Prosperity Bancshares Inc. (PB): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Prosperity Bancshares' third-quarter 2014 earnings surpassed the Zacks Consensus Estimate. Commendable growth in loans and deposits along with improved revenue generation augmented the overall results. However, mounting expenses as well as provision for credit losses continued to be the weak factors. We expect the company's inclination towards acquisitions and organic expansion to pave the way for future growth. Moreover, the company's strong balance sheet position and steady capital deployment activities remain impressive. Nonetheless, weak cost control, significant exposure to the real estate loan portfolio and stringent regulations are expected to keep the financials under pressure in the near term.


Overview:

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 presently 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 Sep 30, 2014, Prosperity Bank operated 245 full-service banking centers.

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 nearly 30 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 completed the acquisitions of East Texas Financial Services Inc., Coppermark Bancshares, Inc. and FVNB Corp.

In Apr 2014, Prosperity Bancshares acquired F&M Bancorporation Inc. in a cash-cum-stock deal valued at $252.4 million.

As of Sep 30, 2014, Prosperity Bancshares had total assets of $21.1 billion, cash and cash equivalents of $331.4 million, total loans of $9.4 billion, total deposits of $17.0 billion and shareholders' equity of $3.2 billion. As of the same date, the company had 3,057 employees.


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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.



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