##### 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 001-32992
 VIEWPOINT FINANCIAL GROUP
 (Exact name of registrant as specified in its charter)
 United States
(State or other jurisdiction of incorporation or organization)
    
    20-4484783
(I.R.S. Employer Identification No.)
 1309 W. 15thStreet, Plano, Texas
    
    75075(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (972) 578-5000
 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
    
    Nasdaq Global Select Market
 Securities registered pursuant to Section 12(g) of the Act: None
 Yes o No þ
 Yes o No þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE: None.




---



##### 



VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
 FORM 10-K
 December 31, 2009
 INDEX
 PagePART IItem 1 Business
    
    
    3Item 1A Risk Factors
    
    
    35Item 1B Unresolved Staff Comments
    
    
    41Item 2 Properties
    
    
    42Item 3 Legal Proceedings
    
    
    47Item 4 (Removed and Reserved)
    
    
    47PART IIItem 5 Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
    
    
    48Item 6 Selected Financial Data
    
    
    50Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    52Item 7A Quantitative and Qualitative Disclosures about Market Risk
    
    
    74Item 8 Financial Statements and Supplementary Data
    
    
    78Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    123Item 9A Controls and Procedures
    
    
    123Item 9B Other Information
    
    
    123PART IIIItem 10 Directors, Executive Officers and Corporate Governance
    
    
    124Item 11 Executive Compensation
    
    
    129Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
    
    
    144Item 13 Certain Relationships and Related Transactions, and Director Independence
    
    
    146Item 14 Principal Accountant Fees and Services
    
    
    148PART IVItem 15 Exhibits, Financial Statement Schedules
    
    
    149Signatures
    
    
    151Exhibit 2.1Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32




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##### Table of Contents



PART I
 
 Item 1.
    
    Business
 Special Note Regarding Forward-Looking Statements
   General
    3




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##### Table of Contents



Market Areas
     4




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##### Table of Contents



Lending Activities
  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
    
    $
    440,847
    
    
    
    39.30
    %
    
    $
    498,961
    
    
    
    39.92
    %
    
    $
    332,780
    
    
    
    36.40
    %
    
    $
    282,918
    
    
    
    29.21
    %
    
    $
    270,891
    
    
    
    25.25
    %Commercial
    
    
    453,604
    
    
    
    40.44
    
    
    
    436,483
    
    
    
    34.92
    
    
    
    251,915
    
    
    
    27.56
    
    
    
    179,635
    
    
    
    18.55
    
    
    
    99,334
    
    
    
    9.26Home equity
    
    
    97,226
    
    
    
    8.67
    
    
    
    101,021
    
    
    
    8.08
    
    
    
    85,064
    
    
    
    9.31
    
    
    
    83,899
    
    
    
    8.66
    
    
    
    85,365
    
    
    
    7.96Construction
    
    
    7,074
    
    
    
    0.63
    
    
    
    503
    
    
    
    0.04
    
    
    
    225
    
    
    
    0.02
    
    
    
    5,181
    
    
    
    0.54
    
    
    
    1,033
    
    
    
    0.10Total real estate loans
    
    
    998,751
    
    
    
    89.04
    
    
    
    1,036,968
    
    
    
    82.96
    
    
    
    669,984
    
    
    
    73.29
    
    
    
    551,633
    
    
    
    56.96
    
    
    
    456,623
    
    
    
    42.57Other loans:Consumer loans:Automobile indirect
    
    
    10,711
    
    
    
    0.96
    
    
    
    38,837
    
    
    
    3.11
    
    
    
    104,156
    
    
    
    11.39
    
    
    
    219,147
    
    
    
    22.63
    
    
    
    364,046
    
    
    
    33.94Automobile direct
    
    
    57,186
    
    
    
    5.10
    
    
    
    73,033
    
    
    
    5.84
    
    
    
    98,817
    
    
    
    10.81
    
    
    
    151,861
    
    
    
    15.68
    
    
    
    196,254
    
    
    
    18.29Other secured
    
    
    12,217
    
    
    
    1.09
    
    
    
    14,107
    
    
    
    1.13
    
    
    
    12,626
    
    
    
    1.38
    
    
    
    14,678
    
    
    
    1.52
    
    
    
    18,263
    
    
    
    1.70Lines of credit/unsecured
    
    
    14,781
    
    
    
    1.32
    
    
    
    15,192
    
    
    
    1.21
    
    
    
    16,351
    
    
    
    1.79
    
    
    
    21,284
    
    
    
    2.20
    
    
    
    28,804
    
    
    
    2.68Total consumer loans
    
    
    94,895
    
    
    
    8.47
    
    
    
    141,169
    
    
    
    11.29
    
    
    
    231,950
    
    
    
    25.37
    
    
    
    406,970
    
    
    
    42.03
    
    
    
    607,367
    
    
    
    56.61Commercial non-mortgage
    
    
    27,983
    
    
    
    2.49
    
    
    
    71,845
    
    
    
    5.75
    
    
    
    12,278
    
    
    
    1.34
    
    
    
    9,780
    
    
    
    1.01
    
    
    
    8,813
    
    
    
    0.82Total loans
    
    
    1,121,629
    
    
    
    100.00
    %
    
    
    1,249,982
    
    
    
    100.00
    %
    
    
    914,212
    
    
    
    100.00
    %
    
    
    968,383
    
    
    
    100.00
    %
    
    
    1,072,803
    
    
    
    100.00
    %Less:Deferred fees and discounts
    
    
    (1,160
    )
    
    
    
    
    
    
    (1,206
    )
    
    
    
    
    
    
    603
    
    
    
    
    
    
    
    3,576
    
    
    
    
    
    
    
    8,061Allowance for loan losses
    
    
    (12,310
    )
    
    
    
    
    
    
    (9,068
    )
    
    
    
    
    
    
    (6,165
    )
    
    
    
    
    
    
    (6,507
    )
    
    
    
    
    
    
    (7,697
    )Total loans receivable, net
    
    $
    1,108,159
    
    
    
    
    
    
    $
    1,239,708
    
    
    
    
    
    
    $
    908,650
    
    
    
    
    
    
    $
    965,452
    
    
    
    
    
    
    $
    1,073,167Loans held for sale
    
    $
    341,431
    
    
    
    
    
    
    $
    159,884
    
    
    
    
    
    
    $
    13,172
    
    
    
    
    
    
    $
    3,212
    
    
    
    
    
    
    $
    2,306
  5




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##### Table of Contents



December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Fixed rate loans:Real estate loans:One- to four- family
    
    $
    312,842
    
    
    
    27.89
    %
    
    $
    375,421
    
    
    
    30.04
    %
    
    $
    302,193
    
    
    
    33.06
    %
    
    $
    247,910
    
    
    
    25.60
    %
    
    $
    227,667
    
    
    
    21.22
    %Commercial
    
    
    284,741
    
    
    
    25.39
    
    
    
    271,830
    
    
    
    21.75
    
    
    
    179,826
    
    
    
    19.67
    
    
    
    140,797
    
    
    
    14.54
    
    
    
    66,622
    
    
    
    6.21Home equity
    
    
    75,336
    
    
    
    6.72
    
    
    
    84,124
    
    
    
    6.73
    
    
    
    70,643
    
    
    
    7.73
    
    
    
    68,795
    
    
    
    7.10
    
    
    
    68,050
    
    
    
    6.35Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,660
    
    
    
    0.17
    
    
    
    30
    
    
    
    0.01Total real estate loans
    
    
    672,919
    
    
    
    60.00
    
    
    
    731,375
    
    
    
    58.52
    
    
    
    552,662
    
    
    
    60.46
    
    
    
    459,162
    
    
    
    47.41
    
    
    
    362,369
    
    
    
    33.79Other loans:Consumer loans:Automobile indirect
    
    
    10,711
    
    
    
    0.96
    
    
    
    38,837
    
    
    
    3.11
    
    
    
    104,156
    
    
    
    11.39
    
    
    
    219,115
    
    
    
    22.63
    
    
    
    364,046
    
    
    
    33.94Automobile direct
    
    
    57,186
    
    
    
    5.10
    
    
    
    73,033
    
    
    
    5.84
    
    
    
    98,817
    
    
    
    10.81
    
    
    
    151,816
    
    
    
    15.68
    
    
    
    196,254
    
    
    
    18.29Other secured
    
    
    4,844
    
    
    
    0.43
    
    
    
    5,238
    
    
    
    0.42
    
    
    
    5,454
    
    
    
    0.60
    
    
    
    7,050
    
    
    
    0.73
    
    
    
    8,999
    
    
    
    0.84Lines of credit/unsecured
    
    
    3,361
    
    
    
    0.30
    
    
    
    3,456
    
    
    
    0.27
    
    
    
    4,168
    
    
    
    0.46
    
    
    
    7,652
    
    
    
    0.79
    
    
    
    11,158
    
    
    
    1.04Total consumer loans
    
    
    76,102
    
    
    
    6.79
    
    
    
    120,564
    
    
    
    9.64
    
    
    
    212,595
    
    
    
    23.26
    
    
    
    385,633
    
    
    
    39.83
    
    
    
    580,457
    
    
    
    54.11Commercial non-mortgage
    
    
    10,901
    
    
    
    0.97
    
    
    
    10,213
    
    
    
    0.82
    
    
    
    9,359
    
    
    
    1.02
    
    
    
    7,979
    
    
    
    0.82
    
    
    
    5,004
    
    
    
    0.47Total fixed rate loans
    
    
    759,922
    
    
    
    67.76
    
    
    
    862,152
    
    
    
    68.98
    
    
    
    774,616
    
    
    
    84.74
    
    
    
    852,774
    
    
    
    88.06
    
    
    
    947,830
    
    
    
    88.37Adjustable rate loans:Real estate loans:One- to four- family
    
    
    128,005
    
    
    
    11.41
    
    
    
    123,540
    
    
    
    9.88
    
    
    
    30,587
    
    
    
    3.34
    
    
    
    35,008
    
    
    
    3.61
    
    
    
    43,224
    
    
    
    4.03Commercial
    
    
    168,863
    
    
    
    15.05
    
    
    
    164,653
    
    
    
    13.17
    
    
    
    72,089
    
    
    
    7.89
    
    
    
    38,838
    
    
    
    4.01
    
    
    
    32,712
    
    
    
    3.05Home equity
    
    
    21,890
    
    
    
    1.95
    
    
    
    16,897
    
    
    
    1.35
    
    
    
    14,421
    
    
    
    1.58
    
    
    
    15,104
    
    
    
    1.56
    
    
    
    17,315
    
    
    
    1.61Construction
    
    
    7,074
    
    
    
    0.63
    
    
    
    503
    
    
    
    0.04
    
    
    
    225
    
    
    
    0.02
    
    
    
    3,521
    
    
    
    0.37
    
    
    
    1,003
    
    
    
    0.09Total real estate loans
    
    
    325,832
    
    
    
    29.04
    
    
    
    305,593
    
    
    
    24.44
    
    
    
    117,322
    
    
    
    12.83
    
    
    
    92,471
    
    
    
    9.55
    
    
    
    94,254
    
    
    
    8.78Other loans:Consumer loans:Automobile indirect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    Automobile direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    Other secured
    
    
    7,373
    
    
    
    0.66
    
    
    
    8,869
    
    
    
    0.71
    
    
    
    7,172
    
    
    
    0.78
    
    
    
    7,628
    
    
    
    0.79
    
    
    
    9,264
    
    
    
    0.86Lines of credit/unsecured
    
    
    11,420
    
    
    
    1.02
    
    
    
    11,736
    
    
    
    0.94
    
    
    
    12,183
    
    
    
    1.33
    
    
    
    13,632
    
    
    
    1.41
    
    
    
    17,646
    
    
    
    1.64Total consumer loans
    
    
    18,793
    
    
    
    1.68
    
    
    
    20,605
    
    
    
    1.65
    
    
    
    19,355
    
    
    
    2.11
    
    
    
    21,337
    
    
    
    2.20
    
    
    
    26,910
    
    
    
    2.50Commercial non-mortgage
    
    
    17,082
    
    
    
    1.52
    
    
    
    61,632
    
    
    
    4.93
    
    
    
    2,919
    
    
    
    0.32
    
    
    
    1,801
    
    
    
    0.19
    
    
    
    3,809
    
    
    
    0.35Total adjustable rate
loans
    
    
    361,707
    
    
    
    32.24
    
    
    
    387,830
    
    
    
    31.02
    
    
    
    139,596
    
    
    
    15.26
    
    
    
    115,609
    
    
    
    11.94
    
    
    
    124,973
    
    
    
    11.63Total loans
    
    
    1,121,629
    
    
    
    100.00
    %
    
    
    1,249,982
    
    
    
    100.00
    %
    
    
    914,212
    
    
    
    100.00
    %
    
    
    968,383
    
    
    
    100.00
    %
    
    
    1,072,803
    
    
    
    100.00
    %Less:Deferred fees and discounts
    
    
    (1,160
    )
    
    
    
    
    
    
    (1,206
    )
    
    
    
    
    
    
    603
    
    
    
    
    
    
    
    3,576
    
    
    
    
    
    
    
    8,061Allowance for loan losses
    
    
    (12,310
    )
    
    
    
    
    
    
    (9,068
    )
    
    
    
    
    
    
    (6,165
    )
    
    
    
    
    
    
    (6,507
    )
    
    
    
    
    
    
    (7,697
    )Total loans receivable,
net
    
    $
    1,108,159
    
    
    
    
    
    
    $
    1,239,708
    
    
    
    
    
    
    $
    908,650
    
    
    
    
    
    
    $
    965,452
    
    
    
    
    
    
    $
    1,073,167Loans held for sale
    
    $
    341,431
    
    
    
    
    
    
    $
    159,884
    
    
    
    
    
    
    $
    13,172
    
    
    
    
    
    
    $
    3,212
    
    
    
    
    
    
    $
    2,306
  6




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##### Table of Contents



One- to Four- Familyand Commercial RealEstate
    
    
    Real Estate Construction
    
    
    Consumer
    
    
    Commercial Non-Mortgage
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedDue During Years
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageEnding December 31,
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(Dollars in thousands)2010 1
    
    $
    30,349
    
    
    
    6.32
    %
    
    $
    6,195
    
    
    
    5.82
    %
    
    $
    26,554
    
    
    
    7.23
    %
    
    $
    16,252
    
    
    
    6.33
    %
    
    $
    79,350
    
    
    
    6.53
    %2011
    
    
    51,918
    
    
    
    6.61
    
    
    
    
    
    
    
    
    
    
    
    15,959
    
    
    
    7.06
    
    
    
    2,388
    
    
    
    6.02
    
    
    
    70,265
    
    
    
    6.692012
    
    
    54,749
    
    
    
    6.59
    
    
    
    879
    
    
    
    6.00
    
    
    
    15,577
    
    
    
    7.11
    
    
    
    2,280
    
    
    
    4.64
    
    
    
    73,485
    
    
    
    6.632013 to 2014
    
    
    101,231
    
    
    
    6.76
    
    
    
    
    
    
    
    
    
    
    
    32,063
    
    
    
    6.62
    
    
    
    3,509
    
    
    
    6.00
    
    
    
    136,803
    
    
    
    6.712015 to 2019
    
    
    255,938
    
    
    
    6.32
    
    
    
    
    
    
    
    
    
    
    
    4,012
    
    
    
    7.15
    
    
    
    3,348
    
    
    
    6.87
    
    
    
    263,298
    
    
    
    6.342020 to 2024
    
    
    89,839
    
    
    
    5.82
    
    
    
    
    
    
    
    
    
    
    
    719
    
    
    
    8.43
    
    
    
    206
    
    
    
    5.78
    
    
    
    90,764
    
    
    
    5.842025 and following
    
    
    407,653
    
    
    
    5.83
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    5.88
    
    
    
    
    
    
    
    
    
    
    
    407,664
    
    
    
    5.83Total
    
    $
    991,677
    
    
    
    
    
    
    $
    7,074
    
    
    
    
    
    
    $
    94,895
    
    
    
    
    
    
    $
    27,983
    
    
    
    
    
    
    $
    1,121,629
 1
    
    Includes demand loans, loans having no stated maturity and overdraft loans.  Lending Authority.
  One- to Four-Family Real Estate Lending.
  7




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##### Table of Contents



8




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##### Table of Contents



Purchase Program.
  Commercial Real Estate Lending.
   9




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##### Table of Contents



Property Type
    
    $ Amount
    
    
    % of Total
    
    
    LTV(Dollars in Thousands)Office
    
    $
    200,144
    
    
    
    44.12
    %
    
    
    62.1
    %Retail
    
    
    135,384
    
    
    
    29.84
    
    
    
    60.7Industrial
    
    
    39,456
    
    
    
    8.70
    
    
    
    60.9Office/Warehouse
    
    
    27,698
    
    
    
    6.10
    
    
    
    63.0Storage Facility
    
    
    12,268
    
    
    
    2.70
    
    
    
    45.9Mixed Use
    
    
    9,060
    
    
    
    2.00
    
    
    
    30.7Hotel
    
    
    7,484
    
    
    
    1.65
    
    
    
    67.2Medical Office
    
    
    5,981
    
    
    
    1.32
    
    
    
    52.7Mobile Home Park
    
    
    5,921
    
    
    
    1.31
    
    
    
    50.8Multifamily
    
    
    3,890
    
    
    
    0.86
    
    
    
    62.3Church
    
    
    3,837
    
    
    
    0.85
    
    
    
    43.1Other
    
    
    2,481
    
    
    
    0.55
    
    
    
    52.2$
    453,604
    
    
    
    100.00
    %
    
    
    59.3
    %
    Home Equity Lending.
   10




---



##### Table of Contents



Consumer Lending.
      Commercial Non-Mortgage Lending.
   11




---



##### Table of Contents



Warehouse Lines of Credit.
 Loan Originations, Purchases, Sales, Repayments and Servicing
      12




---



##### Table of Contents



13




---



##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Originations by type:Adjustable rate loans:Real estate loans:One- to four- family
    
    $
    37,998
    
    
    $
    109,124
    
    
    $
    5,975Construction
    
    
    10,664
    
    
    
    3,753
    
    
    
    900Commercial
    
    
    7,134
    
    
    
    106,756
    
    
    
    42,848Home equity
    
    
    11,095
    
    
    
    8,939
    
    
    
    3,064Total real estate loans
    
    
    66,891
    
    
    
    228,572
    
    
    
    52,787Other loans:Consumer:Automobile indirect
    
    
    
    
    
    
    
    
    
    
    Automobile direct
    
    
    
    
    
    
    
    
    
    
    Other secured
    
    
    3,778
    
    
    
    1,278
    
    
    
    5,621Lines of credit/unsecured
    
    
    617
    
    
    
    1,155
    
    
    
    703Total consumer loans
    
    
    4,395
    
    
    
    2,433
    
    
    
    6,324Commercial non-mortgage
    
    
    38,682
    1
    
    
    105,905
    1
    
    
    4,489Total adjustable rate loans
    
    
    109,968
    
    
    
    336,910
    
    
    
    63,600Fixed rate loans:Real estate loans:One- to four- family
    
    
    647,014
    
    
    
    393,927
    
    
    
    121,209Construction
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    61,019
    
    
    
    159,303
    
    
    
    75,655Home equity
    
    
    12,394
    
    
    
    34,599
    
    
    
    24,276Total real estate loans
    
    
    720,427
    
    
    
    587,829
    
    
    
    221,140Other loans:Consumer:Automobile indirect
    
    
    
    
    
    
    
    
    
    
    181Automobile direct
    
    
    25,626
    
    
    
    31,643
    
    
    
    27,216Other secured
    
    
    2,680
    
    
    
    2,882
    
    
    
    2,299Lines of credit/unsecured
    
    
    2,556
    
    
    
    2,881
    
    
    
    2,241Total consumer loans
    
    
    30,862
    
    
    
    37,406
    
    
    
    31,937Commercial non-mortgage
    
    
    4,853
    
    
    
    8,692
    
    
    
    3,767Total fixed rate loans
    
    
    756,142
    
    
    
    633,927
    
    
    
    256,844Total loans originated
    
    
    866,110
    
    
    
    970,837
    
    
    
    320,444Purchases:Real estate loans:One- to four- family
    
    
    5,242,511
    2
    
    
    296,572
    2
    
    
    44,407Commercial
    
    
    
    
    
    
    3,376
    
    
    
    1,160Total loans purchased
    
    
    5,242,511
    
    
    
    299,948
    
    
    
    45,567Sales and Repayments:Real estate loans:One- to four- family
    
    
    5,561,052
    2
    
    
    444,506
    2
    
    
    77,418Commercial
    
    
    29,322
    
    
    
    30,200
    
    
    
    1,128Other loans:Consumer
    
    
    3,418
    
    
    
    813
    
    
    
    4,012Total loans sold
    
    
    5,593,792
    
    
    
    475,519
    
    
    
    82,558Principal repayments
    
    
    461,635
    
    
    
    312,784
    
    
    
    327,664Total reductions
    
    
    6,055,427
    
    
    
    788,303
    
    
    
    410,222Increase (decrease) in other items, net
    
    
    (3,196
    )
    
    
    (4,712
    )
    
    
    (2,631
    )Net increase (decrease)
    
    $
    49,998
    
    
    $
    477,770
    
    
    $
    (46,842
    )
 
 1
    
    Includes warehouse lines of credit, which are classified as secured commercial
lines of credit.2
    
    Includes Purchase Program loans.  14




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##### Table of Contents



Asset Quality
      15




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##### Table of Contents



Delinquent Loans.
 Loans Delinquent For:60-89 Days
    
    
    90 Days and Over
    
    
    Total Loans Delinquent 60 Days or MorePercent of
    
    
    
    
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    
    
    
    
    Percent ofLoan
    
    
    
    
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    
    
    
    
    LoanNumber
    
    
    Amount
    
    
    Category
    
    
    Number
    
    
    Amount
    
    
    Category
    
    
    Number
    
    
    Amount
    
    
    Category(Dollars in thousands)Real estate loans:One- to four- family
    
    
    26
    
    
    $
    3,749
    
    
    
    0.85
    %
    
    
    30
    
    
    $
    6,080
    
    
    
    1.38
    %
    
    
    56
    
    
    $
    9,829
    
    
    
    2.23
    %Commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    901
    
    
    
    0.20
    
    
    
    1
    
    
    
    901
    
    
    
    0.20Home equity
    
    
    6
    
    
    
    80
    
    
    
    0.08
    
    
    
    6
    
    
    
    415
    
    
    
    0.43
    
    
    
    12
    
    
    
    495
    
    
    
    0.51Total real estate loans
    
    
    32
    
    
    
    3,829
    
    
    
    0.38
    
    
    
    37
    
    
    
    7,396
    
    
    
    0.74
    
    
    
    69
    
    
    
    11,225
    
    
    
    1.12Other loans:Consumer loans:Automobile indirect
    
    
    9
    
    
    
    41
    
    
    
    0.38
    
    
    
    9
    
    
    
    66
    
    
    
    0.62
    
    
    
    18
    
    
    
    107
    
    
    
    1.00Automobile direct
    
    
    9
    
    
    
    51
    
    
    
    0.09
    
    
    
    7
    
    
    
    88
    
    
    
    0.15
    
    
    
    16
    
    
    
    139
    
    
    
    0.24Other secured
    
    
    1
    
    
    
    1
    
    
    
    0.01
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    0.01Lines of credit/unsecured
    
    
    12
    
    
    
    34
    
    
    
    0.23
    
    
    
    20
    
    
    
    116
    
    
    
    0.78
    
    
    
    32
    
    
    
    150
    
    
    
    1.01Total consumer loans
    
    
    31
    
    
    
    127
    
    
    
    0.13
    
    
    
    36
    
    
    
    270
    
    
    
    0.29
    
    
    
    67
    
    
    
    397
    
    
    
    0.42Commercial non-mortgage
    
    
    1
    
    
    
    44
    
    
    
    0.16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    44
    
    
    
    0.16Total loans
    
    
    64
    
    
    $
    4,000
    
    
    
    0.36
    %
    
    
    73
    
    
    $
    7,666
    
    
    
    0.68
    %
    
    
    137
    
    
    $
    11,666
    
    
    
    1.04
    %
  16




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##### Table of Contents



Non-performing Assets.
 Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Nonaccruing loans:One- to four- family real estate
    
    $
    6,151
    
    
    $
    1,423
    
    
    $
    689
    
    
    $
    
    
    
    $
    139Commercial real estate
    
    
    4,682
    
    
    
    
    
    
    
    989
    
    
    
    
    
    
    
    Home equity
    
    
    418
    
    
    
    173
    
    
    
    22
    
    
    
    72
    
    
    
    77Automobile indirect
    
    
    124
    
    
    
    190
    
    
    
    185
    
    
    
    207
    
    
    
    1,084Automobile direct
    
    
    136
    
    
    
    124
    
    
    
    86
    
    
    
    145
    
    
    
    223Consumer other secured
    
    
    4
    
    
    
    5
    
    
    
    1
    
    
    
    
    
    
    
    903Consumer lines of credit/unsecured
    
    
    116
    
    
    
    128
    
    
    
    63
    
    
    
    177
    
    
    
    136Commercial non-mortgage
    
    
    44
    
    
    
    174
    
    
    
    67
    
    
    
    703
    
    
    
    30Total
    
    
    11,675
    
    
    
    2,217
    
    
    
    2,102
    
    
    
    1,304
    
    
    
    2,592Accruing loans more than 90 days delinquent:Automobile direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    Troubled debt restructurings:One- to four- family real estate
    
    
    343
    
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate
    
    
    
    
    
    
    1,796
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    113
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    Automobile indirect
    
    
    162
    
    
    
    231
    
    
    
    607
    
    
    
    592
    
    
    
    Automobile direct
    
    
    185
    
    
    
    209
    
    
    
    759
    
    
    
    1,365
    
    
    
    1,669Consumer other secured
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    4
    
    
    
    86Consumer lines of credit/unsecured
    
    
    96
    
    
    
    132
    
    
    
    40
    
    
    
    76
    
    
    
    248Commercial non-mortgage
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    978
    
    
    
    2,528
    
    
    
    1,411
    
    
    
    2,037
    
    
    
    2,003Foreclosed assets:One- to four- family real estate
    
    
    462
    
    
    
    718
    
    
    
    615
    
    
    
    460
    
    
    
    50Commercial real estate
    
    
    3,455
    
    
    
    843
    
    
    
    
    
    
    
    
    
    
    
    Automobile indirect
    
    
    
    
    
    
    56
    
    
    
    212
    
    
    
    146
    
    
    
    310Automobile direct
    
    
    
    
    
    
    24
    
    
    
    13
    
    
    
    45
    
    
    
    159Other consumer
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Commercial non-mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    Total
    
    
    3,917
    
    
    
    1,644
    
    
    
    840
    
    
    
    655
    
    
    
    519Total non-performing assets
    
    $
    16,570
    
    
    $
    6,389
    
    
    $
    4,353
    
    
    $
    4,026
    
    
    $
    5,114Total non-performing assets as a percentage of total assets
    
    
    0.70
    %
    
    
    0.29
    %
    
    
    0.26
    %
    
    
    0.26
    %
    
    
    0.36
    %Total non-performing loans as a percentage of total loans
    
    
    1.13
    %
    
    
    0.38
    %
    
    
    0.38
    %
    
    
    0.35
    %
    
    
    0.43
    %
   17




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##### Table of Contents



Other Loans of Concern.
 Classified Assets.
   At December 31,2009
    
    
    2008(Dollars in thousands)Loss
    
    $
    
    
    
    $
    Doubtful
    
    
    4,153
    
    
    
    1,106Substandard
    
    
    12,049
    
    
    
    11,186
    1Total
    
    $
    16,202
    
    
    $
    12,292
 
 1
    
    The 2008 substandard amount includes $7.9 million in collateralized debt obligations.
See Investment Activities for a discussion of these securities.  18




---



##### Table of Contents



Allowance for Loan Losses.
    19




---



##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Balance at beginning of period
    
    $
    9,068
    
    
    $
    6,165
    
    
    $
    6,507
    
    
    $
    7,697
    
    
    $
    8,424Charge-offs:Real estate loans:One- to four- family
    
    
    460
    
    
    
    164
    
    
    
    120
    
    
    
    83
    
    
    
    127Commercial
    
    
    835
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    54
    
    
    
    41
    
    
    
    32
    
    
    
    62
    
    
    
    43Total real estate loans
    
    
    1,349
    
    
    
    385
    
    
    
    152
    
    
    
    145
    
    
    
    170Other loans:Consumer loans:Automobile indirect
    
    
    917
    
    
    
    1,493
    
    
    
    2,251
    
    
    
    2,670
    
    
    
    4,575Automobile direct
    
    
    530
    
    
    
    424
    
    
    
    620
    
    
    
    518
    
    
    
    678Other secured
    
    
    23
    
    
    
    39
    
    
    
    31
    
    
    
    21
    
    
    
    869Lines of credit/unsecured
    
    
    1,456
    
    
    
    1,232
    
    
    
    1,862
    
    
    
    1,510
    
    
    
    754Total consumer loans
    
    
    2,926
    
    
    
    3,188
    
    
    
    4,764
    
    
    
    4,719
    
    
    
    6,876Commercial non-mortgage
    
    
    720
    
    
    
    453
    
    
    
    164
    
    
    
    102
    
    
    
    204Total charge-offs
    
    
    4,995
    
    
    
    4,026
    
    
    
    5,080
    
    
    
    4,966
    
    
    
    7,250Recoveries:Real estate loans:One- to four- family
    
    
    32
    
    
    
    13
    
    
    
    14
    
    
    
    29
    
    
    
    Commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    4
    
    
    
    13
    
    
    
    39
    
    
    
    Total real estate loans
    
    
    32
    
    
    
    17
    
    
    
    27
    
    
    
    68
    
    
    
    Other loans:Consumer loans:Automobile indirect
    
    
    219
    
    
    
    305
    
    
    
    700
    
    
    
    744
    
    
    
    102Automobile direct
    
    
    106
    
    
    
    142
    
    
    
    305
    
    
    
    230
    
    
    
    72Other secured
    
    
    1
    
    
    
    23
    
    
    
    14
    
    
    
    8
    
    
    
    102Lines of credit/unsecured
    
    
    190
    
    
    
    249
    
    
    
    376
    
    
    
    156
    
    
    
    127Total consumer loans
    
    
    516
    
    
    
    719
    
    
    
    1,395
    
    
    
    1,138
    
    
    
    403Commercial non-mortgage
    
    
    37
    
    
    
    22
    
    
    
    48
    
    
    
    5
    
    
    
    Total recoveries
    
    
    585
    
    
    
    758
    
    
    
    1,470
    
    
    
    1,211
    
    
    
    403Net charge-offs
    
    
    4,410
    
    
    
    3,268
    
    
    
    3,610
    
    
    
    3,755
    
    
    
    6,847Additions charged to operations
    
    
    7,652
    
    
    
    6,171
    
    
    
    3,268
    
    
    
    2,565
    
    
    
    6,120Balance at end of period
    
    $
    12,310
    
    
    $
    9,068
    
    
    $
    6,165
    
    
    $
    6,507
    
    
    $
    7,697Ratio of net charge-offs during the period to average loans outstanding
during the period
    
    
    0.31
    %
    
    
    0.30
    %
    
    
    0.39
    %
    
    
    0.37
    %
    
    
    0.63
    %Ratio of net charge-offs during the period to average non-performing assets
    
    
    38.42
    %
    
    
    60.85
    %
    
    
    86.16
    %
    
    
    82.17
    %
    
    
    99.84
    %Allowance as a percentage of non-performing loans
    
    
    97.29
    %
    
    
    191.11
    %
    
    
    175.49
    %
    
    
    193.03
    %
    
    
    167.51
    %Allowance as a percentage of total loans (end of period)
    
    
    1.10
    %
    
    
    0.73
    %
    
    
    0.67
    %
    
    
    0.67
    %
    
    
    0.72
    %
  20




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##### Table of Contents



December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent ofLoans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans in
    
    
    
    
    
    
    Loans inEach
    
    
    
    
    
    
    Each
    
    
    
    
    
    
    Each
    
    
    
    
    
    
    Each
    
    
    
    
    
    
    EachCategory to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category to
    
    
    
    
    
    
    Category toAmount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total Loans(Dollars in thousands)Real estate loans:One-to four-family
    
    $
    2,553
    
    
    
    39.85
    %
    
    $
    1,675
    
    
    
    39.96
    %
    
    $
    1,201
    
    
    
    36.40
    %
    
    $
    449
    
    
    
    29.33
    %
    
    $
    311
    
    
    
    25.35
    %Commercial
    
    
    6,457
    
    
    
    40.52
    
    
    
    4,175
    
    
    
    34.92
    
    
    
    2,597
    
    
    
    27.58
    
    
    
    2,025
    
    
    
    18.97
    
    
    
    659
    
    
    
    9.26Home equity
    
    
    556
    
    
    
    8.67
    
    
    
    460
    
    
    
    8.08
    
    
    
    170
    
    
    
    9.31
    
    
    
    182
    
    
    
    8.66
    
    
    
    86
    
    
    
    7.96Consumer loans:Automobile indirect
    
    
    262
    
    
    
    0.96
    
    
    
    503
    
    
    
    3.11
    
    
    
    946
    
    
    
    11.39
    
    
    
    2,232
    
    
    
    22.63
    
    
    
    3,608
    
    
    
    33.94Automobile direct
    
    
    374
    
    
    
    5.10
    
    
    
    262
    
    
    
    5.84
    
    
    
    278
    
    
    
    10.81
    
    
    
    526
    
    
    
    15.68
    
    
    
    1,848
    
    
    
    18.29Other secured
    
    
    25
    
    
    
    1.09
    
    
    
    15
    
    
    
    1.13
    
    
    
    13
    
    
    
    1.38
    
    
    
    9
    
    
    
    1.52
    
    
    
    364
    
    
    
    1.70Lines of credit/unsecured
    
    
    701
    
    
    
    1.32
    
    
    
    639
    
    
    
    1.21
    
    
    
    626
    
    
    
    1.79
    
    
    
    694
    
    
    
    2.20
    
    
    
    592
    
    
    
    2.68Commercial non-mortgage
    
    
    1,382
    
    
    
    2.49
    
    
    
    1,339
    
    
    
    5.75
    
    
    
    334
    
    
    
    1.34
    
    
    
    390
    
    
    
    1.01
    
    
    
    229
    
    
    
    0.82Total
    
    $
    12,310
    
    
    
    100.00
    %
    
    $
    9,068
    
    
    
    100.00
    %
    
    $
    6,165
    
    
    
    100.00
    %
    
    $
    6,507
    
    
    
    100.00
    %
    
    $
    7,697
    
    
    
    100.00
    %
  21




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##### Table of Contents



Investment Activities
         22




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##### Table of Contents



December 31,2009
    
    
    2008
    
    
    2007Amortized
    
    
    
    
    
    
    Amortized
    
    
    
    
    
    
    AmortizedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair Value(Dollars in thousands)Available for sale:US Government and Agency bonds
    
    $
    47,994
    
    
    $
    47,438
    
    
    $
    18,502
    
    
    $
    18,740
    
    
    $
    35,006
    
    
    $
    35,152SBA Pools
    
    
    6,565
    
    
    
    6,492
    
    
    
    8,313
    
    
    
    8,100
    
    
    
    
    
    
    
    Collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    7,940
    
    
    
    7,940
    
    
    
    21,496
    
    
    
    19,616Agency collateralized mortgage obligations
    
    
    226,242
    
    
    
    228,501
    
    
    
    313,391
    
    
    
    310,065
    
    
    
    347,376
    
    
    
    349,234Agency mortgage-backed securities
    
    
    197,437
    
    
    
    201,627
    
    
    
    137,338
    
    
    
    138,171
    
    
    
    137,678
    
    
    
    138,873Total available for sale
    
    
    478,238
    
    
    
    484,058
    
    
    
    485,484
    
    
    
    483,016
    
    
    
    541,556
    
    
    
    542,875Held to maturity:US Government and Agency bonds
    
    
    14,991
    
    
    
    15,131
    
    
    
    9,992
    
    
    
    10,143
    
    
    
    
    
    
    
    Municipal bonds
    
    
    29,306
    
    
    
    29,900
    
    
    
    9,384
    
    
    
    9,642
    
    
    
    
    
    
    
    Agency collateralized mortgage obligations
    
    
    56,414
    
    
    
    57,390
    
    
    
    12,304
    
    
    
    12,696
    
    
    
    5,688
    
    
    
    5,683Agency mortgage-backed securities
    
    
    154,013
    
    
    
    158,393
    
    
    
    140,663
    
    
    
    144,098
    
    
    
    14,403
    
    
    
    14,519Total held to maturity
    
    
    254,724
    
    
    
    260,814
    
    
    
    172,343
    
    
    
    176,579
    
    
    
    20,091
    
    
    
    20,202Total investment securities
    
    
    732,962
    
    
    
    744,872
    
    
    
    657,827
    
    
    
    659,595
    
    
    
    561,647
    
    
    
    563,077Federal Home Loan Bank stock
    
    
    14,147
    
    
    
    14,147
    
    
    
    18,069
    
    
    
    18,069
    
    
    
    6,241
    
    
    
    6,241Total securities
    
    $
    747,109
    
    
    $
    759,019
    
    
    $
    675,896
    
    
    $
    677,664
    
    
    $
    567,888
    
    
    $
    569,318
  23




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##### Table of Contents



1 year or less
    
    
    Over 1 to 5 years
    
    
    Over 5 to 10 years
    
    
    Over 10 years
    
    
    Total SecuritiesWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAmortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    AverageCost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Fair Value(Dollars in thousands)Available for sale:US Government and Agency bonds
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    42,994
    
    
    
    3.22
    %
    
    $
    5,000
    
    
    
    4.99
    %
    
    $
    47,994
    
    
    
    3.40
    %
    
    $
    47,438SBA pools
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,565
    
    
    
    2.38
    
    
    
    
    
    
    
    
    
    
    
    6,565
    
    
    
    2.38
    
    
    
    6,492Agency collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,260
    
    
    
    5.28
    
    
    
    194,982
    
    
    
    2.27
    
    
    
    226,242
    
    
    
    2.69
    
    
    
    228,501Agency mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    7,355
    
    
    
    5.28
    
    
    
    6,291
    
    
    
    4.65
    
    
    
    183,791
    
    
    
    3.56
    
    
    
    197,437
    
    
    
    3.66
    
    
    
    201,627Total available for sale
    
    
    
    
    
    
    
    
    
    
    7,355
    
    
    
    5.28
    
    
    
    87,110
    
    
    
    4.00
    
    
    
    383,773
    
    
    
    2.92
    
    
    
    478,238
    
    
    
    3.16
    
    
    
    484,058Held to maturity:US Government and Agency bonds
    
    
    
    
    
    
    
    
    
    
    14,991
    
    
    
    3.21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,991
    
    
    
    3.21
    
    
    
    15,131Municipal bonds
    
    
    
    
    
    
    
    
    
    
    1,322
    
    
    
    3.51
    
    
    
    8,563
    
    
    
    3.70
    
    
    
    19,421
    
    
    
    3.94
    
    
    
    29,306
    
    
    
    3.85
    
    
    
    29,900Agency collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,654
    
    
    
    3.63
    
    
    
    10,760
    
    
    
    3.26
    
    
    
    56,414
    
    
    
    3.56
    
    
    
    57,390Agency mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,626
    
    
    
    3.73
    
    
    
    120,387
    
    
    
    4.41
    
    
    
    154,013
    
    
    
    4.26
    
    
    
    158,393Total held to maturity
    
    
    
    
    
    
    
    
    
    
    16,313
    
    
    
    3.23
    
    
    
    87,843
    
    
    
    3.68
    
    
    
    150,568
    
    
    
    4.27
    
    
    
    254,724
    
    
    
    4.00
    
    
    
    260,814Total investment securities
    
    $
    
    
    
    
    
    %
    
    $
    23,668
    
    
    
    3.87
    %
    
    $
    174,953
    
    
    
    3.84
    %
    
    $
    534,341
    
    
    
    3.30
    %
    
    $
    732,962
    
    
    
    3.45
    %
    
    $
    744,872
  24




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##### Table of Contents



Sources of Funds
 General.
 Deposits. ®
   Year Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Opening balance
    
    $
    1,548,090
    
    
    $
    1,297,593
    
    
    $
    1,234,881Net deposits and withdrawals
    
    
    214,209
    
    
    
    214,968
    
    
    
    25,639Interest credited
    
    
    34,366
    
    
    
    35,529
    
    
    
    37,073Ending balance
    
    $
    1,796,665
    
    
    $
    1,548,090
    
    
    $
    1,297,593Net increase (decrease)
    
    $
    248,575
    
    
    $
    250,497
    
    
    $
    62,712Percent increase (decrease)
    
    
    16.06
    %
    
    
    19.30
    %
    
    
    5.08
    %
  25




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##### Table of Contents



December 31,2009
    
    
    2008
    
    
    2007Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total(Dollars in thousands)Transaction and Savings Deposits:Non-interest bearing demand
    
    $
    193,581
    
    
    
    10.77
    %
    
    $
    172,395
    
    
    
    11.13
    %
    
    $
    190,163
    
    
    
    14.66
    %Interest bearing demand
    
    
    268,063
    
    
    
    14.92
    
    
    
    98,884
    
    
    
    6.39
    
    
    
    71,934
    
    
    
    5.54Savings
    
    
    143,506
    
    
    
    7.99
    
    
    
    144,530
    
    
    
    9.34
    
    
    
    156,129
    
    
    
    12.03Money market
    
    
    549,619
    
    
    
    30.59
    
    
    
    482,525
    
    
    
    31.17
    
    
    
    414,483
    
    
    
    31.94IRA
    
    
    8,710
    
    
    
    0.49
    
    
    
    8,188
    
    
    
    0.53
    
    
    
    8,116
    
    
    
    0.63Total non-certificates
    
    
    1,163,479
    
    
    
    64.76
    
    
    
    906,522
    
    
    
    58.56
    
    
    
    840,825
    
    
    
    64.80Certificates:0.00-1.99%
    
    
    343,476
    
    
    
    19.12
    
    
    
    11,078
    
    
    
    0.71
    
    
    
    89
    
    
    
    0.012.00-3.99%
    
    
    208,042
    
    
    
    11.58
    
    
    
    411,501
    
    
    
    26.58
    
    
    
    22,973
    
    
    
    1.774.00-5.99%
    
    
    81,438
    
    
    
    4.53
    
    
    
    218,989
    
    
    
    14.15
    
    
    
    433,155
    
    
    
    33.386.00% and over
    
    
    230
    
    
    
    0.01
    
    
    
    
    
    
    
    
    
    
    
    551
    
    
    
    0.04Total certificates
    
    
    633,186
    
    
    
    35.24
    
    
    
    641,568
    
    
    
    41.44
    
    
    
    456,768
    
    
    
    35.20Total deposits
    
    $
    1,796,665
    
    
    
    100.00
    %
    
    $
    1,548,090
    
    
    
    100.00
    %
    
    $
    1,297,593
    
    
    
    100.00
    %
  26




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##### Table of Contents



0.00-1.99%
    
    
    2.00-3.99%
    
    
    4.00-5.99%
    
    
    6.00% and over
    
    
    Total
    
    
    Percent of Total(Dollars in thousands)Certificates maturing in quarter ending:March 31, 2010
    
    $
    92,080
    
    
    $
    27,435
    
    
    $
    6,831
    
    
    $
    
    
    
    $
    126,346
    
    
    
    19.96
    %June 30, 2010
    
    
    124,888
    
    
    
    24,427
    
    
    
    11,198
    
    
    
    
    
    
    
    160,513
    
    
    
    25.35September 30, 2010
    
    
    41,900
    
    
    
    2,844
    
    
    
    6,892
    
    
    
    
    
    
    
    51,636
    
    
    
    8.15December 31, 2010
    
    
    66,212
    
    
    
    8,724
    
    
    
    2,580
    
    
    
    230
    
    
    
    77,746
    
    
    
    12.28March 31, 2011
    
    
    10,836
    
    
    
    10,428
    
    
    
    1,229
    
    
    
    
    
    
    
    22,493
    
    
    
    3.55June 30, 2011
    
    
    7,552
    
    
    
    23,206
    
    
    
    2,187
    
    
    
    
    
    
    
    32,945
    
    
    
    5.20September 30, 2011
    
    
    8
    
    
    
    12,458
    
    
    
    1,630
    
    
    
    
    
    
    
    14,096
    
    
    
    2.23December 31, 2011
    
    
    
    
    
    
    83,632
    
    
    
    2,288
    
    
    
    
    
    
    
    85,920
    
    
    
    13.57March 31, 2012
    
    
    
    
    
    
    1,775
    
    
    
    979
    
    
    
    
    
    
    
    2,754
    
    
    
    0.43June 30, 2012
    
    
    
    
    
    
    649
    
    
    
    3,949
    
    
    
    
    
    
    
    4,598
    
    
    
    0.73September 30, 2012
    
    
    
    
    
    
    1,251
    
    
    
    1,536
    
    
    
    
    
    
    
    2,787
    
    
    
    0.44December 31, 2012
    
    
    
    
    
    
    1,403
    
    
    
    1,003
    
    
    
    
    
    
    
    2,406
    
    
    
    0.38Thereafter
    
    
    
    
    
    
    9,810
    
    
    
    39,136
    
    
    
    
    
    
    
    48,946
    
    
    
    7.73Total
    
    $
    343,476
    
    
    $
    208,042
    
    
    $
    81,438
    
    
    $
    230
    
    
    $
    633,186
    
    
    
    100.00
    %Percent of Total
    
    
    54.24
    %
    
    
    32.86
    %
    
    
    12.86
    %
    
    
    0.04
    %
    
    
    100.00
    %
  Maturity3 Months
    
    
    Over 3 to 6
    
    
    Over 6 to 12
    
    
    Over 12or less
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    Total(Dollars in thousands)Certificates less than $100,000
    
    $
    34,075
    
    
    $
    22,901
    
    
    $
    26,377
    
    
    $
    47,707
    
    
    $
    131,060Certificates of $100,000 or more
    
    
    13,332
    
    
    
    29,489
    
    
    
    44,601
    
    
    
    78,427
    
    
    
    165,849Public funds (1)
    
    
    78,939
    
    
    
    108,123
    
    
    
    58,404
    
    
    
    90,811
    
    
    
    336,277Total certificates
    
    $
    126,346
    
    
    $
    160,513
    
    
    $
    129,382
    
    
    $
    216,945
    
    
    $
    633,186
 
 (1)
    
    Deposits from governmental and other public entities.  27




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##### Table of Contents



Borrowings .
    Year Ended December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)Maximum balance:FHLB advances
    
    $
    424,872
    
    
    $
    410,841
    
    
    $
    128,451Repurchase agreement
    
    
    25,000
    
    
    
    25,000
    
    
    
    Other borrowings
    
    
    10,000
    
    
    
    
    
    
    
    Average balance outstanding:FHLB advances
    
    $
    346,274
    
    
    $
    242,399
    
    
    $
    78,920Repurchase agreement
    
    
    25,000
    
    
    
    18,056
    
    
    
    Other borrowings
    
    
    2,083
    
    
    
    
    
    
    
    
  28




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##### Table of Contents



At December 31,2009
    
    
    2008
    
    
    2007(Dollars in thousands)FHLB advances at end of period
    
    $
    312,504
    
    
    $
    410,841
    
    
    $
    128,451Repurchase agreement at end of period
    
    
    25,000
    
    
    
    25,000
    
    
    
    Other borrowings at end of period
    
    
    10,000
    
    
    
    
    
    
    
    Weighted average rate of FHLB advances during the period
    
    
    4.06
    %
    
    
    4.27
    %
    
    
    5.13
    %Weighted average rate of FHLB advances at end of period
    
    
    4.13
    %
    
    
    3.80
    %
    
    
    4.91
    %Weighted average rate of repurchase agreement during the
period
    
    
    2.83
    %
    
    
    1.62
    %
    
    
    Weighted average rate of repurchase agreement at end of period
    
    
    3.22
    %
    
    
    1.62
    %
    
    
    Weighted average rate of other borrowings during the period
    
    
    6.00
    %
    
    
    
    
    
    
    Weighted average rate of other borrowings at end of period
    
    
    6.00
    %
    
    
    
    
    
    
    
 How We Are Regulated
 General.
   ViewPoint Bank.
 Office of Thrift Supervision.
   29




---



##### Table of Contents



Insurance of Accounts and Regulation by the FDIC.
     30




---



##### Table of Contents



Transactions with Affiliates .
 ViewPoint Financial Group and ViewPoint MHC.
  Capital Requirements for ViewPoint Bank.
     31




---



##### Table of Contents



Capital Requirements for ViewPoint Financial Group and ViewPoint MHC
 Community Reinvestment and Consumer Protection Laws.
  Bank Secrecy Act / Anti-Money Laundering Laws.
  32




---



##### Table of Contents



Limitations on Dividends and Other Capital Distributions.
   Federal Securities Law.
   Taxation
 Federal Taxation
 General
 Method of Accounting
 Minimum Tax
  33




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##### Table of Contents



Net Operating Loss Carryovers
 Corporate Dividends-Received Deduction
 State Taxation
  Subsidiary and Other Activities
   Competition
  Executive Officers of ViewPoint Financial Group and ViewPoint Bank
  Garold (Gary) R. Base.
  34




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##### Table of Contents



Mark E. Hord.
 Pathie (Patti) E. McKee.
 James C. Parks .
 Rick M. Robertson.
 Employees
  Internet Website
 viewpointbank.com viewpointfinancialgroup.com vpbmortgage.com
 
 Item 1A. Risk Factors
   35




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##### Table of Contents



The United States economy remains weak and unemployment levels are high. A prolonged economic
downturn, especially one affecting our geographic market area, will adversely affect our business
and financial results.
    If economic conditions deteriorate in the State of Texas, our results of operations and financial
condition could be adversely impacted as borrowers ability to repay loans declines and the value
of the collateral securing loans decreases.
  Our loan portfolio possesses increased risk due to our percentage of commercial real estate and
commercial non-mortgage loans.
    36




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##### Table of Contents



Our consumer loan portfolio possesses increased risk.
  Our business may be adversely affected by credit risk associated with residential property.
  We are subject to credit risks in connection with the concentration of adjustable rate loans in our
portfolio.
  If our non-performing assets increase, our earnings will suffer.
   37




---



##### Table of Contents



If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings could
decrease.
    Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations
may adversely affect our operations and our income.
    A legislative proposal has been introduced that would eliminate the Office of Thrift Supervision,
ViewPoint Banks and ViewPoint Financial Groups primary federal regulator, which would require
ViewPoint Financial Group to become a bank holding company.
   38




---



##### Table of Contents



Changes in interest rates could adversely affect our results of operations and financial condition.
       Our strategies to modify our interest rate risk profile may be difficult to implement.
   39




---



##### Table of Contents



Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.
   Our securities portfolio may be negatively impacted by fluctuations in market value and interest
rates, which may have an adverse effect on our financial condition.
  Higher Federal Deposit Insurance Corporation insurance premiums and special assessments will
adversely affect our earnings.
   40




---



##### Table of Contents



If we are unsuccessful in raising additional capital now or in the future, our financial condition,
results of operations and business prospects may be adversely affected.
   Strong competition within our market area may limit our growth and profitability.
  System failure or breaches of our network security could subject us to increased operating costs as
well as litigation and other liabilities.
  
 Item 1B.
    
    Unresolved Staff Comments
   41




---



##### Table of Contents



Item 2.
    
    Properties
      42




---



##### Table of Contents



LeaseSquare
    
    
    Owned or
    
    
    Expiration
    
    
    Net Book Value atLocation
    
    Footge
    
    
    Leased
    
    
    Date
    
    
    12/31/09(Dollars in thousands)ADMINISTRATIVE OFFICES:Contact Center
    
    
    31,762
    
    

    
    Owned
    
    
    
    N/A
    
    
    $
    2,5762101 Custer Road
Plano, TX 75075Pitman East
    
    
    54,409
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    4,1351201 West 15th Street
Plano, TX 75075Pitman West (Main Office)
    
    
    53,022
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    1,6471309 West 15th Street
Plano, TX 75075Richardson Annex
    
    
    3,800
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    50700 East Arapaho Road 
Richardson, TX 75081Purchase Program office
    
    
    657
    
    

    
    Leased
    
    
    
    1/31/2011
    
    
    
    N/A13984 West Bowles Avenue, Suite 200
Littleton, CO 80127BANK OFFICES:Addison
    
    
    6,730
    
    

    
    Leased
    
    
    
    4/30/2013
    
    
    
    N/A4560 Beltline Road, Suite 100
Addison, TX 75001Allen
    
    
    4,500
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    340321 East McDermott Drive 
Allen, TX 75002Carrollton
    
    
    6,800
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    1,1091801 Keller Springs Road 
Carrollton, TX 75006
  43




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##### Table of Contents



LeaseSquare
    
    
    Owned or
    
    
    Expiration
    
    
    Net Book Value atLocation
    
    Footge
    
    
    Leased
    
    
    Date
    
    
    12/31/09(Dollars in thousands)Coppell
    
    
    5,674
    
    

    
    Owned
    
    
    
    N/A
    
    
    $
    1,538687 Denton Tap Road
Coppell, TX 75019East Plano
    
    
    5,900
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    1,2192501 East Plano Parkway 
Plano, TX 75074Frisco
    
    
    4,800
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    9723833 Preston Road 
Frisco, TX 75034Garland
    
    
    4,800
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    7792218 North Jupiter Road
Garland, TX 75046Grand Prairie Albertsons*
    
    
    452
    
    

    
    Leased
    
    
    
    8/8/2012
    
    
    
    N/A215 North Carrier Parkway
Grand Prairie, TX 75050Grapevine
    
    
    3,708
    
    

    
    Leased
    
    
    
    12/31/2028
    
    
    
    N/A301 South Park Boulevard
Grapevine, TX 76051Lake Highlands Albertsons*
    
    
    391
    
    

    
    Leased
    
    
    
    11/14/2011
    
    
    
    N/A10203 East Northwest Highway 
Dallas, TX 75238McKinney
    
    
    4,500
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    6432500 West Virginia Parkway 
McKinney, TX 75071McKinney Mini
    
    
    1,800
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    83231 North Chestnut Street
McKinney, TX 75069Northeast Tarrant County
    
    
    4,338
    
    
    
    Owned with Ground Lease
    
    
    
    6/30/2018
    
    
    
    1,6463040 State Highway 121
Euless, TX 76039Oak Cliff
    
    
    2,800
    
    

    
    Leased
    
    
    
    9/30/2013
    
    
    
    N/A2498 West Illinois Avenue 
Dallas, TX 75233
  44




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##### Table of Contents



LeaseSquare
    
    
    Owned or
    
    
    Expiration
    
    
    Net Book Value atLocation
    
    Footge
    
    
    Leased
    
    
    Date
    
    
    12/31/09(Dollars in thousands)Plano Central
    
    
    1,681
    
    
    
    Owned
    
    
    
    N/A
    
    
    $
    787(Located inside Pitman East admin. office) 
1201 West 15th Stret
Plano, TX 75075Richardson
    
    
    22,000
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    726720 East Arapaho Road 
Richardson, TX 75081Richardson Mini
    
    
    2,500
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    941775 North Plano Road
Richardson, TX 75081Tollroad Express
    
    
    2,000
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    5025900 West Park Boulevard
Plano, TX 75093West Allen
    
    
    4,800
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    775225 South Custer Road 
Allen, TX 75013West Frisco
    
    
    4,338
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    1,8082975 Main Street
Frisco, TX 75034West Plano
    
    
    22,800
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    1,7775400 Independence Parkway
Plano, TX 75075West Richardson
    
    
    4,500
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    4941280 West Campbell Road
Richardson, TX 75080Wylie
    
    
    4,338
    
    

    
    Owned
    
    
    
    N/A
    
    
    
    1,8213490 FM 544
Wylie, TX 75098
 *
    
    Represents in-store location.  45




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##### Table of Contents



LeaseSquare
    
    
    Owned or
    
    
    Expiration
    
    
    Net Book Value atLocation
    
    Footge
    
    
    Leased
    
    
    Date
    
    
    12/31/09(Dollars in thousands)VPBM MORTGAGE LOAN PRODUCTION OFFICES:Arlington LPO
    
    
    1,074
    
    
    
    Leased
    
    
    
    7/1/2010
    
    
    
    N/A2340 West Interstate 20 Suites 210 and 212
Arlington, TX 76017Austin LPO
    
    
    1,555
    
    

    
    Leased
    
    

    
    5/31/2010
    
    
    
    N/A3839 Bee Cave Road Suite 204
Austin, TX 78746Clear Lake/Nassau Bay LPO
    
    
    2,419
    
    

    
    Leased
    
    

    
    6/30/2011
    
    
    
    N/A1120 NASA Parkway Suites 308 and 320
Houston, TX 77058Coppell LPO
    
    
    2,540
    
    

    
    Leased
    
    

    
    8/31/2012
    
    
    
    N/A275 South Denton Tap Road Suite 100
Coppell, TX 75019Dallas LPO
    
    
    7,670
    
    

    
    Leased
    
    

    
    12/31/2010
    
    
    
    N/A13101 Preston Road Suite 100
Dallas, TX 75240Ennis LPO
    
    
    100
    
    

    
    Leased
    
    

    
    6/30/2010
    
    
    
    N/A1905 West Ennis Avenue Suite 240B 
Ennis, TX 75119Gulfgate Center LPO
    
    
    3,380
    
    

    
    Leased
    
    

    
    8/31/2012
    
    
    
    N/A1800 Post Oak Boulevard Suite 400
Houston, TX 77056Park Cities LPO
    
    
    4,654
    
    

    
    Leased
    
    

    
    4/30/2011
    
    
    
    N/A5944 Luther Lane Suite 1000
Dallas, TX 75225Plano LPO
    
    
    N/A
    
    

    
    Owned
    
    

    
    N/A
    
    
    
    N/A(Located inside Pitman West admin. office)1309 West 15th Stret 
Plano, TX 75075
  46




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##### Table of Contents



LeaseSquare
    
    
    Owned or
    
    
    Expiration
    
    
    Net Book Value atLocation
    
    Footge
    
    
    Leased
    
    
    Date
    
    
    12/31/09(Dollars in thousands)San Antonio LPO
    
    
    3,212
    
    

    
    Leased
    
    

    
    11/30/2012
    
    
    
    N/A6800 Park Ten Boulevard 
San Antonio, TX 78213Sonterra LPO
    
    
    2,136
    
    

    
    Leased
    
    


    
    MTM
    *
    
    
    N/A325 Sonterra Boulevard East Suite 220
San Antonio, TX 78258Southlake LPO
    
    
    2,400
    
    

    
    Leased
    
    

    
    3/31/2013
    
    
    
    N/A751 East Southlake Boulevard Suite 120
Southlake, TX 76092Waxahachie LPO
    
    
    1,273
    
    

    
    Leased
    
    

    
    5/31/2011
    
    
    
    N/A102 Professional Place Suite 101
Waxahachie, TX 75165Weatherford LPO
    
    
    1,422
    
    

    
    Leased
    
    

    
    6/30/2013
    
    
    
    N/A300 South Main Street Suite 204
Weatherford, TX 76086COMMERCIAL REAL ESTATE LOAN PRODUCTION OFFICE:Houston LPO
    
    
    400
    
    

    
    Leased
    
    


    
    MTM
    *
    
    
    N/A7500 San Felipe Road Suite 600
Houston, TX 77063
 *
    
    Month-to-month   
 Item 3.
    
    Legal Proceedings
  
 Item 4.
    
    (Removed and Reserved).
  47




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##### Table of Contents



PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities
   Market Price Range
    
    
    DividendsHigh
    
    
    Low
    
    
    Declared2009Quarter ended March 31, 2009
    
    $
    15.70
    
    
    $
    10.57
    
    
    $
    0.08Quarter ended June 30, 2009
    
    
    16.03
    
    
    
    12.95
    
    
    
    0.05Quarter ended September 30, 2009
    
    
    14.74
    
    
    
    12.47
    
    
    
    0.05Quarter ended December 31, 2009
    
    
    14.41
    
    
    
    12.94
    
    
    
    0.052008Quarter ended March 31, 2008
    
    $
    16.96
    
    
    $
    14.54
    
    
    $
    0.06Quarter ended June 30, 2008
    
    
    17.00
    
    
    
    14.51
    
    
    
    0.07Quarter ended September 30, 2008
    
    
    17.81
    
    
    
    14.48
    
    
    
    0.08Quarter ended December 31, 2008
    
    
    17.81
    
    
    
    14.62
    
    
    
    0.08
   Equity Compensation Plans
  WeightedAverage
    
    
    Number of SecuritiesNumber of Securities to be Issued upon
    
    
    Exercise
    
    
    Remaining Available forExercise of Outstanding Options
    
    
    Price
    
    
    Issuance under Plan2007 Equity Incentive Plan
    
    
    261,704
    
    
    $
    17.16
    
    
    
    932,779
    (1)
 
 (1)
    
    Includes 33,990 shares under the plan that may be awarded as restricted stock.  48




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##### Table of Contents



Shareholder Return Performance Graph Presentation
  
 10/3/2006
    
    
    12/31/2006
    
    
    12/31/2007
    
    
    12/31/2008
    
    
    12/31/2009ViewPoint Financial Group
    
    $
    100.00
    
    
    $
    113.01
    
    
    $
    111.53
    
    
    $
    109.81
    
    
    $
    100.23Hemscott Group Index
    
    
    100.00
    
    
    
    106.88
    
    
    
    62.63
    
    
    
    44.18
    
    
    
    36.87Nasdaq Market Index
    
    
    100.00
    
    
    
    107.19
    
    
    
    117.85
    
    
    
    69.90
    
    
    
    101.58
  49




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##### Table of Contents



Item 6.
    
    Selected Financial Data
  At and For the Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Selected Financial Condition Data:Total assets
    
    $
    2,379,504
    
    
    $
    2,213,415
    
    
    $
    1,658,204
    
    
    $
    1,529,760
    
    
    $
    1,428,062Loans held for sale
    
    
    341,431
    
    
    
    159,884
    
    
    
    13,172
    
    
    
    3,212
    
    
    
    2,306Loans receivable, net
    
    
    1,108,159
    
    
    
    1,239,708
    
    
    
    908,650
    
    
    
    965,452
    
    
    
    1,073,167Securities available for sale, at fair value:U.S. Government and federal agency securities
    
    
    53,930
    
    
    
    26,840
    
    
    
    35,152
    
    
    
    29,475
    
    
    
    21,892Agency mortgage-backed and collateralized mortgage obligations
    
    
    430,128
    
    
    
    448,236
    
    
    
    488,107
    
    
    
    295,048
    
    
    
    79,668Collateralized debt obligations
    
    
    
    
    
    
    7,940
    
    
    
    19,616
    
    
    
    
    
    
    
    Securities held to maturity, at amortized cost:U.S. Government and federal agency securities
    
    
    14,991
    
    
    
    9,992
    
    
    
    20,091
    
    
    
    11,271
    
    
    
    18,007Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,009Municipal bonds
    
    
    29,306
    
    
    
    9,384
    
    
    
    
    
    
    
    
    
    
    
    Agency mortgage-backed and collateralized mortgage obligations
    
    
    210,427
    
    
    
    152,967
    
    
    
    
    
    
    
    
    
    
    
    20,946Federal Home Loan Bank stock
    
    
    14,147
    
    
    
    18,069
    
    
    
    6,241
    
    
    
    3,724
    
    
    
    3,958Bank-owned life insurance
    
    
    28,117
    
    
    
    27,578
    
    
    
    26,497
    
    
    
    
    
    
    
    Deposits
    
    
    1,796,665
    
    
    
    1,548,090
    
    
    
    1,297,593
    
    
    
    1,234,881
    
    
    
    1,257,727Borrowings
    
    
    347,504
    
    
    
    435,841
    
    
    
    128,451
    
    
    
    55,762
    
    
    
    47,680Shareholders equity
    
    
    205,682
    
    
    
    194,139
    
    
    
    203,794
    
    
    
    214,778
    
    
    
    101,181Selected Operations Data:Total interest income
    
    $
    108,301
    
    
    $
    97,243
    
    
    $
    84,232
    
    
    $
    72,726
    
    
    $
    64,421Total interest expense
    
    
    49,286
    
    
    
    46,169
    
    
    
    41,121
    
    
    
    31,386
    
    
    
    23,342Net interest income
    
    
    59,015
    
    
    
    51,074
    
    
    
    43,111
    
    
    
    41,340
    
    
    
    41,079Provision for loan losses
    
    
    7,652
    
    
    
    6,171
    
    
    
    3,268
    
    
    
    2,565
    
    
    
    6,120Net interest income after provision for loan losses
    
    
    51,363
    
    
    
    44,903
    
    
    
    39,843
    
    
    
    38,775
    
    
    
    34,959Service charges and fees
    
    
    18,866
    
    
    
    19,779
    
    
    
    22,389
    
    
    
    20,589
    
    
    
    20,359Net gain on sale of loans
    
    
    16,591
    
    
    
    9,390
    
    
    
    1,298
    
    
    
    199
    
    
    
    351Loan servicing fees
    
    
    239
    
    
    
    252
    
    
    
    305
    
    
    
    262
    
    
    
    383Brokerage fees
    
    
    347
    
    
    
    434
    
    
    
    602
    
    
    
    557
    
    
    
    548Gain on sale of membership interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    855Bank-owned life insurance income
    
    
    539
    
    
    
    1,081
    
    
    
    460
    
    
    
    
    
    
    
    Gain on redemption of Visa, Inc. shares
    
    
    
    
    
    
    771
    
    
    
    
    
    
    
    
    
    
    
    Impairment of collateralized debt obligations
    
    
    (12,246
    )
    
    
    (13,809
    )
    
    
    
    
    
    
    
    
    
    
    Gain on sale of available for sale securities
    
    
    2,377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Title fee income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384
    
    
    
    524Other non-interest income
    
    
    486
    
    
    
    966
    
    
    
    871
    
    
    
    1,443
    
    
    
    1,465Total non-interest income
    
    
    27,199
    
    
    
    18,864
    
    
    
    25,925
    
    
    
    23,434
    
    
    
    24,485Total non-interest expense
    
    
    74,932
    
    
    
    69,359
    
    
    
    57,957
    
    
    
    56,080
    
    
    
    56,720Income (loss) before income tax expense (benefit)
    
    
    3,630
    
    
    
    (5,592
    )
    
    
    7,811
    
    
    
    6,129
    
    
    
    2,724Income tax expense (benefit) 1
    
    
    960
    
    
    
    (2,277
    )
    
    
    2,744
    
    
    
    (3,557
    )
    
    
    Net income (loss) 1
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067
    
    
    $
    9,686
    
    
    $
    2,724
 
 1
    
    Until its conversion to a federally chartered savings bank on January 1, 2006,
ViewPoint Bank was a credit union, generally exempt from federal and state income taxes. As a
result of the change in tax status on January 1, 2006, ViewPoint Bank recorded a deferred tax asset
in the amount of $6.6 million, as well as a related tax benefit in the income statement of $6.1
million. The following table illustrates a reconciliation to pro forma net income for all periods
presented had ViewPoint Bank been subject to federal and state income taxes: 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in thousands)Historical net income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067
    
    
    $
    9,686
    
    
    $
    2,724Less: pro forma tax expense
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    (1,008
    )Less: tax benefit
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    6,108
    
    
    
    N/APro forma net income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067
    
    
    $
    3,578
    
    
    $
    1,716
  50




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##### Table of Contents



At and For the Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Selected Financial Ratios and Other Data (Unaudited):Performance Ratios:Return on assets (ratio of net income (loss) to average total assets)
    
    
    0.12
    %
    
    
    -0.17
    %
    
    
    0.32
    %
    
    
    0.65
    %
    
    
    0.19
    %Return on assets tax-effected
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.12
    %Return on equity (ratio of net income (loss) to average equity)
    
    
    1.35
    %
    
    
    -1.65
    %
    
    
    2.40
    %
    
    
    6.76
    %
    
    
    2.72
    %Return on equity tax effected
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    1.71
    %Interest rate spread:Average during period
    
    
    2.37
    %
    
    
    2.31
    %
    
    
    2.14
    %
    
    
    2.41
    %
    
    
    2.83
    %End of period
    
    
    2.30
    %
    
    
    2.11
    %
    
    
    2.14
    %
    
    
    2.19
    %
    
    
    2.78
    %Net interest margin
    
    
    2.73
    %
    
    
    2.87
    %
    
    
    2.92
    %
    
    
    3.00
    %
    
    
    3.13
    %Non-interest income to operating revenue
    
    
    20.07
    %
    
    
    16.25
    %
    
    
    23.53
    %
    
    
    24.37
    %
    
    
    27.54
    %Operating expense to average total assets
    
    
    3.27
    %
    
    
    3.66
    %
    
    
    3.62
    %
    
    
    3.79
    %
    
    
    4.00
    %Efficiency ratio 1
    
    
    76.10
    %
    
    
    82.82
    %
    
    
    83.95
    %
    
    
    86.58
    %
    
    
    86.51
    %Average interest earning assets to average interest bearing liabilities
    
    
    115.67
    %
    
    
    121.74
    %
    
    
    127.92
    %
    
    
    125.57
    %
    
    
    117.04
    %Dividend payout ratio
    
    
    92.58
    %
    
    
    N/M
    *
    
    
    41.74
    %
    
    
    N/A
    
    
    
    N/AAsset Quality Ratios:Non-performing assets to total assets at end of period
    
    
    0.70
    %
    
    
    0.29
    %
    
    
    0.26
    %
    
    
    0.26
    %
    
    
    0.36
    %Non-performing loans to total loans
    
    
    1.13
    %
    
    
    0.38
    %
    
    
    0.38
    %
    
    
    0.35
    %
    
    
    0.43
    %Allowance for loan losses to non-performing loans
    
    
    97.29
    %
    
    
    191.11
    %
    
    
    175.49
    %
    
    
    193.03
    %
    
    
    167.51
    %Allowance for loan losses to total loans
    
    
    1.10
    %
    
    
    0.73
    %
    
    
    0.67
    %
    
    
    0.67
    %
    
    
    0.72
    %Capital Ratios:Equity to total assets at end of period
    
    
    8.64
    %
    
    
    8.77
    %
    
    
    12.29
    %
    
    
    14.04
    %
    
    
    7.09
    %Average equity to average assets
    
    
    8.67
    %
    
    
    10.59
    %
    
    
    13.22
    %
    
    
    9.69
    %
    
    
    7.07
    %Other Data:Number of locations (including in-store banking centers and loan production offices)
    
    
    38
    
    
    
    45
    
    
    
    37
    
    
    
    34
    
    
    
    33Number of in-store banking centers
    
    
    2
    
    
    
    12
    
    
    
    12
    
    
    
    16
    
    
    
    18
 
 *
    
    Number is not meaningful.1
    
    Calculated by dividing total non-interest expense by net interest income plus
non-interest income, excluding impairment on securities.  51




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
   Critical Accounting Policies
  Allowance for Loan Loss.
   52




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Other-than-Temporary Impairments.
  , Recognition and Presentation of Other-Than-Temporary
Impairments
    53




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Business Strategy
  
    
    Continuing the growth and diversification of our loan portfolio.
 During the past five years, we have successfully transitioned our lending activities from a
predominantly consumer-driven model to a more diversified consumer and business lender by
emphasizing three key lending initiatives: our Purchase Program, through which we fund third
party mortgage bankers; residential mortgage lending through our own mortgage banking company;
and commercial real estate lending. Additionally, we will seek to diversify our loan portfolio
by increasing secured commercial and industrial lending to small to mid-size businesses in our
market area. Loan diversification improves our earnings because commercial real estate and
commercial and industrial loans generally have higher interest rates than residential mortgage
loans. Another benefit of commercial lending is that it improves the sensitivity of our
interest-earning assets because commercial loans typically have shorter terms than residential
mortgage loans and frequently have variable interest rates.
 
    
    Maintaining our historically high level of asset quality.
 We believe that strong asset quality is a key to long-term financial success. We have sought to
maintain a high level of asset quality and moderate credit risk by strictly adhering to our
strong lending policies, as evidenced by historical low charge-off ratios and non-performing
assets. Although we intend to continue our efforts to grow our loan portfolio, including
through commercial real estate and business lending, we intend to continue our philosophy of
managing credit exposures through our conservative approach to lending.
 
    
    Capturing our customers full relationship.
 We offer a wide range of products and services that provide diversification of revenue sources
and solidify our relationship with our customers. We focus on core retail and business
deposits, including savings and checking accounts, that lead to long-term customer retention.
Our recently introduced Absolute Checking account product, which offers a higher rate of
interest when required electronic transaction amounts and other requirements are satisfied,
provides cost savings and drives fee revenue while providing what we believe to be a stable
customer relationship. As part of our commercial lending process we cross-sell the entire
business banking relationship, including non-interest bearing deposits and business banking
products, such as online cash management, treasury management, wires, and direct deposit
/payment processing.
 
    
    Expanding our reach.
 In addition to deepening our relationships with existing customers, we intend to expand our
business to new customers by leveraging our well-established involvement in the community and by
selectively emphasizing products and services designed to meet their banking needs. We also
intend to continue to pursue expansion in our market area through growth of our branch network.
We may also consider the acquisition of other financial institutions or branches of other banks
in or contiguous to our market area, although currently no specific transactions are planned.
  54




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Comparison of Financial Condition at December 31, 2009, and December 31, 2008
 General.
 Loans.
 December 31,
    
    
    December 31,
    
    
    Dollar
    
    
    Percent2009
    
    
    2008
    
    
    Change
    
    
    Change(Dollars in thousands)Mortgage loans:One- to four-family
    
    $
    440,847
    
    
    $
    498,961
    
    
    $
    (58,114
    )
    
    
    (11.6
    %)Commercial real estate
    
    
    453,604
    
    
    
    436,483
    
    
    
    17,121
    
    
    
    3.9One- to four-family
construction
    
    
    6,195
    
    
    
    503
    
    
    
    5,692
    
    
    
    1,131.6Commercial construction
    
    
    879
    
    
    
    
    
    
    
    879
    
    
    
    N/MMortgage loans held for sale
    
    
    341,431
    
    
    
    159,884
    
    
    
    181,547
    
    
    
    113.5Home equity
    
    
    97,226
    
    
    
    101,021
    
    
    
    (3,795
    )
    
    
    (3.8
    )Total mortgage loans
    
    
    1,340,182
    
    
    
    1,196,852
    
    
    
    143,330
    
    
    
    12.0Automobile loans
    
    
    67,897
    
    
    
    111,870
    
    
    
    (43,973
    )
    
    
    (39.3
    )Other consumer loans
    
    
    26,998
    
    
    
    29,299
    
    
    
    (2,301
    )
    
    
    (7.9
    )Commercial non-mortgage loans
    
    
    27,983
    
    
    
    18,574
    
    
    
    9,409
    
    
    
    50.7Warehouse lines of credit
    
    
    
    
    
    
    53,271
    
    
    
    (53,271
    )
    
    
    (100.0
    )Total non-mortgage loans
    
    
    122,878
    
    
    
    213,014
    
    
    
    (90,136
    )
    
    
    (42.3
    )Gross loans
    
    $
    1,463,060
    
    
    $
    1,409,866
    
    
    $
    53,194
    
    
    
    3.8
    %
  55




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Texas
    
    
    89
    %Oklahoma
    
    
    4Louisiana
    
    
    2Illinois
    
    
    2California
    
    
    2Other*
    
    
    1100
    %
 
 *
    
    Other consists of Arizona, Georgia, New Mexico, Nevada, Oregon and Washington  Allowance
for Loan Losses.
  56




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57




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Foreclosed Assets.
 Cash and Cash Equivalents.
 Securities.
   58




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Deposits.
 December 31,
    
    
    December 31,
    
    
    Dollar
    
    
    Percent2009
    
    
    2008
    
    
    Change
    
    
    Change(Dollars in thousands)Non-interest bearing
demand
    
    $
    193,581
    
    
    $
    172,395
    
    
    $
    21,186
    
    
    
    12.3
    %Interest bearing demand
    
    
    268,063
    
    
    
    98,884
    
    
    
    169,179
    
    
    
    171.1Savings
    
    
    143,506
    
    
    
    144,530
    
    
    
    (1,024
    )
    
    
    (0.7
    )Money Market
    
    
    549,619
    
    
    
    482,525
    
    
    
    67,094
    
    
    
    13.9IRA savings
    
    
    8,710
    
    
    
    8,188
    
    
    
    522
    
    
    
    6.4Time
    
    
    633,186
    
    
    
    641,568
    
    
    
    (8,382
    )
    
    
    (1.3
    )Total deposits
    
    $
    1,796,665
    
    
    $
    1,548,090
    
    
    $
    248,575
    
    
    
    16.1
    %
   Borrowings.
   59




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Shareholders
Equity.
 December 31,
    
    
    December 31,
    
    
    Dollar
    
    
    Percent2009
    
    
    2008
    
    
    Change
    
    
    Change(Dollars in Thousands)Common stock
    
    $
    262
    
    
    $
    262
    
    
    $
    
    
    
    
    
    %Additional paid-in capital
    
    
    118,297
    
    
    
    115,963
    
    
    
    2,334
    
    
    
    2.0Retained Earnings
    
    
    111,188
    
    
    
    108,332
    
    
    
    2,856
    
    
    
    2.6Accumulated other
comprehensive income
(loss)
    
    
    3,802
    
    
    
    (1,613
    )
    
    
    5,415
    
    
    
    N/MUnearned ESOP shares
    
    
    (6,159
    )
    
    
    (7,097
    )
    
    
    938
    
    
    
    13.2Treasury stock
    
    
    (21,708
    )
    
    
    (21,708
    )
    
    
    
    
    
    
    Total shareholders equity
    
    $
    205,682
    
    
    $
    194,139
    
    
    $
    11,543
    
    
    
    5.9
    %
  Comparison of Results of Operation for the Years Ended December 31, 2009 and 2008
 General.
 Interest Income.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2009
    
    
    2008
    
    
    Change
    
    
    Change(Dollars in Thousands)Interest and dividend incomeLoans, including fees
    
    $
    84,197
    
    
    $
    66,386
    
    
    $
    17,811
    
    
    
    26.8
    %Securities
    
    
    23,436
    
    
    
    29,391
    
    
    
    (5,955
    )
    
    
    (20.3
    )Interest bearing deposits
in other financial
institutions
    
    
    652
    
    
    
    1,195
    
    
    
    (543
    )
    
    
    (45.4
    )Federal Home Loan Bank stock
    
    
    16
    
    
    
    271
    
    
    
    (255
    )
    
    
    (94.1
    )$
    108,301
    
    
    $
    97,243
    
    
    $
    11,058
    
    
    
    11.4
    %
  60




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##### Table of Contents



Interest Expense.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2009
    
    
    2008
    
    
    Change
    
    
    Change(Dollars in Thousands)Interest expenseDeposits
    
    $
    34,366
    
    
    $
    35,529
    
    
    $
    (1,163
    )
    
    
    (3.3
    %)Federal Home Loan Bank
advances
    
    
    14,056
    
    
    
    10,340
    
    
    
    3,716
    
    
    
    35.9Federal Reserve Bank advances
    
    
    29
    
    
    
    
    
    
    
    29
    
    
    
    N/MRepurchase agreement
    
    
    707
    
    
    
    300
    
    
    
    407
    
    
    
    135.7Other borrowings
    
    
    128
    
    
    
    
    
    
    
    128
    
    
    
    N/M$
    49,286
    
    
    $
    46,169
    
    
    $
    3,117
    
    
    
    6.8
    %
    61




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Net Interest Income.
 Provision for Loan Losses.
   62




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Three Months Ended
    
    
    Year EndedDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,
    
    
    December 31,2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Beginning balance
    
    $
    10,955
    
    
    $
    9,996
    
    
    $
    9,498
    
    
    $
    9,068
    
    
    $
    9,068Charge-offs:One- to four-family real
estate
    
    
    69
    
    
    
    106
    
    
    
    147
    
    
    
    138
    
    
    
    460Commercial real estate
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835Home equity
    
    
    36
    
    
    
    9
    
    
    
    
    
    
    
    9
    
    
    
    54Total real estate loans
    
    
    940
    
    
    
    115
    
    
    
    147
    
    
    
    147
    
    
    
    1,349Consumer
    
    
    629
    
    
    
    804
    
    
    
    625
    
    
    
    868
    
    
    
    2,926Commercial non-mortgage
    
    
    126
    
    
    
    31
    
    
    
    372
    
    
    
    191
    
    
    
    720Total charge-offs
    
    
    1,695
    
    
    
    950
    
    
    
    1,144
    
    
    
    1,206
    
    
    
    4,995Recoveries:One- to four-family real
estate
    
    
    3
    
    
    
    3
    
    
    
    22
    
    
    
    4
    
    
    
    32Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total real estate loans
    
    
    3
    
    
    
    3
    
    
    
    22
    
    
    
    4
    
    
    
    32Consumer
    
    
    102
    
    
    
    113
    
    
    
    111
    
    
    
    190
    
    
    
    516Commercial non-mortgage
    
    
    4
    
    
    
    18
    
    
    
    15
    
    
    
    
    
    
    
    37Total recoveries
    
    
    109
    
    
    
    134
    
    
    
    148
    
    
    
    194
    
    
    
    585Net charge-offs
    
    
    1,586
    
    
    
    816
    
    
    
    996
    
    
    
    1,012
    
    
    
    4,410Provision for loan losses
    
    
    2,941
    
    
    
    1,775
    
    
    
    1,494
    
    
    
    1,442
    
    
    
    7,652Ending balance
    
    $
    12,310
    
    
    $
    10,955
    
    
    $
    9,996
    
    
    $
    9,498
    
    
    $
    12,310
 Three Months Ended
    
    
    Year EndedDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,
    
    
    December 31,2008
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008Beginning balance
    
    $
    8,514
    
    
    $
    7,278
    
    
    $
    6,549
    
    
    $
    6,165
    
    
    $
    6,165Charge-offs:One- to four-family
real estate
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    164Commercial real estate
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180Home equity
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    41Total real estate loans
    
    
    286
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    385Consumer
    
    
    766
    
    
    
    733
    
    
    
    789
    
    
    
    900
    
    
    
    3,188Commercial non-mortgage
    
    
    214
    
    
    
    69
    
    
    
    163
    
    
    
    7
    
    
    
    453Total charge-offs
    
    
    1,266
    
    
    
    802
    
    
    
    952
    
    
    
    1,006
    
    
    
    4,026Recoveries:One- to four-family
real estate
    
    
    4
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    13Commercial real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    2
    
    
    
    4Total real estate loans
    
    
    5
    
    
    
    3
    
    
    
    4
    
    
    
    5
    
    
    
    17Consumer
    
    
    149
    
    
    
    152
    
    
    
    167
    
    
    
    251
    
    
    
    719Commercial non-mortgage
    
    
    
    
    
    
    16
    
    
    
    4
    
    
    
    2
    
    
    
    22Total recoveries
    
    
    154
    
    
    
    171
    
    
    
    175
    
    
    
    258
    
    
    
    758Net charge-offs
    
    
    1,112
    
    
    
    631
    
    
    
    777
    
    
    
    748
    
    
    
    3,268Provision for loan losses
    
    
    1,666
    
    
    
    1,867
    
    
    
    1,506
    
    
    
    1,132
    
    
    
    6,171Ending balance
    
    $
    9,068
    
    
    $
    8,514
    
    
    $
    7,278
    
    
    $
    6,549
    
    
    $
    9,068
  63




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Non-interest Income.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2009
    
    
    2008
    
    
    Change
    
    
    Change(Dollars in Thousands)Non-interest incomeService charges and fees
    
    $
    18,866
    
    
    $
    19,779
    
    
    $
    (913
    )
    
    
    (4.6
    %)Brokerage fees
    
    
    347
    
    
    
    434
    
    
    
    (87
    )
    
    
    (20.0
    )Net gain on sale of loans
    
    
    16,591
    
    
    
    9,390
    
    
    
    7,201
    
    
    
    76.7Loan servicing fees
    
    
    239
    
    
    
    252
    
    
    
    (13
    )
    
    
    (5.2
    )Bank-owned life insurance income
    
    
    539
    
    
    
    1,081
    
    
    
    (542
    )
    
    
    (50.1
    )Gain on redemption of Visa, Inc. shares
    
    
    
    
    
    
    771
    
    
    
    (771
    )
    
    
    (100.0
    )Valuation adjustment on mortgage servicing rights
    
    
    (191
    )
    
    
    
    
    
    
    (191
    )
    
    
    N/MImpairment of collateralized debt obligation
(all credit)
    
    
    (12,246
    )
    
    
    (13,809
    )
    
    
    1,563
    
    
    
    11.3Gain on sale of available for sale securities
    
    
    2,377
    
    
    
    
    
    
    
    2,377
    
    
    
    N/MGain (loss) on sale of foreclosed assets
    
    
    179
    
    
    
    (43
    )
    
    
    222
    
    
    
    N/MGain (loss) on disposition of assets
    
    
    (1,220
    )
    
    
    16
    
    
    
    (1,236
    )
    
    
    N/MOther
    
    
    1,718
    
    
    
    993
    
    
    
    725
    
    
    
    73.0$
    27,199
    
    
    $
    18,864
    
    
    $
    8,335
    
    
    
    44.2
    %
  , Recognition and Presentation of Other-Than-Temporary Impairments
   64




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##### Table of Contents



Non-interest Expense.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2009
    
    
    2008
    
    
    Change
    
    
    Change(Dollars in Thousands)Non-interest expenseSalaries and employee
benefits
    
    $
    46,777
    
    
    $
    43,560
    
    
    $
    3,217
    
    
    
    7.4
    %Advertising
    
    
    1,284
    
    
    
    2,296
    
    
    
    (1,012
    )
    
    
    (44.1
    )Occupancy and equipment
    
    
    5,999
    
    
    
    5,772
    
    
    
    227
    
    
    
    3.9Outside professional services
    
    
    1,882
    
    
    
    2,004
    
    
    
    (122
    )
    
    
    (6.1
    )Regulatory assessments
    
    
    4,018
    
    
    
    1,225
    
    
    
    2,793
    
    
    
    228.0Data processing
    
    
    4,209
    
    
    
    4,001
    
    
    
    208
    
    
    
    5.2Office operations
    
    
    5,984
    
    
    
    6,111
    
    
    
    (127
    )
    
    
    (2.1
    )Deposit processing charges
    
    
    862
    
    
    
    990
    
    
    
    (128
    )
    
    
    (12.9
    )Lending and collection
    
    
    1,278
    
    
    
    1,276
    
    
    
    2
    
    
    
    0.2Other
    
    
    2,639
    
    
    
    2,124
    
    
    
    515
    
    
    
    24.2$
    74,932
    
    
    $
    69,359
    
    
    $
    5,573
    
    
    
    8.0
    %
   65




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##### Table of Contents



Income Tax Expense.
 Comparison of Results of Operation for the Years Ended December 31, 2008 and 2007
 General.
  Interest Income.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2008
    
    
    2007
    
    
    Change
    
    
    Change(Dollars in Thousands)Interest and dividend incomeLoans, including fees
    
    $
    66,386
    
    
    $
    54,674
    
    
    $
    11,712
    
    
    
    21.4
    %Securities
    
    
    29,391
    
    
    
    25,485
    
    
    
    3,906
    
    
    
    15.3Interest bearing deposits
in other financial
institutions
    
    
    1,195
    
    
    
    3,865
    
    
    
    (2,670
    )
    
    
    (69.1
    )Federal Home Loan Bank stock
    
    
    271
    
    
    
    208
    
    
    
    63
    
    
    
    30.3$
    97,243
    
    
    $
    84,232
    
    
    $
    13,011
    
    
    
    15.4
    %
  66




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##### Table of Contents



Interest Expense.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2008
    
    
    2007
    
    
    Change
    
    
    Change(Dollars in Thousands)Interest expenseDeposits
    
    $
    35,529
    
    
    $
    37,073
    
    
    $
    (1,544
    )
    
    
    (4.2
    %)Federal Home Loan Bank advances
    
    
    10,340
    
    
    
    4,048
    
    
    
    6,292
    
    
    
    155.4Repurchase agreement
    
    
    300
    
    
    
    
    
    
    
    300
    
    
    
    N/M$
    46,169
    
    
    $
    41,121
    
    
    $
    5,048
    
    
    
    12.3
    %
    67




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##### Table of Contents



Net Interest Income.
 Provision
for Loan Losses.
 Non-interest Income.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2008
    
    
    2007
    
    
    Change
    
    
    Change(Dollars in Thousands)Non-interest incomeService charges and fees
    
    $
    19,779
    
    
    $
    22,389
    
    
    $
    (2,610
    )
    
    
    (11.7
    %)Brokerage fees
    
    
    434
    
    
    
    602
    
    
    
    (168
    )
    
    
    (27.9
    )Net gain on sale of loans
    
    
    9,390
    
    
    
    1,298
    
    
    
    8,092
    
    
    
    623.4Loan servicing fees
    
    
    252
    
    
    
    305
    
    
    
    (53
    )
    
    
    (17.4
    )Bank-owned life insurance income
    
    
    1,081
    
    
    
    460
    
    
    
    621
    
    
    
    135.0Gain on redemption of Visa, Inc. shares
    
    
    771
    
    
    
    
    
    
    
    771
    
    
    
    N/MImpairment of collateralized debt obligation (all credit)
    
    
    (13,809
    )
    
    
    
    
    
    
    (13,809
    )
    
    
    N/MGain (loss) on sale of foreclosed assets
    
    
    (43
    )
    
    
    (34
    )
    
    
    (9
    )
    
    
    (26.5
    )Gain (loss) on disposition of assets
    
    
    16
    
    
    
    (164
    )
    
    
    180
    
    
    
    N/MOther
    
    
    993
    
    
    
    1,069
    
    
    
    (76
    )
    
    
    (7.1
    )$
    18,864
    
    
    $
    25,925
    
    
    $
    (7,061
    )
    
    
    (27.2
    %)
    68




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##### Table of Contents



Non-interest Expense.
 Year EndedDecember 31,
    
    
    Dollar
    
    
    Percent2008
    
    
    2007
    
    
    Change
    
    
    Change(Dollars in Thousands)Non-interest expenseSalaries and employee benefits
    
    $
    43,560
    
    
    $
    31,557
    
    
    $
    12,003
    
    
    
    38.0
    %Advertising
    
    
    2,296
    
    
    
    2,238
    
    
    
    58
    
    
    
    2.6Occupancy and equipment
    
    
    5,772
    
    
    
    5,198
    
    
    
    574
    
    
    
    11.0Outside professional services
    
    
    2,004
    
    
    
    2,923
    
    
    
    (919
    )
    
    
    (31.4
    )Regulatory assessments
    
    
    1,225
    
    
    
    1,236
    
    
    
    (11
    )
    
    
    (0.9
    )Data processing
    
    
    4,001
    
    
    
    4,055
    
    
    
    (54
    )
    
    
    (1.3
    )Office operations
    
    
    6,111
    
    
    
    6,287
    
    
    
    (176
    )
    
    
    (2.8
    )Deposit processing charges
    
    
    990
    
    
    
    1,145
    
    
    
    (155
    )
    
    
    (13.5
    )Lending and collection
    
    
    1,276
    
    
    
    1,120
    
    
    
    156
    
    
    
    13.9Other
    
    
    2,124
    
    
    
    2,198
    
    
    
    (74
    )
    
    
    (3.4
    )$
    69,359
    
    
    $
    57,957
    
    
    $
    11,402
    
    
    
    19.7
    %
   Income Tax Expense.
  69




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##### Table of Contents



Average Balances, Net Interest Income, Yields Earned and Rates Paid
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    
    
    
    
    Outstanding
    
    
    Interest
    
    
    
    
    
    
    Outstanding
    
    
    InterestBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest earning assets:One- to four- family real estate
    
    $
    720,487
    
    
    $
    39,244
    
    
    
    5.45
    %
    
    $
    456,116
    
    
    $
    25,913
    
    
    
    5.68
    %
    
    $
    319,299
    
    
    $
    18,253
    
    
    
    5.72
    %Commercial real estate
    
    
    446,459
    
    
    
    28,788
    
    
    
    6.45
    
    
    
    355,056
    
    
    
    22,169
    
    
    
    6.24
    
    
    
    194,088
    
    
    
    12,065
    
    
    
    6.22Home equity
    
    
    99,468
    
    
    
    5,977
    
    
    
    6.01
    
    
    
    91,820
    
    
    
    5,784
    
    
    
    6.30
    
    
    
    82,969
    
    
    
    5,686
    
    
    
    6.85Consumer
    
    
    116,194
    
    
    
    7,202
    
    
    
    6.20
    
    
    
    176,878
    
    
    
    10,771
    
    
    
    6.09
    
    
    
    309,455
    
    
    
    17,184
    
    
    
    5.55Commercial non-mortgage
    
    
    57,601
    
    
    
    2,986
    
    
    
    5.18
    
    
    
    33,051
    
    
    
    1,749
    
    
    
    5.29
    
    
    
    21,695
    
    
    
    1,486
    
    
    
    6.85Less: deferred fees and allowance for loan loss
    
    
    (10,998
    )
    
    
    
    
    
    
    
    
    
    
    (7,717
    )
    
    
    
    
    
    
    
    
    
    
    (4,233
    )
    
    
    
    
    
    
    Loans receivable 1
    
    
    1,429,211
    
    
    
    84,197
    
    
    
    5.89
    
    
    
    1,105,204
    
    
    
    66,386
    
    
    
    6.01
    
    
    
    923,273
    
    
    
    54,674
    
    
    
    5.92Agency mortgage-backed securities
    
    
    299,863
    
    
    
    12,131
    
    
    
    4.05
    
    
    
    223,895
    
    
    
    10,881
    
    
    
    4.86
    
    
    
    121,762
    
    
    
    6,296
    
    
    
    5.17Agency collateralized mortgage obligations
    
    
    292,187
    
    
    
    9,601
    
    
    
    3.29
    
    
    
    330,614
    
    
    
    15,505
    
    
    
    4.69
    
    
    
    308,799
    
    
    
    16,965
    
    
    
    5.49Investment securities
    
    
    52,692
    
    
    
    1,704
    
    
    
    3.23
    
    
    
    57,276
    
    
    
    3,005
    
    
    
    5.25
    
    
    
    44,184
    
    
    
    2,224
    
    
    
    5.03FHLB stock
    
    
    15,473
    
    
    
    16
    
    
    
    0.10
    
    
    
    10,189
    
    
    
    271
    
    
    
    2.66
    
    
    
    4,467
    
    
    
    208
    
    
    
    4.66Interest earning deposit accounts
    
    
    73,215
    
    
    
    652
    
    
    
    0.89
    
    
    
    50,759
    
    
    
    1,195
    
    
    
    2.35
    
    
    
    75,341
    
    
    
    3,865
    
    
    
    5.13Total interest earning assets
    
    
    2,162,641
    
    
    
    108,301
    
    
    
    5.01
    
    
    
    1,777,937
    
    
    
    97,243
    
    
    
    5.47
    
    
    
    1,477,826
    
    
    
    84,232
    
    
    
    5.70Non-interest earning assets
    
    
    125,752
    
    
    
    
    
    
    
    
    
    
    
    117,350
    
    
    
    
    
    
    
    
    
    
    
    121,729Total assets
    
    $
    2,288,393
    
    
    
    
    
    
    
    
    
    
    $
    1,895,287
    
    
    
    
    
    
    
    
    
    
    $
    1,599,555Interest bearing liabilities:Interest bearing demand
    
    
    163,625
    
    
    
    3,350
    
    
    
    2.05
    %
    
    
    78,347
    
    
    
    868
    
    
    
    1.11
    %
    
    
    66,258
    
    
    
    428
    
    
    
    0.65
    %Savings and money market
    
    
    670,369
    
    
    
    12,007
    
    
    
    1.79
    
    
    
    599,549
    
    
    
    14,442
    
    
    
    2.41
    
    
    
    621,099
    
    
    
    17,711
    
    
    
    2.85Time
    
    
    661,301
    
    
    
    19,009
    
    
    
    2.87
    
    
    
    518,069
    
    
    
    20,219
    
    
    
    3.90
    
    
    
    388,895
    
    
    
    18,934
    
    
    
    4.87Borrowings
    
    
    374,408
    
    
    
    14,920
    
    
    
    3.98
    
    
    
    264,500
    
    
    
    10,640
    
    
    
    4.02
    
    
    
    79,025
    
    
    
    4,048
    
    
    
    5.12Total interest bearing liabilities
    
    
    1,869,703
    
    
    
    49,286
    
    
    
    2.64
    
    
    
    1,460,465
    
    
    
    46,169
    
    
    
    3.16
    
    
    
    1,155,277
    
    
    
    41,121
    
    
    
    3.56Non-interest bearing liabilities
    
    
    220,229
    
    
    
    
    
    
    
    
    
    
    
    234,071
    
    
    
    
    
    
    
    
    
    
    
    232,751Total liabilities
    
    
    2,089,932
    
    
    
    
    
    
    
    
    
    
    
    1,694,536
    
    
    
    
    
    
    
    
    
    
    
    1,388,028Total capital
    
    
    198,461
    
    
    
    
    
    
    
    
    
    
    
    200,751
    
    
    
    
    
    
    
    
    
    
    
    211,527Total liabilities and capital
    
    $
    2,288,393
    
    
    
    
    
    
    
    
    
    
    $
    1,895,287
    
    
    
    
    
    
    
    
    
    
    $
    1,599,555Net interest income
    
    
    
    
    
    $
    59,015
    
    
    
    
    
    
    
    
    
    
    $
    51,074
    
    
    
    
    
    
    
    
    
    
    $
    43,111Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.37
    %
    
    
    
    
    
    
    
    
    
    
    2.31
    %
    
    
    
    
    
    
    
    
    
    
    2.14
    %Net earning assets
    
    $
    292,938
    
    
    
    
    
    
    
    
    
    
    $
    317,472
    
    
    
    
    
    
    
    
    
    
    $
    322,549Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.73
    %
    
    
    
    
    
    
    
    
    
    
    2.87
    %
    
    
    
    
    
    
    
    
    
    
    2.92
    %Average
interest earning assets to average interest bearing liabilities
    
    
    115.67
    %
    
    
    
    
    
    
    
    
    
    
    121.74
    %
    
    
    
    
    
    
    
    
    
    
    127.92
    %
 
 1
    
    Calculated net of deferred fees, loan discounts, loans in process and allowance for
loan losses. Includes loans held for sale. Construction loans have been included in the one- to
four- family and commercial real estate line items, as appropriate.  70




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Rate/Volume Analysis
  Year Ended December 31,2009 versus 2008
    
    
    2008 versus 2007Total
    
    
    
    
    
    
    
    
    
    
    TotalIncrease (Decrease) Due to
    
    
    Increase
    
    
    Increase (Decrease) Due to
    
    
    IncreaseVolume
    
    
    Rate
    
    
    (Decrease)
    
    
    Volume
    
    
    Rate
    
    
    (Decrease)(Dollars in thousands)Interest earning assets:One- to four- family real estate
    
    $
    14,441
    
    
    $
    (1,110
    )
    
    $
    13,331
    
    
    $
    7,774
    
    
    $
    (114
    )
    
    $
    7,660Commercial real estate
    
    
    5,873
    
    
    
    746
    
    
    
    6,619
    
    
    
    10,050
    
    
    
    54
    
    
    
    10,104Home equity
    
    
    467
    
    
    
    (274
    )
    
    
    193
    
    
    
    579
    
    
    
    (481
    )
    
    
    98Consumer
    
    
    (3,758
    )
    
    
    189
    
    
    
    (3,569
    )
    
    
    (7,942
    )
    
    
    1,529
    
    
    
    (6,413
    )Commercial non-mortgage
    
    
    1,273
    
    
    
    (36
    )
    
    
    1,237
    
    
    
    655
    
    
    
    (392
    )
    
    
    263Loans receivable
    
    
    18,296
    
    
    
    (485
    )
    
    
    17,811
    
    
    
    11,116
    
    
    
    596
    
    
    
    11,712Agency mortgage-backed securities
    
    
    3,278
    
    
    
    (2,028
    )
    
    
    1,250
    
    
    
    4,985
    
    
    
    (400
    )
    
    
    4,585Agency collateralized mortgage
obligations
    
    
    (1,651
    )
    
    
    (4,253
    )
    
    
    (5,904
    )
    
    
    1,141
    
    
    
    (2,601
    )
    
    
    (1,460
    )Investment securities
    
    
    (225
    )
    
    
    (1,076
    )
    
    
    (1,301
    )
    
    
    683
    
    
    
    98
    
    
    
    781FHLB stock
    
    
    93
    
    
    
    (348
    )
    
    
    (255
    )
    
    
    181
    
    
    
    (118
    )
    
    
    63Interest earning deposit accounts
    
    
    392
    
    
    
    (935
    )
    
    
    (543
    )
    
    
    (1,004
    )
    
    
    (1,666
    )
    
    
    (2,670
    )Total interest earning assets
    
    
    20,183
    
    
    
    (9,125
    )
    
    
    11,058
    
    
    
    17,102
    
    
    
    (4,091
    )
    
    
    13,011Interest bearing liabilities:Interest bearing demand
    
    
    1,395
    
    
    
    1,087
    
    
    
    2,482
    
    
    
    89
    
    
    
    351
    
    
    
    440Savings and money market
    
    
    1,568
    
    
    
    (4,003
    )
    
    
    (2,435
    )
    
    
    (597
    )
    
    
    (2,672
    )
    
    
    (3,269
    )Time
    
    
    4,836
    
    
    
    (6,046
    )
    
    
    (1,210
    )
    
    
    5,508
    
    
    
    (4,223
    )
    
    
    1,285Borrowings
    
    
    4,381
    
    
    
    (101
    )
    
    
    4,280
    
    
    
    7,632
    
    
    
    (1,040
    )
    
    
    6,592Total interest bearing liabilities
    
    
    12,180
    
    
    
    (9,063
    )
    
    
    3,117
    
    
    
    12,632
    
    
    
    (7,584
    )
    
    
    5,048Net interest income
    
    $
    8,003
    
    
    $
    (62
    )
    
    $
    7,941
    
    
    $
    4,470
    
    
    $
    3,493
    
    
    $
    7,963
 Liquidity
      71




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72




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##### Table of Contents



Off-Balance Sheet Arrangements, Contractual Obligations and Commitments
  December 31, 2009One
    
    
    FourLess than
    
    
    through
    
    
    through
    
    
    After FiveOne Year
    
    
    Three Years
    
    
    Five Years
    
    
    Years
    
    
    Total(Dollars in thousands)Contractual obligations:Federal Home Loan Bank advances
    
    $
    48,636
    
    
    $
    116,328
    
    
    $
    60,039
    
    
    $
    87,501
    
    
    $
    312,504Repurchase agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    25,000Other borrowings
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    10,000Operating leases (premises)
    
    
    1,299
    
    
    
    1,823
    
    
    
    856
    
    
    
    3,211
    
    
    
    7,189Total advances and operating leases
    
    $
    49,935
    
    
    $
    118,151
    
    
    $
    70,895
    
    
    $
    115,712
    
    
    
    354,693Off-balance sheet loan commitments:Undisbursed portions of loans closed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,063Commitments to originate loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,596Unused commitment on Purchase Program loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    198,626Unused lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,750Total loan commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    363,035Total contractual obligations and loan
commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    717,728
 Capital Resources
     73




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Impact of Inflation
  Recent Accounting Pronouncements
  
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
 Asset/Liability Management
 Our Risk When Interest Rates Change.
 How We Measure Our Risk of Interest Rate Changes.
     74




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75




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December 31, 2009Change inInterestRates inBasis
    
    
    Net Portfolio Value
    
    
    NPVPoints
    
    
    $ Amount
    
    
    $ Change
    
    
    % Change
    
    
    Ratio %(Dollars in Thousands)300
    
    
    
    174,615
    
    
    
    (42,468
    )
    
    
    (19.56
    )
    
    
    7.82200
    
    
    
    192,168
    
    
    
    (24,915
    )
    
    
    (11.48
    )
    
    
    8.41100
    
    
    
    207,861
    
    
    
    (9,222
    )
    
    
    (4.25
    )
    
    
    8.90
    
    
    
    217,083
    
    
    
    
    
    
    
    
    
    
    
    9.11(100
    )
    
    
    218,003
    
    
    
    920
    
    
    
    0.42
    
    
    
    9.00(200
    )
    
    
    221,750
    
    
    
    4,667
    
    
    
    2.15
    
    
    
    9.01
 December 31, 2008Change inInterestRates inBasis
    
    
    Net Portfolio Value
    
    
    NPVPoints
    
    
    $ Amount
    
    
    $ Change
    
    
    % Change
    
    
    Ratio %(Dollars in Thousands)300
    
    
    
    116,243
    
    
    
    (55,211
    )
    
    
    (32.20
    )
    
    
    5.61200
    
    
    
    138,395
    
    
    
    (33,059
    )
    
    
    (19.28
    )
    
    
    6.51100
    
    
    
    158,694
    
    
    
    (12,760
    )
    
    
    (7.44
    )
    
    
    7.28
    
    
    
    171,454
    
    
    
    
    
    
    
    
    
    
    
    7.70(100
    )
    
    
    173,147
    
    
    
    1,693
    
    
    
    0.99
    
    
    
    7.65(200
    )
    
    
    171,964
    
    
    
    510
    
    
    
    0.30
    
    
    
    7.48
     76




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##### Table of Contents



77




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##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 VIEWPOINT FINANCIAL GROUP AND SUBSIDIARY
 FINANCIAL STATEMENTS
December 31, 2009, 2008, and 2007
 INDEX
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    79CONSOLIDATED FINANCIAL STATEMENTSConsolidated Balance Sheets
    
    
    80Consolidated Statements of Income (Loss)
    
    
    81Consolidated Statements of Comprehensive Income (Loss)
    
    
    82Consolidated Statements of Changes in Shareholders Equity
    
    
    83Consolidated Statements of Cash Flows
    
    
    85Notes to Consolidated Financial Statements
    
    
    87
  78




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##### Table of Contents



(CROWE HORWATH LLP)Crowe Horwath LLP
 
  79




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##### Table of Contents



December 31,
    
    
    December 31,2009
    
    
    2008ASSETSCash and due from financial institutions
    
    $
    17,507
    
    
    $
    20,886Short-term interest bearing deposits in other financial institutions
    
    
    37,963
    
    
    
    11,627Total cash and cash equivalents
    
    
    55,470
    
    
    
    32,513Securities available for sale
    
    
    484,058
    
    
    
    483,016Securities held to maturity (fair value December 31, 2009  $260,814,
December 31, 2008  $176,579)
    
    
    254,724
    
    
    
    172,343Loans held for sale
    
    
    341,431
    
    
    
    159,884Loans, net
of allowance of $12,310  December 31, 2009,
$9,068  December 31, 2008
    
    
    1,108,159
    
    
    
    1,239,708Federal Home Loan Bank stock, at cost
    
    
    14,147
    
    
    
    18,069Bank-owned life insurance
    
    
    28,117
    
    
    
    27,578Mortgage servicing rights
    
    
    872
    
    
    
    1,372Foreclosed assets, net
    
    
    3,917
    
    
    
    1,644Premises and equipment, net
    
    
    50,440
    
    
    
    45,937Goodwill
    
    
    1,089
    
    
    
    1,089Accrued interest receivable
    
    
    8,099
    
    
    
    8,519Prepaid FDIC assessment
    
    
    9,134
    
    
    
    Other assets
    
    
    19,847
    
    
    
    21,743Total assets
    
    $
    2,379,504
    
    
    $
    2,213,415LIABILITIES AND SHAREHOLDERS EQUITYDepositsNon-interest bearing demand
    
    
    193,581
    
    
    
    172,395Interest bearing demand
    
    
    268,063
    
    
    
    98,884Savings and money market
    
    
    701,835
    
    
    
    635,243Time
    
    
    633,186
    
    
    
    641,568Total deposits
    
    
    1,796,665
    
    
    
    1,548,090Federal Home Loan Bank advances
    
    
    312,504
    
    
    
    410,841Repurchase agreement
    
    
    25,000
    
    
    
    25,000Other borrowings
    
    
    10,000
    
    
    
    Accrued interest payable
    
    
    1,884
    
    
    
    1,769Other liabilities
    
    
    27,769
    
    
    
    33,576Total liabilities
    
    
    2,173,822
    
    
    
    2,019,276Commitments and contingent liabilities
    
    
    
    
    
    
    Shareholders equityCommon stock, $.01 par value; 75,000,000 shares
authorized; 26,208,958 shares issued  December 31, 2009;
26,208,958 shares issued  December 31, 2008
    
    
    262
    
    
    
    262Additional paid-in capital
    
    
    118,297
    
    
    
    115,963Retained earnings
    
    
    111,188
    
    
    
    108,332Accumulated other comprehensive income (loss)
    
    
    3,802
    
    
    
    (1,613
    )Unearned Employee Stock Ownership Plan (ESOP) shares;
610,647 shares  December 31, 2009; 704,391 shares  December
31, 2008
    
    
    (6,159
    )
    
    
    (7,097
    )Treasury stock, at cost;
1,279,801 shares  December 31, 2009; 1,279,801 shares  December
31, 2008
    
    
    (21,708
    )
    
    
    (21,708
    )Total shareholders equity
    
    
    205,682
    
    
    
    194,139Total liabilities and shareholders equity
    
    $
    2,379,504
    
    
    $
    2,213,415
   80




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Interest and dividend incomeLoans, including fees
    
    $
    84,197
    
    
    $
    66,386
    
    
    $
    54,674Taxable securities
    
    
    22,919
    
    
    
    29,266
    
    
    
    25,485Nontaxable securities
    
    
    517
    
    
    
    125
    
    
    
    Interest bearing deposits in other financial institutions
    
    
    652
    
    
    
    1,195
    
    
    
    3,865Federal Home Loan Bank stock
    
    
    16
    
    
    
    271
    
    
    
    208108,301
    
    
    
    97,243
    
    
    
    84,232Interest expenseDeposits
    
    
    34,366
    
    
    
    35,529
    
    
    
    37,073Federal Home Loan Bank advances
    
    
    14,056
    
    
    
    10,340
    
    
    
    4,048Federal Reserve Bank advances
    
    
    29
    
    
    
    
    
    
    
    Repurchase agreement
    
    
    707
    
    
    
    300
    
    
    
    Other borrowings
    
    
    128
    
    
    
    
    
    
    
    49,286
    
    
    
    46,169
    
    
    
    41,121Net interest income
    
    
    59,015
    
    
    
    51,074
    
    
    
    43,111Provision for loan losses
    
    
    7,652
    
    
    
    6,171
    
    
    
    3,268Net interest income after provision for loan losses
    
    
    51,363
    
    
    
    44,903
    
    
    
    39,843Non-interest incomeService charges and fees
    
    
    18,866
    
    
    
    19,779
    
    
    
    22,389Brokerage fees
    
    
    347
    
    
    
    434
    
    
    
    602Net gain on sale of loans
    
    
    16,591
    
    
    
    9,390
    
    
    
    1,298Loan servicing fees
    
    
    239
    
    
    
    252
    
    
    
    305Bank-owned life insurance income
    
    
    539
    
    
    
    1,081
    
    
    
    460Gain on redemption of Visa, Inc. shares
    
    
    
    
    
    
    771
    
    
    
    Valuation adjustment on mortgage servicing rights
    
    
    (191
    )
    
    
    
    
    
    
    Impairment of collateralized debt obligations (all credit)
    
    
    (12,246
    )
    
    
    (13,809
    )
    
    
    Gain on sale of available for sale securities
    
    
    2,377
    
    
    
    
    
    
    
    Gain (loss) on sale of foreclosed assets
    
    
    179
    
    
    
    (43
    )
    
    
    (34
    )Gain (loss) on disposition of assets
    
    
    (1,220
    )
    
    
    16
    
    
    
    (164
    )Other
    
    
    1,718
    
    
    
    993
    
    
    
    1,06927,199
    
    
    
    18,864
    
    
    
    25,925Non-interest expenseSalaries and employee benefits
    
    
    46,777
    
    
    
    43,560
    
    
    
    31,557Advertising
    
    
    1,284
    
    
    
    2,296
    
    
    
    2,238Occupancy and equipment
    
    
    5,999
    
    
    
    5,772
    
    
    
    5,198Outside professional services
    
    
    1,882
    
    
    
    2,004
    
    
    
    2,923Regulatory assessments
    
    
    4,018
    
    
    
    1,225
    
    
    
    1,236Data processing
    
    
    4,209
    
    
    
    4,001
    
    
    
    4,055Office operations
    
    
    5,984
    
    
    
    6,111
    
    
    
    6,287Deposit processing charges
    
    
    862
    
    
    
    990
    
    
    
    1,145Lending and collection
    
    
    1,278
    
    
    
    1,276
    
    
    
    1,120Other
    
    
    2,639
    
    
    
    2,124
    
    
    
    2,19874,932
    
    
    
    69,359
    
    
    
    57,957Income (loss) before income tax expense (benefit)
    
    
    3,630
    
    
    
    (5,592
    )
    
    
    7,811Income tax expense (benefit)
    
    
    960
    
    
    
    (2,277
    )
    
    
    2,744Net income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067Earnings (loss) per share:Basic
    
    $
    0.11
    
    
    $
    (0.14
    )
    
    $
    0.20Diluted
    
    $
    0.11
    
    
    $
    (0.14
    )
    
    $
    0.20
   81




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Net income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067Other comprehensive income (loss):Change in unrealized gains (losses) on securities available
for sale
    
    
    1,261
    
    
    
    (17,545
    )
    
    
    1,423Reclassification of amount realized through impairment charges
    
    
    12,246
    
    
    
    13,809
    
    
    
    Reclassification of amount realized through sale of securities
    
    
    (2,377
    )
    
    
    
    
    
    
    Tax effect
    
    
    (2,872
    )
    
    
    1,262
    
    
    
    (493
    )Other comprehensive income (loss), net of tax
    
    
    8,258
    
    
    
    (2,474
    )
    
    
    930Comprehensive income (loss)
    
    $
    10,928
    
    
    $
    (5,789
    )
    
    $
    5,997
   82




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AccumulatedAdditional
    
    
    Unearned
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    ESOP
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Shares
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    EquityBalance at January 1, 2007
    
    $
    258
    
    
    $
    111,844
    
    
    $
    (9,104
    )
    
    $
    111,849
    
    
    $
    (69
    )
    
    $
    
    
    
    $
    214,778ESOP shares earned, 92,839 shares
    
    
    
    
    
    
    682
    
    
    
    928
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,610Treasury stock purchased at cost, 1,000,455 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,566
    )
    
    
    (17,566
    )Share-based compensation expense
    
    
    
    
    
    
    1,090
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,090Restricted stock granted (420,208 shares)
    
    
    4
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends declared ($0.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,115
    )
    
    
    
    
    
    
    
    
    
    
    (2,115
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,067
    
    
    
    
    
    
    
    
    
    
    
    5,067Change in unrealized gains (losses) on securities
available for sale, net of reclassifications and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    930
    
    
    
    
    
    
    
    930Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,997Balance at December 31, 2007
    
    
    262
    
    
    
    113,612
    
    
    
    (8,176
    )
    
    
    114,801
    
    
    
    861
    
    
    
    (17,566
    )
    
    
    203,794ESOP shares earned, 107,955 shares
    
    
    
    
    
    
    881
    
    
    
    1,079
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,960Treasury stock purchased at cost, 289,346 shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,312
    )
    
    
    (4,312
    )Share-based compensation expense
    
    
    
    
    
    
    1,719
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,719Adjustment to deferred tax asset for difference between
fair value of vested restricted stock and expense
booked
    
    
    
    
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79
    )Restricted stock granted (10,000 shares)
    
    
    
    
    
    
    (170
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    Dividends declared ($0.29 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,154
    )
    
    
    
    
    
    
    
    
    
    
    (3,154
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,315
    )
    
    
    
    
    
    
    
    
    
    
    (3,315
    )Change in unrealized gains (losses) on securities
available for sale, net of reclassifications and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,474
    )
    
    
    
    
    
    
    (2,474
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,789
    )Balance at December 31, 2008
    
    
    262
    
    
    
    115,963
    
    
    
    (7,097
    )
    
    
    108,332
    
    
    
    (1,613
    )
    
    
    (21,708
    )
    
    
    194,139
   83




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##### Table of Contents



AccumulatedAdditional
    
    
    Unearned
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    ESOP
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Shares
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    EquityBalance at December 31, 2008
    
    
    262
    
    
    
    115,963
    
    
    
    (7,097
    )
    
    
    108,332
    
    
    
    (1,613
    )
    
    
    (21,708
    )
    
    
    194,139Cumulative effect of change in accounting principle,
initial application of other-than-temporary
impairment guidance (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,843
    
    
    
    (2,843
    )
    
    
    
    
    
    
    ESOP shares earned, 93,744 shares
    
    
    
    
    
    
    707
    
    
    
    938
    
    
    
    (185
    )
    
    
    
    
    
    
    
    
    
    
    1,460Share-based compensation expense
    
    
    
    
    
    
    1,763
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,763Adjustment to deferred tax asset for difference between
fair value of vested restricted stock and expense
booked
    
    
    
    
    
    
    (136
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (136
    )Dividends declared ($0.23 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,472
    )
    
    
    
    
    
    
    
    
    
    
    (2,472
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,670
    
    
    
    
    
    
    
    
    
    
    
    2,670Change in unrealized gains (losses) on securities available
for sale for which a portion of an other-than-temporary
impairment has been recognized in earnings,
net of reclassifications and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,101
    
    
    
    
    
    
    
    7,101Change in unrealized gains (losses) on securities
available for sale, net of reclassifications and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,157
    
    
    
    
    
    
    
    1,157Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,928Balance at December 31, 2009
    
    $
    262
    
    
    $
    118,297
    
    
    $
    (6,159
    )
    
    $
    111,188
    
    
    $
    3,802
    
    
    $
    (21,708
    )
    
    $
    205,682
   84




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Cash flows from operating activitiesNet income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067Adjustments to reconcile net income (loss) to net cash from
operating activities:Provision for loan losses
    
    
    7,652
    
    
    
    6,171
    
    
    
    3,268Depreciation and amortization
    
    
    3,784
    
    
    
    4,365
    
    
    
    4,469Premium amortization and accretion of securities, net
    
    
    1,034
    
    
    
    (767
    )
    
    
    (873
    )Gain on sale of available for sale securities
    
    
    (2,377
    )
    
    
    
    
    
    
    Impairment of collateralized debt obligations
    
    
    12,246
    
    
    
    13,809
    
    
    
    ESOP compensation expense
    
    
    1,460
    
    
    
    1,960
    
    
    
    1,610Share-based compensation expense
    
    
    1,763
    
    
    
    1,719
    
    
    
    1,090Amortization of mortgage servicing rights
    
    
    309
    
    
    
    292
    
    
    
    291Net gain on loans held for sale
    
    
    (16,591
    )
    
    
    (9,390
    )
    
    
    (1,298
    )Loans originated or purchased for sale
    
    
    (5,742,599
    )
    
    
    (591,218
    )
    
    
    (87,378
    )Proceeds from sale of loans held for sale
    
    
    5,577,643
    
    
    
    453,896
    
    
    
    78,716FHLB stock dividends
    
    
    (16
    )
    
    
    (271
    )
    
    
    (208
    )Increase in bank-owned life insurance
    
    
    (539
    )
    
    
    (1,081
    )
    
    
    (460
    )Loss (gain) on disposition of property and equipment
    
    
    34
    
    
    
    (16
    )
    
    
    165Write off of leasehold improvements related to in-store closings
    
    
    337
    
    
    
    
    
    
    
    Net loss (gain) on sales of other real estate owned
    
    
    (195
    )
    
    
    106
    
    
    
    156Valuation adjustment on mortgage servicing rights
    
    
    191
    
    
    
    
    
    
    
    Net change in deferred loan fees
    
    
    (46
    )
    
    
    1,809
    
    
    
    2,973Net change in accrued interest receivable
    
    
    420
    
    
    
    (1,741
    )
    
    
    (911
    )Net change in other assets
    
    
    (10,806
    )
    
    
    (4,388
    )
    
    
    (1,447
    )Net change in other liabilities
    
    
    (5,692
    )
    
    
    7,701
    
    
    
    5,627Net cash from operating activities
    
    
    (169,318
    )
    
    
    (120,359
    )
    
    
    10,857Cash flows from investing activitiesContribution to new markets equity fund
    
    
    
    
    
    
    (1,554
    )
    
    
    (1,600
    )Available-for-sale securities:Maturities, prepayments and calls
    
    
    509,350
    
    
    
    109,051
    
    
    
    103,299Purchases
    
    
    (582,025
    )
    
    
    (66,098
    )
    
    
    (319,337
    )Proceeds from sale of AFS securities
    
    
    73,785
    
    
    
    
    
    
    
    Held-to-maturity securities:Maturities, prepayments and calls
    
    
    49,649
    
    
    
    24,506
    
    
    
    5,565Purchases
    
    
    (132,446
    )
    
    
    (176,630
    )
    
    
    (14,403
    )Proceeds from member capital account
    
    
    
    
    
    
    1,000
    
    
    
    Purchase of assets of VPBM
    
    
    
    
    
    
    
    
    
    
    (1,323
    )Net change in loans
    
    
    118,266
    
    
    
    (341,728
    )
    
    
    49,700Purchase of bank-owned life insurance
    
    
    
    
    
    
    
    
    
    
    (26,037
    )Redemption/(purchase) of FHLB stock
    
    
    3,965
    
    
    
    (11,605
    )
    
    
    (2,309
    )Purchases of premises and equipment
    
    
    (8,667
    )
    
    
    (9,460
    )
    
    
    (3,212
    )Proceeds from sale of fixed assets
    
    
    9
    
    
    
    36
    
    
    
    154Proceeds on sale of other real estate owned
    
    
    2,623
    
    
    
    1,455
    
    
    
    549Net cash from investing activities
    
    
    34,509
    
    
    
    (471,027
    )
    
    
    (208,954
    )
   85




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Cash flows from financing activitiesNet change in deposits
    
    
    248,575
    
    
    
    250,497
    
    
    
    62,712Proceeds from Federal Home Loan Bank advances
    
    
    
    
    
    
    313,000
    
    
    
    84,507Repayments on Federal Home Loan Bank advances
    
    
    (98,337
    )
    
    
    (30,610
    )
    
    
    (11,818
    )Proceeds from other borrowings
    
    
    10,000
    
    
    
    
    
    
    
    Proceeds from repurchase agreement
    
    
    
    
    
    
    25,000
    
    
    
    Treasury stock purchased
    
    
    
    
    
    
    (4,312
    )
    
    
    (17,566
    )Payment of dividends
    
    
    (2,472
    )
    
    
    (3,154
    )
    
    
    (2,115
    )Net cash from financing activities
    
    
    157,766
    
    
    
    550,421
    
    
    
    115,720Net change in cash and cash equivalents
    
    
    22,957
    
    
    
    (40,965
    )
    
    
    (82,377
    )Beginning cash and cash equivalents
    
    
    32,513
    
    
    
    73,478
    
    
    
    155,855Ending cash and cash equivalents
    
    $
    55,470
    
    
    $
    32,513
    
    
    $
    73,478Supplemental cash flow information:Interest paid
    
    $
    49,171
    
    
    $
    45,382
    
    
    $
    40,610Income taxes paid
    
    $
    1,790
    
    
    $
    1,917
    
    
    $
    3,567Supplemental noncash disclosures:Transfers from loans to other real estate owned
    
    $
    5,677
    
    
    $
    2,690
    
    
    $
    983Payable for new markets equity fund
    
    $
    
    
    
    $
    
    
    
    $
    640
   86




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations and Principles of Consolidation
  Use of Estimates
 Cash Flows
 Securities
    87




---



##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Loans Held for Sale
 Loans
   Concentration of Credit Risk
  88




---



##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Allowance for Loan Losses
    Servicing Rights
    Transfers of Financial Assets
  89




---



##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Foreclosed Assets
 Premises and Equipment
 Federal Home Loan Bank (FHLB) stock
 Bank-Owned Life Insurance
 Goodwill
 Long-term Assets
 Membership Capital Account at Corporate Credit Union
 Brokerage Fee Income
 Mortgage Servicing Revenue
 Advertising Expense
 Loan Commitments and Related Financial Instruments
  90




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Income Taxes
   Share-Based Compensation
 Retirement
Plans
 Comprehensive Income (Loss)
 Loss Contingencies
 Restrictions on Cash
 Earnings (loss) per common share
 Employee stock ownership plan (ESOP) Employee Stock Ownership Plans
  91




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Dividend Restriction
 Fair Value of Financial Instruments
 Operating
Segments
 Reclassifications
 Adoption of New Accounting Standards
 Fair Value Measurements
 Business Combinations
 about Derivative Instruments and Hedging
Activities, an amendment of SFAS No. 133
  92




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Subsequent Events
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles The Hierarchy of Generally Accepted Accounting Principles FASB Accounting Standards Codification TM
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
 Recognition and Presentation
of Other-Than-Temporary Impairments
   93




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Determining Fair Value When the
Volume and Level of Activity for the Asset and Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly
 Measuring
Liabilities at Fair Value
 Effect
of Newly Issued But Not Yet Effective Accounting Standards
 Accounting for
Transfers of Financial Assets, an Amendment of FASB Statement No. 140
 Amendments to
FASB Interpretation No. 46 (R)
  94




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##### Table of Contents



NOTE 2  ESOP ADJUSTMENT
    ESOPBALANCE SHEET - DECEMBER 31, 2008
    
    As reported
    
    
    adjustment
    
    
    As adjustedOther liabilities
    
    $
    33,658
    
    
    $
    (82
    )
    
    $
    33,576Total liabilities
    
    
    2,019,358
    
    
    
    (82
    )
    
    
    2,019,276Additional paid-in capital
    
    
    115,873
    
    
    
    90
    
    
    
    115,963Retained earnings
    
    
    108,491
    
    
    
    (159
    )
    
    
    108,332Unearned ESOP shares
    
    
    (7,248
    )
    
    
    151
    
    
    
    (7,097
    )Total shareholders equity
    
    
    194,057
    
    
    
    82
    
    
    
    194,139
 STATEMENT OF INCOME
    
    
    
    
    
    ESOPYear ended December 31, 2008
    
    As reported
    
    
    adjustment
    
    
    As adjustedSalaries and employee benefits expense
    
    $
    43,319
    
    
    $
    241
    
    
    $
    43,560Total non-interest expense
    
    
    69,118
    
    
    
    241
    
    
    
    69,359Loss before income tax benefit
    
    
    (5,351
    )
    
    
    (241
    )
    
    
    (5,592
    )Income tax benefit
    
    
    (2,195
    )
    
    
    (82
    )
    
    
    (2,277
    )Net loss
    
    
    (3,156
    )
    
    
    (159
    )
    
    
    (3,315
    )Loss per share (basic and diluted)
    
    
    (0.13
    )
    
    
    (0.01
    )
    
    
    (0.14
    )
  95




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##### Table of Contents



NOTE 3  CONCENTRATION OF FUNDS
  December 31,2009
    
    
    2008Federal Reserve Bank of Dallas
    
    $
    12,729
    
    
    $
    2,863Federal Home Loan Bank of Dallas
    
    
    2,233
    
    
    
    2,087Texas Independent Bank
    
    
    
    
    
    
    8,799Texas Capital Bank
    
    
    23,063
    
    
    
    741$
    38,025
    
    
    $
    14,490
   NOTE 4  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. government and federal agency
    
    $
    47,994
    
    
    $
    
    
    
    $
    (556
    )
    
    $
    47,438Agency residential mortgage-backed securities
    
    
    197,437
    
    
    
    4,377
    
    
    
    (187
    )
    
    
    201,627Agency residential collateralized mortgage
obligations
    
    
    226,242
    
    
    
    3,588
    
    
    
    (1,329
    )
    
    
    228,501SBA pools
    
    
    6,565
    
    
    
    
    
    
    
    (73
    )
    
    
    6,492Total securities
    
    $
    478,238
    
    
    $
    7,965
    
    
    $
    (2,145
    )
    
    $
    484,058
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2008
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. government and federal agency
    
    $
    18,502
    
    
    $
    238
    
    
    $
    
    
    
    $
    18,740Agency residential mortgage-backed securities
    
    
    137,338
    
    
    
    1,492
    
    
    
    (659
    )
    
    
    138,171Agency residential collateralized mortgage
obligations
    
    
    313,391
    
    
    
    4,199
    
    
    
    (7,525
    )
    
    
    310,065SBA pools
    
    
    8,313
    
    
    
    
    
    
    
    (213
    )
    
    
    8,100Collateralized debt obligations
    
    
    7,940
    
    
    
    
    
    
    
    
    
    
    
    7,940Total securities
    
    $
    485,484
    
    
    $
    5,929
    
    
    $
    (8,397
    )
    
    $
    483,016
  96




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##### Table of Contents



NOTE 4  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. government and federal agency
    
    $
    14,991
    
    
    $
    140
    
    
    $
    
    
    
    $
    15,131Agency residential mortgage-backed securities
    
    
    154,013
    
    
    
    4,555
    
    
    
    (175
    )
    
    
    158,393Agency residential collateralized mortgage
obligations
    
    
    56,414
    
    
    
    978
    
    
    
    (2
    )
    
    
    57,390Municipal bonds
    
    
    29,306
    
    
    
    698
    
    
    
    (104
    )
    
    
    29,900Total securities
    
    $
    254,724
    
    
    $
    6,371
    
    
    $
    (281
    )
    
    $
    260,814
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2008
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. government and federal agency
    
    $
    9,992
    
    
    $
    151
    
    
    $
    
    
    
    $
    10,143Agency residential mortgage-backed securities
    
    
    140,663
    
    
    
    3,491
    
    
    
    (56
    )
    
    
    144,098Agency residential collateralized mortgage
obligations
    
    
    12,304
    
    
    
    417
    
    
    
    (25
    )
    
    
    12,696Municipal bonds
    
    
    9,384
    
    
    
    258
    
    
    
    
    
    
    
    9,642Total securities
    
    $
    172,343
    
    
    $
    4,317
    
    
    $
    (81
    )
    
    $
    176,579
  AvailableHeld to maturity
    
    
    for saleCarrying
    
    
    Fair
    
    
    FairAmount
    
    
    Value
    
    
    ValueDue in one year or less
    
    $
    
    
    
    $
    
    
    
    $
    Due from one to five years
    
    
    16,313
    
    
    
    16,532
    
    
    
    Due from five to ten years
    
    
    8,563
    
    
    
    8,912
    
    
    
    49,041Due after ten years
    
    
    19,421
    
    
    
    19,587
    
    
    
    4,889Agency residential mortgage-backed securities
    
    
    154,013
    
    
    
    158,393
    
    
    
    201,627Agency residential collateralized mortgage obligations
    
    
    56,414
    
    
    
    57,390
    
    
    
    228,501Total
    
    $
    254,724
    
    
    $
    260,814
    
    
    $
    484,058
    December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007Proceeds
    
    $
    73,785
    
    
    $
    
    
    
    $
    Gross gains
    
    
    2,377
    
    
    
    
    
    
    
    Gross losses
    
    
    
    
    
    
    
    
    
    
    Net impairment loss
recognized in
earnings
    
    
    (12,246
    )
    
    
    (13,809
    )
    
    
    
  97




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##### Table of Contents



NOTE 4  SECURITIES
   Less than 12 Months
    
    
    12 Months or More
    
    
    TotalDescription of Securities
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDecember 31, 2009
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    LossSBA pools
    
    $
    
    
    
    $
    
    
    
    $
    6,492
    
    
    $
    (73
    )
    
    $
    6,492
    
    
    $
    (73
    )Municipal bonds
    
    
    4,333
    
    
    
    (104
    )
    
    
    
    
    
    
    
    
    
    
    4,333
    
    
    
    (104
    )Agency residential mortgage-backed securities
    
    
    70,882
    
    
    
    (362
    )
    
    
    
    
    
    
    
    
    
    
    70,882
    
    
    
    (362
    )Agency residential collateralized mortgage
obligations
    
    
    3,797
    
    
    
    (32
    )
    
    
    90,643
    
    
    
    (1,299
    )
    
    
    94,440
    
    
    
    (1,331
    )U.S. Government and federal agency
    
    
    47,438
    
    
    
    (556
    )
    
    
    
    
    
    
    
    
    
    
    47,438
    
    
    
    (556
    )Total temporarily impaired
    
    $
    126,450
    
    
    $
    (1,054
    )
    
    $
    97,135
    
    
    $
    (1,372
    )
    
    $
    223,585
    
    
    $
    (2,426
    )
 Less than 12 Months
    
    
    12 Months or More
    
    
    TotalDescription of Securities
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDecember 31, 2008
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    Loss
    
    
    Fair Value
    
    
    LossSBA pools
    
    $
    8,100
    
    
    $
    (213
    )
    
    $
    
    
    
    $
    
    
    
    $
    8,100
    
    
    $
    (213
    )Agency residential mortgage-backed securities
    
    
    89,439
    
    
    
    (715
    )
    
    
    
    
    
    
    
    
    
    
    89,439
    
    
    
    (715
    )Agency residential collateralized mortgage
obligations
    
    
    23,559
    
    
    
    (217
    )
    
    
    101,447
    
    
    
    (7,333
    )
    
    
    125,006
    
    
    
    (7,550
    )Total temporarily impaired
    
    $
    121,098
    
    
    $
    (1,145
    )
    
    $
    101,447
    
    
    $
    (7,333
    )
    
    $
    222,545
    
    
    $
    (8,478
    )
    98




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##### Table of Contents



NOTE 4  SECURITIES
 , Recognition and Presentation of Other-Than-Temporary Impairments
    December 31, 2009Beginning balance, January 1, 2009
    
    $
    9,408Additional credit losses not recorded previously
    
    
    12,246Reductions for securities sold
    
    
    (21,654
    )Reductions for securities that are planned to be sold
    
    
    Additional credit losses on previous other-than-
temporary impairment reported in accumulated other
comprehensive loss
    
    
    Reductions for increases in cash flows
    
    
    Ending balance, December 31, 2009
    
    $
    
   99




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##### Table of Contents



NOTE 4  SECURITIES
  NOTE 5  LOANS
  December 31,
    
    
    December 31,2009
    
    
    2008Mortgage loans:One- to four-family
    
    $
    440,847
    
    
    $
    498,961Commercial real estate
    
    
    453,604
    
    
    
    436,483One- to four-family construction
    
    
    6,195
    
    
    
    503Commercial construction
    
    
    879
    
    
    
    Home equity
    
    
    97,226
    
    
    
    101,021Total mortgage loans
    
    
    998,751
    
    
    
    1,036,968Automobile indirect loans
    
    
    10,711
    
    
    
    38,837Automobile direct loans
    
    
    57,186
    
    
    
    73,033Government-guaranteed student loans
    
    
    5,818
    
    
    
    7,399Commercial non-mortgage loans
    
    
    27,983
    
    
    
    18,574Warehouse lines of credit
    
    
    
    
    
    
    53,271Consumer lines of credit and unsecured loans
    
    
    14,781
    
    
    
    15,192Other consumer loans, secured
    
    
    6,399
    
    
    
    6,708Total non-mortgage loans
    
    
    122,878
    
    
    
    213,014Gross loans
    
    
    1,121,629
    
    
    
    1,249,982Deferred net loan origination fees
    
    
    (1,160
    )
    
    
    (1,206
    )Allowance for loan losses
    
    
    (12,310
    )
    
    
    (9,068
    )Net loans
    
    $
    1,108,159
    
    
    $
    1,239,708
  100




---



##### Table of Contents



NOTE 5  LOANS
  Years EndedDecember 31,2009
    
    
    2008
    
    
    2007Beginning balance
    
    $
    9,068
    
    
    $
    6,165
    
    
    $
    6,507Provision for loan losses
    
    
    7,652
    
    
    
    6,171
    
    
    
    3,268Loans charged-off
    
    
    (4,995
    )
    
    
    (4,026
    )
    
    
    (5,080
    )Recoveries
    
    
    585
    
    
    
    758
    
    
    
    1,470Ending balance
    
    $
    12,310
    
    
    $
    9,068
    
    
    $
    6,165
  December 31, 2009
    
    
    December 31, 2008Period-end loans with no allocated allowance for loan
losses
    
    $
    8,240
    
    
    $
    3,068Period-end loans with allocated allowance for loan losses
    
    
    4,352
    
    
    
    1,597Total
    
    $
    12,592
    
    
    $
    4,665Amount of the allowance for loan losses allocated to
impaired loans at period-end
    
    $
    738
    
    
    $
    328
 Years Ended,December 31,2009
    
    
    2008
    
    
    2007Average of individually impaired loans during the year
    
    $
    9,349
    
    
    $
    4,225
    
    
    $
    4,027Interest income recognized during impairment
    
    
    366
    
    
    
    258
    
    
    
    370Cash-basis interest income recognized
    
    
    358
    
    
    
    238
    
    
    
    350
  December 31, 2009
    
    
    December 31, 2008Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    Nonaccrual loans
    
    
    11,675
    
    
    
    2,217Troubled debt restructurings
    
    
    978
    
    
    
    2,528Total
    
    $
    12,653
    
    
    $
    4,745
   101




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##### Table of Contents



NOTE 6  FAIR VALUE
          102




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##### Table of Contents



NOTE 6  FAIR VALUE
 Assets and Liabilities Measured on a Recurring Basis
  Fair Value Measurements at December 31, 2009, UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    UnobservableDecember 31, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:U.S. government and federal agency
    
    $
    47,438
    
    
    $
    
    
    
    $
    47,438
    
    
    $
    Agency residential mortgage-backed securities
    
    
    201,627
    
    
    
    
    
    
    
    201,627
    
    
    
    Agency residential collateralized mortgage
obligations
    
    
    228,501
    
    
    
    
    
    
    
    228,501
    
    
    
    SBA pools
    
    
    6,492
    
    
    
    
    
    
    
    6,492
    
    
    
    Total securities available for sale
    
    $
    484,058
    
    
    $
    
    
    
    $
    484,058
    
    
    $
    
 Fair Value Measurements at December 31, 2008, UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    UnobservableDecember 31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:U.S. government and federal agency
    
    $
    18,740
    
    
    $
    
    
    
    $
    18,740
    
    
    $
    Agency residential mortgage-backed securities
    
    
    138,171
    
    
    
    
    
    
    
    138,171
    
    
    
    Agency residential collateralized mortgage
obligations
    
    
    310,065
    
    
    
    
    
    
    
    310,065
    
    
    
    SBA pools
    
    
    8,100
    
    
    
    
    
    
    
    8,100
    
    
    
    Collateralized debt obligations
    
    
    7,940
    
    
    
    
    
    
    
    
    
    
    
    7,940Total securities available for sale
    
    $
    483,016
    
    
    $
    
    
    
    $
    475,076
    
    
    $
    7,940
  Securities availablefor saleBeginning balance, January 1, 2008
    
    $
    Transfers into Level 3 at September 30, 2008
    
    
    14,718Total gains or losses (realized /unrealized)Included in earningsImpairment of collateralized debt obligations to fair value
    
    
    (13,809
    )Included in other comprehensive income
    
    
    7,031Ending balance, December 31, 2008
    
    
    7,940Adjustment due to adoption of ASC 320-10-65, non-credit
portion of impairment previously recorded
    
    
    4,351Proceeds from sale of securities
    
    
    (224
    )Total gains or losses (realized /unrealized)Included in earningsInterest income on securities
    
    
    159Impairment of collateralized debt obligations (all credit)
    
    
    (12,246
    )Gains (losses) on sales of securities
    
    
    20Ending balance, December 31, 2009
    
    $
    
  103




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##### Table of Contents



NOTE 6  FAIR VALUE
 Assets and Liabilities Measured on a Non-Recurring Basis
  Fair Value Measurements at December 31, 2009, UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    UnobservableDecember 31, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:Impaired loans
    
    $
    3,614
    
    
    $
    
    
    
    $
    3,614
    
    
    $
    Mortgage servicing
rights
    
    
    872
    
    
    
    
    
    
    
    872
    
    
    
    Other real estate owned
    
    
    3,917
    
    
    
    
    
    
    
    3,917
    
    
    
    
 Fair Value Measurements at December 31, 2008, UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    UnobservableDecember 31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:Impaired loans
    
    $
    1,269
    
    
    $
    
    
    
    $
    1,269
    
    
    $
    
    Other real estate owned:Balance at January 1, 2009
    
    $
    1,561Transfers in at fair value
    
    
    4,487Change in valuation allowance
    
    
    181Sale of property (gross)
    
    
    (2,312
    )Balance at December 31, 2009
    
    $
    3,917Valuation allowance:Balance at January 1, 2009
    
    $
    218Sale of property
    
    
    (369
    )Valuation adjustment
    
    
    188Balance at December 31, 2009
    
    $
    37
  104




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##### Table of Contents



NOTE 6  FAIR VALUE
  Mortgage servicing rights:Balance at January 1, 2009
    
    $
    1,372Amortized to expense
    
    
    (309
    )Change in valuation allowance
    
    
    (191
    )Balance at December 31, 2009
    
    $
    872Valuation allowance:Balance at January 1, 2009
    
    $
    Additions expensed
    
    
    300Valuation adjustment
    
    
    (109
    )Balance at December 31, 2009
    
    $
    191
    2010
    
    $
    2282011
    
    
    1742012
    
    
    1372013
    
    
    1092014
    
    
    87
  105




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##### Table of Contents



NOTE 6  FAIR VALUE
  December 31, 2009
    
    
    December 31, 2008Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assetsCash and cash equivalents
    
    $
    55,470
    
    
    $
    55,470
    
    
    $
    32,513
    
    
    $
    32,513Securities available for sale
    
    
    484,058
    
    
    
    484,058
    
    
    
    483,016
    
    
    
    483,016Securities held to maturity
    
    
    254,724
    
    
    
    260,814
    
    
    
    172,343
    
    
    
    176,579Loans held for sale
    
    
    341,431
    
    
    
    342,663
    
    
    
    159,884
    
    
    
    159,884Loans, net
    
    
    1,108,159
    
    
    
    1,105,979
    
    
    
    1,239,708
    
    
    
    1,247,457Federal Home Loan Bank stock
    
    
    14,147
    
    
    
    N/A
    
    
    
    18,069
    
    
    
    N/ABank-owned life insurance
    
    
    28,117
    
    
    
    28,117
    
    
    
    27,578
    
    
    
    27,578Accrued interest receivable
    
    
    8,099
    
    
    
    8,099
    
    
    
    8,519
    
    
    
    8,519Financial liabilitiesDeposits
    
    $
    (1,796,665
    )
    
    $
    (1,771,080
    )
    
    $
    (1,548,090
    )
    
    $
    (1,536,545
    )Federal Home Loan Bank
advances
    
    
    (312,504
    )
    
    
    (319,052
    )
    
    
    (410,841
    )
    
    
    (427,243
    )Repurchase agreement
    
    
    (25,000
    )
    
    
    (25,277
    )
    
    
    (25,000
    )
    
    
    (24,980
    )Other borrowings
    
    
    (10,000
    )
    
    
    (10,000
    )
    
    
    
    
    
    
    Accrued interest payable
    
    
    (1,884
    )
    
    
    (1,884
    )
    
    
    (1,769
    )
    
    
    (1,769
    )
   NOTE 7  LOAN SALES AND SERVICING
  2009
    
    
    2008Beginning balance
    
    $
    159,884
    
    
    $
    13,172Loans originated for sale
    
    
    5,742,599
    
    
    
    591,218Proceeds from sale of loans held for sale
    
    
    (5,577,643
    )
    
    
    (453,896
    )Net gain on sale of loans held for sale
    
    
    16,591
    
    
    
    9,390Loans held for sale, net
    
    $
    341,431
    
    
    $
    159,884
  2009
    
    
    2008
    
    
    2007Mortgage loan portfolios serviced for:FNMA
    
    
    145,762
    
    
    
    178,611
    
    
    
    203,933Other investors
    
    
    249,709
    
    
    
    256,403
    
    
    
    194,518Total mortgage loans serviced for
others
    
    $
    395,471
    
    
    $
    435,014
    
    
    $
    398,451
  106




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##### Table of Contents



NOTE 7  LOAN SALES AND SERVICING
  NOTE 8  ACCRUED INTEREST RECEIVABLE
  December 31, 2009
    
    
    December 31, 2008Loans
    
    $
    5,217
    
    
    $
    5,559Securities
    
    
    2,882
    
    
    
    2,960Total
    
    $
    8,099
    
    
    $
    8,519
 NOTE 9  PREMISES AND EQUIPMENT
  December 31, 2009
    
    
    December 31, 2008Land
    
    $
    17,197
    
    
    $
    12,105Buildings
    
    
    42,912
    
    
    
    41,802Furniture, fixtures and
equipment
    
    
    35,558
    
    
    
    34,728Leasehold improvements
    
    
    2,066
    
    
    
    2,91897,733
    
    
    
    91,553Less: accumulated depreciation
    
    
    (47,293
    )
    
    
    (45,616
    )Total
    
    $
    50,440
    
    
    $
    45,937
  Operating Leases
 2010
    
    $
    1,2992011
    
    
    9852012
    
    
    8382013
    
    
    4922014
    
    
    364Thereafter
    
    
    3,211Total
    
    $
    7,189
   107




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##### Table of Contents



NOTE 10  DEPOSITS
  ® ® ® ®
  2010
    
    $
    416,2412011
    
    
    155,4542012
    
    
    12,5452013
    
    
    35,5992014
    
    
    13,347Total
    
    $
    633,186
   Years EndedDecember 31,2009
    
    
    2008
    
    
    2007Interest bearing demand
    
    $
    3,350
    
    
    $
    868
    
    
    $
    428Savings and money market
    
    
    12,007
    
    
    
    14,442
    
    
    
    17,711Time
    
    
    19,009
    
    
    
    20,219
    
    
    
    18,934Total
    
    $
    34,366
    
    
    $
    35,529
    
    
    $
    37,073
 NOTE 11  REPURCHASE AGREEMENT
  2009
    
    
    2008Average balance during the year
    
    $
    31,967
    
    
    $
    37,666Average interest rate during the year
    
    
    2.18
    %
    
    
    3.90
    %Maximum month-end balance during the year
    
    $
    33,747
    
    
    $
    39,835Weighted average interest rate at year-end
    
    
    1.69
    %
    
    
    3.05
    %
  108




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##### Table of Contents



NOTE 12  BORROWINGS
 Federal Home Loan Bank Advances
    2010
    
    $
    48,6362011
    
    
    49,1982012
    
    
    67,1302013
    
    
    39,7112014
    
    
    20,328Thereafter
    
    
    87,501Total
    
    $
    312,504
 Other Borrowings
    109




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##### Table of Contents



NOTE 13  BENEFITS
 Post-Retirement Healthcare Plan
  401(k) Plan
  Deferred Compensation Plan
     110




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##### Table of Contents



NOTE 13  BENEFITS
   NOTE 14  ESOP PLAN
    2009
    
    
    2008Allocated to participants
    
    
    317,748
    
    
    
    224,004Unearned
    
    
    610,647
    
    
    
    704,391Total ESOP shares
    
    
    928,395
    
    
    
    928,395Fair value of unearned shares at December 31
    
    $
    8,799
    
    
    $
    11,305
 NOTE 15  INCOME TAXES
   2009
    
    
    2008
    
    
    2007Current expense (benefit)
    
    $
    (2,991
    )
    
    $
    3,027
    
    
    $
    3,020Deferred expense (benefit)
    
    
    3,951
    
    
    
    (5,304
    )
    
    
    (276
    )Total income tax expense
(benefit)
    
    $
    960
    
    
    $
    (2,277
    )
    
    $
    2,744
  111




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##### Table of Contents



NOTE 15  INCOME TAXES
  December 31, 2009
    
    
    December 31, 2008Deferred tax assets:Allowance for loan losses
    
    $
    4,266
    
    
    $
    3,143REOs
    
    
    376
    
    
    
    165Depreciation
    
    
    1,549
    
    
    
    2,346Deferred compensation arrangements
    
    
    599
    
    
    
    486Self-funded health insurance
    
    
    88
    
    
    
    129Non-accrual interest
    
    
    162
    
    
    
    90Restricted stock and stock options
    
    
    426
    
    
    
    384Net unrealized loss on securities
available for sale
    
    
    
    
    
    
    855Other-than-temporary impairment
    
    
    
    
    
    
    4,786Other
    
    
    112
    
    
    
    1107,578
    
    
    
    12,494Deferred tax liabilities:Mortgage servicing assets
    
    
    (302
    )
    
    
    (476
    )Net unrealized gain on securities
available for sale
    
    
    (2,017
    )
    
    
    Other
    
    
    (175
    )
    
    
    (111
    )(2,494
    )
    
    
    (587
    )Net deferred tax asset
    
    $
    5,084
    
    
    $
    11,907
   2009
    
    
    2008
    
    
    2007Federal statutory rate times
financial statement income
    
    $
    1,234
    
    
    $
    (1,901
    )
    
    $
    2,656Effect of:State taxes, net of federal benefit
    
    
    98
    
    
    
    72
    
    
    
    179New market tax credit
    
    
    (113
    )
    
    
    (106
    )
    
    
    (84
    )Bank-owned life insurance income
    
    
    (183
    )
    
    
    (368
    )
    
    
    (156
    )Municipal interest income
    
    
    (156
    )
    
    
    (37
    )
    
    
    ESOP
    
    
    27
    
    
    
    26
    
    
    
    133Other
    
    
    53
    
    
    
    37
    
    
    
    16Total income tax expense (benefit)
    
    $
    960
    
    
    $
    (2,277
    )
    
    $
    2,744
 NOTE 16  RELATED PARTY TRANSACTIONS
  Beginning balance
    
    $
    2,226New loans
    
    
    24Effect of changes in composition of related parties
    
    
    Repayments
    
    
    (666
    )Ending balance
    
    $
    1,584
   112




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##### Table of Contents



NOTE 17  SHARE-BASED COMPENSATION
 Compensation  Stock Compensation
    Weighted-AverageGrant DateShares
    
    
    Fair ValueNon-vested at January 1, 2009
    
    
    346,161
    
    
    $
    18.41Granted
    
    
    
    
    
    
    Vested
    
    
    (86,043
    )
    
    
    18.42Forfeited
    
    
    
    
    
    
    Non-vested at December 31, 2009
    
    
    260,118
    
    
    $
    18.41
    113




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##### Table of Contents



NOTE 17  SHARE-BASED COMPENSATION
    2009
    
    
    2008
    
    
    2007Risk-free interest rate
    
    
    2.69
    %
    
    
    3.45
    %
    
    
    4.75
    %Expected term of stock options (years)
    
    
    7.5
    
    
    
    7.5
    
    
    
    7.5Expected stock price volatility
    
    
    37.00
    %
    
    
    26.19
    %
    
    
    21.27
    %Expected dividends
    
    
    1.53
    %
    
    
    1.84
    %
    
    
    1.08
    %
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at January 1, 2009
    
    
    235,661
    
    
    
    17.91
    
    
    
    8.7
    
    
    
    Granted
    
    
    88,500
    
    
    
    14.81
    
    
    
    10.0
    
    
    
    14Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (62,457
    )
    
    
    16.68
    
    
    
    
    
    
    
    Outstanding at December 31, 2009
    
    
    261,704
    
    
    $
    17.16
    
    
    
    8.1
    
    
    $
    14Fully vested and expected to vest
    
    
    236,118
    
    
    $
    17.31
    
    
    
    8.0
    
    
    $
    12Exercisable at December 31, 2009
    
    
    29,103
    
    
    $
    18.36
    
    
    
    7.5
    
    
    $
    
    114




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##### Table of Contents



NOTE 18  REGULATORY CAPITAL MATTERS
    To Be Well-CapitalizedRequired for Capital
    
    
    Under Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action RegulationsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in Thousands)As of December 31, 2009:Total capital (to risk-weighted assets)
    
    $
    201,250
    
    
    
    15.27
    %
    
    $
    105,450
    
    
    
    8.00
    %
    
    $
    131,812
    
    
    
    10.00
    %Tier 1 (core) capital (to
risk-weighted assets)
    
    
    189,678
    
    
    
    14.39
    %
    
    
    52,725
    
    
    
    4.00
    %
    
    
    79,087
    
    
    
    6.00
    %Tier 1 (core) capital (to adjusted
total assets)
    
    
    189,678
    
    
    
    7.99
    %
    
    
    94,900
    
    
    
    4.00
    %
    
    
    118,626
    
    
    
    5.00
    %As of December 31, 2008:Total capital (to risk-weighted assets)
    
    $
    163,678
    
    
    
    11.18
    %
    
    $
    117,146
    
    
    
    8.00
    %
    
    $
    146,432
    
    
    
    10.00
    %Tier 1 (core) capital (to
risk-weighted assets)
    
    
    154,938
    
    
    
    10.58
    %
    
    
    58,573
    
    
    
    4.00
    %
    
    
    87,859
    
    
    
    6.00
    %Tier 1 (core) capital (to adjusted
total assets)
    
    
    154,938
    
    
    
    7.02
    %
    
    
    88,258
    
    
    
    4.00
    %
    
    
    110,323
    
    
    
    5.00
    %
  December 31,2009
    
    
    2008GAAP equity
    
    $
    194,491
    
    
    $
    162,731Disallowed servicing and deferred tax assets
    
    
    (88
    )
    
    
    (8,344
    )Unrealized loss (gain) on securities available
for sale
    
    
    (3,802
    )
    
    
    1,613Goodwill and other assets
    
    
    (923
    )
    
    
    (1,062
    )Tier 1 capital
    
    
    189,678
    
    
    
    154,938General allowance for loan losses
    
    
    11,572
    
    
    
    8,740Total capital
    
    $
    201,250
    
    
    $
    163,678
   115




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##### Table of Contents



NOTE 18  REGULATORY CAPITAL MATTERS
  Dividend Restrictions and Information
 NOTE 19  LOAN COMMITMENTS, CONTINGENT LIABILITIES AND OTHER RELATED ACTIVITIES
   2009
    
    
    2008Fixed Rate
    
    
    Variable Rate
    
    
    Fixed Rate
    
    
    Variable RateCommitments to make loans
    
    $
    60,263
    
    
    $
    24,396
    
    
    $
    74,526
    
    
    $
    53,133Unused lines of credit
    
    
    6,347
    
    
    
    73,403
    
    
    
    6,894
    
    
    
    95,633Unused commitment on
Purchase Program loans
    
    
    
    
    
    
    198,626
    
    
    
    
    
    
    
    17,724Total
    
    $
    66,610
    
    
    $
    296,425
    
    
    $
    81,420
    
    
    $
    166,490
   116




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##### Table of Contents



NOTE 19  LOAN COMMITMENTS, CONTINGENT LIABILITIES AND OTHER RELATED ACTIVITIES
      NOTE 20  BUSINESS COMBINATION
    117




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##### Table of Contents



NOTE 20  BUSINESS COMBINATION
  Fixed assets
    
    $
    176Pre-paid rents on assigned contracts
    
    
    33Security deposits on assigned contracts
    
    
    25Goodwill
    
    
    1,089Total
    
    $
    1,323
  2009
    
    
    2008Beginning of year
    
    $
    1,089
    
    
    $
    1,089Acquired goodwill
    
    
    
    
    
    
    Impairment
    
    
    
    
    
    
    End of year
    
    $
    1,089
    
    
    $
    1,089
  NOTE 21  PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
  
 2009
    
    
    2008ASSETSCash on deposit at subsidiary
    
    $
    8,331
    
    
    $
    22,904Investment in banking subsidiary
    
    
    194,491
    
    
    
    162,731Receivable from banking subsidiary
    
    
    6,255
    
    
    
    1,129ESOP note receivable and other assets
    
    
    6,732
    
    
    
    7,423Total assets
    
    $
    215,809
    
    
    $
    194,187LIABILITIES AND SHAREHOLDERS EQUITYBorrowings
    
    $
    10,000
    
    
    $
    Income tax payable
    
    
    
    
    
    
    21Other liabilities
    
    
    127
    
    
    
    27Shareholders equity
    
    
    205,682
    
    
    
    194,139Total liabilities and shareholders equity
    
    $
    215,809
    
    
    $
    194,187
  118




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##### Table of Contents



NOTE 21  PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
 
 2009
    
    
    2008
    
    
    2007Interest income on ESOP loan
    
    $
    391
    
    
    $
    435
    
    
    $
    481Other income
    
    
    
    
    
    
    
    
    
    
    1Interest expense
    
    
    127
    
    
    
    
    
    
    
    Operating expenses
    
    
    341
    
    
    
    344
    
    
    
    333Income (loss) before income tax expense and equity
in undistributed earnings (loss) of subsidiary
    
    
    (77
    )
    
    
    91
    
    
    
    149Income tax expense (benefit)
    
    
    (21
    )
    
    
    31
    
    
    
    50Equity in undistributed earnings (loss) of subsidiary
    
    
    2,726
    
    
    
    (3,375
    )
    
    
    4,968Net income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067
 
 2009
    
    
    2008
    
    
    2007Cash flows from operating activitiesNet income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067Adjustments to reconcile net income (loss) to net cash
from operating activities:Equity in undistributed (earnings) loss of subsidiary
    
    
    (2,726
    )
    
    
    3,375
    
    
    
    (4,968
    )Vesting of restricted stock
    
    
    1,501
    
    
    
    1,601
    
    
    
    Payment due from subsidiary
    
    
    (5,000
    )
    
    
    
    
    
    
    Net change in other assets
    
    
    (137
    )
    
    
    (25
    )
    
    
    Net change in other liabilities
    
    
    263
    
    
    
    (187
    )
    
    
    50Net cash from operating activities
    
    
    (3,429
    )
    
    
    1,449
    
    
    
    149Cash flows from investing activitiesCapital contribution to subsidiary
    
    
    (19,500
    )
    
    
    
    
    
    
    Payments received on ESOP note receivable
    
    
    828
    
    
    
    968
    
    
    
    552Net cash from investing activities
    
    
    (18,672
    )
    
    
    968
    
    
    
    552Cash flows from financing activitiesProceeds from borrowing
    
    
    10,000
    
    
    
    
    
    
    
    Treasury stock purchased
    
    
    
    
    
    
    (4,312
    )
    
    
    (17,566
    )Payment of dividends
    
    
    (2,472
    )
    
    
    (3,154
    )
    
    
    (2,115
    )Net cash from financing activities
    
    
    7,528
    
    
    
    (7,466
    )
    
    
    (19,681
    )Net change in cash and cash equivalents
    
    
    (14,573
    )
    
    
    (5,049
    )
    
    
    (18,980
    )Beginning cash and cash equivalents
    
    
    22,904
    
    
    
    27,953
    
    
    
    46,933Ending cash and cash equivalents
    
    $
    8,331
    
    
    $
    22,904
    
    
    $
    27,953
  119




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NOTE 22  EARNINGS (LOSS) PER SHARE
   2009
    
    
    2008
    
    
    2007BasicNet income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067Weighted average common shares outstanding
    
    
    24,929,157
    
    
    
    25,078,598
    
    
    
    25,746,038Less: Average unallocated ESOP shares
    
    
    (660,965
    )
    
    
    (762,449
    )
    
    
    (862,296
    )Average unvested restricted stock awards
    
    
    (292,584
    )
    
    
    (378,769
    )
    
    
    (257,176
    )Average shares
    
    
    23,975,608
    
    
    
    23,937,380
    
    
    
    24,626,566Basic earnings (loss) per common share
    
    $
    0.11
    
    
    $
    (0.14
    )
    
    $
    0.20DilutedNet income (loss)
    
    $
    2,670
    
    
    $
    (3,315
    )
    
    $
    5,067Weighted
average common shares outstanding for basic earnings (loss) per common share
    
    
    23,975,608
    
    
    
    23,937,380
    
    
    
    24,626,566Add: Dilutive effects of assumed exercises of stock
options
    
    
    
    
    
    
    
    
    
    
    Dilutive effects of full vesting of stock awards
    
    
    
    
    
    
    
    
    
    
    Average shares and dilutive potential common shares
    
    
    23,975,608
    
    
    
    23,937,380
    
    
    
    24,626,566Diluted earnings (loss) per common share
    
    $
    0.11
    
    
    $
    (0.14
    )
    
    $
    0.20
   120




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##### Table of Contents



NOTE 23  SEGMENT INFORMATION
  Year EndedDecember 31, 2009TotalEliminations
    
    
    Segmentsand
    
    
    (ConsolidatedBanking
    
    
    VPBM
    
    
    Adjustments1
    
    
    Total)Results of Operations:Total interest income
    
    $
    108,413
    
    
    $
    2,327
    
    
    $
    (2,439
    )
    
    $
    108,301Total interest expense
    
    
    49,550
    
    
    
    1,583
    
    
    
    (1,847
    )
    
    
    49,286Provision for loan losses
    
    
    7,652
    
    
    
    
    
    
    
    
    
    
    
    7,652Net interest income after provision for loan losses
    
    
    51,211
    
    
    
    744
    
    
    
    (592
    )
    
    
    51,363Other revenue
    
    
    22,967
    
    
    
    (4
    )
    
    
    (109
    )
    
    
    22,854Net gain (loss) on sale of loans
    
    
    (1,024
    )
    
    
    17,615
    
    
    
    
    
    
    
    16,591Impairment of collateralized debt obligations (all
credit)
    
    
    (12,246
    )
    
    
    
    
    
    
    
    
    
    
    (12,246
    )Total non-interest expense
    
    
    57,641
    
    
    
    17,059
    
    
    
    232
    
    
    
    74,932Income before income tax expense (benefit)
    
    
    3,267
    
    
    
    1,296
    
    
    
    (933
    )
    
    
    3,630Income tax expense (benefit)
    
    
    541
    
    
    
    440
    
    
    
    (21
    )
    
    
    960Net income
    
    $
    2,726
    
    
    $
    856
    
    
    $
    (912
    )
    
    $
    2,670Segment assets
    
    $
    2,380,938
    
    
    $
    41,391
    
    
    $
    (42,825
    )
    
    $
    2,379,504Noncash items:Net gain (loss) on sale of loans
    
    
    (1,024
    )
    
    
    17,615
    
    
    
    
    
    
    
    16,591Depreciation
    
    
    3,554
    
    
    
    230
    
    
    
    
    
    
    
    3,784Provision for loan losses
    
    
    7,652
    
    
    
    
    
    
    
    
    
    
    
    7,652
 Year EndedDecember 31, 2008TotalEliminations
    
    
    Segmentsand
    
    
    (ConsolidatedBanking
    
    
    VPBM
    
    
    Adjustments1
    
    
    Total)Results of Operations:Total interest income
    
    $
    96,936
    
    
    $
    1,272
    
    
    $
    (965
    )
    
    $
    97,243Total interest expense
    
    
    46,604
    
    
    
    603
    
    
    
    (1,038
    )
    
    
    46,169Provision for loan losses
    
    
    6,171
    
    
    
    
    
    
    
    
    
    
    
    6,171Net interest income after provision for loan
losses
    
    
    44,161
    
    
    
    669
    
    
    
    73
    
    
    
    44,903Other revenue
    
    
    23,359
    
    
    
    (3
    )
    
    
    (73
    )
    
    
    23,283Net gain on sale of loans
    
    
    61
    
    
    
    13,138
    
    
    
    (3,809
    )
    
    
    9,390Impairment of collateralized debt obligations
    
    
    (13,809
    )
    
    
    
    
    
    
    
    
    
    
    (13,809
    )Total non-interest expense
    
    
    59,729
    
    
    
    13,168
    
    
    
    (3,538
    )
    
    
    69,359Income (loss) before income tax expense
(benefit)
    
    
    (5,957
    )
    
    
    636
    
    
    
    (271
    )
    
    
    (5,592
    )Income tax expense (benefit)
    
    
    (2,582
    )
    
    
    274
    
    
    
    31
    
    
    
    (2,277
    )Net income (loss)
    
    $
    (3,375
    )
    
    $
    362
    
    
    $
    (302
    )
    
    $
    (3,315
    )Segment assets
    
    $
    2,214,463
    
    
    $
    26,831
    
    
    $
    (27,879
    )
    
    $
    2,213,415Noncash items:Net gain on sale of loans
    
    
    61
    
    
    
    13,138
    
    
    
    (3,809
    )
    
    
    9,390Depreciation
    
    
    4,184
    
    
    
    181
    
    
    
    
    
    
    
    4,365Provision for loan losses
    
    
    6,171
    
    
    
    
    
    
    
    
    
    
    
    6,171
 1
    
    Includes eliminating entries for intercompany transactions and stand-alone
expenses of ViewPoint Financial Group.  121




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NOTE 24  QUARTERLY FINANCIAL DATA
 Net InterestIncome afterInterest
    
    
    Provision for
    
    
    Net Income
    
    
    Earnings (Loss) per ShareIncome
    
    
    Loan Losses
    
    
    (Loss)
    
    
    Basic
    
    
    Diluted2009First quarter
    
    $
    27,512
    
    
    $
    13,019
    
    
    $
    1,244
    
    
    $
    0.05
    
    
    $
    0.05Second quarter
    
    
    27,309
    
    
    
    13,321
    
    
    
    (3,831
    )1
    
    
    (0.16
    )1
    
    
    (0.16
    )1Third quarter
    
    
    26,388
    
    
    
    12,441
    
    
    
    2,893
    
    
    
    0.12
    
    
    
    0.12Fourth quarter
    
    
    27,092
    
    
    
    12,582
    
    
    
    2,364
    
    
    
    0.10
    
    
    
    0.102008First quarter
    
    $
    22,132
    
    
    $
    10,253
    
    
    $
    1,499
    
    
    $
    0.06
    
    
    $
    0.06Second quarter
    
    
    23,240
    
    
    
    10,958
    
    
    
    1,400
    
    
    
    0.06
    
    
    
    0.06Third quarter
    
    
    25,297
    
    
    
    11,779
    
    
    
    1,189
    
    
    
    0.05
    
    
    
    0.05Fourth quarter
    
    
    26,574
    
    
    
    11,913
    
    
    
    (7,403
    )2
    
    
    (0.31
    )2
    
    
    (0.31
    )2
 1
    
    During the second quarter of 2009, the Company recognized a $12,246 non-cash,
pre-tax charge for the other-than-temporary impairment of collateralized debt obligations. This
impairment charge was partially offset by the sale of 22 agency residential collateralized mortgage
obligations and two agency residential mortgage-backed securities, which resulted in a $2,377
pre-tax gain during the second quarter of 2009.2
    
    During the fourth quarter of 2008, the Company recognized a $13,809 non-cash, pre-tax
charge for other-than-temporary impairment of collateralized debt obligations. NOTE 25  SUBSEQUENT EVENTS
    122




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Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures: An evaluation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the Act)) was carried out as of December 31, 2009, under the supervision and with the
participation of our Chief Executive Officer, Chief Financial Officer and several other
members of our senior management. Our Chief Executive Officer and Chief Financial Officer
concluded that, as of December 31, 2009, our disclosure controls and procedures were effective
in ensuring that the information we are required to disclose in the reports we file or submit
under the Act is (i) accumulated and communicated to our management (including the Chief
Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded,
processed, summarized and reported within the time periods specified in the SECs rules and
forms.
 (b)
    
    Managements Report on Internal Control Over Financial Reporting: Management of the
Company is responsible for establishing and maintaining an effective system of internal
control over financial reporting. The Companys system of internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. There are inherent limitations in the effectiveness
of any system of internal control over financial reporting, including the possibility of human
error and circumvention or overriding of controls. Accordingly, even an effective system of
internal control over financial reporting can provide only reasonable assurance with respect
to financial statement preparation. Projections of any evaluation of effectiveness to future
periods are subject to the risks that controls may become inadequate because of changes in
conditions or that the degree of compliance with the policies or procedures may deteriorate.
  (c)
    
    Changes in Internal Control Over Financial Reporting: During the quarter ended
December 31, 2009, no change occurred in our internal control over financial reporting that
has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
 
 Item 9B.
    
    Other Information
   123




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PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
 Directors.
   Term ofPosition(s) Held in the
    
    Director
    
    
    OfficeName
    
    Age (1)
    
    
    Company
    
    Since (2)
    
    
    ExpiresNOMINEESGary D. Basham
    
    
    66
    
    
    Vice Chairman of the Board
    
    
    1988
    
    
    
    2010Jack D. Ersman
    
    
    67
    
    
    Director
    
    
    1989
    
    
    
    2010DIRECTORS REMAINING IN OFFICEJames B. McCarley
    
    
    66
    
    
    Chairman of the Board
    
    
    1992
    
    
    
    2011Karen H. OShea
    
    
    59
    
    
    Director
    
    
    1998
    
    
    
    2011Garold R. Base
    
    
    62
    
    
    Director, President and CEO
    
    
    2006
    
    
    
    2012Anthony J. LeVecchio
    
    
    63
    
    
    Director
    
    
    2006
    
    
    
    2012V. Keith Sockwell
    
    
    67
    
    
    Director
    
    
    1987
    
    
    
    2012
 
 (1)
    
    As of December 31, 2009(2)
    
    Includes service as a director of ViewPoint Bank and its predecessor entity  Garold (Gary) R. Base.
  124




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Gary D. Basham.
 Jack D. Ersman
 James B. McCarley.
   125




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Karen H. OShea.
 V. Keith Sockwell
 Anthony J. LeVecchio.
 Executive Officers.
  Corporate Governance.
 Board Meetings and Committees.
  126




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##### Table of Contents



Executive Committee.
 Compensation Committee
  Audit Committee.
  Nominating Committee.
 (i)
    
    Recommend to the Board the appropriate size of the Board and assist in
identifying, interviewing and recruiting candidates for the Board;
 (ii)
    
    Recommend candidates (including incumbents) for election and appointment to the
Board of Directors, subject to the provisions set forth in the Companys charter and
bylaws relating to the nomination or appointment of directors, based on the following
criteria: business experience, education, integrity and reputation, independence,
conflicts of interest, diversity, age, number of other directorships and commitments
(including charitable organizations), tenure on the Board, attendance at Board and
committee meetings, stock ownership, specialized knowledge (such as an understanding
of banking, accounting, marketing, finance, regulation and public policy) and a
commitment to the Companys communities and shared values, as well as overall
experience in the context of the needs of the Board as a whole;
  127




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##### Table of Contents



(iii)
    
    Review nominations submitted by shareholders which have been addressed to the
Companys Secretary and which comply with the requirements of the Companys charter and
bylaws. Nominations from shareholders will be considered and evaluated using the same
criteria as all other nominations;
 (iv)
    
    Annually recommend to the Board committee assignments and committee chairs on
all committees of the Board, and recommend committee members to fill vacancies on
committees as necessary; and
 (v)
    
    Perform any other duties or responsibilities expressly delegated to the
Committee by the Board.
   th
  Committee Charters.
 Section 16(a) Beneficial Ownership Reporting Compliance.
     128




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##### Table of Contents



Code of Ethics.
 www.viewpointfinancialgroup.com
 
 Item 11.
    
    Executive Compensation
   The Objectives of our Executive Compensation Program
   
    
    Attract and retain talented and experienced executives in the highly competitive banking
industry;
 
    
    Motivate and reward executives whose knowledge, skills and performance are critical to
our success;
 
    
    Provide a competitive compensation package which is weighted towards pay for
performance, and in which total compensation is determined by company, team and individual
results and the creation of shareholder value;
 
    
    Ensure fairness among the executive management team by recognizing the contributions
each executive makes to our success;
 
    
    Foster a shared commitment among executives by coordinating their company, team and
individual goals; and
 
    
    Compensate our executives to manage our business to meet our long-range objectives.
 Our Executive Compensation Programs
  Element
    
    Characteristics
    
    PurposeBase salary
    
    Fixed annual cash
compensation; all
executives are
eligible for
periodic increases
in base salary
based on
performance;
targeted at market
pay levels.
    
    Keep our annual
compensation
competitive with
the market for
skills and
experience
necessary to meet
the requirements of
the executives
role with us.Executive Officer 
Incentive Plan
    
    An annual cash
incentive for
executives based on
ViewPoint Bank and
individual
performance.
    
    Encourage
achievement of
goals related to
profitability and
growth and reward
exceptional
performance, both
organizationally
and individually.
  129




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Element
    
    Characteristics
    
    PurposeEquity Incentive Plan
    
    This plan is a long
term incentive plan
that consists of
equity based
awards, such as
options and
restricted stock.
Awards are
generally subject
to forfeiture and
limits on transfer
until they vest.
    
    This plan was
designed to retain
key employees,
encourage directors
and key employees
to focus on
long-range
objectives and to
further link the
interests of
directors and
officers directly
to the interests of
the shareholders.Retirement Benefits
    
    Tax-deferred 401(k)
plan in which all
eligible employees
can choose to defer
compensation for
retirement. We
provide a matching
contribution for
eligible employees
and employees vest
in these
contributions with
each year of
service with full
vesting after 6
years of service. 
In the 4th quarter
of 2006, an ESOP
feature was added
to the 401(k) plan
to create a KSOP.
Shares of ViewPoint
Financial Group
stock are allocated
to all eligible
employees. The
ESOP has a 5 year
vesting period. 
The Deferred
Compensation Plan
is a nonqualified
voluntary deferral
program that allows
executive officers
to defer a portion
of their annual
cash compensation. 
The Supplemental
Executive
Retirement Plan
(SERP) is a
nonqualified,
contributory
program. The SERP
applies only to the
CEO, and allows him
to defer all or
part of his cash
compensation.
ViewPoint Bank also
makes a
contribution equal
to 7% of the CEOs
annual base salary
and incentive
award. 
Retired employees
are eligible to
receive a
contribution toward
the cost of medical
benefits. Upon
retirement,
ViewPoint Bank will
provide $175 per
month toward the
eligible
participants group
coverage.
Eligibility is
determined by age
and length of
service, and ends
when the
participant becomes
eligible for
Medicare.
    
    Provide employees
the opportunity to
save for their
retirement. Account
balances are
affected by
contributions.
The 401(k) Plan is
described in more
detail on page 142 of this
report.
To reward employees
for the success of
ViewPoint Financial
Group and to create
ownership among the
employee
population, aiding
in recruitment and
retention of
employees. The
ESOP is described
in more detail on
pages 142 and 143 of this
report. 
Provides a
tax-deferred
retirement savings
alternative. The
Deferred
Compensation Plan
is described in
more detail on page
142 of this report.
The SERP
supplements the
CEOs retirement
benefits. The SERP
is described in
more detail on page
142 of this report.
Provide a benefit
to the retired
employee to meet
the health and
welfare needs of
the employee.Health & Welfare Benefits
    
    Fixed component.
The same/comparable
health and welfare
benefits (medical,
dental, vision,
disability
insurance and life
insurance) are
available for all
full-time
employees. 
Continuation of
health and welfare
benefits may occur
as part of
severance upon
termination of
employment under
certain
circumstances.
    
    Provides benefits
to meet the health
and welfare needs
of employees and
their families.
  130




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##### Table of Contents



Element
    
    Characteristics
    
    PurposeAdditional Benefits & Perquisites
    
    CEO only.
    
    Provides for
benefit allowance,
automobile, home
security and spouse
travel.Employment and Change in
Control Agreements;
Termination Benefits
    
    We have an
employment
agreement with the
CEO and severance
agreements with our
other named
executive officers.
The employment
agreement and
severance
agreements provide
for payments in the
event of an
involuntary
termination of the
officer.
    
    These arrangements
are designed to
retain executives
and provide
continuity of
management. The
employment
agreement and
severance
agreements are
described in more
detail on page 140
and page 141 of
this report.
  Determination of Appropriate Pay Levels
 Pay Philosophy and Competitive Standing
  th
   131




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##### Table of Contents



Assets
    
    
    Market Cap
    
    
    RevenueCompany Name
    
    ($M)
    
    
    ($M)
    
    
    ($M)Bank Mutual Corporation
    
    
    3,561
    
    
    
    412
    
    
    
    39Beneficial Mutual Bancorp, Inc. (MHC)
    
    
    4,445
    
    
    
    747
    
    
    
    23Camden National Corporation
    
    
    2,273
    
    
    
    253
    
    
    
    14Cascade Financial Corporation
    
    
    1,647
    
    
    
    21
    
    
    
    27Enterprise Financial Services Corp.
    
    
    2,519
    
    
    
    119
    
    
    
    11ESB Financial Corporation
    
    
    1,979
    
    
    
    161
    
    
    
    0First Community Bancshares, Inc.
    
    
    2,298
    
    
    
    223
    
    
    
    23First Defiance Financial Corp.
    
    
    2,019
    
    
    
    121
    
    
    
    122IBERIABANK Corporation
    
    
    6,467
    
    
    
    940
    
    
    
    14Kearny Financial Corp. (MHC)
    
    
    2,165
    
    
    
    721
    
    
    
    27Lakeland Financial Corporation
    
    
    2,470
    
    
    
    255
    
    
    
    17MetroCorp Bancshares, Inc.
    
    
    1,630
    
    
    
    39
    
    
    
    23S.Y. Bancorp, Inc.
    
    
    1,764
    
    
    
    314
    
    
    
    35Southside Bancshares, Inc.
    
    
    2,942
    
    
    
    336
    
    
    
    57Sterling Bancshares, Inc.
    
    
    4,860
    
    
    
    598
    
    
    
    21Suffolk Bancorp
    
    
    1,672
    
    
    
    284
    
    
    
    59Texas Capital Bancshares, Inc.
    
    
    5,318
    
    
    
    603
    
    
    
    17United Western Bancorp, Inc.
    
    
    2,628
    
    
    
    109
    
    
    
    24Univest Corporation of Pennsylvania
    
    
    2,118
    
    
    
    356
    
    
    
    25Virginia Commerce Bancorp, Inc.
    
    
    2,734
    
    
    
    107
    
    
    
    25High
    
    
    6,467
    
    
    
    940
    
    
    
    122Low
    
    
    1,630
    
    
    
    21
    
    
    
    0Average
    
    
    3,023
    
    
    
    333
    
    
    
    30ViewPoint Bank (MHC)
    
    
    2,350
    
    
    
    350
    
    
    
    23
  Base Salary
    132




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##### Table of Contents



Annual Cash Incentive Plan
   
    
    Return on average equity
 
    
    Efficiency ratio
 
    
    Loan growth
 
    
    Deposit growth
 
    
    Earnings per share
   
    
    Leadership
 
    
    Implementation
 
    
    Management
 
    
    Organization
 
    
    Relationships
 
    
    Board interaction (Mr. Base only)
     133




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##### Table of Contents



Equity Incentive Plan
    Impact of Accounting and Tax Treatments of Compensation
    Process Used in Determining Compensation
   134




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##### Table of Contents



Summary Compensation
  Non-EquityIncentive
    
    
    AllPlan
    
    
    OtherName and
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Compen-
    
    
    Compen-Principal
    
    
    
    
    
    Salary
    
    
    Awards
    
    
    sation
    
    
    sation
    
    
    TotalPosition
    
    Year
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)
    
    
    ($)Garold R. Base
    
    
    2009
    
    
    
    490,360
    
    
    
    
    
    
    
    112,890
    
    
    
    134,304
    (3)
    
    
    737,554President and CEO
    
    
    2008
    
    
    
    478,400
    
    
    
    
    
    
    
    245,180
    
    
    
    148,408
    
    
    
    871,9882007
    
    
    
    460,000
    
    
    
    2,572,114
    
    
    
    116,653
    
    
    
    124,465
    
    
    
    3,273,232Pathie E. McKee
    
    
    2009
    
    
    
    216,320
    
    
    
    
    
    
    
    37,721
    
    
    
    36,974
    (3)
    
    
    291,015EVP and CFO
    
    
    2008
    
    
    
    208,000
    
    
    
    
    
    
    
    69,732
    
    
    
    47,224
    
    
    
    324,9562007
    
    
    
    200,000
    
    
    
    834,770
    
    
    
    24,268
    
    
    
    38,823
    
    
    
    1,097,861Mark E. Hord
    
    
    2009
    
    
    
    217,625
    
    
    
    
    
    
    
    36,520
    
    
    
    37,383
    (3)
    
    
    291,528EVP and General Counsel
    
    
    2008
    
    
    
    212,318
    
    
    
    
    
    
    
    85,989
    
    
    
    48,186
    
    
    
    346,4932007
    
    
    
    204,152
    
    
    
    834,770
    
    
    
    22,560
    
    
    
    38,843
    
    
    
    1,100,325James C. Parks
    
    
    2009
    
    
    
    227,136
    
    
    
    
    
    
    
    41,310
    
    
    
    38,499
    (3)
    
    
    306,945EVP, COO and Chief Information Officer of
    
    
    2008
    
    
    
    218,400
    
    
    
    
    
    
    
    79,607
    
    
    
    47,713
    
    
    
    345,720ViewPoint Bank
    
    
    2007
    
    
    
    210,000
    
    
    
    834,770
    
    
    
    25,482
    
    
    
    20,943
    
    
    
    1,091,195Rick M. Robertson
    
    
    2009
    
    
    
    223,860
    
    
    
    
    
    
    
    44,492
    
    
    
    38,319
    (3)
    
    
    306,671EVP and Chief Banking Officer of
ViewPoint Bank
    
    
    2008
    
    
    
    218,400
    
    
    
    
    
    
    
    73,710
    
    
    
    49,140
    
    
    
    341,2502007
    
    
    
    210,000
    
    
    
    834,770
    
    
    
    22,638
    
    
    
    28,577
    
    
    
    1,095,985
 (1)
    
    The executives were granted restricted stock on May 22, 2007 The market price on grant date
was $18.47. Restricted shares awarded were 139,259 shares for Mr. Base and 45,196 shares of
ViewPoint Bank Financial Group common stock for each of the other named executive officers
listed in the table. The closing market price of ViewPoint Bank financial Group common stock
as of December 21, 2009 was $14.41. For each of the named executive officers the stock awards
and total compensation amounts for 2007 have been restated to comply with the Proxy Disclosure
Enhancementsas adopted by the SEC with an effective date of February 28, 2010, and now
reflect the fair value of the stock awards in accordance with FASB ASC Topic 718.  135




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##### Table of Contents



(2)
    
    Represents incentive award amounts awarded for performance under the Annual Incentive Plan.
The awards were approved by the Compensation Committee and were paid following the end of the
fiscal year.(3)
    
    The amounts reported for 2009 consist of the following: Garold R.
    
    
    Pathie E.
    
    
    Mark E.
    
    
    James C.
    
    
    Rick M.Base
    
    
    McKee
    
    
    Hord
    
    
    Parks
    
    
    RobertsonBenefit Type401(k) Matching
    
    $
    12,250
    
    
    $
    11,403
    
    
    $
    11,539
    
    
    $
    11,981
    
    
    $
    11,880SERP Contribution
    
    
    51,488
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ESOP Allocation
    
    
    19,305
    
    
    
    17,975
    
    
    
    18,195
    
    
    
    18,631
    
    
    
    18,552Excess Life Insurance Premiums
    
    
    2,168
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dividends paid on restricted stock
    
    
    22,838
    
    
    
    7,412
    
    
    
    7,412
    
    
    
    7,412
    
    
    
    7,412Bank Owned Life Insurance(a)
    
    
    1,325
    
    
    
    184
    
    
    
    237
    
    
    
    475
    
    
    
    475Perquisites and Other Personal Benefits:Benefit Allowance(b)
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other(c)
    
    
    4,930
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    134,304
    
    
    $
    36,974
    
    
    $
    37,383
    
    
    $
    38,499
    
    
    $
    38,319
 (a)
    
    In September 2007, we purchased Bank Owned Life Insurance (BOLI). Amounts represent
insurance premiums paid on the death benefit portion of the BOLI. Under the terms of the
BOLI, each insured employee was provided the opportunity to designate a beneficiary to
receive a death benefit equal to 2 times the insured employees base salary on the date of
purchase if the insured dies while employed at the Bank.(b)
    
    Under the terms of Mr. Bases employment agreement, he receives an annual allowance to
be used for automobile expenses, professional fees and dues, and as he may otherwise
determine.(c)
    
    This amount includes monthly home security services, accrued vacation payable and
spouse travel. Grants of Plan-Based Awards
  Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)Name
    
    Plan Name
    
    Threshold ($)
    
    
    Target ($)
    
    
    Maximum ($)Garold R. Base
    
    Annual Cash Incentive Plan
    
    
    122,590
    
    
    
    245,180
    
    
    
    490,360Pathie E. McKee
    
    Annual Cash Incentive Plan
    
    
    32,448
    
    
    
    64,896
    
    
    
    129,792Mark E. Hord
    
    Annual Cash Incentive Plan
    
    
    32,644
    
    
    
    65,287
    
    
    
    130,575James C. Parks
    
    Annual Cash Incentive Plan
    
    
    34,070
    
    
    
    68,141
    
    
    
    136,282Rick M. Robertson
    
    Annual Cash Incentive Plan
    
    
    33,579
    
    
    
    67,158
    
    
    
    134,316
 (1)
    
    For each named executive officer, represents the threshold, target and maximum amounts
that were potentially payable for the year ended December 31, 2009 under the Companys
Annual Incentive Plan if all performance criteria met the required level. If some, but not
all performance criteria met or exceeded the threshold level a pro rata portion of the
incentive award could still be earned. The actual amounts earned under these awards for
fiscal 2009 are reflected in the Summary Compensation Table under the Non-Equity Incentive
Plan compensation column. For additional information regarding the Annual Incentive Plan,
see Compensation Discussion and Analysis  Annual Cash Incentive Plan.  136




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Outstanding Equity Awards at Fiscal Year-End
  Stock AwardsNumber of Shares or Units of Stock
    
    
    Market Value of Shares or Units ofName
    
    That Have Not Vested (#)(1)
    
    
    Stock That Have Not Vested ($)(2)Garold R. Base
    
    
    83,555
    
    
    
    1,204,028Pathie E. McKee
    
    
    27,117
    
    
    
    390,756Mark E. Hord
    
    
    27,117
    
    
    
    390,756James C. Parks
    
    
    27,117
    
    
    
    390,756Rick M. Robertson
    
    
    27,117
    
    
    
    390,756
 (1)
    
    The remaining shares vest equally on May 22 over the next three years.(2)
    
    The market value of the shares of restricted stock is based on the closing price of $14.41
per share of ViewPoint Financial Group common stock on December 31, 2009. Option Exercises and Stock Vested
  Stock AwardsNumber of Shares Acquired on Vesting
    
    
    Value Realized on VestingName
    
    (#)
    
    
    ($)(1)Garold R. Base
    
    
    27,852
    
    
    
    392,992Pathie E. McKee
    
    
    9,039
    
    
    
    127,540Mark E. Hord
    
    
    9,039
    
    
    
    127,540James C. Parks
    
    
    9,039
    
    
    
    127,540Rick M. Robertson
    
    
    9,039
    
    
    
    127,540
 (1)
    
    The value of the vested shares of restricted stock is based on the closing price of $14.11
per share of ViewPoint Financial Group common stock on May 22, 2009, the date the shares
vested.  137




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##### Table of Contents



Non-qualified Deferred Compensation
  ExecutiveContributions
    
    
    Companys
    
    
    Aggregate
    
    
    Aggregate
    
    
    Aggregatein Last
    
    
    Contributions
    
    
    Earnings
    
    
    Withdrawals/
    
    
    BalanceFY
    
    
    in Last FY
    
    
    in Last FY
    
    
    Distributions
    
    
    at Last FYEName
    
    Plan
    
    ($)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)
    
    
    ($)(3)Garold R. Base
    
    Supplemental Executive Retirement Plan
    
    
    
    
    
    
    51,488
    
    
    
    14,139
    
    
    
    
    
    
    
    1,080,720Deferred Compensation Plan
    
    
    
    
    
    
    
    
    
    
    27,176
    
    
    
    
    
    
    
    407,277Pathie E. McKee
    
    Deferred Compensation Plan
    
    
    23,613
    
    
    
    
    
    
    
    6,255
    
    
    
    
    
    
    
    38,743
 (1)
    
    These amounts are included in the Summary Compensation Table in the All Other
Compensation column.(2)
    
    Earnings in this column are not included in the Summary Compensation Table because
they were not preferential or above market.(3)
    
    The aggregate amount previously reported as compensation to Mr. Base in the Summary
Compensation Table for previous years is $91,826.  Potential Post-Termination Payments and Benefits
   138




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##### Table of Contents



Garold R. Base
 Involuntary orGood Reason
    
    
    Involuntary ortermination
    
    
    Good Reason(not in
    
    
    termination (inconnection with
    
    
    connection withchange in
    
    
    change inRetirement
    
    
    Death
    
    
    Disability
    
    
    control)
    
    
    control)Benefit
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Employment Contract: (1)Base Salary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    980,720
    
    
    
    980,720Benefit Allowance (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,000
    
    
    
    40,000Continued Employer Contributions under Defined
Contribution Plans (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,150
    
    
    
    93,150Additional Life Insurance
    
    
    
    
    
    
    
    (4)
    
    
    
    (5)
    
    
    6,503
    (4)
    
    
    6,503
    (4)Accrued Vacation Pay(6)
    
    
    169,470
    
    
    
    169,470
    
    
    
    169,470
    
    
    
    169,470
    
    
    
    169,470Supplemental Executive Retirement Plan (7)
    
    
    
    
    
    
    172,915
    
    
    
    172,915
    
    
    
    172,915
    
    
    
    172,915Restricted stock award (8)
    
    
    
    
    
    
    1,204,028
    
    
    
    1,204,028
    
    
    
    
    
    
    
    1,204,028
 (1)
    
    Reflects the amounts payable to or on behalf of Mr. Base over the liquidated damages period
(except for the accrued vacation pay) contained in his employment agreement, which would have
been two years for involuntary or good reason termination and three years for involuntary or
good reason termination in connection with change in control at December 31, 2009. These
amounts are subject to offset for income earned from providing services to another company
during the period. All benefits would terminate upon Mr. Bases death. All payments are
subject to Mr. Bases execution of a general release of claims against the Bank and compliance
with a non-compete agreement for a period of 18 months from the termination of his employment
agreement.(2)
    
    Reflects Mr. Bases allowance to cover expenses related to his automobile, professional fees
and dues, and such other expenses as he may determine.(3)
    
    Reflects the matching contribution under the Banks 401(k) plan ($12,250 annually) and Mr.
Bases Supplemental Executive Retirement Agreement ($34,325 annually, 7% of salary).
Contributions shall be paid to Mr. Base as if he had continued in service during the
liquidated damages period at his existing annual base salary and he made the maximum amount of
employee contributions, if any, required or permitted under such plans.(4)
    
    The Bank provides and pays the premiums for a term life insurance policy in the amount of
$750,000 for Mr. Base. In the event of Mr. Bases death, his designated beneficiaries would
be entitled to the insurance proceeds.(5)
    
    If Mr. Base becomes permanently disabled as defined in the Banks disability plan (which is
available to all employees of the Bank on a non-discriminatory basis), he shall be entitled to
receive the benefits available under that plan.(6)
    
    Mr. Base has accrued 90 days of unused vacation that will be paid to him upon his termination
of employment with the Bank for any reason. The amount is calculated using Mr. Bases base
salary at the date of his termination. The amount Mr. Base is eligible to receive is capped
at 90 days.(7)
    
    Reflects the unvested portion of ViewPoint Financial Groups matching contribution under the
plan. For a more detailed discussion of this plan see Supplemental Executive Retirement
Plan.(8)
    
    Represents the value of the executives restricted shares of ViewPoint Financial Group common
stock based on a closing price of $14.41 per share on December 31, 2009.  139




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##### Table of Contents



Involuntary orGood Reason
    
    
    Involuntary ortermination
    
    
    Good Reason(not in
    
    
    termination (inconnection with
    
    
    connection withchange in
    
    
    change inRetirement
    
    
    Death
    
    
    Disability
    
    
    control)
    
    
    control)Benefit
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Pathie E. McKeeSalary Continuance (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    324,480Restricted stock award (2)
    
    
    
    
    
    
    390,756
    
    
    
    390,756
    
    
    
    
    
    
    
    390,756Mark E. HordSalary Continuance (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    326,437Restricted stock award (2)
    
    
    
    
    
    
    390,756
    
    
    
    390,756
    
    
    
    
    
    
    
    390,756James C. ParksSalary
Continuance (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    340,704Restricted stock award (2)
    
    
    
    
    
    
    390,756
    
    
    
    390,756
    
    
    
    
    
    
    
    390,756Rick M. RobertsonSalary
Continuance (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    335,790Restricted stock award (2)
    
    
    
    
    
    
    390,756
    
    
    
    390,756
    
    
    
    
    
    
    
    390,756
 (1)
    
    The salary continuance payments represent 18 months of the employees current salary if the
employee suffers an involuntary termination of employment in connection with or within 12
months after a change in control. These agreements terminated as of December 31, 2009 and
were replaced with severance agreements, as discussed in more detail under the caption
Description of Our Material Compensation Plans and Arrangements -Salary Continuance
Agreements with Named Executive Officers below.(2)
    
    Represents the value of the executives restricted shares of ViewPoint Financial Group common
stock based on a closing price of $14.41 per share on December 31, 2009. Description of Our Material Compensation Plans and Arrangements
 General.
 Employment Agreements with Garold R. Base.
  140




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Salary Continuance Agreements with Named Executive Officers.
     141




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##### Table of Contents



Supplemental Executive Retirement Plan.
 Deferred Compensation Plan.
 4 01(k) Plan
   Employee Stock Ownership Plan
  142




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##### Table of Contents



COMPENSATION OF DIRECTORS
 Non-Employee Director Compensation
  Fees EarnedorPaid in
    
    
    Stock
    
    
    All OtherCash
    
    
    Awards
    
    
    Compensation
    
    
    TotalName
    
    ($)(1)
    
    
    ($)
    
    
    ($)(2)
    
    
    ($)Current DirectorsGary D. Basham
    
    
    64,500
    
    
    
    
    
    
    
    2,749
    
    
    
    67,249Jack D. Ersman
    
    
    65,250
    
    
    
    
    
    
    
    2,757
    
    
    
    68,007Anthony J. LeVecchio
    
    
    66,750
    
    
    
    
    
    
    
    2,727
    
    
    
    69,477James B. McCarley
    
    
    70,250
    
    
    
    
    
    
    
    3,193
    
    
    
    73,443Karen H. OShea
    
    
    57,250
    
    
    
    
    
    
    
    2,714
    
    
    
    59,964V. Keith Sockwell
    
    
    43,500
    
    
    
    
    
    
    
    2,757
    
    
    
    46,257
 (1)
    
    Directors may defer all or any part of their directors fees, which pursuant to the plan are
invested in independent third-party mutual funds.(2)
    
    All other compensation for the current board members includes dividends paid on restricted
stock, premium on BOLI insurance and spouse travel.    143




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##### Table of Contents



REPORT OF THE COMPENSATION COMMITTEE
   Gary D. Basham  Jack D. Ersman  Anthony J. LeVecchio  James B. McCarley  Karen H. OShea (Co-chair)  V. Keith Sockwell (Chair)
 
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
 Form 10-K
  
    
    ViewPoint MHC and any other shareholders known by management to beneficially own
more than five percent of the outstanding common stock of the Company;
 
    
    Each of our directors and our director nominees for election;
 
    
    Each of our executive officers named in the Summary Compensation Table
appearing in Item 11 of this Form 10-K; and
 
    
    All of the executive officers, directors and director nominees as a group.
  144




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##### Table of Contents



Percent ofCommonStockName of Beneficial Owner
    
    Beneficial Ownership
    
    
    Outstanding5% and Greater Shareholders:ViewPoint MHC
1309 West 15th Street
Plano, TX 75075
    
    
    14,183,812
    (1)
    
    
    56.9
    %Columbia Wanger Asset Management, LP
227 West Monroe Street, Suite 3000
Chicago, IL 60606
    
    
    2,005,978
    (2)
    
    
    8.0
    %Wellington Management Company, LLP
75 State Street
Boston, MA 02109
    
    
    1,745,740
    (3)
    
    
    7.0
    %Directors, Director Nominees and Named Executive Officers:James B. McCarley, Chairman of the Board
    
    
    46,502
    (4)
    
    
    *Gary D. Basham, Vice Chairman of the Board/Director Nominee
    
    
    42,419
    (4) (5)
    
    
    *Garold R. Base, Director, President and CEO
    
    
    166,252
    (4) (6)
    
    
    *Jack D. Ersman, Director/Director Nominee
    
    
    41,243
    (4) (7)
    
    
    *Anthony J. LeVecchio, Director
    
    
    21,243
    (4)
    
    
    *Karen H. OShea, Director
    
    
    33,625
    (4) (8)
    
    
    *V. Keith Sockwell, Director
    
    
    30,243
    (4) (9)
    
    
    *Mark E. Hord, EVP, General Counsel and Corporate Secretary
    
    
    48,310
    (4) (6)
    
    
    *Pathie E. McKee, EVP, CFO and Treasurer
    
    
    49,231
    (4) (6)
    
    
    *James C. Parks, EVP, COO and Chief Information Officer of the Bank
    
    
    46,190
    (4) (6) (10)
    
    
    *Rick M. Robertson, EVP, Chief Banking Officer of the Bank
    
    
    52,674
    (4) (6)
    
    
    *Directors, director nominees and executive officers of ViewPoint
Financial Group as a group (12 persons)
    
    
    578,932
    (11)
    
    
    2.3
    %
 
 (1)
    
    As reported by ViewPoint MHC in a Schedule 13D filed with the SEC on October 13,
2006, which reported sole voting and dispositive power with respect to all shares beneficially owned.(2)
    
    As reported by Columbia Wanger Asset Management, LP in a Schedule 13G/A filed with
the SEC on February 10, 2010, which reported sole voting and dispositive power with respect to all shares beneficially owned.  145




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##### Table of Contents



(3)
    
    As reported by Wellington Management Company, LLP in a Schedule 13G/A filed with the
SEC on February 12, 2010, which reported shared voting power with respect to 1,589,340 shares
beneficially owned and shared dispositive power with respect to 1,745,740 shares beneficially owned.(4)
    
    Includes restricted stock awarded to the individual under the 2007 Equity Incentive
Plan, over which they have sole voting but no dispositive power, as follows: Mr. McCarley 
11,370 shares; Mr. Basham  9,745 shares; Mr. Base  83,555 shares; Mr. Ersman  9,745 shares;
Mr. LeVecchio  9,745 shares; Ms. OShea  9,745 shares; Mr. Sockwell  9,745 shares; Mr. Hord
 27,117 shares; Ms. McKee  27,117 shares; Mr. Parks  27,117 shares; Mr. Robertson  27,117 shares.(5)
    
    Includes 400 shares owned by Mr. Bashams spouse.(6)
    
    Includes shares allocated to the individual under the Employee Stock Ownership Plan,
over which they have sole voting but no dispositive power, as follows: Mr. Base  4,664
shares; Mr. Hord  4,442 shares; Ms. McKee  4,363 shares; Mr. Parks  3,498 shares; Mr. Robertson  3,806 shares.(7)
    
    Includes 25,000 shares that are held in a trust for which Mr. Ersman is the trustee and beneficiary.(8)
    
    Includes 7,694 shares that are owned by Ms. OSheas spouse.(9)
    
    Includes 12,900 shares that are owned by Mr. Sockwells spouse.(10)
    
    Includes 1,700 shares that are owned by Mr. Parkss spouse.(11)
    
    Includes shares held directly, as well as shares held by and jointly with certain
family members, shares held in retirement accounts, shares held by trusts of which the
individual or group member is a trustee or substantial beneficiary, or shares held in another
fiduciary capacity with respect to which shares the individual or group member may be deemed
to have sole or shared voting and/or investment powers. Also includes 1,000 shares owned by a
director of ViewPoint Bank but who is not a director of the Company. 
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
 Director Independence.
 Loans and Related Transactions with Executive Officers and Directors.
  146




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##### Table of Contents



(1)
    
    The terms, conditions and means of compensation shall be no less favorable to
the Company as other similar business transactions previously entered into by it or
which may be entered into with persons who are not directors or executive officers of
the Company, or their related interests.
 (2)
    
    All related party transactions between our directors and executive officers
and/or their related interests and the Company shall require the prior review and
approval of a majority of the disinterested independent directors (as defined under the
NASDAQ Stock Market listing standards) of the Board of Directors, with the interested
director abstaining from participating either directly or indirectly in the voting and
discussion on the proposed business transaction. For these purposes, the term related
party transactions shall refer to transactions required to be disclosed pursuant to
SEC Regulation S-K, Item 404.
 (3)
    
    The minutes of any Board meeting at which a business transaction between the
Company and a director or executive officer, or his or her related interest, is
approved or denied shall include the nature and source of all information used to
establish the reasonableness and comparable nature of the terms, conditions and means
of compensation, with copies thereof attached as appropriate.
   147




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##### Table of Contents



Item 14.
    
    Principal Accountant Fees and Services
  (a)
    
    Audit Fees. The aggregate fees billed by Crowe Horwath LLP for professional
services rendered for the audit of the Companys annual consolidated financial
statements and review of the quarterly consolidated financial statements, proxy
statement, and internal controls for the fiscal years ended December 31, 2009 and 2008
were $275,000 and $282,500, respectively.
 (b)
    
    Audit Related Fees. The aggregate fees billed by Crowe Horwath LLP for
assurance and related services related to the Companys Annual Report on Form 10-K, the
Companys retirement and stock ownership benefit plans and the Companys financial
statements for the U.S. Department of Housing and Urban Development for the year ended
December 31, 2009 and 2008 were $52,500 and $52,000, respectively.
 (c)
    
    Tax Fees. No fees were billed by Crowe Horwath LLP for tax services for the
years ended December 31, 2009 and 2008.
 (d)
    
    All Other Fees. The aggregate fees billed by Crowe Horwath LLP for professional
services rendered for services or products other than those listed under the captions
Audit Fees, Audit-Related Fees, and Tax Fees for fiscal years ended December 31,
2009 and 2008, were $16,663 and $11,563, respectively and consisted of operational
consulting expenses and software licensing.
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PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
 (a)(1)
    
    Financial Statements: See Part IIItem 8. Financial Statements and Supplementary Data.(a)(2)
    
    Financial Statement Schedules: All financial statement schedules have been omitted as
the information is not required under the related instructions or is not applicable.(a)(3)
    
    Exhibits: See below.(b)
    
    Exhibits:
 ExhibitNumber
    
    Description2.1
    
    
    Amended and Restated Plan of Conversion and Reorganization of ViewPoint MHC3.1
    
    
    Charter of the Registrant (incorporated herein by reference to Exhibit 3.1
to the Registrants Registration Statement on Form S-1, as amended (File
No. 0-24566-01))3.2
    
    
    Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.2
to the Registrants Current Report on Form 8-K filed with the SEC on
November 24, 2008 (File No. 001-32992))4.1
    
    
    Certificate of Registrants Common Stock (incorporated herein by reference
to Exhibit 4.0 to the Registrants Registration Statement on Form S-1, as
amended (File No. 0-24566-01))10.1
    
    
    Employment Agreement by and between the Registrant and Garold R. Base
(incorporated herein by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed with the SEC on October 4, 2006 (File No.
001-32992))10.2
    
    
    Amendment to Employment Agreement by and between the Registrant and Garold
R. Base (incorporated herein by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed with the SEC on January 10,
2008 (File No. 001-32992))10.3
    
    
    Employment Agreement by and between ViewPoint Bank, the Registrants
wholly owned operating subsidiary, and Garold R. Base (incorporated herein
by reference to Exhibit 10.2 to the Registrants Current Report on Form
8-K filed with the SEC on October 4, 2006 (File No. 001-32992))10.4
    
    
    Amendment to Employment Agreement by and between ViewPoint Bank, the
Registrants wholly owned operating subsidiary, and Garold R. Base
(incorporated herein by reference to Exhibit 10.2 to the Registrants
Current Report on Form 8-K filed with the SEC on January 10, 2008 (File
No. 001-32992))10.5
    
    
    Amendment to Employment Agreement by and between ViewPoint Bank, the
Registrants wholly owned operating subsidiary, and Garold R. Base
(incorporated herein by reference to Exhibit 10.1 to the Registrants
Current Report on Form 8-K filed with the SEC on March 6, 2008 (File No.
001-32992))10.6
    
    
    Form of Severance Agreement between ViewPoint Bank and the following
executive officers: Pathie E. McKee, Mark E. Hord, James C. Parks and Rick
M. Robertson (incorporated herein by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K filed with the SEC on March 1,
2010 (File No. 001-32992))10.7
    
    
    Summary of Director Board Fee Arrangements (incorporated herein by
reference to Exhibit 3.2 to the Registrants Quarterly Report on Form 10-Q
filed with the SEC on August 9, 2007 (File No. 001-32992))
  149




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ExhibitNumber
    
    Description10.8
    
    
    ViewPoint Bank Deferred Compensation Plan (incorporated herein by
reference to Exhibit 10.7 to the Registrants Registration Statement on
Form S-1, as amended (File No. 0-24566-01))10.9
    
    
    Amended and Restated ViewPoint Bank Supplemental Executive Retirement Plan
(incorporated herein by reference to Exhibit 10.8 to the Registrants
Registration Statement on Form S-1, as amended (File No. 0-24566-01))10.10
    
    
    ViewPoint Bank 2007 Executive Officer Incentive Plan (incorporated herein
by reference to Exhibit 10.1 to the Registrants Current Report on Form
8-K filed with the SEC on July 31, 2007 (File No. 001-32992))10.11
    
    
    Amendment to ViewPoint Bank 2007 Executive Officer Incentive Plan
(incorporated herein by reference to the Registrants Current Report on
Form 8-K filed with the SEC on March 6, 2008 (File No. 001-32992))10.12
    
    
    Form of promissory note between ViewPoint Financial Group and four
lenders, totaling $10 million (incorporated herein by reference to Exhibit
10.1 to the Registrants Current Report on Form 8-K filed with the SEC on
October 22, 2009 (File No. 001-32992))11
    
    
    Statement regarding computation of per share earnings (See Note 22 of the
Notes to Consolidated Financial Statements included in this Form 10-K).21
    
    
    Subsidiaries of the Registrant23
    
    
    Consent of Independent Registered Public Accounting Firm24
    
    
    Power of Attorney (on signature page)31.1
    
    
    Rule 13a  14(a)/15d  14(a) Certification (Chief Executive Officer)31.2
    
    
    Rule 13a  14(a)/15d  14(a) Certification (Chief Financial Officer)32
    
    
    Section 1350 Certifications
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SIGNATURES
 Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
 VIEWPOINT FINANCIAL GROUP
(Registrant)Date:  March 2, 2010
    By:
    /s/ Garold R. BaseGarold R. BasePresident and Chief Executive Officer
(Principal Executive Officer)  Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities and on the dates
indicated.
 /s/ Garold R. Base
    
    Date: March 2, 2010Garold R. Base, President, Chief Executive Officer and Director(Duly authorized representative and Principal Executive Officer)/s/ Gary D. Basham
    
    Date: March 2, 2010Gary D. Basham, Vice Chairman of the Board and Director/s/ Jack D. Ersman
    
    Date: March 2, 2010Jack D. Ersman, Director/s/ Anthony J. LeVecchio
    
    Date: March 2, 2010Anthony J. LeVecchio, Director/s/ Karen H. OShea
    
    Date: March 2, 2010Karen H. OShea, Director/s/ Pathie E. McKee
    
    Date: March 2, 2010Pathie E. McKee, Executive Vice President, Chief Financial Officer
and Treasurer (Principal Financial and Accounting Officer)
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EXHIBIT INDEX
 Exhibits:2.1
    
    
    Amended and Restated Plan of Conversion and Reorganization of ViewPoint MHC21
    
    
    Subsidiaries of the Registrant23
    
    
    Consent of Accountants31.1
    
    
    Certification of the Chief Executive Officer31.2
    
    
    Certification of the Chief Financial Officer32
    
    
    Section 1350 Certifications
  152