Prosperity Bancshares' fourth-quarter earnings outpaced the Zacks
Consensus Estimate. Results benefited mainly from increased
revenues, partly offset by a rise in operating expenses and higher
provision for credit losses. Further, while improvement in loan and
deposit balances was the tailwind, asset quality was a mixed bag.
We believe that synergies from acquisitions and organic expansion
will continue to benefit the company going forward. Additionally, a
strong balance sheet position will likely enable Prosperity
Bancshares to meaningfully deploy capital. However, a still low
interest-rate environment, rising operating expenses, significant
exposure to the real estate loan portfolio and stringent
regulations will likely weigh on the company's financials in the
Houston, TX-based Prosperity Bancshares, Inc. was formed in 1983
as a vehicle to acquire the former Allied Bank in Edna, TX, which
was chartered in 1949 as The First National Bank of Edna and is now
known as Prosperity Bank. The financial holding company pursuant to
the Gramm-Leach-Bliley Act derives substantially all of its
revenues and income from its bank subsidiary Prosperity Bank.
Prosperity Bank provides a wide range of financial products and
services traditional loan and deposit products to small and
medium-sized businesses and consumers. The company provides loans
to businesses in the range of $0.1 million to $8.0 million. As of
Dec 31, 2013, Prosperity Bank operated 238 full-service banking
Since its inception, Prosperity Bancshares has been growing
considerably through the acquisition of community banks and
branches of other banks. Moreover, since 1998, the company has
closed more than 25 deals.
The major buyouts include Commercial Bancshares, Inc. in 2001,
First Capital Bankers, Inc. in 2005, Texas United Bancshares, Inc
in 2007, Franklin Bank in 2008 and First Bank in 2010. Further in
2012, Prosperity Bancshares completed the acquisition of Texas
Bankers, Inc., The Bank Arlington, American State Financial
Corporation and Bellaire-based Community National Bank.
In 2013, Prosperity Bancshares acquired East Texas Financial
Services Inc. and its fully-owned subsidiary, First Federal Bank
Texas Coppermark Bancshares, Inc and its fully-owned subsidiary
Coppermark Bank as well as FVNB Corp. and its fully owned
subsidiary, First Victoria National Bank.
As of Dec 31, 2013, Prosperity Bancshares had total assets of
$18.6 billion, cash and cash equivalents of $381.4 million, net
loans of $7.8 billion, total deposits of $15.3 billion and
shareholders' equity of $2.8 billion. As of the same date, the
company had 2,995 employees.
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