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Growth & Income

ViewPoint Financial Group, Inc. (VPFG - Snapshot Report) recently delivered its 7th consecutive positive earnings surprise, driven by strong loan growth and an expanding net interest margin.

Analysts revised their estimates higher, sending the stock to a Zacks #2 Rank (Buy). On top of solid earnings growth, the company pays a dividend that yields a 1.6%. Valuation is attractive too, with shares trading at just 1.2x book value.

Company Description

ViewPoint Financial Group owns ViewPoint Bank, which operates 31 branches in the Dallas/Fort Worth area.

It was founded in 1952 and has a market cap of $485 million.

First Quarter Results

ViewPoint Financial delivered better-than-expected first quarter results on April 26. Earnings per share came in at 22 cents, beating the Zacks Consensus Estimate by 2 cents. It was a 10% increase over the same quarter in 2011.

Net interest income rose 24% year-over-year to $23.5 million. The net interest margin jumped 50 basis points over the same period to 3.30%. Loan growth was strong, with total loans rising 40% to $1.973 billion. Most of this growth can from higher margin Commercial loans.

Net charge-offs declined from $448 million to $359 million, which contributed to a decrease in loan loss provisions for the quarter. The percentage of non-performing loans to total loans did increase 29 basis points, however, to 1.79%.

Estimates Rising

Following ViewPoint's solid Q1 results, analysts revised their estimates significantly higher for both 2011 and 2012, sending the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2012 is now $0.89, representing 10% growth over 2011 EPS. The 2013 consensus estimate is currently $0.96, corresponding with 8% growth.

The company has delivered 7 consecutive positive earnings surprises.

Dividend

In addition to strong earnings growth, the company pays a dividend that yields a solid 1.6%. ViewPoint did cut its dividend during the financial crisis, but it has raised it twice since then.

If the company can continue to grow its bottom line, then look for more dividend hikes down the road.

Reasonable Valuation

Valuation looks attractive with shares trading at just 1.2x book value, in-line with the industry median, and a discount to its historical multiple of 1.8x.

The Bottom Line

With strong earnings momentum, solid growth projections, a 1.6% yield and reasonable valuation, ViewPoint Financial Group offers attractive total return potential.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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