10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

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 001-34737

VIEWPOINT FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Maryland	6021	27-2176993
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class: Common Stock	Shares Outstanding as of July 28, 2014:
	39,995,920

VIEWPOINT FINANCIAL GROUP, INC.

FORM 10-Q

June 30, 2014

INDEX

PART I -- FINANCIAL INFORMATION	3
Item 1. Financial Statements:	3
Consolidated Balance Sheets at June 30, 2014 (unaudited) and December 31, 2013	3
Unaudited Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013	4
Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2014 and 2013	5
Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the six months ended June 30, 2014 and 2013	6
Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	7
Condensed Notes to Unaudited Consolidated Interim Financial Statements	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosures about Market Risk	53
Item 4. Controls and Procedures	56
PART II—OTHER INFORMATION	57
Item 1. Legal Proceedings	57
Item 1.A. Risk Factors	57
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3. Defaults Upon Senior Securities	57
Item 4. Mine Safety Disclosures	57
Item 5. Other Information	57
Item 6. Exhibits	58
SIGNATURE PAGE	60
EXHIBIT INDEX	61

PART 1 - FINANCIAL INFORMATION        Item 1. Financial Statements

VIEWPOINT FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	June 30,			December 31,
	2014			2013
ASSETS	(unaudited)
Cash and due from financial institutions	$	35,276		$	30,012
Short-term interest-bearing deposits in other financial institutions	130,632			57,962
Total cash and cash equivalents	165,908			87,974
Securities available for sale, at fair value	224,184			248,012
Securities held to maturity (fair value: June 30, 2014 — $277,913, December 31, 2013— $301,739)	267,614			294,583
Loans held for investment:
Loans held for investment (net of allowance for loan losses of $20,440 at June 30, 2014 and $19,358 at December 31, 2013)	2,327,370			2,029,277
Loans held for investment - Warehouse Purchase Program	769,566			673,470
Total loans held for investment	3,096,936			2,702,747
FHLB and Federal Reserve Bank stock, at cost	44,532			34,883
Bank-owned life insurance	35,863			35,565
Premises and equipment, net	51,955			53,272
Goodwill	29,650			29,650
Other assets	34,602			38,546
Total assets	$	3,951,244		$	3,525,232
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest-bearing demand	$	433,194		$	410,933
Interest-bearing demand	476,203			474,515
Savings and money market	1,032,496			904,576
Time	493,833			474,615
Total deposits	2,435,726			2,264,639
FHLB advances	874,866			639,096
Repurchase agreement	25,000			25,000
Other liabilities	58,240			52,037
Total liabilities	3,393,832			2,980,772
Commitments and contingent liabilities	—			—
Shareholders’ equity
Preferred stock, $.01 par value; 10,000,000 shares authorized; 0 shares issued — June 30, 2014 and December 31, 2013	—			—
Common stock, $.01 par value; 90,000,000 shares authorized; 39,995,720 shares issued — June 30, 2014 and 39,938,816 shares issued — December 31, 2013	400			399
Additional paid-in capital	381,808			377,657
Retained earnings	190,150			183,236
Accumulated other comprehensive income (loss), net	770			(383		)
Unearned Employee Stock Ownership Plan (ESOP) shares; 1,641,748 shares at June 30, 2014 and 1,733,845 shares at December 31, 2013	(15,716		)	(16,449		)
Total shareholders’ equity	557,412			544,460
Total liabilities and shareholders’ equity	$	3,951,244		$	3,525,232
See accompanying notes to consolidated financial statements.

3

VIEWPOINT FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
Interest and dividend income
Loans, including fees	$	33,888		$	32,151	$	64,276		$	62,529
Taxable securities	2,453			2,457		5,018			4,860
Nontaxable securities	561			529		1,125			1,003
Interest-bearing deposits in other financial institutions	71			25		128			56
FHLB and Federal Reserve Bank stock	136			134		266			267
	37,109			35,296		70,813			68,715
Interest expense
Deposits	2,035			2,450		4,026			4,882
FHLB advances	1,948			2,205		3,875			4,466
Repurchase agreement	204			203		405			404
	4,187			4,858		8,306			9,752
Net interest income	32,922			30,438		62,507			58,963
Provision for loan losses	1,197			1,858		1,573			2,741
Net interest income after provision for loan losses	31,725			28,580		60,934			56,222
Non-interest income
Service charges and fees	4,874			4,768		9,172			9,059
Other charges and fees	239			179		449			391
Bank-owned life insurance income	145			153		298			315
Loss on sale of available-for-sale securities (reclassified from accumulated other comprehensive income for unrealized losses on available-for-sale securities)	—			—		—			(177		)
Gain on sale and disposition of assets	727			444		728			674
Other	(556		)	199		(256		)	1,340
	5,429			5,743		10,391			11,602
Non-interest expense
Salaries and employee benefits	14,127			12,528		28,259			25,443
Merger and acquisition costs	652			—		821			—
Advertising	493			751		848			1,264
Occupancy and equipment	1,819			1,938		3,711			3,728
Outside professional services	486			570		1,011			1,254
Regulatory assessments	687			650		1,315			1,229
Data processing	1,708			1,729		3,370			3,247
Office operations	1,717			1,751		3,397			3,399
Other	1,661			1,786		2,773			3,012
	23,350			21,703		45,505			42,576
Income before income tax expense	13,804			12,620		25,820			25,248
Income tax expense (items reclassified from accumulated other comprehensive income include an income tax benefit of $62 for the six months ended June 30, 2013)	4,986			4,446		9,320			9,016
Net income	$	8,818		$	8,174	$	16,500		$	16,232
Earnings per share:
Basic	$	0.23		$	0.21	$	0.43		$	0.43
Diluted	$	0.23		$	0.21	$	0.43		$	0.43
Dividends declared per share 1	$	0.12		$	0.10	$	0.24		$	0.10
See accompanying notes to consolidated financial statements.

¹ In 2012, the Company prepaid the quarterly dividend for the first quarter of 2013 in December 2012, distributing an additional $0.10 per common share.

4

VIEWPOINT FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(Dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income	$	8,818		$	8,174		$	16,500		$	16,232
Change in unrealized gains (losses) on securities available for sale	1,065			(3,031		)	1,775			(2,705		)
Reclassification of amount realized through sale of securities	—			—			—			177
Tax effect	(373		)	1,063			(622		)	904
Other comprehensive income (loss), net of tax	692			(1,968		)	1,153			(1,624		)
Comprehensive income	$	9,510		$	6,206		$	17,653		$	14,608
See accompanying notes to consolidated financial statements.

5

VIEWPOINT FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)

(Dollars in thousands, except per share data)

For the six months ended June 30, 2013	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income, Net			Unearned ESOP Shares			Total Shareholders’ Equity
Balance at January 1, 2013	$	396		$	372,168		$	164,328		$	1,895		$	(17,916	)	$	520,871
Net income	—			—			16,232			—			—			16,232
Other comprehensive income (loss), net of tax	—			—			—			(1,624		)	—			(1,624		)
Share repurchase (83,800 shares)	(1		)	(1,553		)	—			—			—			(1,554		)
Dividends declared ($0.10 per share)	—			—			(3,991		)	—			—			(3,991		)
ESOP shares earned (92,097 shares)	—			1,124			—			—			733			1,857
Share-based compensation expense	—			1,422			—			—			—			1,422
Net issuance of common stock under employee stock plans (397,605 shares)	4			217			—			—			—			221
Balance at June 30, 2013	$	399		$	373,378		$	176,569		$	271		$	(17,183	)	$	533,434

For the six months ended June 30, 2014
Balance at January 1, 2014	$	399	$	377,657	$	183,236		$	(383	)	$	(16,449	)	$	544,460
Net income	—		—		16,500			—			—			16,500
Other comprehensive income, net of tax	—		—		—			1,153			—			1,153
Dividends declared ($0.24 per share)	—		—		(9,586		)	—			—			(9,586		)
ESOP shares earned (92,097 shares)	—		1,664		—			—			733			2,397
Share-based compensation expense	—		1,835		—			—			—			1,835
Net issuance of common stock under employee stock plans (56,904 shares)	1		652		—			—			—			653
Balance at June 30, 2014	$	400	$	381,808	$	190,150		$	770		$	(15,716	)	$	557,412

See accompanying notes to consolidated financial statements.

6

VIEWPOINT FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2014			2013
Cash flows from operating activities
Net income	$	16,500		$	16,232
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,573			2,741
Depreciation and amortization	2,211			2,270
Deferred tax expense	1,043			188
Premium amortization and accretion of securities, net	1,803			3,356
Accretion related to acquired loans	(869		)	(1,705		)
Loss on sale of available for sale securities	—			177
ESOP compensation expense	2,397			1,857
Share-based compensation expense	1,835			1,422
FHLB stock dividends	(42		)	(60		)
Bank-owned life insurance (BOLI) income	(298		)	(315		)
Gain (loss) on sale and disposition of assets	49			(674		)
Net change in deferred loan fees	432			371
Net change in accrued interest receivable	(716		)	(199		)
Net change in other assets	3,295			10,230
Net change in other liabilities	5,580			393
Net cash provided by operating activities	34,793			36,284
Cash flows from investing activities
Available-for-sale securities:
Maturities, prepayments and calls	305,686			500,103
Purchases	(281,000		)	(515,941		)
Proceeds from sale of AFS securities	—			10,614
Held-to-maturity securities:
Maturities, prepayments and calls	32,003			59,917
Purchases	(5,919		)	(31,969		)
Originations of Warehouse Purchase Program loans	(5,377,239		)	(7,710,481		)
Proceeds from pay-offs of Warehouse Purchase Program loans	5,281,143			7,866,973
Net change in loans held for investment, excluding Warehouse Purchase Program loans	(299,638		)	(145,566		)
Redemption (purchase) of FHLB and Federal Reserve Bank stock	(9,607		)	3,610
Purchases of premises and equipment	(744		)	(1,755		)
Proceeds from sale of assets	532			3,249
Net cash provided by (used in) investing activities	(354,783		)	38,754

7

Cash flows from financing activities
Net change in deposits	171,087			11,374
Proceeds from FHLB advances	691,000			600,000
Repayments on FHLB advances	(455,230		)	(692,000		)
Share repurchase	—			(1,554		)
Payment of dividends	(9,586		)	(3,991		)
Proceeds from stock option exercises	653			221
Net cash provided by (used in) financing activities	397,924			(85,950		)
Net change in cash and cash equivalents	77,934			(10,912		)
Beginning cash and cash equivalents	87,974			68,696
Ending cash and cash equivalents	$	165,908		$	57,784
Supplemental cash flow information:
Interest paid	$	8,297		$	9,817
Income taxes paid	6,128			5,007
Supplemental noncash disclosures:
Transfers from loans to other real estate owned	409			1,338
See accompanying notes to consolidated financial statements.

8

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying consolidated financial statements of ViewPoint Financial Group, Inc. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") and with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all normal and recurring adjustments which are considered necessary to fairly present the results for the interim periods presented have been included. Certain items in prior periods were reclassified to conform to the current presentation. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K”). Interim results are not necessarily indicative of results for a full year.

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. For further information with respect to significant accounting policies followed by the Company in preparation of its consolidated financial statements, refer to the 2013 Form 10-K.

The accompanying Unaudited Consolidated Interim Financial Statements include the accounts of the Company, whose business primarily consists of the operations of its wholly owned subsidiary, ViewPoint Bank, N.A. (the “Bank”). All significant intercompany transactions and balances are eliminated in consolidation.

9

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 2 - ADJUSTMENTS TO FINANCIAL STATEMENTS

Prior to the December 31, 2013 reporting period, the Company reported Warehouse Purchase Program loans as held for sale as we believed that was the most meaningful presentation to our financial statement users given that the collection of the loan was based upon the sale of the loan. Effective December 31, 2013, the Company concluded that, under US GAAP, these loans should be accounted for as held for investment. This correction changed the accounting for Warehouse Purchase Program loans from a lower-of-cost-or-market accounting method to accounting for the loans under Accounting Standards Codification ("ASC") 310, with any credit losses incurred as of the balance sheet date recognized in the allowance for loan losses. As we had not reported any valuation decreases below cost in prior periods, and we have experienced no credit losses on these loans, this correction had no impact on net income, comprehensive income, earnings per share or income taxes. Additionally, total assets and shareholders' equity remained unchanged. However, this correction did impact the statement of cash flows by moving cash flows associated with the Warehouse Purchase Program from operating cash flows to investing cash flows.

The table below illustrates the impact of this change on the Company's Consolidated Statement of Cash Flows for the six months ended June 30, 2013. There was no impact to the Company's Consolidated Statements of Income for the three or six months ended June 30, 2013.

Impact to the Consolidated Statement of Cash Flows
	Six Months Ended June 30, 2013
	As Originally Presented				As Adjusted
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities:
Loans originated or purchased for sale	$	(7,710,481	)		$	—
Proceeds from sale of loans held for sale	7,866,973				—
Net cash provided by operating activities	192,776				36,284
Cash flows from investing activities
Originations of Warehouse Purchase Program loans	N/A			1	(7,710,481		)
Proceeds from pay-offs of Warehouse Purchase Program loans	N/A			1	7,866,973
Net change in loans held for investment, excluding Warehouse Purchase Program loans	(145,566		)		(145,566		)
Net cash provided by (used in) investing activities	(117,738		)		38,754
Cash flows from financing activities
Net cash used in financing activities	(85,950		)		(85,950		)
Net change in cash and cash equivalents	(10,912		)		(10,912		)
Beginning cash and cash equivalents	68,696				68,696
Ending cash and cash equivalents	$	57,784			$	57,784

¹ Not applicable

10

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 3 - EARNINGS PER COMMON SHARE

Basic earnings per common share is computed by dividing net income (which has been adjusted for distributed and undistributed earnings to participating securities) by the weighted-average number of common shares outstanding for the period, reduced for average unallocated ESOP shares and average unvested restricted stock awards. Unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method described in ASC 260-10-45-60B. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as stock awards and options) were exercised or converted to common stock, or resulted in the issuance of common stock that then shared in the Company’s earnings. Diluted earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period increased for the dilutive effect of unexercised stock options and unvested restricted stock awards. The dilutive effect of the unexercised stock options and unvested restricted stock awards is calculated under the treasury stock method utilizing the average market value of the Company’s stock for the period. A reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation for the three and six months ended June 30, 2014 and 2013 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Basic earnings per share:
Numerator:
Net income	$	8,818		$	8,174		$	16,500		$	16,232
Distributed and undistributed earnings to participating securities	(97		)	(116		)	(187		)	(180		)
Income available to common shareholders	$	8,721		$	8,058		$	16,313		$	16,052
Denominator:
Weighted average common shares outstanding	39,966,568			39,940,712			39,954,509			39,837,010
Less: Average unallocated ESOP shares	(1,671,941		)	(1,856,135		)	(1,694,835		)	(1,879,030		)
Average unvested restricted stock awards	(420,956		)	(539,527		)	(434,729		)	(420,517		)
Average shares for basic earnings per share	37,873,671			37,545,050			37,824,945			37,537,463
Basic earnings per common share	$	0.23		$	0.21		$	0.43		$	0.43
Diluted earnings per share:
Numerator:
Income available to common shareholders	$	8,721		$	8,058		$	16,313		$	16,052
Denominator:
Average shares for basic earnings per share	37,873,671			37,545,050			37,824,945			37,537,463
Dilutive effect of share-based compensation plan	247,703			147,463			247,786			147,231
Average shares for diluted earnings per share	38,121,374			37,692,513			38,072,731			37,684,694
Diluted earnings per common share	$	0.23		$	0.21		$	0.43		0.43
Share awards excluded in the computation of diluted earnings per share because the exercise price was greater than the common stock average market price and were therefore antidilutive	86,910			1,212,900			134,790			1,235,050

11

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 4 - SECURITIES

The fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
June 30, 2014	Cost		Gains		Losses		Fair Value
Agency residential mortgage-backed securities 1	$	160,143	$	1,666	$	812	$	160,997
Agency residential collateralized mortgage obligations 2	60,524		338		65		60,797
SBA pools	2,332		58		—		2,390
Total securities	$	222,999	$	2,062	$	877	$	224,184
December 31, 2013
Agency residential mortgage-backed securities 1	$	175,693	$	1,322	$	2,306	$	174,709
Agency residential collateralized mortgage obligations 2	70,257		423		105		70,575
SBA pools	2,652		76		—		2,728
Total securities	$	248,602	$	1,821	$	2,411	$	248,012

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

The carrying amount, unrecognized gains and losses, and fair value of securities held to maturity were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
June 30, 2014	Cost		Gains		Losses		Fair Value
Agency residential mortgage-backed securities 1	$	72,740	$	3,731	$	28	$	76,443
Agency commercial mortgage-backed securities 2	25,518		991		119		26,390
Agency residential collateralized mortgage obligations 3	102,297		2,635		37		104,895
Municipal bonds	67,059		3,537		411		70,185
Total securities	$	267,614	$	10,894	$	595	$	277,913
December 31, 2013
Agency residential mortgage-backed securities 1	$	83,177	$	3,523	$	130	$	86,570
Agency commercial mortgage-backed securities 2	24,828		523		310		25,041
Agency residential collateralized mortgage obligations 3	118,757		2,772		107		121,422
Municipal bonds	67,821		2,292		1,407		68,706
Total securities	$	294,583	$	9,110	$	1,954	$	301,739

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

12

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The carrying amount and fair value of held to maturity debt securities and the fair value of available for sale debt securities at June 30, 2014 by contractual maturity were as follows. Securities with contractual payments not due at a single maturity date, including mortgage backed securities and collateralized mortgage obligations, are shown separately.

					Available
	Held to maturity				for sale
	Carrying Amount		Fair Value		Fair Value
Due in one year or less	$	145	$	148	$	—
Due after one to five years	7,659		8,124		2,390
Due after five to ten years	28,464		30,570		—
Due after ten years	30,791		31,343		—
Agency residential mortgage-backed securities 1	72,740		76,443		160,997
Agency commercial mortgage-backed securities 2	25,518		26,390		—
Agency residential collateralized mortgage obligations 3	102,297		104,895		60,797
Total	$	267,614	$	277,913	$	224,184

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Information regarding pledged securities is summarized below:

	June 30, 2014		December 31, 2013
Public fund certificates of deposit	$	148,310	$	156,731
Public fund demand deposit accounts	13,781		15,068
Commercial demand deposit accounts	3,058		4,439
Repurchase agreements	25,000		25,000
Federal Reserve Bank primary credit - collateral value	60,016		68,686
Carrying value of securities pledged on above funds	281,005		308,652

Sales activity of securities for the three and six months ended June 30, 2014 and 2013, was as follows. All securities sold were classified as available for sale.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Proceeds	$	—	$	—	$	—	$	10,614
Gross losses	—		—		—		177

Gains and losses on the sale of securities classified as available for sale are recorded on the trade date using the specific-identification method.

13

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Securities with unrealized losses at June 30, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

AFS	Less than 12 Months					12 Months or More					Total
June 30, 2014	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number
Agency residential mortgage-backed securities 1	$	4,929	$	6	3	$	58,392	$	806	10	$	63,321	$	812	13
Agency residential collateralized mortgage obligations 2	5,360		5		2	6,568		60		5	11,928		65		7
Total temporarily impaired	$	10,289	$	11	5	$	64,960	$	866	15	$	75,249	$	877	20
December 31, 2013
Agency residential mortgage-backed securities 1	$	83,461	$	2,306	19	$	—	$	—	—	$	83,461	$	2,306	19
Agency residential collateralized mortgage obligations 2	13,975		50		6	6,780		55		5	20,755		105		11
Total temporarily impaired	$	97,436	$	2,356	25	$	6,780	$	55	5	$	104,216	$	2,411	30

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

HTM	Less than 12 Months					12 Months or More					Total
June 30, 2014	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number
Agency residential mortgage-backed securities 1	$	—	$	—	—	$	3,556	$	28	1	$	3,556	$	28	1
Agency commercial mortgage-backed securities 2	—		—		—	3,860		119		1	3,860		119		1
Agency residential collateralized mortgage obligations 3	—		—		—	5,905		37		3	5,905		37		3
Municipal bonds	6,546		58		11	11,895		353		17	18,441		411		28
Total temporarily impaired	$	6,546	$	58	11	$	25,216	$	537	22	$	31,762	$	595	33
December 31, 2013
Agency residential mortgage-backed securities 1	$	5,779	$	130	2	$	—	$	—	—	$	5,779	$	130	2
Agency commercial mortgage-backed securities 2	4,940		310		2	—		—		—	4,940		310		2
Agency residential collateralized mortgage obligations 3	10,453		91		2	1,679		16		3	12,132		107		5
Municipal bonds	17,784		1,406		29	280		1		1	18,064		1,407		30
Total temporarily impaired	$	38,956	$	1,937	35	$	1,959	$	17	4	$	40,915	$	1,954	39

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Other-than-Temporary Impairment

In determining other-than-temporary impairment for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company does not believe these unrealized losses are other-than-temporary. All principal and interest payments are being received on time and in full.

14

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 5 - LOANS

Loans consist of the following:

	June 30, 2014			December 31, 2013
Commercial real estate	$	1,162,035		$	1,091,200
Commercial and industrial loans:
Commercial	579,561			425,030
Warehouse lines of credit	31,426			14,400
Total commercial and industrial loans	610,987			439,430
Construction and land loans
Commercial construction and land	28,496			27,619
Consumer construction and land	3,445			2,628
Total construction and land loans	31,941			30,247
Consumer:
Consumer real estate	501,328			441,226
Other consumer loans	43,218			47,799
Total consumer	544,546			489,025
Gross loans held for investment, excluding Warehouse Purchase Program	2,349,509			2,049,902
Net of:
Deferred fees and discounts, net	(1,699		)	(1,267		)
Allowance for loan losses	(20,440		)	(19,358		)
Net loans held for investment, excluding Warehouse Purchase Program	2,327,370			2,029,277
Warehouse Purchase Program	769,566			673,470
Total loans held for investment	$	3,096,936		$	2,702,747

15

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Activity in the allowance for loan losses for the three and six months ended June 30, 2014 and 2013, segregated by portfolio segment and evaluation for impairment, was as follows. All Warehouse Purchase Program loans are collectively evaluated for impairment and are purchased under several contractual requirements, providing safeguards to the Company. These safeguards include the requirement that our mortgage company customers have a takeout commitment for each loan and multiple investors identified for purchases. To date, the Company has never experienced a loss on these loans and no allowance for loan losses has been allocated to them. At June 30, 2014 and 2013, $272 and $228, respectively, of the allowance for loan losses individually evaluated for impairment was allocated to purchased credit impaired ("PCI") loans.

For the three months ended June 30, 2014	Commercial Real Estate		Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - April 1, 2014	$	10,668	$	4,802		$	243	$	3,327		$	362		$	19,402
Charge-offs	—		(92		)	—		(74		)	(128		)	(294		)
Recoveries	—		39			—		20			76			135
Provision expense (benefit)	518		536			9		66			68			1,197
Ending balance - June 30, 2014	$	11,186	$	5,285		$	252	$	3,339		$	378		$	20,440

For the six months ended June 30, 2014	Commercial Real Estate		Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - January 1, 2014	$	10,944	$	4,536		$	212	$	3,280		$	386		$	19,358
Charge-offs	—		(302		)	—		(156		)	(307		)	(765		)
Recoveries	—		57			—		25			192			274
Provision expense (benefit)	242		994			40		190			107			1,573
Ending balance - June 30, 2014	$	11,186	$	5,285		$	252	$	3,339		$	378		$	20,440
Allowance ending balance:
Individually evaluated for impairment	$	964	$	1,535		$	—	$	189		$	1		$	2,689
Collectively evaluated for impairment	10,222		3,750			252		3,150			377			17,751
Loans:
Individually evaluated for impairment	8,052		6,407			52		5,152			453			20,116
Collectively evaluated for impairment	1,149,741		604,396			31,889		495,083			42,597			2,323,706
PCI loans	4,242		184			—		1,093			168			5,687
Ending balance	$	1,162,035	$	610,987		$	31,941	$	501,328		$	43,218		$	2,349,509

For the three months ended June 30, 2013	Commercial Real Estate			Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - April 1, 2013	$	10,824		$	3,568		$	114	$	3,566		$	570		$	18,642
Charge-offs	(716		)	(124		)	—		(326		)	(228		)	(1,394		)
Recoveries	—			60			—		6			105			171
Provision expense (benefit)	417			1,235			5		217			(16		)	1,858
Ending balance - June 30, 2013	$	10,525		$	4,739		$	119	$	3,463		$	431		$	19,277

16

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

For the six months ended June 30, 2013	Commercial Real Estate			Commercial and Industrial			Construction and Land			Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - January 1, 2013	$	11,182		$	2,574		$	149		$	3,528		$	618		$	18,051
Charge-offs	(772		)	(334		)	(31		)	(355		)	(378		)	(1,870		)
Recoveries	—			98			—			12			245			355
Provision expense (benefit)	115			2,401			1			278			(54		)	2,741
Ending balance - June 30, 2013	$	10,525		$	4,739		$	119		$	3,463		$	431		$	19,277
Allowance ending balance:
Individually evaluated for impairment	$	1,313		$	1,736		$	—		$	1,043		$	32		$	4,124
Collectively evaluated for impairment	9,212			3,003			119			2,420			399			15,153
Loans:
Individually evaluated for impairment	8,625			7,045			4			8,657			466			24,797
Collectively evaluated for impairment	977,407			304,916			18,836			449,279			51,727			1,802,165
PCI loans	4,195			1,070			1,631			1,140			189			8,225
Ending balance	$	990,227		$	313,031		$	20,471		$	459,076		$	52,382		$	1,835,187

The allowance for loan losses and related provision expense are susceptible to change if the credit quality of our loan portfolio changes, which is evidenced by many factors, including but not limited to charge-offs and non-performing loan trends. Generally, consumer real estate lending has a lower credit risk profile compared to other consumer lending (such as automobile loans). Commercial real estate and commercial and industrial lending, however, can have higher risk profiles than consumer loans due to these loans being larger in amount and non-homogeneous in structure and term. Changes in economic conditions, the mix and size of the loan portfolio, and individual borrower conditions can dramatically impact our level of allowance for loan losses in relatively short periods of time.

The allowance for loan losses is maintained to cover losses that are estimated in accordance with US GAAP. It is our estimate of credit losses inherent in our loan portfolio at each balance sheet date. Our methodology for analyzing the allowance for loan losses consists of general and specific components. For the general component, we stratify the loan portfolio into homogeneous groups of loans that possess similar loss potential characteristics and apply a loss ratio to these groups of loans to estimate the credit losses in the loan portfolio. We use both historical loss ratios and qualitative loss factors assigned to major loan collateral types to establish general component loss allocations. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data and external economic indicators, which may not yet be reflected in the historical loss ratios, and that could impact the Company's specific loan portfolios. The Allowance for Loan Loss Committee sets and adjusts qualitative loss factors by regularly reviewing changes in underlying loan composition and the seasonality of specific portfolios. The Allowance for Loan Loss Committee also considers credit quality and trends relating to delinquency, non-performing and/or classified loans and bankruptcy within the Company's loan portfolio when evaluating qualitative loss factors. Additionally, the Allowance for Loan Loss Committee adjusts qualitative factors to account for the potential impact of external economic factors, including the unemployment rate, housing price, vacancy rates and inventory levels specific to our primary market area.

Management evaluates current information and events regarding a borrower's ability to repay its obligations and considers a loan to be impaired when the ultimate collectability of amounts due, according to the contractual terms of the loan agreement, is in doubt. If an impaired loan is collateral-dependent, the fair value of the collateral, less the estimated cost to sell, is used to determine the amount of impairment. If an impaired loan is not collateral-dependent, the impairment amount is determined using the negative difference, if any, between the estimated discounted cash flows and the loan amount due. For impaired loans, the amount of the impairment can be adjusted, based on current data, until such time as the actual basis is established by acquisition of the collateral or until the basis is collected. Impairment losses are reflected in the allowance for loan losses through a charge to the provision for loan losses. Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal.

For the specific component, the allowance for loan losses includes loans where management has concerns about the borrower's ability to repay and on individually analyzed loans found to be impaired by definition. For example, all troubled debt restructurings are considered to be impaired. Loss estimates include the negative difference, if any, between the estimated

17

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

discounted cash flows of the loan, or if the loan is collateral dependent the current fair value of the collateral, and the loan amount due.

Impaired loans at June 30, 2014, and December 31, 2013, were as follows ¹:

June 30, 2014	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial real estate	$	8,911	$	4,755	$	3,297	$	8,052	$	793
Commercial and industrial	7,380		3,152		3,255		6,407		1,461
Construction and land	52		52		—		52		—
Consumer:
Consumer real estate	5,436		4,027		1,125		5,152		163
Other consumer	501		453		—		453		—
Total	$	22,280	$	12,439	$	7,677	$	20,116	$	2,417
December 31, 2013
Commercial real estate	$	8,328	$	3,619	$	3,986	$	7,605	$	2,016
Commercial and industrial	6,058		539		4,786		5,325		550
Construction and land	2		2		—		2		—
Consumer:
Consumer real estate	5,050		3,725		1,087		4,812		155
Other consumer	579		550		—		550		—
Total	$	20,017	$	8,435	$	9,859	$	18,294	$	2,721

¹ No Warehouse Purchase Program loans were impaired at June 30, 2014 or December 31, 2013. Loans reported do not include PCI loans.

18

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Income on impaired loans at June 30, 2014 and 2013 was as follows¹:

June 30, 2014	Current Quarter Average Recorded Investment		Year-to-Date Average Recorded Investment		Current Quarter Interest Income Recognized		Year-to-Date Interest Income Recognized
Commercial real estate	$	8,067	$	8,021	$	3	$	3
Commercial and industrial	6,163		5,973		3		6
Construction and land	13		9		—		—
Consumer:
Consumer real estate	4,759		4,675		11		23
Other consumer	482		510		1		2
Total	$	19,484	$	19,188	$	18	$	34
June 30, 2013
Commercial real estate	$	13,340	$	14,740	$	62	$	124
Commercial and industrial	6,924		6,366		3		6
Construction and land	4		79		—		—
Consumer:
Consumer real estate	8,513		8,502		19		33
Other consumer	433		406		—		—
Total	$	29,214	$	30,093	$	84	$	163

¹ Loans reported do not include PCI loans.

Past due status is based on the contractual terms of the loan. Loans that are past due 30 days are considered delinquent. A loan is moved to nonaccrual status in accordance with the Company's policy, typically after 90 days of non-payment. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Non-mortgage consumer loans are typically charged off no later than 120 days past due. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and larger individually classified impaired loans.

All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

19

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Loans past due over 90 days that were still accruing interest totaled $981 at June 30, 2014 and $266 at December 31, 2013, which consisted entirely of PCI loans. At June 30, 2014 and December 31, 2013, no PCI loans were considered non-performing loans. Purchased performing loans that were non-performing as of June 30, 2014 and December 31, 2013 totaled $3,335 and $4,201, respectively. Those loans included $1,358 and $1,698 at June 30, 2014 and December 31, 2013, respectively, of commercial lines of credit that did not qualify for PCI accounting due to their revolving nature. No Warehouse Purchase Program loans were non-performing at June 30, 2014 or December 31, 2013. Non-performing (nonaccrual) loans were as follows:

	June 30, 2014		December 31, 2013
Commercial real estate	$	7,386	$	7,604
Commercial and industrial	6,245		5,141
Construction and land	213		—
Consumer:
Consumer real estate	9,304		8,812
Other consumer	457		567
Total	$	23,605	$	22,124

A modified loan is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. Modifications to loan terms may include a modification of the contractual interest rate to a below-market rate (even if the modified rate is higher than the original rate), forgiveness of accrued interest, forgiveness of a portion of principal, an extended repayment period or a deed in lieu of foreclosure or other transfer of assets other than cash to fully or partially satisfy a debt. The Company's policy is to place all TDRs on nonaccrual for a minimum period of six months. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months and the collection of principal and interest under the revised terms is deemed probable. All TDRs are considered to be impaired loans.

Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. As a result, the Company does not separately identify consumer real estate loans less than $417 or individual consumer non-real estate secured loans for impairment disclosures.

20

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The outstanding balances of troubled debt restructurings ("TDRs") are shown below:

	June 30, 2014		December 31, 2013
Nonaccrual TDRs(1)	$	12,498	$	11,368
Performing TDRs (2)	1,600		971
Total	$	14,098	$	12,339
Specific reserves on TDRs	$	1,048	$	1,191
Outstanding commitments to lend additional funds to borrowers with TDR loans	—		—

¹ Nonaccrual TDR loans are included in the nonaccrual loan totals.

² Performing TDR loans are loans that have been performing under the restructured terms for at least six months and the Company is accruing interest on these loans.

The following tables provide the recorded balances of loans modified as a TDR during the three and six months ended June 30, 2014 and 2013.

	Three Months Ended June 30, 2014								Six Months Ended June 30, 2014
	Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total		Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	1,913	$	1,913
Consumer real estate	130		—		113		243		130		269		113		512
Other consumer	—		—		—		—		13		6		—		19
Total	$	130	$	—	$	113	$	243	$	143	$	275	$	2,026	$	2,444

	Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
	Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total		Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total
Commercial real estate	$	62	$	47	$	—	$	109	$	752	$	47	$	—	$	799
Commercial and industrial	—		—		—		—		8		31		—		39
Consumer real estate	41		73		223		337		41		73		223		337
Other consumer	71		68		—		139		130		68		—		198
Total	$	174	$	188	$	223	$	585	$	931	$	219	$	223	$	1,373

¹ Principal deferrals include Chapter 7 bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt. Such loans are placed on non-accrual status.

TDRs modified during the three and six months endedJune 30, 2014 and 2013 which experienced a subsequent default during the periods are shown below. A payment default is defined as a loan that was 90 days or more past due.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Commercial and industrial	$	66	$	—	$	66	$	—
Consumer real estate	210		359		210		584
Total	$	276	$	359	$	276	$	584

21

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Below is an analysis of the age of recorded investment in loans that were past due at June 30, 2014 and December 31, 2013. No Warehouse Purchase Program loans were delinquent at June 30, 2014 or December 31, 2013.

June 30, 2014	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Loans Past Due		Current Loans 1		Total Loans
Commercial real estate	$	2,731	$	—	$	1,342	$	4,073	$	1,157,962	$	1,162,035
Commercial and industrial	142		2,632		875		3,649		607,338		610,987
Construction and land	—		—		213		213		31,728		31,941
Consumer loans:
Consumer real estate	481		2,149		4,268		6,898		494,430		501,328
Other consumer	161		102		27		290		42,928		43,218
Total	$	3,515	$	4,883	$	6,725	$	15,123	$	2,334,386	$	2,349,509

December 31, 2013	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Loans Past Due		Current Loans 1		Total Loans
Commercial real estate	$	552	$	1,315	$	57	$	1,924	$	1,089,276	$	1,091,200
Commercial and industrial	4,518		129		2,835		7,482		431,948		439,430
Construction and land	152		—		—		152		30,095		30,247
Consumer loans:
Consumer real estate	6,579		3,295		3,651		13,525		427,701		441,226
Other consumer	460		106		53		619		47,180		47,799
Total	$	12,261	$	4,845	$	6,596	$	23,702	$	2,026,200	$	2,049,902

¹ Includes acquired PCI loans with a total carrying value of $2,295 and $5,218 at June 30, 2014 and December 31, 2013, respectively.

For loans collateralized by real property and commercial and industrial loans, credit exposure is monitored by internally assigned grades used for classification of loans. A loan is considered “special mention” when management has determined that there is a potential weakness that deserves management's close attention. Loans rated as "special mention" are not adversely classified according to regulatory classifications and do not expose the Company to sufficient risk to warrant adverse classification. A loan is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. “Substandard” loans include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected, and the loan may or may not meet the criteria for impairment. Loans classified as “doubtful” have all of the weaknesses of those classified as “substandard”, with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions and values, “highly questionable and improbable.” All other loans that do not fall into the above mentioned categories are considered “pass” loans. Updates to internally assigned grades are made monthly and/or upon significant developments.

For consumer loans, credit exposure is monitored by payment history of the loans. Non-performing consumer loans are on nonaccrual and are generally greater than 90 days past due.

22

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The recorded investment in loans by credit quality indicators at June 30, 2014 and December 31, 2013, was as follows.

Real Estate and Commercial and Industrial Credit Exposure

Credit Risk Profile by Internally Assigned Grade

June 30, 2014	Commercial Real Estate		Commercial and Industrial		Construction and Land		Consumer Real Estate
Grade: 1
Pass	$	1,133,080	$	596,508	$	31,430	$	484,590
Special Mention	10,542		5,223		163		4,125
Substandard	17,574		9,191		348		8,911
Doubtful	839		65		—		3,702
Total	$	1,162,035	$	610,987	$	31,941	$	501,328

December 31, 2013	Commercial Real Estate		Commercial and Industrial		Construction and Land		Consumer Real Estate
Grade: 1
Pass	$	1,055,872	$	424,110	$	28,146	$	424,174
Special Mention	16,030		1,672		161		3,661
Substandard	18,444		13,492		1,940		9,110
Doubtful	854		156		—		4,281
Total	$	1,091,200	$	439,430	$	30,247	$	441,226

¹ PCI loans are included in the substandard or doubtful categories. These categories are consistent with the "substandard" and "doubtful" categories as defined by regulatory authorities.

Warehouse Purchase Program Credit Exposure

All Warehouse Purchase Program loans were graded pass as of June 30, 2014 and December 31, 2013.

Consumer Other Credit Exposure

Credit Risk Profile Based on Payment Activity

	June 30, 2014		December 31, 2013
Performing	$	42,761	$	47,232
Non-performing	457		567
Total	$	43,218	$	47,799

23

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 6 - FAIR VALUE

ASC 820, “Fair Value Measurements and Disclosures”, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Prices or valuation techniques that require inputs that are both significant and unobservable in the market. These instruments are valued using the best information available, some of which is internally developed, and reflects a reporting entity’s own assumptions about the risk premiums that market participants would generally require and the assumptions they would use.

The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs).

The estimated fair value of interest rate swaps are obtained from a pricing service that provides the swaps' unwind value (Level 2 inputs). In September 2013, we entered into certain interest rate derivative positions that are not designated as hedging instruments. The fair value of these derivative positions outstanding are included in other assets and other liabilities in the accompanying consolidated balance sheets. Please see Note 7 - Derivative Financial Instruments for more information.

24

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below.

June 30, 2014	Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
Assets:
Agency residential mortgage-backed securities	$	160,997
Agency residential collateralized mortgage obligations	60,797
SBA pools	2,390
Total securities available for sale	$	224,184
Derivative asset 1	$	79
Derivative liability 1	$	79

December 31, 2013
Assets:
Agency residential mortgage-backed securities	$	174,709
Agency residential collateralized mortgage obligations	70,575
SBA pools	2,728
Total securities available for sale	$	248,012
Derivative asset 1	$	33
Derivative liability 1	$	33

¹ Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly. Please see Note 7 - Derivative Financial Instruments for more information.

Assets and Liabilities Measured on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis are summarized below. There were no liabilities measured at fair value on a non-recurring basis at June 30, 2014 or December 31, 2013.

June 30, 2014	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans	$	5,260
Foreclosed assets	240
December 31, 2013
Assets:
Impaired loans	$	7,138
Foreclosed assets	480

Impaired loans that are collateral dependent are measured for impairment using the fair value of the collateral adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. At June 30, 2014, impaired loans secured by real estate had an average discount of 5% applied to the appraised value of the collateral, and impaired loans secured by receivables or inventory had discounts determined by management on an individual loan basis. Impaired loans that are not collateral dependent are measured for impairmentby a discounted cash flow analysis using a net present value calculation that utilizes data from the loan file before and after the modification.

Foreclosed assets are measured at the lower of book or fair value less costs to sell using third party appraisals, listing

25

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

agreements or sale contracts, which may be adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. Management may also consider additional adjustments on specific properties due to the age of the appraisal, expected holding period, lack of comparable sales, or if the other real estate owned is a special use property. The market value discounts on foreclosed assets at June 30, 2014, ranged from 0% to 77%, with an average of 19%.

The Credit Administration department evaluates the valuations on impaired loans and foreclosed assets at least quarterly. The valuations on impaired loans are reviewed at least quarterly by the Allowance for Loan Loss Committee and are considered in the calculation of the allowance for loan losses. Unobservable inputs, such as discounts to collateral, are monitored and adjusted if market conditions change.

The carrying amount and fair value information of financial instruments not recorded at fair value in their entirety on a recurring basis on the Company's consolidated balance sheets at June 30, 2014 and at December 31, 2013, were as follows:

			Fair Value
June 30, 2014	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	165,908	$	165,908	$	—	$	—
Securities held to maturity	267,614		—		277,913		—
Loans held for investment, net	2,327,370		—		—		2,345,041
Loans held for investment - Warehouse Purchase Program	769,566		—		—		769,877
FHLB and Federal Reserve Bank stock	44,532		—		44,532		—
Accrued interest receivable	10,620		10,620		—		—
Financial liabilities
Deposits	$	2,435,726	$	—	$	—	$	2,307,105
FHLB advances	874,866		—		—		884,707
Repurchase agreement	25,000		—		—		27,149
Accrued interest payable	1,075		1,075		—		—

26

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

			Fair Value
December 31, 2013	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	87,974	$	87,974	$	—	$	—
Securities held to maturity	294,583		—		301,739		—
Loans held for investment, net	2,029,277		—		—		2,054,460
Loans held for investment - Warehouse Purchase Program	673,470		—		—		673,785
FHLB and Federal Reserve Bank stock	34,883		—		34,883		—
Accrued interest receivable	9,904		9,904		—		—
Financial liabilities
Deposits	$	2,264,639	$	—	$	—	$	2,123,846
FHLB advances	639,096		—		—		650,976
Repurchase agreement	25,000		—		—		27,430
Accrued interest payable	1,066		1,066		—		—

The methods and assumptions used to estimate fair value are described as follows:

Estimated fair value is the carrying amount for cash and cash equivalents and accrued interest receivable and payable. The fair values of securities held to maturity are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). For loans held for investment, fair value is based on discounted cash flows using current market offering rates, estimated life, and applicable credit risk. For deposits and FHLB advances, fair value is calculated using the FHLB advance curve to discount cash flows for the estimated life for deposits and according to the contractual repayment schedule for FHLB advances. Fair value of the repurchase agreement is based on discounting the estimated cash flows using the current rate at which similar borrowings would be made with similar terms and remaining maturities. It is not practicable to determine the fair value of FHLB and Federal Reserve Bank stock due to restrictions on its transferability. The fair value of off-balance sheet items is based on the current fees or costs that would be charged to enter into or terminate such arrangements and are not considered significant to this presentation.

27

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 7 - DERIVATIVE FINANCIAL INSTRUMENTS

In September 2013, we entered into certain interest rate derivative positions that are not designated as hedging instruments. These derivative positions related to transactions in which we entered into an interest rate swap with a customer, while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows our customer to effectively convert a variable rate loan to a fixed rate. Because we act as an intermediary for our customer, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on our results of operations. The Company presents derivative instruments at fair value in other assets and other liabilities in the accompanying consolidated balance sheets.

The notional amounts and estimated fair values of interest rate derivative positions outstanding and weighted-average receive and pay interest rates at June 30, 2014 and December 31, 2013 are presented in the following table.

	Outstanding Notional Amount			Estimated Fair Value			Weighted-Average Interest Rate
Non-hedging interest rate contracts - commercial loan interest rate swaps:							Received		Paid
June 30, 2014
Loan customer counterparty	$	6,304		$	79		4.38	%	2.90	%
Financial institution counterparty	(6,304		)	(79		)	2.90		4.38
December 31, 2013
Loan customer counterparty	$	6,406		$	33		4.38	%	2.92	%
Financial institution counterparty	(6,406		)	(33		)	2.92		4.38

Our credit exposure on interest rate swaps is limited to the net favorable value of all swaps by each counterparty. In some cases, collateral may be required from the counterparties involved if the net value of the swaps exceed a nominal amount considered to be immaterial. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. At June 30, 2014, our cash collateral pledged for these derivatives totaled $150, which was in excess of our credit exposure. This collateral is reported in our interest-bearing deposits in other financial institutions in the accompanying consolidated balance sheets.

28

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 8 - SHARE-BASED COMPENSATION

Compensation cost charged to income for share-based compensation is presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Restricted stock	$	640	$	595	$	1,295	$	1,025
Stock options	276		255		540		397
Income tax benefit	320		298		642		498

A summary of activity in the restricted stock portion of the Company's stock plans is presented below:

	Six Months Ended June 30, 2014
	Time-Vested Shares				Performance-Based Shares
	Shares		Weighted-Average Grant Date Fair Value 1		Shares	Weighted-Average Grant Date Fair Value 2
Non-vested at December 31, 2013	381,402		$	20.39	82,400	$	27.45
Granted	20,000		24.69		—	—
Vested	(63,000	)	21.61		—	—
Forfeited	—		—		—	—
Non-vested at June 30, 2014	338,402		$	20.57	82,400	$	27.06

¹For restricted stock awards with time-based vesting conditions, the grant date fair value is based on the closing stock price as quoted on the NASDAQ Stock Market on the grant date.

² For restricted stock awards with performance-based vesting conditions, the value of the award is based upon the closing stock price as quoted on the NASDAQ Stock Market on the date of vesting. Until the final value is determined on the vesting date, the Company estimates the fair value quarterly based upon the closing stock price as quoted on the NASDAQ Stock Market near the last business day of each calendar quarter end.

As of June 30, 2014, there was $7,924 of total unrecognized compensation expense related to non-vested shares awarded under the restricted stock plans. That expense is expected to be recognized over a weighted-average period of 2.77 years.

A summary of activity in the stock option portion of the Company's stock plans as of June 30, 2014, is presented below:

			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	Shares
Outstanding at December 31, 2013	1,173,618		$	18.16	8.4	$	10,903
Granted	8,500		28.51		10.0	—
Exercised	(36,904	)	13.30		0.0	421
Forfeited	(21,420	)	16.74		0.0	—
Outstanding at June 30, 2014	1,123,794		18.42		8.1	9,549
Fully vested and expected to vest	1,116,799		18.42		8.1	9,497
Exercisable at June 30, 2014	342,458		$	16.19	7.0	$	3,671

As of June 30, 2014, there was $3,886 of total unrecognized compensation expense related to non-vested stock options. That expense is expected to be recognized over a weighted-average period of 3.50 years.

29

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 9 - INCOME TAXES    

A summary of the net deferred tax assets as of June 30, 2014 and December 31, 2013, is presented below:

	June 30, 2014			December 31, 2013
Net deferred tax assets	$	10,656		$	12,320
Estimated annual effective tax rate	36		%

30

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, the Company enters into various transactions which, in accordance with US GAAP, are not included in its consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit which involve, to varying degrees, elements of credit and interest rate risk. Credit losses up to the face amount of these instruments could occur, although material losses are not anticipated. The Company's credit policies applied to loan originations are also applied to these commitment requests, including obtaining collateral at the exercise of the commitment.

The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Since many commitments expire without being drawn upon, the total contractual amount of commitments does not necessarily represent future cash requirements of the Company. Substantially all of the Company's commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of future loan funding. Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment were funded, the Company would seek payment from the customer under pre-arranged terms. The Company's policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements.

The contractual amounts of financial instruments with off‑balance sheet risk at June 30, 2014 and December 31, 2013, are summarized below. Please see Part I-Item 2-"Off-Balance Sheet Arrangements, Contractual Obligation and Commitments" of this Form 10-Q for information related to commitment maturities.

	June 30, 2014		December 31, 2013
Unused commitments to extend credit	$	399,229	$	425,324
Unused capacity on Warehouse Purchase Program loans	344,434		562,030
Standby letters of credit	1,192		1,354
Total unused commitments/capacity	$	744,855	$	988,708

In addition to the commitments above, the Company guarantees the credit card debt of certain customers to the merchant bank that issues the credit cards. These guarantees are in place for as long as the guaranteed credit card is open. At June 30, 2014 and December 31, 2013, these credit card guarantees totaled $1,099 and $1,307, respectively. This amount represents the maximum potential amount of future payments under the guarantee. At June 30, 2014, the Company had set aside a reserve of $28 for its credit card guarantees.

    Also, the Company had overdraft protection available in the amounts of $74,608 and $87,772 for June 30, 2014 and December 31, 2013, respectively.

In regards to unused capacity on Warehouse Purchase Program loans, the Company has established maximum purchase facility amounts, but reserves the right, at any time, to refuse to buy any mortgage loans offered for sale with each customer, for any reason in the Company's sole and absolute discretion.

At June 30, 2014, the Company had $3,480 of unfunded commitments recorded in other liabilities in its consolidated balance sheet related to investments in community development -oriented private equity funds used for Community Reinvestment Act purposes.

31

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 11 - RECENT ACCOUNTING DEVELOPMENTS    

In January 2014, the FASB issued ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects. This ASU permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. For public entities, the amendments are effective, with retrospective application, for annual periods, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.

In January 2014, the FASB issued ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. This ASU is intended to clarify when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. For public entities, the amendments are effective for annual periods, and interim periods within those years, beginning after December 15, 2014. An entity can elect to adopt the amendments in this update using either a modified retrospective transition method or a prospective transition method. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.    

In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU states that only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results. In addition, this ASU requires expanded disclosures about discontinued operations and disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. For public entities, the amendments are effective prospectively for annual periods, and interim periods within those years, beginning on or after December 15, 2014. Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.    

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU affects entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. For public entities, the amendments are effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements by accounting for these transactions as secured borrowings. This ASU also requires a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return of the transferred financial assets throughout the term of the transaction. For public entities, the amendments are effective for annual periods, and interim periods within those years, beginning after December 15, 2014. Early adoption is not permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments are effective for annual periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.

32

VIEWPOINT FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 12 — SUBSEQUENT EVENTS

The Company evaluated events from the date of the consolidated financial statements on June 30, 2014, through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q dated July 29, 2014. No additional events were identified requiring recognition in and/or disclosures in the consolidated financial statements.

33

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Private Securities Litigation Reform Act Safe Harbor Statement

When used in filings by ViewPoint Financial Group, Inc. (“ViewPoint”) with the Securities and Exchange Commission (the “SEC”), in ViewPoint’s press releases or other public or shareholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “intends” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected, including, among other things: the expected cost savings, synergies and other financial benefits from the ViewPoint-LegacyTexas merger (the “Merger”) might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters might be greater than expected; the requisite regulatory approvals might not be obtained or other conditions to completion of the merger set forth in the merger agreement might not be satisfied or waived; changes in economic conditions; legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; ViewPoint’s ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in ViewPoint’s market area; the industry-wide decline in mortgage production; competition; changes in management’s business strategies and other factors set forth in ViewPoint’s filings with the SEC.

ViewPoint does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Overview

The Company, a Maryland corporation, is a full stock holding company for its wholly owned subsidiary, ViewPoint Bank, N.A. (the “Bank”). Unless the context otherwise requires, references in this document to the “Company” refer to ViewPoint Financial Group, Inc. and references to the “Bank” refer to ViewPoint Bank, N.A. References to “we,” “us,” and “our” means ViewPoint Financial Group, Inc. or ViewPoint Bank, N.A. , as the context requires. The Company is regulated by the Board of Governors of the Federal Reserve System ("FRB") and the Bank is regulated by the Office of the Comptroller of the Currency (“OCC”) with certain back-up oversight by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is required to have certain reserves and stock set by the FRB and is a member of the Federal Home Loan Bank of Dallas, which is one of the 12 regional banks in the Federal Home Loan Bank (“FHLB”) System.

On November 25, 2013, the Company and LegacyTexas Group, Inc. (“LegacyTexas”) announced that they had entered into a definitive merger agreement whereby LegacyTexas will merge into the Company and, immediately thereafter, the Bank will merge into LegacyTexas’ subsidiary bank, LegacyTexas Bank. The merger was approved by LegacyTexas' shareholders on May 19, 2014, and will result in one of the largest independent banks in the state of Texas, with 51 branches and pro forma assets of over $5 billion. On June 17, 2014, the Company and LegacyTexas announced that additional time will be required to obtain regulatory approvals and to satisfy customary closing conditions necessary to complete the merger, and have jointly extended the agreement to August 31, 2014, pursuant to its terms.

Our principal business consists of attracting retail deposits from the general public and the business community and investing those funds, along with borrowed funds, in commercial real estate loans, secured and unsecured commercial and industrial loans, as well as permanent loans secured by first and second mortgages on owner-occupied, one- to four-family residences and consumer loans. Additionally, the Warehouse Purchase Program allows mortgage banking company customers to close one- to four-family real estate loans in their own name and manage its cash flow needs until the loans are sold to investors. We also offer brokerage services for the purchase and sale of non-deposit investment and insurance products through a third party brokerage arrangement. Our operating revenues are derived principally from interest earned on interest-earning assets including loans and investment securities and service charges and fees on deposits and other account services. Our primary sources of funds are deposits, FHLB advances and other borrowings, and payments received on loans and securities. We offer a variety of deposit accounts that provide a wide range of interest rates and terms, generally including savings, money market, term certificate and demand accounts. Our principal objective is to remain an independent, community-oriented financial institution, providing outstanding service and innovative products to customers in our primary market area.

34

Performance Highlights

• Loans held for investment, excluding Warehouse Purchase Program loans, grew $299.6 million, or 14.6%, from December 31, 2013, with commercial loans increasing by $243.3 million, or 15.6%, to $1.80 billion at June 30, 2014.

• Warehouse Purchase Program loans increased by $96.1 million, or 14.3%, from December 31, 2013, to $769.6 million at June 30, 2014.

• The $644,000, or 7.9%, increase in net income for the quarter ended June 30, 2014, compared to the quarter ended June 30, 2013, was driven by a $1.7 million, or 5.4%, increase in interest income on loans and a $671,000, or 13.8%, decrease in interest expense.

• Deposits increased by $171.1 million, or 7.6%, from December 31, 2013.

• Net interest margin for the quarter ended June 30, 2014, was 3.76%, a four basis point increase from the quarter ended June 30, 2013.

Critical Accounting Estimates

Certain of our accounting estimates are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. Management believes that its critical accounting estimates include determining the allowance for loan losses and other-than-temporary impairments in our securities portfolio. Our accounting policies are discussed in detail in Note 1 of the Notes to Consolidated Financial Statements contained in Item 8 of our 2013 Form 10-K.

Allowance for Loan Loss. The allowance for loan losses and related provision expense are susceptible to change if the credit quality of our loan portfolio changes, which is evidenced by many factors, including but not limited to charge-offs and non-performing loan trends. Generally, consumer real estate lending has a lower risk profile compared to other consumer lending (such as automobile loans). Commercial real estate and commercial and industrial lending, however, can have higher risk profiles than consumer loans due to these loans being larger in amount and more susceptible to fluctuations in industry, market and economic conditions. While management uses available information to recognize losses on loans, changes, in economic conditions, the mix and size of the loan portfolio and individual borrower conditions can dramatically impact our level of allowance for loan losses in relatively short periods of time. Management believes that the allowance for loan losses is maintained at a level that represents coverage of our best estimate of inherent credit losses in the loan portfolio as of June 30, 2014.

Management evaluates current information and events regarding a borrower's ability to repay its obligations and considers a loan to be impaired when the ultimate collectability of amounts due, according to the contractual terms of the loan agreement, is in doubt. If an impaired loan is collateral-dependent, the fair value of the collateral, less the estimated cost to sell, is used to determine the amount of impairment. If an impaired loan is not collateral-dependent, the impairment amount is determined using the negative difference, if any, between the estimated discounted cash flows and the loan amount due. For impaired loans, the amount of the impairment can be adjusted, based on current data, until such time as the actual basis is established by acquisition of the collateral or until the basis is collected. Impairment losses are reflected in the allowance for loan losses through a charge to the provision for loan losses. Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal.

Other-than-Temporary Impairments. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis and more frequently when economic, market, or security specific concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than amortized cost, the financial condition and near-term prospects of the issuer, adverse conditions specifically related to the security, issuer, or geographic area, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. The Company conducts regular reviews of the bond agency ratings of securities and considers whether the securities were issued by or have principal and interest payments

35

guaranteed by the federal government or its agencies. These reviews focus on the underlying rating of the issuer and also include the insurance or guarantee rating of securities that have an insurance or guarantee component. The ratings and financial condition of the issuers are monitored, as well as the financial condition and ratings of the insurers and guarantors.

Comparison of Financial Condition at June 30, 2014 and December 31, 2013

General. Total assets increased by $426.0 million, or 12.1%, to $3.95 billion at June 30, 2014, from $3.53 billion at December 31, 2013, primarily due to an increase of $171.6 million, or 39.0%, in commercial and industrial loans, a $70.8 million, or 6.5%, increase in commercial real estate loans, a $60.1 million, or 13.6%, increase in consumer real estate loans and a $96.1 million, or 14.3%, increase in Warehouse Purchase Program loans. These increases were partially offset by a $50.8 million, or 9.4%, decrease in the securities portfolio.

Loans. Gross loans increased by $395.7 million, or 14.5%, to $3.12 billion at June 30, 2014, from $2.72 billion at December 31, 2013.

	June 30, 2014		December 31, 2013		Dollar Change			Percent Change
	(Dollars in thousands)
Commercial real estate	$	1,162,035	$	1,091,200	$	70,835		6.5	%
Commercial and industrial loans:
Commercial	579,561		425,030		154,531			36.4
Warehouse lines of credit	31,426		14,400		17,026			118.2
Total commercial and industrial loans	610,987		439,430		171,557			39.0
Construction and land loans
Commercial construction and land	28,496		27,619		877			3.2
Consumer construction and land	3,445		2,628		817			31.1
Total construction and land loans	31,941		30,247		1,694			5.6
Consumer:
Consumer real estate	501,328		441,226		60,102			13.6
Other consumer	43,218		47,799		(4,581		)	(9.6	)
Total consumer loans	544,546		489,025		55,521			11.4
Gross loans held for investment, excluding Warehouse Purchase Program loans	2,349,509		2,049,902		299,607			14.6
Warehouse Purchase Program loans	769,566		673,470		96,096			14.3
Gross loans	$	3,119,075	$	2,723,372	$	395,703		14.5	%

During the six months ended June 30, 2014, the increase in gross loans, excluding Warehouse Purchase Program loans, was primarily driven by growth in our commercial lending portfolio, as commercial loans (essentially commercial real estate and commercial and industrial loans) increased a combined $243.3 million, or 15.6%, from December 31, 2013. Our commercial real estate portfolio consists almost exclusively of loans secured by well-established, multi-tenanted commercial real estate properties. Approximately 91% of our commercial real estate loan balances are secured by properties located in Texas.

The Company has historically participated in several energy loan transactions, but to further develop this line of business, in May 2013, the Company announced the formation of a new energy lending group. The Energy Finance group focuses on providing loans to private and public oil and gas companies throughout the United States, with an emphasis on reserve-based transactions for development drilling, capital expenditures to enhance oil and gas reserves, and acquisitions of oil and gas reserves. The group's offerings also include the Bank's full array of commercial services, including Treasury Management and letters of credit. Energy loans, which are reported as commercial and industrial loans, totaled $222.2 million at June 30, 2014, up $55.7 million from $166.5 million at December 31, 2013.

Warehouse Purchase Program loans increased by $96.1 million, or 14.3%, to $769.6 million at June 30, 2014, from $673.5 million at December 31, 2013. The Company purchases a 100% participation interest in the loans originated by our mortgage banking company customers, which are then held as one- to four- family mortgage loans. The mortgage banking company has no obligation to offer to sell to us and we have no obligation to purchase participation interests in these loans. The

36

mortgage banking company closes mortgage loans consistent with underwriting standards established by approved investors and once the loan closes, the participation interest is delivered by the Company to the investor selected by the originator and approved by the Company. Loans funded by the Warehouse Purchase Program during the second quarter of 2014 consisted of 57% conforming, 42% government and 1% Home Affordable Refinance Program (HARP) loans.

Prior to the December 31, 2013 reporting period, the Company reported Warehouse Purchase Program loans as held for sale, as the Company believed that was the most meaningful presentation to our financial statement users given that the collection of the loan was based upon the sale of the loan. Effective December 31, 2013, the Company concluded that, under US GAAP, these loans should be accounted for as held for investment. This correction changed the accounting for Warehouse Purchase Program loans from a lower of cost or market accounting method to accounting for the loans under ASC 310, with any credit losses incurred as of the balance sheet date recognized in the allowance for loan losses. As we had not reported any valuation decreases below cost in prior periods and we have experienced no credit losses on these loans, this correction had no impact on net income, comprehensive income, earnings per share or income taxes. Additionally, total assets and shareholders' equity remained unchanged. However, this correction did impact the statement of cash flows by moving cash flows associated with the Warehouse Purchase Program from operating cash flows to investing cash flows.

Consumer real estate loans increased by $60.1 million, or 13.6%, to $501.3 million at June 30, 2014, from $441.2 million at December 31, 2013. The Company does not originate one- to four- family real estate loans but does periodically purchase these loans from correspondents on both a servicing retained and servicing released basis. Also, the Company originates consumer home equity and home improvement loans.

Mortgage reform rules mandated by the Dodd-Frank Act became effective in January 2014, requiring lenders to make a reasonable, good faith determination of a borrower’s ability to repay any consumer closed-end credit transaction secured by a dwelling and to limit prepayment penalties. Increased risks of legal challenge, private right of action and regulatory enforcement are presented by these rules. The Company originates and purchases loans that do not meet the definition of a “qualified mortgage” (“QM”). At June 30, 2014, the Company had $25.2 million in non-QM loans, consisting of home equity and home improvement loans totaling $18.1 million and residential mortgage loans totaling $7.1 million. To mitigate the risks involved with non-QM loans, the Company has implemented systems, processes, procedural and product changes, and maintains its underwriting standards, to ensure that the “ability-to-repay” requirements of the new rules are adequately addressed.

Allowance for Loan Losses. The allowance for loan losses is maintained to cover losses that are estimated in accordance with US GAAP. It is our estimate of credit losses in our loan portfolio at each balance sheet date. Our methodology for analyzing the allowance for loan losses consists of general and specific components.

For the general component, we stratify the loan portfolio into homogeneous groups of loans that possess similar loss potential characteristics and apply a loss ratio to these groups of loans to estimate the credit losses in the loan portfolio. We use both historical loss ratios and qualitative loss factors assigned to major loan collateral types to establish loss allocations. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data and external economic indicators which may not yet be reflective in the historical loss ratios and that could impact the Company's specific loan portfolios. The Allowance for Loan Loss Committee sets and adjusts qualitative loss factors by reviewing changes in loan composition and the seasonality of specific portfolios. The Allowance for Loan Loss Committee also considers credit quality and trends relating to delinquency, non-performing and/or classified loans and bankruptcy within the Company's loan portfolio when evaluating qualitative loss factors. Additionally, the Allowance for Loan Loss Committee adjusts qualitative factors periodically to account for the potential impact of external economic factors, including the unemployment rate, housing price, vacancy rates and inventory levels specific to our primary market area.

For the specific component, the allowance for loan losses includes loans where management has concerns about the borrower's ability to repay and on individually analyzed loans found to be impaired by definition. For example, all troubled debt restructurings are considered to be impaired, regardless of collateral type or note amount. This impairment analysis includes all loans secured by commercial real estate and all commercial and industrial loans, as well as certain residential real estate loans. Loss estimates include the negative difference, if any, between the current fair value of the collateral, or the estimated discounted cash flows, and the loan amount due.

Acquired loans are initially recorded at fair value, which includes an estimate of credit losses expected to be realized over the remaining lives of the loans, and therefore no corresponding allowance for loan losses is recorded for these loans at acquisition. Methods utilized to estimate the required allowance for loan losses for acquired loans not deemed credit−impaired at acquisition are similar to originated loans; however, the estimate of loss is based on the unpaid principal balance less the remaining purchase discount.

37

Purchased credit impaired (PCI) loans are not considered nonperforming loans, and accordingly, are not included in the non-performing loans to total loans ratio as a numerator, but are included in total loans reflected in the denominator. The result is a downward trend in the ratio when compared to prior periods, assuming all other factors stay the same. Similarly, other asset quality ratios, such as the allowance for loan losses to total loans ratio will reflect a downward trend, assuming all other factors stay the same, due to the impact of PCI loans on the denominator with no corresponding impact in the numerator.

Our non-performing loans, which consist of nonaccrual loans, include both smaller balance homogeneous loans that are collectively evaluated for impairment and larger individually classified impaired loans. Loans are placed on nonaccrual status when the collection of principal and/or interest becomes doubtful or other factors involving the loan warrant placing the loan on nonaccrual status.

A modified loan is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. Modifications to loan terms may include a modification of the contractual interest rate to a below-market rate (even if the modified rate is higher than the original rate), forgiveness of accrued interest, forgiveness of a portion of principal, an extended repayment period or a deed in lieu of foreclosure or other transfer of assets other than cash to fully or partially satisfy a debt. The Company's policy is to place all TDRs on nonaccrual for a minimum period of six months. Loans qualify for a return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months and the collection of principal and interest under the revised terms is deemed probable. All TDRs are considered to be impaired loans. At June 30, 2014, of our $14.1 million in TDRs, $1.6 million were accruing interest and $12.5 million were classified as nonaccrual. Nonaccrual TDRs included $6.7 million attributable to four commercial real estate loans, $6.6 million of which were performing in accordance with their restructured terms at June 30, 2014.

Non-performing loans to total loans held for investment, excluding Warehouse Purchase Program loans, was 1.00% at June 30, 2014, compared to 1.08% at December 31, 2013. Including Warehouse Purchase Program loans, non-performing loans to total loans held for investment was 0.76% at June 30, 2014, compared to 0.81% at December 31, 2013. Non-performing loans increased by $1.5 million to $23.6 million at June 30, 2014, from $22.1 million at December 31, 2013. This increase was primarily attributable to a commercial and industrial loan totaling $1.9 million that was placed on nonaccrual status in 2014. The $1.9 million commercial and industrial loan, which was not past due at June 30, 2014, was placed on nonaccrual solely due to its designation as a troubled debt restructuring. Also, non-performing consumer real estate loans increased by $492,000 during the six months ended June 30, 2014, primarily due to a $606,000 loan that was past due and rated as Substandard at June 30, 2014.

Our allowance for loan losses was $20.4 million at June 30, 2014, compared to $19.4 million at December 31, 2013, or 0.66% of total loans held for investment (including Warehouse Purchase Program loans) at June 30, 2014, compared to 0.71% at December 31, 2013. Our allowance for loan losses to non-performing loans was 86.59% at June 30, 2014, compared to 87.50% at December 31, 2013.

Classified Assets. Loans and other assets, such as securities and foreclosed assets that are considered by management to be of lesser quality, are classified as "substandard," "doubtful" or "loss." An asset is considered "substandard" if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. "Substandard" assets include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as "doubtful" have all of the weaknesses of those classified as "substandard," with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets classified as "loss" are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Purchased credit impaired loans are included in the "substandard" and "doubtful" categories.

We regularly review the assets in our portfolio to determine whether any should be considered as classified. The total amount of classified assets represented 7.5% of our total equity and 1.1% of our total assets at June 30, 2014, compared to 9.1% of our total equity and 1.4% of our total assets at December 31, 2013. The aggregate amount of classified assets at the dates indicated was as follows:

38

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Doubtful	$	4,611	$	5,307
Substandard	36,711		43,827
Total classified loans	41,322		49,134
Foreclosed assets	240		480
Total classified assets	$	41,562	$	49,614

The Company has potential problem loans, considered "other loans of concern," that are currently performing and do not meet the criteria for impairment, but where there is the distinct possibility that we could sustain some loss if credit deficiencies are not corrected. These possible credit problems may result in the future inclusion of these loans in the non-performing asset categories and consisted of $11.7 million in loans that were classified as "substandard" but were still accruing interest and were not considered impaired at June 30, 2014.These loans have been considered in management's analysis of potential loan losses.

Securities. Our securities portfolio decreased by $50.8 million, or 9.4%, to $491.8 million at June 30, 2014, from $542.6 million at December 31, 2013. The decrease in our securities portfolio primarily resulted from paydowns and maturities totaling $337.7 million, which were partially offset by purchases totaling $286.9 million. The majority of these purchases were done for tax strategy purposes. A portion of these proceeds from the securities paydowns were maintained in cash accounts to build liquidity in preparation for the cash payment portion of the pending merger with LegacyTexas.

Deposits. Total deposits increased by $171.1 million, or 7.6%, to $2.44 billion at June 30, 2014, from $2.26 billion at December 31, 2013.

	June 30, 2014		December 31, 2013		Dollar Change		Percent Change
	(Dollars in thousands)
Non-interest-bearing demand	$	433,194	$	410,933	$	22,261	5.4	%
Interest-bearing demand	476,203		474,515		1,688		0.4
Savings and money market	1,032,496		904,576		127,920		14.1
Time	493,833		474,615		19,218		4.0
Total deposits	$	2,435,726	$	2,264,639	$	171,087	7.6	%

The increase in deposits from December 31, 2013, was primarily due to a $127.9 million, or 14.1%, increase in savings and money market deposits. In the second quarter of 2014, the Company began offering a savings deposit account to other financial institutions and added $71.8 million in deposits to this product, which drove the increase in savings and money market deposit balances. Non-interest-bearing demand deposits increased by $22.3 million, or 5.4%, to $433.2 million at June 30, 2014, which was driven by higher balances in commercial checking products, while time deposits increased by $19.2 million, or 4.0%.

Borrowings. FHLB advances, net of a $1.7 million restructuring prepayment penalty, increased by $235.8 million, or 36.9%, to $874.9 million at June 30, 2014, from $639.1 million at December 31, 2013. The outstanding balance of FHLB advances increased due to higher Warehouse Purchase Program balances at June 30, 2014, of which a portion had been strategically funded with short-term advances. At June 30, 2014, the Company was eligible to borrow an additional $146.7 million from the FHLB. Additionally, the Company has five available federal funds lines of credit with other financial institutions totaling $125.0 million and was eligible to borrow $60.0 million from the Federal Reserve Bank discount window. In addition to FHLB advances, at June 30, 2014, the Company had a $25.0 million outstanding repurchase agreement with Credit Suisse.

The below table shows FHLB advances by maturity and weighted average rate at June 30, 2014:

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	Balance			Weighted Average Rate
	(Dollars in thousands)
Less than 90 days	$	695,415		0.15	%
90 days to less than one year	38,000			2.46
One to three years	116,421			3.17
After three to five years	21,928			4.42
After five years	4,765			5.49
	876,529			0.79	%
Restructuring prepayment penalty	(1,663		)
Total	$	874,866

Shareholders’ Equity. Total shareholders' equity increased by $13.0 million, or 2.4%, to $557.4 million at June 30, 2014, from $544.5 million at December 31, 2013.

	June 30, 2014			December 31, 2013			Dollar Change		Percent Change
	(Dollars in thousands)
Common stock	$	400		$	399		$	1	0.3	%
Additional paid-in capital	381,808			377,657			4,151		1.1
Retained earnings	190,150			183,236			6,914		3.8
Accumulated other comprehensive income (loss), net	770			(383		)	1,153		N/M 1
Unearned ESOP shares	(15,716		)	(16,449		)	733		(4.5	)
Total shareholders’ equity	$	557,412		$	544,460		$	12,952	2.4	%

¹ N/M - not meaningful

Retained earnings were increased by net income of $16.5 million recognized during the six months ended June 30, 2014. The increase due to net income was partially offset by the payment of two quarterly dividends totaling $0.24 per common share, or $9.6 million, during the six months ended June 30, 2014.

Comparison of Results of Operation for the Three Months Ended June 30, 2014 and 2013

General. Net income for the three months ended June 30, 2014, was $8.8 million, an increase of $644,000, or 7.9%, from net income of $8.2 million for the three months ended June 30, 2013. The increase in net income was driven by a $2.5 million increase in net interest income and a $661,000 decrease in the provision for loan losses, partially offset by a decrease in non-interest income of $314,000 and a $1.6 million increase in non-interest expense. Basic and diluted earnings per share for the three months ended June 30, 2014, was $0.23, a $0.02 increase from $0.21 for the three months ended June 30, 2013.

Interest Income. Interest income increased by $1.8 million, or 5.1%, to $37.1 million for the three months ended June 30, 2014, from $35.3 million for the three months ended June 30, 2013.

	Three Months Ended June 30,				Dollar		Percent
	2014		2013		Change		Change
	(Dollars in thousands)
Interest and dividend income
Loans, including fees	$	33,888	$	32,151	$	1,737	5.4	%
Securities	3,014		2,986		28		0.9
Interest-bearing deposits in other financial institutions	71		25		46		184.0
FHLB and Federal Reserve Bank stock	136		134		2		1.5
	$	37,109	$	35,296	$	1,813	5.1	%

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The increase in interest income for the three months ended June 30, 2014, compared to the same period in 2013, was primarily due to a $1.7 million, or 5.4%, increase in interest income on loans, which was driven by higher commercial loan volume. For the three months ended June 30, 2014, the average balance of commercial and industrial loans increased by $274.2 million, or 86.7%, compared to the three months ended June 30, 2013, which resulted in a $2.3 million increase in interest income. Additionally, the average balance of commercial real estate loans increased by $207.9 million, or 21.6%, for the three months ended June 30, 2014, compared to the same period in 2013, contributing $1.9 million of the increase in interest income. The increases in interest income related to commercial loan volume were partially offset by a $183.7 million, or 24.3%, decrease in the average balance of Warehouse Purchase Program loans for the three months ended June 30, 2014, compared to the same period in 2013, as well as reductions in yields on all commercial and real estate loan portfolios. The average yield on earning assets for the three months ended June 30, 2014 was 4.24%, a decrease of eight basis points from 4.32% for the three months ended June 30, 2013.

Interest Expense. Interest expense decreased by $671,000, or 13.8%, to $4.2 million for the three months ended June 30, 2014, from $4.9 million for the three months ended June 30, 2013.

	Three Months Ended June 30,				Dollar			Percent
	2014		2013		Change			Change
	(Dollars in thousands)
Interest expense
Deposits	$	2,035	$	2,450	$	(415	)	(16.9	)%
FHLB advances	1,948		2,205		(257		)	(11.7	)
Repurchase agreement	204		203		1			0.5
	$	4,187	$	4,858	$	(671	)	(13.8	)%

The decrease in interest expense for the three months ended June 30, 2014, compared to the same period in 2013, was primarily due to a $415,000, or 16.9%, decrease in interest expense on deposits, as well as a $257,000, or 11.7%, decrease in interest expense on FHLB advances. While volume was up in all deposit categories, a 54 basis point reduction in the average rate paid on time deposits, as well as a four basis point decline in the average rate paid on interest-bearing demand deposits, drove the decrease in interest expense on deposits for the three months ended June 30, 2014, compared to the three months ended June 30, 2013. The average rate paid on borrowings decreased by 15 basis points for the three months ended June 30, 2014, compared to the same period in 2013, while volume remained relatively flat. The average cost of interest-bearing liabilities decreased by 16 basis points to 0.63% for the three months ended June 30, 2014, compared to 0.79% for the same period in 2013.

Net Interest Income. Net interest income increased by $2.5 million, or 8.2%, to $32.9 million for the three months ended June 30, 2014, from $30.4 million for the three months ended June 30, 2013. The net interest margin increased by four basis points to 3.76% for the three months ended June 30, 2014, from 3.72% for the same period last year. The net interest rate spread increased by eight basis points to 3.61% for the three months ended June 30, 2014, from 3.53% for the same period last year. The increases in the net interest margin and spread were primarily attributable to changes in the earning asset mix, as we increased volume in higher-yielding commercial loans, as well as lowered time and interest-bearing demand deposit rates. Accretion of interest related to the 2012 Highlands acquisition contributed four basis points to the net interest margin for the three months ended June 30, 2014, compared to nine basis points for the three months ended June 30, 2013.

Provision for Loan Losses. The provision for loan losses was $1.2 million for the three months ended June 30, 2014, a decrease of $661,000, or 35.6%, from $1.9 million for the three months ended June 30, 2013. Non-performing loans totaled $23.6 million at June 30, 2014, compared to $23.8 million at June 30, 2013. Net charge-offs totaled $159,000 for the three months ended June 30, 2014, compared to $1.2 million for the three months ended June 30, 2013.

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Non-interest Income. Non-interest income decreased by $314,000, or 5.5%, to $5.4 million for the three months ended June 30, 2014, from $5.7 million for the three months ended June 30, 2013.

	Three Months Ended June 30,					Dollar			Percent
	2014			2013		Change			Change
	(Dollars in thousands)
Non-interest income
Service charges and fees	$	4,874		$	4,768	$	106		2.2	%
Other charges and fees	239			179		60			33.5
Bank-owned life insurance income	145			153		(8		)	(5.2	)
Gain on sale and disposition of assets	727			444		283			63.7
Other	(556		)	199		(755		)	N/M 1
	$	5,429		$	5,743	$	(314	)	(5.5	)%

¹ N/M - not meaningful

The $314,000 decrease in non-interest income from the three months ended June 30, 2013, was primarily attributable to a $755,000 decrease in other non-interest income, caused by the $610,000 net decrease in the value of an investment in a community development-oriented private equity fund used for Community Reinvestment Act purposes recognized in the second quarter of 2014, compared to no value change recognized in the second quarter of 2013. This decrease was partially offset by a $283,000, or 63.7%, increase in the gain on sale and disposition of assets, which was primarily attributable to $777,000 in gains recognized on payoffs of purchased credit impaired loans during the second quarter of 2014, compared to $331,000 in similar gains recognized during the second quarter of 2013.

Non-interest Expense. Non-interest expense increased by $1.6 million, or 7.6%, to $23.4 million for the three months ended June 30, 2014, from $21.7 million for the three months ended June 30, 2013.

	Three Months Ended June 30,				Dollar			Percent
	2014		2013		Change			Change
	(Dollars in thousands)
Non-interest expense
Salaries and employee benefits	$	14,127	$	12,528	$	1,599		12.8	%
Merger and acquisition costs	652		—		652			N/M 1
Advertising	493		751		(258		)	(34.4	)
Occupancy and equipment	1,819		1,938		(119		)	(6.1	)
Outside professional services	486		570		(84		)	(14.7	)
Regulatory assessments	687		650		37			5.7
Data processing	1,708		1,729		(21		)	(1.2	)
Office operations	1,717		1,751		(34		)	(1.9	)
Other	1,661		1,786		(125		)	(7.0	)
	$	23,350	$	21,703	$	1,647		7.6	%

¹ N/M - not meaningful

The increase in non-interest expense from the three months ended June 30, 2013 was primarily attributable to a $1.6 million, or 12.8%, increase in salaries and employee benefits expense, resulting from increased performance-based incentive accruals due to higher loan production, as well as increased ESOP and share-based compensation expense due to the rise in the Company's stock price. Also contributing to the $1.6 million increase in salaries and employee benefits expense was a $247,000 increase in health care costs for the three months ended June 30, 2014, compared to the three months ended June 30, 2013. The Company incurred merger and acquisition costs related to the pending merger with LegacyTexas totaling $652,000 during the three months ended June 30, 2014, with no comparable costs recognized during the three months ended June 30, 2013. Reductions in advertising, occupancy and equipment and other non-interest expense for the three months ended June 30, 2014, compared to the same period in 2013, partially offset these increases in non-interest expense.

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Income Tax Expense. For the three months ended June 30, 2014, we recognized income tax expense of $5.0 million on our pre-tax income, which was an effective tax rate of 36.1%, compared to income tax expense of $4.4 million for the three months ended June 30, 2013, which was an effective tax rate of 35.2%. The difference in the effective tax rate was primarily due to permanent book-tax differences.

Comparison of Results of Operation for the Six Months EndedJune 30, 2014 and 2013

General. Net income for the six months ended June 30, 2014, was $16.5 million, an increase of $268,000, or 1.7%, from net income of $16.2 million for the six months ended June 30, 2013. The increase in net income was driven by a $3.5 million increase in net interest income and a $1.2 million decrease in the provision for loan losses, partially offset by a decrease in non-interest income of $1.2 million and a $2.9 million increase in non-interest expense. Basic and diluted earnings per share for the six months ended June 30, 2014, was $0.43, unchanged from the six months ended June 30, 2013.

Interest Income. Interest income increased by $2.1 million, or 3.1%, to $70.8 million for the six months ended June 30, 2014, from $68.7 million for the six months ended June 30, 2013.

	Six Months Ended June 30,				Dollar			Percent
	2014		2013		Change			Change
	(Dollars in thousands)
Interest and dividend income
Loans, including fees	$	64,276	$	62,529	$	1,747		2.8	%
Securities	6,143		5,863		280			4.8
Interest-bearing deposits in other financial institutions	128		56		72			128.6
FHLB and Federal Reserve Bank stock	266		267		(1		)	(0.4	)
	$	70,813	$	68,715	$	2,098		3.1	%

The increase in interest income for the six months ended June 30, 2014, compared to the same period in 2013, was primarily due to a $1.7 million, or 2.8%, increase in interest income on loans, which was driven by higher commercial loan volume. For the six months ended June 30, 2014, the average balance of commercial and industrial loans increased by $229.5 million, or 76.5%, compared to the six months ended June 30, 2013, which resulted in a $4.0 million increase in interest income. Additionally, the average balance of commercial real estate loans increased by $249.3 million, or 27.7%, for the six months ended June 30, 2014, compared to the same period in 2013, contributing $4.8 million of the increase in interest income. The increases in interest income related to commercial loan volume were partially offset by a $237.2 million, or 31.8%, decrease in the average balance of Warehouse Purchase Program loans for the six months ended June 30, 2014, compared to the same period in 2013, as well as reductions in yields on all commercial and real estate loan portfolios.

The $280,000 increase in interest income on securities for the six months ended June 30, 2014, compared to the same period in 2013, was primarily due to a 93 basis point increase in the average yield earned on agency collateralized mortgage obligations, which increased to 2.22% for the six months ended June 30, 2014, from 1.29% for the six months ended June 30, 2013. The average yield on earning assets for the six months ended June 30, 2014 was 4.25%, a decrease of four basis points from 4.29% for the six months ended June 30, 2013.

Interest Expense. Interest expense decreased by $1.4 million, or 14.8%, to $8.3 million for the six months ended June 30, 2014, from $9.8 million for the six months ended June 30, 2013.

43

	Six Months Ended June 30,				Dollar			Percent
	2014		2013		Change			Change
	(Dollars in thousands)
Interest expense
Deposits	$	4,026	$	4,882	$	(856	)	(17.5	)%
FHLB advances	3,875		4,466		(591		)	(13.2	)
Repurchase agreement	405		404		1			0.2
	$	8,306	$	9,752	$	(1,446	)	(14.8	)%

The decrease in interest expense for the six months ended June 30, 2014, compared to the same period in 2013, was primarily due to a $856,000, or 17.5%, decrease in interest expense on deposits, as well as a $591,000, or 13.2%, decrease in interest expense on FHLB advances. While volume was up in all deposit categories, a 50 basis point reduction in the average rate paid on time deposits, as well as a three basis point decline in the average rate paid on interest-bearing demand deposits, drove the decrease in interest expense on deposits for the six months ended June 30, 2014, compared to the six months ended June 30, 2013. The average balance of borrowings decreased by $62.9 million for the six months ended June 30, 2014, compared to the same period in 2013, due to lower average Warehouse Purchase Program balances, of which a portion had been strategically funded with short-term advances. The average cost of interest-bearing liabilities decreased by 13 basis points to 0.67% for the six months ended June 30, 2014, compared to 0.80% for the same period in 2013.

Net Interest Income. Net interest income increased by $3.5 million, or 6.0%, to $62.5 million for the six months ended June 30, 2014, from $59.0 million for the six months ended June 30, 2013. The net interest margin increased by seven basis points to 3.75% for the six months ended June 30, 2014, from 3.68% for the same period last year. The net interest rate spread increased by nine basis points to 3.58% for the six months ended June 30, 2014, from 3.49% for the same period last year. The increases in the net interest margin and spread were primarily attributable to changes in the earning asset mix, as we increased volume in higher-yielding commercial loans, as well as lowered time and interest-bearing demand deposit rates.

Provision for Loan Losses. The provision for loan losses was $1.6 million for the six months ended June 30, 2014, a decrease of $1.2 million, or 42.6%, from $2.7 million for the six months ended June 30, 2013. Non-performing loans totaled $23.6 million at June 30, 2014, compared to $23.8 million at June 30, 2013. Net charge-offs totaled $491,000 for the six months ended June 30, 2014, compared to $1.5 million for the six months ended June 30, 2013.

Non-interest Income. Non-interest income decreased by $1.2 million, or 10.4%, to $10.4 million for the six months ended June 30, 2014, from $11.6 million for the six months ended June 30, 2013.

	Six Months Ended June 30,						Dollar			Percent
	2014			2013			Change			Change
	(Dollars in thousands)
Non-interest income
Service charges and fees	$	9,172		$	9,059		$	113		1.2	%
Other charges and fees	449			391			58			14.8
Bank-owned life insurance income	298			315			(17		)	(5.4	)
Loss on sale of available for sale securities	—			(177		)	177			(100.0	)
Gain on sale and disposition of assets	728			674			54			8.0
Other	(256		)	1,340			(1,596		)	N/M 1
	$	10,391		$	11,602		$	(1,211	)	(10.4	)%

¹ N/M - not meaningful

The $1.2 million decrease in non-interest income from the six months ended June 30, 2013, was primarily attributable to a $1.6 million decrease in other non-interest income, caused by the $571,000 net decrease in the value of an investment in a community development-oriented private equity fund used for Community Reinvestment Act purposes recognized during the six months ended June 30, 2014, compared to a $784,000 net increase recognized on this investment during the six months

44

ended June 30, 2013. This decrease was partially offset by a $177,000 loss on the sale of available-for-sale securities recorded in the 2013 period with no comparable loss recorded in the 2014 period.

Non-interest Expense. Non-interest expense increased by $2.9 million, or 6.9%, to $45.5 million for the six months ended June 30, 2014, from $42.6 million for the six months ended June 30, 2013.

	Six Months Ended June 30,				Dollar			Percent
	2014		2013		Change			Change
	(Dollars in thousands)
Non-interest expense
Salaries and employee benefits	$	28,259	$	25,443	$	2,816		11.1	%
Merger and acquisition costs	821		—		821			N/M 1
Advertising	848		1,264		(416		)	(32.9	)
Occupancy and equipment	3,711		3,728		(17		)	(0.5	)
Outside professional services	1,011		1,254		(243		)	(19.4	)
Regulatory assessments	1,315		1,229		86			7.0
Data processing	3,370		3,247		123			3.8
Office operations	3,397		3,399		(2		)	(0.1	)
Other	2,773		3,012		(239		)	(7.9	)
	$	45,505	$	42,576	$	2,929		6.9	%

¹ N/M - not meaningful

The increase in non-interest expense from the six months ended June 30, 2013 was primarily attributable to a $2.8 million, or 11.1%, increase in salaries and employee benefits expense, resulting from increased performance-based incentive accruals due to higher loan production, as well as increased ESOP and share-based compensation expense due to the rise in the Company's stock price. Also contributing to the $2.8 million increase in salaries and employee benefits expense was a $374,000 increase in health care costs for the six months ended June 30, 2014, compared to the six months ended June 30, 2013. The Company incurred merger and acquisition costs related to the pending merger with LegacyTexas totaling $821,000 during the six months ended June 30, 2014, with no comparable costs recognized during the six months ended June 30, 2013. Reductions in advertising, outside professional services and other non-interest expense for the six months ended June 30, 2014, compared to the same period in 2013, partially offset these increases in non-interest expense.

Income Tax Expense. For the six months ended June 30, 2014, we recognized income tax expense of $9.3 million on our pre-tax income, which was an effective tax rate of 36.1%, compared to income tax expense of $9.0 million for the six months ended June 30, 2013, which was an effective tax rate of 35.7%. The difference in the effective tax rate was primarily due to permanent book-tax differences.

Average Balances, Net Interest Income, Yields Earned and Rates Paid

The following tables present, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates. Also presented are the weighted average yields on interest-earning assets, rates paid on interest-bearing liabilities and the resultant spread. All average balances are daily average balances. Non-accruing loans have been included in the table as loans carrying a zero yield.

45

		Three Months Ended June 30,
		2014							2013
		Average Outstanding Balance			Interest Earned/Paid		Yield/ Rate		Average Outstanding Balance			Interest Earned/Paid		Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
	Commercial real estate	$	1,169,484		$	15,989	5.47	%	$	961,631		$	14,074	5.85	%
	Warehouse Purchase Program	571,922			5,094		3.56		755,577			7,307		3.87
	Commercial and industrial	590,353			6,168		4.18		316,151			3,829		4.84
	Consumer real estate	480,512			5,967		4.97		476,226			6,143		5.16
	Other consumer	44,162			670		6.07		53,759			798		5.94
	Less: deferred fees and allowance for loan loss	(21,683		)	—		—		(18,649		)	—		—
	Loans receivable 1	2,834,750			33,888		4.78		2,544,695			32,151		5.05
	Agency mortgage-backed securities	267,218			1,493		2.23		321,548			1,565		1.95
	Agency collateralized mortgage obligations	171,330			943		2.20		253,741			872		1.37
	Investment securities	69,582			578		3.32		67,925			549		3.23
	FHLB and FRB stock	37,814			136		1.44		37,717			134		1.42
	Interest-earning deposit accounts	118,529			71		0.24		45,810			25		0.22
Total interest-earning assets		3,499,223			37,109		4.24		3,271,436			35,296		4.32
Non-interest-earning assets		183,819							182,263
Total assets		$	3,683,042						$	3,453,699
Interest-bearing liabilities:
	Interest-bearing demand	$	468,283		428		0.37		$	459,433		466		0.41
	Savings and money market	1,000,243			738		0.30		883,507			601		0.27
	Time	503,035			869		0.69		451,110			1,383		1.23
	Borrowings	678,817			2,152		1.27		679,693			2,408		1.42
Total interest-bearing liabilities		2,650,378			4,187		0.63		2,473,743			4,858		0.79
Non-interest-bearing demand		414,746							393,815
Non-interest-bearing liabilities		63,417							53,244
Total liabilities		3,128,541							2,920,802
Total shareholders’ equity		554,501							532,897
Total liabilities and shareholders’ equity		$	3,683,042						$	3,453,699
Net interest income and margin					$	32,922	3.76	%				$	30,438	3.72	%
Net interest income and margin (tax-equivalent basis) 2					$	33,120	3.79	%				$	30,628	3.74	%
Net interest rate spread							3.61	%						3.53	%
Net earning assets		$	848,845						$	797,693
Average interest-earning assets to average interest-bearing liabilities		132.03		%					132.25		%
1	Calculated net of deferred fees, loan discounts, loans in process and allowance for loan losses.
2	In order to make pretax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax-equivalent adjustment has been computed using a federal income tax rate of 35% for 2014 and 2013. Tax-exempt investments and loans had an average balance of $67.5 million and $62.0 million for the three months ended June 30, 2014 and 2013, respectively.

46

		Six Months Ended June 30,
		2014							2013
		Average Outstanding Balance			Interest Earned/Paid		Yield/ Rate		Average Outstanding Balance			Interest Earned/Paid		Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
	Commercial real estate	$	1,150,004		$	31,203	5.43	%	$	900,732		$	26,410	5.86	%
	Warehouse Purchase Program	509,773			9,156		3.59		746,954			14,549		3.90
	Commercial and industrial	529,441			11,099		4.19		299,939			7,102		4.74
	Consumer real estate	460,698			11,457		4.97		490,516			12,835		5.23
	Other consumer	45,301			1,361		6.01		55,452			1,633		5.89
	Less: deferred fees and allowance for loan loss	(21,228		)	—		—		(17,949		)	—		—
	Loans receivable 1	2,673,989			64,276		4.81		2,475,644			62,529		5.05
	Agency mortgage-backed securities	271,368			3,012		2.22		308,345			3,066		1.99
	Agency collateralized mortgage obligations	177,751			1,972		2.22		271,252			1,752		1.29
	Investment securities	71,449			1,159		3.24		61,561			1,045		3.40
	FHLB and FRB stock	33,661			266		1.58		36,381			267		1.47
	Interest-earning deposit accounts	107,472			128		0.24		49,930			56		0.22
Total interest-earning assets		3,335,690			70,813		4.25		3,203,113			68,715		4.29
Non-interest-earning assets		184,072							185,548
Total assets		$	3,519,762						$	3,388,661
Interest-bearing liabilities:
	Interest-bearing demand	$	464,535		850		0.37		$	462,393		936		0.40
	Savings and money market	959,665			1,387		0.29		880,614			1,189		0.27
	Time	498,142			1,789		0.72		450,594			2,757		1.22
	Borrowings	572,362			4,280		1.50		635,212			4,870		1.53
Total interest-bearing liabilities		2,494,704			8,306		0.67		2,428,813			9,752		0.80
Non-interest-bearing demand		414,832							380,589
Non-interest-bearing liabilities		59,355							48,817
Total liabilities		2,968,891							2,858,219
Total shareholders’ equity		550,871							530,442
Total liabilities and shareholders’ equity		$	3,519,762						$	3,388,661
Net interest income and margin					$	62,507	3.75	%				$	58,963	3.68	%
Net interest income and margin (tax-equivalent basis) 2					$	62,904	3.77	%				$	59,322	3.70	%
Net interest rate spread							3.58	%						3.49	%
Net earning assets		$	840,986						$	774,300
Average interest-earning assets to average interest-bearing liabilities		133.71		%					131.88		%
1	Calculated net of deferred fees, loan discounts, loans in process and allowance for loan losses.
2	In order to make pretax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax-equivalent adjustment has been computed using a federal income tax rate of 35% for 2014 and 2013. Tax-exempt investments and loans had an average balance of $67.8 million and $56.9 million for the six months ended June 30, 2014 and 2013, respectively.

47

Rate/Volume Analysis

The following tables present the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and those due to changes in interest rates. The change in interest attributable to rate has been determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances outstanding between periods. Changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

	Three Months Ended June 30,
	2014 versus 2013
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(Dollars in thousands)
Interest-earning assets:
Commercial real estate	$	2,889		$	(974	)	$	1,915
Warehouse Purchase Program	(1,670		)	(543		)	(2,213		)
Commercial and industrial	2,927			(588		)	2,339
Consumer real estate	55			(231		)	(176		)
Other consumer	(145		)	17			(128		)
Loans receivable	4,056			(2,319		)	1,737
Agency mortgage-backed securities	(285		)	213			(72		)
Agency collateralized mortgage obligations	(343		)	414			71
Investment securities	14			15			29
FHLB and FRB stock	—			2			2
Interest-earning deposit accounts	43			3			46
Total interest-earning assets	3,485			(1,672		)	1,813
Interest-bearing liabilities:
Interest-bearing demand	9			(47		)	(38		)
Savings and money market	84			53			137
Time	145			(659		)	(514		)
Borrowings	(3		)	(253		)	(256		)
Total interest-bearing liabilities	235			(906		)	(671		)
Net interest income	$	3,250		$	(766	)	$	2,484

48

	Six Months Ended June 30,
	2014 versus 2013
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(Dollars in thousands)
Interest-earning assets:
Commercial real estate	$	6,879		$	(2,086	)	$	4,793
Warehouse Purchase Program	(4,331		)	(1,062		)	(5,393		)
Commercial and industrial	4,892			(895		)	3,997
Consumer real estate	(759		)	(619		)	(1,378		)
Other consumer	(304		)	32			(272		)
Loans receivable	6,377			(4,630		)	1,747
Agency mortgage-backed securities	(389		)	335			(54		)
Agency collateralized mortgage obligations	(745		)	965			220
Investment securities	162			(48		)	114
FHLB and FRB stock	(21		)	20			(1		)
Interest-earning deposit accounts	68			4			72
Total interest-earning assets	5,452			(3,354		)	2,098
Interest-bearing liabilities:
Interest-bearing demand	4			(90		)	(86		)
Savings and money market	111			87			198
Time	266			(1,234		)	(968		)
Borrowings	(472		)	(118		)	(590		)
Total interest-bearing liabilities	(91		)	(1,355		)	(1,446		)
Net interest income	$	5,543		$	(1,999	)	$	3,544

Liquidity

Management maintains a liquidity position that it believes will adequately provide funding for loan demand and deposit run-off that may occur in the normal course of business. The Company relies on a number of different sources in order to meet its potential liquidity demands. The primary sources are increases in deposit accounts and cash flows from loan payments and the securities portfolio.

Planning for the Company's normal business liquidity needs, both expected and unexpected, is done on a daily and short-term basis through the cash management function. On a longer-term basis it is accomplished through the budget and strategic planning functions, with support from internal asset/liability management software model projections.

The Liquidity Committee monitors liquidity positions and projections, and adds liquidity contingency planning to the process by focusing on possible scenarios that would stress liquidity beyond the Bank's normal business liquidity needs. These scenarios may include macro-economic and bank specific situations focusing on high probability-high impact, high probability-low impact, low probability-high impact, and low probability-low impact stressors.

Management recognizes that the events and their severity of liquidity stress leading up to and occurring during a liquidity stress event cannot be precisely defined or listed. Nevertheless, management believes that liquidity stress events can be categorized into sources and uses of liquidity, and levels of severity, with responses that apply to various situations.

In addition to the primary sources of funds, management has several secondary sources available to meet potential funding requirements. At June 30, 2014, the Company had an additional borrowing capacity of $146.7 million with the FHLB. Also, at June 30, 2014, the Company had $125.0 million in federal funds lines of credit available with other financial institutions. The Company may also use the discount window at the Federal Reserve Bank as a source of short-term funding. Federal Reserve Bank borrowing capacity varies based upon securities pledged to the discount window line. At June 30, 2014,

49

securities pledged had a collateral value of $60.0 million.

At June 30, 2014, the Company had classified 45.6% of its securities portfolio as available for sale (including pledged securities), providing an additional source of liquidity. Management believes that because active markets exist and our securities portfolio is of high quality, our available for sale securities are marketable. Participations in loans we originate, including portions of commercial real estate loans, are sold to create another source of liquidity and to manage borrower concentration risk as well as interest rate risk.

Liquidity management is both a daily and long-term function of business management. Short term excess liquidity is generally placed in short-term investments, such as overnight deposits at the Federal Reserve Bank and correspondent banks. On a longer term basis, we maintain a strategy of investing in various lending products and investment securities, including mortgage-backed securities.

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its shareholders. We also have the ability to receive dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At June 30, 2014, the Company (on an unconsolidated basis) had liquid assets of $47.3 million.

On November 25, 2013, the Company and LegacyTexas announced that they had entered into a definitive merger agreement whereby LegacyTexas will merge into the Company and, immediately thereafter, the Bank will merge into LegacyTexas’ subsidiary bank, LegacyTexas Bank. Under the terms of the agreement, the Company will issue 7.85 million shares of the Company's common stock plus approximately $115 million in cash for all the outstanding stock of LegacyTexas. In anticipation of the merger with LegacyTexas, the Company is strategically increasing its cash position in order to accommodate the approximate $115 million cash merger consideration. LegacyTexas' shareholders approved the merger on May 19, 2014, and on June 17, 2014, the Company and LegacyTexas announced that additional time will be required to obtain regulatory approvals and to satisfy customary closing conditions necessary to complete the merger, and have jointly extended the agreement to August 31, 2014, pursuant to its terms.

The Company uses its sources of funds primarily to meet its expenses, pay maturing deposits and fund withdrawals, and to fund loan commitments. Total approved loan commitments (including Warehouse Purchase Program commitments, unused lines of credit and letters of credit) amounted to $744.9 million and $988.7 million at June 30, 2014, and December 31, 2013, respectively. It is management's policy to offer deposit rates that are competitive with other local financial institutions. Based on this management strategy, we believe that a majority of maturing deposits will remain with the Company. Certificates of deposit scheduled to mature in one year or less at June 30, 2014 totaled $287.9 million with a weighted average rate of 0.54%.

During the six months ended June 30, 2014, cash and cash equivalents increased by $77.9 million, or 88.6%, to $165.9 million at June 30, 2014, from $88.0 million at December 31, 2013. Operating activities provided cash of $34.8 million and financing activities provided cash of $397.9 million, which was partially offset by cash used in investing activities of $354.8 million. Primary sources of cash for the six months ended June 30, 2014 included pay-offs of Warehouse Purchase Program loans totaling $5.3 billion, proceeds from FHLB advances of $691.0 million and maturities, prepayments and calls of available-for-sale securities of $305.7 million. Primary uses of cash for the six months ended June 30, 2014, included originations of Warehouse Purchase Program loans totaling $5.4 billion, repayments on FHLB advances of $455.2 million and purchases of available-for-sale securities of $281.0 million.

Please see Item 1A (Risk Factors) under Part 1 of the Company's 2013 Form 10-K for information regarding liquidity risk.

50

Off-Balance Sheet Arrangements, Contractual Obligations and Commitments

The following table presents our longer term, non-deposit related, contractual obligations and commitments to extend credit to our borrowers, in aggregate and by payment due dates (not including any interest amounts). In addition to the commitments below, the Company had overdraft protection available to its depositors in the amount of $74.6 million and credit card guarantees outstanding in the amount of $1.1 million at June 30, 2014.

	June 30, 2014
	Less than One Year		One through Three Years		Four through Five Years		After Five Years		Total
	(Dollars in thousands)
Contractual obligations:
Deposits without a stated maturity	$	1,941,893	$	—	$	—	$	—	$	1,941,893
Certificates of deposit	287,855		192,125		11,921		1,932		493,833
FHLB advances (gross of restructuring prepayment penalty of $1,663)	733,415		116,421		21,928		4,765		876,529
Repurchase agreement	—		—		25,000		—		25,000
Private equity fund for Community Reinvestment Act purposes	3,480		—		—		—		3,480
Operating leases (premises)	2,455		4,267		1,809		4,826		13,357
Total contractual obligations	$	2,969,098	$	312,813	$	60,658	$	11,523	3,354,092
Off-balance sheet loan commitments: 1
Unused commitments to extend credit	$	133,769	$	111,256	$	123,492	$	30,712	399,229
Unused capacity on Warehouse Purchase Program loans	344,434		—		—		—		344,434
Standby letters of credit	901		51		—		240		1,192
Total loan commitments	$	479,104	$	111,307	$	123,492	$	30,952	744,855
Total contractual obligations and loan commitments									$	4,098,947
1  Loans having no stated maturity are reported in the “Less than One Year” category.

51

Capital Resources

The Bank and the Company are subject to minimum capital requirements imposed by the OCC and the FRB. Consistent with our goal to operate a sound and profitable organization, our policy is for the Bank and the Company to maintain “well-capitalized” status under the capital categories of the OCC and the FRB. Based on capital levels at June 30, 2014, and December 31, 2013, the Bank and the Company were considered to be well-capitalized.

At June 30, 2014, the Bank's equity totaled $454.4 million. The Company's consolidated equity totaled $557.4 million, or 14.1% of total assets, at June 30, 2014.

	Actual				Required for Capital Adequacy Purposes				To Be Well-Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2014	(Dollars in Thousands)
Total risk-based capital
the Company	$	546,458	17.06	%	$	256,298	8.00	%	$	320,372	10.00	%
the Bank	443,412		13.84		256,246		8.00		320,308		10.00
Tier 1 risk-based capital
the Company	526,018		16.42		128,149		4.00		192,223		6.00
the Bank	422,972		13.21		128,123		4.00		192,185		6.00
Tier 1 leverage
the Company	526,018		14.43		145,811		4.00		182,264		5.00
the Bank	422,972		11.61		145,750		4.00		182,188		5.00
December 31, 2013
Total risk-based capital
the Company	$	533,266	18.85	%	$	226,316	8.00	%	$	282,895	10.00	%
the Bank	431,442		15.26		226,181		8.00		282,727		10.00
Tier 1 risk-based capital
the Company	513,908		18.17		113,158		4.00		169,737		6.00
the Bank	412,084		14.58		113,091		4.00		169,636		6.00
Tier 1 leverage
the Company	513,908		15.67		131,197		4.00		163,996		5.00
the Bank	412,084		12.56		131,217		4.00		164,021		5.00

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Asset/Liability Management

Our Risk When Interest Rates Change. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time. However, market rates change over time. Like other financial institutions, our results of operations are impacted by changes in market interest rates and the interest rate sensitivity of our assets and liabilities. The risk associated with changes in market interest rates and our ability to adapt to these changes is known as interest rate risk and is our most significant market risk.

How We Measure Our Risk of Interest Rate Changes. As part of our attempt to manage our exposure to changes in market interest rates and comply with applicable regulations, we calculate and monitor our interest rate risk. In doing so, we analyze and manage assets and liabilities based on their interest rates and contractual cash flows, timing of maturities, prepayment potential, repricing opportunities, and sensitivity to actual or potential changes in market interest rates.

The Company is subject to interest rate risk to the extent that its interest bearing liabilities, primarily deposits, FHLB advances and other borrowings, reprice more rapidly or slowly, or at different rates (basis risk) than its interest earning assets, primarily loans and investment securities.

The Bank calculates interest rate risk by entering relevant contractual and projected information into the asset/liability management software simulation model. Data required by the model includes balance, rate, pay down schedule, and maturity. For items that contractually reprice, the repricing index, spread, and frequency are entered, including any initial, periodic, and lifetime interest rate caps and floors.

The Bank has adopted an asset and liability management policy. This policy sets the foundation for monitoring and managing the potential for adverse effects of material prolonged increases or decreases in interest rates on our results of operations. The Board of Directors sets the asset and liability policy for the Bank, which is implemented by the Asset/Liability Management Committee.

The purpose of the Asset/Liability Management Committee is to monitor, communicate, coordinate, and direct asset/liability management consistent with our business plan and board-approved policies. The committee directs and monitors the volume and mix of assets and funding sources, taking into account relative costs and spreads, interest rate sensitivity and liquidity needs. The objectives are to manage assets and funding sources to produce results that are consistent with liquidity, capital adequacy, interest rate risk, growth, and profitability goals.

The Committee meets on a bimonthly basis to, among other things, protect capital through earnings stability over the interest rate cycle; maintain our well-capitalized status; and provide a reasonable return on investment. The Committee recommends appropriate strategy changes based on this review. The Committee is responsible for reviewing and reporting the effects of policy implementation and strategies to the Board of Directors at least quarterly. In addition, two outside members of the Board of Directors are on the Asset/Liability Management Committee. Senior managers oversee the process on a daily basis.

A key element of the Bank’s asset/liability management strategy is to protect earnings by managing the inherent maturity and repricing mismatches between its interest earning assets and interest bearing liabilities. The Bank generally manages such earnings exposure through the addition of loans, investment securities and deposits with risk mitigating characteristics and by entering into appropriate term FHLB advance agreements.

As part of its efforts to monitor and manage interest rate risk, the Bank uses the economic value of equity (“EVE”) methodology adopted by the OCC as part of its capital regulations. In essence, the EVE approach calculates the difference between the present value of expected cash flows from assets and liabilities. In addition to monitoring selected measures of EVE, management also calculates and monitors potential effects on net interest income resulting from increases or decreases in market interest rates. This approach uses the earnings at risk (“EAR”) methodology adopted by the OCC as part of its capital regulations. EAR calculates estimated net interest income using a flat balance sheet approach over a twelve month time horizon. The EAR process is used in conjunction with EVE measures to identify interest rate risk on both a global and account level basis. Management and the Board of Directors review EVE and EAR measurements at least quarterly to review historical trends, projected measurements, and to determine whether the Bank's interest rate exposure is within the limits established by the Board of Directors.

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The Bank's asset/liability management strategy sets acceptable limits for the percentage change in EVE and EAR given changes in interest rates. For an instantaneous, parallel, and sustained interest rate increase or decrease of 100 basis points, the Bank's policy indicates that the EVE ratio should not fall below 7.00%, and for increases of 200, 300 and 400 basis points, the EVE ratio should not fall below 6.00%, 5.25% and 5.00%, respectively. For an instantaneous, parallel, and sustained interest rate increase or decrease of 100 basis points, the Bank's policy indicates that EAR should not decrease by more than 7%, and for increases of 200, 300, and 400 basis points, EAR should not decrease by more than 10%, 13%, and 15%, respectively.

As illustrated in the tables below, the Bank was within policy limits for all scenarios tested. The tables presented below, as of June 30, 2014, and December 31, 2013, are internal analyses of our interest rate risk as measured by changes in EVE and EAR for instantaneous, parallel, and sustained shifts for all market rates and yield curves, in 100 basis point increments, up 400 basis points and down 100 basis points.

As illustrated in the tables below, our EVE would be negatively impacted by a parallel, instantaneous, and sustained increase in market rates. Such an increase in rates would negatively impact EVE as a result of the duration of assets, including loans and investments, being longer than the duration of liabilities, primarily deposit accounts and FHLB borrowings. As illustrated in the table below at June 30, 2014, our EAR would be positively impacted by a parallel, instantaneous, and sustained increase in market rates of 200, 300, or 400 basis points. As market interest rates rise and variable loan rates move above their floors, the interest rate repricing of variable rate and maturing loans and securities increases net interest income.

June 30, 2014
Change in Interest Rates in Basis Points		Economic Value of Equity						Earnings at Risk (12 months)
		Estimated EVE	Estimated Increase / (Decrease) in EVE				EVE Ratio %	Estimated Net Interest Income	Increase / (Decrease) in Estimated Net Interest Income
		$ Amount	$ Change		% Change			$ Amount	$ Change		% Change
		(Dollars in thousands)
400		548,067	(51,116	)	(8.53	)	14.86	152,958	16,905		12.43
300		566,681	(32,502	)	(5.42	)	15.06	147,080	11,027		8.10
200		576,779	(22,404	)	(3.74	)	15.06	141,252	5,199		3.82
100		589,211	(9,972	)	(1.66	)	15.09	135,302	(751	)	(0.55	)
—		599,183	—		—		15.06	136,053	—		—
(100	)	613,013	13,830		2.31		15.08	133,689	(2,364	)	(1.74	)

December 31, 2013
Change in Interest Rates in Basis Points		Economic Value of Equity						Earnings at Risk (12 months)
		Estimated EVE	Estimated Increase / (Decrease) in EVE				EVE Ratio %	Estimated Net Interest Income	Increase / (Decrease) in Estimated Net Interest Income
		$ Amount	$ Change		% Change			$ Amount	$ Change		% Change
		(Dollars in thousands)
400		549,795	(51,978	)	(8.64	)	16.73	133,556	11,026		9.00
300		567,418	(34,355	)	(5.71	)	16.92	129,170	6,640		5.42
200		580,197	(21,576	)	(3.59	)	16.96	124,779	2,249		1.84
100		592,724	(9,049	)	(1.50	)	16.99	120,245	(2,285	)	(1.86	)
—		601,773	—		—		16.92	122,530	—		—
(100	)	604,473	2,700		0.45		16.67	120,556	(1,974	)	(1.61	)

The Bank's EVE was $599.2 million, or 15.06%, of the market value of portfolio assets as of June 30, 2014, a $2.6 million decrease from $601.8 million, or 16.92%, of the market value of portfolio assets as of December 31, 2013. Based upon

54

the assumptions utilized, an immediate 200 basis point increase in market interest rates would result in a $22.4 million decrease in our EVE at June 30, 2014, compared to a $21.6 million decrease at December 31, 2013, and would result in no change in our EVE ratio at June 30, 2014, as compared to a four basis point increase to 16.96% at December 31, 2013. An immediate 100 basis point decrease in market interest rates would result in a $13.8 million increase in our EVE at June 30, 2014, compared to a $2.7 million increase at December 31, 2013, and would result in a two basis point increase in our EVE ratio to 15.08% at June 30, 2014, as compared to a 25 basis point decrease in our EVE ratio to 16.67% at December 31, 2013.

The Bank's projected EAR for the twelve months ending June 30, 2015 is measured at $136.1 million, compared to $122.5 million for the twelve months ending December 31, 2014. Based on the assumptions utilized, an immediate 200 basis point increase in market rates would result in a $5.2 million, or 3.82%, increase in net interest income for the twelve months ending June 30, 2015, compared to a $2.2 million, or 1.84%, increase for the twelve months ending December 31, 2014. An immediate 100 basis point decrease in market rates would result in a $2.4 million decrease in net interest income for the twelve months ending June 30, 2015, compared to a $2.0 million decrease for the twelve months ending December 31, 2014.

We have implemented a strategic plan to mitigate interest rate risk. This plan includes the ongoing review of our current and projected mix of fixed rate versus variable rate loans, investments, deposits, and borrowings. When available and appropriate, high quality adjustable rate assets are purchased or originated. These assets generally may reduce our sensitivity to upward interest rate shocks. On the liability side of the balance sheet, borrowings are added as appropriate. These borrowings will be of a size and term so as to mitigate the impact of duration mismatches, reducing our sensitivity to upward interest rate shocks. These strategies are implemented as needed and as opportunities arise to mitigate interest rate risk without materially sacrificing earnings.

In managing our mix of assets and liabilities, while considering the relationship between long and short term interest rates, market conditions, and consumer preferences, we may place somewhat greater emphasis on maintaining or increasing the Bank’s net interest margin than on strictly matching the interest rate sensitivity of its assets and liabilities.

Management also believes that at times the increased net income which may result from a mismatch in the actual maturity, repricing, or duration of its asset and liability portfolios can provide sufficient returns to justify the increased exposure to sudden and unexpected increases or decreases in interest rates which may result from such a mismatch. Management believes that the Bank’s level of interest rate risk is acceptable under this approach.

In evaluating the Bank’s exposure to market interest rate movements, certain shortcomings inherent in the method of analysis presented in the foregoing table must be considered. For example, although certain assets and liabilities may have similar maturities or repricing characteristics, their interest rate drivers may react in different degrees to changes in market interest rates (basis risk). Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market interest rates. Additionally, certain assets, such as adjustable rate mortgages, have features which restrict changes in interest rates over the life of the asset (time to initial interest rate reset; interest rate reset frequency; initial, periodic, and lifetime caps and floors). Further, in the event of a significant change in market interest rates, loan and securities prepayment and time deposit early withdrawal levels may deviate significantly from those assumed in the table above. Assets with prepayment options and liabilities with early withdrawal options are being monitored, with assumptions stress tested on a regular basis. Current market rates and customer behavior are being considered in the management of interest rate risk. Finally, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase. The Bank considers all of these factors in monitoring its exposure to interest rate risk. Of note, the current historically low interest rate environment has resulted in asymmetrical interest rate risk. The interest rates on certain repricing assets and liabilities cannot be fully shocked downward.

The Board of Directors and management believe that the Bank’s ability to successfully manage and mitigate its exposure to interest rate risk is strengthened by several key factors. For example, the Bank manages its balance sheet duration and overall interest rate risk by placing a preference on originating and retaining adjustable rate loans. In addition, the Bank borrows at various maturities from the FHLB to mitigate mismatches between the asset and liability portfolios. Furthermore, the investment securities portfolio is used as a primary interest rate risk management tool through the duration and repricing targeting of purchases and sales.

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Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2014. Based on that evaluation, the Company's Chief Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. There has been no change in the Company's internal controls over financial reporting during the quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

While the Company believes the present design of its disclosure controls and procedures is effective to achieve its goals, future events affecting its business may cause the Company to modify its disclosure controls and procedures. The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all error and fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns in controls or procedures can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual actions of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.     

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are involved from time to time as plaintiff or defendant in various legal actions arising in the normal course of our businesses. While the ultimate outcome of pending proceedings cannot be predicted with certainty, it is the opinion of management, after consultation with counsel representing us in such proceedings, that the resolution of these proceedings should not have a material adverse effect on our consolidated financial position or results of operations.

Item 1A. Risk Factors

Set forth below is an updated risk factor related to our business. This risk factor should be read in conjunction with the Company's risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013.

New rules issued by the Consumer Financial Protection Bureau (the “CFPB”)may have a negative impact on our residential loan origination process and foreclosure proceedings, which could adversely affect our business, operating results, and financial condition.

The CFPB issued a rule effective in January 2014 to implement the “qualified mortgage” provisions of the Dodd-Frank Act requiring that mortgage lenders consider consumers’ ability to repay home loans before extending them credit. This new rule describes certain minimum requirements for lenders making so-called “ability-to-repay” determinations, but does not dictate that they follow particular underwriting models. Loans that meet the terms of the “qualified mortgage” provisions under the rule will be presumed to have complied with the new ability-to-repay standard. Loans that do not meet the ability-to-repay standard can be challenged in court by borrowers who default and the absence of ability-to-repay status can be used against a lender in foreclosure proceedings. The CFPB’s rule on “qualified mortgages” could limit our ability or desire to make certain types of loans or loans to certain borrowers, or could make it more expensive/and or time consuming to make these loans, which could limit our growth or profitability. In addition, any loans that we make outside of the “qualified mortgage” criteria could expose us to an increased risk of liability and reduce or delay our ability to foreclose on the underlying property. It is difficult to predict how the CFPB’s “qualified mortgage” rule will impact us, but any decreases in loan origination volume or increases in compliance and foreclosure costs caused by the rule could negatively affect our business, operating results and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not repurchase any of its common stock during the quarter ended June 30, 2014.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

Exhibit
Number	Description
2.1	Agreement and Plan of Merger by and between the Registrant and Highlands Bancshares, Inc. (incorporated herein by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 9, 2011 (File No. 001-34737))
2.2	Agreement and Plan of Merger, dated as of November 25, 2013, by and between the Registrant and LegacyTexas Group, Inc. (incorporated herein by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on November 25, 2013 (File No. 001-34737))
2.3	Amendment No. One to the Agreement and Plan of Merger, dated as of February 19, 2014, by and between the Registrant and LegacyTexas Group, Inc. (incorporated herein by reference to Exhibit 2.3 of the Registrant’s Annual Report on Form 10-K filed with the SEC on February 26, 2014 (File No. 001-34737))
3.1	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. 333-165509))
3.2	Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-165509))
4.0	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. 333-165509))
10.1	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))
10.2	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))
10.3	2013 Executive Annual 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 March 6, 2013 (File No. 001-34737))
10.4	Form of Director's Agreement between the Registrant and James B. McCarley (incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the SEC on March 6, 2013 (File No. 001-34737))
10.5	Form of Director's Agreement between the Registrant and Gary D. Basham (incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the SEC on March 6, 2013 (File No. 001-34737))
10.6	Form of Director's Agreement between the Registrant and Jack D. Ersman (incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the SEC on March 6, 2013 (File No. 001-34737))
10.7	Form of Director's Agreement between the Registrant and V. Keith Sockwell (incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the SEC on March 6, 2013 (File No. 001-34737))
10.8	Resignation, Release and Consulting Agreement between the Registrant and Pathie E. McKee (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on July 3, 2013 (File No. 001-34737))
10.9	Change in Control and Severance Benefits Agreement entered into between the Registrant and Mays Davenport (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on November 25, 2013 (File No. 001-34737)).

58

10.10	Form of Change In Control and Severance Benefits Agreement entered into between the Registrant and the following executive officers: Scott A. Almy, Charles D. Eikenberg, Thomas S. Swiley, and Mark L. Williamson (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on December 2, 2013 (File No. 001-34737)).
10.11	Amended and Restated Executive Employment Agreement entered into by the Registrant on December 2, 2013 with Kevin J. Hanigan (incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the SEC on December 2, 2013 (File No. 001-34737)).
11	Statement regarding computation of per share earnings (See Note 3 of the Condensed Notes to Unaudited Consolidated Interim Financial Statements included in this Form 10-Q).
31.1	Rule 13a — 14(a)/15d — 14(a) Certification (Chief Executive Officer)
31.2	Rule 13a — 14(a)/15d — 14(a) Certification (Principal Financial Officer)
32	Section 1350 Certifications
101*	Financial statements from Quarterly Report on Form 10-Q of the Registrant for the quarter ended June 30, 2014, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Condensed Notes to Unaudited Consolidated Interim Financial Statements.
	*This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

59

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ViewPoint Financial Group, Inc.

(Registrant)

Date:	July 29, 2014	By:	/s/ Kevin J. Hanigan
			Kevin J. Hanigan,
			President and Chief Executive Officer
			(Duly Authorized Officer)
Date:	July 29, 2014	By:	/s/ Kari J. Anderson
			Kari J. Anderson,
			Chief Accounting Officer
			(Interim Principal Financial Officer)

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EXHIBIT INDEX

Exhibits:

31.1	Certification of the Chief Executive Officer
31.2	Certification of the Principal Financial Officer
32.0	Section 1350 Certifications
101*	Financial statements from Quarterly Report on Form 10-Q of the Registrant for the quarter ended June 30, 2014, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Condensed Notes to Unaudited Consolidated Interim Financial Statements.*
	* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Kevin J. Hanigan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ViewPoint Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 29, 2014	By:	/s/ Kevin J. Hanigan
			Kevin J. Hanigan,
			President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF ACCOUNTING OFFICER

I, Kari J. Anderson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ViewPoint Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 29, 2014	By:	/s/ Kari J. Anderson
			Kari J. Anderson,
			Chief Accounting Officer and Interim Principal Financial Officer

EX-32.0

EXHIBIT 32

STATEMENT FURNISHED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of ViewPoint Financial Group, Inc. on Form 10-Q for the quarterly period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Kevin J. Hanigan, President and Chief Executive Officer of the Company, and Kari J. Anderson, Chief Accounting Officer and Interim Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company as of the dates and for the periods presented in the financial statements included in such Report.

Date:	July 29, 2014	By:	/s/ Kevin J. Hanigan
			Kevin J. Hanigan,
			President and Chief Executive Officer
Date:	July 29, 2014	By:	/s/ Kari J. Anderson
			Kari J. Anderson,
			Chief Accounting Officer and Interim Principal Financial Officer

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SECURITIES - Securities with Unrealized Losses Aggregated by Investment and Length of Time that Individual Securities Have Been in Continuous Unrealized Loss Position Category (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014 Positions		Dec. 31, 2013 Positions
Available For Sale And Held To Maturity Securities [Line Items]
Fair Value, Less than 12 months	$ 10,289		$ 97,436
Available For Sale Securities Continuous Unrealized Loss Position Less Than 12 Months Aggregate Losses Accumulated In Investments	11		2,356
Number, Less than 12 Months	5		25
Fair Value, 12 Months or More	64,960		6,780
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	866		55
Number, 12 Months or More	15		5
Fair Value, Total	75,249		104,216
Available for Sale Securities Continuous Unrealized Loss Position Aggregate Losses Accumulated In Investments	877		2,411
Number, Total	20		30
Fair Value, Less than 12 Months	6,546		38,956
Held To Maturity Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss	58		1,937
Number, Less than 12 Months	11		35
Fair Value, 12 Months or More	25,216		1,959
Held To Maturity Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	537		17
Number, 12 Months or More	22		4
Fair Value, Total	31,762		40,915
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	595		1,954
Number, Total	33		39
Agency residential mortgage-backed securities
Available For Sale And Held To Maturity Securities [Line Items]
Fair Value, Less than 12 months	4,929	[1]	83,461	[1]
Available For Sale Securities Continuous Unrealized Loss Position Less Than 12 Months Aggregate Losses Accumulated In Investments	6	[1]	2,306	[1]
Number, Less than 12 Months	3	[1]	19	[1]
Fair Value, 12 Months or More	58,392	[1]	0	[1]
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	806	[1]	0	[1]
Number, 12 Months or More	10	[1]	0	[1]
Fair Value, Total	63,321	[1]	83,461	[1]
Available for Sale Securities Continuous Unrealized Loss Position Aggregate Losses Accumulated In Investments	812	[1]	2,306	[1]
Number, Total	13	[1]	19	[1]
Fair Value, Less than 12 Months	0	[1]	5,779	[1]
Held To Maturity Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss	0	[1]	130	[1]
Number, Less than 12 Months	0	[1]	2	[1]
Fair Value, 12 Months or More	3,556	[1]	0	[1]
Held To Maturity Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	28	[1]	0	[1]
Number, 12 Months or More	1	[1]	0	[1]
Fair Value, Total	3,556	[1]	5,779	[1]
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	28	[1]	130	[1]
Number, Total	1	[1]	2	[1]
Agency commercial mortgage backed securities [Member]
Available For Sale And Held To Maturity Securities [Line Items]
Fair Value, Less than 12 Months	0	[2]	4,940	[2]
Held To Maturity Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss	0	[2]	310	[2]
Number, Less than 12 Months	0	[2]	2	[2]
Fair Value, 12 Months or More	3,860	[2]	0	[2]
Held To Maturity Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	119	[2]	0	[2]
Number, 12 Months or More	1	[2]	0	[2]
Fair Value, Total	3,860	[2]	4,940	[2]
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	119	[2]	310	[2]
Number, Total	1	[2]	2	[2]
Agency residential collateralized mortgage securities
Available For Sale And Held To Maturity Securities [Line Items]
Fair Value, Less than 12 months	5,360	[3]	13,975	[3]
Available For Sale Securities Continuous Unrealized Loss Position Less Than 12 Months Aggregate Losses Accumulated In Investments	5	[3]	50	[3]
Number, Less than 12 Months	2	[3]	6	[3]
Fair Value, 12 Months or More	6,568	[3]	6,780	[3]
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments	60	[3]	55	[3]
Number, 12 Months or More	5	[3]	5	[3]
Fair Value, Total	11,928	[3]	20,755	[3]
Available for Sale Securities Continuous Unrealized Loss Position Aggregate Losses Accumulated In Investments	65	[3]	105	[3]
Number, Total	7	[3]	11	[3]
Fair Value, Less than 12 Months	0	[3]	10,453	[3]
Held To Maturity Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss	0	[3]	91	[3]
Number, Less than 12 Months	0	[3]	2	[3]
Fair Value, 12 Months or More	5,905	[3]	1,679	[3]
Held To Maturity Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	37	[3]	16	[3]
Number, 12 Months or More	3	[3]	3	[3]
Fair Value, Total	5,905	[3]	12,132	[3]
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	37	[3]	107	[3]
Number, Total	3	[3]	5	[3]
Municipal bonds
Available For Sale And Held To Maturity Securities [Line Items]
Fair Value, Less than 12 Months	6,546		17,784
Held To Maturity Securities Continuous Unrealized Loss Position Less Than 12 Months Accumulated Loss	58		1,406
Number, Less than 12 Months	11		29
Fair Value, 12 Months or More	11,895		280
Held To Maturity Securities Continuous Unrealized Loss Position 12 Months Or Longer Accumulated Loss	353		1
Number, 12 Months or More	17		1
Fair Value, Total	18,441		18,064
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	$ 411		$ 1,407
Number, Total	28		30

[1] Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

[2] Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

[3] Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivative, Collateral, Obligation to Return Cash	$ 150
Commercial Loan [Member] | Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Commercial loan/lease interest rate swaps, Outstanding Notional Amount, Asset	6,304	6,406
Commercial loan/lease interest rate swaps, Outstanding Notional Amount, Liability	(6,304)	(6,406)
Commercial loan/lease interest rate swaps, Estimated Fair Value, Asset	79	33
Commercial loan/lease interest rate swaps, , Estimated Fair Value, Liability	$ (79)	$ (33)
Loan Customer Counterparty [Member] | Commercial Loan [Member] | Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Derivative, Fixed Interest Rate, Received	4.38%	4.38%
Derivative, Fixed Interest Rate, Paid	2.90%	2.92%
Financial Institution Counterparty [Member] | Commercial Loan [Member] | Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Derivative, Average Variable Interest Rate, Received	2.90%	2.92%
Derivative, Average Variable Interest Rate, Paid	4.38%	4.38%

XML

LOANS - Real Estate and Commercial and Industrial Credit Exposure Credit Risk Profile by Internally Assigned Grade (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Financing Receivable, Recorded Investment [Line Items]
Commercial real estate	$ 1,162,035		$ 1,091,200		$ 990,227
Commercial and industrial	610,987		439,430		313,031
Loans Receivable, Gross, Commercial, Construction	31,941		30,247		20,471
Consumer real estate	501,328		441,226		459,076
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial real estate	1,133,080	[1]	1,055,872	[1]
Commercial and industrial	596,508	[1]	424,110	[1]
Loans Receivable, Gross, Commercial, Construction	31,430	[1]	28,146	[1]
Consumer real estate	484,590	[1]	424,174	[1]
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial real estate	10,542	[1]	16,030	[1]
Commercial and industrial	5,223	[1]	1,672	[1]
Loans Receivable, Gross, Commercial, Construction	163	[1]	161	[1]
Consumer real estate	4,125	[1]	3,661	[1]
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial real estate	17,574	[1]	18,444	[1]
Commercial and industrial	9,191	[1]	13,492	[1]
Loans Receivable, Gross, Commercial, Construction	348	[1]	1,940	[1]
Consumer real estate	8,911	[1]	9,110	[1]
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Commercial real estate	839	[1]	854	[1]
Commercial and industrial	65	[1]	156	[1]
Loans Receivable, Gross, Commercial, Construction	0	[1]	0	[1]
Consumer real estate	$ 3,702	[1]	$ 4,281	[1]

[1] PCI loans are included in the substandard or doubtful categories. These categories are consistent with the "substandard" and "doubtful" categories as defined by regulatory authorities.

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SHARE-BASED COMPENSATION - Compensation Cost Charged to Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Compensation cost charged to income for:
Income tax benefit	$ 320	$ 298	$ 642	$ 498
Restricted stock
Compensation cost charged to income for:
Compensation cost	640	595	1,295	1,025
Stock options
Compensation cost charged to income for:
Compensation cost	$ 276	$ 255	$ 540	$ 397

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LOANS - Information on Loans Modified as Troubled Debt Restructuring by Category (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 243		$ 585		$ 2,444		$ 1,373
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	276		359		276		584
Commercial Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment			109				799
Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0		0		1,913		39
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	66		0		66		0
Consumer Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	243		337		512		337
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	210		359		210		584
Other Consumer
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0		139		19		198
Principal Deferrals
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	130	[1]	174	[1]	143	[1]	931	[1]
Principal Deferrals | Commercial Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment			62	[1]			752	[1]
Principal Deferrals | Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0	[1]	0	[1]	0	[1]	8	[1]
Principal Deferrals | Consumer Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	130	[1]	41	[1]	130	[1]	41	[1]
Principal Deferrals | Other Consumer
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0	[1]	71	[1]	13	[1]	130	[1]
Combination Of Rate And Maturity
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0		188		275		219
Combination Of Rate And Maturity | Commercial Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment			47				47
Combination Of Rate And Maturity | Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0		0		0		31
Combination Of Rate And Maturity | Consumer Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0		73		269		73
Combination Of Rate And Maturity | Other Consumer
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0		68		6		68
Other Member
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	113		223		2,026		223
Other Member | Commercial Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment			0				0
Other Member | Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	0		0		1,913		0
Other Member | Consumer Real Estate
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	113		223		113		223
Other Member | Other Consumer
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 0		$ 0		$ 0		$ 0

[1] Principal deferrals include Chapter 7 bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt. Such loans are placed on non-accrual status.

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EARNINGS PER COMMON SHARE - (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Numerator:
Net income	$ 8,818	$ 8,174	$ 16,500	$ 16,232
Distributed and undistributed earnings to participating securities	(97)	(116)	(187)	(180)
Income available to common shareholders	8,721	8,058	16,313	16,052
Denominator:
Weighted average common shares outstanding	39,966,568	39,940,712	39,954,509	39,837,010
Less: Average unallocated ESOP shares	(1,671,941)	(1,856,135)	(1,694,835)	(1,879,030)
Average unvested restricted stock awards	(420,956)	(539,527)	(434,729)	(420,517)
Average shares for basic earnings per share	37,873,671	37,545,050	37,824,945	37,537,463
Basic earnings per common share (in dollars per share)	$ 0.23	$ 0.21	$ 0.43	$ 0.43
Numerator:
Income available to common shareholders	$ 8,721	$ 8,058	$ 16,313	$ 16,052
Denominator:
Average shares for basic earnings per share	37,873,671	37,545,050	37,824,945	37,537,463
Dilutive effect of share-based compensation plan	247,703	147,463	247,786	147,231
Average shares for diluted earnings per share	38,121,374	37,692,513	38,072,731	37,684,694
Diluted earnings per common share (in dollars per share)	$ 0.23	$ 0.21	$ 0.43	$ 0.43
Share awards excluded in the computation of diluted earnings per share because the exercise price was greater than the common stock average market price and were therefore antidilutive	86,910	1,212,900	134,790	1,235,050

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SHARE-BASED COMPENSATION - Summary of Activity in the Stock Option Portion of the Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Shares Outstanding, Beginning Balance	1,173,618
Shares, Granted	8,500
Shares, Exercised	(36,904)
Shares, Forfeited	(21,420)
Shares Outstanding, Ending Balance	1,123,794	1,173,618
Shares, Fully vested and expected to vest	1,116,799
Shares Exercisable	342,458
Weighted-Average Exercise Price, Outstanding, Beginning Balance (usd per share)	$ 18.16
Weighted-Average Exercise Price, Granted (usd per share)	$ 28.51
Weighted-Average Exercise Price, Exercised (usd per share)	$ 13.30
Weighted-Average Exercise Price, Forfeited (usd per share)	$ 16.74
Weighted-Average Exercise Price, Outstanding, Ending Balance (usd per share)	$ 18.42	$ 18.16
Weighted-Average Exercise Price, Fully vested and expected to vest (usd per share)	$ 18.42
Weighted-Average Exercise Price, Exercisable, Ending Balance (usd per share)	$ 16.19
Weighted-Average Remaining Contractual Term, Outstanding - Beginning Balance	8 years 20 days	8 years 5 months 1 day
Weighted-Average Remaining Contractual Term, Granted	10 years
Weighted-Average Remaining Contractual Term, Outstanding - Ending Balance	8 years 20 days	8 years 5 months 1 day
Weighted-Average Remaining Contractual Term, Fully vested and expected to vest	8 years 20 days
Weighted-Average Remaining Contractual Term, Exercisable	6 years 11 months 25 days
Aggregate Intrinsic Value, Outstanding, Beginning Balance	$ 10,903
Aggregate Intrinsic Value, Exercised	421
Aggregate Intrinsic Value, Outstanding, Ending Balance	9,549	10,903
Aggregate Intrinsic Value, Fully vested and expected to vest	9,497
Aggregate Intrinsic Value, Exercisable	$ 3,671

XML

SECURITIES - (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Fair Value of Available-for-Sale Securities and Related Gross Unrealized Gains and Losses

The fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
June 30, 2014	Cost		Gains		Losses		Fair Value
Agency residential mortgage-backed securities 1	$	160,143	$	1,666	$	812	$	160,997
Agency residential collateralized mortgage obligations 2	60,524		338		65		60,797
SBA pools	2,332		58		—		2,390
Total securities	$	222,999	$	2,062	$	877	$	224,184
December 31, 2013
Agency residential mortgage-backed securities 1	$	175,693	$	1,322	$	2,306	$	174,709
Agency residential collateralized mortgage obligations 2	70,257		423		105		70,575
SBA pools	2,652		76		—		2,728
Total securities	$	248,602	$	1,821	$	2,411	$	248,012

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Carrying Amount, Unrecognized Gains and Losses, and Fair Value of Securities Held to Maturity

The carrying amount, unrecognized gains and losses, and fair value of securities held to maturity were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
June 30, 2014	Cost		Gains		Losses		Fair Value
Agency residential mortgage-backed securities 1	$	72,740	$	3,731	$	28	$	76,443
Agency commercial mortgage-backed securities 2	25,518		991		119		26,390
Agency residential collateralized mortgage obligations 3	102,297		2,635		37		104,895
Municipal bonds	67,059		3,537		411		70,185
Total securities	$	267,614	$	10,894	$	595	$	277,913
December 31, 2013
Agency residential mortgage-backed securities 1	$	83,177	$	3,523	$	130	$	86,570
Agency commercial mortgage-backed securities 2	24,828		523		310		25,041
Agency residential collateralized mortgage obligations 3	118,757		2,772		107		121,422
Municipal bonds	67,821		2,292		1,407		68,706
Total securities	$	294,583	$	9,110	$	1,954	$	301,739

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Carrying Amount and Fair Value of Held to Maturity Debt Securities and Fair Value of Available-for-Sale Debt Securities

The carrying amount and fair value of held to maturity debt securities and the fair value of available for sale debt securities at June 30, 2014 by contractual maturity were as follows. Securities with contractual payments not due at a single maturity date, including mortgage backed securities and collateralized mortgage obligations, are shown separately.

					Available
	Held to maturity				for sale
	Carrying Amount		Fair Value		Fair Value
Due in one year or less	$	145	$	148	$	—
Due after one to five years	7,659		8,124		2,390
Due after five to ten years	28,464		30,570		—
Due after ten years	30,791		31,343		—
Agency residential mortgage-backed securities 1	72,740		76,443		160,997
Agency commercial mortgage-backed securities 2	25,518		26,390		—
Agency residential collateralized mortgage obligations 3	102,297		104,895		60,797
Total	$	267,614	$	277,913	$	224,184

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Summarized Information Regarding Pledged Securities

Information regarding pledged securities is summarized below:

	June 30, 2014		December 31, 2013
Public fund certificates of deposit	$	148,310	$	156,731
Public fund demand deposit accounts	13,781		15,068
Commercial demand deposit accounts	3,058		4,439
Repurchase agreements	25,000		25,000
Federal Reserve Bank primary credit - collateral value	60,016		68,686
Carrying value of securities pledged on above funds	281,005		308,652

Summarized Sales Activity

Sales activity of securities for the three and six months ended June 30, 2014 and 2013, was as follows. All securities sold were classified as available for sale.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Proceeds	$	—	$	—	$	—	$	10,614
Gross losses	—		—		—		177

Securities with Unrealized Losses Aggregated by Investment and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position Category

Securities with unrealized losses at June 30, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

AFS	Less than 12 Months					12 Months or More					Total
June 30, 2014	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number
Agency residential mortgage-backed securities 1	$	4,929	$	6	3	$	58,392	$	806	10	$	63,321	$	812	13
Agency residential collateralized mortgage obligations 2	5,360		5		2	6,568		60		5	11,928		65		7
Total temporarily impaired	$	10,289	$	11	5	$	64,960	$	866	15	$	75,249	$	877	20
December 31, 2013
Agency residential mortgage-backed securities 1	$	83,461	$	2,306	19	$	—	$	—	—	$	83,461	$	2,306	19
Agency residential collateralized mortgage obligations 2	13,975		50		6	6,780		55		5	20,755		105		11
Total temporarily impaired	$	97,436	$	2,356	25	$	6,780	$	55	5	$	104,216	$	2,411	30

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

HTM	Less than 12 Months					12 Months or More					Total
June 30, 2014	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number
Agency residential mortgage-backed securities 1	$	—	$	—	—	$	3,556	$	28	1	$	3,556	$	28	1
Agency commercial mortgage-backed securities 2	—		—		—	3,860		119		1	3,860		119		1
Agency residential collateralized mortgage obligations 3	—		—		—	5,905		37		3	5,905		37		3
Municipal bonds	6,546		58		11	11,895		353		17	18,441		411		28
Total temporarily impaired	$	6,546	$	58	11	$	25,216	$	537	22	$	31,762	$	595	33
December 31, 2013
Agency residential mortgage-backed securities 1	$	5,779	$	130	2	$	—	$	—	—	$	5,779	$	130	2
Agency commercial mortgage-backed securities 2	4,940		310		2	—		—		—	4,940		310		2
Agency residential collateralized mortgage obligations 3	10,453		91		2	1,679		16		3	12,132		107		5
Municipal bonds	17,784		1,406		29	280		1		1	18,064		1,407		30
Total temporarily impaired	$	38,956	$	1,937	35	$	1,959	$	17	4	$	40,915	$	1,954	39

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

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FAIR VALUE - Narrative (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Third Party Appraisal [Member] | Impaired Loans [Member] | Weighted Average [Member] | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs Discount Of Market Value Rate	5.00%
Third Party Appraisal [Member] | Other Real Estate Owned [Member] | Weighted Average [Member] | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs Discount Of Market Value Rate	19.00%
Third Party Appraisal [Member] | Other Real Estate Owned [Member] | Minimum [Member] | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs Discount Of Market Value Rate	0.00%
Third Party Appraisal [Member] | Other Real Estate Owned [Member] | Maximum [Member] | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Inputs Discount Of Market Value Rate	77.00%
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	$ 0	$ 0

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LOANS - Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013		Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Unpaid Contractual Principal Balance	$ 22,280	[1]			$ 22,280	[1]			$ 20,017	[1]
Recorded Investment With No Allowance	12,439	[1]			12,439	[1]			8,435	[1]
Recorded Investment With Allowance	7,677	[1]			7,677	[1]			9,859	[1]
Total Recorded Investment	20,116	[1]			20,116	[1]			18,294	[1]
Related Allowance	2,417	[1]			2,417	[1]			2,721	[1]
Average Recorded Investment	19,484	[1]	29,214		19,188	[1]	30,093	[1]
Interest Income Recognized	18	[1]	84		34	[1]	163	[1]
Commercial Real Estate
Financing Receivable, Impaired [Line Items]
Unpaid Contractual Principal Balance	8,911	[1]			8,911	[1]			8,328	[1]
Recorded Investment With No Allowance	4,755	[1]			4,755	[1]			3,619	[1]
Recorded Investment With Allowance	3,297	[1]			3,297	[1]			3,986	[1]
Total Recorded Investment	8,052	[1]			8,052	[1]			7,605	[1]
Related Allowance	793	[1]			793	[1]			2,016	[1]
Average Recorded Investment	8,067	[1]	13,340	[1]	8,021	[1]	14,740	[1]
Interest Income Recognized	3	[1]	62	[1]	3	[1]	124	[1]
Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Unpaid Contractual Principal Balance	7,380	[1]			7,380	[1]			6,058	[1]
Recorded Investment With No Allowance	3,152	[1]			3,152	[1]			539	[1]
Recorded Investment With Allowance	3,255	[1]			3,255	[1]			4,786	[1]
Total Recorded Investment	6,407	[1]			6,407	[1]			5,325	[1]
Related Allowance	1,461	[1]			1,461	[1]			550	[1]
Average Recorded Investment	6,163	[1]	6,924	[1]	5,973	[1]	6,366	[1]
Interest Income Recognized	3	[1]	3	[1]	6	[1]	6	[1]
Commercial Construction and Land [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Contractual Principal Balance	52				52				2
Recorded Investment With No Allowance	52				52				2
Recorded Investment With Allowance	0				0				0
Total Recorded Investment	52				52				2
Related Allowance	0				0				0
Average Recorded Investment	13		4		9		79
Interest Income Recognized	0		0		0		0
Consumer Real Estate
Financing Receivable, Impaired [Line Items]
Unpaid Contractual Principal Balance	5,436	[1]			5,436	[1]			5,050	[1]
Recorded Investment With No Allowance	4,027	[1]			4,027	[1]			3,725	[1]
Recorded Investment With Allowance	1,125	[1]			1,125	[1]			1,087	[1]
Total Recorded Investment	5,152	[1]			5,152	[1]			4,812	[1]
Related Allowance	163	[1]			163	[1]			155	[1]
Average Recorded Investment	4,759	[1]	8,513	[1]	4,675	[1]	8,502	[1]
Interest Income Recognized	11	[1]	19	[1]	23	[1]	33	[1]
Other Consumer
Financing Receivable, Impaired [Line Items]
Unpaid Contractual Principal Balance	501	[1]			501	[1]			579	[1]
Recorded Investment With No Allowance	453	[1]			453	[1]			550	[1]
Recorded Investment With Allowance	0	[1]			0	[1]			0	[1]
Total Recorded Investment	453	[1]			453	[1]			550	[1]
Related Allowance	0	[1]			0	[1]			0	[1]
Average Recorded Investment	482	[1]	433	[1]	510	[1]	406	[1]
Interest Income Recognized	$ 1	[1]	$ 0	[1]	$ 2	[1]	$ 0	[1]

[1] No Warehouse Purchase Program loans were impaired at June 30, 2014 or December 31, 2013. Loans reported do not include PCI loans.

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SECURITIES - Summarized Information Regarding Pledged Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Held-to-maturity Securities [Line Items]
Secured Debt, Repurchase Agreements	$ 25,000	$ 25,000
Carrying value of securities pledged	281,005	308,652
Federal Reserve Bank primary credit - collateral value
Schedule of Held-to-maturity Securities [Line Items]
Liabilities Secured By Pledged Securities	60,016	68,686
Demand Deposits [Member]
Schedule of Held-to-maturity Securities [Line Items]
Liabilities Secured By Pledged Securities	3,058	4,439
Certificates of Deposit [Member]
Schedule of Held-to-maturity Securities [Line Items]
Liabilities Secured By Pledged Securities	148,310	156,731
Demand Deposits [Member]
Schedule of Held-to-maturity Securities [Line Items]
Liabilities Secured By Pledged Securities	$ 13,781	$ 15,068

XML

FAIR VALUE - Summary of Fair Value Measured on Nonrecurring Basis (Details) (Fair Value, Measurements, Nonrecurring [Member], USD $)	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	$ 0	$ 0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	5,260,000	7,138,000
Other real estate owned	$ 240,000	$ 480,000

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LOANS - Analysis of Age of Recorded Investment in Loans (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Financing Receivable, Past Due [Line Items]
30-59 Days Past Due	$ 3,515		$ 12,261
60-89 Days Past Due	4,883		4,845
90 Days and Greater Past Due	6,725		6,596
Total Loans Past Due	15,123		23,702
Current Loans	2,334,386	[1]	2,026,200	[1]
Commercial real estate	1,162,035		1,091,200		990,227
Commercial and industrial	610,987		439,430		313,031
Construction and land	31,941		30,247		20,471
Consumer real estate	501,328		441,226		459,076
Other consumer loans	43,218		47,799		52,382
Gross loans held for investment, excluding Warehouse Purchase Program	2,349,509		2,049,902		1,835,187
Purchase Credit Impaired Loans Recorded Investment Current Balance	2,295		5,218
Commercial Real Estate
Financing Receivable, Past Due [Line Items]
30-59 Days Past Due	2,731		552
60-89 Days Past Due	0		1,315
90 Days and Greater Past Due	1,342		57
Total Loans Past Due	4,073		1,924
Current Loans	1,157,962	[1]	1,089,276	[1]
Commercial and Industrial
Financing Receivable, Past Due [Line Items]
30-59 Days Past Due	142		4,518
60-89 Days Past Due	2,632		129
90 Days and Greater Past Due	875		2,835
Total Loans Past Due	3,649		7,482
Current Loans	607,338	[1]	431,948	[1]
Commercial Construction and Land [Member]
Financing Receivable, Past Due [Line Items]
30-59 Days Past Due	0		152
60-89 Days Past Due	0		0
90 Days and Greater Past Due	213		0
Total Loans Past Due	213		152
Current Loans	31,728	[1]	30,095	[1]
Consumer Real Estate
Financing Receivable, Past Due [Line Items]
30-59 Days Past Due	481		6,579
60-89 Days Past Due	2,149		3,295
90 Days and Greater Past Due	4,268		3,651
Total Loans Past Due	6,898		13,525
Current Loans	494,430	[1]	427,701	[1]
Other Consumer
Financing Receivable, Past Due [Line Items]
30-59 Days Past Due	161		460
60-89 Days Past Due	102		106
90 Days and Greater Past Due	27		53
Total Loans Past Due	290		619
Current Loans	$ 42,928	[1]	$ 47,180	[1]

[1] Includes acquired PCI loans with a total carrying value of $2,295 and $5,218 at June 30, 2014 and December 31, 2013, respectively.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities
Net income	$ 16,500	$ 16,232
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,573	2,741
Depreciation and amortization	2,211	2,270
Deferred tax expense	1,043	188
Premium amortization and accretion of securities, net	1,803	3,356
Accretion related to acquired loans	(869)	(1,705)
Loss on sale of available for sale securities	0	177
ESOP compensation expense	2,397	1,857
Share-based compensation expense	1,835	1,422
FHLB stock dividends	(42)	(60)
Bank-owned life insurance (BOLI) income	(298)	(315)
Gain (loss) on sale and disposition of assets	49	(674)
Net change in deferred loan fees	432	371
Net change in accrued interest receivable	(716)	(199)
Net change in other assets	3,295	10,230
Net change in other liabilities	5,580	393
Net cash provided by operating activities	34,793	36,284
Available-for-sale securities:
Maturities, prepayments and calls	305,686	500,103
Purchases	(281,000)	(515,941)
Proceeds from sale of AFS securities	0	10,614
Held-to-maturity securities:
Maturities, prepayments and calls	32,003	59,917
Purchases	(5,919)	(31,969)
Originations of Warehouse Purchase Program loans	(5,377,239)	(7,710,481)
Proceeds from pay-offs of Warehouse Purchase Program loans	5,281,143	7,866,973
Net change in loans held for investment, excluding Warehouse Purchase Program loans	(299,638)	(145,566)
Redemption (purchase) of FHLB and Federal Reserve Bank stock	(9,607)	3,610
Purchases of premises and equipment	(744)	(1,755)
Proceeds from sale of assets	532	3,249
Net cash provided by (used in) investing activities	(354,783)	38,754
Cash flows from financing activities
Net change in deposits	171,087	11,374
Proceeds from FHLB advances	691,000	600,000
Repayments on FHLB advances	(455,230)	(692,000)
Share repurchase	0	(1,554)
Payment of dividends	(9,586)	(3,991)
Proceeds from stock option exercises	653	221
Net cash provided by (used in) financing activities	397,924	(85,950)
Net change in cash and cash equivalents	77,934	(10,912)
Beginning cash and cash equivalents	87,974	68,696
Ending cash and cash equivalents	165,908	57,784
Supplemental cash flow information:
Interest paid	8,297	9,817
Income taxes paid	6,128	5,007
Supplemental noncash disclosures:
Transfers from loans to other real estate owned	$ 409	$ 1,338

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LOANS - Narrative (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014 Contract	Dec. 31, 2013 Contract	Jun. 30, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Portion of allowance for loan losses allocated to PCI loans	$ 272		$ 228
Loans That Are Past Due Or Greater Are Considered Delinquent	30 days
Loans Receivable, Nonperforming, Period Before Being Placed Into Nonaccrual Status	90 days
Delinquent Period of Loan to Discontinued Interest Income for Consumer Loan	90 days
Consumer Loans Are Typically Charged Off	120 days
Loans past due over 90 days and still accruing	981	266
PCI loans that are considered non-performing	0	0
Purchased performing loans that were non-performing	3,335	4,201
Purchased performing nonaccruing commercial lines of credit	1,358	1,698
Troubled Debt Restructuring Non Accrual Period	6 months
Troubled Debt Restructuring Performance Period	6 months
Threshold at which large consumer real estate loans are individually evaluated for impairment	$ 417
Number Of Days To Define Payment Default	90 days
Period of time for Consumer Loans to be Past Due to be Classified as Non-Performing	90 days

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SHARE-BASED COMPENSATION - (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

Compensation cost charged to income for share-based compensation is presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Restricted stock	$	640	$	595	$	1,295	$	1,025
Stock options	276		255		540		397
Income tax benefit	320		298		642		498

Nonvested Shares for the Company's Stock Plans

A summary of activity in the restricted stock portion of the Company's stock plans is presented below:

	Six Months Ended June 30, 2014
	Time-Vested Shares				Performance-Based Shares
	Shares		Weighted-Average Grant Date Fair Value 1		Shares	Weighted-Average Grant Date Fair Value 2
Non-vested at December 31, 2013	381,402		$	20.39	82,400	$	27.45
Granted	20,000		24.69		—	—
Vested	(63,000	)	21.61		—	—
Forfeited	—		—		—	—
Non-vested at June 30, 2014	338,402		$	20.57	82,400	$	27.06

¹For restricted stock awards with time-based vesting conditions, the grant date fair value is based on the closing stock price as quoted on the NASDAQ Stock Market on the grant date.

² For restricted stock awards with performance-based vesting conditions, the value of the award is based upon the closing stock price as quoted on the NASDAQ Stock Market on the date of vesting. Until the final value is determined on the vesting date, the Company estimates the fair value quarterly based upon the closing stock price as quoted on the NASDAQ Stock Market near the last business day of each calendar quarter end.

Schedule of Stock Option Activity

A summary of activity in the stock option portion of the Company's stock plans as of June 30, 2014, is presented below:

			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	Shares
Outstanding at December 31, 2013	1,173,618		$	18.16	8.4	$	10,903
Granted	8,500		28.51		10.0	—
Exercised	(36,904	)	13.30		0.0	421
Forfeited	(21,420	)	16.74		0.0	—
Outstanding at June 30, 2014	1,123,794		18.42		8.1	9,549
Fully vested and expected to vest	1,116,799		18.42		8.1	9,497
Exercisable at June 30, 2014	342,458		$	16.19	7.0	$	3,671

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The notional amounts and estimated fair values of interest rate derivative positions outstanding and weighted-average receive and pay interest rates at June 30, 2014 and December 31, 2013 are presented in the following table.

	Outstanding Notional Amount			Estimated Fair Value			Weighted-Average Interest Rate
Non-hedging interest rate contracts - commercial loan interest rate swaps:							Received		Paid
June 30, 2014
Loan customer counterparty	$	6,304		$	79		4.38	%	2.90	%
Financial institution counterparty	(6,304		)	(79		)	2.90		4.38
December 31, 2013
Loan customer counterparty	$	6,406		$	33		4.38	%	2.92	%
Financial institution counterparty	(6,406		)	(33		)	2.92		4.38

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SHARE-BASED COMPENSATION - Changes in the Nonvested Shares for the Company's Stock Plans (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Time-vested restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Shares	381,402
Granted, Shares	20,000
Vested, Shares	(63,000)
Forfeited, Shares	0
Ending Balance, Shares	338,402
Beginning Balance, Weighted-Average Grant Date Fair Value (usd per share)	$ 20.39	[1]
Granted, Weighted-Average Grant Date Fair Value (usd per share)	$ 24.69	[1]
Vested, Weighted-Average Grant Date Fair Value (usd per share)	$ 21.61	[1]
Forfeitures, Weighted Average Grant Date Fair Value (usd per share)	$ 0.00	[1]
Ending Balance, Weighted-Average Grant Date Fair Value (usd per share)	$ 20.57	[1]
Performance-Based Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Shares	82,400
Granted, Shares	0
Vested, Shares	0
Forfeited, Shares	0
Ending Balance, Shares	82,400
Beginning Balance, Weighted-Average Grant Date Fair Value (usd per share)	$ 27.45	[2]
Granted, Weighted-Average Grant Date Fair Value (usd per share)	$ 0.00	[2]
Vested, Weighted-Average Grant Date Fair Value (usd per share)	$ 0.00	[2]
Forfeitures, Weighted Average Grant Date Fair Value (usd per share)	$ 0.00	[2]
Ending Balance, Weighted-Average Grant Date Fair Value (usd per share)	$ 27.06	[2]

[1] For restricted stock awards with time-based vesting conditions, the grant date fair value is based on the closing stock price as quoted on the NASDAQ Stock Market on the grant date.

[2] For restricted stock awards with performance-based vesting conditions, the value of the award is based upon the closing stock price as quoted on the NASDAQ Stock Market on the date of vesting. Until the final value is determined on the vesting date, the Company estimates the fair value quarterly based upon the closing stock price as quoted on the NASDAQ Stock Market near the last business day of each calendar quarter end.

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LOANS - Non-Performing (nonaccrual) loans (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-performing	$ 23,605	$ 22,124
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-performing	7,386	7,604
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-performing	6,245	5,141
Commercial Construction and Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-performing	213	0
Consumer Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-performing	9,304	8,812
Other Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-performing	$ 457	$ 567

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INCOME TAXES (TABLES)

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Summary of Net Deferred Tax Assets

A summary of the net deferred tax assets as of June 30, 2014 and December 31, 2013, is presented below:

	June 30, 2014			December 31, 2013
Net deferred tax assets	$	10,656		$	12,320
Estimated annual effective tax rate	36		%

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LOAN COMMITMENTS AND CONTINGENT LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Financial Instruments Contractual Amounts with off Balance Sheet Risk

The contractual amounts of financial instruments with off‑balance sheet risk at June 30, 2014 and December 31, 2013, are summarized below. Please see Part I-Item 2-"Off-Balance Sheet Arrangements, Contractual Obligation and Commitments" of this Form 10-Q for information related to commitment maturities.

	June 30, 2014		December 31, 2013
Unused commitments to extend credit	$	399,229	$	425,324
Unused capacity on Warehouse Purchase Program loans	344,434		562,030
Standby letters of credit	1,192		1,354
Total unused commitments/capacity	$	744,855	$	988,708

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (PARENTHETICAL) (USD $)	6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013
Statement of Stockholders' Equity [Abstract]
Net issuance of common stock under employee stock plans	56,904		397,605
Share repurchase	0		83,800
ESOP shares earned, shares	92,097		92,097
Dividends declared	$ 0.24	[1]	$ 0.10	[1]

[1] In 2012, the Company prepaid the quarterly dividend for the first quarter of 2013 in December 2012, distributing an additional $0.10 per common share.

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ADJUSTMENTS TO FINANCIAL STATEMENTS (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Adjustment to Financial Statements [Line Items]
Net cash provided by operating activities	$ 34,793	$ 36,284
Originations of Warehouse Purchase Program loans	(5,377,239)	(7,710,481)
Proceeds from pay-offs of Warehouse Purchase Program loans	5,281,143	7,866,973
Net change in loans held for investment, excluding Warehouse Purchase Program loans	(299,638)	(145,566)
Net cash provided by (used in) investing activities	(354,783)	38,754
Net cash used in financing activities	397,924	(85,950)
Net change in cash and cash equivalents	77,934	(10,912)
Beginning cash and cash equivalents	87,974	68,696
Ending cash and cash equivalents	165,908	57,784
Scenario, Previously Reported [Member]
Adjustment to Financial Statements [Line Items]
Loans originated or purchased for sale		(7,710,481)
Proceeds from sale of loans held for sale		7,866,973
Net cash provided by operating activities		192,776
Net change in loans held for investment, excluding Warehouse Purchase Program loans		(145,566)
Net cash provided by (used in) investing activities		(117,738)
Net cash used in financing activities		(85,950)
Net change in cash and cash equivalents		(10,912)
Beginning cash and cash equivalents		68,696
Ending cash and cash equivalents		57,784
Restatement Adjustment [Member]
Adjustment to Financial Statements [Line Items]
Loans originated or purchased for sale		0
Proceeds from sale of loans held for sale		0
Net cash provided by operating activities		36,284
Originations of Warehouse Purchase Program loans		(7,710,481)
Proceeds from pay-offs of Warehouse Purchase Program loans		7,866,973
Net change in loans held for investment, excluding Warehouse Purchase Program loans		(145,566)
Net cash provided by (used in) investing activities		38,754
Net cash used in financing activities		(85,950)
Net change in cash and cash equivalents		(10,912)
Beginning cash and cash equivalents		68,696
Ending cash and cash equivalents		$ 57,784

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LOANS - (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial real estate	$ 1,162,035		$ 1,091,200	$ 990,227
Total commercial and industrial loans	610,987		439,430	313,031
Loans Receivable, Gross, Commercial, Construction	31,941		30,247	20,471
Consumer real estate	501,328		441,226	459,076
Other consumer loans	43,218		47,799	52,382
Total consumer	544,546		489,025
Gross loans held for investment, excluding Warehouse Purchase Program	2,349,509		2,049,902	1,835,187
Deferred fees and discounts, net	(1,699)		(1,267)
Allowance for loan losses	(20,440)	(19,402)	(19,358)	(19,277)	(18,642)	(18,051)
Net loans held for investment, excluding Warehouse Purchase Program	2,327,370		2,029,277
Warehouse Purchase Program	769,566		673,470
Total loans held for investment	3,096,936		2,702,747
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial	579,561		425,030
Warehouse lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Warehouse lines of credit	31,426		14,400
Commercial Construction and Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Construction	28,496		27,619
Consumer Construction and Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross, Consumer, Construction	$ 3,445		$ 2,628

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FAIR VALUE - Carrying Amount and Estimated Fair Values of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, at Carrying Value	$ 165,908	$ 87,974	$ 57,784	$ 68,696
Securities held to maturity (fair value: June 30, 2014 — $277,913, December 31, 2013— $301,739)	267,614	294,583
Fair value of securities held to maturity	277,913	301,739
Net loans held for investment, excluding Warehouse Purchase Program	2,327,370	2,029,277
Loans held for investment - Warehouse Purchase Program	769,566	673,470
FHLB and Federal Reserve Bank stock, at cost	44,532	34,883
Interest Receivable	10,620	9,904
Deposits	2,435,726	2,264,639
FHLB advances	874,866	639,096
Securities Sold under Agreements to Repurchase	25,000	25,000
Interest Payable	1,075	1,066
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	165,908	87,974
Fair value of securities held to maturity
Interest Receivable	10,620	9,904
Federal Home Loan Bank Borrowings, Fair Value Disclosure
Securities Loaned or Sold under Agreements to Repurchase, Fair Value Disclosure
Accrued Liabilities, Fair Value Disclosure	1,075	1,066
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure
Fair value of securities held to maturity	277,913	301,739
FHLB and Federal Reserve Bank stock, at cost	44,532	34,883
Interest Receivable	0	0
Federal Home Loan Bank Borrowings, Fair Value Disclosure
Securities Loaned or Sold under Agreements to Repurchase, Fair Value Disclosure
Accrued Liabilities, Fair Value Disclosure
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure
Fair value of securities held to maturity
Loans and leases receivable net excluding Warehouse Purchase Program, Fair Value Disclosure	2,345,041	2,054,460
Loans Receivable, Gross, Mortgage Warehouse Lending, Fair Value Disclosure	769,877	673,785
FHLB and Federal Reserve Bank stock, at cost	0	0
Interest Receivable
Deposits, fair value	2,307,105	2,123,846
Federal Home Loan Bank Borrowings, Fair Value Disclosure	884,707	650,976
Securities Loaned or Sold under Agreements to Repurchase, Fair Value Disclosure	27,149	27,430
Accrued Liabilities, Fair Value Disclosure

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
ASSETS
Cash and due from financial institutions	$ 35,276	$ 30,012
Short-term interest-bearing deposits in other financial institutions	130,632	57,962
Total cash and cash equivalents	165,908	87,974
Securities available for sale, at fair value	224,184	248,012
Securities held to maturity (fair value: June 30, 2014 — $277,913, December 31, 2013— $301,739)	267,614	294,583
Loans held for investment (net of allowance for loan losses of $20,440 at June 30, 2014 and $19,358 at December 31, 2013)	2,327,370	2,029,277
Loans held for investment - Warehouse Purchase Program	769,566	673,470
Total loans held for investment	3,096,936	2,702,747
FHLB and Federal Reserve Bank stock, at cost	44,532	34,883
Bank-owned life insurance	35,863	35,565
Premises and equipment, net	51,955	53,272
Goodwill	29,650	29,650
Other assets	34,602	38,546
Total assets	3,951,244	3,525,232
Deposits
Non-interest-bearing demand	433,194	410,933
Interest-bearing demand	476,203	474,515
Savings and money market	1,032,496	904,576
Time	493,833	474,615
Total deposits	2,435,726	2,264,639
FHLB advances	874,866	639,096
Repurchase agreement	25,000	25,000
Other liabilities	58,240	52,037
Total liabilities	3,393,832	2,980,772
Commitments and contingent liabilities	0	0
Shareholders’ equity
Preferred stock, $.01 par value; 10,000,000 shares authorized; 0 shares issued — June 30, 2014 and December 31, 2013
Common stock, $.01 par value; 90,000,000 shares authorized; 39,995,720 shares issued — June 30, 2014 and 39,938,816 shares issued — December 31, 2013	400	399
Additional paid-in capital	381,808	377,657
Retained earnings	190,150	183,236
Accumulated other comprehensive income (loss), net	770	(383)
Unearned Employee Stock Ownership Plan (ESOP) shares; 1,641,748 shares at June 30, 2014 and 1,733,845 shares at December 31, 2013	(15,716)	(16,449)
Total shareholders’ equity	557,412	544,460
Total liabilities and shareholders’ equity	$ 3,951,244	$ 3,525,232

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LOANS - Summary of Outstanding Balances of Troubled Debt Restructuring (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Recorded investment	$ 14,098		$ 12,339
Specific reserves on TDRs	1,048		1,191
Outstanding commitments to lend additional funds to borrowers with TDR loans	0		0
Nonperforming Financing Receivable [Member]
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Recorded investment	12,498	[1]	11,368	[1]
Performing Financing Receivable [Member]
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Recorded investment	$ 1,600	[2]	$ 971	[2]

[1] Nonaccrual TDR loans are included in the nonaccrual loan totals.

[2] Performing TDR loans are loans that have been performing under the restructured terms for at least six months and the Company is accruing interest on these loans.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 8,818	$ 8,174	$ 16,500	$ 16,232
Change in unrealized gains (losses) on securities available for sale	1,065	(3,031)	1,775	(2,705)
Reclassification of amount realized through sale of securities	0	0	0	177
Tax effect	(373)	1,063	(622)	904
Other comprehensive income (loss), net of tax	692	(1,968)	1,153	(1,624)
Comprehensive income	$ 9,510	$ 6,206	$ 17,653	$ 14,608

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INCOME TAXES - (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Deferred Tax Assets, Net of Valuation Allowance	$ 10,656	$ 12,320
Effective Income Tax Rate Reconciliation, Percent	36.00%

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SECURITIES - Carrying Amount, Unrecognized Gains and Losses, and Fair Value of Securities Held to Maturity (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Schedule of Held-to-maturity Securities [Line Items]
Securities held to maturity, carrying value	$ 267,614		$ 294,583
Held To Maturity Securities Accumulated Unrecognized Holding Gain	10,894		9,110
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	595		1,954
Fair Value	277,913		301,739
Agency residential mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Securities held to maturity, carrying value	72,740	[1]	83,177	[1]
Held To Maturity Securities Accumulated Unrecognized Holding Gain	3,731	[1]	3,523	[1]
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	28	[1]	130	[1]
Fair Value	76,443	[1]	86,570	[1]
Agency commercial mortgage backed securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Securities held to maturity, carrying value	25,518	[2]	24,828	[2]
Held To Maturity Securities Accumulated Unrecognized Holding Gain	991	[2]	523	[2]
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	119	[2]	310	[2]
Fair Value	26,390	[2]	25,041	[2]
Agency residential collateralized mortgage securities
Schedule of Held-to-maturity Securities [Line Items]
Securities held to maturity, carrying value	102,297	[3]	118,757	[3]
Held To Maturity Securities Accumulated Unrecognized Holding Gain	2,635	[3]	2,772	[3]
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	37	[3]	107	[3]
Fair Value	104,895	[3]	121,422	[3]
Municipal bonds
Schedule of Held-to-maturity Securities [Line Items]
Securities held to maturity, carrying value	67,059		67,821
Held To Maturity Securities Accumulated Unrecognized Holding Gain	3,537		2,292
Held to MaturitySecurities Accumulated Unrecognized Holding Loss	411		1,407
Fair Value	$ 70,185		$ 68,706

[1] Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

[2] Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

[3] Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

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BASIS OF FINANCIAL STATEMENTS - (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Use of Estimates

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. For further information with respect to significant accounting policies followed by the Company in preparation of its consolidated financial statements, refer to the 2013 Form 10-K.

Gross and Net Revenue Recognition

Gains and losses on the sale of securities classified as available for sale are recorded on the trade date using the specific-identification method.

Other-than-Temporary Impairment

In determining other-than-temporary impairment for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company does not believe these unrealized losses are other-than-temporary. All principal and interest payments are being received on time and in full.

Allowance for Loan Losses

The allowance for loan losses and related provision expense are susceptible to change if the credit quality of our loan portfolio changes, which is evidenced by many factors, including but not limited to charge-offs and non-performing loan trends. Generally, consumer real estate lending has a lower credit risk profile compared to other consumer lending (such as automobile loans). Commercial real estate and commercial and industrial lending, however, can have higher risk profiles than consumer loans due to these loans being larger in amount and non-homogeneous in structure and term. Changes in economic conditions, the mix and size of the loan portfolio, and individual borrower conditions can dramatically impact our level of allowance for loan losses in relatively short periods of time.

The allowance for loan losses is maintained to cover losses that are estimated in accordance with US GAAP. It is our estimate of credit losses inherent in our loan portfolio at each balance sheet date. Our methodology for analyzing the allowance for loan losses consists of general and specific components. For the general component, we stratify the loan portfolio into homogeneous groups of loans that possess similar loss potential characteristics and apply a loss ratio to these groups of loans to estimate the credit losses in the loan portfolio. We use both historical loss ratios and qualitative loss factors assigned to major loan collateral types to establish general component loss allocations. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data and external economic indicators, which may not yet be reflected in the historical loss ratios, and that could impact the Company's specific loan portfolios. The Allowance for Loan Loss Committee sets and adjusts qualitative loss factors by regularly reviewing changes in underlying loan composition and the seasonality of specific portfolios. The Allowance for Loan Loss Committee also considers credit quality and trends relating to delinquency, non-performing and/or classified loans and bankruptcy within the Company's loan portfolio when evaluating qualitative loss factors. Additionally, the Allowance for Loan Loss Committee adjusts qualitative factors to account for the potential impact of external economic factors, including the unemployment rate, housing price, vacancy rates and inventory levels specific to our primary market area.

Management evaluates current information and events regarding a borrower's ability to repay its obligations and considers a loan to be impaired when the ultimate collectability of amounts due, according to the contractual terms of the loan agreement, is in doubt. If an impaired loan is collateral-dependent, the fair value of the collateral, less the estimated cost to sell, is used to determine the amount of impairment. If an impaired loan is not collateral-dependent, the impairment amount is determined using the negative difference, if any, between the estimated discounted cash flows and the loan amount due. For impaired loans, the amount of the impairment can be adjusted, based on current data, until such time as the actual basis is established by acquisition of the collateral or until the basis is collected. Impairment losses are reflected in the allowance for loan losses through a charge to the provision for loan losses. Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal.

For the specific component, the allowance for loan losses includes loans where management has concerns about the borrower's ability to repay and on individually analyzed loans found to be impaired by definition. For example, all troubled debt restructurings are considered to be impaired. Loss estimates include the negative difference, if any, between the estimated discounted cash flows of the loan, or if the loan is collateral dependent the current fair value of the collateral, and the loan amount due.

Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. As a result, the Company does not separately identify consumer real estate loans less than $417 or individual consumer non-real estate secured loans for impairment disclosures.

Loans and Leases Receivable, Troubled Debt Restructuring Policy

A modified loan is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. Modifications to loan terms may include a modification of the contractual interest rate to a below-market rate (even if the modified rate is higher than the original rate), forgiveness of accrued interest, forgiveness of a portion of principal, an extended repayment period or a deed in lieu of foreclosure or other transfer of assets other than cash to fully or partially satisfy a debt. The Company's policy is to place all TDRs on nonaccrual for a minimum period of six months. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months and the collection of principal and interest under the revised terms is deemed probable. All TDRs are considered to be impaired loans.

Loans

For loans collateralized by real property and commercial and industrial loans, credit exposure is monitored by internally assigned grades used for classification of loans. A loan is considered “special mention” when management has determined that there is a potential weakness that deserves management's close attention. Loans rated as "special mention" are not adversely classified according to regulatory classifications and do not expose the Company to sufficient risk to warrant adverse classification. A loan is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. “Substandard” loans include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected, and the loan may or may not meet the criteria for impairment. Loans classified as “doubtful” have all of the weaknesses of those classified as “substandard”, with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions and values, “highly questionable and improbable.” All other loans that do not fall into the above mentioned categories are considered “pass” loans. Updates to internally assigned grades are made monthly and/or upon significant developments.

For consumer loans, credit exposure is monitored by payment history of the loans. Non-performing consumer loans are on nonaccrual and are generally greater than 90 days past due.

Past due status is based on the contractual terms of the loan. Loans that are past due 30 days are considered delinquent. A loan is moved to nonaccrual status in accordance with the Company's policy, typically after 90 days of non-payment. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Non-mortgage consumer loans are typically charged off no later than 120 days past due. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and larger individually classified impaired loans.

All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

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SECURITIES - Carrying Amount and Fair Value of Held to Maturity Debt Securities and Fair Value of Available-for-Sale Debt Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Available For Sale And Held To Maturity Securities [Line Items]
Held-to-maturity Securities, Debt Maturities, within One Year, Net Carrying Amount	$ 145
Held to maturity, Carrying Amount, Due from one to five years	7,659
Held to maturity, Carrying Amount, Due from five to ten years	28,464
Held to maturity, Carrying Amount, Due after ten years	30,791
Securities held to maturity, carrying value	267,614		294,583
Held-to-maturity Securities, Debt Maturities, Next Twelve Months, Fair Value	148
Held to maturity, Fair Value, Due from one to five years	8,124
Held to maturity, Fair Value, Due from five to ten years	30,570
Held to maturity, Fair Value, Due after ten years	31,343
Fair value of securities held to maturity	277,913		301,739
Available-for-sale Securities, Debt Maturities, Next Twelve Months, Fair Value	0
Available for sale, Fair Value, Due from one to five years	2,390
Available for sale, Fair Value, Due from five to ten years	0
Available for sale, Fair Value, Due after ten years	0
Securities available for sale, at fair value	224,184		248,012
Agency residential mortgage-backed securities
Available For Sale And Held To Maturity Securities [Line Items]
Securities held to maturity, carrying value	72,740	[1]	83,177	[1]
Fair value of securities held to maturity	76,443	[1]	86,570	[1]
Securities available for sale, at fair value	160,997	[1]	174,709	[1]
Agency commercial mortgage backed securities [Member]
Available For Sale And Held To Maturity Securities [Line Items]
Securities held to maturity, carrying value	25,518	[2]	24,828	[2]
Fair value of securities held to maturity	26,390	[2]	25,041	[2]
Securities available for sale, at fair value	0	[2]
Agency residential collateralized mortgage securities
Available For Sale And Held To Maturity Securities [Line Items]
Securities held to maturity, carrying value	102,297	[3]	118,757	[3]
Fair value of securities held to maturity	104,895	[3]	121,422	[3]
Securities available for sale, at fair value	$ 60,797	[3]	$ 70,575	[3]

[1] Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

[2] Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

[3] Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

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EARNINGS PER COMMON SHARE - (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Reconciliation of Numerator and Denominator of Basic and Diluted Earnings per Common Share

A reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation for the three and six months ended June 30, 2014 and 2013 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Basic earnings per share:
Numerator:
Net income	$	8,818		$	8,174		$	16,500		$	16,232
Distributed and undistributed earnings to participating securities	(97		)	(116		)	(187		)	(180		)
Income available to common shareholders	$	8,721		$	8,058		$	16,313		$	16,052
Denominator:
Weighted average common shares outstanding	39,966,568			39,940,712			39,954,509			39,837,010
Less: Average unallocated ESOP shares	(1,671,941		)	(1,856,135		)	(1,694,835		)	(1,879,030		)
Average unvested restricted stock awards	(420,956		)	(539,527		)	(434,729		)	(420,517		)
Average shares for basic earnings per share	37,873,671			37,545,050			37,824,945			37,537,463
Basic earnings per common share	$	0.23		$	0.21		$	0.43		$	0.43
Diluted earnings per share:
Numerator:
Income available to common shareholders	$	8,721		$	8,058		$	16,313		$	16,052
Denominator:
Average shares for basic earnings per share	37,873,671			37,545,050			37,824,945			37,537,463
Dilutive effect of share-based compensation plan	247,703			147,463			247,786			147,231
Average shares for diluted earnings per share	38,121,374			37,692,513			38,072,731			37,684,694
Diluted earnings per common share	$	0.23		$	0.21		$	0.43		0.43
Share awards excluded in the computation of diluted earnings per share because the exercise price was greater than the common stock average market price and were therefore antidilutive	86,910			1,212,900			134,790			1,235,050

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income, Net	Unearned ESOP Shares
Beginning Balance at Dec. 31, 2012	$ 520,871	$ 396	$ 372,168	$ 164,328	$ 1,895	$ (17,916)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	16,232			16,232
Other comprehensive income (loss), net of tax	(1,624)				(1,624)
Share repurchase	(1,554)	(1)	(1,553)
Dividends declared	(3,991)			(3,991)
ESOP shares earned	1,857		1,124			733
Share-based compensation expense	1,422		1,422
Net issuance of common stock under employee stock plans	221	4	217
Ending Balance at Jun. 30, 2013	533,434	399	373,378	176,569	271	(17,183)
Beginning Balance at Dec. 31, 2013	544,460	399	377,657	183,236	(383)	(16,449)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	16,500			16,500
Other comprehensive income (loss), net of tax	1,153				1,153
Dividends declared	(9,586)			(9,586)
ESOP shares earned	2,397		1,664			733
Share-based compensation expense	1,835		1,835
Net issuance of common stock under employee stock plans	653	1	652
Ending Balance at Jun. 30, 2014	$ 557,412	$ 400	$ 381,808	$ 190,150	$ 770	$ (15,716)

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CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Fair value of securities held to maturity	$ 277,913	$ 301,739
Allowance for loan losses on loans held for investment	$ 20,440	$ 19,358
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	90,000,000	90,000,000
Common Stock, shares issued	39,995,720	39,938,816
Unearned Employee Stock Ownership Plan, shares	1,641,748	1,733,845

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SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

Compensation cost charged to income for share-based compensation is presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Restricted stock	$	640	$	595	$	1,295	$	1,025
Stock options	276		255		540		397
Income tax benefit	320		298		642		498

A summary of activity in the restricted stock portion of the Company's stock plans is presented below:

	Six Months Ended June 30, 2014
	Time-Vested Shares				Performance-Based Shares
	Shares		Weighted-Average Grant Date Fair Value 1		Shares	Weighted-Average Grant Date Fair Value 2
Non-vested at December 31, 2013	381,402		$	20.39	82,400	$	27.45
Granted	20,000		24.69		—	—
Vested	(63,000	)	21.61		—	—
Forfeited	—		—		—	—
Non-vested at June 30, 2014	338,402		$	20.57	82,400	$	27.06

¹For restricted stock awards with time-based vesting conditions, the grant date fair value is based on the closing stock price as quoted on the NASDAQ Stock Market on the grant date.

² For restricted stock awards with performance-based vesting conditions, the value of the award is based upon the closing stock price as quoted on the NASDAQ Stock Market on the date of vesting. Until the final value is determined on the vesting date, the Company estimates the fair value quarterly based upon the closing stock price as quoted on the NASDAQ Stock Market near the last business day of each calendar quarter end.

As of June 30, 2014, there was $7,924 of total unrecognized compensation expense related to non-vested shares awarded under the restricted stock plans. That expense is expected to be recognized over a weighted-average period of 2.77 years.

A summary of activity in the stock option portion of the Company's stock plans as of June 30, 2014, is presented below:

			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	Shares
Outstanding at December 31, 2013	1,173,618		$	18.16	8.4	$	10,903
Granted	8,500		28.51		10.0	—
Exercised	(36,904	)	13.30		0.0	421
Forfeited	(21,420	)	16.74		0.0	—
Outstanding at June 30, 2014	1,123,794		18.42		8.1	9,549
Fully vested and expected to vest	1,116,799		18.42		8.1	9,497
Exercisable at June 30, 2014	342,458		$	16.19	7.0	$	3,671

As of June 30, 2014, there was $3,886 of total unrecognized compensation expense related to non-vested stock options. That expense is expected to be recognized over a weighted-average period of 3.50 years.

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DOCUMENT AND ENTITY INFORMATION	6 Months Ended
	Jun. 30, 2014	Jul. 28, 2014
Entity Information [Line Items]
Entity Registrant Name	ViewPoint Financial Group Inc.
Entity Central Index Key	0001487052
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		39,995,920

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INCOME TAXES

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES    

A summary of the net deferred tax assets as of June 30, 2014 and December 31, 2013, is presented below:

	June 30, 2014			December 31, 2013
Net deferred tax assets	$	10,656		$	12,320
Estimated annual effective tax rate	36		%

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014		Jun. 30, 2013
Interest and dividend income
Loans, including fees	$ 33,888	$ 32,151	$ 64,276		$ 62,529
Taxable securities	2,453	2,457	5,018		4,860
Nontaxable securities	561	529	1,125		1,003
Interest-bearing deposits in other financial institutions	71	25	128		56
FHLB and Federal Reserve Bank stock	136	134	266		267
Total interest and dividend income	37,109	35,296	70,813		68,715
Interest expense
Deposits	2,035	2,450	4,026		4,882
FHLB advances	1,948	2,205	3,875		4,466
Repurchase agreement	204	203	405		404
Total interest expense	4,187	4,858	8,306		9,752
Net interest income	32,922	30,438	62,507		58,963
Provision for loan losses	1,197	1,858	1,573		2,741
Net interest income after provision for loan losses	31,725	28,580	60,934		56,222
Non-interest income
Service charges and fees	4,874	4,768	9,172		9,059
Other charges and fees	239	179	449		391
Bank-owned life insurance income	145	153	298		315
Loss on sale of available-for-sale securities (reclassified from accumulated other comprehensive income for unrealized losses on available-for-sale securities)	0	0	0		(177)
Gain on sale and disposition of assets	727	444	728		674
Other	(556)	199	(256)		1,340
Total non-interest income	5,429	5,743	10,391		11,602
Non-interest expense
Salaries and employee benefits	14,127	12,528	28,259		25,443
Merger and acquisition costs	652	0	821		0
Advertising	493	751	848		1,264
Occupancy and equipment	1,819	1,938	3,711		3,728
Outside professional services	486	570	1,011		1,254
Regulatory assessments	687	650	1,315		1,229
Data processing	1,708	1,729	3,370		3,247
Office operations	1,717	1,751	3,397		3,399
Other	1,661	1,786	2,773		3,012
Total non-interest expense	23,350	21,703	45,505		42,576
Income before income tax expense	13,804	12,620	25,820		25,248
Income tax expense (items reclassified from accumulated other comprehensive income include an income tax benefit of $62 for the six months ended June 30, 2013)	4,986	4,446	9,320		9,016
Net income	$ 8,818	$ 8,174	$ 16,500		$ 16,232
Earnings per share:
Basic (in dollars per share)	$ 0.23	$ 0.21	$ 0.43		$ 0.43
Diluted (in dollars per share)	$ 0.23	$ 0.21	$ 0.43		$ 0.43
Dividends declared per share	$ 0.12	$ 0.10	$ 0.24	[1]	$ 0.10	[1]

[1] In 2012, the Company prepaid the quarterly dividend for the first quarter of 2013 in December 2012, distributing an additional $0.10 per common share.

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EARNINGS PER COMMON SHARE

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE

Basic earnings per common share is computed by dividing net income (which has been adjusted for distributed and undistributed earnings to participating securities) by the weighted-average number of common shares outstanding for the period, reduced for average unallocated ESOP shares and average unvested restricted stock awards. Unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method described in ASC 260-10-45-60B. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as stock awards and options) were exercised or converted to common stock, or resulted in the issuance of common stock that then shared in the Company’s earnings. Diluted earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period increased for the dilutive effect of unexercised stock options and unvested restricted stock awards. The dilutive effect of the unexercised stock options and unvested restricted stock awards is calculated under the treasury stock method utilizing the average market value of the Company’s stock for the period. A reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation for the three and six months ended June 30, 2014 and 2013 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Basic earnings per share:
Numerator:
Net income	$	8,818		$	8,174		$	16,500		$	16,232
Distributed and undistributed earnings to participating securities	(97		)	(116		)	(187		)	(180		)
Income available to common shareholders	$	8,721		$	8,058		$	16,313		$	16,052
Denominator:
Weighted average common shares outstanding	39,966,568			39,940,712			39,954,509			39,837,010
Less: Average unallocated ESOP shares	(1,671,941		)	(1,856,135		)	(1,694,835		)	(1,879,030		)
Average unvested restricted stock awards	(420,956		)	(539,527		)	(434,729		)	(420,517		)
Average shares for basic earnings per share	37,873,671			37,545,050			37,824,945			37,537,463
Basic earnings per common share	$	0.23		$	0.21		$	0.43		$	0.43
Diluted earnings per share:
Numerator:
Income available to common shareholders	$	8,721		$	8,058		$	16,313		$	16,052
Denominator:
Average shares for basic earnings per share	37,873,671			37,545,050			37,824,945			37,537,463
Dilutive effect of share-based compensation plan	247,703			147,463			247,786			147,231
Average shares for diluted earnings per share	38,121,374			37,692,513			38,072,731			37,684,694
Diluted earnings per common share	$	0.23		$	0.21		$	0.43		0.43
Share awards excluded in the computation of diluted earnings per share because the exercise price was greater than the common stock average market price and were therefore antidilutive	86,910			1,212,900			134,790			1,235,050

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ADJUSTMENTS TO FINANCIAL STATEMENTS

6 Months Ended

Jun. 30, 2014

Adjustment to Financial Statements [Abstract]

ADJUSTMENTS TO FINANCIAL STATEMENTS

ADJUSTMENTS TO FINANCIAL STATEMENTS

Prior to the December 31, 2013 reporting period, the Company reported Warehouse Purchase Program loans as held for sale as we believed that was the most meaningful presentation to our financial statement users given that the collection of the loan was based upon the sale of the loan. Effective December 31, 2013, the Company concluded that, under US GAAP, these loans should be accounted for as held for investment. This correction changed the accounting for Warehouse Purchase Program loans from a lower-of-cost-or-market accounting method to accounting for the loans under Accounting Standards Codification ("ASC") 310, with any credit losses incurred as of the balance sheet date recognized in the allowance for loan losses. As we had not reported any valuation decreases below cost in prior periods, and we have experienced no credit losses on these loans, this correction had no impact on net income, comprehensive income, earnings per share or income taxes. Additionally, total assets and shareholders' equity remained unchanged. However, this correction did impact the statement of cash flows by moving cash flows associated with the Warehouse Purchase Program from operating cash flows to investing cash flows.

The table below illustrates the impact of this change on the Company's Consolidated Statement of Cash Flows for the six months ended June 30, 2013. There was no impact to the Company's Consolidated Statements of Income for the three or six months ended June 30, 2013.

Impact to the Consolidated Statement of Cash Flows
	Six Months Ended June 30, 2013
	As Originally Presented				As Adjusted
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities:
Loans originated or purchased for sale	$	(7,710,481	)		$	—
Proceeds from sale of loans held for sale	7,866,973				—
Net cash provided by operating activities	192,776				36,284
Cash flows from investing activities
Originations of Warehouse Purchase Program loans	N/A			1	(7,710,481		)
Proceeds from pay-offs of Warehouse Purchase Program loans	N/A			1	7,866,973
Net change in loans held for investment, excluding Warehouse Purchase Program loans	(145,566		)		(145,566		)
Net cash provided by (used in) investing activities	(117,738		)		38,754
Cash flows from financing activities
Net cash used in financing activities	(85,950		)		(85,950		)
Net change in cash and cash equivalents	(10,912		)		(10,912		)
Beginning cash and cash equivalents	68,696				68,696
Ending cash and cash equivalents	$	57,784			$	57,784

¹ Not applicable

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ADJUSTMENTS TO FINANCIAL STATEMENTS (Tables)

6 Months Ended

Jun. 30, 2014

Adjustment to Financial Statements [Abstract]

Schedule of Adjustment to Financial Statements

Impact to the Consolidated Statement of Cash Flows
	Six Months Ended June 30, 2013
	As Originally Presented				As Adjusted
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities:
Loans originated or purchased for sale	$	(7,710,481	)		$	—
Proceeds from sale of loans held for sale	7,866,973				—
Net cash provided by operating activities	192,776				36,284
Cash flows from investing activities
Originations of Warehouse Purchase Program loans	N/A			1	(7,710,481		)
Proceeds from pay-offs of Warehouse Purchase Program loans	N/A			1	7,866,973
Net change in loans held for investment, excluding Warehouse Purchase Program loans	(145,566		)		(145,566		)
Net cash provided by (used in) investing activities	(117,738		)		38,754
Cash flows from financing activities
Net cash used in financing activities	(85,950		)		(85,950		)
Net change in cash and cash equivalents	(10,912		)		(10,912		)
Beginning cash and cash equivalents	68,696				68,696
Ending cash and cash equivalents	$	57,784			$	57,784

¹ Not applicable

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LOAN COMMITMENTS AND CONTINGENT LIABILITIES

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, the Company enters into various transactions which, in accordance with US GAAP, are not included in its consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit which involve, to varying degrees, elements of credit and interest rate risk. Credit losses up to the face amount of these instruments could occur, although material losses are not anticipated. The Company's credit policies applied to loan originations are also applied to these commitment requests, including obtaining collateral at the exercise of the commitment.

The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Since many commitments expire without being drawn upon, the total contractual amount of commitments does not necessarily represent future cash requirements of the Company. Substantially all of the Company's commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of future loan funding. Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment were funded, the Company would seek payment from the customer under pre-arranged terms. The Company's policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements.

The contractual amounts of financial instruments with off‑balance sheet risk at June 30, 2014 and December 31, 2013, are summarized below. Please see Part I-Item 2-"Off-Balance Sheet Arrangements, Contractual Obligation and Commitments" of this Form 10-Q for information related to commitment maturities.

	June 30, 2014		December 31, 2013
Unused commitments to extend credit	$	399,229	$	425,324
Unused capacity on Warehouse Purchase Program loans	344,434		562,030
Standby letters of credit	1,192		1,354
Total unused commitments/capacity	$	744,855	$	988,708

In addition to the commitments above, the Company guarantees the credit card debt of certain customers to the merchant bank that issues the credit cards. These guarantees are in place for as long as the guaranteed credit card is open. At June 30, 2014 and December 31, 2013, these credit card guarantees totaled $1,099 and $1,307, respectively. This amount represents the maximum potential amount of future payments under the guarantee. At June 30, 2014, the Company had set aside a reserve of $28 for its credit card guarantees.

    Also, the Company had overdraft protection available in the amounts of $74,608 and $87,772 for June 30, 2014 and December 31, 2013, respectively.

In regards to unused capacity on Warehouse Purchase Program loans, the Company has established maximum purchase facility amounts, but reserves the right, at any time, to refuse to buy any mortgage loans offered for sale with each customer, for any reason in the Company's sole and absolute discretion.

At June 30, 2014, the Company had $3,480 of unfunded commitments recorded in other liabilities in its consolidated balance sheet related to investments in community development -oriented private equity funds used for Community Reinvestment Act purposes.

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FAIR VALUE

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

ASC 820, “Fair Value Measurements and Disclosures”, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Prices or valuation techniques that require inputs that are both significant and unobservable in the market. These instruments are valued using the best information available, some of which is internally developed, and reflects a reporting entity’s own assumptions about the risk premiums that market participants would generally require and the assumptions they would use.

The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs).

The estimated fair value of interest rate swaps are obtained from a pricing service that provides the swaps' unwind value (Level 2 inputs). In September 2013, we entered into certain interest rate derivative positions that are not designated as hedging instruments. The fair value of these derivative positions outstanding are included in other assets and other liabilities in the accompanying consolidated balance sheets. Please see Note 7 - Derivative Financial Instruments for more information.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below.

June 30, 2014	Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
Assets:
Agency residential mortgage-backed securities	$	160,997
Agency residential collateralized mortgage obligations	60,797
SBA pools	2,390
Total securities available for sale	$	224,184
Derivative asset 1	$	79
Derivative liability 1	$	79

December 31, 2013
Assets:
Agency residential mortgage-backed securities	$	174,709
Agency residential collateralized mortgage obligations	70,575
SBA pools	2,728
Total securities available for sale	$	248,012
Derivative asset 1	$	33
Derivative liability 1	$	33

¹ Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly. Please see Note 7 - Derivative Financial Instruments for more information.

Assets and Liabilities Measured on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis are summarized below. There were no liabilities measured at fair value on a non-recurring basis at June 30, 2014 or December 31, 2013.

June 30, 2014	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans	$	5,260
Foreclosed assets	240
December 31, 2013
Assets:
Impaired loans	$	7,138
Foreclosed assets	480

Impaired loans that are collateral dependent are measured for impairment using the fair value of the collateral adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. At June 30, 2014, impaired loans secured by real estate had an average discount of 5% applied to the appraised value of the collateral, and impaired loans secured by receivables or inventory had discounts determined by management on an individual loan basis. Impaired loans that are not collateral dependent are measured for impairmentby a discounted cash flow analysis using a net present value calculation that utilizes data from the loan file before and after the modification.

Foreclosed assets are measured at the lower of book or fair value less costs to sell using third party appraisals, listing agreements or sale contracts, which may be adjusted by additional Level 3 inputs, such as discounts of market value, estimated marketing costs and estimated legal expenses. Management may also consider additional adjustments on specific properties due to the age of the appraisal, expected holding period, lack of comparable sales, or if the other real estate owned is a special use property. The market value discounts on foreclosed assets at June 30, 2014, ranged from 0% to 77%, with an average of 19%.

The Credit Administration department evaluates the valuations on impaired loans and foreclosed assets at least quarterly. The valuations on impaired loans are reviewed at least quarterly by the Allowance for Loan Loss Committee and are considered in the calculation of the allowance for loan losses. Unobservable inputs, such as discounts to collateral, are monitored and adjusted if market conditions change.

The carrying amount and fair value information of financial instruments not recorded at fair value in their entirety on a recurring basis on the Company's consolidated balance sheets at June 30, 2014 and at December 31, 2013, were as follows:

			Fair Value
June 30, 2014	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	165,908	$	165,908	$	—	$	—
Securities held to maturity	267,614		—		277,913		—
Loans held for investment, net	2,327,370		—		—		2,345,041
Loans held for investment - Warehouse Purchase Program	769,566		—		—		769,877
FHLB and Federal Reserve Bank stock	44,532		—		44,532		—
Accrued interest receivable	10,620		10,620		—		—
Financial liabilities
Deposits	$	2,435,726	$	—	$	—	$	2,307,105
FHLB advances	874,866		—		—		884,707
Repurchase agreement	25,000		—		—		27,149
Accrued interest payable	1,075		1,075		—		—

			Fair Value
December 31, 2013	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	87,974	$	87,974	$	—	$	—
Securities held to maturity	294,583		—		301,739		—
Loans held for investment, net	2,029,277		—		—		2,054,460
Loans held for investment - Warehouse Purchase Program	673,470		—		—		673,785
FHLB and Federal Reserve Bank stock	34,883		—		34,883		—
Accrued interest receivable	9,904		9,904		—		—
Financial liabilities
Deposits	$	2,264,639	$	—	$	—	$	2,123,846
FHLB advances	639,096		—		—		650,976
Repurchase agreement	25,000		—		—		27,430
Accrued interest payable	1,066		1,066		—		—

The methods and assumptions used to estimate fair value are described as follows:

Estimated fair value is the carrying amount for cash and cash equivalents and accrued interest receivable and payable. The fair values of securities held to maturity are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). For loans held for investment, fair value is based on discounted cash flows using current market offering rates, estimated life, and applicable credit risk. For deposits and FHLB advances, fair value is calculated using the FHLB advance curve to discount cash flows for the estimated life for deposits and according to the contractual repayment schedule for FHLB advances. Fair value of the repurchase agreement is based on discounting the estimated cash flows using the current rate at which similar borrowings would be made with similar terms and remaining maturities. It is not practicable to determine the fair value of FHLB and Federal Reserve Bank stock due to restrictions on its transferability. The fair value of off-balance sheet items is based on the current fees or costs that would be charged to enter into or terminate such arrangements and are not considered significant to this presentation.

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LOAN COMMITMENTS AND CONTINGENT LIABILITIES (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Loss Contingencies [Line Items]
Bank Overdrafts, Overdraft Protection	$ 74,608	$ 87,772
Commitment to Fund Private Equity Fund for Specific Purposes, Unfunded Portion	3,480
Commitments to Extend Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingencies to extend credit	399,229	425,324
Commitment on Warehouse Purchase Program Loans [Member]
Loss Contingencies [Line Items]
Commitments and contingencies to extend credit	344,434	562,030
Standby Letters of Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingencies to extend credit	1,192	1,354
Commitments [Member]
Loss Contingencies [Line Items]
Commitments and contingencies to extend credit	744,855	988,708
Financial Guarantee [Member]
Loss Contingencies [Line Items]
Guarantor Obligations, Current Carrying Value	1,099	1,307
Valuation Allowances and Reserves, Deductions	$ 28

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SECURITIES

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

The fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
June 30, 2014	Cost		Gains		Losses		Fair Value
Agency residential mortgage-backed securities 1	$	160,143	$	1,666	$	812	$	160,997
Agency residential collateralized mortgage obligations 2	60,524		338		65		60,797
SBA pools	2,332		58		—		2,390
Total securities	$	222,999	$	2,062	$	877	$	224,184
December 31, 2013
Agency residential mortgage-backed securities 1	$	175,693	$	1,322	$	2,306	$	174,709
Agency residential collateralized mortgage obligations 2	70,257		423		105		70,575
SBA pools	2,652		76		—		2,728
Total securities	$	248,602	$	1,821	$	2,411	$	248,012

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

The carrying amount, unrecognized gains and losses, and fair value of securities held to maturity were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
June 30, 2014	Cost		Gains		Losses		Fair Value
Agency residential mortgage-backed securities 1	$	72,740	$	3,731	$	28	$	76,443
Agency commercial mortgage-backed securities 2	25,518		991		119		26,390
Agency residential collateralized mortgage obligations 3	102,297		2,635		37		104,895
Municipal bonds	67,059		3,537		411		70,185
Total securities	$	267,614	$	10,894	$	595	$	277,913
December 31, 2013
Agency residential mortgage-backed securities 1	$	83,177	$	3,523	$	130	$	86,570
Agency commercial mortgage-backed securities 2	24,828		523		310		25,041
Agency residential collateralized mortgage obligations 3	118,757		2,772		107		121,422
Municipal bonds	67,821		2,292		1,407		68,706
Total securities	$	294,583	$	9,110	$	1,954	$	301,739

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

The carrying amount and fair value of held to maturity debt securities and the fair value of available for sale debt securities at June 30, 2014 by contractual maturity were as follows. Securities with contractual payments not due at a single maturity date, including mortgage backed securities and collateralized mortgage obligations, are shown separately.

					Available
	Held to maturity				for sale
	Carrying Amount		Fair Value		Fair Value
Due in one year or less	$	145	$	148	$	—
Due after one to five years	7,659		8,124		2,390
Due after five to ten years	28,464		30,570		—
Due after ten years	30,791		31,343		—
Agency residential mortgage-backed securities 1	72,740		76,443		160,997
Agency commercial mortgage-backed securities 2	25,518		26,390		—
Agency residential collateralized mortgage obligations 3	102,297		104,895		60,797
Total	$	267,614	$	277,913	$	224,184

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Information regarding pledged securities is summarized below:

	June 30, 2014		December 31, 2013
Public fund certificates of deposit	$	148,310	$	156,731
Public fund demand deposit accounts	13,781		15,068
Commercial demand deposit accounts	3,058		4,439
Repurchase agreements	25,000		25,000
Federal Reserve Bank primary credit - collateral value	60,016		68,686
Carrying value of securities pledged on above funds	281,005		308,652

Sales activity of securities for the three and six months ended June 30, 2014 and 2013, was as follows. All securities sold were classified as available for sale.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Proceeds	$	—	$	—	$	—	$	10,614
Gross losses	—		—		—		177

Gains and losses on the sale of securities classified as available for sale are recorded on the trade date using the specific-identification method.

Securities with unrealized losses at June 30, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

AFS	Less than 12 Months					12 Months or More					Total
June 30, 2014	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number
Agency residential mortgage-backed securities 1	$	4,929	$	6	3	$	58,392	$	806	10	$	63,321	$	812	13
Agency residential collateralized mortgage obligations 2	5,360		5		2	6,568		60		5	11,928		65		7
Total temporarily impaired	$	10,289	$	11	5	$	64,960	$	866	15	$	75,249	$	877	20
December 31, 2013
Agency residential mortgage-backed securities 1	$	83,461	$	2,306	19	$	—	$	—	—	$	83,461	$	2,306	19
Agency residential collateralized mortgage obligations 2	13,975		50		6	6,780		55		5	20,755		105		11
Total temporarily impaired	$	97,436	$	2,356	25	$	6,780	$	55	5	$	104,216	$	2,411	30

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

HTM	Less than 12 Months					12 Months or More					Total
June 30, 2014	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number	Fair Value		Unrealized Loss		Number
Agency residential mortgage-backed securities 1	$	—	$	—	—	$	3,556	$	28	1	$	3,556	$	28	1
Agency commercial mortgage-backed securities 2	—		—		—	3,860		119		1	3,860		119		1
Agency residential collateralized mortgage obligations 3	—		—		—	5,905		37		3	5,905		37		3
Municipal bonds	6,546		58		11	11,895		353		17	18,441		411		28
Total temporarily impaired	$	6,546	$	58	11	$	25,216	$	537	22	$	31,762	$	595	33
December 31, 2013
Agency residential mortgage-backed securities 1	$	5,779	$	130	2	$	—	$	—	—	$	5,779	$	130	2
Agency commercial mortgage-backed securities 2	4,940		310		2	—		—		—	4,940		310		2
Agency residential collateralized mortgage obligations 3	10,453		91		2	1,679		16		3	12,132		107		5
Municipal bonds	17,784		1,406		29	280		1		1	18,064		1,407		30
Total temporarily impaired	$	38,956	$	1,937	35	$	1,959	$	17	4	$	40,915	$	1,954	39

¹ Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

² Commercial mortgage-backed securities issued and /or guaranteed by U.S. government agencies or government-sponsored enterprises.

³ Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Other-than-Temporary Impairment

In determining other-than-temporary impairment for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company does not believe these unrealized losses are other-than-temporary. All principal and interest payments are being received on time and in full.

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LOANS

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

LOANS

LOANS

Loans consist of the following:

	June 30, 2014			December 31, 2013
Commercial real estate	$	1,162,035		$	1,091,200
Commercial and industrial loans:
Commercial	579,561			425,030
Warehouse lines of credit	31,426			14,400
Total commercial and industrial loans	610,987			439,430
Construction and land loans
Commercial construction and land	28,496			27,619
Consumer construction and land	3,445			2,628
Total construction and land loans	31,941			30,247
Consumer:
Consumer real estate	501,328			441,226
Other consumer loans	43,218			47,799
Total consumer	544,546			489,025
Gross loans held for investment, excluding Warehouse Purchase Program	2,349,509			2,049,902
Net of:
Deferred fees and discounts, net	(1,699		)	(1,267		)
Allowance for loan losses	(20,440		)	(19,358		)
Net loans held for investment, excluding Warehouse Purchase Program	2,327,370			2,029,277
Warehouse Purchase Program	769,566			673,470
Total loans held for investment	$	3,096,936		$	2,702,747

Activity in the allowance for loan losses for the three and six months ended June 30, 2014 and 2013, segregated by portfolio segment and evaluation for impairment, was as follows. All Warehouse Purchase Program loans are collectively evaluated for impairment and are purchased under several contractual requirements, providing safeguards to the Company. These safeguards include the requirement that our mortgage company customers have a takeout commitment for each loan and multiple investors identified for purchases. To date, the Company has never experienced a loss on these loans and no allowance for loan losses has been allocated to them. At June 30, 2014 and 2013, $272 and $228, respectively, of the allowance for loan losses individually evaluated for impairment was allocated to purchased credit impaired ("PCI") loans.

For the three months ended June 30, 2014	Commercial Real Estate		Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - April 1, 2014	$	10,668	$	4,802		$	243	$	3,327		$	362		$	19,402
Charge-offs	—		(92		)	—		(74		)	(128		)	(294		)
Recoveries	—		39			—		20			76			135
Provision expense (benefit)	518		536			9		66			68			1,197
Ending balance - June 30, 2014	$	11,186	$	5,285		$	252	$	3,339		$	378		$	20,440

For the six months ended June 30, 2014	Commercial Real Estate		Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - January 1, 2014	$	10,944	$	4,536		$	212	$	3,280		$	386		$	19,358
Charge-offs	—		(302		)	—		(156		)	(307		)	(765		)
Recoveries	—		57			—		25			192			274
Provision expense (benefit)	242		994			40		190			107			1,573
Ending balance - June 30, 2014	$	11,186	$	5,285		$	252	$	3,339		$	378		$	20,440
Allowance ending balance:
Individually evaluated for impairment	$	964	$	1,535		$	—	$	189		$	1		$	2,689
Collectively evaluated for impairment	10,222		3,750			252		3,150			377			17,751
Loans:
Individually evaluated for impairment	8,052		6,407			52		5,152			453			20,116
Collectively evaluated for impairment	1,149,741		604,396			31,889		495,083			42,597			2,323,706
PCI loans	4,242		184			—		1,093			168			5,687
Ending balance	$	1,162,035	$	610,987		$	31,941	$	501,328		$	43,218		$	2,349,509

For the three months ended June 30, 2013	Commercial Real Estate			Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - April 1, 2013	$	10,824		$	3,568		$	114	$	3,566		$	570		$	18,642
Charge-offs	(716		)	(124		)	—		(326		)	(228		)	(1,394		)
Recoveries	—			60			—		6			105			171
Provision expense (benefit)	417			1,235			5		217			(16		)	1,858
Ending balance - June 30, 2013	$	10,525		$	4,739		$	119	$	3,463		$	431		$	19,277

For the six months ended June 30, 2013	Commercial Real Estate			Commercial and Industrial			Construction and Land			Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - January 1, 2013	$	11,182		$	2,574		$	149		$	3,528		$	618		$	18,051
Charge-offs	(772		)	(334		)	(31		)	(355		)	(378		)	(1,870		)
Recoveries	—			98			—			12			245			355
Provision expense (benefit)	115			2,401			1			278			(54		)	2,741
Ending balance - June 30, 2013	$	10,525		$	4,739		$	119		$	3,463		$	431		$	19,277
Allowance ending balance:
Individually evaluated for impairment	$	1,313		$	1,736		$	—		$	1,043		$	32		$	4,124
Collectively evaluated for impairment	9,212			3,003			119			2,420			399			15,153
Loans:
Individually evaluated for impairment	8,625			7,045			4			8,657			466			24,797
Collectively evaluated for impairment	977,407			304,916			18,836			449,279			51,727			1,802,165
PCI loans	4,195			1,070			1,631			1,140			189			8,225
Ending balance	$	990,227		$	313,031		$	20,471		$	459,076		$	52,382		$	1,835,187

The allowance for loan losses and related provision expense are susceptible to change if the credit quality of our loan portfolio changes, which is evidenced by many factors, including but not limited to charge-offs and non-performing loan trends. Generally, consumer real estate lending has a lower credit risk profile compared to other consumer lending (such as automobile loans). Commercial real estate and commercial and industrial lending, however, can have higher risk profiles than consumer loans due to these loans being larger in amount and non-homogeneous in structure and term. Changes in economic conditions, the mix and size of the loan portfolio, and individual borrower conditions can dramatically impact our level of allowance for loan losses in relatively short periods of time.

The allowance for loan losses is maintained to cover losses that are estimated in accordance with US GAAP. It is our estimate of credit losses inherent in our loan portfolio at each balance sheet date. Our methodology for analyzing the allowance for loan losses consists of general and specific components. For the general component, we stratify the loan portfolio into homogeneous groups of loans that possess similar loss potential characteristics and apply a loss ratio to these groups of loans to estimate the credit losses in the loan portfolio. We use both historical loss ratios and qualitative loss factors assigned to major loan collateral types to establish general component loss allocations. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data and external economic indicators, which may not yet be reflected in the historical loss ratios, and that could impact the Company's specific loan portfolios. The Allowance for Loan Loss Committee sets and adjusts qualitative loss factors by regularly reviewing changes in underlying loan composition and the seasonality of specific portfolios. The Allowance for Loan Loss Committee also considers credit quality and trends relating to delinquency, non-performing and/or classified loans and bankruptcy within the Company's loan portfolio when evaluating qualitative loss factors. Additionally, the Allowance for Loan Loss Committee adjusts qualitative factors to account for the potential impact of external economic factors, including the unemployment rate, housing price, vacancy rates and inventory levels specific to our primary market area.

Management evaluates current information and events regarding a borrower's ability to repay its obligations and considers a loan to be impaired when the ultimate collectability of amounts due, according to the contractual terms of the loan agreement, is in doubt. If an impaired loan is collateral-dependent, the fair value of the collateral, less the estimated cost to sell, is used to determine the amount of impairment. If an impaired loan is not collateral-dependent, the impairment amount is determined using the negative difference, if any, between the estimated discounted cash flows and the loan amount due. For impaired loans, the amount of the impairment can be adjusted, based on current data, until such time as the actual basis is established by acquisition of the collateral or until the basis is collected. Impairment losses are reflected in the allowance for loan losses through a charge to the provision for loan losses. Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal.

For the specific component, the allowance for loan losses includes loans where management has concerns about the borrower's ability to repay and on individually analyzed loans found to be impaired by definition. For example, all troubled debt restructurings are considered to be impaired. Loss estimates include the negative difference, if any, between the estimated discounted cash flows of the loan, or if the loan is collateral dependent the current fair value of the collateral, and the loan amount due.

Impaired loans at June 30, 2014, and December 31, 2013, were as follows ¹:

June 30, 2014	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial real estate	$	8,911	$	4,755	$	3,297	$	8,052	$	793
Commercial and industrial	7,380		3,152		3,255		6,407		1,461
Construction and land	52		52		—		52		—
Consumer:
Consumer real estate	5,436		4,027		1,125		5,152		163
Other consumer	501		453		—		453		—
Total	$	22,280	$	12,439	$	7,677	$	20,116	$	2,417
December 31, 2013
Commercial real estate	$	8,328	$	3,619	$	3,986	$	7,605	$	2,016
Commercial and industrial	6,058		539		4,786		5,325		550
Construction and land	2		2		—		2		—
Consumer:
Consumer real estate	5,050		3,725		1,087		4,812		155
Other consumer	579		550		—		550		—
Total	$	20,017	$	8,435	$	9,859	$	18,294	$	2,721

¹ No Warehouse Purchase Program loans were impaired at June 30, 2014 or December 31, 2013. Loans reported do not include PCI loans.

Income on impaired loans at June 30, 2014 and 2013 was as follows¹:

June 30, 2014	Current Quarter Average Recorded Investment		Year-to-Date Average Recorded Investment		Current Quarter Interest Income Recognized		Year-to-Date Interest Income Recognized
Commercial real estate	$	8,067	$	8,021	$	3	$	3
Commercial and industrial	6,163		5,973		3		6
Construction and land	13		9		—		—
Consumer:
Consumer real estate	4,759		4,675		11		23
Other consumer	482		510		1		2
Total	$	19,484	$	19,188	$	18	$	34
June 30, 2013
Commercial real estate	$	13,340	$	14,740	$	62	$	124
Commercial and industrial	6,924		6,366		3		6
Construction and land	4		79		—		—
Consumer:
Consumer real estate	8,513		8,502		19		33
Other consumer	433		406		—		—
Total	$	29,214	$	30,093	$	84	$	163

¹ Loans reported do not include PCI loans.

Past due status is based on the contractual terms of the loan. Loans that are past due 30 days are considered delinquent. A loan is moved to nonaccrual status in accordance with the Company's policy, typically after 90 days of non-payment. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Non-mortgage consumer loans are typically charged off no later than 120 days past due. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and larger individually classified impaired loans.

All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans past due over 90 days that were still accruing interest totaled $981 at June 30, 2014 and $266 at December 31, 2013, which consisted entirely of PCI loans. At June 30, 2014 and December 31, 2013, no PCI loans were considered non-performing loans. Purchased performing loans that were non-performing as of June 30, 2014 and December 31, 2013 totaled $3,335 and $4,201, respectively. Those loans included $1,358 and $1,698 at June 30, 2014 and December 31, 2013, respectively, of commercial lines of credit that did not qualify for PCI accounting due to their revolving nature. No Warehouse Purchase Program loans were non-performing at June 30, 2014 or December 31, 2013. Non-performing (nonaccrual) loans were as follows:

	June 30, 2014		December 31, 2013
Commercial real estate	$	7,386	$	7,604
Commercial and industrial	6,245		5,141
Construction and land	213		—
Consumer:
Consumer real estate	9,304		8,812
Other consumer	457		567
Total	$	23,605	$	22,124

A modified loan is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. Modifications to loan terms may include a modification of the contractual interest rate to a below-market rate (even if the modified rate is higher than the original rate), forgiveness of accrued interest, forgiveness of a portion of principal, an extended repayment period or a deed in lieu of foreclosure or other transfer of assets other than cash to fully or partially satisfy a debt. The Company's policy is to place all TDRs on nonaccrual for a minimum period of six months. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months and the collection of principal and interest under the revised terms is deemed probable. All TDRs are considered to be impaired loans.

Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. As a result, the Company does not separately identify consumer real estate loans less than $417 or individual consumer non-real estate secured loans for impairment disclosures.

The outstanding balances of troubled debt restructurings ("TDRs") are shown below:

	June 30, 2014		December 31, 2013
Nonaccrual TDRs(1)	$	12,498	$	11,368
Performing TDRs (2)	1,600		971
Total	$	14,098	$	12,339
Specific reserves on TDRs	$	1,048	$	1,191
Outstanding commitments to lend additional funds to borrowers with TDR loans	—		—

¹ Nonaccrual TDR loans are included in the nonaccrual loan totals.

² Performing TDR loans are loans that have been performing under the restructured terms for at least six months and the Company is accruing interest on these loans.

The following tables provide the recorded balances of loans modified as a TDR during the three and six months ended June 30, 2014 and 2013.

	Three Months Ended June 30, 2014								Six Months Ended June 30, 2014
	Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total		Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	1,913	$	1,913
Consumer real estate	130		—		113		243		130		269		113		512
Other consumer	—		—		—		—		13		6		—		19
Total	$	130	$	—	$	113	$	243	$	143	$	275	$	2,026	$	2,444

	Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
	Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total		Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total
Commercial real estate	$	62	$	47	$	—	$	109	$	752	$	47	$	—	$	799
Commercial and industrial	—		—		—		—		8		31		—		39
Consumer real estate	41		73		223		337		41		73		223		337
Other consumer	71		68		—		139		130		68		—		198
Total	$	174	$	188	$	223	$	585	$	931	$	219	$	223	$	1,373

¹ Principal deferrals include Chapter 7 bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt. Such loans are placed on non-accrual status.

TDRs modified during the three and six months endedJune 30, 2014 and 2013 which experienced a subsequent default during the periods are shown below. A payment default is defined as a loan that was 90 days or more past due.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Commercial and industrial	$	66	$	—	$	66	$	—
Consumer real estate	210		359		210		584
Total	$	276	$	359	$	276	$	584

Below is an analysis of the age of recorded investment in loans that were past due at June 30, 2014 and December 31, 2013. No Warehouse Purchase Program loans were delinquent at June 30, 2014 or December 31, 2013.

June 30, 2014	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Loans Past Due		Current Loans 1		Total Loans
Commercial real estate	$	2,731	$	—	$	1,342	$	4,073	$	1,157,962	$	1,162,035
Commercial and industrial	142		2,632		875		3,649		607,338		610,987
Construction and land	—		—		213		213		31,728		31,941
Consumer loans:
Consumer real estate	481		2,149		4,268		6,898		494,430		501,328
Other consumer	161		102		27		290		42,928		43,218
Total	$	3,515	$	4,883	$	6,725	$	15,123	$	2,334,386	$	2,349,509

December 31, 2013	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Loans Past Due		Current Loans 1		Total Loans
Commercial real estate	$	552	$	1,315	$	57	$	1,924	$	1,089,276	$	1,091,200
Commercial and industrial	4,518		129		2,835		7,482		431,948		439,430
Construction and land	152		—		—		152		30,095		30,247
Consumer loans:
Consumer real estate	6,579		3,295		3,651		13,525		427,701		441,226
Other consumer	460		106		53		619		47,180		47,799
Total	$	12,261	$	4,845	$	6,596	$	23,702	$	2,026,200	$	2,049,902

¹ Includes acquired PCI loans with a total carrying value of $2,295 and $5,218 at June 30, 2014 and December 31, 2013, respectively.

For loans collateralized by real property and commercial and industrial loans, credit exposure is monitored by internally assigned grades used for classification of loans. A loan is considered “special mention” when management has determined that there is a potential weakness that deserves management's close attention. Loans rated as "special mention" are not adversely classified according to regulatory classifications and do not expose the Company to sufficient risk to warrant adverse classification. A loan is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. “Substandard” loans include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected, and the loan may or may not meet the criteria for impairment. Loans classified as “doubtful” have all of the weaknesses of those classified as “substandard”, with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions and values, “highly questionable and improbable.” All other loans that do not fall into the above mentioned categories are considered “pass” loans. Updates to internally assigned grades are made monthly and/or upon significant developments.

For consumer loans, credit exposure is monitored by payment history of the loans. Non-performing consumer loans are on nonaccrual and are generally greater than 90 days past due.

The recorded investment in loans by credit quality indicators at June 30, 2014 and December 31, 2013, was as follows.

Real Estate and Commercial and Industrial Credit Exposure

Credit Risk Profile by Internally Assigned Grade

June 30, 2014	Commercial Real Estate		Commercial and Industrial		Construction and Land		Consumer Real Estate
Grade: 1
Pass	$	1,133,080	$	596,508	$	31,430	$	484,590
Special Mention	10,542		5,223		163		4,125
Substandard	17,574		9,191		348		8,911
Doubtful	839		65		—		3,702
Total	$	1,162,035	$	610,987	$	31,941	$	501,328

December 31, 2013	Commercial Real Estate		Commercial and Industrial		Construction and Land		Consumer Real Estate
Grade: 1
Pass	$	1,055,872	$	424,110	$	28,146	$	424,174
Special Mention	16,030		1,672		161		3,661
Substandard	18,444		13,492		1,940		9,110
Doubtful	854		156		—		4,281
Total	$	1,091,200	$	439,430	$	30,247	$	441,226

¹ PCI loans are included in the substandard or doubtful categories. These categories are consistent with the "substandard" and "doubtful" categories as defined by regulatory authorities.

Warehouse Purchase Program Credit Exposure

All Warehouse Purchase Program loans were graded pass as of June 30, 2014 and December 31, 2013.

Consumer Other Credit Exposure

Credit Risk Profile Based on Payment Activity

	June 30, 2014		December 31, 2013
Performing	$	42,761	$	47,232
Non-performing	457		567
Total	$	43,218	$	47,799

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DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

In September 2013, we entered into certain interest rate derivative positions that are not designated as hedging instruments. These derivative positions related to transactions in which we entered into an interest rate swap with a customer, while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows our customer to effectively convert a variable rate loan to a fixed rate. Because we act as an intermediary for our customer, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on our results of operations. The Company presents derivative instruments at fair value in other assets and other liabilities in the accompanying consolidated balance sheets.

The notional amounts and estimated fair values of interest rate derivative positions outstanding and weighted-average receive and pay interest rates at June 30, 2014 and December 31, 2013 are presented in the following table.

	Outstanding Notional Amount			Estimated Fair Value			Weighted-Average Interest Rate
Non-hedging interest rate contracts - commercial loan interest rate swaps:							Received		Paid
June 30, 2014
Loan customer counterparty	$	6,304		$	79		4.38	%	2.90	%
Financial institution counterparty	(6,304		)	(79		)	2.90		4.38
December 31, 2013
Loan customer counterparty	$	6,406		$	33		4.38	%	2.92	%
Financial institution counterparty	(6,406		)	(33		)	2.92		4.38

Our credit exposure on interest rate swaps is limited to the net favorable value of all swaps by each counterparty. In some cases, collateral may be required from the counterparties involved if the net value of the swaps exceed a nominal amount considered to be immaterial. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. At June 30, 2014, our cash collateral pledged for these derivatives totaled $150, which was in excess of our credit exposure. This collateral is reported in our interest-bearing deposits in other financial institutions in the accompanying consolidated balance sheets.

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SECURITIES - Fair Value of Available-for-Sale Securities and Related Gross Unrealized Gains and Losses (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 222,999		$ 248,602
Available for Sale Debt Securities Gross Unrealized Gain Accumulated In Investments	2,062		1,821
Available for Sale Securities Gross Unrealized Loss Accumulated In Investments	877		2,411
Securities available for sale, at fair value	224,184		248,012
Agency residential mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	160,143	[1]	175,693	[1]
Available for Sale Debt Securities Gross Unrealized Gain Accumulated In Investments	1,666	[1]	1,322	[1]
Available for Sale Securities Gross Unrealized Loss Accumulated In Investments	812	[1]	2,306	[1]
Securities available for sale, at fair value	160,997	[1]	174,709	[1]
Agency residential collateralized mortgage securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	60,524	[2]	70,257	[2]
Available for Sale Debt Securities Gross Unrealized Gain Accumulated In Investments	338	[2]	423	[2]
Available for Sale Securities Gross Unrealized Loss Accumulated In Investments	65	[2]	105	[2]
Securities available for sale, at fair value	60,797	[2]	70,575	[2]
SBA pools
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,332		2,652
Available for Sale Debt Securities Gross Unrealized Gain Accumulated In Investments	58		76
Available for Sale Securities Gross Unrealized Loss Accumulated In Investments	0		0
Securities available for sale, at fair value	$ 2,390		$ 2,728

[1] Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

[2] Collateralized mortgage obligations issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

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FAIR VALUE - Summary of Fair Value Measured on Recurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	$ 224,184		$ 248,012
Agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	160,997	[1]	174,709	[1]
SBA pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	2,390		2,728
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	224,184		248,012
Derivative Asset	79	[2]	33	[2]
Derivative Liability	79	[2]	33	[2]
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Agency residential mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	160,997		174,709
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Agency residential collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	60,797		70,575
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | SBA pools
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale, at fair value	$ 2,390		$ 2,728

[1] Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

[2] Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly. Please see Note 7 - Derivative Financial Instruments for more information.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company evaluated events from the date of the consolidated financial statements on June 30, 2014, through the issuance of those consolidated financial statements included in this Quarterly Report on Form 10-Q dated July 29, 2014. No additional events were identified requiring recognition in and/or disclosures in the consolidated financial statements.

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LOANS - (Tables)

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Loans

Loans consist of the following:

	June 30, 2014			December 31, 2013
Commercial real estate	$	1,162,035		$	1,091,200
Commercial and industrial loans:
Commercial	579,561			425,030
Warehouse lines of credit	31,426			14,400
Total commercial and industrial loans	610,987			439,430
Construction and land loans
Commercial construction and land	28,496			27,619
Consumer construction and land	3,445			2,628
Total construction and land loans	31,941			30,247
Consumer:
Consumer real estate	501,328			441,226
Other consumer loans	43,218			47,799
Total consumer	544,546			489,025
Gross loans held for investment, excluding Warehouse Purchase Program	2,349,509			2,049,902
Net of:
Deferred fees and discounts, net	(1,699		)	(1,267		)
Allowance for loan losses	(20,440		)	(19,358		)
Net loans held for investment, excluding Warehouse Purchase Program	2,327,370			2,029,277
Warehouse Purchase Program	769,566			673,470
Total loans held for investment	$	3,096,936		$	2,702,747

Allowance for Loan Losses

Activity in the allowance for loan losses for the three and six months ended June 30, 2014 and 2013, segregated by portfolio segment and evaluation for impairment, was as follows. All Warehouse Purchase Program loans are collectively evaluated for impairment and are purchased under several contractual requirements, providing safeguards to the Company. These safeguards include the requirement that our mortgage company customers have a takeout commitment for each loan and multiple investors identified for purchases. To date, the Company has never experienced a loss on these loans and no allowance for loan losses has been allocated to them. At June 30, 2014 and 2013, $272 and $228, respectively, of the allowance for loan losses individually evaluated for impairment was allocated to purchased credit impaired ("PCI") loans.

For the three months ended June 30, 2014	Commercial Real Estate		Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - April 1, 2014	$	10,668	$	4,802		$	243	$	3,327		$	362		$	19,402
Charge-offs	—		(92		)	—		(74		)	(128		)	(294		)
Recoveries	—		39			—		20			76			135
Provision expense (benefit)	518		536			9		66			68			1,197
Ending balance - June 30, 2014	$	11,186	$	5,285		$	252	$	3,339		$	378		$	20,440

For the six months ended June 30, 2014	Commercial Real Estate		Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - January 1, 2014	$	10,944	$	4,536		$	212	$	3,280		$	386		$	19,358
Charge-offs	—		(302		)	—		(156		)	(307		)	(765		)
Recoveries	—		57			—		25			192			274
Provision expense (benefit)	242		994			40		190			107			1,573
Ending balance - June 30, 2014	$	11,186	$	5,285		$	252	$	3,339		$	378		$	20,440
Allowance ending balance:
Individually evaluated for impairment	$	964	$	1,535		$	—	$	189		$	1		$	2,689
Collectively evaluated for impairment	10,222		3,750			252		3,150			377			17,751
Loans:
Individually evaluated for impairment	8,052		6,407			52		5,152			453			20,116
Collectively evaluated for impairment	1,149,741		604,396			31,889		495,083			42,597			2,323,706
PCI loans	4,242		184			—		1,093			168			5,687
Ending balance	$	1,162,035	$	610,987		$	31,941	$	501,328		$	43,218		$	2,349,509

For the three months ended June 30, 2013	Commercial Real Estate			Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - April 1, 2013	$	10,824		$	3,568		$	114	$	3,566		$	570		$	18,642
Charge-offs	(716		)	(124		)	—		(326		)	(228		)	(1,394		)
Recoveries	—			60			—		6			105			171
Provision expense (benefit)	417			1,235			5		217			(16		)	1,858
Ending balance - June 30, 2013	$	10,525		$	4,739		$	119	$	3,463		$	431		$	19,277

For the six months ended June 30, 2013	Commercial Real Estate			Commercial and Industrial			Construction and Land			Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance - January 1, 2013	$	11,182		$	2,574		$	149		$	3,528		$	618		$	18,051
Charge-offs	(772		)	(334		)	(31		)	(355		)	(378		)	(1,870		)
Recoveries	—			98			—			12			245			355
Provision expense (benefit)	115			2,401			1			278			(54		)	2,741
Ending balance - June 30, 2013	$	10,525		$	4,739		$	119		$	3,463		$	431		$	19,277
Allowance ending balance:
Individually evaluated for impairment	$	1,313		$	1,736		$	—		$	1,043		$	32		$	4,124
Collectively evaluated for impairment	9,212			3,003			119			2,420			399			15,153
Loans:
Individually evaluated for impairment	8,625			7,045			4			8,657			466			24,797
Collectively evaluated for impairment	977,407			304,916			18,836			449,279			51,727			1,802,165
PCI loans	4,195			1,070			1,631			1,140			189			8,225
Ending balance	$	990,227		$	313,031		$	20,471		$	459,076		$	52,382		$	1,835,187

Impaired Loans

Impaired loans at June 30, 2014, and December 31, 2013, were as follows ¹:

June 30, 2014	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial real estate	$	8,911	$	4,755	$	3,297	$	8,052	$	793
Commercial and industrial	7,380		3,152		3,255		6,407		1,461
Construction and land	52		52		—		52		—
Consumer:
Consumer real estate	5,436		4,027		1,125		5,152		163
Other consumer	501		453		—		453		—
Total	$	22,280	$	12,439	$	7,677	$	20,116	$	2,417
December 31, 2013
Commercial real estate	$	8,328	$	3,619	$	3,986	$	7,605	$	2,016
Commercial and industrial	6,058		539		4,786		5,325		550
Construction and land	2		2		—		2		—
Consumer:
Consumer real estate	5,050		3,725		1,087		4,812		155
Other consumer	579		550		—		550		—
Total	$	20,017	$	8,435	$	9,859	$	18,294	$	2,721

¹ No Warehouse Purchase Program loans were impaired at June 30, 2014 or December 31, 2013. Loans reported do not include PCI loans.

Income on impaired loans at June 30, 2014 and 2013 was as follows¹:

June 30, 2014	Current Quarter Average Recorded Investment		Year-to-Date Average Recorded Investment		Current Quarter Interest Income Recognized		Year-to-Date Interest Income Recognized
Commercial real estate	$	8,067	$	8,021	$	3	$	3
Commercial and industrial	6,163		5,973		3		6
Construction and land	13		9		—		—
Consumer:
Consumer real estate	4,759		4,675		11		23
Other consumer	482		510		1		2
Total	$	19,484	$	19,188	$	18	$	34
June 30, 2013
Commercial real estate	$	13,340	$	14,740	$	62	$	124
Commercial and industrial	6,924		6,366		3		6
Construction and land	4		79		—		—
Consumer:
Consumer real estate	8,513		8,502		19		33
Other consumer	433		406		—		—
Total	$	29,214	$	30,093	$	84	$	163

¹ Loans reported do not include PCI loans.

Non-Performing (Nonaccrual) Loans

Non-performing (nonaccrual) loans were as follows:

	June 30, 2014		December 31, 2013
Commercial real estate	$	7,386	$	7,604
Commercial and industrial	6,245		5,141
Construction and land	213		—
Consumer:
Consumer real estate	9,304		8,812
Other consumer	457		567
Total	$	23,605	$	22,124

Summary of Outstanding Balances of Troubled Debt Restructuring

The following tables provide the recorded balances of loans modified as a TDR during the three and six months ended June 30, 2014 and 2013.

	Three Months Ended June 30, 2014								Six Months Ended June 30, 2014
	Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total		Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	1,913	$	1,913
Consumer real estate	130		—		113		243		130		269		113		512
Other consumer	—		—		—		—		13		6		—		19
Total	$	130	$	—	$	113	$	243	$	143	$	275	$	2,026	$	2,444

	Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
	Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total		Principal Deferrals (1)		Combination of Rate Reduction and Principal Deferral		Other		Total
Commercial real estate	$	62	$	47	$	—	$	109	$	752	$	47	$	—	$	799
Commercial and industrial	—		—		—		—		8		31		—		39
Consumer real estate	41		73		223		337		41		73		223		337
Other consumer	71		68		—		139		130		68		—		198
Total	$	174	$	188	$	223	$	585	$	931	$	219	$	223	$	1,373

¹ Principal deferrals include Chapter 7 bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt. Such loans are placed on non-accrual status.

TDRs modified during the three and six months endedJune 30, 2014 and 2013 which experienced a subsequent default during the periods are shown below. A payment default is defined as a loan that was 90 days or more past due.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Commercial and industrial	$	66	$	—	$	66	$	—
Consumer real estate	210		359		210		584
Total	$	276	$	359	$	276	$	584

The outstanding balances of troubled debt restructurings ("TDRs") are shown below:

	June 30, 2014		December 31, 2013
Nonaccrual TDRs(1)	$	12,498	$	11,368
Performing TDRs (2)	1,600		971
Total	$	14,098	$	12,339
Specific reserves on TDRs	$	1,048	$	1,191
Outstanding commitments to lend additional funds to borrowers with TDR loans	—		—

¹ Nonaccrual TDR loans are included in the nonaccrual loan totals.

² Performing TDR loans are loans that have been performing under the restructured terms for at least six months and the Company is accruing interest on these loans.

Analysis of Age of Recorded Investment in Loans

Below is an analysis of the age of recorded investment in loans that were past due at June 30, 2014 and December 31, 2013. No Warehouse Purchase Program loans were delinquent at June 30, 2014 or December 31, 2013.

June 30, 2014	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Loans Past Due		Current Loans 1		Total Loans
Commercial real estate	$	2,731	$	—	$	1,342	$	4,073	$	1,157,962	$	1,162,035
Commercial and industrial	142		2,632		875		3,649		607,338		610,987
Construction and land	—		—		213		213		31,728		31,941
Consumer loans:
Consumer real estate	481		2,149		4,268		6,898		494,430		501,328
Other consumer	161		102		27		290		42,928		43,218
Total	$	3,515	$	4,883	$	6,725	$	15,123	$	2,334,386	$	2,349,509

December 31, 2013	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Loans Past Due		Current Loans 1		Total Loans
Commercial real estate	$	552	$	1,315	$	57	$	1,924	$	1,089,276	$	1,091,200
Commercial and industrial	4,518		129		2,835		7,482		431,948		439,430
Construction and land	152		—		—		152		30,095		30,247
Consumer loans:
Consumer real estate	6,579		3,295		3,651		13,525		427,701		441,226
Other consumer	460		106		53		619		47,180		47,799
Total	$	12,261	$	4,845	$	6,596	$	23,702	$	2,026,200	$	2,049,902

¹ Includes acquired PCI loans with a total carrying value of $2,295 and $5,218 at June 30, 2014 and December 31, 2013, respectively.

Real Estate and Commercial and Industrial Credit Exposure Credit Risk Profile by Internally Assigned Grade

The recorded investment in loans by credit quality indicators at June 30, 2014 and December 31, 2013, was as follows.

Real Estate and Commercial and Industrial Credit Exposure

Credit Risk Profile by Internally Assigned Grade

June 30, 2014	Commercial Real Estate		Commercial and Industrial		Construction and Land		Consumer Real Estate
Grade: 1
Pass	$	1,133,080	$	596,508	$	31,430	$	484,590
Special Mention	10,542		5,223		163		4,125
Substandard	17,574		9,191		348		8,911
Doubtful	839		65		—		3,702
Total	$	1,162,035	$	610,987	$	31,941	$	501,328

December 31, 2013	Commercial Real Estate		Commercial and Industrial		Construction and Land		Consumer Real Estate
Grade: 1
Pass	$	1,055,872	$	424,110	$	28,146	$	424,174
Special Mention	16,030		1,672		161		3,661
Substandard	18,444		13,492		1,940		9,110
Doubtful	854		156		—		4,281
Total	$	1,091,200	$	439,430	$	30,247	$	441,226

¹ PCI loans are included in the substandard or doubtful categories. These categories are consistent with the "substandard" and "doubtful" categories as defined by regulatory authorities.

Consumer Credit Exposure Credit Risk Profile Based on Payment Activity

Consumer Other Credit Exposure

Credit Risk Profile Based on Payment Activity

	June 30, 2014		December 31, 2013
Performing	$	42,761	$	47,232
Non-performing	457		567
Total	$	43,218	$	47,799

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LOANS - Consumer Credit Exposure Credit Risk Profile Based on Payment Activity (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Financing Receivable, Recorded Investment [Line Items]
Non-performing	$ 23,605	$ 22,124
Other consumer loans	43,218	47,799	52,382
Other Consumer [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Performing	42,761	47,232
Other Consumer [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-performing	$ 457	$ 567

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LOANS - Allowance for loan losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	$ 19,402	$ 18,642	$ 19,358	$ 18,051
Charge-offs	(294)	(1,394)	(765)	(1,870)
Recoveries	135	171	274	355
Provision expense (benefit)	1,197	1,858	1,573	2,741
Ending balance	20,440	19,277	20,440	19,277
Individually evaluated for impairment	2,689	4,124	2,689	4,124
Collectively evaluated for impairment	17,751	15,153	17,751	15,153
Loans Evaluated for Impairment [Abstract]
Individually evaluated for impairment	20,116	24,797	20,116	24,797
Collectively evaluated for impairment	2,323,706	1,802,165	2,323,706	1,802,165
PCI loans	5,687	8,225	5,687	8,225
Commercial Real Estate	1,162,035	990,227	1,162,035	990,227	1,091,200
Commercial and Industrial	610,987	313,031	610,987	313,031	439,430
Loans Receivable, Gross, Commercial, Construction	31,941	20,471	31,941	20,471	30,247
Consumer Real Estate	501,328	459,076	501,328	459,076	441,226
Other Consumer	43,218	52,382	43,218	52,382	47,799
Loans and leases gross excluding Warehouse Purchase Program	2,349,509	1,835,187	2,349,509	1,835,187	2,049,902
Commercial Real Estate
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	10,668	10,824	10,944	11,182
Charge-offs	0	(716)	0	(772)
Recoveries	0	0	0	0
Provision expense (benefit)	518	417	242	115
Ending balance	11,186	10,525	11,186	10,525
Individually evaluated for impairment	964	1,313	964	1,313
Collectively evaluated for impairment	10,222	9,212	10,222	9,212
Loans Evaluated for Impairment [Abstract]
Individually evaluated for impairment	8,052	8,625	8,052	8,625
Collectively evaluated for impairment	1,149,741	977,407	1,149,741	977,407
PCI loans	4,242	4,195	4,242	4,195
Commercial and Industrial
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	4,802	3,568	4,536	2,574
Charge-offs	(92)	(124)	(302)	(334)
Recoveries	39	60	57	98
Provision expense (benefit)	536	1,235	994	2,401
Ending balance	5,285	4,739	5,285	4,739
Individually evaluated for impairment	1,535	1,736	1,535	1,736
Collectively evaluated for impairment	3,750	3,003	3,750	3,003
Loans Evaluated for Impairment [Abstract]
Individually evaluated for impairment	6,407	7,045	6,407	7,045
Collectively evaluated for impairment	604,396	304,916	604,396	304,916
PCI loans	184	1,070	184	1,070
Commercial Construction and Land [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	243	114	212	149
Charge-offs	0	0	0	(31)
Recoveries	0	0	0	0
Provision expense (benefit)	9	5	40	1
Ending balance	252	119	252	119
Individually evaluated for impairment	0	0	0	0
Collectively evaluated for impairment	252	119	252	119
Loans Evaluated for Impairment [Abstract]
Individually evaluated for impairment	52	4	52	4
Collectively evaluated for impairment	31,889	18,836	31,889	18,836
PCI loans	0	1,631	0	1,631
Consumer Real Estate
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	3,327	3,566	3,280	3,528
Charge-offs	(74)	(326)	(156)	(355)
Recoveries	20	6	25	12
Provision expense (benefit)	66	217	190	278
Ending balance	3,339	3,463	3,339	3,463
Individually evaluated for impairment	189	1,043	189	1,043
Collectively evaluated for impairment	3,150	2,420	3,150	2,420
Loans Evaluated for Impairment [Abstract]
Individually evaluated for impairment	5,152	8,657	5,152	8,657
Collectively evaluated for impairment	495,083	449,279	495,083	449,279
PCI loans	1,093	1,140	1,093	1,140
Other Consumer
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning balance	362	570	386	618
Charge-offs	(128)	(228)	(307)	(378)
Recoveries	76	105	192	245
Provision expense (benefit)	68	(16)	107	(54)
Ending balance	378	431	378	431
Individually evaluated for impairment	1	32	1	32
Collectively evaluated for impairment	377	399	377	399
Loans Evaluated for Impairment [Abstract]
Individually evaluated for impairment	453	466	453	466
Collectively evaluated for impairment	42,597	51,727	42,597	51,727
PCI loans	$ 168	$ 189	$ 168	$ 189

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CONSOLIDATED STATEMENT OF INCOME (PARENTHETICAL) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Income tax benefit reclassified from AOCI	$ 9,320	$ 9,016
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Income tax benefit reclassified from AOCI	$ 0	$ (62)

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BASIS OF FINANCIAL STATEMENTS

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

BASIS OF FINACIAL STATEMENTS

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying consolidated financial statements of ViewPoint Financial Group, Inc. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") and with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all normal and recurring adjustments which are considered necessary to fairly present the results for the interim periods presented have been included. Certain items in prior periods were reclassified to conform to the current presentation. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K”). Interim results are not necessarily indicative of results for a full year.

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. For further information with respect to significant accounting policies followed by the Company in preparation of its consolidated financial statements, refer to the 2013 Form 10-K.

The accompanying Unaudited Consolidated Interim Financial Statements include the accounts of the Company, whose business primarily consists of the operations of its wholly owned subsidiary, ViewPoint Bank, N.A. (the “Bank”). All significant intercompany transactions and balances are eliminated in consolidation.

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SHARE-BASED COMPENSATION - Narrative (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense related to non-vested shares	$ 7,924
Weighted-average period	2 years 9 months 9 days
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense related to non-vested shares	$ 3,886
Weighted-average period	3 years 5 months 29 days

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FAIR VALUE - (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Summary of Fair Value Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below.

June 30, 2014	Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
Assets:
Agency residential mortgage-backed securities	$	160,997
Agency residential collateralized mortgage obligations	60,797
SBA pools	2,390
Total securities available for sale	$	224,184
Derivative asset 1	$	79
Derivative liability 1	$	79

December 31, 2013
Assets:
Agency residential mortgage-backed securities	$	174,709
Agency residential collateralized mortgage obligations	70,575
SBA pools	2,728
Total securities available for sale	$	248,012
Derivative asset 1	$	33
Derivative liability 1	$	33

¹ Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly. Please see Note 7 - Derivative Financial Instruments for more information.

Summary of Fair Value Measured on Nonrecurring Basis

Assets measured at fair value on a non-recurring basis are summarized below. There were no liabilities measured at fair value on a non-recurring basis at June 30, 2014 or December 31, 2013.

June 30, 2014	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans	$	5,260
Foreclosed assets	240
December 31, 2013
Assets:
Impaired loans	$	7,138
Foreclosed assets	480

Fair Value, by Balance Sheet Grouping

The carrying amount and fair value information of financial instruments not recorded at fair value in their entirety on a recurring basis on the Company's consolidated balance sheets at June 30, 2014 and at December 31, 2013, were as follows:

			Fair Value
June 30, 2014	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	165,908	$	165,908	$	—	$	—
Securities held to maturity	267,614		—		277,913		—
Loans held for investment, net	2,327,370		—		—		2,345,041
Loans held for investment - Warehouse Purchase Program	769,566		—		—		769,877
FHLB and Federal Reserve Bank stock	44,532		—		44,532		—
Accrued interest receivable	10,620		10,620		—		—
Financial liabilities
Deposits	$	2,435,726	$	—	$	—	$	2,307,105
FHLB advances	874,866		—		—		884,707
Repurchase agreement	25,000		—		—		27,149
Accrued interest payable	1,075		1,075		—		—

			Fair Value
December 31, 2013	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	87,974	$	87,974	$	—	$	—
Securities held to maturity	294,583		—		301,739		—
Loans held for investment, net	2,029,277		—		—		2,054,460
Loans held for investment - Warehouse Purchase Program	673,470		—		—		673,785
FHLB and Federal Reserve Bank stock	34,883		—		34,883		—
Accrued interest receivable	9,904		9,904		—		—
Financial liabilities
Deposits	$	2,264,639	$	—	$	—	$	2,123,846
FHLB advances	639,096		—		—		650,976
Repurchase agreement	25,000		—		—		27,430
Accrued interest payable	1,066		1,066		—		—

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SECURITIES - Summarized Sales Activity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Investments, Debt and Equity Securities [Abstract]
Proceeds	$ 0	$ 0	$ 0	$ 10,614
Gross losses	$ 0	$ 0	$ 0	$ 177

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RECENT ACCOUNTING DEVELOPMENTS

6 Months Ended

Jun. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

RECENT ACCOUNTING DEVELOPMENTS

RECENT ACCOUNTING DEVELOPMENTS    

In January 2014, the FASB issued ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects. This ASU permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. For public entities, the amendments are effective, with retrospective application, for annual periods, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.

In January 2014, the FASB issued ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. This ASU is intended to clarify when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. For public entities, the amendments are effective for annual periods, and interim periods within those years, beginning after December 15, 2014. An entity can elect to adopt the amendments in this update using either a modified retrospective transition method or a prospective transition method. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.    

In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU states that only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results. In addition, this ASU requires expanded disclosures about discontinued operations and disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. For public entities, the amendments are effective prospectively for annual periods, and interim periods within those years, beginning on or after December 15, 2014. Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.    

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU affects entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. For public entities, the amendments are effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements by accounting for these transactions as secured borrowings. This ASU also requires a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return of the transferred financial assets throughout the term of the transaction. For public entities, the amendments are effective for annual periods, and interim periods within those years, beginning after December 15, 2014. Early adoption is not permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments are effective for annual periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.