On Jun 25, 2014, we issued an updated research report on
Prosperity Bancshares Inc.
). The Houston, TX-based bank is continuing with its strategic
expansion through inorganic routes. Additionally, the expectations
for higher loan demand have created an ideal platform for organic
Prosperity Bancshares' strong balance sheet positions it to pursue
new acquisition opportunities in a better way. In Apr, 2014, the
company acquired F&M Bancorporation, following three big deals
in 2013. Through these acquisitions, Prosperity Bancshares is not
only exploring uncharted territories but also enhancing its
presence in the existing locations.
Prosperity Bancshares reported its first-quarter 2014 earnings of
$1.01 per share on Apr 23 beating the Zacks Consensus Estimate by
3.1%. The reported figure was up 17.4% from the prior-year quarter.
Results were aided by higher revenues and lower provision for
credit losses, which was, however, partly offset by higher
expenses. Again, asset quality during the quarter was a mixed-bag
while capital ratios deteriorated.
Rising operating expenses remain a concern for the company. Higher
salaries and employee benefits are the major reason behind the
increasing expenses. We believe that with ongoing acquisitions,
expenses will continue to escalate.
Over the past 60 days, the Zacks Consensus Estimate for 2014
remained unchanged at $4.18 per share, while it fell 0.2% to $4.39
per share for 2015.
Prosperity Bancshares currently carries a Zacks Rank #3 (Hold).
Some better-ranked banks include
Capital Bank Financial Corp.
Univest Corporation of Pennsylvania
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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PROSPERITY BCSH (PB): Free Stock Analysis
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