Continuing with its legacy of acquisitions,
Prosperity Bancshares Inc.
) recently 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.
As per the deal, Prosperity will issue 5,570,818 shares of its
common stock, along with $91.25 million cash for FVNB Corp's
outstanding capital stock, subject to certain conditions and
Additionally, the merger, approved by the board of directors of
both the companies, is expected to be complete by this year end.
However, the deal is yet to get the sanction of certain customary
regulations and FVNB shareholders.
Upon completion of the acquisition, M. Russell Marshall, CEO of
FVNB, will serve as the Chairman of Prosperity's Wealth
Management/Private Banking, while Kenneth Vickers, Chief Lending
Officer of FVNB, will be Senior EVP of the Executive Loan
Committee. Further, John Zacek, EVP of the Victoria Region for
FVNB, will become President of South Texas Area for Prosperity.
Notably, David Zalman, Chairman and CEO of Prosperity, stated
that the merger with FVNB would contribute positively to the
company's profitability in the long run. He banks upon the
companies' sound knowledge of customer demand and expects the
merged enterprise to deliver better services through improved and
diversified financial products. Moreover, the merger will
consolidate Prosperity's foothold in South Texas.
Acquisitions Reflect Earnings Power
From capital perspective, Prosperity is doing well owing to its
earnings power. Acquisitions remain a vital part of the company's
growth strategy. Over the years, the company has grown through
acquiring 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
We expect continued synergies from the ongoing acquisitions and
organic growth to benefit Prosperity in the long term. However, a
persistently low interest rate environment, slow economic growth
rate, exposure to the real estate loan portfolio and stringent
regulations are expected to dent the company's financials in the
Prosperity currently carries a Zacks Rank #2 (Buy). Some better
performing banks include
Farmers Capital Bank Corporation
Home Bancshares, Inc.
). All of them carry a Zacks Rank #1(Strong Buy).
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FARMERS CAP KY (FFKT): Free Stock Analysis
HOME BANCSHARES (HOMB): Free Stock Analysis
PROSPERITY BCSH (PB): Free Stock Analysis
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