Prosperity Bancshares Inc.
) touched a new 52-week high of $62.00 during its trading session
on Sep 30. This denotes an increase over the previous high of
$61.99 reached on Sep 18.
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Prosperity Bancshares closed the trading day on Sep 30 at $61.84,
reflecting a solid year-to-date return of 47.7%. The trading
volume for the session was 0.40 million shares. Further upside
potential exists for this Zacks Rank #2 (buy) registered bank
holding company as can be deduced from its expected earnings
growth of 11.1% for 2013 and 11.5% for 2014.
Shares of Prosperity Bancshares have risen 2.4% since the company
on Aug 29, announced to have entered into a definitive agreement
to acquire F&M Bancorporation Inc. (FMBC) and F&M Bank
& Trust Company (F&M Bank). The transaction has been
approved by the board of directors of both the companies and is
anticipated to close by first quarter 2014.
Through this acquisition, 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.
Besides this transaction, a look into Prosperity Bancshares'
second quarter 2013 results clearly points to the company's
financial strength. Earnings per share in the quarter came in at
89 cents, a penny above the Zacks Consensus Estimate. Net
interest income in the quarter grew 41.9% year over year to
$118.7 million and non-interest income jumped 85.1% to $25.3
Talking of balance sheet of Prosperity Bancshares, total assets
grew 7.9% sequentially primarily due to an increase of 17.3% in
total loans. Total deposits in the quarter were up by 6.8%. Loan
to deposit ratio improved 440 basis points sequentially.
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.
Prosperity Bancshares posted positive earnings surprise in each
of the trailing four quarters, with the average being 1.8%. Solid
financial results and the company's focus on capitalizing
promising opportunities and efforts to drive inorganic growth to
enhance shareholder value, raises optimism for better results
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for
Prosperity Bancshares has increased by 0.3% to $3.59 for 2013 and
by 3.6% to $4.00 for 2014, respectively. Also, after the news
about the acquisition of F&M Bank, earnings estimate for 2014
increased 3.1% in the last 30 days.
Prosperity Bancshares currently has a market capitalization of
$3.7 billion. Other stocks to watch out for in the industry are
Cullen/Frost Bankers, Inc.
Enterprise Financial Services Corp.
CoBiz Financial Inc.
), each with a Zacks Rank #2 (Buy).