##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2011
 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 No. 001-34933
 SP Bancorp, Inc.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    27-3347359(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 5224 W. Plano Parkway, Plano, Texas
    
    75093(Address of Principal Executive Offices)
    
    Zip Code
 (972) 931-5311  (Registrants telephone number)
 N/A  (Former name or former address, if changed since last report)
 YES þ NO o
 YES o NO o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 YES o NO þ




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##### 



SP Bancorp, Inc.
FORM 10-Q
 Index
 PagePart I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2011 and December 31, 2010 (unaudited)
    
    
    2Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010 (unaudited)
    
    
    3Consolidated Statements of Stockholders Equity for the Three Months Ended March 31, 2011 and 2010 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    34Part II. Other InformationItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 3. Defaults upon Senior Securities
    
    
    35Item 4. [Reserved]
    
    
    35Item 5. Other Information
    
    
    35Item 6. Exhibits
    
    
    35Signatures
    
    
    36Exhibit 31.1Exhibit 31.2Exhibit 32.1
   1




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##### Table of Contents



SP Bancorp, Inc.
 
 Part I. Financial Information
 
 Item 1.
    
    Financial Statements
 
 Consolidated Balance Sheets

(Unaudited)
(In thousands)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCash and due from banks
    
    $
    11,384
    
    
    $
    2,384Federal funds sold
    
    
    10,095
    
    
    
    9,430Total cash and cash equivalents
    
    
    21,479
    
    
    
    11,814Securities available for sale (amortized cost of $24,806 at
March 31, 2011 and $22,214 at December 31, 2010)
    
    
    24,813
    
    
    
    22,076Fixed annuity investment
    
    
    1,142
    
    
    
    1,131Loans held for sale
    
    
    1,340
    
    
    
    3,589Loans, net of allowance for losses of $1,760 at March 31, 2011
and $2,136 at December 31, 2010
    
    
    193,662
    
    
    
    191,065Accrued interest receivable
    
    
    838
    
    
    
    833Other real estate owned (OREO)
    
    
    1,843
    
    
    
    Premises and equipment, net
    
    
    4,592
    
    
    
    4,637Federal Home Loan Bank (FHLB) stock and other restricted stock, at cost
    
    
    1,004
    
    
    
    1,003Bank-owned life insurance (BOLI)
    
    
    6,017
    
    
    
    Deferred tax assets
    
    
    1,075
    
    
    
    1,131Other assets
    
    
    1,525
    
    
    
    1,538Total assets
    
    $
    259,330
    
    
    $
    238,817LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    11,497
    
    
    $
    5,738Interest-bearing
    
    
    197,298
    
    
    
    182,506Total deposits
    
    
    208,795
    
    
    
    188,244Borrowings
    
    
    15,984
    
    
    
    15,987Accrued interest payable
    
    
    44
    
    
    
    39Other liabilities
    
    
    2,117
    
    
    
    2,443Total liabilities
    
    
    226,940
    
    
    
    206,713Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value, 50,000,000 shares authorized;
none issued or outstanding
    
    
    
    
    
    
    Common stock, par value $0.01 par value; 100,000,000 shares
authorized; 1,725,000 shares issued and outstanding
    
    
    17
    
    
    
    17Additional paid-In capital
    
    
    15,276
    
    
    
    15,290Unallocated Employee Stock Ownership Plan (ESOP) shares
    
    
    (825
    )
    
    
    (817
    )Retained earnings  substantially restricted
    
    
    17,918
    
    
    
    17,701Accumulated other comprehensive income (loss)
    
    
    4
    
    
    
    (87
    )Total stockholders equity
    
    
    32,390
    
    
    
    32,104Total liabilities and stockholders equity
    
    $
    259,330
    
    
    $
    238,817
   2




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##### Table of Contents



SP Bancorp, Inc.
 
 Consolidated Statements of Operations

(Unaudited)
(In thousands, except per share amounts)
 Three Months Ended March 31,2011
    
    
    2010Interest income:Interest and fees on loans
    
    $
    2,618
    
    
    $
    2,420Securities  taxable
    
    
    80
    
    
    
    102Securities  nontaxable
    
    
    34
    
    
    
    13Other interest  earning assets
    
    
    22
    
    
    
    47Total interest income
    
    
    2,754
    
    
    
    2,582Interest expense:Deposit accounts
    
    
    339
    
    
    
    449Borrowings
    
    
    112
    
    
    
    118Total interest expense
    
    
    451
    
    
    
    567Net interest income
    
    
    2,303
    
    
    
    2,015Provision for loan losses
    
    
    120
    
    
    
    1,080Net interest income after provision for loan losses
    
    
    2,183
    
    
    
    935Noninterest income:Service charges
    
    
    320
    
    
    
    374Gain on sale of securities available for sale
    
    
    28
    
    
    
    Gain on sale of mortgage loans
    
    
    223
    
    
    
    112Other
    
    
    122
    
    
    
    29Total noninterest income
    
    
    693
    
    
    
    515Noninterest expense:Compensation and benefits
    
    
    1,286
    
    
    
    969Occupancy costs
    
    
    269
    
    
    
    273Equipment expense
    
    
    69
    
    
    
    47Data processing expense
    
    
    115
    
    
    
    153ATM expense
    
    
    91
    
    
    
    91Professional and outside services
    
    
    232
    
    
    
    176Stationery and supplies
    
    
    38
    
    
    
    26Marketing
    
    
    44
    
    
    
    38FDIC insurance assessments
    
    
    92
    
    
    
    67Operations from OREO
    
    
    102
    
    
    
    (10
    )Other
    
    
    237
    
    
    
    155Total noninterest expense
    
    
    2,575
    
    
    
    1,985Income (loss) before income tax expense (benefit)
    
    
    301
    
    
    
    (535
    )Income tax expense (benefit)
    
    
    84
    
    
    
    (212
    )Net income (loss)
    
    $
    217
    
    
    $
    (323
    )Basic and diluted earnings per share
    
    $
    0.13
    
    
    
    N/A
 N/A
    
    Not applicable.
   3




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##### Table of Contents



SP Bancorp, Inc.
 
 Consolidated Statements of Stockholders Equity

(Unaudited)
(In thousands)
 AccumulatedAdditional
    
    
    Unallocated
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-In
    
    
    ESOP
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Shares
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, December 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    17,177
    
    
    $
    85
    
    
    $
    17,262Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (323
    )
    
    
    
    
    
    
    (323
    )Unrealized gain on securities available
for sale, net of tax of $43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    68Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (255
    )Balance, March 31, 2010
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    16,854
    
    
    $
    153
    
    
    $
    17,007Balance, December 31, 2010
    
    $
    17
    
    
    $
    15,290
    
    
    $
    (817
    )
    
    $
    17,701
    
    
    $
    (87
    )
    
    $
    32,104Additional stock issuance costs
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )ESOP shares purchased in open market
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    (18
    )ESOP shares allocated
    
    
    
    
    
    
    1
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    11Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217
    
    
    
    
    
    
    
    217Unrealized gain on securities
available for sale, net of tax of $54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    91Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    308Balance, March 31, 2011
    
    $
    17
    
    
    $
    15,276
    
    
    $
    (825
    )
    
    $
    17,918
    
    
    $
    4
    
    
    $
    32,390
   4




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##### Table of Contents



SP Bancorp, Inc.
 
 Consolidated Statements of Cash Flows

(Unaudited)
(In thousands)
 Three Months Ended March 31,2011
    
    
    2010Cash flows from operating activities:Net income (loss)
    
    $
    217
    
    
    $
    (323
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    93
    
    
    
    100Amortization of premiums on investments
    
    
    145
    
    
    
    29ESOP expense
    
    
    11
    
    
    
    Provision for loan losses
    
    
    120
    
    
    
    1,080Gain on sale of other real estate owned
    
    
    
    
    
    
    (10
    )Gain on sale of securities available for sale
    
    
    (28
    )
    
    
    Gains on sales of mortgage loans
    
    
    (223
    )
    
    
    (112
    )Proceeds from sale of mortgage loans
    
    
    12,720
    
    
    
    5,893Loans originated for sale
    
    
    (10,248
    )
    
    
    (6,306
    )Increase in cash surrender value of BOLI
    
    
    (17
    )
    
    
    Increase in accrued interest receivable
    
    
    (5
    )
    
    
    (31
    )Decrease in other assets
    
    
    15
    
    
    
    188Increase in fixed annuity investment
    
    
    (11
    )
    
    
    (10
    )Decrease in accrued interest payable and other liabilities
    
    
    (321
    )
    
    
    (296
    )Net cash provided by operating activities
    
    
    2,468
    
    
    
    202Cash flows from investing activities:Purchase of securities available for sale
    
    
    (5,753
    )
    
    
    (520
    )Maturities of securities available for sale
    
    
    1,164
    
    
    
    813Proceeds from sale of securities available for sale
    
    
    1,880
    
    
    
    (Redemptions) purchases of FHLB stock
    
    
    (1
    )
    
    
    1(Originations) loan repayments, net
    
    
    (4,560
    )
    
    
    3,723Proceeds from sale of other real estate owned
    
    
    
    
    
    
    10Purchases of premises and equipment
    
    
    (48
    )
    
    
    (7
    )Purchase of BOLI
    
    
    (6,000
    )
    
    
    Net cash (used in) provided by investing activities
    
    
    (13,318
    )
    
    
    4,020Cash flows from financing activities:Net increase in deposit accounts
    
    
    20,551
    
    
    
    19,600(Repayment of) proceeds from FHLB advances, net
    
    
    (3
    )
    
    
    3ESOP shares purchased
    
    
    (18
    )
    
    
    Additional stock issuance costs
    
    
    (15
    )
    
    
    Net cash provided by financing activities
    
    
    20,515
    
    
    
    19,603Net increase in cash and cash equivalents
    
    
    9,665
    
    
    
    23,825Cash and cash equivalents at beginning of period
    
    
    11,814
    
    
    
    11,717Cash and cash equivalents at end of period
    
    $
    21,479
    
    
    $
    35,542Supplemental cash flow information:Cash transactions:Income taxes paid
    
    $
    90
    
    
    $
    14Interest expense paid
    
    $
    446
    
    
    $
    567Noncash transactions:Transfers of loans to other real estate owned
    
    $
    1,843
    
    
    $
    
   5




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##### Table of Contents



SP Bancorp, Inc.
 
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
 Note 1. Summary of Significant Accounting Policies
 General
   Consolidation
  Accounting Standards Codification
  Interim Financial Statements
  Use of Estimates
   6




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
 Basic and Diluted Earnings Per Share
  Three Months EndedMarch 31, 2011Net earnings
    
    $
    217Weighted-average shares outstanding
    
    
    1,641Basic and diluted earnings per share
    
    $
    0.13
  Recent Authoritative Accounting Guidance
  Note 2. Stock Conversion
    7




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  Note 3. Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available for SaleMarch 31, 2011:Agency securities
    
    $
    1,993
    
    
    $
    
    
    
    $
    (2
    )
    
    $
    1,991Municipal securities
    
    
    3,743
    
    
    
    17
    
    
    
    (79
    )
    
    
    3,681Collateralized mortgage obligations guaranteed
by FNMA and FHLMC
    
    
    10,827
    
    
    
    91
    
    
    
    (15
    )
    
    
    10,903Mortgage-backed securities guaranteed by
SBA, FNMA, GNMA and FHLMC
    
    
    8,243
    
    
    
    5
    
    
    
    (10
    )
    
    
    8,238$
    24,806
    
    
    $
    113
    
    
    $
    (106
    )
    
    $
    24,813December 31, 2010:Municipal securities
    
    $
    3,746
    
    
    $
    4
    
    
    $
    (165
    )
    
    $
    3,585Collateralized mortgage obligations guaranteed
by FNMA and FHLMC
    
    
    10,447
    
    
    
    70
    
    
    
    (29
    )
    
    
    10,488Mortgage-backed securities guaranteed by
SBA, FNMA, GNMA and FHLMC
    
    
    8,021
    
    
    
    29
    
    
    
    (47
    )
    
    
    8,003$
    22,214
    
    
    $
    103
    
    
    $
    (241
    )
    
    $
    22,076
    8




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  Continuous Unrealized
    
    
    Continuous UnrealizedLosses Existing for
    
    
    Losses Existing forNumber of Security
    
    
    Less than 12 Months
    
    
    12 Months or Longer
    
    
    TotalPositions with
    
    
    Market
    
    
    Unrealized
    
    
    Market
    
    
    Unrealized
    
    
    Market
    
    
    UnrealizedUnrealized losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesMarch 31, 2011:Agency securities
    
    
    1
    
    
    $
    1,991
    
    
    $
    (2
    )
    
    $
    
    
    
    $
    
    
    
    $
    1,991
    
    
    $
    (2
    )Municipal securities
    
    
    9
    
    
    
    2,772
    
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    2,772
    
    
    
    (79
    )Collateralized mortgage obligations
    
    
    2
    
    
    
    3,245
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    3,245
    
    
    $
    (15
    )Mortgage-backed securities
    
    
    4
    
    
    
    6,751
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    6,751
    
    
    
    (10
    )16
    
    
    $
    14,759
    
    
    $
    (106
    )
    
    $
    
    
    
    $
    
    
    
    $
    14,759
    
    
    $
    (106
    )December 31, 2010:Municipal securities
    
    
    9
    
    
    $
    2,690
    
    
    $
    (165
    )
    
    $
    
    
    
    $
    
    
    
    $
    2,690
    
    
    $
    (165
    )Collateralized mortgage obligations
    
    
    2
    
    
    
    3,344
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    3,344
    
    
    
    (29
    )Mortgage-backed securities
    
    
    3
    
    
    
    6,073
    
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    6,073
    
    
    
    (47
    )14
    
    
    $
    12,107
    
    
    $
    (241
    )
    
    $
    
    
    
    $
    
    
    
    $
    12,107
    
    
    $
    (241
    )
   9




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  March 31, 2011
    
    
    December 31, 2010Available for Sale
    
    
    Available for SaleAmortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueAfter 5 years through 10 years
    
    $
    2,439
    
    
    $
    2,441
    
    
    $
    446
    
    
    $
    447Due after 10 years
    
    
    3,297
    
    
    
    3,231
    
    
    
    3,300
    
    
    
    3,1385,736
    
    
    
    5,672
    
    
    
    3,746
    
    
    
    3,585Mortgage-backed securities andCollateralized mortgage obligations
    
    
    19,070
    
    
    
    19,141
    
    
    
    18,468
    
    
    
    18,491$
    24,806
    
    
    $
    24,813
    
    
    $
    22,214
    
    
    $
    22,076
 Note 4. Loans and Allowance for Loan Losses
  March 31,
    
    
    December 31,2011
    
    
    2010Commercial business
    
    $
    3,309
    
    
    $
    2,473Commercial real estate
    
    
    32,246
    
    
    
    29,303One-to-four family
    
    
    139,816
    
    
    
    140,340Home equity
    
    
    9,900
    
    
    
    10,112Consumer
    
    
    9,508
    
    
    
    10,335194,779
    
    
    
    192,563Premiums, net
    
    
    104
    
    
    
    106Deferred loan costs, net
    
    
    539
    
    
    
    532Less allowance for loan losses
    
    
    (1,760
    )
    
    
    (2,136
    )$
    193,662
    
    
    $
    191,065
    10




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
       Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalAt March 31, 2011Past Due:30-59 days
    
    $
    259
    
    
    $
    
    
    
    $
    3,009
    
    
    $
    63
    
    
    $
    71
    
    
    $
    3,40260-89 days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90 days or more
    
    
    125
    
    
    
    531
    
    
    
    1,349
    
    
    
    100
    
    
    
    8
    
    
    
    2,113Total past due
    
    
    384
    
    
    
    531
    
    
    
    4,358
    
    
    
    163
    
    
    
    79
    
    
    
    5,515Current
    
    
    2,925
    
    
    
    31,715
    
    
    
    135,458
    
    
    
    9,737
    
    
    
    9,429
    
    
    
    189,264Total loans
    
    $
    3,309
    
    
    $
    32,246
    
    
    $
    139,816
    
    
    $
    9,900
    
    
    $
    9,508
    
    
    $
    194,779At December 31, 2010:30-59 days
    
    $
    
    
    
    $
    1,844
    
    
    $
    1,675
    
    
    $
    38
    
    
    $
    49
    
    
    $
    3,60660-89 days
    
    
    
    
    
    
    
    
    
    
    309
    
    
    
    13
    
    
    
    3
    
    
    
    32590 days or more
    
    
    125
    
    
    
    2,498
    
    
    
    1,704
    
    
    
    101
    
    
    
    20
    
    
    
    4,448Total past due
    
    
    125
    
    
    
    4,342
    
    
    
    3,688
    
    
    
    152
    
    
    
    72
    
    
    
    8,379Current
    
    $
    2,348
    
    
    $
    24,961
    
    
    $
    136,652
    
    
    $
    9,960
    
    
    $
    10,263
    
    
    $
    184,184Total loans
    
    $
    2,473
    
    
    $
    29,303
    
    
    $
    140,340
    
    
    $
    10,112
    
    
    $
    10,335
    
    
    $
    192,563
   11




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
    Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalAt March 31, 2011Credit Quality Indicator:Credit Risk Profile by Grade or Classification:Pass
    
    $
    2,925
    
    
    $
    22,838
    
    
    $
    136,478
    
    
    $
    9,728
    
    
    $
    9,374
    
    
    $
    181,343Special Mention
    
    
    
    
    
    
    1,602
    
    
    
    2,019
    
    
    
    72
    
    
    
    126
    
    
    
    3,819Substandard
    
    
    384
    
    
    
    7,806
    
    
    
    1,319
    
    
    
    100
    
    
    
    8
    
    
    
    9,617Doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    3,309
    
    
    $
    32,246
    
    
    $
    139,816
    
    
    $
    9,900
    
    
    $
    9,508
    
    
    $
    194,779At December 31, 2010:Credit Quality Indicator:Credit Risk Profile by Grade or Classification:Pass
    
    $
    2,088
    
    
    $
    17,760
    
    
    $
    137,601
    
    
    $
    9,969
    
    
    $
    10,175
    
    
    $
    177,593Special Mention
    
    
    
    
    
    
    1,607
    
    
    
    1,036
    
    
    
    42
    
    
    
    138
    
    
    
    2,823Substandard
    
    
    385
    
    
    
    9,936
    
    
    
    1,703
    
    
    
    101
    
    
    
    20
    
    
    
    12,145Doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    2,473
    
    
    $
    29,303
    
    
    $
    140,340
    
    
    $
    10,112
    
    
    $
    10,335
    
    
    $
    192,563
  12




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalAt March 31, 2011Impaired loans:Impaired loans with an allowance for loan losses
    
    $
    125
    
    
    $
    531
    
    
    $
    958
    
    
    $
    33
    
    
    $
    
    
    
    $
    1,647Impaired loans with no allowance for loan losses
    
    
    
    
    
    
    5,363
    
    
    
    598
    
    
    
    80
    
    
    
    36
    
    
    
    6,077Total impaired loans
    
    $
    125
    
    
    $
    5,894
    
    
    $
    1,556
    
    
    $
    113
    
    
    $
    36
    
    
    $
    7,724Unpaid principal balance of impaired loans
    
    $
    125
    
    
    $
    5,894
    
    
    $
    1,556
    
    
    $
    113
    
    
    $
    36
    
    
    $
    7,724Allowance for loan losses on impaired loans
    
    $
    125
    
    
    $
    136
    
    
    $
    134
    
    
    $
    16
    
    
    $
    
    
    
    $
    411Average recorded investment in impaired loans
    
    $
    125
    
    
    $
    5,146
    
    
    $
    2,113
    
    
    $
    114
    
    
    $
    47
    
    
    $
    7,545Nonperforming loans:Nonaccrual loans
    
    $
    125
    
    
    $
    531
    
    
    $
    1,082
    
    
    $
    100
    
    
    $
    8
    
    
    $
    1,846Loans past due 90 days and still accruing
    
    
    
    
    
    
    
    
    
    
    267
    
    
    
    
    
    
    
    
    
    
    
    267Troubled debt restructurings (not included in
nonaccrual loans)
    
    
    
    
    
    
    5,258
    
    
    
    677
    
    
    
    7
    
    
    
    135
    
    
    
    6,077Total nonperforming loans
    
    $
    125
    
    
    $
    5,789
    
    
    $
    2,026
    
    
    $
    107
    
    
    $
    143
    
    
    $
    8,190At December 31, 2010:Impaired loans:Impaired loans with an allowance for loan losses
    
    $
    125
    
    
    $
    2,498
    
    
    $
    1,035
    
    
    $
    33
    
    
    $
    7
    
    
    $
    3,698Impaired loans with no allowance for loan losses
    
    
    
    
    
    
    1,900
    
    
    
    1,634
    
    
    
    81
    
    
    
    53
    
    
    
    3,668Total impaired loans
    
    $
    125
    
    
    $
    4,398
    
    
    $
    2,669
    
    
    $
    114
    
    
    $
    60
    
    
    $
    7,366Unpaid principal balance of impaired loans
    
    $
    125
    
    
    $
    4,398
    
    
    $
    2,669
    
    
    $
    114
    
    
    $
    60
    
    
    $
    7,366Allowance for loan losses on impaired loans
    
    $
    100
    
    
    $
    626
    
    
    $
    183
    
    
    $
    17
    
    
    $
    3
    
    
    $
    929Average recorded investment in impaired loans
    
    $
    63
    
    
    $
    2,834
    
    
    $
    1,887
    
    
    $
    57
    
    
    $
    51
    
    
    $
    4,892Nonperforming loans:Nonaccrual loans
    
    $
    125
    
    
    $
    2,498
    
    
    $
    1,704
    
    
    $
    101
    
    
    $
    20
    
    
    $
    4,448Loans past due 90 days and still accruing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Troubled debt restructurings (not included in
nonaccrual loans)
    
    
    
    
    
    
    
    
    
    
    841
    
    
    
    7
    
    
    
    149
    
    
    
    997Total nonperforming loans
    
    $
    125
    
    
    $
    2,498
    
    
    $
    2,545
    
    
    $
    108
    
    
    $
    169
    
    
    $
    5,445
     13




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  Commercial
    
    
    Commercial
    
    
    One-to-Four
    
    
    HomeBusiness
    
    
    Real Estate
    
    
    Family
    
    
    Equity
    
    
    Consumer
    
    
    TotalThree Months Ended March 31, 2011:Allowance for Loan Losses:Balance, beginning of period
    
    $
    131
    
    
    $
    1,081
    
    
    $
    736
    
    
    $
    60
    
    
    $
    128
    
    
    $
    2,136Provision for loan losses
    
    
    45
    
    
    
    31
    
    
    
    65
    
    
    
    9
    
    
    
    (30
    )
    
    
    120Loans charged to the allowance
    
    
    
    
    
    
    (467
    )
    
    
    (20
    )
    
    
    
    
    
    
    (16
    )
    
    
    (503
    )Recoveries of loans previously charged off
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    7Balance, end of period
    
    $
    176
    
    
    $
    645
    
    
    $
    781
    
    
    $
    69
    
    
    $
    89
    
    
    $
    1,760Ending balance: individually evaluated for impairment
    
    $
    125
    
    
    $
    136
    
    
    $
    134
    
    
    $
    16
    
    
    $
    
    
    
    $
    411Ending balance: collectively evaluated for impairment
    
    $
    51
    
    
    $
    509
    
    
    $
    647
    
    
    $
    53
    
    
    $
    89
    
    
    $
    1,349At March 31, 2011:Loans:Ending balance
    
    $
    3,309
    
    
    $
    32,246
    
    
    $
    139,816
    
    
    $
    9,900
    
    
    $
    9,508
    
    
    $
    194,779Ending balance individually evaluated for impairment
    
    $
    125
    
    
    $
    5,894
    
    
    $
    1,556
    
    
    $
    113
    
    
    $
    36
    
    
    $
    7,724Ending balance collectively evaluated for impairment
    
    $
    3,184
    
    
    $
    26,352
    
    
    $
    138,260
    
    
    $
    9,787
    
    
    $
    9,472
    
    
    $
    187,055At December 31, 2010:Loans:Ending balance
    
    $
    2,473
    
    
    $
    29,303
    
    
    $
    140,340
    
    
    $
    10,112
    
    
    $
    10,335
    
    
    $
    192,563Ending balance individually evaluated for impairment
    
    $
    125
    
    
    $
    4,398
    
    
    $
    2,669
    
    
    $
    114
    
    
    $
    60
    
    
    $
    7,366Ending balance collectively evaluated for impairment
    
    $
    2,348
    
    
    $
    24,905
    
    
    $
    137,671
    
    
    $
    9,998
    
    
    $
    10,275
    
    
    $
    185,197At March 31, 2010:Loans:Ending balance
    
    $
    1,109
    
    
    $
    23,358
    
    
    $
    121,618
    
    
    $
    8,815
    
    
    $
    12,301
    
    
    $
    167,201Ending balance individually evaluated for impairment
    
    $
    
    
    
    $
    5,527
    
    
    $
    1,970
    
    
    $
    
    
    
    $
    36
    
    
    $
    7,533Ending balance collectively evaluated for impairment
    
    $
    1,109
    
    
    $
    17,831
    
    
    $
    119,648
    
    
    $
    8,815
    
    
    $
    12,265
    
    
    $
    159,668Three Months Ended March 31, 2010:Allowance for Loan Losses:Balance, beginning of period
    
    $
    12
    
    
    $
    293
    
    
    $
    455
    
    
    $
    33
    
    
    $
    147
    
    
    $
    940Provision for loan losses
    
    
    35
    
    
    
    723
    
    
    
    295
    
    
    
    19
    
    
    
    8
    
    
    
    1,080Loans charged to the allowance
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    (13
    )
    
    
    (32
    )Recoveries of loans previously charged off
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    6Balance, end of period
    
    $
    47
    
    
    $
    1,016
    
    
    $
    731
    
    
    $
    52
    
    
    $
    148
    
    
    $
    1,994Ending balance: individually evaluated for impairment
    
    $
    
    
    
    $
    603
    
    
    $
    259
    
    
    $
    
    
    
    $
    8
    
    
    $
    870Ending balance: collectively evaluated for impairment
    
    $
    47
    
    
    $
    413
    
    
    $
    472
    
    
    $
    52
    
    
    $
    140
    
    
    $
    1,124
  14




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
    Note 5. Borrowings
    Note 6. Income Taxes
  Note 7. Financial Instruments With Off-Balance Sheet Risk
    15




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  March 31,
    
    
    December 31,2011
    
    
    2010Commitments to extend credit
    
    $
    16,873
    
    
    $
    14,315
   Note 8. Regulatory Matters
     16




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  Minimum To Be WellMinimum for Capital
    
    
    Capitalized Under PromptActual
    
    
    Adequacy Purposes
    
    
    Corrective Action ProvisionAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of March 31, 2011:Tangible capital to tangible assets
    
    $
    28,408
    
    
    
    10.96
    %
    
    
    3,887
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/ATotal capital to risk weighted assets
    
    
    29,757
    
    
    
    17.04
    %
    
    
    13,974
    
    
    
    8.00
    %
    
    $
    17,467
    
    
    
    10.00
    %Tier 1 capital to risk weighted assets
    
    
    28,408
    
    
    
    16.26
    %
    
    
    6,987
    
    
    
    4.00
    %
    
    
    10,480
    
    
    
    6.00
    %Tier 1 capital to average assets
    
    
    28,408
    
    
    
    10.96
    %
    
    
    10,364
    
    
    
    4.00
    %
    
    
    12,955
    
    
    
    5.00
    %As of December 31, 2010:Tangible capital to tangible assets
    
    $
    28,129
    
    
    
    11.78
    %
    
    $
    3,581
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/ATotal capital to risk weighted assets
    
    
    29,336
    
    
    
    18.46
    %
    
    
    12,716
    
    
    
    8.00
    %
    
    $
    15,894
    
    
    
    10.00
    %Tier 1 capital to risk weighted assets
    
    
    28,129
    
    
    
    17.70
    %
    
    
    6,358
    
    
    
    4.00
    %
    
    
    9,537
    
    
    
    6.00
    %Tier 1 capital to average assets
    
    
    28,129
    
    
    
    11.78
    %
    
    
    9,548
    
    
    
    4.00
    %
    
    
    11,936
    
    
    
    5.00
    %
  March 31,
    
    
    December 31,2011
    
    
    2010Equity capital
    
    $
    28,627
    
    
    $
    28,292Disallowed deferred tax asset
    
    
    (215
    )
    
    
    (250
    )Unrealized (gains) losses on securities, net
    
    
    (4
    )
    
    
    87Tangible and Tier 1 capital
    
    
    28,408
    
    
    
    28,129General allowance for loan losses
    
    
    1,349
    
    
    
    1,207Total capital
    
    $
    29,757
    
    
    $
    29,336
 Note 9. Fair Value Measurements
   17




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
       18




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  Fair Value Measurements at ReportingDate UsingQuotedPrices in
    
    
    SignificantAssets/
    
    
    Active Markets
    
    
    Other
    
    
    SignificantLiabilities
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableMeasured
    
    
    Assets
    
    
    Inputs
    
    
    InputsAt Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)March 31, 2011:Measured on a recurring basis:Assets:Securities available for sale:Agency securities
    
    $
    1,991
    
    
    $
    
    
    
    $
    1,991
    
    
    $
    Municipal securities
    
    
    3,681
    
    
    
    
    
    
    
    3,681
    
    
    
    Collateralized mortgage obligations
    
    
    10,903
    
    
    
    
    
    
    
    10,903
    
    
    
    Mortgage-backed securities
    
    
    8,238
    
    
    
    
    
    
    
    8,238
    
    
    
    Measured on a nonrecurring basis:Assets:Impaired loans
    
    
    1,236
    
    
    
    
    
    
    
    
    
    
    
    1,236Other real estate owned
    
    
    1,843
    
    
    
    
    
    
    
    
    
    
    
    1,843December 31, 2010:Measured on a recurring basis:Assets:Securities available for sale:Municipal securities
    
    $
    3,585
    
    
    $
    
    
    
    $
    3,585
    
    
    $
    Collateralized mortgage obligations
    
    
    10,488
    
    
    
    
    
    
    
    10,488
    
    
    
    Mortgage-backed securities
    
    
    8,003
    
    
    
    
    
    
    
    8,003
    
    
    
    Measured on a nonrecurring basis:Assets:Impaired loans
    
    
    2,769
    
    
    
    
    
    
    
    
    
    
    
    2,769
     19




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
  Note 10. Disclosure About the Fair Value of Financial Instruments
  March 31,
    
    
    December 31,2011
    
    
    2010Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assets:Cash and cash equivalents
    
    $
    21,479
    
    
    $
    21,479
    
    
    $
    11,814
    
    
    $
    11,814Securities available for sale
    
    
    24,813
    
    
    
    24,813
    
    
    
    22,076
    
    
    
    22,076Fixed annuity investment
    
    
    1,142
    
    
    
    1,142
    
    
    
    1,131
    
    
    
    1,131Restricted stock
    
    
    1,004
    
    
    
    1,004
    
    
    
    1,003
    
    
    
    1,003Loans and loans held for sale
    
    
    195,002
    
    
    
    195,106
    
    
    
    194,654
    
    
    
    194,707Accrued interest receivable
    
    
    838
    
    
    
    838
    
    
    
    833
    
    
    
    833Financial liabilities:Deposit accounts
    
    
    208,795
    
    
    
    203,215
    
    
    
    188,244
    
    
    
    183,738Accrued interest payable
    
    
    44
    
    
    
    44
    
    
    
    39
    
    
    
    39Borrowings
    
    
    15,984
    
    
    
    15,374
    
    
    
    15,987
    
    
    
    16,151Off-balance sheet assets (liabilities):Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Fair Values of Financial Instruments
   20




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##### Table of Contents



SP Bancorp, Inc.
 Notes to Consolidated Financial Statements (Unaudited)
(In thousands)
 Cash and short-term instruments
  Securities
 
 Fixed annuity investment
  Loans and loans held for sale
  Deposits
  Advances from Federal Home Loan Bank
  Accrued interest
  Off-balance sheet instruments
   21




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##### Table of Contents



Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  CAUTIONARY NOTE REGARDING 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;
 
    
    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;
  22




---



##### Table of Contents




    
    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;
 
    
    changes in our financial condition or results of operations that reduce capital; and
 
    
    changes in the financial condition or future prospects of issuers of securities that
we own.
  Overview
     Critical Accounting Policies.
 Economy
  23




---



##### Table of Contents



Comparison of Financial Condition at March 31, 2011 and December 31, 2010
 Summary of Selected Balance Sheet Data.
 March 31,
    
    
    December 31,
    
    
    Increase(Dollars in thousands)
    
    2011
    
    
    2010
    
    
    (Decrease)
    
    
    % ChangeTotal assets
    
    $
    259,330
    
    
    $
    238,817
    
    
    $
    20,513
    
    
    
    8.59
    %Total cash and cash equivalents
    
    
    21,479
    
    
    
    11,814
    
    
    
    9,665
    
    
    
    81.81Securities available for sale, at fair value
    
    
    24,813
    
    
    
    22,076
    
    
    
    2,737
    
    
    
    12.40Loans held for sale
    
    
    1,340
    
    
    
    3,589
    
    
    
    (2,249
    )
    
    
    (62.66
    )Loans, net
    
    
    193,662
    
    
    
    191,065
    
    
    
    2,597
    
    
    
    1.36Other real estate owned
    
    
    1,843
    
    
    
    
    
    
    
    1,843
    
    
    NMPremises and equipment, net
    
    
    4,592
    
    
    
    4,637
    
    
    
    (45
    )
    
    
    (0.97
    )Federal Home Loan Bank of Dallas stock
and other restricted stock, at cost
    
    
    1,004
    
    
    
    1,003
    
    
    
    1
    
    
    
    0.10Bank-owned life insurance
    
    
    6,017
    
    
    
    
    
    
    
    6,017
    
    
    NMOther assets (1)
    
    
    4,580
    
    
    
    4,633
    
    
    
    (53
    )
    
    
    (1.14
    )Deposits
    
    
    208,795
    
    
    
    188,244
    
    
    
    20,551
    
    
    
    10.92Borrowings
    
    
    15,984
    
    
    
    15,987
    
    
    
    (3
    )
    
    
    (0.02
    )Stockholders equity
    
    
    32,390
    
    
    
    32,104
    
    
    
    286
    
    
    
    0.89
 1)
    
    Includes fixed annuity investment, accrued interest receivable, deferred tax assets and other
assets.NM
    
    Not meaningful.
     Comparison of Operating Results for the Three Months Ended March 31, 2011 and 2010
 General.
  24




---



##### Table of Contents



Summary of Net Interest Income.
 Three Months Ended March 31,
    
    
    Increase(Dollars in thousands)
    
    2011
    
    
    2010
    
    
    (Decrease)
    
    
    % ChangeInterest income:Interest and fees on loans
    
    $
    2,618
    
    
    $
    2,420
    
    
    $
    198
    
    
    
    8.18
    %Securities  taxable
    
    
    80
    
    
    
    102
    
    
    
    (22
    )
    
    
    (21.57
    )Securities  nontaxable
    
    
    34
    
    
    
    13
    
    
    
    21
    
    
    
    161.54Other interest  earning assets
    
    
    22
    
    
    
    47
    
    
    
    (25
    )
    
    
    (53.19
    )Total interest income
    
    
    2,754
    
    
    
    2,582
    
    
    
    172
    
    
    
    6.66Interest expense:Savings deposits
    
    
    20
    
    
    
    20
    
    
    
    
    
    
    
    0.00Money market
    
    
    41
    
    
    
    73
    
    
    
    (32
    )
    
    
    (43.84
    )Demand deposit account
    
    
    27
    
    
    
    38
    
    
    
    (11
    )
    
    
    (28.95
    )Certificates of deposit
    
    
    251
    
    
    
    318
    
    
    
    (67
    )
    
    
    (21.07
    )Total deposits
    
    
    339
    
    
    
    449
    
    
    
    (110
    )
    
    
    (24.50
    )Borrowings
    
    
    112
    
    
    
    118
    
    
    
    (6
    )
    
    
    (5.08
    )Total interest expense
    
    
    451
    
    
    
    567
    
    
    
    (116
    )
    
    
    (20.46
    )Net interest income
    
    $
    2,303
    
    
    $
    2,015
    
    
    $
    288
    
    
    
    14.29
    %
  25




---



##### Table of Contents



Summary of Average Yields, Average Rates and Average Balances.
 Average Yields and Rates
 Three Months Ended March 31,
    
    
    Increase2011
    
    
    2010
    
    
    (decrease)Loans
    
    
    5.37
    %
    
    
    5.69
    %
    
    
    (0.32
    )%Securities  taxable
    
    
    1.64
    %
    
    
    3.43
    %
    
    
    (1.79
    )Securities  nontaxable
    
    
    3.63
    %
    
    
    3.80
    %
    
    
    (0.17
    )Other interest  earning assets
    
    
    0.61
    %
    
    
    0.50
    %
    
    
    0.11Total interest-earning assets
    
    
    4.73
    %
    
    
    4.68
    %
    
    
    0.05Savings deposits
    
    
    0.25
    %
    
    
    0.25
    %
    
    
    0.00Money market
    
    
    0.42
    %
    
    
    0.90
    %
    
    
    (0.48
    )Demand deposit account
    
    
    0.21
    %
    
    
    0.30
    %
    
    
    (0.09
    )Certificates of deposit
    
    
    1.64
    %
    
    
    2.19
    %
    
    
    (0.55
    )Total deposits
    
    
    0.74
    %
    
    
    1.04
    %
    
    
    (0.30
    )Borrowings
    
    
    2.80
    %
    
    
    1.49
    %
    
    
    1.31Total interest-bearing liabilities
    
    
    0.90
    %
    
    
    1.11
    %
    
    
    (0.21
    )Net interest rate spread
    
    
    3.83
    %
    
    
    3.57
    %
    
    
    0.26Net interest margin
    
    
    3.96
    %
    
    
    3.65
    %
    
    
    0.31
    %
 Average Balances
 Three Months Ended March 31,
    
    
    Increase(Dollars in thousands)
    
    2011
    
    
    2010
    
    
    (Decrease)
    
    
    % ChangeLoans
    
    $
    195,082
    
    
    $
    170,010
    
    
    $
    25,072
    
    
    
    14.75
    %Securities  taxable
    
    
    19,474
    
    
    
    11,883
    
    
    
    7,591
    
    
    
    63.88Securities  nontaxable
    
    
    3,745
    
    
    
    1,369
    
    
    
    2,376
    
    
    
    173.56Other interest  earning assets
    
    
    14,484
    
    
    
    37,260
    
    
    
    (22,776
    )
    
    
    (61.13
    )Total interest-earning assets
    
    
    232,785
    
    
    
    220,522
    
    
    
    12,263
    
    
    
    5.56Savings deposits
    
    
    31,544
    
    
    
    32,281
    
    
    
    (737
    )
    
    
    (2.28
    )Money market
    
    
    39,459
    
    
    
    32,404
    
    
    
    7,055
    
    
    
    21.77Demand deposit account
    
    
    51,886
    
    
    
    50,737
    
    
    
    1,149
    
    
    
    2.26Certificates of deposit
    
    
    61,274
    
    
    
    58,032
    
    
    
    3,242
    
    
    
    5.59Total deposits
    
    
    184,163
    
    
    
    173,454
    
    
    
    10,709
    
    
    
    6.17Borrowings
    
    
    15,982
    
    
    
    31,769
    
    
    
    (15,787
    )
    
    
    (49.69
    )Total interest-bearing liabilities
    
    
    200,145
    
    
    
    205,223
    
    
    
    (5,078
    )
    
    
    (2.47
    )Net interest-earning assets
    
    $
    32,640
    
    
    $
    15,299
    
    
    $
    17,341
    
    
    
    113.35
    %
  26




---



##### Table of Contents



Interest Income.
   Interest Expense.
  Net Interest Income.
 Provision for Loan Losses.
  Summary of Noninterest Income.
 Three Months Ended March 31,
    
    
    Increase(Dollars in thousands)
    
    2011
    
    
    2010
    
    
    (Decrease)
    
    
    % ChangeNoninterest income:Service charges
    
    $
    320
    
    
    $
    374
    
    
    $
    (54
    )
    
    
    (14.44
    )%Gain on sale of
securities available for sale
    
    
    28
    
    
    
    
    
    
    
    28
    
    
    NMGain on sale of mortgage loans
    
    
    223
    
    
    
    112
    
    
    
    111
    
    
    
    99.11Other
    
    
    122
    
    
    
    29
    
    
    
    93
    
    
    
    320.69Total noninterest income
    
    $
    693
    
    
    $
    515
    
    
    $
    178
    
    
    
    34.56
    %
 NM
    
    Not meaningful.
 Noninterest Income.
  27




---



##### Table of Contents



Summary of Noninterest Expense.
 Three Months Ended March 31,
    
    
    Increase(Dollars in thousands)
    
    2011
    
    
    2010
    
    
    (Decrease)
    
    
    % ChangeNoninterest expense:Compensation and benefits
    
    $
    1,286
    
    
    $
    969
    
    
    $
    317
    
    
    
    32.71
    %Occupancy costs
    
    
    269
    
    
    
    273
    
    
    
    (4
    )
    
    
    (1.47
    )Equipment expense
    
    
    69
    
    
    
    47
    
    
    
    22
    
    
    
    46.81Data processing expense
    
    
    115
    
    
    
    153
    
    
    
    (38
    )
    
    
    (24.84
    )ATM expense
    
    
    91
    
    
    
    91
    
    
    
    
    
    
    
    0.00Professional and outside services
    
    
    232
    
    
    
    176
    
    
    
    56
    
    
    
    31.82Stationery and supplies
    
    
    38
    
    
    
    26
    
    
    
    12
    
    
    
    46.15Marketing
    
    
    44
    
    
    
    38
    
    
    
    6
    
    
    
    15.79FDIC insurance assessments
    
    
    92
    
    
    
    67
    
    
    
    25
    
    
    
    37.31Operations from OREO
    
    
    102
    
    
    
    (10
    )
    
    
    112
    
    
    
    (1,120.00
    )Other
    
    
    237
    
    
    
    155
    
    
    
    82
    
    
    
    52.90Total noninterest expense
    
    $
    2,575
    
    
    $
    1,985
    
    
    $
    590
    
    
    
    29.72
    %
 Noninterest Expense .
  Income Tax Expense .
  28




---



##### Table of Contents



Average Balances and Yields
  For the Three Months Ended March 31,2011
    
    
    2010Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    
    
    
    OutstandingBalance
    
    
    Interest
    
    
    Yield/ Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Yield/ Rate(1)Interest-earning assets:Loans, net
    
    $
    195,082
    
    
    $
    2,618
    
    
    
    5.37
    %
    
    $
    170,010
    
    
    $
    2,420
    
    
    
    5.69
    %Taxable investment securities
    
    
    19,474
    
    
    
    80
    
    
    
    1.64
    %
    
    
    11,883
    
    
    
    102
    
    
    
    3.43
    %Nontaxable investment securities
    
    
    3,745
    
    
    
    34
    
    
    
    3.63
    %
    
    
    1,369
    
    
    
    13
    
    
    
    3.80
    %Total other interest earning assets
    
    
    13,531
    
    
    
    21
    
    
    
    0.62
    %
    
    
    35,664
    
    
    
    44
    
    
    
    0.49
    %FHLB of Dallas stock
    
    
    953
    
    
    
    1
    
    
    
    0.42
    %
    
    
    1,596
    
    
    
    3
    
    
    
    0.75
    %Total interest-earning assets
    
    
    232,785
    
    
    
    2,754
    
    
    
    4.73
    %
    
    
    220,522
    
    
    
    2,582
    
    
    
    4.68
    %Non-interest-earning assets
    
    
    11,763
    
    
    
    
    
    
    
    
    
    
    
    9,224Total assets
    
    $
    244,548
    
    
    
    
    
    
    
    
    
    
    $
    229,746Interest-bearing liabilities:Savings deposits
    
    $
    31,544
    
    
    $
    20
    
    
    
    0.25
    %
    
    $
    32,281
    
    
    $
    20
    
    
    
    0.25
    %Money market
    
    
    39,459
    
    
    
    41
    
    
    
    0.42
    %
    
    
    32,404
    
    
    
    73
    
    
    
    0.90
    %Demand deposit accounts
    
    
    51,886
    
    
    
    27
    
    
    
    0.21
    %
    
    
    50,737
    
    
    
    38
    
    
    
    0.30
    %Certificates of deposit
    
    
    61,274
    
    
    
    251
    
    
    
    1.64
    %
    
    
    58,032
    
    
    
    318
    
    
    
    2.19
    %Total deposits
    
    
    184,163
    
    
    
    339
    
    
    
    0.74
    %
    
    
    173,454
    
    
    
    449
    
    
    
    1.04
    %Borrowings
    
    
    15,982
    
    
    
    112
    
    
    
    2.80
    %
    
    
    31,769
    
    
    
    118
    
    
    
    1.49
    %Total interest-bearing liabilities
    
    
    200,145
    
    
    
    451
    
    
    
    0.90
    %
    
    
    205,223
    
    
    
    567
    
    
    
    1.11
    %Non-interest-bearing liabilities
    
    
    12,080
    
    
    
    
    
    
    
    
    
    
    
    7,205Total liabilities
    
    
    212,225
    
    
    
    
    
    
    
    
    
    
    
    212,428Equity
    
    
    32,323
    
    
    
    
    
    
    
    
    
    
    
    17,318Total liabilities and equity
    
    $
    244,548
    
    
    
    
    
    
    
    
    
    
    $
    229,746Net interest income
    
    
    
    
    
    $
    2,303
    
    
    
    
    
    
    
    
    
    
    $
    2,015Net interest rate spread (2)
    
    
    
    
    
    
    
    
    
    
    3.83
    %
    
    
    
    
    
    
    
    
    
    
    3.57
    %Net interest-earning assets (3)
    
    $
    32,640
    
    
    
    
    
    
    
    
    
    
    $
    15,299Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.96
    %
    
    
    
    
    
    
    
    
    
    
    3.65
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    116.31
    %
    
    
    
    
    
    
    
    
    
    
    107.45
    %
 (1)
    
    Yields and rates for the three months ended March 31, 2011 and 2010 are annualized.(2)
    
    Interest rate spread represents the difference between the yield on average interest-earning
assets and the cost of average interest-bearing liabilities.(3)
    
    Net interest-earning assets represents total interest-earning assets less total
interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income divided by average total interest-earning
assets.
  29




---



##### Table of Contents



Liquidity and Capital Resources
          30




---



##### Table of Contents



Nonperforming Assets
 Nonperforming Loans
    Troubled Debt Restructurings .
  31




---



##### Table of Contents



Other Real Estate Owned
 Classification of Assets .
   Allowance for Loan Losses
 Analysis and Determination of the Allowance for Loan Losses
  Specific Allowances for Identified Problem Loans
  32




---



##### Table of Contents



General Valuation Allowance on the Remainder of the Loan Portfolio
         33




---



##### Table of Contents



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
 Commitments .
 Contractual Obligations.
 Impact of Inflation and Changing Prices
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4.
    
    Controls and Procedures
    34




---



##### Table of Contents



Part II  Other Information
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    [Reserved]
 
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
 3.1
    
    
    Articles of Incorporation of SP Bancorp Inc. (1)3.2
    
    
    Bylaws of SP Bancorp, Inc. (1)4.0
    
    
    Form of Common Stock Certificate of SP Bancorp, Inc. (1)10.1
    
    
    2010 Incentive Compensation Plan (1)10.2
    
    
    2008 Nonqualified Deferred Compensation Plan (1)10.3
    
    
    Phantom Stock Plan (1)31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 (1)
    
    Incorporated by reference into this document from the Exhibits filed with the Securities
Exchange Commission in the Registration Statement on Form S-1, and any amendments thereto, Registration No. 333-167967.
  35




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##### Table of Contents



SIGNATURES
  SP BANCORP, INC.Date: May 16, 2011

/s/
Jeffrey WeaverJeffrey WeaverPresident and Chief Executive OfficerDate: May 16, 2011

/s/
Suzanne C. SallsSuzanne C. SallsSenior Vice President and Chief Financial Officer  36