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Prosperity Bancshares Upped to Strong Buy

Zacks Equity Research

On Aug 24, Zacks Investment Research upgraded Prosperity Bancshares Inc. (PB) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Prosperity Bancshares has been witnessing rising earnings estimates following the announcement of robust second-quarter 2013 results. Moreover, this regional bank has delivered positive earnings surprises in the last 4 quarters, with an average beat of 1.8%.

Prosperity Bancshares reported second-quarter 2013 results on Jul 24. Earnings per share of 89 cents surpassed the Zacks Consensus Estimate by a penny. Results benefited from top-line growth, partially offset by higher operating expenses and a rise in provision for credit losses. Moreover, loan and deposit balances improved in the quarter.

Net interest income rose 41.9% year over year to $118.7 million. Moreover, non-interest income jumped 85.1% to $25.3 million. On the flip side, non-interest expense rose 60.3% from the prior-year quarter to $61.3 million.

Further, asset quality was a mixed bag. Net charge-offs were $1.4 million, down 26.3% from $1.9 million in the year-ago quarter. However, nonperforming assets increased 25.2% to $14.9 million.

Additionally, following the earnings release, the Zacks Consensus Estimate for 2013 increased 2.6% to $3.59 per share over the last 60 days. Similarly, for 2014, the Zacks Consensus Estimate advanced 8.7% to $3.88 per share over the same time period.

Positive earnings surprises and favorable estimate revisions stimulated the rank upgrade.

Other Stocks to Consider

While we prefer Prosperity Bancshares, other stocks carrying a Zacks Rank #1 include Webster Financial Corp. (WBS), BofI Holding, Inc. (BOFI) and Glacier Bancorp Inc. (GBCI).

Read the Full Research Report on GBCI

Read the Full Research Report on BOFI

Read the Full Research Report on PB

Read the Full Research Report on WBS

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