Prosperity Bancshares, Inc.® Reports Record Second Quarter 2014 Earnings

- Second quarter 2014 earnings per share (diluted) increased 21.3% to $1.08 compared with the second quarter 2013
- Net income increased $21.662 million or 40.2% compared with the second quarter 2013
- Nonperforming assets remain low at 0.15% of second quarter average earning assets
- Loans increased $3.136 billion or 50.8% compared with the second quarter 2013
- Deposits increased $4.772 billion or 38.2% compared with the second quarter 2013

PR Newswire

HOUSTON, July 25, 2014 /PRNewswire/ -- Prosperity Bancshares, Inc. ® ( PB ), the parent company of Prosperity Bank ® (collectively, "Prosperity"), reported net income for the quarter ended June 30, 2014, of $75.506 million or $1.08 per diluted common share, an increase in net income of $21.662 million or 40.2%, compared with $53.844 million, and an increase in diluted earnings per share of 21.3%, compared with $0.89 per diluted common share for the same period in 2013. 

"I am proud of the strong results our team has generated in the second quarter of 2014.  We achieved diluted earnings per share of $1.08 for the quarter, an increase of 21.3% compared with the second quarter of 2013, and continued to see good organic loan growth with our legacy bank. Excluding loans acquired in acquisitions, loans at June 30, 2014 grew 8.4% compared with June 30, 2013 and 3.0% (11.8% annualized) on a linked quarter basis," said David Zalman, Prosperity's Chairman and Chief Executive Officer. 

"We are finished with the operational integration of F&M Bank in Tulsa and look forward to building and growing strong relationships with customers and associates in the Tulsa and Dallas markets served by F&M.  The F&M Bank associates have been great to work with and we look forward to them assuming leadership roles in our company and helping take us forward," continued Zalman.   

"I continue to see growth and prosperity for our company.  Texas and Oklahoma continue to have some of the best economies in the United States and show positive economic and growth trends," concluded Zalman. 

Prosperity's management uses certain nonGAAP (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.  As a result of acquisitions, and thus purchase accounting adjustments, 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 FASB Accounting Standards Codification ("ASC") Topics 310-20, " Receivables-Nonrefundable Fees and Other Costs " and 310-30, " Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality ").  Prosperity has included in this Earnings Release information related 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, 2014

For the three months ended June 30, 2014, net income was $75.506 million compared with $53.844 million for the same period in 2013.  Net income per diluted common share was $1.08 for the three months ended June 30, 2014, compared with $0.89 for the same period in 2013.  Net income for the quarter includes one-time merger expenses of $2.026 million.  Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2014 were 1.42%, 9.75% and 24.06%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.90% for the three months ended June 30, 2014.

Net interest income before provision for credit losses for the quarter ended June 30, 2014 increased 46.6% to $174.055 million, compared with $118.742 million during the same period in 2013.  The increase was primarily due to a 30.7% increase in average interest-earning assets for the same period.  The net interest margin on a tax equivalent basis for the three months ended June 30, 2014 increased to 3.83%, compared with 3.43% for the same period in 2013 and increased from 3.62% for the three months ended March 31, 2014.  Linked quarter net interest income before provision for credit losses increased 21.1% or $30.364 million to $174.055 million, compared with $143.691 million during the three months ended March 31, 2014, primarily due to the acquisition of F&M Bancorporation Inc. and its wholly-owned subsidiary, The F&M Bank and Trust Company (collectively, "F&M") and an $11.877 million increase in purchase accounting adjustments from purchased loans.  Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased on a linked quarter basis from 3.33% for the quarter ended March 31, 2014 to 3.31% for the quarter ended June 30, 2014. 

Noninterest income increased $8.727 million or 34.5% to $34.001 million for the three months ended June 30, 2014, compared with $25.274 million for the same period in 2013.  This increase was primarily due to an increase in fees and service charges as a result of the additional accounts acquired from F&M and FVNB Corp. and its wholly-owned subsidiary, First Victoria National Bank (collectively, "FVNB").  Trust and brokerage income increased as a result of the additional products and services acquired through the acquisition of FVNB in 2013.  These increases were partially offset by a decrease in debit card income as a result of the Durbin Amendment that became effective on July 1, 2013.  As a result of this legislation, the Federal Reserve imposed limits on the amount of interchange, or swipe, fees that can be collected for financial institutions that have assets of $10 billion or more.  On a linked quarter basis, noninterest income increased $5.397 million or 18.9% primarily due to gains on the sale of assets, including the sale of certain bank buildings, gains on other real estate owned, life insurance proceeds received and increased fees and service charges resulting from the additional accounts acquired in the F&M acquisition consummated during the second quarter of 2014. 

Noninterest expense increased $27.396 million or 44.7% to $88.696 million for the three months ended June 30, 2014, compared with $61.300 million for the same period in 2013.  This increase was primarily due to additional noninterest expenses associated with the acquisitions of FVNB and F&M.  On a linked quarter basis, noninterest expense increased 24.9% or $17.662 million primarily due to the additional salaries and benefits and other noninterest expenses associated with the F&M acquisition.  Additionally, one-time pre-tax merger expenses of $2.026 million primarily related to the F&M acquisition were recorded during the second quarter of 2014. 

Loans at June 30, 2014 were $9.308 billion, an increase of $3.136 billion or 50.8%, compared with $6.172 billion at June 30, 2013, primarily due to the acquisitions of FVNB and F&M.  Linked quarter loans increased $1.556 billion or 20.1% from $7.752 billion at March 31, 2014 due mainly to the acquisition of F&M. 

Deposits at June 30, 2014 were $17.281 billion, an increase of $4.772 billion or 38.2%, compared with $12.509 billion at June 30, 2013, primarily due to the acquisitions of FVNB and F&M.  Linked quarter deposits increased $1.821 billion or 11.8% from $15.460 billion at March 31, 2014 due mainly to the acquisition of F&M. 

Average loans increased 54.8% or $3.354 billion to $9.468 billion for the quarter ended June 30, 2014, compared with $6.115 billion for the same period in 2013.  On a linked quarter basis, average loans increased 22.1% or $1.712 billion from $7.756 billion for the quarter ended March 31, 2014. Average deposits increased 35.3% or $4.483 billion to $17.164 billion for the quarter ended June 30, 2014, compared with $12.681 billion for the same period of 2013.   On a linked quarter basis, average deposits increased 11.6% or $1.782 billion from $15.382 billion for the quarter ended March 31, 2014. 

Results of operations for the six months ended June 30, 2014

For the six months ended June 30, 2014, net income was $142.643 million, compared with $103.149 million for the same period in 2013.  Net income per diluted common share was $2.10 for the six months ended June 30, 2014, compared with $1.76 for the same period in 2013.  Returns on average assets, average common equity and average tangible common equity, each on an annualized basis, for the six months ended June 30, 2014 were 1.43%, 9.72% and 24.12%, 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 six months ended June 30, 2014.

Net interest income before provision for credit losses for the six months ended June 30, 2014, increased 40.1% to $317.746 million, compared with $226.824 million during the same period in 2013.  The increase was primarily due to a 28.0% increase in average interest-earning assets over the same period.  The net interest margin on a tax equivalent basis for the six months ended June 30, 2014 increased to 3.73%, compared with 3.43% for the same period in 2013.  Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis increased to 3.32% for the six months ended June 30, 2014 from 3.12% for the same period in 2013. 

Noninterest income increased $13.890 million or 28.5% to $62.605 million for the six months ended June 30, 2014, compared with $48.715 million for the same period in 2013.  This increase was primarily due to the effects of the additional accounts acquired in the acquisitions of Coppermark Bancshares Inc. and its wholly-owned subsidiary, Coppermark Bank (collectively, "Coppermark"), FVNB and F&M completed in 2013 and 2014.  Additionally, trust and brokerage income increased as a result of the additional products and services acquired through the FVNB acquisition.  In addition, gain on the sale of assets increased $4.8 million during the six months ended June 30, 2014 compared to the same period in 2013, primarily due to a $2.224 million gain that was recorded during the first quarter of 2014 on the sale of the agent bank credit card and agent bank merchant processing business of Bankers Credit Card Services, Inc., a subsidiary acquired as part of the acquisition of Coppermark.

Noninterest expense increased $42.663 million or 36.4% to $159.730 million for the six months ended June 30, 2014, compared with $117.067 million for the same period in 2013.  This increase was primarily due to additional noninterest expenses associated with the acquisitions of Coppermark, FVNB and F&M.  Additionally, total noninterest expense for the six months ended June 30, 2014 included one-time pre-tax merger expenses of $2.757 million related primarily to the F&M and FVNB acquisitions. 

Average loans increased 51.4% or $2.925 billion to $8.617 billion for the six months ended June 30, 2014, compared with $5.692 billion for the same period in 2013.  Average deposits increased 33.2% or $4.054 billion to $16.277 billion for the six months ended June 30, 2014, compared with $12.223 billion for the same period of 2013.  

The table below provides detail on loans acquired and deposits assumed in the acquisitions of East Texas Financial Services Inc. and First Federal Bank Texas (collectively "East Texas Financial Services"), Coppermark, FVNB and F&M completed on January 1, 2013, April 1, 2013, November 1, 2013 and April 1, 2014, respectively:

Balance Sheet Data (at period end)










(In thousands)











Jun 30, 2014


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)











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










   East Texas Financial Services

$         85,910


$          92,474


$         99,281


$       104,403


$       111,626

   Coppermark

560,692


580,416


616,333


688,656


772,965

   FVNB

1,424,395


1,509,927


1,588,238


-


-

   F&M

1,502,836


-


-


-


-

All other

5,734,329


5,569,583


5,471,369


5,389,530


5,287,892

Total loans

$    9,308,162


$     7,752,400


$    7,775,221


$    6,182,589


$    6,172,483





















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










   East Texas Financial Services

$         71,696


$          76,734


$         81,200


$         90,649


$         88,289

   Coppermark

987,074


1,014,436


1,031,993


1,073,567


1,087,137

   FVNB

2,105,120


2,164,824


2,239,415


-


-

   F&M

2,090,468


-


-


-


-

All other

12,026,697


12,204,063


11,938,663


11,291,583


11,333,224

Total deposits

$  17,281,055


$   15,460,057


$  15,291,271


$  12,455,799


$  12,508,650

 

As reflected in the table above, loan and deposit growth was impacted by the acquisitions of East Texas Financial Services, Coppermark, FVNB and F&M.  Excluding loans acquired in these acquisitions and new production at the acquired banking centers since the respective acquisition dates, loans at June 30, 2014 grew $446.437 million or 8.4% compared with June 30, 2013 and increased $164.746 million or 3.0% (11.8% 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, 2014 grew $693.473 million or 6.1% compared with June 30, 2013 and decreased $177.366 million or 1.5% on a linked quarter basis.

At June 30, 2014, Prosperity had $21.2 billion in total assets, $9.308 billion in loans and $17.281 billion in deposits. Assets, loans and deposits at June 30, 2014 increased by 30.6%, 50.8% and 38.2%, respectively, compared with their respective levels at June 30, 2013.

Asset Quality

Nonperforming assets totaled $28.521 million or 0.15% of quarterly average earning assets at June 30, 2014, compared with $14.864 million or 0.11% of quarterly average earning assets at June 30, 2013, and $18.696 million or 0.11% of quarterly average earning assets at March 31, 2014.  The allowance for credit losses was 0.79% of total loans at June 30, 2014, 0.91% of total loans at June 30, 2013 and 0.87% of total loans at March 31, 2014.  Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.15% of remaining loans as of June 30, 2014, compared with 1.18% at both June 30, 2013 and March 31, 2014.  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 $6.325 million for the three months ended June 30, 2014, compared with $600 thousand for the three months ended March 31, 2014 and $2.550 million for the three months ended June 30, 2013.  The provision for credit losses was $6.925 million for the six months ended June 30, 2014, compared with $5.350 million for the six months ended June 30, 2013. 

Net charge offs were $155 thousand for the three months ended June 30, 2014, compared with $786 thousand for the three months ended March 31, 2014 and $1.423 million for the three months ended June 30, 2013.  Net charge offs were $941 thousand for the six months ended June 30, 2014, compared with $1.738 million for the six months ended June 30, 2013.

Conference Call

Prosperity's management team will host a conference call on Friday, July 25, 2014 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity's second quarter 2014 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383.  The elite entry number is 8369040.

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 "Investor Relations" tab and then the "Presentations & Calls" link.

Acquisition of F&M Bancorporation

On April 1, 2014, Prosperity completed the acquisition of F&M Bancorporation Inc. ("FMBC") and its wholly-owned subsidiary, The F&M Bank & Trust Company ("F&M") headquartered in Tulsa, Oklahoma.  F&M Bank operated 13 banking offices: 9 in Tulsa, Oklahoma and surrounding areas; 3 in Dallas, Texas; and 1 loan production office in Oklahoma City, Oklahoma.  As of March 31, 2014, FMBC, on a consolidated basis, reported total assets of $2.412 billion, total loans of $1.738 billion and total deposits of $2.267 billion.

Pursuant to the terms of the acquisition agreement, Prosperity issued 3,298,022 shares of Prosperity common stock plus $34.240 million in cash for all outstanding shares of FMBC capital stock, which resulted in goodwill of $214.583 million as of June 30, 2014.  The goodwill balance as of June 30, 2014 does not include subsequent fair value adjustments that are still being finalized. 

Acquisition of FVNB Corp.

On November 1, 2013, Prosperity completed the acquisition of FVNB Corp. and its wholly-owned subsidiary, First Victoria National Bank headquartered in Victoria, Texas.  First Victoria National Bank operated 33 banking offices: 4 in Victoria, Texas; 7 in the South Texas area including Corpus Christi; 6 in the Bryan/College Station area; 5 in the Central Texas area including New Braunfels; and 11 in the Houston area including The Woodlands and Huntsville.  As of September 30, 2013, FVNB, on a consolidated basis, reported total assets of $2.473 billion, total loans of $1.648 billion and total deposits of $2.195 billion. 

Pursuant to the terms of the acquisition agreement, Prosperity issued 5,570,667 shares of Prosperity common stock plus $91.250 million in cash for all outstanding shares of FVNB Corp. capital stock, which resulted in goodwill of $331.090 million as of June 30, 2014.  Additionally, the Company recognized $18.411 million of core deposit intangibles as of June 30, 2014.  These goodwill and core deposit intangible balances as of June 30, 2014 do not include subsequent fair value adjustments that are still being finalized. 

Acquisition of Coppermark Bancshares, Inc.

On April 1, 2013, Prosperity completed the acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank headquartered in Oklahoma City, Oklahoma. Coppermark operated 9 full-service banking offices: 6 in Oklahoma City, Oklahoma and surrounding areas and 3 in the Dallas, Texas area. As of March 31, 2013, Coppermark reported, on a consolidated basis, total assets of $1.248 billion, total loans of $847.558 million and total deposits of $1.120 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 goodwill of $117.653 million.  Additionally, the Company recognized $1.514 million of core deposit intangibles.   

Acquisition of East Texas Financial Services, Inc.

On January 1, 2013, Prosperity completed the acquisition of East Texas Financial Services, Inc. (OTC BB: FFBT) and its wholly-owned subsidiary, First Federal Bank Texas ("Firstbank"). Firstbank operated 4 banking offices in the Tyler MSA, including 3 locations in Tyler, Texas and 1 location in Gilmer, Texas. As of December 31, 2012, East Texas Financial Services reported, on a consolidated basis, total assets of $165.955 million, total loans of $129.307 million and total deposits of $112.293 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 goodwill of $15.007 million.

Prosperity Bancshares, Inc. ®

As of June 30, 2014, Prosperity Bancshares Inc. ® , named America's Best Bank for 2014 by Forbes, is a $21.248 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, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services and Mobile Banking. Prosperity currently operates 246 full-service banking locations: 62 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 37 in the Dallas/Fort Worth area; 22 in the East Texas area; 30 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area, 6 in the Central Oklahoma area and 9 in the Tulsa, Oklahoma area.


Bryan/College Station Area -

Sachse

Sugar Land

Taft 

Bryan

The Colony

SW Medical Center

Victoria

Bryan-29 th Street

Turtle Creek

Tanglewood

Victoria-Navarro

Bryan-East

Westmoreland

Uptown

Victoria-North

Bryan-North


Waugh Drive

Yoakum

Caldwell

Fort Worth -

Westheimer

Yorktown

College Station

Haltom City

West University


Crescent Point

Keller

Woodcreek

West Texas Area -

Hearne

Roanoke


Abilene -

Huntsville

Stockyards

Other Houston Area

Antilley Road

Madisonville


Locations -

Barrow Street

Navasota

Other Dallas/Fort Worth

Angleton

Cypress Street

New Waverly

Locations -

Bay City

Judge Ely

Rock Prairie

Arlington

Beaumont

Mockingbird

Southwest Parkway

Azle

Cinco Ranch


Tower Point

Ennis

Cleveland

Lubbock -

Wellborn Road

Gainesville

East Bernard

4 th Street


Glen Rose

El Campo

66 th Street

Central Texas Area -

Granbury

Dayton

82 nd Street

Austin -

Mesquite

Galveston

86 th Street

183

Muenster

Groves

98 th Street

Allandale

Sanger

Hempstead

Avenue Q

Cedar Park

Waxahachie

Hitchcock

North University

Congress

Weatherford

Katy

Texas Tech Student Union

Lakeway


Katy-Spring Green


Liberty Hill

East Texas Area -

Liberty

Midland -

Northland

Athens

Magnolia

Wadley

Oak Hill

Blooming Grove

Magnolia Parkway

Wall Street

Research Blvd

Canton

Mont Belvieu


Westlake

Carthage

Nederland

Odessa -


Corsicana

Needville

Grandview

Other Central Texas Locations -

Crockett

Rosenberg

Grant

Bastrop

Eustace

Shadow Creek

Kermit Highway

Canyon Lake

Gilmer

Spring

Parkway

Dime Box

Grapeland

Sweeny


Dripping Springs

Gun Barrel City

The Woodlands-I-45

Other West Texas Locations -

Elgin

Jacksonville

The Woodlands-Research Forest

Big Spring

Flatonia

Kerens

Tomball

Brownfield

Georgetown

Longview

Waller

Brownwood

Gruene

Mount Vernon

West Columbia

Cisco

Kingsland

Palestine

Wharton

Comanche

La Grange

Rusk

Winnie

Early

Lexington

Seven Points

Wirt

Floydada

New Braunfels

Teague


Gorman

Pleasanton

Tyler-Beckham

South Texas Area -

Levelland

Round Rock

Tyler-South Broadway

Corpus Christi -

Littlefield

San Antonio

Tyler-University

Airline

Merkel

Schulenburg

Winnsboro

Calallen

Plainview

Seguin


Carmel

San Angelo

Smithville

Houston Area -

Northwest

Slaton

Thorndale

Houston -

Saratoga

Snyder

Weimar

Aldine

Timbergate



Allen Parkway

Water Street

Oklahoma

Dallas/Fort Worth Area -

Bellaire


Central Oklahoma-

Dallas -

Beltway

Other South Texas

23 rd Street

Abrams Centre

Clear Lake

Locations -

Edmond

Balch Springs

Copperfield

Alice

Expressway

Camp Wisdom

Cypress

Aransas Pass

I-240

Cedar Hill

Downtown

Beeville

Memorial

Dallas Central Expressway

Eastex

Colony Creek

Norman

Forest Park

Fairfield

Cuero


Frisco

First Colony

Edna

Tulsa-

Frisco-West

Gessner

Goliad

Garnett

Independence

Gladebrook

Gonzales

Harvard

Kiest

Heights

Hallettsville

Memorial

McKinney

Highway 6 West

Kingsville

Owasso

McKinney-Stonebridge

Little York

Mathis

Sheridan

Midway

Medical Center

Padre Island

S. Harvard

Northwest Highway

Memorial Drive

Palacios

Utica Square

Plano

Northside

Port Lavaca

Utica Tower

Preston Forest

Pasadena

Portland

Yale

Preston Road

Pecan Grove

Rockport


Red Oak

River Oaks

Sinton






 

"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, 2013 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, 2014 


 Mar 31, 2014 


 Dec 31, 2013 


 Sep 30, 2013 


 Jun 30, 2013 

Balance Sheet Data










 (at period end)








Total loans

$       9,308,162


$        7,752,400


$       7,775,221


$       6,182,589


$       6,172,483

Investment securities (A)

8,851,235


8,561,337


8,224,448


7,771,345


8,017,884

Federal funds sold 

3,630


382


400


1,121


606

Allowance for credit losses

(73,266)


(67,096)


(67,282)


(59,913)


(56,176)

Cash and due from banks

509,853


349,860


380,990


269,987


250,542

Goodwill

1,894,270


1,672,004


1,671,520


1,351,782


1,350,834

Core deposit intangibles, net

37,072


39,702


42,049


25,233


26,688

Other real estate owned

5,093


7,372


7,299


7,432


10,244

Fixed assets, net

285,751


280,812


282,925


232,240


227,455

Other assets

426,306


316,360


324,458


272,463


270,158

Total assets

$     21,248,106


$      18,913,133


$     18,642,028


$     16,054,279


$     16,270,718











Noninterest-bearing deposits

$       4,921,398


$        4,142,042


$       4,108,835


$       3,368,357


$       3,283,082

Interest-bearing deposits

12,359,657


11,318,015


11,182,436


9,087,442


9,225,568

Total deposits

17,281,055


15,460,057


15,291,271


12,455,799


12,508,650

Securities sold under 










     repurchase agreements

388,342


349,074


364,357


431,969


481,170

Other borrowings

200,210


40,451


10,689


605,951


781,215

Junior subordinated debentures

167,531


124,231


124,231


85,055


85,055

Other liabilities

90,374


98,566


64,662


86,393


69,346

Total liabilities

18,127,512


16,072,379


15,855,210


13,665,167


13,925,436

Shareholders' equity (B)

3,120,594


2,840,754


2,786,818


2,389,112


2,345,282

Total liabilities and equity

$     21,248,106


$      18,913,133


$     18,642,028


$     16,054,279


$     16,270,718

 

(A) Includes $6,706, $7,023, $7,512, $8,588 and $9,724 in unrealized gains on available for sale securities for the quarterly periods ending June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively.


(B) Includes $4,359, $4,565, $4,883, $5,582 and $6,321 in after-tax unrealized gains on available for sale securities for the quarterly periods ending June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively.


 

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

(In thousands)
















Three Months Ended


Year-to-Date


Jun 30, 2014


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Jun 30, 2014


Jun 30, 2013















Income Statement Data














Interest income:














Loans

$       138,655


$        107,144


$       110,575


$         94,236


$         89,842


$       245,799


$       171,306

Securities (C)

47,670


47,056


45,100


41,961


39,384


94,726


75,932

Federal funds sold and other earning assets

178


48


76


16


76


226


95

Total interest income

186,503


154,248


155,751


136,213


129,302


340,751


247,333















Interest expense:














Deposits

10,918


9,387


9,048


8,314


9,170


20,305


17,860

Securities sold under repurchase agreements

254


237


280


317


312


491


1,211

Junior subordinated debentures

1,087


775


730


610


606


1,862


604

Other borrowings

189


158


224


439


472


347


834

Total interest expense

12,448


10,557


10,282


9,680


10,560


23,005


20,509

Net interest income

174,055


143,691


145,469


126,533


118,742


317,746


226,824

Provision for credit losses

6,325


600


7,865


4,025


2,550


6,925


5,350

Net interest income after provision for credit losses

167,730


143,091


137,604


122,508


116,192


310,821


221,474















Noninterest income:














Nonsufficient funds (NSF) fees

9,099


8,870


9,669


8,649


8,346


17,969


16,855

Credit card, debit card and ATM card income 

5,532


4,724


4,662


4,307


7,007


10,256


13,494

Service charges on deposit accounts

4,823


4,037


3,460


3,169


3,304


8,860


6,235

Trust income

2,044


1,800


1,542


901


896


3,844


1,913

Mortgage income

1,208


593


549


931


1,567


1,801


2,558

Brokerage income

1,401


1,269


719


233


263


2,670


566

Bank owned life insurance income

1,365


1,028


1,011


916


932


2,393


1,708

Net gain (loss) on sale of assets

1,301


3,310


40


126


(180)


4,611


(179)

Net gain (loss) on sale of other real estate

1,404


(60)


196


(864)


237


1,344


132

Other noninterest income

5,824


3,033


3,310


3,186


2,902


8,857


5,433

Total noninterest income

34,001


28,604


25,158


21,554


25,274


62,605


48,715















Noninterest expense:














Salaries and benefits

54,126


43,408


40,633


37,135


37,517


97,534


70,726

Net occupancy and equipment

5,996


5,339


4,893


5,094


4,669


11,335


8,947

Debit card, data processing and software amortization

4,009


3,184


3,333


2,756


3,249


7,193


5,819

Regulatory assessments and FDIC insurance

3,886


2,726


2,771


2,516


2,579


6,612


4,974

Core deposit intangibles amortization

2,630


2,045


1,594


1,455


1,341


4,675


3,096

Depreciation

3,522


3,201


3,072


2,679


2,464


6,723


4,842

Communications

2,919


2,737


2,468


2,397


2,410


5,656


4,606

Other real estate expense

188


396


176


75


237


584


460

Other noninterest expense

11,420


7,998


9,652


7,430


6,834


19,418


13,597

Total noninterest expense

88,696


71,034


68,592


61,537


61,300


159,730


117,067

Income before income taxes

113,035


100,661


94,170


82,525


80,166


213,696


153,122

Provision for income taxes

37,529


33,524


31,199


27,247


26,322


71,053


49,973

Net income available to common shareholders

$         75,506


$          67,137


$         62,971


$         55,278


$         53,844


$       142,643


$       103,149

(C) Interest income on securities was reduced by net premium amortization of $12,837, $12,280, $12,017, $15,136 and $18,838 for the three month periods ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively, and $25,117 and $41,548 for the six month periods ended June 30, 2014 and June 30, 2013, 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, 2014


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Jun 30, 2014


Jun 30, 2013















Profitability














Net income

$         75,506


$          67,137


$         62,971


$         55,278


$         53,844


$       142,643


$       103,149















Basic earnings per share

$             1.08


$              1.01


$             0.98


$             0.92


$             0.89


$             2.10


$             1.76

Diluted earnings per share

$             1.08


$              1.01


$             0.98


$             0.91


$             0.89


$             2.10


$             1.76















Return on average assets (D) 

1.42%


1.43%


1.42%


1.37%


1.33%


1.43%


1.33%

Return on average common equity (D) 

9.75%


9.52%


9.53%


9.31%


9.27%


9.72%


9.25%

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

24.06%


24.23%


23.97%


22.14%


22.32%


24.12%


22.31%

Tax equivalent net interest margin (F)

3.83%


3.62%


3.82%


3.59%


3.43%


3.73%


3.43%

Efficiency ratio (G)

42.90%


42.04%


40.21%


41.59%


42.51%


42.51%


42.46%















Liquidity and Capital Ratios














Equity to assets

14.69%


15.02%


14.95%


14.88%


14.41%


14.69%


14.41%

Tier 1 risk-based capital

12.50%


13.85%


13.29%


14.74%


14.15%


12.50%


14.15%

Total risk-based capital

13.18%


14.59%


14.03%


15.55%


14.91%


13.18%


14.91%

Tier 1 leverage capital

6.98%


7.30%


7.44%


7.37%


7.07%


6.98%


7.07%

Tangible equity to tangible assets (E)

6.16%


6.56%


6.35%


6.90%


6.50%


6.16%


6.50%















Other Data














Shares used in computed earnings per share














Basic

69,667


66,186


64,024


60,344


60,250


67,936


58,629

Diluted

69,728


66,280


64,173


60,504


60,394


68,014


58,774

Period end shares outstanding

69,744


66,261


66,048


60,383


60,315


69,744


60,315

Cash dividends paid per common share

$           0.240


$            0.240


$           0.240


$           0.215


$           0.215


$           0.480


$           0.430

Book value per share

$           44.74


$            42.87


$           42.19


$           39.57


$           38.88


$           44.74


$           38.88

Tangible book value per share (E)

$           17.05


$            17.04


$           16.27


$           16.76


$           16.05


$           17.05


$           16.05















Common Stock Market Price














High

$           67.49


$            67.68


$           65.49


$           62.00


$           52.40


$           67.68


$           52.38

Low

56.04


59.75


61.18


51.85


44.33


56.04


42.38

Period end closing price

62.60


66.15


63.39


61.84


51.79


62.60


51.79

Employees FTE

3,199


2,888


2,995


2,454


2,496


3,199


2,496

Number of banking centers

247


236


238


218


219


247


219

(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.

(G) Calculated by dividing total noninterest 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, 2014


Mar 31, 2014


Jun 30, 2013



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

$   9,468,136


$ 138,655


5.87%


$   7,755,997


$ 107,144


5.60%


$   6,114,598


$   89,842


5.89%


Investment securities

8,748,322


47,670


2.19%

(H)

8,466,946


47,056


2.25%

(H)

7,964,157


39,384


1.98%

(H)

Federal funds sold and other



















   earning assets

234,302


178


0.30%


101,700


48


0.19%


35,113


76


0.87%


      Total interest-earning assets 

18,450,760


$ 186,503


4.05%


16,324,643


$ 154,248


3.83%


14,113,868


$ 129,302


3.67%


Allowance for credit losses 

(72,587)






(67,222)






(57,754)






Noninterest-earning assets 

2,939,375






2,550,893






2,114,816






      Total assets

$ 21,317,548






$ 18,808,314






$ 16,170,930

























Interest-Bearing Liabilities: 



















Interest-bearing demand deposits

$   3,568,475


$     2,272


0.26%


$   3,554,366


$     2,132


0.24%


$   2,580,750


$     2,100


0.33%


Savings and money market deposits

5,479,978


3,550


0.26%


4,992,442


3,155


0.26%


4,261,466


3,172


0.30%


Certificates and other time deposits 

3,379,819


5,096


0.60%


2,816,701


4,100


0.59%


2,543,895


3,898


0.61%


Securities sold under repurchase



















    agreements 

382,692


254


0.27%


347,747


237


0.28%


471,430


312


0.27%


Junior subordinated debentures 

167,531


1,087


2.60%


124,231


775


2.53%


85,055


606


2.86%


Other borrowings

140,906


189


0.54%


51,932


158


1.23%


541,034


472


0.35%


      Total interest-bearing liabilities 

13,119,401


$   12,448


0.38%

(I)

11,887,419


$   10,557


0.36%

(I)

10,483,630


$   10,560


0.40%

(I)




















Noninterest-bearing liabilities: 



















Noninterest-bearing demand deposits

4,735,575






4,018,094






3,295,211






Other liabilities 

365,169






82,288






69,741






      Total liabilities

18,220,145






15,987,801






13,848,582






Shareholders' equity 

3,097,403






2,820,513






2,322,348






      Total liabilities and shareholders' equity 

$ 21,317,548






$ 18,808,314






$ 16,170,930

























Net interest income and margin 



$ 174,055


3.78%




$ 143,691


3.57%




$ 118,742


3.37%





















Non-GAAP to GAAP reconciliation:



















Tax equivalent adjustment



2,083






2,052






2,063























Net interest income and margin



















      (tax equivalent basis)



$ 176,138


3.83%




$ 145,743


3.62%




$ 120,805


3.43%


 

(H) Yield on securities was impacted by net premium amortization of $12,837, $12,280 and $18,838 for the three month periods ended June 30, 2014, March 31, 2014 and June 30, 2013, re spectively.

(I) Total cost of funds, including noninterest-bearing deposits, was 0.28%, 0.27% and 0.31% for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)














YIELD ANALYSIS 

Year-to-Date



Jun 30, 2014


Jun 30, 2013



Average Balance


Interest Earned/ Interest Paid


Average Yield/ Rate


Average Balance


Interest Earned/ Interest Paid


Average Yield/ Rate















Interest-Earning Assets: 













Loans

$   8,616,796


$245,799


5.75%


$   5,691,541


$171,306


6.07%


Investment securities

8,608,411


94,726


2.22%

(J)

7,860,438


75,932


1.95%

(J)

Federal funds sold and other













   earning assets

168,368


226


0.27%


34,954


95


0.55%


  Total interest-earning assets 

17,393,575


$340,751


3.95%


13,586,933


$247,333


3.67%


Allowance for credit losses 

(69,919)






(55,513)






Noninterest-earning assets 

2,746,112






1,982,871






  Total assets

$ 20,069,768






$ 15,514,291



















Interest-Bearing Liabilities: 













Interest-bearing demand deposits

$   3,561,460

...

$    4,404


0.25%


$   2,619,902


$    4,309


0.33%


Savings and money market deposits

5,237,557


6,705


0.26%


4,027,242


6,001


0.30%


Certificates and other time deposits 

3,099,815


9,196


0.60%


2,457,676


7,550


0.62%


Securities sold under repurchase













    agreements 

365,316


491


0.27%


460,049


604


0.26%


Junior subordinated debentures 

145,881


1,862


2.57%


85,055


1,211


2.87%


Other borrowings

96,666


347


0.72%


450,082


834


0.37%


  Total interest bearing liabilities 

12,506,695


$  23,005


0.37%

(K)

10,100,006


$  20,509


0.41%

(K)














Noninterest-bearing liabilities: 













Noninterest-bearing demand deposits

4,378,471






3,118,400






Other liabilities 

224,497






66,251






  Total liabilities

17,109,663






13,284,657






Shareholders' equity 

2,960,105






2,229,634






  Total liabilities and shareholders' equity 

$ 20,069,768






$ 15,514,291



















Net interest income and margin 



$317,746


3.68%




$226,824


3.37%















Non-GAAP to GAAP reconciliation:













Tax equivalent adjustment



4,135






4,188

















Net interest income and margin 













     (tax equivalent basis)



$321,881


3.73%




$231,012


3.43%


(J) Yield on securities was impacted by net premium amortization of $25,117 and $41,548 for the six month periods ended June 30, 2014 and June 30, 2013, respectively.

(K) Total cost of funds, including noninterest-bearing deposits, was 0.27% and 0.31% for the six month periods ended June 30, 2014 and June 30, 2013, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
















Three Months Ended


Year-to-Date


Jun 30, 2014


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Jun 30, 2014


Jun 30, 2013

Adjustment to Loan Yield (L)














Interest on loans, as reported

$       138,655


$        107,144


$       110,575


$         94,236


$         89,842


$       245,799


$       171,306

   Remove purchase accounting adjustment-














            loan discount accretion

(25,352)


(13,475)


(19,979)


(16,421)


(12,031)


(38,827)


(26,323)

Interest on loans without discount accretion

$       113,303


$          93,669


$         90,596


$         77,815


$         77,811


$       206,972


$       144,983

Average loans

$    9,468,136


$     7,755,997


$    7,238,438


$    6,173,394


$    6,114,598


$    8,616,796


$    5,691,541

Loan yield without discount accretion

4.80%


4.90%


4.97%


5.00%


5.10%


4.84%


5.14%

Loan yield, as reported

5.87%


5.60%


6.06%


6.06%


5.89%


5.75%


6.07%















Adjustment to Securities Yield (L)














Interest on securities, as reported

$         47,670


$          47,056


$         45,100


$         41,961


$         39,384


$         94,726


$         75,932

   Remove purchase accounting adjustment-














            securities amortization

1,570


1,964


1,892


2,275


2,599


3,534


5,705

Interest on securities including amortization

$         49,240


$          49,020


$         46,992


$         44,236


$         41,983


$         98,260


$         81,637

Average securities

$    8,748,322


$     8,466,946


$    7,992,673


$    8,015,221


$    7,964,157


$    8,608,411


$    7,860,438

Securities yield without purchase accounting adjustment

2.26%


2.35%


2.33%


2.19%


2.11%


2.30%


2.09%

Securities yield, as reported

2.19%


2.25%


2.24%


2.08%


1.98%


2.22%


1.95%















Net Interest Margin (tax equivalent basis, excluding














   purchase accounting adjustments to yield)

3.31%


3.33%


3.35%


3.19%


3.09%


3.32%


3.12%















Net Interest Margin (tax equivalent basis), as reported

3.83%


3.62%


3.82%


3.59%


3.43%


3.73%


3.43%















Net income available to common shareholders, 














          as reported

$         75,506


$          67,137


$         62,971


$         55,278


$         53,844


$       142,643


$       103,149

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

(15,886)


(7,677)


(12,095)


(9,476)


(6,335)


(23,556)


(13,925)

Net income available to common shareholders, adjusted

$         59,620


$          59,460


$         50,876


$         45,802


$         47,509


$       119,087


$         89,224

 


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


Balance at
Mar 31, 2014


Balance at
Jun 30, 2014


Balance at
Acquisition
Date


Balance at
Mar 31, 2014


Balance at
Jun 30, 2014


Balance at
Acquisition
Date


Balance at
Mar 31, 2014


Balance at
Jun 30, 2014

Loan marks:


















Previously acquired banks (N)

$    159,627


$          77,163


$         67,578


$      63,547


$          42,025


$         32,450


$    223,174


$        119,188


$       100,028

2014 acquisition (O)

65,962


-


55,749


68,359


-


68,359


134,321


-


124,108

Total 

$    225,589


$          77,163


$       123,327


$    131,906


$          42,025


$       100,809


$    357,495


$        119,188


$       224,136



















Acquired portfolio loan balances:


















Previously acquired banks (N)

$ 3,839,648


$     2,123,805


$    1,863,751


$    135,279


$          82,127


$         70,292


$ 3,974,927


$     2,205,932


$    1,934,043

2014 acquisition (O)

1,617,287


-


1,128,510


120,567


-


110,582


1,737,854


-


1,239,092

Total

$ 5,456,935


$     2,123,805


$    2,992,261


$    255,846


$          82,127


$       180,874


$ 5,712,781

(P)

$     2,205,932


$    3,173,135

(L)  Non-GAAP financial measure.







(M) Using effective tax rate of 33.2%, 33.3%, 33.1%, 33.0% and 32.8% for the three month periods ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013,

respectively, and 33.2% and 32.6% for the six month periods ended June 30, 2014 and 2013, respectively.

(N)  Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, East Texas Financial Services, Coppermark and FVNB.

(O)  F&M was acquired on April 1, 2014.  During the second quarter of 2014, F&M added $1.738 billion in loans with related purchase accounting adjustments of $134.321 million at acquisition date.

(P)  Actual principal balances acquired.






 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)












Three Months Ended


 Jun 30,
2014 


 Mar 31,
2014 


 Dec 31,
2013 


 Sep 30,
2013 


 Jun 30,
2013 

YIELD TREND




















Interest-Earning Assets: 










Loans

5.87%


5.60%


6.06%


6.06%


5.89%

Investment securities (Q) 

2.19%


2.25%


2.24%


2.08%


1.98%

Federal funds sold and other earning assets

0.30%


0.19%


0.29%


0.22%


0.87%

  Total interest-earning assets 

4.05%


3.83%


4.03%


3.80%


3.67%











Interest-Bearing Liabilities: 










Interest-bearing demand deposits

0.26%


0.24%


0.25%


0.28%


0.33%

Savings and money market deposits

0.26%


0.26%


0.26%


0.27%


0.30%

Certificates and other time deposits 

0.60%


0.59%


0.60%


0.59%


0.61%

Securities sold under repurchase agreements

0.27%


0.28%


0.28%


0.28%


0.27%

Other borrowings

0.54%


1.23%


0.42%


0.23%


0.35%

Junior subordinated debentures 

2.60%


2.53%


2.61%


2.85%


2.86%

  Total interest-bearing liabilities 

0.38%


0.36%


0.37%


0.37%


0.40%











Net Interest Margin 

3.78%


3.57%


3.76%


3.53%


3.37%

Net Interest Margin (tax equivalent)

3.83%


3.62%


3.82%


3.59%


3.43%

(Q) Yield on securities was impacted by net premium amortization of $12,837, $12,280, $12,017, $15,136 and $18,838 for the three month periods ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively.











 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)












Three Months Ended


Jun 30, 2014


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


June 30, 2013

Balance Sheet Averages










Total loans

$    9,468,136


$     7,755,997


$    7,238,438


$    6,173,394


$      6,114,598

Investment securities

8,748,322


8,466,946


7,992,673


8,015,221


7,964,157

Federal funds sold and










     other earning assets

234,302


101,700


103,413


27,451


35,113

Total interest-earning assets

18,450,760


16,324,643


15,334,524


14,216,066


14,113,868

Allowance for credit losses

(72,587)


(67,222)


(60,170)


(56,765)


(57,754)

Cash and due from banks

284,432


255,297


232,666


189,082


279,271

Goodwill

1,803,534


1,673,216


1,560,905


1,351,236


1,331,568

Core deposit intangibles, net

38,469


38,754


30,641


25,938


25,893

Other real estate

8,562


7,885


7,254


9,494


19,605

Fixed assets, net

292,075


282,411


251,688


231,480


223,769

Other assets

512,303


293,330


419,122


227,738


234,710

Total assets

$  21,317,548


$   18,808,314


$  17,776,630


$  16,194,269


$    16,170,930











Noninterest-bearing deposits

$    4,735,575


$     4,018,094


$    3,860,296


$    3,308,158


$      3,295,211

Interest-bearing demand deposits

3,568,475


3,554,366


2,963,899


2,400,555


2,580,750

Savings and money market deposits

5,479,978


4,992,442


4,654,044


4,233,911


4,261,466

Certificates and other time deposits

3,379,819


2,816,701


2,712,699


2,489,848


2,543,895

Total deposits

17,163,847


15,381,603


14,190,938


12,432,472


12,681,322

Securities sold under










     repurchase agreements

382,692


347,747


398,100


455,276


471,430

Other borrowings

140,906


51,932


210,492


772,083


541,034

Junior subordinated debentures

167,531


124,231


111,172


85,055


85,055

Other liabilities

365,169


82,288


223,394


73,571


69,741

Shareholders' equity

3,097,403


2,820,513


2,642,534


2,375,812


2,322,348

Total liabilities and equity

$  21,317,548


$   18,808,314


$  17,776,630


$  16,194,269


$    16,170,930

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
































Jun 30, 2014


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013

Period End Balances






























Loan Portfolio















Commercial and other

$    2,139,983

23.0%


$   1,312,405

16.9%


$   1,322,975

17.0%


$   1,028,799

16.6%


$      999,677

16.2%

Construction, land development















     and other land loans

1,005,099

10.8%


888,985

11.5%


865,511

11.1%


703,193

11.4%


694,585

11.2%

1-4 family residential

2,153,801

23.1%


1,906,480

24.7%


1,870,365

24.2%


1,503,771

24.4%


1,452,268

23.7%

Home equity

267,759

2.9%


263,966

3.4%


261,355

3.4%


211,742

3.4%


208,739

3.4%

Commercial real estate

3,027,945

32.6%


2,709,386

34.9%


2,753,797

35.3%


2,304,862

37.2%


2,390,820

38.6%

Agriculture (including farmland)

542,360

5.8%


512,857

6.6%


531,258

6.8%


321,518

5.2%


314,945

5.1%

Consumer and other

171,215

1.8%


158,321

2.0%


169,960

2.2%


108,704

1.8%


111,449

1.8%

Total loans

$    9,308,162



$   7,752,400



$   7,775,221



$   6,182,589



$   6,172,483
































Deposit Types















Noninterest-bearing DDA

$    4,921,398

28.5%


$   4,142,042

26.9%


$   4,108,835

26.9%


$   3,368,357

27.0%


$   3,283,082

26.0%

Interest-bearing DDA

3,467,826

20.1%


3,446,375

22.3%


3,470,316

22.7%


2,366,997

19.0%


2,483,428

19.9%

Money market

3,861,339

22.3%


3,468,016

22.4%


3,320,062

21.7%


2,834,172

22.8%


2,868,880

23.0%

Savings

1,707,645

9.9%


1,630,395

10.5%


1,571,504

10.3%


1,413,153

11.3%


1,371,214

11.0%

Certificates and other time deposits

3,322,847

19.2%


2,773,229

17.9%


2,820,554

18.4%


2,473,120

19.9%


2,502,046

20.1%

Total deposits

$  17,281,055



$ 15,460,057



$ 15,291,271



$ 12,455,799



$ 12,508,650

















Loan to Deposit Ratio

53.9%



50.1%



50.8%



49.6%



49.3%
































Construction Loans















Single family residential















   construction

$       316,579

31.2%


$      292,137

32.6%


$      271,491

30.9%


$      239,980

33.5%


$      234,257

32.9%

Land development

88,947

8.8%


73,974

8.2%


83,820

9.6%


60,927

8.6%


63,857

9.0%

Raw land

62,731

6.2%


55,384

6.2%


48,996

5.6%


52,789

7.4%


59,701

8.4%

Residential lots

138,769

13.7%


118,733

13.2%


122,449

14.0%


95,361

13.4%


91,018

12.8%

Commercial lots

93,200

9.2%


99,300

11.1%


103,878

11.9%


58,085

8.2%


60,960

8.6%

Commercial construction and















   other

312,870

30.9%


257,942

28.7%


244,124

28.0%


204,940

28.9%


200,633

28.3%

Net unaccreted discount

(7,997)



(8,485)



(9,247)



(8,889)



(15,841)


Total construction loans

$    1,005,099



$      888,985



$      865,511



$      703,193



$      694,585


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
















Three Months Ended


Year-to-Date


Jun 30, 2014


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Jun 30, 2014


Jun 30, 2013















Asset Quality














Nonaccrual loans

$         23,082


$            7,714


$         10,231


$           4,954


$           4,295


$         23,082


$           4,295

Accruing loans 90 or more














days past due

335


3,519


4,947


283


325


335


325

Total nonperforming loans

23,417


11,233


15,178


5,237


4,620


$         23,417


4,620

Repossessed assets

11


91


27


18


-


11


-

Other real estate

5,093


7,372


7,299


7,432


10,244


5,093


10,244

  Total nonperforming assets

$         28,521


$          18,696


$         22,504


$         12,687


$         14,864


$         28,521


$         14,864





























Nonperforming assets:














Commercial and industrial

$         14,434


$            4,748


$           3,153


$           1,223


$           1,191


$         14,434


$           1,191

Construction, land development and other land loans

2,449


4,053


4,558


4,611


5,898


2,449


5,898

1-4 family residential (including home equity)

6,909


5,435


6,279


2,441


2,112


6,909


2,112

Commercial real estate (including multi-family residential)

3,970


4,196


8,033


4,233


4,330


3,970


4,330

Agriculture (including farmland)

140


104


279


23


1,213


140


1,213

Consumer and other

619


160


202


156


120


619


120

Total 

$         28,521


$          18,696


$         22,504


$         12,687


$         14,864


$         28,521


$         14,864















Number of loans/properties

179


164


203


128


123


179


123















Allowance for credit losses at














end of period

$         73,266


$          67,096


$         67,282


$         59,913


$         56,176


$         73,266


$         56,176















Net charge-offs:














Commercial and industrial

$               (64)


$                 81


$                  7


$              119


$              148


$                17


$              207

Construction, land development and other land loans

115


(17)


(12)


(30)


124


98


68

1-4 family residential (including home equity)

406


131


21


15


35


537


137

Commercial real estate (including multi-family residential)

5


60


(311)


(471)


801


65


744

Agriculture (including farmland)

(843)


(81)


(85)


13


13


(924)


6

Consumer and other

536


612


876


642


302


1,148


576

Total 

$              155


$               786


$              496


$              288


$           1,423


$              941


$           1,738





























Asset Quality Ratios














Nonperforming assets to














     average earning assets

0.15%


0.11%


0.15%


0.09%


0.11%


0.16%


0.11%

Nonperforming assets to loans














     and other real estate

0.31%


0.24%


0.29%


0.20%


0.24%


0.31%


0.24%

Net charge-offs to














     average loans (annualized)

0.01%


0.04%


0.03%


0.02%


0.09%


0.02%


0.06%

Allowance for credit losses to














     total loans

0.79%


0.87%


0.87%


0.97%


0.91%


0.79%


0.91%

Allowance for credit losses to total loans 














(excluding acquired loans accounted for














under ASC Topics 310-20 and 310-30) (E)

1.15%


1.18%


1.25%


1.20%


1.18%


1.15%


1.18%

 

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, 2014 


 Mar 31, 2014 


 Dec 31, 2013 


 Sep 30, 2013 


 Jun 30, 2013 


 Jun 30, 2014 


 Jun 30, 2013 
















Return on average tangible common equity:















Net income


$               75,506


$               67,137


$               62,971


$              55,278


$               53,844


$             142,643


$             103,149

Average shareholders' equity


$          3,097,403


$          2,820,513


$          2,642,534


$         2,375,812


$          2,322,348


$          2,960,105


$          2,229,634

Less: Average goodwill and other intangible assets


(1,842,003)


(1,711,970)


(1,591,546)


(1,377,174)


(1,357,461)


(1,777,346)


(1,304,811)

         Average tangible shareholders' equity


$          1,255,400


$          1,108,543


$          1,050,988


$            998,638


$             964,887


$          1,182,759


$             924,823

Return on average tangible common equity(D)


24.06%


24.23%


23.97%


22.14%


22.32%


24.12%


22.31%
















Tangible book value per share:















Shareholders' equity


$          3,120,594


$          2,840,754


$          2,786,818


$         2,389,112


$          2,345,282


$          3,120,594


$          2,345,282

Less: Goodwill and other intangible assets


(1,931,342)


(1,711,706)


(1,712,121)


(1,377,015)


(1,377,522)


(1,931,342)


(1,377,522)

         Tangible shareholders' equity


$          1,189,252


$          1,129,048


$          1,074,697


$         1,012,097


$             967,760


$          1,189,252


$             967,760
















Period end shares outstanding


69,744


66,261


66,048


60,383


60,315


69,744


60,315

Tangible book value per share:


$                 17.05


$                 17.04


$                 16.27


$                16.76


$                 16.05


$                 17.05


$                 16.05
















Tangible equity to tangible assets ratio:















Tangible shareholders' equity


$          1,189,252


$          1,129,048


$          1,074,697


$         1,012,097


$             967,760


$          1,189,252


$             967,760
















Total assets


$        21,248,106


$        18,913,133


$        18,642,028


$       16,054,279


$        16,270,718


$        21,248,106


$        16,270,718

Less: Goodwill and other intangible assets


(1,931,342)


(1,711,706)


(1,712,121)


(1,377,015)


(1,377,522)


(1,931,342)


(1,377,522)

         Tangible assets


$        19,316,764


$        17,201,427


$        16,929,907


$       14,677,264


$        14,893,196


$        19,316,764


$        14,893,196
















Tangible equity to tangible assets ratio


6.16%


6.56%


6.35%


6.90%


6.50%


6.16%


6.50%

Prosperity Bancshares, Inc.®
Notes to Selected Financial Data (Unaudited)
(Dollars in thousands)



 Jun 30, 2014 


 Mar 31, 2014 


 Jun 30, 2013 








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







Allowance for credit losses


$               73,266


$               67,096


$               56,176

Total loans


$          9,308,162


$          7,752,400


$          6,172,483

Less: Fair value of acquired loans accounted for under ASC







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


$          2,948,999


$          2,086,744


$          1,418,489

Total loans less acquired loans


$          6,359,163


$          5,665,656


$          4,753,994

Allowance for credit losses to total loans, excluding







       acquired loans (non-GAAP basis)


1.15%


1.18%


1.18%

 

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