,830
    
    
    
    33,341Purchases of other investments
    
    
    (10
    )
    
    
    (1,518
    )
    
    
    (3,189
    )Redemptions of other investments
    
    
    6,193
    
    
    
    1,789
    
    
    
    3,158Purchases of loans held for investment
    
    
    (21,460
    )
    
    
    (78,044
    )
    
    
    (37,720
    )Net (increase) decrease in loans held for investment
    
    
    (45,614
    )
    
    
    1,003
    
    
    
    49,814Proceeds from sales of loans held for investment
    
    
    71,906
    
    
    
    65,547
    
    
    
    5,718Purchases of premises and equipment
    
    
    (2,095
    )
    
    
    (6,123
    )
    
    
    (3,444
    )Proceeds from sales of premises and equipment
    
    
    12
    
    
    
    61
    
    
    
    1Proceeds from sales of other real estate owned
    
    
    2,583
    
    
    
    171
    
    
    
    443Net cash provided by (used in) investing activities
    
    
    34,223
    
    
    
    (2,087
    )
    
    
    (75,329
    )Cash flows from financing activities:Net increase (decrease) in deposits
    
    
    170,120
    
    
    
    9,951
    
    
    
    (64,257
    )Net (decrease) increase in Federal Home Loan Bank advances
    
    
    (103,500
    )
    
    
    13,000
    
    
    
    28,000Net (decrease) increase in other secured borrowings
    
    
    (664
    )
    
    
    (7,492
    )
    
    
    24,988Net cash provided by (used in) financing activities
    
    
    65,956
    
    
    
    15,459
    
    
    
    (11,269
    )Net increase (decrease) in cash and cash equivalents
    
    
    98,902
    
    
    
    22,206
    
    
    
    (79,281
    )Cash and cash equivalents, beginning of year
    
    
    41,242
    
    
    
    19,036
    
    
    
    98,317Cash and cash equivalents, end of year
    
    $
    140,144
    
    
    $
    41,242
    
    
    $
    19,036Supplemental cash flow information:Interest paid
    
    $
    20,662
    
    
    $
    27,672
    
    
    $
    28,996Income taxes paid
    
    $
    354
    
    
    $
    193
    
    
    $
    Non-cash transactions:Loans transferred to other real estate owned
    
    $
    9,155
    
    
    $
    168
    
    
    $
    508Loans transferred to foreclosed assets
    
    $
    4,699
    
    
    $
    1,682
    
    
    $
    1,264
   86




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##### Table of Contents



OmniAmerican Bank
 
 Notes to Consolidated Financial Statements
 (Dollars in thousands)
 NOTE 1  Organization and Nature of Operations
  NOTE 2  Summary of Significant Accounting and Reporting Policies
 Principles of Consolidation
  Use of Estimates
  Segment Reporting
  Cash and Cash Equivalents and Concentrations
    87




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Investment Securities
    Membership Capital Accounts at Corporate Credit Unions
  Loans Held for Sale
  Loans
   88




---



##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
    Income Recognition on Impaired and Nonaccrual Loans
   Allowance for Loan Losses
    89




---



##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Premises and Equipment
  Other Real Estate Owned and Foreclosed Assets
   Mortgage Servicing Rights
    90




---



##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Transfers of Financial Assets
  Income Taxes
   Pension Plan
  Comprehensive Income
   91




---



##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Restrictions on Cash
  Reclassifications
  Advertising Costs
  Recent Accounting Pronouncements
     92




---



##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
       93




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  NOTE 3  Concentration of Funds
  December 31,2009
    
    
    2008The Independent Bankers Bank
    
    $
    124,041
    
    
    $
    22,107
 NOTE 4  Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueDecember 31, 2009U. S. government sponsored mortgage-backed securities
    
    $
    $130,090
    
    
    $
    5,000
    
    
    $
    (123
    )
    
    $
    134,967U. S. government sponsored collateralized mortgage
obligations
    
    
    54,378
    
    
    
    999
    
    
    
    (229
    )
    
    
    55,148Private-label collateralized mortgage obligations
(residential)
    
    
    5,513
    
    
    
    
    
    
    
    (438
    )
    
    
    5,075Trust preferred securities
    
    
    7,762
    
    
    
    
    
    
    
    (2,158
    )
    
    
    5,604Municipal obligations
    
    
    4,595
    
    
    
    
    
    
    
    
    
    
    
    4,595Other equity securities
    
    
    5,000
    
    
    
    32
    
    
    
    
    
    
    
    5,032Total investment securities available for sale
    
    $
    $207,338
    
    
    $
    6,031
    
    
    $
    (2,948
    )
    
    $
    210,421
  94




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueDecember 31, 2008U. S. government sponsored mortgage-backed securities
    
    $
    178,825
    
    
    $
    4,584
    
    
    $
    (14
    )
    
    $
    183,395U. S. government sponsored collateralized mortgage
obligations
    
    
    24,919
    
    
    
    298
    
    
    
    (37
    )
    
    
    25,180Private-label collateralized mortgage obligations
(residential)
    
    
    8,407
    
    
    
    1
    
    
    
    (1,273
    )
    
    
    7,135Trust preferred securities
    
    
    7,808
    
    
    
    
    
    
    
    (1,533
    )
    
    
    6,275Municipal obligations
    
    
    5,290
    
    
    
    
    
    
    
    
    
    
    
    5,290Other equity securities
    
    
    3,000
    
    
    
    29
    
    
    
    
    
    
    
    3,029Total investment securities available for sale
    
    $
    228,249
    
    
    $
    4,912
    
    
    $
    (2,857
    )
    
    $
    230,304
  Continuous Unrealized Losses Existing forLess Than 12 Months
    
    
    Greater Than 12 Months
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesDecember 31, 2009U. S. government
sponsored
mortgage-backed
securities
    
    $
    11,680
    
    
    $
    (123
    )
    
    $
    
    
    
    $
    
    
    
    $
    11,680
    
    
    $
    (123
    )U. S. government
sponsored
collateralized
mortgage obligations
    
    
    11,090
    
    
    
    (229
    )
    
    
    
    
    
    
    
    
    
    
    11,090
    
    
    
    (229
    )Private-label
collateralized
mortgage obligations
(residential)
    
    
    1,380
    
    
    
    (2
    )
    
    
    3,695
    
    
    
    (436
    )
    
    
    5,075
    
    
    
    (438
    )Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    5,604
    
    
    
    (2,158
    )
    
    
    5,604
    
    
    
    (2,158
    )$
    24,150
    
    
    $
    (354
    )
    
    $
    9,299
    
    
    $
    (2,594
    )
    
    $
    33,449
    
    
    $
    (2,948
    )December 31, 2008U. S. government
sponsored
mortgage-backed
securities
    
    $
    5,608
    
    
    $
    (14
    )
    
    $
    
    
    
    $
    
    
    
    $
    5,608
    
    
    $
    (14
    )U. S. government
sponsored
collateralized
mortgage obligations
    
    
    4,595
    
    
    
    (11
    )
    
    
    1,332
    
    
    
    (26
    )
    
    
    5,927
    
    
    
    (37
    )Private-label
collateralized
mortgage obligations
(residential)
    
    
    4,273
    
    
    
    (1,022
    )
    
    
    2,143
    
    
    
    (251
    )
    
    
    6,416
    
    
    
    (1,273
    )Trust preferred securities
    
    
    6,275
    
    
    
    (1,533
    )
    
    
    
    
    
    
    
    
    
    
    6,275
    
    
    
    (1,533
    )$
    20,751
    
    
    $
    (2,580
    )
    
    $
    3,475
    
    
    $
    (277
    )
    
    $
    24,226
    
    
    $
    (2,857
    )
  95




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
      December 31,2009
    
    
    2008Federal Home Loan Bank stock
    
    $
    3,825
    
    
    $
    7,640Membership capital accounts in
corporate credit unions
    
    
    
    
    
    $
    2,359Community Development Investment
    
    
    25
    
    
    
    15$
    3,850
    
    
    $
    10,014
   96




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 NOTE 5  Loans and Allowance for Loan Losses
  December 31,2009
    
    
    2008Real Estate Loans:One- to four-family
    
    $
    257,265
    
    
    $
    245,554Home equity
    
    
    28,526
    
    
    
    27,180Commercial real estate
    
    
    100,985
    
    
    
    89,023Real estate construction
    
    
    36,843
    
    
    
    45,840Total real estate loans
    
    
    423,619
    
    
    
    407,597Consumer Loans:Automobile, indirect
    
    
    176,775
    
    
    
    209,371Automobile, direct
    
    
    28,722
    
    
    
    34,824Unsecured
    
    
    14,323
    
    
    
    14,505Other
    
    
    5,001
    
    
    
    5,832Total consumer loans
    
    
    224,821
    
    
    
    264,532Commercial Business Loans
    
    
    59,325
    
    
    
    50,975Total loans
    
    
    707,765
    
    
    
    723,104Plus (Less):Deferred fees and discounts
    
    
    (1,310
    )
    
    
    940Allowance for loan losses
    
    
    (8,328
    )
    
    
    (8,270
    )Total loans receivable, net
    
    $
    698,127
    
    
    $
    715,774
     97




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Balance, beginning of year
    
    $
    8,270
    
    
    $
    7,386
    
    
    $
    7,049Provision for loan losses
    
    
    5,200
    
    
    
    3,825
    
    
    
    3,650Loans charged-off
    
    
    (5,632
    )
    
    
    (3,520
    )
    
    
    (4,329
    )Recoveries of loans previously charged-off
    
    
    490
    
    
    
    579
    
    
    
    1,016Balance, end of period
    
    $
    8,328
    
    
    $
    8,270
    
    
    $
    7,386
  December 31,2009
    
    
    2008Loans with no allocated allowance
    
    $
    10,622
    
    
    $
    2,220Loans with allocated allowance
    
    
    6,561
    
    
    
    5,272Total
    
    $
    17,183
    
    
    $
    7,492Amount of the allowance for loan
losses allocated to impaired
loans
    
    $
    687
    
    
    $
    683
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Average investment in impaired loans during the year
    
    $
    5,038
    
    
    $
    4,469
    
    
    $
    Interest income recognized during impairment
    
    
    
    
    
    
    
    
    
    
    Cash-basis interest income recognized
    
    
    
    
    
    
    
    
    
    
    
    98




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 NOTE 6  Mortgage Servicing Rights
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Carrying value, before valuation allowance:Balance, beginning of year
    
    $
    765
    
    
    $
    65
    
    
    $
    Additions
    
    
    860
    
    
    
    734
    
    
    
    69Amortization
    
    
    (370
    )
    
    
    (34
    )
    
    
    (4
    )Balance, end of year
    
    
    1,255
    
    
    
    765
    
    
    
    65Valuation allowance:Balance, beginning of year
    
    
    
    
    
    
    
    
    
    
    Impairment charge
    
    
    (87
    )
    
    
    
    
    
    
    Recovery
    
    
    
    
    
    
    
    
    
    
    Balance, end of year
    
    
    (87
    )
    
    
    
    
    
    
    Carrying value of mortgage servicing rights
    
    $
    1,168
    
    
    $
    765
    
    
    $
    65Fair value of mortgage servicing rights
    
    $
    1,168
    
    
    $
    765
    
    
    $
    65Mortgage loans serviced
    
    $
    104,927
    
    
    $
    60,198
    
    
    $
    4,710
  NOTE 7  Premises and Equipment
  December 31,2009
    
    
    2008Land
    
    $
    6,690
    
    
    $
    6,690Buildings and improvements
    
    
    46,298
    
    
    
    45,682Furniture and equipment
    
    
    42,190
    
    
    
    40,817Leasehold improvements
    
    
    3,118
    
    
    
    3,15798,296
    
    
    
    96,346Accumulated amortization and depreciation
    
    
    (47,345
    )
    
    
    (42,170
    )$
    50,951
    
    
    $
    54,176
  99




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OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
   Year ended December 31,2010
    
    $
    4882011
    
    
    2412012
    
    
    2412013
    
    
    2412014
    
    
    242Thereafter
    
    
    532$
    1,985
     Year ended December 31,2010
    
    $
    2,2532011
    
    
    1,7632012
    
    
    1,3632013
    
    
    1,1982014
    
    
    1,182Thereafter
    
    
    2,055$
    9,814
  100




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 NOTE 8  Other Real Estate Owned and Other Foreclosed Assets
    NOTE 9  Deposits
  December 31,2009
    
    
    2008Noninterest-bearing demand
    
    $
    75,628
    
    
    $
    67,483Interest-bearing demand
    
    
    201,950
    
    
    
    61,962Savings
    
    
    203,110
    
    
    
    186,352Money market
    
    
    95,463
    
    
    
    81,634Certificates of deposit
    
    
    333,815
    
    
    
    342,415Total deposits
    
    $
    909,966
    
    
    $
    739,846
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Interest-bearing demand
    
    $
    268
    
    
    $
    367
    
    
    $
    457Savings
    
    
    1,344
    
    
    
    2,119
    
    
    
    3,011Money market
    
    
    970
    
    
    
    1,608
    
    
    
    3,640Certificates of deposit
    
    
    10,189
    
    
    
    14,011
    
    
    
    15,616Total interest expense on deposits
    
    $
    12,771
    
    
    $
    18,105
    
    
    $
    22,724
  101




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
   Year ended December 31,2010
    
    $
    254,6802011
    
    
    29,2542012
    
    
    14,5102013
    
    
    27,8202014 & beyond
    
    
    7,551$
    333,815
  NOTE 10  Borrowed Funds
   Year ended December 31,2010
    
    $
    25,4002011
    
    
    19,0002012
    
    
    15,0002013
    
    
    2014
    
    
    Thereafter
    
    
    7,000$
    66,400
   102




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
     Year Ended December 31,2009
    
    
    2008Maximum Balance:FHLB advances
    
    $
    159,900
    
    
    $
    189,650Other secured borrowings
    
    
    58,000
    
    
    
    73,225Average Balance:FHLB advances
    
    
    117,547
    
    
    
    169,026Other secured borrowings
    
    
    58,000
    
    
    
    64,497Weighted average interest rate:During the period:FHLB advances
    
    
    4.05
    %
    
    
    4.21
    %Other secured borrowings
    
    
    3.68
    %
    
    
    3.80
    %End of period:FHLB advances
    
    
    3.54
    %
    
    
    4.20
    %Other secured borrowings
    
    
    3.52
    %
    
    
    3.25
    %
  103




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 NOTE 11  Employee Benefit Plans
   Year Ended December 31,2009
    
    
    2008Projected benefit obligation as of January 1,
    
    $
    4,697
    
    
    $
    5,591Interest cost
    
    
    276
    
    
    
    295Actuarial loss (gain)
    
    
    28
    
    
    
    (412
    )Effect of settlement
    
    
    (1,010
    )
    
    
    (777
    )Projected benefit obligation at December 31,
    
    $
    3,991
    
    
    $
    4,697Accumulated benefit obligation at December
31,
    
    $
    3,991
    
    
    $
    4,697
  Year Ended December 31,2009
    
    
    2008Fair value of plan assets as of January 1,
    
    $
    3,562
    
    
    $
    5,977Actual return on plan assets
    
    
    349
    
    
    
    (1,638
    )Employer contributions
    
    
    116
    
    
    
    Effect of settlement
    
    
    (1,010
    )
    
    
    (777
    )Fair value of plan assets as of December 31,
    
    $
    3,017
    
    
    $
    3,562Funded status as of December 31,
    
    $
    (974
    )
    
    $
    (1,135
    )
   104




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Interest cost on projected benefit obligation
    
    $
    276
    
    
    $
    295
    
    
    $
    322Expected return on assets
    
    
    (223
    )
    
    
    (431
    )
    
    
    (540
    )Amortization of net loss
    
    
    100
    
    
    
    45
    
    
    
    14Effect of settlement recognition
    
    
    550
    
    
    
    483
    
    
    
    472Net periodic pension cost
    
    $
    703
    
    
    $
    392
    
    
    $
    268
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Discount rate
    
    
    6.00
    %
    
    
    5.50
    %
    
    
    5.75
    %Expected long-term rate of return on
assets
    
    
    6.50
    %
    
    
    7.50
    %
    
    
    7.50
    %Rate of increase in future compensation
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
   Target
    
    
    Actual AllocationsAllocations
    
    
    2009
    
    
    2008Equity securities
    
    
    40
    %
    
    
    35
    %
    
    
    44
    %Debt securities
    
    
    60
    %
    
    
    65
    %
    
    
    56
    %100
    %
    
    
    100
    %
    
    
    100
    %
   105




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
   Year ended December 31,2010
    
    $
    382011
    
    
    92012
    
    
    532013
    
    
    1202014
    
    
    280Years 2015 - 2019
    
    
    890
   NOTE 12  Regulatory Matters
    106




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
    MinimumTo Be WellMinimum
    
    
    Capitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2009Total risk-based capital to risk-weighted assets
    
    $
    90,372
    
    
    
    12.03
    %
    
    $
    60,097
    
    
    
    8.00
    %
    
    $
    75,122
    
    
    
    10.00
    %Tier I risk-based capital to risk- weighted assets
    
    
    82,731
    
    
    
    11.01
    %
    
    
    30,049
    
    
    
    4.00
    %
    
    
    45,073
    
    
    
    6.00
    %Tier I (Core) capital to adjusted total assets
    
    
    82,731
    
    
    
    7.35
    %
    
    
    45,022
    
    
    
    4.00
    %
    
    
    56,277
    
    
    
    5.00
    %As of December 31, 2008Total risk-based capital to risk-weighted assets
    
    $
    89,375
    
    
    
    11.73
    %
    
    $
    60,972
    
    
    
    8.00
    %
    
    $
    76,215
    
    
    
    10.00
    %Tier I risk-based capital to risk- weighted assets
    
    
    81,788
    
    
    
    10.73
    %
    
    
    30,486
    
    
    
    4.00
    %
    
    
    45,729
    
    
    
    6.00
    %Tier I (Core) capital to adjusted total assets
    
    
    81,788
    
    
    
    7.71
    %
    
    
    42,415
    
    
    
    4.00
    %
    
    
    53,019
    
    
    
    5.00
    %
   107




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OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  December 31,2009
    
    
    2008Total capital
    
    $
    91,156
    
    
    $
    89,329Deferred tax assets disallowed for regulatory capital
    
    
    (7,824
    )
    
    
    (8,112
    )Unrealized gain on securities available for sale
    
    
    (2,035
    )
    
    
    (1,356
    )Unrealized loss on pension plan
    
    
    1,434
    
    
    
    1,927Tier I capital
    
    
    82,731
    
    
    
    81,788General allowance for loan losses
    
    
    7,641
    
    
    
    7,587Total regulatory capital
    
    $
    90,372
    
    
    $
    89,375
 NOTE 13  Income Taxes
  Year Ended December 31,2009
    
    
    2008
    
    
    2007CurrentFederal
    
    $
    51
    
    
    $
    (528
    )
    
    $
    (989
    )State
    
    
    553
    
    
    
    409
    
    
    
    Total current taxes
    
    
    604
    
    
    
    (119
    )
    
    
    (989
    )DeferredFederal
    
    
    288
    
    
    
    861
    
    
    
    (126
    )State
    
    
    
    
    
    
    
    
    
    
    Total deferred taxes
    
    
    288
    
    
    $
    861
    
    
    $
    (126
    )Total income taxes
    
    $
    892
    
    
    $
    742
    
    
    $
    (1,115
    )
     108




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  December 31,2009
    
    
    2008Deferred tax assets:Allowance for loan losses
    
    $
    2,375
    
    
    $
    2,475Premises and equipment
    
    
    1,827
    
    
    
    2,712Net operating loss
    
    
    3,231
    
    
    
    2,749Deferred compensation
    
    
    202
    
    
    
    166Pension plan
    
    
    739
    
    
    
    993Accrued expenses
    
    
    356
    
    
    
    144Other real estate owned
    
    
    91
    
    
    
    Other
    
    
    212
    
    
    
    2659,033
    
    
    
    9,504Deferred tax liabilities:Servicing rights
    
    
    (397
    )
    
    
    (260
    )Securities available for sale
    
    
    (1,048
    )
    
    
    (698
    )FHLB stock
    
    
    (74
    )
    
    
    (140
    )(1,519
    )
    
    
    (1,098
    )Net deferred tax asset
    
    $
    7,514
    
    
    $
    8,406
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Federal statutory rate times financial
statement income (loss)
    
    $
    526
    
    
    $
    471
    
    
    $
    (1,118
    )Effect of:State taxes, net of federal benefit
    
    
    367
    
    
    
    270
    
    
    
    Nontaxable income
    
    
    (38
    )
    
    
    (16
    )
    
    
    Non-deductible expenses
    
    
    37
    
    
    
    17
    
    
    
    3Total income tax expense (benefit)
    
    $
    892
    
    
    $
    742
    
    
    $
    (1,115
    )Effective tax rate
    
    
    57.7
    %
    
    
    53.5
    %
    
    
    33.9
    %
  109




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OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  NOTE 14  Related Party Transactions
  Balance at beginning of year
    
    $
    1,938New loans
    
    
    1,311Effect of changes in composition of related parties
    
    
    (723
    )Repayments
    
    
    (105
    )Balance at end of year
    
    $
    2,421
  NOTE 15  Fair Value Measurements
  
    
    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.
  110




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OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
         111




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Fair Value Measurements at December 31, 2009, Using
    
    
    Total Fair Value atLevel 1 Inputs
    
    
    Level 2 Inputs
    
    
    Level 3 Inputs
    
    
    December 31, 2009Measured on a recurring basis:Assets:Securities available for
sale
    
    $
    
    
    
    $
    204,817
    
    
    $
    5,604
    
    
    $
    210,421Measured on a nonrecurring basis:Assets:Impaired loans
    
    $
    
    
    
    $
    
    
    
    $
    5,874
    
    
    $
    5,874Mortgage servicing rights
    
    
    
    
    
    
    
    
    
    
    1,168
    
    
    
    1,168Other real estate owned
    
    
    
    
    
    
    
    
    
    
    6,762
    
    
    
    6,762
 Fair Value Measurements at December 31, 2008, Using
    
    
    Total Fair Value atLevel 1 Inputs
    
    
    Level 2 Inputs
    
    
    Level 3 Inputs
    
    
    December 31, 2008Measured on a recurring basis:Assets:Securities available
for sale
    
    $
    
    
    
    $
    224,029
    
    
    $
    6,275
    
    
    $
    230,304Measured on a nonrecurring
basis:Assets:Impaired loans
    
    $
    
    
    
    $
    
    
    
    $
    4,589
    
    
    $
    4,589Other real estate owned
    
    
    
    
    
    
    
    
    
    
    488
    
    
    
    488
  Securitiesavailable for saleBeginning balance, January 1, 2009
    
    $
    6,275Total gains or losses (realized / unrealized)Included in earnings:Interest income on securities
    
    
    18Included in other comprehensive income
    
    
    (626
    )Purchases, issuances and settlements
    
    
    (63
    )Transfers into Level 3
    
    
    Ending balance, December 31, 2009
    
    $
    5,604
  112




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  Securitiesavailable for saleBeginning balance, January 1, 2008
    
    $
    Total gains or losses (realized / unrealized)
    
    
    Total gains or losses included in other comprehensive income
    
    
    (1,533
    )Purchases, issuances and settlements
    
    
    7,808Transfers into Level 3
    
    
    Ending balance, December 31, 2008
    
    $
    6,275
    Cash and cash equivalents:
 Accrued interest receivable and payable:
 Other investments:
 Loans:
 Deposits:
 Borrowed Funds:
 Off-balance sheet financial instruments:
  113




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  December 31, 2009
    
    
    December 31, 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    140,144
    
    
    $
    140,144
    
    
    $
    41,242
    
    
    $
    41,242Securities available for sale
    
    
    210,421
    
    
    
    210,421
    
    
    
    230,304
    
    
    
    230,304Other investments
    
    
    3,850
    
    
    
    3,850
    
    
    
    10,014
    
    
    
    10,014Loans held for sale
    
    
    241
    
    
    
    241
    
    
    
    160
    
    
    
    160Loans, net
    
    
    698,127
    
    
    
    707,198
    
    
    
    715,774
    
    
    
    721,093Mortgage servicing rights
    
    
    1,168
    
    
    
    1,168
    
    
    
    765
    
    
    
    765Accrued interest receivable
    
    
    3,523
    
    
    
    3,523
    
    
    
    3,921
    
    
    
    3,921Financial liabilities:Deposits
    
    $
    909,966
    
    
    $
    913,903
    
    
    $
    739,846
    
    
    $
    744,161Federal Home Loan Bank advances
    
    
    66,400
    
    
    
    68,182
    
    
    
    169,900
    
    
    
    171,466Other secured borrowings
    
    
    58,000
    
    
    
    62,037
    
    
    
    58,664
    
    
    
    64,621Accrued interest payable
    
    
    852
    
    
    
    852
    
    
    
    1,840
    
    
    
    1,840Off-balance sheet financial
instruments:Loan commitments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 NOTE 16  Financial Instruments with Off-Balance Sheet Risk
    114




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OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
  December 31,2009
    
    
    2008Commitments to extend credit
    
    $
    27,619
    
    
    $
    35,269Standby letters of credit
    
    
    1,097
    
    
    
    910$
    28,716
    
    
    $
    36,179
    NOTE 17  Litigation
   115




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OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 NOTE 18  Plan of Reorganization
        116




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
   Net offering proceeds:Stock offering proceeds
    
    $
    119,025Less offering expenses
    
    
    3,499Net offering proceeds
    
    $
    115,526Use of net proceeds:To OmniAmerican Bank
    
    $
    86,645To fund loan to employee stock ownership plan
    
    
    9,522Retained by OmniAmerican Bancorp, Inc.
    
    $
    19,359
  MinimumTo Be WellMinimum
    
    
    Capitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTotal risk-based capital to risk-weighted assets (1)OmniAmerican Bancorp, Inc.
    
    $
    196,376
    
    
    
    24.42
    %
    
    $
    64,337
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AOmniAmerican Bank
    
    
    167,495
    
    
    
    21.21
    %
    
    
    63,182
    
    
    
    8.00
    %
    
    $
    78,978
    
    
    
    10.00
    %Tier I risk-based capital to risk- weighted assets
(1)OmniAmerican Bancorp, Inc.
    
    
    188,735
    
    
    
    23.47
    %
    
    
    32,169
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AOmniAmerican Bank
    
    
    159,854
    
    
    
    20.24
    %
    
    
    31,591
    
    
    
    4.00
    %
    
    
    47,387
    
    
    
    6.00
    %Tier I (Core) capital to adjusted total assetsOmniAmerican Bancorp, Inc.
    
    
    188,735
    
    
    
    15.33
    %
    
    
    49,260
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AOmniAmerican Bank
    
    
    159,854
    
    
    
    13.29
    %
    
    
    48,105
    
    
    
    4.00
    %
    
    
    60,131
    
    
    
    5.00
    %
 (1)
    
    Pro forma amounts and percentages assume net proceeds were invested in assets that carry a
50% risk weighting.  117




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##### Table of Contents



OmniAmerican Bank
 Notes to Consolidated Financial Statements
(Dollars in thousands)
 NOTE 19  Quarterly Financial Data (Unaudited)
 Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter2009Interest income
    
    $
    12,741
    
    
    $
    13,323
    
    
    $
    13,736
    
    
    $
    13,915Interest expense
    
    
    3,941
    
    
    
    4,570
    
    
    
    5,254
    
    
    
    5,909Net interest income
    
    
    8,800
    
    
    
    8,753
    
    
    
    8,482
    
    
    
    8,006Provision for loan losses
    
    
    875
    
    
    
    1,925
    
    
    
    900
    
    
    
    1,500Net interest income after
provision for loan losses
    
    
    7,925
    
    
    
    6,828
    
    
    
    7,582
    
    
    
    6,506Noninterest income
    
    
    3,598
    
    
    
    4,503
    
    
    
    3,959
    
    
    
    4,403Noninterest expense
    
    
    11,227
    
    
    
    11,028
    
    
    
    10,946
    
    
    
    10,556Income before income tax expense
    
    
    296
    
    
    
    303
    
    
    
    595
    
    
    
    353Income tax expense
    
    
    198
    
    
    
    205
    
    
    
    299
    
    
    
    190Net income
    
    $
    98
    
    
    $
    98
    
    
    $
    296
    
    
    $
    1632008Interest income
    
    $
    14,311
    
    
    $
    14,565
    
    
    $
    14,321
    
    
    $
    14,499Interest expense
    
    
    6,368
    
    
    
    6,588
    
    
    
    6,968
    
    
    
    7,753Net interest income
    
    
    7,943
    
    
    
    7,977
    
    
    
    7,353
    
    
    
    6,746Provision for loan losses
    
    
    1,450
    
    
    
    500
    
    
    
    1,300
    
    
    
    575Net interest income after
provision for loan losses
    
    
    6,493
    
    
    
    7,477
    
    
    
    6,053
    
    
    
    6,171Noninterest income
    
    
    3,777
    
    
    
    4,235
    
    
    
    3,823
    
    
    
    4,434Noninterest expense
    
    
    10,611
    
    
    
    10,492
    
    
    
    9,701
    
    
    
    10,273Income before income tax expense
    
    
    (341
    )
    
    
    1,220
    
    
    
    175
    
    
    
    332Income tax expense
    
    
    (76
    )
    
    
    532
    
    
    
    114
    
    
    
    172Net income
    
    $
    (265
    )
    
    $
    688
    
    
    $
    61
    
    
    $
    160
  118




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##### Table of Contents



ITEM 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
  
 ITEM 9A. (T) Controls and Procedures
       
 ITEM 9B. Other Information
  PART III
 
 ITEM 10. Directors, Executive Officers and Corporate Governance
    119




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##### Table of Contents



ITEM 11. Executive Compensation
  
 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
 ITEM 13. Certain Relationships and Related Transactions, and Director Independence
  
 ITEM 14. Principal Accountant Fees and Services
   120




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##### Table of Contents



PART IV
 
 ITEM 15. Exhibits and Financial Statement Schedules
 3.1
    
    
    Articles of Incorporation of OmniAmerican Bancorp, Inc., as amended*3.2
    
    
    Bylaws of OmniAmerican Bancorp, Inc.*4
    
    
    Form of Common Stock Certificate of OmniAmerican Bancorp, Inc.*10.1
    
    
    Employment Agreement between OmniAmerican Bank, OmniAmerican Bancorp, Inc. and
Tim Carter**10.2
    
    
    Form of Change in Control Agreement between OmniAmerican Bank and each Senior
Executive Vice President*10.3
    
    
    OmniAmerican Bank Employee Stock Ownership Plan*10.4
    
    
    OmniAmerican Bank Incentive Award Plan for Senior Executives***14
    
    
    Code of Ethics21
    
    
    Subsidiaries of Registrant*31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 
 *
    
    Incorporated by reference to the Registration Statement on Form S-1 of OmniAmerican Bancorp,
Inc. (File No. 333-161894), originally filed with the Securities and Exchange Commission on
September 11, 2009, as amended.**
    
    Incorporated by reference to Exhibit 10.1 to the Form 8-K of OmniAmerican Bancorp, Inc.,
(File No. 001-34605), originally filed with the Securities and Exchange Commission on February
25, 2010.***
    
    Incorporated by reference to Exhibit 10.1 to the Form 8-K of OmniAmerican Bancorp, Inc.,
(File No. 001-34605), originally filed with the Securities and Exchange Commission on February
1, 2010.  121




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SIGNATURES
  OMNIAMERICAN BANCORP, INC.Date: March 24, 2010
    By:
    /s/ Tim CarterTim CarterPresident, Chief Executive Officer and Director
(Duly Authorized Representative)  Signatures
    
    Title
    
    Date/s/ Tim Carter

Tim Carter
    
    President, Chief
Executive
Officer and
Director 
(Principal
Executive Officer)
    
    March 24, 2010/s/ Deborah B. Wilkinson

Deborah B. Wilkinson
    
    Executive Vice President
and Chief Financial
Officer 
(Principal
Financial and Accounting
Officer)
    
    March 24, 2010/s/ Wayne P. Burchfield, Jr.
    
    Chairman of the Board
    
    March 24, 2010Wayne P. Burchfield, Jr./s/ Elaine Anderson

Elaine Anderson
    
    Vice Chairman of the Board
    
    March 24, 2010/s/ Joan Anthony
    
    Director
    
    March 24, 2010Joan Anthony/s/ Norman G. Carroll

Norman G. Carroll
    
    Director
    
    March 24, 2010/s/ Patti Callan
    
    Director
    
    March 24, 2010Patti Callan/s/ Patrick D. Conley

Patrick D. Conley
    
    Director
    
    March 24, 2010/s/ James Herring

James Herring
    
    Director
    
    March 24, 2010/s/ John F. Sammons, Jr.

John F. Sammons, Jr.
    
    Director
    
    March 24, 2010
  122