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Press release from PR Newswire

Prosperity Bancshares, Inc.® Reports Strong Second Quarter 2013 Earnings

Wednesday, July 24, 2013

Prosperity Bancshares, Inc.® Reports Strong Second Quarter 2013 Earnings

06:06 EDT Wednesday, July 24, 2013

- Second quarter 2013 earnings per share (diluted) increased 14.1% to $0.89 compared with the second quarter 2012
- Net income increased $16.872 million or 45.6% compared with the second quarter 2012
- Acquisition of Coppermark Bancshares completed on April 1, 2013
- Announced the pending acquisition of FVNB Corp. and its wholly-owned subsidiary First Victoria National Bank headquartered in Victoria, Texas
- Nonperforming assets remain low at 0.11% of second quarter average earning assets
- Deposits increased $4.114 billion or 49.0% compared with the second quarter 2012
- Loans increased $2.222 billion or 56.3% compared with the second quarter 2012
- Organic loan growth of 3.7% (14.6% annualized) on a linked quarter basis

HOUSTON, July 24, 2013 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank®, reported net income for the quarter ended June 30, 2013, of $53.844 million or $0.89 per diluted common share, an increase in net income of $16.872 million or 45.6%, compared with $36.972 million and an increase in diluted earnings per share of 14.1% compared with $0.78 per diluted common share for the same period in 2012. 

"Again I am delighted to be able to announce record earnings of $53.844 million for the second quarter of 2013, as well as record earnings per diluted share of $0.89, representing a 14.1% increase over the same period last year.  As you can see, our bank has experienced significant growth.  In fact, our assets increased $5.533 billion, or 51.5%, when compared with the same quarter last year," said David Zalman, Prosperity's Chairman and Chief Executive Officer.

"During the past quarter, we completed our merger with Coppermark Bancshares, Inc. based in Oklahoma. The operational integration went very well and we believe the entire Coppermark team is ahead of schedule.  We have thoroughly enjoyed working with the former Coppermark, now Prosperity, associates and customers in Oklahoma.  You could not ask for a more professional group to work and grow with," said Zalman.

"On July 1, 2013, Prosperity announced the signing of a definitive merger agreement with FVNB Corp. and its wholly-owned subsidiary First Victoria National Bank headquartered in Victoria, Texas.  I could not be more excited about joining forces with all of the professionals of First Victoria National Bank.  We have always had a great deal of respect for the bank and all of the people that have contributed to its success  Both of our banks do business in many of the same communities and we have knowledge of the specific needs of those communities in terms of financial products as well as community support.  We believe this combination will further strengthen our already strong management and operations teams in South Texas and increase our ability to effectively compete and serve our customers," continued Zalman.   

"We are also very pleased with our organic loan growth of 3.7% (14.6% annualized) on a linked quarter basis.  It appears that customers are starting to invest more in their businesses by taking out more loans and using their deposits on hand to grow their business.  The future for Oklahoma and Texas looks very bright with increasing populations and business moving to our states primarily because of structures that favor business and growth," added Zalman.

"Again we owe all of our success to our team of associates and board members who have helped grow the company in the right direction with all of their hard work, insight and dedication and for that I say thank you!  We would also like to thank all of our customers for their business and loyalty to the bank," 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 June 30, 2013

For the three months ended June 30, 2013, net income was $53.844 million compared with $36.972 million for the same period in 2012.  Net income per diluted common share was $0.89 for the three months ended June 30, 2013 compared with $0.78 for the same period in 2012. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2013 were 1.33%, 9.27% and 22.32%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.51% for the three months ended June 30, 2013.

Net interest income before provision for credit losses for the quarter ended June 30, 2013, increased 41.9% to $118.742 million compared with $83.666 million during the same period in 2012.  The increase is primarily due to a 47.5% increase in average interest-earning assets for the same period.  Linked quarter net interest income before provision for credit losses increased 9.9% or $10.660 million to $118.742 million compared with $108.082 million during the three months ended March 31, 2013.  The net interest margin on a tax equivalent basis decreased to 3.43% for the three months ended June 30, 2013, compared with 3.55% for the same period in 2012 and increased from 3.42% for the three months ended March 31, 2013.   

Noninterest income increased $11.618 million or 85.1% to $25.274 million for the three months ended June 30, 2013, compared with $13.656 million for the same period in 2012.  The increase was primarily due to increases in NSF fees, ATM and debit card income and service charges, as a result of a larger customer base, and trust and mortgage income as a result of the acquisition of American State Financial Corporation ("ASB") on July 1, 2012.   Through ASB, Prosperity acquired additional services and products including trust, credit cards and mortgage lending operations.  On a linked quarter basis, noninterest income increased 7.8% or $1.833 million.

Noninterest expense increased $20.512 million or 50.3% to $61.300 million for the three months ended June 30, 2013, compared with $40.788 million for the same period in 2012.  The increase is primarily due to additional noninterest expenses associated with the acquisition of ASB on July 1, 2012 and Coppermark Bancshares, Inc. ("Coppermark Bank") on April 1, 2013.  On a linked quarter basis, noninterest expense increased 9.9% or $5.533 million primarily due to an increase in salaries and benefits as a result of the acquisition of Coppermark Bank.  Additionally, total noninterest expense for the three months ended June 30, 2013 included one-time pre-tax merger expenses of $610,000 primarily related to the Coppermark Bank acquisition.

Average loans increased 56.2% or $2.200 billion to $6.115 billion for the quarter ended June 30, 2013, compared with $3.914 billion for the same period in 2012.  On a linked quarter basis, average loans increased 16.2% or $850.814 million from $5.264 billion at March 31, 2013. Average deposits increased 50.3% to $12.681 billion for the quarter ended June 30, 2013, compared with $8.436 billion for the same period of 2012.  On a linked quarter basis, average deposits increased 7.8% or $921.297 million from $11.760 billion at March 31, 2013.

Loans at June 30, 2013 were $6.172 billion, an increase of $2.222 billion or 56.3%, compared with $3.950 billion at June 30, 2012.  On a linked quarter basis, loans increased $909.459 million or 17.3% from $5.263 billion at March 31, 2013.  Deposits at June 30, 2013 were $12.509 billion, an increase of $4.114 billion or 49.0% compared with $8.395 billion at June 30, 2012.  On a linked quarter basis, deposits increased $795.183 million or 6.8% from $11.713 billion at March 31, 2013. 

Results of operations for the six months ended June 30, 2013

For the six months ended June 30, 2013, net income was $103.149 million compared with $73.459 million for the same period in 2012.  Net income per diluted common share was $1.76 for the six months ended June 30, 2013 compared with $1.55 for the same period in 2012.  Returns on average assets, average common equity and average tangible common equity, each on an annualized basis, for the six months ended June 30, 2013 were 1.33%, 9.25%, and 22.31%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.46% for the six months ended June 30, 2013. 

Net interest income before provision for credit losses for the six months ended June 30, 2013 increased $61.312 million or 37.0% to $226.824 million compared with $165.512 million during the same period in 2012.  The increase was attributable primarily to a 45.2% increase in average earning assets over the same period. 

Noninterest income increased $21.114 million or 76.5% to $48.715 million for the six months ended June 30, 2013 compared with $27.601 million for the same period in 2012.  The increase was primarily due to the additional services and products acquired through the acquisition of ASB on July 1, 2012. 

Noninterest expense increased $35.820 million or 44.1% to $117.067 million for the six months ended June 30, 2013 compared with $81.247 million for the same period in 2012.  This increase was primarily attributable to the increase in salaries and benefits as a result of the completion of five acquisitions over the past year.  Additionally, total noninterest expense for the six months ended June 30, 2013 included one-time pre-tax merger expenses of $862,000.

Average loans increased 47.2% or $1.825 billion to $5.692 billion for the six months ended June 30, 2013, compared with $3.867 billion for the same period in 2012.  Average deposits increased 45.0% to $12.223 billion for the six months ended June 30, 2013, compared with $8.432 billion for the same period in 2012. 

The table below provides detail on loans acquired and deposits assumed in the The Bank Arlington, ASB, Community National Bank ("Community National"), East Texas Financial Services and Coppermark Bank transactions completed on April 1, 2012, July 1, 2012, October 1, 2012, January 1, 2013 and April 1, 2013, respectively:

Balance Sheet Data (at period end)

(In thousands)

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Loans acquired (including new production since respective acquisition dates):

   The Bank Arlington

$         22,826

$          22,919

$         23,308

$         21,806

$         22,542

   ASB

967,732

974,223

1,068,077

1,131,005

-

   Community National

61,722

61,966

63,940

-

-

   East Texas Financial Services

111,626

117,863

-

-

-

   Coppermark Bank

772,965

-

-

-

-

All other

4,235,612

4,086,053

4,024,615

3,926,292

3,927,790

Total loans

$    6,172,483

$     5,263,024

$    5,179,940

$    5,079,103

$    3,950,332

Deposits assumed (including new deposits since respective acquisition dates):

   The Bank Arlington

$         29,772

$          28,220

$         29,842

$         33,609

$         33,505

   ASB

2,367,198

2,461,485

2,510,855

2,518,178

-

   Community National

156,210

156,274

160,404

-

-

   East Texas Financial Services

88,289

98,359

-

-

-

   Coppermark Bank

1,087,137

-

-

-

-

All other

8,780,044

8,969,129

8,940,743

8,402,810

8,361,077

Total deposits

$  12,508,650

$   11,713,467

$  11,641,844

$  10,954,597

$    8,394,582

As reflected in the table above, loan and deposit growth was impacted by the acquisitions of The Bank Arlington, ASB, Community National, East Texas Financial Services and Coppermark Bank.  Excluding loans acquired in these acquisitions and new production at the acquired banking centers since the respective acquisition dates, loans at June 30, 2013 grew 7.8% compared with June 30, 2012 and 3.7% (14.6% annualized) on a linked quarter basis. Excluding deposits assumed in these acquisitions and new deposits generated at the acquired banking centers since the respective acquisition dates, deposits at June 30, 2013 grew 5.0% compared with June 30, 2012 and decreased 2.1% on a linked quarter basis.

At June 30, 2013, Prosperity had $16.271 billion in total assets, $6.172 billion in loans and $12.509 billion in deposits. Assets, loans and deposits at June 30, 2013 increased by 51.5%, 56.3% and 49.0%, respectively, compared with their respective levels at June 30, 2012.

Asset Quality

Nonperforming assets totaled $14.864 million or 0.11% of quarterly average earning assets at June 30, 2013, compared with $11.873 million or 0.12% of quarterly average earning assets at June 30, 2012, and $18.133 million or 0.14% of quarterly average earnings assets at March 31, 2013.  The allowance for credit losses was 0.91% of total loans at June 30, 2013, 1.28% of total loans at June 30, 2012 and 1.05% of total loans at March 31, 2013.  Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.18% and 1.25% of remaining loans as of June 30, 2013 and March 31, 2013, respectively.  Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure. 

The provision for credit losses was $2.550 million for the three months ended June 30, 2013 compared to $2.800 million for the three months ended March 31, 2013 and $600,000 for the three months ended June 30, 2012.  Net charge offs were $1.423 million for the three months ended June 30, 2013 compared to $315,000 for the three months ended March 31, 2013 and $1.860 million for the three months ended June 30, 2012.

Conference Call

Prosperity's management team will host a conference call on Wednesday, July 24, 2013 at 10:30 a.m. Eastern Standard Time (9:30 a.m. Central Standard Time) to discuss Prosperity's second quarter 2013 earnings. Individuals and investment professionals may participate in the call by dialing 866-952-7532, the reference code is PBUS.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at http://www.prosperitybankusa.com.  The webcast may be accessed directly from Prosperity's home page by clicking the "About Us" tab and then the "Presentations & Calls" link.

Pending Acquisition of FVNB Corp.

On July 1, 2013, Prosperity announced the signing of a definitive merger agreement with FVNB Corp. and its wholly-owned subsidiary First Victoria National Bank (collectively referred to as "FVNB") headquartered in Victoria, Texas.  First Victoria National Bank operates thirty-four (34) banking offices; seven (7) in the South Texas area including Corpus Christi; six (6) in the Bryan/College Station area; five (5) in the Central Texas area including New Braunfels; and twelve (12) in the Houston area including The Woodlands and Huntsville.  As of June 30, 2013, FVNB, on a consolidated basis, reported total assets of $2.417 billion, total loans of $1.648 billion and total deposits of $2.150 billion. 

Under the terms of the definitive agreement, Prosperity will issue approximately 5,570,818 shares of Prosperity common stock plus $91.250 million in cash for all outstanding shares of FVNB Corp. capital stock, subject to certain conditions and potential adjustments.  The transaction is subject to customary closing conditions, including the receipt of customary regulatory approvals and approval by FVNB's shareholders.

Acquisition of Coppermark Bancshares, Inc.

On April 1, 2013, Prosperity completed the previously announced acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank ("Coppermark") headquartered in Oklahoma City, Oklahoma. Coppermark operated 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 March 31, 2013, Coppermark reported, on a consolidated basis, total assets of $1.2 billion, total loans of $847.6 million and total deposits of $1.1 billion.

Pursuant to the terms of the acquisition agreement, Prosperity issued 3,258,718 shares of Prosperity common stock plus $60.0 million in cash for all outstanding shares of Coppermark Bancshares capital stock, which resulted in a premium of $91.7 million.

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, which resulted in a premium of $7.0 million.

Acquisition of Community National Bank

On 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 capital stock, which resulted in a premium of $10.6 million.

Acquisition of American State Financial Corporation

On 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 $3.2 billion, total loans of $1.2 billion and total deposits of $2.5 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.

Prosperity Bancshares, Inc. ®

Prosperity Bancshares Inc. ® is a $16.271 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.prosperitybankusa.com, Retail Brokerage Services, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management; and Mobile Banking. Prosperity now operates two hundred nineteen (219) full-service banking locations; fifty-eight (58) 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-two (22) 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; ten (10) in the Bryan/College Station area and six (6) in the Central Oklahoma area.

Bryan/College Station Area -

Midway

First Colony

Goliad

Plano

Gessner

Kingsville

Bryan

Preston Forest

Gladebrook

Mathis

Bryan-East

Preston Road

Heights

Padre Island

Bryan-North

Red Oak

Highway 6 West

Palacios

Caldwell

Sachse

Hillcroft

Port Lavaca

College Station

The Colony

Little York

Portland

Greens Prairie

Turtle Creek

Medical Center

Rockport

Madisonville

Westmoreland

Memorial Drive

Sinton

Navasota

Northside

Victoria

Rock Prairie

Fort Worth -

Pasadena

Victoria-North

Wellborn Road

Haltom City

Pecan Grove

Keller

Piney Point

West Texas Area -

Central Texas Area -

Roanoke

River Oaks

Stockyards

Royal Oaks

Abilene -

Austin -

Sugar Land

Antilley Road

183

Other Dallas/Fort Worth Locations -

SW Medical Center

Barrow Street

Allandale

Arlington

Tanglewood

Cypress Street

Cedar Park

Azle

Uptown

Judge Ely

Congress

Ennis

Waugh Drive

Mockingbird

Lakeway

Gainesville

West University

Liberty Hill

Glen Rose

Woodcreek

Lubbock -

Northland

Granbury

4th Street

Oak Hill

Mesquite

Other Houston Area Locations -

66th Street

Parmer Lane

Muenster

Angleton

82nd Street

Research Blvd

Sanger

Bay City

86th Street

Westlake

Waxahachie

Beaumont

98th Street

Weatherford

Cinco Ranch

Avenue Q

Other Central Texas Locations -

Cleveland

North University

Bastrop

East Texas Area -

East Bernard

Texas Tech Student Union

Cuero

El Campo

Dime Box

Athens

Dayton

Midland -

Dripping Springs

Blooming Grove

Galveston

Wadley

Elgin

Canton

Groves

Wall Street

Flatonia

Carthage

Hempstead

Georgetown

Corsicana

Hitchcock

Odessa -

Gonzales

Crockett

Katy

Grandview

Hallettsville

Eustace

Liberty

Grant

Kingsland

Gilmer

Magnolia

Kermit Highway

La Grange

Grapeland

Mont Belvieu

Parkway

Lexington

Gun Barrel City

Nederland

New Braunfels

Jacksonville

Needville

Other West Texas Locations -

Pleasanton

Kerens

Shadow Creek

Big Spring

Round Rock

Longview

Sweeny

Brownfield

San Antonio

Mount Vernon

Tomball

Brownwood

Schulenburg

Palestine

Waller

Cisco

Seguin

Rusk

West Columbia

Comanche

Smithville

Seven Points

Wharton

Early

Thorndale

Teague

Winnie

Floydada

Weimar

Tyler-Beckham

Wirt

Gorman

Yoakum

Tyler-South Broadway

Levelland

Yorktown

Tyler-University

South Texas Area -

Littlefield

Winnsboro

Merkel

Dallas/Fort Worth Area -

Corpus Christi -

Plainview

Houston Area -

Airline

San Angelo

Dallas -

Carmel

Slaton

Abrams Centre

Houston -

Northwest

Snyder

Balch Springs

Aldine

Saratoga

Camp Wisdom

Allen Parkway

Water Street

Oklahoma

Cedar Hill

Bellaire

23rd Street

Dallas ? Central Expressway

Beltway

Other South Texas Locations -

Edmond

Frisco

Clear Lake

Alice

Expressway

Frisco-West

Copperfield

Aransas Pass

I-240

Independence

Cypress

Beeville

Memorial

Kiest

Downtown

Edna

Norman

McKinney

Eastex

McKinney-Stonebridge

Fairfield

In connection with the proposed merger of FVNB Corp. into Prosperity Bancshares, Prosperity Bancshares 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 FVNB Corp.  The registration statement will include a proxy statement/prospectus which will be sent to the shareholders of FVNB Corp. 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, FVNB CORP. 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, 2012 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 http://www.prosperitybankusa.com.  

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

 Jun 30, 2013 

 Mar 31, 2013 

 Dec 31, 2012 

 Sep 30, 2012 

 Jun 30, 2012 

Balance Sheet Data

 (at period end)

Total loans

$       6,172,483

$        5,263,024

$       5,179,940

$       5,079,103

$       3,950,332

Investment securities(A)

8,017,884

7,985,811

7,442,065

6,799,513

5,400,044

Federal funds sold 

606

835

352

302

133

Allowance for credit losses

(56,176)

(55,049)

(52,564)

(50,927)

(50,382)

Cash and due from banks

250,542

180,577

325,952

207,650

152,678

Goodwill

1,350,834

1,235,743

1,217,162

1,200,098

932,965

Core deposit intangibles

26,688

26,514

26,159

28,092

17,706

Other real estate

10,244

9,913

7,234

8,846

10,236

Fixed assets, net

227,455

206,829

205,268

201,445

166,273

Other assets

270,158

227,117

232,005

237,997

157,366

Total assets

$     16,270,718

$      15,081,314

$     14,583,573

$     13,712,119

$     10,737,351

Demand deposits

$       3,283,082

$        2,995,828

$       3,016,205

$       2,827,748

$       2,083,910

Interest bearing deposits

9,225,568

8,717,639

8,625,639

8,126,849

6,310,672

Total deposits

12,508,650

11,713,467

11,641,844

10,954,597

8,394,582

Securities sold under repurchase agreements

481,170

470,241

454,502

443,856

122,743

Federal funds purchased and other borrowings

781,215

576,768

256,753

112,017

437,278

Junior subordinated debentures

85,055

85,055

85,055

85,055

85,055

Other liabilities

69,346

86,328

56,030

78,418

53,876

Total liabilities

13,925,436

12,931,859

12,494,184

11,673,943

9,093,534

Shareholders' equity(B)

2,345,282

2,149,455

2,089,389

2,038,176

1,643,817

Total liabilities and equity

$     16,270,718

$      15,081,314

$     14,583,573

$     13,712,119

$     10,737,351

(A) Includes $9,724, $12,054, $13,824, $16,991 and $17,709, in unrealized gains on available for sale securities for the quarterly periods ending June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012,  respectively.

(B) Includes $6,321, $7,835, $8,986, $11,044 and $11,511, in after-tax unrealized gains on available for sale securities for the quarterly periods ending June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Three Months Ended

Year-to-Date

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Jun 30, 2013

Jun 30, 2012

Income Statement Data

Interest income:

Loans

$         89,842

$         81,464

$         82,727

$         80,587

$         54,793

$       171,306

$       108,010

Securities(C)

39,384

36,548

34,956

37,025

38,072

75,932

76,393

Federal funds sold and other earning assets

76

19

36

21

9

95

87

Total interest income

129,302

118,031

117,719

117,633

92,874

247,333

184,490

Interest expense:

Deposits

9,170

8,690

8,217

9,395

8,083

17,860

16,874

Junior subordinated debentures

606

605

631

651

648

1,211

1,311

Securities sold under repurchase agreements

312

292

294

315

59

604

96

Other borrowings

472

362

276

379

418

834

697

Total interest expense

10,560

9,949

9,418

10,740

9,208

20,509

18,978

Net interest income

118,742

108,082

108,301

106,893

83,666

226,824

165,512

Provision for credit losses

2,550

2,800

3,550

1,800

600

5,350

750

Net interest income after provision for credit losses

116,192

105,282

104,751

105,093

83,066

221,474

164,762

Noninterest income:

Nonsufficient funds (NSF) fees

8,346

8,509

9,292

9,265

5,167

16,855

10,556

Debit card and ATM card income

7,007

6,487

6,683

6,246

4,292

13,494

8,128

Service charges on deposit accounts

3,304

2,931

2,877

3,362

2,432

6,235

4,873

Trust income

896

1,017

915

831

-

1,913

-

Mortgage income

1,567

991

1,120

1,437

65

2,558

124

Bank owned life insurance income

932

776

1,242

736

345

1,708

694

Net (loss) gain on sale of assets

(180)

1

(244)

(50)

70

(179)

63

Net gain (loss) on sale of other real estate

237

(105)

(113)

(597)

(165)

132

253

Other noninterest income

3,165

2,834

2,334

2,598

1,450

5,999

2,910

Total noninterest income

25,274

23,441

24,106

23,828

13,656

48,715

27,601

Noninterest expense:

Salaries and benefits

37,517

33,209

31,980

36,701

23,572

70,726

46,824

Core deposit intangibles amortization

1,341

1,755

1,932

2,007

1,595

3,096

3,290

Net occupancy and equipment

4,669

4,278

4,812

4,614

3,492

8,947

7,049

Depreciation

2,464

2,378

2,491

2,369

2,028

4,842

4,063

Debit card, data processing and software amortization

3,249

2,570

3,106

2,901

1,906

5,819

3,438

Regulatory assessments and FDIC insurance

2,579

2,395

2,365

2,107

1,659

4,974

3,207

Communications (includes telephone, courier and postage)

2,410

2,196

2,381

2,226

1,802

4,606

3,550

Other real estate expense

237

223

465

271

383

460

1,074

Other non-interest expense

6,834

6,763

7,436

7,046

4,351

13,597

8,752

Total non-interest expense

61,300

55,767

56,968

60,242

40,788

117,067

81,247

Net income before taxes

80,166

72,956

71,889

68,679

55,934

153,122

111,116

Federal income taxes

26,322

23,651

23,623

22,503

18,962

49,973

37,657

Net income available to common shareholders

$         53,844

$         49,305

$         48,266

$         46,176

$         36,972

$       103,149

$         73,459

(C) Interest income on securities was reduced by net premium amortization of $18,838, $22,710, $23,992, $21,423 and $11,755 for the three month periods ended June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, respectively, and $41,548 and $21,474 for the six month periods ended June 30, 2013 and 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars and share amounts in thousands, except per share data and market prices)

Three Months Ended

Year-to-Date

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Jun 30, 2013

Jun 30, 2012

Profitability

Net income

$         53,844

$          49,305

$         48,266

$         46,176

$         36,972

$       103,149

$         73,459

Basic earnings per share

$             0.89

$              0.87

$             0.86

$             0.83

$             0.78

$             1.76

$             1.55

Diluted earnings per share

$             0.89

$              0.86

$             0.85

$             0.82

$             0.78

$             1.76

$             1.55

Return on average assets(D) 

1.33%

1.33%

1.36%

1.32%

1.35%

1.33%

1.37%

Return on average common equity(D) 

9.27%

9.23%

9.28%

9.10%

9.06%

9.25%

9.10%

Return on average tangible common equity(D) (E)

22.32%

22.30%

22.92%

21.59%

21.70%

22.31%

22.12%

Tax equivalent net interest margin(F)

3.43%

3.42%

3.53%

3.52%

3.55%

3.43%

3.60%

Efficiency ratio(G)

42.51%

42.40%

42.95%

46.07%

41.94%

42.46%

42.09%

Liquidity and Capital Ratios

Equity to assets

14.41%

14.25%

14.33%

14.86%

15.31%

14.41%

15.31%

Tier 1 risk-based capital

14.15%

14.77%

14.40%

14.43%

16.42%

14.15%

16.42%

Total risk-based capital

14.91%

15.61%

15.22%

15.26%

17.49%

14.91%

17.49%

Tier 1 leverage capital

7.07%

7.10%

7.10%

6.92%

7.69%

7.07%

7.69%

Tangible equity to tangible assets(E)

6.50%

6.42%

6.34%

6.49%

7.08%

6.50%

7.08%

Other Data

Shares used in computed earnings per share

Basic

60,250

56,988

56,427

55,958

47,456

58,629

47,347

Diluted

60,394

57,134

56,554

56,093

47,608

58,774

47,508

Period end shares outstanding

60,315

57,014

56,447

56,058

47,474

60,315

47,474

Cash dividends paid per common share

$         0.2150

$          0.2150

$         0.2150

$         0.1950

$         0.1950

$         0.4300

$         0.3900

Book value per share

$           38.88

$            37.70

$           37.02

$           36.36

$           34.63

$           38.88

$           34.63

Tangible book value per share(E)

$           16.05

$            15.56

$           14.99

$           14.45

$           14.60

$           16.05

$           14.60

Common Stock Market Price

High

$           52.38

$            47.56

$           43.54

$           45.40

$           47.31

$           52.38

$           47.66

Low

44.33

42.38

38.56

38.90

39.87

42.38

39.66

Period end market price

51.79

47.39

42.00

42.62

42.03

51.79

42.03

Employees ? FTE

2,496

2,304

2,266

2,260

1,666

2,496

1,666

Number of banking centers

219

224

217

213

176

219

176

(D) Interim periods annualized.

(E) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.

(F) Net interest margin for all periods presented is calculated on an actual 365 day basis or 366 day basis.

(G) Calculated by dividing total non-interest expense, excluding credit loss provisions, by net interest income plus noninterest 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)

YIELD ANALYSIS 

Three Months Ended

Jun 30, 2013

Mar 31, 2013

Jun 30, 2012

Average Balance

Interest Earned/ Interest Paid

Average Yield/ Rate

Average Balance

Interest Earned/ Interest Paid

Average Yield/ Rate

Average Balance

Interest Earned/ Interest Paid

Average Yield/ Rate

Interest-Earning Assets: 

Loans

$   6,114,598

$   89,842

5.89%

$   5,263,784

$   81,464

6.28%

$   3,914,352

$ 54,793

5.63%

Investment securities

7,964,157

39,384

1.98%

(H)

7,755,567

36,548

1.91%

(H)

5,635,810

38,072

2.70%

(H)

Federal funds sold and other earning assets

35,113

76

0.87%

34,793

19

0.22%

20,916

9

0.17%

  Total interest earning assets 

14,113,868

$ 129,302

3.67%

13,054,144

$ 118,031

3.67%

9,571,078

$ 92,874

3.90%

Allowance for credit losses 

(57,754)

(53,242)

(50,746)

Noninterest-earning assets 

2,114,816

1,849,461

1,398,857

  Total assets

$ 16,170,930

$ 14,850,363

$ 10,919,189

Interest-Bearing Liabilities: 

Interest-bearing demand deposits

$   2,580,750

$     2,100

0.33%

$   2,659,489

$     2,210

0.34%

$   1,706,176

$   2,089

0.49%

Savings and money market deposits

4,261,466

3,172

0.30%

3,790,416

2,829

0.30%

2,779,524

2,444

0.35%

Certificates and other time deposits 

2,543,895

3,898

0.61%

2,370,499

3,651

0.62%

1,880,096

3,550

0.76%

Securities sold under repurchase agreements 

471,430

312

0.27%

448,542

292

0.26%

98,968

59

0.24%

Federal funds purchased and other borrowings 

541,034

472

0.35%

358,120

362

0.41%

610,499

418

0.28%

Junior subordinated debentures 

85,055

606

2.86%

85,055

605

2.88%

85,055

648

3.06%

  Total interest-bearing liabilities 

10,483,630

10,560

0.40%

(I)

9,712,121

9,949

0.42%

(I)

7,160,318

9,208

0.52%

(I)

Noninterest-bearing liabilities: 

Noninterest-bearing demand deposits

3,295,211

2,939,621

2,069,965

Other liabilities 

69,741

62,716

56,742

  Total liabilities

13,848,582

12,714,458

9,287,025

Shareholders' equity 

2,322,348

2,135,905

1,632,164

  Total liabilities and shareholders' equity 

$ 16,170,930

$ 14,850,363

$ 10,919,189

Net interest income and margin 

$ 118,742

3.37%

$ 108,082

3.36%

$ 83,666

3.52%

Non-GAAP to GAAP reconciliation:

Tax equivalent adjustment

2,063

2,125

832

Net interest income and margin (tax equivalent basis)

$ 120,805

3.43%

$ 110,207

3.42%

$ 84,498

3.55%

(H) Yield on securities was impacted by net premium amortization of $18,838, $22,710 and $11,755 for the three month periods ended June 30, 2013, March 31, 2013, and June 30, 2012, respectively.

(I) Total cost of funds, including non-interest bearing deposits, was 0.31%, 0.32% and 0.40% for the three months ended June 30, 2013, March 31, 2013 and June 30, 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS 

Year-to-Date

Jun 30, 2013

Jun 30, 2012

Average Balance

Interest Earned/ Interest Paid

Average Yield/ Rate

Average Balance

Interest Earned/ Interest Paid

Average Yield/ Rate

Interest-Earning Assets: 

Loans

$   5,691,541

$171,306

6.07%

$   3,866,672

$108,010

5.62%

Investment securities

7,860,438

75,932

1.95%

(J)

5,414,033

76,393

2.82%

(J)

Federal funds sold and other earning assets

34,954

95

0.55%

73,536

87

0.24%

  Total interest-earning assets 

13,586,933

$247,333

3.67%

9,354,241

$184,490

3.97%

Allowance for credit losses 

(55,513)

(51,174)

Noninterest-earning assets 

1,982,871

1,403,182

  Total assets

$ 15,514,291

$ 10,706,249

Interest-Bearing Liabilities: 

Interest-bearing demand deposits

$   2,619,902

$    4,309

0.33%

$   1,700,208

$    4,152

0.49%

Savings and money market deposits

4,027,242

6,001

0.30%

2,785,936

5,033

0.36%

Certificates and other time deposits 

2,457,676

7,550

0.62%

1,925,584

7,689

0.80%

Securities sold under repurchase agreements 

460,049

604

0.26%

76,136

96

0.25%

Federal funds purchased and other  borrowings 

450,082

834

0.37%

441,630

697

0.32%

Junior subordinated debentures 

85,055

1,211

2.87%

85,055

1,311

3.10%

  Total interest bearing liabilities 

10,100,006

20,509

0.41%

(K)

7,014,549

18,978

0.54%

(K)

Noninterest-bearing liabilities: 

Noninterest-bearing demand deposits

3,118,400

2,020,453

Other liabilities 

66,251

57,523

  Total liabilities

13,284,657

9,092,525

Shareholders' equity 

2,229,634

1,613,724

  Total liabilities and shareholders' equity 

$ 15,514,291

$ 10,706,249

Net interest income and margin 

$226,824

3.37%

$165,512

3.56%

Non-GAAP to GAAP reconciliation:

Tax equivalent adjustment

4,188

1,728

Net interest income and margin (tax equivalent basis)

$231,012

3.43%

$167,240

3.60%

(J) Yield on securities was impacted by net premium amortization of $41,548 and $21,474 for the six month periods ended June 30, 2013 and June 30, 2012, respectively.

(K) Total cost of funds, including non-interest bearing deposits, was 0.31% and 0.42% for the six months ended June 30, 2013, and June 30, 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Year-to-Date

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Jun 30, 2013

Jun 30, 2012

Adjustment to Loan Yield (L)

Interest on loans, as reported

$         89,842

$           81,464

$         82,727

$           80,587

$         54,793

$         171,306

$       108,010

   Less: Purchase accounting adjustment-loan discount accretion

(12,031)

(14,292)

(14,523)

(11,188)

(756)

(26,323)

(701)

Interest on loans without discount accretion

$         77,811

$           67,172

$         68,204

$           69,399

$         54,037

$         144,983

$       107,309

Average loans

$    6,114,598

$      5,263,784

$    5,140,163

$      5,169,101

$    3,914,352

$      5,691,541

$    3,866,672

Loan yield without discount accretion

5.10%

5.18%

5.28%

5.34%

5.55%

5.14%

5.58%

Loan yield, as reported

5.89%

6.28%

6.40%

6.20%

5.63%

6.07%

5.62%

Three Months Ended

Year-to-Date

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Jun 30, 2013

Jun 30, 2012

Adjustment to Securities Yield (L)

Interest on securities, as reported

$         39,384

$           36,548

$         34,956

$           37,025

$         38,072

$           75,932

$         76,393

   Add: Purchase accounting adjustment-securities amortization

2,599

3,106

3,540

3,451

-

5,705

-

Interest on securities including amortization

$         41,983

$           39,654

$         38,496

$           40,476

$         38,072

$           81,637

$         76,393

Average securities

$    7,964,157

$      7,755,567

$    7,228,418

$      7,106,871

$    5,635,810

$      7,860,438

$    5,414,033

Securities yield without purchase accounting adjustment

2.11%

2.07%

2.12%

2.28%

2.72%

2.09%

2.82%

Securities yield, as reported

1.98%

1.91%

1.92%

2.08%

2.70%

1.95%

2.82%

Net Interest Margin (tax equivalent basis, excluding

   purchase accounting adjustments to yield)

3.09%

3.08%

3.18%

3.16%

3.52%

3.12%

3.60%

Net Interest Margin (tax equivalent basis), as reported

3.43%

3.42%

3.53%

3.52%

3.55%

3.43%

3.60%

Net income available to common shareholders, as reported

$         53,844

$           49,305

$         48,266

$           46,176

$         36,972

$         103,149

$         73,459

    Less:  Purchase accounting adjustments, net of tax (M)

(6,319)

(7,606)

(7,469)

(5,261)

(514)

(13,925)

(477)

Net income available to common shareholders, adjusted

$         47,525

$           41,699

$         40,797

$           40,915

$         36,458

$           89,224

$         72,982

Acquired Loans Accounted for Under ASC 310-20

Acquired Loans Accounted for Under ASC 310-30

Total Loans Accounted for Under ASC 310-20 and 310-30

Balance at Acquisition Date

Remaining Balance at June 30, 2013

Balance at Acquisition Date

Remaining Balance at June 30, 2013

Balance at Acquisition Date

Remaining Balance at June 30, 2013

Loan marks:

Previously acquired banks (N)

$         81,328

$           37,832

$         28,764

$           22,989

$       110,092

$           60,821

2013 acquisitions (O)

29,440

24,695

23,414

22,571

52,854

47,266

Total

$       110,768

$           62,527

$         52,178

$           45,560

$       162,946

$         108,087

Acquired portfolio loan balances:

Previously acquired banks (N)

$    1,298,380

$         653,945

$         57,979

$           43,505

$    1,356,359

$         697,450

2013 acquisitions (O)

939,804

775,372

54,083

53,754

993,887

829,126

Total

$    2,238,184

$      1,429,317

$       112,062

$           97,259

$    2,350,246

(P)

$      1,526,576

(L)  Non-GAAP financial measure.

(M)  Using effective tax rate.

(N)  Includes Bank of Texas, Bank Arlington, ASB and Community National which were acquired in 2012.

(O)  Includes East Texas Financial Services and Coppermark Bank.

(P)  Actual principal balances acquired.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

Three Months Ended

 Jun 30, 2013 

 Mar 31, 2013 

 Dec 31, 2012 

 Sep 30, 2012 

 Jun 30, 2012 

YIELD TREND

Interest-Earning Assets: 

Loans

5.89%

6.28%

6.40%

6.20%

5.63%

Investment securities (Q) 

1.98%

1.91%

1.92%

2.08%

2.70%

Federal funds sold and other earning assets

0.87%

0.22%

0.19%

0.16%

0.17%

  Total interest-earning assets 

3.67%

3.67%

3.76%

3.80%

3.90%

Interest-Bearing Liabilities: 

Interest-bearing demand deposits

0.33%

0.34%

0.31%

0.41%

0.49%

Savings and money market deposits

0.30%

0.30%

0.29%

0.34%

0.35%

Certificates and other time deposits 

0.61%

0.62%

0.64%

0.69%

0.76%

Securities sold under repurchase agreements

0.27%

0.26%

0.25%

0.29%

0.24%

Federal funds purchased and other borrowings 

0.35%

0.41%

0.40%

0.29%

0.28%

Junior subordinated debentures 

2.86%

2.88%

2.95%

3.04%

3.06%

  Total interest-bearing liabilities 

0.40%

0.42%

0.41%

0.47%

0.52%

Net Interest Margin 

3.37%

3.36%

3.46%

3.45%

3.52%

Net Interest Margin (tax equivalent)

3.43%

3.42%

3.53%

3.52%

3.55%

(Q) Yield on securities was impacted by net premium amortization of $18,838, $22,710, $23,992, $21,423 and $11,755 for the three month periods ended June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Three Months Ended

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Balance Sheet Averages

Total loans

$    6,114,598

$     5,263,784

$    5,140,163

$    5,169,101

$    3,914,352

Investment securities

7,964,157

7,755,567

7,228,418

7,106,871

5,635,810

Federal funds sold and other earning assets

35,113

34,793

75,135

53,111

20,916

Total interest-earning assets

14,113,868

13,054,144

12,443,716

12,329,083

9,571,078

Allowance for credit losses

(57,754)

(53,242)

(50,775)

(53,944)

(50,746)

Cash and due from banks

279,271

206,990

198,797

206,124

134,055

Goodwill

1,331,568

1,226,332

1,211,596

1,157,330

932,112

Core Deposit Intangibles (CDI)

25,893

25,244

27,108

17,280

18,465

Other real estate

19,605

11,789

9,571

11,600

10,178

Fixed assets, net

223,769

207,517

206,869

192,542

165,784

Other assets

234,710

171,589

190,815

145,244

138,263

Total assets

$  16,170,930

$   14,850,363

$  14,237,697

$  14,005,259

$  10,919,189

Noninterest-bearing deposits

$    3,295,211

$     2,939,621

$    2,963,998

$    2,760,405

$    2,069,965

Interest-bearing demand deposits

2,580,750

2,659,489

2,328,969

2,181,928

1,706,176

Savings and money market deposits

4,261,466

3,790,416

3,600,109

3,516,601

2,779,524

Certificates and other time deposits

2,543,895

2,370,499

2,366,155

2,387,279

1,880,096

Total deposits

12,681,322

11,760,025

11,259,231

10,846,213

8,435,761

Securities sold under repurchase agreements

471,430

448,542

459,998

438,410

98,968

Federal funds purchased and other borrowings

541,034

358,120

272,239

512,739

610,499

Junior subordinated debentures

85,055

85,055

85,055

85,055

85,055

Other liabilities

69,741

62,716

80,085

92,873

56,742

Shareholders' equity

2,322,348

2,135,905

2,081,089

2,029,969

1,632,164

Total liabilities and equity

$  16,170,930

$   14,850,363

$  14,237,697

$  14,005,259

$  10,919,189

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Period End Balances

Loan Portfolio

Commercial and other

$      999,677

16.2%

$      760,531

14.5%

$      798,882

15.4%

$      792,247

15.6%

$    491,907

12.5%

Construction

694,585

11.3%

575,307

10.9%

550,768

10.6%

496,417

9.8%

466,884

11.8%

1-4 family residential

1,452,268

23.6%

1,338,936

25.5%

1,255,765

24.3%

1,213,872

23.9%

1,084,936

27.4%

Home equity

208,739

3.4%

203,815

3.9%

186,801

3.6%

183,844

3.6%

154,147

3.9%

Commercial real estate

2,390,820

38.6%

1,993,518

37.8%

1,990,642

38.4%

1,976,112

38.9%

1,484,787

37.6%

Agriculture (includes farmland)

314,945

5.1%

286,789

5.4%

285,637

5.5%

304,134

6.0%

192,462

4.9%

Consumer

111,449

1.8%

104,128

2.0%

111,445

2.2%

112,477

2.2%

75,209

1.9%

Total loans

$   6,172,483

$   5,263,024

$   5,179,940

$   5,079,103

$ 3,950,332

Deposit Types

Noninterest-bearing DDA

$   3,283,082

26.2%

$   2,995,828

25.6%

$   3,016,205

25.9%

$   2,827,748

25.8%

$ 2,083,910

24.8%

Interest-bearing DDA

2,483,428

19.9%

2,521,998

21.5%

2,626,331

22.6%

2,208,568

20.2%

1,684,492

20.1%

Money Market

2,868,880

22.9%

2,509,501

21.4%

2,362,454

20.3%

2,303,680

21.0%

2,206,220

26.3%

Savings

1,371,214

11.0%

1,345,044

11.5%

1,293,552

11.1%

1,276,271

11.7%

581,480

6.9%

Certificates and other time deposits

2,502,046

20.0%

2,341,096

20.0%

2,343,302

20.1%

2,338,330

21.3%

1,838,480

21.9%

Total deposits

$ 12,508,650

$ 11,713,467

$ 11,641,844

$ 10,954,597

$ 8,394,582

Loan to Deposit Ratio

49.3%

44.9%

44.5%

46.4%

47.1%

Construction Loans

Single family residential construction

$      234,257

32.9%

$      177,218

30.6%

$      161,401

29.2%

$      150,959

30.1%

$    143,600

30.8%

Land development

63,857

9.0%

42,520

7.4%

42,199

7.6%

38,075

7.6%

39,704

8.5%

Raw land

59,701

8.4%

46,672

8.1%

58,794

10.6%

47,620

9.5%

51,070

10.9%

Residential lots

91,018

12.8%

93,598

16.2%

92,697

16.8%

97,445

19.4%

86,201

18.5%

Commercial lots

60,960

8.6%

64,394

11.2%

63,716

11.5%

63,418

12.7%

49,454

10.6%

Commercial construction and other

200,633

28.3%

153,047

26.5%

134,427

24.3%

103,677

20.7%

96,855

20.7%

Net unaccreted discount

(15,841)

(2,142)

(2,466)

(4,777)

-

Total construction loans

$      694,585

$      575,307

$      550,768

$      496,417

$    466,884

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Jun 30, 2013

Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

Asset Quality

Nonaccrual loans

$           4,295

$            7,529

$           5,382

$           5,063

$           1,624

Accruing loans 90 or more days past due

325

642

331

132

-

Total non-performing loans

4,620

8,171

5,713

5,195

1,624

Repossessed assets

-

49

68

10

13

Other real estate

10,244

9,913

7,234

8,846

10,236

  Total nonperforming assets

$         14,864

$          18,133

$         13,015

$         14,051

$         11,873

Nonperforming assets:

Commercial

$           1,191

$            3,896

$           1,568

$           1,599

$              394

Construction

5,898

3,678

3,522

3,182

4,056

1-4 family (including home equity)

2,112

3,746

3,081

3,089

2,284

Commercial real estate (including multi-family)

4,330

5,533

2,608

4,671

5,077

Agriculture 

1,213

1,183

1,463

1,476

44

Consumer and other

120

97

773

34

18

Total 

$         14,864

$          18,133

$         13,015

$         14,051

$         11,873

Number of loans/properties

123

124

116

119

88

Allowance for credit losses at end of period

$ 56,176

$ 55,049

$ 52,564

$ 50,927

$ 50,382

Net charge-offs:

Commercial

$              148

$                 59

$              205

$            (511)

$              180

Construction

124

(56)

21

155

1,179

1-4 family (including home equity)

35

102

65

251

90

Commercial real estate (including multi-family)

801

(57)

1,012

800

296

Agriculture

13

(7)

70

(30)

(3)

Consumer and other

302

274

540

590

118

Total 

$           1,423

$               315

$           1,913

$           1,255

$           1,860

Asset Quality Ratios

Nonperforming assets to average earning assets

0.11%

0.14%

0.10%

0.11%

0.12%

Nonperforming assets to loans and other real estate

0.24%

0.34%

0.25%

0.28%

0.30%

Net charge-offs to average loans  (annualized)

0.09%

0.02%

0.15%

0.08%

0.20%

Allowance for credit losses to total loans

0.91%

1.05%

1.01%

1.00%

1.28%

Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)

1.18%

1.25%

1.22%

1.27%

N/A

Prosperity Bancshares, Inc.®Notes to Selected Financial Data (Unaudited)(Dollars and share amounts in thousands, except per share data)

Consolidated Financial Highlights

NOTES TO SELECTED FINANCIAL DATA

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 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

Year-to-Date

 Jun 30, 2013 

 Mar 31, 2013 

 Dec 31, 2012 

 Sep 30, 2012 

 Jun 30, 2012 

 Jun 30, 2013 

 Jun 30, 2012 

Return on average tangible common equity:

Net income

$            53,844

$             49,305

$            48,266

$          46,176

$         36,972

$        103,149

$          73,459

Average shareholders' equity

$       2,322,348

$        2,135,905

$       2,081,089

$     2,029,969

$    1,632,164

$     2,229,634

$     1,613,724

Less: Average goodwill and other intangible assets

(1,357,461)

(1,251,576)

(1,238,704)

(1,174,610)

(950,577)

(1,304,811)

(949,548)

        Average tangible shareholders' equity

$          964,887

$           884,329

$          842,385

$        855,359

$       681,587

$        924,823

$        664,176

Return on average tangible common  equity:

22.32%

22.30%

22.92%

21.59%

21.70%

22.31%

22.12%

Tangible book value per share:

Shareholders' equity

$       2,345,282

$        2,149,455

$       2,089,389

$     2,038,176

$    1,643,817

$     2,345,282

$     1,643,817

Less: Goodwill and other intangible assets

(1,377,522)

(1,262,257)

(1,243,321)

(1,228,190)

(950,671)

(1,377,522)

(950,671)

         Tangible shareholders' equity

$          967,760

$           887,198

$          846,068

$        809,986

$       693,146

$        967,760

$        693,146

Period end shares outstanding

60,315

57,014

56,447

56,058

47,474

60,315

47,474

Tangible book value per share:

$              16.05

$               15.56

$              14.99

$            14.45

$           14.60

$            16.05

$            14.60

Tangible equity to tangible assets ratio:

Tangible shareholders' equity

$          967,760

$           887,199

$          846,068

$        809,986

$       693,146

$        967,760

$        693,146

Total assets

$     16,270,718

$      15,081,314

$     14,583,573

$   13,712,119

$  10,737,351

$   16,270,718

$   10,737,351

Less: Goodwill and other intangible assets

(1,377,522)

(1,262,257)

(1,243,321)

(1,228,190)

(950,671)

(1,377,522)

(950,671)

         Tangible assets

$     14,893,196

$      13,819,057

$     13,340,252

$   12,483,929

$    9,786,680

$   14,893,196

$     9,786,680

Tangible equity to tangible assets ratio:

6.50%

6.42%

6.34%

6.49%

7.08%

6.50%

7.08%

  

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)

 

 Jun 30, 2013 

 Mar 31, 2013 

 Dec 31, 2012 

Allowance for credit losses to total loans, excluding acquired loans:

Allowance for credit losses

$           56,176

$            55,049

$           52,564

Total loans

$      6,172,483

$       5,263,024

$      5,179,940

Less: Fair value of acquired loans accounted for under ASC

       Topics 310-20 and 310-30 (does not include new production)

$      1,418,489

$          853,751

$         887,953

Total loans less acquired loans

$      4,753,994

$       4,409,273

$      4,291,987

Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)

1.18%

1.25%

1.22%

 

SOURCE Prosperity Bancshares, Inc.

For further information: David Zalman Chairman and Chief Executive Officer of Prosperity Bancshares, Inc.®, 281.269.7199, david.zalman@prosperitybankusa.com

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