Prosperity Bancshares, Inc. (PB)

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Prosperity Bancshares (PB)

Q4 2013 Earnings Call

January 24, 2014 10:30 am ET

Executives

Charlotte M. Rasche - Executive Vice President, General Counsel, Senior Executive Vice President of Prosperity Bank and General Counsel of Prosperity Bank

David Zalman - Chairman, Chief Executive Officer, President, Senior Chairman of the Board for Prosperity Bank, Chief Executive Officer of Prosperity Bank and President of Prosperity Bank

David Hollaway - Chief Financial Officer, Executive Vice President, Principal Accounting Officer, Chief Financial Officer of Prosperity Bank and Senior Vice President of Prosperity Bank

H. E. Timanus - Vice Chairman, Chairman of Prosperity Bank and Chief Operating Officer of Prosperity Bank

Chris A. Bagley - Chief Credit Officer

Analysts

David Rochester - Deutsche Bank AG, Research Division

Jennifer H. Demba - SunTrust Robinson Humphrey, Inc., Research Division

Jefferson Harralson - Keefe, Bruyette, & Woods, Inc., Research Division

Scott Valentin - FBR Capital Markets & Co., Research Division

Terence J. McEvoy - Oppenheimer & Co. Inc., Research Division

Mikhail Goberman - Portales Partners, LLC

Mike Granger

Matt Olney - Stephens Inc., Research Division

Jon G. Arfstrom - RBC Capital Markets, LLC, Research Division

Gary P. Tenner - D.A. Davidson & Co., Research Division

Presentation

Operator

Good day, everyone, and welcome to today's program. [Operator Instructions] Please note, this call is being recorded. I'll be standing by if you should need any assistance.

And it's now my pleasure to turn the conference over to Ms. Charlotte Rasche. Please go ahead.

Charlotte M. Rasche

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bancshares Fourth Quarter 2013 Earnings Conference Call. This call is being broadcast live over the Internet at www.prosperitybankusa.com and will be available for replay at the same location for the next few weeks. I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bancshares. And here with me today is David Zalman, Chairman and Chief Executive Officer; H. E. Tim Timanus Jr., Vice Chairman; David Hollaway, Chief Financial Officer; Randy Hester, Chief Lending Officer; and Chris Bagley, our Chief Credit Officer. David Zalman will lead off with a review of the highlights for the recent quarter and an update on our recently announced merger and acquisition activity. He will be followed by David Hollaway, who will review some of our recent financial statistics. And Tim Timanus will discuss our lending activities, including asset quality. Finally, we will open the call for questions.

During the call, interested parties may participate live by following the instructions that will be provided by our call moderator, Tony. Or you may e-mail questions to investor.relations@prosperitybankusa.com. I assume you have all received a copy of the earnings announcement we released earlier this morning. If not, please call Tracy Elkowitz at (281) 269-7221, and she will send a copy to you.

Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for the purposes of the Federal Securities Laws, and as such, may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Prosperity Bancshares to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

Additional information concerning factors that could cause actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bancshares' filings with the Securities and Exchange Commission, including Forms 10-Q and 10-K and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements.

Now let me turn the call over to David Zalman.

David Zalman

Thank you, Charlotte. I would like to welcome and thank everyone for listening to our year end 2013 conference call. I'm very excited to announce the great results and accomplishments for the fourth quarter and full year 2013. We were again selected by Forbes Magazine as the #1 Best Bank in America. All of our Associates and Directors worked very hard and this honor recognizes them for that work.

During the fourth quarter, we completed the merger and operational integration of First Victoria National Bank, with assets in excess of $2 billion and a footprint complementary to Prosperity. We are very excited about the combination and their team members have been great to work with. I know that the associates with First Victoria will help take us to another level and share in our success going forward.

We look forward to our pending merger with F&M Bancorporation and its wholly owned subsidiary, F&M Bank, located in Tulsa, Oklahoma, which we hope to close at the end of the first quarter or the very first part of the second quarter of this year. The merger with F&M Bank, with assets totaling $2.568 billion as of December 31, 2013, combined with our recent merger of Coppermark Bank in Oklahoma City, will increase our market share substantially in Oklahoma and increase our ability to compete more effectively.

We could not be more pleased with our earnings per share for 2013 increasing 13% to $3.65, compared with 2012 diluted earnings per share of $3.23. Including acquisitions, our loans increased $2.595 billion or 50.1%, and our deposits increased $3.649 billion or 31% when compared with the fourth quarter of 2012. These are excellent results and this achievement could not be done without all the hard work of our Associates and Directors. I appreciate all that has been done by everyone to make us the Best Bank in America.

A little bit about our economies. Texas and Oklahoma continue to experience lower unemployment rates than most others areas of the country. In October, the unadjusted unemployment rate for Houston, Sugarland, Baytown MSA was 5.9%. Houston added 79,600 jobs from October 2012 to 2000 and -- to October 2013. The Dallas/Fort Worth area saw unemployment at 5.9%. Dallas/Fort Worth also saw payroll job increases of 96,100, which ranked #1 nationally among the largest 12 U.S. markets. Houston was #2. By the numbers, Dallas/Fort Worth's 91 -- 96,100 job growth only trails New York City's 141,800 in new jobs added.

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