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Press release from PR Newswire

Prosperity Bancshares, Inc.® Reports Strong 2012 Earnings

Friday, January 25, 2013

Prosperity Bancshares, Inc.® Reports Strong 2012 Earnings06:05 EST Friday, January 25, 2013- 4Q 2012 Earnings Per Share of $0.85 (diluted) - Six acquisitions announced and five completed within the past fifteen months - Announced expansion into Oklahoma City and surrounding areas - Non-Performing Assets remain low at 0.10% of 4Q Average Earning Assets - Deposits increased $3.582 billion or 44.4% - Loans increased $1.414 billion or 37.6%HOUSTON, Jan. 25, 2013 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank®, reported net income for the quarter ended December 31, 2012, of $48.266 million or $0.85 per diluted common share, an increase in net income of $11.860 million or 32.6%, compared with $36.406 million or $0.77 per diluted common share for the same period in 2011.  Prosperity also reported net income for the year ended December 31, 2012 of $167.901 million or $3.23 per diluted common share, up 18.4% from 2011 net income of $141.749 million and up 7.3% from 2011 diluted earnings per common share of $3.01."We experienced many successes during 2012.  To start the year, we were rated by Forbes magazine as the Best Bank in America.  Our assets grew 49% from $9.823 billion as of December 31, 2011 to $14.584 billion as of December 31, 2012.  We reported our highest levels of net income and earnings per share, with $168 million in net income and diluted EPS of $3.23.  In addition to our large increase in deposit and loan growth overall, we saw an organic growth rate on deposits of 10% and an organic loan growth rate of 6% from December 31, 2011 to December 31, 2012.  Finally, in December, we announced our merger  with Coppermark Bank, our first merger outside the state of Texas, which will result in our expansion into Oklahoma City and surrounding areas," said David Zalman, Prosperity's Chairman and Chief Executive Officer."We are fortunate to be located in the area of the U.S. that we are.  Our market areas continue to experience low unemployment rates, population growth and increasing sales for homes and other products.  Further, our market areas are experiencing growth in many industries, particularly the oil and gas, chemical, manufacturing, medical and technology areas," added Zalman."I am very proud of all our associates who go above and beyond to help us achieve the success we enjoy. Their commitment to our customer satisfaction is admirable.  Without their hard work and dedication, none of this is possible," concluded Zalman.Prosperity's management uses certain non?GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio.  In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30).  Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.Results of operations for the three months ended December 31, 2012For the three months ended December 31, 2012, net income was $48.266 million compared with $36.406 million for the same period in 2011.  Net income per diluted common share was $0.85 for the three months ended December 31, 2012 compared with $0.77 for the same period in 2011. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended December 31, 2012 were 1.36%, 9.28% and 22.92%, respectively.  Prosperity's efficiency ratio (excluding net gains and losses on the sale of assets and securities) was 42.95% for the three months ended December 31, 2012.Net interest income before provision for credit losses for the quarter ended December 31, 2012, increased 35.2% to $108.301 million compared with $80.087 million during the same period in 2011 and increased 1.3% or $1.408 million compared with $106.893 million during the three months ended September 30, 2012.  The net interest margin on a tax equivalent basis decreased to 3.53% for the three months ended December 31, 2012, compared with 3.82% for the same period in 2011 and increased one basis point from 3.52% for the three months ended September 30, 2012.  Net interest income and net interest margin were positively impacted by the accretion of purchase accounting loan discounts of $14.523 million during the three month period ended December 31, 2012.Non-interest income increased $10.041 million or 71.4% to $24.106 million for the three months ended December 31, 2012, compared with $14.065 million for the same period in 2011.  The change includes increases in NSF fees, debit card and ATM card income, service charges on deposit accounts, trust, mortgage origination and other income due to the acquisition of American State Financial Corporation ("ASB") on July 1, 2012.   Through ASB, Prosperity acquired additional lines of business including trust, credit cards and mortgage lending operations. Non-interest expense increased $18.583 million or 48.4% to $56.968 million for the three months ended December 31, 2012, compared with $38.385 million for the same period in 2011.  The change is primarily due to the acquisition of ASB. Additionally, total noninterest expense for the three months ended December 31, 2012, included one-time merger expenses of approximately $700 thousand, pre-tax, related to the 2012 acquisitions. Average loans increased 37.1% or $1.390 billion to $5.140 billion for the quarter ended December 31, 2012, compared with $3.750 billion for the same period of 2011.  On a linked quarter basis, average loans decreased $28.938 million from $5.169 billion at September 30, 2012. Average deposits increased 42.5% to $11.259 billion for the quarter ended December 31, 2012, compared with $7.899 billion for the same period of 2011.  On a linked quarter basis, average deposits increased 3.8% or $413.018 million from $10.846 billion at September 30, 2012. Loans at December 31, 2012 were $5.180 billion, an increase of $1.414 billion or 37.6%, compared with $3.766 billion at December 31, 2011.  Loans increased 2.0% (7.9% annualized) or $100.837 million on a linked quarter basis compared with loans of $5.079 billion at September 30, 2012.  As reflected in the table below, loan growth was impacted by the acquisitions of Texas Bankers, Inc., The Bank Arlington, ASB and Community National Bank ("Community National").  Excluding loans acquired in these acquisitions and new production at the acquired banking centers since the respective acquisition dates, loans at December 31, 2012 grew 6.2% compared with December 31, 2011 and 2.5% (10.1% annualized) on a linked quarter basis.Deposits at December 31, 2012 were $11.642 billion, an increase of $3.582 billion or 44.4% compared with $8.060 billion at December 31, 2011.  Linked quarter deposits increased $687.247 million or 6.3% from $10.955 billion at September 30, 2012.  As reflected in the table below, deposit growth was impacted by the acquisitions of Texas Bankers, Inc., The Bank Arlington, ASB and Community National.  Excluding deposits assumed and new deposits generated at the acquired banking centers since the respective acquisition dates, deposits at December 31, 2012 grew 10.1% compared with December 31, 2011 and 6.5% (25.9% annualized) on a linked quarter basis.The table below provides detail on loans acquired and deposits assumed in the Texas Bankers, Inc., The Bank Arlington, ASB and Community National transactions completed on January 1, 2012, April 1, 2012, July 1, 2012 and October 1, 2012 respectively: Balance Sheet Data (at period end) Dec 31, 2012  Sep 30, 2012  Jun 30, 2012  Mar 31, 2012  Dec 31, 2011 (In thousands)(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)Loans acquired (including new production since respective acquisition dates):   Texas Bankers, Inc.$                 23,803$                 24,229$               28,421$               27,053$                      -   The Bank Arlington23,30821,80622,542--   ASB1,068,0771,131,005---   Community National63,940-- . -All other4,000,8123,902,0633,899,3693,847,8093,765,906Total Loans$            5,179,940$            5,079,103$          3,950,332$          3,874,862$          3,765,906Deposits assumed (including new deposits since respective acquisition dates):   Texas Bankers, Inc.$                 68,965$                 69,818$               62,739$               63,681$                      -   The Bank Arlington29,84233,60933,505--   ASB2,510,8552,518,178---   Community National160,404----All other8,871,7788,332,9928,298,3388,480,7708,060,254Total Deposits$          11,641,844$          10,954,597$          8,394,582$          8,544,451$          8,060,254At December 31, 2012, Prosperity had $14.584 billion in total assets, $5.180 billion in loans and $11.642 billion in deposits. Assets, loans and deposits at December 31, 2012 increased by 48.5%, 37.6% and 44.4%, respectively, compared with their respective levels at December 31, 2011.Asset QualityNon-performing assets totaled $13.015 million or 0.10% of quarterly average earning assets at December 31, 2012, compared with $12.052 million or 0.14% of quarterly average earning assets at December 31, 2011, and $14.051 million or 0.11% of quarterly average earnings assets at September 30, 2012.  The allowance for credit losses was 1.01% of total loans at December 31, 2012, 1.00% of total loans at September 30, 2012, and 1.37% of total loans at December 31, 2011.  Excluding loans acquired from Texas Bankers, Inc., The Bank of Arlington, ASB and Community National accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.22% and 1.27% of remaining loans as of December 31, 2012 and September 30, 2012, respectively.  Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of the non-GAAP financial measure.  The provision for credit losses was $3.550 million for the three months ended December 31, 2012 and $1.150 million for the three months ended December 31, 2011.  Net charge offs were $1.913 million for the three months ended December 31, 2012 and $2.069 million for the three months ended December 31, 2011. Non-performing assetsDec 31, 2012Sep 30, 2012Dec 31, 2011(In thousands)Amount#Amount#Amount#(Unaudited)(Unaudited)(Unaudited)Commercial$          1,56822$            1,59919$          76717Construction3,522293,182344,649281-4 family (including home equity)3,081343,089363,68938Commercial real estate (including multi-family)2,60874,671152,8779Agriculture 1,463141,4769493Consumer and other77310346214Total $         13,015116$          14,051119$      12,05299Net Charge-offs Three Months Ended(In thousands)Dec 31, 2012Sep 30, 2012Dec 31, 2011(Unaudited)(Unaudited)(Unaudited)Commercial$             205$                 (511)$               676Construction211551531-4 family (including home equity)65251843Commercial real estate  (including multi-family)1,012800218Agriculture70(30)-Consumer and other540590179Total $          1,913$               1,255$            2,069The provision for credit losses was $6.100 million for the twelve months ended December 31, 2012, an increase of $900 thousand compared with $5.200 million for the twelve months ended December 31, 2011.  Net charge offs were $5.130 million for the twelve months ended December 31, 2012 and $5.190 million for the twelve months ended December 31, 2011. Results of operations for the twelve months ended December 31, 2012For the twelve months ended December 31, 2012, net income was $167.901 million compared with $141.749 million for the same period in 2011.  Net income per diluted common share was $3.23 for the twelve months ended December 31, 2012 compared with $3.01 for the same period in 2011.Returns on average assets, average common equity and average tangible common equity for the twelve months ended December 31, 2012 were 1.35%, 9.10% and 21.93%, respectively.  Prosperity's efficiency ratio (excluding net gains and losses on the sale of assets and securities) was 43.48% for the twelve months ended December 31, 2012.Net interest income before provision for credit losses for the twelve months ended December 31, 2012 increased $54.038 million or 16.5%, to $380.706 million compared with $326.668 million during the same period in 2011. The net interest margin on a tax equivalent basis decreased to 3.53% for the twelve months ended December 31, 2012 compared with 3.98% for the same period in 2011. Net interest income included additional interest income of $26.413 million during the twelve month period ended December 31, 2012, related to the accretion of purchase accounting loan discounts.Non-interest income increased $19.492 million or 34.8% to $75.535 million for the twelve months ended December 31, 2012, compared with $56.043 million for the same period in 2011.  The increase in all categories of noninterest income was due primarily to the acquisition of ASB.  Non-interest expense increased $34.712 million or 21.2% to $198.457 million for the twelve months ended December 31, 2012, compared with $163.745 million for the same period in 2011.  Salaries and employee benefits expense increased $23.448 million for the twelve months ended December 31, 2012 compared to the same period in 2011 due primarily to the acquisition of ASB. Additionally, total noninterest expense for the twelve months ended December 31, 2012, included one-time merger expenses of $7.020 million, pre-tax, related to the 2012 acquisitions.Conference CallProsperity's management team will host a conference call on Friday, January 25, 2013 at 10:30 a.m. Eastern Standard Time (9:30 a.m. Central Standard Time) to discuss Prosperity's fourth quarter and full year 2012 earnings. Individuals and investment professionals may participate in the call by dialing 866-952-1906, the reference code is PBTX.Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybanktx.com.  The webcast may be accessed directly from Prosperity's Investor Relations page by clicking on the "4th Quarter Results and Webcast" link.Acquisition of East Texas Financial Services, Inc. On January 1, 2013, Prosperity completed the previously announced acquisition of East Texas Financial Services, Inc. (OTC BB: FFBT) and its wholly-owned subsidiary, First Federal Bank Texas ("Firstbank"). Firstbank operated four (4) banking offices in the Tyler MSA, including three locations in Tyler, Texas and one location in Gilmer, Texas. As of December 31, 2012, East Texas Financial Services reported, on a consolidated basis, total assets of $165.0 million, total loans of $129.3 million and total deposits of $112.3 million. Pursuant to the terms of the acquisition agreement, Prosperity issued 530,940 shares of Prosperity common stock for all outstanding shares of East Texas Financial Services capital stock. Acquisition of Community National BankOn October 1, 2012, Prosperity completed the previously announced acquisition of Community National Bank, Bellaire, Texas.  Community National operated one (1) banking office in Bellaire, Texas, in the Houston Metropolitan Area. As of September 30, 2012, Community National reported total assets of $183.0 million, total loans of $68.0 million and total deposits of $164.6 million.  Pursuant to the terms of the acquisition agreement, Prosperity issued 372,282 shares of Prosperity common stock plus $11.4 million in cash for all outstanding shares of Community National Bank capital stock which resulted in a premium of $10.6 million.Acquisition of American State Financial CorporationOn July 1, 2012, Prosperity completed the previously announced acquisition of American State Financial Corporation and its wholly owned subsidiary American State Bank.  American State Bank operated thirty-seven (37) full service banking offices in eighteen (18) counties across West Texas. As of June 30, 2012, ASB, on a consolidated basis, reported total assets of $3.16 billion, total loans of $1.24 billion and total deposits of $2.51 billion.Pursuant to the terms of the acquisition agreement, Prosperity issued 8,524,835 shares of Prosperity common stock plus $178.5 million in cash for all outstanding shares of American State Financial Corporation capital stock which resulted in a premium of $240.4 million. Acquisition of The Bank Arlington On April 1, 2012, Prosperity completed the previously announced acquisition of The Bank Arlington.  The Bank Arlington operated one (1) banking office in Arlington, Texas, in the Dallas/Fort Worth CMSA. As of March 31, 2012, The Bank Arlington reported total assets of $37.3 million, total loans of $22.8 million and total deposits of $33.2 million.Pursuant to the terms of the acquisition agreement, Prosperity issued 135,389 shares of Prosperity common stock for all outstanding shares of The Bank Arlington capital stock which resulted in a premium of $2.8 million.Acquisition of Texas Bankers, Inc. On January 1, 2012, Prosperity completed the previously announced acquisition of Texas Bankers, Inc. and its wholly-owned subsidiary, Bank of Texas, Austin, Texas.  The three (3) Bank of Texas banking offices in the Austin, Texas CMSA consisted of a location in Rollingwood, which was consolidated with Prosperity's Westlake location and remains in Bank of Texas' Rollingwood banking office; one banking center in downtown Austin, which was consolidated into Prosperity's downtown Austin location; and another banking center in Thorndale. Prosperity now operates thirty-four (34) banking centers in the Central Texas area including Austin and San Antonio. Texas Bankers, Inc. reported, on a consolidated basis, total assets of $77.0 million, total loans of $27.6 million and total deposits of $70.4 million as of December 31, 2011.Pursuant to the terms of the acquisition agreement, Prosperity issued 314,953 shares of Prosperity common stock for all outstanding shares of Texas Bankers capital stock which resulted in a premium of $5.2 million. Pending Acquisition of Coppermark Bancshares Inc. On December 10, 2012, Prosperity entered into a definitive agreement to acquire Coppermark Banchsares, Inc. and its wholly-owned subsidiary, Coppermark Bank ("Coppermark") headquartered in Oklahoma City, Oklahoma. Coppermark operates nine (9) full-service banking offices; six (6) in Oklahoma City, Oklahoma and surrounding areas and three (3) in the Dallas, Texas area. As of December 31, 2012, Coppermark reported, on a consolidated basis, total assets of $1.3 billion, total loans of $853.4 million and total deposits of $1.2 billion. Pursuant to the terms of the acquisition agreement, Prosperity will issue up to 3,258,845 shares of Prosperity common stock plus $60.0 million in cash for all outstanding shares of Coppermark Bancshares capital stock, subject to certain conditions and potential adjustments. Pending the satisfaction of closing conditions, the closing is expected to occur in the late first quarter or early second quarter of 2013, although delays may occur. Prosperity Bancshares, Inc.®Prosperity Bancshares Inc.® was named "America's Best Bank" by Forbes in 2012 and is a $14.6 billion Houston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking to develop broad customer relationships based on service and convenience, Prosperity offers a variety of traditional loan and deposit products to its customers, which consist primarily of small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at http://www.prosperitybanktx.com, Retail Brokerage Services, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management; and Mobile Banking.  Prosperity currently operates two hundred seventeen (217) full service banking locations; fifty-nine (59) in the Houston area; twenty (20) in the South Texas area including Corpus Christi and Victoria; thirty-five (35) in the Dallas/Fort Worth area; twenty-five (25) in the East Texas area; thirty-four (34) in the Central Texas area including Austin and San Antonio; thirty-four (34) in the West Texas area including Lubbock, Midland-Odessa and Abilene; and ten (10) in the Bryan/College Station area.Bryan/College Station Area -DowntownOther South TexasMcKinneyEastexLocations - BryanMcKinney-StonebridgeFairfieldAliceBryan-East MidwayFirst ColonyAransas PassBryan-NorthPreston ForestGessnerBeevilleCaldwellPreston RoadGladebrookEdnaCollege StationRed OakHarrisburgGoliadGreens PrairieSachse HeightsKingsvilleMadisonvilleThe Colony Highway 6 WestMathisNavasotaTurtle CreekHillcroftPadre IslandRock PrairieWestmorelandLittle YorkPalaciosWellborn RoadMedical CenterPort Lavaca Fort Worth - Memorial DrivePortlandCentral Texas Area -Haltom CityNorthsideRockportKellerPasadenaSinton Austin -RoanokePecan GroveVictoria183StockyardsPiney PointVictoria-NorthAllandaleRiver OaksCedar ParkOther Dallas/Fort Worth Locations -Royal OaksWest Texas Area - CongressArlingtonSugar Land LakewayAzleSW Medical CenterAbilene -Liberty HillEnnisTanglewoodAntilley RoadNorthlandGainesvilleUptownBarrow StreetOak HillGlen RoseWaugh DriveCypress StreetParmer LaneGranburyWest UniversityJudge ElyResearch BlvdMesquiteWoodcreekMockingbirdWestlakeMuensterSangerOther Houston AreaLubbock - Other Central Texas Locations -WaxahachieLocations - 4th StreetBastropWeatherfordAngleton66th StreetCueroBay City82nd StreetDime BoxEast Texas Area - Beaumont86th StreetDripping SpringsCinco Ranch98th StreetElginAthensClevelandAvenue QFlatoniaAthens-SouthEast BernardNorth UniversityGeorgetownBlooming GroveEl CampoTexas Tech Student UnionGonzalesCantonDaytonHallettsvilleCarthageGalveston Midland - KingslandCorsicanaGrovesWadleyLa GrangeCrockettHempsteadWall StreetLexingtonEustaceHitchcock GilmerNew BraunfelsGrapelandKatyOdessa -PleasantonGun Barrel CityLiberty GrandviewRound RockJacksonvilleMagnoliaGrantSan AntonioKerensMont BelvieuKermit HighwaySchulenburgLongviewNederlandParkwaySeguin Mount VernonNeedvilleSmithvillePalestineShadow CreekOther West Texas Locations -ThorndaleRuskSweenyBig SpringWeimarSeven PointsTomballBrownfieldYoakumTeagueWallerBrownwoodYorktownTylerWest ColumbiaCiscoTyler-BeckhamWhartonComancheTyler-GreshamWinnieEarlyTyler-South BroadwayWirtFloydadaTyler-UniversityGormanDallas/Fort Worth Area - WinnsboroLevellandLittlefieldDallas - Houston Area -MerkelAbrams CentreSouth Texas Area -PlainviewBalch SpringsHouston - San AngeloCamp WisdomAldineCorpus Christi -SlatonCedar HillAllen ParkwayAirline SnyderCentral ExpresswayBellaireCarmel East RennerBeltwayNorthwest FriscoClear LakeSaratogaFrisco-West CopperfieldWater StreetIndependenceCypress KiestIn connection with the proposed merger of Coppermark Bancshares, Inc. into Prosperity, Prosperity will file with the Securities and Exchange Commission a registration statement on Form S-4 to register the shares of Prosperity's common stock to be issued to the shareholders of Coppermark Bancshares, Inc.  The registration statement will include a proxy statement/prospectus which will be sent to the shareholders of Coppermark Bancshares, Inc. seeking their approval of the proposed transaction.WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, COPPERMARK BANCSHARES, INC. AND THE PROPOSED TRANSACTION. Investors and security holders may obtain free copies of these documents through the website maintained by the Securities and Exchange Commission at http://www.sec.gov.  Documents filed with the SEC by Prosperity will be available free of charge by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations. Prosperity's telephone number is (281) 269-7199."Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the securities laws that are based on current expectations, assumptions, estimates and projections about Prosperity, and its subsidiaries.  These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements.  These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks;  continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives.  Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate fluctuations and interest rate fluctuations; and weather.  These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2011 and other reports and statements Prosperity has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares® may be downloaded from the Internet at no charge from www.prosperitybanktx.com. Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)(Dollars and share amounts in thousands, except per share data)Three Months EndedTwelve Months EndedDec 31, 2012Dec 31, 2011Dec 31, 2012Dec 31, 2011Selected Earnings and Per     Share DataTotal interest income$       117,719$         89,658$       419,842$       371,908Total interest expense9,4189,57139,13645,240Net interest income108,30180,087380,706326,668Provision for credit losses3,5501,1506,1005,200Net interest income after     provision for credit losses104,75178,937374,606321,468Total non-interest income24,10614,06575,53556,043Total non-interest expense56,96838,385198,457163,745Net income before taxes71,88954,617251,684213,766Federal income taxes23,62318,21183,78372,017Net income$         48,266$         36,406$       167,901$       141,749Basic earnings per share$            0.86$            0.78$            3.24$            3.03Diluted earnings per share$            0.85$            0.77$            3.23$            3.01Period end shares outstanding56,44746,91056,44746,910Weighted average shares     outstanding (basic)56,42746,89351,79446,846Weighted average shares     outstanding (diluted)56,55447,02851,94147,017Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)(Dollars in thousands) Dec 31, 2012  Sep 30, 2012  Jun 30, 2012  Mar 31, 2012  Dec 31, 2011 Balance Sheet Data (at period end)Total loans(A)$       5,179,940$       5,079,103$       3,950,332$         3,874,862$      3,765,906Investment securities(B)7,442,0656,799,5135,400,0445,646,5294,658,936Federal funds sold 352302133445642Allowance for credit losses(52,564)(50,927)(50,382)(51,642)(51,594)Cash and due from banks325,952207,650152,678151,467212,800Goodwill1,217,1621,200,098932,965929,161924,537Core deposit intangibles26,15928,09217,70619,30120,996Other real estate7,2348,84610,2367,7188,328Fixed assets, net205,268201,445166,273162,676159,656Other assets232,005237,997157,366149,438122,464Total assets$      14,583,573$      13,712,119$      10,737,351$  10,889,955$      9,822,671Demand deposits$       3,016,205$       2,827,748$       2,083,910$         2,088,749$      1,972,226Interest bearing deposits8,625,6398,126,8496,310,6726,455,7026,088,028Total deposits11,641,84410,954,5978,394,5828,544,4518,060,254Securities sold under      repurchase agreements454,502443,856122,74358,48154,883Federal funds purchased and      other borrowings256,753112,017437,278527,53612,790Junior subordinated debentures85,05585,05585,05585,05585,055Other liabilities56,03078,41853,87664,89942,424Total liabilities12,494,18411,673,9439,093,5349,280,4228,255,406Shareholders' equity(C)2,089,3892,038,1761,643,8171,609,5331,567,265Total liabilities and equity$      14,583,573$      13,712,119$      10,737,351$  10,889,955$      9,822,671(A) Net of discount on acquired loans of $79,943, $92,832 and $431 at December 31, 2012, September 30, 2012 and June 30, 2012, respectively, of which $23,754, $27,117 and $0 respectively, relate to loans accounted for under ASC Topic 310-30 (formerly SOP 03-03).  There was no discount outstanding at March 31, 2012 and December 31, 2011.(B)Includes $13,824, $16,991, $17,709, $19,542,  and $20,726 in unrealized gains on available for sale securities for the quarterly periods ending  December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011,  respectively.(C)Includes $8,986, $11,044, $11,511, $12,702,  and $13,472 in after-tax unrealized gains on available for sale securities for the quarterly periods ending December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively.Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)(Dollars in thousands)Three Months EndedTwelve Months EndedDec 31, 2012Dec 31, 2011Dec 31, 2012Dec 31, 2011Income Statement DataInterest income:   Interest on loans(D)$              82,727$            53,899$           271,324$           214,273   Interest on securities(E)34,95635,719148,374157,580   Interest on federal funds sold and        other earning assets364014455Total interest income117,71989,658419,842371,908Interest expense:    Interest expense - deposits8,2178,68234,48640,975   Interest expense - debentures6316322,5932,984   Interest expense - other5702572,0571,281      Total interest expense9,4189,57139,13645,240      Net interest income108,30180,087380,706326,668Provision for credit losses3,5501,1506,1005,200Net interest income after     provision for credit losses104,75178,937374,606321,468Non-interest income:   Non-sufficient funds (NSF) fees9,2925,86029,11324,442   Debit card and ATM card income6,6834,18921,05715,391   Service charges on deposit accounts2,8772,51511,1129,981   Trust income915-1,746-   Mortgage income1,120-2,681-   Bank Owned Life Insurance1,2423472,6731,382   Net (loss) gain on sale of assets(244)-(231)377   Net loss on sale of ORE(113)(473)(457)(904)   Net loss on sale of securities---(581)   Other non-interest income2,3341,6277,8415,955Total non-interest income24,10614,06575,53556,043Non-interest expense:   Salaries and benefits(F)31,98021,258115,50592,057   CDI amortization1,9321,8797,2297,780   Net occupancy and equipment4,8123,65516,47514,634   Depreciation2,4912,0518,9238,150   Data processing and software amortization3,1061,4179,4456,823   Regulatory assessments and FDIC insurance2,3651,5187,6798,901   ORE expense4656801,8101,501   Other non-interest expense9,8175,92731,39123,899      Total non-interest expense56,96838,385198,457163,745Net income before taxes71,88954,617251,684213,766Federal income taxes23,62318,21183,78372,017Net income available to common shareholders$              48,266$            36,406$           167,901$           141,749(D) Interest income on loans includes additional interest income related to the accretion of purchase accounting loan discounts of $14,523 and $26,413 for the three and twelve month periods ended  December 31, 2012, respectively.  There was no loan discount accretion recorded during the three and twleve month periods ended December 31, 2011.(E) Interest income on securities was reduced by net premium amortization of $23,992 and $8,989 for the three month periods ended December 31, 2012 and 2011, respectively and $66,889 and $28,676 for the twelve month periods ended December 31, 2012 and 2011, respectively.(F) Salaries and benefits includes equity compensation expenses of $389 and $972 for the three months ended December 31, 2012 and December 31, 2011, respectively, and $3,607 and $3,576 for the twelve months ended December 31, 2012 and December 31, 2011, respectively.Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)(Dollars in thousands)Three Months EndedDec 31, 2012Sep 30, 2012Jun 30, 2012Mar 31, 2012Dec 31, 2011Income Statement DataInterest income:  Interest on loans(G)$     82,727$    80,587$     54,793$     53,217$     53,899  Interest on securities(H)34,95637,02538,07238,32135,719  Interest on federal funds-     sold and other earning assets362197840    Total interest income117,719117,63392,87491,61689,658Interest expense:  Interest expense - deposits8,2179,3958,0838,7918,682  Interest expense - debentures631651648663632  Interest expense - other570694477316257    Total interest expense9,41810,7409,2089,7709,571    Net interest income108,301106,89383,66681,84680,087Provision for credit losses3,5501,8006001501,150    Net interest income after        provision for credit losses104,751105,09383,06681,69678,937Non-interest income:  Non-sufficient funds (NSF) fees9,2929,2655,1675,3895,860  Debit card and ATM card income6,6836,2464,2923,8364,189  Service charges on deposit accounts2,8773,3622,4322,4412,515  Trust income915831---  Mortgage income1,1201,4376559-  Bank Owned Life Insurance1,242736345350347  Net (loss) gain on sale of assets(244)(50)70(7)-  Net (loss) gain on sale of  ORE                         (113)(597)(165)418(473) Other non-interest income2,3342,5981,4501,4591,627    Total non-interest income24,10623,82813,65613,94514,065Non-interest expense:  Salaries and benefits31,98036,70123,57223,25221,258  CDI amortization1,9322,0071,5951,6951,879  Net occupancy and equipment4,8124,6143,4923,5573,655  Depreciation2,4912,3692,0282,0352,051   Data processing and software amortization3,1062,9011,9061,5321,417   Regulatory assessments and FDIC insurance2,3652,1071,6591,5481,518  Communications (includes telephone, courier and postage)2,3812,2261,8021,7481,758  ORE expense465271383691680  Other non-interest expense7,4367,0464,3514,4014,169    Total non-interest expense56,96860,24240,78840,45938,385Net income before taxes71,88968,67955,93455,18254,617Federal income taxes23,62322,50318,96218,69518,211Net income available to common shareholders$     48,266$    46,176$     36,972$     36,487$     36,406(G) Interest income on loans includes additional interest income related to the accretion of purchase accounting loan discounts of $14,523, $11,188 and $702  for the three month periods ended  December 31, 2012, September 30, 2012, and June 30, 2012, respectively.  There was no loan discount accretion recorded during the three month periods ended March 31, 2012 and December 31, 2011.(H) Interest income on securities was reduced by net premium amortization of $23,992, $21,423, $11,755, $9,719 and  $8,989 for the three month periods ended December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively.Prosperity Bancshares, Inc.®Supplemental Financial Data (Unaudited)(Dollars in thousands)Three Months EndedDec 31, 2012Sep 30, 2012Dec 31, 2011YIELD ANALYSIS Average BalanceInterest Earned/ Interest PaidYield/RateAverage BalanceInterest Earned/ Interest PaidYield/RateAverage BalanceInterest Earned/ Interest PaidYield/RateInterest Earning Assets: Loans$   5,140,163$    82,7276.40%(I)$   5,169,101$   80,5876.20%(I)$ 3,749,923$    53,8995.70%Investment securities7,228,41834,9561.92%(J)7,106,87137,0252.07%(J)4,596,01735,7193.11%(J)Federal funds sold and other   earning assets75,135360.19%53,111210.16%62,035400.26%  Total interest earning assets 12,443,716$  117,7193.76%12,329,083$ 117,6333.80%8,407,975$    89,6584.23%Allowance for credit losses (50,775)(53,944)(51,713)Non-interest earning assets 1,844,7561,730,1201,373,217  Total assets$ 14,237,697$ 14,005,259$ 9,729,479Interest Bearing Liabilities: Interest bearing demand deposits$   2,328,969$      1,8030.31%$   2,181,928$     2,2730.41%$ 1,363,900$      1,4500.42%Savings and money market deposits3,600,1092,5800.29%3,516,6012,9870.34%2,553,2272,4500.38%Certificates and other time deposits 2,366,1553,8340.64%2,387,2794,1350.69%2,057,9544,7820.92%Securities sold under repurchase    agreements 459,9982940.25%438,4103150.29%60,999630.41%Federal funds purchased and other   borrowings 272,2392760.40%512,7393790.29%66,8341941.15%Junior subordinated debentures 85,0556312.95%85,0556513.04%85,0556322.95%  Total interest bearing liabilities $   9,112,525$      9,4180.41%(K)$   9,122,012$   10,7400.47%(K)$ 6,187,969$      9,5710.61%(K)Non-interest bearing liabilities: Non-interest bearing demand deposits$   2,963,998$   2,760,405$ 1,924,037Other liabilities 80,08592,87360,628  Total liabilities$ 12,156,608$ 11,975,290$ 8,172,634Shareholders' equity 2,081,0892,029,9691,556,845  Total liabilities and shareholders' equity $ 14,237,697$ 14,005,259$ 9,729,479Net Interest Income & Margin $  108,3013.46%$ 106,8933.45%$    80,0873.78%Non-GAAP to GAAP reconciliation:Tax equivalent adjustment2,0992,135850Net Interest Income & Margin     (tax equivalent)$  110,4003.53%$ 109,0283.52%$    80,9373.82%(I) Yield on loans was impacted by additional interest income related to the accretion of purchase accounting loan discounts of $14,523, $11,188 and $702  for the three month periods ended  December 31, 2012, September 30, 2012, and June 30, 2012, respectively.  There was no loan discount accretion recorded during the three month periods ended March 31, 2012 and December 31, 2011.(J) Yield on securities was impacted by net premium amortization of $23,992, $21,423, $11,755, $9,719 and  $8,989 for the three month periods ended December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively.(K) Total cost of funds, including non-interest bearing deposits, was 0.31%, 0.36%, and 0.47% for the three months ended December 31, 2012, September 30, 2012 and December 31, 2011, respectively.Prosperity Bancshares, Inc.®Supplemental Financial Data (Unaudited)(Dollars in thousands)Twelve Months EndedDec 31, 2012Dec 31, 2011YIELD ANALYSIS Average BalanceInterest Earned/ Interest PaidAverage Yield/RateAverage BalanceInterest Earned/ Interest PaidAverage Yield/RateInterest Earning Assets: Loans$     4,514,171$        271,3246.01%(L)$     3,648,701$        214,2735.87%Investment securities6,364,917148,3742.33%(M)4,625,833157,5803.41%(M)Federal funds sold and other   earning assets68,9001440.21%26,879550.20%  Total interest earning assets 10,947,988$        419,8423.83%8,301,413$        371,9084.48%Allowance for credit losses (51,770)(51,871)Non-interest earning assets 1,536,4481,379,342  Total assets$   12,432,666$     9,628,884Interest Bearing Liabilities: Interest bearing demand deposits$     1,979,345$            8,2280.42%$     1,393,501$            7,4160.53%Savings and money market deposits3,174,25610,6000.33%2,421,73511,8360.49%Certificates and other time deposits 2,152,38215,6580.73%2,135,85821,7231.02%Securities sold under repurchase agreements 263,6897050.27%68,0493690.54%Federal funds purchased and other borrowings 416,9251,3520.32%152,7169120.60%Junior subordinated debentures 85,0552,5933.05%86,5572,9843.45%  Total interest bearing liabilities $     8,071,652$          39,1360.48%(N)$     6,258,416$          45,2400.72%(N)Non-interest bearing liabilities: Non-interest bearing demand deposits$     2,442,860$     1,800,102Other liabilities 73,82056,617  Total liabilities$   10,588,332$     8,115,135Shareholders' equity 1,844,3341,513,749  Total liabilities and shareholders' equity $   12,432,666$     9,628,884Net Interest Income & Margin $        380,7063.48%$        326,6683.94%Non-GAAP to GAAP reconciliation:Tax equivalent adjustment5,9653,614Net Interest Income & Margin     (tax equivalent)$        386,6713.53%$        330,2823.98%(L) Yield on loans was impacted by additional interest income related to the accretion of purchase accounting loan discounts of $26,413 for the  twelve month period ended  December 31, 2012.  There was no loan discount accretion recorded during the twleve month period ended December 31, 2011.(M) Yield on securities was impacted by net premium amortization of $66,889 and $28,676 for the twelve month periods ended December 31, 2012 and 2011, respectively.(N) Total cost of funds, including non-interest bearing deposits, was 0.37% and 0.56% for the twelve months ended December 31, 2012 and December 31, 2011, respectively.Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)Three Months EndedTwelve Months Ended Dec 31, 2012  Sep 30, 2012  Jun 30, 2012  Mar 31, 2012  Dec 31, 2011  Dec 31, 2012  Dec 31, 2011 YIELD ANALYSIS Interest Earning Assets: Loans(I) (L) 6.40%6.20%5.63%5.60%5.70%6.01%5.87%Investment securities(J) (M) 1.92%2.07%2.70%2.95%3.11%2.33%3.41%Federal funds sold and other   earning assets0.19%0.16%0.17%0.25%0.26%0.21%0.20%  Total interest earning assets 3.76%3.80%3.90%4.03%4.23%3.83%4.48%Interest Bearing Liabilities: Interest bearing demand deposits0.31%0.41%0.49%0.49%0.42%0.42%0.53%Savings and money market deposits0.29%0.34%0.35%0.37%0.38%0.33%0.49%Certificates and other time deposits 0.64%0.69%0.76%0.84%0.92%0.73%1.02%Securities sold under repurchase agreements0.25%0.29%0.24%0.28%0.41%0.27%0.54%Federal funds purchased and other borrowings 0.40%0.29%0.28%0.41%1.15%0.32%0.60%Junior subordinated debentures 2.95%3.04%3.06%3.14%2.95%3.05%3.45%  Total interest bearing liabilities 0.41%0.47%0.52%0.57%0.61%0.48%0.72%Net Interest Margin 3.46%3.45%3.52%3.60%3.78%3.48%3.94%Net Interest Margin (tax equivalent)3.53%3.52%3.55%3.64%3.82%3.53%3.98%Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)Three Months EndedTwelve Months Ended Dec 31, 2012  Sep 30, 2012  Jun 30, 2012  Mar 31, 2012  Dec 31, 2011  Dec 31, 2012  Dec 31, 2011 Comparative Asset Quality, Performance     & Capital RatiosReturn on average     assets (annualized)1.36%1.32%1.35%1.39%1.50%1.35%1.47%Return on average common     equity (annualized) 9.28%9.10%9.06%9.15%9.35%9.10%9.36%Return on average tangible     equity (annualized)(O) 22.92%21.59%21.70%22.57%23.86%21.93%25.11%Net interest margin (tax     equivalent) (annualized)(P)3.53%3.52%3.55%3.64%3.82%3.53%3.98%Employees ? FTE2,2662,2601,6661,6901,6642,2661,664Efficiency ratio(Q)42.95%46.07%41.94%42.23%40.77%43.48%42.76%Non-performing assets to     average earning assets0.10%0.11%0.12%0.16%0.14%0.12%0.15%Non-performing assets to loans     and other real estate0.25%0.28%0.30%0.38%0.32%0.25%0.32%Net charge-offs to     average loans  (annualized)0.15%0.08%0.20%0.00%0.24%0.11%0.14%Allowance for credit losses to     total loans1.01%1.00%1.28%1.33%1.37%1.01%1.37%Allowance for credit losses tototal loans (excluding acquired loans)(O)1.22%1.27%    N/A     N/A     N/A1.22%     N/ABook value per share$ 37.02$ 36.36$ 34.63$ 34.03$ 33.41$   37.02$ 33.41Tangible book value per share(O)$ 14.99$ 14.45$ 14.60$ 13.98$ 13.25$   14.99$ 13.25Tier 1 risk-based capital14.40%14.43%16.42%15.70%15.90%14.40%15.90%Total risk-based capital15.22%15.26%17.49%16.80%17.09%15.22%17.09%Tier 1 leverage capital7.10%6.92%7.69%7.68%7.89%7.10%7.89%Tangible equity to tangible assets(O)6.34%6.49%7.08%6.65%7.00%6.34%7.00%Equity to assets14.33%14.86%15.31%14.78%15.96%14.33%15.96%Basic earnings per share$   0.86$   0.83$   0.78$   0.77$   0.78$    3.24$   3.03Diluted earnings per share$   0.85$   0.82$   0.78$   0.77$   0.77$    3.23$   3.01(O) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconcilation of this non-GAAP financial measure.(P) Net interest margin for all periods presented is calculated on an actual 365 day basis or 366 day basis.(Q) Prosperity's efficiency ratio is calculated by dividing total non-interest expense (excluding credit loss provisions) by net interest income plus non-interest income (excluding net gains and losses on the sale of assets and securities).  Additionally, taxes are not part of this calculation. Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)(Dollars in thousands)As of and for the As of and for theThree Months EndedTwelve Months EndedDec 31, 2012Dec 31, 2011Dec 31, 2012Dec 31, 2011Common Share and     Other DataEmployees - FTE2,2661,6642,2661,664Book value per share$          37.02$          33.41$          37.02$          33.41Tangible book value per share(O)$          14.99$          13.25$          14.99$          13.25Period end shares outstanding56,44746,91056,44746,910Weighted average shares     outstanding (basic)56,42746,89351,79446,846Weighted average shares     outstanding (diluted) 56,55447,02851,94147,017Basic earnings per share$            0.86$            0.78$            3.24$            3.03Diluted earnings per share$            0.85$            0.77$            3.23$            3.01Common Stock Market PriceHigh$          43.54$          41.74$          47.66$          46.87Low$          38.56$          31.31$          38.56$          30.91Period end market price$          42.00$          40.35$          42.00$          40.35Asset QualityNon-accrual loans$          5,382$          3,578$          5,382$          3,578Accruing loans 90 or more     days past due331-331-Restructured loans----Total non-performing loans5,7133,5785,7133,578Repossessed assets6814668146Other real estate7,2348,3287,2348,328  Total non-performing assets$        13,015$        12,052$        13,015$        12,052Allowance for credit losses at     end of period$        52,564$        51,594$        52,564$        51,594Net charge-offs$          1,913$          2,069$          5,130$          5,190Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)(Dollars in thousands)Three Months EndedTwelve Months EndedDec 31, 2012Dec 31, 2011Dec 31, 2012Dec 31, 2011Balance Sheet AveragesTotal loans$    5,140,163$    3,749,923$    4,514,171$    3,648,701Investment securities7,228,4184,596,0176,364,9174,625,833Federal funds sold and     other earning assets75,13562,03568,90026,879Total earning assets12,443,7168,407,97510,947,9888,301,413Allowance for credit losses(50,775)(51,713)(51,770)(51,871)Cash and due from banks198,797136,856174,291131,374Goodwill1,211,596924,5371,058,058924,506Core Deposit Intangibles (CDI)27,10821,89020,74624,767Other real estate9,5719,80310,00010,220Fixed assets, net206,869160,261182,193159,983Other assets190,815119,87091,160128,492Total assets$   14,237,697$    9,729,479$   12,432,666$    9,628,884Non-interest bearing deposits$    2,963,998$    1,924,037$    2,442,860$    1,800,102Interest bearing demand deposits2,328,9691,363,9001,979,3451,393,501Savings and money market deposits3,600,1092,553,2273,174,2562,421,735Certificates and other time deposits2,366,1552,057,9542,152,3822,135,858Total deposits11,259,2317,899,1189,748,8437,751,196Securities sold under     repurchase agreements459,99860,999263,68968,049Federal funds purchased and     other borrowings272,23966,834416,925152,716Junior subordinated     debentures85,05585,05585,05586,557Other liabilities80,08560,62873,82056,617Shareholders' equity(R)2,081,0891,556,8451,844,3341,513,749Total liabilities and equity$   14,237,697$    9,729,479$   12,432,666$    9,628,884(R) Includes $10,411 and $14,515, in after-tax unrealized gains on available for sale securities for the three month periods ending December 31, 2012 and December 31, 2011, respectively,  and $12,059 and $14,680 for the twelve month periods ending December 31, 2012 and December 31, 2011, respectively. Prosperity Bancshares, Inc.®Financial Highlights (Unaudited)(Dollars in thousands)Dec 31, 2012Sep 30, 2012Jun 30, 2012Mar 31, 2012Loan PortfolioCommercial and other$     798,88215.4%$     792,24715.6%$     491,90712.5%$   475,86012.3%Construction550,76810.6%496,4179.8%466,88411.8%484,29512.5%1-4 family residential1,255,76524.3%1,213,87223.9%1,084,93627.4%1,036,31826.7%Home equity186,8013.6%183,8443.6%154,1473.9%149,5973.9%Commercial real estate1,990,64238.4%1,976,11238.9%1,484,78737.6%1,473,92538.0%Agriculture (includes farmland)285,6375.5%304,1346.0%192,4624.9%178,4744.6%Consumer111,4452.2%112,4772.2%75,2091.9%76,3932.0%Total loans$  5,179,940$   5,079,103$   3,950,332$ 3,874,862Deposit TypesNon-interest bearing DDA$  3,016,19625.9%$   2,827,74825.8%$   2,083,91024.8%$ 2,088,74924.4%Interest bearing DDA2,626,33122.6%2,208,56820.2%1,684,49220.1%1,671,76019.6%Money Market2,362,46320.3%2,303,68021.0%2,206,22026.3%2,312,10727.1%Savings1,293,55211.1%1,276,27111.6%581,4806.9%554,2116.5%Time < $1001,082,8599.3%1,103,10810.1%909,61610.8%938,91111.0%Time > $1001,260,44310.8%1,235,22211.3%928,86411.1%978,71311.5%Total deposits$ 11,641,844$ 10,954,597$   8,394,582$ 8,544,451Loan to Deposit Ratio44.5%46.4%47.1%45.3%Construction LoansSingle family residential   construction$     161,40129.2%$     150,95930.1%$     143,60030.8%$   142,58429.4%Land development42,1997.6%38,0757.6%39,7048.5%41,1778.5%Raw land58,79410.6%47,6209.5%51,07010.9%63,00613.0%Residential lots92,69716.8%97,44519.4%86,20118.5%88,05418.2%Commercial lots63,71611.5%63,41812.7%49,45410.6%51,64210.7%Commercial construction and   other134,42724.3%103,67720.7%96,85520.7%97,83220.2%Net unaccreted discount(2,466)(4,777)--Total construction loans$     550,768$     496,417$     466,884$   484,295 Prosperity Bancshares, Inc.®Notes to Selected Financial Data(Dollars and share amounts in thousands, except per share data)Consolidated Financial HighlightsNOTES TO SELECTED FINANCIAL DATAProsperity's management uses certain non?GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and Prosperity believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.   Three Months Ended Dec 31, 2012  Sep 30, 2012  Jun 30, 2012  Mar 31, 2012  Dec 31, 2011 Return on average tangible common equity:(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)Net income$            48,266$          46,176$          36,972$          36,487$          36,406Average shareholders' equity2,081,0892,029,9691,632,1641,595,2841,556,845Less: Average goodwill and other intangible assets(1,238,704)(1,174,573)(950,577)(948,519)(946,427)       Average tangible shareholders' equity$          842,385$         855,396$        681,587$        646,765$        610,418Return on average tangible common  equity:22.92%21.59%21.70%22.57%23.86%Tangible book value per share:Shareholders' equity$       2,089,389$      2,038,176$     1,643,817$     1,609,533$     1,567,265Less: Goodwill and other intangible assets(1,243,321)(1,228,190)(950,671)(948,462)(945,533)         Tangible shareholders' equity$          846,068$         809,986$        693,146$        661,071$        621,732Period end shares outstanding56,44756,05847,47447,29746,910Tangible book value per share:$             14.99$            14.45$            14.60$            13.98$            13.25Tangible equity to tangible assets ratio:Tangible shareholders' equity$          846,068$         809,986$        693,146$        661,071$        621,732Total assets$     14,583,573$    13,712,119$    10,737,351$    10,889,955$     9,822,671Less: Goodwill and other intangible assets(1,243,321)(1,228,190)(950,671)(948,462)(945,533)       Tangible assets$     13,340,252$    12,483,929$     9,786,680$     9,941,493$     8,877,138Tangible equity to tangible assets ratio:6.34%6.49%7.08%6.65%7.00%Prosperity Bancshares, Inc.® Notes to Selected Financial Data (Dollars and share amounts in thousands, except per share data)Twelve Months Ended Dec 31, 2012  Dec 31, 2011 Return on average tangible common equity:(unaudited)(unaudited)Net income$          167,901$         141,749Average shareholders' equity1,844,3341,513,749Less: Average goodwill and other intangible assets(1,078,804)(949,273)         Average tangible shareholders' equity$          765,530$         564,476Return on average tangible common equity:21.93%25.11%Tangible book value per share:Shareholders equity$       2,089,389$      1,567,265Less: Goodwill and other intangible assets(1,243,321)(945,533)         Tangible shareholders' equity$          846,068$         621,732Period end shares outstanding56,44746,910Tangible book value per share:$             14.99$            13.25Tangible equity to tangible assets ratio:Tangible shareholders' equity$          846,068$         621,732Total assets$     14,583,573$      9,822,671Less: Goodwill and other intangible assets(1,243,321)(945,533)       Tangible assets$     13,340,252$      8,877,138Tangible equity to tangible assets ratio:6.34%7.00%Dec 31, 2012Sep 30, 2012Allowance for credit losses to total loans, excluding acquired loans:(unaudited)(unaudited)Allowance for credit losses$            52,564$            50,927Total loans$       5,179,940$      5,079,103Less: acquired loans accounted for under ASC Topics 310-20 and 310-30 (does not include new production)$          887,953$      1,066,567         Total loans less acquired loans$       4,291,987$      4,012,536Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)1.22%1.27%  SOURCE Prosperity Bancshares, Inc.For further information: David Zalman, Chairman and Chief Executive Officer, 281.269.7199, david.zalman@prosperitybanktx.com