Prosperity Bancshares Expands Further - Analyst Blog


On Thursday, Prosperity Bancshares Inc. ( PB ) entered into a definitive agreement with F&M Bancorporation Inc. ('FMBC') to acquire the latter's wing F&M Bank & Trust Company. The merger, as approved by the board of directors of both the companies, is expected to close by first-quarter 2014.

In order to fund this merger, Prosperity Bancshares will issue 3.3 million shares of its common stock and use $47.0 million in cash. Moreover, the deal still awaits approvals from regulatory bodies as well as FMBC's shareholders.

J.P.Morgan Securities LLC, a division of JPMorgan Chase & Co. ( JPM ), acted as financial advisor for the deal.

With the recent announcement, Prosperity Bancshares intends to expand in the economically attractive Tulsa market and utilize F&M Bank's 68 years of banking experience there. Further, it plans to capitalize on F&M Bank's attractive core deposit base as well as commercial and industrial lending portfolios.

Acquisitions remain a vital part of Prosperity Bancshares' growth strategy. Over the years, the company has grown through acquiring a number of banks and branches. Following four major deals in 2012, the company completed the merger of East Texas Financial Services Inc. in Jan 2013 as well as the merger of Coppermark Bancshares, Inc and the latter's fully-owned subsidiary Coppermark Bank in Apr 2013.

Further, in Jul 2013, Prosperity signed a definitive merger deal with Victoria, Texas-based FVNB Corp. and its fully owned subsidiary, First Victoria National Bank. According to the agreement, First Victoria National Bank (comprising 34 banking branches) will merge with Prosperity Bank after completion of the transaction. The deal is expected to close by this year end.

Such deals have not only increased the company's geographical footprint, but also boosted its existing market presence. With the ongoing consolidation in the banking sector, we believe that Prosperity Bancshares will continue to capitalize on promising opportunities and drive inorganic growth to enhance shareholder value.

Prosperity Bancshares currently carries a Zacks Rank #1 (Strong Buy). Apart from Prosperity Bancshares, other banks worth considering include First Interstate Bancsystem Inc. ( FIBK ) and Firstbank Corporation ( FBMI ). Both the stocks carry a Zacks Rank #1 (Strong Buy).

FIRSTBANK ALMA (FBMI): Free Stock Analysis Report

FIRST INTST MT (FIBK): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

PROSPERITY BCSH (PB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: FBMI , FIBK , JPM , PB

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