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On Dec 24, Zacks Investment Research upgraded ViewPoint Financial Group, Inc. (VPFG - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

ViewPoint Financial continued with its acquisition strategy and exhibited efforts to enhance shareholder value. Further, the company has witnessed positive estimate revisions and it has a long-term expected earnings growth rate of 12%.

On Nov 25, ViewPoint Financial inked a deal to merge with a Texas-based private commercial bank- LegacyTexas Group, Inc for a stock plus cash offer. Upon closure, ViewPoint Financial will be known as LegacyTexas Financial Group, Inc. The deal is expected to close by second-quarter 2014, subject to regulatory approvals, customary closing conditions and approval by shareholders of LegacyTexas.

According to the terms of the deal, ViewPoint Financial will issue 7.85 million shares of its common stock in addition to cash of around $115 million for all the outstanding shares of LegacyTexas. The deal is expected to be significantly accretive to earnings per share. Further, this venture is expected to lead to the formation of one of the largest independent banks in the state of Texas, consisting of 51 branches and pro forma assets worth over $5 billion.

Additionally, on Oct 22, ViewPoint Financial declared a 20% hike in its quarterly cash dividend to 12 cents per share.

The Zacks Consensus Estimate for 2013 remained stable at 85 cents per share over the last 60 days, while for 2014 it advanced 20.4% to $1.12 per share.

Other Stocks to Consider

Other South-West Banks worth considering include First Financial Bankshares Inc. (FFIN - Snapshot Report), Metrocorp Bancshares Inc. and Prosperity Bancshares Inc. (PB - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).

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