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ViewPoint Financial Group

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ViewPoint Financial Group, Inc. (VPFG) has watched all analyst earnings estimates for this year and next move higher in the past 30 days. This Zacks #1 Rank (Strong Buy) financial services provider also hit its 52-week high earlier this month and offers a regular quarterly dividend of 2%. For these reasons, VPFG is an attractive possibility for growth & income investors.

Dividend Payment

ViewPoint Financial Group is one of the few banks that maintained its dividend payment throughout the financial crisis. Since the beginning of the year, the company has raised its dividend three times, most recently by 25% in October 2012.

Currently, the company pays a quarterly dividend of 10 cents per share, affirming an annual yield of 2.0%.

Impressive Third Quarter Earnings

On October 25, ViewPoint Financial Group reported third quarter earnings per share of 30 cents, topping the Zacks Consensus Estimate by 20.0% and the year-ago performance by 87.5%. The company has now beaten earnings estimates in 8 of the last 9 quarters.

Net interest income climbed 54.1% year over year to $31.6 million. Net interest margin expanded 83 basis points to 3.70%, mainly due to changes in the earnings asset mix and lower deposit and borrowing rates paid. Non-interest income rose 25.8% to $7.8 million over the same period. However, the company's non-interest expenses increased 14.0% year over year to $21.2 million.

ViewPoint Financial Group’s capital position improved in the quarter. Total assets came in at $3.6 billion, up 12.5% year over year. Total deposits also surged 48% to $2.2 billion. Moreover, the tangible common equity ratio stood at 13.45%, up 91 basis points on a year-over-year basis.

Earnings Estimates Moving Higher

Over the last 30 days, the Zacks Consensus Estimate for 2012 jumped 9.9% to $1.00 per share as all six estimates moved higher. This implies year-over-year growth of 23.5%. For 2013, positive revisions of all six estimates again helped the Zacks Consensus Estimate to advance 11.9% to $1.22 per share over the same period.

Valuation Looks Stretched but Justified

Shares of ViewPoint Financial Group currently trade at 20.0x 12-month forward earnings, a 42.0% premium to the peer group average of 14.1x. Its price to book ratio of 1.5 is at a 15% premium to the industry median of 1.3. The company has a trailing 12-month ROE of 7.5% compared with the peer group average of 9.7%. But given its strong fundamentals, the premium valuation looks justified.

Chart Shows Strength

ViewPoint Financial Group has been continuously outperforming its 200-day moving average over the last six months, exhibiting a steady growth trend. The year-to-date return for the stock is 53.8%, compared with the S&P 500’s return of 12.1%.

Headquartered in Plano, Texas, ViewPoint Financial Group, operating as the holding company for ViewPoint Bank, N.A., provides various financial services to consumers and businesses in the United States. The company was founded in 1952 and conducts business through 31 community bank offices. ViewPoint Financial Group has a market cap of about $785.4 million. Cardinal Financial Corp. (CFNL) and Capital City Bank Group Inc. (CCBG) are the other Zacks #1 Rank (Strong Buy) stocks in the same sector.

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